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.
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.No
Persons
Rate
(1)
(2)
(3)
1.
Persons importing goods classified in Part I of the Twelfth Schedule
1% 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 Schedule
2% 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 Schedule
5.5% 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(a) in the case of manufacturers covered under rescinded Notification No. S.R.O 1125(I)/2011 dated the 31st December, 2011 as it stood on the 28th June, 2019 on import of items covered under the aforementioned S.R.O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)
1
Up to 30 except smart phones
70
0
2
Exceeding 30 and up to 100 and smart phones up to 100
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.No
Person(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.
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 Gain
Rate of tax
(1)
(2)
(3)
1.
Where the gain does not exceed Rs. 5 million
2.5%
2.
Where the gain exceeds Rs. 5 million but does not exceed Rs. 10 million
5%
3.
Where the gain exceeds Rs. 10 million but does not exceed Rs. 15 million
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 rent
Rate 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. 6,000,000
Rs.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. 8,000,000
Rs.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. 8,000,000
Rs.1,710,000 plus 35 percent of the gross amount exceeding Rs.8,000,000
KARACHI: Federal Board of Revenue (FBR) has updated tax rate for profit on debt to be 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 following rate of tax on profit on debt.
The rate of tax for profit on debt imposed under section 7B shall be—
S.NO
Profit on Debt
Rate of tax
(1)
(2)
(3)
1.
Where profit on debt does not exceed Rs.5,000,000
15%
2.
Where profit on debt exceeds Rs.5,000,000 but does not exceed Rs.25,000,000
17.5%
3.
Where profit on debt exceeds Rs.25,000,000 but does not exceed Rs. 36,000,000
20%
The tax rate is deducted under Section 7B of Income Tax Ordinance, 2001, under which:
Section 7B. Tax on profit on debt.—(1) Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division IIIA of Part I of the First Schedule, on every person, other than a company, who receives a profit on debt from any person mentioned in clauses (a) to (d) of sub-section (1)of section 151.
(2) The tax imposed under sub-section (1) on a person, other than a company, who receives a profit on debt shall be computed by applying the relevant rate of tax to the gross amount of the profit on debt.
(3) This section shall not apply to a profit on debt that –
ISLAMABAD: Federal Board of Revenue (FBR) has updated income tax rate on dividend received from a company during tax year 2021 (July 01, 2020 – June 30, 2021).
The FBR issued Income Tax Ordinance, 2001 (updated up to June 30, 2020) incorporating amendments brought through Finance Act, 2020. The FBR updated following rate of dividend tax:
The rate of tax imposed under section 5 on dividend received from a company shall be-
(a) 7.5 percent in the case of dividends 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 re-imbursed by Central Power Purchasing (CPPA-G) or its predecessor or successor entity.
(b) 15 percent in mutual funds and cases other than those mentioned in clauses (a) and (c).
(c) 25 percent in case of a person receiving dividend from a company where no tax payable by such company, due to exemption of income or carry forward of business losses under Part VIII of Chapter III or claim of tax credits under Part X of Chapter III.
Section 5 of Income Tax Ordinance, 2001 explains tax on dividends as:
Section 5. Tax on dividends.— (1) Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division III of Part I of the First Schedule, on every person who receives a dividend from a company or treated as dividend under clause (19) of section 2.
(2) The tax imposed under sub-section (1) on a person who receives a dividend shall be computed by applying the relevant rate of tax to the gross amount of the dividend.
(3) This section shall not apply to a dividend that is exempt from tax under this Ordinance.
ISLAMABAD: Federal Board of Revenue (FBR) has updated rate of super tax to be applicable for tax year 2021 (July 01, 2020 – June 30, 2021).
The FBR issued Income Tax Ordinance, 2001 after incorporating amendment brought through Finance Act, 2020. The FBR issued the following updated rate of super tax:
Provided that in case of a banking company, super tax for tax year 2019 shall be payable, on estimate basis, by thirtieth day of June, 2018.
Super tax was introduced through Finance Act, 2015 by inserting Section 4B to Income Tax Ordinance, 2001.
The section 4B is read as:
4B. Super tax for rehabilitation of temporarily displaced persons.― (1) A super tax shall be imposed for rehabilitation of temporarily displaced persons, for tax years 2015 and onwards, at the rates specified in Division IIA of Part I of the First Schedule, on income of every person specified in the said Division.
(2) For the purposes of this section, “income” shall be the sum of the following:—
(i) profit on debt, dividend, capital gains, brokerage and commission;
(ii) taxable income (other than brought forward depreciation and brought forward business losses) under section (9) of this Ordinance, if not included in clause (i);
(iii) imputable income as defined in clause (28A) of section 2 excluding amounts specified in clause (i); and
(iv) income computed, other than brought forward depreciation, brought forward amortization and brought forward business lossess under Fourth, Fifth, Seventh and Eighth Schedules.
(3) The super tax payable under sub-section (1) shall be paid, collected and deposited on the date and in the manner as specified in sub-section (1) of section 137 and all provisions of Chapter X of the Ordinance shall apply.
(4) Where the super tax is not paid by a person liable to pay it, the Commissioner shall by an order in writing, determine the super tax payable, and shall serve upon the person, a notice of demand specifying the super tax payable and within the time specified under section 137 of the Ordinance.
(5) Where the super tax is not paid by a person liable to pay it, the Commissioner shall recover the super tax payable under subsection (1) and the provisions of Part IV,X, XI and XII of Chapter X and Part I of Chapter XI of the Ordinance shall, so far as may be, apply to the collection of super tax as these apply to the collection of tax under the Ordinance.
(6) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.
ISLAMABAD: Federal Board of Revenue (FBR) has issued rates of income tax for companies to be applicable during tax year 2021.
The FBR issued Income Tax Ordinance, 2001 (updated June 30, 2020) incorporating amendments brought through Finance Act, 2020.
The FBR said that the rate of tax shall be 29 percent on the taxable income of a company for tax year 2021.
As per the Income Tax Ordinance, 2001, the tax rate on corporate entities has been defined as:
The rate of tax imposed on the taxable income of a company for the tax year 2007 and onward shall be 35 percent:
Provided that the rate of tax imposed on the taxable income of a company other than a banking company, shall be 34 percent for the tax year 2014:
Provided further that the rate of tax imposed on the taxable income of a company, other than a banking company, shall be 33 percent for the tax year 2015:
Provided further that the rate of tax imposed on taxable income of a company, other than banking company shall be 32 percent for the tax year 2016, 31 percent for tax year 2017, 30 percent for tax year 2018 and 29 percent for tax year 2019 and onwards.
Where the taxpayer is a small company as defined in section 2 of Income Tax Ordinance, 2001, tax shall be payable at the rate of 25 percent:
Provided that for tax year 2019 and onwards tax rates shall be as set out in the following Table, namely:—
The Federal Board of Revenue (FBR) has updated the income tax rates for salaried individuals for the tax year 2021. These rates, which have been incorporated into the Income Tax Ordinance, 2001, as amended by the Finance Act, 2020, will remain applicable from July 1, 2020, to June 30, 2021, unless further amendments are made.
