The Pakistani rupee experienced a slight decline against the US dollar on Friday, falling by 12 paisas due to increased demand for import and corporate payments. The rupee closed at Rs163.84 to the dollar in the interbank foreign exchange market, down from the previous day’s closing of Rs163.72.
(more…)Author: Mrs. Anjum Shahnawaz
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FBR grants tax exemption of Rs1.1 billion on gratuity payments
Islamabad – The Federal Board of Revenue (FBR) has granted a substantial exemption of Rs1.11 billion on gratuity payments during the tax year 2020.
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Rupee gains 25 paisas against dollar
KARACHI: The Pak Rupee gained 25 paisas against the dollar on Thursday owing to improved economic indicators, dealers said.
The rupee ended Rs163.72 to the dollar from previous day’s closing of Rs163.97 in interbank foreign exchange market.
The currency dealers said that the due to lower demand for import and corporate payments and sufficient inflows of export receipts and workers remittances the rupee gained the value.
They said that the sentiments were remained positive in the market due to escalating economic activities.
The experts said that the exports registered 18.24 percent growth to $1.873 billion during September 2020 as compared with $1.58 billion in August 2020.
They hoped that present positivity in the market would help the local unit to make gain further against the greenback.
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SBP allows banks to outsource cash management function
KARACHI: State Bank of Pakistan (SBP) on Thursday allowed banks to outsource their case processing functions in order to provide more flexibility.
The SBP said that through Circular No. 03 /2015 dated August 26, 2015, under which the banks required to automate cash processing function and disburse only machine authenticated good quality banknotes of higher denomination to the public.
Presently all banks are issuing machine processed banknotes (Rs100 and above) to the public.
The SBP said that the Cash Management System (CMS) has given flexibility to banks to either have their own cash processing facilities or make arrangements with other banks having the required capacity to get their cash processed.
The outsourcing of processing of higher denominated banknotes was, however, kept restricted to other banks only having the requisite capacity as CMS did not allow outsourcing of this function to commercial cash processing companies.
In order to further enhance the flexibility for banks to get their cash processed and encourage greater innovation and development of cost effective models for cash processing, it has been decided to allow banks to outsource their cash processing functions.
“The banks may thus outsource their cash processing functions (sorting, authentication, and packing) for all denominations of banknotes to such cash processing companies having capacity to process the cash in full conformity with the CMS instruction.”
Banks shall ensure that the cash processing company (service provider), if any engaged, operates in full conformity with the CMS instructions issued vide FD Circulars No. 03 /2015 dated August 26, 2015 and No. 02 / 2017 dated March 10, 2017 as amended from time to time.
It is reiterated that compliance with the CMS instructions is the responsibility of banks outsourcing cash processing and any non-compliance of instruction by the service provider shall, for all intents and purposes be treated as non-compliance by the concerned bank, making the bank liable to penal action under the CMS.
Banks shall contractually bind the service provider that SBP may conduct surprise visits of its CPCs, to assess the control environment and regulatory compliance regarding CMS.
The Banks while engaging the service provider shall ensure compliance with SBP instructions on outsourcing arrangement with third parties, as issued vide BPRD Circular No. 6 of 2019 dated December 17, 2019, as amended from time to time.
The Banks shall report all such arrangements to Finance Department SBP along with details of branches and ATMs to be fed through the outsourced service providers within seven (7) days of signing of contract with the service provider. The Banks shall also share the address(es) of the cash processing centers of the service provider and contact details of the CEOs and other senior management for SBP’s information and record.
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Temporary import allowed against bank guarantee under policy order
ISLAMABAD: The ministry of commerce has said that temporary import-cum-export of goods is allowed by the respective collectors of customs against submission of indemnity bond or bank guarantee to the satisfaction of customs authorities.
The ministry issued Import Policy Order, 2020 through SRO 902(I)/2020 dated September 25, 2020 and explained the temporary import as: temporary import-cum-export of goods in respect of the following shall be allowed by the respective Collectors of Customs against submission of indemnity bond or bank guarantee to the satisfaction of custom authorities to ensure re-export of the same within the specified period, namely: –
(a) construction companies or firms or oil and gas companies, oil exploration and production companies, mining companies, their authorized or approved contractors, sub-contractors and service companies, and refineries shall be allowed to import all plant, machinery and equipment including specialized machinery whether new or used except second-hand or used passenger vehicles, trucks, buses and static road rollers of 10-12 tons capacity, 55HP. Certification of the Chief Executive of a company of the respective sector-endorsing requirement of the contractor, sub-contractor or service companies shall be required:
Provided that permanent retention of all permissible categories of machinery or equipment imported on temporary basis by construction companies shall be allowed by the Federal Board of Revenue subject to payment of all duties and taxes to be assessed by the Customs under relevant laws;
(b) airlines and shipping lines shall be allowed to import items on import cum export basis except those mentioned in Appendix-A, B and C, unless specifically allowed under this Order;
(c) any goods manifested for a country outside Pakistan, which are bonded in Pakistan for re-export to that country;
(d) any good imported and bonded for re-export as ship stores to a country outside Pakistan without requirement of furnishing indemnity bond or bank guarantee;
(e) exhibition materials for fairs and exhibitions officially organized by the Government or Federation of Pakistan Chambers of Commerce and Industry or Chambers of Commerce and Industry shall be allowed to import items except mentioned in Appendix-A, B and C except where specifically allowed under this Order. However, giveaways, sale on payment of leviable duties, donations and wastages etc., shall be allowed:
Provided that all-Pakistan based associations and individual companies shall also be allowed to import exhibition materials for fairs and exhibitions except those mentioned in Appendix-A, B and C subject to endorsement by Trade Development Authority of Pakistan;
(f) any goods except those specified in Appendix A, B and C for demonstration, display, test or trial purpose for a limited period;
(g) second-hand tools and professional equipment imported by scientists, information technology experts, doctors, technicians, engineers etc., either imported in their own name or in the name of the company in Pakistan for which these are imported;
(h) excavation equipment and materials imported by foreign archeological missions;
(i) scientific and educational equipment imported for scientific educational, or cultural seminars in Pakistan on the recommendation of the concerned Ministry;
(j) equipment and materials imported by Pakistani as well as foreign nationals such as journalists, press photographers, members of television teams, broadcasting units, film companies, theater and circus companies, for their professional requirement, subject to endorsement on their passports;
(k) shipping containers for transportation of cargo;
(l) trucks and cargo transport vehicles registered in foreign countries carrying imported cargo through border customs stations, provided that there is a bilateral or multilateral agreement on reciprocity basis between Pakistan and the foreign country to which those vehicles belong;
(m) import of engineering goods, carpets, sports goods, surgical instruments etc., into Pakistan shall be allowed to the existing industry for the purpose of repairing in Pakistan and subsequent re-export, subject to submission of indemnity bond or bank guarantee to the customs authorities to ensure re-export of the same within the specified period;
(n) Pakistani exporters are allowed to re-import exported goods for the purpose of removing defects by way of repairing during the warranty period provided in the sales contracts against submission of indemnity bond to the satisfaction of the concerned Collector of Customs;
(o) import of goods including means of transport, excluding those mentioned in Appendix-A, B and C, shall be allowed under ATA Carnet (Istanbul Convention 1990) upon furnishing of temporary admission papers (Carnet etc.) as due security;
(p) import of goods including means of transport excluding those mentioned in Appendix-A, B and C, shall be allowed under TIR Convention subject to fulfillment of all prescribed conditions;
(q) mountaineering expeditions shall be allowed to import their equipment and materials on import-cum-export basis. In case, the equipment and material are not re-exported, they may donate such equipment and material to local mountaineering clubs and produce a certificate to the Customs from a mountaineering club to the effect that the equipment and material imported on import-cum-export basis has been donated to that club; and
(r) temporary import-cum-export of arms and ammunition by foreign hunters shall be allowed subject to NOC from the Ministry of Interior.
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Airlines’ pilots get Rs430 million tax concession on allowances
Pilots of Pakistani airlines collectively availed tax concessions amounting to Rs430 million during the tax year 2020 on allowances received from their respective employers, according to official data made available to PkRevenue.com.
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Tax exemption to LNG Terminals costs Rs732 million
ISLAMABAD: Federal Board of Revenue (FBR) has granted exemption of Rs732 million to LNG Terminal Operators and Terminal Owners during tax year 2020.
According to official documents made available to PkRevenue.com, the FBR allowed the exemption to two taxpayers engaged in LNG Terminal Operators and Terminal Owners.
The exemption is available from total income under Clause 141 of Part 1 of Second Schedule, Income Tax Ordinance, 2001.
The FBR said that profit and gains derived by LNG Terminal Operators and Terminal Owners are exempt under the income tax laws.
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Agha Steel’s IPO receives overwhelming response
KARACHI: The Initial Public Offering (IPO) of Agha Steel has received overwhelming response from investors as it was oversubscribed at the book building phase on Wednesday.
The IPO received an overwhelming response from institutional investors and high net worth individuals as the strike price clocked in at Rs32 per share, higher than the floor price of Rs30, a statement said.
The book-building phase of the Initial Public Offer (IPO) of Agha Steel concluded with investors oversubscribing it by as much as 1.63 times.
This means Agha Steel is going to raise Rs3.8 billion in total, making it the largest IPO in the steel sector and the second-largest IPO in the private sector.
Brokers and investment advisory firms had issued almost unanimous calls to ‘subscribe,’ which resulted in investor demand amounting to Rs4.4 billion against the IPO’s book-building size of Rs2.7 billion.
The general public will subscribe to the remaining 30 million shares (25 percent of the total offer size) on Oct 14-15 at the strike price of Rs32.
The company will use IPO proceeds to finance the expansion of its re-rolling capacity from 250,000 metric tons to 650,000 MT. It will increase the reinforcing bar production capacity by 160 per cent.
Brokerage houses anticipate steady growth in the company’s bottom line owing to a substantial rise in construction activities across the country. The main product of Agha Steel is reinforcing bars that are used in the construction of megastructures, roads, bridges, skyscrapers and homes.
In a research report last week, AL Habib Capital Markets stated that it expected the share price of Agha Steel to hover around Rs57 by June 2022. The target prices stated by Pearl Securities and KASB Securities are Rs50 and Rs42, respectively.
In a message on social media, Agha Steel CEO Hussain Iqbal Agha expressed his gratitude to investors and their historic overwhelming response. He vowed to ensure growth of their shareholders’ equity.
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FBR not to ask source of money invested for housing projects by December 31: MTO Chief
KARACHI: Federal Board of Revenue (FBR) will not ask source of money to be invested till December 31, 2020 in a new housing projects, Abdul Hameed Memon, Chief Commissioner, Inland Revenue, Medium Taxpayers Office (MTO) said on Wednesday.
“This is a unique program announced by the Prime Minister of Pakistan. The tax rates have also been reduced under this package,” he said while addressing an event organized by Association of Builders and Developers (ABAD).
However, he said that those who availed the scheme will require to complete the project by September 2022.
He urged the ABAD members to avail the opportunity as growth in the construction sector would generate employment.
He said that the government through amendment in tax laws had announced the package for the construction sector. “The package has two types of benefits: immunity from questioning the source of investment; and reduced rate of income tax in the shape of a fixed tax regime for builders and developers.”
The chief commissioner said that the package would help in enhancing activities in the construction sector and result in significant economic growth.
Earlier, Abdul Hafeez, Commissioner Inland Revenue, MTO gave a detailed presentation to builders and developers on the immunity from Section 111 of Income Tax Ordinance, 2001. This section attracts penal action for persons who conceal assets from tax authorities.
The commissioner said that the section 111 would not apply to an individual if the person deposited the money in a new bank account up to December 31, 2020 or having ownership / title of the land invested as on April 17, 2020.
In case of a company or an Association of Persons (AOP), the section shall not apply if a single purpose company or AOP is registered between April 17, 2020 and December 31, 2020.
The commissioner outlined other exemptions and benefits under the tax package as the investors would have exemption from the requirement of withholding tax on purchase of building material except cement and steel.
They will also have exemption from the requirement of withholding tax on acquisition of services relating to construction except those from companies.
The persons, who are engaged in low cost housing projects, will be granted 90 percent reduction in fixed tax liability, the commissioner said.
Besides, dividends paid by builder or developer companies shall not be liable to tax and there shall be no withholding on the payment of these dividends, he added.
Chairman Association of Builders and Developers of Pakistan (ABAD) Fayyaz Ilyas has demanded of the Federal Government to extend date of registration for Incentive Package of Naya Pakistan Housing Scheme upto 31st December 2021 and also extend time period for the completion of housing projects under this scheme.
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Stock market rebounds with 723 points on buying activities
KARACHI: The stock market rebounded on Wednesday and gained 723 points as significant buying activities seen during the day.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 39,850 points as against 39,127 points showing an increase of 723 points.
Analysts at Arif Habib Limited said that the market finally made a positive move today, which was jittery in the beginning but solidified by mid-day to post a total gain of 793 points and closing the index +723 points.
Buying activity was observed across the board but had major impact on Cement sector, especially DGKC and LUCK. SBP’s notification to transfer Federal government related deposits in part from commercial banking system to SBP caused selling pressure in BOP and NBP.
A number of mid-cap stocks (usually traded in high volumes) like UNITY, TRG and HASCOL traded at and near upper circuits in the later part of the session.
The rebound in Index is among other reasons also attributed to adjustment / settlement of CGT lately demanded by NCCPL from Investors which had negative impact on investor sentiment. Among scrips, HASCOL topped the volumes with 59.7 million shares, followed by UNITY (34.5 million) and TRG (23.9 million).
Sectors contributing to the performance include Cement (+133 points), Pharma (+74 points), O&GMCs (+66 points), Technology (+65 points) and Banks (+58 points).
Volumes increased from 406 million shares to 432.0 million shares (+6 percent DoD). Average traded value also increased by 9 percent to reach US$ 82.5 million as against US$ 75.4 million.
Stocks that contributed significantly to the volumes include HASCOL, UNITY, TRG, FFL and POWER, which formed 36 percent of total volumes.
Stocks that contributed positively to the index include LUCK (+46 points), SEARL (+39 points), TRG (+32 points), ENGRO (+32 points) and MCB (+27 points). Stocks that contributed negatively include NBP (-16 points), PMPK (-7 points), HGFA (-4 points), FFC (-4 points) and HMB (-3 points).