Tax Laws (Third) Amend Ord being promulgated: Anomalies in Finance Act 2021 to be rectified

ISLAMABAD: The government has decided to promulgate Tax Laws (Third) Amendment Ordinance, 2021, to introduce some procedural and legal changes in sales tax and income tax laws and rectify certain mistakes in the Finance Act 2021.

Sources told Business Recorder that the Tax Laws (Third) Amendment Ordinance 2021 will amend certain clauses of the Finance Act 2021.

The Ordinance may amend the Sales Tax Act 1990, the Income Tax Ordinance 2001, and the Customs Act, 1969.

According to sources, the government will withdraw 17 percent sales tax on fat-filled milk sold in retail packing under brand name. After promulgation of the Ordinance, fat-filled milk sold in retail packing under brand name would be subjected to sales tax zero-rating.

The Federal Board of Revenue (FBR) will also propose to change certain Pakistan Customs Tariff headings to rectify the errors in the Finance Act 2021.

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Certain procedural changes have also been proposed in the Income Tax Ordinance 2001 and Sales Tax Act 1990.

The Tax Laws (Third) Amendment Ordinance 2021 would be promulgated after vetting from the Law and Justice Division, the sources added.

This would be the third taxes-related Ordinance during 2021.

The Tax Laws (Amendment) Ordinance, 2021 dated February 12, 2021 was related to the measures to facilitate non-resident Pakistanis to open non-resident Pakistani Rupee Value Accounts (NRVAs); imposed withholding tax (Rs50,000-Rs 200,000) on persons who sell locally-manufactured vehicles within 90 days of delivery of such vehicles and offered tax exemptions for the electric vehicles.

The Tax Laws (Second Amendment) Ordinance, 2021 was issued on March 24, 2021, which made a number of major amendments in the Income Tax Ordinance, 2001 including tax credits to certain categories of taxpayers.

Copyright Business Recorder, 2021