Karachi, August 12, 2024 – In a bold move signaling rising discontent among Karachi’s small business community, traders have announced a major protest against the imposition of advance income tax on retail operations.
(more…)Tag: advance tax
-
Traders Decry Advance Income Tax as ‘Anti-Business’
Peshawar, August 12, 2024 – The traders of Peshawar have vocally opposed the recent advance income tax collection measures introduced by the Federal Board of Revenue (FBR). During a crucial meeting held recently under the leadership of Malik Mehr Elahi, President of the Khyber Pakhtunkhwa Trade Association, the business community came together to condemn the new tax policies, describing them as detrimental to the local economy and unfairly burdensome.
(more…) -
FBR applies new advance tax rates on car registration from July 1
Karachi, July 2, 2023: FBR, the Federal Board of Revenue, has implemented new advance tax rates on car registration effective from July 1, 2023.
(more…) -
New Provision Requires Employers of Foreign Workers to Pay Advance Tax
The Finance Bill 2023 has proposed a significant provision that mandates employers or agencies of foreign workers to pay advance tax. This development aims to streamline taxation processes and ensure compliance with the Income Tax Ordinance, 2001.
(more…) -
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.
READ MORE: Tax imposed on foreign payments made by exchange companies
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.
READ MORE: Tax through electricity connections on retailers, service providers
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.
-
Pakistan massively increases taxation on motor vehicles
ISLAMABAD: Pakistan has massively increased the amount of tax on purchase of motor vehicles from July 01, 2022.
The country presented its federal budget 2022/2023 on June 10, 2022 and took various taxation measures to boost revenue collection.
Finance Minister Miftah Ismail while presenting the budget stated that in continuation of our policy to shift the burden of tax on the rich class, advance tax on motor vehicles exceeding 1600cc is proposed to be increased.
READ MORE: New rates of capital gain tax on disposal of securities
Furthermore, advance tax shall also be collected at the rate of 2 per cent of the value in cases of high value hybrid and electric vehicles. Additionally, the rate of tax for non-filers shall be enhanced to 200 per cent from the current 100 per cent.
Accordingly, the Finance Bill, 2022 proposed the following new rates of advance tax on registration of motor vehicles from July 01, 2022:
S.No Engine Capacity Tax (1) (2) (3) 1. Upto 850 cc Rs.10,000 2. 851cc to 1000cc Rs.20,000 3. 1001cc to 1300cc Rs.25,000 4. 1301cc to 1600cc Rs.50,000 5. 1601cc to 1800cc Rs.150,000 6. 1801cc to 2000cc Rs.200,000 7. 2001cc to 2500cc Rs.300,000 8. 2501cc to 3000cc Rs.400,000 9. Above 3000cc Rs.500,000 According to the Finance Bill, 2022, provided that in cases where engine capacity is not applicable and the value of vehicle is Rupees five million or more, the rate of tax collectible shall be 3% of the 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: Pakistan slaps 45% corporate tax on banks
It further said: “Provided that the tax required to be collected under section 231B shall be increased by two hundred percent of the rate specified in First Schedule in case of persons not appearing in the active taxpayers’ list.”
READ MORE: Advance tax on private motor vehicles
The existing rates of advance tax on motor vehicles are (for filers and it will increase by 100 per cent in case of non-filer of income tax returns):
1. upto 850cc: Rs. 7,500
2. 851cc to 1000cc: Rs. 15,000
3. 1001cc to 1300cc: Rs. 25,000
4. 1301cc to 1600cc: Rs. 50,000
5. 1601cc to 1800cc: Rs. 75,000
6. 1801cc to 2000cc: Rs. 100,000
7. 2001cc to 2500cc: Rs. 150,000
8. 2501cc to 3000cc: Rs. 200,000
9. Above 3000cc: Rs. 250,000]
-
Advance tax on stock exchange transactions abolished
KARACHI: The government through budget 2021/2022 has abolished advance tax on stock exchange transactions and in this regard required amendment has been proposed through Finance Bill, 2021.
Tax experts at KPMG Taseer Hadi & Co. in its commentary on budget 2021/2022 said that the stock exchanges registered in Pakistan were required to collect advance tax from their members on purchases and sales of shares in lieu of tax on commission earned by them.
The Finance Supplementary (Second Amendment) Act, 2019 abolished the collection of this advance tax effective 01 March 2019.
Resultantly, applicability of section 233 of the Income Tax Ordinance, 2001 i.e. withholding of tax on commission income was triggered.
However, there is a point of view that taxation of income earned by members of stock exchange registered in Pakistan still covered under this section.
In view of above, the Bill proposes to withdraw section 233A of the Income Tax Ordinance, 2001, hence, after such amendment, the taxability of income earned by members of stock exchanges now compulsorily fall under section 233 of the Ordinance.
The bill also proposed to abolish collection of tax by National Clearing Company of Pakistan Limited (NCCPL).
NCCPL collects advance tax from the members of Stock Exchanges registered in Pakistan on margin financiers, trading financiers and lenders in respect of margin financing in share business. The Bill proposes to withdraw such collection of tax.
-
Advance tax on cable operators abolished
ISLAMABAD: The government has abolished advance tax on cable operators and other electronic media that was collected under Income Tax Ordinance, 2001.
Through Finance Act, 2020 the Section 236F of the Income Tax Ordinance, 2001 has been deleted.
The Section 236F was related to advance tax on cable operators and other electronic media, officials at Federal Board of Revenue (FBR) said on Thursday.
After the deletion of the section the advance tax under this has no more required to be collected from July 01, 2020.
The omitted section was as:
236F. Advance tax on cable operators and other electronic media.— (1) Pakistan Electronic Media Regulatory Authority, at the time of issuance of licence for distribution services or renewal of the licence to a licencee, shall collect advance tax at the rates specified in Division XIII of Part IV of the First Schedule.
(2) The tax collected under sub-section (1) shall be adjustable.
(3) For the purpose of this section, “cable television operator” “DTH”, “Distribution Service”, “electronic media”, “IPTV”, “loop holder”, “MMDS”, “mobile TV”, shall have the same meanings as defined in Pakistan Electronic Media Regulatory Authority Ordinance, 2002 (XIII of 2002) and rules made thereunder.
Division XIII of Part IV of the First Schedule
1) The rate of tax to be collected under section 236F in the case of Cable Television Operator shall be as follows:—
(License Category as provided in PEMRA Rules Tax on License Fee Tax on Renewal H Rs. 7,500 Rs. 10,000 H-I Rs. 10,000 Rs. 15,000 H-II Rs. 25,000 Rs. 30,000 R Rs. 5,000 Rs. 12,000 B Rs. 5,000 Rs. 40,000 B-1 Rs. 30,000 Rs. 35,000 B-2 Rs. 40,000 Rs. 45,000 B-3 Rs. 50,000 Rs. 75,000 B-4 Rs. 75,000 Rs. 100,000 B-5 Rs. 87,500 Rs. 150,000 B-6 Rs. 175,000 Rs. 200,000 B-7 Rs. 262,500 Rs. 300,000 B-8 Rs. 437,500 Rs. 500,000 B-9 Rs. 700,000 Rs. 800,000 B-10 Rs. 875,500 Rs. 900,000 (2) The rate of tax to be collected by Pakistan Electronic Media Regulatory Authority under section 236F in the case of IPTV, FM Radio, MMDS, Mobile TV, Mobile Audio, Satellite TV Channel and Landing Rights, shall be 20 per cent of the permission fee or renewal fee, as the case may be.]
“(3) In addition to tax collected under paragraph (2) Pakistan Electronic Media Regulatory Authority shall collect tax at the rate of fifty per cent of the permission fee or renewal fee, as the case may be, from every TV Channel on which foreign TV drama serial or a play in any language, other than English, is screened or viewed.”
-
Provincial registered taxpayers require to pay advance income tax
KARACHI: Persons registered for sales tax with the provincial revenue authorities are required to pay advance income tax to Federal Board of Revenue (FBR) on the basis turnover declared before the provincial revenue authorities.
According to Section 147A of Income Tax Ordinance, 2001, every provincial sales tax registered person shall be liable to pay adjustable advance tax at the rate of three per cent of the turnover declared before the provincial revenue authority.
The Section 147A is read as:
Advance tax from provincial sales tax registered person.-
Sub-Section (1): Every provincial sales tax registered person shall be liable to pay adjustable advance tax at the rate of three per cent of the turnover declared before the provincial revenue authority.
Sub-Section (2): The advance tax under sub-section (1) shall be paid monthly at the time when sales tax return is to be filed with the provincial revenue authority.
Sub-Section (3): Advance tax paid under this section may be taken into account while working out advance tax payable under section 147.
Sub-Section (4): The provisions of this Ordinance shall apply to any advance tax due under this section as if the amount due were tax due under an assessment order.
Sub-Section (5): A taxpayer who has paid advance tax under this section for a tax year shall be allowed a tax credit for that tax in computing the tax due by the taxpayer on the taxable income of the taxpayer for that year.
Sub-Section (6): A tax credit allowed for advance tax paid under this section shall be applied in accordance with sub-section (3) of section 4.
Sub-Section (7): A tax credit or part of a tax credit allowed under this section for a tax year that is not able to be credited under sub-section (3) of section 4 for the year shall be refunded to the taxpayer in accordance with section 170.
Sub-Section (8): This section shall not apply to a person whose name was appearing in the active taxpayers’ list on the thirtieth day of June of the previous tax year.
-
Advance tax exempted on sale of immovable properties on holding period of above five years
KARACHI: The Federal Board of Revenue (FBR) has exempted the advance tax on sale of immovable property subject to the property is held for above five years.
The officials of Federal Board of Revenue (FBR) said that advance tax under Sub-Section (1) of Section 236C of Income Tax Ordinance, 2001 would not be collected if the immovable property is held for a period exceeding five years.
Under Sub Section 1 of Section 236C of the Income Tax Ordinance, 2001, Any person responsible for registering, recording or attesting transfer of any immovable property shall at the time of registering, recording or attesting the transfer shall collect from the seller or transferor advance tax at the rate specified in Division X of Part IV of the First Schedule:
Explanation,—For removal of doubt, it is clarified that the person responsible for registering, recording or attesting transfer includes person responsible for registering, recording or attesting transfer for local authority, housing authority, housing society, co-operative society and registrar of properties.
Provided that this sub-section shall not apply to a seller, being the dependant of a Shaheed belonging to Pakistan Armed Forces or a person who dies while in the service of the Pakistan Armed Forces or the service of Federal or Provincial Government, in respect of first sale of immovable property acquired from or allotted by the Federal Government or Provincial Government or any authority duly certified by the official allotment authority, and the property acquired or allotted is in recognition of or for services rendered by the Shaheed or the person who dies in service.
(2) The Advance tax collected under sub-section (1) shall be adjustable
Provided that where immovable property referred to in sub-section (1) is acquired and disposed of within the same tax year, the tax collected under this section shall be minimum tax.
According to the ordinance the advance tax rate on sale of immovable properties is one percent of the gross amount of the consideration received. However, the tax rate shall be two percent if a person is not appearing on the Active Taxpayers List.