Profit on Bank Account - FTR or Normal
Wednesday, March 30, 2011
Query from Labeeb Subhani
"whether tax deducted on profit of an individual by a bank is adjustable or full and final discharge of tax liability."
Section : 151 states that;
Interest income from following shall be taxable under Final Tax Regime (FTR) for a person other than a company
• Bank Profit including profit and loss sharing (PLS) account
• Profit on certificates under national saving scheme including defence saving certificates and post office saving account
• Profit on certificates, debentures including TFCs, COIs issued by a company or a financial institution.
Labels: FTR, Section 151, Withholding Tax
posted @ 5:43 PM,
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Witholding Tax On Purchase of Agri Produce
Monday, January 17, 2011
Federal Board of Revenue (FBR) has clarified news reports published in a section of the press recently regarding the exemption of 3.5% withholding tax on purchase of agricultural produce, withdrawn through issuance of Board’s SRO 1161(I)/2010 Dated 31st December 2010. The issue needs clarification for the facilitation of general public, as follows:
i) Section 41 of the Income Tax Ordinance 2001 provides exemption to ‘agricultural income’ on sale/supply of agricultural produce by a cultivator/grower. Similar exemption was also available in the Repealed Income Tax Ordinance 1979. Earlier through Clause (v) of Board’s SRO 586(I)/91 Dated 30th June 1991 persons receiving payments from a company or an Association of Persons (AOP) having turnover of fifty million rupees or above exclusively for the supply of agricultural produce which has not been subjected to any process other than that which is ordinarily performed to render such produce fit to be taken to market, was exempted from deduction of withholding tax @ 3.5%
ii) Through Finance Act 2010, the definition of ‘prescribed persons’ was amended and “an individual having turnover of Rs.50 million rupees or above” was added in the list of withholding agents, to deduct withholding tax on sales/supplies [section 153(1)(a) of the Income Tax Ordinance 2001];
iii) Afterwards, Board had received various representations requesting to include “an individual having turnover of Rs.50 million rupees or above” in clause (v) of SRO 586(I)/91 of 30th June 1991;
iv) SRO 1161(I)/2010 Dated 31st December 2010 was issued with approval of competent authority, wherein following amendments were made in clause(v) of SRO 586:
- a) The word “persons” was replaced with the words “growers/producers of agricultural produce”, in order to restrict exemption to actual growers/cultivators as prescribed in the law; and
- b) The phrase “an individual having turnover of Rs.50 million rupees or above” was added in the list of prescribed persons, who will not deduct withholding tax from growers on sale / supply of agricultural produce.
It is therefore clarified that exemption of withholding tax on sale / supply of agricultural produce by a grower / cultivator is still intact, and SRO 1161(I)/2010 Dated 31st December 2010 has aligned the whole situation in line with the exemption on agricultural income by a grower, as provided in section 41 of the Income Tax Ordinance 2001.
Labels: Agricultural Income, Withholding Tax
posted @ 11:10 AM,
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Payment To Non Residents - Section 152
Friday, July 2, 2010
Every Person is required to deduct tax while making payment in full or part (including a payment by way of advance) to non-residents person on account of following nature of payments at mentioned rates.
Royalty or Fee For Technical Services:
- Tax @ 15 % - Covered under FTR
Execution of Construction Contracts including related contracts and services and advertisement services rendered by T.V. Satellite Channels:
- Tax @ 6 % - Covered under FTR
Insurance Premium:
- Tax @ 5 % - Covered under FTR
Others:
- Tax @ 30 % - Covered under FTR
Circumstances when a person is not required to deduct tax @ 30% while payment to non-resident: When
- An amount is subject to deduction of tax under section 149, 150, 153,155 ,156 or 233;
- Written approval of the Commissioner provided by non-resident, that amount is taxable to a permanent establishment in Pakistan of the non-resident person;
- Amount is payable by a person who is liable to pay tax on the amount as representative of the non-resident person;
- Non-resident person is not chargeable to tax in respect of the amount.
Where a person claims to be a representative of a non-resident person in case of non deduction of tax @ 30%, the person shall file a declaration to that effect with the Commissioner prior to making any payment to
the non-resident person.
Can any person make payment of non-resident without deduction of Tax?
Yes, a person intends to make a payment to a non-resident person without deduction of tax, however before making the payment, he would furnish to the Commissioner a notice in writing setting out –
- (a) the name and address of the non-resident person; and
- (b) the nature and amount of the payment.
The Commissioner on receipt of notice shall within thirty days pass an order accepting the contention or making the order of deduction of tax.
Circumstances, where above mentioned notice is not required to be furnished:
Where payment is made on account of –
(a) an import of goods where title to the goods passes outside Pakistan , except an import that is part of an overall arrangement for the supply of goods, their installation, and any commission and guarantees in respect of the supply where –
- (i) the supply is made by the head office outside Pakistan of a person to a permanent establishment of the person in Pakistan;
- (ii) the supply is made by a permanent establishment of the person outside Pakistan to a permanent establishment of the person in Pakistan;
- (iii) the supply is made between associates; or
- (iv) the supply is made by a resident person or a Pakistan permanent establishment of a non-resident person; or
(b) educational and medical expenses remitted in accordance with the regulations of the State Bank of Pakistan.
Labels: Payment To Non Residents, Section 152, Withholding Tax, withholding tax agent
posted @ 4:08 PM,
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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.
Labels: advance income tax, Imports, Section 148, Withholding Tax
posted @ 2:05 PM,
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