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Tag: Income Tax Ordinance 2001

  • Advance tax rate on sale to retailers updated

    Advance tax rate on sale to retailers updated

    ISLAMABAD: Federal Board of Revenue (FBR) has updated rate of advance income tax on sale to retailers during tax year 2021 (July 01, 2020 to June 30, 2020).

    The FBR issued Income Tax Ordinance, 2001 (updated up to June 30, 2020) after incorporating amendment brought through Finance Act, 2020.

    The rate of collection of tax under section 236H on the gross amount of sales shall be:

    The rate of advance tax on sale of electronics shall be one percent. The rate of advance tax in case of sales to other goods shall be 0.5 percent.

    Following is the text of Section 236H of Income Tax Ordinance, 2001:

    236H. Advance tax on sales to retailers.— (1) Every manufacturer, distributor, dealer, wholesaler or commercial importer of electronics, sugar, cement, iron and steel products, motorcycles, pesticides, cigarettes, glass, textile, beverages, paint or foam sector, at the time of sale to retailers, and every distributor or dealer to another wholesaler in respect of the said sectors, shall collect advance tax at the rate specified in Division XV of Part IV of the First Schedule, from the aforesaid person to whom such sales have been made.

    (2) Credit for the tax collected under sub-section (1) shall be allowed in computing the tax due by the retailer on the taxable income for the tax year in which the tax was collected.

  • Rate of tax on sale to distributors, dealers and wholesalers

    Rate of tax on sale to distributors, dealers and wholesalers

    ISLAMABAD: Federal Board of Revenue (FBR) has updated rate of advance income tax on sale to distributors, dealers and wholesalers during tax year 2021 (July 01, 2020 to June 30, 2020).

    The FBR issued Income Tax Ordinance, 2001 (updated up to June 30, 2020) after incorporating amendment brought through Finance Act, 2020.

    The FBR updated the rate of advance income tax on sale to distributors, dealers and wholesalers under Section 236G of Income Tax Ordinance, 2001.

    The rate of collection of tax under section 236G shall be at 0.7 percent on sale of fertilizers and 0.1 percent on sale of other than fertilizers/

    The text of section 236G is as follow:

    Section 236G. Advance tax on sales to distributors, dealers and wholesalers.—

    (1) Every manufacturer or commercial importer of electronics, sugar, cement, iron and steel products, fertilizer, motorcycles, pesticides, cigarettes, glass, textile, beverages, paint or foam sector, at the time of sale to distributors, dealers and wholesalers, shall collect advance tax at the rate specified in Division XIV of Part IV of the First Schedule, from the aforesaid person to whom such sales have been made.

    (2) Credit for tax collected under sub-section (1) shall be allowed in computing the tax due by the distributor, dealer or wholesaler on the taxable income for the tax year in which the tax was collected.

  • Rate of advance tax on sale, purchase of immovable properties

    Rate of advance tax on sale, purchase of immovable properties

    ISLAMABAD: Federal Board of Revenue (FBR) has updated rate of advance tax on sale and purchase of immovable properties during tax year 2021 (July 01, 2020 to June 30, 2021).

    The FBR issued Income Tax Ordinance, 2001 (Updated up to June 30, 2020) after incorporating amendments introduced through Finance Act, 2020.

    The FBR updated the rate of tax to be collected under section 236C of Income Tax Ordinance, 2001. The advance tax rate shall be one percent of the gross amount of the consideration received.

    The rate of advance tax shall be two percent on a person for not appearing on Active Taxpayers List (ATL).

    Following is the text of Section 236C of the Ordinance:

    236C. Advance Tax on sale 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 seller or transferor advance tax at the rate specified in Division X 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 and registrar of properties.

    Provided that this sub-section shall not apply to a seller, being the dependant of a Shaheed belonging to Pakistan Armed Forces or a person who dies while in the service of the Pakistan Armed Forces or the service of Federal or Provincial Government, in respect of first sale of immovable property acquired from or allotted by the Federal Government or Provincial Government or any authority duly certified by the official allotment authority, and the property acquired or allotted is in recognition of or for services rendered by the Shaheed or the person who dies in service.

    (2) The Advance tax collected under sub-section (1) shall be adjustable.

    Provided that where immovable property referred to in sub-section (1) is acquired and disposed of within the same tax year, the tax collected under this section shall be minimum tax.

    (3) Advance tax under sub-section (1) shall not be collected if the immovable property is held for a period exceeding four years.

    The FBR also updated rate of advance tax on purchase of immovable properties. The rate of tax to be collected under section 236K shall be one percent of the fair market value.

    The advance tax rate shall be two percent on a person for not appearing on Active Taxpayers List (ATL).

    The text of Section 236K of Income Tax Ordinance, 2001:

    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 and registrar of properties.

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

    (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.

    (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.”

  • Tax Year 2021: rate of tax on cash withdrawal from banks

    Tax Year 2021: rate of tax on cash withdrawal from banks

    ISLAMABAD: Federal Board of Revenue (FBR) has updated rate of income tax to be deducted at the time of cash withdrawal from banks during tax year 2021 (July 01, 2020 to June 30, 2021).

    The FBR issued Income Tax Ordinance, 2001 (updated up to June 30, 2020) after incorporating amendments brought through Finance Act, 2020.

    The FBR updated the rate of tax to be deducted under section 231A of Income Tax Ordinance shall be 0.6 percent of the cash amount withdrawn, for the person whose name is not appearing in the active taxpayers’ list.

    The text of Section 231A is as follow:

    231A. Cash withdrawal from a bank.—(1) Every banking company shall deduct tax at the rate specified in Division VI of Part IV of the First Schedule, if the payment for cash withdrawal, or the sum total of the payments for cash withdrawal in a day, exceeds fifty thousand rupees.

    “Explanation.- For removal of doubt, it is clarified that the said fifty thousand rupees shall be aggregate withdrawals from all the bank accounts in a single day.”

    The FBR also updated the rate of tax to be deducted under section 231AA shall be at the rate of 0.6 percent of the transactions for the person whose name is not appearing in the active taxpayers’ list.

    Following is the text of Section 231AA of the Ordinance is:

    231AA. Advance tax on transactions in bank.— (1) Every banking company, non-banking financial institution, exchange company or any authorized dealer of foreign exchange shall collect advance tax at the time of sale against cash of any instrument, including Demand Draft, Pay Order, CDR, STDR, SDR, RTC, or any other instrument of bearer nature or on receipt of cash on cancellation of any of these instruments.

    (2) Every banking company, non-banking financial institution, exchange company or any authorized dealer of foreign exchange shall collect advance tax at the time of transfer of any sum against cash through online transfer, telegraphic transfer, mail transfer or any other mode of electronic transfer.

    (3) The advance tax under this section shall be collected at the rate specified in Division VIA of Part IV of the First Schedule, where the sum total of payments for transactions mentioned in sub-section (1) or sub-section (2) as the case may be, exceed twenty-five thousand rupees in a day.

  • Income tax rates on telephone, internet usage

    Income tax rates on telephone, internet usage

    ISLAMABAD: Federal Board of Revenue (FBR) has updated rates of income tax on usage of telephone and internet services by phone subscribers during tax year 2021 (July 30, 202 to June 30, 2021).

    The FBR issued Income Tax Ordinance, 2001 (updated June 30, 2020) after incorporating amendments brought through Finance Act, 2020.

    The FBR also updated following rates of collection of tax under section 236 of the Income Tax Ordinance, —

    (a)In the case of a telephone subscriber (other than mobile phone subscriber) where the amount of monthly bills exceeds Rs100010 percent of the exceeding amount of bill
    (b)In the case of subscriber of internet, mobile telephone and pre-paid internet or telephone card12.5 percent of the amount of bill or sales price of internet pre-paid card or prepaid telephone card or sale of units through any electronic medium or whatever form.

    Following is the text of Section 236 of Income Tax Ordinance, 2001:

    236. Telephone and internet users.- (1) Advance tax at the rates specified in Part IV of the First Schedule shall be collected on the amount of –

    (a) telephone bill of a subscriber;

    (b) prepaid cards for telephones;

    (c) sale of units through any electronic medium or whatever form; and

    (d) internet bill of a subscriber; and

    (e) prepaid cards for internet.

    (2) The person preparing the telephone or internet bill shall charge advance tax under sub-section (1) in the manner telephone or internet charges are charged.

    (3) The person issuing or selling prepaid cards for telephones or internet shall collect advance tax under sub-section (1) from the purchasers at the time of issuance or sale of cards.

    (3A) The person issuing or selling units through any electronic medium or whatever form shall collect advance tax under sub-section (1) from the purchaser at the time of issuance of sale of units.

    (4) Advance tax under this section shall not be collected from Government, a foreign diplomat, a diplomatic mission in Pakistan, or a person who produces a certificate from the Commissioner that his income during the tax year is exempt from tax.

  • Income tax rates on electricity consumption

    Income tax rates on electricity consumption

    ISLAMABAD: Federal Board of Revenue (FBR) has updated rates of income tax on consumption of electricity for the tax year 2021 (July 01, 2020 to June 30, 2021).

    The FBR issued Income Tax Ordinance, 2001 (updated up to June 30, 2020) after incorporating amendments brought through Finance Act, 2020.

    The FBR updated the following rates of income tax on electricity consumption under Section 235 of the Ordinance:

    Rate of collection of tax under section 235 where the gross amount of electricity bill,

    (a) does not exceed Rs. 400 – the tax rate shall be zero

    (b) exceeds Rs. 400 but does not exceed Rs. 600 – the tax amount shall be Rs. 80

    (c) exceeds Rs. 600 but does not exceed Rs. 800 – the tax amount shall be Rs. 100

    (d) exceeds Rs. 800 but does not exceed Rs. 1000 – the tax amount shall be Rs. 160

    (e) exceeds Rs. 1000 but does not exceed Rs. 1500 – the tax amount shall be Rs. 300

    (f) exceeds Rs. 1500 but does not exceed Rs. 3000 – the tax amount shall be Rs. 350

    (g) exceeds Rs. 3000 but does not exceed Rs. 4500 – the tax amount shall be Rs. 450

    (h) exceeds Rs. 4500 but does not exceed Rs. 6000 – the tax amount shall be Rs. 500

    (i) exceeds Rs. 6000 but does not exceed Rs. 10000 – the tax amount shall be Rs. 650

    (j) exceeds Rs. 10000 but does not exceed Rs. 15000 – the tax amount shall be Rs. 1000

    (k) exceeds Rs. 15000 but does not exceed Rs. 20000 – the tax amount shall be Rs. 1500

    (l) exceeds Rs. 20000 – the tax amount shall be:

    (i) at the rate of 12 percent for commercial consumers;

    (ii) at the rate of 5 per cent for industrial consumers.

    The text of Section 235 is as:

    235. Electricity consumption.- (1) There shall be collected advance tax at the rates specified in Division IV of Part-IV of the First Schedule on the amount of electricity bill of a commercial or industrial consumer.

    (2) The person preparing electricity consumption bill shall charge advance tax under sub-section (1) in the manner electricity consumption charges are charged.

    Explanation.— For removal of doubt, it is clarified that for the purposes of this section electricity consumption bill referred to in sub-section (2) means electricity bill inclusive of sales tax and all incidental charges.

    (3) Advance tax under this section shall not be collected from a person who produces a certificate from the Commissioner that his income during tax year is exempt from tax or that he has discharged advance tax liability for the tax year.

    (4) Under this section, —

    (a) in the case of a taxpayer other than a company, tax collected upto bill amount of three hundred and sixty thousand Rupees per annum shall be treated as minimum tax on the income of such persons and no refund shall be allowed;

    (b) in the case of a taxpayer other than a company, tax collected on monthly bill over and above thirty thousand rupees per month shall be adjustable; and

    (c) in the case of a company, tax collected shall be adjustable against tax liability.

    The FBR also updated rate of tax to be collected from domestic consumers of electricity under Section 235A of the Ordinance:

    The rate of tax to be collected under section 235A shall be—

    (i) 7.5 percent if the amount of monthly bill is Rs. 75,000 or more; and

    (ii) 0 percent the amount of monthly bill is less than Rs. 75,000.

    The text of Section 235A is as follow:

    235A. Domestic electricity consumption.- (1) There shall be collected advance tax at the rates specified in Division XIX of Part IV of the First Schedule on the amount of electricity bill of a domestic consumer.

    Explanation.— For removal of doubt, it is clarified that for the purposes of this section, electricity consumption bill referred to in sub-section (2) means electricity bill inclusive of sales tax and all incidental charges.

    (2) The person preparing electricity consumption bill shall charge advance tax under sub-section (1) in the manner electricity consumption charges are charged.

    (3) Tax collected under this section shall be adjustable against tax liability.

  • Motor vehicle tax rates for Tax Year 2021

    Motor vehicle tax rates for Tax Year 2021

    ISLAMABAD: Federal Board of Revenue (FBR) has updated rate of income tax on motor vehicles used for passenger and goods transportation. The income tax rate shall apply during tax year 2021 (July 01, 2020 to June 30, 2021).

    The FBR issued Income Tax Ordinance, 2001 (Updated up to June 30, 2020) after incorporating amendments brought through Finance Act, 2020.

    The FBR updated rate of income tax on motor vehicles under Section 234 of Income Tax Ordinance, 2001:

    Rates of collection of tax under section 234,—

    (1) In case of goods transport vehicles, tax of two rupees and fifty paisa per kilogram of the laden weight shall be charged.

    (1A) In the case of goods transport vehicles with laden weight of 8120 kilograms or more, advance tax after a period of ten years from the date of first registration of vehicle in Pakistan shall be collected at the rate of twelve hundred rupees per annum;

    (2) In the case of passenger transport vehicles plying for hire with registered seating capacity of—

    S.No.CapacityRs per seat per annum
    (i)Four or more persons but less than ten persons.50
    (ii)Ten or more persons but less than twenty persons.100
    (iii)Twenty persons or more.300

    (3) In case of other private motor vehicles shall be as set out in the following Table, namely:-

    S. No.Engine capacityTax
    (1)(2)(3)
    1.upto 1000ccRs. 800
    2.1001cc to 1199ccRs. 1,500
    3.1200cc to 1299ccRs. 1,750
    4.1300cc to 1499ccRs. 2,500
    5.1500cc to 1599ccRs. 3,750
    6.1600cc to 1999ccRs. 4,500
    7.2000cc & aboveRs. 10,000

    (4) where the motor vehicle tax is collected in lump sum,

    S. No.Engine capacityTax
    (1)(2)(3)
    1.upto 1000ccRs. 10,000
    2.1001cc to 1199ccRs. 18,000
    3.1200cc to 1299ccRs. 20,000
    4.1300cc to 1499ccRs. 30,000
    5.1500cc to 1599ccRs. 45,000
    6.1600cc to 1999ccRs. 60,000
    7.2000cc & aboveRs. 120,000

    Following is Section 234 of Income Tax ordinance, 2001

    Tax on motor vehicles— (1) Any person at the time of collecting motor vehicle tax shall also collect advance tax at the rates specified in Division III of Part IV of the First Schedule.

    (2) If the motor vehicle tax is collected in instalments or lump sum the advance tax may also be collected in instalments or lump sum in like manner.

    (2A) In respect of motor cars used for more than ten years in Pakistan, no advance tax shall be collected after a period of ten years.

    (3) In respect of a passenger transport vehicle with registered seating capacity of ten or more persons, advance tax shall not be collected after a period of ten years from the first day of July of the year of make of the vehicle.

    (4) In respect of a goods transport vehicle with registered laden weight of less than 8120 kilograms, advance tax shall not be collected after a period of ten years from the date of first registration of vehicle in Pakistan.

    (5) Advance tax collected under this section shall be adjustable.

    (6) For the purpose of sub-sections (1) and (2) “motor vehicle” shall include the vehicles specified in sub-section (7) of section 231B.

  • Rate of income tax on brokerage, commission

    Rate of income tax on brokerage, commission

    ISLAMABAD: Federal Board of Revenue (FBR) has updated rate of income tax on brokerage and commission to be applicable for tax year 2021 (July 01, 2020 to June 30, 2021).

    The FBR issued Income Tax Ordinance, 2001 (updated up to June 30, 2020) after incorporating amendments brought through Finance Act, 2020.

    The FBR updated rate of tax for deduction or collection brokerage and commission under Section 233 of Income Tax Ordinance, 2001 shall be as set out in the following table:

    S.No.PersonRate of Tax
    (1)(2)(3)
    1.Advertising Agents10%
    2.Life Insurance Agents where commission received is less than Rs.0.5 million per annum8%
    3.Persons not covered in 1 and 2 above12%

    Following is Section 233 under which the tax is applicable on brokerage and commission:

    233. Brokerage and commission. — (1) Where any payment on account of brokerage or commission is made by the Federal Government, a Provincial Government, a Local Government, a company or an association of persons constituted by, or under any law (hereinafter called the “principal”) to a person (hereinafter called the “agent”), the principal shall deduct advance tax at the rate specified in Division II of Part IV of the First Schedule from such payment.

    (2) If the agent retains Commission or brokerage from any amount remitted by him to the principal, he shall be deemed to have been paid the commission or brokerage by the principal and the principal shall collect advance tax from the agent.

    (2A) Notwithstanding the provisions of sub-section (1), where the principal is making payment on account of commission to an advertising agent, directly or through electronic or print media, the principal shall deduct tax (in addition to tax required to be deducted under clause (b) of sub-section (1) of section 153 on advertising services excluding commission), at the rate specified in Division II of Part IV of the First Schedule on the amount equal to-

    A X 15/85

    Where A = amount paid or to be paid to electronic or print media for advertising services (excluding commission) on which tax is deductible under clause (b) of sub-section (I) of section 153.

    (2B) Tax deducted under sub-section (2A) shall be minimum tax on the income of the advertising agent.

    (3) Where any tax is required to be collected from a person under sub-section (1), such tax shall be the minimum tax on the income of such persons.

  • Income tax rates on prize winnings

    Income tax rates on prize winnings

    ISLAMABAD: Federal Board of Revenue (FBR) has updated rate of income tax on winning of prize bonds and lottery during tax year 2021 (July 01, 2020 to June 30, 2021).

    The FBR issued Income Tax Ordinance, 2001 (updated up to June 30, 2020) after incorporating amendments brought through Finance Act, 2020.

    The FBR updated following rate of income tax on prize winnings under Section 156 of Income Tax Ordinance, 2001:

    (1) The rate of tax to be deducted under section 156 on a prize on prize bond or cross-word puzzle shall be 15 percent of the gross amount paid.

    (2) The rate of tax to be deducted under section 156 on winnings from a raffle, lottery, prize on winning a quiz, prize offered by a company for promotion of sale, shall be 20 percent of the gross amount paid.

    The income tax rate applicable under Section 156 of Income Tax Ordinance, 2001, which is as follow:

    Section 156: Prizes and winnings.—(1) Every person paying prize on a prize bond, or winnings from a raffle, lottery, prize on winning a quiz, prize offered by companies for promotion of sale, or cross-word puzzle shall deduct tax from the gross amount paid at the rate specified in Division VI of Part III of the First Schedule.

    (2) Where a prize, referred to in sub-section (1), is not in cash, the person while giving the prize shall collect tax on the fair market value of the prize.

    (3) The tax deductible under sub-section (1) or collected under sub-section (2) shall be final tax on the income from prizes or winnings referred to in the said sub-sections.

  • Rate of income tax on export proceeds

    Rate of income tax on export proceeds

    Islamabad, February 7, 2025 – The Federal Board of Revenue (FBR) has updated the income tax rates applicable to export proceeds for the tax year 2021, covering the period from July 1, 2020, to June 30, 2021.

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