KARACHI: MCB Bank on Wednesday announced an impressive 21 percent increase in net profit for the year ending December 31, 2020, primarily driven by remarkable growth in gains on securities.
(more…)Author: Mrs. Anjum Shahnawaz
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Sales tax law explains ‘time of supply’
Sales Tax Act, 1990 has explained ‘time of supply’ for collection of sales tax.
The Sales Tax Act, 1990 [updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR)] explained the term as:
“Time of supply”, in relation to,–
(a) a supply of goods, other than under hire purchase agreement, means the time at which the goods are delivered or made available to the recipient of the supply” “or the time when any payment is received by the supplier in respect of that supply, whichever is earlier;
(b) a supply of goods under a hire purchase agreement, means the time at which the agreement is entered into; and
(c) services, means the time at which the services are rendered or provided;
Provided that in respect of sub clause ( a) ,(b) or (c), where any part payment is received, –
(i) for the supply in a tax period, it shall be accounted for in the return for that tax period; and
(ii) in respect of exempt supply, it shall be accounted for in the return for the tax period during which the exemption is withdrawn from such supply .
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Who are Tier-1 retailers under Sales Tax Act?
The term ‘Tier-1 retailer’ was introduced through Finance Act, 2017 by inserting relevant clause into Sales Tax Act, 1990.
All Tier-1 retailers are required to integrate all their Point of Sales (POSs) with computerized system of the Federal Board of Revenue (FBR).
The Sales Tax Act, 1990 (updated up to June 30, 2020 issued by the FBR), defined Tier-1 retailer as:
“Tier-1 retailer” means a retailer falling in any one or more of the following categories, namely:-
(a) a retailer operating as a unit of a national or international chain of stores;
(b) a retailer operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks;
(c) a retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds Rupees twelve hundred thousand;
(d) a wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on wholesale basis to the retailers as well as on retail basis to the general body of the consumers”;
(e) a retailer, whose shop measures one thousand square feet in area or more; and
(f) any other person or class of persons as prescribed by the Board.”
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Prime Minister issues directives for reducing burden of indirect taxes
ISLAMABAD: The government has started easing burden of indirect taxes to provide relief to the masses. In this regard Prime Minister Imran Khan has issued instructions to relevant ministries for preparing proposals.
Meeting of the Federal Cabinet was chaired by Prime Minister Imran Khan at Islamabad on Tuesday.
The Prime Minister apprised the meeting that relevant ministries have been directed to present proposals for reducing the burden of indirect taxes, particularly on food items in order to provide relief to the masses.
The federal cabinet approved Tax Laws (Amendment) Ordinance 2021. These amendments are aimed at facilitating transaction under Digital Roshan Pakistan scheme.
It was apprised that $ 500 million have been transacted through Digital Roshan Pakistan scheme so far.
The Cabinet accorded approval for 3 months extension of Afghanistan-Pakistan Transit Trade Agreement (APTTA 2010). The existing agreement is due to expire on 11th February, 2021.
The Cabinet was also briefed about the measures taken to control smuggling at Pak-Iran and Pak-Afghanistan borders.
The Cabinet expressed serious concerns over the report, according to which Sindh Government released 32,000 tons of wheat that was a 6 years old stock and unfit for human consumption.
The Cabinet noted that Sindh did not release wheat timely for public need and did not share Wheat and Sugar stock position with the Federal Government which resulted in artificial price hike and issues of hoarding, on one hand, and wastage of available wheat stock that could have been utilized for public good.
The Cabinet was apprised about the updated status of actions taken pursuant to Sugar Enquiry Committee Report. It was informed that several sugar mills had approached courts of law and action is underway after completion of court proceedings. The Cabinet was also informed that NAB was looking into the issue of subsidies.
Chairman, Task Force on IT & Telecom briefed the Cabinet about progress made for development of IT and Telecom sector.
The Cabinet was updated on Vacant Positions of Heads / CEOs of Public Sector Organizations. It was informed that since 2018, 56 Heads / CEOs have been appointed to Public Sector Organizations in a merit based and transparent manner.
The meeting was informed that at present 86 posts of heads/CEOs were vacant. The Prime Minister expressed displeasure over the vacant positions and directed Secretary Establishment Division to furnish a report before the Cabinet citing reasons for delay in appointments.
The Cabinet was apprised about Metro Bus Project, Islamabad. Chairman NHA informed that infrastructure work has been completed and the project is ready to be handed over to CDA. Minister for Interior was tasked by the Cabinet to present a road-map for handing-over of the project from NHA to CDA and operationalization plan.
The Cabinet accorded approval for Mutual Legal Assistance requests from Non-Treaty Countries.
The Cabinet approved appointment of Chief Metropolitan Officer as Administrator, Metropolitan Corporation, Islamabad for 6 months or till the time new Local Government setup is in place, whichever is earlier.
The Cabinet approved establishment of 30 Additional Accountability Courts in implementation of Hon. Supreme Court’s orders. These courts are to be established in Karachi, Lahore, Multan, Peshawar, Rawalpindi, Sukkur, Hyderabad and Quetta. The Prime Minister directed that first phase of establishment be completed on priority.
The Cabinet approved appointment of Masroor Khan as Chairman, Oil & Gas Regulatory Authority (OGRA).
Cabinet ratified decisions taken in Economic Coordination Committee (ECC) meeting held on 3rd & 8th February, 2021; and Cabinet Committee on Energy meeting held on 4th & 8th February, 2021.
The Cabinet was briefed on negotiations held with Independent Power Producers (IPPs). It was informed that the Government will benefit to the tune of Rs. 800 billion over a period of 20 years. It was apprised that the present Government is clearing a liability of approx. Rs. 400 billion after pre-audit. The Cabinet was apprised that a high level committee has been established comprising of two Hon. Supreme Court Judges and the Auditor to decide on the disputed amount of Rs. 57 billion claimed by IPPs. The Cabinet was informed that as a result of negotiations, the Government saved Rs. 32 billion against an adjudicated claim of Rs. 92 billion by IPPs. It was clarified that the Government has not surrendered any of its rights in the negotiations process. The Cabinet was informed that this process will result in a direct benefit of reduction in energy prices for the consumers. The Cabinet appreciated efforts of the Negotiations Committee.
The Prime Minister directed that unscheduled load shedding should not be practiced in any part of the country and directed Minister for Energy to conduct in-depth investigations for load-shedding occurring due to technical reasons.
The Cabinet accorded approval for exemption of PPRA regulations for import of 300,000 tons Wheat and 500,000 sugar.
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Private sector credit offtake sharply increases by 62 percent in seven months
KARACHI: The lending of commercial banks to private sector has surged by 62 percent in the first seven months (July – January) 2020/2021 owing to accelerated economic activities following reduction in coronavirus cases.
The private sector borrowing increased to Rs283.45 billion during the first seven months of the current fiscal year as compared with Rs175 billion in the corresponding months of the last fiscal year, according to data released on Tuesday.
Industry sources said that due to fall in coronavirus cases and availability of vaccine had helped to boost industrial and commercial activities.
The lending to private sector by branches of conventional banks registered phenomenal growth of 98 percent to Rs152 billion during the first seven months of the current fiscal year as compared with Rs76.7 billion in the corresponding months of the last fiscal year.
The private sector borrowing from Islamic banks increased to Rs57.3 billion during the period under review as compared with Rs20.2 billion in the corresponding period of the last fiscal year.
The Islamic banking branches of conventional banks extended loan facilities to private sector to the tune of Rs74.46 billion during July – January 2020/2021, which fell from Rs78 billion in the same period of the last fiscal year.
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Government borrowing from commercial banks increases by 26pc in seven months
KARACHI: The government borrowing from commercial banks has sharply increased by 26 percent during first seven months of the current fiscal year mainly due to financing the ballooning budget deficit.
The government borrowing from commercial banks increased to Rs906.54 billion during first seven months (July – January) of 2020/2021 as compared with Rs720.68 billion in the corresponding period of the last fiscal year, according to statistics released by the State Bank of Pakistan (SBP) on Tuesday.
The federal government borrows from scheduled banks through fortnightly auctioning of Market Treasury Bills (MTBs) of 3-, 6- and 12-month maturities. The federal also borrows long-term by quarterly auctioning of Pakistan Investment Bonds (PIBs)/Sukuk of 3, 5, 10, 15, 20 and 30 years maturities.
The budget deficit for the first half of the current fiscal year widened to 2.5 percent of the GDP as the budget deficit was 2.3 percent in the same half of the last fiscal year, according to fiscal operation for first half of the fiscal year 2020/2021 issued by the finance ministry.
The government financed the budget deficit with the domestic borrowing to the tune of Rs683.48 billion during the first half of the current fiscal year. Likewise, the government borrowing was Rs481.13 billion in the same half of the last fiscal year.
Since there is restriction of borrowing from State Bank of Pakistan (SBP) the government is heavily dependent on commercial banks. During the period the government retired borrowing from SBP to the tune of Rs317.7 billion as against the retirement of Rs266 billion in the same period of the last fiscal year.
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FBR warns against issuing manual tax notices
KARACHI: Federal Board of Revenue (FBR) has warned tax officials of initiating disciplinary proceedings for issuing manual tax notices, including audit and assessment.
The FBR in an official communication sent to Large Taxpayers Offices (LTOs), Regional Tax Offices (RTOs), Corporate Tax Offices (CTOs) and Medium Taxpayers Office (MTO) that instances had been reported to the revenue board that field officers tend to issue manual notices and assessment orders.
These manual notices have created problems for the taxpayers as they preferred to file appeal and were also adversely affecting the efficiency of the field formations.
The FBR issued following instructions to the tax offices:
i. All statutory notices available in IRIS shall be issued electronically without any exception; manual issuance of notices, available in IRIS, is not allowed.
ii. All orders shall be issued electronically through IRIS; issuance of manual orders is not allowed.
iii. All Commissioners are requested to conduct periodic inspection to ensure that notices/orders are issued electronically.
Any divergence from instructions shall be viewed as inefficiency and shall entail disciplinary proceedings, the FBR said.
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Value-added textile demands allowing cotton yarn import from India
KARACHI: Value-added textile sector on Tuesday demanded the government of allowing cotton yarn from India as it was done in case of pharmaceuticals.
In an online meeting with Abdul Razak Dawood, Advisor to Prime Minister on Commerce & Textile, the representatives of value added textile sector said that without discrimination, in order to overcome the scarcity of yarn in the Pakistan, as the government previously allowed for import of pharmaceuticals, “it is also most crucial to allow import of cotton yarn from neighbouring country through Wagah border as the quality yarn is not available and prices are also multiplied to manifolds.”
Wagah is a union council of Pakistan bordering with India.
Allowing import of cotton yarn was demanded by Value-Added Textile Associations – Zubair Motiwala, Chairman, Council of All Pakistan Textile Associations (CAPTA), Muhammad Jawed Bilwani, Chairman, Pakistan Apparel Forum, Riaz Ahmed, Central Chairman Pakistan Hosiery & Manufacturers Exporters Association, Tariq Munir, Zonal Chairman (SZ), Farukh Iqbal, Sr Vice Chairman PHMA (NZ), Ijaz Khokhar, Former Chairman, Pakistan Readymade Garments Manufacturers & Exporters Association, Haroon Shamsi, Former Chairman, Towel Manufacturers Association and Zia Alamdar, Former President, Faisalabad Chamber of Commerce & Industry in an online meeting held with Abdul Razak Dawood, Advisor to Prime Minister on Commerce & Textile.
The council raised: “The government, through Presidential Ordinance, must abolish all duties and taxes and allow duty free import of Cotton yarn which is the raw material of value-added textile sector in order to sustain and achieve milestone in enhancement of exports.
“The government should also place ban on export of cotton yarn of 30 single or below till June 2021 ensuring availability of quality yarn to facilitate export sector to complete their export orders without hassle and unrest.
“In view of shortage of wheat and sugar, the Government had allowed to import wheat and sugar and also banned their export to cater the national needs.”
Likewise, anti-dumping duties on goods imported meant for re-export by Export Oriented Units and Manufacturing Bond should also be abolished. Moreover, to turn vision of the Prime Minister for enhancement of exports into reality and to control the declining trend in exports, the government should freeze the special tariffs of 7.5 cents for electricity and $ 6.5 for gas for at least next three years and provide uninterrupted and quality electricity and gas providing level playing field and competitive environment to enhance their export efficiency and materialize all exports orders.”
The value-added textile sector has emphasized that the vision of Prime Minister Imran Khan for industrialization, increasing exports, creating trade surplus, generation of employment opportunities and earning precious foreign exchange shall become possible only when raw material – cotton yarn and uninterrupted supply of utilities is ensured on special tariffs approved for export-oriented industries. The Value-added Textile Exporters are highly worried over the unavailability of cotton yarn – which is basic raw material in the local market despite huge export orders are available with the value added textile.
On the demand of textile exporters, the government, previously, considered removing the Regulatory Duty only. Sense of severe unrest and uncertainty prevails as exporters feel it “discriminatory” because in the case of cotton, the government had allowed complete duty-free import.
Removal of Regulatory Duty has supported the value-added textile sector to some extent, whereas, the situation necessitates and demands to also remove the Customs Duty to fully support the value-added textile sector to complete their export orders which they have materialized for the next several months.
The gravity of situation demands the government to immediately abolish Customs duty on import of cotton yarn by passing through a Presidential Ordinance, in the interest of export and the country.
The Associations also expressed severe concern on the recent announcement of the Federal Government regarding discontinuation of gas to the industrial captive power plants which depicted a bleak picture in eyes of foreign buyers across the globe, particularly of US & EU who become doubtful as to how the Pakistani exporters will complete export orders?
The buyers have also communicated that since there will be no gas and orders cannot be completed, therefore, they are thinking to divert the export orders given to Pakistani exporters to other countries.
The Associations’ representatives lamented that 225 CPPs of Industries in Sindh were closed abruptly. The Government later clarified that the announcement was related to energy efficiency benchmark.
The Associations reacted that the CPPs of industries were more efficient and productive as compared to CPPs of utility companies. More than a decade back the export industries invested in CPPs on the offer of the then Government when the utility companies were failed to provide required quality electricity and there were load-shedding problems.
Now the sitting Government is asking to close the CPPs and take electricity from utility companies which is totally contradictory.
The Associations stated that the utility companies neither have the required quantum of electricity to supply to industries nor have the adequate infrastructure available for the purpose, thus, the Government must refrain from such unwise move which will bring disastrous effects on industries and exports.
Abdul Razak Dawood, Advisor to Prime Minister on Commerce & Textile gave patient hearing to the issues and problems confronting to the Value-Added Textile Industry and assured that he will take up the matter with the Prime Minister and Cabinet and the Government will consider and resolve some of the issued highlighted in the meeting.
Value Added Textile Export Industry contributes around 62 percent in total exports, provide highest urban employment particularly to female workforce and supports approx. 40 allied industries.
In view of its significant importance in the economy and free market mechanism, the Government must consider the appeal of value-added textile sector for duty-free import of cotton yarn to ensure availability of cotton yarn of good quality.
Such state of affairs demands the Government to remove 5 percent custom duty on import of 30 single yarn and below count and the exporters, manufacturers and importers, shall be given full liberty to import yarn from any country till the scarcity of cotton yarn is controlled and required quantity of yarn is available in abundance in all Pakistani markets to complete the export order smoothly.
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Stock market eases amid mixed trading
KARACHI: The stock market fell by 47 points on Tuesday owing to mixed trading activities during the day.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 46,675 points as against previous day’s closing of 46,722 points showing a decline of 47 points.
Analysts at Arif Habib Limited said that anticipation of better quarterly results as well as continued Bull Run in international crude oil prices boosted investor confidence to take new positions in O&GMCs, E&P and refinery sectors.
Banking sector stocks remained under selling pressure following the downtrend witnessed in the recent sessions. Power and Refinery sectors also performed well on the expectation of finalization of OMC Policy by the government.
Among scrips, TELE realized trading volume of 62.8 million shares, followed by PRL (43.1 million) and HASCOL (39.7 million).
Sectors contributing to the performance include Banks (-79 points), Pharma (23 points), Textile (-20 points), E&P (+44 points) and O&GMCs (+22 points).
Volumes increased from 428.6 million shares as against 664.0 million shares (+55 percent DoD). Average traded value also increased by 28 percent to reach US$ 178.1 million as against US$ 139.2 million.
Stocks that contributed significantly to the volumes include TELE, PRL, HASCOL, TRG and PIBTL, which formed 32 percent of total volumes.
Stocks that contributed positively to the index include POL (+22 points), PSO (+20 points), KAPCO (+15 points), MEBL (+15 points) and ATRL (+14 points). Stocks that contributed negatively include UBL (-30 points), HBL (-26 points), MCB (-24 points), ENGRO (-13 points) and FCEPL (-12 points).
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Rupee appreciates by 21 against dollar
KARACHI: The Pak Rupee appreciated by 21 paisas against the dollar on Tuesday as positive sentiments prevailed after inflows of export receipts.
The rupee ended Rs159.35 to the dollar from previous day’s close of Rs159.56 in the interbank foreign exchange market.
Currency experts said that better exports had supported the local currency.
Pakistan’s exports have crossed over $2 billion for the fourth consecutive months in January 2021 for the first time in last eight years, a official statement said.