“Profit on Debt” CDNS will charge 30pc WHT to people not appearing in ATL
ISLAMABAD: The Central Directorate of National Savings (CDNS) will levy a withholding tax of 30% on the “profits on debt” of persons not appearing on the list of active taxpayers (ATL) of the Federal Council of Revenue ( FBR). In this context, the CDNS Islamabad published revised rates of withholding tax on national savings plans as of July 1, 2021.
According to a communication from the CDNS to its regional offices on the 2021 finance law, refer to the modifications made to section III of part I of the first annex of the 2001 income tax ordinance see the draft law 2021 and the explanation of the significant change made by the RBF.
Consequently, the rate of profit tax on debt imposed under Article 7B will be 15% as of July 1, 2021. However, for persons not included in the ATL, the rate d The tax to be deducted or levied as the case may be, will be increased by 100 per cent of the rate specified in the First Schedule of the Income Tax Ordinance 2001.
The rate of withholding tax (regardless of the date and amount of the investment) would be 15% on persons appearing in the ATL and the rate of withholding at source (regardless of the date and investment amount) would be 30% on people not appearing in ATL, CDN instructions added.
The FBR Income Tax Information Circular states that the scope of the separate block taxation on interest income has been reduced. Previously, interest income up to Rs36 million, in the case of individuals and AOPS was taxable at rates ranging from 15 percent to 20 percent under the final tax regime.
Under new amendments, interest income up to 5 million rupees will be taxed at the rate of 15 percent under the final tax regime.
If the interest income is more than 5 million rupees, it will be taxed under the normal tax regime.
The uniform rate of withholding tax under Section 151 of the Interest Income Ordinance was introduced at 15 percent, the FBR added.
When contacted, a tax expert said the said tax would not apply to Bahbood certificates, retirement accounts and Shuhada accounts.
By virtue of Clause (36A), Part IV, Second Schedule, the provisions of clause (a) of subsection (1) of Article 151 do not apply to any amount paid as an output or profit on an investment in the Bahbood Savings Certificate or the Shuhada Benefit and Family Welfare Account.
In this case, there is no withholding tax.
In addition, under clause (6), part III of the second schedule, the tax payable under clause (c) of subsection (1) of section 39, in respect of any amount paid as a return or profit on the investment in the Bahbood Savings Certificate or The Retiree Benefit Account and the Shuhada Family Welfare Account shall not exceed 10 percent of such profits. His tax is still there and not removed by the 2021 finance law, he added.
Copyright Business Recorder, 2021