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  • Sales tax exempted on all petroleum products

    Sales tax exempted on all petroleum products

    ISLAMABAD: The government on Tuesday granted sales tax holiday on supply of all petroleum products to bring down the impact of high prices.

    In order to implement sales tax exemption on all the petroleum products, the Federal Board of Revenue (FBR) issued SRO 321(I)/2022.

    As per the SRO the sales tax has brought to zero per cent on petroleum products, including petrol, high speed diesel, kerosene and light diesel oil.

    The FBR previously issued SRO 183(I)/2022 on February 10, 2022 to notify reduction the sales tax rates on petroleum products. According to this notification, the light diesel oil was cut to zero per cent sales tax. The sales tax rates on other petroleum products were: 0.79 per cent on petrol; 3.17 per cent on high speed diesel; and 5.3 per cent on kerosene.

    READ MORE; FBR announces sharp cut in sales tax on POL products

    A day earlier, Prime Minister Imran Khan announced major relief by reducing prices of petroleum products and cut in electricity tariff. The prime minister also announced to keep the prices unchanged till upcoming budget. The prices of petrol and diesel have been slashed by Rs10 per liter on both the products.

    The latest move to bring the sales tax at zero per cent on supply of petroleum products is also connected to the announcement. By reducing the sales tax the government has absorbed impact of high oil prices and prevent passing the high prices to the masses.

    READ MORE: FBR slashes sales tax rates on petrol, HSD

    A statement issued by the Finance Division a day earlier stated that the global prices of petroleum products are tracking the Ukraine-Russia war and resultantly surged to $100 per barrel. “The unprecedented increase is very risky for the domestic fuel prices and inflation,” it added.

    The situation leaves very few options for the government, it said, adding that prior to review on February 28, 2022, the government had left more than Rs70 billion per month to keep the prices lower and providing relief to the masses.

    READ MORE: Pakistan’s petrol price rises to record high at Rs147.83

  • Pakistan cuts petroleum prices amid Russia-Ukraine War

    Pakistan cuts petroleum prices amid Russia-Ukraine War

    ISLAMABAD: Pakistan on Monday decided to reduce the prices of petroleum products despite the high international oil prices in the wake of Russia-Ukraine war.

    The finance division issued the notification to cut the prices of petrol and diesel by Rs10 per liter each from March 01, 2022.

    READ MORE: Pakistan raises petrol price to record high at Rs160/liter

    According to a statement issued by the finance division, the global prices of petroleum products are tracking the Ukraine-Russia war and resultantly surged to $100 per barrel. “The unprecedented increase is very risky for the domestic fuel prices and inflation,” it added.

    The situation leaves very few options for the government, it said, adding that prior to review on February 28, 2022, the government had left more than Rs70 billion per month to keep the prices lower and providing relief to the masses.

    READ MORE; Petroleum prices kept unchanged for next fortnight

    In the fortnightly review on February 28, 2022, the Oil and Gas Regulatory Authority (OGRA) recommended Rs10 per liter increase in the prices of petroleum products.

    “The prime minister has not only rejected the increase but also announced to decrease the prices of petroleum products by Rs10 per liter in his address to the nation in order to provide maximum relief to the consumers, despite the limited fiscal space,” it added.

    READ MORE: Pakistan’s petrol price rises to record high at Rs147.83

    According to the statement the new prices of the petroleum products effective from March 01, 2022 are:

    The price of petrol slashed by Rs10 to Rs149.86 per liter from Rs159.86.

    The rate of high speed diesel has been reduced by Rs10 to Rs144.15 per liter from Rs154.15.

    READ MORE: Prices of all POL products increased to wish New Year

    The price of kerosene oil has been brought down by Re1 to Rs125.56 per liter from Rs126.56.

    Similarly, the rate of light diesel oil has been slashed by Rs5.66 to Rs118.31 per liter from Rs123.97.

  • PM Imran reduces, freezes POL prices

    PM Imran reduces, freezes POL prices

    ISLAMABAD: Prime Minister Imran Khan on Monday announced reduction in prices of petroleum products and electricity tariff and further announced to freeze the reduced rates till upcoming federal budget.

    The Prime Minister provided the relief by slashing prices of petroleum and electricity to provide massive relief to the people.

    In his address to the nation on Monday, he said prices of petrol and diesel will be reduced by ten rupees per litre and electricity by five rupees per unit.

    The Prime Minister also announced to award internship to all jobless graduates worth 30,000 rupees per month. He said 26,000 scholarships, costing 38 billion rupees will be given to students.

    He said his recent visits to China and Russia will have far reaching impact on country’s economy.

    The Prime Minister said we are going to import two million tons of wheat and gas from Russia, while we have better understanding on the second phase of China-Pakistan Economic Corridor.

    Imran Khan said he believes in an independent policy in the best interest of the people of Pakistan.

    He urged the people to not vote for a party, whose leader is involved in corruption as such parties cannot pursue an independent foreign policy.

    PM Imran, President Putin discuss regional development
  • FBR registration made mandatory for housing projects

    FBR registration made mandatory for housing projects

    ISLAMABAD: Registration with the Federal Board of Revenue (FBR) has been made mandatory in order to prevent money laundering in real estate industry, according to an official note issued on Monday.

    The FBR said that the Anti-Money Laundering Act, 2010 empowers it to license or register Designated Non-Financial Businesses and Professions (DNFBPs), impose conditions to conduct any activities by the DNFBPs and issue directions with respect to the relevant provisions of the AML Act.

    READ MORE: FBR transfers IRS officers BS-17 to BS-20

    Now, in exercise of powers conferred under section 6A of the AML Act read with clause 1(iii) of Schedule IV ibid, and in pursuance to Condition No.1 of 2021 issued on 25 November 2021, the FBR is pleased to impose the following condition on all the Public Sector Development Departments/Authorities in order to strengthen the anti-money laundering and countering financing of terrorism regime in the country; namely:-

    “No Public Sector Development Department/Authority shall provide any NOC/Approval/Permission to any kind of Real Estate Development Authority or Housing Society (commercial/residential) unless the applicant is registered with the Federal Board of Revenue as a Designated Non-Financial Business and Profession (DNFBP) and has also appointed or nominated AIVIL/CFT Compliance Officer.

    READ MORE: Sindh High Court stops tax recovery against SSGC

    The Public Sector Development Department/Authorities shall also ensure that previously approved Real Estate Authorities or Societies falling in their respective jurisdiction and currently in business are registered with FBR as DNFBPs and have appointed or nominated AML/CFT Compliance Officers.”

    READ MORE: FBR says not to extend sales tax return filing date

    The Public Sector Development Departments/Authorities shall immediately issue instructions to the staff concerned and respective housing authorities or societies for registration with FBR as DNFBPs and appointment or nomination of AML/CFT Compliance Officers without fail. The real estate development authorities or societies may also be informed to obtain Registration Certificate from the concerned Director, DNFBPs once registered as a DNFBP with FBR.

    This Condition comes into effect on March 15, 2022.

    READ MORE: FBR assures Customs agents of resolving issues

  • Pakistan’s e-banking registers sharp increase in 1QFY22

    Pakistan’s e-banking registers sharp increase in 1QFY22

    KARACHI: Pakistan’s e-banking registered sharp growth in the first quarter of the fiscal year 2021/2022, the central bank said on Monday.

    E-banking—defined as transactions conducted via electronic channels (including Real-time Online Branches, ATMs, mobile banking, internet banking, call center banking, POS and e-Commerce), continued to thrive in both volume and value during the quarter under review as it grew by 12 per cent and 16 per cent respectively in Q1-FY22 over the same quarter of FY21.

    The State Bank of Pakistan (SBP) released its first quarterly report of payment systems for the fiscal year 2021-22 today covering the period July – September, 2021. The report shows that Pakistan’s payment ecosystem, especially though digital platforms, continued its brisk pace of growth.

    READ MORE: SBP imposes Rs1.45 billion penalty on 18 banks in 2021

    Two major areas where high adoption in digital payments were witnessed are mobile and internet banking. The number of mobile banking users grew by 4 per cent on quarter over quarter (QoQ) basis, reaching a total of 11.3 million.

    The number of transactions conducted via mobile banking channels was 79.1 million with a value of around PKR 2.2 trillion, showing a QoQ growth of 29 per cent by volume and 36 per cent by value. Internet banking also contributed to the upswing in usage of e-Banking services by registering 31 per cent QoQ growth in internet banking users who conducted 30 million transactions amounting to PKR 1.9 trillion. This amounts to 6 per cent progress in terms of volume and 10 per cent increase in the value of these transactions on QoQ basis.

    READ MORE: SBP imposes penalty of Rs58 million on five banks

    Retail sector continued to show adoption of digital payments. Overall e-Commerce transactions recorded an impressive QoQ growth of 87 per cent by volume and 21 per cent by value, though the number of e-commerce merchants remained almost the same as of the last quarter.

    During the quarter, 12.7 million ecommerce related transactions amounting to Rs22.3 billion were conducted using digital payment channels. Similarly, the number of merchant Point of Sale (POS) machines also increased by 10 per cent QoQ reaching to 79,134 machines in the country.

    These machines processed 28.1 million card-based transactions at merchant locations amounting to almost PKR 134.9 billion which showed QoQ increase of 16.1 per cent by volume and 10.6 per cent by value.

    READ MORE: SBP slaps Rs280 million penalty on National Bank

    As of end-September 2021, there were 46.2 million total cards in circulation which mainly comprised of Debit Cards (64 per cent), Social Welfare Cards (22 per cent), ATM only Cards (10 per cent), Credit Cards (4 per cent), and Prepaid Cards (0.3 per cent). During this quarter, QoQ increase of 5 per cent in volume of paper-based transactions and 3 per cent increase in value of paper-based transactions was also observed which may be attributed to people returning to traditional channels (i.e. branches) as pandemic related restrictions were lifted.

    In Large-value (wholesale) payments segment, transactions processed, during this quarter, through SBP’s Real-time Inter-Bank Settlement Mechanism (PRISM) recorded a total of 1.1 million transactions amounting to PKR 159.1 trillion which is 7 per cent higher than the preceding quarter.

    READ MORE: National Bank under grip of regulatory violations

  • Gwadar Customs auctions huge lot of vehicles on March 2

    Gwadar Customs auctions huge lot of vehicles on March 2

    The Directorate of Customs Intelligence and Investigation in Gwadar has announced a substantial auction of motor vehicles scheduled for March 2, 2024, at Custom House Gaddani.

    (more…)
  • Notification issued for implementing 15% salary increase

    Notification issued for implementing 15% salary increase

    ISLAMABAD: The finance ministry has notified an office memorandum for the increase of 15 per cent in the salary of federal government employees from March 01, 2022.

    According the memorandum dated February 23, 2022, the employees of the federal government will get disparity reduction allowance at 15 per cent of the basic pay scales 2017 with effect from March 01, 2022.

    The federal government on February 10, 2022 announced an increase of 15 per cent in salaries of employees from BS-1 to BS-19.

    READ MORE: Federal government announces 15% increase in salaries

    The latest memorandum stated that the allowance shall be admissible to civil employees in BPS-1 to BPS-19 of the federal government, (including employees of the federal secretariat, attached departments and subordinate offices) who have never been allowed additional allowance / allowances equal to or more than 100 per cent of the basic pay (whether frozen or not) or performance allowance subject to the following conditions:

    READ MORE: Withholding tax rates on salary income for 2021-2022

    a. This allowance will not be admissible to the employees of the organizations who are drawing additional allowance/allowances equal to or more than 100 per cent of the basic pay (whether frozen or otherwise);

    b. This allowance will be frozen at the level drawn on March 01, 2022;

    c. This allowance will be subject to Income Tax;

    d. This allowance will be admissible during leave and entire period of LPR except during extra ordinary leave;

    e. This allowance will not be treated as part of emoluments for the purpose of calculation of pension/gratuity and recovery of house rent;

    READ MORE: Employers to deduct tax on salary income

    f. This allowance will not be admissible to the employees during the tenure of their posting/deputation abroad;

    g. This allowance will be admissible to the employees on their repatriation from posting/deputation abroad at the rate and amount which would have been admissible to them, had they not been posted abroad;

    READ MORE: Tax on salary income of earlier year

    h. This allowance will be admissible during the period of suspension;

    i. The term ‘basic pay’ will also include the amount of personal pay granted on account of annual increment (s) beyond the maximum of the existing pay scales.

  • SBP relaxes financing for under construction houses

    SBP relaxes financing for under construction houses

    KARACHI: The State Bank of Pakistan (SBP) has relaxed financing conditions for housing units in under construction projects.

    The central bank issued a circular dated February 25, 2022 to ease the conditions for house financing. It said that in order to further facilitate buyers of housing units in under construction projects, requirement of builder/developer to avail construction financing is being relaxed.

    READ MORE: Bank Alfalah tops in house financing under MPMG

    “Accordingly, purchasers of housing units in under construction projects may avail housing finance against their housing units in projects where builder/developer has not availed construction financing,” the SBP said.

    In such cases, the builder/developer will have to create mortgage charge over project’s land in favor of bank/DFI through an agreement. The charge will only be vacated after completion of the project and transfer of housing units to the purchasers. Moreover, the builder/developer will comply with all other provisions of subject guidelines, it added.

    Any bank/DFI can provide housing finance to a purchaser of a housing unit in such under construction projects.

    READ MORE: SBP launches webpage for promoting house financing

    However, if the purchaser wants to avail financing from a bank/DFI other than the mortgagee bank/DFI, then it will have to obtain NOC from the mortgagee bank/DFI in this regard.

    Moreover, financing bank/DFI of such purchasers will also be required to enter into bilateral arrangement with the mortgagee bank/DFI to secure its risk.

    With regard to the requirement of informed consent under guidelines, it is clarified that the builder/developer will be responsible to arrange written informed consent from the customers who intend to purchase housing units from their own sources without availing mortgage finance.

    The letters of written consent of such purchasers will be submitted to the bank/DFI in original by the builder/developer.

    The builders/developers are developing and marketing a number of multi-storey projects of housing units across the country. Although these under construction projects are exposed to project completion risk and performance risk of builders/developers, many individuals are attracted to book housing units in these projects owing to their affordability and option of payments through installments.

    However, the banks/DFIs have traditionally shied away from financing to the housing units in under construction projects due to issues in availability of legally enforceable title documents and registration of mortgages as per requirements of Prudential Regulations (PR) for Housing Finance.

    It may be noted that banks/DFIs extend project financing to builders/developers for construction of multistorey housing projects after adequately securing their project and builder risks through mortgage of project land and other securities. Utilizing these already established security arrangements with the builders/developers, the banks/DFIs may also extend housing finance against housing units in multistorey housing projects. This will expand options of affordable housing to the individual borrowers. This will also facilitate banks/DFIs in ensuring repayment/ settlement of their project financing through conversion of the same in housing finance.

  • Sindh High Court stops tax recovery against SSGC

    Sindh High Court stops tax recovery against SSGC

    KARACHI: Sindh High Court has suspended tax recovery notices issued against Sui Southern Gas Company Limited, according to a communication sent to the Pakistan Stock Exchange (PSX) on Friday.

    The gas utility clarified reports regarding action of the Large Taxpayers Office (LTO) Karachi for making recovery by attachment of bank accounts.

    READ MORE: FBR freezes SSGC’s bank accounts for tax recovery

    SSGC said that LTO Karachi had issued notice of recovery of sales tax to banks regarding SSGC without following the legal process and waiting for decision of an independent forum i.e. Appellate Tribunal.

    “Demand was raised on irrational and unreasonable grounds of treating swapping of indigenous gas against RLNG to SNGPL as sales income,” the gas utility said.

    It said that against the said recovery notice, SSGC filed constitutional petition before Sindh High Court and the SHC suspended the recovery notice of LTO Karachi through an Order dated February 23, 2022 being devoid of legal merits and directed SSGC to pursue matter before the Appellate Tribunal.

    The LTO Karachi on February 23, 2021 issued a press release stating that it had frozen bank accounts of SSGC due to its default of sales tax amount to the tune of Rs23 billion. The default amount of sales tax was also confirmed by the Commissioner Inland Revenue (Appeals).

    The SSGC in its latest communication said that the LTO Karachi had withdrawn such recovery notices.

    The LTO Karachi in an official note dated February 24, 2022 sent to banks stated: “… for the recovery of sales tax outstanding demand of Rs23.65 billion through bank attachment issued/served in respect of M/s. Suit Southern Gas Company Limited is hereby withdrawn with immediate effect.”

  • National Bank under grip of regulatory violations

    National Bank under grip of regulatory violations

    National Bank of Pakistan in a notice sent to Pakistan Stock Exchange (PSX) disclosed that it reached an agreement with US regulators of NBP’s New York branch with fines of $55 million arising due to historical compliance weakness and delays in making compliance related enhancements.

    However, there were no findings of improper transactions or willful conduct as per the notice.

    Latest press release by U.S Department of Financial Services stated: “The National Bank of Pakistan allowed serious compliance deficiencies in its New York branch to persist for years despite repeated regulatory warnings. Foreign banks that enjoy the privilege of operating in New York have an obligation to maintain effective controls, and the Department will continue to promote financial transparency and take action to protect the global financial system when those obligations are not met”.

    READ MORE: US central bank imposes $20.4 million penalty on NBP

    Following examinations conducted by the Department and the Federal Reserve Bank of New York in 2014 and 2015, NBP’s New York branch was found to have inadequate Bank Secrecy/Anti-money compliance programs.

    As a result, enforcement action against NBP was taken in 2016 where NBP agreed to improve compliance deficiencies which later on it failed to do so. As a result, the bank will now be subject to $35 million penalty in addition to certain deliverables for the improvement in its compliance program.

    READ MORE: NBP lends Rs18.8bn in Hascol’s Rs54bn scam

    In addition to the fine by U.S Department of Financial Services, Federal Reserve Board also imposed $20.4million penalty against NBP on anti-money laundering violations totaling penalty to $55million which translates into Rs9.7billion (Rs4.6/share). In 9M2021, the bank has so far reported earnings of Rs25billion.

    Analysts at Topline Securities said that previously HBL also faced a similar fine in 2017 where the U.S regulators initially imposed a penalty of US$630million on HBL on non-compliance of Anti-money laundering laws, which was later revised down to US$225million.

    NBP is also faced with a pending pension liability case with potential liabilities of over Rs70 billion under which the company had filed a review petition in Supreme Court of Pakistan where further judgement is still awaited. The bank due to the aforementioned reason has skipped dividends since 2017, we believe.