Final tax regime for certain amount under Income Tax Ordinance

Final tax regime for certain amount under Income Tax Ordinance

KARACHI: Federal Board of Revenue (FBR) has defined final tax regime for certain income with certain conditions explained under Income Tax Ordinance, 2001.

Following are the income falling under Final Tax Regime under the Ordinance:

Section 5: Tax on dividends

Section 6: Tax on certain payments to non-residents.—

Section 7: Tax on shipping and air transport income of a non-resident person.

Section 5AA: Tax on return on investments in sukuks.

Section 7A: Tax on shipping of a resident person.

Section 7B: Tax on profit on debt.

The Section 8 of the Ordinance explained the scheme and terms and conditions
General provisions relating to taxes imposed under sections 5, 6 and 7
(1)-Subject to this Ordinance, the tax imposed under Sections 5, 5AA, 6, 7, 7A and 7B shall be a final tax on the amount in respect of which the tax is imposed and—

(a) such amount shall not be chargeable to tax under any head of income in computing the taxable income of the person who derives it for any tax year;

(b) no deduction shall be allowable under this Ordinance for any expenditure incurred in deriving the amount;

(c) the amount shall not be reduced by —

(i) any deductible allowance; or

(ii) the set off of any loss;

(d) the tax payable by a person under section 5, 5A, 5AA, 6, 7, 7A and 7B shall not be reduced by any tax credits allowed under this Ordinance; and

(e) the liability of a person under section 5, 6 or 7 shall be discharged to the extent that —

(i) in the case of shipping and air transport income, the tax has been paid in accordance with section 143 or 144, as the case may be; or

(ii) in any other case, the tax payable has been deducted at source under Division III of Part V of Chapter X.

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