ISLAMABAD: The cottage industry and small and medium enterprises were unable to avail the major facility of simplified income tax return form for manufacturers having turnover of less than Rs50 million for the tax year 2020. Tax experts told Business Recorder here on Thursday that the draft income tax return form and wealth statement for manufacturers (individuals and association of persons) having annual turnover of less than Rs50 million was issued on November 26, 2020.
The final return form was notified under SRO 1316(I)/2020 on December 9, 2020 i.e. after the deadline for filing of return for tax year 2020 i.e. December 8, 2020. As it was a draft law and manufacturers legally could not avail the facility on December 8, 2020 (the deadline for filing of returns), therefore, the manufacturers (individuals and association of persons) having annual turnover of less than Rs50 million were unable to timely file simple form because it was still a draft on the last date for filing of return.
The FBR has issued the final form for manufacturers after expiry of the deadline for filing of return. Thus, the cottage industry and small and medium enterprises cannot file the simplified form as it was not finalised till December 9.
The question arises when the intention of the FBR was not to extend the date, then why the form was not issued before the deadline of filing of return form i.e. December 8. According to the experts, as a result of these events, the cottage industry was left with no option but to file the original/complicated return form to timely file return within the deadline of December 8.
The FBR has divided the form into two parts, i.e. Form-A (new income tax return form) and Form-B (wealth statement). The income tax return form has sought information of gross sales excluding ST/FE, cost of sales, opening stock, purchases (domestic/imports), closing stock, other direct expenses, gross profit, and profit and loss expenses.
Total income covers information of inadmissible tax deductions, admissible tax deductions, deductible Allowance Net Profit/taxable income, tax chargeable, tax credit, tax payable, whichever is higher, electricity, telephone, and net tax payable/refundable.
Under the new wealth statement, the FBR has asked the small manufacturers to provide details of immovable assets, manufacturing unit, moveable assets, business capital, investment/advance, cash in hand/bank, investment /advance, loan/ liabilities, and net assets.
The reconciliation of net assets would also be done with the help of information of net assets current year, net assets previous year, increase/decrease in assets, income as per return, other inflows (gift, loan, remittance etc), outflows (gift, loan etc), and personal expenses.
Copyright Business Recorder, 2020