Single form for tax collection, deduction certificate
By Our Staff Reporter
ISLAMABAD, July 4: The Central Board of Revenue (CBR) has notified a single form for the certificate of tax collected or deducted at source under any of the provisions of the Income Tax Ordinance, 2001, except salary. Through an Income Tax Notification SRO 641 issued on Monday, the rule 41 to 66A of the Income Tax Rules, 2002, have been substituted by Rule 41 to 45 for rationalizing the obligations of the withholding agents to make them simplified and user-friendly. According to the amended rules, all withholding agents, other than the federal or provincial government, were now required to deposit the tax collected or deducted under any provision of the Income Tax Ordinance, 2001, to the credit of the federal government within seven days from the end of each fortnight.
Earlier, the withholding agents were required to deposit the tax within seven days and fifteen days of the collection or deduction under different provisions and so practically round the year on a daily basis.
All withholding agents were also now required to submit quarterly and annual statements about details of tax collected or deducted. Earlier, some of the collection or deduction of tax at source required monthly and semi-annual reporting.
Under the new rules, the 17 existing prescribed statements of monthly, quarterly and annual statements have been replaced by a single quarterly statement and two annual statements — one for salary and one for all other items.
The new annual salary statement is slightly more elaborate and detailed to cater for the exemption granted to employees, having no other source of income etc., from filing a return of income or employer’s certificate in lieu of the return of income.
However, an employer has an option to delete any of the columns of the new annual salary statement that are not applicable in its present case.
The other annual statement is designed to obtain information about persons from whom tax has been collected or deducted for the purposes of broadening of the tax base.
In the quarterly statement, summarized details of tax collected or deducted and deposited are required while the emphasis is on obtaining details about transactions from which tax has not been collected or deducted and the reasons thereof. The purpose of the quarterly statement is to monitor the withholding agents. The employers are now required to give the certificate of tax deducted from salary to its employees, in the prescribed form, within 45 days from the end of the financial year.
Earlier, this period was 60 days.
Where the employment ceases before the end of the financial year the employers are required to give the certificate of tax deducted to their employees, in the prescribed form, within seven days of the ceasing of employment or at the time of making the payment of the final settlement, whichever is later.
All withholding agents are now required to give the annual certificate of tax collected or deducted, other than the salary, to persons from whom tax has been collected or deducted, in the prescribed form within 15 days from the end of the financial year or discontinuation of business, etc.
The withholding agents are also required to give the certificate of tax collected or deducted, other than the salary, on demand from the person from whom tax has been collected or deducted, in the prescribed form, within seven days of the request made.
As a result of the changes cited above, the longstanding demand of taxpayers for simplification of the obligations of the withholding agents, avoidance of duplication of information and the hassle of daily depositing of the tax collected or deducted has been met. In addition, some inconsistencies in the rules have also been removed.
The revised rules are in force and the quarterly and annual statements now due shall be filed accordingly.
