"\u003chtml xmlns:v=\"urn:schemas-microsoft-com:vml\"\r\nxmlns:o=\"urn:schemas-microsoft-com:office:office\"\r\nxmlns:w=\"urn:schemas-microsoft-com:office:word\"\r\nxmlns:st1=\"urn:schemas-microsoft-com:office:smarttags\"\r\nxmlns=\"http://www.w3.org/TR/REC-html40\"\u003e\r\n\r\n\u003chead\u003e\r\n\u003cmeta http-equiv=Content-Type content=\"text/html; charset=windows-1256\"\u003e\r\n\u003cmeta name=ProgId content=Word.Document\u003e\r\n\u003cmeta name=Generator content=\"Microsoft Word 10\"\u003e\r\n\u003cmeta name=Originator content=\"Microsoft Word 10\"\u003e\r\n\u003clink rel=File-List href=\"2004J5949_files/filelist.xml\"\u003e\r\n\u003ctitle\u003eLIST OF NOTIFICATIONS REPRODUCED IN THE\u003c/title\u003e\r\n\u003co:SmartTagType namespaceuri=\"urn:schemas-microsoft-com:office:smarttags\"\r\n name=\"country-region\"/\u003e\r\n\u003co:SmartTagType namespaceuri=\"urn:schemas-microsoft-com:office:smarttags\"\r\n name=\"date\"/\u003e\r\n\u003co:SmartTagType namespaceuri=\"urn:schemas-microsoft-com:office:smarttags\"\r\n name=\"City\"/\u003e\r\n\u003co:SmartTagType namespaceuri=\"urn:schemas-microsoft-com:office:smarttags\"\r\n name=\"place\"/\u003e\r\n\u003c!--[if gte mso 9]\u003e\u003cxml\u003e\r\n \u003co:DocumentProperties\u003e\r\n  \u003co:Author\u003eziaqat\u003c/o:Author\u003e\r\n  \u003co:Template\u003eNormal\u003c/o:Template\u003e\r\n  \u003co:LastAuthor\u003eAdministrator\u003c/o:LastAuthor\u003e\r\n  \u003co:Revision\u003e2\u003c/o:Revision\u003e\r\n  \u003co:TotalTime\u003e33\u003c/o:TotalTime\u003e\r\n  \u003co:Created\u003e2006-03-11T10:15:00Z\u003c/o:Created\u003e\r\n  \u003co:LastSaved\u003e2006-03-11T10:15:00Z\u003c/o:LastSaved\u003e\r\n  \u003co:Pages\u003e1\u003c/o:Pages\u003e\r\n  \u003co:Words\u003e2128\u003c/o:Words\u003e\r\n  \u003co:Characters\u003e12130\u003c/o:Characters\u003e\r\n  \u003co:Company\u003eORATIER\u003c/o:Company\u003e\r\n  \u003co:Lines\u003e101\u003c/o:Lines\u003e\r\n  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spidmax=\"2050\"/\u003e\r\n\u003c/xml\u003e\u003c![endif]--\u003e\u003c!--[if gte mso 9]\u003e\u003cxml\u003e\r\n \u003co:shapelayout v:ext=\"edit\"\u003e\r\n  \u003co:idmap v:ext=\"edit\" data=\"1\"/\u003e\r\n \u003c/o:shapelayout\u003e\u003c/xml\u003e\r\n \r\n\r\n\u003cbody lang=EN-US style=\u0027tab-interval:.5in\u0027\u003e\r\n\r\n\u003cdiv class=Section1\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center\u0027\u003e\u003cb\u003eSTOCK EXCHANGE A\r\nWITHHOLDING TAX AGENT\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center\u0027\u003e\u003cb\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center\u0027\u003e\u003cb\u003eM. Iqbal Patel,\r\nF.C.A., \u003c/b\u003e\u003cst1:City\u003e\u003cst1:place\u003e\u003cb\u003eKarachi\u003c/b\u003e\u003c/st1:place\u003e\u003c/st1:City\u003e\u003cb\u003e\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eThe Finance Minister Mr. Shaukat\r\nAziz in his budget 2004-2005 speech Said that the daily turnover of shares on\r\nstock exchange is around Rs.70 billion but the Capital gains arising out of\r\nsuch shares are exempt from levy of income until tax year 2007. In view of\r\nextensive tax free income being generated in this business, it is proposed to\r\nlevy capital value tax (CVT) on purchase of shares at the rate of 0.1% of the\r\nvalue of shares transacted.\u003co:p\u003e\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eThere was hue and cry from the\r\ntycoons of stock exchange members/brokers against this nominal levy and crushed\r\nthe stock rate which confirmed the fact that the capital market is dominated by\r\nfew tycoons in the name of the investors who manipulate it according to their\r\nrequirement. It is unfortunate with this country that the big fish whether in\r\nthe agriculture or otherwise sector are not in a mood to contribute to the\r\nexchequer to build the nation stronger enough to get it rid of the world donors\r\nwho lend the money at their dictated terms and conditions and thus the\r\nsovereignty of the nation is at their mercy.\u003co:p\u003e\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eIt appears that the Government\r\nhad not done its homework before framing this propose of levy of CVT, hence it\r\nsurrendered under the pressure of these wealthy and powerful lobby obviously\r\nfor the reasons that the rulers, whether in uniform or otherwise, are from the\r\nsaid flock.\u003co:p\u003e\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eHowever final outcome of the said\r\nresistance against the levy of Capital Value Tax emerged that the Central Board\r\nof Revenue (CBR) has inserted section 233A to the Income Tax Ordinance, 2001\r\n(Ordinance) and issued three circulars on deduction of withholding tax by a\r\nregistered stock exchange and one circular on collection of capital value tax\r\nby a registered stock exchange on purchase of shares.\u003co:p\u003e\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eThe scenario would now be that\r\nthe Circular No. 3 of 2004 dated 1-7-2004 requires the stock exchange to\r\ncollect tax at the rate of 0.005% with effect from July 1, 2004, on the sale\r\ntrading value of shares transacted through its automated trading system in\r\n.ready, future, provisional and any other counter. The members concerned of the\r\nstock exchange shall collect tax from its clients and shall pay it to the stock\r\nexchange. The lax so collected states the circular that it is an advance tax\r\nand is adjustable against final tax liability of the seller of shares.\u003co:p\u003e\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eThe Circular No. 4 of 2004 dated \u003cst1:date\r\nMonth=\"7\" Day=\"1\" Year=\"2004\"\u003e1-7-2004\u003c/st1:date\u003e requires the stock exchange\r\nto collect tax @ 0.005% of the purchase value and 0.005% on the sale value of\r\nshares from its members in lieu of the commission earned on purchase/sales\r\ntransacted. The members shall pay tax on purchase/sales. The tax will be final\r\ntax liability of the member.\u003co:p\u003e\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eThe Circular No. 5 of 2004 dated \u003cst1:date\r\nMonth=\"7\" Day=\"1\" Year=\"2004\"\u003e1-7-2004\u003c/st1:date\u003e requires the stock exchange\r\nto collect advance tax @ 10% on carry over (Badla) markup transacted. The\r\nmember shall collect tax from its financers. The tax so collected would be\r\nadjustable against final tax liability of the financers.\u003co:p\u003e\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eThe new section inserted in the\r\nOrdinance provides that Stock Exchange shall collect advance tax from it\r\nmembers (a) on purchase of shares. in lieu of the commission earned by such\r\nmembers (b) on sale of shares in lieu of commission \u0026quot;earned by \u003cspan\r\nstyle=\u0027letter-spacing:.1pt\u0027\u003esuch \u003c/span\u003emembers (c) in respect of trading of\r\nshares of members (d) in respect of financing or carry over trade (Badla).\u003co:p\u003e\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eThere appears some divergent\r\nprovision between under section 233A of the Ordinance and the circulars issued\r\nby the CBR. The section 233A(c) provides that the stock exchange shall collect\r\ntax from its members of the sale trading of shares in lieu of the commission\r\nearned by such members whereas the Circular No.3 dated July 1, 2004 states that\r\nthe members concerned of the stock exchange shall collect tax from its clients.\r\nThereby according to the circular the investors on whose behalf the members\r\nsale the shares will have to pay the tax of the sale value of shares transacted\r\nthrough the members. Though the intention of the statute is not as such. \u003co:p\u003e\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eSimilarly Circular No. 5 of 2004\r\ndated \u003cst1:date Month=\"7\" Day=\"1\" Year=\"2004\"\u003e1-7-2004\u003c/st1:date\u003e states a\r\nstock exchange shall collect advance tax @ 10% from its members on carry over\r\ntrades (COT   Badla) markup transacted through its automated system in COT\r\nmarket and the member shall collect this tax from its financier. But there is\r\nno such provision in the section 233A(d) of the Ordinance to collect the tax\r\nfrom the financier.\u003co:p\u003e\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eMoreover the section 233A(1)\r\nprovides that the tax collected by the stock exchange (a) on purchase of shares\r\nand (b) on sale of shares is advance tax but subsection (2) of section 233A\r\nprovides that the said tax is final. Such poor drafting confuses the issues and\r\nmisleads the investors or taxpayers. This provision needs to be reviewed by the\r\nCBR and stock exchange as well too. Further the Securities Exchange Commission\r\nof Pakistan (SEC) cannot remain align to this confused provision in the\r\nOrdinance which has very significant impact on taxability or otherwise of the\r\ninvestors.\u003co:p\u003e\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eThe Circular No. 6 of 2004 dated\r\n1-7-2004 issued by the CBR relates to the collection of Capital Value Tax (CVT)\r\nby a registered stock exchange on purchase of shares @ 0.01% of the purchase\r\nvalue of any Modaraba certificates or any instrument of redeemable capital as\r\ndefined in the Companies Ordinance, 1984 or shares of a public company listed\r\non Stock Exchange in Pakistan. The circular states that the members shall\r\ncollect CVT from its clients. The said circular provides that non-resident\r\nperson/institutions seeking refund shall file their claims with the taxation\r\nofficer concerned. Though the refund application under section 170 of the Ordinance\r\nis required to be filed with the Commissioner but the circular requires the\r\nnon-resident to apply for refund to the taxation officer which is not in\r\nconfirmative with the statute which overrides.\u003co:p\u003e\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eThe Finance Act, 2004 has\r\nintroduced a new proviso to section 7(4) to the Finance Act, 1989 whereby the\r\nStock Exchange will collect CVT from the resident person. It does not provide\r\nthat the members will collect tax from their client.\u003co:p\u003e\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eIt will be observed that the CVT\r\nwas levied in the Finance Bill, 2004-05 on purchase of shares by the members @\r\n0.1% of the value of shares transacted. The Government intention was to bring\r\ninto tax-net the free income generated by the members, broker of the stock\r\nexchange; but on their resistance the CBR imposes the withholding tax on the\r\nsmall investors who will bear this additional burden of tax because the tax\r\ndeducted on sale of shares is the final tax. They cannot adjust this tax\r\nagainst income earned through other source. Thus both the said decisions of CBR\r\nare on unsound footing.\u003co:p\u003e\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eOn the one hand the period of\r\nexemption to income of capital gain from sale of shares etc. has been extended\r\nfor another two years in the budget, on the other it levied CVT on such sale of\r\nshares. If the Government has intention to generate revenue, it could have not\r\nextended the exemption on capital gain in the budget 2004-05 because it was to\r\nexpire on \u003cst1:date Month=\"6\" Day=\"30\" Year=\"2005\"\u003e30th June, 2005\u003c/st1:date\u003e.\r\nMoreover the exemption on the capital gain is allowed without any limit of\r\nincome of capital gain earned. In order to encourage the small investors, the\r\nexemption on this account should be allowed at lower limit, exceeding the\r\nspecified ceiling of such income be brought to tax. \u003co:p\u003e\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eThe levy of withholding tax on\r\npurchase and sale of shares will have adverse impact on the investment. Because\r\nthe trading in shares is mostly done by the National Investment (unit) Trust or\r\nmutual funds established by the Investment Corporation of \u003cst1:country-region\u003e\u003cst1:place\u003ePakistan\u003c/st1:place\u003e\u003c/st1:country-region\u003e\r\nor collective investment scheme authorized or registered under the Non-Banking\r\nFinance Companies Rules, 2003 or a Modaraba. These institutions are exempted\r\nunder clause (47B) of Part IV of the Second Schedule to the Ordinance from\r\ndeduction of tax on payment to them on account of dividend under section 150,\r\nprofit on debt under section 151, and brokerage and commission under section\r\n233. But the new section 233A inserted in the Ordinance in respect of\r\ncollection of tax on sale/purchase of share has not been inserted in the said clause\r\nfor exemption of such tax. Consequently these institutions will suffer tax\r\nburden despite income of mutual fund of an investment company registered under\r\nthe Investment Companies and Investment Advisors Rules, 1971 or unit trust\r\nscheme of an assets management company is exempt under clause (99) of Part I of\r\n.the Second Schedule to the Ordinance from tax if these institutions distribute\r\nnot less than 90% of their accounting income among their certificate or unit\r\nholder. Similarly clause (57) of Part I of the said schedule exempt the income\r\nof NIT, Mutual Funds subject to distribution of 90% of their income. Further\r\nincome of EOBI and other funds who are the main investors, their income is also\r\nexempt from tax under the said clause. These exempted provisions, thus will\r\nseriously hit by the provision of section 233A.\u003co:p\u003e\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eThe Government thus in order to\r\nprotect the interest of the few tycoons, has created serious problems for the\r\ninvestors especially for foreign investors who has to approach the taxation\r\nauthorities for refund of such tax withhold on their transaction. It is\r\ninteresting that the Ordinance exempts on income under one provision while the\r\nother provision (233A) tax the same income.\u003co:p\u003e\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eMoreover the members have started\r\nto shift the tax so deducted/collected from trading of shares to the investors.\r\nThe CBR has, therefore, advised the members of KSE not to charge tax from their\r\nclients as it is against the norms of income tax law. Because the\r\nmembers/brokers pass on the presumptive tax payable by them on the commission\r\nto their clients either by enhancing the rate of commission or through\r\ncollecting service charges. In fact the payment of presumptive tax is the\r\npersonal and exclusive liability of the members/brokers on their commission\r\nincome.\u003co:p\u003e\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eThe mechanism devised for\r\ncollection/deduction of tax on purchase/sale or Badla transaction is that the\r\nmembers will tax so collected including proprietary trade submit a specified\r\nstatement to the Stock Exchange who will deposit tax on 25\u003csup\u003eth\u003c/sup\u003e of each\r\nmonth into Government treasury. The copy of the paid challans alongwith a\r\nspecified statement shall be forwarded to the CIT concerned holding\r\njurisdiction over the concerned stock exchange.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eThe Stock Exchange claims that it\r\nhas developed a software to collect and process the required data and to create\r\nthe required specified statements etc. It has delivered a cheque of over Rs.73\r\nmillion to the CBR of tax collected during .the period of July 2004.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eThe system of said withholding\r\ntax is very complicate and the chances of evasion are tremendous. The MD of the\r\nKarachi Stock Exchange also has admitted that out of 150 working members 140\r\nhave complied with, rest are the defaulters. The CBR has not any means to\r\ndetect the evasion and thus default in tax culture will grow.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eThe question is why the investors\r\nare made subject to withholding tax on their investments activities just to\r\nplease a powerful lobby. The section 233A clearly provides that; these\r\nwithholding taxes are levied on the income of the members/brokers in lieu of\r\ncommission income earned by them. There nowhere is provided that it will be collected\r\nfrom the investors whereas the members/brokers have started to collect these\r\ntaxes from their clients. The CBR has also warned them against their illegal\r\npractice. But there is no provision in the Ordinance to check this trend.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eIt is recommended that:\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e(i)\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e         \u003c/span\u003eThe withholding tax levied under clause (a) and (b) of\r\n233A(1) be withdrawn.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify;text-indent:-.5in\u0027\u003e(ii)\u003cspan\r\nstyle=\u0027mso-tab-count:1\u0027\u003e        \u003c/span\u003eThe capital gain tax be \u0027exempted to a\r\ncertain low ceiling, exceeding this ceiling be brought to tax. \u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e(iii)\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e       \u003c/span\u003eThe words Advance Tax in subsection (1) of section 233A be,\r\ndeleted.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify;text-indent:-.5in\u0027\u003e(iv)\u003cspan\r\nstyle=\u0027mso-tab-count:1\u0027\u003e       \u003c/span\u003eAs a result of withdrawal of tax on the\r\nsale / purchase from the investors, the rate of CVT be raised to 0.02% and the\r\nmembers be made liable to pay pit.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e(v)\u003cspan style=\u0027mso-tab-count:\r\n1\u0027\u003e        \u003c/span\u003eThe non\u0026#8209;resident investors be exempted from payment of\r\nCVT.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center\u0027\u003e\u003cb\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center\u0027\u003e\u003cb\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center\u0027\u003e\u003cb\u003eLETTER FROM MUHAMMAD\r\nSHAHID BAIG,\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center\u0027\u003e\u003cb\u003eADVOCATE, \u003c/b\u003e\u003cst1:City\u003e\u003cst1:place\u003e\u003cb\u003eLAHORE\u003c/b\u003e\u003c/st1:place\u003e\u003c/st1:City\u003e\u003cb\u003e\r\nTO THE CHAIRMAN,\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center\u0027\u003e\u003cb\u003eCENTRAL BOARD OF\r\nREVENUE, REVENUE DIVISION,\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center\u0027\u003e\u003cb\u003eGOVERNMENT OF \u003c/b\u003e\u003cst1:country-region\u003e\u003cst1:place\u003e\u003cb\u003ePAKISTAN\u003c/b\u003e\u003c/st1:place\u003e\u003c/st1:country-region\u003e\u003cb\u003e\u003co:p\u003e\u003c/o:p\u003e\u003c/b\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center\u0027\u003e(Re: Request for\r\nclarification regarding\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center\u0027\u003edefinition of\r\n\u0026quot;retailers\u0026quot;)\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal align=center style=\u0027text-align:center\u0027\u003e[\u003cst1:date Year=\"2004\"\r\nDay=\"24\" Month=\"8\"\u003e24\u003csup\u003eth\u003c/sup\u003e August, 2004\u003c/st1:date\u003e]\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eThe Chairman, \u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eCentral Board of Revenue \u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eRevenue Division, Government of \u003cst1:country-region\u003e\u003cst1:place\u003ePakistan\u003c/st1:place\u003e\u003c/st1:country-region\u003e,\r\n\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003cst1:City\u003e\u003cst1:place\u003eIslamabad\u003c/st1:place\u003e\u003c/st1:City\u003e.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eRespected Sir,\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;text-indent:.5in\u0027\u003eThis refers to\r\nthe above subject.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eAs per newly added section i.e.\r\n113A to the Income Tax Ordinance, 2001 by Finance Act, 2004,\r\n\u0026quot;Retailers\u0026quot; having turnover up to Rs.5(M) have been given option to\r\npay Turnover Tax @ 0.75% being their Final Tax liability.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;text-indent:.5in\u0027\u003e\u0026quot;Retailers\u0026quot;\r\nhave been defined as under:\u0026#8209;\u0026#8209;\u0026#8209;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;text-indent:.5in\u0027\u003e\u003cu\u003eSection\r\n113A(2)(a)\u003co:p\u003e\u003c/o:p\u003e\u003c/u\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003e\u0026quot;Retailer\r\nmeans a person selling goods to general public for the purpose of\r\nconsumption.\u0026quot;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;text-indent:.5in\u0027\u003eWhereas the word\r\n\u0026quot;turnover\u0026quot; has been defined in the following words\u0026#8209;\u0026#8209;\u0026#8209;\u0026#8209;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;text-indent:.5in\u0027\u003e\u003cu\u003eSection\r\n113(3)\u003co:p\u003e\u003c/o:p\u003e\u003c/u\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;text-indent:.5in\u0027\u003e\u0026quot;In this\r\nsection \u0026quot;turnover means\u0026quot;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003e(a) the gross\r\nreceipts, exclusive of 4[sales tax and central excise duty or] any trade\r\ndiscounts shown on invoices or bills, derived from the sale of goods;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003e(b) the gross\r\nfees for the rendering of service 5[or, giving benefits], including\r\ncommissions;\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;text-indent:.5in\u0027\u003e(c) the gross\r\nreceipts from the execution of contracts; and\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003e(d) the\r\ncompany\u0027s share of the amounts stated above of any association of persons of\r\nwhich the company is a member.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eIt appears from the above\r\ndefinitions that those rendering services to the general public against\r\nfees/receipts also fall within the definition of \u0026quot;retailer\u0026quot;. Your\r\ngood\u0026#8209;self may appreciate that following categories of persons are also\r\nrendering services to the genera public\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003eHotels, \u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003eGuest Houses, \u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003eMarriage Halls, \u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003eWorkshops,\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003ePrinters, \u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003eArchitects \u0026amp;\r\nEngineers, \u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003eEducational\r\nInstitutions, \u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003eProperty\r\nDealers, \u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003eFashion\r\nDesigners, \u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003ePhotographers, \u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003eBeauty parlours,\r\n\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003eCar dealers, \u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027margin-left:.5in;text-align:justify\u0027\u003eDry cleaners.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eYou are requested to clarify,\r\nwhether or not above service providers along with others fall in the definition\r\nof \u0026quot;retailer\u0026quot;. You are also requested to clarify whether or not those\r\nengaged in retail sale vis\u0026#8209;a -vis manufacturing and sale can also avail\r\nthis scheme to the extent of their retail sale.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003eAn early consideration is deeply\r\nrequested so that concerned Tax Payers could be benefited from the newly\r\npromulgated law.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify;text-indent:.5in\u0027\u003eThanking you.\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003cp class=MsoNormal style=\u0027text-align:justify\u0027\u003e\u003co:p\u003e\u0026nbsp;\u003c/o:p\u003e\u003c/p\u003e\r\n\r\n\u003c/div\u003e\r\n\r\n\u003c/body\u003e\r\n\r\n\u003c/html\u003e\r\n"