Income Tax
1. Amendment in definition of Consumer Goods - S. 2(22A)
Durable goods have been proposed to be excluded from definition of Consumer goods vide FB 2017.
2. Continuation of Super Tax (S. 4B)
A super tax was levied, for tax year 2016, vide Finance Act 2015 ("FA-15") for every banking company and every other company whose taxable profits exceeded Rs 500 million. The super tax was charged in the backdrop of Military operation 'Zarb- e-Azb' for rehabilitation of Temporarily Displaced Persons ("TDPs"). The tax was levied at 4% for Banking Companies and at 2% for others. The tax was continued for tax year 2017 also.
Finance Bill 2017 ("FB-17") proposes to further continue the super tax for tax year 2018. The matter is sub judice.
3. Undistributed Reserves (S.5A)
It has been proposed that tax at 10% shall be charged on every public company other than a scheduled bank or a modaraba, that derives profit for a tax year but does not distribute at least 40% of its after tax profits within six months of the end of the tax year through cash or bonus shares.
4. Abolition of Fixed Tax Regime for Builders and Developers (S. 7C and 7D)
FA-16 introduced a separate tax slab for builders and Developers at the following rates, which was a full and final discharge of their tax liability:
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Proposed Tax Rates for Builders
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(A) For Karachi, Lahore (B) For Hyderabad, Sukkur, Multan, (C) For Urban Areas
& Islamabad Faisalabad, Rawalpindi, not specified in A&B
Gujranwala, Sahiwal, Peshawar,
Mardan, Abbotabad, Quetta
Commercial Buildings Rs 210/Sq. ft Commercial Buildings Commercial Buildings Rs 210/Sq. ft
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Residential Buildings & Offices Residential Buildings Residential Buildings
& Offices & Offices
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Area/Sq. ft Rate/Sq. ft Area/Sq. ft Rate/Sq. ft Area/Sq. ft Rate/Sq. ft
Up to 750 Rs.20 Up to 750 Rs. 15 Up to 750 Rs. 10
751 to 1500 Rs.40 751 to 1500 Rs. 35 751 to 1500 Rs. 25
1501 & More Rs.70 1501 & More Rs. 55 1501 & More Rs. 35
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Proposed Tax Rates for Land Developers
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(A) For Karachi, Lahore (B) For Hyderabad, Sukkur, Multan, (C) For Urban Areas
& Islamabad Faisalabad, Rawalpindi, Gujranwala, Sahiwal, not specified in A&B
Peshawar, Mardan, Abbotabad, Quetta
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Commercial Plots Rs. 210/Sq. yd Commercial Plots Rs. 210/Sq. yd Commercial Plots Rs. 210/Sq. yd
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Residential Plots Residential Plots Residential Plots
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Area/Sq. yd Rate/Sq. yd Area/Sq.yd Rate/Sq. yd Area/Sq. yd Rate/Sq. yd
Up to 120 Rs.20 Up to 120 Rs. 15 Up to 120 Rs. 10
121 to 200 Rs.40 121 to 200 Rs. 35 121 to 200 Rs. 25
201 & More Rs.70 201 & More Rs. 55 201 & More Rs. 35
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It has been proposed that, from TY 2018 onwards, builders and Developers may be taxed under normal tax regime instead of fixed tax regime introduced vide FA 2016.
The proposed amendment may not be applied on projects undertaken for development and sale of residential, commercial or other plots initiated and approved.
a) during tax year 2017 only;
b) for which payment of prescribed taxes has been made by the developer/builder during tax year 2017; and
c) the Chief Commissioner has issued online schedule of advance tax installments to be paid by the developer.
We believe that the scheme of FTR should have been continued for another for consistency.
5. Limit of interest free loans from Employer exceeded - S. 13(7)
Currently, for interest free loans in form employer to employee in excess of Rs. 500,000, profit at benchmark rate of 10% is included in the salary income of employee. The limit of Rs. 500,000 is proposed to be increased to Rs. 1 million vide FB 2017.
6. Limit of sales promotion expense expanded - S. 21 (o)
Currently, expenses on account of sales promotion or advertisement are allowed as deductible expenses upto 5% of turnover of a pharmaceutical company. This cap has been proposed to be increased upto 10% vide FB 2017.
7. Depreciation on Jointly owned assets under Musharika - S. 22(15)
FB 17 has proposed an amendment, whereby, an asset jointly owned by a tax payer and an Islamic Financial Institution ("IFI") licensed by the State Bank of Pakistan or Securities and Exchange Commission of Pakistan, as the case may be, pursuant to an arrangement of Musharika financing or Diminishing Musharika Financing or Ijara, shall be treated to be owned by the taxpayer.
This has the effect that the whole asset shall be treated to be owned by the taxpayer for the purpose of claiming depreciation. This amendment has been proposed to neutralize tax advantage commercial banks used to have over IFIs.
8. Deductible Allowance for Education Expense - S. 64AB renumbered as 60D
FA 2016 introduced a tax credit for educational expenses incurred by an individual for his children may be allowed provided the person's taxable income does not exceed Rupees one million. The limit of tax credit was actual payment, 25% of taxable income or Rs. 60,000 per children, whichever is lower.
The above limit of Rs. 1,000,000/- has been proposed to be increased to Rs. 1,500,000/- vide FB 2017.
9. Tax Credit on Health Insurance - S. 62A
FA-16 introduced tax credit for premium paid on health Insurance policy. The tax credit was set to be lower of actual payment of premium, 5% of Taxable income or Rs. 100,000. This limit of Rs. 100,000 has been proposed to be increased to Rs. 150,000.
10. Tax Credit for Purchases from Registered Person - 65A
FA 2009 inserted section 65A, wherein, every manufacturer registered under Sales Tax Act, 1990 ("STA"), is entitled to a tax credit of 2.5% of tax payable in a tax year if 90 % or more of his sales are made to persons registered under STA during the said tax year.
FA-16 extended the above tax credit to 3% from 2.5% of tax payable and allowed additional tax credit of 0.5% to the said registered manufacturer if 90% or more of his purchases are made from persons registered under STA during the said tax year.
FB 2017 proposes to omit the above tax credit. This will credit discouragement to buy goods from Sales Tax Registered Persons.
11. Tax Credit for enlistment - 65C
Section 65C was first inserted vide FA 2010 and a tax credit of 5% tax payable was allowed for companies which enlist in a registered stock exchange in Pakistan during subject tax year. Later, vide FA 2011 and FA 2015, the tax credit was increased to 15% and 20% respectively. The said credit was allowed for only one year, ie the year in which the company is enlisted.
FA 16 extended the above credit of 20% for two years instead of only one year. Now, FB 2017 proposes to further extend the benefit for following three tax year in addition to tax year of enlistment. However, the tax credit for the last two years will be allowed only upto 10%.
12. Dividend from Non-Resident Company -S. 94(3)
Section 94(3) of ITO provides that dividend from a non-resident company to a resident person shall be taxable under the head "Income from business" or "Income from other sources" FB 17 proposes to omit subsection (3) of section 94 of ITO. This will have the effect that dividend, whether received from resident or non-resident company, will be taxable under section 5 of ITO, ie Tax on Dividends.
13. Profits and Gains of Sui Gas Field - S. 100(2)
FB 17 has proposed to amend section 100(2) of ITO to bring the profit and gains derived from sui gas field within the purview of Fifth Schedule, ie Rules for the computation of the profits and gains from the exploration and extraction Mineral Deposits. Currently, as per subsection (2) section 100 of ITO, production of natural gas has been excluded from the purview of Fifth Schedule.
14. Tax Credit for Non-Profit organizations
- S. 100C
Currently, to avail tax credit of 100%, a non-profit organization is required to fulfill following conditions, namely:
a) return has been filed;
b) tax required to be deducted or collected has been deducted or collected and paid; and
c) withholding tax statements for the immediately preceding tax year have been filed.
FB 2017 proposes to add another condition, ie the administrative and management expenditure does not exceed 15% of the total receipts.
FB 17 also proposes to tax surplus funds at the rate of 10%.
15. Minimum Tax Rate - S. 113
Section 113 was inserted by FA 2009. It was earlier omitted by FA 2008. As per section 113, Minimum tax @ 1% of turnover (turnover tax) is charged in case of a company and in case of an Individual or AOP (with specified turnover limit of Rs.10 million). FB 2017 proposes to increase turnover tax rate from 1% to 1.25% to encourage proper declaration of Revenues and expenses, so that the taxpayer falls under normal tax liability instead of minimum tax liability.
16. Requirement of return filing by widows, orphans and disabled - S. 115
Currently, Section 114 of ITO requires following persons, among others, to file return of income who:
i. owns immoveable property with a land area of five hundred square yards or more located in a rating area;
ii. owns a flat having covered area of two thousand square feet or more located in a rating area
iii. owns a motor vehicle having engine capacity above1000CC.
FB 2017 proposes to relieve widows, orphans and disabled from requirement of filing return of income, who are solely required to file return of income due to above three reasons.
17. Extension in time for furnishing return of income - S. 119
Section 119 of ITO empowers Commissioner to grant extension in time for filing of return or other documents. FB 2017 proposes to empower Chief Commissioner also to grant such extension if the same is not granted by the Commissioner.
18. Power of Best Judgment Assessment - S. 121
As per section 121 of ITO, the Commissioner is empowered to make a best Judgment Assessment on the basis of available information in certain circumstances. FB 2017 proposes to widen the power of Commissioner of Best Judgment Assessment in the event of failure by the taxpayer to comply with the notices of Commissioner to file return of Income.
19. Provisional Assessment - S. 122C
As per section 121 of ITO, the Commissioner is empowered to make a provisional Assessment on the basis of available information in the event of failure by the taxpayer to comply with the notices of Commissioner to file return of Income.
FB 2017 has proposed to omit the section as the provisions of this section are proposed to be embedded in section 121 of ITO as discussed in previous paragraphs.
Another impact of this omission will be eligibility of taxpayer to file an appeal as currently no appeal may be filed against an order under section 122C.
20. Advance Tax - S. 147
Under section 147, an individual or AOP having latest assessed income of Rs. 500,000 or more and every company AOP is required to pay advance tax on quarterly basis. FB 2017 proposes to enhance this limit of Rs. 500,000 to Rs. 1,000,000/-.
21. Import of Fertilizer - S. 148
Currently, as per section 148 of ITO, income tax deducted at import stage is final tax except following:
a) raw material, plant, machinery, equipment and parts by an industrial undertaking for its own use;
b) fertilizer by manufacturer of fertilizer;
c) motor vehicles in CBU condition by manufacturer of motor vehicles.
d) large import houses (with certain conditions); and
e) a foreign produced film imported for the purposes of screening and viewing
FB 2017 proposes to omit clause b above. This has the effect that tax deducted on import of fertilizer shall be a final tax.
22. Option to revise statement of withholding tax-S. 165
FB 2017 proposes to amend section 165 of ITO and to provide an option to the filers of the withholding tax statements to revise the statement within 60 days of filing of the same in the event of any error or omission.
23. Collection of Tax by Stock Exchange - S. 233A
Currently, advance tax is collected by PSX on sale and purchase of share in lieu of Commission by its members at the rates of 0.02% of the values of sales or purchase, as the case may be, which is adjustable. FB 2017 proposes to make this collection of advance tax as a final tax liability.
24. Advance Tax on Electricity consumption by a CNG station - S. 234A and S. 235
Currently, advance tax collected on consumption of electricity by industrial or commercial user is adjustable. FB 2017 that advance tax on electricity consumption by CNG station may be made final tax liability of income of CNG stations in addition to 4% final advance tax liability on gas consumption.
FB 2017 also proposes to increase the rate of advance tax from 4% to 6% for non-filers.
25. Advance Tax on Electricity consumption by a CNG station - S. 234A and S. 235
Currently, advance tax collected on consumption of electricity by a non-corporate industrial or commercial consumer is adjustable over and above the billed amount of Rs. 30,000. FB 2017 proposes to enhance this limit up to billed amount of Rs. 360,0, ie tax collected on the billed amount of less than Rs. 360,000 shall be minimum tax liability and no adjustment of such tax collected shall be available.
26. Advance Tax on Sale or Transfer of Immovable property - S. 236C
Currently, advance tax collected at 1% (2% for filers) of the gross value on sale or transfer of immovable property is adjustable. FB 2017 proposes that in the event of purchase and sale of an immovable property in the same tax year, the tax so collected shall be minimum tax.
27. Advance Tax on Tobacco - S. 236X
FB 2017 proposes to insert a new section, whereby, Pakistan Tobacco Board, at the time of collecting cess on tobacco, directly or indirectly, shall collect advance tax at the rate of five percent of the purchase value of tobacco from every person purchasing tobacco including manufacturers of cigarettes. The tax so collected will be adjustable.
28. Tax Rates on dividend - Sch. I, Div. Ill, Part I
The current chargeability and proposed rates of tax on dividends is tabulated below:
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Recipient of Divident TY 2017 Proposed TY 2018
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Shareholders of a:
- Power project privatized by WAPDA 7.5% 7.5%
- Company setup for power generation
- Company supplying coal exclusively to
power generation projects
Dividend received from a mutual fund 25% 25%
received by a company
Received by Individual or AOP 10% (15% for 12.5% (15% for
Non-Filer) Non-filer)
Dividend received from a stock fund
if dividend receipts are less than 12.5% 12.5%
capital gains 10% (15% 10% ( 15%
if dividend receipts are equal to for Non-Filer) for Non-Filer)
or more than capital gains
Dividend from a collective
investment scheme, REIT scheme etc. 25% 25%
received by a company
Received by Individual or AOP 10% 10%
Other corporate and non-corporate shareholders:
Filer 12.5% 15%
Non-Filer 20% 20%
(7.5% (7.5%
adjustab adjustab
le in case le in case
he files he files
return of return of
income) income)
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29. Tax Rates on Profit on Debt - Sch. I, Div. IMA, Parti
The current chargeability and proposed rates of tax on profit on debt is tabulated below:
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Current
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Profit on Debt Rate of Tax
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Where profit on debt does not exceed 10%
Rs.25,000,000
Where profit on debt exceeds Rs.2,500,000 + 12.5% of
Rs.25,000,000 but does not exceed the amount exceeding
Rs.50,000,000 Rs 25,000,000
Where profit on debt exceeds Rs. 5,625,000 + 15%
Rs.50,000,000 of the amount exceeding
Rs.50,000,000"
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Proposed
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Profit on Debt Rate of Tax
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Where profit on debt does not exceed 10%
Rs.5,000,000
Where profit on debt exceeds 12.5%
Rs.5,000,000 but does not exceed
Rs.25,000,000
Where profit on debt exceeds 15%
Rs.25,000,000
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30. Advance Tax Rates on income from property - Sch. I, Div. V, Part III
Currently, advance tax is charged at 15% of gross amount of rent in case the owner is a company. FB 2017 proposes to increase this rate to 17.5% in case the company is a non-filer.
31. Advance Tax Rates on Prizes and Winnings - Sch. I, Div. VI, Part III
Currently, advance tax is collected at 15% of gross amount of prizes and winnings in case of filer and 20% in case of non-filer. FB 2017 proposes to increase this rate to 25% in case of non-filer.
32. Advance Tax Rates on Petroleum Products- Sch. I, Div. VIA, Part III
Currently, advance tax is collected from the amount of commission at 12% for filers and at 15% FOR non-filers. FB 2017 proposes to increase the rate for non-filers to 17.5%.
33. Advance Tax Rates on tele ph one and internet user - Sch. I, Div. V, Part IV
Currently, in case of subscriber of internet, mobile telephone and prepaid internet of telephone or telephone card, advance tax at 14% is collected. This rate is proposed to be reduced to 12.5% vide FB 2017.
34. Advance Tax on Motor Vehicles - Sch. I, Div. VII, Part IV
FB 2017 proposes to reduce advance tax amounts from Rs. 10,000; Rs. 20,000 and Rs. 30,000 to Rs. 7,500; Rs. 15,000 and 25,000 for categories up to 850cc; 1000cc and 1300cc, respectively for filers.
35. Advance Tax on Sale by Auction - Sch. I, Div. VIII, Part IV
FB 2017 proposes to introduce advance tax on sales by auction at 15% for non-filers. Currently this rate is 10% irrespective of status of filer or non-filer.
36. Advance Tax on Sale to Retailers - Sch. I, Div. XV, Part IV
Currently, advance tax on sales to retailers by distributors and/or wholesalers is collected at 0.5% of the gross amount of sales. FB 2017 proposes following rates:
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Rate of Tax
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Category of sale Filer Non-Filer
Electronics 1% 1%
Others 0.5%
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37. Advance Tax on Insurance Premium - Sch. I, Div. XXV, Part IV
Currently advance tax is collected from non-filers on insurance premium as under:
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Type of Premium Current rate
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General Insurance Premium 4%
Life insurance premium if exceeding
Rs. 0.2 million per annum 1%
Others 0%
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FB 2017 proposes to extend the above limit of Rs.0. 2 million to Rs. 0.3 million.
38. Advance Tax on Payment to Non-Residents-S. 152
The current and proposed rates of advance taxes on payments to Non-Residents are as under:
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Description Current Proposed
Rate Rate
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Royalty/ Fee for Technical Services 7% (For Filer) 7% (For Filer)
12% (For Non-Filer) 13% (For
Non-Filer)
Insurance Premium or 5% 5%
Reinsurance Premium Other Services 20% 20%
Non Resident/ Media Person 10% 10%
Permanent Establishment of 4% (For 4% (For
Company) Company)
Non-Resident in Pakistan 6% (For 7% (For
Company, If Company, If
non-filer) nonfiler)
- Sales of Goods 4.5% (For 4.5% (For
other case, If other
filer) case, If filer)
6.5% (For 7.75% (For
other case, If other case,
non-filer) If non-filer)
Payment to Permanent 8% (For 8% (For
Establishment Company) Company)
12% (For 14% (For
Company, If Company, If
non-filer) non-filer)
- Services 10% (For 10% (For other
other case) case)
15% (For 17.5% (For
other case, If other case,
non-filer) If non-filer)
Payment to Permanent 7% (For Filer) 7% (For Filer)
Establishment - Execution of Contracts 12% (For non-filer) 13% (For non-filer)
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39. Advance Tax on Payments to residents- S. 153
The current and proposed rates of advance taxes on payments are as under:
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Description Current Proposed
Rate Rate
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Sale of Rice, Cotton seed or edible o1.5% 1.5%
Supplies made by the distributors of 3% (for Company) 2% (for
Company)
moving consumer goods 3.5% (Other than 2.5% (Other
Company) than
Company)
In case of sale of goods 4% (For Company, 4% (For
if Filer) Company, if
6%(For Company, Filer)
if non-filer) 7% (For
if non-Filer)
In case of transport services 2% 2%
In case of rendering of or providing 8% (For 8% (For
Company, if Filer) Company, if
Filer)
services 12% (For 14.5%(For
Company, Company,
if Non-Filer) if Non-Filer)
In other Case 10% For Filer 10% (For
Filer)
15% (For 17.5% (For
Non-Filer) Non-Filer)
1.5% (For Filer) 1.5% (For
Filer)
12% (For 12% (For
Company, If Company,
Persons making payments to electronic Non-Filer) If Non-Filer)
15% (Other Than 15% (Other
and print media for advertising A Company, If Than A
Non-Filer Company,
If Non-Filer
Payment for execution of contract 10% (For 10% (For
Sportsperson) Sportsperson)
7% (For 7% (For
Company, Company,
if Filer) if Filer)
10% (For 12% (For
Company, if Company,
Non-Filer if Non-Filer)
In Other Cases 7.5% (If Filer) 7.5% (If Filer)
10% (If Non-Filer) 12.5% (If Non-Filer)
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40. Exemptions under Second Schedule to ITO
Following exemptions have been proposed in Second Schedule to ITO:
-Any income derived by a political party registered under the Political Parties Order, 2002 with the Election Commission of Pakistan.
-Profit and gains derived by a start-up for the tax year in which the startup is certified by the Pakistan Software Export Board and the following two tax years. A definition of 'startup has been proposed to be introduced vide FB 2017. Following are the major prerequisites of startup:
a. Registered in Pakistan after July 01, 2012;
b. Engaged or intends to offer technology driven products or services to any sector of the economy;
c. Registered with or certified with Pakistan Software Export Board; and
d. Turnover must be less than Rs. 100 million in each of last five tax years
FB 2017 also proposes exemption from section 113 and 153 of ITO. However, the exemption from section 113 will be of no use without exemption from alternate corporate tax.
-Quota of raw material has been proposed to be increased from 110% of previous years consumption to 125%, with respect to exemption from Income Tax on Import under section 148.
-Under the list of services exempted from section 153(b), the "car rental services" and "services rendered by Pakistan Stock Exchange Limited" has been proposed to be added and also, the exemption has been proposed to be extended for Tax Year 2018.
-Cash Withdrawals from branchless banking (easy paisa, omni etc.) have been proposed to be exempted from section 231A, ie deduction of 0.3% (0.6% for non-filers) on cash withdrawals if exceeds Rs. 50,000.
1. Scope of Sales Tax Act Widened
Proposed Amendment widened the scope of Sales Tax in FATA and PATA. The purpose of this proposed Amendment is to check illicit movement of supplies from tax exempted areas. However, goods imported and used in FATA and PATA will remain exempt from levy of Sales Tax.
2. Powers of Federal Government devolved into FBR
The powers of Federal Government to levy Sales Tax at varied rates as enunciated in the following sections of Sales Tax Act, 1990 ("STA") have been devolved to Board ("FBR") with the approval of Minister Incharge ie Finance Minister:
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Sections Description
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3 (2b), 3 (3A), 3 (5) Scope of Tax
4 (c) Zero Rated
7 (3), 7 (4), 7A (1) Determination of Tax Liability
8 (1b) Tax Credit not allowed
13(2a) Exemption
60 Powers to deliver certain goods without
payment of tax
65 Exemption of tax not levied or short
levied as a result of general practice
71 Special procedure
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In the light of recent apex court judgment a protracted procedure is required to be followed if such notification is issued by the Federal Government. To short circuit the lengthy process this power is proposed to be delegated to FBR but with the approval of Finance Minister. However, validation of all previous notifications issued by Federal Government has been given in the proposed amendments.
Similar amendment has also been proposed for ITO.
3. SRO 608 LAHORE HIGH COURT/2014
Definition of Tier-1 Retailer:
Concept of Tier-1 Retailer has been embedded in the law as follows:
a) a retailer operating as a unit of a national or international chain of stores;
b) a retailer operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks;
c) a retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds rupees six hundred thousand; and
d) a wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on wholesale basis to the retailers as well as on retail basis to the general body of the consumers;"
Previously it was part of SRO 608 of 2014; which was declared unconstitutional by Lahore High Court, insertion of this definition may result in loss of previous demands raised by FBR and furthermore it will trigger further litigation for refund of Sales Tax paid by registered persons if they have not recovered Sales Tax from buyers.
A proviso to section 3(9A) has also been added whereby an option has been extended of payment of 2% Sales Tax without any input adjustment. This option was also extended in Special Regime vide SRO 488, which is also sub judiced.
4. Scope of Further Tax extended to Zero-rated items
An amendment has been proposed whereby scope of further tax at the rate of 2% has been extended to Zero Rating Regime. Consequently, Section 3(6) and Section 4 are also proposed to be amended.
5. Rate of Local Supplies under SRO 1125 increase
Rate of local Sales Tax of 5 export oriented sectors has been increased from 5% to 6%.
6. Tenure of SROs not rescinded extended
Sunset clause was introduced in Finance Act, 2016; whereby all SROs issued after July 01, 2015; stand rescinded maximum by the close of expiration of financial year. Through proposed amendment life of all such un-rescinded SROs (including those issued on or after July 01, 2016) has been enhanced till June 30, 3018. I ^AS
Almost 77 SROs including 3 SROs issued on or after July 01, 2016 will get an extended life.
This is also applied on ITO and FEA.
7. Addition of Hierarchy
Two additional categories District Taxation Officer and Assistant Director Audit is proposed to strengthen the enforcement of Sales Tax functions.
8. Penalties on Cigarette Sales
Consequent to decision to monitor manufacture and import of cigarette, electronically (trace and track) befitting penalties both of imprisonment and fines have been proposed. In future more sectors will be monitored through trace and track mechanism.
9. Automatic Stay of Recovery Demand
In line with the amendment made in ITO last year, a replicating amendment has been proposed in STA whereby in the event of pending decision of appeal under section 45B; on payment 25% of demand; no recovery shall be made.
10. Electronic Servicing of notice added
An amendment has been proposed to include service through email and/or e-folder of registered person is legitimise in section 56 of STA.
11. Validation of Notifications and orders issued before commitment of Finance Act, 2017
To avert any litigation consequent to paradigm shift of powers to issue notification retrospective application may result in further complication.
12. Changes in 3rd Schedule
Following two basic amendments have been proposed:
1. Substitution of PCT of Ice Cream; and
2. Deletion of Serial 32 ie Fertilizer
13. Sixth Schedule
PCTs have been changed consequent to application of new PCT was systemized. Details will be given in our commentary on Finance Act, 2017.
14. Amendment in Eight Schedule
Following items have been added at the given amount or rate:
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S.No Items Rate/Amount
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1. DAP Rs. 100 per 50 kg bag
2. NP (22-20) Rs. 168 per 50 kg bag
3. NP (18-18) Rs. 165 per 50 kg bag
4. NPK-I Rs. 251 per 50 kg bag
5. NPK-II Rs. 222 per 50 kg bag
6. NPK-III Rs. 341 per 50 kg bag
7. SSP Rs. 31 per 50 kg bag
8. CAN Rs. 98 per 50 kg bag
9. Natural gas 10%
10. Phosphoric acid 5%
Following machinery for poultry sector
(i)Machinery for preparing feeding stuff 7%
(ii)Poultry incubators and brooders 7%
(iii)Insulated sandwich panels 7%
(iv) Poultry sheds 7%
(v)Evaporative air cooling system 7%
(vi) Evaporative cooling pad 7%
11. Multimedia projectors 10%
12. Locally produced coal Rs.425 per metric
tonne or 17% ad valorem,
whichever is higher
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15. Amendment in 9th Schedule
Sales Tax on first two categories has been proposed at a uniform rate of Rs. 650 per mobile in the place of Rs. 300 and Rs. 1,000 Sales Tax of low and medium categories respectively. However, for category 3, Sales Tax remain at Rs. 1500/-.
16. Withdrawal of Sales Tax Withholding
The FB 2017 proposes to withdraw sales tax withholding provision on supply of goods between registered persons. However, advertisement services and supplies to Government are not excluded from such withholding provisions.
17. Rate of Sales Tax on Iron and Steel
Sales Tax rate of per unit electricity consumed is proposed to increase from Rs. 9 per unit to Rs. 10.50 per unit. In actual such sales tax charge per unit should be Rs. 14 per unit if compare to normal sales tax regime.
18. Sales Tax on Import and Supply of Hybrid Electrical Vehicle
FB 2017 proposes amendment in Sales Tax Special Procedure Rules, 2007; to cater reduction of sales tax by 50% on Hybrid Electrical Vehicle upto 1800CC and 25% on Hybrid Electrical Vehicle from 1801CC to 2500CC.
1. Increase in rates of excise duty on Cigarette.
Presently, FED is charged on locally produced cigarettes at the rates given in 1st Schedule.
FB-17 proposes to increase the existing rates as under:
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Proposed
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SNo Description of Goods Heading/ Rate of
subheading Duty
Number
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1 Locally produced cigarettes if 24.02 3,740 per
their on-pack printed retail thousand
price exceeds four thousand cigarette
five hundred rupees per
thousand cigarettes
2 Locally produced cigarettes if 24.02 1,670 per
their on-pack printed retail price thousand
exceeds two thousand nine hundred cigarette
and twenty five rupees but does
not exceed four thousand
five hundred rupees per
thousand cigarettes
3 Locally produced cigarettes 24.02 800 per
if their on-pack printed retail thousand
price does not exceeds two thousand cigarette
nine hundred and twenty five
rupees per thousand cigarettes
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2. Increase in rates of excise duty on Cement.
Presently the rates of excise duty on cement are one rupee per kilogram.
The FB-17 proposes to increase the rates of excise duty on cement to one rupee and twenty five paisa per kilogram.
3. Levy of excise duty on Telecommunication services.
Currently excise duty at the rate of eighteen and half percent is chargeable on Telecommunication Services.
The FB-17 proposes to reduce the rates of excise duty on Telecommunication services to seventeen percent.
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