Astro Associate Tax Consultant in Islamabad

The amendment has been introduced through Finance Act, 2020, which was recently approved by the National Assembly. A new sub-section 2B of Section 57 to Income Tax Ordinance, 2001. The new sub-section is as: Sub-section 2B: Where a loss, referred to in sub-section (2), relating to a tax year commencing on or after the first day of July 2020 is sustained by a resident company engaged in the hotel business in Pakistan, the said loss shall be carried forward for a period of eight years.” The sub-section of the Section 57 before the amendment is read as: (2) If a loss sustained by a person for a tax year under the head “Income from Business” is not wholly set off under sub-section (1), then the amount of the loss not set off shall be carried forward to the following tax year and applied as specified in sub-section (1) in that year, and so on, but no loss can be carried forward to more than six tax years immediately succeeding the tax year for which the loss was first computed. ta

The restriction has been imposed through introduction of Section 106A of Income Tax Ordinance, 2001 through Finance Act, 2020, recently passed by the National Assembly of Pakistan. Tax experts at EY Ford Rhodes Chartered Accountants said that in line with Action Plan 4 of the OECD’s recommendations on Base Erosion and Profit Shifting (BEPS), the new section has been introduced which imposes a restriction on deduction of profit on debt payable to associated enterprise. The salient features of the new section are: — Deduction of foreign profit on debt in excess of fifteen percent of taxable income before depreciation, amortization and foreign profit on debt shall be disallowed to a foreign controlled resident company (other than an insurance or banking company); — The section shall not apply if the total foreign profit on debt claimed as a deduction is less than Rs10 million for a tax year; — tax consultants in islamabad - Where the foreign profit on debt cannot be fully adj

Section 114. Return of income.  — (1) Subject to this Ordinance, the following persons are required to furnish a return of income for a tax year, namely:– (a) every company; (ab) every person (other than a company) whose taxable income for the year exceeds the maximum amount that is not chargeable to tax under this Ordinance for the year;or (ac) any non-profit organization as defined in clause (36) of section 2; (ad) any welfare institution approved under clause (58) of Part I of the Second Schedule; (b) any person not covered by clause (a), (ab), (ac) or (ad) who,— (i) has been charged to tax in respect of any of the two preceding tax years; (ii) claims a loss carried forward under this Ordinance for a tax year; (iii) owns immovable property with a land area of five hundred square yards or more or owns any flat located in areas falling within the municipal limits existing immediately before the commencement of Local Government laws in the provinces; or areas in a Can

The amendment has been approved by the National Assembly by passing the Finance Act, 2020. The amendment has been introduced in sub-section 3 of Section 116 to Income Tax Ordinance, 2001. The sources said that under Income Tax Ordinance, 2001 taxpayers had already been allowed to revise their wealth statement by providing reasons for the revision and before any notice issued by a tax office in this regard. However, through amendment Commissioner Inland Revenue has been empowered to declare the revised wealth statement if he found any ill intention of the taxpayer. According to the amendment: “Provided that where the commissioner is of the opinion that the revision under this sub-section is not for the purpose of correcting a bona fide omission or wrong statement, he may declare such revision as void through an order in writing after providing and opportunity of being heard.” An explanation has also been included through amendment which said: “For the removal of doubt it is cl