Deductions not allowed Finance Act 2022
The Finance Act, 2022 has brought about certain amendments in the Income Tax Ordinance, 2001 (the Ordinance, hereafter). Some significant amendments on Deductions not allowed Finance Act 2022 are explained hereunder: –
Section 21 of the Income Tax Ordinance provides for disallowance of certain business expenditures as deductions.
Following new clauses have been inserted in this section as explained hereunder:
(1) Earlier, the whole amount of employer contribution to an approved gratuity fund, an approved pension fund or an approved superannuation fund was allowed as deduction. Now, clause (ea) has been inserted whereby the allowable deduction is restricted to fifty percent of employer contribution to these funds and the remaining fifty percent of the employer contribution is not allowed as deduction.
(ii) The Board through notification in official gazette may require a person to integrate his business with Board through approved fiscal electronic device and software. If the notified person fails to integrate his business with the Board, then any expenditure, not exceeding eight percent of allowable deduction attributable to sales, will be disallowed as deduction under newly inserted clause (r).
For more information on FBR’s new regulations / circulars/ SROs/ amendments in taxation laws in Pakistan please visit https://www.fbr.gov.pk/