Taxation

~~with focus on tax education~~

Advance Tax Paid to a Collection Agent - Imports (Section 148)

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Collection Authority: Collector of Customs
Applicable Rate: 4% (in most cases)
Time of Collection: in the same manner and at the same time as the customs-duty payable in respect of the import
Final Tax / Normal: Final tax on the income of the importer arising from the imports except in the case of import-


Large Import House means concern

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VAT - Frequently Asked Questions and Answers

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Q 1. What is difference between VAT and Sales Tax?

Answer: VAT is levied on goods and services while sales tax is imposed generally on goods. Contrary to sales tax VAT has no cascading effect. VAT is a multistage tax, levied only on the value added at each stage in the chain of supply of goods and services with the provision of a set-off for the tax paid at earlier stages in the chain. Thus, VAT eventually becomes a single point tax.

Q 2. What will be scope of VAT?

Answer: VAT will cover supply (including import) of both goods and services at uniform rate of 15 percent unless exempted under the VAT law. The businesses whose annual turnover is less than Rs.7.5 million will be out of VAT net.

Q 3. How VAT will be helpful in documentation of economy and improve revenue collection?

Answer: Generally, all the commercial activities involving production and distribution of goods and provision of services are brought under tax net giving tolerance for a pre-fixed registration threshold level. This results in documentation of every body in the supply chain. Those who are not registered in the chain are not in a position to claim or deduct tax paid at purchase levels. VAT promotes economic documentation with the help of its in-built invoice-based credit mechanism. Tax invoice is blood line of VAT-induced documentation. VAT has self-enforcing features and documents business transactions through tax invoicing.

Q 4.What will be impact of VAT on food prices?

Answer: In Pakistan, most of the processed packaged/branded food items are already chargeable to sales tax. Basic food items being out of VAT net, there will be no tangible price increase in food items usually sold in processed packaged/branded form. Consumer prices of the food items which are currently being charged to sales tax on retail price basis are likely to fall because VAT will be charged on actual sale or open market price, not on printed retail price basis. Retailers will be in position to discount their prices to attract consumers.

Q 5. What is difference between goods and services?

Answer: Goods are tangible supplies (materials, commodities and articles) and services are intangible supplies. VAT will regulate mixed supplies on the basis of their contractual character. Under VAT, services means anything that is not goods, immoveable property or money. However, actionable claims, money, stocks and securities are not included in goods.

To See more questions and answers about VAT click here.

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Completeness of Return of Income Tax

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An Income Tax Return or any statement can only be complete if following conditions are fulfilled;


  1. Must be in the prescribed form;
  2. shall be accompanied by annexures, statements or documents as may be prescribed;
  3. shall fully state all the relevant particulars or information as specified in the form of return, 
  4. include a declaration of the records kept by the taxpayer;
  5. shall be signed by the person, being an individual, or the person’s representative.

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Wealth Statement - Section 116

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Who are Required to file Wealth Statement along with Reconciliation?

Wealth Statement must be in the prescribed form and giving particulars of –

Person can revised wealth statement at any time before an assessment, for the tax year to which it relates.

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Who Are Not Required to File Income Tax Return?

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Following Tax Payers are not Required to file return including

  1. Where the entire income of a taxpayer in a tax year consists of income chargeable under the head “Salary” below Rs. 500,000/- this person is required to furnish Employer's Certificate
  2. Any person who is not obliged to furnish a return for a tax year because all the person’s income is subject to final taxation (FTR) - this person is required to furnish Statement as prescribed
  3. Following persons even they owns immovable property with a land area of 250 square yards or more or owns any flat located in urban areas
    • (a) A widow;
    • (b) an orphan below the age of twenty-five years;
    • (c) a disabled person; or
    • (d) in the case of ownership of immovable property, a nonresident person.

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Return of Income

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Following persons are required to furnish a return of income for a tax year, namely:–

a) every company including any non-profit organization and approved welfare institution 
b) every person (other than a company) whose taxable income for the year exceeds the maximum amount that is not chargeable to tax under this Ordinance for the year
c) any person who

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Main Points of Budget 2010-11

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Rs. 663bn allocated in PSDP-2010-11

 

Following are the highlights of Public Sector Development Programme (PSDP) 2010-11, released here on Saturday:

 

Total amount of Rs. 663 billion has been allocated in PSDP-2010-11 for various ongoing and new schemes.
Out of total PSDP, the federal share is Rs. 280 billion, provincial share Rs.373 billion where as Rs.10 billion would be spent for Reconstruction and Rehabilitation of Earthquake-hit areas.

Following are the main allocations:

 

--- Rs.28423.8 million for Water and Power Division (Water Sector)

--- Rs.15227.5 million for Pakistan Atomic Energy Commission.

--- Rs.14565.7 million for Finance Division.

--- Rs.13629.6 million for Railways Division.

--- Rs.9395.7 million for Planning and Development Division.

--- Rs.15762.5 million for Higher Education Commission.

--- Rs.16944.5 million for Health Division.

--- Rs.10873.7 million for Food and Agriculture Division.

--- Rs.3220.1 million for Industries and Proudction division.

--- Rs.5140.9 million for Education Division.

--- Rs.5584 million for Interior Division.

--- Rs.3887.1 million for Defence Division.

--- Rs.3618.3 million for Housing and Works Division.

--- Rs.3618.7 million for Cabinet Division.

--- Rs.4115.5 million for Population Welfare Division.

--- Rs.1646.2 million for Science and Technological research Division.

--- Rs.885.6 million for Livestock and Dairy Development Division.

--- Rs.1000 million for Law and Justice Division.

--- Rs.1000 million for Environment Division.

--- Rs.1000 million for Special Initiatives Division.

 -- Rs.1234.7 million for Revenue Division.

 --- Rs.623.4 million for Petroleum and Natural Resources Division.

 --- Rs.718.3 million for Information Technology and Telecom Division.

 --- Rs.1229.7 million for Defence Production Division.

 --- Rs.474.1 million for Commerce Division.

 --- Rs.149.1 million for Communication Division (other than NHA).

 --- Rs.518.6 million for Ports and Shipping Division.

 --- Rs.246.9 million for Pakistan Nuclear Regulatory Authority.

 --- Rs.152.9 million for Women Development Division.

 --- Rs.107.6 million for Social Welfare and Special Education Division.

 --- Rs.65.8 million for Labour and Manpower Division.

 --- Rs.82.3 million for Local government and Rural Development Division.

 --- Rs.125 million for Tourism Division.

 --- Rs.140.8 million for ministry of Foreign Affairs.

 --- Rs.549.8 million for Narcotics Control division.

 --- Rs.114.4 million for Establishment Division.

 --- Rs.353.9 million for Culture Division.

 --- Rs.229.6 million for Sports Division.

 --- Rs.74.5 for Youth Affairs Division.

 --- Rs.509.9 million for Information and Broadcasting Division.

 --- Rs.164.6 million for Textile Industry Division.

 --- Rs.82.3 million for Statistics Division.

 --- Rs.81.1 million for Ministry of Postal Services.

 --- Rs.15 million for Economic Affairs Division.

 --- Rs.12029.7 million for WAPDA (Water)

 --- Rs. 44637 million for National Highway Authority

 --- Rs.10523.5 million for Azad Jammu and Kashmir (Block & other projects)

 --- Rs.6584.9 million for Gilgit-Baltistan (Block and other projects)

 --- Rs.8642.6 million for FATA.

 --- Rs. 5000 million for People's Works Programme-I

 -- Rs.25000 million for People's Works Programme-II

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