The Engineering Development Board (EDB) has proposed to the Federal Board of Revenue (FBR) to increase depreciation allowance rate, to 25 percent per annum, for corporate sector on vehicles under the Income Tax Ordinance 2001. According to the budget proposals of the EDB, submitted to the FBR for 2010-11, amendment has been proposed in the depreciation rate on vehicles (section 22, 23A and Part I of Third Schedule).
The depreciation rate applicable to vehicles for the purpose of section 22 is 15 percent, if the vehicle is not plying for hire. Vehicles are also not eligible for FYA u/s 23A with restricted value of Rs 1.5 million. It is, therefore, proposed that depreciation rate for corporate sector on vehicles under the Ordinance be increased to 25 percent per annum with an initial depreciation @ 50 percent in the year of purchase and restricted value be increased from Rs 1.5 million to Rs 2 million.
The Securities and Exchange Commission of Pakistan (SECP) has proposed that due to issues encountered by mutual funds, provident funds, approved pension funds, gratuity funds and superannuation funds regarding contribution of profit in the WWF. These funds are structured as trust in compliance with the SECP regulatory framework and income tax rules. Most of these funds represent the pooled investments and operate as open-ended funds. Necessary relief may be provided by exempting these funds from contribution to the WWF.
In its budget proposals (2010-11), Karachi Stock Exchange (KSE) has proposed imposition of the capital gains tax (CGT) and withdrawal of all other taxes on the shares transactions. The KSE is focusing its tax proposals on the Capital Gains Tax because it is a significant change to the current taxation regime and is committed to working with the Government to implement a long-term and effective tax policy.
The KSE is encouraging the government to move away from presumptive tax regime and move towards direct tax regime. "We encourage the Government to eliminate withholding taxes to reduce the cost of doing business. In addition, there should be no concept of a minimum tax. Capital Gains, except banking companies, have been exempt from taxation and this exemption is due to be withdrawn from Tax Year 2010 and onwards.
With the introduction of Capital Gains Tax, all other taxes and levies related to purchase and disposal of securities would be abolished, with the exception of Federal Excise Duty (FED) on brokerage services. In view of the possible pressure being created in the market due to the uncertainty of how tax on Capital Gains will be imposed, KSE management has worked out what it believes will be a fair basis for imposing the tax and would urge the government to announce the proposed structure at the very earliest", the KSE added.