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Salient Features of Income Tax Act 1961

The document outlines proposed changes to Pakistan's income tax law, including: increasing the basic exemption limit from Rs. 300,000 to Rs. 350,000; providing a 100% tax credit for new corporate industrial undertakings with 100% equity financing; reducing the tax deducted on cash withdrawals from banks to 0.2%; capping cumulative tax credits for investments and insurance premiums at 15% of taxable income up to Rs. 500,000; and providing tax relief for withdrawals over Rs. 500,000 from voluntary pension funds.

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10 views2 pages

Salient Features of Income Tax Act 1961

The document outlines proposed changes to Pakistan's income tax law, including: increasing the basic exemption limit from Rs. 300,000 to Rs. 350,000; providing a 100% tax credit for new corporate industrial undertakings with 100% equity financing; reducing the tax deducted on cash withdrawals from banks to 0.2%; capping cumulative tax credits for investments and insurance premiums at 15% of taxable income up to Rs. 500,000; and providing tax relief for withdrawals over Rs. 500,000 from voluntary pension funds.

Uploaded by

Mfarhanonline
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

SALIENT FEATURES

INCOME TAX

1. For the welfare of individuals with low income earnings, the basic exemption
limit is proposed to be enhanced from Rs.300,000/- to Rs.350,000/-. However
individual taxpayers whose normal income is between Rs.300,000/- to
Rs.350,000/- shall be required to file return of income and statement, for the
purposes of documentation.

2. In order to encourage enhanced equity financing, and to provide relief to new


corporate industrial undertakings established on or after 1st July 2011, with
100% equity financing, a tax credit equal to 100% of tax payable is proposed.
The existing companies may also take benefit under this arrangement if
investment in BMR is financed through their 100% equity, on or after by 1st July
2011.

3. The rate of tax deductible on Cash Withdrawals from Banks is proposed to be


reduced to 0.2% from existing 0.3%, for bringing in improvement in the liquidity
position of eligible taxpayers.

4. In order to harmonize the existing tax credits available to individuals for


investment in shares and for premium paid to Insurance Company, the
maximum cumulative limit for both the investments is fixed @ 15% of the
taxable income, with maximum upper limit for investment upto five hundred
thousand.

5. Tax relief is proposed to be provided to withdrawals exceeding Rs.500,000/-


from a Voluntary Pension Fund.

6. For encouraging companies’ enlistment on stock exchange, the existing tax


credit equal to 5% is proposed to be enhanced to 15%.

1
7. For the national cause of Broadening of Tax Base and utilization of third party
databases, NTN and CNIC of eligible taxpayers are proposed to be provided
expressly alongwith other particulars, in the withholding tax statements filed by
withholding agents.

8. For the purpose of identification of eligible taxpayers, the requirement of


mandatory filing of return of income by the commercial and Industrial consumers
of electricity with annual billing above one million rupees, is proposed. This
measure will also help in Broadening of Tax Base in the country.

9. In order to discourage the practice of arbitrage by banks for receiving ‘dividends’


from Asset Management Companies, the rate of tax on such return is proposed
to be enhanced from 10% to 20%.

10. For encouraging investments made by non-residents in Government Securities,


the withholding tax on profit on debt deductible @ 10% is proposed to be a final
tax. This measure will relieve the non-residents from the statutory requirement
of filing of return of income, and will boost national economy.

11. The withholding tax on profit on debt deductible @ 10% arising from investment
in Government securities by individual is also proposed to be a final tax. This
measure will relieve such taxpayers from the statutory requirement of filing of
return of income, and will also encourage domestic investments in the
Government Securities.

12. After imposition of capital gain tax on Modarba certificates and instruments of
redeemable capital traded at stock exchange through Finance Act 2010, the
0.01% CVT on such instruments is proposed to be withdrawn in order to
encourage their trade.

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