ISLAMABAD, June 3 (APP): Following are the revenue measures taken in the Federal Budget for the fiscal year 2016-17:
Advance Tax for Alternate Corporate Tax (ACT): Advance tax is paid on the basis of tax calculated on income or minimum tax on turnover and is required to be deposited in four installments. However, advance tax is not calculated on the basis of Alternate Corporate Tax (ACT). Taxpayers under existing law have to pay entire tax at the time of filing of return. It is proposed that Alternate Corporate Tax may also be made the basis for payment of advance tax.
Rationalizing Rates For Capital Gain Tax On Immovable Property: It is proposed to extend the holding period for taxation of capital gain on sale of immovable property from two years to five years to be charged at uniform rate of tax of 10%.
Taxation of Property Income on Gross Basis: In order to simplify taxation of property income in the case of individuals and associations of persons, it is proposed that for such persons the property income may not be clubbed with income under other heads and may be taxed as a separate block of income. Accordingly separate rates of tax have been proposed.
Persons registered with Provincial Sales Tax Authorities: At present a large number of service providers are filing sales tax returns with the Provincial authorities but are not filing Income Tax returns. In order to encourage filing of Income Tax returns, it is proposed that an advance tax at 3% of turnover of nonfiler service providers be collected by provincial ST authorities along with their sales tax returns.
Rationalizing Minimum Tax: At present, Companies declaring Gross Loss are exempt from payment of Minimum Tax at the rate of 1% of turnover. However, this exemption is not available to Individuals and AOPs. In order to maintain neutrality and to stop misuse of the provision, it is proposed that Minimum tax may be charged on companies declaring gross loss.
Extending the Scope of Minimum Tax: At present, minimum tax on turnover is paid by individuals and AOPs having turnover exceeding fifty million rupees. A large number of Individuals and AOPs having turnover below Rs fifty million are filing returns yet they are not paying any tax. It is proposed that minimum tax @ 1% of turnover may be made payable by individuals and AOPs having turnover exceeding ten million rupees.
Taxation of Builders & Land Developers: At present tax collection from Builders and Land Developers does not match with the level of investment and profits accruing in construction sector. After discussion with ABAD, final tax is being imposed on builders/ land developers on the basis of per unit area.
Withholding Tax on Mining: In order to expand the tax base, it is proposed that a withholding tax at the rate of 5% of the value of minerals be collected from nonfilers by the departments of provincial governments responsible for issuing licenses for extraction of minerals and collection of royalty on the extracted minerals.
Extending the leviability of Super Tax for year: Super Tax was levied for the Tax Year 2015 to meet revenue needs for certain unforeseen expenditure by the Government. Since the circumstances still persist, it is being extended for Tax Year 2016.
Increasing Cost of Non-Compliance with Tax Laws:
Continuing with the policy of differential taxation for filer and non-filer, various sections are included with higher withholding tax rates for those not filing income tax returns.
Rate of tax on Securities: In order to encourage capital markets, it is proposed to maintain the existing tax rate for filers only. However, the tax rates for nonfilers are being increased.
Rationalization of Withholding Tax on Commercial Electricity Bills: Traders are not properly contributing in tax collection therefore it is proposed to increase the adjustable Withholding Tax on commercial electricity bills exceeding Rs 20,000 per month to 12 percent. No increase is however proposed on industrial and residential electricity bills.