KARACHI: The Finance Act 2022 made significant changes to the Income Tax Ordinance 2001, which are applicable from July 1, 2022.
Here are the significant changes to the Income Tax Order 2001 through the Finance Act 2022, as explained by PwC AF Ferguson & Co.:
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1. Flat rates for super tax have been introduced for taxpayers with income above Rs 150 million. The bill previously proposed such a threshold at 300 million rupees at a standard rate of 2%.
2. The super-tax rate is increased to 10% for certain specified sectors for the 2022 tax year, while for banking companies, this reinforced super-tax rate will be applicable for the 2023 tax year .
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3. The proposal for a definitive tax regime for commercial importers is withdrawn. Therefore, commercial importers will remain subject to the minimum tax regime.
4. The proposal to restrict the tax exemption of certain MEPPs withdrawn.
5. The normal bank corporation tax rate revised to 39 percent.
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6. The revised slab rates for salaried persons introduced by setting below the taxable limit at Rs 600,000 compared to the initial proposal of Rs 1,200,000. budget law has not only been cancelled, but the tax incidence has also been improved (compared to the situation before the budget law).
7. The right to defer minimum tax is retained, however the period is reduced from five to three years.
8. The tax credit on contributions to the voluntary pension scheme is retained.
9. The resident person will now also include a citizen of Pakistan who has not stayed in any foreign country for more than 182 days.
10. The tax credit for income subject to final tax in respect of assets declared in the statement of assets or in the accounting books in excess of chargeable income is notably subject to the presentation of audited financial statements.
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11. Withholding tax on the sale of real estate to be collected regardless of the period of ownership.
12. The rate of withholding tax on imports mentioned in Part II of the Twelfth Schedule is increased from 2 per cent to 3.5 per cent.
13. Reduced rate of capital gains tax on listed securities depending on the holding period to be applied on securities purchased on or after July 1, 2022.