1.The concept of minimum taxis very old which was abolished by the Finance Act, 2008 and now re-introduced by the Finance Act, 2009.

2.This section (113) is applicable to a resident company onlyeven in cases wherein they are not required to pay tax for any reason including the following:

a)Loss for the year;

b)The setting up of loss for earlier year;

c)Exemption from tax;

d)Tax is not payable on account of any tax credit or rebate; or

e)The claiming of allowances or deductions (including depreciation and amortization deductions) no tax is payable or paid by the person for a tax year or the tax payable or paid by the person for a tax year is less than one-half per cent of the amount representing the person's turnover from all sources for that year.

3-This Section is not applicable to those companies which have declared gross loss before set off, of depreciation and other inadmissible expenses however Commissioner has the power to compute the tax as per historical accounting pattern.

4-The rate of Minimum tax:

a) The Gross receipt derived from sale of Goods:

The rate of tax is 0.5 % of the aggregate of the turnover which is defined as gross receipts exclusive of sales tax and federal excise duty and trade discount. But excluding any amount taken as deemed income and assessed as final discharge of tax liability.

b)The gross fees for the rendering services:

Resident companies providing services including commission except receipts covered by final discharge of tax liability

c)Resident companies having gross receipts from execution of contracts excluding receipts by final discharge of tax liability.

d)A resident company's share of aforesaid gross receipts and fees of an Association of Persons (AOP) of which such company is a member

5-They shall pay minimum tax as income tax instead of actual tax payable.

6-If the minimum tax exceeds the actual tax payable the excess amount shall be carried forward for adjustment against tax liability of subsequent three tax years.

B-MINIMUM TAX UNDER SECTION 148 (IMPORT)

The advance tax collected under section 148 from importers of following goods shall be treated as minimum tax.

·Import of edible oil.

·Import of packing material.

C- MINIMUM TAX UNDER SECTION 153(PAYMENTS FROM GOODS AND SERVICES:

a)Tax deducted from the gross amount paid to resident person or permanent establishment in Pakistan of a non resident person for rendering or providing services shall be treated as minimum tax.

b)The term service includes the services of accountants, architects, dentists, doctors, engineers, interior decorators and lawyers, otherwise than an employee.

Kindly note all persons as referred under A, B, and C shall file normal Return

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Dear Usman Bhai, (KARACHI CHAMBER OF COMMERCE AND INDUSTRY)

In case of  import ofedible oiland  packing material amount collected  at import stage under section 148  shall be minimum tax.

the wordminimum  is substituted for the wordFINAL TAXin section 148(8) by the Finance Act 2009.

regards

(Khushnood A. Khan)
khushnoodk@gmail.com
taxes1@cyber.net.pk
Phone Nos. 92214384625, 9221 4384630,
Mobile; 03332108546

Please alkso visit our web sitewww.karachisalestaxbar.org