ISLAMABAD: Fearing backlash from taxpayers, the government has withdrawn mandatory requirement of filing taxpayers’ profile with the return.
Under Section 114 A of the Income Tax Ordinance 2001, the deadline for online submission or updating of taxpayers’ profiles was Dec 31, 2020. However, it was extended until June 30, 2021.
Through the Finance Bill, it has been proposed to omit Section 114A and withdraw requirement of filing of taxpayer’s profile.
Special tax at the rate of four per cent was applicable on banking companies since 2020 till tax year 2021. However, this tax was extended for indefinite period meant for rehabilitation of temporarily displaced persons.
The bill proposes to introduce definition of business bank account to be a bank account utilised by the taxpayer for business transactions. Penalties are proposed for those who do not declare these accounts.
The Finance Bill defines Small and Medium Enterprises (SMEs) to be a person who is engaged in manufacturing; whose business turnover in a tax year or any preceding tax year does not exceed Rs250 million. SMEs are excluded from the definition of small company.
An SME must be registered with the Federal Board of Revenue on IRIS or with the SME Development Authority on its portal SMERP. For taxability, SMEs are categorised into two types — one whose turnover is not more than Rs100m will be taxed at 7.5pc of taxable income; and the other whose turnover is more than Rs100m but not more than Rs250m will be taxed at 15pc of taxable income.
The SME is also given an option to be taxed under the Fixed Tax Regime (FTR). For SMEs whose turnover is not more than Rs100m will be taxed at 0.25pc of gross turnover; and whose turnover is more than Rs100m but not more than Rs250m will be taxed at 0.5pc of gross turnover
These options may be exercised at the time of filing of return and once exercised cannot be revoked for three years. If an SME is opting for normal tax regime and its tax payable is below the fixed tax to be paid under the FTR, then FBR may invoke Section 214C to pursue audit of that SME.
In pursuance of request from a foreign jurisdiction under a tax treaty, the Commissioner may attach bank account of the person involved without any local proceedings, etc.
The facility of issuance of exemption certificates within 15 days was extended to all companies. Earlier, it was only available to listed companies. It has been proposed that registered taxpayers to maintain electronic version of all records in addition to hardcopies.
Published in Dawn, June 13th, 2021