The 2021 Finance Law subjected property income to uniform taxation for all taxpayers on the basis of net income at the applicable rates. This means that the separate flat rates for the solvency of the tax on personal property income or the PDO are no longer applicable. In the event that rental income is calculated on the basis of net income, certain specific deductions are allowed, including expenses for administrative and collection costs (up to a threshold of 4% of gross income). All payments made due to the rental of real estate are subject to the above withholding tax rates (if made to individuals and AOPs), including in the case of subletting. The withholding tax rates that apply in the case of the payment of rent on real estate to individuals or PDOs have also been revised as follows: KARACHI: The Federal Board of Revenue (FBR) has stated that wage income to determine taxes includes the value of all benefits, allowances and benefits received by employees. Salary is the amount an employee receives from their job, whether it is income or capital. These include vacation pay, payments in lieu of vacation, overtime, bonuses, commissions, fees, tips, supplements to working conditions, monetary and non-monetary benefits, all allowances, including those paid on a fixed basis or not issued exclusively in the name of the employer, profits in or in addition to salary, pensions, pensions and tax refunds. In addition, amounts or benefits paid or provided by a partner of the employer, a third party under an agreement with the employer or a partner of the employer, a former employer or a potential employer, or payments to an employee of the employee are also considered wages. Taxable income is calculated according to five different types of income: for the purpose of calculating the income to be taxed under the heading “Salary”, the value of all benefits, allowances and advantages granted by the employer to the employee is included in that income. Dividend income is usually subject to final tax of 15% (received from a corporation, including mutual funds and real estate investment trusts, etc.); However, a different rate would apply in the following cases: capital gains from the sale, exchange or transfer of movable property are taxable. The capital gain from the sale of real estate is subject to tax, depending on the amount of profit and the holding period in the manner indicated below: the employee`s gross salary is income from Pakistani sources and taxable in Pakistan if it comes from employment done in Pakistan or if it is paid by or on behalf of the federal government.
a provincial government or local authority. The value of the promotion granted by the employer to the employee is assumed to be in an amount as follows:- (i) Provided that the value used for this purpose is in no case less than forty-five per cent of the minimum schedule of the basic salary or the basic salary, if there is no timetable. An employee is taxed on the fair value of the shares when exercising an option, which is reduced by the cost to the employee at the time of acquisition. The capital gain is taxed as an employee`s expense in the year of the transfer, taking into account the fair value at the time the option is exercised. The value of the accommodation provided by an employer to the employee is equal to the amount that the employer would have paid if the accommodation had not been provided. (b) the fair value of the motor vehicle at the beginning of the lease, if the motor vehicle is leased by the employer; For the purposes of this Part, “employee” means a director of a business. The capital gains described above are subject to tax at the following rates: Capital gains from the sale of securities (listed and other specified securities) are tax-free if the instrument is acquired before July 1, 2013. From 1 July 2021, capital gains on securities will be taxed at the rate of 12.5% for those acquired after 1 July 2013. The applicable rate is 5% in the case of future commodity contracts concluded by members of the Pakistan Mercantile Exchange. Previously, losses resulting from the sale of publicly traded securities and other securities could only be offset by capital gains (and could not be carried forward). Starting with the 2019 taxation year, these losses can now be carried forward and offset by future capital gains from these securities for up to three taxation years.
Donations to certain approved institutions that were previously eligible for a direct deduction from income have now been transferred to the tax credit system. As a result, the overall ceiling on tax relief for donors for grant-intensive purposes has been lowered; The acquisition of immovable property in excess of PKR 5 million and all other assets in excess of PKR 1 million through a channel other than a banking channel shall not be considered as eligible costs for the purpose of calculating capital gains, nor as an eligible asset. In addition, such an approach would also entail criminal consequences for the buyer. . The fair value of the shares determined at the time of issuance under an employee share ownership plan, including following the exercise of an option or right to acquire the shares, less the consideration paid by the employee for the shares, is taxable as wages. However, if shares are issued to the employee, subject to the restriction on the transfer of those shares, no amount will be included in the employee`s salary until the employee has the free right to transfer the shares or at the time the employee sells the shares. . (a) the costs incurred by the employer in purchasing the motor vehicle; or foreign income from returning expatriates (Pakistani citizens who did not reside in Pakistan in one of the previous four tax years) is exempt in the tax year of the tax return and the following tax year.
The value of the right or option to acquire shares under an employee share ownership program is not taxable The extent of taxation and the exclusion of certain initial payments from income are discussed in the Deductions section. Foreign companies (excluding private equity in Pakistan) and non-residents investing in debt securities and government bonds in Pakistan through special convertible rupee accounts (SCRA) and Roshan digital accounts (RDA) are subject to a flat withholding tax rate of 10% on capital gains resulting from the sale of such debt securities and government bonds. . . .
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