On 6 March 2019, the National Assembly has approved the Finance Supplementary (Second Amendment) Bill, 2019 aimed at amending tax laws. The major changes introduced to income tax laws are as follow:
-For nonbanking sectors, the super tax is abolished from tax year 2020. For banking companies, super tax at 4% is maintained up to tax year 2021.
-The super tax, which was imposed in 2015 for only 1 year to raise funds for the rehabilitation of temporarily displaced persons, is extended indefinitely.
-Banking companies are not required to report the withholding tax information pertaining to section 151 and 231A.
-To promote capital formation, the tax on undistributed profits is being abolished.
-Majority of the manpower in Pakistan in employed in Agriculture, Micro and Small & Medium Enterprises. Low-cost housing is also a priority area. The law proposed to provide incentive to the Banks to provide loans to these sectors and to low cost housing schemes to boost economic activities and generate employment. Banks’ income arising from loans to these sectors in addition to loans in 2018 shall be taxed at 20% instead of 35% and shall be exempt from super tax.
-Special procedures to be introduced via notification with respect to scope and payment of tax, filing of return and assessment for small traders and shopkeepers for different cities or territories.
-For companies availing group relief, tax on inter-corporate dividend has been reduced to the extent of percentage of shareholding the recipient of dividend has in the distributing company.
-To provide relief to filers advance tax on cash withdrawal and sale of banking instruments has been totally abolished.
-Carry forward of capital loss on disposal of securities, as envisaged under section 37A, to be allowed for three tax years from tax year 2019 and onwards.
-To incentivize foreign remittance by overseas Pakistanis, advance tax on cash withdrawal on accounts solely fed by foreign remittance has been exempted.
-Through this amendment exemption has been granted for five years to industrial undertakings set up for manufacturing of equipment used in generation of renewable energy if such undertaking is set up between 1st March 2019 and 30th June 2023.
-Through this amendment provisional assessment may be made in case of an offshore asset not declared earlier if such asset is discovered by the Commissioner or any department or agency of the federal or provincial government.
