Islamabad: According to media sources, the government has decided to eliminate the need of including a taxpayer’s profile with income tax returns.

According to Section 114 A of the Income Tax Ordinance 2001, taxpayers were expected to update their profiles by entering information such as utility connections, types of businesses, business locations, bank accounts, and so on. The deadline for updating taxpayer profiles was originally set for December 31, 2020, but it was later extended to June 30, 2021.

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Through the Finance Bill, 2020, the government proposes to remove Section 114 A and the filing requirement. The definitions of business accounts and Small and Medium Enterprises (SMEs) have also been revised in accordance with the legislation:

This law defines a business account as a bank account used by the taxpayer for business purposes. Penalties will be imposed on those who fail to declare these accounts.

A Small and Medium Enterprise (SMEs) is defined as someone who works in manufacturing and has a corporate turnover of less than PKR 250 million, according to the Finance Bill.

The SMEs must be registered with the Federal Board of Revenue’s Image Recognition Integrated Systems (IRIS) or the Small & Medium Enterprise Development Authority on the Small & Medium Enterprise Resource Planning (SMERP) site (SMEDA).

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SMEs are classified into two categories when it comes to taxation:

• A company with a turnover of less than PKR 100 million will be taxed at a rate of 7.5 percent of taxable income.

• Those with a turnover of more than PKR 100 million but less than PKR 250 million would be taxed at a rate of 15% on their taxable income.

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