Islamabad, June 29, 2023: Starting from July 1, 2023, Pakistan has introduced an additional tax on unexpected income, profit, and gains. The Federal Board of Revenue (FBR) has been granted the authority to collect this tax.
(more…)Tag: income tax
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Pakistan Enacts Legislation to Broaden Permanent Establishment Scope
Islamabad: In a significant move, Pakistan has passed legislation aimed at expanding the scope of permanent establishment to regulate transactions conducted through electronic mediums.
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Revival of Tax on Bonus Shares through Finance Act, 2023
Karachi, Pakistan – The Finance Act, 2023, has brought back the tax on bonus shares, which will take effect from July 1.
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Experts Analyze Amendments to Deemed Property Income in Finance Act 2023
With the implementation of the Finance Act 2023 from July 1, 2023, significant amendments have been made to the provisions related to deemed income.
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Banks to Collect 0.6% Tax on Cash Withdrawal from Non-Filers
Islamabad, June 28, 2023: The National Assembly of Pakistan has given its approval to implement a withholding tax on cash withdrawals made by non-filers of income tax returns, effective from July 1, 2023.
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Active Taxpayers Exempted from Deemed Income Tax
Islamabad, June 27, 2023: The government has announced that active taxpayers will no longer be required to pay tax on deemed income, according to the Finance Act, 2023.
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Additional Tax on Windfall Income Becomes Act of Parliament
Islamabad, June 27, 2023 – The national assembly has passed the budget proposals, making the additional tax on windfall income a law, according to experts.
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Pakistan Imposes 10% Income Tax on Bonus Shares Issued by Companies
The government of Pakistan has introduced a new measure through the Finance Bill, 2023, which imposes a 10 percent income tax on the issuance of bonus shares by companies to their shareholders. This tax is implemented under a new section, 236Z, of the Income Tax Ordinance, 2001.
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Lahore High Court declares tax on deemed income as illegal
Lahore High Court has declared the imposition of income tax on ‘deemed rental income’ of properties as illegal.
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Tax on deemed income arising from capital assets in Pakistan
KARACHI: A resident person, who owns capital assets in Pakistan, will be taxed on deemed income arising from capital assets for tax year 2022.
An important amendment has been made part of the Income Tax Ordinance, 2001 through Finance Act, 2022.
Experts at PwC A. F. Ferguson & Co. explained this provision of the ordinance made part through Finance Act, 2022, as a resident person owning capital assets in Pakistan will be taxed on deemed income arising from capital assets for tax year 2022 and onwards.
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For this purpose, such deemed income shall be computed as 5 per cent of the Fair Market Value (as determined by the FBR under section 68 of Income Tax Ordinance, 2001 of capital assets.
The rate of tax on such income is prescribed as 20 per cent.
This translates into an effective tax at 1 per cent of Fair Market Value of capital assets.
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The experts said that an exclusionary definition of ‘capital asset’ has been provided, which effectively means that such tax is leviable only in respect of ‘immovable property’ situated in Pakistan owned by resident persons.
For the purposes of such tax; however, while following immovable properties shall stand excluded, the Federal Government has been empowered to notify any exclusion or inclusion of any person and/ or property from the scope of such tax:
(a) one immovable property owned by the resident person;
(b) self-owned business premises from where the business is carried out by the persons appearing on the active taxpayers’ list at any time during the year;
(c) self-owned agriculture land where agriculture activity is carried out by person excluding farmhouse (defined in a specified manner) and land annexed thereto;
(d) immovable property allotted to:
READ MORE: Key changes to income tax laws through Finance Act 2022
(i) a shaheed or dependents of a shaheed belonging to Pakistan Armed Forces;
(ii) a person or dependents of the person who dies while in the service of Pakistan armed forces or Federal or provincial government;
(iii) a war wounded person while in service of Pakistan armed forces or Federal or provincial government; or
(iv) an ex-serviceman and serving personnel of armed forces or ex-employees or serving personnel of Federal and provincial governments, being original allottees of the capital asset duly certified by the allotment authority;
(e) any property from which income is chargeable to tax under the Ordinance and tax leviable is paid thereon;
(f) immovable property in the first tax year of acquisition where tax under section 236K of the Income Tax Ordinance, 2001 has been paid;
(g) where the fair market value of the capital assets in aggregate excluding the capital assets mentioned in clauses (a) through (f) above does not exceed Rs 25 million;
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(h) immovable property owned by a provincial government or a local government; or
(i) immovable property owned by a local authority, a development authority, builders and developers for land development and construction, subject to the condition that such persons are registered with Directorate General of Designated Non-Financial Business and Professions.
The constitutional validity of this tax in relation to entry 50 of the Fourth Schedule to the Constitution of Pakistan and the scope of any amount which can be deemed as income will have to be tested, they added.