LAHORE: The federal government has taken a number of tax measures in the federal budget for the fiscal year 2016-17.
As per details, advance tax is paid on the basis of tax calculated on income or minimum tax on turnover and is required to be deposited in four installments. However, advance tax is not calculated on the basis of Alternate Corporate Tax (ACT).
It is proposed to extend the holding period for taxation of capital gain on sale of immovable property from two years to five years to be charged at uniform rate of tax of 10 percent.
In order to simplify taxation of property income in the case of individuals and associations of persons, it is proposed that for such persons the property income may not be clubbed with income under other heads and may be taxed as a separate block of income.
At present a large number of service providers are filing sales tax returns with the provincial authorities but are not filing income tax returns. At present, companies declaring gross loss are exempt from payment of minimum tax at the rate of 1% of turnover. However, this exemption is not available to Individuals and AOPs.
At present, minimum tax on turnover is paid by individuals and AOPs having turnover exceeding fifty million rupees. At present tax collection from builders and land developers does not match with the level of investment and profits accruing in construction sector.
In order to expand the tax base, it is proposed that a withholding tax at the rate of 5% of the value of minerals be collected from nonfilers by the departments of provincial governments responsible for issuing licenses for extraction of minerals and collection of royalty on the extracted minerals.
Super tax was levied for the tax year 2015 to meet revenue needs for certain unforeseen expenditure by the government. Since the circumstances still persist, it is being extended for tax year 2016.
Continuing with the policy of differential taxation for filer and non-filer, various sections are included with higher withholding tax rates for those not filing income tax returns.
In order to encourage capital markets, it is proposed to maintain the existing tax rate for filers only. However, the tax rates for non-filers are being increased.
Traders are not properly contributing in tax collection therefore it is proposed to increase the adjustable withholding tax on commercial electricity bills exceeding Rs20,000 per month to 12 percent.
