Medical Allowance - Tax Treatment
Wednesday, April 3, 2013
According to Clause 139 of part 1 (Exemption from total income) of 2nd Schedule of Income Tax Ordinance, 2001
a) If Medical Facility or reimbursement of actual Medical expenses is provided:
- in accordance with terms of employment: The amount provided is fully exempt if NTN of medical practitioner and employer's attestation are available.
- Not in accordance with terms of employment: The amount provided is fully taxable
b) Medical Allowance provided: Tax Treatment is exempt upto 10% of Basic Salary
c) Medical allowance is provided in addition to medical facility or reimbursement in accordance with the terms: Tax Treatment is Medical allowance fully taxable and Facility / reimbursement is Fully Exempt if NTN of medical practitioner and employer's attestation are available.
d) Medical allowance is provided in addition to medical facility or reimbursement but NOT in accordance with the terms: Tax Treatment is Medical allowance is exempt upto 10 % of Basic Salary and Facility / reimbursement is Fully taxable.
Ref: Income Tax Ordinance, 2001
Labels: Medical Allowance, Salary income, Taxation
posted @ 10:56 AM,
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Person - Section-80
Wednesday, March 20, 2013
(Section-80) - Person include
(a) an individual
(b) a company or association of persons incorporated, formed, organised or established in Pakistan or elsewhere;
(c) the Federal Government, a foreign government, a political subdivision of a foreign government, or public international organisation
Association of Persons
includes a firm, a Hindu undivided family, any artificial juridical person and any body of persons formed under a foreign law, but does not include a company;
Company means
(i) a company as defined in the Companies Ordinance, 1984
(ii) a body corporate formed by or under any law in force in Pakistan
(iii) a modaraba;
(iv) a body incorporated by or under the law of a country outside Pakistan relating to incorporation of companies;
(v) a trust, a co-operative society or a finance society or any other society established or constituted by or under any law for the time being in force
(vi) a foreign association, whether incorporated or not, which the Board has, by general or special order, declared to be a company for the purposes of this Ordinance;
(vii) a Provincial Government;
(viii) a Local Government in Pakistan;
(ix) a Small Company as defined in section 2
(a) an individual
(b) a company or association of persons incorporated, formed, organised or established in Pakistan or elsewhere;
(c) the Federal Government, a foreign government, a political subdivision of a foreign government, or public international organisation
Association of Persons
includes a firm, a Hindu undivided family, any artificial juridical person and any body of persons formed under a foreign law, but does not include a company;
Company means
(i) a company as defined in the Companies Ordinance, 1984
(ii) a body corporate formed by or under any law in force in Pakistan
(iii) a modaraba;
(iv) a body incorporated by or under the law of a country outside Pakistan relating to incorporation of companies;
(v) a trust, a co-operative society or a finance society or any other society established or constituted by or under any law for the time being in force
(vi) a foreign association, whether incorporated or not, which the Board has, by general or special order, declared to be a company for the purposes of this Ordinance;
(vii) a Provincial Government;
(viii) a Local Government in Pakistan;
(ix) a Small Company as defined in section 2
Labels: Person, Section 80, Taxation
posted @ 5:43 PM,
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Introduction to Taxation
Sunday, March 17, 2013
Constitution of Pakistan empowers Federal Government to Levy Tax (for the purpose of federation) through Act or Ordinance.
Act: is approved by the Parliament (eg: Sales Tax Act, 1990)
Ordinance: is promulgated by the President (eg: I.Tax ordinance, 2001)
Income Tax aims at two Roles:
1- Redistribution of wealth: (Through progressive taxation means higher level of income is subject to higher rate of tax)
2- Serve as an instrument of fiscal policy: (through granting exemptions to a particular class of income / person)
Scheme of the Income Tax Ordinance, 2001
- Chapters (total number are 13 and each chapter deals with particular subject
- Parts
- Divisions
- Section
- Sub section
- Clauses
Paper – C7: TAXATION - (Syllabus)
Income Tax
|
Marks
|
a. Basic concepts of taxation
|
15
|
b. Heads of income, Computation of income, Determination of tax liability
|
40
|
c. Types of persons and their taxation
|
10
|
d. Procedures and Administration
e. Income Tax Rules 2002
|
10
|
Sales Tax
| |
Prescribe chapters of Sales Tax Act and Rules.
|
25
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Total
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100
|
* Indicative Grid but not final
(a) Source of Income Tax Law
1- Legislative Law (I Tax Ordin.)
2- Procedural Law (I Tax Rules)
3- Notification, Circulars issued by the board
4- Case Laws: Judgments of tribunal and courts.
(b) Purpose of Income Tax Law: In the society is
- To levy and collect tax
- On income of person and
- Use it for the welfare purpose
Labels: Introduction to Taxation, Taxation
posted @ 12:40 PM,
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FBR Likely To Raise Salaried Sector Tax To 25 Percent
Wednesday, April 27, 2011
This refers to the news item published on 25th April, 2011 in the Business Recorder with the heading ’FBR likely to raise salaried sector tax to 25 percent’. In the details this news item has been associated with the proposals given by the Institute of Chartered Accountants of Pakistan. This news item is based on Para 1.3 of the Budget Proposals of the Institute of Chartered Accountants of Pakistan which has been misunderstood and reported incorrectly resulting into a negative perception.
In fact, the Institute’s recommendation is not to increase the maximum tax rate applicable to Salaried Individuals (as reported) but to remove the disparity of the rates of tax on income of Non-Salaried Individuals by rationalizing the tax bands, enhancing the threshold of the maximum tax rate of 25% from Rs. 1,500,000 to Rs. 3,000,000 and to provide for the marginal relief as applicable in case of Salaried Individuals.
For your information a Corrigendum has been published by the Business Recorder today, for the rectification of the above as under:
This refers to the news item published in Business Recorder on April 25, 2011 titled "FBR likely to raise salaried sector tax to 25 percent". In the details this news item has been attributed to the proposals given by the Institute of Chartered Accountants of Pakistan (ICAP).
This news item is based on Para 1.3 of the budget proposals of the ICAP, which has been misunderstood and reported incorrectly.
In fact, the Institute's recommendation is not to increase the maximum tax rate applicable to salaried individuals but to remove the disparity of the rates of tax on income of non-salaried individuals by rationalizing the tax bands, enhancing the threshold of the maximum tax rate of 25 per cent from Rs. 1,500,000 to Rs. 3,000,000 and to provide for the marginal relief as applicable in case of salaried individuals.
It was incorrectly reported due to the misunderstanding of the ICAP budget proposals which in fact has recommended that the tax rate for non-salaried individuals should be rationalized to provide relief at par with that of the salaried individuals by increasing threshold for levy of maximum tax rate of 25 per cent from taxable income of Rs. 1,500,000 to Rs. 3,000,000 and to also provide marginal relief as in case of the salaried individuals. The original text of the ICAP proposals is reproduced hereunder:
"Discrimination of salaried and non-salaried persons by providing for separate tax rates is against the norms of personal taxation". "This clearly indicates that the law itself admits that non-salaried persons understate their income". "It is very odd that: A salaried person attracts the maximum tax rate of 20 per cent where the income exceeds Rs. 4,550,000 as compared to a non-salaried person who attracts the maximum tax rate of 25 per cent where the income exceeds Rs. 1,500,000; and a salaried person is allowed a marginal relief where the income marginally exceeds from a particular slab of income and tax thereon whereas a non-salaried person is not allowed any such relief.
Therefore, it is recommended that, "huge gap in maximum tax rate should be narrowed by expanding the non-salaried tax bands so that the maximum tax rate of 25 per cent starts at least from income above Rs. 3,000,000. "Non-salaried persons should also be allowed to claim marginal relief where the income marginally exceeds from a particular slab of income and thereon".
Labels: Salary income, Taxation
posted @ 9:44 AM,
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Revised Target for Fiscal Year 2011
Wednesday, February 2, 2011
The FBR has provisionally collected Rs 761.2 billion during July-January 2010-11 against Rs 666 billion during the same period last fiscal year, showing an increase of Rs 95.2 billion. Break up of collection is as under;
- Direct tax = Rs 272 billion,
- Sales tax = Rs 327.5 billion,
- Customs duty = Rs 94.4 billion and
- Fed. Excise duty = Rs 67.3 billion during the period under review.
Keeping in view collection of Rs 761.2 billion during July-January 2010-11, the tax machinery has to collect Rs 152.24 billion on monthly basis to achieve the downward revised revenue collection target of Rs 1604 billion. On average basis, the tax machinery has to generate at least Rs 152.24 billion per month to meet the annual target for 2010-11. The FBR has collected nearly Rs 99 billion in January 2011. In December 2010, the Board had collected around Rs 151 billion against the target of Rs 147 billion, showing an increase of Rs 4 billion.
Labels: FBR, Fiscal Year 2011, Taxation
posted @ 10:20 AM,
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Banking Sector and RGST
Wednesday, December 1, 2010
The General Sales Tax (GST) Bill 2010 is silent over some key issues of banking sector particularly services provided by banking companies. There are some important issues of banking sector have not been clarified in the General Sales Tax Bill 2010.
Issuance of Tax Invoice:
In the existing FED Rules, banks are not required to issue tax invoice, the proposed law is silent in this regard. The Rule 40 A (6A) of the FED Rules exempt the banks from issuance of tax invoices to their clients. The question arises whether such tax invoice would be required under the GST Bill 2010 or not?. Secondly, whether such exemption would continue under the RGST regime.
Exemption of Some Services:
Existing federal excise duty (FED) is applicable on all services provided by a banking company at the rate of 16 percent except for services against mark up/interest income, Hajj, Umrah, Cheque Book Issuance, Insurance Premium, Musharika and Modaraba Financing and Utility bills collection. After promulgation of GST Bill 2010, the FED at the rate of 16 percent will be converted into GST at the standard rate of 15 percent. However, it is not clear as to whether these services of the FED would remain exempted under the RGST.
Federal or Provincial Jurisdiction:
The main difference between FED and GST is that the former falls under federal jurisdiction, whereas the later falls within the provincial jurisdiction but collection rights may remain with FBR in certain cases. About the issuance of tax invoice, in the existing FED Rules banks are not required to issue tax invoice, the proposed law needs to clarify the issue. In case of sales tax return, this also needs to be clarified by FBR, whether the monthly return shall be filed province wise separately or a combined return is required to be filed with breakups of income and sales tax thereon for all provinces.
Maintenance of Record:
As far as maintenance of record is concerned, he said, all the branches shall be required to keep proper records of GST and related income for the purpose of audit. It is not clear as to whether it will be centralised or will have to deposited province wise; needless to state that the claim of input will also be on the similar lines if the bank so decides to claim the same.
Labels: RGST, Taxation, Taxation Updates
posted @ 10:29 AM,
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FBR Broadening The Tax Base By 29 Percent
Thursday, September 16, 2010
The Federal Board of Revenue (FBR) has succeeded in broadening the tax base by 29 percent, just in one year, by mopping up new companies, associations of persons (AOPs), individuals, salaried persons and employers. There has been an increase of 29 percent in the existing tax base during the period under review, reflecting extraordinary performance of the FBR in discovering new taxpayers.
As compared to previous fiscal year the increase in number of new companies, AOPs, individuals and salaried persons, who filed returns/statements has been unprecedented this year as a result of more practicable enforcement strategy of the department. Every year, the government fixes target of achieving 20 percent for broadening the tax base.
However, 29 percent increase in the tax base showed successful implementation of the enforcement plan, monitoring policy and voluntarily compliance by new taxpayers.
Documentation of property transactions and enforcement of returns filing by the business suppliers had also helped the tax department to amassed 29 percent growth in the tax base. The FBR has also witnessed substantial increase in the number of statements filed by employers and return filing by non-salaried individuals during this period.
The FBR latest data showed that the FBR had received 2.31 million returns and statements during period from July 1, 2009 to June 30, 2010 as compared to 1.79 million returns in the corresponding period of previous fiscal year, reflecting an increase of 0.516 million. The data clearly reflected that the 0.516 million new taxpayers had been discovered during the period.
According to sources, the FBR has been able to bring 0.516 million new taxpayers into the tax net due to proper monitoring and enforcement in the field formations. The policy measures vis-à-vis direct taxes also played an important role to encourage voluntary compliance.
The FBR data further showed that it had discovered over 21,099 companies cases during the period under review, reflecting improved compliance by the corporate sector. A total of 46,657 AOPs had responded to FBR's awareness campaign to enforce filing of returns during July 1, 2009 to June 30, 2010 as compared to 27,649 return filers in the same period of previous fiscal year. This showed that 19,008 new AOPs had been brought into the tax net during the said period. Over 21,099 taxpayers, falling within the category of individuals, filed returns during the period under review.
Similar trend had been observed in the salaried class where the number of return filers by the salaried individuals showed sudden jump during this period. The data showed that 197,743 salaried persons filed returns during the period under review. Within the category of non-salaried individuals, 639,233 persons filed returns as compared to 548,790 returns filed by non-salaried taxpayers. The statements filed by the employers after deduction of tax from the salaried persons stood at over and above 1.3 million as compared to 0.9 million, the FBR data said.
Sharing some of the factors responsible for increase in the number of taxpayers, sources said that the extended date in filing of returns, massive awareness campaign and effective enforcement strategy to ensure filing of returns by potential taxpayers helped the department to broaden the tax base
posted @ 10:57 AM,
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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.
Labels: Pakistan Budget, Sales Tax, Taxation, Value Added Tax, VAT
posted @ 8:34 PM,
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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
Labels: Pakistan Budget, Taxation
posted @ 9:46 PM,
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Lease Rental of Land
Sunday, April 25, 2010
Query from Ateeq Ahmad:
Does a company can capitalize rental payment against lease of land before the start of commercial production? What is the date of Commercial production? Further, briefly discuss the taxation implications of the said rental payment.
Does a company can capitalize rental payment against lease of land before the start of commercial production? What is the date of Commercial production? Further, briefly discuss the taxation implications of the said rental payment.
Comment:
Accounting Aspect:
As per para 14 of IAS-17, characteristic of land is that it normally has an indefinite economic life and lessee normally does not receive substantially all of the risks and rewards incidendtal to ownership, in which case its an Operating Lease.
ICAP's technical committee recomended in its accounting TR-21 that date of commencement of commercial production is the date when the plant is ready for the production of intended products in commercially feasible quantities. The cut off date so established is without regard when the plant actually commences commercial production. Where the construction of an asset is completed in parts and each part is capable of being used while construction continues on the other parts, capitalization of costs for each part should cease as it is completed.
Therefore, all expensed paid before the commencement of commercial production would be capitalized including rental payment to the lessor.
Taxation Aspect:
Witholding tax would be deducted under section 153 of the Income tax Ordinance under execution of other contracts provided any exemption certificate is produced by the lessor.
Labels: accounting, Taxation
posted @ 4:00 PM,
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Income Tax Audit In Pakistan
Monday, March 29, 2010
As per recent Amendments of Finance Act, 2009, everyone knows FBR can appoint for outsource of Income Tax Audit to the Chartered Accountants Firm. But number of professional Accountants, Finance professionals & Auditors are not fimaliar or awarness about the tax audit & its procedure due to its different from Financial or Statutory audit.
What is an Income Tax Audit?
An income tax audit is an inspection conducted by a government representative to confirm that someone's taxes were prepared correctly. Tax audits are very intimidating for most taxpayers, and the important thing to remember about audit notices is that they are not accusations, and that taxpayers are not being required to prove that they are not guilty of something when they are audited. Audits are usually performed on an entirely random basis, with taxpayers being selected by the Commissioner of Income Tax.
In an income tax audit, the taxpayer is required to show documentation and support for every aspect of his or her tax return. For example, if someone claims itemized deductions, receipts for those deductions must be produced, in addition to justifications for why the taxpayer felt that those deductions were legitimate. Tax deducted by bank on Cash withdrawal on higher side than compare to business activity it also attract for tax audit. In addition, taxpayers must open their accounting methods to inspection, and demonstrate that all of their income was in fact properly documented and claimed on the tax return.
Audits are usually performed because a taxpayer was randomly selected by the Commissioner of Income Tax. Certain areas of tax returns are especially prone to errors, so the Commissioner of Income Tax may weight people with things like high income, high levels of deductions, or repeated business losses for audits. Taxpayers may also be selected for auditing when they fail to pay their taxes, or when they request an installment plan to pay taxes.
In a correspondence income tax audit, the taxpayer is sent a notice and asked to return documents by mail. There are two types of Income Tax Audit which are as follows:-
1. Field Audits
Many taxpayers in pakistan are not aware of this kind of income tax audit. Field audits occur when FBR agents come to the taxpayer in the office to discuss tax issues as such power was conferred by the FBR to the selected Chartered Accountants Firm in shape of outsourcing of tax audit in the recent Finance Act, 2009.
2. Office audits
Office Audit requires the taxpayer to show up in a government office like Regional Tax Office / Large Tax Payer Unit with supporting documentation on a specific day or time. The FBR agent/ relevant Income Tax Officer/ Commissioner of Income Tax assigned to the case will review the material and make a determination on the basis of that review.
Sometimes, someone's taxes are audited and everything appears to be in order, in which case no action is taken. In other instances, over or underpayment of taxes is detected, and the issue will need to be corrected. If the taxpayer engaged in activity which is fraudulent or illegal, he or she can face legal penalties in addition to fines.
Mistakes happen on everyone's taxes now and then, and as long as taxpayers can demonstrate that an error is a true accident or the result of an action taken in good faith, the government is usually satisfied with a correction and no other action. Taxpayers can make the audit process smoother by taking the time to fully prepare for an income tax audit so that all of the information is organized and available, and by being polite and helpful to the auditing team. Consulting chartered accountant or income tax lawyer can be advisable if someone is preparing for an income tax audit.
The business community in Sindh and Punjab is perturbed at the flurry of notices received from the tax department in the last number of months. In certain instances, the department had re-opened cases of tax returns filed over the past five years. Taxpayers have been advised to make prompt payment to avoid tax evasion.
From the FBR point of view, it was to improve recovery the FBR has started the exercise of selective audit to” bridge the gap between the tax potential and its realisation.”
Presently, a taxpayer is required to maintain prescribed documents and records for five years from the end of relevant tax year. As per recent amendment in U/s. 174,176, 177 & 210 of the Income Tax Ordinance, 2001, require the taxpayer to maintain documents and records till final decision in any proceedings for assessment, appeal, revision, reference, petition and any proceedings before Alternative Dispute Resolution Committee.
As reported, the Board is considering outsourcing of tax audits to Chartered Accountant Firms. To enable the Chartered Accountant Firms to conduct such tax audits, the Finance Act seeks to empower Chartered Accountant Firms, with the prior approval of the Commissioner of Income Tax, to obtain and retain information, record or computers for such time as necessary.
Similarly, the amendment empowers the Commissioner to delegate the powers to conduct the audit of persons selected for audit to a Firm appointed by the Board.
INSTRUCTIONS FOR INCOME TAX AUDIT
Instructions
Things you will need:
· Copies of all affected tax returns
· Copies of Profit & Loss account and Balance Sheet
· Copies of all relevant receipts and other information
· Copies of Tax Challans & Other evidences for deduction of taxes
· Copy of Tax Computation
· Name and contact information for a tax accountant or lawyer
1. Step 1
Read the notice carefully. Some audits involve only parts of a single year's tax return, while others can include entire returns for multiple years. In addition, some audits request information by mail, while others require a meeting with an FBR agent/ relevant Income Tax Officer/ Income Tax Commissioner. Understanding what the FBR is asking for is vital to ensure that you prepare precisely for the specified audit.
2. Step 2
Start immediately. You will need plenty of time to pull your information together, to request information from others, such as buyers/ sellers, charities, credit card companies, and banks and to work with a tax professional.
3. Step 3
Consult a tax accountant or lawyer. The tax payment codes are extremely complex, and require years of study to fully comprehend. It's best to take the advice of professionals when responding to an audit. They can tell you what the audit means, what the consequences might be, and the exact information you will need to provide.
4. Step 4
Gather the required information. Hopefully, you stored all of the relevant receipts and other information when you filed your tax return, and so you will have an easy time of creating copies in preparation for the audit. If not, then you will need to locate all of the required information.
5. Step 5
Organize your information. Now that you have all of your information in place, put it in the proper order. All of the information should be laid out as in the audit notice. That way, it will be easier for you and your tax professional to double-check your information and have it ready for the response.
6. Step 6
Respond to the audit. If your audit is in person, either you or your tax professional can represent you to the FBR agent/ relevant Income Tax Officer/ Income Tax Commissioner. If you are not required to be at the audit, have your professional attend alone with a power of attorney. If your audit requires that you mail your response to the FBR, then send copies only and ensure that you've answered all of the issues outlined in the audit notice.
7. Step 7
Act on the FBR findings. You may have to pay an additional amount to the FBR, return part of a refund, or you may receive money back. You also have the right to appeal the FBR agent's findings to the Commissioner Appeal or the Appeals Division, and you can take your case to the High Court’s Tax Bench.
By: Muhammad Mustafa Rahim, Rahman Sarfaraz Rahim Iqbal Rafiq,Chartered Accountants
Sources:Complete Tax Solutions, English Law Dictionary, FBR
What is an Income Tax Audit?
An income tax audit is an inspection conducted by a government representative to confirm that someone's taxes were prepared correctly. Tax audits are very intimidating for most taxpayers, and the important thing to remember about audit notices is that they are not accusations, and that taxpayers are not being required to prove that they are not guilty of something when they are audited. Audits are usually performed on an entirely random basis, with taxpayers being selected by the Commissioner of Income Tax.
In an income tax audit, the taxpayer is required to show documentation and support for every aspect of his or her tax return. For example, if someone claims itemized deductions, receipts for those deductions must be produced, in addition to justifications for why the taxpayer felt that those deductions were legitimate. Tax deducted by bank on Cash withdrawal on higher side than compare to business activity it also attract for tax audit. In addition, taxpayers must open their accounting methods to inspection, and demonstrate that all of their income was in fact properly documented and claimed on the tax return.
Audits are usually performed because a taxpayer was randomly selected by the Commissioner of Income Tax. Certain areas of tax returns are especially prone to errors, so the Commissioner of Income Tax may weight people with things like high income, high levels of deductions, or repeated business losses for audits. Taxpayers may also be selected for auditing when they fail to pay their taxes, or when they request an installment plan to pay taxes.
In a correspondence income tax audit, the taxpayer is sent a notice and asked to return documents by mail. There are two types of Income Tax Audit which are as follows:-
1. Field Audits
Many taxpayers in pakistan are not aware of this kind of income tax audit. Field audits occur when FBR agents come to the taxpayer in the office to discuss tax issues as such power was conferred by the FBR to the selected Chartered Accountants Firm in shape of outsourcing of tax audit in the recent Finance Act, 2009.
2. Office audits
Office Audit requires the taxpayer to show up in a government office like Regional Tax Office / Large Tax Payer Unit with supporting documentation on a specific day or time. The FBR agent/ relevant Income Tax Officer/ Commissioner of Income Tax assigned to the case will review the material and make a determination on the basis of that review.
Sometimes, someone's taxes are audited and everything appears to be in order, in which case no action is taken. In other instances, over or underpayment of taxes is detected, and the issue will need to be corrected. If the taxpayer engaged in activity which is fraudulent or illegal, he or she can face legal penalties in addition to fines.
Mistakes happen on everyone's taxes now and then, and as long as taxpayers can demonstrate that an error is a true accident or the result of an action taken in good faith, the government is usually satisfied with a correction and no other action. Taxpayers can make the audit process smoother by taking the time to fully prepare for an income tax audit so that all of the information is organized and available, and by being polite and helpful to the auditing team. Consulting chartered accountant or income tax lawyer can be advisable if someone is preparing for an income tax audit.
The business community in Sindh and Punjab is perturbed at the flurry of notices received from the tax department in the last number of months. In certain instances, the department had re-opened cases of tax returns filed over the past five years. Taxpayers have been advised to make prompt payment to avoid tax evasion.
From the FBR point of view, it was to improve recovery the FBR has started the exercise of selective audit to” bridge the gap between the tax potential and its realisation.”
Presently, a taxpayer is required to maintain prescribed documents and records for five years from the end of relevant tax year. As per recent amendment in U/s. 174,176, 177 & 210 of the Income Tax Ordinance, 2001, require the taxpayer to maintain documents and records till final decision in any proceedings for assessment, appeal, revision, reference, petition and any proceedings before Alternative Dispute Resolution Committee.
As reported, the Board is considering outsourcing of tax audits to Chartered Accountant Firms. To enable the Chartered Accountant Firms to conduct such tax audits, the Finance Act seeks to empower Chartered Accountant Firms, with the prior approval of the Commissioner of Income Tax, to obtain and retain information, record or computers for such time as necessary.
Similarly, the amendment empowers the Commissioner to delegate the powers to conduct the audit of persons selected for audit to a Firm appointed by the Board.
INSTRUCTIONS FOR INCOME TAX AUDIT
Instructions
Things you will need:
· Copies of all affected tax returns
· Copies of Profit & Loss account and Balance Sheet
· Copies of all relevant receipts and other information
· Copies of Tax Challans & Other evidences for deduction of taxes
· Copy of Tax Computation
· Name and contact information for a tax accountant or lawyer
1. Step 1
Read the notice carefully. Some audits involve only parts of a single year's tax return, while others can include entire returns for multiple years. In addition, some audits request information by mail, while others require a meeting with an FBR agent/ relevant Income Tax Officer/ Income Tax Commissioner. Understanding what the FBR is asking for is vital to ensure that you prepare precisely for the specified audit.
2. Step 2
Start immediately. You will need plenty of time to pull your information together, to request information from others, such as buyers/ sellers, charities, credit card companies, and banks and to work with a tax professional.
3. Step 3
Consult a tax accountant or lawyer. The tax payment codes are extremely complex, and require years of study to fully comprehend. It's best to take the advice of professionals when responding to an audit. They can tell you what the audit means, what the consequences might be, and the exact information you will need to provide.
4. Step 4
Gather the required information. Hopefully, you stored all of the relevant receipts and other information when you filed your tax return, and so you will have an easy time of creating copies in preparation for the audit. If not, then you will need to locate all of the required information.
5. Step 5
Organize your information. Now that you have all of your information in place, put it in the proper order. All of the information should be laid out as in the audit notice. That way, it will be easier for you and your tax professional to double-check your information and have it ready for the response.
6. Step 6
Respond to the audit. If your audit is in person, either you or your tax professional can represent you to the FBR agent/ relevant Income Tax Officer/ Income Tax Commissioner. If you are not required to be at the audit, have your professional attend alone with a power of attorney. If your audit requires that you mail your response to the FBR, then send copies only and ensure that you've answered all of the issues outlined in the audit notice.
7. Step 7
Act on the FBR findings. You may have to pay an additional amount to the FBR, return part of a refund, or you may receive money back. You also have the right to appeal the FBR agent's findings to the Commissioner Appeal or the Appeals Division, and you can take your case to the High Court’s Tax Bench.
By: Muhammad Mustafa Rahim, Rahman Sarfaraz Rahim Iqbal Rafiq,Chartered Accountants
Sources:Complete Tax Solutions, English Law Dictionary, FBR
Labels: Income Tax Audit, Taxation
posted @ 1:31 PM,
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Cash Payment on Purchase of Prepaid Cards
Wednesday, March 24, 2010
Section 21(I) states that;
Any expenditure for a transaction, paid or payable under a single account head which, in aggregate, exceeds fifty thousand rupees, made other than by a crossed cheque drawn on a bank or by 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 would be inadmissible:
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:
Provided further that this clause shall not apply in the case of
(a) expenditures not exceeding ten thousand rupees;
(b) expenditures on account of
- utility bills;
- freight charges;
- travel fare;
- postage; and
- payment of taxes, duties, fee, fines or any other statutory obligation;
In the context of above provision of income tax while making payment of Rs.200,000/- to a single party you are required to make payment through cross cheque and further witholding tax is also required to be deducted from it subject to non-availability of exemption certificate, if any.
However we can make plea that its impossible to purchase prepaid cards from one vendor therefore you have to make payments in cash as there are a lot of vendors involved.
Labels: Taxation
posted @ 12:14 PM,
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Mandatory Books of Accounts
Sunday, March 21, 2010
For businesses, professionals & manufacturersBenefits of maintaining books of accounts:
- You can compute correct profit and loss.
- will help in justifying the declared results.
- Escape from penalty of Rs.10,000/-
- Profit and loss cannot be calculated.
- During audit declared results can be rejected resulting in furter tax liability.
- Penalty can be imposed.
- Books of accounts to be maintained by a compnay.
With income up to Rs.200,000/-
- Serially numbered and dated cash-memo / invoice /receipt for each transaction of sale or receipt.
- Daily record of receipts, sales, payments, purchases and expenses; a single entry in respect of daily receipts, sales, purchases and different heads of expenses will suffice; and
- Vouchers of purchases and expenses.
(excluding wholesalers, distributors, dealers and commission agents:
- Serially numbered and dated cash-memo / invoice /receipt for each transaction of sale or receipt.
- Cash book and/or bank book or daily record of receipts, sales, payments, purchases and expenses; a single entry in respect of daily receipts, sales, purchases and different heads of expenses will suffice;
- General ledger or annual summary of receipts, sales, payments, purchases and expenses under distinctive heads;
- Vouchers of purchases and expenses and where a single transaction exceeds Rs. 10,000 with the name and address of the payee; and
- Where the taxpayer deals in purchase and sale of goods, quarterly inventory of stock-in-trade showing description, quantity and value.
- Serially numbered and dated patient-slip / invoice /receipt for each transaction of sale or receipt.
- Daily appointment and engagement diary in respect of clients and patients: Provided that this clause shall not apply to general medical practitioners;
- Daily record of receipts, sales, payments, purchases and expenses; a single entry in respect of daily receipts, sales, purchases and different heads of expenses will suffice; and
- Vouchers of purchases and expenses.
- Serially numbered and dated cash-memo / invoice /receipt for each transaction of sale or receipt.
- Cash book and/or bank book;
- Sales day book and sales ledger (where applicable);
- Purchases day book and purchase ledger (where applicable);
- General ledger;
- Vouchers of purchases and expenses and where a single transaction exceeds Rs. 10,000 with the name and address of the payee; and
- Stock register of stock-in-trade.
Labels: Books of Accounts, Education, Income Tax Rules, Taxation
posted @ 10:31 AM,
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Major Withholding Taxes Agents
Saturday, March 20, 2010
Prescribed Persons / Withholding Agent U/S Relevant Sections- Collector of Customs U/S 148
- Authorized dealer in foreign exchange U/S 149, 154(1), 154(2)
- Registration Authorities (motor vehicles) U/S 231B
- Association of persons U/S 149, 152(1), 152(2), 156, 233
- Association of persons constituted by, or under, law U/S 149, 152(1), 152(2), 153(1), 153(3), 156, 233
- Banking Company U/S 149, 151(1)(a), 151(1)(b), 151(1)(d), 152(1), 152(2), 153(1), 153(3), 154(1), 154(2), 154(3), 155, 156, 231A, 233
- Body Corporate U/S 149, 151(1)(d), 152(1), 152(2), 153(1), 153(3), 155, 156, 233
- Body incorporated by or under the law of a country outside Pakistan relating to incorporation of companies U/S 149, 152(1), 152(2), 153(1), 153(3), 155, 156, 233
- CNG Stations (Gas consumption bill preparer) U/S 234A
- Company as defined under the Companies Ordinance, 1984 except a Small Company U/S 149, 151(1)(d), 152(1), 152(2), 153(1), 153(3), 155, 156, 233
- Consortium U/S 149, 152(1), 152(2), 153(1), 153(3), 156
- Co-operative Society U/S 149, 152(1), 152(2), 153(1), 153(3), 155, 156, 233
- Diplomatic Mission of a foreign state U/S 155
- Direct Exporter U/S 154(3B)
- Electricity Consumption Bill Preparing Authority U/S 235
- Export House registered under DTRE Rule, 2001 U/S 154(3B)
- Export Processing Zone Authority U/S 154(3A)
- Federal Government U/S 149, 151(1)(a), 151(1)(c), 152(1), 152(2), 153(1), 153(3), 155, 156, 233A
- Finance Society U/S 149, 151(1)(D), 152(1), 152(2), 153(1), 153(3), 155, 156, 233
- Foreign association, whether incorporated or not, declared to be a company by the Federal Board of Revenue U/S 149, 152(1), 152(2), 153(1), 153(3), 155, 156, 233
- Foreign consultant U/S 149, 152(1), 152(2), 153(1), 153(3), 156, 233
- Foreign contractor U/S 149, 152(1), 152(2), 153(1), 153(3), 156, 233
- Individual U/S 149, 152(1), 152(2), 153(1), 153(3), 156
- Local Authority U/S 149, 151(1)©, 152(1), 152(2), 153(1), 153(3), 155, 156, 233
- Manufacturer of motor cars U/S 231B
- Modaraba U/S 149, 152(1), 152(2), 153(1), 153(3), 155, 156, 233
- Motor Vehicle Tax Collection Authority U/S 234
- Non-profit organizations U/S 149, 152(1), 152(2), 153(1), 153(3), 155, 156, 233
- Persons selling petroleum products to petrol pump operators U/S 156A
- Company U/S 149, 152(1), 152(2), 155, 156, 233
- Trusts/Non-profit Sector U/S 149, 152(1), 152(2), 153(1), 153(3), 155, 156, 233
- Telephone (bill preparer) & Cards (issuer & Seller) U/S 236
- Provincial Government U/S 149, 151(1)(c ), 152(1), 152(2), 153(1), 153(3), 155, 156, 233
- Resident Company U/S 150
- Society established or constituted by or under any law for the time being in force U/S 149, 152(1), 152(2), 153(1), 153(3), 155, 156, 233
- Stock Exchange Registered in Pakistan U/S 233A
Labels: CA Final Exam, Taxation, withholding tax agent
posted @ 2:10 PM,
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Avail the Opportunity On All Undisclosed Investments / Assets
Wednesday, December 16, 2009
INVESTMENT TAX SCHEME, 2008.
In exercise of the powers conferred under section 120A of the Income Tax Ordinance, 2001 the Federal Board of Revenue is pleased to introduce the scheme for the declaration of moveable and immoveable assets and payment of "investment tax" thereon as under:-
1. TITLE AND SCOPE OF THE SCHEME
(i) This Scheme shall be called "Investment Tax Scheme (ITS) 2008".
(ii) The Scheme shall apply to all existing as well as new taxpayers.
(iii) The scheme shall not apply to the cases where proceedings are pending before the Department, Appellate Authority or any court.
2. DEFINITIONS
For the purposes of this Scheme,-
a) "Investment Tax" means tax as defined under clause (63) of section 2 of the Income Tax Ordinance, 2001.
b) "Unexplained income/assets" means any asset for which the taxpayer has no explanation regarding nature and source and was chargeable to tax but could not be so charged under Income Tax Ordinance, 2001, for any tax year or years ended on or before 30th day of June, 2007.
c) "Declaration" means declaration made on the prescribed form annexed
to the Scheme (Annex-I).
d) "Declarant" means a person, as defined under section 80 of Income Tax Ordinance, 2001, who files declaration under the Scheme.
3. CHARGE OF TAX.
Investment tax shall be payable @ 2% of fair market value of the asset at the time of declaration of all moveable/immovable, undisclosed/unexplained investments/ assets, as declared by the taxpayer under this scheme, on the prescribed form any time from 1st July, 2008 to 31st December, 2008.
4. COMPULSORY FILING OF RETURN FOR NEW DECLARANTS.
New tax payers availing this scheme shall be obliged to file return of income for the tax year 2008 and subsequent three consecutive tax years. The department shall not question the source of acquisition of assets declared under the scheme for the past years and obligation of filing income tax return, if any, for the last five years.
5.INCORPORATION OF UNEXPLAINED INCOME/ASSETS IN BOOKS OF ACCOUNTS.
Where the declarant has paid tax on his unexplained income/assets in accordance with the Scheme, he shall be entitled to incorporate such income in his books of accounts.
6. FINALITY OF PROCEEDINGS UNDER THE SCHEME.
(i) Where a declaration in respect of undisclosed/unexplained income/assets has been made and the tax due thereon has been fully paid, such declaration shall be accepted by the department and the declarant shall be informed within one month of the date of receipt of the declaration.
(ii) Where any deficiency in calculation of tax or filling in the columns of the declaration form is noticed, the taxpayer shall be conveyed through a letter to make good the deficiency. The aforesaid letter shall be issued with the approval of Director General requiring the declarant to meet the deficiency within 10 days of the service of such letter.
7. DEPRECIATION ALLOWANCE
No depreciation allowance in respect of building, plant and machinery or other depreciable assets declared under the Scheme shall be admissible for any tax year prior to the tax year commencing on or before the 1st day of July, 2008.
8. VALUATION OF ASSETS
The Scheme of "Investment Tax – 2008" is a voluntary scheme through which government has reposed trust in the taxpayers and an opportunity has been provided to legitimize the unexplained/undisclosed assets at a nominal rate of 2% of the fair market value of the assets as declared.
ANNEX-I INVESTMENT TAX SCHEME - 2008
DECLARATION FORM FOR UNEXPLAINED INCOME/ASSETS/INVESTMENTS
1. NTN _______________(New declarant shall attach NTN application form duly filled in)
2. Name and Address of the declarant ________________________________
3. CNIC No. __________________________________________________
4. Name and address of business ____________________________________
5. Status. Individual /AOP /Company /Member of AOP/ Principal Officer/Chief Executive /Officer of the Company
Labels: Taxation
posted @ 1:24 PM,
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Taxation of Bonus Paid to Corporate Employees
Thursday, November 5, 2009
A proviso has been inserted in Clause (a)of sub section 2 of section 20 whereby any bonus paid or payable to corporate employees receiving salary income of Rs.One million or more (exculding bonus) shall be chargeable to tax at the rate of 30%. This is a one time levy and payable for the tax year 2010 only, so as to support the Internally Displaced People (IDP)for their rehabilitation.
Example # 1
Salary Income other than bonus = 1,000,000
Bonus amount = 300,000
Tax @ 9% at salary other than bonus = 90,000 (A)
Tax @ 30% at bonus = 90,000 (B)
Total Tax = 180,000 (A)+ (B)
Example # 2
Salary Income other than bonus = 900,000
Bonus amount = 100,000
Total Salary = 1,000,000
Tax @ 9% at salary other than bonus = 90,000 (A)
No Tax @30% at bonus as salary excluding bonus is less than one million (B)
Total Tax = 90,000 (A)+ (B)
Labels: Bonus, Salary income, Taxation
posted @ 1:32 PM,
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Last Date to File Income Tax Returns
Saturday, October 10, 2009
Remember - Its 20th October, 2010
Who has to file return?
Who has to file return?
- Business individuals and AOPs
- Companies where accounts are closed on 30-12-2008
- Salaried individuals having income other than salary
- Employees claiming refund
- Those who availed investment tax scheme 2008
- Owners of immovable property (with land area of 250 sq. yards or more) or owner of a flat in specified areas
- Non-corporate cases with property income
- Non-corporate taxpayers having business income and having income falling under PTR
E-Filing of Income Tax Returns
Compulsory for
- Corporate
- Taxpayers registered for Sales Tax
- Association of Persons - AOPs
- Salaried individuals having income of Rs.500,000/-
- Claimant of refunds
- Optional for other non-corporate Taxpayers
Last Date for Filing of IT Returns
- Individuals, AOPs (IT-2) = 20th October 2009
- Companies where accounts closed on 31-12-2008 (IT-1) = 20th October 2009
- Companies where accounts closed on 30-06-2009 (IT-1) = 31th December 2009
Remember: Filing of Wealth Statement along with the returns is mandatory in case of individuals with income of Rs.500,000/- or more.
Labels: Income Tax Return, Taxation
posted @ 1:08 PM,
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Taxation Updates - From 01-06-09 to 06-06-09
Saturday, June 6, 2009
15 percent regulatory duty levied on molasses export:
The Federal Board of Revenue (FBR) has imposed regulatory duty (RD), at the rate of 15 percent ad valorem, on export of molasses, with immediate effect. According to SRO 321(I)/2009 issued here on Saturday, 15 percent RD would be applicable on export of molasses.
No WHT exemption certificate on iron, steel supply:
The Federal Board of Revenue has rejected issuance of withholding tax exemption certificate on the supply of iron and steel products used as raw materials in the finished products such as auto parts by local manufactures
Industries Ministry lobbying to raise regulatory duty on molasses export:
The Ministry of Industries and Production is reported to be lobbying to raise regulatory duty (RD) on molasses export from 15 percent to 25 percent on the insistence of some top policy makers, sources in the Ministry told Business Recorder.
Property CVT to be deposited through new challan form:
The purchasers of the immovable property, including commercial and residential property within urban areas, are required to deposit the capital value tax (CVT) under the new challan form. In this connection, the FBR has amended the CVT Rules 1990 through SRO 416(I)/2009 issued here on Wednesday. The Federal Board of Revenue (FBR) has issued new CVT challan form on property transactions to introduce the system of Computerised Payment Receipt (CPR) by banks.
Penal surcharge for warehouse goods waived:
The Chairman, LCCI Standing Committee on Liaison with FBR, Aftab Ahmad Vohra has lauded the issuance of SRO 404 (I)/2009, wherein the Ministry of Finance, Economic Affairs, Statistics and Revenue have allowed to keep the warehouse goods in the warehouse till June 30, 2009 without any penal surcharge.
Sindh plans to raise sugarcane support price by 22 percent:
The Sindh government has planned 22 percent increase in the support price on 40 kg of sugarcane for the next year's seasonal crop. With this 22 percent increase, the support price on 40 kg of sugarcane would jump from Rs 81 to Rs 103. The support price was previously increased up to 14 percent, from Rs 67 to Rs 81to encourage the growers to enhance sugarcane yield in the province.
ITBA takes note of amendments to Income Tax Rules 2002:
Income Tax Bar Association (ITBA) has taken a serious note to the amendments made in Income Tax Rules 2002 vide SRO No 392(1) 2009 dated May 19th, even though the Bar and other Stakeholders had objected to the amendments.
Labels: Taxation
posted @ 1:52 PM,
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Tax History
Wednesday, April 15, 2009
Taxes represent a transfer of wealth from the citizens of a country to the ruling power of that country. As such, they have existed since ancient times. The Bible speaks of them and it is clear from the biblical text that tax collectors were generally reviled. Almost anything can be taxed and there are various ways in which taxes can be applied.
The first taxes of which we have a documentary record were applied in ancient Egypt. In ancient times, it is clear that taxpayers were expected to offer up a portion of the agricultural produce they raised from the land to the ruling power of the day.
As economies have evolved, governments and rulers have chosen to raise taxes in different ways. For a long time, many countries raised revenue primarily through taxing imports into the country.
In modern times, the income tax, which is charged as a percentage of all income earned in a period of time has become the most popular method by which governments in developed countries raise revenue. Corporation tax, a tax charged as a percentage of the profits made by incorporated companies, is also significant. Many countries also have sales taxes, or value added taxes, which are charged as a percentage of the selling price of a product or service.
Labels: Taxation
posted @ 12:09 PM,
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Sales Tax - hotels / restaurants
Monday, April 13, 2009
The Federal Board of Revenue has launched a campaign to collect due sales tax from hotels / restaurants sector.
- Non-registered hotels / restaurants get themselves voluntary registered immediately to avoid strict action.
- As responsible tax payer, issue sales tax invoice for every sale and e-file monthly sales tax return.
- law allows collectors to post sales tax officers at hotels /restaurants to monitor sales.
- Avoiding registration, non-issuance of sales tax invoice and non e-filing of monthly sales tax return attacts penalties and fines.
Labels: Taxation
posted @ 9:12 AM,
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