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  • Saudi financial assistance to Pakistan in few days: envoy

    Saudi financial assistance to Pakistan in few days: envoy

    ISLAMABAD: Saudi Arabia will disburse cash deposits to Pakistan under assistance package pledged on October 26, 2021, Saudi diplomat said on Thursday.

    While talking to the Pakistan’s state media Saudi Ambassador Nawaf Bin Said Al-Malki said Saudi Arabia will disburse cash deposits under the pledged financial assistance after approval of the Royal Court and signing of a Memorandum of Understanding (MoU) in a few days.

    “This will be soon InshaAllah. There will be the agreement from the Royal Court and the MoU will be signed in a few days for the payment, and also for the deferred oil payment [facility],” the Saudi envoy said in an exclusive interview with APP, during his visit to the headquarters.

    Saudi Arabia had recently announced to provide Pakistan $3 billion as a cash deposit with the State Bank to address its balance-of-payments crisis. Also, the Kingdom had pledged a one-year deferred payment facility for the import of oil, worth up to another $1.2 billion.

    Ambassador Al-Malki said the government of Saudi Arabia considered Pakistan as “a dear country” with a very deep and strong relationship.

    He said Saudia Arabia always stood with Pakistan and extended support to it on multiple occasions, adding that the relationship with Pakistan was regardless of any government in power.

    “Our connection is with the Pakistani flag and we consider it our brotherly country,” he said, adding that he saw a “very bright future of Pakistan”.

    The Saudi ambassador mentioned the camaraderie between the Saudi Crown Prince Mohammed Bin Salman and Prime Minister Imran Khan and expressed confidence that the relationship would strengthen in the future.

    In three years, the six visits of PM Imran Khan to the Kingdom reflect the level of relationship, he added.

    The Saudi envoy said Pakistani people loved the Kingdom of Saudi Arabia from the core of their hearts and held in high esteem the Custodian of the holy mosques.

    Saudi Arabia places $3bn with Pakistan’s central bank
  • Petrol tax rate cut by 73% to lower global oil price impact

    Petrol tax rate cut by 73% to lower global oil price impact

    ISLAMABAD: The federal government has announced a reduction of 73 per cent in sales tax rate on supply of petrol in order lower the impact of high global oil prices.

    In this regard the Federal Board of Revenue (FBR) issued a notification i.e. SRO 1450(I)/2021 to reduce the sales tax rate on petrol and High Speed Diesel (HSD).

    According to the notification the rate of sales tax has been reduced to 1.43 per cent from the rate of 6.84 per cent. The FBR issued previous notification SRO 1327(I)/2021 on October 7, 2021.

    The revenue body also reduced the rate of sales tax on High Speed Diesel (HSD) to 6.75 per cent from 10.32 per cent.

    However, the sales tax rates on kerosene and Light Diesel Oil (LDO) have been kept unchanged at 6.70 per cent and 0.20 per cent, respectively.

    It is worth mentioning here that the normal rate of sales tax is 17 per cent. The present government has already reduced the rate of sales tax on petroleum products to the lowest level to minimize the impact of sharp rise in global oil prices.

    The government on November 04, 2021 notified increased in petroleum prices, which are now all time high.

    The petrol was fixed at Rs145.82 per litre instead of Rs137.79, showing an increase of Rs8.03. The price has been increased from previous high of Rs137.79.

    Similarly, the price of high speed diesel has been increased by Rs8.14 to Rs142.62 from Rs134.48.

    The rate of kerosene oil has been increased by 6.27 per liter to Rs116.53 from Rs110.26. Likewise, the price of light diesel oil has been increased by Rs5.72 per liter to Rs114.07 from Rs108.35.

    A notification issued by the Finance Division stated that on November 01, 2021, the prime minister had not agreed with the proposals worked out by the Oil and Gas Regulatory Authority (OGRA) and the finance division directed to maintain the prices as notified on October 16, 2021.

    It is pertinent to mention that maintaining the October 16, 2021 petroleum prices had some underlying concerns for cash flow issues due to short recovery of the cost, according to the statement.

    It is important to note that in the previous petroleum prices, already a significant relief was provided to the consumers. The government is cognizant of its responsibility to provide maximum relief to the consumers.

    “This has dented the petroleum levy budget of Rs152.5 billion during July – September, 2021 as compared to Rs20 billion realized only,” it said.

    Foregoing in view, prices of petroleum products have been increased partially as compared to the prices being worked out by the OGRA. If the government had accepted OGRA’s recommendations, the new prices would have been much higher.

    Infact, the government has absorbed the bulk of the pressure after making adjustment after making adjustment in the sales tax and petroleum levy. The collection of petroleum levy is far short of its fixed target for the first quarter of the fiscal year 2021/2022, it added.

    Petrol price increases to new high of Rs145.82 per liter
  • Dollar jumps to Rs174.19 at interbank closing

    Dollar jumps to Rs174.19 at interbank closing

    KARACHI: The US dollar jumped to Rs174.19 at the closing on Thursday making a fourth straight day gain.

    The Pak Rupee lost another Rs1.26 to the dollar from the previous day’s closing of Rs172.93 in the interbank foreign exchange market.

    Currency experts said that the rupee remained under pressure due to large external payments.

    The local currency made recovery after falling to the lowest level of Rs175.27 on October 26, 2021. The recovery in the local unit was due to the announcement of the Saudi government to support Pakistan in managing the balance of payment.

    The Saudi government announced an amount of $3 billion on October 26, 2021 that was to be transferred directly to the State Bank of Pakistan (SBP).

    The currency experts said that the rupee witnessed the massive depreciation due to the delay in Saudi package as well as IMF tranche.

    Meanwhile, the import bill remained on the higher side due to a surge in international commodity prices.

    The import bill registered a growth of 65.15 per cent to $25.06 billion during July – October 2021 as compared with $15.17 billion in the same period of the last fiscal year, according to the Pakistan Bureau of Statistics (PBS).

    Dollar advances to Rs172.93 at interbank closing
  • Rules for computing capital gains on listed securities

    Rules for computing capital gains on listed securities

    Eight Schedule of Income Tax Ordinance, 2001 has explained the rules for computing capital gains on listed securities.

    (more…)
  • ITFC provides $761.5 million for Pakistan oil, gas import

    ITFC provides $761.5 million for Pakistan oil, gas import

    ISLAMABAD: The International Islamic Trade Finance Corporation (ITFC) will provide financing of an amount $761.5 million to Pakistan for import of oil and gas.

    In this regard a financing agreement amounting to $761.5 million has been signed between the Ministry of Economic Affairs, Government of Pakistan and International Islamic Trade Finance Corporation (ITFC) for import of crude oil, refined petroleum products and LNG etc.

    The financing agreement was signed by Mian Asad Hayaud Din, Secretary, EAD and Eng. Hani Salem Sonbol, CEO, ITFC. The facility has been made effective immediately and ready for utilization by Pakistan State Oil Company Ltd (PSO), Pak Arab Refinery Ltd (PARCO) and Pakistan LNG Ltd (PLL) for import of oil and gas.

    This Syndicated Murabaha Financing facility of $ 761.5 million is for a period of one year and is a part of umbrella Framework Agreement signed with ITFC in June 2021 for total envelop of $ 4.5 billion ($ 1.5 million annually) for a period of three-years.

    Originally, ITFC had agreed to provide the financing of US$ 300 million. However, due to growing energy needs of the country and enhanced confidence level of international financial institutions on economic reforms and recovery amid COVID-19 pandemic, the financing was over-subscribed by 2.5 times i.e. from $ 300 million to from $ 761.5 million.

    The financing facility will also be helpful in financing oil and gas import bill of the country and easing of pressure on foreign exchange reserves of the country.

    Mian Asad Hayaud Din, Secretary, EAD appreciated the support for ITFc for arranging US$ 761.5 million for trade financing. He lauded the efforts of Eng. Hani Salem Sonbol, CEO, ITFC and his team for making this transaction successful.

    The ITFC and GOP have also agreed to continue their cooperation in future to mobilize financial resources to support Pakistan in its endeavours to achieve its economic growth targets through ITFC financing facility.

    Trade financing facility of $551 million signed for import oil, LNG
  • Dollar advances to Rs172.93 at interbank closing

    Dollar advances to Rs172.93 at interbank closing

    KARACHI: The US dollar advanced to Rs172.93 at the closing of the interbank foreign exchange market on Wednesday.

    The dollar recorded the gain for the third consecutive gain. The rupee lost Rs1.30 against the dollar to close at Rs172.93 from the previous day’s closing of Rs171.63 in the interbank foreign exchange market.

    The currency dealers said that the rupee witnessed massive decline owing to higher dollar demand for import payments.

    The import bill registered a growth of 65.15 per cent to $25.06 billion during July – October 2021 as compared with $15.17 billion in the same period of the last fiscal year.

    The said that non-availability of expected inflows from Saudi Arabia had also put pressure on the dollar demand. The Saudi government on October 26, 2021 pledged to provide $3 billion assistance to Pakistan in managing balance of payment.

    The local unit recorded the all-time low of Rs175.27 on October 26, 2021.

    Dollar makes sharp gain to end at Rs171.63
  • FBR decides posting officials for sugar crushing 2021-22

    FBR decides posting officials for sugar crushing 2021-22

    ISLAMABAD: The Federal Board of Revenue (FBR) has decided to deploy officials at sugar mills for monitoring of production and supply of sugar, sources said on Tuesday.

    The sources said that the tax offices having jurisdiction over sugar mills would post their officials for the crushing season 2021-2022.

    In this regard the FBR would invoke Section 40B of Sales Tax Act, 1990 for physical monitoring of manufacturing and supply of the commodity.

    In this regard, tax offices in Lahore have initiated the process for deploying the officials at the sugar mills. The Regional Tax Office (RTO) Lahore has placed its officials at the disposal of chief commissioner Inland Revenue, Large Taxpayers Office (LTO) Lahore.

    The sources said that the monitoring would help bringing down retail price of the commodity in the local market.

    It is worth mentioning that the sugar prices have gone up to Rs160 per kilogram in some parts of the country. However, as the crushing is coming near the prices have come down.

    This year the FBR has planned to document all the supply chain from manufacturing to the retail sale of the sugar.

    Through Finance Act, 2021 the treatment of sales tax on supply of sugar was changed and it was brought taxation at the retail price. The FBR through Circular No. 02 of 2021 stated: “Currently, the price of white crystalline sugar is fixed at Rs60 per kg in terms of SRO 812(I)/2016 dated September 02, 2016, which is considerably below the actual market price of the commodity.

    “In order to address this anomaly, sugar is proposed to be included in Third Schedule of the Sales Tax Act, 1990, so that sales tax is charged and collected on actual retail price of the product at the manufacturing stage.

    “This measure would not only ensure due payment of tax but also help in putting a more effective price control mechanism in place for sugar.”

    The rate of sales tax at 17 per cent on retail price was to be applicable on sugar supply from July 01, 2021. However, the implementation was deferred till November 30, 2021. Therefore, the normal sales tax rate on sugar supply will be applicable from December 01, 2021.

    Meantime, the FBR has increased the minimum sales tax rate on domestically produced sugar to Rs72.22 per kg from Rs60 per kg.

    Tax on sugar retail sale to be imposed from December 01
  • Pakistan’s fiscal deficit lowers by 9.5% in first quarter

    Pakistan’s fiscal deficit lowers by 9.5% in first quarter

    KARACHI: Pakistan’s fiscal balance in the outgoing first quarter of 2021/2022 posted a deficit of PKR 438 billion, -9.5 per cent YoY lower than prior year’s deficit, according to data released by the finance ministry on Tuesday.

    In terms of per cent GDP, the deficit arrived at 0.8 per cent in 1QFY22 compared to 1.1 per cent recorded in 1QFY21 (PKR 484 billion), said analysts at Arif Habib Limited.

    However, the primary surplus during the period stood at PKR 184 billion (0.3 per cent of GDP in 1QFY22) , down 29 per cent YoY, compared to a primary surplus of PKR 258 billion witnessed same period last year (0.6 per cent of GDP).

    Primarily, total revenue growth of 22 per cent in 1QFY22 to PKR 1.8 trillion (1QFY21: PKR 1.5 trillion) aided the fiscal balance, translating into 3.4 per cent of GDP vs. 3.2 per cent same period last year.

    The total tax revenue collection was up by 37 per cent YoY to PKR 1.5 trillion. Indirect taxes (+42 per cent YoY to PKR 917 billion) mainly on the back of higher sales tax (+43 per cent YoY to PKR 264 billion), and direct taxes (+32 per cent YoY to PKR 481 billion amid higher number of tax payers), contributed to the overall collection.

    In addition, the government collected PKR 276 billion in non-tax revenues, displaying a decline of 23 per cent YoY. This was particularly owed to lower Petroleum Levy (-90 per cent YoY | PKR 13 billion). On the flipside, the surplus profit of State Bank of Pakistan and Pakistan Telecommunication Authority increased during 1QFY22 to PKR 109 billion (+4 per cent YoY) and PKR 30 billion (+269 per cent YoY), respectively.

    In addition, total expenditures went up by 14 per cent YoY to PKR 2.3 trillion (4.2 per cent of GDP vs. 4.3 per cent of GDP in 1QFY21).

    Further breakup revealed that current expenditure underwent an uptick of 9 per cent YoY of which defence rose by 17 per cent YoY.

    However, the markup expenses went down by 16 per cent YoY to PKR 623 billion. Moreover, development expenditure and net lending undertaken by the government increased by 38 per cent YoY to PKR 180 billion.

    Total PSDP expenditure in 1QFY22 arrived at PKR 262 billion (+63 per cent YoY) with provincial expenditure at PKR 154 billion (+71 per cent YoY), outdoing federal disbursement of PKR 108 billion (+53 per cent YoY).

    Pakistan’s fiscal deficit narrows in nine months
  • Dollar makes sharp gain to end at Rs171.63

    Dollar makes sharp gain to end at Rs171.63

    KARACHI: The US dollar made a gain of Rs1.12 against the Pak Rupee on Tuesday as import payment demand remained high during the day.

    The rupee ended at Rs171.63 to the dollar from the previous day’s closing of Rs170.51 in the interbank foreign exchange market.

    The dollar advanced against the local currency for the second straight trading session. Currency experts said that the rupee made recovery during the past week after Saudi pledge to assist Pakistan in balance of payment.

    However, the dollar for the large import payment has once again started deterioration in the rupee value.

    The import bill registered a growth of 65.15 per cent to $25.06 billion during July – October 2021 as compared with $15.17 billion in the same period of the last fiscal year, according to the PBS.

  • Two basic salaries announced for timely tax inquiry report

    Two basic salaries announced for timely tax inquiry report

    ISLAMABAD: Federal Board of Revenue (FBR) has announced an incentive scheme for its officials in completion and timely submission of inquiry reports, official sources said on Tuesday.

    Under the incentive scheme up to two basic salaries have been announced for the authorized officer for submitting inquiry report up to 60 days from receipt of letter nominating inquiry officer/authorized officer.

    The FBR has decided the incentive while observing that most inquiry officers were delaying the finalization of inquiries which lead to delay in conclusion of disciplinary proceedings against the officer/officials of FBR.

    “This not only reflect poorly on the part of inquiry officer, authorized officer, authorized concerned but also puts the career of the accused officers in the state of limbo for longer periods,” the FBR said.

    Therefore, with a view to encourage expeditious finalization of inquiries and with a view to prevent delays in finalization of inquires, the FBR chairman approved the incentive and punitive regime.

    For inquiry officers/inquiry committees/fact finding inquiry officers/fact finding inquiry committees; for submitting quality reports to the satisfaction of the authorized officers/authorized concerned:

    i. Two basic salaries to be given as incentive on submission of inquiry report up to 60 days from receipt of letter nominating inquiry officer / authorized officer.

    ii. One basic salary to be given as incentive on submission of inquiry report up to 75 days from receipts of letter nominating inquiry officer/authorized officer.

    iii. Half basic salary to be given as incentive on submission of inquiry report up to 90 days from receipt of letter nominating inquiry officer/authorized officer.

    For authorized officer the incentive shall be one basic salary on disposal of inquiry report within 30 days from date of receipt of inquiry report.

    For authority the incentive shall be one basic salary for passing order within 30 days from date of receipt of reply to show cause notice/recommendations of inquiry officer / authorized officer.

    The FBR also introduced punitive regime for delaying inquiry report.

    The FBR said that Internal Job Posting (IJP) allowance of inquiry officers/inquiry committee members/fact finding inquiry officer/ fact finding inquiry committee members shall be discontinued who will take more than 100 days to complete the inquiry till completion of such inquires.

    Similar shall apply to authorized officers who take more than 40 days to decide the inquiry; and in case of proceedings against officers’ upto to BS-16; the authority who takes more than 40 days for doing the needful.

    The FBR said any excuse including requests for adjournment, non-availability of record etc., shall not be taken as valid excuse for lack of adherence to the time set for doing the needful. Time will not run only in the case of valid stay order from a court of competent jurisdiction.

    “These instructions will have prospective effect, but these instructions shall be applicable to all pending inquiries from the date of issuance of these instructions by the board. Accordingly, time will from the date of issuance of these instructions.”

    The instruction have been implemented with effect from November 08, 2021.

    FBR warns of action for delaying inquiry reports