HIGHLIGHTS OF THE FINANCE BILL
June 22-28, 96With retrospective effects an explanation is proposed to be added that where the owner receives rent of the property in which he also resides can not be claimed as self occupied for the purposes of claiming exemption from income from house property.
Appeal fees at first and second appellate stages are proposed to be reduced.
The income earned from salary will be offered to tax at gross amount by the employees of the companies as defined in section 2(16) excluding employees of a corporation whose salaries are regulated by the government. On the other hand, the existing restriction of admissibility of expenditure in employers' hand, to the extent of fifty percent on account of excess perquisite is proposed to be removed from the Income Tax Ordinance.
Cash deposit receipts or rupee traveller cheques and payment of cellular phone M; have been brought into the ambit of withholding taxes.
The provisions related to deemed income in respect of private loan or advance remaining unpaid within five years are proposed to be withdrawn from the Income Tax Ordinance.
The tax credit in respect of balancing and modernisution of plant or machinery is being revived.
Initial depreciation on plant and machinery is proposed to be withdrawn effective assessment year 1994-95.
Tax exemptions to industrial undertaking have been curtailed which would now be available, if it is set-up by June 30, 1997.
Protection is being provided to new assesses not to disclose source of investment, who make investment in business under the fixed tax scheme to be announced by the Government subsequently.
Octroi collections, tolls, fee and other levies at the time of auction bids have been brought under presumptive tax regime to be taxed at the rate of five percent.
Rates of additional tax upon certain defaults are proposed to be enhanced from fifteen percent to twenty four percent.
Reduced rate certificate can be obtained by certain manufacturers to the extent of fifty percent upon satisfying the Regional Commissioner of Income Tax that their actual tax liability has already been discharged.
The reduction in corporate tax rates due for the current year 1996-97 has been deferred .
The mandatory stay of demand available to the assessee till the decision of first appeal is proposed to be withdrawn.
Penalties for non-compliance of filing requirement of return of income are proposed to be reduced.
Reduced tax rate on dividend @ seven and half percent is proposed for Privatised Power Projects by WAPDA.
Exemption from tax on tax is proposed to be extended to all non-residents.
Income of expatriates resident in Pakistan which accrues or arises outside Pakistan is proposed to be exempted.
Immunity is extended to income tax assesses from concealment prior to assessment year 1996-97 who are now registering themselves under the Sales Tax Act .
Residential houses owned by the agriculturists have been included in the definition of assets and have become liable to tax. However, exemption is proposed to be extended to one dwelling house only. (see real estate story for details)
Assets jointly held by co - owners are now to be taxed in their individual hands instead of being taxed as an association of persons or body of individuals.
Debts unpaid within Eve years would not be disallowed as in-admissible debt against total wealth of the assesses.
Produce index units for agricultural land are proposed to be increased to four hundred times from the existing two hundred times.
Minimum wealth tax is proposed to be levied in respect of immovable assets owned by an assessee in urban area.
Penalty for deliberately furnishing inaccurate particulars of assets or debts is proposed to be decreased to two and half times from the existing penalty of four times.
The scope of sales tax has been widened to include more classes of goods.
The general rate of sales tax is proposed to be enhanced from 15% to 18%. On certain goods the prescribed rates even go upto 23%.
A turnover tax is being introduced for manufacturers whose taxable turnover does not exceed rupees one million.
A Settlement Commission for indirect taxes is proposed to be formed on the pattern of Income Tax Settlement Commission.
a Powers of the sales tax officer to confiscate goods and conveyance is being withdrawn
Any goods, which are not loaded on the conveyance for export within one month may be sold or removed from the port to customs warehouse.
A Settlement Commission for indirect taxes is being formed on the pattern of income Tax Settlement Commission.
The system of Form 'A' is being done away with and replaced by shopping curds system.
Excise duty is being enhanced on most of the goods and services.
Excise duty is being levied at 40% on international telephone calls and faxes. Further increase in duty at 40% is proposed to be charged on local and domestic calls, the previous rate of duty was 35%.
Duty is being levied on leases and musharika financing at the rate of 1% of the amount of each lease outstanding on the last working day of each month 10% duty is also proposed to be levied on doctors and advocates including income tax practitioners.
A Settlement Commission for indirect taxes is being formed on the pattern of Income Tax Settlement Commission.
CAPITAL VALUE TAX (CVT)
CVT is proposed to be extended to air tickets.
Exemption from payment of CVT on motor vehicle above 1000 CC available to assesses who had paid income tax in the preceding year is proposed to be withdrawn.