Page 43 - ICAP Newsletter December 2018 Final

Governance, Transparency and Service to Members & Students www.icap.org.pk Update: above conditions shall apply. In such a situation, if no notice under Section 122 has been issued by 7.10.2018, Tax the taxpayer shall pay penalty under entry at Serial No. Amnesty for Individual tax payers 1 of sub-section (1) of Section 182 and the audit shall stand closed. Section 214D was omitted through the Finance Act 2018 i.e. with effect from 1.7.2018. As such the cases Clarification regarding Simplified Income Tax which were selected for audit under Section 214D Return prior to 1.7.2018 are still pending. Through the Finance The FBR vide Income Tax Circular No. 5 dated 17 Supplementary (Amendment) Act 2018, a new Section October 2018, has clarified that separate and simplified 214E has been inserted in the Income Tax Ordinance 2001 income tax return form can be used by persons deriving which provides an option to taxpayers for conclusion income from ‘salary’ and ‘other sources’ where income of their pending audits automatically selected under from salary is more than 50% of the total income. Section 214D of the Ordinance upon the fulfillment of However, for persons deriving income from business, following conditions: house property (rental income) and capital gains in addition to salary income, the declaration has to be 1. The taxpayer was selected for audit under made on the main return form containing all heads of sub-section (1) of the omitted Section 214D. income and not on the simplified form. 2. Notice under Section 122 has not been issued till 7.10.2018 as the said Act No. XXXVIII of 2018 was Online Collection of Government Taxes through published in the Gazette of Pakistan, Extraordinary, Part-I on 8.10.2018. ADCs 3. The taxpayer revises return voluntarily, by 31.12.2018 The SBP vide FD Circular Letter No. 09/2018 dated 17 along with payment of tax as follows: October has advised banks/MFBs for compliance of • 25% higher tax than the tax paid with return on its earlier Circular Letter No. 5 dated July 17, 2018, for the basis of taxable income; or activation of Over the Counter (OTC) facility, October 31, • Where no tax is payable, 2% of the turnover. 2018. The OTC project was officially launched on March Turnover shall have the same meaning as defined 20, 2018, enabling the taxpayers to pay the FBR taxes in sub-section (4) of Section 113. and duties using their internet banking accounts and • Where no turnover is declared, penalty under ATMs. While most of the banks have activated the OTC entry at Serial No.1 of sub-section (1) of Section 182 of the Ordinance. and Alternate Delivery Channel (ADC) facilities, some banks/MFBs are still in the process of activating these facilities. The Federal Board of Revenue (FBR) has clarified that the option for closure of cases automatically selected for audit under Section 214D of the Income Tax Ordinance E-Procedure for Correction in CPR-IT, FST, FED 2001 would not be applicable in certain cases. An The FBR vide Circular No. 1(2)-SS(BDT)/18-CPR/119196-R explanation has been provided in Section 214E that has restricted procedure for changes in following Section shall not apply to audits selected separately by particulars of Computerised Payment Receipts (CPR) the Commissioner under Section 177 or by the board only through online application on IRIS: under Section 214C of the Ordinance. • Change of name, address, NTN/CNIC • Change in tax year/tax period The condition of revision of return or payment of 25% • Change in payment code/payment section higher tax or 2% of the turnover shall not apply if the taxable income of the taxpayer includes salary income The Online application will be submitted along with and income subject to final taxation under sub-section scanned copies of CPR and CNIC. In case of mistake (1) of Section 169 or subject to taxation under Section(s) made by withholding agent, letter from withholding 5, 5M, 6, 7, 7A or 7B of the Ordinance e.g. if the income agent and affidavit from the tax payer on stamp paper of a person includes, say, 40% salary, 30% dividend and that amendment may be made in CPR. For correction of 30% profit on debt the condition shall not apply. Even NTN/CNIC in CPR, affidavit from the person on whose if 1% of the income includes, say, business income, the name the payment has been deposited mistakenly. December 2018 43