KARACHI: The US dollar surged against Pakistani Rupee (PKR) to Rs220.66 on Friday ahead of the executive board meeting of the International Monetary Fund (IMF).
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Pakistan to increase petroleum prices from September 01, 2022
ISLAMABAD: Pakistan is likely to increase prices of petroleum products from September 01, 2022 due to expected imposition of sales tax and petroleum levy.
Besides, international oil prices are also seeing upward movement, sources said on Friday.
The federal government will announce the revised prices of petroleum products on August 31, 2022 for next fortnight effective from September 01, 2022.
Previously, the federal government on August 15, 2022 and revised upward the rate of petrol effective from August 16, 2022.
READ MORE: New petroleum prices in Pakistan from August 16, 2022
According to the sources the government had kept the sales tax rate at zero per cent on petroleum products. The prevailing normal sales tax rate is 17 per cent. If the government implements the normal sales tax rate then the prices of petroleum products will witness massive rise.
The finance division issued following new prices effective from August 16, 2022:
The price of petrol was increased by Rs6.72 per liter to Rs233.91 from Rs227.19.
The rate of high speed diesel (HSD) was nominally reduced by 51 paisas to Rs244.44 from Rs244.95.
The price of kerosene oil decreased by Rs1.67 to Rs199.40 from Rs201.07.
The rate of light diesel oil (LDO) was nominally enhanced by 43 paisas to Rs191.75 from Rs191.32.
A press release issued by the finance division stated that in the wake of fluctuations in petroleum prices in the international market and exchange rate variation, the government had decided to revise the existing prices of petroleum products to pass on the impact to the consumers.
READ MORE: New petroleum prices in Pakistan from August 1, 2022
It is important to note that the government revised the prices in the wake of falling international oil prices and massive recovery in rupee value.
The sources said that the government is striving to get loans under the Extended Fund Facility (EFF) from the International Monetary Fund (IMF). Almost all the conditions have been met and the government is hoping the executive board of the IMF would release an amount of $1.17 billion through an approval at a meeting scheduled for August 29, 2022.
The sources said that the government would impose sales tax on petroleum products in order to fulfill requirements under the IMF program.
Pakistan is a net importer of petroleum products so huge foreign exchange is required for paying against foreign purchases and meeting local demand.
READ MORE: New petroleum prices in Pakistan from July 15, 2022
The country has spent a staggering amount of $23.32 billion for the import of petroleum group during fiscal year 2021/2022 as compared with $11.36 billion in preceding year, showing a growth of 105 per cent. The import of finished products recorded an increase of 134 per cent to $12.07 billion during the fiscal year 2021/2022 as compared with $5.16 billion in the preceding fiscal year.
The benchmark Brent crude is about $100 dollars. Brent crude futures were at $97.40 per barrel in New York trade on August 10, 2022.
The present government had started increasing the petroleum prices on May 26, 2022 when the benchmark Brent Oil was at $112 per barrel.
Considering the price slump of international oil, the government had reduced the prices of petroleum products from July 15 to July 31. However experts believed it was a political decision as the government had to increase petroleum levy and apply sales tax.
READ MORE: New prices of petroleum products in Pakistan from July 01, 2022
The previous government of PTI had kept both the petroleum levy and sales tax at zero in order to provide relief to the masses. The PTI government also provided a huge subsidy on prices of petroleum products in order to lower the rates and provide relief to the masses.
However, former Prime Minister Imran Khan was removed through a vote of no-confidence motion on April 10, 2022. Since then the new coalition government led by PML-N increased the prices of petroleum products sharply on three different occasions.
The present government in the budget estimated to collect Rs855 billion as petroleum levy during the fiscal year 2022/2023. As this fiscal year is starting from July 01, 2022, it is likely that the government will opt to impose the levy from this date.
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Pakistan’s forex reserves fall to $13.52 billion
KARACHI: Pakistan’s foreign exchange reserves fell by $91 million to $13.522 billion by week ended August 19, 2022, State Bank of Pakistan (SBP) said on Thursday.
The foreign exchange reserves of the country were at $13.613 billion a week ago i.e. August 12, 2022.
READ MORE: Pakistan’s forex reserves increase by $52 million
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 $13.703 billion.
The official foreign exchange reserves of the State Bank witnessed a decline of $87 million to $7.81 billion by week ended August 19, 2022 as against $7.897 billion a week ago.
READ MORE: Pakistan’s reserves plunge 43-month low to $13.56 billion
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 $12.336 billion.
The country is hoping to receive a $1.17 billion tranche under Extended Fund Facility (EFF) from the International Monetary Fund (IMF). This will help Pakistan to boost its foreign exchange reserves.
READ MORE: Pakistan’s foreign reserves dip to $14.21 billion
A meeting of IMF executive board is scheduled on August 29, 2022 to approve the tranche for the country.
The foreign exchange reserves held by commercial banks also slipped by $4 million to $5.712 billion by week ended August 19, 2022 when compared with $5.716 billion a week ago.
READ MORE: Pakistan forex reserves deplete to $14.42 billion
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Tax Return becomes invalid on depriving refund adjustment: PTBA
KARACHI: Pakistan Tax Bar Association (PTBA) has declared that deletion of column to deny refund adjustment made the income tax return invalid.
In a letter sent to Asim Ahmed, Chairman, Federal Board of Revenue (FBR) on Thursday, the PTBA apprised about the burning issue due to which the legal fraternity, taxpayers and other stake holders are very much perturbed that is with regard to deletion of tab previously available in the return to claim “adjustment of earlier refunds against the taxpayer of the current year”.
READ MORE: FBR notifies statutory tax rates for salaried persons
President PTBA Rana Munir Hassain said that the adjustment of refund against the payable tax is a fundamental right of a taxpayer a row for adjustment of earlier refunds before calculating net payable tax was always provided in the return forms.
He said that the proposed draft amendments in Income Tax Rules, 2002 through SRO 820(I)/2022, dated 21st June, 2022 (regarding draft Income Tax Return for the Tax Year 2022 for Ind/AOP/Cos) was issued in pursuance of section 237(3) of the Income Tax Ordinance, 2001, whereas, the row bearing code 92101 regarding “refund adjustment of other year(s) against demand of the current year was appearing” was provided therein as per past.
READ MORE: FBR slaps additional customs duty at 35% on motor vehicles
Subsequently, after lapse of statutory period of seven days, the final version of the Income Tax Return for the Tax Year 2022 was introduced through SRO.978(I)/2022 dated 30th June 2022, whereby, part-II-V was added in the Second Schedule, after Part II in the Income Tax Rules, 2002.
In the said final version, in the computation tab, the row as appearing against code 92101 is as under;
“refund adjustment of other year(s) against demand of this year”
The notified return which is part of the rules is now a valid return for all the purposes including deemed assessment order u/s 120(1) of the Ordinance.
Uploaded return electronically on IRIS, presently, having no column for adjustment of refund adjustment of other year(s), cannot be termed as “prescribed form of return” therefore, if filed, will not be a valid return in the eyes of law as under section 114(2)(a) a return is to be furnished in the prescribed form.
READ MORE: Tax exemption granted to donations for PM flood relief fund
It is also pertinent to mention here that the deletion of refund adjustment, row is against the fundamental rights, due process of law, whereas, the taxpayers have been deprived from their legitimate right as guaranteed by the constitution of Islamic Republic of Pakistan.
In the light of the above facts, the apex tax bar urged the FBR chairman to look into the matter personally and take necessary action on priority basis and restore the row “refund adjustment of the other year(s) against demand of this year” enabling the taxpayer and tax fraternity to file their Income Tax Returns for the Tax Year 2022 within stipulated time.
READ MORE: Pakistan raises Regulatory Duty to 100 % on motor vehicle import
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Pakistani Rupee falls for 4th day; dollar climbs up to Rs219.14
KARACHI: Pakistani Rupee (PKR) fell for the fourth consecutive day against the US dollar on Thursday as interbank foreign exchange market ended at Rs219.14.
The rupee lost 76 paisas to end at Rs 217.14 to the dollar from previous day’s closing of Rs218.38 in the interbank foreign exchange market.
Currency experts said that the rupee was under immense pressure due to massive demand for import payments and rising oil prices in the international market.
READ MORE: Dollar gains for third day, ends at PKR 218.38
Besides, political noise was also rising due to cases filed against country’s biggest party chairman Imran Khan.
The rupee has witnessed decline during all four trading days of the ongoing week.
Currency experts said that shortage of dollar for import payment impacted the rupee value. Further decline in foreign exchange reserves also resulted a panic in the market.
They said that the government on August 20 withdrew the ban on import of luxury and non-essential items, which was imposed on May 18, 2022.
READ MORE: Dollar climbs up to PKR 217.66 at interbank closing
The government had imposed the ban in the wake of depleting foreign exchange reserves and falling value in the rupee against the dollar.
The government lifted the ban at a time when both the indicators deteriorated.
After the ban the rupee fell to historic low of Rs239.94 to the dollar on July 28, 2022.
Pakistan’s foreign exchange reserves have increased by $52 million by week ended August 12, 2022. The foreign exchange reserves of the country have recorded at $13.613 billion by week ended August 12, 2022 as compared with $13.561 billion a week ago i.e. August 05, 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 $13.615 billion.
READ MORE: Dollar jumps to PKR 216.66 amid political crisis
The official foreign exchange reserves of the State Bank witnessed an increase of $67 million to $7.897 billion by week ended August 12, 2022 as compared with $7.83 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 $12.249 billion.
Previously, the rupee made gain on reports of renewal of Saudi financial assistance helped to improve sentiments in the currency market. Further decline in international oil prices also helped the rupee to make gain.
READ MORE: Rupee gains 30 paisas to dollar at closing on August 19, 2022
Besides, the tight monitoring of the State Bank of Pakistan (SBP) had eased the pressure on exchange rate.
It is worth mentioning that the foreign exchange reserves of the country depleted massively.
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FBR notifies statutory tax rates for salaried persons
The Federal Board of Revenue (FBR) has notified the statutory rates of income tax for salaried persons during Tax Year 2023.
In order to implement the rate of tax for salaried persons, the FBR issued Income Tax Ordinance, 2001 updated up to June 30, 2022. The following table is enacted for the taxation of salaried taxpayers for the Tax Year 2023:
READ MORE: FBR slaps additional customs duty at 35% on motor vehicles
Taxable Income Rate of Tax Up to Rs600,000 0% Rs600,001 –1,200,000 2.5% of amount exceeding Rs600,000 Rs1,200,001 –2,400,000 Rs15,000 + 12.5% of amount exceeding Rs1,200,000 Rs2,400,001 –3,600,000 Rs165,000 + 20% of amount exceeding Rs2,400,000 Rs3,600,001 –6,000,000 Rs405,000 + 25% of amount exceeding Rs3,600,000 Rs6,000,001 –12,000,000 Rs1,005,000 + 32.5% of amount exceeding Rs6,000,000 Amount exceeding Rs12,000,000 Rs2,955,000 + 35% of amount exceeding Rs12,000,000 The rate of tax in the table above are applicable where the income of an individual chargeable under the head ‘salary’ exceeds seventy-five per cent of his/her taxable income.
It is pertinent to mention that Finance Minister Dr. Miftah Ismail on floor of the House while presenting the federal budget 2022/2023 announced massive relief for salaried persons.
According to the budget speech of the finance minister, the basic threshold of taxable salary is proposed to be enhanced to Rs1.2 million from the Rs600,000 for salaried individuals.
READ MORE: Tax exemption granted to donations for PM flood relief fund
“This would pass tens of billions of rupees benefit to salaried people. This will generate a positive economic cycle whereby this money would get transferred to the businesses as the disposable income of salaried people increases therefore ultimately, the government will benefit through the thriving of the business, the creation of more jobs, and tax revenues in the future,” according to the budget speech.
However, the government withdrew the proposal and revived the exempt income to Rs600,000 while approving the Finance Act, 2022 from the National Assembly.
READ MORE: Pakistan raises Regulatory Duty to 100 % on motor vehicle import
Haider Ali Patel, former president of Karachi Tax Bar Association (KTBA) in a recent presentation on the Finance Act, 2022 stated that the revised rates in respect of salaried taxpayers had been enacted with the change in maximum rate of tax from 32.5 per cent to 35 per cent.
He stated that the enacted tax rates have taken away the proposed tax relief sought to be provided to the individuals belonging to lower salaried class.
READ MORE: Pakistan amends laws to tax retailers
“On the other hand, the tax incidence has been increased considerably for the individuals belonging to higher salary brackets,” he added.
Patel presented the following table provides the increase / decrease in the tax incidence of salaries taxpayers from tax liability of the tax year 2022 to tax year 2023 and also the tax liability calculated as per the proposed Finance Bill, 2023:
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Pakistan current account deficit widens by 42% in July 2022
Pakistan current account deficit (CAD) widened by 42 per cent in the first month (July) of the fiscal year 2022/2023 as compared with the same month of the last fiscal year, according to data released by the central bank on Wednesday.
According to the Balance of Payment (BoP) data issued by the State Bank of Pakistan (SBP), the current account deficit ballooned to $1.21 billion in July 2022 as compared with the deficit of $851 million in the same month of last year.
READ MORE: Pakistan’s FY22 current account deficit widens to $17.41 bn
However, the current account deficit narrowed in July 2022 when compared with the previous month. The current account deficit was recorded at $2.19 billion in June 2022.
Analysts at Arif Habib Limited said that the country posted current account deficit of $1.2 billion for the month of July 2022 compared to a deficit of $851 million during July 2021, up 42 per cent YoY.
On a YoY basis, the primary reason behind the deficit was an 8 per cent YoY decline in remittances along with a 0.4 per cent YoY increase in total imports to $6.2 billion.
READ MORE: Pakistan’s CAD balloons to $15.19 billion in 11 months
However, total exports increased by 4 per cent YoY during July 2022. On a MoM basis, CAD was significantly down (by 45 per cent) aided by a 27 per cent decline in Balance of Trade.
Workers’ remittances too posted a decline on MoM basis, down 9 per cent.
READ MORE: Current account deficit swells to $13.78 bn in 10 months
To recall, SBP had mentioned in its latest MPS that lower (MoM) imports on account of a decline in energy imports as well as non-energy imports, improved the current account position in July 2022. Albeit, exports too showed a decline on a MoM basis amid Eid Holidays and “emerging signs of slower global demand.”
READ MORE: Pakistan’s CAD hit $13.17 billion in July – March
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Dollar gains for third day, ends at PKR 218.38
KARACHI: The US dollar continued to make gain against the Pakistani Rupee (PKR) for third consecutive day on Wednesday and ended at Rs218.38 in interbank foreign exchange market.
The exchange rate recorded 72 paisas decline in rupee value to end at Rs218.38 from previous day’s closing of Rs217.66 in the interbank foreign exchange market.
READ MORE: Dollar climbs up to PKR 217.66 at interbank closing
The rupee has witnessed decline during all three trading days of the ongoing week.
Currency experts said that shortage of dollar for import payment impacted the rupee value. Further decline in foreign exchange reserves also resulted a panic in the market.
They said that the government on August 20 withdrew the ban on import of luxury and non-essential items, which was imposed on May 18, 2022.
The government had imposed the ban in the wake of depleting foreign exchange reserves and falling value in the rupee against the dollar.
READ MORE: Dollar jumps to PKR 216.66 amid political crisis
The government lifted the ban at a time when both the indicators deteriorated.
After the ban the rupee fell to historic low of Rs239.94 to the dollar on July 28, 2022.
Pakistan’s foreign exchange reserves have increased by $52 million by week ended August 12, 2022. The foreign exchange reserves of the country have recorded at $13.613 billion by week ended August 12, 2022 as compared with $13.561 billion a week ago i.e. August 05, 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 $13.615 billion.
READ MORE: Rupee gains 30 paisas to dollar at closing on August 19, 2022
The official foreign exchange reserves of the State Bank witnessed an increase of $67 million to $7.897 billion by week ended August 12, 2022 as compared with $7.83 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 $12.249 billion.
Previously, the rupee made gain on reports of renewal of Saudi financial assistance helped to improve sentiments in the currency market. Further decline in international oil prices also helped the rupee to make gain.
Besides, the tight monitoring of the State Bank of Pakistan (SBP) had eased the pressure on exchange rate.
It is worth mentioning that the foreign exchange reserves of the country depleted massively.
READ MORE: Pakistani Rupee eases against dollar; Interbank ends at Rs214.88
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Tax exemption granted to donations for PM flood relief fund
ISLAMABAD: The federal government on Tuesday granted tax exemptions to donations made for Prime Minister’s Flood Relief Fund 2022.
The Federal Board of Revenue (FBR) issued SRO 1590(I)/2022 dated August 23, 2022 to exempts deduction of tax under various provisions of Income Tax Ordinance, 2001.
According to the SRO an amendment has been made into Part 1 of the Second Schedule of the Income Tax Ordinance, 2001 that any income derived from The Prime Minister’s Flood Relief Fund, 2022 has been exempted from income tax with effect on and from August 5, 2022.
Furthermore, an amendment has been made to Part IV of the Second Schedule under which minimum tax under Section 113 of the Income Tax Ordinance, 2001 shall not apply to the flood relief fund.
In the same part of the schedule a new clause 120 has been inserted under which Section 151 related to profit from debt shall not apply to the relief fund with effect on and from August 5, 2022.
It further said that the provisions of Section 236 of Income Tax Ordinance, 2001 shall not apply on the amount donated through SMS to the Prime Minister’s Flood Relief Fund, 2022 with effect on and from August 5, 2022.
The FBR issued another SRO 1589(I)/2022 dated August 23, 2022, under which the federal government exempted the federal excise duty leviable on any donation received in Prime Minister’s Flood Relief Fund, 2022. “The notification shall take effect on and from August 5, 2022,” the FBR added.
The Finance Division on August 5, 2022 issued a notification to establish Prime Minister’s Flood Relief Fund 2022.
According to the notification: “It has been decided to establish / open with immediate effect a Fund to be known as ‘Prime Minister’s Flood Relief Fund 2022’ for collective national effort to meet the challenge of providing relief and rehabilitation to the affected population due to excessive rains and floods across the country.
It said that all proceeds and payments for the fund will be received at all branches of State Bank of Pakistan (SBP), all treasuries and branches of National Bank of Pakistan (NBP) and all other scheduled banks.
The fund may receive donations from both domestic, international donors and contributions from abroad which will be received at all the branches of above referred banks where such branches are existing. In other foreign countries contributions will be received at Pakistan missions and remitted to the State Bank of Pakistan which would prescribe necessary procedure for their accounting.
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Pakistan raises Regulatory Duty to 100 % on motor vehicle import
Pakistan has increased the regulatory duty on imported motor vehicles from 90% to 100%. The decision, communicated through the issuance of SRO 1571(I)/2022 by the Federal Board of Revenue (FBR), comes as part of the government’s efforts to stabilize the balance of payments and manage the outflow of foreign exchange.
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