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Finance Act, 2009 released on Saturday has entitled every manufacturer, registered under the Sales Tax Act, 1990, to a tax credit of 2.5 percent of tax payable for a 'tax year' in case 90 percent of his sales are to the registered persons. The government on Saturday issued Finance Act, 2009 for enforcement of the budgetary provisions for fiscal 2009-10 incorporating amendments made in the Finance Bill (2009-10).
According to the Finance Act, 2009, a new section "65A ie Tax credit to a person registered under the Sales Tax Act, 1990" has been added in the Income Tax Ordinance 2001". Every manufacturer, registered under the Sales Tax Act, 1990, shall be entitled to a tax credit of two and a half percent of tax payable for a tax year, if 90 percent of his sales are to the person who is registered under the aforesaid act during the said tax year.
For claiming of the credit, the person shall provide complete details of the persons to whom the sales were made. No credit will be allowed to a person whose income is covered under final tax or minimum tax. The carry forward of any amount where full credit may not be allowed against the tax liability for the tax year, will not be allowed.
The amended Income Tax Ordinance 2001 has specified that any bonus paid or payable to corporate employees receiving salary income of one million rupees or more (excluding bonus) in tax year 2010, shall be chargeable to tax at the rate provided in paragraph (2) of Division I of Part I of the First Schedule.
Similarly, Internally Displaced Persons Tax (IDPT), treated as income tax, on the tax payable on the taxable income of one million rupees or more, shall be levied at the rate of 5 percent of such tax, for tax year 2009. The rate of tax payable on bonus as IDPT as income tax shall be 30 percent for the tax year 2010, Finance Act said.
Finance Act 2009 has also empowered the director generals to compound offences. Where any person has committed any offence, the Director General may, with the prior approval of the Board, either before or after the institution of proceedings, compound such offence subject to payment of tax due along with additional tax and penalty as is determined under the provisions of Ordinance 2001.
After section 23A of the Ordinance 2001, the new section "23B". (Accelerated depreciation to alternate energy project) said that any plant, machinery and equipment installed for generation of alternate energy by an industrial undertaking set up anywhere in Pakistan and owned and managed by a company shall be allowed first year allowance in lieu of initial allowance under section 23, at the rate specified in Part II of the Third Schedule against the cost of the eligible depreciation assets put to use after first day of July, 2009.
In section 235 of the Ordinance 2001, for sub-section (4), the following shall be substituted, namely:-In the case of a taxpayer other than a company, tax collected upto bill amount of thirty thousand rupees per month shall be treated as minimum tax on the income of such persons and no refund shall be allowed. In the case of a taxpayer other than a company, tax collected on monthly bill over and above thirty thousand rupees per month shall be adjustable; and in the case of a company, tax collected shall be adjustable against tax liability.
The amended Income Tax Ordinance has further specified that any person who, having furnished a return, discovers any omission or wrong statement therein, without prejudice to any other liability, which he may incur under this Ordinance, may furnish a revised return for that tax year at any time, within five years from the end of the financial year in which original return was filed, subject to the following, namely:- It is accompanied by the revised accounts or revised audited accounts, as the case may be. The reason of revision of return, in writing, duly signed, is filed therewith; and it is filed before the issuance of the notice for amendment of assessment.
Provided that where salary income, for the tax year is five hundred thousand rupees or more, the taxpayer shall file return of income electronically in the prescribed form and it shall be accompanied by the proof of deduction or payment of tax and wealth statement as required under section 116 of the Ordinance 2001.
Another amendment in the Ordinance 2001 said that every person (other than a company) filing statement under sub-section (4), falling under final tax regime (FTR) and has paid tax amounting to twenty thousand rupees or more for the tax year, shall file a wealth statement along with reconciliation of wealth statement.
Finance Act 2009 has further issued procedure for payment of advance tax by companies. Advance tax is payable by a company to the Commissioner in respect of the September quarter, on or before the 15th day of October; in respect of the December quarter, on or before the 15th day of January; in respect of the March quarter, on or before the 15th day of April and in respect of the June quarter, on or before the 15th day of June.
Where the taxpayer is a company or an association of persons, advance tax shall be payable by it in the absence of last assessed income or declared turnover also. The taxpayer shall estimate the amount of advance tax payable on the basis of quarterly turnover of the company or an association of persons, as the case may be, and thereafter pay such amount after, taking into account tax payable under section 113 as provided in sub-section (4AA); and making adjustment for the amount (if any) already paid.
As per new section "192A". (Prosecution for concealment of income), where, in the course of any proceedings under this Ordinance, any person has either in the said proceedings or in any earlier proceedings concealed income or furnished inaccurate particulars of such income and revenue impact of such concealment or furnishing of inaccurate particulars of such income is five hundred thousand rupees or more shall commit an offence punishable on conviction with imprisonment upto two years or with fine or both. The concealment of income or the furnishing of inaccurate particulars of income shall include the suppression of any income or amount chargeable to tax and the claiming of any deduction for any expenditure not actually incurred.
Through another new section "236A (Advance tax at the time of sale by auction), any person making sale by public auction, of any property or goods confiscated or attached either belonging to or not belonging to the Government, local Government, any authority, a company, a foreign association declared to be a company, or a foreign contractor or a consultant or a consortium or Collector of Customs or Commissioner of Income Tax or any other authority, shall collect advance tax, computed on the basis of sale price of such property and at the rate specified in Division VIII of Part IV of the First Schedule, from the person to whom such property or goods are being sold.
Finance Act has amended Seventh Schedule of the Income Tax Ordinance 2001, provisions for advances and off balance sheet items shall be allowed upto a maximum of 1% of total advances. Provided a certificate from the external auditor is furnished by the banking company to the effect that such provisions are based upon and are in line with the Prudential Regulations. Provisioning in excess of 1percent would be allowed to be carried over to succeeding years: Provided that if provisioning is less than 1% of the advances, then actual provisioning for the year shall be allowed. The amount of "bad debts" classified as "sub-standard" under the Prudential Regulations issued by the State Bank of Pakistan shall not be allowed as expense.
The provisions of section 113 shall apply to banking companies as they apply to any other resident company."; As per amendments in the Sixth Schedule of the Sales Tax Act, 1990, sales tax exemption would be available on the import of tractors, bulldozers and combined Respective harvesters; and components headings"; (which include sub-components, components, sub-assemblies and assemblies but exclude consumables) imported in any kit form and direct materials or assembly or manufacture thereof, subject to the same conditions as are envisaged for the purpose of exemption under the Customs Act, 1969 (IV of 1969).

Copyright Business Recorder, 2009

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