Advance Tax Paid to a Collection Agent - Imports (Section 148)
Monday, June 28, 2010
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-
- (a) raw material, plant, machinery, equipment and parts by an industrial undertaking for its own use;
- (b) fertilizer by manufacturer of fertilizer; and
- (c) motor vehicles in CBU condition by manufacturer of motor vehicles
- (d) large import houses, who,-
Large Import House means concern
- (i) have paid-up capital of exceeding Rs.250 million;
- (ii) have imports exceeding Rs.500 million during the tax year;
- (iii) own total assets exceeding Rs.350 million at the close of the tax year;
- (iv) is single object company;
- (v) maintain computerized records of imports and sale of goods;
- (vi) maintain a system for issuance of 100% cash receipts on sales;
- (vii) present accounts for tax audit every year;
- (viii) is registered with Sales Tax Department; and
- (ix) make sales of industrial raw material of manufacturer registered for sales tax purposes.
VAT - Frequently Asked Questions and Answers
Thursday, June 24, 2010
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.
Completeness of Return of Income Tax
Friday, June 18, 2010
An Income Tax Return or any statement can only be complete if following conditions are fulfilled;
- Must be in the prescribed form;
- shall be accompanied by annexures, statements or documents as may be prescribed;
- shall fully state all the relevant particulars or information as specified in the form of return,
- include a declaration of the records kept by the taxpayer;
- shall be signed by the person, being an individual, or the person’s representative.
Who are Required to file Wealth Statement along with Reconciliation?
- Every resident taxpayer filing a return of income for any tax year whose last declared or assessed income or the declared income for the year is Rs.500,000/-
- Every person to whom Commissioner may, by notice in writing, require to furnish, on the date specified in the notice.
- Every person who is required to file a return in response to a provisional assessment.
Wealth Statement must be in the prescribed form and giving particulars of –
- (a) the person’s total assets and liabilities.
- (b) the total assets and liabilities of the person’s spouse, minor children, and other dependents.
- (c) any assets transferred by the person to any other person
- (d) the total expenditures incurred by the person, and the person’s spouse, minor children, and other dependents
- (e) the reconciliation statement of wealth.
Person can revised wealth statement at any time before an assessment, for the tax year to which it relates.
Following Tax Payers are not Required to file return including
- 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
- 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
- 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.
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
- has been charged to tax in respect of any of the two preceding tax years;
- claims a loss carried forward under this Ordinance for a tax year;
- owns immovable property with a land area of 250 square yards or more or owns any flat located in areas falling within the municipal limits existing immediately before the commencement of Local Government laws in the provinces; or areas in a Cantonment; or the Islamabad Capital Territory.
- owns immoveable property with a land area of five hundred square yards or more located in a rating area;
- owns a flat having covered area of two thousand square feet or more located in a rating area;
- owns a motor vehicle having engine capacity above 1000 CC; and
- has obtained National Tax Number
Main Points of Budget 2010-11
Saturday, June 5, 2010
- Total budget outlay for 2010-11 is Rs 3259 billion, which is 10.7 percent more than the current year.
- 50 percent ad hoc allowance of basic salaries to be granted to government employees.
- GST raised from 16 to 17 percent.
- Salaries of government employees raised by 50 percent.
- Federal Cabinet cut down its salaries by 10 percent.
- Medical Allowance for employees of Grade-1 to 15 increased by 100 percent. While the raise in medical allowance for employees of Grade-16 to 22 is 15 percent of their basic pay.
- Rs 1 CED imposed on manufacturing of each cigarette.
- Tax revenue is targeted at 1.78 trillion rupees out of which the Federal Board of Revenue will collect 1.667 trillion rupees, about 9.8 percent of GDP.
- Non-tax revenue is targeted at 632.2 billion rupees. Revenue from direct taxes is targeted at 657.7 billion rupees and revenue from indirect taxes is targeted at 1.12 trillion rupees. Subsidies will be reduced to 126.68 billion rupees from 228.99 billion rupees.
- Development spending or the public sector development spending is targeted at 663 billion rupees, with 373 billion rupees allocated for provinces, and 280 billion rupees as the federal component.
- Inflation is targeted at 9.5 percent in 2010/11 fiscal year, down from the central bank's forecast of between 11.5percent and 12.5 percent for the year ending June 30.
- The defence budget is set at 442.2 billion rupees, a 17percent increase from last year.
- The debt to GDP ratio has climbed to 55 percent and ‘we must protect the poor’.
- 30 million energy savors will be provided in a bid to conserve electricity.
- He stressed upon self-reliance and resource mobilization.
- Talking about unemployment, he said jobs are created when the whole economy grows.
- He held flawed policies and influence of some government departments responsible for energy shortage in the country where people are willing to pay for the utility but cannot get it due to unavailability.
- We have to make our policies right and rise above the petty issues.
- He said there is burden of 235 billion on the country’s budget due to losses being incurred by state owned enterprises including PIA, Pakistan Steel Mills and PEPCO.
- Three dams will be built in 2010-11.
- Pepco want subsidy of Rs 180 billion.
- 685 billion budget deficit, which is 4 percent of GDP.
- Reformed GST to be implemented from October 31.
- All non-developmental expenditures frozen.
- 40 billion to be distributed among people from Benazir Income Support Programme.
- Baitul Maal to continue functioning with Rs2 million.
- Minimum wage raised from Rs6000 to Rs7000.
- ADP fixed at 603 billion out of which 52 percent will be given to the provinces.
- GST will be reformed under which instead of 16 to 25 percent GST there should be single 15 percent GST for all. No sales tax on health and food.
- Rs10 FED imposed on 1 mmbtu gas.
- Minimum taxable income for salaried class raised from Rs200,000 to Rs300,000.
- Capital Gains Tax of 10 percent being imposed on gains from stocks held for less than 6 months; 7.5 percent on gains from stocks held for 6 months to 1 year and; no tax on capital gains from stocks held for more than a year.
- Custom duty reduced on 29 items.
- Pension raised by 15 percent for the employees who retired before 2001 and 20 percent for those retired after 2001.
- 200,000 unemployed youth will be provided employment for 100 days under Youth Scheme.
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