The Federal Board of Revenue has clarified that all taxpayers irrespective of their income closing year will pay 15 percent surcharge for three and a half months on pro-rata basis. In this connection, the FBR has issued an Income Tax Circular 11 of 2011 here on Monday.
When contacted, a tax expert said that all taxpayers irrespective of their income closing period will pay 15 percent surcharge for three and a half months period on pro-rata basis. This means that all those banking companies, insurance companies and multinationals which close their accounts on December 31, 2010 will also be paying surcharge at the rate of 15 percent of their income on pro-rata basis ie three and a half months, he added. The FBR has announced that the 15 percent surcharge under section 4A of the Income Tax Ordinance 2011 is payable by all taxpayers of their tax liability for the Tax Year 2011, irrespective of their tax year ends on 31st December 2010 or 30th June 2011 or any other date.
In a circular issued here on Monday, the FBR has made certain clarifications to the 15 percent surcharge under section 4A of the ordinance in view to address the queries being received by the Board suggesting multiple interpretations of this section and to streamline the implementation of this time bound provision.
The circular further clarifies that the Tax Liability for the entire Tax Year 2011 may not be subjected to the imposition of surcharge and the same be levied on the proportionate liability for a period of three and a half month. The surcharge is to be computed @ 15 percent of the income tax payable for three months and a half on pro-rata basis and the tax liability inclusive of 15 percent surcharge so calculated is to be set off against the taxes withheld or collected in the tax year, the circular added.