Tax time is ticking for salaried employees and small businesses and both deserve to get the best deal of the leverage provided to them in the Budget for the year 2004. Low income salaried persons will get more refunds (starting from Rs1500) in the current tax season closing on the midnight of September 30,2004. File your tax return in time.

Though late filing of return will not stop you from getting your refund. Late filing means showing red rag to the tax bull. He will surely reduce the size of your refund cake. He earns his living by imposing penalties and charging additional taxes for late filing.

Tax deductions on salaried pay checks during the income year ending June 2004 were made on the basis of taxable threshold of Rs80,000. Taxable slab for salaried community have been raised to Rs100,000 in the Budget 2004.

If you take care to claim in your tax return all the allowances, deductions, credits that you are entitled to under law you can bet to pay zero taxes to Islamabad. And the taxman is bound by law to pay you refund at his earliest or pay additional taxes at the rate of 6 per cent as well. Be alive and act in time to enjoy your rights as taxpayer.

You may be having two or more sources of income, salary and a part time job, property income and running a micro enterprise or a retail shop. More often than not, your retail shop might be running in losses or hardly sustaining itself. A regular teacher may be imparting private tuitions.

As a low paid employee you may be running a karyana shop in your locality. Better report both. It is a smart move. Your engagement in tuitions or operating a karyana shop entitles you to a far wider range of allowances, breaks and expenses to claim. A combined reporting of your income will offset your business losses against your salaried income.

You may end up reporting overall losses or reporting income that stays below the new taxable limits of Rs. 100,000. In either case, you do not owe any taxes. Your pay check deductions will qualify to be refunded. In the worst-case scenario, your tax bite will be reduced to your minimum tolerance level.

For the tax year 2004, retail shop owners must exercise their best judgment to assess the pros and cons of the new law that offers to charge tax @ .75 per cent of their turnover up to Rs5,000,000.

This stick comes with the carrot i.e. no question asked and no audit to be undertaken. At the proposed rate of .75 per cent, the shops falling within the maximum turnover limit will bear the tax burden of Rs37,500. A hefty sum (on current rate, it equals to almost eight months lease rentals for a Suzuki car).

When worked back on the basis of revised tax slab for tax year 2004, it presumes that every retailer with the given turnover earns taxable income of around Rs375,000.

In terms of net profit rate it says that your minimum net profit during the tax year 2004 stood at 7 per cent of your turnover. In the days of growing inflation and cut throat competition in the retails store business, the presumption of earning a net profit of 7 per cent or more may be too wild a guess to seduce a taxpayer.

Even if you do not opt to exercise this offer, you still land in the safe harbour of universal self-assessment scheme and odds of selection in the audit are also very thin if the current year's experience could be our guide. So put your best foot forward before parting with your hard earned money in the context of commercial realities of your small business.

For the newly emerging elite club of high net worth individuals (HNWIs) of Pakistan, there exists an equally better chance of reducing their tax burden. Some lucky executives are earning around 40,000,000 a year in pay checks. Good luck to them.

They can also keep more money to their families and children by having recourse to finer avenues of tax planning that the law allows smilingly. For them the core issue is whether their income is in the character of a salary or of an independent contract.

As an owner-operator of a small business or as salaried employee it is high time to organize your tax affairs. Too many of us look upon keeping good records as a burden instead of a benefit. For a taxpayer, good records mean taxes saved.

Your bank statements, check stubs, your appointment /contract letter, receipts for donations and charities, credit/debit card statements, used prepaid cards for mobile phone or home connections, restaurant bills, utilities bills, rent agreements, club bills, tickets of your travelling inside and outside country, laundry bills, car repair and gasoline bills, receipts of home and office renovation, of marriage expenses and above all your medical bills; all will have serious tax consequences. Having a logbook of your personal and employer's mileage or a business and a non-business mileage of your car may be your best shot.