Pakistan Tax Bar Association has voiced serious concern over the application of income tax surcharge for the Tax Year 2011. In a letter to FBR Chairman Salman Siddiq here on Thursday, the association said that the question is how the surcharge is to be calculated.
The law says that it is to be paid @15 percent of the income tax payable for the period commencing from the promulgation of this Ordinance, till the 30th June 2011. In this regard clarification is required that through which of the following modes surcharge is to be calculated:
Firstly, the net income tax liability of the whole year is to be calculated and then the same is to be divided by twelve and multiply by 3.5 to work out the average income tax liability for 3.5 months. Then 15% of the income tax for 3.5 month is to he paid as surcharge?
Secondly, the income for the 3.5-month is to be calculated separately and then taking into account the portion of income tax payable on income for 3.5 month surcharge is to be calculated? Thirdly, if in any case any taxpayer does not earn any income during the period from March 15, 2011 to June 30, 2011 then what would be position regarding payment of surcharge?
The FBR should also clarify that is there any eventuality in fixed and final tax regime cases where surcharge is not payable? In the cases of retailers opting for payment of turnover tax u/s 113A of the Income Tax Ordinance, 2001 how the surcharge is to be calculated, association said.
In cases of fixed and final tax regime what is the position particularly when Law itself says that the tax is final tax. No amendment has been made to declare the said tax as final income tax? The association further said that the queries have been made keeping into consideration small taxpayers like shopkeepers, small industrial establishments etc.
An early response in this regard would help the taxpayers and tax practitioner to submit returns in time by fulfilling their due obligation for payment of taxes. The association said that vide Income Tax Amendment Ordinance, 2011 a new sect ion 4A has been inserted in the statue. For facility of reference the same is reproduced here under: