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    Clarification and Deduction of Tax PDF

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    usmansidiqi
    The document outlines various exemptions from tax deduction at source under Section 153 of the Income Tax Ordinance, 2001. It lists parties that are not required to deduct tax such as exporters, special purpose vehicles for securitization, the Islamic Development Bank, manufacturer-cum-exporters, large trading houses, and large import houses that meet certain capitalization, import, sales, and record keeping requirements. It also provides clarifications for bifurcating payments to agents and principals, obtaining import documents for claimed exemptions on imported goods sales, and that lease payments and car rentals are subject to tax deduction while insurance premiums and claims are not.

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    Clarification and Deduction of Tax PDF

    Uploaded by

    usmansidiqi
    702 views1 page
    The document outlines various exemptions from tax deduction at source under Section 153 of the Income Tax Ordinance, 2001. It lists parties that are not required to deduct tax such as exporters, special purpose vehicles for securitization, the Islamic Development Bank, manufacturer-cum-exporters, large trading houses, and large import houses that meet certain capitalization, import, sales, and record keeping requirements. It also provides clarifications for bifurcating payments to agents and principals, obtaining import documents for claimed exemptions on imported goods sales, and that lease payments and car rentals are subject to tax deduction while insurance premiums and claims are not.

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    The document outlines various exemptions from tax deduction at source under Section 153 of the Income Tax Ordinance, 2001. It lists parties that are not required to deduct tax such as exporters, special purpose vehicles for securitization, the Islamic Development Bank, manufacturer-cum-exporters, large trading houses, and large import houses that meet certain capitalization, import, sales, and record keeping requirements. It also provides clarifications for bifurcating payments to agents and principals, obtaining import documents for claimed exemptions on imported goods sales, and that lease payments and car rentals are subject to tax deduction while insurance premiums and claims are not.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    702 views1 page

    Clarification and Deduction of Tax PDF

    Uploaded by

    usmansidiqi
    The document outlines various exemptions from tax deduction at source under Section 153 of the Income Tax Ordinance, 2001. It lists parties that are not required to deduct tax such as exporters, special purpose vehicles for securitization, the Islamic Development Bank, manufacturer-cum-exporters, large trading houses, and large import houses that meet certain capitalization, import, sales, and record keeping requirements. It also provides clarifications for bifurcating payments to agents and principals, obtaining import documents for claimed exemptions on imported goods sales, and that lease payments and car rentals are subject to tax deduction while insurance premiums and claims are not.

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    40. Sale of goods to an exporter of such goods outside Pakistan.

    Provided that(a) the exporter shall deduct tax on account of goods purchased in respect of goods sold in Pakistan; and (b) if tax has not beer+ deducted from payments on account of supply of goods in respect of goods soldin Pakistan, the said tax shall be paid by the exporter, if the sales in Pakistan are in excess of five percent of export sales. This exemption does not apply to sale of goods in respect of which special rates of tax deduction are specified. [SRO 368(1)/94 dated March 07,1994]. Following persons are not obliged to deduct tax at source under this section: 41. Special purpose vehicle for the purpose of securitization. [Clause (38) of Part IV of 2nd Schedule). 42. Islamic Development Bank [Clause (38C) of Part IV of 2nd Schedule]. 43. A manufacturer-cu m-exporter, excluding payments relating to goods sold in Pakistan or payments in respect of which special rates of tax deduction are specified. [Clause (45) of Part IV of 2nd Schedule]. 44. Trading Houses which full fill the following conditions in a tax year. (i) Has a paid up capital of more than RS.250 million; (ii) Owns fixed assets exceeding RS.300 million at the close of the Tax Year; (iii) Maintains computerized records of imports and sales of goods; (iv) Maintains a system for issuance of 100% cash receipts on sales; (v) Presents its accounts for tax audit every year; and (vi) Is registered with Sales Tax Department: [Clauses (57) of Part IV of 2nd Schedule) 45. Large import houses which full fill the following conditions in a tax year. (i) Has a paid up capital of more than Rs. 250 million; (ii) Has imports exceeding RS.500 million during the tax year; (iii) Owns total assets exceeding Rs. 350 million at the close of the Tax Year; (iv) Is a single object company; 25 Brochure -IR-IT-004

    (v) Maintains computerized records of imports and sales of goods; (vi) Maintains a system for issuance of 100% cash receipts on sales; (vii) Presents its accounts for tax audit every year; (viii) Is registered with Sales Tax Department; and (ix) Makes sales of industrial raw material to manufacturer registered for sales tax purposes; [Clauses (57A) of Part IV of 2nd Schedule) Clarifications 1. Paymen to agents, who work on fixed commission basis but receive payment on behalf of their principals as well, can be bifurcated between the agent and the principal for the purposes of deduction at source. Accordingly the tax deducted will be separately deposited on behalf of the agent and principal. Where the principal is exempt, the tax shall be deducted from the payment relating to the agent only. This situation normally arises in case of advertising agents, insurance agents, travel agents and agents of petroleum companies etc. [Circular No. 25 of 1980 dated September 23, 1980, Circular No.1 of 1981 dated January 03, 1981 and Circular No. 29 of 1999 dated November 16, 1999) 2. In case the recipient of payment claims exemption on account of sale of imported goods, it is the responsibility of the person making the payment to ensure that the conditions for exemption are fulfilled and for this purpose may obtain the relevant import documents etc. [Section 153(5)(a) and Clause (47A) of Part IV of 2nd Schedule) Lease payments under "lease financing arrangements" are not liable to deduction of tax at source [Circular Letter C. No. IT.JI.1(7)/84-VolII dated March 27,1988) Renting of vehicles amounts to provision of services and therefore car rentals attract deduction of tax at source [Circular Letter C. No. 1(17)WHT/91 dated November 18,1992) Insurance premiums paid to and claims discharged by insurance companies are not Collection and Deduction of Tax at Source

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