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Taxation
Special Assistant to the Prime Minister on Information and Broadcasting, Dr Firdous Ashiq Awan Friday said that credit of transforming national responsibility of tax collection into a movement goes to Prime Minister Imran Khan. In a tweet, Dr Firdous said that a practical step for achieving the target of self-reliance was taken by the Prime Minister which is called patriotism. Prime Minister Khan proved through his actions that as a nation “we should strive to end dependence on others,” she said.

She said that Prime Minister Khan has taken bold decisions in national interest and not for political gains. She said that even political opponents of Prime Minister Khan are admitting if the nation shows courage and determination at this critical juncture, a bright future would be its destination. She underlined the need for national unity to confront the challenges being faced by the country.

Addressing a seminar on “Pakistan towards Peaceful Coexistence,” Dr Firdous was of the view that dialogue is the only way forward to resolve the prevailing issues. She said that the Ministries of Religious Affairs, Law and Justice and Information and Broadcasting need to sit together and prepare a roadmap for encouraging dialogue in the society. “Instead of talking about differences, we all need to highlight the commonalities that bring us closer,” she remarked.

Dr Firdous said that the confrontation can never be a solution to an issue, adding, “When a nation gets united to overcome challenges, it emerges successful.” She said that Pakistan’s foundations were laid on an ideology. She said that Prime Minister Khan wants to make Pakistan a state on the vision of State of Medina, with the main features of rule of law, equal opportunities, justice for all and respect for human rights including those of minorities.
Dr Firdous said that Islam stands for peace and it has no link with hatred and extremism. She said that a handful of individuals and some groups held hostage the entire society in the name of religion whereas indeed they have no link with Islam. She said that state’s intervention has become imperative to stop those groups and individuals in the better of interest of its people. She said that it is a matter of pride that Pakistan is among the top five countries of the world where the people donate in the name of charity. “We are proud that our religion ordains us charity. As Muslims, we believe that our earnings become only pure when we donate for the deserving and needy individuals of our society.”

“The followers of such a religion can never even think to inflict pain on others,” she remarked. About the hate speech issue, she said that Islam does not allow anyone to impose one’s personal thoughts on others forcibly. “Our religion gives all the right of freedom of expression. Neither our religion nor our law allows anyone to impose his thought or ideology upon others by force. The extremist attitudes and thoughts are negations of basic philosophy of Islam,” she added.

She said the faith of a Muslim remains incomplete if there is no balance between rights of Allah and rights of people. She said that Islam gives a code of conduct to its followers and provides them the best charter of human rights through the Holy Quran, which is also incorporated by the United Nations in its charter. “Islam is the first religion which lays emphasis on grant of rights to women, servants and downtrodden segments of the society,” she added.
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Taxation
Sindh Excise and Taxation department has collected Rs 7.14 million during its road checking campaign. According to details, over 11968 vehicles had been checked during campaign and the department has impounded 505 vehicles on different reasons and the documents of 750 vehicles were also confiscated. The department has checked 2346 vehicles in Karachi, 3130 vehicles in Hyderabad, 1313 vehicles in Sukkur, 2764 vehicles in Larkana, 1012 vehicles in Mirpurkhas and 812 vehicles were checked in Shaheed Benazirabad.

Moreover, the department has collected Rs 617391 from Karachi, Rs 1581061 from Hyderabad, Rs 960891 from Sukkur, Rs 2124691 from Larkana, Rs 631274 from Mirpurkhas and Rs 1227024 from Shaheed Benazirabad on account of taxes, fines and withholding tax, which accumulated to Rs 7.14 million.
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Uncategorized
The Model Customs Collectorate (MCC), Preventive foiled an attempt to smuggle huge quantity of gold ornaments to Dubai at Jinnah International Airport (JIAP). According to details, credible information was received that some unscrupulous elements were planning to smuggle gold ornaments to UAE via air route.

Reacting on this information, the staff of MCC, Preventive mounted stiff vigilance at the international departure at JIAP. Resultantly, three passengers Tufail Junani, Sana Tufail and Farida Bano, who were travelling to Dubai and USA via Emirates airline flight no. EK 607 were intercepted.

During detailed examination of their luggage and personal search, the department has recovered 4.517 kilograms of gold ornaments worth Rs 31.17 million from their possession. The customs officials said that during initial course of investigations, it was revealed that gold in semi-finished form was being used to launder-money/assets. Consequent upon on recovery, case has been registered and all three accused persons were taken into custody. Further investigation was in progress.
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Taxation
Rental income originated from Dubai-based properties is declarable but not chargeable in Pakistan, said commissioner FBR. Speaking at an awareness seminar on Assets Declaration Ordinance (ADO), 2019, Maqsood Jahangir commissioner IR Zone VI, Corporate Regional Tax Office (CRTO), Karachi said that double taxation treaty overwrote the domestic law and the treaty between Pakistan and the UAE clearly stated that tax on rental income is charged by the country where income is originated hence rental income from Dubai-based properties are declarable but not chargeable in Pakistan.

Commissioner said that amnesty scheme is aimed at increasing direct tax and give final opportunity to the individuals to declare all undisclosed assets, expenditures and sales and added that the date would not be extended beyond June 30, 2019. He said that all immoveable properties, which were transferred on power of attorney, would be declared as Benami property under the ADO, 2019; adding that the objective for promulgation of the Ordinance was to allow inclusion of non-documented economy in taxation system and to promote economic revival and growth by encouraging tax compliance.

The awareness seminar was attended by chief commissioner Shafqat Ali Keher, chief commissioner IR CRTO, senior vice president FPCCI Mirza Ikhtiar Baig, Arshad Jamal, vice president FPCCI and others.

Needless to mention, this was the first time when the field formation of FBR is actively holding meetings with the individuals and representatives of different trade associations in order to encourage them to avail this opportunity besides offering free of cost consultancy through volunteers especially in Karachi to facilitate them declaring assets under ADO, 2019.

Tax experts were of the view that the amnesty scheme announced by the incumbent government was the most comprehensive scheme as compared to past schemes and FBR was making all preparations to initiate crackdown against non-filers, who remain unable to avail an opportunity to disclose benami assets on or before June 30, 2019 to avoid confiscation and imprisonment up to seven years.
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Taxation
Commissioner Inland Revenue Dr Irfa Iqbal enlightened that the “Assets Declaration Scheme 2019” aims to broaden tax base and mobilize resources. She expressed these views while inaugurating the seminar as part of the awareness campaign for “Assets Declaration Scheme 2019”.

Ceremony was organized by Zone-III, Corporate Regional Tax Office Lahore. Additional Commissioner Attique-ur-Rehman and Deputy Commissioner Sana Ghaus were also present on this occasion. While addressing the ceremony, Dr Irfa Iqbal said that the main objective of this scheme is to initiative measures for the documentations of concede assets against concessionary tax payment. Commissioner Inland Revenue highlighted the attendees about the merit of availing this scheme as well as its implications for the country at large. She also reiterated that people could declare their Benami Accounts and no action would be taken against them.

She explained that no proceedings will be initiated and their name would be confidentially maintained. Dr Irfa Iqbal explicated that people must avail Assets Declaration Scheme by June 30, 2019 as it is rear opportunity to give legal status to their undeclared assets. The scheme would also document the economy and bring debts assets into the economy. Another perspective presented by her that this scheme has realistic targets with low rates. Moreover, strict rules and regulations will be implemented after the deadline.

She said that the scope of this scheme is extended to Assets, Expenses and Sales. The rate of tax on all assets except domestic immoveable properties is 4%, domestic immoveable properties 1.5%, foreign liquid assets not repatriated 6%, unexplained expenditure 4% and undisclosed sales is 2%, she maintained.
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Taxation
The Federal Board of Revenue (FBR) has introduced automated system for processing and issuance of the income tax refund based on Income Tax Refund Module (ITRM). According to the FBR, the board has issued a circular to all Chief Commissioners IR, LTUs / RTOs / CRTOs in order to facilitate the taxpayers.

In order to ensure transparency, efficiency and taxpayer facilitation leading to their confidence building in FBR, an automated system of income tax refund processing is being devised in the form of developing a complete Income Tax Refund Module (ITRM). The system is must for creating confidence among the taxpayers and all stakeholders in the revenue system of the country, FBR added.

The process of verification of claimed refunds may be initiated and competed in each case by July 15, 2019 for determining genuine refund in each case in respect of all the tax years by the deadline of July 31, 2019, FBR said.

The Federal Board of Revenue (FBR) has also issued instructions to all the LTUs/CRTOs/RTOs to remain open and observe extended working hours till 08:00 pm on 28th June(Friday), and 29th June (Saturday) and till 11:00 pm on 30th June, 2019 (Sunday) to facilitate the taxpayers’ in payment of duties and taxes and filing of income tax returns/statements.

FBR has further instructed the Chief Commissioners (IR) to liaise with the State Bank of Pakistan and authorized branches of National Bank of Pakistan to ensure transfer of tax collection by these branches on 30th June to the respective branches of State Bank of Pakistan on the same date and to account the same towards collection for the month of June, 2019.
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Business

KARACHI: The rupee plunged by 3.29 percent to a record low against the dollar on Wednesday in what appeared to be currency devaluation by the central bank ahead of the IMF bailout package approval due next month.

Gold price has also soared and business at the stock exchange also witnessed a decline. The government has also decided to increase gas and electricity tariffs substantially. The rupee closed at 162.16 to a dollar, compared with previous close of 156.98 in the interbank market. The rupee weakened Rs5.18 to a dollar during the day. The currency was trading as low as 162.25 to the dollar in an intraday trade. The rupee weakened Rs6.1 to close at Rs163 to a dollar in the open market.

Dealers said the rupee came under renewed pressure and the State Bank of Pakistan (SBP)’s reticence also fueledspeculative onslaught on the battered currency. “It was another volatile trading day despite a lack of payment pressure,” a dealer said. He said, “The market expects rupee will face more pressure in coming days as the government is about to get IMF approval on $6 billion loan package.” The IMF’s board is due to meet on July 3.

The economy is going through a familiar boom-and-bust cycle; debt is soaring, inflation is rocketing, and reserves are falling after a deficit blowout. The IMF has long advocated Pakistan to loosen its grip on the rupee, and estimated the real exchange rate was overvalued by as much as 20 percent in 2017. The market participants said there are also reports that government has already signed letter of intent and memorandum of economic and financial policies for securing approval of $6 billion loan from the IMF’s board. “The rupee is likely to weaken further, trading at 180 to a dollar in the next few months,” said another dealer.

Samiullah Tariq, director research at brokerage Arif Habib, said dollar recorded increase on back of importers demand and some of the oil payments. “Moreover, due to year end closing some of the multinational companies might have been purchasing dollars to repatriate their earnings to their principles.” The rupee has lost more than 50 percent of its value since December 2017, stoking inflation and becoming the worst performance Asian currency.

Reuters, quoting SBP, reported that the central bank said it is watching the foreign exchange market closely and would act in the case of “unwarranted” volatility. It said the recent slide “reflects the continuing resolution of accumulated imbalances of the past and some role of supply and demand factors”. The SBP governor, earlier this month, defended the market-based exchange rate system that he said staved off external finance risks in the past couple of months.

Governor Reza Baqir, in his first press briefing, reiterated the central bank’s resolve to intervene in the market to check ‘excessive 

 and ‘disorderly conditions’. He said currently market-based system is implemented in Pakistan, which protects exchange rate from manipulation and simultaneously follows demand and supply mechanism. Neither fixed not free-float regime of exchange rate is good for Pakistan, as the former can lead to external imbalances and the latter can lead to manipulation, governor viewed.

Meanwhile, the Economic Coordination Committee (ECC) of the Cabinet extended conditional approval for hiking the gas tariff up to 191 percent and average power rates by Rs1.49 per unit for consumers using over 300 units. With second increase in the power tariff in the last six months, the government will generate Rs190 billion from the consumers. The government hiked the electricity tariff by Rs1.27 per unit in January 2019.

The ECC granted its approval and now the final approval would be sought from the federal cabinet before implementing this decision. The ECC also decided to withdraw Rs3 per unit for export-oriented sectors with the condition that the subsidy will continue for peak hours. The government has accomplished almost all prior 

Pakistan will have to fulfill all conditions before tabling Pakistan’s request in front of IMF’s Executive Board scheduled to meet at Washington DC on July 3 for approving $6 billion under 39 months Extended Fund Facility (EFF). A new wave of inflation is going to hit the country with start of next fiscal year during which the administrative hike in utility prices such as gas and electricity, devaluation of rupee against dollar that had touched from Rs157 to Rs163 in a single day, increased taxation rates and possibility of surge in POL prices with effect from July 1 will push price hike making lives of common man of the country more miserable.

A top official of Finance Division confirmed that the electricity tariff will be increased by Rs1.49 per unit while the government protected power consumers using 300 units on monthly basis. The government allocated Rs216 billion subsidy for protecting the vulnerable segments from hike in power tariff in fiscal year 2019-20 starting from July 1.The government claims that there would be no increase for 40 percent consumers for initial slabs.

According to official statement issued by Finance Ministry after ECC meeting, Adviser to Prime Minister on Finance, Revenue and Economic Affairs Dr Abdul Hafeez Shaikh chaired the meeting to review the demands of various ministries/divisions. In order to promote Maritime Sector and strengthen the shipping industry in the country, the Committee approved the proposal of Ministry of Maritime Affairs to extend the existing tax incentives to the shipping sector from 2020-2030, subject to vetting by Law Division.

The Power Division briefed the Committee about the cash and non-cash settlement for power sector. The ECC decided that Industrial Support Package (ISP) and AJK power sector subsidy would be adjusted against the outstanding loan of government of Pakistan from power sector entity.

It also approved the proposal of Power Division to provide additional power supply for three hours to the tube-wells, domestic and commercial consumers of Balochistan province for initial period of three months. In this regard, an amount of Rs9 billion was approved for three months which is to be provided in three tranches. The Committee would review the performance of the Qesco on monthly basis to find whether the recovery drive against the power sector defaulters is producing the desired results.

The ECC decided to give a deadline of three months to Power Division to resolve the issue of recovery from around thirty thousand and eight tube-wells of Balochistan. The Committee directed Power Division to accelerate the recovery campaign against the defaulters and submit a report to ECC on monthly basis. The Committee acceded to the proposal of Petroleum Division to allow import of petroleum products by PSO under Saudi Fund for Development. It also reviewed various slabs of gas tariff. The ECC approved supplementary and technical supplementary grants of various ministries/divisions.

The summary tabled before the ECC on hike in gas tariff stated that in order to meet the projected revenue shortfall of Rs563 billion, Ogra has also recommended category wise prescribed prices to be made effective from July 1, 2019 and recommended 31 percent and 20 percent across the board increase in gas sale prices. Up to 0.5 cubic hecto meters there will be no increase in prices for consumers. Up to 1 hm3, the monthly bill will go up from Rs572 to Rs933, up to 2 hm3 consumers the monthly bill be increased from Rs2305 to Rs3872, for users up to 3 hm3 the monthly bill will go up from Rs3589 to Rs7995, up to 4 hm3, the bill will be increased from Rs13508 to Rs14373, above 4 hm3, the bill will be decreased from Rs31573 to Rs25534.

For fertilizer sector, the price went by 62 percent from Rs185 per MMBTU to Rs300 per MMBTU, fertilizer fuel by 31 percent from Rs780 per MMBTU to Rs1021 per MMBTU, power sector by 31 percent from 629 per MMBTU to Rs824 per MMBTU, cement by 31 percent from Rs975 per MMBTU to Rs1277 per MMBTU, general industry by 31 percent from Rs780 to Rs1021 per MMBTU, zero rated industry by 31 percent up from Rs600 to Rs786 per MMBTU, CNG up by 31 percent from Rs980 to Rs1283 per MMBTU and commercial from Rs980 to Rs1283 per MMBTU.

According to summary Ministry of Energy (Petroleum Division) approved by the Economic Coordination Committee (ECC) of the Cabinet under chairmanship of Adviser to PM on Finance Dr Abdul Hafeez Shaikh here on Wednesday approved gas prices up to 191 percent after protecting lifeline consumers.

The summary states that the natural gas price hike will become effective from July 1, 2019. The two gas utility companies, viz Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) are engaged in gas purchase from Exploration and Production (E&P) Companies and transmission, distribution and sale thereof to various categories of consumers. They are operating on Cost plus Return on Assets formulae under licences from Oil and Gas Regulatory Authority (Ogra).

Under this regime and in accordance with Section (1) of Ogra Ordinance 2002, revenue requirements of the two companies are determined by Ogra which mainly comprise (i) well head gas price (ii) transmission & distribution cost and (iii) profit margin (presently 17.43 percent return on assets before financial charges and taxes).

The per unit Revenue Requirement (Rupees per million BTU) is defined as prescribed price. Based on Revenue Requirements, Ogra pursuant to section 8(1) of the Ogra Ordinance, 2002 advises category wise prescribed prices for various categories of consumers, which forms the basis for the federal government in determining the category wise Gas Sale Price for each category of consumer, pursuant to section 8(3) of the Ogra Ordinance, 2002.

Ogra in its latest decision dated May 17, 2019 has determined the estimated Revenue Requirement of SNGPL Rs 293.305 billion and SSGCL Rs270.776 billion for the FY 2019-20. Accordingly a Net Revenue Requirement after adjusting other income regarding SNGPL is Rs277.913 billion and SSGCL Rs263.247 billion.

Current Gas Sale Prices would result in a Net Revenue Shortfall of Rs87.630 billion and Rs56.803 billion respectively. To meet the projected revenue shortfall, Ogra has also recommended category wise prescribed prices to be made effective from July 1, 2019 and recommended 31 percent and 20 percent across the board increase in gas sale prices for all categories of consumers of SNGPL and SSGC respectively, except domestic sector, where the suggested increase illustrates an approach towards rationalisation of domestic tariff based on indexation of each slab tariff with weighted average Prescribed Price (Cost of Supply).

 
 
 
 
 
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Taxation
The anomaly committee of the Federal Board of Revenue (FBR) Tuesday finalised a list of 146 grievances, which were raised by business community, associations, chambers, trade bodies, individual companies and investors, pertaining to the income tax, sales tax, excise duty and customs duty related issues in the Finance Bill 2019.

As a result of negotiations between the business community and FBR on Tuesday, the government may amend the biggest Sales Tax documentation measure of seeking CNIC number of unregistered buyers. The CNIC number may be asked on transactions of over Rs 50,000.

Over 120 leading trade bodies, associations, chambers, investors, corporate firms and representatives of business and trade submitted their budget anomalies to the anomaly committee of the FBR under the Finance Bill 2019. This is the highest number of associations and chambers which ever visited the FBR in a single day. In many cases, individual companies also came to the FBR House for addressing their grievances in the Finance Bill 2019.

The FBR House from ground floor to third floor was full of visitors and everyone had its own grievances against the Finance Bill 2019 and was unhappy with the budget. Despite a large number of taxpayers visited the FBR in a single day, the FBR/anomaly committee effectively handled the visitors well and there was no complaint on part of the visitors.

The meeting of the anomaly committee chaired by Ashfaq Tola continued throughout the day at the FBR House to identify and remove the technical and legal anomalies in the Finance Bill 2019.
According to sources, the anomaly committee has heard the grievances of over 125 representatives of different associations and bodies including companies and local/foreign investors. After finalisation of 146 grievances, the anomaly committee would submit its report to the chairman FBR on Wednesday (today).

Sources said that the anomaly committee would scrutinise each and every grievance and recommend necessary changes in the Finance Bill 2019 in viable cases. On Wednesday (June 26), the committee would review the entire list of grievances submitted by the business community.

Keeping in view extraordinary number of businessmen coming with their grievances to the FBR, the anomaly committee divided visitors into three different groups to submit their grievances. The first committee-A was headed by Ashfaq Tola, Abid Shaban led the second committee-B and third committee-C was headed by Abdul Qadir Memon.
“We have distributed the work among three committees and each committee handled around 40 associations, trade bodies and representatives of business and trade to ensure completion of the job by Tuesday (June 25),” said Ashfaq Tola.

He informed that the anomaly committee would give best possible solution of the anomalies to the FBR chairman for resolving the issues raised by the taxpayers.

The three committees heard the viewpoint of wide range of sectors and companies including fertilizer companies, telecom companies, petroleum companies, banks and cement manufacturers. Fertilizer Importers Council, All Pakistan Fertilizer Dealers Association, Towel Manufacturers Association, Pakistan Association of Large Steel Producers, Travel Agents Association of Pakistan, and Pakistan Chemist and Druggists Association also submitted their grievances to the respective anomaly committee.

The three committees (A-B-C) heard the grievances of PSX Stock Brokers Association, Oil Companies Advisory Council, Pakistan Yarn Merchants Association, Pakistan Banks Association, Pakistan Software Houses Association and Pakistan State Oil Company Limited.

One of the major grievances was imposition of the condition of providing CNIC number on supplies to unregistered persons under Sales Tax Act 1990. Through an amendment in the Finance Bill 2019, the government is planning to exempt the condition below Rs 50,000 transactions from the requirement of providing the CNIC number. The government may ask for the CNIC numbers of buyers above Rs 50,000 limit transactions.On the issue of raids at the residential premises or private houses, the anomaly committee assured that the government has decided to withdraw this power from the FBR in the Finance Bill 2019.

After receiving a large number of complaints against withdrawal of restriction of single audit in three years, the anomaly committee assured that guidelines would be issued to address the issue. The government may restore single audit in three years period under the amended Finance Bill 2019.

The anomaly committees also received complaints that the Finance Bill 2019 has increased the minimum general turnover tax from 1.25% to 1.5%, which needs to be reduced.

Former President Karachi Chamber of Commerce and Industry Anjum Nisar told Business Recorder that over 60-70 percent anomalies were submitted by business community of Karachi. It is encouraging to note that the anomaly committee heard the viewpoints of businesses and trades patiently.

The requirement of the CNIC from the buyers should be deferred for 3-6 months to further discuss the issue. The sellers should not be made withholding agents on behalf of the government. The condition should be implemented in phase-wise manner. However, FBR Chairman Shabbar Zaidi has assured that the sellers would not be held responsible in case wrong CNIC number is submitted by the buyers. In case of forged CNIC numbers, the sellers would not be held responsible or prosecuted.

Anjum Nisar said that the government has also agreed to review the capital gain period on immovable properties on the basis of holding period of property under the Finance Bill 2019.

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Taxation
Directorate of Intelligence and Investigation (I&I)-FBR has impounded non-duty paid luxury vehicles worth in million during an intelligence based operation. According to details, the six-hour long operations by the Directorate team has resulted the recovery of six non-duty paid luxury vehicles worth Rs 11.1 million in the drive against non-duty paid luxury vehicles and contraband goods.

The Directorate claimed that it was the fifth intelligence based operations carried out successfully during last two months and added that these joint operations against non-duty paid luxury vehicles were conducted in Nausheroferoz, Jamshoro, Dadu and Sanghar Districts with the assistance of Sindh police. The Directorate has so far detained 15 non-duty paid luxury vehicles and seized contraband goods worth Rs 400 million during ongoing financial year.
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Taxation
Federal Board of Revenue has announced that the automated system for sales tax registration will be effective from 1st July, 2019.The following procedure is proposed and the same shall replace the one as prescribed in sub-rules (2) to (8) of rule 5 of the Sales Tax Act, 1990. The applicant having NTN/income tax registration shall, using his login credentials, upload following information/documents:

(a) Bank account certificate issued by the bank in the name of the business.

(b) Registration/consumer number with the gas and electricity supplier. (c) Particulars of all branches in case of multiple branches at various locations.

(d) GPS-tagged photographs of the business premises.

(e) In case of manufacturer, also the GPS-tagged photographs of machinery and industrial electricity or gas meter installed. On furnishing above documents, the system shall register the applicant for sales tax. After registration, the applicant or his authorized person shall visit e-Sahulat Centre of NADRA within a month for bio-metric verification.-PR
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