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Tax Handbook

2012

Tax Handbook 2012
An Information Guide

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Professional advice should be sought before acting on any amendment in the Finance Bill or on our comments. This commentary attempts to provide a general guideline and thus should not be considered as a conclusive and enforceable document. The applicable amendments in the laws after enactment are effective from July 1. we have also drafted a Tax Planning Guide appended to this handbook. Federal Excise Act. 2012 unless otherwise specified. Although best efforts have been made to ensure accuracy of the information in this handbook. Sales Tax Act.Tax Handbook 2012 Preface This handbook attempts to cater the needs of the various post budget queries forthcoming by our clients. We have attempted to apprise them with a comprehensive explanation of the implications and effect that this Finance Bill has brought about. any errors and omissions are regretted. No part of this handbook may be reproduced except with prior permission of Horwath Hussain Chaudhury & Co. 2012 www.crowehorwath. The handbook encompasses the amendments in the Income Tax Ordinance. We hope that this handbook enhances your perception of Budget 2012-13. Lahore June 02. Customs Act and Miscellaneous Laws. The commentary should be read in conjunction with the applicable sections of respective Ordinances. and is compiled for the exclusive use of its clients and employees. For better understanding and convenience. This handbook is the property of Horwath Hussain Chaudhury & Co.pk . Acts and Rules along with the text of the Finance Bill 2012.

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Tax Handbook 2012 Contents Chapter Page 1-4 General Budget ‘12-13 Highlights Commentary on the Finance Bill 2012 5-7 Income Tax Ordinance. 2005 Schedules First Notable Notifications 27-29 30 Customs Act. 1969 Notable Notifications 31-32 33-34 35-36 Miscellaneous Laws Tax Planning Guide 2012 Income Tax Sales Tax Capital Value Tax 37-47 48-49 50 . 2001 Schedules First Second Third Fourth Fifth Seventh Eighth 9-16 16-19 20-21 21 21 21 22 22 Sales Tax Act. 1990 Schedules Sixth Schedule Notable Notifications 23 23 24-26 Federal Excise Act.

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Tax Handbook

2012

Budget, 2012-2013
Budget, 2012-2013 Salient Features of the Budget 2012-2013
The salient features of the budget 2012-13 are as follows: The total outlay of budget 2012-13 is Rs. 3,203 billion (Rs. 3,110 billion: 2011) showing an increment of 3%. The resource availability during 2012-13 has been estimated at Rs. 2,719 billion (Rs. 2,171 billion: 2011) showing an increment of 25%. The net revenue receipts for 2012-13 have been estimated at Rs. 1,775 billion (Rs. 1,328 billion: 2011) indicating an increment of 34%. The provincial share in federal revenue receipts is estimated at Rs. 1,459 billion (Rs. 1,209 billion: 2011) during 2012-13 showing an increment of 21%. The net capital receipts for 2012-13 have been estimated at Rs. 478 billion (Rs. 525 billion: 2011) showing a decrease of 9%. The external receipts in 2012-13 are estimated at Rs. 387 billion (Rs. 226 billion: 2011) showing an increment of 71%. The overall expenditure during 2012-13 has been estimated at Rs. 3,203 billion (Rs. 3,110 billion: 2011) of which the current expenditure is Rs. 2,612 billion (Rs. 2,632 billion: 2011) and development expenditure is Rs. 591 billion (Rs. 478 billion: 2011). The share of current expenditure Rs. 2,612 billion (Rs. 2,632 billion: 2011) is 82%, (85% : 2011) of the total budgetary outlay for 2012-13. The expenditure on General Public Services is estimated at Rs. 1,877 billion, (Rs 1,898 billion: 2011) which is 72% (72% : 2011) of the current expenditures. The size of Public Sector Development Programme (PSDP) for 2012-13 is Rs. 873 billion (Rs 734 billion: 2011), while for other Development expenditures an amount of Rs. 154 billion (Rs. 122 billion: 2011) has been allocated. This shows an increment of 19% and 26%, respectively. The provinces have been allocated an amount of Rs. 513 billion (Rs. 430 billion: 2011) from Public Sector Development Programme (PSDP) showing an increment of 19%. An amount of Rs. 10 billion (Rs.10 billion: 2011) has been allocated to Earthquake Reconstruction and Rehabilitation Authority (ERRA) in the PSDP 2012-13.

01

Budget, 2012-2013

Comparative Budgetary Position 2012-2013 & 2011-2012 Receipts
2012-2013 (Rs. in Billion)
Tax Revenue (FBR) Non Tax Revenue Gross Revenue Receipts Less: Provincial Share in Taxes 2,503.58 730.33 3,233.91 (1,458.92) 1,774.99 477.78 386.87 79.55 483.81

2011-2012 (Rs. in Billion)
2,024.57 512.19 2,536.76 (1,208.62) 1,328.14 525.50 226.15 90.74 939.20

Net Federal Revenue Receipts (A) Net Capital Receipts (B) External Resources (C) Estimated Provincial Surplus (D) Bank Borrowings (E)

Total Resources (A+B+C+D+E)

3,203.00

3,109.73

02

in Billion) General Public Services Defence Affairs and Services Public Order and Safety Affairs Economic Affairs Environment Protection Housing and Community Amenities Health Affairs and Services Recreation.34 2.65 5.40 356.84 545.25 47. in Billion) 1. Culture and Religion Education Affairs and Services Social Protection 1.13 2.77 303.Tax Handbook 2012 Budget.00 76.60 1. 2012-2013 Expenditures 2012-2013 (Rs.74 1.37 45.109.898.876.76 3.21 30.94 2011-2012 (Rs.66 52.24 0.16 53.65 6.87 1.18 61.85 72.91 Current Expenditures (A) Development Expenditure (B) Federal Government Provincial Government 360.611.03 510.86 7.39 70.631.64 0.06 121.85 6.77 436.29 3203.00 03 .73 Other Development Expenditure (C) Total Expenditures (A+B+C) 154.

49% 0.24% 1.10% Revenue Receipts (Net) Capital Receipts (Net) External Resources Estimated Provincial Surplus Bank Borrowings Breakup of Expenditures 0. Loans and Grants to Province 04 .02% 1.67% 2. Culture & Religon Dev.Budget.24% 2.19% Defence Affairs and Services Housing and Community Amenities Education Affairs and Services Other Development Expenditures Public Order and Safety Affairs General Public Services Social Protection Economic Affairs Health Affairs and Services Development Expenditures (PSDP) Environment Protection Recreation. 2012-2013 Breakup of Receipts 14.92% 12.06% 0.08% 2.04% 11.03% 0.42% 15.82% 58.40% 4.60% 17.48% 55.20% 0.

2012 .Tax Handbook 2012 Commentary The Finance Bill.

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Exemption threshold for salary income and business income has been increased to Rs. Tax for passengers transport vehicles plying for hire has been increased from Rs. Commissioner (Appeals) is no more bound to dispose of an appeal within 4 month time limit. Initial Allowance on building reduced from 50% to 25%. Slabs of total income have been reduced and uniform and progressive rates for computing tax liability have been introduced for both individuals and AOPs. 2001 Finance Bill Highlights The Finance Bill.600cc) has been increased from Rs. The Bill seeks to make manufacturer a withholding agent in respect of supplies made to distributors. 5 per Kg of the laden weight.a.875 to Rs. 50. dealers and wholesalers.301cc to 1. Notional benefit on concessional loan by employers to employees to the extent of Rs.000. Intra group profit on debt and dividends shall be exempt from tax if group companies opt to be taxed under group taxation.000. 500.000. Traders and Exporters have been provided an alternative option to be taxed under Normal Tax Regime. Flat rate of default surcharge at 18% p. Tax on goods transport vehicles has been increased from Re. An alternative option for payment of tax at the rate of 40% of profits and gains net of royalty has been provided to Petroleum Exploration and Production Companies. 2012 seeks to define National Clearing Company Limited and assigns it the role of withholding agent. 100 per seat per annum to Rs. 500 per seat per annum. Appellate Tribunal empowered to grant stay against recovery of tax demand for 180 days. Commercial Importers. subject to certain conditions. Exemption. 05 .000 shall be exempt from tax. Tax on capital gains from short selling of immovable property has been imposed. 25.Tax Handbook 2012 Finance Bill Highlights Income Tax Ordinance. Tax credits have been extended to industrial undertakings as a relief to combat industrial crises. Exemption from applicability of capital gains tax extended. prescribed. 1 to Rs. Relief has been provided to both individual and AOP retailers by reducing rate of turnover tax applicable to them from 1% to 0. 25. has been provided on amount received from income payment plan out of accumulated balance of Pension Accounts. 400. Additional amount received on delayed refunds to be treated as 'Income from Other Sources'. Advance tax to be paid on registration of motor vehicles (1.5%.000 to Rs. Rates of tax on disposal of securities frozen for two years. Dividends received by banks from money market funds and income funds are to be taxed at the rate 25% in Tax Year 2013 and at the rate of 35% in Tax Year 2014 and onwards. Limits for determination of tax credit on investment in listed shares and life insurance have been relaxed. Tax free threshold of daily cash withdrawals from banks has been increased from Rs. Taxpayer Honor Card Scheme has been introduced providing privilege to active taxpayers. Provisions relating to setting off of losses in case of AOPs have been rationalized. Reduced rate of 3% shall be sanctioned to importers only at the production of exemption certificate. 16. Concept of 'Total Income' income rationalized. NCCPL has been empowered to collect advance tax from members of stock exchanges. The Commissioner (Appeals) empowered to grant stay against tax demand for 30 days.

Departmental appeals allowed for officers before Collector (Appeals) and Appellate Tribunal. Custom duty in respect of shredded tyre scrap for cement manufacturers and raw materials of printing and stationery items has been reduced. certain cosmetic items and perfumes withdrawn. Additional functionary directorates have been introduced for effective functional enforcement. Punishment of whipping eliminated and punishment on computer related offences introduced. Certain zero-rated items included in exempt items list. Federal Excise Act. Uniform rate of sales tax @16% made applicable and higher sales tax rates from standard rate of 16% eliminated. Nomenclature of certain existing HS Codes revised to align coding with World Customs Organization (WCO). 2005 Rate of duty enhanced on locally produced cigarettes. Rate of duty reduced by Rs. Duty on lubricant oil. 100 per metric ton on cement. 1990 The Finance Bill harmonized the procedure for tax assessment and recovery of tax not levied or short levied or erroneously refunded. Duty in respect of air travel rationalized. Concept of e-auction of goods introduced. 06 . Customs Act. Sales Tax rate on import and supplies of black tea reduced from 16% to 5%. Exemption on viscose staple fiber withdrawn. 1969 En route pilferage of transit goods has regarded as smuggle. Powers of adjudicating authorities Collectors. Services provided by asset management company and companies providing insurance cover for livestock have been exempted from duty. Exemption on locally produced cotton seeds oil withdrawn. Supplies against international tenders exempted that are currently treated as zero rated. Superintendent and Principal Appraiser extended and jurisdiction of monetary limit of each level of authority redefined.Finance Bill Highlights Sales Tax Act. The maximum tariff rate has been reduced from 35% to 30%.

For residential flats and commercial immovable area. 2012 are to be immediately applicable with effect from June 2. Cantonment Board not to be included in the definition of urban area. 2012. 07 . Maximum rate of cess for gas infrastructure development companies has been increased. the rate of CVT has been decreased to 2% of the recorded value if the value of the immovable property is recorded. Certain provisions of the Finance Bill.Tax Handbook 2012 Finance Bill Highlights Miscellaneous Laws Capital value of shares of a public listed company acquired by a person has been exempted from CVT.

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Pursuant to amendment in the definition of 'total income'. 500. 2001 'National Clearing Company Limited' Defined Section 2(35A) National Clearing Company Limited (NCCPL) was incorporated in 2001 to manage and operate the National Clearing & Settlement System (NCSS). Central Depository Company and NCCPL. Thus. By virtue of the Finance Bill. therefore. It would result in including the person's income under all heads of income for the year except exempt income. The Operations of NCCPL are governed by the following: NCCPL Regulations. 2012 the definition of NCCPL has been sought to be inserted as a company incorporated under the Companies Ordinance. 2012 seeks to introduce the policy of taxing gains on disposal of real estate. 53(IA). 2012. the superfluous provision envisaged under subsection (1A) of Section 53 captioned as Exemptions and tax concessions under the Second Schedule is sought to be omitted. 09 . 1984 and licensed as 'Clearing House' by the Securities and Exchange Commission of Pakistan. flow of foreign remittances and a phenomenal rise in banking growth in the past years helped significant investment in the real estate sector but the revenue contribution from this sector was negligible due to legal issues. (14) Presently the loan advanced by an employer to an employee on soft terms is considered as perquisite for the employee and it is added to the taxable income of the employee based on benchmark interest rate policy given under the provisions of the law. whereby the exempt income has been included in the scope of total income and. 2003 Clearing House (Registration and Regulations) Rules. notional benefit on loan amount of upto Rs. and Person's income exempt from tax under any of the provisions of the Income Tax Ordinance. Concessional Loans by Employers to Employees Section 13(7). 500.000 to an employee free of interest or at a rate lower than the benchmark rate.000 would not be treated as taxable perquisite for an employee. 2003 NCSS Procedures. the employer may disburse a loan of upto Rs. 2005 By virtue of the Finance Bill. 2001 Section 10. Taxability of Capital Gain on Sale of Immovable Property Section 37(1A) The Finance Bill. Taxing the real estate sector is very much confusing in the Country and according to research reports a huge foreign direct investment (FDI). 9 By virtue of proposed amendment in the definition of total income. Concept of 'Total Income' Rationalized The Bill seeks to rationalize an inclusive concept of 'total income' that includes: Person's income under all heads of income for the year. Section 9 captioned as 'Taxable income' is sought to be amended. The capital market of Pakistan has a triangular foundation comprising of the stock exchanges. This is a good move to incentivize employees whereby small loans are advanced by employers to employees for their financial assistance. The Bill proposes a new tax policy for the property sector with an aim to broaden the tax base and impose tax on those earning huge profits in this sector.Tax Handbook 2012 Income Tax Ordinance. 2001 Income Tax Ordinance. NCCPL is playing a significant role in the capital market of Pakistan. In an another move the Bill seeks to cap the benchmark rate of interest for concessional loans as 10% instead of aligning it with benchmark rate that has pitched upto 13%.

500. 2001 The Bill seeks to tax the gains arising on sale of immovable property held for a period less than two years under the head capital gains at the following rates: Period for which Immovable Property is Held Up to 1 year More than 1 year but not more than 2 years Rate of Tax 10% 5% Additional Amount Received on Delayed Refunds Section 39. Redundancy in Setting off of Losses in AOP Cases Removed Section 59A By virtue of the Finance Act. the Bill seeks to tax such amount under the income head of ‘Income from other sources’ so as to charge tax on such compensation.(3) Where A is the amount of tax assessed to the person for the tax year before allowance of any tax credit under Part-X of Chapter III B is the person's taxable income for the tax year and C is the lesser of: a) b) c) Total cost of acquiring the shares or the total contribution or the premium paid by the person 15% of the person's taxable income for the year Rs.171 In the wake of activating the dormant provisions of law to compensate the taxpayer receiving additional amount on account of delayed refunds. a new section 59A was inserted to provide procedure for set-off of losses in the case of AOPs. The Bill seeks to replace the fluctuating rate linked with KIBOR for determining the compensation on delayed refunds with the flate rate of 15% per anum. the redundant references made to the provisions of loss adjustment are sought to be removed so as to bring harmony in the principles of taxation of AOPs. Consequent to changes in principles of taxation of AOPs.000 10 .Income Tax Ordinance. Tax Credit on Investment in Listed Shares and Life Insurance Tax credit for investment in shares and insurance is worked out using the following formula: (A/B) X C Section 62(2). 2003.

Tax Handbook 2012 Income Tax Ordinance. 2012 seeks to extend the terminative date of availing the tax credit upto the Tax Year 2016 and the credit amount is also sought to be doubled i. modernization and replacement (BMR) of plant and machinery shall be allowed as tax credit. 1. 1984 The industrial undertaking is not formed by the splitting up or reconstruction or reconstitution The industrial undertaking is set up with 100% equity owned by the company The Finance Bill. 2011 and 30th day of June. 2001 The Bill seeks to enhance the eligible investment amount for tax credit on investment in shares and insurance by the resident persons other than companies in the following manner: Current 15% of the person's taxable income for the year Rs. 2011 on fulfilling the following pre-requisites: A new corporate taxpayer establishes a new industrial undertaking for manufacturing in Pakistan between the first day of July. The tax payable shall constitue the tax paid under the following regimes: Normal Tax Regime Minimum Tax Regime Final Tax Regime Terminative Date for Availing of Tax Credit for Investment in BMR Extended Section 65B(4) By virtue of Finance Act. whether trial-run production or commercial production 11 . 2012 seeks to include and clarify the following in order to avail the tax credit: Corporate dairy farming is proposed to be treated as an industrial undertaking 100% equity raised through issuance of new shares for cash consideration Short term financing obtained from banking companies for the purposes of meeting working capital requirements shall not disqualify the taxpayer from claiming tax credit under this section Industrial undertaking is proposed to be treated to have been setup on the date on which the industrial undertaking is ready to go into production. 500.000.000 Proposed 20% of the person's taxable income for the year Rs. at 20% of the tax payable. This concession had been made available in-between the Tax Years 2011 to 2015. as a relief measure for new investment. introduced tax credit for new industrial undertakings vide Finance Act. 2010 some relief measures for recession stricken industry and a tax credit for BMR costs incurred by corporate sector was provided @ 10% in the tax year of its incurrence.000 The Bill seeks to curtail the limit of holding period of shares for reversing the tax credit already availed thereof under the following timeline: Current Disposal of shares within 36 months of the date of acquisition Proposed Disposal of shares within 24 months of the date of acquisition 'Tax Payable' Clarified for Availing of Tax Credit for Investment in BMR Section 65B(1) The Bill seeks to clarify the phraseology of ‘tax payable’ in consonance to availing tax credit on the amount invested for balancing. The Finance Bill. Tax Credit for Newly Established Industrial Undertakings Section 65D In the wake of dampening industrial crisis in the country the Federal Government. 2016 Industrial undertaking is managed by a company registered under the Companies Ordinance.e.

FBR Empowered to Make Rules for Determination of Cost of an Asset and Consideration Received Section 76. 2012 seeks to include and clarify the following in order to avail the tax credit: Corporate dairy farming to be treated as an industrial undertaking 100% equity raised through issuance of new shares Equity investment for expansion project and for a new project 100% tax credit whereby separate books of accounts are maintained for an expansion project or a new project otherwise the tax credit shall be such proportion of the tax payable as is the proportion between the new equity and the total equity including new equity The plant and machinery is installed at any time between July 1st. introduced a tax credit for equity investment in existing established industrial undertakings. an insurance company A modaraba A “foreign institutional investor” being a person registered with NCCPL as a foreign institutional investor Any other person or class of persons notified by the Board 12 . 2011 and the 30th June. collected and deposited in accordance with the rules laid down in Eighth Schedule. determined. The tax credit shall be allowed if the plant and machinery is purchased and installed at any time between July 1. the newly introduced section 65E is meant to provide tax credit on investment by a company with 100% equity investment in BMR. 2012 seeks to insert a special provision relating to Capital Gain Tax. which states that tax on Capital Gains on disposal of listed securities shall be computed. 2011 subject to the fulfillment of laid down conditions. This section shall not apply to the following persons or class of persons. or for expansion of the plant and machinery already installed. The Finance Bill. a non-banking finance company. as a relief measure for an investment. namely: a) b) c) d) e) A mutual fund A banking company.Income Tax Ordinance. 77 The Bill seeks to empower FBR to make rules for determination of cost of any asset and determination of consideration received for any asset. 2011 the Federal Government. 2016 and amount of tax credit shall be allowed against the tax payable by the taxpayer in respect of the tax year in which the plant or machinery is purchased and installed and for the subsequent four years. Tax credit shall be allowed on the basis of proportion that such equity investment bears to the total investment in the company. The amount of the tax credit is equal to 100% of the tax payable and is allowed to such company for new investment made on or after first day of July. for a period of five years or commencement of commercial production. 2011 and June 30. Special Provision Relating to Capital Gain Tax on Disposal of Listed Securities Section 100B The Finance Bill. 2001 Tax Credit for Equity Investment in Existing Established Industrial Undertakings Section 65E By virtue of Finance Act. 2011. whichever is later. 2016 New equity means the fresh issue of shares and shall not include loans obtained from shareholders or directors Short term financing obtained from banking companies for the purposes of meeting working capital requirements shall not disqualify the taxpayer from claiming tax credit under this section In case of tax credit for equity investment for expansion in Industrial unit. in an industrial undertaking set up in Pakistan before July 1.

Tax Handbook 2012 Income Tax Ordinance. Amendment of Provisional Assessment The proposed insertion seeks to include the provisional assessment in the scope of amendment of assessment. the Commissioner has the powers to serve a notice for furnishing of certain documents uptill the close of the financial year in which the return is furnished. reference to Pakistan source income was overlooked under the scope of geographical source of income. however. amended order. Time Limitation for Tax Demand Stay by Commissioner (Appeals) Prescribed Section 128(1A) The proposed insertion seeks to envisage the powers of the Commissioner (Appeals) against the recovery of tax levied under the Ordinance and period of stay has been provided for 30 days. 2001 Anomaly in Pakistan-Source Dividend Income Removed Section 101B The proposed insertion seeks to include ‘remittance of after tax profit of a branch of a foreign company operating in Pakistan’ as a Pakistan-source income. Limitation Period for Examination of Return Extended Section 120(6) The Finance Bill. 2012 proposes to extend the limitation of examination of return by further 180 days. 2008 amended the inclusive definition of dividend income to include remittance of after tax profit of a branch of a foreign company operating in Pakistan. 13 . Compliance Requirement for Invalidating of Provisional Assessment for Corporate Taxpayers Explained Section 122C (2) Proviso The Bill proposes to insert a new proviso to envisage the compliance requirement for invalidating the provisional assessment made in the case of corporate taxpayers whereby the return of total income along with audited accounts or final accounts are filed electronically during the time limitation of sixty days. The Finance Act. Profit/Loss for Revised Return Section 114(6)(c) The Bill proposes that the revised return ought to reflect the profit amount or loss amount as determined or ascertained under best judgment assessment. the Finance Minister announced the incentive of reduction in minimum tax rate from 1% to 0. provisional assessment.5% but relevant amendments are missing under the provisions of the Finance Bill. revision order. Section 122(1)(5A) The Bill further seeks to omit the redundant references for amending assessments made under the Repealed Income Tax Ordinance. The Bill also seeks to empower the Commissioner to undertake such enquiries as he deems fit for amending an order. appellate order or rectified order. Ex-parte Assessment Effectuated Section 121(1) By virtue of proposed insertion the Bill seeks to elaborate that the ex-parte assessment would have an overriding effect on the deemed assessment on the basis of original return or revised return filed thereof. This anomaly is sought to be removed by elaborating the Pakistan-source dividend as: Dividend paid by a resident company Remittance of after tax profit of a branch of a foreign company operating in Pakistan Phraseology of 'Tax Payable or Paid' for Minimum Tax Applicability Clarified Section 113 The Bill seeks to clarify that tax payable or paid does not include tax already paid or payable in respect of deemed income which comes under the Final Tax Regime in ascertaining the minimum tax liability . 2012 and to that extent needs to be clarified. Presently in case the return of income is not complete. In Budget speech.

in order to opt in the newly introduced scheme the minimum tax liability in respect of such income shall not be less than: 60% of tax collected at the import stage 70% of tax deducted at source on such supplies 50% of the tax collected at the time of realization of export proceeds and indenting commission 14 . Option to Commercial Importers. Eligibility Criterion for Appointment of Chairperson of Inland Revenue Appellate Tribunal Section 130(5) The Bill seeks to remove the compulsive condition of appointment of a judicial member as a chairperson of Inland Revenue Appellate Tribunal. 2001 Time Limitation for Disposal of the Appeal by Commissioner (Appeals) Withdrawn Section 129(5)(6)(7) The Bill proposes to withdraw the provisions of time limitation of four months for disposal of an appeal by the Commissioner (Appeals) as well as to withdraw the relating conditions laid down for implementation of such time limitation. 153(1)(a). taxpayer will either have to pay higher rate of withholding tax for not maintaining books of accounts or pay lower rate under normal tax regime and file income tax returns. Traders & Exporters For Assessment under Normal Tax Regime Sections 148(7). commercial importers are paying 5% withholding tax. However. In this way. Under that system taxes collected or deducted at source are treated as a final tax liability in respect of such amounts.5%. 154(4) and 169 Clauses (41A). The proposed omission empowers the Government to appoint a chairperson either from accountant members or judicial members. For example.Income Tax Ordinance. suppliers 3. The proposed changes would result in maintenance of books of account to record each and every business transaction which would ultimately promote documentation. (41AA) and (41AAA) of Part IV of the Second Schedule At present. To bring them at par with the taxpayers operating under normal tax regime the right of carry forward of losses and other related provisions will remain applicable if such option is availed. Tax Demand Stay by Appellate Tribunal Section 131(5) The proposed substitution seeks to remove the ambiguous multiple time limitation periods against stay of recovery of tax with a single provision of stay against tax recovery for 180 days in aggregate and in case stay by high court is already granted then the availed time thereof would be excluded from the given time period of 180 days. Appointment of An Accountant Member of ATIR Section 130(4)(ii) The proposed amendment seeks to curtail the minimum experience requirement for appointment of an Accountant Member of Appellate Tribunal Inland Revenue from five years to three years. exporters 1%. different sectors are operating under the Final Tax Regime (FTR) and finally discharge their tax liabilities under that regime.

dealers and wholesalers at the proposed tax rate of 1% of the gross amount of their sales. Manufacturers Liable to Collect Tax at Source from Traders and Distributors Section 153A Withholding tax on payments for goods. 2001 Payments to Non-residents & to PE of Non-residents Sections 152. The Bill proposes to arrange hierarchical order of income tax authorities to name the subordinates of Chief Commissioner of Inland Revenue. 2012 proposes to insert a proviso to prescribe that where the taxpayer admits his default he may voluntarily pay the amount of penalty due thereon.Tax Handbook 2012 Income Tax Ordinance. The Bill proposes the insertion of a new subsection to rearrange the withholding tax provisions whereby a person making a payment for advertisement services to a nonresident media person relaying from outside Pakistan shall deduct tax from the gross amount paid at the rate of 10%. The Bill further seeks to provide relief in the amount of default in consequent to appeal orders. 15 . Hierarchical Arrangement of Tax Authorities Section 207(3)(3A) The Bill seeks to make all the tax authorities subordinate to FBR. Condonation of Time Limit Section 214A The Bill seeks to insert an explanation to the provision of condonation of time limit to elaborate the jurisdictional powers of authorities to condone the time limit with respect to powers vested with them. no such corresponding reference has been made to Section 152. This was previously covered under section 153A which is now being replaced. services and contracts is one of the major contributors to the Government Exchequer and over the period of time frequent amendments have been brought in under the relevant provisions of law. 153 In an effort to remove the anomalous placement of withholding taxes provisions applicable to nonresidents and to Permanent Establishment (PE) of a nonresident have been rearranged to make the implications of the provisions more clear and unambiguous. The proposed omission of references in Section 153 regarding payments to a PE of a non-resident on account of sale of goods. The Bill further seeks that deduction of tax from payment of insurance premium or re-insurance premium to a nonresident shall not apply in case of written approval of the Commissioner to the effect that such amount is taxable to a PE of the nonresident in Pakistan. rendering of or providing of services or execution of a contract are intended to be placed in Section 152. Taxpayer Card Scheme Introduced Section 181B In an attempt to boost the morale of active taxpayers the proposed insertion of a new section seeks to introduce a 'Taxpayer Honour Card Scheme' to privilege active taxpayers. however. Default Surcharge to be Determined on Flat Rate Basis Section 205 The Finance Bill. Right from the promulgation of the Ordinance numerous amendments have been made to the withholding provisions and in eventuality has resulted into some ambiguities in its application. Voluntarily Penalty Payment Prescribed Section 182(2) The Finance Bill. In an attempt to broaden tax base manufacturers have been given the role of withholding tax agent to collect the required amount of withholding tax at the time of sale to distributors. 2012 proposes to introduce a flat rate of default surcharge at the rate of 18% per annum contrary to the prevailing varying rate that is linked with the KIBOR.

500. 2. other than the salaried class.000 Taxable income exceeding Rs. Inland Revenue Established Section 230 In line with similar functionaries working under the auspices of 'Inland Revenue' under Sales Tax and FED the proposed insertion seeks to induct the DG Intelligence and Investigation authority under hierarchical arrangement as to be notified by the Government. 1.000 but not exceeding Rs. The restriction to collect advance tax from members on trade of shares has been reinforced in the Finance Bill. 400. and the AOPs and revised the rates and slabs as under: Current Rates of Tax for Individuals Applicable on Taxable income Taxable income not exceeding Rs.500 + 20% of the amount exceeding Rs. The Finance Bill. 2001 Functionary of Directorate General (Intelligence and investigation). 1. 1. 2012.000 Rs.000 Taxable income exceeding Rs.000 Taxable income exceeding Rs. the rate of withholding tax has not been changed. However.000. 1.000 but not exceeding Rs.000 Taxable income exceeding Rs.500.500.000.000 0% 7. and AOPs were taxed at the same slab rates.000 but not exceeding Rs.000 16 . 2.5% 10% 15% 20% 25% Proposed Rates of Tax for Individuals and AOPs Applicable on Taxable income Taxable income not exceeding Rs. 750.500. 147.500 + 25% of the amount exceeding Rs.500. 25.Income Tax Ordinance. Limit of Cash Withdrawal from a Bank Section 231A Finance Bill 2012 seeks to enhance the daily cash withdrawal limit attracting the deduction of withholding tax from Rs.000 + 15% of the amount exceeding Rs.500.000 but not exceeding Rs. 350. 750. The Finance Bill.000 but not exceeding Rs. other than the salaried class.000 Rs. Collection of Tax by a Stock Exchange Section 233A(1)(d) The Bill seeks to restrict the Stock Exchanges registered in Pakistan to act as a withholding agent from collecting advance tax from its members in respect of trading of shares and financing of carryover trades in share business. 400.000 Taxable income exceeding Rs.000 Taxable income exceeding Rs.000 Taxable income exceeding Rs. 2012 seeks to restore the common slab rates used by both the individuals. 750. 500. Collection of Tax by NCCPL Section 233AA The Bill seeks to introduce a new section whereby it proposes NCCPL to collect advance tax from the members of stock exchanges registered in Pakistan in respect of margin financing in share business at the rate of 0.000 to Rs. 347. 35.000 Rs. 500.500. 2. 2012 seeks to revive the older pattern whereby the individuals. 750. First Schedule Uniform Rates of Tax for Business Individuals and Association of Persons Part 1 Division 1 Clause 1 The Finance Bill. 2012 as it was also provided in the Finance (Amendment) Ordinance. 750.000 but not exceeding Rs. 50.000.000 0% 10% of the amount exceeding Rs. 350. 1.500. 1. 400.000 Taxable income exceeding Rs. 1.000 Taxable income exceeding Rs. 2010 introduced a flat rate of 25% applicable on all AOPs.000 but not exceeding Rs.01% of value of shares.

000 but not exceeding Rs. 3.00% 12.250.000 Taxable income exceeding Rs.850.450.50% 20% 17 Taxable income not exceeding Rs. 1.000 but not exceeding Rs. 350.000 but not exceeding Rs.500.000 but not exceeding Rs. 1. 400.50% 4. 1.000 but not exceeding Rs. 1.000 but not exceeding Rs.000 Taxable income exceeding Rs.500 + 20% of the amount exceeding Rs.550.950. 2.000 but not exceeding Rs.250.000 but not exceeding Rs.00% 15. 2.050. 2.000 . 4.000 but not exceeding Rs. 2. 2.000 but not exceeding Rs.50% 2.000 Taxable income exceeding Rs. 900. 2.50% 3.550.550.50% 9. 2001 Rates of Tax for Salaried Taxpayers Part 1 Division 1 Clause 1A The Finance Bill.550.Tax Handbook 2012 Income Tax Ordinance.000 0% 5% of the amount exceeding Rs.50% 18.50% 14.000 but not exceeding Rs.000 Taxable income exceeding Rs. 400.850.000 but not exceeding Rs.000 Taxable income exceeding Rs.500.200. 1. 1.950. 4.050. 750.000 Taxable income exceeding Rs. 1. 1.000 Taxable income exceeding Rs.000 Taxable income exceeding Rs.000 Taxable income exceeding Rs.000 Taxable income exceeding Rs. 400.000 but not exceeding Rs.000 Rs. 1.450.000 but not exceeding Rs.00% 11. 350.500.00% 17. 2012 seeks to reduce the slab rates applicable on salaried individuals.500 + 10% of the amount exceeding Rs.000 Rs.700. 400. 2.000 but not exceeding Rs. 750.000 Taxable income exceeding Rs.000 Taxable income exceeding Rs. 750. 450.00% 10.000 0% 1. 650.500. 550.000 Rs. 1.200. 750. 450. 242.000 Taxable income exceeding Rs.500.000 but not exceeding Rs.000 Taxable income exceeding Rs.00% 16.000 Taxable income exceeding Rs.00% 7.500. 750.000 Taxable income exceeding Rs.50% 6.000 Taxable income exceeding Rs. 650.000 but not exceeding Rs. 17.000 Taxable income exceeding Rs.500 + 15% of the amount exceeding Rs. 900. Existing 17 slabs are proposed to be reduced to 5 as under: Current Rates of Tax for Salaried Taxpayers Proposed Rates of Tax for Salaried Taxpayers Applicable on Taxable income Applicable on Taxable income Taxable income not exceeding Rs.000 Taxable income exceeding Rs. 1. 92.700. 1. 1.000 but not exceeding Rs. 400.000 Taxable income exceeding Rs. 550. 3.

000 1.250) (257.5000% 14.000 650.500 87.0000% 7.2059% 8.000 400.500 32.000.250.500) (143.000) (47.3636% 1.000 3.000) (90.000 2.500 160.750) (11.500 12.000 4. 0 0 2.500) (35.110.050.000) (113.000 312.5000% 2.000 1.000 450.000 1.000 1.000 1.750) (27.7465% 14.000) (8.500 212.550.0345% 7.750 1.5000% 6.000 5.250 19. 0 6.6111% 4.1111% 10.0000% 10.0000% 12.9231% 2.0000% 17.5000% 3.5000% 20.0000% Post-Budget % 0% 0% 0.500 94.950. 0 (6.5000% 4.000 1.000 2.9649% 12.500 122.500) Taxable Salary Rs.500 652.000 Pre-Budget Rs.000 800.750) (16.700. 2001 Taxability of Salary Income Sr.2083% 6. 350.0000% 11.250 45.000 400.450.500) (168.000 11.2051% 9.5000% 9.250 29.5000% 18.5238% 5.000 621.500 120.000 205.3333% 3.200.000) (57.200 Post-Budget Rs.550.500) (72.0000% 15.000 67.3612% Tax liability has been worked out without taking into account the marginal tax relief.500 452.500 17.000 200.500 852.5556% 1.500 273.000 900.250 841.000 159.551.3407% 15. No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Tax Liability for the Tax Year 2012 Average Tax Rate Increase / (Decrease) Rs.000 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 .000 600.Income Tax Ordinance. Graphical Representaion 1.000 550.500 47.000) (132.200.700 Pre-Budget % 0% 1.500 62.500 456.500 7.000 750.000 337.850.750) (189.0000% 16.

5% 15% 17.50%. 16. having turnover of upto Rs.5% 10% More than 6 months but less than 12 months Rate of Tax on Capital Gains on Disposal of Immovable Property Part 1 Division VIII The Finance Bill. Division III & Division VII 19 . 2012 seeks to reduce tax rate applicable on retailers. 100 per seat per annum to Rs. 2012 seeks to charge tax on capital gains in respect of disposal of immovable properties on the following rates: Period for which Immovable Property is Held Up to 1 year More than 1 year but less than 2 years Rate of Tax 10% 5% Collection of Tax from Distributors. 1 to Rs. Rate of Tax Applicable on Capital Gains on Disposal of Securities Part 1 Division VII The Finance Bill. Dealers and Wholesalers The Finance Bill seeks to collect tax from distributors. dealers and wholesalers at 1% of the gross amount of their sales. 5 per kilogram of the laden weight.5% 10% Proposed Rates 10% 10% 10% 10% 17.5% 8% 8% 8% 9. tax is proposed to be increased from Re. both individuals and AOPs. and Advance tax levied at the time of registration of a new 1301cc to 1600cc locally manufactured motor vehicle is proposed to be enhanced from Rs.875 to Rs.5% 9% 9.5% 7. 2012 seeks to make editorial changes to enhance clarity and seeks to freeze the tax rates for Tax Years 2011 to 2014 that have already been introduced by the Finance (Amendment) Ordinance. Tax rates proposed by the Finance Bill are as under: Period for which Securities are Held Less than 6 months Tax Year 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2016 Existing Rates 10% 10% 12. For passenger transport vehicles plying for hire with registered seating capacity of 20 persons or more. 2001 Rate of Tax on Retailers Part 1 Division 1A The Finance Bill.000. 2012. 5 million in a tax year from 1% to 0.Tax Handbook 2012 Income Tax Ordinance. 25. Part IIA Part IV Tax on Motor Vehicles The Bill seeks to enhance tax rates on motor vehicles as under: For goods transport vehicle. the tax is proposed to be increased from Rs.5% 7. 500 per seat per annum.5% 8% 8.

Part IV Exemptions from Specific Provisions Exemption from Deduction of Tax on Paying Dividends and Profit on Debt Clause 11B & 11C The Bill seeks to introduce new clauses whereby the payment of inter-corporate dividends and inter-corporate profit on debts would not attract the deduction of tax in the hands of company making such payment provided the group companies are subject to group taxation under Section 59AA and 59B of the Income Tax Ordinance. provided the accumulated balance is invested for 10 years. reduction in tax liability and exemption from specific provisions. reduction in tax rates. as specified in Voluntary Pension System Rules. Donations to Specified Institutions Clause 61(ia) & Clause 66(xxvii) The Bill seeks to extend the exemption on donation paid to The Citizen Foundation as a straight deduction from taxable income . The Bill proposes to exempt or extend the scope of exemptions in respect of the following sources of income: Part I Exemptions from Total Income Amounts Received from Income Payment Plan out of Accumulated Balance of Pension Accounts Clause 23B & 23C The Bill seeks to exempt from tax the amounts received as monthly installment from income payment plan invested out of the accumulated balance of an individual pension account with a pension fund manager or an approved annuity plan etc. 2005. 2005. 2001. Profits and Gains Derived by a Venture Capital Company & Venture Capital fund Clause 101 The Bill seeks to extend the exemption to profits and gains derived by a venture capital company and venture capital fund registered under the Venture Capital Companies and Funds Management Rules. It proposes to extend this exemption by further 10 years upto June 30. Part II Reduction in Tax Rates Advance Tax from Importers Clause 9A The Bills seeks to correlate the collection of 3% tax from importers only on production of exemption certificate issued by the Commissioner. 20 .Income Tax Ordinance. 2000 beyond 2014. It also seeks to exempt the withdrawal of accumulated balance from approved pension fund that represents the transfer of balance of approved provident fund to the said approved pension fund under the Voluntary Pension System Rules. 2001 Second Schedule Exemptions & Tax Concessions The Second Schedule relates to specific exemptions granted in respect of total income. 2024. Any income derived by The Citizen Foundation shalll also be exempt.

0% 10.0% 8. vouchers of Pakistan Telecommunication Corporation.0% 17. 2001 upto the tax year 2011 by June 30.5% 15. Part II Fourth Schedule Mutual Insurance Companies Rule 6B The Bill seeks to reduce the rates of tax applicable on capital gains on disposal of shares of listed companies. However. 21 . approved superannuation fund or approved gratuity fund. It is pertinent to mention that the Bill proposes that this option is available for one time only and would be irrevocable.5% 9. 2001 Capital Gains Tax on Disposal of Certain Securities Withdrawn Clause 47B The Finance Bill. Private Equity and Venture Capital Fund.5% 17. Modaraba Certificates or instruments of redeemable capital and derivative products by mutual insurance associations as under: Period for which Securities are Held Less than 6 months Tax Year 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Existing Rates 10. Collective Investment Scheme.0% More than 6 months but less than 12 months Fifth Schedule Mechanism for Computation of Tax on Profits and Gains Petroleum Exploration and Production Companies Rule 4A The Bill seeks to introduce a new rule whereby petroleum exploration and production companies may opt to pay tax at the rate of 40% of their profit and gains net of royalty derived by them.5% 10.0% 8.0% 9.5% 9.0% 9.5% 15. 2012.0% 8.0% 17.5% 8. references and petitions filed by them and paying the entire outstanding tax liability created under the Income Tax Ordinance. REIT Scheme. Third Schedule Initial Allowance and First Year Allowance The Finance Bill seeks to reduce the initial allowance for buildings from 50% to 25%. they may opt to do so upon withdrawing pending appeals. recognized provident fund.0% 12.0% 12. Modaraba.0% Proposed Rates 10. 2012 seeks to extend the exemption from application of capital gains tax on disposal of securities to National Investment Unit Trust. Applicability of Advance Tax on Electricity Bill of a Commercial / Industrial Consumer Clause 76 The Bill seeks to withdraw exemption available to manufacturer-cum-exporter industrial undertakings situated in Karachi Export Processing Zone from the collection of advance tax on electricity bills.5% 8.Tax Handbook 2012 Income Tax Ordinance.

5% 10% 0% Proposed Rate 10% 10% 10% 10% 17. Manner and basis of computation of capital gains and tax thereon: NCCPL shall issue an annual certificate to the taxpayer on the prescribed form in respect of capital gains subject to tax for a financial year. on request of a taxpayer or if required by the Commissioner. Eighth Schedule Rules for the Computation of Capital Gains on Listed Securities The Bill seeks to introduce Eighth Schedule dealing with the rules for the computation of capital gains on listed securities. This Schedule proposes the structural and procedural details that would be followed by NCCPL in calculating capital gains and issuing certificate to taxpayers in respect of their capital gains subject to tax. NCCPL shall issue a certificate for a shorter period within a financial year.5% 9% 9. Above mentioned certificate shall be filed along-with the return of income. If a person has made investment in listed securities from the date of coming into force of this Ordinance till 30th June.5% 8% 8% 8% 9. Capital Gains computed under this Schedule shall be charged to tax at the rate applicable in Division VII of Part I of First Schedule. Rates for CGT for the Tax Years 2013 and 2014 Division VII Part I First Schedule The Finance Bill. 2012 seeks to freeze the rate of tax for two years. However.5% 15% 17. NCCPL shall furnish to the Board within 30 days of end of each quarter. Proposed rate of tax shall be as follows: Holding Period Less than six months Tax Year 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2016 22 Present Rate 10% 10% 12.5% 8% 8. 2014 and the amount remains invested for a period of 120 days and the tax on capital gains has been duly discharged and he has filed a statement of investment with the Commissioner alongwith a Return of Income and wealth Statement for the Tax Year 2012.5% 7. The tax rate is proposed to be raised further to 35% in the Tax Year 2014 for the ongoing period. 2001 Seventh Schedule Rules for the Computation of the Profits and Gains of a Banking Company and Tax Payable Thereon Dividends Received from Money Market Funds and Income Funds Rule 6 The Bill seeks to enhance the tax rates on dividends received from money market funds and income funds to 25% for the Tax Year 2013.5% 10% 0% More than six months but less than twelve months Twelve months or more .5% 7. a statement of capital gains and tax computed thereon in that quarter.Income Tax Ordinance. Enquiries as to source of Investment shall not be made: If a person has made investment in listed securities prior to introduction of this Ordinance and the amount remains invested for a period of 45 days upto June 30. 2012 and he has filed a statement of investment with the Commissioner along with a Return of Income and wealth Statement for the Tax Year 2012.

error or misconstruction. Withdrawal of Exemption for Cotton Seed Oil The Bill proposes to withdraw exemption on cotton seed oil.O.Tax Handbook 2012 Sales Tax Act. 644 (I)/2007 whereby items which were charged at 19. 594(1)/2012 seeks to rescind S. 1990 Assessment of Tax and Recovery of Short Levied or Erroneously Refunded Tax Section 11 and Section 36 In view of concurrence in procedural application of Section 11 and Section 36. These changes are of technical nature and will have no effect on rates to be applied and procedures to be followed. the proposed amendment seeks to merge these provisions under Section 11 and seeks to omit Section 36. due to adjournment or stay. Zero Rating Category Substitution with Exemption Category Fifth Schedule & Sixth Schedule (Table 2) The Bill proposes to substitute zero rating on supplies made against international tenders with exempt supplies by omitting it from Fifth Schedule and including it in Table 2 of Sixth Schedule. Officer of Inland Revenue is proposed to make his decision in 120 days from the date of issuance of show cause notice.R. Sixth Schedule (Table 1) Implementation of Revised HS Code . however. 644 (I)/2007 S. has also been extended by 60 days.5% and 22% would be charged at a uniform rate of 16%.R.R. HS codes are revised in view of technological and trade developments after every five years.O. has been enhanced from three years to five years from relevant date. this period can be further extended by 90 days and the maximum period which can be excluded from the time period mentioned earlier. Uniformity in Standard Sales Tax Rate of 16% S. The proposed amendment further aims at the following changes: Time limit for issuance of show cause notice.O.2012 The Bill proposes to implement revised HS code .2012 of the World Customs Organization (WCO) by substituting 18 PCT headings in column 3 of Table 1 of Sixth Schedule with 23 new PCT headings. The new placement of these provisions of law would harmonize the procedure for assessment of Sales Tax and streamline the provisions of law. Sixth Schedule (Table 2) 23 . 1990 Sales Tax Act. in case of tax not levied or short levied or refunded due to any inadvertence.

590(I)/2012 The S. (2). sub rule(1).R. This change has been made with an aim to hold illegal refunds. additions or substitution is as under: Rule Ref. seeks to remove requirement for commercial importers of computer hardware and parts to pay minimum value addition Tax @ 10%. clause C Rule 7. to suspend the registration or black list a person if they have reasons to do so.R. Rule 5.R. a new Sales Tax Registration Number shall be issued. (3).O. Procedure is same as was for availing zero rated facility.R. 1990 Notable Notification S. Rule 50B has been substituted which describes the procedure to be followed to avail the exemption facility for supply of locally produced goods against international tender. 591(I)/2012 Through amendments made by this S. S.O.R.Sales Tax Act. Rule 12 Rule 50B Rule 50C S. (4) and (5) are substituted resultantly giving powers to Commissioner or Board. under rescinded rule. seeks to make amendments. Whereby transfer of business or change in nature of business is due to any other reason. 24 . with one exception that the facility of exemption has been restricted to goods which become part of project to be completed or goods to be supplied. A brief summary of significant proposed amendments. additions or substitution in Sales Tax Rules 2006. sub rule(3) Description of proposed amendments.O.R. 589(I)/2012 This S. import and supply of polyethylene and polypropylene by registered manufacturer for manufacture of mono filament yarn and who makes exempt supplies of net cloth to green house farming shall be exempt. A new sub rule (4) is introduced which states that change of nature of business from individual to AOP or corporate person shall be allowed when: Transfer of individual business from any person to his spouses or children or change in nature of business from individual to AOP Change of nature of business from AOP to corporate entity provided directors in the corporate entity are the same persons who were members of AOP For both cases mentioned above change shall be allowed by LRO after receiving verified documents from RTO. instead of Collector. earlier they were zero rated.O.O. additions or substitution It proposes to authorize the FBR to transfer the registration of a registered person or any business of a registered person to an area of jurisdiction where the place of business or registered office or manufacturing unit is located. It is substituted with new rule to replace "zero rated" with "exempt". Sub rules (1).O.

R. 58 H Sales Tax Payable By Every steel-melter. 1. Waste paper. Rules of Chapter XI has been substituted with new rules. 780 per metric ton Rs.R. 7.651 per metric ton Rs. 1040 per metric ton Rs. 8. 595(I)/2012 This S. 25 . Rs.O.628 per metric ton Rs.960 per metric ton Rs.308 per metric ton (registered person) Rs. S. 5. 1. 7. 51.O.822 per inch of mill size Rs. 592(I)/2012 This S. ingots and re-rolled MS products shall follow standard Sales Tax procedures and fixed taxes under this chapter shall not be applicable to them.972 per hundred cubic meter or HM3 Rs. 848 per metric ton. 6.306 per metric ton Rs. 780 per metric ton (other than registered person) Rs.387 per metric ton Rs. Proposed Sales Tax Rate Rs. 6.526 per metric ton Rs. seeks to make following changes in Sales Tax Special Procedure Rules 2007: Sub rule(2) of rule 58E is omitted which would result in importers who do not claim any refund of excess input tax also being subject to audit.R.O. sprinkler equipment. 38.900 per hundred cubic meter or HM3 Rs. Rs. 6 per unit of electricity consumed. 1990 S. component and subcomponents imported for using the in manufacture of goods to be supplied against international tenders are removed from list of exempted goods. 9. in new rules Sales Tax rates has been revised with a view to increase revenue.R. 5. 551(1)/2008: Raw material.040 per metric ton (other than registered person) A new rule 58MC has been inserted which states that steel melters and re-rollers who also supply stainless steel products other than billets.O. 5. 8 per unit of electricity consumed. 1.740 per metric ton Rs. seeks to make following amendments in S. 9.O.Tax Handbook 2012 Sales Tax Act. 58 H (4) 58 Ha (2) 58 Ha (2) 58 I (1) 58 I (2) 58 I (3) 58 I (4) 58 I (5) 58 I (6) Rs. re-meltable scrap.R. steel re-roller and composite unit of aforesaid (having single electricity meter) Ship breakers Steel melters (generating electricity using gas generators) Re-rolling mills (self generated electricity) Re-roller Registered person Downstream Industry Registered Person Un-registered buyer Registered person Un-registered person Existing Sales Tax Rate Rs. 7. detail of such revision is as below: Rule Ref.349 per metric ton Rs.700 per metric ton.651 per metric ton (registered person) Rs.964 per inch of mill size Rs. drip equipment and spray pumps including supplies thereof have been exempted from the ambit of Sales Tax.

Sales Tax Act. 60.O 313(I)/2006 Import and supplies of black tea Import of rapeseed and sunflower seed Billets and Ingots Previous Rate/Amount 7% 16% 15% Rs.000 & Rs.000 & Rs. 60.000 respectively (This has also been set at minimum value) Exempt 0% 602(I)/2012 Re-meltable scrap.R. drip equipment cotton seed oil 26 . 1990 Revision in Sales Tax Rates Following new S. sprinkler.000 respectively 0% Exempt Proposed Rate/Amount 6% 5% 14% Rs.R.R.Os are introduced which seek to amend the old rates as given below: S. 55.O 604(I)/2012 608(I)/2012 605(I)/2012 597(I)/2012 Description Import of soya bean as mentioned in S. 65.

23 First Schedule (Table I) Federal Excise Duty on Excisable Goods Withdrawn The Finance Bill. Headings/Subheadings Number 2710. 21 per 10 Cigarettes) Rs. subject to the condition if sold in retail packing or under brand names the words manufactured from reclaimed oil or sludge or sediment should be clearly printed on the pack. 13. 11.50 per 10 Cigarettes) Rs. Lubricating oil in bulk (vessels.15 per Liter Rs. aluminous cement. 6.1952 2710. Portland cement.86 per ten cigarettes. Rs. 500 per Metric ton Proposed Rates 65% of retail price (if retail price exceeds Rs. Headings/SubPresent Rates headings Number 24.02 per 10 cigarettes Rs. whether or not coloured or in the form of clinkers.04 per 10 cigarettes + 70% per incremental rupee or part thereof (if retail price exceed Rs.1951 2710. Locally produced cigarettes if their retail price exceeds Rs.50 but does not exceed Rs. 7. bouzerslorries etc). 2005 Federal Excise Act.02 13 25. 22.36 per ten cigarettes. 11.Tax Handbook 2012 Federal Excise Act. 2012 seeks to revise rates of FED for certain excisable goods aligned with given pricing threshold as under: Relevant Reference in Schedule 9 Description of Goods Locally produced cigarettes if their retail price exceeds Rs. super sulphate cement and similar hydraulic cements. Lubricating oil in packs exceeding 10 liters. 6.04 per 10 cigarettes (if retail price does not exceed Rs. 21 per 10 Cigarettes) Rs.02 11 24. seeks to withdraw the FED charged on the following items: Relevant Reference in Schedule 22 23 24 25 Description of Goods Lubricating oil in packs not exceeding 10 liters. slag cement. 13. 400 per Metric ton 10 24. Locally produced cigarettes if their retail price does not exceed Rs.1953 Respective headings Present Rates 10% per Liter 10% per Litre Rs. 22. 7.02 65% of retail price (if retail price exceeds Rs. 2005 First Schedule (Table I) Federal Excise Duty on Excisable Goods Revised The Finance Bill.36 per ten cigarettes but does not exceeds Rs.86 per ten cigarettes. 22. Lubricating oil manufactured from reclaimed oils or sludge or sediment.02 per 10 cigarettes + 70% per incremental rupee or part thereof. 7. 2 per Liter Proposed Rates Nil Nil Nil Nil 27 .86 per 10 Cigarettes) Rs.

7.0090 20% ad val. manicure or pedicure preparations Preparation for use on the hair excluding herbal hair oil and kali mehndi.Federal Excise Act. personal deodorants.15 per Liter 10% of retail price if packed in retail packing and 10% ad valorem if in bulk 10% of retail price if packed in retail packing and 10% ad valorem if in bulk Proposed Rates Nil Nil 43 Beauty or make-up preparations and preparations for the care of the skin (other than medicaments).04 Nil 44 33. Filter rods for cigarettes 33. Pre-shave.07 Nil 50 5502. shaving or after shave preparations. than the price of a Most Popular Price Category (MPPC). Nil Pricing Mechanism for Cigarettes Rationalized The Finance Bill. not elsewhere specified or included.1993 3303. whether or not perfumed or having disinfectant properties (excluding agarbatti and other odoriferous preparations which operate by burning). 28 . 2012 seeks to insert new conditions regarding variant of the existing brand of cigarettes. depilatories and other perfumery. The Bill seeks to restrict the manufacturer or importer of cigarette to introduce or sell new cigarette brand variant of the existing brand family at a price lower than the price of the existing variant cigarettes after the announcement of 2012-13 Budget.0000 Present Rates Rs. including sunscreen or sun tan preparations.05 10% of retail price if packed in retail packing and 10% ad valorem if in bulk 10% of retail price if packed in retail packing and 10% ad valorem if in bulk Nil 45 33. cosmetic or toilet preparations. in order to avoid FED evasion. 2005 Relevant Reference in Schedule 27 42 Description of Goods Base lube oil Perfumes and toilet waters. Headings/Subheadings Number 2710. bath preparations. The Bill also seeks to introduce a provision by virtue of which. prepared room deodorizers. a new brand of cigarette could not be sold at a price which is more than 5% lower.

6. Services provided or rendered in respect of travel by air of the passenger embarking on international journey from Pakistan (i) Economy and economy plus Headings/Subheadings Number 9803. business and first classes. 2007.840 Exemption Granted on Services Relating to Livestock Insurance and Asset Management Companies The Finance Bill.240 for economy and economy plus classes and five thousand seven hundred and forty rupees for club. Headings/Sub-headings Number 9813.840 (ii) Club. business and first class Rs. 3.1000 Present Rates 16% of the charges plus rupees twenty per ticket Proposed Rate of FED 16% of the charges plus rupees sixty per ticket 3(b) 9803. Saudi Arabia.240 for Economy and economy plus and four thousand two hundred and forty rupees for club. Rs. 3. Rs. 4. UAE (Middle East).1100 Rs. business and first classes. 2012 seeks to revise the FED on international air travel as enumerated below: Relevant Reference in Schedule 3(a) Description Services provided or rendered in respect of travel by air of the passenger within the territorial jurisdiction of Pakistan. Africa.Tax Handbook 2012 Federal Excise Act. 2005 FED Increased on Air Tickets First Schedule (Table II) The Finance Bill. Afghanistan. for passengers embarking from SAARC region. 2012 seeks to amend the Table-II in third schedule to grant exemptions on services in respect of livestock insurance and asset management companies Relevant Reference in Schedule 7 8 Description of Services Livestock insurance Services provided by Asset Management Companies with effect from 1st of July.1600 Respective Headings 29 .

2009 to withdraw exemptions in respect of following: Relevant Reference in Schedule 48 Description of Goods Viscose staple fibre Headings/Sub-headings Number Respective Headings Restored Rate of Duty 10% ad val.R. USA. Canada. A brief summary of the S. proposes to amend Rule 41A of Federal Excise Rules 2005 by withdrawing excise duty on services provided by aircraft operators in respect of travel by air of passengers embarking for Pakistan from anywhere in the world.R. the liability to charge.1951 and 2710. S.R.O.R.O. This S. Europe.O.O. 474(I) / 2009. seeks to amend Table in S. proposed to substitute existing sub-rule (7) with a new rule as follow: Existing sub-rule(7) An air ticket issued for international travel covering more than one destination on flights operated by one or more airlines shall be chargeable to excise duty by the airline issuing the ticket and shall be charged at the rate of excise duty applicable for the farther destination in terms of distance from Pakistan.R.O.O S. shall be of the uplifting airline. China. 599(I) / 2012 This S.R.Os rescinded.R.R. Saudi Arabia.R. 2005 Notable Notifications: Withdrawal of FED Exemption S.O Rebate given of Federal Excise Duty. As excise duty on international travel to Pakistan has proposed to be withdrawn. 603(I) / 2012 This S. 1229(I)/2007 S.R.O.O rescinds 6 notifications already issued by Federal Government of Pakistan.O. 777(I)/2006 Subject Matter of the S.O.Federal Excise Act. so such excise duty will not be called as Air Travel Tax (ATT).1952) Rates of excise duty chargeable on the tickets issued for the services of travel by air on international journey originating from Pakistan to SAARC countries.O. Australia and South America Exempting the import and supply of solvent oil (PCT heading 2710.R. matters discussed in them and the effect of rescission thereof is given hereunder: Rescinded S. dated June 13. Proposed sub-rule(7) Where an airline operating in Pakistan uplifts passengers from Pakistan for another airline.R. 949(I)/2006 S. FED on Air Tickets Rationalized S. excise duty chargeable on all international air tickets issued by airlines or through their agents for international journey terminating in Pakistan has been withdrawn.O 47(I)/2012 Exemption withdrawn Exemption withdrawn Rates withdrawn . By virtue of this S. Far East.R. paid on base oil used in the manufacture of the motor lubricating oil for different automobiles Fixing the minimum price of lubricating oil in packs at US$ 2 per litre for the purpose of assessment of excise duty at import stage (PCT headings 2710.R. Afghanistan.O.R.R.R.R. 671(I)/2006 S. 807(I)/2005 S.O.1150) for manufacture of shoe adhesives subject to certain conditions Exempting special Excise Duty levied on the tractor parts by registered vendors to the manufacturers of agricultural tractors Levying FED on facilities for travel services at specified rates 30 Effect of Rescission Rebate withdrawn Price determination as per normal procedure Rates withdrawn S. Middle East.O. 600(I) / 2012 This S. collect and pay Federal Excise Duty with respect to such passengers.O.

1969 Customs Act. 3BBB. Punishment for Certain Offences Altered The Finance Bill. 89(i) and 92 of Section 156(1) Applicable to General Serial No. 3BB. 64 of Section 156(1) Section 128 & Section 129 Serial No. The punishment. 101. 8(i).Tax Handbook 2012 Customs Act. be enhanced. 2012 seeks to authorize the Board to make changes in the Pakistan Customs Tariff. for transferring certain classes of goods subject to prescribed conditions and transit of goods across Pakistan to a foreign territory. Additional Functionary Directorates Established Section 3AA. Serial No. 1969 Definition of 'Smuggle' Broadened Section 2 (s) The Finance Bill. The new proposed directorates are: Directorate General of Transit Trade Directorate General of Reform and Automation Directorate General of Risk Management Directorate General of Intellectual Property Rights Enforcement Board Empowered to Change Pakistan Customs Tariff Coding Section 18E The Finance Bill. 2012 proposes the following amendments in provisions for punishment for following offences: Section 156(1) Punishment The punishment. 1969 merely for the purposes of aligning statistical suffix of the Pakistan Customs Tariff (PCT) codes with World Customs Organization (WCO). 2012 seeks to introduce new additional functionary directorates for the purposes of jurisdictional administrative division evident from the assigned nomenclature. 3CC The Finance Bill. of whipping under this section. 2012 proposes to insert “en route pilferage of transit goods” in definition of 'smuggle' in an effort to curb en route pilferage for evading duties. to be totally eliminated. Serial No. 155J and 155K 31 . Prosecution to those instances where attempts are made to make unauthorized access or to interfere with Custom Computerized System or to make unauthorized use of unique user identifier by any person. 102 and 103 of Section 156(1) Sections 155I. to be enhanced by including imprisonment for a term of up to 5 years. specified in the First Schedule to the Customs Act.

000.000 not exceeding Rs.000 - Proposed Limit without limit not exceeding Rs. 1969 Adjudicating Jurisdiction and Powers of the Officers Changed Section 179(1) The Finance Bill. the Bill proposes to allow the mode of disposal of goods through electronic auctions.000. 2012 proposes to authorize the authorities to condone the time limit in complying with the procedural requirement whereby the delay is beyond the control of the concerned person.000 Departmental Appeals Allowed before Collector (Appeals) & Appellate Tribunal Section 193(1). 2012 proposes revision in the jurisdiction and powers of the officers of Customs in terms of amount of duties and other taxes involved thereby.000 not exceeding Rs. 32 .Customs Act. 800. (i) (ii) (iii) (iv) (v) (vi) Adjudicating Authority Collector Additional Collector Deputy Collector Assistant Collector Superintendent Principal Appraiser Existing Limit without limit not exceeding Rs.000 not exceeding Rs. 194 A The Finance Bill. 3.000 not exceeding Rs. 2012 proposes that any person or officer of Customs may prefer to file an appeal to the Appellate Tribunal against any order passed by any officer of Customs not below the rank of Additional Collector under section 179. The Finance Bill. Condonation of Time Limit Section 224 The Finance Bill. 500. No. Section 201 Rewards for Meritorious Conduct Section 202 B The Finance Bill. 2012 seeks to introduce the system of award for those officers and informers who render meritorious conduct in cases involving evasion of Custom duty and taxes and confiscation of goods after the realization of whole or part of duty and taxes involved. 1. 300. S. 2012 proposes that officer of Customs aggrieved by any decision or order passed by officer of Customs below the rank of Additional Collector may also prefer an appeal to Collector (Appeals) within thirty days of the date of communication to him of such decision or order.000 not exceeding Rs. 50. Electronic Auction for Sale of Goods Allowed In the wake of growing trend of e-trading. 50. The procedure of such reward is proposed to be introduced by the Board by notification in the Official Gazette.

2006.R.1010 3215.5700 Description Shredded tyre scrap Black ink Colour ink CTP plates Fully sensitized cheque paper weighing 40 g/m2 or more but not more than 150 g/m2 Red bleed through ribbons for dot matrix printers Anti-forgery security printing ink Present Rate 20% 20% 20% 10% 20% Proposed Rate 10% 10% 10% 5% 10% Condition If imported by cement manufacturers If imported by Printing Industry 9612.O.O.Tax Handbook 2012 Customs Act.R. 23A 44A PCT Code 4004. wiring switch sockets 12Volt Water resistant floor Suction unit Suspension system of base vehicle to be spring and shock absorber type and not exclusively of leaf spring type Permanent markings as ambulance on the front and rear of the vehicle The S. 33 .1190 3215.O.R.R. examination light. further seeks to amend Table-III of S. seeks to amend Table-I of S. 1969 Notable Notifications Rates of Duty Reduced on Certain Items S. 574(I)/2012 This S. S.3020 4802.1990 20% 20% 10% 10% The notification also seeks to restrict the concession of Customs duty at 0% only to ambulances having following features: Rear panel and rear step Stretcher of 8 feet length in case of hiace type vehicles and 6 feet in case of mini-van type vehicles Folding seats for 2-4 persons Oxygen supply system with cylinder Rotary lamp and siren Fire extinguisher Hooks for intravenous infusion giving sets / bottles Small cabinet for medicines Nebulizer.R. 567(I) / 2006 dated June 5.R.O. Custom duty on following items shall be levied at reduced rate specified hereunder against each item.O. dated June 5.1990 3701.0020 3215.O. By virtue of this S. room light. 2006 by reducing the rate of Customs duty from 10% to 5% on 87 pharmaceuticals ingredients. No. 567(I)/2006.

R. instead of twenty four months from the date of approval of DTRE application. seeks to amend rule No.O. 482(I) / 2009.R.R. 1 Revising SRO (New) S. 1 6 PCT Code 0802. 2009 by substituting certain items in the table for levy of regulatory duty on import of goods. 570(I)/2005 DTRE Scheme Rationalized S.O.O.R.Customs Act.R.O. 34 . only if the value addition is not less than 15%.8000 2403. 582(I)/2012 SRO Revised S. 586(I)/2012 S.R.R.R. 1969 Exemption on Certain Items Withdrawn S.O. 1296(I)/2005 4 S. and goods imported shall be utilized within twelve months. 1969 Other (Newly Inserted) Rate of Regulatory Duty 10% ad valorem 15% ad valorem Smoking tobacco. 577(I)/2012 This S.R.R.O. 297 and 305 of Custom Rules.R.O.O.O.R. 584(I)/2012 S. 558(I)/2004 5 S.1100 Existing Betel Nuts Description Proposed Areca nuts (Betel nuts) Water pipe tobacco specified in Subheading Note 1 of Chapter 24 of the First Schedule to the Customs Act. 585(I)/2012 S.O.R.R. seeks to amend S. 2001 by attaching condition that DTRE facility shall be available to persons who manufacture and export goods in accordance with the prevalent value-addition of the relevant industry. dated June 13.O. No.O.O. whether or not containing tobacco substitutes in any proportion 6A 2403.1900 15% ad valorem Notification under Free Trade Agreements Rearranged S. 583(I)/2012 S.O. 659(I)/2007 Description Substituted Table-I and Table-II in respect of certain items imported into Pakistan from Peoples Republic of China under Free Trade Agreement (FTA) Substituted Table-I and Table-II in respect of certain items imported into Pakistan from Malaysia under Free Trade Agreement (FTA) Substituted Table-I and Table-II in respect of certain items imported into Pakistan from Peoples Republic of China under Free Trade Agreement (FTA) Substituted Table-I and Table-II in respect of certain items produced in and imported from Islamic Republic of Iran or the Republic of Turkey and SAARC countries imported into Pakistan under Free Trade Agreement (FTA) Substituted Table-I and Table-III and Table-IV in respect of certain items imported into Pakistan from Sri Lanka under Free Trade Agreement (FTA) 2 3 S.O.601(I)/2012 This S. S. No. 1261(I)/2007 S.R.

2012 seeks to reinforce the amendments introduced in the Finance (Amendment) Ordinance. 100 per square feet of the covered areas of the immovable property or value as per DC rate 2% of recorded value of the landed area or value as per DC rate Rs. Cantonment Board and the rating areas as defined under the Urban Immovable Property Act.No 1 1a Description of Property Where the value of immovable property is recorded Where the value of immovable property is not recorded Where the value of immovable property is recorded Where the value of immovable property is not recorded Where the immovable property is a constructed property Rate of CVT 2% of recorded value or value as per DC rate Rs. by virtue of which a person shall not be liable to pay CVT on the capital value of shares of public listed company acquired by him. 2012. Revision in rates of CVT on Residential Flats of any Size and Commercial Immovable Property Situated in Urban Areas The Bill proposes to apply CVT on following rates on the above-cited properties. Section 7(2) Category Residential flats S. 1985 are proposed to be excluded from the definition of 'urban area' under CVT law. Further. 100 per square feet of the landed area or value as per DC rate Rs. 10 per square feet of the constructed area in addition to the value worked out above Whichever is higher Whichever is higher Whichever is higher Whichever is higher Whichever is higher Commercial immovable property 2 2a 2b 35 .Tax Handbook 2012 Miscellaneous Laws Capital Value Tax (CVT) Exemption of CVT on Shares of Public Listed Company Section 7(1) The Finance Bill.

Feed Stock (except for fertilizer plants having fixed price contracts) Compressed Natural Gas (CNG) (a) Region .I Khyber Pakhtunkhwa. due to inadvertence. 1931 The provision of the Finance Bill. 2012 seeks to increase the maximum rate of cess as follows: Section 3(1) S.Miscellaneous Laws Gas Infrastructure Development Cess Act. 2012: Service of show cause notice on a person for payment of tax or charge not levied. misconstruction or by reason of collusion or a deliberate act Change in the rate of FED on cigarette and cement and withdrawal of FED on certain items specified in the First Schedule to the Federal Excise Act./MMBTU) Proposed Cess (Rs. 2011 The Second Schedule Increase in Rates of Cess The Finance Bill.No 1 2 Sector Fertilizer . short levied or erroneously refunded. 2012 regarding the following matters shall be immediately applicable with effect from 2nd June./MMBTU) 197 141 79 13 27 70 300 300 200 100 100 100 3 4 5 Declaration under the Provisional Collection of Taxes Act. Islamabad & Gujarkhan) (b) Region . 2005 Customs tariff as provided in the First Schedule to the Customs Act. under the Sales Tax Act. Baluchistan & Potohar Region (Rawalpindi. 1969 36 . 1990.II Sindh & Punjab (excluding Potohar Region) Industrial (including Captive Power) WAPDA/KESC/GENCOs Independent Power Plants (IPPs) Existing Cess (Rs. error.

Tax Handbook 2012 Tax Planning Guide For Corporations & Individuals .

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1. yards or more. or the Islamabad Capital Territory. 35.Tax Handbook 2012 Income Tax Income Tax Who is Required to File a Return of Income? Following persons are required to furnish a return of income for a tax year: every company every AOP individual whose taxable income for the year exceeds Rs.000.000 What Year End Can a Taxpayer Adopt? Class of Person Companies. or owns any flat located in areas falling within the municipal limits existing immediately before the commencement of Local Government laws in the provinces. 1. Association of persons and Individuals Sugar Banking and Insurance Companies Ginners.000 Who is Required to File Wealth Statement? Every resident taxpayer filing a return of income whose declared or assessed income is Rs. The following are excluded from this category: • • • • widows orphans below the age of 25 years disabled persons non-resident Pakistanis in case of ownership of immovable property owns immovable property with a land area of 500 square yards or more located in a rating area owns a flat having covered area of 2.000.000 or more Every resident taxpayer filing statement under FTR and has paid tax of Rs. or area in a Cantonment. 400.000 any non-profit organization any person who has been charged to tax in respect of any of the two preceding tax years claims a loss carried forward under the Income Tax Ordinance for a tax year owns immovable property with a land area of 250 sq. Rice huskers. Oil mills Shawl manufacturers Tax Year Type Normal Tax Year Special Tax Year Special Tax Year Special Tax Year Special Tax Year Year End July 01 to June 30 October 01 to September 30 January 01 to December 31 September 01 to August 31 April 01 to March 31 37 .000 square feet or more located in a rating area owns a motor vehicle having engine capacity above 1000cc has obtained National Tax Number has industrial and commercial electricity connection and the amount of annual utility bills exceed Rs.

2012 September 30.Income Tax When to File the Return of Income? Status Salaried Individual & Non-corporate Taxpayer (falling under FTR) Other Individual & AOP Company (including falling under FTR) Company Company Year End June 30. 2012 June 30. 2012 June 30. 500. 2013 September 30.000 Every Association of Person Every Company When to Pay Advance Tax by an Individual? Individuals have to pay advance tax within 15 days after the close of each quarter. 2012 December 31. When to Pay Advance Tax by an AOP or Company? Period 1st of July to 30th September 1st October to 31st December 1st January to 31st March 1st April to 30th June Quarter September quarter December quarter March quarter June quarter Payment Date On or before the 25th of September On or before the 25th of December On or before the 25th March On or before the 15th of June 38 . 2013 Tax Year 2012 2012 2012 2013 2013 Who is Required to Pay Advance Tax? Every business individual whose latest assessed taxable income excluding the presumptive tax income is more than Rs. 2012 Date of Filing August 31. 2012 December 31. 2012 September 30. 2012 September 30.

500.000 Rs. 400.000 Rates 0% 10% of the amount exceeding Rs. 750. 2. 347.000 Taxable income exceeding Rs.000 but not exceeding Rs. 1. 1. 35.000.500 + 25% of the amount exceeding Rs.000 Rs. 1.500.000 + 15% of the amount exceeding Rs.000 Taxable income exceeding Rs. 400. 1. AOP (having turnover more than 50 million) and individuals (having turnover more than 50 million) at the rate of 1% (in budget speech 2012. Minimum Tax Minimum tax is applicable to a resident company.500 + 20% of the amount exceeding Rs.000. provided his total income excluding FTR income does not exceed Rs.500.000 Special Rebates To Senior Citizens A rebate of 50% of the tax payable is allowed to senior citizen who has attained the age of 60 years or above. 400. rate is proposed to be reduced to 0.000 Rs.000 and the varying slab rates range from 10% to 25% as under: Income Brackets Taxable income not exceeding Rs.000 but not exceeding Rs. 400.000 Taxable income exceeding Rs.500.500.000 Taxable income exceeding Rs. employed in a non profit education or research institution recognized by a Board of Education or Higher Education Commission including Government training and research institution. 750.500. 147. 39 .000 but not exceeding Rs. 750.5%) of turnover even if the business sustain losses except a company which has declared gross loss before depreciation and other inadmissible expenses.Tax Handbook 2012 Income Tax Rate of Tax for Business Individuals and AOPs The basic exemption limit for business individuals and AOPs is Rs. To Teachers and Researchers A further rebate of 75% of taxpayable on salary income is allowed to a full time teacher or a researcher. 2. 2.

242.000 Rs.500 + 10% of the amount exceeding Rs. 1.050.000 Marginal Taxable Amount 20% 30% 40% 50% 60% 40 . 2.500 + 15% of the amount exceeding Rs.000 Exceeds Rs. 2. 2.500. 4.550.550.000 Rs.000 but not exceeding Rs. 550.Income Tax Rate of Tax for Salaried Individuals The basic exemption limit for salaried individuals is Rs.500 + 20% of the amount exceeding Rs. the income tax payable shall be the tax payable upto the maximum of the slab exceeded plus tax on marginal amount as under: Income Bracket Where total income: Does not exceed Rs. 2.500.000 but not exceeding Rs. 400. 400.000 Does not exceed Rs. 400. 750.250.000 Taxable income exceeding Rs. 17.500.500.500.000 but not exceeding Rs.000 Marginal Tax Relief for Salaried Taxpayers Where the total income of the taxpayer marginally exceeds the maximum slab limit.000 Does not exceed Rs.000 Taxable income exceeding Rs. 4.500.000 and the varying slab rates range from 5% to 25% as under: Income Brackets Taxable income not exceeding Rs. 1.000 Rates 0% 5% of the amount exceeding Rs.000 Taxable income exceeding Rs. 1.000 Does not exceed Rs. 400. 1.000 Rs.000 Taxable income exceeding Rs. 750. 92. 750.

000.00% of the gross amount exceeding Rs. 400.000.50% of the gross amount exceeding Rs.000 but does not exceed Rs. 150.000 Rs.000. 400. 1.000 Rs. 65.000 Rate of Tax 41 .000 Nil 5.Tax Handbook 2012 Income Tax Tax on Rental Income In case of non-corporate taxpayers: Gross Amount of Rent Where the gross amount of rent: Does not exceed Rs. 1. 400.000. 400.000 Exceeds Rs.000 Exceeds Rs.000 plus 10. 400.00% of the gross amount exceeding Rs. 20.000 Exceeds Rs. 57.000 Rate of Tax In Case of Corporate Taxpayers Gross Amount of Rent Where the gross amount of rent: Does not exceed Rs. 1.000 Rs.00% of the gross amount of rent Rs.00% of the gross amount exceeding Rs. 1. 150.50% of the gross amount exceeding Rs.000 but does not exceed Rs.000 Exceeds Rs. 400.000 5.000.000.000 plus 7. 1.500 plus 10. 1. 12.500 plus 7.000 Exceeds Rs. 150.000 but does not exceed Rs.

00 % of tax payable Equal to 100% of tax payable (Conditions apply) Equal to 100% of tax payable attributable to new expansion (Conditions apply) 42 . modernization and replacement of plant & machinery from July 1. 1. 750.000 Lower of: total contribution or premium paid by individual 20% of taxable income Lower of: total profit paid 50% of taxable income Rs.Income Tax Allowances and Tax Credit Section 60 61 Particulars Zakat Charitable Donation Concession Straight income deduction Straight income deduction / Tax credit Tax credit N/A Maximum Limit Lower of amount of donations or: 30% of taxable income in case of individual and AOP 20% of taxable income in case of company Resident person other than company shall be allowed Lower of: total cost of acquiring shares / insurance premiums paid 20% of taxable income Rs. 2011 to June 30. 2016 Enlisting a company on stock exchange Equity Investment Equity Investment Tax credit 65B Tax credit 20% of tax payable 65C 65D 65E Tax credit Tax credit Tax credit 15.000 2.50% of tax payable 62 Investment in Shares and Insurance 63 Approved Pension Fund Tax credit 64 Profit on Debt or Share Tax credit 65A If 90% of sales by the manufacturer are made to sales tax registered persons Balancing.000.

50.000.000 plus 0.000 Rs. 5.000.5% of the turnover exceeding Rs.Tax Handbook 2012 Income Tax Tax Rates for Companies Company Banking Company Public Company (other than a banking company) Private Company (other than a banking company) Small Company having turnover upto Rs.000 Rs. 250 million Tax Rate 35% 35% 35% 25% Fixed Tax on Turnover in Case of Individual and AOPs Category In case of individual or AOP being retailer and having turnover upto Rs.5% of turnover as final tax Rate Individual and AOP retailer cannot claim any adjustment of withholding tax collected or deducted under any head during the year Rate of Tax on Capital Gains on Disposal of Immovable Property Period for which Immovable Property is Held Up to 1 year More than 1 year but less than 2 years Rate 10% 5% 43 . 25.000 Exceeding Rs.000 0. 5.000. 10.000. 5.000. 10.75% of the turnover exceeding Rs.000 but does not exceed Rs.000 plus 0.000 In case of individual or AOP being retailers having turnover Exceeding Rs. 10.000.

technical or professional books Computer hardware including printer. 250. not exceeding Rs. monitor and allied items Machinery and equipment used in manufacturing of I.000 each Rate 10% 15% 30% 100% 20% 100% Third Schedule (Part II) Depreciation Allowance Description Initial allowance First year allowance First year allowance (in case of alternate energy projects) Section 23 23A 23B Rate 25% (For buildings) 50% (Other eligible assets) 90% 90% 44 .Income Tax Third Schedule (Part I) Tax Depreciation Rates Description Building (all types) Furniture (including fittings) Machinery and plant (not otherwise specified) Motor vehicles* (all types) Ships.T. products Aircraft and aero engines Below ground installations Offshore platform and production installations A ramp built to provide access to person with disabilities.

Tax Handbook 2012 Income Tax Penalties Default Failure to file any return of income Failure to pay any tax (other than a penalty) In case of first default In case of second default additional penalty In case of third and subsequent defaults additional penalty Concealment of income or furnishing of inaccurate particulars of income Failure to maintain records Making of false or misleading statement Penalty for obstructing the access of comissioner Penalty for obstructing any Income Tax authority in performance of his official duties 5% of the amount of tax on default 25% of the amount of tax on default 50% of the amount of tax on default 25. 25. 10.000 & maximum 25% of tax payable Additional Tax Failure to pay tax excluding advance tax pay any penalty pay any other amount of tax under the Income Tax Law pay advance tax collect tax deduct tax deposit tax deducted or collected 18% per annum of amount of default 45 .000 or 100% of the tax involved. whichever is higher Rs. 25.000 or 100% of the amount of tax short fall. whichever is high Rs.000 or amount equal to tax sought to be evaded by concealment or furnishing of inaccurate particulars which ever is high Rs. 25. 5.1% of tax payable per day subject to minimum Rs.000 or 5% of the amount of tax on income whichever is high Rs.000 Rate of Penalty 0.

silver. supervisory activities and advertisement services Other payments to non-resident except payment to foreign news agencies. broadcasting equipment. 10. urea fertilizer etc. 150. Company.000 per month After Deduction of Zakat 10% 10% 10% 10% 10% 10% Bank / Financial institution Banking Co.000 (In case of non-corporate taxpayer) Federal Govt. syndicate services & non-resident contributing having no permanent establishment in Pakistan Profit on Debt On payment of insurance or re-insurance premium Payments to non-resident media persons 20% 5% 10% Payer When actually paid 153 Payment to resident company on account of: Sale of Goods: Sale of rice.000 Minimum Final except for listed companies Final Final Nil Nil Government Company. wood. medical surgical & dental equipment.. coal.. 25. 150. Finance Society Federal Government.Deduction/Collection of Tax at Source Standard Tax Rates Adjustable/ Final Discharge Persons Required To Deduct/Collect Tax Custom Authorities Section/ Sub-section of I. certain medicines & vaccines. gold. Financial Int. lottery or cross word puzzle Prize on winning of quiz & prize offered by companies for promotion on sales 10% 20% 10% Average rate of tax Final Nil Payer When actually paid 156A Payment of commission to petrol pump operators Final Final Nil 25% of accumulated balance Every person selling petroleum products Pension fund manager Monthly Monthly Income Tax 46 156B Payment on account of approved pension fund . under national saving scheme Profit on TFCs Profit on banking account or deposit Profit on security Profit on Post Office Saving Account Profit on security issued by Federal Government. a registered AOP.Tax Ord. capital goods. Local Authority or a company When Paid At time of realization 154 Exports Foreign exchange proceeds on account of indenting commission 155 Income from Property Monthly 156 Prize on prize bonds.5% 3. mobile phones. Provincial Government or Local Authority Final Interest on investment up to Rs. assembly.5% 1% Final except for manufacturercum-supplier & listed companies Rs. installation projects. 149 10% Payer of Profit Final Nil Payer Income from Salary Average rate of tax Adjustable Rs. 400.000 Every Employer Monthly When Paid 150 Dividends 151 Profit on Debt: National saving deposit including DSC. Nature of Payment/Transaction Exemption Limit Statements of Tax Collected/Deducted Subject to certain exclusion 5% 3% 2% 1% Final except for imports for self use by manufacturers 148 Imports: Commercial imports Raw material imports by an industrial undertaking Pulses Fiber fabrics (other than of cotton). Provincial Government or Local Authority When credited or paid which ever is earlier 152 15% 6% 6% 20% Final Nil Payment to Non-Resident on account of: Royalty. wheat raw. sugar.000 When actually paid Rendering of Services: Passenger transport services & News print media services Other services 2% 6% 6% 1% 1% 5% As per slabs Rs. foreign contractor or consultant or a consortium or a joint venture. Individual with turnover exceeding 25 million. AOP with turnover exceeding 50 million and exporter of export house Execution of Contract (other than supply of goods & rendering of services) 153A Manufacturers to collect tax at source from traders and distributors Payer Collector / Authorized dealer in foreign exchange Final Rs. cotton seed or edible oil Sale of any other goods Sale of edible oil to manufacturer of cooking & vegetable ghee mills 1. winning from raffle. Provincial Govt. 1.000 is exempt in case of National Saving Scheme and TFCs and where installment is less than Rs. cement. fee for technical services to a non-resident Person Execution of Contract (other than for supply of goods & rendering of services) Contract for construction.

000 Person preparing mobile and phone bills and person selling prepaid cards Monthly 236A Sale of any property or goods by auction / tenders N/A Person making sale by auction At time of realization 236B Purchase of air tickets 5% Adjustable N/A Person making sale Income Tax At time of realization of sale proceeds 2012 47 . 50. 400 but does not exceed Rs. 50.500 Rs. 6. 1200 Per Annum After 10 years from 1st registration Tax on motor vehicle Goods transport vehicle of: Ladden weight till 8119 Kg Ladden weight 8120 Kg or more Annually Final / Adjustable N/A Excise and Taxation Department In case of passenger transport vehicle with seating capacity of: 4 or more person but less than 10 person 10 or more person but less than 20 person 20 or more person Other private motor car with engine capacity of: Upto 1000CC 1001CC to 1199CC 1200CC to 1299CC 1300CC to 1599CC 1600CC to 1999CC 2000CC and above Rs. 80 Rs.000 but does not exceed Rs. 10.000 Exceeds Rs. 10. 1. 3.000 Exceeds Rs.000 Subscriber of mobile phone and prepaid mobile & telephone cards Sale of units through any electric medium or whatever form 10% 10% 10% Fully adjustable for companies whereas adjustable upto the extent of tax liability for individuals and AOPs 5% Adjustable Rs. 800 Exceeds Rs. 1. 500 Rs. 1. 300 whereas adjustable upto the extent Rs. 15. 1. 1750 Rs. 600 Exceeds Rs. 600 but does not exceed Rs. 5 Per Kg of laden weight Rs. 20. 4. 20. 750 Rs. 450 AOPs Rs.500 At 5% (Industrial consumer) At 10% (Commercial consumer) N/A Person preparing Electricity bills Monthly 236 Tax Handbook Telephone subscriber where the monthly bill exceeds Rs. 400 Exceeds Rs.01% 0.875 Rs.000 Every banking company When cash is with drawn 0. 800 but does not exceeds Rs. 650 Rs.000 Adjustable Nil Registering Authority 10% Final Nil Payer At time of registration 233 Brokerage and Commission When actually paid 233A 0.500 but does not exceed Rs.Tax Ord. 15.500 but does not exceed Rs. 16. 350 of tax liability for individuals and Rs.000 Exceeds Rs. 25.Section/ Subsection of I. 100 Rs. 1.000 but does not exceed Rs. 1.500 Exceeds Rs. 4.500 Rs. 160 Fully adjustable for companies Rs.000 but does not exceed Rs.875 Rs. 10.000 but does not exceed Rs. 1.000 Exceeds Rs. 25 per seat Rs. Nature of Payment/Transaction Adjustable/ Final Discharge Adjustable Rs.500 Rs. 1.000 but does not exceed Rs. 60 per seat Rs. 8000 4% Final Nil 234A Tax on gas consumption charges of a Compressed Natural Gas (CNG) Station Person making consumption bill Monthly 235 Electricity Consumption Does not exceed Rs. 3000 Rs.01% Final Nil Stock exchange Collection of tax by stock exchange registered in Pakistan on account of: Purchase of shares Sale of shares At time of payment 234 Rs. 6.000 0 Rs.000 Rs. 500 per seat Rs.000 Rs.2% Standard Tax Rates Exemption Limit Persons Required To Deduct/Collect Tax Statements of Tax Collected/Deducted 231A Cash withdrawals from bank 231B Purchase of motor vehicle manufactured locally with engine capacity: Up to 850CC 851CC to 1000CC 1001CC to 1300CC 1301CC to 1600CC 1601CC to 1800CC 1801CC to 2000CC Above 2000CC Rs. 7.000 Rs. 16.4.000 Exceeds Rs. 22.000 Exceeds Rs.500 Exceeds Rs. 1250 Rs. 3.

importers & wholesalers Exporters fall under zero-rated category (@ 0%) Retailers fall under special procedure for payment of sales tax 48 .5 million Up to Rs.Sales Tax Sales Tax Applicability Sales Tax is applicable at the rate of 16% of the value of: Taxable supplies made by a registered person Goods imported into Pakistan Sales Tax Filing of Sales Tax Return The sales tax return is to be filed within 15 days from the close of month by the registered persons Sales Tax Registration Threshold Annual Turnover of Taxable Supply Manufacturers or Producers Retailer Importers and Exporters Wholesalers (including Dealers) and Distributors More than Rs. 2. 2.5 million More than 50 million Making Taxable Supply Sales Tax Exempt u/s 13 Sales Sales Tax Tax GST @ 16% on manufacturer.

25. 10. 5.000 or 10% of amount of tax involved whichever is higher Violates any embargo placed on removal of goods in connection with recovery of tax Failure to submit summary of sale and purchase invoices required under this Act Fails to notify change in nature of supply Fails to issue invoice Un-authorisely issues invoice Fails to deposit tax *Repeats erroneous calculation Contravenes any provision of this Act for which no specific penalty is provided and fails to fulfil conditions prescribed in a Notification Fails to make payment in the manner prescribed in Section 73 Rs.000 Rs.Penalties If any person Fails to furnish return within due date Non production of record Required to enrol / register himself and fails to do so Fails to maintain records Rs. 5. 10. knowingly and without lawful authority gains access to the computerized system unauthorizedly uses or discloses or publishes information obtained from the computerized system falsifies any record or information stored in the computerized system knowingly or dishonestly damages or impairs the computerized system knowingly or dishonestly damages or impairs any duplicate tape or disc or other storage medium unauthorizedly uses unique user identifier of any other registered fails to comply with or contravenes security of unique user identifier * No penalty shall be imposed. 25. or with fine which may extend to an amount equal to the loss of tax involved.000 or 3% of amount of tax involved whichever is higher Rs. 5. 10. 5. causes to commit or attempts to commit tax fraud Denies or obstructs Sales Tax Officer posted to business premises to access record and to perform his duties Rs. 25. Refer to Section 33 of the Sales Tax Act for complete reference of penalties. to imprisonment for a term which may extend to one year. upon conviction by the Special Judge. further be liable.000 due to failure to furnish the information required by Board Twice of the amount of penalty for the said offence Rs. 5. *Default Surcharge at the rate KIBOR plus 3% per annum of the tax due would be imposed in the case of inadmissible input tax credit or refund and on nonpayment of tax and such tax would be calculated on the basis of period of default. 25. 10.000 or 100% of tax involved whichever is higher Rs.000 Rs.000 or 5% of amount of tax involved whichever is higher Rs.000 or 3% of tax involved whichever is higher Rs. Tax Handbook Sales Tax 2012 49 .000 or 5% of amount of tax involved whichever is higher Makes or files false documents.000 Penalty of Rs. statements and declaration Destroys or alters the record Denies or obstructs authorised officer to access record and to perform his duties Commits. 5. if miscalculation is made first time during the year.000 Rs.000 or 100 % of amount of tax involved whichever is higher Such person shall. 100 for each day of default Rs. or with both. * Certain defaults attract imprisonment along with penalty.000 Repetition of an offence for which a penalty is provided under this Act If return is filed in 15 days of due date than penalty of Rs. 10.000 Penalty of Rs.000 or 3% of amount of tax involved whichever is higher Rs.000 or 5% of tax involved whichever is higher On receipt of 1st notice 2nd notice 3rd notice Rs. 50.

Personal responsible for registering or attesting the tranfer of asset. CVT on Real Estate Transactions Capital Value Tax is leviable on the real estate transactions of sale and purchase in the following manner: Nature of Transaction Residential immovable property (other than flats) situated in urban area.01% of purchase value Collected by Personal responsible for registering or attesting the tranfer of asset.10 per square feet of the constructed area in addition to the value worked out above 2 % of the recorded value of land Rs.100 per square yard of the landed area Rs.02% of purchase value 0.Capital Value Tax (CVT) Certificates / Instruments of Redeemable Capital Capital Value Tax is levied on the transactions of certificates or any instrument of redeemable capital as under: Capital Value Tax Purchase Modaraba certificates or any instrument of redeemable capital Purchase of shares of a public company listed on a registered Stock Exchange Rate of CVT 0.100 per square feet of the landed area Rs.10 per square feet of the constructed area in property addition to the value worked out above Residential flats Where the value of immovable property is recorded Where the value of immovable property is not recorded 2 % of the recorded value Rs.100 per square feet of the covered area 50 . measuring at least 500 square yards or one kanal whichever is less Where the value of Immovable property is recorded Where the value of immovable property is not recorded Where the immovable property is a constructed property Commercial immovable of any size situated in urban area Where the value of immovable property is recorded Where the value of immovable property is not recorded Where the immovable property is a constructed Rate of CVT 2 % of the recorded value Rs.

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