ISLAMABAD, June 7: The government has withdrawn 20 income tax exemptions from the income tax law 2001 in federal budget 2003-04, which would earn the exchequer an additional amount of Rs70 million.
According to the finance bill 2003-04, released here on Saturday, the income tax exemption was withdrawn on any income chargeable under the head “salary” received by any person being an employee of the International Irrigation Management Institute (IIMI) in Pakistan, who is neither a citizen of Pakistan nor a resident individual in any of the four years immediately preceding the year in which he arrived in Pakistan.
The exemption withdrawn include on any income of any officer representing the sum received by him as Orderly Allowance admissible to him under the Finance Division O.M. No. F.1 (3)IMP- II/85, Oct 24, 1985, the additional tax liability on this account is also proposed to be grossed up; any income of any employee of a recognized university in Pakistan representing the sums received by him as Orderly Allowance admissible under the terms and conditions of the service, the additional tax liability on this account is also proposed to be grossed up; any income of an officer representing the sum received by him as Personal Staff Subsidy admissible to him under the Cabinet Secretariat (Establishment Division) Office Memorandum NO.18/2/78-CV, dated the July 13, 1978; such portion of the income of a member of Pakistan Armed Forces as is compulsorily payable by him under any orders issued by the government to mess, entertainment or band fund.
The other exemptions withdrawn included deferred pay admissible to Armed Forces personal under the new Pay Code; any income derived by a non-resident person from foreign investment in 7th issue of rupee denominated Wapda Energy Bonds issued under the Wapda Energy Bonds (7th issue) Regulations, 1997; any income derived by the International Irrigating Management Institute (IIMI), Pakistan; any amount collected by the Civil Aviation Authority up to Dec 31, 1998, on account of security charges; any share of income received by a taxpayer out of capital gains on which tax has been paid by the firm of which he is a partner, provided that exemption under this clause shall not apply in respect of any tax year commencing on or after July 1, 2002; profits and gains derived by an assessee from an industrial undertaking set up in an area declared by the federal government to be a “Zone” within the meaning of the Export Processing Zones Authority Ordinance, 1980 (IV of 1980) for the assessment years 1998-1999, 1999-2000 and 2000-2001.
However, the exemption under this clause shall be restricted to the remaining period of exemption to which a company was entitled before the relevant amendments made by the Finance Act, 1996 (IX of 1996); any income of Saudi-Pak Industrial and Agricultural Investment Company in Pakistan for a period of 20 years commencing with Dec 31, 1982; any amount received on encashment of any certificate issued in pursuance of the US Dollar Bearer Certificate Rules, 1991: Provided that the exemption under this clause shall not be available in respect of certificates purchased on or after June 15, 1995; payments made on or after July 1, 1991, for the supply of plant, equipment and machinery to the Hub Power Company by a non-resident person; in the case of an industrial undertaking set up in an area declared by the federal government to be a “Zone” within the meaning of the Export Processing Zones Authority Ordinance, 1980 (IV of 1980), the income, profits and gains of such undertaking accruing or arising after the expiry of the period of exemption under clause (122) of Part I shall be charged to tax for a period of five years thereafter at the rate equal to 25 per cent of the rates specified in the first Schedule: Provided that nothing contained in this clause shall apply in respect of undertakings whose period of exemption under clause (124) of Part I will expire after June 30, 1997.
The exemptions also include the provisions of clause (k) of section 21 shall not apply to any expenditure incurred by a banking company or a financial institution owned and controlled by the federal government on the provisions perquisites, allowance or other benefits to any employee in pursuance of any law; the provisions of section 111 in respect of any amount invested in the acquisition of foreign exchange bearer certificates issued under the Foreign Exchange Bearer Certificates Rule, 1985; the provisions of section 111 shall not apply in respect of any amount invested in the acquisition of US dollar bearer certificate issued under the US Dollar Bearer Certificates Rules, 1991; the provisions of section 111 shall not applying in respect of any amount invested by a sponsor or an original allottee in the purchase of shares of a company owning and managing an industrial undertaking specified in rule 5A of the Third Schedule of the Income Tax Ordinance, 1979 and the provisions of section 146 and 152 relating to fee for technical services shall not apply to M/s Siddiq Sons Tin Plate in respect to salaries expatriate employees, royalty or technological and know-how fee for technical assistance for projects located in Special Industrial Zone, Windher, Balochistan, established L/Cs prior to Jan 31, 1996.
ISLAMABAD, June 7: The government has withdrawn 20 income tax exemptions from the income tax law 2001 in federal budget 2003-04, which would earn the exchequer an additional amount of Rs70 million.
