The Federal Board of Revenue on Tuesday issued a simplified income tax return form for companies (Tax Year 2012) by deleting some items from the main page and creating separate annexure like Annex- E1, Annex- F1, Annex- G1, Annex- H1, Annex- J1, Annex- K1 and Annex- L1.
The FBR has circulated the draft of the income tax return form (Tax Year 2012) for the stakeholders seeking their comments. The FBR will notify the corporate return after incorporating changes proposed by the stakeholders after 15 days. Sources said the major advantage of simplifying main page of return will be to the small and medium companies with limited transactions/scope of business. They will comfortably complete the income tax return because in the electronic filing system of the FBR, the respective annexures are filled by the companies only when they conduct transaction of that particular nature. Now, the companies will only fill the relevant annexures saving their time by submitting a simple return form.
The FBR has introduced a couple of new annexures in the company's return such as Annex- E1, Annex- F1, Annex- G1, Annex- H1, Annex- J1, Annex- K1 and Annex- L1. The new annexures in the proposed return of income tax for companies are Annex F-1 (foreign income); Annex G-1 (income/loss from other sources; Annex J-1 (transactions with non residents to be field by taxpayers whose transactions, in aggregate, with non-residents are more than Rs 50 million during the tax year); Annex K-1 (bifurcation of Income/(Loss) from business attributable to sales/receipts etc subject to Final Taxation) and Annex L-1 (admissible/inadmissible deduction and adjustments).
The admissible/inadmissible deduction and adjustments were earlier part of the main page of the income tax return. Through a separate annex, further details have been sought from the companies. Sources said that those companies who will conduct any transactions with associates/non-residents for an aggregate amount of Rs 50 million and above and will complete annexure J-1 by providing the particulars of each non-resident company showing the value of transaction taking place. The separate Annex J-1 would effectively tackle the issue of transfer pricing by seeking necessary information from companies, sources added.
Similarly, Annex G-1 (income/loss from other sources) was part of the main return and now a separate annex been introduced to obtain break-up of various heads, sources added. A tax expert opined that a new Annex-J1 has been introduced for the first time in the history of corporate taxpayers' income tax return. Under the new Annex-J1, transactions with non-residents has been asked to be reported in income tax return with the exclusion it is to be filled by corporate taxpayers whose transactions, in aggregate, with non-residents are more than Rs 50,000,000/- during the tax year.
This will help the Inland Revenue Service (IRS) officers to examine the revenue from non-residents disclosed in the tax return vis-à-vis their claim of expenditures against such revenue. This move will also be quite supportive for IRS officer while analysing and comparing the declared results of different corporate sectors taxpayers dealing with non residents under desk-audit.
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