ISLAMABAD: The Finance Bill, 2020 has proposed to withdraw withholding tax collection on nine different types of transactions under Income Tax Ordinance, 2001.
According to budget commentary issued by PwC A F Ferguson, as part of reforms for ease of doing business, the government has proposed to withdraw following withholding tax provisions, which in government’s view were not generating enough revenues:
01. Section 148A – Tax on local purchase of cooking oil or vegetable ghee by certain persons
Two percent tax was chargeable on the purchase of locally produced edible oil by the manufacturers of cooking oil or vegetable ghee.
02. Section 156B – Withdrawal of balance under Pension Fund
A pension fund manager making payment from individual pension accounts, maintained under any approved Pension Fund, was required to deduct tax at the average rate of tax as calculated in section 12, from the amount so withdrawn by the pensioner before or after his retirement.
03. Section 235B – Tax on steel melters and composite units
Tax under this section was required to be collected from every steel melter, and composite steel units, registered for the purpose of Chapter XI of Sales Tax Special Procedure Rules, 2007 at the rate of one rupee per unit of electricity consumed for the production of steel billets, ingots and mild steel (MS products) excluding stainless steel.
04. Section 235D – Advance tax on functions and gatherings
Advance tax under this section was required to be collected by the prescribed person on the total amount of the bill from a person arranging or holding a function in a marriage hall, marquee, hotel, restaurant, commercial lawn, club, a community place or any other place used for such purpose including the food, service or any other facility is provided by any other person, from the person arranging or holding the function.
05. Section 235F – Advance tax on cable operators and other electronic media
Under this section, Pakistan Electronic Media Regulatory Authority was required to collect advance tax, at the time of issuance of licence for distribution services or renewal of the licence to a licencee.
06. Section 236J – Advance tax on dealers, commission agents and arhatis etc
Advance tax under this section was required to be collected by every market committee from dealers, commission agents or arhatis, etc. at the time of issuance or renewal of licences
07. Section 236R – Collection of advance tax on education related expenses remitted abroad
Advance tax was required to be collected by Banks, financial institutions, foreign exchange companies or any other person responsible for remitting foreign currency abroad for the purpose of education related expenses remitted abroad from the payer of education related expenses.
08. Section 236U – Advance tax on insurance premium
Advance tax was required to be collected under this section, by the insurance company at the time of collection of insurance premium from the person in respect of general insurance premium and life insurance premium.
09. Section 236X- Advance tax on tobacco
Pakistan Tobacco Board or its contractors, at the time of collecting cess on tobacco, directly or indirectly, shall collect advance tax at the rate of five percent of the purchase value of tobacco from every person purchasing tobacco including manufacturers of cigarettes.
