11-17-2011, 09:20 PM
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by rufntuf22</i>
<br />thanks for your guidence. You have clearified lot of confusions. I have few more questions As for as the law state that withholding tax deducted at source is final tax for exporters. But this final tax allow me how much of my turn over as my income?? let say my turn over is 10858401/- so my bank deducted 108,583 /- withholding tax. That will clear my tax liability but how it will be decided that what is my actual profit / income form my turn over of 10858401/- , one lawyer says it will be 2.5% of your turn over and other says 4% ??
But what if my profit is 25% of this turn over assuming I'm doing some value added exports with high profits.
When I go to buy some land or say new car with this money how I will justify my income?? Will there be a further tax to declare that income?
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
In the repealed Income Tax Ordinance, 1979, there was a section, 80C(5). According to this sub-section, if some one is asked to explain source of income u/s 13 of the repealed Act, in respect of investment made or amount received, etc. the taxpayer while explaining the source of investment, amount etc. cannot treat its income exceeding such sum as is corresponding to the tax payable under normal regime. For example,
Mr. A provides services for Rs.10,00,000
Tax deducted u/s 153 @ 6% Rs.60,000
His income shall be deemed u/s 80C(5) as the amount on which he would be liable to pay same tax.
On looking at First Schedule, we find that if he had earned profit of Rs.600,000 then he would have been liable to the tax of Rs.60,000.
So, according to principle of section 80C (5) of the repealed Act, income of Mr. A would be treated as Rs.600,000.
This method of determining income has been taken as a matter of routine, though it was only relevant where one is explaining source of certain transaction under s.13 of the repealed act and for explaining such source he relies on the income that is subject to final taxation. In this regard I rely upon the case of Prince Glass Works Limited, reported as (1995) 71 (TAX) 227
As I understand Prince Glass case quoted supra, one was not even required to declare wrong income in wealth statement earlier when 80C (5) was in force. It was just in the proceedings of s.13 repealed, that deemed income to the extent specified u/s 80C(5) was to be taken into account.
Current situation is that there is no sub-section in the Income Tax Ordinance, 2001, corresponding to 80C (5) of the repealed income Tax Ordinance, 1979. So relax and declare your income same as you have actually earned according to your books of accounts. In this way you would at least be able to prepare wealth statement & reconciliation with accurate particulars and would not be liable to state false particulars therein.
<br />thanks for your guidence. You have clearified lot of confusions. I have few more questions As for as the law state that withholding tax deducted at source is final tax for exporters. But this final tax allow me how much of my turn over as my income?? let say my turn over is 10858401/- so my bank deducted 108,583 /- withholding tax. That will clear my tax liability but how it will be decided that what is my actual profit / income form my turn over of 10858401/- , one lawyer says it will be 2.5% of your turn over and other says 4% ??
But what if my profit is 25% of this turn over assuming I'm doing some value added exports with high profits.
When I go to buy some land or say new car with this money how I will justify my income?? Will there be a further tax to declare that income?
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
In the repealed Income Tax Ordinance, 1979, there was a section, 80C(5). According to this sub-section, if some one is asked to explain source of income u/s 13 of the repealed Act, in respect of investment made or amount received, etc. the taxpayer while explaining the source of investment, amount etc. cannot treat its income exceeding such sum as is corresponding to the tax payable under normal regime. For example,
Mr. A provides services for Rs.10,00,000
Tax deducted u/s 153 @ 6% Rs.60,000
His income shall be deemed u/s 80C(5) as the amount on which he would be liable to pay same tax.
On looking at First Schedule, we find that if he had earned profit of Rs.600,000 then he would have been liable to the tax of Rs.60,000.
So, according to principle of section 80C (5) of the repealed Act, income of Mr. A would be treated as Rs.600,000.
This method of determining income has been taken as a matter of routine, though it was only relevant where one is explaining source of certain transaction under s.13 of the repealed act and for explaining such source he relies on the income that is subject to final taxation. In this regard I rely upon the case of Prince Glass Works Limited, reported as (1995) 71 (TAX) 227
As I understand Prince Glass case quoted supra, one was not even required to declare wrong income in wealth statement earlier when 80C (5) was in force. It was just in the proceedings of s.13 repealed, that deemed income to the extent specified u/s 80C(5) was to be taken into account.
Current situation is that there is no sub-section in the Income Tax Ordinance, 2001, corresponding to 80C (5) of the repealed income Tax Ordinance, 1979. So relax and declare your income same as you have actually earned according to your books of accounts. In this way you would at least be able to prepare wealth statement & reconciliation with accurate particulars and would not be liable to state false particulars therein.
