Radical change in the tax deduction i.e section153

[zahidnoor]

Asalm O aliakum,

I just have read the radicle change in the deduction of tax regime in the new Income Tax Ordinance. which states that now every sale is to be consider as the supply. I just couldn't digest it and just wonder that this means that evry company purchasing any huge value property should also deduct the tax of the seller at the specified rates. Moreover the payment for the purchase from the non tax payer should also be done after deducting the Income Tax.

I just could not digest, so wanted to share it with u people and get the respose.

[Ali Akbar]

AoA

You should be clear in the definition of 'goods' as well, which states that 'goods include movable property'. Moreover you should keep in mind the whole sentence in mind
'Subject to sales tax Act 1990, there shall be levied tax at rate of value of supply of TAXABLE GOODS by a REGISTERED PERSON in COURSE OR FURTHERENCE OF TAXABLE ACTIVITY at the time of supply'
Now I think that if u understand the aforesaid sentence you will never confuse in concepts of sales tax. For example if a company casually disposes of its assets then it needs not to levy sales tax on it, bcz it is not its taxable activity.



ICAP is the best, impeccably best.

[zahidnoor]

hi,

Thanx for ur advice, which was very helful for me in brain storming over this topic. but i think u r confusing the deduction of tax under Income tax Ordinance 2001 (ITO 2001) wiht the levy of Sales Tax.

You are right in a way, as the captal gain on the immoveable property dose not fall wihtin the jurisdiction of the Fedral Taxes.

Section 153 of the ITO 2001 requires the prescribed person to deduct the income tax from the 'sale of goods'. i think an example will depict the problem i m having more clearly

Prescribed person will have to deduct the tax from the payment it is making for the shopping at a mall or dinning at a restaurant, as this will be the sale of goods for that shopkeeper and the restaurant.

hope that will make my problem more understandable.

Regards,

Zahid

[Ali Akbar]

AoA

I did not confuse your question with the Sales Tax rather I knew that your question pertains to Section 153, but clarification of Sales Tax concept was inevitable at the moment.

So would you please revise your question in a more clear and concise way? I will be waiting

ICAP is the best, impeccably best.

[zahidnoor]

Aslam O Aliakum,

thanx for ur kind advice.

my question was relating to the use of words 'sale of goods' in the said section.

for deduction of tax at source the deducting agent will be purchasing any goods or services.

Now with reference to the 'Sale of goods' any person making a sales is making a taxable activity, whether or not he is actually filing an income tax return.

As the deducting agent will have to deduct the tax of the person from whom he has received goods or services exceeding prescribed limits. the tax status of the seller is not important, unless he has obtain a tax exemption certificate.one of my friend quoted the case law of the Prime diary milk in which the court has decided that the company will have to deduct the tax at source from the payments it made to the milkmen, where the company's argument was the same that the seller is not in the tax net hence his tax should not be deducted (hence not making a taxable sale).

Moreover he has also refer me the SRO (Number i could not recall at the moment but i found it in the PBP text book ) of 1991 in which the financial limit of supply and services are define and certain transactions are exempted from deduction of tax at source in which the hotels and restaurants also falls.

Hope this will help me getting more help from my fellow members. I do need a lot of help and luck as i m sitting in Module F exams for my first attempt.

Regards

Zahid

[Taxonomy]

Walakum As Salam

It is absolutely correct that tax u/s 153 of ITO2001 is not applicable on PROPERTY.

The concept lies in the fact that As per constitution of Pakistan -no tax can be levied on sale of property.

Moreover you will find alot of case in PLD regarding this subject till High Court Level which clearly certify the abovereferred facts.

However, if you still have any query please don't hesitate to contact.


<blockquote id="quote"><font size="1" face="Verdana, Tahoma, Arial" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by zahidnoor</i>
<br />Aslam O Aliakum,

thanx for ur kind advice.

my question was relating to the use of words 'sale of goods' in the said section.

for deduction of tax at source the deducting agent will be purchasing any goods or services.

Now with reference to the 'Sale of goods' any person making a sales is making a taxable activity, whether or not he is actually filing an income tax return.

As the deducting agent will have to deduct the tax of the person from whom he has received goods or services exceeding prescribed limits. the tax status of the seller is not important, unless he has obtain a tax exemption certificate.one of my friend quoted the case law of the Prime diary milk in which the court has decided that the company will have to deduct the tax at source from the payments it made to the milkmen, where the company's argument was the same that the seller is not in the tax net hence his tax should not be deducted (hence not making a taxable sale).

Moreover he has also refer me the SRO (Number i could not recall at the moment but i found it in the PBP text book ) of 1991 in which the financial limit of supply and services are define and certain transactions are exempted from deduction of tax at source in which the hotels and restaurants also falls.

Hope this will help me getting more help from my fellow members. I do need a lot of help and luck as i m sitting in Module F exams for my first attempt.

Regards

Zahid
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

Best Regards
Mohammed Ashraf
ACCA, APA, APA, AFA
International Tax Advisor