180428-480-Tola Associates - Budget Comments 2018-19

ASSOCIATES
TAX & CORPORATE ADVISORS
Amnesty
Scheme
Tax Target
Devaluation
408, Continental Trade Centre, Block 8, Clifton, Karachi 75600, Pakistan

Karachi - Lahore - Islamabad
https://goo.gl/LFiWyx https://goo.gl/QDM4ZM
ASSOCIATES
This budget brief gives an overview of the country’s economy for the financial year 2017-18 and the
important changes which are proposed through the Finance Bill 2018 tabled before the Parliament on
April 27, 2018. This is the secondbudget brief of .
The instant commentary contains highlights on the proposed budget and comments on the amendments
proposed in the bill 2018; through the Income Tax Ordinance, 2001; the Sales Tax Act, 1990, the Federal
Excise Act, 2005, and Petroleum Product (Petroleum Levy) Ordinance, 1961.
The amendments proposed through these laws are intended to be effective, once the Bill is passed by
the Parliament in its present form or with some amendments and would therefore be effective thereafter,
unless otherwise indicated.
This Tax Memorandum is intended to provide general guidance to our clients and other readers on the
important changes proposed to be brought through the Bill and should not be construed as an expert
advice relating to a particular matter. For assessing the impact of proposed changes, reference should
be made to the appropriate wording to the relevant law, notifications issued thereunder and judgment
given by the Courts.
This Memorandum has been prepared exclusively for the use of our staff, clients and intended readers
based on public information available with us till the time of giving it for printing. This Memorandum
should not be published or printed in any manner without seeking a written consent from us.
It should be noted that the instant commentary is our interpretation of the changes proposed in the Bill.
ASSOCIATES
Our comments in this commentary should not be construed as definite and should therefore, be used
only as a guidance.
Please be informed that this is only a brief overview and the detailed summary shall be issued in this
regard after the approval of the federal finance bill and provincial finance bills from their respective
assemblies.
Warm Regards
Dated: April 28, 2018
Finance Bill 2018-19 | Significant Tax Amendments Page 03

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Economy of Pakistan is facing a bumpy ride these The overall industrial sector showed an increase of
days. From lows of 2012 to record breaking 5.80 provisionally. The mining and quarrying sector
performance graduated over last five years, it is grew by 3.04%. The large scale manufacturing
under pressure again chiefly due to widening trade sector showed an increase of 6.24%. Major
deficit owing to huge import bills, resulting contributors to this growth were cement (12%),
mounting of current account deficit (“CAD”) and tractors (44.7%), trucks (24.41%) and petroleum
devaluation of Pak Rupee. products (10.26%). Electricity and gas sub sector
showed growth of 1.84% while the construction
The provisional GDP for the year 2017-18 has been activity increased by 9.13%.
estimated at 5.79 percent as compared to 5.36%
(revised) during 2016-17. The growth of the
agricultural, industrial and services sector is 3.81%,
5.80% and 6.43% respectively. The growth in GDP The services sector showed a growth of 6.43%.
is majorly contributed by service sector (3.85%) Wholesale and retail trade sector grew at a rate of
followed by Industrial and agricultural sector (1.21% 7.51% which is dependent on the output of
and 0.73% respectively). agriculture and manufacturing and imports.
Agriculture increased by 3.81%, Manufacturing
increased by 5.80% and imports increased by 17%.
Transport, storage and communication sector grew
at a rate of 3.58%. Finance and insurance sector
showed an overall increase of 6.13%, General
government services grew by 11.42%. It is mainly
driven by the increase in salaries and the inflation.
Other private services also contributed positively.
ASSOCIATES
The sectors are further discussed below briefly: Pakistan has been successful in achieving
consistently increasing growth rates during last six
fiscal years.
Theagricultural sector grew by 3.81%. The growth

of crops during this year, is 3.83%. The growth in
production of three important crops namely rice,
sugarcane and cotton is estimated at 8.7%, 7.4%,
and 11.8% respectively, while adecline in
production has been estimated in Wheat and Maize
at 4.4% and 7.1% respectively. Whereas, livestock
sector registered a growth of 3.76%.
Livestock, forestry and fishing has also contributed

to GDP growth and grew by 3.76%, 7.17% and
1.63% respectively.

ASSOCIATES
A comparison of growth with other countries of Average inflation for 2017-18, targeted at 6 percent,
region shows Pakistan’s growth has been consistent was contained at 3.8 percent for July-March 2017-
as compared to India and Sri Lanka. The GDP growth 18 compared to 4 percent in July-March 2016-17.
of India has been stagnant for last three years, Average SPI was also lower in July-March 2017-18,
at 0.9 percent as against 1.4 percent in July-March
whereas, Pakistan’ GDP growth has shown
2016-17. Similarly, average WPI stood at 2.7 percent
improvements. in the same period compared to 3.8 percent
last year.
3.70 6.60 6.50 3.40

4.10 7.20 6.00 4.90
4.81 2.64 4.01 3.78
4.00 7.60 6.10 4.80
4.70 7.60 6.60 5.00
1.86 1.27 1.42 0.96
5.20 7.60 7.10 5.00
5.50 7.30 6.90 4.80 0.03 -1.5 3.79 2.7
303 2457 246 88
11.18 10.99 8.96 10.49
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GDP at current market prices has also been
computed and stands at Rs. 34,396 billion for 2017-
18. This shows a growth of 7.6% over Rs. 31,963
billion for 2016-17. The per capita income is
calculated to be Rs. 180,204 for 2017-18. Whereas,
per per capita income during 2016-17 wasRs.
162,230 based on provisional figures of Population
Census 2017 held in March 2017. The revised series
of per capita income will be compiled after
finalization of 6th Housing and Population
Census result.

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34,396 38,312
4.00 6.00
13-04-2018 14-04-2017
(Rs. In Million)
16.40 17.20
779,035 577,531 307,558 265,418
12.10 13.30
3,911,315 5,009 3,936 129 1,436
4.40 3.80
22,692 758,665 1,174,562 365,508 517,110
10,646,875 1,542,708 1,756,029 673,195 783,964
14,580,882 13.67% 13.69% 4.62% 6.11%
Money supply, during 1st July, 2017 to 13th April,

2018, increased by Rs. 673,195 million (4.62%),
which stood at Rs. 14,580,882 million at 30thJune,
2017. During similar previous periods, money
supply increased by Rs. 783,964 (6.11%).
Investments are targeted to grow at 4.8% uptoRs.

17.2 billion from current estimate of Rs. 16.4 billion.
The target investments would contribute by
National Savings (Rs. 13.3 billion) and Foreign
Savings (Rs. 3.8 billion) ASSOCIATES
Net Government Borrowing was Rs. 784 billion

during July 2017 to 13th April, 2018, which was Rs.
650 billion for the similar previous periods. The
Government borrowings were majorly utilized to
support budgetary deficit (Rs. 839 billion). The
support for budgetary deficit was also contributed
from commodity operations (Rs. 59 billion).

ASSOCIATES
839,541 785,537
(59,538) (138,028)
4,365 2,660
784,367 650,169
Foreign exchange reserves, as on 13thApril, 2018

were down to $ 17.5 billion (18.6%) as compared
Credit to non government sector during 1st July,
2017 to 13th April, 2018 was lower at Rs. 516,729
ASSOCIATES to last years’ (end of March 2017) $ 21.6 billion.
However, private banking reserves seen a rise of
20.6% from last year, whereas, government reserves
million in comparison with similar periods of
previous year (Rs. 660,996 million). Rs. 454 million were 30.9% lower.
was credited to Private sector while Rs. 161 million
were credited to public sector enterprises.
453,991 440,939 11,380 16,466

160,829 216,490
6,166 5,106
0 0
908 3,567 17,546 21,572
516,729 660,996

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The current account deficit for July-February 2017-

18 stood at $10.8 billion compared to $ 7.2 billion
in July-February 2016-17 indicating deterioration
in current account deficit which stood at 4.8 percent
of GDP compared to 3.6 percent last year. Trade
deficit during the first eight months of 2017-18
stood at $19.7 billion with exports of $15.9 billion
USD parity with Pakistani Rupee took a hike of
and imports of $35.6 billion. During July-February
10.8% and 4.5% as compared to its values in
2017-18, exports increased by 12.2 percent
December 2016 and December 2017, respectively. compared to a decline of 0.8 percent in July-
USD parity with PKR remained bit consistent during
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February 2016-17, whereas, imports increased by
past years with the exception of recent devaluation 17.3 percent compared to an increase of 12.5
during December 2017. percent on comparable period of 2016-17.
115.65 6.31 83.78 66.39

24.50 27.30
110.70 6.51 82.69 63.87
53.10 56.50
104.40 6.95 78.92 67.92
28.60 29.20
104.75 6.49 78.25 66.15
13.70 12.50
100.55 6.21 77.93 63.04
105.40 6.05 77.67 61.80 4.40 3.80

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5.40 5.80 6.25 6.50 7.00

4.20 4.50 6.00 6.00 6.00
12.40 13.20 13.60 13.80 13.90

amounted to $14.6 -5.80 -5.50 -5.30 -5.00 -4.90
billion in July-March 2017-18 compared with US$
14.1 billion during same period last year registering 67.00 70.10 67.60 65.20 62.50
an increase of 3.5 percent. The total liquid foreign
exchange reserves stood at $ 17.8 billion on 30th 61.40 64.90 63.10 61.20 59.00
March 2018.
-4.10 -5.00 -4.10 -3.40 -3.10
2017-18 2017-18 2018-19 2019-20 2020-21

Economic growth prospects are positive for 2018-
19 on accounts of strong expected performance
of agriculture, steady growth in industrial sector
1,364 1,436 1,607 1,767 1,998 emanating from acceleration in large scale
920
248
377
998
320
426
1,100
342
445
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1,210
394
484
1,333
421
527
manufacturing and improved energy supply.
Inflation, though slightly picking up, is expected to
remain below 6 percent for the next year. However,
high fiscal and current account deficits in 2017-18
0 36 0 0 may pose a challenge on external front.
Annual Pl an 2018-19 envisages overall

macroeconomic stability in view of encouraging
2017-18 2017-18 2018-19 2019-20 2020-21 agriculture performance and steady industrial
growth. The GDP growth for 2018-19 is targeted at
550 588 624 632 729
6.2 percent with contributions from agriculture (3.8
percent), industry (7.6 percent) and services (6.5
1,001 750 800 850 900 percent). The growth targets are subject to
123 123 76 58 58 favourable weather conditions, current account
deficit management, consistent economic policies
and aligned monetary and fiscal policies.

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i. The agriculture sector

is targeted to grow by 3.8 percent on the basis of
expected contributions from important crops (3 5.80 6.20
percent), other crops (3.5 percent), cotton ginned 3.80 3.80
(8.9 percent), livestock (3.8 percent), fishery (1.8 3.60 3.00
percent) and forestry (8.5 percent). Higher
3.80 3.80
production of cotton crop is expected during 2018-
5.80 7.60
19 given better performance of cotton crop in
6.20 7.80
2017-18 and increasing trend in cotton prices. The
growth prospects for livestock, fishery and minor 6.10 8.10
crops are also bright. 6.40 6.50
ii. In view of steady growth

rate during the current fiscal year, the industrial iv. Fiscal Policy during 2018-19
sector is expected to grow by 7.6 percent during envisages containment of fiscal deficit, mobilizing
2018-19 on the back of better energy supply and more revenues, controlling current spending and
planned investment under CPEC. The mining & switching to targeted subsidies while prioritizing
quarrying sector is projected to grow by 3.6 percent, development spending.
manufacturing sector by 7.8 percent, large scale
Manufacturing by 8.1 percent, construction by 10 v. the expansionary
monetary policy has generated economic activity
percent and electricity generation& distribution
in private sector. There are signs of improvement
and gas distribution by 7.5 percent. Moreover, the
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in large scale manufacturing with expansion plans
increase in consumer demand is expected to further announced by major industries. Thus, momentum
spur private sector activities and help maintain in the demand for credit is expected to pick up
aggregate demand. pace.
iii. is targeted to grow by 6.5 vi. Average inflation during 2018-19

percent in 2018-19, supported by growth of 7.8 is projected at 6 percent on the basis of rising
percent in wholesale & retail trade, 4.9 percent in commodity prices in the international markets.
transport, storage & communication, 7.5 percent
vii. Resurgence of global
in finance & insurance, 4 percent in housing, 7.2
commodity prices in 2018-19 is positive signal for
percent in general government services and 6.8
exporters. Concerted efforts are required to
pecent in other private services. The expected enhance quality of exportable, diversify product
higher growth in commodity producing sectors range and look for new markets. Trade deficit is
will support the targeted growth in Services Sector. projected to be at $29.2 billion.

ASSOCIATES
• The success of China Pakistan Economic Recently introduced amnesty scheme is expected
Corridor (“CPEC”), will have three major benefits, to contribute positively to the economy in terms
i.e. Resolution of Energy Crisis, Development of of influx of undeclared assets into the economy.
Infrastructure and Regional Connectivity. Energy However, the scheme is not expected to contribute
Crisis resolution and Infrastructural Development more than Rs. 2 billion is current rates are prevailed.
is expected to contribute to incremental growth Whereas, if Rs. 150 billion ($ 100 billion foreign, $
in GDP of 2% and 1.5%, respectively, i.e. a combined 50 billion local) of undeclared assets are declared
additional growth of 3.5%, which, after accounting (and not repatriated), only Rs. 6 billion are expected
for existing growth rate, will expectedly result in to be generated at average rate of 4%. However, in
GDP growth of 9.5%. longer run, the scheme may contribute positively
in documenting the economy especially from real
• Regional connectivity will improve the ease estate perspective.
of doing business which will in turn improve the
business competitiveness. This will stimulate inflow
of and growth in investment. Major sectors to have
positive investment growth are construction,
cement, energy, real estate, logistics, transportation, Recent currency devaluation in during December
banking and finance, auto and allied services, 2017 has had a negative impact on economy and
technical and vocational education, health and is likely to further pull down the economy in future.
pharmaceutical, chemical, security services, airline The devaluation has resulted in higher inflation,
industry, shipping industry, telecommunication, higher markup rates and increased debts. The
and engineering. potential 10% benefit in increased export revenues
• ASSOCIATES
The above benefits will also additionally
contribute to reduction in Unemployment, which
is also offset by increased import bills upto 7% and
remaining 3% would also offset due to discounted
price adjustments demanded by foreign buyers.
will have a further positive impact on GDP growth. Debt and foreign liabilities of $ 70 billion and $ 89
billion, respectively, would also increase by 11% in
rupee terms.
With CPEC investments and better performance in

industrial sector exports are expected to gain
momentum. Exports for 2018-19 are thus projected
3.97 4.57 4.42 3.80 3.25
to grow by 11.6 percent while imports are projected
to increase by 6.3 percent. The current account is 6.16 6.16 6.37 6.38 6.50
projected to be in deficit by $12.5 billion in 2018.19
(3.8 percent of GDP) 5.99 6.01 6.24 6.22 6.64

ASSOCIATES
Tax revenues are expected to increase by 1 to 1.5

billion dollars due to increased duties and taxes
based on inflated import values.
We expect that due to positive CPEC developments

and recent amnesty scheme coupled with reforms
in immovable property revaluations, Pakistan can
see amagical GDP growth of double digits within
three years provided political stability prevails.
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A concept of offshore services as a definition. Definition of Income has been proposed to be

“offshore digital services” has been proposed to be amended to excluded tax deducted at the time of
issuance of bonus share from ambit of income. This
defined as services by a non- resident person for
amendment has been introduced as a consequence
online advertising including digital advertising of removal of provisions with respect to deduction
space, designing, creating, hosting or maintenance of advance taxes at the time of issuance of bonus
of websites, digital or cyber space for websites, shares.
advertising, e-mails, online computing, blogs, online
content and online data, providing any facility or Such amendment may be used by majority
service for uploading, storing or distribution of corporate shareholders to avoid taxes on dividend
digital content including digital text, digital audio by issuing bonus shares instead of declaring
or digital video, online collection or processing of dividends. As a result, minority shareholders will
data related to users in Pakistan, any facility for suffer illiquidity.
online sale of goods or services or any other
online facility.
Fee for offshore digital services has been proposed Definition of a Permanent Establishment (“PE”) has
to be charged at 5%. been proposed to be amended to further widen
the scope of a PE to include:
It has also been proposed that the fee for offshore
digital services shall be Pakistan source income if • Any person who has and habitually exercises
it is: an authority to conclude contracts on behalf
of the other person; or
(a) paid by a resident person, except where the
• any person who has and habitually plays the
fee is payable in respect of services utilised
in a business carried on by the resident
outside Pakistan through a permanent
ASSOCIATES principal role leading to the conclusion of
contracts that are routinely concluded without
material modification by the person and these
establishment; or contracts are -
(b) borne by a permanent establishment in (a) in the name of the person; or

Pakistan of a non-resident person (b) for the transfer of the ownership of or for
the granting of the right to use property
owned by that enterprise or that the
enterprise has the right to use;
(c) for the provision of services by that
person.
Definition of filer has been proposed to be
amended so that taxpayers as appearing in active • a fixed place of business that is used or
taxpayers’ lists issued by AJ&K Council Board of maintained by a person if the person or an
Revenue or Gilgit-Baltistan Council Board of associate of a person carries on business at
Revenue, alongwith FBR, are also treated as filer. that place or at another place in Pakistan, and

ASSOCIATES
(i) that place or other place constitutes a The bill proposes to reduce the tax rate from 7.5%
permanent establishment of the person or to 5%. The bill also proposes to reduce the threshold
an associate of the person under this sub of 40% reserves to 20% reserves.
clause; or
(ii) business carried on by the person or an Imposition of tax for not distributing profits is
associate of the person at the same place against the reinvestment business model of
or at more than one place constitute corporations. Amendment would result in decline
complementary that are part of a cohesive
business operation. of the tax revenue in short run, however, the same
will reap higher tax revenues in longer run due to
reinvestment and expansion in tax base.
A super tax was levied, for tax year 2015, vide

Finance Act 2015 (“FA-15”) for every banking
company and every other company whose taxable
profits exceeded Rs.500 million. The super tax was Provisions of section 37 provides that in case of
charged in the backdrop of Military operation ‘Zarb- transfer of any asset by way of gift, the value of the
e-Azb’ for rehabilitation of Temporarily Displaced underlined assets in the hands of transferee is
Persons (“TDPs”). The tax was levied at 4% for
Banking Companies and at 2% for others. The tax treated to be the cost of the asset.
was continued till tax year 2017.
Moreover, section 79 provides that in case of
The super tax has been proposed to be continued transfer of any asset by of gift, no gain or loss shall
till tax year 2020, however it has been proposed
arise.
that the rate of such tax shall be reduced by 1%
each year.
The bill proposes to restrict such non-recognition
Most of the taxpayers, who were hit by super tax,
ASSOCIATES
has filed suits against the tax and has obtained stay
orders from courts of law.
of value and gain or loss of assets in case of gifts
between relatives only. Relative has been defined
in section 85 as:
a. An ancestor, a descendent of any of the

It was made necessary through FA 1999 for listed grandparents, or an adopted child, of the
companies with free reserves of more than 40% of
individual, or of a spouse of the individual; or
their paid-up capital to distribute at least 50% of
their taxed profits as cash dividend.
b. A spouse of the individual or of any person
Vide finance act 2017 tax at 7.5% was charged on specified in clause (a).
every public company other than a scheduled bank
or a modaraba, that derives profit for a tax year but
does not distribute at least 40% of its after tax The amendment will curtail the misuse of the
profits within six months of the end of the tax year provisions and will benefit the genuine donors and
through cash or bonus shares. donees.

ASSOCIATES
Section 57 provides that any unabsorbed depreciation, initial allowance, first year allowance, accelerated
depreciation and amortization for the year shall be fully allowable for deductions from business income
of following tax years.
The bill proposes to amend section 57 such that any of the above unabsorbed expenses shall be adjusted
only to the extent of 50% of the net business income of following years and balance shall be carried
forward to next year and will be adjusted similarly in following years until completely adjusted.
However, in case any subsequent tax year has business income less than 10 million, the above unabsorbed
expenses would be allowed to be adjusted completely and limit of 10% shall not apply.
Tax Year X1 50 40 40 10
Tax Year X2 30 40 35 5 Only 50% of 10

m would be
allowed
Tax Year X3 3 9 8 0 Completely

allowed since
ASSOCIATES income is less

than 10 m
Had there been a business income of 11 million in A tax credit for investment in shares and life
year 3, only 50% of Rs. 11 million would have been insurance premium is allowed to a resident
allowed to be adjusted. individual at the average rate of tax on the lower
of:
The proposed amendment will stagger the
adjustment of unabsorbed depreciation to longer a. The amount of actual cost of investment;
periods. The amendment is an impediment to the b. Rs.1,500,000; or
genuine taxpayer who would be forced to pay tax c. 20% of taxable income.
even though he has genuine deductions available.
The above limit of Rs.1,500,000 has been proposed
to be increased to Rs.2,000,000. The amendment
would encourage investment

ASSOCIATES
Section 107 provides that a tax treaty shall have

Section 65B, 65D and 65E provides for tax credits an overriding effect on any law for the time being
for investment in extension, expansion and BMR in force. However, the bill proposes to make such
projects provided that the investments are made blanket overriding effect subject to the powers of
before 30th June, 2019. The bill proposes to amend Commissioner to recharacterize any transaction
sections 65B, 65D and 65E to further extend the which was entered into as part of a tax avoidance
time of investment upto 30th June, 2021. scheme, under section 109. These amendment with
sweeping powers to Tax Authorities may results in
litigations.
The bill proposes to amend section 101 such that

the business income attributable to import of
goods, whether or not the title to the goods passes The bill proposes to extend the powers of
outside Pakistan, if the import is part of an overall Commissioner under section 107 to recharacterize
arrangement for the supply of goods, installation, a transaction. The bill proposes that the
construction, assembly, commission, guarantees commissioner shall have the power to disregard
or supervisory activities and all or principal an entity or a corporate structure that does not
activities are undertaken or performed either by have an economic or commercial substance or was
the associates of the person supplying the goods created as part of the tax avoidance scheme. These
or its permanent establishment, whether or not amendment with sweeping powers to Tax
the goods are imported in the name of the Authorities may results in litigations.
person, associate of the person or any other person,
would be covered under Pakistan Source of Income. ASSOCIATES
The bill proposes to add a new concept of a
controlled foreign entity by adding a new section
109A. A controlled foreign entity has been proposed
The bill proposes to insert a comprehensive section to be defined as a non-resident company if:
101A to bring disposal of assets located in Pakistan
and disposed out side Pakistan into tax regime. a. more than 50% of the capital or voting rights
The bill proposes that any gain from disposal of of the non-resident company are held, directly
assets located in Pakistan of a non-resident or indirectly, by one or more persons resident
company shall be Pakistan Source. in Pakistan or more than 40% of the capital
or voting rights of the non- resident
Such gain shall be charged at higher of 20% of FMV company are held, directly or indirectly, by a
less Cost or 10% of FMV, whichever is higher. single resident pe rson in Pakistan;

ASSOCIATES
b. tax paid, after taking into account any foreign was incurred, such explanation shall not be
tax credits available to the non-resident rejected on the basis that the source does not
company, on the income derived or accrued, relate to the tax year immediately preceding
during a foreign tax year, by the non-resident tax year in which the asset or expenditure was
company to any tax authority outside Pakistan
is less than 60% of the tax payable on the said discovered by the Commissioner.
income under this Ordinance;
The amendment shall be beneficial for the
c. non-resident company does not derive taxpayers who had genuine sources but did
active business income; and not declare the corresponding assets in their
wealth statements due to error or omission.
d. the shares of the company are not traded on However, the same may be misused.
any stock exchange recognized by law of the
country or jurisdiction of which the non
resident company is resident for tax purposes
A company shall be treated to have derived active

income if: The bill proposed to insert a new section 116A
to file a foreign income and assets statements.
a. more than 80% of income of the company does The bill proposes as under:
not include income from dividend, interest,
property, capital gains, royalty, annuity payment, � Every resident individual
supply of goods or services to an associate, sale or
licensing of intangibles and management, holding
or investment in securities and financial assets; and • Having foreign income equal to or in
b.the company principally derives income under excess of $ 10,000; or
the head “income from business” in the country or • Having foreign assets with a value of
jurisdiction of which it is a resident. $ 100,000 or more
The bill proposes to tax attributable income of a
foreign controlled entity as Pakistan source income.ASSOCIATES Shall furnish a ‘foreign income and assets
statement’ giving following particulars:
• Total assets and liabilities as on the

last day of the tax year;
The bill proposes to add an explanation in section • Foreign asset transferred during the
111(2). The bill proposes to explain that where the year and consideration thereof; and
investment, money, valuable article or expenditure • Foreign income and expenditure
in respect of assets or expenditure situated or derived wholly and necessarily for the
incurred outside Pakistan liable to be included in said income.
the income of tax year 2018 and onwards on the
basis of discovery made by the Commissioner
during tax year 2019 and onwards and the person � Every person who is required to file a
explains the acquisition of such asset or ‘foreign income and assets statement’ i
expenditure from sources relating to tax year in also required to file return of income under
which such asset was acquired or expenditure section 114 of ITO

ASSOCIATES
It is proposed to reduce the percentage of amount

Section 121 provides that a best judgement paid to obtain stay from 25% to 10%.
assessment order shall be issued within 5 years
after the end of the tax year or income year to
which it relates.
The bill proposes to add time limit of two years The bill proposes that in case an AOP or a company
from issuance of notice, in case a notice under fails to provide estimated turnover for the year, the
section 114 has been issued for any of the last ten turnover shall be treated to one-fourth of 110% of
years. the latest tax year for which a return has been filed.
The bill further proposes that banking companies

Section 131 provides that the Appellate Tribunal shall also be liable to furnish their estimates of
Inland Revenue shall have the power to grant stay turnover and advance tax liabilities to the
from recovery of demand upto 180 days. However, Commissioner.
the bill proposes that after expiry of the said 180
days, the Commissioner shall initiate recovery It has also been proposed that an estimate of the
proceedings. amount of tax payable shall contain:
• turnover for the completed quarters of the

relevant tax year,
Through the Finance Bill it is proposed to revamp
the Section 47A where know any aggrieved person • estimated turnover of the remaining quarters
, who has filled and appeal before any Appellate along with reasons for any decline in
Authority will file an appeal before the Board and
simultaneously will withdraw such appeal filed
before any appellate authority for the resolution
ASSOCIATES estimated turnover,
• documentary evidence of estimated expenses

of hardship or dispute. Both the parties will be
or deductions which may result in lower
bound to accept the recommendations of ADRC.
payment of advance tax, and
The powers and composition of ADRC have been
enhanced whereby it can resolve any pending • the computation of the estimated taxable
disputes which are pending before any Appellate income of the relevant tax year
Authority. It seems that erroneously word retired
is appeared before Chartered Accountants and where an estimate of the amount of tax payable is
Advocates. This inadvertent error requires not accompanied by details mentioned in the first
correction.
proviso, the Commissioner may reject the estimate
Furthermore, this proposed section has also after providing an opportunity of being heard to
eliminated Cost and Management Accountant from the taxpayer and the taxpayer shall pay advance
the panel. tax accordingly.

ASSOCIATES
Section 153 provides definition of prescribed

person (i.e. withholding agent) as having turnover
Section 148 provides that the tax required to be exceeding Rs. 50 million or above in tax year 2007
collected from a person under section 148 shall be or any subsequent tax year. The bill proposes to
minimum tax for a tax year on the import of- amend the definition person having turnover more
than Rs. 50 million in any preceding tax year.
• edible oil;
• packing material; and The bill further proposes to include person deriving
• plastic raw material imported by an industrial business income from construction, development
undertaking falling under PCT headings 39.01 and sale of residential, commercial or other plots
to 39.12.” under definition of prescribed person (i.e.
withholding agent).
The bill proposes to further make addition in the
list and proposes that tax required to be deducted
under section 148 on import of goods where goods
are sold in the same condition as they were when
imported; shall also be minimum tax and not Final Section 165A provides that banking companies are
Tax. required to provide online access to their central
database that contains details of account holders
and their day to day transactions. Such access was
so far denied by the banks for reason of secrecy
and confidentiality of banking data.
Section 152 provides deduction of advance tax on
certain payments to non resident persons. The bill The bill proposes that the banks, instead of giving
proposes every banking company or financial access to online data, may provide details of tax
institution remitting outside Pakistan an amount collected on cash withdrawal exceeding Rs. 50,000
of fee for offshore digital services, to a non- from filers and non-filers in respect of such accounts
resident person on behalf of any resident or a
permanent establishment of a non-resident in
Pakistan shall deduct tax from the gross amount
ASSOCIATES where cash withdrawal exceed Rs.1 million or more
during each calendar month. The threshold for
providing details of deposit in any account during
paid at the rate of 15% in line with royalty and fee a month has also been proposed to be enhanced
for technical services. from Rs.1 million to Rs.10 million. Similarly, the
threshold of credit card transactions is also
The bill further proposes that taxes deducted for proposed to be increased from Rs. 100,000 to Rs.
rendering of services shall be minimum. 200,000 per month.
The bill proposes to increase the limit for non The bill proposes to provide a tax credit to company,
deduction of taxes from Rs. 25,000 to Rs.75,000 in who is a member in an AOP, in respect of taxes paid
case of payment for goods and from Rs. 10,000 to by the AOP. The formula for tax credit is proposed
30,000 i n aggregat e during a tax year to be (A/B)xC, where

ASSOCIATES
is the amount of share of profits before tax Section 218 provides for manner of serving notices
received by the company as a member from the and other documents. The bill proposes to also add
association of persons; service by electronic means as a valid manner of
service of notices, orders or other documents. The
is the taxable income of the association of amendment will create hardship for taxpayers as
persons; and majority of small taxpayers and small businessman
are computer illiterate.
is the amount of tax withheld in the name of
the association of persons.
The bill proposes to impose restriction on non-filer

Section 177 provides for constitution of a special on registration of motor vehicles, and immovable
audit panel. The bill proposes to add window for a property.
foreign expert or specialist to be included in the
team. Moreover, a tax audit expert deployed under
an audit assistance programme of an international
tax organization or a tax authority outside Pakistan
The bill proposes to insert a new section 230F,
may also be a member of the panel. However, in
whereby, directorate general of Immovable
case the member is not an officer of Inland Revenue,
property has been established alongwith appellate
the person shall only be included as a member in
tribunal of immovable property.
the special audit panel if an agreement of
confidentiality has been entered into between the The DGIP shall be vested with the powers to acquire
Board and the person, international tax organization a property where DGIP has reasons to believe that
or a tax authority, as the case may be. any immovable property has been transferred on
values less than FMV.
The bill proposes to insert a new section 182A, ASSOCIATES

whereby, in case of late filing of return, the person
The DGIP may appoint any valuer or expert for the
purpose of deter mination of valuatio n.
would not be added in then active tax payers’ list
even after filing of the return. Moreover, losses for
that year shall also not be allowed to be carried
forward. Section 233A provides that tax collected by stock
exchange on sale and purchase of shares shall be
The bill also proposes to delete section 214D, a final tax. However, the bill proposes that the tax
whereby, cases of late filers were automatically shall be covered under normal tax regime.
selected for audit owing to audit incapacity of FBR.
However, a clarification would be required with The proceedings shall not be initiated after 6
respect to pending cases under section 214D. months from the end of month in which instrument
of transfer is registered. The provisions of section
230F shall come into force from such date as the
federal government may specify.

ASSOCIATES
After the enforcement of section 230F, rate of

advance tax on purchase of immovable property
under section 236K shall be 1%. Whereas, provisions
of clause (c) of subsection (4) of section 111, section
236C, section 236W and advance tax on sale of
immovable property shall cease ton apply.
The bill proposes to charge advance tax on sale of

petroleum products to a petrol pump operator or
distributor, at 0.5% (1% for non filers) on ex depot
sale price. The tax so deducted shall be final tax.
The bill proposes to insert a new section whereby

banks are made liable to deduct taxes at 1% (3%
for non-filer) on payments made through credit
cards, debit cards and prepaid cards to non resident
persons. The taxes so deducted shall be adjustable.
ASSOCIATES

ASSOCIATES
1. Third Pakistan International Sukuk

Company Limited.”; and
2. SAARC Energy Centre.
3. Pakistan Bar Council.
4. Pakistan Centre for Philanthropy.
� Through bill, exemption has been proposed 5. Pakistan Mortgage Refinance Company
from total income on various allowances paid Limited.
to the Armed Forces personnel such as kit 6. Aziz Tabba Foundation.
allowance, ration allowance, special messing 7. (l) Al-Shifa Trust Eye Hospital. 97
8. Saylani Welfare International Trust.
allowance, SSG allowance, Northern Areas
9. Shaukat Khanum Memorial Trust.
compensatory allowance, special pay for
10. Layton Rahmatullah Benevolent Trust
Northern Areas and height allowance.
(LRBT).
11. The Kidney Centre Post Graduate Training
� Through bill, income of following funds and Institute.
Institutions has been proposed to be 12. Pakistan Disabled Foundation.
exempted from income tax: 13. Forman Christian College.”;
1. Khyber Pakhtunkhwa Retirement Benefits � Through bill, the income of Third Pakistan
and D eath Compensatio n Fund. International Sukuk Company Limited has
2. Khyber Pakhtunkhwa General Provident been proposed to be exempted.
Investment Fund.
3. Khyber Pakhtunkhwa Pension Fund. � Through bill, an exemption from income tax
has been proposed for any person deriving
� Through bill, it is proposed that donation paid any profit on debt on bonds issued by Pakistan
to following institutions shall be exempted Mortgage Refinance Company to refinance
from income tax: the residential housing mortgage market, for
1. Pakistan Sweet Home, Angels and Fairies

Place.
ASSOCIATES a period of five years with effect from the 1st
day of July, 2018 shall be exempt from income
tax.
2. Al-Shifa Trust Eye Hospital.
� Through bill, an exemption from tax has been
3. Aziz Tabba Foundation.
proposed for manufacturing activity of a
4. Sindh Institute of Urology and
modaraba registered under modaraba
Transplantation, SIUT Trust and Society companies and Modaraba Ordinance 1980.
for the Welfare of SIUT.
5. Sharif Trust. � Through bill, an exemption from tax has been
6. The Kidney Centre Post Graduate Institute. proposed for any gain derived by a person on
7. Pakistan Disabled Foundation. transfer of a capital asset, being a bond issued
by Pakistan Mortgage Refinance Company to
� Through bill, it is proposed that any income refinance the residential housing mortgage
derived by following institutions shall be market, during the period from the 1st day of
exempt from income tax under clause 66: July, 2018 till the 30th day of June, 2023.

ASSOCIATES
� Through bill, an exemption from tax has been � Through Bill, it has been proposed that the
proposed to refinery set up wherein Profits amount of tax payable by resident companies
and gains derived by a refinery set up between deriving income from film-making shall be
the 1st day of July, 2018 and the 30th day of reduced by fifty percent on income from film-
June, 2023 with minimum 100,000 barrels per making.”;
day production capacity for a period of twenty
years beginning in the month in which the
Exemption from specific provision - Second
refinery is set up or commercial production is
Schedule, Part IV,
commenced, whichever is later. Exemption
under this clause shall also be available to
existing refineries, if � Through Bill, the exemption from income tax
has also been proposed to the Third Pakistan
(a) existing production capacity is enhanced International Sukuk Company Limited.
by at least 100,000 barrels per day;
(b) the refinery maintains separate accounts � Through Bill exemption from minimum tax
for income arising from aforesaid has also been proposed on following
additional production capacity; and institutions:
(c) the refinery is a deep conversion refinery.
1. Third Pakistan International Sukuk
Reduction in tax rates - Second Schedule, Part II, Company Limited, and
� Through bill, the rate of tax, under section 152
2. taxpayers qualifying for exemption under
in the case of M/S CR-NORINCO JV (Chinese
Contractor) as recipient, on payments arising clause (126) of Part-I of this Schedule with
out of commercial contract agreement signed effect from the tax year 2014.
with the Government of Punjab for installation
of electrical and mechanical (E&M) equipment � Through bill, it has been proposed that
for construction of the Lahore Orange Line provisions of clause (b) of sub-section (1) of
Metro Train Project, has been proposed to be
6% of the gross amount of payment. ASSOCIATES section 153 shall not apply to payments
received by Sui Southern Gas Company
Limited and Pakistan LNG Terminal Limited
Reduction in tax liability - Second Schedule, from Sui Northern Gas Pipelines Limited on
Part III, account of re- g asificatio n charges.
� Through Bill, the rate of tax at 10% has been � Through bill, it has been proposed that the
introduced on any amount paid as yield or
provisions of section 150 shall not apply to
profit on investment in Shuhada Family
Welfare Account. dividend paid to Transmission Line Projects
under Transmission Line Policy 2015.
� Through Bill, it has been proposed that the
amount of tax payable by foreign film-makers � Through bill, it has been proposed that any
from making films in Pakistan shall be reduced amount paid as yield or profit on investment
by fifty percent on income from film-making in Shuhada Family Welfare Account shall also
in Pakistan. be exempt from withholding tax.

ASSOCIATES
� Through bill, the clause 56B has been � Through bill, it has been proposed that the
abolished wherein, the commercial importers provisions of section 148 shall not apply on
who is subject to final taxation, have an option import of thirty-five armoured and security
to file an statement under 115 (4) of the ITO vehicles imported by or for Ministry of Foreign
that will be treated as assessment under Affairs, Government of Pakistan meant for
security of visiting foreign dignitaries, subject
Section 120 of ITO. Due to abolishment of
to the following conditions,
Section 56B now the commercial importers
have to file income tax return under Section a. that the vehicles imported under this
114 of ITO. clause shall only be used for the security
purpose of foreign dignitaries and will be
� Through bill the minimum tax of 0.5 under parked in Central Pool of Cars (CPC) in the
Section 113 for trading house has been Cabinet Division for further use as and
extended till 2019. when needed; and
b. that the importing Ministry at the time of

� Through bill, it is proposed that the provisions
import shall furnish an undertaking to the
of section 148 shall not apply for import of concerned Collector of Customs to the
plant, machinery and equipment including extent of customs-dues exempted under
dumpers and special purposes motor vehicles this clause on consignment to
imported by the following for construction of consignment basis binding themselves
Sukkur-Multan section of Karachi-Peshawar that the vehicles imported under this
Motorway project and Karakorum Highway clause shall not be re-exported, sold or
(KKH) Phase-II (Thakot to Havellian Section) otherwise disposed of without prior
of CPEC project respectively, by approval of the Board and in the manner
prescribed therefor.
(a) M/s China State Construction Engineering
Corporation Ltd. (M/s CSCEC); and
(b) M/s China Communication Construction
ASSOCIATES � Through bill, it has been proposed that the
provision of section 148 shall not apply on
import of equipment to be furnished or
Company (M/s CCCC). installed for Rail Based Mass Transit Projects
in Lahore, Karachi, Peshawar and Quetta under
� Through bill,, it has been proposed that the CPEC.”;
provisions of section 148 of the Income Tax
Ordinance, 2001(XLIX of 2001), shall not apply � Through bill, the name of Lahore University
for import of construction materials or goods of Management Sciences, Lahore has been
up to a maximum of 10,898.000 million rupees proposed to be treated as non-profit
organization and shall be deemed to have
imported by China State Construction
been approved for sub-section 36 of Section
Engineering Corporation (M/s CSCEC) for 2 of ITO.
construction of Sukkur-Multan section of
Karachi Peshawar Motorway project of � Through bill, it has been proposed that the
National Highway Authority under CPEC provisions of section 111 shall not apply to

ASSOCIATES
(i) investment made by an individual in 9. flour mills

agreenfield industrial undertaking directly 10. vegetable ghee; and
or as an original allottee in the purchase of 11. cooking oil manufacturing;
shares of a company establishing an
industrial undertaking or capital contribution d. The term green field industrial undertaking
in an association of persons establishing an shall include expansion projects for the
industrial undertaking; purposes of this clause.
(ii) investment made by an association of e. Immunity under this clause shall not be
persons in an industrial undertaking; and available to proceeds of crime relating
to offences under the following laws,
(iii) investment made by a company in an
industrial undertaking— if the said (i) Control of Narcotics Substances Act, 1997;
investment is made on or after the 1st day (ii) Anti Terrorism Act, 1997; and
of January, 2014 and commercial production (iii) Anti-Money Laundering Act, 2010.
commences on or before the 30th day of
June, 2019. � Through bill, further services like “inspection,
certification, testing and training services”
b. The concessions given in this clause shall has been proposed that sub section (3) of
also apply to investment made in – Section 153 shall not apply for being a filer.
1. construction industry in corporate sector; � Through bill, clause 95 & 96 has been
2. low cost housing construction in the substituted as the provisions of sections 147,
corporate sector; 150A, 151, 152, 231A, 231AA, 236A and 236K
3. livestock development projects in the shall not apply to “The second Pakistan
corporate sector; international Sukuk Company Limited” and
4. new captive p ower plants; and
5. mining and quarrying in Thar coal,
Balochistan and Khyber Pakhtunkhawa.
ASSOCIATES the Third Pakistan International Sukuk
Company Limited, as a payer.” “(96) the
provisions of sections 147, 150A, 151, 155
and 236K shall not apply to “The second
c. The concessions given in sub-clause (a) shall Pakistan international Sukuk Company
not apply to investment made in- Limited” and the Third Pakistan International
Sukuk Company Limited, as a recipient.”
1. arms and ammunitions;
2. explosives; � Through bill, it has been proposed that
3. fertilizers; advance tax in terms of section 236U shall
4. ugar; not apply to an insurance company collecting
5. cigarettes; premium under-
6. aerated beverages;
7. cement; (a) Crop Loan Insurance Scheme (CLIS); and
8. textile spinning units; (b) Livestock Insurance Scheme (LIS).”;

ASSOCIATES
� Through bill it has been proposed that profit\

on debt in terms of section 7B shall not apply
to yield or profit on investment in Bahbood
Savings Certificate or Pensioner’s Benefit
Account, provided that tax on the said yield
or profit on debt is paid at the rates specified
in Division I of Part I of the First Schedule
subject to clause (6) of Part III.
� Through bill, it has been proposed that the

provisions of section 5A “ tax on undistributed
profit” shall not apply to a company where a
restriction has been imposed on distribution
of dividend on account of an agreement with
the Government of Pakistan.
� Through bill, it has been proposed that audit

proceedings under section 177 and selection
for audit by board under Section 214C shall
not apply to a person whose income tax
affairs have been audited in any of the
preceding three tax years.
Provided that the Commissioner may select a

person under section 177 for audit, with approval
of the Board.
Rules for the computation of the profits and gains

of a banking company and tax payable thereon -
ASSOCIATES
Seventh Schedule
Through Bill, in Rule 1 the Income of banking

companies has been made subject to the provisions
of Chapter VII and Chapter VIII.

ASSOCIATES
The finance bill proposed to insert new section sub

section for empowering the Commissioner or the
It is proposed that the “Board with the approval of Officer Inland Revenue to issue order of assessment
Federal Minster in charge” the words “ Federal of tax to any registered person, giving effect to any
Government shall be substituted in the following finding or direction in order made by the
section. Commissioner Appeals, Appellate Tribunal, High
Court or Supreme Court. Furthermore, if an order
In Section 3 (2)(b),(3A) (5), 4(c), 7(3) (4), 7A(1) (2), is made by Appellate Tribunal, High Court or
8(1b), 13(2A), 60,65,71(1) Supreme Court where an order of assessment is
set aside wholly or partially the Commissioner, The
By such amendment the Finance Bill proposes to Commissioner (Appeals) or Officer of Inland
curtail the power of Finance Minister and allow the Revenue is directed to pass new order of
Federal Government to make any amendments in assessment within on year of the financial year in
the Sales Tax Act, 1990. which the order is served.
This amendment has been made in light of recent On pertinent note, we understand that such order
court judgement of Mustafa Impex vs Federation through such insertion in the Act , it is to facilitate
of Pakistan. taxpayers by removing unnecessary disputes in
quantification of tax liability pursuant to appeal
order by Commissioner (Appeals) , Appellate
Tr ibunal, High Cour t or Supreme Court.
It is proposed that the Further Tax to be enhanced
from 2% to 3%. Initially, further tax was levied vide
Finance Act 2013 at the rate of 1 % . Later it was
enhanced in Finance Act 2015 to 2 %
The Finance Bill proposed that the audit of
registered person shall be conducted once in every
It appears that through such amendment the
revenue of FBR would be enhanced. ASSOCIATES three years.
By insertion of such amendment a relief has been

given to tax payers for annual tax audits.
Through this bill It is proposed that the input tax
adjustment on import of scrap compressors falling
under PCT heading 7204.4940 would be disallowed.
It appears that such input tax is primarily disallowed The Finance Bill proposes to insert Section 30A
for the air conditioning and refrigeration industry where the powers are conferred to Directorate
who claim such input tax adjustment on General Investigation.
compressors.
The Finance bill has provided legal cover to the
actions of Directorate General (Intelligence and
investigation).

ASSOCIATES
The powers and composition of ADRC have been

enhanced whereby it can resolve any pending
The Finance Bill proposes to fix the rate of default
disputes which are pending before any Appellate
surcharge from Kibor plus 3 percent to a fixed rate
Authority.
of 12 %.
Even though the proposed rate is on higher side,

this insertion has provided the tax payer with
simplicity in calculating default surcharge as
It is proposed to reduce the percentage of amount
compared to the earlier position where the taxpayer
was required to make calculation on basis of daily paid to obtain stay from 25% to 10%.
KIBOR rates.
The Finance Bill proposes to provide legal coverage
It is proposed that the powers of Chief to orders of Directorate General (Intelligence and
Commissioner are curtailed regarding posting of Investigation) as if these powers were conferred
officer on premises of tax payers. before the commencement of Finance Act,2018.
Because of numerous complaints where the Chief

Commissioners were found to misusing the powers
conferred under Section 40 B. Through such
amendment only the Board has powers to post
officer at the premises of tax payers. ASSOCIATES � The Finance Bill proposes to provide
exemption of value addition tax of 3% on
import of LNG.
Through the Finance Bill it is proposed to revamp � Scope of services under Islamabad Capital
the Section 47A where know any aggrieved person Territory (Tax on Services) Ordinance, 2001 is
, who has filled and appeal before any Appellate being increased owing to the fact that services
Authority will file an appeal before the Board and
which are chargeable to sales tax in provinces
simultaneously will withdraw such appeal filed
before any appellate authority for the resolution are not chargeable to sales tax in Islamabad
of hardship or dispute. Both the parties will be Capital Territory (Tax on Services) Ordinance,
bound to accept the recommendations of ADRC. 2001.

ASSOCIATES
Rate of sales tax for steal sector is proposed to be increased to Rs. 13 per unit of electricity consumed,
moreover the rate of sales tax for other allied steel industries i.e. Ship breakers and re-rollers is also being
rationalized.
The following amendments will be issued through SRO’s and we will provide the comments when these
are issued
SRO 1125 Amendment will be to increase the rate of further tax by 1%.
SRO 1125 Input tax adjustment is being allowed on packing material to five export-oriented
sectors.
SRO Extra tax and further tax @2% is being granted to Pakistani Foam Manufacturers
SRO Exemption of value addition tax on import of Second hand worn clothing and
footwear.
SRO SRO 962 is being receinded to provide standard rate of sales tax on import and
supply of furnace oil.
SRO Rate of Sales Tax on import of Lithium iron phosphate batteries from 17% to 12%
SRO’s where numbers are not mentioned will be issued by FBR at a later date.
In Fifth Schedule, in column (1), against serial number 12, in column 12, after clause (xix), the following
new clauses shall be added:
“(xx) Colors in sets (PCT heading 3213.1000).

ASSOCIATES Exempt Zero rating
(xxi) Writing, drawing and marking inks (PCT heading. 3215.9010 and Exempt Zero rating
3215.9090)
(xxii) Erasers (PCT heading 4016.9210 and 4016.9290) Exempt Zero rating
(xxiii) Exercise books (PCT heading 4820.2000) Exempt Zero rating
(xxiv) Pencil sharpeners (PCT heading 8214.1000) Exempt Zero rating
(xxv) Geometry boxes (PCT heading 9017.2000) Exempt Zero rating
(xxvi) Pens, ball pens, markers and porous tipped pens (PCT heading Exempt Zero rating
96.08)
(xxvii) Pencils including color pencils ( PCT heading 96.09)”.; Exempt Zero rating

ASSOCIATES
137. Paper weighing 60 g/m2 for printing of Holy Quran 4802.5510 - Exempt
imported by Federal or Provincial Governments and
Nashiran-e-Quran as per quota determined by IOCO
138. Fish Feed Respective heading 10 % Exempt
139. Fans for dairy farms 8414.5990 - Exempt
140. Bovine semen 0511.1000 - Exempt
141. Preparations for making animal feed 2309.9000 - Exempt
142. Promotional and advertising material including 9920(3) - Exempt

technical literature, pamphlets, brochures and other
give-aways of no commercial value, distributed free of
cost by the exhibitors
143. (i) Hearing aids (all types and kinds) (ii) 9937 - Exempt
Hearing assessment equipment;
(a) Audiometers
(b) Tympanometer
(c) ABR
(d) Oto Acoustic Omission
144. Liquefied Natural Gas imported by fertilizer 2711.1100.; 5% Exempt

manufacturers for use as feed stock
145. Plant, machinery, equipment including dumpers and Respective Heading - Exempt
special purpose motor vehicles, if not manufactured
locally, imported by M/s China State Construction
Engineering Corporation Limited (M/s CSCECL) for the
construction of Karachi – Peshawar Motorway (Sukkur
– Multan Section) and M/s China Communication
Construction Company (M/s CCCC) for the construction
of Karakorum Highway (KKH) Phase-II (Thakot- Havellian
Section) subject to the certain conditions.)
146. Equipment, whether or not locally manufactured, Respective Heading - Exempt

imported by M/s China Railway Corporation to be
furnished and installed in Lahore Orange Line Metro
Train Project subject to the certain conditions.

ASSOCIATES
50. LNG 2711.1100 If imported by 17% 12%

M/s Pakistan
State Oil and M/s
Pakistan LNG
Limited
51. RLNG 2711.2100 If supplied by 17% 12%

M/s Pakistan
State Oil and M/s
Pakistan LNG
Limited to M/s
SNGPL
52. Fertilizers (all types)* Respective Nil 17% 3%

heading
53. The following cinematographic equipment imported Subject to same - 5%

during the period commencing on the 1st day of limitations and
Conditions as
July,2018 and ending on the 30th day of June, 2023 are specified in
Part-1 of Fifth
Schedule to the
Customs Act,
1969 for availing
3%
concessionary
rate of customs
duty onthe
import of these
equipment.”;
(i) Projector 9007.2000
(ii) Parts and accessories for projector 9007.9200
(iii) Other instruments and apparatus for cinema 9032.8990
(iv) Screen 9010.6000
(v) Cinematographic Parts and accessories 9010.9000
(vi) 3D Glasses 9004.9000
(vii) Digital Loud Speakers 8518.2200

ASSOCIATES
(viii) Digital Processor 8519.8190
(ix) Sub-woofer and Surround Speakers 8518.2990
(x) Amplifiers 8518.5000
(xi) Audio rack and termination board 7326.9090
8537.1090
(xii) Music Distribution System 8519.8990
(xiii) Seats 9401.7100
(xiv) Recliners 9401.7900
(xv) Wall Panels and metal profiles 7308.9090
(xvi) Step Lights 9405.4090
(xvii) Illuminated Signs 9405.6000
(xviii) Dry Walls 6809.1100
(xix) Ready Gips 3214.9090
54. lithium iron phosphate battery (Li-Fe- PO4) 8506.5000 17% 12%
• There is an anomaly in the rate of fertilizer where by the Fertilizer has been brought into reduced
rate at the 3% and at the same time it has not been removed from the Third Schedule

ASSOCIATES
It is proposed that the “ Board with the approval On pertinent note, we understand that such order
of Federal Minster in charge” the words “ Federal through such insertion in the Act, it is to facilitate
Government shall be substituted in the following taxpayers by removing unnecessary disputes in
section. quantification of tax liability pursuant to appeal
order by Commissioner (Appeals) , Appellate
Tr ibunal, High Cour t or Supreme Court.
By such amendment the Finance Bill proposes to
curtail the power of Finance Minister and allow the
Federal Government to make any amendments in
the Sales Tax Act,1990. It is proposed to reduce the percentage of amount
paid to obtain stay from 25% to 10%.
This amendment has been made in light of recent
court judgement of Mustafa Impex vs Federation
of Pakistan.
Through the Finance Bill it is proposed to revamp

The Finance Bill proposes to fix the rate of default the Section 47A where know any aggrieved person
surcharge from Kibor plus 3 percent to a fixed rate , who has filled and appeal before any Appellate
of 12 %. Authority will file an appeal before the Board and
Even though the proposed rate is on higher side, simultaneously will withdraw such appeal filed
this insertion has provided the tax payer with before any appellate authority for the resolution
simplicity in calculating default surcharge as of hardship or dispute. Both the parties will be
compared to the earlier position where the taxpayer bound to accept the recommendations of ADRC.
was required to make calculation on basis of daily
KIBOR rates. The powers and composition of ADRC have been
enhanced whereby it can resolve any pending
ASSOCIATES disputes which are pending before any Appellate

Authority.
The finance bill proposed to insert new section sub
section for empowering the Commissioner or the
Officer Inland Revenue to issue order of assessment
of tax to any registered person, giving effect to any
finding or direction in order made by the It is proposed that the powers of Chief
Commissioner Appeals, Appellate Tribunal, High Commissioner are curtailed regarding posting of
Court or Supreme Court. Furthermore, if an order officer on premises of tax payers.
is made by Appellate Tribunal, High Court or
Supreme Court where an order of assessment is
set aside wholly or partially the Commissioner, The Because of numerous complaints where the Chief
Commissioner (Appeals) or Officer of Inland Commissioners were found to misusing the powers
Revenue is directed to pass new order of conferred under Section 45. Through such
assessment within on year of the financial year in amendment only the Board has powers to post
which the order is served. officer at the premises of tax payers.

ASSOCIATES
The Finance Bill proposed that the audit of

registered person shall be conducted once in every
three years.
Tier-1 3,740 3,964
By insertion of such amendment a relief has been
given to tax payers for annual tax audits.
Tier-2 1,670 1,770
Tier-3 800 848

The Finance Bill proposes to insert Section 30A
where the powers are conferred to Directorate
General Investigation. The FED on cement has been enhanced in the
following manner.
The Finance bill has provided legal cover to the
actions of Directorate General (Intelligence and
investigation).
The first Schedule Table-1 the rates of cigarettes 1.25 per kg 1.50 per kg
have been enhanced:
Plant, machinery, equipment including dumpers and

special purpose motor vehicles, if not manufactured
locally, imported by M/s China State Construction
Engineering Corporation Limited (M/s CSCECL) for the
construction of Karachi – Peshawar Motorway (Sukkur
– Multan Section) and M/s China Communication
ASSOCIATES
Respective
Heading
Exempt
Construction Company (M/s CCCC) for the construction

of Karakorum Highway (KKH) Phase-II (Thakot- Havellian
Section) subject to the certain conditions.)
Equipment, whether or not locally manufactured,

imported by M/s China Railway Corporation to be Respective Exempt
furnished and installed in Lahore Orange Line Metro Heading
Train Project subject to the certain conditions.
Commission paid by State Bank of Pakistan and its

subsidiaries to National Bank of Pakistan or any other
banking company for handling of banking services of Exempt
Federal or Provincial Governments as State Bank of
Pakistan’s agent.

ASSOCIATES
1. Where Import value of handset (including duties and taxes) does not Nil
exceed Rs.10,000/-
2. Where Import value of handset (including duties and taxes) exceeds Rs. 1,000
10,000 but does not exceed RS 40,000/-
3. Where import value of handset (including duties and taxes) exceeds Rs. 3,000
40,000 but does not exceed Rs. 80,000/-
4. Where Import value of handset (including duties and taxes ) exceeds 5,000
Rs. 80,000/-
ASSOCIATES

ASSOCIATES
Through Proposed Amendment in the Finance Bill 2018; the federal government is proposing following
exorbitant increase in Petroleum Levy. Such astronomical increase in Petroleum Levy will have far reaching
impacts on Economy and will leave fathomless marks on inflation in near future.
High Speed Diesel Oil (HSDO) 8 30 22 275
Motor Gasoline 10 30 20 200
Superior Kerosene Oil (SKO) 6 30 24 400
Light Diesel Oil (LDO) 3 30 27 900
High Octane Blending Component (HOBC) 14 30 16 114
E-10 Gasoline 9 30 21 233
Liquefied Petroleum Gas (produced/extracted in Pakistan 11,486 20,000 8514 74
ASSOCIATES
* These rates were introduced through Finance Act, 2012.

ASSOCIATES
The rates of tax imposed on the taxable income of every individual and Association of Persons
except a salaried taxpayer [Division I Part I First Schedule]
1. Where the taxable income does not exceed Rs. 400,000 0%
2. Where the taxable income exceeds Rs.400,000 but does 7% of the amount exceeding
not exceed Rs.500,000 Rs.400,000
3. Where the taxable income exceeds Rs.500,000 but does Rs. 7,000 + 10% of th amount
not exceed Rs.750,000 exceeding Rs.500,000
4. Where the taxable income exceeds Rs.750,000 but does Rs.32,000 + 15% of the
not exceed Rs.1,500,000 amount exceeding Rs.750,000
5. Where the taxable income exceeds Rs.1,500,000 but does Rs.144,500 + 20% of the
not exceed Rs.2,500,000 amount exceeding Rs.1,500,000
6. Where the taxable income exceeds Rs.2,500,000 but does Rs.344,500 + 25% of the amount
not exceed Rs.4,000,000 exceeding Rs.2,500,000
8. Where the taxable income exceeds Rs.6,000,000 Rs.1,319,500 + 35%* of the

amount exceeding Rs.6,000,000
*In case of professional firm (AOP) prohibited from incorporating by relevant laws or rules, the
rate of Tax is 32% from Tax Year 2016 and onwards instead of 35% where income of such AOP
exceeds Rs 6,000,000.

ASSOCIATES
The rates of tax imposed on the taxable Salary income of every individual [Division I Part I First
Schedule]
1. Where the taxable income does not exceed Rs.400,000 0%
not exceed Rs.500,000 Rs.400,000
3. Where the taxable income exceeds Rs.500,000 but does Rs. 2000 + 5% of the amount
not exceed Rs.750,000 exceeding Rs.500,000
4. Where the taxable income exceeds Rs.750,000 but does Rs.14,500 + 10% of the amount
not exceed Rs.1,400,000 exceeding Rs.750,000
5. Where the taxable income exceeds Rs.1,400,000 but does Rs. 79,500 + 12.5% of the amount
6. Where the taxable income exceeds Rs.1,500,000 but does Rs. 92,000 + 15% of the amount
7.
8.
not exceed Rs.2,500,000
ASSOCIATES
Where the taxable income exceeds Rs.1,800,000 but does
Where the taxable income exceeds Rs.2,500,000 but does

Rs.137,000 + 17.5% of the amount
exceeding Rs.1,800,000
Rs. 259,500 + 20% of the amount

9. Where the taxable income exceeds Rs.3,000,000 but does Rs. 359,500 + 22.5% of the amount
11. Where the taxable income exceeds Rs.4,000,000 but does Rs.597,000 + 27.5% of the amount
12. Where the taxable income exceeds Rs.7,000,000 Rs.1,422,000 + 30% of the amount

ASSOCIATES
The rates of tax imposed on the taxable income of every Association of Persons [Division I Part
I First Schedule]
not exceed Rs.1,200,000 Rs.400,000
3. Where the taxable income exceeds Rs.1,200,000 but does Rs. 40,000 + 10% of the amount
7. Where the taxable income exceeds Rs.6,000,000 Rs.880,000 + 30% of the amount

ASSOCIATES
The rates of tax imposed on the taxable income of every individual (whether business or salary)
as per Division I Part I First Schedule

2. Where the taxable income exceeds Rs.400,000 but does Rs 1,000
not exceed Rs.800,000
3. Where the taxable income exceeds Rs.800,000 but does Rs 2,000
not exceed Rs.1,200,000
4. Where the taxable income exceeds Rs.1,200,000 but does 5% of the amount exceeding
not exceed Rs.2,400,000 1,200,000
5. Where the taxable income exceeds Rs.2,400,000 but does Rs. 60,000 plus 10% of the amount
not exceed Rs.4,800,000 exceeding 2,400,000
6. Where the taxable income exceeds Rs.4,800,000 Rs. 300,000 15% of the amount
exceeding 4,800,000
If a person’sannual taxable salary is Rs 1,200,000, the tax payable as per Tax year 2017 is Rs 59,500 as compared
to Tax year 2018 his tax liability is reduced to Rs 2,000.
If a person’sannual income (other than Salary) is Rs 1,200,000, the tax payable as per Tax year 2017 is Rs 99,500
as compared to Tax year 2018 his tax liability is reduced to Rs 2,000.
Shipping income 8% 8%
Air transport income 3% 3%

ASSOCIATES
Chartered and flying Pakistan flag USD 1 per gross USD 1 per gross
registered tonnage registered tonnage
Not registered in Pakistan and hired any charter other USD 0.15 / ton of gross USD 0.15 / ton of gross
than bare-boat charter registered tonnage per registered tonnage per
chartered voyage, chartered voyage,
subject to a maximum subject to a maximum
annual amount of USD 1 annual amount of USD 1
per ton of gross per ton of gross
registered tonnage registered tonnage
Profit upto Rs. 5 Million 10% 10%
Profit on debt exceeds Rs.5 Million but does

not exceed Rs.25 Million 13% 13%
Profit on debt exceeds Rs.25 Million 15% 15%
Karachi, Lahore & Islamabad Rs. 210 /Sq. Ft Rs. 210 /Sq. Ft
Hyderabad, Faisalabad, Sukkur, Multan, Rawalpindi, Gujranwala,

Sahiwal, Peshawar, Mardan, Abbottabad, Quetta Rs. 210 /Sq. Ft Rs. 210 /Sq. Ft
Urban Areas not specified in above Rs. 210 /Sq. Ft Rs. 210 /Sq. Ft

ASSOCIATES
Upto Upto
Upto 1501 Upto 1501
751 to 751 to
750 Sq. ft 750 Sq. ft
1500 1500
Sq. ft & more Sq. ft & more
Sq. ft Sq. ft
(Rs) (Rs) (Rs) (Rs)
(Rs) (Rs)
Karachi, Lahore & Islamabad 20 40 20 40 70 70
Hyderabad, Faisalabad, Sukkur, Multan, Rawalpindi,

15 35 15 35 55 55
Gujranwala, Sahiwal, Peshawar, Mardan, Abbottabad, Quetta
Urban Areas not specified in above 10 25 10 25 35 35
Karachi, Lahore & Islamabad Rs. 210 /Sq. yard Rs. 210 /Sq. yard

Gujranwala, Sahiwal, Peshawar, Mardan, Abbottabad, Quetta Rs. 210 /Sq. yard Rs. 210 /Sq. yard
Urban Areas not specified in above Rs. 210 /Sq. yard Rs. 210 /Sq. yard
Upto Upto Upto Upto

750 751 to 1501 750 751 to 1501
Sq. 1500 Sq. yard Sq. 1500 Sq. yard
yard Sq. yard & more yard Sq. yard & more
(Rs) (Rs) (Rs) (Rs) (Rs) (Rs)
Karachi, Lahore & Islamabad 20 40 20 40 70 70

15 35 15 35 55 55
Gujranwala, Sahiwal, Peshawar, Mardan, Abbottabad, Quetta
Urban Areas not specified in above 10 25 10 25 35 35

ASSOCIATES
Up to one year, acquired on after 01-07-2016 10% 10%

Up to two years, acquired on or after 01-07-2016 7.5% 7.5%
Up to three years, acquired on or after 01-07-2016 5% 5%
More than three years, acquired onor after 01-07-2016 0% 0%
Up to three years, acquired before 01-07-2016 5% 5%
More than three years, acquired before 01-07-2016 0% 0%
Where holding period of a security is

12.5% 15% 15% 15% 15% 15%
less than twelve months
twelve months or more but less than 10% 12.5% 12.5% 12.5% 12.5% 12.5%
twenty-four months
twenty-four months or more but the
0% 7.5% 7.5% 7.5% 7.5% 7.5%
security was acquired on or after
1st July, 2012
Where the security was acquired
0% 0% 0% 0% 0% 0%
before 1st July, 2012

ASSOCIATES
Industrial undertaking importing remeltable steel (PCT
Heading 72.04) and directly reduced iron for its own use;
Persons importing potassic fertilizers in pursuance of ECC‘s
decision No.ECC-155/12/2004 dated the 9 Dec 2004;
Persons importing urea
Manufacturers covered under S.R.O. 1125(I)/2011 dated the 1% 1.5% 1% 1.5%
31 Dec 2011 for importing items as per said SRO
Persons importing gold
Persons importing cotton
Designated buyer of LNG importing on behalf of
Govt. of Pakistan
Persons importing Pulses 2% 3% 2% 3%
Commercial importers covered under S.R.O. 1125(I)/2011

3% 4.5% 3% 4.5%
dated the 31 Dec 2011
Persons importing Coal 4% 6%
Ship breaker on import of ships 4.5% 6.5% 4.5% 6.5%
Companies and industrial undertakings not covered above 5.5% 8% 5.5% 8%
Others than not covered above 6% 9% 6% 9%
All above are fall in except in some cases fall under

- Import of packing material;
- Import of edible oil
- Import of plastic raw material imported by an industrial undertaking

ASSOCIATES
Dividends from privatized power projects or companies set

up for power generation or companies supplying coal 7.5% 7.5%
exclusively to power generation projects
Dividends received by a company from a collective investment
25% 25%
scheme, REIT scheme or a mutual fund
Dividends exceeding Rs. 2.5 million, received by other than a
company, from a collective investment scheme, REIT scheme 12.5% 15% 7.5% 15%
or a mutual fund
Dividends upto Rs. 2.5 million, received by other than a
company, from a collective investment scheme, REIT scheme 10% 15% 7.5% 15%
or a mutual fund
Dividends received from stock funds 12.5% 12.5%
Other cases 15% 20% 15% 20%
Dividends for 3 years from June 30, 2018 paid by
Developmental REIT Schemes set up by June 30, 2018 with Rate to be reduced Rate to be reduced
the object of development and construction of residential by 50% by 50%
buildings
Received by Company 25% 25%

Received by an individual or an AOP, if the profit is more
13% 13%
than Rs. 1 Million
Received by an individual or an AOP, if the profit is less
10% 10%
than Rs. 1 Million

ASSOCIATES
Where debt yield is up to Rs. 500,000 10% 10%
Where debt yield is above Rs. 500,000 10% 17.50% 10% 17.50%
- Tax on profit on dedt is final except adjustable in below cases :

1) Tax payer is a company;
2) Profit on debt is taxable under 7(B)
Royalty or fee for technical services 15% 15%

Fee for offshore digital services 5%
Contracts or related services or advertisement 7% 13% 7% 13%
Insurance or re-insurance premium 5% 5%
Advertisement services to a non-resident media person
10% 10%
relaying from outside Pakistan
Any other receipt not covered above 20% 20%
Sale/ supply of goods by PE of non-resident company 4% 7% 4% 7%
Sale/ supply of goods by PE of other non-residents 4.5% 7.75% 4.5% 7.75%
Rendering/ providing of transport services 2% 2%
Rendering/ providing of services by PE of
8% 14% 8% 14%
non-resident company
Rendering/ providing of services by PE of other non-residents 10% 17.5% 10% 17.5%
Execution of contract other than contract for sale or
7% 13% 7% 13%
services by PE
Execution of contract of the sport person 10% 10%

ASSOCIATES
Payment against foreign produced advertisement commercial

20% 20%
to non-residents
Sale of rice, cotton seed oil and edible oil 1.5% 1.5%
Sale of goods by FMCG distributors by companies 2.00% 2.00%
Sale of goods by FMCG distributors by other than companies 2.50% 2.50%
Sale of any other goods by companies 4% 7% 4% 8%
Sale of any other goods by other than companies 4.50% 7.75% 4.50% 9%
Companies providing advertising services (electronic & print

1.5% 12% 1.5% 12%
media services)
Other than companies providing advertising services

1.5% 15% 1.5% 15%
(electronic & print media services)
Companies providing transport services 2% 2%
Companies providing other services 8% 14.5% 8% 14.5%
Non-company entities providing other services 10% 17.5% 10% 17.5%
By export houses for services rendered for stitching, dying,

1% 1%
printing, embroidery, washing,sizing & weaving

ASSOCIATES
Companies executed the contracts
*Advance Tax for listed companies where as final Tax for 7%* 12%* 7%* 14%*
non-listed companies
Other than companies executed the contracts 7.5% 12.5% 7.5% 15%
To sportsperson 10% 10%
At the time of realization of proceeds on export of goods
[Exemption to cooking oil or vegetable ghee exported to 1% 1%
Afghanistan if tax u/s 148 is paid]
Indenting commission on realization of proceeds on account

5% 5%
of commission to indenting agent
Inland back to back LC by exporter on sale of goods under
inland back to back LC or any other arrangement as may be 1% 1%
prescribed by FBR.
Export of goods by units located in EPZ 1% 1%
Payment for a firm contract by direct exporters or export
houses registered under DTRE Rules, 2001 to an indirect 1% 1%
exporter as per the said Rules

ASSOCIATES
15% of 17.5% of 15% of 17.5% of

the gross the gross the gross the gross
Ownership of companies
amount amount amount amount
of rent of rent of rent of rent
Ownership of Individuals & AOPs
Upto Rs.200,000. NIL NIL

Above Rs.200,000 to Rs.600,000. 5% of the gross amount 5% of the gross amount
exceeding Rs.200,000 exceeding Rs.200,000
Above Rs.600,000 to Rs.1,000,000 Rs.20,000 plus 10% of the Rs.20,000 plus 10% of the
gross amount exceeding gross amount exceeding
Rs.600,000 Rs.600,000
Above Rs.2,000,000. Rs.210,000 plus 20% of Rs.210,000 plus 20% of
the gross amount the gross amount
exceeding Rs.2,000,000 exceeding Rs.2,000,000
Prize on prize bonds and cross-word puzzle 15% 25% 15% 25%
Winnings from a raffle, lottery, prize on winning a quiz or prizes

20% 20%
related to companies’ sales promotion schemes
Commission or discount to petrol pump operators on

12% 17.5% 12% 17.5%
petroleum products

ASSOCIATES
Withdrawal before retirement age Average rate of tax for 3 Average rate of tax for 3
preceding years or rate preceding years or rate
Withdrawal in excess of 50% of accumulated balance applicable for the year, applicable for the year,
whichever is lower whichever is lower
at or after the retirement age
Sale against cash of any instrument including demand draft,

payment order, CDR, STDR, RTC, or any other instrument of
0.3% 0.6% 0.3% 0.6%
bearer nature except payment is made through a crossed
cheque
Tax on purchase/ transfer of motor vehicles which is adjustable
upto 850cc Rs. 10,000 Rs. 10,000 Rs. 10,000 Rs. 10,000
851cc to 1000cc Rs. 20,000 Rs. 25,000 Rs. 20,000 Rs. 25,000
1001cc to 1300cc Rs. 30,000 Rs. 40,000 Rs. 30,000 Rs. 40,000
1301cc to 1600cc Rs. 50,000 Rs.100,000 Rs. 50,000 Rs.100,000
1601cc to 1800cc Rs. 75,000 Rs.150,000 Rs. 75,000 Rs.150,000
1801cc to 2000cc Rs.100,000 Rs.200,000 Rs.100,000 Rs.200,000
2001cc to 2500cc Rs. 150,000 Rs.300,000 Rs. 150,000 Rs.300,000
2501cc to 3000cc Rs. 200,000 Rs.400,000 Rs. 200,000 Rs.400,000
Above 3000cc Rs. 250,000 Rs.450,000 Rs. 250,000 Rs.450,000
On value of motor vehicle leased by Leasing companies, 4% of the 4% of the

0% 0%
Schedule bank, Investment bank, DFIs or Modaraba value value

ASSOCIATES
Tax on transfer of registration of motor vehicles which is adjustable
upto 850cc - Rs. 5,000 - Rs. 5,000

851cc to 1000cc Rs. 5,000 Rs. 15,000 Rs. 5,000 Rs. 15,000
1001cc to 1300cc Rs. 7,500 Rs. 25,000 Rs. 7,500 Rs. 25,000
1301cc to 1600cc Rs. 12,500 Rs. 65,000 Rs. 12,500 Rs. 65,000
1601cc to 1800cc Rs. 18,750 Rs. 100,000 Rs. 18,750 Rs. 100,000
1801cc to 2000cc Rs. 25,000 Rs. 135,000 Rs. 25,000 Rs. 135,000
2001cc to 2500cc Rs. 37,500 Rs. 200,000 Rs. 37,500 Rs. 200,000
2501cc to 3000cc Rs. 50,000 Rs. 270,000 Rs. 50,000 Rs. 270,000
Above 3000cc Rs. 62,500 Rs. 300,000 Rs. 62,500 Rs. 300,000
Advertising agents 10% 15% 10% 15%

Life Insurance Agents where commission received is less than
8% 16% 8% 16%
Rs. 0.5 million per annum
Others 12% 15% 12% 15%
On purchase of shares 0.02% 0.02%

On sale of shares 0.02% 0.02%
Tax on margin financing through in share business. 10% 10%

ASSOCIATES
Rs 2.5/ Rs 4/ Rs 2.5/ Rs 4/
In case of good transport vehicles
Kilogram Kilogram Kilogram Kilogram
In the case of passenger transport vehicles
Four or more persons but less than ten persons. Rs. 50 Rs. 100 Rs. 50 Rs. 100
Ten or more persons but less than twentypersons. Rs. 100 Rs. 200 Rs. 100 Rs. 200
Twenty persons or more. Rs. 300 Rs. 500 Rs. 300 Rs. 500
a) In case of other private motor
upto 1000cc Rs. 800 Rs. 1,200 Rs. 800 Rs. 1,200
1001cc to 1199cc Rs. 1,500 Rs. 4,000 Rs. 1,500 Rs. 4,000
1200cc to 1299cc Rs. 1,750 Rs. 5,000 Rs. 1,750 Rs. 5,000
1300cc to 1499cc Rs. 2,500 Rs. 7,500 Rs. 2,500 Rs. 7,500
1500cc to 1599cc Rs. 3,750 Rs. 12,000 Rs. 3,750 Rs. 12,000
1600cc to 1999cc Rs. 4,500 Rs. 15,000 Rs. 4,500 Rs. 15,000
2000cc & above Rs. 10,000 Rs. 30,000 Rs. 10,000 Rs. 30,000
b) In case of where the motor vehicle tax is collected in lump sum
upto 1000cc Rs. 10,000 Rs. 10,000 Rs. 10,000 Rs. 10,000
1001cc to 1199cc Rs. 18,000 Rs. 36,000 Rs. 18,000 Rs. 36,000
1200cc to 1299cc Rs. 20,000 Rs. 40,000 Rs. 20,000 Rs. 40,000
1300cc to 1499cc Rs. 30,000 Rs. 60,000 Rs. 30,000 Rs. 60,000
1500cc to 1599cc Rs. 45,000 Rs. 90,000 Rs. 45,000 Rs. 90,000
1600cc to 1999cc Rs. 60,000 Rs.120,000 Rs. 60,000 Rs.120,000
2000cc & above Rs. 120,000 Rs.240,000 Rs. 120,000 Rs.240,000

ASSOCIATES
On the amount of gas bill 4% 6% 4% 6%
Electricity bill of commercial or industrial consumers

[Exporters-cum-manufacturers are exempt from this collection
a) does not exceed Rs. 400 Rs 0 Rs 0

b) exceeds Rs. 400 but does not exceed Rs. 600 Rs. 80 Rs. 80
c) exceeds Rs 600 but does not exceed Rs. 800 Rs. 100 Rs. 100
d) exceeds Rs. 800 but does not exceed Rs. 1,000 Rs. 160 Rs. 160
e) exceeds Rs.1,000 but does not exceed Rs. 1,500 Rs. 300 Rs. 300
f) exceeds Rs.1,500 but does not exceed Rs. 3,000 Rs. 350 Rs. 350
g) exceeds Rs.3,000 but does not exceed Rs. 4,500 Rs. 450 Rs. 450
h) exceeds Rs. 4,500 but does not exceed Rs. 6,000 Rs. 500 Rs. 500
i) exceeds Rs. 6,000 but does not exceed Rs.10,000 Rs. 650 Rs. 650
j) exceeds Rs.10,000 but does not exceed Rs. 15,000 Rs. 1,000 Rs. 1,000
k) exceeds Rs.15,000 but does not exceed Rs. 20,000 Rs. 1,500 Rs. 1,500
l) exceeds Rs.20,000. - 12% for - 12% for
commercialconsumers; commercialconsumers;
- 5% for industrial - 5% for industrial
consumers; consumers;
-Adjustable in case of company

-In case of other than company tax collected on Rs. 360,000 amount of annual bill will be minimum tax
-In case other than company tax collected on amount over and above Rs 30,000 of monthly bill will be adjustable

ASSOCIATES
Where the amount of monthly bill is less than Rs. 75,000. 0% 0%

Where the monthly bill is Rs. 75,000 and above 7.5% 7.5%
Tax from Every Steel Melters and, Composite Steel Units Re. 1 per unit of Re. 1 per unit of
registered for the purpose of Chapter IX of Sales Tax Special electricity consumed electricity consumed
procedure Rules, 2007
In case of subscriber of internet,mobile telephone and pre- 12.5% 12.5%

paid internet or telephone card
Landline bills exceeding Rs. 1,000 10% 10%
Sale of property, goods or lease of right by public auction

10% 15% 10% 15%
or tender
Sale of lease of the right to collect tolls 10% 15% 10% 15%
Domestic air ticket 5% 5%

ASSOCIATES
To be collected from seller or transferor at the time of recording

or attesting the transfer, where holding period of property is 10% 2% 10% 2%
up to 3 years
To be collected from seller or transferor at the time of
registering or attesting the transfer, where holding period of 0% 0%
property is above 3 years
- Minimum if property is acquired and disposed off with the same tax year
To be collected from a person arranging or holding a function

on total amount of bill and also for food, service or facility. 5% - -
For Islamabad, Lahore, Multan, Faisalabad, Rawalpindi,

5% of the
Gujranwala, Bahawalpur, Sargodha, Sahiwal, Shekhurpura,
Bill or
Dera Ghazi Khan, Karachi, Hyderabad, Sukkur, Thatta, Rs. 20,000
Larkana, Mirpur Khas, Nawabshah, Peshawar, per
function,
Mardan,Abbottabad, Kohat, Dera Ismail Khan, Quetta, Sibi,
whichever
Loralai, Khuzdar, Dera Murad Jamali and Turbat is higher
5% of the
Bill or
Rs. 10,000
For cities other than those
per
mentioned above
function,
whichever
is higher

ASSOCIATES
PEMRA shall collect tax on issuance of license for distribution

services or renewal of the license to a license.
H Rs. 7,500 Rs. 10,000 Rs. 7,500 Rs. 10,000

H-I Rs. 10,000 Rs. 15,000 Rs. 10,000 Rs. 15,000
H-II Rs. 25,000 Rs. 30,000 Rs. 25,000 Rs. 30,000
R Rs. 5,000 Rs. 12,000 Rs. 5,000 Rs. 12,000
B Rs. 5,000 Rs. 40,000 Rs. 5,000 Rs. 40,000
B-1 Rs. 30,000 Rs. 35,000 Rs. 30,000 Rs. 35,000
B-2 Rs. 40,000 Rs. 45,000 Rs. 40,000 Rs. 45,000
B-3 Rs. 50,000 Rs. 75,000 Rs. 50,000 Rs. 75,000
B-4 Rs. 75,000 Rs. 100,000 Rs. 75,000 Rs. 100,000
B-5 Rs. 87,500 Rs. 150,000 Rs. 87,500 Rs. 150,000
B-6 Rs. 175,000 Rs. 200,000 Rs. 175,000 Rs. 200,000
B-7 Rs. 262,500 Rs. 300,000 Rs. 262,500 Rs. 300,000
B-8 Rs. 437,500 Rs. 500,000 Rs. 437,500 Rs. 500,000
B-9 Rs. 700,000 Rs. 800,000 Rs. 700,000 Rs. 800,000
B-10 Rs. 875,500 Rs. 900,000 Rs. 875,500 Rs. 900,000
On sale of fertilizers 0.7% 1.4% 0.7% 1.4%

On sale of electronics, sugar, cement, iron & steel products,
motorcycles, pesticides, cigarettes, glass, textile, beverages, 0.1% 0.2% 0.1% 0.2%
paint, batteries or foam
On sale of electronics 1% 1% 1% 1%
On sale of sugar, cement, iron & steel products, motorcycles,
pesticides, cigarettes, glass, textile, beverages, paint, batteries 0.5% 1% 0.5% 1%
or foam

ASSOCIATES
Every person selling petroleum products to a petrol pump

0.5% 1%
operator or distributer
From residents 5% 5%
From non-residents Exempt Exempt
Every Market committee shall collect tax from dealers, Amount of tax Amount of tax
commission agents or Arhetis on issuance or renewal of license (per annum) (per annum)
Group or Class A: Rs. 10,000 Rs. 10,000
Group or Class B: Rs. 7,500 Rs. 7,500
Group or Class C: Rs. 5,000 Rs. 5,000
Any other category: Rs. 5,000 Rs. 5,000
Value up to Rs. 4 Million 0% 0%

Value exceeding Rs. 4 Million 2% 4% 2% 4%

ASSOCIATES
Rs.16,000 per person Rs.16,000 per person

First/ executive class
Rs.12,000 per person Rs.12,000 per person

Others excluding economy
Economy Nil Nil
Issued by listed companies 5% of bonus shares issued

Abolished
Issued by other companies
Transactions otherwise through cash up to Rs.50,000 per day Not Applicable Not Applicable
0.6%
(reduced
to 0.4%
0.4%
Transactions otherwise through cash above Rs.50,000 in Not upto 30th Not
aggregate from all bank accounts per day
Applicable June, Applicable
2017

ASSOCIATES
To be collected in case of industrial, commercial & scientific

10% 10%
equipment and machinery
The deduction shall not be applicable in the following cases:

a. agricultural machinery; and
b. machinery owned and leased by leasing companies, investment banks, modarabas, scheduled banks or DFIs
Remittance of tuition fee, boarding & lodging expenses,

payments for distant learning programs and any other expense 5% 5%
related to foreign education
General insurance premium 0% 4% 0% 4%
Life insurance premium exceeding Rs. 0.3 million per annum 0% 1% 0% 1%
Others 0% 0%
Value of minerals extracted, produced, dispatched & carried

away from licensed or leased areas of mines - to be collected 0% 5% 0% 5%
by provincial revenue authority/ board

ASSOCIATES
To be collected by person responsible for registering, recording

or attesting transfer of any immovable property on value 0% 3% 0% 3%
computed with reference to section 111(4)( c )
To be collected by Pakistan Tobacco Board or its contractor

on value of tobacco purchased by a person including 5% 5%
manufacturers of cigarettes
Advance tax collected on the amount remitted abroad through

1% 3%
credit, debit or prepaid cards
= Final Tax
= Minimum Tax
= Tax

408, Continental Trade Centre
Block 8, Clifton, Karachi 75600, Pakistan
Tel: +92 21 3530 3294-6, Fax +92 21 3530 3293
eMail: connect@tolaassociates.com
web: www.tolaassociates.com
144, 1st Floor, Street No. 82, Sector E-11/2 FECHS

Islamabad 44000, Pakistan
Tel: +92 51 835 1551, Fax: +92 51 835 1552
202-E, 2nd Floor Sadiq Plaza
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180428-480-Tola Associates - Budget Comments 2018-19

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180428-480-Tola Associates - Budget Comments 2018-19

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ASSOCIATES

TAX & CORPORATE ADVISORS

408, Continental Trade Centre, Block 8, Clifton, Karachi 75600, Pakistan

Dated: April 28, 2018

Finance Bill 2018-19 | Significant Tax Amendments Page 03

Finance Bill 2018-19 | Significant Tax Amendments Page 04

Theagricultural sector grew by 3.81%. The growth

Livestock, forestry and fishing has also contributed

Finance Bill 2018-19 | Significant Tax Amendments Page 05

3.70 6.60 6.50 3.40

Finance Bill 2018-19 | Significant Tax Amendments Page 06

Money supply, during 1st July, 2017 to 13th April,

Investments are targeted to grow at 4.8% uptoRs.

Net Government Borrowing was Rs. 784 billion

Finance Bill 2018-19 | Significant Tax Amendments Page 07

Foreign exchange reserves, as on 13thApril, 2018

453,991 440,939 11,380 16,466

Finance Bill 2018-19 | Significant Tax Amendments Page 08

The current account deficit for July-February 2017-

115.65 6.31 83.78 66.39

Finance Bill 2018-19 | Significant Tax Amendments Page 09

5.40 5.80 6.25 6.50 7.00

12.40 13.20 13.60 13.80 13.90

2017-18 2017-18 2018-19 2019-20 2020-21

Annual Pl an 2018-19 envisages overall

Finance Bill 2018-19 | Significant Tax Amendments Page 10

i. The agriculture sector

crops are also bright. 6.40 6.50

ii. In view of steady growth

iii. is targeted to grow by 6.5 vi. Average inflation during 2018-19

Finance Bill 2018-19 | Significant Tax Amendments Page 11

With CPEC investments and better performance in

Finance Bill 2018-19 | Significant Tax Amendments Page 12

Tax revenues are expected to increase by 1 to 1.5

We expect that due to positive CPEC developments

Finance Bill 2018-19 | Significant Tax Amendments Page 13

A concept of offshore services as a definition. Definition of Income has been proposed to be

(b) borne by a permanent establishment in (a) in the name of the person; or

Finance Bill 2018-19 | Significant Tax Amendments Page 14

A super tax was levied, for tax year 2015, vide

a. An ancestor, a descendent of any of the

Finance Bill 2018-19 | Significant Tax Amendments Page 15

Tax Year X2 30 40 35 5 Only 50% of 10

Tax Year X3 3 9 8 0 Completely

ASSOCIATES income is less

Finance Bill 2018-19 | Significant Tax Amendments Page 16

Section 107 provides that a tax treaty shall have

The bill proposes to amend section 101 such that

Finance Bill 2018-19 | Significant Tax Amendments Page 17

A company shall be treated to have derived active

• Total assets and liabilities as on the

Finance Bill 2018-19 | Significant Tax Amendments Page 18

It is proposed to reduce the percentage of amount

The bill further proposes that banking companies

• turnover for the completed quarters of the

• documentary evidence of estimated expenses

Finance Bill 2018-19 | Significant Tax Amendments Page 19

Section 153 provides definition of prescribed

Finance Bill 2018-19 | Significant Tax Amendments Page 20

The bill proposes to impose restriction on non-filer

The bill proposes to insert a new section 182A, ASSOCIATES

Finance Bill 2018-19 | Significant Tax Amendments Page 21

After the enforcement of section 230F, rate of