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

# Section Provision Before Change Change Sales Tax Act, 1990 new clause (5 AC) inserted that provides definition of CREST as Computerized Risk Evaluation of Sales Tax. Result of Change

2 (5 AC) not existed

2 (22A)

in older provision refernce to specific provincial sales tax ordinance was provided.

Provincial sales tax definition changed. Now Provincial Sales Tax means tax levied under provincial laws of laws relating to Islamabad Capital Territory, which are declared by the F.G, through notification in the official gazette, to be provincial sales tax for the purposes of input tax.

Now Provincial sales tax means as notified by the F.G.

2 (33 A) not existed

Supply chan defined as Supply chain means the series of transactions between buyers and sellers from the stage of the first purchase or import to the stage of final supply

2 (44A)

time of supply was meant that when goods are delivered or made 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 or made available for delivery or when supplier recieves money whichever is earlier.

Rate of Sales Tax was 16 %.

One percent increase rate of sales tax.

Now Rate becomes 17 %.

Detail of Changes Made in Sales Tax Through Finance Act, 2013 Sr. # Section Provision Before Change Change Sales Tax Act, 1990 Result of Change

3 (1A)

not existed

Previously sales tax was same for registered and unregistered one percent extra sales tax to be person. Now law discriminates charged on supply made to unrate for the both i.e 17 % for registered person. registered and 18 % for unregistered persons.

3 (1B)

not existed

Board can prescribe through notification the levying and collection of tax in addition to that of 17% on production capacity of plants, machinery etc. or on fixed basis. Gas Transmission and distribution companies shall charge 9 % sales tax in lieu of 17 % on the value of supply made to CNG stattions. where discrepancy is highlighted by the crest or input is not criteria for claiming input enhanced. verifiable in supply chain then the same cannot be claimed. Now CC or Board can post officer of inland revenue to premises of registered persons.

3 (8)

not existed

8 (1) (caa) not existed

10

40 B

Only Board has the authority to post officer of inland revenue to Chief Commissioner has also the premises of the registered given this power. person.

11

40 C

not existed

Board can notify in official gazette 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 through electronic or other means.

12

45 B (1A) not existed

CIR (A) can stay the recovery proceedings for 30 days in aggregate.

Detail of Changes Made in Sales Tax Through Finance Act, 2013 Sr. # Section Provision Before Change Change Sales Tax Act, 1990 Result of Change

13

57

Now criteria made for mistake apparent from record. Where rectified order is not made within financial year after scope of rectification was limited highlighting the mistake, the to clerical or arithmetical errors. same shall be deemed to have been made. No order can be rectified after five years from the date of the order.

Previously criteria for rectification was limited and now they have made it at par with section 221 of the Income Tax Ordinance, 2001.

14

72 C

not existed

Scheme of cash reward introduced for officers of inland revenue and informers of reliable information where recoveries are made from concealment, tax evasion etc.

Detail of Changes Made in Sales Tax Through Finance Act, 2013 Sr. # Section Provision Before Change Change Sales Tax Act, 1990 Result of Change

15

Now List has been extended to 36 items and include articles of textile and leather sold in retail packing, Household electronic goods, household gas appliances, foam or spring mattresses, Auto parts and accessories sold in retail packing, lubricating oils for List of goods on which sales tax Third vehicle sold in retail packing, was charged on retail price was Schedule tyres & tubes, storage batteries, limited to 21 items. Arms & ammunition, Paints of all kinds sold in retail packing, Fertilizers, Cement sold in retailpacking, tiles sold in retail packing, Biscuits, confectionary, choclates, tofees and candies, other goods and products sold in retail packing.

16

Milk preparations obtained by replacing one or more of the Sixth constituents of milk by another Exemption withdrawn. Schedule subtance was exempt from sales tax. Supplies against international tender was exempt from sales tax.

Now it becomes part of taxable goods.

17

Exemption withdrawn.

Now it becomes part of taxable goods.

Detail of Changes Made in Income Tax Ordinance, 2001 Through Finance Act, 2013 Sr. # Section Provision Before Change Change Income Tax Ordinance, 2001 Dividend received by company was taxable under normal law. Now it has been made final tax. Property Income was separate block of income and exemptions to individuals & Aops and persons having property income upto Rs. 150,000 were available. Property Income excluded from separate block of income and now will be taxed as per normal slabs rate applicable to business income. Certain expenses like repair & maintenance, insurance, local taxes, interest, rent collection charges, legal expenses etc can be claimed against property income subject to certains conditions and restrictions. Now Income from salary and property income can not be adjusted against losses from other heads of income.

8 (e )

15

15 A

Not existed. Previously no deductions of expenses were allowed against Ptoperty income. Income from salary and business income were allowed to set off against losses from any other head of income.

56

59 AA

Group taxation was allowed to groups following Now criteria extende and included group code of corporate governance requirements. designation rules or regulations. Now only such agricultural income shall be accepted on which agricultural tax is paid under provincial laws. Now it has been increased to 1%. Now this option has been withdran from retailers and they will be taxed under the normal law. Now builders will pay minimum tax on their income at the rates specified by the F.G. This limit of one million has been reduced to Rs. 500,000/- and further any person holding membership of any professional body, chamber of commerce and industry etc shall also file income tax return. Approval of commissioner made mandatory for the revision of return. Now every salaried individual having taxable income will file income tax return. Now the limit of one million has been withdrawn and every person filing income tax return will file wealth statement and this is pplicable from tax year 2013 and onwards.

6 7

Previously if a person offers explantion of funds, investments or expenses made, that the same are from agricultural income then the same was 111 (1) accepted. 113 (1) Minimum tax was 0.5%.

113 A

Retailers being individuals and AOPs were allowed to opt for final tax regime. A person holding industrial or commercial connection of electricity and amount of annual bill exceeds one million was required to file income tax return. Income tax return was revised without approval of commissioner. Salaried indviduals whose income was less than Rs. 500,000/- were not required to file income tax return. Individuals and members of AOPs whose annual income and share from AOP repectively was Rs. One million were required to file wealth statement alongwith their return of income.

9 10

114 (1) 114 (6)

11

115 (1)

12

116 (2)

Detail of Changes Made in Income Tax Ordinance, 2001 Through Finance Act, 2013 Sr. # Section Provision Before Change Income Tax Ordinance, 2001 Change

13

116 (4)

Now limit of Rs. 35,000 has been withdrawn and every person other than company and AOP Persons other than company filling statement filling statement under FTR will file wealth under FTR regime and paid tax amounting to Rs. statement. This provision is applicable from tax 35,000/- were required to file wealth statement. year 2013 and onwards. Employers of individuals wre required to file annual statement of deuction of tax from salary of enployees. 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 requirement has been withdrawn and now employee will file income tax returns. Where salary income exceeds Rs. 500,000/- they will file return electronically.

14

118

15

120 A

This power has been withdrawn.

16

122 C

Provisional assessments was treated as final assessment within 60 days of service of order of This period of 60 days has been reduced to 45 provisional assessment. days. Qualification for appointment of Judicial member of Appellate Tribunal was restricted to a District Judge and an advocate eligible for appointment as Judge of High Court. Qualification of Accountant member was restricted to Regional Commissioner, Commissioner inland revenue and commissioner appeals. Person having property income was not required to pay advance tax. Now the officer of Inland Revenue Service in BS20 or above and being law graduate is also eligible for becoming Judicial member of Appellate Tribunal. Criteria for becoming Accountant member of Appellate Tribunal enhanced to practicing Chartered Accountant who has practice of at least 10 years. Now person having property income will also pay advance tax.

17

130 (3)

18 19

130 (4) 147 (1)

20 21

148 (7) 153 (7)

Tax deducted on import of foreign produced Previously the tax deducted on import of foreign film imported for the purposes of screening and produced film was final tax. viewing shall not be a final tax. Withholding agent does not include persons Now a person registered under the sales tax act, registered under the Sales Tax Act, 1990 1990 is also a withholding agent. Manufacturers were required to collect tax at the This section has been deleted. Now no tax shall rate of 0.5% of gross amount of sales made to be deducted by the manufacturers on sale to the distributors,dealers and wholesalers. said persons.

22

153 A

Detail of Changes Made in Income Tax Ordinance, 2001 Through Finance Act, 2013 Sr. # Section Provision Before Change Income Tax Ordinance, 2001 Change

23

155 (3)

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

Now charitable organizations alongwwith private educational institutions, boutique, beauty parlour, hospital, clinic or maternity home have been made withholding agents. Further, individuals or AOPs paying gross rent of Rs.1.5 million will also be withholding agents.

24

164 (2)

The certificate of tax deducted at source and paid was considered to be sufficient evidence of tax Now the actual challans paid will be treated as collected and paid for claiming credit. evidence of tax deducted and paid. Now banks will furnish various information to the board including online access to the central database of the banks, list of deposits exceeding Rs. One million in a month, list of persons paying credit card bills exceeding Rs. 100,000 in a month, list of loans written off exceeding Rs. one million in a calendar year etc. Board may require in case of individuals to use CNIC instead of NTN. Now this requirement has been prescribed in ordinance.

25 26 27

165 A 181 (3) 181 C

Not existed. not existed. Previously requirement to display NTN was prescrribed in rules. Penalty for not filing of income tax return was 0.1% of the tax payable for each day of default subject to minimum penalty of Rs. 5,000 and maximum penalty of 25% of the tax payable.

28

182

Penalty increased to minimum of Rs. 20,000 and maximum of 50% of the tax payable subject to 0.1% of the tax payable.

29

182

Penalty for not filing of statement u/s 115 and 165 was 0.1% of the tax payable for each day of Now penalty has been defined as Rs. 2,500 for default subject to minimum penalty of Rs. 5,000 each day of default subject to minimum penalty and maximum penalty of 25% of the tax payable. of Rs. 50,000 Where banks do not provide required statements they will pay penalty of Rs. 2,500 for each day of default subject to minimum penalty of Rs. 50,000/-. 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. This has been increased and now ranges from Rs. 25,000 to Rs. 100,000/-

30

182

not existed

31

182

not existed Penalty for non compliance of section 177 ranged from Rs. 5,000 to 50,000 depending on the number of notices.

32

182

Detail of Changes Made in Income Tax Ordinance, 2001 Through Finance Act, 2013 Sr. # Section Provision Before Change Income Tax Ordinance, 2001 Penalty for non compliance of section 176 was Rs. 5,000 and 10,000 for first and each subsequent default respectively.. Previously no specific penalty was defined for non displaying of NTN Certificate. Previously no specific amount of fine was defined for unauthorized disclosure of information by public servant. not existed Change

33 34

182 182

This has been increased and now Rs. 25,000 and Rs. 50,000/- for first and each subsequent default respectively. Now penalty of Rs. 5,000 has been defined. Now minimum fine of Rs. 500,000 has been defined for such disclosure. The board shall keep the criteria for selection of audit confidential. Reward for officers of inland revenue and informers for recovery of tax where the same was being concealed, evaded etc. Now NCCPL shall also collect advance tax from margin financers, trading financers and lenders.

35 36

198 214 C

37

227 A

not existed

38

Previously NCCPL was required to collect advance tax from members of stock exchange 233 AA registered in Pakistan. Tax on motor vehicle collected from owners of goods transport vehicle was final tax.

39

234 (5)

Now this tax has been made adjustable. Restaurants, hotels, marriage halls etc shall collect advance tax at the rate of 10% of the total amount of Bill from the person arranging a function therein. Any licensing authority certifying any foreign TV drama serial or a play dubbed in Urdu or regional language shall collect adjustable advance tax of Rs. 100,000/- per episode. PEMRA will collect adjustable advance tax at the time of issuance of license for distribution services or renewal of a license to a licensee. Ranging from 7,500 and 10,000 to 875,000 and 900,000 depending on the type of license in case of renewal and new license respectively. Manufacturers & Commercial importers of electronics, sugar,cement,iron & steel products, fertilizer, motorcycles, pesticides, cigrattes, glass, textile,beverages,paint or foam sector shall collect adjustable advance tax at the rate of 0.1% of the sale made to dealers,distributors and wholesalers.

40

236 D

not existed

41

236 E

not existed

42

236 F

not existed

43

236 G

not existed

Detail of Changes Made in Income Tax Ordinance, 2001 Through Finance Act, 2013 Sr. # Section Provision Before Change Income Tax Ordinance, 2001 Change

44

236 H

not existed

Distributors, Dealers and Wholesalers of above mentioned products shall collect adjustable advance tax at the rate of 0.5% of the sale made to the retailers. Educational Institutions shall collect adjustable advance tax at the rate of 5% of the fee including charges collected by the institute where annual fee exceeds Rs. 200,000/-. Every market committee shall collect adjustable advance tax from delaers, commission agents or arhatis ranging from Rs. 5,000 to 10,000 depending on the category of dealers,commission agents etc.

45

236 I

not existed

46

236 J

not existed

FIRST SCHEDULE

Detail of Changes Made in Income Tax Ordinance, 2001 Through Finance Act, 2013 Sr. # Section Provision Before Change Income Tax Ordinance, 2001 There were five slabs for taxation of business individuals and AOPs. Change

47

Now two more slabs have been added for income group from 4 M to 6 M and other for those exceeding 6 M.

48 49

Slabs rate for salaried individuals alsl changed. Now 11 slabs exists for which rate of 0 % to 30 % applies. The rate of tax for all types of companies except Now the rate for companies except banking small companies was 35%. company is 34%. Now this is 5% for companies and industrial undertakings and 5.5% for all other taxpayers. Furthermore, advance tax on import of foreign produced film is 12% of the value of film.

50

Advance tax on import of goods was 5%.

51

Now this has been bifurcated into companies and other tax payers. For companies 3.5% and for others 4% in case of goods. In case of Services, 6% for companies and 7% for others. In case of The rate of withholding tax u/s 153 was 3.5% in Contracts, 6% for companies and 6.5% for case of goods and 6% for services and contracts. others. The slabs rate for withholding of tax on payment for rent has been changed. One slab has been reduced in case of individuals and AOPs. In case of companies 15 % of gross rent has been defined instead of slab rates. Rate of tax for Prize Bond Winnings etc was 10 %.This has been increased to 15%. Rate of advance tax on telephone and mobile phone was 10% of the amount of bill exceeding 1000 in case of telephone and 10% of the sale price of card or bill for mobile phone.. This has been increased to 15%. Rate of advance tax on cash withdrawl was 0.2%. This has been increased to 0.3%. Advance tax on purchase of New Vehicles was 7500 to 50,000 for engine capacity ranging from Now this has been increased and now ranges 850CC to above 2000 CC from 10,000 to 150,000. Advance tax on sale by auction was 5%. This has been increased to 10%. Second Schedule Part I (Exemption from Total Income) It provided exemption to free or concessional passage provided by transporters including airlines to its employees.

52 53

54 55

56 57

58

(53A)

Exemption has been withdrawn.

Detail of Changes Made in Income Tax Ordinance, 2001 Through Finance Act, 2013 Sr. # Section Provision Before Change Income Tax Ordinance, 2001 not existed. This type of exemption was available under claue 92 which has now been deleted. The difference between new and old provision is that new provision prescribes condition of NPO which was not in old clause. Change

59

(58A)

New inserted. It provides exemption to income of university or other educational institution being run by non profit organisation existing solely for the purpose of education and not for profit.

60 61

(98A) (103B)

Income of ICC, IDI and its memers, officials etc except Residents of Pakistan derived from ICC Champions Trophy, 2008 was exempt. This has been deleted. Now this has been made taxable as this clause has been deleted. Dividend in specie was exempt from tax. This clause provided tax holiday for entities in Tax holiday period is 10 years now for zone special econimic zone for five years and for 10 enterprise as defined in Special Economic Zone years to the developers of zone. Act, 2012 and developer of zone. PART II (REDUCTION IN TAX RATES) Rate of tax on import of Hybrid Cars reduced from 100% to 25% depending on engine capacity. PART III (REDUCTION IN TAX LIABILITY) Now limit of this allowance has been defined as to the extent of basic salary. It means that now such allowance in excess of basic salary will be taxed as per normal law. Now this limit has been reduced and now their liability will be reduced by 40%.

62

(126E)

63

(28A)

not existed

64 65

(1) (2)

Flying Allownace by pilots, flight engineers, navigators of Pakistan Armed Forces etc and submarine allowance by officers of Pakistan Navy was taxed at 2.5% as separate block of income. Income Tax payable by full time teacher and researchers was reduced by 75%.

66

(3)

The minimum tax payable by the company u/s Now the criteria for this exemption has been 113 engaged in ditribution of cigrattes increased and now every taxpayer can avail this manufactured in Pakistan was reduced by eighty exemption which was previously available to percent. companies only. PART IV (EXEMPTION FROM SPECIFIC PROVISIONS) The tax deducted u/s 236 E on foreign produced dramas and serials shall not be a final tax.

67

(56A)

not existed

68

(59)

Exemption was available on income / profits received by resident individuals from investments made 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.

Detail of Changes Made in Income Tax Ordinance, 2001 Through Finance Act, 2013 Sr. # Section Provision Before Change Income Tax Ordinance, 2001 Change

69

(72A)

not existed

The provisions of section 21 (l) regarding limit of cash payments, 113 regarding Minimum Tax, 152 regarding payment to non resident shall not apply to Hajj Group Operators in case of Hajj Operations provided that tax at the rate of Rs. 3,500 and 5,000 per haji has been paid for Tax year 2013 and 2014 respectively. Now industrial undertakings can take exemption from withholding tax liable to be dedcuted u/s 148 if the tax liability for the current year based on higher tax liability of preceding two years has been paid and exemption certificate has been obtained from commissioner.

70

(72B)

not existed

71 PART-II

THIRD SCHEDULE Initial Allowance on Plant & Machinery was 50%. Now this has been reduced to 25%.

Detail of Changes Made in Income Tax Ordinance, 2001 Through Finance Act, 2013 Sr. # Section Provision Before Change Income Tax Ordinance, 2001 Change