Pakistan's tax laws: Finance Act 2013 amendments

Relevant to Paper F6 (PKN)

This article is applicable to candidates taking Paper F6 (PKN) in both the June or December 2014 sittings, and is based totally on the tax regulation contained in the Finance Act 2013.

In Pakistan, as in many jurisdictions, a tax can be levied solely by, or under, the authority of an Act of Parliament. While taxation of profits (other than agricultural income) is ruled by way of the Income Tax Ordinance 2001 as amended from time to time, the Sales Tax Act 1990 offers with income tax at Federal level. Sales tax on offerings is a provincial situation and no longer examinable in Paper F6 (PKN). According to the hints issued by way of ACCA, applicable rules (including Ordinance) which receives President’s assent on or earlier than 30 September 2013 will be assessed for the first time in the June 2014 sitting of Paper F6 (PKN).

The Finance Act 2013 is wonderful from 1 July 2013 and is consequently examinable in the June and December 2014 sittings of Paper F6 (PKN). It has been discovered that many candidates do no longer provide due interest to the adjustments introduced about in the modern day examinable Finance Act. Therefore, candidates are counseled to go thru these amendments cautiously so that they can reply examination questions precisely and earn desirable marks accordingly.

It need to be mentioned that references to the one of a kind sections of the Income Tax Ordinance 2001 and the Sales Tax Act 1990 are for extra data only, as candidates are no longer required to be capable to quote these when answering the F6 (PKN) paper.

The examinable amendments are defined below.

Changes in the Income Tax Ordinance 2001

New withholding taxes

With impact from 1 July 2013, a quantity of new withholding taxes have been introduced. The examiner does not assume candidates to memorise these rates; however, the examiner does assume candidates to have understanding of the withholding agents, penalties of non-compliance with the withholding tax provisions and to comprehend whether or not the tax withheld is allowed as a tax deposit or is the remaining tax.

The tax withheld on the transactions mentioned under are allowed as a tax deposit in opposition to the tax legal responsibility of a tax payer and are now not included beneath the ultimate tax regime.

Advance tax on features and gatherings at 10% of the quantity of the invoice from the character arranging a feature in a marriage hall, marquee, hotel, restaurant, business lawn, club, or any vicinity used for such reason shall be accrued via the owner, operator or supervisor of such premises. [s236D]

Advance tax on foreign-produced TV drama performs or serials shall be gathered at the price of Rs. 100,000 per episode of the drama or play through the licensing authority certifying any overseas TV drama serial or a play dubbed in Urdu or any different regional language, for screening and viewing on any touchdown rights channel. [s236E]

Advance tax from cable operators and different digital media shall be gathered by way of the Pakistan Electronic Media Regulatory Authority (PEMRA) at the costs unique in the Division XIII of Part IV of the First Schedule. The costs fluctuate from Rs.10,000 to Rs.900,000 relying upon the class of licence. [s236F]

Advance tax on income to distributors, sellers and wholesalers shall be accrued by using each producer or industrial importer of electronics, sugar, cement, iron and metal products, fertilizer, motorcycles, pesticides, cigarettes, glass, textile, beverages, paint or foam sector, at the time of sale of these items to distributors, sellers and wholesalers at a charge of 0.1% of the gross quantity of sales. [s236G]

Advance tax on income to outlets shall be gathered by means of each manufacturer, distributor, dealer, wholesaler or business importer of electronics, sugar, cement, iron and metal products, fertilizer, motorcycles, pesticides, cigarettes, glass, textile, beverages, paint or foam sector, at the time of sale to outlets at a fee of 0.5% of the gross quantity of sales. [s236H]

Advance tax on prices paid to instructional establishments shall be charged by using the individual making ready the price voucher or challan at 5% of the quantity of the rate the place the annual charge paid to an schooling organization exceeds Rs. 200,000 [s236I]

Advance tax on dealers, fee marketers and arhatis (vernacular for a 'commission agent' dealing in agricultural products) shall be accumulated via each and every market committee at the time of issuance or renewal of licences. The charge of tax varies from Rs. 5,000 to Rs. 10,000 per annum relying upon class of the dealer, and so on [s236J]