Major Amendments in Finance Bill
National Assembly of Pakistan today approved the Finance Bill for financial year 2008-09. Out of total 76 amendments, proposed by the Senate of Pakistan, 51 proposals have been accepted. The remaining 15 proposals will be duly considered during the course of the year.
Major Amendments made in the Finance Bill, passed by the National Assembly today, concerning Sales Tax & Federal Excise are as under:
Definition of cottage industry has been amended to provide that those manufacturers shall fall within the purview of cottage industry whose annual utility bill is below seven lac rupees and annual turnover is below Rs. Five million. Earlier the utility bill limit was six lac rupees. It may be noted that supplies of cottage industry are exempt from payment of sales tax.
Exemption from payment of sales tax has also been granted by amending Sixth Schedule of Sales Tax Act, 1990, to hospitals owned by federal or provincial government, hospitals of statutory teaching universities having two hundred or more beds and charitable hospitals having fifty or more beds.
The services of property developers and promoters have been subjected to federal excise duty by amendment in First Schedule. The development of plots shall be subject to FED at Rs. 100 per square yard and construction of residential and commercial units shall be subject to FED at Rs. 50 per square foot of covered area.
The duty structure for cigarettes has been changed to reflect increase in prices of cigarettes. The new structure shall be effective from 22nd June 2008.
Amendments pertaining to Customs include the reduction of import duty on sulphonic acid from 15% to 10%.
INCOME TAX :
Earlier, the definition of urban area for the purpose of CVT, apart from rating areas, also included the following extended areas:
I. In respect of Karachi, 40 kms from the outer limit of rating area or Cantonment Board.
II. In respect of Faisalabad & Lahore, 30 kms form the outer limit of rating area or Cantonment Board.
III. In respect of other cities, 10 kms form the outer limit of the rating areas.
Now, the urban area for the purpose of CVT has been restricted to rating areas only and the above limits have been withdrawn.
2. In Finance Bill, a proposal was included whereby the limit of donation to charitable institutions, educational intuitions and hospitals etc were reduced from 30% and 15% to 10% of the taxable income in respect of individuals and companies. By making amendment in the Finance Bill this reduction in donation for the purpose of tax credit to a donor has been withdrawn.
3. One time collection of Withholding Tax (WHT) on purchase of new cars has been reduced substantially. The rate of WHT on purchase of new cars will now be as under:
|ENGINE CAPACITY||AMOUNT OF TAX|
|Upto 850cc||Rs. 7, 500|
|851cc to 1000cc||Rs. 10,500|
|1001cc to 1300cc||Rs. 16,875|
|1301cc to 1600cc||Rs. 16,875|
|1601cc to 1800||Rs. 22,500|
|1801cc to 2000cc||Rs. 16,875|
|Above 2000cc||Rs. 50,000|
4. Exemption form Withholding Tax (WHT) in respect of the following categories of exporters
has been allowed:
i) Direct & Indirect exporters covered, by DTRE scheme.
ii) Goods temporarily imported into Pakistan for the purpose of re-export.
iii) Manufacturing bonds.
Further, WHT on import of cotton lint, cotton yarn, and fabrics will be subjected to 1% WHT. The anomaly has been removed by bringing it at par with five (5) zero-rated sectors in Sales Tax.
5. Earlier, the senior citizens of age 60 and above were allowed a 50% rebate on tax liability if their total taxable income was upto Rs. 400,000. This limit has been increased to RS. 500, 000 to give relief to the senior citizens.
6. Earlier fixed tax was imposed on builders and developers. Now this tax has been withdrawn as income tax and the Federal Excise duty on services of property developers and builders has been levied.
Several other changes of editorial nature have also been made on the basis of the discussion in the Parliament on the Bill.