My question is about tax return and wealth statement for exporters.
I am a commercial exporter ( no factory I run business from my home address ) , for last year my total export was Rs. 10858401/- for which my bank deducted with holding tax of 108583/- and flood surcharge of 5777/-
I think this is considered as final tax for an exporter if he don't have any other source of income, am I right?
The firm is proprietorship so I will file the return as business individual as done in previous years?
Do I have to file wealth statement?
How my income will be calculated that I fall in for category of filing wealth statement?
I have an agricultural property worth 6000000/-( buy last year but have no income from that , do I have to mention this in wealth statement?
What is basically purpose of wealth statement? is it basis for further tax ?
Also do I have to give details in Anexure D, expenses electricity , phone, gas bill details etc. (The home is owned by my father )
How I would asses the value of an 8 year old car on my name?
sorry for so many questions but Its getting confusing with IT form have been expanded to six pages from one page.
Right. Tax deducted at source from exporters is final. s.154(4)of the INcome Tax Ordinance, 2001.
Every individual whose income is subject to final tax deduction shall file wealth statement if deduction of tax is equal to or more
than thirty five thousand rupees. section 116(4), ITO, 2001.
There is no wealth tax.
Purpose of wealth statement is to determine whether one's income justify his assets.
Wealth statement shows amount that you have spent to acquire asset. So you have to show cost price paid at the time of purchase of your old car plus any value addition cost.
You have to mention agricultural property
thanks for your guidence. You have clearified lot of confusions. I have few more questions I will appriciate if you can answer these, (this wil benifite lot of small exporters) over the past years I consulted few lawyers and I'm still confused on how the income of exporter is assesed, ( I think there might be some ambiguity in the law which was mentioned by few lawyers to me as well )
As for as the law state that withholding tax deducted at source is final tax for exporters. But this final tax allow me how much of my turn over as my income?? let say my turn over is 10858401/- so my bank deducted 108,583 /- withholding tax. That will clear my tax liability but how it will be decided that what is my actual profit / income form my turn over of 10858401/- , one lawyer says it will be 2.5% of your turn over and other says 4% ??
But what if my profit is 25% of this turn over assuming I'm doing some value added exports with high profits.
When I go to buy some land or say new car with this money how I will justify my income?? Will there be a further tax to declare that income?
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by rufntuf22</i>
<br />thanks for your guidence. You have clearified lot of confusions. I have few more questions As for as the law state that withholding tax deducted at source is final tax for exporters. But this final tax allow me how much of my turn over as my income?? let say my turn over is 10858401/- so my bank deducted 108,583 /- withholding tax. That will clear my tax liability but how it will be decided that what is my actual profit / income form my turn over of 10858401/- , one lawyer says it will be 2.5% of your turn over and other says 4% ??
But what if my profit is 25% of this turn over assuming I'm doing some value added exports with high profits.
When I go to buy some land or say new car with this money how I will justify my income?? Will there be a further tax to declare that income?
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
In the repealed Income Tax Ordinance, 1979, there was a section, 80C(5). According to this sub-section, if some one is asked to explain source of income u/s 13 of the repealed Act, in respect of investment made or amount received, etc. the taxpayer while explaining the source of investment, amount etc. cannot treat its income exceeding such sum as is corresponding to the tax payable under normal regime. For example,
Mr. A provides services for Rs.10,00,000
Tax deducted u/s 153 @ 6% Rs.60,000
His income shall be deemed u/s 80C(5) as the amount on which he would be liable to pay same tax.
On looking at First Schedule, we find that if he had earned profit of Rs.600,000 then he would have been liable to the tax of Rs.60,000.
So, according to principle of section 80C (5) of the repealed Act, income of Mr. A would be treated as Rs.600,000.
This method of determining income has been taken as a matter of routine, though it was only relevant where one is explaining source of certain transaction under s.13 of the repealed act and for explaining such source he relies on the income that is subject to final taxation. In this regard I rely upon the case of Prince Glass Works Limited, reported as (1995) 71 (TAX) 227
As I understand Prince Glass case quoted supra, one was not even required to declare wrong income in wealth statement earlier when 80C (5) was in force. It was just in the proceedings of s.13 repealed, that deemed income to the extent specified u/s 80C(5) was to be taken into account.
Current situation is that there is no sub-section in the Income Tax Ordinance, 2001, corresponding to 80C (5) of the repealed income Tax Ordinance, 1979. So relax and declare your income same as you have actually earned according to your books of accounts. In this way you would at least be able to prepare wealth statement & reconciliation with accurate particulars and would not be liable to state false particulars therein.
In continuation to my last reply, I have just found that a section corresponding to 80C(5) of the repealed Income Tax Ordinance 1979 was incorporated in the Income Tax Ordinance, 2001. This sub-section was section 169(4). But this sub-section was omitted by Finance Act, 2004.
By expressly omitting this sub-section legislature has made it clear that from Tax year 2005 onwards there is no restriction on the quantum of profit that one may take into account in respect of his revenues subjected to final tax. You may take into account original profit that you have earned according to your books of accounts.