Author: Mrs. Anjum Shahnawaz

Stock market gains 47 points in narrow band trading

KARACHI: The stock exchange ended with gain of 47 points on Wednesday as market traded in narrow band.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 33,524 points as against 33,477 points showing an increase of +47 points.

Analysts at Arif Habib Limited said that the market continued trading in a narrow band between +128 points and -137 points and closed the session +47 points.

Chemical sector contributed positively to the index, whereby LOTCHEM, EPCL, DOL hit upper circuits due to better expectation of financial results of the outgoing quarter.

Quarterly financial results are due to be announced in October. Besides, buying activity was also observed in O&GMCs and small cap banks.

The index braced selling pressure largely from Steel and Cement sectors, which are the subject of profit booking and have shown decent price growth since recent lows.

Chemical sector topped the volumes with 48.7 million shares, followed by Cement (26.8 million) and Vanaspati (26.1 million). Among scrips, LOTCHEM led the volumes with 27 million shares followed by UNITY (26 million) and BOP (14 million).

Sectors contributing to the performance include Pharma (+28 points), E&P (+23 points), Banks (+17 points), Power (+16 points), Chemical (+10 points) and Cement (-48 points).

Volumes declined further from 243 million shares to 237.4 million shares (-2 percent DoD). Average traded value declined from US$ 56.9 million to US$ 40.9 million (-28 percent DoD).

Stocks that contributed significantly to the volumes include LOTCHEM, UNITY, BOP, KEL and EPCL, which formed 36 percent of total volumes.

Stocks that contributed positively include HUBC (+27 points), MARI (+24 points), HBL (+18 points), UBL (+14 points) and POL (+13 points). Stocks that contributed negatively include LUCK (-23 points), MCB (-17 points), DGKC (-14 points), OGDC (-12 points), and NBP (-12 points).

October 9, 2019
Rupee gains 16 paisas on improved dollar inflows

KARACHI: The Pak Rupee gained 16 paisas against dollar on Wednesday owing to inflows of export receipts and workers’ remittances, dealers said.

The rupee ended Rs156.32 to the dollar from previous day’s closing of Rs156.46 in interbank foreign exchange market.

Currency dealers said that the market was opened on the higher demand for dollar. However, improved supply of dollar through export receipts and remittances helped the rupee to gain the value.

The foreign currency market was opened in the range of Rs156.40 and Rs156.44. The market recorded day high of Rs156.45 and low of Rs156.32 and closed at Rs156.32.

The exchange rate in open market also witnessed appreciation in rupee value. The buying and selling of dollar was recorded at Rs156.00/Rs156.50 from previous day’s closing of Rs156.10/Rs156.60 in cash ready market.

October 9, 2019
Investment in premium Rs40,000 prize bonds surges by 156 percent

KARACHI: The investment in premium prize bonds of Rs40,000 denomination has sharply increased by 156 percent to Rs14.84 billion by August 2019 as compared with Rs5.78 billion in the same month of the last year.

The significant increase in registered prize bonds of Rs40,000 denomination has been attributed to the announcement of the government to seize the issuance of unregistered instrument to stop expansion of black economy.

In February this year the central bank stopped the issuance of Rs40,000 denomination prize bonds from its offices. The SBP also advised the Central Directorate of National Savings (CDNS) to stop printing the unregistered Rs40,000 prize bonds.

A member of Tax Reform Committee (TRC), which was constituted by the former government in 2014 said that it was recommendation of the TRC to stop the circulation of high denomination prize bonds.

The member said that the committee had presented its report in May 2015 and advised the then finance minister the high denomination prize bonds were major source for expansion of black economy.

The TRC had recommended to document high denomination prize bonds of Rs25,000 and Rs40,000 and should be issued against CNICs of individuals.

The government on June 24, 2019 announced to discontinue the circulation of Rs40,000 denomination bearer prize bonds.

In compliance to the government announcement the SBP also issued instructions to banks. The central bank issued procedure for the banks to facilitate general public in exchanging the unregistered prize bonds with three different modes.

The SBP said that the bearer prize bonds of Rs40,000 cannot be exchanged against cash. However, it can be redeemed against registered prize bonds or can be converted into national saving schemes or face value (direct transfer to the bank account of bond bolder).

The SBP informed the banks that such prize bonds would not be sold after June 24, 2019 and will not be encashed/redeemed after March 31, 2020. No further draws of Rs40,000 denomination national prize bonds shall be held.

The government is intending to expand the documented prize bonds in other denomination as well on the recommendations of the TRC, the member said.

The TRC in its report pointed out: “Issuance of prize bond of Rs 25,000 or Rs 40,000 should be discontinued as these high denomination bearer instruments fuel corruption and tax evasion.”

October 9, 2019
Tax rate on interest income for Tax Year 2020

KARACHI: Federal Board of Revenue (FBR) issued tax rate to be imposed on interest income during Tax Year 2020.

The FBR issued Income Tax Ordinance, 2001 updated up to June 30, 2019 incorporating changes brought through Finance Act, 2019.

The Section 7B of the Income Tax Ordinance, 2001 explained the application of income tax on profit on debt derived by a person during a tax year.

Section 7B: Tax on profit on debt

Sub-Section (1): Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division IIIA of Part I of the First Schedule, on every person, other than a company, who receives a profit on debt from any person mentioned in clauses (a) to (d) of sub-section (1)of section 151.

Sub-Section (2): The tax imposed under sub-section (1) on a person, other than a company, who receives a profit on debt shall be computed by applying the relevant rate of tax to the gross amount of the profit on debt.

Sub-Section (3): This section shall not apply to a profit on debt that –

(a) is exempt from tax under this Ordinance; or

(b) exceeds thirty six million Rupees.

Division IIIA of Part I of the First Schedule for the rate of tax for profit on debt imposed under section 7B shall be—

1. Where profit on debt does not exceed Rs.5,000,000: the tax rate shall be 15 percent

2. Where profit on debt exceeds Rs.5,000,000 but does not exceed Rs.25,000,000: the tax rate shall be 17.5 percent

3. Where profit on debt exceeds Rs.25,000,000 but does not exceed Rs. 36,000,000: the tax rate shall be 20 percent

Section 151 explains persons receiving profit on debt

Section 151: Profit on debt:

Sub-Section (1) Where –

(a) a person pays yield on an account, deposit or a certificate under the National Savings Scheme or Post Office Savings Account;

(b) a banking company or financial institution pays any profit on a debt, being an account or deposit maintained with the company or institution;

(c) the Federal Government, a Provincial Government or a Local Government pays to any person profit on any security other than that referred to in clause (a) issued by such Government or authority; or

(d) a banking company, a financial institution, a company referred

to in sub-clauses (i) and (ii) of clause (b) of sub-section (2) of section 80, or a finance society pays any profit on any bond, certificate, debenture, security or instrument of any kind (other than a loan agreement between a borrower and a banking company or a development finance institution) to any person other than financial institution.

October 9, 2019
Refunds of customs duties to be claimed within one year

KARACHI: Federal Board of Revenue (FBR) has said that the refunds against customs duties would be paid if claims have been made within one year.

The FBR issued Customs Act, 1969 updated till June 30, 2019 incorporating changes brought through Finance Act, 2019.

The FBR explained through Section 33 of the Act that refunds f customs duties would be paid if claims had been made within one year.

Section 33: Refund to be claimed within one year.

Sub-Section (1): No refund of any customs-duties or charges claimed to have been paid or over-paid through inadvertence, error or misconstruction shall be allowed, unless such claim is made within one year of the date of payment.

Sub-Section (2): In the case of provisional payments made under section 81, the said period of one year shall be reckoned from the date of the adjustment of duty after its final assessment.

Sub-Section (3): In the case where refund has become due in consequence of any decision or judgment by any appropriate officer of Customs or the Board or the Appellate Tribunal or the Court, the said period of one year shall be reckoned from the date of such decision or judgment, as the case may be.

Sub-Section (3A): The claim filed under this section shall be disposed of subject to pre-audit within a period not exceeding one hundred and twenty days from the date of filing of such claim:

Provided that the said period may, for reasons to be recorded in writing, be extended by the Collector of Customs for a period not exceeding ninety days.

Sub-Section (4): No refund shall be allowed under this section, if the sanctioning authority is satisfied that the incidence of customs duty and other levies has been passed on to the buyer or consumer.

Sub-Section (5): For the purpose of this section, the Board may, by notification in the official Gazette, specify the jurisdiction and powers of the officers of Customs to sanction refund in terms of amount of Customs duty and other taxes involved.

Section 34: Power to give credit for, and keep account-current of duties and charges.

An officer of customs, not below the rank of Assistant Collector of customs may, in the case of any mercantile firm or public body, if he so thinks fit, instead of requiring payment of customs duties or charges as and when they become due, keep with such firm or body an account-current of such duties and charges, which account shall be settled at intervals of not exceeding one month, and such firm or body shall make a deposit or furnish a security sufficient in the opinion of that officer to cover the amount which may at any time be payable by it in respect of such duties or charges.

October 9, 2019
Pakistan, China agree FTA 2nd phase to lead more trade, investment opportunities

ISLAMABAD: The leaders of Pakistan and China on Tuesday agreed that the implementation of the 2nd phase of China-Pakistan Free Trade Agreement (FTA) would lead to more trade, economic and investment opportunities between the two countries.

Other areas of potential collaboration discussed between the two sides included railways, steel, oil and gas, industry and science & technology.

Prime Minister Imran Khan held wide-ranging bilateral talks with Chinese Premier Li Keqiang at the Great Hall of the People in Beijing on Tuesday.

The exchange of views particularly covered strengthening of bilateral economic partnership, says a press release received here today from Beijing (China).

On his arrival, the Prime Minister was presented a guard of honour, accompanied by 19-gun salute.

The Foreign Minister, Minister of Planning, Development and Reform, Minister of Railways, Advisor on Commerce, Special Assistant to Prime Minister on Energy, and Chairman BOI, Chief of Army Staff, DG ISI, and other senior officials were present.

The bilateral talks were followed by a banquet hosted by Premier Li. Extending felicitations on the 70th Anniversary of the founding of the People’s Republic of China, the Prime Minister underscored that the All-Weather Strategic Cooperative Partnership between Pakistan and China served the fundamental interests of the two countries and peoples and contributed to peace, development and stability in the region.

Prime Minister Imran Khan emphasized that expeditious completion of CPEC projects was the foremost priority of his government as this transformational project was pivotal to accelerating Pakistan’s economic development and regional prosperity.

Premier Li was apprised of the actions undertaken recently to fast-track CPEC projects and to push the development momentum in Gawadar.

Premier Li underlined the salience of the abiding Pakistan-China relationship and reiterated China’s support for Pakistan’s issues of core national interest.

Premier Li thanked Prime Minister Imran Khan for the measures to advance CPEC projects and maintained that the second phase of CPEC will be instrumental in reinforcing and consolidating Pakistan’s economic development and pave the way for enhanced Chinese investments in Pakistan.

The two sides exchanged views on deepening bilateral trade and explored ways of increasing Pakistan’s exports to China.

The two sides also discussed regional security situation including serious human rights and humanitarian situation in IoJK.

Prime Minister Imran Khan apprised Premier Li of the latest developments and the importance of urgent action by the international community to alleviate the sufferings of the Kashmiri people in the lockdown.

Both leaders maintained that frequent and substantive bilateral exchanges were contributing to elevating the All-Weather Strategic Co-operative Partnership to new heights and were reinforcing people-to-people ties.

The two leaders also witnessed signing of various Agreements and MOUs aimed at deepening Pakistan-China ties in a range of socio-economic sectors.

Prime Minister Imran Khan reiterated his invitation to Premier Li to visit Pakistan at the earliest opportunity.

October 8, 2019
How taxpayers fail in filing returns by due date, KTBA questions FBR

KARACHI: A body of tax practitioners has questioned Federal Board of Revenue (FBR) that how taxpayers fail to file returns for tax year 2019 on September 30, 2019 when the tax authorities extend the date ahead of cutoff time.

The Karachi Tax Bar Association (KTBA) in a letter to FBR chairman referring the Circular No. 14 of 2019 dated September 30, 2019 whereby the due date for filing the returns of income had been extended till October 31, 2019 in respect of Individuals and AOPs, and Companies following Special Tax Year.

“At the outset, regarding the construction of the above mentioned Circular, it is pertinent that it was communicated to the taxpayers around 9:30 pm on September 30, 2019 whereas the deadline was up to 12:00 am.

“The extension has purportedly been announced on account of alleged ‘failure of the taxpayers’ to file the returns of income by the due date of September 30, 2019 as the Circular states that the taxpayers (Individuals, AOPs and Companies) “failed to file their income tax returns/ statements.”

On behalf of its members, the bar takes serious exception to the use of this uncalled for statement for, the said extension was necessitated due to the FBR’s failure to timely issue the final forms of returns of income.

Even after issuance of SRO 979(I)/2019 on 02 September 2019, it took couple of more days for the FBR to upload these forms on IRIS and after the same having been uploaded, were carrying certain system issues/ technical glitches as well as interpretational matters.

These were duly intimated by the Bar vide its letter dated 20 September 2019.

The tax bar is of the view that instead of blaming the taxpayers who “could not file” the income tax returns by September 30, 2019 on account of the above discussed reasons, the Board acknowledging the same would have allowed the taxpayers without blaming them, due time of ninety days to file the income tax returns.

As regards the extension allowed to the companies, it is tainted with an unprecedented condition of payment of 95 percent of admitted income tax liability by September 30, 2019.

“This condition of payment of 95 percent tax liability is completely unheard and couldn’t be found to have existed anywhere under any provision of the Income Tax Ordinance, 2001 including the very section 214A under which the aforesaid Circular has been issued.”

Besides the debate of any legality, what needs to be emphasized here remain that had there been any patent or latent intention of the Board to extend the due date only for those Companies which would have paid 95 percent of their income tax liability, the same should have been communicated clearly well before the last date of filing to provide necessary time to them to deposit the income tax demanded at the eleventh hour.

What however, has been witnessed that the above Circular, with this irrational condition, was issued at the eleventh hour and came as a surprise, when the extended banking hours had already been lapsed.

It was therefore, impossible for anyone to fulfill the condition even if they were forced too. Thought it was reported in the news media that the FBR had issued a Circular letter on this topic of payment of 95 percent income tax before availing extension in time, however the said Circular letter was never made public.

Besides the above pandemonium, what needs emphasis here is that legal and permissible time period for filing the return of income in terms of section 118 of the Ordinance has not been allowed to Companies for, the final SRO for Companies was issued on September 06, 2019 allowing only twenty four (24) days to them for filing the return of income.

It is, therefore, a strange condition in the first place and that too without any legal footing hence it would be all just and bona fide that the due number of days, which are ninety (90) from the issuance date of the final forms of return of income are allowed to the taxpayers including Companies without any pre-condition levied upon.

October 8, 2019
Stock market ends down by 160 points amid positive sentiments

The Pakistan Stock market experienced a minor setback on Tuesday as the benchmark KSE-100 index fell by 160 points, closing at 33,476 points, down from the previous day’s 33,636 points. This decline comes despite the overall positive sentiment that has driven the market in recent weeks.
(more…)

October 8, 2019
Rupee ends down by five paisas in dull trading

KARACHI: The Pak Rupee ended down by five paisas against dollar on Tuesday in dull trading activities in foreign currency market.

The rupee ended Rs156.46 to the dollar from previous day’s closing of Rs156.41 in interbank foreign exchange market.

Currency dealers said that the market activities were remained dull as the exchange rate was remained in the band of eight paisas.

The foreign currency market was initiated in the range of Rs156.40 and Rs156.50. The market recorded day high of Rs156.48 and low of Rs156.40 and closed at Rs156.46.

The exchange rate in open market witnessed appreciation in rupee value. The buying and selling of dollar recorded at Rs156.10/Rs156.60 from previous day’s closing of Rs156.40/Rs156.80 in cash ready market.

October 8, 2019
Unregistered prize bonds worth Rs206 billion surrendered on discontinuation announcement

KARACHI: An amount of around Rs206 billion has been surrendered following the government announcement of discontinuation the circulation of unregistered prize bonds of Rs40,000 denomination.

According to information received to PkRevenue.com, the total investment in unregistered Rs40,000 denomination prize bonds fell to Rs52.46 billion by August-end 2019 as compared with Rs258 billion in May 2019.

The government on June 24, 2019 announced to discontinue the circulation of Rs40,000 denomination bearer prize bonds.

In compliance to the government announcement the State Bank of Pakistan (SBP) also issued instructions to banks. The central bank issued procedure for the banks to facilitate general public in exchanging the unregistered prize bonds with three different modes.

The SBP said that the bearer prize bonds of Rs40,000 cannot be exchanged against cash. However, it can be redeemed against registered prize bonds or can be converted into national saving schemes or face value (direct transfer to the bank account of bond bolder).

The SBP asked the banks that such prize bonds would not be sold after June 24, 2019 and will not be encashed/redeemed after March 31, 2020. No further draws of Rs40,000 denomination national prize bonds would be held.

The SBP issued the following instructions regarding handling of Rs.40,000/- denomination National Prize Bonds are issued herewith for information, guidance and meticulous compliance:

a) National Prize Bonds of Rs.40,000/- denomination shall not be sold after June 24, 2019 and will not be encashed/redeemed after March 31, 2020.

b) No further draws of Rs.40,000/-denomination National Prize Bonds shall be held.

c) Cash payment for encashments of bonds is not allowed. However, the bond holder (s) shall have the following options to replace / encash these bonds:

1. Conversion of premium prize bonds (registered)

2. Replacement with special saving certificate (SSC)/Defence Saving Certificate (DSC)

3. Encashment at face value.

d) Appended below is the SOP for processing requests under the aforementioned options for compliance by all banks:

1. Conversion to Premium Prize Bonds (Registered)

i. The bonds can be converted to premium prize bonds (registered) through the 16 field offices of SBP Banking Services Corporation, and authorized branches of six commercial banks i.e. National Bank of Pakistan (NBP), Habib Bank Limited (HBL), United Bank Limited (UBL), MCB Bank Limited (MCB), Allied Bank Limited (ABL) and Bank Alflah Limited (BAFL).

ii. The bond holder shall be required to submit a written request for conversion of bearer bonds to premium prize bonds (registered) to be registered in his (her) name on the prescribed application.

iii. The bond holder shall also be required to submit prescribed applications forms for registrations / purchase of premium prize bond as per the procedure in vogue.

Replacement with the Special Saving Certificate (SSC)/Defence Saving Certificate (DSC)

i. The bonds can be replaced with SSC / DSC through the 16 field offices of SBP Banking Services Corporation, authorized commercial banks and National Savings Centers.

ii. All authorized commercial banks shall, therefore, accept requests for replacement of bearer bonds with SSC or DSC on the prescribed application form.

iii. The bondholder shall also be required to submit application form for purchase of SSC/DSC (SC-1) as per the prescribed procedure.

Encashment at Face Value:

i. The bonds will only be encashed by transferring the proceeds to the bond holder’s bank account through the 16 field offices of SBP Banking Services Corporation as well as the authorized commercial bank branches.

ii. All commercial banks shall receive requests for encashment of bearer bonds on the prescribed application form.

A cop of the application form, duly signed and stamped, shall be provided to the bondholder as an acknowledgement receipt.

The SBP said that it is needless to mention that the National Prize Bonds of Rs40,000 denomination tendered at the counters of banks shall be subject to through scrutiny to ascertain their genuineness. In this regard, details regarding the security features in Rs40,000 denomination National Prize Bonds are available online.

Moreover, the prize bonds encashed / replaced by general public may be surrendered to concerned SBP BSC office through respective regional office of the commercial banks. For the purpose, the regional office may intimate the SBP BSC office three days in advance so that necessary arrangements for receipt of the bonds can be made.

It is imperative to mention that a notice regarding the above / mentioned facilities must be displayed at prominent places within branch premises for awareness and information of general public.

October 8, 2019