A seven-day time limit for income tax deduction at source to a non-resident has been prescribed by the Federal Board of Revenue (FBR) before the amount is intended to be remitted abroad to that non-resident through State Bank of Pakistan (SBP) or any banking company. The FBR has issued SRO 1314(I)/2017 here on Monday.
Following is the text of the notification SRO 1314(I)/2017 issued here on Monday:- In exercise of the powers conferred by sub-section (1) of section 237 of the Income Tax Ordinance, 2001, the Federal Board of Revenue has directed that the following further amendments shall be made in the Income Tax Rules, 2002, the same having been previously published vide notification No SRO 1072(1)/2017, dated 24th October, 2017 as required by sub-section (3) of the said section, namely:-
In the aforesaid Rules, rule 43-B shall be re-numbered as sub-rule (1) of that rule and thereafter the following new sub-rule (2) shall be added, namely:-
"(2) In case of remittance abroad to non-resident, seven days before the amount is intended to be remitted abroad to that non-resident, through State Bank or any banking company".
When contacted, a tax lawyer told this correspondent that proposed amendment relates to provisions of Section 158 of the Income Tax Ordinance, 2001 read with Rule 43-B of Income Tax Rules, 2002 which reads as under:
Section 158: Time of deduction of tax.- A person required to deduct tax from an amount paid by the person shall deduct tax:-
(a) in the case of deduction under section 151, at the time the amount is paid or credited to the account of recipient, whichever is earlier; and (b) in other cases, at the time the amount is actually paid; and (c) amount actually paid shall have the meaning as may be prescribed.
Rule 43B- Amount actually paid under section 158.- The amount actually paid as per clause (c) of section 158 of the Ordinance includes:-
(a) amount paid by the person, as withholding agent;
(b) amount paid on behalf of the person, as withholding agent;
(c) amount paid at the instruction of the person, as withholding agent; and
(d) gross amount settled or discharged by the person, as withholding agent, to other person before netting off or adjusting such amount against any receivable from the said other person.
Conclusively time limit for income tax deduction at source in the light of provisions of Section 158 of the Income Tax Ordinance, 2001 to non-resident has now been made at seven days before the amount is intended to be remitted abroad to that non-resident, through State Bank of Pakistan or any other banking company, the tax expert added.