This blog is written by Mr. Hussain Mehmood Asif, Senior Manager Taxation Advisory Services and Principal Editor of KCO Publications. Please read this blog and provide your valued comments.

Salient Features of Finance Supplementary (Second Amendment) Bill 2019

There is a lot in news and social media regarding the above mentioned bill. The current blog aims to enlist salient highlights without forming or conveying any opinion and for ease of understanding:

AMENDMENTS IN INCOME TAX ORDINANCE, 2001:

  • It is proposed to amend section 5A to abolish tax on undistributed profits after tax year 2019
  • It is proposed to amend section 37A to allow carry forward of capital losses for tax year 2019 and onwards for three years
  • It is proposed to extend exemption on incorne of Federal Government from sale of spectrum and licenses to renewal of licenses.
  • It is proposed to insert section 998 to empower Federal Government to prescribe schemes for small traders and shopkeepers
  • It is proposed to amend section 123 to provide for provisional assessment of off-shore assets
  • It is proposed to amend section 148 to make tax collected on certain commercial imports as final tax
  • It is proposed to amend section 165 to make requirement of filing of withholding statement bi-annual instead of monthly, to make the relevant related technical changes and to authorize empower Commissioner to call for withholding statement for any period deemed fit for the purpose
  • It is proposed to amend section 227C to relax restriction for non-filers on purchase of locally manufactured motor vehicles up to 1300CC and to relax restriction on purchase of immovable property as well as locally manufactured vehicles for non-resident Pakistani citizens
  • It is proposed to omit section 230E which provided for establishment of Directorate General of Transfer Pricing
  • It is proposed to amend section 233A to abolish advance income tax on members of stock exchange from February 01, 2019
  • It is proposed to abolish super tax on non-banking persons after tax year 2019 and to keep rate of super tax for banking companies at 4%.
  • It is proposed to provide advance income tax rates on import of mobile phones.
  • It is proposed to abolish advance income tax on cash withdrawals & banking transactions for filers.
  • It is proposed to increase rate of advance income tax on purchase registration or booking of motor vehicles by non-filers.
  • It is proposed to reduce the minimum rate of withholding tax to Rs. 5000 in case of small marriage halls (area of function less than 500 sq yards)
  • It is proposed to grant exemption from tax on income to National Disaster Risk Management Fund and Deposit Protection Corporation
  • It is proposed to enhance and extend exemption from tax on profit & gains to manufacturers of plant and machinery and equipment for dedicated use in renewable energy generation set up between March 01, 2019 and 30th June, 2023 for five years
  • It is proposed to reduce tax liability on inter-corporate dividend in case of income arise on availing group relief
  • It is proposed to grant exemption to National Disaster Risk Management Fund and Deposit Protection Corporation from minimum tax u/s 113
  • It is proposed to grant exemption to National Disaster Risk Management Fund from tax deductions under section 151 and 153
  • It is proposed to grant exemption to banks from filing withholding statements in respect of sections 151 & 231 i-e tax deducted on cash withdrawals and bank profit
  • It is proposed to grant exemption from deduction of tax on auction of franchise rights to teams participating in national or international sports league
  • It is proposed to grant exemption from withholding tax on cash withdrawal to accounts where amounts are directly credited through foreign remittances
  • It is proposed to exempt taxable income of banking company from additional financing in specific sectors from super tax.
  • It is proposed to amend Seventh Schedule to provide for reduced rate of tax on income of banks arising from additional financing to Micro, Small & Medium Enterprises, Low cost Housing and Farm Credits.

AMENDMENTS TO SALES TAX ACT, 1990:

  • It is proposed to insert new section 67A after section 67 introducing promissory note for payment of refunds to those who opt so, instead of cheques or electronic advice to SBP in accordance with mode, manner, features laid down in newly inserted Tenth Schedule to the Act subject to opting so by the claimant.
  • It is proposed to insert the words “for the period ending on 30rh June, 2023″ after the word ” lslamabad” in Table-1 in the Sixih Schedule fixing five year period out loud
  • It is proposed to substitute serial number 117 and entries relating thereto in columns (1), (2) and (3) in Table-1 in the Sixth Schedule proposing exemptions to renewable energy resources and machinery used for the purpose
  • It is proposed to substitute serial number 2 and entries relating thereto in columns (1), (2), (3), (4) and (5) in column (1) in the Table in the Ninth Schedule introducing new categories and sales tax rates relating those

AMENDMENTS TO CUSTOMS ACT, 1969:

  • It is proposed to amend First Schedule to the Customs Act, 1969 to give effect to the proposed exemption on import of all items for Ostomy use;
  • It is proposed to amend Fifth Schedule to the Customs Act, 1969 to give effect to the proposed exemption of duty on newsprint;
  • It is proposed to amend Fitth Schedule to the Customs Act, 1969 to give effect to the proposed reduction ln rate of customs duty on Plastic moulding Compound;
  • It is proposed to add proposed Part-Vlll of Fiflh Schedule to the Customs Act, 1969 to give effect to the proposed reduction in rate of customs duty on certain industrial raw materials/ inputs

AMENDMENTS IN FEDERAL EXCISE

  • It is proposed to substitute the phrase “sub-section (1) of section 29” for the phrase “section 30” in sub-clause (ii), in clause (aa) in sub-section
  • It is proposed to substitute the comma and words “, but not exceeding 3000 cc” rfter the word “above”, occurring twice, in column (2) against serial number 55 in colun’rn (1) in Table I in the First Schedule
  • It is proposed to insert the hyphen and word ‘-five” after word “twenty”, in column (4) against serial number 55 in column (1), n Tabl€t I in the
  • First Schedule: It is proposed to insert new serial numbers 55A and 55B and entries relating thereto in columns (1), (2), (3) and (4) after serial number 55 in Table I in the First Schedule

I hope that the above mentioned comments will help the readers to understand the bill and impact of proposed amendments. A plain reading leads to appreciate the steps taken despite the difficult economic condition. Let’s hope that the desired goals may also be achieved.

Note: This is just initial understanding of the Bill presented and may not be considered as final word.

Hussain Mehmood Asif