Tariq Abdul Ghani Maqbool & Co.

Chartered Accountants

Highlights on the Finance Bill, 2022

This document summarizes significant changes proposed to be brought to statute vide the Finance
Bill, 2022 (the Bill).

Effective date of applicability of these changes will be July 1, 2022, unless otherwise mentioned.

Nothing contained in this document shall be construed as our advice in general or on a given case,
accordingly, for ascertaining any effect of these changes in general or particular, the wordings in the
Bill should carefully be examined, taking into consideration the applicable laws and regulations, and
precise advice should be sought before taking any decision based on, or acting up on any of the
contents hereof.

Table of contents
Section 1: Budget at a Glance
Section 2: Overview of the Economy
Section 3: Salient Features
Section 4: Income Tax
Section 5: Sales Tax & Federal Excise Duty
Section 6: Customs
Section 7: Finance Act, 2018 (XXX of 2018)
Section 8: Capital Value Tax 2022
Section 9: Islamabad Capital Territory (Tax on Services) Ordinance, 2001
Section 10: Rates for Withholding (Income) Tax | Tax Year 2022
Effective July 01, 2022 | Proposed

June 11, 2022

 Tariq Abdul Ghani Maqbool & Co.
Chartered Accountants

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 Tariq Abdul Ghani Maqbool & Co.
Chartered Accountants

SECTION 1 BUDGET AT A GLANCE

2022-23 2021-22 Change
SOURCES OF FUNDS
Rupees in Billion % 2022-23 Net Revenue
Net Revenue Receipts* 4,904 4,497 9.1 12% Receipts
Net Capital Receipts 1996 1,241 60.8 8% Net Capital
8% 7% Receipts
External Receipts 533 1,246 -57.2 3%
1% External
Privatization Proceeds 96 252 -61.8 6% 15% 2021-22 Receipts
53% 52%
Provincial Surplus 800 570 40.4 Privatization
Proceeds
Bank Borrowings 1172 681 72.1 15% Provincial
21%
Surplus
Total 9,502 8,487 12.0 Bank
Borrowings

APPLICATION OF 2022-23 2021-22 Change

FUNDS Rupees in Billion % 2022-23
General Public Service
7,252 6,153 17.9 8% General Public
incl. others
Service incl.
11%
Defense Affairs and 16% others
1,523 1,370 11.2
Services
16% Defense Affairs
Development 2021-22 and Services
727 964 (24.6)
Expenditure

72% Development
76% Expenditure
Total 9,502 8,487 12.0

*NET REVENUE 2022-23 2021-22 Change

RECEIPTS Rupees in Billion % 2022-23
Tax Revenue 7,004 5,829 20.2
22%
Non-tax Revenue 2,000 2,080 -3.8 26%
Tax Revenue
Gross Revenue
9,004 7,909 13.8 2022-23
Receipts Non-tax
Less: Provincial Share Revenue
4,100 3,412 20.2
in Taxes 74%
78%
Total 4,904 4,497 9.1

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 Tariq Abdul Ghani Maqbool & Co.
Chartered Accountants

SECTION 2 OVERVIEW OF THE ECONOMY

Pakistan economic growth for fiscal year 2021-22 has been recorded at 5.97 percent, compared to 5.74
percent last year. The synchronized monetary-fiscal policy approach after the COVID-19 outbreak has
succeeded in stimulating the real economic activity. Specifically, the fiscal-monetary stimulus packages
have a cascading effect on growth through a revival in private investment. In addition, the accommodative
monetary policy stance in FY2021, focused on the revival of the construction industry. Further, growth
momentum was observed on account of broad-based expansion in large-scale manufacturing (LSM) and
improved crop production. The sectoral growth turned out to be 4.40 percent for agriculture, 7.19 percent
for industry and 6.19 percent for services. National CPI inflation for FY2022 remained higher than last year,
recorded at 11.3 percent measured by CPI, against 8.8 percent same time last year. Increase in current
account deficit together with a build-up in inflationary pressures in the backdrop of the geopolitical situation
(especially the Russia-Ukraine conflict) has created significant challenges for sustainable economic
growth. In addition, the recent emergence of domestic conditions (including political instability) is corroding
business confidence. Hence, all in all, inflationary and external sector pressures have caused
macroeconomic imbalances in the economy.

Following is a synopsis of Pakistan economy during the fiscal year 2021-22:

• Fiscal deficit as a percent of GDP was confined at 3.8 percent as compared to 3.0 percent during
same period of last year.
• Net Domestic Assets (NDA) of the banking system observed an expansion of rupees 2,784.8 billion
during the period under review compared to an expansion of rupees 652.1 billion during same
period last year.
• The Consumer Price Index (CPI) inflation for the period July-May FY2022 was recorded at 11.3
percent against 8.8 percent during the same period last year. The other inflationary indicators like
the Sensitive Price Indicator (SPI) were recorded at 16.7 percent against 13.5 percent last year.
Wholesale Price Index (WPI) was recorded at 23.6 percent in July-May FY2022 compared to 8.4
percent last year.
• Total imports during July-March FY2022 clocked at US$ 58.9 billion as compared to US$ 39.5
billion in the same period last year, showing a growth of 49.1 percent. Export of goods grew by
27.6 percent to US$ 26.8 billion, whereas services exports grew by 18.2 percent to US$ 5.8 billion.
• The country’s total foreign exchange reserves decreased by US$ 7.0 billion during Jul-Mar FY2022
and reached US$ 10.9 billion by end-March 2022.
• Total public debt was recorded at rupees 44,366 billion at end-March 2022. Domestic debt was
recorded at rupees 28,076 billion, while external public debt was recorded at rupees 16,290 billion
or US$ 88.8 billion at end-March 2022.
• FDI inflows rose 6.1 percent to US$ 1.25 billion till February 2022 as against US$ 1.18 billion last
year. In March 2022, net outflow was recorded at 30.4 million on account of political instability and
ultimate change of regime. The FDI during Jul-Mar FY2022 declined by 2.0 percent to 1.28 billion
as compared to US$ 1.31 billion same period last year.
• National Savings dropped to 11.1% of GDP in 2021-22 (provisional), compared to 14.1% of GDP
in 2020-21.
• As of March 31, 2022, the total number of listed companies on the Pakistan Stock Exchange (PSX)
stood at 532, with a total market capitalization of Rupees 7,583 billion. Pakistan stock market’s
performance has posted a boom-and-bust situation during the first nine months of the current fiscal
year. During July-March FY2022, the benchmark KSE-100 index declined from 47,356 points to
44,929 points. During the period under review, the index closed at its highest level of 48,112 points
on August 23, 2021.

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• The trade deficit grew by 49.6 percent to US$ 32.9 billion which is historically high, though on the
other hand remittances which always supported in easing out the pressure of trade deficit of both
goods and services, recorded at US$ 26.1 billion during July-April FY2022 and posted a growth of
7.6 percent.

Summary of key performance indicators are as follows:

Description 2018-19 2019-20 2020-21 2021-22P
Gross Domestic Product (GDP) – % 3.1 -0.9 5.7 6.0
Total Investment – Growth % 15.5 14.8 14.6 15.1
Consumer Price Index (CPI) – % 6.8 10.7 8.9 11.0
Trade Deficit - % of GDP 8.6 7.0 8.2 8.6
Current Account Deficit - % of GDP 4.2 1.5 0.8 3.6
Total Public Debt to GDP Ratio (as of) 74.7 June 19 76.6 June 20 71.5 June 21 -
Foreign Exchange Reserves – US$ billion 14.8 17.1 17.6 11.4
Depreciation in Rupee Value against US$ % 34 11.51 23.58 15.1
International Credit Rating – Moody’s B3 Stable B3 Stable B3 Stable B3 Negative
PSX – 100 Index (%) 9.8 7.4 5.9 -5.1
P = Provisional (various durations)

GROWTH
• Economy of Pakistan recovered strongly in FY2022 and posted increase in GDP by 4 percent over
last year’s growth, which is not only substantially higher than the previous two years, timely and
appropriate policy measures taken by the government helped maintain a V-Shaped economic
recovery.
• The economy has shown a strong recovery after being depressed due to the pandemic which
resulted in lockdown. For FY2022, real GDP (GVA at basic prices 2015-16) posted a growth of
5.97 percent on account of 4.40 percent growth in Agriculture, 7.19 percent growth in the Industrial
sector, and 6.19 percent growth in the Services sector. This growth is slightly above the growth of
5.74 percent recorded for FY2021.

• Services Sector Accounts for 58 percent of GDP. The sector has witnessed a growth of 6.19
percent in current fiscal.
• Performance of Large-Scale Manufacturing (LSM) stood tremendous with 10.4 percent growth
during July-March FY2022 as compared to growth of 4.2 percent same period last year. LSM on
year-to-year basis grew by 26.6 percent in March FY2022 against 22.5 percent growth in the same
month last year.

2018-19 2019-20 2020-21 2021-22P

Description
Growth % Growth % Growth % Growth %
Gross Domestic Product (GDP) 3.1 -0.9 5.7 6.0
Agriculture 0.9 3.9 3.5 4.4
Manufacturing 4.5 -7.8 10.5 9.8
Commodity Producing Sector 0.6 -0.6 5.4 5.7
Services Sector 5.0 -1.2 6.0 6.2
P = Provisional

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Chartered Accountants

INVESTMENT & SAVING

• Total investment recorded growth of 24.1 percent in FY2022. Fixed investment as percentage of
GDP is recorded at 13.4 percent increased from 12.90 percent last year, while Private investment
as percentage of GDP at 10 percent remained same as to last year. Public investment as
percentage of GDP has increased from 3 percent to 3.4 percent this year.
• National savings shows a decline to 11.1.3 percent of GDP in this fiscal year against 14.1 percent
last year.
• The inflows of FDI reached US$ 1.96 billion during Jul-Mar FY2022 compared to US$ 2.33 billion
million same period last year, declined by 15.6 percent. The outflows of FDI during Jul-Mar FY2022
decreased by 33.2 percent and reached US$ 682.4 million compared to US$ 1021.0 million same
period last year.

Description 2018-19 2019-20 2020-21 2021-22 P

Total Investment - % of GDP 15.60 14.80 14.60 15.10
Fixed Investment - % of GDP 13.80 13.10 12.90 13.40
Public Investment - % of GDP 3.10 2.80 3.00 3.40
Private Investment - % of GDP 10.70 10.30 10.00 10.00
National Saving - % of GDP 11.30 13.30 14.10 11.10
P = Provisional

CAPITAL MARKETS
• During first three quarters of FY 2022, the performance of stock markets remained volatile. The
KSE-100 index showed an encouraging trend from the start of July 2021, which is also evident
from the listing of significant number of IPOs. However, the index witnessed a declining trend from
24th February 2022 till end March 2022 due to many reasons including but not limited to rupee
value decline, current account deficit and political tension.

• As of March 31, 2022, number of listed companies stood at 532, with total market capitalization of
rupees 7,583 billion, while during July 2021 to March 2022, the benchmark KSE-100 index declined
from 47,356 points to 44,929 points.
• Though investors are confident that the reforms and development activities introduced by the
SECP will not only help the capital markets to regain its momentum but also neutralize the
associated risks. However, the performance of Pakistan’s capital market will depend on the
domestic as well as international economic conditions in the future.

Some of the relevant statistics related to the Karachi Stock Exchange are as follows:
Description 2018-19 2019-20 2020-21 2021-22P
KSE – 100 Index Points 33,766 34,889 47,356 44,929
KSE – 100 Index - Growth % -19.6 3.2 35.7 -5.1
Aggregate Market Capitalization (Growth %) -20.5 -18.4 26.6 -8.6
Turnover of Shares (Rs. Billions) 39.9 52.8 49.86 20.07 (D-M)
P = Provisional (D-M= Dec 2021 to March 2022)

INFLATION
• Average inflation during the current fiscal year has been recorded at 11.3 percent, as against 8.8
percent during last year, this is due to significant increase in the non-perishable food prices,
exchange rate depreciation along with rapid increase in global fuel and commodity prices.
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Chartered Accountants

Description 2018-19 2019-20 2020-21 2021-22P

CPI (Consumer Price Index) 6.51 11.22 8.8 11.3
Average Food Inflation 4.69 15.09 14.1 -
Average Non-food Inflation 8.07 8.07 8.9 -
SPI (Sensitive Price Index) (Base Year 2015-16=100) 0.9 1.37 13.5 16.7
WPI (Wholesale Price Index) (Base Year 2015-
0.25 -0.32 8.4 23.6
16=100)
P = Provisional

BALANCE OF PAYMENTS & RESERVES

• Trade deficit increased by 49.6 percent in July-April FY2022 to US$ 32.9 billion as compared to
US$ 22.0 billion in the same period last year.
• During July-April FY2022, goods exports grew by 27.6 percent to US$ 26.8 billion. Around two-
thirds of the increase came from the textile sector, especially from the high value-added segment.
Services exports grew by 18.2 percent to US$ 5.8 billion.

• During July-April FY2022, current account posted a deficit of US$ 13.8 billion compared to a deficit
of US$ 0.5 billion during the same period last year.
• Inflow of remittances in Pakistan has been rising consistently since FY2018 and the trend
continued in FY2022 with a growth of 7.6 % and reached $ 26.1 billion during July-April FY2022.
• The country’s total foreign exchange reserves decreased by US$ 7.0 billion during Jul-Mar FY2022
and reached US$ 10.9 billion by end-March 2022. Most of the decline was noted in the SBP’s
reserves, which fell by US$ 5.9 billion to US$ 11.4 billion by end-March.
• The interbank PKR-USD exchange rate depreciated 15.1 percent during July-April FY2022.
• The FDI during Jul-Mar FY2022 declined by 2.0 percent to 1.28 billion as compared to US$ 1.31
billion same period last year.
Some of the relevant statistics related to balance of payments and foreign exchange reserves are
as follows:

2018-19 2019-20 2020-21 2021-22P

Description
Growth % Growth % Growth % Growth %
Exports -2.10 -6.81 7.13 26.6
Imports -6.80 -18.64 13.52 39.0
Workers’ Remittances (US$ in billion) 9.2 6.0 26.2 22.9
Foreign Direct Investment (FDI) -50.0 31.33 -14.1 -2.0
Total Foreign Exchange Reserves – US$ in billion 14.48 18.88 24.39 16.4 A
P = Provisional (A: End April 2022, SBP Data)

PUBLIC DEBT
• Total public debt was recorded at rupees 44,366 billion at end-March 2022. Domestic debt was
recorded at rupees 28,076 billion, while external public debt was recorded at rupees 16,290 billion
or US$ 88.8 billion at end-March 2022.
• Domestic debt was recorded at rupees 28,076 billion at end-March 2022, registering an increase
of rupees 1,811 billion during the first nine months of the current fiscal year.

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• During first nine month of current fiscal year, external debt stood at rupees16,290 billion till Mar
2022 vs rupees 13,601 billion in FY2021

2018-19 2019-20 2020-21 2021-22P

Description
Growth % Growth % Growth % Growth %
Total Public Debt to GDP Ratio 17.2 2.5 -6.6 -
Depreciation in Value of Rupee against US$ - % 34 11.51 23.58 15.1
International Credit Rating – Moody B3 Stable B3 Stable B3 Stable B3 Negative
New Guarantees issued as a percentage of GDP 0.4 0.8 - -
P = Provisional

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SECTION 3 SALIENT FEATURES

Income Tax 3. Substantial increase in the tax burden for non-
salaried individuals and AOPs.
Relief measures 4. Increase in tax rate from 35% to 45% for
1. Substantial tax relief for salaried class, banking companies.
especially those under lower income brackets. 5. 2% tax for poverty alleviation on high earning
Tax saving where annual income is up to Rs. taxpayers having income above Rs. 300M.
18.82M. 6. Increase in final tax rate from 5% to 10% in
2. 1% relief in tax rate for small companies. case of payment of fee for offshore digital
3. 50% ceiling on allowable depreciation in the services.
year of acquisition and disposal to be 7. Levy of 10% final tax on Fee for:
abolished. a. money transfer operations;
4. Increase in monetary cost threshold for b. card network services;
allowing depreciation on private vehicles from c. payment gateway services; and
Rs. 2.5 Million to Rs. 5 Million. d. interbank financial telecommunication
5. Tax collected at imports stage to be treated as services.
final tax in case of commercial imports. 8. From tax year 2022, levy of tax at effective rate
6. The anomaly that tax collected at the rate of of 1% on deemed income from immoveable
5.5% from industrial undertakings on imports property.
for their own use was being treated as 9. Limiting the admissibility of contributions to
minimum tax during tax years 2021 and 2022 approved EOSB funds to the extent of 50% of
instead of advance tax has been done away the actual amount contributed.
with. 10. Increase in tax burden on capital gains on
7. The anomaly that higher tax was being disposal immoveable property.
collected on imports of high-end mobiles under 11. Gains on disposal of offshore immoveable
CKD/ SKD over CBU has been done away with. property to be taxed as foreign source income
8. Export proceeds of Computer software or IT instead of capital gains.
services or IT Enabled services by PSEB 12. Abolishing 25% relief on all capital gains arising
registered taxpayers to be reduced from 1% to upon disposal of capital assets other than
0.25% of proceeds. immoveable property irrespective of one year
9. The minimum tax for REIT management holding period.
services & NCCPLs services to be withheld at 13. The relief by way of treating the fair value as
3%. cost of capital asset in case of transfer/
10. Lowering the rate of tax on yield or profit on acquisition in case of gift, succession, etc. is no
investment in Bahbood Savings Certificate or more applicable.
Pensioners Benefit Account and Shuhada 14. Tax on capital gain on disposal of listed
Family Welfare Account from existing 10% to securities more closely linked with holding
5%. period.
11. Enactment of exemption from minimum tax u/s 15. Carry forward of losses for industrial units
113 to mobile phone manufacturers engaged in granted to acquiring company to be abolished.
the local manufacturing of mobile phone 16. Collection of final tax along with electricity bills
devices. from retailers (other than Tier-1 retailers) and
12. Immunity from audit u/s 177 & 214C for retailers & service providers specified through
persons who have been subjected to tax audits Income Tax General Order.
in any of the preceding 4 tax years. 17. Excess of minimum tax amount over the actual
tax liability not to be carried forward and
Revenue measures adjusted from tax payable for succeeding
1. Withdrawal of deductible allowance on account years.
of profit on debt. 18. Final tax from commercial importers for items
2. Tax credits for investment in shares, life & as per Part II of Twelfth Schedule to be
health insurance and approved pension funds increased from 2% to 4%.
abolished.
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19. Advance taxes applicable related to motor applicable only for cases involving tax of Rs.
vehicle registration and transfer to be 100M and above.
increased substantially. 10. A new concept of Synchronized Withholding
20. Advance tax also to be collected on registration Administration and Payment System (SWAPS)
of Electric Vehicles valuing Rs. 5M or more. and SWAPS agent to be introduced with further
21. Advance tax collection rate doubled from 1% to rules in this regard to follow.
2% both in case of sale and purchase of 11. Companies and AOPs to electronically furnish
immoveable properties. particulars of beneficial owners and to keep
22. Advance tax to be collected at a total increased these particulars updated.
rate of 7% (i.e., proposed new rate of 2%, 12. Exemption on withdrawal of accumulated
increased by 250%) on purchase of balance from voluntary pension system under
immoveable property by non-filers. Voluntary Pension System Rules, 2005.
23. Non-filers to be subjected 6% advance tax at Whereas, the monthly payments from these
the time of registration of motor vehicles. plans are to be taxed.
24. Advance tax to be collected at 1% of the
amount remitted abroad via credit, debit and
prepaid cards. Sales Tax
25. Scale of penalties to be increased
substantially. Relief measures
26. Substantial increase in tax rates for banking 1. The Bill seeks to withdraw the condition of
companies on income from investment in the mentioning the CNIC/ NTN on the invoices
Federal Government securities. where supplies are made to unregistered
person.
Other/ regulatory measures 2. It has been proposed to allow payment of sales
1. The restriction of Rs. 250,000 for payments via tax on installment basis for the import or supply
banking channels for certain payments not to of any goods or class of goods by the Federal
apply to companies. or Provincial Governments or any public sector
2. Expenditure by a company under a single organization, subject to such conditions,
account head which aggregating Rs. 1 Million limitations and restriction as Federal
made other than by digital means from Government may impose.
business bank to be disallowed. 3. It has been proposed to exempt import and
3. Payment of salaries exceeding Rs. 25,000 to supply of solar panels.
be allowed by digital means in addition to being 4. The bill seeks to exempt sales tax on
made through other banking channels. agriculture machinery and seeds.
4. Disallowance up to 10% for any expenditure 5. It has been proposed to withdraw sales tax on
attributable to sales by persons required to tractors.
integrate business with the Board but failing to 6. Reduction in sales tax is proposed on
do so. potassium chlorate from Rs. 90 per kg to Rs.
5. Citizens of Pakistan not being tax residents of 60 per kg.
any other country in a tax year to be considered
tax resident in Pakistan.
6. A separate notice under section 111 not Revenue measures
required to be issued if the related explanation 1. It has been proposed to extend the scope of
has been confronted to the taxpayer through a further sales tax to those persons who are not
notice under section 122(9). active taxpayer regardless of being registered
7. Commissioner to be empowered to make best person in sales tax.
judgement assessments within a period of next 2. The Bill seeks to expand the scope of Tier-1
6 years instead of prevailing 5 years for a given Retailer by including the persons engaged in
tax year. supply of articles of jewelry, or part thereof, of
8. The maximum timeframe for an assessment to precious metals or of metal clad with precious
be amended or further amended under section metal.
122 to be increased from 120 to 180 days. 3. It has been proposed to charge sales tax on
9. The procedure for alternative dispute resolution retailers as per slab, other than tier-1 retailers
to be revisited. Moreover, this channel to be through electricity bills, the value of sales tax
has also been proposed to be increased.
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Federal Excise Duty Transformer, aluminum alloy sheet, Tantalum

capacitors (DIP/SMD) and other inductors,
Revenue measure small transformer, coil (DIP/SMD).
1. The Bill proposed to increase rates of duty on Furthermore, the scope of exemption has also
locally produce cigarettes. been extended for the manufacturers of Parts
of LED light and Bulbs.
2. The Bills seeks to increase the duty value on
filer rods for cigarettes which was earlier Rupee 8. For local industry tariff structure on the different
one per filter rod to Rupee fifteen hundred per tariff lines related to MDF / HDF have been
Kg. rationalized evenly.
3. It has been proposed to increase Federal 9. Reduction in CD and ACD rates on import of
excise duty on Telecommunication services Plywood, veneered panels & similar laminated
from existing 16% to proposed 19.5%. wood, poly (methyl methacrylate),
cyanoacrylate.
4. The Bill proposes to increase the Federal
excise duty imposed on club, business & first- 10. To encourage local manufacturers of brush
class travel facilities services from Rs. 10,000 ware, customs duties have been exempted on
to Rs. 50,000. import of Poly-butylene terephthalate.
11. For manufacturers of Optical Fiber Cable CD &
ACD on import of Stamping foils have been
exempted.
12. To encourage export-oriented industry, CD and
ACD have been exempted on import of Guts,
Customs bladders and stomachs of animals etc.
13. For manufacturers of Dibutyl Orthophthalates,
Relief Measures extension in scope of concession on import of
1. Proposed CD & ACD reduction for packaging organic composite solvents and thinners.
industry, on various tariff lines pertaining to 14. Rationalization of Tariff structure on import of
aluminum, polymers of ethylene, BOPP etc. Ivy Leaves extract powders and exemption of
2. Reduction in CD and ACD on 10 tariff lines CD & ACD on its raw materials i.e., other plants
pertaining to direct and reactive dyes for local and parts of plants from 3% CD and 2% ACD.
industry. 15. Exemption of customs duties on import of
3. For agricultural sector and farmers, CD membrane for filtering / purifying water from
exemption extended further to Farm 16% CD & 4% ACD.
Mechanization and Logistics including 16. Exemption of customs duties on 03 different
agricultural machinery pertaining to irrigation, raw materials for first aid bandages
drainage, harvesting / post- harvest handling & manufacturing industry from 5%.
processing, plant protection equipment as well 17. Exemption of CD & ACD on import of raw
as machinery, equipment and other capital materials of paper sizing industry and
goods for miscellaneous agro based set ups. chlorinated paraffin wax industry.
4. For Coating Industry, CD and ACD have been 18. Reduction of customs duties on import of
exempted on Aluminum paste and powder and flavouring powders for food preparation for
CD and ACD have been reduced on glycerol snacks manufacturers.
crude and glycerol. 19. Exemption of CD & ACD on raw materials of
5. For manufacturers of filters other than aluminum conductor composite core
automotive, CD and ACD have been reduced manufacturers.
on their raw materials i.e., Adhesive, Epoxide 20. To keep the prices of medicines stable in the
resins, Filter media/ paper, Non-woven fabric market and to encourage local manufacturing
media and Steel plates / sheets of prime of pharmaceuticals, customs duties have been
quality. exempted on 26 more APIs and on one drug
6. Footwear industry, CDs have been reduced on “Grafalon”.
different categories of other woven fabrics and 21. Customs duties have been exempted on import
artificial flowers / foliage of other materials. of Irisvision Device, with its complete
7. Exemptions for LED lights and bulbs components. Irisvision is for low vision
manufacturers’, customs duties have been individuals of all ages and with this gadget low
exempted on import of 05 more items i.e., vision persons can read and write easily.
Aluminum Electrolytic capacitor, SMT Electrical

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Other measures 6. RD exemption withdrawal on import of High

1. It has been proposed to adopt the Harmonized Carbon Wire Rod.
Commodity Description and Coding System 7. To encourage the local manufacturers RD on
(HS) by adopting the same in Pakistan import of optical fibre cables has been
Customs Tariff. increased from 10% to 20%.
2. The definition of smuggling has been widened
to include smuggling of essential commodities
out of Pakistan through bordering and coastal
areas to curtail smuggling.
3. To facilitate trade and industry, changes have
been incorporated to align the provisions of the
Customs Act, 1969 with the Pakistan Single
Window (PSW) Act, 2021, providing platform
for integration of other government agencies.
4. The timeline to finalize the provisional
assessment has been reduced from existing
nine months to four months to facilitate trade
and avoid delay in realization of government
revenue.
5. Powers regarding extension in warehousing
period have been delegated to Additional
Collector of Customs to facilitate trade by
expediting grant of requests for extension.
6. Option to change consignee name in relation to
frustrated cargo has been provided to address
the issue of port congestion.
7. Pecuniary jurisdiction of Additional Collector
and Deputy Collector has been increased to
rationalize the workload of adjudicating
authorities and quick disposal of legal cases.
8. To reduce the cost of doing business and
rationalize fees charged by the terminal
operators, enabling provision has been
provided for determination of various charges
by customs authorities.
9. Provision has been incorporated to indemnify
the officers of provincial governments for their
actions taken in good faith to prevent the
smuggling of essential commodities under the
Customs Act, 1969.

Regulatory Duty
1. Replacement of 10% CD rate on import of
motor spirit with 10% RD.
2. Continuation of 20% RD on import of Disodium
Carbonate to protect the local industry.
3. RD reduction for vendor industry, on import of
case hardening steel from 30% to 20%.
4. Withdrawal of 15% RD on import of Chrome
yellow.
5. To protect the local industry 10% RD has been
levied on import of other paper, paperboard,
cellulose wadding and webs of cellulose fibres.

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SECTION 4 INCOME TAX

1. SALARIED INDIVIDUALS

Rate of tax [Cl (2) Div I Pt 1 First Sch.]

The Bill effectively seeks to relieve the tax burden for salaried individuals in brackets up to
Rs.12,000,000 by reducing the tax rates. The below table of rates has been proposed:
Taxable Income (Rs.)
Rate of Tax
From To
Up to 600,000 0.00%
600,001 1,200,000 Rs. 100
1,200,001 2,400,000 7% of the amount exceeding Rs. 1,200,000
2,400,001 3,600,000 Rs.84,000 12.5% of the amount exceeding Rs. 2,400,000

PLUS
3,600,001 6,000,000 Rs.234,000 17.5% of the amount exceeding Rs. 3,600,000
6,000,001 12,000,000 Rs.654,000 22.5% of the amount exceeding Rs. 6,000,000
Above 12,000,000 Rs.2,004,000 32.5% of the amount exceeding Rs.12,000,000

As seen in the below charts, there appears a relief in overall tax burden where salary is below
Rs.18.82 Million, whereas there is an incremental tax burden on cases with salary above this amount.

Annual Income Up to Rs. 18.82M Annual Income Above Rs. 18.82M

Tax Relief (%) Incremental Tax Burden (%)
0%

100%
-1%

-2%
80%

-3%

60%
-4%

40% -5%

-6%

20%

-7%

0% -8%
PKR (M) PKR (M) PKR (M) PKR (M) PKR (M) PKR (M) PKR (M) PKR (M) PKR (M) PKR (M) PKR (M) PKR (M) PKR (M) PKR (M)
0.70 3.20 5.70 8.20 10.70 13.20 15.70 18.82 31.30 43.80 56.30 68.80 81.30 93.80

Deductible allowance & tax credits

It has been sought to abolish deductible allowance and all existing tax credits available for reducing
tax liability.
Section 60C | Deductible allowance for profit on debt
Section 62 | Tax credit for investment in shares and insurance
Section 62A | Tax credit for investment in health insurance
Section 63 | Contribution to an approved pension fund
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2. NON-SALARIED INDIVIDUALS AND ASSOCIATION OF PERSONS

Rate of tax [Cl (1) Div I Pt 1 First Sch.]

It has been sought to substantially increase the tax burden for non-salaried individuals and association
of persons. The below table of rates has been proposed:
Taxable Income (Rs.)
Rate of Tax
From To
Up to 600,000 0.00%
600,001 800,000 5% of the amount exceeding Rs. 600,000
800,001 1,200,000 Rs.10,000 12.5% of the amount exceeding Rs. 800,000
1,200,000 2,400,000 Rs.60,000 17.5% of the amount exceeding Rs. 1,200,000

PLUS
2,400,000 3,000,000 Rs.270,000 22.5% of the amount exceeding Rs. 2,400,000
3,000,001 4,000,000 Rs.405,000 27.5% of the amount exceeding Rs. 3,000,000
4,000,001 6,000,000 Rs.680,000 32.5% of the amount exceeding Rs. 4,000,000
Above 6,000,000 Rs.1,330,000 35% of the amount exceeding Rs.6,000,000

3. DEFINITIONS
The following new definitions are proposed to be adopted:
(i) Beneficial owner [Section 2(7A)]
Beneficial owner means a natural person who:
(a) ultimately owns or controls a Company or association of persons, whether directly or
indirectly, through at least ten percent shares or voting rights; or
(b) exercise ultimate effective control, through direct or indirect means, over the company or
association of persons including control over the finances or decisions or other affairs of the
company or association of persons.

(ii) Distributor [Section 2(18A)]

Distributor means a person appointed by a manufacturer, importer or any other person for a
specified area to purchase goods from him for further supply.

(iii) Fair market value [Section 2(22AA)]

Fair market value means value as provided in section 68.

(iv) Synchronized Withholding Administration & Payment System agent [Section 2(62B)]
Synchronized Withholding Administration and Payment System agent or “SWAPS agent” means
any person or class of persons notified by Board to collect or deduct withholding taxes through
Synchronized Withholding Administration and Payment System.

(v) Tax invoice [Section 2(66A)]

Tax invoice means an invoice as prescribed under the Income Tax Rules, 2002.

4. TAXATION OF COMPANIES
Tax rates [Div II Part I First Sch.]

Type of Company Existing Rates Proposed Rates

Small companies 21% 20%
Banking companies 35% 45%
Other companies 29% 29%

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5. CHARGE OF TAX
Tax on taxable income [Section 4]
The Bill seeks to clarify that all the taxes under Chapter II of the Income Tax Ordinance, 2001 are to
be treated as final taxes instead of limiting final taxation to Div. sections 5, 6 and 7.

Tax on high earning persons for poverty alleviation [Section 4C | Div IIB Part 1 First Sch.]
It has been sought to insert a new section 4C, which aims to tax high earning persons, i.e., earning
income exceeding Rs. 300M. The proposed section reads as:
(1) A tax shall be imposed for poverty alleviation at the rates specified in Division IIB of Part I of the
First Schedule, on income of every person
(2) For the purposes of this section, “income” shall be the sum of the following:
(i) profit on debt, dividend, capital gains, brokerage and commission
(ii) taxable income (other than brought forward depreciation and brought forward business
losses) under section 9 of the Ordinance, if not included in clause (i);
(iii) imputable income as defined in clause (28A) of section 2 excluding amounts specified in
clause (i); and
(iv) income computed, other than brought forward depreciation, brought forward amortization and
brought forward business losses under Fourth, Fifth and Seventh Schedules.
(3) The tax payable under sub-section (1) shall be paid, collected and deposited on the date and in
the manner as specified in sub-section (1) of section 137 and all provisions of Chapter X of the
Ordinance shall apply.
(4) Where the tax is not paid by a person liable to pay it, the Commissioner shall by an order in writing,
determine the tax payable, and shall serve upon the person, a notice of demand specifying the
tax payable and within the time specified under section 137 of the Ordinance.
(5) Where the tax is not paid by a person liable to pay it, the Commissioner shall recover the tax
payable under sub-section (1) and the provisions of Part IV, X, XI and XII of Chapter X and Part I
of Chapter XI of the Ordinance shall, so far as may be, apply to the collection of tax as these apply
to the collection of tax under the Ordinance.
(6) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of
this section.

The rate of tax under section 4C are proposed as:

Income under section 4C Rate of tax
Up to Rs. 300 M 0% of the income
Exceeding Rs. 300M 2% of the income

Tax on certain payments to non-residents [Section 6 | Div IV Part 1 First Sch.]

The Bill seeks to include certain other payments to non-residents not having a permanent
establishment in Pakistan by specification and include as well amend rates of tax on these payments.
Existing Services/ Rates Proposed Services/ Rates
Royalty 15% Royalty 15%
Fee for technical services 15% Fee for technical services 15%
Fee for offshore digital services 5% Fee for offshore digital services 10%
Fee for money transfer operations 10%
Fee for card network services 10%
Fee for payment gateway services 10%
Fee for interbank financial 10%
telecommunication services
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Tax on deemed (rental) income [Section 7E | Div VIIIC Part 1 First Sch.]
It has been sought, with effect from tax year 2022, to tax income from immoveable property on
deemed basis, whether or not the said property is rented-out for any consideration or not. For this
purpose, tax at 20% is to applied on deemed rental income computed as 5% of fair value of the
property. This tax shall, however, not apply to:
(a) one self-owned immoveable property;
(b) self-owned business premises from which business is carried out;
(c) self-owned agriculture land where agriculture activity is carried out by person but does not include
farmhouse and land annexed thereto;
(d) where the fair market value of the property or properties, in aggregate, excluding properties
mentioned in clauses (a), (b) and (c) does not exceed Rs. 25 million;
(e) a Provincial Government, a Local Government, a local authority or a development authority;
(f) land development and construction projects of builders and developers registered with Directorate
General of Designated Non-Financial Businesses and Professions of Board;
(g) a property which is subject to tax under section 15 of the Ordinance and the tax chargeable is
more than tax chargeable under this section. However, in case the tax chargeable under section
15 (Income from Property) is less than the tax chargeable under this proposed section, so much
of the amount of tax which is in excess of tax chargeable under section 15 shall be paid as final
tax.

It has also been sought that the Federal Government may include or exclude any person or property
for the purpose of this proposed tax.

6. INCOME FROM BUSINESS

Deductions not allowed [Section 21]
The Bill seeks to limit contributions made to approved gratuity funds, approved pension funds or
approved superannuation funds to the extent of 50% of the actual contribution made to these funds.

It has also been sought to enact the clauses (l) and (la) earlier included vide Tax Laws (Third
Amendment) Ordinance, 2021 as under:

Clause (l) | Certain expenditure under single account head exceeding Rs. 250,000 is to be paid
via banking channels. It has been proposed that this restriction shall not be
applicable to a company.

Clause (la) | Any expenditure incurred by a company for a transaction under a single account
head which aggregates to exceed Rs. 1 Million made other than by digital means
from business bank account of the company notified to the Commissioner under
section 114A. However, this requirement shall not apply in the case of following
utility bills, freight charges, travel fare, postage; and payment of taxes, duties, fee,
fines or any other statutory obligation. It has also been sought to empower the Board
to notify the effective date for this clause.

Clause (m) | Payment of salaries exceeding Rs. 25,000 to be allowed by digital means in addition
to being made through other banking channels.

A new Clause (r) is proposed to be introduced that aims to disallow any expenditure attributable to
sales claimed by any person who is required to integrate but fails to integrate his business with the
Board through approved fiscal electronic device and software. However, disallowance of such
expenditure shall not exceed 10% of the allowable deduction.

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Depreciation [Section 22]

The existing ceiling of 50% brought vide Finance Act, 2020 for allowable depreciation on new assets
acquired after July 1, 2020 is proposed to be done away with. Likewise, the similar of 50% in case of
disposal of these assets has also been proposed to be abolished.

It has also been proposed to increase the monetary threshold of existing Rs. 2.5 Million to Rs. 5 Million
in case of passenger transport vehicles not plying for hire.

Initial allowance [Section 23]

It has been sought to clarify that initial allowance shall not be admissible on immovable property or
structural improvement to the immovable property.

7. CAPITAL GAINS
Capital gains [Section 37 | Div VIII Pt 1 First Sch.]
The Bill seeks to amend the tax rates for capital gains on disposal of immoveable property as under
as well to abolish the relief based on holding period:

Existing Rates Proposed Rates

Rate of Tax
Const-
Amount of Gain Rate Holding Period
Open Plots ructed Flats
Property
Up to Rs. 5 M 3.5% Up to 1 Year 15% 15% 15%

Above Rs. 5 M to Rs. 10 M 7.5% Above 1 Year to 2 Years 12.5% 10% 7.5%

Above Rs. 10 M to Rs. 15 M 10% Above 2 Year to 3 Years 10% 7.5% -

Exceeding Rs. 15 M 15% Above 3 Year to 4 Years 7.5% 5% -

Above 4 Year to 5 Years 5% - -

Above 5 Year to 6 Years 2.5% - -

Above 6 Years 0% - -

Moreover, the above concept for taxing capital gains on immoveable property has been limited to gain
disposal of immoveable property in Pakistan only, meaning thereby that any gains arising from
disposal of offshore immoveable property are to be taxed as foreign source income on which foreign
tax credit on this gain shall be admissible.

It has also been proposed to abolish 25% relief on all capital gains arising upon disposal of other
capital assets after a holding period of one year.

Presently the fair market value of the capital asset is treated to be the cost of the asset on the date of
its transfer or acquisition in the following cases:
(a) under a gift from a relative as defined in sub section (5) of section 85, bequest or will;
(b) by succession, inheritance or devolution;
(c) a distribution of assets on dissolution of an association of persons; or
(d) on distribution of assets on liquidation of a company.
The Bill now seeks to abolish this relief.

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Capital gains on disposal of listed securities [Section 37A | Div VII Pt 1 First Sch.]
Capital gains on sale of listed securities are taxable at 12.5% for the tax year 2022 irrespective of the
holding period. The Bill now seeks to propose the following rates for tax year 2023 and onwards:
Holding Period Rate of Tax
Up to 1 year 15.0%
Above 1 year to 2 years 12.5%
Above 2 years to 3 years 10.0%
Above 3 years to 4 years 7.5%
Above 4 years to 5 years 5.0%
Above 5 years to 6 years 2.5%
Above 6 years 0.0%

8. LOSSES
Carry forward of business losses of sick industrial units [Section 59C]
Carry forward of losses for industrial units granted to acquiring company vide Income Tax
(Amendment) Ordinance, 2022 dated March 3, 2022 is proposed to be abolished with effect from
March 2, 2022.

9. DEDUCTIBLE ALLOWANCES & TAX CREDITS, ETC.

The Bills seeks to abolish the following deductible allowances and tax credits applicable to individuals:

Section 60C | Deductible allowance for profit on debt

Section 62 | Tax credit for investment in shares and insurance
Section 62A | Tax credit for investment in health insurance
Section 63 | Contribution to an Approved Pension Fund
Section 65F(1)(c) | Exports of computer software, IT services or IT enabled services
Section 65H | Tax credit for foreign investment for industrial promotion (w.e.f. March 2, 2022)
Section 100F | Special provisions relating to investment in industrial promotion (w.e.f. March 2,
2022)

10. PROVISIONS GOVERNING PERSONS

Resident individual [Section 82]
It has been sought to clarify that citizens of Pakistan who are not tax residents of any other country in
a tax year are to be considered a resident individual in Pakistan.

Principles of taxation of associations of persons [Section 92]

The Bill seeks to clarify by way of an explanation that if the income of association of persons is exempt
and no tax is payable under the Ordinance due to this exemption, the share received in the capacity
as member out of the income of the association shall remain exempt.

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11. SPECIAL INDUSTRIES

Special provisions relating to payment of tax through electricity connections
[Section 99A & 235 | Div IV Part IV First Sch.]
It has been sought to substitute section 99A to collect income tax from certain retailers through their
electricity bills:
(1) Notwithstanding anything contained in the Ordinance, a tax shall be charged and collected from
retailers other than Tier-I retailers as defined in Sales Tax Act, 1990 (VII of 1990) and specified
service providers on commercial electricity connections at the rates provided in clause (2A) of
Division IV, Part IV of the First Schedule.
(2) A retailer who has paid sales tax under sub-section (9) of section 3 of Sales Tax Act, 1990 (VII of
1990), shall not be required to pay tax under this section and the sales tax so paid shall constitute
discharge of tax liability under this section.
(3) The tax collected or paid under this section shall be final tax on the income of persons covered
under this section in respect of business being carried out from the premises where the electricity
connection is installed.
(4) For the purposes of this section, Board with the approval of the Minister in-charge may issue an
income tax general order to-`
(a) provide the scope, time, payment, recovery, penalty, default surcharge, adjustment or refund
of tax payable under this section in such manner and with such conditions as may be
specified.
(b) provide record keeping, filing of return, statement and assessment in such manner and with
such conditions as may be specified;
(c) provide mechanism of collection, deduction and payment of tax in respect of any person; or
(d) include or exempt any person or classes of persons, any income or classes of income from
the application of this section, in such manner and with such conditions as may be specified.

Following rates have been proposed for collection of tax under this mode:
Gross amount of monthly bill Tax
Up to Rs. 30,000 Rs. 3,000
Above Rs. 30,000 to Rs. 50,000 Rs. 5,000
Rs. 50,000 to Rs. 100,000 Rs. 10,000
Specified retailers and service providers Rs. 50,000
through Income Tax General Order

12. ANTI AVOIDANCE

Recharacterisation of income and deductions [Section 109(1)(e)]

The Bill seeks to introduce a new clause effective from tax year 2018 empowering the Commissioner
to treat a place of business in Pakistan as a permanent establishment, if the said place fulfills the
conditions as specified in sub-clause (g) of clause (41) of section 2.

Unexplained income or assets [Section 111]

Powers of the Commissioner to probe under section 111(1) are not to apply to any amount of foreign
exchange remitted from outside Pakistan through normal banking channels not exceeding five million
Rupees in a tax year that is en-cashed into rupees by a scheduled bank and a certificate from such
bank is produced to that effect. The Bill now seeks to enact the explanation that the remittance through
money service bureaus, exchange companies or money transfer operators shall be deemed to
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constitute foreign exchange remitted from outside Pakistan through normal banking channels as
provided under this sub-section.

It has also been sought to clarify that a separate notice under section 111 is not required to be issued
if the explanation has been confronted to the taxpayer through a notice under section 122(9) regarding
nature and sources of:
a. any amount credited in a person’s books of account; or
b. any investment made or ownership of money or valuable article; or
c. funds from which expenditure was made; or
d. suppression of any production, sales, or any amount chargeable to tax; or
e. suppression of any item of receipt liable to tax in whole or in part.

13. MINIMUM TAX

Minimum tax on income of certain persons [Section 113]
Presently the excess of minimum tax amount over the actual tax liability is carried forward and
adjusted from tax payable for succeeding 5 tax years. The Bill seeks to abolish this concept.

14. RETURNS

Powers to enforce filing of returns [Section 114B]

The Bill seeks to enact section 114B earlier introduced vide Tax Laws (Third Amendment) Ordinance,
2021 dated September 15, 2021.

Section 114B empowers the Board to issue income tax general order in respect of persons who are
not appearing on active taxpayers’ list but are liable to file return under the provisions of the
Ordinance. The said income tax general order may entail any or all of the following consequences for
the persons mentioned therein, namely:
(a) disabling of mobile phones or mobile phone SIMS;
(b) discontinuance of electricity connection; or
(c) discontinuance of gas connection.

The Board or the Commissioner having jurisdiction over the person mentioned in the income tax
general order may order restoration of mobile phones, mobile phone SIMS and connections of
electricity and gas, in cases where he is satisfied that:
(a) the return has been filed; or
(b) person was not liable to file return under the provisions of the Ordinance.

No person shall be included in the said general order unless following conditions have been met with:
(a) notice under sub-section (4) of section 114 has been issued;
(b) date of compliance of the notice under sub-section (4) of section 114 has elapsed; and
(c) the person has not filed the return.

The action under this section shall not preclude any other action provided under the provisions of the
Ordinance.

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15. ASSESSMENTS
Best judgement assessment [Section 121]
The Commissioner is empowered to make best judgement assessment within a period of next 5 years
in respect of a given tax year. It has been proposed to increase this timeframe to 6 succeeding years.

Amendment of assessments [Section 122]

The existing maximum allowable timeframe for an assessment to be amended or further amended
under section 122 is 120 days. It has now been sought to enhance this timeframe to 180 days.

16. APPEALS
Alternative Dispute Resolution [Section 134A]
The Bill seeks to substitute the provisions related to alternate dispute resolution as under:
An aggrieved person may apply to the Board for the appointment of a committee for the resolution of
any hardship or dispute mentioned in detail in the application, which is under litigation in any court of
law or an Appellate Authority, except where criminal proceedings have been initiated, in connection
with any dispute pertaining to:
(a) the liability of tax of one hundred million and above against the aggrieved person or admissibility
of refund, as the case may be;
(b) the extent of waiver of default surcharge and penalty; or
(c) any other specific relief required to resolve the dispute;

The application for dispute resolution shall be accompanied by an initial proposition for resolution of
the dispute, including an offer of tax payment, from which, the applicant would not be entitled to retract.

The Board may, after examination of the application of an aggrieved person, appoint a committee,
within 45 days of receipt of such application in the Board, comprising:
(i) Chief Commissioner Inland Revenue having jurisdiction over the case;

(ii) person to be nominated by the taxpayer from a panel notified by the Board comprising –
(a) chartered accountants, cost and management accountants and advocates having a minimum
of 10 years’ experience in the field of taxation;
(b) officers of the Inland Revenue Service who have retired in BS 21 or above; or
(c) reputable businessmen as nominated by Chambers of Commerce and Industry:
Provided that the taxpayer shall not nominate a Chartered Accountant or an advocate if the said
Chartered Accountant or the advocate is or has been an auditor or an authorized representative
of the taxpayer; and
(d) person to be nominated through consensus by the members appointed under (i) and (ii) above,
from the panel as notified by the Board in (ii) above:
Provided that where the member under this clause cannot be appointed through consensus,
the Board may nominate a member proposed by the taxpayer eligible to be nominated as per
clause (ii).

The aggrieved person, or the Commissioner, or both, as the case may be, shall withdraw the appeal
pending before any court of law or an Appellate Authority, after constitution of the committee by the
Board, in respect of dispute.

The committee shall not commence the proceedings unless the order of withdrawal by the court of law
or the Appellate Authority is communicated to the Board:
Provided that if the order of withdrawal is not communicated within 75 days of the appointment of the
committee, the said committee shall be dissolved and provisions of this section shall not apply.

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The Committee appointed shall examine the issue and may, if it deems necessary, conduct inquiry,
seek expert opinion, direct any officer of the Inland Revenue or any other person to conduct an audit
and shall decide the dispute by majority, within one hundred and twenty days of its appointment:

Provided that in computing the aforesaid period of one hundred and twenty days, the period, if any, for
communicating the order of withdrawal shall be excluded.

The decision by the Committee shall not be cited or taken as a precedent in any other case or in the
same case for a different tax year.

The recovery of tax payable by a taxpayer in connection with any dispute for which a Committee has
been appointed shall be deemed to have been stayed on withdrawal of appeal up to the date of
decision by the Committee or the dissolution of the Committee whichever is earlier.

The decision of the committee shall be binding on the Commissioner and the aggrieved person.

If the Committee fails to decide within the period of 120 days, the Board shall dissolve the committee
by an order in writing and the matter shall be decided by the court of law or the Appellate Authority
which issued the order of withdrawal and the appeal shall be treated to be pending before such court
of law or the Appellate Authority as if the appeal had never been withdrawn.

The Board shall communicate the order of dissolution to the court of law or the Appellate Authority and
the Commissioner.

The aggrieved person, on receipt of the order of dissolution, shall communicate it to the court of law
or the Appellate Authority, which shall decide the appeal within six months of the communication of
said order.

The aggrieved person may make the payment of income tax and other taxes as decided by the
committee and all decisions, orders and judgments made or passed shall stand modified to that extent.

The Board may prescribe the amount to be paid as remuneration for the services of the members of
the Committee, other than the appointed member.

The Board may, by notification in the official Gazette, make rules in this regard.

17. IMPORTS [Section 148 & 169 | Pt II First Sch.]

The tax collected on commercial imports was made minimum tax vide the Finance Act, 2019. The Bill
now seeks to subject commercial imports to final tax on the basis of tax collected at import stage.

The rate for collection of final tax from commercial importers in respect of items specified in Part II of
Twelfth Schedule proposed to be increased from 2% to 4%.

Moreover, it has been sought to do away with the anomaly where the tax collected at the rate of 5.5%
from industrial undertakings on imports for their own use was being treated as minimum tax during tax
years 2021 and 2022 instead of advance tax.

However, the tax collected at imports shall be minimum tax on the income of every person arising from
imports of following goods:
(a) edible oil;
(b) packaging material;
(c) paper and paper board; or
(d) plastics:

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It has also been sought to empower the adjusted Board with the approval of Minister in-charge to add
or omit or amend any entry from the above list by notification in the official Gazette.

The rate for collection of advance tax related to mobile phones proposed to be rationalized for CKD/
SKD and CBU conditions for last two brackets. The proposed updated table of rates is as below:

Tax in Rs.
C & F Value of mobile phone
(in US Dollar) In CBU In CKD/ SKD
Condition Condition
Up to 30 except smart phones 70 NIL
Exceeding 30 and up to 100 and smart phones up to 100 100 NIL
Exceeding 100 and up to 200 930 NIL
Exceeding 200 and up to 350 970 NIL
Exceeding 350 and up to 500 3,000 5,000
Exceeding 500 5,200 11,500

18. PAYMENTS TO NON-RESIDENTS [Section 152]

It has been sought to introduce two new sub-sections to section 152 as under, whereby the tax
collected shall be final tax:

(1DC) Every exchange company licensed by the State Bank of Pakistan shall deduct tax at the time
of making payment of service charges or commission or fee, by whatever name called, to
the global money transfer operators, international money transfer operators or such other
persons engaged in international money transfers or cross-border remittances for facilitating
outward remittances, at the rates given in Division IV, Part I of the First Schedule:

Provided that where such person retains service charges or commission or fee, by whatever
name called from the amount payable to the exchange company on any account, the
exchange company shall be deemed to have paid the service charges or commission or fee,
by whatever name called and the exchange company shall collect the tax accordingly.

(1DD) Every banking company while making payment to card network company or payment
gateway or any other person, of any transaction fee or licensing fee or service charges or
commission or fee by whatever name called or interbank financial telecommunication
services, shall deduct tax at the rates given in Division IV, Part I of the First Schedule:

Provided that where card network company or payment gateway or any other person retains
money in relation to aforementioned services from the amount payable to the banking
company on any account, the banking company shall be deemed to have paid the amount
and the banking company shall collect the tax accordingly.

19. EXPORT OF SERVICES [Section 154A | Div IVA Part III First Sch.]
The Bill seeks to introduce the following final tax rates for collection of tax from export of services
instead of the unified rate of 1%:

Types of Receipts Rate of Tax

Export proceeds of Computer software or IT services or IT Enabled 0.25% of proceeds
services by persons registered with Pakistan Software Export Board
Any other case 1% of proceeds

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20. COLLECTION OR DEDUCTION OF WITHHOLDING TAX

Withholding tax on services [Section 153(1)(b) | Div III Pt III First Sch.]
It has been sought to subject REIT management services and services rendered by National Clearing
Company of Pakistan Limited in the list of services to which withholding tax rate apply at 3% of gross
amount payable.

Payment of tax collected or deducted by SWAPS agents [Section 164A]

The Bills seeks to bring a new concept of Synchronized Withholding Administration and Payment
System through newly proposed sections 164A, whereby the Board may, by notification in the official
gazette, notify any person or class of persons required to deduct or collect tax under the Ordinance to
integrate with Synchronized Withholding Administration and Payment System and to act as SWAPS
agent within the time and in the manner as may be prescribed.

The tax collected or purported to be collected or deducted or purported to be deducted under the
Ordinance by a notified SWAPS agent and credited to the Commissioner through digital mode, shall
be treated to have been paid under section 160 of the Ordinance.

Where tax has been paid by a notified SWAPS agent, copy or number of SWAPS Payment Receipt
(SPR) shall replace copy or number of Computerized Payment Receipts (CPR) for the purposes of the
Ordinance.

Any notified SWAPS agent shall not be eligible for tax credit under Part X of Chapter III of the
Ordinance and exemption under any of the provisions of the Ordinance if notified SWAPS agent fails
to integrate with Board.

All persons from whom the tax has been collected or deducted by the notified SWAPS agents shall be
eligible for credit of tax withheld against SPR issued by SWAPS Agent.

All other provisions of the Ordinance shall, mutatis mutandis, apply to the notified SWAPS agents.

Advance tax on motor vehicles [Section 234 | Div III Part IV First Sch.]
The Bill seeks to introduce collection of advance tax based on the air conditioning facility in addition to
the seating capacity while proposing to increase the rates:

Proposed Rates per Seat per

Existing Rate Annum (Rs.)
Seating
per Seat per
Capacity Non-
Annum (Rs.) Airconditioned
Airconditioned
4 to 10 50 500 1,000
persons
10 to 20 100 1,500 2,000
persons
Above 20 300 2,500 4,000
persons

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Advance tax on Purchase, Registration & Transfer of Motor Vehicles

[Section 231B | Div VII Part IV First Sch.]
The Bill has been sought to increase the following rates of advance tax based on engine capacity at
the time of purchase and registration of Motor Vehicles:

Existing Rate Proposed Rate

Engine Capacity
(Rs.) (Rs.)
Up to 850cc 7,500 10,000
851cc to 1000cc 15,000 20,000
1001cc to 1300cc 25,000 25,000
1301cc to 1600cc 50,000 50,000
1601cc to 1800cc 75,000 150,000
1801cc to 2000cc 100,000 200,000
2001cc to 2500cc 150,000 300,000
2501cc to 3000cc 200,000 400,000
Above 3000cc 250,000 500,000

It also has been sought to collect 3% advance tax on Electric Vehicles where the value of vehicle is
Rs. 5 Million or more. The rate of advance tax for imported vehicles to be applicable on imports value
as increased by customs duty, sales tax & federal excise duty. In case of locally manufactured vehicles
the rate to apply on invoice value.

Moreover, the advance tax also to be collected on these Electric Vehicles at the time of transfer at Rs.
20,000 and this rate to be reduced at 10% annually from the date of first registration in Pakistan.

Advance tax on sale or transfer of immovable property

[Section 236C | Div X Part IV First Sch.]
Advance tax is collectible from sellers upon sale or transfer of immoveable property at 1% in case the
holding period of property is up to four years. It has now been sought to increase this minimum holding
period threshold from four to ten years and increase the rate for collection of advance tax from 1% to
2%.

Advance tax on TV plays and advertisements [Section 236CA | Div XA Part IV First Sch.]
A new section 236CA was introduced vide the Finance (Supplementary) Act, 2022 dated January 15,
2022, whereby minimum tax has to be collected foreign-produced TV plays and advertisements
starring foreign actors. The Bill now seeks to adopt the rates table and reducing rate for said
advertisements from existing Rs. 500,000 to. Rs. 100,000 per second.

Collection of advance tax by educational institutions

[Section 236I | Div XVI Part IV First Sch.]
Advance tax is collectible from non-filers on education fee where such fee exceeds Rs. 200,000 per
annum. The Bill seeks to abolish this tax.

Advance tax on purchase or transfer of immovable property

[Section 236K | Div XVIII Part IV First Sch.]
The rate for collection of advance tax on purchase of immoveable property has been sought to be
increased from 1% to 2%.

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Payment to residents for use of machinery and equipment

[Section 236Q | Div XXIII Part IV First Sch.]
Payments to resident persons for use or right to use industrial, commercial and scientific equipment
are subject to deduction of tax at 10%. The Bill seeks to abolish this collection.

Advance tax on persons remitting amounts abroad through credit or debit or prepaid cards
[Section 236Y | Div XXVII Part IV First Sch.]
Banks were required vide the Finance Act, 2018 to collect advance tax at the time of remitting funds
outside Pakistan on credit card/ debit card or prepaid cards. Later this requirement was done away
vide the Finance Act 2021. It has now been proposed to reinstate this advance tax at 1% of the amount
remitted.

21. RECORDS, INFORMATION COLLECTION AND AUDIT

Records [Section 174]
The accounts and documents are required to be maintained for six years after the end of the tax year
to which they relate. It has now been sought to introduce a new proviso which aims that this limitation
not to apply to records pertaining to income, assets, expenses or transactions to which of section
111(2)(ii) applies.

National Database and Registration Authority (NADRA) [Section 175B]

It has been sought to enact section 175B earlier introduced vide Tax Laws (Third Amendment)
Ordinance, 2021 dated September 15, 2021. The section reads as under:
(1) The National Database and Registration Authority shall, on its own motion or upon application by
the Board, share its records and any information available or held by it, with the Board, for
broadening of the tax base or carrying out the purposes of the Ordinance.
(2) The National Database and Registration Authority may:
(i) submit proposals and information to the Board with a view to broadening the tax base;
(ii) identify in relation to any person, whether a taxpayer or not:
(a) income, receipts, assets, properties, liabilities, expenditures, or transactions that have
escaped assessment or are under-assessed or have been assessed at a low rate, or have
been subjected to excessive relief or refund or have been mis-declared or misclassified
under a particular head of income or otherwise;
(b) the value of anything mentioned in sub-clause (a) of clause (ii), if such value is at variance
with the value notified by the Board or the district authorities, as the case may be, or if no
such value has been notified the true or market value; and
(iii) enter into a memorandum of understanding with the Board for a secure exchange and
utilization of a person's information.
(3) The Board may use and utilize any information communicated to it by the National Database and
Registration Authority and forward such information to an income tax authority having jurisdiction
in relation to the subject matter regarding the information, who may utilize the information for the
purposes of the Ordinance.
(4) The National Database and Registration Authority may compute indicative income and tax liability
of anyone mentioned under sub-sections (1) or (2) by use of artificial intelligence, mathematical or
statistical modeling or any other modern device or calculation method.
(5) The indicative income and tax liability computed by the National Database and Registration
Authority under sub-section (4) shall be notified by the Board to the person in respect of whom
such indicative income and tax liability has been determined, who shall have the option to pay the
determined amount on such terms, conditions, installments, discounts, reprieves pertaining to
penalty and default surcharge, and time limits that may be prescribed by the Board.

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(6) In case the person against whom a liability has been determined under sub-section (4), does not
pay such liability within the time prescribed under sub-section (5), the Board shall take action under
the Ordinance, upon the basis of tax liability computed under sub-section (4).
(7) If the person against whom the liability has been determined under sub-section (4) pays such
liability in terms of sub-section (5), such payment shall be construed to be an amended assessment
order under section 120 or sub-section (1) of section 122 or sub-section (4) of section 122, as the
case may be.
(8) For the purposes of sub-sections (4) and (5), the Board may prescribe the extent of installments,
reprieves pertaining to penalty and default surcharge and time limits.

Audit [Section 177]

It has been sought to do away with issuance of audit report by Commissioner upon completion of audit
before proceeding for amending the assessment order under section 122.

22. TAXPAYER’S REGISTRATION

Record of beneficial owners [Section 181E]
The Bill seeks that companies and association of persons shall be required to electronically furnish
particulars of its beneficial owners in such form and manner as may be prescribed. Moreover,
companies and association of persons also to update the particulars of their beneficial owners as and
when there is a change in the particulars of the beneficial owners.

23. OFFENCES AND PENALTIES [Section 182]

Following new offences and penalties are proposed to be enacted, adopted or amended:
a. Sr. No. 1 | Penalty for failure to furnish return of income u/s 114 by due date, higher of:
(i) 0.1% of the tax payable for each day of default
(ii) Rs. 1,000 for each day of default
In case individual having income of 75% or more from salary, the penalty is to be
imposed at a minimum amount of Rs. 10,000.
Penalty for delayed filing of return of income to be reduced by 75%, 50% and 25%
if the return is filed within 1, 2 & 3 months respectively after the due date or
extended due date of filing of return.
In other cases, the penalty shall be Rs. 50,000. However, the maximum penalty
shall not exceed 200% of tax payable by the person in a tax year.

b. Sr. No. 30 | Penalty for contravention to the provisions of section 181E is to be imposed at Rs.
1,000,000 for each default.

c. Sr. No. 31 | Person fails to integrate or perform roles and functions as specified, after being
duly notified by the Board as SWAPS Agent, the penalty is to be imposed as:
(i) Rs.50,000 for first default of 07 days;
(ii) Rs. 100,000 for second default of next 07 days
(iii) Rs. 50,000 for each week after the second consecutive week of default
However, the above penalty shall not impose on cases where an extension is
granted by the Commissioner.

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d. Sr. No. 32 | Person, who is integrated for monitoring, tracking, reporting or recording of sales,
services and similar business transactions with the Board or its computerized
system but fails to conduct transactions in a manner to avoid monitoring, tracking,
reporting or recording of such transactions, or issues an invoice which does not
carry the prescribed invoice number or QR code or bears duplicate invoice number
or counterfeit QR code, or defaces the prescribed invoice number or QR code, or
any person who abets commissioning of above offence. Penalty shall be higher of:
(i) Rs. 500,000 or
(ii) 200% of the amount of tax involved

e. Sr. No. 33 | Person who fails to integrate his business for monitoring, tracking, reporting or
recording of sales, services and similar business transactions with the Board or its
computerized system, fails to get himself registered under the Ordinance, and if
registered, fails to integrate in the manner as required under the law. The penalty
for above offence shall be:
(i) Rs. 1,000,000
(ii) The same offence commits again after a period of 2 months after imposition of
penalty at (i), his business premises shall be sealed till such time he integrates his
business in the manner as stipulated under section 237A(3) of the Ordinance.

f. Sr. No. 34 | Person who fails to get his business integrated under section 237A(3) of the
Ordinance, and if registered, fails to integrate in the manner as required under the
law and rules made thereunder. The penalty shall be imposed as under:
i) Rs 500,000 for first default;
ii) Rs 1,000,000 for second default after 15 days of order for first default;
iii) Rs 2,000,000 for third default after 15 days of order for second default;
iv) Rs. 3,000,000 for fourth default after 15 days of order for third default:
In case a person fails to integrate his business within 15 days of imposition of
penalty for fourth default, his business premises shall be sealed till such time he
integrates his business under section 237A(3) of the Ordinance.
Penalty for first default shall be waived by the Commissioner, if the person
integrates his business with the Board's computerized system before imposition of
penalty for second default.

24. OFFENCES AND PROSECUTIONS

Prosecution for non-compliance with certain statutory obligations [Section 191]
Failure towards certain compliances is punishable, on conviction, with a fine or imprisonment for a
term not exceeding one year or both. It is proposed to include the below two non-compliances within
the list:
(a) Integrating business with Board’s computerized system; or
(b) Generating tax invoice verifiable by the Board’s system.

25. ADMINISTRATION
Condonation of time limit [Section 214A]
The Board is empowered to extend the time limit for any application to be made or any act or thing to
be done. Now it has been sought to give these powers to the Board on retrospective basis.

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26. MISCELLANEOUS
Electronic record [Section 237A(3)]
A new definition for “Integrated Enterprise” was introduced earlier vide Finance Act, 2020, which
means a person integrated with the Board through approved fiscal electronic device and software, and
who fulfills obligations and requirements for integration as may be prescribed. The Bill now seeks that
no sale shall be made or service shall be rendered without generating fiscal invoices as prescribed in
case of an integrated enterprises.

Prize schemes to promote tax culture [Section 237B]

With a view to promote tax culture, the Bill seeks to empower the Board to prescribe prize schemes to
encourage the general public to make purchases or avail services from integrated enterprises issuing
tax invoices. It has also been sought to empower the Board to prescribe procedure for mystery
shopping in respect of invoices issued by integrated enterprises randomly.

27. EXEMPTIONS FROM TOTAL INCOME [Second Schedule Part I]

Exemptions proposed to be granted

Withdrawal of balance from voluntary pension system [Clause (23A)]

It has been proposed to grant exemption for withdrawal of accumulated balance from voluntary pension
system under Voluntary Pension System Rules, 2005.

Income derived by institutions [Clause (66)]

It has been proposed to grant unconditional exemption from tax on total income to the following
institutions:
(a) Pakistan Mortgage Refinance Company Limited;
(b) The Pakistan Global Sukuk Programme Company Limited;
(c) Karandaaz Pakistan from tax year 2015 onwards;
(d) Pakistan Sweet Homes Angles and Fairies Place;
(e) Public Private Partnership Authority for tax year 2022 and subsequent four tax years;
(f) Dawat-e-Islami Trust; and
(g) Hamdard Laboratories (Waqf) Pakistan.

Extension in period for exemption

CIS, REIT and SPVs [Clause (99)]
It has been sought to grant the benefit to Collective Investment Schemes, Real Estate Investment
Trusts and Special Purpose Vehicles of accumulated losses while reckoning at least 90% distribution
of income to remain exempt from income tax.

Exemptions withdrawn
Clause (23B) | Monthly pension from voluntary pension system

Clause (102A) | Subsidy by the Federal Government for implementation of any orders on behalf
of the Federal Government

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28. REDUCTION IN TAX RATES [Second Schedule Part II]

Exemptions proposed to be granted

Supply-chain for steel industry [Clause (24C) | Section 153]

Clause (24C) | Section 153 | It has been sought to enact the reduced rate on supply of goods at
0.25% on distributors, dealers, sub-dealers, wholesalers and retailers
of steel subject to the same conditions as presently applicable to fast
moving consumer goods, fertilizer, electronics excluding mobile
phones, sugar, cement and edible oil. The conditions include:
a. Borne on the Active Taxpayers’ Lists issued under the provisions
of the Sales Tax Act, 1990 and the Income Tax Ordinance, 2001
b. For retailers this concession is limited to Tier-1 retailers as defined
under Sales Tax Act, 1990, who are integrated and configured with
Board or its computerized system for real time reporting of sales or
receipts.

Clause (24D) | Section 113 | It has been sought to enact the reduced rate for Minimum Tax u/s 113
at 0.25% on distributors, dealers, sub-dealers, wholesalers and
retailers of steel subject to the same conditions as presently applicable
to fast moving consumer goods, fertilizer, electronics excluding mobile
phones, sugar, cement and edible oil. The conditions include:
a. Borne on the Active Taxpayers’ Lists issued under the provisions
of the Sales Tax Act, 1990 and the Income Tax Ordinance, 2001
b. For retailers this concession is limited to Tier-1 retailers as defined
under Sales Tax Act, 1990, who are integrated and configured with
Board or its computerized system for real time reporting of sales or
receipts.

29. REDUCTION IN TAX LIABILITY [Second Schedule Part III]

Enhancement in concession
Bahbood Savings Certificate, Pensioners Benefit Account, etc. [Clause (6)]
The Bill seeks to further lower the rate of tax on yield or profit on investment in Bahbood Savings
Certificate or Pensioners Benefit Account and Shuhada Family Welfare Account from existing 10% to
5%.

Exemptions proposed to be withdrawn

Clause (1) | Allowances received by flight engineers, navigators of Pakistan Armed Forces,
Pakistani Airlines or Civil Aviation Authority, Junior Commissioned Officers or
other ranks of Pakistan Armed Forces and submarine allowance by the officers
of the Pakistan Navy presently being taxed at 2.5%

Clause (1AA) | Allowances received by pilots of any Pakistani airlines presently being taxed at
7.5%

Clause (9A) | 50% reduced rate for Capital Gains on disposal of immovable property on first
sale of immovable property allotted to ex-servicemen and serving personal of
Armed Forces or ex-employees or serving personnel of Federal and Provincial
Governments
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30. EXEMPTIONS FROM SPECIFIC PROVISIONS [Second Schedule Part IV]

Exemptions proposed to be granted

Exemptions from minimum tax u/s 113 [Clause (11A)(xlv)]
The Bill seeks to enact exemption from minimum tax u/s 113 to mobile phone manufacturers engaged
in the local manufacturing of mobile phone devices. This was earlier brought to statute vide Tax Laws
(Third Amendment) Ordinance, 2021.

Exemptions from tax u/s 148

Clause (12O) | On import of drones donated by Ministry of Agriculture and Rural Affairs (MARA),
Government of China to Pakistan through Sea Route
Clause (12P) | On import of cinematographic equipment as notified by the Federal Government.

Exemptions from collection & deduction of withholding taxes [Clause (120)]

The Bill seeks to immune the persons mentioned in Table 1 of clause (66) of Part I of the second
schedule as recipients of payment from the provisions of Divisions II and III of Part V of Chapter X and
Chapter XII of the Ordinance for deduction or collection of withholding subject to the condition that
such persons shall continue to perform functions as withholding and collecting agent under the
aforesaid provisions.

Immunity from audit [Clause (105A)]

It has been sought that the provisions of section 177 and 214C shall not apply to a person whose
income tax affairs have been audited in any of the preceding 4 tax years. However, the Commissioner
may select a person under section 177 for audit with approval of the Board.

31. INSURANCE BUSINESS [Fourth Schedule]

Tax on high earning persons for poverty alleviation [Rule 6DA]
It has been sought that insurance companies with income exceeding Rs. 300 Million shall also be
subject to tax for poverty alleviation at 2% on income.

32. EXPLORATION AND EXTRACTION OF MINERAL DEPOSITS [Fifth Schedule]

Tax on high earning persons for poverty alleviation [Rule 4AB]
The Bills seeks that taxpayers with income exceeding Rs. 300 Million shall also be subject to tax for
poverty alleviation at 2% on income.

33. BANKING COMPANIES

Super tax [Section 4B]
The Bills seeks to enact the extension in the applicability of super tax under section 4B of the Ordinance
to all tax years onwards to 2021.

Computation of profits & gains of a banking company and tax thereon [Seventh Schedule]
Rule (6A) | The Bill seeks to substitute provisions related to taxation of income attributable to
investment in the Federal Government securities as under:
“For tax year 2022 and onwards, the taxable income attributable to investment in the
Federal Government securities shall be taxed at the rate of:
(i) 55% instead of rate provided in Division II of Part I of the First schedule if the gross
advances to deposit ratio as on last day of the tax year is up to 40%;

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(ii) 49% instead of rate provided in Division II of Part I of the First schedule if the gross
advances to deposit ratio as on last day of the tax year exceeds 40% but does not
exceed 50%; and
(iii) at the rates provided in Division II of Part I of the First schedule if gross advances
to deposit ratio as on last day of the tax year exceeds 50%.
Explanation.- For the removal of doubt it is clarified that the tax rate under this sub-rule
is applicable to total income attributable to total investment in Federal Government
securities.
Rule (7CA) | Banking companies with income exceeding Rs. 300 Million proposed to be subject to
tax for poverty alleviation at 2% on income.

34. PERSONS NOT APPEARING IN THE ACTIVE TAXPAYERS’ LIST [Tenth Schedule]
Rule (1) | Tax on registration of motor vehicle (u/s 231B): The Bill seeks that tax be collected
at three times on registration of motor vehicles in case of non-filers.
Tax on purchase of immoveable property (u/s 236K): The Bill seeks that tax be
collected at three and half times on purchase of immoveable property by non-filers.

Rule (10) | 100% increase in tax rate: It has been sought that the 100% increase in the rate of
collection of advance tax shall not be applicable on proceeds from export services u/s
154A.
The Bill also seeks to omit collection of taxes at double rate due to proposed omission
of sections 236I (Advance tax on educational fee) and 236Q (Advance tax on renting of
equipment, etc.).

35. TWELFTH SCHEDULE

PART I | List of items on which tax at import stage is collected at 1%: The Bill seeks to insert
a new entry for PCT Code 27.01 (Coal; briquettes, ovoids and similar solid fuels
manufactured from coal)

PART II | List of items on which tax at import stage is collected at 2%: It has been sought to
insert the following new entries:
PCT Code Description
8504.3100 SMD Inductors for LED Bulb and Lights.
8504.4090 Constant Current Power Supply of LED Lights and Bulbs.
8532.2200 Electrical Capacitors Aluminum Electrolytic for LED Bulbs and Lights.
8532.2200 Electrical Capacitors Aluminum Electrolytic for LED Bulbs and Lights.
8539.9020 Base Cap for all Kinds of LED Bulbs
8539.9090 Bare or Stuffed Metad Clad Printed Circuit Boards (MCPCB) for all kinds of LED Bulbs.
8539.9090 Housing/Shell, Shell Cover and Base Cap for all Kinds of LED Bulbs.
9001.9000 Lenses for LED Bulbs and Lights.
9405.1090 Housing/Shell, Shell Cover and Base Cap for all Kinds of LED Lights.
9405.9900 Bare or Stuffed Metal Clad Printed Circuit Boards (MCPCB) for all kinds of LED Lights.

36. THIRTEENTH SCHEDULE

It has been sought to enact a new entry no. 63 earlier inserted vide Tax Laws (Third Amendment)
Ordinance, 2021 related to entities mentioned in Table-I of clause (66) of Part-I of the Second Schedule
of the Ordinance for allowability of tax credit on donations u/s 61 of the Ordinance.

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SECTION 5 SALES TAX & FEDERAL EXCISE DUTY

1. SALES TAX ACT, 1990

Definitions

Goods [Section 2(12)]

The Bill seeks to expand the scope of definition by adding the production, transmission and distribution
of electricity for clarification.

Sales tax [Section 2(29A)]

It has been sought to exclude the scope of sales tax on fee and service charges imposed and collection
by Board with approval of Federal Minister-in-charge, by notification as covered under section 76 of
the Sales Tax Act, 1990.

Supply [Section 2(33)(e)]

The Bill seeks to add new sub clause (e) to expand the scope of supplies for the production,
transmission and distribution of the electricity as it has also been proposed to add in the definition of
goods in section 2(12) of the Sales Tax Act, 1990.

Tier-1 Retailer [Section 2(43)(ga)]

It has been sought to extend the scope of Tier-1 retailer by adding a new subclause to include the
persons engaged in supply of articles of jewelry, or part thereof, of precious metals or of metal clad
with precious metal as Tier-1 Retailer.

Scope of tax
It has been sought to make the following amendments to the definition of scope of tax:
Section 3(1A) | Extend the scope of further sales tax i.e., 3% to those persons who is not
active taxpayer regardless of being registered person in sales tax.

Section 3(9) | The Bill seeks to refix the rate of sales tax to be collected from retailers by
electricity supplier, other than those falling in Tier-1 retailer.

Existing Proposed
Range of Bill Amount of tax Range of Monthly Bill
Percentage
Amount (Rs.) (Rs.) Amount (Rs.)
5% Up to 20,000 3,000 Up to 30,000
7.5% Above 20,000 5,000 Up to 50,000
10,000 Above 50,000

Section 3(9) | The Bill seeks to insert new proviso to empower Board that through a general
order it can prescribe any person or class of person who shall be liable to
pay sales tax to pay Rupees fifty thousand per month through their monthly
electricity bill.

Section 3(11) | Seek to insert new sub section that empowers board to issue notifications in
the official gazette notification for integration of any person or class of person
to integrate their invoice issuing machine with the Board’s Computerize
System for real time reporting of sales in specific manner, mode and date as
may be prescribed.

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Time and manner of payment [Section 6(5)]

It has been proposed that the Federal Government, through a notification, may allow the payment of
Sales Tax on an installments basis by the Federal or Provincial Governments, or any public sector
organization on the import or supply of any goods or class of goods. The proposed facility may be
allowed subject to any conditions, limitations and from any previous date, as specified in the
notification.

Tax credit not allowed [Section 8(1)(m)]

It has been proposed to provide relief by deleting this sub section which earlier disallows the input tax
on supplies made to unregistered person, on pro-rata basis, for cases where sales tax invoice do not
bear invoice particulars as stipulated in section 23 of the Sales Tax Act, 1990.

Adjustable input tax [Section (8B)(1)]

The proposed Bill seeks to impose limitation of input tax adjustment to 90% of its output by including
the public limited companies listed in Pakistan Stock Exchange in the purview of section 8B of the
Sales Tax Act, 1990 which is currently excluded from this limitation.

Discontinuance of gas and electricity connections [Section (14AB)]

The proposed Bill seeks to empowered the Board to direct the gas and electricity distribution
companies for disconnection of any person utility connection that falls in Tier-1 retailer but, who fail to
register for sales tax purpose or notified Tier-1 retailer registered but not integrate with the Board
computerize system. The Board shall notify the restoration of utility connection through sales tax
general order upon registration or integration by the person.

Tax invoices [Section 23(1)(b)]

The Bill seeks to withdraw the requirement to mention CNIC/ NTN number in case of supplies made
to unregistered person.

Offences and penalties [Section (33)]

It has been proposed to amend Serial No.24, by including the requirement of a QR code when issuing
an invoice. In addition to this, the Bill also seeks that defacing the prescribed invoice number or
barcode or QR code, will be considered an offence.

Sales tax on retail price [Third Schedule]

The Bill proposes to substitute the PCT heading at Sr. 7 of Third Schedule of the Sales Tax Act, 1990:
Existing Proposed

Heading Nos. of the Heading Nos. of the

Sr. Description First Schedule to the Sr. Description First Schedule to the
Customs Act, 1969 Customs Act, 1969

7. Detergents 3402.2000 7. Detergents Respective headings

Exemptions [Sixth Schedule]

The Bill proposes to omit following two PCT codes/ headings from Table I:
Heading Nos. of the First Schedule to the
Sr. Description
Customs Act, 1969

13 Edible vegetables [imported from Afghanistan] including roots and 0709.5910, 0709.5990
tubers, [ except ware potato and onions], whether fresh, frozen or
otherwise preserved (e.g., in cold storage) but excluding those bottled
[or] canned

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The Bill proposes to substitute the following amendment in Table I:

Existing Proposed

Heading Nos. of the First Heading Nos. of the First

Sr. Description Schedule to the Schedule to the Customs
Customs Act, 1969 Act, 1969

32. Newsprint and books but excluding brochures, leaflets 4801.0000, 4901.9100, Respective Headings
and directories 4901.9990, 4902.1000,
4902.9000 and 4903.0000

45. Dextrose and saline infusion giving sets along with 9027.8000 Respective Headings
empty non-toxic bags for infusion solution, Dextrose and
saline infusion giving sets, Artificial parts of the body,
Intra-Ocular lenses and Glucose testing equipment

120. Diagnostic kits or equipment, 3822.0000 Respective Headings

namely: -
HIV Kits, 4C Es Trionyx, 5C Cell control Lnormal,
Bovine precision multi, sera, Pregnancy test, DNA SSP
DRB Generic, IC, Reticulocyte count, (control) retic C
Control, Kit for vitamin B12, estimation, Ferritin kit, HEV
(Hepatitis E virus), ID-DA Cell, Urine Analysis Strips,
Albumin beg, Cratinin sysi, Ring, Detektiion cups, ISE
Standard, Alkaline phosphatase (Alb), Bilirubin kit, HDL
Cholesterol, Ck creatinin kinase (mb), Ck nac, Glucose
kit, Ammonia Modular, Lac, Ldh kit (lactate,
dehydrogenase kit), Urea uv kit, Ua plus, Tina quant,
Crp control, Aslo tin, Proteins, Lipids, HDL/LDL
cholesterol, Protein kit, U, Control Sera, Pac Control,
HCV, UIBC (Unsaturated iron, binding, capacity),
U/CSF, Inorganic Phosphorus kit, Kit, amplicon kit (for
PCR), Ige, Lc hsv, Oligo, NA/K/CL, Hcy, Standard [or
calibrated], Hla B27, Liss Coombs, Typhoid kit, HCV
amp, Urine test strips, Strips for Sugar test, Blood
glucose test strips, Kits for automatic cell, separator for
collection of platelets, Elisa or Eclia kit, PCR kits,
Immunoblast (western blot test), I.C.T.
(Immunochromatographic kit), CBC Reagent (For
hematology analyzer), Complete blood count reagent

133. Pesticides and their active ingredients registered by the

Department of Plant Protection under the Agricultural
Pesticides Ordinance, 1971(II of 1971), stabilizers,
emulsifiers and solvents, namely:−

Other orgonosulpher compounds 2930.9090 Respective headings

- Ethion, Methamidophos Technical Material
- Dimethysulfoxid

Ingredients for pesticides 2931.0010 Respective headings

Other Ingredients for pesticides 2931.0090 Respective headings

Ingredients for pesticides 2932.2920 Respective headings

Ingredients for pesticides 2933.3930 Respective headings

- Abamectin, Emamectin Technical Material 2941.9050 Respective headings

Sulphonic acid (Soft) 3402.1110 Respective headings

Other surface-active agents 3402.1190 Respective headings

Catonic 3402.1290 Respective headings

Non ionic surface active agents 3402.1300 Respective headings

Other organic surface-active agents 3402.1990 Respective headings

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The Bill proposes to substitute the following amendment in Table I:

Existing Proposed

Heading Nos. of Heading Nos. of

the First Schedule the First Schedule
Sr. Description Sr. Description
to the Customs to the Customs
Act, 1969 Act, 1969

137. Paper weighing 60 g/m2 4802.5510, 137. Paper weighing 60 g/m2 art 4802.5510,
art paper and printing 4810.1990, paper and printing paper, 4810.1990,
paper for printing of Holy art card for printing of Holy 4810.1910
Quran imported by 4810.1910 and Quran imported by Federal 4802.6990 and
Federal or Provincial 4802.6990 or Provincial Governments 4810.2900
Governments and and Nashiran-e-Quran as
Nashiran-e-Quran as per quota determined by
per quota determined by IOCO
IOCO

The Bill proposes to insert following new items in Table I:

Heading Nos. of the First
Sr. Description Schedule to the Customs
Act, 1969

163. Goods imported by various agencies of the United Nations, diplomats, diplomatic missions, 99.01, 99.02, 99.03 and
privileged persons and privileged organizations which are covered under various Acts and, 99.06
Orders, rules and regulations made thereunder; and agreements by the Federal
Government:

Provided that such goods are charged to zero-rate of customs duty under the Customs Act,
1969 (IV of 1969), and the conditions laid therein.

Provided further that exemption under this serial shall be available with effect from the 15th
day of January, 2022.
164. Photovoltaic cells whether or not assembled in modules or made up into panels 8541.4200 and 8541.4300
165. Goods imported by or donated to hospitals run by the non-profit making institutions subject 99.13 and 99.14,
to the similar restrictions, limitations, conditions and procedures as are envisaged for the
purpose of applying zero-rate of customs duty on such goods under the Customs Act, 1969,
(IV of 1969).
166. Goods excluding electricity and natural gas supplied to hospitals run by the charitable Respective headings
hospitals of fifty beds or more.
167. Goods temporarily imported into Pakistan, meant for subsequent exportation charged to 99.19, 99.20 and 99.21
zero-rate of customs duty subject to the similar restrictions, limitations, conditions and
procedures as are envisaged for the purpose of applying zero-rate of customs duty on such
goods under the Customs Act, 1969 (IV of 1969).
168. Tractor 8701.9220 and 8701.9320
169. Seeds for sowing Respective heading
170. Machinery, equipment and materials imported either for exclusive use within the limits of Respective headings
Export Processing Zone or for making exports therefrom, and goods imported for
warehousing purpose in Export Processing Zone, subject to the conditions that such
machinery, equipment, materials and goods are imported by investors of Export processing
Zones, and all the procedures, limitations and restrictions as are applicable on such goods
under the Customs Act, 1969 (IV of 1969) and rules made thereunder shall mutatis
mutandis, apply.

The Bill proposes to omit following items from Table II:

Sr. Description PCT Heading

11. Supply of ware potato and onions 0701.9000 and 0703.1000

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The Bill proposes to substitute following items from Table II:

Existing Proposed

Heading Nos. of the First Schedule to Heading Nos. of the First

Sr. Description the Customs Act, 1969 Schedule to the Customs Act,
1969

32. Yogurt, excluding that sold in retail 0403.1000 Respective headings

packing under a brand name
45. Edible vegetables including roots and 0701.1000, 0702.0000, 0703.2000, Respective headings
tubers whether fresh, frozen or 0703.9000, 0704.1000, 0704.2000,
otherwise reserved (e.g. in cold 0704.9000, 0705.1100, 0705.1900,
storage) but excluding those bottled 0705.2100, 0705.2900, 0706.1000,
or canned. 0706.9000, 0707.0000, 0708.1000,
0708.2000, 0708.9000, 0709.1000,
0709.2000, 0709.3000, 0709.4000,
0709.5100, 0709.5910, 0709.5990,
0709.6000, 0709.7000, 0709.9000,
0710.1000, 0710.2100, 0710.2200,
0710.2900, 0710.3000, 0710.4000,
0710.8000, 0710.9000, 0712.2000,
0712.3100, 0712.3200, 0712.3300,
0712.3900 and 0712.9000

The Bill proposes to insert following new items in Table II:

Heading Nos. of the First
Sr. Description Schedule to the Customs
Act, 1969

52. Supply of articles of jewelry, or parts thereof, of precious metal or of metal clad with 71.13
precious metal on which tax has been paid at the import stage @ 4%.
53. Prepared food or foodstuff supplied by Restaurants and caterers Respective heading

The Bill proposes to insert following new items in Table III:

PCT
Sr. Description Conditions
Heading

22. 1. Machinery, equipment and Respective (i) This concession shall also be available to primary
spares meant for initial Headings contractors of the project upon fulfilment of the
installation, balancing, following conditions, namely:-
modernization, replacement or (a) the contractor shall submit a copy of the contract
expansion of projects for power or agreement under which he intends to import
generation through hydel, oil, the goods for the project;
gas, coal, nuclear and renewable
energy sources including under (b) the Chief Executive or head of the contracting
construction projects entered into company shall certify in the prescribed manner
an implementation agreement and format as per Annex-A that the imported
with the Government of Pakistan goods are the projects bona fide requirement; and
prior to 15th day of January, (c) the goods shall not be sold or otherwise disposed
2022. of without prior approval of the FBR on payment
of sales tax leviable at the time of import;
2. Construction machinery, (ii) Temporarily imported goods shall be cleared against a
equipment and specialized security in the form of a post-dated cheque for the
vehicles, excluding passenger differential amount between the statutory rate of sales
vehicles, imported on temporary tax and the amount payable along with an undertaking
basis as required for the to pay the sales tax at the statutory rates in case such
construction of project. goods are not re-exported on conclusion of the project.

Reduce Rate Subject to Conditions and Limitations [Eight Schedule]

The Bill proposes to omit the following entries from Table I:
Sr. Description PCT Heading Rate of Sales tax Conditions

25. Agricultural tractors 8701.9220 and 5%

701.9320
47. Locally produced coal 27.01 Rs. 425 per metric ton or 17% Nil
ad valorem, whichever is higher
75. Import of electric vehicle in CBU conditions 8703.8090 12.5%

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The Bill seeks to adopt change in rate of sales tax and condition on the following item in Table I:

Existing Proposed

S. Rate
Description Rate of
# PCT PCT of
Sales Condition Condition
Heading Heading Sales
Tax
Tax

53. The following 9405.4090 5% Subject to Respective 5% Subject to

cinematographi same headings same
c equipment limitations and limitations and
imported during conditions as conditions as
the period are specified in are specified in
commencing on Part-1 of Fifth Part-1 of Fifth
the 1st day of Schedule to Schedule to the
July, 2018 and the Customs Customs Act,
ending on the Act, 1969 for 1969 for
30th day of availing 3% availing 3%
June, 2023. concessionary concessionary
rate of customs rate of customs
duty on the duty on the
(xvi) Steplights import of these import of these
equipment. equipment.

56. Potassium Respective 17% Import and Respective 17% Import and
Chlorate headings along supply thereof. headings along supply thereof.
(KCLO3) with Provided that with Provided that
rupees rate of rupees rupees rate of rupees
90 per 90 per 60 per 60 per kilogram
kg kilogram shall shall not apply
Kg
not apply on on imports
imports made made by and
by and supplies made
supplies made to
to organizations
organizations under the
under the control of
control of Ministry of
Ministry of Defense
Defense production.
production.

It has been sought to insert the following new entries in Table I:

Rate of
PCT
Sr. Description Sales Conditions
Heading
Tax
78. Supply of articles of jewellery, or parts thereof, of 71.13 3% No input tax shall be
precious metal or of metal clad with precious metal. adjusted
79. Import of articles of jewellery, or parts thereof, of 71.13 4% No input tax shall be
precious metal or of metal clad with precious metal. adjusted
80. Local supply of reclaimed lead Respective 1% Subject to the conditions that:
heading (i) Supplies are made to
registered manufacturers
of lead and lead batteries;
and
(ii) No refund of input tax
shall be admissible.

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Sales Tax Withholding [Eleventh Schedule]

The Bill seeks to substitute the following in Eleventh Schedule:

Existing Proposed
S. Withholding Rate or Rate or
# Agent Supplier Category extent of Supplier Category extent of
deduction deduction

53. Registered 8548.1010, 8548.1090 75% of the sales Respective headings 75% of the
persons tax Applicable”. sales tax
manufacturing Applicable”.
lead batteries

Levy and Collection of Tax on Specified Goods on Value Addition [Twelfth Schedule]
The Bill proposes to substitute following sub-clause (i) of procedure and condition (2):
Existing Proposed

(2) The value addition tax under this Schedule shall not be (2) The value addition tax under this Schedule shall not be
charged on, — charged on, —
(i) Raw materials and intermediary goods imported by a (i) Raw materials and intermediary goods imported by a
manufacturer for in-house consumption; manufacturer for in-house consumption excluding
compressor scrap (PCT heading 7204.4940), motor
scrap (PCT heading 7204.4990) and copper cable cutting
scrap (PCT heading 7404.0090)”

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2. FEDERAL EXCISE ACT, 2005

Definition

Duty [Section 2(9)]

The Bill proposes to exclude fee and service charges for valuation, in respect of any other service or
control mechanism provided by any formation under the control of the Board, including ventures of
public-private partnership stipulated under section 49 of the Federal Excise Act, 2005, from the
definition of duty.

Appointment of Federal Excise Officers and Delegation of Powers [Section 29(2c)]

The Bill seeks to substitute designation of Directorate General of Training and Research with Inland
Revenue Services Academy.

Uniform [Section 50]

It has been proposed to insert a new section to empower the Board to prescribe rules for wearing of
uniform by officers and staff of Inland Revenue Services.

Excisable goods [First Schedule]

The Bill proposes following changes in the Table I:
Existing Proposed

Heading/ Heading/
Description of sub- Rate of Description of sub- Rate of
S. # S. #
Goods heading Duty Goods heading Duty
Number Number

8a. E-liquids by Respective Rupees 8a. E-liquids by Respective Rupees

whatsoever name heading ten per whatsoever name heading ten
called, for electric ml. called, for electric thousand
cigarette kits. cigarette kits. per Kg.

9. Locally produced 24.02 Rupees 9. Locally produced 24.02 Rupees

cigarettes if their five cigarettes if their five
on-pack printed thousand on-pack printed thousand
retail price exceeds two retail price six
five thousand nine hundred exceeds five hundred
hundred and sixty per thousand nine per
rupees per hundred and sixty
thousand thousand rupees per thousand
cigarettes. cigarettes thousand cigarettes
cigarettes.
10. Locally produced 24.02 Rupees 10. Locally produced 24.02 Rupees
cigarettes if their one cigarettes if their one
on-pack printed thousand on-pack printed thousand
retail price does six retail price does eight
not exceed five hundred not exceed five hundred
thousand nine and fifty thousand nine and fifty
hundred and sixty per hundred and sixty per
rupees per rupees per
thousand thousand thousand thousand
cigarettes cigarettes
Cigarettes cigarettes
56. Filter rod for 5502.0090 Rupee 56. Filter rod for Respective Rupee
cigarettes one per cigarettes heading fifteen
filter rod hundred
per Kg.

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Excisable services [First Schedule]

The Bill proposes following changes in the Table II:
Existing Proposed

Description of PCT Rate of Description of PCT Rate of

S. # S. #
Goods Heading Duty Services Heading Duty

3. Facilities for travel 98.03 Ten 3. Facilities for travel 98.03 Fifty
thousand thousand
rupees rupees
(b) Services 9803.1000 (b) Services 9803.1000
provided or provided or
rendered in respect rendered in respect
of travel by air of of travel by air of
passengers passengers
embarking on embarking on
international journey international journey
from Pakistan, - from Pakistan, -
(ii) Club, business (ii) Club, business
and first class
6. Telecommunication 98.12 Sixteen 6. Telecommunication 98.12 Nineteen
services, excluding (All sub percent services, excluding (All sub and half
such services in the headings) of such services in the headings) percent
area of a Province charges area of a Province of
where such where such charges
Province has Province has
imposed Provincial imposed Provincial
sales tax and has sales tax and has
started collecting the started collecting
same through its the same through its
own Board or own Board or
Authority, as the Authority, as the
case may be. case may be.

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SECTION 6 CUSTOMS DUTY

1. DEFINITIONS
Bordering and coastal areas [Section 2(bbc)]
It has been sought to include a new clause to define bordering and coastal areas which means all
districts located along international borders including coastal areas of Pakistan, notified as such by
Provincial Governments.

Documents [Section 2(kka)]

The Bill seeks to ammend in the definition of the documents to include standardized information and
documents lodged with a single entrypoint through Pakistan Single Window, in order to align Customs
Act, 1969 with the Pakistan Single Window (PSW) Act, 2021.

Essential commodities [Section 2(kkd)]

It has been proposed to insert a new clause to define essential commodities to mean those items
availability of which is considered vital for domestic use or consumption, as notified by the Board, from
time to time, in consultation with the concerned ministries.

Other government agencies [Section 2(oa)]

The Bill proposes to include and define other government agencies to means as defined under the
clause (n) of sub-section (1) of section 2 of the Pakistan Single Window Act, 2021 (III of 2021), in order
to align Customs Act, 1969 with the Pakistan Single Window (PSW) Act, 2021.

Pakistan Single Window [Section 2(pb)]

The Bill proposes to include Pakistan Single Window to mean as defined under the clause (m) of sub-
section (1) of section 2 of the Pakistan Single Window Act, 2021 (III of 2021), in order to align Customs
Act, 1969 with the Pakistan Single Window (PSW) Act, 2021.

Risk Management System [Section 2(qb)]

The Bill seeks to include the word Trade controls in the systematic application of Customs Controls
and Management Procedures, in order to align Customs Act, 1969 with the Pakistan Single Window
(PSW) Act, 2021.

Smuggle [Section 2(s)]

The Bill seeks to include a new sub-clause ‘Essential Commodities’, as notified by the Board to cover
the same in the definition of smuggling.

Trade controls [Section 2(sa)]

The Bill proposes to include trade controls to mean as defined under the clause (x) of sub-section (1)
of section 2 of the Pakistan Single Window Act, 2021 (III of 2021).

Un-authorized access [Section 2(sb)]

The Bill proposes to include un-authorized access definition to mean as defined under the clause (y)
of sub-section (1) of section 2 of the Pakistan Single Window Act, 2021 (III of 2021).

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2. PAKISTAN CUSTOMS ACADEMY (PCA) [Section 3C]

The Bill seeks to replace the heading of Directorate General of Training and Research to be Pakistan
Customs Academy (PCA).

3. GENERAL POWER TO EXEMPT FROM CUSTOMS-DUTIES [Section 19]

It has been proposed to replace the year 2022 with 2023 in General Power to exempt from customs
duties to provide continuity to the notifications earlier issued so that they may remain effective in the
next fiscal year.

4. POWER TO DELIVER CERTAIN GOODS WITH-OUT PAYMENT OF DUTY AND TO REPAY DUTY
ON CERTAIN GOODS [Section 21]
The Bill seeks to exclude the expression “or for supplies against international tenders’’, from clause c
of the above section”.

5. PROVISIONAL DETERMINATION OF LIABILITY [Section 81]

The Bill proposes to reduce the time limit of determination of provisional duty, taxes and charges from
existing “six months” to 90 days, where any goods are allowed to be cleared or delivered on the basis
of provisional determination.
Further it has also been proposed to reduce the time limit from existing 90 days to 30 days for extending
the proposed period of 90 days by Collector of Customs or by Director of Valuation, in circumstances
of exceptional nature and after recording such circumstances.

6. PERIOD FOR WHICH GOODS MAY REMAIN WAREHOUSED [Section 98]

The Bill seeks to facilitate the trade by expediating grant of request for extension in warehousing period
from current total of six month to seven months – 1 month by Additional Collector Customs 6 months
by the Collector of Customs.

7. FRUSTRATED CARGO HOW DEALT WITH [Section 138]

Currently where any goods are brought into a customs-station by reason of inadvertence, misdirection
or untraceability of the consignee, or where consignee has dishonored his commitments an officer of
Customs not below the rank of Additional Collector of Customs may, on application by the person-in-
charge of the conveyance which brought such goods or of the consignor of such goods and subject to
rules, allow export of such goods without payment of any duties (whether of import or export)
chargeable thereon, provided that such goods have remained and are exported under the custody of
an officer of customs.
Bill now seeks to also allow the change of consignee name for clearance upon payment of duties and
fulfilling the conditions under section 79.

8. PUNISHMENT FOR OFFENCES [Section 156 (1)]

Table | Serial 8.(i) The Bill proposes to broaden the scope of the offence related to smuggled goods
by including the ‘essential commodities’ if smuggled within the purview of the offence.
Further the Bill seeks to add the following new S.No. and entries related thereto:
S.No.
Offences Penalties
105
(i) Un-authorised access to information, data or personal details of Imprisonment which may extend up to six months or with fine
registered user of Pakistan Single Window system or systems which may extend to one hundred thousand rupees or with both.
connected or ancillary thereto;

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S.No.
Offences Penalties
105
(ii) Un-authorised copy, transmission or cause to transmit any data, Imprisonment which may extend up to six months or with fine
information or detail in relations to Pakistan Single Window system or which may extend to one hundred thousand rupees or with both.
systems connected or ancillary thereto;
(iii) Un-authorised interference, or attempt to interfere, damage or attempt Imprisonment which may extend to three years or fine which
to damage any part of whole of the Pakistan Single Window system or may extend to five hundred thousand rupees or with both.
data or system connected to or ancillary thereto;
(iv) Use of any information system, device or data to make any illegal claim Imprisonment which may extend to four years or fine which may
or title or cause any person to part with property or to enter into any extend to one million rupees or with both.
express or implied contract or intent to commit fraud by any input,
alteration, deletion or suppression of data, resulting in unauthentic data
with the intent that such data be considered or acted upon for legal
purpose, as if it were authentic in relations to Pakistan Single Window
system or Systems connected or ancillary thereto;
(v) Use, make, supply, retain, obtain device, system or software for Imprisonment which may extend to six months or with fine which
offences under section 13 of the Pakistan Single Window Act, 2021; may extend to one hundred thousand rupees or with both.
(vi) Obtain, sell, process, use or transmit another person's Unique User Imprisonment which may extend to four years and fine which
Identifier or make an attempt thereof without authorisation; may extend to one million rupees or with both.
(vii) Tamper with or attempt to tamper with, alter, re-programme any Imprisonment which may extend to 4 years and fine which may
Pakistan Single Window system or system connected or ancillary extend up to one million rupees or with both and any devices or
thereto for un-authorised use; systems used in offence shall be liable to confiscation.
(viii) Write, offer, make available, distribute or transmit a malicious code or Imprisonment for a term which may extend to four years and fine
abet in the same, with intent to cause harm to Pakistan Single Window which may extend to five million rupees or with both.
system or data resulting in or intending to result in corruption,
destruction, alteration, suppression, theft or loss to the Pakistan Single
Window system or data, or any attempt thereof.

9. EXTENT OF CONFISCATION [Section 157(2)]

Every conveyance of whatever kind used in the removal of any goods liable to confiscation has now
been proposed not to be confiscated by removing the second proviso to the extent of confiscation.

10. POWER TO STOP AND SEARCH CONVEYANCES [Section 164(3)]

It has been proposed to add a new proviso to restrict stop and search operations and related actions
to restrict smuggled goods, in case of essential commodities other than bordering and coastal areas.

11. PROCEDURE IN CASE OF SEIZURE OF ESSENTIAL COMMODITIES [Section 170(a)]

The Bill seeks to insert this section to define the procedure for seizure of essential commodities, where
in case of seizure of essential commodities, as notified by the Board, such seized goods shall be
deposited in the nearest custom-house or the nearest place appointed by the Collector of Customs,
as the case may be, for deposit of goods so seized.

12. POWER OF ADJUDICATION [Section 179]

It has been sought to enhance the jurisdiction and powers of the officers of Customs in terms of amount
of duties and other taxes involved, excluding the conveyance. Existing & proposed limits are as below:
Existing Proposed
Additional Collector - not exceeding three million rupees Additional Collector - not exceeding five million rupees
Deputy Collector - not exceeding one million rupees Deputy Collector - not exceeding two million rupees

13. REFERENCE TO HIGH COURT [Section 196]

For filing the reference to the honorable High Court, it has been proposed to also empower an officer
of Customs, along with the existing Collector or Director of Intelligence and Investigation, or Director
of Valuation.

14. WHARFAGE OR STORAGE FEES [Section 203]

The Bill seeks to substitute existing sub section with below:
(1) The Collector of Customs may from time to time fix the period after the expiration of which goods left in
any custom-house, customs area, wharf or other authorised landing place or part of the custom-house
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premises, shall be subject to payment of fees, and the amount of such fees, as provided under the rules
prescribed by the Board.
(2) The Collector of Customs may from time to time fix the port charges on import and export of goods for
services rendered by terminal operators, as provided under the rules prescribed by the Board.
(3) The Collector of Customs having jurisdiction may from time-to-time fix charges, fees for storing of seized
and confiscated goods, vehicles etc. in declared State warehouse.

15. PROTECTION OF ACTION TAKEN UNDER THE ACT [Section 217]

The Bill seeks to add “or the Provincial Government” after the word “Government”, to protect the
actions taken by the officers of the Provincial Government.

16. FIRST SCHEDULE

1. The Bill seeks to increase customs duty from existing PCT CODE DESCRIPTION
0% to proposed 11% on the following: 4411.9200 - - Of a density exceeding 0.8 g/cm2
PCT CODE DESCRIPTION 4411.9310 - - - Not mechanically worked or surface covered
5402.4800 - - Other, of polypropylene 4411.9390 - - - Other
5402.5300 - - Of polypropylene 4411.9400 - - Of a density not exceeding 0.5 g/cm2
5402.6300 - - Of polypropylene 7606.9290 - - - Other
5404.1200 - - Other, of polypropylene
5503.4000 - Of polypropylene 7. The Bill seeks to decrease customs duty from existing 20%
5506.4000 - Of polypropylene to proposed 16% on the following:
PCT CODE DESCRIPTION
2. The Bill seeks to increase customs duty from existing 2905.4500 - - Glycerol
0% to proposed 3% on the following: 3204.2000 - Synthetic organic products of a kind used as
PCT CODE DESCRIPTION 3204.9000 - Other
8462.4900 - - Other 3505.2010 - - - Starch based glues
3701.3090 - - - Other
3. The Bill seeks to decrease customs duty from 3823.1100 - - Stearic acid
3920.1000 - Of polymers of ethylene
existing 3% to proposed 0% on the following:
3920.2010 - - - Biaxially Oriented Polypropylene (BOPP)
PCT CODE DESCRIPTION
3920.2020 - - - Biaxially Oriented Polypropylene (BOPP)
0504.0000 Guts, bladders and stomachs of animals
3920.2030 - - - Biaxially Oriented Polypropylene (BOPP)
1211.9000 - Other
3920.2040 - - - Biaxially Oriented Polypropylene (BOPP)
3204.1110 - - - Powdered
3920.2090 - - - Other
3204.1710 - - - Powdered
3920.4990 - - - Other
3212.9010 - - - Aluminum paste and powder
3920.5100 - - Of poly (methyl methacrylate)
4. The Bill seeks to decrease customs duty from existing 11% 3920.6200 - - Of poly (ethylene terephthalate)
to proposed 3% on the following: 3920.6310 - - - Polyester rigid film
PCT CODE DESCRIPTION 3920.6900 - - Of other polyesters
2710.1995 - - - -Liquid paraffin 4412.1000 - Of bamboo
3901.1000 - Polyethylene having a specific gravity of less 4412.3100 - - With at least one outer ply of tropical wood
3901.2000 - Polyethylene having a specific gravity of 0.94 4412.3300 - - Other, with at least one outer ply of non-
3901.3000 - Ethylene- Vinyl acetate copolymers 4412.3400 - - Other, with at least one outer ply of non-
3901.4000 - Ethylene-alpha-olefin copolymers, having a 4412.3900 - - Other, with both outer plies of coniferous wood
3901.9000 - Other 4412.9900 - - Other, with both outer plies of coniferous wood
3902.1000 - Polypropylene 4804.1900 - - Other
3902.2000 - Polyisobutylene 4805.1100 - - Semi-chemical fluting paper
3902.3000 - Propylene copolymers 4805.1900 - - Other
3902.9000 - Other 4805.2400 - - Weighing 150 g/ m² or less
7606.9190 - - - Other 4806.4090 - - - Other
4809.9000 - Other
5. The Bill seeks to decrease customs duty from existing 11% 4811.5100 - - Bleached, weighing more than 150 g/m2
to proposed 0% on the following: 4819.1000 - Cartons, boxes and cases, of corrugated paper
PCT CODE DESCRIPTION 4819.2000 - Folding cartons, boxes and cases, of non
2710.1210 - - - Motor spirit 4823.6900 - - Other
7606.1100 - - Of aluminum, not alloyed 4823.9090 - - - Other
7606.1200 - - Of aluminum alloys 7607.1100 - - Rolled but not further worked
7607.1990 - - - Other:
6. The Bill seeks to decrease customs duty from existing 16% 7607.2000 - Backed
to proposed 11% on the following:
PCT CODE DESCRIPTION
3204.1190 - - - Other 17. FIFTH SCHEDULE
3204.1200 - - Acid dyes, whether or not premetallised, and
3204.1400 - - Direct dyes and preparations based thereon The Fifth Schedule to the Customs Act, 1969 is
3204.1600 - - Reactive dyes and preparations based thereon sought to be fully substituted with the proposed
3204.1790 - - - Other
3204.1910 - - - Dyes, sulphur
Fifth schedule.
3906.9010 - - - Cyanoacrylate

Highlights on the Finance Bill, 2022 | Section 6 | Customs Duty 6.4

 Tariq Abdul Ghani Maqbool & Co.
Chartered Accountants

SECTION 7 FINANCE ACT, 2018 (XXX OF 2018)

In the Finance Act, 2018 (XXX of 2018), for Mobile handset levy the following table has been proposed
to be substituted:

Rate of levy
Sr. Mobile Phones having C&F
per set in Pak
No Value (US Dollars)
Rupees
1. Up to 30 100
2. Above 30 and up to 100 200
3. Above 101 and up to 200 600
4. Above 201 and up to 350 1,800
5. Above 351 and up to 500 4,000
6. Above 501 and up to 700 8,000
7. Above 701 and above 16,000

Highlights on the Finance Bill, 2022 | Section 7 | Finance Act, 2018 (XXX of 2018) 7.1
 Tariq Abdul Ghani Maqbool & Co.
Chartered Accountants

SECTION 8 CAPITAL VALUE TAX 2022

It has been proposed to levy Capital Value Tax 2022 Assets held abroad, the value shall be the higher
(CVT) on the following assets at the below rates and of-
limits: a. the total consideration paid to acquire, alter
S Assets/ Applicable limits of
or improve the asset; or
Rate b. the fair market value of the asset;
No. Description CVT

1 Motor vehicle 2% of motor vehicle held in

the Pakistan where the
value value of motor vehicle In case of assets notified by Federal
exceeds rupees five Government, the value shall be as specified in such
million. notification.
2 Assets held 1% of assets of a resident
abroad the individual, whether
value movable or immovable, CVT shall be collected or paid in following
held abroad where the
value of such assets
manner:
exceeds rupees one a. the Collector of Customs shall collect CVT
hundred million.
at the time of import of motor vehicle on the
3 Assets or class of To be as specified in such import value as increased by customs
assets notified by notifie notification.
the Federal d duties;
Government b. the provisions of the Customs Act, 1969 (IV
of 1969), in so far as relevant, shall apply to
the collection and payment of CVT;
Value of the assets, for the purposes of CVT, c. Local manufacturer or assembler shall
shall be determined in the following manner: collect CVT from the buyer of the motor
vehicle on sale value;
Motor vehicle: d. any person making sale by public auction or
auction by a tender of motor vehicle shall
a. where the vehicle is imported in Pakistan, collect CVT from the person to whom such
the import value assessed by the Customs motor vehicle is sold on the sale value
authorities as increased by customs duties; ‘auction price’ of motor vehicle;
b. where the vehicle is manufactured or e. where clauses (c) or (d) apply, the tax shall
assembled locally in Pakistan, the value at be collected at the time of sale or where the
which the motor vehicle is sold by the local payment is made in installments at the time
manufacturer or assembler; of payment of first installment and the CVT
c. where the vehicle is auctioned, the auction collected shall be paid to the credit of the
price; or Federal Government through remittance to
d. in any other case, the total consideration the Government Treasury or deposit in an
paid to acquire, alter or improve the vehicle; authorized branch of the State Bank of
Pakistan or the National Bank of Pakistan
The value of the motor vehicle, shall be reduced within seven days of the date of collection.
by ten percent for each year from the end of Provided that the CVT collected by the
financial year in which the motor vehicle is Federal Government, a Provincial
acquired. Provided that the value shall be Government or a Local Government shall be
treated as zero: paid to the credit of the Federal Government
a. after ten years from the end of financial year on the day the CVT is collected;
in which the motor vehicle is acquired; or f. Every motor vehicle registering authority of
b. where the value after reduction as Excise and Taxation Department at the time
mentioned in this clause, is less than or of collecting motor vehicle tax shall also
equal to rupees five million; collect CVT on the value of motor vehicle.
Provided that CVT under this clause shall
not be collected from the person in the
financial year in which CVT has been paid

Highlights on the Finance Bill, 2022 | Section 8 | Capital Value Tax 2022 8.1
 Tariq Abdul Ghani Maqbool & Co.
Chartered Accountants

or collected from the said person under this collection and recovery of CVT under this
section at the time of- section.
(i) import;
(ii) purchase from local manufacturer or Any person dissatisfied with any order passed
assembler; or by the Commissioner or an officer of Inland
(iii) auction; Revenue under this section may prefer an
appeal before the Commissioner (Appeals)
g. in case of assets mentioned in clauses (b)
against the order as provided in section 127 of
of sub-section (2), the person holding the
the Income Tax Ordinance, 2001 (XLIX of 2001)
assets shall be liable to pay CVT at the time
and all provisions of Part III of Chapter X of the
of filing of income tax return for the tax year
Income Tax Ordinance, 2001 shall apply
in the manner prescribed; and
accordingly.
h. in case of assets notified by Federal
Government in terms of clause (c) of sub-
section (2) above, the CVT shall be The Federal Board of Revenue may, by
collected or paid in the manner as specified notification in the official Gazette, prescribe the
in such notification. manner and procedure relating to the collection
and recovery of, or any other matter relating to
the capital value tax (CVT).
The proceeds of the tax collected shall be
credited to the Federal Consolidated Fund
under the head specified by the Federal The Federal Government may, by notification in
Government. the official Gazette, exempt any asset or class
of assets from CVT subject to such conditions
as may be specified.
Where a person fails to-
a. pay CVT to the credit of the Federal
Government;
b. collect CVT; or
c. pay to the credit of the Federal Government
after having collected the CVT, the person
shall be personally liable to pay–
(i) the amount of CVT; and
(ii) the default surcharge at a rate equal to
twelve per cent per annum on the CVT
unpaid computed for the period
commencing on the date on which the
CVT was due and ending on the date on
which it was paid.

The officer of Inland Revenue may pass an

order after giving the person an opportunity of
being heard, and proceed to recover the CVT
under the provisions of the Income Tax
Ordinance, 2001 (XLIX of 2001) and the Income
Tax Rules, 2002 as if the CVT were an arrear of
income tax.

The Commissioner, on an application by the

person, may revise any order made.

The provisions of the Income Tax Ordinance,

2001 (XLIX of 2001) and the Income Tax Rules,
2002 in so far as relevant, shall apply to the

Highlights on the Finance Bill, 2022 | Section 8 | Capital Value Tax 2022 8.2
 Tariq Abdul Ghani Maqbool & Co.
Chartered Accountants

SECTION 9 ICT (TAX ON SERVICES) ORDINANCE, 2001

Scope of tax [Section 3(1A)]

The Bill proposes following changes in the Table I:
Existing Proposed

S.No. PCT PCT

Rate of
Description Heading, if Description Heading, if Rate of Tax
Tax
applicable applicable

1 Services provided 9801.1000 Sixteen Services provided or rendered 98.01 Fifteen

or rendered by 9801.3000 percent by hotels, motels, guest percent
hotels, motels, houses, farmhouses,
guest houses, 9801.4000 restaurants, marriage halls,
marriage halls and 9801.5000 lawns, clubs and caterers.
lawns (by 9801.6000
whatever name
called) including Services provided or rendered
“pandal” and by hotels motels, guest
“shamiana” houses and farmhouses.
services, clubs Services provided or rendered
including race by restaurants.
clubs, and Services provided or rendered
caterers. by marriage halls and lawns.
Services provided or rendered
by clubs.
Services provided or rendered
by caterers, suppliers of food
and drinks

It has been proposed to reduce the rate of tax in Table I:

PCT Heading, Rate of Tax
S.No. Description
if applicable Existing Proposed

2 Advertisement on television and radio, excluding advertisements– 9802.1000 and Sixteen Fifteen
(a) sponsored by an agency of the Federal or Provincial Government 9802.2000 percent percent
for health education;
(b) sponsored by the Population Welfare Division relating to
educational promotion campaign;
(c) financed out of funds provided by a Government under grant-in-
aid agreement; and
(d) conveying public service messages, if telecast on television by
the World-Wide Fund for Nature (WWF) or United Nations Children’s
Fund (UNICEF)
3 Services provided by persons authorized to transact business on 9805.2000 Sixteen Fifteen
behalf of others– 9805.4000 and percent percent
(a) stevedore; 9805.8000
(b) customs agents; and
(c) ship chandlers.
4 Courier services and cargo services by road provided by courier 9808.0000 Sixteen Fifteen
companies; 9804.9000 percent percent

5 Construction services, excluding: 9824.0000 Sixteen Fifteen

(i) construction projects (industrial and commercial) of the value and percent percent
(excluding actual and documented cost of land) not exceeding Rs. 9814.2000
50 million per annum.
(ii) the cases where sales tax is otherwise paid as property
developers or promoters.
(iii) Government civil works including Cantonment Boards.
(iv) construction of industrial zones, consular buildings and other
organizations exempt from income tax.

Highlights on the Finance Bill, 2022 | Section 10 | Rates for Withholding (Income) Tax 9.1
 Tariq Abdul Ghani Maqbool & Co.
Chartered Accountants

PCT Heading, Rate of Tax

S.No. Description
if applicable Existing Proposed
(v) construction work under international tenders against foreign
grants-in-aid.
(vi) Residential construction projects where the covered area does
not exceed 10,000 square feet for houses and 20,000 square feet for
apartments
7 Services provided by persons engaged in contractual execution of 9809.0000 Sixteen Fifteen
work, excluding: percent percent
(i) annual total value of the contractual works or supplies does not
exceed Rs.50 million;
(ii) the contract involving printing or supplies of books.
8 Services provided for personal care by beauty parlours, clinics and 9810.0000 Sixteen Fifteen
slimming clinics, body massage centres, pedicure centres; including 9821.4000 and percent percent
cosmetic and plastic surgery by such parlours/clinics, but excluding:
9821.5000
(i) annual turnover does not exceed Rs.3.6 million; or
(ii) the facility of air-conditioning is not installed or available in the
premises.
9 Management consultancy services 9815.4000, Sixteen Fifteen
9819.9300 percent percent
10 Services provided by freight forwarding agents, and packers and 9805.3000, Sixteen Fifteen
movers. 9819.1400 percent or percent or
Rs. 400 per Rs. 400
Bill of per Bill of
lading, lading,
whichever whichever
is higher is higher
11 Services provided by software or IT-based system development 9815.6000 Sixteen Fifteen
consultants. percent percent
12 Services provided by technical, scientific and engineering 9815.5000 Sixteen Fifteen
consultants percent percent
13 Services provided by other consultants including but not limited to 9815.9000 Sixteen Fifteen
human resource and personnel development services; market 9818.3000 percent percent
research services and credit rating services.
9818.2000

14 Services provided by tour operators and travel agents including all 9805.5100 Sixteen Fifteen
their allied services or facilities (other than Hajj and Umrah) 9805.5000 percent percent
9803.9000
15 Manpower recruitment agents including labour and manpower 9805.6000 Sixteen Fifteen
supplies. percent percent
16 Services provided by security agencies. 9818.1000 Sixteen Fifteen
percent percent
17 Services provided by advertising agents 9805.7000 Sixteen Fifteen
percent percent
18 Share transfer or depository agents including services provided 9805.9000 Sixteen Fifteen
through manual or electronic book-entry system used to record and percent percent
maintain securities and to register the transfer of shares, securities
and derivatives.
19 Business support services. 9805.9200 Sixteen Fifteen
percent percent
20 Services provided by fashion designers, whether relating to textile, 9819.6000 Sixteen Fifteen
leather, jewellery or other product regimes, including allied services, percent percent
marketing, packing, delivery and display, etc.
21 Services provided by architects, town planners and interior 9814.1000 Sixteen Fifteen
decorators. 9814.9000 percent percent

22 Services provided in respect of rent a car. 9819.3000 Sixteen Fifteen

percent percent
23 Services provided by specialized workshops or undertakings (auto- 98.20 Sixteen Fifteen
workshops; workshops for industrial machinery, construction and percent percent
earth- moving machinery or other special purpose machinery etc.;
workshops for electric or electronic equipments or appliances etc.

Highlights on the Finance Bill, 2022 | Section 10 | Rates for Withholding (Income) Tax 9.2
 Tariq Abdul Ghani Maqbool & Co.
Chartered Accountants

PCT Heading, Rate of Tax

S.No. Description
if applicable Existing Proposed
Including computer hard ware; car washing or similar service
stations and other workshops).
24 Services provided for purposes including fumigation services, 98.22 Sixteen Fifteen
maintenance and repair (including building and equipment percent percent
maintenance and repair including after sale services) or cleaning
services, janitorial services, dredging or de-silting services and other
similar services etc.
25 Services provided by underwriter, indenters, commission agents 9819.1100, Sixteen Fifteen
including brokers (other than stock) and auctioneers 9819.1200, percent percent
9819.1300
and
9819.9100
26 Services provided by laboratories other than services relating to 98.17 Sixteen Fifteen
pathological or diagnostic tests for patients. percent percent
27 Services provided by health clubs, gyms, physical fitness centres, 9821.1000 Sixteen Fifteen
indoor sports and games centres and body or sauna massage and percent percent
centres
9821.2000
9821.4000
28 Services provided by laundries and dry cleaners. 9811.0000 Sixteen Fifteen
percent percent
29 Services provided by cable TV operators 9819.9000 Sixteen Fifteen
percent percent
30 Technical analysis and testing services 9819.9400 Sixteen Fifteen
percent percent
31 Services provided by TV or radio program producers or production -- Sixteen Fifteen
houses. percent percent
32 Transportation through pipeline and conduit services. -- Sixteen Fifteen
percent percent
33 Fund and asset (including investment) management services. -- Sixteen Fifteen
percent percent

34 Services provided by inland port operators (including airports and -- Sixteen Fifteen
dry ports) and allied services provided at ports and services provided percent percent
by terminal operators including services in respect of public bonded
warehouses, excluding the amounts received by way of fee under
any law or by-law.
35 Technical inspection and certification services and quality control -- Sixteen Fifteen
(standards’ certification) services percent percent
36 Erection, commissioning and installation services. -- Sixteen Fifteen
percent percent
37 Event management services -- Sixteen Fifteen
percent percent
38 Valuation services; competency and eligibility testing services -- Sixteen Fifteen
excluding education testing services provided or rendered under a percent percent
bilateral or multilateral agreement signed by the Government of
Pakistan],
39 Exhibition or convention services -- Sixteen Fifteen
percent percent
40 Services provided in respect of mining of minerals, oil & gas -- Sixteen Fifteen
including related and allied activities percent percent
41 Services provided by property dealers and realtors. -- Sixteen Fifteen
percent percent
42 Call centres. -- Seventeen Fifteen
per cent percent
43 Services provided by car/ automobile dealers. -- Sixteen Fifteen
percent percent
44. Advertisement on hoarding boards, pole signs and signboards, and 9802.9000 Sixteen Fifteen
websites or internet percent percent

Highlights on the Finance Bill, 2022 | Section 10 | Rates for Withholding (Income) Tax 9.3
 Tariq Abdul Ghani Maqbool & Co.
Chartered Accountants

PCT Heading, Rate of Tax

S.No. Description
if applicable Existing Proposed
45. Services provided by landscape designers 9814.4000 Sixteen Fifteen
percent percent
46. Sponsorship services 9805.9100 Sixteen Fifteen
percent percent
47. Services provided or rendered by legal practitioners and consultants 9815.2000 Sixteen Fifteen
percent percent
48. Services provided by accountants and auditors 9815.3000 Sixteen Fifteen
percent percent
49. Service provided or rendered by Stockbrokers, future brokers and 9819.1000, Sixteen Fifteen
commodity brokers, money exchanger, surveyors, outdoor 9819.2000, percent percent
photographers, event photographers, videographers, art painters, 9819.5000,
auctioneers (excluding value of goods) and registrar to an issue 9819.7000,
9819.8000,
9819.9100,
9819.9500 and
9819.9090
50. Services provided by race clubs: -- Sixteen Fifteen
Entry/ admission and other services percent percent

51. Services provided or rendered by corporate law consultants 9815.9000 Sixteen Fifteen
percent percent
52. Visa processing services, including advisory or consultancy services -- Sixteen Fifteen
for migration or visa application filing services percent percent

53. Debt collection services and other debt recovery services -- Sixteen Fifteen
percent percent
54. Supply chain management or distribution (including delivery) -- Sixteen Fifteen
services percent percent
55. Services provided or rendered by persons engaged in inter-city -- Sixteen Fifteen
transportation or carriage of goods by road or through pipeline or percent percent
conduit
56. Ready mix concrete services -- Sixteen Fifteen
percent percent
57. Public relations services -- Sixteen Fifteen
percent percent
58. Training or coaching services other than education services -- Sixteen Fifteen
percent percent
59. Cleaning services including janitorial services, collection of waste 9822.2000, Sixteen Fifteen
and processing of domestic waste 9822.3000 and percent]. percent
9822.9000

It has been sought to omit following item from Table II:

S.No. Description PCT Heading, if applicable Rate of Tax

11. IT services and IT-enabled services. Respective heading Five percent

Explanation. - For the purpose of this entry –

(a) “IT services” include software development, software

maintenance, system
integration, web design, web development, web hosting and
network design; and

(b) “IT enabled services” include inbound or outbound call

centres, medical transcription, remote monitoring, graphics
design, accounting services, HR services, telemedicine centers,
data entry operations, locally produced television programs and
insurance claims processing

Highlights on the Finance Bill, 2022 | Section 10 | Rates for Withholding (Income) Tax 9.4
 Tariq Abdul Ghani Maqbool & Co.
Chartered Accountants

SECTION 10 RATES FOR WITHHOLDING (INCOME) TAX

Effective July 01, 2022 | Proposed

LINK TO DOWNLOAD: https://tagm.co/pdf/WithHoldingRatesTaxYear2023.pdf

Highlights on the Finance Bill, 2022 | Section 10 | Rates for Withholding (Income) Tax 10.1