~~with focus on tax education~~

Distance Education

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In modern world there are number of methods available to educate their children. Among all distance education is one of the educational practices where students are enrolled in a registered schools and conduct their academic work at home under the supervision of a parent. However to adopt this sort of education method for our own child we need to consider many questions like do our child would learn what he will do in the campus. Is there any good institution available in our area like Perth, Rockingham, Mandurah, Bunbury, Kalgoorlie, Geraldton and Albany. I personally found Australian Christian College Southlands one of the best among all in these area because this is giving every thing what parents are expecting for their children.
The Australian Christian College Southlands, established in 2006, has grown to become a mature institution of higher learning to provide quality Christian education to students on campus education and distance education. The main aim of the institution is to provide a wide variety of experiences and opportunities through unique learning environment. They have build a customized campus which helps every student to thrive spiritually, academically, socially and physically.
The Australian Christian College also places great stress on extra-curricular activities, particularly in Sports, Debates, Dramatics, Music and Art. Their Sports and Debating Teams are amongst the best in region in large part due to the fact that these activities are a regular part of the daily activities of the campus. Visit the neatly laid out site of ACCS and see what they are offering and how?

posted @ 11:06 AM, , links to this post

16 More Sectors to be Taxed - Under Sales Tax Act

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The Punjab government has brought as many as 16 more sectors under the ambit of sales tax on services. The newly added sectors include services provided by
1) software or IT-based system development consultants,
2) technical/scientific and engineering consultants,
3) other consultants,
4) services provided by tour operators (other than Hajj and Umrah),
5) manpower recruitment agents, services provided by the security agency,
6) services provided in respect of mining of minerals,
7) oil and gas including related surveys and allied activities.
8) advertising agents,
9) share transfer agents,
10) business support services,
11) services by property dealers,
12) fashion designers,
13) architects/town planners and interior decorators,
14) rent a car,
15) car/automobile dealers and
16) services provided in respect of manufacturing or processing on toll or job basis (against processing on conversion charges) have also been brought under the scope of provincial sales tax.

A notification bearing No SO (TAX)1-2/97 was issued by the Finance Department of the Punjab Government with effect from July 01, 2013 expanding the list of services on which the Punjab Revenue Authority (PRA) was collecting sales tax on services. Prior to this, the Punjab Revenue Authority (PRA) which started working with effect from July 01, 2012 was collecting sales tax from 21 categories of services.

With the addition of 16 more now the number of services to be taxed under provincial sales tax has reached to 37. The notification issued in this regard said that it would come into force with effect from July 01, 2013 and rate of the sales tax will be 16 percent.

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posted @ 6:55 PM, , links to this post

Luxury Tax on Houses

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The Punjab Excise and Taxation Department has started issuance of notices to the owners of the big houses for payment of luxury tax on houses for the FY 2013-14, official sources told Business Recorder on Tuesday. In the Finance Bill 2013-14, the Punjab government has levied a luxury tax on residential houses located in a part of rating area of Punjab Urban Immoveable Property Tax Act 1958 at the following rates.
(a) Residential house measuring two kanals & above but less than four kanals: Rs 0.5 million
(b) Residential house measuring four kanals & above but less than eight kanals Rs 1 million
(c) Residential house measuring eight kanals and above Rs 1.5 million.
The provincial government has clarified as under:
(1) In case of an existing house, the luxury tax shall be paid within a year commencing from the first day of July, 2013 in four equal instalments before the expiry of each of the four quarter of the year.
(2) Where an instalments of the luxury tax is not paid within the prescribed time, surcharge equal to two percent of the outstanding tax per month shall be paid and where surcharge is paid during a month, the surcharge shall be prorated on daily basis for the days of the last month in default.
(3) The tax levied under subsection (a) shall be paid on one time basis provided that where a taxable house is constructed after the commencement of this Act, the luxury tax shall be likewise paid on one time basis within one year of the completion of construction of such house.
(4) A residential house, measuring not exceeding four kanals owned by a widow and in which she is residing, shall be exempt from the payment of the luxury tax levied under subsection (a) Provided that where a widow owns more than one houses
(5) Where the luxury tax has not been levied on a house owned by a widow, the whole amount of tax shall be payable on such house by her legal heirs or any other transferee not being a widow within one year of her demise or transfer.
(6) In case of house liable to luxury tax under subsection (a) is registered in the name of a minor, the liability to pay the luxury tax shall be on the parents or the guardian of the minor.
(7) No tax shall be levied, charged or paid in case of a house which is sold or transferred after the payment of the luxury tax once due thereon.

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posted @ 4:18 PM, , links to this post

Business Income - Inadmissible Expenses

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Deductions Not Admissible (Section 21)
i) Amount paid or payable on account of any cess, rate or tax levied on profits or gains of business or assessed as percentage or otherwise on the basis of such profits or gains. Tax shall include any tax paid or payable in Pakistan or in a foreign country. Note: In case where sales tax paid by a tax payer is not charged by him to his customers, such sales tax shall be allowed as deduction.
ii) Any amount of tax deducted at source under division III of Part V of Chapter X. being tax deducted at source u/s 149 to 158.
iii) Any sum paid on account of salary, profit on debt, brokerage, commission, rent, payment to non-resident, payment for services or fee paid by the person unless tax is paid or deducted at source and paid under Income Tax Ordinance, 2001.
iv) Any entertainment expenditure in excess of such limits or in violations of such conditions as may be prescribed.
Limits prescribed for allowing any expenditure on entertainment are as under (Rule 10).
Expenditure should be incurred in deriving income from business chargeable to tax and should not be in excess of following limits or in violation of condition specified:
a) Such expenditure is: -  
  1. Incurred outside Pakistan on entertainment in connection with business transactions: or
  2. Allocated as head office expenditure; or
b) Incurred in Pakistan on the entertainment of foreign customers & suppliers;
c) Incurred on the entertainment of customer & clients at the person’s business premises
d) Incurred on the entertainment at the meeting of shareholders, agents, directors or employees
e) Incurred on entertainment at the opening of branches. Note All these person (who are entertained) should be related directly to the person’s business.
v) Any contribution to un-recognized provident fund, unapproved pension, superannuation or gratuity funds. Moreover, contributions to any fund unless effective arrangements are made to deduct tax shall also be inadmissible.
vi) Any sum paid by an association of persons to a member of the association on account of profit on debt, commission, salary, brokerage or any other remuneration.
vii) Any expenditure paid or payable exceeding Rs. 10,000 on a single item is inadmissible if the balance under relevant head of account exceeds Rs.50,000 and the payment is made otherwise than through crossed bank cheque or crossed bank draft or crossed pay order or any other crossed banking instrument showing transfer of amount from the business bank account of the taxpayer.
Provided that online transfer of payment from the business account of the payer to the business account of payee as well as payments through credit card shall be treated as transactions through the banking channel, subject to the condition that such transactions are verifiable from the bank statements of the respective payer and the payee.
However, this shall not be applicable in case of payments for:
  • freight charges; -
  • travel fare; -
  • postage; -
  • utility bills; and -
  • taxes, duties, fee, fines or other statutory obligation
viii) Salary exceeding Rs.15,000 per month not paid through crossed cheque or bank transfer to employee’s account.

ix) Any payment of a fine or penalty for the violation of any law or rule or regulation.

x) Any personal expenditure.
xi) Any amount carried to a revenue fund or capitalized in any way.
xii) Any capital expenditure. However, depreciation or amortization shall be allowed in respect of a depreciable asset, intangible or pre-commencement expenditure.

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posted @ 10:01 AM, , links to this post

Income From Business - Definition and Admissible Expenses

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Business Income
The following incomes of a person for a tax year, other than exempt incomes, shall be chargeable to tax under this head of income:
  1. Any profit and gain from a business which is carried on by the person at any time in the year.
  2. Any income derived by any trade, professional or similar association from the sale of goods or provision of services to its members (e.g. Cloth Merchants Association, Professionals Association, Stock Exchange, Chamber of Commerce etc.)
  3. Any income from the hiring or lease of tangible movable property.
  4. The fair market value of any benefit or perquisite derived by a person from any past, present or future business relationship. However, it is clarified that the word ‘benefit’ includes any benefit derived by way of waiver of profit on debt or the debt itself under SBP circular 29 of 2002 or in any other scheme issued by SBP.
  5. Any management fee derived by a management company including modaraba management company.
  6. Any profit on debt derived, where the business of a person is to derive such income;
  7. In case where a lesser, being a scheduled bank or an investment bank or a development finance institution or a modaraba or a leasing company has leased out any asset, whether owned by it or not, to another person, any amount paid or payable by the said person in connection with the lease of said asset shall be treated as the income of the said lessor and shall be chargeable to tax under the head “Income from Business”.
  8. Any amount received by a banking company or a non-banking finance companies, where such amount represents distribution by a mutual fund or a Private Equity and Venture Capital Fund out of its income from profit on debt, shall be chargeable to tax under the head “Income from Business” and not under the head “Income from other sources”.
  • In computing the income of a person chargeable to tax under the head “Income from Business” for a  tax year, a deduction shall be allowed for every expenditure incurred wholly & exclusively for the purpose of business.
  • Where animals which have been used for the purposes of business or profession otherwise than as stock-in-trade and have died or become permanently useless for such purposes, the difference between the actual cost to the tax payer of the animals and the amount, if any, realized in respect of carcasses or animals. Admissibility of this expenditure has encouraged dairy farming businesses.
  • If the expenditure stated above is incurred in acquiring a depreciable asset or an intangible with a useful life of more than one year or is pre-commencement expenditure, the person must depreciate or amortize the expenditure in accordance with sections 22, 23, 24 and 25.
  • Expenditure incurred by an amalgamated company on the financial advisory services and other administrative cost relating to planning and implementation of amalgamation shall be allowed as deduction. To the amalgamated company.

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posted @ 1:19 PM, , links to this post

Capital Gains - Section 37, 37A and 38

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Gain arising on the disposal of a capital asset by a person in a tax year shall be chargeable to tax in that year under the head "Capital Gains".

Gain shall be computed as:–

A – B

where —

A is the consideration received by the person on disposal of the asset; and
B is the cost of the asset.

Where a capital asset has been held by a person for more than one year, the amount of any gain arising on disposal of the asset shall be computed in accordance with the following formula, namely: —

A x ¾

where A is the amount of the gain determined as above

(4) For the purposes of determining component B of the formula in sub-section (2), no amount shall be included in the cost of a capital asset for any expenditure incurred by a person –

(a) that is or may be deducted under another provision of this Chapter; or
(b) that is referred to in section 21.

Where the capital asset becomes the property of the person —-

(a) under a gift, bequest or will;
(b) by succession, inheritance or devolution;
(c) a distribution of assets on dissolution of an association of persons; or
(d) on distribution of assets on liquidation of a company,

the fair market value of the asset, on the date of its transfer or acquisition by the person shall be treated to be the cost of the asset.

Capital Asset means property of any kind held by a person, whether or not connected with a business, but does not include —

(a) any stock-in-trade , consumable stores or raw materials held for the purpose of business;
(b) any property with respect to which the person is entitled to a depreciation or amortization deduction;
(c) any immovable property;
(d) any movable property excluding following assets held for personal use by the person or any member of the person‘s family dependent on the person

(a) A painting, sculpture, drawing or other work of art;
(b) jewellery;
(c) a rare manuscript, folio or book;
(d) a postage stamp or first day cover;
(e) a coin or medallion; or
(f) an antique.

No loss shall be recognized under this Ordinance on the disposal of the above personal capital assets.

Capital gain on disposal of securities.— Section 37A

The capital gain arising on or after the first day of July 2010, from disposal of securities held for a period of less than a year, shall be chargeable to tax at the rates specified in Division VII of Part I of the First Schedule:

Provided that this section shall not apply :

1. if the securities are held for a period of more than a year:
2. to a banking company and an insurance company.

Security: means
  • share of a public company,
  • voucher of Pakistan Telecommunication Corporation,
  • Modaraba Certificate,
  • an instrument of redeemable capital and
  • derivative products.
Gain under this section shall be treated as a separate block of income.

Where a person sustains a loss on disposal of securities in a tax year, the loss shall be set off only against the gain of the person from any other securities chargeable to tax under this section and no loss shall be carried forward to the subsequent tax year.

Deduction of losses in computing the amount chargeable under the head Capital Gains — Section 38

A deduction shall be allowed for any loss on the disposal of a capital asset by the person in the year.

No loss shall be deducted under this section on the disposal of a capital asset where a gain on the disposal of such asset would not be chargeable to tax.

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posted @ 9:48 AM, , links to this post

Income From Property

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Property means an immovable property whether improved / constructed or not, other than agricultural land from which the income derived is “agricultural income”. It includes land containing natural resources and income from lease of such land shall be rental income of property.
Rent means any amount received or receivable for a tax year, by the owner of land or a building as consideration for the use or occupation of or the right to use, occupy the land or building. This also includes any forfeited deposit paid under a contract for the sale of land or a building.

Rent received or receivable for a tax year except rent exempt from tax, shall be chargeable to tax under the head "Income from property". [Section 15(1)]. Rent is taxable on accrual basis. 

Where rent received or receivable is less than fair market rent for the property, the owner shall be treated as having received the fair market rent for the period the property is let on rent in the tax year. However, this shall not apply where fair market rent is included in the income of this lessee, chargeable to tax under the head “Salary”. [Section 15(4) & (5)]
Where the owner of building receives an advance which is not adjustable against rent, the whole of advance shall be treated as rent chargeable to tax under the head income from property in the year of receipt and following nine tax years in equal proportion i.e. 1/10th of such un-adjustable advance shall be included in the total income of assessed under the head “income from property”. in 10 tax years commencing from the tax year in which the advance is received.

If advance is refunded in any year before the expiry of 10 years such advance shall not be included in the income from the tax year in which it is refunded.
After vacancy, if the property is let out again against another advance, new advance less advance already charged to tax shall be taxable in ten equal installments in 10 tax years, commencing from the tax year in which the advance is received from the succeeding tenant.


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posted @ 12:01 PM, , links to this post

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