2 Fa 2015 Final Draft 07072015 PDF

1
Finance Act 2015
PREFACE
Finance Act 2015
This document gives a brief insight of significant amendments made through Finance
Act 2015 and SROs relating to Income Tax, Sales Tax and Federal Excise Duty. This
document also presents significant changes made in fiscal laws through respective
Provincial Finance Acts. Changes made in Custom laws and the Sindh Sales Tax on
Services Act, 2011 are not included in this document.
In order to understand the impact of a particular change, reference should be made to
the specific wordings in the relevant statute.
This summary of Finance Acts can also be accessed on our website www.frants.pk
July 4, 2015
F.R.A.N.T.S. & Co,Chartered Accountants, is a member rm of the PKF International Limited network of legally independent rms and do not accept
any responsibility or liability for the actions or inactions on the part of any other individual member rm or rms.
Finance Act 2015
1.
PREFACE
01
2.
INCOME TAX
05
2.1 Powers of Federal Government
06
2.2 Tax Credit
06
2.3 Others
07
2.4 Income Tax Schedule
11
3.
SALES TAX
15
4.
FEDERAL EXCISE DUTY
23
5.
ICT ORDINANCE, 2001
24
6.
PUNJAB FINANCE ACT, 2015
25
7.
KPK PROVINCIAL FINANCE ACT, 2015
29
Finance Act 2015
INCOME TAX
Definitions
Section 2
The definition of Consumer Goods andFast
Moving Consumer Goods has been introduced
to give clarity regarding eligibility for reduction in
Minimum Tax.
Definitions related to Real Estate Investment
Trust and Pakistan Mercantile Exchange
Limited have been introduced with regard to new
taxation m|easures.
Small Company definition has been amended
to increase the maximum paid up capital and
Reserves from Rs. 25 Million to Rs. 50 Million.
Imposition of Super Tax (Tax Year 2015)
Section 4B
For the Tax Year 2015, Banking Companies and
Other Persons having income equal to or
exceeding Rs. 500 million, will additionally be
subjected to Super Tax for Rehabilitation of
Temporarily Displaced Persons at the rate of 4%
and 3% respectively. Final tax related income will
be calculated through imputable income basis for
the calculation of Super Tax.
Tax on Undistributed Reserves
Section 5A
From Tax Year 2015, Public Companies
(excluding banking companies, public companies
in which not less than 50% shares are held by the
Government and a modaraba) derives profit for a
tax year and having undistributed tax reserves
exceeding 100% of its paid up capital after paying
dividend (if any), so much of its reserves as
exceed 100% of its paid up capital shall be treated
as income and will be subjected to tax at the rate
of 10%. For tax year 2015, Companies have
been given option of distributing cash dividend
before the filing of tax return to avoid tax under
this section. This provision shall not apply to
public companies who distribute 40% of their after
tax profit or 50% of paid up capital within 6 months
of the end of tax year.
It has also been clarified that reserves include all
revenue reserves but exclude capital reserves,

share premium reserves and reserves required to
be created under any law, rules or regulations
Tax on Shipping of a resident Person
Section 7A
Presumptive tax on the shipping income of
resident persons previously provided in Second
Schedule has now been placed in this section at
following rates:
-
Pakistani ships or vessel - US$ 1 per ton

per gross registered tonnage per annum.
Foreign ships or vessels - US $ 0.15 per

ton per gross registered tonnage for each
charter subject to a maximum of US$ 1
per annum per ton.
Tax on Profit on Debt

Section 7B
Fixed Tax regime on Profit on Debt has been
revised where maximum tax rate has been
increased to 15% from earlier 10% in case the
profit on debt exceeds Rs. 25 million in a
progressive manner and will be treated as
separate block of income in cases other than
companies. However, companies shall continue to
pay tax at their applicable corporate tax rates.
This Tax shall not apply to profit on debt which is
exempt under ITO, 2001.
Depreciation First Year Allowance
Section 23 A
This section has been amended to include
undertakings engaged in the manufacturing of
cellular mobile phones and qualifying for
exemption under clause 126N of Part I of the
Second Schedule for claiming first year allowance.
Capital Gain
Section 37A
Rates on Capital Gains on disposal of securities
have been revised. Such gains are subject to
12.50% and 15% tax for Tax Year 2015 & 2016
respectively if the security sold having holding
period of one year or less. Whereas, if the holding
period of security is between twelve to twenty four
61
Finance Act 2015
months, gains are subject to 10% and 12.50% tax

for Tax Year 2015 & 2016 respectively. However,
for the Tax Year 2015, there will be no tax if the
period of holding of the security sold exceeds
twenty four months but for the Tax Year 2016,

such gains will attract tax at the rate 7.5% if the
holding period is upto forty eight months.
POWERS OF FEDERAL GOVERNMENT

The power of the Federal Government for
allowing exemptions and concession under the
Income Tax Ordinance, 2001(ITO) have been
made subject to the approval for Economic
Coordination Committee of Cabinet, that too, on

the basis of specific purposes and circumstances
as defined in the law. Moreover, the maximum
validity of notifications shall be one year.
TAX CREDITS
Investment in Shares & Insurance
Section 62
The maximum limit of Rs.1.000 Million has been
increased to Rs. 1.500 Million for calculation of tax
credit on Investment in shares and insurance
premium.
Prot on Debt
Section 64 A
The Tax Credit available for Prot on House
Loan/Debt has been replaced by deductible
allowance for house loan/debt and its maximum
limit has been enhanced to Rs. 1.000 Million from
Rs. 0.750 Million. Previously tax credit was
allowed on average tax rate formula but now
straight deduction has been allowed subject to
restriction of 50% of taxable income or Rs. 1.000
Million which ever is less. Further any excess
prot on debt paid shall not be allowed to carry
forward to next years.
Credit for Employment Generation
Section 64 B
A new Tax Credit has been introduced for
Employment Generation. The Manufacturers,
setting up new manufacturing units (between July
1, 2015 to June 30th, 2018), will be eligible for a
tax credit of 1% of tax payable (subject to
maximum of 10% of tax payable) for every fty
registered employees' with EOBI and ESSI, The
company can avail the Tax Credit for a period of
ten years.
due to section 169(2) and 113 (1) there was

confusion in eligibility of such tax credits. A new
sub-section has now been introduced for the
resolution of said ambiguity as tax credits under
said sections are already allowed against
nal/minimum tax.
Balancing, Modernization & Replacement
Section 65 B
Tax credit for investment in Balancing,
Modernization and Replacement of existing plant
and machinery which was available with respect
to investments made up till 30 June 2015 has
been extended for one more year i.e. 30 June,
2016.
Tax Credit for Enlistment
Section 65 C
Tax Credit for the Company opting for enlistment
in any registered stock exchanges in Pakistan has
now been increased to 20% from existing 15%.
Tax Credit for Industrial Undertakings
Section 65 E
The time frame for the Tax Credit under Section
65E of ITO for industrial undertakings established
before July 1, 2011 has been rationalized by
allowing ve years from the date of setting up or
commencement of commercial production from
the new plant or expansion project, whichever is
later.
Miscellaneous - Tax Credit

Section 65
Tax credit under section 65B, 65D and 65E were
allowed against the nal/minimum taxation but
71
Finance Act 2015
OTHERS
TAX CREDITS
Agreements for the avoidance of double
taxation
Section 107
Furthermore, in case the order for approval for

revision of return is not made within 60 days, the
approval shall be deemed to have been granted.
In order to exchange information with regard to

double taxation and prevention of scal evasion, the
Federal Government is authorized to enter into
agreements with Government or Governments of
foreign countries or tax jurisdictions. In addition, the
Federal Government has ensured the condentiality
of such sort of information under the cover of
Notwithstandingclause. Similar authority has also
been introduced in the Sales Tax as well as Federal
Excise laws.
Stay in Recovery Proceedings by

Commissioner Appeals
Section 128
Tax on Builders
Section 113A
Tax on Builders, which was introduced through
Finance Act, 2013 on the income of builders, has
been suspended till June 30, 2018.
Tax on Land Developers
Section 113B
Minimum Tax on Land Developers has been
introduced at the rate of 2% of the value of land
notied by any authority for the purpose of stamp
duty.
Alternative Corporate Tax
Section 113C
The Finance Act has claried the term Corporate
tax as higher of tax payable by the company on
income liable to corporate tax rate mentioned in
the 1st Schedule and minimum tax payable under
any of the provisions of the Ordinance.
Furthermore, the applicability of ACT has been
extended to a company setting up an Industrial
undertaking that is subject to reduced corporate
tax rate of 20 percent under clause (18A) of Part II
of the Second Schedule to the Ordinance.
Revision of Income Tax Return
Section 114
Taxpayer has been authorized to revise the Tax
Return without the prior approval of
Commissioner, if the Revised Tax Return is led
within 60 days of ling of the Original Tax Return.
The Commissioner (Appeals) may extend the stay

for another thirty days after hearing the
Commissioner against whose order an appeal has
been made, provided that order on appeal shall be
passed within the said period of such thirty days.
Recovery against Order
Section 137
The period for the recovery of tax under an
assessment order or an amended assessment
order or any other order issued by the
Commissioner has been extended to thirty days
from existing fteen days. However, the period of
sixty days allowed for the provisional assessment
under Section 122C of the ITO has been reduced
to forty ve days.
Advance Payment of Tax
Section 147
Tax payer is now required to estimate its Tax
Liability for the Tax Year before the end of its
second quarter instead of the prevailing
requirement before the end of fourth quarter. In
case, the tax payable for the tax year is likely to be
more than the amount required to be paid as per
provisions of law, the tax payer is required to pay
50% of such tax liability by due date of second
installment and the balance 50% in two equal
installments payable by the due dates of third and
fourth quarters of the Tax Year.
Imports
Section 148
Power of exempting persons, goods or classes of
goods from tax withholding under section 148 has
been withdrawn from the Board. However, all the
active notications shall remain in place unless
rescinded by the Board.
Moreover, special rate of nal tax on local
81
Finance Act 2015
purchase of cooking oil or vegetable ghee by

manufacturers at the rate of 2 percent has been
placed under a special provision earlier it was
covered under clause 13C of Part II of Second
Schedule.
Exemption Certicate for Permanent
Establishment
Section 152
The Permanent Establishment in Pakistan of a
non-resident person is now entitled to apply
Commissioner for tax exemption/reduction
certicate on account of tax payable under
Section 152(2A) of the ITO.
With holding from Services
Section 153
Tax deducted while making payment to companies
on account of services rendered was proposed in
Finance Bill 2015 to be made adjustable for the
Companies Rendering Services with effect from
tax year 2009 on the demand of Services Sector.
But surprisingly clause 79 of Part IV of Second
Schedule has been omitted through the Finance
Act passed by Parliament which means that the
tax withheld from both companies and others shall
be minimum tax on their income.
Tax deducted at the rate of 10% while making
payment to a Sports person has been declared
Final Tax with effect from Tax Year 2013.
Option of Normal Taxation for Exporters
Section 154
Exporters have been provided with an irrevocable
option to opt for ling of normal income tax return
under Section 114 of the ITO, 2001 instead of
ling statement of nal taxation under Section
115(4) of the ITO, 2001. This option shall be
exercised every year at the time of ling the
income tax return. However, no incentives have
been provided in this regard as tax deducted on
the exports proceeds shall be minimum tax for
such tax year.
Timing of Deduction of Tax
Section (158)
Board has been empowered to dene the term
'actually paid' as the deduction of tax at source is
to be made on the 'amount actually paid' to the

recipients in most cases.
Payment of Surcharge/Refund
Section 161/171
Rate of Default Surcharge on account of nondeduction/payment of tax has been reduced to
12% from 18% whereas additional payment for
delayed refund payable by Board has also been
reduced to KIBOR plus 0.5% from 15%.
Banking Information of Non Residents
Section 165B
A new section 165B has been introduced to
empower the Board to procure information related
to non-resident persons from nancial institutions
including banks to discharge its duties under
bilateral or multilateral treaties/agreements.
Special Audit Panels
Section 176-177
The concept of Special Audit Panels(SAP) has
been introduced this year which will be comprising
of two or more members, consisting of an ofcer
of the Inland Revenue, a rm of Chartered
Accountants, a rm of Cost and Management
Accountants or any persons as directed by Board.
SAP will be headed by the chairman who shall be
an Ofcer of Inland Revenue. Such SAPs, after
getting approvals from the Commissioner, may
exercise powers under Sections 121, 176, 177,
210 and 211 of the ITO, 2001.
Computerized National Identity Card (CNIC)
Number
Section (181)
Through this amendment, Individuals'
Computerized National Identity card numbers
shall be used as National Tax Number from the
tax year 2015. It implies that NTN number shall be
no longer required for ling returns of individuals.
Penalties
Section 182
Minimum Penalty for Non-Filing of statement of
nal taxation and withholding tax statements has
been brought in the main section from the
respective schedule and has been reduced to ten
thousand rupees from fty thousand rupees.
91
Finance Act 2015
The penalty for non-ling of wealth statement and

wealth reconciliation statement has been
enhanced from Rs. 100/per day of default to
higher of 0.1% of the taxable income per week or
Rs. 20,000.
Automatic Selection for Audit
Section 214 D
Finance Act now provides for automatic selection
for tax audit of a person who doesn't:
a) le his tax return within specied time
provided in the Ordinance or within the
time extended by the Board or further
extended upto 30 days by the
Commissioner or
b) pay tax due alongwith return within due
date.
However, audit proceedings in such cases shall
only be initiated after the expiry of ninety days
from the due date of ling of return as mentioned
in (a) above.
Subject to provisions regarding levy of penalty,
default surcharge and selection for audit by the
Board under section 182, 205 and 214C
respectively, aforesaid automatic selection
provisions shall not apply if the person les the
return within ninety days from the date mentioned
in (a) above
- 25% higher tax is paid than the tax paid on
the basis of taxable income declared during
immediately preceding tax year
- tax at the rate of 2% of turnover or tax as per
the applicable tax rate under the First
Schedule, whichever is higher, is paid
alongwith the return in cases where either a
return was not led or income below taxable
limit was declared in the immediately
preceding tax year and
- where return has been led for immediately
preceding tax year, turnover declared for the
tax year is not less than the turnover
declared for the immediately preceding tax
year.
Section 177 and 214C regarding audit and

selection for audit by the Board shall not apply for
a tax year to a person registered as a retailer
under rule (4) of the Sales Tax Special Procedure
Rules, 2007 subject to the condition that the name
of the person so registered remained on the sales
tax active taxpayers' list throughout the tax year.
This provision shall have effect from the date
announced by the Board through Notication in
the ofcial gazette.
Reward to Whistle blowers
Section 227B
A concept of whistle blower has been introduced
in Income Tax, Sales Tax and Federal Excise laws
for the person who reports concealment or
evasion of income tax, fraud, corruption or
misconduct by providing credible information
leading towards detection of tax evasion and
related recovery. The Board may sanction reward
to such whistle blowers subject to the procedures
to be prescribed in this behalf.
Domestic Electricity Consumption
Section 235A
For the purpose of collection of advance tax from
the domestic consumers' monthly limit of
electricity bill is reduced from Rs. 100,000 to Rs.
75,000.
Advance Tax on Internet
Section 236
Advance tax rates applicable on telephone services
expanded to include internet services in their ambit
for deduction of tax.
Advance Tax on Domestic Tickets
Section 236B
Collection of advance tax has been abolished on
purchase of air tickets for travailing to Balochistan
Coastal Belt, Azad Jammu and Kashmir, FATA,
Gilgit-Baltistan and Chitral.
Advance Tax on Sales to Retailers or
Wholesalers
Section 236H
Fertilizer has been excluded from the ambit of
10
Finance Act 2015
or non-ler) which would be Final Tax on such

advance tax on sales to retailers or wholesalers.
INCOME
TAXAgriculture machinery and machinery
income.
The Finance Act has also levied tax on
owned and leased by a leasing company, an
transactions between dealers and wholesalers. .
INCOME
TAX bank, a modaraba, a scheduled bank or
investment
Advance tax by Educational Institutions
a developmental nance institution shall not be
Section 236I
covered by this provision.
Collection of advance tax by Educational
Advance tax on Educational Expenses remitted
Institutions from non-resident person has been
abroad
relaxed on the premise that the non-resident has
Section 236R
no Pakistan source income and fee is remitted
directly to the bank account of educational
institution from abroad through normal banking
channels.
Advance tax on Non Cash Banking
Transactions
Section 236P
For Non-Filers, all banking transactions related to
transfer and purchase of banking instruments,
exceeding fty thousand rupees a day, will be
liable to adjustable advance tax at the rate of
0.6%. It includes payments through crossed
cheques. Amount shall be deducted from the
account of person issuing banking instrument.
Advance tax on Rental of Machinery &
Equipment
Section 236Q
Payment to a resident person for rent to use
commercial, industrial, scientic equipment or
machinery has been made subject to deduction of
Income Tax at the rate of 10% (irrespective of ler
Education related expenses remitted abroad will

also be made liable to deduction of adjustable
advance tax at the rate of 5%. Tax shall be
collected from the payer of education related
expenses.
Dividend in Specie
Section 236S
Dividend in specie has also been made liable for
deduction of advance tax at the rates applicable to
cash dividend i.e. 12.50% for lers while 17.50%
for Non-Filers.
Future Commodity Contracts
Section 236 T
Pakistan Mercantile Exchange Limited is required
to collect advance tax from purchase, sale and
commission on future commodity contracts at the
rate of 0.05%. The aforementioned collection of
tax shall be adjustable against tax liability.
11
Finance Act 2015

1,400,001
1,500,000
Rs. 79,500 + 12.5% of amount

exceeding 1,400,000
FIRST SCHEDULE
1,500,001
1,800,000
Rs. 92,000 + 15% of amount

exceeding 1,500,000
Tax Rates For Business Individual and

AOPs
1,800,001
2,500,000 Rs. 137,000 + 17.5% of amount

exceeding 1,800,000
2,500,001
3,000,000
3,000,001
3,500,000 Rs. 359,500 + 22.5% of amount

exceeding 3,000,000
7%of amount exceeding

400,000
3,500,001
4,000,000
INCOME
TAX SCHEDULES
TAX CREDITS
Taxable income
from
upto
0
400,001
400,000
500,000
Rate
Rs. 259,500 + 20% of amount

exceeding 2,500,000
0%
Rs. 472,500 + 25% of amount

exceeding 3,500,000
500,001
750,000
Rs. 7,000 + 10% of amount

exceeding 500,000
4,000,001
7,000,000 Rs. 597,000 + 27.5% of amount

exceeding 4,000,000
750,001
1,500,000
Rs. 32,000 + 15% of amount

exceeding 750,000
7,000,001
and above Rs. 1,422,000 + 30% of amount

exceeding 7,000,000
1,500,001
2,500,000
Rs. 144,500 + 20% of amount

exceeding 1,500,000
2,500,001
4,000,000
Rs. 344,500 + 25% of amount

exceeding 2,500,000
4,000,001
6,000,001
6,000,000
and above
Rs. 719,500 + 30% of amount

exceeding 4,000,000
Rs. 1,319,500 + *35% of
amount exceeding 6,000,000
* for AOPs (Professional rms prohibited from incorporating

by any law) rate of tax shall be at 32% from tax year 2016
and onwards.
Tax Rates For Companies

Description
Rate
Banking company
35%
Other than banking company- TY- 2016
32%
31%
30%
Super Tax Rates

Description
Rate
Banking company
4%
Other person having income equal to or

exceeding Rs. 500 Million
3%
Tax Rates For Salaried Individual

Taxable income
from
upto
0
Rate
Tax Rates For Prot on debt
400,000
0%
400,001
500,000
2%of amount exceeding

400,000
25,000,000
10%
500,001
750,000
Rs. 2,000 + 5% of amount

exceeding 500,000
25,000,001
50,000,000
Rs. 2,500.000 + 12.5% of

amount exceeding 25 Million
750,001
1,400,000
Rs. 14,500 + 10% of amount

exceeding 750,000
50,000,001
Taxable income
from
upto
Rate
and above Rs. 5,625,000 + 15% of amount

exceeding 50 Million
Finance Act 2015
12
Sec.
Category
Filer
Non
Sec.
Category
Filer
Non
Filer
Filer
150
Dividend income
12.5%
17.5%
151
Prot on Debit
10 %
17.5%
152
Payments to Permanent
Establishment of Non- Residents
4%
6%
4.5%
6.5%
8%
12%
10%
15%
Capital Gains Tax - Company
37A
Stock Funds
10 % 25%
Other than Stock Funds
25%
Capital Gains Tax - Individuals &

AOPs
10%
25%
supply of goods
- Company
- Others
17.5%
supply of services
- Company
- Others
148
Industrial undertaking importing
transport services
re-meltable steel (PCP Heading
execution of contract - Company

- Others
72.04) and directly reduced iron

Sport persons
for its own use.
Manufacturers covered under
2011.
Import of Potassic Fertilizer
Imports of Urea fertilizer
Import of gold
Import of cotton
Import of LNG- designated bryers
SOR 1125( I)/2011, dated 3112-
1%
1.5%
153
supply of goods
- Company
- Others
supply of services
2%
3%
4%
6%
- Others
10%
15%
2%
2%
7%
10%
7.5%
10%
10%
10%
1%
12%
1%
15%
Commission on Petroleum
products
12%
15%
231A
Cash withdrawal exceeding Rs.

50,000/- in a day
0.3%
0.6%
231AA
Other transaction with Bank
0.3%
0.6%
execution of contract
3%
- Company
Sport Persons
4.5%
- Company
- Others
6.5%
156A
Tax to be collected from every

importer of goods on the value of
goods.
5.5%
10%
6.5
Services
In the case of Industrial
10%
12%
SRO 1125 (I) / 2011, dated 31-12-
a)
10%
8%
2011
4.5%
7.5%
- Company
Electronic and Print Media
Ship breaker on import of ship
10%
4.5%
- Others
Commercial importers covered under
2%
7%
Payments to Residents
transport services
Import of pulses
2%
8%
undertaking not otherwise

covered
b)
all other cases of companies
5.5%
8%
c)
In the case of persons other
6%
9%
than those covered in a & b

above
13
Finance Act 2015
Sec
233
234
Category
231B
236G
Non Filer
Advertisements
10%
15%
Others
12%
15%
Rs. 2.5
Rs. 4
Goods Transport Vehicles

(per kg)
Passenger Transport Vehicles
Seating capacity
>4<10
>10<20
20 or more
50
100
300
100
200
500
800
1,500
1,750
2,500
3,750
4,500
10,000
1,200
4,000
5,000
7,500
12,000
15,000
20,000
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
Rates of Advance tax on

transfer of Vehicles
Engine capacity (cc)
up to 850
851 to 1000
1001 to 1300
1301 to 1600
1601 to 1800
1801 to 2000
2001 to 2500
2501 to 3000
above 3000
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
Other than Fertilizer
236P
Transaction other than cash

through Bank (exceeding
50,000 in a day)
236Q
Tax on Machinery rental
Description
Period of
Exemption
China Overseas Ports holding Company

from Gwadar port
up to February
06, 2030
Developmental REIT scheme
Up to June 30,
2020
Manufacture of Plant and Machinery

used for renewable energy resources
ve years from
July 01, 2015
Operation of warehousing or Cold Chain

facilities for agricultural produce
03 years of
commercial
operations.
Industrial undertaking involved in Halal

04 years of
Meat production including export receipts commercial
operations
Rates of Advance Tax on

Registration of Vehicles
Engine Capacity (cc)
Upto 850
851 to 1000
1001 to 1300
1301 to 1600
1601 to 1800
1801 to 2000
2001 to 2500
2501 to 3000
above 3000
Sales of Distributors, dealers or

wholesaler
Fertilizer
SECOND SCHEDULE
Income tax exemption is granted to prot and
gains of the following
Brokerage & Commission
Token Tax
Engine Capacity (cc)
upto 1000
1001 to 1199
1200 to 1299
1300 to 1499
1500 to 1599
1600 to 1999
2000 and above
231B
Filer
0.7%
1.4%
0.1%
0.2%
Nil
0.6%
10%
10%
Manufacturing unit setup in the Province

of KPK ( setup between July, 2015 to
June 2018)
05 years of
commercial
ooperation /
Production
Operation and Owners of LNG Terminals 05 years of

commercial
operation /
Production
Taxpayers establishing Transmission

Line Project setup on or after July 01,
2015 to June 30, 2018
10 years of
commercial
operation /
Production
Manufacturer of machinery and

equipment for cellur phone setup
between July 01, 2015 to June 30, 2017
05 years of
commercial
operation /
Production.
Following major exemptions are also included in

the Second Schedule:
Contribution on account of Social Security
to Social Security Departments shall be
exempt.
Minimum Tax Exemption to following
persons and business:
Coal supplies from Sindh for

Power Generation.
Operators and Owners of LNG
14
1
Finance Act 2015

Terminals
print media services in respect of
INCOME TAXadvertising services.
Taxpayers In most affected areas

of KPK, FATA or PATA for tax
years 2010, 2011 and 2012
excluding manufacturers and
suppliers of cement, sugar,
beverages and cigarettes.
Rice Mills (for Tax Year 2015 only)
Tax on Cash withdrawal by exchange

companies @ reduced rate of 0.15%.
Incentive available to green field
undertakings in the form of Nondisclosure of source of income has been
extended to June 30, 2017 by amending
clause 86 of part IV.
That section 113 and 153 remain not
applicable to trading houses where sale of
in house produced and processed food
and allied items to customers doesn't
exceed 2% of total sales
Exemptions withdrawn from the Second
Schedule.
Capital Gains from sale of shares of
Public Companies set up in Special
Industrial Zone.
Income from Hajj Operations.

Minimum tax exemption is withdrawn from
KAPCO
Blanket exemption to exchange company
from withholding tax u/s 231A through
exemption certificate from Commissioner
has been withdrawn.
Clause 79 of part IV has been omitted
whereby exemption of levy of minimum
tax to companies on services u/s
153(3)(b) has been withdrawn. This
amendment shall have serious effect on
service providing companies because the
withholding tax on services have been
increased.
Filing of wealth statement by each tax
payer has been made mandatory because
clause 82 has not been extended.
4TH TO 8TH SCHEDULE
The Finance Act seeks to tax the capital gains and
dividend income and chargeability of super tax on
the total income of Insurance, banking and oil
exploration companies.
Provision of section 153(1)(b) shall now

be applied on payments to electronic and
15
Finance Act 2015
SALES TAX
Who is not Active Tax Payer
Section 2(l)
Supply
Section 2(33)
The definition of active tax payer in the Sales Tax

Act has been introduced through amendment in
subsection 2(1). The Active Taxpayer means a
registered person who does not fall in any of the
following categories:
The definition of Supply has been extended to

include goods belonged to another person when
transferred or delivered to the owner or to a
person nominated by him. The definition of
supply has been amended to give legal cover for
sales tax collection on supply upon toll
manufacturing. Here it is important to note the
dispute over rights to claim sales tax on toll
manufacturing service is prevailing among
provinces and Federal Government. The Board
though has strengthened their stance on their
right to collect sales tax on toll manufacturing,
however, the issue will not be resolved until and
unless provincial governments delete the entry of
Sales Tax on toll manufacturing from their
charging Schedule of respective Sales Tax Act
otherwise dispute would continue to prevail over
the exclusive right of collection of sales tax on toll
manufacturing.
(a) who is black listed or whose registration is

suspended or blocked under section 21
(b) who fails to file Sales Tax returns by due
date for consecutive 2 periods
(c) who fails to file Income Tax return u/s 114
or statement u/s 115 of IT Ordinance
2001 by due date and
(d) who fails to file two consecutive monthly
or an annual withholding statement under
section 165 of the Income Tax Ordinance,
2001.
The Board shall have the power to maintain active
taxpayers list (ATL) in the manner as prescribed
through rules under section 21A.The Board
updates the ATL on 15th of every month. It is
important to be on ATL all times otherwise it would
adversely affect the tax payer in terms of
application of higher tax rate and non-admissibility
of input tax.
Cottage Industry
Section 2( 5AB)
Previously persons being manufacturer having
utility bills value during the last 12 months less
than Rs.700,000 are defined as Cottage
Industry.Now this limit of utility bills has been
increased to Rs.800,000 considering the
inflationary impact and increasing utilities cost.
Retailer
Section 2(28)
Definition of retailer has been modified and the
threshold limit for retailer having combine
business of importer or manufacturer for
registration as retailer has been omitted.
Further Tax
Section 3 (1A)
The rate of further sales tax has been increased
from 1% to 2%. This further sales tax is required
to be paid by a registered person on supplies to
un-registered person. The rationale behind
increase of further sales tax is to increase cost of
doing business with unregistered segment of the
trade and also to recover some indirect tax.
Scope of Tax
Section 3(2) / 13
The Power of the Federal Government for
Sales Tax Act, 1990 have been made subjected to
the approval of Economic Coordination Committee
of Cabinet, and that too, on the basis of specific
purposes and circumstances as defined in the law.
Any notification issued after 1st July 2015 shall
stand rescind on expiry of financial year if not
approved by the National Assembly.
16
Finance Act 2015
Time and manner of payment

Section 6.
The powers of Customs authority has been
extended with respect to recovery of sales tax
which is currently available with Inland Revenue
officials only.
Determination of tax liability
Section 7
The anomalies faced by persons on provisional
clearance of their bill of entry has been
addressed. Earlier, credit of input tax on
provisionally cleared bill of entry was not available
for adjustment with sales tax liability.
Tax credit not allowed
Section 8
The restriction on Input Tax adjustment placed
under section 8(1)(h) on pre-fabricated buildings
has been removed.
The restriction on Input Tax adjustment against
services has been placed in respect of which
adjustment is barred by the respective provincial
sales tax laws.
No input shall be allowed against import or
purchase of agricultural machinery and
equipment.
The restriction on input adjustment is also placed
on such goods and service which at the time of
filing of return by the buyer have not be declared
by the supplier in its respective return. This is very
dangerous amendment and shall have serious
consequences. The effective date of this particular
restriction will be notified by the Board.
Joint & Several Liability
Section 8A
The burden has been placed on tax department to
discharge onus in respect of unpaid amount of
sales tax under section 8-A. The amendment is
very important in nature considering the frequent
abuse of this section by the field formations in
past against the spirit of the law.
Registration
Section 14
transferred into Sales Tax Rules which are now

being transferred back to main legislation. As per
existing provisions of law, following categories are
required to be registered under Sales Tax Act,
1990.
a)
a manufacturer other than cottage

industry
b)
a retailer who is liable to pay sales tax

under the Act or Rules excluding such
retailers required to pay sales tax through
electricity bills.
c)
an importer
d)
an exporter who intends to obtain sales

tax refund.
e)
a wholesaler, dealer or distributor
f)
a person required to be registered under

Federal or Provincial law
The Board has amended Sales Tax Rules, 2006 to

include the concept of temporary registration for
import purposes by the new manufacturers.
Special Audit Panels
Section 32A
The concept of Special Audit Panels(SAP) has
been introduced this year which will be comprising
of two or more members, consisting of an officer
of the Inland Revenue, a firm of Chartered
Accountants, a firm of Cost and Management
Accountants or any persons as directed by Board.
SAP will be headed by the chairman who shall be
an Officer of Inland Revenue. This penal shall
lawfully function even one member other than
chairman is absent from conducting audit.
Penalty
Section 33
Penalty of Rs.100 per day was applicable for the
first fifteen days in case of delayed filing of Sales
Tax Return. Now the time limit of fifteen days has
been reduced to ten days. Likewise, minimum
penalty amount of Rs.500 per day is now provided
if the due amount of sale tax is paid within next
ten days instead of earlier fifteen days.
The basic sales tax registration laws were
17
Finance Act 2015
Monitoring / Tracking by electronic means

Section 40C
Reward to Whistle blower

Section 72D
Regarding barcode facility for the goods which

cannot be sold without affixing the tax stamp,
banderole, sticker by the manufacturer, importer
or any other person. The Board shall appoint
licensee from whom such tax stamp, banderole,
stickers, barcode, etc. would be acquired against
price approved by the Board including cost of
equipment installed by such licensee in the
premises of the registered person.
A concept of whistle blower has been introduced

in Income Tax, Sales Tax and Federal Excise laws
for the person who reports concealment or
evasion of income tax fraud, corruption or
misconduct by providing credible information
leading towards detection of tax and related
recovery. The Board may sanction reward to such
whistle blowers subject procedures to be
prescribed in this behalf.
Power of the Board and Commissioner to call

records
Section 45A
Certain important amendments in Schedules
A meaningful amendment has been made

whereby the Board or CIR can call record for
either on his own motion or otherwise. Previously
such power can only be exercised on his own
motion only.
Agreement for exchange of information
Section 56A
The Federal Government has been empowered to
enter into bilateral or multilateral agreements with
provincial government or foreign governments for
exchange of information. However the disclosure
of such information by a public servant shall be
confidential and restricted as provided under
section 216 of ITO 2001.
Prize Scheme
Section 56C
Federal Board of Revenue is authorized to
introduce prize schemes to promote tax culture. In
order to encourage the general public to make
purchases only from registered persons against
valid sales tax invoice, the Board may introduce
incentive in terms of cash, prize or as it deem fit.
Flavored milk, milk cream, yogurt, cheese butter,

desi ghee and whey powder which are sold in
retail packing under a brand name were under
Zero Rating Regime under Fifth Schedule read
with SRO 608/(I) 2014. The same are now shifted
to Eighth Schedule with chargeability of Sales Tax
at the rate of 10%.
Air crafts, aviation equipment, diagnostic kits and
other medical related material will be exempted
from sales tax.
Raw, pickled and wet blue hides and skins,
manufacturers of marble and granite (turnover
being less than five million), Poultry and Cattle
Feeds, Bricks & Crush Stone(upto June 30th,
2018) are now exempted from sales tax.
Incinerators, motorized sweepers, snow plough,
reclaimed lead, waste paper, ginned cotton and
plant & machinery for Bio Diesel will now be
subject to sales tax at the rate of 5%.
Sales tax slabs on import of and registration of
Mobile Phones will be doubled. However,
regulatory duty currently applicable has been
withdrawn.
18
Finance Act 2015
IMPACT OF SALES TAX SROs

S.R.O 483(I)/2015
Prior to July
01, 2015
Amendment in S.R.O 383(I)/2015 dated the 30th

April, 2015
Petroleum products related Sales Tax rates have
been changed by amending SRO 383(I)/2015
dated April 30th, 2015. The comparisons of rates
are as under
Rates prior
to
01.07.2015
Rates
w.e.f.
01.07.2015
Motor Spirit
19%
17%
HOBC
17%
17%
Kerosene Oil
17%
17%
HSD
28%
29%
LDO
16%
17%
Product
S.R.O 484(I)/2015
Amendment In Sales Tax (Special Procedures)
Rules, 2007
The summary of proposed changes is as under:
Chapter IX relating to special procedure for
processing of refund claims led by the cotton
ginners has been omitted, as the same
become redundant due to ginned cotton's
exemption status under the prevailing
provisions of sales tax law.
Wholesaler-cum-retailers falling under
Chapter XIII are given waiver from provisions
of section 73 of the Act and allowed to issue
tax invoice in respect of specied goods
subject to extra tax.
Sales tax invoices shall be issued by the
registered persons in steel sector for the
product / category at the following rates
Invoices issued by
and for or to
Amount of sales tax

to mentioned on the
invoices
After July 01,

2015
Amount of sales tax

to mentioned on the
invoices
By steel melters or
composite units of
melting, re-rolling
and MS cold
drawing to
registered re-rollers
Rs. 6,447 per metric

ton
By steel re-rollers,
using ingots or
billets of steel
melters or
composite units of
melting, re-rolling
and MS cold
drawing, to registerd
persons
Rs.7,357 per metric

ton
Rs.9,217 per metric
By re-rollers, using
billets of Pakistan
Steel Mills or
Peoples Steel Mills
or Heavy
Mechanical
Complex or
imported billets, to
registered persons

ton
By re-rollers,using
ship-plated and rerollable scrap as raw
material, to
registered persons
Rs.7,610 per metric

ton
Rs.9,170 per metric
By re-rollers, to
unregistered
persons
Rs. 910 per metric

ton
By persons
supplying imported
MS products, to
registered persons

ton
By persons
supplying imported
MS products, to
unregistered
persons
Rs. 910 per metric

ton
ton
ton
ton
ton
ton
ton
ton
With a view to rationalizing the present

concessionery regime of sales tax rates on steel
sector, rates have been changed as under:
19
Finance Act 2015
Description
Rates prior
to
01.07.2015
Rates w.e.f.
01.07.2015
Steel Melter, Steel re-roller,

composite unit of melting, rerolling and MS cold drawing
Rs.7 per unit

of electricity
consumed
Rs.9 per unit

of electricity
consumed
Import of re-meltable iron

and steel scrap
Adjustable
sales tax of
Rs.5,600/PM
T
Adjustable
sales tax of
Rs.5,600/PM
T
Import of waste and scrap

compressor
Nonadjustable
sales tax of
Rs.5,600/P
MT
Local supply of waste and

scrap compressor
Not subject to
sales tax
has been withdrawn. Now these products shall also

be subject to withholding of sales tax.
S.R.O 486(I)/2015
Amendment in S.R.O 1125(I)/2011 dt. 31.12.2011
Rate of sales tax applicable to persons doing
business in textile (including jute), carpets, leather,
sports and surgical goods sectors who is
registered as manufacturer, importer, exporter or
wholesaler under the Sales Tax, 1990 and appear
on the Active Taxpayers List (ATL) has been
revised. Increase of 1% rate from 2% to 3% and
for Commercial importer, the rates converted to
3%+1% instead of 2%+2%. The conditions from iv
to ixa have been deleted for presenting the same
in tabular form with increased rate of 1%
generally. The summary of changes made
alongwith comparison with previously applicable
rates are as follows:
S. No.
Local supply of re-meltable

iron and steel scrap
Ship breakers-at the time of

import on re-rollable scrap
Rs.1,663
Rs.5,600/PM
T
Rs.2,138
Description of goods and
Rate of
Previous
point of taxation
Sales Tax
rate
w.e.f.July 1, 2015
Goods usable as industrial inputs, specied in Table I
1.
Import for in-house
3%
2%
consumption by registered
Steel melters and re-rolling
units-generating selfelectricity
Rs.45,458
Re-rollable scrap supplied by

ship breakers
Rs.39,412/P
MT
Rs.58,446
manufacturers of the ve
sectors
2.
Commercial imports
Rs.47,059/P
MT
3% + 1% value
addition tax
2% + 2%
value
addition
tax
Supplies to registered or
unregistered persons of
S.R.O 485(I)/2015
Amendment in the Sales Tax Special Procedure
(Withholding) Rules, 2007
Sales Tax is now liable to be withheld on purchase
basis. Petroleum Dealers supplying motor spirit
and diesel are inserted in Exclusion clause whereas
the words including Petroleum dealers have been
omitted from the clause allowing one tenth
withholding of Sales Tax. Chapter XI of Special
Procedure Rules, 2007 has now grossly included in
the exclusion instead of already provided "mild steel
products". Further, exclusion available to paper, in
rolls or sheets and plastic products including pipes
3%
2%
the said ve sectors
Supplies to persons
17%
17%
3%
2%
outside the said ve

sectors
Import
to,
by,
or
supply
registered
manufacturers, whether or
not of the said ve sectors,
for the manufacture of
goods specied in Table-I
or Table-II
20
Finance Act 2015
Fabric, including grey fabric

3.
Import for in-house consumption
3%
3%
3% Plus
1% value
addition
tax
3% Plus
1% value
addition
tax
3%
3%
Processing of goods owned by other
3% of the
2% of the
persons, by registered manufacturers
processing
processing
of the ve sectors mentioned in
charges
charges
by registered manufacturers of the

ve sectors
Commercial imports
The due date for payment of sales tax on

petroleum products by petroleum exploration and
production companies is reduced from twenty fth
(25th) to eighteenth (18th) day of the month and
return would be led on the following twenty rst
(21st) day of that month.
S.R.O 488(I)/2015 Rescission of certain Sales Tax SROs
Supplies
Processed goods, including fabrics

4.
condition (i) below.
SRO 208/1998 dated March 31, 1998
Locally manufactured nished articles of (a) textiles and textile

made-ups and (b) leather and articial leather
5.
Supplies to any person, including
5%
Imported nished goods ready for use by the general public

(i) Import
(ii) Supply thereof
Time bound exemption to excessive sales tax

leviable above the notied value of sugar.
SRO 397/2001 dated June 18, 2001-
5%
retail sales
6.
In accordance with its drive to eliminate SRO

culture, certain SROs has been rescinded either
being redundant or as consequence of placement
of the exemptions to the relevant Schedules of the
Act. Following is the list of SRO's rescinded.
17%, plus
17%, plus
2% value
2% value
addition
addition
tax
tax
17%
17%
There is no change in prevalent conditions of SRO

1125(I)/2011 regarding input tax adjustment and
refund.
S.R.O492(I)/2015
Amendment in SRO 647(I)/2007 dt. 27.06.2007
Persons subject to reduced rate regime under
SRO 1125(I)/2011 have been excluded from
applicability of Section 8B(1) of the Sales Tax Act,
1990. Such persons can now fully adjust their
input tax against the output tax liability subject to
condition that value of such supplies must exceed
50% of value of all taxable supplies in a tax period
S.R.O 487(I)/2015 Supersedes SRO 88(I)/2002 dt. 11.02.1988
Exemption with respect to supply of Plant and

machinery to companies in Export Processing
Zones alongwith the respective procedure to be
followed has been placed in 5th Schedule, hence
this SRO exhibiting the same procedure
withdrawn
SRO 77/2004 dated January 28, 2004Time bound Exemption to Trading Corporation of
Pakistan for export of sugar.
SRO 433/2005 dated May 14, 2005One time exemption to M/s Hino Pak Motors for
manufacturing buses for donation to Afghanistan.
SRO 1007/2005 dated September 26, 2005
Exemption to ingredients of poultry and cattle feed
withdrawn and now sales tax will be charged at
5%.
SRO 69/2006 dated January 28, 2006
Sales tax leviable at 16% at import stage on
sunower seed, canola seed by solvent extraction
industries placed in 8th Schedule.
SRO 313/2006 dated March 31, 2006Sales tax leviable at 6% at import stage on
soyabeen seed by solvent extraction industries
21
Finance Act 2015
placed in 8th Schedule.

SRO 880/2007 dated September 01, 2007Zero rating available to medical diagnostics
equipment placed in 6th Schedule.
Exemption available to marble and granite
manufacturers through this SRO have been
placed in Table II of the 6th Schedule.
SRO 408/2012 dated April 19, 2012Exemption available to Blood Bag CPDA has now
been provided in part II of 6th Schedule
SRO 760/2012 dated June 22, 2012
Exemption available to Urine bags has now been
provided in part II of 6th Schedule.
SRO 460/2013 dated May 30, 2013Sales tax on import stage of cellular phones has
now been provided in 9th Schedule.
SRO 657/2013 dated July 11, 2013Reduced rate of 5% on second hand and worn
clothes has now been placed in 8th Schedule.
SRO 572/2014 dated June 26, 2014Reduced rate on import and supply of agricultural
tractors falling under PCT heading 8701.9020 has
now been placed in 8th Schedule
Exemption granted to import and supply of raw
material for the basic manufacture of
pharmaceutical active ingredients and for
manufacture of pharmaceutical products, falling in
respective headings of the rst Schedule to the
Customs Act, 1969 (IV of 1969) has been
withdrawn.
S.R.O 491(I)/2015
Suppression of SRO 532(I)/2008 dt June 11, 2008
The minimum value of assessment of locally
produced coal has been enhanced from Rs. 1,000
per metric ton to Rs. 2,500 per metric ton
S.R.O 493(I)/2015
Rescinds SRO 863(I)/2008 dt. 20.08.2008
Production and supply data of certain

manufacturers is now made part of Sales Tax
Rules, 2006, hence this SRO rescinded.
S.R.O494(I)/2015
Amendments in the Sales Tax Rules, 2006.
In the Sales Tax Rules, 2006 following signicant
changes have been made:
In order to apply the barcodes, band roles, etc.
relevant denitions has been provided.
Biometric verication of the owner, partner or
member has been made compulsory for sales tax
registration.
Concept of temporary registration for two months
to the new manufacturer who intends to import
plant & machinery and raw material introduced to
avail the rates applicable to manufacturers.
However, during this period, neither any invoice
can be issued nor can refund be claimed. A return
shall also be led in specied format during
temporary registration period.
If a person cannot electronically le application for
registration, he may submit the manual application
to the concerned Commissioner who will ensure
its entry in online system.
If a registered person fails to le sales tax return
for consecutive six months, he can be
deregistered subject to other conditions. If a
registered person intends to le return after failure
of six months, he will be required prior approval of
the concerned Commissioner.
Monthly production and supply data as required in
the SRO 863/2007 has now been made part of
Rules including ten additional categories of
manufacturers
Import and supply of exempt goods to
organizations or agencies under grants-in-aid
shall now be made subject to exemption certicate
issued by Economic Affairs Division.
Registered persons operating restaurants, cafes,
coffee shops, eateries, snack bars and hotels
shall ensure access to the FBR with respect to the
electronic invoice system and other record
22
Finance Act 2015
maintained by such persons. The intention of the

Federal Government to bring this sector under
Federal Sales Tax as against the Provincial Sales
Tax Authorities claim to tax this sector as service
sector.
Manufacturers and importers of aerated waters,
cigarettes, fertilizers, cements and sugar have
now been made subject of electronic monitoring
and tracking through barcodes, band roles, tax

stamps etc. The electronic system shall be
installed on the production lines or at port or
bonded ware house and persons of these
mentioned sector shall not route any production
otherwise than electronic system after the date to
be specied by the FBR in this regard.
23
Finance Act 2015
FEDERAL EXCISE DUTY

POWER OF THE FEDERAL GOVERNMENT
SECTION 16
The Power of the Federal Government for
Federal Excise Act, 2005 have been made
subjected to the approval of Economic
Coordination Committee of Cabinet, and that too,
on the basis of specific purposes and
circumstances as defined in the law.
Concept of Whistle blower. special audit panel
and power of Federal Government to enter into
bilateral agreements in line with Income and Sales
tax laws have also been introduced under Federal
Excise Laws.
S.R.O 489(I)/2015
Amends SRO 550(I)/2006 dt. 05.06.2006
FED on air travel service and carriage of goods by
air service is excluded from sales tax mode
hence input tax adjustment against these
services will not be available.
S.R.O 490(I)/2015
Rescission of certain FED SROs which have
been transposed to the Third Schedule of Federal
Excise Act, 2005
First Schedule
SRO 778/2006 dated August 01, 2006
The rate of Federal Excise Duty (FED) on Aerated

Waters has been increased to 10.5% from 9%.
SRO 474/2009 dated June 13, 2009
SRO 802/2009 dated September 14, 2009
SRO 81/2010 dated February 13, 2010
The FED on locally produced cigarettes has been

increased to Rs. 3,030 per thousand cigarettes
from Rs. 2,632 and to Rs.1,320 per thousand
cigarettes from Rs.1,085 for the on pack printed
retail price exceeding three thousand three
hundred and fifty per thousand cigarettes and for
lesser on pack printed value respectively.
FED of Rs. 0.75 per filter rod for cigarettes has
been introduced.
FED on air travel for socio-economic routes has
been withdrawn. Socio-economic routes mean 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.
Exemption available to following has been made

part of Third Schedule, hence the above SROs
rescinded.
Hajj passengers, Diplomats,

Supernumerary crew
Motor cars exceeding cylinder capacity of

850
Certain services provided by the banking

and non banking companies viz.a.viz Haj
and Umrah, cheque books, insurance,
Musharika, Modaraba and utility bill
collection
White cement
Advertisement in newspapers and
Third Schedule
White Cement and Motor Vehicles of cylinder
capacity exceeding 850cc have been exempted
from the levy of FED.
Advertisement in newspapers and periodicals, air
travel services for Hajj passengers, Diplomats &
Supernumerary crew and services rendered by
banking companies and non-banking financial
companies in respect of Hajj & Umrah, cheque
book, insurance, Musharika & Modaraba financing
and utility bill collection have also been exempted
from the levy of FED.
periodicals
24
Finance Act 2015
ISLAMABAD CAPITAL TERRITORY

( TAX ON SERVICES) ORDINANCE, 2001 (ICTO)
The ambit of taxable services has been expanded
to included forty two categories of services against
previous four categories in line with services
taxable under other Provincial Sales Tax on
Services Laws. General rate of sales tax at 16%
except for few services has been specified as
below.
Existing taxable services has been amended as
under:
1.
Services provided or rendered by hotels,

motels, guest houses, marriage halls and
lawns (by whatever name called)
including pandal and shamiana
services, clubs including race clubs, and
caterers.
2.
Advertisement on television and radio,

excluding advertisements
United Nations Children's Fund

(UNICEF)
3.
Services provided by persons authorized

to transact business on behalf of others
Stevedore
Customs agents and

Ship chandlers.
4.
Courier services and cargo services

by road provided by courier companies.
Following services have been excluded from

general rate of sales tax:
Call centres
18.5%
Freight forwarding agents,
Sponsored by an agency of the

Federal or Provincial Government for
health education
packers and movers
Sponsored by the Population

Welfare Division relating to educational
promotion campaign(c) financed out
of funds provided by a Government
under grant-in-aid agreement And
Services provided by property
developers and constructors
16% or
400/bill of
lading
100/sq
yard and 50/sq
feet respectively
Conveying public service messages, if

telecast on television by the World
Wide Fund for Nature (WWF) or
25
Finance Act 2015
AMENDMENTS BY PUNJAB FINANCE ACT 2015

PUNJAB SALES TAX ON SERVICES ACT,
2012
k)
Domestic Air Travel: Long Routes (journey

exceeding 500 kms) @ Rs 2,500 per
ticket and short routes @ Rs 1,500 per
ticket
Addition in list of taxable services Second

Schedule
The following services have been added in list
of taxable services (i.e. sales tax will be charged
on them):
a)
Services in relation to transport of goods

(including domestic transportation through
air) and inter-city carriage of goods by rail
or road
b)
Visa processing services including

consultancy services for foreign education
or migration etc
c)
d)
e)
Services in relation to supply of tangible

goods including machinery, equipment
and appliances for use, without
transferring right of possession and
effective control of such machinery,
equipment and appliances
Public relation services including
communication services, media
management and research and services
provided by opinion poll agencies
Services provided by practicing chartered
or cost accountants, auditors, actuaries,
tax consultants, practicing company
secretaries, receivers, liquidators,
auctioneers and corporate law consultants
irrespective of their legal status
f)
Chartered flight services within or

originating from the Punjab
g)
Debt collection and similar other recovery

services
h)
Supply chain management or distribution

(including delivery) services
i)
Services provided by photography studios

and event or occasion photographers /
filmmakers and
j)
Sponsorship services.
Services provided for Air Travel in respect

of passengers embarking from Punjab:
International Air Travel (excluding Hajj or

Umrah passengers, diplomats and
supernumerary crew): Economy &
Economy plus @ Rs 5,000 per ticket and
Club, Business and First class @ Rs
10,000 per ticket.
Broadening of scope of taxable services
Second Schedule
The scope of following services already taxable
has been broadened without any change of
rate:
a)
Services of caterers will include floral or

other decoration, furnishing of space
involving rental of equipment and
accessories or without it
b)
Courier services will include express

cargo or logistic services
c)
Franchise services will cover licensing

arrangements
d)
Services of builders are clubbed with

those of property developers and
promoters
e)
Services provided for personal care by

beauty parlors, salons, clinics, hair
transplants etc excluding parlors or clinics
where air-conditioners are not installed or
available
f)
All IT-enabled or IT-based services
g)
Services provided by other consultants

will cover evaluation services,
certification, verification and equivalence
services, marketing or sales services,
surveyors services, training or coaching
services (other than general education
26
Finance Act 2015

withdrawn:
services)
h)
Services provided by shares registrar will

include share transfer or depository
services, investor account services,
trustee or custodial services
i)
Services provided by fashion designers

will include use of logo, brand name,
house mark etc in the manufacturing or
trading of products
j)
Services provided by landscapers and

landscape designers are included with
those architects, town planners and
interior decorators and
k)
Rent-a-car services will include services

of rental of any vehicle for transportation
of persons.
Sales tax on freight forwarding agents increased

to Rs. 1,000 per bill of lading from Rs. 400 per
bill of lading.
Reduced rate scheme
In the Budget Speech, Punjab Finance Minister
proposed to introduce reduced rate scheme
whereby flat rates ranging from 2% to 10%
would be applicable on certain service sectors.
However, no such amendment has been made
in Finance Act, 2015.
Withdrawal of exemptions
Second Schedule
a)
Ambit of exemption available to

advertisement services on television and
radio financed out of funds provided under
grant-in-aid agreements has been
restricted to foreign agreements only.
b)
Exemption in respect of the following

construction services has been
Construction of industrial and

commercial projects of value not
exceeding Rs 50 million per annum
Construction of Industrial zones and
Construction services to organizations

exempt from income tax
c)
Sales tax exemption on construction

services to residential construction
projects with covered area not exceeding
10,000 sq. feet in case of houses and
20,000 sq. feet in case of apartments will
be restricted to one such unit.
d)
Exemption available to beauty parlors:
All the new services and/ or services with

broadened scope will be chargeable to sales tax
at 16%, except in case of air travel in respect
whereof flat rates as mentioned above are
applicable.
Increase in sales tax rate
Second Schedule
Having corporate status or trademark

or annual turnover exceeding Rs. 3.6
million or
Which are part of chain business or

franchise arrangement have been
withdrawn.
Grant of exemptions
Second Schedule
a)
With respect to sales tax on

transportation, goods do not include
water.
b)
Services provided by an individual owner

of a vehicle for carriage of goods are
exempt.
c)
Services provided by non-corporate

photographers operating from small roadside shops as declared by PRA are
exempt.
Retention of records
Section 32(1)
Time period for retention of records has been
increased from five to six years, thereby making
it harmonized with the requirements of FBR for
records' retention.
27
Finance Act 2015
Forensic Audit
Section 34
Prize Schemes
Section 88
Punjab Revenue Authority (PRA) has been

empowered to appoint Chartered Accountants,
Cost and Management Accountants or Forensic
Auditors for conduct of special audit or forensic
audit or both of records of any registered person
with or without collaboration of FBR or any
other provincial sales tax authority. Basically,
concept of forensic audit has been introduced
as power to conduct special audit was already
available with PRA.
In order to promote tax culture and encourage the

general public to make purchases only from
registered persons, PRA has been empowered to
introduce prize schemes with the approval of the
Punjab Government.
Penalties
Section 48
Minimum penalties for non-compliance with
compulsory registration requirement have been
increased:
Type of
persons
Company
Other than
company
Penalty Rate
(Rs.) with
effect from 17-2015
Previous
Status (Rs.)
1,00,000
10,000
50,000
10,000
Penalties for non-production of records as

required by PRA have been increased as per
below:
1-7-2015
Reward to Whistleblowers
Section 89
The concept of whistle blowers has been
introduced in same line as introduced in federal
fiscal laws with same purpose. However, such
person shall be liable to penalty of Rs. 100,000 in
case he fails to prove that his information is not
false or misleading.
STAMP ACT, 1899 (PUNJAB)
Calculation of value of leasehold property as
per Valuation Table for stamp duty
Section 27-A
Previously, Stamp Duty on the instruments of
transfer of lease hold rights is charged on the
value of property as declared by the parties
without considering the Valuation Table as notified
by the District Collector under Section 27-A of the
Stamp Act, 1899. In order to regularize the
calculation of value of property as per Valuation
Table, scope of Section 27-A of said Act has been
increased to cover Article 63 of Schedule-I to said
Act which pertains to transfer of lease hold rights.
CAPITAL VALUE TAX (PUNJAB FINANCE
ACT, 2010)
Withdrawal of exemption on urban property
The Capital Value Tax on property is a provincial
subject in the aftermath of the 18th Constitutional
Amendment. It is payable by a person who
acquires an immovable property by purchase, gift,
exchange or power of attorney, surrender or
relinquishment of right by the owner or a right to
use thereof for twenty years or more or renewal of
lease. Previously, immovable properties other
28
Finance Act 2015
than commercial or industrial property, plaza or

multi-storey building situated in urban area and
valuing less than one million rupees were exempt
from CVT. The said exemption has been
withdrawn to avoid its misuse.
were subjected to sales tax at 16% since July,

2012. In order to avoid dual taxation of clubs, the
Punjab Government has decided to abolish
Education Cess on clubs to prevent hardships to
such clubs.
EDUCATION CESS ON CLUBS (PUNJAB

FINANCE ACT, 2011)
Withdrawal of Education Cess
Education Cess on Clubs was levied through
Punjab Finance Act, 2011, while services of clubs
29
Finance Act 2015
AMENDMENTS BY KHYBER PAKHTUNKHWA FINANCE ACT 2015

Property Tax
Vehicles for plying
KP government has raised the property Tax on

Commercial buildings on the basis of their annual
letting values. The enhanced rates for different
categories are as follows:
Description
On the basis of Seats (upto 6

person)
400-652 p.a
More than 6
120-180 per
seat
Rate
Other Vehicles
Commercial Property
Locality A1
13%
On the basis of engine

capacity
Locality A
10%
Tractors
500-5,000 p.a
With or without trolly

Locality B
600 p.a
7%
Khyber Pakhtunkhwa Revenue Authority

Locality D
4%
Petrol Pumps & CNG Stations
Following amendments have been made in

the Finance Act, 2013 through which KP
Revenue Authority was legislated:
Special Audit
With Store
Without Store
Rs. 15,000
Rs. 7,500 p.a
Motor Vehicle Tax

Provincial government has provided for option of
paying vehicle token tax on a lump sum basis for
vehicles not for plying for hire at the time of
registration of vehicles. Moreover, the vehicle
token tax rates have been increased. The
summary of new rates is as follows:
Description
Rate
(Rs.)
Motorcycle
Once for lifetime
1,000
Section 51
In addition to Chartered Accountant and Cost
& Management firms, any foreign or local
consultant having experience of forensic audit
can be appointed for the special audit of any
registered person.
Authority for Exemptions
Section 94
Through this amendment, provincial
government has provided for power of
exempting any goods through notification.
Amendment in Sales Tax Schedule I
In order to broaden the scope of provincial
sales tax, the following new services have
been notified in the First Schedule:
9812.2600 Voice over I. P services
Vehicles for Haulage

On the basis of haul capacity
9812.2700 Teleconferencing services

500-8,000 p.a
9812.2800 3G/4G LTE services

9875.0000 Electric power transmission or
distribution services.

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1

Finance Act 2015

Finance Act 2015

2.1 Powers of Federal Government

2.2 Tax Credit

2.4 Income Tax Schedule

FEDERAL EXCISE DUTY

ICT ORDINANCE, 2001

PUNJAB FINANCE ACT, 2015

KPK PROVINCIAL FINANCE ACT, 2015

Finance Act 2015

revenue reserves but exclude capital reserves,

Pakistani ships or vessel - US$ 1 per ton

Foreign ships or vessels - US $ 0.15 per

Tax on Profit on Debt

Finance Act 2015

months, gains are subject to 10% and 12.50% tax

twenty four months but for the Tax Year 2016,

POWERS OF FEDERAL GOVERNMENT

Coordination Committee of Cabinet, that too, on

due to section 169(2) and 113 (1) there was

Miscellaneous - Tax Credit

Finance Act 2015

Furthermore, in case the order for approval for

In order to exchange information with regard to

Stay in Recovery Proceedings by

The Commissioner (Appeals) may extend the stay

Finance Act 2015

purchase of cooking oil or vegetable ghee by

to be made on the 'amount actually paid' to the

Finance Act 2015

The penalty for non-ling of wealth statement and

Section 177 and 214C regarding audit and

Finance Act 2015

or non-ler) which would be Final Tax on such

Education related expenses remitted abroad will

Finance Act 2015

Rs. 79,500 + 12.5% of amount

Rs. 92,000 + 15% of amount

Tax Rates For Business Individual and

2,500,000 Rs. 137,000 + 17.5% of amount

3,500,000 Rs. 359,500 + 22.5% of amount

7%of amount exceeding

Rs. 259,500 + 20% of amount

Rs. 472,500 + 25% of amount

Rs. 7,000 + 10% of amount

7,000,000 Rs. 597,000 + 27.5% of amount

Rs. 32,000 + 15% of amount

and above Rs. 1,422,000 + 30% of amount

Rs. 144,500 + 20% of amount

Rs. 344,500 + 25% of amount

Rs. 719,500 + 30% of amount

* for AOPs (Professional rms prohibited from incorporating

Tax Rates For Companies

Other than banking company- TY- 2016

Other than banking company- TY- 2017

Other than banking company- TY- 2018

Super Tax Rates

Other person having income equal to or

Tax Rates For Salaried Individual

Tax Rates For Prot on debt

2%of amount exceeding