Non-Salaried and Corporate Executive

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Non-Salaried and Corporate Executive - abbas_chinikham - 06-22-2009

Who are included in the list of Non-Salaried and Corporate Executive ??

I am quite confuse of following new tax

Non salaried persons
A new one time levy as Internally Displaced Persons Tax (IDPT) is proposed to be levied @ 5% of the tax liability on the income of the non-salaried persons having taxable income of Rs.1,000,000 or more for the tax year 2009

are all employees whose taxable income exceed 1 million counted in this new law?

- faisal_desperado - 06-22-2009

Dear,
You have jumbled Two different clauses in one, Please note the following verbatim clauses ,

Quoted
â¢ In order to raise funds for the rehabilitation of internally displaced persons (IDPs) of Swat, Dir & Bunir it is proposed to charge 5% tax on tax payable by individuals and AOPs whose taxable income exceeds one million rupees.
â¢ In order to support IDPs in their habilitation a new tax is being proposed to be charged on bonus income of corporate executives @ 30% of the bonus. This is a one time levy and payable for tax year 2009 only.

Unquoted
These clauses have been proposed to be amended, since the Tax Year should have been 2010 and it has been mentioned as 2009 aforementioned.
Let it be rectified or any explaination with regards to these clauses be presented.

Best Regards,

- abbas_chinikham - 06-23-2009

So does it mean that a tax of 5% is impose on every employee whose salary exceeds 1 million? and 30% on bonus is impose on only corporate employees?

If yes, then who are included in Corporate Employees? Is there any special classification for them?

- awaisaftab - 06-23-2009

<blockquote id="quote">quote<hr height="1" noshade id="quote">Originally posted by abbas_chinikham
 So does it mean that a tax of 5% is impose on every employee whose salary exceeds 1 million? and 30% on bonus is impose on only corporate employees?

If yes, then who are included in Corporate Employees? Is there any special classification for them?
<hr height="1" noshade id="quote"></blockquote id="quote">
No it does not mean as you have determined.Internally Displaced Person Tax shall be leviend at the rate of 5% of tax liability. For example the tax liability of a person ,whose income is more than 1 million,is Rs.80,000/- then the Internally Displaced Person Tax would be Rs.4,000/-. These types of tax levied at the very nominal rate or on the tax liability.

An example of this tax is Education Cess which is levied in Azad Jammu and Kashmir @ 5% of tax liability. Tajveed-e-Quran Trust Deduction is also levied @ 0.2% in Azad Jammu and Kashmir.

Regards

Awais Aftab

- faisal_desperado - 06-23-2009

<blockquote id="quote">quote<hr height="1" noshade id="quote">Originally posted by abbas_chinikham
 So does it mean that a tax of 5% is impose on every employee whose salary exceeds 1 million? and 30% on bonus is impose on only corporate employees?

If yes, then who are included in Corporate Employees? Is there any special classification for them?
<hr height="1" noshade id="quote"></blockquote id="quote">

Exactly,
5% Additional Tax will be applicable on Tax liablity of every employee, whose salary income exceeds 1 million,
30% Tax will be applicable on Bonus of corporate employees* having salary income (excluding bonus) of Rs. 1 million or more in tax year 2009.

* corporate employees has nowehere been defined in the ordinance, however another clause(which i mentioned) indicates the word "corporate executives" i.e. a contradiction between two clauses exists,
another confusion is related to the Tax Year , whether it is 2009 or 2010, in my opinion , had it been 2009 then it would have been announced through any amendment prior to the announcement of budget 2009 - 2010, however, this matter needs clarification and for this purpose, issue has been proposed to be clarified.

Best Regards,

- abbas_chinikham - 06-23-2009

As per my Auditor, any person whose salary exceeds 500,000 is a corporate executives.

And actual Tax calculation is

' Dear Mr. Abbas,

Amounts are calculated in budget comments as follows;

Taxable income excluding bonus 1,000,000 x Tax rate applicable on 1,000,000 slab @ 9% = 90,000 tax liability
IDP tax = Tax liability 90,000 x 5% = 4,500

Tax on bonus

IDP Tax on bonus @ 30%

Tax rate on total income including bonus 11%

Differential = 30% - 11% = 19%

Tax on bonus = 250,000 bonus x 19% = 47,500

Regards,

Abbas Shabbir

- faisal_desperado - 06-27-2009

My Dear ,
Your Auditor is seems to be a legerdemain, who has already anticipated the meaning of that clause, which is still to be absolved
Anyways, Act on , whatever your auditor advises,

Regards,

- abbas_chinikham - 06-29-2009

Dear Faisal,

Please refer to Grant Thornton Tax Memorandum 2009, page number 39 .. they have given an example of tax deduction.

- abbas_chinikham - 07-02-2009

???

- faisal_desperado - 07-04-2009

<blockquote id="quote">quote<hr height="1" noshade id="quote">Originally posted by abbas_chinikham
 Dear Faisal,

Please refer to Grant Thornton Tax Memorandum 2009, page number 39 .. they have given an example of tax deduction.
<hr height="1" noshade id="quote"></blockquote id="quote">

Dear Abbas,
I could not have reached to the aforementioned by you,
Could you please send me a link to do so,

Best Regards,

- abbas_chinikham - 07-07-2009

Faisal,

Please provide me with your email address. I will email you the file

- abbas_chinikham - 07-08-2009

Dear Faisal,

File has been emailed. Waiting for your reply !

- faisal_desperado - 07-08-2009

<blockquote id="quote">quote<hr height="1" noshade id="quote">Originally posted by abbas_chinikham
 Dear Faisal,

File has been emailed. Waiting for your reply !
<hr height="1" noshade id="quote"></blockquote id="quote">

Yes dear , i have received the file ,Thanks for that.
But sorry to say , my opinion is still the same, that this relates to the tax year 2010, but let this matter be cleared (by others), the file, which you sent me reveals the issuance date of 14 June, although , matter was proposed after that date,
Furthermore, it also mentioned about the carbon tax on CNG , which has been withdrawn afterward.

Best Regards,

- Farhan2009 - 07-09-2009

Dear all,
It is to inform all of you that 5% tax on bonus has been withdrawn by the National Assembly and this is no more payable neither in 2009 nor in 2010.

- mianramzan - 07-11-2009

I may further add to clarify the provisions relating to IDP Tax.
For the tax year 2009 IDP tax@ 5% is applicable on tax payable. As you know in case of salaries that every employer is responsible to withhold tax and deposit in Government Treasury.

The Finance bill was approved on 26th June , 2009 and Finance Act was not made public and some employer might not be able to deduct the tax and deposit in Govt. Treasury. But as you know that ignorance of law has no excuse. The employers have to comply. It is suggested to deposit the balance amount now and deduct from salaries for the month of July.

IDP Tax @ 30% will be applicable on salary of corporate executives for the next year (Tax year 2010) and Bonus will be excluded from taxable salary if taxable salary is Rs.1,000,000/- or more.

The word corporate executives is not defined in the law, however, we may conclude that the employees of a company would be corporate executives. The company is explained in Section 80(2) of the Income Tax Ordinance, 2001 which is reproduced below

Section 80(2)
(b) âcompanyâ means â
(i) a company as defined in the Companies Ordinance,
1984 (XLVII of 1984);
(ii) a body corporate formed by or under any law in force in
Pakistan;
(iii) a modaraba;
(iv) a body incorporated by or under the law of a country
outside Pakistan relating to incorporation of companies;
(v) a trust, a co-operative society or a finance society 1[or
any other society established or constituted by or under
any law for the time being in force;]
(vi) a foreign association, whether incorporated or not, which
the 2[Board] has, by general or special order, declared to
be a company for the purposes of this Ordinance;
(vii) a Provincial Government; 3[ ]
(viii) a 4[Local Government] in Pakistan; 5[or]
[(ix) a Small Company as defined in section 2;]

Mian Ramzan