Collection of withholding tax at import stage under Income Tax Ordinance 2001

KARACHI: The collector of customs has been empowered to collect advance tax from every importer of goods on the value of goods.



The power has been given under Section 148 of Income Tax Ordinance, 2001. The Federal Board of Revenue (FBR) recently issued updated Income Tax Ordinance, 2001, which explained Section 148 as:

Section 148: Imports

(1) The Collector of Customs shall collect advance tax from every importer of goods on the value of the goods at the rate specified in Part II of the First Schedule.

“(2A) Notwithstanding omission of sub-section (2), any notification issued under the said sub-section and for the time being in force, shall continue to remain in force, unless amended or rescinded by the Board through notification in the official Gazette.”;

(5) Advance tax shall be collected in the same manner and at the same time as the customs-duty payable in respect of the import or, if the goods are exempt from customs-duty, at the time customs-duty would be payable if the goods were dutiable.

(6) The provisions of the Customs Act, 1969 (IV of 1969), in so far as relevant, shall apply to the collection of tax under this section.

(7) The tax required to be collected under this section shall be a final tax except as provided under sub-section (8) on the income of the importer arising from the imports subject to sub-section (1) and this sub-section shall not apply in the case of import of—

(a) raw material, plant, machinery, equipment and parts by an industrial undertaking for its own use;

(c) motor vehicles in CBU condition by manufacturer of motor vehicles;

(d) large import houses, who,—

(i) have paid-up capital of exceeding Rs.250 million;

(ii) have imports exceeding Rs.500 million during the tax year;

(iii) own total assets exceeding Rs.350 million at the close of the tax year;

(iv) is single object company;

(v) maintain computerized records of imports and sale of goods;

(vi) maintain a system for issuance of 100% cash receipts on sales;

(vii) present accounts for tax audit every year;

(viii) is registered under the Sales Tax Act, 1990 and

(ix) make sales of industrial raw material of manufacturer registered Under the Sales Tax Act,1990; and

(e) a foreign produced film imported for the purposes of screening and viewing.

(8) The tax required to be collected from a person under this section shall be minimum tax for a tax year on the import of─

(a) goods where goods are sold in the same condition as they were when imported:

Provided that the minimum tax payable under this clause shall be five percent of the import value as increased by customs duty, sales tax and federal excise duty;

(b) edible oil;

(c) packing material; and

(d) plastic raw material imported by an industrial undertaking falling under PCT headings 39.01 to 39.12.

(8A) The tax collected under this section at the time of import of ships by ship-breakers shall be final tax.

(9) In this section –

“Collector of Customs” means the person appointed as Collector of Customs under section 3 of the Customs Act, 1969 (IV of 1969), and includes a Deputy Collector of Customs, an Additional Collector of Customs, or an officer of customs appointed as such under the aforesaid section;

“value of goods” means the value of the goods as determined under the Customs Act, 1969 (IV of 1969), as if the goods were subject to ad valorem duty increased by the customs-duty, federal excise duty and sales tax, if any, payable in respect of the import of the goods.

Explanation.- For the purpose of this section the expression “edible oils” includes crude oil, imported as raw material for manufacture of ghee or cooking oil.

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