Finance Supplementary (Second Amendment) Bill 2018: Key points of income tax proposals

KARACHI: A chartered accountant firm has highlighted proposed amendments to Income Tax Ordinance, 2001 through Finance Supplementary (Second Amendment) Bill, 2019.
Deloitte Yousuf Adil, Chartered Accountants Firm highlighted following points that are proposed to income tax laws through the bill:
1. Tax on undistributed reserves, reintroduced through Finance Act, 2017, to be abolished after tax year 2019.
2. Carry forward of capital loss on disposal of securities, as envisaged under section 37A, to be allowed for three tax years from tax year 2019 and onwards.
3. Income from renewal of the spectrum and licenses by Pakistan Telecommunication Authority on behalf of the Federal Government to be treated as income of the Federal Government thereby exempt from income tax.
4. Special procedures to be introduced via notification with respect to scope and payment of tax, filing of return and assessment for small traders and shopkeepers for different cities or territories.
5. Undeclared offshore assets discovered by the Commissioner or any department or agency are now liable to provisional assessment by the Commissioner Inland Revenue.
6. Imports of certain goods are now liable to tax collection under Final Tax Regime as against minimum tax; thus reverting to the position as was in place prior to July 01, 2018.
7. Income tax withholding statements are now to be filed on bi annual basis.
8. Non-filers are now allowed to purchase locally manufactured vehicles up to 1300 CC.
9. Non-resident Pakistani citizens holding international passport are
now allowed to purchase immoveable property and locally manufactured vehicles without filing requirement.
10. Super tax is abolished for non-banking sectors from tax year 2020.
11. For banking companies, super tax at 4% is maintained upto tax year 2021.
12. Mobile phones imported in Pakistan are subjected to higher collection of tax at import stage.
13. Advance Tax on Cash Withdrawals and Banking Transactions is abolished for filer.
14. Advance tax on registration of private motor vehicles for non-filers is enhanced.
15. Advance tax on small functions and gatherings is reduced to Rs. 5,000.
16. Banking companies are not required to report the withholding tax information pertaining to section 151 and 231A.
17. Advance tax collection on auction would not apply on franchise rights of participating teams in a national or international league organized by any board or other organization established by the Government of Pakistan.
18. Tax on dividend income would be reduced to the extent of percentage of ordinary shareholding held by the company, in the case of companies availing group relief under section 59B.
19. Removal of advance tax on cash withdrawal from Pak Rupees Account where deposit in the account is made solely from foreign remittance.
20. Reduced rate is introduced for interest income derived by Banking Companies from additional advances given to Micro, SME, Low Cost Housing Finance and Farm Credit.
21. Interest income received by banking companies from additional advances Micro, SME, Low Cost Housing Finance and Farm Credit would not be subject to levy of Super Tax.
Reform package exempts withholding tax for rupee accounts receiving foreign remittances
Bill proposes valuation in US Dollar for imported mobile phones to collect smart phone levy
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