ISLAMABAD: The government has increased threshold of annual turnover to Rs100 million from Rs10 million for imposing minimum income tax from July 01, 2021 onwards.
According to Budget 2021/2022 documents, Finance Bill 2021 has proposed amendment to Section 113 of Income Tax Ordinance, 2001.
The Section 113 after the proposed amendment is:
Minimum tax on the income of certain persons.- (1) This section shall apply to a resident company, permanent establishment of a non-resident company, an individual (having turnover of one hundred million rupees or above in the tax year 2017 or in any subsequent tax year) and an association of persons (having turnover of one hundred million rupees or above in the tax year 2017 or in any subsequent tax year) where, for any reason whatsoever allowed under this Ordinance, including any other law for the time being in force—
(a) loss for the year;
(b) the setting off of a loss of an earlier year;
(c) exemption from tax;
(d) the application of credits or rebates; or
(e) the claiming of allowances or deductions (including depreciation and amortization deductions) no tax is payable or paid by the person for a tax year or the tax payable or paid by the person for a tax year is less than the percentage as specified in column (3) of the Table in Division IX of Part-I of the First Schedule of the amount representing the person’s turnover from all sources for that year:
The Finance Bill 2021 also added an explanation:.- For the removal of doubt, it is clarified that the definition of turnover covers receipts from all business activities in line with expression “ turnover from all sources” used in sub-section (1) including but not limited to receipts from sale of immoveable property where such receipt is taxable under the head Income from Business.”
More provisos has been proposed through Finance Bill 2021:
“Provided that if tax is paid under sub-section (1) due to the fact that no tax is payable or paid for the year, the entire amount of tax paid under sub-section (1) shall be carried forward for adjustment in the manner stated aforesaid:
Provided further that the amount under this clause shall be carried forward and adjusted against tax liability for five tax years immediately succeeding the tax year for which the amount was paid.”;