The Federal Board of Revenue (FBR) has received budget proposals of the Directorate General of Internal Audit (DGIA), Lahore to amend Section 113 of the Income Tax Ordinance to ensure payment of turnover tax by all companies if tax payable is less than 0.5 percent of the turnover. The budget proposals (2010-2011) of the directorate are being examined by the board.
According to the budget proposals, minimum tax is payable by a resident company under Section 113. However, companies declaring gross loss are not liable to pay minimum tax. This facility is going to be exploited and, therefore, the provisions of Section 113 are required to be so amended as to make all companies pay turnover tax if tax payable is less than 0.5 percent of the turnover.
Presently penalty u/s 182 for late/non-filing of return is leviable equal to 1/10th of 1 percent of the tax payable. Under the scheme of universal self-assessment (USAS), non-corporate taxpayers get away with the mischief of these provisions by declaring losses or BTL income. It is proposed that fixed amount may be made the basis of penalty for default of non-filing/late filing of return of income.
In order to ensure maximum compliance by non-filers, default of notice u/s 121(1)(d) may also be included in Section 186 for the purposes of imposition of penalties for non-compliance of the said notice.
The directorate further proposed that the provision of Section 205 required to be amended suitably so as to provide imposition of additional tax in the cases of consistent default of non-payment of due taxes. The words "and ending on the date on which it was paid" as appearing in Section 205(1) may be substituted with the words "to the date of passing of order or payment of tax which ever is earlier.
The rate for determining CVT on transfer etc of urban immovable properties given in Circular No 4 of 2009 are confusing and have created lots of ambiguities particularly amongst the Revenue Authorities as the circular says that:-
i) Where the value is recorded 4 percent of the recorded value; OR
ii) Where the value is not recorded, Rs 100 per Sq Yds of the landed value;
Higher of the value of (i) and (ii) has to be adopted.
The words "where the value of property is recorded/non recorded" in para (i) and (ii) above are the main source of confusion as these create an impression that if the value of property is recorded then 4 percent of the recorded value has to be collected as CVT and if value of the property is not recorded then Rs 100 Per Sq Yds/Sq. Ft. have to be collected. Higher value of the scenario as given in Para (i) and (ii) above is not possible to be determined. It is, therefore, proposed that the substantive law may suitably be amended by substituting para (i) and (ii) above with the words "4 percent of the recorded value or Rs 100 per Sq. Yds/Sq. Ft which ever is higher, Directorate General of Internal Audit, Lahore added.