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Tag: Prize Bonds

  • Investment in premium prize bonds surges by 157 percent

    Investment in premium prize bonds surges by 157 percent

    KARACHI: The investment in premium prize bonds of Rs40,000 denomination has witnessed unprecedented growth of 157 percent after the government announcement to discontinue bearer prize bonds of same denomination.

    According to official documents, the investment in premium prize bonds of Rs40,000 denomination surged by 157 percent to Rs15.86 billion by September 2019 as compared with Rs6.17 billion as of May 2019.

    The government on June 24, 2019 announced to discontinue the circulation of Rs40,000 denomination bearer prize bond.

    After the decision of the government people have surrendered Rs222 billion bearer bonds of Rs40,000 denomination by September 2019, which is around 86 percent of the total invested amount till May 2019.

    The State Bank of Pakistan (SBP) following the announcement issued procedure for the banks to facilitate general public in exchanging the unregistered prize bonds through three different modes.

    The SBP has barred the exchange of bearer prize bonds against cash.

    However, it can be redeemed against registered or premium prize bonds or can be converted into national saving schemes or face value (direct transfer to the bank account of bond bolder).

    The bearer instruments have been known as parking lot for undocumented economy. Therefore, the government launched registered prize bonds of Rs40,000 denomination in March 2017 which could be purchased against certain requirements including Computerized National Identity Card (CNIC) and valid bank account.

    According to the SBP the bearer instrument can also be exchanged in savings schemes such as Special Saving Certificates (SSC) or Defence Saving Certificates (DSC).

    The total investment into the saving certificates increased to Rs2.317 trillion by September 2019 as compared with Rs2.2 trillion by May 2019.

    The government is intended to transform all the bearer prize bonds into to registered securities. In this regard the Central Directorate of National Savings in collaboration with SBP is planning to issue scripless registered prize bonds amongst all denominations with objective to document the economy.

  • Investment in premium Rs40,000 prize bonds surges by 156 percent

    Investment in premium Rs40,000 prize bonds surges by 156 percent

    KARACHI: The investment in premium prize bonds of Rs40,000 denomination has sharply increased by 156 percent to Rs14.84 billion by August 2019 as compared with Rs5.78 billion in the same month of the last year.

    The significant increase in registered prize bonds of Rs40,000 denomination has been attributed to the announcement of the government to seize the issuance of unregistered instrument to stop expansion of black economy.

    In February this year the central bank stopped the issuance of Rs40,000 denomination prize bonds from its offices. The SBP also advised the Central Directorate of National Savings (CDNS) to stop printing the unregistered Rs40,000 prize bonds.

    A member of Tax Reform Committee (TRC), which was constituted by the former government in 2014 said that it was recommendation of the TRC to stop the circulation of high denomination prize bonds.

    The member said that the committee had presented its report in May 2015 and advised the then finance minister the high denomination prize bonds were major source for expansion of black economy.

    The TRC had recommended to document high denomination prize bonds of Rs25,000 and Rs40,000 and should be issued against CNICs of individuals.

    The government on June 24, 2019 announced to discontinue the circulation of Rs40,000 denomination bearer prize bonds.

    In compliance to the government announcement the SBP also issued instructions to banks. The central bank issued procedure for the banks to facilitate general public in exchanging the unregistered prize bonds with three different modes.

    The SBP said that the bearer prize bonds of Rs40,000 cannot be exchanged against cash. However, it can be redeemed against registered prize bonds or can be converted into national saving schemes or face value (direct transfer to the bank account of bond bolder).

    The SBP informed the banks that such prize bonds would not be sold after June 24, 2019 and will not be encashed/redeemed after March 31, 2020. No further draws of Rs40,000 denomination national prize bonds shall be held.

    The government is intending to expand the documented prize bonds in other denomination as well on the recommendations of the TRC, the member said.

    The TRC in its report pointed out: “Issuance of prize bond of Rs 25,000 or Rs 40,000 should be discontinued as these high denomination bearer instruments fuel corruption and tax evasion.”

  • Unregistered prize bonds worth Rs206 billion surrendered on discontinuation announcement

    Unregistered prize bonds worth Rs206 billion surrendered on discontinuation announcement

    KARACHI: An amount of around Rs206 billion has been surrendered following the government announcement of discontinuation the circulation of unregistered prize bonds of Rs40,000 denomination.

    According to information received to PkRevenue.com, the total investment in unregistered Rs40,000 denomination prize bonds fell to Rs52.46 billion by August-end 2019 as compared with Rs258 billion in May 2019.

    The government on June 24, 2019 announced to discontinue the circulation of Rs40,000 denomination bearer prize bonds.

    In compliance to the government announcement the State Bank of Pakistan (SBP) also issued instructions to banks. The central bank issued procedure for the banks to facilitate general public in exchanging the unregistered prize bonds with three different modes.

    The SBP said that the bearer prize bonds of Rs40,000 cannot be exchanged against cash. However, it can be redeemed against registered prize bonds or can be converted into national saving schemes or face value (direct transfer to the bank account of bond bolder).

    The SBP asked the banks that such prize bonds would not be sold after June 24, 2019 and will not be encashed/redeemed after March 31, 2020. No further draws of Rs40,000 denomination national prize bonds would be held.

    The SBP issued the following instructions regarding handling of Rs.40,000/- denomination National Prize Bonds are issued herewith for information, guidance and meticulous compliance:

    a) National Prize Bonds of Rs.40,000/- denomination shall not be sold after June 24, 2019 and will not be encashed/redeemed after March 31, 2020.

    b) No further draws of Rs.40,000/-denomination National Prize Bonds shall be held.

    c) Cash payment for encashments of bonds is not allowed. However, the bond holder (s) shall have the following options to replace / encash these bonds:

    1. Conversion of premium prize bonds (registered)

    2. Replacement with special saving certificate (SSC)/Defence Saving Certificate (DSC)

    3. Encashment at face value.

    d) Appended below is the SOP for processing requests under the aforementioned options for compliance by all banks:

    1. Conversion to Premium Prize Bonds (Registered)

    i. The bonds can be converted to premium prize bonds (registered) through the 16 field offices of SBP Banking Services Corporation, and authorized branches of six commercial banks i.e. National Bank of Pakistan (NBP), Habib Bank Limited (HBL), United Bank Limited (UBL), MCB Bank Limited (MCB), Allied Bank Limited (ABL) and Bank Alflah Limited (BAFL).

    ii. The bond holder shall be required to submit a written request for conversion of bearer bonds to premium prize bonds (registered) to be registered in his (her) name on the prescribed application.

    iii. The bond holder shall also be required to submit prescribed applications forms for registrations / purchase of premium prize bond as per the procedure in vogue.

    Replacement with the Special Saving Certificate (SSC)/Defence Saving Certificate (DSC)

    i. The bonds can be replaced with SSC / DSC through the 16 field offices of SBP Banking Services Corporation, authorized commercial banks and National Savings Centers.

    ii. All authorized commercial banks shall, therefore, accept requests for replacement of bearer bonds with SSC or DSC on the prescribed application form.

    iii. The bondholder shall also be required to submit application form for purchase of SSC/DSC (SC-1) as per the prescribed procedure.

    Encashment at Face Value:

    i. The bonds will only be encashed by transferring the proceeds to the bond holder’s bank account through the 16 field offices of SBP Banking Services Corporation as well as the authorized commercial bank branches.

    ii. All commercial banks shall receive requests for encashment of bearer bonds on the prescribed application form.

    A cop of the application form, duly signed and stamped, shall be provided to the bondholder as an acknowledgement receipt.

    The SBP said that it is needless to mention that the National Prize Bonds of Rs40,000 denomination tendered at the counters of banks shall be subject to through scrutiny to ascertain their genuineness. In this regard, details regarding the security features in Rs40,000 denomination National Prize Bonds are available online.

    Moreover, the prize bonds encashed / replaced by general public may be surrendered to concerned SBP BSC office through respective regional office of the commercial banks. For the purpose, the regional office may intimate the SBP BSC office three days in advance so that necessary arrangements for receipt of the bonds can be made.

    It is imperative to mention that a notice regarding the above / mentioned facilities must be displayed at prominent places within branch premises for awareness and information of general public.

  • Investment in premium prize bonds grows by 115 percent after ban on bearer instruments

    Investment in premium prize bonds grows by 115 percent after ban on bearer instruments

    KARACHI: The investment in premium prize bonds of Rs40,000 denomination has increased sharply by 115 percent following the ban imposed by the government on bearer instrument of same denomination.

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  • Investment into premium prize bonds post 46pc growth

    Investment into premium prize bonds post 46pc growth

    KARACHI: The investment in premium prize bonds of Rs40,000 denomination has increased by over 46 percent as the government stopped the circulation of bearer bonds of same denomination and launched campaign to document the economy.

    According to statistics released by State Bank of Pakistan (SBP) the total investment into premium prize bonds of Rs40,000 denomination increased to Rs7.665 billion by end of June 2019 as compared with Rs5.245 billion in same month of the last year.

    The premium prize bonds were launched by the government in March 2019 with the aim to bring undocumented money into the mainstream economy.

    According to salient features of the premium bonds issued by Central Directorate of National Savings (CDNS):

    — The bond is available in Rs40,000 denomination

    — Registered in the name of investor.

    — Quarterly prize money draws as well as bi-annual profit payment.

    — For individuals, public and private sector institutions except banks, insurance companies and mutual funds.

    — Direct credit and prize money and profit in investors bank account.

    — No Application Forms required for claiming prize money & profit.

    — Unlimited Investment and Tenure.

    — WHT applicable and Exempt from Zakat.

    — Transferable and Pledge-able.

    — Can be purchased through Cash, Cheque, Pay-Order and Bank Draft

    — Can be purchased from offices of State Bank of Pakistan Banking Services Corporations.

    The growth in premium prize bonds investment is much faster in the month of June 2019 as compared with the previous month due to the government announcement to stop the circulation of bearer bonds of Rs40,000 denomination.

    The investment in Rs40,000 prize bonds denomination grew by 24 percent to Rs7.665 billion in June 2019 as compared with Rs6.17 billion in May 2019.

    The government on June 24, 2019 notified withdrawal of Rs40,000 denomination national prize bonds from circulation.

    On the same date the State Bank of Pakistan (SBP) issued instructions to chief executives and banks of all banks for compliance.

    The SBP instructed:

    (a) National Prize Bonds of Rs40,000 denomination shall not be sold after June 24, 2019 and will not be encashed/redeemed after March 31, 2020.

    (b) No further draws of Rs40,000 denomination national prize bonds shall be held.

    (c) Cash payment for encashment of bonds is ‘Not’ allowed. However, the bond holder(s) shall have the following options to replace/encash the bonds:

    1. Conversion of Premium Prize Bonds (Registered)

    2. Replacement with Special Saving Certificate (SSC)/Defence Savings Certificate (DSC)

    3. Encashment at Face Value.

    The SBP also issued Standard Operating Procedure (SOP) for conversion to premium prize bonds (registered).

    i. The bonds can be converted to premium prize bonds (registered) through the 16 field offices of SBP Banking Services Corporation, and authorized branches of six commercial banks i.e. National Bank of Pakistan, Habib Bank Limited, United Bank Limited, MCB Bank Limited, Allied Bank Limited and Bank Alfalah Limited.

    ii. The bond holder shall be required to submit a written request for conversion of bearer bonds to premium prize bonds (registered) to be registered in his/her name on the prescribed application form.

    iii. The bond holder shall also be required to submit prescribed application form for registration/purchase of premium prize bonds as per the procedure in vogue.

    The SBP also issued procedure for replacement with Special Saving Certificate (SSC)/Defence Savings Certificate (DSC).

    i. The bonds can be replaced with SSC/DSC through the 16 field offices of SBP Banking Services Corporation, authorized commercial banks and National Saving Centers.

    ii. All authorized commercial banks shall therefore, accept requests for replacement of bearer bonds with SSC or DSC on the prescribed application form.

    iii. The bond holder shall also be required to submit application form for purchase of SSC/DSC as per the prescribed procedure.

    The SBP issued procedure for encashment at face value and said that the bonds will only be encashed by transferring the proceeds to the bond holder’s bank account through the 16 field offices of SBP banking services corporation as well as the authorized commercial bank branches.

    The SBP further said that all commercial banks shall receive request for encashment of bearer bonds on the prescribed application form.

    The SBP said that the prize bonds encashed/replaced by general public may be surrendered to concerned SBP BSC office through respective regional office of the commercial bank. For the purpose, the regional office may intimate the SBP BSC office three days in advance so that necessary arrangements for receipt of the bonds can be made.

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    Investment in saving certificates rises by 19 percent to Rs2,217 billion

  • FBR issues withholding tax rates for winning prize bonds

    FBR issues withholding tax rates for winning prize bonds

    KARACHI: Federal Board of Revenue (FBR) has issued withholding tax rates for winning prize bonds, cross word, raffle, lottery and quiz for tax year 2019/2020 as effective from July 01, 2019.

    The FBR said that every person making payment shall collect withholding tax from persons on active taxpayers list (ATL) and double the amount of the tax from persons not appearing on the ATL at the time the prize or winning were actually paid.

    The collection of withholding tax under Section 156 of Income Tax Ordinance, 2001 shall be final.

    The withholding tax shall be collected at the following rates:

    (I) Payments made for prize on quiz bond and cross word the tax rate shall be 15 percent of the gross amount.

    Persons not appearing in the Active Taxpayers’ List: The applicable tax rate is to be increased by 100 percent (Rule-1 of Tenth Schedule to the Ordinance), i.e. 30 percent of the gross amount.

    (II) Payments on winning from a raffle, lottery, prize on winning a quiz, prize, offered by companies for promotion of sale crossword puzzles the tax rate shall be 20 percent of the gross amount.

    Persons not appearing in the Active Taxpayers’ List: The applicable tax rate is to be increased by 100 percent (Rule-1 of Tenth Schedule to the Ordinance), i.e. 40 percent of the gross amount.

  • Prize bonds, bearer instruments to be registered

    Prize bonds, bearer instruments to be registered

    KARACHI: Pakistani authorities have assured International Monetary Fund (IMF) of registering prize bonds and other bearer instruments to eliminate the use of these instruments in potential illegal activities and tax avoidance.

    The IMF issued Pakistan country report on Monday following successful $6 billion loan program.

    In order to make the program successful the Pakistani authorities had assured the fund of strengthening governance and the control of corruption.

    The priorities include:

    Strengthening the effectiveness of anticorruption institutions. A national committee has been established to implement the recommendations from the UNCAC 2017 report.

    A task force will review the institutional framework of the anticorruption institutions to enhance their independence and effectiveness in investigating and prosecuting corruption cases.

    A study will be conducted on establishing a dedicated AML unit in the Federal Investigation Agency (FIA). Upgrading the financial investigation capacities of law enforcement agencies will be also prioritized.

    Moreover, the authorities are pursuing agreements on information exchange with foreign countries to complement efforts to recover unlawful assets.

    An Asset Recovery Unit in the Prime Minister’s Office is cooperating with the FBR’s International Taxation Unit in identifying assets abroad owned by Pakistani residents, in line with the OECD Convention on Mutual Administrative Assistance on Tax Matters.

    Advancing anti-corruption efforts through the enhanced used of AML tools, including by (i) ensuring that banks and other reporting institutions improve their capacities to identify politically exposed persons and apply enhanced due diligence measures and (ii) providing adequate resources to the Financial Monitoring Unit to improve the dissemination of financial intelligence that can be used to support corruption investigations.

    Moreover, asset declarations of high-level public officials will be comprehensive in scope (i.e., assets beneficial owned or located abroad), filed with a central federal agency, electronically searchable, and appropriately verified.

    “Registering prize bonds and other bearer instruments to eliminate their use in potential illegal activities/tax avoidance,” the report said.

  • Rs260 billion to be documented through withdrawal of Rs40,000 bearer bonds in first phase

    Rs260 billion to be documented through withdrawal of Rs40,000 bearer bonds in first phase

    KARACHI: The government will document an amount of Rs260 billion in first phase by withdrawing Rs40,000 denomination bonds.

    The government has announced to stop circulation of high denomination bearer bonds in order to curb the black economy.

    Till February 2019 the central directorate of national savings issued Rs259.22 billion bonds of Rs40,000.

    On Jane 24, 2019 State Bank of Pakistan (SBP) issued instructions to commercial banks for not selling Rs40,000 Prize Bonds. The SBP also issued procedure for exchanging the bonds with premium bonds or documented saving certificates by March 2020.

    According to Economic Survey of Pakistan 2018-2019 the CDNS had planned to convert all bearer bonds into documented securities.

    A staggering amount of Rs939 billion has been invested in bearer bonds up to February 2019.

    Market sources said the holders of bearer bonds worth Rs40,000 were desperate to exchange and were even offering to exchange much lower rates in order to avoid questioning.

    The sources further said that many of those holders were desperate to exchange with US dollar and other foreign currencies, which put pressure on the local currency.

    The rupee hit all time low at Rs165 to a dollar in Interbank Foreign Exchange Market on Wednesday.

    On the other hand the FBR is also planning to question the persons exchanging the bearer bonds regarding source of investment.

  • SBP stops banks selling Rs40,000 prize bonds, issues procedure for conversion into registered bonds

    SBP stops banks selling Rs40,000 prize bonds, issues procedure for conversion into registered bonds

    KARACHI: State Bank of Pakistan (SBP) has stopped banks from issuing prize bond denomination of Rs40,000 with immediate effect and also issued instructions regarding conversion into registered bonds and encashment.

    The SBP on Monday issued the following instructions regarding handling of Rs.40,000/- denomination National Prize Bonds are issued herewith for information, guidance and meticulous compliance:

    a) National Prize Bonds of Rs.40,000/- denomination shall not be sold after June 24, 2019 and will not be encashed/redeemed after March 31, 2020.

    b) No further draws of Rs.40,000/-denomination National Prize Bonds shall be held.

    c) Cash payment for encashments of bonds is not allowed. However, the bond holder (s) shall have the following options to replace / encash these bonds:

    1. Conversion of premium prize bonds (registered)

    2. Replacement with special saving certificate (SSC)/Defence Saving Certificate (DSC)

    3. Encashment at face value.

    d) Appended below is the SOP for processing requests under the aforementioned options for compliance by all banks:

    1. Conversion to Premium Prize Bonds (Registered)

    i. The bonds can be converted to premium prize bonds (registered) through the 16 field offices of SBP Banking Services Corporation, and authorized branches of six commercial banks i.e. National Bank of Pakistan (NBP), Habib Bank Limited (HBL), United Bank Limited (UBL), MCB Bank Limited (MCB), Allied Bank Limited (ABL) and Bank Alflah Limited (BAFL).

    ii. The bond holder shall be required to submit a written request for conversion of bearer bonds to premium prize bonds (registered) to be registered in his (her) name on the prescribed application.

    iii. The bond holder shall also be required to submit prescribed applications forms for registrations / purchase of premium prize bond as per the procedure in vogue.

    Replacement with the Special Saving Certificate (SSC)/Defence Saving Certificate (DSC)

    i. The bonds can be replaced with SSC / DSC through the 16 field offices of SBP Banking Services Corporation, authorized commercial banks and National Savings Centers.

    ii. All authorized commercial banks shall, therefore, accept requests for replacement of bearer bonds with SSC or DSC on the prescribed application form.

    iii. The bondholder shall also be required to submit application form for purchase of SSC/DSC (SC-1) as per the prescribed procedure.

    Encashment at Face Value:

    i. The bonds will only be encashed by transferring the proceeds to the bond holder’s bank account through the 16 field offices of SBP Banking Services Corporation as well as the authorized commercial bank branches.

    ii. All commercial banks shall receive requests for encashment of bearer bonds on the prescribed application form.

    A cop of the application form, duly signed and stamped, shall be provided to the bondholder as an acknowledgement receipt.

    The SBP said that it is needless to mention that the National Prize Bonds of Rs40,000 denomination tendered at the counters of banks shall be subject to through scrutiny to ascertain their genuineness. In this regard, details regarding the security features in Rs40,000 denomination National Prize Bonds are available online.

    Moreover, the prize bonds encashed / replaced by general public may be surrendered to concerned SBP BSC office through respective regional office of the commercial banks. For the purpose, the regional office may intimate the SBP BSC office three days in advance so that necessary arrangements for receipt of the bonds can be made.

    It is imperative to mention that a notice regarding the above / mentioned facilities must be displayed at prominent places within branch premises for awareness and information of general public.

  • Non-ATL persons to pay double amount of withholding tax on prize bond winning

    Non-ATL persons to pay double amount of withholding tax on prize bond winning

    ISLAMABAD: The government has increased withholding tax by 100 percent on winning of prize bonds for persons not on Active Taxpayers List (ATL).

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