07-11-2009, 09:43 PM
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
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
