ISLAMABAD: The government has decided to withdraw reduced rates of income tax applicable on nine different sectors/industries and determine actual tax liability for four sectors under the Income Tax (Second Amendment) Bill 2021 submitted to the National Assembly Secretariat Friday.
Sources told Business Recorder the Federal Board of Revenue (FBR) has submitted the draft of the Income Tax (Second Amendment) Bill 2021 to the National Assembly.
Income Tax (Second Amendment) Bill 2021 has proposed amendments to the Part-II (reduction in tax rates) and Part-III (reduction in tax liability) of the Second Schedule of the Income Tax Ordinance 2001.
Moreover, the government may take away reduction in tax liability for foreign film-makers and resident companies deriving income from film-making. Presently, the amount of tax payable by foreign film-makers from making films in Pakistan shall be reduced by 50 percent on income from film-making in Pakistan.
The amount of tax payable by resident companies deriving income from film-making shall be reduced by 70 percent on income from film-making.
Income Tax (Second Amendment) Bill 2021 has proposed to withdraw clause 28B. Under the said clause, the rate of tax shall be 0.15% under section 231A on cash withdrawal by an exchange company, duly licensed and authorized by the State Bank of Pakistan, exclusively dedicated for its authorized business related transactions, subject to the condition that a certificate issued by the concerned Commissioner Inland Revenue for a financial year mentioning details and particulars of its Bank Account being used entirely for business transactions is provided.
The government may abolish reduce rate under clause 2 of Part-II (reduction in tax rates) of the Second Schedule of the Income Tax Ordinance 2001. Under clause 2, any income of persons whose profits or gains from business are computed under the Fifth Schedule to this Ordinance as is derived from letting out to other similar persons any pipeline for the purpose of carriage of petroleum shall be charged to tax at the same rate as is applicable to such persons in accordance with the provisions of the said Schedule.
The government may abolish reduce rate under clause 3 of Part-II (reduction in tax rates) of the Second Schedule of the Ordinance 2001. Under clause 3, the tax in respect of income from services rendered outside Pakistan and construction contracts executed outside Pakistan shall be charged at the rates as specified, provided that receipts from services and income from contracts are brought into Pakistan in foreign exchange through normal banking channel. The rates in respect of income from services rendered outside Pakistan shall be 50% of the rates as specified in clause (2) of Division III of Part III of the First Schedule and the rates in respect of contracts executed outside Pakistan shall be 50% of the rates as specified in clause (3) of Division III of Part III of the First Schedule.
Income Tax (Second Amendment) Bill 2021 may abolish reduce rate of tax on the income of Pakistan Cricket Board derived from sources outside Pakistan including media rights, gate money, sponsorship fee, in-stadium rights, out-stadium rights, payments made by International Cricket Council, Asian Cricket Council or any other Cricket Board which shall be taxed at a rate of four per cent of the gross receipts from such sources.
Under clause 5B, the tax in respect of capital gains derived by a person from the sale of shares or assets by a private limited company to Private Equity and Venture Capital Fund shall be charged at the rate of ten per cent of such gains. This entry is proposed to be deleted through the Income Tax (Second Amendment) Bill 2021.
The FBR has proposed to abolish reduce rate of tax in the case of a Modaraba where the rate of income tax shall be 25% of total income excluding such part of total income to which Division III of Part I of the First Schedule or section153 or section 154 applies.
The government may abolish reduce rate under clause 18B of Part-II (reduction in tax rates) of the Second Schedule of the Ordinance 2001. Under clause 18B, the rate of tax as specified in Division II of Part I of the First Schedule shall be reduced by 2% in case of a company whose shares are traded on stock exchange if it fulfils prescribed Shariah compliant criteria approved by State Bank of Pakistan, Securities and Exchange Commission of Pakistan and the Board; derives income from manufacturing activities only; declared taxable income for the last three consecutive tax years; and has issued dividend for the last five consecutive tax years.
The government may abolish reduced rate of tax under section 148 on import of hybrid cars, according to the draft bill.
Copyright Business Recorder, 2021
Comments
Comments are closed.