The Pakistani Rupee experienced a decline of 56 paisas against the US dollar on Tuesday, driven by increased demand for import and corporate payments, according to currency dealers.
(more…)Author: Mrs. Anjum Shahnawaz
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Engro Fertilizers, MCB Bank introduce first electronic bank guarantee solution
KARACHI: Engro Fertilizers Ltd and MCB Bank Ltd have partnered to accelerate digitization of financial products and developed Pakistan’s first-ever solution to electronically manage bank guarantees.
With businesses adopting virtual operations and enforcing minimal physical interaction in the wake of COVID-19, Engro Fertilizers Ltd engaged MCB Bank Ltd, one of the leading Banks in the country, to develop an electronic bank guarantee management solution that will promote digitalization and enhanced corporate service delivery.
The Bank, in consultation with Mohsin Tayebaly & Co, managed legal and regulatory concerns to provide a SWIFT-based mechanism to Engro Fertilizers Ltd at nominal cost and minimal impact to business operations. Additionally, the designed process will also facilitate to mitigate the risk of counterfeit bank guarantees, identified as a recurring cause of concern in Pakistan’s banking Industry.
This system, currently operational only for Engro Fertilizers, is expected to be rolled out for all other clients of MCB Bank. Given the existing credit sales model offered by most corporations, the product would assist the wider industry in facilitating their customers and stakeholders in the near future.
This project is in line with the commitment of Engro Fertilizers Ltd to improve national corporate practices and lead the industry with innovative solutions. Earlier this year, the Company was recognized as the best in industrial sector for showing outstanding performance and demonstrating progressive management practices, by the Management Association of Pakistan (MAP).
In a joint statement, Nadir S Qureshi (CEO Engro Fertilizers Ltd) and Imran Maqbool (President/CEO MCB Bank Ltd) shared pride in the abilities of the combined team responsible for identifying and developing this much needed financial solution.
They were confident that this solution would transform the way bank guarantees could now be managed in the country. Imran Ahmed, CFO Engro Fertilizers Limited, added that designing electronic bank guarantees seemed to be a very challenging task at first, but the teams were able to co-create this solution with great dedication and professionalism.
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Withholding tax rate on non-cash banking transactions updated
ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rate on non-cash banking transactions made by persons not appearing on the Active Taxpayers List (ATL).
The FBR issued withholding tax card 2020/2021 updated up to June 30, 2020.
The FBR said that 0.6 percent withholding tax rate is applicable on non-cash banking transactions under Section 236P of Income Tax Ordinance, 2001. It said that every banking company shall collect withholding tax from persons not on the ATL at the time of sale of such instruments. The tax so deducted/collected shall be adjustable.
Under the Section 236P:
(i) Every banking company shall collect advance tax from a person whose name is not appearing in the Active Taxpayers List on sale of instruments, including demand draft, pay order, special deposit receipts, cash deposit receipt, short term deposit receipt, call deposit receipt and rupee travelers’ cheque, where payment for sum total of all transactions exceed Rs50,000 in a day.
(ii) Every banking company shall collect advance tax from a person whose name is not appearing in the active taxpayers list on transfer of any sum through cheque or clearing, interbank or interbank transfers through cheque, online/telegraphic/mail transfer, where payment for sum total of all transactions exceeds Rs50,000 in a day.
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Stock market gains 272 points in mixed trading
KARACHI: The Pakistan stock market witnessed a gain of 272 points on Monday as the benchmark KSE-100 index closed at 42,293 points, up from the previous close of 42,023 points.
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Marriage halls to install fiscal devices for tax reporting
ISLAMABAD: Marriage halls and hotels will be required to install electronic fiscal devices for sharing their business transactions with the Federal Board of Revenue (FBR).
The installation of fiscal devices have been mandatory in order bring certain service providers into the income tax net.
According to sources that hotels, motels, guest houses, marriage halls, marquees, clubs (including race clubs) are required to install electronic fiscal devices.
However, exemption from installation of devices are available where: the restaurant is operating otherwise than as part of a food court; and the facility of air-conditioning is not installed or available in the premises.
The FBR issued SRO 779(I)/2020 dated August 26, 2020 to unveil draft rules to implement the law related to installation of electronic fiscal devices under Income Tax Ordinance, 2001.
According to the rules, such taxpayers operating in Karachi, Lahore, Islamabad, Rawalpindi, Faisalabad, Multan, Peshawar and Gujranwala will be required to install the fiscal devices.
The sources said that the installation of fiscal devices to help the FBR in preventing revenue leakages in hospitality sector.
They said that the taxpayers shall provide all sales data through online system which will be connected to the FBR portal for online monitoring and examination.
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Rupee eases by 10 paisas on import payment demand
KARACHI: The Pak Rupee eased by 10 paisas against dollar on Monday owing to higher demand for import and corporate payments, dealers said.
The rupee ended at Rs165.87 to the dollar from last Friday’s closing of Rs165.77 in interbank foreign exchange market.
The currency experts said that the rupee was under pressure against the foreign currency due to the first day of the week. They said that the rupee may rebound in coming days due to improved foreign exchange reserves of the country.
The liquid foreign exchange of the country has increased by $121 million to $19.843 billion by week ended August 28, 2020, according to the State Bank of Pakistan (SBP).
The foreign exchange reserves were at $19.722 billion by week ended August 21.2020.
The official foreign exchange reserves of the SBP increased by $72 million to $12.713 billion by week ended August 28, 2020 as compared with $12.641 billion a week ago.
Similarly, the foreign exchange reserves held by commercial banks also increased by $49 million to $7.13 billion by week ended August 28, 2020 as compared with $7.081 billion a week ago.
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FBR launches online system to monitor earnings of doctors, medical consultants
ISLAMABAD: Federal Board of Revenue (FBR) has launched an online system to monitor income derived by medical practitioners, doctors and consultants in order to prevent tax evasion.
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FBR explains holding period, tax rates on disposal of immovable properties
ISLAMABAD: Federal Board of Revenue (FBR) has explained holding period and tax rates for the computation of capital gains on disposal of immovable properties, which were amended through Finance Act, 2020.
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Weekly Review: market likely to maintain upward trajectory
KARACHI: Stock market likely to maintain upward trajectory during upcoming week owing to positive sentiments on improved foreign exchange reserves and stable exchange rate.
Analysts at Arif Habib Limited said that the market to maintain the upwards trajectory in the upcoming month.
Meanwhile, Prime Minister Imran Khan will visit Karachi on Saturday, in which important development projects are expected to be announced for the rain-stricken city.
Sentiment in specific sectors may be influenced by their respective results. Given foreign reserves rising, Pak Rupee stabilizing and cyclical demand increasing investor sentiment is expected to remain optimistic.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.5x (2020) compared to Asia Pac regional average of 18.4x and while offering DY of 6.0 percent versus 2.7 percent offered by the region.
The market continued the positivity this week. With CPI declining on yearly and monthly basis to 8.21 percent, a strong momentum was built which took the index beyond the 42,000 level (since 28th January 2020).
Moreover, Pak Rupee appreciated against greenback at PKR 165.77, which kept the sentiment positive. Furthermore, oil sales in the month of August 2020 witnessed a jump of 21 percent YoY.
Average weekly volume skyrocketed to levels last seen in 2005 as liquidity continued flushing into the equity market, making it the best stock market in the World on weekly basis. The KSE-100 closed at 42,023 points (up by 967 points / 2.4 percent WoW).
Sector-wise positive contributions came from i) Cements (194 points), ii) Oil & Gas Marketing Companies (114 points), iii) Fertilizer (103 points), iv) Chemical (83 points), and v) Textile Composite (82 points). On the other hand, negative contributions came from Automobile Assembler (23 points) and Power Generation & Distribution (13 points). Scrip-wise positive contributions were led by SYS (65 points), HASCOL (65 points), COLG (55 points), MLCF (53 points) and MARI (53 points).
Foreign selling continued this week clocking-in at USD 10.0 million compared to a net sell of USD 0.8 million last week. Selling was witnessed in Commercial Banks (USD 5.2 million) and Cement (USD 2.6 million). On the domestic front, major buying was reported by Individuals (USD 15.4 million and Mutual Funds (USD 8.6 million). Average volumes settled at 745 million shares (up by a massive 70 percent WoW), which is the highest weekly average volume since 7th Mar’05. While average value traded clocked-in at USD 139 million (up by 37 percent WoW).
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FBR enhances threshold to designate withholding agent
ISLAMABAD: In a significant move to enhance the ease of doing business, the Federal Board of Revenue (FBR) has announced that taxpayers with a turnover below Rs100 million are now excluded from the mandatory collection and deduction of withholding tax.
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