Sharif ud din Khilji

Chief Executive
Khilji & Co. Chartered Accountants

SUPER TAX
TAX ON RESERVES

SK TAX NOTES
WHT (FTR & NTR)

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SALARY

Applicable Section 149.

Already discussed

SK TAX NOTES
during Salary
Presentation.
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 SUPPLIES, SERVICES & CONTRACTS
Sales of goods MTR – Individual, AOP, company except: Check rate card for
1. Company being a manufacturer rates
2. Listed company
3. Clause 56C allows to opt for NTR subject to the condition that
tax liability under NTR is not less than 3.5% of gross amount of
sales for companies and 4% for others
Note: reduced rate are applicable for certain suppliers.

Services MTR – Individual, AOP, Company Rate card

SK TAX NOTES
Note: Where recipient of payment receive payment through agent
and agent retains service charges, the agent is treated to have been
paid service charges and recipient shall collect tax along with the
payment received.

Contracts MTR – Individual, AOP, company except listed company Rate card

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SUPPLIES, SERVICES, CONTRACTS – OTHER PROVISIONS2

• Where importer, who has paid tax under section 148, supplies such
imported goods in same condition, provisions of section 153(1)(a)
would not apply.
• On purchase of assets under lease & buy back arrangement, 153(1)
(a) would not apply.
• Tax deducted by a person making payment to special purpose
vehicle on behalf of originator, the tax is credited to originator.

SK TAX NOTES
• Prescribed person means Federal Govt, Company, AOP/ individual
having turnover of 100 million or above, non-profit organization,
foreign contractor or consultant, consortium or joint venture.
• Turnover in case of sale of goods is inclusive of sales tax, FED or any
trade discount. This is different from turnover from sale of goods
defined in Section 113 relating to minimum tax.
• Exemption certificate to be issued within 15 days otherwise
exemption to be automatically issued. 4
 Export of Services including IT - 1
Section 154A; 1% FTR for following:
1.Exports of computer software or IT services or IT enabled services
in case tax credit under section 65F is not available;
2.Services or technical services rendered outside Pakistan or
exported from Pakistan;
3.Royalty, commission or fees derived by a resident company from a
foreign enterprise in consideration for the use outside Pakistan of
any patent, invention, model, design, secret process or formula or
similar property right, or information concerning industrial,
commercial or scientific knowledge, experience or skill made
available or provided to such enterprise;
4.Construction contracts executed outside Pakistan; and
5.Other services rendered outside Pakistan as notified by the Board5
from time to time;
 Export of Services including IT - 2
Conditions
• Return has been filed
• Withholding tax statements for the
relevant tax year have been filed; and
• Sales tax returns under Federal or
provincial laws have been filed, if
required under law;
• No credit for foreign taxes paid shall be6
allowed.
 Export of Services including IT - 3
•Exercising of option to go for NTR instead of FTR
A person can also opt out of FTR however option to opt out
of FTR shall be exercised every year at the time of filing of
return under section 114.
No entitlement to take credit
The Finance Act provides that where a taxpayer, while
explaining the nature and source of any amount,
investment, money, valuable article, expenditure referred to
in section 111, takes into account any income which is
subject to FTR under section 154A, then such person shall
not be entitled to take credit of a sum that can be reasonably7
be attributed to the business activity mentioned in sub-
section (1) of section 154A.
Income From Property Section 155

•Already Discussed
while studying

SK TAX NOTES
Income From
Property
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Section 161 to 165
• Section 161/ Statements – Failure to collect or deduct tax or pay
tax collected or deducted/ Statements
• In case of failure to collect or deduct tax or payment of tax collected
or deducted, the withholding agent is treated as assessee/ taxpayer
in default.
• Principal amount + additional tax can be collected from tax payer in
default.

SK TAX NOTES
• Tax payer in default can recover principal amount from the person
from whom tax was to be collected or deducted
• Where principal amount has been paid by the recipient of income,
the withholding agent is only liable to pay additional tax
• Quarterly and annual withholding statements are required to be
filed for all tax collected or deducted
• Annual statement of reconciliation between financial statements/
tax return and withholding statements has also been introduced.
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Section 170, 171 Refund
• Excess tax paid can be claimed as refund within 3 years of the later
of:
• The date on which the Commissioner has issued the assessment
order to the taxpayer for the tax year to which the refund
application relates or
• The date on which tax was paid
• Refund can be:

SK TAX NOTES
• Applied by Commissioner to reduce any other tax due from the
taxpayer
• Applied in reduction of any outstanding liability of taxpayer; and
• Refund the remainder to taxpayer.
• Commissioner to pass order within 60 days on receipt of refund
application
• Section 170A for auto refunds if verifiable at ITMS
• In case of delayed refund department to pay additional amount @ 10
KIBOR plus 0.5% per annum (section 171) also treated as income
from other sources
 Auto Refund
Section 170A namely ‘Electronic processing and electronic issuance
of Refunds by the Board’ which states that regardless of anything in
section 170 of this Ordinance, beginning in tax year 2021, the Board
may process and issue refunds to taxpayers who have filed income tax
returns without requiring a refund application to the extent of tax
credits verified by the Board's computerized system as may be
prescribed. The refund amount will be electronically remitted to the
taxpayer's notified bank account under this provision.

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