Tax HandBook 2013-2014

2013
Tax Handbook 2013
An Information Guide
2013
Preface
This handbook aempts to come back with the various post budget queries forthcoming by our clients. We have aempted to apprise them with a comprehensive explanaon of the implicaons and an upshot that this Finance Bill has brought about. The handbook encompasses the amendments in the Income Tax Ordinance, Sales Tax Act, Federal Excise Act, Customs Act and Income Support Levy Act. The applicable amendments in the laws aer enactment are eecve from July 1, 2013 unless otherwise specied. The commentary should be read in conjuncon with the applicable secons of respecve Ordinances, Acts and Rules along with the text of the Finance Bill, 2013. This commentary aempts to provide a general guideline and thus should not be considered as a conclusive and enforceable document. Professional advice should be sought before acng on any newly introduced amendment in the Finance Bill or on our comments. We hope that this handbook enhances your percepon of Budget 2013-2014. For beer understanding and convenience, we have also draed a Tax Planning Guide appended to this handbook. This handbook is the property of Horwath Hussain Chaudhury & Co. and is compiled for the exclusive use of its clients and employees. No part of this handbook may be reproduced except with prior permission of Horwath Hussain Chaudhury & Co. Although best eorts have been made to ensure accuracy of the informaon in this handbook, any errors and omissions are regreed.
Lahore June 14, 2013 www.crowehorwath.pk
2013
2013
Budget, 2013-14
Salient Features of the Budget 2013-14
The salient features of the budget 2013-14 are as follows: The total outlay of the budget 2013-14 is Rs. 3,592 billion (2012-13: Rs. 3,203 billion) showing an increase of 12%. The resource availability during 2013-14 has been esmated at Rs. 3,010 billion (2012-13: Rs. 2,719 billion) showing an increase of 11%. The net revenue receipts for 2013-14 have been esmated at Rs. 1,918 billion (2012-13: Rs. 1,775 billion) indicang an increase of 8%. The provincial share in Federal revenue receipts during 2013-14 is esmated at Rs. 1,502 billion (2012-13: Rs. 1,459 billion) showing an increase of 3%. The net capital receipts for 2013-14 have been esmated at Rs. 507 billion (2012-13: Rs. 478 billion) showing an increase of 6%. The external receipts during 2013-14 are esmated at Rs. 169 billion (2012-13: Rs. 387 billion) showing a decrease of 56%. The overall expenditures during 2013-14 have been esmated at Rs. 3,592 billion (2012-13: Rs. 3,203 billion) of which the current expenditure is Rs. 2,829 billion (2012-13: Rs. 2,612 billion) and development expenditure is Rs. 762 billion (2012-13: Rs. 591 billion) showing an increase of 8% and 29% respecvely. The share of current expenditure is Rs. 2,830.08 billion (2012-13: Rs. 2,612 billion) which is 79% (2012-13: 82%) of the total budgetary outlay for 2013-14. The expenditure on General Public Services is esmated at Rs. 2,357 billion (2012-13: Rs 1,877 billion) which is 83% (2012-13: 71%) of the current expenditures. The size of Public Sector Development Programme (PSDP) for 2013-14 is Rs. 762 billion (2012-13: Rs. 591), while for other development expenditures an amount of Rs. 172 billion (2012-13: Rs. 154.29 billion) has been allocated. This shows an increase of 32% and 11% respecvely. Provinces have been allocated an amount of Rs. 615 billion (2012-13: Rs. 513 billion) from Public Sector Development Programme (PSDP) showing an increase of 20%. An amount of Rs. 10 billion (2012-13: Rs.10 billion) has been allocated to Earthquake Reconstrucon and Rehabilitaon Authority (ERRA) in the PSDP 2013-14.
Budget 2013-14
Comparave Budgetary Posion 2013-2014 & 2012-2013 Receipts

2013-2014 (Rs. In Billion) 2012-2013 (Rs. In Billion)
Tax Revenue (FBR) Non Tax Revenue Gross Revenue Receipts Less: Provincial Share in Taxes Net Federal Revenue Receipts (A)
2,598.00 822.00 3,420.00 (1,502.00) 1,918.00
2,503.58 730.33 3,233.91 (1,458.92) 1,774.99
Net Capital Receipts (B) External Resources (C) Esmated Provincial Surplus (D) Bank Borrowings (E)
507.00 169.00 23.00 975.00
477.78 386.87 79.55 483.81
Total Resources (A+B+C+D+E)
3,592.00
3,203.00
2013
Budget, 2013-14
Expenditures
2013-2014 (Rs. In Billion) General Public Services Defence Aairs and Services Public Order and Safety Aairs Economic Aairs Environment Protecon Housing and Community Amenies Health Aairs and Services Recreaon, Culture and Religion Educaon Aairs and Services Social Protecon Current Expenditures Less: Foreign Loan Repayment Net Current Expenditures (A) Development Expenditure (B) Federal Government Provincial Government/ Net Lending 540.00 50.00 590.00 Other Development Expenditure (C) Total Expenditures (A+B+C) 171.00 3592.00 360.00 76.77 436.77 154.29 3,203.00 2,357.41 627.23 78.60 52.26 0.92 1.91 9.90 6.95 60.00 1.81 3,197.00 (366.00) 2,831.00 2012-2013 (Rs. In Billion) 1,876.84 545.39 70.16 53.64 0.74 1.86 7.85 6.25 47.87 1.34 2,611.94 2,611.94
Breakup of Receipts
2013
Commentary
The Finance Bill, 2013
2013
Finance Bill Highlights
Finance Bill Highlights
Income Tax Ordinance, 2001 Dividend received by companies proposed to be taxed under FTR. Prerequisites for group taxaon and group relief enhanced. Measures to expand tax base adopted. Revision of income tax return has been subject to the prior approval of Commissioner. Wealth Statement mandated for every individual return ler. Rate of minimum tax increased from 0.5% to 1 %. Minimum tax imposed on builders and developers. Advance Tax to be collected by manufacturers and commercial importers on sales to Distributors, Dealers, Wholesalers and Retailers only on businesses dealing with specied items. A new provision requiring banking companies to furnish certain informaon to the FBR introduced. The Directorate-General of Internal Audit and Directorate-General of Withholding Taxes renamed. Tax rates on incomes of salaried and business individuals, and AOPs progressively increased. The tax benet of carry forward of unadjusted minimum tax extended to Individuals and AOPs. Terminave Tax Holiday in Special Economic Zone extended to 10 years. Withholding tax on payment of provincial motor vehicle tax in case of goods transport vehicles made adjustable. Withholding tax on import of hybrid cars with engine capacity upto 1200cc exempted. Withholding tax on import of hybrid cars with engine capacity above 1200cc reduced. Rate of tax for non-banking companies reduced. Scope of withholding agents on account of withholdings on rental income enlarged. Concept of reckoning of days of default on account of delayed refunds claried. Denion of Business Connecon in respect of representave of a non-resident person broadened. Powers of Commissioner for calling for record for audit purposes claried. Tax rates on income from property progressively increased. An adjustable advance tax on hotels, clubs, marriage halls and restaurants introduced. An adjustable advance tax on renewal of license and license fee of cable operators applied. Withholding tax applied on margin nancing, trading nancing and lending. Rate of withholding tax on cash withdrawals increased. Rates of tax on motor vehicle registraon enhanced. Withholding tax on account of supply of goods for non-corporate taxpayers increased. A mechanism of collecon of advance tax by market commiees introduced. An adjustable withholding tax on foreign-produced lms, TV serials and plays introduced. Rate of collecon of advance tax on aucon sale enhanced. Collecon of advance tax by educaonal instuons to be collected along with annual fee. Rate of withholding tax on payment of prize on prize bonds increased. Exempon limit of withholding tax for investment in Naonal Saving Centers withdrawn. Exempon on dividend in specie withdrawn. Reducon in tax liability available to full me teachers and researchers withdrawn. Senior cizens tax rebate abolished. Specic exempons granted to a Hajj Group Operators. Rate of inial depreciaon allowance reduced.
Sales Tax Act, 1990 The rate of GST increased from 16% to 17%. Unregistered persons to be charged further GST @ 2% on taxable supplies. Commissioner (Appeals) empowered to grant stay of maximum 30 days on hardship basis. FBR empowered to nofy Fixed Sale Tax Schemes. Ocers of Inland Revenue authorized to access records, documents. Provisions of reccaon of errors harmonized. Mechanism of monitoring or tracking of producon, sales, stocks, etc. by electronic or other means introduced.
Federal Excise Act, 2005 Further FED at the rate of 2% on supply of excisable goods and services to be charged from unregistered persons. Record of gate inward and outward passes and transport receipt to be maintained by the registered person. Commissioner (Appeals) empowered to grant stay against tax recovery. Whistleblower reward scheme introduced. FED on aerated beverages has increased from 6% to 9%. Ad-valorem FED to be charged on motor vehicles at the rate of 10%. FED on nancial services expanded to all kind of nancial services.
Customs Act, 1969 Transshipment of Goods Declaraon included in the Denion of Goods Declaraon. Postdated cheque not acceptable for the purpose of payment of provisional assessment liability. Director of Valuaon empowered to le reference before High Court. Duty on Hybrid Electric Vehicles substanally slashed.
Income Support Levy Act, 2013 Income Support Levy has been levied on persons whose net movable wealth exceeds Rs. 1 million. Liabilies relang to moveable assets will be allowed as deducon while compung net movable wealth. The levy is chargeable at the rate of 0.5%. Default surcharge to be charged at the rate of 16% .
2013
Income Tax Ordinance, 2001
Dividend to be Taxed under FTR for Companies

Secon 8(e) (ii), 169
By virtue of proposed omission of proviso the Finance Bill, 2013 seeks to bring the dividend taxaon for corporate taxpayers at par with non-corporate taxpayers under FTR regime. Secon 5 is the charging Secon of dividend income, which states that dividend received by a person shall be taxed at the rate of 10% whether it is received from a resident company, or a non-resident company. The proposed omied proviso to sub-clause (ii) of Clause (e) of Secon 8 reads as under: Provided that the provision of this secon shall not apply to dividend received by a company The proviso stated hereinabove transpires that the tax deducted u/s 5 shall be nal tax however it shall not apply to dividend received by a company. Prior to Tax Year 2008, dividend income was treated as a separate block income. The paying company had an obligaon to deduct tax @ 10% of the gross amount, and the amount so deducted was full and nal discharge of tax liability in respect of dividend income. Presently, at-source deducon is not a full and nal discharge of liability for the companies to provide cushion to investment companies; however, the normal tax rate for that parcular source of dividend income is 10% that equalizes the tax impact in case of both regimes i.e. FTR and NTR except investment companies. Seng o of Losses Anomaly Removed Secon 56(1)
The Finance Bill, 2013 seeks to remove the anomaly that has crept in under the provisions relang to seng o of losses and claricaon has been proposed to be inserted that the losses can be set o under any head of income except income under the head salary. The current provision of law generalizes that the losses arising under any head of income can be set o in contrary to the fact that there is no concept of losses in respect of income under the head salary. Prerequisites for Group Taxaon and Group Relief Enhanced Secon 59 AA, 59B
The Finance Bill, 2013 seeks to enhance the prerequisites for availing the schemes of group taxaon and group relief and it has been sought that conglomerates shall have to meet the requirements prescribed under group designaon rules or regulaons as may be specied by the Securies and Exchange Commission of Pakistan. Scope of Denion of Company Broadened Secon 80
The Finance Bill, 2013 seeks to expand the inclusive denion of Company and the following enes have been sought to be treated as company under the tax laws: A non-prot organizaon An enty or a body of persons established or constuted by or under any law for the me being in force This move aimed to encourage the documentaon through corporazaon of certain segments of non-corporate sectors. Assets Created out of Agricultural Income to be Explained in Relaon to Agriculture Income vis--vis Agriculture Income Tax
Secon 111
The Finance Bill, 2013 seeks to insert a proviso that spulates whereby a taxpayer explains the source of investment on account of agricultural income; such explanaon shall be accepted to the extent of agricultural income worked back on the basis of agricultural income tax paid under the relevant provincial law. This is a posive iniave to tax agricultural income at least under deemed provisions of law to carve out an avenue for taxing agricultural income by the Federal Government.
Rate of Minimum Tax Enhanced
Secon 113
The Finance Bill, 2013 seeks to enhance the tax rate of minimum tax on the turnover in the following manner: Current Tax Rate Minimum Tax 0.5% Proposed Tax Rate 1%
By virtue of Finance Act, 2012 the tax rate of minimum tax was reduced from 1% to 0.5%. In the wake of a recent judgment of Sindh High Court, the FBR has recently claried, that the reduced rate of 0.5 percent turnover tax under Secon 113 would only be applicable for Tax Year 2013 and not for Tax Year 2012. The frequent change in the tax rate of minimum tax is a point of grave concern for the businesses for strategizing opmal planning. Carry Forward of Excess of Minimum Tax Over Actual Tax Extended to Individuals and AOPs
Secon 113(2)
Previously, the facility of carry forward of excess of minimum tax over actual tax was available only to companies. The proposed amendment seeks to extend the tax benet to individuals and AOPs also.
Fixed Tax Schemes Withdrawn
Secon 113A, 113B
By virtue of the Finance Bill, 2013 the proposed substuon seeks to abolish the xed tax schemes tabulated hereunder: Secon 113 A Income Tax Amount of Turn over Where turnover is upto Rs.5,000,000 Rate 1% of the turnover Amount of turn over Where turnover is upto Rs.5,000,000 Where the turnover exceeds Rs. 5,000,000 but does not Exceed Rs. 10,000,000 Where the turnover exceeds Rs. 10,000,000 Sales Tax Amount of Turn over Where turnover is upto Rs.5,000,000 Nil Up to Rs. 1.25 million Nil More than Rs. 1.25 0.5% of turnover which is million and up to in excess of Rs. 1.25 million Rs. 2.50 million More Than Rs. 2.5 million Rs. 6,250 plus 0.75% of turnover which is in excess of Rs. 2.5 million Rate Nil Rs. 25000 plus 0.5% of the turnover Secon 113 B
Rs. 50,000 plus 0.75 % of the turnover
2013

Minimum Tax on Builders Secon 113A
By virtue of proposed substuon the Finance Bill, 2013 seeks to charge minimum tax at the rate of Rs. 25 per square foot as per the construcon or site plan approved by the regulatory authority. The minimum tax to be paid under this category shall be computed on the basis of total number of square feet sold or booked for sale during the year. The tax paid under such category shall be minimum tax on the income of the builder from the sale of such residenal, commercial or other building. Minimum Tax on Land Developers Secon 113B
By virtue of proposed substuon the Finance Bill, 2013 seeks to charge minimum tax at the rate of Rs. 50 per square yard as per the lay out or site plan approved by the relevant regulatory authority. The tax computed under this category shall be paid on the basis of total number of square yards sold or booked for sale during the year and the tax paid under this category shall be minimum tax on the income of the developer. Iniaves for Tax Base Expansion Holder of commercial or industrial connecon of electricity Presently, any person who is the holder of commercial or industrial connecon of electricity where the amount of annual bill exceeds Rupees one million is required to le a return of total income. The proposed amendment seeks to reduce the criteria as under: Present Amount of Annual Bill Holder of commercial/industrial connecon of electricity Members of Business and Professional Bodies Any person who is registered with the following bodies/associaons shall be required to le a return of total income: Chamber of commerce and industry Trade or business associaon or any market commiee Professional body including Pakistan Engineering Council Pakistan Medical and Dental Council Pakistan Bar Council or Provincial Bar Council Instute of Chartered Accountants of Pakistan Instute of Cost and Management Accountants of Pakistan. Exceeding Rs. 1,000,000 Proposed Amount of Annual Bill Exceeding Rs. 500,000 Secon 114(1)(b)(viii),(ix)
In recent years there has been growing interest in abandoning the system of taxing income altogether and replacing it with a system that taxes consumpon in the form of withholdings. To a larger extent it has opened new horizons for the FBR and substanal amounts are being collected in this way. By now the tax policy is mainly emphasizing on the withholding way of tax collecon and it is a major shi from the voluntary payment of taxes on incomes that is assumed an uphill task for our tax machinery. This shrunken tax base necessitates higher rates, therefore, the main concern of the day is higher tax rates; presently tax rates are more than twice as high as could be that results into increasingly extra tax burdens of evaders on the exisng taxpayers. An ideal tax system is one that taxes a wide base at lower rates. Thus the only soluon that we nd in order to reduce the tax rates lies in the broadening of tax base. Anomaly in Basic Exempon Threshold Removed Secon 114(1A)
The Finance Bill, 2013 seeks to remove the anomaly in basic exempon threshold provided for business income by enhancing the basic threshold for ling of tax return to Rs. 400,000. Commissioners Approval Mandated for Revision of Tax Return Secon 114 (4) (6)
The Finance Bill, 2013 proposes to make it mandatory to seek approval of the Commissioner for revision of a tax return. The proposed condionality has been aligned with the Sales Tax Act wherein prior approval is required from the concerned authority for revision of sales tax return. Salaried Individuals Having Income Less Than Rs. 500,000 Required to File Return Secon 115
The proposed omission seeks that the salaried individuals having income from salary of less than Rs. 500,000 are also required to le return of total income. Wealth Statement Made Mandatory For Every Individual Return Filer Secon 116(2)
In the wake of introducon of new tax under Income Support Levy Act, 2013 the proposed amendment seeks mandatory ling of wealth statement for every individual taxpayer irrespecve of income threshold. Investment Tax on Income Abolished Secon 120A
The proposed amendment seeks to withdraw the empowerment of the FBR to introduce investment whitening schemes in due course of me in respect of undisclosed income represenng any amount or investment made in movable or immovable assets. Timeframe for Validity of Provisional Assessment Reduced Secon 122C
Presently, whereby a taxpayer les the return within the meframe of 60 days, from the date of service of provisional assessment order, such order is treated as cancelled forthwith automacally and the return led henceforth is deemed as an order for that parcular tax year. By virtue of the Finance Bill, 2013 the proposed substuon seeks to curtail the meframe for validity of provisional assessment order from 60 days to 45 days. Appointment Criteria of Appellate Judicial Member Enhanced Secon 130
The proposed inseron seeks that an ocer of Inland Revenue Service and a law graduate having at least een years of service in BS-17 and above can also be appointed as a Judicial Member of Appellate Tribunal.
10
2013

Deducon of Tax from Salary Secon 149
Under the exisng provisions of secon 149, every employer is required to deduct tax from payment of taxable salary to employees. The Finance Bill, 2013 now seeks to substute the word employer with the word person responsible for making payment of taxable salary. The Finance Bill, 2013 now seeks to withdraw adjustment of tax withheld under other secons and tax credits on charitable donaon, on investment in shares and insurance, on contribuon to an approved pension fund and on prot on debt on house nance. . Scope of Withholding Agent in respect of Payments for Goods, Services and Contracts Enlarged Secon 153(7)
By virtue of proposed inseron the Finance Bill, 2013 seeks to enhance the scope of withholding tax agent and a person registered under the Sales Tax Act, 1990 has been added in the list of withholding tax agents. Keeping in view Exchequers major focus on withholdings the role of withholding agents has connually been enhanced over the years and the proposed inseron would come in a larger way as every registered person under the Sales Tax Act irrespecve of legal status and turnover basis would be required to deduct tax at source whilst making payments against goods, services and contracts. Advance Tax on Sales to Distributors, Dealers, Wholesalers and Retailers Secon 153A, 236G, 236H
By virtue of Finance Act, 2012 a new Secon 153A was inserted whereby every manufacturer had to collect withholding tax @ 0.5% at the me of sale, of the gross sales to all distributors, dealers and wholesalers. FBR vide Circular 01, 2012 claried that this adjustable withholding tax was chargeable on the gross sales to all dealers, distributors and wholesalers irrespecve of whether they were registered or unregistered taxpayers under Income Tax or Sales Tax and also the gross sales were inclusive of Sales Tax and Federal Excise Duty and any trade discount shown on the invoices or bills. FBR issued SRO1487 (I)/2012 to suspend the applicability of Secon 153A ll June 30, 2013. Under the nocaon, in exercise of powers conferred under secon 53(2) a new clause 80 has been added to Part IV of the Second Schedule to the Income Tax Ordinance, 2001. The provisions of Secon 153A of the Income Tax Ordinance, 2001 shall not apply to any manufacturer ll June 30, 2013, the nocaon added. The Finance Bill, 2013 seeks to omit the Secon 153A altogether provide relief to traders and distributors in general. By virtue of the Finance Bill, 2013 the proposed Secon 236G and Secon 236H raonalizes advance tax on sales to distributors, dealers, wholesalers and retailers dealing in specic lines of businesses. The Finance Bill, 2013 seeks to collect advance tax by every manufacturer or commercial importer of: Electronics Sugar Cement Iron and steel products Ferlizer Motorcycles Pescides Cigarees Glass Texle Beverages Paint Foam sector 11
The above-said advance tax shall be collected from distributors, dealers, wholesalers at the rate of 0.1% of the gross amount of sales and from retailers at the rate of 0.5% of the gross amount of sales at the me of making sales to them and shall be adjustable against tax liability of these persons. Scope of Withholding Agents in respect of Rental Income Enlarged Secon 155(3)
The Finance Bill, 2013 seeks to specify the following persons as withholding agents, in addion to persons already specied in secon 155(3), for collecon of tax at the me of making payment in respect of rent. a charitable instuon, a private educaonal instuon, a bouque, a beauty parlour, a hospital, a clinic or a maternity home, individuals or associaon of persons paying gross rent of Rupees 1.5 million or above. Divulgence of Informaon regarding Filing of Withholding Tax Statements Secon 165
The Finance Bill, 2013 seeks to amend the scope of secon 165 conferring powers therein to override laws restricng for divulgence of informaon. In the wake of proposed amendments the Banking Companies shall be required to le withholding tax statements furnishing informaon required thereof despite of the fact the Banking Companies Ordinance, 1962 requires otherwise. FBR Empowered to Call for Specic Informaon from Banks Secon 165 A
The Finance Bill, 2013 seeks to insert a new secon in Income Tax Ordinance, 2001, which embark upon banking companies with certain responsibilies and the banking companies are required to provide the following informaon to the FBR: online access to its central database containing details of its account holders and all transacons made in their accounts. a list containing parculars of deposits aggregang Rupees one million or more made during the preceding calendar month. a list of payments made by any person against bills raised in respect of a credit card issued to that person aggregang to Rupees one hundred thousand or more made during the preceding calendar month. A consolidated list of loans wrien o exceeding Rupees one million or more made during the preceding calendar month. A copy of each Currency Transacons Report and Suspicious Transacons Report generated and submied by it to the Finance Monitoring Unit under the An-Money Laundering Act, 2010. Banking Companies are also required to nominate a senior ocer at head oce to coordinate with the FBR. Banking Companies and their ocers shall not be liable to any civil, criminal or disciplinary proceedings against them for furnishing informaon required under this Ordinance. All informaon received under this secon shall be kept condenal and shall be used only for tax purposes. Timelines regarding Claim of Compensaon on Delayed Refund Claried Secon 171
The Finance Bill, 2013 seeks to explain the reckoning of days of default on account of delayed refunds for compensaon claim with eect from the date of order of refund by the Commissioner rather than from the date the deemed assessment is treated as made by the Commissioner as envisaged under the provisions of Secon 120. Denion of Business Connecon Broadened Secon 172
By virtue of Finance Bill, 2013 the proposed inseron seeks to broaden the denion of business connecon in relaon to a non-resident person vis--vis a representave and the inclusive denion of business connecon includes transfer of an asset or business in Pakistan by a non-resident. Commissioner Empowered to Call for Informaon and Record for Audit Purposes Independently Secon 177
The Finance Bill, 2013 seeks to insert an explanaon wherein the Commissioner is empowered to select a person for audit irrespecve of the fact that the Board is also empowered to do so under secon 214C.
12
2013

Permission to Use CNIC in place of NTN Allowed Secon 181
Secon 181 requires a person to apply to Commissioner for registraon as a taxpayer. The Commissioner on receiving an applicaon shall register the person and issue Naonal Tax Number. The Finance Bill, 2013 seeks to add a proviso whereby an individual would be allowed to use his CNIC in place of his Naonal Tax Number for taxpayer registraon purposes. Displaying of Naonal Tax Number Secon 181C
The Finance Bill, 2013 seeks to bind a person, deriving income taxable under the Income Tax Ordinance, 2001, to display his NTN conspicuously at every place of his business. Oences and Penales Raonalized Secon 182
The Finance Bill, 2013 seeks to make certain changes in the exisng oences and penales chargeable to a taxable person and also seeks to introduce certain new penales as under: Sr. No. Oences Penales Secon of the Ordinance to which the oence has reference Synopsis of Change Proposed by the Finance Bill, 2013
Change Proposed by the Finance Bill, 2013 Where any person fails to furnish a return of income as required under secon 114 within the due date Such person shall pay a penalty equal to 0.1% of the tax payable in respect of that tax year for each day of default subject to a maximum penalty of 50% of the tax payable provided that if the penalty worked out as aforesaid is less than Rs. 20,000 or no tax is payable for that tax year such person shall pay a penalty of Rs. 20,000 114 and 118 Reference to secon 115, wealth statement, wealth statement reconciliaon, secon 120, secon 121, secon 122, secon 122C and secon 165 is abolished. Penales of oences pertaining to requirements of secon 115 and 165 taken to serial numbers 1A and 1AA. Minimum penalty is raised from Rs. 5,000 to Rs. 20,000. Maximum penalty is raised from 25% of the tax payable to 50% of the tax payable. For those persons having no tax payable in the year but violang this secon, a penalty of Rs. 20,000 is introduced. New serial number introduced by the Finance Bill, 2013
1A.
Where any person fails to furnish a statement as required under secon 115, 165 or 165A within the due date Where any person fails to furnish wealth statement or wealth reconciliaon statement
Such person shall pay a penalty of Rs. 2,500 for each day of default subject to a minimum penalty of Rs. 50,000
115, 165 and 165A
1AA.
Such person shall pay a penalty of Rs. 100 for each day of default
114, 115 and 116 New serial number introduced by the Finance Bill, 2013
13
Sr. No.
Oences
Penales
Secon of the Ordinance to which the oence has reference 177
Synopsis of Change Proposed by the Finance Bill, 2013
Where a taxpayer who, without any reasonable cause, in non- compliance with the provisions of secon 177 fails to produce the record or documents on receipt of rst noce Fails to produce the record or documents on receipt of second noce Fails to produce the record or documents on receipt of third noce Any person who fails to furnish the informaon required or to comply with any other term of the noce served under secon 176
Such person shall pay a penalty of Rs. 25,000
The Finance Bill, 2013 does not seek to make any amendment in the exisng regulaons; it only seeks to enhance the penales as under: For rst failure from Rs. 5,000 to Rs. 25,000 For second failure from Rs. 10,000 to Rs. 50,000 For third failure from Rs. 50,000 to Rs. 100,000
Such person shall pay a penalty of Rs. 25,000 for the rst default and Rs. 50,000 for each subsequent default
176
The Finance Bill, 2013 does not seek to make any amendment in the exisng regulaons; it only seeks to enhance the penales as under: For rst default the penalty is enhanced from Rs. 5,000 to Rs. 25,000 For second default the penalty is enhanced from Rs. 10,000 to Rs. 50,000 New serial number introduced by the Finance Bill, 2013
16
Any person who fails to display NTN cercate at the place of business as required under this Ordinance or the rules made thereunder
181C
14
2013

Hierarchical Arrangement for Delegaon of Powers Secon 210
The Finance Bill, 2013 seeks to clarify the term ocer to whom the Commissioner can delegate authority. It seeks to specify Addional Commissioner, Deputy Commissioner and Assistant Commissioner as authories to whom the Commissioner would be allowed to delegate his powers. Audit Selecon Criteria to be Kept Condenal Secon 214C
The Finance Bill, 2013 seeks to enhance the powers of the FBR regarding the cases selected for tax audits. It proposes the FBR to keep the parameters of selecng cases for tax audit secret. It proposes to empower the Commissioner under secon 177 by making his powers independent of the powers of the FBR and by enabling him to call records or documents or books of accounts of a taxpayer for audit without any restricon. Whistleblower Rewards Introduced Secon 227A
The Finance Bill, 2013 seeks to introduce a new secon whereby informers and ocers and ocials of the Inland Revenue providing credible informaon regarding the cases involving concealment or evasion of income tax and other taxes shall be sanconed cash rewards. It seeks to sancon this reward only aer the realizaon of taxes involved in these cases, wholly or partly. The Finance Bill, 2013 proposes to prescribe the procedure of reward sancon through nocaon in the ocial Gazee. Nomenclature of Directorates Changed Chapter XI Part II & Part III
The Finance Bill, 2013 seeks to rename the Directorate-General of Internal Audit and Directorate-General of Withholding Taxes as Directorates-General. Inducon of New Directorates Secon 230B & Secon 230C
The Finance Bill, 2013 seeks to introduce two new directorates i.e. Directorate-General of Law and Directorate-General of Research and Development. It also proposes that these directorates shall consist of their respecve director generals and may have as many addional directors, deputy directors, assistant directors and other ocers as the Board may appoint by nocaon in the ocial Gazee. Margin Financiers, Trading Financiers and Lenders Included in the Tax Net Secon 233AA
The Finance Bill, 2013 seeks to include margin nanciers, trading nanciers and lenders in the tax net by proposing NCCPL to collect advance tax from such persons on providing margin nancing, margin trading or securies lending under Securies (Leveraged Markets and Pledging) Rules, 2011 in share business. The Finance Bill, 2013 also proposes that such tax shall be deducted at the rate of 10% of prot, mark-up or interest earned by the member, margin nancier or securies lender. Tax on Motor Vehicles Secon 234
The Finance Bill, 2013 proposes to collect the motor vehicle tax in lump sum as well; previously this is being charged on annual basis. In concurrence with this proposal, the rates of collecon of motor vehicle tax in lump sum have been proposed to be as under:
15
Cylindrical capacity Upto 1,000cc 1,001cc to 1,199cc 1,200cc to 1,299cc 1,300cc to 1,599cc 1,600cc to 1,999cc 2,000cc and above It also proposes that advance tax collected under this secon to be adjustable Advance Tax on Funcons and Gatherings
Amount of Tax (in Rupees) 7,500 12,500 17,500 30,000 40,000 80,000
Secon 236D, First Schedule Part IV Division XII
The Finance Bill, 2013 proposes to collect advance tax from a person arranging or holding a funcon in a marriage hall, marquee, hotel, restaurant, commercial lawn, club, a community place or any other place used for such purpose. It is also proposed that if food, service or any other facility is provided by any other person, advance tax shall also be collected on payment against such food, service or facility. This secon proposes to collect advance tax at the rate of 10% of the total amount of the bill from the person arranging this funcon. The Finance Bill, 2013 seeks to clarify that owner, lease-holder, operator or manager of such marriage hall, marquee, hotel, restaurant, commercial lawn, club, the community place or any place used for such purpose shall be the withholding agent. It also explains that funcons on which this advance tax shall be levied include wedding-related events, seminars, workshops, sessions, exhibions, concerts, shows, pares or any gatherings held for such purpose. Advance Tax on Foreign-Produced Films TV Plays and Serials Secon 236E First Schedule Part IV Division XII
The Finance Bill, 2013 seeks to levy advance tax, adjustable in nature, on foreign-produced lms, TV plays and serials to be collected by a person responsible for censoring or cerfying these foreign contents at the me of censoring or cerfying. The Finance Bill, 2013 seeks to introduce advance tax on foreign-produced lms and TV plays, at the following rates: Parculars Foreign-produced lm Foreign-produced TV drama serial Foreign-produced TV play Amount of Tax (in Rupees) 1,000,000 100,000 per episode 100,000 per episode
Advance Tax on Cable Operators and Other Electronic Media Secon 236F, First Schedule Part IV Division XIII Para (1) The Finance Bill, 2013 purposes to collect advance tax, adjustable in nature, by Pakistan Electronic Media Regulatory Authority (PEMRA) at the me of issuance of license for distribuon services or renewal of license to a licensee.
16
2013

The Finance Bill, 2013 seeks to introduce withholding tax to be collected from Cable Television Operators, at the following rates: License Category as provided in PEMRA Rules 2009 H H-1 H-2 R B B-1 B-2 B-3 B-4 B-5 B-6 B-7 B-8 B-9 B-10 Collecon of Advance Tax by Educaonal Instuons Tax on License Fee (Rupees) Tax on Renewal (Rupees)
7,500 10,000 25,000 5,000 5,000 30,000 40,000 50,000 75,000 87,500 175,000 262,500 437,500 700,000 875,500
10,000 15,000 30,000 30,000 40,000 50,000 60,000 75,000 100,000 150,000 200,000 300,000 500,000 800,000 900,000 Secon 236I
The Finance Bill, 2013 purposes to collect advance tax at the rate of 5% of the amount of fee paid to an educaonal instuon, to be collected by the person preparing fee voucher or challan. The above tax shall be collected only where annual fee exceeds two hundred thousand rupees (Rs. 200,000) and shall be adjustable against the tax liability of parents or guardians. Advance Tax on Dealers, Commission Agents and Arhas Secon 236J, First Schedule Part IV Division XVII
The Finance Bill, 2013 seeks to collect advance tax from dealers, commission agents or arhas, by every market commiee, which will be treated as adjustable tax. The Finance Bill, 2013 also introduces an inclusive denion of market commiee which states market commiee includes any commiee or body formed under any provision or local law made for the purposes of establishing, regulang or organizing agricultural, livestock and other commodity markets. The Finance Bill, 2013 seeks to introduce advance tax on dealers, commission agents and arhas at the following rate: Group Group or Class A Group or Class B Group or Class C Any other category Amount of Tax (Rupees) 10,000 7,500 5,000 5,000
17
First Schedule
Rates of Tax for Individuals, Other than the Salaried Class, and Associaon of Persons Part I Division I Clause 1
The Finance Bill, 2013 seeks to increase slabs applicable on Individuals and AOPs other than salaried individuals. Exisng 5 slabs are proposed to be enhanced to 7 as under: Current Rates of Tax for Individuals and AOPs Applicable on Taxable income Taxable income not exceeding Rs. 400,000 0% Proposed Rates of Tax for Individuals and AOPs Applicable on Taxable income Taxable income not exceeding Rs. 400,000 0%
Taxable income exceeding Rs. 10% of the amount Rs. 400,000 but not exceeding Rs. exceeding 400,000 750,000 Taxable income exceeding Rs. Rs. 35,000 + 15% 750,000 but not exceeding Rs. of the amount exceeding Rs. 1,500,000 750,000 Taxable income exceeding Rs. Rs. 147,500 + 20% 1,500,000 but not exceeding Rs. of the amount exceeding Rs. 2,500,000 1,500,000 Taxable income exceeding Rs. Rs. 347,500 + 25% of the amount 2,500,000 exceeding Rs. 2,500,000
Taxable income exceeding Rs. 10% of the amount Rs. 400,000 but not exceeding Rs. exceeding 400,000 750,000 Taxable income exceeding Rs. Rs. 35,000 + 15% 750,000 but not exceeding Rs. of the amount exceeding Rs. 1,500,000 750,000 Taxable income exceeding Rs. Rs. 147,500 + 20% 1,500,000 but not exceeding Rs. of the amount exceeding Rs. 2,500,000 1,500,000 Taxable income exceeding Rs. Rs. 347,500 + 25% 2,500,000 but not exceeding Rs. of the amount exceeding Rs. 4,000,000 2,500,000 Taxable income exceeding Rs. Rs. 722,500 + 30% 4,000,000 but not exceeding Rs. of the amount exceeding Rs. 6,000,000 4,000,000 Taxable income exceeding Rs. Rs. 1,322,500 + 35% of the amount 6,000,000 exceeding Rs. 6,000,000
18
2013

Rates of Tax for Salaried Taxpayers Part I Division I Clause 1A
The Finance Bill, 2013 seeks to increase the slab rates applicable on salaried individuals. Exisng 5 slabs are proposed to be enhanced to 12 as under: Current Rates of Tax for Salaried Taxpayers Applicable on Taxable income Taxable income not exceeding Rs. 400,000 0% Proposed Rates of Tax for Salaried Taxpayers Applicable on Taxable income Taxable income not exceeding Rs. 400,000 0%
Taxable income exceeding Rs. 5% of the amount 400,000 but not exceeding Rs. exceeding Rs. 750,000 400,000 Taxable income exceeding Rs. Rs. 17,500 + 10% 750,000 but not exceeding Rs. of the amount 1,500,000 exceeding Rs. 750,000 Taxable income exceeding Rs. Rs. 95,000 + 15% 1,500,000 but not exceeding Rs. of the amount 2,000,000 exceeding Rs. 1,500,000 Taxable income exceeding Rs. Rs. 175,000 + 17.5% 2,000,000 but not exceeding Rs. of the amount 2,500,000 exceeding Rs. 2,000,000 Taxable income exceeding Rs. Rs. 420,000 + 20% 2,500,000. of the amount exceeding Rs. 2,500,000
Taxable income exceeding Rs. 5% of the amount 400,000 but not exceeding Rs. exceeding Rs. 500,000 400,000 Taxable income exceeding Rs. Rs. 5,000 + 7.5% 500,000 but not exceeding Rs. of the amount 800,000 exceeding Rs. 500,000 Taxable income exceeding Rs. Rs. 27,500 + 10% 800,000 but not exceeding Rs. of the amount 1,300,000 exceeding Rs. 800,000 Taxable income exceeding Rs. Rs. 77,500 + 12.5% 1,300,000 but not exceeding Rs. of the amount 1,800,000 exceeding Rs. 1,300,000 Taxable income exceeding Rs. Rs. 140,000 + 15% 1,800,000 but not exceeding Rs. of the amount 2,200,000 exceeding Rs. 1,800,000 Taxable income exceeding Rs. Rs. 200,000 + 17.5% 2,200,000 but not exceeding Rs. of the amount 2,600,000 exceeding Rs. 2,200,000 Taxable income exceeding Rs. Rs. 270,000 + 20% 2,600,000 but not exceeding Rs. of the amount 3,000,000 exceeding Rs. 2,600,000 Taxable income exceeding Rs. Rs. 350,000 + 22.5% 3,000,000 but not exceeding Rs. of the amount 3,500,000 exceeding Rs. 3,000,000
19
Current Rates of Tax for Salaried Taxpayers Applicable on Taxable income -
Proposed Rates of Tax for Salaried Taxpayers Applicable on Taxable income Taxable income exceeding Rs. Rs. 462,500 + 25% of 3,500,000 but not exceeding Rs. the amount exceeding 4,000,000 Rs. 3,500,000 Taxable income exceeding Rs. Rs. 587,500 + 27.5% of 4,000,000 but not exceeding Rs. the amount exceeding 7,000,000 Rs. 4,000,000 Taxable income exceeding Rs. Rs. 1,412,500 + 30% of 7,000,000 the amount exceeding Rs. 7,000,000
Taxability of Salary Income Tax liability Sr. No. Taxable Salary Rs. 400,000 500,000 800,000 1,300,000 1,800,000 2,200,000 2,600,000 3,000,000 3,500,000 4,000,000 7,000,000 7,000,000 Pre-Budget Rs. 0 5,000 22,500 72,500 140,000 210,000 440,000 520,000 620,000 720,000 1,320,000 1,360,000 Post Budget Rs. 0 5,000 27,500 77,500 140,000 200,000 270,000 350,000 462,500 587,500 1,412,500 1,472,500 Increase /(Decrease) Rs. 0 0 5,000 5,000 0 (10,000) (170,000) (170,000) (157,500) (132,500) 92,500 112,500 Average Tax Rate Pre-Budget % 0% 1.00% 2.81% 5.58% 7.78% 9.55% 16.92% 17.33% 17.71% 18.00% 18.86% 19.43% Post Budget % 0% 1.00% 3.44% 5.96% 7.78% 9.09% 10.38% 11.67% 13.21% 14.69% 20.18% 21.04%
1 2 3 4 5 5 7 8 9 10 11 12
Tax liability has been worked out without taking into account marginal relief.
Graphical Representaon
20
2013

Rate of Tax for Companies Part I Division II Clause (i)
The Finance Bill, 2013 seeks to reduce tax on the taxable income of companies, other than banking companies, to 34% for the tax year 2014. Rate of Tax on Income from Property Part I Division VI Paragraph (a)
The Finance Bill, 2013 seeks to increase the tax rate slabs applicable on individuals and AOPs. Exisng 4 slabs are proposed to be enhanced to 7 as under: Current Rates of Tax for Individuals and AOP Applicable on Gross Amount of Rent Gross amount of rent not exceeding Rs. 150,000 Nil Proposed Rates of Tax for Individuals and AOP Applicable on Gross Amount of Rent Gross amount of rent exceeding Rs. 150,000 not Nil
Gross amount of rent exceeding 5% of the gross Rs. 150,000 but not exceeding Rs. amount exceeding 150,000 400,000 Gross amount of rent exceeding Rs. 12,500 plus 7.5% Rs. 400,000 but not exceeding Rs. of the gross amount exceeding 400,000 1,000,000 Gross amount of rent exceeding Rs. 57,500 plus 10% of the gross amount Rs. 1,000,000 exceeding 1,000,000
Gross amount of rent exceeding 5% of the gross Rs. 150,000 but not exceeding Rs. amount exceeding 150,000 400,000 Gross amount of rent exceeding Rs. 12,500 plus 7.5% Rs. 400,000 but not exceeding Rs. of the gross amount exceeding 400,000 1,000,000 Gross amount of rent exceeding Rs. 57,500 plus 10% Rs. 1,000,000 but not exceeding of the gross amount exceeding 1,000,000 Rs. 2,000,000 Gross amount of rent exceeding Rs. 157,500 plus Rs. 2,000,000 but not exceeding 12.5% of the gross amount exceeding Rs. 3,000,000 2,000,000 Gross amount of rent exceeding Rs. 282,500 plus 15% Rs. 3,000,000 but not exceeding of the gross amount exceeding 3,000,000 Rs. 4,000,000 Gross amount of rent exceeding Rs. 432,500 plus 17.5% of the gross Rs. 4,000,000 amount exceeding 4,000,000
21
Rate of Tax on Income from Property
Part I Division VI Paragraph (b)
The Finance Bill, 2013 seeks to increase the tax rate slabs applicable on companies. Exisng 3 slabs are proposed to be enhanced to 6 as under: Current Rates of Tax for Companies Applicable on Gross Amount of Rent Gross amount of rent exceeding Rs. 400,000 not 5% of the gross amount of rent Proposed Rates of Tax for Companies Applicable on Gross Amount of Rent Gross amount of rent exceeding Rs. 400,000 not 5% of the gross amount of rent
Gross amount of rent exceeding Rs. 20,000 plus 7.5% Rs. 400,000 but not exceeding Rs. of the gross amount exceeding 400,000 1,000,000 Gross amount of rent exceeding Rs. 65,000 plus 10% of the gross amount Rs. 1,000,000 exceeding 1,000,000
Gross amount of rent exceeding Rs. 20,000 plus 7.5% Rs. 400,000 but not exceeding Rs. of the gross amount exceeding 400,000 1,000,000 Gross amount of rent exceeding Rs. 65,000 plus 10% Rs. 1,000,000 but not exceeding of the gross amount exceeding 1,000,000 Rs. 2,000,000 Gross amount of rent exceeding Rs. 165,000 plus Rs. 2,000,000 but not exceeding 12.5% of the gross amount exceeding Rs. 3,000,000 2,000,000 Gross amount of rent exceeding Rs. 290,000 plus 15% Rs. 3,000,000 but not exceeding of the gross amount exceeding 3,000,000 Rs. 4,000,000 Gross amount of rent exceeding Rs. 440,000 plus 17.5% of the gross Rs. 4,000,000 amount exceeding 4,000,000 Part II
Rates of Advance Tax on Import of Goods
The Finance Bill, 2013 seeks to dierenate advance tax, to be collected from importer of goods, other than industrial undertakings and companies, as under: (a) (b) 5% of the value of goods in case of industrial undertakings and companies, 5.5% of the value of goods in case of all taxpayers other than those covered in (a) above. Part III Division III Para 1 Subpara (b)
Rates of Tax on Payments for Goods
The Finance Bill, 2013 seeks to dierenate advance tax on payment for sale of goods in the following manner: (a) (b) 3.5% of the gross amount payable in the case of companies 4% of the gross amount payable in the case of other taxpayers
22
2013

Rates of Tax on Payments for Rendering of Services Part III Division III Para 2 Subpara (ii)
The Finance Bill, 2013 seeks to dierenate advance tax on payment for rendering of services, other than transportaon, in the following case: (a) (b) 6% of the gross amount payable in the case of companies 7% of the gross amount payable in the case of other taxpayers Part III Division III Para 3
Rates of Tax on Payments for Execuon of Contracts
The Finance Bill, 2013 seeks to deduct tax at source deducted tax at source on payment for execuon of contracts, other than contracts for sale of goods or rendering of services at the rate of 6% and the rate of 6.5% for other taxpayers. Rate of Tax on Prizes and Winnings Part III Division VI Paragraph (1)
The Finance Bill, 2013 seeks to increase the rate of tax to be deducted on prize on a prize bond or cross word puzzle from 10% to 15% of the gross amount paid. Collecon of Tax by a Stock Exchange registered in Pakistan Part IV Division IIA
The Finance Bill, 2013 seeks to omit tax on nancing of carry over trades (Badla) @ 10% of the carry over charge tax. Collecon of Tax by NCCPL Part IV Division IIB
The Finance Bill, 2013 seeks to introduce advance tax to be collected from the members of stock exchange by Naonal Clearing Company of Pakistan Limited at the rate of 10% of prot, markup or interest earned by the member, margin nancier or securies lender. Rates of Collecon of Tax on Motor Vehicles in Lump sum Part IV Division III Para (4)
The Finance Bill, 2013 seeks to collect tax on private motor vehicles in lump sum at the following rates: Engine Capacity Upto 1,000 cc 1001 cc to 1199 cc 1200 cc to 1299 cc 1300 cc to 1599 cc 1600 cc to 1999 cc 2,000 cc and above Amount of Tax in Rupees 7,500 12,500 17,500 30,000 40,000 80,000
23
Rate of Collecon of Tax on Cash Withdrawal from a Bank
Part IV Division VI
The Finance Bill, 2013 seeks to increase tax on cash withdrawal from a bank from 0.2% to 0.3% of the amount withdrawn. Rate of Payment of Tax on Purchase of Motor Vehicles Part IV Division VII
The Finance Bill, 2013 seeks to increase rate of advance tax on purchase of private motor cars and jeeps. Proposed rates are as follows: Engine Capacity Upto 850cc 851cc to 1000cc 1001cc to 1300cc 1301cc to 1600cc 1601cc to 1800cc 1801cc to 2000cc Above 2000cc Rate of Advance Tax at the Time of Sale by Aucon Amount of tax Rs. 10,000 Rs. 20,000 Rs. 30,000 Rs. 50,000 Rs. 75,000 Rs. 100,000 Rs. 150,000 Part IV Division VIII
The Finance Bill, 2013 seeks to increase the rate of collecon of tax, at the me of sale by aucon, from 5% to 10% of the gross sale price of any property or goods sold by aucon.
24
2013

Tax to be collected from Cable Television Operator Part IV Division XIII Para (2)
The Finance Bill, 2013 seeks to introduce withholding tax on provision of other distribuon services, at the following rates: Type of Channel as Provided in PEMRA Rules 2009 IPTV FM Radio MMDS Mobile TV Satellite TV Staon News/Current Aairs Sports Regional Language Health or Agro Educaon Entertainment Specialized Subject Staon Landing Rights per Channel News/Current Aairs Sports Educaonal Entertainment Children 1,000,000 500,000 200,000 200,000 350,000 5,000,000 2,500,000 1,000,000 2,000,000 1,500,000 1,000,000 1,000,000 700,000 300,000 300,000 1,000,000 500,000 2,000,000 1,000,000 700,000 300,000 300,000 1,000,000 200,000 Tax on Issuance of License (Rupees) 100,000 100,000 200,000 100,000 Tax on Renewal (Rupees) 1,000,000 100,000 100,000 50,000
Advance Tax on Sale to Distributors, Dealers or Wholesalers
Part IV Division XIV
The Finance Bill, 2013 seeks to introduce advance tax on sale to distributors, dealers or wholesalers at the rate of 0.1% of the gross amount of sales. Advance Tax on Sale to Retailers Part IV Division XV
The Finance Bill, 2013 seeks to introduce advance tax on sale to retailers at the rate of 0.5% of the gross amount of sales. Collecon of Advance Tax by Educaonal Instuons Part IV Division XVI
The Finance Bill, 2013 seeks to introduce collecon of advance tax by educaonal instutes at the rate of 5% of the amount of fee whereby annual fee exceeds Rs. 200,000.
25
Second Schedule
Exempons & Tax Concessions The Second Schedule relates to specic exempons granted in respect of total income; reducon in tax rates; reducon in tax liability and exempon from specic provisions. The Finance Bill, 2013 proposes to withdraw, exempt or extend the scope of exempon in respect of following sources of income:
Part I
Exempons from Total Income Exempon on Free and Concessional Passage Withdrawn Clause (53A (i))
The Finance Bill, 2013 seeks to withdraw exempon on free or concessional passage provided by transporters including airlines to its employees (including members of their household and dependents) Exempon on Income of any University or Other Educaonal Instuon Withdrawn Clause (92)
The Finance Bill, 2013 seeks to withdraw exempon on any income of any university or other educaonal instuon established solely for educaonal purposes and not for purpose of prot. Exempon on Dividend in Specie Withdrawn Clause (103B)
The Finance Bill, 2013 seeks to withdraw exempon on income from dividend in specie derived in the form of shares in a company. Grant of Tax Holiday to a Zone Enterprise and a Developer Clause (126E)
The Finance Bill, 2013 seeks to extend exempon of tax on income derived by a zone enterprise from ve years to ten year starng from the date the developer ceres that the zone enterprise has commenced commercial operaon and to a developer for a period of ten year from the date of signing of the development agreement in the special economic zone as announced by the Federal Government.
Part II
Reducon in Tax Rates Reduced Rate of Tax on Imports The Finance Bill, 2013 seeks to reduce the rate of tax under secon 148 on import of hybrid cars as follows: Engine Capacity Up to 1200 cc 1201 to 1800 cc 1801 to 2500 cc Rate of Reducon 100% 50% 25% Clause (28)
26
2013
Income Tax Ordinance, 2001 Part III

Reducon in Tax Liability Withdrawal of Reducon in Tax Liability on Certain Allowances The Finance Bill, 2013 seeks to withdraw reducon in tax liability on following allowances and incomes: Flying allowance by pilots, ight engineers, navigators of Pakistan Armed Forces, Pakistani Airline or Civil Aviaon Authority, Junior Commissioned Ocers or other ranks of Pakistan Armed Forces, Submarine allowance received by the ocers of the Pakistan Navy which were previously taxed at the rate of 2.5% as a separate block of income. Reducon of 50% of the tax liability of a senior cizen (Senior Cizen Allowance). The reducon of 75% of tax liability of a full me teacher or a researcher, employed in a non-prot educaon or research instuon duly recognized by Higher Educaon Commission (HEC), a Board of Educaon or a University recognized by the Higher Educaon Commission (HEC). The reducon in tax liability allowed, in a year in which the rupee is revalued or devalued, to a taxpayer whose prots or gains are computed in accordance with the rules contained in the Fih Schedule to the Ordinance. Exempon Extended to all Taxpayers Clause (7) Clause (1), (2)
The Finance Bill, 2013 purposes to extend Eighty percent (80%) reducon in minimum tax liability to any taxpayer engaged in the business of distribuon of cigarees manufactured in Pakistan. Previously this reducon was available only to companies.
Part IV
Exempons from Specic provisions Tax Deducted at Import Stage to be treated as Adjustable Tax Clause (56A)
The Finance Bill, 2013 purposes that advance tax deducted at import stage on foreign-produced lms, TV plays and serials, under secon 148, shall be treated as adjustable tax and not as nal tax. Exempon of Tax on Prot on Debt Withdrawn Clause (59)
The Finance Bill, 2013 seeks to withdraw exempon of tax on prot on debt on Defence Savings Cercates, Special Savings Cercates, Savings Accounts or Post Oce Savings Accounts, or Term Finance Cercate (TFCs). Previously such prot was exempt from tax up to the limit of one hundred and y thousand rupees. Certain Exempons Granted to Hajj Group Operators The Finance Bill, 2013 seeks to exclude a Hajj Group Operator from the purview of: Clause (l) of Secon 21 in respect of any expenditure for a transacon under a single account head exceeding Rupees y thousand in aggregate Secon 113 (minimum tax) Secon 152 (withholding tax on certain payments to non-residents) Clause (72A)
27
The above-cited exempon shall be available if the tax has been paid in respect of income from Hajj operaons: @ Rs. 3,500 per Hajji for the Tax Year 2013 @ Rs. 5,000 per Hajji for the Tax Year 2014 Exempon of Withholding Tax at Import Stage to Industrial Undertakings Clause (72B)
The Finance Bill, 2013 seeks to provide exempon from tax on import of raw material by industrial undertakings consequent upon the payment of tax liability for the current tax year on the basis of tax liability for any of the preceding two tax years, whichever is higher, and approval of the Commissioner by way of a cercate.
Third Schedule
Depreciaon
Part II
Reducon in Inial Depreciaon Allowance The Finance Bill, 2013 seeks to reduce rate of inial depreciaon from 50% to 25%. Clause (1)
Seventh Schedule
Reducon in Rate of Tax on Dividend from Certain Funds Rule 6
The Finance Bill, 2013 seeks to freeze the rate of tax on dividend received by a banking company from Money Market Funds and Income Funds @ 25% for the Tax Year 2013 onwards.
28
2013
Sales Tax Act, 1990
Sales Tax Act, 1990
CREST-Computerized Risk-Based Evaluaon Program Dened Secon 2(5AC), 8
CREST is an acronym of Computerized Risk-based Evaluaon of Sales Tax and this soware has recently been launched by the FBR for analyzing and cross-matching of sales tax returns. CREST soware checks informaon in monthly returns, import and export data and cross matches for every registered person. The CREST system has an in-built capacity to verify the veracity of reply received from the registered person. CREST system is designed for Sales Tax and is based on declaraons and covers areas as purchases including Input tax adjustment of buyers and suppliers; Zero Rated Sales to registered person with non-acve ATL or blacklisted or suspended Sales Tax Registraon Numbers. The proposed inseron seeks to include the denion of CREST to align implementaon of the program under the provisions of tax laws. The Finance Bill, 2013, proposes to introduce new clauses in order to disallow adjustment on the basis of discrepancies indicated by CREST or where input tax is not veriable in the supply chain. Provincial Sales Tax for Input Tax Adjustment Redened Secon 2(22A)
Provincial sales tax redened as tax levied under provincial laws or laws relang to Islamabad Capital Territory, which are declared by the Federal Government through nocaon in the ocial Gazee, to be provincial sales tax for the purpose of input tax. Supply Chain Concept Reinforced Secon 2(33A)
By virtue of the proposed amendment the Finance Bill, 2013 seeks to insert the denion of supply chain as the series of transacon between buyers and sellers from the stage of rst purchase or import to the stage of nal supply. The VAT mode taxaon is applied under thorough supply chain. VAT taxes all sales, whether wholesale or retail, but allows registered traders to deduct the tax charged on their inputs. It is therefore a tax on the value added at each stage of the producon process. The value of the nal product is the total of the value added at each stage of producon. Consequently, the tax is in eect imposed on the value of the nal product but is collected in small chunks from each link in the supply chain. Concept of Time of Supply Claried Secon 2(44)
The denion of me of supply is proposed to be amended and the Finance Bill, 2013seeks that me of supply shall be considered the me of delivery of goods or me when any payment is received by the supplier in respect of that supply, whichever is earlier. The Bill proposes to insert a proviso that where any part payments is received: for the supply in a tax period, it shall be accounted for in the return for that tax period; and in respect of exempt supply, it shall be accounted for in the return for the tax period during which the exempon is withdrawn from such supply.
29
Rate of GST Enhanced The Finance Bill, 2013 proposes to increase the rate of sales tax in the following manner: Present Rate of GST For Registered Persons For unregistered Persons 16% 16% Proposed Rate of GST 17% 19%
Secon 3(1)
The Finance Bill, 2013 seeks to insert a new provision by which un-registered person would be charged 2% addional sales tax. The Bill proposes that the FBR may levy and collect tax on xed basis or on the producon capacity of plants, machinery, undertaking, establishments or installaons producing or manufacturing such goods instead of levying tax at the general rate of tax. Comissioner Empowered to Block Refunds or Input Tax Adjustment
Secon 21
The Finance Bill, 2013 proposes to block sales tax refund or Input Tax credit of a registered person who is engaged in the any of the following pracces: Issuing fake or ying invoices Claiming fraudulent input tax or refunds Does not physically exist Not conducng actual business Comming any other fraudulent acvity It further proposes to invesgate the aairs of such person through the concerned Commissioner having jurisdicon for further invesgaon and iniate appropriate legal acon. Scope of Maintaining of Record Enlarged The Finance Bill, 2013 proposes to make it mandatory to maintain the following further record: Inward and outward gate passes Transport receipts as legal document Delegaon of Powers of Authories to Access to Premises and Record Extended Secon 25 Secon 22(1)(ea)
The Finance Bill, 2013 seeks to insert explanaon for removal of doubt regarding powers of Board, Commissioner and ocer of Inland Revenue. Through the introducon of this explanaon, the powers of the Commissioner and ocer of the Inland Revenue shall be independent of the powers of the Board and that the Board, Commissioner or the ocer of the Inland Revenue shall be authorized to have access to premises, stocks, accounts and records etc. Posng of Inland Revenue Ocer Delegated to Chief Commissioner Secon 40B
The Finance Bill, 2013 seeks to amend this secon to equate powers of the Board and Chief Commissioner regarding posng of Ocers or ocials of Inland Revenue to business premises for monitoring.
30
2013
Sales Tax Act, 1990

Monitoring or Tracking by Electronic or Other Means Secon 40C
The Finance Bill, 2013 proposes to empower the Board for monitoring or tracking by electronic or other means the producon, sales, clearance of stocks or any other related acvity of any registered persons and it further restricts that no taxable goods shall be removed without axing tax stamp, banderole, sckers, labels etc. in any such form, style and manner as may be prescribed by the Board in this behalf. Commissioner Appeals Empowered to Grant Stay against Tax Recovery Secon 45B (1A)
The Finance Bill, 2013, seeks to allow Commissioner (Appeals) to grant stay of maximum 30 days from the recovery of tax levied under the Sales Tax Act, 1990; if such collecon brings undue hardship to the taxpayer. Procedure of Reccaon of Mistakes Raonalized Secon 57
The Finance Bill, 2013, seeks to amend this secon to harmonize the concept of reccaon of mistake on the lines of Income Tax Ordinance, 2001. Now Commissioner, Commissioner (Appeal) or the Appellate Tribunal may by an order in wring amend any order in order to recfy the mistake apparent from record. Whistleblower Reward to Inland Revenue Ocers and Ocials Secon 72C
The Finance Bill, 2013 seeks to insert new secon to allow provision of reward to ocers and ocials of Inland Revenue in case of detecon of concealment and evasion of sales tax. This provision of law is also in line with the proposed provisions in the Income Tax Ordinance, 2001. Change of Bank Accounts for Registered Persons Allowed only Through Sales Tax Registraon Process
Secon 73
In an aempt to reinforce the transparent documentaon process by the registered persons, the Finance Bill, 2013, seeks to amend explanaon of secon 73 to prescribe change in bank account through sales tax registraon form or through change in parculars in registraon database.
31
Third Schedule
Sales tax chargeable on retail price The Finance Bill, 2013 seeks to add items in the Third Schedule of the Act to charge sales tax on retail price basis on the following items: Sr. No 1 Sr. No in the Table 22 Descripon Heading Nos. of the First Schedule to the Customs Act, 1969 (IV of 1969) Respecve headings
Finished or made-up arcles of texle and leather, including garments, footwear, and bed ware, sold in retail packing Household electrical goods, including air condioners, refrigerators, deep freezers, televisions, recorders and players, electric bulbs, tube-lights, fans, electric irons, washing machines and telephone sets Household gas appliances, including cooking range, ovens, geysers and gas heaters Foam or spring maresses, and other foam products for household use Auto parts and accessories sold in retail packing Lubricang oils, brake uid, transmission uid, and other vehicular uids and maintenance products in retail packing Tyres and tubes Storage baeries Arms and ammunion Paints, distempers, enamels, pigments, colours, varnishes, gums, resins, dyes, glazes, thinners, blacks, cellulose lacquers and polishes sold in retail packing Ferlizers Cement sold in retail packing Tiles sold in retail packing Biscuits, confeconary, chocolates, toees and candies Other goods and products sold in retail packing
23
Respecve headings
3 4 5 6
24 25 26 27
Respecve headings Respecve headings Respecve headings Respecve headings
7 8 9 10
28 29 30 31
Respecve headings Respecve headings Respecve headings Respecve headings
11 12 13 14 15
32 33 34 35 36
Respecve headings Respecve headings Respecve headings Respecve headings Respecve headings
32
2013
Sales Tax Act, 1990 Sixth Schedule

Table 1(Exempted Goods) Sr. No 1 Sr. No in the Table 25 Heading Nos. of the First Schedule to the Customs Act, 1969 (IV of 1969) Omied
Descripon
Milk preparaons obtained by replacing one or more of the constuents of milk by another substance, whether or not packed for retail sale.
Notable Nocaons
SRO 501(I)/2013 The SRO seeks to exempt the import and supplies of the following goods from sales tax; previously these were charged as zero rated through SRO 549(I)/2008: Sr. No 1 2 3 4 5 6 7 8 9 10 11 12 Descripon PCT Heading
Uncooked poultry meat Milk and cream Flavored milk Yogurt Whey Buer Desi ghee Cheese Processed cheese not grated or powdered Coon seed Frozen, prepared or preserved sausages and similar products of poultry meat or meat oal Meat and similar products of prepared frozen or preserved meat or meat oal of all types including poultry meat and sh
2.07 04.01 and 04.02 0402.9900 and 22.02 403.1000 4.04 405.1000 405.9000 406.1010 406.3000 1207.2000 1601.0000 1602.3200, 1602.3900, 1602.5000, 1604.1100, 1604.1200, 1604.1300, 1604.1400, 1604.1500, 1604.1600, 1604.1900, 1604.2010, 1604.2020, 1604.2090, 1604.3000 1901.1000 1901.9090 2304.0000 2306.1000 3213.1000 3215.9010 and 3215.9090
13 14 15 16 17 18
Preparaons for infant use, put up for retail sale Fat lled milk Soyabean meal Oil cake and other solid residues, whether or not ground or in the form of pellets Colours in sets Wring, drawing and marking inks
33
Sr. No 19 20 21 22 23 24 25
Descripon
PCT Heading
29 30 31 32 33 34 35 36
Erasers Exercise books Directly reduced iron Pencil sharpeners Energy saver lamps Sewing machines of the household type Purpose built taxis, whether in CBU or CKD condion which are built on girder chassis and having features, namely: Aack resistance central division along with payment tray; Wheelchair compartment with folding ramp Taximeter and two-way radio system Bicycles Wheelchairs Vessels for breaking up Other drawing, marking out or mathemacal calculang instruments Pens and ball pens Pencils including colour pencils Compost (non-chemical ferlizer) produced and supplied locally Construcon materials to Gawadar Export Processing Zones investors and to Export Processing Zone Gawadar for development of Zones infrastructure
4016.9210 and 4016.9290 4820.2000 72.03 8214.1000 8539.3910 8452.1010 and 8452.1090 8703.3226 and 8703.3227
87.12 8713.1000 and 8713.9000 89.08 9017.2000 96.08 96.09
34
2013
Sales Tax Act, 1990

SRO 504(I)/2013 The SRO seeks to make the following amendments in SRO 1125(I)/2011, aer this amendments benet from the lower rates of sales tax is no longer available on nished goods (i.e. leather goods, texles, carpets, sports goods and surgical goods)
Sr. No 1
Exisng Rule Leather and arcles including arcial Footwear thereof leather
Proposed amendments Leathers and arcles thereof, excluding nished arcles of leather and arcial leather Texle and arcles thereof, excluding (a)nished arcles of texles and texle made-ups; (b) mono-lament of more than 67 decitex; (c) sun shading; (d) shing net of nylon or other material; (e)rope of polyethylene or nylon; and (f) tyre cord fabric Carpets, excluding nished condion those in
PCT heading No. Chapter 41 and heading 64.06
Texle and arcles thereof excluding monolament, sun shading, nylon shing net, other shing net, rope of polyethylene and rope of nylon, tyre cord fabric
Chapters 50, 51, 52, 53, 54 (excluding 5407.2000), 55, 56 (excluding 56.08 and 56.09), 57(excluding made ups), 58, 59 (excluding 59.05, 59.10) and 60
3 6 7 56
Carpets Sports goods Surgical goods Other colouring maer and other preparaons Shoe adhesives
Chapter57 (excluding made ups) Respecve headings excluding nished goods. Respecve headings excluding nished goods. 3206.4900 3506.9110
Sports goods, excluding those in nished condion Surgical goods, excluding those in nished condion Other colouring maer and other preparaons excluding master batches Omied
68
SRO 505(I)/2013 The SRO seeks to liable all the withholding agent to withhold sales tax at the full rate in case of payments against supplies of taxable goods from unregistered persons. SRO 509(I)/2013 The SRO seeks to charge sales tax @ 5% in addion to the standard of 16% on non-registered commercial and industrial consumers of electricity and gas having monthly bill in access of Rs. 15,000.
35
The Federal Excise Act, 2005

Futher Duty to be Charged on Supply of Goods to Unregistered Person Secon 3 (3A)
The Finance Bill, 2013 seeks to charge further duty at the rate of 2% in addion to normal duty in case of supply of excisable goods and services to unregistered persons. Scope of Maintaining of Record Enlarged Secon 17 (1)
The Finance Bill, 2013 proposes that record relang to gate passes, inward or outward and transport receipts be maintained for a period of 6 years by every registered person. Commissioner Appeals Empowered to Grant Stay against Tax Recovery Secon 33
The Finance Bill, 2013 proposes to empower Commissioner (Appeals) to grant stay against recovery of tax levied under this Act, for a period not exceeding 30 days in aggregate, in case the taxpayer faces any hardship in making such payment. This proposal is in line with the changes proposed in the Sales Tax Act, 1990. Power of FBR Ocers Claried Secon 35(3)
In order to remove any ambiguity, the Finance Bill, 2013 seeks to explain that the powers of the FBR ocers regarding examinaon, access to the record and departmental audit under dierent secons are independent from the powers already vested with the FBR to select any person for audit through random or parametric computer ballot. Whistleblower Reward to Inland Revenue Ocers and Ocials Secon 42(c)
In order to enhance the collecon and stop concealment; the Finance Bill, 2013 proposes to reward ocials and informers providing credible informaon relang to cases of concealment and evasion of duty, aer realizaon of part or whole of such taxes. Posng of Inland Revenue Ocer at Registered Persons Premises Delegated to Chief Commissioner
Secon 45(2)
The Finance Bill, 2013 seeks to equate the powers of the FBR with Chief Commissioner regarding posng of ocials to the premises of registered person to monitor producon, removal or sale of goods and the stock posion or the maintenance of records. Monitoring or Tracking by Electronic or Other Means Secon 45A
The Finance Bill, 2013 proposes that the FBR may monitor or track data regarding producon, sales, clearance, stocks or any other related acvity either electronically or through other means, by nocaon in the ocial Gazee specifying any registered person or goods in this regard. Furthermore, the FBR may restrict sale or removal of such excisable goods without axing tax stamps, sckers etc in such form, style and manner as may be prescribed.
36
2013
Federal Excise Act, 2005
First Schedule (Table I)

Rate of FED Enhanced on Aerated Waters The Finance Bill, 2013 seeks to amend the rates on following goods: Relevant Reference in Schedule. 4 5 Descripon Heading /Subheading number 2201.102 2202.101 Previous Rate 6% 6% Proposed Rate 9% 9% Sr. No. 9 & 10 of Table I Sr. No. 4 & 5 of Table I
Aerated Waters Aerated Waters containing added sugar or other sweetening maer or avoured
Rate of FED Enhanced on Cigarees
The Finance Bill, 2013 seeks to substute the serial 9 and serial 10 of Table 1 of First Schedule in the following manner: Relevant Reference in Schedule. 9 Descripon Heading / SubHeading Number 24.02 Proposed Rate
Locally produced cigarees if their on pack printed retail price exceeds two thousand two hundred and eighty six per thousand cigarees Locally, produced cigarees if their retail price does not exceed rupees two thousand two hundred and eighty six per thousand cigarees
Rupees two thousand three hundred and twenty ve per thousand cigarees Rupees eight hundred and eighty per thousand cigarees Sr. No. 54 & 55 of Table I
10
24.02
FED Levied on Oil Seeds and Motor Cars
The Finance Bill, 2013 purposes to remove serial 11 of Table 1 of First Schedule and seeks to add following at serial No. 54 and 55 of Table I in the following manner: Relevant Reference in Schedule. 54 55 Descripon Heading / SubHeading Number Respecve Headings 87.03 Proposed Rate Forty paisa per Kg Ten percent ad.val
Oil seeds Motor cars, including staon wagons of 1800 cc or above
37
Table II
FED Levied on Services of Banking and Non-banking Corporate Sector Sr. No. 8 of Table II
The Finance Bill, 2013 purposes to delete serial 7 in column (1) of Table II and seeks to substute the following at serial 8 of Table II, as follows: Relevant Reference in Schedule. 8 Descripon Heading / SubHeading Number Proposed Rate
Services provided or rendered by banking companies, cooperave, nancing sociees, modarabas, musharikas, leasing companies , NBFCs, Asset management Companies and other persons dealing in such services.
98.13
16%
Third Schedule
The Finance Bill, 2013 purposes to withdraw the exempon on: Hydraulic cement imported or purchased locally by petroleum or energy sector companies Lubricang oil supplied to Pakistan Navy for consumpon in its vessels. Transformer oil if used in the manufacture of transformers supplied against internaonal tenders to a project nanced out of funds provided by the internaonal loan or aid giving agencies. Exempon of Federal Excise Duty on services provided or rendered by Asset Management Companies is being withdrawn.
Notable Nocaons
Fixed duty on locally produced Oil SRO 507(I)/2013
The SRO seeks to impose xed duty with immediate eect at one rupee per Kg on locally produced oil purchased by a manufacturer of vegetable ghee and cooking oil, in lieu of the federal excise duty payable @ 16% on vegetable ghee and cooking oil produced or manufactured from locally produced oil and that shall be payable along with the monthly return in which such locally produced oil is purchased. Fixed Duty on Oil Seeds SRO 508/2013
The SRO seeks to impose xed duty of forty paisa per kilogram on oilseeds, at the import stage, in lieu of federal excise duty payable at producon or manufacturing stage of vegetable ghee or cooking oil.
38
2013
CUSTOMS ACT, 1969
Goods Declaraon Includes Goods Declaraon for Transshipment (GD-TP)
Customs Act, 1969

Secon 2 (la)
The FBR has recently issued transshipment procedure for importers under Customs Computerized System for implemenng the Web Based One Customs (WeBOC) on Naonal level. The FBR under SRO 174 (I)/2013 has explained the procedure for ling and approval of GD-TP (Goods Declaraon for Transshipment) at the port of entry. The owner of goods or his authorized bonded carrier shall access the Customs Computerized System through his assigned User ID, for ling online Goods Declaraon for Transshipment (GD-TP), at the port of entry against the bill of lading manifested for transshipment in the Import General Manifest (IGM). The Finance Bill, 2013 proposes to incorporate ling of Goods Declaraon for Transshipment in Computerized Clearing System to provide legal cover to rules provided for the Goods Declaraon for Transshipment (GD-TP). Funconary of Directorate General of Input Output Co-ecient Organizaon (IOCO) Re-characterized Secon 3DDD
The Finance Bill, 2013 seeks to provide legal cover to Directorate General of Input Output Co-ecient Organizaon (IOCO) which shall consist of Director General and as many Directors, Deputy Directors, Assistant Director and other ocers as the FBR may, by nocaon in the ocial Gazee, may specify. Provision of Security and Accommodaon Secon 14A
The Finance Bill, 2013 seeks to bind port owners, managers or agencies who are managing customs port, customs staon, freight staon to provide not only cost free accommodaon but also to provide security to Customs authories for residenal purposes, oces, examinaon of goods, detenon and storage of goods and for other departmental requirements to be determined by the Collector of Customs. Furthermore, the proposed amendment seeks to propose that custodian of goods and terminal handlers to entertain any waiver of demurrage charges by the Custom authories in favor of importer. Reccaon of Errors Raonalized Secon 32(4)
The Finance Bill, 2013 seeks to empower the ocer to recfy the errors whereby any duty or charge has not been levied or has been short levied or has been erroneously refunded and this has been discovered as a result of an audit examinaon. For Discharging o Provisional Assessment Liability Pay Orders Acceptable but Postdated Cheques Unacceptable
Secon 81
The Finance Bill, 2013 seeks to amend the provision in order to withdraw the mode of seling o provisional assessment liability through postdated cheques and the new mode of discharging o provisional assessment liability through pay order has been provided. Adjudicang Jurisdicon and Powers of the Ocers Secon 179(1)
The Finance Bill, 2013 proposes to add a new proviso whereby in case of export of goods, the ocers of Customs have been vested with adjudicaon jurisdicon on the basis of FOB value of goods exported and twice their respecve monetary adjudicaon limit. Director of Valuaon Empowered to Authorize any Ocer for the Purpose of Filing of Reference before High Court
Secon 196(1)
In addion to Collector and Director of Intelligence and Invesgaon, The Finance Bill, 2013 proposes that Director of Valuaon will also be authorized to le special reference before honorable High Court against the order of Appellate Custom Tribunal.
39
Customs Act, 1969 Notable Nocaons

Rate of Duty on Hybrid Vehicles reduced SRO 499(I)/2013
By virtue of SRO 499(I)/2013 customs duty and sales tax on import of Hybrid Electric Vehicle has been slashed down to the extent as under: Sr. No 1 2 3 Engine Capacity Upto 1200 cc From 1201 cc to 1800 cc From 1801 cc to 2500 cc Extent of Exempon in leviable duty and taxes 100% 50% 25%
Concessionary Rate of dues withdrawn Vide SRO 497(I)/2013 concessionary rate of custom duty has been withdrawn as under: Sr. No of SRO 567 16 Descripon Preparaons put up in retail packing for agriculture Uncoated Kra paper and paper board in rolls or sheets Virgin cra liner Virgin white top cra Semi chemical ung paper Flat rolled products of stainless steel, of a width of 600 mm or more Silicon electrical steel sheet LCD Panels in CBU form Plasma display panels in CBU form
SRO 497(I)/2013
Present concessionary rate 0% 5% 0% 0% 0% 0% 0% 20% 20%
24
28 29 48
Grant of Exempons
SRO 498(I)/2013
Vide this SRO exempon has been granted on import of solar submersible pumps, Energy saving lights and any other item in relaon to geo thermal energy by amending SRO 575(me) /2006. This measure has been taken in order to overcome energy crisis by giving incenve to the importers of above named goods. Further, this SRO restricts that exempon / concessionary rate (provide in SRO 575(I)/2006) of customs duty and sales tax on import of specied agricultural machinery will now apply only where such machinery is used for agriculture sector.
40
2013
Income Support Levy Act, 2013
Income Support Levy Act, 2013
The Finance Bill, 2013 seeks to promulgate an Act to be named as the Income Support Levy Act, 2013 (ISL). It shall come into force at once. Some salient features of the proposed Act are as under: Net Moveable Wealth Secon 2(b)
It is the excess of aggregate value of movable assets, as declared in the wealth statement for the relevant tax year, over the aggregate value of liabilies, for the relevant tax year. Determinaon of Net Wealth In determining the net wealth value the liabilies against the movable assets should be allowed in the following manner: Where liability claimed relates wholly and exclusively to movable asset in that case such liability shall be allowed but no liability will be allowed if it relates wholly and exclusively to immovable assets. However, where nature of asset to which the liability relates is not determinable then liability shall be allowed on proporonate basis using the following formula: (A/B) X C Where: A B C Valuaon Date Levy would be charged on the last date of the tax year. Time of Payment Levy under this Act would be paid along with the ling of wealth statement. Rate of Levy Levy would be charged at the rate of 0.5% of the value of net moveable assets exceeding Rs. 1,000,000. Some signicant highlights of the proposed Act are as under: Authorized ocer of Inland Revenue to access the levy payable by order in wring and may issue a noce of demand specifying therein the me and sum payable. Charge default surcharge at the rate of 16% per annum on a person who fails to pay levy or levy paid is less than the amount payable on the amount payable / less paid. Same provisions would be applicable for the recovery of levy imposed under this Act as are applicable for collecon of tax under the Income Tax Ordinance, 2001. Same provisions would be applicable regarding the appeals, revision or reccaon of an order under this Act as are provided under the Income Tax Ordinance, 2001. 41 Secon 9 Secon 4 is gross value of moveable assets is gross value of both movable and immovable assets is the gross value of debts owned Secon 3

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2013

Tax Handbook 2013

Lahore June 14, 2013 www.crowehorwath.pk

Comparave Budgetary Posion 2013-2014 & 2012-2013 Receipts

2,598.00 822.00 3,420.00 (1,502.00) 1,918.00

2,503.58 730.33 3,233.91 (1,458.92) 1,774.99

507.00 169.00 23.00 975.00

477.78 386.87 79.55 483.81

Total Resources (A+B+C+D+E)

The Finance Bill, 2013

Income Tax Ordinance, 2001

Rate of Minimum Tax Enhanced

Fixed Tax Schemes Withdrawn

Secon 113A, 113B

Rs. 50,000 plus 0.75 % of the turnover

Income Tax Ordinance, 2001

Income Tax Ordinance, 2001

Income Tax Ordinance, 2001

115, 165 and 165A

Secon of the Ordinance to which the oence has reference 177

Synopsis of Change Proposed by the Finance Bill, 2013

Such person shall pay a penalty of Rs. 25,000

Such person shall pay a penalty of Rs. 50,000

Such person shall pay a penalty of Rs. 100,000

Such person shall pay a penalty of Rs. 5,000

Income Tax Ordinance, 2001

Secon 236D, First Schedule Part IV Division XII

Income Tax Ordinance, 2001

Income Tax Ordinance, 2001

Current Rates of Tax for Salaried Taxpayers Applicable on Taxable income -

Income Tax Ordinance, 2001

Rate of Tax on Income from Property

Part I Division VI Paragraph (b)

Rates of Advance Tax on Import of Goods

Rates of Tax on Payments for Goods

Income Tax Ordinance, 2001

Rates of Tax on Payments for Execuon of Contracts

Rate of Collecon of Tax on Cash Withdrawal from a Bank

Income Tax Ordinance, 2001

Advance Tax on Sale to Distributors, Dealers or Wholesalers

Part IV Division XIV

Income Tax Ordinance, 2001 Part III

Sales Tax Act, 1990

Respecve headings Respecve headings Respecve headings Respecve headings

Respecve headings Respecve headings Respecve headings Respecve headings

Sales Tax Act, 1990 Sixth Schedule

87.12 8713.1000 and 8713.9000 89.08 9017.2000 96.08 96.09

Sales Tax Act, 1990

PCT heading No. Chapter 41 and heading 64.06

The Federal Excise Act, 2005

First Schedule (Table I)

Rate of FED Enhanced on Cigarees

FED Levied on Oil Seeds and Motor Cars

Oil seeds Motor cars, including staon wagons of 1800 cc or above

Customs Act, 1969

Customs Act, 1969 Notable Nocaons

Present concessionary rate 0% 5% 0% 0% 0% 0% 0% 20% 20%

Income Support Levy Act, 2013

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