Federal Budget 2012-13€¦ · financial year. ADVANCE INCOME TAX COMPLIANCE CHART Every taxpayer (except income subject to final taxation, salary income and in case of business individual)

Page 1

PREFACE

This document has been prepared as a general guide for the benefit of our clients and is also available to

other interested persons upon request.

The sources of information to prepare this memorandum are Economic Survey of Pakistan, Budget in

Brief 2019-20 and the Finance Act 2019 as were available on the websites of Ministry of Finance and

Federal Board of Revenue, Government of Pakistan.

This memorandum is correct to the best of our knowledge and belief. However, this should not be taken

as legal text as it sets out the interpretation of the significant amendments made through the Finance Act

2019 in the taxation laws, etc. in a brief manner to assist the readers in understanding important changes.

We hope that this memorandum will be beneficial for the readers in understanding the budgetary changes.

It is suggested that the text of the Act and the relevant notifications, where applicable, be referred to in

considering the interpretation of any provision of the law. Since these are only general comments, no final

decision on any issue may be arrived at without further consideration. Specific professional advice should

be sought before any action is taken. TMRAC will not accept any responsibility in this regard.

We value your suggestions. Please e-mail us your questions and comments at [email protected]

Following Members of TMRAC Team has made the contribution to compile this document;

Sikandar Zulkarnain, Supervisor

Touseef Bin Talib CMA

Muhammad Shakoor, CMA

Mehwish Pervaiz, ACCA

Hina Saleem, CMA

Asad Iqbal, M. Com, CMA(Finalist)

Syed Badar Ali Shah Gilani,

Syeda Talha Niaz,

Naeem Sabir,

Fakhar Abbas,

Muhammad Saleem,

Sadaf Humayun,

M. Imran Malik, FCMA, ACIS Sr. Consultant/Partner

Muhammad Arshad Bashir, FCMA, FPFA, Partner

Muhammad Tariq Khurshid FCMA, Partner

Mian Muhammad Ramzan, FCMA, FPFA, Partner

Date: July 10, 2019 Place: Islamabad, Pakistan -

mailto:[email protected]

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TABLE OF CONTENTS

PREFACE ....................................................................................................................................................................................... 1

TAX COMPLIANCE GUIDE ........................................................................................................................................................ 3

PERIODIC & ANNUAL TAX COMPLIANCE CHART ....................................................................................................................... 3 ADVANCE INCOME TAX COMPLIANCE CHART ............................................................................................................................ 3 WITHHOLDING TAXES- INCOME TAX .............................................................................................................................................. 4 FEDERAL SALES TAX LAW- OVER VIEW. ........................................................................................................................................ 8 SALES TAX WITHHOLDING-FEDERAL SALES TAX LAW .......................................................................................................... 9 PROVINCIAL SALES TAX ON SERVICES- OVER VIEW .............................................................................................................. 10 TAXABLE SERVICES IN ISLAMABAD CAPITAL TERRITORY ........................................................................................................................ 11 SALES TAX WITHHOLDING-PUNJAB SALES TAX LAW ........................................................................................................... 16 SALES TAX WITHHOLDING-SINDH SALES TAX LAW .............................................................................................................. 17 SALES TAX WITHHOLDING-KHYBER PAKHTUNKHAWA SALES TAX LAW ............................................................................. 18 SALES TAX WITHHOLDING-BALOCHISTAN SALES TAX LAW ............................................................................................. 19

INCOME TAX RATES ............................................................................................................................................................... 20

BUDGET 2019-20 AT A GLANCE ........................................................................................................................................ 38

BUDGET HIGHLIGHTS ........................................................................................................................................................... 40

Tax Compliance Guide

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TAX COMPLIANCE GUIDE PERIODIC & ANNUAL TAX COMPLIANCE CHART

S.No. Description of Legal/Statutory Requirements Frequency Date of Compliance

1. Filing of Annual Income Tax Return and statement of

Final Taxation (in case of Companies)- for the year

ending between first day of January and 30th

day of

June.

Filing of Annual Income Tax Return and statement of

Final Taxation (in case of Companies)- for the year

ending between first day of July and 31st day of

December.

Annual On or before 31st

December.

On or before 30th

September

2. For Individuals/Proprietorships/Firms/AOPs

-For PTR Cases, Filing of Statement u/s 115(4) in

lieu of Annual Income Tax Returns for

Proprietorships/Firms/AOPs

-For Salaried Individuals Annual Income Tax

Return is also required to be filed

-For Non PTR Cases, Filing of Annual Income

Tax Returns for Proprietorships /Firms/AOPs is

required to be filed

Annual

on or before 30th September



3.

Filing of Income tax withholding Statements Half Yearly On or before 15th of the

month next to the end of each

six months.

4. Filing of Annual withholding tax Statements (In case

of salaries only)

Annual On or Before 31st July of

every year

5.

Filing of Monthly Sales Tax Returns under the Federal

and Provincial Sales Tax Laws;

Monthly On or before 18th

of the month

next to the end of each month

(Subject to that due date to

complete Annex C is 10th

and

amount of sales tax to be

deposited on or before 15th

of

the month)

6.

Filling of Annual Sales Tax Return (for Companies

only)

Annual For a financial year by the 30th

September of the following

financial year.

ADVANCE INCOME TAX COMPLIANCE CHART Every taxpayer (except income subject to final taxation, salary income and in case of business

individual) who has income that was charged to tax in previous tax year shall have to pay advance tax

in four quarterly instalments. Advance Tax is computed according to provisions of Section 147.

Advance Tax is payable as per following schedule of due dates; Sr. No. Quarter In case of Individuals In case of AOPs/Companies other than

banking company

1. September Quarter On or before 15th

September On or before 25th

September

2. December Quarter On or before 15th

December On or before 25th

December

3. March Quarter On or before 15th

March On or before 25th

March

4. June Quarter On or before 15th

June On or before 15th

June


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WITHHOLDING TAXES- INCOME TAX Withholding tax regime has become vital in the taxation system of Pakistan. WHT is an act of

deduction or collection of tax at source, through withholding tax agents, which has generally been

in the nature of an advance tax payment. More than 70% of income tax is being collected through

WHT Regime.

A deduction of tax at source at the time of payments is required to be made under different

withholding tax provisions of the Income Tax Law.

The deduction/collection of tax is required to be made at prescribed rates according to the nature

of payments/receipts.

The concept of Filer and Non-Filer was introduced in 2013 to increase the tax base and Non-

Filers were subject to higher WHT Rate, Now the same concept has been provided in the 10th

Schedule providing that whose name will not appear in Active Taxpayers List, the rate of

withholding shall be increased by 100% with some exceptions.

Tax deducted/collected at source is required to be deposited in the govt. treasury within seven

days of ending of each week in which deduction has been made.

FBR, to meet revenue targets, has been putting special focus on monitoring of withholding taxes.

For the last few years withholding tax agents have to face WHT audits u/s 161/205 almost in

every year. Therefore, WHT agents need to be more careful regarding their obligations for

Withholding Taxes under Income tax law.

Some of the Important Withholding Tax Provisions are as follows; Section Withholding Agents (Prescribed

Persons)

Scope Rate Reference

149-

Salary

The Person Responsible for Paying

Salaries to Employees

Payments of Salaries As per Rate Schedule

(Table1A Division I of Part

I of the First Schedule)

152(1)-

Payments to

Non Residents

Every Person Making Payment Payments to a non-resident

person for Royalty or Fee

for Technical Services

15% (Division IV of Part I

of the First Schedule)

152(2A)-

Payments to

Non- Residents

As prescribed under Section 153 (below) Payments to a permanent

establishment in Pakistan

of a non-resident person

(i) for the sale of goods;

(ii)for the rendering of or

providing services; and

(iii)on the execution of a

contract, other than a

contract for the sale of

goods or the rendering of

or providing services

As per Rate Schedule

(Division II of Part III of

the First Schedule)

153-

Payments for

Goods, Services

and Contracts

the Federal Government;

a company;

an association of persons constituted

by, or under law;

a non-profit organization;

a foreign contractor or consultant;

a consortium or joint venture;

an exporter or an export house;

an association of persons, having

turnover of fifty million rupees or

Payments to Resident

Persons against;

153(1)(a): Sale of Goods;

(except where payment is

less than Rs. 75,000/- in

aggregate, during a

financial year)

153(1)(b): Providing or

rendering of service;

(except where payment is

less than Rs. 30,000/- in

As per Rate Schedule

(Division III of Part III of

the First Schedule)


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above in tax year 2007 or in any

subsequent tax year;

an individual, having turnover of fifty

million rupees or above in the tax

year 2009 or in any subsequent year;

a person registered under the sales

tax Act 1990

a person deriving income from

the business of construction and sale

of residential, commercial or other

buildings(builder); or

a person deriving income from

the business of development and sale

of residential, commercial or other

plots (developer);

aggregate, during a

financial year)

153(1)(c): the execution of

a contract, other than a

contract for the sale of

goods or the rendering of

or providing services.

153B

Payments for

Royalty to

Resident

Persons

Every Person Paying Royalty Payments for Royalty to

Resident Persons

15% as per

Division IIIB of Part III of

the First Schedule

155-

Payment of

Property Rent

the Federal Government;

a Provincial Government;

Local Government;

a company;

a non-profit organization or a

charitable institution

a diplomatic mission of a foreign

state

a private educational institution, a

boutique, a beauty parlour, a hospital,

a clinic or a maternity home

individuals or association of persons

paying gross rent of rupees one and a

half million and above in a year; or

any other person notified by the

Board for the purpose of this section.

Payments of Rent of

property

As per

Division V of Part III of

the First Schedule

156A-

Petroleum

Products

By every person selling petroleum

products to petrol pump operator

Commission /Dealer

margin /Discount on Sales

of Petroleum products

As per

Division VIA of Part III of

the First Schedule; 12%

for active taxpayers & 24%

for nonactive taxpayers

233-

Brokerage and

Commission

Federal Government,

a Provincial Government,

a Local Government,

a company or

an association of persons constituted

by, or under any law

Payment of Brokerage and

Commission to Agents

As per Division II of Part

IV of the First Schedule

236A-

Sale by Auction

Every Person Making Sale by public

Auction or Auction by a tender

Sale by public auction or

auction by a tender, of any

property or goods

As per Division VIII of

Part IV of the First

Schedule; 10% of active

taxpayer & 20% for

nonactive taxpayer


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236C-

Sale or transfer

of Immovable

Property

The person responsible for registering or

attesting transfer of any immovable

property

Sale or Transfer of

Immovable Property

As per Division X of Part

IV of the First Schedule;

1% for active taxpayers &

2% for non-active

taxpayers

236K- Advance

tax on purchase

or transfer of

Immovable

Property



property

Purchase or

Transfer of Immovable

Property

As per Division XVIII of

Part IV, of the First

Schedule; 1% for active

taxpayers & 2% for non-

active taxpayers

236W-Tax on

purchase or

transfer of

immovable

property



property

Purchase of immovable

property on the differential

amount in registry price

and FBR Notified Rates

under clause (c) of sub-

section (4) of Section 111,

read with section 68 of the

Ordinance.

This tax shall be adjustable

3% differential amount as

computed under clause (c)

of sub-section (4) of

Section 111.

236D-

Functions and

Gatherings

The Owner/a Lease holder, an operator or

a manager of marriage hall, marquee,

hotel, restaurant, commercial lawn, club,

a community place or any other place

used for such purpose

On Functions and

Gatherings

As provided in Division XI

of Part IV of the First

Schedule

236G-

Sale to

Distributors,

Dealers and

Wholesalers

Every manufacturer or commercial

importer of electronics, sugar, cement,

pesticides, iron and steel products,

fertilizer, motorcycle, pesticides,

cigarettes, glass, textile, beverage, paint

or foam sector

On Sale to Distributors,

Dealers & wholesalers

As per rates provided in

Division XIV of Part IV of

the First Schedule; 0.7%

for fertilizers & 0.1% for

others. Rates are double for

non active taxpayers

236H-

Sales to

Retailers

Every Manufacturer or Commercial

importer or dealer or wholesalers or

distributor of electronics, sugar, cement,

pesticides, iron and steel products,

motorcycle, cigarettes, glass, textile,

beverage, paint or foam sector

On Sales to Retailers etc. As per rates proved in

Division XV of Part IV of

the First Schedule; 1% for

electronics & 0.5% for

other. Rates are double for

non active taxpayers.

236HA-

Sales of Certain

Petroleum

Products

Every person selling petroleum products

to a petrol pump operator or distributor,

where such operator or distributor is not

allowed a commission or discount

On Sales of certain

petroleum products

As per rates provided in

Division XVA of Part IV of

the First Schedule. 0.5% of

Ex-depot price & 1%

whose name is not

appearing on ATL list

236 I

Collection of

Advance Tax by

Educational

Institutions

Person preparing Fee Voucher/Challan on

behalf of Educational Institutions

Collection of Advance Tax

by Educational Institutions

on Fee/Charges of Students

where annual fee/charges

exceed Rs.200,000 except

on an amount which is paid

by way of scholarship

5%

(Division XVI of Part IV

of the First Schedule)

236 J

Advance tax on

Dealers,

Commission

Market Committee Dealers, Commission

agents and Arhatis

As per rate schedule

Division XVII of Part IV

of the First Schedule


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Agent and

Arhatis etc.

236 L

Advance tax on

purchase of

international

tickets

Every Airline From passengers on

international tickets either

one way or return

excluding economy class

As per Division XX of Part

IV of the First Schedule;

Rs.16,000 on First

class/business class and

Rs.12,000 on other class

except economy.

236P Advance

Tax on Banking

Transactions

Banks/Financial Institutions Banking Transactions by

persons whose name is not

appearing in ATL on

transaction other than cash

As per Division XXI of

Part IV of First Schedule;

0.6% of the transaction

236Q

Advance Tax on

usage of

Machinery and

Equipment

Every person as prescribed u/s 153(7) On rentals of machinery

and equipment other than

agricultural machinery and

leased machinery and

equipment

As per Division XXIII of


Schedule @10%

236R- Advance

tax on

Education

related expenses

remitted abroad

Banks/Foreign Exchange

Companies/Financial Institutions

On Remittance of amount

abroad relating to

education expenses

As per Division XXIV of


Schedule @5%

236S

Dividend in

Specie

Every Company making payment of

dividend

On dividend in specie As per Division 1 of Part

III of First Schedule: 15%

& for power companies

reduced rate of 7.5%.

Shall be double for persons

whose name is not

appearing in ATL.

236 U

Tax on

Insurance

Premium paid

An insurance company On insurance premium

from persons whose name

is not appearing on ATL

As per XXV of Part IV of

First Schedule: General

insurance premium @4%

and life insurance premium

if exceeding Rs. 300,000/-

per annum @ 1%

236 V

Advance tax on

extraction of

minerals

Provincial authority collecting royalty from the lease-holder of

mines or any person

extracting minerals &

whose name is not

appearing in ATL.

As per Division XXVI of

Part IV of First Schedule;

5% for the person whose

name is not appearing in

ATL & 0% for active

person

236 X

Advance Tax on

Tobacco

Pakistan Tobacco Board From Persons Purchasing

Tobacco

5% of the purchase value-

adjustable tax

236Y

Advance tax on

persons

remitting

amounts abroad

through credit

or debit or

prepaid card

Every Banking Company Persons remitting amounts

abroad through credit or

debit or prepaid card

1% Active taxpayers and

2% for whose name is not

appearing on ATL as per

Division XXVII of Part-IV

of First Schedule


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FEDERAL SALES TAX LAW- OVER VIEW.

1. Sales Tax is an indirect tax and a consumption tax which is charged by the sellers on supply of

goods and services and is borne by the final consumers. Here sellers collect sales tax and deposit

in Government Treasury and act an „agent‟/‟intermediary‟ to the Government.

2. The mandate to collect Sales tax on goods is of the Federal Government and is being charged and

collected under the provisions of the Sales Tax Act, 1990.

3. Every person making taxable supplies is required to charge sales tax while making supplies/sales

to customers.

4. Rate of sales tax is 17% other applicable reduced rates as provided in the law.

5. Further Tax is chargeable @ 3% against supplies to unregistered persons not being the final

consumer- This further tax shall not be chargeable in on certain persons and goods as exception

provided under SRO 648(1)2013 dated 9th July 2013 as amended from time to time.

6. Sales Tax is charged on all goods except exemptions under section 13 of the Sales Tax Act 1990

as provided in the Sixth Schedule to the Sales Tax Act, 1990.

7. Input Tax Adjustment is allowed subject to certain conditions as laid down in Section 7 and 8 and

Section 73 of the Sales Tax Act including the condition that the Payments above Rs.50,000 are

made through banking channel.

8. Payment of Sales Tax is to be made on or before 15th of the Subsequent Month and File Sales Tax

Return before 18th of the subsequent Month.

9. Sales Tax is payable in VAT mode on most of the items whereas different regimes also exist

under the Federal Sales Tax Law e.g.;

Retail price tax regime i.e 3rd

Schedule items where tax is paid at manufacturing stage at

retail price which mostly include fast moving consumer goods and house hold goods.

Tax on Retailers has different mechanism where retailers have been categorized in Tier 1

and Tier 2. Tier 1 retailers pay sales tax under normal VAT Regime. Tier 2 retailers pay

taxes on their electricity bills and not required to be registered.

10. Keep Proper Sales Tax Records as required under section 22 of the Sales Tax act 1990

Record of Supplies Made

Record of Goods Purchased

Records of Goods Imported

Records of Zero Rated and Exempt Supplies

Double Entry Sales Tax Accounts

Invoices

Record relating to gate passes inward/outward and transport receipts

Credit Notes/ Debit Notes

Bank Statements

Inventory Records

Make Sales Tax Withholding Compliances, where applicable, as per Eleventh Schedule to the Sales Tax

Act 1990. As per SRO 698 dated 29.06.2019 sales tax withholding is also applicable on to services on

which "federal excise duty is payable in sales tax mode, and the ones specified in the Schedule to the

Islamabad Capital Territory (Tax on Services) Ordinance, 2001 (XLII of 2001).


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SALES TAX WITHHILDING-FEDERAL SALES TAX LAW

UNDER ELEVENTH SCHEDULE TO THE SALE TAX ACT 1990

S.No. Withholding agent Supplier

category

Rate or extent

of deduction

(1) (2) (3) (4)

1. (a) Federal and provincial government departments;

autonomous bodies; and public sector organizations

(b) Companies as defined in the Income Tax

Ordinance, 2001 (XLIX of 2001)

Registered

persons 1/5

th of Sales

Tax as shown

on the invoice

2. (a) Federal and provincial government departments;


(b) Companies as defined in the Income Tax

Ordinance, 2001 (XLIX of 2001)

A person registered

as a wholesaler,

dealer or distributor

1/10th

of Sales

Tax as shown on

the invoice

3. Federal and provincial government departments;


Unregistered

persons

The whole of the

tax involved or as

applicable to

supplies on the

basis of the gross

value of supplies

4. Companies as defined in the Income Tax Ordinance,

2001 (XLIX of 2001)

Unregistered

persons

5% of the gross

value of supplies

5. Registered persons as the recipient of advertisement

services

The person providing

advertisement

services

The whole of sales

tax applicable

6. Registered persons purchasing cane molasses. Unregistered persons Whole of sales tax

applicable

Exception from sales tax withholding are as under:

i. Electrical energy;

ii. Natural Gas;

iii. Petroleum products as supplied by petroleum production and exploration companies, oil

refineries, oil marketing companies and dealers of motor spirit and high speed diesel;

iv. Vegetable ghee and cooking oil;

v. Telecommunication services;

vi. Goods specified in the Third Schedule to the Sale Tax Act, 1990;

vii. Supplies made by importers who paid value addition tax on such goods at the time of

import; and

viii. Supplies made by an active Taxpayer as defined in the Sale Tax Act, 1990 to another

registered person with exception of advertisement.


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PROVINCIAL SALES TAX ON SERVICES- OVER VIEW Prior to 2011 the sales tax on Goods and Service was being collected under the federal Sales Tax Act

1990. There were certain services taxable under the ICT, Provincial Ordinances and Federal Excise

Laws on which sales tax was being collected by the Federal Government under the Provisions of the

Sales Tax Act 1990.

In 2010 through the 18th amendment in the Constitution of Pakistan, the right to levy and collect

sales tax on services was entrusted to the Provinces.

The province of Sindh promulgated the Sales Tax Act on Services 2011 and levied the sales tax on

services as listed in the second schedule to the said Act.

In 2012, The Province of Punjab followed the Sindh Province and promulgated Punjab Sales Tax on

Services Act 2012 and levied sales tax on the services as listed in the second schedule to the said Act.

KP Government also followed the same and promulgated KP Sales Tax on Services Act 2013 and

levied sales tax on the services as listed in the second schedule to the said Act.

Baluchistan Government also promulgated the Baluchistan Sales Tax on Services Act 2015 and

levied sales tax on the services as listed in the second schedule to the said Act.

Through the finance Act 2015 the Federal Government also enhanced the list of taxable services in

Islamabad Capital Territory.

All the provinces are collecting sales tax independently through their own Revenue Departments.

In Islamabad Capital Territory, services are taxable as per separate law, but collection is made by

FBR under the Sales Tax Act, 1990.

Persons Providing/Receiving Taxable Services under the ICT tax on Services Law are required to Pay

Sales Tax on Services as listed in the Schedule of the ICT (Tax on Services) Ordinance 2001 and

provisions of Federal Sales Tax Law are applicable mutatis mutandis including Federal Sales Tax

Withholding Rules.

Persons Providing/Receiving Services in Punjab, Sindh, KPK and Baluchistan are required to pay

Sales Tax on taxable services, as per second schedule to the respective provincial sales tax laws.

Standard Sales Tax Rates on Services in the provinces are as follows except reduced rates for

specified services as provided under respective provincial Law‟s Schedules and SROs.

ICT Sindh Punjab KPK Baluchistan Relevant Law The ICT (Tax

on Services)

Ordinance

2001

The Sindh

Sales Tax on

Services Act,

2011

The Punjab

Sales Tax on

Services Act,

2012

The KP Sales

Tax on

Services Act,

2013

The Baluchistan

Sales Tax on

Services

Act,2015

Standard Rate 16% 13% 16% 15% 15% Sales Tax registration is mandatory under the relevant laws where specified services are taxable and

organization providing services to be considered as separate entity in the respective province.

The Sales Tax is payable to the respective authority in the provinces whether service is originated or

terminated in the respective province.

Sales Tax Withholding is also Applicable under the Provincial Laws as per their own prescribed

Rules and Sales Tax Withheld is required to be deposited to the Respective Revenue Department of

the Province under which the sales tax is charged.


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TAXABLE SERVICES IN ISLAMABAD CAPITAL TERRITORY As per Schedule to the Islamabad Capital Territory (Tax on Services) Ordinance 2001.

Sr.

No.

Service Description Rate Remarks

1. Services provided or rendered by hotels, motels,

guest houses, marriage halls and lawns (by

whatever name called) including "pandal" and

"shamiana" services, clubs including race clubs,

and caterers.

16% Services provided or rendered by

marriage halls and lawns, by whatever

name called, including “pandal” and

“shamiana” services and caterers.

Reduce rate @ 5% under SRO

495(I)/2016 subject to the condition that

no input tax adjustment or refund shall be

admissible.

2. Advertisement on television and radio, excluding

advertisements-

a. Sponsored by an agency of the Federal or

Provincial Government for the health

education;

b. Sponsored by the population promotion

campaign;

c. Financed out of funds provided by a

Government under grant-in-aid

agreement; and

d. Conveying public service massages, if

telecast on television by the World Wide

Fund for Nature (WWF) or United

Nations Children‟s Fund (UNICEF)

16%

3. Services provided by persons authorized

to transact business on behalf of others–

a) stevedore;

b) customs agents; and Ship chandlers.

16%

4. Courier services and cargo services by

road provided by courier companies;

16%

5. Construction services, excluding:

i. Construction projects (industrial and

commercial) of the value (excluding

actual and documented cost of land) not

exceeding Rs. 50 million per annum.

ii. The cases where sales tax is otherwise

paid as property developers or promoters.

iii. Government civil works including

Cantonment Boards.

iv. Construction of industrial zones, consular

buildings and other organizations exempt

from income tax.

v. Construction work under international

tenders against foreign grants-in-aid.

Residential construction projects where the

covered area does not exceed 10,000 square feet

for houses and 20,000 square feet for apartments

Taxable

@16%




admissible.


Page 12

6. Services provided by property developers

and promoters (including allied services)

excluding the actual purchase value or

documented cost of land.

Rs. 100

per Square

yard for

land

developm

ent, and

Rs. 50 per

square feet

for

building

constructi

on

7. Services provided by persons engaged in

contractual execution of work, excluding:

i. annual total value of the contractual

works or supplies does not exceed Rs.50

million;

The contract involving printing or supplies of

books.

16%

8. Services provided for personal care by

beauty parlours, clinics and slimming clinics, body

massage centers, pedicure

centers; including cosmetic and plastic

surgery by such parlours/clinics, but

excluding:

i. annual turnover does not exceed Rs.3.6

million; or

The facility of air-conditioning is not installed or

available in the premises.

16% Reduce rate @ 5% under SRO



admissible.

9. Management consultancy services 16%

10. Services provided by freight forwarding agents,

and packers and movers.

Sixteen

per cent or

Rs. 400

per bill of

landing,

whichever

is higher

Rate changed under SRO 495(I)/2016 as

Rs. 1000 per bill of lading, whichever is

higher.

11. Services provided by software or IT-based system

development consultants.

16% IT services and IT-enabled services.


495(I)/2016.

12. Services provided by technical, scientific and

engineering consultants.

16%

13. Services provided by other consultants including

but not limited to human resource and personnel

development services; market research services

and credit rating services.

16%

14. Services provided by tour operators and travel

agents including all their allied services or

facilities (other than Hajj and Umrah)




admissible.

15. Manpower recruitment agents including labour

and manpower supplies.

16%


Page 13

16. Services provided by security agencies.

16%

17. Services provided by advertising agents 16%

18. Share transfer or depository agents including

services provided through manual or electronic

book-entry system used to record and maintain

securities and to register the transfer of shares,

securities and derivatives.

16%

19. Business support services. 16%

20. Services provided by fashion designers, whether

relating to textile, leather, jeweller or other product

regimes, including allied services, marketing,

packing, delivery and display, etc.

16%

21. Services provided by architects, town planners and

interior decorators.

16%

22. Services provided in respect of rent-a-car.

16%

23. Services provided by specialized workshops or

undertakings (auto workshops; workshops for

industrial machinery, construction and earth-

moving machinery or other special purpose

machinery etc.; workshops for electric or

electronic equipment or appliances etc. including

computer hardware; car washing or similar service

stations and other workshops).




admissible.

24. Services provided for specified purposes including

fumigation services, maintenance and repair

(including building and equipment maintenance

and repair including after sale services) or cleaning

services, janitorial services, dredging or desilting

services and other similar services etc.

16%

25. Services provided by underwriters, indenters,

commission agents including brokers (other than

stock) and auctioneers

16%

26. Services provided by laboratories other than

services relating to pathological or diagnostic tests

for patients.

16%

27. Services provided by health clubs, gyms, physical

fitness centers, indoor sports and games centers

and body or sauna massage centers




admissible.

28. Services provided by laundries and dry cleaners.




admissible.

29. Services provided by cable TV operators.

Technical analysis and testing services

16%

30. Services provided by TV or radio program

production houses.

16%

31. Transportation through pipeline and conduit

services.

16%


Page 14

32. Fund and asset (including investment)

management services.

16%

33. Services provided by inland port operators

(including airports and dry ports) and allied

services provided by terminal operators including

services in respect of public bonded warehouses,

excluding the amounts received by way of fee

under any law or bylaw.

16%

34. Technical inspection and certification services and

quality (standards‟ certification) services.

16%

35. Erection, commissioning and installation services. 16%

36. Event management services. 16%

37. Valuation services; competency and eligibility

testing services excluding education testing

services provided or rendered under a bilateral or

multilateral agreement signed by the Government

of Pakistan.

16%

38. Exhibition or convention services 16%

39. Services provided in respect of mining of

minerals, oil & gas including related surveys and

allied activities

16%

40. Services provided by property dealers and realtors. 16% Reduce rate @ 5% under SRO



admissible.

41. Call Centres. 17%

42. Services provided by car/automobile dealers. 16% Reduce rate @ 5% under SRO



admissible.

43. Advertisement on hoarding boards, pole signs

and signboards, and websites or internet

16%

44. Services provided by landscape designers 16%

45. Sponsorship services 16%

46. Services provided or rendered by legal

practitioners and consultants

16%

47. Services provided by accountants and

auditors

16%

48. Service provided or rendered by Stockbrokers,

future brokers and commodity brokers, money

exchanger, surveyors, outdoor photographers,

event photographers, videographers, art

painters, auctioneers (excluding the value of

goods) and registrar to an issue

16%

49. Services provided by race clubs Entry/

admission and other services

16%

50. Services provided or rendered by corporate law

consultants

16%


Page 15

51. Visa processing services, including advisory or

consultancy services for migration or

visa application filing services

filing services

16%

52. Debt collection services and other debt

recovery services

16%

53. Supply chain management or distribution

(including delivery) services

16%

54. Services provided or rendered by persons

engaged in inter-city transportation or carriage

of goods by road or through pipeline or conduit

pipeline or conduit

16%

55. Ready mix concrete services 16%

56. Public relations services 16%

57. Training or coaching services other than

education services

16%

58. Cleaning services including janitorial services,

collection of waste and processing of domestic

waste

16%


Page 16

SALES TAX WITHHOLDING-PUNJAB SALES TAX LAW UNDER PUNJAB SALES TAX ON SERVICES (WITHHOLDING) RULES 2015

Where sales tax is charged by the service provider under the Punjab Sales Tax on Services Act 2012, the

withholding shall be applicable as per following table and Withholding Agent is required to pay the Sales

Tax Withheld to Punjab Revenue Authority (PRA) through monthly Statement /Return to be filed through

PRA Web Portal.

WH Agent From Whom Rate

i)Federal Government and

Provincial governments,

departments and offices

ii) Autonomous bodies

iii) Organizations funded

fully or partially by Federal

or Provincial Govt)

v) Company which is resident

in Punjab or having a place of

business in the Punjab

vi) Registered persons

receiving Taxable Services

from unregistered persons

vii) Accounting offices

responsible for making

payments of bills received by

an office or department of

Federal, Provincial or Local

Governments.

a. Persons providing taxable

service and Registered under

Punjab Sales Tax Law other than

persons providing advertisement

services and companies being the

active tax payers.

Whole amount of Sales Tax

on Services charged

b. Persons providing taxable

Services and not registered under

the Punjab Sales Tax Law.


chargeable at applicable rate

on the gross value of taxable

services.

Recipient of Advertisement

Services Registered for Sales

Tax under the Federal Sales

Tax Law or Punjab Sales Tax

Law

Persons providing advertisement

services whether registered or

unregistered providing from

Pakistan or abroad


charged in case of registered

person OR chargeable at

applicable rates to be applied

on gross value of taxable

services.

Exceptions;

Exception of withholding has been provided on the services relating to telecommunication, banking,

courier and insurance. Further withholding shall not apply where the services, except advertisement

services, are provided by Companies being active taxpayers and insurance services provided from outside

the province.


Page 17

SALES TAX WITHHOLDING-SINDH SALES TAX LAW UNDER SINDH SALES TAX SPECIAL PROCEDURE (WITHHOLDING) RULES 2014

Where sales tax is charged by the service provider under the Sindh Sales Tax on Services Act 2011, the

withholding shall be applicable as per following table and Withholding Agent is required to pay the Sales

Tax Withheld to Sindh Revenue Board (SRB) through monthly Statement /Return to be filed through

SRB Web Portal.

Exception of withholding has been provided in the said rules for Telecommunication Services Banking

Company, Financial Institution, Port, Airport, terminal operator and airport ground service provider:

WH Agent

(Applicable In case WH Agent is

resident of Sindh Province)

From Whom Rate

a) Federal Government and



a. Persons providing

taxable service and

registered under Sindh

Sales Tax Law

1/5th of the Sales of Sales Tax on

Services charged

b) Public sector organizations

c) Autonomous bodies

d) Organizations who are

funded by Federal or Provincial

Govt.

d) Companies

e) Persons resident in Sindh

registered with the Sind

Revenue Board (SRB)

b. Persons providing

Taxable Services and not

registered under the Sindh

Sales Tax Law

Whole amount of Sales Tax chargeable

at applicable rate on the value of

taxable services provided.



Tax under the Federal Sales Tax

Law or Sindh Sales Tax Law

Persons providing

advertisement services

whether registered or


Pakistan or abroad

Whole amount of Sales Tax charged or

chargeable at applicable rates

Exceptions:

Exception of withholding has been provided in the said rules for Telecommunication Services Banking

Company, Financial Institution, Port, Airport, terminal operator and airport ground service provider:


Page 18

SALES TAX WITHHOLDING-KHYBER PAKHTUNKHAWA SALES TAX LAW

SALES TAX ON SERVICES SPECIAL PROCEDURE (WITHHOLDING) REGULATIONS 2015

Where sales tax is charged by the service provider under the Khyber Pakhtunkhawa Sales Tax on Services

Act 2013, the withholding shall be applicable as per following table and Withholding Agent is required to

pay the Sales Tax Withheld to Khyber Pakhtunkhawa Revenue Authority (KPRA) through monthly

Statement /Return to be filed through KPRA Web Portal.


a) Federal Government and




taxable service and

registered under Khyber

Pakhtunkhawa Sales Tax

Law


Services charged





Govt.

d) Companies

e) Persons registered with the

KP authority receiving taxable

services from unregistered

persons



registered under the Khyber

Pakhtunkhawa Sales Tax

Law







Law or Khyber Pakhtunkhawa

Sales Tax Law

Persons providing




Pakistan or abroad




Page 19

SALES TAX WITHHOLDING-BALOCHISTAN SALES TAX LAW

UNDER BALOCHISTAN SALES TAX SPECIAL PROCEDURE (WITHHOLDING) RULES 2016

Where sales tax is charged by the service provider under the Baluchistan Sales Tax on Services Act,

2015, the withholding shall be applicable as per following table and Withholding Agent is required to pay

the Sales Tax Withheld to Baluchistan Revenue Authority (BRA) through monthly Statement /Return to

be filed through BRA Web Portal.


a) Offices of Federal

Government and Provincial

governments, departments


taxable service and

registered under

Balochistan Sales Tax Law


Services charged





Govt.

d) Companies

e) Persons resident in

Baluchistan registered with the

Balochistan Revenue Authority

(BRA)



registered under the

Balochistan Sales Tax Law







Law or Balochistan Sales Tax

Law

Persons providing




Pakistan or abroad



Exceptions:

Exception of withholding has been provided in the said rules for Telecommunication, Banks, and

Financial Institutions, insurance, airport operator, Airport Ground Services, Terminal Operator and port

operator

Income Tax Rate

Page 20

INCOME TAX RATES The important tax rates after changes through Finance Act is given below:

Rates of Tax for Individuals and AOPs 1st Schedule Part 1, Division I

Rates for Individuals and AOPs for Tax Year 2020 onward

Sr. No. Taxable income Tax Rate

1 0 to Rs. 400,000 0%

2 Rs. 400,001 to Rs.600,000 5% of the amount exceeding Rs. 400,000

3 Rs. 600,001 to Rs. 1,200,000 Rs. 10,000 + 10% of the amount exceeding Rs. 600,000

4 Rs. 1,200,001 to Rs. 2,400,000 Rs. 70,000 + 15% of the amount exceeding Rs. 1,200,000

5 Rs.2,400,000 to Rs. 3,000,000 Rs. 250,000 + 20% of the amount exceeding Rs. 2,400,000



7 Exceeding Rs. 6,000,000 Rs. 1,220,000 + 35% of the amount exceeding Rs. 6,000,000

Tax Rates for AOPs TY-2019


1 0 to Rs. 400,000 0%

2 Rs. 400,001 to Rs. 1,200,000 5% of the amount exceeding Rs. 400,000





7 Exceeding Rs. 6,000,000 Rs. 880,000 + 30% of the amount exceeding Rs. 6,000,000

Tax Rates for Individual Other than Salaried Individual TY-2019


1 0-Rs.400,000 0%

2 Rs. 400,001 to Rs. 800,000 Rs. 1,000/-

3 Rs. 800,001 to Rs. 1,200,000 Rs. 2,000/-

4 Rs. 1,200,001 to Rs. 2,400,000 5% of the amount exceeding Rs. 1,200,000




8 Exceeding Rs. 5,000,000 Rs. 600,000 + 29% of the amount exceeding Rs. 5,000,000

Rates of Tax for Salaried Individuals 1st Schedule Part 1, Division I

For Tax Year 2020 onward, where salary income exceeds seventy-five percent of individual‟s taxable

income


1 0 to Rs. 600,000 0%

2 Rs.600,001 to Rs. 1,200,000 5% of the amount exceeding Rs. 600,000

3 Rs.1,200,001 to Rs.1,800,000 Rs. 30,000 + 10% of the amount exceeding Rs. 1,200,000


5 Rs.2,500,001 to Rs.3,500,000 Rs. 195,000 + 17.5% of the amount exceeding Rs. 2,500,000


7 Rs.5,000,001 to Rs. 8,000,000 Rs. 670,000 + 22.5% of the amount exceeding Rs. 5,000,000

8 Rs.8,000,001 to Rs. Rs. 1,345,000 + 25% of the amount exceeding Rs. 8,000,000

Income Tax Rate

Page 21

12,000,000

9 Rs.12,000,001 to

Rs.30,000,000

Rs. 2,345,000 + 27.5% of the amount exceeding Rs.

12,000,000

10 Rs.30,000,001 to

Rs.50,000,000 Rs. 7,295,000 + 30% of the amount exceeding Rs. 30,000,000

11 Rs.50,000,001 to

Rs.75,000,000

Rs. 13,295,000 + 32.5% of the amount exceeding Rs.

50,000,000

12 Exceeding Rs. 75,000,000

Rs. 21,420,000 + 35% of the amount exceeding Rs.

75,000,000

Tax Rates for Salaried Individual for TY-2019

Where salary income exceeds fifty percent of individual‟s taxable income


1 0 to Rs. 400,000 0%

2 Rs.400,001 to Rs.800,000 Rs. 1,000/-

3 Rs.800,001 to Rs.1,200,000 Rs. 2,000/-

4 Rs.1,200,001 to Rs.2,500,000 5% of the amount exceeding Rs. 1,200,000

5 Rs.2,500,001 Rs.4,000,000 Rs. 65,000 + 15% of the amount exceeding Rs. 2,500,000


7 Exceeding Rs. 8,000,000 Rs. 1,090,000 + 25% of the amount exceeding Rs. 8,000,000

Rates of Tax for Companies 1st Schedule Part 1, Division II

The companies Other than banking companies’ and small companies’, rate has been frozen at 29% for

TY-2019 & onward.

Nature of Company Previous Rates Amended Rates

Companies other than

banking companies

For TY2019 29%, For TY2020 28%

For TY2021 27%, For TY2022 26%

For TY2023 and onwards 25%

For TY2019 and onward 29%

Banking Companies 35% 35%

Small Company For TY2019 24%, For TY2020 23%

For TY2021 22%, For TY2022 21%


No change

For TY2019 24%, For TY2020 23%

For TY2021 22%, For TY2022 21%


Rates of Super Tax Part 1, Division IIA (Section 4B)

Inserted through Finance Act 2015 and Tax Rates are tabulated below as lastly amended through

Finance Supplementary (second amendment) Act 2019.

Person Rate (%age of Income)

TY

2018

TY 2019 TY

2020

TY 2021

Banking company 4% 4% 4% 4%

Person, other than banking, having income equal to or

Exceeding Rs.500 million

3% 2% 0% 0%

Income Tax Rate

Page 22

Tax on Dividend Income Part 1, Division III (Section 5)

The rate of tax imposed under section 5 on dividend received from a company shall be-

Dividend Paid By Amended TY-2020

onward

(a) Independent Power Purchasers where such dividend is a pass-through

item under an implementation agreement or power purchase

agreement or energy purchase agreement and is required to be

reimbursed by Central Power Purchasing Agency (CPPA-G) or its

predecessor or successor entity.

7.5%

(b) In Mutual Funds and cases other than those mentioned in (a) and (c) 15%

(c) A person receiving a dividend from a company where no tax is

payable by such company due to the exemption of income or carry

forward of business losses under Part VIII of Chapter III or claim of

tax credits under Part X of Chapter III.";

25%

Note: Above amended rates shall be increased by100% for the persons not appearing in ATL as per 10th

Schedule inserted through Finance Act 2019.

Rate for Profit on Debt Part 1, Division IIIA (Section 7B)

Previous Amended

S.No. Profit on Debt TY-

2019

S.No. Profit on Debt TY-2020

onward

(1) (2) (3) (1) (2) (3)

1. Where profit on debt

does not exceed

Rs.5,000,000

10% 1. Where profit on debt does not

exceed Rs.5,000,000

15%


exceeds Rs.5,000,000

but does not exceed

Rs.25,000,000

12.5% 2. Where profit on debt exceeds

Rs.5,000,000 but does not

exceed Rs.25,000,000

17.5%



15% 3. Where profit on debt exceeds

Rs.25,000,000 but does not

exceed Rs.36,000,000

20%



Royalty or Fee for Technical services To Non-Resident Part 1, Division IV (Section 6)

The rate of tax imposed under section 6 on payment to non-residents shall be 15% of the gross amount of

the royalty or fee for technical services and 5% of the gross amount of the fee for offshore digital

Services.



Income Tax Rate

Page 23

Income from Property Part 1, Division VIA (Section 15)

Previous upto TY 2019 Amended Rates for TY 2020 onward

S.No Gross Amount of

Rent

Rate of Tax S.No Gross Amount of

Rent

Rate of Tax

(1) (2) (3) (1) (2) (3)

1. Where the gross

amount of rent does

not exceed

Rs.200,000.

Nil 1. Where the gross

amount of rent does

not exceed

Rs.200,000.

Nil

2. Where the gross

amount of rent

exceeds Rs.200,000

but does not exceed

Rs.600,000.

5 percent of the

gross amount

exceeding

Rs.200,000.

2. Where the gross

amount of rent

exceeds Rs.200,000

but does not exceed

Rs.600,000.

5 percent of the gross

amount exceeding

Rs.200,000.

3. Where the gross

amount of rent

exceeds Rs.600,000

but does not exceed

Rs.1,000,000.

Rs.20,000 plus

10 percent of

the gross

amount

exceeding

Rs.600,000

3. Where the gross

amount of rent

exceeds Rs.600,000

but does not exceed

Rs.1,000,000.

Rs.20,000 plus 10

percent of the gross

amount exceeding

Rs.600,000

4. Where the gross

amount of rent


but does not exceed

Rs.2,000,000.

Rs.60,000 plus

15 per cent of

the gross

amount

exceeding

Rs.1,000,000.

4. Where the gross

amount of rent

exceeds

Rs.1,000,000 but

does not exceed

Rs.2,000,000.

Rs.60,000 plus 15

per cent of the gross

amount exceeding

Rs.1,000,000.

5. Where the gross

amount of rent

exceeds

Rs.2,000,000.

Rs.210,000

plus 20 per cent

of the gross

amount

exceeding

Rs.2,000,000

5. Where the gross

amount of rent

exceeds

Rs.2,000,000 but

does not exceed

Rs.4,000,000.

Rs.210,000 plus 20


amount exceeding

Rs.2,000,000”]

6. Where the gross

amount of rent

exceeds

Rs.4,000,000 but

does not exceed

Rs.6,000,000.

Rs.610,000 plus 25


amount exceeding

Rs.4000,000.

7. Where the gross

amount of rent

exceeds Rs.6000,000

but does not exceed

Rs.8000,000

Rs.1,110,000 plus 30


amount exceeding

Rs.6000,000

8 Where the gross

amount of rent

exceeds Rs.8000,000

Rs.1,710,000 plus 35


amount exceeding

Rs.8000,000

Income Tax Rate

Page 24

Capital gains on disposal of securities Part I, Division VII (Section 37-A)

Rate Table Substituted through FA 2019

TY-2018,2019 &

2020

Sr.

No

Period TY-

2015

TY-

2016

TY-

2017

acquired

before

1.7.2016

acquired

after

1.7.2016

(1) (2) (3) (4) (5) (6) (7)

1. Where holding period of a security is less

than twelve months

12.5% 15% 15% 15%

15% 2. Where the holding period of security is

twelve months or more but less than

twenty-four months

10% 12.5% 12.5% 12.5%

3. Where holding period of security is twenty-

four months or more but the security was

acquired on or after 1st July, 2013.

0% 7.5% 7.5% 7.5%

4. Where the security was acquired before 1st

July, 2013

0% 0% 0% 0% 0%

5. Future commodity contracts entered into by

the members of Pakistan Mercantile

Exchange

0% 0% 5% 5% 5%

Note: Above amended rates shall be increased by 100% for the persons not appearing in ATL as per 10th


Tax on Capital gains on disposal of Immovable

Property

Part I, Division VIII (Section 37-(1A)

The rate of tax to be paid under sub-section 1A of section 37 (Capital Gain on Immovable Property) shall

be as follows as inserted through Finance Act 2019:

S. No. Amount of Gain Rate of

Tax

(1) (2) (3)

1. Where the gain does not exceed Rs. 5 million 5%

2. Where the gain exceeds Rs. 5 million but does not exceed Rs.10 million 10%

3. Where the gain exceeds Rs.10 million but does not exceed Rs. 15 million 15%

4. Where the gain exceeds Rs. 15 million 20%

Previous Rate for TY 2019

Sr. No. Period Rate

(1) (2) (3)

For immovable property allotted to persons mentioned in the proviso to sub-section (1) of section

236C;

(a) a seller, if the seller is dependent on:

(i) a Shaheed belonging to Pakistan Armed Forces; or

(ii) a person who dies while in the service of the Pakistan Armed Forces or the Federal and

Income Tax Rate

Page 25

Provincial Governments; and

(b) the first sale of immovable property which has been acquired or allotted as an original allottee,

duly certified by the official allotment authority

1. Immovable property is held irrespective of the holding period. 0%

For immovable property acquired on or after July 1, 2016, other than those mentioned against S.

No. 1

2. Where holding period of immovable property is up to one year. 10%

3. Where holding period of immovable property is more than one year but less than two

years.

7.5%

4. Where holding period of immovable property is more than two years but less than

three years.

5%

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

For immovable property acquired before July 1, 2016, other than those mentioned against S. No. 1

6. Where holding period of immovable property is up to three years. 5%

7. Where holding period of immovable property is more than three years. 0%”]

Provided that gain arising on the disposal of immovable property by a person in a tax year to a Rental

REIT Scheme shall be taxed at the rate of five percent up to thirtieth day of June, 2019, irrespective of

the holding period.

Provided that rate of tax to be paid under sub-section (1A) of section 37 shall be reduced by fifty per cent

on the first sale of immovable property acquired or allotted to ex-servicemen and serving personnel of

Armed Forces or ex-employees or serving personnel of Federal and Provincial Governments, being

original allottees of the immovable property, duly certified by the allotment authority”

Minimum Tax Part I, Division IX, (Section 113)

Sr. No Persons Previous

upto TY

2019

Amended

for TY

2020

onward-

1. (a) Oil marketing companies, Oil refineries, Sui Southern Gas

Company Limited, and Sui Northern Gas Pipelines Limited (for the

cases where annual turnover exceeds rupees one billion.)

(b) Pakistani Airlines; and

(c) Poultry industry including poultry breeding, broiler production,

egg production, and poultry feed production.

(d) Dealers or distributors of fertilizer

0.5%

0.75%

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

goods, and cigarettes;

(b) Petroleum agents and distributors who are registered under the

Sales Tax Act, 1990;

(c) Rice mills and dealers; and

(d) Flour mills.

0.2%

0.25%

3. Motorcycle dealers registered under the Sales Tax Act, 1990 0.25% 0.3%

4. In all other cases. 1.25% 1.5%

Income Tax Rate

Page 26

Advance tax on Imports Part II, (Section 148)

Amended for TY 2020 Onward

S. #. Person(s) Rates

(1) (2) (3)

1. i) Industrial undertaking importing remeltable steel (PCT

Heading 72.04) and directly reduced iron for its own use;

(ii) Persons importing potassic fertilizers in pursuance of

Economic Coordination Committee of the cabinet's decision No.

ECC-155/12/2004 dated the 9th December, 2004;

1% of import value as

increased by customs-

duty, sales tax and

federal excise duty

(iii) Persons importing urea; and

(iv) Manufacturers covered under Notification No. S.R.O

1125(I)/2011 dated the 31st December, 2011 and importing

items covered under SRO 1125(I)/2011, dated the 31st

December, 2011

(v) Persons importing gold and

(vi) Persons importing cottons

(vii)Persons importing LNG

2 Persons importing pulses 2% of import value as


duty, sales tax and

federal excise duty

3 Commercial importers covered under Notification No. S.R.O.

1125(I)/2011 dated the 31st December, 2011 and importing

items covered under SRO 1125(I)/2011 dated the 31st

December, 2011.

3% of import value as


duty, sales tax and

federal excise duty

4 Persons importing coal 4%

5 Persons importing finished pharmaceutical products that are not

manufactured otherwise in Pakistan, as certified by the Drug

Regulatory Authority of Pakistan

4%

6 Shipbreakers on import of ships 4.5%

7 Industrial undertakings not covered under S. Nos. 1 to 6 5.5%

8 Companies not covered under S. Nos. 1 to 7 5.5%

9 Persons not covered under S. Nos. 1 to 8 6%



Advance Tax on dividend & Dividend in Specie Part III, Division I (Section 150 & 236S)

The rate of tax under section 150 and 236S shall be

Existing Amended

S.

No. Person(s) Rate

Person (s) Rate

a) In the case of dividends

declared or distributed by the

purchaser of a power project

7.50% in case of dividend

paid by Independent Power

Purchasers where such dividend

7.5%

Income Tax Rate

Page 27

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;

is a pass through item under an

Implementation Agreement

or Power Purchase

Agreement or Energy Purchase

Agreement and is required to be

re-imbrued by Central Power

Purchasing Agency (CPPA-G)

or its predecessor or successor

entity

b) Filers other than mentioned in

(a) above;

15% Amended as Other than

mentioned in (a) above

15%

c) Non-filers other than

mentioned in (a) above;

20% Omitted -



Profit on Debt Part III, Division IA (Section 151)

The rate of tax to be deducted under section 151 has been increased from “10%” to “15%”

The expression “for filer and “17.5%” of the yield or profit paid for “non-filers” has been

omitted.

Following proviso has also been substituted as follows;

Existing upto tax year 2019 Amended from tax year 2020

Provided that for a non-filer, if the yield or

profit paid is rupees five hundred thousand or

less, the rate shall be ten percent”

"Provided that the rate shall be 10% in cases

where yield or profit paid is rupees five

hundred thousand or less.";



Return on Investment in Sukuks Part III, Division IB (Section 150A)

Sr Description Rate

(a) In case of Sukuk holder is a Company 15%

(b) In case sukuk holder is an individual or AOP and return is more than Rs.1m 12.5%

( c) In case sukuk holder is an individual or AOP and return is less than Rs.1m 10%



Withholding Tax Rates on Certain

Payments to Non-Residents under Section

152

Part 1, Division IV (Section 6 & Section 152 (1)

Part III, Division II (Section 152(1A)(1AA)

Section 152(1AAA), 2A

Nature of Payment Relevant Section Previous

Rates

Amended

Rate

Royalty or Fee for

technical services Payment to non-residents u/s 152(1) & Section 6 15%

15%

Payment to non-

residents against

contracts

From payments on the execution of construction

contract including supervisory activities &

related services u/s 152(1A)

7% for Filer

and 13% for

Non-Filer

7%

Income Tax Rate

Page 28

Insurance premium or

Re-insurance to non-

resident persons

The rate of tax to be deducted under sub-section

(1AA) of section 152. 5% 5%

Advertisement services

to non- resident media

persons

The rate of tax to be deducted under sub-section

(1AAA) of section 152. 10% 10%

Payments to non-

residents

In other cases. not covered under Section 152

(1),(1A), (1AA) (1AAA)(2A) 20% 20%

Withholding Tax Rates on Certain Payments to

PE of Non-Residents

Part III Division II (Section 152(2)

Nature of Payment Amended Rate

Payments to a Permanent

establishment of a nonresident

person for payments against sales

of goods

The rate of tax to be deducted from a

payment under clause (a) of Section 152

(2A)

4% for the company

4.5% in another case



person for payments against

services


payment under clause (b) section

152(2A)

2% on transport

services

8% in case of other

services in case of a

company

10% in case of other

services in other than

company



person for payments against

contracts


payment referred to in clause (c) section

152 (2A)

10% in case of

sportsperson

7% in other cases

Note: Above amended rates shall be increased by 100% for payments under subsections

(1),(1AA,),(2),(2A)(b)and (2A)(c) not appearing in ATL as per 10th Schedule inserted through Finance

Act 2019.

Payments for Goods & Services Part III Division III (Section 153

Rates under section 153 have been amended as follows:

Nature of

Payment Nature of Income

Amended

Rates

Supp

lies

(S

ecti

on

153(1

)(a)

(E

xce

pt

wher

e p

aym

ent

is l

ess

than

R

s.

75

,00

0/-

in

aggre

gat

e,

duri

ng

a

finan

cial

yea

r)

In case of sale of rice, cottonseed oil or edible oil 1.5%

In case of sale of goods on the amount by payable to companies. 4%

In case of supplies made by distributors of fast-moving consumer

goods-for companies 2%

In case of supplies made by distributors of fast-moving consumer

goods-other than companies 2.5%

In case of sale of goods -on payments to other taxpayers i.e. other

than companies 4.5%

Income Tax Rate

Page 29

Ser

vic

es

(Sec

tio

n

15

3(1

)(b)

(Ex

cep

t w

her

e

pay

men

t is

les

s th

an R

s. 3

0,0

00

/- i

n a

ggre

gat

e,

duri

ng a

fin

anci

al y

ear)

In the cases of transport services, freight forwarding services, air

cargo services, courier services, manpower outsourcing services,

hotel services, security guard services, software development

services, IT services and IT-enabled services as defined in clause

(133) of Part I of the Second Schedule, tracking services, advertising

services (other than by print or electronic media), share registrar

services, engineering services, car rental services, building

maintenance services, services rendered by Pakistan Stock Exchange

Limited and Pakistan Mercantile Exchange Limited inspection,

certification, testing and training services;

Previous it was only on transport services

3%

In case of other services on the amount payable to Companies 8%

In case of other services on payments to other taxpayers i.e other than

companies

10%

In Case of persons making payments to electronic and print media for

advertising services (in case payment to a Company)

1.5% In Case of persons making payments to electronic and print media for

advertising services (in case payment to others that a company)

In case of contracts on payments to companies 7%

Contr

acts

(Sec

tion

153(1

) (c

) In case of contracts on payments to other taxpayers i.e other than

companies

7.5%

In case of contracts on payments to sportspersons 10%



Royalty Paid to Resident Person Part III, Division IIIB (Section 153B)

Inserted through Finance Act 2019

The rate of tax to be deducted under section 153B shall be 15% of the gross amount payable

under the head of Royalty paid to a resident person.



WHT on Income from Property Part III, Division V (Section 155)

(a) The rate of tax to be deducted under section 155, against (Payments to) individual/AOPs

S.No Gross Amount Amended for TY-2020 onward

(1) 0- Rs. 200,000. Nil

(2) Rs. 200,001 to Rs. 600,000. 5% of the gross amount exceeding Rs.

200,000

(3) Rs. 600,001 to Rs. 1,000,000. Rs. 20,000 plus 10% of the gross amount

exceeding Rs. 600,000

(4) Rs. 1,000,001 to Rs. 2,000,000. Rs. 60,000 plus 15% of the amount

exceeding Rs. 1,000,000

(5) Rs. 2,000,001 but does not exceed Rs.

4,000,000

Rs. 210,000 plus 20% of the amount


(6) Rs. 4,000,001 but does not exceed Rs. Rs. 610,000 plus 25% of the amount

Income Tax Rate

Page 30

6,000,000. exceeding Rs. 4,000,000

(7) Rs. 6,000,001 to Rs. 8,000,000. Rs. 1,110,000 plus 30% of the amount

exceeding Rs. 6000,000

(8)

Exceeding Rs. 8,000,000 Rs. 1,710,000 plus 35% of the amount


(b) The rate of tax to be deducted under section 155,

against (Payments to) Company

15% of the gross amount of rent

Withholding tax on Prizes and Winnings Part III, Division VI (Section 156)

Nature of Payment Rate

On a prize on prize bond or crossword puzzle 15%

On winnings from a raffle, lottery, prize on winning a quiz, prizes offered

by a company for promotion of the sale

20%



Withholding Tax on Petroleum Products Part III, Division VIA (Section 156A)

Rate of collection of tax is 12% of the amount of payment.

Note: Above amended rate shall be increased by100% for the persons not appearing in ATL as per 10th


Rate of tax on Cash Withdrawal from Bank Part IV Division VI (Section 231A)

The rate tax to be deducted under section 231A shall be

Cash Withdrawal from[ Bank Rate

Amended

Aggregate amount of cash withdrawal from a bank account exceeding Rs. 50,000 in a

day for the person whose name is not appearing in the active taxpayer's list

Previous

The aggregate amount of cash withdrawal from a bank account exceeding Rs. 50,000

in a day for non-filers

0.6%

Advance Tax on Transactions in Bank Part IV Division VIA (Section 231AA)

Advance Tax on Transaction in Bank Rate

Amended

Aggregate amount of cash transaction through bank exceeding Rs. 25,000 in a day for the

person whose name is not appearing in the active taxpayer's list

Earlier it was read as

Aggregate amount of cash transaction through bank exceeding Rs. 25,000 in a day for non-

filers

0.6%

Income Tax Rate

Page 31

Brokerage and commission Part IV Division II, First Schedule (Section

233)

S.

No.

Person(s) Rates

(1) (2)

1 Advertising Agents 10%

2 Life Insurance Agents where commission received is less than Rs.0.5million per annum 8%

3 Persons not covered in 1 and 2 above 12%



Rate of Collection of Tax by a Stock Exchange

Registered in Pakistan

Part IV, Division IIA (Section 233A)

0.02% of the share purchase/sale value



Rate for Collection of Tax by NCCPL Part IV, Division II B (Section 233AA)

10% of profit or mark-up or interest earned by the member, margin financier or securities lender.

Advance Tax on new registration or purchase of

Motor Vehicles

Part IV Division VII (Section 231B

Tax rates for new registration of vehicles –Section 231B(1) or sales by manufacturers-Section 231B(3)

S.No. Engine Capacity Previous Rate for

Filers

Previous Rate for

Non-filers

Amended Rate for

tax year 2020

onwards

1 Upto 850cc Rs. 7,500 Rs. 10,000 Rs. 7,500

2 851cc to 1000cc Rs. 15,000 Rs. 25,000 Rs. 15,000

3 1001cc to 1300cc Rs. 25,000 Rs. 40,000 Rs. 25,000

4 1301cc to 1600cc Rs. 50,000 Rs. 100,000 Rs. 50,000

5 1601cc to 1800cc Rs. 75,000 Rs. 150,000 Rs. 75,000

6 1801cc to 2000cc Rs. 100,000 Rs. 200,000 Rs. 100,000

7 2001cc to 2500cc Rs. 150,000 Rs. 300,000 Rs. 150,000

8 2501cc to 3000cc Rs. 200,000 Rs. 400,000 Rs. 200,000

9 Above 3000cc Rs. 250,000 Rs. 450,000 Rs. 250,000



Advance Tax on transfer of Motor Vehicles Part IV Division VII (Section 231B(2)

Tax rates for transfer of registration or ownership of motor vehicles –Section 231B(2)- applicable if

transfer of vehicle is executed within five years from the date of first registration in Pakistan

S.No. Engine Capacity Previous Rate

For Filers

Previous Rate for

Non-filers

amended Rates

(1) (2) (3) (4)

1 Upto 850cc - Rs. 5,000 -

2 851cc to 1000cc Rs. 5,000 Rs.15,000 Rs. 5,000

3 1001cc to 1300cc Rs. 7,500 Rs. 25,000 Rs. 7,500

Income Tax Rate

Page 32

4 1301cc to 1600cc Rs. 12,500 Rs. 65,000 Rs. 12,500

5 1601cc to 1800cc Rs. 18,750 Rs. 100,000 Rs. 18,750

6 1801cc to 2000cc Rs. 25,000 Rs. 135,000 Rs. 25,000

7 2001cc to 2500cc Rs. 37,500 Rs. 200,000 Rs. 37,500

8 2501cc to 3000cc Rs. 50,000 Rs. 270,000 Rs. 50,000

9 Above 3000cc Rs. 62,500 Rs. 300,000 Rs. 62,500

Provided that the rate of tax to be collected shall be reduced by 10% each year from the date of first

registration in Pakistan.



Advance Tax on Motor Vehicles – collected with Token

Tax

Part IV, Division III (Section 234

(i.) Rate of collection of tax on Goods Transport Vehicles

Previous Rate

for Filers

Previous

Rate for non-

filer

Amended Rates

In the case of goods transport vehicle for laden

weight

Rs.2.5/KG Rs. 4/KG 2.5/KG

(ii) In the case of passenger transport vehicles plying for hire with a registered seating capacity of---

Previous Rates (Per Seat

Per annum)

Amended Rates (Per

Seat Per annum)

Filers Non-filers

(a) Four or more persons but less than ten

persons.

(b) Ten or more persons but less than twenty

persons.

(c) Twenty persons or more

50`

100

300

100

200

500

50

100

300

(iii) Advance Tax on Private Motor Vehicle to be collected with Token Tax (if in Installment)- upto10

years

S. No. Engine Capacity Previous

Rate for

Filers

Previous

Rate for

non-Filers

Amended Rate

1 upto 1000cc Rs.800 Rs.1,200 Rs. 800

2 1001cc to 1199cc Rs.1,500 Rs.4,000 Rs. 1,500

3 1200cc to 1299cc Rs.1,750 Rs.5,000 Rs.1,750

4 1300cc to 1499cc Rs.2,500 Rs.7,500 Rs.2,500

5 1500cc to 1599cc Rs.3,750 Rs.12,000 Rs.3,750

6 1600cc to 1999cc Rs.4,500 Rs.15,000 Rs.4,500

7 2000cc & above Rs.10,000 Rs.30,000 Rs.10,000

(iv) Advance Tax on Private Motor Vehicle to be collected with Token Tax (if paid lumpsum)

S. No. Engine Capacity Previous

Rate for

Filers

Previous

Rate for

non-Filers

amended Rate

1 upto 1000cc Rs. 10,000 Rs. 10,000 Rs. 10,000

2 1001cc to 1199cc Rs. 18,000 Rs. 36,000 Rs. 18,000

3 1200cc to 1299cc Rs. 20,000 Rs. 40,000 Rs. 20,000

Income Tax Rate

Page 33

4 1300cc to 1499cc Rs. 30,000 Rs. 60,000 Rs. 30,000

5 1500cc to 1599cc Rs. 45,000 Rs. 90,000 Rs. 45,000

6 1600cc to 1999cc Rs. 60,000 Rs. 120,000 Rs. 60,000

7

2000cc & above

Rs.

120,000 Rs. 240,000 Rs. 120,000



Collection of tax from CNG Stations Part III, Division VIB (Section 234A)

The amended rate of tax under section 234A shall be 4% of the gas consumption charges.

Previously it was 4% for filer & 6% for non-filer.



Advance Tax on Electricity Consumption Part IV, Division IV (Section 235)

Rate of collection of tax under section 235 is slabs rates from Rs.80 to Rs.1500 to the bill amount

less than 20,000.

Where the amount of electricity bill exceeds Rs. 20,000: 5% for industrial consumers and 12%

for commercial consumers.

Advance Tax on Domestic electricity Consumption Part IV, Division XIX (Section 235A)

S. No. Bill Amount Rate

1. if the amount of monthly bill is Rs.75,000 or more 7.5%

2. if monthly bill is less than Rs.75,000. 0%

Advance tax from Telephone Users Part IV Division V (Section 236)

Subscribers Rate

(a)

in the case of a 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 the case of the subscriber of internet, mobile

telephone and pre-paid internet or a telephone card

12.5% of the amount of bill or sales

price of internet pre-paid card or

prepaid telephone card or sale of units

through any electronic medium or

whatever form.

Advance tax at the time of sale by auction Part IV Division VIII (Section 236A)

It is amended that tax @10% of the gross sale price of any property or goods sold by auction shall be

collected

Earlier it was read as 10% of the gross sale price of any property or goods sold by auction for filers and

15% for non-filers

Note: Above amended rate shall be increased by100% for the persons not appearing in ATL as per 10th


Income Tax Rate

Page 34

Advance tax on Purchase of Air Ticket Part IV Division IX (Section 236B)

The rate of tax to be deducted under section236B shall be 5% of the gross amount of air ticket.

Advance Tax on Sale or Transfer of Immovable

Property

Part IV Division X (Section 236C)

The rate of tax to be collected shall be @ 1% of the gross amount of the consideration received.

Earlier it was read as 1% of the gross amount of the consideration received for filers and 2% of the gross

amount of the consideration received for non-filers.



Advance tax on functions and gatherings Part IV, Division XI, Section 236 D

5% for general functions and gatherings

Provided that for marriage functions the rate shall be as follows:

Sr. No Rate of Tax

(1) (2) (3)

1. 5% of the bill ad valorem or Rs.

20,000/- per Function, whichever is

higher

For Islamabad, Lahore, Multan, Faisalabad,

Rawalpindi, Gujranwala, Bahawalpur, Sargodha,

Sahiwal, Sheikhupura, Dera Ghazi Kahn, Karachi,

Hyderabad, Sukkur, Thatta, Larkana, Mirpur Khas,

Nawabshah, Peshawar, Mardan, Abbottabad, Kohat,

Dera Ismail Khan, Quetta, Sibi, Loralai, Khuzdar,

Dera Murad Jamali and Turbat.

2. 5% of the bill ad valorem or Rs.

10,000/- per Function, whichever is

higher

For Cities other than those mentioned above”;

“Provided further that the rate for the function of a marriage in a marriage hall, marquee or a community

place with the total function area less than 500 square yards or, in case of multi storied premises, with the

largest total function area on one floor less than 500 square yards, shall be 5% of the bill ad valorem or

Rs.5,000 per function whichever is higher”;

Advance tax on Cable Operators and other

Electronic Media

Part IV, Division XIII (Section 236F)

1) The rate of tax to be collected in case of Cable Television Operator shall be as per the following table;

License

Category as

provided in

PEMRA Rules

Tax on

License

Fee

Tax on

Renewal

License

Category as

provided in

PEMRA Rules

Tax on License Fee

Tax on Renewal

H Rs. 7,500 Rs. 10,000 B-4 Rs. 75,000 Rs. 100,000

H-1 Rs. 10,000 Rs. 15,000 B-5 Rs. 87,500 Rs. 150,000

H-II Rs. 25,000 Rs. 30,000 B-6 Rs. 175,000 Rs. 200,000

R Rs. 5,000 Rs.12,000 B-7 Rs. 262,500 Rs. 300,000

B Rs. 5,000 Rs. 40,000 B-8 Rs. 437,500 Rs. 500,000

Income Tax Rate

Page 35

B-1 Rs. 30,000 Rs. 35,000 B-9 Rs. 700,000 Rs. 800,000

B-2 Rs. 40,000 Rs. 45,000 B-10 Rs. 875,500 Rs. 900,000

B-3 Rs. 50,000 Rs. 75,000

2) The rate of tax to be collected in case of IPTV, FM Radio, MMDS, Mobile TV, Mobile Audio,

Satellite TV Channel, and Landing Rights shall be 20% of the permission fee or renewal fee, as the

case may be.

3) In addition to tax collected under paragraph (2) Pakistan Electronic Media Regulatory Authority shall

collect tax at the rate of 50% of the permission fee or renewal fee, as the case may be, from every TV

Channel on which foreign TV drama serial or play in any language, other than English, is screened or

viewed.

Advance tax on sale to Distributors, Dealers or

Wholesalers

Part IV, Division XIV (Section 236G)

Category of Salle Previous Rate of

Tax

Amended Rates

Filer Non-Filer

Fertilizers 0.7% 1.4% 0.7%

Other than Fertilizers (electronics,sugar, cement, iron and steel

products, motorcycles, pesticides, cigarettes, glass, textile,

beverages, paint or foam sector)

0.1% 0.2% 0.1%



Advance tax on sale to Retailers Part IV, Division XV (Section 236H)

Category of sales (sectors) Previous

Rate Filer

Previous

Rate Non-

Filer

Amended Rate

Electronics 1%

1%

1%

Others (sugar, cement, iron and steel products,

motorcycles, pesticides, cigarettes, glass, textile,

beverages, paint or foam sector)

0.5%

0.5%



Advance tax on sale of Certain Petroleum Products Part IV, Division XVA (Section 236HA)

The rate is 0.5% of the ex-depot sale price

Previously was Inserted through Fiance Act 2018 as 0.5% of ex-depot sale price for Filers & 1% of the

ex-depot sale price for Non-Filers



Collection of Advance Tax by Educational

Institution

Part IV, Division XVI (Section 236I)

5% of the amount of Fee/Charges if the fee is above Rs.200,000 per annum and not applicable on

scholarships.

Income Tax Rate

Page 36

Advance Tax on Dealers, Commission Agents and

Arhatis etc.

Part IV, Division XVII (Section 236J)

The rate of collection of tax will be as follows by every Market Committee

Group Previous Amount of Tax (per

annum)

Amended amount of Tax (per

annum)

Group or Class A: Rs. 10,000 Rs. 100,000

Group or Class B: Rs. 7,500 Rs. 75,000

Group or Class C: Rs. 5,000 Rs. 50,000

Any other category: Rs. 5,000. Rs. 50,000

Advance Tax on purchase of immovable property Part IV, Division XVIII (Section 236K)

S. No. *Period Previous Rate of

Tax

Amended Rate

(1) (2) (3)

1 Where value of Immovable

property is up to 3 million.

0% Rate of tax to be

collected U/s

236K shall 1% of

the fair market

value

2 Where the value of Immovable

property is more than 3 million

Filer

2%

Non-Filer

4%*



Advance Tax on international air ticket Part IV, Division XX (Section 236L)

Sr.No. Type of Ticket Rate

1 First/Business/Club class 16,000 per person

2 Other excluding economy 12,000 per person

3 Economy 0%

Advance Tax on Banking Transactions Otherwise

Than Through Cash

Part IV, Division XXI (Section 236P)

The rate of tax to be collected under section 236P shall be 0.6 % of the transaction for the persons who

are not appearing in the active taxpayer list.

Earlier it was read as

The rate of tax to be collected under section 236P shall be 0.6% of the transaction for the non-filers.

Payment to a resident person for right to use

machinery and equipment

Part IV, Division XXIII (Section 236Q)

Rate of collection of tax under section 236Q shall be 10% of the amount of the payment.

Collection of advance tax on education-related

expenses remitted abroad

Part IV, Division XXIV (Section 236R)

Rate of collection of tax under section 236R shall be 5% of the amount of total education-related

expenses.

Income Tax Rate

Page 37

Advance Tax on Insurance Premium Part IV, Division XXV (Section 236U)

The expression of “non-filer” is substituted with “persons who are not appearing in active taxpayer list”

Earlier it was read as the rate of tax to be collected from non-filers under section 236U shall be as under;

Sr.No. Type of Premium (existing) Type of Premium (amended) Rate (no

change)

1 General Insurance Premium General Insurance Premium 4%

2 Life Insurance Premium if exceeding

Rs.0.3 million in aggregate

Life Insurance Premium if exceeding

Rs.0.3 million in aggregate

1%

3 Others Others 0%

Advance Tax on Extraction of Minerals Part IV, Division XXVI (Section 236V)

Rate of tax collected is 5% of value of minerals from the persons whose name is in the active taxpayer

list”

Earlier it was read as the rate of tax to be collected under section 236V shall be 5% of the value of the

minerals for non-filers and 0% for filers

Advance Tax on Tobacco (Section 236X)

5% of the Purchase Value of Tobacco to be collected by Pakistan Tobacco Board or its contractors

Advance Tax on Amount Remitted abroad through

credit, debit or prepaid cards

Part IV, Division XXVII (Section 236Y)

Previous as Inserted through Finance Act 2018 Amended ,

1% of the gross amount remitted abroad for Filers

1% of the gross amount remitted abroad 3% of the gross amount remitted abroad for Non-

Filers



Budget 2019-2020 Highlights

Page 38

BUDGET 2019-20 AT A GLANCE Comparative Analysis with the Previous Budget (Rupees in million)

Budget

Estimates Revised

Estimates Budget

Estimates % age

Increase

2018-19 2018-19 2019-20

A. TOTAL RESOURCES

Tax Revenue Receipts *

4,888,645 4,393,876 5,822,160 32.51 Non-Tax Revenue Receipts 771,861 637,751 894,464 40.25 Capital Receipts

443,096 1,031,676 831,659 (19.39)

External Receipts

1,118,024 1,403,156 3,032,325 116.11 Privatization Proceeds

- - 150,000 -

Gross Federal Resources 7,221,626 7,466,459 10,730,608 43.72

Less: Provincial share in federal taxes 2,590,066 2,462,651 3,254,526 32.16

Net Federal Resources

4,631,560 5,003,808 7,476,082 49.41 Cash balance built up by provinces 285,604 58,987 422,995 617.09

TOTAL RESOURCES 4,917,164 5,062,796 7,899,077 56.02

B. TOTAL EXPENDITURES

Current Expenditure

4,780,359 5,589,432 7,288,178 30.39 Development Expenditures (PSDP) 1,152,105 829,680 949,895 14.49

TOTAL EXPENDITURES 5,932,464 6,419,111 8,238,073 28.34

Bank Borrowings (A-B) 1,015,300 1,356,315 338,996 (75.01)

Difference

- - - *Tax Revenue Receipts

Direct Taxes

1,735,000 1,659,000 2,081,945 25.49

Indirect Taxes

2,700,000 2,491,000 3,473,055 39.42

FBR Taxes

4,435,000 4,150,000 5,555,000 33.86 Other Taxes

453,645 243,876 267,160 9.55

4,888,645 4,393,876 5,822,160 32.51


Page 39

BREAKUP OF FEDERAL TAX REVENUE RECEIPTS

Rs.in million

Budget 2018-19

Revised 2018-19

%age of T.Rev.

Budget 2019-20

%age of T.Rev.

%age Vs. Last Yr.

Direct Taxes

Income Tax 1,709,939

1,651,584 37.59%

2,073,000 35.61% 25.52%

WWF 18,636

4,186 0.10%

5,050 0.09% 20.64%

Capital Value Tax 6,425

3,230 0.07%

3,895 0.07% 20.59%

1,735,000 1,659,000 37.76% 2,081,945 35.76% 25.49%

Indirect Taxes

Customs 735,000

735,000 16.73%

1,000,500 17.18% 36.12%

Sales Tax 1,700,000

1,490,000 33.91%

2,107,738 36.20% 41.46%

Federal Excise 265,000

266,000 6.05%

364,817 6.27% 37.15%

2,700,000

2,491,000 56.69%

3,473,055 59.65% 39.42%

FBR TAXES 4,435,000

4,150,000 94.45%

5,555,000 95.41% 33.86%

Other Indirect Taxes

Petroleum Levy 300,000

203,354 4.63%

216,025 3.71% 6.23%

ICT Taxes 37,555

7,492 0.17%

11,100 0.19% 48.16%

Gas Infrastructure Develop.Cess 100,000

25,000 0.57%

30,000 0.52% 20.00%

Natural Gas develop.surcharge 16,000

8,000 0.18%

10,000 0.17% 25.00%

Airport Tax 90

30 0.00%

35 0.00% 16.67%

453,645 243,876 5.55% 267,160 4.59% 9.55%

Total Tax Revenue Receipts 4,888,645 4,393,876 100.00% 5,822,160 100.00% 32.51%


Page 40

BUDGET HIGHLIGHTS BUDGET LAYOUT The budget 2019-20 has the following salient features:

The total outlay of budget 2019-20 is Rs 8,238.1 billion. This size is 38.9% higher than the size of

budget estimates 2018-19.

The resource availability during 2019-20 has been estimated at Rs 7,899.1 billion against Rs

4,917.2 billion in the budget estimates of 2018-19.

The net revenue receipts for 2019-20 have been estimated at Rs 3,462.1 billion indicating an

increase of 12.8% over the budget estimates of 2018-19.

The provincial share in federal taxes is estimated at Rs 3,254.5 billion during 2019-20, which is

25.7% higher than the budget estimates for 2018-19.

The net capital receipts for 2019-20 have been estimated at Rs 831.7 billion against the budget

estimates of Rs 443.1 billion in 2018-19 i.e. an increase of 87.7%.

The external receipts in 2019-20 are estimated at Rs 3,032.3 billion. This shows an increase of

171.2% over the budget estimates for 2018-19.

The overall expenditure during 2019-20 has been estimated at Rs 8,238.1 billion, out of which the

current expenditure is Rs 7,288.1 billion and development expenditure is Rs 950 billion.

The share of current and development expenditure respectively in total budgetary outlay

for 2019-20 is 88.46% and 11.54%.

The expenditure on General Public Services is estimated at Rs 5,607 billion, which is 76.9% of

the current expenditure.

The development expenditure outside PSDP has been estimated at Rs 85.5 billion in the

budget 2019-20.

The size of the Public Sector Development Programme (PSDP) for 2019-20 is Rs 1,613 billion.

Out of this, Rs 912 billion has been allocated to provinces. Federal PSDP has been estimated at

Rs 701 billion, out of which Rs 348.2 billion for Federal Ministries/Divisions, Rs 348.2 billion

for Corporations, Rs 5 billion for Earthquake Reconstruction and Rehabilitation Authority

(ERRA), Rs 17 billion for relief and rehabilitation of IDPs, Rs 53 billion for Security

Enhancement, Rs 5 billion for Prime Minister's Youth skill development initiative, Rs. 2 billion

for Clean/ Green Pakistan Movement/ Tourism and Rs 1 billion for Gas Infrastructure

Development Cess. Rs 48 billion for merged areas of FATA 10 year‟s development plan and 24

billion for sustainable development goals and community development program.

To meet expenditures bank borrowings has been estimated for 2019-20 at Rs. 339 billion, which

is lower by 688.7 billion than the revised estimates of 2018-19 reflecting decrease at 75%.


Page 41

SALES TAX & FEDERAL EXCISE The budgetary changes pertaining to Sales Tax & Federal Excise are:

The Scheme of Law has been changed and special procedures have been abolished and making

these parts of the Act in shape of inserting new Schedules to the Sales Tax Act 1990. Further

SROs have also been rescinded consequent to making these parts of the Act to make the law

simple. The Sales Tax Special Procedure (Withholding) Rules, 2007, issued vide SRO

660(I)/2007 have also been rescinded & moved to the Schedule to the Sales Tax Act, 1990

consequent to change in the scheme of law. The withholding requirements and rates, and the

exclusions therefrom have been transposed to the new Eleventh schedule. Other procedural

provisions have been re-enacted in Chapter XIV-D of the Sales Tax Rules, 2006, through SRO

698(I)/2019 dated 29.06.2019.

As per SRO 698 dated 29.06.2019; sales tax withholding is also applicable on to services on

which "federal excise duty is payable in sales tax mode, and the ones specified in the Schedule to

the Islamabad Capital Territory (Tax on Services) Ordinance, 2001 (XLII of 2001).

Extra tax regime under Chapter XIII Sales Tax Special Procedure Rules has been done away with

and items like electric and gas appliances, foam, confectionary, lubricants (in retail packing),

batteries, tyres / tubes, Paints & varnishes, etc. have been moved to Third Schedule (retail price

taxation) of the Sales Tax Act, 1990.

Special Regime of taxation of the whole of the steel sector has been abolished. Sales tax on

billets, ingots, bars, ship plates, and other long profiles exempted at manufacturing and import

stage, and in lieu thereof FED at 17% in sales tax mode has been imposed.

Sales Tax on Marble shall be charged @ 17% under normal regime. Previously sales tax at Rs.

1.25 per unit of electricity consumed was being charged through the special procedure which has

been abolished.

It is provided that from August 2018, in case of supplies to unregistered persons, invoices should

bear the NIC number or NTN, as the case may be, along with the name, address and registration

number of the recipient, excluding supplies made by a retailer where the transaction value

inclusive of sales tax amount does not exceed rupees fifty thousand, if sale is being made to an

ordinary consumer. In case of non-compliance input adjustment shall be disallowed on pro rata

basis.

The scope of tax on Tier 1 retailers has been enhanced and further retailers have been shifted from

Tier 2 to Tier 1 to bring them into the sales tax net and their points of sales (POSs) would be

integrated with FBR‟s Computerized System so that the sales are reported in real time. Those

retailers who would not be integrated with FBR‟s Computerized System, their input tax will be

reduced by 15%.

Expansion in the scope of exemption allowed in respect of Tribal Areas inserting it in the

Exemption Schedule (Sixth Schedule) to the Sales Tax Act, 1990.

Withdrawal of 3% Value Addition Tax on Petroleum Products and Mobile Phones mobile cellular

phones and satellite phones by inserting in the Twelfth Schedule to the Act.

The brick kiln has been taxed under the Fixed Tax Regime and tax Category A Rs. 12500 pm, for

Category B Rs.10000 pm and for Category C Rs.7500 pm.

Rate of Sales Tax on Food Supplied by Restaurant, Bakery, and Caterers has been reduced from

17% to 7.5% against which input tax adjustment will not be allowed.

Sales tax on Sugar has been increased to 17% from 8%.

Rate of sales tax on milk and cream, concentrated, and unsweetened/unflavored has been reduced

to 10% to make it in line with other items in such category which are already subject to a reduced

rate.


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Cottage industry has been redefined to include almost all into the tax net except (a) having

turnover less than Rs.3 million per annum which currently is Rs.10 million, (b) does not have an

industrial gas or electricity connection, (c) is located in a residential area and (d) does not have a

total labour force of more than ten workers.

SRO 1125(I)/2011 providing zero-rating and reduced rating for inputs and products of five

export-oriented sectors i.e. textile, leather, carpets, sports goods, and surgical goods have been

rescinded thus restoring the standard rate of 17% on items covered under the said SRO. The rate

of sales tax on local supplies of finished articles of textile and leather and finished fabric has been

raised to 14% and 17%, respectively. Zero-rating of utilities (gas, electricity, and fuels) allowed to

these export-oriented sectors through various sales tax general orders has been withdrawn. Ginned

cotton which is previously exempt has been taxed at a reduced rate of 10%. Thus SRO

1125(I)/2011 dated 31.12.2011, relating to zero-rating of five export-oriented sectors, has been

rescinded since 1st July, 2019 vide rescinding SRO 694(I)/2019 dated 29.06.2019.

SRO 692(I)/2019 dated 29.06.2019 amends SRO 648(I)/2013 which prescribes exclusions from

chargeability of further tax. Two new serial numbers 12 and 13 have been added which provide

exclusion from further tax to supplies to the Government, semi government and statutory

regulatory bodies and supplies of white crystalline sugar. The further tax under Section 3(1 A) of

the Sales Tax Act, 1990, shall not be charged in the aforesaid two cases.

SRO 190(I)/2002, issued in exercise of powers under clause (iii) of the first proviso to section 4

of the Sales Tax Act, 1990, provides that zero-rating shall not apply to exports of goods specified

in SRO as made by air or via land route to Afghanistan and through Afghanistan to Central Asian

Republics (CARs). The 2002-notification has now been amended vide SRO 691(I)/2019 dated

29.06.2019 to exclude PVC and PMC materials from purview of SRO 190(I)/2002, meaning

thereby that zero-rating on export of these items shall be available on exports to Afghanistan or to

CARs through Afghanistan

More items have been taken out of the Sixth Schedule and brought into the tax net if sold in retail

packing and with a brand name like Frozen Sausages, meat if preserved, fat-filled milk and

cereals other than those of wheat and meslin.

Sales Tax @ 1% on gold and silver will be chargeable. Similarly, presently, jewellery is taxed on

the basis of making charges only now gold in jewellery would be taxed at 1.5%, the diamond at

0.5% and making charges at 3%, with input adjustment available only in respect of gold.

Through Finance Act, 2018, a relief was provided that the audit of the registered person can only

be conducted only once in every three years. However, now it is being amended to go away from

this restriction & now there is no such restriction, means a registered taxpayer can be audit for

every year even.

Approval will not be required to file the revised sales tax return if the revised return will be filed

within 60 days of the filing of return. However, either the tax payable is more than the amount

paid or the refund claimed therein is less than the amount claimed, under the return sought to be

revised.

In Islamabad few more services which have been subjected to sales tax by the provinces have

been included in the list of taxable services, resulting, more services would be subject to services

sales tax in Islamabad Capital Territory. For clarity, it is mentioned that the services which are

already being taxed under the Federal Excise Act, 2005, are not included in the services to be

added to ICT law.

The Sales Tax Special Procedure Rules, 2007, issued vide SRO 480(I)/2007 dated 09.06.2007

have been rescinded through SRO 694(I)/2019, dated 29.06.2019. All special procedures

provided therein have been thus discontinued. The desirable provisions from these rules have


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either been transposed to the Sales Tax Act, 1990, or are being transposed to the Sales Tax Rules,

2006. Necessary amendments to the Sales Tax Rules, 2006, shall follow in few days.

FED has been increased from 16% to 17% on Vegetable ghee and cooking oil. FED has been increased from 11.5% to 13% on Aerated waters and related products. FED on Locally produced cigarettes has been revised upward. FED has been increased from Rs.1.5/kg to Rs.2/kg on Cement. FED has been increased from Rs.7.8/100 meter3 to Rs.10/MMBTu on LNG. FED has been imposed at 2.5% on up to 1000cc, 5% on 1001cc to 2000cc and 7.5% on above

2000cc on locally manufactures or assembled motor vehicle. Earlier 10% FED was imposed on above 1700cc motor vehicles.

On imported motor cars/vehicle & SUVs, FED has been imposed at 2.5% on up to 1000cc, 5% on 1001cc to 1799cc, 25% on 1800cc to 3000cc and 30% on above 3000cc. Earlier 10% FED was imposed on above 1700cc motor vehicles.

Exemption of FED on internet services whether dial-up or broadband has been abolished by amending the 3rd Schedule Table II of the Federal Excise Act, 2005.

Limiting the scope of exemption of FED on charges payable on terrestrial bandwidth services only once imposing a duty on satellite and bandwidth services excluding those provided by foreign satellite companies by amending the 3rd Schedule Table II of the Federal Excise Act, 2005

FED from Oilseeds has been abolished. FED on Local travel by Air has been reduced from existing Rs.2000 (long routes) and Rs.1,250

(short routes) per passenger to Rs.1,500 and Rs.900 per passenger.

CUSTOMS ACT

The budgetary measures pertaining to the Customs Act are as under;

To standardize printing and preservation of Holy Quran, import of good quality duty-free Art

paper has been allowed.

Exemption of CD on 18 medicinal inputs/items

Exemption of CD on Modular/ Particle Free Operation Theatre

Exemption of CD on Medicines for certain rare diseases

The incentive to promote tourism by reducing the duty on pre-fabricated structures for

hotels.

Exemption of CD on more than 1650 raw materials/industrial inputs

Reduction of CD on Writing & Printing Papers

Exemption of CD on Raw- materials of Paper Industry

Exemption of CD on import of Wood

Reduction of the CD on Glass Board for LED Panel manufacturing

Reduction of the CD on input goods for paper-based Liquid Food Packaging Industry

Reduction of the CD on Acetic Acid

Reduction of the CD on Nonwoven fabrics

Exemption of CD on Machinery Parts / Accessories for Textile Sector

Exemption of CD on Elastomeric Yarn

Rationalization of the CD on Aluminium Beverage Cans & Inputs thereof

Exemption of CD on raw material for hemodialyzers used by kidney patients

Tariff rationalization on Home Appliance Sector

Reduction of the CD on Base Oil as input for Coning Oil, White Oil, and other Textile Oils


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Reduction of the CD on Raw Material for Manufacturing of Pre-Sensitized Printing Plate

Exemption of CD on Preparations for Metal Surfaces as input for Solar Panels

Exemption of CD on Foundation Cloth

Reduction of Duty on Wooden Sheets for Veneering

Reduction of the CD on Oxalic Acid

Reduction of the CD on Raw Material of Powder Coating Industry

Reduction of the CD on Raw Material for Paper Sizing Agents

Reduction of CD on Bobbins & Spools of Paperboard

Exemption of CD for Hydrocracker Industry for oil refining

Rationalization of tariff structure for SIM card manufacturing industry

Reduction of RD on Mobile Phones

Reduction of RD on smuggling prone items and other industrial inputs

Reduction of RD on Tyres.

Increase in rate of Additional Customs Duty for non-essential items

Withdrawal of exemption on import of LNG


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INCOME TAX The highlights of amendments in the income tax law are as under;

The threshold of taxable income for individuals fixed at Rs.600,000 whose income from salary

exceeds 75% of his taxable income and Rs.400,000 for non-salaried individuals and higher tax

rates have been introduced.

A provision relating to updating of ATL for late filers has been introduced where it is provided

late filers shall pay certain amount of surcharge along with late filing of the income tax return.

System of refunds via promissory notes through FBR Refund Settlement Company Limited has

been introduced:

Tax credit for persons employing fresh graduates has been allowed:

Various allowances being given to Armed Forces Personnel i.e. internal security allowance and

compensation in lieu of bearer allowance have been exempted from tax

Gift other than gifts from related persons will be treated as income of the recipient:

Minimum turnover tax u/s 113 has been increased to 1.50% from 1.25%. Reduced turnover rates

are also have been enhanced.

BMR Tax Credit has been abolished.

Special provisions for persons not appearing on Active Taxpayer‟s List have been introduced by

inserting the Tenth Schedule to the Income Tax Ordinance 2001. Further, currently under

different provisions higher, withholding tax rates are charged to Non-Filers. The rates for Non-

Filers from the First Schedule have been abolished and it is provided in the Tenth Schedule that

rate of WHT for non-filers (whose name is not appearing in ATL) shall be doubled with some

exception provided in the tenth schedule.

Rate of Withholding Tax would be double for persons whose name not appearing on ATL and the

withholding agents will clearly specify the names, CNIC or any other identification of such

persons in the withholding statement so that legal provisions to enforce return can come into

effect.

Additional slabs of income from the property have been inserted where rates of 25%, 30%, and

35% have been imposed. The rate of rental income exceeding Rs.8 million will be 35%. Further

AOPs and Individuals earning income from property above Rs.4 million have been given option

to apt normal taxation with deductions allowable under section 15A.

Withholding tax on royalty to a resident person @ 15% will be applicable.

Tax on Companies has been frozen to 29% which was previously to be reduced by 1% every year

up to 25%

The holding period for the purpose of capital gain on immovable property has been increased to 8

years for vacant plots and 4 years for constructed plots from existing 03 years. Further the higher

capital Cain on immovable property shall be taxed on higher rates as compared to previous rates.

Certain incomes upon which WHT provisions applicable have been shifted from Final Tax

Regime to Minimum Tax Regime including commercial importers, commercial suppliers of

goods, contractors, persons deriving brokerage or commission income and persons earning

income from CNG stations.

Tax rate of dividend would be charged at 25% for persons receiving dividend from companies

which enjoy exemption of tax on income or where no tax is payable due to availability of tax

credits or due to brought forward business or depreciation losses.

Initial depreciation allowance of 15% on buildings has been abolished:

Tax Rates on Profit on Debt have been revised upward.

Commission paid in access 0.2% of the gross amount of supplies shall be disallowed unless the

dealer is registered under the Sales Tax Act, 1990 and also appearing in the active taxpayer's list

of income tax. Further, where the excess commission is being paid to a dealer who is an associate,

75% of margin paid to the dealer is to be treated as income of the supplier


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Under section 111(4) limit of foreign remittance has been decreased to Rs.5 million from Rs. 10

million for explaining the source of investment through foreign remittance.

For amortization purpose, the useful life of intangibles has been increased to 25 years from 10

years where useful life is not ascertainable.

Advance Tax rate on dealers, commission agents & arhats has been for Class A from Rs 10,000

to Rs 100,000/-, for Class B from Rs 7,500 to 75,000/-, for Class C from Rs 5,000/- to Rs. 50,000

and for any other category from Rs 5,000/-. To Rs. 50,000/-.

The purchase of assets above 5 million in case of immovable property & Rs.1million in case of

movable property shall be through banking channel. In case of non-compliance, the deductions in

respect of depreciation and amortization in respect of such assets shall not be allowed. Further,

the amount of purchase shall not be treated as the cost for calculation of any gain on sale of such

asset. A penalty at the rate of five percent of FBR value of the asset has been imposed for

violation of this requirement

It has been provided that the federal government may introduce simplified tax regimes for certain

persons including small businesses, construction businesses, medical practitioners, hospitals,

educational institutions, and any other sector specified.

Trusts and welfare institutions shall also be required to obtain approval u/s 2(36) recognition from

Commissioner to avail the facility of 100% tax credit u/s 100C of the ITO 2001.

The Commissioner has been empowered to obtain such data from an independent chartered

accountant or cost accountant for evaluation of non-arm‟s length transactions between associates.

Now where any tax payable by an association of persons cannot be recovered, the same would be

recovered from any person who is a member of the association. The member would thereafter be

allowed to recover the tax paid by him from the AOP.

It has been provided that the functions of audit and assessment shall be performed by separate and

independent officers to ensure the impartial treatment to the taxpayers.

Previously, only taxpayers were required to register with the Board for tax purposes. Persons

deriving business income who are otherwise not required to file return being below the taxable

threshold were not required to register. In order to create a verifiable database of all persons

deriving business income, a new registration scheme has been introduced where every person

deriving business income, even if below the tax threshold shall be required to register with the

Board through NADRA's e-sahulat centers. Business registration would not make the registrant

liable to file the return. However, it would create a database which would be a source of detecting

new taxpayers in the future.

The definition of a resident individual has been amended. Previously a resident individual for a

tax year was defined as an individual who is present in Pakistan for a period of, or periods

amounting in aggregate to, one hundred and eighty-three days. Now the definition of resident has

been amended to include an individual present in Pakistan for a period of, or periods amounting

in aggregate to, one hundred & twenty days or more in the tax year and who, in the four years

preceding the tax years, has been in Pakistan for a period of, or periods amounting in aggregate

to, three hundred and sixty-five days or more.

A new provision has been introduced which authorizes the Board to design an Automated

Impersonal Tax Regime and prescribe rules in respect of the same through a notification in the

Gazette. The purpose of this regime is to minimize the interaction between officials and taxpayers

which are low risk and compliant.

In order to effectively check misuse of authority to gain financial benefit, a new enabling

provision has been introduced to prescribe rules for initiating criminal proceedings against

officers and officials of the Board who deliberately commit acts or failure to act for personal

benefits. Similar action would also be taken against persons who offer bribes or other financial

benefits to the tax employees.


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Documents

Federal Budget 2012-13€¦ · financial year. ADVANCE INCOME TAX COMPLIANCE CHART Every taxpayer (except income subject to final taxation, salary income and in case of business individual)