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LAHORE: A yarn trader has succeeded in availing the facility of concessional rate despite a hot pursuit of the tax department to drag him to the ambit of minimum tax liability.

The taxpayer had claimed income from both streams covered under normal and final tax regimes. Therefore, the departmental allegations that withholding tax deductions were claimed as corresponding adjustment of minimum tax liability were declared as misconceived by the relevant appellate forums.

According to details, the taxpayer had claimed to pay the prescribed due minimum tax while computing the same liability on concessional rates against his annual turnover.

The department, however, disputed the application of the concessional rate related to withholding tax deductions, agitating that the taxpayer was not allowed to do so under the relevant provisions of the Income Tax Ordinance as well as the SRO.

Tax authorities were further agitating that the taxpayer had admittedly not fulfilled the criteria of filling withholding statements and paid tax @ 1% on monthly basis. Also, the department was objecting to blending of the legal provision regarding minimum tax payable with the exemption available to the traders of yarn in respect of goods sold in Pakistan.

According to the tax officials, the adjudicating forum had equated the provision of minimum tax with the minimum tax payable under another provision of the law without going into the meaning, interpretation and scope of the two.

They were of the view that concessional rates could neither substitute the rate applicable to minimum tax liability nor any deduction made for withholding tax was available for claiming adjustment of minimum tax liability, which requires independent determination.

The law had intended the concept of exemptions/concessional rates under different provisions of the law, having no relevance to the concept of minimum tax payable by a taxpayer.

Also, the taxpayer had failed to fulfill the requirement of necessary registration to avail the facility of concessional rates.

However, the department failed to prove its stance before the appellate forums, consequently losing the revenue to the national exchequer.

Copyright Business Recorder, 2024

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