Pakistan Finance Act, 2009: 2-year imprisonment for giving inaccurate income details

By Sajid Chaudhry

ISLAMABAD: Finance Act, 2009 has declared concealment of true income or furnishing inaccurate particulars of income the impact of which is Rs 500,000 or above as an offence punishable with imprisonment of up to two years or fine or both, according to the key amendment’s notified through the Finance Act, 2009 released on Saturday.

In section 235 a new sub-section (4) has been introduced, according to which, in the case of a taxpayer other than a company, tax collected up to bill amount of Rs 30,000 per month shall be treated as minimum tax on the income of such persons and no refund shall be allowed. In the case of a taxpayer other than a company, tax collected on monthly bill over and above Rs 30, 000 per month shall be adjustable; and in the case of a company, tax collected shall be adjustable against tax liability.

Imprisonment: A new section 192A has been added in the IT Ordinance where prosecution for concealment of income has been explained. According to the new section, where, in the course of any proceedings under this ordinance, any person has either in the said proceedings or in any earlier proceedings concealed income or furnished inaccurate particulars of such income and revenue impact of such concealment or furnishing of inaccurate particulars of such income is Rs 500,000 or more shall commit an offence punishable on conviction with imprisonment of up to two years or with fine or both.

According to the amendments made in Finance Act, 1989 for applicability of Capital Value Tax (CVT) chargeable at the time of the transfer of immoveable property has been redefined. The amendments state that in case the residential immovable property, (other than flats), situated in urban area, measuring at least 500 square yards or one kanal (whichever is less) and more, where the value of immovable property is recorded 4 percent of the recorded value and where the value of immovable property is not recorded at Rs 100 per square yard of the landed area to be chargeable. Where the immovable property is a constructed property CVT at the rate of Rs 10 per square feet of the constructed area in addition to the value worked out like Rs 100 per square yard of the landed area to be chargeable. Commercial immovable property of any size situated in urban area, where the value of immovable is recorded 4 percent of the recoded value. Where the value of immovable property is not recorded CVT would be Rs 100 per square feet of the landed area. Where the immovable property is a constructed property CVT at the rate of Rs 10 per square feet of the constructed area in addition to the value worked out like Rs 100 per square feet of the landed area. Residential flats, where the value of immovable property is recorded 4 percent of the recorded value. Where the value of immovable property is not recorded Rs 100 per square feet of the covered area.

2.5 percent tax credit: Finance Act, 2009 has added after section 65, new section 65A for allowing 2.5 percent tax credit to a person registered under the Sales Tax Act, 1990. According to the amendment, every manufacturer, registered under the Sales Tax Act, 1990, shall be entitled to a tax credit of 2.5 percent of tax payable for a tax year, if 90 percent of his sales are to the person who is registered under the aforesaid act during the said tax year. For claiming of the credit, the person shall provide complete details of the persons to whom the sales were made. No credit will be allowed to a person whose income is covered under final tax or minimum tax. Carry forward of any amount where full credit may not be allowed against the tax liability for the tax year, shall not be allowed.

IT Return: Following persons who own immoveable property with a land area of 500 square yards or more located in a rating area; owns a flat having covered area of 2,000 square feet or more located in a rating area; owns a motor vehicle having engine capacity above 1,000CC; and has obtained National Tax Number would be required to file income tax return.

Audit: A new clause has been added in the section 76, in sub-section (1) according to which the firm of chartered accountants, as appointed by the board, to conduct audit under section 177, for any tax year, may with the prior approval of the commissioner concerned, enter the business premises of a taxpayer, selected for audit, to obtain any information, required production of any record, on which the required information is stored and examine it within such premises; and such firm may if specifically delegated by the commissioner, also exercise the powers as provided in subsection (4).

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