Refund of Excess Tax
Tuesday, January 13, 2009
Section 170: Refunds states that
(1) A taxpayer who has paid tax in excess of the amount which the taxpayer is properly chargeable under this Ordinance may apply to the Commissioner for a refund of the excess.
(1A) Where any advance or loan, to which sub-clause (e) of clause (19) of section 2 applies, is repaid by a taxpayer, he shall be entitled to a refund of the tax, if any, paid by him as a result of such advance or loan having been treated as dividend under the aforesaid provision.
(2)An application for a refund under sub-section (1) shall be –
(a) made in the prescribed form;
(b)verified in the prescribed manner; and
(c) made within two years of the later of –
(i) the date on which the Commissioner has issued the assessment order to the taxpayer for the tax year to which the refund application relates; or
(ii) the date on which the tax was paid.
(3)Where the Commissioner is satisfied that tax has been overpaid, the Commissioner shall –
(a) apply the excess in reduction of any other tax due from the taxpayer under this Ordinance;
(b) apply the balance of the excess, if any, in reduction of any outstanding liability of the taxpayer to pay other taxes; and
(c) refund the remainder, if any, to the taxpayer.
(4) The Commissioner shall, within forty five days of receipt of a refund application under sub-section (1), serve on the person applying for the refund an order in writing of the decision after providing the taxpayer an opportunity of being heard.
(5) A person aggrieved by-
(a) an order passed under sub-section (4); or
(b) the failure of the Commissioner to pass an order under sub-section (4) within the time specified in that sub-section, may prefer an appeal under Part III of this Chapter.
Ref: Income Tax Ordinance, 2001
Penalty in case of Late Payment of Tax
Friday, January 2, 2009
Section 205. Additional tax of Income Tax Ordinance,2001 states that
(1) A person who fails to pay –
(a) any tax, excluding the advance tax under section 147 and additional tax under this section;
Clause (a) substituted by Finance Act, 2003 which previously read as follows :
(a) any tax, including any advance payment of tax under section 147;
(b) any penalty; or
(c) any amount referred to in section 140 or 141,
on or before the due date for payment shall be liable for additional tax at a rate equal to twelve per cent per annum on the tax, penalty or other amount unpaid computed for the period commencing on the date on which the tax, penalty or other amount was due and ending on the date on which it was paid.
Therefore, late payment by employer for tax deducted at source U/S. 149 would be treated under above mentioned provision of Income Tax Ordinance, 2001
Tax Treatment of Gift
Thursday, January 1, 2009
As per Income Tax Ordinance, 2001 there is no tax implication over gift received from any one, however gain on sale of such asset that was received as gift would be treated under section 37 of ITO, 2001 that is as follows;
37. Capital gains
(1) Subject to this Ordinance, a gain arising on the disposal of a capital asset by a person in a tax year, other than a gain that is exempt from tax under this Ordinance, shall be chargeable to tax in that year under the head “Capital Gains”.
(2) Subject to sub-sections (3) and (4), the gain arising on the disposal of a capital asset by a person shall be computed in accordance with the following formula, namely:–
A – B
A is the consideration received by the person on disposal of the asset; and
B is the cost of the asset.
(3) 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 under sub-section (2).
(4) For the purposes of determining component B of the formula in subsection (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.
(4A) Where the capital asset becomes the property of the person-
(a) under a gift, bequest or will;
(b) by succession , inheritance or devolution;
(b) by succession , inheritance or devolution;
(c) distribution of assets on dissolution of an association of persons; or
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.
(5) In this section, “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 (not being stocks and shares), 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 deduction under section 22 or amortisation deduction under section 24;
(c) any immovable property; or
(d) any movable property (excluding capital assets specified in sub-section (5) of section 38) (Substituted for "(including wearing apparel, jewellery, or furniture)" by Finance Act, 2003) held for personal use by the person or any member of the person’s family dependent on the person.