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Amendments in Amendments in Income Tax ordinance, Income Tax ordinance, 2001 vide Finance Act, 2001 vide Finance Act, 2008 (Insurance 2008 (Insurance Sector)Sector)

Payment to non-residentPayment to non-resident

152 (1AA)152 (1AA)

Every person making a Every person making a payment of insurance payment of insurance premium or re-insurance premium or re-insurance premium to a non-resident premium to a non-resident person shall deduct tax from person shall deduct tax from the gross amount paid.the gross amount paid.

Payment to Non-ResidentPayment to Non-Resident

The rate of tax to be deducted The rate of tax to be deducted from payments referred to in from payments referred to in sub-section (1AA) of section 152 sub-section (1AA) of section 152 shall be shall be 5% of the gross 5% of the gross amount paid.amount paid.

Payment to Non-ResidentPayment to Non-Resident

152(1BB) 152(1BB)

Tax deducted under sub-section Tax deducted under sub-section (1AA) shall be a (1AA) shall be a final taxfinal tax on the on the income of the non-resident income of the non-resident person arising out of such person arising out of such payment.payment.

Certificate of collection Certificate of collection or deduction of taxor deduction of tax

164 164 Every person collecting tax shall, at Every person collecting tax shall, at the time of collection or deduction the time of collection or deduction of the tax, furnish to the person of the tax, furnish to the person from whom the tax has been from whom the tax has been collected or to whom the payment collected or to whom the payment from which tax has been deducted from which tax has been deducted has been made, a certificate setting has been made, a certificate setting out the amount of tax collected or out the amount of tax collected or deducteddeducted

Section 107 of Income Section 107 of Income Tax Ordinance, 2001Tax Ordinance, 2001

• The Provisions of Double Taxation The Provisions of Double Taxation treaties override the treaties override the

provisions of provisions of Income Tax Income Tax Ordinance 2001.Ordinance 2001.

Section 152 (IAA) of Section 152 (IAA) of Income tax Income tax Ordinance, Ordinance,

20012001• Not applicable to the non-Not applicable to the non-

resident companies having resident companies having residence in the countries with residence in the countries with which Pakistan has entered into which Pakistan has entered into Double Taxation Treaties. Double Taxation Treaties.

Agreements on Avoidance of Agreements on Avoidance of Double Taxation between Double Taxation between Pakistan and following Pakistan and following

countriescountries1)1) Austria Austria 2) Azerbaijan 2) Azerbaijan 3) Bangladesh3) Bangladesh4)4) Belgium Belgium 5) Canada 5) Canada 6) China6) China7)7) Denmark Denmark 8) Egypt 8) Egypt 9) Finland9) Finland10) 10) France France 11) Germany11) Germany 12) Greece12) Greece13)13) HollandHolland 14) Hungary14) Hungary 15) India 15) India 16) 16) IndonesiaIndonesia 17) Iran17) Iran 18) Ireland18) Ireland19)19) ItalyItaly 20) Japan20) Japan 21) Jordan21) Jordan22)22) KazakhstanKazakhstan 23) Kenya 23) Kenya 24) Korea24) Korea25)25) KuwaitKuwait 26) Lebanon26) Lebanon 27) Libya27) Libya28)28) MalaysiaMalaysia 29) Malta29) Malta 30) 30)

MauritiusMauritius31)31) NetherlandNetherland 32) Nigeria 32) Nigeria 33) Norway33) Norway34)34) Oman Oman 35) Philippines 35) Philippines 36) Poland 36) Poland 37)37) QatarQatar 38) Romania38) Romania 39) Saudi Arabia39) Saudi Arabia40)40) SingaporeSingapore 41) South Africa 41) South Africa 42) Srilanka42) Srilanka43)43) Sweden Sweden 44) Switzerland 44) Switzerland 45) Syrian 45) Syrian 46)46) ThailandThailand 47) Tunisia47) Tunisia 48) Turkey 48) Turkey 47)47) Turkmenistan Turkmenistan 50) UAE50) UAE 51) United 51) United

Kingdom Kingdom 52) 52) USAUSA 53) Uzbekistan 53) Uzbekistan

Exemption Exemption CertificatesCertificates

Exemption Certificate for non Exemption Certificate for non deduction of Income Tax Under deduction of Income Tax Under Section 152(1AA) not required.Section 152(1AA) not required.

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WITHOLDING PROVISONS WITHOLDING PROVISONS APPLICABLE TO INSURANCE APPLICABLE TO INSURANCE

BUSINESSBUSINESS

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APPLICABLE WITHOLDING SECTIONS AT A GLANCE

Salaries u/s 149 Dividends u/s 150 Non Residents (General) u/s 152 Non Residents (Premiums) u/s 152 Non Residents (Advertisements) u/s153A Local Contracts & Services u/s 153 Rent of properties u/s 155 Prizes & Winnings u/s 156 Commission u/s 233

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OBLIGATIONS Deduct Tax at prescribed rates.

Deposit Tax within 7 days of the end of fortnight

Issue Prescribed Deduction Certificate to payee Salary within 45 days of the end of F.Y. Others within 15 days of the end of F.Y. On request of Payee within 7 days of request.

Submit Monthly Statement by 20th of following month

Submit Annual Statement by 31st August

Furnish Reconciliation of Statements,if required

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SALARIES

Payment through cross cheque or transfer except upto Rs. 15,000 p.m. which may be paid in cash.

Deductions to be made on average basis

Rates of Deductions as per First Schedule

Adjustments may be made for credits and other deductions as per section 149 (1)

Deductions also to be made from payment out of Pension Fund.(Sec 156B)

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SALARIES

No deductions upto Rs. 180,000

In case of woman, no deductions upto Rs. 240,000

Minimum rate of deduction 0.5 %

Maximum rate of deduction 20 %

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DIVIDENDS

Deduction of Tax at the time of Payment

Tax to be deducted at 10 % by Resident

companies ( Division III Part I 1st Schedule )

Dividend to include after tax profit of a branch

of a foreign company ( Section 2 (19) (f) )

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INSURANCE OR RE-INSURANCE PREMIUM INSURANCE OR RE-INSURANCE PREMIUM PAYMENT TO NON RESIDENT PERSONPAYMENT TO NON RESIDENT PERSON

(SECTION 152(1AA)

Inserted through Finance Act 2008.Inserted through Finance Act 2008.

Rate of Tax Deduction 5 % Rate of Tax Deduction 5 % ( Div II Part III 1( Div II Part III 1stst

Schedule)Schedule)

Full & Final Tax as Pakistan source Full & Final Tax as Pakistan source income income (Section 152(1BB))(Section 152(1BB))

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PAYMENT OF LOCAL COMMISSION PAYMENT OF LOCAL COMMISSION

Tax to be deducted / collected at 10 % Tax to be deducted / collected at 10 %

( Part IV of First Schedule )( Part IV of First Schedule )

Rate in case of Advertising Agents at 5 % Rate in case of Advertising Agents at 5 %

(Clause 26 Part II 2(Clause 26 Part II 2ndnd Schedule ) Schedule )

Tax is full & Final in case of RecipientsTax is full & Final in case of Recipients

( Section 233 (2) )( Section 233 (2) )

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PAYMENT TO NON RESIDENT MEDIA PERSONSPAYMENT TO NON RESIDENT MEDIA PERSONS

Payment for advertisement services Payment for advertisement services attract this deduction attract this deduction ( Section 153A)( Section 153A)

Rate of Tax Deduction 10 % Rate of Tax Deduction 10 % (Division IIIA, (Division IIIA, Part III ,First Schedule )Part III ,First Schedule )

Full & Final tax as Pakistan source Full & Final tax as Pakistan source income income (Section 169 (1)(b))(Section 169 (1)(b))

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RENT OF IMMOVEABLE PROPERTYRENT OF IMMOVEABLE PROPERTY

Rent to include advance rent , rent of Rent to include advance rent , rent of

furniture / fixtures and amount for furniture / fixtures and amount for

services relating to such property.services relating to such property.

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RATES OF TAX DEDUCTION ON RENT( Div V Part III 1st Schedule / Clause 28 Part II 2Clause 28 Part II 2ndnd Schedule Schedule ) )

PAYMENT TO INDIVIDUAL From 150,000 to 400,000 5 % of amount exceeding 150,000

From 400,000 to 1000,000 12500 + 7.5 of amount exceeding 400,000

Exceeding 1,000,000 57,500 +10 of amount exceeding 1,000,000

PAYMENT TO COMPANY Upto 400,000 5 %

From 400,000 to 1,000,000 20,000 + 7.5 % of amount exceeding 400,000

Exceeding 1,000,000 65,000 + 10 % of amount exceeding 1,000,000

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EXPOSURES ON DEFAULT

1. In case of non deduction of tax at source, following expenditures are inadmissible ;

. Salary . Services and Fee

. Rent . Commission

. Contractual Payment . Payment to Non

Residents

2. Defaulted amount will be recoverable with additional tax @ 12 %.

3. Prosecution proceedings may be initiated.

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FORMAT OF STATEMENTS

Monthly Statement ( Consolidated for salary & other payments )

Annual Statement for Salary

Annual Statement for Other payment . Formats may be downloaded from http:// fbr.gov.pk /

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EFILING ON FBR PORTAL

Get enrolled at https://e.fbr.gov.pk

Obtain Digital certificate from NIFT (www.nift.com.pk)

Submit Returns, Statements , application on line

Make the payments on line

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BENEFITS OF EFILING

Filing of Income Tax Returns and Statements electronically

Tax Payment by Taxpayers and Withholding Agents Payment Collection by Banks Online Payments from bank accounts electronically

(ePayments) In order to facilitate the taxpayers and users of these

services; FAQs and help is available online, however in case of any further assistance , please contact at following:

Helpline : (051) 111-772-772  ...  24 hrs

FEDERAL EXCISE DUTY (F.E.D)FEDERAL EXCISE DUTY (F.E.D)

Services provided or rendered in respect of insurance to a policy holder by an insurer, including a re-insurer “[in case where direct insurance service has been provided]

RATE OF DUTY

i) Goods insurance “[Ten] per cent of the gross premium paid.

ii) Fire insurance do

iii) Theft insurance do

iv) Marine insurance do

v) Other insurance do

FEDERAL EXCISE DUTY (F.E.D)FEDERAL EXCISE DUTY (F.E.D)- Exclusion: Life Insurance- Rule 40 : Special procedure for insurance companies- Monthly return in the form STR-7 (Sales Tax Rules 2006)- Return to be filed by 15th day of the following month.

- In case of default

Default surcharge @ 1.5% per month

- Penalty provision

- Non-filing of return: Rs.5000/-.

- Non or short payment of duty ; Rs.10,000/- or

5% of the duty involved whichever is greater

- If return filed within 15 days of due date; Penalty of

Rs.100/- for each day of default.

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