73rd update dated July 20, 2010

 This update covers:-

-Finance Act, 2010;
-Circulars 05 to 10 of 2010.

These are briefly summarized as follows:-

Part I – Income Tax Ordinance

1.    Amendments have been made in the Ordinance by the Finance Act, 2010 dated June 30, 2010 in the following provisions:-

Sections:

2(clauses 2, 11B, 13, 13A, 29C, 38A, 41, 48A & 65); 4(1), (4); 13(7); 22(3); 37(3), (5); 37A; 65B; 65C; 87(2A); 111(2), (3), (4); 113(1), (2); 114(6), (6A); 115(4B); 116(2A), (4); 118(3); 119(6); 120(1A); 121(1); 122(3), (4), (5AA); 122A(1); 122C; 124(2); 127(1), (4); 130(4); 134A(2), (3); 137(2), (6); 138B; 146B(1); 147(1), (2), (4), (4B), (5), (5A), (5B); 148(7); 152(2); 153(9); 155(2); 161(1B); 162(2); 165(1), (2), (4); 169(1), (3); 174(3); 176(1); 177(1) to (8), (10); 181A; 182; 183; 184 to 190; 202; 203(1), (1A), (1B), (3), (4); 203A; 205(1), (1A), (1B), (2), (3), (5), (6); 205A; 207; 208(1); 209(2), (4); 210(1), (1A), (1B); 211; 214C; 215(1), (2); 217(3); 226; 227(1), (2); 229; 231AA; 233(1); 233A(2); 236(1), (3A); 236A(1); 236B; 237(2); 239(3), (7); 239B; 240(2).

Bulk of the amendments relate to the re-naming and re-designation of various officers of the Department as officers of the Inland Revenue; the Appellate Tribunal as the Appellate Tribunal Inland Revenue; and changing additional tax to default surcharge.

Some of the other amendments made are as follows:

-s. 2(29A), defining industrial undertaking.

-s. 37A, taxation of capital gains from disposal of securities held for less than a year.

-s. 65B, allowing tax credit @10% for investment in plant and machinery for BMR.

-s. 65C, allowing tax credit of 5% for first year of listing on stock exchange.

-s.111(2), changing the year of taxation for unexplained or untaxed money from the year of discovery to the year to which the amount relates.

      -s. 114(6) and (6A), providing for revision of returns to benefit from lower default surcharge etc. where notice u/s 122(9) is issued or being issued.

      -s.116, providing for return in response to a provisional assessment to be accompanied by a wealth reconciliation and explanation of sources.

      -s. 118, to revise the dates for filing returns and annual statements in non-corporate sector.

-s. 122(5AA), to clarify that a Commissioner always had the power of revision.

      -s. 122C, providing for a new mechanism for provisional assessment.

-s. 138B, providing for preferential ranking of tax liability in case of estates in bankruptcy.

-s. 174, requiring records and accounts to be maintained for 6 years or till completion of all proceedings instead of the current 5 years.

-s. 177, extensive amendments re: powers of the Commissioner to call for record and accounts.

-s. 181A, empowering the Board to institute an active tax payers list.

-s. 182, revising provisions relating to offences and penalties.

-s. 183, empowering the Federal Government to allow exemption to persons or classes of persons from penalty and default surcharge by notification.

-s. 203 and 203A, providing for the appointment and qualifications of Special Judges and related matters and appeals.

-s. 214C, providing for the selection of cases by Board for audit.

-s. 231AA, providing for payment of advance tax on transactions in banks.

-s. 236B, providing for advance tax on purchase of air tickets.

-Most of the amendments made by the Finance (Amendment) Ordinance, 2009 dated October 28, 2009 have been incorporated in the Finance Act 2010. Some of the amendments are to be deemed to have taken effect from June 5, 2010

Schedules:

I           Part I Division I, 1A, 1B, VII; Part II; Part III Division II, VI; Part IV Division III, IV, V, VIA, IX;

II          Part I clauses: 57, 72, 92A, 999A, 102, 103, 103B, 110, 110A, 111, 126F; Part II clause 26A; Part III clause 1A; Part IV clauses: 10A, 52, 73 to 75;

III        Part I sub-clause V;

IV         Rules 6B, 6C & 7;

V          Part I rule 4A;

VII       Rules 1 and 8A.

            Significant amendments are as under:-

            -New rates of tax, lowered for individuals, and AOPs.

            -Advance tax on imports @ 5% instead of the current 4%.

            -New rates of tax on electricity bills.

Part IV – CVT

2.    On page 10, Rule 7(2) has been amended by Finance Act, 2010 dated June 30, 2010.