KARACHI: The business community has proposed an amendment in the law of ‘advance tax paid by the taxpayer’ to slash the advance tax rate to 80 percent from the current tax rate of 90 percent.
The business community said that the law be changed at the one, which was in force before the Finance Act 2006 amendment whereby a company was required to pay advance tax equal to one fourth of the tax liability finalized for the latest tax year.
It is recommended in the budget proposal 2014-2015 that the advance tax benchmark of 90 percent should be reduced to 80 percent.
In the current situation, as per sub-section 4A of Section 147 of the Income Tax Ordinance, 2001 “A company is now required to pay advance tax on the basis of estimate of current year’s income, If the income is likely to be more than latest assessed income.” In such a way the company is required to at any time before the last installment is due; furnish to the commissioner an estimate of the amount of tax payable by it; and thereafter pay such amount after making adjustment of the amount; if any, already paid.
The business community highlighted that the old advance tax law was working well in the past years where 80 percent tax was charging so; the previous law should be restored.
Moreover, the business community also suggested that the company should be given exemption from withholding taxes if it is complying with the law of advance tax of Income Tax Ordinance 2001.
It is mentioned that the company subjected to Final Tax Regime cannot avail exemption from withholding sections.
However, in existing situation a company paying advance tax u/s 147 is also subjected to deduction of tax at source under other sections of the ITO, 2001, such as Section 148 of Imports and Section 153 of Payments for goods, services and contracts etc.
The business community said that the tax machinery should allow all companies to avail the option in upcoming tax year.