Finance Act, 2015 in respect of Income Tax, Federal Sales Tax and Islamabad Capital Territory Sales Tax



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Division – IX

Minimum tax under section 113







Minimum tax rate on distributors or dealers of fertilizer will now be 0.5% instead of 0.2%.

Distributors of consumers goods (not fast moving) will be subject to minimum tax @1% instead of 0.2%.






PART II

RATES OF ADVANCE TAX

[See Division II of Part V of Chapter X]





Rates of advance tax to be collected under section 148 will be as under:









Filer

Non-Filer

(1)

(2)

(3)

(4)

1.

  1. Industrial undertaking importing remeltable steel (PCT Heading 72.04) and directly reduced iron for its own use;

1% of the import

value as increased by customs-duty,

sales tax and federal excise duty


1.5% of the import

value as increased

by customs duty,

sales tax and

federal excise duty





Persons importing potassic fertilizers in pursuance of Economic Coordination Committee of the cabinet’s decision No.ECC-155/12/2004 dated the 9th December, 2004;










Persons importing urea;

Manufacturers covered under Notification No. S.R.O. 1125(I)/2011 dated the 31st December, 2011 and importing items covered under S.R.O. 1125(I)/2011 dated the 31st December, 2011

Persons importing Gold; and

Persons importing Cotton









2.

Persons importing pulses

2% of the import

value as increased

by customs-duty,

sales tax and

federal excise duty


3% of the import

value as increased

by customs duty,

sales tax and

federal excise duty


3.

Commercial importers covered under Notification No. S.R.O. 1125(I)/2011 dated the 31st December, 2011 and importing items covered under S.R.O.

1125(I)/2011 dated the 31st

December, 2011.


3% of the import

value as increased by customs-duty,

sales tax and federal excise duty


4.5% of the import

value as increased

by customs duty,

sales tax and federal excise duty



4.

Ship breakers on import of ships


4.5%

6.5%

5.

Industrial undertakings not

covered under S. Nos. 1 to 4




5.5%

8%

6.

Companies not covered under

S. Nos. 1 to 5



5.5%

8%

7.

Persons not covered under S.

Nos. 1 to 6



6%

9%;






PART III

DEDUCTION OF TAX AT SOURCE

(See Division III of Part V of Chapter X)





Now the tax will be deducted from dividend in specie as well.

Tax from non-filers will now be deducted at 17.5% instead of 15%. This will not apply to dividend payable at reduced rate of 7.5%.

Deduction rate in case of clause (b) will be 12.5%

If a Developmental REIT Scheme with the object of development and construction of residential buildings is set up by thirtieth day of June, 2018, rate of deduction will be reduced by fifty percent for three years from thirtieth day of June, 2018.







Division IA

Profit on Debt







Rate of deduction for non-filers increased to 17.5% from 15%.





Division II

Payments to non-residents







Tax will be now deducted as under from the payments made to Permanent Establishment of a non-resident:





Nature of payment

Filer Rate

Non-filer




Rate

Rate

Sale of goods - Company

4%

6%

- Others


4.5%

6.5%

Provision of services - Company

8%

12%

- Others


10%

15%

Contracts - Company

7%

10%

- Others

7.5%

10%





Tax will be deducted at the rate of 10% from payments to sports persons.



Division III

Payments for Goods and Services





Now the deduction of tax will be made as under from payments made to residents:



Nature of payment

Filer

Non-filer




Rate

Rate

Sale of goods - Company

4%

6%

- Others

4.5%

6.5%

Provision of services - Company

8%

12%

- Others

10%

15%

Contracts - Company

7%

10%

- Others

7.5%

10%

Tax will be deducted at the rate of 10% from payments to sports persons.






Division VIA

Petroleum Products





Now the rate of tax deduction will be 12% for filer and 15% for non-filer.



PART IV

DEDUCTION OR COLLECTION OF ADVANCE TAX

Division II

Brokerage And Commission





The rate of collection of tax under sub-section (1) of section 233 will be:



  1. in case of filers:



  1. 10% of the amount of the payment, in case of advertising agents; and



  1. 12% of the amount of payment in all other cases; and



  1. in case of non-filers, 15% of the amount of payment.





Division III

Tax on Motor Vehicles



Para (1)

In case of goods transport vehicles, now the tax of two rupees and fifty paisa per kilogram of the laden weight will be charged for filer and four rupees per kilogram of the laden weight for non-filer.”;

Para (2)

Now the tax on passenger transport vehicles plying for hire will be collected as under:






Capacity

Rs per seat per annum







Filer

Non-Filer













(i)

Four or more persons but less than ten persons.

50

100

(ii)

Ten or more persons but less than twenty persons.

100

200

(iii)

Twenty persons or more.

300

500















Para (3)

Amounts of tax collection on other private motor vehicles has been decreased for filers but increased for non-filers.






Engine capacity

for filers

for non-filer













1.

upto 1000cc

Rs. 800

Rs. 1,200

2.

1001cc to 1199cc

Rs. 1,500

Rs. 4,000

3.

1200cc to 1299cc

Rs. 1,750

Rs. 5,000

4.

1300cc to 1499cc

Rs. 2,500

Rs. 7,500

5.

1500cc to 1599cc

Rs. 3,750

Rs. 12,000

6.

1600cc to 1999cc

Rs. 4,500

Rs. 15,000

7.

2000cc & above

Rs.10,000

Rs. 30,000






Division V

Telephone Users



Clause (b)

Revised provision for collection to tax is as under:



in the case of subscriber of internet, mobile telephone and pre-paid internet or telephone card

14% of the amount of bill or sales price of internet pre-paid card or prepaid telephone card or sale of units through any electronic medium or whatever form”;






Division VI

Cash withdrawal from a Bank





Rate of collection of tax on cash withdrawal by a non-filer increased to 0.6% from 0.5%.



Division VI A

Advance tax on transactions in Bank





In case of non-filer, tax will be deducted at the rate of 0.6%.



DIVISION VII

Advance Tax on Purchase, Registration and Transfer of



Motor Vehicles



The substituted Division (Paragraph(1) provides for tax collection on registration or sale only of all motor vehicles (previously motor car or jeep only) as under:






Engine capacity

For filer

For non-filer













1.

upto 850cc

Rs. 10,000

Rs. 10,000

2.

851cc to 1000cc

Rs. 20,000

Rs. 25,000

3.

1001cc to 1300cc

Rs. 30,000

Rs. 40,000

4.

1301cc to 1600cc

Rs. 50,000

Rs. 100,000

5.

1601cc to 1800cc

Rs. 75,000

Rs. 150,000

6.

1801cc to 2000cc

Rs. 100,000

Rs. 200,000

7.

2001cc to 2500cc

Rs. 150,000

Rs. 300,000

8.

2501cc to 3000cc

Rs. 200,000

Rs. 400,000

9.

Above 3000cc

Rs. 250,000

Rs. 450,000”

















Paragraph (2) of this Division now separately provides for collection of tax on registration of transfer of motor vehicles at following amounts which were previously higher as in paragraph (1) above:





Engine capacity

For filer

For non-filer













1.

upto 850cc

-

5000

2.

851cc to 1000cc

5,000

15,000

3.

1001cc to 1300cc

7,500

25,000

4.

1301cc to 1600cc

12,500

65,000

5.

1601cc to 1800cc

18,750

100,000

6.

1801cc to 2000cc

25,000

135,000

7.

2001cc to 2500cc

37,500

200,000

8.

2501cc to 3000cc

50,000

270,000

9.

Above 3000cc

62,500

300,000

















The rate of tax to be collected will be reduced by 10% each year from the date of first registration in Pakistan.



Division XIV

Advance tax on sale of distributors, dealers or wholesalers







In case of sale of fertilizer, tax under section 235G will be collected at the rate of 0.7% from filers and at the rate of 1.4% from non-filers.



Division XIX

Advance tax on domestic electricity consumption





Tax will be collected under section 235A if now the monthly electricity bill is Rs 75,000 or more.





Division XX

Advance tax on international air ticket





Tax will now be collection under section 236L as under:






Type of Ticket

Rate


1.

First/Executive Class

Rs.16,000 per person

2.

Others excluding Economy

Rs.12,000 per person

3.

Economy

NIL





Division XXI

Advance tax on banking transactions otherwise

Than through cash




This new Division provides that the rate of tax to be collected under section 236P will be 0.6% of the transaction for non-filers.



Division XXII

Rate of Collection of Tax by Pakistan

Mercantile Exchange Limited




Rates for collection of tax under section 236T will be as under:



in case of sale or purchase of future commodity contract as per clauses (a) and (b) of sub-section (1) of section 236T.

0.05%











DIVISION XXIII

Payment to a resident person for right to use

machinery and equipment




This new Division provides for the Rate of collection of tax of 10 percent of the amount paid under section 236Q.



DIVISION XXIV

Collection of advance tax on education related expenses

remitted abroad




This new Division provides for rate of collection of tax under section 236R at 5% of the amount of total education related expenses remitted abroad.











THE SECOND SCHEDULE

EXEMPTIONS AND TAX CONCESSIONS

PART I

EXEMPTIONS FROM TOTAL INCOME



Clause



(20)

The exemption provided to income of Rs 10,000 per annum from annuity issued by the Pakistan Postal Annuity Certificate Scheme on or after July 27, 1977 has been withdrawn by omitting this clause.

(99A)

2nd proviso



Profit and gains on sale of immoveable property to a Developmental REIT Scheme with the object of development and construction of residential building will now be exempt from tax upto June 30, 2020.

(103A)

Income from inter – corporate dividend will be available only if the return of the group has been filed.

(126A)

Period of exemption granted to China Overseas Ports Holding Company Ltd from Gwadar Port Operation has been extended from 20 years to 23 year starting from February 6, 2007.

(126l)

Profits and gains of an industrial undertaking will be exempt for 05 years beginning July 01, 2015 if:

  1. It is set-up by December 31, 2016; and

  2. Is engaged in the manufacture of plant, machinery, equipment and items with dedicated use (no multiple usage) for generation of renewable energy from sources like solar and wind.



(126J)

Profits and gains of an industrial undertaking will be exempt for 03 years beginning with the month in which it is set-up or commercial production is commenced, whichever is later, if:

  1. it is set-up between July 01, 2015 and December 31, 2016; and

  2. is engaged in operating warehousing or cold chain facilities for storage of agricultural produce.

(126K)

Profits and gains of an industrial undertaking will be exempt for 04 years beginning with the month in which it is set-up or commercial production is commenced, whichever is later, if:

  1. it is set-up between July 01, 2015 and June 30, 2017; and

  2. is engaged in operating halal meat production and has obtained halal Certificate for the period of exemption.



(126L)

Profits and gains of an industrial undertaking set-up in Khyber Pakhtunkhwa Province will be exempt for 05 years beginning with the month in which it is set-up or commercial production is commenced, whichever is later, if:

  1. it is set-up between July 01, 2015 and June 30, 2018; and

  2. the manufacturing unit is not set-up by splitting up or re-construction or re-constitution of an existing undertaking or by transfer of machinery or plant from an undertaking established in Pakistan before July 01, 2015.



(126M)

Profits and gains from transmission line project set-up between July 01, 2015 and June 30, 2018 will be exempt (no period stated) if:

  1. the project is owned and managed by a Company formed and registered in Pakistan for operating this project and with registered office in Pakistan;

  2. the Company is not formed by splitting up or re-construction or re-constitution of an existing business;

  3. the machinery or plant is not transferred to new business (Company) from a business carried on in Pakistan before July 01, 2015; and

  4. the Company is not owned by a Company whose 50% shares are not held by or it is not controlled by the Federal or Provincial or a Local Government.



(126N)

Profits and gains from an industrial undertaking will be exempt for 05 years from the year of commencement of business if:

  1. New undertaking and machinery was not used before in Pakistan;

  2. Commercial business commenced between July 01, 2015 and June 30, 2017;

  3. Industrial undertaking is engaged in manufacture of cellular mobile phones; and

  4. Certified by the Pakistan Telecommunication Authority.



(141)

Profit and gains of LNG Terminal Operators and Terminal Owners will be exempt for 05 years from the date when the commercial operations are commenced.

(142)

Income of Employees’ Social Security Institutions of the Provinces of Baluchistan, Khyber Pakhtunkhwa, Punjab and Sind, only from social security contributions, will be exempt.





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