ISLAMABAD: The government, in its attempt to document the economy, has increased the rate of taxes in several categories for people who do not file their tax returns.
Moreover, the federal government has extended the levy of 17pc sales tax on the import of goods for end use in non-taxable tribal areas.
Through the Finance Bill 2017, the government has proposed an amendment to the law to extend the scope of sales tax in Federally Administered Tribal Areas (FATA) as well as Provincially Administered Tribal Areas (PATA).
This means all imports at ports and taxable areas for end consumers in these areas will be charged at 17pc. The Federal Board of Revenue (FBR) claims that the proposed amendment will check illicit movement of supplies from tax-exempted areas.
Advance tax rate has been increased to 17.5pc of gross amount of rent for a non-filer company while it will remain at 15pc for a filer company. The advance tax of gross amount of prices and winnings in case of non-filers has been increased to 25pc from 20pc. For filers it will remain at 15pc.
The advance tax collected from the amount of commission for non-filers has been raised to 17.5pc from 15pc. It will remain at 12pc for filers. Similarly, advance tax on sales by auction for non-filer has been proposed at 15pc as against the current 10pc.
The advance tax of a non-filer company of a permanent establishment of non-residents in Pakistan has been enhanced to 7pc from 6pc; in case of sales of goods, the rate for non-filers has been increased to 7.75pc from 6.5pc.
In payment to permanent establishment in services, the rate for non-filer companies has been raised to 14pc from 12pc, and the rate for non-filers has been increased to 17.5pc from 15pc.
It has been proposed to raise rate of advance tax to 13pc from 12pc for non-filers in case of payment to permanent establishment in execution of contracts. In case of filers, the rate will remain at 7pc.
The advance tax in case of sales of goods was raised to 7pc from 6pc for non-filer companies; the rate for non-filer company rendering of or providing of services has been raised to 14.5pc from 12pc, while in other case for non-filer the rate has been enhanced to 17.5pc from 15pc. The rate of advance tax has been enhanced to 12pc from 10pc for non-filer company on payment for execution of contract while it has been raised to 12.5pc from 10pc for non-filers.
For availing tax credit of 100pc, the government has proposed additional conditions for non-profit organisations. For instance, the administrative and management expenditure of such organisations should not exceed 15pc of the total receipts. Tax on surplus funds has been proposed at 10pc.
The FBR has proposed to relieve those widows, orphans and the disabled from the requirement of filing return of income who are solely required to file income tax on their own immoveable property with a land area of 500 square yards or more located in a rating area, on a flat having covered area of 2,000 square feet or more located in a rating area, or on a motor vehicle having engine capacity above 1000cc.
Currently, advance tax collected on the consumption of electricity by industrial or commercial users is adjustable. It has been proposed that advance tax on electricity consumption by CNG stations may be made final tax liability of their income in addition to 4pc final advance tax liability on gas consumption. It has also been proposed that the rate of advance tax should be increased from 4pc to 6pc for non-filers.
Currently, advance tax collected on consumption of electricity by a non-corporate industrial or commercial consumer is adjustable over and above the billed amount of Rs30,000. Under the Finance Bill 2017, it has been proposed to enhance this limit up to Rs360,000, i.e. tax collected on the billed amount of less than Rs360,000 will be minimum tax liability and no adjustment of such tax collected shall be available.
The powers of federal government to levy sales tax at varied rates as enunciated in the Sales Tax Act of 1990 have been devolved to the FBR with the approval of the minister in charge, i.e. the finance minister. Similar amendment has also been proposed to the income tax ordinance.
Consequent to decision to monitor the manufacturing and import of cigarette, electronically (trace and track) befitting penalties both of imprisonment and fines have been proposed. Under the amendments, more sectors will be monitored through a trace-and-track mechanism.
Two additional categories — district taxation officer and assistant director audit — have been proposed in the finance bill to strengthen the enforcement of sales tax functions.
According to proposed federal excise rates on locally produced cigarettes, it has been proposed to collect Rs3,740 per 1,000 cigarettes if their printed retail price exceeds Rs4,500 per 1,000 cigarettes; Rs1, 670 per 1,000 cigarettes if the price is between Rs2,925 and Rs4,500; and Rs800 per 1,000 cigarettes if the price is below Rs2,925.
Published in Dawn, May 28th, 2017