a- INCOME TAX

1- NTN Registration

Who is liable to get NTN Registration?

Following classes of persons are under obligation to file the income tax return under section 114 (1) Ordinance, 2001 and get registered for NTN

• Every Limited Company.
• Non-profit organizations/NGOs.
• Welfare institutions approved under clause (58) of Part I of the Second Schedule to Income Tax Ordinance, 2001.
• Any person not covered by clause [(a), (ab), (ac) or (ad)] who, has been charged to tax in respect of any of the two preceding tax years.
• A Person who claims a loss carried forward under this Ordinance for a tax year.
• A person owning immovable property with a land area of two hundred and fifty square yards or more or owning any flat located in areas falling within the municipal limits existing immediately before the commencement of Local Government laws in the provinces; or areas in a Cantonment; or the Islamabad Capital Territory; owns immoveable property with a land area of five hundred square yards or more located in a rating area.
• A person who is having a flat having covered area of two thousand square feet or more located in a rating area.
• A person who is having a motor vehicle carrying engine capacity above 1000 CC has obtained National Tax Number; holder of commercial or industrial connection of electricity where the amount of annual bill exceeds rupees one million.
• Every individual whose income under the head ‘Income from business’ exceeds rupees three hundred thousand but does not exceed rupees three hundred and fifty thousand in a tax year.
• Every person holder of NTN certificate, is also required to furnish return of income from the tax year.

Classes of NTN Registration

• Registration as a Salaried Person
• Registration as Business Individuals
• AOP (Partnership) Or Joint Venture
• Registration of Partnership Firms
• A Company

Company Means according to Income Tax Ordinance 2001

• Limited Companies
• Trusts
• Welfare societies
• Co-Operative Societies
• NGOs

2- Filing of Returns & Statements

ILP assists its valued customers with filing returns and statements under prescribed laws of income tax ordinance 2001

• Statements under section 165 of the Income Tax Ordinance.
• Statement under section 149 of the Income Tax Ordinance, 2001.
• Filling of Annual Return of Income Tax.
• Sales Tax Monthly Returns & ST Refunds

3- Income Tax with Holding Agent

Who Is required to pay Withholding tax?

According to Income Tax Ordinance 2001, every prescribed person, is Income Tax Withholding person, the ordinance describes prescribed person as below:

Who Are Prescribed Persons?

Sub-section (7) of section 153 explains “PRESCRIBED PERSONS”

• Federal Government
• A company, including society
• An association of persons constituted by or under law
• A non-profit organization including NGO & welfare associations
• A foreign Consultant and Contractor A
• Consortium or Joint Venture
• An exporter or an Export House for the purpose of Sub-Section (2)
• An association of persons having turnover of Rs.50 million or above in tax year 2007 or in any subsequent tax year or
• An individual having turnover of Rs.50 million or above in the tax year 2009 or in any subsequent year
• A person registered in sales tax act 1990

Section 153(1) of the Income Tax Ordinance, 2001 provides that every prescribed person making a payment in full or part including a payment by way of advance to a resident person or permanent establishment in Pakistan of a non-resident person:

• for sale of goods;
• for rendering of or providing of services;
• or the execution of a contract, other than a contract for the sale of goods or rendering of or providing of services of interior decorator and lawyers otherwise than as an employee, where payment, to a single supplier, in a year, exceeds Rs. 10,000
• “SERVICES” includes the services of accountant, architect, dentist, doctors, engineers

“SALE OF GOODS” includes a Sale of goods for cash or on credit, whether under written contract or not. Where payment, to a single supplier, in a year, exceeds Rs. 25,000. There are two exceptions in general laws, that is payment of salaries and payment for rent, every business person has to withhold income tax before making these to payments.

“Payment of Salary” Tax deductions from employees’ salary as per section 149 of Income Tax Ordinance 2001, every person has to deduct income tax from salary of his employee, as per salary slabs, which is updated in every budget.

“Payment for rents” every person registered under income tax ordinance 2001, has to deduct income tax from rental payments, as per rates prescribed under section 155 of the income tax ordinance 2001.

Therefore in a way every person is income tax withholding person, subject to certain conditions and limitations as prescribed in tax laws, person making a payment in full or part including a payment by way of advance to a resident person or permanent establishment in Pakistan of a non-resident person for rendering of or providing of services, against goods supplied, against salaries, rentals for business or payment against any contract shall at the time of making the payment, deduct tax from the gross amount payable at the rate specified in Division IV of the Part III of the First Schedule. [Sub-Section (2) Of Section 153]. “A withholding agent shall, at the time of making the payment, deduct income tax from the gross amount payable (including sale tax) at the rate specified in division iii of part iii of the first schedule”.

Payment of tax in Government Treasury:

The person is liable to deposit tax into government’s treasury within 7 days from withholding tax deduction. The challan for the payment of withholding income tax can be generated from FBR E-portal which is called PSID, it is then presented into the bank and a CRP is generated by FBR system, this CPR is a proof of payment, for all legal purposes. when a certificate of withholding tax is requested by suppliers and employees, it can be automatically generated by FBR portal.

Filling of Income Tax and withholding Statements U/s 149 & 165

The person is required to file statements under sections 149, 165 of Income Tax Ordinance, 2001.

Statements under section 165 of the Income Tax Ordinance.

The tax required to be deducted/ collected on payments made on account of goods and services. These deductions are reported via statement u/s 165 of the Income Tax Ordinance, 2001.

Statement under section 149 of the Income Tax Ordinance, 2001.

When an employer pays its employees/staff their remuneration by the way of salary income, bonus, benefits and others then tax is deducted u/s 149 of the Income tax Ordinance, 2001 which in addition to be reported by bi-annually u/s 165, has also to be reported annually through statement u/s 149 of the Income Tax Ordinance, 2001.