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An amount of Rs.337 billion has been allocated by the Punjab Government as Annual Development Plan (ADP) for the next fiscal year in the current budget presented on June 15, 2020.

As per the sayings of the Finance Minister of Punjab Makhdoom Hashim Javan Bakht, it has been decided by the provincial government to not compromise on ongoing development projects.

The breakup of ADP allocation:

• Rs.97.66 billion for social sector
• Rs.77.86 billion for infrastructure development
• Rs.17.35 billion for the production sector
• Rs.45.38 for the services sector
• Rs.51.24 billion for other sectors
• Rs47.5 billion for special programs 
• Rs25 billion for public-private partnership (PPP)

Keeping in view the limited resources of the province, it has been decided by the government to include the private sector for raising finances.

For this purpose, a Public-Private Partnership Authority has been established in the province and mega projects of amount Rs.165 billion have been identified.

18 June 2020

It has been made mandatory for all the taxpayers to provide details of the bank accounts or they will be excluded out of the active taxpayer's list (ATL).

An amendment in Section 114A of the Income Tax Ordinance, 2001 is proposed to be made in the finance bill 2020. As per this amendment, it has been made mandatory for all the taxpayers to update their profiles.

According to budget commentary issued by PwC A. F. Ferguson Chartered Accountants, all existing registered taxpayers as well as those who will obtain registration by September 30, 2020, will be required to file and update their tax profile by December 31, 2020, whereas other taxpayers will be required to file and update their profiles within 90 days of registration.

Also, any change in such a profile is required to be updated within 90 days of such a change.

Failure to file and update tax profiles in the above manner and within the prescribed dates could result in a taxpayer’s exclusion from active taxpayers list. However, such persons can be included back in active taxpayers list by filing the requisite information and paying the prescribed amount of surcharges.

Proposed new section 114A of Income Tax Ordinance is as follows:

114A. Taxpayer’s profile:

1.As per this section, the following persons shall furnish a profile:

• every person applying for registration under section 181;
• every person whose income is subject to final taxation
• any trust or welfare institution;
• Any other person prescribed by the Board.
• any non-profit organization as defined in clause (36) of section 2
• every person deriving income chargeable to tax under the head, “income from business”;

2.Taxpayers profile:

• shall be in the prescribed form and shall be accompanied by such annexures, statements or documents as may be prescribed;
• shall fully state, in the specified form and manner, the relevant particulars of:
• utility connections;
• types of businesses
• such other information as may be prescribed;
• bank accounts;
• business premises including all manufacturing, storage or retail outlets operated or leased by the taxpayer;

3.shall be signed by the person being an individual, or the person’s representative where section 172 applies

4. Shall be filed electronically on the web as prescribed by the Board.

5. A taxpayer’s profile shall be furnished:

• within ninety days registration in case of a person not registered under section 181 before the 30th day of September 2020.

• on or before the 31st day of December 2020 in case of a person registered under section 181 before the 30th day of September 2020

6. A taxpayer’s profile shall be updated within ninety days of the change in any of the relevant particulars of information as mentioned in clause (b) of sub-section (2).”

15 June 2020

By the week ending May 29, 2020, the liquid foreign exchange reserves of the country fell by $1.68 billion.

The total foreign exchange reserves of the country before this week were $18.559 billion which decreased to $16.92 billion.

The foreign exchange held by the central bank fell by $1.712 billion to $10.362 billion by week ended May 29, 2020, as compared with official reserves of $12.074 billion.

The decline is primarily due to the external debt repayments of $1.669 billion.

However, there is an increase of $34 million in the foreign exchange reserves held by the commercial banks. The reserves increased to $6.558 billion by the week ended May 29, 2020, as compared to the $6.524 billion for the last week.

11 June 2020

As per the analysis of some analysts at Arif Habib Limited, the government’s objectives for the budget for the year 2021 have been highlighted as the revival and stabilization of the economy after a huge fall of the economy due to COVID-19 pandemic. And the government may support the business community and masses by providing relief while maintaining the fiscal imbalances along with the fulfillment of IMF’s revenue collection target.

 Budget 2020/2021 is scheduled to be presented on June 12, 2020, by the Government.

Some of the expectations regarding measures in the budget are as follows:

1. Counter Coronavirus and ensure social security

2. Allocation of PKR 1.0 trillion to fight the ongoing COVID-19 contagion that might be allocated as follows:

   • Subsidized electricity for lifeline consumers
   • Higher allocation for health and food supplies,
   • Lowering down taxes on basic essential goods.
   • Daily wagers cash allocation,
   • Higher allocation to the Ehsaas program (for vulnerable families),
   • Enhanced allocation to Utility Stores Corporation (USC),
   • Lowering down taxes on basic essential goods.

3. To help mitigate the effects of COVID-19 pandemic, State Bank of Pakistan has already introduced the following measures:

   • announcement of a relief package for households, industries, and SMEs,
   • Relaxation in credit requirement for exports and imports
   • 525bps cut in interest rate,
   • Refinancing scheme to support employment and avert layoffs,
   • Facilitation of new investments via subsidized interest rates for BMR activities.

4. social expenditure might be higher allocated under Federal PSDP. 

   Revive Economic growth, increase PSDP allocation along with incentives for industries.

5. The government has set GDP target for FY21 at 2.3 percent (FY20 estimated at -0.38 percent primarily due to the coronavirus pandemic):

   • Reduction of custom and excise duty by 3 percent on imports of machinery for agriculture and power sector,
   • Allocation of PKR 630 billion under the Federal PSDP along with an additional PKR 200 billion under Public Private Partnership Authority (PPPA),
   • Removal of import duty on plant and machinery. Cascading duty structure on import of raw materials, intermediate goods, and finished goods
   • Removal of additional customs duty on different products to support local production and revive demand
6. Mobilize revenue measures to achieve the additional collection target for next year.

   The tall revenue target of the FBR at PKR 5.1 trillion with additional requirement amounting to Rs.575 billion (discussed ahead) could be generated by means of:

• Administrative and enforcement actions were undertaken by FBR.
• The imposition of import duty on 60 luxury imported items including cars, ceramics, and others,
• Amendment in the income tax treatment of bad debts, which could generate Rs.100 billion in revenue from the banking sector,
• The imposition of luxury tax on luxury houses, farmhouses, mansions, and bungalows,
• Higher petroleum development levy during FY21.

7. Certain expenditures (ex-social spending) to remain uncompromised.

The government has set an expenditure target for FY21 at Rs.10.4trn.

• Government is expected to allocate Rs.2.7 trillion for debt servicing in FY21,
• Defense expenditure likely to go up to Rs.1.4 trillion,
• Federal PSDP allocation will be targeted at Rs.630 billion.

8. Scope of documentation drive to be eased and relaxation expected to revive consumer spending:

• Reduction of 3 percent in further sales tax on supplies to undocumented individuals
• Withholding tax on remittances to be abolished,
• New sectors to be added to the tax net.
• Increase the limit of providing CNIC conditions from Rs 50,000 to Rs 100,000

Source:

https://pkrevenue.com/budget-2020-2021-to-focus-on-mitigating-covid-19-impact/

10 June 2020