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  • New rates of FED on local, imported motor vehicles

    New rates of FED on local, imported motor vehicles

    ISLAMABAD: The federal government has proposed enhancement in federal excise duty (FED) on imported and locally assembled vehicles through mini-budget.

    The government on December 30, 2021 presented Finance (Supplementary) Bill, 2021 to take tax measures to generate additional revenue for improve fiscal situation of the country. One of the major revenue measure is increasing the FED on imported and locally manufactured motor vehicles.

    READ MORE: Mini-budget: FBR to generate Rs4.5bn through tax rate increase on cellular services

    Sources said that the Federal Board of Revenue (FBR) had estimated to generate additional Rs6.5 billion through the changes.

     According to the changes proposed, the FED on imported completely built unit (CBU) up to 1,000 CC the rate shall be unchanged at 2.5 per cent ad valorem.

    READ MORE: Mini-budget: income tax rates proposed for foreign TV dramas

    However, CBU imported vehicles between 1001CC to 1799CC the FED has been proposed to enhance to 10 per cent from 5 per cent.

    Similarly, the CBU imported motor vehicles between 1800CC to 3000CC the FED has been increased to 30 per cent from 25 per cent.

    Likewise, the motor vehicles above 3000CC, the FED has been enhanced to 40 per cent from 30 per cent.

    READ MORE: Tax exemptions worth Rs343 billion withdrawn through mini-budget

    The FED on locally manufactured motor vehicles has been kept unchanged at zero per cent for engine capacity up to 1000CC.

    However, motor vehicles with engine capacity between 1000CC to 2000CC and exceeding 2000CC, the FED has been enhanced to 5 per cent from 2.5 per cent and enhanced to 10 per cent from 5 per cent, respectively.

    The Federal Board of Revenue (FBR) said that the FED has been announced to increase to 30 per cent from existing rate of 25 per cent on import of double cabin (4X4) pick-up vehicles.

    Similarly, the FED on locally manufactured double cabin (4X4) has been increased to 10 per cent from existing rate of 7.5 per cent.

    READ MORE: Mini-budget: Advance tax on motor vehicles doubles

  • Headline inflation rises by 12.3% in December 2021

    Headline inflation rises by 12.3% in December 2021

    ISLAMABAD: The headline inflation based on Consumer Price Index (CPI) has increased by 12.3 per cent on year-on-year basis in December 2021 as compared to an increase of 11.5 per cent in the previous month and 8.0 per cent in December 2020.

    Pakistan Bureau of Statistics (PBS) on Saturday said that on month-on-month basis, it decreased by -0.02 per cent in December 2021 as compared to increase of 3.0 per cent in the previous month and a decrease of -0.7 per cent in December 2020.

    READ MORE: Headline inflation surges by 11.5% in November 2021

    CPI inflation Urban, increased by 12.7 per cent on year-on-year basis in December 2021 as compared to an increase of 12.0 per cent in the previous month and 7.0 per cent in December 2020. On month-on-month basis, it increased by 0.3 per cent in December 2021 as compared to increase of 2.9 per cent in the previous month and a decrease of -0.3 per cent in December 2020.

    READ MORE: Headline inflation increases by 9.2% in October

    CPI inflation Rural, increased by 11.6 per cent on year-on-year basis in December 2021 as compared to an increase of 10.9 per cent in the previous month and 9.5 per cent in December 2020. On month-on-month basis, it decreased by -0.5 per cent in December 2021 as compared to increase of 3.1 per cent in the previous month and a decrease of -1.2 per cent in December 2020.

    Sensitive Price Indicator (SPI) inflation on YoY increased by 20.9 per cent in December 2021 as compared to an increase of 18.1 per cent a month earlier and an increase of 9.1 per cent in December 2020. On MoM basis, it decreased by -0.4 per cent in December 2021 as compared to increase of 3.6 per cent a month earlier and a decrease of -2.7 per cent in December 2020.

    READ MORE: Comparing inflation target not correct: State Bank

    Wholesale Price Index (WPI) inflation on YoY basis increased by 26.2 per cent in December 2021 as compared to an increase of 27.0 per cent a month earlier and an increase of 5.7 per cent in December 2020. WPI inflation on MoM basis decreased by -0.2 per cent in December 2021 as compared to an increase of 3.8 per cent a month earlier and an increase of 0.3 per cent in corresponding month i.e. December 2020.

  • Prices of all POL products increased to wish New Year

    Prices of all POL products increased to wish New Year

    ISLAMABAD: The government on Friday increased prices of all petroleum products to wish the nation the New Year 2022.

    The prices have been increased across the board around Rs4 per liter on all the products.

    READ MORE: Petrol price reduces to Rs140.82 per liter

    The prices have been implemented at 00:00 hours of January 01, 2022 for next fortnight.

    According to a notification issued by the finance division the new price of petrol has been increased by Rs4 to Rs144.82 per liter from Rs140.82.

    The rate of high speed diesel (HSD) has been increased by Rs4 to Rs141.62 per liter from Rs137.62.

    READ MORE: SBP revises manual on remittances for petroleum sector

    Similarly, the price of kerosene has been increased by Rs3.95 to Rs113.53 per liter from Rs109.53.

    Likewise, the price of light diesel oil has been increased by Rs4.15 to Rs111.06 per liter from Rs107.06.

    The notification stated that in the fortnightly review of petroleum products prices, the prime minister had rejected the proposal of Oil and Gas Regulatory Authority (OGRA) for increase in prices of petroleum products and advised to increase only Rs4 per liter to meet the petroleum levy target agreed with the International Monetary Fund (IMF).

    “Sales tax on petrol and diesel has been adjusted downwards as compared to December 16, 2021 to keep the prices lower,” the notification stated.

    READ MORE: FBR notifies increase in sales tax on petrol, HSD

  • FBR collects Rs2.92 trillion in first half of FY22

    FBR collects Rs2.92 trillion in first half of FY22

    The Federal Board of Revenue (FBR) has achieved a significant milestone by provisionally collecting Rs2.92 trillion during the first half (July – December) of the fiscal year 2021/2022 (FY22), surpassing the half-year target of Rs2.63 trillion by an impressive Rs287 billion.

    (more…)
  • Mini-budget: FBR to generate Rs4.5bn through tax rate increase on cellular services

    Mini-budget: FBR to generate Rs4.5bn through tax rate increase on cellular services

    ISLAMABAD: The Federal Board of Revenue (FBR) may generate additional Rs4.5 billion as advance income tax from cellular services as tax rate has been increased through mini-budget.

    The government has increased the withholding tax rates on cellular services to 15 per cent from existing 10 per cent in the mini-budget announced on December 30, 2021.

    The increase in advance tax rates on cellular services to generate Rs4.5 billion.

    The changes in the withholding tax regime on usage of internet and mobile phones services have been brought through the Finance (Supplementary) Bill, 2021.

    The FBR said that through the Finance Act, 2021 federal excise duty (FED) was levied on telecom services. However, telecom companies challenged the duty and got a favourable decision.

    “A marginal increase in adjustable advance tax has been proposed from 10 per cent to 15 per cent to make up for revenue loss from telecos,” the FBR added.

    The rate of tax has been proposed to increase to 15 per cent from existing 10 per cent for tax year 2022 and eight per cent onwards of the amount of the bill or sales price of internet prepaid card or prepaid telephone card or sale of units through any electronic medium or whatever form from subscriber of internet, mobile telephone and pre-paid internet or telephone card.

    The FBR collects the advance tax on telephone and internet users under Section 236 of Income Tax Ordinance, 2001.

    According to the ordinance:

    “Telephone and internet users.- (1) Advance tax at the rates specified in Division V Part IV of the First Schedule shall be collected on the amount of – (a) telephone bill of a subscriber; (b) prepaid cards for telephones; (c) sale of units through any electronic medium or whatever form ; and (d) internet bill of a subscriber; and (e) prepaid cards for internet.

    (2) The person preparing the telephone or internet bill shall charge advance tax under sub-section (1) in the manner telephone or internet charges are charged.

    (3) The person issuing or selling prepaid cards for telephones or the internet shall collect advance tax under sub-section (1) from the purchasers at the time of issuance or sale of cards.

    (3A) The person issuing or selling units through any electronic medium or whatever form shall collect advance tax under sub-section (1) from the purchaser at the time of issuance of sale of units.

    (4) Advance tax under this section shall not be collected from the Government, a foreign diplomat, a diplomatic mission in Pakistan, or a person who produces a certificate from the Commissioner that his income during the tax year is exempt from tax.”

    Mini-budget: income tax rates proposed for foreign TV dramas
  • Mini-budget: Advance tax on motor vehicles doubles

    Mini-budget: Advance tax on motor vehicles doubles

    In a bid to curb the practice of on-money transactions on motor vehicles and boost advance tax revenues, the government has introduced significant changes in the Finance (Supplementary) Bill, 2021, commonly referred to as the mini-budget.

    (more…)
  • Tax exemptions worth Rs343 billion withdrawn through mini-budget

    Tax exemptions worth Rs343 billion withdrawn through mini-budget

    The Pakistani government unveiled a mini-budget on Thursday, signaling the withdrawal of tax exemptions amounting to Rs343 billion.

    (more…)
  • Text of Finance (Supplementary) Bill, 2021

    Text of Finance (Supplementary) Bill, 2021

    ISLAMABAD: The federal government on Thursday presented the Finance (Supplementary) Bill, 2021 which is called mini-budget by many quarters due to changes in taxation system.

    According to Finance Minister Shaukat Tarin the government has reviewed tax exemptions. This withdrawal of tax exemption will not affect the common men.

    Following is the text of the Finance (Supplementary) Bill, 2021:

    THE FINANCE (SUPPLEMENTARY) BILL, 2021

  • Rupee makes sharp recovery; ends at Rs177.51 to dollar

    Rupee makes sharp recovery; ends at Rs177.51 to dollar

    KARACHI: The Pak Rupee (PKR) made a sharp recovery of 73 paisas against the dollar on Thursday owing to sufficient supply of the foreign currency in the market.

    The rupee ended Rs177.51 to the dollar from previous day’s closing of Rs178.24 in the interbank foreign exchange market.

    READ MORE: Rupee falls to new historic low of Rs178.24 to dollar

    The last day’s closing was the lowest level of the rupee.

    Currency experts said that the market witnessed high dollar demand earlier in the day and the rupee fell to intraday low of Rs178.35.

    However, they said that the State Bank of Pakistan (SBP) intervened to support the local currency. They claimed sufficient liquidity provided by the central bank to meet the foreign payments.

    READ MORE: Bank holiday on January 03, 2022 announced

    The experts said that the action was taken to support the local unit and keep the value below the lowest level by end the year. Today was second last trading of the year.

    They said that due to year end the demand for dollar remained high as corporate buyers and importers were seen active during the day.

    READ MORE: Pakistan’s forex reserves decline by $395 million in week

    Since the start of the current fiscal year the rupee has witnessed sharp decline owing to large import bill and widening of current account deficit.

  • SBP introduces Shariah compliant OMO injections

    SBP introduces Shariah compliant OMO injections

    KARACHI: The State Bank of Pakistan (SBP) on Wednesday introduced Shariah Compliant Standing Ceiling facility and Open Market Operations (OMO) injections for Islamic banking Institutions (IBIs).

    As the size of the Islamic banking industry is increasing, SBP recognizes the need to introduce Shariah compliant liquidity facilities for IBIs. With a view to bring IBIs at par vis-à-vis their conventional counterparts in terms of liquidity management avenues, and to enhance SBP’s tools for managing market’s liquidity as part of its monetary policy objective, SBP has introduced the aforementioned facilities.

    READ MORE: Bank Alfalah tops in house financing under MPMG

    The structure and broad features of these facilities are as under:

    Shariah Compliant Standing Ceiling Facility is a Mudarabah based Financing Facility (MFF) whereby SBP will provide financing to IBIs on an overnight basis against Shariah compliant collateral. IBIs shall place the funds received from SBP in a special pool consisting of high quality assets. The MFF will be offered at an ‘Expected Rate’ – equivalent to conventional overnight reverse repo rate – based on a Profit Sharing Ratio agreed between the SBP and IBI at the onset of the transaction.

    For Shariah Compliant Open Market Operations (Injections), Mudarabah mode of financing will be used. It would be pertinent to mention here that this open market operations (OMO) facility will currently be available for ‘injection’ i.e. provision of liquidity purposes only.

    READ MORE: RDA: SECP exempts banks from obtaining license

    Similar to conventional OMOs, SBP will be conducting Shariah Compliant OMOs (Injections) based on market liquidity conditions through a multiple price competitive bidding process for tenors as announced by SBP from time to time, against collateral. Once the expected rate of return is finalized through a competitive bidding process, the funds provided by SBP shall be invested in a pool of high quality assets by the respective IBI. SBP and IBI shall agree a Profit Sharing ratio at the onset of the transaction.

    Islamic banking industry in Pakistan has become systemically an important component of the banking industry registering remarkable growth over the last two decades. Currently there are five (5) full-fledged Islamic banks and seventeen (17) conventional banks operating with standalone Islamic banking branches offering a wide array of Shariah compliant financial solutions.

    READ MORE: Meezan Bank starts Islamic financing scheme for SMEs

    At the end of June 2021, the market share of the Islamic banking industry assets and deposits in the overall banking sector stood at 17 per cent and 18.7 per cent respectively and the branch network of Islamic banking institutions comprised over 3,583 branches and 1,562 windows.

    Introduction of aforesaid liquidity facilities will bring Islamic Banking industry at par with their conventional counterparts and enable them to effectively manage their short-term liquidity.

    This would strengthen financial intermediation by IBIs and enable them to offer better returns and rates to their customers on deposits and loans. Further, introduction of proposed facilities will also strengthen monetary policy transmission mechanism & enhance the effectiveness of monetary policy implementation by SBP to achieve the ultimate objective of price stability.