The Economic Survey of Pakistan 2018/2019 stated that the payment for imported vehicles can now be made at the customs stage through foreign remittances received in the account of family members of the sender.
(more…)Tag: Economic Survey 2018/2019
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Government borrows Rs3.2 trillion from SBP in 10 months: Economic Survey
ISLAMABAD: The government has borrowed Rs3.2 trillion from State Bank of Pakistan (SBP) for budget financing during first ten months of current fiscal year, Economic Survey of Pakistan revealed.
The survey released a day earlier stated that during July 01, 2018-April 26, 2019 government borrowed Rs 1,073.0 billion for budgetary support compared to Rs 850 billion in the same period last year, of which, government has borrowed from SBP Rs 3,204.7 billion as compared to Rs 1,316.1 billion last year.
On the other hand, government retired Rs 2,131.7 billion to scheduled banks against retirement of Rs 466.1 billion in last year. Net government sector borrowing thus remained at Rs 908.0 billion during the period under review compared with Rs 813.6 billion last year.
During the period 01 Jul-26 Apr, FY2019 money supply (M2) increased by Rs 625.3 billion (growth of 3.9 percent) compared with Rs 601.8 billion (4.1 percent) in comparable period of last year.
Net Domestic Assets (NDA) is the main contributor to M2 growth.
Net Foreign Assets (NFA) point contribution is negative and stood at (-5.5 percent) during the period under review compared with (-3.3 percent) in the same period last year.
NDA point contribution has increased to 9.4 percent compared with 7.4 percent last year. NDA point contribution growth partially offset by NFA negative growth, thus overall money supply grew by 3.9 percent during the period under review.
On the other hand, reserve money posted an expansion of Rs 488.0 billion (growth of 8.9 percent) during 01 Jul-26 Apr, FY2019 against Rs 260.5 billion (5.4 percent) last year.
SBP’s NDA posted a growth of 22.5 percent compared with 18.18 percent during the same period last year, whereas, SBP’s NFA decreased by Rs 743.8 billion compared with contraction of Rs 473.7 billion in the comparable period last year.
Therefore, reserve money growth stemmed from NDA of the SBP whereas NFA outstanding stock remained negative during the period under review.
Within Broad Money, NFA of the banking sector further contracted to Rs 882.4 billion during 01 Jul-26 Apr, FY2019. During same period last year, it was contracted by Rs 475.4 billion.
Therefore, SBA and scheduled bank’s NFA remained negative during the period under review.
During the period 01 Jul-26 Apr, FY2019 NDA of the banking sector registered an expansion of Rs 1,507.7 billion (growth of 9.3 percent) compared with Rs 1,077.2 billion (7.7 percent) during the comparable period last year.
NDA of SBP increased by Rs 1,132.5 billion as compared with Rs 661.5 billion during same period last year.
The NDA of scheduled banks witnessed an expansion of Rs 375.1 billion compared to expansion of Rs 415.7 billion in the same period of last year.
Government sector borrowing and private sector credit mutually impacted NDA growth of the banking system, which was more than offset the contraction in NFA of the banking system.
Consequently, broad money growth increased to 3.9 percent during 01 Jul-26 Apr, FY2019 as compared to 4.1 percent during the comparable period last year.
Credit to Public Sector Enterprises (PSEs) increased by Rs 312.1 billion during the period 01 Jul-26 Apr, FY2019 against Rs 153.2 billion during the same period of last year.
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Share of indirect taxes increases to 60.9 percent: Economic Survey
ISLAMABAD: Despite claims of authorities to increase the share of direct taxes in total revenue, the share of indirect taxes further increased to 60.9 percent in 2018/2019.
The Economic Survey 2018/2019 launched a day earlier, stated that the tax structure in Pakistan is skewed towards indirect taxes.
The share of indirect tax to FBR tax collection remained static around 60 percent over the last one decade.
“For fiscal year 2018/2019, the share of indirect tax collection set at 60.9 percent.”
Within indirect taxes, sales tax posted a growth of 11.8 percent in FY2018 against 2.0 percent increase in FY2017.
Strong aggregate demand and pass through of high international oil prices contributed in sales tax collection during FY2018.
The share of sales tax which constituted 64.4 percent of indirect taxes during FY2018 reduced gradually from 72.3 percent in FY2014.
Similarly, share of sales tax in total FBR tax is gradually coming down since FY2014 from 44.2 percent to 38.6 percent during FY2018.
“For FY2019, sales tax collection target set at Rs 1,700 billion which is 14.5 percent higher than last year collection and (constitute 63.0 percent of indirect tax and 38.3 percent of FBR tax collection target).”
The share of custom duty in indirect taxes has increased gradually from 17.6 percent in FY2014 to 26.4 percent in FY2018.
It is pertinent to mention that the maximum statutory rates of customs duty have been gradually reduced from 125 percent in FY1988 to 20 percent in FY2016 till date.
Consequently, the share of custom duty in FBR tax collection has reduced gradually from 45.7 percent in FY1991 to 15.8 percent in FY2018.
Custom duty collection momentum continued with the same pace and registered a growth of 22.5 percent in FY2018 against 22.8 percent in FY2017.
High aggregate demand, increase in general income level, high imports, higher commodity prices, exchange rate depreciation and fiscal measures such as regulatory duties on non-essential imports and an increase in additional custom duty by 1 percent led to increase in growth of custom duty.
Custom duty collection is estimated at Rs 735.0 billion for FY2019 which reflects an increase of 20.8 percent over last year actual tax collection.
On the other hand, the share of federal excise duty in indirect taxes declined by 9.3 percent in FY2018.
The tax base of Federal Excise Duty (FED) contracted over the years and now is restricted to only few commodities like cigarettes, cement, beverages, and international travel etc. Share of FED in total FBR tax collection has also fallen from 10.1 percent in FY2009 to 5.6 percent in FY2018.
FED registered a growth of 7.9 percent in FY2018 compared to 5.2 percent in FY2017. Collection from cement mainly fueled this growth momentum. FED is projected to Rs 265.0 billion which is 24.1 percent higher as compared with actual last year collection.
The projected share is 6.0 and 9.8 percent of FBR and indirect tax collection, respectively for FY2019.
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PIA implements business plan to improve financial health
ISLAMABAD: Pakistan International Airlines Corporation (PIAC) has implemented strategic business plan to improve its financial health, according to Economic Survey 2018/2019 launched a day earlier.
It said PIA came into existence in 1955 as Public Sector organization.
However, in April 2016 it was converted from a statuary organization to a company governed by Companies Act 1984, through Pakistan International Airlines Limited (PIAL conversion) Act 2016.
At present PIA is passing through a dire financial state. However, the present government is very keen to make itself-reliant.
Efforts are underway to improve the financial health of the corporation by reducing its losses through various means and modes. Stringent action is being taken against corruption and mismanagement.
Despite financial constraints and tough and uneven competitive environment, PIACL gave a stable performance during 2018.
To reduce losses, PIA had to take measures like route rationalization and suspended its loss making routes.
PIA is in the process of its Strategic Business Plan 2019-23 to improve its performance:
i. Launching of profitable new routes like Silakot-Sharjha, Lahore-Muscat, Islamabad-Doha and Lahore-Bangkok-Kualalalmpur. These routes are going very strong and economically viable
ii. More new routes have been started which include; Sialkot-Paris-Barcelona, Peshawar-Sharjha, Peshawar-Al Ain and Multan-Sharjha
iii. Increasing frequencies and capacity on profitable routes like Jeddah and Madinah coupled with closure of loss making routes like New York, Salalah (Oman), Kuwait, Mumbai
iv. Stoppage of all officiating and extra allowances given on additional assignments to officials
v. Ban on overtime allowances in all cadres along with monitoring of flights by senior officials
vi. Increasing regularity and punctuality of flights by assigning target to be achieved 90 percent
vii. Improvement in flight services, training of crew and regular monitoring
viii. Introduction of executive economy class on European and Gulf sectors which are attracting more customers
ix. Rationalization of fares according to market demand thus helping in increase of seat factor
x. Delays of flights have been cut down significantly by better planning in engineering, flight operation and ground handling departments
xi. Special emphasis on cargo business with monitoring of performance, rationalization of cargo fares and more effective liaison with all stakeholders
The survey said PIA is in process of acquiring new aircraft for its fleet. Presently, a tender has been floated for four narrow body aircrafts according to PPRA rules.
PIA has submitted its business plan to the federal government and now it is under consideration for approval of Federal Cabinet.
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FBR to force all NTN holders for filing tax returns
ISLAMABAD: Federal Board of Revenue (FBR) has chalked out a comprehensive plan to broaden the tax base by enforcing tax returns in the case of all National Tax Number (NTN) holders.
According to Economic Survey 2018/2019 released on Monday said that the FBR would take following measures to broaden the tax base:
— Creation of a central data bank
— Enforcement of return in the case of all NTN holders
— Preparation of directory of non-filers deductees
— Data to be obtained from NADRA, Telecom Cos, Banking Cos, Development Authorities, Schools, Clubs, Hotels etc
— Data of suppliers/buyers of sales tax returns of 5,000 big companies
— Raising expenditure on revenue collecting machinery from 0.8% to 1.5% of total revenue
— Registration of persons subjected to withholding of sales tax
— Registration of retailers under the new scheme introduced under Special Procedure Rules.
— Deployment of Technology to Identify Risk Areas to Support Risk Based Audit
It said that an audit plan has been reintroduced to accompany the self-assessment scheme and to overcome weak tax compliance.
Substantial progress has been achieved for infrastructure upgradation and development with the introduction of the fully Inland Revenue Information System (Iris), which is available to all the field formations.
A paradigm shift from simple random selection to Parametric Computer Ballot selection of cases and finally risk based selection in audit has been introduced. Moreover, litigation against General Audit Policies was successfully defended before different Courts of Law.
Under the reform initiatives, Draft Audit policy for the Tax Year 2017 is under consideration and will be finalized after due deliberation/consultation with all concerned.
Moreover, Risk-based Audit Framework is being devised to ensure a more targeted and focused approach with the help of World Bank. Training modules have been prepared to import Investigative Audit Training to officers with the help of World Bank.
In order to promote tax culture, compliance and to dispel the general impression about evading taxation by individuals having prominent position in the society, FBR has under taken following initiatives for bringing a behavioral change regarding the tax culture perception in the society:
a) Publishing Tax Directory of Parliamentarians
b) Establishment of Financial Investigation Cell
c) Campaign against Tax Evaders
To simplify procedures and minimize contact between the taxpayers and the tax collectors, FBR management has made revolutionary changes in automation of tax procedures. Major achievements include:
i. Web Based One Customs (WeBOC) System of Clearance
ii. EDI – Electronic Data Interchange
iii. National Single Window (NSW)
iv. iv. Inland Revenue Information System (Iris)
Current initiatives
− Creation of Tax Policy Unit within Ministry of Finance
− Identification and scrutiny of evasion by High Net worth Individuals
− Administrative measures to increase tax collection by identifying untaxed wealth overseas and by data matching to identify non-filers
− Practical steps taken to curb Offshore Tax Evasion (UK and UAE properties, Panama and Paradise Leaks, etc.) and continuous monitoring of such cases
− Plaza Mapping at Lahore, Karachi and Islamabad
− Launch of Device Identification, Registration and Blocking System (DIRBS) to control smuggling of mobile devices
− Introduction of Currency Declaration System and Advanced Passenger Information System at major airports of the country
− Discouraging imports of luxurious goods through additional Regulatory Duties (RDs)
− Addressing under invoicing by signing MOU with China for exchange of pricing information
− Forensic audit in Sugar, Tobacco and Steel Industries to address leakages and tax evasion and in these industries
− Implementation of Tobacco Track & Trace System
− Resolving pending litigation
− Collection of pending arrears identified as collectable arrears
− Resolving 1.2 million automatically selected cases for audit U/s 214D
These reforms will start paying dividends in shape of improved compliance, higher revenue growth and improvement in tax-GDP ratio.
The tax revenues have increased significantly during last four years. The collection jumped from Rs 1,946 billion in FY2013 to Rs 3,844 billion in FY 2018, registering an overall growth of 97.5 percent.
Similarly, tax-GDP ratio of the country which was just 8.7 in FY2013 jumped to 11.1 in FY 2018.
With the help of these initiatives, FBR is moving towards a more efficient tax system; facilitating taxpayers, promoting investment and broadening the tax base in the years to come. It is envisioned that these resource mobilization efforts will result in further improvement of domestic tax revenues in coming years.
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National Savings to issue registered prize bonds in all denominations
ISLAMABAD: The Central Directorate of National Savings (CDNS) to issue scripless registered prize bonds amongst all denominations with objective to document the economy.
Economic Survey 2018/2019 released by the finance ministry of Monday, said that in collaboration with SBP, National Savings is in the process of introduction of registered scripless prize bonds amongst all denominations.
The registered prize bonds will be a step towards documentation of the economy while providing facility to the general public.
The CDNS remained in the process of restructuring and transformation in the Fiscal Year 2019. In this regard, the achievements made in the first nine months and initiatives in the pipeline are as under:
IT Transformation:
Starting from 2002-03, National Savings has gone a long way towards computerization and automation of its processes.
Out of 375 National Savings Centers (NSCs), 222 have been computerized. In the last one year, some more milestones have been achieved for transformation of the organization into an Information Technology enabled entity.
i. A data center has been established at National Telecommunication Corporation (NTC) and now 205 NSCs are connected to centralized location through Wide Area Network (WAN) whereas NTC is working for provisioning of connectivity at remaining NSCs.
ii. CDNS Main Application System has been upgraded into state-of-the-art Business Application Solution and deployed at 35 National Savings Centers while remaining NSCs are in the process of migration to the centralized architecture by using the newly upgraded Business Application Solution. The aforesaid achievement has enabled CDNS for provisioning of advance, efficient and value-added services to its customers using Alternative Deliver Channels (ADCs) i.e. Debit/ATM Cards, etc.
iii. Protocols have been laid down with National Database Registration Authority (NADRA) for obtaining Verisys and Biosys, which are necessary in the new digitized set up of the organization.
iv. Vendor has been selected for providing the card (ATM/Debit Card) solution for CDNS.
v. Agreement with 1Linkhas been signed for providing connectivity with banking sector/ATM operations.
Achievement of Annual Targets:
CDNS, being the foremost institution providing the avenue to general public to park their savings has been able to not only achieve the targets assigned but also surpassed by a big margin. As of 30.04.2019, the CDNS has achieved 213 % of the Gross and 191% of proportionate targets.
Initiatives in the Pipeline:
Sharia Product of National Savings
There was a persistent demand of Sharia compliant product and CDNS has responded to it and has developed its first-ever Sharia Compliant product called Sarwa Islamic Savings Account (SISA) for those who desire to invest only in the Sharia-compliant scheme of CDNS. The Draft rules for it have been printed in the Gazette of Pakistan and after approval of the Cabinet Committee for Disposal of Legislative Cases (CCLC) and the Federal Cabinet, the proposed SISA Scheme will be introduced across the country.
Overseas Pakistanis Savings Certificates (OPSCs)
The Pakistani diaspora abroad wanted to have a secure investment channel for their savings while Government of Pakistan, in order to increase more also looked for bringing remittances into formal money channels which were mostly coming via informal channels. In this regard, to fill the void, OPSCs has been designed as a product by CDNS to be launched for Overseas Pakistanis only. It will be launched initially in the Gulf Cooperation Council (GCC) market and then other countries. The Agreement with Manger To the Issue (MTI) has been almost finalized. Being a scripless security, OPSCs will be offered in both the US$ and rupee currencies. It is expected that they will be launched in the Fiscal Year 2019-20.
Launch of Rs. 100,000 Premium Prize Bond (Registered)
After successful launch of Rs.40000, Premium Prize Bond (Registered) National Savings is in the process of launching another registered prize bond for Rs. 100,000
Debit Card Launch & Membership of 1Link System
In near future National Savings is launching ATM Debit Cards with the support of the Karandaaz Pakistan.
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Economic Survey 2018/2019: SBP increases policy rate by 650bps in past 18 months
ISLAMABAD: State Bank of Pakistan (SBP) enhanced policy rate by 650 basis points during last 18 months (January 2018 to date) for macroeconomic stabilization.
According to Economic Survey 2018/2019 issued by the ministry of finance on Monday said the SBP had adopted policy rate reversal and gradually increased it by a cumulative 650 bps since January, 2018.
“Despite increase in policy rate, Weighted Average Lending Rate (WALR) remained stable which translated into healthy private sector credit demand.”
Credit to private sector (CPS) increased to Rs 775.5 billion during FY2018 against Rs 747.9 billion last year. Significant increase in credit demand primarily came from working capital and fixed investment in the preceding year.
During the period July-March, FY2019 CPS increased to Rs 554.7 billion compared with Rs 401.1 billion during same period of last year.
Of which working capital loans received the major share and stood at Rs 369.0 billion compared to Rs 215.3 billion last year. While fixed investment decelerated to Rs 83.1 billion against Rs 148.1 billion in the comparable period last year.
The survey said that the monetary policy is an important tool to achieve price stability and manage economic fluctuations.
Inflation targeting has emerged as the leading framework for monetary policy over recent decades in many advanced and in low income economies.
Monetary policy role after global financial crises has extended as macro prudential policy which required strong institutional framework for financial stability and to achieve twin objectives of price and output stabilization.
Pakistan’s economy witnessed a consumption led growth of 5.53 percent during preceding year FY2018.
The incumbent government has inherited the economy facing multiple challenges including unsustainable twin deficits that pose serious risks to the economy.
Hence, to correct the imbalances in the economy, authorities have taken steps to curtail the fiscal deficits and tighten monetary policy to contain demand.
SBP has significantly tightened monetary policy, and allowed greater flexibility in the exchange rate adjustments to curb excessive aggregate demand and move towards macroeconomic stabilization.
This trend is in line with the global trends. The global economic expansion has weakened and projected to slow down from 3.6 percent in 2018 to 3.3 in 2019, before returning to 3.6 percent in 2020.
Following a notable tightening of global financial conditions during second half of 2018, conditions have eased in early 2019 as the US Federal Reserve signaled a more accommodative monetary policy stance and markets became more optimistic about a US–China trade deal.
The US federal funds rate is expected to increase to about 2.75 percent by the end of 2019. Policy rates are assumed to remain at close to zero in Japan through 2020 and negative in the Euro area until mid-2020.
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LSM growth exhibits massive decline on lower PSDP spending
ISLAMABAD: The Large-Scale Manufacturing (LSM) declined by 2.93 percent during July-March 2018/2019 in contrast to growth of 6.33 percent during the same period last year. The target for this year was 8.1 percent, said Economic Survey 2018/2019 released on Monday.
“The present trend suggests that full year LSM growth will remain below the target by a wide margin,” according to the economic survey.
Year on Year (YoY), LSM growth witnessed sharp decline of 10.63 percent in March 2019 as compared to increase of 4.70 percent in March 2018.
There are a number of factors which have contributed to the negative growth in LSM.
These include lower Public Sector Development Program (PSDP) expenditures compared to last year, muted private sector construction activities and lower consumer spending on durable goods amongst others.
This was more noticeable in construction-allied industries. Demand for housing moderated as the price of building materials and cost of financing increased. Moreover, additional tax measures further restricted the real estate market.
Certain sector-specific issues also contributed to the decline in LSM. Automobile prices witnessed multiple upward revisions due to PKR depreciation which made the potential buyers refrain from making booking and purchases.
Certain restrictions on non-filers with respect to purchase of cars further dampened the automobile demand.
Pharmaceuticals also suffered due to a considerable lag in regulatory adjustments in prices.
This pricing issue was in addition to weakening of the local currency, which added to the distress of an import dependent sector.
The industry specific data shows that electronics recorded highest growth of 23.70 percent, wood products 15.21 percent, rubber products 3.47 percent, engineering products 9.54 percent, leather products 0.97 percent and fertilizers 4.50 percent.
The industries which recorded negative growth during the period are; Iron & Steel 11.00 percent, Pharmaceuticals 8.40 percent, Automobile 7.58 percent, Coke & Petroleum products 6.00 percent, Food Beverages & Tobacco 4.69 percent, Chemicals 3.94 percent, Paper & Board 3.86 percent, Non-metallic mineral product 4.96 percent and Textile 0.30 percent.
The Mining and Quarrying sector declined by 1.96 percent during Jul-Feb FY 2019 in contrast to the growth of 7.7 percent during the same period last year. Chromite, Magnesite, Rock salt, Barytes, Ocher and Crude oil posted a positive growth of 228.69 percent, 159.63 percent, 12.65 percent, 22.15 percent, 19.12 percent and 0.47 percent respectively.
However, some minerals witnessed negative growth during the period under review such as Coal 25.42 percent, Natural gas 1.98 percent, Sulphur 40.72 percent, Calcite 91.49 percent, Soap stone 13.12 percent, Marble 4.66 percent and Bauxite 30.82 percent.
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Agriculture posts meager 0.85 percent growth on reduction in cultivation area
ISLAMABAD: The agriculture has posted meagre 0.85 percent growth in 2018/2019 against the target of 3.8 percent, said Economic Survey 2018/2019 on Monday.
It said that the performance of agriculture during 2018/2019 remained subdued.
The under-performance of agriculture sector hinged upon reduction in the area of cultivation, lower water availability and drop in fertilizer off take. The crops sector has witnessed negative growth of 4.43 percent against the target 3.6 percent on the back of decline in growth of important crops by (-6.55) percent.
Sugarcane production declined by (-19.4) percent to 67.174 million tons, Cotton (-17.5 percent) to 9.861 million bales and Rice (-3.3 percent) to 7.202 million tonnes while production of Maize crop increased by 6.9 percent to 6.309 million tonnes and production of wheat crop marginally increased by 0.5 percent to 25.195 million tonnes. Other crops having share of 11.21 percent in agriculture value addition and 2.08 percent in GDP, showed growth of 1.95 mainly due to increase in production of pulses and oilseeds.
Cotton ginning declined by 12.74 percent due to decrease in production of cotton crop.
Livestock having share of 60.54 percent in agriculture and 11.22 percent in GDP, recorded the growth at 4.0 percent against the target of 3.8 percent.
The Fishing and Forestry sector having share of 2.10 percent each in agriculture value addition grew by 0.79 and 6.47 percent, respectively.
The strong growth in forestry is due to increase in timber production in Khyber Pakhtunkhwa in the range of 26.7 to 36.1 thousand cubic meters.
The gram production increased by 35.6 percent on account of higher yield due to favourable weather condition prevalent at the time of sowing. The production of Bajra increased by 3.2 percent.
The production of Barley, Rapeseed & Mustard and Tobacco remained constant while the production of Jowar witnessed a decline of 2.6 percent.
The production of Onion and Chillies witnessed increase of 2.0 percent to 2.12 thousand tonnes and 0.4 percent to 148.7 thousand tonnes respectively, as compared to production of last year.
However, the production of pulse Mash (Lentil), Moong and Potato decreased by 5.5 percent, 3.4 percent and 0.3 percent, respectively compared to last year’s production. While the production of Masoor pulse remained the same as last year’s production.
The total availability of water for the Kharif crops 2018 recorded 59.6 Million Acre Feet (MAF), which means it remained short by 11.2 percent against the average system usage of 67.1 MAF and by 14.9 percent as compared to Kharif 2017. During Rabi season 2018-19, the total water availability was recorded at 24.8 MAF showing an increase of 2.5 percent over Rabi 2017-18 and a decline of 31.9 percent from the normal availability of 36.4 MAF.
The domestic production of fertilizers during 2018-19 (July-March) increased by 2.6 per cent over the same period of previous year. This increase is due to functioning of two urea manufacturing plants (Agritech& Fatima Fertilizer) as supply of LNG was available on subsidized rates.
The imported fertilizer increased by 4.8 percent. Therefore, total availability of fertilizer increased by 3.2 percent during current fiscal year. Total off take of fertilizer nutrients decreased by 7.3 percent.
Nitrogen off take decreased by 2.89 percent and phosphate by 18.2 percent. Potash off take recorded an increase of 4.55 percent during 2018-19 (July-March). Reduction in fertilizers off take was due to its high prices.
In line with government’s priority for agriculture sector development, Agricultural Credit Advisory Committee (ACAC) has set the indicative agricultural credit disbursement targets at Rs 1,250 billion for FY 2018-19 to 50 agriculture lending institutions including 19 commercial banks, 2 specialized banks, 5 Islamic banks, 11 microfinance banks and 13 microfinance institutions/rural support programs (MFIs/RSPs).
During FY 2018-19 (July- March), the agriculture lending institutions have disbursed Rs. 805 billion which is 64.4 percent of the overall annual target of Rs. 1,250 billion and 20.8 percent higher than the disbursement of Rs. 666.2 billion made during corresponding period of last year.
The outstanding portfolio of agriculture loans has increased by 15.5 percent to Rs. 70.7 billion by end March, 2019.
Further, the agriculture outreach in terms of total borrowers has increased to 4.0 million, showing a rise of 8.2 percent over 3.72 million borrowers as of end June, 2018.
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Exemptions, concessions cost Rs972.4 billion in 2018/2019
ISLAMABAD: The economy has incurred duty and tax losses to the tune of Rs972.4 billion due to exemptions and concessions during the fiscal year 2018/2019, according to Economic Survey 2018/2019 launched on Monday.
The cost of tax exemptions included: income tax Rs141.6 billion, sales tax Rs597 billion; and Rs233.1 billion as customs duty.
Income Tax:
1. Tax credit for charitable donations u/s 61 Rs2.448 billion
2. Tax credits u/s 64A Rs1.191 billion
3. Tax credit u/s 64AB deductible allowance on education expenses Rs0.067 billion
4. Tax credit for employment generation by manufacturers u/s 64B Rs0.0096 billion
5. Tax credit for investment in balancing, modernization and replacement of plant & machinery u/s 65B Rs90.954 billion
6. Tax credit for enlistment u/s 65C Rs0.356 billion
7. Tax credit for newly established industrial undertakings u/s 65D Rs5.487 billion
8. Tax credit for industrial undertakings established before the first day of July, 2011 u/s 65E Rs6.458 billion
9. Tax credit u/s 100C Rs13.977 billion
10. Tax credit for investment in shares and insurance u/62 Rs2.055 billion
11. Tax loss due to exempt business income claimed by IPPs under clause (132) of Part I of the Second Schedule Rs18.034 billion
12. Tax loss due to exemption to export of IT services under clause (133) of Part I of Second Schedule Rs0.608 billion
Sales Tax:
SRO Loss of sales tax due to exemptions projected for FY2019, based On July-March figures:
SRO 1125(1)/2011, dated 31.12.2011 (leather, textile, carpets, surgical goods etc.) Rs86.7 billion
Import under 5th Schedule Rs0.59 billion
Local supply under 5th Schedule Rs53.5 billion
Imports under 6th Schedule. Rs53.7 billion
Local supply under 6th Schedule Rs247.3 billion
Imports under 8th Schedule Rs62.7 billion
Local supply under 8th Schedule Rs93.3 billion
Customs Duty
Concession of customs duty on goods imported from SAARC and ECO countries Rs348.8 million
Exemption from customs duty on import into Pakistan from China Rs2.5 million
Exemption from customs duty on import into Pakistan from Iran under Pak-Iran PTA: no loss
Exemption from customs duty on imports into Pakistan from under SAFTA Agreement Rs1,614.8 million
Exemption from customs duty on import into Pakistan from China Rs31,620.7 million
Exemption from customs duty on goods imported from Mauritius Rs6 million
Exemption from customs duty on import into Pakistan from Malaysia Rs3,162.7 million
Exemption from customs duty on import into Pakistan from Indonesia under Pak-Indonesia PTA. Rs3,950 million
Exemption from customs duty on imports from Sri Lanka Rs2,401.6 million
Conditional exemption of customs duty on import of raw materials and components etc. for manufacture of certain goods (Survey based) Rs4,755.1 million
Exemption of customs duty and sales tax to Exploration and Production (E&P) companies on import of machinery equipment & vehicles etc. Rs5,725.7 million
Exemption from customs duty for vendors of Automotive Sector Rs26,604.4 million
Exemption from customs duty for OEMs of Automotive Sector Rs38,818.8 million
Exemption from Customs Duty on Cotton Rs2,275.9 million
Exemption from Customs Duty for CPEC Rs1,009.2 million
Exemption from Customs Duty for Lahore Orange Line Metro Train Rs749.1 million
Chapter 99 Exemptions [Special Classification Provisions] Rs10,530.8 million
5th Schedule Exemptions/ concessions Rs99,558.0 million