Major amendments made in finance bill

The government has introduced some major amendments in the Finance Bill 2019 including changes in Assets Declaration Act 2019, applicability of condition of CNIC from un-registered buyers from August 1, 2019, enactment of the Public Finance Management Act 2019, and change in procedure for penalising illegal transfer of funds from Pakistan through mis- declarations.
According to some of the key amendments made in the Finance Bill 2019, the declaration under the Assets Declaration Act 2019, made shall be valid if cash held by the declarant is deposited into a bank account in the manner specified at the time of declaration and is retained in such bank account up to the June 30. Provided that this clause shall not apply to an individual who cannot deposit cash in the bank account on June 30, 2019 on account of investment in immovable property or business, subject to the payment of tax at the rate which is 2 percent more than the normal rate prescribed in the schedule. Provided further that such person shall provide particulars of immovable properties or investment in business as prescribed in the declaration form.
In the Assets Declaration Act 2019, an amendment in the Finance Bill 2019 has revised the definition of the misrepresentation.
The declaration made under Assets Declaration Act 2019 shall not render any declaration made under the Foreign Assets (Declaration and Repatriation) Act 2018 or the Voluntary Declaration of Domestic 2018.
Another key amendment in the Finance Bill 2019 has been made in the condition for sellers to obtain CNIC numbers of the buyers. According to the amendment, the condition of the CNIC shall be effective from August 1, 2019.
The condition of CNIC would exclude supplies made by a retailer where the transaction value inclusive of sales tax amount does not exceed Rs 50,000, if sale is being made to an ordinary consumer. The ordinary consumer means a person who is buying the goods for his own consumption and not for the purpose of re-sale or processing.
If it is subsequently proved that CNIC number provided by the purchaser is not correct, liability of tax or penalty shall not arise against the seller, in case of sale made in good faith, said the amendment in the Finance Bill 2019.
Under the amendment in the Finance ill 2019, the tax on capital gains on disposal of immovable property has been specified.
The rate of tax on amount of gains to be paid shall be as follows: where the gain does not exceed Rs 5 million, the rate of tax would be 5 percent. Where the gain exceeds Rs 5 million but does not exceed Rs 10 million, the rate of tax would be 10 percent. Where the gain exceeds Rs 10 million but does not exceed Rs 15 million, the rate of tax would be 15 percent and where the gain exceeds Rs 15 million, the rate tax would be 20 percent.
The amendments in the Finance Bill 2019 have also revised rate of dividend tax.
Under the amendments in Finance Bill 2019, the rate of tax imposed on dividend received from a company shall be 7.5 percent in case of dividend paid by Independent Power Purchasers where such dividend is a pass through item under an Implementation Agreement or Power Purchase Agreement and is required to be re-imbursed by Central Power Purchasing Agency (CPPA-G) or its predecessor or successor entity; 15 percent in mutual funds and cases other than those mentioned and 25 percent in case of a person receiving dividend from a company where no tax is payable by such company due to exemption or income or carry forward of business losses or claim of tax credits.
The Finance Bill 2019 has enacted the Public Finance Management Act 2019 to strengthen management of public finances with the view to improving definition and implementation of fiscal policy for better macroeconomic management, to clarify institutional responsibilities related to financial management, and to strengthen budgetary management.
The matters are pivotal for reducing public debt and management of public finances. It is expedient to provide for regulating the custody of the Federal Consolidated Fund, the payment of money into Fund, the withdrawal of moneys therefore, the custody of the other moneys received by or on behalf of the federal government, their payment into, and withdrawal from, the public account of the federation, and all matters connected with or ancillary.
The Finance Bill 2019 has enacted the Public Finance Management Act 2019 to give elaborate mechanism of public finance management as envisaged in Articles 78 to 88, 118 to 127 and 160 to 171 of the Constitution and to guide budgetary amendment processes, financial and fiscal controls, cash and banking arrangements, and financial oversight of public entities.
Under the revised procedure for mis-declaration of value for illegal transfer of funds into or out of Pakistan, if any person overstates the value of imported goods or understates the value of exported goods or vice versa, or using other means including short-shipment, over-shipment, with a view to illegally transferring funds into or out of Pakistan, such person shall be served with a notice to show cause within a period of two years from the date of detection of such mis-declaration as to why penal action shall not be initiated: provided that if goods have not been cleared from customs, such goods shall also be liable to be seized.
Provided further that a team consisting of additional collector, duly assisted by an expert in the relevant field and an officer of State Bank of Pakistan (SBP) as specified, shall submit a report in writing with evidence for the chief collector. The said report shall also be furnished to the SBP for action, if any, under the law regulated by SBP. Any proceeding under this section shall not be initiated, without the explicit approval of Board.