Finance bill further amended

ISLAMABAD: The amended Finance Bill, 2022, has incorporated further new amendments late Tuesday night including a further increase in the incidence of Federal Excise Duty (FED) on cigarettes, a possible reduction in the sales tax rate from 17 to one percent on the import of pharmaceutical raw materials, tax exemption to cinemas/production houses and change in the definition of “deemed rental income” by replacing words “immovable properties” with “capital assets” and other legal and procedural changes in the Finance Bill, 2022.

The budget makers at the FBR continued to make amendments and remove anomalies in the Finance Bill, 2022, in consultation with the finance minister and recommendations of the anomaly committees. Throughout Tuesday, further changes in the Finance Bill 2022 were introduced at the FBR. Late night the Finance Ministry submitted the amendments to the Finance Bill, 2022, to the National Assembly Secretariat to be taken up on Wednesday (June 29).

The amended bill 2022 may reduce 17 per cent sales tax to only one per cent on the import of active pharmaceutical ingredients (APIs) with the continuation of the zero-rating scheme on local sales.

The FBR has also reduced the capital value tax (CVT) on vehicles from two per cent to one per cent under the amended Finance Bill 2022.

A provision of 50 per cent reduction in capital gains tax for those who had been allotted plots while in services was initially removed from the budget but now it had been restored. Families of martyrs and war-wounded individuals would be exempted from tax on income from plots.

One of the proposals under consideration is to amend the definition of the “Tax on deemed income” under section 7E of the Income Tax Ordinance 2001. The attempt has been made to avoid litigation in courts.

Under the redrafted definition, a tax shall be imposed at the rates specified in Division VIIIC of Part-I of the First Schedule on the income specified in this section, for tax year 2022 and onwards.

NA: Amendments to finance bill may be presented today

A resident person shall be treated to have derived as income chargeable to tax under this section an amount equal to five per cent of the fair market value of capital assets situated in Pakistan excluding the following-

(a) one capital asset under self-occupation owned by the resident person;

(b) self-owned business premises from where the business is carried out by the persons appearing on the active taxpayers’ list at any time during the year;

(c) self-owned agriculture land where agriculture activity is carried out by person excluding farmhouse and land annexed thereto;

(d) any constructed property in respect of which the completion certificate has been obtained from the concerned authority;

(e) any under-construction property in respect of which construction plan, development plan or a layout plan has been approved by the concerned authority;

(f) where the fair market value of the capital assets in aggregate excluding the capital assets mentioned in clauses (a), (b) and (c) does not exceed rupees twenty-five million;

(g) capital assets owned by a provincial government, a local government, a local authority;

(h) land development and construction projects registered with Directorate General of designated non-financial businesses and professions; or

(i) any property from which income is chargeable to tax under section 15of the Ordinance and tax leviable is paid thereon.

(3) Federal Government may include or exclude any person or property for the purpose of this section.

(4) In this section “capital asset” means property of any kind held by a person, whether or not connected with a business, but does not include —

(a) any stock-in-trade, consumable stores or raw materials held for the purpose of business;

(b) any shares, stocks or securities;

(c) any property with respect to which the person is entitled to a depreciation deduction under section 22 or amortisation deduction under section 24; or

(d) any movable asset not mentioned in clauses (a), (b) or (c) above;

Resident Person: in section 82,–(b) in clause (c), for the full stop at the end, a semicolon shall be substituted and thereafter the following new clause shall be added, namely:–“(d) being a citizen of Pakistan who during the tax year is present in any other country for less than 183 days or who is not a tax resident of any other country,” one of the drafts of the proposed changes in the Finance Bill 2022 added.

Copyright Business Recorder, 2022