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Tag: Income Tax Ordinance 2001

  • Tax rates for salary, business individuals

    Tax rates for salary, business individuals

    KARACHI: Following are the tax rates for individuals under First Schedule of Income Tax Ordinance, 2001.

    The tax rate as updated through Finance Supplementary (Amendment) Act, 2018 to Income Tax Ordinance, 2001, issued by Federal Board of Revenue (FBR).

    Rates of tax for individuals

    (1) The rates of tax imposed on the taxable income of every individual, not being an individual to which paragraph (1A) of this Division applies, shall be as set out in the following table, namely:—

    Table

    S. No.Taxable IncomeRate of Tax
    01Where the taxable income does not exceed Rs. 400,0000 percent
    02Where the taxable income exceeds Rs. 400,000 but does not exceed Rs. 800,000Rs1,000
    03Where the taxable income exceeds Rs. 800,000 but does not exceed Rs. 1,200,000Rs2,000
    04Where the taxable income exceeds Rs.1,200,000 but does not exceed Rs. 2,400,0005 percent of the amount exceeding Rs. 1,200,000
    05Where the taxable income exceeds Rs. 2,400,000 but does not exceed Rs. 3,000,00060,000 + 15 percent of the amount exceeding Rs. 2,400,000
    06Where the taxable income exceeds Rs. 3,000,000 but does not exceed Rs. 4,000,000150,000 + 20 percent of the amount exceeding Rs. 3,000,000
    07Where the taxable income exceeds Rs. 4,000,000 but does not exceed Rs. 5,000,000350,000 + 25 percent of the amount exceeding Rs. 4,000,000
    08Where the taxable income exceeds Rs. 5,000,000
         		600,000 + 29 percent of the amount exceeding Rs. 5,000,000

    Provided that where the taxable income exceeds eight hundred thousand rupees the minimum tax payable shall be two thousand rupees.

    Salary persons

    (1A) Where the income of an individual chargeable under the head “salary” exceeds fifty per cent of his taxable income, the rates of tax to be applied shall be as set out in the following table, namely:—

    Table

    S.No.Taxable IncomeRate of Tax
    01Where the taxable income does not exceed Rs. 400,0000 percent
    02Where the taxable income exceeds Rs. 400,000 but does not exceed Rs. 800,000Rs1,000
    03Where the taxable income exceeds Rs. 800,000 but does not exceed Rs. 1,200,000Rs2,000
    04Where the taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 2,500,0005 percent of the amount exceeding Rs. 1,200,000
    05Where the taxable income exceeds Rs.2,500,000 but does not exceed Rs. 4,000,00065,000 + 15 percent of the amount exceeding Rs. 2,500,000
    06Where the taxable income exceeds Rs. 4,000,000 but does not exceed Rs. 8,000,000290,000 + 20 percent of the amount exceeding Rs. 4,000,000
    07Where the taxable income exceeds Rs. 8,000,0001,090,000 + 25 percent of the amount exceeding Rs. 8,000,000

    Provided that where the taxable income exceeds eight hundred thousand rupees the minimum tax payable shall be two thousand rupees.

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  • Income Tax Ordinance 2001: advance tax on paying education fee abroad

    Income Tax Ordinance 2001: advance tax on paying education fee abroad

    KARACHI: Foreign exchange companies are responsible for collecting advance tax on remitting abroad the education related expenses.

    The Federal Board of Revenue (FBR) recently updated Income Tax Ordinance, 2001 under which Section 236R explained the advance tax on remitting amount abroad for education expenses.

    Section 236R: Collection of advance tax on education related expenses remitted abroad

    Sub-Section (1): There shall be collected advance tax at the rate specified in Division XXIIV of Part-IV of the First Schedule on the amount of education related expenses remitted abroad.

    Rate of collection of tax under section 236R shall be 5percent of the amount of total education related expenses.

    Sub-Section (2): Banks, financial institutions, foreign exchange companies or any other person responsible for remitting foreign currency abroad shall collect advance tax from the payer of education related expenses.

    Sub-Section (3): Tax collected under this section shall be adjustable against the income of the person remitting payment of education related expenses.

    Sub-Section (4): For the purpose of this section, “education related expenses” includes tuition fee, boarding and lodging expenses, any payment for distant learning to any institution or university in a foreign country and any other expense related or attributable to foreign education.

  • Advance tax on dealers, commission agents

    Advance tax on dealers, commission agents

    KARACHI: Every market committee has been required to collect advance tax from dealers, commission agents under income tax laws.

    The Federal Board of Revenue (FBR) recently updated Income Tax Ordinance, 2001 under which advance tax is collectable from dealers, commission agents and arhatis under Section 236J.

    Section 236J: Advance tax on dealers, commission agents and arhatis etc

    Sub-Section (1): Every market committee shall collect advance tax from dealers, commission agents or arhatis, etc. at the rates specified in Division XVII of Part-IV of the First Schedule at the time of issuance or renewal of licences.

    The rate of collection of tax under section 236J shall be as follows:

    GroupAmount of tax
    (per annum)
    Group or Class A:Rs. 10,000
    Group or Class B:Rs. 7,500
    Group or Class C:Rs. 5,000
    Any other category:Rs. 5,000

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

    Sub-Section (4): In this section “market committee” includes any committee or body formed under any provincial or local law made for the purposes of establishing, regulating or organizing agricultural, livestock and other commodity markets.

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  • Income Tax Ordinance 2001: return filers can claim tax adjustment paid on educational fee

    Income Tax Ordinance 2001: return filers can claim tax adjustment paid on educational fee

    KARACHI: Income tax return filers can claim adjustment of advance tax paid on educational fee.

    According to updated Income Tax Ordinance, 2001 issued by Federal Board of Revenue (FBR) the advance tax collected on education fee under Section 236I is adjustable against total income tax liability of a taxpayer.

    Section 236I: Collection of advance tax by educational institutions

    Sub-Section (1): There shall be collected advance tax at the rate specified in Division XVI of Part-IV of the First Schedule on the amount of fee paid to an educational institution.

    The rate of collection of tax under section 236I shall be 5 percent of the amount of fee.

    Sub-Section (2): The person preparing fee voucher or challan shall charge advance tax under sub-section (1) in the manner the fee is charged.

    Sub-Section (3): Advance tax under this section shall not be collected from a person on an amount which is paid by way of scholarship or where annual fee does not exceed two hundred thousand rupees.

    Sub-Section (4): The term “fee” includes, tuition fee and all charges received by the educational institution, by whatever name called, excluding the amount which is refundable.

    Sub-Section (5): Tax collected under this section shall be adjustable against the tax liability of either of the parents or guardian making payment of the fee.

    Sub-Section (6): Advance tax under this section shall not be collected from a person who is a non-resident and,—

    (i) furnishes copy of passport as an evidence to the educational institution that during previous tax year, his stay in Pakistan was less than one hundred eighty-three days;

    (ii) furnishes a certificate that he has no Pakistan-source income; and
    (iii) the fee is remitted directly from abroad through normal banking channels to the bank account of the educational institution.

  • Advance tax on sales to distributors, dealers and wholesalers

    Advance tax on sales to distributors, dealers and wholesalers

    KARACHI: Federal Board of Revenue (FBR) has made manufacturers responsible for collecting advance tax on sales to distributors, dealers and wholesalers.

    The tax has been imposed under Section 236G of Income Tax Ordinance, 2001.

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

    Sub-Section (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.

    The rate of collection of tax under section 236G shall be as follows:-

    Category of SaleRate of Tax
     FilerNon-Filer
    Fertilizers0.7 percent1.4 percent
    Other than Fertilizers0.1 percent0.2 percent

    Sub-Section (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.

    Section 236H: Advance tax on sales to retailers

    Sub-Section (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.

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

    Category of saleRate of tax
     FilerNon-Filer
    (1)(2)(3)
    Electronics1 percent1 percent
    Others0.5 percent

    Sub-Section (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.

    Section 236HA: Tax on sale of certain petroleum products

    Sub-Section (1): Every person selling petroleum products to a petrol pump operator or distributor, where such operator or distributor is not allowed a commission or discount, shall collect advance tax on ex-depot sale price of such products at the rate specified in Division XVA of Part IV of the First schedule.

    The rate of collection of tax under section 236HA shall be 0.5 percent of ex-depot sale price for filers and 1 percent for non-filers.

    Sub-Section (2): The tax deductible under sub-section (1) shall be a final tax on the income arising from the sale of petroleum products to which sub-section (1) applies.

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  • Advance tax on electronic media, cable operators

    Advance tax on electronic media, cable operators

    KARACHI: Electronic media and cable operators are required to pay adjustable advance tax at the time of obtaining new license or renewal of license.

    According to updated Income Tax Ordinance, 2001 issued by the Federal Board of Revenue (FBR), Pakistan Electronic Media Regulatory Authority (PEMRA) shall collect the advance tax at the time of issuance of licence for distribution services or renewal of the licence to a licencee under Section 236F of the Ordinance.

    Section 236F: Advance tax on cable operators and other electronic media

    Sub-Section (1): Pakistan Electronic Media Regulatory Authority, at the time of issuance of licence for distribution services or renewal of the licence to a licencee, shall collect advance tax at the rates specified in Division XIII of Part IV of the First Schedule.

    (1) The rate of tax to be collected under section 236F in the case of Cable Television Operator shall be as follows:—

    License Category as provided in PEMRA RulesTax on License FeeTax on Renewal
    HRs. 7,500Rs. 10,000
    H-IRs. 10,000Rs. 15,000
    H-IIRs. 25,000Rs. 30,000
    RRs. 5,000Rs. 12,000
    BRs. 5,000Rs. 40,000
    B-1Rs. 30,000Rs. 35,000
    B-2Rs. 40,000Rs. 45,000
    B-3Rs. 50,000Rs. 75,000
    B-4Rs. 75,000Rs. 100,000
    B-5Rs. 87,500Rs. 150,000
    B-6Rs. 175,000Rs. 200,000
    B-7Rs. 262,500Rs. 300,000
    B-8Rs. 437,500Rs. 500,000
    B-9Rs. 700,000Rs. 800,000
    B-10Rs. 875,500Rs. 900,000

    (2) The rate of tax to be collected by Pakistan Electronic Media Regulatory Authority under section 236F in the case of IPTV, FM Radio, MMDS, Mobile TV, Mobile Audio, Satellite TV Channel and Landing Rights, shall be 20 per cent of the permission fee or renewal fee, as the case may be.

    “(3) In addition to tax collected under paragraph (2) Pakistan Electronic Media Regulatory Authority shall collect tax at the rate of fifty per cent of the permission fee or renewal fee, as the case may be, from every TV Channel on which foreign TV drama serial or a play in any language, other than English, is screened or viewed.”

    Sub-Section (2): The tax collected under sub-section (1) shall be adjustable.

    Sub-Section (3): For the purpose of this section, “cable television operator” “DTH”, “Distribution Service”, “electronic media”, “IPTV”, “loop holder”, “MMDS”, “mobile TV”, shall have the same meanings as defined in Pakistan Electronic Media Regulatory Authority Ordinance, 2002 (XIII of 2002) and rules made thereunder.

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  • Income Tax Ordinance 2001: amended advance tax rates on marriages, functions

    Income Tax Ordinance 2001: amended advance tax rates on marriages, functions

    KARACHI: Federal Board of Revenue (FBR) has updated advance tax rates on marriages and functions through latest amendment to Income Tax Ordinance, 2001.
    The national assembly recently approved Finance Supplementary (Second Amendment) Act, 2019 and advance tax rate for functions and gathering has been updated.
    The advance tax is collected under following section of the Ordinance.
    Section 236D: Advance tax on functions and gatherings
    Sub-Section (1): Every prescribed person shall collect advance tax at the rate specified in Division XI of Part IV of the First Schedule on the total amount of the bill from a person arranging or holding a function in a marriage hall, marquee, hotel, restaurant, commercial lawn, club, a community place or any other place used for such purpose.
    Sub-Section (2): Where the food, service or any other facility is provided by any other person, the prescribed person shall also collect advance tax on the payment for such food, service or facility at the rate specified in Division XI of Part IV of the First Schedule from the person arranging or holding the function.
    Sub-Section (3): The advance tax collected under sub-section (1) and sub-section (2) shall be adjustable.
    Sub-Section (4): In this section,—
    (a) “function” includes any wedding related event, a seminar, a workshop, a session, an exhibition, a concert, a show, a party or any other gathering held for such purpose; and
    (b) “prescribed person” includes the owner, a lease-holder, an operator or a manager of a marriage hall, marquee, hotel, restaurant, commercial lawn, club, a community place or any other place used for such purpose.
    The rate of tax to be collected under each sub-sections (1) and (2) of section 236D shall be 5%;
    Provided that the rate for the function of marriage in a marriage hall, marquee, hotel, restaurant, commercial lawn, club, a community place or any other place used for such purpose shall be as set out in the Table below:─

    S. No.Rate of tax 
    015% of the bill ad valorem or Rs20,000 per function, whichever is higherFor Islamabad, Lahore, Multan,Faisalabad, Rawalpindi, Gujranwala, Bahawalpur, Sargodha, Sahiwal, Shekhurpura, Dera Ghazi Khan, Karachi, Hyderabad, Sukkur, Thatta, Larkana, Mirpur Khas, Nawabshah, Peshawar, Mardan, Abbottabad, Kohat, Dera Ismail Khan, Quetta, Sibi, Loralai, Khuzdar, Dera Murad Jamali and Turbat.
     
    025% of the bill ad valorem or Rs10,000 per function, whichever is higherFor cities other than those mentioned above.

    Through Finance Supplementary (Second Amendment) Act, 2019, the following amendment has been inserted:
    “Provided further that the rate for the function of marriage in a marriage hall, marquee or a community place with the total function area less than 500 square yards or, in case of a multi-stories premises, with the largest total function area on one floor less than 500 square yards, shall be 5 percent of the bill ad valorem or Rs5,000 function whichever is higher.”
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  • Income Tax Ordinance 2001: advance tax on sale, purchase of immovable properties

    Income Tax Ordinance 2001: advance tax on sale, purchase of immovable properties

    KARACHI: Adjustable advance tax is applicable for filers and non-filers of income tax return on sales and purchase of immovable properties to be collected at the time of transaction.

    According to updated Income Tax Ordinance, 2001 issued by Federal Board of Revenue (FBR) the tax shall be collected under Section 236C and Section 236K of the Ordinance, which are as follow:

    Section 236C: Advance Tax on sale or transfer of immovable Property
    Sub-Section (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:

    “The rate of tax to be collected under section 236C shall be 1% of the gross amount of the consideration received for filers and 2% of the gross amount of the consideration received for non-filers.”

    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.

    Sub-Section (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.

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

    Section 236K: Advance tax on purchase or transfer of immovable property

    Sub-Section (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.

    The rate of tax to be collected under section 236K shall be:-

    S. NoPeriodRate of Tax
    01Where value of immovable property is up to Rs4 millionZero percent
    02Where the value of immovable property is more than Rs4 millionFiler 2 percent
    Non-filer 4 percent

     
    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.

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

    Sub-Section (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.

    Sub-Section (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.”

  • Income Tax Ordinance 2001: advance tax on domestic, international air tickets

    Income Tax Ordinance 2001: advance tax on domestic, international air tickets

    KARACHI: Passengers traveling through domestic or international airlines are required to pay certain amount of advance tax on purchase of air tickets.

    According to Income Tax Ordinance, 2001 issued by Federal Board of Revenue (FBR) passengers of domestic and international destinations are required to pay advance tax under Section 236B and Section 236L.
    Section 236B: Advance tax on purchase of air ticket.

    Sub-Section (1): There shall be collected advance tax at the rate specified in Division IX of Part IV of the First Schedule, on the purchase of gross amount of domestic air ticket:

    (The rate of tax to be deducted under section 236B shall be 5 percent of the gross amount of air ticket.)

    “Provided that this section shall not apply to routes of Baluchistan coastal belt, Azad Jammu and Kashmir, Federally Administered Tribal Areas, Gilgit-Baltistan and Chitral.”

    Sub-Section (2): The airline issuing air ticket shall charge advance tax under sub-section (1) in the manner air ticket charges are charged.

    Sub-Section (2A): The mode, manner and time of collection shall be as may be prescribed.

    Sub-Section (3): The advance tax collected under sub-section (1) shall be adjustable.

    Section 236L: Advance tax on purchase of international air ticket
    Sub-Section (1): Every airline, issuing ticket for journey originating from Pakistan, shall collect advance tax at the rates specified in Division XX of Part IV of the First Schedule, on the gross amount of international air tickets issued to passengers booking one-way or return, from Pakistan.
     

    01First/Executive ClassRs16,000 per person
    02Other excluding EconomyRs12,000 per person
    03Economy0

     
    Sub-Section (2): The airline issuing air ticket shall collect or charge advance tax under sub-section (1) in the manner air ticket charges are collected or charged, either manually or electronically.

    Sub-Section (3): The mode, manner and time of collection under sub-section (1) and time of collection shall be as may be prescribed.

    Sub-Section (4): The advance tax collected under sub-section (1) shall be adjustable.

  • Income Tax Ordinance 2001: advance tax on electricity consumption

    Income Tax Ordinance 2001: advance tax on electricity consumption

    KARACHI: Power supply companies are required to deduct and collect advance tax from industrial and commercial consumers at rates specified.

    According to updated Income Tax Ordinance, 2001 issued by Federal Board of Revenue (FBR), the Section 235 explained the rates of advance tax on consumption of electricity.

    Section 235: Electricity consumption

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

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

    (a)does not exceed Rs. 400Rs. 0
    (b)exceeds Rs. 400 but does not exceed Rs. 600Rs. 80
    (c)exceeds Rs. 600 but does not exceed Rs. 800Rs. 100
    (d)exceeds Rs. 800 but does not exceed Rs. 1000Rs. 160
    (e)exceeds Rs. 1000 but does not exceed Rs. 1500Rs. 300
    (f)exceeds Rs. 1500 but does not exceed Rs. 3000Rs. 350
    (g)exceeds Rs. 3000 but does not exceed Rs. 4500Rs. 450
    (h)exceeds Rs. 4500 but does not exceed Rs. 6000Rs. 500
    (i)exceeds Rs. 6000 but does not exceed Rs. 10000Rs. 650
    (j)exceeds Rs. 10000 but does not exceed Rs. 15000Rs. 1000
    (k)exceeds Rs. 15000 but does not exceed Rs. 20000Rs. 1500
    (l)exceeds Rs. 20000.(i) at the rate of 12 per cent for commercial consumers;
    (ii) at the rate of 5 per cent for industrial consumers.

    Sub-Section (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.

    Sub-Section (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.

    Sub-Section (4): Under this section, —

    (a) in the case of a taxpayer other than a company, tax collected up to 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.

    Section 235A: Domestic electricity consumption

    Sub-Section (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.

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

    (i) 7.5% if the amount of monthly bill is Rs. 75,000 or more; and
    (ii) 0% the amount of monthly bill is less than Rs. 75,000.

    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.

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

    Sub-Section (3): Tax collected under this section shall be adjustable against tax liability.