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Tag: Income Tax Ordinance 2001

  • Rate of tax on payments for goods, services

    Rate of tax on payments for goods, services

    ISLAMABAD: Federal Board of Revenue (FBR) has updated rate of income tax on payments for goods or services 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 tax on payments for goods or services under Section 153 of the Income Tax Ordinance, 2001 in following manner:

    (1) The rate of tax to be deducted from a payment referred to in clause (a) of sub-section (1) of section 153 shall be –

    (a) in the case of the sale of rice, cotton seed or edible oils, 1.5 percent of the gross amount payable; or

    Explanation.— For removal of doubt, it is clarified that “cotton seed and edible oils” means cotton seed oil and edible oils;

    (ab) in the case of supplies made by the distributer of fast moving consumer goods,─

    (i) in case of a company, 2 percent of the gross amount payable; and

    (ii) in any other case, 2.5 percent of the gross amount payable.

    (b) in the case of sale of goods including toll manufacturing,—

    (i) in case of a company, 4 percent of the gross amount payable, and

    (ii) in any other case, 4.5 percent of the gross amount payable,

    (2) The rate of tax to be deducted from a payment referred to in clause (b) of sub-section (1) of section 153 shall be —

    (i) 3 percent of the gross amount payable, in the cases of transport services, freight forwarding services, air cargo services, courier services, manpower outsourcing services, hotel services, security guard services, software development services, IT services and IT enabled services as defined in clause (133) of Part I of the Second Schedule, tracking services, advertising services (other than by print or electronic media), share registrar services, engineering services, warehousing services, services rendered by asset management companies, data services provided under license issued by the Pakistan Telecommunication Authority, telecommunication infrastructure (tower) services, car rental services, building maintenance services, services rendered by Pakistan Stock Exchange Limited and Pakistan Mercantile Exchange Limited inspection, certification, testing and training services;

    (ii) in case of rendering of or providing of services other than sub-clause (i),-

    (a) in case of a company, 8 percent of the gross amount payable;

    (b) in any other case, 10 percent of the gross amount payable; and

    (c) in respect of persons making payments to electronic and print media for advertising services, 1.5 percent of the gross amount payable.

    (3) The rate of tax to be deducted from a payment referred to in clause (c) of sub-section (1) of section 153 shall be –

    (i) 10 percent of the gross amount payable in case of sportspersons;

    (ii) in case of a company, 7 percent of the gross amount payable; and

    (iii) in any other case, 7.5 percent of the gross amount payable.

  • Penalty for not filing return of income

    Penalty for not filing return of income

    ISLAMABAD: The Federal Board of Revenue (FBR) has revised the rates of fines and penalties for individuals who fail to file their annual income returns despite having taxable income or being required to file under the law.

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  • Tax rates on payments to non-residents on services, contract execution

    Tax rates on payments to non-residents on services, contract execution

    ISLAMABAD: Federal Board of Revenue (FBR) has updated tax rates on payments to non-residents as fee for technical services or execution of contracts during tax year 2021 (July 01, 2020 to June 30, 2021).

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  • TAX YEAR 2021: tax rate on Sukuks

    TAX YEAR 2021: tax rate on Sukuks

    ISLAMABAD: Federal Board of Revenue (FBR) has updated tax rate on return on investment in Sukuks for the tax year (July 01, 2020 to June 30, 2021).

    The FBR issued Income Tax Ordinance, 2001 (updated till June 30, 2020) after incorporating amendments brought through Finance Act, 2020. The FBR updated the rate of tax on return on investment in Sukuks.

    Section 150A of Income Tax Ordinance, 2001 deals with return on investment in Sukuks as:

    150A. Return on investment in Sukuks—Every special purpose vehicle, or a company, at the time of making payment of a return on investment in sukuks to a sukuk holder shall deduct tax from the gross amount of return on investment at the rate specified in Division IB of Part III of the First Schedule.

    The rate of tax to be deducted under section 150A shall be—

    (a) 25 percent in case the sukuk-holder is a company;

    (b) 12.5 percent in case the sukuk-holder is an individual or an association of person, if the return on investment is more than one million;

    (c) 10 percent in case the sukuk-holder is an individual and an association of person, if the return on investment is less than one million.

  • TAX YEAR 2021: tax rate on profit on bank deposits

    TAX YEAR 2021: tax rate on profit on bank deposits

    KARACHI: Federal Board of Revenue (FBR) has updated rate of tax on profit on debt applicable during tax year 2021 (July 01, 2020 to June 30, 2021).

    The FBR issued Income Tax Ordinance, 2001 (updated June 30, 2020) after incorporating amendments introduced through Finance Act, 2020. The FBR updated the rate of tax to be deducted under section 151 shall be 15 percent of the yield or profit:

    Provided that the rate shall be 10 percent in cases where the taxpayer furnishes a certificate to the payer of profit that during the tax year yield or profit paid is rupees five hundred thousand rupees or less.

    According to the Section 151 of the Ordinance, 2001, the Profit on debt. — (1) Where –

    (a) a person pays yield on an account, deposit or a certificate under the National Savings Scheme or Post Office Savings Account;

    (b) a banking company or financial institution pays any profit on a debt, being an account or deposit maintained with the company or institution;

    (c) the Federal Government, a Provincial Government or a Local Government pays to any person profit on any security other than that referred to in clause (a) issued by such Government or authority; or

    (d) a banking company, a financial institution, a company referred to in sub-clauses (i) and (ii) of clause (b) of sub-section (2) of section 80, or a finance society pays any profit on any bond, certificate, debenture, security or instrument of any kind (other than a loan agreement between a borrower and a banking company or a development finance institution) to any person other than financial institution.

    the payer of the profit shall deduct tax at the rate specified in Division IA of Part III of the First Schedule from the gross amount of the yield or profit paid as reduced by the amount of Zakat, if any, paid by the recipient under the Zakat and Ushr Ordinance, 1980 (XVII of 1980), at the time the profit is paid to the recipient.

    (2) This section shall not apply to any profit on debt that is subject to sub-section (2) of section 152.

    “(3) Tax deductible under this section shall be a minimum tax on the profit on debt arising to a taxpayer, except where —

    (a) taxpayer is a company; or

    (b) profit on debt is taxable under section 7B.

  • TAX YEAR 2021: rate of advance tax on dividends

    TAX YEAR 2021: rate of advance tax on dividends

    ISLAMABAD: Federal Board of Revenue (FBR) has updated rate of advance tax on dividends 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 amendment brought through Finance Act, 2020.

    The FBR updated the rate of tax to be deducted under section 150 and 236S:

    (a) 7.5 percent in case of dividend paid by Independent Power Producers where such dividend is a pass through item under an Implementation Agreement or Power Purchase Agreement or Energy Purchase Agreement and is required to be reimbursed by Central Power Purchasing Agency (CPPA-G) or its predecessor or successor entity.

    (b) 15 percent in mutual funds and cases other than those mentioned in clauses (a) and (ba); and

    (ba) 25 percent in case of a person receiving dividend from a company where no tax is payable by such company, due to exemption of income or carry forward of business losses under Part VIII Chapter III or claim of tax credits under Part X of Chapter III.

    According to Section 150: Dividends — Every person paying a dividend shall deduct tax from the gross amount of the dividend paid at the rate specified in Division I of Part III of the First Schedule.

    According to 236S: Dividend in specie — Every person making payment of dividend-in-specie shall collect tax from the gross amount of the dividend in specie paid at the rate specified in Division I of Part III of the First Schedule.

  • TAX YEAR 2021: Rates of advance tax on imports

    TAX YEAR 2021: Rates of advance tax on imports

    ISLAMABAD: Federal Board of Revenue (FBR) has updated rate of advance tax on imports for tax year 2021 (July 01, 2020 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 updated following rate of advance tax on import of goods:

    S.NoPersonsRate
    (1)(2)(3)
    1.Persons importing goods classified in Part I of the Twelfth Schedule1% of the import value as increased by customs-duty, sales tax and federal excise duty
    2.Persons importing goods classified in Part II of the Twelfth Schedule2% of the import value as increased by customs-duty, sales tax and federal excise duty
    3.Persons importing goods classified in Part III of the Twelfth Schedule5.5% of the import value as increased by customs-duty, sales tax and federal excise duty’;

    Provided that the rate specified in column (3),—

    (a) in the case of manufacturers covered under rescinded Notification No. S.R.O 1125(I)/2011 dated the 31st December, 2011 as it stood on the 28th June, 2019 on import of items covered under the aforementioned S.R.O shall be 1%;

    (b) in case of persons importing finished pharmaceutical products that are not manufactured otherwise in Pakistan, as certified by the Drug Regulatory Authority of Pakistan shall be 4%:

    Provided further that the rate of tax on value of import of mobile phone by any person shall be as set out in the following table, namely:-

    S.No.C & F Value of mobile phone (in US Dollar) In CBU condition PCT Heading 8517.1219 Tax (in Rs.)  IN CKD/SKD condition under PCT Heading 8517.1211 Tax (in Rs.)
    (1)(2)(3)(4)
    1Up to 30 except smart phones700
    2Exceeding 30 and up to 100 and smart phones up to 1001000
    3Exceeding 100 and up to 2009300
    4Exceeding 200 and up to 3509700
    5Exceeding 350 and up to 5003,0005,000
    6Exceeding 5005,20011,500

  • TAX YEAR 2021: minimum tax rates

    TAX YEAR 2021: minimum tax rates

    ISLAMABAD: Federal Board of Revenue (FBR) has updated rates of minimum tax to be applicable during tax year 2021 (July 01, 2020 – June 30, 2021).

    The FBR issued Income Tax Ordinance, 2001 (updated up to June 30, 2020) after incorporating amendment brought through Finance Act, 2020. The FBR updated following rates of minimum tax under Section 113 of the Ordinance:

    S.NoPerson(s)Minimum Tax as percentage of the person’s turnover for the year
    (1)(2)(3)
    1.  (a) Oil marketing companies, Oil refineries, Sui Southern Gas Company Limited and Sui Northern Gas Pipelines Limited (for the cases where annual turnover exceeds rupees one billion.)   (b) Pakistani Airlines; and   (c) Poultry industry including poultry breeding, broiler production, egg production and poultry feed production.   (d) Dealers or distributors of fertilizer ; and (e) person running an online marketplace as defined in clause (38B) of section 2.0.75%
    2.  (a) Distributors of pharmaceutical products, fast moving consumer goods and cigarettes; (b) Petroleum agents and distributors who are registered under the Sales Tax Act, 1990; (c) Rice mills and dealers; and (d) Flour mills.  0.25%
    3.Motorcycle dealers registered under the Sales Tax Act, 1990.0.3%
    4.In all other cases.1.5%

    Section 113: Minimum tax on the income of certain persons.

    (1) This section shall apply to a resident company, permanent establishment of a non-resident company, an individual (having turnover of ten million rupees or above in the tax year 2017 or in any subsequent tax year) and an association of persons (having turnover of ten million rupees or above in the tax year 2017 or in any subsequent tax year) where, for any reason whatsoever allowed under this Ordinance, including any other law for the time being in force—

    (a) loss for the year;

    (b) the setting off of a loss of an earlier year;

    (c) exemption from tax;

    (d) the application of credits or rebates; or

    (e) the claiming of allowances or deductions (including depreciation and amortization deductions) no tax is payable or paid by the person for a tax year or the tax payable or paid by the person for a tax year is less than the percentage as specified in column (3) of the Table in Division IX of Part-I of the First Schedule of the amount representing the person’s turnover from all sources for that year:

    Explanation.-For the purpose of this sub-section, the expression “tax payable or paid” does not include-

    (a) tax already paid or payable in respect of deemed income which is assessed as final discharge of the tax liability under section 169 or under any other provision of this Ordinance; and

    (b) tax payable or paid under section 4B.”

    (3) Where this section applies:

    (a) the aggregate of the person’s turnover as defined in sub-section (3) for the tax year shall be treated as the income of the person for the year chargeable to tax;

    (b) the person shall pay as income tax for the tax year (instead of the actual tax payable under this Ordinance), minimum tax computed on the basis of rates as specified in Division IX of Part I of First Schedule;

    (c) where tax paid under sub-section (1) exceeds the actual tax payable under Part I, clause (1) of Division I, or Division II of the First Schedule, the excess amount of tax paid shall be carried forward for adjustment against tax liability under the aforesaid Part of the subsequent tax year:

    Provided that the amount under this clause shall be carried forward and adjusted against tax liability for five tax years immediately succeeding the tax year for which the amount was paid.

    (4) “turnover” means,-

    (a) the gross sales or gross receipts, exclusive of Sales Tax and Federal Excise duty or any trade discounts shown on invoices,

    or bills, derived from the sale of goods, and also excluding any amount taken as deemed income and is assessed as final discharge of the tax liability for which tax is already paid or payable;

    (b) the gross fees for the rendering of services for giving benefits including commissions; except covered by final discharge of tax liability for which tax is separately paid or payable;

    (c) the gross receipts from the execution of contracts; except covered by final discharge of tax liability for which tax is separately paid or payable; and

    (d) the company’s share of the amounts stated above of any association of persons of which the company is a member.

  • TAX YEAR 2021: rate of CGT on immovable property

    TAX YEAR 2021: rate of CGT on immovable property

    ISLAMABAD: Federal Board of Revenue (FBR) has updated rates of tax on capital gain on disposal of immovable properties that are applicable during tax year 2021 (July 01, 2020 – June 30, 2021).

    The FBR issued Income Tax Ordinance, 2001 (updated June 30, 2020) after incorporating amendments brought through Finance Act, 2020. The FBR updated the following rate of tax on Capital Gains on disposal of Immovable Property.

    The rate of tax to be paid under sub-section (1A) of section 37 shall be as follows:—

    S.No.Amount of GainRate of tax
    (1)(2)(3)
    1.Where the gain does not exceed Rs. 5 million2.5%
    2.Where the gain exceeds Rs. 5 million but does not exceed Rs. 10 million5%
    3.Where the gain exceeds Rs. 10 million but does not exceed Rs. 15 million7.5%
    4.Where the gain exceeds Rs. 15 million10%
  • TAX YEAR 2021: tax rates on income from property

    TAX YEAR 2021: tax rates on income from property

    ISLAMABAD: Federal Board of Revenue (FBR) has updated rates of tax on income from property to be applicable during tax year 2021 (July 01, 2020 to June 30, 2021).

    The FBR issued Income Tax Ordinance, 2001 (updated till June 30, 2020) incorporating amendments brought through Finance Act, 2020. Through the ordinance, the FBR updated the rate of tax to be paid under section 15, in the case of individual and association of persons, shall be as follows:-

    S.No.Gross amount of rentRate of tax
    (1)(2)(3)
    1.Where the gross amount of rent does not exceed Rs.200,000.Nil
    2.Where the gross amount of rent exceeds Rs.200,000 but does not exceed Rs.600,000.5 per cent of the gross amount exceeding Rs.200,000.
    3.Where the gross amount of rent exceeds Rs.600,000 but does not exceed Rs.1,000,000.Rs.20,000 plus 10 per cent of the gross amount exceeding Rs.600,000.
    4.Where the gross amount of rent exceeds Rs.1,000,000 but does not exceed Rs. 2,000,000.Rs.60,000 plus 15 per cent of the gross amount exceeding Rs1,000,000.
    5.Where the gross amount of rent exceeds Rs.2,000,000 but does not exceed Rs. 4,000,000.Rs.210,000 plus 20 per cent of the gross amount exceeding Rs.2,000,000
    6.Where the gross amount of rent exceeds Rs. 4,000,000 but does not exceed Rs. 6,000,000Rs.610,000 plus 25 per cent of the gross amount exceeding Rs.4,000,000
    7.Where the gross amount of rent exceeds Rs. 6000,000 but does not exceeds Rs. 8,000,000Rs.1,110,000 plus 30 per cent of the gross amount exceeding Rs.6,000,000
    8.Where the gross amount of rent exceeds Rs. 8,000,000Rs.1,710,000 plus 35 percent of the gross amount exceeding Rs.8,000,000