Tax on transactions under dealership arrangements

Tax on transactions under dealership arrangements

Section 108B of Income Tax Ordinance, 2001 explained the income tax levy on transactions made under dealership arrangements.

The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021. The Ordinance incorporated amendments brought through Finance Act, 2021.

Following is the text of Section 108B of the Income Tax Ordinance, 2001:

108B. Transactions under dealership arrangements.- (1) Where a person supplies products listed in the Third Schedule to the Sales Tax Act, 1990 or any other products as prescribed by the Board, under a dealership arrangement with the dealers who are not registered under Sales Tax Act, 1990 and are not appearing in the active taxpayers’ list under this Ordinance, an amount equal to seventy-five percent of the dealer’s margin shall be added to the income of the person making such supplies.

(2) For the purposes of operation of this section, ten percent of the sale price of the manufacturer shall be treated as dealers margin.

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