The Pakistan Business Council (PBC) has proposed several measures to the Federal Board of Revenue (FBR) in order to tackle the problem of under-invoicing by commercial importers.
(more…)Category: Budget
This is parent category of budget presented by Pakistan government. Here you will find year-wise federal and provincial budgets.
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PBC proposes massive tax burden on non-filers in upcoming budget
The Pakistan Business Council (PBC) has proposed increasing the burden on non-filers of income tax in the upcoming budget 2023-2024.
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Capital market seeks income tax exemption on foreign investment
Pakistan’s capital market has recommended tax exemption on income derived from foreign investments.
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PSX suggests aligning CGT on disposal of securities, immovable properties
Pakistan Stock Exchange (PSX) in its proposals for budget 2023-2024 suggested to align rates of capital gains tax on disposal of listed securities with the rates of CGT on sale of immovable property.
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FBR invites sales tax, FED proposals for budget 2023-2024
ISLAMABAD: The Federal Board of Revenue (FBR) has opened the door for proposals to amend laws related to sales tax and Federal Excise Duty (FED) as part of the upcoming budget for the fiscal year 2023-2024.
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FBR seeks proposals to eliminate exemption, concessions in income tax
ISLAMABAD: The Federal Board of Revenue (FBR) has called for proposals to eliminate exemptions and concessions under income tax laws as part of the formulation process for the budget 2023-2024.
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Pakistan grants 5-year tax exemption to promote film industry
ISLAMABAD: Pakistan has granted five-year tax exemption on income derived from cinema operations in order to promote local film industry.
The tax exemption has been granted under Income Tax Ordinance, 2001 by amendment made through Finance Act, 2022.
READ MORE: Advance tax on immovable property enhanced by 100%
The Federal Board of Revenue (FBR), the apex tax collecting agency of Pakistan, issued Income Tax Circular No. 15 of 2022/2023 to explain important amendments introduced through the Finance Act, 2022 to the Income Tax Ordinance, 2001.
The FBR said that in order to promote local film industry, following new measures have been introduced:
(i) Five years tax exemption has been granted by inserting clause (151) in Part I of Second Schedule to the Income Tax Ordinance 2001 to a person who derives any income from cinema operations, starting from the commencement of cinema operations.
READ MORE: FBR explains changes in advance tax on motor vehicles
(ii) Through insertion of clause (153) in Part I of Second Schedule to the Ordinance, exemption has been granted to profit and gains derived by a resident producer or a resident production house from production of feature films during the period from July 01, 2022 to June 30, 2027.
READ MORE: Pakistan introduces automated system for withholding tax payments
(iii) Similarly, exclusion from provisions of section 148 of the Income Tax Ordinance, 2001 has been provided through insertion of Clause (12P) in Part IV of Second Schedule on import of machinery and equipment as listed in serial no. 32 of Part-I of Fifth Schedule to the Customs Act, 1969 subject to the conditions and limitations specified therein.
(iv) Moreover, through insertion of clause (43H) in Part IV of Second Schedule, exclusion from the provisions of clause (b) of sub-section (1) of section 153 has been provided to an exhibitor or a distributor of a feature film, as payer, on payment made to a distributor, producer or importer of feature film.
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Advance tax on immovable property enhanced by 100%
ISLAMABAD: The rate of advance tax on sale and purchase of immovable property has been enhanced by 100 per cent.
The tax rate has been enhanced on property transaction through Finance Act, 2022.
READ MORE: FBR explains changes in advance tax on motor vehicles
The FBR issued Income Tax Circular No. 15 of 2022/2023 to explain major amendments brought through Finance Act, 2022 to Income Tax Ordinance, 2001.
The FBR said that the rate of advance tax on sale or transfer and on purchase or transfer of immovable property has been enhanced from 1 per cent to 2 per cent.
READ MORE: Pakistan introduces automated system for withholding tax payments
Moreover, sub-section (3) of section 236C of the Income Tax Ordinance, 2001 has been omitted.
“Now advance tax on sale or transfer of immovable property will be collected under this section irrespective of holding period,” the FBR added.
READ MORE: Tax imposed on foreign payments made by exchange companies
Meanwhile, in case of purchaser of immovable property who is not appearing on the active taxpayers list, rate of tax to be collected under section 236K of the Income Tax Ordinance, 2001 will increase by two hundred and fifty (250) per cent of the rate specified in Division XVIII of Part IV of First Schedule.
Necessary change has been incorporated in rule 1 of Tenth Schedule to the Income Tax Ordinance 2001, the FBR added.
READ MORE: Minimum tax for commercial importers enhanced: FBR
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FBR explains changes in advance tax on motor vehicles
ISLAMABAD: The Federal Board of Revenue (FBR) has explained changes made to advance tax on motor vehicles through Finance Act, 2022.
The FBR issued Income Tax Circular No. 15 of 2022/2023 to explain important amendments brought through Finance Act, 2022 to the Income Tax Ordinance, 2001.
The FBR said that provision of section 231B of Income Tax Ordinance, 2001 was limited to private motor vehicles. The scope of withholding tax has now been enhanced though omission of the word ‘private’ from the heading and elsewhere in the section.
READ MORE: Pakistan introduces automated system for withholding tax payments
Further, an inclusive definition of motor vehicle has been provided in the substituted sub-section (7) of section 231B with following exclusions:
(i) a motor vehicle used for public transportation, carriage of goods and agriculture machinery;
(ii) a rickshaw or a motorcycle rickshaw and
(iii) any other motor vehicle having engine capacity up to 200cc.
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Except motor vehicles mentioned at i, ii and iii above, provision of section 231B will apply on motor vehicles of all makes and models irrespective of its private or commercial use by the end users.
The FBR further said that the withholding tax amount required to be collected at the time of purchase or registration of motor vehicle has been enhanced with engine capacity of 1601cc and above.
In cases of electric vehicles where engine capacity of a vehicle is not available and value of vehicle is rupees five million or more, the amount of tax collected will be 3 per cent of import value as increased by customs duty, sales tax and federal excise duty in case of imported vehicles or invoice value in case of locally manufactured or assembled vehicles.
READ MORE: Minimum tax for commercial importers enhanced: FBR
Rates of tax required to be collected at the time of transfer of registration or ownership of a motor vehicles have been provided in clause (2) in the Table in Division VII of Part IV of First Schedule of the Ordinance.
A new proviso has been inserted whereby a vehicle in which engine capacity is not applicable (electric vehicles) and the value of said vehicle is rupees five million or more, then tax amount of rupees twenty thousand will be collected at the time of transfer of registration or ownership of such vehicle.
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In case of a person not appearing in active taxpayer list, tax collectible under this section will increase by two hundred percent. Necessary change has been incorporated in rule 1 of Tenth Schedule of the Ordinance, the FBR added.
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Pakistan introduces automated system for withholding tax payments
ISLAMABAD: Pakistan has introduced an automated system for real-time payment for withholding tax. The system has been introduced through the Finance Act, 2022 by making amendment to the Income Tax Ordinance, 2001.
The Federal Board of Revenue (FBR), the apex tax collecting agency of Pakistan, issued Income Tax Circular No. 15 of 2022/2023 to explain important amendments introduced through the Finance Act, 2022 to the Income Tax Ordinance, 2001.
READ MORE: Tax imposed on foreign payments made by exchange companies
The FBR said that currently, withholding agents are required to collect and deduct tax at the time of making payment and deposit the same in government treasury within the prescribed time period.
Similarly, withholding agents are required to file quarterly and annual withholding statements which consumes time and resources of taxpayers leading to increased compliance cost.
Moreover, certain large withholding tax agents like banks, DISCOs, TELCOs, Government institutions etc. are still depositing tax through a single payment receipt for multiple taxpayers.
READ MORE: Minimum tax for commercial importers enhanced: FBR
“In order to streamline withholding tax collection and deduction mechanism, enabling provision for the placement of a fully automated system by the name Synchronized Withholding Administration and Payment System (SWAPS) has been introduced under section 164A of the Ordinance,” the FBR said.
A withholding agent notified under section 164A will be called a SWAPS agent.
The notified SWAPS agent will be integrated with Board and withholding tax will be deposited in government treasury on real time basis simultaneously at the time of making third party payment processed through SWAPS by the SWAPS agent.
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It will also result in auto populated withholding statements thereby saving time and reducing cost of compliance for the business.
SWAPS Payment Receipt (SPR) will be generated upon deposit of tax in this manner which will be a valid document for the purpose of claiming credit against tax payable under the provisions of this Ordinance.
In case if a notified SWAPS agent fails to integrate with the Board in the manner prescribed, the said agent will not be eligible for credit under Part X of Chapter III of the Ordinance and exemption under any of the provisions of the Ordinance.
READ MORE: FBR explains income tax on export of services
All other provisions of the Ordinance not specifically dealt with in newly inserted section 164A will mutatis mutandis apply on a notified SWAPS agent.
Corresponding changes have been made in section 164 of the Ordinance.