Author: Mrs. Anjum Shahnawaz

Pakistan’s foreign exchange reserves at $14.993 billion

KARACHI: The total liquid foreign exchange reserves of Pakistan declined nominally by $11 million to $14.993 billion by week ended October 04, 2019 as compared with $15.003 billion a week ago, State Bank of Pakistan (SBP) said on Thursday.

The reserves held by SBP increased by $16 million to $7.757 billion by week ended October 04, 2019 as compared with $7.771 billion a week ago.

The foreign exchange reserves held by commercial banks declined by 27 million to $7.235 billion as compared with $7.262 billion a week ago.

October 10, 2019
Stock market gains over 500 points on improved trading activities

KARACHI: The stock market gained over 500 points on Thursday on across the board trading activity witnessed in the market.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 34,028 points as against 33,524 points showing an increase of 504 points.
Analysts at Arif Habib Limited said that the market rebounded today with a jump of 500 points that took the index above 34,000 level, last seen in early July 2019.

Activity was observed across the board, but mainly contributed by Banking and Cement sectors. Expectation of further increase in Cement price / bag gave way to optimism in Cements, while improvement in fixed income portfolio for the Banks also engaged Investors.

Volumes improved over the day to 261 million shares and were mainly contributed by Chemical sector, which performed consecutively to reach a turnover of 49.4 million shares, followed by Cement (30.3 million) and Banks (23.9 million). Among scrips, LOTCHEM realized volume of 26.5 million shares, followed by PIBTL (17.2 million) and KEL (16.4 million).

Sectors contributing to the performance include Banks (+115 points), E&P (+74 points), Cement (+58 points), Power (+40 points) and Tobacco (+31 points).

Volumes increased from 237.7 million shares to 261.1 million shares (+10 percent DoD). Average traded value also increased by 32 percent to reach US$ 54 million as against U$ 40.9 million.

Stocks that contributed significantly to the volumes include LOTCHEM, PIBTL, KEL, UNITY and EPCL, which formed 33 percent of total volumes.

Stocks that contributed positively include LUCK (+41 points), UBL (+32 points), HBL (+31 points), PAKT (+31 points) and HUBC (+30 points). Stocks that contributed negatively include BAFL (-13 points), EFERT (-7 points), JLICL (-5 points), PPL (-3 points), and IGIHL (-2 points).

October 10, 2019
Overseas Pakistanis remit $5.478 billion in July – September

KARACHI: The overseas workers have sent $5.478 billion during first quarter (July – September) of current fiscal year, which is 1.43 percent down when compared with $5.557 billion in the corresponding period of the last fiscal year, according to data released by State Bank of Pakistan (SBP) on Thursday.

However, inflows of workers’ remittances witnessed 17.59 percent growth to $1.747 billion in the month of September 2019 when compared with $1.486 billion in the same month of the last year.

Saudi Arab was the major destination from where Pakistanis sent remittances to homeland. The inflows of remittances from Saudi Arabia were $1.269 billion during first quarter of current fiscal year as compared with $1.263 billion in the same quarter of the last fiscal year, showing growth of 0.49 percent.

The country received $911 million as workers’ remittances from the US during first quarter of the current fiscal year as compared with $862.76 million in the corresponding quarter of the last fiscal year, showing 5.67 percent growth.

The third major destination for workers’ remittances was the UK from where the country received $814.37 million during July –September 2019 as compared with $810 million in the same period of the last fiscal year.

The combined inflows from United Arab Emirates (UAE) were $1.139 billion during first quarter of current fiscal year as compared with $1.227 billion in the same quarter of the last fiscal year, registering 7.19 percent decline.

The inflows from other GCC countries were at $519.43 million during July – September 2019 as compared with $526.96 million in the same period of the last fiscal year, showing 1.43 percent decline.

October 10, 2019
Rupee gains 14 paisas on improved sentiments

KARACHI: The rupee gained 14 paisas against dollar on Thursday owing to improved economic sentiments.

The rupee ended Rs156.18 to the dollar from previous day’s closing of Rs156.32 in interbank foreign exchange market.

Currency dealers said that the successful visit of the prime minister to China helped confidence building in the market. Besides, inflows of export receipts also helped the local currency to appreciate.

The foreign currency market initiated in the range of Rs156.21 and Rs156.24. The market recorded day high of Rs156.28 and low Rs156.17.

The exchange rate in open market also witnessed appreciation in rupee value. The buying and selling of dollar was recorded at Rs155.90/Rs156.40 from previous day’s closing of Rs156.00/Rs156.50 in cash ready market.

October 10, 2019
Pakistan’s oil, gas reserves witness increase

KARACHI: Pakistan’s oil and gas reserves have witnessed increase by 7 percent and 1.4 percent, respectively, according to analysts at Topline Research.

The analysts on Thursday said that Pakistan Petroleum Information Services (PPIS) had reported oil and gas reserves for Jun 2019, whereby few major fields of Tal block (operated by MOL Pakistan) have witnessed an upward adjustment in which Pakistan Oil Fields (POL), Pakistan Petroleum Limited (PPL) and Oil and Gas development (OGDC) have working interest of 21 percent, 28 percent and 28 percent respectively.

Overall oil reserves of the country are up by 7 percent (excluding PEL reserves) to 286 million barrels (10 years) mainly on back of upward adjustment in fields of Tal block and Adhi.

Maramzai and Mardankhel fields (belongs to Tal Block) have seen increase of 42 percent and 89 percent respectively in their recoverable oil reserves. Increase in reserves have extended fields life by 1-3 years, as per estimates.

Adhi South reserves are also separately reported, whereby overall Adhi field oil reserves are up 70 percent to 25.9 million barrels. Field life due to incremental reserves is up by around 3 years.

Gas reserves of the country are up by meagre 1 percent to 21tcf (15 years). Field wise, reserves from Adhi, Marmazai, Mardankhel, Makori East, and Manzalai are increased by 12-132 percent. These incremental reserves will help companies to continue their production for 1-3 years more.

October 10, 2019
Account holders with Rs10 million deposits on FBR’s radar

KARACHI: Bank account holders making aggregate deposits of Rs10 million in a month are on radar of Federal Board of Revenue (FBR) for the purpose of broadening of tax base and identifying concealed incomes.

Federal Board of Revenue (FBR) has said that banks are required to provide details of account holders having aggregate deposits of Rs10 million in a month.

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

Several changes have been introduced through Section 165A related to furnishing of information by banks of cash withdrawals and deposits.

Section 165A: Furnishing of information by banks

Sub-Section (1): Notwithstanding anything contained in any law for the time being in force including but not limited to the Banking Companies Ordinance, 1962 (LVII of 1962), the Protection of Economic Reforms Act, 1992 (XII of 1992), the Foreign Exchange Regulation Act, 1947 (VII of 1947) and the regulations made under the State Bank of Pakistan Act, 1956 (XXXIII of 1956), if any, on the subject every banking company shall make arrangements to provide to the Board in the prescribed form and manner,—

(a) a list of persons containing particulars of cash withdrawals exceeding fifty thousand Rupees in a day and tax deductions thereon 4[ ], aggregating to Rupees one million or more during each preceding calendar month.;

(b) a list containing particulars of deposits aggregating rupees ten million or more made during the preceding calendar month;

(c) a list of payments made by any person against bills raised in respect of a credit card issued to that person, aggregating to rupees two hundred thousand or more during the preceding calendar month;

(d) a list of persons receiving profit on debt exceeding five hundred thousand rupees and tax deductions thereon during preceding financial year.

Sub-Section (2): Each banking company shall also make arrangements to nominate a senior officer at the head office to coordinate with the Board for provision of any information and documents in addition to those listed in sub-section (1), as may be required by the Board.

Sub-Section (3): The banking companies and their officers shall not be liable to any civil, criminal or disciplinary proceedings against them for furnishing information required under this Ordinance.

Sub-Section (5): Subject to section 216, all information received under this section shall be used only for tax purposes and kept confidential.

October 10, 2019
Tax evading manufacturers, commercial importers supporting traders’ protest

ISLAMABAD: A large segment of tax evaders in manufacturing sector and commercial importers are behind the traders’ protest in order to force tax authorities to withdraw condition of computerized national identity card (CNIC).

The condition of CNIC has been introduced in order to identify persons in supply chain and plug leakages of revenue from manufacturing stage to end-consumers.

In recent surveys of the Federal Board of Revenue (FBR) it has been identified that markets are flooded with goods from domestic and import sources and without payment of duty and taxes.

Sources in FBR said that some manufacturers and importers were supplying unreported goods to such retailers, which sold to end-consumers without payment of duty and taxes.

The traders do not want to become part of documented economy on the behest of manufacturers or commercial importers in order to shelter the tax evasion.

In the past several measures were taken by the government to bring retailers into the tax net but all the times such efforts ended in a failure.

The latest wave of protests by the trade community is another bid to force the FBR to bow down their demand. But this time, the FBR chairman, who is from private sector, is committed to bring traders into the tax net.

The traders on Wednesday announced to observe a countrywide shutter-down strike on October 28 and 29, following the failure of talks with FBR officials.

A protest demonstration was held by the traders against the tax reforms introduced by the government.

The protesting traders attempted to move towards the FBR Headquarters.

However, the police stopped the protesters at the Serena Chowk, where they observed a sit-in.

A few enraged protesters attempted to cause damage to the public properties and tried to remove barbwires in the area.

This prompted the law enforcers to baton-charge the protesters. Meanwhile, the FBR decided to hold talks with the protesters, but they failed to yield any results.

The leaders of the protesting traders’ community claimed that the FBR is not ready to listen to their demands and added that they will not pay unjust tax.

They further that the business community will not accept the condition of presentation of a copy of their CNICs for the sale and purchase of goods.

The traders hoped that the present government led by Pakistan Tehreek-e-Insaf (PTI) would reconsider their demands and will provide them the fix tax scheme.

October 10, 2019
Repayment of drawback of export on imported goods explained

KARACHI: Federal Board of Revenue (FBR) has explained repayment of drawback of the export on imported goods under Customs Act 1969.

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

Following are the provisions explaining the repayment of drawback:

Section 35: Drawback of the export on imported goods

Subject to the subsequent provisions of this Chapter and the rules, when any goods, capable of being easily identified, which have been imported into Pakistan and upon which customs-duties have been paid on importation, are exported to any place outside Pakistan or as provisions or stores for use on board a conveyance proceeding to a foreign territory, seven-eight of such duties shall be repaid as drawback, subject to the following conditions, namely:-

(1) the goods are identified to the satisfaction of an officer of customs not below the rank of Assistant Collector of Customs at the customs-station, to be the same as had been imported, and

(2) the goods are entered for export within two years of the date of their importation, as shown by the records of the custom-house or if such time is extended by the Board or the Collector of Customs for sufficient cause within such extended time:

Provided that the Collector of Customs shall not extend the time beyond three years of the importation of such goods.

Explanation.- For the purposes of this section, the goods shall be deemed to have been entered for export on the date on which the 3 [goods declaration] is delivered to the appropriate officer under section 131.

Section 36: Drawback on goods taken into use between importation and exportation

Notwithstanding anything contained in section 35, the repayment of duty as drawback in respect of goods which have been taken into use between their importation and subsequent exportation shall be made in accordance with the provisions of the rules made in that behalf.

Section 37: Drawback on goods used in the manufacture of goods which are exported

Where it appears to the Board that in respect of goods of any class or description manufactured in Pakistan and exported to any place outside Pakistan, a drawback of customs-duties should be allowed on any imported goods of a class or description used in the manufacture of such exported goods, the Board may, by notification in the official Gazette, direct that drawback shall be allowed in respect of such imported goods to such extent and subject to such condition as may be provided in the rules.

Section 38: Power to declare what goods are identifiable and to prohibit draw-back in case of specified foreign territory

(1) The Board may, from time to time, by notification in the official Gazette, declare what goods shall, for the purposes of this Chapter, be deemed to be not capable of being easily identified.

(2) The 5[Federal Government ] may, from time to time, by notification in the official Gazette, prohibit the payment of drawback upon the exportation of goods or any specified goods or class of goods to any specified foreign port or territory.

Section 39: When no drawback allowed

Notwithstanding anything hereinbefore contained, no drawback shall be allowed-

(a) upon goods which are required to be included in the export manifest and are not so included, or

(b) when the claim is for drawback amounting, in respect of any single shipment, to less than or equal to hundred rupees, or

(c) unless the claim for drawback has been made and established at the time of export.

Section 40: Time of payment of drawback

No such payment of drawback shall be made until the vessel carrying the goods has put out to sea or other conveyance has left Pakistan.

Section 41: Declaration by parties claiming drawback

Every person, or his duly authorized agent, claiming drawback on any goods duly exported, shall make and subscribe a declaration that such goods have been actually exported and have not been relanded and are not intended to be relanded at any place in Pakistan and that such person was at the time of entry outwards and export and continues to be entitled to drawback thereon.

October 10, 2019

FBR updates sales tax rates on mobile phones on import, local supply

KARACHI: Federal Board of Revenue (FBR) has updated sales tax rates on import or local supply of mobile phones to be applicable for Tax Year 2020 (July 01, 2019 to June 30, 2020).

The FBR issued Sales Tax Act, 1990 updated up to June 30, 2019 incorporating changes brought through Finance Act, 2019.

The FBR updated NINTH SCHEDULE of the Sales Tax Act, 1990 to prescribe sales tax rates on mobile phones.

The Table:

S.No.	Description/ Specification of goods	Sales Tax on import or local supply	Sales tax chargeable at the time of registration (IMEI number by CMOs)	Sales tax on supply (payable at the time of supply by CMOs)
1.	Subscriber Identification Module (SIM) Cards			Rs250
2	Cellular mobile phones or satellite phones to be charged on the basis of import value per set, or equivalent value in rupees in case of supply by the manufacturer, at the rate as indicated against each category:–
	A. Not exceeding US$ 30	Rs135	Rs135
	B. Exceeding US$ 30 but not exceeding US$ 100	Rs1,320	Rs1,320
	C. Exceeding US$ 100 but not exceeding US$ 200	Rs1,680	Rs1,680
	D. Exceeding US$ 200 but not exceeding US$ 350	Rs1,740	Rs1,740
	E. Exceeding US$ 350 but not exceeding US$ 500	Rs5,400	Rs5,400
	F. Exceeding US$ 500	Rs9,270	Rs9,270

LIABILITY, PROCEDURE AND CONDITIONS

(i) In case of the goods specified against S.No 1of the Table, the liability to charge, collect and pay tax shall be on the Cellular Mobile Operator (CMO) at the time of supply. In case of the goods specified against S.No 2, the liability to pay sales tax at the time of import shall be on the importer, and the liability to charge, collect and pay sales tax payable on supplies shall be on the Cellular Mobile Operator at the time of registering International Mobile Equipment Identity (IMEI) number in his system.

(ii) The Cellular Mobile Operators shall, if not already registered, obtain registration under the Sales Tax Act, 1990.

(iii) No IMEI shall be registered in his system by a Cellular mobile Operator without charging and collecting the sales tax as specified in the Table.
(iv) The Cellular Mobile Operator shall deposit the sales tax so collected through his monthly tax return in the manner prescribed in section 26 of the Sales Tax Act, 1990, and rules made thereunder.

(v) The Cellular Mobile Operator shall maintain proper records of all IMEI numbers registered for a period of six years, and such records shall be produced for inspection, audit or verification, as and when required, by an authorized officer of Inland Revenue.

(vi) The Pakistan Telecommunication Authority shall provide data regarding IMEI numbers registered with other Cellular Mobile Operators to prevent double taxation on the same IMEI number in case of switching by a subscriber from one operator to another, and to provide data regarding registration of IMEI numbers to the Board on monthly basis.

(via) The sales tax as indicated in column (3) of the Table above shall be paid by the importer, in case of imports and by the manufacturer, in case of locally manufactured cellular mobile phones.

(vii) No adjustment of input tax shall be admissible to the Cellular Mobile Operator or any purchaser of cellular mobile phone against the sales tax charged and paid in terms of this Schedule.

(viii) The tax specified in column (4) of the Table shall be charged, collected and paid with effect from such date as may be specified by the Board and the sales tax specified in column(3) shall stand withdrawn from the date so specified.

The FBR said that notwithstanding anything contained in any other law for the time being in force, the levy, collection and payment of sales tax under Notification No. S.R.O. 460(I)/2013, dated the 30th May, 2013, shall be deemed to always have been lawfully and validly, levied, collected and paid.

October 10, 2019

RTO-II Karachi to assess incomes of lawyers, doctors, CAs, other professionals

KARACHI: Regional Tax Office (RTO) – II Karachi has been authorized to assess incomes of professionals including lawyers, doctors, chartered accountants etc. for assessment of their incomes and enforce income tax returns.

The Federal Board of Revenue (FBR) has revised jurisdiction of Chief Commissioner and Commissioners of Inland Revenue, RTO-II Karachi.

The Zone-I of the RTO-II, Karachi has been assigned jurisdiction over: (i) lawyers, advocates, auditors and chartered accountants, legal consultants, architects and engineers; (ii) doctors, hakeems, homeopathic, doctors, hospitals, clinics, laboratories, diagnostic centers, X-Ray centers, CT-Scans centers, MRI centers, ultrasound centers, nursing homes etc.

Under Section 114 of Income Tax Ordinance, 2001 the filing of income tax returns is mandatory for persons registered with any chamber of commerce and industry or any trade or business association or any market committee or any professional body including Pakistan Engineering Council, Pakistan Medical and Dental Council, Pakistan Bar Council or any Provincial Bar Council, Institute of Chartered Accountants of Pakistan or Institute of Cost and Management Accountants of Pakistan.

The zone has also been assigned jurisdiction over: (iii) chemicals and dyes manufacturers, importers, exporters, distributors and wholesalers; (iv) pharmaceutical manufacturers, importers, distributors/wholesalers including drug stores and chemists.

The FBR said that the commissioner of Zone I of RTO-II Karachi would have jurisdiction over all cases or classes of cases, persons or classes of persons of non-corporate sector including individuals and association of persons (AOPs) of mentioned above sectors other than those specifically assigned to Large Taxpayers Unit (LTU)/LTU-II Karachi, Corporate RTO Karachi or RTO-III or any other zone of RTO-II Karachi whose place of business is situated in the areas falling within the limits of former Baldia Town, Jamshed Town, Liaquatabad Town, Orangi Town, Saddar Town, SITE Town and within the limits of Clifton Cantonment, Karachi Cantonment, Kimari Cantonment and Manora Cantonment.

The Zone-III of the RTO-II, Karachi has been assigned jurisdiction over falling under: education/training/vocational institutions; real estate developers, contractors, dealers builders and cooperative housing societies; travel agents, hajj and umrah operators and visa and immigration consultants.

The FBR has also assigned jurisdictions on various sectors to remaining zones of the RTO-II Karachi.

October 9, 2019