Important definitions in Finance Act 2020
[Section 2] INDUSTRIAL UNDERTAKING [Clause (29C) (aa) and (ab) of Section 2, 57 (2B)]
Previously, the construction sector was not treated as industry. However, as part of announcement of special incentive package by Prime Minister, the construction sector of the country was announced to be treated as industry. In the light of said package, the Finance Act has approved the amendment in the definition of industrial undertaking by including the construction companies in the definition of industrial undertaking from 1st May, 2020.
From the first day of July, 2020 a resident company engaged in the hotel business in Pakistan has also been added in the definition of industrial undertaking.
Furthermore, the loss, relating to a tax year by a resident company engaged in the hotel business in Pakistan shall be carried forward for a period of eight years.
INTEGRATED ENTERPRISE [Clause (30)(A) of Section 2]
The Finance Act 2020 approved definition of integrated enterprise which is integrated enterprise” means a person integrated with the Board through approved fiscal electronic device and software, and who fulfills obligations and requirements for integration as may be prescribed.
IRIS [Clause (30)(AC) of Section 2]
The Finance Act 2020 has approved the definition of IRIS as “IRIS” means a web-based computer program for operation and management of Inland Revenue taxes and laws administered by the Board.
NON-PROFIT ORGANIZATION [Clause (36) of Section 2]
The Finance Act has amended sub-clause ‘a’ of clause 36 by substituting the expression and word “or development purposes” the expression “purposes for general public”. This change will have impact that only such persons (other than individual) would be treated as NPO which will be working for the purposes of general public. This provision would have impact of filtering ghost NPOs.