KSE-100 hits fresh record as bullish momentum continues
Bullish momentum continued at the Pakistan Stock Exchange (PSX), as the benchmark KSE-100 closed at a new record high on Monday.
Positive trading was seen throughout the trading session, pushing the KSE-100 Index to an intra-day high of 125,748.58.
At close, the benchmark index settled at 125,627.31 level, an increase of 1,248.25 points or 1%.
During the previous week, the PSX witnessed a stellar performance as the benchmark KSE-100 Index jumped by 4,355 points, or 3.6%, on a week-on-week (WoW) basis to close at an all-time high of 124,379 points on Friday.
The sharp rally was largely driven by easing geopolitical tensions in the Middle East and the smooth passage of the federal budget in the National Assembly.
Internationally, Asia shares firmed on Monday as signs of progress in a trade standoff between the United States and Canada helped risk sentiment, while the dollar dipped on concerns U.S. jobs data will show enough weakness to justify larger rate cuts.
Canada on Sunday said it had rescinded its digital services tax in a bid to advance trade negotiations, bowing to pressure from President Donald Trump.
The talks are aimed at getting a deal done by July 21, extending Trump's original July 9 deadline for his 'reciprocal' tariffs.
Officials have suggested most deals could now be done by the September 1 Labor Day holiday.
Investors were also keeping a wary eye on the progress of a huge U.S. tax-cutting and spending bill slowly making its way through the Senate, with signs it may not make it by Trump's preferred July 4 deadline.
The Congressional Budget Office estimated the bill would add $3.3 trillion to the nation's debt, testing foreign appetite for US Treasuries.
There was no doubting the demand for the U.S. tech sector and megacap growth stocks including Nvidia, Alphabet and Amazon.
Nasdaq futures rose another 0.4%, while S&P 500 e-minis added 0.3%.
EUROSTOXX 50 futures rose 0.2%, while FTSE futures were flat and DAX futures gained 0.3%.
The bullish sentiment spilled over into Japan's Nikkei which rose 1.6%, while South Korean stocks gained 0.8%. MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.2%.
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As a result provisions have been introduced where certain large economic transactions for acquisition of assets and bank withdrawal are restricted in case where return is not filed and there are insufficient funds in the wealth statement or the person is not registered; if required to be registered. These notes describe, in summary, the important changes in the existing provisions and introduction of some new provisions. Through the Finance Act, 2025 a completely new regime has been introduced for digitally delivered goods and services. A final rate of income tax has been provided at 1 and 2 % of gross sale proceeds in respective cases. Furthermore, a substantially reduced sales rate of 2% as against 18% has been prescribed for domestic digitally delivered goods by retailers other than Tier 1 retailers and cottage industry. For international transactions a new law, which is similar to Indian Equalisation Tax has been enacted. The major change in the enforcement system is the introduction of the concept of embargo / restriction placed on certain economic transactions including withdrawal of cash from a bank account when the return is not filed or business is not registered under the Sales Tax. This is a very big step. It will assist in improving the level of documentation of the economy, if properly implemented. Income Tax: Taxation of Digital Transactions General Finance Act, 2025 has separated tax on digital transactions from normal tax regime. Two different systems have been introduced each for domestic and international digital transactions or presence. Accordingly, a final tax regime has been introduced for domestic transactions whereas a separate law, which is also a final tax, by the name of Digital Presence Proceeds Tax Act, 2025 has been enacted for international transactions. Domestic Digital Presence and Transactions Concept A new final tax regime has been introduced for supply of digitally ordered goods or services using locally operated online platforms including online marketplace. Now such transactions would not be part of normal tax regime. (Section 8 of the Income Tax Ordinance 2001 will apply on these transactions) These provisions are applicable on supply of digitally ordered goods or services which are delivered within Pakistan using locally operated online platforms, including online marketplace or websites. These terms have been appropriately defined in the Ordinance.) Nature of supply of goods covered: These provisions will apply on transaction of ordering and delivery of goods which comply with the following conditions: Transaction is undertaken through: a. 'E-commerce', which has been defined to mean sale or purchase of goods and services conducted over computer networks by methods specifically designed for the purpose of receiving or placing of orders either through websites, mobile applications or online marketplace having digital ordering features by using either mobile phone, iPad, Tablet or automated computer-to-computer ordering system. or b. Online marketplace being an information technology platform run by e-commerce entity over an electronic network that acts as a facilitator in transactions that occur between a buyer and a seller and includes 'online interfaces' that facilitate, for a fee, the direct interaction between multiple buyers and multiple sellers via digital orders for supply of goods and services, with or without the platform taking economic ownership of the goods or providing or rendering the services that are being sold. The payment is received through: a. Courier service which means any specialized entity that provides fast, secure and often tracked transportation of documents, packages and small freight, typically offering door-to-door delivery solutions of goods within specific timeframes and in case of digitally ordered goods in e-commerce delivery and collection of cash (CoD) on behalf of the seller and such delivery service provider includes but not limited to – (a) Logistic services; (b) Ride-haling services; (c) Food-delivery platforms; and (d) E-commerce services; b. Payment intermediary being any third party entity including a banking company, financial institution, a licensed foreign exchange company or payments gateways that facilitate the transfer of funds or payment instructions between two or more parties to enable, process, route or settle payments in a financial transaction, without being the ultimate source or recipient of the payment There are withholding/ collecting provisions under Section 153 of the Ordinance, as under: (i) every payment intermediary at the time of processing payment through digital means, on behalf of a seller of digitally ordered goods or services through locally operated e-commerce platforms (including websites); and (ii) every courier business providing courier services collecting cash from a buyer under Cash on Delivery (CoD) payment terms on behalf of a seller for the supply of digitally ordered goods and services through e-commerce platforms (including websites); This withholding/collection is on every person including an individual. Rate The rate of tax on such goods and services shall be: (i) Digital Means or banking channels by payment intermediary at the rate of 1% of gross amount paid or payable; and (ii) Cash on Delivery by courier service at the rate of 2% of the gross amount paid or payable. This means that if the goods and services are digitally ordered and delivered then there would be collection/deduction of tax at the rate referred above by the 'payment intermediary' or the 'courier service', as the case may be, which will be the final tax with respect to such goods and services. Definition of digitally ordered and delivered services The term 'digitally delivered service' has specifically been defined in Section 2 of the Income Tax Ordinance 2001 as under: '(17C) 'digitally delivered services' means any service delivered over the internet or electronic networks, where the delivery is automated and requires minimal or no human intervention including music, audio and video streaming services, cloud services, online software applications services, services delivered through online inter-personal interaction i.e., tele medicines, e-learning etc., online banking services, architectural design services, research and consultancy reports, accounting services in the form of digital files or any other online facility'. The definition is very wide. For example, the term such as 'online software applications services' would need to be properly identified. Furthermore, the concept of 'no or minimal human interventions' does not tie up with the overall perspective for services such as 'online inter personal interaction', 'e-learning', tele-medicine, etc. In the context of international transactions this has been defined as: Digitally delivered services, in an international context, refer to services that are traded internationally and delivered remotely over computer networks. This encompasses a wide range of services that can be transmitted electronically, including those related to information and communication technology (ICT), audiovisuals, and other digital content. Essentially, it's about the international exchange of services where the service provider and the consumer are not physically located in the same place, and the transaction is facilitated through digital means. These issues do not arise internationally as there is no concept of final tax in those regimes. (To be continued) Copyright Business Recorder, 2025
