changes through finance act 2013

7/29/2019 Changes Through Finance Act 2013

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Detail of Changes Made in Sales Tax Through Finance Act, 2013

Sr. # Section Provision Before Change Change Result of Change

1 2 (5 AC) not existed

new clause (5 AC) inserted thatprovides definition of CREST asComputerized Risk Evaluationof Sales Tax.

2 2 (22A)in older provision refernce tospecific provincial sales taxordinance was provided.

Provincial sales tax definitionchanged. Now Provincial Sales

Tax means tax levied underprovincial laws of laws relating to Islamabad Capital Territory,

which are declared by the F.G,

through notification in theofficial gazette, to be provincialsales tax for the purposes of input tax.

Now Provincial sales tax meansas notified by the F.G.

3 2 (33 A) not existed

Supply chan defined as Supply chain means the series of transactions between buyers andsellers from the stage of the first

purchase or import to the stageof final supply

4 2 (44A)time of supply was meant that

when goods are delivered ormade available for delivery.

definition of time of supply changed and time of receipt of money added.

Now Time of supply means when goods are delivered ormade available for delivery or

when supplier recieves money whichever is earlier.

5 3 Rate of Sales Tax was 16 %. One percent increase rate of sales tax. Now Rate becomes 17 %.

Sales Tax Act, 1990


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Sr. # Section Provision Before Change Change Result of ChangeSales Tax Act, 1990

6 3 (1A) not existedone percent extra sales tax to becharged on supply made to un-registered person.

Previously sales tax was same for

registered and unregisteredperson. Now law discriminatesrate for the both i.e 17 % forregistered and 18 % forunregistered persons.

7 3 (1B) not existed

Board can prescribe throughnotification the levying andcollection of tax in addition tothat of 17% on productioncapacity of plants, machinery etc.or on fixed basis.

8 3 (8) not existed

Gas Transmission anddistribution companies shallcharge 9 % sales tax in lieu of 17% on the value of supply madeto CNG stattions.

9 8 (1) (caa) not existed criteria for claiming input enhanc

where discrepancy is highlightedby the crest or input is not

verifiable in supply chain thenthe same cannot be claimed.

10 40 B

Only Board has the authority topost officer of inland revenue tothe premises of the registeredperson.

Chief Commissioner has alsogiven this power.

Now CC or Board can postofficer of inland revenue topremises of registered persons.

11 40 C not existed

Board can notify in officialgazette the RP or class of RP or

goods or class of goods for which monitoring of production,sale or clearance or any activity may be implemented throughelectronic or other means.

12 45 B (1A) not existedCIR (A) can stay the recovery proceedings for 30 days inaggregate.


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13 57 scope of rectification was limitedto clerical or arithmetical errors.

Now criteria made for mistakeapparent from record. Whererectified order is not made

within financial year afterhighlighting the mistake, thesame shall be deemed to havebeen made. No order can berectified after five years from thedate of the order.

Previously criteria forrectification was limited and nowthey have made it at par withsection 221 of the Income TaxOrdinance, 2001.

14 72 C not existed

Scheme of cash rewardintroduced for officers of inlandrevenue and informers of reliable information whererecoveries are made fromconcealment, tax evasion etc.


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15 ThirdSchedule

List of goods on which sales tax was charged on retail price waslimited to 21 items.

Now List has been extended to36 items and include articles of textile and leather sold in retailpacking, Household electronicgoods, household gas appliances,foam or spring mattresses, Autoparts and accessories sold inretail packing, lubricating oils for

vehicle sold in retail packing,tyres & tubes, storage batteries, Arms & ammunition, Paints of all kinds sold in retail packing,Fertilizers, Cement sold inretailpacking, tiles sold in retailpacking, Biscuits, confectionary,choclates, tofees and candies,other goods and products sold inretail packing.

16 SixthSchedule

Milk preparations obtained by replacing one or more of theconstituents of milk by anothersubtance was exempt from salestax.

Exemption withdrawn. Now it becomes part of taxablegoods.

17Supplies against internationaltender was exempt from salestax.

Exemption withdrawn. Now it becomes part of taxablegoods.


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Detail of Changes Made in Income Tax Ordinance, 2001 Through Finance Act, 2013

Sr. # Section Provision Before Change Change

1 8 (e )Dividend received by company was taxable undernormal law. Now it has been made final tax.

2 15

Property Income was separate block of incomeand exemptions to individuals & Aops andpersons having property income upto Rs.150,000 were available.

Property Income excluded from separate block of income and now will be taxed as per normalslabs rate applicable to business income.

3 15 ANot existed. Previously no deductions of expenses were allowed against Ptoperty income.

Certain expenses like repair & maintenance,insurance, local taxes, interest, rent collectioncharges, legal expenses etc can be claimed againstproperty income subject to certains conditionsand restrictions.

4 56

Income from salary and business income wereallowed to set off against losses from any other

head of income.

Now Income from salary and property incomecan not be adjusted against losses from other

heads of income.

5 59 AAGroup taxation was allowed to groups following code of corporate governance requirements.

Now criteria extende and included groupdesignation rules or regulations.

6 111 (1)

Previously if a person offers explantion of funds,investments or expenses made, that the same arefrom agricultural income then the same wasaccepted.

Now only such agricultural income shall beaccepted on which agricultural tax is paid underprovincial laws.

7 113 (1) Minimum tax was 0.5%. Now it has been increased to 1%.

8 113 ARetailers being individuals and AOPs wereallowed to opt for final tax regime.

Now this option has been withdran from retailersand they will be taxed under the normal law.Now builders will pay minimum tax on theirincome at the rates specified by the F.G.

9 114 (1)

A person holding industrial or commercialconnection of electricity and amount of annualbill exceeds one million was required to fileincome tax return.

This limit of one million has been reduced to Rs.500,000/- and further any person holding membership of any professional body, chamberof commerce and industry etc shall also fileincome tax return.

10 114 (6)Income tax return was revised without approvalof commissioner.

Approval of commissioner made mandatory forthe revision of return.

11 115 (1)

Salaried indviduals whose income was less thanRs. 500,000/- were not required to file incometax return.

Now every salaried individual having taxableincome will file income tax return.

12 116 (2)

Individuals and members of AOPs whose annualincome and share from AOP repectively was Rs.One million were required to file wealthstatement alongwith their return of income.

Now the limit of one million has been withdrawnand every person filing income tax return will file

wealth statement and this is pplicable from taxyear 2013 and onwards.

Income Tax Ordinance, 2001


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Sr. # Section Provision Before Change ChangeIncome Tax Ordinance, 2001

13 116 (4)

Persons other than company filling statementunder FTR regime and paid tax amounting to Rs.35,000/- were required to file wealth statement.

Now limit of Rs. 35,000 has been withdrawn and

every person other than company and AOPfilling statement under FTR will file wealthstatement. This provision is applicable from taxyear 2013 and onwards.

14 118

Employers of individuals wre required to fileannual statement of deuction of tax from salary of enployees.

This requirement has been withdrawn and now employee will file income tax returns. Wheresalary income exceeds Rs. 500,000/- they will filereturn electronically.

15 120 A

The board had the power to make schemes for whitening of black money whereby person pay tax called investment tax on undisclosed assets

and income. This power has been withdrawn.

16 122 C

Provisional assessments was treated as finalassessment within 60 days of service of order of provisional assessment.

This period of 60 days has been reduced to 45days.

17 130 (3)

Qualification for appointment of Judicialmember of Appellate Tribunal was restricted to aDistrict Judge and an advocate eligible forappointment as Judge of High Court.

Now the officer of Inland Revenue Service in BS-20 or above and being law graduate is also eligiblefor becoming Judicial member of Appellate

Tribunal.

18 130 (4)

Qualification of Accountant member was

restricted to Regional Commissioner,Commissioner inland revenue and commissionerappeals.

Criteria for becoming Accountant member of

Appellate Tribunal enhanced to practicing Chartered Accountant who has practice of atleast 10 years.

19 147 (1)Person having property income was not requiredto pay advance tax.

Now person having property income will alsopay advance tax.

20 148 (7)Previously the tax deducted on import of foreignproduced film was final tax.

Tax deducted on import of foreign producedfilm imported for the purposes of screening and

viewing shall not be a final tax.

21 153 (7) Withholding agent does not include personsregistered under the Sales Tax Act, 1990

Now a person registered under the sales tax act,1990 is also a withholding agent.

22 153 A

Manufacturers were required to collect tax at therate of 0.5% of gross amount of sales made todistributors,dealers and wholesalers.

This section has been deleted. Now no tax shallbe deducted by the manufacturers on sale to thesaid persons.


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23 155 (3)

The list of withholding agents for the purposesof withholding tax on payment for rent wasrestricted to Federal, provincial & local govt.,company, NPO etc.

Now charitable organizations alongwwith private

educational institutions, boutique, beauty parlour,hospital, clinic or maternity home have beenmade withholding agents. Further, individuals or

AOPs paying gross rent of Rs.1.5 million willalso be withholding agents.

24 164 (2)

The certificate of tax deducted at source and paid was considered to be sufficient evidence of taxcollected and paid for claiming credit.

Now the actual challans paid will be treated asevidence of tax deducted and paid.

25 165 A Not existed.

Now banks will furnish various information tothe board including online access to the centraldatabase of the banks, list of deposits exceeding Rs. One million in a month, list of personspaying credit card bills exceeding Rs. 100,000 in amonth, list of loans written off exceeding Rs. onemillion in a calendar year etc.

26 181 (3) not existed.Board may require in case of individuals to useCNIC instead of NTN.

27 181 CPreviously requirement to display NTN wasprescrribed in rules.

Now this requirement has been prescribed inordinance.

28 182

Penalty for not filing of income tax return was0.1% of the tax payable for each day of defaultsubject to minimum penalty of Rs. 5,000 andmaximum penalty of 25% of the tax payable.

Penalty increased to minimum of Rs. 20,000 andmaximum of 50% of the tax payable subject to0.1% of the tax payable.

29 182

Penalty for not filing of statement u/s 115 and165 was 0.1% of the tax payable for each day of default subject to minimum penalty of Rs. 5,000and maximum penalty of 25% of the tax payable.

Now penalty has been defined as Rs. 2,500 foreach day of default subject to minimum penalty of Rs. 50,000

30 182 not existed

Where banks do not provide required statementsthey will pay penalty of Rs. 2,500 for each day of default subject to minimum penalty of Rs.50,000/-.

31 182 not existed

If person fails to furnish wealth statement or wealth reconciliation statement then he shall pay a penalty of Rs. 100 for each day of default.

32 182

Penalty for non compliance of section 177ranged from Rs. 5,000 to 50,000 depending onthe number of notices.

This has been increased and now ranges from Rs.25,000 to Rs. 100,000/-


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33 182

Penalty for non compliance of section 176 wasRs. 5,000 and 10,000 for first and eachsubsequent default respectively..

This has been increased and now Rs. 25,000 andRs. 50,000/- for first and each subsequent defaultrespectively.

34 182Previously no specific penalty was defined fornon displaying of NTN Certificate. Now penalty of Rs. 5,000 has been defined.

35 198

Previously no specific amount of fine wasdefined for unauthorized disclosure of information by public servant.

Now minimum fine of Rs. 500,000 has beendefined for such disclosure.

36 214 C not existed The board shall keep the criteria for selection of audit confidential.

37 227 A not existed

Reward for officers of inland revenue andinformers for recovery of tax where the same wasbeing concealed, evaded etc.

38 233 AA

Previously NCCPL was required to collectadvance tax from members of stock exchangeregistered in Pakistan.

Now NCCPL shall also collect advance tax frommargin financers, trading financers and lenders.

39 234 (5) Tax on motor vehicle collected from owners of goods transport vehicle was final tax. Now this tax has been made adjustable.

40 236 D not existed

Restaurants, hotels, marriage halls etc shall collectadvance tax at the rate of 10% of the totalamount of Bill from the person arranging afunction therein.

41 236 E not existed

Any licensing authority certifying any foreign TV drama serial or a play dubbed in Urdu or regionallanguage shall collect adjustable advance tax of Rs. 100,000/- per episode.

42 236 F not existed

PEMRA will collect adjustable advance tax at thetime of issuance of license for distributionservices or renewal of a license to a licensee.Ranging from 7,500 and 10,000 to 875,000 and900,000 depending on the type of license in caseof renewal and new license respectively.

43 236 G not existed

Manufacturers & Commercial importers of electronics, sugar,cement,iron & steel products,fertilizer, motorcycles, pesticides, cigrattes, glass,textile,beverages,paint or foam sector shall collectadjustable advance tax at the rate of 0.1% of thesale made to dealers,distributors and wholesalers.


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44 236 H not existed

Distributors, Dealers and Wholesalers of abovementioned products shall collect adjustable

advance tax at the rate of 0.5% of the sale madeto the retailers.

45 236 I not existed

Educational Institutions shall collect adjustableadvance tax at the rate of 5% of the fee including charges collected by the institute where annualfee exceeds Rs. 200,000/-.

46 236 J not existed

Every market committee shall collect adjustableadvance tax from delaers, commission agents orarhatis ranging from Rs. 5,000 to 10,000depending on the category of dealers,commission

agents etc.FIRST SCHEDULE


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47 There were five slabs for taxation of businessindividuals and AOPs.

Now two more slabs have been added forincome group from 4 M to 6 M and other forthose exceeding 6 M.

48

Slabs rate for salaried individuals alsl changed.Now 11 slabs exists for which rate of 0 % to 30% applies.

49 The rate of tax for all types of companies exceptsmall companies was 35%.

Now the rate for companies except banking company is 34%.

50 Advance tax on import of goods was 5%.

Now this is 5% for companies and industrialundertakings and 5.5% for all other taxpayers.Furthermore, advance tax on import of foreignproduced film is 12% of the value of film.

51 The rate of withholding tax u/s 153 was 3.5% incase of goods and 6% for services and contracts.

Now this has been bifurcated into companies andother tax payers. For companies 3.5% and forothers 4% in case of goods. In case of Services,6% for companies and 7% for others. In case of Contracts, 6% for companies and 6.5% forothers.

52

The slabs rate for withholding of tax on paymentfor rent has been changed. One slab has been

reduced in case of individuals and AOPs. In caseof companies 15 % of gross rent has beendefined instead of slab rates.

53 Rate of tax for Prize Bond Winnings etc was 10 %This has been increased to 15%.

54

Rate of advance tax on telephone and mobilephone was 10% of the amount of bill exceeding 1000 in case of telephone and 10% of the saleprice of card or bill for mobile phone.. This has been increased to 15%.

55 Rate of advance tax on cash withdrawl was 0.2%. This has been increased to 0.3%.

56

Advance tax on purchase of New Vehicles was

7500 to 50,000 for engine capacity ranging from850CC to above 2000 CC

Now this has been increased and now rangesfrom 10,000 to 150,000.

57 Advance tax on sale by auction was 5%. This has been increased to 10%.

58 (53A)

It provided exemption to free or concessionalpassage provided by transporters including airlines to its employees. Exemption has been withdrawn.

Second Schedule Part I (Exemption from Total Income)


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59 (58A)

not existed. This type of exemption was available

under claue 92 which has now been deleted. Thedifference between new and old provision is thatnew provision prescribes condition of NPO

which was not in old clause.

New inserted. It provides exemption to income

of university or other educational institutionbeing run by non profit organisation existing solely for the purpose of education and not forprofit.

60 (98A)

Income of ICC, IDI and its memers, officials etcexcept Residents of Pakistan derived from ICCChampions Trophy, 2008 was exempt. This has been deleted.

61 (103B) Dividend in specie was exempt from tax.Now this has been made taxable as this clausehas been deleted.

62 (126E)

This clause provided tax holiday for entities inspecial econimic zone for five years and for 10years to the developers of zone.

Tax holiday period is 10 years now for zoneenterprise as defined in Special Economic Zone

Act, 2012 and developer of zone.

63 (28A) not existed

Rate of tax on import of Hybrid Cars reducedfrom 100% to 25% depending on enginecapacity.

64 (1)

Flying Allownace by pilots, flight engineers,navigators of Pakistan Armed Forces etc andsubmarine allowance by officers of PakistanNavy was taxed at 2.5% as separate block of income.

Now limit of this allowance has been defined asto the extent of basic salary. It means that now such allowance in excess of basic salary will betaxed as per normal law.

65 (2)Income Tax payable by full time teacher andresearchers was reduced by 75%.

Now this limit has been reduced and now theirliability will be reduced by 40%.

66 (3)

The minimum tax payable by the company u/s113 engaged in ditribution of cigrattesmanufactured in Pakistan was reduced by eighty percent.

Now the criteria for this exemption has beenincreased and now every taxpayer can avail thisexemption which was previously available tocompanies only.


The tax deducted u/s 236 E on foreign produced

dramas and serials shall not be a final tax.

68 (59)

Exemption was available on income / profitsreceived by resident individuals from investmentsmade in DSC, Special Saving Certificates, Saving

Accounts, or Post Office Saving Accounts, TFCs where such deposits do not exceed Rs. 150,000/-. This exemption has been withdrawn.

PART II (REDUCTION IN TAX RATES)

PART III (REDUCTION IN TAX LIABILITY)

PART IV (EXEMPTION FROM SPECIFIC PROVISIONS)


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The provisions of section 21 (l) regarding limit of

cash payments, 113 regarding Minimum Tax, 152regarding payment to non resident shall not apply to Hajj Group Operators in case of HajjOperations provided that tax at the rate of Rs.3,500 and 5,000 per haji has been paid for Taxyear 2013 and 2014 respectively.

70 (72B) not existed

Now industrial undertakings can take exemptionfrom withholding tax liable to be dedcuted u/s148 if the tax liability for the current year basedon higher tax liability of preceding two years hasbeen paid and exemption certificate has beenobtained from commissioner.

71 PART-IIInitial Allowance on Plant & Machinery was50%. Now this has been reduced to 25%.

THIRD SCHEDULE


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changes through finance act 2013

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