Prime Minister Yousuf Raza Gilani has approved the revised relief package for NWFP, designed to rehabilitate the economy of the province by offering tax incentives and Rs 2.5 billion Credit Guarantee Scheme (CGS).
The changes have been made only in six points of the previously announced 18-point compensation package for NWFP by the Prime Minister, after consultation with Sarhad Chamber of Commerce and Industry and trade bodies during his recent visit to Peshawar.
The changes included zero federal excise duty on goods produced in FATA and most affected areas and 50 percent of the leviable rate in moderately affected areas. The three categories include most affected, moderate and less affected areas, but Peshawar was put in most affected, and Nowshera in moderately affected areas.
The government will also transfer Rs 2.5 billion earmarked for Credit Guarantee Scheme (CGS) to State Bank of Pakistan (SBP) for devising a concessional refinance scheme for loans up to Rs 0.5 million in consultation with representatives of trade bodies. The revised package also allows total loans write-off, including microfinance in Buner, Swat, Malakand and Chitral, and the cost of the write-off would be borne by the banks.
In this regard, the banks would bear the cost of such write-offs to the extent of the amount held in provision and interest in suspense account; the rest of the cost will be borne by the federal government. The banks will charge mark-up @7.5 percent per annum, or KIBOR, which is lower, for next two years on existing business loans (corporate, SMEs, agriculture and Micro) in areas of NWFP, FATA and PATA excluding loans to cigarette, textile, cement, sugar and beverages sectors.
The differential between 7.5 percent and rate charged would be borne by the government as subsidy through budgetary allocation or by authorising SBP to deduct cost of subsidy from its remittable profit to the government. The people of Malakand Division were granted complete waiver in electricity and gas bills from September 2009 to December 2009 while NWFP will be given priority in provision of electricity and gas.
The additional incentives by Federal Board of Revenue (FBR) will be to consider reduction in duty on Afghan transit goods; marble sector''s share in export development fund will be released by Ministry of Commerce; exports of Plastic Venial Coated (PVC) & High Density Poly Ethylene (HDPE) pipe and fitting products through Ghulam Khan Check Post will be considered by FBR. The income tax exemption for small traders of Most and Moderately affected areas of NWFP/FATA/PATA will be enhanced from Rs 0.1 million to Rs 0.3 million for tax years 2010-2011 through amendment in the Income Tax Ordinance through Finance Act, 2010.
One ghee factory in Bajaur and one in South Waziristan will be handed back to the owners and their past liabilities will be waived off; the proposal for allowing edible oil imports under duty taxes remission on export (DTRE) will be taken by FBR with Ministry of Commerce and other stakeholders and a summary submitted to ECC for orders. FBR will allow 100 percent refund on the export of vegetable ghee/cooking oil to Afghanistan subject to the condition that exporting units provide proof of 100 percent imported edible oil.
Small traders'' chamber will be established. The case will be referred by Finance Division to Ministry of Commerce, audit cases in NWFP will be selected after Board''s approval, the process of Alternate Dispute Resolution Committee (ADRC) will be expedited, government will consider exemption of taxes on import plant and machinery and three years holiday from income tax, incentives by the State Bank of Pakistan (SBP).
Additional incentives by NWFP government and other Federal Ministries tax exemption included property tax on educational institutions, injuries management/Trauma Centre will be established in Peshawar as a Joint Venture with 50:50 sharing. The compensation for dead and injured in terrorist incidents should be the same across the province. All industries occupied by the security agencies will be vacated.
The old package that was not changed included that federal government may allow the registered persons/importers or any other business entity owing any amount due to the government in form of customs duty, sales tax or excise duty and income tax, a waiver of the entire amount of penalty and default surcharge if the principal amount is paid by 30.06.2010. This treatment may be extended both to the most affected as well as moderately affected areas.
Sales tax on the electricity consumed by the manufacturing units operating in the most affected and moderately affected areas as are registered/un-registered for the purpose of sales tax may be exempted. This will serve as a major boost to the marble, cosmetics and silk industries. Income tax payable along with electricity bills of commercial and industrial consumers located in the most affected and moderately affected areas may be fully exempted. Drawback of sales tax admissible on exports originating from the most affected and moderately affected areas may be paid within 3 days. The exports originating from most and moderately affected areas exempted from income tax leviable on exports. This exemption may be allowed till the end of the next financial year.
The rate of domestic sales tax on goods manufactured and supplies made in the most affected and moderately affected districts may be reduced by 50 percent of leviable rate. Recovery of the outstanding arrears of income tax, sales tax and excise duty etc may be allowed through easy instalments over a period of 3 years on case to case basis and on the agreeable terms and conditions. The above concessions will not be applicable to the manufacturers and suppliers of cement, sugar, beverages and cigarettes.
Under the State Bank incentives, the bank launched an Agricultural Loans Refinancing & Guarantee Scheme of Rs 3 billion for providing loans at a maximum mark-up of 8 percent. SBP will share up to 50 percent of bona fide losses of banks from its own resources. Under Prime Minister''s Relief Package for Small Farmers of Malakand Division & FATA, loans of Rs 2.56 billion will be written off. For ensuring growth of SME Credit, SBP will launch a Refinance Facility of Rs 10 billion to be disbursed through mandatory targets to Banks. For existing loans, banks will be advised to charge mark-up at 7.5 percent pa or at KIBOR, whichever is lower, for next two years.
State Bank of Pakistan will also launch a Credit Guarantee Scheme for Small & Rural Enterprises with a support of Rs 1 billion from UK''s DFID. SBP will put in efforts to reserve this facility exclusively for the SME borrowers of NWFP, FATA and Gilgit-Baltistan. The government will also consider transferring, partly or fully, this year''s budgetary allocation of Rs 2.5 billion for SME Credit Guarantee Fund, allowing increased outreach of this scheme.
Comments
Comments are closed.