KARACHI: The Pak Rupee gained 15 paisas against the US Dollar on Wednesday, buoyed by a report indicating a surplus current account for the first quarter of the current fiscal year. The rupee ended the day at Rs162.13 to the dollar, compared to the previous day’s closing of Rs162.28 in the interbank foreign exchange market.
(more…)Author: Mrs. Anjum Shahnawaz
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Current account posts $792m surplus in first quarter
KARACHI: The current account of the country registered a surplus of $792 million during first quarter (July – September) 2020/2021, State Bank of Pakistan (SBP) said on Wednesday.
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TAX YEAR 2021: tax rate on profit on bank deposits
KARACHI: Federal Board of Revenue (FBR) has updated rate of tax on profit on debt applicable during tax year 2021 (July 01, 2020 to June 30, 2021).
The FBR issued Income Tax Ordinance, 2001 (updated June 30, 2020) after incorporating amendments introduced through Finance Act, 2020. The FBR updated the rate of tax to be deducted under section 151 shall be 15 percent of the yield or profit:
Provided that the rate shall be 10 percent in cases where the taxpayer furnishes a certificate to the payer of profit that during the tax year yield or profit paid is rupees five hundred thousand rupees or less.
According to the Section 151 of the Ordinance, 2001, the Profit on debt. — (1) Where –
(a) a person pays yield on an account, deposit or a certificate under the National Savings Scheme or Post Office Savings Account;
(b) a banking company or financial institution pays any profit on a debt, being an account or deposit maintained with the company or institution;
(c) the Federal Government, a Provincial Government or a Local Government pays to any person profit on any security other than that referred to in clause (a) issued by such Government or authority; or
(d) a banking company, a financial institution, a company referred to in sub-clauses (i) and (ii) of clause (b) of sub-section (2) of section 80, or a finance society pays any profit on any bond, certificate, debenture, security or instrument of any kind (other than a loan agreement between a borrower and a banking company or a development finance institution) to any person other than financial institution.
the payer of the profit shall deduct tax at the rate specified in Division IA of Part III of the First Schedule from the gross amount of the yield or profit paid as reduced by the amount of Zakat, if any, paid by the recipient under the Zakat and Ushr Ordinance, 1980 (XVII of 1980), at the time the profit is paid to the recipient.
(2) This section shall not apply to any profit on debt that is subject to sub-section (2) of section 152.
“(3) Tax deductible under this section shall be a minimum tax on the profit on debt arising to a taxpayer, except where —
(a) taxpayer is a company; or
(b) profit on debt is taxable under section 7B.
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TAX YEAR 2021: rate of advance tax on dividends
ISLAMABAD: Federal Board of Revenue (FBR) has updated rate of advance tax on dividends for tax year 2021 (July 01, 2020 to June 30, 2021).
The FBR issued Income Tax Ordinance, 2001 (updated up to June 30, 2020) after incorporating amendment brought through Finance Act, 2020.
The FBR updated the rate of tax to be deducted under section 150 and 236S:
(a) 7.5 percent in case of dividend paid by Independent Power Producers where such dividend is a pass through item under an Implementation Agreement or Power Purchase Agreement or Energy Purchase Agreement and is required to be reimbursed by Central Power Purchasing Agency (CPPA-G) or its predecessor or successor entity.
(b) 15 percent in mutual funds and cases other than those mentioned in clauses (a) and (ba); and
(ba) 25 percent in case of a person receiving dividend from a company where no tax is payable by such company, due to exemption of income or carry forward of business losses under Part VIII Chapter III or claim of tax credits under Part X of Chapter III.
According to Section 150: Dividends — Every person paying a dividend shall deduct tax from the gross amount of the dividend paid at the rate specified in Division I of Part III of the First Schedule.
According to 236S: Dividend in specie — Every person making payment of dividend-in-specie shall collect tax from the gross amount of the dividend in specie paid at the rate specified in Division I of Part III of the First Schedule.
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FBR registers 127 projects under construction industry incentive scheme
ISLAMABAD: Federal Board of Revenue (FBR) has registered around 127 projects worth Rs63 billion under Prime Minister’s construction industry incentive scheme, a spokesman said on Tuesday.
The Prime Minister’s incentive scheme for builders and developers is now picking-up showing definite signs of success and great amount of interest by the construction industry.
Till October 19, 2020, a total of 127 projects have been registered with a total projected cost of Rs63 billion.
In addition, a total of 108 persons are also in the process of registering 114 projects at a projected cost of Rs109 billion.
The registered projects from major cities include 61 projects from Karachi, Lahore 44, Islamabad 30, Rawalpindi 19, Faisalabad 10 and rest from other cities.
The last date for registering projects under the scheme is December 31, 2020.
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CNIC condition reduces transactions and revenue: FBR
KARACHI: Federal Board of Revenue (FBR) has admitted that the condition of Computerized National Identity Card (CNIC) reduced number transactions as well as shortfall in revenue.
“This [CNIC] condition has further reduced transaction and our revenue,” Dr, Muhammad Ashfaq Ahmed, Member, Inland Revenue, Federal Board of Revenue (FBR) quoted as saying in a statement issued by Federation of Pakistan Chambers of Commerce and Industry (FPCCI) issued on Tuesday.
The statement further quoted the Member that the FBR so far has resolved CNIC issues with the retailers and conditions will remain applicable at some stages.
While responding to the issues raised by President FPCCI, the Member said that taxation is a by-product of business which is missing in our strategy, refunds are considered as oxygen for trade and industry while in practice to show revenue we ignored to payback refunds.
The FBR is now following open door policy to facilitate industry and transparency is first in our strategy.
He further said that FBR is changing its approach to deal with commercial exporters. He further agreed to extend the days of filing form H from 120 to 180 days.
However, with the automation of FBR the trade and industry have to gear-up and be compatible with the latest technology.
Earlier, FPCCI President Mian Anjum Nisar appreciated the efforts of Federal Board of Revenue on achieving revenue targets despite difficult circumstances under COVID-19 pandemic.
While welcoming the Member Inland Revenue (Operation) Dr. Muhammad Ashfaq Ahmed, the President FPCCI said that the release of refunds has slightly improved but industry paid taxes and salaries during the period when labour was idle and industries were stalled.
He mentioned that irrespective of gain or loss businesses have to pay 1.5 percent tax despite the issue has been discussed with Advisor to PM and Chairperson FBR but matter still not resolved.
It was also informed that FASTER will release refunds within 72 hours but practically refunds are being released within 72 hours.
Further President FPCCI strongly suggested extending the filing of Form “H” period from 120 days to 180 days, and demanded a focal person to deal with affairs relevant to FASTER.
He also raised a question on shifting of final tax regime to minimum tax and proposed to reversed if there is no conditionality and payback refunds or ask for amount if due and vice versa, he also proposed to NTC deal issue of raw material that were previously falls under 12th schedule and demanded restoration of SRO 1125.
Mian Anjum Nisar President FPCCI also raised the issue of Audit at different tiers and proposed that stages/tiers level of audit should be minimized.
CNIC still has not resolved despite available agreement between businesses and government. President FPCCI also raised issues of different sectors such inclusion of Edible Offal in the definition of Agriculture, inability of FATER system for processing of Multi-tax period carry-forward based sales tax refunds. Uniform rate of tax on Iron and Steel flat products and issue of Audit being faced by trade and industry.
Meeting was attended by representative of various chambers and association, Kurram Ijaz, Vice President, Zakaria Usma, Shaukat Ahmed, Ghani Usman, Saqib Fayyas, Shabir Mensha, Khursheed, member FPCCI Advisory Committee, Khuram Saeed, former Vice President FPCCI, EC and General Body members.
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Meezan Bank declares healthy profit of 65 percent in nine months
KARACHI: Meezan Bank Limited on Tuesday announced healthy profit of 65 percent for nine-month period ended September 30, 2020.
According to financial results submitted to Pakistan Stock Exchange (PSX), the bank declared profit after tax of Rs18 billion for the nine-month period ended September 30, 2020 as compared with Rs10.94 billion in the corresponding period of the last year.
The bank also declared earnings per share of Rs12.78 for the period under review as compared with Rs7.73 in the corresponding period of the last year.
Total income of the bank registered 43 percent increase to Rs56.92 billion during the period as compared with Rs39.88 billion in the same period of the last year.
Operating expenses of the bank grew by 22.43 percent to Rs21.88 billion for the period ended September 2020 as compared with Rs17.87 billion in the same period of the last year.
The gross profit of the bank witnessed a growth of 58 percent to Rs30 billion for the nine-month period as compared with Rs19 billion in the same period of the last year.
Alongside result, the bank announced a cash dividend of Rs4.0 share.
Analysts at Topline said that the result came in higher than our expectations due to lower than expected profit expensed on deposits, which is most likely driven by continued focus on Current Account growth and possible re-pricing of maturing Term Deposits.
Profit earned on assets depicted a decline of 9 percent Quarter on Quarter (QoQ). Along with lower interest rates, 1 percent QoQ decline in industry loans amidst slowdown in economic activity has been the cause of the decline.
Profit expensed on deposits substantially declined by 22 percent QoQ amidst re-pricing of liabilities to lower interest/profit rates, where non applicability of Minimum Deposit Rate (MDR) on Islamic banks would have also contributed.
As a result, Net Spread Earned declined by just 1 percent QoQ.
Other Income showed resurgence with a jump of 17 percent QoQ driven by increase in Fee Income growth of 49 percent QoQ as branch operation resumed after lifting of COVID-19 lockdown.
Despite the branch expansion strategy, other expenses were kept in check (down 0.1 percent QoQ). Cost to Income for the quarter stood at 40 percent.
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SBP issues criteria for investment in dollar certificates by resident Pakistanis
KARACHI: State Bank of Pakistan (SBP) on Tuesday issued criteria for investment by resident Pakistanis in US Dollar denominated Naya Pakistan Certificates (NPCs).
The SBP said that resident Pakistanis having assets abroad as declared in their latest wealth statement filed with the Federal Board of Revenue (FBR) may invest in USD-denominated NPCs by opening a Foreign Currency Value Account (FCVA), subject to the following conditions:
(i) at the time of opening the FCVA, they must present their latest wealth statement filed with FBR, as prescribed in FE Circular No.2 of 2020 dated 5th August 2020 or a signed affidavit stating the value of their assets held abroad as declared in their latest wealth statement filed with FBR;
(ii) the investment must be funded by remittance from abroad; and
(iii) their total investment (including the NPCs) through FCVA shall not exceed the value of assets abroad declared in the above-referred wealth statement plus such accretion, as may be attributable to interest and profit thereon and/ or gain on disposal thereof, in respect of which adequate evidence is provided in the form of bank statement, profit/ coupon and/or sale deed respectively.
The agent banks thus while processing the investment requests in NPC or other permissible avenues by resident Pakistanis who have opened an FCVA with them shall ensure compliance with the conditions as stated above.
The rest of the process for investment in NPC shall be the same as prescribed in FD Circular No.3 of 2020 dated 10th September 2020.
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Share market up 616 points as investors’ positive expectation on FATF
KARACHI: The share market experienced a robust rally on Tuesday, with the KSE-100 index of the Pakistan Stock Exchange (PSX) gaining 616 points, closing at 40,956. The surge comes as investors anticipate favorable outcomes from the upcoming FATF plenary session, which has boosted market sentiment.
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Rupee gains 10 paisas against dollar
KARACHI: The Pak Rupee gained 10 paisas against dollar on Tuesday owing to inflows of workers’ remittances and export receipts.
The rupee ended Rs162.28 to the dollar from previous day’s closing of Rs162.38 in interbank foreign exchange market.
Currency experts said that the market witnessed sufficient supply of the foreign currency which helped the local unit to gain the value.
They said that positive sentiments were prevailed in the market. They hoped that improved economic indicators would help the rupee to gain further.
Workers’ remittances remained above $2 billion for the fourth consecutive month in September.
They increased to $2.3 billion, 31.2 percent higher than the same month last year and 9 percent higher than in August, the State Bank of Pakistan (SBP) recently said.