This blog is written by Mr. Rizwan Abbas, Senior Associate Taxation Advisory Services. Please read this blog and provide your valued comments.
Highlights of important fiscal proposals
- Corporate tax rate for companies is gradually reduced to 25% till tax year 2023 as tabulated below:
Tax year Rate
2023 and onwards 25%
- Individual tax rate slabs have been revised in line with tax reforms package. Maximum rate of tax for individuals (both salaried and non-salaried) is reduced to 15%.
- The limit of investment in shares, Sukuks our life insurance premium has been enhanced from Rs.1.5 million to Rs.2 million for claiming tax credit under section 62.
- For association of persons the maximum tax rate of 35% for the highest slab is reduced to 30%.
- Super tax to be abolished in phased manner. It is to be reduced by 1 percent every year.
- Decision of ADRC shall be binding on both FBR and the tax payer subject to withdrawal of appeals by the tax payer as well as the FBR. Retired High Court judges and tax professionals to be included in the ADRC.
- Withholding tax at 5% on issuance of bonus shares is abolished.
- Tax on undistributed profits is reduced from 7.5 % to 5%. The said rate is applicable where every public company, other than scheduled bank or a modaraba, that drives profit for at tax year does not distribute atleast 40% of its after tax profits within six months of the end of the tax year through cash or bonus shares. The condition of distributing 40% of after tax profits is reduced to 20%.
- Commissioner to select a case for audit only once in 3 years, unless prior approval is obtained from the Board in exceptional circumstances.
- Automatic selection for audit under section 214D for late filing of return has been abolished.
- Late filer of income tax return not to be included in the Active Taxpayers’ List for the year and shall not be allowed to carry forward any tax losses.
- Time limitation to avail tax credits under sections 65B, 65D and 65E has been extended to the year ending on June 30, 2021.
- Minimum threshold of tax deduction Rs.10,000 on account of payment for services and Rs. 25,000 for goods is increased to Rs.30,000 and Rs.75,000 respectively.