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Pakistan’s FY22 current account deficit widens to $17.41 bn

KARACHI: Pakistan has posted $17.41 billion as current account deficit (CAD) for the fiscal year 2021/2022, according to data of balance of payment released by the State Bank of Pakistan (SBP) on Wednesday.

The country posted a deficit in the current account of $2.82 billion in the preceding fiscal year i.e. 2020/2021. It shows that the current account deficit of the country ballooned by over five times.

The widening of the current account deficit may be attributed to a surge in import bill during the fiscal year under review.

READ MORE: Pakistan’s CAD balloons to $15.19 billion in 11 months

The import bill of the country recorded an increase of 42.21 per cent to $80.18 billion during the fiscal year 2021/2022 as compared with $56.38 billion in the preceding fiscal year, according to Pakistan Bureau of Statistics (PBS).

However, the exports also posted an increase of 25.64 per cent to $31.79 billion during the fiscal year under review as compared with $25.30 billion a year ago.

But the massive rise in import bill resulted in a huge trade deficit. The country posted 55.70 per cent in widening of trade deficit to $48.38 billion during the year under review as compared with the deficit of $31.07 billion in the preceding fiscal year.

READ MORE: Current account deficit swells to $13.78 bn in 10 months

Even the record remittances during the year have failed to curtail the current account deficit. The Pakistani workers sent record high remittances amounting $31.24 billion during the fiscal year 2021/2022 as compared with $29.45 billion in the preceding fiscal year.

Meanwhile, the total investment into Pakistan recorded a 61 per cent decline to $1.79 billion in the fiscal year 2021/2022 as compared with $4.58 billion in the preceding fiscal year.

The inflow of foreign private investment into the country fell 27 per cent to $1.48 billion during the fiscal year under review as compared with $2.03 billion in the preceding fiscal year.

READ MORE: Pakistan’s CAD hit $13.17 billion in July – March

The major component of the foreign private investment i.e. Foreign Direct Investment (FDI) posted an increase of 2.6 per cent to $1.87 billion during the fiscal year 2021/2022 as compared with $1.82 billion a year ago.

However, the foreign investment in the capital market recorded a massive decline of 288 per cent. The capital market witnessed an outflow of $388.4 million during fiscal year 2021/2022 as compared with an inflow of $206.6 million in the preceding fiscal year.

July 27, 2022
Dollar touches new peak at Rs236.02 at interbank closing

KARACHI: The US dollar touched a new peak at Rs236.02 against the Pakistan Rupee (PKR) on Wednesday at closing of interbank foreign exchange market.

The exchange rate recorded a decline of Rs3.09 in rupee value to end at Rs236.02 to the dollar from previous day’s closing of Rs232.93 in the interbank foreign exchange market.

READ MORE: Rupee crashes Rs232.93 to dollar at interbank closing

The rupee is falling continuously against the greenback for the last many days due to political instability and weak economic indicators.

Currency dealers said that external payment pressure causing a continuous decline in rupee value.

The dealers said that the continuous decline in rupee value may also be attributed to the fall in foreign exchange reserves.

The foreign exchange reserves of the country have further declined.

READ MORE: Dollar hits new high Rs229.86 on political crisis

Pakistan’s foreign exchange reserves have declined by $368 million to $15.242 billion by week ended July 15, 2022. The foreign exchange reserves of the country were $15.61 billion a week ago i.e. July 07, 2022.

The country’s foreign exchange reserves hit all-time high of $27.228 billion on August 27, 2021. Since then the foreign exchange reserves have declined by $11.986 billion.

The official reserves of the State Bank also depleted by $388 billion to $9.329 billion by week ended July 15, 2022 as compared with $9.717 billion a week ago.

READ MORE: Dollar hits new high at Rs228.37 at interbank closing

The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021. Since then the official reserves of the SBP declined by $10.817 billion.

The SBP on July 07, 2022 announced a hike of 125 basis points in policy rate to bring it to 15 per cent. The purpose of increasing the interest rate was to curb the demand and support the rupee value. However, the effort of the SBP failed to support the rupee value.

READ MORE: Rupee ends to new low at Rs226.81 against dollar in interbank

July 27, 2022
Rupee crashes Rs232.93 to dollar at interbank closing

KARACHI: Pakistani rupee (PKR) on Tuesday crashed at Rs232.93 to the US dollar at closing of interbank foreign exchange market.

The exchange rate recorded a loss of Rs3.05 in rupee value to end at Rs232.93 as compared with last day’s closing of Rs229.88 in the interbank foreign exchange market.

READ MORE: Dollar hits new high Rs229.86 on political crisis

Currency dealers said that political instability and fiscal weakness putting pressure on exchange rate.

The rupee recorded a decline of Rs28.08 or 13.75 per cent during first 26 days of the current fiscal year.

The fiscal year 2022/2023 initiated at Rs204.85 to the dollar and now at Rs232.93 till July 26, 2022.

The dealers said that the continuous decline in rupee value may be attributed to the fall in foreign exchange reserves.

The foreign exchange reserves of the country have further declined.

READ MORE: Dollar hits new high at Rs228.37 at interbank closing

Pakistan’s foreign exchange reserves have declined by $368 million to $15.242 billion by week ended July 15, 2022. The foreign exchange reserves of the country were $15.61 billion a week ago i.e. July 07, 2022.

The country’s foreign exchange reserves hit all-time high of $27.228 billion on August 27, 2021. Since then the foreign exchange reserves have declined by $11.986 billion.

READ MORE: Rupee ends to new low at Rs226.81 against dollar in interbank

The official reserves of the State Bank also depleted by $388 billion to $9.329 billion by week ended July 15, 2022 as compared with $9.717 billion a week ago.

The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021. Since then the official reserves of the SBP declined by $10.817 billion.

The SBP on July 07, 2022 announced a hike of 125 basis points in policy rate to bring it to 15 per cent. The purpose of increasing the interest rate was to curb the demand and support the rupee value. However, the effort of the SBP failed to support the rupee value.

READ MORE: Rupee hits fresh low Rs224.92 to dollar at interbank closing

July 26, 2022
15% surcharge imposed for clearance of banned items

ISLAMABAD: Pakistan has imposed surcharge up to 15 per cent for clearance of consignments stuck up at ports and were banned for saving foreign exchange.

The ministry of commerce issued an office memorandum dated July 22, 2022 pursuance to the federal cabinet decision to release the consignments of prohibited items.

READ MORE: Pakistan allows release of banned items stuck up at ports

The government through SRO 598(I)/2022 dated May 19, 2022 imposed a complete ban on the import of luxury and non-essential items.

However, a large number of containers were stuck up at ports that were arrived after the imposition of ban.

The Federal Cabinet on July 15, 2022 allowed the release of all those consignments/shipment which had been imported in violation of SRO 598(I)/2022 dated May 19, 2022 and were pending customs clearance.

READ MORE: KCCI demands release of stuck up containers

However, this clearance was subject to condition that consignments had landed at any port including sea, air or dry port of the country on or before June 30, 2022 subject to payment of surcharge to be imposed on the cost and freight value of goods.

According to the ministry of commerce, five per cent surcharge has been imposed on the shipment which had arrived within two weeks of issuance of the SRO 598(I)/2022.

Further, 15 per cent surcharge has been imposed on shipment which had arrived after two weeks of issuance of SRO 598(I)/2022 till June 30, 2022.

Due to the ban about one thousand containers piled up and resulted in choking the ports. The stakeholders requested the government to allow the release of those consignments as many of the consignments were shipped before May 19, 2022 but lander after the date.

READ MORE: Committee recommends lifting import ban on luxury items

Previously, the Economic Coordination Committee (ECC) of the Cabinet in its meeting held on Tuesday July 5, 2022 allowed one-time release of those consignments carrying banned items and reached on or before June 30, 2022.

Ministry of Commerce submitted a summary to seek permission for one time release of those consignments of items banned on May 19, 2022 which have reached Pakistan or would reach or their payments.

In order to resolve the hardship cases, the ECC granted one-time special permission for release of consignments stuck at the ports due to contravention framed under SRO 598(I)/2022 dated May 19, 2022, only for those consignments which have landed at ports or airports in Pakistan on or before June 30, 2022.

READ MORE: Raw materials excluded from import banned items list

July 26, 2022
Dollar hits new high Rs229.86 on political crisis

KARACHI: The US dollar on Monday recorded a new historic high at Rs229.86 against the Pakistan Rupee (PKR) due to rising political crisis.

The exchange rate recorded a decline of Rs1.49 in rupee value to end at Rs229.86 against the dollar from last Friday’s closing of Rs228.87 in the interbank foreign exchange market.

READ MORE: Dollar hits new high at Rs228.37 at interbank closing

The previous historic high of the dollar was Rs228.37 on July 22, 2022 in interbank foreign exchange market.

Currency experts said that the deepening political crisis had created panic in the currency market and rise in dollar demand.

The recent election for the chief minister in the Punjab Assembly was challenged by PTI and PML (Q) seeking relief from the Supreme Court. Meanwhile, other coalition partners are demanding the Supreme Court to form a full court to decide the case.

READ MORE: Rupee ends to new low at Rs226.81 against dollar in interbank

Currency experts said that the rupee under severe pressure due to high dollar demand for external payments.

The foreign exchange reserves of the country have further declined.

Pakistan’s foreign exchange reserves have declined by $368 million to $15.242 billion by week ended July 15, 2022. The foreign exchange reserves of the country were $15.61 billion a week ago i.e. July 07, 2022.

The country’s foreign exchange reserves hit all-time high of $27.228 billion on August 27, 2021. Since then the foreign exchange reserves have declined by $11.986 billion.

READ MORE: PKR plunges Rs227 to dollar at interbank midday trading

The official reserves of the State Bank also depleted by $388 billion to $9.329 billion by week ended July 15, 2022 as compared with $9.717 billion a week ago.

The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021. Since then the official reserves of the SBP declined by $10.817 billion.

The SBP on July 07, 2022 announced a hike of 125 basis points in policy rate to bring it to 15 per cent. The purpose of increasing the interest rate was to curb the demand and support the rupee value. However, the effort of the SBP failed to support the rupee value.

READ MORE: Rupee hits fresh low Rs224.92 to dollar at interbank closing

July 25, 2022
FBR explains changes in advance tax on motor vehicles

ISLAMABAD: The Federal Board of Revenue (FBR) has explained changes made to advance tax on motor vehicles through Finance Act, 2022.

The FBR issued Income Tax Circular No. 15 of 2022/2023 to explain important amendments brought through Finance Act, 2022 to the Income Tax Ordinance, 2001.

The FBR said that provision of section 231B of Income Tax Ordinance, 2001 was limited to private motor vehicles. The scope of withholding tax has now been enhanced though omission of the word ‘private’ from the heading and elsewhere in the section.

READ MORE: Pakistan introduces automated system for withholding tax payments

Further, an inclusive definition of motor vehicle has been provided in the substituted sub-section (7) of section 231B with following exclusions:

(i) a motor vehicle used for public transportation, carriage of goods and agriculture machinery;

(ii) a rickshaw or a motorcycle rickshaw and

(iii) any other motor vehicle having engine capacity up to 200cc.

READ MORE: Tax imposed on foreign payments made by exchange companies

Except motor vehicles mentioned at i, ii and iii above, provision of section 231B will apply on motor vehicles of all makes and models irrespective of its private or commercial use by the end users.

The FBR further said that the withholding tax amount required to be collected at the time of purchase or registration of motor vehicle has been enhanced with engine capacity of 1601cc and above.

In cases of electric vehicles where engine capacity of a vehicle is not available and value of vehicle is rupees five million or more, the amount of tax collected will be 3 per cent of import value as increased by customs duty, sales tax and federal excise duty in case of imported vehicles or invoice value in case of locally manufactured or assembled vehicles.

READ MORE: Minimum tax for commercial importers enhanced: FBR

Rates of tax required to be collected at the time of transfer of registration or ownership of a motor vehicles have been provided in clause (2) in the Table in Division VII of Part IV of First Schedule of the Ordinance.

A new proviso has been inserted whereby a vehicle in which engine capacity is not applicable (electric vehicles) and the value of said vehicle is rupees five million or more, then tax amount of rupees twenty thousand will be collected at the time of transfer of registration or ownership of such vehicle.

READ MORE: Tax through electricity connections on retailers, service providers

In case of a person not appearing in active taxpayer list, tax collectible under this section will increase by two hundred percent. Necessary change has been incorporated in rule 1 of Tenth Schedule of the Ordinance, the FBR added.

July 24, 2022
Tax through electricity connections on retailers, service providers

ISLAMABAD: The Federal Boar of Revenue (FBR) has issued explanation to tax collection through electricity connections from retailers and service providers.

In this regard the FBR issued Income Tax Circular No. 15 of 2022/2023 to explain important amendments introduced through the Finance Act, 2022 to the Income Tax Ordinance, 2001.

The FBR said that in order to collect income tax from certain retailers and specified service providers a special fixed tax regime has been introduced though insertion of section 99A of the Income Tax Ordinance, 2001.

READ MORE: FBR explains income tax on export of services

Now retailers, other than Tier-I retailers as defined in Sales Tax Act, 1990, and specified service providers will pay fixed income tax through their commercial electricity bills which has been provided in clause (3) of Division IV of Part IV of First Schedule to the Ordinance in the following manner:

Where the gross amount of monthly bill does not exceed Rs30,000: the tax rate shall be Rs3,000

Where the gross amount of monthly bill exceeds Rs30,000 but does not exceed Rs50,000: the tax rate shall be Rs 5,000.

READ MORE: FBR restores 100% depreciation deduction

Where the gross amount of monthly bill exceeds Rs50,000 but does not exceed Rs100,000: the tax rate shall Rs.10,000.

Retailers and service providers as notified by the Board in the income tax general order: the tax shall be up to Rs.200,000.

The FBR said that this is final tax on the income of persons covered in this section in respect of business being carried out from the premises for which tax is collected under this section.

READ MORE: FBR notifies graduated tax rates on disposal of securities

Retailers from whom tax has been collected in terms of sub-section (9) of section 3 of Sales Tax Act, 1990 shall not be required to pay tax under section 99A of the Ordinance and the tax collected under the Sales Tax Act, 1990 is also a final discharge of income tax liability under section 99A of the Ordinance.

The Board with the approval of Minister in-charge is empowered to determine the scope, mode, manner, record keeping, mechanism of collection and deduction etc and to include or exempt any person or class of person, any income or class of income though issuance of income tax general order for the purpose of this section.

READ MORE: FBR applies separates CGT rates on immovable properties

Furthermore, enabling provision has been provided by inserting sub-section (1A) in section 235 of the Ordinance to collect tax through electricity bills from retailers other than Tier-I retailers as defined in Sales Tax Act, 1990 and specified service providers for the purpose of this section.

The FBR issued another Circular No. 09 of 2022/2023 (Sales Tax, Federal Excise and ICT tax on service). According to this circular, the fixed tax regime for the retailers has been rationalized and now instead of percentage of the amount of monthly electricity bill, tax shall be charged on their monthly electricity bills as; Rs. 3000 for monthly bill upto Rs30,000, Rs5,000 if the monthly bill exceeds Rs30,000 but does not exceed Rs50,000 and Rs10,000 for monthly bill over Rs50,000.

This shall constitute full and final discharge of tax liability of such persons under both Income Tax Ordinance, 2001, and Sales Tax Act, 1990.

However, these tax amounts shall be doubled if the name of the retailer is not appearing on the Active Taxpayers List (ATL) issued by the Board under section 181A of the Income Tax Ordinance, 2001 on the date of issuance of monthly electricity bill, the FBR added.

In addition to the above, the Board has been empowered to notify through a Sales Tax General Order (STGO) persons or class of persons required to discharge their sales tax liability through payment of a fixed amount along with their monthly electricity bills.

July 23, 2022
Dollar hits new high at Rs228.37 at interbank closing

KARACHI: The US dollar made a new record high to close at Rs228.37 to the dollar on Friday at closing of interbank foreign exchange market.

The exchange rate recorded a decline of Rs1.56 in rupee value to end at Rs228.37 to the dollar from previous day’s closing of Rs226.81 in the interbank foreign exchange market.

READ MORE: Rupee ends to new low at Rs226.81 against dollar in interbank

Currency experts said that the rupee under severe pressure due to high dollar demand for external payments.

The foreign exchange reserves of the country have further declined.

READ MORE: PKR plunges Rs227 to dollar at interbank midday trading

Pakistan’s foreign exchange reserves have declined by $368 million to $15.242 billion by week ended July 15, 2022. The foreign exchange reserves of the country were $15.61 billion a week ago i.e. July 07, 2022.

The country’s foreign exchange reserves hit all-time high of $27.228 billion on August 27, 2021. Since then the foreign exchange reserves have declined by $11.986 billion.

READ MORE: Rupee hits fresh low Rs224.92 to dollar at interbank closing

The official reserves of the State Bank also depleted by $388 billion to $9.329 billion by week ended July 15, 2022 as compared with $9.717 billion a week ago.

The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021. Since then the official reserves of the SBP declined by $10.817 billion.

READ MORE: Pakistani Rupee crashes to Rs222 against Dollar at closing on July 19, 2022

The SBP on July 07, 2022 announced a hike of 125 basis points in policy rate to bring it to 15 per cent. The purpose of increasing the interest rate was to curb the demand and support the rupee value. However, the effort of the SBP failed to support the rupee value.

July 22, 2022
Rupee hits new midday low of Rs228.50 against dollar

KARACHI: The Pakistani Rupee (PKR) made a new midday trading low of Rs228.50 against the US dollar on Friday in interbank foreign exchange market.

The dollar is being traded at Rs228.50, up Rs1.69 from last day’s closing of Rs226.81 in the interbank foreign exchange market.

READ MORE: Rupee ends to new low at Rs226.81 against dollar in interbank

Currency experts said that the rupee under severe pressure due to high dollar demand for external payments.

The foreign exchange reserves of the country have further declined.

Pakistan’s foreign exchange reserves have declined by $368 million to $15.242 billion by week ended July 15, 2022. The foreign exchange reserves of the country were $15.61 billion a week ago i.e. July 07, 2022.

READ MORE: PKR plunges Rs227 to dollar at interbank midday trading

The country’s foreign exchange reserves hit all-time high of $27.228 billion on August 27, 2021. Since then the foreign exchange reserves have declined by $11.986 billion.

The official reserves of the State Bank also depleted by $388 billion to $9.329 billion by week ended July 15, 2022 as compared with $9.717 billion a week ago.

READ MORE: Rupee hits fresh low Rs224.92 to dollar at interbank closing

The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021. Since then the official reserves of the SBP declined by $10.817 billion.

The SBP on July 07, 2022 announced a hike of 125 basis points in policy rate to bring it to 15 per cent. The purpose of increasing the interest rate was to curb the demand and support the rupee value. However, the effort of the SBP failed to support the rupee value.

READ MORE: Pakistani Rupee crashes to Rs222 against Dollar at closing on July 19, 2022

July 22, 2022

Super tax to apply for Tax Year 2022 and onwards: FBR

ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday said that super tax will be applicable for tax year 2022 and onwards.

The FBR issued Income Tax Circular No. 15 of 2022/2023 to explain important amendments made to Income Tax Ordinance, 2001 through Finance Act, 2022.

The FBR said that a new section 4C to Income Tax Ordinance, 2001 has been introduced through Finance Act, 2022 and this section will apply for tax year 2022 and onwards.

Except for the persons whose income as envisaged in this section is below Rs150 million, all other persons including those assessed under Fourth, Fifth and Seventh Schedules to the Ordinance are liable to pay super tax on graduated rates ranging from 1% to 4% based on graduated income slabs provided in Division JIB of Part I of First Schedule given as under:

S. No.	Income under Section 4C	Rate of Tax
1.	Where income does not exceed Rs150 million	0% of the income
2.	Where income exceeds Rs150 million 1% of the income but does not exceed Rs200 million	1% of the income
3.	Where income exceeds Rs200 million 2% of the income but does not exceed Rs250 million	2% of the income
4.	Where income exceeds Rs250 million but does not exceed Rs300 million	3% of the income
5.	Where income exceeds Rs300 million	4% of the income

However, for tax year 2022 the rate of super tax under this section will be 10% instead of 4%, where the income of the persons engaged, partly or wholly, in business of airlines, automobiles, beverages, cement, chemicals, cigarette & tobacco, fertilizer, iron & steel, LNG terminal, oil marketing, oil refining, petroleum & gas exploration and production, pharmaceuticals, sugar and textiles exceeds Rs.300 million. For tax year 2023, this super tax on income of banking companies will be 10% if the income for the year exceeds Rs. 300 million.

For the purposes of this section, the income will be the sum of the following:

(i) Profit on debt, dividend, capital gains, brokerage, and commission;

(ii) Taxable income (other than brought forward depreciation and brought forward business losses) under section 9 of the Ordinance, excluding amounts specified in (i) above;

(iii) Imputable income as defined in clause (28A) of section 2 excluding amounts specified in clause (i) above; and

(iv) Income computed, other than brought forward depreciation, brought forward amortization and brought forward business losses under Fourth, Fifth and Seventh Schedule.

Super tax payable under this section will be paid on the date and manner as specified in under section 137(1) of the Ordinance.

In case of default by the person liable to pay super tax under this section, Commissioner through an order in writing will determine the liability of the person and proceed to recover the same under applicable provisions of the Ordinance, the FBR added.

July 21, 2022