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ISLAMABAD: The taxpayers/resident individuals who failed to deposit Capital Value Tax (CVT) on their foreign assets by December 15, 2022 would be liable to pay the default surcharge at the rate of 12 percent per annum.

The one percent CVT is applicable on the value of the foreign assets of a resident individual where the value of such assets on the last day of the tax year in the aggregate exceeds Rs100 million.

Sources told Business Recorder here on Monday that the due date for submission of electronic declaration and payment of the CVT on foreign assets was the deadline for filing of income tax returns. The last date for filing of returns was December 15, 2022 which has been expired. Therefore, the last date for filing of electronic declaration and payment of the CVT on foreign assets was December 15, 2022. Now, the owners of foreign assets would be subjected to the specified default surcharge of 12 percent per annum under the Finance Act 2022.

To a query, sources were of the view that if the concerned Commissioner Inland Revenue has granted an extension in the filing of income tax returns beyond December 15, the same extension would not be applicable on payment of the CVT on foreign assets, sources opined.

Assets declared under two statutes not subject to CVT: expert

Under the Finance Act 2022, where a person fails to pay tax, or to collect tax or fails to pay to the credit of the Federal Government after having collected the tax the person shall be personally liable to pay the amount of tax and the default surcharge at a rate equal to twelve per cent per annum on the tax unpaid computed for the period commencing on the date on which the tax was due and ending on the date on which it was paid, it added.

Under the Capital Value Tax Rules, 2022, the value of foreign assets shall be converted into rupees for the calculation of the Capital Value Tax (CVT) on foreign assets of resident individuals.

Under the rules, every person who is liable to pay capital value tax on assets mentioned in clauses (b) and (c) of sub-section (2) of section 8 of the Finance Act, 2022 shall file the electronic declaration in Iris as set out in the Form-A attached to these rules.

The value of foreign assets shall be converted in rupees as per ready transactions exchange rates for mark to market revaluation notified by the State Bank of Pakistan (SBP) applicable for the last day of the tax year, the rules said. The person required to pay tax in respect of foreign assets or assets specified by the Federal Government shall pay tax by way of credit to the federal government through a computerized payment receipt (CPR) at time the income tax return for the tax year is due for payment of tax on foreign movable assets, as set out in the Form “C-l” and for payment of tax on foreign immovable assets, as set out in the Form ‘C-2’ appended to these rules.

All sums being capital value tax collected under section 8 of the Finance Act, 2022, shall be paid by way of credit to the federal government by remittance into the government treasury or in the authorised branches of the SBP or the National Bank of Pakistan. The rules revealed that the Income Tax Rules, 2002, shall apply to the recovery of arrears of the capital value tax as they apply to the recovery of the arrears of income tax, it added.

Copyright Business Recorder, 2022

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Bilwani Dec 20, 2022 12:51pm
Why not charging Sharifs and Molana along with thousands of feudal lord's
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