News
Thursday, June 23, 2011
NA approves budget, rejects all opp amends
* House incorporates 20 out of total 66 recommendations of Senate in finance bill
Staff Report
ISLAMABAD: The National Assembly on Wednesday approved the Finance Bill 2011 for the upcoming year worth Rs. 2.7 trillion, with majority vote and rejecting amendments moved by the opposition.
The Lower House session, presided over by Speaker Dr Fahmida Mirza, also incorporated 20 out of total 66 recommendations of the Senate in the finance bill, which was moved by Federal Finance Minister Dr Abdul Hafeez Sheikh. The government rejected the amendments moved by the opposition members who sought bringing down of the GST rate to 10 percent from the present 16 percent as well as increasing income tax limit to 0.5 million.
While responding to amendments of the opposition, Sheikh said that GST rate would further reduce after the completion of reforms in the existing sale tax. About the income tax exemption, the federal minister said that keeping in view the inflationary trends, the government had enhanced the exemption limit from Rs 300,000 to Rs 350,000. “Government has to strike a balance while taking such a decision”, Sheikh maintained.
He reiterated the commitment that tax base would be broadened during this year by brining into the tax net 700,000 potential taxpayers.
It also approved giving a tax credit equal to hundred percent of the tax payable on the taxable income arising from such industrial undertaking for a period of five years beginning from the date of setting up or commencement of commercial production, whichever is later for establishing of new industrial units.
Tax credit under this section shall be admissible where; (a) The company is incorporated and industrial undertaking is setup between the first day of July 2011 and 30th day of June 2016; (b) Industrial undertaking is managed by a company formed for operating the said industrial undertaking and registered under the Companies Ordinance, 1984 (XLVII of 1984) and having its registered office in Pakistan; (c) The industrial undertaking is not established by the splitting up or reconstruction or re-constitution of an undertaking already in existence or by transfer of machinery or plant from an industrial undertaking established in Pakistan at any time before 1st of July 2011; and the industrial undertaking is setup with hundred percent equity owned by the company.
The amount of credit admissible under this section shall be deducted from the tax payable by the taxpayer in respect of the tax year in which the plant or machinery referred in subsection (1) is purchased and installed.
Where any credit is allowed under this section and subsequently it is discovered, on the basis of documents or otherwise, by the Commissioner inland Revenue that any of the conditions specified in this section was not fulfilled, the credit originally allowed shall be deemed to have been wrongly allowed and the Commissioner inland Revenue may, notwithstanding anything contained in this Ordinance, re-compute the tax payable by the taxpayer for the relevant year and the provisions of this Ordinance shall, so far as may be, apply accordingly.
According to 65E amendment namely tax credit for industrial undertakings established before the first day of July, 2011; (1) Where a taxpayer being a company invests any amount, with hundred per cent equity investment, in the purchase and installation of plant and machinery for the purposes of balancing, modernisation, replacement, or for expansion of the plant and machinery already installed in an industrial undertaking setup in Pakistan before the first day of July 2011, a tax credit shall be allowed against the tax payable in the manner provided hereinafter, in the same proportion, which exists between and total investment and such equity investment made by the industrial undertaking. Earlier, opposition benches tabled certain amendments and demanded that Rs 53 billion taxes promulgated through ordinance be tabled in parliament.
Courtesy www.dailytimes.com.pk