In order to rationalize the advance tax regime on electricity bills, the Finance Act 2010 has brought in few amendments in Division-IV of Part-IV of First Schedule to the Income Tax Ordinance 2001. The new amendments are explained as follows:
(i) In case of the minimum tax rate slab where the monthly electricity bill does not exceed Rs.400/-. No advance tax under section 235 shall be deductible. Earlier advance tax on monthly electricity bills not exceeding Rs.400 was chargeable @ Rs.60/-;
(ii) In case of the maximum tax rate slab where the monthly electricity bill exceeds Rs.20,000/-, advance tax under section 235 shall be deductible at a reduced rate of 5% only in case of industrial consumers. However, in the case of commercial consumers the advance tax shall continue to be deductible @ 10%; and
(iii) These amendments in the rates of advance tax under section 235 and as provided in Division-IV of Part-IV of First Schedule to the Income Tax Ordinance 2001, shall be effective from 1st July, 2010.
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