The Association of Persons (AOPs), having over Rs 50 million turnover and engaged in making payments for purchase of agricultural produce, will not be required to withhold tax under section 153 of the Income Tax Ordinance, 2001. The board has amended SRO.586(I)/1991 through an SRO.1248(I)/2008 issued here on Saturday.
Under the new decision, the AOPs having more than Rs 50 million turnover will not be required to "withhold tax". The decision would be instrumental in facilitating agriculturists selling goods in the market. Details revealed that by virtue of SRO586(I)/91 of 1991 payments made by a company for supply of agriculture produce which was not subjected to any process were exempted from the provisions of withholding tax.
Through Finance Act 2008, the AOPs having a turnover more than Rs 50 million was added as a "withholding agent" after amending Section 153 of the Income Tax Ordinance, 2001. This amendment meant that the agriculture produce when purchased by a company in its original form was not subjected to withholding tax but if purchased by an AOP having more than Rs 50 million turnover would be subjected to withholding tax.
The SRO 1248(I)/2008 has removed this anomaly by adding the words AOP having turnover more than Rs 50 million in clause V of SRO 586(I)/91. Now AOP making payment for purchase of agriculture produce shall not be required to withhold tax under section 153 of the Income Tax Ordinance, 2001. This anomaly was highlighted by Pakistan Tax Bar Association as early as August 2008. The board after examining the issue removed this anomaly in the tax law.