The Economic Co-ordination Committee (ECC) of the Cabinet has granted another extension to the levy of 0.3 percent withholding tax on banking transactions for non-filers up to November 7, 2015 subsequent to an agreement with traders. The ECC meeting presided over by Finance Minister Ishaq Dar also decided that in the event of extension of Income Tax Ordinance 2015 by the National Assembly, the reduced rate will remain applicable till 15th November 2015.
The government's decision to impose 0.6 percent withholding in budget 2015-16 on banking transactions for non-filers triggered traders' protests which eventually forced Finance Minister to agree on issuance of presidential ordinance to reduce the rate to 0.3 per cent for the first three months ending September 30, 2015. On expiry of presidential Ordinance, first extension of one month was approved by the ECC and now another extension in the rate has been approved. An official said the meeting was informed the committees are expected to submit their recommendations to remove traders' irritants and forge an agreement between government and business community on the tax.
The ECC meeting also approved a proposal of Federal Board of Revenue (FBR) as per agreement reached with textile exports for introducing a 10% Regulatory Duty (RD) on the import of cotton yarn and grey and processed fabrics of cotton. The Chairman FBR informed the Committee that the proposal was based on extensive consultations with the relevant stakeholders.
On a number of proposals for power sector, the ECC decided to issue revised government guarantees of up to Rs 37.650 billion for 425MW Nandipur Power Project by a syndicate of local banks (HBL, NBP, UBL, Askari bank, Bank Alfalah and BoP), against their financing for the project. Senior officials of Ministry of Water and Power reportedly argued that the revision of guarantees would enable the syndicate to extend the period of financing facility till 1st June 2016.
On another proposal for power sector, ECC granted approval for the issuance of a sovereign guarantee against financing facility of Rs 18 billion for a transmission line for 1200 MW Thar-Matyari project to transmit electricity to the national grid. The ECC also approved extension in sovereign guarantees of Rs 15 billion term financing facility from the National Bank of Pakistan for Power Holding (Private) Limited. The meeting was informed that the guaranteed facility has been in place for the last two years and its tenor has been extended for another two years. To set up two1000-1200MW (gross) Combined Cycle Power Plants at Haveli Bahadar Shah, Dist Jhang and Balloki, Dist Kasur, ECC approved provision of a sovereign grantee for the establishment of letters of credit.
The ECC considered and gave approval to the provision of 64,000 Metric tons of wheat to the United Nations WFP for temporary displaced persons (TDPs) of FATA and KP for distribution up to Dec 2015, costing Rs 2.569 billion.