Day: December 24, 2021

The Federal Tax Ombudsman (FTO), in pursuance of Own Motion (OM) investigation powers conferred to him under Section 9(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance), has ordered to probe irregularities committed by the FBR’s field formations in processing and sanctioning of bogus sales tax refund and directed for initiation of disciplinary and criminal proceedings against the senior officers of Inland Revenue Service of FBR.

The Directorate General I&I-IR, FBR, had issued the “Red Alerts” in such cases to the field formations concerned, but no action was initiated against the fake claimants of income tax refund, and their connivers in the Department, involved in bogus registration, processing, and sanctioning of fraudulent income tax refund and issuance of refund cheques. Furthermore, no action was proposed against the officers/officials of bank branches concerned and the PRAL management.

In the case of M/s China National Electric Wire & Cable Import & Export Corporation (RP), an AOP registered vide NTN 2789363-2 with principle activity of electrical installation refund for Tax Year 2012 amounting to Rs.26.119 million was claimed. In terms of sub-Section (3), tax deducted on the income of a resident person or Permanent Established (PE) of the non-resident person under clauses (a) and (c) of sub-Section (2) 153 of the Income Tax Ordinance 2001 (the Ordinance) should be a final tax. Thus, the income tax refund claimed by the RP, non-resident PE, for Tax Year 2012 was inadmissible.

Furthermore, after conducting Post Refund Audit (PRA) of the RP for Tax Years 2007, 2008, 2009, and 2011, the Director I&I Lahore also issued an investigation report to the Chief Commissioner-IR RTO Lahore. As per the report, the RP claimed a refund for Tax Years 2007, 2008, 2009, 2010, and 2011, amounting to Rs. 26.778, Rs. 25.264, Rs. 71.151,and Rs. 0.170 million respectively. The Department had, however, already issued refunds for Tax Years 2007, 2008, 2009, and 2011, aggregating to Rs. 123.364 million.

In order to retrieve the loss of revenue, the Directorate I&I also proposed initiation of action for Tax Years 2007 to 2011 under Section 122(5A) of the Ordinance.

Evidently, no action whatsoever was taken by the department on the above Red Alert and PRA investigation report. Therefore, the failure of the department to take timely action on such an important anti-tax evasion exercise carried out by I&I-IR led to serious instances of maladministration on account of certain acts of omission and commission, reflecting improper motives, jeopardizing good governance and transparency in tax administration.

Federal Tax Ombudsman, while finally disposing of the case, has directed FBR to initiate proceedings for recovery of tax demand created for Tax Years 2007, 2008, and 2009, vide consolidated order dated 05.06.2013, as per law, and remove the officers involved from field postings and initiate disciplinary and criminal action against Ch. Muhammad Tariq, the then Additional C-IR, and Ashfaq Ahmad, the then DC-IR.

Further, The Federal Tax Ombudsman has also ordered disciplinary proceedings against Dr. Sarmad Qureshi, the then Commissioner, CRTO Lahore, and Syed Nadeem Hussain Rizvi, the then Chief Commissioner, CRTO Lahore, in the same scam.

Source: Pro Pakistani

The economic prosperity has improved by 1.5 percent in Pakistan during the period from November 2020 to October 2021 with an improvement in the country’s overall economic performance, according to the latest survey conducted by the Policy Research Institute of Market Economy (PRIME).

The improvement in the overall economic performance can be attributed to higher business activity on the back of rising domestic and international demand for goods and services, a decline in supply chain distortions, and a return to normalcy.

The report reveals that the trade volume witnessed an increase of Rs. 538 billion year-on-year (YoY) and Rs. 3.8 billion month-on-month (MoM) on account of an increase in domestic and international demand. In MoM trade growth, exports witnessed an increase of Rs. 19 billion, while imports witnessed a decline of Rs. 15 billion in October 2021.

The purchasing power continued to decline as the YoY inflation was reported at 9.2 percent, while the MoM inflation clocked at 1.9 percent. The prevalent high levels of inflation are due to the soaring supply-demand gap emanating from monetary expansion carried out through commercial banks’ investment in government securities, a higher inflow of remittances, falling productivity, and surging petroleum prices.

The Large Scale Manufacturing (LSM) output posted a growth of 1.9 percent MoM, while a decline of 1.2 percent YoY. The slowdown in manufacturing activities on yearly basis is due to a significant increase in the energy and input prices while the monthly increase is associated with rising demand. The automobile industry maintains a leading position with a growth of 1.2 percent, while textile and food industries having weightage of 21 percent and 12 percent showed growth of 0.1 percent and 0.4 percent.

The private sector borrowing from banks has been on an upward trajectory with Rs. 197 billion YoY and Rs. 19 billion MoM increase. The borrowing continues to increase despite a slight hike of 25 basis points in the policy rate and the indication of a further hike in the coming months. However, the borrowing is likely to slow down after recent hikes in the policy rate.

As per the report, the economic performance is encouraging but caution is needed due to prevalent challenges. The burgeoning current account deficit on the back of a significant increase in the international commodity and energy prices and the resultant hike in the policy rate will contribute to a slowdown in the economic activities in the country. This is a cardinal factor in the yearly decline in manufacturing sector output.

The surging global energy prices, says the report, translates into domestic inflation thus declining the purchasing power/real incomes of the citizens and hindering the economic activity. Instead of relying on administrative measures to control prices, addressing the supply side bottlenecks such as lower productivity and interruption in the supply of energy are imperative to lower inflation, especially food inflation, which is the main cause of rising overall inflation in the economy.

The overall economic outlook, as measured by PPI, shows improvement and supports the government’s growth targets. The supply-side shocks call for more liberal trade measures and the elimination of state intervention in the market. Moreover, prudent economic planning is needed to curtail the fiscal deficit.

PRIME publishes monthly PPI report with a lag of two months. The report covers trade volume, lending to the private sector, purchasing power, and manufacturing output indices.

Source: Pro Pakistani

Prime Minister Imran Khan has lauded the leading role of the State Bank of Pakistan (SBP) and the efforts of the banking industry in the implementation of the Mera Pakistan Mera Ghar (MPMG) scheme.

A ceremony was held at the Prime Minister House on Friday to mark the approval of Rs. 100 billion in home finance by the banks for the government’s flagship MPMG scheme under the theme, “Khawab Ke Tabeer Ab Tez Ter”.

The Prime Minister witnessed ceremonial keys being handed over to six beneficiaries of MPMG who were from different regions and represented various segments of Pakistan. Over 20 other beneficiaries of MPMG also participated in the ceremony.

It is to note that under the low-cost housing Mera Pakistan Mera Ghar (MPMG) scheme, the commercial banks have received applications of Rs. 263 billion while approvals of Rs. 109 billion have already been made till December 20, 2021.

Over the last nine months, the approved amount increased by Rs. 98 billion. The disbursement has also increased from almost zero in March 2021 to Rs. 32 billion by December 20, 2021.

The Prime Minister distributed awards among top-performing banks with respect to approvals and disbursements. He urged the banks to accelerate their efforts to help realize the dream of every Pakistani owning their houses.

He expressed pleasure that low and middle-income citizens, ignored earlier, were being served by the banks and obtaining home finance.

The ceremony was attended by Federal Minister for Kashmir Affairs & Gilgit Baltistan, Ali Amin Gandhapur, Special Assistant to Prime Minister on Political Communication, Dr. Shahbaz Gill, Advisor to Prime Minister on Finance & Revenue, Senator Shaukat Tareen, Governor SBP, Chairman NAPHDA [Naya Pakistan Housing & Development Authority], Minister for Housing Khyber Pakhtunkhwa, Dr. Amjad Ali, and Presidents/CEOs of banks.

Central Bank Update

Expressing his views on the occasion, Governor SBP, Dr. Reza Baqir, shared the progress of MPMG since its inception. He highlighted that all stakeholders were taking steps in the right direction to translate the Prime Minister’s vision of increasing homeownership into reality.

Shedding light on the theme of the event, he mentioned that during the last month, banks on average approved Rs. 4 billion and disbursed Rs. 1.6 billion on weekly basis. He underscored the need to maintain and accelerate this momentum. There are six banks that disbursed over Rs. 2 billion each and seven banks that disbursed over Rs. 1 billion each in the span of nine months under MPMG, he underlined.

The SBP Governor said that growth in MPMG was attributed to various measures taken by the Government, SBP, and NAPHDA to provide a conducive environment for the banking industry to enter the untapped market of housing and construction finance.

He mentioned the simplification of a complex procedure, a significant reduction in documentation requirement, development of a model to assess informal income, effective redressal mechanism as examples of this support. The communication initiatives like Mera Pakistan Mera Ghar Meri Kahani — a series of testimonials of MPMG beneficiaries — have also been instrumental in encouraging others to apply.

Earlier, in a meeting of the National Coordination Committee on Housing, Construction, and Development (NCCHCD), the Governor SBP apprised the Prime Minister of the developments in housing and construction finance.

He recalled that in July 2020, in line with the government’s vision of boosting economic activity, SBP mandated banks to increase their housing and construction finance to at least five percent of their domestic private sector advances by December 31, 2021. Five banks have already achieved their December 2021 targets.

Source: Pro Pakistani