Finance Bill Riaz Chowdreyy PDF

RIAZ AHMAD & COMPANY
Chartered Accountants
INDEX
DESCRIPTION
INTRODUCTION
PAGE NO.
EXECUTIVE SUMMARY
24
INCOME TAX
5 62
SALES TAX
63 75
FEDERAL EXCISE DUTY
76 77
OTHER LAWS
78
CONTACT PARTNERS
79
FINANCE ACT 2015

INTRODUCTION
This Memorandum has been prepared to facilitate our clients in better understanding of the
changes made in income tax, sales tax, federal excise duty and other laws through the Finance Act,
2015. The changes have been explained in a concise manner and insignificant changes of
consequential, administrative, procedural or editorial nature have been ignored for the sake of
brevity.
Included under the heading of Income Tax Ordinance, 2001 is a dedicated portion, titled
General, which covers complete rates of income tax, schedule of filing of various periodical
statements, rates for deduction of income tax at source, filing date of income tax return,
computation of advance tax, etc. for convenience and ready reference of our clients.
The Finance Act, 2015, unless otherwise stated, has come into force on 01 July 2015.
This Memorandum may be accessed on our web-site: www.racopk.com
It is recommended that the text of the Finance Act, 2015 as published in the Official Gazette and
the relevant laws and notifications, wherever applicable should be referred to in considering the
interpretation of any provision. This Memorandum contains only general comments. Final decision
on any issue should not be taken without detailed consideration and professional advice.
This Memorandum should not be published in any manner without the consent of the firm. For
professional advice, you may contact our following tax experts:
Sarfraz Mahmood
Muhammad Arshad
Lahore Office
Inaam Ellahi Sheikh
M. Hamid Jan
Liaqat Ali Panwar

Pirzada M. Khurram
Atif Bin Arshad

Muddassar Mehmood
Faisalabad Office
Islamabad Office
Karachi Office
LAHORE: 10 July 2015
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EXECUTIVE SUMMARY
Income Tax
Threshhold of paid-up capital plus undistributed reserves to fall under the ambit of small company has
been enhanced to Rupees 50 million.
One time super tax for rehabilitation of temporarily displaced persons has been imposed @ 3% on every
person, other than a banking company, having income of Rupees 500 million or more and for banking
company @ 4% without any threshold of income.
Final tax @ 10% on undistributed reserves has been imposed from tax year 2015 and onwards on every
public company other than a scheduled bank, a modaraba, an exempt electric power generation
company or a company in which 50% or more shares are held by Government. However, this tax will
not be applicable to a company which distributes either 40% of its after tax profits or 50% of its paid up
capital, whichever is less, within 6 months of the end of the tax year.
Profit on debt received by a person, other than a company, will be charged to tax at slab rates ranging
from 10% to 15%.
Tax will now also be charged @ 7.5% on capital gain on disposal of securities held for 2 years or more
but less than 4 years.
Exemption from tax or reduced rate of tax will now be allowed only by the Federal Government after
approval from Economic Coordination Committee of Cabinet under specified circumstances.
Threshold of Rupees 1 million for claim of tax credit for investment in shares and insurance has been
enhanced to Rupees 1.5 million.
A company formed for establishing and operating a new manufacturing unit between 01 July 2015 to 30
June 2018 shall be entitled to a tax credit equal to 1% of the tax payable for every 50 employees
registered with EOBI or Employees Social Security Institutions of Provincial Governments, subject to a
maximum of 10% of the tax payable.
10% tax credit on investment in purchase of plant and machinery for extension, expansion and BMR,
under section 65B has been extended for one year.
Tax credit available to companies for enlistment in stock exchange has been enhanced to 20% of tax
payable.
Income from development and sale of residential or commercial plots will now be subjected to minimum
tax @ 2% of the value of land notified for the purpose of stamp duty.
Written approval of the Commissioner will not be required if return of income is revised within 60 days
of filing of the return.
Now, return of income of every individual or a member of an association of persons (AOP), will be
accompanied by wealth statement and reconciliation of wealth statement.
Commissioner (Appeals) has been empowered to extend stay against recovery of demand for a further
period of 30 days with the condition that order on appeal will be passed within this extended period.
Tax demand created under an assessment order will be payable within 30 days of receipt of notice
instead of 15 days.
Estimates of advance tax will now be furnished on or before the due date of 2nd quarter instead of 4th
quarter.
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EXECUTIVE SUMMARY
Exporters may opt out of final taxation subject to the condition that tax deducted on exports will be
treated as minimum tax.
Rate of default surcharge in case of failure to deduct tax at source and default in deposit of tax in
Government treasury has been reduced to 12% from 18%.
Additional payment for delayed refund will be made at KIBOR + 0.5%.
FBR has been empowered to form special audit panels to conduct audit or forensic audit of income tax
affairs.
From tax year 2015 and onwards, all individuals shall use CNIC as NTN.
A person not filing return within due or extended date or if tax payable is not paid with the return, will be
automatically selected for audit.
A person registered as retailer under Rule (4) of Sales Tax Special Procedure Rules, 2007 will not be
subjected to audit under sections 177 and 214C if the person remained on sales tax active taxpayers list
throughout the year. Effective date of this provision will be notified by FBR.
FBR may reward any person providing credible information in respect of concealment, fraud, corruption
or evasion of tax etc.
Advance tax @ 14% of the amount of internet bill or price of prepaid internet card shall be collected
from internet users.
Advance tax shall not be collected from retailers on sale of fertilizer.
Banking company shall collect advance tax @ 0.6% from non-filer at the time of sale of any instrument
or transfer of any amount if the sum total of payments exceed Rupees 50,000 in a day. However,
according to the news in print and electronic media, the Federal Government has decided to reduce rate
of withholding tax from 0.6% to 0.3% for a period of three months up to 30 September 2015 with the
condition that non-filers will file their tax returns for tax year 2015. After the expiry of 3 months period,
withholding tax @ 0.6% will be applicable if the person fails to file his return.
Advance tax shall be collected @ 5% on education related expenses remitted abroad.
Pakistan Mercantile Exchange Limited (PMEX) shall collect advance tax @ 0.05% from its members on
purchase or sale of futures commodity contracts.
Rate of tax on taxable income of a company, other than a banking company, shall be 32%, 31% and
30% for the tax years 2016, 2017 and 2018 and onwards, respectively.
In case of AOP that is a professional firm prohibited from incorporating by any law or the rules of the
body regulating their profession, the 35% slab rate of tax shall be reduced to 32% for the tax year 2016
and onwards.
Minimum tax on a company, rendering or providing services, shall now be 8%, in case of filer and 12%,
in case of non-filer.
Advance tax on international air tickets will be collected @ Rupees 16,000 per person travelling in first /
executive class and @ Rupees 12,000 per person travelling in other than economy class.
Income from developmental REIT scheme shall be exempt from tax upto tax year 2020.
Profits and gains derived from manufacturing of plant, machinery etc. for generation of renewable energy
will be exempt from tax for 5 years beginning from tax year 2015.
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EXECUTIVE SUMMARY
Profits and gains derived from warehousing facility for storage of agriculture produce shall be exempt for
3 years.
Profits and gains derived from operating a halal meat production unit will be exempt from tax for a
period of 4 years.
Profits and gains from industrial undertaking set up in Khyber Pukhtunkhwa and Balochistan will be
exempt from tax for a period of 5 years.
Profit and gains derived from transmission line project will be exempt from tax for 10 years.
Profits and gains from manufacturing of cellular mobile phones will be exempt from tax for 5 years.
Profits and gains derived by LNG terminal operators and terminal owners will be exempt from tax for 5
years.
SALES TAX
The concept of active taxpayers has also been introduced for the purposes of sales tax.
Rate of further tax has been enhanced from 1% to 2%.
Amendments have been introduced in relation to the admissibility of input tax in certain cases.
Powers enjoyed by FBR to grant exemption from payment of whole or any part of the tax chargeable
under the Sales Tax Act, 1990 have been withdrawn.
New sections have been introduced in the Sales Tax Act, 1990 for the purposes of bilateral or
multilateral agreements for exchange of information, disclosure of information by a public servant, prize
schemes to promote tax culture and reward to whistleblowers.
Sales tax regime in respect of certain items has been revamped. Processed and unprocessed milk, both,
shall continue to be zero-rated. However, sales tax regime for other dairy products like flavoured milk,
yogurt, cheese etc. has been considerably changed by way of substitution into either exemption or
reduced tax rate of 10%.
Sales tax withholding has now been linked with the purchase / purchase period, irrespective of payment
in any subsequent month.
New rules for registration, de-registration, suspension and blacklisting etc. have been issued. Now, the
applicant for sales tax registration being the owner, authorized member or partner or authorized director,
as the case may be, will visit the concerned Regional Tax Office for biometric verification along with all
those documents specified under the Sales Tax Rules, 2006 for sales tax registration which have not been
submitted through computerized system.
A concept of temporary registration has been introduced for persons importing machinery for installation
at their premises. The temporary registration is meant for intending manufacturers importing machinery.
The registration will be valid for a period of 60 days.
In case the sales tax return is not filed within a period of six months after the due date, the same shall be
filed only after approval of the Commissioner Inland Revenue having jurisdiction.
FEDERAL EXCISE DUTY (FED)
FED on aerated beverages and locally produced cigarettes has been enhanced.
FED has been exempted on services provided or rendered in respect of travel by air of passengers on
socio economic routes.
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INCOME TAX ORDINANCE, 2001

Definitions
Section 2
Following new definitions have been inserted in this section:

Consumer goods
Section 2(13AA)
"Consumer goods means goods that are consumed by the end consumer rather than used in the production
of another good.
Developmental REIT Scheme
Section 2(17A)
"Developmental REIT Scheme means Developmental REIT Scheme as defined under the Real Estate
Investment Trust Regulations, 2015.
Fast moving consumer goods
Section 2(22A)
"Fast moving consumer goods means consumer goods which are supplied in retail marketing as per daily
demand of a consumer.
Imputable income
Section 2(28A)
"Imputable income in relation to an amount subject to final tax means the income which would have
resulted in the same tax, had this amount not been subject to final tax.
PMEX
Section 2(42A)
"PMEX means Pakistan Mercantile Exchange Limited a futures commodity exchange company incorporated
under the Companies Ordinance, 1984 (XLVII of 1984) and is licensed and regulated by the Securities and
Exchange Commission of Pakistan.
Rental REIT Scheme
Section 2(47C)
"Rental REIT Scheme means a Rental REIT Scheme as defined under the Real Estate Investment Trust
Regulations, 2015.
Small company
Section 2(59A)(i)
By amendment in this clause, threshold of paid up capital plus undistributed reserves to fall under the ambit
of small company has been enhanced to Rupees 50 million from Rupees 25 million.
Super tax for rehabilitation of temporarily displaced persons
New section 4B
New section 4B has been inserted to impose one time super tax for rehabilitation of temporarily displaced
persons @ 3% on income equal to or exceeding Rupees 500 million of every person other than a banking
company. In case of banking company, such tax will be imposed @ 4% of its income without any threshold
of income. The tax will be charged on income for the tax year 2015 only.
For this purpose, income shall be sum of taxable income under all heads of income including profit on debt,
dividend, capital gains, brokerage and commission and imputable income (income which would have
resulted in the same tax, had this amount not been subject to final tax). Profits and gains of insurance
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business, exploration and production of petroleum, a banking company and capital gains on listed securities
computed under Forth, Fifth, Seventh and Eighth Schedule respectively shall also be charged to super tax.
The newly inserted section states as under:
4B. Super tax for rehabilitation of temporarily displaced persons.(1) A super tax shall be imposed for
rehabilitation of temporarily displaced persons, for tax year 2015, at the rates specified in Division IIA of
Part I of the First Schedule, on income of every person specified in the said Division.
(2) For the purposes of this section, "income shall be the sum of the following:(i) profit on debt, dividend, capital gains, brokerage and commission;
(ii) taxable income under section (9) of this Ordinance if not included in clause (i);
(iii) imputable income as defined in clause (28A) of section 2 excluding amounts specified in
clause (i); and
(iv) income computed under Fourth, Fifth, Seventh and Eighth Schedule.
(3) The super tax payable under sub-section (1) shall be paid, collected and deposited on the date and
in the manner as specified in sub-section (1) of section 137 and all provisions of Chapter X of the
Ordinance shall apply.
(4) Where the super tax is not paid by a person liable to pay it, the Commissioner shall by an order in
writing, determine the Super tax payable, and shall serve upon the person, a notice of demand specifying
the super tax payable and within the time specified under section 137 of the Ordinance.
(5) Where the super tax is not paid by a person liable to pay it, the Commissioner shall recover the
super tax payable under sub-section (1) and the provisions of Part IV,X, XI and XII of Chapter X and Part I
of Chapter XI of the Ordinance shall, so far as may be, apply to the collection of super tax as these apply
to the collection of tax under the Ordinance.
(6) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of
this section.
Tax on undistributed reserves
New section 5A
Final tax on undistributed reserves has been imposed @ 10%, from tax year 2015 and onwards, on every
public company other than a scheduled bank or a modaraba or company deriving profits and gains from
electric power generation or company in which 50% or more shares are held by Government or a company
which distributes profit equal to either 40% of its after tax profits or 50% of its paid up capital whichever is
less within six months of the end of the tax year. This tax shall be charged if a company derives profits for the
year but does not distribute cash dividends within six months from the end of the said tax year or after such
distribution its reserves are in excess of 100% of its paid up capital. So much of its reserves as exceed 100%
of its paid-up capital shall be treated as income of the company for computation of tax @ 10%. Reserve
includes amount set aside out of revenue or surpluses excluding capital reserves, share premium reserves and
reserves required to be created under any law, rules or regulations. It is also provided that for tax year 2015,
cash dividends may be distributed before the due date of filing of return of the said tax year. This proviso is
for company cases where six months dividend distribution period has already expired or near to expire at the
time of implementation of this Finance Act. The section prescribes as under:
5A. Tax on undistributed reserves.- (1) Subject to this Ordinance, a tax shall be imposed at the rate
of ten percent, on every public company other than a scheduled bank or a modaraba, that derives
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profits for a tax year but does not distribute cash dividends within six months of the end of the said
tax year or distributes dividends to such an extent that its reserves, after such distribution, are in
excess of hundred percent of its paid up capital, so much of its reserves as exceed hundred per cent
of its paid up capital shall be treated as income of the said company:
Provided that for tax year 2015, cash dividends may be distributed before the due date mentioned in
sub-section (2) of section 118, for filing of return for tax year 2015.
(2)
The provisions of sub-section (1) shall not apply to

(a) a public company which distributes profit equal to either forty per cent of its after tax profits
or fifty per cent of its paid up capital, whichever is less, within six months of the end of the
tax year.
(b) a company qualifying for exemption under clause (132) of Part I of the Second Schedule;
and
(c) a company in which not less than fifty percent shares are held by the Government.
(3)
For the purpose of this section, reserve includes amounts set-aside out of revenue or other
surpluses excluding capital reserves, share premium reserves and reserves required to be created
under any law, rules or regulations.
Tax on shipping income of a resident person
New section 7A & Clause 21 of Part II of Second Schedule
Taxation of shipping business of a resident person was already governed by clause (21) of Part II of Second
Schedule. Now section 7A has been introduced in the Ordinance for this purpose and thereby the said clause
(21) has been omitted.
Tax on profit on debt
New section 7B
Tax on profit on debt shall now be imposed on every person other than a company at the slab rates ranging
from 10% to 15% of the gross amount of profit. The section states as under:
"7B. Tax on profit on debt. (1) Subject to this Ordinance, a tax shall be imposed, at the rate
specified in Division IIIA of Part I of the First Schedule, on every person other than a company who
receives a profit on debt from any person mentioned in clause (a) to (d) of sub-section (1) of section
151.
(2)
The tax imposed under sub-section (1) on a person other than a company who receives a
profit on debt shall be computed by applying the relevant rate of tax to the gross amount of the profit
on debt.
(3)
This section shall not apply to a profit on debt that is exempt from tax under this
Ordinance.
General provisions relating to taxes imposed under sections 5, 5A, 6, 7, 7A or 7B
Section 8
By virtue of amendment in this section, tax imposed on undistributed reserves under section 5A, tax on
shipping income of a resident person under section 7A and tax imposed on profit on debt under section 7B
shall also be a final tax on the amount in respect of which the tax is imposed. Moreover, such tax payable
shall not be reduced by any tax credits allowed under this Ordinance.
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Deductions in computing income chargeable under the head
Income from Property
Sections 15A(h)
Clause (h) of sub-section (1) of this section has been substituted and thereby rent collection charges
admissible @ 6% of rent will be inclusive of any administration expenses, incurred wholly and exclusively for
the purpose of deriving rent. The substituted clause is as under:
"(h) any expenditure, not exceeding six per cent of the rent chargeable to tax in respect of the
property for the year computed before any deduction allowed under this section, paid or payable by
the person in the year wholly and exclusively for the purpose of deriving rent chargeable to tax
under the head, "Income from Property including administration and collection charges;
First year allowance
Section 23A
According to amendments in this section, plant, machinery and equipment installed by any industrial
undertaking engaged in the manufacturing of cellular mobile phones and owned and managed by a
company shall be allowed first year allowance @ 90% against the cost of the eligible depreciable assets in
lieu of initial allowance under section 23. However, it is provided that industrial undertaking engaged in
manufacturing of cellular mobile phones should be duly certified by Pakistan Telecommunication Authority
and has been set up and commercial production has been commenced between the first day of July 2015
and 30th day of June 2017.
Capital gain on sale of securities
Section 37A(1)
Capital gain arising from disposal of securities was charged to tax for the tax year 2015 at 0% if holding
period of security was twenty four months or more. Now, for tax year 2016, tax will also be charged @ 7.5%
where holding period of a security is twenty four months or more but less than four years.
Exemptions and tax concessions in Second Schedule
Section 53(2)
Powers of Federal Government, exercised by FBR under delegated authority of the Federal Government, in
respect of amendments in Second Schedule to the Ordinance have been withdrawn.
Now, such powers will be exercised by Federal Government, subject to approval of Economic Coordination
Committee of Cabinet (ECC) whenever circumstances exist to take immediate action for the purposes of
national security, natural disaster, national food security in emergency situations, protection of national
economic interests in situations arising out of abnormal fluctuation in international commodity prices,
removal of anomalies in taxes, development of backward areas and implementation of bilateral and
multilateral agreements, by notification in the official Gazette.
It has also been provided that any such notification issued after promulgation of Finance Act 2015 shall stand
rescinded on expiry of the financial year in which it was issued, if not rescinded earlier.
Tax credit for investment in shares and insurance
Section 62(2)(c)
Tax credit for investment in shares and insurance premium shall now be allowed on lesser of: (a) cost of
shares or premium paid on insurance; (b) 20% of taxable income; or (c) Rupees 1.5 million. Earlier this
amount was Rupees 1 million.
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Profit on debt and deductable allowance for profit on debt
Section 64 and Section 64A
Tax credit allowed in respect of any profit or share in rent and share in appreciation for value of house paid
by the individual on loan from bank or non-banking finance institutions, etc., obtained for construction or
acquisition of house has been withdrawn by omitting section 64. However, benefit in this regard has been
provided by inserting new section 64A whereby under the same circumstances, deductible allowance not
exceeding 50% of taxable income or Rupees 1 million, whichever is lower, shall be allowed to the
individual. New section 64A states as under:
64A. Deductible allowance for profit on debt. (1) Every individual shall be entitled to a
deductible allowance for the amount of any profit or share in rent and share in appreciation for value
of house paid by the individual in a tax year on a loan by a scheduled bank or non-banking finance
institution regulated by the Securities and Exchange Commission of Pakistan or advanced by
Government or the Local Government, Provincial Government or a statutory body or a public
company listed on a registered stock exchange in Pakistan where the individual utilizes the loan for
the construction of a new house or the acquisition of a house.
(2)
The amount of an individuals deductible allowance allowed under sub-section (1) for a tax
year shall not exceed fifty percent of taxable income or one million rupees, whichever is lower.
(3)
Any allowance or part of an allowance under this section for a tax year that is not able to be
deducted for the year shall not be carried forward to a subsequent tax year.
Tax credit for employment generation by manufacturers
New section 64B
New tax credit has been introduced for a company if it is incorporated and its manufacturing unit is setup
between 01 July 2015 to 30 June 2018. Such tax credit will be allowed equal to one percent of tax payable
for every fifty employees registered with the Employees Old Age Benefits Institutions (EOBI) or the Employees
Social Security Institution (ESSI) of Provincial Governments during the tax year. Maximum tax credit under
this section will be allowed upto 10% of the tax payable. The tax credit will be admissible for a period of 10
years if, inter alia, the company employs more than fifty employees in a tax year registered with EOBI or ESSI.
Text of the section is as under:
64B. Tax credit for employment generation by manufacturers. (1) Where a taxpayer being a
company formed for establishing and operating a new manufacturing unit sets up a new
manufacturing unit between 1st day of July, 2015 and 30th of June, 2018, it shall be given a tax
credit for a period of ten years.
(2)
The tax credit under sub-section (1) for a tax year shall be equal to one percent of the tax
payable for every fifty employees registered with The Employees Old Age Benefits Institution or the
Employees Social Security Institutions of Provincial Governments during the tax year, subject to a
maximum of ten percent of the tax payable.
(3)
Tax credit under this section shall be admissible where

(a)
the company is incorporated and manufacturing unit is setup between the first day
of July, 2015 and 30th day of June, 2018, both days inclusive;
(b)
employs more than fifty employees in a tax year registered with The Employees Old
Age Benefits Institution and the Employees Social Security Institutions of Provincial
Governments;
(c)
manufacturing unit is managed by a company formed for operating the said

manufacturing unit and registered under the Companies Ordinance, 1984 (XLVII of
1984) and having its registered office in Pakistan; and
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(d)
the manufacturing unit is not established by the splitting up or reconstruction or

reconstitution of an undertaking already in existence or by transfer of machinery or
plant from an undertaking established in Pakistan at any time before 1st July 2015.
(4)
Where any credit is allowed under this section and subsequently it is discovered, on the
basis of documents or otherwise, by the Commissioner that any of the conditions specified in this
section were not fulfilled, the credit originally allowed shall be deemed to have been wrongly
allowed and the Commissioner may, notwithstanding anything contained in this Ordinance, recompute the tax payable by the taxpayer for the relevant year and the provisions of this Ordinance
shall, so far as may be, apply accordingly.
(5)
For the purposes of this section a manufacturing unit shall be treated to have been setup on
the date on which the manufacturing unit is ready to go into production, whether trial production or
commercial production.
Miscellaneous provisions relating to tax credits
Section 65(6)
By inserting new sub-section (6) in this section, the anomaly of disallowance of tax credit against tax
deducted under final tax regime and minimum tax has been removed. Sections 65B Tax credit for
investment, 65D Tax credit for newly established industrial undertakings and 65E Tax credit for industrial
undertakings established before the first day of July 2011 were already amended by Finance Act, 2012 and
such credits were made admissible against tax payable on account of minimum tax and final tax under any
provisions of the Ordinance. This sub-section has also provided that condition for charge of minimum tax
under clause (d) of sub-section (1) of section 113 shall not apply to persons entitled to tax credit under the
aforementioned sections 65B, 65D and 65E.
Tax credit for investment
Section 65B(2)
Tax credit equal to 10% of investment in purchase of plant and machinery, made for the purposes of BMR,
extension and expansion at any time between the first day of July 2010 and 30th day of June 2015, was
allowed by Finance Act, 2010. Now, by amendment in sub-section (2) of this section, such tax credit will be
allowed for a further period of one year if such investment is made up to 30th day of June 2016.
Tax credit for enlistment
Section 65C(1)
Tax credit admissible to companies opting for enlistment in any registered stock exchange in Pakistan has
been enhanced from 15% to 20% of tax payable for the tax year of enlistment.
Tax credit for industrial undertakings established before the first day of July 2011
Section 65E(5)
By amending sub-section (5) of this section, it has been clarified that tax credit under this section will be
admissible for a period of five years beginning from the date of setting up or commencement of commercial
production from the new plant or expansion project, whichever is latter.
Principles of taxation of companies
Section 94
Under the provisions of section 5, tax on dividend is imposed on every person who receives dividend from a
company. The word resident, appearing before company in section 5 was omitted by Finance Act, 2003,
but the corresponding amendment was not incorporated in sub-section (2) of section 94. Now the anomaly
has been removed and thereby provisions of sub-section (2) of section 94 have been brought in line with
section 5, after 12 years. However, similar amendment is still needed in sub-section (3) of this section to
remove conflict between both sections 5 and 94.
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Agreements for avoidance of double taxation and prevention

of fiscal evasion
Sections 107(1), (1A) and (1B)
Sub-section (1) of this section has been substituted and new sub-sections (1A) and (1B) have been inserted in
this section for the purposes of exchanging financial information including automatic exchange of
information with respect to taxes imposed under the Ordinance or any other law for the time being in force
and under corresponding law in force in foreign country. Substituted sub-section (1) and new sub-sections
(1A) and (1B) are as under:
(1) The Federal Government may enter into an agreement, bilateral or multilateral with the
government or governments of foreign countries or tax jurisdictions for the avoidance of double
taxation and the prevention of fiscal evasion and exchange of information including automatic
exchange of information with respect to taxes on income imposed under this Ordinance or any other
law for the time being in force and under the corresponding laws in force in that country, and may,
by notification in the official Gazette make such provisions as may be necessary for implementing
the agreement.
(1A) Notwithstanding anything contained in any other law to the contrary, the Board shall have the
powers to obtain and collect information when solicited by another country under a tax treaty, a tax
information exchange agreement, a multilateral convention, an inter-governmental agreement, a
similar arrangement or mechanism.
(1B) Notwithstanding the provisions of the Freedom of Information Ordinance, 2002 (XCVI of 2002),
any information received or supplied, and any concomitant communication or correspondence
made, under a tax treaty, a tax information exchange agreement, a multilateral convention, a similar
arrangement or mechanism, shall be confidential subject to subsection (3) of section 216.
Minimum tax on builders
Section 113A(3)
Application of minimum tax on income of builders from sale of residential, commercial or other building has
been deferred till 30 June 2018. This section was introduced through Finance Act, 2013, with minimum tax
rates to be notified by Federal Government in the official Gazette. However, no such notification was issued
so far and now by inserting new sub-section (3), this section shall have not effect till 30 June 2018.
Minimum tax on land developers
Section 113B
Minimum tax on persons deriving income from the business of development and sale of residential,
commercial or other plots has been imposed @ 2% of the value of land notified by any authority for the
purpose of stamp duty. This section was introduced through Finance Act, 2013, but rate of minimum tax was
not notified by the Federal Government in official Gazette so far.
Alternative corporate tax
Section 113C
Provisions of section 113C relating to Alternative Corporate Tax (ACT) have been clarified. ACT is now
applicable on company in respect of income subject to tax at corporate rate as provided in Division II of Part
I of the First Schedule, if such tax or minimum tax payable under any provisions of the Ordinance is less than
17% of accounting income. Income subject to tax under final tax regime or separate block of income are not
subject to ACT.
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Return of income
Section 114
After sub-section (6) of this section, new proviso has been added whereby written approval of Commissioner
shall not be required if the return of income is revised within 60 days of furnishing of return. However, other
conditions mentioned in sub-section (6) shall remain applicable.
It has further been provided that if the Commissioner fails to grant approval in writing within 60 days from
the date when revision of return was sought, the approval shall be deemed to have been granted by the
Commissioner. Mode and manner of seeking the revision shall be prescribed by FBR.
Method of furnishing returns and other documents
Section 118(2A)
According to provisions of sub-section (2A) of this section, the taxpayer having salary income of Rupees
500,000 or more in a tax year is obliged to file his return of income electronically accompanied by proof of
deduction / payment of tax and wealth statement. Now, the FBR has been empowered to amend the
aforementioned condition or direct that the said condition shall not apply for a tax year.
Best judgment assessment
Section 121(1)(d)
Where a person fails to produce the information required for audit under section 177 before inter alia, a
special audit panel appointed under sub-section (11) of section 177, the Commissioner may make best
judgment assessment of the taxable income on the basis of available information and material.
Procedure in appeal
Section 128(1AA)
The Commissioner (Appeals) has now been empowered to stay the recovery of tax demand for further period
of thirty days with the condition to pass order on appeal within the said period of 30 days. Under the
prevailing sub-section (1A), stay against recovery of tax demand was granted for a period not exceeding 30
days in aggregate without any condition of passing the appellate order. Now by inserting new sub-section
(1AA) in this section, the Commissioner (Appeals) may extend stay for further period of 30 days and will pass
appellate order within the extended period of 30 days.
Due date for payment of tax
Section 137(2)
Now, tax demand created under an assessment order or an amended assessment order, if payable, shall be
paid within thirty days from the date of service of notice. Earlier such tax demand was required to be paid
within fifteen days from receipt of notice under this section. However, practically such tax demand, in some
cases is recovered through banks of the taxpayer even before expiry of 15 days and without serving notice
under section 138(1).
On the other hand, period of tax payable as a result of provisional assessment order under section 122C has
been curtailed from 60 days to 45 days from the date of service of notice.
Advance tax paid by the tax payer
Section 147(4A)
Estimate of advance tax in case of company or association of persons, shall now be furnished at any time
before the second installment of advance tax is due if the tax payable is likely to be more than the amount
required to pay on turnover basis. By virtue of substitution in sub-section (4A), 50% of such estimated
advance tax will be paid by the due date of second quarter and the remaining 50% will be paid in two equal
installments by the due date of third and fourth quarter of the tax year.
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Imports
Section 148(2) and (2A)
By omitting sub-section (2) of this section, power of FBR to grant exemption through SROs in respect of
collection of tax on import of any goods or class of goods or persons or class of persons importing such
goods or class of goods, has been withdrawn. However, new sub-section (2A) has been inserted and thereby
notifications / SROs already issued under the omitted sub-section (2) shall continue to remain in force unless
rescinded by FBR.
Tax on local purchases of cooking oil or vegetable ghee by certain
persons
New section 148A & Clause 13C of

Part II of Second Schedule
Manufacturers of cooking oil or vegetable ghee or both are chargeable to tax at reduced rate of 2% on
purchase price of locally produced edible oil under clause (13C) of Part II of Second Schedule. The same
provisions will now be governed under newly inserted section 148A and such tax payable will be final tax in
respect of income accruing from locally produced edible oil. Accordingly the said clause (13C) has been
omitted.
Profit on debt
Section 151(3)
According to substituted sub-section (3) of section 151, tax deductable under this section shall be final tax on
the profit on debt arising to a taxpayer except where:
(a) taxpayer is a company; or
(b) profit on debt is taxable under section 7B.
Payments to non residents
Section 152(4A)
New sub-section (4A) has been inserted in this section which empowers the Commissioner to issue order in
writing on application made by permanent establishment in Pakistan of a non-resident person for payment
without deduction of tax or deduction of tax at reduced rate, in cases where the tax so deductable is
adjustable against tax liability.
Payments for goods, services and contracts
Section 153(3) Proviso
By inserting new proviso (d) in sub-section (3) of this section, tax deducted on payments in respect of
contract signed by a sportsperson has been included in final tax regime retrospectively effective from tax year
2013.
Exports
Section 154(5)
New option has been introduced for exporters to opt out of final taxation subject to the condition that tax so
deducted will be treated as minimum tax instead of final tax and option will be exercised at the time of filing
of return of income under normal tax regime. For this purpose, new sub-section (5) has been inserted in this
section as under:
"(5) The provisions of sub-section (4) shall not apply to a person who opts not to be subject to final
taxation:
Provided that this sub-section shall be applicable from tax year 2015 and the option shall be
exercised every year at the time of filing of return under section 114:
Provided further that the tax deducted under this sub-section shall be minimum tax.
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Time of deduction of tax
Section 158(c)
Clause (b) of this section states that a person is required to deduct tax from an amount at the time the amount
is actually paid. Now, by inserting new clause (c) after this clause, amount actually paid shall have the
meaning as may be prescribed. However, it is not mentioned that who is authorized to so prescribe.
Exemption or lower rate certificate
Section 159(6)
Notifications / SROs issued under the omitted sub-sections (3), (4) and (5) and for the time being in force
shall continue to remain in force unless rescinded by the FBR through notification in the official Gazette.
Failure to pay tax collected or deducted and default surcharge
Section 161(1B) and Section 205
Rate of default surcharge has been reduced from 18% to 12% in case of failure to collect or deduct tax at
source or default in payment of tax collected or deducted into the Government treasury by the withholding
agent.
Furnishing of information by financial institutions including banks
New section 165B
Every financial institution shall now be liable to make arrangements to provide information regarding nonresident persons to the FBR for the purpose of automatic exchange of information under bilateral agreement
or multilateral convention. For this purpose following new section 165B has been inserted in the statute:
165B. Furnishing of information by financial institutions including banks. (1) Notwithstanding
anything contained in any law for the time being in force including but not limited to the Banking
Companies Ordinance, 1962 (LVII of 1962), the Protection of Economic Reforms Act, 1992 (XII of
1992), the Foreign Exchange Regulation Act, 1947 (VII of 1947) and any regulations made under the
State Bank of Pakistan Act, 1956 (XXXIII of 1956), on the subject every financial institution shall
make arrangements to provide information regarding non-resident Persons to the Board in the
prescribed form and manner for the purpose of automatic exchange of information under bilateral
agreement or multilateral convention.
(2)
Subject to section 216, all information received under this section shall be used only for tax
and related purposes and kept confidential.
Additional payment for delayed refund
Section 171(1)
Additional payment for delayed refund will now be made at the rate of KIBOR + 0.5% instead of 15% per
annum.
Notice to obtain information or evidence
Section 176(1) & (1A)
Clause (a) of sub-section (1) of this section has been substituted whereby any person will be required to
furnish to the Commissioner or an authorized officer, any information relevant to any tax leviable under this
Ordinance or to fulfill any obligation under any agreement with the foreign governments or tax jurisdiction
as specified in the notice.
Moreover, by inserting new sub-section (1A) in this section, the special audit panel appointed for any tax
year may be allowed by the concerned Commissioner to enter into the business premises of a taxpayer to
obtain / examine any information / record. Such panel, if specifically delegated by the Commissioner may
also exercise the powers as are vested in a Court under the Code of Civil Procedure, 1908 in respect of some
specified matters.
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Audit
Section 177
FBR has been empowered to appoint as many special audit panels as may be necessary for conducting audit
including a forensic audit of income tax affairs of any person or classes of persons. Formation and scope of
such audit panels will be governed by following new sub-sections inserted in this section:
(11)
The Board may appoint as many special audit panels as may be necessary, comprising two
or more members from the following:(a)
an officer or officers of Inland Revenue;
(b)
a firm of Chartered Accountants as defined under the Chartered Accountants Ordinance,
1961 (X of 1961);
(c)
a firm of Cost and Management Accountants as defined under the Cost and Management
Accountants Act, 1966 (XIV of 1966); or
(d)
any other person as directed by the Board,
to conduct an audit, including a forensic audit, of the income tax affairs of any person or classes of
persons and the scope of such audit shall be as determined by the Board or the Commissioner on
case to case basis.
(12)
Special audit panel shall be headed by a Chairman who shall be an officer of Inland
Revenue.
(13)
Powers under sections 175 and 176 for the purposes of conducting an audit under subsection (11), shall only be exercised by an officer or officers of Inland Revenue, who are member or
members of the special audit panel, and authorized by the Commissioner.
(14)
Notwithstanding anything contained in sub-sections (2) and (6), where a person fails to
produce before the Commissioner or a special audit panel under sub-section (11) to conduct an
audit, any accounts, documents and records, required to be maintained under section 174 or any
other relevant document, electronically kept record, electronic machine or any other evidence that
may be required by the Commissioner or the panel, the Commissioner may proceed to make best
judgment assessment under section 121 of this Ordinance and the assessment treated to have been
made on the basis of return or revised return filed by the taxpayer shall be of no legal effect.
(15)
If any one member of the special audit panel, other than the Chairman, is absent from
conducting an audit, the proceedings of the audit may continue, and the audit conducted by the
special audit panel shall not be invalid or be called in question merely on the ground of such
absence.
(16)
Functions performed by an officer or officers of Inland Revenue as members of the special
audit Panel, for conducting audit, shall be treated to have been performed by special audit panel.
(17)
The Board may prescribe the mode and manner of constitution, procedure and working of
the special audit panel.
Taxpayers registration
Section 181(4)
National Tax Number (NTN) has been replaced with Computerized National Identity Card (CNIC) issued by
National Database and Registration Authority (NADRA). From tax year 2015 and onwards, all individuals
shall use CNIC as NTN.
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The amendment needs further clarification / rules in respect of its implementation and application of existing
provisions of law regarding NTN.
Offences and penalties
Section 182
Minimum penalty of Rupees 50,000 in case any person fails to furnish a statement under section 115, final
taxation, section 165, periodical withholding tax statements or section 165A, furnishing of information by
banks, within the due date has been reduced to Rupees 10,000.
Moreover, penalty @ 0.1% of taxable income per week or Rupees 20,000 whichever is higher shall be paid
by any person who fails to furnish wealth statement or wealth reconciliation statement.
Prosecution for making false or misleading statements
Section 195(3)
Penalty of Rupees 25,000 or 100% of the amount of tax shortfall whichever is higher, shall be paid by any
person who makes a false or misleading statement to an Inland Revenue Officer either in writing or orally or
electronically in respect of furnishing of return of income u/s 114, statement of final taxation u/s 115, wealth
statement u/s 116, maintaining of record u/s 174, information in respect audit of the tax affairs or general
information u/s 176 or 177 of the Ordinance.
Power or function exercised and delegation
Section 210(1B) and Section 211
Sub-section (1B) of this section has been reworded to include special audit panel for the purpose of
delegation of powers or functions by the Commissioner to conduct audit. Substituted sub-section (1B) is as
under:
"(1B) The Commissioner may, by an order in writing, delegate to a special audit panel appointed
under sub-section (11) of section 177, or to a firm of chartered accountants or a firm of Cost and
Management Accountants appointed by the Board or the Commissioner to conduct an audit of
person under section 177, all or any of the powers or functions to conduct an audit under this
Ordinance.
Moreover, such powers or functions delegated by the Commissioner to special audit panel shall be treated as
having been exercised or performed by the Commissioner.
Automatic selection of audit
New section 214D
A person shall automatically be selected for audit of income tax affairs for a tax year if he fails to fulfill
certain parameters as provided in the following new section 214D:
214D. Automatic selection for audit.(1) A person shall be automatically selected for audit of its
income tax affairs for a tax year, if
(a) the return is not filed within the date it is required to be filed as specified in section 118, or,
as the case may be, not filed within the time extended by the Board under section 214A or
further extended for a period not exceeding thirty days by the Commissioner under section
119; or
(b) the tax payable under sub-section (1) of section 137 has not been paid.
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(2) Audit of income tax affairs of persons automatically selected under sub-section (1) shall be
conducted as per procedure given in section 177 and all the provisions of this Ordinance shall apply
accordingly:
Provided that audit proceedings shall only be initiated after the expiry of ninety days from the date as
mentioned in sub-section (1).
(3) Subject to section 182, 205 and 214C, sub-section (1) shall not apply if the person files the return
within ninety days from the date as mentioned in sub-section (1) and
(a) Twenty-five percent higher tax, than the tax paid during immediately preceding tax year, has been
paid by a person on the basis of taxable income and had declared taxable income in the return for
immediately preceding tax year; or
(b) tax at the rate of two percent of the turnover or the tax payable under Part I of the First Schedule,
whichever is higher, has been paid by a person alongwith the return and in the immediately
preceding tax year has either not filed a return or had declared income below taxable limit:
Provided that where return has been filed for the immediately preceding tax year, turnover
declared for the tax year is not less than the turnover declared for the immediately preceding tax
year.
(4) The provisions of sub-section (1) and sections 177 and 214C shall not apply, for a tax year, to a
person registered as retailer under rule (4) of the Sales Tax Special Procedure Rules, 2007 subject to the
condition that name of the person registered under rule (4) of the Sales Tax Special Procedure Rules,
2007 remained on the sales tax active taxpayers list throughout the tax year.
(5) Sub-section (4) shall have effect from the date as the Board may, by notification in the official
Gazette, appoint.
Reward to whistleblowers
New section 227B
Concept of reward to whistleblowers has been introduced whereby the FBR has been empowered to allow
reward to any person providing credible information leading to detection of tax in cases of concealment,
fraud, corruptions or evasion of tax etc. For this purpose, following new section 227B has been introduced:
227B. Reward to whistleblowers. (1) The Board may sanction reward to whistleblowers in cases of
concealment or evasion of income tax, fraud, corruption or misconduct providing credible information
leading to such detection of tax.
(2) The Board may, by notification in the official Gazette, prescribe the procedure in this behalf and also
specify the apportionment of reward sanctioned under this section for whistleblowers.
(3) The claim for reward by the whistleblower shall be rejected if
(a)
(b)
(c)
(d)
the information provided is of no value;

the Board already had the information;
the information was available in public records; or
no collection of taxes is made from the information provided from which the Board can pay
the reward.
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(4) For the purpose of this section, "whistleblower means a person who reports concealment or evasion
of income tax leading to detection or collection of taxes, fraud, corruption or misconduct, to the
competent authority having power to take action against the person or an income tax authority
committing fraud, corruption, misconduct, or involved in concealment or evasion of taxes.
Advance tax on private motor vehicles
Section 231B(6) & (7)
Following new sub-section (6) has been inserted to provide definition of date of first registration for the
purpose of collection of advance tax under this section:
"(6)
For the purposes of this section the expression "date of first registration means(a)
the date of issuance of broad arrow number in case a vehicle is acquired from the Armed
Forces of Pakistan;
(b)
the date of registration by the Ministry of Foreign Affairs in case the vehicle is acquired from
a foreign diplomat or a diplomatic mission in Pakistan;
(c)
the last day of the year of manufacture in case of acquisition of an unregistered vehicle from
the Federal or a Provincial Government; and
(d)
in all other cases the date of first registration by the Excise and Taxation Department.
Moreover, new sub-section (7) of this section also clarifies that for the purpose of this section and section
234, motor vehicle includes car, jeep, van, sports utility vehicle, pick-up trucks for private use, carvan
automobile, limousine, wagon and any other automobile used for private purpose.
Telephone and internet users
Section 236
Advance tax @ 14% of the amount of internet bill of a subscriber or sale price of internet prepaid card shall
also be collected from internet users.
Advance tax on purchase of air tickets
Section 236B
Exemption on collection of advance tax on purchase of domestic air ticket of Baluchistan coastal belt, Azad
Jammu and Kashmir, FATA, Gilgit-Baltistan and Chitral routes has been provided by adding a proviso after
sub-section (1) of this section.
Advance tax on sales to retailers
Section 236H
Collection of advance tax from the retailers at the time of sale of fertilizer to them by manufacturer,
distributor, dealer, wholesaler or commercial importer has been exempted. Moreover, every distributor or
dealer will now collect advance tax on sales to another wholesaler in respect of the specified sectors at the
specified rate.
Collection of advance tax by educational institutions
Section 236I(6) & Clause 89, Part IV, 2nd Schedule
Clause 89 of Part IV of Second Schedule providing exemption from collection of advance tax under this
section, to certain persons including non-residents has been omitted. Now, by relocating sub-clause (d) of
clause 89 as new sub-section (6) in this section, such exemption will remain available inter alia, to the
person who is non-resident and:
(i)
furnishes copy of passport as an evidence to the educational institution that during previous
tax year, his stay in Pakistan was less than one hundred eighty-three days;
(ii)
furnishes a certificate that he has no Pakistan-source income; and
(iii)
the fee is remitted directly from abroad through normal banking channels to the bank
account of the educational institution.
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Advance tax on purchase or transfer of immovable property
Section 236K(4) Proviso
According to sub-section (4), provisions in respect of collection of advance tax on purchase or transfer of
immovable property are not applicable to a scheme introduced by the Federal or a Provincial Government
or an Authority established under Federal or Provincial law for expatriate Pakistanis. Now, it is provided that
such exemption will be available if payment by expatriate Pakistanis is made in the foreign exchange
remitted from outside Pakistan through normal banking channels.
Advance tax under Chapter XII
Section 236O
Exemption from collection of advance tax already available under various sections of Chapter XII
Transitional Advance Tax Provisions or under certain clauses of Second Schedule has been consolidated in
new section 236O by stating as under:
236O. Advance tax under this chapter.- The advance tax under this chapter shall not be collected in the
case of withdrawals made by(a)
the Federal Government or a Provincial Government;
(b)
a foreign diplomat or a diplomatic mission in Pakistan; or
(c)
a person who produces a certificate from the Commissioner that his income during the tax
year is exempt.
Following new sections have been inserted in Chapter XII for collection of advance tax on banking
transactions otherwise than through cash, payments to residents for use of machinery and equipment,
education related expenses remitted abroad, payment of dividend in specie and collection of tax by Pakistan
Mercantile Exchange Limited (PMEX) from its members on sale / purchase of futures commodity contracts,
etc. Provisions contained in each section are as under:
236P. Advance tax on banking transactions otherwise than through cash. (1) Every banking company
shall collect advance adjustable tax from a non-filer at the time of sale of any instrument, including
demand draft, pay order, special deposit receipt, cash deposit receipt, short term deposit receipt, call
deposit receipt, rupee travellers cheque or any other instrument of such nature.
(2) Every banking company shall collect advance adjustable tax from a non-filer at the time of transfer of
any sum through cheque or clearing, interbank or intra bank transfers through cheques, online transfer,
telegraphic transfer, mail transfer, direct debit, payments through internet, payments through mobile
phones, account to account funds transfer, third party account to account funds transfers, real time
account to account funds transfer, real time third party account to account fund transfer, automated teller
machine (ATM) transfers, or any other mode of electronic or paper based funds transfer.
(3) The advance tax under this section shall be collected at the rate specified in Division XXI of Part IV
of the First Schedule, where the sum total of payments for all transactions mentioned in sub-section (1) or
subsection (2), as the case may be, exceed fifty thousand rupees in a day.
(4) Advance tax under this section shall not be collected in the case of Pakistan Realtime Interbank
Settlement Mechanism (PRISM) transactions or payments made for Federal, Provincial or local
Government taxes.
[However, according to the news in print and electronic media, the Federal Government has decided to
reduce rate of withholding tax from 0.6% to 0.3% for a period of three months up to 30 September 2015
with the condition that non-filers will file their tax returns for tax year 2015. After the expiry of 3 months
period, withholding tax @ 0.6% will be applicable if the person fails to file his return.]
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236Q. Payment to residents for use of machinery and equipment.- (1) Every prescribed person
making a payment in full or in part including a payment by way of advance to a resident person for
use or right to use industrial, commercial and scientific equipment shall deduct tax from the gross
amount at the rate specified in Division XXIII of Part IV of the First Schedule.
(2)
Every prescribed person making a payment in full or in part including a payment by way of
advance to a resident person on account of rent of machinery shall deduct tax from the gross amount
at the rate specified in Division XXIII of Part IV of the First Schedule.
(3)
The tax deductible under sub-sections (1) and (2) shall be final tax on the income of such
resident person.
(4)
In this section "prescribed person means a prescribed person as defined in sub-section (7)
of section 153.
(5)
The provisions of sub-section (1) and (2) shall not apply to

(a) Agricultural machinery; and
(b) machinery leased by a leasing company, an investment bank or a modaraba or a scheduled
bank or a development finance institution in respect of assets owned by the leasing
company or an investment bank or a modaraba or a scheduled bank or a development
finance institution.
236R. Collection of advance tax on education related expenses remitted abroad. (1) There shall be
collected advance tax at the rate specified in Division XXIV of Part-IV of the First Schedule on the
amount of education related expenses remitted abroad.
(2)
Banks, financial institutions, foreign exchange companies or any other person responsible
for remitting foreign currency abroad shall collect advance tax from the payer of education related
expenses.
(3)
Tax collected under this section shall be adjustable against the income of the person
remitting payment of education related expenses.
(4)
For the purpose of this section, "education related expenses includes tuition fee, boarding
and lodging expenses, any payment for distant learning to any institution or university in a foreign
country and any other expense related or attributable to foreign education.
236S. Dividend in specie. - Every person making payment of dividend-in specie shall collect tax
from the gross amount of the dividend in specie paid at the rate specified in Division I of Part III of
the First Schedule.
236T. Collection of tax by Pakistan Mercantile Exchange Limited (PMEX). (1) Pakistan Mercantile
Exchange Limited (PMEX) shall collect advance tax
(a) at the rates specified in Division XXII of Part IV of First Schedule from its members on
purchase of futures commodity contracts;
(b) at the rates specified in Division XXII of Part IV of First Schedule from its members on sale of
futures commodity contracts; and
(2)
The tax collected under clauses (a) and (b) of sub-section (1) shall be an adjustable tax.
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INCOME TAX ORDINANCE, 2001 THE FIRST SCHEDULE

THE FIRST SCHEDULE
Part I RATES OF TAX
Division I Rates of Tax for Individuals and Association of Persons
Clause (1)
Rates of tax imposed on taxable income of individuals and association of persons except salaried taxpayers
are as under:
S.No.
Taxable Income
Rate of tax
1.
Where the taxable income does not exceed Rs.

400,000
0%
2.
Where the taxable income exceeds Rs. 400,000

but does not exceed Rs. 500,000
7% of the
400,000
3.

Rs. 7,000 + 10% of the amount

exceeding Rs. 500,000
4.

but does not exceed Rs. 1,500,000

5.
Where the taxable income exceeds Rs. 1,500,000


exceeding Rs. 1,500,000
6.


7.

but does not exceed Rs.6,000,000

8.
Rs. 1,319,500 + 35% of the amount

amount
exceeding Rs.
Provided that in the case of an association of persons that is a professional firm prohibited from incorporating
by any law or the rules of the body regulating their profession, the 35% rate of tax mentioned against serial
No. 8 of the table shall be 32% for tax year 2016 and onwards.
Salaried individuals, where income from salary exceeds 50% of taxable income:
S. No.
Clause (1A)
Taxable Income
Rate of tax
1.
Where the taxable income does not exceed

Rs. 400,000
0%
2.
Where the taxable income exceeds Rs.

400,000 but does not exceed Rs. 500,000
2% of the amount exceeding Rs. 400,000
3.

500,000 but does not exceed Rs. 750,000
Rs. 2,000 + 5% of the amount exceeding Rs.

500,000
4.

750,000 but does not exceed Rs. 1,400,000
Rs. 14,500 + 10% of the amount exceeding

Rs. 750,000
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S. No.
Taxable Income
Rate of tax
5.

1,400,000 but does not exceed Rs.1,500,000
Rs. 79,500 + 12.5% of the amount exceeding

Rs. 1,400,000
6.


Rs. 1,500,000
7.

1,800,000 but does not exceed Rs. 2,500,000

Rs. 1,800,000
8.


Rs. 2,500,000
9.


Rs. 3,000,000
10


Rs. 3,500,000
11


Rs. 4,000,000
12

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

Rs. 7,000,000
Division II Rates of Tax for Companies

Rate of tax imposed on taxable income of a company, other than banking company, shall be 32% for the tax
year 2016, 31% for the tax year 2017 and 30% for the tax year 2018 and onwards.
Division IIA Rates of Super Tax
The rate of super tax imposed for rehabilitation of temporarily displaced persons shall be:
Person
Rate of tax
Banking Company
Person, other than a banking company, having income
equal to or exceeding Rs. 500 million
4%
3%
Super tax shall be charged on income for the tax year 2015 only.
Division III Rate of Dividend Tax
The rate of tax imposed under section 5 on dividend received from a company shall be:
(a) 7.5% in the case of dividends declared or distributed by purchaser of a power project privatized by
WAPDA or on shares of a company set up for power generation or on shares of a company, Supplying
coal exclusively to power generation projects.
(b) 12.5% in cases other than mentioned in clauses (a) and (c).
(c) 10% in case of dividend received by a person from a mutual fund.
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Provided further that the dividend received by a company from a collective investment scheme, Real
Estate Investment Trust Scheme or a mutual fund, other than a stock fund, shall be taxed at the rate of
25% for tax year 2015 and onwards.
Provided also that, if a developmental REIT scheme with the object of development and construction of
residential buildings is set up by 30th day of June 2018, tax imposed on dividend received by a person
from such developmental REIT scheme shall be reduced by 50% for three years from 30th day of June
2018.
Division IIIA Profit on Debt
As per newly inserted Division IIIA, the rates of tax for profit on debt imposed under section 7B shall be as
under:
Profit on Debt
Rate of tax
Where the profit on debt does not exceed Rs. 25,000,000
10%
Where the profit on debt exceed Rs. 25,000,000 but does

not exceed Rs. 50,000,000
Rs. 2,500,000 + 12.5% of the amount

Where the profit on debt exceed Rs. 50,000,000
Rs. 5,625,000 + 15% of the amount

Division VII Capital Gains on Disposal of Securities

The rates of tax to be paid under section 37A for the tax years 2015 and 2016 are as under:
Holding period
Rate of tax
Tax year 2015
Tax year 2016
12.5%
15%
Where holding period of a security is twelve months or more but

less than twenty four months
10%
12.5%
Where holding period of a security is twenty four months or more

but less than four years
0%
7.5%
Where holding period is more than four years
0%
0%
Where holding period of a security is less than twelve months
However, mutual fund or a collective investment scheme or a REIT scheme shall deduct capital gains tax, at
the rates as specified below, on redemption of securities as prescribed, namely:
Category
Rate
Individual & AOP

Company
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Stock Fund
Other Fund
10%
10%
10%
25%


Provided that in case of a stock fund if dividend receipts of the fund are less than capital gains, the rate of
tax deduction shall be 12.5%.
Provided further that no capital gains tax shall be deducted, if the holding period of the security is more
than four years.
Division IX Minimum Tax
As per amendments made in Division IX, minimum tax at the rate of 0.5% shall now be charged on
distributors of fertilizers instead of 0.2% and minimum tax on dealers of fertilizers shall also be charged @
0.5%.
Part II Rates of Advance Tax
The rate of advance tax to be collected by the Collector of Customs from every importer of goods on the
value of the goods imported, under section 148 shall be as under:
S.No.
1
Persons
Filer
Non-Filer
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
cabinets decision No. ECC-155/12/2004 dated the
9th December, 2004;
(iii) Persons importing urea;
(iv) Manufacturers covered under Notification No.
S.R.O. 1125(I)/2011 dated the 31st December, 2011
and importing items covered under S.R.O.
1125(l)/2011 dated the 31st December, 2011;
(v) Person importing gold;
(vi) Person importing cotton; and
(vii) Designated buyer of LNG on behalf of Government
of Pakistan, to import LNG.
Persons importing pulses
1% of import
value as increased
by customs-duty,
sales
tax
and
federal
excise
duty
1.5% of import
value as increased
by customs-duty,
sales
tax
and
federal excise duty
2% of import
value as increased
by customs-duty,
sales
tax
and
federal
excise
duty
3% of import
value as increased
by customs-duty,
sales
tax
and
federal
excise
duty
4.5%
5.5%
5.5%
6%
3%
of
import
value as increased
by customs-duty,
sales
tax
and
federal excise duty
(i)
Commercial importers covered under Notification No.

S.R.O. 1125(I)/2011 dated the 31st December, 2011 and
importing items covered under S.R.O. 1125(l)/2011
dated the 31st December, 2011.
4
5
6
7
Ship breakers on import of ships

Industrial undertakings not covered under S. Nos. 1 to 4
Companies not covered under S. Nos. 1 to 5
Persons not covered under S. Nos. 1 to 6
FINANCE ACT 2015

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4.5% of import
value as increased
by customs-duty,
sales
tax
and
federal excise duty
6.5%
8%
8%
9%


Part III DEDUCTION OF TAX AT SOURCE
Division I Advance Tax on Dividend
The rate of tax to be deducted on gross amount of dividend or dividend in specie paid under section 150 and
236S respectively, shall be as under:
(a)
7.5% in the case of dividends declared or distributed by purchaser of a power project privatized by
WAPDA or on shares of a company set up for power generation or on shares of a company, supplying
coal exclusively to power generation projects;
(b)
12.5% for filers other than mentioned in (a) above;
(c)
17.5% for non-filers other than mentioned in (a) above:

Provided that the rate of tax required to be deducted by a collective investment scheme, REIT scheme
or a mutual fund shall be:
Stock Fund
Individual
Company
AOP
10%
10%
10%
Money Market Fund, Income Fund

or REIT Scheme or any other fund
10%
25%
10%
Provided further that in case of a stock fund if dividend receipts of the fund are less than capital gains,
the rate of tax deduction shall be 12.5%
Provided further that, if a developmental REIT scheme with the object of development and
construction of residential buildings is set up by 30th day of June 2018, rate of tax on dividend received
by a person from such developmental REIT scheme shall be reduced by 50% for 3 years from 30th day
of June 2018.
Division IA Profit on Debt
The rate of tax to be deducted under section 151 shall be 10% of the yield or profit for filers and 17.5% of
the yield or profit paid, for non-filers:
Provided that for a non-filer, if the yield or profit paid is Rupees 500,000 or less, the rate shall be 10%.
Division II Payment to Non-Residents
Amended tax rates in respect of payments to non-resident person under section 152 are as under:
Description
Corporate
Filer
Non-filer
Non-Corporate
Filer
Non-filer
For supply of goods
4%
6%
4.5%
6.5%
For services other than transport services
8%
12%
10%
15%
For execution of contract
7%
10%
7.5%
10%
However, in case of execution of contract with sportsperson, tax will be deducted @ 10% of the gross
amount.
Division III Payments for Goods or Services
Amended tax rates in respect of payments for goods, services and contracts under section 153 are as under:
(1) Sale of goods [Section 153(1)(a)]:
(i) 4% of the gross amount payable, if the company is a filer and 6% if the company is a non-filer.
FINANCE ACT 2015

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(ii) In any other case, 4.5% of the gross amount payable, if the person is a filer and 6.5% if the
person is a non-filer.
(2) Rendering or providing services [Section 153(1)(b)]:
(i) 8% of the gross amount payable, if the company is a filer and 12% if the company is a non-filer.
(ii) In any other case, 10% of the gross amount payable, if the person is a filer and 15% if the person
is a non-filer.
(iii) In respect of person making payment to electronic and print media for advertising services:
a)
In case of filer, 1% of the gross amount payable; and
b) In case of a non-filer, 12% of the gross amount payable, if the non-filer is a company
and 15% if the non-filer is other than a company.
(3) Execution of contract [Section 153(1)(c)]:
(i) 10% of the gross amount payable in the case of sportspersons.
(ii) 7% of the gross amount payable, if the company is a filer and 10% if the company is a non-filer.
(iii) In any other case, 7.5% of the gross amount payable if the person is a filer and 10% if the person
is a non-filer.
Division VIA Petroleum Products
Rate of collection of tax under section 156A by every person selling petroleum products to petrol pump
operators shall be 12% of the amount of payment in case of filers and 15% of the amount of payment in case
of non-filers.
Part IV Deduction or Collection of Advance Tax
Division II Brokerage and Commission
The rate of collection of tax on brokerage and commission under section 233(1) shall be as under:
i.
In case of filers:a) 10% of the amount of the payment, in case of advertising agents.
b) 12% of the amount in all other cases.
ii.
In case of non-filers, 15% of the amount of payment.

Division III Tax on Motor Vehicles
(1)
As per revised rates, tax under section 234, in case of goods transport vehicles, tax of Rupees 2.50
per kilogram of the laden weight shall be charged for filer and Rupees 4 per kilogram of the laden weight for
non-filer.
(2)
Revised rates for collection of tax on passenger transport vehicles plying for hire on the basis of
registered seating capacity which are as under:
S. No.
(i)
(ii)
(iii)
Seating capacity
Rupees per seat per annum

Filer
Non-filer
Four or more persons but less than ten persons.

Ten or more persons but less than twenty persons.
Twenty persons or more.
FINANCE ACT 2015

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50
100
300
100
200
500

(3)
Revised rates of collection of tax under section 234 in case of other private motor vehicles shall be
as follows:
S. No.
1
2
3
4
5
6
7
Engine capacity
upto 1000cc
1001cc to 1199cc
1200cc to 1299cc
1300cc to 1499cc
1500cc to 1599cc
1600cc to 1999cc
2000cc and above
Filer
Non-filer
Rupees
800
1,500
1,750
2,500
3,750
4,500
10,000
Rupees
1,200
4,000
5,000
7,500
12,000
15,000
30,000
Division V Telephone Users

Advance tax rate under section 236, in case of subscriber of internet, mobile telephone and prepaid internet
or telephone card shall be 14% of the amount of bill or sales price of internet prepaid card or prepaid
telephone card or sale of units through any electronic medium or whatever form.
Division VI Cash Withdrawal from Banks
The rate of tax to be deducted under section 231A on cash withdrawal from banks shall remain 0.3% in case
of a filer and for non-filer, it will now be 0.6%, if the payment for cash withdrawal, or the sum total of the
payments for cash withdrawal in a day, exceeds Rupees 50,000.
Division VIA Advance Tax on Transactions in Bank
The rate of tax to be deducted under section 231AA shall be at the rate of 0.3% of the transaction for filers
and 0.6% for non-filers.
Division VII Advance Tax on Purchase, Registration and Transfer of Motor Vehicles
The rate of advance tax on registration and tax to be collected by manufacturer on sale of motor vehicles,
under sub-sections (1) and (3) respectively, of section 231B shall be as follows:
S. No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
Engine Capacity
Upto 850cc
851cc to 1000cc
1001cc to 1300cc
1301cc to 1600cc
1601cc to 1800cc
1801cc to 2000cc
2001cc to 2500cc
2501cc to 3000cc
Above 3000cc
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Filer
Rupees
Non-filer
Rupees
10,000
20,000
30,000
50,000
75,000
100,000
150,000
200,000
250,000
10,000
25,000
40,000
100,000
150,000
200,000
300,000
400,000
450,000


The rate of advance tax on transfer of registration of motor vehicles, under sub-section (2) of section 231B
shall be as follows:
S. No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
Engine Capacity
Upto 850cc
851cc to 1000cc
1001cc to 1300cc
1301cc to 1600cc
1601cc to 1800cc
1801cc to 2000cc
2001cc to 2500cc
2501cc to 3000cc
Above 3000cc
Filer
Rupees
Non-filer
Rupees
5,000
7,500
12,500
18,750
25,000
37,500
50,000
62,500
5,000
15,000
25,000
65,000
100,000
135,000
200,000
270,000
300,000
Provided that the rate of tax to be collected on transfer of registration of a private motor vehicle shall be
reduced by 10% each year from the date of first registration in Pakistan.
Division XIV Advance Tax on Sale to Distributors, Dealers or Wholesalers
Advance tax from distributors, dealers or wholesalers under section 236G shall be collected at following
rates:
Category of Sale
Filer
0.7%
0.1%
Fertilizers
Other than fertilizers
Rate of Tax
Non-filer
1.4%
0.2%
Division XIX Advance tax on Domestic Electricity Consumption

The rate of tax to be collected on domestic electricity consumption under section 235A shall be:
(i) 7.5% if the amount of monthly bill is Rupees 75,000 or more; and
(ii) 0% if the amount of monthly bill is less than Rupees 100,000. [In this clause, the amount of Rupees
100,000 should have also been reduced to Rupees 75,000]
Division XX Advance tax on International Air Ticket
The rate of tax to be collected under section 236L shall be:
S. No.
1
2
3
Type of Ticket
First / Executive Class
Other than economy
Economy
Rupees
16,000 per person
12,000 per person
-
Division XXI Advance Tax on Banking Transactions Otherwise than Through Cash
The rate of tax to be collected under section 236P shall be 0.6% of the transaction for non-filers, where the
sum total of payments for all transactions otherwise than through cash, exceeds Rupees 50,000 in a day.
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INCOME TAX ORDINANCE, 2001 THE FIRST AND SECOND SCHEDULE
Division XXII Rate of Collection of Tax by Pakistan Mercantile Exchange Limited

The rate of tax to be collected under clause (a) and (b) of sub-section (1) of section 236T, in case of sale or
purchase of future commodity contract shall be 0.05%.
Division XXIII Payment to a Resident Person for Right to Use Machinery and Equipment
Rate of collection of tax under section 236Q shall be 10% of the amount of payment.
Division XXIV Collection of Advance Tax on Education Related Expenses Remitted Abroad
Rate of collection of tax under section 236R shall be 5% of the amount of total education related expenses.
THE SECOND SCHEDULE
Part I Exemptions from Total Income
Income from annuity
Clause (20)
Exemption available in respect of any income received by a person from an annuity issued under the
Pakistan Postal Annuity Certificate Scheme on or after the 27 July 1977, not exceeding Rupees 10,000 per
annum, has been withdrawn.
Exemption to Punjab General Provident Investment Fund
Clause (57)
Exemption has been provided to Punjab General Provident Investment Fund established under the Punjab
General Provident Fund Act, 2009 (V of 2009) and the trust established thereunder.
Donations to The Indus Hospital, Karachi
Clause (61)(xliv) and (66)(xxxiii)
Donations to and any income derived by the The Indus Hospital, Karachi have been exempted from tax by
inserting the new sub-clause (xliv) in clause (61) and sub-clause (xxxiii) in clause (66).
Sale of immovable property to Developmental REIT Scheme
Clause (99A)
Profit and gains accruing to a person on sale of immovable property to a REIT scheme is exempt from tax
upto 30 June 2015. However, by adding proviso, the profit and gains on sale of immoveable property to a
Developmental REIT Scheme with the objective of development and construction of residential buildings
have been exempted up to 30 June 2020.
Exemption to inter-corporate dividend
Clause (103A)
By amendment in clause (103A), exemption to any income derived from inter-corporate dividend within the
group companies entitled to group taxation under section 59AA or section 59B has been subjected to the
condition that return of the group has been filed for the tax year.
Income from sale of certain shares
Clause (113)
Exemption provided to capital gain on sale of shares of a public company set up in any Special Industrial
Zone, has been withdrawn.
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INCOME TAX ORDINANCE, 2001 THE SECOND SCHEDULE

Income from Gwader Port
Clause (126A)
By substitution of this clause, exemption on income derived by China Overseas Ports Holding Company
Limited from Gwader Port operations has been extended from twenty years to twenty three years effective
from 6 February 2007.
Profit and gain derived by taxpayer located in certain affected areas
Clause (126F)
Exemption was provided to the profit and gains derived by a taxpayer located in the most affected and
moderately affected areas of Khyber Pakhtunkhwa, FATA and PATA, for a period of three years starting from
tax year 2010. Now this clause being redundant has been omitted.
Exemptions under certain new clauses:
Clauses (126I), (126J), (126K), (126L), (126M) and (126N)
Following new clauses from (126I) to (126N) have been inserted and thereby profits and gains of certain
taxpayers shall be exempt from tax, with conditions specified therein:
(126I) Profits and gains derived by a taxpayer, from an industrial undertaking set up by 31st day of
December, 2016 and engaged in the manufacture of plant, machinery, equipment and items with dedicated
use (no multiple uses) for generation of renewable energy from sources like solar and wind, for a period of
five years beginning from first day of July, 2015.
(126J) Profits and gains derived by a taxpayer, from an industrial undertaking set up between 1st day of July,
2015 and 30th day of June, 2016 engaged in operating warehousing or cold chain facilities for storage of
agriculture produce for a period of three years beginning with the month in which the industrial undertaking
is set up or commercial operations are commenced, whichever is later.
(126K) Profits and gains derived by a taxpayer, from an industrial undertaking set up between the 1st day of
July, 2015 and the 30th day of June, 2017 for establishing and operating a halal meat production unit, for a
period of four years beginning with the month in which the industrial undertaking commences commercial
production. The exemption under this clause shall apply if the industrial undertaking is
(a) owned and managed by a company formed for operating the said halal meat production unit and
registered under the Companies Ordinance, 1984 (XLVII of 1984), and having its registered office in
Pakistan;
(b) not formed by the splitting up, or the re construction or re constitution, of a business already in
existence or by transfer to a new business of any machinery or plant used in a business which was
being carried on in Pakistan at any time before the commencement of the new business; and
(c) halal meat production unit is established and obtains a halal certification within the period between
the first day of July, 2015 and the 30th day of June, 2017.
(126L) Profits and gains derived by a taxpayer, from an industrial undertaking set up in the provinces of
Khyber Pukhtunkhwa and Balochistan between 1st day of July, 2015 and 30th day of June, 2018 for a period
of five years beginning with the month in which the industrial undertaking is set up or commercial
production is commenced, whichever is later:
Provided that exemption under this clause shall be admissible where
a.
The industrial undertaking is setup between the first day of July, 2015 and 30th day of June, 2018, both
days inclusive; and
b. The industrial undertaking is not established by the splitting up or reconstruction or reconstitution of an
undertaking already in existence or by transfer of machinery or plant from an undertaking established in
Pakistan at any time before 1st July 2015.
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(126M) Profits and gains derived by a taxpayer from a transmission line project set up in Pakistan on or after
the1st day of July, 2015 for a period of ten years. The exemption under this clause shall apply to such project
which is
a.
owned and managed by a company formed for operating the said project and registered under the
Companies Ordinance, 1984 (XLVII of 1984), and having its registered office in Pakistan;
b. Not formed by the splitting up, or the reconstruction or reconstitution, of a business already in existence
or by transfer to a new business of any machinery or plant used in a business which was being carried on
in Pakistan at any time before the commencement of the new business; and
c.
Owned by a company fifty per cent of whose shares are not held by the Federal Government or
Provincial Government or a Local Government or which is not controlled by the Federal Government or
a Provincial Government or a Local Government:
Provided that the exemption under this clause shall not apply to projects set up on or after the thirtieth day of
June, 2018.
(126N) Profits and gains derived by a taxpayer from an industrial undertaking, duly certified by the Pakistan
Telecommunication Authority, engaged in the manufacturing of cellular mobile phones, for a period of five
years, from the month of commencement of commercial production.
Provided that the industrial undertaking has been set up and commercial production has commenced
between the first day of July, 2015 and the thirtieth day of June, 2017 and the industrial undertaking is not
formed by the splitting up, or the reconstruction or reconstitution, of a business already in existence or by
transfer to a new business of any machinery or plant used in a business which was being carried on in
Pakistan.
Exemption to LNG Terminal Operators and Terminal Owners
Clause (141)
Exemption has been provided on profit and gain derived by LNG terminal operators and terminal owners for
a period of five years beginning from the date when commercial operations are commenced.
Exemption to income of social security contribution
Clause (142)
By inserting this new clause, income from social security contributions derived by Balochistan employees
social security institution, employees social security institution Khyber Pakhtunkhwa, Punjab employees
social security institution and Sindh employees social security institution shall be exempt from tax. However,
all incomes other than income from social security contributions would remain taxable.
Part II Reduction in Tax Rates
The provisions of clauses (13C), (14), (14A), (14B) and (21) being relocated in respective places of the
Ordinance and accordingly have been omitted from this part of Second Schedule.
Cash Withdrawal by Exchange Company
Clause (28B)
Withholding tax at reduced rate of 0.15% shall be applicable on cash withdrawals by exchange companies
subject to the conditions specified in following new clause (28B). As a consequence, clause (61A) of Part IV
has been omitted.
FINANCE ACT 2015

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(28B) The rate of tax shall be 0.15% under section 231A on cash withdrawal by an exchange company,
duly licensed and authorized by the State Bank of Pakistan, exclusively dedicated for its authorized business
related transactions, subject to the condition that a certificate issued by the concerned Commissioner Inland
Revenue for a financial year mentioning details and particulars of its Bank Account being used entirely for
business transactions is provided.
Part III Reduction in Tax Liability
Penalty for failure to furnish statement
Clause (16)
Provisions regarding reduced penalty of Rupees 10,000 for failure to furnish statement under section 115,
165 or 165A has been incorporated in sub-section (1) of section 182 and accordingly this clause stands
omitted.
Part IV Exemption from Specific Provisions
Minimum Tax under section 113
Clause (11A)
Following new sub-clauses has been inserted in this clause to provide exemption from charge of minimum
tax under section 113:
xviii)
Companies, qualifying for exemption under clause (132B) of Part-I of this Schedule, in respect of
receipts from a coal mining project in Sindh, supplying coal exclusively to power generation
projects.
xix)
LNG Terminal Operators and LNG Terminal Owners.
xx)
Taxpayers located in the most affected and moderately affected areas of Khyber Pakhtunkhwa, FATA
and PATA for tax year 2010, 2011 and 2012 excluding manufacturers and suppliers of cement,
sugar, beverages and cigarettes.
xxi)
Rice Mills for the Tax Year 2015.
xxii)
Taxpayers qualifying for exemption under clauses (126I) of Part-I of this Schedule in respect of
income from manufacture of equipment with dedicated use for generation of renewable energy.
xxiii)
Taxpayers qualifying for exemption under clauses (126J) of Part-I of this Schedule in respect of
income from operating warehousing or cold chain facilities for storage of agriculture produce.
xxiv)
Taxpayers qualifying for exemption under clauses (126K) of Part-I of this Schedule in respect of
income from operating halal meat production, during the period mentioned in clause (126K).
xxv)
Taxpayers qualifying for exemption under clauses (126L) of Part-I of this Schedule in respect of
income from a manufacturing unit set up in Khyber Pukhtunkhwa Province between 1st day of July,
2015 and 30th day of June, 2018.
Group taxation
Clause (11B) and (11C)
Exemption available to group companies entitled for group taxation from withholding tax on dividend under
section 150 and on profit on debt under section 151 shall now be subjected to the condition that return of
the group has been filed for the latest completed tax year.
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LNG terminal operators and terminal owners
Clause (11D)
LNG Terminal Operators and Terminal Owners shall be exempt from the levy of alternate corporate tax
under section 113C of the Ordinance.
Withholding tax on imports
Clause (56)
By virtue of amendment in sub-clause (i), withholding tax on imports under section 148 shall not apply in
respect of goods classified under Pakistan Customs Tariff falling under chapter 86 and 89 except PCT
Heading 9918. Moreover, new sub-clause (ia) has been inserted and thereby following petroleum products
imported by Pakistan State Oil Company Limited, Shell Pakistan Limited, Attock Petroleum Limited, Byco
Petroleum Pakistan Limited, Admore Gas (Private) Limited, Chevron Pakistan Limited, Total-PARCO Pakistan
(Private) Limited, Hascol Petroleum Limited, Bakri Trading Company Pakistan (Private) Limited, Overseas Oil
Trading Company (Private) Limited, Gas and Oil Pakistan (Private) Limited and oil refineries shall be exempt
from payment of tax at import stage:
Petroleum oils and oils obtained from bituminous minerals crude (PCT code 2709.0000)
Furnace oil (PCT code 2710.1941)
High speed diesel oil (PCT code 2710.1931)
Motor spirit (PCT code 2710.1210)
J.P.1 (PCT code 2710.1912)
Base oil for lubricating oil (PCT code 2710.1993)
Light diesel oil (PCT code 2710.1921)
Super Kerosene Oil
Trading Houses
Clause (57)
Trading Houses, subject to certain conditions, are exempt from payment of minimum tax under Section 113
and are not subject to withholding tax under Section 153. New paragraph is inserted for further explanation
to Clause (57) that in-house preparation and processing of food and allied items for sale to customers shall
not disqualify a company from being treated as a Trading House, provided that all the conditions in this
clause are fulfilled and sale of such items does not exceed 2% of total sales.
International Finance Corporation
New Clause (67A)
By inserting this clause, exemption from applicability of provisions of section 100B and Eighth Schedule
regarding capital gain tax, has been granted to International Finance Corporation (IFC), in respect of
transactions carried on by them upto 30th day of June 2015 on any stock exchange of Pakistan.
Since, any income of IFC is already exempt from tax with reference to sub-clause (XXI) of clause (66) of Part I
of Second Schedule, hence, there was no need to restrict this exception upto 30 June 2015
Hajj group operators
Clause (72A)
Exemption provided to Hajj group operator in respect of Hajj operations from the applicability of Clause (l) of
Section 21, section 113 and section 152 of the Ordinance subject to payment of tax @ Rupees 5,000 per
Hajji has been extended to tax year 2015.
Imports
Clause (77)
Provisions of sections 148 and 153 shall also not be applicable on import and subsequent supply of tubular
daylighting devices such as solatube.
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Minimum tax on services 153(3)(b)
Clause (79)
Under the provisions of this clause, tax deducted under section 153(1)(b) on payments received by a
company for providing or rendering of services, was not treated as minimum tax. Now, by omitting this
clause, companies providing or rendering services have been made liable to pay minimum tax in accordance
with the proviso (b) of sub-section (3) of section 153, at the rate of 8% (12% if the company is a non-filer)
instead of 1% under section 113.
Wealth statement
Clauses (82) and (83)
An individual or a member of an association of persons will now furnish his wealth statement and
reconciliation of wealth statements alongwith his return of income without any threshhold of income or
deduction of final tax, in accordance with sub-sections (2) and (4) of section 116.
Exemption from invocation of section 111
Clause (86)
Investment made by an individual, association of persons or company in a Greenfield industrial undertaking

shall be exempt, subject to certain conditions, from probe of source of investment under Section 111 of the
Ordinance. One of the conditions is that the investment has to be made on or after 01 January 2014 and
commercial production of the said industrial undertaking has to be commenced on or before 30 June 2016.
Now, substitution in this clause, extends the period of commencement of commercial production to on or
before 30 June 2017.
Collection of advance tax by educational institutions and
advance tax on functions and gatherings
Clause (89) and Clause (90)
Exemptions from collection of advance tax available under these both clauses has been made part of the
relevant sections 236l and 236D after amendments. Hence, the aforesaid clauses have been omitted being
redundant.
Payment of tax at import stage
Clause (91) and Clause (92)
As per newly inserted Clause (91), provisions of section 148 of the Ordinance shall not apply to specified
tillage and seed bed preparation equipment, specified seeding or planting equipment, specified irrigation,
drainage and agro-chemical application equipment, specified harvesting, threshing and storage equipment
and specified port-harvest handling and processing and miscellaneous machinery.
As per newly inserted Clause (92), provisions of section 148 of the Ordinance shall not apply to aircraft,
maintenance kits for use in trainer aircrafts, aviation simulators, spare parts for use in aircrafts, trainer aircrafts
or simulators, machinery, equipment and tools for setting up maintenance, repair and overhaul workshop
and operational tools, machinery, equipment and furniture and fixtures on one time basis for setting up
Greenfield airports.
Halal meat
Clause (93)
As per newly inserted clause (93), provisions relating to deduction of tax on exports under section 154(1)
shall not apply to taxpayers operating halal meat production and qualifying for exemption under clause
(126K) of Part 1 of this Schedule.
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INCOME TAX ORDINANCE, 2001 THE FOURTH AND FIFTH SCHEDULE

THE FOURTH SCHEDULE
RULES FOR THE COMPUTATION OF THE PROFITS AND GAINS OF INSURANCE BUSINESS
Capital gains on disposal of shares
Rule (6B)
Rates of tax on capital gains on disposal of shares of listed companies, vouchers of Pakistan
Telecommunication Corporation, modaraba certificates or instruments of redeemable capital and derivative
products have been substituted as under:
S. No.
(1)
Period
(2)
Tax Year 2015

(3)
Tax Year 2016

(4)
1.
Where holding period of a security is less than twelve

months
12.5%
15%
Where holding period of a security is twelve months

or more but less than twenty four months
10%
12.5%
Where holding period of a security is twenty four

months or more but less than four years; and
0%
7.5%
2.
3.
Accordingly, proviso under this table in respect of exemption of tax on sale of securities held for a period of
more than twelve months, has been omitted.
Super tax for rehabilitation of temporarily displaced persons under section 4B
Super tax @ 3% of income equal to or exceeding Rupees 500 million shall be paid by insurance companies.
For this purpose, Rule 6D has been added in this Schedule as under:
6D. The provisions of section 4B shall apply to the taxpayers under this schedule and taxed at the rates
specified in Division IIA of Part I of the First Schedule.
THE FIFTH SCHEDULE
RULES FOR THE COMPUTATION OF THE PROFITS AND GAINS FROM THE EXPLORATION,
PRODUCTION OF PETROLEUM AND EXTRACTION OF MINERAL DEPOSITS (OTHER THAN
PETROLEUM)
By insertion of Rules 4AA and 2A in Part I and Part II respectively of this Schedule, super tax @ 3% of income
equal to or exceeding Rupees 500 million shall be paid by the taxpayers engaged in business of exploration
and production of petroleum and exploration and extraction of mineral deposits (other than petroleum) in
accordance with section 4B of the Ordinance.
FINANCE ACT 2015

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

RULES FOR THE COMPUTATION OF THE PROFITS AND GAINS OF A BANKING COMPANY AND TAX
PAYABLE THEREON
Tax on income computed
Rule (6), (6A) and (6B)
Income from dividend and capital gain on sale of shares of listed companies shall now be taxed under the
head income from business instead of separate rate of 10% and 12.5%, respectively. As provided in newly
inserted Rule (7B), from tax year 2015 and onwards, income from dividend and capital gains shall be taxed
at the rates specified in Division II of Part I of First Schedule.
Accordingly, Rule 6 of this Schedule has been amended and three provisos under this rule have been
omitted. Further, Rules 6A and 6B providing method of computation of net income from dividend and capital
gains have also been omitted.
Super tax
Rule (7C)
For the tax year 2015, tax for rehabilitation of temporarily displaced persons under section 4B shall be paid
at the rate specified in Division IIA of Part I of First Schedule.
THE EIGHTH SCHEDULE
RULES FOR COMPUTATION OF CAPITAL GAINS ON LISTED SECURITIES
Super tax
Rule (8)
For the tax year 2015, super tax under section 4B of this Ordinance shall be charged to taxpayers under this
Schedule at the rate specified in Division IIA of Part I of First Schedule.
FINANCE ACT 2015

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INCOME TAX ORDINANCE, 2001 GENERAL

Important provisions regarding income tax rates, advance tax, withholding tax rates, filing dates of various
periodical statements and return of income, etc. are given in this part for convenience of our clients.
INCOME TAX RATES TAX YEAR 2016
RATES OF TAX FOR COMPANIES
The rates of tax imposed on taxable income of companies falling under various categories are as under:
S. No.
1
2
3
4
Description
Rate of Tax
Modaraba Company [Clause (18), Part II, 2nd Sch.]

Company other than a banking company [Clause (I), Division II, Part I, 1st Sch.]
Banking Company (Division II, Part I, 1st Sch.)
Small Company [Paragraph (iii), Division II, Part I, 1st Sch.]
25%
32%
35%
25%
Moreover, the rate of tax imposed on taxable income of a company, other than banking company, shall be
31% for the tax year 2017 and 30% for the tax year 2018 and onwards.
The rate of tax imposed for rehabilitation of temporarily displaced persons for the tax year 2015 shall be:
Person
Rate of tax
Banking Company
4%
Person, other than a banking company, having

income equal to or exceeding Rs. 500 million
3%
MINIMUM TAX ON INCOME OF CERTAIN PERSONS

Rates of minimum tax u/s 113 for companies of various categories are as under: [Division IX, Part 1, 1st Sch.]
S.No.
1.
Person(s)
(a)
(b)
(c)
(d)
2.
(a)
(b)
(c)
(d)
Minimum Tax as
percentage of the
persons turnover for
the year
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);
Pakistani Airlines; and
Poultry industry including poultry breeding, broiler production, egg
production and poultry feed production;
Dealers or distributors of fertilizers.
0.5%
Distributors of pharmaceutical products, fast moving consumer

goods and cigarettes;
Petroleum agents and distributors who are registered under the
Sales Tax Act, 1990;
Rice mills and dealers; and
Flour mills.
0.2%
3.
Motorcycle dealers registered under the Sales Tax Act, 1990.
4.
In all other cases.
0.25%
1%
FINANCE ACT 2015

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INCOME TAX RATES ON DIVIDEND
The rate of tax imposed under section 5 on dividend received from a company shall be: [Division III, Part I,
1st Sch.]
(a) 7.5% in the case of dividends declared or distributed by purchaser of a power project privatized by
WAPDA or on shares of a company set up for power generation or on shares of a company, Supplying
coal exclusively to power generation projects; and
(b) 12.5% in cases other than mentioned in clauses (a) and (c)
(c) 10%, in case of dividend received by a person from a mutual fund.
Provided that the dividend received by a person from a stock fund shall be taxed at the rate of 12.5% for
the tax year 2015 and onwards, if dividend receipts are less than capital gains.
Provided further that the dividend received by a company from a collective investment scheme, Real
Estate Investment Trust Scheme (REIT) or a mutual fund, other than a stock fund, shall be taxed at the rate
of 25% for tax year 2015 and onwards.
Provided also that, if a developmental REIT scheme with the object of development and construction of
residential buildings is set up by 30th day of June, 2018, tax imposed on dividend received by a person
from such developmental REIT scheme shall be reduced by 50% for three years from 30th day of June,
2018.
From tax year 2015 and onwards, income from dividend received by a baking company shall be taxed @
35%. [Rule 7B, 7th Sch.]
TAX RATES FOR INDIVIDUALS AND ASSOCIATION OF PERSONS
The rates of tax chargeable for the Tax Year 2016 are as under:
Non-Salaried Individuals and association of persons (AOP)

S.No.
Taxable Income
Rate of tax
1.

Rs. 400,000
0%
2.

7% of the amount exceeding Rs.

400,000
6.


7.


3.
4.
5.
8.
FINANCE ACT 2015

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Rs. 1,319,500 + 35% of the amount



Provided that in the case of an association of persons that is a professional firm prohibited from incorporation
by any law or the rules of the body regulating their profession, the 35% rate of tax mentioned against serial
No. 8 of the table shall be 32% for tax year 2016 and onwards.
Salaried Individuals, where income from salary exceeds 50% of taxable income:
S. No.
Taxable Income
Rate of tax
1.

Rs. 400,000
0%
2.

2% of the amount exceeding Rs. 400,000
3.


Rs. 500,000
4.

750,000 but does not exceed Rs. 1,400,000

5.


Rs. 1,400,000
6.


7.

Rs. 137,000 + 17.5% of the amount

8.


Rs. 2,500,000
9.

Rs. 359,500 + 22.5% of the amount

10


Rs. 3,500,000
11

Rs. 597,000 + 27.5% of the amount

12

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

REDUCTION IN TAX LIABILITY OF SENIOR CITIZENS, DISABLED PERSONS AND TEACHERS OR

RESEARCHERS
Clause (IB), Part I, First Schedule
Where taxable income other than income on which the deduction of tax is final discharge of tax liability,
does not exceed Rupees 1,000,000, in a tax year of a taxpayer holding NADRAs CNIC for disabled person or
a taxpayer aged 60 years or more on the first day of that tax year, his tax liability on such income shall be
reduced by 50%.
FINANCE ACT 2015

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Clause (2), Part III, Second Schedule
The provision to reduce the income tax liability of a full time teacher or a researcher employed in a non
profit educational or research institution duly recognized by Higher Education Commission, a Board of
Education or a University recognized by the Higher Education Commission including government training
and research institution, continues to be available. The tax liability in such cases shall be reduced by an
amount equal to 40% of the tax payable.
ADJUSTMENT OF TAX CREDIT BY EMPLOYER
Every responsible person, while deducting tax on the income chargeable under the head salary of employees,
shall allow tax credit on donations to approved NPOs (section 61), investment in shares and insurance
(section 62); and contribution to approved pension funds (section 63) and make adjustments of tax withheld
from employee under other heads during the tax year after obtaining evidences as may be necessary, for
i)
ii)
iii)
tax withheld from the employee under this Ordinance during tax year;
any excess deduction or deficiency arising out of any previous deductions; or
failure to make deduction during the year.
The employers will, however, be responsible to obtain documentary evidences alongwith declaration from
employees on prescribed form IT-3, for correct application of relevant provisions of law. The said
declaration and evidences are required to be retained by the employer for at least 5 years.
VALUATION OF PERQUISITES, ALLOWANCES AND BENEFITS
In case of salaried taxpayers special allowance and medical allowance are exempt from tax under Clause
(39) and Clause (139) respectively of Part I of Second Schedule. However, value of other perquisites,
allowances and benefits provided by the employer shall be included in income of the employee in
accordance with the rules 4 to 6 of Part I of Chapter II of Income Tax Rules, 2002 as reproduced below:
4.
Valuation of Accommodation - The value of accommodation provided by an employer to the

employee shall be taken equal to the amount that would have been paid by the employer in case
such accommodation was not provided.
Provided that the value taken for this purpose shall, in any case, not be less than forty five percent of
the minimum of the time scale of the basic salary or the basic salary where there is no time scale.
Provided further that where House Rent Allowance is admissible @ thirty per cent, the value taken
for the purpose of this rule shall be an amount not less than thirty per cent of minimum of the time
scale of basic salary or the basic salary where there is no time scale.
5.
Valuation of conveyance.- The value of conveyance provided by the employer to the employee shall
be taken equal to an amount as below: (i)
Partly for personal and

partly for official use
5% of:
(a) the cost to the employer for acquiring the motor vehicle; or
(b) the fair market value of the motor vehicle at the
commencement of the lease, if the motor vehicle is taken on
lease by the employer;
FINANCE ACT 2015

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(ii)
For personal use only
10% of:
(a) the cost to the employer for acquiring the motor vehicle; or,
(b) the fair market value of the motor vehicle at the
commencement of the lease, if the motor vehicle is taken on
lease by the employer; and
6.
For the purpose of this part, employee includes a director of a company.
RATE OF TAX FOR CAPITAL GAIN ON SALE OF SECURITIES

The rates of tax to be paid under section 37A, are as under: [Division VII, Part I, 1st Sch.]
Holding period
Rate of tax
Tax year 2015
Tax year 2016
Where holding period of a security is less than twelve

months
12.5%
15%
Where holding period of a security is twelve months or

more but less than twenty four months
10%
12.5%
Where holding period of a security is twenty four months

or more but less than four years
0%
7.5%
Where holding period is more than four years
0%
0%
The rate for companies in respect of debt securities shall be as specified in Division II of Part I of First
Schedule which is 32% for the tax year 2016, 31% for the tax year 2017 and 30% for the tax year 2018 and
onwards.
From tax year 2015 and onwards, income from capital gains in case of banking company shall be taxed @
35%. [Rule 7B, 7th Sch.]
Mutual fund or a collective investment scheme or a REIT scheme shall deduct capital gains tax, at the rates as
specified below, on redemption of securities as prescribed namely:
Category
Rate
Individual & AOP

Company
Stock Fund
Other Fund
10%
10%
10%
25%
Provided that in case of a stock fund if dividend receipts of the fund are less than capital gains, the rate of
tax deduction shall be 12.5%.
Provided further that no capital gains tax shall be deducted, if the holding period of the security is more
than four years.
FINANCE ACT 2015

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RATE OF TAX ON CAPITAL GAIN ON DISPOSAL OF IMMOVABLE PROPERTY
Holding period
Up to one year
More than one year but not more than two years
More than two years
Rate of tax
10%
5%
0%
ADVANCE TAX UNDER SECTION 147

Every taxpayer whose income was charged to tax for the latest tax year under this Ordinance excluding the
followings shall pay advance tax for the year under section 147 of Income Tax Ordinance, 2001 as reduced
by the tax already paid/deducted at source in the year:
i)
ii)
iii)
iv)
Dividend received from a company (Section 5)

Income of a non resident from Pakistan-source royalty or fee for technical services, shipping and
transport (Sections 6 & 7)
Salary income subject to deduction of tax (Section 149)
All income where the tax collected or deducted is considered as final tax (Section 168)
Advance tax in case of an individual, will be calculated in accordance with the following formula:
(A/4)-B
Where
A
is the tax assessed to the taxpayer for the latest tax year under the Ordinance; and
is the tax paid in the quarter for which a tax credit is allowed under section 168, other than tax
deducted on dividend income, salary income or income from property.
Individual whose latest assessed income excluding incomes referred to in items (i) to (iv) above is less than
Rupees 500,000 is not required to pay advance income tax under section 147 of Income Tax Ordinance,
2001.
Where the taxpayer is an association of persons or a company, advance tax will be computed according to
the following formula:
(AxB/C)D
Where
A
is the taxpayers turnover for the quarter
is the tax assessed of the taxpayer company for the latest tax year
is turnover of the taxpayer for the latest tax year
is the total amount of tax paid/deducted in the quarter other than tax collected/deducted which is
considered as final tax.
FINANCE ACT 2015

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Adjustable advance tax on capital gain from sale of securities will be computed at following rates: [Section
147(5B)]
Where holding period of a security is less

than 6 months
Where holding period of a security is 6
months or more but less than 12 months
2% of the capital gains derived during the quarter

1.5% of the capital gains derived during the quarter
However, provisions regarding advance tax on capital gain from sale of securities are not applicable to
individual investors.
In case the taxpayer is an association of persons or a company, it shall estimate the tax payable by it for the
relevant tax year at any time before the 2nd installment is due. In case the tax payable is likely to be more
than the amount that the taxpayer is required to pay under sub-section (4), the taxpayer shall furnish to the
Commissioner on or before the due date of the 2nd quarter an estimate of the amount of tax payable by the
taxpayer and pay 50% of such amount by the due date of the 2nd quarter of the tax year after making
adjustment for the amount, if any, already paid in terms of sub-section (4). The remaining 50% of the
estimate shall be paid in two equal installments payable by the due date of the 3rd and 4th quarter of the tax
year. Similarly, according to the provisions of sub-section (6), if the tax payable is less than the tax due on the
said basis, every taxpayer who is required to pay advance tax, after furnishing the estimates to Commissioner,
will pay such estimated amount after adjustment of tax already paid. The provision of minimum tax will also
be taken into account while computing advance tax liability on such basis.
New company or an association of persons, are required to pay advance income tax even in the first year of
their operation. The taxpayer will estimate the amount of advance tax payable on quarterly income basis and
thereafter pay such amount after taking into account minimum tax payable under section 113. If minimum
tax payable comes more than the advance tax calculated on the basis of quarterly income, then advance tax
will be paid equal to minimum tax calculated @ 1% on aggregated turnover of the quarter after adjustment of
the amount already paid during the quarter, if any.
Where the advance tax paid on the basis of estimation under sub-section (4A) or (6) of section 147 is less
than 90% of the tax chargeable for the relevant tax year, the taxpayer shall be liable to pay default surcharge
under section 205(IB) at the rate of 12% per annum on the amount by which the tax paid by him falls short of
the 90%. Such default surcharge shall be calculated from 1st day of April in that year to the date on which the
assessment is made or the 30th day of June of the financial year next following whichever is the earlier. [Subsection (1B) of Section 205]
DATE OF PAYMENT OF ADVANCE TAX
Tax Payable For
Individuals
On or Before
Companies and AOPs (excluding
Banking Company)
September quarter
15 September
25 September
December quarter
15 December
25 December
15 March
25 March
15 June
15 June
March quarter
June quarter
FINANCE ACT 2015

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Advance tax on capital gain from sale of securities is payable within 21 days from the close of each quarter
except last quarter which is payable on or before 30 June of each year. [Section 147(5b)]
Banking company will be required to pay advance tax under section 147 in 12 equal installments on or
before 15th of every month. [Rule 5(1) of the Seventh Schedule]
PAYMENT OF TAX COLLECTED / DEDUCTED (RULE 43 OF INCOME TAX RULES, 2002)
Tax collected / deducted by
Deposit into Government treasury
Federal / Provincial Government
On the same day
Other persons
Within 7 days from the end of each week ending on Sunday
DATE OF FILING OF STATEMENTS UNDER SECTION 165 (Rule 44 of Income Tax Rules, 2002)
Every prescribed person shall furnish or e-file statement under sub-section (1) of section 165 by 15th day of
the month following the month to which the withholding tax pertains.
ANNUAL STATEMENT
Annual statements will be furnished on or before 31 August of each year by the person deducting tax from
salary under section 149. [Section 165(6)]
DATE OF FILING OF RETURN OF INCOME / STATEMENT UNDER SECTION 115(4)
Category of Taxpayer
Date of Filing
Companies: (For return under section 114, statements under sections 115(4) and 165)
Having tax year ending between 01 January to 30 June
31 December
Other cases
30 September
Annual Statement of deduction of Income tax from salary
31 August
Other than Companies
Annual Statement of deduction of income tax from salary
31 August
Return of income through e-portal in the case of salaried person
31 August
Statement of final tax under section 115(4)
31 August
Return of income
30 September
FINANCE ACT 2015

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

Section
Nature of Payment / Transactions
148
1.(i) Industrial undertaking importing

remeltable steel (PCT Heading 72.04) and
directly reduced iron for its own use [Sr.
No. 1(i) of Table, Part II, 1st Sch.]
(ii) Import of potassic fertilizers in
pursuance of Economic Coordination
Committee of the Cabinets decision No.
ECC-155/12/2004 dated the 09 December
2004 [Sr. No. 1(ii) of Table, Part II, 1st Sch.]
(iii) Import of Urea [Sr. No. 1(iii) of Table,
Part II, 1st Sch.]
(iv)
Manufacturers
covered
under
Notification No. S.R.O. 1125(I)/2011
dated 31 December 2011 and importing
items covered under S.R.O. 1125(I).2011
dated 31 December, 2011[Sr. No. 1(iv) of
Table, Part II, 1st Sch.]
(v) Person importing gold [Sr. No. 1(v) of
(vi) Person importing cotton [Sr. No. 1(vi)
of Table, Part II, 1st Sch.]
(vii) Designated buyer of LNG on behalf of
Government of Pakistan, to import LNG.
[Sr. No. 1(vii) of Table, Part II, 1st Sch.]
2. Import of pulses [Sr. No. 2 of Table, Part
II, 1st Sch.]
Tax Rate for

Deduction / Collections
Filer
1% of
import
value as
increased
by customs
duty, sales
tax and
federal
excise duty
Non-filer
1.5% of
import
value as
increased
by
customsduty, sales
tax and
federal
excise duty
Responsibility for
Deduction / Deposit
Collector of customs
-do-
-do-do-
-do-do-do-
2% of import
value as
increased by
customs
duty, sales
tax and
federal excise
duty
3% of
import
value as
increased
by customs
duty, sales
tax and
federal
excise duty
FINANCE ACT 2015

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Remarks
Final - except the followings (Sec.148(7)):

(a) raw material, plant, machinery, equipment
and parts by an industrial undertaking for
its own use.
(b) fertilizer by manufacturer of fertilizer.
(c) Motor vehicles in CBU condition by
manufacturer of motor vehicles.
(d) Large import houses.
(e) Foreign produced film imported for the
purpose of screening and viewing.
(f) Edible oil and packing material (will be
treated as minimum tax) [Sec. 148(8)].


Section
3. Commercial importers covered under

Notification No. S.R.O. 1125(I)/2011
dated 31 December 2011 and importing
items covered under S.R.O. 1125(I)/2011
dated the 31 December, 2011[Sr. No. 3 of
4. Ship breakers on import of ships [Sr.

No. 4 of Table, Part II, 1st Sch.]
5. Industrial undertakings not covered
under S. Nos. 1 to 4 [Sr. No. 5 of Table,
Part II, 1st Sch.]
6. Companies not covered under S. Nos. 1
to 5 [Sr. No. 6 of Table, Part II, 1st Sch.]
7. Persons not covered under S. Nos. 1 to
6 [Sr. No. 7 of Table, Part II, 1st Sch.]
148A
Purchase of locally produced edible oil by

manufacturers of cooking oil and
vegetable ghee.
149(1)
Basic salary and taxable allowances
Tax Rate for

Responsibility for
Deduction / Deposit
Remarks
Filer
3% of
import
value as
increased
by customs
duty, sales
tax and
federal
excise duty
4.5%
Non-filer
4.5% of
import
value as
increased
by customs
duty,
sales tax
and federal
excise duty
6.5%
5.5%
8%
5.5%
8%
6%
9%
2%
2%
Person making the

payment
Final
Employer
Adjustable. Exempt where the taxable income

does not exceed Rupees 400,000. [Cl (IA),
Division I, Part I, 1st Sch.]
Average rate
Tax deducted at source of the employee, short /

excess tax deducted from salary, tax credits
under sections 61, 62, 63 etc. can be adjusted
by the employer. [Sec. 149(1)].
Payment of salary more than Rupees 15,000
FINANCE ACT 2015

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Section
Tax Rate for

Filer
Responsibility for
Deduction / Deposit
Remarks
Non-filer
should be through crossed cheques or direct
transfer of funds to the employees bank
account. [Sec. 21(m)]
(3)
Directorship fee or fee for attending board

meeting or such fee by whatever name
called
20%
20%
Employer / responsible
person
for
making
payment
Adjustable
150
i Dividend declared or distributed by

purchaser of power project privatized by
WAPDA. or on shares of a company set up
for power generation or on shares of a
company, supplying coal exclusively to
power generation projects.[Division I, Part
III, 1st Sch.]
ii other than mentioned in (i) above
7.5%
7.5%
Every person paying

dividend
12.5%
17.5%
Final - Following are exempt:

- any income derived from inter-corporate
dividend within the group companies entitled to
group taxation under section 59AA or 59B
subject to condition that return of the group has
been filed for the tax year. [Cl. (103A), Part I,
2nd Sch.]
- Payment to approved Pension fund,
recognized
provident
fund,
approved
superannuation fund or approved gratuity fund
etc. [Cl. (47B), Part IV, 2nd Sch.]
10%
17.5%
Every person making

payment
Adjustable where taxpayer is a company or profit

on debt is taxable under section 7B and for nonfiler, equal to tax deductible in case of filer.
10%
17.5%
Banking company or
financial institution
10%
17.5%
Federal Government,
Provincial Government
or local Government
10%
17.5%
Banking company,
financial institution, etc.
If the yield or profit paid is Rupees 500,000 or

less, the rate of tax for non-filer shall be 10%
No tax will be deducted in following cases:
Yield or profit on investment in Bahbood
Saving Certificates or Pensioners Benefit
Account. [Cl. (36A), Part IV, 2nd Sch]
- If monthly installment in monthly income
saving scheme does not exceed Rupees 1,000[Cl. (59) (iv) (b), Part IV, 2nd Sch.].
- Any yield from National Saving Schemes of
-do-
151(1):
(a)
(b)
(c)
(d)
Yield on an account, deposit or a

certificate under the National Saving
Scheme or post office saving account
Profit on a debt, being an account or
deposit maintained with the Banking
company or financial institution
Profit on any security other than that
referred in Clause (a), issued by Federal
Government, Provincial Government or
local Government.
Profit on bond, certificate, debenture,
security or instrument of any kind to any
person other than financial institution
FINANCE ACT 2015

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Section
Tax Rate for

Filer
Responsibility for
Deduction / Deposit
Remarks
Non-filer
Directorate of National Savings where
investment was made on or before 30 June
2001 and any income derived from Mahana
Amdani Account where monthly installment
does not exceed Rupees 1,000 shall continue to
remain exempt and any person paying such
yield or income shall not deduct tax u/s 151.
The recipient of such receipt or income is not
required to produce exemption certificate in this
regard [S. 239(14)]
152
(1)
Royalty or fee for technical services to non

resident
15%
15%
Every person making

payment
Final
Payment to non-resident
account of certain contracts
on
6%
6%
Every person making

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

insurance or re-insurance premium
5%
5%
Every person making

payment
Final
(1AAA)
Payment for advertisement services to nonresident media person relaying from

outside Pakistan [Cl. (3) Div II, Part III, Ist
Sch.]
10%
10%
Every person making

payment
Final
(2)
Payment to non-resident other than

amount to which sub-section (1), (IA),
(IAA) or (IAAA) above applies
20%
20%
Every person making

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

Pakistan, in respect of profit on debt [Cl.
(5A), Part II, 2nd Sch.]
10%
10%
Every person making

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

of 2nd Schedule
(1A)
persons
FINANCE ACT 2015

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Section
(2A)(a)
(2A)(b)
(2A)(c)
Payment to PE for sale of goods

- In case of company
- In other case
i) Payment to PE for transport services
Filer
Non-filer
4%
4.5%
6%
6.5%
2%
2%
ii) Payment to PE for services in other

cases
- In case of company
- In other case
8%
10%
12%
15%
Payment to PE in any other case

- In case of sportsperson
10%
10%
In case of company
In other case
7%
7.5%
10%
10%
-Sale of rice, cotton seed or edible oil

[Div III, Part III, 1st Sch.]
1.5%
1.5%
153
(1)(a)
Tax Rate for

-Sale of any other goods

[Div III, Part III, 1st Sch.]
--in case of companies
--in case of other taxpayers
4%
4.5%
6%
6.5%
FINANCE ACT 2015

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Responsibility for
Deduction / Deposit
Remarks
Every person making

payment
Adjustable
Every person making

payment
Every person making
payment
Adjustable
Every person making

payment
Adjustable
Every prescribed person

making payment
Final
(Adjustable for
manufacturing
company and listed
company)

making payment
Final
(Adjustable for
manufacturing
company and listed
company)
Adjustable
Gross
amount
payable for sale of
goods shall include
the
sales
tax.
[S.153(1)]
Tax will not be
deducted on account
of payments made
for:
Sale of goods not
exceeding
Rs.
25,000 in a financial
year


Section
-Sale of cigarettes and pharmaceutical

products by distributors of such products
and by large distribution houses subject to
the fulfillment of conditions u/s 148(7).
[Cl. (24A), Part II, 2nd Sch.]
Local sales, supplies to taxpayers as per
clause (45A) of Part IV of 2nd Schedule.
(1)(b)
Rendering or providing of services:

[Cl. (2), Div III, Part III, 1st Sch.]
- transportation
- electronic and print media for advertising
services:
-in case of companies
- in case of other taxpayers
Tax Rate for

Filer
1%
Non-filer
1%
1%
1%
Responsibility for
Deduction / Deposit
Remarks

making payment
Final
(Adjustable for
manufacturing
company and listed
company)
Every person making

payment
Final

making payment
2%
2%
Minimum
1%
1%
12%
15%
Adjustable
Minimum
8%
10%
12%
15%
Adjustable
Minimum
- others:
- in case of companies
FINANCE ACT 2015

- 50 -
Services
and
execution of contracts
not exceeding Rs.
10,000 in a financial
year. Provided that
where
the
total
payments
in
a
financial year, exceed
Rs. 25,000 / 10,000
as stated above, the
taxpayer will deduct
tax from the payments
including
the
payments
made
earlier
without
deduction
of
tax
during
the
same
financial year [SRO
586(1)/91
dated
30.06.1991]
Tax deducted on
account
of
the
followings will not be
final tax: [Sec.153(3)]
Sale of goods and
execution of contracts
by a public company
listed on a registered
stock exchange in
Pakistan.


Section
(1)(c)
(2)
Services provided to taxpayers as per

clause (45A) of Part IV of 2nd Schedule
Execution of a contract (Residents)
[ Cl. (3), Div III, Part III, 1st Sch.]
- in case of companies
- in case of sportsperson
Payments made by every exporter or an
export house to a resident person or
permanent establishment in Pakistan, on
account of rendering of services of
stitching, dying etc. [Cl. (3), Division IV,
Part III, 1st Sch.]
Tax Rate for

Filer
1%
Non-filer
1%
7%
7.5%
10%
1%
10%
10%
10%
1%
Responsibility for
Deduction / Deposit
Every person making
payment
making payment
Every exporter or export

house
Remarks
Minimum
Final
(Adjustable for listed
companies)[Sec153(3)]
Final
Final
Advertisement
services by owners of
newspaper
and
magazines.
Rendering
or
providing of services
154(1)
Realization of foreign exchange on

account of export of goods by exporter.
1%
1%
Every authorized dealer

in foreign exchange
(2)
5%
5%
1%
1%
Every authorized dealer

in Foreign Exchange
Every banking company
(3A)
Commission due to an indenting

commission agent.
Sale of goods to an exporter under in land
back to back L/C.
Export of goods Export Processing Zone
1%
1%
Export Processing Zone

Authority
-do-
(3B)
Indirect exporter
1%
1%
Direct exporter, export

house
-do-
(3C)
Clearing of goods
1%
1%
-do-
155
Payment in full or part (including advance)

on account of rent of immovable property
(including rent of furniture and fixture and
services relating to such property)
(3)
Prescribed persons as
mentioned
in
subsection (3) of section
155
FINANCE ACT 2015

- 51 -
Final. Minimum tax if the taxpayer opts an

option not to be subject to final tax at the time
of filling of return.
-do-do-


Section
Tax Rate for

Filer
Individuals and Association of Persons

where the gross amount of rent is:
Up to Rs. 150,000
156
Adjustable
Nil
10% of the amount
exceeding Rs.150,000
Over Rs. 1,000,000
Rs. 85,000 + 15% of the

amount exceeding Rs.
1,000,000
15%
15%
- Payment of prize on a prize bond or

cross word puzzle.
- Payment on winning from a raffle,
lottery, prize on winning a quiz, prize
offered by companies for promotion of
sales.
15%
15%
20%
20%
156A
Commission paid or discount allowed to

petrol pump operator
12%
15%
156B
Withdrawal of balance under pension

fund:
(a) Withdrawn before the retirement age
(b) Withdrawn if in excess of 50% of
accumulated balance at or after the age of
retirement
Remarks
Non-filer
Rs. 150,001 Rs. 1,000,000
Company
Responsibility for
Deduction / Deposit
Average rate [Sec. 12(6)]

of tax for the last 3 years
or tax rate for the year
which ever is less
- do -
FINANCE ACT 2015

- 52 -
Adjustable
Every person making
payment
Every person making
payment
Final
Every person selling

petroleum products
Final
Pension fund manager
Adjustable - Tax will not be deducted:

i) in care of disability
ii) on share of the nominated survivor of the
deceased person
iii) invested in an approved income payment
plan
iv) paid to life insurance company for purchase
of approved annuity plan
Final
Where the prize is not

in cash, the person
while giving the prize
shall collect tax on
the fair market value
of
the
prize.
[Sec.156(2)]


Section
Tax Rate for

Filer
Responsibility for
Deduction / Deposit
Non-filer
TRANSITIONAL ADVANCE TAX
231A
231AA
231B
(1)
Remarks
Advance tax under this chapter shall not be

collected in case of withdrawals made by the
Federal Government, Provisional Government,
foreign diplomat or a diplomatic mission in
Pakistan or a person who produces a certificate
from the Commissioner that his income during
the tax year is exempt.
Adjustable tax - No tax deduction, if cash
withdrawal does not exceed Rupees 50,000, in
a day. However, if cash amount withdrawn
exceeds Rs. 50,000 in a day, tax will be
deducted on the whole amount withdrawn.
[Circular No. 9 of 2008 dated 15 August 2008].
Cash withdrawal from a bank
0.3%
0.6%
Banking company
Sale of various banking instruments against

cash, receipt of cash on cancellation of
any of these instruments and transfer of
any sum against cash through online
transfer, telegraphic transfer, mail transfer
or any other mode of electronic transfer.
0.3%
0.6%
Banking company, nonbanking

financial
institution,
exchange
company,
authorized
dealer
of
foreign
exchange.
Adjustable No tax will be collected where

sum total of the transaction does not exceed
Rupees 25,000 in a day.
(Rupees)
10,000
25,000
40,000
100,000
150,000
200,000
300,000
400,000
450,000
Motor
vehicle
registration authority of
Excise and Taxation
Department
Adjustable
(Rupees)
10,000
20,000
30,000
50,000
75,000
100,000
150,000
200,000
250,000
Registration of a new locally manufactured

motor vehicle:
upto 850 cc
851 cc to 1000 cc
1001 cc to 1300 cc
1301 cc to 1600 cc
1601 cc to 1800 cc
1801 cc to 2000 cc
2001 cc to 2500 cc
2501 cc to 3000 cc
Above 3000 cc
FINANCE ACT 2015

- 53 -


Section
Tax Rate for

Filer
(2)
(3)
233
233A(I)
Transfer of registration or ownership of a

motor vehicle:
upto 850 cc
851 cc to 1000 cc
1001 cc to 1300 cc
1301 cc to 1600 cc
1601 cc to 1800 cc
1801 cc to 2000 cc
2001 cc to 2500 cc
2501 cc to 3000 cc
Above 3000 cc
Sale of motor vehicle:
Engine Capacity
upto 850 cc
851 cc to 1000 cc
1001 cc to 1300 cc
1301 cc to 1600 cc
1601 cc to 1800 cc
1801 cc to 2000 cc
2001 cc to 2500 cc
2501 cc to 3000 cc
Above 3000 cc
Payment on account of brokerage or
commission made to a person:
- Commission agents other than
advertising agents and export
indenting commission agents
- Advertising agents
- Purchase of shares as per clause (a)
- Sale of shares as per clause (b)
Responsibility for
Deduction / Deposit
Remarks
Non-filer
-do-
(Rupees)
5,000
7,500
12,500
18,750
25,000
37,500
50,000
62,500
(Rupees)
5,000
15,000
25,000
65,000
100,000
135,000
200,000
270,000
300,000
(Rupees)
10,000
20,000
30,000
50,000
75,000
100,000
150,000
200,000
250,000
(Rupees)
10,000
25,000
40,000
100,000
150,000
200,000
300,000
400,000
450,000
12%
15%
10%
15%
0.01%
0.01%
0.01%
0.01%
FINANCE ACT 2015

- 54 -
Manufacturer of motor
vehicle
- Tax will not be collected if vehicle is

transferred after five years from the date of
registration in Pakistan.
- Rate of tax to be collected shall be reduced by
10% each year from the date of first registration
in Pakistan.
- Tax will not be deducted if a person produces
evidence that tax while transfer of registration or
ownership in case of locally manufactured or
tax u/s 148 in the case of imported vehicle was
collected from the same person in respect of the
same vehicle.
Federal
Government,
Provincial Government,
Local Government, a
Company or an AOP
(termed as principal)
Final
Stock Exchange
Stock Exchange
Adjustable
Adjustable


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

member, margin financer, or security
lender
234
Advance tax will be collected at the time

of collecting motor vehicle tax:
(1) In the case of goods transport vehicles
(2) In the case of passenger transport

vehicles plying for hire with registered
seating capacity of:
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
(3) Other private motor cars with engine

capacity of:
a) up to 1000 cc
b) 1001 - 1199 cc
c) 1200 - 1299 cc
d) 1300 - 1499 cc
Tax Rate for

Filer
10%
Non-filer
10%
Rs. 2.50 per

kg. of the
laden
weight
Responsibility for
Deduction / Deposit
Remarks
NCCPL
Adjustable
Motor
vehicle
tax
Collecting Authority
Adjustable
Rs. 4 per
kg. of the
laden
weight
Rupees
per seat per annum
50
100
100
200
300
500
(Rupees)
800
1,500
1,750
2,500
(Rupees)
1,200
4,000
5,000
7,500
FINANCE ACT 2015

- 55 -
No advance tax after 10 years from the date of first

registration in Pakistan on vehicle with registered
laden weight less than 8120 Kgs.[ S. 234(4)]
Advance tax after period of 10 years from the

date of first registration of vehicle in Pakistan
shall be collected at the rate of Rupees 1200 per
annum. (for category of 8120 Kgs or more) [Cl.
(IA) of Division III, Part IV, 1st Sch.]
Advance tax on passenger transport vehicles
with registered seating capacity of ten or more
persons, shall not be collected after a period of
10 years from 1st day of July of the year of make
of the vehicle. [S. 234(3)].
In case of motor cars used for more than 10
years in Pakistan, no advance tax shall be
collected after a period of 10 years. [S. 234(2A)]


Section
234A
235
e) 1500 - 1599 cc
f) 1600 1999 cc
g) 2000 cc and above
(4) Where the motor vehicle tax is
collected in lump sum:
a) up to 1000 cc
b) 1001 - 1199 cc
c) 1200 - 1299 cc
d) 1300 - 1499 cc
e) 1500 - 1599 cc
f) 1600 1999 cc
g) 2000 cc and above
Advance tax shall be collected on the
amount of gas bill of a Compressed
Natural Gas (CNG) station.
Rate of collection of advance tax on
electricity bill of commercial or industrial
consumers, where the amount of bill:
(a) does not exceed Rs. 400
(b) Rs. 401 - 600
(c) Rs. 601 - 800
(d) Rs. 801 - 1,000
(e) Rs. 1,001 - 1,500
(f) Rs. 1,501 - 3,000
(g) Rs. 3,001 - 4,500
(h) Rs. 4,501 - 6,000
(i) Rs. 6,001 - 10,000
(j) Rs. 10,001 - 15,000
(k) Rs. 15,001 - 20,000
Tax Rate for

Filer
(Rupees)
3,750
4,500
10,000
Non-filer
(Rupees)
12,000
15,000
30,000
(Rupees)
10,000
18,000
20,000
30,000
45,000
60,000
120,000
4%
(Rupees)
10,000
36,000
40,000
60,000
90,000
120,000
240,000
4%
(Rupees)
80
100
160
300
350
450
500
650
1,000
1,500
(Rupees)
80
100
160
300
350
450
500
650
1,000
1,500
FINANCE ACT 2015

- 56 -
Responsibility for
Deduction / Deposit
Remarks
The person preparing

gas consumption bill
Final

electricity bills
No tax shall be collected from the taxpayers

who are registered as exporter or manufacturers
of carpets, leather and articles thereof, surgical
goods, sports goods and textile and articles
thereof. [Cl (66) Part IV, 2nd Sch].
No advance tax shall be collected from a
person who produces a certificate from
Commissioner that his income during the tax
year is exempt from tax. [S. 235(3)]
As per section 235(4), tax collected will be:

- In case of company, adjustable.


Section
(l) Exceeding Rs. 20,000:

- Commercial consumers
- Industrial consumers
235A
235B
236
Rate of collection of advance tax on the

amount of electricity bill of domestic
consumer where the amount of bill is:
(i) Rupees 75,000 or more
(ii) Less than Rupees 100,000*
Tax Rate for

Filer
Non-filer
10%
5%
10%
5%
7.5%
0%
Responsibility for
Deduction / Deposit
Remarks
- In case of other than Company:

- minimum tax up to monthly bill of Rs. 30,000
- adjustable if monthly bill exceeds Rupees
30,000
electricity bill
Adjustable *As the first limit has been reduced

to Rs. 75,000 hence the second limit of Rs.
100,000 should also be reduced to Rs. 75,000.
-do-
Non-adjustable Tax collected shall be deemed

to be deducted under sub-section (1) of section
153 on the payment for local purchase of scrap.
- Credit of tax shall not be allowed to any
person
7.5%
0%
Rate of advance tax to be collected from

steel melters, steel re-rollers, composite
steel units, registered for the purpose of
chapter XI of Sales Tax Special Procedure
Rules, 2007 for electricity consumed for
the production of steel billets, ingots and
mildsteel (MS Products) excluding stainless
steel
Advance tax shall be collected on account
of the following:
Rs. 1 per unit of electricity

consumed
for
such
production
a) in case of telephone subscriber (other

than mobile phone subscriber) where the
amount of monthly bill exceeds Rs. 1,000
b) in case of subscriber of internet, mobile
telephone and prepaid internet or
telephone card
10% of the exceeding

amount of bill.

telephone bills / issuing
prepaid card
14% of the amount of bill

or sales price of internet
prepaid card or prepaid
telephone card or sale of
units
through
any
electronic medium or
whatever form.
FINANCE ACT 2015

- 57 -
Adjustable


Tax Rate for
Responsibility for
Deduction / Deposit
Collection of advance tax at the time of

sale by public auction or auction by a
tender
Filer
Non-filer
10% of the gross sale
price of any property or
goods sold by auction.
Any person making sale

by public auction or
auction by a tender
Adjustable
236B
Collection of advance tax on purchase of

domestic air ticket.
5% of the gross amount of

air ticket.
The airline issuing air

ticket
Adjustable - No tax shall be collected from

routes of Balochistan coastal belt, Azad Jammu
and Kashmir, Federally Administrated Tribal
Areas, Gilgit Baltistan and Chitral
236C
Advance tax on sale or transfer of

immovable property
Section
236A
Remarks
0.5%
1%
The person responsible

for
registering
or
attesting the transfer
Adjustable
Advance tax on functions and gatherings
5%
5%
Prescribed person as
mentioned in clause (b)
of sub-section (4) of
section 236D
Adjustable
(2)
In case where food, service or any other

facility is provided
5%
5%
-do-
Adjustable
236E
Advance tax on foreign produced T.V

plays and serials:
(a) Foreignproduced T.V drama
Serial
(b) Foreignproduced T.V play
236D(1)
236F(1)
Rs. 100,000 per episode

Rs. 100,000 for single
episode
Licensing authority
-do-
Advance tax on cable operators and other

electronic media shall be as follows:
Pakistan Electronic
Media Regulatory
Authority (PEMRA)
FINANCE ACT 2015

- 58 -
Adjustable
Adjustable
Adjustable


Section
License Category
H
H-l
H-II
R
B
B-l
B-2
B-3
B-4
B-5
B-6
B-7
B-8
B-9
B-10
236G(1)
236H(1)
Tax Rate for

Filer
Tax on
License fee
(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
Responsibility for
Deduction / Deposit
Remarks
Non-filer
Tax on
Renewal
(Rupees)
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
Advance tax on sales to distributors,

dealers and wholesalers:
- Fertilizers
- Other than fertilizers
0.7%
0.1%
1.4%
0.2%
Advance tax on sale to retailer
0.5%
0.5%
FINANCE ACT 2015

- 59 -
Manufacturer,
commercial importer
Adjustable - Tax shall be deducted in respect of

following sectors: Electronic, sugar, cement,
iron and steel products, fertilizer, motorcycles,
pesticides, cigarettes, glass, textile, beverages
and paint of foam sector.
Manufacturer,
distributors, dealer,
wholesaler or
commercial importer
Tax credit for the tax deducted under sections

236G(1) and 236H(1) shall be allowed in
computing the tax due by the distributor, dealer,
wholesaler / retailer on the taxable income for
the tax year in which the tax was collected.


Section
236I(1)
Collection of advance tax by educational

institutions
Tax Rate for

Filer
5%
Non-filer
5%
Responsibility for
Deduction / Deposit
The person preparing fee
voucher or challan
Remarks
Adjustable Tax shall not be deducted from a

person where annual fee does not exceed two
hundred thousand rupees.
-No tax shall be collected from a non-resident
where;
copy of passport is provided as an evidence to
the educational institution that during
previous tax year, his stay in Pakistan was less
than one hundred eighty-three days;
a certificate is furnished that he has no
Pakistan source income; and
the fee is remitted directly from abroad
through normal banking channel to the bank
account of the educational institution
-Tax shall also not be collected on the amount
which is refundable.
236J(1)
Advance tax on dealers, commission

agents and arhatis etc.
Group
Group or Class A
Group or Class B
Group or Class C
Any other category
Market committee
Tax
(per annum)
(Rupees)
10,000
7,500
5,000
5,000
Tax
(per annum)
(Rupees)
10,000
7,500
5,000
5,000
FINANCE ACT 2015

- 60 -
Adjustable


Section
236K(1)
Advance tax on purchase or transfer of

immovable property:
- where value of immovable property is
upto Rupees 3 million
- where value of immovable property is
more than 3 million
Tax Rate for

Filer
Responsibility for
Deduction / Deposit
Remarks
Non-filer
Person registering
attesting transfer
0%
0%
1%
2%
236L
Advance tax on purchase of international

air tickets:
- First / Executive class
-Others excluding Economy
- Economy
Rupees per
person
16,000
12,000
-
Rupees per
person
16,000
12,000
-
236M
Advance tax on bonus shares issued by

companies quoted on stock exchange
5%
236N
Advance tax on bonus shares issued by

companies not quoted on stock exchange
236P
Advance tax on banking transactions

otherwise than through cash
or
Adjustable - Tax shall also not be collected from

a scheme introduced by the Federal
Government, or Provincial Government or an
Authority under a Federal or Provincial law for
expatriate Pakistanis provided that the mode of
payment by the expatriate Pakistanis in the said
scheme or schemes shall be in the foreign
exchange remitted from outside Pakistan
through normal banking channels
Airline issuing air ticket
Adjustable
5%
Company issuing bonus

shares
Final
5%
5%
Company issuing bonus

shares
Final
0.6%
Every banking company
Adjustable No tax shall be collected, if sum of

all transactions mentioned in this section does
not exceed Rupees 50,000, in a day. However,
if amount exceeds Rs. 50,000 in a day, tax will
be deducted on the whole amount.
-Tax shall not be collected in case of Pakistan
Realtime Interbank Settlement Mechanism
(PRISM) transactions or payments made for
Federal, Provincial or local Government taxes.
FINANCE ACT 2015

- 61 -


Section
236Q
Payments to residents for use of machinery

and equipments
236R
Advance tax on education

expenses remitted abroad
236S
Dividend in specie
236T
Collection of tax by Pakistan Mercantile

Exchange Limited (PMEX)
related
Tax Rate for

Filer
10%
Non-filer
10%
5%
5%
As stated against Section

150
0.05%
0.05%
FINANCE ACT 2015

- 62 -
Responsibility for
Deduction / Deposit
Remarks

making payment
Final Tax shall not be collected in case of

agricultural machinery and machinery leased by
a leasing company, an investment bank or a
modaraba or a scheduled bank or a
development finance institution in respect of
assets owned by the leasing company or an
investment bank or a modaraba or a scheduled
bank or a development finance institution.
Banks,
financial
institutions,
foreign
exchange companies or
any
other
person
responsible for remitting
foreign currency abroad
Adjustable against the income of the person

remitting payment of education related
expenses.
Every person making

payment of dividend
Final
Pakistan
Exchange
(PMEX)
Adjustable
Mercantile
Limited

SALES TAX
Sales Tax Act, 1990
Active taxpayer
Section 2(1)
The concept of active taxpayer has also been introduced in Sales Tax Act, for the purpose of segregating
compliant and non-compliant registered persons. Following clause (1) has been inserted in section 2 to
define active taxpayer:
(1) active taxpayer means a registered person who does not fall in any of the following categories,
namely:(a)
(b)
(c)
(d)
who is blacklisted or whose registration is suspended or is blocked in terms of section 21;

who fails to file the return under section 26 by the due date for two consecutive tax periods;
who fails to file an Income Tax return under section 114 or statement under section 115, of
the Income Tax Ordinance, 2001(XLlX of 2001), by the due date; and
who fails to file two consecutive monthly or an annual withholding tax statement under
section 165 of the Income Tax Ordinance, 2001.
Cottage industry
Section 2(5AB)
Threshold of annual utility (electricity, gas and telephone) bills during the last twelve months has been
enhanced from Rupees 700,000 to Rupees 800,000. Now, a manufacturer whose annual turnover from
taxable supplies does not exceed Rupees 5,000,000 or whose annual utility (electricity, gas and telephone)
bills during the last twelve months ending any tax period do not exceed Rupees 800,000 will fall under the
definition of cottage industry. Needless to mention here that supplies of cottage industry are exempt from
sales tax as per Sixth Schedule to the Sales Tax Act, 1990.
Supply
Section 2(33)
The scope of definition of Supply has been enlarged to bring toll manufacturing within the ambit of supply.
Now goods manufactured belonging to another person and transfer or delivery of such goods to the owner or
to nominated person shall be considered as supply.
The amendment needs further clarification to resolve the issue of taxability of toll manufacturing between the
Federal and Provincial Governments, because activities of toll manufacturing are treated as Services and
sales tax on services has also been levied at standard rate by the Provincial Governments.
Scope of tax
Section 3(1A)
Rate of further tax on supplies to unregistered persons has been enhanced from 1% to 2% of the value of
taxable supplies.
Time and manner of payment
Section 6(1)
By virtue of amendment in sub-section (1) of this section, Customs authorities have been empowered to
recover subsequently, the short payment or non-payment of tax if any in respect of goods imported into
Pakistan.
Determination of tax liability
Section 7(2)(ii)
By amendment in clause (ii) of sub-section (2) of this section, a registered person shall now be also entitled to
deduct input tax paid on goods imported and cleared on provisional basis under section 81 of the Customs
Act, 1969, from its output tax.
FINANCE ACT 2015

- 63 -

SALES TAX
Tax credit not allowed
Section 8
Registered person has now been made entitled to reclaim or deduct input tax paid on purchase of
prefabricated buildings. Previously, this was not an allowable adjustment.
Further, three more clauses (j), (k) and (l) have been inserted in sub-section (1) of this section and thereby a
registered person shall not be entitled to reclaim or deduct input tax paid on:
services in respect of which input tax adjustment is barred under the respective provincial sales tax
law.
import or purchase of agricultural machinery or equipment subject to sales tax @ 7% under 8th
Schedule to this Act.
such goods and services (to be notified by FBR) which, at the time of filing of return by the buyer,
have not been declared by the supplier in his return.
Joint and several liability of registered persons in supply chain where tax unpaid
Section 8A
Burden to prove that the registered person receiving supplies was in knowledge of the fact that tax paid in
respect of supply of goods would go unpaid, has been shifted on the shoulders of the Department. Hence, it
will now be the responsibility of the Department to prove that buyer was in the knowledge that the seller will
not pay the tax into Government exchequer.
Exemptions
Section 13
By virtue of amendments in this section, powers enjoyed by FBR to grant exemption from payment of whole
or any part of the tax chargeable under this Act, have been withdrawn.
Moreover, the Federal Government will issue such notification to exempt any taxable supply, after approval
of the Economic Co-ordination Committee of Cabinet (ECC), under the specified circumstances. All such
notifications issued under this section shall be placed before the National Assembly in the financial year.
Further, any notification issued under this section after 01 July 2015 shall stand rescinded on expiry of the
financial year if not earlier rescinded.
Registration
Section 14
This section has been substituted to prescribe categories required to be registered under this Act.
14. Registration.(1) Every person engaged in making taxable supplies in Pakistan, including zero-rated
supplies, in the course or furtherance of any taxable activity carried on by him, falling in any of the
following categories, if not already registered, is required to be registered under this Act, namely:(a)
(b)
(c)
(d)
(e)
(f)
a manufacturer who is not running a cottage industry;

a retailer who is liable to pay sales tax under the Act or rules made thereunder, excluding such
retailer required to pay sales tax through his electricity bill under sub-section (9) of section 3;
an importer;
an exporter who intends to obtain sales tax refund against his zero-rated supplies;
a wholesaler, dealer or distributor; and
a person who is required, under any other Federal law or Provincial law, to be registered for
the purpose of any duty or tax collected or paid as if it were a levy of sales tax to be collected
under the Act;
(2) Persons not engaged in making of taxable supplies in Pakistan, if required to be registered for making
imports or exports, or under any provisions of the Act, or any other Federal law, may apply for
registration.
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SALES TAX
(3) The registration under this Act shall be regulated in such manner as the Board may, by notification in
the official Gazette, prescribe.
Active taxpayers list
New Section 21A
By inserting this new section, the FBR has been empowered to maintain active taxpayers list in the manner as
may be prescribed by rules and such rules may provide for restrictions and limitations to be imposed on a
person who ceases to be an active taxpayer.
Audit by special audit panels
Section 32A
Section 32A, Special audit by Chartered Accountants or Cost Accountants has been substituted and
concept of special audit panels for conducting audits including forensic audit and refund claims audit of
registered person has been introduced. Scope of such audit shall be determined by FBR or Commissioner
Inland Revenue on case to case basis. The FBR has further been authorized to get such audit conducted
jointly with similar audits being conducted by provincial administrations of sales tax on services, if it is
considered appropriate. Moreover, the FBR may appoint as many special audit panels as may be necessary in
similar manner as prescribed in section 177 of the Income Tax Ordinance, 2001.
Offences and penalties
Section 33
Penalty of five thousand rupees is payable in case where any person fails to furnish a return within the due
date. However, marginal relief was made available and such penalty was reduced to Rupees 100 for each
day if the return was filed within fifteen days of the due date. Now, this period of fifteen days has been
reduced to ten days and if the return is filed within 10 days of the due date, the penalty shall be paid at
Rupees 100 for each day of default.
Similarly, the fifteen days delayed period in respect of deposit of the amount of tax due has been reduced to
ten days. Hence, reduced penalty of Rupees 500 for each day of default shall now be leviable for ten days
default only and in case the payment of due tax is made after ten days, penalty of Rupees 10,000 or 5% of
the amount of tax involved, whichever is higher shall be applicable.
Monitoring or tracking by electronic or other means
Section 40C (2) & (3)
Section 40C was inserted vide Finance Act, 2013, whereby the Board was authorized to issue notification in
order to specify any registered person or class of registered persons or any goods or class of goods in respect
of which monitoring or tracking of production, sales, clearances, stocks or any other related activity may be
implemented through electronic or other means.
By amending sub-section (2) and inserting new sub-section (3) in this section, taxable goods shall not be
removed or sold by the manufacturer or any other person without affixing barcodes in addition to tax
stamps, banderols, stickers, labels, etc. on such goods.
Such tax stamps, bandroles, stickers, labels, barcodes, etc., shall be acquired by registered person from a
licensee appointed by FBR and at price approved by FBR which shall include the cost of equipment installed
by such licensee in the premises of the said registered person.
Agreement for the exchange of information, Disclosure of information
by a public servant, Prize schemes to promote tax culture and Reward
to whistleblowers
Sections 56A, 56B, 56C and 72D
Like income tax, new sections have been introduced in Sales Tax Act for the purposes of bilateral or
multilateral agreements for exchange of information, disclosure of information by a public servant, prize
schemes to promote tax culture and reward to whistleblowers.
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SALES TAX
THE FIFTH SCHEDULE
(ZERO RATING)
Supply of locally manufactured plant and machinery to manufacturers in the Export Processing Zone earlier
zero rated under SRO 397(I)/2001 will now continue to be zero rated under the Fifth Schedule to the Sales
Tax Act, 1990.
Export of goods exempted from sales tax under section 13 of the Sales Tax Act, 1990 by manufacturer shall
be zero rated. Accordingly, input tax adjustment will be available to such manufacturer / exporter.
THE SIXTH SCHEDULE
(EXEMPTIONS)
Supply or import of the following goods has been exempted:
Description
PCT Heading
Aircraft, whether imported or acquired on wet or

dry lease
Maintenance kits for use in trainer aircrafts of PCT
headings 8802.2000 and 8802.3000
Spare parts for use in aircrafts, trainer aircrafts or
simulators
Machinery, equipment and tools for setting up
maintenance, repair and overhaul (MRO)
workshop by MRO company recognized by
Aviation Division
Operational tools, machinery, equipment and
furniture and fixtures on one-time basis for setting
up Greenfield airports by a company authorized by
Aviation Division
Aviation simulators imported by airline company
recognized by Aviation Division
Import of plant, machinery and production line
equipment used for the manufacturing of mobile
phones by the local manufactures of mobile
phones
duly
certified
by
the
Pakistan
Telecommunication Authority.
8802.4000
Respective headings
Respective headings
Respective headings
Respective headings
Respective headings
Respective headings
Local supply of the following goods has been exempted:

Description
PCT Heading
Raw and pickled hides and skins, wet blue hides

and skins
Bricks (upto 30 June 2018)
Crushed stone (upto 30 June 2018)
Poultry feed, cattle feed, sunflower seed meal, rape
seed meal and canola seed meal
41.01, 41.02, 41.03, 4104.1000, 4105.1000,

4106.2100, 4106.3000, 4106.9000
6901.1000
2517.1000
2306.3000, 2306.4900 and respective headings
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Items exempted under SRO 880(I)/2007, SRO 408(I)/2012 and SRO 760(I)/2012 shall continue to be
exempted under the Sixth Schedule.
Supplies made by manufacturers of marble and granite exempted under SRO 76(I)/2008 shall continue to be
exempted under Sixth Schedule subject to conditions of annual turnover of less than Rupees 5 million even
if their annual utility bill is more than Rupees 800,000.
Items covered under Fifth Schedule to the Customs Act, 1969 have been exempted under the Sixth Schedule.
Import and supply of appliances for colostomy (PCT heading 3006.9100), colostomy and urostomy bags (PCT
heading 3926.9050) and tubular day lighting devices (TDDs) (PCT heading 8539.3930) have been exempted
under the Sixth Schedule.
EIGHTH SCHEDULE
Following items have been subjected to reduced rate of 7%:
Description
PCT Heading
Tillage and seed bed preparation equipment

Seeding or planting equipment
Irrigation, drainage and agrochemical
application equipment
Harvesting, threshing and storage
Equipment
Post-harvest handling and processing
& miscellaneous machinery
Pesticides and their active ingredients registered by
the Department of Plant Protection under the
Agricultural Pesticides Ordinance, 1971 (II of
1971), stabilizers, emulsifiers and solvents subject
to the condition that in case of supplies, no input
tax credit shall be admissible, except that of the tax
paid under this serial number.
Certain PCT headings

Certain PCT headings
Certain PCT Headings
8437.1000 and 8433.4000
Following items have been subjected to reduced rate of 10% instead of 5%:
Description
PCT Heading
Machinery and equipment for development of

grain handling and storage facilities.
Complete plants for relocated industries.
Machinery, equipment and other capital goods
meant
for
initial
installation,
balancing,
modernization, replacement or expansion of oil
refining (mineral oil, hydro-cracking and other
value added petroleum products), petrochemical
and petrochemical downstream products including
fibers and heavy chemical industry, cryogenic
facility for ethylene storage and handling.
Respective headings
Respective headings
Respective headings
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SALES TAX
Following items previously subject to reduced rate of 5% have now been omitted from the Eighth Schedule:
S.
No.
Description
PCT
Heading
Following items imported by Call Centers, Business Processing Outsourcing facilities

duly approved by Pakistan Telecommunication Authority:
(1) Telephone sets/head sets.
(2) Cat 5/Cat 6/Power cables
(3) PABX Switch
(4) Plasma TV
(5) Dedicated telephone exchange system for call centres.
(6) Other (digital cell recorders)
Proprietary Formwork System for building/structures of a height of 100 ft and above
and its various items/ components consisting of the following, namely:(1) Plastic tube.
(2) Plastic tie slot filters/plugs, plastic cone.
(3) Standard steel ply panels, Special sized steel ply panels, wedges, tube clamps (BType & G Type), push/pull props, brackets (structure), steel soldiers (structure), drop
head, standard, prop tic, buard rail post (structure), coupler brace, cantilever frame,
decking beam / Infill beam and doorway angles.
(4) Lifting Unit (Structure)
(5) Bolts, tie bolts, anchor bolt assembly (fastener), anchor screw (fastener).
(6) Nuts
(7) Steel pins, tie wing nut (fastener).
(8) Steel washers, water plate (fastener).
(9) Adjustable base jack (thread rod with nut and steel plate), adjustable fork head
(threaded rod with nut and steel channel).
Various
Various
Import and supply of ingredients of poultry and cattle feed except rapeseed meal (HS Code 2306.4900) and
sunflower meal (HS Code 2306.3000), previously exempt under SRO 1007(I)/2005 dated 24 September
2005, shall now be taxed at the rate of 5% under the Eighth Schedule.
Reduced rates of sale tax were notified through the following notifications. Goods covered under these
notifications have been subjected to same reduced rate and conditions under the Eighth Schedule:
SRO 69(I)/2006 dated 28 January 2006 - Import by solvent extraction industries of rapeseed,
sunflower seed and canola seed @ 16%.
SRO 313(I)/2006 dated 31 March 2006 - Import by solvent extraction industries of soya bean seed @
6% subject to the condition that no refund of input sales tax shall be admissible.
SRO 657(I)/2013 dated 11 July 2013 Secondhand and worn clothing or footwear @ 5%.
SRO 572(I)/2014 dated 26 June 2014 - Agricultural tractors @ 10%.
NINTH SCHEDULE
Sales tax rates under the Ninth Schedule on import or local supply of cellular mobile phones or satellite
phones and/or registration of International Mobile Equipment Identity (IMEI) number by Cellular Mobile
Operators (CMOs) have been doubled. Further, a new clause has been added in Liability, Procedure and
Conditions of the Ninth Schedule to specify that sales tax on import of cellular mobile phones or satellite
phones shall be paid by the importer and by the manufacturer, in case of locally manufactured cellular
mobile phones.
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SALES TAX ON DAIRY PRODUCTS
Processed and unprocessed milk both shall continue to be zero-rated. However, sales tax regime for other
dairy products like flavoured milk, yogurt, cheese etc. has been considerably changed by way of substitution
into either exemption or reduced tax rate of 10%.
NEW SALES TAX REGIME FOR CERTAIN ITEMS
Sales tax regime for certain items has been revamped as follows:
Description
HS Code
Previous sales tax regime
New sales tax regime
Soyabean meal
2304.0000
Poultry feed and Cattle feed

including
their
ingredients
except soyabean meal of PCT
heading 2304.0000 and oilcake of cottonseed falling under
PCT heading 2306.1000
Various HS
Codes
previously
exempt
under SRO
1007(I)/2005
dated 24
September
2005 except
rapeseed
meal (HS
Code
2306.4900)
and
sunflower
meal (HS
Code
2306.3000)
04.04
0402.9900
0405.1000
0405.9000
0406.1010
0402.1000
Tax rate 5% under Eight

Schedule.
Exempt
under
Sixth
Schedule.

Schedule.
Schedule. Local supply of
rapeseed meal (HS Code
2306.4900)
and
sunflower meal (HS Code
2306.3000)
shall
be
exempt
under
Sixth
Schedule.
Previously,
import or supply of
rapeseed
meal
and
sunflower
meal
was
exempt.
Zero rated subject to

certain
conditions
specified in Chapter XIV
of Sales Tax Special
Procedure Rules, 2007
and exempt if not
covered
under
Fifth
Schedule.
Exempt if not sold in retail

packing under a brand
name
under
Sixth
Schedule and reduced
rate of 10% if sold in
retail packing under a
brand name under Eight
Schedule.
Exempt
under
Schedule.
Exempt if not sold in retail

Packing under a brand
name
under
Sixth
Schedule.
Reduced rate of 10% if
sold in retail packing
under a brand name
under Eight Schedule.
Whey
Flavored milk
Butter
Desi ghee
Cheese
Milk and cream, concentrated
and added sugar or other
sweetening matter
Yogurt
Processed cheese not grated
or powdered
Cream
0403.1000
0406.3000
04.01 and
04.02
Sixth
Zero rated subject to

certain
conditions
specified in Chapter XIV
of Sales Tax Special
Procedure Rules, 2007.
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SALES TAX
Description
HS Code
Previous sales tax regime
New sales tax regime
Directly reduced iron
72.03
Tax rate 5% under Eighth

Schedule.
Entry omitted from Eight

Schedule.
Incinerators of disposal of
waste management,
motorized sweepers and
snow ploughs
8417.8000,
8430.2000
and
8479.8990
Exempt
under
Schedule.
Sixth

Schedule.
Re-importation of foreign
origin goods which were
temporarily exported out of
Pakistan
99.18
Plant, machinery,
equipment and specific
items used in production of
bio-diesel
Respective
headings
Reclaimed lead, if supplied

to recognized manufacturer
of lead batteries
Respective
headings
Waste papers
Respective
headings
Plant and machinery not

manufactured
locally
and
having no compatible local
substitutes
Respective
headings

Schedule.

Schedule.
Pesticides and their active

ingredients registered by the
Department of Plant Protection
under the Agricultural Pesticides
Ordinance, 1971 (II of 1971),
stabilizers,
emulsifiers
and
solvents.
Certain PCT
Headings
General rate of sales tax.

Schedule subject to the
condition that in case of
supplies, no input tax
credit shall be admissible,
except that of the tax paid
under this serial number
(31) of Eight Schedule.
SRO 486(I)/2015 DATED 30 JUNE 2015 (EFFECTIVE FROM 01 JULY 2015)

Vide SRO 486(I)/2015 following significant changes have been made in SRO 1125(I)/2011 dated 31
December 2011:
Maize (corn) starch (PCT Heading No. 1108.1200) has been excluded from Table I of the SRO
1125(I)/2011 dated 31 December 2011. Hence, standard rate of sales tax shall be applicable on Maize (corn)
starch.
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Table II of SRO 1125(I)/2011 dated 31 December 2011 has been substituted as under:
S.
No.
Description of goods and point of taxation
1.
Goods usable as industrial inputs, specified in Table I

(i) Import for in-house consumption by registered manufacturers of the
five sectors mentioned in condition (i) below
(ii) Commercial imports
PCT
Heading
No.
As specified
in column
(3) of Table
-I
(iii) Supplies to registered or unregistered persons of the said five

sectors
(iv) Supplies to persons outside the said five sectors
(v) Import by, or supply to, registered manufacturers, whether or not of
the said five sectors, for the manufacture of goods specified in Table-I
or Table-II
2.
Fabric, including grey fabric

(i) Import for in-house consumption by registered manufacturers of the
five sectors mentioned in condition (i) below
(ii) Commercial imports
3%
3%, plus
1% value
addition tax
3%
17%
3%
Respective
headings
3%
3%, plus
1% value
addition tax
3%
(iii) Supplies
3.
Processed goods, including fabrics

Processing of goods owned by other persons, by registered
manufacturers of the five sectors mentioned in condition (i) below.
Respective
headings
4.
Locally manufactured finished articles of

(a) textiles and textile made-ups.
(b) leather and artificial leather
Respective
headings
Supplies to any person, including retail sales

5.
Rate of
Sales Tax
3% of the
processing
charges
5%
Imported finished goods ready for use by the general public

(i) Import
Respective
headings
(ii) Supply thereof
17%, plus
2% value
addition tax
17%

Vide SRO 489(I)/2015 dated 30 June 2015, following changes have been made in SRO 550(I)/2006 dated 05
June 2006:
Services provided or rendered in respect of travel by air of passengers within territorial limits of Pakistan and
carriage of goods by air will no longer be subjected to federal excise duty in sales tax mode.
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SALES TAX
SRO 494(I)/2015 DATED 30 JUNE 2015
Certain amendments have been made in the Sales Tax Rules, 2006 vide SRO 494(I)/2015. Highlights of the
changes are as under:
New rules for registration, de-registration, suspension and blacklisting etc. have been issued. Now,
the applicant for sales tax registration being the owner, authorized member or partner or authorized
director, as the case may be, will visit the concerned Regional Tax Office for biometric verification
along with all those documents specified under Sales Tax Rules for sales tax registration which have
not been submitted through computerized system. Sales tax registration documents will now include
distribution certificate from the principal showing distributorship or dealership, in case of distributor
or dealer, balance sheet / statements of affairs / equity of the business, particulars of all the branches
in case of multiple branches at various locations and particulars of all franchise holders in case of
national or international franchise.
A concept of temporary registration has been introduced for persons importing machinery for
installation at their premises. The temporary registration is meant for intending manufacturers
importing machinery. The registration will be valid for a period of 60 days.
Concept of non-active taxpayer has also been introduced, in line with the change made in the Sales
Tax Act, 1990 through Finance Act, 2015.
Now, all registered manufactures making supply of specified taxable goods shall furnish in Annex-J
of the monthly return, details of such goods manufactured or produced and goods supplied using the
prescribed unit of measurement.
In case the sales tax return is not filed within a period of six months after the due date, the same shall
be filed only after approval of the Commissioner Inland Revenue having jurisdiction.
A new Chapter VIII-A has been introduced for import or supply of exempt goods to organizations or
agencies under grants -in-aid.
A new Chapter XIV-A has been introduced for monitoring or tracking of restaurants, cafes etc. by
electronic or other means. Such restaurants will be required to give continuous and full remote as
well as on-site access to the tax department to their computerized system.
A new Chapter XIV-B has been added for electronic monitoring and tracking of aerated waters,
cigarettes, fertilizers, cement and sugar. Under this Chapter the manufacturers or importers shall be
required to affix tax stamps, banderoles, stickers, labels, barcodes, etc. on each packet/packing. This
new Chapter will be made effective at a subsequent date through a notification.
It has been clarified that supplies charged to reduced rate under Notification No. SRO 1125(I)/2011 dated 31
December 2011 shall be excluded from the purview of sub-section (1) of section 8B of the Sales Tax Act,
1990, provided that value of such supplies exceeds 50% of value of all taxable supplies in a tax period.
Vide SRO 491(I)/2015 dated 30 June 2015, minimum value of taxable supply of locally produced coal (PCT
heading 27.01) has been fixed at Rupees 2,500 per metric ton. Previously, the value was Rupees 1,000.
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SALES TAX
Vide SRO 488(I)/2015 dated 30.06.2015, the following notifications have been rescinded:
1.
SRO 208(I)/1998 dated 31 March, 1998 (Exemption of sales tax on sugar);
2.
SRO 397(I)/2001 dated 18 June 2001 (Specification of plant and machinery to be supplied to
manufacturers in the Export Processing Zone);
3.
SRO 77(I)/2004 dated 28 January 2004 (Zero-rating of sugar sold to Trading Corporation of Pakistan
for export);
4.
SRO 433(I)/2005 dated 14 May 2005 (Zero-rating of supply of 100 buses by M/s Hinopak to Ministry
of Foreign Affairs);
5.
SRO 1007(I)/2005 dated 26 September 2005 (Exemption on import and supply of ingredients of
poultry and cattle feed);
6.
SRO 69(I)/2006 dated 28 January 2006 (Reduced rate of sales tax on import of rapeseed, sunflower
seed and canola seed);
7.
SRO 313(I)/2006 dated 31 March 2006 (Reduced rate on import of soyabean seed);
8.
SRO 880(I)/2007 dated the 1 September 2007 (Exemption on certain diagnostic kits and equipment);
9.
SRO 76(I)/2008 dated 23 January 2008 ( Exemption on supplies by small scale marble and granite
manufacturers);
10.
SRO 408(I)/2012 dated 19 April 2012 (Exemption on import and supply of blood bag);
11.
SRO 760(I)/2012 dated 22 June 2012 (Exemption on import and supply of urine bag);
12.
SRO 460(I)/2013 dated 30 May 2013 (Fixed rate of sales tax on mobile phones);
13.
SRO 657(I)/2013 dated 11 July 2013 (Reduced rate of sales tax on import and supply of second hand
and worn clothing);
14.
SRO 572(I)/2014 dated 26 June 2014 (Reduced rate of sales tax on agricultural tractors); and
15.
SRO 84(I)/2015 dated the 28 January 2015 (Exemption on import and supply of raw material for the
basic manufacture of pharmaceutical active ingredients and for manufacture of pharmaceutical
products).
Vide SRO 487(I)/2015 dated 30 June 2015, following dates have been specified for payment of sales tax and
filing of monthly return by petroleum exploration and production companies:
i.
18th day of the month following the tax period for the purposes of payment of sales tax on petroleum
products; and
ii.
Monthly sales tax return filing date for petroleum exploration and production companies will be 21st
day of the month following the tax period.
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SALES TAX
SRO 493(I)/2015 DATED 30 JUNE 2015
SRO 863(I)/2008 dated 20 August 2008 has been rescinded vide SRO 493(I)/2015 dated 30 June 2015. SRO
863(I)/2008 required all the registered manufacturers making supply of specified taxable goods to furnish, by
the 25th of each month, the details of goods manufactured or produced and goods supplied in the prescribed
format. After amendment in Sales Tax Rules, 2006, now, all registered manufactures making supply of
specified taxable goods shall furnish in Annex-J of the monthly return, details of such goods manufactured or
produced and goods supplied using the prescribed unit of measurement.
SRO 485(I)/2015 DATED 30 JUNE 2015
Vide SRO 485(I)/2015 dated 30 June 2015, following changes have been made in the Sales Tax Special
Procedure (Withholding) Rules, 2007:
i.
Now, a withholding agent shall not deduct an amount equal to one-tenth of the total sales tax shown
on the sales tax invoice issued by person registered as petroleum dealer (dealer of motor spirit and
high speed diesel).
ii.
Previously, withholding was required at the time of making of payment. This has now been linked
with the purchase / purchase period, irrespective of payment in any subsequent month.
iii.
Previously, provisions of Sales Tax Special Procedure (Withholding) Rules, 2007 were not applicable
to the supplies of mild steel products, if made by a registered person. Now, provisions of these Rules
will not apply to registered persons paying sales tax under Chapter XI Special Procedure for
Payment of Sales Tax by Steel-Melters, Re-Rollers and Ship Breakers of the Sales Tax Special
Procedures Rules, 2007, except those paying sales tax on ad valorem basis at standard rate.
iv.
Withholding will now be required on purchase of products made from sheets of iron or non-steel
alloy, stainless steel or other alloy steel, such as pipes, almirahs, trunks etc., paper, in rolls or sheets,
plastic products including pipes.
SRO 484(I)/2015 DATED 30 JUNE 2015
Vide SRO 484(I)/2015 dated 30 June 2015, following amendments have been made in the Sales Tax Special
Procedures Rules, 2007:
1.
Chapter IX Special Procedure for Processing of Refund Claims filed by the Persons Engaged in
Making Zero-Rated Supply of Ginned Cotton has been omitted being redundant.
2.
Certain amendments have been made in Chapter XI Special Procedure for Payment of Sales Tax by
Steel-Melters, Re-Rollers and Ship Breakers as follows:
i.
These rules have also been made applicable to importers of re-meltable iron and steel scrap falling
under PCT Headings 7204.3000, 7204.4100 and 7204.4990, and of waste and scrap of compressor
falling under PCT Heading 7204.4940 and local suppliers of re-meltable iron and steel scrap.
ii.
Rate of sales tax has been increased from Rupees 7 to Rupees 9 per unit of electricity consumed.
iii.
Adjustable sales tax @ Rupees 5,600 per metric ton shall be levied and collected on import of remeltable iron and steel scrap whereas non-adjustable sales tax @ Rupees 5,600 per metric ton will
be levied and collected on import of waste and scrap of compressors. Further, local supplies of such
imported waste and scrap of compressor shall not be subject to sales tax.
iv.
Local supplies of re-meltable iron and steel scrap will be charged to sales tax @ Rupees 5,600 per
metric ton.
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SALES TAX
v.
Steel melters may obtain adjustment of the sales tax paid on imported re-meltable iron and steel
scrap, against the sales tax payable through their electricity bills, in the manner prescribed by
Federal Board of Revenue through a general order.
vi.
Rate of sales tax for ship breakers has increased from Rupees 6,700 to Rupees 8,000 per metric ton.
vii.
Rate of sales tax for steel-melters and re-rollers operating on self generation through gas has been
increased as under:
Sales tax payable = {HM3 x Rupees 2,138 sales tax paid on gas bill}
viii.
Rate of sales tax for steel-melters and re-rollers operating on self generated electricity other than gas
has been increased as under:
Sales tax payable = mill size (in inches) x Rupees 58,446.
ix.
Sales tax invoices shall be issued by the registered persons for the products or category specified in
the Table below at the rates mentioned in the Table below:
S.
Invoices issued by and for or to
No.
Amount of sales tax to be

mentioned on the invoices.
By steel melters or composite units of melting, re-rolling and MS cold Rupees 8,047 per metric ton
drawing to registered re-rollers
By steel re-rollers, using ingots or billets of steel melters or composite Rupees 9,217 per metric ton
units of melting, re-rolling and MS cold drawing to registered persons
By re-rollers, using billets of Pakistan Steel Mills or Peoples Steel Rupees 8,092 per metric ton
Mills or Heavy Mechanical Complex or imported billets, to
registered persons
By re-rollers, using ship-plates and re-rollers scrap as raw material, to Rupees 9,170 per metric ton
registered persons
By re-rollers, to unregistered persons
Rupees 1,170 per metric ton
By persons supplying imported MS products, to registered persons
Rupees 8,526 per metric ton
By persons supplying imported MS products, to unregistered persons Rupees 1,170 per metric ton
x.
The value of re-rollable scrap supplied by ship breakers, for the purpose of levy of sales tax, has been
increased from Rupees 39,412 to Rupees 47,059 per metric ton.
3.
Certain changes have been introduced in Chapter XII Special Procedure for Payment of Sales Tax by
Wholesaler-cum-Retail Outlets:
i.
The wholesaler-cum-retailer operating under this Chapter shall issue a sales tax invoice for the goods
subject to extra tax under Chapter XIII, if supplied to a registered person, for the purpose of claiming
input tax adjustment by the buyer.
ii.
The provisions of Section 73 of the Sales Tax Act, 1990 shall not affect the admissibility of input tax
adjustment where the wholesaler-cum-retailer receives consideration in cash against the supplies
made by him.
4.
After amendment in Chapter XIII Special Procedure for Payment of Extra Sales Tax on Specified
Goods, extra amount of sales tax so charged and collected by the registered manufacturers and importers
shall be declared in the monthly return against relevant supplies and shall be deposited without any
adjustment against the same.
FINANCE ACT 2015

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FEDERAL EXCISE DUTY
FEDERAL EXCISE ACT, 2005

Like income and sales tax, amendments in Federal Excise Act, 2005 have also been made in respect of
followings:
withdrawal of powers of FBR to grant exemption from levy of FED through SROs (Section 16);
reward to whistleblowers (Section 42D);
affixation of barcodes on goods sold by specified manufacturers or any other persons (Section 45A);
formation of Special Audit Panel to conduct audit of records and documents including audit of
refund claims and forensic audit, of any person registered under this Act (Section 46);
bilateral or multilateral agreements for exchange of information by Federal Government with

Provincial Governments or Governments of foreign countries. (Section 47A); and
disclosure of information by public servant (Section 47B).

FIRST SCHEDULE
TABLE I (EXCISABLE GOODS)
Aerated Waters
The rate of duty has been enhanced from 9% to 10.5% of retail price with effect from 01 July 2015.
Locally Produced Cigarettes
Duty on locally produced cigarettes has been enhanced as under:
S.
No.
Description of goods
Heading /
sub-heading
number
Revised
rate
Locally produced cigarettes if their on-pack

printed retail price exceeds Rupees 3,350
per 1,000 cigarettes
24.02
Rupees 3,030 per 1,000 cigarettes
10
Locally produced cigarettes if their on-pack

printed retail price does not exceed Rupees
3,350 per 1,000 cigarettes
24.02
Rupees 1,320 per 1,000 cigarettes
This enhancement in duty on locally produced cigarettes is effective from 05 June 2015 due to SRO
481(I)/2015 dated 05 June 2015 which was rescinded through SRO 495(I)/2015 dated 01 July 2015 after
approval of Finance Act, 2015.
FINANCE ACT 2015

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FEDERAL EXCISE DUTY
FILTER ROD FOR CIGARETTES

Duty has been charged on filter rod for cigarettes with effect from 01 July 2015:
S.
No.
Description of goods
Heading / subheading number
Rate of duty
56
Filter rod for cigarettes
5502.0090
Rupees 0.75 per filter

rod
TABLE II (EXCISABLE SERVICES)

EXEMPTIONS
Travel by air on socio economic routes
Federal excise duty has been exempted on services provided or rendered in respect of travel by air of
passengers on socio economic routes. Duty was previously payable at Rupees 500 per passenger. Socio
economic routes have now been defined as the shortest part of journeys starting from or ending at an airport
located in Makran coastal region, FATA, Azad Jammu and Kashmir, Gilgit-Baltistan or Chitral.
THIRD SCHEDULE
Exemptions available under SROs consolidated in 3rd Schedule
The exemptions earlier available in respect of following goods / services under SRO 778(I)/2006 dated 01
August 2006, SRO 474(I)/ 2009 dated 13 June 2009, SRO 802(I)/2009 dated 14 September 2009 and
81(I)/2010 dated 13 February 2010 have been incorporated in the Third Schedule to the Federal Excise Act,
2005: (The aforesaid four SROs have been rescinded vide SRO 490(I)/2015 dated 30 June 2015 with effect
from 01 July 2015)
Services of air travel for Hajj passengers, diplomats and Supernumerary crew (Heading / sub-heading
number 9803.1000);
White cement (Heading / sub-heading number 25.23);
Services provided or rendered by banking companies and non-banking financial companies in

respect of Hajj and Umrah, cheque book, insurance, Musharika and Modaraba financing and utility
bill collection (Heading / sub-heading number 98.13); and
Advertisement in newspapers and periodicals (Heading / sub-heading number 9802.4000).
FINANCE ACT 2015

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OTHER LAWS
Islamabad Capital Territory (Tax on Services) Ordinance, 2001
The Provincial Government of Punjab, Sindh and Khyber Pakhtunkhwa have established respective
authorities to levy / collect sales tax on services. However, such services remained untaxed in Islamabad
Capital Territory (ICT). Hence, amendments have been made in Islamabad Capital Territory (Tax on Services)
Ordinance, 2001 to harmonise the tax regime on services on national basis. The list of services taxable in ICT
has been enlarged. Now, the services taxable under the Islamabad Capital Territory (Tax on Services)
Ordinance, 2001 are generally in line with the prevalent basis in the three other provinces.
Auditor-Generals (Functions, Powers and Terms and Conditions of Service) Ordinance, 2001
A new section 19A has been inserted whereby President has been empowered to appoint an independent
officer to audit sanctions to expenditure accorded by the Auditor-General. The Auditor-General shall
produce for inspection by that officer all books and other documents relating thereto and give him such
information as he may require for the purpose of audit.
Workers Welfare Fund Ordinance, 1971
Mutual funds and collective investment schemes including National Investment (Unit) Trust or REIT Scheme
have been excluded from the definition of 'industrial establishment' subject to Workers Welfare Fund under
the Workers Welfare Fund Ordinance, 1971.
Members of Parliament (Salaries and Allowances) Act, 1974
A member shall now be entitled to receive a salary at the rate of Rupees 36,423 per mensem. Previously, it
was Rupees 27,377 per mensem.
Previously, every member was provided during a year with such vouchers of the value of Rupees 300,000 as
would enable him to travel within Pakistan at any time without payment of any fare. Now, he can travel
within or outside Pakistan against such vouchers without payment of any fare by Pakistan International
Airlines or by Pakistan Railways.
FINANCE ACT 2015

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CONTACT PARTNERS
For further explanations, please contact following partners:

LAHORE:
Principal Office
10-B, Saint Mary Park
Main Boulevard, Gulberg-III
LAHORE-54660
Phones : (042) 35718137-9
Fax
: (042) 35718136,
35714340
E-Mail : racolhr@racopk.com
Mr. Sarfraz Mahmood

FCA, FITM, FICS
Mr. Muhammad Atif Mirza
FCA
Syed Mustafa Ali
FCA
Mr. Mubashar Mehmood
FCA
Other offices at:

ISLAMABAD:
2-A, ATS Centre, 30-West

Fazal-e-Haq Road, Blue Area
ISLAMABAD
Phones : (051) 2274121-22
Fax
: (051) 2278859
E-Mail : racoisd@racopk.com
Mr. Atif Bin Arshad

FCA
FAISALABAD:
560-F, Raja Road, Gulistan Colony

FAISALABAD-38000
Phones : (041) 8861042,
8863644
Fax
: (041) 8863611
E-Mail : racofsd@racopk.com
Mr. Liaqat Ali Panwar

FCA, FITM, FICS
KARACHI:
108, Park Avenue, Block-6,

P.E.C.H.S., Shahrah-e-Faisal
KARACHI
Phones : (021) 34310826-7,
34313952
Fax
: (021) 34313951
E-Mail : racokhi@racopk.com
Mr. Inaam Ellahi Sheikh

FCA, FCA (England & Wales)
Website
www.racopk.com
FINANCE ACT 2015

- 79 -
Mr. Muddassar Mehmood

FCA
Mr. Muhammad Hamid Jan

ACA
Mr. Muhammad Waqas
ACA

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RIAZ AHMAD & COMPANY

FEDERAL EXCISE DUTY

FINANCE ACT 2015

RIAZ AHMAD & COMPANY

Inaam Ellahi Sheikh

Liaqat Ali Panwar

Atif Bin Arshad

LAHORE: 10 July 2015

FINANCE ACT 2015

RIAZ AHMAD & COMPANY

FINANCE ACT 2015

RIAZ AHMAD & COMPANY

Additional payment for delayed refund will be made at KIBOR + 0.5%.

Advance tax shall not be collected from retailers on sale of fertilizer.

Advance tax shall be collected @ 5% on education related expenses remitted abroad.

FINANCE ACT 2015

RIAZ AHMAD & COMPANY

Rate of further tax has been enhanced from 1% to 2%.

FEDERAL EXCISE DUTY (FED)

FINANCE ACT 2015

RIAZ AHMAD & COMPANY

INCOME TAX ORDINANCE, 2001

Following new definitions have been inserted in this section:

FINANCE ACT 2015

RIAZ AHMAD & COMPANY

INCOME TAX ORDINANCE, 2001

FINANCE ACT 2015

RIAZ AHMAD & COMPANY

INCOME TAX ORDINANCE, 2001

The provisions of sub-section (1) shall not apply to

New section 7A & Clause 21 of Part II of Second Schedule

FINANCE ACT 2015

RIAZ AHMAD & COMPANY

INCOME TAX ORDINANCE, 2001

FINANCE ACT 2015

RIAZ AHMAD & COMPANY

INCOME TAX ORDINANCE, 2001

Section 64 and Section 64A

New section 64B

Tax credit under this section shall be admissible where

manufacturing unit is managed by a company formed for operating the said

FINANCE ACT 2015

RIAZ AHMAD & COMPANY

INCOME TAX ORDINANCE, 2001

the manufacturing unit is not established by the splitting up or reconstruction or

FINANCE ACT 2015

RIAZ AHMAD & COMPANY

INCOME TAX ORDINANCE, 2001

Agreements for avoidance of double taxation and prevention

Sections 107(1), (1A) and (1B)

FINANCE ACT 2015

RIAZ AHMAD & COMPANY

INCOME TAX ORDINANCE, 2001

FINANCE ACT 2015

RIAZ AHMAD & COMPANY

INCOME TAX ORDINANCE, 2001

Section 148(2) and (2A)

New section 148A & Clause 13C of

Section 153(3) Proviso

FINANCE ACT 2015

RIAZ AHMAD & COMPANY

INCOME TAX ORDINANCE, 2001