Category: Budget

This is parent category of budgets presented by Pakistan government. Here you will find year-wise federal and provincial budgets.

Sindh increases salary by 15% from July 1, 2022

KARACHI: The Sindh government on Tuesday announced a 15 per cent raise in salary of provincial government employees and 5 per cent increase in pension effective from July 01, 2022.

Sindh Chief Minister Syed Murad Ali Shah announced raise in pay and pension while presenting the provincial budget 2022-2023.

READ MORE: Sindh unveils Rs1.714 trillion budget for 2022/2023

The chief minister announced various relief measures for employees and pensioners during next fiscal year.

He said Adhoc Relief Allowances 2016, 2017, 2018, 2019 and 2021 at the rates admissible to employees of Federal Government are being merged and Revised Basic Pay Scale 2022 for Civil Servants of Government of Sindh is being introduced on the pattern of Federal Government.

Adhoc Relief Allowance at the rate of 15 per cent of Basic Pay Scales to Civil Servants of Government of Sindh w.e.f. 1st July 2022 is proposed.

READ MORE: Khyber Pakhtunkhwa raises salary, pension by 15%

Disparity Allowance at the rate of 33 per cent of Basic Pay will be paid to Civil Servants in BPS-1 to 16 and at the rate of 30 per cent to Civil Servants in BPS-17 and above in lieu of the differential rate of Ad-hoc Relief Allowances 2013, 2015, 2016, 2017, 2018, 2019, 2020 & 2021, which are being abolished w.e.f 1st July, 2022.

Pensioners of Government of Sindh were already getting 22.5 per cent more increase in net pension than pensioners of Federal Government till February 2022. Therefore, an increase at the rate of 5 per cent of net pension will be paid to the pensioners of the Sindh Government w.e.f 1st July, 2022.

READ MORE: Khyber Pakhtunkhwa presents Rs1.33 trillion budget 2022-2023

Thus, after announcement of 10 per cent increase in net pension by Federal Government in March 2022 and enhancement of the rate of increase to 15 per cent from 1st July 2022, the pensioners of Government of Sindh will still be getting 12.5 per cent more of net pension than the pensioners of Federal Government.

READ MORE: Advance tax on immovable property purchase enhanced to 250% for non-filers

June 14, 2022
Sindh unveils Rs1.714 trillion budget for 2022/2023

KARACHI: Syed Murad Ali Shah, Chief Minister of Sindh on Tuesday presented provincial budget 2022-2023 with total outlay of Rs1.714 trillion.

The province estimated the deficit budget amounting Rs33.85 billion for the next fiscal year.

READ MORE: Khyber Pakhtunkhwa raises salary, pension by 15%

The chief minister said that the total budget outlay for Financial Year 2022-2023 is estimated at Rs.1.714 trillion, as against budget estimate of Rs.1.478 trillion for 2021-2022, showing overall increase of 15.9 per cent.

The current expenditure of the province is projected at Rs.1.254 trillion, which includes current revenue expenditure of Rs. 1.199 trillion and current capital expenditure of Rs.54.5 billion.

This is 73.2 per cent of total expenditure of the province and shows an increase of 9.1 per cent in comparison to the current expenditure for last year that was Rs.1.148 trillion.

READ MORE: Khyber Pakhtunkhwa presents Rs1.33 trillion budget 2022-2023

The chief minister said that for the next financial year, size of development budget will be Rs459.658 billion as compared to Rs. 329.033 billion in year 2021-2022, that will include Rs. 332.165 billion for Provincial Annual Development Plan (ADP) and Rs.30.00 billion for Districts ADP.

Foreign project assistance of Rs.91.468 billion from the development partners and Rs.6.025 billion are expected from Federal PSDP grant for schemes being executed by Government of Sindh.

Murad Ali Shah said shift in federal priorities during last four years caused the people of the second largest province face deprivation due to lack of infrastructure development and non-provision basic health facilities in rural areas.

READ MORE: Advance tax on immovable property purchase enhanced to 250% for non-filers

“Despite these difficulties we maintained our resolve towards our development objectives,” he added.

Hence, next year’s ADP will include schemes to provide basic facilities to the marginalized segments of society. More resources are being allocated for water and sanitation, road network, transport, health and education sectors to provide maximum relief to the common people in the next year’s ADP.

There are 2,506 ongoing schemes with allocation of Rs. 253.146 billion being 75 per cent of total ADP.

There are 1,652 new schemes with allocation of Rs.79.02 billion being 25 per cent age of total ADP

On-Going schemes where more than 70 per cent expenditure is made, have been fully funded for completion by June, 2023.

More than 1,510 schemes have been fully funded and are expected to be completed in next financial year 2022-23.

READ MORE: Pakistan massively increases taxation on motor vehicles

Allocation for Education Sector schemes is Rs. 34.22 billion (10.2 per cent of the total size).

Allocation for Health Sector schemes is Rs. 23.33 billion (6.5 per cent of the total size).

Allocation for Water and Sanitation Sector (PHE & LG) is Rs. 59.36 billion (18 per cent of the total size).

Allocation for Agriculture & Livestock sector is Rs 10.2 billion (3 per cent of total size)

Allocation for Irrigation including lining is Rs. 32.5 billion (12 per cent of the total size).

Allocation for Transport & Communication (Road under W&S and LG) sector is Rs. 100.64 billion (30 per cent of the total size).

Allocation for Karachi based schemes is Rs. 118 billion, Rs.72 billion under ADP, Rs. 5 billion under District ADP and Rs. 41 billion through Foreign Project Assistance.

Keeping in view the above non-development and development expenditure priorities, the major milestones of our objectives are:

READ MORE: New rates of capital gain tax on disposal of securities

Provide infrastructure to educational institutions for increased enrolment.

Improve and Upgrade health facilities and manage available health institutions

Provide nutrition support, community infrastructure funds, income generating grants, micro assets, and low cost housing for reducing poverty of poorest of the poor.

Increase agricultural productivity and value chain, Conservation of water for agriculture, industrial and municipal consumption.

Provide clean drinking water and safe disposal of sewerage.

Improve connectivity between major cities and towns of province.

Increase road connectivity and planned mass transit for Karachi city.

June 14, 2022
Khyber Pakhtunkhwa raises salary, pension by 15%

PESHAWAR: Khyber Pakhtunkhwa on Monday announced 15 per cent increase in salary of provincial government employees and 15 per cent increase in pension as well.

Finance Minister Taimur Salim Jhagra announced the increase in salary and pension of provincial employees while presenting the provincial budget 2022-2023.

READ MORE: Khyber Pakhtunkhwa presents Rs1.33 trillion budget 2022-2023

The minister announced Rs15 percent increase in salaries and pension of all the government employees, Rs15 percent ad-hoc relief allowance, adding the increase for grade1-19 employees besides DRA allowance.

He said risk allowance of police officials from grade 7-16 have been increased and was brought at par of DRA in line with the police martyrs package.

The Finance Minister Taimur Salim Jhagra said that Rs447.9 billion would be spent on salaries including Rs372.1 billion in settled districts and Rs75.8 billion through merged tribal districts while Rs107 billion on pension including Rs106 billion in settled districts and Rs one billion in merged tribal districts.

READ MORE: Advance tax on immovable property purchase enhanced to 250% for non-filers

He said 100 percent increase in pension expenditure have been witnessed in last couple of years, adding expenditure of pensions, which was only one percent of total KP budget expenditure in 2003-04 ie Rs0.87 billion has jumped to 14.7percent ie Rs90 billion in 2021-2022.

READ MORE: Pakistan massively increases taxation on motor vehicles

He said amendment in KP Civil Servant Act 1973 has been made under which contributory and provident fund were increased for newly recruited employees under contributory pension scheme under which either lumsum amount one time or long terms investment offer would be given to retired employees.

As many as services of 63,0000 employees would be regularized including 675 adhoc doctors from July 1, 2002, regularization of 58,0000 teachers and 4079 employees of 128 projects of erstwhile Fata during 2022-2023.

READ MORE: New rates of capital gain tax on disposal of securities

June 14, 2022
Khyber Pakhtunkhwa presents Rs1.33 trillion budget 2022-2023

PESHAWAR: Khyber Pakthunkhwa government on Monday presented Rs1.332 trillion budget for fiscal year 2022-2023.

The budget included an allocation of Rs1.11 trillion for settled districts and Rs223.1 billion for merged tribal districts.

Presenting its fourth budget at Khyber Pakthunkhwa Assembly floor, Finance Minister Taimur Salim Jhagra said that the volume of the current budget is Rs913.8 billion including Rs789.8 billion for settled districts and Rs124 billion for merged tribal districts.

READ MORE: Advance tax on immovable property purchase enhanced to 250% for non-filers

He said total development budget of Khyber Pakthunkhwa was Rs418.2 billion including Rs319.2 billion for settled districts and Rs99 billion for merged tribal districts.

Regarding revenue and receipts collection, the minister said that total receipts was estimated at Rs1,332 billion including Rs750.9 billion to be collected from federal taxes receipts and Rs68.6percent as one percent share of divisible pool on war on terror.

He said Rs31 billion would be collected through oil and gas royalty and surcharge and Rs61.9 billion through net hydel power in accordance of MoU 2015-16 and arrears.

READ MORE: Pakistan massively increases taxation on motor vehicles

The minister said Rs85 billion would be collected through provincial tax and non-tax revenue, Rs4.3 billion under the head of foreign program assistance (FPA) for settled districts and Rs208.7 billion grant for merged tribal districts besides Rs212.7 billion receipts through other resources.

The Finance Minister Taimur Salim Jhagra said that Rs447.9 billion would be spent on salaries including Rs372.1 billion in settled districts and Rs75.8 billion through merged tribal districts while Rs107 billion on pension including Rs106 billion in settled districts and Rs one billion in merged tribal districts.

Besides salaries, he said Rs247.4billion would be spent on O&M, emergency and district expenditures, Rs111.4 billion on others current expenditures while volume of provincial development program including accelerated development program budget was Rs241 billion including Rs185 billion for settled districts and Rs56 billion for merged tribal districts while volume of total development budget was Rs383.5 billion including 319.2 billion for settled districts and Rs64.3billion for merged tribal districts.

READ MORE: New rates of capital gain tax on disposal of securities

Under foreign program assistance, Rs93.2 billion would be spent including Rs88.9 billion for settled districts and Rs4.3 billion for merged tribal districts while 8.3 billion would be received through Public Sector Development Program for settled districts of Khyber Pakthunkhwa.

The Minister said that Rs26,458 million would be spent on agriculture, Rs4191 on Aukaf, Religious Affairs, Rs73 million on Bureau of Statistics, Rs71653 million on communication and works, Rs227,087 million for elementary and secondary education, Rs29203 million on energy and power,

Rs4191 million for environment, Rs1607 million for excise and taxation, Rs32,446 million through finance, Rs6433 million through forestry, Rs6655 million through general administration, Rs205,725 million for health, Rs34,191 million through higher education, Rs101,572 million for home and Rs823 million for housing sectors.

READ MORE: Pakistan slaps 45% corporate tax on banks

Likewise, Rs4926 million were allocated for industries, Rs1808 million for information and public relations, Rs2990 million for information technology, Rs25725 million for irrigation, Rs1033 million for labour, Rs14377 million for law and justice, Rs22337 million for local government, Rs1426 million for mines and mineral, Rs64372 million for planning and development,

Rs3616 million for population welfare, Rs23071 million for public health engineering, Rs30003 million for relief, rehabilitation and settlement, Rs3045 million revenue and estate, Rs6068 million for social welfare, Rs22017 million sports, culture and tourism, Rs2849 million through technical education, Rs12151 million for transport and Rs392 million for Zakat and Usher.

Finance Minister Taimur Salim Jhagra said health department budget has been increased by Rs55 billion, elementary and secondary education by Rs47 billion, police by Rs14 billion and energy and power by Rs11 billion.

The Minister announced Rs15percent increase in salaries and pension of all the government employees, Rs15 percent ad-hoc relief allowance, adding the increase for grade1-19 employees besides DRA allowance. He said risk allowance of police officials from grade 7-16 have been increased and was brought at par of DRA in line with the police martyrs package.

Transport monetization and vehicle leasing policy, change of executive allowance to performance allowance, work from home on Fridays and introduction of fleet cards to save fuel and reduce risk of pilferage across all departments announced.

Taimur Salim Jhagra said 100 percent increase in pension expenditure have been witnessed in last couple of years, adding expenditure of pensions, which was only one percent of total KP budget expenditure in 2003-04 ie Rs0.87 billion has jumped to 14.7percent ie Rs90 billion in 2021-22.

He said amendment in KP Civil Servant Act 1973 has been made under which contributory and provident fund were increased for newly recruited employees under contributory pension scheme under which either lumsum amount one time or long terms investment offer would be given to retired employees.

As many as services of 63,0000 employees would be regularized including 675 adhoc doctors from July 1, 2002, regularization of 58,0000 teachers and 4079 employees of 128 projects of erstwhile Fata during 2022-23.

OPD services under Sehat Card Plus program would soon be launched in all Govt hospitals and patient can available free treatment up to Rs10 million, he said adding Rs25 billion were allocated for Sehat Plus Card through eight lakh patients were benefited during 2021-22.

Following inclusion of liver transplant, he said five more chronic diseases including bone marrow transplant, sclerosis, cochlear implants, thalassemia and advance cancer coverage would be included in Sehat Card for which Rs2.5billion were allocated. He said that Rs53.6 billion earmarked for MTIs, allied and medical hospitals in Khyber Pakthunkhwa.

Four new medical colleges at Dir, Buner, Charsadda and Haripur would be established besides setting up of four new MTIs at Fountains House Peshawar, Kohat Institute of Medical and Dental Sciences, DHQ Charassadda and Women Children Hospital and DHQ Haripur.

As many as Rs3 billion were set aside for revamping of secondary care and service delivery while renovation of rehabilitation of 32 hospitals were completed.
Besides allocation of Rs2.7 billion for 58 hospitals in 24 districts for secondary care hospital under Public Private Partnership, he said that 3000 more beds would be established while primary care revamping program carrying allocation Rs2125 million was producing excellent results.

He said renovation of 700BHUs and RHCs costing Rs82.4 billion have been started while renovation of 500 facilities completed. He said Rs2 billion allocated for strengthening of 15 BHUs and RHCs in 15 districts provision of better services to people.

He said Rs10 billion would be spent on provision of free medicines to people besides allocation of Rs500 million for LHS and LHWs in addition to 3500 additional LHWs recruitment and additional funds of Rs one billion funds for arrangements regarding eradication of polio in Bannu and Dera Ismail and Rs1.3 billion for launching of maternal ambulance service.

Taimur Jhagra said KP Govt has decided to maintain tax rates of fiscal year 2021-22, adding 20pc relaxation would be provided for re-registration of motor vehicles or first registration and there would be not tax on land with full exemption from capital value tax (CVT) and registration fee.

He announced students of elementary and secondary education are exempted from fee and exempted library, archives and hostels fees. The Minister claimed that tax rates of Khyber Pakthunkhwa Revenue Authority was minimum than other provinces of Pakistan.

He said PFM (Public Financial Management) law was being introduced under Article 119 of the Constitution for bringing more transparency in the financial system. Insaf Food Cards program has been introduced under which Rs26 billion targeted subsidy would be provided to one million families of KP.

June 13, 2022
Advance tax on immovable property purchase enhanced to 250% for non-filers

ISLAMABAD: Pakistan has announced a sharp increase in advance tax on purchase of immovable property to 250 per cent for persons not filing income tax returns.

The country presented budget 2022/2023 on June 10, 2022 and announced various taxation measures to boost revenue collection.

The Finance Bill, 2022 proposed the sharp increase in advance tax for persons not filing tax returns. The decision has been taken to further burden the persons not complying with the statutory requirements.

READ MORE: Pakistan massively increases taxation on motor vehicles

The bill proposed amendment in Section 236K of Income Tax Ordinance, 2001. According to the proposed amendment:

“Provided further that the tax required to be collected under section 236K shall be increased by two hundred and fifty percent of the rate specified in Division XVIII of Part IV of the First Schedule in case of persons not appearing in the active taxpayers.”

At present the buyer, in case of filer of income tax return, of immovable property is required to pay advance tax at 1 per cent of the value. However, in case of non-filer the rate shall be enhanced by 100 per cent or 2 per cent as envisaged under Tenth Schedule of the Income Tax Ordinance, 2001.

READ MORE: New rates of capital gain tax on disposal of securities

According to the Ordinance updated up to June 30, 2021, following is the text of Section 236K:

236K. Advance tax on purchase or transfer of immovable property.—(1) Any person responsible for registering, recording or attesting transfer of any immovable property shall at the time of registering, recording or attesting the transfer shall collect from the purchaser or transferee advance tax at the rate specified in Division XVIII of Part IV of the First Schedule.

Explanation,—For removal of doubt, it is clarified that the person responsible for registering, recording or attesting transfer includes person responsible for registering, recording or attesting transfer for local authority, housing authority, housing society, co-operative society, public and private real estate projects registered/governed under any law, joint ventures, private commercial concerns and registrar of properties.

(2) The advance tax collected under sub-section (1) shall be adjustable:

READ MORE: Pakistan slaps 45% corporate tax on banks

Provided that if the buyer or transferee is a non-resident individual holding a Pakistan Origin Card (POC) or National ID Card for Overseas Pakistanis (NICOP) or Computerized National ID Card (CNIC) who has acquired the said immovable property through a Foreign Currency Value Account (FCVA) or NRP Rupee Value Account (NRVA) maintained with authorized banks in Pakistan under the foreign exchange regulations issued by the State Bank of Pakistan, the tax collected under this section from such persons shall be final discharge of tax liability for such buyer or transferee.

(3) Any person responsible for collecting payments in installments for purchase or allotment of any immovable property where the transfer is to be effected after making payment of all installments, shall at the time of collecting installments collect from the allotee or transferee advance tax at the rate specified in Division XVIII of Part IV of the First Schedule:

READ MORE: Tax rates for business individuals, AOPs during TY2023

Provided that where tax has been collected along with installments, no further tax under this section shall be collected at the time of transfer of property in the name of buyer from whom tax has been collected in installments which is equal to the amount payable in this section.

(4) Nothing contained in this section shall apply to a scheme introduced by the Federal Government, or Provincial Government or an Authority established under a Federal or Provincial law for expatriate Pakistanis:

“Provided that the mode of payment by the expatriate Pakistanis in the said scheme or schemes shall be in the foreign exchange remitted from outside Pakistan through normal banking channels.”

READ MORE: Pakistan reintroduces advance tax on foreign payments

June 13, 2022

Pakistan massively increases taxation on motor vehicles

ISLAMABAD: Pakistan has massively increased the amount of tax on purchase of motor vehicles from July 01, 2022.

The country presented its federal budget 2022/2023 on June 10, 2022 and took various taxation measures to boost revenue collection.

Finance Minister Miftah Ismail while presenting the budget stated that in continuation of our policy to shift the burden of tax on the rich class, advance tax on motor vehicles exceeding 1600cc is proposed to be increased.

Furthermore, advance tax shall also be collected at the rate of 2 per cent of the value in cases of high value hybrid and electric vehicles. Additionally, the rate of tax for non-filers shall be enhanced to 200 per cent from the current 100 per cent.

Accordingly, the Finance Bill, 2022 proposed the following new rates of advance tax on registration of motor vehicles from July 01, 2022:

S.No	Engine Capacity	Tax
(1)	(2)	(3)
1.	Upto 850 cc	Rs.10,000
2.	851cc to 1000cc	Rs.20,000
3.	1001cc to 1300cc	Rs.25,000
4.	1301cc to 1600cc	Rs.50,000
5.	1601cc to 1800cc	Rs.150,000
6.	1801cc to 2000cc	Rs.200,000
7.	2001cc to 2500cc	Rs.300,000
8.	2501cc to 3000cc	Rs.400,000
9.	Above 3000cc	Rs.500,000

According to the Finance Bill, 2022, provided that in cases where engine capacity is not applicable and the value of vehicle is Rupees five million or more, the rate of tax collectible shall be 3% of the import value as increased by customs duty, sales tax and federal excise duty in case of imported vehicles or invoice value in case of locally manufactured or assembled vehicles.”

It further said: “Provided that the tax required to be collected under section 231B shall be increased by two hundred percent of the rate specified in First Schedule in case of persons not appearing in the active taxpayers’ list.”

The existing rates of advance tax on motor vehicles are (for filers and it will increase by 100 per cent in case of non-filer of income tax returns):

1. upto 850cc: Rs. 7,500

2. 851cc to 1000cc: Rs. 15,000

3. 1001cc to 1300cc: Rs. 25,000

4. 1301cc to 1600cc: Rs. 50,000

5. 1601cc to 1800cc: Rs. 75,000

6. 1801cc to 2000cc: Rs. 100,000

7. 2001cc to 2500cc: Rs. 150,000

8. 2501cc to 3000cc: Rs. 200,000

9. Above 3000cc: Rs. 250,000]

June 13, 2022

New rates of capital gain tax on disposal of securities

ISLAMABAD: The government has proposed new rates of capital gain tax on disposal of securities traded at Pakistan Stock Exchange (PSX).

Pakistan presented its federal budget on June 10, 2022 and introduced various taxation measures to boost revenue collection.

Through Finance Bill, 2022 proposed to revise the rates of capital gain tax for tax year 2023 and onwards.

Following is the proposed rates of capital gain tax:

S.No	Holding Period	Rate of Tax for Tax year 2023 and onwards
(1)	(2)	(3)
1.	Where the holding period does not exceed one year	15%
2.	Where the holding period exceeds one year but does not exceed two years	12.5%
3.	Where the holding period exceeds two years but does not exceed three years	10%
4.	Where the holding period exceeds three years but does not exceed four years	7.5%
5.	Where the holding period exceeds four years but does not exceed five years	5%
6.	Where the holding period exceeds five years but does not exceed six years	2.5%
7.	Where the holding period exceeds six years	0%
8.	Future commodity contracts entered into by members of Pakistan Mercantile Exchange	5%”;

The Federal Board of Revenue (FBR) collects capital gain tax on disposal of securities under Section 37A of the Income Tax Ordinance, 2001.

Following is the text of Section 37A of Income Tax Ordinance, 2001:

37A. Capital gain on disposal of securities.—(1) The capital gain arising on or after the first day of July 2010, from disposal of securities, other than a gain that is exempt from tax under this Ordinance, shall be chargeable to tax at the rates specified in Division VII of Part I of the First Schedule:

Provided that this section shall not apply to a banking company and an insurance company.

(1A) The gain arising on the disposal of a security by a person shall be computed in accordance with the following formula, namely: —

A – B

Where —

(i) ‘A’ is the consideration received by the person on disposal of the security; and

(ii) ‘B’ is the cost of acquisition of the security.

(2) The holding period of a security, for the purposes of this section, shall be reckoned from the date of acquisition (whether before, on or after the thirtieth day of June, 2010) to the date of disposal of such security falling after the thirtieth day of June, 2010.

(3) For the purposes of this section “security” means share of a public company, voucher of Pakistan Telecommunication Corporation, Modaraba Certificate, an instrument of redeemable capital,debt Securities, unit of exchange traded fund and derivative products.

(3A) For the purpose of this section, “debt securities” means –

(a) Corporate Debt Securities such as Term Finance Certificates (TFCs), Sukuk Certificates (Sharia Compliant Bonds), Registered Bonds, Commercial Papers, Participation Term Certificates (PTCs) and all kinds of debt instruments issued by any Pakistani or foreign company or corporation registered in Pakistan; and

(b) Government Debt Securities such as Treasury Bills (T-bills), Federal Investment Bonds (FIBs), Pakistan Investment Bonds (PIBs), Foreign Currency Bonds, Government Papers, Municipal Bonds, Infrastructure Bonds and all kinds of debt instruments issued by Federal Government, Provincial Governments, Local Authorities and other statutory bodies.

“Explanation: For removal of doubt it is clarified that derivative products include future commodity contracts entered into by the members of Pakistan Mercantile Exchange whether or not settled by physical delivery.”

(3B) For the purpose of this section, “shares of a public company” shall be considered as security if such company is a public company at the time of disposal of such shares.

(4) Gain under this section shall be treated as a separate block of income.

(5) Notwithstanding anything contained in this Ordinance, where a person sustains a loss on disposal of securities in a tax year, the loss shall be set off only against the gain of the person from any other securities chargeable to tax under this section and no loss shall be carried forward to the subsequent tax year:

Provided that so much of the loss sustained on disposal of securities in tax year 20l9 and onwards that has not been set off against the gain of the person from disposal of securities chargeable to tax under this section shall be carried forward to the following tax year and set off only against the gain of the person from disposal of securities chargeable to tax under this section, but no such loss shall be carried forward to more than three tax years immediately succeeding the tax year for which the loss was first computed.

(6) To carry out purpose of this section, the Board may prescribe rules.

The rate of tax to be paid under section 37A shall be as follows:—

June 12, 2022

Pakistan slaps 45% corporate tax on banks

ISLAMABAD: Pakistan has slapped corporate income tax at 45 per cent on banks, which is raised from 35 per cent.

The country presented its federal budget on June 10, 2022 and introduced tax measures for boosting revenue collection.

READ MORE: Tax rates for business individuals, AOPs during TY2023

Through Finance Bill, 2022 the tax rate for banking companies have been proposed to increase to 45 per cent from existing 35 per cent.

In this regard, the bill proposed amendment to Division II, Part I of First Schedule of the Income Tax Ordinance, 2001.

Proposed Rates of Tax for Companies

READ MORE: Pakistan reintroduces advance tax on foreign payments

The rate of tax imposed on the taxable income of a company shall be as set out in the following Table, namely:-

Type of Company Rate of Tax
Small company 20%
Banking company 45%
Any other company 29%

Following are the existing rates of tax for corporate entities for tax year 2022:

(i) The rate of tax imposed on the taxable income of a company for the tax year 2007 and onward shall be 35%:

Provided that the rate of tax imposed on the taxable income of a company other than a banking company, shall be 34% for the tax year 20145:

READ MORE: Exchange companies to withhold tax on payment to MTOs

Provided further that the rate of tax imposed on the taxable income of a company, other than a banking company, shall be 33% for the tax year 2015:

“Provided further that the rate of tax imposed on taxable income of a company, other than banking company shall be 32% for the tax year 2016, 31% for tax year 2017, 30% for tax year 2018 and 29% for tax year 2019 and onwards.

READ MORE: Salaried persons denied adjustments against deduction

(iii) where the taxpayer is a small company as defined in section 2, tax shall be payable at the rate of 25%:

Provided that for tax year 2019 and onwards tax rates shall be as set out in the following Table, namely:—

Tax year Rate of Tax
2019 24%
2020 23%
2021 22%
2022 21%
2023 and onwards 20%”

June 12, 2022

Tax rates for business individuals, AOPs during TY2023

ISLAMABAD: Finance Bill, 2022 has proposed to revise tax rates for business individuals and Association of Persons (AOPs) during Tax year 2023.

The government presented its federal budget 2022/2023 and introduced various changes to taxation laws to ensure documentation and plug revenue leakages.

Through Finance Bill, 2022 the basic exemption of tax on income of individuals and AOPs has been increased to Rs600,000 from Rs400,000.

Following is the proposed tax card for business individuals and AOPs.

Sr. No.	Taxable Income	Rate of Tax
1.	Where taxable income does not exceed Rs. 600,000/	0 per cent
2.	Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 800,000	5 per cent of the amount exceeding Rs. 600,000
3.	Where taxable income exceeds Rs. 800,000 but does not exceed Rs. 1,200,000	Rs. 10,000 + 12.5 per cent of the amount exceeding Rs. 800,000
4.	Where taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 2,400,000	Rs.60,000 + 17.5 per cent of the amount exceeding Rs. 1,200,000
5.	Where taxable income exceeds Rs. 2,400,000 but does not exceed Rs. 3,000,000	Rs. 270,000 + 22.5 per cent of the amount exceeding Rs. 2,400,000
6.	Where taxable income exceeds Rs. 3,000,000 but does not exceed Rs. 4,000,000	Rs. 405,000 + 27.5 per cent of the amount exceeding Rs. 3,000,000
7.	Where taxable income exceeds Rs. 4,000,000 but does not exceed Rs. 6,000,000	Rs. 680,000 + 32.5 per cent of the amount exceeding Rs. 4,000,000
8.	Where taxable income exceeds Rs. 6,000,000	Rs. 1,330,000 + 35 per cent of the amount exceeding Rs. 6,000,000.”

Following are the existing rates of tax for Individuals and Association of Persons for tax year 2022:

(1) Subject to clause (2), the rates of tax imposed on the income of every individual and association of persons except a salaried individual shall be as set out in the following Table, namely:—

1. Where taxable income does not exceed Rs. 400,000: the tax rate shall be zero per cent.

2. Where the taxable income exceeds Rs. 400,000 but does not exceed Rs. 600,000: the tax rate shall be 5 per cent of the amount exceeding Rs. 400,000.

3. Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000: the tax rate shall be Rs. 10,000 plus 10 per cent of the amount exceeding Rs. 600,000.

4. Where taxable income exceeds Rs.1,200,000 but does not exceed Rs. 2,400,000: the tax rate shall be Rs. 70,000 plus 15 per cent of the amount exceeding Rs. 1,200,000.

5. Where taxable income exceeds Rs. 2,400,000 but does not exceed Rs. 3,000,000: the tax rate shall be Rs. 250,000 plus 20 per cent of the amount exceeding Rs. 2,400,000.

6. Where taxable income exceeds Rs. 3,000,000 but does not exceed Rs. 4,000,000: the tax rate shall be Rs. 370,000 plus 25 per cent of the amount exceeding Rs. 3,000,000.

7. Where taxable income exceeds Rs. 4,000,000 but does not exceed Rs. 6,000,000: the tax rate shall be Rs. 620,000 plus 30 per cent of the amount exceeding Rs. 4,000,000.

8. Where taxable income exceeds Rs. 6,000,000: the tax rate shall be Rs. 1,220,000 plus 35 per cent of the amount exceeding Rs. 6,000,000.

June 12, 2022

Pakistan reintroduces advance tax on foreign payments

ISLAMABAD: Pakistan has reintroduced advance tax on foreign payments made through credit, debit or prepaid cards. The advance tax has been revived through Finance Bill, 2022.

The country presented its federal budget 2022/2023 on June 10, 2022 and made several amendments in tax laws to broaden tax base and plug revenue leakages.

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The Finance Bill, 2022 proposed to reintroduce Section 236Y of the Income Tax Ordinance, 2001. The section was omitted through Finance Act, 2021.

Following is the proposed amendment in the Income Tax Ordinance, 2001:

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“236Y. Advance tax on persons remitting amounts abroad through credit or debit or prepaid cards.—(1) Every banking company shall collect advance tax, at the time of transfer of any sum remitted outside Pakistan, on behalf of any person who has completed a credit card or debit card or prepaid card transaction with a person outside Pakistan at the rate specified in Division XXVII of Part IV of the First Schedule.

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(2) The advance tax collected under this section shall be adjustable.”

The Finance Bill 2022 proposed advance tax rate on amount remitted abroad through credit, debit or prepaid cards under section 236Y shall be 1 per cent of the gross amount remitted abroad.

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June 12, 2022

Type of Company	Rate of Tax
Small company	20%
Banking company	45%
Any other company	29%

Tax year	Rate of Tax
2019	24%
2020	23%
2021	22%
2022	21%
2023 and onwards	20%”