Author: Mrs. Anjum Shahnawaz

Bank deposits reach new peak of Rs16.88 trillion by September

KARACHI: The deposits of banking system surged to a new record high of Rs16.886 trillion by end of September 2020, according to data released by State Bank of Pakistan (SBP) on Wednesday.

The bank deposits reached to new record-level from previous all-time high of Rs16.327 trillion by end of August 2020.

The deposits of the banking system recorded growth of 20.39 percent in September 2020 when compared with the stock of Rs14.026 trillion in the same month of the last year.

The significant growth in banking deposits has been attributed to higher foreign inflows and safe venue to keep money amid coronavirus pandemic.

They said that growth in deposits has been fueled by higher remittances (+15 percent YoY in USD and 27 percent YoY in PKR terms during eight months of 2020), while lack of business activity due to COVID-19 (cash-based) may have also resulted in increase in bank deposits.

Investments of banks have increased to Rs11.09 trillion by end of September 2020, which is 19.65 percent higher when compared with the investment of Rs9.269 trillion in the same month of the last year.

Investment to Deposit Ratio (IDR) is around 66 percent in September 2020. The higher IDR is largely due to high interest rates at the start of the year and low appetite for risk (advances) due to COVID-19 lately.

On the other hand, advances have grown by just 1.5 percent YoY to Rs8.094 trillion by end September 2020 as compared with Rs7.975 trillion by end of same month of the last year.

This is despite the aggressive cuts in interest rates by the Pakistan Central Bank since March 2020 as the impact of COVID-19 pandemic has reduced the overall risk appetite of banks.

October 14, 2020
FBR abolishes regulatory duty, ACD on various imported goods

ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday abolished regulatory duty and additional customs duty on various raw materials used by textile industry.

The FBR issued SRO 1043(I)/2020 dated October 13, 2020 abolished regulatory duty of 8 percent on various chemicals used as raw material for textile industry.

Besides, regulatory duty imposed at two percent on import of artificial yarn and staple fiber has also been abolished. Besides, the regulatory duty has been reduced from five percent to 2.5 percent on import of woven fabric of synthetic staple fiber.

The FBR issued another SRO 1042(I)/2020 dated October 13, 2020 to withdraw additional customs duty (ACD) on over 100 tariff lines.

October 14, 2020
LTO Karachi takes measures to contain resurgence of coronavirus

KARACHI: Large Taxpayers Office (LTO) Karachi has taken measures to contain the resurgence of coronavirus. In this regard, an advisory has been issued for the staff of LTO Karachi with directives of strict implementation.

Badaruddin Ahmed Qureshi, Chief Commissioner, LTO Karachi directed all divisions including audit, enforcement and legal of the tax office in order to contain the spread and resurgence of coronavirus.

The following advisory has been issued:

01. No one shall enter into the premises of offices without wearing a mask.

02. Social distancing of at least six feet must be maintained by all officers and staff.

03. Temperature of every person will be monitored at the entrance with thermal guns.

04. A person having flue, cough, shortness of breath and body pain shall not be allowed to enter in the premises of office.

05. The office is declared as no smoking zone.

06. Unauthorized persons shall not be allowed to visit offices unnecessarily and without any reason.

07. All symptomatic and suspected employees must be identified and reported to the Chief Commissioner Inland Revenue Office.

08. Any officer/official found violating any instruction contained in this SOPs shall be liable for action in accordance with applicable law and rules accordingly.

09. All officers/officials/visitors should wash hands with soap and water or hand sanitizer properly and regularly. Hand sanitizer should be available at all time on the wall-mounted spray machines and in the washrooms/lavatories.

10. The administrative officer shall ensure the provisions of thermal guns at the entrance of office for screening of body temperature of officer/officials/visitors.

11. Administrative officer shall ensure effective disinfection of all office at regular intervals.

12. Lifts/elevators installed in the field offices shall be used as less possible and lift operators shall be provided with antiseptic sprays and swabs to clean the buttons/knobs regularly.

13. In order to avoid physical contact with door handle/knobs, it is advised that all office door be kept open and room window be kept open also to ensure ventilation.

14. The CCIR Office will ensure the provision of sufficient number of face masks to all commissioner for onward distribution among the officer/officials.

October 14, 2020
Stock market gains 138 points amid volatile trading

KARACHI: The stock market gained 138 points on Wednesday amid high volatile trading sessions during the day.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) ended 40,144 points from previous day’s closing of 40,007, showing a gain of 138 points.

Analysts at Topline Securities said that Pakistan equities end higher in a volatile session where benchmark KSE-100 Index settled at 40,144 level.

After positive opening benchmark KSE100 Index traded in a range of 330 points with thin volumes.

Upcoming public rallies by PDM as part of its anti-government drive, FATF preliminary session due next week and upcoming result season led the investors to remain hesitant.

SHEL and ANL closed at their respective upper circuits where on the other hand AICL, BAFL and POL declined.

Traded volume and value for the day decreased by 20 percent and 13 percent on DoD basis to 232 million shares and Rs.8.52 billion, respectively.

October 14, 2020
New AML/CFT screening facility launched for financial sector

KARACHI: First Paramount Modaraba, managed by Paramount Investments Limited, announced the launch of its new Anti-Money Laundering (AML) and Countering Financing of Terrorism (CFT) screening facility on Wednesday. This initiative aims to support the financial sector and other businesses in Pakistan in safeguarding themselves from the risks of money laundering and financial crimes.
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October 14, 2020
Rupee gains 39 paisas on sufficient inflows

KARACHI: The Pak Rupee gained 39 paisas against the dollar on Wednesday owing to significant inflows of export receipts and workers’ remittances.

The rupee ended at Rs163.48 to the dollar from the previous day’s closing of Rs163.87 in the interbank foreign exchange market.

Currency dealers said that the market witnessed sufficient supply of the foreign currency which helped the rupee to appreciate.

Workers’ remittances remained above $2 billion for the fourth consecutive month in September 2020.

They increased to $2.3 billion, 31.2 percent higher than the same month last year and 9 percent higher than in August.

On a cumulative basis, remittances rose to a record $ 7.1 billion in the first quarter of 2020/2021, 31.1 higher than the same period last year.

The dealers hoped that considering the inflows and buffer stock of foreign exchange reserves would help the local currency to make gain.

October 14, 2020
FTO directs to enforce certificate of origin to prevent under invoicing

ISLAMABAD: Federal Tax Ombudsman (FTO) has directed tax authorities to enforce certificate of origin from respective country of manufacture.

The FTO recommended that the commerce ministry to frame and enforce rules of origin in respect of goods suspected of circumvention and import from free ports, which are not covered under preferential trade agreement (PTA).

The FTO made these recommendations in an order dated October 01, 2020 issued in the case of M/s Poplon Pakistan (Pvt) limited, which filed complaint against the Collector, Model Customs Collectorate (MCC) Appraisement & Facilitation – East and MCC Appraisement & Facilitation – West, Karachi for failing to detect import of inorganic chrome pigments against fake certificate of origin through circumvention of origin of goods and under invoicing by various importers in respect of goods imported and cleared through Karachi Port.

The complainant is a manufacturer of inorganic chrome pigments for use in paint, plastic and leather industries in Pakistan. The complainant alleged that after suspension of trade with India, pigment of Indian origin goods were imported through trade proxies such as M/s. Galaxy International FZC, UAE by using fake documents.

After hearing both the parties, the FTO issued the following recommendation, that the FBR:

To seek information from the Director General, UAE Customs under mutual legal assistance agreements for verification of origin of goods;

To direct the Directorate General of Post Clearance Audit (PCA) to carry out post-import transaction verification of all relevant GDs so as to satisfy the accuracy and authenticity of declared import values on the basis of export documents/information obtained through commercial counselors posted in South Korea and UAE;

To direct the Director of Customs Valuation to check accuracy of values declared by the importers and determine custom value for assessment of inorganic chrome pigments in terms of Section 25A of the Act, and

To direct the Chief Collector (Appraisement-South), to ensure finalization of investigation expeditiously and take appropriate action in cases where mis-declaration is established; and

To recommend to the ministry of commerce to frame and enforce rules of origin in respect of goods suspected of circumvention and import from free ports which are not covered under PTA. Also make it mandatory to furnish certificate of origin from respective country of manufacture duly verified by the respective government.

October 14, 2020
FBR notifies draft rules for timely issuance of annual return forms

ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday issued SRO 1041(I)/2020 for timely issuance of annual income tax return forms in order to facilitate taxpayers and avoid unnecessary delays in return filing process.

The FBR proposed amendment to Income Tax Rules, 2002 through the SRO. A new rule 34A has been proposed to insert in the Income Tax Rules, 2002.

As per the rules the annual income tax return form shall be finalized and available by January 31 every year for the relevant tax year.

The procedure to finalize the return forms revealed that the Inland Revenue Policy Wing would identify the legal amendments to be incorporated in income tax return forms by August 31 of the financial year following the Finance Act to which the return relates.

By September 15, preparation of change request form (CRF) shall be finalized by Inland Revenue Policy Wing and Information Technology Wing, in consultation with PRAL.

Analysis and scrutiny of change request form (CRF) by Chief Income Tax Policy and Chief Business Domain Team shall be conducted by September 16 of the financial year following the Finance Act to which the return relates and the same shall be submitted to member Inland Revenue Policy for approval on the same day.

PRAL shall complete configuration and development of the approved CRF by October 31 of financial year following the Finance Act to which the return relates.

User Acceptance Test (UAT) of the amended return forms on testing environment shall be finalized by Inland Revenue Policy Wing and Information Technology Wing, in consultation with PRAL, by November 15 of financial year following the Finance Act to which the return relates and the same shall be submitted to Member Inland Revenue Policy for approval on the same day.

The return form shall remain available on the portal for suggestions till January 07 of financial year following the Finance Act to which the return relates.

The final return form shall be notified on or before January 31 of financial year following the Finance Act to which the return relates by observing following timelines:

Inland Revenue Policy Wing and Information Technology Wing shall review the suggestion received from stakeholders by December 12 of financial year following the Finance Act to which the return relates

A new change request form (CRF), if required, shall be finalized by Inland Revenue Policy Wing and Information Technology Wing, in consultation with PRAL, by January 10 of the financial year following the Finance Act to which the return relates and the same shall be approved by Member Inland Revenue

PRAL shall complete configuration and development of the approved CRF by January 15 of the financial year following the Finance Act to which the return relates

User Acceptance Test (UAT) of the final return forms on testing environment shall be finalized by Inland Revenue Policy Wing and Information Technology Wing, in consultation with PRAL, by January 18 of the financial year following the Finance Act to which the return relates and the same shall be submitted to Member Inland Revenue Policy for approval.

Finance income tax return forms shall be available on IRIS by January 31 of financial year following the Finance Act to which the return relates

In case, any further amendment are introduced in Finance Act that have an impact on the finally notified income tax return forms referred to at clause (e), such amendments shall be incorporated by July 07 of the financial year next following; and

Notwithstanding anything contained in this rule, the time so specified may, if requested by the Member Inland Revenue Policy, be extended by the FBR to such extent and subject to such conditions and limitations as it may deem proper.

October 13, 2020
FBR adopts policy to strengthen legal team for tax cases

ISLAMABAD: Federal Board of Revenue (FBR) has adopted new policy for placement of legal advisors and advocates on its panel to improve the representation before the courts.

The FBR said that previously policy for appointment of advocates was regulated under guidelines issued on October 16, 2017.

“However, to improve the representation before the courts in the light of directors of Supreme Court given in CMA No. 991/2015, the existing policy has been reviewed and the new policy guidelines are proposed for placing advocates on FBR panel and appointment as legal advisors on retainership,” the FBR added.

According to eligibility criteria for appointment of legal advisors, advocates must have at least seven years practice as advocate High Court in relaxation or service matters shall be considered.

For placement on FBR panel, the applicant must have at least three years practices/experience as advocate of High Court in taxation or services matters, having good reputation and professional competence.

However, where the applicant is a retired officer of FBR and has served in IRS or Pakistan Customs for at least ten years, experience as an advocate High Court for one year may also be considered.

The FBR said that advocate placed on panel of FBR while representing the FBR shall not give any conceding statement before any court unless specifically in this regard. “The advocate shall not enter into appearance in any case against FBR or its field formations,” the FBR added.

The advocate shall be responsible to apply for the certified copy on the date of judgment is announced and provide the same to the department immediately.

Advocate appointed by the FBR or its field formation shall not seek unnecessary adjournment. Further, the appointed advocate shall ensure the departmental case is not left unattended for want of prosecution.

October 13, 2020
Karachi Chamber rejects power tariff hike; demands immediate withdrawal

KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has strongly rejected the power tariff hike by K-Electric and demanded the government of immediate withdrawal the relevant notification.

In a statement issued on Tuesday, KCCI President Shariq Vohra said that the anti-business move would give a serious blow to the trade & industry which was still struggling really hard to recover from the disaster caused by the lockdown for six months imposed to contain Covid-19 pandemic.

Power Division through a notification allowed K-Electric (KE) to increase rates of electricity ranging from Rs.1.09 to Rs.2.89 per unit with effect from September 1, 2020, stated that this anti-business

While rejecting outright the federal government’s decision to increase KE’s tariff, Shariq Vohra said Karachiites are already suffering badly due to unbridled inflation hence the hike in KE’s electricity bills was unacceptable and must be withdrawn immediately.

“Although the lawmakers are assuring that Prime Minister Imran Khan and his government were striving to control inflation by making earnest efforts but it is really unfortunate that they have given go ahead to KE for raising its tariff which would not only intensify the hardships for business community due to high cost of doing business but would also terribly affect the poor masses who are already overburden due to inflation while KE’s tariff hike would further worsen the situation”, he added.

“Indeed it is a huge disappointment that the Federal Government, instead of providing relief to the already burdened citizens of Karachi during the ongoing difficult times, continues to take anti-business and anti-Karachi actions. It is well known fact that the economic hub of Pakistan is passing through worst possible crisis and suffering badly due to crumbling infrastructure, electricity load shedding, gas and water shortages etc. For God’s sake, please have mercy on poor citizens and the anxious business & industrial community of Karachi which is battling for survival”, he stressed.

Shariq Vohra pointed out that on one hand, the government has been pushing the business & industrial community to enhance their productivity and exports so that more wealth and employment opportunities could be generated in order to improve the ailing economy but how is it going to be possible when on the other hand, they give go ahead to electricity tariff hike which by all means is an anti-business and anti-people move.

The cost of utilities in Pakistan are much higher as compared to regional countries, making our products uncompetitive in the international markets.

“The economy and businesses would only flourish when the cost of doing business is brought down by substantially reducing the electricity, gas and water tariffs while all other exorbitant taxes and duties must also be reduced and the government will have to particularly make all-out efforts to rebuilt Karachi’s dilapidated infrastructure which has been the top most reason behind the poor industrial performance of all the industries situated in seven industrial zones of Karachi.”

“The decision makers will have to understand that if the cost of input rises, it would lead to poor performance and reduced output of the industry, resulting in lower revenue collection, shrinking employment opportunities and making the production uncompetitive in the domestic as well as international markets”, he added.

He mentioned that the Karachi Chamber has been strongly opposing this particular increase in K-Electric Tariff and urged the authorities through media statements issued on July 10, 2020 and September 3, 2020 to refrain from raising KE’s tariff. Although the increase was postponed at that time but it has once again been imposed in an odd situation when the businesses are desperately questing hard for survival.

He hoped that keeping in view all the above mentioned facts, the government would review KE’s electricity hike notification and immediately withdraw the same which would certainly be highly appreciated not only by the business & industrial community but also by people belonging to all walks of life.

October 13, 2020