FRIDAY JUNE 17: Revised Section 153 of Income Tax Ordinance 2001: Senate recommends changes

ISLAMABAD: Senate has recommended some legal changes in the revised section 153 of the Income Tax Ordinance 2001 dealing with the deduction of tax on rendering or providing services and execution of contracts etc. In this connection, Senate has recommended to the National Assembly to substitute the sub-section (3) of the proposed section 153 of the Income Tax Ordinance 2001.
In the Finance Bill (2011-2012), the FBR has issued a totally revamped section 153 of the Income Tax Ordinance 2001 pertaining to payments for goods, services and contracts. Senate has recommended changes in the sub-section 3 of section 153 of the Ordinance 2001. According to the Senate recommendation, "sub-section 3 of section 153 shall' be substituted as under:
Sub-section (3) of the proposed section 153 shall be substituted as under:
"(3) The tax deducted under clauses (a) and (c) of sub-section (1) and under subsection (2) of this section, on the income of a resident person or permanent establishment of a non-resident person, shall be final tax.
Provided that:
a) Tax deducted under clause (a) of sub-section (1) shall be adjustable where payments are received on sale or supply of goods, by;
(i) a company being a manufacturer of such goods; or
(ii) a public company listed on a registered stock exchange in Pakistan;
b) Tax deducted shall be a minimum tax on transactions referred to in clause (b) of sub-section (1); and
Tax deducted under clause (c) of sub-section (1) shall be adjustable' if payments are received by a public company listed on a registered stock exchange in Pakistan, on account of execution of contracts, Senate recommendation added. The Senate recommended the National Assembly that the Government may encourage compliant tax payers by issuing tax compliant cards whereby card holders will be given priority in tax refunds, concession in tax rates quota allocations and speedy processing of cases at appellate forums.
The Senate recommended the National Assembly that Government may introduce FBR privilege cards for compliant tax payers who pay over Rs 5million as Income Tax so that they can get incentives in investments and processing of utility connections. The Senate recommended the National Assembly that incomes from all sources may be brought under the tax net so as to generate revenue for sustainable economic development.
The Senate further recommended the National Assembly that taxation laws may be invoked in Gilgit-Baltistan, FATA and PATA to eliminate discrimination between different parts of the Country, which in turn would broaden the tax base leading to lower tax rates. The Senate recommended the National Assembly that Government may establish good governance, curbs corruption, collects taxes efficiently and plug leakages so as to broaden the tax base.
The Senate further recommended the National Assembly that the Government may plug leakages and corruption in Public Sector enterprises and bring about reforms in FBR, which will accrue additional resources. The Senate recommends to the National Assembly that the Government may prevent the misuse of Afghan Transit Trade, curb smuggling, under invoicing and use railways for regional transportation of goods.
The Senate recommends to the National Assembly that the industrial and agricultural machinery imported or locally manufactured should be exempted from all taxes and duties. The Senate recommends to the National Assembly that one window operation may be started for easy and secured investment opportunities for Overseas Pakistanis. The Senate recommends to the National Assembly that the Government may promote agriculture reforms in order to incentivize small farmers and rural women, encourage co-operative farming and distribute state land among landless peasants.
The Senate recommends to the National Assembly that no supplementary grant involving expenditure over and above the amounts sanctioned in the budget be made without prior approval of the Cabinet and no reduction or re-allocation be made in the approved development budget without the sanction of the National Assembly.
The Senate recommends to the National Assembly that Ministry of Finance may present broad parameters of the Budget in March every year and detailed budget by mid May every year in both Houses of the Parliament for pre-budget discussion. The Senate recommends to the National Assembly that all SROs issued by the government may be placed before both the Houses of Parliament subsequent to issuance of such SROs. The Senate recommends to the National Assembly that mid year budget review may be made mandatory and should be done each year in the month of February in Parliament.
The Senate recommends to the National Assembly that supplementary grants may be approved at the time of mid year budget review. The Senate recommends to the National Assembly that all international loans and economic agreements may be ratified by Parliament.
The Senate recommends to the National Assembly that the State Bank of Pakistan may work out protocol in consultation with the banks to make it obligatory for banks both local and foreign to spend at least 5 percent of their profit for the promotion of educational and health services in country. The Senate recommends to the National Assembly that the State Bank of Pakistan may accelerate its efforts towards, promotion of Islamic banking and finance in the country in order to eliminate Riba as stipulated in Article 38(f) of the-Constitution.