Changes introduced through Finance Act, 2016

1. Finance Act 2016
PRESENTED BY DR. IKRAMUL HAQ, ADVOCATE SUPREME COURT
ASSISTED BY SYED MUHAMMAD IJAZ, FCA, LL.B. ADVOCATE HIGH COURT
PARTNERS HUZAIMA IKRAM & IJAZ

2. Table of contents
 Material changes relating to manufacturing sector
 Customs Act 1969
 Sales tax Act, 1990
 Income Tax Ordinance, 2001
 Federal Excise Act, 2005

3. Customs Act, 1969
CHANGES IN ACT AND SCHEDULES

4. SUMMARY
 Confidentiality and restricted public disclosure of information
 ADRC related changes
 Changes in Tariffs/slabs/duties and rates
 Amendment in 5th Schedule

5. Section 155H. Confidentiality of
information.
 Two new clauses (d)” and (e) added after clause (c) allowing customs authority data sharing
 Clause (d) - to the extent of agreed data contents under a memorandum of understanding, bilateral,
regional, multilateral agreements or convention
 Clause (e) -public disclosure of valuation data through any medium containing description of items,
origin, currency, declared and assessed unit value without disclosing name and address of the importer
or exporter or their suppliers
 Purpose of adding these two clauses is to protect the confidentiality of information through exchange of
information with trading partners, it will be ensured that data will not be disclosed publically with specific
name and addresses of importer or exporter or their suppliers
Comments:
For violation of this confidentiality provision for punishment has not been provided as is the case of Income
Tax Ordinance, 2001- To be checked

6. Section 195C. Alternative Dispute
Resolution.
 By change in subsection 2 membership of the ADR committee from customs side is restricted
to an officer of customs not below the rank of Collector
 Through change in subsection 4 the time limit for Board for passing an order on
recommendations of ADRC is extended from 45 days to 90 days
 Further a proviso is added after subsection 4 through which if order is not passed by the
Board within 90 days then recommendations of ADRC shall be treated as an order passed by
the Board under this subsection
 Corresponding amendments (relating to proviso of subsection 4) are made is subsection 5
allowing the aggrieved person to pay against recommendations of committee (treated to be
an order passed under the proviso to subsection 4)

7. TARIFFS/SLABS/DUTIES AND RATES
 Reduction in slabs (from 5 to 4)
 Comments
 2% & 5% merged as single rate of 3%
 The main distortion is through SROs that controls main tariffs which is still there and government
keeps on creating uncertainties through administrative orders
 Reduction in duties mainly in selected items and overall issue of rationalization i.e. lower rate
of custom duty and ending all other taxes at source that increase the cost of inputs remains
un attended.

8. 5th Schedule to the Customs Act, 1969
 The Fifth Schedule To The Customs Act, 1969 (IV Of 1969), Shall Be Substituted In The
Manner Specified In The Second Schedule To This Act [Finance Act 2016]
 Part-i Imports Of Plant, Machinery, Equipment And Apparatus, Including Capital Goods For Various
Industries/Sectors
 PART-II Import Of Active Pharmaceutical Ingredients, Excipients /Chemicals, Drugs, Packing
Material/ Raw Materials For Packing And Diagnostic Kits And Equipment , Components And Other
Goods
 Part-III Raw Materials/Inputs For Poultry And Textile Sector; Other Goods
 PART- IV Imports Of Machinery And Equipment For Textile Sector
 Part-V Import Of Automotive Vehicles (Cbus) Under Automotive Development Policy (Adp) 2016-21
 Part-VI Imports Of Aviation Related Goods I.E. Aircrafts And Parts Etc. By Airline Companies /
Industry Under National Aviation Policy 2015
 PART-VII MISCELLANEOUS

9. Sales Tax Act, 1990
CHANGES IN ACT AND SCHEDULES

10. SUMMARY
 Zero rated regime for 5 export oriented sectors
 Disallowance of input tax paid under provincial laws
 Different due dates for different annexures and parts
 Enhancement of cottage industry turnover threshold
 Tax credit restriction in case supplies fails to declare supply or pay tax
 ADRC related changes
 Zero rating of supplies in case of sale of taxable activity (mergers/acquisitions)

11. Section 2- Definitions
 clause (5AB) – Minimum threshold of supplies for Cottage industry increased from PKR 5 M to PKR
10M
 clause (9) – Due Date – Reference to section 26AA (this section was omitted vide Finance Act, 2008)
rendering reference redundant thus omitted. Board is further empowered to specify different dates for
furnishing of different parts or annexures of the return. Corresponding changes have also been made in
section 26 Returns by omitting subsection 2. Corresponding changes are also made in section 6.
 clause (14) – Input Tax – sub clause “d” relating to provincial sales tax on services omitted. This is very
strange that no such corresponding amendment in clause 20 [output tax] is made thus output tax still
includes
(iii) Provincial sales tax levied on services rendered or provided by the person;]
 Point for discussion lack of harmonization and cases of harmful competition

12. Section 6, 7, 8, 11
 Changes made in section 7 Determination of tax liability a proviso is added to clause (i) of subsection 2 to
restrict the input tax adjustment from the date to be notified by the Board in this respect, in addition to other
conditions, if the supplier has not declared such supply in his return or he has not paid amount of tax due as
indicated in his return
 8. Tax credit not allowed- through changes in clause (L) of subsection 1 changes corresponding to change
in section 7 are made to restrict tax credit where the tax due has not been paid.
 section 11 – Assessment of Tax and recovery of tax not levied or short-levied or erroneously refunded-
by adding subsection 4A an Officer of inland revenue is now authorized to determine the tax liability after
giving notice in cases where a person who is required to withhold tax under the provisions of this Act or rules
made thereunder.
 Fails to withhold tax
 Fails to deposit tax where tax is being withheld

13. Section, 30DDD, 47A
 Newly added section 30DDD. Directorate General of Input Output Co-efficient Organization.
Authorizing Board to appoint a Director General and as many Directors, Additional Directors,
Deputy Directors, Assistant Directors and such other officers through a notification to this effect.
 47A. Alternative dispute resolution only an officer not below the rank of Commissioner can be a
member of the committee earlier it was Additional Commissioner. Further time limit for Board to
pass an order against the recommendations of the committee is extended to 90 days [earlier 45
days] moreover a proviso is added to subsection 4 whereby the recommendations of committee
shall be treated as order passed by Board if Board fails to pass an order within 90 days.

14. Section 49, 56B
 49. Sales of taxable activity or transfer of ownership by adding subsection 2 mergers and
acquisitions are facilitated by transferring the stock through a zero rated invoice to surviving or
acquiring entity
 Section 56B substituted to accommodate OECD membership related conditions
 56B. Disclosure of information by a public servant.– (1) Any information acquired under any provision of this Act
shall be confidential and no public servant shall disclose any such information, except as provided under section 216
of the Income Tax Ordinance, 2001 (XLIX of 2001).
 (2) Notwithstanding anything contained in sub-section (1) and the Freedom of Information Ordinance, 2002 (XCVI
of 2002), any information received or supplied in pursuance of bilateral or multilateral agreements with government of
foreign countries for exchange of information under section 56A shall be confidential

15. Schedule 6 Table 1
 Sr. # 100A inserted providing exemption with reference to Gawadar to various Chinese companies
defining procedure of impose and procedure for local supplies
 Sr. # 100B inserted to exempt supplies(within Gawadar free zone) for 23 years by business to be
established within Gawadar- supplies outside Gawadar free zone & into territory of Pakistan shall be
subject to sales tax
 Sr. #105 corresponding changes to first schedule of custom by amending rate to 11 percent advalorem
for raw materials for the basic manufacture of pharmaceuticals
 Sr. #110 LVD, SMD, LED’s with or without blast, tubular day lights, energy savers, tube lights, inverters,
for renewable energy (respective PCT heading as provided in schedule 6)
 Sr. # 111 white crystalline sugar (now appearing at serial 32 of table 1 of eighth schedule)
 Sr. # 123 Aircraft dry/wet lease by PIA with effect from 19.3.2015
 Sr. # 130 inserted-premixes for growth stunting
 Sr. #131 inserted-laptop, notebooks whether or not incorporating multimedia kits & Sr. #132 Pc’s
 Sr. #133 inserted-pesticides

16. Schedule 8 Table 1, 2 & 9th Schedule
 Sr. #15 Tax rate on ingredients of poultry feed and cattle feed raise to 10 percent (earlier 5 percent)
 Sr. #20 words and equipment edit to allow reduce rate on equipment related to alternative energy provided certificate
from AEDB on prescribe format is available
 Sr. #25 Tax on agriculture tractor's reduce to 5 percent (earlier 10 percent)
 Sr. #26 Laser land leveler edit to be taxed at 7 percent
 Sr. #33 Urea at the rate 5 percent
 Sr. #34 setup top boxes, TV broadcast transmitters etc at the rate 5 percent (subject to PEMRA approval) concession
available up to 30.6.217
 Table 2 tax at 5 percent silos are edit
 Table 2 serial 8 milk chillers, tubular heat exchangers, milk processing plant, drying plants, UHT plants, Milk filters, &
any other machinery and equipment for manufacturing of dairy products- if imported by registered manufactured who is
member of Pakistan Dairy Association
 9th Schedule Sr. # 2 (B) Duty raised from 5 hundred rupees to thousand rupees & two hundred fifty two thousand
rupees.
 9th Schedule Sr. # 2 (C) tax raise to 1500 (earlier 1000)-IMEI registration tax raise to 1500 (earlier 500).

17. Federal Excise Act, 2005
CHANGES IN ACT AND SCHEDULES

18. Section 2, 6, 16, 19
 Clause (8a) – Due Date – Federal Government is empowered to specify different dates for
furnishing of different parts or annexures of the return. Corresponding changes have also
been made in section 4 Filing of Returns and payment of duties by omitting subsection 3 and
adding words “by the date as prescribed in this respect” in subsection 2.
 Changes made in section 6 Adjustment of duties of excise a new subsection 2A is added
to restrict the input duty adjustment from the date to be notified by the Board in this respect,
in addition to other conditions, if the supplier has not declared such supply in his return or he
has not paid amount of tax due as indicated in his return
 Subsection (13) is added to section 19 [Offences, penalties, fines and allied matters]
whereby Any person who contravenes any provision of this Act or rules made thereunder for
which no penalty has specifically been provided in this section shall be liable to pay a penalty
of five thousand rupees or three percent of the amount of duty involved, whichever is higher.

19. Section 38, 47B
 38. Alternative dispute resolution - only an officer not below the rank of Commissioner can
be a member of the committee earlier it was Additional Commissioner. Further time limit for
Board to pass an order against the recommendations of the committee is extended to 90
days [earlier 45 days] moreover a proviso is added to subsection 4 whereby the
recommendations of committee shall be treated as order passed by Board if Board fails to
pass an order within 90 days
 Section 47B substituted to accommodate OECD membership related conditions
[47B. Disclosure of information by a public servant.– (1) Any information
acquired under any provision of this Act shall be confidential and no public servant
shall disclose any such information, except as provided under section 216 of the
Income Tax Ordinance, 2001 (XLIX of 2001).
(2) Notwithstanding anything contained in sub-section (1) and the
Freedom of Information Ordinance, 2002 (XCVI of 2002), any information
received or supplied in pursuance of bilateral or multilateral agreements with
government of foreign countries for exchange of information under section
47A shall be confidential.]

20. Schedules I, II, III
 Schedule 1- Duty on certain items increased from 10 to 11%
 Schedule 1- Duty of Cigarettes is now Rupees one thousand six hundred and forty-nine per
thousand cigarettes
 Schedule 1- Table II- an note is added below table II– The duty on the services as specified
against serial numbers 1, 2, 2A, 5, 8, 11 and 13 shall not be levied on services provided in a
Province where the provincial sales tax has been levied thereon.]
 Schedule II-Duty in VAT mode- White crystalline sugar is omitted as this is now a Sales Tax
Act, 1990’s subject.
 Schedule III- CPEC and Gwadar related exemptions are provided to Chinese companies

21. Income Tax Ordinance,
2001
CHANGES IN ACT AND SCHEDULES

22. Section 4B, 7C,7D, 8 and Division VIIIA
& B of P-1 of First Schedule
 4B. Super tax for rehabilitation of temporarily displaced persons. Application of this section
extended to Tax Year 2016 though this was intended to be a “One Time” Tax. This shows
the high handedness and trustworthiness of the Government
 Clause (II) of Subsection 2 is also amended to bring clarity in definition and scope of taxable
Income. Taxable Income is now other than brought forward depreciation and brought
forward business losses
 7C. Tax on builders, 7D. Tax on developers and 8. General provisions relating to taxes
imposed under sections 5, 1[5A, 6, 7, 7A 2[, 7B, 7C and 7D
 Newly inserted Section 7C-tax shall be imposed on the profits and gains of a person deriving income
from the business of construction and sale of residential, commercial or other buildings at the rates
specified in Division VIIIA of Part I of the First Schedule- Applicable from 1-7-2016
 Newly inserted 7D-a tax shall be imposed on the profits and gains of a person deriving income
from the business of development and sale of residential, commercial or other plots at the rates
specified in Division VIIIB of Part I of the First Schedule- Applicable from 1-7-2016
 Corresponding amendments are also made in section 8 to make 7C and 7D a final discharge. Further no
tax credits be allowed against such deductions

23. Section 15 & 15A
 Sub-section (6) & 7 inserted to section 15 making property income taxable under fixed tax
regime as available before omission through Finance Act, 2013. Now up to PRK 200,000
property income is not taxable provided the AOP or individual has no other source of Income.
 Company is still under normal tax regime. Hence provisions of section 15A are made
company specific only.
 Rates defined in -First Schedule Part 1, Division VIA-INCOME FROM PROPERTY various
slabs- Various Slabs 5 to 20 percent rates

24. Section 21
 21. Deductions not allowed- New clause “c” is added to disallow deduction where
tax is required to be deducted and has not been deducted or if deducted has not
been deposited.
 Two provisos are also added to clause “c” Proviso 1 restricts disallowance in respect of
purchases of raw materials and finished goods under this clause shall not exceed
twenty per cent of purchases of raw materials and finished goods
 Proviso 2 considers recovery of any amount of tax under sections 161 or 162 as tax
paid
 Clause “o” inserted whereby disallowing expenditure in respect of sales promotion,
advertisement and publicity in excess of five per cent of turnover incurred by
pharmaceutical manufacturers.]

25. Section 22, 37A
 22. Depreciation- Explanation to subsection 5 added whereby if asset is used for business
during tax holiday/exemption period depreciation shall be deemed to be allowed in respect of
the said tax year and after expiration of the exemption period, written down value of such
assets shall be determined after reducing total depreciation deductions (including any initial
allowance under section 23) in accordance with clauses (a) and (b) of this sub-section
 37A. Capital gain on sale of securities. Explanation to clause “b” of subsection 3A
added For removal of doubt it is clarified that derivative products include future
commodity contracts entered into by the members of Pakistan Mercantile Exchange
whether or not settled by physical delivery.
 Rates defined in -First Schedule Part 1,
 Division VII-CAPITAL GAINS ON DISPOSAL OF SECURITIES- 0 to 18% rates depending on Tax
year and holding period
 Division VIII Capital Gains on disposal of Immovable Property- 0 to 10% depending on
holding period REITs at 5%

26. Section 53, 59B
 53. Exemptions and tax concessions in the Second Schedule – Subsection 2 amended to
facilitate MOUs and bilateral agreements with foreign Governments and IFIs
 59B. Group relief- is now restricted to %age shareholding of the holding company in a
subsidiary.

27. Section 62A, 63
 62A. Tax credit for investment in health insurance– New section added to provide tax
credit to a resident persons [filers only] deriving income from “Salary” or “Income from
business” on insurance premium paid to an insurance company registered with SECP
under the Insurance Ordinance, 2000. Following conditions apply
 Maximum credit is restricted to actual premium paid or 5% of Income or 100,000/- whichever is
less
 63. Contribution to an Approved Pension Fund- Proviso added to clause (ii) of subsection
2 through which the additional contribution of two percent per annum for each year of
age exceeding forty years shall be allowed upto the 30th June, 2019 subject to the
condition that the total contribution allowed to such person shall not exceed thirty
percent of the total taxable income of the preceding year.

28. Section 64AB
 64AB. Deductible allowance for education expenses– New section added to provide tax
credit to individuals on tuition fee paid. Following conditions apply
 taxable income of the individual is less than one million rupees
 The amount of an individual’s deductible allowance for a tax year shall not exceed the lesser of–
 (a) five per cent of the total tuition fee paid by the individual referred to in sub-section (1) in the year;
 (b) twenty-five per cent of the person’s taxable income for the year; and
 (c) an amount computed by multiplying sixty thousand with number of children of the individual
 Carry forward of unadjusted allowance is not allowed
 Either of parents by providing NTN or name of the Institution can claim credit
 This allowance is not allowed as a deduction from withholding under section 149

29. Section 64B, 65A, 65B, 65C
 64B. Tax credit for employment generation by manufacturers– Tax credit is extended for
companies formed for establishing and operating a new manufacturing unit sets up a
new manufacturing unit between 1st day of July, 2015 and 30th of June, [2019]- Earlier
ending limit was 2018
 65A. Tax credit to a person registered under the Sales Tax Act, Tax credit for Sales Tax
Registered persons is enhanced from 2.5% to 3%
 65B. Tax credit for investment- Credit for investment is extended to 2019. Now this section
applies if the plant and machinery is purchased and installed at any time between the
first day of July, 2010, and the 30th day of June, 6[2019]- Earlier last cutoff was 30-6-2016
 65C. Tax credit for enlistment- Tax credit is extended to following year of enlistment as
well earlier it was available in the year of enlistment only.

30. Section 65D
 65D. Tax credit for newly established industrial undertakings– Tax credit extended if the
company is incorporated and industrial undertaking is set up between the first day of July, 2011
and 30th day of June, 4[2019]- Earlier ending limit was 2016
 Ratio of equity raised through cash is reduced to at least 75% earlier 100% was to be raised
through cash.
 New restriction in subsection 4 added to treat the credit as being wrongly allowed if the
business has been discontinued in the subsequent five years after the credit has been allowed
 New subsection 1A added to provide formula for calculation of credit;
A x (B/C)
Where–
A is the amount of tax assessed to the person for the tax year before allowance of any tax credit for the tax
year; and
B is the equity raised through issuance of new shares for cash consideration.
C is the total amount invested in setting up the new industrial undertaking.]

31. Section 65E
 65E. Tax credit for industrial undertakings established before the first day of July, 2011– Tax
credit extended if the plant and machinery is installed at any time between the first day of
July, 2011 and 30th day of June, [2019]- Earlier ending limit was 2016
 Ratio of equity raised through cash is reduced to at least 75% earlier 100% was to be raised
through cash.
 New restriction in subsection 6 added to treat the credit as being wrongly allowed if the
business has been discontinued in the subsequent five years after the credit has been allowed
 New subsection 3A added to provide formula for calculation of credit;
A x (B/C)
Where–
A is the amount of tax assessed to the person for the tax year before allowance of any tax credit for the tax
year;
B is the equity raised through issuance of new shares for cash consideration; and
C is the total amount invested in the purchase and installation of plant and machinery for the industrial
undertaking.]

32. Section 67, 68
 67. Apportionment of deductions– By adding the words “expenditures, deductions and
allowances” now deductions and allowances are also to be apportioned earlier it was only
the expenditure that was to be apportioned. This will affect the pending litigations as the
addition of words means an acceptance by the department that earlier the position was not
so.
 68. Fair market value – Very much discussed amendment
 Through new subsection 4- Notwithstanding anything contained in sub-sections (1) and (3), the
fair market value of immovable property shall be determined on the basis of valuation made by
a panel of approved valuers of the State Bank of Pakistan
 By Change in subsection 3- Commissioners are now left with the valuation of other than
immovable properties
 This is a major shift earlier only in cases where the FMV cannot be worked out commissioners
were authorized to value. Now through subsection 4 an overriding effect is created to leave
valuation of immovable property whether the value of it is ascertainable or not- to be valued by
SBP’s approved valuers. So in 100% cases now valuation of immovable property has to be made.
 This more like stepping inside the shoes of Provincial Government as the Federation is indirectly
trying to tax immovable property which is beyond its constitutional command.

33. Section 107
 107. Agreements for the avoidance of double taxation and prevention of fiscal evasion– Scope of this
section enhanced by substitution of subsection 1 whereby now information exchange agreements for the
prevention of fiscal evasion or avoidance of taxes including automatic exchange of information with
respect to taxes on income imposed under this Ordinance or any other law for the time being in force, are
also within purview of this section earlier it was limited only to avoidance of double taxation agreement.
 By change is subsection 2 now restrictions are relaxed as any one of the following condition is to be met
earlier it were all.
at least one of the following:]–
(a) relief from the tax payable under this Ordinance;
(b) the determination of the Pakistan-source income of non-resident persons;
(c) where all the operations of a business are not carried on within Pakistan, the determination of the
income attributable to operations carried on within and outside Pakistan, or the income chargeable to
tax in Pakistan in the hands of non-resident persons, including their agents, branches, and permanent
establishments in Pakistan;
(d) the determination of the income to be attributed to any resident person having a special relationship
with a non-resident person; and
(e) the exchange of information for the prevention of fiscal evasion or avoidance of taxes on income
chargeable under this Ordinance and under the corresponding laws in force in that other country

34. Section 108
 108. Transactions between associates- Subsection 3, 4, 5 Inserted through Finance Act to
specify;
 Every taxpayer who has entered into a transaction with its associate shall:
(a) maintain a master file and a local file containing documents and information as may be
prescribed;
(b) keep and maintain prescribed country-by-country report, where applicable;
(c) keep and maintain any other information and document in respect of transaction with its
associate as may be prescribed; and
(d) keep the files, documents, information and reports specified in clauses (a) to (c) for the
period as may be prescribed
 Taxpayer has to provide such record if demanded by Commissioner within 30 days of such
demand
 Commissioner can by an order in writing on request in writing by taxpayer grant 45 days
extension at max unless there are exceptional circumstances justifying for a longer extension

35. Section 113, 113A & B
 113. Minimum tax on the income of certain persons.– From Tax Year 2017 minimum
threshold for charge of minimum tax is reduced to PKR 10M or above earlier it was PKR
50M
 By omitting proviso to subsection 1 of section 113 the concept of Gross loss in relation to
Minimum Tax is done away with. Now minimum tax is applicable in cases of gross loss as
well.
 By adding an explanation to subsection 1 the following are made un-adjustable
Explanation.– For the purpose of this sub-section, the expression “tax payable or paid” does not include–
(a) tax already paid or payable in respect of deemed income which is assessed as final discharge of
the tax liability under section 169 or under any other provision of this Ordinance; and
(b) tax payable or paid under section 4B.]

36. Section 114, 122C
 114. Return of income.– By adding proviso to subsection 5 the commissioner is
empowered to issue notice for any one or more of last ten completed tax years, to any
person who has not filed a tax return for any of last 5 completed tax years.
 New proviso added to subsection 6 whereby COMMISSIONER’S APPROVAL IS DEEMED TO
HAVE BEEN GRANTED if commissioner has not issued order in writing within 60 days for
revision of return [from the date when the revision was sought] OR tax in revised return in
greater than or loss is less than the return treated as assessed under section 120.
 122C. Provisional assessment.– Provisos to subsection 2 substituted to restrain
Commissioner from making provisions assessments in the following cases;
 In case of Individuals and AOPs if they file return of Income with wealth statement and
wealth reconciliation [within 45 days as prescribed in subsection 2] and present accounts
and documents for audit of Income tax affairs for that tax year
 Similarly In case of companies if they file return of Income with audited or final accounts
as the case may be electronically [within 45 days as prescribed in subsection 2] and
present accounts and documents for audit of Income tax affairs for that tax year

37. Section 134A, 140
 134A. 3[Alternative] Dispute Resolution.– By changes in section 134A now an officer not
below the rank of commission can be the member of ADRC earlier it was Additional
Commissioner.
 Further time limitation for Board to pass an order on recommendations of the ADRC is
extended to 90 days earlier it was 45 days
 In case order is not passed within the aforesaid period, recommendations of the
committee shall be treated to be an order passed by the Board under this sub-section
 140. Recovery of tax from persons holding money on behalf of a taxpayer.– A relief
provided to Tax payer by adding proviso to subsection 1 whereby no recovery under this
section can be made if the Tax payer has preferred appeal before the CIR (A) and the
appeal has not been decided and amounts becomes payable, subject to the condition
that taxpayer has deposited 25% of the disputed amount. [Though recovery before
adjudication by and independent Tribunal in against the norms of justice]

38. Section 147, 147A
 147. Advance tax paid by the taxpayer.– Clarification added to include tax assessed
under section 113 and 113C as the base of determining advance tax liability
 147A. Advance tax from provincial sales tax registered person.– Newly added section
 This section does not apply to a person who is a filer on the thirtieth day of June of the previous
tax year
 3% of the Turnover to be paid each month as advance tax
 This is adjustable against 147 and against income tax liability
 Excess to be refunded under section 170
 Credit for tax paid has to be granted in sequence provided under section 4(3)

39. Section 152,152A, 153, 165B
 152. Payments to non-residents.– Same state goods are excluded from the ambit of
subsection 2A i.e. payments by a person to Pakistani PE of non residents being importer of the
goods where tax has been paid on import u/s 148 are not more subject to withholding u/s 152
 152A. Payment for foreign produced commercials.– Newly added section provides withholding
of tax on payments to non residents either directly, through agent or intermediary relating to
foreign produced commercials
 Rate of withholding is 20%
 Tax deducted is a final discharge of tax on income of non-resident arising out of such payment
 [153. Payments for goods, services and contracts.– Clause (e ) to proviso to subsection 3
added whereby payments to electronic and print media for advertising services shall be final
tax with effect from the 1st July, 2016
 Cotton ginners are now subject to withholding of tax by virtue of omission of clause (e) of
subsection 5 to section 153
 165B. Furnishing of information by financial institutions including banks.– Confidentiality of “All”
information is guaranteed earlier this was subject to section 216

40. Section 169, 170, 182, 231A
 169. Tax collected or deducted as a final tax – Through subsection 4 clarification added that Where
the tax collected or deducted is final tax under any provision of the Ordinance and separate rates
for filer and non-filer have been prescribed for the said tax, the final tax shall be the tax rate for filer .
 Higher rate of non-filer shall be adjustable in the return filed for the relevant tax year.
 170. Refunds.– Time limit for claiming refund is enhanced to 3 years earlier it was 2 years
 198. Prosecution for un-authorised disclosure of information by a public servant.– by adding
reference to section 107 the scope of section is further enhanced
 231A. Cash withdrawal from a bank.– Explanation added whereby limit of cash withdrawal of PKR
50,000/- in on aggregate withdrawals from all the bank accounts in a single day. This is a bank
related amendment. Since this refers to ”Every Banking company” Hence it is quite clear that it
addresses on Bank specific account and not account holder specific accounts (Where the account
holder has accounts in other banks as well) otherwise this would have been a Sisyphean task

41. Section 231B, 236A, 236C, 236E
 231B. Advance tax on private motor vehicles.– Proviso to subsection 1 added -Tax under this section
cannot be recovered after 5 years from first registration
 New subsection 1A added- Every leasing company or a scheduled bank or an investment bank or a
development finance institution or a modaraba shall, at the time of leasing of a motor vehicle to a
non-filer, collect advance tax at the rate of three per cent of the value of the motor vehicle.
 236A. Advance tax at the time of sale by auction.– Notwithstanding the provisions of sub-
section (2), tax collected on a lease of the right to collect tolls shall be final tax
 236C. Advance Tax on sale or transfer of immovable Property- Subsection (3) Advance
tax under sub-section (1) shall not be collected if the immovable property is held for a
period exceeding five years
 236E. Advance tax on foreign-produced TV plays and serials.– Omitted as now covered
under section 152A

42. Section 236O, 236P, 236T
 236O. Advance tax under this chapter236A. Advance tax at the time of sale by auction.–
Words “Deducted” added as earlier only collected was available- Just a clarificatory
amendment
 236P. Advance tax on banking transactions otherwise than through cash- Explanation
added whereby limit of transactions otherwise than cash amounting to PKR 50,000/- in on
aggregate from all the bank accounts in a single day. This is a bank related amendment.
Since this refers to ”Every Banking company” Hence it is quite clear that it addresses on
Bank specific account and not account holder specific accounts (Where the account
holder has accounts in other banks as well) otherwise this would have been a Sisyphean
task

43. Section 236U, 236V
 236U. Advance tax on insurance premium.– Every insurance company shall collect advance tax at
the time of collection of insurance premium from non-filers
 In respect of general insurance premium and life insurance premium
 the rates specified in Division XXV of Part IV of the First Schedule
 Collection through agents is to be treated as collection by Insurance company- thus agents are also
dragged into this
 236V. Advance tax on extraction of minerals.– advance tax at the rate specified in Division XXVI of
Part-IV of the First Schedule on the value of minerals extracted, produced, dispatched and carried
away from the licensed or leased areas of the mines
 shall be collected by the provincial authority collecting royalty per metric ton from the lease-holder
of mines or any person extracting minerals
 Advance tax collected under this section shall be adjustable
 The value of the minerals for the purpose of this section shall be as specified by the Board

44. Other Changes- First Schedule
 PART III Division II PAYMENTS TO NON-RESIDENTS The rate of tax to be deducted from
a payment referred to in sub-section (1A) of section 152 shall be 3[7% of the gross
amount payable in case a person is a filer and 12% in case the person is a non-filer].
 PART III Division II PAYMENTS TO NON-RESIDENTS 6) The rate of tax to be deducted
from a payment referred to in clause (c) of sub-section (2A) of section 152 shall be,–
[(ii) in case a person is a filer, 7% of the gross amount payable and 12% if the person is a non-filer.]
 PART III Division III PAYMENTS FOR GOODS OR SERVICES- (ab) in the case of the
supplies made by the distributors of fast moving consumer goods, 3% of the gross
amount payable, if the supplier is a company and 3.5% if the supplier is other than a
company

45. Other Changes- First Schedule
 PART III Division III PAYMENTS FOR GOODS OR SERVICES- (c) in respect of persons
making payments to electronic and print media for advertising services,–
 (i) in case of a filer, 3[1.5%] of the gross amount payable
 PART III Division V Income from Property- Withholding rates ranging 5 to 20% various
slabs
 PART IV (See Chapter XII) DEDUCTION OR COLLECTION OF ADVANCE TAX- [Division II
BROKERAGE AND COMMISSION- New table -8 to 16% for various agents and filers
and non filers

46. Other Changes- First Schedule
 PART IV Division IV Electricity Consumption- Bill value exceeds Rs.20000- at the rate
of [12] per cent for commercial consumers earlier it was 10%
 PART IV [DIVISION X Advance tax on sale or transfer of immoveable property- The
rate of tax to be collected under section 236C shall be 5[1]% of the gross amount of
the consideration received 6[for filers and 7[2]% of the gross amount of the
consideration received for non-filers].]

47. Other Changes- First Schedule
 PART IV DIVISION XVIII Advance tax on purchase of immovable property- Where
value of property is more than 3m Tax to be collected is Increased to 2% [earlier 1%]
for filer and 4% [earlier 2%] for non filer
 PART IV [Division XXI Advance Tax On Banking Transactions Otherwise Than Through
Cash – Federal Government authorized to change the rate under this Division
 PART IV Division XXV ADVANCE TAX ON INSURANCE PREMIUM- 0 to 4% rates on
various types of premiums
 Division XXVI ADVANCE TAX ON EXTRACTION OF MINERALS – 0% for filers and 5% for
non filers

48. THE SECOND SCHEDULE
PART I-EXEMPTIONS FROM TOTAL INCOME
 Clause (13)- For receipt of income from other employers on account of gratuity,
pension etc exemption is increased to PRK 300000 [earlier 200000]
 Clauses 126A to 126AD added exempting Chinese companies and Government
Organization WRT CPEC and GWADAR
 [(133) IT exports- Income exempted till 2019 [earlier 2016] provided 80% of the
receipts are brought to Pakistan in foreign Exchange through a banking channel

49. THE SECOND SCHEDULE
PART II-REDUCTION IN TAX RATES
 Clause (3)- Substituted 50% reduction in overseas contracts if Foreign exchange is
brought in Pakistan through normal banking channels
 Clause [(18B) added- Rate of Tax of Listed Companies shall be reduced by 2% if
(a) it fulfils prescribed shari’ah compliant criteria approved by State Bank of Pakistan,
Securities and Exchange Commission of Pakistan and the Board;
(b) derives income from manufacturing activities only;
(c) has declared taxable income for the last three consecutive tax years; and
(d) has issued dividend for the last five consecutive tax years.]

50. THE SECOND SCHEDULE
PART IV -EXEMPTION FROM SPECIFIC PROVISIONS
 Clause (IIA)- sub clauses xxvi CPEC and GWADAR related exemption for 23 years starting from sixth day of February,
2007
 & xxvii to allow exemption on Profit and gains of transmission line projects in line with clause 126M of part I of this
schedule
 Clause [(38AA) CPEC and GWADAR related exemption to Chinese companies from operation of section 150
 Clause [(57) Proviso added to allow reduced rate of minimum tax @ 05.% in case of Trading houses till Tax Year 2019
 72B Three provisos added- Exemption from provisions of section 148 on imports by Industrial undertakings
 quantity of raw material to be imported shall not exceed 110 per cent of the quantity of raw material imported
and consumed during the previous tax year
 Commissioner shall conduct audit in respect of consumption, production and sales of the latest tax year for
which return has been filed and the taxpayer shall be treated to have been selected for audit under section
214C
 if the taxpayer fails to present accounts or documents to the Commissioner or the officer authorized by the
Commissioner, the Commissioner shall, by an order in writing, cancel the certificate issued and shall proceed to
recover the tax not collected under section 148

51. THE SECOND SCHEDULE
PART IV -EXEMPTION FROM SPECIFIC PROVISIONS
 Clause [(86) Exemption from probe u/s 111 for investment in Industrial undertaking where
investment made on or after 1st day of January, 2014- Start of commercial production
extended to Tax year 2019 earlier it was 2017
 Clause 94- minimum tax on services of certain sector extended to Tax year 2017 [earlier
2016]
 Clause[(98) The provisions of section 148 shall not apply to import of ships and other
floating crafts including tugs, survey vessels and other specialized crafts purchased or
bare-boat chartered by a Pakistani entity and flying Pakistani flag:
Provided that exemption under this clause shall be available up to the year 2020, subject to the
condition that the ships and crafts are used for the purpose for which they were procured, and in
case such ships and crafts are used for demolition purposes, tax collectible under section 148,
applicable to ships and crafts purchased for demolition purposes, shall be chargeable.]
 Clause 6[(99) The provisions of section 148 shall not apply to import or acquisition of
aircraft on wet or dry lease by M/s Pakistan International Airlines Corporation with effect
from 19th March, 2015.]

52. THE FROUTH SCHEDULE
RULES FOR THE COMPUTATION OF THE
PROFITS AND GAINS OF INSURANCE BUSINESS
 Rule 6B substituted to be included in computing profit and taxed followings at
normal rate [earlier taxed as separate block]
 there shall be included capital gains on disposal of shares and dividend of listed
companies, vouchers of Pakistan Telecommunication corporation, modaraba certificate
or instruments of redeemable capital and derivative products and shall be taxed at the
rates specified in Division II of Part I of First Schedule
 THE SIXTH SCHEDULE
PART I, RECOGNISED PROVIDENT FUNDS
 3. Employer’s annual contributions, when deemed to be income received by
employee]- Contribution threshold raised to PKR 150000 [earlier 100000]

53. CONCLUDED- THANK
YOU VERY MUCH