Islamabad, June 9, 2023: The Pakistan Budget 2023-24, presented on Friday, has brought forth several amendments to the Income Tax Ordinance, 2001 through the Finance Bill 2023.
These amendments aim to streamline the tax system and enhance revenue generation for the government. Here is a comprehensive list of the key amendments introduced:
READ MORE: List of amendments to Sales Tax Act through Finance Bill 2023
Clause 6(1) Seeks to amend section 2 (definitions)
Clause 6(1)(a) Seeks to amend definition of income to include any amount subject to collection or deduction of tax under section 236Z
Clause 6(1)(b)(i)&(ii) Seeks to enhance the scope of definition of permanent establishment by amendment in clause (41)
Clause 6(1)(c) Seeks to broaden the definition of SME by including IT & IT enabled services and increasing the business turnover limit to 800 million
Clause 6(2) Seeks to insert new sub-section (5A) in section 4C
Clause 6(3)(i)&(ii) Seeks to add a new clause (lb) in section 39 to add income from bonus shares issuance as “income from other sources”
Clause 6(4) Seeks to insert a new section 44A to operationalize the exemptions and incentives provided under Foreign Investment (Promotion and Production) Act, 2022
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Clause 6(5) Seeks to insert a new section 65I to provide tax credit for construction of a new house by an individual
Clause 6(6)(a) Seeks to substitute sub-section (1) of section 85 to elaborate the concept of associates and to include resident of jurisdiction with zero taxation regime in the ambit of associate
Clause 6(6)(b) Seeks to add definition of jurisdiction with zero taxation regime in sub-section (5) of section 85
Clause 6(7) Seeks to add a new charging section 99D to impose an additional tax up to the rate of fifty percent on any income, profits on gains for the tax year 2023 and onwards arising due to economic factors as determined and notified by the Federal Government.
Clause 6(8) Seeks to enhance the limit in sub-section (4) of section 111 to rupee equivalent of one hundred thousand United States dollars
Clause 6(9) Seeks to add explanation in clause (c) of sub-section (2) of section 113
Clause 6(10) Seeks to add a new section 146D for recovery of liability outstanding under other laws.
Clause 6(11)(i),(ii)and (iii) Seeks to amend section 147 to clarify and to provide that tax assessed includes tax payable under section 4C for the purposes of calculating advance tax payable
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Clause 6(12) Seeks to amend sub-section (5A) of section 152 to provide for automatic issuance of exemption certificate upon expiry of thirty days of receipt of notice by the Commissioner
Clause 6(13) Seeks to amend sub-section (3B) of section 154
Clause 6(14) Seeks to relax the condition of filing of sales tax returns for exporters of IT & IT enabled services
Clause 6(15) Seeks to amend the marginal note of section 164A
Clause 6(16) Seeks to amend sub-section (3) of section 168 consequent to new insertion of sub-section (7) of section 236Z
Clause 6(17) Seeks to amend clause (b) of sub-section (1) of section 169 consequent to new insertion of sub-section (7) of section 236Z
Clause 6(18) Seeks to amend clause (b) of sub-section (2) of section 218
Clause 6(19) Seeks to insert a new section 231AB for deduction of tax on cash withdrawals from persons not appearing in the ATL
Clause 6(20) Seeks to insert a new section 231C for collection of tax from the agency, sponsor or an employer hiring the services of a foreign domestic worker
Clause 6(21)(a)&(b) Seeks to exempt a non-resident individuals holding POC, NICOP and CNIC acquiring property through SBP notified FCVA and NRVA account from collection of tax under section 236K on purchase of said property
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Clause 6(22) Seeks to insert a new section 236Z for collection of tax on bonus shares issued by a company
Clause 6(23) Seeks to amend the First Schedule to the Income Tax Ordinance, 2001
Clause 6(23)(A)(1) Seeks to substitute Table in Division IIB of Part-I to provide income slabs and tax rates for section 4C
Clause 6(23)(A)(2) Seeks to substitute S. No. 4 in the Table in Division IX of Part I with new Serial Nos. 4 and 5 to provide for minimum tax rate for listed companies under section 113 at 1%
Clause 6(23)(B) Seeks to amend S. No. 3 in the Table in Part II to provide rate of collection of advance tax under section 148 for commercial importers
Clause 6(23)(C)(1)(i), (ii) and (iii) Seeks to amend paragraphs (4), (5) and (6) of Division II of Part III to provide for increase of 1% in rates of withholding tax by PE of a non-resident on payments against sale of goods, rendering of services and contracts under section 152(2A)
Clause 6(23)(C)(2)(i), (ii) and (iii) Seeks to amend sub-paragraph (b) of paragraph (1), subparagraphs (i) & (ii) of paragraph (2) and sub-paragraph (ii) & (iii) of paragraph (3) of Division III of Part III to provide for increase of 1% in rates of withholding tax by prescribed persons on payments against sale of goods, rendering of services and contracts under section 153
Clause 6(23)(C)(3) Seeks to amend S. No. 1 in the table in Division IVA of Part III for application of reduced rate of 0.25% on export proceeds of software, IT Services and IT enabled services for tax year 2024 up to tax year 2026
Clause 6(23)(D) Seeks to increase the rate of advance tax deduction under section 236Y from 1% to 5% of the gross amount remitted abroad through credit, debit or prepaid cards
Clause 6(24) Seeks to amend the Second Schedule to the Income Tax Ordinance, 2001
Clause 6(24)(A)(i) Seeks to insert new entries in Table 1 of sub-clause (1) of clause (66)
Clause 6(24)(A)(ii) Seeks to extend the limitation of exemption from 30th day of June 2023 to 30th day of June 2024 on profit and gains on sale of immoveable property or shares of Special Purpose Vehicle to any REIT scheme
Clause 6(24)(A)(iii) Seeks to extend the limitation of exemption from 30th day of June 2023 to 30th day of June 2024 on any income of any individual domiciled or company and AOP resident in e Tribal Area forming part of the Provinces of Khyber Pakhtunkhwa and Balochistan.
Clause 6(24)(A)(iv) Seeks to amend clause (150) of Part I Clause 6(24)(A)(v) Seeks to insert new clause (154) in Part I to provide tax holiday to SME setup exclusively as agro based industry for five years up to tax year 2028
Clause 6(24)(B) Seeks to insert new clauses (21) and (22) in Part III 131
Clause 6(24)(C)(i) Seeks to add new sub-clause (xlvi) in clause (11A) of Part IV
Clause 6(24)(C)(ii) Seeks to omit clause (100) of Part IV
Clause 6(24)(C)(iii) Seeks to insert new clauses (121), (122), (123) and (124) in Part IV
Clause 6(25) Seeks to insert new rule (6DB) in the Fourth Schedule
Clause 6(26) Seeks to insert new rule (4AC) in the Fifth Schedule
Clause 6(27)(a) Seeks to amend rule 7CA in the Seventh Schedule
Clause 6(27)(b) Seeks to insert new rule (7CB) in the Seventh Schedule
Clause 6(27)(c) Seeks to amend sub-rule (1) of rules 7D, 7E and 7F in the Seventh Schedule
Clause 6(27)(d) Seeks to insert new rule 7G in the Seventh Schedule to provide reduced rate of on additional advances for IT & IT enabled services Clause 6(28) Seeks to insert new rule 4A in the Eighth Schedule to provide for competition, collection and payment of tax under section 4C by NCCPL on the amount of capital gains computed under the Eighth Schedule
Clause 6(29) Seeks to insert new entries in the Table of Thirteenth Schedule
Clause 6(30)(a) Seeks to substitute rule 2 of the Fourteenth Schedule
Clause 6(30)(b)&(c) Seeks to insert new category at S.No.3 in the Table in rules 3 and 4 of the Fourteenth Schedule.
