ISLAMABAD: The amended Finance Bill 2022 has imposed a 10 percent supertax for the Tax Year 2022 on persons including companies engaged in the business of airlines, automobiles, beverages, cement, chemicals, cigarettes/tobacco, fertilizer, iron/steel, LNG terminal, oil marketing, oil refining, petroleum and gas exploration and production, pharmaceuticals, sugar and textile where income exceeds Rs300 million.
According to the amendments introduced in the Finance Bill 2022 on Wednesday, in case of banking companies for the Tax Year 2023, the rate of tax shall be 10 percent where the income exceeds Rs300 million. Under the amended bill, supertax has been imposed on high-earning persons for the Tax Year 2022 and onwards.
Rate of tax would be zero percent where income does not exceed Rs150 million; tax rate would be one percent of the income where income exceeds Rs150 million, but does not exceed Rs200 million; tax rate would be two percent where income exceeds Rs200million but does not exceed Rs250 million; three percent tax rate where income exceeds Rs250 million but does not exceed Rs300 million and four percent tax rate would be applicable where income exceeds Rs300 million.
The government has reduced sales tax from 17 percent to one percent on the import of active pharmaceutical ingredients and substances registered as drugs without the facility of input tax adjustment. However, zero-rating of sales tax on local sales within the supply chain has been replaced with one percent sales tax.
From July 1, 2022, the Federal Board of Revenue (FBR) will charge one percent capital value tax (CVT) on motor vehicles held in Pakistan where engine capacity exceeds 1300cc and electric vehicles having battery power capacity exceeding 50kwh.
The special provisions relating to persons not appearing in active taxpayers’ list (section 100BA) of the Income Tax Ordinance 2001 will not be applicable to non-resident individual holding Pakistan Origin Card (POC) or National ID Card for Overseas Pakistanis (NICOP) in respect of transactions on which advance Tax on sale/purchase or transfer of immovable Property is collectable under section 236C and 2236K of the Income Tax Ordinance 2001.
The amendments in the Finance Bill, 2022, revealed that the monthly tax has been increased from Rs50,000 to up to Rs200,000 on retailers and service providers excluding Tier-I retailers.
The remaining tax slabs for shopkeepers based on monthly electricity bills remained the same as fixed in Finance Bill 2022. Giving additional privileges to the parliamentarians, the Finance Committee of the Senate or National Assembly may grant to the chairman or the speaker including a person who has held such office after election thereto, such additional privileges as it may deem fit from time to time.
The income tax exemption has now been granted on the profits and gains derived between July 1, 2022, and June 30, 2025, by a venture capital company and venture capital fund registered with the Securities and Exchange Commission of Pakistan (SECP).
In case of the online marketplace facilitating the sale of third-party goods, the liability to withhold tax on taxable supplies of such party at the sales tax rates specified shall be on the operator of such marketplace.
The amended Finance Bill 2022 has also revised the procedure of imposing tax on deemed income basis for the tax year 2022 and onwards. The FBR replaced the words “immovable property’’ with “capital assets”. A resident person shall be treated to have derived, as income chargeable to tax, an amount equal to five percent of the fair market value of capital assets situated in Pakistan held on the last day of the tax year with some exclusions.
Under the revised tax slabs for the salaried class:
zero per cent tax would be applicable where taxable income does not exceed Rs600,000;
tax would be 2.5 per cent of the amount exceeding Rs600,000 where taxable income exceeds Rs600,000 but does not exceed Rs1,200,000;
rate of tax would be Rs15,000 + 12.5 per cent of the amount exceeding Rs1,200,000 where taxable income exceeds Rs1,200,000 but does not exceed Rs2,400,000;
tax rate would be 165,000 + 20 per cent of the amount exceeding Rs2,400,000 where taxable income exceeds Rs2,400,000 but does not exceed Rs3,600,000;
tax rate would be Rs405,000+25 per cent of the amount exceeding Rs3,600,000 where taxable income exceeds Rs3,600,000 but does not exceed Rs6,000,000;
tax rate would be Rs1,005,000+ 32.5 per cent of the amount exceeding Rs6,000,000 where taxable income exceeds Rs6,000,000 but does not exceed Rs12,000,000 and
tax rate would be Rs2,955,000 + 35 per cent of the amount exceeding Rs12,000,000 where taxable income exceeds Rs12,000,000.
The FBR has also revised penalties for unauthorized access to the data or tampering the system of the Pakistan Single Window (PSW).
Zero per cent import duty would be applicable on the import of smartphones in CKD/SKD conditions if imported by local assemblers/manufacturers dully certified by the Pakistan Telecommunication Authority (PTA) subject to the quota determination by the Input Output Coefficient organization (IOCO).
Through amendments in the Finance Bill 2022, the reduced rates of tax on capital gains arising on disposal of securities shall apply where the securities are acquired on or after July 1, 2022. The rate of 12.5 per cent tax shall be charged on capital gains arising on disposal where the securities are acquired on or before June 30, 2022, irrespective of holding period of such securities.
A mutual fund or a collective investment scheme or a REIT scheme shall deduct capital gains tax at the specified rates on redemption of securities: The individuals and association of persons are subjected to 10 per cent CGT for stock funds and other funds. In case of company, 10 per cent CGT for stock funds and 25 per cent for other funds.
No capital gains tax shall be deducted if the holding period of a security is more than six years, amended bill said.
Through the amended bill 2022, the FBR has clarified that the remittances through money service bureaus, exchange companies or money transfer operators shall be deemed to constitute foreign exchange remitted from outside Pakistan through normal banking channels.
Through amended Bill 2022, the FBR has specified that the retailers who do not integrate with the FBR’s computerized system will be heavily penalized. In case of default for the first time, there will be a fine of Rs 500,000.
For the second time, after 15 days, a penalty of Rs. 1 million will be levied on default. Fifteen days after the second default, a fine of Rs. 2 million will have to be paid for the violation. The fine will reach Rs. 3 million 15 days after the third default, and non-compliant retailer businesses can also be sealed.
Copyright Business Recorder, 2022