The persons trading in sectors of tyre, mobile phone, ghee, sugar, pulses, cement, fertilizer, electronics, yarn, iron & steel, paper and automobile would meet tax authorities at the Federal Board of Revenue (FBR) on January 13-14 to discuss issues arisin
The persons trading in sectors of tyre, mobile phone, ghee, sugar, pulses, cement, fertilizer, electronics, yarn, iron & steel, paper and automobile would meet tax authorities at the Federal Board of Revenue (FBR) on January 13-14 to discuss issues arising out after changes in turnover tax rate under the Tax Laws (Second Amendment) Ordinance 2019.
The FBR took this decision during a meeting with traders' community and representatives of trade associations here at FBR House on Thursday.
Under the Tax Laws (Second Amendment) Ordinance 2019, the standard rate of minimum tax under section 113 of the Income Tax Ordinance, 2001 is being reduced from 1.5% to 0.5% in the case of traders having turnover up to Rs100 million for the Tax Year 2020.
However, traders having turnover up to Rs100 million who have filed their returns for the Tax Year 2018 will be obliged to pay tax equal to or more than the tax paid for the Tax Year 2018 for the Tax Years 2019 and 2020.
Moreover, a trader has been defined as an individual engaged in the buying and selling of goods in the same state including a retailer and a wholesaler; however, distributors have been ousted from the scope of this definition.
Under section 153 of the Ordinance, individuals having turnover of Rs 50 million or above in any of the preceding tax years are obliged to act as withholding tax agents whilst making payments for supply of goods, rendering of services or for execution of contracts. Henceforth traders, being individuals and having turnover up to Rs 100 million shall not be required to act as a withholding agent under section 153 of the Ordinance.
Under the Tax Laws (Second Amendment) Ordinance 2019, the definition of tier-1 retailer has been amended in section 2(43A), whereby the Federal Board of Revenue is empowered to add any other category of retailers to tier-1. In view of the higher tariff rates of electricity, the conditions to qualify for a Tier-1 retailer have been amended so as to increase the threshold of electricity consumption from Rs 600,000 to Rs 1,200,000.
The rate of minimum tax under section 113 of the Ordinance for the Tax Year 2020 shall be 0.5% in the case of a trader of yarn, being an individual, irrespective of the date of registration in sales tax. Moreover, rate of deduction of withholding tax in respect of yarn traders making sales/supplies or rendering services to the five export-oriented sectors shall henceforth be 0.5%.
The traders' representatives included Kashif Chaudhry, Naeem Mir and Ajmal Baloch whereas FBR team was led by Acting Chairperson FBR Nausheen Amjad and included Member IR Policy Doctor Hamid Ateeq Sarwar and DG Retail Hameed Memon. It was agreed in the meeting that committees established throughout Pakistan will be completed in coming two days.
A combined meeting of traders' representatives and senior officers of FBR will be held on 22nd January at FBR House Islamabad. In the meeting, the chairperson and other senior officers of FBR will brief the traders about the progress on the agreement with the traders and will take them into confidence.
It was decided in Thursday meeting that representatives of traders and the FBR officers would hold combined meetings on 24th January at Regional Office Islamabad/Rawalpindi, on 27th January at Karachi, on 29th January at Multan, on 30th January at Faisalabad and on 31st January at Lahore Regional Office.
It was also agreed in the meeting that issues arising out due to turnover tax would be analyzed afresh in a meeting with the tyre, mobile phone, ghee, sugar, pulses, cement, fertilizer, electronics, yarn, iron & steel, paper, automobile and other sectors on 13th and 14th January at FBR House Islamabad.