ISLAMABAD (July 17 2010): The Federal Board of Revenue has categorically declared that the recovery of income tax arrears from the bankrupt taxpayers would be made from his assets (estate).
The income tax circular explaining the provisions of the Finance Act 2010 here on Friday said that to safeguard the interest of revenue in cases of bankruptcy, a new section 138B in the Income Tax Ordinance, 2001 has been introduced through which if a taxpayer is declared bankrupt, his income tax liability will be passed on to the taxpayer estate in bankruptcy.
It has also been provided that in such cases income tax liability shall be paid in preference over the claims of other creditors against such estate in bankruptcy and such payment of income tax shall be deemed to be an expenditure of current nature in the operations of the estate in bankruptcy.
Another important explanation has been made on the issue of taxability of interest free/concessional loans under section 37A of the Income Tax Ordinance 2001. The FBR said that sub-section (7) of section 13 provides for taxation of benefit arising on free or concessional loan in the hands of an employee.
A proviso has now been added under this section whereby such benefit shall not be taxable in the hands of an employee in cases where such benefit is extended by the employer due to the waiver of interest by such employee on his accounts (eg provident fund etc) maintained with the employer.
Explaining the amendment made in the Capital Value Tax Laws, the FBR said that consequent upon amendment in the Federal Legislative List of the Constitution of Pakistan, through 18th Amendment, Federal Government is no more empowered to levy/collect Capital Value Tax on immovable properties located in Provinces.
Therefore, through an amendment in CVT Law, brought about through Finance Act 2010, capital value tax rates applicable on immovable properties have been omitted. Consequently, capital value tax is no more chargeable under section 7 of the Finance Act, 1989 on immovable properties with effect from July 1, 2010.
-www.brecorder.com
The income tax circular explaining the provisions of the Finance Act 2010 here on Friday said that to safeguard the interest of revenue in cases of bankruptcy, a new section 138B in the Income Tax Ordinance, 2001 has been introduced through which if a taxpayer is declared bankrupt, his income tax liability will be passed on to the taxpayer estate in bankruptcy.
It has also been provided that in such cases income tax liability shall be paid in preference over the claims of other creditors against such estate in bankruptcy and such payment of income tax shall be deemed to be an expenditure of current nature in the operations of the estate in bankruptcy.
Another important explanation has been made on the issue of taxability of interest free/concessional loans under section 37A of the Income Tax Ordinance 2001. The FBR said that sub-section (7) of section 13 provides for taxation of benefit arising on free or concessional loan in the hands of an employee.
A proviso has now been added under this section whereby such benefit shall not be taxable in the hands of an employee in cases where such benefit is extended by the employer due to the waiver of interest by such employee on his accounts (eg provident fund etc) maintained with the employer.
Explaining the amendment made in the Capital Value Tax Laws, the FBR said that consequent upon amendment in the Federal Legislative List of the Constitution of Pakistan, through 18th Amendment, Federal Government is no more empowered to levy/collect Capital Value Tax on immovable properties located in Provinces.
Therefore, through an amendment in CVT Law, brought about through Finance Act 2010, capital value tax rates applicable on immovable properties have been omitted. Consequently, capital value tax is no more chargeable under section 7 of the Finance Act, 1989 on immovable properties with effect from July 1, 2010.
-www.brecorder.com
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