In a decisive move to bolster transparency in financial transactions, the Federal Board of Revenue (FBR) is set to require all banks to provide detailed information on individuals receiving profit on debt, effective from July 1, 2020.
(more…)Author: Mrs. Anjum Shahnawaz
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FPCCI seeks intervention to prevent Pak Rupee depreciation
KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged the government to immediately control the depreciation of Pak Rupee.
FPCCI President Mian Anjum Nisar has urged the government to control surge of dollar against Pakistani currency, as the rupee has dropped to more than two-month low of 167.65 against greenback in the interbank market while it has fallen to 168 versus the US dollar in the open trade.
FPCCI President, in a statement issued here on Wednesday, observed that the rupee has dropped by Rs1.08 against the dollar in a single session in the interbank market, falling to 167.77, a level last seen in the start of April.
He said that huge depreciation of Rupee continued to damage national economy, as the cost of deals done by the businessmen with their foreign counterparts has increased manifold due to massive fall of rupee against dollar.
Apart from increasing exports and controlling imports the government will have to take administrative measures, as a large demand of cash dollars are seen in the market, he suggested.
He said that the rupee has dropped by 2.8 percent or Rs4.55 against the dollar since the start of June, as it was closed at 163.10 at the end of last month.
Mian Anjum Nisar appreciated the positive development, related to the imports, which have now started decreasing since the last financial year followed by the government’s initiative of imposing regulatory duties.
He said that the country would hopefully receive multilateral inflows during this week, which could help strengthen the rupee and the foreign exchange reserves, as the government has signed a $1.5 billion loan agreement with the World Bank, Asian Development Bank and Asian Infrastructure Investment Bank.
FPCCI President said that excessive government borrowing, absence of foreign flows, lack of foreign investment and the huge current account deficit are the vital reasons for constant depreciation of Pak rupee.
Terming rupee depreciation against dollar a mysterious development, the leader of business community said that continued fall of rupee is not understandable with a fact that there was no fundamental change in country’s imports during last few months while other economic indicators are also same for a long time.
He said that the local currency has been under pressure due to falling foreign exchange reserves and increasing outflows amid foreign debt repayments.
The SBP’s foreign exchange reserves have been under pressure due to external debt repayments recently, which were dropped to $10.1 billion as of June 12 from $12.3 billion on May 8.
Mian Anjum Nisar was of the view that State Bank of Pakistan and Ministry of Finance will have to remain vigilant in this regard.
Besides this, the SBP and the government also need to intervene and come up with policy reforms to control depreciation of rupee which is becoming more and more valueless.
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Stock market ends down in dull trading
KARACHI: The stock market ended down on Wednesday amid dull trading activities during the day.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 34,034 points as against 34,052 points showing a decline of 18 points.
Market traded in a narrow range between +108 points and -115 points, closing the session -18 points. Activity remained dull throughout the session, primarily due to absence of a strong trigger ahead.
During the session, news of trade surplus added a bit of excitement but selling pressure kept the prices in check. International crude oil prices also saw attrition during trading hours, which brought E&P stocks below yesterday’s closing prices.
Fertilizer stocks performed well, among which DAWH hit upper circuit, whereas buying interest was also observed in ENGRO.
Technology sector topped the volumes with 34.9 million shares, followed by Food (16.7 million) and Refinery (14.4 million). Among scrips, TRG realized 16.4 million shares, followed by UNITY (12.6 million) and PRLR (11.8 million).
Sectors contributing to the performance include E&P (-44 points), Banks (-33 points), Power (-20 points), Cement (-13 points) and Pharma (-12 points).
Volumes increased from 160.6 million shares to 195.7 million shares (+19 percent DoD). Average traded value increased by merely 1 percent to reach US$ 34.6 million as against US$ 33.5 million.
Stocks that contributed significantly to the volumes include TRG, UNITY, PRLR1, TPL and ASC, which formed 30 percent of total volumes.
Stocks that contributed positively to the index include DAWH (+62 points), NESTLE (+40 points), ENGRO (+27 points), APL (+10 points) and EFERT (+10 points). Stocks that contributed negatively include PPL (-20 points), HUBC (-18 points), HBL (-16 points), OGDC (-13 points), and PAKT (-9 points).
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SECP extends date for AMCs to comply with investor’s suitability assessment
ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has extended date for Asset Management Companies (AMCs) to comply with mandatory requirement of providing investor’s suitability assessment.
A statement issued on Wednesday the SEPC said that to provide mutual fund industry further relief in fulfilling regulatory compliance requirements during COVID-19 pandemic the regulator has extended the timeline for AMCs to meet investor’s suitability assessment requirements, stipulated in Circular No 2 of 2020.
The extended timeline is July 24, 2020.
SECP’s suitability assessment requirements require AMCs to classify the Collective Investment Schemes (CIS) and investment plans with regards to the risk of principle erosion, ranging from very low risk for money market funds to high risk for equity funds.
AMCs are also required to ensure suitability of CIS/Plan to the investor and assess the risk profiles of investors before his/her investment in any specific product or strategy.
Effective implementation of AMCs risk profiling mechanism will ensure that the investor makes an informed investment decision while investing in any mutual fund/plan, as per his/her risk profile.
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Rupee strengthens by 29 paisas on inflows
KARACHI: The Pak Rupee gained 29 paisas against dollar on Wednesday owing to inflows from international financial institutions and shrinking current account deficit.
The rupee ended Rs167.36 to the dollar from previous day’s closing of Rs166.65 in interbank foreign exchange market.
Currency experts said that the rupee recovered 29 paisas after a fall of Rs1.06 a day earlier against the dollar.
They said that the rupee was strengthened after the SBP received $1 billion from the World Bank and Asian Development Bank.
Further, the data of Balance of Payment (BOP) showed 74 percent decline in current account deficit during first eleven months of current fiscal year.
The foreign exchange reserves of the country have increased by $70 million to $16.775 billion by week ended June 12, 2020.
The foreign exchange reserves were at $16.705 billion by week ended on June 05, 2020.
The foreign exchange reserves held by the central bank increased by $11 million to $10.107 billion by week ended June 12, 2020 as compared with $10.096 billion a week ago.
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Current account deficit shrinks by 74 percent in 11 months
KARACHI: Current account deficit has declined by 74 percent during first eleven months of current fiscal year owing to significant slump in import bill.
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SBP receives $1bn from ADB, World Bank
KARACHI: State Bank of Pakistan (SBP) on Tuesday received $1 billion from two international financial institutions to mitigate adverse economic impact of COVID-19.
The SBP said that it had received $500 million each from Asian Development Bank (ADB) and World Bank.
Pakistan and three international financial institutions (IFIs) including World Bank, ADB and Asian Infrastructure Investment Bank (AIIB) have signed $1.5 billion loans agreement as each of the IFI has provided $500 million facility.
This is concessional financing in the form of budgetary support that is being provided by the three IFIs that will help mitigate socio-economic impact of COVID-19 pandemic and strengthen health, education, and social safety nets systems.
The Asian Development Bank is extending financial support of $500 million for this programme with the objective to support the government of Pakistan’s efforts to strengthen the health system and mitigate socio-economic impacts of the COVID-19 pandemic.
The Asian Infrastructure Investment Bank is extending co-financing of $500 million for the CARES to augment the government’s efforts to mitigate the direct and indirect impacts of COVID-19 pandemic
The scope of the CARES programme covers: (i) social protection for the poor and vulnerable, (ii) an expanded health sector response to the pandemic; and (iii) a pro-poor fiscal stimulus package to ensure recovery in growth and employment.
Securing Human Investments to Foster Transformation (SHIFT) $500 million: It aims to strengthen the Civil Registration and Vital Statistics, health and education systems essential for human capital accumulation; recognise and support the contribution of women to economic productivity; and improve efficiency of the national safety nets.
Noor Ahmed, Secretary Ministry of Economic Affairs, signed the three loan agreements on behalf of government of Pakistan, while Patchamuthu Illangovan, Country Director WB Ms Xiaohong Yang, Country Director, ADB and Konstantin Limitovsriy, Vice President, AIIB signed agreements on behalf of the World Bank, Asian Development Bank and AIIB respectively.
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Tax deduction allowed on salary up to Rs25,000 paid in cash
KARACHI: The Finance Bill 2020 has proposed major changes related to tax deduction in order to provide relief to business community. Under the proposed amendments the threshold amount has been increased up to Rs25,000 for tax deduction in case salary is paid.
According to interpretation of the Finance Bill 2020 by BDO Pakistan, the Finance Bill proposed amendments to Section 21 of the Income Tax Ordinance, 2001.
(l) The Bill seeks to enhance threshold of deduction for cash payment against business income under single account head from Rupees fifty thousand to Rupees two hundred and fifty thousand per annum.
This proposal seeks to relieve businesses from making transactions through banking channel, as it is difficult for business to make every transaction through banking channel.
Further The Bill seeks to increase the threshold of expenditure liable to be disallowed as a business expense if the same is not made through a crossed banking instrument/ online transfer of payment from Rs.10,000/- to Rs.25,000/ per transaction.
Furthermore, The Bill seeks to enhance threshold from Rs.15,000/- to Rs.25,000/- as allowable deduction against business income if the salary is paid in cash.
(p) & (q) The Bill seeks to add two new clauses to regulate limit of expenditure on account of utility bill and sales made to persons required to be registered but not registered under the Sales Tax Act, 1990 as an admissible deduction against business income where sales equal to or exceed Rs. 100 million per person. However, the disallowance of expenditure shall not exceed 20 percent of total deduction claimed.
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Exemption from withholding tax on foreign remittances may not practical for banks
The Pakistani government has announced a significant tax relief measure, granting withholding tax exemption on the transfer of foreign remittances to Pak Rupee (PKR) accounts. However, tax experts have raised concerns about the practical implementation of this exemption, particularly regarding the bifurcation of transactions for banks.
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SRB extends date for sales tax payment, return filing
KARACHI: Sindh Revenue Board (SRB) has extended date for payment and filing sales tax return for the month of May 2020.
The SRB issued a notification extending the last date for e-deposit of Sindh sales tax for the tax period May 2020 and for e-filing of tax return for the tax period May 2020.
The notification said that the SRB allowed the registered persons, including the withholding agents covered by provisions of the Sindh Sales Tax Special Procedure (Withholding) Rules, 2014:
e-deposit the amounts of Sindh sales tax for the tax period May 2020 on or before Monday June 29, 2020; and
e-file their returns for the tax period May 2020 on or before Thursday July 02, 2020.