Kashif Rasheed Tax Co.

New finance bill 2020-2021

*Reduction in Holding Period and Tax Rates for Capital Gain on Immoveable Property*
to incentivize and propel economic activity in the real estate sector, the bifurcation of plots and constructed property for determining holding period of capital gains is being done away with i.e. the holding period for taxation of capital gains on disposal of immovable property is being restricted to 4 years. In addition, rates are also being reduced on capital gains emanating from disposal of immoveable property
*Collection of Advance Tax by Educational Institutions not to Apply to Persons on the ATL* 👍
To facilitate and encourage compliant taxpayers and ease the burden for persons paying tuition fees to educational institutions, amendment is being made to the effect that advance tax on tuition fees shall not be collected from persons whose names are appearing on the Active Taxpayers Lis

*Issuance of Centralized Income Tax Refunds*
The present system of manually verifying and processing refunds is outdated and prone to corruption. Therefore, to facilitate taxpayers, impart transparency and efficiency and promote ease of doing business, a provision is being introduced to enable expeditious processing and automatic payment of refunds directly into the bank accounts of the taxpayer by the Board through a centralized processing system.

*Increase in Threshold of Section 21(l)*
In order to promote ease of doing business and reduce compliance cost for taxpayers running businesses the threshold per transaction delineated under section 21(l) is being increased from Rs. 10,000/- to Rs. 25,000/-. Similarly, the threshold of payments under a single account head liable to disallowed as a business deduction /expense under section 21(l) is being increased from Rs.50,000/- to Rs.250,000/-.

*Withholding Tax Rate on Toll Manufacturing* 👍
Considering the costs involved and the low profit margins of toll manufacturers, the rate of withholding tax on toll manufacturing is being synchronized with the tax rates applicable on manufacturers supplying goods. Therefore, the withholding tax rate for payment regarding toll manufacturing is being reduced to 4% for companies and 4.5% in other cases.

*Disallowance of Business Expenditure Proportionate to Sales Made to Sales Tax Unregistered Persons*
To compel industrial undertakings to sell to sales tax registered persons, their business expenditure equivalent to the proportion of their sales to unregistered persons is being disallowed in the same ratio as exists between their total business expenditure and total turnover, however, the aggregate disallowance shall not exceed twenty percent of total business deductions excluding deductions under this provision.