This Blog is written by Mr. Muhammad Kaleem Majeed, Manager, Taxation Advisory Services. Pleas read this blog and provide your valued Comments
PROCEDURE FOR CHANGE OF RATE FOR SMALL COMPANIES IN IRIS
“You don’t get gushers of revenue by raising tax rates. You get it through expansion”
The purpose of this blog is to explain the procedure for having the effect of reduced rate on IRIS portal for small companies as provided in Income Tax Ordinance, 2001.
CONDITIONS FOR SMALL COMPANY
“Small company” means a company
Description | Existing Condition |
Registration under Companies Ordinance, 1984 [Now Companies Act, 2017] | on or after July 1, 2005
|
Paid up capital + undistributed reserves | Equal to or, less than 50 million |
Employees any time during the year | Equal to or, less than 250 |
Annual turnover | Equal to or, less than 250 million |
Not formed | By the splitting up or the reconstitution of a company already in existence |
Reference: Section 2(59A) of the Income Tax Ordinance, 2001
RATE FOR SMALL COMPANY
Where the taxpayer is a small company as defined above, the tax shall be payable at the rates mentioned below
Tax Year | Rate of Tax |
2019 | 24% |
2020 | 23% |
2021 | 22% |
2022 | 21% |
2023 and onwards | 20% |
Reference: Division II, Part I OF First Schedule of Income Tax Ordinance, 2001
PROCEDURE
Online application on IRIS for the relevant tax year under section 2(59A) of ITO, 2001 is required to be filed before Commissioner having jurisdiction in concerned tax office.
DOCUMENTS REQUIRED
- Application on company’s letterhead for change of rate
- Certified copy of Incorporation Certificate
- Certified copy of Form A showing particulars of paid-up capital
- Latest audited accounts along-with certificate from auditors that company’s paid up capital and undistributed reserves are not exceeding Rs. 50 million
- Month wise payroll sheets of complete year
- Undertaking on stamp paper from taxpayer
Muhammad Kaleem Majeed
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