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TAX-3141
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* General
Understanding of Tax:
* Definition
of Tax:
Direct taxes
Direct taxes are the taxes where incidence of taxation is on the person on whom levied. For
example income tax.
Indirect Taxes
Indirect taxes are the taxes where incidence of tax can be shifted by the person on whom
levied to other persons. For example sale tax
Proportional Taxes
These taxes are levied with the same percentage. For example, sales tax is levied at the rate
of 15%.
Progressive Taxes
This is based on the capacity to pay principle of taxation. In this type, the rate of tax
increase as the income increase.
Regressive taxes
A Regressive tax is the opposite of a Progressive Tax. It is based on the benefits received
principle. A type of tax that takes a larger percentage from the income of low-income people
than the income of high-income people is called regressive tax.
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Is a strategy where by a person manages its business and other transactions/
activities in such a way so as to make maximum use of:
Tax holidays,
Exemption,
Concession,
Rebates,
Tax credits,
Deductible allowances,
Available under law and as a result is able to derive the benefit of minimizing his
tax liability.
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* Taxation
Employment
self- employment
Sole proprietorship,
Partnership,
Private company
Public company.
* It is professional strategy to plan tax affairs of a person. It is of significant
importance in business management decision.
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Understanding and application of updated laws particularly tax laws, rules and
procedures
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Federal taxes are the taxes which can be levied by the federal government and
include among others the followings:
Income tax
Corporate tax
Customs duties/Tariffs
Sales tax
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Stamps Duty
Registration Tax
Motor vehicle tax
Process of Legislation
Money Bill
President
Ordinance
National
Assembly
National
Assembly
Senate
President
Sent for reconsideration to
Parliament
(Joint
sitting
of
National
Assembly and Senate)
Reject
Assent
Act/Law
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* A Income
* When the tax is levied on the income of companies, it is often called a corporate tax,
corporate income tax, or profit tax.
* Individual
income taxes often tax the total income of the individual (with some
deductions permitted).
* Corporate income taxes often tax net income (the difference between gross receipts,
expenses, and additional write-offs).
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Background/ History:
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* In
1985, the government Set up a National Tax reform Commission to suggest the
ways and means to improve the exiting structure of taxation in Pakistan.
* The
* Terms
I.
II.
III.
IV.
of reference:
To
To
To
To
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The commission suggested that Income Tax ordinance 1979, should be replaced by
Income tax ordinance,2001.
This ordinance was promulgated on 13th September, 2001, which became effective
from 1st July, 2002.
The assessment of tax year 2003 onwards are based on the new ordinance.
The new Law abolished the role Assessing Officer who used to determine the
income of taxpayer and compute his tax liability. These are now entrusted to
taxpayer himself.
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Article-77 of the constitution of Pakistan empowers the Federal Government to Levy
tax for the purpose of the federation. The Federal Government Levy a tax through an
Act of the Parliament or a ordinance promulgated by President. The following are the
sources of the Income Tax Law.
1.
2.
3.
4.
5.
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* Basis Constituent of Income tax law in Our country.
* Includes Whole Procedure of taxation regarding;
* Payment of Tax.
* Collection of Tax.
* Penalties.
* Assessment.
* Refund.
* Appeals etc.
* It Consists of thirteen chapter, each chapter deals with a particular subject and has
been divided into parts and then subdivided into divisions.
* The change
in Income tax ordinance 2001, are brought about the Finance ordinance
or Finance Act every year.
*
.
* The FBR,
makes rules from time to time which are meant for the guidance
of its officers as well as the taxpayers.
* These rules
* Rules
have same force as the sections in the Income tax Ordinance itself
and are implemented in the same manner.
* The
Income Tax Rules 2002: These were promulgated by FBR on 1st July
2002 in exercise of powers granted under section 237 of the Income Tax
Ordinance 2001 .
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* The
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* When
dispute arises, the aggrieved party parents its case to a court of law,
which decides the case and provide correct interpretation of the law.
* Such
* Reference
guidance.
*
* To meet budgetary, social and economic need of the country an annual law known
as Finance Act or Ordinance is promulgated every year.
* Changes
in Income Tax ordinance, 2001, itself are brought about through this
legislation.
* Rates
* A sales
* The
* Most sales taxes are collected from the buyer by the seller, who remits the tax
to a government agency.
* Sales
taxes are commonly charged on sales of goods, but many sales taxes are
also charged on sales of services.
* Ideally,
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* Background/ History :
The General Sales Tax Act 1948 :
The sales Tax was imposed as federal tax 1948 through the general Sales tax 1948.
Previously it was provincial tax and the provinces of Punjab and Sindh were charging it.
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* The standard rate of Sales Tax in Pakistan is 16%.
* Taxable
* Sales Tax Registration :Is mandatory for manufacturers if turnover exceeds PKR
5 million; for retailers, if the value of supplies exceeds PKR 5 million; and for
importers and other persons if required by another federal or provincial law
* Filing and sales tax payment :Sales Tax returns and payments must be made on
a monthly basis
federal government.
It is
Regulated by the federal board of revenue through the federal excise Act,
2005 and the federal excise Rules 2005.
The Federal Excise Act, 2005, was promulgated with effect from 1st July, 2005,
repealing the Central Excises Act, 1944.
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Goods produced
or manufactured in Pakistan.
Goods imported
into Pakistan.
Such
As
are produced or manufactured in the non-tariff areas and are brought to the
tariff areas for sale or consumption.
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The Excise duty is levied and collected
However , the
at the rate of 15 %.
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As part of budgetary measures
Custom
It
is categorized into import duty and export duty levies upon imports and
exports of goods' respectively.
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*
Goods Imported into Pakistan.
Goods which are brought from any
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It
is imposed on all or any of the goods specified in first schedule, at a rate not
exceeding one hundred per cent (100%) at the value of goods.
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Additional custom duty shall be levied by the federal government at a rate not
exceeding 35% of value of goods specified in the First schedule.
In order to levy this duty the government shall notify in the official gazette.
This additional duty shall be in addition to any duty imposed under the custom act.
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It is
imposed on the imports and exports of such goods ,as are the same kind as
goods produced or manufactured in Pakistan.
It
is levied at rate not exceeding FED (15%) levied under the Federal Excise
Act,2005 on goods manufactured or produced
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The government may levy fee and service charges by giving a notification in
the official gazette.
The rate for fee charges will also be specified in the notification.
The government may impose such condition ,limitation , restriction as it may
deem fit to impose.
The charges may b levied for examination , scanning ,inspection ,sealing , desealing , valuation check.