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Author: Mrs. Anjum Shahnawaz

Foreign direct investment increases by 68.3% in first half

KARACHI: The foreign direct investment (FDI) into Pakistan has increased by 68.3 percent during first six months (July – December) of 2019/2020 owing to lower outflows during the period, according to data released by State Bank of Pakistan (SBP) on Thursday.

The FDI increased to $1.34 billion during first six months of current fiscal year as compared with $796.8 million in the corresponding months of the last fiscal year.

The inflows under the head were at $1.71 billion during the period under review as compared with $1.84 billion in the same period in the last fiscal year.

The outflows were at $391.2 million during first half of the current fiscal year as compared with $1.05 billion in the corresponding half of the last fiscal year.

The portfolio investment in the equity market witnessed increased by $18.8 million in July – December 2019/2020 as compared with outflows of $419.8 million in corresponding period of the last fiscal year.

The total foreign private investment surged by 260.6 percent to $1.36 billion during the first half of the current fiscal year as compared with $377 million in the same half of the last fiscal year.

During the period under review an investment of $452 million was witnessed in the debt securities as foreign public investment.

The total foreign investment increased to $1.81 billion during first six months of current fiscal year as compared with $377 million in the corresponding months of the last fiscal year.

January 16, 2020
Equity market gains 72 points amid range bound activity

KARACHI: The equity market gained 72 points on Thursday amid range bound trading activity during the day.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 43,065 points as against 42,993 points showing an increase of 72 points.

Analysts at Arif Habib Limited said that the market maintained the range bound activity, witnessed for the past 2 sessions, where the index moves both directions and in the end maintains 43,000 level.

Political uncertainty has so far kept the otherwise bright outlook muddled.

Banking sector scrips also held on to price levels, whereas Index heavy weights such as ENGRO, POL, OGDC, HBL, PSO remained under slight pressure.

In general, Cement and Textile sector scrips performed well and price gains were observed, although a news article quoted additional cost burden being added by the government on the textile sector.

Banking sector led the volumes with 81.1 million shares, contributed mainly by BOP (60.3 million), followed by Cement (33.9 million) and Technology (29.4 million).

Among scrips, WTL (11.7 million) and TRG (9.1 million) followed BOP.

Sectors contributing to the performance include Banks (+63 points), Textile (+21 points), Cement (+13 points), E&P (-18 points), Chemical (-16 points), Inv Banks (-16 points).

Volumes increased from 171.3 million shares to 229.9 million shares (+34 percent DoD). Average traded value increased by merely 7 percent to reach US$ 42.3 million as against US$ 39.6 million.

Stocks that contributed significantly to the volumes include BOP, WTL, TRG, MLCF and POWER, which formed 42 percent of total volumes.

Stocks that contributed positively include FFC (+17 points), MEBL (+17 points), MCB (+17 points), BOP (+16 points) and HMB (+15 points). Stocks that contributed negatively include DAWH (-17 points), COLG (-16 points), OGDC (-15 points), ENGRO (-12 points), and POL (-12 points).

January 16, 2020
Rupee gains 12 paisas on sufficient dollar supply

KARACHI: The Pak Rupee gained 12 paisas against dollar on Thursday owing to sufficient supply of the greenback in the market.

The rupee ended Rs154.66 to the dollar from previous day’s closing of Rs154.78 in interbank foreign exchange market.

Currency dealers said that the market witnessed sufficient supply of dollar during the day. The inflows helped the rupee to gain the value against the foreign currency.

The foreign currency market was initiated in the range of Rs154.76 and Rs154.79. The market recorded day high of Rs154.77 and low of Rs154.66 and closed at Rs154.66.

The exchange rate in open market also witnessed appreciation in local currency.

The buying and selling of the dollar was recorded at Rs154.60/Rs154.90 from previous day’s closing of Rs154.70/Rs155.00 in cash ready market.

January 16, 2020
Sales tax on mobile phones reduced by 85% to promote digital economy: FBR

ISLAMABAD: Federal Board of Revenue (FBR) has reduced sales tax on imported mobile phones by 85 percent in order to promote digital economy in the country.
(more…)

January 16, 2020
Return filing for tax year 2019 must for salary income above Rs400,000

KARACHI: Persons having salary income above Rs400,000 are required to file income tax returns for tax year 2019 as slabs revised through Finance Act, 2019 will be applicable for tax year 2020, officials said on Thursday.

The officials said that there were misconceptions about the filing of income tax returns for tax year 2019 by the salary persons due to changes brought in Income Tax Ordinance, 2001 through Finance Act, 2019.

As per the amendment the minimum threshold for filing income tax returns for tax year 2020 has been increased to Rs600,000 for which the return filing will be due in September 2020. However, the salary persons are required to file income tax returns on the basis of minimum threshold of Rs400,000.

The date for filing of income tax return has been extended to January 31, 2020. The actual date for filing of income tax returns for tax year 2019 was September 30, 2019. However, since then the FBR extended the date for five times.

The tax officials said that the persons required to file income tax returns before the applicable of new tax rates should discharge their liabilities in order to avoid penal action.

The tax rates for salary persons under Income Tax Ordinance, 2001 prior to amendments through Finance Act, 2019 are as follow:

Where the income of an individual chargeable under the head “salary” exceeds fifty per cent of his taxable income, the rates of tax to be applied shall be as set out in the following table, namely:—

01. Where the taxable income does not exceed Rs400,000: the tax rate shall be zero percent

02. Where the taxable income exceeds Rs400,000 but does not exceed Rs800,000: the tax rate shall be Rs1,000

03. Where the taxable income exceeds Rs800,000 but does not exceed Rs1,200,000: the tax rate shall be Rs2,000

04. Where the taxable income exceeds Rs1,200,000 but does not exceed Rs2,500,000: the tax rate shall be 5 percent of the amount exceeding Rs1,200,000

05. Where the taxable income exceeds Rs2,500,000 but does not exceed Rs4,000,000: the tax rate shall be 65,000 + 15 percent of the amount exceeding Rs. 2,500,000

06. Where the taxable income exceeds Rs4,000,000 but does not exceed Rs8,000,000: the tax rate shall be 290,000 + 20 percent of the amount exceeding Rs4,000,000

07. Where the taxable income exceeds Rs. 8,000,000: the tax rate shall be Rs1,090,000 + 25 percent of the amount exceeding Rs8,000,000

Provided that where the taxable income exceeds eight hundred thousand rupees the minimum tax payable shall be two thousand rupees.

January 16, 2020
Treasury Single Account to have every penny of public money: finance ministry

ISLAMABAD: Every penny of the public money shall be reverted to the Treasury Single Account (TSA), within the framework of different authorized accounts of government in the State Bank of Pakistan (SBP) or its nominated agency and cash therein shall be zero balanced, the ministry of finance said.

According to Budget Manual issued this month by the ministry of finance explained that TSA means a banking arrangement for the consolidation of government financial resources in one bank account or multiple bank accounts linked to one main account through which the government transacts all its receipts and payments.

The ministry said that the ultimate objective of introducing the treasury single account arrangement is not only to ensure the efficient cash management but also to minimize the cost of short term borrowing by the federal government.

Withdrawal of public money from the Government Account (SBP) and park, deposit and invest somewhere (in commercial banks) at zero or less competitive rate of return is against the spirit of the provisions under Section 20 of the PFM Act-2019.

The principles defined in the cash management policy approved by the Cabinet can be enlisted as under:

(a) Government shall put in place a framework and timeline to ensure unified structure of the TSA as per law and expand it into the major areas of legal exceptions through amendments in the relevant law/rules. It shall ensure maximum fund availability of cash resources in real time;

(b) the government shall put in place a legal and institution regime to give exceptions from the TSA;

(c) the government shall bring all the public entities into the budgetary, accounting and cash management framework;

(d) the government shall empower the cash manager/s to oversee the cash management operations across the spectrum of budget and its operations;

(e) Cash balance in the TSA shall be maintained at a level sufficient to meet daily operational requirements and a linkage between cash management and debt management shall be institutionalized; and

(f) the government shall ensure full consolidation of cash balances of all government entities (budgetary and extra-budgetary) and devise a mechanism daily zero balancing of the TSA and monthly reporting of complete cash balance of the government within and outside the TSA.

Besides, all the money collected by the public entities as their own revenue and kept in the accounts opened and maintained in the scheduled banks, after specific authorization by the Federal Government, shall be reconciled and reported to the Finance Division by the SBP through its RTGS on daily basis.

The SBP shall devise a regime for availability of this cash for use by the Federal Government and need based disbursement to the relevant public entities.

If any account is opened in a scheduled bank without a specific authorization by the Federal Government, disciplinary proceedings shall be initiated against head of the organization and Principal Accounting Officer concerned under the relevant laws/rules.

The Federal Government shall, however, be empowered to give exception to any organization from the TSA after recommendation by a Committee, which shall be constituted and notified in light of this policy. This committee shall also propose legal amendments for removal of already granted exceptions and inclusion of new exceptions from the TSA, after due deliberation, for approval of the Federal Government.

The detailed rules, under Section 30 of the Public Finance Management Act-2019, are under drafting in the Finance Division and, shall be issued after approval of the Federal Government.

January 16, 2020
Sales tax rates for services rendered on immovable properties

The Sindh Revenue Board (SRB) has recently announced the sales tax rates applicable to services related to the sale and purchase of immovable properties within the province for the tax year 2020.
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January 15, 2020
FBR directs withholding agents to clearly mention CNIC of non-ATL persons

KARACHI: Withholding agents have been directed to clearly mention the Computerized Identity Card Number (CNIC) of persons whose amounts have been withheld under various transactions.

The withholding agents have been directed to provide CNIC particularly those persons who are not appearing on the Act Taxpayers List (ATL).

Sources in Federal Board of Revenue (FBR) said that withholding agents will submit biannual statement related to transactions for the period July – December 2019 during this month.

The FBR officials said that the withholding agents will clearly specify the names, CNIC or any other identification of such persons in the withholding statement so that legal provisions to enforce return can come into effect.

Where a withholding agent is of the opinion that hundred percent increased tax is not required to be collected on the basis that the person was not required to file return, the withholding agent shall furnish an intimation to the Commissioner setting out the basis on which the person is not required to file return.

The Commissioner shall accept or reject the contention on the basis of existing law. In case the Commissioner fails to respond within thirty days, permission shall be deemed to be granted to not deduct tax at hundred percent increased rate.

Where the person’s tax has been deducted or collected at hundred percent increased rate and the person fails to file return of income for the year for which tax was deducted, the Commissioner shall make a provisional assessment within sixty days of the due date for filing of return by imputing income so that tax on imputed income is equal to the hundred percent increased tax deducted or collected from such person and the imputed income shall be treated as concealed income.

The provisional assessment shall be of no effect if the person files return within forty five days of completion of provisional assessment and the provisions of the Ordinance shall apply accordingly.

Where return is not filed within forty five days of provisional assessment, it shall be treated as final assessment and the Commissioner shall initiate penalty proceedings for concealment of income.

January 15, 2020
Equity market falls by 214 points on political uncertainty

KARACHI: The equity market fell by 214 points on Wednesday owing to political uncertainty as allies of ruling party are showing disapproval.
(more…)

January 15, 2020
Worst weather halts flight operation at Skardu Airport

KARACHI: Worst weather conditions have halted flight operations at the world’s highest airports i.e. Skardu Airport, a statement said on Wednesday.

Worst weather conditions at Skardu Airport, one of the world’s heighest airports, has halted flight operations.

Skardu Airport is located at 7500 feet high and is considered one of the tallest airports in the world.

Skardu Airport is also known as Lifeline Airport.

Skardu Airport has experienced heavy snow fall from Sunday to Wednesday.

More then 18 inch snow has been accumulated at airfield during the period.

Snow removal work from car parking area, access road, runway and maneuvering area started on Tuesday at 09.00 hours Pakistan Standard Time (PST) with all available resources including one snow plough machine (Babcat) and 3 tractors.

4000 feet of runway from threshold runway 14 has been cleared till Wednesday.

Runway 14/32 is still blocked due to snow. Local administration is also helping Civil Aviation Authority (CAA) in this regard.

January 15, 2020