COMMENTSONFINANCEBILL2015

Theinformationcontainedinthisbooklethasbeenpreparedonthebasisof
FinanceBill2015andisnotintendedtobeadviceonanyparticularmatter.
Nopersonshouldactonthebasisofanymattercontainedinthispublication
withoutseekingappropriateprofessionaladvice.Theamendmentsproposed
by this bill become effective from 01 July, 2015 unless specified otherwise
afterhavingbeenenactedasFinanceAct2015withorwithoutmodification.

The booklet is published for our clients and staff for information and
guidance only and should not be published or reproduced without prior
permissionofthefirm.

Thisdocumentcanbeaccessedonwww.hzco.com.pk

HAROONZAKARIA&COMPANY
CHARTEREDACCOUNTANTS
Dated:June05,2015
 BUDGET2015
ATAGLANCE

===RupeesinBillion===
201516 201415
Revised
RESOURCES
Internalresources
Revenuereceipts(net)
Directtax 1,348 1,109
Indirecttax 1,755 1,496
Nontaxrevenue 1,209 1,347
Less:Provincialshare (1,849) (1,575)
Capitalreceipts(net) 656 620
Estimatedprovincialsurplus 297 142
3,416 3,139
Externalresources 752 693
4,168 3,832

Bankborrowings 283 402

4,451 4,234

Bankborrowings
Externalresources 6%
17%

Estimated
provincialsurplus
7%

Revenuereceipts
(net)
Capitalreceipts 55%
(net)
15%

EXPENDITURES
Currentexpenditures 3,482 3,480
Developmentexpenditures(PSDP) 969 754
4,451 4,234
 ===RupeesinBillion===
201516 201415
Revised
RevenueReceipts(Gross)
Directtax 1,348 1,109
Indirecttax
Customs 299 255
SalesTax 1,250 1,082
FederalExcise 206 159
Others 315 305
3,418 2,910

EXPENDITURES
Debtservices 1,596 1,565
Defenceaffairs&services 781 720
Otherrevenueexpenditures 1,105 1,195
3,482 3,480
Developmentexpenditures 969 754
4,451 4,234

Expenditures
Development
Debtservices
expenditures
36%
22%

Otherrevenue
expenditures
25% Defenceaffairs&
services
17%

FinanceBill2015

TableofContents

PageNo.
SalientFeature

IncomeTax 0106
SalesTax 0710
FederalExcise 1112
CustomsAct 1313



Detailedcommentson

IncomeTax 14101
SalesTax 102157
FederalExcise 158165
CustomsAct 166168

 SALIENTFEATURES

SALIENTFEATURES
FinanceBill2015
All the proposed amendment through Finance Bill 2015 are effective from
July 01, 2015 except amendments in Custom Duty which shall have effect
from the next day of assent given to the Act by the President of Islamic
RepublicofPakistan

INCOMETAX

IthasbeenproposedtowithdrawpoweroftheBoardforissuance
ofnotificationwithregardtoimpositionoftaxandexemption,now
Economic Coordination Committee shall be vested with power to
imposetaxordeclareincomeasexempt.

The limit of paid up capital plus undistributed reserve for the

purpose of small companies has been proposed to be enhanced
fromRs.25MilliontoRs.50Million.

It has been proposed to impose one time levy of super tax for
rehabilitationoftemporarilydisplacedpersononincomeofBanking
Company@4%andincaseofpersonotherthanbankingcompany
having income equal to or exceeding Rs. 500 Million @ 3% for tax
year2015.

It has been proposed to tax on undistributed reserves @ 10%

subjecttoconditionsandrestrictions.

1
SALIENTFEATURES

Profitondebthasbeenproposedtobetaxedasseparateblockof
income on gross amount at reduce rate, profit making companies
shallbeinadvantagesposition.

Scopeofwithholdingtaxesatincreasedrateincaseofnonfilerhas
beenproposedtobeextended.

Rateoftaxoncapitalgainondisposalsecuritieshasbeenproposed
toenhance.

The capital gain on sale of debt securities by companies shall be

subjecttonormaltax.

InvestmentlimithasbeenproposedtoenhancefromRs.1(Million)
to Rs. 1.5 (Million) for the purpose of tax credit on investment in
sharesandinsurance.

Ithasbeenproposedtoallowdeductionforprofitondebtpaidto
schedulebankoranapprovedfinancialinstitutiononloanutilizefor
thepurchaseofnewhouse.

Tax credit for a period of ten years for manufacturing unit setup
between July 2013 to June 2018 subject to restrictions and
conditions.

Tax credit for enlistment of a company in any registered Stock

Exchange in Pakistan has been proposed to enhance from 15% to
20%ofthetaxpayable.

2
 SALIENTFEATURES

Operation of minimum tax on builders has been proposed to

suspendtillJune30,2018.

Minimumtaxonlanddevelopershasbeenproposed@2%onthe
value of land notified by any authority for the purpose of Stamp
duty.

It has been proposed that approval of Commissioner shall not be

requiredifreturnofincomeisrevisedwithin60daysfromthedate
offilingofreturn.

Power of Commissioner (Appeals) granting stay from recovery of

disputeddemandhasbeenproposedtoenhancefrom30daysto60
dayssubjecttotheconditionsandrestrictions.

Ithasbeenproposedtoenhanceperiodofduedateforpaymentof
taxfrom15daysto30daysfromthedateofserviceofthenotice.

It has been proposed that the manufacturer of cooking oil and

vegetableGheeshallpaytax@2%onpurchaseoflocallyproduced
edibleoil.

The commissioner is being empowered to issue Exemption

certificate on payment to nonresident person having permanent
establishmentinPakistan.

Ithasbeenproposedthatwithholdingtaxinrespectofsportperson
shall be considered as final discharge of tax liability effective from
taxyear2013.

Theexportermayexerciseoptiontobeassessedundernormaltax
regimesubjecttotheconditionsandrestrictions.

3
SALIENTFEATURES

It has been proposed that the Board may obtain information

regarding nonresidence person from financial institution including
bankingcompanyintheprescribedforms.

Special audit panel is being empowered to enter the business

premises of a tax payer to obtain any necessary
informations/documents.

It has been proposed to consider computerized National Identify

Card(CNIC)tobeusedasNationalTaxNumberfromtaxyear2015.

Certain category of retailers shall be subject to selection of audit

automaticallytoaudittheirincometaxaffairs.

Certainretailersshallnotbesubjecttoaudituponfulfillmentoflaid
downconditions.

IthasbeenproposedtoexcludeFertilizerproductfromwithholding
taxonsaletoretailerorwholesaler.

Ithasbeenproposedtoexcludenonresidentfromwithholdingtax
on account of collection of advance tax by educational institution
subjecttotermsandconditions.

Advance tax on banking transaction other than cash shall be

collectedbybank@0.6%ofthetransactionincaseofnonfiler.

Advancetaxtobecollectedonpaymenttoresidentperson@10%
onaccountofrentofequipmentandmachinery.

Advancetaxoneducationrelatedexpensesremittedaboardshallbe
subjecttotax@5%.

Advancetaxtobecollectedonpaymentofdividendinspecie.

4
 SALIENTFEATURES

Ithasbeenproposedtoreducetaxrateincaseofindividualderiving
incomefrombusinessandsalaries.

The corporate rate of income tax has been proposed to reduce to

32%fromtaxyear2016.

Anynotificationissuedshall,ifnotearlierrescindedstandrescinded
ontheexpiryofthefinancialyearinwhichitwasissued.

ProfitandgainonsaleofimmoveablepropertytoaDevelopmentof
REIT Scheme with object of development and construction of
residentialbuildingshallbeexemptupto30062020.

Profitandgainsderivedbytaxpayerfromanindustrialundertaking
between 01072015 and 30062016 engaged in operating
warehousing, cold chain facilities for storage agricultural products
foraperiodof3years.

Profitandgainsfromindustrialundertakingsetupbetween0107
2015 to 31122016 engaged in operating halal meat production
shallbeexemptfromtaxforaperiodorfouryears.

Profitandgainofthemanufacturingunitsetupbetween01072015
to30062018inKhyberPakhtoonKhuwaProvinceshallbeexempt
foraperiodoffiveyears.

It has been proposed to tax income in case of banking companies

fromdividedandcapitalgainatnormaltaxrate.

It has been proposed that Rice Mills may be exempted from

minimumtaxfortheyear2015.

It has been proposed that approval of commission shall not be

requiredifreturnofrevisewithin60daysoffilingofreturn

5
SALIENTFEATURES

Ithasbeenproposedthatmanufacturerofcookingoilandvegetable
gheeshallpaytax@2%onpurchaseoflocallyproducededibleoil.

Anynotificationissuedshall,ifnotearlierrescindedstandrescinded
ontheexpiryofthefinancialyearinwhichitwasissued.

6
 SALIENTFEATURES

SALESTAXACT,1990

ProposedtowithdrawpoweroftheBoardforissuanceofnotification
with regard to imposition of tax and exemption, now Economic Co
ordination Committee shall be vested power to impose duty or
declaregoodsasexempt.

ProposedtointroduceconceptofactivetaxpayerunderSalesTaxAct,
1990.

Proposed to enhance condition of utility amount from Rs. 700,000/

toRs.800,000/incaseofCottageIndustry.

Proposed to extend scope of supply by including manufacturing of

goods belonging to other person and transfer of such goods to the
owner i.e. toll manufacturing has been include in the definition of
supply.

Furthertaxproposedtoenhancefrom1%to2%incaseofsupplyto
unregisteredperson.

Proposed to allow input tax at import stage in case of provisional

assessment.

Proposedtoallowinputtaxonprefabricatedbuildingmaterials.

Proposedtorestrictinputtaxonservicesinrespectofwhichinputtax
adjustmentisbarredundertherespectiveprovincialsalestaxlaws.

It has been proposed to shift burden ofproof on the department to

establishtaxliabilityincertainsituation.

7
SALIENTFEATURES

ThepowerofBoardgrantingexemptionproposedtobedoneaway.

Concept of special audit panel comprising of Officer Inland Revenue

and professional accountants has been proposed to introduce to
conductaudit.

It has been proposed that Federal Government may enter into

bilateral agreement for the exchange of information with provincial
GovernmentandForeigncountries.

Conceptofagreementfortheavoidanceofdoubletaxationhasbeen
proposedtointroduce.

Prizeschemetowhistleblowerwhoreportsconcealmentorevasionof
SalesTax.

SmartphoneRs.500/toRs.1,000/

Ithasproposedtodeclaresuppliesoflocallymanufacturedmachinery
to manufacturer of Export Processing Zone at zero rates subject to
conditionsandrestrictions.

Supply of bricks and crushed stone have been proposed to be

exemptedfromlevyofSalesTax

Rateofsalestaxonsupplydirectlyreducedironhasbeenproposed
tosubjecttostandardrateinsteadofreducerateat5%

Any notification issued shall, if not earlier rescinded stand rescinded

ontheexpiryofthefinancialyearinwhichitwasissued.

ProposedchangeinSalesTaxrateonthefollowingitems.

8
 SALIENTFEATURES

SerialNo. Description Present Proposed

1 Poultry feed and cattle feed and Exempt 5%
theiringredients.
2. Incinerators of disposal of waste Exempt 5%
magnet, motorized sweepers and
snowploughs
3. Reimportation of foreign origin Exempt 5%
goods which were temporarily
exported out of Pakistan subject to
similar conditions as are envisaged
forthepurposeofapplyingzerorate
of customs duty under Custom Act,
1969.
4. Reclaimed lead, if supplied to Exempt 5%
recognized manufacturers of lead
batteries
5. Wastepaper Exempt 5%
6. Weightingmachineofdifferentkind Exempt 5%
7. Furnaceoilandovans Exempt 5%
8. Electronicandotherbalances 5% 10%
9. Supply of soya bean meal and oil 5% 10%
seedsmeantforsowing
10. Plant&machinerynotmanufactured 5% 10%
locally and having no compatible
localsubstitutes.
11. Flavouredmilk,soldinretailpacking Exempt 10%
under brand name Yogurt, cheese,
butter cream, desi ghee, milk and
cream concentrated and added
sugarorothersweeteningmatter
12. Salestaxonmobilephoneatimport Rs.150/ Rs.300/
and atthe time of registration. (low

9
SALIENTFEATURES

price Rs.250/ Rs.500/

Cellularmobile(mediumprice) Rs.500/ Rs.1000/
Smartmobile
13. Supply of soya bean meal and oil 5% 10%
cake

10
 SALIENTFEATURES

FEDERALEXCISEACT,2005

Proposed to withdraw power of the Board for issuance of notification

with regard to imposition of tax and exemption, now Economic Co
ordinationCommitteeshallbevestedpowertoimposedutyordeclare
goodsasexempt.

The role of whistleblowers has been introduced in order to stop the

evasionofdutyandpointingoutthecasesbyawardingtothem.

The Federal Government subject to the approval of Economic

Coordination Committee of Cabinet would levy the duty and all the
notificationsissuedmustbeplacedbeforetheNationalAssembly.

Forthepurposeofmonitoringortrackingthroughelectronicdevicesthe
wordbarcodeshasalsobeenincluded.

Themechanismofaudithasbeenrestructured.

The authority of executing the agreements with other Government

including foreign countries has been bestowed to the Federal
Government.

Thedutiesonvariousbrandsofcigaretteproposedtoenhance.

ThedutyonFilterRodofcigarettehasbeenproposedtobelevied.

ThewhitecementaswellasmotorcarsfallingunderPCTheading25.23
and87.03respectivelyisdeclaredexempt.

TheservicesinrespectofHajjpassenger,diplomatsandsupernumerary
hasbeenproposedtobedeclaredexempt.

The services of advertisement in news paper and periodicals are

proposedtobedeclaredasexempt.

11
SALIENTFEATURES

The services relating to issuance of cheque books, insurance, hajj and

umrah services rendered by banking or non banking company are
proposedtobedeclaredasexempt.

Anynotificationissuedshall,ifnotearlierrescindedstandrescindedon
theexpiryofthefinancialyearinwhichitwasissued.

12
 SALIENTFEATURES

CUSTOMSACT,1969

ProposedtowithdrawpoweroftheBoardforissuanceofnotification
with regard to imposition of tax and exemption, now Economic Co
ordination Committee shall be vested power to impose duty or
declaregoodsasexempt.

Proposed to bring transshipment at par with home consumption or

warehousingfortheprepareofassessmentofduty.

The conditionof invoice and packaging list has beenproposed to be

placed in container and in case of violation the importer would face
thepenalproceedings.

First&FifthScheduletotheCustomsAct,1969hasbeenrationalized
inordertomeetthenewmodernbusinesschallenges.

Any notification issued shall, if not earlier rescinded stand rescinded

ontheexpiryofthefinancialyearinwhichitwasissued.

OTHERS

Amendment of Islamabad Capital Territory (Tax on Services

Ordinance)hasbeenincorporatedinFinanceBill.

IthasbeenproposedtofixminimumwagesofworkeratRs.13,000as
againstRs.12,000atpresent.

13
INCOMETAX

INCOMETAX

The amendments are applicable from July 1, 2015 unless specified

otherwise.

SECTION

PROPOSEDAMENDMENT
PRESENTPOSITION
THROUGH
ASON30THJUNE,2015
FINANCEBILL2015

NonExistent The term consumer goods have

beendefinedasunder:
2(13)AA

(13AA) consumer goods means

goods that are consumed by the
end consumer rather than used in
theproductionofanothergood;;
NonExistent New definition clause proposed to
beaddedasunder;
Developmental REIT Scheme
2(17D)

means Developmental REIT

Scheme as defined under the Real
Estate Investment Trust
Regulations,2015;
NonExistent New definition clause proposed to
beaddedasunder;
(22A) fast moving consumer
2(22A)

goods means consumer goods

which are supplied in retail
marketingasperdailydemandof
aconsumer;;
NonExistent Concept of imputable income
reintroducedasunder;
(28A) imputable income in
2(28A)

relation to an amount subject to

final tax means the income which
would have resulted in the same
tax, had this amount not been
subjecttofinaltax;;

14
 INCOMETAX

NonExistent New definition clause proposed to

beaddedasunder;
(42A) PMEX means Pakistan
Mercantile Exchange Limited a
futures commodity exchange
2(42A)

company incorporated under the

CompaniesOrdinance,1984(XLVII
of 1984) and is licensed and
regulated by the Securities and
Exchange Commission of
Pakistan;
Real Estate Investment Trust The clause amended to reflect the
(REIT) Scheme means a REIT updated reference of
Scheme as defined in the Real correspondinglawasunder;
2(47A)

Estate Investment Trust (47A) REIT Scheme means a

Regulations,2008; REITSchemeasdefinedintheReal
Estate Investment Trust
Regulations2015
Real Estate Investment Trust The clause amended to reflect the
Management Company updated reference of
(REITMC)means REITMC as correspondinglawasunder;
defined under the Real Estate Real Estate Investment Trust
Investment Trust Regulations, Management Company RMC as
2(47B)

2008 defined under the Real Estate

Investment Trust Regulations,
2015
NonExistent New definition clause proposed to
beaddedasunder;
(47C)RentalREITSchememeans
a Rental REIT Scheme as defined
2(47C)

under the Real Estate Investment

TrustRegulations,2015;

15
INCOMETAX

(59A) SmallCompanymeansa To quality for concessional rate of

companyregisteredonorafterthe
first day of July, 2005, under the
CompaniesOrdinance,1984(XLVII)
of1984,which,
2(59A)
25%forsmallcompanies,thelimit
of paidup capital enhanced from
twentyfivetofiftymillion
(59A) SmallCompanymeansa

(i) has paid up capital plus companyregisteredonorafterthe

undistributed reserves not first day of July, 2005, under the
exceeding twentyfive million CompaniesOrdinance,1984(XLVII)
rupees; of1984,which,
(i) has paid up capital plus
undistributed reserves not
exceedingfiftymillionrupees;
NonExistent New definition clause proposed to
beaddedasunder;
2(75)

(75)whistleblower means
whistleblowerasdefinedinsection
227B;

16
 INCOMETAX

NonExistent Proposed insertion of new section

enablingonetimelevyofsupertax
readasunder;

4B. Super tax for rehabilitation of
temporarilydisplacedpersons.
(1) A super tax shall be imposed
for rehabilitation of temporarily
displaced persons, for tax year
2015, at the rates specified in
Division IIA of Part I of the Firs t
Schedule, on income of every
person specified in the said
Division.

(2)Forthepurposesofthissection,
income shall be the sum of the
following:
4B

(i)profitondebt,dividend,capital
gains,brokerageandcommission;
(ii)taxableincomeundersection
(9)ofthisOrdinance;
(iii) imputable income as defined
inclause(28A)ofsection2;and
(iv) income computed under
Fourth,Fifth,SeventhandEighth
Schedule.

(3) The super tax payable under
subsection (1) shall be paid,
collected and deposited on the
date and in the manner as
specified in subsection (1) of
section 137 and all provisions of
ChapterXoftheOrdinanceshall
apply.

17
INCOMETAX

4)Wherethesupertaxisnotpaid
byapersonliabletopayit,the
Commissioner shall by an order in
writing,determinetheSupertax
payable, and shall serve upon the
person, a notice of demand
specifying the super tax payable
andwithinthetimespecifiedunder
section137oftheOrdinance.

5)Wherethesupertaxisnotpaid
byapersonliabletopayit,the
Commissioner shall recover the
4B

super tax payable under sub

section (1) and the provisions of
Part IV,X, XI and XII of Chapter X
and Part I of Chapter XI of the
Ordinanceshall,sofarasmaybe,
applytothecollectionofsupertax
as these apply to the collection of
taxundertheOrdinance.

(6) The Board may, by notification
in the official Gazette, make rules
for carrying out the purposes of
thissection.;

18
 INCOMETAX

NonExistent Concept of additional income tax

on undistributed reserve of public
company exceeding 100% of paid
up capital isproposed to belevied
by introducing new section which
readasunder;

Taxonundistributedreserves.
(1)SubjecttothisOrdinance,atax
shallbeimposedattherateoften
percent, on every public company
other than a scheduled bank or a
modaraba, that derives profits for
ataxyearbutdoesnotdistribute
cash dividends within six months
of the end of the said tax year or
distributes dividends to such an
extentthatitsreserves,aftersuch
distribution, are in excess of
5A

hundred percent of its paid up

capital, so much of its reserves as
exceed hundred per cent of its
paid up capital shall be treated as
incomeofthesaidcompany:

Provided that for tax year 2015,
cash dividends may be distributed
before the due date mentioned in
subsection (2) of section 118, for
filingofreturnfortaxyear2015.

(2)Theprovisionsofsubsection
(1) shall not apply to a
company in which not less than
fiftypercentsharesareheldbythe
Government.

19
INCOMETAX

NonExistent (3)Forthepurposeofthissection,
reserve includes amounts set
aside out of revenue or other
surpluses excluding capital
5A

reserves, share premium reserves

and reserves required to be
created under any law, rules or
regulations.

20
 INCOMETAX

NonExistent Shippingincomeofresidentperson
is proposed to be taxed under
presumptive tax regime upto tax
year 2020 inserting following self
explanatoryproviso;

7A. Tax on shipping of a resident
person. (1) In the case of any
resident person engaged in the
business of shipping, a
presumptive income tax shall be
charged in the following manner,
namely:

(a) ships and all floating crafts
includingtugs,dredgers,survey
vessels and other specialized craft
purchased or bareboat chartered
7A

and flying Pakistan flag shall pay

tonnage tax of an amount
equivalent to one US $ per gross
registered tonnage per annum;
and

(b) ships, vessels and all floating
crafts including tugs, dredgers,
survey vessels and other
specializedcraftnotregisteredin
Pakistan and hired under any
charter other than bareboat
chartershallpaytonnagetaxofan
amount equivalent to fifteen US
cents per ton of gross registered
tonnage per chartered voyage
provided that such tax shall not
exceed one US $ per ton of gross
registeredtonnageperannum:

21
INCOMETAX

Explanation. For the purpose of
this section, the expression
equivalent amount means the
rupee equivalent of a US dollar
according to the exchange rate
prevalent on the first day of
December in the case of a
company and the first day of
September in other cases in the
relevantassessmentyear.

(2) The provisions of this section
shall not be applicable after 30th
June,2020.

NonExistent Profit on debts taxable as normal

income is proposed to be taxed at
reduced rate by inserting new
sectionwhichreadasunder;
Taxonprofitondebt.
(1) Subject to this Ordinance, a
tax shall be imposed, at the rate
specifiedinDivisionIIIAofPartIof
theFirstSchedule,oneveryperson
whoreceivesaprofitondebtfrom
anypersonmentionedinclause(a)
7B

to(d)ofsubsection(1)ofsection
151.

(2) The tax imposed under sub
section (1) on a person who
receives a profit on debt shall be
computedbyapplyingtherelevant
rateoftaxtothegrossamountof
theprofitondebt.

22

anyexpenditure(notexceedingsix
percentoftherentchargeableto
tax in respect of the property for
the year computed before any
deduction allowed under this
section) paid or payable by the
15A(1)(h)
personintheyearforthepurpose
of collecting the rent due in
respectoftheproperty;
Thecapitalgainarisingonorafter
the first day of July 2010, from
disposal of securities held for a
period of less than a year [ other
thanagainthatisexemptfromtax
under this Ordinance], shall be
chargeable to tax at the rates
37A(1)
specifiedinDivisionVIIofPartIof
theFirstSchedule:
23
INCOMETAX
(3)Thissectionshallnotapplytoa
profitondebtthatisexemptfrom
taxunderthisOrdinance.
The said clause is proposed to be
substituted with more elaborative
oneasunder;
(h)anyexpenditure,notexceeding
sixpercentoftherentchargeable
to tax in respect of the property
for the year computed before any
deduction allowed under this
section, paid or payable by the
person in the year wholly and
exclusively for the purpose of
deriving rent chargeable to tax
under the head, Income from
Property including administration
andcollectioncharges
Said section is proposed to be
amended to bring the capital gain
earned on disposal of securities
heldforperiodupto4yearsunder
tax ambit, amended proviso read
asunder;
Thecapitalgainarisingonorafter
the first day of July 2010, from
disposalofsecurities,otherthana
gainthatisexemptfromtaxunder
thisOrdinance,shallbechargeable
to tax at the rates specified in
Division VII of Part I of the First
Schedule:
INCOMETAX
(2)The Federal Government may,
from time to time, by notification
in the official Gazette, make such
amendment in the Second
Scheduleby
(a)adding any clause or condition
therein;
(b)omittinganyclauseorcondition
therein;or
(c)makinganychangeinanyclause
or condition therein, as the
Government may think fit, and all
such amendments shall have
effect in respect of any tax year
beginning on any date before or
after the commencement of the
financial year in which the
notificationisissued.
53(2)
24
The power of Federal Government
to issue concessionary SROs is
proposed to be restricted the
amendedprovisoisreadasunder;
The Federal Government may,
from time to time
pursuant to the approval of the
Economic Coordination
Committee of Cabinet, whenever
circumstances exist to take
immediate action for the
purposes of national security,
natural disaster, national food
security in emergency situations,
protectionofnationaleconomic
interests in situations arising out
of abnormal fluctuation in
international commodity prices,
removal of anomalies in taxes,
development of backward areas
and implementation of bilateral
and multilateral agreements by
notification in the official Gazette,
make such amendment in the
Second Schedule by(a)adding
anyclauseorconditiontherein;
(b) omitting any clause or
conditiontherein;or
(c)makinganychangeinanyclause
or condition therein, as the
Government may think fit, and all
such amendments shall have
effect in respect of any tax year
beginning on any date before or
after the commencement of the
financial year in which the
notificationisissued.
 INCOMETAX

NonExistent Following new self explanatory

subsection is proposed to be
addedasunder;
(4) Any notification issued after
53(4)

the promulgation of Finance Act,

2015, under subsection (2) shall,
if not earlier rescinded, stand
rescinded on the expiry of the
financial year in which it was
issued;

25
INCOMETAX
Tax credit for investment in
sharesandinsurance
(1)Aresidentpersonotherthana
companyshallbeentitledtoatax
creditforataxyeareither
2)The amount of a persons tax
credit allowed under subsection
(1) for a tax year shall be
computed according to the
followingformula,namely:
(A/B)xC
where
A.istheamountoftaxassessedto
thepersonforthetaxyearbefore
62(2)(c)
allowance of any tax credit under
thisPart;
B. is the persons taxable income
forthetaxyear;and
C.isthelesserof
(a) the total cost of acquiring the
shares,orthetotalcontributionor
premium paid by the person
referredtoinsubsection(1)inthe
year;
(b)[twenty] per cent of the
persons taxable income for the
year;or
(c)[onemillionrupees].
Quantum of tax credit as per said
sectionisproposedtobeenhanced
asunder;
Tax credit for investment in
sharesandinsurance.
(1)Aresidentpersonotherthana
companyshallbeentitledtoatax
creditforataxyeareither
2)The amount of a persons tax
credit allowed under subsection
(1) for a tax year shall be
computed according to the
followingformula,namely:
(A/B)xC
where
A.istheamountoftaxassessedto
thepersonforthetaxyearbefore
allowance of any tax credit under
thisPart;
B. is the persons taxable income
forthetaxyear;and
C.isthelesserof
(a)thetotalcostofacquiringthe
shares,orthetotalcontributionor
premium paid by the person
referredtoinsubsection(1)inthe
year;
(b) [twenty] per cent of the
persons taxable income for the
year;or
(c)[oneandahalfmillionrupees].
26
 INCOMETAX

Omitted, Previously tax credit on profit on

debt paid on house loan is
proposed to be abolished &
deductable allowance is to be
introduced through following self
explanatorysection;
Deductibleallowanceforprofiton
debt.(1)Everyindividualshallbe
entitled to a deductible allowance
for the amount of any profit or
share in rent and share in
appreciation for value of house
paidbytheindividualinataxyear
onaloanbyascheduledbankor
nonbanking finance institution
regulated by t he Securities and
Exchange Commission of Pakistan
oradvancedbyGovernmentorthe
64&64A

Local Government, Provincial

Governmentorastatutorybodyor
a public company listed on a
registered stock exchange in
Pakistan where the individual
utilizes the loan for the
constructionofanewhouseorthe
acquisitionofahouse.
(2) The amount of an individuals
deductible allowance allowed
undersubsection(1)forataxyear
shall not exceed fifty percent of
taxable income or one million
rupees,whicheverislower.
(3) Any allowance or par t of an
allowance under this section for a
tax year that is not able to be
deductedfortheyearshallnotbe
carried forward to a subsequent
taxyear.

27
INCOMETAX

NonExistent To promote employment

generation following new tax
credit is proposed to be
introduced;
Tax credit for employment
generation by manufacturers. (1)
Where a taxpayer being a
company formed for establishing
and operating a new
manufacturingunitsetsupanew
manufacturing unit between 1st
July,2015and30thofJune,2018,
it shall be given a tax credit for a
periodoftenyears.
(2) The tax credit under sub
section (1 ) for a tax year shall be
64B

equal to one percent of the tax

payableforeveryfiftyemployees
registeredwithTheEmployeesOld
Age Benefits Institution and the
Employees Social Security
Institutions of Provincial
Governments during the tax year,
subject to a maximum of ten
percentofthetaxpayable.

(3) Tax credit under this section
shallbeadmissiblewhere
(a) the company is incorporated
and manufacturing unit is setup
betweenthefirstdayofJuly,2015
and 30th day of June, 2018, both
daysinclusive;

28
 INCOMETAX

NonExistent (b) employs more than fifty

employeesinataxyearregistered
with The Employees Old Age
Benefits Institution and the
Employees Social Security
Institutions of Provincial
Governments;
(c)manufacturingunitismanaged
by a company formed for
operating the said manufacturing
unit and registered under the
CompaniesOrdinance,1984(XLVII
of 1984) and having its registered
officeinPakistan;and
(d) the manufacturing unit is not
established by the splitting up or
reconstructionorreconstitutionof
an undertaking already in
64B

existence or by transfer of
machinery or plant from an
undertaking established in
Pakistanatanytimebefore1stJuly
2015.

(4) Where any credit is allowed
under this section and
subsequently it is discovered, on
the basis of documents or
otherwise, by the Commissioner
that any of the conditions
specifiedinthissectionwerenot
fulfilled, the credit originally
allowed shall be deemed to have
been wrongly allowed and
the Commissioner may,
notwithstanding anything
containedinthisOrdinance,

29
INCOMETAX
NonExistent
64B
NonExistent
65(6)
Taxcreditforenlistment:
Where a taxpayer being a
company opts for enlistment in
any registered stock exchange in
Pakistan, a tax credit equal to
65C(1)
[fifteen]percentofthetaxpayable
shallbeallowedforthetaxyearin
which the said company is
enlisted.
30
recompute thetaxpayablebythe
taxpayerfortherelevantyearand
the provisions of this Ordinance
shall, so far as may be, apply
accordingly.
(5)Forthepurposesofthissection
a manufacturing unit shall be
treatedtohavebeensetuponthe
date on which the manufacturing
unitisreadytogointoproduction,
whether trial production or
commercialproduction.
Following clarifying subsection is
proposedtobeaddedasunder;
(6)Wherethepersonisentitledto
ataxcreditundersection65B,65D
or 65E, provisions of clause (d) of
subsection (2) of section 169 and
clause (d) of subsection (1) of
section113shallnotapply.;
Quantum of tax credit on
enlistment is proposed to be
enhancedasunder;
Where a taxpayer being a
company opts for enlistment in
any registered stock exchange in
Pakistan, a tax credit equal to
twentypercentofthetaxpayable
shallbeallowedforthetaxyearin
which the said company is
enlisted.

Tax credit for industrial
undertakings established before
thefirstdayofJuly,2011.
(5) The amount of credit
admissibleunderthissectionshall
bedeductedfromthetaxpayable,
including minimum tax and final
taxes payable under any of the
provisions of this Ordinance, by
65E(5)
the taxpayer in respect of the tax
year in which the plant or
machinery referred to in sub
section (1) is installed and for the
subsequentfouryears.
Principles of taxation of
companies:
(2) A dividend paid by a resident
94(2)
company shall be taxable in
accordancewithSection5.
INCOMETAX
Curative amendment in sub
section(5)isproposedtoeliminate
the contradiction with subsection
(1)asunder;
(5)Theamountofcreditadmissible
under this section shall be
deducted from the tax payable,
including minimum tax and final
taxes payable under any of the
provisions of this Ordinance, by
thetaxpayerinrespectofthetax
year in which the plant or
machinery referred to in sub
section(1)isinstalledandforthe
subsequent four years the
commasandwords,foraperiod
of five years beginning from the
date of setting up or
commencement of commercial
productionfromthenewplantor
expansion project, whichever is
later
Proposedamendmentseekstotax
the dividend received from non
resident company under section5
insteadofsection39.
(2) A dividend paid by a company
shallbetaxableinaccordancewith
Section5.
31
INCOMETAX

Taxcreditforcertainpersons. Toremoveambiguitytheprovision
(1)Nonprofitorganizations,trustsis proposed to be amended as
or welfare institutions, as under;
mentioned in subsection (2) shall
(1) The income of nonprofit
be allowed a tax credit equal to
organizations, trusts or welfare
one hundred per cent of the tax
institutions, as mentioned in sub
100C(1)

payable, including minimum tax section (2) shall be allowed a tax

and final taxes payable under any
credit equal to one hundred per
oftheprovisionsofthisOrdinance,cent of the tax payable, including
subject to the following
minimum tax and final taxes
conditions,namely: payable under any of the
provisions of this Ordinance,
subject to the following
conditions,namely:
Persons eligible for tax credit Toremoveambiguitytheprovision
underthissectioninclude is proposed to be amended as
100C(2)

under;
Persons and incomes eligible for
tax credit under this section
include

32

Agreements for the avoidance of
doubletaxationandpreventionof
fiscalevasion:
(1) The Federal Government may
enter into an agreement with the
government of a foreign country
for the avoidance of double
taxation and the prevention of
fiscalevasionwithrespecttotaxes
on income imposed under this
107(1)
Ordinance and under the
correspondinglawsinforceinthat
country, and may, by notification
in the official Gazette make such
provisionsasmaybenecessaryfor
implementingtheagreement.
33
INCOMETAX
Provision is proposed to be
substituted with more elaborative
oneasunder;
(1) The Federal Government may
enter into an agreement, bilateral
or multilateral with the
government or governments of
foreign countries or tax
jurisdictions for the avoidance of
double taxation and the
prevention of fiscal evasion and
exchange of information including
automatic exchange of
information with respect to taxes
on income imposed under this
Ordinanceoranyotherlawforthe
timebeinginforceandunderthe
correspondinglawsinforceinthat
country, and may, by notification
in the official Gazette make such
provisionsasmaybenecessary
forimplementingtheagreement.;
INCOMETAX

NonExistent The Board is proposed to be

empowered for collection of
informationtofacilitateittofulfill
obligations under inter
governmental agreements as
under;
Notwithstanding anything
107(1A)

contained in any other law to the

contrary, the Board shall have the
powers to obtain and collect
information when solicited by
another country under a tax
treaty,ataxinformationexchange
agreement, a multilateral
convention,anintergovernmental
agreement, a similar arrangement
ormechanism.
NonExistent Informationcollectedbythe Board
is proposed to be confidential as
under;
Notwithstanding the provisions of
the Freedom of Information
Ordinance, 2002 (XCV I of 2002),
107(1B)

any information received or

supplied, and any concomitant
communicationorcorrespondence
made, under a tax treaty, a tax
information exchange agreement,
amultilateralconvention,asimilar
arrangement or mechanism, shall
be confidential subject to
subsection(3)ofsection216.
NonExistent The following subsection is
proposedtobeinsertedtoprovide
113A(3)

exemption from minimum tax on

builders;
(3) This section shall not have
effecttill30thJune,2018

34

Minimum tax on land
developers:
1) Subject to this Ordinance,
where a person derives income
fromthebusinessofdevelopment
andsaleofresidential,commercial
113B
or other plots, he shall pay
minimum tax at the rates as the
FederalGovernmentmaynotifyin
the official Gazette. The Federal
Government may also specify the
mode, manner and time of
paymentofsuchamountoftax.
NonExistent
114(6)
35
INCOMETAX
Rate of minimum tax on land
developers is proposed by
amendingsaidsectionasunder;
(1) Subject to this Ordinance,
where a person derives income
fromthebusinessofdevelopment
andsaleofresidential,commercial
or other plots, he shall pay
minimum tax at the rate of two
per cent of the value of land
notified by any author ity for the
purposeofstampduty
Requirementofwrittenpermission
from Commissioner for revision of
returnwithin60daysfromfilingof
returnisproposedtobewaivedby
insertingfollowingnewproviso;
Providedfurtherthatthecondition
specifiedinclause(ba)shallnot
apply if revised return is filed
within60daysoffilingofreturn.
INCOMETAX
Bestjudgmentassessment.
(d)produce before the
Commissioner, or any person
employed by a firm of chartered
accountants[orafirmofcostand
management accountants] under
section 177, accounts, documents
and records required to be
maintained under section 174, or
121(1)(d)
any other relevant document or
evidence that may be required by
him for the purpose of making
assessment of income and
determinationoftaxduethereon,
Clause (d) of subsection(1) is
proposed to be amended to
incorporate corresponding
reference of proposed new sub
section(11) of section 177 as
under:
(d)produce before the
Commissioner, or a special audit
panel appointed under sub
section (11) of section177 or any
person employed by a firm of
chartered accountants [or a firm
of cost and management
accountants] under section 177,
accounts, documents and records
required to be maintained under
section 174, or any other relevant
documentorevidencethatmaybe
requiredbyhimforthepurposeof
makingassessmentofincomeand
determinationoftaxduethereon,
36
 INCOMETAX

Procedureinappeal Ithasbeenproposedtoextendthe
NonExistent powers of Commissioner(Appeals)
to grant stay from recovery of tax
beyond 30 days time inserting the
followingnewsubsection;

The amendment shall be helpful
for fast disposal of appeals
taxpayer shall be prevented from
harsh recovery steps by the
128(1AA)

department.

(1AA)TheCommissioner(Appeals),
after affording opportunity of
being heard to the Commissioner
against whose order appeal has
beenmade,maystaytherecovery
of such tax for a further period of
thirty days, provided that the
order on appeal shall be passed
within the said period of thirty
days.

37
INCOMETAX
Duedateforpaymentoftax
(2) Where any tax is payable
under an assessment order or an
amendedassessmentorderorany
other order issued by the
Commissioner under
Ordinance,anoticeshallbeserved
upon the taxpayer in the
prescribed form specifying the
amount payable and thereupon
the sum so specified shall be paid
within[fifteen]daysfromthedate
ofserviceofthenotice:
Providedthatthetaxpayableasa
137(2)
result of provisional assessment
[order] under section 122C, as
specified in the notice under sub
section (2) shall be payable
[immediately] after a period of
sixtydaysfromthedateofservice
ofthenotice.
Timeallowedforpaymentoftaxas
aresultoforderisproposedtobe
extended from fifteen to thirty
daysasunder;
this (2)Whereanytaxispayableunder
an assessment order or an
amendedassessmentorderorany
other order issued by the
Commissioner under this
Ordinance,anoticeshallbeserved
upon the taxpayer in the
prescribed form specifying the
amount payable and thereupon
the sum so specified shall be paid
within[thirty]daysfromthedate
ofserviceofthenotice:
Time allowed for payment of tax
against provisional assessment
order has been proposed to be
reducedtofortyfivedaysasunder;
Theamendmentwasbadlyneeded
tohaveenoughtimetofileappeal
Providedthatthetaxpayableasa
result of provisional assessment
[order] under section 122C, as
specified in the notice under sub
section (2) shall be payable
[immediately] after a period of
forty five days from the date of
serviceofthenotice.
38

Advance Tax paid by the
taxpayer:
(4A)Any taxpayer who is required
to make payment of advance tax
inaccordancewithsubsection(4),
shall estimate the tax payable by
him for the relevant tax year, at
any time before the last
installment is due. In case the tax
payable is likely to be more than
the amount he is required to pay
undersubsection(4),thetaxpayer
shall furnish to the Commissioner
an estimate of the amount of tax
payablebyhimandthereafterpay
147(4A)
such amount after making
adjustmentfortheamount(ifany)
already paid in terms of sub
section(4).
39
INCOMETAX
Subsection is proposed to be
amended to reduce the time for
filing of upward revision of
estimate to end of second quarter
asunder;
(4A)Anytaxpayerwhoisrequired
tomakepaymentofadvancetaxin
accordance with subsection (4),
shall estimate the tax payable for
the relevant tax year, at any time
before the second Installment is
due. In case the tax payable is
likelytobemorethantheamount
that the taxpayer is required to
pay under subsection(4), the
taxpayer shall furnish to the
Commissioner on or before the
duedateofthesecondquarteran
estimate of the amount of tax
payable by the taxpayer and
thereafter pay fifty per cent of
such amount by the due date of
thesecondquarterofthetaxyear
after making adjustment for the
amount (if any) already paid in
terms of subsection (4). The
remaining fifty per cent of the
estimate shall be paid after the
second quarter in two equal
installmentspayableby
the due date of the third and
fourthquarterofthetaxyear
INCOMETAX

Imports Subsection is proposed to be

2) Nothing contained in sub omittedbeingredundant
section(1)shallapplytoanygoods
148(2)

or class of goods or persons or

class of persons importing such
goodsorclassofgoodsasmaybe
specifiedbytheBoard
NonExistent Following new section is proposed
to be inserted with simultaneous
omissionofclause13CofpartIIof
Second Schedule seeking the
income accruing from locally
produced edible oil to be taxed at
the rate of 2% under FTR. (earlier
the levy covered under clause13C
wasnotonlegalfooting,therefore
through this amendment
ambiguityhasbeenremoved).

148A

148A. Tax on local purchase of

cookingoilorvegetableghee
by certain persons. (1)The
manufacturers of cooking oil or
vegetable ghee, or both, shall be
chargeable to tax at the rate of
twopercentonpurchaseoflocally
producededibleoil.

(2) The tax payable under sub
section (1) shall be final tax in
respect of income accruing from
locallyproducededibleoil.

40
 INCOMETAX

Profitondebt. Subsection is proposed to be

(3) Tax [deductible] under this
section shall be a final tax on the
profitondebtarisingtoataxpayer
otherthanacompany
151(3)
substituted to bring it inharmony
with new proposed section5A as
under;

(3) Tax deductible under this

sectionshallbeafinaltaxonthe
profit on debt arising to a
taxpayer,exceptwhere:
(a)taxpayerisacompany;or
(b)profitondebtistaxableunder
section5A.
Paymentstononresidents Following new subsection
NonExistent empowering Commissioner to
issue exemption certificate for
Nondeduction of tax under
section152(2A) to PE of Non
residentperson

(4A) The Commissioner may, on
152(4A)

applicationmadebytherecipient
of a payment referred to in sub
section(2A)andaftermakingsuch
inquiryastheCommissionerthinks
fit, may allow in cases where the
tax deductable under subsection
(2A) is adjustable, by order in
writing, any person to make the
payment,withoutdeductionoftax
or deduction of tax at a reduced
rate

41
INCOMETAX

Payments for goods and services Said clause is proposed to be

andcontracts. substituted to clarify ambiguity
(b) tax [deductible] shall be regarding taxability of corporate
a minimum tax on transactions sectorserviceproviderssince2009
referred to in clause (b) of sub due to issuance of several
section(1);and clarifications by the Board on the
issue;
.
(b)taxdeductibleontransactions
153(3)

referred to in clause (b) of sub

section(1)shallbe,

(i)adjustable,witheffectfromtax
year 2009, if payments are
receivedbyacompany;and

(ii) a minimum tax, if payments
are received by a person other
thanacompany
NonExistent Income of sportsperson subjected
to deduction of tax under section
153(1)(c)hasbeenproposedtobe
153(3)(d)

taxed under FTR retrospectively

fromtaxyear2013;
(d) tax deducted under clause (c)
of subsection (1) in respect of a
sportspersonshallbefinaltaxwith
effectfromtaxyear2013.

42
 INCOMETAX

NonExistent Exportersareproposedtobegiven
an option to be taxed under NTR
byinsertingthefollowingnewsub
section;

(5) The provisions of subsection
(4) shall not apply to a person
who irrevocably opts not to be
154(5)

subjecttofinaltaxation:

Provided that this option shall be
exercised at the time of filing of
returnundersection114:

Provided further that the tax
deducted under this subsection
shallbeminimumtax

43
INCOMETAX

Exemption or lower rate Powers vested with the Board to

certificate: grant exemptions/concession from
(3) The Board may, from time to withholding taxes to certain
time, by notification in theofficial person by issuance of notification
Gazette by the Board are proposed to be
(a) amend the rates of withdrawn by omitting said sub
withholding tax prescribed under sections.
thisOrdinance;or

(b) exempt persons, class of
persons, goods or class of goods
from withholding tax under this
159(3),(4)&(5)

Ordinance.]

(4) All such amendments shall
have effect in respect of any tax
year beginning [on] any date
before or after the
commencement of the financial
year in which the notification is
issued and shall not be applicable
inrespectofincomeonwhichtax
withheldistreatedasdischargeof
finaltaxliability.]

(5) The Board shall place all
notifications issued under sub
section (3) in a financial year
before both Houses of Majlise
Shoora(Parliament).

44

Failure to pay tax collected or
deducted;
(1B) Where at the time of
recovery of tax under subsection
(1) it is established that the tax
thatwastobedeductedfromthe
payment made to a person or
collected from a person has
meanwhile been paid by that
person,norecoveryshallbemade
fromthepersonwhohadfailedto
collect or deduct the tax but the
said person shall be liable to pay
[default surcharge]at the rate of
eighteenpercentperannumfrom
the date he failed to collect or
deductthetaxtothedatethetax
waspaid
161(1B)
45
INCOMETAX
The rate of default surcharge is
proposed to be reduced from 18%
to 12% consequent to substantial
reduction in interest rates in
country;
(1B) Where at the time of
recovery of tax under subsection
(1) it is established that the tax
thatwastobedeductedfromthe
payment made to a person or
collected from a person has
meanwhile been paid by that
person,norecoveryshallbemade
fromthepersonwhohadfailedto
collect or deduct the tax but the
said person shall be liable to pay
[default surcharge]at the rate of
twelve per cent per annum from
the date he failed to collect or
deductthetaxtothedatethetax
waspaid
INCOMETAX

NonExistent Following new self explanatory

sectionisproposedtobeinserted;
165B. Furnishing of information
by financial institutions including
banks.
(1) Notwithstanding anything
contained in any law for the time
being in force including but not
limited to the Banking Companies
Ordinance,1962(LVIIof1962),the
Protection of Economic Reforms
Act,1992(XIIof1992),theForeign
ExchangeRegulationAct,1947(VII
of1947)andanyregulationsmade
under the State Bank of Pakistan
Act, 1956 (XXXIII of 1956), on the
subject every financial institution
shall make arrangements to
provide information regarding
nonresidentPersonstotheBoard
intheprescribedformandmanner
for the purpose of automatic
exchange of information under
bilateralagreementormultilateral
convention.
Through Finance Act, 2014 power
obtained information from
banking companies in respect of
resident person was acquired now
similar information can be
obtainedincaseofnonresidents.

(2) Subject to section 216, all
information received under this
section shall be used only for tax
165B

andrelatedpurposesandkept
confidential

46

171. Additional payment for
delayedrefunds.(1)
Wherearefundduetoataxpayer
isnotpaidwithinthreemonthsof
thedateonwhichitbecomesdue,
theCommissionershallpaytothe
taxpayerafurtheramountbyway
of compensation at the rate of
[fifteen]perannumoftheamount
of the refund computed for the
period commencing at the end of
the three month period and
endingonthedateonwhichitwas
171(1)
paid
Notice to obtain information or
evidence:
(a)tofurnishtotheCommissioner
or an authorized officer, any
information relevant to any tax
[leviable] under this Ordinance as
176(1)(a)
specifiedinthenotice;or
47
INCOMETAX
The rate of compensation for
delayed refund is proposed to be
linkedwithKIBORrateasunder;
Wherearefundduetoataxpayer
isnotpaidwithinthreemonthsof
thedateonwhichitbecomesdue,
theCommissionershallpaytothe
taxpayerafurtheramountbyway
of compensation at the rate of
[KIBOR plus 0.5 per cent] per
annum of the amount of the
refund computed for the period
commencing at the end of the
threemonthperiodandendingon
thedateonwhichitwaspaid
The proposed substituted clause
seeks to broaden the scope of
section 176 to include the
information that may be required
to fulfill obligation under
intergovernmental agreements
undersection107asunder;
(a)tofurnishtotheCommissioner
or an authorised officer, any
information relevant to any tax
leviableunderthisOrdinanceorto
fulfill any obligation under any
agreement with foreign
governmentorgovernmentsortax
jurisdiction, as specified in the
notice;or;and
INCOMETAX

NonExistent Following self explanatory sub

section is proposed to be inserted
asunder;

(1A) A special audit panel
appointedundersubsection(11)
of section 177, for any tax year,
may,withthepriorapprovalofthe
176(1A)

Commissioner concerned, enter

the business premises of a
taxpayer, to obtain any
information,requireproductionof
anyrecord,onwhichtherequired
informationisstoredandexamine
itwithinsuchpremisesand
such panel may if specifically
delegated by the Commissioner,
also exercise the powers as
providedinsubsection(4).

48
 INCOMETAX

Audit In order to take advantage of

NonExistent professionalsoutsidetheFBRstaff
new audit methodology
comprising of teams consisting of
bothFBRofficialsandProfessional
Accountants is proposed to be
introduced by inserting following
self explanatory subsections in
section177;

(11) The Board may appoint as
manyspecialauditpanelsas
maybenecessary,comprisingtwo
ormoremembersfromthe
following:
(a)an officeror officers ofInland
177(11)

Revenue;
(b)afirmofCharteredAccountants
asdefinedunderthe
Chartered Accountants Ordinance,
1961(Xof1961);
(c)afirmofCostandManagement
Accountantsasdefinedunder
the Cost and Management
AccountantsAct,1966(XIVof
1966);or
(d) any other person as directed
bytheBoard,toconductanaudit,
including a forensic audit, of the
incometaxaffairsofanypersonor
classesofpersonsandthescopeof
such audit shall be as determined
bytheBoardortheCommissioner
oncasetocasebasis.
NonExistent
177(12)

(12) Special audit panel shall be

headedbyaChairmanwhoshall
beanofficerofInlandRevenue.

49
INCOMETAX

NonExistent (13) Powers under sections 175

and 176 for the purposes of
conducting an audit under sub
177(13)

section (11), shall only be

exercised by an officer or officers
of Inland Revenue, who are
member or members of the
specialauditpanel,andauthorized
bytheCommissioner.
NonExistent (14) Notwithstanding anything
containedinsubsections(2)and
(6), where a person fails to
producebeforetheCommissioner
oraspecialauditpanelundersub
section (11) to conduct an audit,
any accounts, documents and
records,requiredtobemaintained
under section 174 or any other
177(14)

relevant document, electronically

keptrecord,electronicmachineor
any other evidence that may be
required by the Commissioner or
thepanel,theCommissionermay
Proceed to make best judgment
assessment under section 121 of
thisOrdinanceandtheassessment
treatedtohavebeenmadeonthe
basis of return or revised return
filedbythetaxpayershallbeofno
legaleffect.

50
 INCOMETAX

NonExistent (15) If any one member of the

specialauditpanel,otherthanthe
Chairman, is absent from
conducting an audit, the
177(15)

proceedings of the audit may

continue,andtheauditconducted
bythespecialauditpanelshallnot
be invalid or be called in question
merely on the ground of such
absence.
NonExistent (16) Functions performed by an
officer or officers of Inland
177(16)

Revenue as members of the

specialauditPanel,forconducting
audit, shall be treated to have
been performed by special audit
panel.
NonExistent (17)TheBoardmayprescribethe
177(17)

modeandmannerofconstitution,
procedure and working of the
specialauditpanel
TaxpayersRegistration Computerized NIC No. issued by
NonExistent NADRA is deemed to be NTN no.
fromtaxyear,2015;
The amendment is silent about
statusofNTNalreadyissued.

181(4)

(4) From tax year 2015 and

onwards, in case of individuals
having Computerized National
Identity Card (CNIC) issued by the
National Database and
Registration Authority, CNIC shall
beusedasNationalTaxNumber.

51
INCOMETAX
Offencesandpenalties:
Suchpersonshallpayapenaltyof
Rs. 2,500 for each day of default
subject to a minimum penalty of
182(1A)
fiftythousandrupees.
Suchpersonshallpayapenaltyof
Rs.100foreachdayofdefault.
182(1AA)
Prosecution for making false or
misleadingstatements;
(3)Subsection (3) of section 187
195(3)
shallapplyindeterminingwhether
apersonhasmadeastatementto
[anincometaxauthority].
52
Penaltyfornonfilingofstatement
under section 115, 165, 165A has
been proposed to be amended as
under (previously same amount
was provided as a concession in
SecondSchedule);
Suchpersonshallpayapenaltyof
Rs. 2,500 for each day of default
subject to a minimum penalty of
tenthousandrupees.
Penalty for nonfiling of wealth
statement has been proposed to
berevisedasunder;
Suchpersonshallpayapenaltyof
0.1% of the taxable income per
week or Rs.20,000, whichever is
higher.
Corresponding amendment is
proposed to be made for
incorporating correct reference as
under;
(3)EntryagainstS.No.10incolumn
(2) of the Table insubsection (1)
of section 182 shall apply in
determiningwhetherapersonhas
made a statement to an income
taxauthority.

Defaultsurcharge.
(1)Apersonwhofailstopay
(a)any tax, excluding the advance
taxundersection147and[default
surcharge]underthissection;
(b)anypenalty;or
(c)any amount referred to in
section 140 or 141, on or before
theduedateforpaymentshallbe
liable for [default surcharge]at a
205(1)
rate equal to [18 per cent per
annum] on the tax, penalty or
other amount unpaid computed
fortheperiodcommencingonthe
date on which the tax, penalty or
otheramountwasdueandending
onthedateonwhichitwaspaid
NonExistent
207(ga)
INCOMETAX
The rate of default surcharge has
been proposed to be reduced to
12% reflecting substantial
decreaseinInterestRateasunder;
(1)Apersonwhofailstopay
(a) any tax, excluding the
advancetaxundersection147and
[default surcharge]under this
section;
(b)anypenalty;or
(c) any amount referred to in
section 140 or 141, on or before
theduedateforpaymentshallbe
liable for [default surcharge]at a
rate equal to [12 per cent per
annum] on the tax, penalty or
other amount unpaid computed
fortheperiodcommencingonthe
date on which the tax, penalty or
otheramountwasdueandending
onthedateonwhichitwaspaid
Corresponding amendment is
proposed to be made for
incorporating correct reference as
under;
Incometaxauthorities
(ga)specialauditpanel;
53
INCOMETAX
Delegation;
(1B) The Commissioner may
delegate the powers to a firm of
charteredaccountants[orafirmof
Cost and Management
Accountants] appointed by the
[Board or the Commissioner] to
conduct the audit of persons [ ]
210(1B)
forauditundersection177.]
Powerorfunctionexercised.
(1) Where, by virtue of an order
undersection210,a[anofficerof
Inland Revenue]exercises a power
or performs a function of the
Commissioner, such power or
functionshallbetreatedashaving
been exercised or performed by
211
theCommissioner.
Subsection proposed to be
substituted to incorporate the
reference of newly proposed sub
section177(11)asunder;
(1B)TheCommissionermay,byan
order in writing, delegate to a
special audit panel appointed
under subsection (11) of section
177, or to a firm of chartered
accountantsorafirmofCostand
Management Accountants
appointed by the Board or the
Commissionertoconductanaudit
ofpersonundersection177,allor
any of the powers or functions to
conduct an audit under this
Ordinance.
Subsection proposed to be
substituted to incorporate the
reference of newly proposed sub
section177(11)asunder;
(1) Where, by virtue of an order
undersection210,a[anofficerof
Inland Revenue] or by a special
auditpanelappointedundersub
section (11) of section 177
exercises a power or performs a
function of the Commissioner,
such power or function shall be
treated as having been exercised
or performed by the
Commissioner.
54
 INCOMETAX

NonExistent Followingselfexplanatorysections
is proposed to be introduced for
automatic selection for audit of
noncompliantretailers;

Automaticselectionforaudit.(1)
A person registered as retailer
under rule (4) or rule (6) of the
Sales Tax Special Procedure Rules,
2007 who does not fulfill the
parameters mentioned in sub
clauses(a)to(e)ofsubsection(3)
shallbeautomaticallyselectedfor
auditofincometaxaffairsforthat
taxyear.
(2) Audit of Income Tax affairs of
persons automatically selected
214D

under subsection (1) shall be

conducted as per procedure given
in section 177 and all the
provisions of the Ordinance,
except the first proviso to sub
section (1) of section 177, shall
applyaccordingly.
(3)Theprovisionsofsections177
and 214C for a tax year shall not
apply to a person registered as
retailerunderrule(4)orrule(6)of
the Sales Tax Special Procedure
Rules, 2007 subject to the
conditionsthat;
(a)nameofthepersonregistered
under rule (4) of the Sales Tax
Special Procedure Rules, 20 07
appears in the sales tax active
taxpayerslist;

55
INCOMETAX

(b) complete return of income

withinthemeaningofsubsection
(2) of section 114 has been filed
within the date it was required to
be furnished as mentioned in
section 118 including the date
extendedbytheBoardfromtime
totime;
(c) the tax payable under sub
section(1)ofsection137hasbeen
paid;
(d) two percent tax on turnover
under section 113 has been paid
by a person registered under rule
(6) of the Sales Tax Special
ProcedureRules,2007whofilesa
214D

return below taxable limit and

whointheprecedingtaxyearhad
either not filed return or had
declared income below taxable
limit;and
(e)twentyfivepercenthighertax
than the previous tax year has
been paid by a person registered
under rule (6) of the Sales Tax
SpecialProcedureRules,2007who
haddeclaredtaxableincomeinthe
return for immediately preceding
taxyear.
(4) This section shall have effect
from the date appointed by the
Board through notification in
officialgazette;

56
 INCOMETAX

NonExistent Following self explanatory new

section is proposed to be inserted
asunder;

Rewardtowhistleblowers.
(1)TheBoardmaysanctionreward
to whistleblowers in cases of
concealmentorevasionofincome
tax, fraud, corruption or
misconduct providing credible
information leading to such
detectionoftax.
(2)TheBoardmay,bynotification
in the official Gazette, prescribe
the procedure in this behalf and
227B

also specify the apportionment of

reward sanctioned under this
sectionforwhistleblowers.
(3) The claim for reward by the
whistleblower shall be rejected
if
(a)theinformationprovidedisof
novalue;
(b) the Board already had the
information;
(c) the information was available
inpublicrecords;or
(d)nocollectionoftaxesismade
from the information provided
fromwhichtheBoardcanpaythe
reward.

57
INCOMETAX

(4)Forthepurposeofthissection,
whistleblower means a person
who reports concealment or
evasion of income tax leading to
detection or collection of taxes,
fraud, corrupt ion or misconduct,
tothecompetentauthorityhaving
power to take action against the
personoranincometaxauthority
committing fraud, corruption,
misconduct, or involved in
concealmentorevasionoftaxes.;

Cashwithdrawalfromabank: Omitted
(2)Advancetaxunderthissection The exemptions provided under
shall not be collected in the case varioussectionsofchapterXIIhave
ofwithdrawalsmadeby, beenproposedtobeomittedfrom
(a) the Federal Government or a individual sections and
231A(2)

ProvincialGovernment; simultaneously provided in

(b) a foreign diplomat or a separate section 236O to avoid
diplomaticmissioninPakistan;or repetition.
(c) a person who produces a
certificate from the Commissioner
thathisincomeduringthetaxyear
isexempt.

58

231AA. Advance tax
transactionsinbank.
(1) Every banking company, non
banking financial institution,
exchange company or any
authorized dealer of foreign
exchangeshallcollectadvancetax
atthetimeofsaleagainstcashof
anyinstrument,includingDemand
Draft, Pay Order, CDR, STDR, SDR,
231AA(1)
RTC, or any other instrument of
bearernatureoronreceiptofcash
on cancellation of any of these
instruments:
Providedthatthissubsectionshall
not be applicable in case of inter
bank or intrabank transfer and
also where payment is made
through a crossed cheque for
purchaseofafinancialinstrument
asreferredtoinsubsection(1).
Advance tax on transactions in
bank;
Advance tax under this section
shall not be collected in the case
oftransactionsmadeby,
231AA(4)
(a) the Federal Government or a
ProvincialGovernment;
(b) a foreign diplomat or a
diplomaticmissioninPakistan;or
(c) a person who produces a
certificate from the Commissioner
thatitsincomeduringthetaxyear
isexempt
INCOMETAX
on Exemptiononinterbankandintra
bank transfers is proposed to
withdrawn by omitting proviso to
subsection(1)asunder;
(1) Every banking company, non
banking financial institution,
exchange company or any
authorized dealer of foreign
exchangeshallcollectadvancetax
atthetimeofsaleagainstcashof
anyinstrument,includingDemand
Draft, Pay Order, CDR, STDR, SDR,
RTC, or any other instrument of
bearernatureoronreceiptofcash
on cancellation of any of these
instruments.
Omitted
Omitted
The exemptions provided under
varioussectionsofchapterXIIhave
beenproposedtobeomittedfrom
individual sections and
simultaneously provided in
separate section 236O to avoid
repetition.
59
INCOMETAX
Advance tax on private motor
vehicles;
(3)Everymanufacturerofamotor
car or jeep shall collect, at the
231B(3)
timeofsaleofamotorcarorjeep,
advancetaxattheratespecifiedin
Division VII of Part IV of the First
Schedule from the person to
whomsuchsaleismade.
Theproposedamendmentseeksto
broaden the scope of said proviso
isasunder;
3) Every manufacturer of a motor
vehicleshallcollect,atthetimeof
sale of a motor car or jeep,
advancetaxattheratespecifiedin
Division VII of Part IV of the First
Schedule from the person to
whomsuchsaleismade.
60
 INCOMETAX

NonExistent Followingexplanatorysubsections
areproposedtobeinserted;

(6) For the purposes of this sect
ion the expression date of first
registrationmeans:
(a)thedateofissuanceofbroad
arrow number in case a vehicle is
acquiredfromtheArmedForcesof
Pakistan;
(b)thedateofregistrationbythe
Ministry of Foreign Affairs in case
the vehicle is acquired from a
231B(6)&(7)

foreign diplomat or a diplomatic

missioninPakistan;
(c) the last day of the year of
manufactureincaseofacquisition
of an unregistered vehicle from
the Federal or a Provincial
Government;and
(d) in all other cases the date of
first registration by theExcise and
TaxationDepartment.
(7)Forthepurposeofthissection
motorvehicleincludescar,jeep,
van, sports utility vehicle, pickup
trucks for private use, caravan
automobile,limousine,wagonand
any other automobile used for
privatepurpose.;
NonExistent Followingexplanatorysubsections
areproposedtobeinserted;

234(6)

(6)Forthepurposeofsubsections
(1) and (2) motor vehicle shall
include the vehicles specified in
subsection(7)ofsection231B.;

61
INCOMETAX
Telephoneusers.
(1) Advance tax at the rates
specified in Part IV of the First
Scheduleshallbecollectedonthe
amountof
(a)telephonebillofasubscriber;
(b)prepaidcardsfortelephones;
(c)saleofunitsthroughany
electronicmediumor amountof
whateverform. (a)telephoneandinternet
(2) The person preparing the
telephonebillshallchargeadvance
tax under subsection (1) in the
236
manner telephone charges are
charged.
(3) The person issuing or selling
prepaid cards for telephones shall
[collect] advance tax under sub
section(1)fromthepurchasersat
the time of issuance or sale of
cards.
Theproposedamendmentseeksto
extendthescopeofsection236to
internetusersalsoasunder;
236. Telephone & Internet
users.
(1) Advance tax at the rates
specified in Part IV of the First
Schedule shall becollectedon the
billofasubscriber;
(b)prepaidcardsfortelephones;
(c)saleofunitsthroughany
electronicmediumor
whateverform.
(d)internetbillofasubscriber;
(e)prepaidcardsforinternet;
(2) The person preparing the
telephonebillshallchargeadvance
tax under subsection (1) in the
manner telephone or internet
chargesarecharged.
(3) The person issuing or selling
prepaid cards for telephones or
internetshall[collect]advancetax
under subsection (1) from the
purchasersatthetimeofissuance
orsaleofcards.
62
 INCOMETAX

NonExistent Following self explanatory proviso

is proposed to be inserted as
under;
Advance tax on purchase of air
236B(1)

ticket;
Provided that this section shall
not apply to routes of Baluchistan
coastal belt, Azad Jammu and
Kashmir,FATA,GilgitBaltistanand
Chitral.;and
(4) The advance tax under The exemptions provided under
this section shall not be collected varioussectionsofchapterXIIhave
inthecaseof beenproposedtobeomittedfrom
(a) the Federal Government individual sections and
236B(4)

oraProvincialGovernment;or simultaneously provided in

(b) a person who produces a
certificate from the Commissioner
Inland Revenue that income of
suchpersonduringthetaxyearis
exempt.]
Advance Tax on sale or transfer
ofimmovableProperty.
(3)The advance tax under this
236C(3)
separate section 236O to avoid
repetition.
Omitted
The exemptions provided under
varioussectionsofchapterXIIhave
beenproposedtobeomittedfrom

section shall not be collected in individual sections and

the case of Federal Government, simultaneously provided in
Provincial Government or a Local separate section 236O to avoid
Government.] repetition.
Omitted

63
INCOMETAX
236H.Advancetaxonsalesto
retailers.
(1)Everymanufacturer,distributor,
dealer, wholesaler or commercial
importer of electronics, sugar,
cement, iron and steel products,
fertilizer, motorcycles, pesticides,
236H(1)
cigarettes, glass, textile,
beverages,paintorfoamsector,at
the time of sale to retailers, shall
collect advance tax at the rate
specified in Division XV of Part IV
of the First Schedule, from the
aforesaid person to whom such
saleshavebeenmade.
64
Proposed amendment seeks to
exclude fertilizer sector from
collectionoftaxundersaidsection
asunder;
(1)Everymanufacturer,distributor,
dealer, wholesaler or commercial
importer of electronics, sugar,
cement, iron and steel products,
motorcycles,pesticides,cigarettes,
glass, textile, beverages, paint or
foamsector,atthetimeofsaleto
retailers or wholesalers shall
collect advance tax at the rate
specified in Division XV of Part IV
of the First Schedule, from the
aforesaid person to whom such
saleshavebeenmade.
 INCOMETAX

NonExistent Following subsection providing

exemption to nonresident is
proposedtobeinserted;

Collection of advance tax by
educationalinstitutions;
(6)Advancetaxunderthissection
shall not be collected from a
personwhoisanonresidentand,
(i) furnishes copy of passport as
236I(6)

an evidence to the educational

Advancetaxonpurchaseor
transferofimmovableproperty.
(3) The advance tax under
this section shall not be collected
236K(3)
institutionthatduringprevioustax
year, his stay in Pakistan was less
than one hundred eightythree
days;
(ii) furnishes a certificate that he
has no Pakistansource income;
and
(iii) the fee is remitted directly
from abroad through normal
banking channels to the bank
account of the educational
institution.;
The exemptions provided under
varioussectionsofchapterXIIhave
beenproposedtobeomittedfrom
individual sections and
simultaneously provided in

in the case of the Federal separate section 236O to avoid

Government, a Provincial repetition.
Government, a Local Government Omitted
or a foreign diplomatic mission in
Pakistan.

65
INCOMETAX

NonExistent The exemptions provided under

varioussectionsofchapterXIIhave
beenproposedtobeomittedfrom
individual sections and
simultaneously provided in
following section to avoid
repetition;

Advance tax under this chapter.
236O

The advance tax under this

chapter shall not be collected in
thecaseofwithdrawalsmadeby,
(a) the Federal Government or a
ProvincialGovernment;
(b) a foreign diplomat or a
diplomaticmissioninPakistan;or
(c) a person who produces a
certificate from the Commissioner
thathisincomeduringthetaxyear
isexempt

66
 INCOMETAX

NonExistent Following new subsection

proposed to be inserted for
collection of advance tax on
bankingtransactionincaseofnon
filersonly;
Advance tax on banking transact
ionsotherwisethanthroughcash;
(1) Every banking company shall
collect advance adjustable tax
fromanonfileratthetimeofsale
of any instrument, including
demand draft, pay order, special
deposit receipt, cash deposit
receipt,shorttermdepositreceipt,
call deposit receipt, rupee
travellers cheque or any other
instrumentofsuchnature.

236P

(2) Every banking company shall

collect advance adjustable tax
from a nonfiler at the time of
transfer of any sum through
cheque o clearing, interbank or
intra bank transfers through
cheques, online transfer,
telegraphic transfer, mail transfer,
direct debit, payments through
internet,paymentsthroughmobile
phones,accounttoaccountfunds
transfer, third party account to
account funds transfers, real time
accounttoaccountfundstransfer,
real time third party account to
account fund transfer, automated
teller machine (ATM) transfers, or
any other mode of electronic or
paperbasedfundstransfer.

67
INCOMETAX

NonExistent (3) The advance tax under this

section shall be collected at the
rate specified in Division XXI of
Part IV of the First Schedule,
where the sum total of payments
for all transactions mentioned in
subsection (1) or subsection (2),
236P

as the case may be, exceed fifty

thousandrupeesinaday.
(4)Advancetaxunderthissection
shallnotbecollectedinthecaseof
Pakistan Realtime Interbank
Settlement Mechanism (PRISM)
transactionsorpaymentsmadefor
Federal, Provincial or local
Governmenttaxes.
NonExistent Following new section is proposed
to be inserted for collection of
advance tax from payment on
accountofequipmentrental;

Payment to residents for use of
machineryandequipment.
(1) Every prescribed person
236Q

makingapaymentinfullorinpart
including a payment by way of
advance to a resident person for
use or right to use industrial,
commercial and scientific
equipment shall deduct tax from
the gross amount at the rate
specifiedinDivisionXXIIIofPartIV
oftheFirstSchedule.

68
 INCOMETAX

NonExistent (2) Every prescribed person

makingapaymentinfullorinpart
including a payment by way of
advance to a resident person on
accountofrentofmachineryshall
deducttaxfromthegrossamount
at the rate specified in Division
XXIII of Part IV of the First
236Q

Schedule.
(3)Thetaxdeductibleundersub
sections (1) and (2) shall be final
taxontheincomeofsuchresident
person.
(4) In this section prescribed
person means a prescribed
person as defined in subsection
(7)ofsection153.

69
INCOMETAX

NonExistent Following new subsection is

proposed to be inserted for
collection of advance tax on
remittance of education expenses
abroad;

Collection of advance tax on
education related expenses
remittedabroad;
(1) There shall be collected
advancetaxattheratespecifiedin
Division XXIIV of PartI V of the
First Schedule on the amount of
education related expenses
remittedabroad.

(2) Banks, financial institutions,
foreign exchange companies or
236R

any other person responsible for

remitting foreign currency abroad
shall collect advance tax from the
payer of education related
expenses.
3)Taxcollectedunderthissection
shall be adjustable against the
income of the person remitting
payment of education related
expenses.

(4)Forthepurposeofthissection,
education related expenses
includestuitionfee,boardingand
lodgingexpenses,anypaymentfor
distant learning to any institution
or university in a foreign country
and any other expense related or
attributabletoforeigneducation

70
 INCOMETAX

NonExistent Following new subsection has

been proposed to be inserted for
collection of advance tax from
paymentsofdividendinspecie;
Dividendinspecie.
236S

Every person making payment of

dividendinspecie shall collect tax
from the gross amount of the
dividendinspeciepaidattherate
specified in Division I of Part III of
theFirstSchedule.
NonExistent Following new subsection has
been proposed to be inserted
whereby PMEX is empowered to
collect advance tax from its
member;

Collection of tax by Pakistan
Mercantile Exchange Limited
(PMEX);
(1) Pakistan Mercantile Exchange
Limited(PMEX) shall collect
236T

advancetax,

(a) at the rates specified in
Division XXII of Part IV of First
Schedule from its members on
purchase of futures commodity
contracts;

(b) at the rates specified in
Division XXII of Part IV of First
Schedule from its members on
sale of futures commodity
contracts;

71
INCOMETAX

NonExistent (c) at the rates specified in

Division XXII of Part IV of First
Schedule from its members on
purchase of futures commodity
contracts in lieu of tax on the
commission earned by such
members;

(d) at the rates specified in
236T

Division XXII of Part IV of First

Schedule from its members on
sale of futures commodity
contracts in lieu of tax on the
commission earned by such
members;

(2)Thetaxcollectedunderclauses
(a)to(d)ofsubsection(1)shallbe
aminimumtax.;

72
 INCOMETAX

THEFIRSTSCHEDULE
RATESOFTAXFORINDIVIDUALANDAOPs
PARTI(DivisionI)
Sr.# TaxableIncome RateofTax
1 Where the taxable income 0%
doesnotexceedRs.400,000
2 Where the taxable income 7% of the amount
exceedsRs400,000butdoes exceedingRs.400,000
notexceedRs500,000
3 Where the taxable income Rs 7,000 + 10% of the
exceedsRs500,000butdoes amount exceeding
notexceedRs750,000 Rs.500,000
4 Where the taxable income Rs 32,000 + 15% of the
exceedsRs750,000butdoes amount exceeding
notexceedRs1,500,000 Rs.750,000
5 Where the taxable income Rs144,500+20%ofthe
exceeds Rs 1,500,000 but amount exceeding
doesnotexceedRs2,500,000 Rs.500,000
6 Where the taxable income Rs344,500+25%ofthe
exceeds Rs 2,500,000 but amount exceeding
doesnotexceedRs4,000,000 Rs.2,500,000
7 Where the taxable income Rs719,500+ 30%ofthe
exceeds Rs 4,000,000 but amount exceeding
doesnotexceedRs6,000,000 Rs.4,000,000
8 Where the taxable income Rs 1,319,500 + 35% of
exceedsRs6,000,000 the amount exceeding
Rs.6,000,000

73
INCOMETAX

RATESOFTAXFORSALARIEDINDIVIDUAL
PARTIA(DivisionI)
Sr.# TaxableIncome RateofTax
1 Where the taxable income does not 0%
exceedRs.400,000
2 Where the taxable income exceeds 2% of the amount
Rs 400,000 but does not exceed exceedingRs.400,000
Rs.500,000
3 Where the taxable income exceeds Rs.2,000 + 05% of the
Rs.500,000 but does not exceed amount exceeding
Rs.750,000 Rs.500,000
4 Where the taxable income exceeds Rs.14,500 + 10% of the
Rs.750,000 but does not exceed Rs amount exceeding
1,400,000 Rs.750,000
5 Where the taxable income exceeds Rs.79,500 + 12.50% of
Rs1,400,000butdoesnotexceedRs the amount exceeding
1,500,000 Rs.1,400,000
6 Where the taxable income exceeds Rs.92,000 +15%ofthe
Rs1,500,000butdoesnotexceedRs amount exceeding
1,800,000 Rs.1,500,000
7 Where the taxable income exceeds Rs.137,000 + 17.50% of
Rs1,800,000butdoesnotexceedRs the amount exceeding
2,500,000 Rs.1,800,000
8 Where the taxable income exceeds Rs.259,500 + 20% of
Rs 2,500,000 but does not exceed the amount exceeding
Rs.3,000,000 Rs.2,500,000
9 Where the taxable income exceeds Rs.359,500 + 22.5% of
Rs.3,000,000 but does not exceed the amount exceeding
Rs.3,500,000 Rs.3,000,000
10 Where the taxable income exceeds Rs.472,000 + 25% of
Rs 3,500,000 but does not exceed the amount exceeding
Rs.4,000,000 Rs.3,500,000
11 Where the taxable income exceeds Rs.597,000 + 27.5% of
Rs 4,000,000 but does not exceed the amount exceeding
Rs.7,000,000 Rs.4,000,000
12 Where the taxable income exceeds Rs.1,422,000 + 30% of
Rs7,000,000 the amount exceeding
Rs.7,000,000

74
 INCOMETAX

DivisionII
RATESOFTAXFORCOMPANIES

Followingnewprovisoprescribingrateoftaxforcompaniesfortaxyear2016
hasbeenproposedtobeinserted

Providedfurtherthattherateoftaximposedontaxableincomeof
acompany,otherthanbankingcompanyshallbe32%forthetax
year2016.;

Following new division prescribing rate of super tax levied through new
proposedsectionisproposedtobeinsertedasunder;

DivisionIIA
RatesofSuperTax

Person RateofSuperTax
BankingCompany 4%oftheincome
Person, other than a banking 3%oftheincome;
company,havingincomeequal
toorexceedingRs.500million

DivisionIII
RatesofDividendTax
Amendedratesofdividendtaxareasunder;

Therateoftaximposedundersection5ondividendreceivedfroma
companyshallbe

(a) 7.5%inthecaseofdividendsdeclaredordistributedbypurchaserof
apowerprojectprivatizedbyWAPDAoronsharesofacompanysetupfor
powergenerationoronsharesofacompany,supplyingcoalexclusivelyto
powergenerationprojects;and

(b) 12.5%,inallothercases:
Providedthatthedividendreceivedbyapersonfromastockfundshallbe
taxedattherateof15%fortaxyear2016andonwards,ifdividendreceipts
arelessthancapitalgains:

75
INCOMETAX

Providedfurtherthatthedividendreceivedbyacompanyfromacollective
investmentscheme,REITSchemeoramutualfund,otherthanastockfund,
shallbetaxedattherateof25%fortaxyear2016andonwards;

Provided also that if a Developmental REIT Scheme with the object of

development and construction of residential buildings is set up by thirtieth
dayofJune,2018,dividendreceivedbyapersonfromsuchDevelopmental
REITSchemeshallbereducedbyfiftypercentforthreeyearsfromthirtieth
dayofJune,2018.

FollowingnewdivisionnamelyDivisionIIIAprescribingratesoftaxonprofit
ondebtimposedunderproposedsection5Atobeinsertedasunder;

DivisionIIIA
RateforProfitonDebt
S.No. ProfitonDebt Rateoftax
(1) (2) (3)
1. Where profit on debt does not 10%
exceedRs.25,000,000
2. Where profit on debt exceeds Rs.2,500,000 + 12.5% of
Rs.25,000,000 but does not exceed the amount exceeding
Rs.50,000,000 Rs.25,000,000
3. Whereprofitondebtexceeds Rs.5,625,000 + 15% of
Rs.50,000,000 the amount exceeding
Rs.50,000,000

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 INCOMETAX

DivisionVII
CapitalGainsondisposalofSecurities
Rates of tax on Capital Gains on Disposal of Securities under section 37(A)
have been proposed to be amended by substituting Division VII with
following;

S.No. Period TaxYear2015 TaxYear2016

(1) (2) (3)
1. Whereholdingperiodofa 12.5% 15%
securityislessthantwelve
months
2. Whereholdingperiodofa 10% 12.5%
security is twelve months
or more but less than
twentyfourmonths
3. Whereholdingperiodofa 0% 7.5%
security is twenty four
months or more but less
thanfouryears

ProvidedthattherateforcompaniesshallbeasspecifiedinDivisionIIofPart
IofFirstSchedule,inrespectiveofdebtsecurities;

Providedfurtherthatamutualfundoracollectiveinvestmentschemeora
REITschemeshalldeductCapitalGainsTaxattheratesasspecifiedbelow,on
redemptionofsecuritiesasprescribed,namely:

Category Filer NonFiler

Individual and 10%forstockfunds 17.5%
associationofpersons 10%forothers
Company 10%forstockfunds 25%
25%forothers

Providedfurtherthatincaseofastockfundifdividendreceiptsofthefund
arelessthancapitalgains,therateoftaxdeductionshallbe12.5%.

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INCOMETAX

DivisionIX
MinimumTaxundersection113

Therateofminimumtaxpayablebydistributoroffertilizersandconsumer
goodshasbeenproposedtobeenhancedfrom0.2%to0.5%byamending
DivisionIXasunder;
S.No Person(s) MinimumTaxas
percentageof
thepersons
turnoverforthe
year
(1) (2) (3)
1. (a) Oil marketing companies, Oil 0.5%
refineries, Sui Southern Gas Company
Limited and Sui Northern Gas
PipelinesLimited(forthecaseswhere
annual turnover exceeds rupees one
billion.)
(b) PakistaniAirlines;and
(c) Poultry industry including poultry
breeding, broiler production, egg
production and poultry feed
production.
(d) Dealersordistributorsoffertilizers.
2. (a) Distributorsofpharmaceutical 0.2%
products,fastmovingconsumergoods
andcigarettes;
(b) Petroleumagentsanddistributors
whoareregisteredundertheSales
TaxAct,1990;
(c) Ricemillsanddealers;and
(d) Flourmills.
3. MotorcycledealersregisteredundertheSales 0.25%
TaxAct,1990.
4. Inallothercases. 1%

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 INCOMETAX

RatesofAdvanceTax
IMPORTS

Theincreasedratesoftaxcollectiononnonfilershavealsobeenbroughtin
section 148, the amended rates of tax collection are proposed to be as
under;
S.No Persons Rate
Filer NonFiler
(1) (2) (3) (4)
1. (i) Industrial undertaking 1% of the 1.5%ofthe
importing remeltable steel (PCT import Import
Heading 72.04) and directly value as valueas
reducedironforitsownuse; increased increased
(ii) Persons importing potassic by by customs
fertilizers in pursuance of customs duty,sales
EconomicCoordinationCommittee duty, sales tax and
of the cabinets decision No.ECC tax and federal
155/12/2004 dated the 9th federal exciseduty
December,2004; exciseduty
(iii) Personsimportingurea;and
(iv) Manufacturers covered under
Notification No. S.R.O.
1125(I)/2011 dated the 31st
December,2011
2. Personsimportingpulses 2% of the 3%ofthe
import import
value as valueas
increased increasedby
by customs
customs duty,sales
duty, sales taxand
tax and federal
federal exciseduty
exciseduty
3. Commercial importers covered 3% of the 4.5%ofthe
underNotificationNo. import import
S.R.O.1125(I)/2011datedthe31st value as valueas
December,2011. increased increased

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INCOMETAX

by bycustoms
customs duty,sales
duty, sales taxand
tax and federal
federal exciseduty
exciseduty
4. Shipbreakersonimportofships 4.5% 6.5%
5. Industrial undertakings not 5.5% 8.5%
coveredunderS.Nos.1to4
6. Companies not covered under S. 5.5% 8%
Nos.1to5
7. PersonsnotcoveredunderS.Nos. 6% 9%
1to6

PartIII(DivisionI)
AdvanceTaxonDividend
Theratesoftaxdeductionfromdividendareproposedtobeamendedas
under;

Therateoftaxtobedeductedundersection150and236Sshallbe

(a) 7.5%inthecaseofdividendsdeclaredordistributedbypurchaserofa
powerprojectprivatizedbyWAPDAoronsharesofacompanysetup
for power generation or on shares of a company, supplying coal
exclusivelytopowergenerationprojects;

(b) 10%forfilersotherthanmentionedin(a)above;

(c) 17.5%fornonfilersotherthanmentionedin(a)above:

Providedthattherateoftaxrequiredtobedeductedbyacollective
investmentscheme,REITSchemeoramutualfundshallbe;

Category StockFund MoneymarketFund,Income
Fundoranyotherfund
Individual 10% 10%
Company 10% 25%
AOP 10% 10%

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 INCOMETAX

Provided further that if a Developmental REIT Scheme with the object of

development and construction of residential buildings is set up by thirtieth
dayofJune,2018,dividendreceivedbyapersonfromsuchDevelopmental
REITSchemeshallbereducedbyfiftypercentforthreeyearsfromthirtieth
dayofJune,2018..

Providedfurtherthatincaseofastockfundifdividendreceiptsofthefund
arelessthancapitalgains,therateoftaxdeductionshallbe15%.

DivisionI
Profitondebt

Ratesfordeductionoftaxu/s.151areproposedtobeamendedasunder;

Therateoftaxtobedeductedundersection151shallbe15%oftheyieldor
profitforfilersand17.5%oftheyieldorprofitpaid,fornonfilers:

Providedthatforanonfiler,iftheyieldorprofitpaidisrupeesfivehundred
thousandorless,therateshallbetenpercent;

DivisionII
Paymenttononresidents

The rate of deduction of tax from payment to PE of nonresidents under

section 152 (2A) on account of supply of goods, services and execution of
contract has been proposed to be amended to bring them at par with
deductionratesapplicabletoresidentpersons.Theproposedratesaregiven
asunder;

(4)Therateoftaxtobedeductedfromapaymentreferredtoinclause(a)of
subsection(2A)ofsection152shallbe

(i)incaseofacompany,4%ofthegrossamountpayable,ifthecompanyis
afilerand6%ifthecompanyisanonfiler;and(ii)inanyothercase,4.5%
ofthegrossamountpayable,ifthepersonisafilerand6.5%ifthepersonis
anonfiler.;

(4)Therateoftaxtobedeductedfromapaymentreferredtoinclause(a)
ofsubsection(2A)ofsection152shallbe

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INCOMETAX

i) in case of a company, 4% of the gross amount payable, if the

companyisafilerand6%ifthecompanyisanonfiler;and

(ii)inanyothercase,4.5%ofthegrossamountpayable,iftheperson
isafilerand6.5%ifthepersonisanonfiler.;

(5)Therateoftaxtobedeductedfromapaymentreferredtoinclause(b)of
subsection(2A)ofsection152shallbe

i) in the case of transport services, two percent of the gross

amountpayable;or
ii) incasesotherthantransport,

(a)incaseofacompany,8%ofthegrossamountpayable,
ifthecompanyisafilerand12%ifthecompanyisanon
filer;and

(b)inanyothercase,10%ofthegrossamountpayable,if
thepersonisafilerand15%ifthepersonisanonfiler;;

(6)Therateoftaxtobedeductedfromapaymentreferredtoinclause(c)of
subsection(2A)ofsection152shallbe,

(i)10%ofthegrossamountpayableincaseofsportspersons;
(ii)incaseofacompany,7%ofthegrossamountpayable,ifthe
companyisafilerand10%ifthecompanyisanonfiler;and
(iii)inanyothercase,7.5%ofthegrossamountpayable,ifthe
personisafilerand10%ifthepersonisanonfiler.;

DivisionIII
Paymentforgoodsandservices

The increased rate of tax for nonfilers have also been proposed to be
introducedincaseofpaymentsonaccountofsupplyofgoodsandexecution
of contracts, the amended rates for deduction of tax under section153 are
proposedasunder;

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 INCOMETAX

(1) Therateoftaxtobedeductedfromapaymentreferredtoinclause
(a)ofsubsection(1)ofsection153shallbe

(a) inthecaseofthesaleofrice,[],cottonseedoredibleoils,
[1.5]%ofthegrossamountpayable;or

(b) inthecaseofsaleofgoods,

(i) in case of a company, 4% of the gross amount

payable, if the company is a filer and 6% if the
companyisanonfiler;and

(ii) in any other case, 4.5% of the gross amount

payable, if the person is a filer and 6. 5% if the
personisanonfiler;

(2)Therateoftaxtobedeductedfromapaymentreferredtoinclause(b)of
subsection(1)ofsection153shallbe

(i) in the case of transport services, two per cent of

thegrossamountpayable;or

(ii) inthecaseofrenderingoforprovidingofservices,

(a)incaseofacompany,8%ofthegrossamount
payable,ifthecompanyisafilerand12%if
thecompanyisanonfiler;and
(b) in any other case, 10% of the gross amount
payable,ifthepersonisafilerand15%ifthe
personisanonfiler;

(3) Therateoftaxtobedeductedfromapaymentreferredtoinclause
(c)ofsubsection(1)ofsection153shallbe[]

(a) incaseofacompany,8%ofthegrossamountpayable,ifthecompany
isafilerand12%ifthecompanyisanonfiler;and

(b) inanyothercase,10%ofthegrossamountpayable,ifthepersonisa
filerand15%ifthepersonisanonfiler;

83
INCOMETAX

DivisionVIA
PetroleumProducts

The increased rate of tax for deduction on payment to nonfilers has been
proposed to be introduced in section 156A as well, the amended rate is
prescribedasunder;

Rateofcollectionoftaxundersection156Ashallbe[12%]oftheamountof
paymentforfilersand15%fornonfilers.

PartIV
DivisionII
Brokerage&Commission
Thetaxdeductionathigherratefornonfilershasalsobeenproposedtobe
introducedinsection233,theamendedratesareasfollows;

Therateofcollectionundersubsection(1)ofsection233shallbe,
(i) incaseoffilers,
a) 10% of the amount of the payment, incase of advertising
agents;and

b) 12%oftheamountofpaymentinallothercases;and

(ii) incaseofnonfilers,15%oftheamountofpayment.;

DivisionIII
TaxonMotorVehicles

The increased rate of tax for deduction on payment to nonfilers has been
proposed to be introduced in section 234 as well, the amended rate is
prescribedasunder;

Ratesofcollectionoftaxundersection234,

(i) Incaseofgoodstransportvehicles,taxoftworupeesand
fiftypaisaperkilogramoftheladenweightshallbecharged
forfilerandfourrupeesperkilogramoftheladenweightfor
nonfiler.

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 INCOMETAX

[(1A)Inthecaseofgoodstransportvehicleswithladenweightof8120
kilogramsormore,advancetaxafteraperiodoftenyearsfrom
thedateoffirstregistrationofvehicleinPakistanshallbe
collectedattherateoftwelvehundredrupeesperannum;]

(2) In the case of passenger transport vehicles plying for hire with
registeredseatingcapacityof;
Rsperseatperannum
S.No Capacity
Filer NonFiler
(a) Four or more persons but 50 100
lessthantenpersons.
(b) Ten or more persons but 100 200
lessthantwentypersons.
(c) Twentypersonsor more. 300 500

(3)Incaseofotherprivatemotorvehiclesshallbeasfollowing,

S.No. Enginecapacity forfilers fornonfiler

(1) (2) (3) (4)
1. upto1000cc Rs.800 Rs.1,200
2. 1001ccto1199cc Rs.1,500 Rs.4,000
3. 1200ccto1299cc Rs.1,750 Rs.5,000
4. 1300ccto1499cc Rs.2,500 Rs.7,500
5. 1500ccto1599cc Rs.3,750 Rs.12,000
6. 1600ccto1999cc Rs.4,500 Rs.15,000
7. 2000cc&above Rs.10,000 Rs.30,000

DivisionV
TelephoneUsers
Theratesoftaxdeductionundersection236areproposedtobeamendedas
under;
Ratesofcollectionoftaxundersection236,

(a) inthecaseofatelephonesubscriber(other 10% of the

than mobile phone subscriber) where the exceeding amount
amountofmonthlybillexceedsRs.1000. ofbill.

(b) inthecaseofsubscriberofinternet,mobile 14%oftheamount

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INCOMETAX

telephone and prepaid internet or ofbillorsalesprice

telephonecard of internet pre
paid card or
prepaid telephone
card or sale of
units through any
electronic medium
orwhateverform
DivisionVI
Cashwithdrawalfromabank
Therateoftaxdeductionundersection231Aareproposedtobeamendedas
under;

TheRateoftaxtobedeductedundersection231Ashallbe0.3%ofthecash
amount withdrawn for filers and 0.6% of the cash amount withdrawn, for
nonfilers.

DIVISIONVIA
AdvancetaxonTransactionsinBank
Therateoftaxdeductionundersection231Aareproposedtobeamendedas
under;

The rate of tax to be deducted under section 231AA shall be at the rate of
0.3%ofthetransactionforfilersand0.6%fornonfilers.

DIVISIONVII
AdvanceTaxonPurchase,RegistrationandTransferofMotorVehicles

(1) The rate of tax under subsections (1) and (3) of section 231B
shallbeasfollows:

S.No. Enginecapacity Forfilers Taxfornonfiler
(1) (2) (3) (4)
1. upto850cc Rs.10,000 Rs.10,000
2. 851ccto1000cc Rs.20,000 Rs.25,000
3. 1001ccto1300cc Rs.30,000 Rs.40,000
4. 1301ccto1600cc Rs.50,000 Rs.100,000
5. 1601ccto1800cc Rs.75,000 Rs.150,000

86
 INCOMETAX

6. 1801ccto2000cc Rs.100,000 Rs.200,000

7. 2001ccto2500cc Rs.150,000 Rs.300,000
8. 2501ccto3000cc Rs.200,000 Rs.400,000
9. Above3000cc Rs.250,000 Rs.450,000

(2)Therateoftaxundersubsection(2)ofsection231Bshallbeasfollows:

S.No. Enginecapacity Forfilers Taxfornonfiler

(1) (2) (3) (4)
1. upto850cc Rs.5,000
2. 851ccto1000cc Rs.5,000 Rs.15,000
3. 1001ccto1300cc Rs.7,500 Rs.25,000
4. 1301ccto1600cc Rs.12,500 Rs.65,000
5. 1601ccto1800cc Rs.18,750 Rs.100,000
6. 1801ccto2000cc Rs.25,000 Rs.135,000
7. 2001ccto2500cc Rs.37,500 Rs.200,000
8. 2501ccto3000cc Rs.50,000 Rs.270,000
9. Above3000cc Rs.62,500 Rs.300,000

Provided that the rate of tax to be collected shall be reduced by 10% each
yearfromthedateoffirstregistrationinPakistan.

DIVISIONXIV
AdvanceTaxonSaletoDistributors,DealersorWholesalers

Therateoftaxdeductionundersection236Gareproposedtobeamendedas
under;
CategoryofSale RateofTax

Filer NonFiler
Fertilizers 0.7% 1.4%
OtherthanFertilizers 0.1% 0.2%

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INCOMETAX

DIVISIONXIX
AdvanceTaxonDomesticElectricityConsumption
Therateoftaxdeductionundersection235Aareproposedtobeamendedas
under;
Therateoftaxtobecollectedundersection235Ashallbe
(i) 7.5%iftheamountofmonthlybillisRs.75.000ormore;and
(ii) 0%theamountofmonthlybillislessthanRs.75,000.

DIVISIONXX
AdvanceTaxonInternationalAirTickets
Therateoftaxdeductionundersection235Aareproposedtobeamendedas
under;

Therateoftaxtobecollectedundersection236Lshallbe:
S.No. TypeofTicket Rate
(1) (2) (3)
1. First/ExecutiveClass 16,000perperson
2. OthersexcludingEconomy 12,000perperson
3. Economy 0

DIVISIONXXI
AdvanceTaxonBankingTransactionsOtherwiseThanThroughCash
Anewdivisionprescribingrateofcollectionoftaxundersection236Pis
proposedtobeinsertedasunder;

Therateoftaxtobecollectedundersection236Pshallbe0.6%ofthe
transactionfornonfilers.

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 INCOMETAX

DIVISIONXXII
RateofCollectionofTaxbyPakistanMercantileExchangeLimited

Anewdivisionprescribingrateofcollectionoftaxundersection236Tis
proposedtobeinsertedasunder;

Therateoftaxtobecollectedundersection236Tshallbeshallbe
asfollows:
(a)incaseofsaleorpurchaseoffuturecommodity
contractasperclause(a)and(b)ofsubsection(1)of
section236Tshallbe0.1%.

(b)incaseofcommissiononsaleorpurchaseoffuture
commoditycontractasperclause(c)and(d)ofsubsection
(1)ofsection236Tshallbe0.1%.

DIVISIONXXIII
Paymenttoaresidentpersonforrighttousemachineryandequipment

Anewdivisionprescribingrateofcollectionoftaxundersection236Qis
proposedtobeinsertedasunder;

Rateofcollectionoftaxundersection236Qshallbe10
percentoftheamountofpayment.

DIVISIONXXIV
Collectionofadvancetaxoneducationrelatedexpensesremittedabroad

Anewdivisionprescribingrateofcollectionoftaxundersection236Qis
proposedtobeinsertedasunder;

Rateofcollectionoftaxundersection236Rshallbe5percentoftheamount
oftotaleducationrelatedexpenses.

SECONDSCHEDULE
EXEMPTIONSANDTAXCONCESSTIONS
PARTI
ExemptionsfromTotalIncome

89
INCOMETAX

I. Exemptionsprovidedthroughfollowingclausesareproposedtobe
withdrawn;

(20) Anyincomereceivedbyapersonfromanannuityissuedunderthe
Pakistan Postal Annuity Certificate Scheme on or after the 27th July, 1977,
notexceedingtenthousandrupeesperannum.

(113)Anyincomechargeableunderthehead"capitalgains",beingincome
fromthesaleofsharesofapubliccompanysetupinanySpecialIndustrial
Zone referred to in clause (126)of this Schedule, derived by a person for a
period of five years from the date of commencement of its commercial
production:
Providedthattheexemptionunderthisclauseshallnotbeavailable
toapersonfromthesaleofsharesofsuchcompanieswhicharenot
eligibleforexemptionfromtaxunderclause(126).

(126F) Profits and gains derived by a taxpayer located in the most affected
andmoderatelyaffectedareasofKhyberPakhtunkhwa,FATAandPATAfora
periodofthreeyearsstartingfromthetaxyear2010:

Provided that this concession shall not be available to the

manufacturers and suppliers of cement, sugar, beverages and
cigarettes.

II. Followingnewexemptionsareproposedtobeallowedbyinserting
clausesmentionedbelow;
(61)Any amountpaidas donationto the following institution, foundations,
societies,boards,trustsandfunds,namely:
(xiv)TheIndusHospital,Karachi.(newsubclauseinserted).

(66)Anyincomederivedby
(xxxiii)TheIndusHospital,Karachi.(newsubclauseinserted).

(126I)Profitsandgainsderivedbyataxpayer,fromanindustrialundertaking
set up by 31st day of December, 2016 and engaged in the manufacture of
plant,machinery,equipmentanditemswithdedicateduse(nomultipleuses)
for generation of renewable energy from sources like solar and wind, for a
periodoffiveyearsbeginningfromfirstdayofJuly,2015.

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 INCOMETAX

(126J)Profitsandgainsderivedbyataxpayer,fromanindustrialundertaking
setupbetween1stdayofJuly,2015and30thdayofJune,2016engagedin
operating warehousing or cold chain facilities for storage of agriculture
produceforaperiodofthreeyearsbeginningwiththemonthinwhichthe
industrial undertaking is set up or commercial operations are commenced,
whicheverislater.

(126K)Profitsandgainsderivedbyataxpayer,fromanindustrialundertaking
setupbetween1stdayofJuly,2015and31stdayofDecember,2016whichis
engaged in operating halal meat production and has obtained halal
certification,foraperiodoffouryearsbeginningwiththemonthinwhichthe
industrial undertaking is set up or commercial production is commenced,
whicheverislater.

(126L)Profitsandgainsderivedbyataxpayer,fromamanufacturingunitset
up in KhyberPukhtunkhwa Province between 1st day of July, 2015 and 30th
day of June, 2018 for a period of five years beginning with the month in
which the industrial undertaking is set up or commercial production is
commenced,whicheverislater:
Providedthatexemptionunderthisclauseshallbeadmissiblewhere
(a) themanufacturingunitissetupbetweenthefirstdayofJuly,
2015and30thdayofJune,2018,bothdaysinclusive;and
(b) themanufacturingunitisnotestablishedbythesplittingup
or reconstruction or reconstitution of an undertaking
already in existence or by transfer of machinery or plant
from an undertaking established in Pakistan at any time
before1stJuly2015.
(126M)Profitsandgainsderivedbyataxpayerfromatransmissionline
projectsetupinPakistanonorafterthe1stdayofJuly,2015.Theexemption
underthisclauseshallapplytosuchprojectwhichis

(a) owned and managed by a company formed for operating the
said project and registered under the Companies Ordinance, 1984
(XLVIIof1984),andhavingitsregisteredofficeinPakistan;

(b) not formed by the splitting up, or the reconstruction or

reconstitution,ofabusinessalreadyinexistenceorbytransfertoa

91
INCOMETAX

new business of any machinery or plant used in a business which

was being carried on in Pakistan at any time before the
commencementofthenewbusiness;and(c)ownedbyacompany
fifty per cent of whose shares are not held by t he Federal
Government or Provincial Government or a Local Government or
whichisnotcontrolledbytheFederalGovernmentoraProvincial
GovernmentoraLocalGovernment:

Provided that the exemption under this clause shall not
apply to projects set up on or after the thirtieth day of
June,2018.

(141) Profit and gains derived by LNG Terminal Operators and Terminal
Ownersforaperiodoffiveyearsbeginningfromthedatewhencommercial
operationsarecommenced.

(142) Income from social security contributions derived by Baluchistan

Employees Social Security Institution,Employees Social Security Institution
Khyber Pakhtunkhwa, Punjab Employees Social Security Institution and
SindhEmployeesSocialSecurityInstitution.

Explanation: For the removal of doubt, it is clarified that all
incomes other than social security contributions shall not be
exempt.
Inclause(99A)followingprovisoisproposedtobeadded;

Provided that profit and gains on sale of immovable property to a

Developmental REIT Scheme with the object of development and
construction of residential buildings shall be exempt upto thirtieth
dayofJune,2020.

III. Clause(103A)hasbeenproposedtobeamendedasunder;

(103A) Any income derived from intercorporate dividend within the group
companies entitled to group taxation under section 59AA or section 59B
subjecttotheconditionthatreturnofthegrouphasbeenfiledforthetax
year.

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 INCOMETAX

IV. Clause(126A)hasbeenproposedtobeamendedasunder;

(126A) Income derived by China Overseas Ports Holding Company Limited

fromGawadarPortoperationsforaperiodoftwentythreeyears,witheffect
fromthesixthdayofFebruary,2007.

PARTII
REDUCTIONSINTAXRATES

I. Concessions of reduced tax rates provided under following clauses

are proposed to be withdrawn however the subject matter dealt
therein is now made part of the statute by inserting new sections
(7A,148A);

(13C) In respect of manufacturers of cooking oil or vegetable ghee or

both,therateofincometaxonpurchaseoflocallyproducededibleoilshall
be2%ofthepurchaseprice.

(14) In case of owners of [goods transport vehicles], the rate of tax as

specified in clause (i) of Division III of Part IV of First Schedule shall be
reducedtoRs.2perkilogramoftheladenweight.

(14A) Incaseofpassengertransportvehicles,therateoftaxasspecifiedin
subclause(c)ofclause(2)inDivisionIIIofPartIVoftheFirstScheduleshall
bereducedto250rupeesperseatperannum.

(21) In the case of any resident person engaged in the business of

shipping,apresumptiveincometaxshallbechargedinthefollowingmanner,
namely:
(a) ships and all floating crafts including tugs, dredgers, survey
vessels and other specialized craft purchased or bareboat
chartered and flying Pakistan flag shall pay tonnage tax of an
amount equivalent to one US $ per gross registered tonnage
perannum;and
(b) ships, vessels and all floating crafts including tugs, dredgers,
survey vessels and other specialized craft not registered in
Pakistan and hired under any charter other than bareboat
chartershallpaytonnagetaxofanamountequivalenttofifteen

93
INCOMETAX

US cents per tonne of gross registered tonnage per chartered

voyage provided that such tax shall not exceed one US $ per
tonneofgrossregisteredtonnageperannum:

Provided that the reduction under this clause shall not be
availableafterthe30thJune,2020.

II. Followingnewclausehasbeenproposedtobeaddedasunder;

(28B) The rate of tax shall be 0.15% under section 231A on cash
withdrawal by an exchange company, duly licensed and authorized by the
State Bank of Pakistan, exclusively dedicated for its authorized business
relatedtransactions,subjecttotheconditionthatacertificateissuedbythe
concerned Commissioner Inland Revenue for a financial year mentioning
details and particulars of its Bank Account being used entirely for business
transactionsisprovided.
PARTIII
REDUCTIONINTAXLIABILITY
I. Followingclauseisproposedtobeomitted;

(16) Theminimumpenaltyforfailuretofurnishstatementundersection
115, 165 or 165A as mentioned in column (3) against serial No. (1A) in the
Tablegiveninsubsection(1)ofsection182shallbereducedtotenthousand
rupees.
PARTIV
EXEMPTIONSFROMSPECIFICPROVISIONS
I. Exemption provided from payment of minimum tax under
section 113 to KAPCO under clause (11A) and coal mining
projectssupplyingcoalexclusivelytopowergenerationprojects
isproposedtobewithdrawn.
II. Exemption provided from payment of minimum tax under
section 113 under clause (11A) has been proposed to be
extended to following persons by inserting new subclauses as
under.

(xviii) companies, qualifying for exemption under clause (132B) of PartI of

this Schedule, in respect of receipts from a coal mining project in Sindh,
supplyingcoalexclusivelytopowergenerationprojects.

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 INCOMETAX

(xix)LNGTerminalOperatorsandLNGTerminalOwners.

(xx)taxpayerslocatedinthemostaffectedandmoderatelyaffectedareasof
KhyberPakhtunkhwa,FATAandPATAfortaxyear2010,2011and2012

excluding manufacturers and suppliers of cement, sugar, beverages and

cigarettes.

(xxi)RiceMillsfortheTaxYear2015.

(xxii)taxpayersqualifyingforexemptionunderclauses(126I)ofPartIofthis
Schedule in respect of income from manufacture of equipment with
dedicateduseforgenerationofrenewableenergy.

(xxiii) taxpayers qualifying for exemption under clauses (126J) of PartI of

thisScheduleinrespectofincomefromoperatingwarehousingorcoldchain
facilitiesforstorageofagricultureproduce.

(xxiv)taxpayersqualifyingforexemptionunderclauses(126K)ofPartIofthe
is Schedule in respect of income from operating halal meat production,
duringtheperiodmentionedinclause(126K).

(xxv)taxpayersqualifyingforexemptionunderclauses(126L)ofPartIofthis
Schedule in respect of income from a manufacturing unit set up in Khyber
PukhtunkhwaProvince between1st day ofJuly,2015 and 30th day of June,
2018.

III. Followingclauseshavebeenproposedtobeomitted;
(16A) The provisions of section 153(1)(b) shall not be applicable to the
persons making payments to electronic and print media in respect of the
advertisingservices.
(56H) Provisions of section 148 shall not apply in respect of potatoes
between 5th of May, 2014 and 15th of November, 2014 provided that such
import shall not exceed 300,000 metric tons in aggregate during the said
period.

(59(iii)) toPakrupeeaccountsorcertificatesreferredtoinclause(83)of
PartIofthisSchedule.

95
INCOMETAX

(61A) Theprovisionsofsection231Ashallnotapplyinrespectofanycash
withdrawalbyexchangecompaniesdulylicensedandauthorizedbytheState
BankofPakistanontheirbankaccountexclusivelydedicatedfortheir
authorizedbusinessrelatedtransaction:
Providedthat.
(a) exemption under this clause shall be available to exchange
companies who are issued exemption certificate by the
concerned Commissioner Inland Revenue for a financial year;
and
(b) the Commissioner shall issue the exemption certificate after
obtainingrelevantdetailsandparticularsoftheBankAccounts.

(72A) The provisions of clause (l) and section 21, sections 113 and 152
shallnotapplyincaseofaHajjGroupOperatorinrespectofHajjoperations
providedthatthetaxhasbeenpaidattherateofRs.3,500perHajjiforthe
tax year 2013 and Rs.5,000 per Hajji for the tax year 2014 in respect of
incomefromHajjoperations.

(79) Theprovisionsofclause(b)ofprovisotosubsection(3)ofsection
153 shall not be applicable to the tax withheld on payments received by a
companyforprovidingorrenderingofservices.

(83) Theprovisionofsubsection(4)ofsection116shallnotapplyforthe
tax year 2013 to a person other than a company or a member of an
associationofpersonfallingunderfinaltaxregime(FTR)andhaspaidtaxless
thanthirtyfivethousandrupees.

(89) TheProvisionsofsection236Ishallnotapplyto
(a) theFederalGovernmentoraProvincialGovernment;
(b) an individual entitled to privileges under the United
Nations(PrivilegesandImmunities)Act,1948(XXof1948);
(c) aforeigndiplomatoradiplomaticmissioninPakistan;or
(d) apersonwhoisanonresidentand

(i) furnishes copy of passport as an evidence to the

educational institution that during previous tax
year, his stay in Pakistan was less than one
hundredeightythreedays;

96
 INCOMETAX

(ii) furnishes a certificate that he has no Pakistan

sourceincome;and
(iii) fee is remitted directly from abroad through
normal banking channels to the bank account of
theeducationalinstitution.
(90) Theprovisionsofsection236Dshallnotapplyto
(a) theFederalGovernmentoraProvincialGovernment;
(b) an individual entitled to privileges under the United
Nations(PrivilegesandImmunities)Act,1948(XXof1948);
or
(c) aforeigndiplomatordiplomaticmissioninPakistan.

(iv).Followingnewclausesareproposedtobeinserted;
(11D) The provisions of section 113C shall not apply to LNG Terminal
OperatorsandLNGTerminalOwners.
(91) Theprovisionsofsection148shallnotapplyto
(i)Tillageandseedbedpreparationequipmentasspecifiedbelow

Equipment PCTCode
(i)Rotavator 8432.8010
(ii)Cultivator 8432.2910
(iii)Ridger 8432.8090
(iv)Subsoiler 8432.3090
(v)Rotaryslasher 8432.8090
(vi)Chiselplow 8432.1010
(vii)Ditcher 8432.1090
(viii)Borderdisc 8432.2990
(ix)Discharrow 8432.2100
(x)Barharrow 8432.2990
(xi)Mouldboardplow 8432.1090
(xii)Tractorrearorfrontblade 8430.6900
(XIII)Landlevellerorlandplaner 8430.6900
(xiv)Rotarytiller 8432.8090
(xv)Discplow 8432.1090
(xvi)Soilscrapper 8432.8090
(xvii)K.R.Karundi 8432.8090
(xviii)Tractormountedtrancher 8701.9020
(xix)Landleveler 8430.6900

97
INCOMETAX

(92)Theprovisionsofsection148shallnotapplyto.
PCTheadings PCTCodes
Aircraft,whether 8802.2000,
importedoracquiredon 8802.3000,
wetordrylease 8802.4000
Maintenancekitsforuse
intraineraircraftsof
PCTheadings8802.2000and
8802.3000
Sparepartsforusein Respective
aircrafts,traineraircrafts headings
orsimulators
Machinery,equipment Respective
andtoolsforsettingup headings
maintenance,repairand
overhaul(MRO)
workshopbyMRO
companyrecognizedby
AviationDivision
Operationaltools, Respective
machinery,equipment headings
andfurnitureandfixtures
ononetimebasisfor
settingupGreenfield
airportsbyacompany
authorizedbyAviation
Division
Aviationsimulators Respective
importedbyairline headings
companyrecognizedby
AviationDivision

(93) The provisions of subsection (1) of section 154 shall not apply to
taxpayers operating halal meat production and qualifying for exemption
under clause (126K) of PartI of this Schedule for the period specified in
clause(126K).;
IV. Clause(56(i))hasbeenproposedtobeamendedasunder;

98
 INCOMETAX

(56(i)) goodsclassifiedunderPakistanCustomsTarifffallingunderChapters
86and99exceptPCTheading9918.

(56(ia)) Petroleum oils and oils obtained from bituminous minerals crude
(PCTCode2709.0000),Furnaceoil(PCTCode2710.1941),Highspeeddiesel
oil (PCT) Code 2710.1931), Motor spirit (PCT Code 2710.1210), J.P.1 (PCT
Code2710.1912),baseoilforlubricatingoil(PCTCode2710.1993)imported
by Pakistan State Oil Company Limited, Shell Pakistan Limited, Attock
Petroleum Limited, Byco Petroleum Pakistan Limited, Admore Gas Private
Limited, Chevron Pakistan Limited, TotalPARCO Pakistan(Private) Limited,
HascolPetroleumLimited,andoilrefineries.

V. Clause (86) has been proposed to be amended to extend the

amnesty provided therein from application of section 111 for
perioduptoJune30,2017.

FOURTHSCHEDULE
Rulesforthecomputationoftheprofitsandgainsofinsurancebusiness

I. Rule(6A)hasbeenproposedtobeomittedbeingredundant.
II. Rule(6B)hasbeenproposedtobesubstitutedprescribing
amendedrateofcapitalgaintaxasunder;
S.No. TaxYear Where Whereholding
holding periodof
periodof securitiesis
securities morethansix
isless monthsbut
thansix lessthan
months twelvemonths
(1) (2) (3) (4)
1 Whereholdingperiodofasecurity 12.5% 15%
islessthantwelvemonths
2 Whereholdingperiodofasecurity 10.0% 12.5%
istwelvemonthsormorebutless
thantwentyfourmonths
3 Whereholdingperiodofasecurity 0% 7.5%
istwentyfourmonthsormorebut
lessthanfouryears

99
INCOMETAX

Thefollowingnewsubrulehasbeenproposedtobeinsertedclarifyingthat
supertaxisalsochargeableoninsurancebusiness;

6D.Theprovisionsofsection4Bshallapplytothetaxpayersunder
thisscheduleandtaxedattheratesspecifiedinDivisionIIAof
PartIoftheFirstSchedule.;

THEFIFTHSCHEDULE
PartI&II

Thefollowingnewrulehasbeenproposedtobeinsertedclarifyingthatsuper
taxundersection4Bisalsoapplicableonpetroleumbusiness;

4AA.Theprovisionsofsection4Bshallapplytothetaxpayersunder
thisPartandtaxedattheratesspecifiedinDivisionIIAof2A.The
provisionsofsection4BshallapplytothetaxpayersunderthisPart
andtaxedattheratesspecifiedinDivisionIIAofPartIoftheFirst
SchedulePart.;

2A.Theprovisionsofsection4Bshallapplytothetaxpayersunder
thisPartandtaxedattheratesspecifiedinDivisionIIAofPartIof
theFirstSchedule.

THESEVENTHSCHEDULE
PartI

RULESFORTHECOMPUTATIONOFTHEPROFITSANDGAINSOFABANKING
COMPANYANDTAXPAYABLETHEREON

The Rule6 is proposed to be amended, Rule6A and 6B are to be

omitted and a new Rule7B is introduced consequent to these
proposedamendmentsthecapitalgainanddividendincomeofthe
bankingcompanieswillbetaxableatnormalrateoftaxapplicable
tosuchcompaniesunderFirstschedule.TheproposedRule7bread
asunder;

100
 INCOMETAX

(7B)Fromtaxyear2015andonwards,incomefromDividendand
income from Capital Gains shall be taxed at the rate specified in
DivisionIIofPartIofFirstSchedule.

Thefollowingnewrulehasbeenproposedtobeinsertedclarifyingthatsuper
taxundersection4Bisalsoapplicableonbankingcompanies;

(7C)Fortaxyear2015,theprovisionsofsection4Bshallapplyto
banking companies and shall be taxed at the rate specified in
DivisionIIAofPartIofFirstSchedule.;and

THEEIGHTHSCHEDULE

Thefollowingnewrulehasbeenproposedtobeinsertedclarifyingthatsuper
taxundersection4Bisequallyapplicableonpersonearningtaxableincome
underEighthScheduleaswell;

(8)Theprovisionsofsection4Bshallapplytothetaxpayersunder
thisscheduleandtaxedattheratesspecifiedinDivisionIIAofPart
IoftheFirstSchedule.;

101
SALESTAX

SALESTAX

TheAmendmentsareapplicablefromJuly1,2015unlessspecifiedotherwise.

SECTION

PROPOSEDAMENDMENT
PRESENTPOSITION
THROUGH
ASON30THJUNE,2015
FINANCEBILL2015

AppellateTribunal The new clause(1) is proposed to

NonExistent beaddedasunder;
active taxpayer means a
registered person who does not
fall in any of the following
categoriesnamely;
(a) Who is blacklisted or whose
registration is suspended or is
blockedintermsofsection21;
(b) Who fails to file the return
Section2(1)

under section 26 by the due

date for two consecutive tax
periods;
(c) Who fails to file income tax
return under section 114 or
statementundersection115of
the Income Tax Ordinance,
2001bytheduedateand;
(d) Who fails to file two
consecutive monthly or an
annual withholding tax
statementundersection165of
the Income Tax Ordinance,
2001.
Appellatetribunal Clause 1(A) has been substituted
Section2(1)

Appellate Tribunal means the fromclause1.

Appellate Tribunal Inland Revenue
established under section 130 of
theIncomeTaxOrdinance,2001.

102

Cottageindustry
Cottage industry means a
manufacturer whose annual
turnover from taxable supplies
Section2(5AB)
made any tax period during the
last 12 months ending any tax
period does not exceed Rs.5
million or whose annual utility
(electricity, gas and telephone)
bills during the last 12 months
ending tax period do not exceed
sevenhundredthousandrupees.
Retailer
Retailer means a person supplying
goods to general public for the
purposeofconsumption.
Provided that any person who
Section2(28)
combines the business of import
and retail or manufacture or
production with retail shall notify
andadvertisewholesalepricesand
retailpricesseparatelyanddeclare
the address of retail outlets, and
his total turnover per annum shall
be taken into account for the
purpose of registration under
section14.
103
SALESTAX
The limit of utility bills has been
proposed to be enhanced from
sevenhundredthousandrupeesto
eighthundredrupees.
Registration of retailer has been
proposed to make compulsory
without any threshold limit by
making amendment in clause (28)
whichisasunder:
Retailer means a person supplying
goods to general public for the
purpose ofconsumption. Provided
thatanypersonwhocombinesthe
business of import and retail or
manufacture or production with
retail shall notify and advertise
wholesale prices and retail prices
separatelyanddeclaretheaddress
ofretailoutlets.
SALESTAX

Supply Through this amendment toll

NonExistent manufacturing activity has also
been brought to sale tax in
addition to Sindh Sales Tax on
ServicesAct,2011thedefinitionof
Section2(33)

supplyisproposedtobeenhanced
by adding new clause (d) which
readsasunder:

(d) in case of manufacture of
goods belonging to another
person, the transfer or delivery of
such goods to the owner or to a
personnominatedbyhim.
Valueofsupply The definition of whistleblower is
Section2(46)

NonExistent proposed to be added by inserting

clause46(a)whichisasunder:
(46A) whistleblower means
whistleblowerasdefinedinsection
72DoftheSalesTaxAct,1990
Scopeoftax The rate of further tax has been
Subject to provision of subsection proposed to enhance from 1% to
6 of section 8 or any notification 2%.
Section3(1A)

issued there under, where taxable

suppliesaremadetoapersonwho
has not obtained registration
number, there shall be levied and
paidafurthertaxattherateof1%
ofthevalueinadditiontotherate
specifiedinsubsection(1),(1B),(2),
(5)and(6).

104

Scopeoftax:
The Federal Government may,
subject to such conditions and
restrictions as it may impose, by
notification in the official Gazette,
declare that in respect of any
Section3(2)(b)
goods or class of goods imported
into or produced 2 or any taxable
supplies made by a registered
person or a class of registered
persons, the tax shall be charged,
collectedandpaidinsuchmanner
andatsuchhigherorlowerrateor
rates as may be specified in the
saidnotification.
105
SALESTAX
The power of Federal Government
hasbeenproposedtobeenhanced
in respect of charging and
collecting sales tax irrespective of
registration of a person and said
power can only be exercised on
taxable goods by substituting
clause(b)whichisasunder:
(b) the Federal Government may,
subject to such conditions and
restrictions as it may impose, by
notificationintheofficialGazette,
declare that in respect of any
taxable goods, the tax shall be
charged,collectedandpaidinsuch
manner and at such higher or
lower rate or rates as may be
specifiedinthesaidnotification.;
SALESTAX
Timeandmannerofpayment:
The tax in respect of goods
imported into Pakistan shall be
charged and paid in the same
mannerandatthesametimeasif
it were a duty of customspayable
undertheCustomsAct,1969[and
the provisions of the said Act
Section6(1)
[including section 31A thereof],
shall, so far as they relate to
collection, payment and
enforcement of tax under this Act
on such goods where no specific
provisionexistsinthisAct,apply,].
Determinationoftaxliability:
In case of goods imported into
Pakistan, he holds bill of entry or
goodsdeclarationinhisnameand
Section7(2)(ii)
showing his sales tax registration
number, duly cleared by the
customs under section 79 or
section 104 of the Customs Act,
1969(IVof1969);
106
The procedure for recovery is
applicableunderCustomAct,1969
is proposed to be applied under
SalesTaxAct,1990onsuchgoods
wherenospecificprovisionexistin
the Sales Tax Act, 1990 by
amending section 6(1) which is as
under:
The tax in respect of goods
imported into Pakistan shall be
charged and paid in the same
mannerandatthesametimeasif
it were a duty of customs payable
undertheCustomsAct,1969[and
the provisions of the said Act
[including section 31A thereof],
shall, so far as they relate to
collection, payment and
enforcement including recovery
oftaxunderthisActonsuchgoods
where no specific provision exists
inthisAct,apply,].
Procedure as envisaged under
section81oftheCustomAct,1969
has been proposed to be applied
on imported goods in respect of
claiming input tax by amending
Section7(2)(ii)whichisasunder:
In case of goods imported into
Pakistan, he holds bill of entry or
goodsdeclarationinhisnameand
showing his sales tax registration
number, duly cleared by the
customsundersection79,section
81 or section 104 of the Customs
Act,1969(IVof1969);

Taxcreditnotallowed:
Goods used in, or permanently
attachedto,immoveableproperty,
such as building and construction
materials, paints, electrical and
sanitary fittings, pipes, wires and
Section8(1)(h)
cables, but excluding such goods
acquired for sale or resale or for
direct use in the production or
manufactureoftaxablegoods;
Taxcreditnotallowed
NonExistent
Section8(1)(j)(k)(l)
107
SALESTAX
Sales tax paid on goods used in
construction of pre fabricated
buildings has been proposed to be
eligible for input tax claim by
amending Section 8(1)(h) which is
asunder:
Goods used in, or permanently
attachedto,immoveableproperty,
such as building and construction
materials, paints, electrical and
sanitary fittings, pipes, wires and
cables, but excluding, prefabri
cated buildings and such goods
acquired for sale or resale or for
direct use in the production or
manufactureoftaxablegoods.
It has been proposed by inserting
new clauses (j)(k)(l) to disallow
inputtaxpaidoncertaingoodsand
serviceswhichreadsasunder:
(j) services in respect of which
input tax adjustment is barred
undertherespectiveprovincial
salestaxlaw;
(k) import or purchase of
agricultural machinery or
equipment subject to sales tax
attherateof7%underEighth
ScheduletothisAct;and
(l)fromthedatetobenotifiedby
the Board, such goods and
services which, at the time of
filing of return by the buyer,
havenotbeendeclaredbythe
supplierinhisreturn.;
SALESTAX
Joint and several liability of
registeredpersonsinsupplychain
wheretaxunpaid:
Where a registered person
receiving a taxable supply from
anotherregisteredpersonisinthe
knowledge or has reasonable
groundstosuspectthatsomeorall
of the tax payable in respect of
that supply or any previous or
subsequent supply of the goods
supplied would go unpaid, such
person as well as the person
Section8A
makingthetaxablesupplyshallbe
jointly and severally liable for
paymentofsuchunpaidamountof
tax provided that the Board may
by notification in the official
gazette,exemptanytransactionor
transactionsfromtheprovisionsof
thissection.
108
It has been proposed that burden
of prove for not depositing sales
tax by the supplier shall be on the
department by making amend
ment in section 8A which reads as
under:
Joint and several liability of
registeredpersonsinsupplychain
wheretaxunpaid.
Where a registered person
receiving a taxable supply from
anotherregisteredpersonisinthe
knowledge or has reasonable
groundstosuspectthatsomeorall
of the tax payable in respect of
that supply or any previous or
subsequent supply of the goods
supplied would go unpaid, of
which the burden to prove shall
be on the department such
person as well as the person
makingthetaxablesupplyshallbe
jointly and severally liable for
paymentofsuchunpaidamountof
tax provided that the Board may
by notification in the official
gazette,exemptanytransactionor
transactionsfromtheprovisionsof
thissection.

Exemption
The Federal Government may, by
notification in the official Gazette,
exemptanytaxablesuppliesmade
or[importorsupplyof]anygoods
or class of goods, from the whole
or any part of the tax chargeable
under this Act, subject to the
conditions and limitations
specifiedtherein;
Section13(2)(a)
109
SALESTAX
The power of Federal Government
to exempt a supply has been
proposed to be dependent on the
approvalofEconomicCoordination
Committee subject to certain
conditions by making amendment
in Section 13(2)(a) which reads as
under:
The Federal Government may,
pursuant to the approval of the
EconomicCoordinationCommittee
of Cabinet, whenever circumst
ances exist to take immediate
actionforthepurposesofnational
security, natural disaster, national
food security in emergency
situations, protection of national
economic interests in situations
arisingoutofabnormalfluctuation
in international commodity prices,
removal of anomalies in taxes,
development of backward areas
and implementation of bilateral
and multilateral agreements by
notification in the official Gazette,
exemptanytaxablesuppliesmade
or[importorsupplyof]anygoods
or class of goods, from the whole
or any part of the tax chargeable
under this Act, subject to the
conditions and limitations
specifiedtherein;
SALESTAX
Exemption:
TheBoardmay,byspecialorderin
Section13(2)(b)
each case stating the reasons,
exempt any [import or supply of
goodsofsuchdescriptionorclass,
as may be specified] from the
payment of the whole or any part
of the tax chargeable under this
Act.
The exemption from tax charge
ableundersubsection(2)maybe
Section13(3)
allowed from any previous date
specified in the notification issued
under clause (a) or, as the case
may be, order made under clause
(b)ofthatsubsection.]
Exemption
NonExistent
Section13(6)(7)
110
Clause (b) of subsection (2) of
section13hasbeenproposedtobe
omitted.
Thepoweroftheboardformaking
order to exempt any supply or
import of goods by special order
has been proposed to be
withdrawn.
It has been proposed to place all
the notifications issued under
section 13 of the Sales Tax Act,
1990beforetheNationalAssembly
and any notification in respect of
exemption issued under sub
section 2 if not already rescinded
shallstandrescindedattheendof
the financial year in which said
notificationwasissuedbyinserting
new subsection (6) and (7) which
readsasunder:
(6) The Federal Government shall
place before the National
Assembly all notifications issued
under this section in a financial
year.

Exemption
Section13(6)(7)
NonExistent
Registration
UnderthisAct,registrationwillbe
required for such persons and be
regulated in such manner and
subjecttorulesastheBoardmay,
by notification in the official
Gazette,prescribe.]
Section14
111
SALESTAX
(7) Any notification issued under
subsection (2), shall, if not
earlier rescinded, stand
rescindedontheexpiryofthe
financial year in which it was
issued.
Requirement of registration as
envisagedundersection14ofSales
Tax Act, 1990 has been proposed
tobesubstitutedasunder:
(1) Every person engaged in
making taxable supplies in
Pakistan, including zerorated
supplies, in the course or
furtherance of any taxable
activity carried on by him,
falling in any of the following
categories, if not already
registered, is required to be
registered under this Act,
namely:
(a) a manufacturer who is not
runningacottageindustry;
(b) a retailer who is liable to pay
salestaxundertheActorrules
made there under, excluding
such retailer required to pay
salestaxthroughhiselectricity
bill under subsection (9) of
section3;
SALESTAX

(c)animporter;
(d) an exporter who intends to
obtain sales tax refund against
hiszeroratedsupplies;
(e) a wholesaler, dealer or
Section14

distributor;and
(f) a person who is required,
underanyotherFederallawor
Provinciallaw,toberegistered
forthepurposeofanydutyor
tax collected or paid as if it
were a levy of sales tax to be
collectedundertheAct;
(2) Personsnotengagedinmaking
oftaxablesuppliesinPakistan,
ifrequiredtoberegisteredfor
making imports or exports, or
Section14

under any provisions of the

Act, or any other Federal law,
mayapplyforregistration.
(3) The registration under this Act
shall be regulated in such
manner as the Board may, by
notification in the official
Gazette,prescribe.
Activetaxpayerslist Section 21A has been proposed to
NonExistent benewlyinsertedasunder:
TheBoardshallhavethepowerto
Section21A

maintain active taxpayers list in

the manner as may be prescribed
by rules and such rules may
provide for the restrictions and
limitations to be imposed on a
personwhoceasestobeanactive
taxpayer.

112

Accesstorecord,documents,etc.
After completion of Audit under
thissectionoranyotherprovision
of this Act, the officer of Inland
Revenue may, after obtaining the
Section25(3)
registeredpersonsexplanationon
all the issues raised in the audit
shall pass an order under section
(11) or section (36), as the case
maybe.
Special Audit by Chartered
AccountantsorCostAccountants:
The Board or the Commissioner
may, appoint a Chartered
Accountant as defined under
Chartered Accountants Ordinance,
Section32A
1961 (X of 1961) or a firm of
Chartered Accountants or a Cost
and Management Accountant
withinthemeaningoftheCostand
Management Accountants Act,
1966(XIVof1966)orafirmofCost
andManagementAccountants,for
conductingspecialauditofrecords
ofregisteredperson:
113
SALESTAX
The power of Officer Inland
Revenue has been proposed to be
withdrawn to pass order under
section 36 of the Sales Tax Act,
1990 by amending Section 25(3)
whichreadsasunder:
After completion of Audit under
thissectionoranyotherprovision
of this Act, the officer of Inland
Revenue may, after obtaining the
registeredpersonsexplanationon
all the issues raised in the audit
shall pass an order under section
(11),asthecasemaybe.
Thesection32Ahasbeenproposed
tobesubstitutedasunder;
AuditBySpecialAuditPanels;
The Board may appoint as many
special audit panels as may be
necessary,comprisingtwoormore
membersfromthefollowing
(a) an officer or officers of Inland
Revenue;
(b)afirmofcharteredaccountants
as defined under the Chartered
AccountantsOrdinance,1961(Xof
1961);
SALESTAX
[Provided that the Board [ or the
commissioner]may,appointafirm
of Chartered Accountants as
defined under the Chartered
AccountantsOrdinance,1961(Xof
1961),oraCostandManagement
Accountant within the meaning of
the Cost and Management
Accountants Act, 1966 (XIV of
1966), or a firm of Cost and
Management Accountants to
conductauditofrefundclaims.
(2) Notwithstanding that records
of a registered person have been
audited by an officer appointed
under section 30, the Board or a
Section32A
Commissioner may direct an
auditor appointed under sub
section (1) to audit the records of
anyregisteredperson.
(3) An auditor appointed under
subsection (1), shall have the
powers of an officer of [Inland
Revenue] under sections 25, 37
and38.
114
(c)afirmofcostandmanagement
accountants as defined under the
Cost and Management Account
antsAct,1966(XIVof1966);or
(d)anyotherpersonasdirectedby
the Board, to conduct audit of a
registered person or persons,
including audit of refund claims
and forensic audit and the scope
of such audit shall be determined
bytheBoardortheCommissioner
Inland Revenue on a casetocase
basis.Inaddition,theBoardmay,
where it considers appropriate,
alsogetsuchauditconducted
jointly with similar audits being
conducted by provincial
administrations of sales tax on
services
(2) Notwithstanding that records
of a registered person have been
audited by an officer appointed
under section 30, the Board or a
[Commissioner]maydirectSpecial
Audit Panel appointed under sub
section (1) to audit the records of
anyregisteredperson
(3) Every member of special audit
panelappointedundersubsection
(1), shall have the powers of an
officer of [Inland Revenue] under
sections25,37and38.
(4) Each special audit panel shall
beheadedbyachairmanwhoshall
beanofficerofInlandRevenue
 SALESTAX

(5) if any one member of the

specialauditpanel,otherthanthe
chairman, is absent from
conducting an audit, the procee
dings of the audit may continue
Section32A

and the audit conducted by the

special audit panel shall not be
invalid or be called in question
merely on the ground of such
absence.
(6) The Board may prescribe rules
in respect of constitution,
procedure and working of special
auditpanel.

115
SALESTAX
Penalties
1.Whereanypersonfailstofurni
sh a return within the due date.
Suchpersonshallpayapenaltyof
fivethousandrupees:
Providedthatincaseapersonfiles
a return within fifteendays of the
duedate,heshallpayapenaltyof
one hundred rupees for each day
ofdefault.
Section33(TableSerialNo.01&05)
5. Anypersonwhofailstodeposit
theamountoftaxdueoranypart
thereofinthetimeormannerlaid
down under this Act or rules or
orders made there under. Such
person shall pay a penalty of ten
thousandrupeesorfivepercentof
the amount of the tax involved,
whicheverishigher:
Providedthat,iftheamountoftax
or any part thereof is paid within
fifteendaysfromtheduedate,the
defaultershallpayapenaltyoffive
hundred rupees for each day of
default: Provided further that no
penaltyshallbeimposedwhenany
miscalculationismadeforthefirst
timeduringayear:
Provided further that if the
amountoftaxdueisnotpaideven
aftertheexpiryofaperiodofsixty
days of issuance of the notice for
such payments by an officer of
[Inland Revenue, not below the
rankof
116
Theperiodoftime forthepurpose
of calculating penalty has been
proposed to be reduced from
fifteen days to ten days in respect
of late filing salestax return and
depositofamountoftaxduefrom
the due dateby amendingagainst
serial no 1 and serial no 5 of
section 33 of the Sales Tax 1990
whichreadsasunder.
1.Whereanypersonfailstofurni
sh a return within the due date.
Suchpersonshallpayapenaltyof
fivethousandrupees:
Providedthatincaseapersonfiles
areturnwithintendaysofthedue
date,heshallpayapenaltyofone
hundred rupees for each day of
default.
5. Anypersonwhofailstodeposit
theamountoftaxdueoranypart
thereofinthetimeormannerlaid
down under this Act or rules or
orders made there under. Such
person shall pay a penalty of ten
thousandrupeesorfivepercentof
the amount of the tax involved
whicheverishigher:
Providedthat,iftheamountoftax
or any part thereof is paid within
tendaysfromtheduedate,

Assistant Commissioner Inland
Revenue], the defaulter shall,
further be liable, upon conviction
by a Special Judge, to
imprisonment for a term which
Section33(TableSerialNo.01&05)
mayextendtothreeyears,orwith
fine which may extend to amount
equal to the amount of tax
involved,orwithboth.
Monitoring or Tracking by
Electronicorothermeans
From such date as may be
prescribed by the Board, no
Section40C(2)
taxablegoodsshallberemovedor
sold by the manufacturer or any
other person without affixing tax
stamp, bandroles stickers, labels,
etc. in any such form, style and
manner as may be prescribed by
theBoardinthisbehalf
117
SALESTAX
thedefaultershallpayapenaltyof
five hundred rupees for each day
ofdefault:Providedfurtherthatno
penaltyshallbeimposedwhenany
miscalculationismadeforthefirst
timeduringayear:
Provided further that if the
amountoftaxdueisnotpaideven
aftertheexpiryofaperiodofsixty
days of issuance of the notice for
such payments by an officer of
[InlandRevenue,notbelowrankof
the defaulter shall, further be
liable,uponconvictionbyaSpecial
Judge,toimprisonmentforaterm
which may extend to three years,
or with fine which may extend to
amountequaltotheamountoftax
involved,orwithboth.
Additional condition has been
proposed to be edit on taxable
goods before making their supply
forthepurposeofmonitoringand
trackingbyamendingsubsection2
ofsection40CoftheSalesTaxAct
whichreadsasunder;
From such date as may be
prescribed by the Board, no
taxablegoodsshallberemovedor
sold by the manufacturer or any
other person without affixing tax
stamp, bandroles stickers, labels
barcodes;and
SALESTAX
Monitoring or Tracking by It has been proposed that board
Electronicorothermeans
Section40C(3)
NonExistent
Power of Board & Commissioner
toCallforrecord
TheBoardmay,ofitsownmotion,
callforandexaminetherecordof
Section45A(1)
any departmental proceedings
under this Act or the rules made
there under for the purpose of
satisfyingitselfastothelegalityor
propriety of any decision or order
passed therein by an Officer of
[Inland Revenue, it may pass such
order as it may think fit Provided
thatnoorder
118
shall appoint licensee for the
purpose of issuing stance
bandroles,stickerslabels,barcodes
by inserting sub section 3 which
readsasunder;
Such tax stamps, banderoles,
stickers,labels,barcodesetc.,shall
be acquired by the registered
person referred to in subsection
(2) from a licensee appointed by
theBoardforthepurpose,against
price approved by the Board,
whichshallincludethecostof
equipment installed by such
licenseeinthepremisesofthesaid
registeredperson.
The scope for calling of record by
theBoardhasbeenproposedtobe
enhancedbyamendingsubsection
1of45Awhichreadasunder
TheBoardmay,ofitsownmotion,
or otherwise call for and examine
the record of any departmental
proceedings under this Act or the
rules made there under for the
purpose of satisfying itself as to
the legality or propriety of any
decisionororderpassedthereinby
anOfficerof

imposingorenhancinganypenalty
or fine requiring payment of a
greateramountof[SalesTax]than
Section45A(1)
theoriginallyleviedshallbepassed
unlessthepersonaffectedbysuch
order has been given an
opportunity of showing cause and
ofbeingheard.
Agreement for the Exchange of
Information
NonExistent
Section56A
119
SALESTAX
[InlandRevenue,itmaypasssuch
order as it may think fit Provided
that no order imposing or
enhancing any penalty or fine
requiring payment of a greater
amount of [Sales Tax] than the
originally levied shall be passed
unlessthepersonaffectedbysuch
order has been given an
opportunity of showing cause and
ofbeingheard.
It has been proposed to give the
powers with the federal
governments for entering into
bilateral or multilateral
agreements for exchange of
information with provincial
governments or government of
foreign countries by introducing
section56Awhichreadsasunder;
(1) The Federal Government may
enter into bilateral or multilateral
agreements with provincial
governmentsorwithgovernments
of foreign countries for the
exchangeofinformation,including
electronic exchange of
information, with respect to sales
tax imposed under this Act or any
other law of Pakistan and under
the corresponding laws of such
countries and may, by notification
in the official Gazette, make such
provisionsasmaybenecessaryfor
implementingsuchagreements
SALESTAX

It has been proposed to give the

powers with the federal
governments for entering into
bilateral or multilateral
agreements for exchange of
information with provincial
governments or government of
foreign countries by introducing
section56Awhichreadsasunder;

(1) The Federal Government may
enter into bilateral or multilateral
agreements with provincial
governmentsorwithgovernments
Section56A

of foreign countries for the

exchangeofinformation,including
electronic exchange of
information, with respect to sales
tax imposed under this Act or any
other law of Pakistan and under
the corresponding laws of such
countries and may, by notification
in the official Gazette, make such
provisionsasmaybenecessaryfor
implementingsuchagreements

(2)Theprovisionsofsection107of
the Income Tax Ordinance, 2001
(XLIX of 2001) shall, mutatis
mutandis, apply to the provisions
ofthissection

120
 SALESTAX

Disclosure of Information by a It has been proposed through

PublicServant inserting section 56 B that any
informationacquiredunderthisact
NonExistent or in relation to bilateral or
multilateral agreement or tax
information exchange agreement
shall be kept confidential and no
public servant shall disclose such
information except as provided
under section 216 of the Income
Tax Ordinance 2001. The relevant
sectionisreproducedasunder;

Section56B

(1) Any information acquired

underanyprovisionofthisActor
in pursuance of a bilateral or
multilateral agreement or tax
informationexchangeagreement
shallbeconfidentialandnopublic
servantshalldiscloseanysuch
information, except as provided
under section 216 of the Income
TaxOrdinance,2001(XLIXof2001)

(2)Theprovisionsofsection216of
Income Tax Ordinance, 2001 (XLIX
of 2001), shall, mutatis mutandis,
apply to the provisions of this
section.

121
SALESTAX

Prize Schemes to Promote Tax Prizeschemehasbeenproposedto

Culture beintroducedtopromotepurchase
from registered person. The
NonExistent relevant section is reproduced as
Section56C

under;

The Board may prescribe prize
schemestoencouragethegeneral
public to make purchases only
fromregisteredpersonsissuingtax
invoices.
RewardtoWhistleblowers Reward has been proposed for
persons who provide information
NonExistent in respect of tax fraud. The
relevant section is reproduced as
under;

(1)theBoardmaysanctionreward
to whistleblowers in cases of
concealmentorevasionoftax,tax
fraud, corruption or misconduct
providing credible information
Section72D

leading to such detection of tax

fraud
(2) The Board may, by notification
in the official Gazette, prescribe
the procedure in this behalf and
alsospecifytheapportionmentof
reward sanctioned under this
sectionforwhistleblowers
(3) The claim for reward by the
whistleblowershallberejectedif
(a) the information provided is of
novalue;
(b) the Board already had the
information;

122
 SALESTAX

RewardtoWhistleblowers (c) the information was available

inpublicrecords;or
NonExistent (d) no collection of taxes is made
fromtheinformationprovided
fromwhichtheBoardcanpaythe
reward
(4)Forthepurposeofthissection,
whistleblower means a person
Section72D

who reports concealment or

evasion of sales tax and tax fraud
leading to detection or collection
of taxes, fraud, corruption or
misconduct, to the competent
authority having power to take
actionagainstthepersonora
sales tax authority committing
fraud, corruption, misconduct, or
involvedinconcealmentorevasion
oftaxes.

FIFTHSCHEDULE:(ZeroRated)

06 Supplies of such Suppliesofsuchlocally The facility of zero

locally manufactured manufactured plant rating has been
plant and machinery and machinery to the withdrawnonSupply
to the Export Export Processing of locally manufac
ProcessingZones[and Zones [and to turer plant and
to petroleum and gas petroleum and gas machineries to the
sectorExplorationand sector Exploration and Export Processing
Production companies Productioncompanies, Zone.
,theircontractorsand their contractors and
subcontractors] as subcontractors] as
may be specified by may be specified by
the Federal Governm the Federal Govern
ent, by notification in ment, by notification
the official Gazette, in the official Gazette,
subject to such subjecttosuchconditi
conditions and ons and restrictions as

123
SALESTAX

restrictions as may be may be specified in

specified in such such notification
notification Supplies Suppliesofsuchlocally
of such locally manufactured plant
manufactured plant and machinery to the
and machinery to the petroleum and gas
Export Processing sector Exploration and
Zones [and to Productioncompanies,
petroleum and gas their contractors and
sectorExplorationand subcontractors] as
Production companies may be specified by
,theircontractorsand the Federal Govern
subcontractors] as ment, by notification
may be specified by in the official Gazette,
the Federal Governm subject to such condi
ent, by notification in tions and restrictions
the official Gazette, as may be specified in
subjecttosuchcondit suchnotification
ions and restrictions
asmaybespecifiedin
suchnotification
6A NonExistent Supplies of locally The entry has been
manufactured plant newly inserted
andmachineryofthe wherein supply of
Following specifi locally manufacture
cationstomanufactu plant and machinery
rers in the Export of the specific
Processing Zone, specification to
subject to the condi manufacturer of
tions, restrictions and export processing
procedure given be zone has been made
low,namely: zero rated subject o
(i)Plantandmachinery, certain conditions
operated by power of restrictions and
any description, as is procedures.
used for the
manufactureor
productionofgoodsby

124
 SALESTAX

thatmanufacturer;
NonExistent (ii) Apparatus,
appliances and
equipments specific
ally meant or adapted
foruseinconjunction
6A with the machinery
specifiedinclause(i);
(iii) Mechanical and
electrical control and
transmission gear,
meant or adapted for
use in conjunction
with machinery
specified in clause (i);
and
(iv)Partsofmachinery
as specified in clauses
(i), (ii) and (iii)
identifiable for use in
or with such machin
ery. Conditions,
restrictions and
procedures:
(a)thesupplierofthe
machinery is
registered under the
Act;
(b) proper bill of
exportisfiledshowing
registrationnumber;
(c) the purchaser of
themachineryisan
established manufa
cturer located in the
Export Processing
Zone and holds a
certificatefrom

125
SALESTAX

the Export Processing

ZoneAuthoritytothat
effect;
(d) the purchaser
submit s an indemnity
bondinproperformto
the satisfaction of the
concerned Commiss
ioner Inland Revenue
that the machinery
shall, without prior
permission from the
said Commissioner,
not be sold,
transferred or
otherwise moved out
of the Export Proces
sing Zone before a
period of five years
fromthedateofentry
intotheZone;
(e)ifthemachineryis
brought to tariff area
of Pakistan, sales tax
shall be charged on
the value assessed on
thebillofentry;and
(f) breach of any of
theconditionspecified
herein shall attract
legal action under the
relevant provisions of
the Act, besides
recovery of the
amount of sales tax
alongwithdefault
surcharge and
penaltiesinvolved.;

126
 SALESTAX

9 Goods exempted Goodsexempted The condition of

under section 13, if undersection13,if making export of
exported by a exportedbya exempted goods as
manufacturer who manufacturer zero rated has been
makes local supplies omitted, meaning
of both taxable and thereby is that
exemptgoods exemptgoodswillbe
zero rated
irrespective of local
supply of
manufacturer
12 The following goods Thefollowinggoods Zero rated facility on
andtherawmaterials, andtherawmaterials, Supply of Milk
packing materials, packingmaterials,sub including flavored
subcomponents, components, milk (PCT heading
components, sub components,sub 04.01 and
assemblies and assembliesand 0402.9900), yogurt
assemblies imported assembliesimported (PCT heading 0403.
or purchased locally orpurchasedlocally 1000) and Milk and
forthemanufactureof forthemanufactureof cream, concentrated
thesaidgoods,subject thesaidgoods,subject and added sugar or
to the conditions, totheconditions, otherwise
limitations and limitationsand sweetening matter
restrictions as restrictionsas (PCT heading
specified in Chapter specifiedinChapter 0402.1000) has been
XIV of the Sales Tax XIVoftheSalesTax withdrawn by
Special Procedure SpecialProcedure transposingittosixth
Rules,2007: Rules,2007: schedule.
(i)Colors in sets (PCT (i)Colorsinsets(PCT
heading3213.1000). heading3213.1000).
(ii)Writing, drawing
and marking inks (PCT (ii)Writing,drawing
heading. 3215.9010 andmarkinginks(PCT
and3215.9090) heading.3215.9010
(iii)Erasers (PCT and3215.9090)
heading 4016.9210 (iii)Erasers(PCT
and4016.9290) heading4016.9210
(iv)Exercise books and4016.9290)

127
SALESTAX

(PCT heading (iv)Exercisebooks(PCT

4820.2000) heading4820.2000)
(v)Pencil sharpeners (v)Pencilsharpeners
(PCT heading (PCTheading
8214.1000) 8214.1000)
(vi)Geometry boxes (vi)Geometryboxes
(PCT heading (PCTheading
9017.2000) 9017.2000)
(vii) Pens, ball pens, (vii)Pens,ballpens,
markers and porous markersandporous
tipped pens (PCT tippedpens(PCT
heading96.08) heading96.08)
(viii) Pencils including (viii)Pencilsincluding
color pencils (PCT colorpencils(PCT
heading96.09) heading96.09)
(ix) Milk including (ix)Milkincluding
flavored milk (PCT flavoredmilk(PCT
heading 04,01 and heading04,01and
0402.9900) 0402.9900)
(x)Yogurt(PCTheading (x)Yogurt(PCTheading
0403.1000) 0403.1000)
(xi)Cheese (PCT (xi)Cheese(PCT
heading0406.1010) heading0406.1010)
(xii)Butter (PCT (xii)Butter(PCT
heading0405.1000) heading0405.1000)
(xiii)Cream (PCT (xiii)Cream(PCT
heading 04.01 and heading04.01and
04.02) 04.02)
(xiv) Desi ghee ( PCT (xiv)Desighee(PCT
heading0405.9000) heading0405.9000)
(xv)Whey (PCT (xv)Whey(PCTheading
heading04.04) 04.04)
(xvi) Milk and (xvi) Milkand
cream, concentrated cream,concentrated
and added sugar or andaddedsugaror
other sweetening othersweetening
matter ( PCT heading matter(PCTheading
0402.1000) 0402.1000)

128
 SALESTAX

(xvii)Preparations for (xvii)Preparationsfor

infant use put up for infantuseputupfor
retail sale ( PCT retailsale(PCT
heading1901.1000) heading1901.1000)
(xviii)Fat filled milk (xviii)Fatfilledmilk(
(PCT heading PCTheading
1901.9090) 1901.9090)
(xix)Bicycles (PCT (xix)Bicycles(PCT
heading87.12). heading87.12).

SIXTHSCHEDULE:

19 Cereals and products 1001.1000,1001.9000, Entry having

ofmilling 1002.0000,1003.0000, PCT heading
Industry 1004.0000,1005.1000, 1006.1010 as
1005.9000,1006.1010, mentioned in
1006.1090,1006.2000, column 3 of
1006.3010,1006.3090, the table has
1006.4000,1007.0000, been
1008.1000,1008.2000, proposed to
1008.3000,1008.9000, beomitted.
1101.0010,1101.0020,
1102.1000,1102.2000,
1102.3000,1102.9000,
1103.1100,1103.1300,
1103.1900,1104.2200,
1104.2300,1104.2900
and1104.3000
20 Seeds,fruitandspores 1209.1000,1209.2100, The entry
of a kind used for 1209.2200,1209.2300, having PCT
sowing. 1209.2400,1209.2500, heading
1209.2900,1209.3000, 1209.1000 as
1209.9110,1209.9120, mentioned in
1209.9130,1209.9190 column 3 has
and1209.9900. been
proposed to
be substituted
as 1006.1010,
1209.1000

129
SALESTAX

28 PoultryfeedandCattle 2301.2090,2305.0000, The entry at

feed including their all 2306.2000,2306.3000, serialno28as
ingredients except 2306.4100,2306.5000, mentioned in
soyabean meal of PCT [2309.9010,2309.9020, Column No. 2
heading 2304.0000 2309.9090, & 3 of the
and oilcake of 2936.2100,2936.2200, tablehasbeen
cottonseed falling 2936.2300, proposed to
under PCT heading 2936.2400,2936.2500, beomitted.
2306.1000. 2936.2600,
2936.2700and
2936.2800]
39 Incineratorsofdisposal 8417.8000,8430.2000 Theentryat
ofwastemanagement, and8479.8990 serialno39as
motorized sweepers mentionedin
andsnowploughs. ColumnNo.2
&3ofthe
tablehasbeen
proposedto
beomitted.
56 Reimportation of 99.18 The entry at
foreign origin goods serialno56as
which were mentioned in
temporarily exported Column No. 2
outofPakistansubject & 3 of the
tosimilarconditionsas tablehasbeen
are envisaged for the proposed to
purposes of applying beomitted.
zerorate of customs
duty under the
CustomsAct,1969.

130
 SALESTAX

Milkandcream Milk04.01 Theentriesfor

Flavoredmilk, Milkandcream, serialno73to
Yogurt,Whey,Butter concentratedor 80 has been
Desighee,Cheese containingaddedsugar proposed to
Processed, cheese not orothersweetening be substituted
gratedorpowdered matter,excludingthat by entries as
04.01and04.02soldin mentioned in
retailpackingundera column 3 of
brandnameFlavored thetable.
milk,excludingthat
soldinretailpacking
underabrandname
0402.9900
Yogurt,excludingthat
soldinretailpacking
underabrandname
0403.1000
Whey,excludingthat
(73To80)

soldinretailpacking
underabrandname

04.04
Butter,excludingthat
soldinretailpacking
underabrandname
0405.1000
Desighee,excluding
thatsoldinretail
packingunderabrand
name0405.9000
Cheese,excludingthat
soldinretailpacking
underabrandname
0406.1010
Processedcheesenot
gratedorpowdered,
excludingthatsoldin
retailpackingundera
brandname
0406.3000;

131
SALESTAX

105 Raw materials for the Rawmaterialsforthe Exemptionwill

basic manufacture of basicmanufactureof be subject to
pharmaceutical active pharmaceuticalactive custom duty
ingredients and for ingredientsandfor not exceeding
manufacture of manufactureof 10% on assist
pharmaceutical pharmaceutical value either
products, provided products,providedthat under first
that in case of import, incaseofimport,only schedule or
only such raw suchrawmaterials fifth schedule
materials shall be shallbeentitledto of the Custom
entitled to exemption exemptionwhichare Act1969.
which are liable to liabletocustomsduty
customs duty not notexceedingtenper
exceedingtenpercent centadvalorem,either
advalorem, either undertheFirst
under the First ScheduleorFifth
Schedule to the Scheduletothe
Customs Act, 1969 (IV CustomsAct,1969(IV
of 1969) or under a of1969)orundera
notification issued notificationissued
under section 19 undersection19
thereof. thereof.
114 Green House Framing GreenHouseFraming Exemption of
and Other Green andOtherGreenHouse tunnel
House Equipment (If Equipment(Ifusedfor farming
used for Agriculture AgricultureSector) equipment
Sector) 1.Tunnelfarming shall be
1.Tunnel farming equipmentconsisting subject to
equipment ofplasticcoveringand specification
2.Green houses mulchfilm,antiinsect as mentioned
(prefabricated) netandshadenet. in serial 1 of
2.Greenhouses column 3 of
(prefabricated) thetable.

114(B) Tunnelfarming 3920.1000,3926.9099, The Entries
equipment 5608.1900,5608.9000 mentioned in
(8430.3100,8430.3900) column 3 has
been

132
 SALESTAX

substituted
against the
entries as
mentioned
column2.
117 NonExistent Appliancesfor The Entry as
colostomy3006.9100 mentioned in
column 3 has
been newly
inserted.
118 NonExistent Colostomy and The Entry as
urostomy bags mentioned in
3926.9050 column 3 has
been newly
inserted.
119 NonExistent Tubular day lighting The Entry as
devices (TDDs) mentioned in
8539.3930 column 3 has
been newly
inserted.
120 NonExistent Diagnostickitsor The Entry as
equipment,namely: mentioned in
HIVKits,4CEsTrionyx column 3 has
5CCellcontrolLnormal been newly
Bovineprecisionmulti inserted.
seraPregnancytest
DNASSPDRBGeneric
ICReticulocytecount
(control)reticCControl
KitforvitaminB12
estimationFerritinkit
HEV(HepatitisEvirus)
IDDACellUrine
AnalysisStrips
AlbuminbegCratinin
sysiRingDetektiion
cupsISEStandard
Alkalinephosphatase

133
SALESTAX

(Alb)Bilirubinkit
HDLCholesterol
Ckcreatininkinase
(mb)CknacGlulcose
kitAmmoniaModular
LacLdhkit(lactate
dehydrogenase
kit)Ureauvkit
UaplusTinaquant
CrpcontrolAslotin
ProteinsLipids
HDL/LDLcholesterol
ProteinkitU
ControlSeraPac
ControlHCV
UIBC(Unsaturatediron
bindingcapacity)
U/CSF
InorganicPhosphorus
kitKitampliconkit(for
PCR)Ige22Lchsv
OligoNA/K/CL
HcyStandard[or
calibrated]HlaB27
LissCoombs
Typhoidkit
HCVampUrinetest
stripsforsugartest
Bloodglucosetest
strips
Kitsforautomaticcell
separator
forcollectionof
platelets
ElisaorEcliakit
PCRkits
Immunoblast(western
blottest).I.C.T.

134
 SALESTAX

(Immunochromatograp
hickit)
CBCReagent(For
hematology
analyzer)Complete
bloodcountreagent
3822.0000
121 NonExistent BloodBagCPDA1with The Entry as
blood transfusion set mentioned in
packinaluminum column 3 has
foilwithset.Respective been newly
Heading inserted.
122 NonExistent Urine drainage bags The Entry as
RespectiveHeading mentioned in
column 3 has
been newly
inserted.
123 NonExistent Aircraft, whether The Entry as
imported or acquired mentioned in
on wet or dry lease column 3 has
8802.2000, 8802.3000, been newly
8802.4000 inserted.
124 NonExistent Maintenance kits for The Entry as
use in trainer aircrafts mentioned in
of PCT headings column 3 has
8802.2000 and been newly
8802.3000 inserted.
RespectiveHeading
125 NonExistent Spare parts for use in The Entry as
aircrafts, trainer mentioned in
aircrafts or simulators column 3 has
RespectiveHeading been newly
inserted.
126 NonExistent Machinery, equipment The Entry as
andtoolsforsettingup mentioned in
maintenance, repair column 3 has
and overhaul (MRO) been newly
workshop by MRO inserted.

135
SALESTAX

companyrecognizedby
Aviation Division
RespectiveHeading
127 NonExistent Operational tools, The Entry as
machinery, equipment mentioned in
and furniture and column 3 has
fixtures on onetime been newly
basisfor inserted.
setting up Greenfield
airports by a company
authorized by Aviation
Division Respective
Heading
128 NonExistent Aviation simulators Entry
importedby mentioned in
airline company column 3 has
recognizedby been newly
Aviation Division inserted.
RespectiveHeading

SIXTHSCHEDULE

TABLE2

13 Reclaimed lead, if Omitted Exemption has been

suppliedtorecognized withdrawn
manufacturer of lead
batteries
14 Wastepaper Omitted Exemption has been
withdrawn
17 NonExistent Rawandpickledhides Entries mentioned in
andskins, column 3 have been
wetbluehidesand purposedtobenewly
skins inserted.
41.01,
41.02,
41.03,
4104.1000,

136
 SALESTAX

4105.1000,
4106.2100,
4106.3000,
4106.9000
18 NonExistent Supplies made by Entries mentioned in
manufacturers of column 3 have been
marble and granite purposedtobenewly
havingannual inserted.
turnover less than five
million rupees even if
theirannualutilitybill
is more than eight
hundred thousand
rupeesRespective
headings
19 NonExistent Bricks(upto30th Entries mentioned in
June,2018)6901.1000 column 3 have been
purposedtobenewly
inserted.
20 NonExistent Crushed stone (up to Entries mentioned in
30thJune,2018) column 3 have been
2517.1000; purposedtobenewly
inserted.

SIXTHSCHEDULE

TABLE3
Annexure
10 Machinery, Omitted Entry mentioned in
equipment, raw column(2)(3)and(4)
materials, hasbeenproposedto
componentsandother be omitted in the
capital goods for use annexureoftable3.
in buildings, fittings,
repairing or refitting
of ships, boats or
floating structures
imported by Karachi

137
SALESTAX

Shipyard and
Engineering Works
Limited. Respective
Headings
16 Plant, machinery, Omitted Entry mentioned in
equipment and column(2)(3)and(4)
specific items used in hasbeenproposedto
production of bio be omitted in the
diesel. Respective annexureoftable3.
headings

EIGHTSCHEDULE
TABLE1

1 5% 10% The rate of SalesTax

hasbeenproposedto
beenhancedfrom5%
to10%onsoyabean
meal having PCT
Heading2304.0000
3 Directly reduced Omitted Entry as mentioned
iron72.035% in column 2 of the
table has been
proposed to be
omitted.
4 5% 10% The rate of SalesTax
hasbeenproposedto
beenhancedfrom5%
to 10% on Oil Seeds
meant for sowing
having Respective
Heading.
6 5% 10% The rate of SalesTax
hasbeenproposedto
beenhancedfrom5%
to 10% on Plant and
Machinery not
manufacture locally
and having no

138
 SALESTAX

compatible
substitute Respective
Heading.
7 NonExistent Flavoured milk Entry mentioned in
0402.9900 10% Sold column3ofthetable
inretailpackingunder hasbeenproposedto
abrandname benewlyinserted.
8 NonExistent Yogurt 0403.1000 Entry mentioned in
10%Soldinretail column3ofthetable
packing under a brand hasbeenproposedto
name benewlyinserted.
9 NonExistent Cheese 0406.1010 Entry mentioned in
10%Soldinretail column3ofthetable
packing under a brand hasbeenproposedto
name benewlyinserted.
10 NonExistent Butter 0405.1000 Entry mentioned in
10%Soldinretail column3ofthetable
packing under a brand hasbeenproposedto
name benewlyinserted.
11 NonExistent Cream04.01and Entry mentioned in
04.02 10% Sold in column3ofthetable
retailpackingunder hasbeenproposedto
abrandname benewlyinserted.
12 NonExistent Desi ghee 0405.9000 Entry mentioned in
10%Soldinretail column3ofthetable
packing under a brand hasbeenproposedto
name benewlyinserted.
13 NonExistent Whey 04.04 10% Entry mentioned in
Sold in retail packing column3ofthetable
underabrandname hasbeenproposedto
benewlyinserted.
14 NonExistent Milkandcream, Entry mentioned in
concentratedand column3ofthetable
addedsugarorother hasbeenproposedto
sweeteningmatter benewlyinserted.
0402.1000 10% Sold
inretailpackingunder
abrandname

139
SALESTAX

15 NonExistent Poultryfeed,cattle Entry mentioned in

feed,andtheir column3ofthetable
ingredientsexcept hasbeenproposedto
soyabeanmealof benewlyinserted.
PCTheading
2304.0000andoilcake
ofcottonseed
fallingunderPCT
heading2306.1000
2301.2090,
2305.0000,
2306.2000,
2306.3000,
2306.4100,
2306.5000,
2309.9010,
2309.9020,
2309.9090,
2936.2100,
2936.2200,
2936.2300,
2936.2400,
2936.2500,
2936.2600,
2936.2700,
2936.2800,
And2306.4900
(RapeSeedMeal),
2308.9000
(GuarMeal),
2303.1000
(CornGluton
Feed/Meal)
2303.1000
(Residuesofstarch
manufactureand
similarresidues),
3507.9000

140
 SALESTAX

(Enzymes other),
2302.1000
(MaizeBran),
2302.2000
(RiceBran),
2302.3000
(WheatBran),
2302.4000
(OtherCereals),
2302.5000
(BranofLeguminous
Plants),
2306.7000
(Oilcakeandother
solidresiduesof
Maize(corn)germ),
2306.4900
(SesameCake),
2306.9000
(SesameMeal/other
Meal),
2842.1000
(Doubleorcomplex
silicates,
including
aluminosilicates
whetherornot
chemicallydefined),
2301.2010
(FishMeal),
0505.9000
(Poultrybyproduct
Meal),andthe
Followingitemsonlyof
FeedGrade:
2827.6000
(PotassiumLodide),
2833.2990

141
SALESTAX

(Manganese Sulphate),
2833.2600
(ZincSulphate),
2817.4000
(ZincOxide),
2833.2500
(CopperSulphate),
2833.2910
(FerrousSulphate),
2915.5000
(Propionicacid,its
saltsandesters),
2930.4000
(DLMethionine),
2930.4000
(MethionineHydroxy
Analogue
(liquid)),2922.4100
(LysineMonohydro
Chloride/sulphate),
2923.2000
(Lecithins),
2923.9000
(Betafin),
2922.4290
(Arganine),
2934.9910
(Furazolidone),
2922.5000
(Threonine),
2835.2600
(MonoCalcium
Phosphate),
2835.2500
(DiCalcium
Phosphate),and
2835.2600
(MonoDiCalcium

142
 SALESTAX

Phosphate)
5%
16 NonExistent Incineratorsof Entry mentioned in
disposalofwaste column3ofthetable
management, hasbeenproposedto
motorizedsweepers benewlyinserted.
8417.8000,
8430.2000
And8479.8990and
snowploughs5%
17 NonExistent Reimportationof Entry mentioned in
foreignorigingoods column3ofthetable
whichwere hasbeenproposedto
temporarilyexported benewlyinserted.
outofPakistan
99.185%Subjectto
Similarconditionsas
areenvisagedforthe
purposes of customs
dutyunderthe
CustomsAct,1969,and
taxable value shall be
thevaluedetermined
under PCT heading
99.18ofthesaidAct
increased by customs
dutypayable
18 NonExistent Reclaimed lead Entry mentioned in
Respectiveheadings column3ofthetable
5%Ifsuppliedto hasbeenproposedto
Recognized manufact benewlyinserted.
urers of lead and lead
batteries
19 NonExistent Waste paper 47.07 Entry mentioned in
5% column3ofthetable
hasbeenproposedto
benewlyinserted.
20 NonExistent Plant,machinery, Entry mentioned in

143
SALESTAX

equipmentand column3ofthetable
specificitemsused hasbeenproposedto
in production of bio benewlyinserted.
dieselRespective
headings5%The
AlternativeEnergy
DevelopmentBoard
(AEDB),Islamabad
shall certify in the
prescribed manner
andformatasper
AnnexB, as given in
the Sixth Schedule,
that the imported
goods are bonafide
projectrequirement.
Thegoodsshallnotbe
soldorotherwise
disposed of within a
periodoffiveyearsof
their import except
withthepriorapproval
of the FBR and
payment of customs
duties and taxes
leviable at the time of
import
21 NonExistent Rapeseed, sunflower Entry mentioned in
seedandcanolaseed column3ofthetable
1205.0000,1206.0000 hasbeenproposedto
16%Onimportby benewlyinserted.
solventextraction
industries
22 NonExistent Soya bean seed Entry mentioned in
1201.1000 6% On column3ofthetable
importbysolvent hasbeenproposedto
Extractionindustries, benewlyinserted.
subject to the

144
 SALESTAX

condition that no
refund of input tax
shallbeadmissible;
23 NonExistent Secondhand and worn Entry mentioned in
clothingorfootwear column3ofthetable
6309.00005% hasbeenproposedto
benewlyinserted.
25 NonExistent Agricultural tractors Entry mentioned in
8701.902010% column3ofthetable
hasbeenproposedto
benewlyinserted.
26 NonExistent Tillageandseed Entry mentioned in
bedpreparation column3ofthetable
equipment:7% hasbeenproposedto
(i)Rotavator benewlyinserted.
8432.8010
(ii)Cultivator
8432.2910
(iii)Ridger
8432.8090
(iv)Subsoiler
8432.3090
(v)Rotaryslasher
8432.8090
(vi)Chiselplow
8432.1010
(vii)Ditcher
8432.1090
(viii)Borderdisc
8432.2990
(ix)Discharrow
8432.2100
(x)Barharrow
8432.2990
(xi)Mouldboard
plow
8432.1090
(xii)Tractorrear

145
SALESTAX

orfrontblade
8430.6900
(xiii)Landleveller
orlandplaner
8430.6900
(xiv)Rotarytiller
8432.8090
(xv)Discplow
8432.1090
(xvi)Soilscrapper
8432.8090
(xvii)K.R.Karundi
8432.8090
(xviii)Tractor
Mountedtrancher
8701.9020
(xix)Landleveler
8430.6900
27 NonExistent Seedingorplanting Entry mentioned in
7%equipment: column3ofthetable
(i)Seedcum hasbeenproposedto
fertilizerdrill benewlyinserted.
wheat,ricebarley,etc.
8432.3010
(ii)Cottonormaize
planterwithfertilizer
attachment
8432.3090
(iii)Potatoplanter
8432.3090
(iv)Fertilizeror
Manurespreaderor
Broadcaster8432.4000
(v)Ricetransplanter
8432.3090
(vi)Canolaor
sunflowerdrill
8432.3010

146
 SALESTAX

(vii)Sugarcaneplanter
8432.3090
28 NonExistent Irrigation,drainage Entry mentioned in
andagrochemical column3ofthetable
application hasbeenproposedto
equipment: benewlyinserted.
(i)Tubewellsfiltersor
Strainers
(ii)Knapsacksprayers
(iii)Granularapplicator
7%
8421.2100,
8421.9990
8424.2010
8424.2010
8424.2010
8424.2010
8424.2010,39
(iv)Boomorfield
sprayers
(v)Selfpropelled
sprayers
(vi)Orchardsprayer
29 NonExistent (i)Harvesting, Entry mentioned in
threshingand column3ofthetable
storageequipment: hasbeenproposedto
(ii)Wheatthresher benewlyinserted.
(iii)Maizeor
groundnut
thresherorsheller
(iv)Groundnutdigger
(v)Potatodigger
orharvester
(vi)Sunflowerthresher
(vii)Postholedigger
(viii)Strawbalers
(ix)Fodderrake
(x)Wheatorrice

147
SALESTAX

reaper
(xi)Chafforfodder
cutter
(xii)Cottonpicker7%
8433.5200
8433.5200
8433.5900
8433.5300
8433.5200
8433.5900
8433.4000
8433.5900
8433.5900
8433.5900
8433.5900
8433.5200
8433.5200
8716.8090
8433.5900
8433.5100
8433.5900
(xiii)Onionorgarlic
harvester
(xiv)Sugarharvester
(xv)Tractortrolley
orforagewagon
(xvi)Reapingmachines
(xvii)Combined
harvesters
(xviii)Pruner/shears
30 NonExistent Postharvesthandling Entry mentioned in
andprocessing& column3ofthetable
miscellaneous hasbeenproposedto
machinery:7% benewlyinserted.
(i)Vegetables
andfruitscleaningand
sortingorgrading
equipment

148
 SALESTAX

(ii)Fodderand
feedcubemaker
equipment

EIGHTSCHEDULE
TABLE2Annexure
Plant, machinery, The rate of 5% has
equipment and beenproposedtobe
apparatus, including enhanced to 10% in
capital goods, specified the preamble in
in column (2) of the respect of the items
Annexure below, falling mentioned in serial
under the HS Codes no.(1)(5)and(6)of
specified in column (3) theannexure.
of that Annexure, shall
be charged to sales tax
at the rate of five
percent, subject to the
following conditions,
besides the conditions
specified in column (4)

of the Annexure,
namely:

(i)Theimportedgoods
as are not listed in the
locally manufactured
items, notified through
a Customs General
Order issued by the
Boardfromtimetotime
or, as the case may be,
certified as such by the
Engineering
DevelopmentBoard.

149
SALESTAX

(ii) The Chief

Executive,ortheperson
next in hierarchy duly
authorized by the Chief
Executive or Head of
the importing company
shall certify in the
prescribed manner and
format as per AnnexA
thattheimporteditems
are the companys
bonafide requirement.
He shall furnish all
relevant information
Online to Pakistan
Customs Computerized
System against a
specific user ID and
password obtained
under section 155D of
the Customs Act, 1969.
Inalreadycomputerized
Collectorates or
Customsstationswhere
the Pakistan Customs
ComputerizedSystemis
not operational, the
Project Director or any
otherpersonauthorized
by the Collector in this
behalf shall enter the
requisite information in
the

150
 SALESTAX

Pakistan Customs
Computerized System
on daily basis, whereas
entry of the data
obtained from the
customs stations which
have not yet been
computerized shall be
made on weekly basis;
and
(iii) In case of
partial shipments of
machinery and
equipment for setting
upaplant,theimporter
shall, at the time of
arrival of first partial
shipment, furnish

complete details of the

machinery, equipment
and components
required for the
complete plant, duly
supported by the
contract, lay out plan
anddrawings.
Explanation.In this
Table the expression,
capital goods mean any
plant, machinery,
equipment, spares and
accessories,classifiedin
chapters 84, 85 or any
other chapter of the
PakistanCustomsTariff,
requiredfor

151
SALESTAX

Following items Omitted Entry as mentioned

imported by Call in column no. 2 has
Centers, Business beenproposedtobe
Processing Outsourcing omitted.
facilities duly approved
byPakistanTelecommu
nicationAuthority.
(1)Telephonesets/head
sets. 8517.1100
(2) Cat 5/Cat 6/Power
3 cables 8544.4990
(3)PABX Switch
8517.6290
(4)Plasma TV
8528.7212
(5)Dedicated telephone
exchange system for
callcentres.
(6)Other digital cell
recorders8517.6290
8519.8990

152
 SALESTAX

Proprietary Formwork Omitted Entry as mentioned

System for in column no. 2 has
building/structures of a beenproposedtobe
height of 100 ft and omitted.
above and its various
items/ components
consisting of the
following, namely:
7308.4000
(i) If not manufactured
locally and imported by
the construction
companies registered
with the Pakistan
EngineeringCouncil;
7 (1)Plastictube.
3917.2390
(ii) the system is to be
procured from a well
renowned internat
ionalmanufacturer;
(2) Plastic tie slot
filters/plugs, plastic
cone. 3926.9099

(III) a certificate from

one of the following
International Pre
shipment Inspection
Companies/Survey
Firmstotheextent

153
SALESTAX

that all the

components/parts are
to be used in the
Proprietary Formwork
System for construction
of structures/buildings
of more than 100 feet
height, is produced,
namely:

(3) Standard steel ply
panels, Special sized
steel ply panels,
wedges,tubeclamps(B
Type & G Type),
push/pull props,
brackets (structure),
steel soldiers
(structure), drop head,
standard, prop tic,
buard rail post
(structure), coupler
brace, cantilever frame,
decking beam/Infill
beam and doorway
angles.
7308.4000
(a) ) Messrs Lloyds of
London; (b) Messrs
Quality Tech, LLC; (c)
Messrs ABS; (d) Messrs
BureauVeritas;and
(e) Messrs SGS; and (iv)
The Pakistan
Engineering Council
shall

154
 SALESTAX

certify that the

imported Proprietary
Formworks System
conform to the
requirement of the
Companysproject.

(4)Lifting Unit
(Structure) 7308.9090
do
(5) Bolts, tie bolts,
anchor bolt assembly
(fastener),anchorscrew
(fastener). 7318.1590
do

(6)Nuts 7318.1690
do
(7) Steel pins, tie wing
nut(fastener).7318.1900
do
(8)Steelwashers,water
plate (fastener).
7318.2290do
(9) djustable base jack
(thread rod with nut
and steel plate),
adjustable fork head
(threaded rod with nut
and steel channel).
8425.4900 do

155
SALESTAX

NINTHSCHEDULE

TABLE
2 Low Priced Cellular Low Priced Cellular Rates have been
Mobile Phones or Mobile Phones or purposed to be
SatellitePhones SatellitePhones enhanced from 150
i. All cameras: i. All cameras: to 300, 250 to 500
2.0megapixelsorless 2.0megapixelsorless and 500 to 1000
ii. Screen size: ii. Screen size: against the serial no
2.6inchesorless 2.6inchesorless 2 mentioned in
iii. Keypad iii. Keypad column 3 and 4 of
the ninth schedule of
Rs.150 Rs.300 SalesTaxAct1990.
Rs.150
B. Medium Rs.300
Priced Cellular Mobile B. Medium
Phones or Satellite Priced Cellular Mobile
Phones Phones or Satellite
i. One or two Phones
cameras: between 2.1 i. One or two
to10megapixels cameras: between 2.1
ii. Screen size: to10megapixels
between 2.6 inches ii. Screen size:
and4.2inches between 2.6 inches
iii. Micro and4.2inches
processor: less than 2 iii. Micro
GHZ Rs.250Rs. processor: less than 2
250 GHZ Rs.500Rs.
C. Smart 500
Cellular Mobile C. Smart Cellular
Phones or Satellite Mobile Phones or
Phones SatellitePhones
i. One or two i. One or two
cameras: 10 mega cameras: 10 mega
pixelsandabove pixelsandabove
ii. Touch ii. Touch Screen:
Screen:size4.2inches size 4.2 inches and

156
 SALESTAX

andabove above
iii.4GBorhigherBasic iii. 4GB or higher
Memory BasicMemory
iv. Operating system iv.Operatingsystemof
of the type IOS, the type IOS, Android
Android V2.3, Android V2.3, Android
Gingerbreadorhigher, Gingerbreadorhigher,
Windows 8 or Windows 8 or
BlackberryRIM BlackberryRIM
v. Microprocessor: v. Microprocessor:
2GHZ or higher, dual 2GHZ or higher, dual
core or quad core core or quad core Rs.
Rs.500 Rs.500 1000 Rs.1000

157
FEDERALEXCISE

FEDERALEXCISE

TheamendmentsareapplicablefromJuly1,2015unlessspecifiedotherwise.

FEDERALEXCISEACT,2005

PROPOSEDAMENDMENT
Serial

PRESENTPOSITION THROUGH
ASON30THJUNE,2015
FINANCEBILL2015

NonExistent Throughthisproposedamendment
newdefinitionofthewhistleblower
has been inserted in order to un
earththehiddencasesofevasionof
taxesanddutiesbygivingthemthe
handsome reward subject to
certainconditionsnotifiedtherein.
Rewardtowhistleblowers.
24(A)&42D

(1)TheBoardmaysanctionreward
to whistleblowers in cases of
concealment or evasion of duty,
corruptionormisconductproviding
credible information leading to
suchdetectionofevasionofduty;
(2)TheBoardmay,bynotification
in the official Gazette, prescribe
the procedure in this behalf and
also specify the apportionment of
reward sanctioned under this
sectionforwhistleblowers;

158
 FEDERALEXCISE

(3)The claim for reward by the

whistleblowershallberejectedif
(a) the information provided is of
novalue;
(b) the Board already had the
information;
(c)theinformationwasavailablein
publicrecords;or
(d) no collection of duty is made
fromtheinformationprovided
24(A)&42D

from which the Board can pay the

reward;
(4)Forthepurposeofthissection,
whistleblowermeansaperson
who reports concealment or evasi
on of duty leading to detection or
collection of duty, corruption or
misconduct, to the competent
authority having power to take
action against the person or a
federalexciseauthoritycommitting
fraud, corruption, misconduct, or
involvedinconcealmentorevasion
ofduty.;
Exemptions Throughthisproposedamendment
the sub section (1) of referred
section has been further added
whereby the authority of
exemption of duty would be
16(2)

validatedsubjecttotheapprovalof
Economic Coordination Committee
of Cabinet. Further the
circumstances for purpose of levy
have been widely enlarged and
specificallydefined

159
FEDERALEXCISE

Through this insertion the, Federal

Government shall be bound to
place all the notifications before
the National Assembly in the
FinancialYear.
The Federal Government shall
placebeforetheNationalAssembly
all notifications issued under this
sectioninafinancialyear.
16(5&6)

Monitoring or tracking by Throughthisproposedamendment
electronicorothermeans
45A
Allthenotificationsissuedafter01st
July 2015, if not rescinded would
not have any legal effect and
considered to stand rescinded
accordingly.
Any notification issued under sub
section (2) after 1st July, 2015,
shall,ifnotearlierrescinded,stand
rescinded on the expiry of the
financial year in which it was
issued.
thegoodshavingthebarcodesalso

included for doing the exercise of

checking
NonExistent In order to monitor the business
transaction the proposed amend
menthasbeenbrought,whichread
asunder;
45(3)

Such tax stamps, banderoles,

stickers,labels,barcodesetc.,shall
be acquired by the registered
person referred to in subsection
(2)fromalicenseeappointedby

160
 FEDERALEXCISE

NonExistent the Board for the purpose, against

priceapprovedbytheBoard,which
45(3)

shallincludethecostofequipment
installed by such licensee in the
premises of the said registered
person.
DepartmentalAudit Throughthisproposedamendment
thewordDepartmentalhasbeen
deletedandthescopeandstructure
ofAuditincludingtheappointment
of special audit panels also been
introduced.
The referred amendment is
reproducedbelow;
The Board may appoint as many
special audit panels as may be
46(4)

necessary,comprisingtwoormore
membersfromthefollowing
(a) an officer or officers of Inland
Revenue;
(b) a firm of Chartered Account
antsasdefinedunderthe
CharteredAccountantsOrdinance,
1961(Xof1961);
(c)afirmofCostandManagement
Accountantsasdefinedunderthe
CostandManagementAccountants
Act,1966(XIVof1966);or
(d)anyotherpersonasdirectedby
the Board, to conduct audit of a
46(4)

registered person or persons,

including audit of refund claims
andforensicauditandthescopeof
suchauditshallbedeterminedby

161
FEDERALEXCISE

the Board or the Commissioner

Inland Revenue on a casetocase
basis. In addition, the Board may,
where it considers appropriate,
also get such audit conducted
jointlywithsimilarauditsbeing
conducted by provincial
administrationsofsalestaxon
services;
(c) after subsection (4), substitu
tedasaforesaid,thefollowingnew
subsections shall be inserted and
theexistingsubsection(5)shall
berenumberedassubsection(9),
namely:
(5)Eachspecialauditpanelshall
beheadedbyachairmanwhoshall
beanofficerofInlandRevenue;
46(4)

(6) If any one member of the

special audit panel, other than the
chairman, is absent from
conducting an audit, the
proceedings of the audit may
continue and the audit conducted
bythespecialauditpanelshallnot
be invalid or be called in question
merely on the ground of such
absence
(7) The Board may prescribe rules
in respect of constitution,
procedure and working of special
auditpanel.
(8) Every member of the special
audit panel shall have the powers
ofofficersofInlandRevenueunder
sections 23 and 45 and sub
sections(1)to(3)ofsection46.;

162
 FEDERALEXCISE

NonExistent Agreement for the exchange of

information
Thisnewclausehasbeenproposed
to be added whereby the Federal
47A

Government may execute

agreement with Government and
Foreign country for exchange of
information relating to excise duty
imposedongoodsorservices.
NonExistent DisclosureofinformationbyPublic
Servant
Thepublicservantsarerestrictedto
47B

passonanyinformationrelatingto
such agreement made with
GovernmentorForeigncountries.

FIRSTSCHEDULE
TABLEI
EXCISABLEGOODS

Therateaswellasdutyhasbeen
enhanced the same is given as
under:
Locallyproducedcigarettesiftheir Locallyproducedcigarettesiftheir
9

on pack printed retail price on pack printed retail price

exceeds Rs. 2,706 per thousand
cigarettes @ Rs. 2,632 per
thousandcigarettes.
Alocallyproducedcigaretteiftheir
on pack printed retail does not
10
exceeds Rs. 3,350 per thousand
cigarettes @ Rs. 3,030 per
thousandcigarettes.
A locally produced cigarette if
their on pack printed retail does

exceed Rs. 2,706 per thousand
cigarettes @ Rs. 1,085 per
thousandcigarettes.
NonExistent
56
not exceed Rs.3,350 per thousand
cigarettes @ Rs. 1,320 per
thousandcigarettes.
Filter Rod for cigarette @ Rs. 0.75

perfilterRod.

163
FEDERALEXCISE

THIRDSCHEDULE
TABLEI
EXCISABLEGOODS

NonExistent The Exemption has been granted

to the White Cement falling under
18

PCTheading25.23
WhiteCement
NonExistent The Exemption has been granted
to the Motor cars falling under
PCTheading87.03
whichreadsasunder;
19

Motorcarsandothermotor
vehicles principally designed for
thetransportofpersonsincluding
stationwagonsandracingcarsof
cylindercapacityexceeding850cc

THIRDSCHEDULE
TABLEII
EXCISABLESERVICES

NonExistent Throughthisproposedamendment
the services provided in respect of
9

travel on flights rotating on socio

economicrouts.
NonExistent By virtue of this proposed
amendmenttheservicesinrespect
10

of Hajj passengers, diplomats and

Supernumerarycrew
NonExistent The services of advertisement in
newspapers and periodicals are
11

now proposed to be exempted

fromlevyofduty.

164
 FEDERALEXCISE

NonExistent Through this amendment the

services rendered by any Banking
or NonBanking companies in
respect of Hajj and Umrrah,
12

Cheque Book, Insurance, Mushar

ikaandModaribafinancingareout
of scope of duty and proposed to
bedeclaredasexempt.

165
CUSTOMSACT

CUSTOMSACT

TheamendmentsareapplicablefromJuly1,2015unlessspecifiedotherwise.

SECTION

PROPOSEDAMENDMENT
PRESENTPOSITION THROUGH
ASON30THJUNE,2015
FINANCEBILL2015

General Power to exempt from Through this proposed amendment

CustomsDuties
The Federal Government
possessed the power to impose
the duty on any product either
imported or exported and
declared any goods or class of
goodsexemptfromsuchduties
19(1)
the sub section (1) of referred
section substituted and now the
impositionofanydutyaswellasits
exemption would be validated
subject to theapprovalof Economic
Coordination Committee of Cabinet.
Further the circumstances for
purpose of levy have been widely
enlargedandspecificallydefined.
(1) The Federal Government

pursuant to the approval of the

Economic Coordination Committee
ofCabinet,whenevercircumstances
exist to take immediate action for
the purposes of national security,
natural disaster , national food
securityintheemergencysituations,
protection of national economic
interests in situations arising out of
abnormal fluctuation in
international commodity prices,
removal of anomalies in duties,
developmentofbackwardareasand

166
 CUSTOMSACT

implementation of bilateral and

multilateral agreements, subject to
such conditions, limitations or
restrictions,ifany,asitthinksfitto
impose, may, by notification in the
official Gazette, exempt any goods
19(1)

imported into, or exported from,

Pakistan or into or from any
specified port or station or area
therein from the whole or any part
of the customsduties chargeable
thereonandmayremitfine,penalty,
charge or any other amount
recoverableunderthisAct.;and
NonExistent Through this insertion the, Federal
Governmentshallbeboundtoplace
all the notifications before the
National Assembly in the Financial
Year.

(4) The Federal Government shall

place before the National Assembly

all notifications issued under this

sectioninafinancialyear.

19(4)&(5)

NonExistent All the previous notifications issued

after promulgationof Finance Act,
2015, if not rescinded would not
haveanylegaleffectandconsidered
tostandrescindedaccordingly
(5) Any notification issued after the
promulgation of the Finance Act,
2015 under subsection (1) shall, if
not earlier rescinded, stand
rescinded on the expiry of the
financial year in which it was
issued.

167
CUSTOMSACT

Boards power to grant Through this proposed amendment

exemption from duty in the power of the Board has been
20

exceptionalcircumstances withdrawn

Untruestatement,error, etc Through this proposed amendment
The proceedings involving the andkeepingthecostofthelitigation
32(3)

amount of duties less than 100 under consideration the monetary

rupeesnottobeinitiated limitofunnecessaryproceedingshas
beenincreasedfrom100to20,000/
Declaration and assessment for
Through this proposed amendment
home consumption or
thefacilityalsohasbeenextendedin
warehousing cases of transshipment where the
goods are not landed for home
The importer either for home
consumptionorwarehousingwas consumption or warehousing.
79

However, for this purpose the

required to file the entry within
explanationhasalsobeenaddedfor
fifteen days of arrival of the
goods. determining the place of liability of
the assessment which is the port of
destination.
Transshipmentofgoodswithout Theprovisohasbeenaddedwhereby
paymentofduty. thedefinitionofcustomstationshas
121(1)

been enlarged keeping in mind the

onlinebusinesstransactionsandthe
custom station now means where
thesystemisoperational.
Punishmentforoffences Bywayofthisproposedamendment
NonExistent it is mandatory condition to keep
156(1)

invoice and packaging list in the

importedconsignmentotherwisethe
penalty of Rs. 50,000/ shall be

imposedontheimporter.

168