Tag: Income Tax Ordinance 2001

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:

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.

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.

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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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.

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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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.