WEDNESDAY JUNE 24: Companies providing services are liable to pay minimum tax: government limits scope of USAS for all taxpayers

ISLAMABAD: The government Tuesday limited scope of the Universal Self Assessment Scheme (USAS) for all categories of taxpayers including companies and only those income tax return filers would qualify for USAS, who have timely filed their returns and deposited tax liability on the basis of returns. An official said that a major change in the USAS has been made through amendment in the Finance Bill 2015 approved by the National Assembly here on Tuesday.
The USAS has been restricted to return filers only who would timely file return within the due date. Moreover, the withholding tax exemption under section 148 of the Income Tax Ordinance, 2001 would be applicable on the import of LNG by designated buyer of LNG on behalf government on Pakistan. The companies providing services are liable to pay minimum tax under section 153 (1) (b) irrespective of their quantum of profit or loss declared in their income tax returns under amended Finance Bill.
They said that under the amended Finance Bill 2015, the USAS has been made conditional to facilitate filers of income tax returns. Now, late filers of income tax returns would not qualify for the self assessment scheme. The decision would be applicable on all categories of taxpayers. Under the modified USAS, only those returns would qualify for the self-assessment where return have been timely filed. Secondly, tax liability has been duly paid on the basis of filed returns. The late filed returns cannot be treated as assessment orders under the modified USAS.
Before the introduction of the USAS, the return filing scheme was conditional in the past. The same concept has been restored and late filers have to pay the penalty to qualify for the USAS. In the past scheme, only timely filed returns qualified for the self assessment scheme. Similarly, the modified USAS would also accept only timely filed returns under the self assessment scheme where due amount of tax has been paid along with timely submission of return.
Finance Bill 2015 approved by the National Assembly here on Tuesday empowered Federal Board of Revenue (FBR) to automatically select any case of late filer for audit of its income tax under new section 214D of the Income Tax Ordinance, 2001. Through amendment in the Finance Bill 2015, the new section 214D (Automatic selection for audit) said that a person shall be automatically selected for audit of its Income tax affairs for a tax year if the return is not filed within the date. It is required to be filed as specified in section 118, or, as the case may be, not filed within the time extended by the Board under section 214A or further extended for a period not exceeding thirty days by the Commissioner under section 119 or the tax payable under sub-section (1) of section 137 has not been paid. Audit of Income tax affairs of persons automatically selected under sub-section (1) shall be conducted as per procedure given in section 177 and all the provisions of the Ordinance shall apply accordingly:
Provided that audit proceedings shall only be initiated after the expiry of ninety days from the date as mentioned in sub-section (1). (3) Subject to section 182, 205 and 214C, subsection (1) shall not apply if the person files the return within ninety days from the date as mentioned in sub-section (1) and;
(a) twenty five percent higher tax, than the tax paid during immediately preceding tax year, has been paid by a person on the basis of taxable Income and had declared taxable income in the return for immediately preceding tax year; or (b) tax at the rate of two percent of the turnover or the tax payable under Part I of the First Schedule, whichever is higher, has been paid by a person along with the return and in the immediately preceding tax year has either not filed a return or had declared income below taxable limit:
Provided that where return has been filed for the immediately preceding tax year, turnover declared for the tax year is not less than the turnover declared for the immediately preceding tax year. (4)The provisions of sub-section (1) and sections 177 and 214C shall not apply, for a tax year, to a person registered as retailer under rule (4) of the Sales Tax Special Procedure Rules, 2007 subject to the condition that name of the person registered under rule (4) of the Sales Tax Special Procedure Rules, 2007 remained on the sales tax active taxpayers' list throughout the tax year, (5) Sub-section (4) shall have effect from the date appointed by the Board through Notification in the official gazette, new section 214D added.