Pakistan amends tax laws, revises penalty clauses

ISLAMABAD — Pakistan government has decided to facilitate taxpayers by revising the penalty quantum against defaulters and violators of tax laws.

By From A Correspondent

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Published: Sat 24 Jun 2006, 10:51 AM

Last updated: Sat 4 Apr 2015, 1:12 PM

"We have amended taxation laws through Finance Act 2006 by making adjustments in certain clauses to facilitate the taxpayers," Chairman of the Central Board of Revenue (CBR) M. Abdullah Yousuf said.

He told reporters on Thursday that the new amendments were incorporated in the taxation laws following proposals made in the National Assembly budget debate.

The government through the act exempted the rental income of a taxpayer — an individual or association of persons who derived income chargeable to tax under this section not exceeding Rs150, 000 in a tax year and did not derive taxable income under any other head. Earlier, the government in the budget introduced a fixed tax of 5 per cent on income from property.

An amendment was made in income tax for taxing at the rate of 2.5 per cent of income on the flying allowance received by pilots, flight engineers and navigators of Pakistan Armed Forces, Pakistani Airlines or Civil Aviation Authority and junior commissioned officers or ranks of Pakistan Armed Forces. However, senior officers were excluded form this levy.

Through the act, withholding tax at the rate of 10 per cent on profit on debt was made the final discharge of tax liability of the taxpayers. However, the companies were excluded from the ambit of the presumptive tax regime (PTR).

According to the amendments, the government has reduced the withholding tax from 6 per cent to 1 per cent on import of computer hardware, parts and accessories. Exemption has been given on capital gains arising from sale of ships and all floating craft including tugs, dredgers, survey vessels and other specialised craft up to the tax year ending on June 13, 2011. The government reduced withholding tax to 1 per cent on import of gold and silver. Earlier, a reduced rate of Rs2 per 11 gram 664 milligram on import of gold and Rs5 per kilogramme in the case of import of silver, which was deemed to be full and final tax liability of the taxpayer.

Through the act, the government introduced one per cent withholding tax on turnover for a tax year of those retailers whose turnover exceed Rs5 million and who was subjected to special procedure for payment of sales tax at the rate of 2 per cent sales tax. With this the total rate would be 3 per cent of the declared turnover as envisaged in the sales tax rules.

An amendment was made to define the expression of edible oil to include crude oil imported as raw material for manufacturing of ghee or cooking oil. Exemption from provisions of section 150,151 and 233 was extended to real estate investment trust (REIT). The medical exemption available to a resident taxpayer up to Rs30, 000 was withdrawn through the act.

Through amendments in the sales tax, the government allowed cases for resolution under alternated dispute resolution committee (ADRC) pending with the supreme court. Earlier, it was only allowed for those cases pending with the high courts.

The government though the act enhanced the powers of appellate tribunals sitting singly to dispose an appeal involving amount of taxes/penalty/fine of up to Rs1500,000 as against the previous Rs500,000. Similarly, the appellate tribunals were empowered to refuse to admit an appeal in which the amount of fine or penalty did not exceed Rs500,000 as against the earlier Rs50,000.

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