Section 194 of the Income Tax Ordinance, 2001, updated up to June 30, 2021, now explicitly prescribes prosecution for the improper use of the National Tax Number (NTN) Certificate.
(more…)Tag: Income Tax Ordinance 2001
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Three years imprisonment for undeclared offshore asset
Section 192B of Income Tax Ordinance, 2001, updated up to June 30, 2021, now prescribes severe penalties, including imprisonment for up to three years, for individuals who fail to declare offshore assets or provide inaccurate particulars.
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Failure to keep record to attract two years imprisonment
Section 193 of Income Tax Ordinance, 2001, updated up to June 30, 2021, now emphasizes that a taxpayer may face two years imprisonment on failure to keep record.
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Two years jail for income concealment
Income Tax Ordinance, 2001 has specifically outlined two years jail for concealment of income. Section 192A of the Income Tax Ordinance, 2001, as amended through the Finance Act, 2021 and updated until June 30, 2021, outlines serious legal consequences for concealment of income. According to this provision, any individual who deliberately hides their income or provides inaccurate details during tax proceedings can face strict legal action.
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Revised taxation for banks applicable January 01, 2021
ISLAMABAD: The Federal Board of Revenue (FBR) has revised taxation for banks from tax year 2022 (starting from January 01, 2021, to December 31, 2021) onwards.
An important amendment has been introduced through Tax Laws (Third Amendment) Ordinance, 2021, which was promulgated through a presidential ordinance.
Through Finance Act, 2021, a sub-rule (6A) in rule 6C of Income Tax Ordinance, 2001 was introduced, which was applicable for banks from the tax year 2022 (January 01, 2021 to December 31, 2021).
The text of sub-rule 6A was:
(6A) For tax year 2022 onwards, the taxable income attributable to investment in the Federal Government securities shall be taxed at the rate of—
(i) 40 per cent instead of rate provided in Division II of Part I of the First schedule if the assets to deposit ratio as on last day of the tax year is upto 40 per cent;
(ii) 37.5 per cent instead of rate provided in Division II of Part I of the First schedule if the assets to deposit ratio as on last day of the tax year exceeds 40 per cent but does not exceed 50 per cent; and
(iii) at the rates provided in Division II of Part I of the First schedule if assets to deposit ratio as on last day of the tax year exceeds 50 per cent.
However, through Tax Laws (Third Amendment) Ordinance, 2021 this was amended and for the words ‘assets’, wherever occurring, the words ‘gross advances’ shall be substituted.
Tax experts believe that the amendment would have a negative impact on banks with ADR of less than 50 per cent as they have to pay additional tax on their entire income arising from investment in government securities rather than additional income as was the case previously.
They said that the banks with low ADR took the impact of the same in June 2021 financial results and as a result effective tax rate of banking sector increased from 38 per cent in 2Q2020 to 40 per cent in 2Q2021. This is likely to have an earnings impact of around 5-10 per cent for the sector.
The idea of this increased taxation was to encourage banks to increase their lending activity but this remains a big question mark of how effective this policy measure will be.
The latest banking sector data (week ending September 3, 2021) show that ADR of the sector is at 47 per cent, below the threshold of 50 per cent for additional taxation. This compares to ADR of 48 per cent in Sep-2020 and 45 per cent in Jun-2021.
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Three-year jail for false statement under income tax law
Section 192 of the Income Tax Ordinance, 2001, as updated up to June 30, 2021, through the Finance Act, 2021, recommends a three-year jail term for individuals found guilty of making false statements before the Commissioner Inland Revenue (IR).
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Prosecution for failure to comply with tax obligations
Section 191 of Income Tax Ordinance, 2001 explains the prosecution for non-compliance with certain statutory obligations.
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Exemption from penalty and default surcharge
In a move aimed at providing flexibility and mitigating financial burdens for taxpayers, Section 183 of the Income Tax Ordinance, 2001 grants the Federal Board of Revenue (FBR) and the Commissioner Inland Revenue (IR) the authority to exempt individuals or classes of persons from penalties and default surcharges.
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Returns filed after due date not to get ATL status
Section 182A of Income Tax Ordinance, 2001 describes that a person failed to file the income tax return by the due date will not get status of Active Taxpayers’ List (ATL) until the payment default surcharge.
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Penalty for non-issuance of cash memos
The Federal Board of Revenue (FBR) has introduced a penalty provision under Section 182(2) of the Income Tax Ordinance, 2001 for individuals or businesses failing to issue cash memos, invoices, or receipts when required by the ordinance or related rules.
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