Following is the latest of the blogs published in the current series of KCO Blogs (Phase II)

This blog is written by Mr. Mohsin Alizai, Supervisor, Taxation and Corporate Services. Please read this read which will hopefully enhance your knowledge about a particular technical aspect of Taxation Matter.

FTR rules and salient benefits of opting for FTR

  1. Following rules apply to income subject to separate charge (FTR):
  • Tax imposed is a final tax
  • Such income is not chargeable to tax under any head of income in computing the taxable income of the person
  • No deduction is allowed for any expenditure incurred in deriving such income
  • The amount of such income is not reduced by:

(a) Any deductible allowance

(b) The set off of any loss

  • The final tax payable is not reduced by any tax credit allowed (foreign tax credit or tax credits on donations, investments etc.)
  1. Salient benefits of opting for final tax regime are as under:
  • After opting for final tax regime, the taxpayer will not be required to file return of income u/s 114. Instead the company will furnish a statement u/s 115(4) and assessment order u/s 120 will be finalized on the basis thereof.
  • The tax assessment of the company will be much simple compared to normal tax regime.
  • The taxpayer will not be subject to inadmissibility of expenses and accordingly will get more operational flexibility e.g by making payments in cash exceeding Rs.10,000.
  • Tax advisory expenses can be lowered due to simplification of taxability by opting for final tax regime.
  1. Notwithstanding the obvious benefits listed above, the taxpayer will still need to discharge its obligations as a withholding agent

Mohsin Alizai