ISLAMABAD, June 12: The government in a move to facilitate the business community has introduced amendments in the Sales Tax Act through the Finance Bill 2008 allowing carry forward amount for excess input tax.

The rate of default tax has been enhanced from 1 per cent to 1.5 per cent per month in order to keep the rate of default surcharge higher than the interest rates of banks to avoid short-filing by the taxpayers.

Time to adjudicate the cases under Sales Tax Act, 1990 and Federal Excise Act, 2005 has been increased from 90 to 120 days. In order to clear pendency at the tribunal level and to make it a more effective forum, the monetary limit for single member bench is being proposed to be increased from Rs1.5 million to Rs10 million.

The definition of “franchise services” has been enlarged by including royalty and technical fee in it. Moreover, the definition of franchise has been shifted from Federal Excise Rules, 2005 to Federal Excise Act, 2005.

Through the Bill, the government amended the income tax ordinance so that the period of payment of tax due from a taxpayer is being reduced from 30 days to 15 days.

The provisions of section 115 of the Income Tax Ordinance, 2001 amended to ensure filing of wealth statement by a salaried taxpayer whose income is more than Rs500,000 even if he is not required to file a return of income.

Under the proposed amendment, tax deducted in the case of non-corporate taxpayers on supply of manufactured goods shall be a final tax to ensure correct recording of sale, Electronic Tax Register (ETR) are planned to be installed at selected wholesale and retail outlets with known high volume of business.

The limit for payment of salary to be paid by an employer through cheque or transfer to employee’s account is being increased from Rs10,000 to Rs15,000, a time limit of 90 days is being provided under the Income Tax Rules, 2002 for making an order by the FBR on receipt of recommendations from the Alternate Dispute Resolution Committee (ADRC).

In case of withdrawals from superannuation fund liable to withholding tax the deduction of tax is proposed to be made at the rate applicable to the year of withdrawal instead of average rate of the preceding three years.

In order to create linkages between voluntary and occupational savings schemes, the subscriber of a Recognised Provident Fund is proposed to be allowed to transfer funds to a voluntary pension fund scheme.

The provisions of 7th Schedule allowing deduction on account of non-performing loans as per prudential regulation issued by the SBP are proposed to be deleted. From the next financial year such deductions would be allowed under sections 29 and 29A of the Income Tax Ordinance, 2001.

A person making payment to a non-resident would not be required to give a notice to the CIT under section 152(5) of the Income Tax Ordinance, 2001, if no withholding or withholding of tax at a lesser rate is provided under the avoidance of double taxation treaty.

Enabling powers are proposed to be given to the FBR to allow exemption from Withholding taxes required under different provisions of the Ordinance.