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Highlights
The tax benefits have been proposed to be extended to amalgamation of companies engaged in providing services, and not engaged in trading.
The maximum turnover for classification as Small Company has been enhanced to Rs. 250 million and further condition of maximum number of employees has been imposed at 250 employees in a year.
The benefits of set-off and carry forward of business loss would be available to a company operating hotels and registered in Pakistan or AJK against its income in Pakistan or AJK.
Only assessed losses of the amalgamating companies, other than brought forward and capital loss, would be available for set-off after amalgamation.
An irrevocable option to be taxed as single unit will be granted to 100% owned group.
A subsidiary would be able to surrender its loss for a year to its holding or other subsidiary company subject to certain conditions.
The maximum cost of investment for tax credit would be deemed to be Rs. 300,000 instead of Rs. 200,000.
Tax liability of an AOP of professional would be taxed in the same way as other AOPs.
Disposal of assets from one company to another company will be a non taxable event, if such disposal will be effected through a Scheme of Arrangement and Reconstruction under the provisions of the Companies Ordinance, 1984 or the Banking Companies Ordinance, 1962.
New rules for computation of taxable income of banking companies have been laid down in replaced Seventh Schedule.
Retailer with turnover less than Rs. 5 million would not be allowed to claim adjustment of tax deductions. Their tax rate has been reduced to 0.5% from 0.75%.
Different rate depending upon turnover has been prescribed for retailers with turnover in excess of Rs. 5 million.
Advance tax in the first year of the business of a company on the basis of its estimated quarterly accounting profit will also be required to be paid.
A large importer has been defined and its income would be taxable under normal law.
Employers have been allowed to adjust tax credits admissible while calculating tax to be deducted at source.
Income of organizations providing services of stitching, dying, printing, embroidery, washing, sizing, and weaving to exporters or export houses would be chargeable under normal law.
Payments received on account of (1) advertisement services, by owners of newspapers and magazines; and (2) sales of goods and execution of contract by a listed company will be taxable under normal law.
Manufacturers or authorized dealers of motor cars would be required to collect advance tax at the time of sale of a car @ 5% of the gross amount.
Income of CNG stations would be subject to final taxation @ 6% of the amount of gas bill.
Tax collected on the amount of electricity bills will be minimum tax on the income of a person (other than a company).
Rate of tax on dividend is now 10% for all the persons.
Rate of tax at import stage has been reduced to 5% of the value of goods including polyester filament yarn.
A reduced rate of 2% on transport services has been proposed for collection under the Section 153 i.e. withholding tax on payment of goods ad services.
The rate of tax under Section 154 i.e. with holding tax on exports will be 1% for all types of goods.
Profits and gains accruing to a person on sale of immovable property to a Real Estate Investment Trust up to June 30, 2010 will be exempted from tax.
The profits and gains derived between July 1, 2000 and June 30, 2014 by Private Equity and Venture Capital Fund will be exempt.
Exemption on capital gains has been extended till 2008.
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Mr. Gohar Manzoor
