Month: June 2021

The federal Minister for Finance, Shaukat Tarin, has announced that the Extended Fund Facility (EFF) program will continue as both Pakistan and the International Monetary Fund (IMF) want it to move forward.

He made these remarks while speaking to the media, and ruled out any disagreements between Pakistan and the IMF. “Both the Government of Pakistan and the IMF want to continue the program,” he affirmed.

Minister Tarin said that there is no danger of Pakistan exiting the program, and that both sides will definitely develop an understanding as the way Pakistan has chosen for sustainable growth will eventually convince the IMF.

He said that Pakistan has asked the IMF to observe the country’s economic performance for a few months and evaluate the impact of the policies announced in the budget.

He explained that while both the IMF and Pakistan want improvements in certain segments of the economy, including the power sector, Pakistan has chosen a path that is different from the one recommended by the IMF.

The IMF wanted to enhance revenues by removing exemptions, but Pakistan chose to implement reforms to broaden the tax base instead of burdening the existing taxpayers, he added.

The minister stated that the IMF has agreed to continue discussions and to monitor the impacts of new policies for two to three months.

He said that the sixth IMF review that had previously been scheduled for July will now be held two months later.

Source: Pro Pakistani

The Federal Board of Revenue (FBR) has categorically said that no tax has been imposed on pensions, major components of salary, gratuity funds payments, leave prior to retirement (LPR), commutation of pension and other allied benefits.

The Federal Board of Revenue (FBR) has issued a clarification regarding recent budget proposals on the taxation of salary income.

The FBR has clarified that withdrawal of exemption & reduced rates should not be confused with the imposition of new taxes. It is very clearly and candidly informed that the present budget proposals do not contain any new item for taxation of pensions or major components of salary as initially discussed. Omission of Clause (39) of Part I of Second Schedule to the Income Tax Ordinance, 2001 is only of technical nature.

This clause provided exemption to reimbursement of expenditure incurred by employees on behalf of the employer organization. This type of transaction cannot form part of the salary in any circumstances.

The omission has been made only because there were some interpretations of the courts that were not in accordance with the actual purpose of this clause. The clause has accordingly been, omitted to avoid multiple interpretations or confusions.

FBR has further clarified that no tax has been imposed on pensions, gratuity funds payments, leave prior to retirement (LPR), commutation of pension and other allied benefits. However, profit on debt or markup component on provident fund has been proposed to be taxed @ 10% as a separate block of income only if such markup exceeds Rs.500, 000 in a tax year.

FBR firmly believes that this change will not result in any significant burden on taxpayers. Similarly, the exemption to reimbursement of medical expenditure has been proposed to be omitted as a streamlining measure because there were complaints of fake claims of exemption on this account. Slight changes on account of traveling allowance of newspaper employees, free supply of food or other perquisites etc., and salary of seafarers that was wholly exempt have been proposed for rationalization of salary tax regime rather than as revenue generation measure.

The tax rate on capital market transactions has been lowered from 15% to 12.5% in order to encourage ordinary people to invest their savings in the stock market tradable securities. This change will result in enhanced savings and investment in an activity that will lead to industrial expansion and economic growth.

Needless to highlight, enhanced confidence in the stock market ultimately translates into raising funds/money by initial public offerings (IPOs) by existing companies or new companies joining the field. The incentive has been offered for promoting sustainable and inclusive economic growth.

Ministry of Finance and FBR are always open to positive critique for making changes if any required in the proposals, however, take a strong exception to undue, unwarranted and unjustified criticism, FBR added.

Source: Pro Pakistani

The government has decided to hand over the loss-making entity — the Telephone Industries of Pakistan (TIP) — to the National Radio & Telecommunication Corporation (NRTC) to revitalize it.

The federal Cabinet has approved the transfer, as confirmed in a tweet by the federal Minister for Economic Affairs, Omar Ayub Khan.

He added that an important industry in Haripur will now be revitalized and made operational, entailing the creation of new job opportunities in a key technological sector.

The federal Minister for Information Technology and Telecommunication (IT&T), Syed Amin Ul Haq, said that a summary regarding the transference of the TIP to the NRTC had been moved in the Cabinet. He said that his ministry was of the view that if the latter is ready to take the TIP’s liabilities of Rs. 7.9 billion that has been piling up since 2004, its pensions, and its employees’ future responsibility, it is ready to hand the TIP over to the NRTC.

Haq added that an inter-ministerial committee comprising the federal Ministers for Finance, Defence Production, and IT&T has been constituted to look into the matter.

Official sources revealed that the TIP had become non-functional when its annual revenue had drastically dipped from Rs. 700 million to about Rs. 20 million in the recent past. It is a state-owned enterprise (SOE) that is currently running in losses while draining an average of Rs. 500 million a year in terms of salary support.

The TIP has adequate land of 432 kanals, infrastructure, and skilled manpower. Soon after coming into power the Minister for IT&T, Khalid Maqbool Siddiqui, announced during a press conference that the government is ready to establish a mobile phone manufacturing plant in Haripur in collaboration with the private sector, while dropping the idea of privatizing the TIP.

The NRTC’s mission statement is to design, develop, and manufacture military and commercial level telecommunication equipment, electronic systems, and IT-based solutions. Its quality policy is to provide its customers world-class quality telecommunication equipment that meets all their operational requirements in time at affordable costs.

Prime Minister Imran Khan had visited the NRTC in Haripur and inaugurated the production facility of the first-ever indigenously-developed ventilators in Pakistan. He had commended the initiative taken by the NRTC and the Ministry of Science & Technology as a landmark achievement for Pakistan.

Source: Pro Pakistani