WHT on imports rationalised through Finance Act 2013
The withholding tax on imports under Section 148 of the Income Tax Ordinance has been rationalised through Finance Act 2013. Explaining the important amendments made in the Income Tax Ordinance through Finance Act 2013, the Federal Board of Revenue (FBR) has issued a circular here on Friday.
Copyright Business Recorder, 2013
As per circular, the rates of collection of tax in the case of imports have been rationalised. The rates are 5 percent of the value of goods in the case of industrial undertakings; 5 percent in all other cases of companies, and 5.5 percent in case of all other taxpayers. Moreover rate of collection of tax is 12 percent of the value of the film in the case of a foreign produced film imported for the purposes of screening and viewing, FBR added.
For the purpose of deduction of tax from non-resident persons, the definition of prescribed person as given in sub-section (7) of section 153 of the Income Tax Ordinance, 2001 has been adopted. Thus, the prescribed person for the purpose of section 152 are: the Federal Government; a company; an association of persons constituted by, or under law; a non-profit organisation; a foreign contractor or consultant; a consortium or joint venture; an exporter or an export house; an association of persons, having turnover of fifty million rupees or above in tax year 2007 or in any subsequent tax year; or an individual, having turnover of fifty million rupees or above in the tax year 2009 or in any subsequent year; a person registered under the Sales Tax Act, 1990.
The scope of prescribed person for the purposes of Section 153 has been extended to 'a person registered under the Sales Tax Act, 1990'. It means that every person registered under the Sales Tax Act, 1990 shall also deduct income tax at the prescribed rate.
Through Finance Act, 2013, 'Explanation' to Section 165 has been added through which it has been clarified that the provisions of sub-section (1) of Section 165 override all conflicting provisions contained in the Protection of Economic Reforms Act, 1992 (XII of 1992), the Banking Companies Ordinance, 1962 (LVII of 1962), the Foreign Exchange Regulation Act, 1947 (VII of 1947) and the regulations made under the State Bank of Pakistan Act,1956 (XXXIII of 1956), if any, on the subject, in so far as divulgence of information under section 165 is concerned, circular added.