Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • Weekly Review: Equity market to move with escalating Middle East tension

    Weekly Review: Equity market to move with escalating Middle East tension

    KARACHI: The stock market likely to move with the development in mounting tension in the Middle East following killing of Iranian leader in US air strike.

    Analysts at Arif Habib Limited said that market to remain in the green zone next week. Oil scrips may manage to attract the limelight following renewed tension in the Middle East which is likely to fuel international oil prices.

    Additionally, fresh portfolio allocations and inflow of funds with the advent of the New Year should support the momentum. The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.4x (2020) compared to Asia Pac regional average of 12.5x and while offering DY of ~6.4 percent versus ~2.7 percent offered by the region.

    Overall optimism in the equity markets continued this week. Investors welcomed the New Year with a spectacular two-day rally of 1,746 points on the first two days of the New Year.

    Abu Dhabi Crown Prince’s one day visit and continuously improving macros with further improvement in SBP reserves (+5.5 percent WoW) helped to sustain the bullish run of the KSE-100 Index.

    Albeit, the last trading day witnessed profit taking in the wake of a US strike in Iraq to kill a key Iranian army commander. Inflation reading for Dec’19 settled at 12.63 percent YoY, declining 0.34 percent MoM. The KSE-100 Index settled at 42,323 points, up 1,475 points WoW.

    Sector-wise positive contributions came from i) Commercial Banks (261 points), ii) Fertilizer (218 points), iii) Oil & Gas Exploration Companies (208 points), iv) Power Generation (184 points), and v) Cement (171 points). Whereas, negative sector-wise contribution came from Tobacco (27). Scrip-wise positive contributions were led by HUBC (138 points), LUCK (124 points), ENGRO (102 points), OGDC (85 points) and PSO (79 points).

    Foreign selling continued this week clocking-in at USD 7.3 million compared to a net sell of USD 2.9 million last week. Selling was witnessed in Commercial Banks (USD 4.7 million) and Fertilizer (USD 1.4 million).

    On the domestic front, major buying was reported by Mutual Funds (USD 8.6 million) and Banks/DFI (USD 4.2 million). Average Volumes settled at 282 million shares (up by 23 percent WoW) while average value traded clocked-in at USD 69 million (up by 29 percent WoW).

  • FBR empowered for closure of automatic audit selection

    FBR empowered for closure of automatic audit selection

    ISLAMABAD: Federal Board of Revenue (FBR) has been empowered to conclude cases which were automatic selected for audit.

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  • SBP issues procedure for loan disbursement to unemployed youth

    SBP issues procedure for loan disbursement to unemployed youth

    KARACHI: State Bank of Pakistan (SBP) on Friday issued procedure for disbursement of loan to unemployed youth under Prime Minister’s Kamyab Jawan Youth Entrepreneurship Scheme (PMKJ-YES).

    In a circular issued to all chief executives of banks and development financial institutions, the SBP said that executing agencies (EAs) shall evaluate loan applications of unemployed youth as per parameters of PMKJ-YES approved by the Federal Cabinet and circulated by the State Bank of Pakistan to all banks vide its IH&SMEFD Circular No. 08 of 2019 dated July 11, 2019.

    The loan facility for a borrower shall be sanctioned and disbursed by the EA after completion of documentation formalities.

    These loans shall be entitled for service charges subsidy and credit losses subsidy. No further evaluation on eligibility of borrowers would be conducted by the SBP.

    The government has launched PM Kamyab Jawan Youth Entrepreneurship Scheme (PMKJ-YES) to provide concessional loans to youth for establishing or extending business enterprises thereby promoting entrepreneurship and reducing unemployment and poverty in Pakistan.

    The SBP has issued necessary instructions to all banks through IH&SMEFD Circular No. 08 dated July 11, 2019. All loans disbursed under PMKJ-YES shall be reported to SBP under Small Enterprise Financing category.

    Under the Scheme, loans are segregated into two tiers i.e. Tier 1 (T1) loans from Rs. 100,000 to Rs. 0.5 million and Tier 2 (T2) loans – above Rs 0.5 million and up to Rs 5 million.

    The loans will be provided through the banking system at service charges of 6 percent per annum. for TI loans and 8 percent p.a. for T2 loans, while the rate of return for banks working as EAs for PMKJ-YES would be KIBOR (6- Months offer) + 500 bps for T1 loans and KIBOR (6- Months offer) + 400 bps for T2 loans with KIBOR to be reset bi-annually.

    The government shall absorb the difference between the rate of return for EAs and end user rate as service charges subsidy, the SBP said.

    Besides, GOP will also bear credit losses (principal portion only) on the disbursed portfolio of the banks up to 50 percent in case of T1 loans and up to 10 percent in case of T2 loans.

    As per SBP’s Prudential Regulations for Small Enterprise Financing, loans are classified as loss on objective basis (time based criteria) when default period is 18 months or more or on subjective basis.

    Hence, for determination of admissible credit losses against EA’s total PMKJ-YES disbursed portfolio at the end of each quarter, only loan cases classified under loss category as per SBP SME Financing PRs will be considered.

    The SBP said that the payment of service charges subsidy to EAs will be made through SBP’s operational arm viz Development Finance Support Department (DFSD), SBP BSC Head Office Karachi.

    The EAs shall prepare and submit claims to DFSD for receiving government service charges subsidy on outstanding principal amount of their regular PMKJ-YES portfolio up to expiry of each individual loan.

    In case of a loan becoming non-performing, no service charges subsidy will be paid after being classified as ‘Loss’ as per SBP PRs for SME Financing.

    The EAs claims shall contain particulars of each individual loan along with calculations of subsidy based on relevant six months KIBOR used. The service charges subsidy claim should be duly vetted by internal audit department of the EA. The audited claim along with a certificate from EA relating to eligibility of borrower for PMKJ-YES and correctness of the subsidy amount shall be submitted to DFSD within 15 working days after the end of respective quarter for payment of service charges subsidy.

    DFSD, SBP BSC shall scrutinize subsidy claim of EAs within 15 working days after receipt of complete information from EAs.

    DFSD shall ascertain that calculations of EAs subsidy claim are correct and applicable KIBOR rate has been used by the EAs.

    Thereafter, DFSD shall submit scrutinized claims to Finance Division for release of funds. After receiving funds from GoP, DFSD will advise SBP BSC Karachi for crediting the subsidy amount in respective EA’s account maintained at SBP BSC Karachi.

    Banking Inspection Department of State Bank during regular inspection of the EAs shall conduct inspection of their PMKJ-YES portfolio on sampling basis using its own sampling techniques.

    SBP inspectors shall randomly select credit files and review them from the perspective of eligibility of borrowers under the Program, status of loan (regular or NPL) and GOP subsidy claim.

    The BID inspection report section on PMKJ-YES shall be used as an important input for reviewing the Scheme and assessing its effectiveness in fulfilling the government objective of promoting youth entrepreneurship in the country.

    On behalf of government, payment of credit losses subsidy to EAs will be made up to 50 percent in case of TI loans and up to 10 percent in case of T2 loans on their disbursed portfolio under the Scheme on quarterly basis through Development Finance Support Department (DFSD), SBP BSC Head Office Karachi.

    EAs shall prepare claims for submission to DFSD, SBP BSC for receiving payment on account of credit losses subsidy from the government on their disbursed PMKJ-YES portfolio. The list containing details of individual loans classified as loss as per SBP SME PRs and calculation of credit loss subsidy based on total disbursed PMKJ-YES portfolio of EAs at the end of respective quarter shall be submitted to DFSD. EAs claim in this respect should be duly vetted by their internal audit department. The audited claim along with a certificate from EA relating to correctness of the claimed amount shall be submitted to DFSD within 15 working days after the end of respective quarter.

    DFSD, SBP BSC shall scrutinize credit loss subsidy claim of EAs within 15 working days after receipt of complete information from EAs and ascertain that calculations of EAs loss claim are correct.

    Thereafter, DFSD will forward admissible claims of EAs to Finance Division, GoP, for release of funds. After receiving funds from Finance Division, DFSD will advise SBP BSC Karachi office for crediting the approved subsidy claim in respective EAs account maintained at SBP BSC Karachi Office.

    EAs will return excess amount arising, if any, to DFSD, in case movement in their PMKJ-YES portfolio causes amount of credit loss to be less than/falls below 50 percent in case of T1 loans and 10 percent in case of T2 loans of total disbursed portfolio of EA at the end of reporting Quarter.

  • Procedure for making correction in cash payment receipt issued

    Procedure for making correction in cash payment receipt issued

    ISLAMABAD: Federal Board of Revenue (FBR) has notified procedure for making correction in computerized payment receipt (CPR).

    The FBR issued a circular on Friday stating that the electronic procedure for correction of CPR had been updated in IRIS software and following e-procedure would be followed for the correction of CPR of income tax, sales tax and federal excise duty.

    The FBR said that the scope of changes would be restricted to the following ares:

    a. Change of name, address, National Tax Number (NTN)/Computerized National Identity Card (CNIC).

    b. Change in tax year/tax period

    c. change in payment code/payment section.

    The FBR said that online application for the changes should be submitted through Iris software. An applicant is required to provide documents, included: copy of CPR; in case of mistake made by withholding agent, letter from withholding agent and affidavit from the taxpayer on stamp paper that amendment may be made in CPR; for correction of NTN/CNIC in CPR, affidavit from the person on whose name the payment has been deposited mistakenly.

    The FBR said that the chief commissioner shall designate an officer in his office for such purpose. In case, where scope of correction falls in different territorial jurisdiction, the chief commissioner to who such application has been made shall forward such application electronically to the chief commissioner where such CPR was recorded incorrectly.

    Change in CPR will only take place in the system of FBR for all accounting purpose and the taxpayer will be entitled to take such credit accordingly.

  • Rupee falls by two paisas on higher import

    Rupee falls by two paisas on higher import

    KARACHI: The Pak Rupee ended down by two paisas against dollar on Friday owing to payment demand from importers and corporate buyers.

    The rupee ended Rs154.90 to the dollar from previous day’s closing of Rs154.88 in interbank foreign exchange market.

    Currency dealers said that the demand for the greenback was higher during the day for import and corporate payment.

    However, the inflows helped the rupee for further depreciation.

    The foreign currency market was initiated in the range of Rs154.90 and Rs154.95. The market recorded day high of Rs154.95 and low of Rs154.89 and closed at Rs154.90.

    The exchange rate in open market witnessed slight change in rupee value. The buying and selling of the dollar was recorded at Rs154.80/Rs155.10 from previous day’s closing of Rs154.70 and Rs155.00.

  • Equity market ends down 158 points on profit taking

    Equity market ends down 158 points on profit taking

    KARACHI: The equity market fell by 158 points on Friday owing to profit taking on the last trading day of the week.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 42,323 points as against 42,481 points showing a decline of 158 points.

    Analysts at Arif Habib Limited said that the market opened on a positive note today with +334 points and 3.34 million volume traded. Oil chain reacted to the jump in international oil prices which went up on the news of US attack on Iranian military commander.

    POL reacted the most to hike in oil prices. Similarly, among OMCs, PSO made a rapid ascent.

    Majority of the stocks remained red by the end of session due to profit booking and concerns over regional security.

    Among Banks, HBL and UBL remained under pressure. Technology sector led the volumes table with 43 million shares, followed by Banks (34.5 million) and Cement (33.2 million).

    Among scrips, TRG topped the chart with 23.7 million shares, followed by UNITY (20.8M) and KEL (20.2 million).

    Sectors contributing to the performance include E&P (+63 points), Fertilizer (-87 points), Banks (-77 points), Pharma (-18 points), Autos (-12 points).

    Volumes declined over the day from 412.3 million shares to 322.9 million shares (-22 percent DoD). Average traded value also declined by 14 percent to reach US$ 94.8 million as against US$ 110.1 million.

    Stocks that contributed significantly to the volumes include TRG, UNITY, KEL, PAEL and FFL, which formed 30 percent of total volumes.

    Stocks that contributed positively include POL (+34 points), OGDC (+33 points), MCB (+24 points), HUBC (+18 points) and BAHL (+16 points). Stocks that contributed negatively include HBL (-78 points), ENGRO (-74 points), UBL (-29 points), SEARL (-10 points), and MARI (-10 points).

  • Withholding agent condition withdrawn on individuals with turnover up to Rs100 million

    Withholding agent condition withdrawn on individuals with turnover up to Rs100 million

    ISLAMABAD: Federal Board of Revenue (FBR) has withdrawn the condition on individuals to act as withholding agent in case the business turnover is up to Rs100 million.

    The government through Tax Laws (Second Amendment) Ordinance, 2019 introduced major change to Income Tax Ordinance, 2001.

    Under section 153 of the Ordinance, individuals having turnover of Rs50 Million or above in any of the preceding Tax Years are obliged to act as withholding tax agents whilst making payments for supply of goods, rendering of services or for execution of contracts.

    “Henceforth traders, being individuals and having turnover up to Rs100 million shall not be required to act as a withholding agent under section 153 of the Ordinance,” according to the FBR.

    Tax experts explained that individual having turnover of Rs50 million or more in any of the preceding tax years is liable to deduct tax under section 153 while making payments against supply of goods, services and contracts.

    Through the Second Amendment Ordinance, traders being individuals having turnover up to Rs100 million have been exempted from deducting tax under section 153 while making payment against supply of goods, services and contracts.

    However, the FBR may clarify the year with respect to which turnover of Rs100 million will be calculated by the trader.

  • KCCI demands terminal operators to publicize container charges

    KCCI demands terminal operators to publicize container charges

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has demanded the terminal operators to make public the container charges.

    Agha Shahab Ahmed Khan, President, KCCI while referring to numerous complaints submitted at the Chamber by the importers, urged the Terminal Operators and Shipping Agents to publicize Full Container Load (FCL) and Less Than Container Load (LCL) charges on their websites in order to facilitate trade and industry.

    It has been observed that terminal operators and shipping agents do not share the breakup of charges even on demand and seek aggregate amount decided whimsically which was highly unfair as the relevant traders are totally unaware of what exactly was being charged under what label.

    “Access to such information is the fundamental right and a fair demand of the importers who are carrying out legitimate businesses and timely paying all their taxes”, he said, adding that the Ministry of Maritime Affairs must look into this issue and order the Terminal Operators and Shipping Agents to share breakup of charges with importers which would certainly be appreciated by the business community.

    Agha Shahab was of the opinion that Pakistan’s sea port charges were one of the highest in the South Asian region which discourage cost efficient shipping lines from taking cargo to and from Pakistan resulting in a demand/supply gap and higher transportation costs for the traders.

    “As per studies conducted earlier, Karachi’s two ports have charges which are estimated to be three times that of Sri Lanka’s, and seven times that of Singapore. Such problems should be addressed at the earliest, if we want to see Pakistan rapidly become a hub of regional trade”, he added.

    He said that the business community faces inconsistency in the charges of shipping companies, thus making costing and forecasting difficult for businessmen.

    Shipping lines are charging exorbitant charges in the name of free competitive rates and loose cargo landing delivery orders.

    “In addition, high port charges are being charged as there is no fixed policy in this regard. This is adversely affecting the business in terms of flow thus creating a negative impact for the business community,” he added.

    He stressed that the charges of KICT, PICT and QICT are too high in comparison with global standards and need to be reduced.

    “There is a need to increase the time of free days of delivery order and detention charges of containers to 21 days and detention slab of not more than $5 per day after 21 days by the shipping companies. The number of demurrage free days should also be increased to around 10 days,” he added.

  • Exemption on electricity bills for commercial, industrial consumers withdrawn

    Exemption on electricity bills for commercial, industrial consumers withdrawn

    ISLAMABAD: Federal Board of Revenue (FBR) has withdrawn the exemption of advance income tax on electricity bills to industrial and commercial consumers.

    The exemption has been withdrawn through Tax Laws (Second Amendment) Ordinance, 2019.

    The FBR said that in terms of clause (66) of Part-IV of the Income Tax Ordinance, 2001 exemption from collection of advance tax under section 235 of the Ordinance on the electricity bills of commercial and industrial consumers was available to the five export oriented sectors who fulfill the twin conditions of falling under the zero rated regime of sales tax and being registered in sales tax as exporters or manufacturers.

    The zero rating regime for the five export–oriented sectors has now been abolished, therefore, consequent amendment in clause (66) of Part-IV of the Second Schedule has been made to remove the legal anomaly.