KARACHI: Federal Board of Revenue (FBR) may allow taxpayers who filed their returns after due date to have their names on Active Taxpayers List (ATL).
FBR sources said that the finance ministry had asked the revenue body to review the issue. The ministry of finance had received many representations on the issue.
The government through Finance Act, 2018 introduced Section 182A of Income Tax Ordinance, 2001 to restrict late filers of income tax to appear on ATL for tax year 2018.
The ATL for the tax year 2018 issued by the FBR on March 01, 2010 showed around 1.6 million return filers by due date for salaried class, business individuals and corporate entities i.e. December 15, 2018 and December 31, 2018.
The last ATL for tax year 2017 issued by the FBR had shown around 1.84 million active taxpayers on the list. This means the FBR has lost around 240,000 active taxpayers on the list.
Pakistan Tax Bar Association (PTBA), the apex tax bar of the country, urged the FBR to delete this section as this would result in discouraging potential taxpayers to become filers.
“It will be another disaster like the provision of Section 214D of the Ordinance, which created huge pendency of tax audt cases approximately 1.2 million and finaly the government created facility for the existing taxpayers by introducing Section 214E of the Ordinance for disposal / closure of such cases in the Finance Supplementary (Amendment) Act, 2018.”
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PTBA calls for including late filers into Active Taxpayers List by deleting Section 182A
Author: Faisal Shahnawaz
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Late filers may be allowed for Active Taxpayers List
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Income Tax Ordinance 2001: advance tax on cash withdrawal
KARACHI: Every banking company is responsible for deducting and collecting a certain percentage of tax on cash withdrawal on Rs50,000 per day from an account.
Since passage of Finance Supplementary (Second Amendment) Bill, 2019 from the parliament, the tax is no more on withdrawal by a filer of income tax return.
Therefore, this tax is only be deducted on withdrawal by non-filer of income tax return at the rate of 0.6 percent on cash withdrawal of Rs50,000 per day.
The tax is deducted under Section 231 of Income Tax Ordinance, 2001.
Section 231A: Cash withdrawal from a bank.—Sub-Section (1): Every banking company shall deduct tax at the rate specified in Division VI of Part IV of the First Schedule, if the payment for cash withdrawal, or the sum total of the payments for cash withdrawal in a day, exceeds fifty thousand rupees.
“Explanation.- For removal of doubt, it is clarified that the said fifty thousand rupees shall be aggregate withdrawals from all the bank accounts in a single day.”
Section 231AA: Advance tax on transactions in bank
Sub-Section (1): Every banking company, non-banking financial institution, exchange company or any authorized dealer of foreign exchange shall collect advance tax at the time of sale against cash of any instrument, including Demand Draft, Pay Order, CDR, STDR, SDR, RTC, or any other instrument of bearer nature or on receipt of cash on cancellation of any of these instruments.
Sub-Section (2): Every banking company, non-banking financial institution, exchange company or any authorized dealer of foreign exchange shall collect advance tax at the time of transfer of any sum against cash through online transfer, telegraphic transfer, mail transfer or any other mode of electronic transfer.
Sub-Section (3): The advance tax under this section shall be collected at the rate specified in Division VIA of Part IV of the First Schedule, where the sum total of payments for transactions mentioned in sub-section (1) or sub-section (2) as the case may be, exceed twenty-five thousand rupees in a day.
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New tax amnesty scheme to be considered: Asad Umar
Finance Minister Asad Umar announced on Saturday that the government is contemplating the implementation of a new tax amnesty scheme, driven by proposals received from the business community.
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Rupee gains 20 paisas on foreign inflows
KARACHI: Pak Rupee gained 20 paisas against US dollar in open market on Saturday on reports of foreign inflows from friendly countries.
The buying and selling of dollar was recorded at Rs138.30/Rs138.80 from previous day’s closing of Rs138.50/Rs139.00 in cash free market.
Currency experts said that the signing of financing between State Bank of Pakistan (SBP) and Abu Dhabi Fund for Development (ADFD) for deposit of $2 billion helped the local currency to gain.
They further said that the local currency would strengthen during the next week owing to foreign inflows.
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SBP signs $2bn deposit pact with ADFD
KARACHI: State Bank of Pakistan (SBP) has signed $2 billion deposit agreement with Abu Dhabi Fund for Development, a statement said on Saturday.
The agreement for the placement of the second tranche of US$ 2.0 billion by Abu Dhabi Fund for Development (ADFD) with the State Bank of Pakistan (SBP) has been signed between the SBP and the ADFD. These funds are expected to be received shortly by SBP.
It may be recalled that the first tranche of US$ 1.0 billion has already been received by SBP in January 2019.
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Legislation to encourage tax non-compliance
KARACHI: All efforts of tax collecting agency in broadening of tax base will be in vain due to changes introduced to tax laws by the present government, which allows non-compliant taxpayers to make transactions.
The government through Finance Supplementary (Second Amendment) Bill, 2019, which was passed by the national assembly, allowed non-filers of income tax returns to purchase locally assembled motor vehicles of any engine capacity.
Though the decision was made to generate more revenue through high rate of withholding tax for non-filers but this would discourage compliant taxpayers.
Whereas through Finance Act, 2018 a Section 182A late filers of income tax returns have been deprived of appearing on the Active Taxpayers List (ATL), which is mandatory for availing reduced withholding tax rates applicable on various transactions for compliant taxpayers.
In a realistic approach if the government allowed late filers, who filed their returns after due date, to appear on the ATL then more people would file their returns in order to purchase motor vehicles as it has been done in the case of purchasing immovable properties.
Another change brought through Finance Supplementary (Second Amendment) Bill, 2019 was allowing commercial importers into Final Tax Regime (FTR).
It is surprising that business community belonging to industrial associations strongly proposed bringing commercial importers into the FTR from minimum tax regime, where tax rates are comparatively lower.
It is obvious that the commercial importers do not want to declare their transactions and want to stay remain out of audit proceedings.
The government has already allowed several concessions and exemptions to industrial sector, especially the export sector for importing raw material.
Allowing commercial importers an audit free regime when the country is facing challenges of money laundering will be problematic.
It is pertinent to mention here that associations of foreign investors and multinational companies do not want relaxation to commercial importers and termed it would be counterproductive for documentation of economy.
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Weekly Review: market to stay range bound
KARACHI: The equity market to stay range bound during next week after end of results season and ease in tension between Pakistan and India.
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FBR unveils basic concepts of income tax
KARACHI: Federal Board of Revenue (FBR) has pointed out basic concepts of income tax for persons intending to get registration and filing income tax returns.
The FBR said that knowledge of basic concepts would not only ensure that the tasks are performed easily but also in the prescribed manner.
Taxable Income
Taxable Income means Total Income reduced by donations qualifying straight for deductions and certain deductible allowances.
Total Income
Total Income is the aggregate of Income chargeable to Tax under each head of Income.
Head of Income
Under the Income Tax Ordinance, 2001, all Income are broadly divided into following five heads of Income:
Salary;
Income from property;
Income from business;
Capital gains; and
Income from Other Sources
Resident
An Association of Persons is Resident for a Tax Year if the control and management of its affairs is situated wholly or partly in Pakistan at any time in that year;
A Company is Resident for a Tax Year if :
It is incorporated or formed by or under any law in force in Pakistan;
The control and management of its affairs is situated wholly in Pakistan at any time in the year; or
It is a Provincial Government or a local Government in Pakistan.
An individual is Resident for a Tax Year if he/she:
Is present in Pakistan for a period of, or periods amounting in aggregate to, 183 days or more in the Tax Year; or
Is an employee or official of the Federal Government or a Provincial Government posted abroad in the Tax Year.
Non-Resident
An Association of Persons, a Company and an Individual are Non-Resident for a Tax Year if they are not Resident for that year.
Pakistan source Income
Is defined in section 101 of the Income Tax Ordinance, 2001, which caters for Incomes under different heads and situations. Some of the common Pakistan source Incomes are as under: –
Salary received or receivable from any employment exercised in Pakistan wherever paid;
Salary paid by, or on behalf of, the Federal Government, a Provincial Government, or a local Government in Pakistan, wherever the employment is exercised;
Dividend paid by Resident Company;
Profit on debt paid by a Resident Person;
Property or rental Income from the lease of immovable property in Pakistan;
Pension or annuity paid or payable by a Resident or permanent establishment of a Non-Resident;.
Foreign source Income
Is any Income, which is not a Pakistan source Income.
Person
An Individual;
A Company or Association of Persons incorporated, formed, organized or established in Pakistan or elsewhere;
The Federal Government, a foreign government, a political subdivision of a foreign government, or public international organization
Company
A Company as defined in the Companies Ordinance, 1984 (XLVII of 1984);
A body corporate formed by or under any law in force in Pakistan;
A modaraba;
A body incorporated by or under the law of a country outside Pakistan relating to incorporation of Companies;
An amendment has been made through Finance Act, 2013 to enlarge the scope of definition of a Company. Now as per Income Tax Ordinance, 2001 a company includes:
A co-operative society, a finance society or any other society;
A non-profit organization;
A trust, an entity or a body of persons established or constituted by or under any law for the time being in force.
A foreign association, whether incorporated or not, which the Board has, by general or special order, declared to be a company for the purposes of this Ordinance;
A Provincial Government;
A Local Government in Pakistan;
A Small Company
Association of Persons
Includes a firm (the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all), a Hindu undivided family, any artificial juridical person and any body of persons formed under a foreign law, but does not include a Company.
Tax Year
Is a period of twelve months ending on 30th day of June i.e. the financial year and is denoted by the calendar year in which the said date falls. For example, tax year for the period of twelve months from July 01, 2017 to June 30, 2018 shall be denoted by calendar year 2018 and the period of twelve months from July 01, 2018 to June 30, 2019 shall be denoted by calendar year 2019. It is called Normal Tax Year.
Special Tax Year
Means any period of twelve months and is denoted by the calendar year relevant to the Normal Tax Year in which closing date of the Special Tax Year falls. For example, Tax Year for the period of twelve months from January 01, 2017 to December 31, 2017 shall be denoted by calendar year 2018 and the period of twelve months from October 01, 2017 to September 30, 2018 shall be denoted by calendar year 2019.
Basic concepts on Income Tax would help answer a lot of fundamental questions, avoiding unnecessary mistakes or errors that normally arise during Registration and Filing of Income Tax Return.
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Prices of essential items increase by 11.72 percent: PBS
KARACHI: The prices of essential items increased by 11.72 percent by week ended March 07, 2019 when compared with the same week last year, according to data released by Pakistan Bureau of Statistics (PBS) on Friday.
According to Sensitive Price Indicator (SPI) all the income groups had witnessed inflation for the period.
The PBS computes the weekly SPI with base 2007-2008=100 covering 17 urban centers and 53 essential items for all income groups / quintiles and combined.
The statistics have shown that price of tomatoes posted 308 percent growth to Rs128.42 per kilogram for the week under review as compared with Rs31.42/kg in the corresponding week of the last year.
The price of LPG cylinder grew by 19 percent for the period. While prices of High Speed Diesel, Petrol and Kerosene Oil witnessed increase in their prices by 13.13 percent, 5.57 percent and 6.8 percent, respectively.
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PSX opening bell marks Women Day
KARACHI: Pakistan Stock Exchange (PSX) on Friday celebrated World Women Day as a prominent woman rang the bell for opening trading.
Dr. Shamshad Akhtar, former governor State Bank of Pakistan (SBP), rang the opening bell on the occasion of Women Day.
Women from different sectors of the economy attended the event and also rang the bell.
The stock exchange has important role in promoting women participation in financial market of the country.
The latest event is also part of those efforts to encourage women increase their participation.