The government has increased the rate of capital value tax (CVT) from 2 to 4 percent on transfer of immoveable property; withholding tax on imports raised from 2 to 4 percent; 16 percent Federal Excise Duty (FED) in Value Added Tax (VAT) mode on services provided by fund/non-fund services provided by banking and non-banking financial companies, insurance services, ports/terminal operators, stock brokers and 16 percent FED on advertisements in newspapers, periodicals, hoarding boards, pole signs and shop boards.

Finance Bill 2009-10 released by the Federal Board of Revenue (FBR) on Saturday reveals taxation measures to meet the revenue collection target of around Rs 1.375 trillion for 2009-10. To meet this target, the FBR has envisaged collecting Rs 565 billion in shape of direct taxes, Rs 492 billion as sales tax, Rs 165 billion as FED and Rs 160 billion as customs duty in 2009-10.

Some major changes in tax laws show that the Presumptive Tax Regime (PTR) has been abolished on imports, exports and services. They would be liable to file returns and pay minimum tax.

Through another measure, the scope of advance tax collection on purchase of new locally manufactured motorcar/jeep is proposed to be extended to all types of motor vehicles. The basic limit of exemption from income tax in respect of salaried persons is proposed to be increased from Rs 180,000 to Rs 200,000. In the case of women salaried taxpayers, this limit is proposed to be increased from Rs 240,000 to Rs 260,000.

Presently, tax collected on monthly electricity bills in respect of non-corporate commercial and industrial consumers is treated as final tax. The tax deducted on the monthly electricity bills exceeding Rs 30,000 will be adjustable which consequently could be refunded.

The Seventh Schedule to the Income Tax Ordinance has been amended to restore the facility for banks to claim deduction on account of provisions of non-performing loans. However, the same is proposed to be restricted to 1 percent of the total advances made by the bank in a tax year. The government has also restored an important provision regarding payment of minimum tax on declared turnover by the companies showing losses.

The motor vehicle registration authorities are being empowered to collect advance tax payable on purchase of a new locally manufactured motor vehicle at the time of registration of such vehicle. It is being made mandatory that the taxpayers who are required to file wealth statement shall also file wealth statement reconciliation giving necessary details and documents in support thereof.

Copyright Business Recorder, 2009