Tax amendments made for income of salaried persons, individuals

Tax amendments made for income of salaried persons, individuals

KARACHI: The Finance Bill, 2021 has proposed certain amendments in Income Tax Ordinance, 2001 related to income of salaried persons and business individuals.

According to a presentation made at post budget 2021/2022 webinar of Karachi Tax Bar Association (KTBA) the major changes proposed through the Finance Bill 2021, are:

— Interest income above Rs5 million taxable at normal rates (previously Rs. 36 million); withholding @15 percent (previously 10 percent) for interest income below Rs. 500,000.

— Exemption for medical allowance / reimbursement withdrawn, which needs to be reconsidered.

— Interest income distributed by Provident Fund above Rs. 500,000 taxed @ 10 percent – conflict with 6th Schedule needs to be addressed.

— Rental income taxable at normal rate.

— No tax on transfer of assets via gift / inheritance etc. to non-resident relatives.

— Giftee allowed to claim FMV of gifted assets, after a holding period of 2 years.

— Individuals have been made a withholding agent for payment of commission (having turnover of Rs. 100 million).

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