FBR extends exemption to more tax filers

KARACHI: Federal Board of Revenue (FBR) has expanded the list of individuals who are exempted from filing income tax returns.  

FBR, explaining amendments made into Income Tax Ordinance 2001 through Finance Act 2017, said on Wednesday the scope of concessions/relief accorded to individuals not required to file annual income tax returns has been enlarged.

Such individuals will not be required to file return of income solely by reason of owning a property with a land area of 500 square yards or more located in a rating area, a flat having a covered area of 2,000 square feet or more located in a rating year, or a motor vehicle with engine capacity above 1,000cc. Prior to amendments into the tax law, a widow, an orphan below the age of 25 years, a disabled person and a non-resident person was not obliged to furnish a return of income solely on account of owning property with a land area of 250 square yards or more or any flat located in areas falling within the municipal limits, in cantonment or Islamabad Capital Territory.

FBR, on tax credit to non-profit organisations (NPOs), said the restriction placed on them to limit administrative expenses equal to 15 percent of their total receipts doesn’t apply on project expenditures.

“The rationale behind the amendment is to stop misuse of receipts/donations received by NPOs and discourage them from spending such amounts on huge administrative salaries, vehicles etc.,” it added. The revenue body said individuals operating online marketplaces will be subject to reduced/concessionary rate of minimum tax of 0.5 percent for the tax year 2018. Advance tax on brokerage and commission on such individuals is five percent, which is final.

Finance Act 2017 defines online marketplace as an information technology platform operated by an e-commerce entity over an electronic network that acts as a facilitator in transaction between a buyer and a seller. The government also introduced incentives for tech start-ups, which have been defined as business set up by an individual or a company having turnover of up to Rs10 million in the last five years and registered and certified by Pakistan Software Export Board (PSEB) as an information technology entity.

Start-ups are exempted from paying taxes on profit earned by such entities in the last tax year in which the entity is certified by PSEB and the subsequent two tax years. Finance Act, 2017 also bounds FBR to share payroll information of companies submitted through withholding statements with Employees’ Old Age Benefits Institution (EOBI).

“Disclosure of such information shall enable EOBI to crosscheck information regarding the number of employees and salaries being disbursed by various employers and shall assist EOBI in preventing revenue leakages,” FBR said.