Education testing services within ICT: Amended Finance Bill withdraws 16 percent sales tax

The amended Finance Bill 2016 has withdrawn 16 percent sales tax within the Islamabad Capital Territory (ICT) on education testing services provided or rendered under a bilateral or multilateral agreement signed by the government and granted duty exemption on import or acquisition on wet or dry lease by national flag carrier from March 19, 2015.
The amendments to the Finance Bill 2016 approved by the National Assembly on Wednesday revealed that the 16 percent sales tax would be charged on valuation services; competency and eligibility testing services within the territory of ICT. For accurate valuation of immovable property, the amended bill revealed that the fair market value of immovable property shall be determined on the basis of valuation made by a panel of approved valuers of the State Bank of Pakistan. The amended Bill has bound non-filers of income tax returns, who are registered with any provincial sales tax authority, to pay 3 percent of his turnover as advance income tax at the time of filing of sales tax return with the provinces.
Through amended bill, in case a person who has not filed return for any of the last five completed tax years, notice under sub-section (4) may be issued in respect of one or more of the last ten completed tax years. Tax expert explained that a proviso has been added whereby a person who has not filed tax return for the last five tax years, the commissioner may issue him notice to file a return for the last 10 tax years. This means that the limit provided in the Income Tax Ordinance 2001 has been extended to 10 years for all those persons who have not filed their tax returns for the last five tax years.
Through the amended bill, a provision has been added whereby it is proposed that the recovery proceedings through attachment of bank accounts may not be initiated till the first appeal has been decided by the appellate commissioner, sources explained. In section 140, in sub-section (1), for the full stop at the end, a colon shall be substituted, and thereafter the following proviso shall be added, namely:-Provided that the Commissioner shall not issue notice under this sub-section for recovery of any tax due from a taxpayer if the said taxpayer has filed an appeal under section 127 in respect of the order under which the tax sought to be recovered has become payable and the appeal has not been decided by the Commissioner (Appeals), subject to the condition that twenty-five percent of the said amount of tax due has been paid by the taxpayer..
The tax expert further said that a new section 147A was being proposed to be inserted in the Income Tax Ordinance whereby a non-filer but registered with any provincial sales tax authority, shall pay 3 percent of his turnover as advance income tax at the time of filing of sales tax return with the provinces. The advance tax so paid by the non-filer shall be adjusted against income tax return filed for the tax year. If the said person does not pay advance tax, the same shall be recovered by the Commissioner IR as outstanding tax liability against the taxpayer.
The amended bill said that after section 147, the following new section shall be inserted, namely:- 147-A. Advance tax from provincial sales tax registered person.- (1) Every provincial sales tax registered person shall be liable to pay adjustable advance tax at the rate of three per cent of the turnover declared before the provincial revenue authority. The advance tax shall be paid monthly at the time when sales tax return is to be filed with the provincial revenue authority. Advance tax paid under this section may be taken into account while working out advance tax payable under section 147. The provisions of this Ordinance shall apply to any advance tax due under this section as if the amount due were tax due under an assessment order. A taxpayer who has paid advance tax under this section for a tax year shall be allowed a tax credit for that tax in computing the tax due by the taxpayer on the taxable income of the taxpayer for that year. A tax credit allowed for advance tax paid under this section shall be applied in accordance with sub-section (3) of section 4. A tax credit or part of a tax credit allowed under this section for a tax year that is not able to be credited under sub-section (3) of section 4 for the year shall be refunded to the taxpayer in accordance with section 170. This section shall not apply to a person who was filer on the June 30 of the previous tax year, amended bill added.
Through amended Bill, the FBR is bound to accept or reject findings of the ADRC within 90 days period. It said that provided that if such order is not passed within the aforesaid period, recommendations of the committee shall be treated to be an order passed by the Board under this sub-section.
Under the amended Bill, in case of import or acquisition on wet or dry lease by Pakistan International Airlines Corporation, the exemption shall be available with effect from 19th March, 2015. Official said that the amendment is not retrospective and the airline has to pay past dues of over Rs 1 billion on import of past aircrafts in line with the EEC decision.
As per Bill, 5 percent sales tax would be applicable on white crystalline sugar; 5 percent sales tax on urea, whether or not in aqueous solution and 5 percent sales tax on set top boxes for gaining access to internet, TV broadcast transmitter, Reception apparatus for receiving satellite signals of a kind used with TV (satellite dish receivers) and other set top boxes. This is subject to type approval by PEMRA. This concession shall be available upto 30th June, 2017. The reduced rate of sales tax would be applicable on the import of milk chillers, tubular heat exchanger (for pasteurisation), milk processing plant, milk spray drying plant, Milk UHT plant, milk filters and any other machinery and equipment for manufacturing of dairy products. This is subject to the condition that if imported by registered manufacturer who is member of Pakistan Dairy Association.
Under another amendment, the gain arising on the disposal of immovable property by a person in a tax year to a Rental REIT Scheme shall be taxed at the rate of five percent upto June 30, 2019, irrespective of the holding period.
In case of non-residents executing contacts in Pakistan, in case a person is a filer, 7 percent of the gross amount payable and 12 percent if the person is a non-filer. The amended Bill specified that the provisions of section 148 shall not apply to import of ships and other floating crafts including tugs, survey vessels and other specialised crafts purchased or bare-boat chartered by a Pakistani entity and flying Pakistani flag. Provided that exemption under this clause shall be available up to the year 2020, subject to the condition that the ships and crafts are used for the purpose for which they were procured, and in case such ships and crafts are used for demolition purposes, tax collectible under section 148, applicable to ships and crafts purchased for demolition purposes, shall be chargeable.
The rate of tax as specified in Division II of Part 1 of the First Schedule shall be reduced by 2 percent in case of a company whose shares are traded on stock exchange if it fulfils prescribed shari'ah compliant criteria approved by State Bank of Pakistan, Securities and Exchange Commission of Pakistan and the Board; derives income from manufacturing activities only; has declared taxable income for the last three consecutive tax years and has issued dividend for the last five consecutive tax years.
Zero percent duty would be applicable on the import of solar Power Systems ie Off-grid/On-grid solar power system(with or without provision for USB/charging port); Invertors (off-grid/on grid/hybrid) with provision for direct connection/ input from renewable energy source and with Maximum Power Point Tracking (MPPT) and Charge controller/ Current controller.