As the banks and financial institutions (FIs) are facing difficulties to deduct tax at source at different rates from the persons and companies, the revenue authority has issued a clarification defining 'person' to facilitate collecting the source tax at the actual rates.
There was no definition of 'persons' in the Income Tax Ordinance-1984.
In the national budget for the current fiscal year, the National Board of Revenue (NBR) brought some changes in the provision of 'deduction at source from interest on savings deposits and fixed deposits etc'.
If a payee is a company, the tax rate would be 20 per cent while it is 10 per cent for a person.
In the clarification issued Thursday and signed by income tax second secretary Bapon Chandra Das, the income tax wing of the NBR said defining 'person' became important for the taxpayers to comply with the tax law including obtaining TIN, submission of returns and determination of tax.
As per the NBR's clarification, a 'person' includes an individual, a firm, an association of persons, a Hindu undivided family, a trust, a fund, a local authority, a company, an entity and every other artificial juridical person.
In the clarification, the income tax authority said the tax at source would be deducted at a rate of 50 per cent in the case of failure to submit the proof of submission of return (PSR).
In case of minor taxpayers, the parent's PSR would be considered as their PSR.
