INVESTMENT TAX SCHEME 2008 INTRODUCTION

Investment Tax Scheme 2008 is basically a Tax Amnesty

scheme for the undeclared and unexplainable income /assets as the similar schemes offered in the past

INVESTMENT TAX SCHEME 2008

PURPOSE:
To provide an opportunity for declaration of moveable and
immovable assets for which the tax payer has no explanation regarding nature and source of investment, and were chargeable to tax but could not be so charged

LEGAL AUTHORITY:
FBR Circular No. 3 of 2008 issued in exercise of powers conferred
under section 120A of the Income Tax Ordinance, 2001 Explanatory circulars No.7 & 8 of 2008

 APPLICABILITY : Applicable to existing as well as new tax

payers. Applicable on the assets acquired till 30th June 2007 Assets include all moveable and immoveable assets including cash Cash includes Foreign currency

 MANDATORY PRE-REQUISITES: Declaration is to be made on the prescribed

form The declaration is to be made till 31st December 2008. The tax has to be paid @ 2% of the fair market value of the asset determined Foreign currency has to be converted into Pak currency at exchange rate as on 30-06-2008

 ADDITIONAL MANDATORY OBLIGATIONS :

New tax payers availing this scheme shall be

obliged to file return of income for tax year 2008 and subsequent 3 consecutive tax years If the tax payer fails to do so, the immunity under the scheme shall be withdrawn

 GUARENTEES AND ASSURANCES: Once the declaration has been made and the tax
due there upon has been fully paid, the department shall accept the declaration as such and no questions shall be asked No questions shall be asked from the new tax payers availing this scheme, regarding the Income Tax returns for the past years, if the return for tax year 2008 and the subsequent 3 consecutive years are filed

 CONSESSIONS AND LENIENCIES: The declarant has been allowed to determine the fair
market value of the asset declared and no method of such determination has been imposed by Law No declaration shall be rejected on the basis of method of evaluation of fair market value of the asset The declarant after having paid the tax on un-explained income/assets shall be entitled to incorporate such income in his books of accounts

 CONDITIONALITIES : Issues pending in appeal or raised/detected by the

department are not covered by the scheme and shall be dealt with under normal law Assets/investments pertaining to the period after 30-062007 till the date of filing of declaration are not covered by the scheme and shall be dealt with under the normal Law No depreciation allowance is allowable in respect of building, plant and machinery or other depreciable asset declared under the scheme

 PAST AMNESTY SCHEMES & DEPARTURE

FROM HISTORY:

The rate of tax payable is very low as compared

to the past schemes The determination of fair market value of the asset declared is left to the declarant instead of the department The declaration cannot be rejected once made, if the tax has been properly calculated and paid