KARACHI: The Finance Act, 2022 has made significant changes to Income Tax Ordinance, 2001, which are applicable from July 01, 2022.
Following are the significant changes in Income Tax Ordinance, 2001 through Finance Act, 2022 as explained by PwC A.F. Ferguson & Co.:
1. Slab rates for super tax introduced for taxpayers having income in excess of Rs 150 million. The Bill earlier proposed such threshold at Rs 300 million at a standard rate of 2 per cent.
2. Super tax rate is enhanced to 10 per cent for certain specified sectors for tax year 2022 whereas for banking companies such enhanced rate of super tax will be applicable for tax year 2023.
3. The proposal of final tax regime for commercial importers is withdrawn. Consequently, commercial importers will remain under minimum tax regime.
4. The proposal to restrict income tax holiday of certain IPPs withdrawn.
5. The standard rate of tax for banking companies revised at 39 per cent.
6. The revised slab rates for salaried individuals introduced by setting below taxable limit at Rs 600,000 as against the original proposal of Rs 1,200,000. Further, the reduction in tax rates proposed in Finance Bill has not only been reversed but the tax incidence has also been enhanced (as compared to position prior to Finance Bill).
7. The right to carry forward minimum tax retained, however, the period is reduced from five to three years.
8. The tax credit on contributions to Voluntary Pension Scheme retained.
9. The resident individual will now also include a citizen of Pakistan who was not in any one foreign country for more than 182 days.
10. The credit for income covered by final tax in respect of assets declared in wealth statement or books of account in excess of imputable income is inter alia subject to submission of audited financial statements.
11. Advance tax on sale of immovable properties to be collected irrespective of holding period.
12. The rate of advance tax on imports mentioned in Part II of the Twelfth Schedule enhanced from 2 per cent to 3.5 per cent.
13. Reduced rate of Capital Gains Tax on listed securities based on holding period to apply on securities purchased on or after July 01, 2022.