AMAZON IN PAKISTAN – AN IMPORTANT MILESTONE
June 7, 2021

Income Tax Amendments In The Finance Bill, 2021

The finance bill of 2021 has brought forward specific modifications in the tax laws. To be more precise, the amendments have been suggested for income of salaried person and business individuals in Income Tax Ordinance, 2001.

What is the Income Tax Ordinance, 2001 ?

The ITO is the existing tax law of Pakistan. It was announced on 13 September 2001 and it became operative on 1st July 2002. Basically, it was a deviation from the schemes of Income Tax Ordinance 1979. New tax terminologies were introduced for professionals and tax officials. It included new laws that would result in the betterment of tax system in Pakistan. Discussing those laws will be a topic of its own.

Modifications suggested through Finance Bill, 2021:

The following changes were proposed in a webinar of Karachi Tax Bar Association (KTBA). They are mainly related to the income of salaries persons and business individuals. Following are the suggested amendments:

  • Exemption for medical allowance has been withdrawn.
  • Previously, interest income that was taxable at normal rate was Rs. 36 million. Now, as proposed, interest income above Rs. 5 million is taxable at normal rates.
  • Withholding tax used to be 10% for interest income below Rs. 5 million. Now, the proposed withholding tax for interest income below Rs. 500,000 is 15%.
  • The interest income that is distributed by provident fund, above Rs. 500,000 will be taxed 10%.
  • The rental income is encouraged to be taxable at normal rate.
  • There will be no tax on transferring of assets through gift/inheritance to absentee relatives.
  • The giftee will have the permit to claim Fair Market Value (FMV) of gifted assets after holding for 2 years.
  • As recommended, individuals have been made a withholding agent for payment of commission. It should have a turnover of Rs. 100 million.

CONCLUSION

We hope that the mentioned information in the article is clear to you. Spectrum is a tax firm comprising of tax professionals. If you have any tax query, feel free to contact us! For the last few years, Spectrum Consultancy has provided tax services to 5,000+ satisfied clients. If you are looking for company registration services, income tax, NGO registration, GST registration, and any other corporate service, you have come to the right place.

Leave a Reply

Your email address will not be published. Required fields are marked *