AIRLINK 62.48 Increased By ▲ 2.05 (3.39%)
BOP 5.36 Increased By ▲ 0.01 (0.19%)
CNERGY 4.58 Decreased By ▼ -0.02 (-0.43%)
DFML 15.50 Increased By ▲ 0.66 (4.45%)
DGKC 66.40 Increased By ▲ 1.60 (2.47%)
FCCL 17.59 Increased By ▲ 0.73 (4.33%)
FFBL 27.70 Increased By ▲ 2.95 (11.92%)
FFL 9.27 Increased By ▲ 0.21 (2.32%)
GGL 10.06 Increased By ▲ 0.10 (1%)
HBL 105.70 Increased By ▲ 1.49 (1.43%)
HUBC 122.30 Increased By ▲ 4.78 (4.07%)
HUMNL 6.60 Increased By ▲ 0.06 (0.92%)
KEL 4.50 Decreased By ▼ -0.05 (-1.1%)
KOSM 4.48 Decreased By ▼ -0.09 (-1.97%)
MLCF 36.20 Increased By ▲ 0.79 (2.23%)
OGDC 122.92 Increased By ▲ 0.53 (0.43%)
PAEL 23.00 Increased By ▲ 1.09 (4.97%)
PIAA 29.34 Increased By ▲ 2.05 (7.51%)
PIBTL 5.80 Decreased By ▼ -0.14 (-2.36%)
PPL 107.50 Increased By ▲ 0.13 (0.12%)
PRL 27.25 Increased By ▲ 0.74 (2.79%)
PTC 18.07 Increased By ▲ 1.97 (12.24%)
SEARL 53.00 Decreased By ▼ -0.63 (-1.17%)
SNGP 63.21 Increased By ▲ 2.01 (3.28%)
SSGC 10.80 Increased By ▲ 0.05 (0.47%)
TELE 9.20 Increased By ▲ 0.71 (8.36%)
TPLP 11.44 Increased By ▲ 0.86 (8.13%)
TRG 70.86 Increased By ▲ 0.95 (1.36%)
UNITY 23.62 Increased By ▲ 0.11 (0.47%)
WTL 1.28 No Change ▼ 0.00 (0%)
BR100 6,944 Increased By 65.8 (0.96%)
BR30 22,827 Increased By 258.6 (1.15%)
KSE100 67,142 Increased By 594.3 (0.89%)
KSE30 22,090 Increased By 175.1 (0.8%)

ISLAMABAD: The government is planning to introduce a new procedure to provide 100 percent tax credit facility to the charitable organizations under the draft Income Tax (Second Amendment) Bill 2021.

According to the draft of the Income Tax (Second Amendment) Bill 2021, a number of exemptions would be withdrawn from the Income Tax Ordinance 2001. However, senior officials said that the said draft of the Income Tax (Second Amendment) Bill 2021 does not contain changes made by the federal cabinet. This Bill is a copy which was submitted to the federal cabinet for approval.

Under the draft Income Tax (Second Amendment) Bill 2021, the FBR has introduced “Thirteen Schedule” in the Income Tax Ordinance 2001 to allow tax credit facility to 62 charitable organizations.

The draft Income Tax (Second Amendment) Bill 2021 has introduced a new procedure for issuing 100 percent tax credit to the charitable organizations.

The government may withdraw income tax exemption on any income derived by Sukuk holder in relation to Sukuk issued by “The Second Pakistan International Sukuk Company Limited” and the Third Pakistan International Sukuk Company Limited including any gain on disposal of such Sukuk.

The government will withdraw exemption on any amount paid as donation to the institution, foundations, societies, boards, trusts and funds including any Sports Board or institution recognised by the Federal Government for the purposes of promoting, controlling or regulating any sport or game; The Citizens Foundation; Fund for Promotion of Science and Technology in Pakistan; Fund for Retarded and Handicapped Children and National Trust Fund for the Disabled.

The exemption would be withdrawn on any amount donated to the Prime Minister’s Special Fund for victims of terrorism.

The exemption would not be available to any amount donated to the Chief Minister’s (Punjab) Relief Fund for Internally Displaced Persons (IDPs) of NWFP; Prime Minister’s Flood Relief Fund 2010 and Provincial Chief Ministers’ Relief Funds, for victims of flood 2010 and any income derived from donations made by non-official or private sector sources in Pakistan to the Waqf for Research on Islamic History, Art and Culture, Istanbul set up by the Research Centre for Islamic History, Art and Culture (IRCICA).

The exemption would not be available to income for any tax year commencing from the tax year 2003, derived from the Welfare Fund created under rule-26 of the Emigration Rules, 1979 (made under section 16 of the Emigration Ordinance, 1979, except the income generated by the aforesaid Fund through commercial activities.

However, income tax exemption would be available to the Islamic Naya Pakistan Certificates Company Limited (INPCCL).

The exemption may be withdraw from any profit on debt derived by Hub Power Company Limited on or after the first day of July, 1991, on its bank deposits or accounts with1 [financial institutions] directly connected with financial transactions relating to the project operations.

The clause 75 of the Second Schedule of the Income Tax ordinance 2001 may be replaced with the following: Any profit on debt and capital gains derived by any agency of foreign Government or any non-resident person approved by the Federal Government for the purpose of this clause from debt and debt instruments approved by the Federal Government.

The income tax exemption may be withdrawn from any profit on debt payable by an industrial undertaking in Pakistan on moneys borrowed by it under a loan agreement entered into with any such financial institution in a foreign country as may be approved in this behalf by the Federal Government by a general or special order; and on moneys borrowed or debts incurred by it in a foreign country in respect of the purchase outside Pakistan of capital plant and machinery in any case where the loan or debt is approved by the Federal Government, having regard to its terms generally and in particular to the terms of its payment, from so much of the tax payable in respect thereof as exceeds the tax or taxes on income paid on such interest in the foreign country from which the loan emanated or in which the debt was incurred.

The income tax exemption would be withdrawn on any profit on debt derived by any person on bonds issued by Pakistan Mortgage Refinance Company to refinance the residential housing mortgage market, for a period of five years with effect from July 1, 2018.

The proposed Bill may withdraw income tax exemption on any income of a text-book board of a Province established under any law for the time being in force, accruing or arising from the date of its establishment.

The exemption may be withdrawn on any income derived by any Board or other organization established by Government in Pakistan for the purposes of controlling, regulating or encouraging major games and sports recognised by government.

The income tax exemption may be taken away on the profits and gains accruing to a person on sale of immovable property to a REIT Scheme and any income, not being income from manufacturing or trading activity, of a modaraba registered under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 for any assessment year commencing on or after the first day of July, 1999.

The exemption may be withdrawn on profits and gains derived between July, 2000 and June 2024, by a venture capital company and venture capital fund registered under Venture Capital Companies and Funds Management Rules, 2000 and a Private Equity and Venture Capital Fund.

The proposed Bill may withdraw income tax exemption on any distribution received by a taxpayer from a collective investment scheme registered by the Securities and Exchange Commission of Pakistan under the Non-Banking Finance Companies and Notified Entities Regulations, 2007, including National Investment (Unit) Trust or REIT Scheme or a Private Equity and Venture Capital Fund out of the capital gains of the said Schemes or Trust or Fund.

The exemption may be withdrawn on dividend income derived by a company, if the recipient of the dividend, for the tax year is eligible for group relief under section 59B.

The exemption may be withdrawn on any income derived by the Libyan Arab Foreign Investment Company being dividend of the Pak-Libya Holding Company; any income derived by the Government of Kingdom of Saudi Arabia being dividend of the Saudi-Pak Industrial and Agricultural Investment Company Limited and any income derived by Kuwait Foreign Trading Contracting and Investment Company or Kuwait Investment Authority being dividend of the PakKuwait Investment Company in Pakistan from the year of incorporation of PakKuwait Investment Company.

The exemption may be withdrawn from any gain on transfer of a capital asset, being a membership right held by a member of an existing stock exchange, for acquisition of shares and trading or clearing rights acquired by such member in new corporatized stock exchange in the course of corporatization of an existing stock exchange.

The proposed Bill would withdraw income tax exemption on any gain by a person on transfer of a capital asset, being a bond issued by Pakistan Mortgage Refinance Company to refinance the residential housing mortgage market, during the period from July 1, 2018 till June 30, 2023.

The exemption may not available on any income chargeable under the head “capital gains” derived by a person from an industrial undertaking set up in an area declared by the Federal Government to be a “Zone” within the meaning of the Export Processing Zones Authority Ordinance, 1980.

The exemption would be available to profits and gains derived by a refinery from new deep conversion refinery of at least 100,000 barrels per day for which approval is given by the federal government before December 31, 2021 and exemption would be available to profits and gains derived by a refinery for the purpose of up gradation, modernization or expansion project of any refinery existing on the date of commencement of the Income Tax (Second Amendment Act 2021) for which purpose such refinery makes understanding to the federal government in writing before Dec 31, 2021.

The exemption may be withdrawn on profits and gains derived by a refinery set up between the 1st day of July, 2018 and the 30th day of June, 2023 with minimum 100,000 barrels per day production capacity for a period of twenty years beginning in the month in which the refinery is set up or commercial production is commenced, whichever is later.

The exemption may be withdrawn on profits and gains derived for a period of five years from the date of start of commercial production by the following companies from the projects mentioned against each that have been declared ‘Pioneer Industry’ by Economic Coordination Committee of the Cabinet.

The income tax exemption may be withdrawn on profits and gains derived by a taxpayer, from an industrial undertaking set up by December 31, 2016 and engaged in the manufacture of plant, machinery, equipment and items with dedicated use (no multiple uses) for generation of renewable energy from sources like solar and wind, for a period of five years beginning from July, 2015.

The exemption may be withdrawn on profits and gains of a company from a green field industrial undertaking for a period of five years incorporated on or after the first day of July, 2019 provided that the green field industrial undertaking is not formed by the splitting up or reconstitution of an undertaking already in existence or by transfer of machinery or plant from an undertaking established in Pakistan before the commencement of the new business.

The Bill may withdraw income tax exemption on any income of company registered under the Companies Ordinance 1984 and having its registered office in Pakistan, as is derived by it by way of royalty, commission or fees from a foreign enterprise in consideration for the use outside Pakistan of any patent, invention, model, design, secret process or formula or similar property right, or information concerning industrial, commercial or scientific knowledge, experience or skill made available or provided to such enterprise by the company or in the consideration of technical services rendered outside Pakistan to such enterprise by the company under an agreement in this behalf.

Under clause 132 of the Second Schedule of the Income Tax Ordinance 2001, exemption is available to the profits and gains derived by a taxpayer from an electric power generation project set up in Pakistan on or after the July 1, 1988. Under the proposed Bill, no exemption under this clause shall be available to persons, who enter into agreements or to whom letter of intent is issued by the federal or provincial government for setting up an electric power generation project in Pakistan after June 30, 2021.

The exemption may be withdrawn on profit and gains derived by Bosicor Oil Pakistan Limited for a period of seven and half years beginning from the day on which the refinery is set up or commercial production is commenced whichever is later.

The exemption may be withdrawn on profits and gains derived by a taxpayer from a coal mining project in Sindh, supplying coal exclusively to power generation projects. The exemption may be withdrawn on income from exports of computer software or IT services or IT enabled services upto the period ending on June 30, 2025.

The exemption is expected to be withdrawn from any income of a special purpose vehicle as defined in the Asset Backed Securitization Rules, 1999 made under the Companies Ordinance, 1984. The exemption may be withdrawn on profit and gains derived by LNG Terminal Operators and Terminal Owners for a period of five years beginning from the date when commercial operations are commenced.

The exemption may be withdrawn on profit and gains derived by a start–up as defined in clause (62A) of section 2 for the tax year in which the start-up is certified by the Pakistan Software Export Board and the following two tax years.

Copyright Business Recorder, 2021

Comments

Comments are closed.