tax commentary 2013 PDF
Preview tax commentary 2013
result assured services for growth tax commentary 2013 Corporate Office 5-Nasim C.H.S. Major Nazir Bhatti Road Off: Shaheed-e-Millat Road, Karachi. Tel.: (92-21) 34945427, 34946112, 34931736 Fax: (92-21) 34932629 Email: [email protected], [email protected] Lahore Building No.35 - D / E, Ali Block New Garden Town, Lahore. Tel.: (92-42) 35940246 - 7 Fax: (92-42) 35940248 Email: [email protected] Faisalabad. First Floor, Al-Fateh Plaza Plot # 475/D, Ground, Peoples Colony Faisalabad. Tel.: (92-41) 8549532, 8549632 Fax: (92-41) 8549732 Email: [email protected] Islamababd 3-B, Street 17, F – 8/3 Islamabad RIAZ AHMAD Tel.: (92-51) 2540503 S AQIB Email: [email protected] G OHAR Chartered Accountants tax commentary 2 13 vision & mission THE PROFESSION LEADERS ~ to deliver unique professional services to our clients with complete independence and integrity rendered by a well groomed, professional trained, committed & motivated team. ENVIRONMENT ~ conducive to creativity, job security, personal & professional growth and development of team members with adherence to ethical practices. TRAINING FACILITIES ~ with dedication to groom the professional with an aim to make them leaders in the chosen disciplines. www.rasgco.com to download the tax commentary 2013 01 table of contents 1. preamble 1 2. highlights 2-3 3. budget highlights 2013-2014 4 4. economic overview 5-9 5. income tax ordinance, 2001 10-45 6. sales tax act, 1990 46-54 7. other laws 55 federal excise act, 2005 55-59 custom act, 1969 59-66 income support levy act, 2013 67 declaration under the provisional collection of taxes act, 1931 68 preamble Alhamdulillah! RIAZ AHMAD SAQIB GOHAR & CO. RASG is pleased to present the ‘highlights, comparison and comments’ on this year’s budget to its client, friends and associates. While developing this document every endeavor has been made to keep the presentation simple, with the view to help our readers understand the amendments in the various statutes through the Finance Bill, 2013. This commentary reflects our understanding of the legislation and we recommend that reference should be made to the precise wording of the Bill wherever necessary. We would also recommend that the professional advice should be sought before acting upon the any amendments. The measures proposed in the Finance Bill, 2013 are mainly geared towards enhancement of the tax revenue both through direct and indirect taxes. Many measures have been proposed for the better tax governance. These amendments if implemented will certainly increase inflation for the general public. A question remains to be answered that will the general masses after bearing yet another burden of taxes will see the revival of the economy. I am thankful to my all team members who now take this preparation of the annual tax commentary as RASG - festival and enjoy thoroughly. We will be anxiously waiting for your comments and suggestions for improvements. Regards Gohar Manzoor Managing partner June 13, 2013 1 tax commentary 2 13 highlights Income tax o In order to progressively tax the salary earners, seven new slabs have been introduced. The maximum ceiling of tax rate have been increased to 30% from the existing limit of 20%.. o Two new slabs have been introduced for business individuals and AOPs having taxable income above Rs. 2,500,000/- with tax rate upto 35% from the existing limit of 25%. o In order to provide relief to corporate sector, other than banking companies, the rate of tax on profit is proposed to be reduced to 34%. o Every business & salaried individuals, irrespective of their income, are now required to file wealth statement. o The rate of turnover tax has been increased to 1% from the existing rate of 0.5%. o The facility of adjustment of minimum tax available to be carried forward in case of loss suffering companies has been proposed to be extended to Individuals & AOPs. o Every person registered under the Sales Tax Act, 1990 is now being proposed to be included in the definition of Withholding Agent. o Enhanced rate of withholding tax has been proposed on tax payers other than industrial undertakings & companies. o Facility of exemption certificate on import of raw material is proposed for industrial undertaking. o Exemption of income available to universities & educational institutes’ alongwith exemption to full time teacher or researcher is proposed to be withdrawn. o 5% advance tax is proposed to be collected from the parents on annual fee above Rs. 200,000/- paid to an educational institute. o Rate of initial depreciation on Plant & Machinery is proposed to be reduced to 25% from 50%. o Rate of deduction on prize bonds is proposed to be enhanced to 15% from existing rate of 10%. o Exemption available on withdrawal of investment in National savings Centre is proposed to be withdrawn. o The rate of tax on cash withdrawal from banks is proposed to be enhanced to 0.3% from 0.2%. o A minimum tax of Rs. 25 per square feet is proposed to be imposed on the person deriving income from construction business. o A minimum tax of Rs. 50 per square yard is proposed to be imposed on the person deriving income from sale of plots. o Advance tax @ 10% is proposed to be imposed on any occasion or gathering arranged at any Hotels / Clubs/Marriage Halls, etc. o Various tax slabs have been proposed on license issuance & renewal on services provided by media & other related services. o To encourage import of hybrid cars in the economy the rate of withholding taxes have been reduced. Sales tax o General rate of sales tax has been enhanced to 17% from 16%. o Input tax adjustment will be disallowed where any discrepancy found by CREST. o 2% additional sales tax imposed on non-registered taxpayers. o 21% (16% + 5%) Sales Tax will be applicable to non-registered commercial & industrial electricity consumers having monthly bill exceeding Rs. 15,000/-. o Commissioner (Appeals) is empowered to grant stay of thirty (30) days. o New methodology for monitoring or tracking by electronic means to be introduced o The definition of withholding agent, in case of purchase from an unregistered person, broadened to include companies, recipient of services of advertisement and exporters. Other laws Federal excise – o Federal Excise Duty on aerated beverages has been increased to 9% from 6%. o Various financial services have been made chargeable to Federal Excise @ 16%. o New methodology for monitoring or tracking by electronic means to be introduced o FED on Aerated waters, juices, etc. enhanced from 6% to 9% of the retail price and locally manufactured cigarette to be charged at Rs. 2,325 per thousand and Rs. 880 per thousand where the retail price exceed/does not exceed Rs. 2,286 per thousand respectively. o F.E.D levied @ 40 paisa per kg on oil seeds and certain vehicles @ 10% ad.val. Customs act – o Reduction in duties on water treatment and purifying machinery & equipment, hybrid electric vehicles, etc. o Duty free import on solar submersible pumps, energy saving tubes, etc. Income Support Levy Act introduced budget % highlights 2013 direct tax indirect tax Up by Up by 25 21 external receipt debt servicing Up by Up by 25 12 defense affairs & services development expenditure Up by Up by 10 38 economic overview According to the Economic survey of Pakistan 2012-13 launched by Ministry of Finance Pakistan, on Tuesday, June 11, 2013, Pakistan’s economy continues to face numerous domestic and external shocks from 2007 onwards. Economic performance was affected from the devastating floods and rains, internal security hazards and energy crisis. The economy of Pakistan during the last five years grew on average rate of 2.9 % per annum. The GDP growth for 2012-13 was targeted at 4.3 %on the back of 4.0 % growth in Agriculture, 2.5 % growth in Large Scale Manufacturing and 4.6 % in Services sectors. However, the heavy rains in Sindh and Punjab province damaged the crops which affected performance of agriculture and other related sectors. The real GDP growth for 2012-13 has been estimated at 3.6 % as compared to 4.4 % (revised) in the previous fiscal year 2012 after rebasing the national accounts at constant prices of 2005-06. Historical GDP growth rate shows following trend 2011-2012 2012-2013 Agriculture Agriculture (0.72%) Industry 0.76% Industry (0.73%) 0.56% 0.72% 0.29% 0.73% 4.36% Manufacturing 0.46% Manufacturing 3.59% (0.46%) Services (2.14%) 3.05%Services 2.14% Real GDP (3.59%) Real GDP 5 Sector wise contribution to the GDP growth (% points)
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