Tax return forms: Experts urge FBR to remove ambiguities

RECORDER REPORT

ISLAMABAD: Tax experts have asked the Federal Board of Revenue (FBR) to remove ambiguities in the proposed income tax return forms for companies (IT-1) and individual/AOP (IT-2) for Tax Year 2012 in which certain points need clarification.

In a communication to the FBR here on Wednesday, Waheed Shahzad Butt, a leading Lahore based tax lawyer informed the FBR that certain amendments in the Income Tax Rules, 2002 have been announced under Notifications SRO 727(I)/2012 and SRO 752(I)/2012 wherein proposed income tax return forms for Companies (IT-1) and for Individual/AOP (IT-2) for Tax Year 2012 have been published for the information of all persons likely to be affected. There are certain issues in proposed tax returns which needs clarification/modification.  According to the tax expert, the levy of surcharge has been omitted from the proposed tax returns, which is contrary to the clear wording of the law and verdicts of the High Courts.

Income Tax (Amendment) Ordinance, 2011 inserted a new section 4A in the Income Tax Ordinance, 2001 on March 15, 2011. The law categorically says that it is to be paid at the rate of 15 percent of the income tax payable for the period commencing from the promulgation of this Ordinance, till June 30, 2011.

There are certain categories of taxpayers' whose income year is clearly out of the domain of section 4A of the Income Tax Ordinance, 2001 but they are legally bound to discharge this obligation. These taxpayers includes banking companies, insurance companies, multinationals and PE of Non-Residents which close their accounts on December 31 or sugar industries which close its accounts on September 30, while law the categorically says that it is to be paid at the rate of 15 percent of the income tax payable for the period commencing from the promulgation of this Ordinance, i.e. March 15, 2011 till June 30, 2011. It also means the period between January 1, 2011 till December 31, 2011 and August 1, 2010 till September 30, 2011 shall also be liable to payment of surcharge under Section 4A, Waheed said.