KARACHI: The Finance Bill 2020 has proposed changes to taxability on payments made for goods, services and contracts.
According to explanation to amendments made to Section 153 of Income Tax Ordinance, 2001 through Finance Bill 2020 by BDO Pakistan Audit Consultancy and Tax Advisory Firm:
(1a): The bill seeks to include toll manufacturing to be treated as sale of good for the purpose of withholding under this subsection. This inclusion clarifies the taxability of this segment and it will be minimum tax.
(3): The bill seeks to treat taxes withheld at source as minimum tax on payment of goods, services and execution of contracts.
(4): The tax deducted at source is adjustable for the Company being manufacturer and the Public Listed Company registered on stock exchange. This inclusion will result in expansion of tax collection by the board.
The Bill seeks that the Commissioner shall respond to application for the issuance of exemption certificate related to withholding of taxes against goods, services and execution of contracts to facilitate the public listed companies registered in stock exchange, within fifteen days.
Where not responded, the IRIS may issue exemption certificate provided that the advance tax under section 147 was paid by the taxpayer.
The Commissioner retains the power to revoke the automatically issued certificate by IRIS on the basis of reasons to be recorded in writing after providing an opportunity of being heard.
(7) The Bill has sought following amendments in the requirement of the prescribed person defined as withholding agent.
Individuals and association of person having turnover of fifty million rupees
Individuals and association of person having turnover of one hundred million rupees. Persons registered under Sales Tax Act, 1990 only are now required to meet turnover of one hundred million rupees or more in any preceding tax years to qualify as withholding agent.