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SYNOPSIS OF FINANCE ACT_ 2009

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SYNOPSIS OF FINANCE ACT_ 2009 Powered By Docstoc
					    PAKISTAN TAX BAR ASSOCIATION
    Synopsis of Finance Act, 2009
    Presented at PTBA Summer Camp-2009
    at Pearl Continental Hotel-Burbhan

                                      Presented By :

                              RANA MUNIR HUSSAIN
                          Advocate Supreme Court of Pakistan
                         Senior Vice President Pakistan Tax Bar Association




1
    Table of Contents

       Income Tax

       Sales Tax

       Capital Value Tax




2
    Section 2(30AA)



      KIBOR has been defined u/s 2(30AA) as ( Karachi Inter Bank Rate ) for the
      purpose of Additional Payment for delayed refund and additional Tax




3
    Rate of tax on Small Companies

       Section 2(59A), Division II Part I of the First Schedule

       In case of a small company the rate of tax is 20%. A
        proviso inserted under finance Act. 2008, wherein it was
        inserted that in case of a small company where turnover
        exceed Rs.250 million, the progressive of rate of tax of
        25% , 30% and 35% shall be applicable. But according to
        the definition of small company as defined under Section
        2(59A), if the turnover exceeds Rs.250 million, the
        company becomes ineligible to be a small company and
        this was an anomaly and the same is removed by deleting
        this proviso through Finance Act 2009. Now Small
        Company will be charged to tax @ 20%.


4
    Minimum Tax on the income of certain persons
    Turnover

       Section 113,Section 2(70A), Section 137(1),Section 147(4AA)

       Prior to the amendments through finance Act 2008, wherein, section
        113 was omitted, the resident companies sustaining losses were
        required to pay a minimum tax @ 0.5% of the turnover from all
        sources                 for                 that              year.
        Now it is amended to restore the Section 113 in the same spirit.
        Further this section has been more elaborated to remove the
        anomalies e.g. the treatment of turnover of the persons where some
        part of the income was subject to final tax. Now under section
        113(3), the turnover has been defined and it will include the gross
        receipts excluding the sales tax/federal excise and the receipts
        which          are        subject         to        final       tax.
        Consequently, relevant provisions in section 137 (1), relating to
        payment of tax on due date, section 147(4AA) relating to payment of
        advance tax as amended last year are restored accordingly.

5
    30% Tax on bonus received by corporate employees



          The rate of tax on bonus income will be charged
         @30% for tax year 2010. A proviso has been
         inserted in section 12 of the Ordinance wherein it is
         provided that to compute taxable salary of the
         corporate employees, the bonus will be excluded
         from taxable salary of the corporate employees for
         the tax year 2010 whose income is Rs.1,000,000 or
         more.




6
    IDP Tax @ 5 % of Tax Payable




       Tax @ 5% will be charged to business
        individuals and AOPs having income
        Rs.1,000,000/- or more for the tax year
        2009 to support Internally Displaced
        Persons (IDP’S).




7
    Basic limit of           exemption        for
    Salaried person

       The basic limit of exemption from income
        tax in respect of salaried person is
        increased      from     Rs.180,000     to
        Rs.200,000.       In   the     case    of
        women salaried taxpayer the basic
        exemption     limit   is increased from
        Rs.240,000 to Rs.260,000 effective from
        July 1,2009. (Tax Year 2010)

8
    Income from Property, Rate of tax under section 15
    Rate of Tax under Section 155


       Section 15, Division IV Part I of the First Schedule, Division
        V Part III of the First Schedule


       Through Finance Act 2008, progressive rates of tax , 5% , 10%
        & 15% for Property income were introduced and later on
        through SRO 766(I)/2008 , dated July 21,2008 the relief was
        given by reducing the tax rate to 5%, 7.5% and 10% and this
        relief was given in the second schedule and now through
        Finance Act 2009 this clause has been inserted in first
        schedule and omitted from second schedule.



9
     Deductions in Computing “Income from Business”
     Loss of Animals died or permanently disabled

        Section 20, Subsection 1A


        A new subsection 1A is inserted providing that If the animals are
         used for the purpose of business or profession other than as
         stock in trade died or become useless, the difference of cost of
         that animal and any amount realized will be deductible to compute
         income chargeable to tax. Previously such provisions are not
         available in the Ordinance.




10
     Depreciation, Limit of depreciable cost of passenger
     transport vehicles not plying for hire


        Section 22, Subsection (13)


        In case of passenger transport vehicles not plying for
         hire, there is no threshold limit of depreciable cost in
         case the vehicles are purchased on or after 1st day of
         July 2005, Now, through the amendment in this section,
         a limit of Rs.1.5 million has been prescribed, if actual
         cost is more, for the purpose of computing depreciation.



11
     Deductible allowance to off- set bad debts on
     Consumer Loans by Banking Companies

        Section 29A,

        Now banking companies, not allowed a deduction
         previously allowed up to three percent of the
         income arising out of consumer loans for creation
         of a reserve to offset bad debts arising out of
         such loans.



12
     Charitable Donations-Tax Credits

        Section 61 (2)

        Previously, the limit of charitable donations,
         eligible for tax credit, in the case of
         individual/association   of    persons    and
         companies is admissible @ 30% and 15%
         respectively of the taxable income. It is the
         limit is enhanced to 20% from existing 15%
         for companies.
13
     Profit on Debt-Tax Credits on housing
     loan

        Section 64 (2)

        Tax credit is also allowed in respect of payments
         by a person on a loan against any profit or share in
         rent and share in appreciation of for the value of
         house to a scheduled bank or non banking finance
         institution subject to certain limitations.
        Percentage has been increased to 50 %from 40 %
         of the income or Rs. 750,000/- as against Rs,
         500,000/-

14
     Tax Credit to a Person Registered
     under the Sales Tax Act, 1990

        Section 65 A(New Insertion)
        A new section is inserted in the Ordinance
         allowing tax credit @2.5% of the tax payable for
         the persons registered under the Sales Tax Act,
         1990 subject to the condition that 90% of its sales
         will to the registered persons. Such tax credit will
         not be available to the persons whose income is
         covered under final tax or minimum tax. Further,
         this credit not will be available where the loss is
         carried forward.
15
     Taxation of Retailers having turnover exceeding
     Rs.5,000,000 by excluding supplies subject to final
     tax


        Section 113(B)
        The tax on retailers other than companies is paid on
         turnover at slab rates @ 0.5% & 0.75%. Previously, all
         the receipts of retailers are taken into account for the
         purpose of turnover tax. It is amended that the turnover
         of retailers will not include the sale of goods on which
         tax is deducted or deductible under clause (a)
         subsection 1 of Section 153 of the Ordinance. This
         amendment is made to remove the anomaly because
         such sales/supplies are already subject to final tax.

16
     Persons Required to furnish the Return of Total Income
     Disallowing Revised Return if proceedings initiated by the
     department


        Section 114(1) ,Section 114(2)
        Subsection 1 of section 114 prescribes the persons who have to file
         the return of total income. The scope of filing of tax returns is
         enhanced and now the following persons will also be required to file
         income tax return for a tax year Who owns immoveable property
         with a land area of five hundred square yards or more located in a
         rating area;
        Who owns a flat having covered area of two thousand square feet or
         more located in a rating area;
        Who owns a motor vehicle having engine capacity above 1000CC;
         and
        Who has obtained National Tax Number”.
        Under subsection 2, it is amended to disallow the revised return if it
         is filed after initiating the proceeding for amendment of assessment
         by the department. Previously, a return can be revised anytime
         within a period of five years of filing the original return without any
         condition.
17
     Filing of Return made mandatory by Salaried
     Person if income is Rs.500,000 or more.

        Section115(1) , Section 114(2)

        Previously, the salaried persons are not required to furnish
         a return under section 114 if the employer furnishes annual
         statement of deduction of tax as required under the law.
         However, where the annual income is Rs.500,000 or more,
         the salaried person is required to file Wealth Statement.

        Now, the salaried persons having annual income of
         Rs.500,000 or more will require to file the return of income
         electronically  along      with       wealth      statement.


18
     Revision of Statement u/s 115(4) and filing of wealth statement u/s
     115(4B)



        Revision of statement:
         –   Now the tax payer like return of income can also file
             revise statement u/s 115

        Filling of Wealth Statement u/s 115(4B):
         –   Where the amount declared as final tax is Rs. 20,000/- or
             more filing of wealth statement with statement of 115(4)
             has been made mandatory, there was no such condition
             previously




19
     Filing of Reconciliation Statement of Wealth
     along with Wealth Statement


        Section 116
        It is amended that filing of Reconciliation Statement of
         Wealth will be mandatory along with Wealth Statement
         required to be filed under this section. Previously, tax
         payers normally file wealth reconciliation statements
         along with the wealth statement and returns but it was
         not mandatory.




20
     Prescribed Fee for Appeal to the Commissioner (Appeals) and
     Appeal to the Appellate Tribunal fixed



        Section 127(4), Section 131(3)
        Previously, the prescribed fee for appeal to the
         Commissioner (Appeals) was 10% of the tax payable or
         Rs.1000 whichever was less. It is amended to fix the
         appeal fee as Rs.1000/-. Previously the prescribed fee
         for appeal to Appellate Tribunal was lesser of 10% of
         the tax payable or Rs.2500. Now the fee for appeal to
         Appellate Tribunal is also fixed to Rs.2000/-.



21
     Appellate Tribunal –Empowering Chairman to
     Constitute Single Member Benches to decide where
     amount involved is less than Rs.5million


        Section 130(8A), (8AA)
        Previously, a Bench cannot be less than two members
         to decide the cases of appeals in the Appellate
         Tribunal. It is amended to empower the Chairman-
         Appellate Tribunal to constitute as many single member
         benches as he may deem necessary. Further, the
         single member, on behalf of chairman, may dispose off
         any case where the amount of tax or penalty involved is
         less than Rs.5 million. This amendment is made to
         reduce the pendency of cases in the Appellate Tribunal.

22
     Alternative Dispute Resolution Committee (ADRC)-
     Limiting the Scope and Specifying Time Limits


        Section 134
        Previously, any aggrieved person in connection with any matter pending with any
         appellate authority may apply to ADRC for the resolution of any hardship or dispute. An
         amendment in subsection (1) is made limiting the scope of ADRC. Now the cases where
         prosecution proceedings have already been started or where interpretation of question of
         law having effect on identical other cases will not be referred to ADRC. Previously no
         time limits for the whole process of ADRC are defined resulting delays in settlement of
         ADRC cases. Now it is amended to specify the time limits as follows.

        Appointment of Committee by FBR :within 60 days of the receipt of
         application Recommendations by ADRC :Within 90 days of constitution Passing of
         Order by the Board on Recommendations of ADRC :Within 45 days of receipt of
         recommendations of ADRC Further it is amended by substituting subsection (3) that the
         committee may if it deem fit necessary to to conduct inquiry seek expert opinion, direct
         any officer of the income tax or any other person to conduct an audit and if the
         committee fails to submit recommendations within 90 days of its constitution, the board
         may dissolve the committee and constitute a new committee which shall decide the
         matter with in a further period 90 days. If after the expiry of that period the dispute is not
         resolved the matter shall be taken up by the appropriate forum.


23
     Modes of Recovery of tax from tax payer or other
     person on behalf of taxpayer


        Section 138


        Subsection (2) of section 138 empowers the
         commissioner to recover the amount of any tax due
         from the tax payer.




24
     Advance Tax-
     AOPs require to pay advance tax
     Turnover will be taken into account to compute advance


        Section 147, Section 147(2) , Section 147(4)
        Under this section advance tax is payable by the persons in four quarterly installments
         computed according to the formula given. Previously individuals and AOPs whose latest
         assessed taxable income is less than Rs.200,000 are not liable to pay advance tax.
         The formula is also amended as follows.
                 (A x B/C)-D
         Where
         A is the taxpayer’s turnover for the quarter
         B is the tax assessed to the taxpayer for the latest tax year
         C is the taxpayer’s turnover for the latest tax year; and
         D is the tax paid in the quarter for which a tax credit is allowed under section 168 for tax
         deducted or collected, other than tax deducted under section 155.
        Previously, the advance tax was computed on the basis of latest tax assessed only. [The
         Formula was (A/4)-B where A is latest tax assessed, B is tax deducted or collected in the
         quarter]
        In the amended formula the turnover will also be taken into account for the purpose of
         computing the advance tax installment.
         The time for payment of advance tax for companies is 15 days after the quarter end except
         the last quarter of the tax year and for individuals/AOPs is 15 days before the quarter end.




25
     Tax on Imports-Rate of Tax on Imports

        Section 148 , Part II of the First Schedule
        The rate of tax on imports is increased from 2% to 4% whereas the rate
         of tax under this section for import of raw material imported by an
         industrial undertaking for its own use will be 3% and this will be final
         tax The provisions of final tax will not be applicable on certain imports
         in case of imports by industrial undertakings, manufacturers of
         fertilizers and manufacturers of motor vehicles. These provisions will
         also be not applicable to the Large Import Houses having paid up
         capital of Rs.250 million, total assets Rs.350 million and imports
         exceeding 500 million in a year. Section 169 regarding collection or
         deduction of tax as final tax is amended accordingly. Previously the
         tax collected on imports of edible oil was final now it will be
         minimum tax.




26
     Payments     for   goods    and                                         services
     NPOs to Act as Withholding Agent

        Section 153 (6), (9), Section 153 (6B)

        Section 153 contains provisions relating to deduction of tax at source from
         payments made on account of sale of goods, rendering of services and
         execution of contracts etc.
        Subsection (6) contains provisions that tax deducted under this section shall be
         final tax except deduction against rendering of services by companies. The
         Finance Act amended that deduction against services other than companies will
         also not be the final tax but it will be minimum tax. Now the service providers will
         file the normal return of income.
        In Subsection (9), provisions defining the prescribed persons to act as
         withholding agents are amended by including Non Profit Organizations (NPOs).
        The definition of “manufacturer” under subsection (9) is also amended by
         excluding packing and repacking process but under the Sales Tax Act, packing
         and repacking process still comes under manufacturing.




27
     Rate of Tax on Payments to News Print Media
     Services

        Section 153 (1) b Division III Part III of the First Schedule




        The News Print Media have been exempted from deduction of tax
         under section 153(1)(b).




28
     Collection of Tax on Exports at the time of
     Clearing

        Section 154 (3C), Section 169, Division IV Part III of the First Schedule
        An amendment has been made in section 154 whereby
         the Collectorate of Customs shall also collect tax @ 1%
         at the time of clearing goods for export. The tax shall be
         final.

        The rate for indenting commission as per provisions of
         subsection 2 of section 154 has been increased from
         1% to 5%.



29
     Copy of Challan will be required along
     with Certificates of Collection or deduction of Tax


        Section 164
        Previously, withholding agent is required to
         provide certificate of tax collected or deducted.
         The certificate does not guarantee the payment
         of the tax collected/deducted in the Government
         Treasury. The Finance Act made it mandatory
         to provide copy of the challan of payment or other
         equivalent document along with the certificate to
         authenticate and verify the deposit of the tax
         collected/deducted by the withholding agent.

30
     Credit for Tax Collected or Deducted

        Section 168
        Further, subsections (6) and (7) are inserted clarifying that no
         service charges are allowed to any person under to ordinance
         against collection/deduction of tax. If any person will do so, such
         amount will be payable to the Federal Government as recovery of
         tax.

        Although, no provision is available under the Ordinance that any
         person can deduct service charges from the tax withheld or
         collected. This amendment is made to further clarify the matter.



31
     Refunds   –   time   period    to  process
     refund enhanced from 45 to 60 days


        Section 170
        The time period to process refund application by the
         commissioner is enhanced from 45 days to 60 days
         providing relief to the department.




32
     Notice to Obtain Information or Evidence
     Audit , Delegation of Powers

        Section 176,Section 177,Section 210 (IB)

        Amendments in section 177 are made empowering Commissioner to
         appoint a firm of chartered accountant for the audit of selected
         persons or classes of persons.

        Section 176 empower a firm of chartered accountants, appointed
         under section 177, to serve notices to obtain information or evidence
         for the purpose of audit of tax payers.

        A new subsection (1B) under section 210 is inserted where the
         Commissioner may delegate his powers to a firm of chartered
         accountants appointed to conduct audit under section 177.



33
     Fine on Prosecutions
     Prosecution for Concealment of Income

        Section 191,192,193,194,,197,198 , Section 192A (New Insertion)

        Previously, no limit of fines is prescribed on prosecutions under section
         191, 192, 193, 194, 197 and 198 regarding the prosecutions for non-
         compliance with statutory obligations, false statements in verification,
         failure to maintain records, improper use of NTN, , disposal of property
         to prevent attachment or unauthorized disclosure of information by a
         public servant respectively. Now it is amended to prescribe amounts of
         fine under these sections. This amendment is made to discourage
         discretions of the officers of the Board.

        A new section 192A is inserted regarding prosecution for concealment
         of income.




34
     Empowering Commissioner and Director
     General to Condone Time Limit


        Section 214A

        Previously, the powers to condone time limits specified
         under the provisions of the Ordinance or Rules lie with
         the Board. A new section is inserted where the Board
         may empower the Commissioner or Director General to
         exercise his powers in any case or class of cases.




35
     Advance Tax on private motor vehicles

        Section 231B, Division VII of Part IV of the First Schedule


        Last year this section was substituted which stated the manufactures of
         vehicle are required to collect advance tax at the time of sale of vehicles.
         According to the current provisions of this section every person is liable to
         pay at the time of registration of a new motor car or a jeep, advance
         tax     at     different     rates     according      to     engine   capacity.
         Now, this section is substituted again making withholding agent to the vehicle
         registering authority of Excise and Taxation Department to collect advance
         tax at the time of registration of a newly manufactured motor vehicle Division
         VII of Part IV of the First Schedule. Clause (64) of Part IV of Second
         Schedule, The exemptions allowed for a specific period from application of
         the provisions of section 231B has been withdrawn. This amendment will bind
         the registering authority to act as withholding agent as the current provisions
         do not bind the registration authorities to collect advance tax.



36
     Electricity Consumption

        Section 235 (4)
        Subsection (4) of this section provides that
         advance tax collected on electricity
         consumption up to the bill amount of
         Rs.20,000 shall be minimum tax on the
         income of a person (other than a company).
         The Finance Act       increase the limit to
         Rs.30,000/- per month.

37
     Rate of tax on Telephone under section 236

        Division V Part IV of the First Schedule
        Through Finance Act 2009 the scope of tax
         deductions on subscribers of Mobile phone &
         prepaid telephone cards has been broaden
         by including “sales of unit through CD or
         whatever form”.



38
     Advance Tax at the time of Sale by Auction

        Section 236A, Division VIII of Part IV of the First Schedule
        A new section 236 A is inserted for collection of advance
         tax at the time of Sale by auction of any property or
         goods confiscated or attached. Any person making
         auction will collect @ 5% of the gross sale price of any
         property or goods sold by auction. The credit of tax
         collected shall be given to the person subject to the
         provisions of section 147, section 98B or section 145 of
         the Income Tax Ordinance.



39
     SALES TAX


40
     Adjustable Input Tax

        Section 8B (2)
        Previously, section 8B (2) allows the adjustment of
         input tax in excess of 90% of the output tax,
         subject to conditions given under this section.
         However, section 8B (3) also allows the registered
         person for refund of sales tax. The Finance Act
         now removed this inconsistency by inserting the
         words “or refund” after the words adjustment in
         Section 8B (2).

41
     Assessment of Tax

        Section 11(4)
        The Finance Act, reduces the time period for the issuance
         of order to “within 180 days of show cause notice” (i.e. 120
         days initial, further extendable for additional 60 days)
         previously it was 240 days (i.e. 120 days initial, further
         extendable for additional 120 days) .However, the period
         during which any case will remain adjourned on the request
         of the registered person or due to any other appellate
         proceedings, will be excluded while calculating the given
         time                                                    limit.
         This change will expedite the settlement of assessment
         proceedings.

42
     Offences & Penalties

        Section 33
        Under section 40B, board is empowered to post an
         officer of sales tax to the premises of any registered
         person or class of persons to monitor production, sale of
         taxable goods and stock position; however provisions for
         penal action do not exist in case of any hindrance caused
         in respect of such posting. The Finance Act now impose
         a penalty of Rs. 25,000 or 100 percent of the tax involved
         whichever is higher on the person who denies or
         obstructs the positing of any sales tax officer mentioned
         in serial 12 of table in section 33.

43
     Default Surcharge

        Section 34(1)
        The Finance Act now proposes that the default
         surcharge payable at the rate KIBOR plus 3
         percent per annum in case of any erroneous
         default or on account of a tax fraud.
         Previously default surcharge was payable at the
         rate 1.5 percent per month for the period of default
         and on account of a tax fraud, the rate of default
         surcharge is 2 percent per month of the amount of
         tax evaded.

44
     Recovery of tax not levied or short
     levied or erroneously refunded

        Section 36(3)
        The Finance Act reduce the time period for the issuance of
         order for recovery of tax not levied or short levied or
         erroneously refunded to “within 180 days of show cause
         notice” (i.e. 120 days initial, further extendable for
         additional 60 days) previously it was 240 days (i.e. 120
         days initial, further extendable for additional 120 days)
         .However, the period during which any case will remain
         adjourned on the request of the registered person or due to
         any other appellate proceedings, will be excluded while
         calculating the given time limit. This change will expedite
         the settlement of tax proceedings

45
     Appeals

        Section 45B
        The Finance Act reduce the time period for the issuance of
         an appellate order by the Collector (Appeals) to “180 days
         from date of filing of appeal” (i.e. 120 days initial, further
         extendable for additional 60 days) previously it was 240
         days (i.e. 120 days initial, further extendable for additional
         120 days) . However, the period during which any case will
         remain adjourned on the request of the registered person
         or due to any other appellate proceedings, will be excluded
         while calculating the given time limit. This change will
         expedite the settlement of appeal proceedings


46
     Appeals to Appellate Tribunal

        Section 46
        The Finance Acts amend the procedures for
         admitting, hearing and disposing of appeal by
         the Appellate Tribunal to bring it in line with
         the procedure laid down under the Customs
         Act, 1969.



47
     Alternative Dispute Resolution
        Section 47A (3)

        The Finance Act, increased the time period for issuance of
         recommendations by the Alternate Dispute Resolution Committee from 60
         days to 90 days. The committee may, if it deem fit necessary to conduct
         inquiry seek expert opinion, direct any officer of the income tax or any
         other person to conduct an audit and shall make recommendations. The
         board may dissolve the committee and constitute a new committee which
         shall decide the matter with in a further period 90 days. If after the expiry
         of that period the dispute is not resolved the matter shall be taken up by
         the appropriate forum.

        A new sub-section 3A also inserted to give powers to Board to dissolve
         the Committee and form a new Committee if the previous one fails to give
         its recommendations to Board within the stipulated 90 days. Further, the
         Act also specifies the time limit of 45 days for Board for issuing an order
         after receipt of Committee recommendations.

48
     Delayed Refund

        Section 67
        Previously, the compensation for delayed
         refund was payable at the rate of 6 percent
         per annum of the amount of refund due, for
         the period of delay. The Finance Act now
         changed the rate of compensation equal to
         KIBOR.


49
     SIGNIFICANT SROs

        SRO 471(I)/2009 dated 13 June 2009.
        This notification has been issued to
         exclude monofilament, sun shedding,
         nylon fishing net, other fishing net, rope
         of poly ethylene and rope of nylon; and
         tyre cord fabric from the purview of zero
         rating given under SRO 509(I)/2007 dated
         9 June 2007 with effect from 14 June 2009.

50
     SRO 472(I)/2009 dated 13 June 2009.

        The import and supply of plant and machinery is
         zero rated except households and office
         equipment      items.   The     notification  SRO
         472(1)/2009 has been issued to amend SRO
         549(I)/2008 dated 11 June 2008 to avoid
         confusions about the items where zero rating will
         not be applicable. Now tariff headings has been
         specified for import and supply of plant, machinery
         and equipment, where zero rating will not be
         available

51
     SRO 473(I)/2009 dated 13 June 2009.

        The notification has been to amend SRO
         551(I)/2008 dated 11 June 2008 allowing
         sales tax exemption on cinematographic film
         exposed or developed. This exemption will
         be effective 14 June 2009.




52
     SRO 476(I)/2009 dated 13 June 2009.

        This notification has been issued decreasing
         the amount of sales tax on activation or
         energzation of cellular handsets Rs. 250 from
         Rs. 500 per set by amending SRO 542(1)/
         2008 dated 11 June 2008.




53
     SRO 477(I)/2009 dated 13 June 2009.

        The notification has been issued to amend
         SRO 1007(I)/2005 dated 26 September 2006
         allowing sales tax exemption on sulphate the
         raw material for poultry feed. This exemption
         will be effective 14 June 2009.




54
        Capital Value Tax




55
     Revision of CVT rates

        Previously transactions were subjected to
         CVT at a general rate of 2% as provided in
         paragraph CA of sub-section 2 of the section
         7. Amendment has been made to this
         paragraph to increase CVT rate to 4% on
         property transactions in order to expand the
         revenue


56
     Listed shares exempt from CVT

        Previously shares of listed companies in Pakistan
         were subject to CVT at 0.02% of purchase value of
         the shares as provided in sub-paragraph E of
         paragraph CA of sub-section 2 of the section. Now
         an amendment has been made to the said
         paragraph to exempt the purchase of listed shares
         from CVT. The amended measure may be one of
         the steps to encourage investors to invest in listed
         companies in Pakistan by limiting the cost of
         investment in shares so as to strengthen the
         capital market position.

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        Thanking for Your Participation




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