Karachi, March 4, 2025 – Gatron (Industries) Limited has filed a review petition against the recent Supreme Court of Pakistan ruling in the tax credit case, aiming to secure its claim over investment-related tax benefits.
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Finance Bill 2023 Proposes Tax Credit for Construction of New Houses
The Finance Bill 2023 aims to boost the construction industry by introducing a tax credit for the construction of new houses.
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Banks withhold tax on export of IT services
KARACHI: Tax practitioners in Karachi have brought to light a concerning issue where banks are deducting withholding tax on proceeds from the exports of computer software and IT-enabled services, despite these being granted a 100% tax credit.
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Income tax credit allowed for real time reporting of sales
ISLAMABAD: The government has granted income tax credit for person who integrates the point of sales machine for real time reporting sales or receipt.
According to budget 2021/2022 documents, amendment has been proposed to Income Tax Ordinance, 2001 through Finance Bill, 2021.
A new section 64D has been proposed for the purpose, which states:
“Tax credit for point of sale machine.– (1) Any person who is required to integrate with Board’s computerized system for real time reporting of sale or receipt, shall be entitled to tax credit in respect of the amount invested in purchase of point of sale machine.
(2) The amount of tax credit allowed under sub-section (1) for a tax year in which point of sale machine is installed, integrated and configured with the Board’s computerized system shall be lesser of –
(a) amount actually invested in purchase of point of sale machine; or
(b) rupees one hundred and fifty thousand per machine.
(3) For the purpose of this section, the term point of sale machine means a machine meant for processing and recording the sale transactions for goods or services, either in cash or through credit and debit cards or online payments in an internet enabled environment.”
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FBR urged to reintroduce income tax credit on registered sales
KARACHI: Federal Board of Revenue (FBR) has been urged to reintroduce income tax credit on registered sales in order to provide incentive to documentation of economy and increase the tax base.
Karachi Tax Bar Association (KTBA) in its recommendations for budget 2021/2022 submitted to the FBR proposed the reintroduction of tax credit on registered sales.
The KTBA said that the tax credit would provide incentive for documentation of economy and increase of the tax base a tax credit of 2.5 percent of tax liability was offered to manufacturers given in the year 2009 making 90 percent of their sales to persons registered under the Sales Tax Law.
The tax credit was increased to 3 percent by Finance Act, 2016. However, this Tax credit was deleted by Finance Act, 2017.
Years of efforts to document the economy has been pushed backwards and that too without any warning and rationale.
The KTBA said that the tax credit should be re-introduced. Further this tax credit on 90 percent sales should be extended to persons making 90 percent of purchases from persons registered under the Sales Tax Act, 1990 as well.
It will encourage the much-desired documentation of the economy.
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Tax credit for enlistment in stock exchange abolished
ISLAMABAD: A tax credit granted to encourage companies for enlistment in stock exchange has been abolished through Tax Laws (Second Amendment) Ordinance, 2021.
Sources in Federal Board of Revenue (FBR) said that Section 65C of the Income Tax Ordinance, 2001 has been abolished through Tax Laws (Second Amendment) Ordinance, 2021.
They said that this concession was granted through Finance Act, 2010. The cost of this credit was Rs357 million during fiscal year 2019/2020.
According to omitted section 65C related to tax credit for enlistment:
(1) Where a taxpayer being a company opts for enlistment in any registered stock exchange in Pakistan on or before the 30th day of June, 2022 a tax credit equal to twenty percent of the tax payable shall be allowed for the tax year in which the said company is enlisted “and for the following three tax years:
Provided that the tax credit for the last two years shall be ten per cent of the tax payable.
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Abolishing tax credit for new industrial setup proposed
ISLAMABAD: Federal Board of Revenue (FBR) has proposed to withdraw tax credit available for establishment of new industrial establishment as the facility was misused by existing industrial units.
The investors have tax credit under Section 65D of Income Tax Ordinance, 2001 for five years.
However, many misuses of exemption/concession claims under section 65D of the Income Tax Ordinance, 2001 by industrial undertakings had been detected in recent years, where an existing industrial undertaking took the guise of a new industrial undertaking to claim tax credit.
The sources said that an amount of Rs5.57 billion was granted as tax concession during tax year 2020 for newly established industrial undertakings. However, the net impact of the tax credit is Rs15 billion every year.
They said that the FBR had discovered that some ghee manufacturers were availing this credit by splitting up their existing industrial units with a newer one.
Further, investigation revealed that the production of those ghee manufacturers were remained stagnant or growth with the pace of inflationary growth despite declaring to set up new units.
The FBR on the directives of the federal government had started cleaning up exemptions and concessions granted under Income Tax Ordinance, 2001 to make the taxation system equitable.
In a recent high level meeting chaired by the Prime Minister Imran Khan, the FBR proposed withdrawal of many provisions of the ordinance related to exemption and concession.
The FBR proposed to omit the tax credit provision available to newly established industrial undertakings that is already expiring on June 30, 2021.
The tax credit available under this provision is for five years from the date of setting up the new industrial unit. The sources said that those who claimed the tax credit or set up a new unit by June 30, 2021 would be able to avail the concessions for next five years.
The provision for the grant of tax credit was introduced through the Finance Act, 2011 for next five years. However, it was extended to June 30, 2019 and then further extended up to June 30, 2021.
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Tax credit for enlistment in stock exchange may be withdrawn
ISLAMABAD: The government likely to withdraw tax credit available to companies for enlistment in stock exchange.
The withdrawal of tax credit is part of proposal to rationalize tax exemption regime in the country. The law to withdraw tax exemption and incentives may be introduced soon.
The tax credit for enlistment is available under Section 65C of the Income Tax Ordinance, 2001. The tax credit is available for three years. The first year tax credit for enlistment in stock exchange is 20 percent of the tax payable for the year in which the company is enlistment. Meanwhile tax credit for the following two years is 10 percent of the tax payable.
The government is considering omitting this tax credit. The Federal Board of Revenue (FBR) granted an amount of Rs357 million as tax credit during fiscal year 2019/2020 to the companies listed with stock exchange availing this incentive.
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100 percent income tax credit proposed for IT sector: FBR
Federal Board of Revenue (FBR) announced on Wednesday a proposal to expand the range of tax concessions for income derived from the export of software, IT services, and IT-enabled services.
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Input tax credit against services provided by non-resident available with conditions: SRB
KARACHI: Sindh Revenue Board (SRB) on Friday said that input tax credit for resident taxpayers receiving services from resident outside is available with certain condition.
The provincial revenue body said that the SRB-registered service recipients who receive taxable services from a foreign service provider (not registered with SRB) shall be entitled to claim input tax credit if:
(i) such SRB-registered person receives the taxable services against an invoice issued by that foreign service provider;
(ii) pays, to the foreign service provider, the consideration for the services so received by the resident service recipient; and
(iii) e-deposits the amount of Sindh sales tax, on such services in Sindh Government’s head of account “B-02384” in the prescribed manner.
The entitlement of input tax credit shall be in terms of the provisions of section 15 of the Act-2011, subject to the conditions, limitations and restrictions prescribed under the Act-2011 and the rules or notifications made thereunder (including the provisions of sections 15A and 15B of the Act-2011, rules 21, 22 and 22A of the Sindh Sales Tax on Services Rules, 2011(Rules-2011) and other provisions of various rules and notification issued thereunder).
The SBP said that a question had arisen whether input tax credits were admissible [where not otherwise inadmissible under the provisions of the Sindh Sales Tax on Services Act, 2011(Act-2011) or the rules/notifications issued thereunder] against an invoice issued by such a non-resident service provider who is resident outside Pakistan and does not hold Sindh Sales Tax Registration Number (SNTN). Also, in case it is admissible, the question is that what shall be the procedure in this regard.
The SBP further said that as regards the procedure for input tax credit claims, the resident SRB-registered person (service recipient, in this case) shall e-deposit (in Sindh Government head of account “B-02384” in the prescribed manner) the amounts of Sindh sales tax on such services as are received by him from a foreign service provider (not registered with SRB) against the SNTN of the service recipient himself.
Thereafter, the resident SRB-registered service recipient shall declare:
(i) his own (resident SRB-registered service recipient) name and SNTN in the column “Particulars of Buyer”; and
(ii) the date and number of the invoice issued by the foreign service provider in the column “Document/invoice” of Annex-C of his return SST-
For claiming input tax credit, he shall enter corresponding entries in Annex-A of his Form SST-03 and shall also declare the “Non-creditable input”, if any, in the relevant column of such Annex-`A’.
The invoice of the foreign service provider and the associated documents, including the document of evidence of payment of consideration through banking channel, shall form a part of the prescribed records for the purposes of section 26(1) of the Act-2011 and the rules made thereunder including rule 29 of the Rules-2011.