Tag: Income Tax Ordinance 2001

Normal tax year to run through July 01 to June 30 as defined under Section 74 of the Income Tax Ordinance, 2001. This provision has been updated with the Finance Act, 2021, and includes some important special provisions.

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In the intricate landscape of taxation, ensuring fairness and preventing duplicity is paramount. Section 73 of the Income Tax Ordinance, 2001, as updated up to June 30, 2021, serves this purpose by delineating rules to prevent double derivation and double deductions.

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Section 72 of the Income Tax Ordinance, 2001 has outlined tax on income from ceases business. The Federal Board of Revenue (FBR) has incorporated these regulations into the Ordinance, ensuring that taxpayers understand the implications of income derived from a business, activity, investment, or other sources that have ceased.

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Section 71 of the Income Tax Ordinance, 2001 sets forth the requirement that every amount considered for taxation purposes must be in Pakistani Rupees (PKR).

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In a bid to provide clarity on the income tax treatment for expenditures or losses that are initially deducted but later compensated, Section 70 of the Income Tax Ordinance, 2001 outlines specific provisions.

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Section 69 of Income Tax Ordinance, 2001 provides treatment of time for receiving amount under tax law.

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ISLAMABAD: The Federal Board of Revenue (FBR) on Monday said that a limitation of 120 days has been imposed with regard to the period of time during which amendment of assessment under section 122 of the Ordinance must be completed.

The FBR in a circular No. 4 Income Tax (Operations) stated that owing to availability of extended period of time, the completion of proceedings under section 122 of the Income Tax Ordinance, 2001 within desired time has remained a challenge and diverse treatment was meted out viz-a-viz time taken for completion of proceedings across the formations.

This varied treatment has commutatively resulted in below par revenue outcomes for the exchequer and increased compliance costs for the taxpayers due to protracted delays in legal actions.

The Finance Act, 2021 has brought about a significant amendment in section 122 of the Ordinance whereby a limitation of 120 days has been imposed with regard to the period of time during which amendment of assessment under section 122 of the Ordinance must be completed subsequent to issuance of a show cause notice.

The said amendment harmonizes the procedure of amendment of assessment under the Income Tax Ordinance, 2001 with the procedure of assessment under section 11 the Sales Tax Act, 1990 and section 14 of the Federal Excise Act, 2005.

The aforementioned amendment is also an effort to restore the true spirit of the Income Tax Ordinance, 2001 where amendment proceedings are entered into after carrying out inquiry or audit, if necessary, and do not remain pending for an indefinite period of time.

In case the proceedings cannot be completed within the prescribed time period of 120 days, the Commissioner may extend the time limit for up to another ninety days for recorded reasons. The new provision would apply to the show cause notices issued after July 1, 2021.

Accordingly, formations are expected to be cognizant of this important amendment. The Commissioners are required to ensure that necessary guidance is provided to assessing officers in this regard.

Islamabad – The Federal Board of Revenue (FBR) has shed light on the calculation of income tax concerning the fair market value of various assets, services, and properties.

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