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Riaz Ahmad & CompanyRiaz Ahmad & CompanyChartered AccountantsChartered Accountants

FINANCE ACT 2017FINANCE ACT 2017

RIAZ AHMAD & COMPANYChartered Accountants

I N D E X

FINANCE ACT 2017

DESCRIPTION PAGE NO.

INTRODUCTION 1

EXECUTIVE SUMMARY 2 – 4

INCOME TAX 5 – 48

SALES TAX 49 – 57

FEDERAL EXCISE DUTY 58 – 60

OTHER LAW 61

CONTACT PARTNERS 62


INTRODUCTION

FINANCE ACT 2017- 1 -

This Memorandum has been prepared to facilitate our clients in better understanding of the changesmade in income tax, sales tax, federal excise duty and other law through the Finance Act, 2017. Thechanges have been explained in a concise manner and insignificant changes of consequential,administrative, procedural or editorial nature have been ignored for the sake of brevity.

Included under the heading of Income Tax Ordinance, 2001 is a dedicated portion, titled “General”,which covers complete rates of income tax, schedule of filing of various periodical statements, rates fordeduction of income tax at source, filing date of income tax return, computation of advance tax, etc. forconvenience and ready reference of our clients.

The Finance Act, 2017, unless otherwise stated, has come into force on 01 July 2017.

This Memorandum may be accessed on our web-site: www.racopk.com

It is recommended that the text of the Finance Act, 2017 as published in the Official Gazette and therelevant laws and notifications, wherever applicable should be referred to in considering theinterpretation of any provision. This Memorandum contains only general comments. Final decision on anyissue should not be taken without detailed consideration and professional advice.

This Memorandum should not be published in any manner without the consent of the firm. Forprofessional advice, you may contact our following tax experts:

Sarfraz Mahmood Muhammad Arshad

Inaam Ellahi Sheikh Muhammad Waqas

Liaqat Ali Panwar Pirzada M. Khurram

Raheel Arshad Bilal Ahmad

Lahore Office Karachi Office Faisalabad Office Islamabad Office

LAHORE: 13 July 2017


EXECUTIVE SUMMARY


Income Tax

Durable goods have been excluded from the definition of 'fast moving consumer goods'.

Liaison office has been defined as a place of business, acting for the principal, head office or anentity of which it is a part, maintains itself out of foreign remittance and no income is derived inPakistan from its activities.

Online marketplace has been defined as information technology platform run by e-commerce entityto facilitate transactions between buyer and seller.

Concept of startup has been introduced whereby the person engaged in 'technology driven productsor services' duly certified by Pakistan Software Export Board, having turnover less than one hundredmillion rupees in each of the last five tax years will be exempt from tax including minimum tax forthree years.

Super tax imposed @ 4% on income of banking companies and @ 3% on other taxpayers earningincome of Rupees 500 million or above has been further extended upto tax year 2017.

Now, tax on undistributed profits (instead of undistributed reserves) shall be imposed @ 7.5% ofaccounting profit before tax on every public company other than a scheduled bank or a modarabathat does not distribute 40% of its after tax profit within six months of the end of the tax year.

Return on investment on sukuks from a company shall be charged to tax on the same lines as in thecase of special purpose vehicle.

Final taxation on builders and developers is no more available.

Threshold of loan given to an employee without any profit or at reduced rate of profit has beenenhanced from five hundred thousand rupees to one million rupees for the purposes of taxation ofthe employee.

Now, expenditure incurred by pharmaceutical manufactures on account of sales promotion andadvertisement, exceeding ten percent of their turnover shall not be allowed as admissible deduction.

Tax depreciation on assets jointly owned by the taxpayer and Islamic Financial Institution pursuant toarrangement of Musharika or Diminishing Musharika Financing will be allowed to lessee (taxpayer).

Tax credit for investment in sukuks shall also be allowed to a resident person, other than a company,being original allottee as is being allowed in respect of investment in shares of a public company.

If the taxpayer surrenders the insurance policy within two subsequent years of its acquisition, thecredit allowed in this regard shall be deemed to have been wrongly allowed.

Limit of taxable income for the purposes of deductible allowance in respect of tuition fee has beenenhanced from one million rupees to one and a half million rupees.

Maximum limit of premium paid for claiming tax credit in respect of health insurance has beenenhanced from one hundred thousand rupees to one hundred and fifty thousand rupees.


EXECUTIVE SUMMARY


Three percent tax credit previously available in respect of ninety percent sales to registered personhas been withdrawn.

Period of tax credit for enlistment of company in stock exchange has been enhanced to four years.

Profits and gains derived from sui gas field shall also be taxed in accordance with the Rules given inPart I of Fifth Schedule from tax year 2017 and onwards.

Administrative and management expenditure of non-profit organizations (NPOs) shall not exceed15% of their total receipts subject to specified conditions for the purposes of claiming one hundredpercent tax credit. Moreover, surplus funds of the NPO shall be taxed @ 10%.

General rate of minimum tax u/s 113 on turnover has been enhanced from 1% to 1.25%.

The concept of provisional assessment has been eliminated.

Threshold of latest assessed income for the purpose of payment of advance tax u/s 147 by individualhas been enhanced from five hundred thousand rupees to one million rupees.

Now, revised monthly statement of withholding tax may be furnished within sixty days of its filing.

Financial institutions shall also provide information in respect of any other reportable person to theFBR for the purposes of automatic exchange of information under bilateral agreement or multilateralconvention.

Directorates-General for broadening the tax base and for the purpose to conduct audit of transferpricing in transactions between associates have been introduced.

Advance tax collected by stock exchange from its members on purchase or sale of shares in lieu oftax on commission earned by such members shall now be final tax.

Advance tax collected on electricity bills of CNG stations shall be final tax.

Advance tax on sale, purchase or transfer of immoveable properties shall also be collected by housingauthorities, housing societies, co-operative societies and registrar of properties.

Tax collected on immoveable property acquired and disposed of within the same tax year shall beminimum tax.

Pakistan Tobacco Board shall collect advance tax @ 5% of purchase value from the personpurchasing tobacco.

General rate of tax on dividend income has been enhanced from 12.5% to 15%.

Rate of tax to be collected from subscribers of internet, mobile telephone and prepaid internet ortelephone card has been reduced from 14% to 12.5%.

Limit of quantity of raw material to be imported which is sought to be exempted from withholding taxat import stage has been enhanced from 110% to 125% of the quantity imported and consumedduring previous tax year.


EXECUTIVE SUMMARY


Sales tax

Sales tax shall be charged / levied on the value of goods imported irrespective of their finaldestination in territories of Pakistan where Sales Tax Act is not applicable.

Further tax shall be charged, levied and paid on zero rated goods supplied to person who has notobtained registration number.

Notice for recovery of tax shall not be issued if the taxpayer has paid 25% of the tax due and appealagainst the order is pending with the Commissioner (Appeals).

Fertilizer products (other than Urea) was previously subject to tax under retail price regime. Suchproducts shall now be subject to sales tax at fixed rates per bag. As fertilizer products manufacturedfrom LNG were already subject to reduced rate of 5%, fixed taxes shall apply only in respect offertilizers manufactured from natural gas other than LNG.

Natural gas supplied to fertilizer plants for use as feed stock in manufacturing of fertilizer is madesubject to sales tax at reduced rate of 10%.

Poultry related equipment has been subject to reduced rate of sales tax @ 7%.

Supply of locally produced coal has been subject to sales tax at higher of 17% of value of supply orRupees 425 per metric tonne.

Commercial import of fabric shall be subject to sales tax at the rate of 6% plus 2% value additiontax.

Rate of sales tax on supplies of finished fabric to and by retailers; supplies of finished fabric to endconsumers; other supplies of finished fabrics shall now be 6% instead of 5%.

Rate of sales tax on supplies to any person, including retail sales, of locally manufactured finishedarticles of: (a) textiles and textile made-ups including carpets; and (b) leather and artificial leathershall now be 6% instead of 5%.

Federal excise duty

Scope of duty on imported goods has been expanded to areas / places where Federal Excise Act isnot applicable.

Notice for recovery of tax shall not be issued if the taxpayer has paid 25% of the tax due and appealagainst the order is pending with the Commissioner (Appeals).

Rate of duty on various types of cement has been enhanced from Rupee 1 to Rupees 1.25 perkilogram.

Rate of duty on telecommunication services, except in specified area, has been reduced to 17% from18.5%.


INCOME TAX ORDINANCE, 2001


Fast moving consumer goods - definition Section 2(22A)

Durable goods have specifically been excluded from the definition of 'fast moving goods' which will nowbe read as, "fast moving consumers goods means consumer goods which are supplied in retail marketingas per daily demand of a consumer excluding durable goods".

Liaison office - definition Section 2(30C)

Liaison office has been defined as under:

“liaison office” means a place of business acting for the principal, head office or any entity of which it is apart, and(a) its activities do not result in deriving income in Pakistan; and(b) maintains itself out of any amount remitted from outside Pakistan received through normal bankingchannels.

Explanation,- It is clarified that-

i. place of business shall not be treated as liaison office if it engages in: (a) commercial activities;(b) trading or industrial activities; or (c) the negotiation and conclusion of contracts;

ii. the activities shall be treated to be commercial activities, if these include (a) providing after salesservices for goods or services; or (b) marketing or promoting pharmaceutical and medicalproducts or services;

iii. subject to clause (i), a place of business shall be treated as a liaison office, if it undertakesactivities of (a) an exploratory or preparatory nature, to investigate the possibilities of tradingwith, or in, Pakistan; (b) exploring the possibility of joint collaboration and export promotion; (c)promoting products where such products are yet to be supplied to, or sold in, Pakistan; (d)promoting technical and financial collaborations between its principal and taxpayers in Pakistan;or (e) provision of technical advice and assistance.

NCCPL Section 2(35AA)

This sub-section has been amended to include 'any subsidiary of NCCPL notified by the FBR' in thedefinition of NCCPL. So now, 'NCCPL' means National Clearing Company of Pakistan Limited, which is acompany incorporated under the Companies Ordinance, 1984 (XLVII of 1984) and licensed as "ClearingHouse" by the Securities and Exchange Commission of Pakistan or any subsidiary of NCCPL notified bythe Board (FBR) for the purpose of this clause.

Officer of Inland Revenue Section 2(38A)

New income tax authorities, "District Taxation Officer Inland Revenue" and "Assistant Director Audit"have been introduced and included in the definition of Officer of Inland Revenue. Relevant sections 207and 208 have also been amended for this purpose.

Online marketplace - new definition Section 2(38B) & Clause (28C)Part II, Second Schedule

“online marketplace” means an information technology platform run by e-commerce entity over anelectronic network that acts as a facilitator in transactions that occur between a buyer and a seller.”

Moreover, reduced rate of withholding tax at five percent has been introduced in case of a person runningsuch business, by adding new clause (28C) in Second Schedule.




Startup Section 2(62A) & Clause 143 of Part I and Clause11A & 43E of Part IV of Second Schedule

New concept of startup has been introduced which means, (i) a business of a resident individual,AOP or a company that commenced on or after first day of July, 2012 and the person is engaged in orintends to offer technology driven products or services to any sector of the economy provided that theperson is registered with and duly certified by the Pakistan Software Export Board (PSEB) and hasturnover of less than one hundred million rupees in each of the last five tax years; or (ii) any businessof a person or class of persons, subject to the conditions as the Federal Government may, by notificationin the official Gazette, specify.

Profit and gains derived by a start-up shall be exempt from tax for the tax year in which it is certified bythe PSEB and the following two tax years. Moreover, provisions of section 113 regarding minimum taxand provisions of section 153 regarding withholding tax being recipient of payment, shall not apply incase of such business.

Super tax for rehabilitation of temporarily displaced person Section 4B

Super tax imposed only for tax year 2015 @ 4% on the income of banking companies and @ 3% onother taxpayers earning income of Rupees 500 million or above was extended to tax year 2016 throughFinance Act, 2016, has now again been extended for tax year 2017.

Tax on undistributed profits Section 5A

'Tax on undistributed reserves' has now been replaced with 'tax on undistributed profits' before tax forthe year applicable retrospectively from tax years 2017 and onward. The tax shall be imposed @ 7.5% ofaccounting profit before tax on every public company other than a scheduled bank or a modaraba thatderives profit for a tax year but does not distribute at least 40% of its after tax profit within six months ofthe end of the tax year through cash or bonus shares. Bonus shares or cash dividends for the tax year2017 may be distributed before the due date of filing return of income of the company. This tax shall notbe applicable to electric power generation companies qualifying for exemption under clause (132) of PartI of the Second Schedule and companies in which not less than fifty percent shares are held by theGovernment.

Tax on return on investment in sukuks Sections 5AA & 150A

By amendment in section 5AA, return on investment in sukuks from a company shall also be charged totax as is the case with return on investment in sukuks from a special purpose vehicle. Accordingly,section 150A regarding withholding tax on such return has also been amended.

Tax on builders and developers Sections 7C, 7D & 8

Final tax regime for builders and land developers, as was introduced through Finance Act, 2016, has nowbeen abolished. However, final tax regime shall apply to projects undertaken for construction /development and sale of residential and commercial buildings / plots initiated and approved during taxyes 2017 and for which advance tax for approval was paid during tax year 2017 and for which the ChiefCommissioner has issued online schedule of advance tax installments to be paid by the builders ordevelopers, in accordance with the respective Income Tax Rules, 2002. Consequently, tax on projectsinitiated and approved after the tax year 2017 and onwards shall be charged under normal tax regime.For this purpose, section 8 has been amended to exclude sections 7C and 7D from final tax regime.




Value of perquisites Section 13(7)

In case, the loan is provided by the employer to its employee without any profit or at reduced rate ofprofit, the differential deemed profit computed using specified rate, was added in the income of theemployee provided that amount of loan was not exceeding five hundred thousand rupees. Now, this limitof five hundred thousand rupees has been enhanced to one million rupees.

Deduction not allowed Section 21(o)

Limit of deduction allowed to pharmaceutical manufactures in respect of expenditure incurred on accountof sales promotion, advertisement and publicity has been enhanced from five percent to ten percent oftheir turnover. Now such expenditure in excess of ten percent of turnover will not allowed as admissiblededuction.

Depreciation Section 22(15)

By inserting new proviso after the sub-section (15) of this section, the depreciable asset shall be treatedto be wholly owned by the taxpayer where the depreciable asset is jointly owned by a taxpayer and anIslamic Financial Institution licensed by the State Bank of Pakistan or Securities and ExchangeCommission of Pakistan, pursuant to an arrangement of Musharika or diminishing Musharika financing.Accordingly, tax depreciation on asset financed under Musharika or diminishing Musharika arrangementsshall be allowed to the lessee.

Exemption and tax concessions in the Second Schedule Section 53(2) & (4)

By amendment in sub-section (2) of this section, the FBR has been empowered to grant exemptions andconcessions with the approval of Federal Minister-in-Charge pursuant to the approval of the EconomicCoordination Committee of Cabinet instead of the Federal Government. Further, following two provisoshave been added after sub-section (4) to validate notifications upto 30 June 2018 which were issuedfrom 01 July 2016 onward:

"Provided that all such notifications, except those earlier rescinded, shall be deemed to have been inforce with effect from the first day of July, 2016 and shall continue to be in force till the thirtiethday of June, 2018, if not earlier rescinded:

"Provided further that all notifications issued on or after the first day of July, 2016 and placed before theNational Assembly as required under sub-section (3) shall continue to remain in force till the thirtieth dayof June, 2018, if not earlier rescinded by the Federal Government or the National Assembly.”

Tax credit for investment in shares and insurance Section 62(1) & (2)

A resident person, other than a company, shall also be entitled to a tax credit for a tax year in respect ofcost of acquiring in the tax year, sukuks offered to the public by a public company listed and traded onstock exchange in Pakistan, provided the resident person is the original allottee of the sukuks.

The amount of such tax credit shall be computed according to same formula as is being used for taxcredit in respect of shares of a public company or premium paid on life insurance. Moreover, by insertinga proviso in this section, if the taxpayer surrenders the insurance policy within two subsequent years ofits acquisition, tax credit allowed under this section shall be deemed to have been wrongly allowed.




Deductible allowance for profit on debt andDeductible allowance for education expenses

Sections 64A & 64AB

Both sections 64A and 64AB have be re-numbered as 60C and 60D respectively to shift those at the rightplace under the head of "deductible allowances". By amendment in re-numbered section 60D, everyindividual shall now be entitled to a deductible allowance in respect of tuition fee if his taxable income isless than one and a half million rupees. Earlier this limit was one million rupees.

Tax credit for investment in health insurance Section 62A(2)

Maximum limit of contribution or premium paid for claiming tax credit in respect of health insurance hasbeen enhanced from one hundred thousand rupees to one hundred and fifty thousand rupees.

Tax credit to a person registered under the Sales Tax Act, 1990 Section 65A

This section has been omitted and thereby three percent tax credit in respect of ninety percent sales toperson registered under the Sales Tax Act, 1990 will no more be available.

Tax credit for enlistment Section 65C

Period of tax credit for enlistment in stock exchange has been enhanced from two tax years to four taxyears with the condition that the tax credit for the last two tax years shall be ten percent of the taxpayable.

Principles of taxation of companies Section 94Sub-section (3) of this section regarding taxation of dividend paid by a non-resident company to aresident person under the head "Income from Business" or "Income from other Sources" has beenomitted. Accordingly, ambiguousness of taxation of dividend received from a non-resident company hasbeen removed and now dividend shall be taxed at reduced rate as per section 5, in the same manner asin the case of dividend received from a resident company. This sub-section should have been omittedthrough Finance Act, 2015 when sub-section (2) of this section was amended by substituting the words'resident company' with 'company' which resulted in ambiguity in taxation of dividend income.

Special provision relating to the production of oil and natural gas,and exploration and extraction of other mineral deposits

Section 100(2)

Profits and gains derived from sui gas field for the tax year 2017 and onwards shall also be taxed inaccordance with the Rules given in Part I of the Fifth Schedule. Earlier taxation of sui gas field was beingdealt with normal provisions of law.

Tax credit for certain persons Section 100CBy inserting new clause (d) in sub-section (1) of this section, another condition has been imposed toclaim one hundred percent tax credit by non-profit organizations (NPOs), trusts or welfare institutionsthat the administrative and management expenditure does not exceed 15% of total receipts. However,this condition will not apply to NPO if (a) charitable and welfare activities of the NPO have commencedfor the first time within last three years and (b) total receipts of the NPO during the tax year are less thanone hundred million rupees. Moreover, surplus funds of NPO shall be taxed at the rate of ten percent. Forthis purpose 'surplus funds' have been defined as under:

"Surplus funds mean funds or monies (a) not spent on charitable and welfare activities during the taxyear; (b) received during the tax year as donations, voluntary contributions, subscriptions and otherincomes; (c) which are more than twenty-five percent of the total receipts of the non-profit organizationreceived during the tax year; and (d) are not part of restricted funds.




Explanation.- For the purpose of this sub-section, “restricted funds” mean any fund received by theorganization but could not be spent and treated as revenue during the year due to any obligation placedby the donor.”

Minimum tax on the income of certain persons Section 113

Rate of minimum tax on turnover has been enhanced from 1% to 1.25%.

Persons not required to furnish a return of income Section 115(3)

Sub-section (3) of this section has been amended and thereby a widow, an orphan below the age of 25years, a disabled person or a non-resident person in case of ownership of immovable property shall alsonot be required to furnish return of income solely by the following reasons: (a) own immoveable propertywith a land area of five hundred square yards or more located in a rating area; (b) owns a flat havingcovered area of two thousand square feet or more located in rating area; (c) owns a motor vehiclehaving engine capacity above 1000CC.

Wealth statement Section 116(3)

Now, wealth statement can be revised at any time before the receipt of notice of opportunity of beingheard under section 122(9) for the tax year to which it relates. Earlier this option was available any timebefore making the assessment order under sub-section (1) or (4) of section 122.

Extension of time for furnishing returns and other documents Section 119(4)

In case, the Commissioner has not granted extension for furnishing return of income or statement, theChief Commissioner has now specifically been empowered to grant extension or further extension for aperiod not exceeding fifteen days unless there are exceptional circumstances justifying a longer extensionof time.

Provisional assessment Sections 122C, 114, 116, 121, 122, 127 & 137

By omitting section 122C, the concept of provisional assessment introduced through Finance Act, 2010has now been withdrawn. Corresponding amendment has been made in section 121, "Best judgmentassessment" to pass assessment order on the basis of available information or material and to the bestjudgment of the Commissioner. Consequential amendments have also made in sections 114, 116, 122,127 and 137.

Appointment of the Appellate Tribunal Section 130(3)

An Officer of Inland Revenue Service in BS-20 or above and a law graduate, shall no more be eligible forappointment as judicial member of the Appellate Tribunal.

Recovery of tax from persons assessed in Azad Jammuand Kashmir and Gilgit-Baltistan

Section 146

Gilgit-Baltistan (GB) has been added in this section after Azad Jammu and Kashmir (AJ&K) for recovery ofunrecovered amount of tax assessed in GB because the person's residence is in Pakistan or has nomoveable or immoveable property in GB. Such amount will recovered in the same manner as the amountof tax assessed in AJ&K is being recovered by the Commissioner in Pakistan.

Advance tax paid by the taxpayer Section 147(2) & (4B)

Threshold of latest assessed income for the purpose of payment of advance tax by the individual hasbeen increased from five hundred thousand rupees to one million rupees.




Imports Section 148(7) & (8)The tax required to be collected on import of fertilizer by manufacturer of fertilizer shall now be a finaltax. Moreover, the tax required to be collected on the import of plastic raw material imported by anindustrial undertaking falling under PCT heading 39.01 to 39.12 for a tax year shall be minimum tax.Payments to non-residents Section 152(1B), (4A) & Clause (41) of

Part IV of Second ScheduleProvisions of clause (41) of Part IV of Second Schedule requiring option to be filed by the non-residentperson for taxation under final tax regime on income arising from certain contracts have now been placedin sub-section (1B) of this section as a consequence of deletion of clause (41). The inserted new provisohas not specified any time limit for filing the option as well as period of validation of the option forassessment under final tax regime. Moreover, sub-section (4A) has been substituted to allow in writing bythe Commissioner, the facility of making payment without deduction of tax or deduction of tax at areduced rate, to a non-resident person having permanent establishment in Pakistan in respect of: (a) acontract or sub-contract under a construction assembly or installation project in Pakistan; (b) any othercontract for construction or services rendered thereto; or (c) a contract for advertisement servicesrendered by T.V. Satellite Channels. Previously, such facility was available only in respect of supply ofgoods, rendering or providing services and execution of a contract.Payments for goods, services and contracts Section 153(1)(c)Where the recipient of the payment in respect of rendering or providing services, receive the paymentthrough an agent or third person after retention of service charges or fee, by whatever name called, thensuch retention of service charges or fee shall be treated as payment made by the recipient and therecipient shall collect tax alongwith the payment received from the agent or third person.Statements Section 165(2)If any person after furnishing monthly statement of withholding tax, discovers any omission or wrongstatement therein, a revised statement may be furnished within sixty days of filing of original statement.Earlier this facility was not available.Furnishing of information by financial institutionsincluding banks

Section 165B(1) & (2)

Financial institution shall also make arrangements to provide information regarding any other reportableperson to the FBR for the purpose of automatic exchange of information under bilateral agreement ormultilateral convention. Earlier, such information was provided in respect of non-resident person only. Forthis purpose, 'reportable person' has been defined in Chapter XIIA of the Income Tax Rules, 2002inserted through SRO 166(I)/2017 dated 15 March 2017, as under:Reportable person means a person other than:

i. A corporation the stock of which is regularly traded on one or more established securitiesmarkets;

ii. Any corporation that is a Related Entity of a corporation described in sub-clause (i);iii. A governmental entity;iv. An International Organization;v. A Central Bank; orvi. A Financial Institutional.

Notice to obtain information or evidence Section 176A firm of cost and management accounts as defined under the Cost and Management Accountants Act,1996 has also been empowered to conduct audit in the same manner as the powers have already beengiven to a firm of Chartered Accountants under this section.




Offences and penalties Section 182

Any person who fails to maintain records in respect of transactions between associates shall pay penaltyof ten thousand rupees or five percent of the amount of tax on income whichever is higher. Similarly, ifany person fails to furnish the information required in this regard shall pay penalty of twenty fivethousand rupees for first default and fifty thousand rupees for each subsequent default.

Moreover, penalties in respect of following offences have also been added in this section.

Sr.No. Offences Penalties

Section of theOrdinance towhich offencehas reference

17 Any reporting financial institution orreporting entity who fails to furnishinformation or country-by-countryreport to the Board as required undersection 107, 108 or 165B within thedue date.

Such reporting financial institutionor reporting entity shall pay apenalty of two thousand rupees foreach day of default subject to aminimum penalty of twenty fivethousand rupees.

107, 108 and165B

18 Any person who fails to keep andmaintain document and informationrequired under section 108 or IncomeTax Rules, 2002.

1% of the value of transactions, therecord of which is required to bemaintained under section 108 andIncome Tax Rules, 2002.

108

Prosecution for non-compliance with certain statutory obligation Section 191(1)

Any person who without reasonable excuse fails to provide return of income as required by theCommissioner through notice or fails to comply with provisions of Chapter XII regarding collection /deduction of tax at source, shall commit an offence punishable on conviction with a fine or imprisonmentfor a term not exceeding one year or both.

Default surcharge Section 205(1B)

Default surcharge due to non-payment or short payment of advance tax by the person having a specialtax year, shall be calculated on and from the first day of the fourth quarter of the special tax year till thedate on which assessment is made or the last day of special tax year, whichever is earlier.

Advance ruling Section 206A(3)

Now, a non-resident taxpayer having a permanent establishment in Pakistan can also apply for advanceruling in the same manner as was being done by a non-resident taxpayer under the provisions of thissection.

Disclosure of information by a public servant Section 216(3)

Employees Old Age Benefit Institution shall also not be precluded from disclosure of informationregarding salaries reported in statement furnished under section 165.

Directorate-General of Broadening of Tax BaseDirectorate-General of Transfer Pricing

Section 230DSection 230E

New directorates have been introduced for broadening of tax base and audit for determination of transferpricing at arm's length by inserting following two sections 230D and 230E:




“230D. Directorate-General of Broadening of Tax Base.— (1) The Directorate-General ofBroadening of Tax Base shall consist of a Director-General and as many Directors, Additional Directors,Deputy Directors, Assistant Directors and such other officers as the Board may, by notification in theofficial Gazette, appoint.

(2) The Board may, by notification in the official Gazette, specify the functions, jurisdiction and powers ofthe Directorate-General of Broadening of Tax Base."

"230E. Directorate-General of Transfer Pricing.— (1) The Directorate-General of Transfer Pricingshall consist of a Director-General and as many Directors, Additional Directors, Deputy Directors,Assistant Directors and such other officers as the Board may, by notification in the official Gazette,appoint.

(2) The functions of the Directorate General of Transfer Pricing shall be to conduct transfer pricing audit.

Explanation: For the removal of doubt, it is clarified that transfer pricing audit refers to the audit fordetermination of transfer price at arm's length in transactions between associates and is independent ofaudit under section 177, 214C or 214D which is audit of the income tax affairs of the taxpayer.

(3) The Board may, by notification in the official Gazette, specify the criteria for selection of the taxpayerfor transfer pricing audit and may further specify functions, jurisdiction and powers of the Directorate-General of Transfer Pricing.”

Advance tax on private motor vehicles Section 231B(1A) &Clause (102) of Part IV of Second Schedule

Sub-section (1A) of this section has been substituted to enhance scope and rate of withholding tax froma non-filer from three percent to four percent. The substituted sub-section is as under:

“(1A) Every leasing company or a scheduled bank or a non-banking financial institution or aninvestment bank or a modaraba or a development finance institution, whether shariah compliant orunder conventional mode, at the time of leasing of a motor vehicle to a non-filer, either through ijaraor otherwise, shall collect advance tax at the rate of four per cent of the value of the motor vehicle.”

Moreover, by inserting new clause (102) in Part IV of Second Schedule, such provision shall not beapplicable in case of light commercial vehicles leased under the Prime Minister's Youth Business LoanScheme.

Brokerage and commission Section 233(2A)

Now, the principal shall withhold tax on payment to electronic or print media for advertising services inthe manner as specified in following new sub-section of this section:

“(2A) Notwithstanding the provisions of sub-section (1), where the principal is making payment onaccount of commission to an advertising agent, directly or through electronic or print media, theprincipal shall deduct tax (in addition to tax required to be deducted under clause (b) of sub-section(1) of section 153 on advertising services excluding commission), at the rate specified in Division II ofPart IV of the First Schedule on the amount equal to-

A x 1585

Where A = amount paid or to be paid to electronic or print media for advertising services (excludingcommission) on which tax is deductible under clause (b) of sub- section (I) of section 153.

(2B) Tax deducted under sub-section (2A) shall be final tax on the income of the advertising agent."




Collection of tax by a stock exchange registered in Pakistan Section 233A(2)

Advance tax collected by stock exchange registered in Pakistan from its members on purchase or sale ofshares in lieu of tax on commission earned by such members, shall now be final tax instead of adjustabletax.

CNG stations Section 234A

Advance tax collected on the amount of electricity bill (under section 235) of CNG stations shall now be afinal tax on the income of CNG station arising from the consumption of the gas. It has also been clarifiedthat tax on income arising from consumption of gas means the tax collected on the amount of gas bill ofa CNG station which is inclusive of sales tax and all incidental charges.

However, the CNG stations have now been entitled to claim any adjustment of withholding tax collectedor deducted under any other head, during the tax year.

Electricity consumption Section 235(2)

After sub-section (2) of this section, explanation has been added whereby electricity consumption billmeans electricity bill inclusive of sales tax and all incidental charges.

Domestic electricity consumption Section 235A(1)

Similar to section 235, it has been clarified that electricity bill shall be inclusive of sales tax and allincidental charges.

Advance tax on sale or transfer of immoveable property,Advance tax on purchase or transfer of immoveable property andTax on purchase or transfer of immoveable property

Sections 236C, 236K &236W

By adding a proviso after sub-section (2) of section 236C, tax collected on immoveable property acquiredand disposed of within the same tax year shall be minimum tax. Moreover, scope of collection of advancetax has been enhanced by inserting the word 'recording' in sub-section (1) of all the sections 236C, 236Kand 236W and by adding following explanation therein:

“Explanation,- For removal of doubt, it is clarified that the person responsible for registering, recordingor attesting transfer includes person responsible for registering, recording or attesting transfer forlocal authority, housing authority, housing society, co-operative society and registrar of properties."

Advance tax on tobacco Section 236X

Under this new section, Pakistan Tobacco Board or its contractors, at the time of collecting cess ontobacco, directly or indirectly, shall collect advance tax at the rate of five percent of the purchase valueof tobacco from every person purchasing tobacco including manufacturers of cigarettes. Tax collectedunder this section shall be adjustable.

Validation Section 241

All notifications and orders issued and notified, in exercise of the powers conferred upon the FederalGovernment, before the commencement of Finance Act, 2017 shall be deemed to have been validlyissued and notified in exercise of those powers.


INCOME TAX ORDINANCE, 2001 – THE FIRST SCHEDULE


THE FIRST SCHEDULE

Part I – RATES OF TAX

Division III – Rate of Dividend Tax

General rate of tax on dividend given in clause (b) of this Division has been enhanced from 12.5% to15%. Moreover, rate of tax shall be 12.5% in case dividend is received by a person from a mutual fundand is above Rupees 2.5 million. The rate of tax shall remain 10% if such dividend received is less thanor equal to Rupees 2.5 million.

Division IIIA – Rate for Profit on DebtThe rate of tax on profit on debt imposed under section 7B shall be as follows:

Sr.No. Period Rate of

tax1. Where profit on debt does not exceed Rs. 5,000,000 10%2. Where profit on debt exceeds Rs. 5,000,000 but does not exceed Rs. 25,000,000 12.5%3. Where profit on debt exceeds Rs. 25,000,000 15%

Division VII – Capital Gains on Disposal of SecuritiesThe rate of tax under section 37A for the tax years 2017 and 2018 are as under:

Sr.No. Holding Period Tax Year 2017

Tax Year 2018Securities acquiredbefore 01-07-2016

Securities acquiredafter 01-07-2016

Filer Non-Filer Filer Non-Filer Filer Non-Filer

1. Where holding period of asecurity is less than twelvemonths

15% 18% 15% 18% 15% 20%

2. Where holding period of asecurity is twelve months ormore but less than twenty-four months

12.5% 16% 12.5% 16% 15% 20%

3. Where holding period of asecurity is twenty-fourmonths or more but thesecurity was acquired on orafter 1st July, 2013

7.5% 11% 7.5% 11% 15% 20%

4. Where the security wasacquired before 1st July,2013

0% 0% 0% 0% 0% 0%

5. Future commodity contractsentered into by themembers of PakistanMercantile Exchange

5% 5% 5% 5% 5% 5%

Rate of tax on cash settled derivatives traded on the stock exchange shall be 5% for the tax year 2018 to2020.

Division IX – Minimum tax under section 113General rate of minimum tax u/s 113 has been increased from 1% to 1.25% of turnover for the year.Moreover, the rate of minimum tax for a person running an online market place shall be 0.5% of turnoverfor the year.




Part II – RATES OF ADVANCE TAX

Rate of advance tax to be collected by Collector of Customs from industrial undertaking and commercialimporter, being a filer under section 148 shall be as follows:

Person Importing plastic raw material falling under PCTHeading 39.01 to 39.12

FilerIndustrial undertaking (for its own use) 1.75% of the import value as increased by customs

duty, sales tax and Federal excise dutyCommercial importer 4.5% of the import value as increased by customs

duty, sales tax and Federal excise duty

Part III – DEDUCTION OF TAX AT SOURCE

Division I – Advance Tax on Dividend

General rate of advance tax to be collected u/s 150 and 236S shall now be 15%. Moreover, the rate oftax required to be deducted by a collective investment scheme, REIT Scheme or a mutual fund has beensubstituted as follows:

Person Stock FundMoney market Fund, Income Fund or REIT

Scheme or any other FundFiler Non-filer

Individual 12.5% 12.5% 15%Company 12.5% 25% 25%

AOP 12.5% 12.5% 15%

Rate of tax on dividend received by a person, other than a company from a money market mutual fundshall be 10% if the amount of dividend does not exceed two and a half million rupees.

Division II – Payment to Non-Residents

The rate of tax to be deducted from a payment to non-resident on execution of contract under sub-section (1A) of section 152 in case of non-filer has been enhanced from 12% to 13%.

The rate of tax to be deducted from a payment to permanent establishment in Pakistan of a non-residentperson, on sale of goods under section 152(2A), for non-filer has been increased from 6% to 7% forcompany and from 6.5% to 7.75% in other cases.

The rate of tax to be deducted from a payment to permanent establishment in Pakistan of a non-residentperson, for rendering or providing of services under section 152(2A), for non-filer has been increasedfrom 12% to 14% for company and from 15% to 17.5% in other cases.

The rate of tax to be deducted from a payment to permanent establishment in Pakistan of a non-residentperson, on execution of contracts under section 152(2A) in case of other than sports person has beenenhanced from 12% to 13%.

Division III – Payments for Goods or Services

The rate of tax to be deducted from payments in respect of fast moving consumer goods (FMCG)supplied by the distributors has been reduced to 2% from 3% in case of company and to 2.5% from3.5% in case of other than a company.




Rate of tax to be deducted on sale of goods falling under clause (1)(b) of this Division has beenenhanced from 6% to 7% for non-filer in case of company and from 6.5% to 7.75% for non-filer in caseof other than company.

Rate of tax to be deducted for rendering or providing of services under clause (2)(ii)(b) of this Divisionhas been enhanced from 12% to 14.5% for non-filer in case of company and from 15% to 17.5% fornon-filer in case of other than company.

Rate of tax to be deducted on execution of a contract under clause (3) of this Division has beenenhanced from 10% to 12% for non-filer in case of company and from 10% to 12.5% for non-filer incase of other than company and sportsperson.

Division V – Income from Property

By amendment in Division V, rate of tax to be deducted under section 155, in case of a company beingnon-filer shall be 17.5% of the gross amount of rent.

Division VI – Prizes and Winnings

The rate of tax to be deducted under section 156 on prize on a prize bond or cross-word puzzle in case ofnon-filer has been enhanced from 20% to 25%.

Division VIA – Petroleum Products

The rate of tax to be deducted under section 156A in case of non-filer has been enhanced from 15% to17.5%.

Division VIB – CNG Stations

The rate of tax to be deducted on gas bill of a Compressed Natural Gas station under section 234A, incase of a non-filer shall be 6%.

Part IV – DEDUCTION OR COLLECTION OF ADVANCE TAX

Division V – Telephone users

Rate of tax to be collected under section 236 in case of subscribers of internet, mobile telephone andpre-paid internet or telephone card has been reduced to 12.5% from 14%.

Division VII – Advance tax on purchase, Registration and Transfer of Motor Vehicles

By amendment in this Division, rates of tax under section 231B for registration and sale of motor vehiclehaving engine capacity up to 850cc, 851cc to 1000cc and 1001cc to 1300cc in case of filer have beenreduced to Rupees 7,500, Rupees 15,000 and Rupees 25,000 respectively from Rupees 10,000, Rupees20,000 and Rupees 30,000 respectively.

Division VIII – Advance tax at the time of sale by auction

Now, rate of tax to be deducted on the gross sale price of any property or goods sold by auction undersection 236A, in case of a non-filer shall be 15%.


INCOME TAX ORDINANCE, 2001 – THE FIRST AND SECOND SCHEDULE


Division XV – Advance tax on sale to retailers

Division XV has been substituted. Now, rate of collection of tax under section 236H on the gross amountof sales shall be as follows:

Category of sale Rate of taxFiler Non-filer

Electronics 1% 1%Others 0.5% 1%

Division XXV – Advance Tax on Insurance Premium

In case of non-filer, the limit of life insurance premium on which tax is to be deducted has beenenhanced to exceeding Rupees 0.3 million in aggregate per annum from exceeding Rupees 0.2 millionper annum.

THE SECOND SCHEDULE

Part I – EXEMPTIONS FROM TOTAL INCOME

Income exempt from tax Clause (66)

In sub-clause (xxxi), the name of Society for Welfare of Patients of SIUT has been changed as Society forthe Welfare of SIUT.

Income of following institutions has also been exempted by adding following new clauses:

(xxxvi) Asian Infrastructure Investment Bank and persons as provided in Article 51 of Chapter IX of theArticles of Agreement signed and ratified by Pakistan and entered into force on the 25 th December, 2015.(xxxvii) Gulab Devi Chest Hospital.(xxxviii) Pakistan Poverty Alleviation Fund.(xxxix) National Academy of Performing Arts.(xl) Pakistan Sweet Homes Angels and Fairies Place.(xli) National Rural Support Programme.

Profit on debt received by Japan International Cooperation Agency (JICA) Clause (140A)

By adding new clause (140A), exemption has been provided to Japan International Cooperation Agencyon receipt of profit on debt from Islamabad-Burhan Transmission Reinforcement Project (Phase – I).

Part IV – EXEMPTION FROM SPECIFIC PROVISION

Exemption from provisions of section 148 Clause (56)(ia)

By amendment in sub-clause (ia) of clause (56), exemption from provisions of withholding tax undersection 148 on import of certain petroleum products by the entities mentioned in this sub-clause hasbeen extended to any other oil marketing company licensed by Oil and Gas Regulatory Authority (OGRA).

Advance tax on foreign-produced TV plays and serials Clause (56A)

Since, section 236E was omitted by Finance Act, 2016 resultantly this clause being redundant has beenomitted.


INCOME TAX ORDINANCE, 2001 – THE SECOND, SEVENTH AND EIGHTH SCHEDULE


Hajj group operators Clause (72A)

Exemption provided to Hajj group operators in respect of Hajj operations from the applicability ofprovisions relating to banking transaction u/s 21(l), minimum tax u/s 113 and withholding tax onpayment to non-residents u/s 152 subject to payment of tax @ Rupees 5,000 per Hajji, has beenextended to tax year 2017.

Imports (Exemption certificate from withholding tax) Clause (72B)

By amendment in second proviso to this clause, limit of quantity of raw material to be imported which issought to be exempted from tax u/s 148, has been enhanced from 110% to 125% of the quantity of rawmaterial imported and consumed during the previous tax year.

New proviso has been inserted restricting issuance of exemption certificate u/s 148 to an industrialundertaking, importing raw materials as specified in sub-section (8) of section 148.

Exemption from provisions of section 153(3)(b) Clause (94)

Exemption from provisions of clause (b) of sub-section (3) of section 153 regarding minimum tax onservices has been extended to tax year 2018 in respect of specified services. Moreover, buildingmaintenance services, services rendered by Pakistan Stock Exchange Limited and Pakistan MercantileExchange Limited, have also been in list of specified services included to avail the aforesaid exemption.

Branchless Banking (BB) Agent Account Clauses (101)

Under this new clause, exemption from provisions of section 231A regarding withholding tax on cashwithdrawals has been provided to Branchless Banking (BB) Agent Account used for rendering branchlessbanking services.

THE SEVENTH SCHEDULE

RULES FOR THE COMPUTATION OF THE PROFITS AND GAINS OF A BANKING COMPANY ANDTAX PAYABLE THEREON

Taxable income Rule 1(g)

Explanation in clause (g) of Rule 1 has been added regarding exclusion of notional gain / (loss)adjustments made in annual accounts due to application of International Accounting Standards 39 and40. The said explanation is as follows:

“Explanation.- For removal of doubt, it is clarified that nothing in this clause shall be so construed as toallow a notional loss, or charge to tax any notional gain on any investment under any regulation orinstruction unless all the events that determine such gain or loss have occurred and the gain or loss canbe determined with reasonable accuracy.”

THE EIGHTH SCHEDULERULES FOR COMPUTATION OF CAPITAL GAINS ON LISTED SECURITIES

Manner and basis of computation of capital gains and tax thereon Rule (1)(6)

Period for furnishing of statement of capital gains and tax computed thereon by National ClearingCompany (Private) Limited (NCCPL) to FBR, has been extended from 30 days to 45 days of the end ofeach quarter.


INCOME TAX ORDINANCE, 2001 – GENERAL


Important provisions regarding income tax rates, advance tax, withholding tax rates, filing dates ofvarious periodical statements and return of income, etc. are given in this part for convenience of ourclients.

INCOME TAX RATES – TAX YEAR 2018

RATES OF TAX FOR COMPANIESThe rates of tax imposed on taxable income of companies falling under various categories are as under:

Sr.No.

Description Rate ofTax

1 Modaraba Company [Clause (18), Part II, 2nd Sch.] 25%2 Company other than a banking company [Clause (i), Division II, Part I, 1st Sch.] 30%3 Banking Company (Division II, Part I, 1st Sch.) 35%4 Small Company [Paragraph (iii), Division II, Part I, 1st Sch.] 25%

The rate of tax as specified in Division II of Part I of the First Schedule shall be reduced by 2% in caseof a company whose shares are traded on stock exchange if:

(a) it fulfils prescribed shari’ah compliant criteria approved by State Bank of Pakistan, Securities andExchange Commission of Pakistan and the Board;

(b) derives income from manufacturing activities only;(c) has declared taxable income for the last three consecutive tax years; and(d) has issued dividend for the last five consecutive tax years.

MINIMUM TAX ON INCOME OF CERTAIN PERSONS

Rates of minimum tax u/s 113 for companies of various categories are as under: [Division IX, Part 1, 1st

Sch.]

Sr.No.

Person(s) Minimum Tax aspercentage of theperson’s turnover

for the year

1. (a) Oil marketing companies, Oil refineries, Sui Southern Gas CompanyLimited and Sui Northern Gas Pipelines Limited (for the cases whereannual turnover exceeds rupees one billion);

(b) Pakistani Airlines;(c) Poultry industry including poultry breeding, broiler production, egg

production and poultry feed production;(d) Dealers or distributors of fertilizers; and(e) Person running an online marketplace as defined in clause (38B) of

section 2.

0.5%

2. (a) Distributors of pharmaceutical products, fast moving consumer goodsand cigarettes;

(b) Petroleum agents and distributors who are registered under the SalesTax Act, 1990;

(c) Rice mills and dealers; and(d) Flour mills.

0.2%

3. Motorcycle dealers registered under the Sales Tax Act, 1990. 0.25%

4. In all other cases. 1.25%




INCOME TAX RATES ON DIVIDENDThe rate of tax imposed under section 5 on dividend received from a company shall be: [Division III, PartI, 1st Sch.](a) 7.5% in the case of dividends declared or distributed by purchaser of a power project privatized by

WAPDA or on shares of a company set up for power generation or on shares of a company, supplyingcoal exclusively to power generation projects; and

(b) 12.5% in case of dividend received by a person from a mutual fund where amount of dividend isabove Rupees 2.5 million and 10% where the amount of dividend is less than or equal to Rupees 2.5million.

(c) 15% in cases other than mentioned in clauses (a) and (b).The dividend received by a person from a stock fund shall be taxed at the rate of 12.5% for the tax year2015 and onwards, if dividend receipts are less than capital gains.The dividend received by a company from a collective investment scheme, Real Estate Investment TrustScheme (REIT) or a mutual fund, other than a stock fund, shall be taxed at the rate of 25% for tax year2015 and onwards.If a developmental REIT scheme with the object of development and construction of residential buildingsis set up by 30th day of June, 2018, tax imposed on dividend received by a person from suchdevelopmental REIT scheme shall be reduced by 50% for three years from 30th day of June, 2018.From tax year 2015 and onwards, income from dividend received by a banking company shall be taxed @35%. [Rule 7B, 7th Sch.]TAX RATES FOR INDIVIDUALS AND ASSOCIATION OF PERSONS

The rates of tax chargeable for the “Tax Year 2018” are as under: Non-Salaried Individuals and association of persons (AOP)

Sr. No. Taxable Income Rate of tax

1. Where the taxable income does not exceed Rs.400,000

0%

2. Where the taxable income exceeds Rs. 400,000but does not exceed Rs. 500,000

7% of the amount exceeding Rs.400,000

3. Where the taxable income exceeds Rs. 500,000but does not exceed Rs. 750,000

Rs. 7,000 + 10% of the amountexceeding Rs. 500,000

4. Where the taxable income exceeds Rs. 750,000but does not exceed Rs. 1,500,000


5. Where the taxable income exceeds Rs. 1,500,000 butdoes not exceed Rs. 2,500,000

Rs. 144,500 + 20% of the amountexceeding Rs. 1,500,000

6. Where the taxable income exceeds Rs. 2,500,000 butdoes not exceed Rs. 4,000,000


7. Where the taxable income exceeds Rs. 4,000,000but does not exceed Rs. 6,000,000


8. Where the taxable income exceeds Rs. 6,000,000 Rs. 1,319,500 + 35% of the amountexceeding Rs. 6,000,000

In the case of an association of persons that is a professional firm prohibited from incorporation by anylaw or the rules of the body regulating their profession, the 35% rate of tax mentioned against serial No.8 of the table shall be 32% for tax year 2016 and onwards.




Salaried Individuals, where income from salary exceeds 50% of taxable income:

Sr. No. Taxable Income Rate of tax

1. Where the taxable income does not exceed Rs.400,000

0%

2. Where the taxable income exceeds Rs.400,000 but does not exceed Rs. 500,000

2% of the amount exceeding Rs. 400,000

3. Where the taxable income exceeds Rs.500,000 but does not exceed Rs. 750,000

Rs. 2,000 + 5% of the amount exceedingRs. 500,000

4. Where the taxable income exceeds Rs.750,000 but does not exceed Rs. 1,400,000


5. Where the taxable income exceeds Rs.1,400,000 but does not exceed Rs.1,500,000

Rs. 79,500 + 12.5% of the amountexceeding Rs. 1,400,000

6. Where the taxable income exceeds Rs.1,500,000 but does not exceed Rs.1,800,000


7. Where the taxable income exceeds Rs.1,800,000 but does not exceed Rs. 2,500,000






10 Where the taxable income exceeds Rs.3,500,000 but does not exceed Rs. 4,000,000


11 Where the taxable income exceeds Rs.4,000,000 but does not exceed Rs. 7,000,000


12 Where the taxable income exceeds Rs.7,000,000

Rs. 1,422,000 + 30% of the amountexceeding Rs. 7,000,000

REDUCTION IN TAX LIABILITY OF SENIOR CITIZENS, DISABLED PERSONS AND TEACHERSOR RESEARCHERSClause (IB), Part I, First ScheduleWhere taxable income other than income on which the deduction of tax is final discharge of tax liability,does not exceed Rupees 1,000,000, in a tax year of a taxpayer holding NADRA’s CNIC for disabled personor a taxpayer aged 60 years or more on the first day of that tax year, his tax liability on such income shallbe reduced by 50%.

Clause (2), Part III, Second ScheduleThe provision to reduce the income tax liability of a full time teacher or a researcher employed in a non-profit educational or research institution duly recognized by Higher Education Commission, a Board ofEducation or a University recognized by the Higher Education Commission including government trainingand research institution, continues to be available. The tax liability in such cases shall be reduced by anamount equal to 40% of the tax payable on income from salary.




ADJUSTMENT OF TAX CREDIT BY EMPLOYER

Every responsible person, while deducting tax on the income chargeable under the head salary ofemployees, shall allow tax credit on donations to approved NPOs (section 61), investment in shares andinsurance (section 62); and contribution to approved pension funds (section 63) and make adjustmentsof tax withheld from employee under other heads during the tax year after obtaining evidences as maybe necessary, for:

i) tax withheld from the employee under this Ordinance during tax year;ii) any excess deduction or deficiency arising out of any previous deductions; oriii) failure to make deduction during the year.

The employers will, however, be responsible to obtain documentary evidences alongwith declaration fromemployees on prescribed form “IT-3”, for correct application of relevant provisions of law.

The said declaration and evidences are required to be retained by the employer for at least 6 years afterthe end of the tax year to which they relate. [Sec. 174(3)]

VALUATION OF PERQUISITES, ALLOWANCES AND BENEFITS

In case of salaried taxpayers special allowance and medical allowance are exempt from tax under Clause(39) and Clause (139) respectively of Part I of Second Schedule. However, value of other perquisites,allowances and benefits provided by the employer shall be included in income of the employee inaccordance with the rules 4 to 6 of Part I of Chapter II of Income Tax Rules, 2002 as reproduced below:

“4. Valuation of Accommodation - The value of accommodation provided by an employer to theemployee shall be taken equal to the amount that would have been paid by the employer in casesuch accommodation was not provided.

Provided that the value taken for this purpose shall, in any case, not be less than forty fivepercent of the minimum of the time scale of the basic salary or the basic salary where there is notime scale.

Provided further that where House Rent Allowance is admissible @ thirty per cent, the valuetaken for the purpose of this rule shall be an amount not less than thirty per cent of minimum ofthe time scale of basic salary or the basic salary where there is no time scale.

5. Valuation of conveyance.- The value of conveyance provided by the employer to theemployee shall be taken equal to an amount as below: -

(i) Partly for personal andpartly for official use

5% of:

(a) the cost to the employer for acquiring the motor vehicle; or(b) the fair market value of the motor vehicle at the commencement of

the lease, if the motor vehicle is taken on lease by the employer;(ii) For personal use only 10% of:

(a) the cost to the employer for acquiring the motor vehicle; or,

(b) the fair market value of the motor vehicle at the commencement ofthe lease, if the motor vehicle is taken on lease by the employer;and

6. For the purpose of this part, “employee” includes a director of a company.”




INCOME FROM PROPERTY U/S 15 & 155The rate of tax to be paid under section 15 and 155 shall be as follows:

Individual and association of persons:

Sr.No. Gross amount of rent Rate of tax

1. Where the gross amount of rent does not exceed Rs. 200,000 Nil2. Where the gross amount of rent exceeds Rs. 200,000 but does

not exceed Rs. 600,0005% of the gross amount exceedingRs. 200,000

3. Where the gross amount of rent exceeds Rs. 600,000 but doesnot exceed Rs. 1,000,000

Rs. 20,000 + 10% of the grossamount exceeding Rs. 600,000

4. Where the gross amount of rent exceeds Rs. 1,000,000 but doesnot exceed Rs. 2,000,000

Rs. 60,000 + 15% of the grossamount exceeding Rs. 1,000,000

5. Where the gross amount of rent exceeds Rs. 2,000,000 Rs. 210,000 + 20% of the grossamount exceeding Rs. 2,000,000

Company:Rate of tax to be deducted u/s 155 shall be 15% for filer and 17.5% for non-filer. Income tax u/s 15 shallbe charged as per applicable rates under Division II, Part I, First Schedule to a company under normaltax regime.

RATE OF TAX ON CAPITAL GAIN ON SALE OF SECURITIESThe rates of tax to be paid under section 37A, are as under: [Division VII, Part I, 1st Sch.]

Sr.No. Holding Period Tax Year 2017

Tax Year 2018Securities acquiredbefore 01-07-2016

Securities acquiredafter 01-07-2016

Filer Non-Filer Filer Non-Filer Filer Non-Filer

1. Where holding period of a securityis less than twelve months

15% 18% 15% 18% 15% 20%

2. Where holding period of a securityis twelve months or more but lessthan twenty-four months

12.5% 16% 12.5% 16% 15% 20%

3. Where holding period of a securityis twenty-four months or more butthe security was acquired on orafter 1st July, 2013

7.5% 11% 7.5% 11% 15% 20%

4. Where the security wasacquired before 1st July, 2013

0% 0% 0% 0% 0% 0%

5. Future commodity contractsentered into by the members ofPakistan Mercantile Exchange

5% 5% 5% 5% 5% 5%

Provided that rate of tax on cash settled derivatives traded on the stock exchange shall be 5% for the taxyear 2018 to 2020.

Moreover, from tax year 2015 and onwards, income from capital gains in case of banking company shallbe taxed @ 35%. [Rule 7B, 7th Sch.]

RATE OF TAX ON CAPITAL GAIN ON DISPOSAL OF IMMOVABLE PROPERTYThe rate of tax to paid under section 37(1A) shall be as under: [Division VIII, Part I, 1st Sch.]




- For immovable property acquired on or after July 1, 2016:

Sr.No. Period Rate of tax

1. Where holding period of immovable property is up to one year 10%2. Where holding period of immovable property is more than or equal to one year

but less than two years7.5%

3. Where holding period of immovable property is more than or equal to twoyears but less than three years

5%

4. Where holding period of immovable property is more than three years 0%

- For immovable property acquired before July 1, 2016:

Sr.No. Period Rate of tax

1. Where holding period of immovable property is up to three years 5%2. Where holding period of immovable property is more than three years 0%

Rate of tax will be 0% irrespective of holding period, if the seller is dependent of a Shaheed belonging toPakistan Armed Forces or a person who dies while in the service of the Pakistan Armed Forces or theFederal or Provincial Government in respect of first sale of immovable property acquired from or allottedby the Federal Government or Provincial Government or any authority duly certified by the officialallotment authority or the property acquired or allotted is in recognition of or for services rendered by theShaheed or the person who dies in service. [Sec. 236C(4)]

Rate of tax to be paid under sub-section (1A) of section 37 shall be reduced by fifty per cent on the firstsale of immovable property acquired or allotted to ex-servicemen and serving personnel of Armed Forcesor ex-employees or serving personnel of Federal and Provincial Governments, being original allottees ofthe immovable property, duly certified by the allotment authority. (First proviso)

Gain arising on the disposal of immovable property by a person in a tax year to a Rental REIT Schemeshall be taxed at the rate of five percent upto thirtieth day of June 2019, irrespective of the holdingperiod. (Second proviso)

ADVANCE TAX UNDER SECTION 147Every taxpayer whose income was charged to tax for the latest tax year under this Ordinance excludingthe followings shall pay advance tax for the year under section 147 of Income Tax Ordinance, 2001 asreduced by the tax already paid/deducted at source in the year:

i) Dividend received from a company (Section 5)ii) Income of a non-resident from Pakistan-source royalty or fee for technical services, shipping and

transport (Sections 6 & 7)iii) Salary income subject to deduction of tax (Section 149)iv) All income where the tax collected or deducted is considered as final tax (Section 168)

Advance tax in case of an individual, will be calculated in accordance with the following formula:

( A / 4 ) - BWhere —

A is the tax assessed to the taxpayer for the latest tax year under the Ordinance; and

B is the tax paid in the quarter for which a tax credit is allowed under section 168, other than taxdeducted on dividend income, salary income or income from property.




Individual whose latest assessed income excluding incomes referred to in items (i) to (iv) above is lessthan Rupees 1,000,000 is not required to pay advance income tax under section 147 of Income TaxOrdinance, 2001.Where the taxpayer is an association of persons or a company, advance tax will be computed accordingto the following formula:

(A x B / C) – DWhere —A is the taxpayer’s turnover for the quarterB is the tax assessed of the taxpayer company for the latest tax yearC is turnover of the taxpayer for the latest tax yearD is the total amount of tax paid/deducted in the quarter other than tax collected/deducted which

is considered as final tax.The provision of minimum tax u/s 113 and Alternative Corporate Tax u/s 113C will also be taken intoaccount while computing advance tax liability.Adjustable advance tax on capital gain from sale of securities will be computed at following rates:[Section 147(5B)]

Where holding period of a security is lessthan 6 months

2% of the capital gains derived during the quarter

Where holding period of a security is 6months or more but less than 12 months

1.5% of the capital gains derived during thequarter

However, provisions regarding advance tax on capital gain from sale of securities are not applicable toindividual investors.In case the taxpayer is an association of persons or a company, it shall estimate the tax payable by it forthe relevant tax year at any time before the 2nd installment is due. In case the tax payable is likely to bemore than the amount that the taxpayer is required to pay under sub-section (4), the taxpayer shallfurnish to the Commissioner on or before the due date of the 2nd quarter an estimate of the amount oftax payable by the taxpayer and pay 50% of such amount by the due date of the 2nd quarter of the taxyear after making adjustment for the amount, if any, already paid in terms of sub-section (4). Theremaining 50% of the estimate shall be paid in two equal installments payable by the due date of the 3 rd

and 4th quarter of the tax year. Similarly, according to the provisions of sub-section (6), if the tax payableis less than the tax due on the said basis, every taxpayer who is required to pay advance tax, afterfurnishing the estimates to Commissioner, will pay such estimated amount after adjustment of taxalready paid.New company or an association of persons, are required to pay advance income tax even in the first yearof their operation. The taxpayer will estimate the amount of advance tax payable on quarterly incomebasis and thereafter pay such amount after taking into account minimum tax payable under section 113and Alternate Corporate Tax u/s 113C. If minimum tax payable comes more than the advance taxcalculated on the basis of quarterly income, then advance tax will be paid equal to minimum taxcalculated @ 1.25% on aggregated turnover of the quarter after adjustment of the amount already paidduring the quarter, if any.Where the advance tax paid on the basis of estimation under sub-section (4A) or (6) of section 147 isless than 90% of the tax chargeable for the relevant tax year, the taxpayer shall be liable to pay defaultsurcharge under section 205(IB) at the rate of 12% per annum on the amount by which the tax paid byhim falls short of the 90%. Such default surcharge shall be calculated from 1st day of April in that year tothe date on which the assessment is made or the 30th day of June of the financial year next followingwhichever is the earlier. [Sub-section (1B) of Section 205]




As required u/s 147A, provincial sales tax registered person, if non-filer on 30 June of previous tax year,shall also pay advance tax at the rate of three percent of the turnover declared before the provincialrevenue authority.DATE OF PAYMENT OF ADVANCE TAX

Tax Payable For On or BeforeIndividuals Companies and AOPs

(excluding BankingCompany)

September quarter 15 September 25 SeptemberDecember quarter 15 December 25 DecemberMarch quarter 15 March 25 MarchJune quarter 15 June 15 June

Advance tax on capital gain from sale of securities is payable within 21 days from the close of eachquarter. [Section 147(5b)]Banking company will be required to pay advance tax under section 147 in 12 equal installments on orbefore 15th of every month. [Rule 5(1), 7th, Sch.]PAYMENT OF TAX COLLECTED / DEDUCTED (RULE 43 OF INCOME TAX RULES, 2002)

DATE OF FILING OF STATEMENTS UNDER SECTION 165 (Rule 44 of Income Tax Rules, 2002)Every prescribed person shall furnish or e-file statement under sub-section (1) of section 165 by 15th dayof the month following the month to which the withholding tax pertains.ANNUAL STATEMENTAnnual statements will be furnished on or before 31 July of each year by the person deducting tax fromsalary under section 149. [Section 165(6)]DATE OF FILING OF RETURN OF INCOME / STATEMENT UNDER SECTION 115(4)

Category of Taxpayer Date of Filing

Companies: Having tax year ending between 01 January to 30 June 31 December Other cases 30 September

Other than Companies:

Return of income required to be filed through e-portal in case of asalaried person / Statement under section 115(4)

31 August

Return of income in other cases 30 September

Tax collected / deducted by Deposit into Government treasuryFederal / Provincial Government On the same dayOther persons - Within 7 days from the end of each week ending on Sunday.

- In case of remittance abroad to a non-resident through StateBank of Pakistan or other baking company, prior to remittingabroad of the amount from which tax is to be deducted orcollected.

RIAZ AHMAD & COMPANY Chartered Accountants

INCOME TAX ORDINANCE, 2001 – GENERAL - SUMMARY OF WITHHOLDING TAX REGIME

FINANCE ACT 2017 - 27 -

Section Nature of Payment / Transactions

Withholding /

Collection Rate

% / Rupees

Responsibility for Deduction / Deposit

Remarks

Filer Non-filer

148 1.(i) Industrial undertaking importing

remeltable steel (PCT Heading 72.04) and directly reduced iron for its own use [Sr.

No. 1(i) of Table, Part II, 1st Sch.] (ii) Import of potassic fertilizers in

pursuance of Economic Coordination Committee of the Cabinet’s decision No.

ECC-155/12/2004 dated the 09 December

2004 [Sr. No. 1(ii) of Table, Part II, 1st Sch.]

(iii) Import of Urea [Sr. No. 1(iii) of Table,

Part II, 1st Sch.] (iv) Manufacturers covered under

Notification No. S.R.O. 1125(I)/2011 dated 31 December 2011 and importing

items covered under S.R.O. 1125(I).2011 dated 31 December, 2011[Sr. No. 1(iv) of

Table, Part II, 1st Sch.]

(v) Person importing gold [Sr. No. 1(v) of Table, Part II, 1st Sch.]

(vi) Person importing cotton [Sr. No. 1(vi) of Table, Part II, 1st Sch.]

(vii) Designated buyer of LNG on behalf of

Government of Pakistan, to import LNG. [Sr. No. 1(vii) of Table, Part II, 1st Sch.]

1% of

import value as

increased by

customs – duty, sales

tax and

federal excise

duty

-do-

-do-

-do-

-do-

-do-

1.5% of

import value as

increased by customs-

duty, sales tax and

federal

excise duty

-do-

-do-

-do-

-do-

-do-

Collector of customs

-do-

-do-

-do-

-do-

-do-

-do-

-do-

Final - except the followings

(Sec.148(7)): (a) raw material, plant, machinery,

equipment and parts by an industrial undertaking for its own use.

(b) Motor vehicles in CBU condition by manufacturer of motor vehicles.

(c) Large import houses.

(d) Foreign produced film imported for the purpose of screening and viewing.

(e) Plastic raw material imported by an industrial undertaking falling under PCT

Heading 39.01 to 39.12, edible oil and

packing material (will be treated as minimum tax) [Sec. 148(8)].

2. Import of pulses [Sr. No. 2 of Table,Part II, 1st Sch.]

2% of import

value as increased

by customs – duty,

sales tax

3% of import value as

increased by customs – duty, sales

tax and






Withholding /

Collection Rate

% / Rupees

Responsibility for

Deduction / Deposit Remarks

Filer Non-filer and federal excise duty

federal excise duty

3. Commercial importers covered under

Notification No. S.R.O. 1125(I)/2011 dated 31 December 2011 and importing

items covered under S.R.O. 1125(I)/2011 dated the 31 December, 2011[Sr. No. 3 of

Table, Part II, 1st Sch.]

3% of

import value as

increased by

customs –

duty, sales tax and

federal excise

duty

4.5% of

import value as

increased by customs

– duty,

sales tax and federal

excise duty


4. Ship breakers on import of ships [Sr.

No. 4 of Table, Part II, 1st Sch.]

4.5% 6.5% Collector of customs

5. Industrial undertakings not covered under S. Nos. 1 to 4 [Sr. No. 5 of Table,

Part II, 1st Sch.]

5.5% 8% Collector of customs

In case of industrial undertaking, being a filer, importing plastic raw material falling under PCT

Heading 39.01 to 39.12 for its own use shall be 1.75% of the import value as increased by

customs duty, sales tax and Federal excise

duty. 6. Companies not covered under S. Nos. 1

to 5 [Sr. No. 6 of Table, Part II, 1st Sch.]

5.5% 8% Collector of customs

7. Persons not covered under S. Nos. 1 to

6 [Sr. No. 7 of Table, Part II, 1st Sch.]

6% 9% Collector of customs

In case of commercial importer, being a filer,

importing plastic raw material falling under PCT Heading 39.01 to 39.12 shall be 4.5% of the

import value as increased by customs duty,

sales tax and Federal excise duty.

148A Purchase of locally produced edible oil by manufacturers of cooking oil and

vegetable ghee.

2% 2% Person making the payment

Final





Withholding /

Collection Rate

% / Rupees

Responsibility for


Filer Non-filer

149(1) Basic salary and taxable allowances

Average rate Employer Adjustable. Exempt where the taxable income

does not exceed Rupees 400,000. [Cl (IA), Division I, Part I, 1st Sch.]

Tax deducted at source of the employee, short / excess tax deducted from salary, tax credits

under sections 61, 62, 63 etc. can be adjusted

by the employer. [Sec. 149(1)]. Payment of salary more than Rupees 15,000

should be through crossed cheques or direct transfer of funds to the employee’s bank

account. [Sec. 21(m)]

(3) Directorship fee or fee for attending board meeting or such fee by whatever name

called

20% 20% Employer / responsible person for making

payment

Adjustable

150 i – Dividend declared or distributed by purchaser of power project privatized by

WAPDA. or on shares of a company set up

for power generation or on shares of a company, supplying coal exclusively to

power generation projects.[Division I, Part III, 1st Sch.]

7.5%

7.5% Every person paying dividend

-do-

Final - Following are exempt: - any income derived from inter-corporate

dividend within the group companies entitled to

group taxation under section 59AA subject to condition that return of the group has been

filed for the tax year. [Cl. (103A), Part I, 2nd Sch.]

- Payment to approved Pension fund, recognized provident fund, approved

superannuation fund or approved gratuity fund

etc. [Cl. (47B), Part IV, 2nd Sch.] - Rate of tax to be deducted shall be 12.5%,

if dividend received of the stock fund is less than capital gains.

- Rate of tax shall be reduced by 50% for three

years from 30 June 2018, if a Development

ii – other than mentioned in (i) above

Dividend received by:-

Stock fund: - Individual

- Company - AOP

Money market fund, Income fund or REIT

Scheme or any other fund:

15%

12.5%

12.5% 12.5%

20%

12.5%

12.5% 12.5%





Withholding /

Collection Rate

% / Rupees

Responsibility for


Filer Non-filer

- Individual

- Company - AOP

12.5%

25% 12.5%

15%

25% 15%

REIT Scheme with the object of development

and construction of residential buildings is set up by 30 June 2018.

- Rate of tax on dividend received by a person, other than a company, from a money market

mutual fund shall be 10%, if the amount of dividend does not exceed Rupees 2.5 million.

150A Return on investment in Sukuks

- Company

- Individual and AOP: (i) Return on investment more

than 1 million rupees (ii) Return on investment less

than 1 million rupees

15%

12.5%

10%

17.5%

17.5%

17.5%

Adjustable against tax imposed under section

5AA.

151(1):

(a) Yield on an account, deposit or a certificate under the National Saving

Scheme or post office saving account

10% 17.5% Every person making payment

Adjustable where taxpayer is a company or profit on debt is taxable under section 7B and

excess tax deducted/collected in case of non-filer.

(b) Profit on a debt, being an account or

deposit maintained with the Banking

company or financial institution

10% 17.5% Banking company or

financial institution

If the yield or profit paid is Rupees 500,000 or

less, the rate of tax for non-filer shall be 10%.

[Div. IA, Pt. III, 1st Sch.]. No tax will be deducted in following

cases: - Yield or profit on investment in Bahbood

Saving Certificates or Pensioners Benefit Account. [Cl. (36A), Part IV, 2nd Sch]

- If monthly installment in monthly income

saving scheme does not exceed Rupees 1,000 - [Cl. (59)(iv)(b), Part IV, 2nd Sch.].

(c) Profit on any security other than that

referred in Clause (a), issued by Federal Government, Provincial Government or

local Government.

10% 17.5% Federal Government,

Provincial Government or local Government

(d) Profit on bond, certificate, debenture,

security or instrument of any kind to any

person other than financial institution

10% 17.5% Banking company,

financial institution, etc.





Withholding /

Collection Rate

% / Rupees

Responsibility for


Filer Non-filer

- Any yield from National Saving Schemes of

Directorate of National Savings where investment was made on or before 30 June

2001 and any income derived from Mahana Amdani Account where monthly installment

does not exceed Rupees 1,000 shall continue to remain exempt and any person paying such

yield or income shall not deduct tax u/s 151.

The recipient of such receipt or income is not required to produce exemption certificate in

this regard [S. 239(14)] 152

(1) Royalty or fee for technical services to

non-resident

15% 15% Every person making

payment

Final

(1A) Payment to non-resident persons on

account of certain contracts


payment

Final where non-resident person opts for final

tax regime.

(1AA) Payments to non-resident on account of

insurance or re-insurance premium


payment

Final

(1AAA) Payment for advertisement services to

non-resident media person relaying from

outside Pakistan [Cl. (3) Div II, Part III, Ist Sch.]


payment

Final

(2) Payment to non-resident other than

amount to which sub-section (1), (IA), (IAA) or (IAAA) above applies


payment

Adjustable

(2) Payment to non-resident having no PE in

Pakistan, in respect of profit on debt [Cl. (5A), Part II, 2nd Sch.]


payment

Final - Subject to proviso of clause (5A) of Part

II of 2nd Schedule





Withholding /

Collection Rate

% / Rupees

Responsibility for


Filer Non-filer

(2A)(a) Payment to PE for sale of goods:

- In case of company - In other cases

Every person making

payment

Adjustable No tax shall be deducted in case

where the sale of goods is made by importer of the goods and tax u/s 148 in respect of such

goods has been paid and the goods are sold in same condition as they were when imported.

4% 4.5%

7% 7.75%

(2A)(b) i) Payment to PE for transport services

ii) Payment to PE for other services:

- In case of company

- In other case

2% 2% Every person making payment

Every person making

payment

Adjustable

Adjustable

8%

10%

14%

17.5%

(2A)(c) Payment to PE in any other case

- In case of sportsperson

- In other cases

10%

7%

10%

13%

Every person making

payment

Adjustable

152A Payment for foreign produced commercial

for advertisement 20% 20%

Every prescribed person

making payment

Final

153 (1)(a) -Sale of rice, cotton seed oil or edible oils

[Div III, Part III, 1st Sch.]

1.5% 1.5% Every prescribed person

making payment

Final

(Adjustable for manufacturing

company and listed

company)

Gross amount

payable for sale of goods shall include

the sales tax.

[S.153(1)] Tax will not be

deducted on account of

payments made

for: -Sale of other goods (except fast moving

consumer goods sold by distributors):


making payment

Final

(Adjustable for

Sale of goods not

exceeding Rs.





Withholding /

Collection Rate

% / Rupees

Responsibility for


Filer Non-filer

[Div III, Part III, 1st Sch.]

--in case of companies --in case of other taxpayers

-Sale of fast moving consumer goods by distributors:

--in case of companies --in case of other taxpayers

4%

4.5%

2% 2.5%

7%

7.75%

2% 2.5%

manufacturing

company and listed company)

25,000 in a financial

year

Services and

execution of

contracts not

exceeding Rs. 10,000 in a financial year.

Provided that where the total payments in

a financial year, exceed Rs. 25,000 /

10,000 as stated

above, the taxpayer will deduct tax from

the payments including the

payments made

earlier without deduction of tax

during the same financial year [SRO

586(1)/91 dated 30.06.1991]

-Sale of cigarettes and pharmaceutical

products by distributors of such products

and by large distribution houses subject to the fulfillment of conditions u/s 148(7).

[Cl. (24A), Part II, 2nd Sch.]

1% 1% Every prescribed person

making payment

Final

(Adjustable for

manufacturing company and listed

company)

Local sales, supplies to taxpayers as per clause (45A) of Part IV of 2nd Schedule.


Final

(1)(b) Rendering or providing of services:

[Cl. (2), Div III, Part III, 1st Sch.] - transportation

- electronic and print media for advertising

services: -in case of companies

- in case of other taxpayers

2%

2%


making payment

Minimum

Final

Final

Where the recipient

of the payment for services receives the

payment through an

agent or the third person by whatever

name called, the agent or the third

1.5%

1.5%

12%

15%





Withholding /

Collection Rate

% / Rupees

Responsibility for


Filer Non-filer

- other services:

- in case of companies - in case of other taxpayers

8% 10%

14.5% 17.5%

Minimum Minimum

person shall be

treated to have been paid the service

charges or fee by the recipient and the

recipient shall collect tax along with the

payment received.

Tax deducted on account of the

followings will not

be final tax: [Sec.153(3)]

Sale of goods and

execution of contracts by a public

company listed on a registered stock

exchange in Pakistan.

Services provided to taxpayers as per clause (45A) of Part IV of 2nd Schedule


Minimum Advertisement

services by owners of newspaper and

magazines.

Rendering or providing of services

(1)(c) Execution of a contract (Residents) [Cl. (3), Div III, Part III, 1st Sch.]

- in case of companies

- in case of other taxpayers - in case of sportsperson

Every prescribed person making payment

Final - (Adjustable for listed companies)

[Sec153(3)]

Final

7%

7.5%

12%

12.5% 10% 10%

(2) Payments made by every exporter or an export house to a resident person or

permanent establishment in Pakistan, on account of rendering of services of

1% 1% Every exporter or export house

Final





Withholding /

Collection Rate

% / Rupees

Responsibility for


Filer Non-filer

stitching, dying etc. [Cl. (3), Division IV,

Part III, 1st Sch.]

154(1) Realization of foreign exchange on

account of export of goods by exporter.

1% 1% Every authorized dealer

in foreign exchange

Final. Minimum tax, if the taxpayer opts not to

be subject to final tax at the time of filling of

return. (2) Commission due to an indenting

commission agent.

5% 5% Every authorized dealer

in Foreign Exchange

-do-

(3) Sale of goods to an exporter under in land

back to back L/C.

1% 1% Every banking company -do-

(3A) Export of goods – Export Processing Zone 1% 1% Export Processing Zone Authority

-do-

(3B) Indirect exporter 1% 1% Direct exporter, export

house

-do-

(3C) Clearing of goods 1% 1% Collector of customs -do-

155 Payment in full or part (including advance) on account of rent of immovable property

(including rent of furniture and fixture and services relating to such property)

Prescribed persons as mentioned in sub-

section (3) of section 155

Individuals and Association of

Persons where the gross amount of

rent is: Up to Rs. 200,000

Nil

Adjustable

Rs. 200,001 – Rs. 600,000 5% of the amount

exceeding Rs. 200,000

Rs. 600,001 – Rs. 1,000,000 Rs. 20,000 + 10% of the amount exceeding Rs.

600,000





Withholding /

Collection Rate

% / Rupees

Responsibility for


Filer Non-filer

Rs. 1,000,001 – Rs. 2,000,000 Rs. 60,000 + 15% of the

amount exceeding Rs. 1,000,000

Over Rs. 2,000,000

Rs. 210,000 + 20% of the amount exceeding Rs.

2,000,000

Company 15% 17.5% Adjustable

156 - Payment of prize on a prize bond or cross

word puzzle.


payment

Final Where the prize is not

in cash, the person while giving the prize

shall collect tax on

the fair market value of the prize.

[Sec.156(2)]

- Payment on winning from a raffle,

lottery, prize on winning a quiz, prize

offered by companies for promotion of sales.


payment

Final

156A Commission paid or discount allowed to

petrol pump operator

12% 17.5% Every person selling

petroleum products

Final

156B Withdrawal of balance under pension fund:

(a) Withdrawn before the retirement age

(b) Withdrawn if in excess of 50% of accumulated balance at or after the age

of retirement

Average rate [Sec. 12(6)] of tax for the last

3 years or tax rate for

the year whichever is less

- do -

Pension fund manager Adjustable - Tax will not be deducted: i) in case of disability

ii) on share of the nominated survivor of the

deceased person iii) invested in an approved income payment

plan iv) paid to life insurance company for purchase

of approved annuity plan [Provisos to sec. 156B(a) and 156B(b)]

TRANSITIONAL ADVANCE TAX

Advance tax under this chapter shall not be collected or deducted from the Federal Government, Provisional Government, foreign diplomat or a diplomatic mission in Pakistan or a person who produces a certificate from the Commissioner that his income during the tax year is exempt.





Withholding /

Collection Rate

% / Rupees

Responsibility for


Filer Non-filer

231A Cash withdrawal from a bank

0.3% 0.6% Banking company

Adjustable tax – Tax will not be collected, if cash withdrawal does not exceed Rs. 50,000 in aggregate from all bank accounts in a single day. However, if cash amount withdrawn exceeds Rs. 50,000 in a day, tax will be deducted on the whole amount withdrawn. [Circular No. 9 of 2008 dated 15-08-2008].

No tax will be collected in respect of cash

withdrawal made from a “Branchless Banking (BB) Agent Account” utilized to render

branchless banking services to customers. [Cl. (101), Pt. IV, 2nd Sch.]

231AA Sale of various banking instruments

against cash, receipt of cash on cancellation of any of these instruments

and transfer of any sum against cash through online transfer, telegraphic

transfer, mail transfer or any other mode

of electronic transfer.

0.3% 0.6% Banking company, non-

banking financial institution, exchange

company, authorized dealer of foreign

exchange.

Adjustable – No tax will be collected where sum total of the transaction does not exceed Rupees 25,000 in a day.

231B (1) Registration of a new locally

manufactured motor vehicle:

(Rupees)

(Rupees)

Motor vehicle

registration authority of

Excise and Taxation Department

Adjustable - No advance tax shall be collected at the time of registration of a motor vehicle after five years from the date of first registration in case the vehicle is acquired from the Armed Forces of Pakistan or from a foreign diplomats or a diplomatic mission in Pakistan or from the Federal or Provincial Government.

- Tax will not be deducted if a person produces

evidence that tax while transfer of registration or ownership in case of locally manufactured or

tax u/s 148 in the case of imported vehicle was collected from the same person in respect of

the same vehicle.

upto 850 cc 7,500 10,000 851 cc to 1000 cc 15,000 25,000

1001 cc to 1300 cc 25,000 40,000 1301 cc to 1600 cc 50,000 100,000

1601 cc to 1800 cc 75,000 150,000

1801 cc to 2000 cc 100,000 200,000 2001 cc to 2500 cc 150,000 300,000

2501 cc to 3000 cc 200,000 400,000 Above 3000 cc 250,000 450,000





Withholding /

Collection Rate

% / Rupees

Responsibility for


Filer Non-filer

(1A) Leasing of motor vehicle - 4% Leasing company,

scheduled bank, investment bank, non-

banking financial

institutions, development finance

institution and modarba.

Adjustable – Tax will not be collected in case

of light commercial vehicles leased under Prime Minister’s Youth Business Loan Scheme. [Cl.

(102), Pt. IV, 2nd Sch.]

(2) Transfer of registration or ownership of a

motor vehicle:

(Rupees)

(Rupees)

Excise and Taxation

Department

- Tax will not be collected if vehicle is

transferred after five years from the date of registration in Pakistan.

- Rate of tax to be collected shall be reduced by 10% each year from the date of first

registration in Pakistan. [Div. VII, Pt. IV, 1st Sch.]

upto 850 cc - 5,000

851 cc to 1000 cc 5,000 15,000 1001 cc to 1300 cc 7,500 25,000

1301 cc to 1600 cc 12,500 65,000

1601 cc to 1800 cc 18,750 100,000 1801 cc to 2000 cc 25,000 135,000

2001 cc to 2500 cc 37,500 200,000 2501 cc to 3000 cc 50,000 270,000

Above 3000 cc 62,500 300,000

(3) Sale of motor vehicle: Manufacturer of motor vehicle

Engine Capacity (Rupees) (Rupees)

upto 850 cc 7,500 10,000

851 cc to 1000 cc 15,000 25,000 1001 cc to 1300 cc 25,000 40,000

1301 cc to 1600 cc 50,000 100,000 1601 cc to 1800 cc 75,000 150,000

1801 cc to 2000 cc 100,000 200,000

2001 cc to 2500 cc 150,000 300,000 2501 cc to 3000 cc 200,000 400,000

Above 3000 cc 250,000 450,000





Withholding /

Collection Rate

% / Rupees

Responsibility for


Filer Non-filer

233 Payment on account of brokerage or

commission made to a person:

Federal Government,

Provincial Government, Local Government, a

Company or an AOP (termed as principal)

Final – In case of payment to advertising

agent, directly or through electronic or print media the principal shall deduct tax on the

amount equal to “A x 15/85”.

Where A is the amount paid or to be paid to electronic or print media for advertising

services (excluding commission) on which tax

is deductible u/s 153(1)(b).

(i) Advertising agents

(ii) Life insurance agents where commission received is less than Rs.

0.5 million per annum

(iii) Commission agents (other than (i) and (ii) above and export indenting

commission agents)

10%

8%

12%

15%

16%

15%

233A(1) - Purchase of shares as per clause (a) 0.02% 0.02% Stock Exchange Final - Sale of shares as per clause (b) 0.02% 0.02% Stock Exchange Final

233(AA) - Profit or mark-up or interest earned by

member, margin financer, or security lender

10% 10% NCCPL Adjustable

234 Advance tax will be collected at the time

of collecting motor vehicle tax:

Motor vehicle tax

Collecting Authority

Adjustable

(1) In the case of goods transport

vehicles

Rs. 2.50

per kg. of

the laden weight

Rs. 4 per

kg. of the

laden weight

No advance tax after 10 years from the date of

first registration in Pakistan on vehicle with

registered laden weight less than 8120 Kgs. [ S. 234(4)]. In case of laden weight 8120 Kgs.

or more, Rupees 1,200 per annum will be collected.[Cl. (1A), Div. III, Pt. IV, 1ST Sch.]

(2) In the case of passenger transport

vehicles plying for hire with registered seating capacity of:

Rupees per seat per annum

Advance tax on passenger transport vehicles

with registered seating capacity of ten or more persons, shall not be collected after a period of

10 years from 1st day of July of the year of make of the vehicle. [S. 234(3)].

In case of motor cars used for more than 10 years in Pakistan, no advance tax shall be

a) Four or more persons but less than

ten persons

50 100

b) Ten or more persons but less than twenty persons

100 200





Withholding /

Collection Rate

% / Rupees

Responsibility for


Filer Non-filer

c) Twenty persons or more 300 500 collected after a period of 10 years. [S.

234(2A)]

(3) Other private motor cars with engine capacity of:

(Rupees) (Rupees)

a) up to 1000 cc 800 1,200 b) 1001 - 1199 cc 1,500 4,000

c) 1200 - 1299 cc 1,750 5,000

d) 1300 - 1499 cc 2,500 7,500 e) 1500 - 1599 cc 3,750 12,000

f) 1600 – 1999 cc 4,500 15,000 g) 2000 cc and above 10,000 30,000

(4) Where the motor vehicle tax is

collected in lump sum:

(Rupees)

(Rupees)

a) up to 1000 cc 10,000 10,000

b) 1001 - 1199 cc 18,000 36,000

c) 1200 - 1299 cc 20,000 40,000 d) 1300 - 1499 cc 30,000 60,000

e) 1500 - 1599 cc 45,000 90,000 f) 1600 – 1999 cc 60,000 120,000

g) 2000 cc and above 120,000 240,000

234A Advance tax shall be collected on the amount of gas bill of a Compressed

Natural Gas (CNG) station.

4% 6% The person preparing gas consumption bill

Final

235 Rate of collection of advance tax on

electricity bill of commercial or industrial

consumers, where the gross amount of bill:

(Rupees)

(Rupees)

The person preparing

electricity bills

Tax collected from CNG stations shall be final

tax. [Sec. 234A(3)]

No tax shall be collected from the taxpayers

who are registered as exporter or manufacturers of carpets, leather and articles

thereof, surgical goods, sports goods and

(a) does not exceed Rs. 400 - -

(b) Rs. 401 – 600 80 80

(c) Rs. 601 – 800 100 100

(d) Rs. 801 - 1,000 160 160





Withholding /

Collection Rate

% / Rupees

Responsibility for


Filer Non-filer

(e) Rs. 1,001 - 1,500 300 300 textile and articles thereof. [Cl (66) Part IV, 2nd

Sch.].

No advance tax shall be collected from a person

who produces a certificate from Commissioner

that his income during the tax year is exempt from tax. [S. 235(3)]

As per section 235(4), tax collected will be:

- In case of company, adjustable. - In case of other than Company:

- minimum tax up to bill of Rs. 360,000 per

annum - adjustable if monthly bill exceeds Rupees

30,000

(f) Rs. 1,501 - 3,000 350 350

(g) Rs. 3,001 - 4,500 450 450

(h) Rs. 4,501 - 6,000 500 500

(i) Rs. 6,001 - 10,000 650 650

(j) Rs. 10,001 - 15,000 1,000 1,000 (k) Rs. 15,001 - 20,000 1,500 1,500

(l) Exceeding Rs. 20,000: - Commercial consumers 12% 12%

- Industrial consumers 5% 5%

235A Rate of collection of advance tax on the amount of electricity bill of domestic

consumer where the amount of bill

inclusive of sales tax and all incidental charges is:

(i) Rupees 75,000 or more (ii) Less than Rupees 75,000

7.5% 0%

7.5% 0%

The person preparing electricity bill

Adjustable

235B Rate of advance tax to be collected from steel melters and composite steel units,

registered for the purpose of chapter XI of Sales Tax Special Procedure Rules, 2007

for electricity consumed for the production of steel billets, ingots and mildsteel (MS

Products) excluding stainless steel.

Rs. 1 per unit of electricity consumed for such

production

-do- Tax collected shall be deemed to be deducted under sub-section (1) of section 153 on the

payment for local purchase of scrap. Tax collected shall be non-adjustable and credit of

tax shall not be allowed to any person.





Withholding /

Collection Rate

% / Rupees

Responsibility for


Filer Non-filer

236 Advance tax shall be collected on account

of the following:

The person preparing

telephone bills / issuing prepaid card

Adjustable

a) in case of telephone subscriber (other than mobile phone subscriber) where the

amount of monthly bill exceeds Rs. 1,000

10% of the exceeding amount of bill.

b) in case of subscriber of internet, mobile telephone and prepaid internet or

telephone card

12.5% of the amount of bill or sales price of

internet prepaid card or prepaid telephone card or

sale of units through any

electronic medium or whatever form.

236A Collection of advance tax at the time of

sale by public auction or auction by a tender

10% 15% Any person making sale

by public auction or auction by a tender

Adjustable – Tax collected on lease of the

right to collect tolls shall be final. [236A(3)]

236B Collection of advance tax on purchase of

domestic air ticket.

5% of the gross amount

of air ticket.

The airline issuing air

ticket

Adjustable - No tax shall be collected from

routes of Balochistan coastal belt, Azad Jammu and Kashmir, Federally Administrated Tribal

Areas, Gilgit Baltistan and Chitral

236C Advance tax on sale or transfer of immovable property

1% 2% The person responsible for registering, recording

or attesting the transfer, including the person

responsible for

registering or attesting transfer for local

authority, housing authority, housing

society, co-operative

Adjustable – Tax collected shall be minimum tax if immovable property is acquired and

disposed of within the same tax year. No tax shall be collected if immovable property

is held for a period exceeding three years.

- Rate of tax will be 0% irrespective of holding

period, if the seller is dependent of a Shaheed belonging to Pakistan Armed Forces or a person

who dies while in the service of the Pakistan





Withholding /

Collection Rate

% / Rupees

Responsibility for


Filer Non-filer

society and registrar of

properties.

Armed Forces or the Federal or Provincial

Government in respect of first sale of immovable property acquired from or allotted

by the Federal Government or Provincial Government or any authority duly certified by

the official allotment authority or the property acquired or allotted is in recognition of or for

services rendered by the Shaheed or the person

who dies in service.

236D(1) Advance tax on functions and gatherings 5% 5% Prescribed person as

mentioned in clause (b)

of sub-section (4) of section 236D

Adjustable

(2) In case where food, service or any other facility is provided by any other person

5% 5% -do- Adjustable

236F(1) Advance tax on cable operators and other

electronic media shall be as follows:

Pakistan Electronic

Media Regulatory Authority (PEMRA)

Adjustable

License Category Tax on

License fee

Tax on

Renewal

(Rupees) (Rupees)

H 7,500 10,000

H-l 10,000 15,000

H-II 25,000 30,000

R 5,000 12,000

B 5,000 40,000

B-l 30,000 35,000

B-2 40,000 45,000





Withholding /

Collection Rate

% / Rupees

Responsibility for


Filer Non-filer

Tax on

License fee

Tax on

Renewal

(Rupees) (Rupees)

B-3 50,000 75,000

B-4 75,000 100,000

B-5 87,500 150,000

B-6 175,000 200,000 B-7 262,500 300,000

B-8 437,500 500,000 B-9 700,000 800,000

B-10 875,500 900,000

(2) Advance tax in case of IPTV, FM Radio,

MMDS, Mobile TV, Mobile Audio, Satellite TV Channel and Landing Rights

20% 20% PEMRA

(3) Advance tax from TV channel on which

foreign TV drama serial or a play in any language, other than English, is screened

or viewed.

50% 50% PEMRA

236G(1)

Advance tax on sales to distributors,

dealers and wholesalers: - Fertilizers

- Other than fertilizers

0.7%

0.1%

1.4%

0.2%

Manufacturer,

commercial importer

Adjustable - Tax shall be deducted in respect

of following sectors: Electronic, sugar, cement, iron and steel products, fertilizer, motorcycles,

pesticides, cigarettes, glass, textile, beverages and paint of foam sector.





Withholding /

Collection Rate

% / Rupees

Responsibility for


Filer Non-filer

236H(1) Advance tax on sale to retailer:

- Electronics - Others

1% 0.5%

1% 1%

Manufacturer,

distributors, dealer, wholesaler or

commercial importer

Adjustable - Tax credit for the tax deducted

under sections 236G(1) and 236H(1) shall be allowed in computing the tax due by the

distributor, dealer, wholesaler / retailer on the taxable income for the tax year in which the tax

was collected.

236I(1) Collection of advance tax by educational

institutions

5% 5% The person preparing

fee voucher or challan

Adjustable – Tax shall not be deducted from

a person where annual fee does not exceed two hundred thousand rupees.

-No tax shall be collected from a non-resident where;

copy of passport is provided as an evidence

to the educational institution that during previous tax year, his stay in Pakistan was

less than one hundred eighty-three days;

a certificate is furnished that he has no Pakistan source income; and

the fee is remitted directly from abroad

through normal banking channel to the bank account of the educational institution

-Tax shall also not be collected on the amount

which is refundable.

236J(1) Advance tax on dealers, commission agents and arhatis etc.

Market committee Adjustable





Withholding /

Collection Rate

% / Rupees

Responsibility for


Filer Non-filer

Group Tax (per annum)

(Rupees) (Rupees)

Group or Class A 10,000 10,000 Group or Class B 7,500 7,500

Group or Class C 5,000 5,000

Any other category 5,000 5,000 236K(1) Advance tax on purchase or transfer of

immovable property: - where value of immovable property is

upto Rupees 4 million - where value of immovable property is

more than 4 million

0%

2%

0%

4%

The person responsible

for registering, recording or attesting the transfer,

including the person responsible for

registering or attesting

transfer for local authority, housing

authority, housing society, co-operative


properties.

Adjustable - Tax shall also not be collected

from a scheme introduced by the Federal Government, or Provincial Government or an

Authority under a Federal or Provincial law for expatriate Pakistanis provided that the mode of

payment by the expatriate Pakistanis in the said

scheme or schemes shall be in the foreign exchange remitted from outside Pakistan

through normal banking channels

236L Advance tax on purchase of international

air tickets:

- First / Executive class

-Others excluding Economy - Economy

Rupees

per person

16,000

12,000 -

Rupees

per person

16,000

12,000 -

Airline issuing air ticket Adjustable

236M Advance tax on bonus shares issued by

companies quoted on stock exchange

5% 5% Company issuing bonus

shares

Final

236N Advance tax on bonus shares issued by

companies not quoted on stock exchange

5% 5% Company issuing bonus

shares

Final





Withholding /

Collection Rate

% / Rupees

Responsibility for


Filer Non-filer

236P Advance tax on banking transactions

otherwise than through cash

- 0.6% Every banking company Adjustable – No tax shall be collected, if sum

of all transactions mentioned in this section does not exceed Rupees 50,000, in aggregate

from all bank accounts in a day. However, if amount exceeds Rs. 50,000 in a day, tax will be

collected on the whole amount. -Tax shall not be collected in case of Pakistan

Realtime Interbank Settlement Mechanism

(PRISM) transactions or payments made for Federal, Provincial or local Government taxes.

- Withholding tax rate of 0.6% has been reduced to 0.4% up till 30-09-2017

[S.R.O 602(I)/2017 dated 03-07-2017.

236Q Payments to residents for use of machinery and equipments

10% 10% Every prescribed person making payment

Final – Tax shall not be collected in case of agricultural machinery and machinery leased

by a leasing company, an investment bank or a

modaraba or a scheduled bank or a development finance institution in respect of

assets owned by the leasing company or an investment bank or a modaraba or a scheduled

bank or a development finance institution.

236R Advance tax on education related expenses remitted abroad

5% 5% Banks, financial institutions, foreign

exchange companies or any other person

responsible for remitting

foreign currency abroad

Adjustable against the income of the person remitting payment of education related

expenses.

236S Dividend in specie As stated above in Section 150

Every person making payment of dividend

Final





Withholding /

Collection Rate

% / Rupees

Responsibility for


Filer Non-filer

236U Advance tax on insurance premium:

- General insurance premium - Life insurance premium exceeding Rs.

0.3 million in aggregate per annum - Others

- -

-

4% 1%

-

Every insurance

company

Adjustable

236V Advance tax on extraction of minerals - 5% Provincial authority Adjustable

236W Advance tax on purchase or transfer of

any immovable property

3% of value calculated

u/s 111(4)(c)

The person responsible

for registering, recording or attesting the transfer,

including the person responsible for

registering or attesting

transfer for local authority, housing

authority, housing society, co-operative


properties.

Non-adjustable – Rate of tax will be applied

on amount computed according to the formula “A - B”

Where, A is the value of immovable property

determined under section 68

B is the value recorded by authority registering or attesting the transfer

[Sec. 111(4)(c)]

236X Advance tax on tobacco 5% 5% Pakistan Tobacco Board

or its contractors

Adjustable


SALES TAX


Tier - 1 retailers - definition Section 2(43A)

Clause (43A) has been inserted in this section to define the 'Tier-1 retailers' which means (a) a retaileroperating as a unit of a national or international chain of stores; (b) a retailer operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks; (c) a retailer whose cumulative electricitybill during the immediately preceding twelve consecutive months exceeds Rupees six hundred thousand;and (d) a wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on wholesalebasis to the retailers as well as on retail basis to the general body of the consumers.

Scope of tax Section 3Clause (b) of sub-section (1) of this section has been substituted to enhance the scope of sales tax onimported goods to the areas / places where Sales Tax Act is not applicable. Now, sales tax shall becharged / levied on the value of goods imported into Pakistan irrespective of their final destination interritories of Pakistan.

By amendment in sub-section (1A), further tax shall also be charged, levied and paid on zero rated goods(section 4) supplied to a person who has not obtained registration number.

Clause (a) of sub-section (2) has been amended to clarify that if taxable supplies specified in ThirdSchedule are also specified in Eighth Schedule, such supplies shall be charged to tax at the rate specifiedin the Eighth Schedule instead of seventeen percent of the retail price.

Clause (b) of sub-section (2) is substituted to empower the Board (FBR) with the approval of FederalMinister-in-charge, by notification, to declare that tax on taxable goods shall be charged, collected andpaid in such manner and at such higher or lower rate or rates as may be specified in the said notification.Earlier such powers were with the Federal Government. Accordingly, sub-section (3A) and (5) as well asother relevant provisions have also been substituted.

Sub-section (9A) has been inserted in this section whereby scheme of sales tax for Tier-1 retailers hasbeen enacted. The scheme regarding Tier-2 retailers has already been enacted under sub-section (9) ofthis section read with Rule 6 of Chapter II of the Sales Tax Special Procedure Rules, 2007. Under thescheme of Tier-1, the retailers shall also have an option to pay sales tax @ 2% of their total turnoverincluding exempt supplies without adjustment of any input tax. In this regard the relevant Rule 5 of SalesTax Special Procedure Rules, 2007 has been substituted accordingly through S.R.O. 583(I)/2017 dated 01July 2017. The sub-section prescribes as under:

“(9A) Notwithstanding anything contained in this Act, Tier-1 retailers shall pay sales tax at the ratespecified in sub-section (1) and shall observe all the applicable provisions of this Act and rules madethereunder, including the requirement to file monthly sales tax returns in the manner prescribed inChapter II of the Sales Tax Rules, 2006:

Provided that the retailers making supplies of finished goods of the five sectors specified in NotificationNo. S.R.O. 1125(I)/2011, dated the 31st December, 2011 shall pay sales tax in respect of such suppliesat the rates prescribed in the said Notification:

Provided further that Tier-1 retailers, in lieu of net tax payable at the applicable rate, shall have an optionto pay sales tax under the turnover regime at the rate of two percent of their total turnover, includingturnover relating to exempt supplies, without adjustment of any input tax whatsoever:

Provided also that retailers opting to pay sales tax on the basis of total turnover shall file an option to theChief Commissioner of Regional Tax Office or Large Taxpayers Unit having jurisdiction by fifteenth day ofJuly opting to pay sales tax on the basis of turnover and such an option shall remain in force for thewhole financial year."


SALES TAX


Exemption Section 13(7)

After sub-section (7) of this section, two provisos have been added to provide that all notifications,except those earlier rescinded, shall be deemed to have been in force with effect from 01 July 2016 andshall continue till 30 June 2018, if not earlier rescinded. Similarly, all notifications issued on or after 01July 2016 and placed before the National Assembly shall continue to be in force till 30 June 2018 if notearlier rescinded.

Appointment of authorities Section 30

Now, the FBR has also been empowered to appoint District Taxation Office Inland Revenue and AssistantDirector Audit Inland Revenue.

Sub-section (2A) and (2B) have been added in this section whereby Chief Commissioners Inland Revenueshall perform their functions as per directions of the FBR and Commissioners Inland Revenue shallperform their functions as per directions of the Chief Commissioner Inland Revenue to whom they aresubordinate. Sub-sections (3) and (4) have also been substituted to specify that District Taxation OfficerInland Revenue shall be sub-ordinate to Deputy Commissioner Inland Revenue and Assistant DirectorAudit Inland Revenue shall be sub-ordinate to Assistant Commissioner Inland Revenue.

Offences and penalties Section 33

Following serial number 23 has been added in the Table of this section to introduce specific penalty forcigarette manufacturers including distributors, sellers, etc.

Offences PenaltiesSection of theAct to whichoffence hasreference

23. Any person who manufactures,possesses transports, distributes, stores orsells cigarette packs with counterfeited taxstamps, banderoles, stickers, labels orbarcodes or without tax stamps,banderoles, stickers, labels or barcodes

(i) Such cigarette stock shall be liable to outrightconfiscation and destruction. Any personcommitting the offence shall pay a penalty oftwenty-five thousand rupees or one hundred percent of the amount of tax involved, whichever ishigher. He shall, further be liable, uponconviction by a Special Judge, to simpleimprisonment for a term which may extend tothree years, or with additional fine which mayextend to an amount equal to the loss of taxinvolved, or with both.

(ii) In case of transport of cigarettes withcounterfeited tax stamps, banderoles, stickers,labels or barcodes, or without tax stamps,banderoles, stickers, labels or barcodes,permanents seizure of the vehicle used fortransportation of non-conforming or counterfeitcigarette packs; and

(ii) In case of repeat sale of cigarettes without orwith counterfeited, tax stamps, banderoles,stickers, labels or barcodes, the premises usedfor such sale be sealed for a period notexceeding fifteen days.

40C(2)


SALES TAX


Recovery of arrears of tax Section 48(1)

No notice shall be issued for recover of any tax due if the taxpayer has filed appeal in respect of theorder under which the tax has become payable and the appeal has not be decided by the Commissioner(Appeals) subject to the condition that twenty five percent of the amount of tax due has been paid by thetaxpayer.

Service of orders, decisions, etc. Section 56

Any notice, order or requisition required to be served on resident individual, other than in arepresentative capacity, or any person, other than a resident individual, shall be treated as properlyserved on the resident individual or any person other than a resident individual, if it is sent electronicallythrough e-mail or to the e-folder maintained for the purpose of e-filling of Sales Tax-cum-Federal Excisereturns by the both public and private limited companies.

Validation Section 74A

This new section has been inserted in the statue and thereby all notifications and orders issued andnotified in exercise of the powers conferred upon the Federal Government, before the commencement ofFinance Act, 2017 shall be deemed to have been validly issued and notified in exercise of those powers.

THE SIXTH SCHEDULE (EXEMPTION)TABLE - 1 (IMPORTS OR SUPPLIES)

Description of serial number 84 has been substituted as "Preparations suitable for infants, put up forretail sale." Earlier it was "Preparations for infant use, put up for retail sale."

Markers and porous tipped pens have also been included in serial number 97 to allow exemption fromsales tax on supply or import thereof.

In serial number 100A, 'Materials and equipment' have been specified as 'Plant, machinery, equipment,appliances and accessories'.

Vehicles imported for construction and operation of Gwadar port and development of free zone havebeen exempted from sales tax by adding new serial number 100C as follows:

“100C. Vehicles imported by China Overseas Ports Holding Company Limited (COPHCL) and itsoperating companies namely (i) China Overseas Ports Holding Company Pakistan (Private) Limited (ii)Gwadar International Terminal Limited, (iii) Gwadar Marine Services Limited and (iv) Gwadar Free ZoneCompany Limited, for a period of twenty-three years for construction, development and operations ofGwadar Port and Free Zone Area subject to limitations, conditions prescribed under PCT heading 9917(3)”.

In serial number 130, description, 'premixes for growth stunting' has been substituted with "Sodium Iron(Na Fe EDTA), and other premixes of vitamins, minerals and micro-nutrients (food grade) and subject toconditions imposed for importation under the Customs Act, 1969".

Serial number 133 has been amended by omitting ingredients for pesticides (2903.3040, 2918.9010,2919.0010 and 2924.2930), Cadausafos Techinal Material (2903.6900), other ingredients for pesticides(2919.0090), Tiethanolamine and its salts (2922.1300), for withdrawal of exemption.


SALES TAX


Following new entries have been added to allow exemption thereon:

Sr.No. Description

Heading Nos. of theFirst Schedule to theCustoms Act, 1969

(IV of 1969)134. Goods received as gift or donation from a foreign government or

organization by the Federal or Provincial Governments or any publicsector organization subject to recommendations of the CabinetDivision and concurrence by the Federal Board of Revenue

9908

135. Sunflower and canola hybrid seeds meant for sowing Respective heading136. Combined harvesters upto five years old 8433.5100

TABLE - 2 (LOCAL SUPPLIES ONLY)Local supply of single cylinder agricultural diesel engines (compression-ignition internal combustion pistonengines) of 3 to 36 HP under heading 8408.9000 have been exempted from sales tax, by adding serialnumber 22 in this table.

TABLE - 3Elaborated list of specified items for use with solar energy, items for dedicated use with renewable sourceof energy, items for promotion of renewable energy technologies or for conversation of energy and partsand components for manufacturing LED lights have been included in the Annexure of Table-3 of thisSchedule to allow conditional exemption from sales tax thereon.

THE EIGHT SCHEDULESPECIAL TAX RATES FOR SPECIFIED GOODS

Fertilizer products (other than Urea) was previously subject to tax under retail price regime. Suchproducts shall now be subject to sales tax at fixed rates per bag stated in table below. As fertilizerproducts manufactured from LNG were already subject to reduced rate of 5%, fixed taxes shall applyonly in respect of fertilizers manufactured from natural gas other than LNG. Previously, natural gassupplied to fertilizer manufacturers was subject to sales tax at standard rate of 17%. Now, natural gassupplied to fertilizer plants for use as feed stock in manufacturing of fertilizer is made subject to sales taxat reduced rate of 10%. Reduced rate of 5% for technology related equipment (set top boxes for gainingaccess to internet, TV broadcast transmitter, reception apparatus for receiving satellite signals of a kindused with TV (satellite dish receivers) and other set top boxes) has been extended for financial year2017-18. Poultry related equipment has been subject to reduced rate of sales tax @ 7%. Supply of locallyproduced coal has been subject to sales tax at higher of 17% of value of supply or Rupees 425 per metricton.After serial number 34 of Table - 1, following entries have been added to specify special tax ratesthereon:

Sr.No. Description

Heading Nos. ofthe First Scheduleto the Customs Act,1969 (IV of 1969)

Rate of Sales Tax Condition

35. DAP Respective heading Rs. 100 per 50 kg bag Nil36. NP(22-20) Respective heading Rs. 168 per 50 kg bag If manufactured from gas other

than imported LNG37. NP(18-18) Respective heading Rs. 165 per 50 kg bag If manufactured from gas other

than imported LNG38. NPK-I Respective heading Rs. 251 per 50 kg bag If manufactured from gas other

than imported LNG


SALES TAX


Sr.No. Description

Heading Nos. ofthe First Scheduleto the Customs Act,1969 (IV of 1969)

Rate of Sales Tax Condition

39. NPK-II Respective heading Rs. 222 per 50 kg bag If manufactured from gas otherthan imported LNG

40. NPK-III Respective heading Rs. 341 per 50 kg bag If manufactured from gas otherthan imported LNG

41. SSP Respective heading Rs. 31 per 50 kg bag If manufactured from gas otherthan imported LNG

42. CAN Respective heading Rs. 98 per 50 kg bag If manufactured from gas otherthan imported LNG

43. Natural gas Respective heading 10% If supplied to fertilizer plants for useas feed stock in manufacturing offertilizer.

44. Phosphoric acid 2809.2010 5% If imported by fertilizer company formanufacturing of DAP

45. Followingmachinery forpoultry sector:

Import and supply

(i) Machinery forpreparing feedingstuff

8436.1000 7%

(ii) Incubators,brooders andother poultryequipment

8436.2100 and8436.2900

7%

(iii) Insulatedsandwich panels

Respective heading 7%

(iv) Poultry sheds 9406.1020 and9406.9020

7%

(v) Evaporative aircooling system

8479.6000 7%

(vi) Evaporativecooling pad

8479.9010 7%

46. Multimediaprojectors

8528.6210 10% Nil

47. Locally producedcoal

27.01 Rs. 425 per metrictonne or 17% advalorem, whichever ishigher.

Nil

48. Liquefied NaturalGas

2711.1100 5% Imported by fertilizer manufacturersfor use as feed stock

49. Fish feed 2309.9090 10% Nil

THE NINTH SCHEDULE(SUB-SECTION 3B OF SECTION 3 - SCOPE OF TAX)

Rate of sale tax on import or local supply of low priced cellular mobile phones or satellite phones andsales tax chargeable on registration of IMEI number by Cellular Mobile Operators (CMOs), on such mobileand satellite phones have been enhanced from Rupees 300 to Rupees 650.

Similarly, sales tax rate and sales tax chargeable on medium priced cellular mobiles or satellite phoneshave been reduced to Rupees 650 from Rupees 1,000.


SALES TAX


S.R.O. 581(I)/2017 DATED 30 JUNE 2017 (EFFECTIVE FROM 01 JULY 2017)

Vide SRO 581(I)/2017 dated 30 June 2017 amendment has been made in SRO 57(I)/2016 dated 29January 2016. By this amendment sales tax shall now be levied and collected on import and supply ofspecified goods at modified rates as follows:

Sr.No.

Description PCT heading Rate

1 Motor spirit excluding HOBC 2710.1210 20.5% ad valorem2 High speed diesel oil 2710.1931 33.5% ad valorem3 Kerosene 2710.1911 0% ad valorem4 Light diesel oil 2710.1921 1.5% ad valorem

S.R.O. 583(I)/2017 DATED 01 JULY 2017

Vide SRO 583(I)/2017 dated 01 July 2017, following amendments have been made in the Sales TaxSpecial Procedure Rules, 2007:

1. Sub-rule (1) of Rule 5 of Chapter II ‘Special Procedure for Payment of Sales Tax by Retailers’ hasbeen substituted. By this amendment, now, the retailers specified in Rule 4 of this Chapter shall pay salestax at the rates and in the manner as prescribed in newly inserted sub-section (9A) of section 3 of theAct.

2. Certain amendments have been made in Chapter XI ‘Special Procedure for Payment of Sales Taxby Steel-melters, Re-rollers and Ship Breakers’ as follows:

i. Rate of tax in case of persons as specified in sub-rule (1) of Rule 58H engaged in production ofsteel billets, ingots and mild steel (MS) products excluding stainless steel has been increasedfrom nine rupees to ten and a half rupees per unit of electricity consumed.

ii. Sub-rule (2) in this regard has also been amended accordingly. Moreover, it is also provided thatpayment of sales tax at the rate of ten and a half rupees per unit of electricity shall be the finaldischarge of liability of steel re-rolling units and composite units of melting and re-rollingincluding their preheating section operated through fuels other than electricity.

iii. By amendment in sub-rule (2A) of Rule 58H, now, adjustable sales tax at the rate of Rupees5,600 per metric ton shall be levied and collected on import by the persons discharging sales taxliability under sub-rule (1) of Rule 58H. In case of other importers, such tax shall be levied at therate of Rupees eight thousand four hundred per metric ton.

iv. After sub-rule (2A), new proviso has been inserted stating that the steel melters discharging theirliability under sub-rules (1) and (2) of Rule 58H shall submit paid electricity bills of last threemonths at the time of filing of Goods Declarations.

v. By amendment in sub-rule (2B), rate of sales tax has been increased from Rupees 5,600 toRupees 8,400 per metric ton on local supplies of re-meltable iron and steel scrap.

vi. By substitution of sub-rule (4) of Rule 58H, rate of sales tax on ship breakers to be paid at thetime of import has been increased from eight thousand rupees to eight thousand five hundredrupees per metric ton. Moreover, quantity of re-rollable scrap has been determined, at 80% foroil tankers and gas carriers and 72.5% for other vessels, of the total LDT of the ship imported forbreaking.


SALES TAX


vii. Amendment has been made in sub-rule (2) of Rule 58Ha by increasing the rate of sales tax forsteel-melters and re-rolling mills producing electricity using gas generators as under:

Sales tax payable = {HM3 (or hundred cubic meter) x Rupees 2,494*} – sales tax paid on gas bill

* Previously, it was Rupees 2,138.

viii. Amendment has been made in sub-rule (3) of Rule 58Ha by increasing the rate of sales tax forsteel-melters and re-rolling mills operating on self-generated electricity other than gas as under:

Sales tax payable = mill size (in inches) x Rupees 68,187*

* Previously, it was Rupees 58,446.

ix. In Table-1 of sub-rule (1) of Rule 58I, serial number 6 and 7 regarding persons supplyingimported MS products to registered / unregistered persons have been omitted. Moreover, amountof sales tax to be mentioned on sales tax invoices by the remaining registered persons for theproducts or category mentioned in the said Table have been amended as follows:

Sr.No.

Invoices issued by and for or to Amount of sales tax to bementioned on the invoices

1 By steel melters or composite units of melting, re-rolling andMS cold drawing to registered re-rollers

Rupees 9,247 per metric ton

2 By steel re-rollers, using ingots or billets of steel melters orcomposite units of melting, re-rolling and MS cold drawing,to registered persons


3 By re-rollers, using billets of Pakistan Steel Mills or PeoplesSteel Mills or Heavy Mechanical Complex or imported billets,to registered persons


4 By re-rollers, using ship-plates and re-rollable scrap as rawmaterial, to registered persons


5 By re-rollers, to unregistered persons Rupees 1,365 per metric ton

x. Value of steel products to be assessed for the purpose of sales tax in case of re-rollable scrapsupplied by ship breakers has been increased from Rupees 47,059 to Rupees 50,000 per metricton. Moreover, such value for imported re-rollable scrap under HS Code 72.04 has also beenspecified at 480 US dollars per metric ton.

xi. By amendment in clause (a) of sub-rule (1) of Rule 58MA, date for submission of option to paysales tax by steel melters and re-rollers on ad valorem basis has been changed from 25th of Juneto 15th of July each year of that financial year.

3. Through this SRO, in sub-rule (1) of Rule 58T of Chapter XIII ‘Special Procedure for Payment ofExtra Sales Tax on Specified Goods’ proviso has been added stating that extra tax under this rule shallnot apply on supplies of lubricating oils made to registered oil marketing companies (OMCs) and thosemade by OMCs to registered manufacturers for in-house consumption.


SALES TAX


SRO 584(I)/2017 DATED 01 JULY 2017

Vide SRO 584(I)/2017 dated 01 July 2017, following amendments in SRO 1125(I)/2011 dated 31December 2011 have been made:

(i) With effect from 15 July 2017, imported raw and ginned cotton shall be excluded fromthe purview of this notification.

(ii) Scope of concession on ‘Mucilages and thickness’ under serial number 5 of Table-I hasbeen extended to mucilages and thicknesses of all vegetables except agar-agar.Previously this concession was restricted to mucilages and thickness derived from locustbeans, locust bean seeds or guar seeds.

(iii) By virtue of amendment in Table-II, serial number 1 ‘Goods usable as industrial inputs,specified in Table-I, including fabric’, now:

Commercial import of fabric shall be subject to sales tax at the rate of 6%plus 2% value addition tax.

Rate of sales tax on supplies of finished fabric to and by retailers; supplies offinished fabric to end consumers; other supplies of finished fabrics shall nowbe 6% instead of 5%.

(iv) Rate of sales tax on supplies to any person, including retail sales, of locally manufacturedfinished articles of: (a) textiles and textile made-ups including carpets; and (b) leatherand artificial leather shall now be 6% instead of 5%.

(v) With effect from 15 July 2017, benefit of this notification shall be restricted to spinningstage onwards in case of textile sector. Previously it was also applicable on imports ofraw cotton and onwards in case of imports.

(vi) A new condition (xiv) has been added and further tax @ 1% for supplies under thisnotification has been prescribed. Supplies of finished articles shall attract further tax @2%.

S.R.O. 585(I)/2017 DATED 01 JULY 2017

Amendment in SRO 648(I)/2013 dated 9 July 2013 has been made through SRO 585(I)/2017 dated 01July 2017 by inserting further taxable supplies in the aforesaid SRO dated 9 July 2013. As a result of thisamendment, now, further tax shall also not be charged, levied or paid on taxable supplies of fertilizers,supplies by steel melters, re-rollers and ship breakers operating under Chapter XI of Sales Tax SpecialProcedure Rules, 2007 and supplies covered under the Fifth Schedule to the Sales Tax Act, 1990.

S.R.O. 586(I)/2017 DATED 01 JULY 2017

Amendment has been made in Rule 5 of the Sales Tax Special Procedure (Withholding) Rules, 2007. As aresult of this amendment, now the provisions of said withholding rules shall not apply to supplies, otherthan advertisement services, made by an active taxpayer to another registered person.


SALES TAX


S.R.O. 587(I)/2017 DATED 01 JULY 2017

Vide SRO 587(I)/2017 dated 01 July 2017, rates of sales tax have been specified on local supply ofHybrid Electric Vehicles (HEVs) falling under the PCT heading 87.03 as follows:

Sr. No. Engine Capacity Rate of sales tax

1 Up to 1800CC 50% of the rate specified in sub-section (1) of section 3 of theSales Tax Act, 1990

2 1801CC to 2500CC 75% of the rate specified in sub-section (1) of section 3 of theSales Tax Act, 1990

S.R.O. 588(I)/2017 DATED 01 JULY 2017

Amendment in SRO 445(I)/2004 dated 12 June 2004 has been made through SRO 588(I)/2017 dated 01July 2017. By this amendment, goods delivered under Musawamah, Bai Muajjal, Bai Salam, Istisna,Tijarah and Istijrar financing arrangement by a bank or a financial institution approved by the State Bankof Pakistan or the Securities and Exchange Commission of Pakistan, shall not constitute as supply withreference to clause (33) of section 2 of the Act.

S.R.O. 591(I)/2017 DATED 01 JULY 2017

Through SRO 591(I)/2017 dated 01 July 2017, minimum value of taxable supply of locally produced coal(PCT heading 27.01) has been withdrawn by rescinding the SRO 491(I)/2015 dated 30 June 2015.Previously, minimum value of taxable supply of locally produced coal (PCT heading 27.01) was fixed attwo thousand and five hundred rupees per metric ton.

S.R.O. 592(I)/2017 DATED 01 JULY 2017

By amendment through SRO 592(I)/2017 dated 01 July 2017, new proviso in SRO 549(I)/2006 dated 05June 2006 has been added. As a result of this amendment, input tax adjustment has been allowed to theregistered persons making taxable supply of locally produced coal (PCT heading 27.01) where value ofsupply exceeds five thousand rupees per metric tonne.

SRO 641(I)/2017 DATED 13 JULY 2017

Vide SRO 641(I)/2017 dated 13 July 2017, goods supplied to German Development Agency (DeutscheGesellschaft fur Internationale Zusammenarbeit) GIZ, have been exempted from whole of sales tax.


FEDERAL EXCISE DUTY


Due date Section 2(8a)FBR has now been empowered to specify due date for filing of return and payment of duty and specifydifferent parts or annexures of return by notification in the official Gazette.Duties specified in the First Schedule to be levied Section 3(1)(b) & (1)(c)Clause (b) of sub-section (1) of this section has been substituted to enhance the scope of duty onimported goods to the areas / places where Federal Excise Act is not applicable. Now, duty shall be leviedand collected on the value of goods imported into Pakistan irrespective of their final destination interritories of Pakistan.Clause (c) of sub-section (1) is substituted to empower the Board (FBR) with the approval of FederalMinister-in-charge, by notification in the official Gazette, to specify such goods as are produced ormanufactured in the non-tariff areas and are brought to the tariff areas for sale or consumption therein.Earlier, such powers were with the Federal Government. Other sections relevant to similar powers havealso been modified accordingly.

Exemptions Section 16(6)After sub-section (6), two provisos has been added to provide that all notifications, except those earlierrescinded, shall be deemed to have been in force with effect from 01 July 2016 and shall continue till 30June 2018, if not earlier rescinded. Similarly, all notifications issued on or after 01 July 2016 and placedbefore the National Assembly shall continue to be in force till 30 June 2018, if not earlier rescinded.Offences, penalties, fines and allied matters Section 19(10)Sub-section (10) has been substituted to enhance the scope of penal action against the person engagedin manufacture or production of cigarette, as under:

"(10) Where any person is engaged in the manufacture or production of cigarettes in the mannercontrary to this Act or the rules made thereunder or otherwise evades duty of excise on cigaretteor is engaged in the manufacture or production of counterfeited cigarettes or tax stamps,banderoles, stickers, labels or barcodes, or is engaged in the manufacturing or production ofcigarettes packs without affixing, or affixing counterfeited, tax stamps, banderoles, stickers,labels or barcodes, the machinery, equipments, instruments or devices used in such manufactureor production shall, after outright confiscation, be destroyed in such manner as may be approvedby the Commissioner and such person shall not be entitled to any claim on any groundwhatsoever or be otherwise not entitled to any compensation in respect of such machinery orequipment, instruments or devices and such confiscation or destruction shall be without prejudiceto any other penal action which may be taken under the law against the person or in respect ofthe cigarette, tax stamps, stickers, labels, barcodes or vehicles involved in or otherwise linked orconnected with the case."

Appointment of Federal excise officers and delegation of powers Section 29(1)Now, the FBR has also been empowered to appoint District Taxation Office Inland Revenue and AssistantDirector Audit Inland Revenue.Sub-section (1AA) and (1AB) have been added in this section whereby Chief Commissioners InlandRevenue shall perform their functions as per direction of the FBR and Commissioners Inland Revenueshall perform their functions as per directions of the Chief Commissioner Inland Revenue to whom theyare subordinate.Sub-section (1B) has also been substituted to specify that District Taxation Officer Inland Revenue shallbe sub-ordinate to Deputy Commissioner Inland Revenue and Assistant Director Audit Inland Revenueshall be sub-ordinate to Assistant Commissioner Inland Revenue.


FEDERAL EXCISE DUTY

FINANCE ACT 2017

- 59 -

Deposits, pending appeal of duty demanded or penalty levied Section 37(3)

No notice shall be issued for recovery of any tax due, if the taxpayer has filed appeal in respect of the

order under which the tax has become payable and the appeal has not been decided by the Commissioner (Appeals) subject to the condition that twenty five percent of the amount of tax due has

been paid by the taxpayer.

Services of notices and other documents Section 47

Any notice, order or requisition required to be served on a resident individual, other than in a

representative capacity, or any person other than a resident individual shall be treated as properly served

on the resident individual or any person other than a resident individual if it is sent electronically through e-mail or to the e-folder maintained for the purpose of e-filling of Sales Tax-cum-Federal Excise Return by

the both public and private limited companies.

Validation Section 47C

This new section has been inserted in the statute and thereby all notifications and orders issued and

notified in exercise of the powers conferred upon the Federal Government, before the commencement of Finance Act, 2017 shall be deemed to have validly issued and notified in exercise of those power.

FIRST SCHEDULE

TABLE – I (EXCISABLE GOODS)

Locally Produced Cigarettes Sr. Nos. 9, 10 & 10a

Serial numbers, description and duty of locally produced cigarettes (PCT heading 24.02) have been

substituted / enhanced as under:

Sr.

No.

Description of goods Heading

/ sub-heading

No.

Rate of duty

9. Locally produced cigarettes if their on-pack printed

retail price exceeds four thousand five hundred Rupees per thousand cigarettes.

24.02 Rupees three thousand

seven hundred and forty per thousand cigarettes

10. Locally produced cigarettes if their on-pack printed retail price exceeds two thousand nine hundred and

twenty five Rupees per thousand cigarettes but does not exceed four thousand five hundred rupees per

thousand cigarettes.

24.02 Rupees one thousand six hundred and seventy per

thousand cigarettes

10a. Locally produced cigarettes if their on-pack printed

retail price does not exceed two thousand nine hundred and twenty-five Rupees per thousand

cigarettes.

24.02 Rupees eight hundred per

thousand cigarettes


FEDERAL EXCISE DUTY


Cement Sr. No. 13

Rate of duty on various types of cement (PCT heading) 25.30) has been enhanced from one rupee perkilogram to one rupee and twenty five paisa per kilogram.

Following two restrictions have been amended in respect of Serial No. 9 of the Table, locally producedcigarette, if their on pack printed retail price exceeds four thousand five hundred rupees per thousandcigarettes:

Restriction 1 - Reduction and Restriction 3 - Minimum price

No cigarette manufacturer shall reduce retail price from the level adopted on the day of theannouncement of the latest budget. Moreover, no brand shall be sold at retail price lower than a forty-five percent of the retail price against serial No. 9.

As the earlier amendments were made in Table - I through S.R.O. 407(I)/2017 dated 29 May 2017,hence it has now been rescinded through S.R.O. 593(I)/2017 dated 01 July 2017.

TABLE – II (EXCISABLE SERVICES)

Telecommunication services Sr. No. 6

Rate of duty on telecommunication services excluding such services in the area of a Province where suchProvince has imposed Provincial Sales Tax and has started collecting the same has been reduced fromeighteen and a half percent to seventeen percent of the charges.

THIRD SCHEDULETABLE – I (CONDITIONAL EXEMPTIONS)

Material and equipment Sr. No. 19

Equipment have been specified as plant, machinery, equipment, appliances and accessories.

Imported vehicles Sr. No. 21

New, serial number 21 has been inserted to exempt the imported vehicles by specified companies asunder:

Sr.No.

Description of goods Heading / sub-headingNumber

21 Vehicles imported by China Overseas Ports Holding CompanyLimited (COPHCL) and its operating companies, namely:-

a) China Overseas Ports Holding Company Pakistan (Private)Limited;

b) Gwadar International Terminal Limited;c) Gwadar Marine Services Limited; andd) Gwadar Free Zone Company Limited;

For a period of twenty-three years for construction, developmentand operations of Gwadar Port and Free zone Area subject tolimitations, conditions prescribed under PCT heading 9917(3).

Respective headings


OTHER LAW


Islamabad Capital Territory (Tax on Services) Ordinance, 2001

Through SRO 589(I)/2017 dated 01 July 2017, sales tax at reduced rate of 5% has been levied onservices provided or rendered by marriage halls and lawns, by whatever name called, throughamendment in SRO 495(I)/2016 dated 04 July 2016 with the condition that no refund or adjustment ofinput tax shall be allowed.

Through SRO 590(I)/2017 dated 01 July 2017, export of IT services and IT-enabled services have beenexempted from whole of sales tax.

Vide SRO 641(I)/2017 dated 13 July 2017, services provided to German Development Agency (DeutscheGesellschaft fur Internationale Zusammenarbeit) GIZ within Islamabad Capital Territory by serviceproviders registered under Sales Tax Act, 1990, have been exempted from whole of sales tax.


CONTACT PARTNERS


For further explanations, please contact following partners:

LAHORE: Principal Office

10-B, Saint Mary ParkMain Boulevard, Gulberg-IIILAHORE-54660Phones : (042) 35718137-9Fax : (042) 35718136E-Mail : [email protected]

Mr. Sarfraz MahmoodFCA, FITM, FICS

Syed Mustafa AliFCA

Mr. Sarwar KhanFCA

Mr. Mubashar MehmoodFCA

Other offices at:

ISLAMABAD: 2-A, ATS Centre, 30-WestFazal-e-Haq Road, Blue AreaISLAMABADPhones : (051) 2274121-22Fax : (051) 2278859E-Mail : [email protected]

Mr. Muddassar MehmoodFCA

Mr. Raheel ArshadFCA

FAISALABAD: 560-F, Raja Road, Gulistan ColonyFAISALABAD-38000Phones : (041) 8861042,

8863644Fax : (041) 8863611E-Mail : [email protected]

Mr. Liaqat Ali PanwarFCA, FITM, FICS

KARACHI: 108, Park Avenue, Block-6, P.E.C.H.S.Shahrah-e-FaisalKARACHIPhones : (021) 34310826-7,

34313952Fax : (021) 34313951E-Mail : [email protected]

Mr. Inaam Ellahi SheikhFCA, FCA (England & Wales)

Mr. Muhammad WaqasACA

Website www.racopk.com

Riaz Ahmad & CompanyChartered Accountants

Faisalabad Office

560-F, Raja RoadGulistan ColonyFaisalabad 38000, PakistanTelephone Fax

(92-41) 886 10 42(92-41) 886 36 11

[email protected]

Lahore Office

10-B, Saint Mary ParkMain Boulevard, Gulberg-IIILahore 54660, PakistanTelephones (92-42) 3571 81 37-9Fax (92-42) 3571 81 [email protected]

Karachi Office

108-109, 1st Floor, Park AvenueBlock-6, P.E.C.H.S., Shahrah-e-FaisalKarachi 75400, PakistanTelephones Fax

(92-21) 3431 08 26-7(92-21) 3431 39 51

[email protected]

2-A, ATS Centre, 30-WestFazal-ul-Haq Road, Blue AreaIslamabad, PakistanTelephones (92-51) 227 41 21-2Fax (92-51) 227 88 [email protected]

Islamabad Office

www.racopk.com

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