Amended Finance Bill-2012: only six tax-related recommendations of Senate incorporated

Despite announcement of former Finance Minister Dr Abdul Hafeez Sheikh during his winding up speech on June 13 to incorporate the Senate recommendations in the Finance Bill (2012-13), only six tax-related recommendations of Senate have been incorporated in the amended Finance Bill (2012-13). Sources told Business Recorder on Friday that the Senate has made 34 tax-related recommendations to the National Assembly out of total 145 approved recommendations.
The 34 tax-related recommendations of Senate covered changes in tax rates and rules and regulations to improve the existing tax system. Out of these 34 tax-related, Senate's recommendations, only six have been made part of the amended Finance Bill (2012-13).
Dr Abdul Hafeez Sheikh, in his speech to wind up debate on budget 2012-13 in National Assembly on June 13, announced that the government would consider and make part some of the Senate recommendations of Finance Bill 2012. However, very few recommendations have been made part of the Finance Bill including rectification of an error to reduce the rate of turnover tax from 1 to 0.5 percent.
Following are the six recommendations of the Senate Standing Committee on Finance which were made part of the amended Finance Bill (2012-213):
1. The Senate recommends to the National Assembly that in the Finance Bill 2012 in, clause 13, after sub-clause, (17) the following new sub-clause shall be inserted, namely:
"(17A) In section 113, in sub-section (1), in clause (e) for the word "one" the words and hyphen "one-half' shall be substituted."
2. The Senate recommends to the National Assembly that in the Finance Bill 2012 in clause 13 after sub-clause (53), a new sub-clause (adding a new section 236C in the Income Tax Ordinance) shall be added, namely:
"(53A) 236C. Advance Tax on sale or transfer of immovable Property. (1) Any person responsible for registering or attesting transfer of any immovable property shall at the time of registering or attesting the transfer shall collect from the seller or transferor advance tax at the rate specified in Division X of Part IV of the First Schedule to the Income Tax Ordinance, 2001;
(2) The advance tax collected under sub-section shall be adjustable; and
The advance tax under this section shall not be collected in the case of Federal Government, Provincial Government or a Local Government."
3. The Senate recommends to the National Assembly that in the Finance Bill 2012 in clause 13 in sub-clause (54), in paragraph (iv) after sub-paragraph (b), a new subparagraph shall be added, namely:
"(c) after Division IX, a new Division shall be added, namely:
"DIVISION X Advance tax on sale or transfer of immoveable property the rate of tax to be collected under section 236C shall be 0.5% of the gross amount of the sale proceeds recorded."
4. The Senate recommends to the National Assembly that in the Finance Bill, 2012, in clause 13, in sub-clause (32), after para (b), the following new para (adding a new sub-section in section 152 of the Income Tax Ordinance 2001) shall be added, namely-,
"(ba) (2A) Every prescribed person making a payment in full or part including a payment by way of advance to a permanent establishment in Pakistan of a non-resident person-
(a) for the sale of goods;
(b) for the rendering of or providing of services; and;
(c) on the execution of a contract, other than a contract for the sale of goods or the rendering of or providing services, shall, at the time of making the payment, deduct tax from the gross amount payable (including sales tax, if any) at the rate specified in Division II of Part III of the First Schedule."
5. The Senate recommends to the National Assembly that the rate of tax collected by withholding agents against the sale made to traders and distributors may be reduced from one percent to 0.5 %.
6. The Senate recommends to the National Assembly that the explanation in the Finance Bill 2012-13 may include exemption from Excise Duty: Entry 8 of the table II, of the third schedule, giving retrospective effect to the Amendment from 1st July, 2007, Or an SRO may be issued to the effect. So that LTU in Karachi can withdraw notices issued to the Airlines from the period July, 2008 to 2011.