KARACHI: Current account deficit has declined by 74 percent during first eleven months of current fiscal year owing to significant slump in import bill.
(more…)Author: Mrs. Anjum Shahnawaz
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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.
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Customs barred from auction of cigarettes without health warning
ISLAMABAD: Customs authorities have been barred from auction of confiscated cigarettes without printed health warning.
The Federal Board of Revenue (FBR) on Tuesday issued draft amendment to Customs Rules 2001. In this regard SRO 554(I)/2020 has been issued to invite comments from stakeholders.
The FBR proposed amendment to sub-rule (3) of rule 58 of Customs Rules, 2001. The proposed amendment is: “(vi) cigarettes packing whereof does not bear printed graphical health warning in accordance with Section 3 of the Cigarettes (Printing of Warning) Ordinance, 1979.”
Prior to this proposed amendment, as per sub-rule (3) the following goods shall not be put on auction and be sold or disposed off in the manner as prescribed by the FBR, namely:
Arms and ammunition;
Liquor/narcotics and like goods;
Confiscated books, written material which in obscene, subversive, anti-state or anti-religion;
Transit goods excluding confiscated goods; and
Diplomatic cargo excluding confiscated goods.
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Stock market gains 315 points amid thin volumes
KARACHI: The stock market gained 315 points on Tuesday amid thin volumes because of fiscal year end.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 34,053 points as against 33,738 points showing an increase of +315 points.
Analysts at Arif Habib Limited said that the market followed the momentum made yesterday.
Traded volume remained thin as have been the case in the past couple of sessions, mainly due to financial year end marked to market valuation of portfolio scrips by institutional investors.
Among E&P Stocks, OGDC came in limelight with price gains, which was aided by an upward move in international crude oil prices. Similarly, PSO also witnessed price gains during the session.
Banking sector stocks also traded largely in the positive territory. Technology sector stocks topped the volumes with 20.9 million shares, followed by Cement (15.5 million) and Chemical (14.2 million).
Among scrips, TRG led the volumes with 11.8 million shares, followed by UNITY (11 million) and MLCF (6.9 million).
Sectors contributing to the performance include E&P (+68 points), Cement (+38 points), O&GMCs (+35 points), Power (+29 points) and Banks (+27 points).
Volumes declined from 161.2 million shares to 160.6 million shares (-0.8 percent DoD). Average traded value also declined by 9 percent to reach US$ 33.5 million as against US$ 36.5 million.
Stocks that contributed significantly to the volumes include TRG, UNITY, MLCF, PAEL and PRLR1, which formed 26 percent of total volumes.
Stocks that contributed positively to the index include OGDC (+36 points), HUBC (+29 points), FFC (+22 points), TRG (+20 points) and MEBL (+19 points). Stocks that contributed negatively include ENGRO (-10 points), PAKT (-8 points), PMPK (-5 points), BAHL (-5 points), and THALL (-5 points).
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Rupee plummets by Rs1.06 on dollar demand for import payments
KARACHI: The Pak Rupee fell Rs1.06 against dollar on Tuesday owing to higher import and corporate demand.
The rupee ended Rs167.65 to the dollar from previous day’s closing of Rs166.59 in interbank foreign exchange market.
Currency experts said that the rupee was under pressure due to high demand for corporate and import payments. They said that due to fiscal year closing the corporate sector repatriate their profits to their parent companies abroad.
They said that the scheduled repayment of foreign loans also put pressure on foreign exchange reserves.
However, the reserves slightly increased last week.
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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Sindh exempts sales tax on life insurance service
KARACHI: Sindh government has exempted sales tax on services provided by life insurance companies for full fiscal year i.e. July 01, 2019 to June 30, 2020.
Sindh Revenue Board (SRB) issued notification No. SRB-3-4/13/2020 dated June 22, 2020 stated that the Sindh government had granted exemption to the life insurance services (other than its related re-insurance services), classified under tariff heading 9813.1500 of the Second Schedule to the Sindh Sales Tax on Services Act, 2010, from whole of the sales tax payable thereon, as were provided or rendered during the period from July 01, 2019 to June 30, 2020.
However, the relaxation is subject to following conditions:
(a) the person providing or rendering life insurance services commences e-depositing, in the Sindh government’s head of account in the prescribed manner, the amount s of Sindh sales tax due, on such services for the tax periods from July 2020 onward; and
(b) the amounts of Sindh sales tax charged or collected, if any, on such services during the period from the 1st day of July, 2019 to the 30th June, 2020, are e-deposited, by the person providing or rendering such services, in Sindh Government’s head of account “B-02384” in the prescribed manner by the 15th day of July, 2020.
This notification shall not entitle any person, whether a service provider or a service recipient, to any refund or adjustment of tax, the SRB added.
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German financial institution shows interest to acquire 20pc stake in TPL Insurance
KARACHI: A Germany based development finance institution has shown interest to acquire 20 percent stake in TPL Insurance Limited, a statement said on Tuesday.
According to an announcement on Pakistan Stock Exchange (PSX), TPL Insurance Limited (“the Company”), a subsidiary of TPL Corp Limited, is pleased to announce that DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH (“DEG”), a wholly owned subsidiary of KfW Group based in Cologne, Germany, a major development finance institution, has expressed interest in acquiring 20 percent stake in the Company.
The transaction shall be executed subject to approval of the Board of Directors’, Shareholders’, Securities and Exchange Commission of Pakistan and other regulatory bodies.
DEG is re-entering into the Pakistani market with the investment being a first, in an insurance company by a Development Finance Institution in recent times in Pakistan.
With the experience and expertise of DEG as a major institutional investor, the Company will greatly benefit in terms of custom shaped solutions in all respectable areas including but not limited to best corporate governance practices, business support, risk management and environmental and social matters.
“We shall keep our shareholders updated with respect to this transaction by making further announcements as and when the transaction progresses further,” the announcement said.