A
Bill to amend income tax laws WHEREAS a major segment of national economy is undocumented and a large number of traders who are required to file their income tax returns are either persistent non-filers or filers but are underreporting their income and are depriving the national exchequer of its due share;
WHEREAS in view of the prevailing culture of massive non-reporting and under-reporting, it is expedient to provide a one-time opportunity to the filer as well as non-filer traders to regularise their tax affairs by adopting a special and simplified procedure for assessment of their tax;
WHEREAS it is also expedient to further amend certain provisions of income tax law for the purposes appearing hereinafter;
It is hereby enacted as follows: 1. Short title and commencement.- (1) This Act may be called the Income Tax (First Amendment) Act, 2016.
(2) It shall come into force at once.
4. Amendment of Ordinance XLIX of 2001.- In the Income Tax Ordinance, 2001 (XLIX of 2001), the following further amendments shall be made, namely:-
(a) after section 99, the following new section shall be added, namely:-
"99A. Special provisions relating to traders. - (1) Subject to sub-section (3), tax payable on the profits and gains of a trader as defined in sub-section (4), who upto thirty first day of December, 2015, has not filed a return during any of the ten preceding tax years shall be computed in accordance with the rules laid down in Part I of the Ninth Schedule.
(2) ) Subject to sub-section (3), tax payable on the profits and gains of any trader as defined in sub-section (4), who
(i) is a filer; or
(ii) is NTN holder and a non-filer but has filed return or returns in any of the last ten preceding tax years; shall be computed in accordance with the rules laid down in Part II of the Ninth Schedule.
(3) Sub-section (1) and (2) shall apply, if:
(i) the return filed by the trader qualifies for acceptance in accordance with the rules laid down in the Ninth Schedule;
(ii return relates to tax years 2015 to 2018; and
(iii) "Income from Business" consists of profits and gains from trading activity only.
(4) For the purpose of this section and the Ninth Schedule, 'trader' means an individual or an AOP buying goods or merchandise and selling the same without further processing and providing business related after sales services by doing repair jobs.
Explanation:- For the removal of doubt any person engaged in
(i) rendering of or providing of services as defined in clause (ii) of sub section (7) of section 153; or
(ii) retailer falling under rule (5) of Chapter II Of Sales Tax Special Procedures Rules, 2007, shall not be treated as a trader."
(b) in the Second Schedule, in Part IV, in clause (94),-
a) for the expression "tax year 2016" appearing for the first time the expression "the period beginning first day of July, 2015 and ending thirtieth day of June, 2016" shall be substituted; and
b) in the proviso, after the figure "2016" the expression "or 2017 as the case may be" shall be inserted;
(c) after Eighth Schedule, the following new Schedule shall be inserted, namely:-
"THE NINTH SCHEDULE
(See Section 99A)
1. A trader qualifying under this Schedule shall have the option to be assessed including filing of return, either:
(a) under the provisions of the Ordinance, other than this Schedule; or
(b) under the provision of this Schedule.
PART I
RULES FOR THE COMPUTATION OF THE TAX PAYABLE ON PROFITS AND GAINS OF A TRADER FALLING UNDER SUB-SECTION (1) OF SECTION 99A
2. The tax payable on profits and gains of a trader falling under sub-section (1) of section 99A in respect of trading activities chargeable under the head "Income from Business" shall be computed in the manner hereinafter provided.
3. For trader qualifying under this Part, working capital for tax year 2015 shall not exceed rupees fifty million and tax at the rate of one per cent of the working capital shall be tax payable on profits and gains from the trading activity.
4. For tax year 2016, 2017 and 2018, trader qualifying under this Part shall pay tax at the rates specified in rule (4), subject to the following conditions:
(a) for tax year 2016, the trader shall declare turnover at least three times of the working capital declared during tax year 2015; and
(b) for tax years 2017 and 2018 the trader shall declare turnover on which tax paid is at least twenty five per cent more than the tax paid for tax year 2016.
5. For the purpose of rule (3), the tax rate on turnover shall be:
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Turnover Rate
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Where turnover does not exceed Rs 50 million 0.2%
Where turnover exceeds Rs 50 million but Rs 100,000 plus 0.15% of
the does not exceed
Rs 250 million turnover
exceeding Rs 50 million
Where turnover exceeds Rs 250 million Rs 400,000 plus 0.1% of
the turnover exceeding
Rs 250 million
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6. Trader qualifying under this Part shall be entitled to take credit of imputable income as defined in clause (28A) of section 2 of the Ordinance, for tax years 2016 to 2018, in relation to tax paid under rule (3) for the purpose of section 111.
PART II
RULES FOR THE COMPUTATION OF THE TAX PAYABLE ON PROFITS AND GAINS OF A TRADER FALLING UNDER SUB-SECTION (2) OF SECTION 99A
7. The tax payable on profits and gains of a trader falling under sub-section (2) of section 99A in respect of trading activities chargeable under the head "Income from Business" shall be computed in the manner hereinafter provided.
8. For tax year 2015, the tax payable on profits and gains of a trader qualifying under this Part shall be higher of the following:
a) 25% higher tax than paid for tax year 2014 or for the latest tax year for which return has been filed on the basis of taxable income;
b) tax on turnover at the rates specified in rule (4); or
c) rupees thirty thousand.
9. For tax years 2016 to 2018, the tax payable on profits and gains of a trader qualifying under this Part shall be higher of the following:
a) 25% higher tax on the basis of taxable income than tax paid for tax year 2015; or
b) tax on turnover at the rates specified in rule (4).
10. Trader qualifying under this Part, who has filed return for tax year 2015 before the due date of filing of return under this Schedule, may file a revised return subject to the condition that the tax paid is higher of the following:
a) tax as per rule (7) on the basis of revised return; or
b) 10% higher tax than the tax paid as per original return.
11. For tax year 2015, the provisions of section 114(6)(ba) shall not apply to a trader who has revised the return under rule (9) before the due date of filing of return under this Schedule.
12. Where the imputable income as defined in clause (28A) of section 2 of the Ordinance in relation to tax on turnover at the rates specified in rule (4) is higher than the taxable income declared, the trader qualifying under this Part may opt to take the credit for the purpose of section 111, of the difference between the said imputable income and taxable income, provided that tax at the rate of one per cent of the difference is paid along with the return.
PART III
GENERAL PROVISIONS FOR THE TRADERS UNDER PART I AND PART II
13. Traders deriving income other than from trading activities chargeable under the head "Income from Business", profit on debt, dividend and income from property shall not qualify under this Schedule.
14. The provisions of sections 177, 214C and 214D shall not apply to a trader qualifying under this Schedule, for tax years 2015 to 2018.
15. Trader qualifying under Part I of this Schedule shall file a return as specified in Form 'A" of rule ( ) of this Part and trader qualifying under Part II of this Schedule shall file a return as prescribed under Income Tax Rules, 2002.
16. A trader qualifying under this Schedule shall not be entitled to claim any adjustment of withholding tax collected or deducted under the Ordinance or refund due, against tax payable in respect of profits and gains relating to trading activity.
17. A trader qualifying under this Schedule shall not be entitled to claim any adjustment of refund due, against tax payable under rule (2), (3), (7), (8) or (9).
18. A trader qualifying under this Schedule shall be entitled to claim adjustment of withholding tax collected or deducted under sections 150, 151 and 155 against tax payable in respect of income under section 5, 7B and 15 respectively.
19. If a trader fails to furnish a return for any of the tax years 2016, 2017 or 2018 after having furnished a return for tax year 2015 shall not qualify under this Schedule for any of the tax years 2015 to 2018 notwithstanding the fact that the return for tax year 2015 stood qualified under this Schedule at the time of furnishing of such return and all the provisions of the Ordinance shall apply.
20. Where it is subsequently discovered by the Commissioner that the trader was not eligible to be qualified under this Schedule or became ineligible to be qualified under this Schedule during any time between tax years 2015 to 2018 due to non-payment of tax or filing of return or otherwise, the trader shall be treated to have exercised option (b) of rule (1) and all the provisions of the Ordinance shall apply accordingly.
21. Tax payable under rule (2), (3), (7), (8) and (9) shall be paid in State Bank of Pakistan or authorised branches of National Bank of Pakistan and evidence in the form of a copy of CPR (Computerised Tax Payment Receipt) shall be provided along with the specified or prescribed return, as the case may be, by the due date; or
22. A trader qualifying under this Schedule shall not be a prescribed person for the purpose of section 153 of the Ordinance.
23. For the income relating to trading activity and qualifying under this Schedule:
a) the Commissioner shall be taken to have made an assessment of income for that tax year, and the tax due thereon as equal to those respective amounts computed under rules (2), (3), (7), (8) and (9) of this Schedule; and
b) the specified or prescribed return, as the case may be, shall be taken for all purposes of this Ordinance to be an assessment order including the application of Section 120.
Explanation: For the removal of doubt and for the purpose of this rule it is declared that income means taxable income or imputable income as the case may be.
24. The Federal Government may, from time to time, by notification in the official Gazette, amend the schedule so as to add any entry therein or modify or omit any entry therein.
25. The provisions of sub-section (2) of section 116 shall not apply for the tax year 2015 to the trader qualifying under this Schedule if the declared income for the year is less than one million rupees.
26. Notwithstanding anything contained in aforesaid rules, a return qualifying under this Schedule may be subjected to amendment under section 122 where definite information, as defined in sub-section (8) of section 122, comes into the knowledge or possession of the Commissioner in which case all the provisions of the Ordinance shall apply accordingly.
27. In this Schedule,-
a) 'due date' means ----- for tax year 2015 and for the tax year(s) 2016, 2017 and 2018 on the date prescribed in sub-clause (b) of sub-section (2) of section 118.
b) 'Turnover' means turnover as defined in clause (a) of sub-section (3) of section 113 of the Ordinance.
c) Working capital means the difference between the current assets and current liabilities of the trader's business
28. Persons convicted under Control of Narcotics Substances Act, 1997, Anti Terrorism Act, 1997 and Anti-Money Laundering Act, 2010 shall not be eligible to qualify under this Schedule.
29. Return for the trader qualifying under Part I of the Schedule is specified as below:
"Form A
RETURN FOR TRADER QUALIFYING UNDER PART I OF THE SCHEDULE FOR THE TAX YEARS 2015 TO 2018
Name of proprietor/Managing Member of AOP______________________
CNIC: (please attach copy of CNIC)_____________________________
Business (es) Name &Address(es) _______________________________
_______________________________________________________________
Phone:___________Email:_______________Mobile: _________________
Residential Address of the proprietor:____________________________________________________
Name(s) and Residential address(es) of Members of AOP (if applicable) _______________________________________________________________
(1) Amount of working capital ________________________________
(2) Tax payable on (1) above (for tax year 2015 only)__________
(3) Total Turnover ______________________________________________
(4) Tax payable on (3) above (for tax years 2016 2017 and 2018 only)_____
(5) Income from Property/Profit on Debt/Dividend, if any, ____
(6) Tax payable on (5) above________________________________
(7) Amount of Tax (2) or (4) plus (6) ________________________
(8) CPR No: ___________________________ Dated: ___________ ___
Declaration:
I______________________CNIC No _________________ in my capacity as self /representative of taxpayer named above, do hereby solemnly declare that to the best of my knowledge and belief the information given in simplified return is correct and complete in accordance with the provisions of Part I of the Ninth Schedule to Income Tax Ordinance, 2001
Signature : ________________________
Date : ________________________"