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CBR devises uniform system of income tax and sales tax jurisdiction for companies

ISLAMABAD (May 31 2003) : To make things easy for the public limited companies, the Central Board of Revenue (CBR) has laid down uniform criteria for both sales tax and income tax departments to assign jurisdiction to these companies from next financial year.

Presently, income tax and sales tax departments have different parameters to decide jurisdiction of a particular tax office for assessment of revenue liabilities pertaining to these companies.

On the income tax side, the jurisdiction of public limited companies, whether listed or not, is determined on the basis of location of their registered offices.

On the other hand, Sales Tax Department assigns jurisdiction on the basis of location of the business premises.

To harmonise the jurisdiction of Income Tax and Sales Tax Departments, a uniform system was needed.

The matter was examined in the Board in concurrence with the Ministry of Finance.

It has been decided that in case of companies quoted on stock exchange, the jurisdiction would be determined on the basis of their registered offices.

In case of public limited companies, not quoted on stock exchange and private limited companies, the jurisdiction would be determined, in cases of manufacturers/processors, on the basis of location of their factories and in cases of companies engaged in the businesses other than manufacturing/processing, on the basis of location of their business premises.

In case of companies conducting manufacturing/processing and other business at more than one place, the jurisdiction would be assigned on the basis of principal place where such manufacturing/ processing and other business is carried on.

The CBR on Friday issued instructions to all Regional Commissioners of Income Tax (RCITs) to identify all such companies whose location of assessments would be affected by the above-mentioned order.

For an effective and smooth transfer of all such cases to their new jurisdictions, the RCITs would closely monitor the whole exercise and ensure that all such cases are transferred by July 15, 2003.

Following is the text of the Order issued pertaining to the jurisdiction of Public Limited Companies:

In exercise of the powers conferred by sub section (I) of Section 209 of the Income Tax Ordinance, 2001, and in partial modification of board's order of even number dated 1st July, 2002, the Central Board of Revenue is pleased to substitute the “Explanation” as provided at the end of the First Schedule to the above referred order with the following:

EXPLANATION

The expression “place of business” as used in the Schedules means:

a) In the case of Public Limited Companies, quoted on stock exchange, the “place” where the registered offices of such companies are situated.

b) In the case of other companies;

(i) If the company is primarily engaged in manufacturing or processing, the “place” where the factory is situated;

(ii) If the company is primarily engaged in business other than manufacturing or processing, the “place” where such business is actually carried-on.

Provided that in the cases at (b) (I) & (ii) above, if the manufacturing/processing/other business is carried on at more than one place, the expression “place of business” shall mean the principal place where such manufacturing/ processing/other business is carried on”.

The above order shall be effective from 01.07.2003.

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