Income Tax for export of processed kinnow

[Sarfaraz]

Dear members

If i process and export kinnows to dubai than what would be the rate of income tax according to which i have to pay tax.

If i would work as a partnership and if as a private limited company.

According to my understanding in case of private limited company than the rate of tax would be 35% and if my export is 80% of my total sale then the a certain portion of my realized amount of export that would range between .75 to 1.25% would be my full and final tax liability.

In case of partnership what would be my tax liability in case of export and in case of import?

According to my understanding the rates specified in finance Act 2006 would apply to calculate the total tax liability; what would be the benefit of export in it?

Regards

Sarfaraz Ahmed

[Sarfaraz]

Aslam u alaikum

kisi singer ka gana yaad aa raha hai


wajan mariyan bulaya kai baar oyeee kisse ne meri gal na suneeee....


aisa hi kuch mujhe yahan nazar aa raha hai

[Abdur.Rehman]

Well ur liability in case of a private limited company for import of Kinnos would be 0.75% of ur gross turnover. And if all ur income is from export of kinnos, u will have to file a return of total income, showing the total income and no tax liability.
And in case of a partnership again if all ur income is from exports then the treatment as stated above.
but the difficulty arises when u have both types of revenue.i.e. from exports and inland sales
In that case the tax on ur exports will be final tax irrespective of the fact that u r a private limited company or a partnership.
and for income other than exports u will be taxed @35% if u r a private company. and if u r a partnership or an inidividual, then the tax slab will be applicable to u( i v not gone through the latest amendments, in finance act 2006 thoroughly,) u may consider the rate that is applicable to individual or AOP.
plz ask if any confusion

[Sarfaraz]

Aslam u alaikum

Dear Abdur.Rehman

Thanx for your response; waise CBR kitna acha hai k woh in case of total export hamare sir par koi liability nahi rakhna chahta

Hamari export proceeds hi main se .75% (I think you have confirmed it from seventh schedule of Income tax ordinance, 2001) bank deduct kar le ga aur hamari liabiliy nil ho gee. Just apni return main dikha dain ge k all full and final tax liability has been already been deducted.\

Acha it means k tax liability export proceeds par hai na k total exports par... I mean to say hum ne export kar dee hai.. risks and rewards have been transferred but the proceeds have not been received by us then whether we have to submit the tax or not..

iss k illawa not total of our product is export and we are also running a cold storage and ice manufacturing unit with it. So the total of our expenditures would be apportioned between our export and local revenue and than taxable profit would be determined aur uss par tax. M i right?

Thank you for your response and thank you in anticipation for the next response... ;-)

[Abdur.Rehman]

Well the tax is deducted at the time of realization of export proceeds. u can realize it from EPZA, Bank, Indenting agent or export house. Those person will deduct tax at the time of payment to u.
and han no deduction is allowed for any expense incurred in deriving income from exports. u will be assessed separately 4 ur income other than exports and u will have to allocate expenses to that other source of income. u will not take into account the expenses of exports. this is the crux of final tax regime.

[Sarfaraz]

AOA

and from where i can read information about final tax regime.

[Abdur.Rehman]

Well u may find articles regarding it. also on this forum. But it is not a term of law and not defined or specifically discussed in any statute. it is a common tax term.
u may also read section 5,6,7 and 8 of the Income Tax Ordinance.
The main crux of it is that the withholding tax deducted from u is the final tax. and u can not claim any expense regarding that income. and ur that income will also not be counted for determining ur tax liability.