The definition of information technology (IT) and IT-enabled services has been broadened by the Federal Board of Revenue (FBR).
The board also amended the Finance Bill 2022 to lower the turnover tax for Oil Marketing Companies (OMCs) from 0.75 percent to 0.5 percent.
The IT Services and IT-enabled Services Clauses (30AD) and (30AE) of the modified Finance Bill 2022 describe IT services to encompass software development, software maintenance, system integration, web design, web development, web hosting, and network design.
Inbound or outbound call centres, medical transcription, remote monitoring, graphics design, accounting services, human resource (HR) services, telemedicine facilities, data entry operations, cloud computing services, data storage services, locally produced television programmes, and the processing of insurance claims are all included in the list of IT-enabled services.
The modified law now stipulates that the term “IT” and “IT-enabled services” shall not be confined to the services listed above. This implies that any further comparable services will likewise be regarded as being under the scope of IT and IT-enabled Services.
The deduction of taxes at various rates on various products is allowed under Section 148. Additionally, Section 148 stipulates that the taxes that industrial undertakings are obligated to deduct at rates of 1 percent and 2 percent must be adjustable.
The bill proposes that the tax that industrial undertakings are required to collect under Section 148 be modifiable regardless of the rate at which such collection is necessary.
The measure also suggested that the tax that must be collected on the importation of the following goods, such as edible oil, packaging, paper and paper board, or plastics, be classified as a minimum tax.
The law also called for raising the advance tax rate for commercial importers from 2% to 4%. In addition, the bill suggested that the tax deducted at the point of entry for importers other than industrial undertakings be the final tax rather than the minimum tax. The proposed adjustment to the bill regarding the final tax has been dropped, and it is once again a minimal tax.
According to Section 21(l) of the ITO, a business expense of any person may not be paid by any method other than crossed banking instruments from the taxpayer’s business bank account. The bill seeks to change the aforementioned article and has also inserted another clause (la), which makes it mandatory for businesses to pay for business costs through digital means from the taxpayer’s business bank account that has been reported to the Commissioner.
All other exemptions from the aforementioned limitations are still suggested to be valid. The exclusions include expenses that fall under a single account head and do not total more than Rs. 1,000,000 in a calendar year, as well as expenses for utility bills, freight, travel, postage, and the payment of taxes, tariffs, fees, fines, and other statutory obligations.
The threshold for an aggregate expense under one single account head has been decreased from Rs. 1 million to Rs. 250,000 by the modified bill. Additionally, these clauses are not applicable to expenses under Rs. 25,000 in the modified bill.
Clause (9A) states that the amount of tax payable on income charged under the head “Capital Gains” on disposal of immovable property shall be reduced by 50% on the first sale of immovable property (by 75% in the case of after 3 years) acquired or allotted to ex-servicemen and serving personnel of the Armed Forces or ex-employees or serving personnel of the federal and provincial governments, being original allottees of the immovable property, duly certified by The above exemption was suggested to be removed by the law. The exemption has been reinstated under the modified bill, nevertheless.
According to Section 177, the commissioner must get the taxpayer’s explanation of all the issues revealed in the audit before issuing an audit report following the completion of the audit of the taxpayer. According to Section 177, before changing the assessment order after releasing the audit report, the commissioner must provide the taxpayer an opportunity to be heard. The audit report obligation was to be removed, according to the bill. The aforementioned suggestion has since been removed from the altered draught, the commentator said.