Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • SRB makes mandatory for banks to provide quarterly statement of taxable services

    SRB makes mandatory for banks to provide quarterly statement of taxable services

    KARACHI: Sindh Revenue Board (SRB) has made mandatory for banking companies to provide quarterly reconciled statement of taxable services provided during the period.

    The SRB issued notification No. SRB-3-4/17/2020 effective from July 01, 2020 to make it mandatory for banking and non-banking financing companies to submit quarterly reconciliation of sales taxable services provided or rendered during the period.

    The financial institutions are required to provide particulars of services or services related fee, commission, brokerage or charges.

    These services are included:

    1. Branch baking customer free and commission
    2. Consumer finance related fee and commission
    3. Card related fee and commission (debit and credit cards)
    4. Credit related fee and commission
    5. Investment banking fee and commission
    6. Commission and fee on foreign trade
    7. Bill discounting commission and fee
    8. Commission and brokerage on foreign exchange dealing
    9. Commission and fee on guarantees, including bank guarantees
    10. Commission and fee on cash management
    11. Commission and fee on remittances, including home remittances
    12. Commission and fee on bancassurance
    13. Commission on commodity operations
    14. Commission on handing of federal government or provincial or local government businesses
    15. Fee or rent of safe deposit lockers and safe vaults
    16. Services in respect of Hajj and Umrah
    17. Services in respect of Musharika and Modarba
    18. Services in respect of utility bills collection
    19. Services provided as a banker to an issue
    20. Services provided as a consultant to an issue
    21. Financial leasing
    22. Commodity or equipment leasing
    23. Other leasing
    24. Services in respect of Ijarah
    25. Funds management services
    26. Asset management services
    27. Advisory services
    28. Consultancy services
    29. Other services

    The reconciliation should include sales tax withheld by the banking/non-banking financial company as a withholding agent.

    Sales tax of the banking/non-banking financial companies services withheld, if any, by others as withholding agents.

  • FBR imposes up to seven percent additional customs duty

    FBR imposes up to seven percent additional customs duty

    ISLAMABAD: Federal Board of Revenue (FBR) has started preparation for achieving revenue collection target for fiscal year 2020/2021 as it massively increased additional customs duty up to 7 percent from July 01, 2020.

    The FBR issued SRO 572(I)/2020 on Tuesday for levying additional customs duty at different rates of two percent, four percent and seven percent.

    The FBR provisionally collected Rs3.957 trillion for fiscal year 2019/2020. As per budget documents the FBR has been assigned to collect Rs4,963 billion during the fiscal year 2020/2021, which is around 25 percent higher than collection of fiscal year 2019/2020..

    The government while presenting the budget 2020/2021 had claimed that the budget was tax free and it had not levied any duty and tax in order to provide relief to the masses amid outbreak of coronavirus.

    However, as per the notification additional customs duty at two percent has been imposed on goods imported under tariff slabs of zero percent, three percent and 11 percent.

    Another rate of four percent additional customs duty has been levied on goods imported under tariff slab of 16 percent.

    While the rate additional customs duty at seven percent has been applied on goods imported under tariff slab of 20 percent and above.

    However, import of edible crude oil which are subject to import at higher tariff slab, the additional customs duty shall be charged at the rate of two percent, the FBR said.

    The FBR further said that additional customs duty would not be applicable on the goods imported under concessionary regime for exporters.

    Further, the additional customs duty shall also not be applicable on the contractors and services companies for offshore projects.

  • FBR surpasses fiscal year 2019/2020 collection target

    FBR surpasses fiscal year 2019/2020 collection target

    ISLAMABAD: Federal Board of Revenue (FBR) has surpassed revenue collection target of Rs3,907 billion for fiscal year 2019/2020, which was significantly lower due to coronavirus adverse impact on the economy.

    FBR official spokesman on Tuesday said that the tax authorities had surpassed the downward revised target of Rs3,907 billion and collected Rs3,957 billion be Tuesday evening.

    The spokesman said that the gross collection of the FBR also recorded above Rs4,000 billion for the first time in the history. The collection is considerably high considering the adverse impact of coronavirus.

    The collection in the month of June 2020 also recorded at Rs411 billion by 3:00PM on June 30, 2020 as against the June target of Rs398 billion.

    It is important to note that the FBR had lost around 30 officials due to the pandemic, which also included a grade 22 officer Muhammad Zahid Khokhar.

    The FBR praised its officials for their dedication toward revenue collection despite threat of COVID.

  • KSE-100 index closes in positive after two consecutive years in red

    KSE-100 index closes in positive after two consecutive years in red

    KARACHI: The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed 2019/2020 with a positive return after two consecutive years in red, portraying a Pak Rupee based increase of 1.5 percent.

    Analysts at Arif Habib Limited said that the performance of the fiscal year 2019/2020 is in stark contrast to the last 10-year performance of the benchmark index, which has depicted an average positive return of 15.4 percent.

    Key highlights of the outgoing year include:

    Macroeconomic concerns were largely controlled before COVID-19 outbreak, especially on the external side [CAD (still under control), currency stability, and building up of FX reserves].

    However, post COVID-19 outbreak, the economy slowed down significantly amid introduction of a lockdown and overall decline in consumer spending.

    The government announced a fiscal stimulus amounting PKR 1.3tn while the SBP announced various schemes/incentives to support households and industries’ stressed cash cycles alongside a reduction of 625 basis points since March 2020 post COVID-19 to stimulate spending and economic activity.

    Profitability declined by -7.2n percent YoY in 9MFY20.

    Foreign outflow (USD 279 million) continued for the fifth consecutive year. However, foreigners bought T-bills and PIBs worth USD 688 million.

  • SBP extends employment support scheme for three months

    SBP extends employment support scheme for three months

    KARACHI: State Bank of Pakistan (SBP) has extended the Rozgar scheme for another three months and, in collaboration with the Government of Pakistan, has increased the risk coverage for SMEs under the scheme.

    Soon after the outbreak of Covid-19 pandemic, SBP took a number of steps to provide economic support to businesses and households. SBP reduced the financial cost to the private and public businesses and households by reducing the policy rate by a cumulative 625 basis points since 17th March 2020. To improve the cash flow of businesses and households, it allowed deferment of principal amount and restructuring of loans. In addition to these measures, SBP introduced several refinance schemes to support employment and investment to fight the economic impact of COVID-19, the SBP said.

    Refinance Scheme to Support Employment and Prevent Layoff of Workers, commonly known as SBP Rozgar scheme: This scheme provides concessional loans to businesses for wages and salaries expenses provided they commit not lay off their employees for the period of the loan.  SBP has decided to extend the validity of this scheme by another 3 months to end September, 2020. Businesses will now be able to obtain financing to pay wages and salaries for a maximum period of 6 months starting April 2020 till September 2020.

    Effectively, this suggests that not only businesses can obtain loans to fund their wages and salaries bill up to a period of 3 months from July till September 2020, but can also get reimbursement for the wages and salaries paid during April-June 2020.  For those who have already availed financing under the scheme, financing limits for the months of July to September 2020 will be calculated on the same basis on which limits were calculated for the months of April to June 2020.

    Under the scheme, up till 19th June 2020, financing of Rs 112.8 billion have been approved by banks for 1653 businesses covering wages and salaries of over 1.1 million employees.

    The government Risk Sharing Facility under SBP Rozgar Scheme: With a view to incentivize banks/DFIs for financing to SMEs and non SME corporates, Government of Pakistan (GoP) introduced a Risk Sharing Facility (RSF) for SBP’s Rozgar Scheme.

    Under this facility, GoP bears 40 percent first loss on disbursed portfolio (principal portion only) for eligible borrowers.

    Government of Pakistan has now decided not only to extend validity of its risk sharing facility (RSF) for another three months for SMEs and small corporates with turnover of up to Rs 2 billion but also enhanced risk coverage for SMEs from 40 percent to 60 percent First Loss on portfolio basis.

    This higher risk coverage will help banks to provide financing under Rozgar scheme to collateral deficient SMEs which are otherwise struggling hard.

     SBP now expects that more SMEs will benefit from the scheme mainly due to higher risk coverage, more awareness of the scheme among the stakeholders and robust support mechanism to address queries and complaints with well organized set up comprising regional focal persons of SBP Offices and banks all across the country. Under the RSF, up till 19th June 2020, financing of Rs 25.4 billion have been approved by banks for around 1100 businesses covering wages and salaries of over 220,000 employees.

    It is expected that the above two measures will allow more businesses to benefit from these schemes and thereby support the employment of their employees.

  • Stock market gains 240 points on improved sentiments

    Stock market gains 240 points on improved sentiments

    KARACHI: The stock market gained 240 points to end the fiscal year on Tuesday over improved sentiments of investors over approval of finance bill and successful action by security forces against terrorists a day earlier.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 34,422 points as against 34,182 points showing an increase of 240 points.

    Analysts at Arif Habib Limited said that the financial year ended on a positive note with 240 points at 34,422 points.

    Trading volumes also improved over the day, however, the focus was still at marked to market valuation of securities in the portfolios.

    Among banking sector stocks, HBL and NBP did high volumes, amid small price gains. Comparatively, MCB posted better gains but the volumes remained in check. Cement sector stocks, which performed well during the past 2 sessions, remained muted.

    E&P sector stocks also lacked any excitement, which coincided with international crude oil prices, showing nominal price changes.

    Refinery sector led the volumes with 43.3 million shares, followed by O&GMCs (27.4 million) and Technology (27.1 million). Among scrips, PRLR did 39.1 million shares, followed by SSGC (14.6 million) and TRG (13.7 million).

    Sectors contributing to the performance include Banks (+140 points), Fertilizer (+30 points), Food (+24 points), Technology (+21 points) and Power (+16 points).

    Volumes increased from 156.9 million shares to 223.3 million shares (+42 percent DoD). Average traded value also increased by 33 percent to reach US$ 44.7 million as against US$ 33.5 million.

    Stocks that contributed significantly to the volumes include PRLR1, SSGC, TRG, KEL and HUMNL, which formed 37 percent of total volumes.

    Stocks that contributed positively to the index include MCB (+69 points), NESTLE (+21 points), UBL (+17 points), OGDC (+17 points) and HBL (+15 points). Stocks that contributed negatively include PPL (-12 points), HCAR (-7 points), JLICL (-6 points), KOHC (-4 points), and SHEL (-4 points).

  • Rupee gains 14 paisas on last day of fiscal year

    Rupee gains 14 paisas on last day of fiscal year

    KARACHI: The Pak Rupee gained 14 paisas against dollar on the last date of fiscal year 2019/2020 owing to transfer of loan amount from Chinese bank.

    The rupee ended Rs168.05 to the dollar from previous day’s closing of Rs168.19 in interbank foreign exchange market.

    The State Bank of Pakistan (SBP) has received $1.3 billion as government of Pakistan loan disbursements from Chinese Banks this week.

    This brings the total amount of official inflows received since June 23, 2020 to around $3 billion.

    Experts said that the transfers would also help the central bank to improve foreign exchange reserves.

  • World Bank approves $500 million to help Pakistan strengthening fiscal management

    World Bank approves $500 million to help Pakistan strengthening fiscal management

    KARACHI: The World Bank on Tuesday approved $500 million in financing for the Resilient Institutions for Sustainable Economy program (RISE) to help Pakistan strengthen fiscal management.

    A statement issued by The World Bank’s Board of Executive Directors approved today $500 million in financing for the Resilient Institutions for Sustainable Economy program (RISE) to help Pakistan strengthen fiscal management, promote transparency and private sector growth, and undertake foundational reforms in the energy sector to transition to low-carbon energy. These reforms are critical to build fiscal resilience and stimulate recovery from impacts of the COVID-19 pandemic.

    “Pakistan is suffering a significant fiscal shock from the economic fallout from the pandemic and the increased spending on crisis response, including emergency healthcare, social protection, and business support,” said Illango Patchamuthu, World Bank Country Director for Pakistan.

    “The RISE program supports the government efforts to achieve macroeconomic stability, accelerates long-delayed policy reforms, and sets the course for a strong and competitive economy.”

    The program supports reforms to broaden the tax base and reduce distortions in tax policy, strengthen debt management and transparency, and implement urgently needed reforms to achieve financial viability of the power sector.

    In tandem, reforms to lower barriers to the formalization of firms, increase the use of digital payments, and better regulate real estate developments will help create an enabling environment to attract private investment.

    “RISE supports reforms such as harmonizing sales tax and making the trade tariff structure more competitive. This could help the country attract new investments and spur economic recovery,” said Shabih Mohib, Lead Country Economist for the World Bank.

    “Taken as a whole, we hope that RISE can build a foundation for sustainable growth driven by the private sector.”

    The program supports the foundations for a move toward a low-carbon and more financially viable power sector. The program includes reforms to improve the integrity of the banking sector, promote digital finance, and create a more competitive national tariff policy to promote trade and reduce costs to consumers.

    The digital finance component of the program will help deepen electronic money transactions and digital payments will benefit populations with limited mobility, such as women and low-income populations.

    RISE is aligned with the government’s COVID-19 crisis response, which aims to scale up spending on health and social protection while pursuing macro-fiscal reforms in the face of economic contraction.

    RISE complements the Securing Human Investments to Foster Transformation (SHIFT) which focuses on human capital and an upcoming Program for Affordable and Clean Energy (PACE) which will tackle power sector reforms.

    PACE, which will include critical power sector reforms needed to put the country on sustainable fiscal path, will precede the second programs of RISE and SHIFT.

  • Shanghai Electric submits fresh intention to acquire 66.4pc K-Electric shares

    Shanghai Electric submits fresh intention to acquire 66.4pc K-Electric shares

    KARACHI: K-Electric on Tuesday said that it has received fresh Public Announcement of Intention (PAI) from Shanghai Electric Power (SEP) Company Limited (SEP) to acquire up to 66.40 percent voting shares of K-Electric Limited, subject to receipt of regulatory and other approvals.

    This PAI has been notified to the K-Electric Board of Directors on 30 June 2020.

    A copy of the said PAI and disclosure form are enclosed. The SECP and PSX are requested to make the above information immediately available to the shareholders of K-Electric under regulation 5(1) of Takeover Regulation 2017 by placing it on the notice board and through notification on automated information system and make an announcement on the house of the Exchange.

    SEP was established in 1882 and then transformed into a limited company in 1998.With a long history of 138 years, SEP is one of the major electric energy companies in Shanghai and is also a publicly-traded company listed on Shanghai Stock Exchange under ticker 600021.

    It is principally engaged in the development and construction of electricity, as well as its operation and management business.

    For the financial year ended December 31, 2019, SEP recorded an annual net profit of RMB2.0billion (US$289.7million) and an annual power generation of 48.66TWh.

    As of December 31,2019, SEP has an overall installed capacity of 15.8GW, with contributions of 53.92%, 15.16%, 13.58%, and 17.34% from coal power, natural gas power, wind power, and solar power respectively.

  • FBR grants Rs30 billion as tax concession to new business entities

    FBR grants Rs30 billion as tax concession to new business entities

    ISLAMABAD: Federal Board of Revenue (FBR) has granted Rs30 billion as initial allowance to new business entities during fiscal year 2019/2020.

    The concession of allowance has been granted under Section 23 of Income Tax Ordinance, 2001.

    As per Section 23 the allowance has been granted as:

    Section 23. Initial allowance.—

    Sub-Section (1): A person who places an eligible depreciable asset into service in Pakistan for the first time in a tax year shall be allowed a deduction (hereinafter referred to as an “initial allowance”) computed in accordance with sub-section (2), provided the asset is used by the person for the purposes of his business for the first time or the tax year in which commercial production is commenced, whichever is later.

    Sub-Section (2): The amount of the initial allowance of a person shall be computed by applying the rate specified in Part II of the Third Schedule against the cost of the asset.

    [The rate of initial allowance under section 23 shall be 25 percent for plant and machinery.]

    Sub-Section (3): The rules in section 76 shall apply in determining the cost of an eligible depreciable asset for the purposes of this section.

    Sub-Section (4): A deduction allowed under this section to a leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution in respect of assets owned by the leasing company or the investment bank or the modaraba or the scheduled bank or the development finance institution and leased to another person shall be deducted only against the leased rental income derived in respect of such assets.

    (5) In this section, “eligible depreciable asset” means a depreciable asset other than —

    (a) any road transport vehicle unless the vehicle is plying for hire;

    (b) any furniture, including fittings;

    (c) any plant or machinery that has been used previously in Pakistan; or

    (d) any plant or machinery in relation to which a deduction has been allowed under another section of this Ordinance for the entire cost of the asset in the tax year in which the asset is acquired.

    The FBR granted a sum of Rs36.43 billion as allowances including the initial allowance during fiscal year 2019/2020.

    Under Section 23A an amount of Rs335 million has been granted as first year allowance under the head of industrial undertaking set up in specified rural and under developed areas or engaged in the manufacturing of cellular mobile phones.

    An amount of Rs477 million has been granted concessions under Section 60 of the Income Tax Ordinance, 2001 for persons paying Zakat.

    The FBR granted concession of Rs2.45 billion under Section 60A for persons paying Workers’ Welfare Fund. Another amount of Rs2.72 billion has been granted as allowance under Section 62B for persons paying workers’ participation fund.

    An amount of Rs285 million has been granted as allowance under Section 60C for individuals paying profit or share in rent and share in appreciation for value of house on loan by banks etc.

    The FBR granted Rs154 million as deductible allowance for education expenses under Section 60D.