Govt restricts scope of gifts among relatives to avoid tax evasion
Islamabad : The government has proposed the scope of gift scheme in order to avoid misuse for purpose of tax evasion.
According to the Finance Bill 2018 issued here on Friday, it has been decided by the government to restrict the scope of gifts amongst the relatives of the taxpayer. As per prevalent law no gain or loss is taken to arise on the disposal of an asset by reason of a gift of the asset.
The FBR proposed important amendment in Section 111 of the Income Tax Ordinance, 2001 whereby concealed income arising from outside Pakistan may be taxed in the tax year prior to the year of discovery of such unexplained income or asset by the FBR authorities.
Inbuilt tax amnesty scheme in shape of Section 111 of the Income Tax Ordinance, 2001 has been rationalized. At present a person was not required to explain the nature as well as the source of any amount of foreign exchange which is remitted from outside Pakistan through normal banking channels and subsequently en-cashed into Pakistani Rupees by any scheduled bank. In order to discourage whitening of untaxed money and legitimizing tax evaded incomes through this mode, amendment has been made in Sub-section 4 of Section 111 of the Income Tax Ordinance, 2001 whereby persons would be required to explain the source of investment if the amount of foreign remittances exceeds Rs10 million in a year of twelve months.
Furnishing of Foreign Income and Assets Statement has been made mandatory for all resident individuals while time limitation for issuance of a notice calling for return of income in case of foreign income /assets has been rationalized and now time limit for issuance of a notice calling for return shall not apply if the Commissioner Inland Revenue is satisfied on the basis of reasons to be recorded in writing that a person who failed to furnish his return has foreign income or owns foreign assets.