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Deloitte Yousuf Adil Chartered Accountants Member of Deloitte Touché Tohmatsu Limited
Highlights & Comments
Audit.Tax.Consulting.Financial Advisory
1 | © Budget 2016-17 | Highlights & Comments
Foreword
2 | © Budget 2016-17 | Highlights & Comments
Contents
3 | © Budget 2016-17 | Highlights & Comments
Budget at a Glance
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Economic Overview
GDP Growth
Economic Review and
Budget 2016-17
Fiscal Changes
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Source: Table 1.1, Growth and Investments, Economic Survey 2015-16, Ministry of Finance. P = Provisional
Source: Table 1.1, Growth and Investments, Economic Survey 2015-16, Ministry of Finance
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Source: Table 1.2, Growth and Investments, Economic Survey 2015-16, Ministry of Finance
Source: Table 1.2, Growth and Investments, Economic Survey 2015-16, Ministry of Finance
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Source: Table 1.2, Growth and Investments and Table 12.8, Population, Labour Force and Employment, Economic Survey 2015-16, Ministry of Finance
Sources: World bank, databank, World development indicators, FY-14 (last updated)
National Savings & Investments
Source: Table 1.7, Growth and Investments, Economic Survey 2015-16, Ministry of Finance; P = Provisional
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Source: Economic Survey, 2014-15, Ministry of Finance, Deloitte Research, E = Annualized based on 10 months of data
Trade Deficit
Source: State Bank of Pakistan
E = Annualized based on 10 months of data
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Source: State Bank of Pakistan
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Fiscal Policy Implications
Public Debt
Source: State Bank of Pakistan, Ministry of Finance
Note: FY16 figures not for the full year
Tax Collections
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Source: Table 4.1, Fiscal Development, Economic Survey 2015-16, Ministry of Finance
P = Provisional
Monetary Policy and interest rates
Source: Table 7.1, Inflation, Economic Survey 2015-16, Ministry of Finance
P = Provisional
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Energy Crisis
Source: Table 2, Energy, Economic Survey 2015-16, Ministry of Finance, NEPRA
P = Provisional
Employment
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Source: Table 12.10, Population, Labour Force and Employment, Economic Survey 2015-16, Ministry of Finance
Budget and Economic outlook for
FY 2016-17
Key Challenges for reviving and
sustaining the economic growth
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Income tax
Highlights of Important
Fiscal Proposals
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Sales tax on goods
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Federal excise duty
Customs duty
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Income Tax Ordinance, 2001
1. Super tax [Section 4B]
2. Tax on builders [Sections
7C and 8]
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3. Tax on developers [Sections
7D and 8]
4. Income from Property
[Sections 15 and 15A]
5. Income from Business –
inadmissible deductions
[Section 21]
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6. Depreciation [Section 22]
7. Capital gain on disposal of
securities [Section 37A]
8. Scope of exemptions and tax
concessions in the Second
Schedule [Section 53]
9. Group relief [Section 59B]
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10. Tax credit for investment in
health insurance [Section
62A]
11. Contribution to an approved
pension fund [Section 63]
12. Deductible allowance for
profit on debt [Section 64A]
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13. Deductible allowance for
education expenses [Section
64AB]
14. Tax credit for employment
generation by manufacturers
(Section 64B) Tax credit is presently available to companies, equal to 1% of the tax payable for every 50
15. Tax credit to a person
registered under Sales Tax Act,
1990 (Section 65A)
16. Tax credit on investments
(Section 65B)
17. Tax credit on enlistments
(Section 65C)
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18. Tax credits for newly
established industrial undertakings
(Section 65D)
19. Tax credits for industrial
undertakings established before the
first day of July, 2011
(Section 65 E)
.
20. Apportionment of deductions
(Section 67)
21. Fair market value (Section 68)
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22. Persons (Section 80)
23. Agreements for avoidance of
double taxation and prevention of
fiscal evasion (Section 107)
24. Transaction between associates
(Section 108)
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25. Minimum tax on certain
persons (Section 113)
26. Minimum tax on builders and
land developers (Sections 113A
and 113B)
27. Return of Income (Section
114)
28. Provisional assessment
(Section 122C)
.
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28. Advance tax paid by the
taxpayer (Section 147)
29. Payments for foreign
produced commercials (Section
152A)
30. Payments for goods, services
and contracts (Section 153)
31. Tax collected or deducted as a
final tax (Section 169)
32. Cash withdrawal from a bank
(Section 231A)
33. Advance tax on private motor
vehicles (Section 231B)
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34. Advance tax at the time of
sales at auction (Section 236A)
35. Advance tax on sales or
transfer of immovable property
(Section 236C)
36. Advance tax on banking
transaction otherwise than through
cash (Section 236P)
37. Advance tax on insurance
premium (Section 236U)
38. Advance tax on extractions of
minerals (Section 236V)
39. Advance tax from provincial
sales tax registered person (Section
236W)
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The First Schedule
Rates of Tax
Part I
Division VIA (Income from Property)
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Division VII (Capital gains on disposal of securities)
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Division VIII (Capital gains on disposal of immovable property)
Existing:
Proposed:
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Division VIIIA (Tax on Builders)
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Division VIIIB (Tax on Developer)
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Part III
Division I (Advance Tax on Dividends)
Division III (Payments for Goods or Services)
Division III (Prize and Winnings)
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Division V (Income from property)
:
Part IV
Division II (Brokerage and commission)
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Division IIA (Rates for collection of tax by stock exchange registered in Pakistan)
Division IV (Electricity consumption)
Division X (Advance tax on sale or transfer of immovable property)
Division XVIII (Advance tax on purchase of immovable property)
Division XIX (Advance tax on domestic electricity consumers)
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Division XXI (Advance tax on banking transactions otherwise than through cash)
Division XXV (Advance tax on insurance premium)
Division XXII (Collection of tax by Pakistan Mercantile Exchange Limited)
Division XXVI (Advance tax on extraction of minerals)
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The Second Schedule
Exemptions and Tax Concessions
Part I
Exemption from Total Income
[Technical Correction]
Exemption from Any Income
Clause (66) (XVIII)
Restricts Exemption to
Organization Established by the
Government
Clause (98)
Exemption of Inter-Corporate
Dividend
Clause (103A)
Income derived from Gawadar port
operations
Clause (126A) [Substituted]
Clauses (126AA) [Addition]
Clause (126AB) [Addition]
(i)
(ii)
Clause (126AC) [Addition]
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Clause (126AD) [Addition]
Export of IT Products
Clause (133)
Part II Reduction in tax rates.
Services rendered and Execution of
contract
Clause (3)
Clause 3B [Addition]
(i)
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(ii)
PART IV
Exemption from Specific
Provisions
Exemption from Minimum Tax
under Section 113
Clause (11A) (XXVI) and
(XXVII)
Inter corporate dividend and profit
on date Exemption from
Withholding Tax
Clauses (11B) and (11C)
Exemption from Section 150
Clause (38AA)
Reduced rate of minimum tax for
trading houses
Clause (57)
Term Finance Certificate
Exemption from Withholding Tax
under Section 151
Clause 59 (i)
Extension of Concession to Hajj
Operators
Clause (72A)
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Conditions imposed in Respect of
Issuance of Withholding
Certificate under Section 148
Clause (72B)
Extension of Exemption from
Applicability of Section 111
Clause (86) (a)
Clauses (91), (92) and (93)
[Technical Correction]
Extension of Exemption in
Respect of Minimum Tax to Low
Profit Service Sector and Inclusion
of IT Sector to Promote IT
Clause (94)
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The Fourth Schedule (Rules for the computation of the
profits and gains of insurance
business)
The Sixth Schedule (Recognized Provident Fund)
The Seventh Schedule (Rules for the computation of the
profits and gains of a banking
company and tax payable thereon)
The Eight Schedule (Rules for the
computation of capital
gains on listed
securities)
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Tax Deduction / Collection Guide
Tax Collection and Withholding
Guide
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1. Definition (Section 2)
Cottage Industry (Clause 5AB)
Due Date (Clause 9)
Input Tax (Clause 14)
2. Time and manner of payment
(Section 6)
3. Determination of tax liability
(Sections 7 and 8)
Sales Tax Act, 1990
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4. Assessment of Tax and
recovery of tax not levied or
short-levied or erroneously
refunded (Section 11)
5. Exemption (Section 13)
6. Return (Section 26)
7. Directorate General of Input
Output Coefficient Organization
(Section 30DDD)
8. Offences and penalties
(Section 33)
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9. Sale of taxable activity or
transfer of ownership (Section 49)
10. Disclosure of information by
public servant (Section 56B)
Third Schedule
Fifth Schedule
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Sixth Schedule
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Table 3
Eighth Schedule
Table I
Poultry feed
Biodiesel
Pesticides
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New Insertions
Table II
Grain Handling
Ninth Schedule
Mobile phones
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Section 3: Scope of Tax:
Sub-section (2A)
Sub-section (2B)
Islamabad Capital Territory (Tax on
Services) Ordinance, 2001
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1. Due date (clause (8a) of
Section 2):
2. Filing of return and payment
of Duty etc. (Section 4):
3. Adjustment of duties of excise
(Section 6):
4. Exemption (Section 16):
5. Offences, penalties, fines and
allied matters (Section 19):
6. Disclosure of information by
public servant (Section 47B)
Federal Excise Act, 2005
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First Schedule
Table II
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Third Schedule
o
o
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1. Power to exempt from
Customs Duty (Section
19)
2. Confidentiality of
information (Section
155H)
First Schedule
Insertions
Customs Act, 1969
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Fifth Schedule
Part-I – Import of plant,
machinery, equipment and
apparatus including Capital Goods
for various industries and sectors
Insertions
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Part-III – Raw Materials/Inputs for
Poultry and Textile Sector; Other
Goods
Insertions
Changes
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Part-IV – Imports of Machinery
and Equipment for Textile Sector
Insertions
Part-V – Import of Automotive
Vehicles (CBUs) under
Automotive Development Policy
(ADP) 2016-21
Insertions
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Part-VII – Miscellaneous
Insertions
Table-A
Table-B
S.
No Description
PCT
Codes
Omissions
S.
No Description
PCT
Codes
1 | © Budget 2016 - 17 | Highlights
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