Pakistan Banks Association (PBA) has proposed procedural and legal amendments to the Finance Supplementary (Second Amendment) Bill 2019 in respect of Super Tax on banking industry and tax credit to banks regarding additional advances disbursed to micro, small and medium enterprises.
The PBA has also proposed change in the Finance Supplementary (Second Amendment) Bill 2019 that a banking company shall be entitled to tax credit for that tax year in respect of additional advances, disbursed to micro, small and medium enterprises at the rate of 0.25% of such additional advances, for the tax years 2020 to 2023. According to a communication of PBA to Finance Minister Asad Umer here on Saturday, the PBA appreciated Minister of State for Revenue Hammad Azhar, chairman FBR and their team for meeting to resolve the banking sector''''s issues arising out of Finance Supplementary (Second Amendment) Bill 2019 (Bill).
As agreed in the said meeting, PBA''''s representatives subsequently met with the Member Inland Revenue (Policy), FBR, on February 11, 2019 at FBR House where the proposals were further deliberated.
Accordingly, the revised proposed draft of the Amendment has been developed by the PBA which addresses the issue highlighted regarding possible Super Tax charge in accounting year 2019, along with two suggested options on the changes to the proposed sections on providing incentives for increasing credit to the priority sectors of low-cost housing, agriculture, and micro, small and medium enterprises.
The suggested drafts, covering the proposed changes shall facilitate the required revenue collection objective and also stimulate growth in the priority sectors of the economy, PBA said.
First draft: Super tax for rehabilitation of temporarily displaced persons (section 4B);
For banking company, the rate of super tax at the rate of zero percent for Tax Year 2018: 4 percent Tax Year 2019; 4 percent Tax Year 2020 and percentage of tax is 4 percent for the Tax Year 2021.
In case of person other than banking company, having income equal to or exceeding Rs 500 million, the rate of Super Tax (Percentage of income) would be 3 percent for Tax Year 2018; 2 percent Tax Year 2019; zero percent Tax Year 2020 and zero percent tax for Tax Year 2021.
Provided that in case of a banking company, super tax for tax years 2019, 2020 and 2021 shall be payable, on estimate basis, by June 30, 2018, 2019 and 2020 respectively.
Furthermore, it is once again proposed that rate of this tax is reduced for the banking sector in line with other industries, PBA proposed.
According to the text of the proposed amendment in the Income Tax ordinance 2001:
(13) in the Seventh Schedule,-
Proposed amendment for Rule 7D * option 1 (Preferred Suggestion):
(A) after rule 7C, the following new rules shall be inserted, namely:-
7D, Tax credit for additional advances to micro, small and medium enterprises.
(1), A banking company shall be entitled to tax credit for that tax year in respect of additional advances, disbursed to micro, small and medium enterprises at the rate of 0.25% of such additional advances, for the tax years 2020 to 2023.
Provided that such tax credit shall be available subject to filing of auditors'''' certificate in respect of such additional advances.
(2) for the purpose of this rule, the terms "micro, small and medium enterprises" shall have the same meaning as provided in Prudential Regulations issued by State Bank of Pakistan.
(3) Additional advances mean average advances in addition to total average amount of such advances as of close of the preceding tax year.
Same amendment is also suggested for Rule 7E, applicable for additional advances to low cost housing finance and Rule 7E applicable for additional advances as farm credit.
Comments
Comments are closed.