The Income Tax Ordinance, 2001 outlines the collection of withholding tax at the import stage in Pakistan. This is a crucial revenue collection mechanism and is primarily administered by the Collector of Customs.
The relevant section of the Income Tax Ordinance, 2001, Section 148, governs this process. Here’s a breakdown of the key provisions and procedures under this section:
Section 148: Imports
1. Advance Tax Collection: The Collector of Customs is authorized to collect advance tax from every importer of goods. The tax is levied on the value of the imported goods at a rate specified in Part II of the First Schedule.
2. Continuity of Notifications: Despite any changes or omissions in subsection (2), any notification issued under this sub-section that is currently in effect will remain in force unless amended or revoked by the Federal Board of Revenue (FBR) through an official Gazette notification.
3. Tax Collection Procedure: The advance tax is to be collected in the same manner and at the same time as customs duties would be payable for the import. If the goods are exempt from customs duties, the tax is collected at the time when customs duties would have been payable if the goods were subject to such duties.
4. Application of Customs Act: The provisions of the Customs Act, 1969 (IV of 1969), are applicable in relevant areas concerning the collection of tax under this section.
5. Final Tax: The tax collected under this section is considered a final tax. However, there are exceptions, and this sub-section does not apply in cases of imports of specific goods, such as raw material, plant, machinery, equipment, and parts for industrial use, or in the case of large import houses meeting specific criteria.
6. Minimum Tax: The tax collected under this section is regarded as a minimum tax for a tax year in specific situations, such as the import of goods sold in the same condition as when imported, edible oil, packing material, and plastic raw material imported by certain industrial undertakings.
8A. Final Tax for Ship-Breakers: The tax collected under this section for the import of ships by ship-breakers is considered a final tax.
9. Definitions: The section provides definitions for key terms, including “Collector of Customs,” which encompasses various customs officials, and “value of goods,” which is determined under the Customs Act, 1969, and includes ad valorem duty, customs duty, federal excise duty, and sales tax, if applicable.
The explanation included in the section clarifies that “edible oils” also encompass crude oil imported as raw material for the production of ghee or cooking oil.
In summary, Section 148 of the Income Tax Ordinance, 2001, establishes the authority and procedures for the collection of withholding tax at the import stage in Pakistan. This tax is an important source of government revenue and helps regulate the import process while ensuring that taxes are paid in a timely and structured manner. The section contains provisions for various tax rates, exceptions, and definitions to ensure transparency and accountability in the tax collection process.
