COMMENTS ON FY2020-21 BUDGET
INCOME TAX
INTRODUCTION OF SPECIAL TAX REGIME FOR SMALL AND MEDIUM SIZE MANUFACTURING ENTERPRISE
The Bill proposes to introduce a new tax regime for Small and Medium Size Enterprise (SME) for the tax year 2021 and onwards.
SME is defined to mean a person who is engaged in manufacturing as defined in section 153 of the Ordinance and his business turnover in a tax year does not exceed Rs 250 Million. SME is required to register with the FBR on the IRIS web portal or Small and Medium Enterprises Development Authority (SMEDA) on its SME registration portal. A company covered by the definition of SME will not qualify as a ‘small company1.
In case, annual business turnover exceeds Rs 250 Million, it shall cease to be an SME for such tax year and onwards.
Tax rates under Normal Tax Regime
For the purpose of taxation, the SMEs are classified into the following two categories and tax on taxable income is required to be computed at the rates given below:
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S. Category Turnover Rate of Tax
No.
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1 Category-i Where annual business 7.5% of
turnover does not exceed taxable
Rs 100 Million income
2 Category-2 Where annual turnover 15% of taxable
exceeds Rs 100 Million income
but does not exceed Rs
250 Million
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Option to be taxed under Final Tax Regime (FTR)
It is proposed that the SMEs can also opt to be taxed under the FTR. The said option is required to be exercised at the time of return filing and the same will be irrevocable for three tax years.
The SMEs who opts to be taxed under FTR shall not be subject to tax audit under sections 177 and 214C. The category-wise rate of tax under FTR is given as under:
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S. Category Turnover Rate of Tax
No.
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1 Category-1 Where annual 0.25% of
business turnover ; does not exceed Rs gross
100 Million turnover
2 Category-2 Where annual 0.5% of
|turnover exceeds Rs 100 Million but gross
does not exceed Rs 250 Million turnover
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Income tax audit for those not opting for FTR
SMEs who opt for taxation under normal law can be selected for tax audit through risk based parametric computer ballot if its tax to turnover ratio is below the tax rates prescribed for FTR, however, the cases selected will not exceed 5 % o f the total population of SMEs whose tax to turnover ratio is below the tax rates prescribed for FTR.
Simplified return and other provisions of law
It is proposed that a simplified return for such SMEs may also be prescribed by the FBR. Other provisions of the Ordinance shall apply mutatis mutandis.
EXPORT OF SERVICES
Facility of reduced rate of tax and exemption on proceeds received from abroad in relation to provision of certain services was withdrawn through the Tax Laws (Second Amendment) Ordinance, 2021. It is now proposed to introduce a new final tax regime at par with export of goods.
Under the proposed provision, the final withholding tax rate of 1% shall apply in following cases:-
a) export of computer software or IT services or IT enabled services otherwise not eligible for tax credit under section 65F;
b) services or technical services rendered outside Pakistan or exported from Pakistan; Withholding tax
c) royalty, commission or fees derived by a resident company from a foreign enterprise for the use of certain intangibles outside Pakistan; and
The FBR is also empowered to include new categories of services in the above regime.
SCOPE OF AMENDMENT PROCEEDINGS RATIONALISED
The Finance Act 2012, in respect of amendment of erroneous assessments, introduced power to conduct enquiries in certain cases which were misapplied by the tax authorities as a substitute of an ‘audit’. The action of tax authorities was widely challenged before appellate fora, who disapproved such approach. Through the Bill, the pre-2012 position is proposed to be reinstated.
PROPERTY INCOME
Basis of taxation
At present, Individuals and Association of Persons (AOPs) can opt for their property income to be chargeable to tax on gross rent without any deductions, at specified (lower) tax rates. Companies’ property income, however, is subject to tax after certain admissible deductions at applicable corporate rate.
Through the proposed amendments, property income for all taxpayers shall henceforth be subject to uniform taxation on net-income basis at the applicable rates.
Withholding tax
Withholding tax rates applicable to the property income of Individuals and AOPs are also proposed to be revised as under:
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Sr. Gross amount of rent Rate of tax
No
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1 Where the gross amount Nil
of rent does not exceed Rs. 300,000
2 Where the gross amount of 5 per cent of the
rent exceeds Rs. 300,000 gross amount
but does not exceed Rs. exceeding Rs.
600,000 300,000
3 Where the gross amount Rs. 15,000 plus
of rent exceeds Rs. 10 per cent of the
600,000 but does not gross amount
exceed exceeding Rs.
Rs. 2,000,000 600,000
Where the gross amount Adjustment of
of rent exceeds Rs. losses
2,000,000
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Adjustment of losses
Further, the adjustment of property income for a tax year against loss under any other head of income is proposed to be reinstated. The adjustment of such losses could give rise to a situation where effectively no tax is payable on property income. In order to give full effect to this amendment, the Government may, therefore, consider introducing enabling provision for issuance of exemption / reduced rate certificates in eligible cases.
CAPITAL GAINS ON DISPOSAL OF SECURITIES
The following slab rates of tax have been proposed to be inserted in existing table for capital gains on disposal of securities under section 37A for tax year 2022 and onwards:
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S. Period Tax year 2022
No. and onwards
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Where holding period of a 12.5%
1. security is less than twelve months
Where holding period of a
2. security is twelve months or
more but less than twenty-four months
Where holding period of a
3. security is twenty-four months
or more but the security was
acquired on or after 1st July,
Where the security was 0%
4. acquired before 1st July, 2013
Future commodity contracts 5%
5. entered into by the members of
Pakistan Mercantile Exchange
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TELECOMMUNICATION COMPANIES DECLARED AS INDUSTRIAL UNDERTAKING
There has been a controversy in the past as to whether telecommunication companies are industrial undertaking so as to claim certain specific consequential tax treatments. In parallel, these companies have been representing to be notified as industrial undertakings.
In order to redress this long outstanding issue, the definition of ‘industrial undertaking’ is proposed to be amended to include telecommunication companies operating under the license of the Pakistan Telecommunication Authority.
BENEFITS ACCRUED UNDER CERTAIN REPEALED EXEMPTION PROVISIONS
Certain tax exemptions and concessions were withdrawn through the Tax Laws (Second Amendment) Ordinance 2021. Few beneficiaries were, however, protected through appropriate provisions. This abrupt withdrawal was not positively viewed by the businesses including foreign investors, thus, resulting in litigation on the basis of vested rights. Furthermore, certain exemption provisions were already expired or expiring on June 30, 2021.
A grandfathering clause is proposed to be inserted to regain the confidence of businesses by specifically providing continuity of exemptions / concessions in cases which had already qualified prior to omission / expiry but related benefit has not outlived.
This is a positive proposal indicating commitment of government to ensure stability of tax policy.
NON-RECOGNITION RULES ON DISPOSAL OF ASSETS TO NONRESIDENTS
Presently, the non-recognition rules provided for in Section 79 are inapplicable in respect of events envisaged therein, on a person disposing of an asset to a non-resident person. This has the effect of taxing the transferor being the person disposing of an asset under the applicable provision.
It is proposed that no gain or loss shall arise in the hands of transferor where the transferee is a non-resident person to whom an asset is being transferred under the following circumstances:
(a) Spouses under an agreement to live apart;
(b) Transmission of asset to an executor or beneficiary on death of a person; and
(c) Gift of asset to a relative [defined in Section 85(5)].
The tax neutrality provided in section 79 is proposed to be extended to nonresident transferees. This would mean transferees will be treated to have acquired the asset of the same character and cost ascthat in the hands of the transferor.
TAXATION OF GIFTS IN THE HANDS OF RECIPIENT
Through the Finance Act, 2019, Clause (la) was inserted in Section 39 to account for taxation of gifts received other than from grandparents, parents, spouse, brother, sister, son or a daughter. The permissible list of relatives was inconsistent with the non-recognition rules of section 79 for which an expanded definition of relatives apply.
It is now proposed to harmonise both provisions whereby the gifts received from following relatives shall now remain nontaxable:
(a) an ancestor, a descendant of any of the grandparents, or an adopted child, of the individual, or of a spouse of the individual; or
(b) a spouse of the individual or of any person specified in clause (a).
CAPITAL ASSET ACQUIRED AS GIFT
Presently, Section 37(4) provides that where an asset is acquired under gift from a relative [defined in Section 85(5)], the fair market value on the date of transfer/acquisition is to be treated as cost. It is now proposed that where such asset is disposed of by the transferee within two years of the acquisition and the Commissioner is satisfied that the gift arrangement is part of a ‘tax avoidance scheme’, then such asset in the hands of the transferee will be treated to be of the same character and cost as that in the hands of the transferor at the time of transfer. There is a view that if there is a transfer of asset through gift between relatives, which are tax neutral under Section 79, transferees should not be allowed the cost equal to fair market value on the date of gift in terms of Section 79 of the Ordinance.
GAIN ON DISPOSAL OF DEPRECIABLE IMMOVABLE PROPERTY
In case of disposal of a depreciable immovable property at a consideration higher than its cost, the provisions of law deem consideration as cost of such property, thus, resulting into recoupment of tax deprecation only. The rationale for such provision was that the Federal Government did not have powers under the Constitution of Pakistan to tax gain on disposal of an immovable property. However, the 18th amendment to the Constitution was construed by the Federal Government to have given them jurisdiction to tax such gains. Consequently, specific provisions were introduced for taxation of gains on immovable properties, but no such amendment was made for depreciable immovable assets.
An amendment is now proposed to tax the aforesaid ‘excess’ as capital gains under section 37. As a result, in case of depreciable immovable assets, the excess should be dealt in the same manner as applicable for other immovable properties particularly with the concept of holding period.
The placement and language of the proposed amendment contradicts section 22(8) thus resulting in anomalous situation, which should be reconsidered.
GAIN ON DISPOSAL OF IMMOVABLE PROPERTIES
Under the existing provisions, gains on disposal of immovable properties are taxed at special (reduced) slab rates along with reduction in gain based on holding period. Gains on disposal of immovable properties held for more than four years are effectively non-taxable.
The proposed amendment at the outset seeks to clarify that this regime for immovable properties is not applicable on persons habitually engaged in transaction of sale and purchase of properties or where sale is adventure in the nature of trade or business.
Income of such persons would be taxable under the head of business with consequential effect that no benefit of holding period and special rate of tax would apply.
Furthermore, it is proposed that gains upto Rs 5 million will be taxed at a special rate of 5% as against the existing rate of 2.5%. The gains exceeding Rs 5 million will be taxed at normal rate though the benefit of holding period in computation would continue to apply as per existing provisions given below:
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S. Holding period Gain
No.
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1. Where the holding period of an A =
immovable property does not Consideration A x 3/4
exceed one year minus cost
2. Where the holding period of an
immovable property exceeds
one year but does not exceed two years A x 1/2
3. Where the holding period of an
immovable property exceeds
two years but does not exceed three years A x 1/4
4. Where the holding period of an
immovable property exceeds
three years but does not exceed four years Zero
5. Where the holding period of an
immovable property exceeds four years
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GAIN ON SALE OF IMMOVABLE PROPERTY TO REIT SCHEMES
Presently, exemption for profit and gains on sale of immovable property to a Developmental REIT Scheme and Rental REIT Scheme is available till June 30, 2023.
The Bill proposes to extend exemption to profit and gains on sale of immovable property to other REIT schemes till June 30, 2023. This was previously available till June 30, 2015.
PRIME MINISTER’S PACKAGE FOR CONSTRUCTION SECTOR
In April 2020, a package was introduced in the form of section 100D read with Eleventh Schedule for the construction & housing sector. The said provisions were subsequently adopted through Finance Act, 2020 whereby certain time lines were required to be followed for eligibility of concessions provided in the Scheme. Subsequently, through an Income Tax (Amendment) Ordinance, 2021, the said time lines were extended. These subsequent amendments in time lines are now being ratified through proposed amendments as part of the Finance Bill.
PROFIT ON DEBT
Income by way of profit on debt of non-corporate persons not exceeding Rs 36 million is currently subject to tax at certain slab (reduced) rates. Where the profit on debt exceeds Rs 36 million, the whole amount is taxable at normal tax rate. The threshold of Rs 36 million is proposed to be reduced to Rs 5 million.
Currently, the reduce rate of withholding tax of 10% on profit on debt has been prescribed in cases where the taxpayer furnishes a certificate to the payer of profit that during the tax year yield or profit paid is Rs 500,000 or less. This reduced rate of 10% is now proposed to be withdrawn. Consequentially, the rate of withholding tax even on yield or profit of Rs 500,000 or less in a tax year shall be 15%.
MINIMUM TAX
Threshold
The minimum tax on turnover currently does not apply on individuals and AOPs whose annual turnover remains less than Rs 10 million. This threshold is proposed to be enhanced to Rs 100 million.
Minimum tax also made applicable on proceeds of immovable business properties
Through a specific amendment, scope of ‘turnover’ for application of minimum tax is proposed to include proceeds from sale of immovable properties taxable as 'business income'.
Carry forward
The Sindh High Court in one of its judgement interpreted the provision relating to carry forward of minimum tax as not applicable on taxpayers having no tax payable otherwise, whereas there has been a contrary view of the Lahore High Court. The matter is currently pending in the Supreme Court. The provision is proposed to be redrafted to specifically allow carry forward of minimum tax in such cases.
Exemption for Special Economic Zone Enterprise
Presently, income derived by a zone enterprise as defined in the Special Economic Zones Act, 2012 is exempt from tax for a period of ten years starting from the date the developer certifies that the zone enterprise has commenced commercial operation and for a period of ten years to a developer of zone starting from the date of signing of the development agreement in the special economic zone as announced by the Federal Government. The said exemption is also applicable to a co-developer as defined in Special Economic Zone Rules, 2013 subject to the certain conditions.
It is now proposed that a person qualifying for such exemption is excluded from the ambit of minimum tax under section 113 for tax year 2021 and onwards.
It is worth mentioning that the matter relating to exemption from minimum tax has been a matter of debate amongst different government functionaries. It appears that through the proposed amendment, exemption for minimum tax considered to be allowed under special law relating to Special Economic Zone has now been made part of Income Tax Law.
Revised rates
A new table has been proposed to be substituted which seeks to prescribe tax rate for chargeability of minimum tax on turnover under section 113 of the Ordinance on persons or class of persons. A comparison of the tax rate in the existing table vis-à-vis the newly proposed one is as under:
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S. Person (s) Minimum Tax as
No. percentage of the
person's turnover for
the year
Existing Proposed
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1. Oil marketing companies, Sui 0.75% 0.75%
Southern Gas Company Limited
and Sui Northern Gas, Pipelines
Limited (for cases where annual
turnover exceeds rupees one billion).
2. Pakistan International Airlines 0.75% 0.75%
Corporation.
3- Pakistani Airlines. 0.75% 1.25%
4- Poultry industry including 0.75% 0.75%
poultry breeding, broiler
production, egg production and
poultry feed production.
5. Dealers or distributors of 0.75% 0.25%
fertilizers.
Through Tax Law
(Amendment) Ordinance, 2021
minimum tax rate for dealers/sub-dealers of fertilizers was
reduced to 0.25%. This resulted in an anomaly as to whether
the concession would be applicable to distributor of
fertilizers or not. This anomaly is now
proposed to be resolved."
A reduced rate of 0.25% has also been proposed for
distributors, dealers, subdealers, wholesale
6. refineries. 0.75% 0.5%
7. Motorcycle dealers registered 0.3% 0.5%
under the Sales Tax Act, 1990.
8. Distributors of pharmaceutical 0.25% 0.25%
products, fast moving consumer
goods and cigarettes.
9. Petroleum agents and 0.25% 0.25%
distributors who are registered
under the Sales Tax Act, 1990.
10. mills and dealers. 0.25% 0.25%
11. mills. 0.25% 1.25%
12. Person's turnover from supplies 0.75% 0.25%
through e-commerce including
from running an online
marketplace as defined in clause (38B) of section 2.
Previously there was a view that only commission-based
model of the online marketplace business was eligible
for the reduced rate of 0.75%. Through the proposed
amendment, both the retail and commission-based
models will be subject to reduced rate of 0.25%."
13. Tier-1 retailers of fast-moving 0.25% 0.25%
consumer goods who are
integrated with the Board or its
computerized system for real
time reporting of sales and receipts.
Previously both types of retailers were allowed reduced
rate of 0.25% subject to the
condition of obtaining registration under the Sales Tax
Act, 1990 within the specified time and appearing on ATLs of
both Income Tax Ordinance, 2001 and Sales Tax Act, 1990.
It is now proposed that:
Time bound registration requirement be withdrawn,
however provided that the retailers should
appear in the ATLs maintained under both the Income Tax
Ordinance, 2001 and Sales Tax
Act, 1990; and
Tier-1 retailers are also required to integrate their computerized
system for real time reporting of sales and receipts with FBR as
required under the Sales Tax Act, 1990."
14. Persons engaged in the sale and 1.5% 0.25%
purchase of used vehicles.
15. In all other cases. 1.5% 1.25%
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Minimum tax for yarn traders being individuals
The Bill proposes to extend the reduced rate of minimum tax under section 113 for traders of yarn being an individual for indefinite period. Presently, the reduced rate is prescribed for tax year 2020 only.
Exemption to corporatized entities of WAPDA
Presently, corporatized entities of Pakistan Water and Power Development Authority are exempted from the levy of minimum tax on their receipts on account of sales of electricity, from the date of their creation upto the date of completion of the process of corporatization i.e. till the tariff is notified.
It is now proposed to withdraw such exemption.
GROUP RELIEF
Surrender of tax losses between eligible group companies has been allowed since 2007. The provisions allow both holding and a subsidiary company within the group to surrender their respective losses. An editorial amendment has been made to remove the ambiguity for surrender of losses by the holding companies.
DEDUCTIONS FOR WWF & WPPF
As a result of promulgation of WWF and WPPF laws by certain Provinces under the 18th Constitutional amendment, editorial amendments were required to avoid any ambiguity with regard to deduction of contributions made by taxpayers under the respective Provincial laws on WWF and WPPF.
Since there is a view that such provincial laws cannot be applicable on Trans-provincial entities, the proposed amendments specifically disallow the claim for contributions made by such entities.
TAXPAYER’S PROFILE
Through Finance Act, 2020, a concept of taxpayer’s profile was introduced which was required to be updated by June 30, 2021 and any failure thereof would have resulted in taxpayer's status becoming inactive besides attracting penalties. The said provision is now proposed to be withdrawn.
PROCESSING OF RETURNS THROUGH AUTOMATED SYSTEM
The Finance Act, 2020 introduced a new provision for processing of returns of income through automated system to arrive at the correct amounts of taxable income and tax payable by making certain adjustments, such as arithmetical errors, incorrect claims apparent from the information given in the return, etc. A procedure was also laid out for such purposes and deemed assessment provisions were also made subject to processing of returns under such automated system. As this system could not bec implemented, an anomaly arisen when the tax authorities intended to amend the returns filed for tax year 2020. Realizing this, certain amendments were made through the Income Tax (Amendment) Ordinance, 2021 which are now being ratified through Finance Bill 2021 with certain amendments. As a result of proposed amendments, the provisions in this regard would become applicable from the date when notified by the FBR.
TIME LIMIT FOR PASSING CERTAIN ORDERS
Amendment order
Unlike indirect tax provisions, there has been no prescribed period for completion of proceedings once initiated under income tax law. Under a proposed amendment, an order is required to be issued within 120 days from the date of issuance of a show cause notice under section 122 (excluding any period for which proceedings are stayed) unless extended by the Commissioner for not more than 90 days. This amendment will apply on notices issued after July 1, 2021.
Revision order’s effect
Currently, there is no time prescribed for a lower authority to pass an order to give effect to a revision order passed by the Commissioner under section 122A. The Bill proposes that an order in these circumstances be passed within 120 days.
ALTERNATIVE DISPUTE RESOLUTION (ADR)
The eligibility to opt for ADR mechanism has been extended to both cases where criminal proceedings have already been initiated and where the issues involve mixed questions of law and facts. Certain other amendments relating to procedure and time limitation including stay of demand during the pendency of proceedings before ADRC, are also proposed to strengthen the ADR mechanism.
DUE DATE OF TAX PAYMENT IN APPEAL EFFECTS ORDER
In case of an appeal effect order issued as a consequence of a direct relief or an issue remanded back / set-aside, the tax demand is proposed to be payable immediately.
WITHDRAWAL OF COMMISSIONER’S POWER TO DISREGARD ADVANCE TAX ESTIMATE
In case of taxpayer filing an advance tax estimate on lower side, the Commissioner’s power to reject such estimate in certain circumstances is proposed to be withdrawn.
AUTOMATED ISSUANCE OF EXEMPTION CERTIFICATES
The facility of automated issuance of exemption certificates to public listed companies, in cases where advance tax liability is discharged, is now proposed to be extended to all companies including where certificate has to be issued for the reduced rate.
EXEMPTION CERTIFICATE IN TAX CREDIT CASES
Taxpayers entitled to 100% tax credit under any provision of the Ordinance are now allowed to be issued an exemption certificate. The existing facility is available only to Nonprofit organisations.
ELECTRONIC PROCESSING OF REFUNDS
Commencing from tax year 2021, the FBR is proposed to be empowered to issue refund to the taxpayer by directly transferring electronically to the taxpayer’s notified bank account, on the basis of tax credit verified from FBR’s automated system, who has filed a return of income. Such electronic processing of refunds would not require filing of refund application and passing a refund order.
BUSINESS BANK ACCOUNT
‘Business bank account’ is proposed to be defined as a bank account utilised by the taxpayer for business transaction. Such account is required to be declared to the Commissioner through original or modified registration form and failure to do so shall entail penalty and prosecution proceedings.
ARREST AND PROSECUTION OF PERSONS INVOLVED IN CONCEALMENT OF INCOME
The term ‘concealment of income’ is proposed to be introduced to include (a) suppression of any item of receipt liable to tax in whole or in part, or failure to disclose income chargeable to tax; (b) claiming any deduction or any expenditure not actually incurred; and (c) any act referred to in sub-section (1) of section 111. An explanation has also been added to clarify that where any item of receipt declared by the taxpayer is claimed as exempt from tax, or where any deduction in respect of any expenditure is claimed, mere disallowance of such claim shall not constitute concealment of income or the furnishing of inaccurate particulars of income, unless it is proved that the taxpayer deliberately claimed exemption from tax in respect of the aforesaid item of receipt or claimed deduction in respect of such expenditure not actually incurred by him.
The above definition is relevant for proposed provisions 203A to 203H relating to powers of an authorised officer, to arrest any person who, on the basis of material evidence, is believed to have committed such offence. Detailed provisions are proposed for procedural and other aspects relating to such powers.
In order to curb the potential abuse of such powers, there is a need to rationalize the provisions including a certain approval / adjudication process whereafter the provisions could be applied.
TAX CREDIT FOR POINT OF SALE (POS) MACHINE
The FBR through its notification 779(I)/2020 dated August 26, 2020 required various persons to integrate with FBR’s real time reporting computerised system. A tax credit is now proposed for such persons against the lower of amount actually invested in purchase of POS machine and Rs 150,000 per machine.
SEPARATE NOTICE NOT REQUIRED FOR CONCEALEMENTS
Based on certain judgements of the Hon’ble High Courts, there was a view that in order to invoke the provisions of section 111, there should be a separate notice issued under such provision. In order to nullify the effect of such judgements, an explanation has been proposed to clarify that where the nature and source of an item is already asked through a notice under section 122, no such separate notice is to be issued.
NOTICE FOR FILING OF RETURN FOR FOREIGN ASSETS
Through Income Tax (Amendment) Ordinance, 2018, section 111 was amended to empower the Commissioner to treat undisclosed / unexplained foreign assets or foreign income in the immediately preceding year of discovery. As a result of this amendment, even the items related to time barred years could have been taxed on the basis of year of discovery. A corresponding amendment was also made in section 114 to disregard the limitation provisions applicable on issuance of notice by the Commissioner for filing of return.
Whilst the amendment made in section 111 was subsequently validated through Finance Act, 2018, the legislature then appears to have dropped the amendment relating to section 114. The Finance Bill 2021 now proposes to reinstate the amendment in section 114 thereby empowering the Commissioner to issue a notice for filing of return in respect of foreign assets or foreign income, disregarding the limitation provisions.
REQUIREMENT OF MENS REA FOR PENALTY
There has been a consistent position of the Courts that no penalty can be imposed in fiscal matters without establishing mens rea, a term akin to ‘guilty mind’. Contrary to established jurisprudence, an explanation is proposed to be added nullifying this principle. The matter needs reconsideration. It is suggested that specific offences where requirement of mens rea cannot be applied may be specified.
DELETION OF WITHHOLDING TAX PROVISIONS
Following withholding tax provisions are proposed to be withdrawn:
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Section Withholding/Collection of Tax on
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153B Payment of royalty to residents.
231A Cash withdrawals by those not appearing on ATL.
231AA Banking instruments sold/cancelled
against cash by those not appearing on ATL
236P Banking transactions by those not
appearing on ATL.
236Y Amounts remitted abroad through credit
or debit or prepaid cards.
236B Domestic air travel.
236L International air travel.
236V Extraction of minerals.
233A Commission earned by member of stock
exchange. The said withholding was
otherwise made inapplicable with effect
from March 1, 2019. A clarity is required
whether such omission would render
withholding tax under section 233
applicable on the commission earned by
members of the stock exchange.
233AA Margin financing by NCCPL.
234A Gas bill of CNG stations.
Sale of petroleum products to petrol pump
236HA operator or distributor not receiving
commission or discount.
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CHANGES MADE THROUGH THE FIRST & SECOND AMENDMENT ORDINANCES, 2021 MADE PART OF FINANCE BILL
The below-referred significant changes made through the Tax Laws (Amendment) Ordinance, 2021 promulgated on February 11, 2021 and Tax Laws (Second Amendment) Ordinance, 2021 promulgated on March 22, 2021 have been made part of the Finance Bill, 2021 so as to validate and give legislative effect to these Amendment Ordinances (being Presidential Ordinances):
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Section/
Clause Description
reference
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Tax Laws (Amendment) Ordinance, 2021
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To promote and encourage investment by non-resident
Pakistanis, State Bank of Pakistan introduced Roshan
Digital Accounts
(RDA). Tax incetives for RDAs are briefly mentioned herein:
Additional incentives/concessions were
introduced for Non-Resident Individuals (NRIs)
Clause who invest in Government debt securities,
(114A) in Immovable property, Listed securities and units of
Part IV of Mutual Funds; and Term deposit and other
Second products of the Bank through Foreign Currency
Schedule Value Account (FCVA) or a Non-Resident
Pakistani Rupee Value Account (NRVA) with
authorized banks in Pakistan. These incentives/
concessions inter alia included waiver of
requirements to obtain National Tax Number and
to file tax return in Pakistan if such NRI has no
income other than income from abovereferred
investments. Moreover, certain tax withholding
provisions as well as the provisions of Tenth
Schedule (which prescribe for 100% increased tax
withholding) were made inapplicable to such NRIs
operating through FCVA/NRVA.
Clause Reduced tax withholding rate of 10%, which would
(5AB) in also constitute full and final discharge of tax
Part II of liability, was prescribed for interest income earned
Second by such resident citizens of Pakistan who invest in
Schedule Naya Pakistan Certificates and other Government
securities through FVCA, out of foreign assets
declared to FBR.
Clauses (24C) Reduced tax withholding rate (and the consequential minimum tax)
Part II of of 0.25% under section 153 on receipts and (24D) in of dealers and
Second subdealers of sugar, cement and edible
Schedule oils also extended to wholesalers and retailers and the
scope of goods/sectors covered was expanded to also
include fertilizer and fast-moving consumer goods.
Apart from this, minimum tax rate of 0.25% applicable
to dealers and sub-dealers of sugar, cement and edible
oils under section 113 (as against standard rate of 1.5%
applicable on their turnover), also extended to
wholesalers and retailers and the scope of goods/
sectors covered was expanded to also include fertilizer
and fast-moving consumer goods, provided they are
active taxpayers in terms of relevant provisions of both
Income Tax Ordinance, 2001 and Sales Tax Act, 1990.
Through the Finance Bill, 2021; the applicability of
above-referred provisions relating to section 113 & 153
has been extended to distributors. Moreover, the scope
of goods/sectors covered has been extended to
include electronics excluding mobile phones.
Furthermore, an additional condition has been put in
place that the above-referred benefit of reduced rate
under section 113 & 153 shall be available only to those
Tier-1 retailers who are integrated and configured with
the FBR or its computerized system for real time
reporting of sales or receipts.
Section The rate of advance tax collection by manufacturer or
236G commercial importer of fertilizers reduced to 0.25% if
the distributor/dealer/wholesaler is already
appearing on both the Active Taxpayers' Lists issued
under the provisions of the Sales Tax Act, 1990 and the
Income Tax Ordinance, 2001.
Clause (119) With effect from July 1, 2020, the provisions of
Part IV of withholding tax under section 153 (1) (a) shall not apply
Second to distributors, dealers, wholesalers and retailers of
Schedule locally manufactured mobile phone devices as
withholding agent. As a result of exemption of
withholding tax on supplies within the supply chain, all
these persons would now be subject to tax on their net income.
Clause (17) in A concessionary regime was provided for cotton
Part III of ginners under a Circular of 1994. Through the
Second Amendment Ordinance, the same was given effect into
Schedule the provisions of Income Tax Ordinance, 2001 whereby
tax liability of cotton ginners on their income shall not
be more than 1% of their turnover from cotton lint,
cotton seed, cotton seed oil and cotton seed cakes. The
tax so payable shall be final tax in respect of their
cotton ginning and oil milling activities only.
Clause Profits and gains derived from a transmission line
(126M) in project setup in Pakistan on or after July 1, 2015 are
Part I of exempt from income tax for a period of 10 years,
Second subject to certain conditions prescribed under clause
Schedule (126M) contained in Part I of Second Schedule. One
such condition provided is that such project should be
setup by June 30, 2018. Through the Amendment
Ordinance, the said date was extended until June 30, 2022.
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Tax Laws (Second Amendment) Ordinance, 2021
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Clause (103) Withdrawal of exemption for inter-corporate dividend for those group
in Part I of structures which are eligible for group relief.
Second Schedule
Sections 61 & Transposition of donations eligible for direct deduction from income into
100C tax credit regime. As a result of that, overall upper limit for tax break for
the donors, in respect of charitable donations, has been reduced.
Also, tax credit regime for the NPOs further simplified
and clarified.
businesses into full/partial tax credit regime,
resulting that these businesses can now avail tax
breaks subject to certain compliances:
Sections 65F Transposition of tax exemptions of following business into full / partial
& 65G tax credit regime, resulting that these businesses can now avail tax
breaks subject to certain compliances:
(i) coal mining projects of Sindh
(ii) startup businesses certified by Pakistan software board
(iii) export of software, IT and IT enabled services*.
(iv) greenfield projects/ship building
(v) undertaking engaged in manufacturing of plant and
machinery with dedicated use of generation of
renewable energy.
* Through the Finance Bill, 2021, the definition of IT and IT
enabled services is proposed to be expanded so as to also include
cloud computing services and data storage services
Section Withdrawal of tax credits for enlistment of a
64C & 65C company on stock exchange and for
employing fresh graduates.
Section 182 Rationalization of certain penalty provisions.
Clause (75) in Through the Second Amendment Ordinance,
Part I of Second any profit on debt and capital gains derived by
Schedule any agency of foreign government or any nonresident
person from debt and debt
instruments approved by the Federal
Government has been exempted from tax.
Previously, the said exemption was limited to
income from profit on money borrowed under
a loan agreement or foreign currency
instrument approved by the Federal Government.
Various Withdrawal of a number of tax exemptions
exemption and concessions in the Second Schedule,
clauses some of which were either person-specific or
contained were timebound whereas some of the
in Part I of exemptions / concessions have been
transposed into tax credit regime. Major
businesses affected by withdrawal of
exemptions / concessions include Modarabas,
LNG terminal owners & operators,
services/contracts rendered/executed outside
Pakistan and those IPPs who will enter into
agreement or to whom letter of intent will be
issued for setting up of power generation
project on or after July 1, 2021.
Through Finance Bill, 2021 it is being
proposed that exemptions / concessions
already expired or expiring, on June 30, 2021
or repealed by Tax Laws (Second
Amendment) Ordinance, 2021 shall continue
to enjoy benefits of the repealed provisions for
the periods prescribed therein and subject to
conditions and limitations specified therein.
Clause (132) in Subject to certain prescribed conditions, profits and
Part I of Second gains derived by a taxpayer from an electric power generation
Schedule project set up in Pakistan on or after July 1,
1988 are exempt from tax. Through the Second
Amendment Ordinance, this exemption was restricted
to persons entering into agreement or to whom letter
of intent is issued by Federal or Provincial
Government, for setting up an electric power
generation project in Pakistan upto June 30, 2021.
Section 4B Through Finance Act, 2015, Super Tax was levied inter
read with alia on banks @ 4% of income. It had previously been
Division was effectively repealed for such taxpayers from tax
IIA imposed on taxpayers (other than banks) as well but year 2020.
of Part I of Through the Tax Laws (Amendment) Ordinance, 2021,
First Super Tax was prescribed to be levied in case of banks
Schedule for indefinite period.
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ADVANCE TAX ON IMPORTED VEHICLES
The rate of advance tax to be collected by the Collector of Customs under section 148 of the Ordinance in case of importer of CKD kits of electric vehicles for small cars or SUVs with 50 kwh battery or below and LCVs with 150 kwh battery or below is proposed to be reduced at 1 percent.
WITHHOLDING TAX ON PAYMENTS FOR GOODS OR SERVICES
Distributor of Fast-Moving Consumer Goods
The rate of withholding tax on payment received by distributors of fast-moving consumer goods is now proposed to be reduced from 2% / 2.5% to 0.25% subject to the condition that the distributor is appearing on the ATLs maintained under the Income Tax Ordinance, 2001 and Sales Tax Act, 1990.
Reduced withholding tax rate for specified service sectors
Following service sectors are proposed to be allowed reduced withholding tax rate of 3% (including consequential minimum tax rate):
Oilfield services;
Telecommunication services;
Warehousing services;
Collateral management services; and
Travel and tour services
In order to provide level playing field to nonresident service providers, corresponding amendment needs to be provided for nonresident persons providing above services.
Qualification for the reduced withholding tax rate of 3% (including consequential minimum tax rate)
The concept of reduced withholding tax rate (including consequential minimum tax rate) was introduced for the low margin service sectors. However, few of such sectors challenged before the Courts the application of withholding tax on the reimbursement portions of their consideration particularly in manpower outsourcing sector.
Now an explanation has been proposed to restrict the benefit of reduced withholding tax rate only to those service providers not agitating taxation of gross receipts before any court of law.
This amendment needs to be re-examined as the lower rate of tax cannot be denied to a person merely on the basis of his decision to contest an issue before the Court of law.
ELECTRICITY CONSUMPTION
Advance tax collection prescribed for industrial, commercial and domestic consumers of electricity is proposed to be revised as follows:
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Commercial & Industrial consumers:
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. Existing
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S. No. Gross Amount of Bill Tax
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1 Does not exceed Rs. 400 Rs. 0
2 Exceeds Rs. 400 but does not Rs. 80
exceed Rs. 600
3 Exceeds Rs. 600 but does not Rs. 100
exceed Rs. 800
4 Exceeds Rs. 800 but does not Rs. 160
exceed Rs. 1,000
5 Exceeds Rs. 1,000 but does not Rs. 300
exceed Rs. 1,500
6 Exceeds Rs. 1,500 but does not Rs. 350
exceed Rs. 3,000
7 Exceeds Rs. 3,000 but does not Rs. 450
exceed Rs. 4,500
8 Exceeds Rs. 4,500 but does not Rs. 500
exceed Rs. 6,000
9 Exceeds Rs. 6,000 but does not Rs. 650
exceed Rs. 10,000
10 Exceeds Rs. 10,000 but does Rs. 1,000
not exceed Rs. 15,000
11 Exceeds Rs. 15,000 but does Rs. 1,500
not exceed Rs. 20,000
12 Exceeds Rs. 20,000 (i) 12% for commercial
consumers
(ii) 5% for industrial
consumers
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. Proposed
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S.No. Gross Amount Tax
of Bill
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1 Upto Rs. 500 Rs. 0
2 Exceeds Rs. 500 10% of the amount
but does not
exceed Rs.
20,000
3 Exceeds Rs. (i) Rs. 1,950 plus 12%
20,000 of the amount
exceeding Rs
20.0 for commercial
consumers
(ii) Rs. 1,950 plus 5% of
the amount
exceeding Rs.
20.0 for
industrial
consumers
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Domestic consumers
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. Existing
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S.No. Gross Amount of Bill Rate of Tax
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1 Monthly bill is Rs. 75,000 7.5% of the
or more monthly bill
2 Monthly bill is less than Rs0% of the
75,000 monthly bill
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TELEPHONE AND INTERNET USERS
Advance tax collection at the rate of 12.5% in the case of subscriber of internet, mobile telephone and pre-paid internet or telephone card is proposed to be reduced to 10% for tax year 2022 and 8% for onwards.
ADVANCE TAX ON SALES TO DISTRIBUTORS, DEALERS, SUBDEALERS AND WHOLESALERS
The Bill proposes to extend the scope of collection of advance tax from distributors, dealers, sub-dealers and wholesalers of the following sectors:
Pharmaceuticals;
Poultry and animal feed;
Edible oil and ghee;
Battery;
Tyres;
Varnishes;
Chemicals;
Cosmetics; and
IT equipment.
A proviso had been inserted vide Tax Laws (Amendment) Ordinance, 2021 whereby the rate of advance tax collection on sale to distributors, dealers or wholesalers of fertilizer under section 236G had been made at the reduced rate of 0.25% if the aforesaid persons get themselves registered under Sales Tax Act, 1990 within 60 days of the promulgation of the Amendment Ordinance i.e. by April 11, 2021.
The Bill now proposes to replace this registration requirement with the condition that in order to avail the reduced rate of 0.25%, the aforesaid persons now must appear on both ATLs issued under the provisions of the Sales Tax Act, 1990 and the Income Tax Ordinance, 2001.
ADVANCE TAX ON SALE TO RETAILERS
The Bill proposes to extend the scope of collection of advance tax from retailers of the following sectors:
Pharmaceuticals;
Poultry and animal feed;
Edible oil and ghee;
Battery;
Tyres;
Varnishes;
Chemicals;
Cosmetics; and
IT equipment.
Currently, the advance tax collection at the time of sale to retailers of electronics and other specified sectors under section 236H has been prescribed at the rate of 1% and 0.5% respectively. The Bill now proposes a uniform rate of 0.5% for retailers of all sectors specified under section 236H of the Ordinance.
EXEMPTION OF PAYMENTS AND TRANSFERS OUT OF PROVIDENT FUNDS
Currently, the following exemptions are inter alia available in respect of payments and transfers out of provident funds:
(a) Payment received from provident fund to which Provident Funds Act, 1925 applies;
(b) The accumulated balance due and become payable to employees participating in recognized provident funds;
(c) Any withdrawal of accumulated balance from an approved pension fund that represents transfer of balance of approved provident fund to the said approved pension fund under the Voluntary Pension System Rules, 2005.
The bill proposes to restrict the above exemptions in case of the payments representing profit on debt exceeding Rs. 500,000. The said payment (in excess of Rs 500,000) is proposed to be taxed at the rate of 10 per cent as a separate block of income. The person making the payment is required to deduct such tax.
NON-PROFIT ORGANIZATIONS
The following organizations are proposed to be transferred from Table II to Table I of clause (66), meaning thereby, the entire income derived by the following organizations has been proposed to be exempt without any condition:
Abdul Sattar Edhi Foundation.
Patient’s Aid Foundation.
Indus Hospital and Health Network.
Dawat-e-Hadiya, Karachi.
The Citizens Foundation.
Audit Oversight Board.
Additionally, the following new entries are proposed to be added in Table I:
Islamic Naya Pakistan Certificates Company Limited (INPCCL).
Securities and Exchange Commission of Pakistan.
Privatisation Commission of Pakistan.
Sundus Foundation.
Ali Zaib Foundation
Fauji Foundation.
Make a Wish Foundation
Supreme Court Water Conservation
Account.
- Political Parties registered with
Election Commission of Pakistan.
EXEMPTIONS FOR CERTAIN ENTITIES UNDER SPECIAL TECHNOLOGY ZONES AUTHORITY ORDINANCE, 2020 (STZAO)
The exemptions and concessions under the STZAO are now incorporated in the taxation laws as under:-
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Nature of Entity type Period of
income exemption
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Dividend income Venture Ten years
and long-term capital fund commencing from
capital gains for issuance of license
from investment in by the Authority
investments in zone to the zone
zone enterprises enterprises enterprise
as defined in the
STZAO
Profit and gains Zone Ten years from
from the developer as the date of
development and defined in the signing of the
operations of the STZAO development
zones agreement
Profit and gains Zone Ten years from
enterprises as the date of
defined in the issuance of license
SZTAO by the Special
Technology Zone
Authority
Profit and gains Special No limit is
Technology prescribed.
Zone Authority
established under SZTAO
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NATIONAL POWER PARKS MANAGEMENT COMPANY LIMITED (NPPMCL)
Profit from sale of electricity by NPPMCL
The Bill proposes to exempt profit and gains derived from sale of electricity by NPPMCL commencing from the date of change of ownership as a result of privatization by the Privatization Commission of Pakistan.
Immunity to NPPMCL on change of ownership
Under the provisions of section 65D, a tax credit is allowed for the period of 5 years on fulfilment of certain prescribed conditions inter alia includes the industrial understanding is setup with at least 70% new equity.
It is proposed that the Tax Credit already allowed for investment in plant and machinery to National Power Parks Management Company Limited shall not be recouped under any provision of the law in the eve of privatization merely for the reasons of change in its ownership pattern or debt to equity ratio.
Exclusion from Minimum Tax
New entity taking over National Power Parks Management Company Limited in the eve of privatization shall be exempt from minimum tax.
BAGASSE / BIOMASS COGENERATION POWER PROJECT
Exemption of profits & gains
The Bill proposed to exempt profit and gains derived by a taxpayer from a bagasse / biomass based cogeneration power project having one or more boilers of not less than 60 bar (kg/CM3) pressure each, commissioned after the first day of January 2013.
Reduced rate on dividends
The Bill proposes a reduced rate of 7.5% for dividends declared out of profit attributable to bagasse and biomass based co-generation power project. The following conditions have been proposed:
(a) The attributable dividend subject to reduced rate shall be computed in the ratio of accounting profit relating to bagasse and biomass based cogeneration power project as a percentage of total accounting profit before tax; and
(b) The accounting profit relating to bagasse and biomass based cogeneration power project would be determined and certified by the external auditor.
DEEP CONVERSION REFINERIES
The Bill proposes to exempt profit and gains derived by the following deep conversion refineries having capacity of at least 100,000 barrels per day:
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Category Conditions Period of
exemption
New Approval to be 10 years from the
refinery obtained from the date of
Federal commercial
Government production
before December 31, 2021
Existing For the purpose of 10 years from the
refinery upgradation, date of completion
modernization or of the upgradation,
expansion project modernization or
provided that the expansion project
undertaking to the
Federal Government in
writing is submitted
before December 31, 2021
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WITHDRAWAL OF EXEMPTIONS
Exemptions from total income available in respect of the following under respective clauses of Part I of the Second Schedule are now proposed to be withdrawn:
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Clause
Reference Description
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Clause (4) Salary income of the Pakistani seafarer:
(a) working on Pakistan flag
vessel for 183 days or more
during a tax year; or
(b) working on a foreign flag
vessel provided that such
income is remitted to
Pakistan not later than two
months of the relevant tax
year through normal banking channel.
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Clause (39) Any special allowance or benefit (not
being entertainment or conveyance
allowance) or other perquisite within the meaning of
section 12 specially granted to meet expenses wholly and
necessarily incurred in the performance of the duties of
an office or employment of profit.
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Clause (40) Any income of a newspaper employee
representing Local Travelling
Allowance paid in accordance with
the decision of the Third Wage Board
for Newspaper Employees constituted under
the Newspaper Employees (Conditions of Service)
Act, 1973, published in Part II of the
Gazette of Pakistan, Extraordinary, dated the 28th June, 1980.
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Clause (53A)
The following perquisites received by an employee
by virtue of his employment, namely:-
(i) free or subsidized food provided by hotels and
restaurants to its employees during duty hours;
(ii) free or subsidized education provided by an
educational institution to the children of its employees;
(iii) free or subsidized medical treatment provided
by a hospital or a clinic to its employees; and
(iv) any other perquisite or benefit for which the
employer does not have to bear any marginal cost,
as notified by the Board.
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Clause (72) Any profit on debt payable to a nonresident
person-
(i) in respect of such private loan to
be utilized on such project in
Pakistan as may be approved by the
Federal Government for the
purposes of this clause, having
regard to the rate of profit and the
terms of repayment of the loan and
the nature of project on which it is to be utilized;
(ii) on a loan in foreign exchange against export LC
credit which is used exclusively for export of goods
manufactured or processed for exports in Pakistan
(iii) being a foreign individual, company, firm or
association of persons in respect of a foreign loan as
is utilized for industrial investment in Pakistan
provided that the agreement for such loan is concluded
on or after the first day of February, 1991, and is duly
registered with the State Bank of Pakistan: Provided
that this clause shall have retrospective effect of
exemption to the agreements entered into in the
past and shall not be applicable to new contracts after
the 30th day of June, 2010, prospectively.
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Clause (80) Any income derived from a private
foreign currency account held with
an authorised bank in Pakistan, or
certificate of investment issued by
investment banks in accordance with
the Foreign Currency Accounts
Scheme introduced by the State Bank
of Pakistan, by a resident individual
who is a citizen of Pakistan:
Provided that the exemption under
this clause shall not be available in
respect of any incremental deposits
made in the said accounts on or after
the 16th day of December, 1999, or in
respect of any accounts opened
under the said scheme on or after the said date.
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Clause Any distribution received by a
(103) taxpayer from a collective investment scheme registered
by the Securities and Exchange Commission of
Pakistan under the Non-Banking Finance Companies
and Notified Entities Regulations, 2007, including
National Investment (Unit) Trust or REIT Scheme or
a Private Equity and Venture Capital Fund out of the
capital gains of the said Schemes or Trust or Fund :
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Clause Any income chargeable under the
(114AA) head "capital gains" derived by a
resident individual from the sale of constructed residential
property: Provided that exemption under this
clause shall only apply, if (a) at the time of sale, the
residential property was being used for the
purpose of personal accommodation by the resident
individual, his spouse or dependents and for which any of
the utility bills is issued in the name of such individual;
(b) the land area of the property does not exceed 500
square yards in case of a house and 4000 square feet in
case of a flat; and
(c) exemption under this clause has not previously
been availed by the individual, his spouse or dependents.
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Clause (117) Any income derived by a person from
plying of any vehicle registered in the territories of
Azad Jammu and Kashmir, excluding income arising
from the operation of such vehicle in
Pakistan to a person who is resident in Pakistan
and non-resident in those territories.
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Clause (1) Profit and gains derived by a
(126C) taxpayer from an industrial undertaking set up in Larkano
Industrial Estate between the 1st day
of July, 2008 and the thirtieth day of
June, 2013, both days inclusive, for a
period of ten years beginning with
the month in which the industrial undertaking is set up or
commercial production commenced, whichever is
the later.
(2) Exemption under this clause shall apply to an
industrial undertaking which is owned and managed by a
company registered under the Companies Ordinance
1984 (XLVII of 1984) and formed exclusively for
operating the said undertaking.
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Clause Profit and gains derived by a
(126H) taxpayer, from a fruit processing or
preservation unit set up in Balochistan Province,
Malakand Division, Gilgit Baltistan and FATA
between the first day of July, 2014 to the thirtieth day
of June, 2017, both days inclusive, engaged in processing
of locally grown fruits for a period of five years
beginning with the month in which the industrial
undertaking is set up or commercial production is
commenced, whichever is later.
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Clause Profit and gains derived by a taxpayer, from an industrial
(126J) undertaking set up between 1st day of July, 2015 and
30th day of June, 2016 engaged in operating
warehousing or cold chain facilities for storage of
agriculture produce for a period of three years beginning
with the month in which the industrial undertaking is set
up or commercial operations are commenced,
whichever is later.
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Clause Profit and gains derived by a taxpayer, from an industrial
(126K) undertaking set up between the first day of July, 2015
and the 30th day of June, 2017 for establishing and
operating a halal meat production unit, for a period
of four years beginning with the month in which
the industrial undertaking commences commercial
production. The exemption under this clause shall apply
if the industrial undertaking is -
(a) owned and managed by a company formed for
operating the said halal meat production unit and
registered under the Companies Ordinance, 1984
(XLVII of 1984), and having its registered office in Pakistan;
(b) not formed by the splitting up, or there construction
or reconstitution, of a business already in existence or
by transfer to a new business of any machinery or
plant used in a business which was being carried on in
Pakistan at any time before the commencement of
new business; and
(c) halal meat production unit is established and obtains
a halal certification within the period between the first
day of July, 2015 and the 30th day of June, 2017.
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Clause Profit and gains derived by a taxpayer, from industrial
(126L) undertaking set up in Khyber Pukhtunkhwa
and Baluchistan between 1st day of July, 2015and
30th day of June, 2018 for a period of five years
beginning with the month in which industrial
undertaking is set up or commercial production is
commenced, whichever is later: Provided that
exemption under this clause shall be admissible where-
(a) the industrial undertaking is
setup between the first day of July,
2015 and 30th day of June, 2018, both days inclusive; and
(b) the industrial undertaking is not established by the
splitting up or reconstruction or reconstitution of
an undertaking already inexistence or by transfer
of machinery or plant from an undertaking established in
Pakistan at any time before 1st July 2015.
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Clause Profit and gains derived by a taxpayer from an
(126N) industrial undertaking, duly
certified by the Pakistan Telecommunication Authority,
engaged in the manufacturing of cellular mobile
phones, for a period of five years, from the month of
commencement of commercial production:
Provided that the industrial undertaking has been setup
and commercial production has commenced between
the first day of July, 2015 and the thirtieth day of
June, 2017 and the industrial undertaking is not formed
by the splitting up, or the reconstruction or reconstitution,
of a business already inexistence or by transfer to a
new business of any machinery or plant used in a
business which was being carried on in Pakistan 2.
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Clause (a) The benefit represented by free provision to the
(139) employee of medical treatment or hospitalization or both
by an employer or the reimbursement received by the
employee of the medical charges or hospital charges
or both paid by him, where such provision or
reimbursement is in accordance with the terms of
employment: Provided that National Tax Number of
the hospital or clinic, as the case may be, is given
and the employer also certifies and attests the
medical or hospital bills to which this clause applies;
(b) any medical allowance received by an employee
not exceeding ten per cent of the basic salary of the
employee if free medical treatment or hospitalization
or reimbursement of medical or hospitalization charges
is not provided for in the terms of employment.
The withdrawal of this exemption needs to be reconsidered.
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REDUCTION IN TAX RATES RELATING TO SUGAR INDUSTRY
Following reduced rates of tax withholding under section 148 on import of white sugar have been proposed:
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Period Rate Conditions
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August 25, 2020 0.25% As per quantity, quality, mode and
-November 15, manner prescribed by Ministry of
2020 Commerce during the said period
January 26, 2021- 0.25% Commercial import
June 30, 2021
January 26, 2021- 0.25% Subject to quota allotment by
June 30, 2021 Commerce Division provided that
such imports shall not exceed fifty
thousand metric tons per sugar mill
and three hundred thousand metric
tons in aggregate by the sugar industry
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REDUCED WITHHOLDING TAX ON OFFSHORE SUPPLY CONTRACTORS FOR IPPS LOCATED IN AJK
It has been proposed that the rate of tax withholding on offshore supply contract for an IPP located in Azad Jammu & Kashmir to be 1 per cent subject to the following conditions:
(i) PPIB has issued Letter of Support for the project;
(ii) its EPC Contract has been executed and submitted to NEPRA for EPC stage tariff determination prior to the enactment of Finance Act, 2018;
(iii) the offshore supply contractor does not have permanent establishment in Pakistan; and
(iv) such 1% tax shall be full and final liability of the offshore contractor.
REDUCED RATE FOR WOMEN ENTERPRISE
A new concept of woman enterprise has been proposed to be introduced which has been defined to mean a startup established on or after July 1, 2021 as sole proprietorship concern owned by a woman or an AOP all of whose members are women or a company whose 100% shareholding is held or owned by women. A reduced rate of 25 per cent has been proposed on profit and gains derived from business chargeable to tax under the head “Income from Business”. The benefit of this clause, however, will not be available to a business that is formed by the transfer or reconstitution or reconstruction or splitting up of an existing business.
EXEMPTION ON MEDICAL AND TESTING EQUIPMENT REGARDING OUTBREAK OF COVID-19
Through SRO 236(I)/2020 dated March 20, 2020, exemption has been provided from income tax withholding on import of identified medical and testing equipment regarding outbreak of COVID-19. Such exemption was initially provided till June 20, 2020 which was validated through Finance Act 2020 with an extension till September 30, 2020.
The said exemption is now proposed to be extended till June 30, 2021.
WITHHOLDING TAX ON OIL TANKER CONTRACTORS
Presently, withholding tax section 153(1)(a) is not applicable in case of Oil Tanker Contractor provided that such contractor pays tax at the rate of 2.5% on payment for rendering or providing of carriage services. It is now proposed that the scope of such exemption be also extended to rendering of services. It is also proposed that the rate of tax be increased from 2.5% to 3.5%.
WITHHOLDING TAX ON GOODS TRANSPORT CONTRACTOR
Presently, the provision of section 153(1)(a) is not applicable in case of Goods Transport Contractor provided that such contractor pays tax at the rate of 3% on payment for rendering or providing of carriage services. It is now proposed that the scope of such exemption be extended to rendering of services. It is also proposed that the rate of tax be increased from 3% to 3.5%.
COMMODITY FUTURE CONTRACTS
It is proposed that the provisions of section 153 shall not apply to commodity future contracts listed on a Future Exchange license under the Future Market Act, 2016.
WITHHOLDING TAX ON PURCHASE OF USED MOTOR VEHICLE
It is proposed that the withholding tax under section 153 shall not be applicable on purchase of used motor vehicles from general public.
TAX WITHHOLDING / COLLECTION FROM MODARABA, PRIVATE EQUITY AND VENTURE CAPITAL FUND
Presently, the tax withholding / collection in respect of dividend, Profit on debt, Brokerage and Commission and Capital gains on disposal of securities is not applicable on payment to Modaraba, Private Equity and Venture Capital Fund.
The said exemption from withholding tax collection is proposed to be withdrawn.
NON-APPLICABILITY OF TAX ON IMPORT UNDER SECTION 148
It is proposed that the withholding tax on imports under section 148 shall not be applicable in respect of the following:
a) Goods produced or manufactured and exported from Pakistan which are subsequently imported in Pakistan within one year of their exportation, provided conditions of section 22 of the Customs Act, 1969 (IV of 1969) are complied with;
b) Plant and machinery imported for setting up of a bagasse/biomass based cogeneration power project qualifying for exemption under clause (132C) of Part-I of this Schedule.
c) persons authorized under Export Facilitation Scheme 2021 notified by the FBR with such scope, conditions, limitation, restrictions and specification of goods.
d) Motor vehicles upto 850cc in CBU condition.
e) Printed books excluding brochures, leaflets and similar printed matter, whether or not in single sheets.
f) Newspapers, journals and periodicals, whether or not illustrated or containing advertising material.
Further, import of certain harvesting, threshing and storage equipment is exempted from tax on import.
It is now proposed to exclude the import of Corn harvester / corn picker and silage maker from the applicability tax on import under section 148.
REDUCED RATE OF WITHHOLDING FOR EXPORT-ORIENTED SECTORS
Presently, the rate of tax withholding under section 153 is 1% on local sales, supplies and services provided or rendered to the taxpayer falling in the following categories:
i) Textile and articles thereof;
ii) Carpets
iii) Leather and articles thereof including artificial leather footwear;
iv) Surgical goods; and
v) Sports goods
An explanation is proposed to clarify that the relief of reduced rate of withholding is available only to the local sales, supplies and services made by the taxpayers of above categories consequently the benefit is not applicable on payments made by such persons.
EXEMPTION FROM WHT ON SUPPLY OF AGRICULTURE PRODUCE
The provisions of section 153 are presently not applicable as recipient of payment exclusively for the supply of agriculture produce including fresh milk, fish by any person engaged in fish farming, live chicken, birds and eggs by any person engaged in poultry farming and by an industrial undertaking engaged in poultry processing which has not been subjected to any process other than that which is ordinarily performed to render such produce fit to be taken to market.
It is now proposed that the said exemption shall be subject to fulfilment of certain additional conditions with an addition of the following items to the prescribed list of items:
i) live animals by any person engaged
in cattle farming;
ii) unpackaged meat; and
iii) raw hides.
WITHHOLDING TAX BY MANUFACTURER CUM EXPORTER
Presently, manufacturer-cum-exporter is required to withhold income tax from payments made on account of purchase of the goods in respect of which special rates of tax deduction have been specified under the provisions of the repealed Ordinance. The Bill proposes to exempt manufacturer-cumexporter from the obligation to withhold tax from payment made on account of purchase of such goods.
IMPORTS IN PURSUANCE OF CABINET DECISION
Following exemptions are proposed for imports under section 148, made in pursuance of Cabinet decisions;
Import of 1.5 million of wheats – Cabinet decision in case No. 399/23/2020 dated June 16, 2020
Import of 300,000 metric tons of white sugar Trading Corporation of Pakistan– Cabinet decision in case No. 541/30/2020 dated August 4, 2020
Import of 300,000 metric tons of wheat by Trading Corporation of Pakistan – Cabinet decision in case No. 34/02/2021 dated January 12, 2021
EXEMPTION ON IMPORT OF SPECIFIED GOODS UNDER SECTION 148
It is proposed to exempt import of following goods for a period of three months starting from June 23, 2020, including to import where letters of credit were opened or goods declaration forms were filed on or after June 23, 2020;
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Description Heading
Oxygen gas 2804.4000 Cylinders (for oxygen gas) 7311.0090
Cryogenic tanks (for oxygen gas) 7311.0030
It is proposed to exempt import of 83X Micron sprayers for Anti-Locust Operation (Respective heading) by National Disaster Management Authority.
It is proposed to exempt import of following goods for a period of three months starting from December 25, 2020 by the manufacturers of oxygen, including to import where letters of credit were opened or goods declaration forms were filed on or after December 25, 2020;
=====================================================
Description TariffHeading
Cryogenic tanks (for oxygen gas) 7311.0030
It is proposed to exempt tax collection/withholding of tax on import and subsequent supply (under section 148 and 153) of 500,000 metric tons white sugar imported by TCP. that provisions of section 148 and 153.
It is proposed to exempt import of following goods for a period of 180 days starting from May 14, 2021:
===================================================== Description Tariff
Heading
Oxygen gas 2804.4000 Other (Oxygen Cylinders 7311.0090 For Cryogenic (Tanks/vessels) 7311.0030 Oxygen Concentration, Respective
Generators . manufacturing Headings
plants of all specification and capacities.
CONCESSIONS ALLOWED TO BORDER SUSTENANCE MARKETS
The Bill has proposed to introduce a new concept of Border Sustenance Markets (BSM) as a tool to boost the local trade and economic activity in the border regions in order to enhance bilateral trades between the countries involved. The proposal would further mitigate the adverse effects of fencing and countersmuggling which may create hinderance towards people residing in the border areas. So far, the borders identified by the Bill are with Iran and Afghanistan. The term ‘BSM’ has not been defined so far however, it has been included in the definition of the term ‘tax exempt areas’ for the purposes of section 40D of the Act.
EXEMPTION FROM INCOME TAX & SALES TAX
The scope of BSM is to provide exemptions / concessions, from income tax and sales tax of food related items, such as fruits, vegetables and milk products, and other consumables, such as crockery, skin-care items and non-motorized cycles. Specific goods / conditions are proposed to be prescribed under relevant statute. Summary of qualifying conditions under the Income tax and Sales tax statutes is summarized below:
• Income from supply of specified goods within the limits of BSM established in cooperation with Iran and Afghanistan;
• Specified goods, on which exemption would be availed, are not to be brought outside the BSM limits. In case of a breach of the condition, income tax will be charged on the import value as per section 148 of the Ordinance. However, in the case of sales tax, it would be chargeable at the higher of the assessed value of the goods declaration import or fair value;
• In case of import, clearance shall be provided for specified goods by the Customs Authorities subject to furnishing of bank guarantee equal to the amount of taxes involved and the same shall be released after presentation of consumption certificate issued by the Commissioner Inland Revenue having jurisdiction;
• Exemption would be available to the person who has furnished proof of having a functional business premises located within BSM limits; and
• Breach of any of the conditions provided aforesaid would attract the relevant legal provisions of the relevant statutes, besides recovery of the amount of income tax and sales tax along with default surcharge and penalties involved.
EXEMPTION FROM CUSTOMS DUTY AND RELATED PROVISIONS
Customs duty exemption also available on food related items, such as fruits, vegetables and milk products, and other consumables, such as crockery, skin-care items and non-motorized cycles. Specific goods / conditions are proposed to be prescribed under relevant statute. In this regard, relevant provisions are summarized as under:
• BSM will function for 2 days each week and total allowance per day for the visitor will be $100;
• To ascertain the admissible quantities of imported goods, the Customs Value is to be displayed;
• Visitor will purchase the food related items and other consumables up to $50 on concessional rate provided in the table. Purchase exceeding $50 would result in statutory rate instead of the concessional rates proposed;
• For goods purchased by the visitors, the Customs staff posted at BSM will make an entry via electronic system of the goods purchased by the visitor on a prescribed form; and
• Customs officer posted at the BSM will issue a system-generated receipt to the visitor which would bear the Name, CNIC and the customs payable on the goods purchased.
SALES TAX
COTTAGE INDUSTRY
The threshold of turnover for qualifying as cottage industry is proposed to be enhanced from Rs 3 million to Rs 10 million. ‘Cottage industries’ are not required to be registered for sales tax purposes being also exempt from sales tax.
ONLINE MARKETPLACE
A new definition ‘eonline marketplace’ is proposed to be inserted to include electronic interface such as a market place, e-commerce platform, portal or similar means which facilitate sale of goods, including third party sales by controlling the terms and conditions of sale, authorizing charging to customers or ordering / delivery of goods.
Furthermore, person running an ‘online market-places’ is proposed to be made responsible to collect sales tax on goods being traded through such portal, whether or not such goods are owned by him.
In case of goods supplied by registered persons charging sales tax on their goods supplied through online market place, the above proposed amendment may result in a duplicate levy, which is an anomaly needs to be addressed.
TIER-1 RETAILER
The definition of Tier-1 retailer is proposed to be expanded to include:-
retailer operating online marketplace supplying through e-commerce platform whether or not goods owned by such retailer;
a retailer who has acquired point of sale for accepting payments through debit/credit cards or any other digital payment service.
However, in respect of retailers of furniture, a beneficial amendment is proposed whereby the minimum shop size is proposed to be increased from of 1,000 sqft to 2,000 sqft.
Through proposed amendment in section 3(9A) of the Act, the entitlement of certain customers of Tier-1 retailers for 5% cash back subject to manner and extent prescribed by the Board is proposed to be withdrawn.
TIME OF SUPPLY – CHARGE ON ADVANCES
It is proposed to amend the definition of time of supply so that sales tax is charged only at the time of actual supply of goods. Currently, sales tax is charged on the earlier of delivery of goods or receipt of advance payment.
It is observed that uptill 2007 and then from 2013 to date, the law has been to charge sales tax on the earlier of delivery of goods or receipt of advance whilst between 2007 to 2013 the law was to charge sales tax on actual delivery of goods.
RESTRICTION ON ADJUSTABLE INPUT TAX
It is proposed to remove the cap for adjustment of input tax up to 90% of output tax from public limited companies listed on Pakistan Stock Exchange.
LIMITATION – EXTENDED
It is proposed to amend the start of 5 years limitation for initiation of proceedings from the end of the financial year in which the relevant tax period falls. Currently, the limitation period starts from the end of the tax period i.e. respective month. The Honourable Supreme Court of Pakistan in a recent judgment on similar matter of income tax has observed that in cases where the limitation has already started to run, cannot be meddled with and such amendment would apply prospectively.
COMMON IDENTIFIER NUMBER (CIN)
It is proposed that in case of Computerized National Identification Card number (CNIC) for individuals and National Tax Numbers (NTN) for artificial juristic persons will be CIN in addition to Sales Tax Registration Number.
RECORDS MAINTENANCE
It is proposed to make cash book and electronically maintained records as mandatory records to made available for verification of making taxable supplies.
TRANSACTIONS BETWEEN ASSOCIATES
The Finance Act, 2010 introduced a specific provision whereby the Commissioner was empowered to determine the transfer price of taxable supplies between associated persons, however, no mechanism was in place for such determination. The absence of rules was creating controversies.
It is proposed to empower the Board to make rules in connection with determination of transfer pricing on transactions between associates to reflect the fair market value of supplies.
EXTENSION IN TIME FOR FURNISHING OF RETURN
It is proposed to empower tax authorities to allow time in filing of tax returns subject to certain restrictions, however, such extensions will not affect the charge of default surcharge for late deposit of sales tax.
LICENSING OF BRAND NAME
It is proposed that for specified goods, manufacturers will be required to obtain license for respective brand or their Stock Keeping Units (SKU). Any specified
brand and SKU found to be sold without obtaining license would be deemed to be counterfeited goods. In this respect, neither nature of goods nor methodology has been explained, accordingly, clarity will only be available after issuance of related notifications.
Similar amendment has been made in the Federal Excise Law.
RECOVERY OF FOREIGN TAXES / EXCHANGE /SHARING OF INFORMATION
Through Finance Act 2015, section 56A was introduced through which Federal Government was empowered to enter into bilateral or multilateral agreements with provincial and foreign governments for exchange of information and recovery of taxes. It is now proposed to authorize Tax Authorities to recover tax demands raised by other governments based on the related bilateral/multilateral or other related intergovernmental agreements which are also proposed to be entered by the Federal Government. This proposed amendment is similar, to the relevant provisions under the Income Tax Ordinance, 2001.
Through the proposed amendment, FBR is now been empowered for sharing of data or information with Ministries, Divisions of Federal / Provincial Governments. Similar amendment has been made in the Federal Excise Law.
MYSTERY SHOPPING
The Board is proposed to be empowered to prescribe procedure in this respect for invoices issued by Tier-1 retailers integrated with FBR’s online systems.
DELAYED REFUND
It is proposed to pay interest @ KIBOR per annum on the amount of refund not paid within 45 days of determination of refund under section 66 of the Act.
PAYMENT AGAINST TRANSACTIONS EXCEEDING RS. 50,000
Through Finance Act, 2004 a condition was laid for adjustment of input tax that payment against such transactions were to be made through banking channel. It is now proposed that subject to certain conditions the amounts payable and receivable to and from same party shall be treated as constructive payment.
THIRD SCHEDULE
Sugar is proposed to be added in the list of retail items at Serial No. 50 of Third Schedule. However, supply of sugar as industrial raw material to pharmaceutical, beverage and confectionery industries is proposed not to be treated as retail item. It is pertinent to observe that in the current Pakistan market, this will be a challenge to implement as sugar sold at retail level varies considerably in volume.
FIFTH SCHEDULE
i) Zero rating for the following items is proposed to be withdrawn:
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S.
No. Description
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1 (i) Supply, repair or maintenance of any ship which is neither;
(a) a ship of gross tonnage of less than 15 LDT; nor
(b) a ship designed or adapted for use for recreation or pleasure.
(ii) Supply, repair or maintenance of any aircraft which is neither;
(a) an aircraft of weight-less than 8000 kilograms; nor
(b) an aircraft designed or adapted for use for recreation
or pleasure.
(iii) Supply of spare parts and equipment for ships
and aircraft falling under (i) and (ii) above.
(iv) Supply of equipment and machinery for
pilotage, salvage or towage services.
(v) Supply of equipment and machinery for air
navigation services.
(vi) Supply of equipment and machinery for other
services provided for the handling of ships or
aircraft in a port or Customs Airport.
6 Supplies of such locally manufactured plant and
machinery to petroleum and gas sector Exploration
and Production companies, their contractors and
sub-contractors as may be specified by the Federal
Government, by notification in the official Gazette,
subject to such conditions and restrictions as may
be specified in such notification.
10 Petroleum Crude Oil (PCT heading 2709.0000).
11 Raw materials, components, sub-components and
parts, if imported or purchased locally for use in
the manufacturing of such plants and machinery as
is chargeable to sales tax at the rate of zero percent,
subject to the condition that the importer or
purchaser of such goods holds a valid sales tax
registration showing his registration category as
manufacturer; and in case of import , all the
conditions, restrictions, limitations and
procedures as are imposed by notification under
section 19 of the Customs Act,1969(IV of 1969), shall apply.
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ii) It is proposed to extend zero rating to “Local supplies of raw materials, components, parts and plant and machinery to registered exporters authorized under Export Facilitation Scheme, 2021 notified by the Board with such conditions, limitations and restrictions”
SIXTH SCHEDULE
i) Exemption from sales tax on import or supply of following has been proposed to be withdrawn:
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Heading Nos. of the First
Sr. Description Schedule to
No. the Customs
Act, 1969
================================================================================
(1) (2) (3)
24 Edible oils and 1507.9000,
vegetable ghee, 1508.9000,
including cooking oil,` 1509.1000,
on which Federal 1509.9000,
Excise Duty is 1510.0000,
charged, levied and 1511.1000,
collected by a 1511.9020,
registered 1511.9030,
manufacturer or 1512.1900,
importer as if it were 1513.1900,
a tax payable under 1513.2900,
section 3 of the Act. 1514.1900,
Explanation.- 1514.9900,
Exemption of this 1515.2900,
entry shall not be 1515.5000,
available on local 1516.2010,
supplies made by 1516.2020,
importers, 1517.1000,
distributors, 1517.9000 and
wholesalers or retailers. 1518.0000
103 Import and supply Respective
thereof, up to the headings
year 2030, of ships
and all floating crafts
including tugs, dredgers, survey
vessels and other specialized crafts
purchased or bareboat chartered by a Pakistan
entity and flying the Pakistan flag, except ships or
crafts acquired for demolition purposes
or are designed or adapted for use for
recreation or pleasure purposes, subject to the
condition that such ships or crafts are
used only for the purpose for which
they were procured and in case such
ships or crafts are used only for the
purpose for which they were procured,
and in case such ships or crafts are
used for demolition purposes within a
period of five years of their acquisition,
sales tax applicable to such ships
purchased for demolition purposes
shall be chargeable.
106 Import of Halal 0206.1000,
edible offal of bovine 0206.8000 and
animals 0206.9000
108 Components or sub-
components of
energy saver lamps,
namely:-
(a) Electronic Circuit 8539.9040
(b) Plastic Caps 8539.9040
(upper and lower)
(c) Base Caps B22 and E27 8539.9040
(d) Tungsten Filaments 8539.9040
(e) Lead-in-wire 8539.9040
(f) Fluorescent powder 3206.5010
(Tri Band
Phospher)
(g) Adhesive Additive 3824.9099
(h) Al-oxide 3824.8400
Suspension
(i) Capping Cement 3214.1050
(j) Stamp Pad Ink 3215.9010
(k) Gutter for 2850.0000
Suspension
115 Plant, machinery and Respective
equipment imported headings
for setting up fruit
processing and
preservation units in
Gilgit-Baltistan, Balochistan Province
and Malakand Division upto the
30th June, 2019 subject to the same
conditions and procedure as are
applicable for import of such plant,
machinery and equipment under the
Customs Act, 1969 (IV of 1969).
123 Aircraft, whether 8802.4000
imported or acquired on wet or dry lease:
Provided that in case of import or
acquisition on wet or dry lease by Pakistan
International Airlines Corporation,
this exemption shall be available with
effect from 19th March, 2015.
124 Maintenance kits for Respective
use in trainer headings
aircrafts of PCT headings 8802.2000
and 8802.3000.
125 Spare parts for use in Respective
aircrafts, trainer headings
aircrafts or simulators.
128 Aviation simulators Respective
imported by airline headings
company recognized
by Aviation Division.
153 Steel billets, ingots, Respective
ship plates, bars and headings
other long re-rolled
profiles, on such
imports and supplies
by the manufacturer
on which federal
excise duty is payable
in sales tax mode
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ii) Exemption from sales tax on the import of following has been proposed to be withdrawn. However, local supply thereof is proposed to be continued under Table 2 of Sixth Schedule.
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Sr. Description PCT Heading
No.
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27 Eggs including eggs for 0407.1100, 0407.1900
hatching 0407.2100 and 0407.2900
28 Cereals and products of 1001.1000, 1001.9000, 1002.0000,
milling industry 1003.0000, 1004.0000, 1005.1000,
excluding the products 1005.9000, 1006.1090, 1006.2000,
of milling industry, 1006.3010, 1006.3090, 1006.4000,
other than wheat and 1007.0000, 1008.1000, 1008.2000,
meslin flour, as sold in 1008.3000, 1008.9000, 1101.0010,
retail packing bearing 1101.0020, 1102.2000, 1102.9000,
brand name or a 1103.1100, 1103.1300, 1103.1900,
trademark 1104.2200, 1104.2300, 1104.2900
and 1104.3000
29 Sugar beet 1212.9100
30 Fruit juices, whether 2009.1100, 2009.1200, 2009.1900,
fresh, frozen or 2009.2100, 2009.2900, 2009.3100,
otherwise preserved but 2009.3900, 2009.4100,
excluding those bottled, 2009.4900, 2009.5000,
canned or packaged. 2009.6100, 2009.6900, 2009.7100,
2009.7900, and 2009.9000
31 Milk and cream, 04.02
concentrated or
containing added sugar
or other sweetening
matter, excluding that
sold in retail packing
under a brand name
32 Flavored milk, 0402.9900
excluding that sold in
retail packing under a brand name
33 Yogurt, excluding that 0403.1000
sold in retail packing
under a brand name
34 Whey, excluding that 04.04
sold in retail packing
under a brand name
35 Butter, excluding that 0405.1000
sold in retail packing
under a brand name
36 Desi ghee, excluding 0405.9000
that sold in retail
packing under a brand name
37 Cheese, excluding that 0406.1010
sold in retail packing
under a brand name
38 Processed cheese not 0406.3000
grated or powdered,
excluding that sold in
retail packing under a brand name
39 Sausages and similar 1601.0000
products of poultry
meat or meat offal
excluding sold in retail
packing under a brand
name or trademark
40 Products of meat or 1602.3200, 1602.3900, 1602.5000,
meat offal excluding 1604.1100, 1604.1200, 1604.1300,
sold in retail packing 1604.1400, 1604.1500, 1604.1600,
under a brand name or 1604.1900, 1604.2010, 1604.2020
trademark and 1604.2090
41 Preparations suitable 1901.1000
for infants, put up for
retail sale
42 Fat filled milk excluding 1901.9090
that sold in retail
packing under a brand
name or a trademark
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iii) Exemption from sales tax on the import or supply of art paper and printing paper for printing of Holy Quran imported by Federal or Provincial Governments and Nashiran-e-Quran as per quota determined by IOCO is proposed with the insertion of PCT headings 4810.1990, 4810.1910 and 4802.6990.
iv) Exemption on import or supply of following earlier introduced through Tax Laws (Amendment) Ordinance, 2021 is proposed to be part of Finance Bill:
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Sr. No. 157 of Import of CKD kits for the following electric
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Table 1 of Sixth vehicles (4 wheelers) by local manufacturers till
Schedule the 30th day of June 2026:
(a) Small cars and SUVs with 50 kwh
battery or below; and
(b) Light Commercial Vehicles (LCVs)
with 150 kwh battery or below
Sr. No. 158 of Goods temporarily imported into Pakistan by
Table 1 of Sixth international athletes which would be
Schedule subsequently taken back by them within 120
days have been allowed exemption from sales
tax at import stage
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v) Exemption on import or supply of following earlier introduced through Tax Laws (Second Amendment) Ordinance, 2021 has now been made part of Finance Bill
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Description Heading Nos. of
the First Schedule
to the Customs Act,
==============================================================
1969
Import of auto disable Syringes till June 30 9018.3110
2021 9018.3120
(i) with needles
(ii) without needles
Import of following raw materials for the 9018.3200
4016.9310
==============================================================
manufacturer of auto disable syringes till June
30, 2021
(i) Tubular metal needles
(ii) Rubber Gaskets
vi) Exemption from sales tax on import or supply of following has now been proposed:
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Entry Description Heading
Reference
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Sr. No. 161 of Import of Plant, machinery, Respective
headings
Table 1 of Sixth equipment and raw materials for
Schedule consumption of these items within
Special Technology Zone by the
Special Technology Zone Authority,
zone developers and zone enterprises
Sr. No. 162 of Import of raw materials, Respective
headings
Table 1 of Sixth components, parts and plant and
Schedule machinery by registered persons
authorized under Export Facilitation
Scheme, 2021 notified by the Board
with such conditions, limitations and
restrictions
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vii) Exemption from sales tax on the supply of following has been proposed to be withdrawn:
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S. Description PCT heading
No
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17 Raw and pickled hides and 41.01, 41.02, 41.02, 4104.1000,
skins, wet blue hides and 4105.1000, 4106.2100,
skins 4106.3000, 4106.9000
19 Bricks (up to 30th June, 6901.1000
2018)
24 LED or SMD lights and 8539.5010, 8539.5020,
bulbs meant for 9405.1030 and 9405.4020
conservation of energy
25 Cottonseed oil 1512.2100 and 1512.2900
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viii) Supply of locally produced silos is proposed to exempt from sales tax till June 30, 2026.
TABLE 1 OF EIGHTH SCHEDULE – SPECIFIED RATES
i) Following items have been proposed at standard rate of sales tax. Previously such items were subject to reduced rate of sales tax subject to conditions specified in Table 1 of the Eighth Schedule to the Act:
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S. No. Description
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1 Soyabean meal
5 Raw cotton and ginned cotton
6 Plant and machinery not manufactured locally and having
no compatible local substitutes
7 Flavoured milk
8 Yogurt
9 Cheese
10 Butter
11 Cream
14 Milk and cream, concentrated or containing added sugar or other
15 Ingredients of poultry feed, cattle feed, except soya bean
meal of PCT heading 2304.0000 and oilcake of cotton-
seed falling under PCT heading 2306.1000
19 Waste paper
20 Plant, machinery, and equipment used in production of biodiesel
22 Soya bean seed
29 Harvesting, threshing and storage equipment:
(i) Wheat thresher
(ii) Maize or groundnut thresher or sheller
(iii) Groundnut digger
(iv) Potato digger or harvester
(v) Sunflower thresher
(vi) Post hole digger
(vii) Straw balers
(viii) Fodder rake
(ix) Wheat or rice reaper
(x) Chaff or fodder cutter
(xi) Cotton picker
(xii) Onion or garlic harvester
(xiii) Sugar harvester
(xiv) Tractor trolley or forage wagon
(xv) Reaping machines
(xvi) Combined harvesters
(xvii) Pruner/shears
45 Following machinery for poultry sector :
(i) Machinery for preparing feeding stuff
(ii) Incubators, brooders and other poultry
equipment
(iii) Insulated sandwich panels
(iv) Poultry sheds
(v) Evaporative air cooling system
(vi) Evaporative cooling pad
50 LNG/RLNG
51 LNG/RLNG
60 Fat filled milk
61 Silver, in unworked condition
62 Gold, in unworked condition
63 Articles of jewellery, or parts thereof, of precious metal or
of metal clad with precious metal.
65 Ginned cotton
67 LNG imported for servicing CNG sector and local supplies thereof
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ii) The rate of sales tax on import and supply of potassium chlorate is proposed to be increase from Rs 80 per Kg to Rs 90 per Kg in addition to 17% standard rate.
iii) Serial No 71, earlier added vide Tax Laws (Amendment) Ordinance, 2021 allowing reduced rate of 1% on the supply of locally manufactured or assembled electric vehicles of prescribed categories is proposed in the Finance Bill.
iv) Supply of locally manufactured or assembled motorcars of cylinder capacity upto 850cc has been proposed at reduced rate of 12.5%.
v) Import and supply of Hybrid Electric Vehicles are proposed to reduced rate of sales tax as follows:
===================================================
Capacity PCT Rate of
sales tax
===================================================
Upto 1800 cc 87.03 8.5%
From 1801 to 2500 cc 87.03 12.75%
===================================================
NINTH SCHEDULE
Sales tax of Rs 250 on supply of SIM cards by Cellular Mobile Operators is proposed to be discontinued with effect from July 1, 2020 with savings to department’s position pending before any court of Law. However, corresponding change has not been made w.r.t. the liability, procedure and conditions in the Ninth Schedule.
ELEVENTH SCHEDULE
Registered persons manufacturing lead batteries are proposed to withhold entire amount of Sales Tax from person supplying reclaimed lead or used lead batteries.
TWELFTH SCHEDULE
Certain eclusions from levy of value addition tax were introduced through Tax Laws (Amendment Ordinance, 2021 now made part of Finance Bill. A new exception has been proposed for import of motor cars of cylinder capacity upto 850cc.
FEDERAL EXCISE DUTY
REVISION OF RETURN
Sales tax return can be suo moto revised by a registered person within 60 days of filing thereof provided the liability admitted in revised return is more than that admitted in original return or the refund claimed therein is less than that claimed in original return.
In line with such provisions, it has been proposed that similar mechanism is provided for the FED return.
EXEMPTION FROM DUTY ON AUTOMOBILES & FRUIT JUICES
It has been proposed to withdraw excise duty presently payable on:
• Import and local manufacturing of electric vehicles (4 wheelers) till 30th day of June 2026;
• Local manufacturing of vehicles of cylinder capacity of up to 850cc; and
• Fruit juices, syrups and squashes, waters containing added sugar or sweetening matter etc. excluding mineral and aerated waters.
DUTY ON ELECTRONICALLY HEATED TOBACCO MIXTURES
Recently, a new tobacco product, called ‘heets sticks; has been introduced that is marketed to be less harmful than ordinary cigarettes as instead of combustion, it heats the tobacco. It is proposed that such niche product is made subject to excise duty @ Rs 5,200 per kilogram.
LEVY OF SALES TAX IN PLACE OF EXCISE DUTY
Following goods, presently subject to excise duty in sales tax mode @ 17% are proposed to be excluded from purview of excise duty and made liable to sales tax at same rate:
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Entry Description HS Code
No.
====================================================================
1 Edible oils excluding 15.07, 15.08, 15.09,
deoxidized soybean 15.10, 15.11, 15.12, 15.13,
15.14, 15.15, 15.16 1517,
and 15.18,
2 Vegetable ghee and cooking Respective
oil headings
(a) in retail packing;
(b) not in retail packing
58 Steel Billets, ingots, ship Respective
plates, bars and other long re- headings
rolled products
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EXEMPTION FROM DUTY ON FEES RECEIVED BY BANKING COMPANIES FROM MERCHANTS USING ELECTRONIC PAYMENNT MACHINES
It is proposed that fees charged by banking companies to merchants for processing payments through digital cards are excluded from the charge of duty leviable @ 16%.
Proposal is aimed at promoting and encouraging electronic payments.
EXCISE DUTY ON TELECOMMUNICATION SECTOR
Rate of duty on Telecommunication Services is proposed to be reduced from 17% to 16%.
Further, a new charge of duty is proposed to be levied in respect of following services as explained below:
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Description Proposed duty
==========================================================================
(a) Mobile phone One rupee per call in addition to
call, if call the rates of duty specified under
duration Serial No.6
exceeds three minutes;
(b) Internet services Five rupees per GB in addition to
the rates of duty specified under Serial No.6
(c) SMS services Ten paisa per sms in addition to
the rates of duty specified under serial no.6
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Since indirect taxation of telecommunication sector is provincial subject consequent to 18th Amendment in Constitution, proposed charges of excise duty will only be applicable in territories falling in jurisdiction of Federal Government.
Accordingly, these proposed duties would also have to be levied by provinces in order to make these applicable on a country wide basis. Thus, it is considered that Provincial Governments are on board in respect of these proposed duties.
THIRD SCHEDULE
Exemptions from duty are proposed in respect of following, subject to the conditions specified:
• Imported vegetable and animal fats and their oils and fractions, if consumed within the limits of Border Sustenance Markets (BSM) to be established in cooperation with Iran and Afghanistan subject to certification of consumption by relevant Commissioner and proof of owning a business premises in such markets.
• Import and supply of raw material, components, parts and plant and machinery by persons registered under Export Facilitation Scheme, 2021.
ISLAMABAD CAPITAL TERRITORY (TAX ON SERVICES) ORDINANCE, 2001
Export of services is proposed to be charged at Zero per cent.
CUSTOMS ACT
DEFINITIONS
Following amendments / additions are proposed to be made through the Finance Bill in the definitions:
DOCUMENTS
The term ‘documents’ is proposed to include ‘master bill of lading’ and ‘certificate of origin’.
ELECTRONIC ASSESSMENT
A new definition of ‘electronic assessment’ is proposed to be introduced that means assessment of a goods declaration in Customs Computerized System by an officer of Customs or by the computerized system according to the selectivity criteria.
VESSEL INTIMATION REPORT (VIR)
Another new concept of ‘vessel intimation report (VIR)’ is proposed to be introduced, which refers to an intimation regarding impending arrival of a vessel at a customs sea port, where the customs computerized system is operational to the customs authorities in the form and manner by the carrier of his agent, as may be prescribed in the rules.
OWNER
The term “owner” of goods has been proposed to be defined as any person who is for the time being entitled, either as owner or agent for the owner, to the possession of the goods.
SMUGGLE
The term ‘smuggle’ is proposed to also include the ‘retailing’ of smuggled goods’.
POWER TO APPOINT OR LICENCE COMMON WAREHOUSES
The concept of ‘common bonded warehouse’ earlier defined in Customs Rules, 2001 is now proposed to be inserted in the Customs Act, 1969 as ‘common warehouse’. This is possibly being done to provide statutory cover to this concept. In a common warehouse, dutiable goods may be deposited without payment of customs-duty on owner or licensee own account.
The powers to appoint or licence common warehouses and the powers to cancel or suspend a licence for a common warehouse will be exercised by the respective Collector of Customs in his own jurisdiction.
Where the Customs Computerized System is operational, the application for a licence for common warehouse will be filed through the system in the prescribed manner.
PAKISTAN CUSTOMS TARIFF
It has been proposed to empower the Board to constitute a committee or a centre for settlement of any disputes regarding classification of goods. The Board may also prescribe rules or procedure for that purpose.
VALIDATION OF NOTICATIONS
The validity of exemption notifications issued on or after July 1, 2016 is proposed to be extended to next fiscal year i.e. up to June 2022.
POWER TO DETERMINE CUSTOMS VALUE
The power of Director of Customs Valuation to determine customs value ‘on his own motion’ is proposed to be extended to Collector of Customs. However, in case of any conflict in customs value, the Director General of Valuation shall determine the applicable value. It is further proposed that in determining the customs value, the Director may incorporate values from the internationally acclaimed publications, periodicals, bulletins or official websites of manufacturers or indenters of such goods.
POWER TO TAKEOVER IMPORTED GOODS
The power to grant approval to an offer to buy the imported goods sought to be cleared at value declared by the importer in the goods declaration is proposed to be shifted from the ‘Board’ to the ‘Chief Collector’.
REVIEW OF THE VALUE DETERMINED
Presently, no time limit has been prescribed for the Director General Valuation to determine value in a revision petition filed before him. Through the Finance Bill, a time limit of 60 days from the filing of the review petition or initiation of proceedings on his own motion has been proposed for such proceedings to be concluded.
MUTILATION OR SCRAPPING OF GOODS
It has been proposed that the request for allowing mutilation or scrapping of goods for the purpose of charging duty at applicable rates of scrapped / mutilated goods shall be made ‘before the filing of goods declaration’.
DATE OF DETERMINATION OF IMPORT DUTY RATE
Presently, where the goods declaration has been manifested in advance of the arrival of the conveyance, the date of determination of the import duty rate (relevant date) is the date on which the manifest of the conveyance is delivered at the port of first entry. It has now been proposed that in such a case the relevant date shall be the date on which the goods declaration is manifested. However, the relevant date for goods declaration in respect of which the rate of duty changes after the submission of the goods declaration and before the berthing or cross-over event of the vessel or the vehicle respectively, shall be the date on which the vessel has berthed or the vehicle has crossed-over the border.
TIME LIMIT FOR DECISION OF CASES
Cases involving any contravention under the Act (duty short levied, not levied, penalty etc.) are generally required to be decided within 90 days (extendable up to 60 days) of issuance of show cause notice.
It is proposed to limit the time allowed for deciding the cases where goods are lying at seaport, airport or dry port, to 30 days of the issuance of show cause notice which can be extended by another 15 days by Collector of Customs, if so required.
THRESHOLD FOR ISSUANCE OF SHOW CAUSE NOTICE
The Customs authority may issue show cause notice for recovery of duty, taxes or charge not levied or short-levied or erroneously refunded subject to the prescribed time limitation. However, the above is applicable where the recoverable amount is:
a. Rs 100 or more in case the default is discovered as a result of an audit / examination or by any other means;
b. Rs 20,000 or more in case the default is by reason of inadvertence, error or misconstruction.
Through the Finance Bill it has been proposed to harmonize the above threshold by increasing the threshold of Rs 100 in (a) above to Rs 20,000.
SUSPENSION OF UNIQUE USER IDENTIFIER
It has been proposed that the unique user identifier of a registered user / person may only be suspended after giving notice and affording reasonable opportunity of hearing to the person.
IMPORT MANIFEST FOR CONVEYANCE
Presently an import manifest is required to be delivered to the Customs officer within 24 hours after arrival of a conveyance other than a vessel at land customs station or customs airport. The above timeline has been proposed to be revised as: (a) within three hours of landing for customs airport; and (b) at the time of entry into the country for land customsstation.
AMENDMENT OF IMPORT MANIFEST
It is proposed that a person in-charge of a conveyance may amend the import manifest / cargo declaration before the berthing of the vessel or the crossover of the vehicle without any permission by the Customs authorities subject to the rules notified by the Board.
RE-EXPORT OF BANNED / RESTRICTED GOODS
To harmonize the provisions of Customs Act, 1969 and the Import Policy Order, it has been proposed that in case any goods, banned or restricted through a notification issued by the Federal Government are not cleared or auctioned within 60 days of their arrival, the Collector of Customs may direct the importer / shipping line to re-export the same out of Pakistan.
AMENDMENT OF GOODS DECLARATION
Presently, an amendment / rectification of a bona fide error may be made in goods declaration in respect of quantity or value of any goods at any time before the warehousing of the goods is completed and not subsequently. The said condition has now been proposed to be removed and such rectification in goods declaration may be made on directions of the Collector of Customs for reasons to be recorded in writing.
EXTENSION IN PERIOD OF WAREHOUSED GOODS
Goods may remain in the warehouse for a period of six months following the date of their admission. The said period can presently be extended up to one month (by the Collector of Customs subject to prescribed conditions), however, it is now proposed to increase said period of extension up to six months.
CORRECTION CERTIFICATE FOR CLERICAL ERRORS
In respect of any clerical or typographical error in computerized goods declaration, it is proposed that the importer / exporter may apply to the concerned officer for issuance of correction / corrigendum certificate that may be granted upon satisfaction of the officer.
PENALTIES
Below amendments have been proposed in penalties for the stated offences:
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Offence Penalty
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Contravention in the Existing penalty: not
requirement of placement of exceeding Rs 50,000
invoice and packing list inside
the import container or Proposed penalty:
consignment. 1st time: Rs 100,000 2nd time:
Rs 500,000 3rd time: Rs
1,000,000 4th time:
confiscation of goods &
blockage of WeBOC user ID
for 1 year
If any person fails to attach or Proposed penalty:
electronically upload 1st time: Rs 50,000 2nd time: Rs
mandatory documents 100,000 3rd time: Rs 150,000
required under sections 79 or 4th time: Rs 200,000 5th time &
131 of the Customs Act, 1969. onwards: Rs 250,000
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Moreover, penalty of Rs 100,000 applicable for not filing the goods declaration within the prescribed period of 10 days is proposed to be omitted.
CONFISCATION OF CONVEYANCE
In cases where a conveyance used in removal of any goods liable to confiscation has been seized for the third time, it is proposed that no option to pay fine in lieu of the confiscation shall be given in order to discourage such practices.
VALIDITY OF ADVANCE RULING
The validity of an advance ruling being binding on the Customs has been proposed to be increased from 1 year to 3 years in accordance with the international benchmarks.
GOODS THROUGH GREEN CHANNEL
It has been proposed that the goods declaration through green channel may be examined by the Customs authority with prior approval of the Collector of Customs.
DOCUMENTS FOR IMPORTED GOODS
Through the Finance Bill, certain mandatory documents for assessment of goods as may be prescribed by the Board are proposed to be filed by an importer along with the goods declaration.
REDUCTION / CONCESSIONS IN CUSTOMS DUTY
Customs Duty and Additional Customs Duty leviable on the import of following categories of items / sectors is proposed to be reduced as follows;
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Description Proposed
Rate
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Specified machinery, equipment 0%
and other goods for textile sector, subject to condition that
imported by textile industrial units registered with Ministry of
Textile Industrial & not locally
manufactured.Glucose precursors, Yeast, Toxin 5%
Binders, Energy supplements for cows transition period, Acidifiers,
Electrolytes for calves, Biotin, Buffers, Copper boluses and Non-
protein nitrogen sources-vaccines for veterinary medicines
and feed additives imported by dairy sector.
Specified goods for tourism 50% of
projects, subject to certification prevailing rate
by the concerned Secretary of of Custom
Provincial Tourism Department Duty
or equivalent Authorized Officer
of the Federal Government as
bona fide requirement of the
approved projects with objective
to promote tourism industry.
Medicaments used as input by 3%
poultry industry.
PVC Emulsion grade imported by 0%
Sales Tax registered
manufacturers of artificial leather subject to quota determination by
Input Output Co-efficient
Organization (IOCO) and also subject to lab test
Release paper imported by Sales 3%
Tax registered manufacturers of
artificial leather subject to quota
determination by IOCO
Specified inputs, if imported by 0%
manufacturers of Ready to Use
Supplementary Foods (RUSF)
and Ready-To-Use Therapeutic
Food (RUTF), duly authorized by
United Nations World Food
Program (UNWFP) and subject
to annual quota determination by
IOCO.Imiglucerase, Alghlucosidase 0%
Alfa, Laronidase, Agalsidase,
Protactant Alfta and Caffeine
Citrate-lifesaving drugs
Grain storage hermetic bags and 0%
cocoons subject to certification by
Ministry of National Food
Security and Research
(MoNFS&R) that imported goods
are bona fide requirement for use in the Agriculture Sector. The
authorized officer of the Ministry shall furnish all relevant
information online to Pakistan Customs Computerized System
against specific user ID and Password obtained under section
155D of the Customs Act, 1969. Inputs relating to footwear 5%
industry, if imported by Sales Tax registered Shoe manufacturers
subject to quota determination by IOCO.
Raw material i.e. Film of ethylene 15%
for manufacturer of aseptic plastic packaging is proposed to
15% from 16%, if imported by a Sales Tax registered
manufacturer of aseptic plastic packages meant for liquid foods,
subject to quota determination by IOCO.
Ednozym Pectofruit, Endozym 3%
Pectofruit PR, Endozym Alphamyl MG, Silite Normal
Speed, Silite High Speed and Spindasol FJ under if imported
by Sales Tax registered manufacturers of Food
Processing Industry, subject to quota determination by IOCO.
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• Following exemptions are proposed to incentivize the pharmaceutical sector:
Exemption of Customs Duty and Additional Customs Duty on more than 350 Active Pharmaceutical Ingredients, subject to the conditions specified in Part II of the Fifth Schedule of the Customs Act.
Concessionary rate of 5% on import of plant, machinery and equipment, if imported by registered pharmaceutical manufacturers for their own use, subject to No Objection Certificate (NOC) from Ministry of Health.
Exemption of customs duty on imported finished auto-disable syringes is proposed to be reduced to 10%. Furthermore, exemption of customs duty on specified raw materials such as Polypropylene, Propylene copolymers, Plasticised, Epoxide resins, Biaxially Oriented Polypropylene (BOPP) film, laminated, etc. imported by registered manufacturers of Auto- Disable Syringes with quota determination by IOCO and subject to NOC from Ministry of National Health Services Regulation and Coordination is proposed to be reduced to 0%.
• Rationalization of tariff structure for auto sector
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Description Rate
Import of 4 Concessional rate of 10%
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wheeler Electric is proposed to be allowed
Vehicles (CBU) till June 30, 2022 which is proposed to increase
to 25% from July 1, 2022 to June 30, 2026.
Import of first 100 Concessional rate of 50%
4 wheeler Electric of the above rates is
Vehicles (CBU) proposed till June 30,
per company 2026 subject to
approval/certification by Engineering
Development Board (EDB) which shall also
monitor compliance with EV Policy 2020.
CKD and Spare Concessional rate of 1%
parts of Electric is proposed till June 30,
Vehicles 4- 2026 subject to
wheelers: certification and quota
determination by EDB.
i) EV Specific Concessional rate of 1%
components for is proposed till June 30,
assembly/man 2026 subject to certification and
ufacture in any quota determination by EDB
kit-form (CKD)
ii) Components for assembly/
manufacture in any kit-form (CKD)
-Non- Concessional rate of 25%
Localised is proposed till June 30, 2026
-Localised Parts Concessional rate of 25% is proposed till June 30, 2026
Subject to fulfillment of conditions mentioned at
Para-2 of the SRO 656 (1) /2006 dated 22.06.2006.
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EXEMPTION OF CUSTOMS DUTY, ADDITIONAL CUSTOMS DUTY AND REGULATORY DUTY ON IMPORT OF COVID 19 RELATED ITEMS
Exemption from customs duty, regulatory duty and additional customs duty allowed on import of COVID-19 related items vide SRO 1251(I)/2020 dated November 23, 2020 till June 30, 2021 is proposed to be extended for a further period of six months.
OTHER ANNOUNCEMENTS
Following announcements have been made in the Salient Features issued with the Budget documents, for which notifications are expected to be issued.
Reduction in additional customs duty
Additional Customs Duty currently applicable at 7% on import of goods, subject to customs duty at rate of 20%, is proposed to be reduced to 6%.
Increase in Regulatory Duty
With the objective to support local industry and encourage import substitution, increase in RD rates are proposed as under:
• Mobile Phones
• Non-essential / luxury items
Reduction in Regulatory Duty
• Cocoa paste, butter and powder being industrial input goods.
• Goods imported by the textile sector.
• Flat rolled products of Hot Rolled Coil (HRC) and stainless steel.
• Export of molasses, skin and hides to boost positive image of the country with our important trading partners across the world.
Other relief and rationalization measures
• Enhance the value of unsolicited gifts through post or courier from Rs 20,000 to 30,000.
• Raw materials for Paint Industry.
• Inputs for Electronics Manufacturing Industry.
• Raw materials / inputs of furniture, coating, boiler manufacturing industry, bobbins and cops manufacturing industry etc.
• Import of flat rolled products of Hot Rolled Coil (HRC) and stainless steel.
• Raw materials and intermediary goods and point of sale machines.
• Uncoated paper and paperboard used in Printing and Graphic Arts Industry.
EXPORT FACILITATION SCHEME
It is proposed to integrate all existing export schemes used by the exporters into a uniform scheme, which will phase out all existing schemes in next two years’ time. Notification is expected to be issued by FBR. It is also proposed to allow Bond to Bond transfer of goods through WeBOC without prior approval of the Collector. Notification is expected to be issued by FBR.
Copyright Business Recorder, 2021
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