Latest news with #Eid-ul-Adha
Business Recorder
7 hours ago
- Business
- Business Recorder
SBP injects record high Rs14.3trn in banks for seven days
The State Bank of Pakistan (SBP) has injected a record high Rs14.3 trillion in conventional commercial and Shariah-compliant banks for one week to help overcome the shortage of liquidity in the system after people withdrew significant cash during Eid-ul-Adha and external inflows delayed, it was learnt on Friday. The volume of the injection through open market operations (OMO) comes to almost 44% of the total deposits standing at Rs32.7 trillion in May 2025, according to the central bank latest data. SBP injects massive Rs11.85 trillion into banking system for up to 14 days Citing SBP Governor Jameel Ahmad from an analysts briefing held after the issuance of the latest monetary policy at the outset this week, Arif Habib Limited (AHL) and Topline Research said the OMO stock had increased mainly due to two reasons, including higher currency in circulation during Eid (temporary effect) and delays in external inflows. 'However, OMO levels are expected to decline in the coming weeks as (external) inflows materialise,' AHL reported Ahmad saying this. AHL's Sana Tawfiq and AKD Securities' Awais Ashraf said the cumulative supply of over Rs14 trillion to banks through OMO were record high injections. Elaborating SBP Governor Ahmad's reasoning for the elevated OMO stocks, Tawfiq said people withdrew huge cash from banks during Eid that reduced deposits levels and created additional demand for liquidity in the system. Besides, the reliance of the government on domestic debt has spiked after external inflows from multilateral creditors like the International Monetary Fund (IMF), World Bank, and Asian Development Bank (ADB) got delayed. She added the government reliance on domestic debt, including the one from commercial banks, had been on the rise, as the collection of revenue in taxes had remained low compared to government expenditure. The low tax collection was increasing fiscal deficit, which is being met through piling up debt. Ashraf said the external inflows had remained low for the past two to three years, shifting the government reliance solely on domestic debt to finance budget deficit. Pakistan salaried class rejects govt's claim of giving relief in income tax He said commercial bank financing and national saving schemes had remained two rich avenues available with the government to raise new debt. Out of total Rs31.8 trillion the domestic debt, the share of bank loans had stood at Rs28.1 trillion at present, he added. SBP OMO breakup The breakup of the data suggest the SBP injected Rs13.9 trillion into conventional commercial banks at the rate of return of 11.03% for a period of seven days, as it accepted all the 34 quotes received from banks for the loan. The central bank supplied another Rs375 billion to Shariah compliant banks at the rate of return of 11.11% for seven days, accepting all the three quotes received from Islamic banks.
Business Recorder
3 days ago
- Automotive
- Business Recorder
Numbers speak: Sindh agriculturalists spend more on vehicle registration, pay less in income tax
In a revealing fiscal projection, the Sindh government has said it will collect Rs9.35 billion in motor vehicle registration fees in the outgoing fiscal year ending June 30, 2025. That is more than double the Rs4 billion to be collected from income tax on the province's vast agriculture sector, according to budget documents. The figures highlight a long-standing wealth imbalance, suggesting people who are classified in middle and upper agriculture income brackets and rural elite earn and spend significantly on their lifestyle, but their tax contributions remain surprisingly low. The situation has resulted in a climbing tax burden on tax compliant industrial and services sectors as well as individuals earning salaries from non-agriculture sectors. The provincial government is set to collect comparatively higher revenue from motor vehicle registration fees despite the fact that the tax is charged at lower rates — ranging from 1% to 5% of the value of vehicles, depending on engine size. In contrast, agriculture income is taxed at significantly higher rates, from 15% to 45%, effective January 1, 2025. Additionally, a super tax of 1% to 10% applies to high agricultural incomes, while corporate farming is taxed at rates between 20% and 29%. Agriculturists remain minimal contributors to provincial tax revenues During the first half of FY25 (July–December), the applicable agriculture income tax ranged from 5% to 15%. Yet, agriculturists continue to contribute disproportionately little to provincial tax revenues. Agriculture remains a big source of income for almost half of the total provincial population (55.7 million) living in rural areas including poor farmers, landlords and individuals as well as businesses engaged in large-scale agricultural production including livestock. Muhammad Abrar Polani, an auto analyst at Arif Habib Limited, estimated that some 40% of the total vehicles sold nationwide are purchased by the people living in rural areas across the country. People living in rural Sindh buy around 40% of the total sold in the province. Other analysts said car purchasing is at peak in rural areas at the time of harvesting winter and summer crops, as well as around Eid-ul-Adha when farmers sell livestock mainly in urban centers. Hamdan Ahmed, an auto analyst at Optimus Capital Management, said in a commentary this week that agriculture season and development (PSDP/public sector development programme) spending fueled volumes growth in sale of passenger cars, SUVs (Sports Utility Vehicles) and LCVs (Light Commercial Vehicles) in May 2025. Auto sales (excluding tractors, buses and 2/3 wheelers) improved 38% year-on-year to 15,396 units in May, 'supported by the easing of highway closures from last month's canal protests, PSDP spending in the last months of FY25, (and) 'wheat harvest' despite pre-budgetary expectations.' Numbers reveal deeper reality As cars continue to fill garages in rural Sindh while collection of revenue in income tax on agriculture remain significantly low, the province's fiscal data tells a deeper story — of wealth that's visible on roads, but not reflected in the tax rolls. Latest estimates suggest the share of agriculture in Pakistan's gross domestic product stands at around 23.54% in FY25, while its share in revenue in taxes remained around 1%. Since agriculture income tax remains a provincial subject, Federal Finance Minister Muhammad Aurangzeb said the provinces have done legislation for income tax on agriculture, expecting a significant increase in collections in the next fiscal year starting July 1, 2025. In contrast to Aurangzeb's projection, the Sindh government has targeted to collect Rs8 billion income tax on agriculture at in the next fiscal year (FY26) starting July 1, 2025. This is still low compared to the motor vehicle registration fees to be collected at Rs9.35 billion in both outgoing FY25 and upcoming FY26. All four provincial governments have legislated agriculture income tax recently in compliance with the federal government commitment with International Monetary Fund (IMF) to increase tax collection to Rs14.307 trillion (10.7% of GDP). The Sindh government, however, criticized the federal government for the commitment, saying it should have taken provinces into confidence before making such promises. The agriculture income tax is projected to make agriculture produces expensive, as people belonging to the sector may pass on the tax impact to end-consumers, it was learnt. A major portion of the motor vehicle registration fee was earned from passenger cars, SUVs and LCVs segment, according to Sindh's Excise, Taxation and Narcotics Control Department, which collects the fee in the range of 1% to 5% of the value of the vehicle. The department books small collections from the registration of tractors at Rs2,000/unit and motorcycles in range of 0.5% to 2% of the value of the two-wheelers.
Business Recorder
3 days ago
- Automotive
- Business Recorder
Numbers speak: Sindh agriculturalists spend more on vehicles, pay less in income tax
In a revealing fiscal projection, the Sindh government has said it will collect Rs9.35 billion in motor vehicle registration fees in the outgoing fiscal year ending June 30, 2025. That is more than double the Rs4 billion to be collected from income tax on the province's vast agriculture sector, according to budget documents. The figures highlight a long-standing wealth imbalance, suggesting people who are classified in middle and upper agriculture income brackets and rural elite earn and spend significantly on their lifestyle, but their tax contributions remain surprisingly low. The situation has resulted in a climbing tax burden on tax compliant industrial and services sectors as well as individuals earning salaries from non-agriculture sectors. The provincial government is set to collect comparatively higher revenue from motor vehicle registration fees despite the fact that the tax is charged at lower rates — ranging from 1% to 5% of the value of vehicles, depending on engine size. In contrast, agriculture income is taxed at significantly higher rates, from 15% to 45%, effective January 1, 2025. Additionally, a super tax of 1% to 10% applies to high agricultural incomes, while corporate farming is taxed at rates between 20% and 29%. Agriculturists remain minimal contributors to provincial tax revenues During the first half of FY25 (July–December), the applicable agriculture income tax ranged from 5% to 15%. Yet, agriculturists continue to contribute disproportionately little to provincial tax revenues. Agriculture remains a big source of income for almost half of the total provincial population (55.7 million) living in rural areas including poor farmers, landlords and individuals as well as businesses engaged in large-scale agricultural production including livestock. Muhammad Abrar Polani, an auto analyst at Arif Habib Limited, estimated that some 40% of the total vehicles sold nationwide are purchased by the people living in rural areas across the country. People living in rural Sindh buy around 40% of the total sold in the province. Other analysts said car purchasing is at peak in rural areas at the time of harvesting winter and summer crops, as well as around Eid-ul-Adha when farmers sell livestock mainly in urban centers. Hamdan Ahmed, an auto analyst at Optimus Capital Management, said in a commentary this week that agriculture season and development (PSDP/public sector development programme) spending fueled volumes growth in sale of passenger cars, SUVs (Sports Utility Vehicles) and LCVs (Light Commercial Vehicles) in May 2025. Auto sales (excluding tractors, buses and 2/3 wheelers) improved 38% year-on-year to 15,396 units in May, 'supported by the easing of highway closures from last month's canal protests, PSDP spending in the last months of FY25, (and) 'wheat harvest' despite pre-budgetary expectations.' Numbers reveal deeper reality As cars continue to fill garages in rural Sindh while collection of revenue in income tax on agriculture remain significantly low, the province's fiscal data tells a deeper story — of wealth that's visible on roads, but not reflected in the tax rolls. Latest estimates suggest the share of agriculture in Pakistan's gross domestic product stands at around 23.54% in FY25, while its share in revenue in taxes remained around 1%. Since agriculture income tax remains a provincial subject, Federal Finance Minister Muhammad Aurangzeb said the provinces have done legislation for income tax on agriculture, expecting a significant increase in collections in the next fiscal year starting July 1, 2025. In contrast to Aurangzeb's projection, the Sindh government has targeted to collect Rs8 billion income tax on agriculture at in the next fiscal year (FY26) starting July 1, 2025. This is still low compared to the motor vehicle registration fees to be collected at Rs9.35 billion in both outgoing FY25 and upcoming FY26. All four provincial governments have legislated agriculture income tax recently in compliance with the federal government commitment with International Monetary Fund (IMF) to increase tax collection to Rs14.307 trillion (10.7% of GDP). The Sindh government, however, criticized the federal government for the commitment, saying it should have taken provinces into confidence before making such promises. The agriculture income tax is projected to make agriculture produces expensive, as people belonging to the sector may pass on the tax impact to end-consumers, it was learnt. A major portion of the motor vehicle registration fee was earned from passenger cars, SUVs and LCVs segment, according to Sindh's Excise, Taxation and Narcotics Control Department, which collects the fee in the range of 1% to 5% of the value of the vehicle. The department books small collections from the registration of tractors at Rs2,000/unit and motorcycles in range of 0.5% to 2% of the value of the two-wheelers.
Business Recorder
3 days ago
- Automotive
- Business Recorder
Tax imbalance: Sindh to earn over twice as much from vehicle registration as agriculture
In a revealing fiscal projection, the Sindh government has said it will collect Rs9.35 billion in motor vehicle registration fees in the outgoing fiscal year ending June 30, 2025. That is more than double the Rs4 billion to be collected from income tax on the province's vast agriculture sector, according to budget documents. The figures highlight a long-standing wealth imbalance, suggesting people who are classified in middle and upper agriculture income brackets and rural elite earn and spend significantly on their lifestyle, but their tax contributions remain surprisingly low. The situation has resulted in a climbing tax burden on tax compliant industrial and services sectors as well as individuals earning salaries from non-agriculture sectors. The provincial government is set to collect comparatively higher revenue from motor vehicle registration fees despite the fact that the tax is charged at lower rates — ranging from 1% to 5% of the value of vehicles, depending on engine size. In contrast, agriculture income is taxed at significantly higher rates, from 15% to 45%, effective January 1, 2025. Additionally, a super tax of 1% to 10% applies to high agricultural incomes, while corporate farming is taxed at rates between 20% and 29%. Agriculturists remain minimal contributors to provincial tax revenues During the first half of FY25 (July–December), the applicable agriculture income tax ranged from 5% to 15%. Yet, agriculturists continue to contribute disproportionately little to provincial tax revenues. Agriculture remains a big source of income for almost half of the total provincial population (55.7 million) living in rural areas including poor farmers, landlords and individuals as well as businesses engaged in large-scale agricultural production including livestock. Muhammad Abrar Polani, an auto analyst at Arif Habib Limited, estimated that some 40% of the total vehicles sold nationwide are purchased by the people living in rural areas across the country. People living in rural Sindh buy around 40% of the total sold in the province. Other analysts said car purchasing is at peak in rural areas at the time of harvesting winter and summer crops, as well as around Eid-ul-Adha when farmers sell livestock mainly in urban centers. Hamdan Ahmed, an auto analyst at Optimus Capital Management, said in a commentary this week that agriculture season and development (PSDP/public sector development programme) spending fueled volumes growth in sale of passenger cars, SUVs (Sports Utility Vehicles) and LCVs (Light Commercial Vehicles) in May 2025. Auto sales (excluding tractors, buses and 2/3 wheelers) improved 38% year-on-year to 15,396 units in May, 'supported by the easing of highway closures from last month's canal protests, PSDP spending in the last months of FY25, (and) 'wheat harvest' despite pre-budgetary expectations.' Numbers reveal deeper reality As cars continue to fill garages in rural Sindh while collection of revenue in income tax on agriculture remain significantly low, the province's fiscal data tells a deeper story — of wealth that's visible on roads, but not reflected in the tax rolls. Latest estimates suggest the share of agriculture in Pakistan's gross domestic product stands at around 23.54% in FY25, while its share in revenue in taxes remained around 1%. Since agriculture income tax remains a provincial subject, Federal Finance Minister Muhammad Aurangzeb said the provinces have done legislation for income tax on agriculture, expecting a significant increase in collections in the next fiscal year starting July 1, 2025. In contrast to Aurangzeb's projection, the Sindh government has targeted to collect Rs8 billion income tax on agriculture at in the next fiscal year (FY26) starting July 1, 2025. This is still low compared to the motor vehicle registration fees to be collected at Rs9.35 billion in both outgoing FY25 and upcoming FY26. All four provincial governments have legislated agriculture income tax recently in compliance with the federal government commitment with International Monetary Fund (IMF) to increase tax collection to Rs14.307 trillion (10.7% of GDP). The Sindh government, however, criticized the federal government for the commitment, saying it should have taken provinces into confidence before making such promises. The agriculture income tax is projected to make agriculture produces expensive, as people belonging to the sector may pass on the tax impact to end-consumers, it was learnt. A major portion of the motor vehicle registration fee was earned from passenger cars, SUVs and LCVs segment, according to Sindh's Excuse, Taxation and Narcotics Control Department, which collects the fee in the range of 1% to 5% of the value of the vehicle. The department books small collections from the registration of tractors at Rs2,000/unit and motorcycles in range of 0.5% to 2% of the value of the two-wheelers.
Business Recorder
5 days ago
- Business
- Business Recorder
Weekly Cotton Review: Prices dip further as spot rate falls by Rs500 per maund
KARACHI: The downward trend in cotton prices persists, with the spot rate declining by Rs 500 per maund. Several ginning factories in Sindh and Punjab have partially resumed operations, with approximately 8,000 to 10,000 bales of cotton lint reaching ginning factories so far. However, the government has not announced any incentives for ginning factories in the budget, instead imposing an 18% sales tax on yarn imports—a move that has left ginners deeply disappointed. Ihsan-ul-Haq, Chairman of the Cotton Ginners Forum, stated that this decision is detrimental to the industry. Similarly, the Pakistan Cotton Ginners Association (PCGA) has also rejected the budget, calling it 'poisonous' for farmers and the ginning industry. According to Dr. Jesumal, Chairman of PCGA, the government has failed to take concrete steps to address the challenges facing the cotton sector. In Sindh, cotton is currently selling between Rs 16,000 to Rs. 16,500 per maund, while in Punjab, prices range from Rs 16,500 to Rs. 17,000 per maund. Phutti prices have been recorded between Rs. 7,800 to Rs. 8,800 per 40 kg. The federal budget lacks a clear strategy to boost cotton production. Sohail Talat, Chairman of the South Punjab Pakistan Business Forum, emphasized that the government must take effective measures to increase cotton output. He stated that a cohesive agricultural policy and financial support for research are essential for the sector's growth. Head Transfer of Technology Central Cotton Research Institute Multan Sajid Mahmood echoed these concerns, asserting that agricultural development is impossible without proper policy and research investments. In the local cotton market, several ginning factories in the provinces of Sindh and Punjab have partially resumed operations after the extended holidays of Eid-ul-Adha last week, while more factories are preparing to start. The supply of cotton has also been gradually increasing. In the budget, the Textile Sector and the Ginning Sector will see the elimination of the Export Facilitation Scheme (EFS) on the import of cotton and fabric, while ginners were hopeful that several taxes imposed on ginning would be abolished in the budget. However, the budget has only imposed an 18% sales tax on the import of yarn, although APTMA has appreciated these measures. Overall, the ginners have been greatly disappointed, as several taxes imposed on them remain unchanged. This disappointment among ginners will also have a negative impact on cotton growers, who are equally disheartened. The EFS facility is available for the import of cotton and fabric, which will have negative effects on local cotton because an 18% sales tax is imposed on local cotton. As a result, the cotton market will not be able to gain momentum, and this will impact cotton growers. If the price of cotton decreases, the price of cottonseed will also drop. Additionally, if the input costs for cotton growers remain high, there is a risk of reduced cotton cultivation. This year, large groups of mills have already signed a significant number of import contracts for cotton, which will result in relatively lower purchases of local cotton. As a consequence, ginners and cotton farmers will see reduced demand for cottonseed and lint, and they will also not receive fair prices. In the provinces of Sindh and Punjab, the price of cotton currently ranges between 16,000 to 17,000 rupees per maund, while Phutti (40 kg) is being traded at 7,800 to 8,800 rupees. The Spot Rate Committee of the Karachi Cotton Association reduced the spot rate by 500 rupees per maund and closed the spot rate at 16,200 rupees per maund. Naseem Usman, Chairman of the Karachi Cotton Brokers Forum, said that international cotton prices remained bearish. New York cotton futures closed at 65.30 to 69.06 cents per pound. According to the USDA's weekly export and sales report, sales for the 2024-25 season reached 60,200 bales. Vietnam topped the list by purchasing 28,000 bales. India ranked second with purchases of 18,600 bales, while Pakistan came in third with 6,600 bales. For the 2025-26 season, 36,100 bales were sold. Vietnam again led with 25,100 bales, followed by Turkey in second place with 7,500 bales, and Bangladesh in third with 2,200 bales. Meanwhile, cotton ginning and oil mill industries across Pakistan are experiencing deep disappointment and concern following the federal budget's failure to eliminate the sales tax on cotton and its by-products and to withdraw the exemption on sales tax for imported cotton. This decision comes despite strong recommendations from two committees established by Prime Minister Shehbaz Sharif, raising fears of further factory closures, a significant decline in cotton cultivation, and a sharp drop in cotton prices. Reports indicate a staggering reduction of Rs 1,000 per maund in cotton prices after the budget. Ginners argue that a 'flawed' Export Facilitation Scheme (EFS), introduced several years ago, allowed the duty-free import of cotton, cotton yarn, and grey fabric, while an 18% sales tax was imposed on domestic purchases of these items. Ehsanul Haq, Chairman of the Cotton Ginners Forum, stated, 'This scheme led to the import of millions of cotton bales and cotton yarn, severely damaging the country's foreign exchange reserves.' 'Simultaneously, textile mills stopped purchasing cotton locally, causing a massive drop in the prices of cotton and phutti (seed cotton). As a result, Pakistan's total cotton production for 2024-25 plummeted to a historic low of only 5.5 million bales, with an additional 200,000 bales remaining unsold.' The decline in cotton cultivation has also forced Pakistan to import billions of dollars' worth of edible oil, lamented Junaid Iqbal, another ginner from Punjab. He stated that the EFS has plunged the cotton ginning sector into its worst economic crisis, resulting in the closure of over 800 ginning units and hundreds of oil mills across the country. Haq noted that the exclusion of these recommendations has led to a record drop of Rs. 1,000 per maund in cotton prices within just two days, bringing them down to Rs. 16,000–16,200 per maund, with fears of further declines. Additionally, the Pakistan Cotton Ginners Association has rejected the budget, calling it 'deadly poison' for farmers and the ginning industry. During a telephone conversation with Pakistan's renowned cotton analyst Naseem Usman, Sajid Mahmood, the head of the Transfer of Technology department at the Central Cotton Research Institute Multan, stated that the country's agricultural sector is currently going through a critical phase, where having a clear direction and strategy for sustainable development is absolutely essential. He mentioned that the continuous rise in production costs is becoming a major challenge for farmers, as they neither receive fair prices for their crops nor are provided with easy access to markets. According to Sajid Mahmood, due to the lack of consistent investment in agricultural research and modern technology, most farmers are still forced to rely on traditional farming methods, which directly affects per-acre yield. Sajid Mahmood said that cotton, which was once a strong pillar of Pakistan's economy, textile industry, and rural economy, is now facing a severe crisis. Coordinated efforts and a clear action plan are crucial for its revival. He added that the irrigation system has not kept pace with modern requirements, while the availability of quality seeds, fertilizers, and other agricultural inputs at reasonable prices remains a persistent issue for farmers. He emphasized that the Pakistan Central Cotton Committee (PCCC) is the key institution for cotton research and development in the country. However, unfortunately, billions of rupees in cotton cess dues are still pending from the textile industry. He demanded that these dues be released immediately so that cotton-related research can be strengthened and the scope of advanced research can be expanded further. Sajid Mahmood further stated that the 18% General Sales Tax (GST) on local cotton and its by-products is an unnecessary burden on farmers and the ginning industry, which should be immediately abolished or reduced. These measures would lead to a significant reduction in production costs and promote value addition at the local level. In conclusion, he said that for the development of a crucial sector like agriculture, a comprehensive, long-term, and ground-reality-based policy is indispensable. If experienced agricultural experts and those familiar with ground realities are included in the policymaking process, not only can farmers' difficulties be reduced, but the national economy can also benefit more from this vital sector. Copyright Business Recorder, 2025
