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BUDGET PRECIS

2019 - 2020

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BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty

Contents
PREFACE --------------------------------------------- 2
INCOME TAX ------------------------------------------- 3
SALES TAX ------------------------------------------- 25
FEDERAL EXCISE DUTY -------------------------------- 30
SALES TAX ON SERVICES-ISLAMABAD CAPITAL TERRITORY
----------------------------------------------------- 32

Budget Precis 2019-2020 | PKF


BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty

PREFACE
This document gives a brief insight of proposed amendments made through Finance Bill 2019. In
order to understand the impact of a particular proposed change, reference should be made to the
specific wordings in the relevant statues.

This document is accurate to the best of our knowledge and belief at the time of its provision for
issuance. It is intended to provide only a general outline of finance bill presented by the
Government of Pakistan for fiscal year 2020. Expert opinion on specific proposed change should be
sought before taking decision having major economic significance. PKF F.R.A.N.T.S., Chartered
Accountants and PKFI do not accept any responsibility for any loss arising from any action taken or
not taken by anyone using this publication.

This document can also be accessed from our website www.pkf.com.pk

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BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty

INCOME TAX
Section 2(1A) has been proposed to define under Common Reporting Standard with
“active taxpayers’ list (ATL)”. The ATL is a list Pakistan.
instituted by the Board under section 181A f) “unspecified jurisdiction” means a
and also includes list issued by AJK or Gilgit- jurisdiction which is not specified
Baltistan Council Board of Revenue. The jurisdiction.
concept of Filer/non-filer earlier defined in
clause 23A and 35C have been proposed to be Super tax under section 4B was imposed on
omitted. big corporations for the rehabilitation of
temporarily displaced persons. Now, the
New clauses 5C, 38AB, 38AC, 38AD, 60A, and amendment has been proposed that while
73A have been proposed to define concepts computing income; brought forward
of “asset move”, “offshore asset”, “offshore depreciation and brought forward loss shall
enabler”, “offshore evader”, “specified not be considered.
jurisdiction” and “unspecified jurisdiction” in
order to tap new horizons of taxation. Tax on profit on debt under section 7B
chargeable to persons other than the
a) “asset move” means the transfer of an company is the final discharge of their tax
offshore asset to an unspecified liability. Now if the profit on debt in a year
jurisdiction by or on behalf of a person exceeds Rs 36 million; it would be taxed at a
who owns, possesses, controls, or is the normal rate and shall not be covered under
beneficial owner of such offshore asset this section. Amendment in section 151(3)
for the purpose of tax evasion. has been proposed where the tax deducted
b) “offshore asset” includes any movable or shall be minimum instead of final except in
immovable asset held, any gain, profit, or cases covered under section 7B.
income derived, or any expenditure A new clause (ca) proposed to be added to
incurred outside Pakistan.
section 21; whereby the commission paid or
c) “offshore enabler” means a person who payable in respect of supply of products listed
owns, possesses, controls, or is the in 3rd schedule of Sales Tax Act exceeds 0.2%
beneficial owner of such offshore asset of gross amount of supplies, such commission
and does not declare, or under declares shall not be allowed as admissible
or provides inaccurate particulars of such expenditure unless recipient of commission is
asset to the Commissioners. registered under sales tax Act and appearing
in ATL.
d) “offshore evader” includes any person
who enables, assists, or advises any Previously in case, the life of an intangible
person to plan, design, arrange or asset was not ascertainable; its maximum life
manage a transaction or declaration was considered as ten years and the cost was
relating to an offshore asset resulting in amortized over ten years. Now the useful life
tax evasion. of such asset shall be 25 years instead of ten
years for the purpose of amortization. Further
e) “specified jurisdiction” means any
section 24(11) has been proposed to amend
jurisdiction which has committed to
the cost of intangible shall not include self-
automatically exchange information
generated goodwill.

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BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty
Section 37(1A) has been proposed to omit to cannot be used under the garb of “removal of
change the tax base for taxing capital gain on anomalies or development of backward
sale of immovable property. Now the gain on areas”.
sale of the open plot shall be taxed on the A new incentive under tax credit has been
following formula: proposed to attract the employment of fresh
a) Where the holding period is less than a graduates by any taxpayer. Such graduate
year = total amount of capital gain will be must hold a degree from an HEC approved
included in total income. institution or university. The tax credit shall
be allowed for the tax year in which he is
b) Where the holding period exceeds one
employed. The maximum limit of such tax
year but is less than ten years =3/4th of
credit is 5% of the taxable income and also
the total amount of capital gain will be
such graduates shall not exceed 15% of the
included in total income.
total employees.
c) Where the holding period exceeds ten
The incentive of the Tax credit for investment
years = total amount of capital gain will be
in the purchase of plant and machinery for
exempted.
the purpose of extension/expansion, which
The gain on sale of constructed property shall was available upto 30th June 2021 under
be taxed on the following formula: section 65B, has been proposed to restrict to
a) Where the holding period is less than a 30th June 2019. The rate of the tax credit has
year = total amount of capital gain will be also been proposed to reduce from 10% to
included in total income. 5% for the tax year 2019. However, the carry
forward of the tax credit shall continue to be
b) Where the holding period exceeds one allowed after the tax year 2019.
year but is less than five years =3/4th of
the total amount of capital gain will be In order to document the economy, purchase
included in total income. of immovable property having a fair market
value exceeding Rs 5 million or purchase of
c) Where the holding period exceeds five any other asset having value more than Rs
years = total amount of capital gain will be one million should be made through crossed
exempted. cheque or bank transfer. In case these assets
A clause (la) has been proposed in Section 39 are purchased through cash or bearer
to tax any amount or fair market value of any cheque; it shall have the following
property received without consideration or consequences:
received as a gift; other than from a) No depreciation shall be allowed on such
grandparents, parents, spouse, real brothers, assets
real sister, son or a daughter. It is worth
mentioning that if any amount is received b) The cost of such asset shall be presumed
from the above-mentioned relative, other as ZERO to calculate the gain on its
than crossed cheques shall be included in disposal. It means the total sale proceeds
taxable income under “Income from Other shall be added to income.
sources” c) Penalty at 5% of the value of the property
The Federal Government can, in case of Other criteria have been proposed to
emergency, grant an exemption under determine the resident status of a taxpayer.
section 53(2). It is proposed that such power In case an individual is present in Pakistan for

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BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty
90 days in a tax year and who have been in determine the fair market value of the asset,
Pakistan for 365 days in last four years shall product, expenditure or service. However, the
also be treated as a resident of Pakistan for Commissioner has to obtain prior approval of
the purpose of income tax. the Board. Further such report shall
constitute “definite information” for the
An overriding section 99C has been proposed
purpose of amendment of assessment under
to enable Federal Government to prescribe
section 122.
the special procedure for scope and payment
of tax, record keeping, filing of return and A new section 108AB has been introduced to
assessment of small businesses, construction document the economy whereby the persons
businesses, medical practitioners, hospital, supplying products listed in 3rd Schedule of
educational institutions, and any other sales tax Act or any other product prescribed
specified sector in such cities and territories. by the Board, under dealership arrangement
It seems that the Federal Government intends who are not registered under Sales Tax Act
to introduce a fix tax system or other schemes and not appearing in ATL; an amount of 75%
for such businesses. of the dealer’s margin shall be added to the
income of the person making such supplies.
Section 100C was introduced in 2015 whereby
For the purposes of this section; 10% of the
the Non-Profit Organization can claim 100%
sale price of the manufacturer shall be
tax credit of tax payable including minimum
treated as “dealer’s margin”.
tax and presumptive tax. Now in order to
claim such tax credit; the approval of the A huge amount of untaxed /undeclared
Commissioner under section 2(36) has been income / black money was being whitened
made compulsory with effect from 1st July under the garb of Foreign remittance without
2020. Also, it is necessary that none of the any limit and blanket protection was available
assets of such trusts or welfare institutions under section 111(4)(a). Through Finance Act
confer a private benefit to the donors or his 2018 a limit of Rs ten million in a tax year was
family, children or any other person. Further, imposed on such blanket provision. This limit
where such private benefit is conferred, the has now been proposed to reduce to Rs 5
amount of such benefit shall be added to the million. Further clause (c) has been deleted in
income of the donor. consequence to the omission of section
236W. Earlier the difference of FBR value of
A new section 108A has been proposed,
any immovable property and DC value could
where, in the opinion of the Commissioner; a
be declared by paying tax at the rate of 3%
transaction declared by a taxpayer is not at
under section 236W. This facility has been
“arm’s length”; the Commissioner may obtain
proposed to be withdrawn. Accordingly,
report from an independent Chartered
Section 230F(23) has also been proposed to
Accountant or Cost and management
be omitted.
accountant to determine the fair market
value of the asset, product, expenditure or Amendment has been proposed in section
service. The scope, terms, and conditions of 114, earlier where a person owns immovable
the report shall be prescribed. A further check property measuring 250 yards was liable to
has been proposed where the Commissioner file a tax return. Now, a person who owns
is not satisfied with such report, with reason immovable property measuring 500 yards
to be recorded, can seek a report from shall be liable to file tax return instead of 250
another independent Chartered Accountant yards.
or Cost and management accountant to

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BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty
The date of filing of statement u/s 115(4) and in “offshore tax evasion” or such person
return of a salaried person was 31st August. This about to dispose-off such asset.
date was invariably extended every year. Now,
the date is proposed to be 30th September. An amendment has been proposed in section
148 where the tax paid at import stage by
In order to give protection to persons the commercial importers and import of ship
declaring undisclosed assets, expenditure or by shipbreakers shall now be “minimum tax”
sales, a new section 120B has been proposed and not “final tax”. It means that they will be
to ensure that no proceedings shall be required to file the normal return on the basis
undertaken under this Ordinance in respect of of their financial statements. Earlier they
such declaration. Further, the particulars of were submitting simple statement u/s 115(4).
such declaration shall remain confidential;
notwithstanding anything contained in any A similar amendment is proposed in section
other law. However, this protection is subject 152 on account of deduction of tax from
to section 216(a) and (g) whereby such payments to non-residents shall now be
information can be used for Income Tax, Sales “minimum tax” instead of a final tax. Further,
tax or Federal excise duty or Custom in case of turn-key projects under “cohesive
authority. business operation” as referred in section
2(41)(g)(ii); payment can be made after
A chartered accountant could be a member of deduction of tax @ 30% after approval of the
a committee of Alternate Dispute Resolution Commissioner.
appointed and now it is proposed that cost
and management accountant can also be a Again, an amendment has been proposed in
member of ADRC. Further, the condition of section 153 on account of deduction of tax on
having minimum experience of 10 years in the payments for supplies and contract shall now
field of tax has been proposed for CAs, CMAs, be “minimum tax” instead of a final tax. The
and Lawyers. tax deductible on account of services
rendered under section 153(1)(b) has already
There was implied provision in Partnership been treated as a minimum tax on such
Act that liability of each partner is jointly and transactions. The relaxation available under
severally liable and, in this context, the clause 94 of part IV of the second schedule
department can make the recovery of AOP’s has been done away with. The facility of final
tax liability from a member. Now specific tax regime shall remain available to
amendment has been proposed in section sportsmen and print & electronic media.
139 whereby the tax due from AOP can be
recovered from a member of AOP. However, A new section 153B has been proposed to
such member is entitled to recover the same withhold tax on payments of royalty to the
from AOP or other members according to resident persons. The tax shall be withheld @
their share in AOP. 15% on the gross amount payable on account
of Royalty including federal excise duty and
An overriding sub-section (5) has been provincial tax if any.
proposed to be added to section 145 whereby
the Commissioner is empowered to freeze Where a person fails to deduct or withhold
any domestic asset of a person including any tax at source or having collected failed to pay
asset beneficially owned by the person for a such tax; the Commissioner can pass an order
period of 120 days in case a person who is to that effect to recover the same from
likely to leave Pakistan and may be involved withholding agent. There was no provision
with the Commissioner to amend this order in

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BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty
case such order of recovery is erroneous in Income Tax Bonds in multiple values of one
so far it is prejudicial to the interest of hundred thousand rupees. These bonds shall
revenue. Now such powers are proposed for have a maturity of 3 years and can be traded
the Commissioner, who after giving the freely and can also be used as collateral. The
opportunity of being heard to the withholding Board shall make payment of bonds with a
agent, may amend the earlier order. profit due to the bondholders. For this
purpose, the claimants of refund have to opt
Every withholding agent has to file a
for this facility.
statement of deduction in prescribed form on
a bi-annual basis under section 165. Now it is By insertion sub-section (6A) in section 175; a
proposed that the particulars as per 10th blanket authority has been proposed to
Schedule shall also be included in such Commissioner subject to the condition as may
statement. be prescribed, to raid any premises where
there is reliable information of undeclared
It is proposed that every bank is required to
gold, bearer security or foreign currency and
file a list of the person receiving profit on
confiscate the same.
debt exceeding Rs 500,000 irrespective of the
fact whether the account holder is in ATL or Subsection 6 has been proposed to be
not. substituted and sub-section 6A has been
proposed to be inserted in section 177 In
Section 168(3) has been proposed to omit
order to further clarify that when a case is
where no tax credit was allowed in PTR case.
selected for audit and audit is conducted u/s
Since a number of such withholding tax
177; how the audit should be concluded.
regime have been shifted from Final to
After completion of the audit, the
Minimum tax; the tax credit shall now be
Commissioner shall confront the taxpayer on
allowed in all respective withholding regime.
all points raised in the audit and issue an
The status of Exporter remains intact and audit report containing audit observations
their withholding tax shall remain final and findings. Then the assessment shall be
discharge of their tax liability. amended under section 122 after providing
Where the tax deducted or collected is final an opportunity of being heard to taxpayer u/s
tax 100% higher tax rate have been proposed 122(9).
under the 10th Schedule; the final tax shall be A new section 181D has been proposed
the rate proposed in the First Schedule and whereby every person engaged in any
the excess tax collected under 10th Schedule business, profession or vocation shall be
for persons not appearing in ATL, shall be required to obtain and display a “business
adjustable, in case the return is filed before license” as prescribed by the Board.
finalization of assessment under 10th
Penalties have been drastically proposed to
Schedule.
be increased through this Finance Bill. A
Concept of payment of refund through comparative chart has been annexed
income tax refund bonds has been proposed herewith to understand present change.
on the same lines as done for sales tax
A proviso has been proposed to be added to
refunds through new section 171A. These
section 182A to enable a person to include his
provisions are identical to sales tax law. The
name on ATL who file a tax return after the
Board shall issue a promissory note to a state-
due date and pay the following surcharge*:
owned company named “FBR Refund
Settlement Company Limited” for issuance of a) Rs 20,000 in case of a company

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BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty
b) Rs 10,000 in case of AOP “offshore tax evasion”. Such an offense is
punishable with imprisonment upto 7 years or
c) Rs 1,000 in case of an individual
with fine upto Rs 5 million or both.
*Please note that this surcharge is in addition
Section 216 imposes a certain restriction on
to any other liability including penalty and
disclosure of information by a public servant
default surcharge payable under the
with few exceptions. Now the Board has been
Ordinance.
empowered to publish the names of offshore
The above-mentioned person whose name is tax enablers, in the print and electronic media
not appearing in the active taxpayers' list shall who have enabled offshore tax evasion.
further be penalized, and no refund shall be
The officers of FBR, incase, willfully and
issued during the period the person is not
deliberately commits or omits an act which
included in ATL and such period shall also not be
counted for payment of additional payment for results in personal benefits and undue
delayed refund. advantage to the authority or person or
taxpayer. The Board can initiate proceedings
In order to forcefully implement the including criminal proceedings against such
documentation of economy; it is proposed person or authority.
that a withholding agent can also be
prosecuted with fine and imprisonment; if he Restrictions proposed to be imposed on the
fails to furnish particulars, complete or purchase of certain assets vide Finance Act
accurate particulars of persons from whom tax 2018 to non-filer have been omitted.
is withheld under various sections including A new section 227D has been inserted
10th Schedule. whereby the Board may design an alternate
Again, in order to effectively tap the offshore impersonal taxation regime to minimize
assets; stern action has been proposed vide personal interaction for low-risk and
section 192B. It is proposed that if a person compliant taxpayer
fails to declare an offshore asset or furnishes The expression of “non-filer” has been
inaccurate particulars and revenue impact of proposed to be changed to “persons whose
such concealment is Rs 100,000 or more shall name is not appearing in the active taxpayer
be considered an offense punishable with list (ATL)”in the following cases:
imprisonment upto 7 years or with fine upto
a. Advance tax on registering private
200% of the amount of tax evaded or both.
vehicles under section 231B
Another section 195A proposed that in case a b. Advance tax on banking transactions
person fails to comply with a notice under otherwise than through cash under
section 116A (2) issued to a resident taxpayer section 236P
to file a wealth statement of Foreign assets c. Advance tax on insurance premium under
and foreign income. Such an offense is section 236U
punishable with imprisonment upto 2 years or
PTR regime has been proposed to be abolished
with fine upto 200% of the amount of tax
gradually. Further income/withholding tax
evaded or both.
under following heads shall be assessed under
Section 195B proposed that in case a person normal regime but the tax deducted /
who enables, guides or advises any person to collected at source shall be minimum tax and
design, arrange or manage a transaction or no refund shall be allowed in case the tax
declaration in such manner which results in

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BUDGET PRECIS 2019-2020
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Contents Preface Income Tax Sales Tax ICT
Excise Duty
payable on declared income is less than Offense Current Proposed
withholding tax:
a. Brokerage and commission Where any Such person Such person shall
b. CNG Station person fails to shall pay a pay a penalty of
furnish a penalty of 0.1% of the
c. Commercial Imports
wealth 0.1% of the taxable income
d. Supplies and Contract
statement or taxable per week or Rs.
e. Payments to Non-Residents wealth income per 100,000
The exemption of collection advance tax on reconciliation week or whichever is
sale or transfer of immovable property is statement. Rs.20,000, higher.
proposed to be restricted to such properties whichever is
which are held for more than 5 years instead higher
of 3 years. Any person Such person Such person shall
Section 236W is proposed to be omitted where who is shall pay a pay a penalty of
the taxpayer was allowed to pay 3% tax on the required to penalty of Rs. Rs. 10,000
difference of value calculated on FBR rates and apply for 5,000
DC rates. registration
under this
Following is the comparative of existing and Ordinance but
proposed penalties. fails to make
an application
Offense Current Proposed for
registration.
Where any If the penalty If the penalty
person fails to worked out worked out as Any person Such person Such person shall
furnish a return as aforesaid aforesaid is less who repeats shall pay a pay a penalty of
of income as is less than than Rs. 40,000 erroneous penalty of Rs. 30,000 or 3%
required under Rs. 20,000 or or no tax is calculation in Rs. 5000 or of the amount of
section 114 no tax is payable for that the return for 3% of the the tax involved,
within the due payable for tax year such more than one amount of whichever is
date that tax year person shall pay year whereby the tax higher.
such person a penalty of Rs. the amount of involved,
shall pay a 40,000. tax less than whichever is
penalty of the actual tax higher.
Proviso:
Rs. 20,000. payable under
Provided that If this Ordinance
75% of the is paid.
income is from
salary and the Any person Such person Such person shall
amount of who denies or shall pay a pay a penalty of
income under obstructs the penalty of Rs. 50,000 or
salary is less than access of the Rs. 25,000 or 100% of the
Rs. 5 million the Commissioner 100% of the amount of tax
minimum or any officer amount of involved,
amount of authorized by tax involved, whichever is
penalty shall be the whichever is higher.
Rs 5000. Commissioner higher.
to the

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BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty

Offense Current Proposed Offense Current Proposed


premises,
Any person Such person Such person shall
place,
who fails to shall pay a pay a penalty of
accounts,
collect or penalty of Rs. Rs. 40,000or the
documents,
deduct tax as 25,000 or 10% of the
computers or
required 10% of the amount of tax
stocks.
under any amount of whichever is
provision of tax higher.
Where a Such person Such person shall
this Ordinance whichever is
person has shall pay a pay a penalty of
or fails to pay higher.
concealed penalty of Rs. 100,000 or an
the tax
income or Rs. 25,000 or amount equal to
collected or
furnished an amount the tax which the
deducted as
inaccurate equal to the person sought to
required
particulars of tax which evade whichever
under section
such income, the person is higher.
160
including but sought to
not limited to evade
For the following offence, new penalties
the whichever is
suppression of higher. have been proposed as under.
any income or
amount Offense Penalty Proposed
chargeable to
Any person who Such person shall pay
tax, the
purchases immovable a penalty of five
claiming of any
property having fair percent of the value
deduction for
an market value greater of property
than rupees five million determined by the
expenditure
through cash or bearer Board under sub-
not actually
cheque section (4) of section
incurred or
68 or by the provincial
any act
authority for the
referred to in
purposes of stamp
subsection (1)
duty, whichever is
of section 111,
higher.
in the course
of any
Where an offshore tax Such person shall pay
proceeding
evader is involved in a penalty of one
under this
offshore tax evasion in the hundred thousand
Ordinance
course of any proceedings rupees or an amount
before any
under this Ordinance equal to two hundred
Income-tax
before any Income Tax per cent of the tax
authority or
authority or the appellate which the person
the appellate
tribunal. sought to evade,
tribunal.
whichever is higher.

Where in the course of Such person shall pay a


any transaction or penalty of three
declaration made by a hundred thousand

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BUDGET PRECIS 2019-2020
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Contents Preface Income Tax Sales Tax ICT
Excise Duty

Offense Penalty Proposed Offense Penalty Proposed


person an enabler has rupees or an amount false self-certification additional Rs. 10,000
enabled, guided, advised equal to two hundred made by the Reportable each month until the
or managed any person per cent of the tax Jurisdiction Person under default is redressed.
to design, arrange or which was sought to Common Reporting
manage that transaction be evaded, whichever Standard Rules in Chapter
or declaration in such a is higher. XIIA of Income Tax Rules,
manner which has 2002.
resulted or may result in
offshore tax evasion in Where a Reportable Such Reportable
the course of any Jurisdiction Person fails Jurisdiction Person
proceedings under this to furnish valid self- shall pay a penalty of
Ordinance. certification or furnishes Rs. 5,000 for each
false self-certification default and an
Any person who is Such person shall pay under Common additional Rs. 5,000
involved in asset move as a penalty of one Reporting Standard Rules each month until the
defined in clause (5C) of hundred thousand in Chapter XIIA of Income default is redressed.
section 2 of the rupees or an amount Tax Rules, 2002
Ordinance from a equal to one hundred
specified territory to an per cent of the tax
un-specified territory. whichever is higher.

Where a Reporting Such Reporting Income Tax Schedules


Financial Institution fails Financial Institution
to comply with any shall pay a penalty of 1st Schedule
provisions of section Rs.10, 000 for each
165B of the Ordinance or default and an Major rates prescribed under this schedule
Common Reporting additional Rs. 10,000 are given hereunder with bold text of the
Standard Rules in Chapter each month until the changes made through Finance Bill, 2019 for
XIIA of Income Tax Rules, default is redressed. ready reference.
2002.
Tax Rates for Salaried Individuals
Where a Reporting Such Reporting
Financial Institution files Financial Institution Taxable Income Rate
an incomplete or shall pay a penalty of
inaccurate report under Rs.10, 000 for each From Up to
provisions of section default and an
165B of the Ordinance additional Rs. 10,000 - 600,000 0%
and Common Reporting each month until the
Standard Rules in Chapter default is redressed. 5% of the
XIIA of Income Tax Rules, amount
600,001 1,200,000
2002. exceeding Rs.
600,000
Where a Reporting Such Reporting
Financial Institution fails Financial Institution Rs. 30,000
to obtain valid self- shall pay a penalty of 1,200,001 1,800,000 plus 10% of
certification for new Rs.10,000 for each the amount
accounts or furnishes
default and an

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BUDGET PRECIS 2019-2020
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Contents Preface Income Tax Sales Tax ICT
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Taxable Income Rate Taxable Income Rate


exceeding
Rs.
Rs.1,200,000
13,295,000
plus 32.5% of
50,000,001 75,000,000
the amount
Rs. 90,000 exceeding Rs.
plus 15% of 50,000,000
1,800,001 2,500,000 the amount
exceeding Rs. Rs.
1,800,000 21,420,000
plus 35% of
75,000,001 and above
Rs. 195,000 the amount
plus 17.5% of exceeding Rs.
2,500,001 3,500,000 the amount 75,000,000
exceeding Rs.
2,500,000

Rs. 370,000 Tax Rates for AOPs and Business


plus 20% of Individuals
3,500,001 5,000,000 the amount
exceeding Rs. Taxable Income
3,500,000 Rate
From Up to
Rs. 670,000
plus 22.5% of - 400,000 0%
5,000,001 8,000,000 the amount
exceeding Rs. 5% of the amount
400,001 600,000
5,000,000 exceeding Rs.
400,000
Rs. 1,345,000 Rs. 10,000 plus 10%
plus 25 % of of the amount
600,001 1,200,000
8,000,001 12,000,000 the amount exceeding Rs.
exceeding Rs. 600,000
8,000,000
Rs. 70,000 plus 15%
1,200,001 2,400,000 of the amount
Rs. 2,345,000
plus 27.5% of exceeding Rs.
12,000,001 30,000,000 the amount 1,200,000
Rs. 250,000 plus 20%
exceeding Rs. of the amount
12,000,000 2,400,001 3,000,000
exceeding Rs.
2,400,000
Rs. 7,295,000
plus 30% of Rs. 370,000 plus 25%
30,000,001 50,000,000 the amount of the amount
exceeding Rs. 3,000,001 4,000,000
exceeding Rs.
30,000,000 3,000,000

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BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty

Rs. 620,000 plus 30% Companies who did not


of the amount pay tax due to exemption
4,000,001 6,000,000 25% 50%
exceeding Rs. or carry forward of losses
4,000,000 or tax credits

Rs. 1,220,000 plus Other


15% 30%
6,000,001 and above 35% of the amount Companies/Schemes
exceeding Rs.
6,000,000 Tax Rates for Profit on debt for Individuals
and AOPs are proposed as under:
Tax Rates for Companies
Rate of tax for Companies has been proposed Profit on debt
to be fixed at 29% and no further yearly Rate
decrease shall be made. From Up to
Super Tax Rates 0 5,000,000 15%

Description Rate 5,000,001 25,000,000 17.5%

Banking Company 25,000,001 36,000,000 20%

- TY 2019 3% Normal slab rate


36,000,001 and above applicable to AOP/
- TY 2020 2% business Individual

- TY 2021 0%
Tax Rates for Return on Investment in
Other Persons having income
of Rs. 500 Million or more Sukuks

- TY 2019 2% Sukuk holder Rate


- TY 2020 1%
Company 25%
- TY 2021 0%
10% If the return is less than
Tax Rates for Dividend Income Individual or Rs. 1 million and 12.5% if
AOP return is more than Rs. 1
(including under Section 150 & 236S) million

Dividend declared by Rate Property income. The same rates shall be


applicable for withholding tax under section
Non- 155 for individual and AOPs.
ATL
ATL

Power generation Sector 15% 30%


Companies.

Budget Precis 2019-2020 | PKF Page 13 of 32


BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty

Taxable Income Sr.


Rate N Persons Rate
From Upto o

0 200,000 0% SNGPL (where turnover


exceeds Rs. 1 Billion;
5% of the gross b) Pakistan Airlines; and
amount of rent
200,001 600,000 c) Poultry industry including
exceeding
Rs.200,000 poultry breeding, broiler
production, egg production
Rs.20,000 + 10 % & poultry feed production.
of the gross d) Dealers of distributors of
600,001 1,000,000
amount exceeding fertilizers; and
Rs.600,000
e) person running online
Rs.60,000 + 15 % market place
of the gross
1,000,001 2,000,000 a) Distributors of
amount exceeding
pharmaceutical products,
Rs.1,000,000
Fast moving consumer
Rs.210,000 + 20% goods and cigarettes
of the gross b) Petroleum agents and
2,000,001 4,000,000 2 0.25%
amount exceeding distributors who are
Rs.2,000,000 registered under the Sales
Tax Act, 1990;
Rs.610,000 + 25%
of the gross c) Rice mills and dealers; and
4,000,001 6,000,000
amount exceeding d) Flour Mills
Rs.4,000,000
Motorcycle dealers registered
Rs.1,110,000 + 3 0.30%
under the Sales Tax Act, 1990
30% of the gross
6,000,001 8,000,000
amount exceeding 4 In all other cases 1.50%
Rs.6,000,000

Rs.1,710,000 +
Tax Rates for Imports under Section
And 35% of the gross 148
8,000,001
above amount exceeding
Rs.8,000,000 Non
Category ATL
ATL
Minimum Tax under section 113
- Industrial undertaking
1% of the 2% of the
Sr. importing remeltable steel
import import
N Persons Rate (PCT Heading 72.04) and
value as value as
o directly reduced iron for its
increased increased
- own use
a) Oil Marketing Companies, by by
1 0.75% customs- customs-
Oil Refineries, SSGCL, - Persons importing

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BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty

Non Non
Category ATL Category ATL
ATL ATL
potassic fertilizers in duty, duty,
Ship breakers on import of
pursuance of Economic sales tax sales tax
ships 4.5% 9%
Coordination Committee of and and
the cabinet’s decision federal federal
Industrial undertakings not
No.ECC-155/12/2004 dated excise excise
covered above 5.5% 11%
the 9th December, 2004; duty duty
Companies not covered
- Persons importing urea
above 5.5% 11%
- Manufacturers covered
Persons not covered above 6% 12%
under Notification No.
S.R.O. 1125(I)/2011 dated
the 31st December, 2011 Rates of tax applicable under other
and importing items provisions of the Ordinance are tabulated as
covered under under with distinction of taxpayers being in
S.R.O.1125(I)/2011 dated ATL and not in ATL.
the 31st December, 2011;
Non-
- - Persons importing Gold Sec Category ATL
ATL
- Persons importing Cotton
Capital Gains Tax
- Persons importing LNG on Securities

2% ad 4% ad
Securities
Persons importing pulses valorem valorem
acquired before
basis basis 01.07.2016
where
Commercial importers
covered under Notification
No. S.R.O. 1125(I)/2011
3% ad 6% ad
dated the 31st December, Holding period 15% 30%
valorem valorem
2011 and importing items less than 12
basis basis
covered under S.R.O. 37A Months
1125(I)/2011 dated the 31st
December, 2011.
12.50
Holding period 25%
Persons importing coal 4% 8% %
12 to 24 Months
Persons importing finished
pharmaceutical products
that are not manufactured Holding period
otherwise in Pakistan, as 4% 8% more than 24
certified by the Drug 7.50% 15%
Months but
Regulatory Authority of purchased after
Pakistan 01-07-2013

Budget Precis 2019-2020 | PKF Page 15 of 32


BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty

Non- Non-
Sec Category ATL Sec Category ATL
ATL ATL

through
Satellite T.V.
Security Channels
purchased 0% 0%
before 01-07- Payments to
2013 Permanent
Establishment of
Securities Non- Residents
acquired after
01.07.2016 15% 30% supply of goods
irrespective of
holding period
- Company 4% 4%

Future
- Others 4.50% 4.5%
Commodity 5% 10%
Contracts-
supply of
services
Derivatives
traded on stock
5% 10% - Company 8% 16%
exchange settled
through cash
- Others 10% 20%
Profit on Debit 15% 30%
transport
151 2% 4%
Where profit ≤ services
10% 20%
Rs.500,000
execution of
Payments to contract
Non-Residents
for - Company 7% 14%

▪ Royalty 15% 30% - Others 7% 14%

▪ Fee for Sport persons 10% 20%


152 Technical 15% 30%
Services Payments to
Residents
▪ Constructio
n contracts supply of goods-
153
and 7% 7%
- Company 4% 8%
▪ Advertiseme
nt services - Others 4.50% 9%

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BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty

Non- Non-
Sec Category ATL Sec Category ATL
ATL ATL

supply of goods- media), share


FMCG registrar services,
distributors engineering
services, car
rental services,
- Company 2% 4%
building
maintenance
- Others 2.50% 5% services, services
rendered by
supply of Pakistan Stock
services Exchange Limited
and Pakistan
- Company 8% 16%
Mercantile
Exchange Limited
- Others 10% 20%
inspection,
certification,
Execution of
testing and
contract
training services
Transport
Services, freight execution of
forwarding contract
services, air
cargo services, - Company 7% 14%
courier services,
manpower - Others 7.50% 15%
outsourcing
services, hotel Sport Persons 10% 20%
services, security
guard services, Electronic and
software Print Media 1.50% 3%
development 4% 8%
Services
services, IT
services and IT
Royalty to
enabled services 153B 15% 30%
resident persons
as defined in
clause (133) of
Part I of the Rent received by
155 15% 15%
Second Schedule, company
tracking services,
advertising Prize bonds
156 15% 30%
services (other winning
than by print or
electronic

Budget Precis 2019-2020 | PKF Page 17 of 32


BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty

Non- Non-
Sec Category ATL Sec Category ATL
ATL ATL

Other than prize >4<10 50 100


20% 40%
bond winnings
>10<20 100 200
Commission on
156A Petroleum 12% 24% 20 or more 300 600
Products
Token Tax
Cash withdrawal
exceeding Engine Capacity
231A - 0.60%
Rs.50,000/- in a (cc)
day
upto 1000 800 1,600
Other
231A
transaction with - 0.60%
A 1001 to 1199 1,500 3,000
Bank
1200 to 1299 1,750 3,500
Brokerage &
Commission
1300 to 1499 2,500 5,000
Advertiseme
10% 20% 1500 to 1599 3,750 7,500
nts

Life 1600 to 1999 4,500 9,000


insurance
233 2000 and above 10,000 20,000
where 8% 16%
commission
is >Rs.500,00 Token Tax-
collected in
Online lumpsum
5% 10%
Market Place
Engine Capacity
Others 12% 24% (cc)

Goods Transport upto 1000 10,000 20,000


Rs. 2.5 Rs. 5
Vehicles (per kg)
1001 to 1199 18,000 36,000
Passenger
234 1200 to 1299 20,000 40,000
Transport
Vehicles
1300 to 1499 30,000 60,000
Seating capacity
1500 to 1599 45,000 90,000

Budget Precis 2019-2020 | PKF Page 18 of 32


BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty

Non- Non-
Sec Category ATL Sec Category ATL
ATL ATL

1600 to 1999 60,000 120,000 up to 850 - -

120,00 851 to 1000 5,000 10,000


2000 and above 240,000
0
1001 to 1300 7,500 15,000
Rates of
Advance Tax on
1301 to 1600 12,500 25,000
Registration of
Vehicles
1601 to 1800 18,750 37,500

Engine Capacity
1801 to 2000 25,000 50,000
(cc)

Upto 850 7,500 15,000 2001 to 2500 37,500 75,000

851 to 1000 15,000 30,000 2501 to 3000 50,000 100,000

1001 to 1300 25,000 50,000 above 3000 62,500 125,000

231B 1301 to 1600 50,000 100,000 234A CNG station 4% 8%

1601 to 1800 75,000 150,000 236A Sale by auction 10% 20%

100,00 Purchase of
1801 to 2000 200,000
0 236B domestic air 5% 5%
ticket
150,00
2001 to 2500 300,000
0 Sale/transfer of
236C immovable 1% 2%
200,00 property
2501 to 3000 400,000
0

Functions and
250,00 236D 5% 5%
above 3000 500,000 gatherings
0

Rates of Sales to retailers


Advance tax on
transfer of 236H - Electronics 1% 2%
231B Vehicles
- Others 0.50% 1%
Engine capacity
(cc)

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BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty

Non- Non-
Sec Category ATL Sec Category ATL
ATL ATL

Sale of certain 236 Tax on


236H 10% 10%
petroleum 0.50% 1% Q Machinery rental
A
products
Education
Sales of 236R expenses 5% 5%
Distributors, remitted abroad
dealers or
wholesaler Insurance
236
premium
G
- Fertilizer 0.70% 1.40%
236 General - 4%
- Other than U
0.10% 0.20% Life insurance
Fertilizer 1% 1%
exceeding 0.3
million/annum
Advance tax by
236I educational 5% 5% Others - 0%
Institutions
Extraction of
236V 0% 5%
Advance tax on minerals
dealers,
commission Purchase of
236X 5% 5%
agents and tobacco
arhatis etc.
Amount remitted
Group/Class A 100,000 100,000 through debit /
236J 236Y 1% 2%
credit / prepaid
Group/Class B 75,000 75,000 cards

Group/Class C 50,000 50,000

Any other 2nd Schedule


50,000 50,000
category
Part I
Purchase of
Clause (39A) Internal Security allowances
236K immovable 1% 2%
property
and compensation in lieu of bearer
allowances paid to members of armed forces
Transaction is proposed to be exempted from tax.
other than cash In clause (61) following two institutions have
236P through Bank - 0.6% been proposed to be added for exemption to
(exceeding any donation paid to these charitable
50,000 in a day) organizations:

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BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty
• Layton Rahmatullah Benevolent Trust income, the capital Gains" on disposal of
• Akhuwat immovable property acquired or allotted to
ex-servicemen and serving personnel of
Following institutes/organizations has been
Armed Forces or ex-employees or serving
proposed for addition to grant exemption
personnel of Federal and Provincial
from taxation, namely: —
Governments, being original allottees of the
• -Akhuwat. immovable property, duly certified by the
• -Audit Oversight Board." allotment authority has been proposed to be
Profit and gains on sale of immovable reduced by fifty percent on the first sale of
property to a rental REIT scheme have been immovable property.
proposed to be exempted up to the 30thday
of June, 2021.
Part IV
Exemption on inter corporate dividend is The provisions of clause (a) of sub section (1)
proposed to be available on eligibility basis. of section 153 shall not apply in case of goods
transport contractors, provided that such
It has been proposed to exempt profit and contractors pay tax at the rate of 3% on
gains accruing to persons mentioned in payments for rendering or providing of
proviso to dependents of Shuhada and carriage services.
persons who dies in service in respect of first
sale of immovable property acquired from or Clauses 81 & 81A have been proposed to be
allotted by the Federal Government or withdrawn which will make the provisions of
Provincial Government or any authority duly clause (a) of section 165 applicable to
certified by the official allotment authority. manufacturers, distributors, dealers and
Previously it was taxed at 0%. wholesalers required to collect advance tax
under sub section (1) of section 236H and to
Income of any individual domiciled or banking companies for furnishing information
company and association of persons resident of taxes collected and deducted under
in the Tribal Areas forming part of the sections 231A and 151.
Provinces of Khyber Pakhtunkhwa and
Balochistan has been proposed to be Clause 94 has been proposed to be
exempted for a period of five years with withdrawn which will result in withdrawal of
effect from the 1st day of June 2018 to the exemption from the withholding provisions of
30th 1st day of June, day of June, 2023. clause (b) of the proviso to sub-section (3) of
section 153 on payment of 2% minimum tax
Part III as the same was valid till June 30, 2019.
However, under section 153, the rate on such
Reduction of tax liability of full-time teacher services would be 4%.
or Researcher has been proposed to be
Clause 110 has been proposed to be
reduced from 40%to 25%. Furthermore,
incorporated which shall exempt the
benefit of this clause is proposed to be
individual domiciled or company and
withdrawn from teachers of medical
profession who derive income from private association of persons resident in the Tribal
medical practice or who receive share of Areas forming part of the Provinces of Khyber
consideration received from patients. Pakhtunkhwa and Baluchistan from
withholding tax as specified in Division III of
As the capital gain of immovable property has Part V of Chapter X and Chapter XII of ITO
been withdrawn as a separate block of

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BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty
2001 for deduction or collection of Prudential Regulations issued by the State
withholding taxes for a period of five years Bank of Pakistan as expense.
with effect from the 1st day of June 2018 to An explanation has been proposed after
the 30th day of June, 2023. clause (h) removing doubts that this section
do not restrict power of Commissioner, while
3rd Schedule conducting audit of the income tax affairs
The Third Schedule has been under section 177, to call for record or such
proposed to be amended so as to other information and documents as he may
withdraw initial depreciation on the deem appropriate in order to examine
additions to buildings at the rate of accounts and records to conduct enquiry into
15%. expenditure, income, assets and liabilities of a
banking company and all provisions of ITO
4th Schedule 2001 shall be applicable accordingly.
Rule 6E has been proposed to be Rule 6C has been proposed through which
incorporated which shall authorize the “Additional income earned" has been defined
Commissioner to examine and amend the and taxed at a rate of 37.5% for the tax year
amount of income as disclosed in the financial 2020 onwards.
statement presented to the Securities and Additional income earned means any average
Exchange Commission of Pakistan with earned in addition to average amount of such
respect to commission paid and claimed for income earned from investment in Federal
losses. Government securities by the bank for the tax
year. which will result in additional income
7th Schedule earned. Furthermore, each year auditor
Explanation has been proposed to be added certificate along with accounts shall be
to clause (c) of Rule 1 clarifying that: submitted to FBR for the computation of this
tax.
i. provision for advances and off balance
sheet items allowed under this clause, The taxable income arising from additional
at the rate of 1 percent or 5 percent, investment shall be determined according to
as the case may be, shall be exclusive the following formula, namely: -
of reversals of such provisions; Taxable income subject to enhanced rate of
ii. reversal of “bad debts” classified as tax = A x B/C
“doubtful” or “loss” are taxable as the
Where-
respective provisions have been
allowed under this clause; and A. is taxable income of the banking company;
iii. with effect from tax year 2020 and B is net markup income earned from such
onward; reversal of “bad debts” additional income earned for the tax year as
classified as “ loss” are taxable as the declared in the annual accounts; and
respective provisions have been
allowed under this clause. C is total of the net mark-up and non-mark-up
income of the banking company as per
In the clause (d) & (e), it is proposed to accounts.
disallow doubtful debts in addition to “sub-
standard” loans classified under the Rule 7C has been proposed to be amended to
exclude brought forward losses adjustment

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BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty
from the computation of income for Super statements within 45 days of the receipt of
Tax under section 4B of ITO 2001. “provisional assessment order”, the
provisional order shall be abated. However,
Rule 7D has been proposed to be
in case he fails to file the return the
amended to provide better
provisional assessment shall be considered
clarification by removing
“final assessment”.
duplicating words of taxable
income & interest income. Rule 5 Imposition of Penalty Where the
provisional assessment has been treated as
10th Schedule final assessment under sub-rule (1) of rule 4,
the Commissioner may within thirty days of
A separate schedule has been proposed for the final assessment initiate proceedings for
making the rules regarding the persons imposition of penalties under section 182 on
whose names are not appearing in the active account of non-furnishing of return and
taxpayer’s list. concealment of income.
Rule 1 Rate of Deduction or Collection of Rule 6 Imputed Income for individuals,
Tax: The rate of tax to be applied for withholding association of persons and companies means
from persons not appearing in “active taxpayers’
income which would have resulted in the
list” at the double of the normal prescribed rate.
amount of tax given in paragraph (1) of
Rule 2 Application for Non-Deduction of Tax Division I and Division II respectively of the
The withholding agent shall furnish a return First Schedule equal to the tax collected or
to Commissioner stating the reason as to why deducted under rule 1 for not appearing in
deduction was not necessary from a “person” the active taxpayers' list.
under the provisions of the law. The
Rule 7 Where the withholding agent fails to
Commissioner shall pass an order within 30
furnish in the withholding statement
days failing which the same may be deemed
complete or accurate particulars of persons
as approved. However, Commissioner may,
not appearing on active taxpayers' list, the
on the basis reasonable ground, direct the
Commissioner shall initiate proceedings
withholding agent to deduct tax from the
under sections 182 and 191 against the
“person”.
withholding agent within thirty days of filing
Rule 3 Provisional assessment: The non-filer of withholding statement under section 165.
whose tax has been deducted by the
Rule 8 Amendment of assessment The
withholding agent in a tax year is required to
Commissioner may amend an assessment
file a return within due date. In case he fails
order on the basis of definite information
to file the return Commissioner of Income tax
acquired from an audit or otherwise, the
shall make a “provisional Assessment” by
Commissioner is satisfied that the order is
imputing taxable income on the basis of tax
erroneous and has resulted in loss of revenue
withheld. The income so imputed shall be
to FBR, he may amend the said assessment
considered as “concealed income” under the
including provisional and final assessments.
provisions of clause (d) of sub section (1) of
section 111. Rule 9 Provisions of Ordinance to apply—
The provisions of this Ordinance not
Rule 4 Finalization or abatement of
specifically dealt with in the aforesaid rules
provisional assessment In case the “person”
shall apply, mutatis mutandis, in the case of
files a return of the relevant tax year and
preceding year along with other required

Budget Precis 2019-2020 | PKF Page 23 of 32


BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty
proceedings against the persons not
appearing on active taxpayers' list.
Rule 10-Exceptions
The provisions of this Schedule are not
applicable from taxes deductible under
sections 149, 154, 155, 156B, 231A, 231AA,
233AA, 235, 235A, 235B, 236B, 236F, 236I,
236J, 236L, 236P, 236Q, 236R, 236U, 236V,
236X ) and tax deducted under section 152
other than sub-section (1), (1AA), (2).

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BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty

SALES TAX
Paradigm shift in the definition of Cottage Tier-1 retailers are proposed to pay tax at
Industry is proposed. Now only normal rate under the Act. Customers of Tier-
manufacturing concern located in residential 1 retailers shall be entitled to receive cash
area which does not have industrial gas or back of upto 5% of the tax involved from such
electricity connection, having labour force date and in such manner as the Board may
upto ten workers and annual turnover from prescribe. This step would compel issuance of
all supplies not exceeding two million rupees sales tax invoice by the Tier-1 retailers on
would be considered as Cottage Industry customer’s demand.
which is not liable to registration under the
Act. Previously, manufacturing concern Value of supply in case of toll manufacturing
having annual turnover not exceeding ten is proposed to be defined as the actual
million and utility bills not exceeding eight consideration received for value addition
hundred thousand rupees were considered as carried out by the manufacturer.
cottage industry. Withholding tax regime has been proposed
to be made part of the main law and with
It is proposed to add importer in addition to enhanced ambit to cover transactions with
the manufacturer for the purpose of charging registered and active taxpayer companies.
sales tax on the retail price on the existing as The Board will prescribe the modalities in this
well as additional goods proposed to be regard.
included in the Third Schedule in this bill. Powers of Federal Government to zero rate
or exempt goods are proposed to be only
Certain Powers conferred to the Federal exercisable in the event of national security,
Government are proposed to be exercisable natural disaster, national food security and
by the Federal Board of Revenue with the for implementation of bilateral and
approval of the Minister-in-charge. In view of multilateral agreements.
this shift, appropriate amendments have
been introduced in sections 2(33), 2(43), Minimum value addition at import stage
3(3A), 7(3), 8(6), 37B and 67A of the Sales Tax currently regulated through Special
Act, 1990. Procedure is proposed to be made part of
Retailer whose shop measures one thousand main law with exclusion of POL products
square feet in area and above are proposed imported by licensed OMC and cellular and
to be covered in Tier-1 type and to pay sales satellite phones.
tax at normal rate. Tier-1 retailers dealing in
textile and leather products may charge 15% Input on supplies made to unregistered
sales tax in case of integration with FBR person where invoice do not bear NIC
system. number of buyers is proposed to be
disallowed on pro-rata basis.
The Commissioner Inland Revenue is
proposed to be empowered to exclude
registered person being a Tier-1 retailer or Restriction on claim of input for imported
scrap compressor is proposed to be
not a retailer from the ambit of chargeability
withdrawn.
of tax on electricity consumption.

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BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty
It is proposed to empower the Board to allow whose share in such concerns is less than ten
adjustment of input tax upto 95% for any percent.
person or class of persons which is currently
available upto 90% under the provisions of Special procedure for various taxation
section 8B of the Act. matters are proposed to be regulated by the
Board in a manner consistent with the
It is proposed that Board may pay refund of provisions of main law. overriding effect of
input tax against export on fixed rate basis in special procedure is proposed to be done
the manner to be prescribed by the Board. away.

Sales Tax invoice is proposed to be issued in Selection parameters for audit by the Board
Urdu or English. Further, in case of sale to the are proposed to be confidential in line with
unregistered person, NIC number of the provisions available in the Income Tax
recipient is proposed to be included in the Ordinance, 2001.
invoice. Textile sector dealing in yarn and
fabric is proposed to mention count, denier
and construction in the description of invoice. Schedules
The relaxation available for conduct of audit 3rd Schedule
once in three years under section 25 of the
Following items covered under the ambit of
Act is proposed to be conducted every year.
extra tax and sold in retail pack are proposed
to be brought back in Third Schedule.
Approval of Commissioner for revision of
return within sixty days of filing of original • Household electrical goods, including air
return is proposed to be done away where conditioners, refrigerators, deep
after revision, tax payable is enhanced or the freezers, televisions, recorders and
refund claimed is reduced. players, electric bulbs, tube-lights,
electric fans, electric irons, washing
Penalty for late filing of return is proposed to machines and telephone sets’
be doubled from the existing Rs.5,000 or • Household gas appliances, including cooking
Rs.100 per day i.e to Rs.10,000 and Rs.200 per range, ovens, geysers and gas heaters;
day respectively. • Foam or spring mattresses and other
foam products for household use;
A provision in the Act is proposed whereby • Paints, distempers, enamels, pigments,
criminal proceedings can be initiated against colours, varnishes, gums, resins, dyes,
any authority including any person employed glazes, thinners, blacks, cellulose
under such authority for willful and deliberate lacquers and polishes sold in retail
acts of omission and commission and packing;
resulting in undue advantage and personal • Lubricating oils, brake fluids,
benefits to the authority, person or the transmission fluid, and other vehicular
taxpayer or both. Respective headings 85 fluids sold in
retail packing;
Recovery from members or persons of • Storage batteries excluding those sold to
business enterprises is proposed to be automotive manufacturers or
rationalized by excluding those members assemblers;

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BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty
• Tyres and tubes excluding those sold to and excluding steel, ghee and cooking
automotive manufacturers or oil industries is to be exempted till
assemblers; and June 30, 2023.
• Motorcycles and Auto Rickshaws • Exemption from sales tax to steel
billets, ingots, ship plates, bars is to be
6th Schedule introduced where Federal Excise Duty
Following changes have been proposed in is payable in sales tax mode.
Table 1 (Import or Supplies): • Exemption on local supply of ginned
• Tax exemption on packed meat cotton is to be withdrawn.
whether imported or local is proposed • Exemption on local supply of
to be allowed. cottonseed oil and wheat bran is to be
• Tax exemption on products of milling introduced.
industry sold in retail packing bearing
trade/brand name except wheat and 8th Schedule
meslin flour is to be withdrawn. Following amendments proposed in Table -I,
• Exemption available for gold and silver whereby reduced rate to be withdrawn on
is to be withdrawn. following items.
• Tax on electricity and gas supplied to • reclaimed lead,
teaching hospitals of universities and • rapeseed sunflower and canola seed
hospitals of Federal/Provincial
Government is to be charged as per • soya been seed;
law. • white crystalline sugar
• Exemption to be granted to all sort of Reduced rate for following items with
uncooked poultry meats. certain restrictions and limitations is
• Exemption available to sausages and proposed.
meat offal is to be withdrawn for
items sold in retail packing with brand Items/Products Rate
name/trade mark
Products of milling industry 10%
• Exemption is to be withdrawn for fat except wheat and meslin
filled milk sold in retail packing with flour-sold in retail packing
brand name/trade mark under brand name or trade
mark
• Supplies, industrial inputs and import
of plant, machinery and equipment for
Fat filled milk--sold in retail 10%
installation/use in tribal areas is to be
packing under brand name
exempted till June 30, 2023 with
or trade mark
certain conditions.
• Electricity supplied in tribal areas to Silver/Gold, in unworked 1% plus
residential, commercial and industrial condition 2% VAT
users (setup and industrial production
commenced prior to May 31, 2018)

Budget Precis 2019-2020 | PKF Page 27 of 32


BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty
Sales Tax on mobile and satellite phones is
Items/Products Rate
proposed to be reduced in the following
Articles of jewellery, or parts 1.5%-of manner.
thereof, of precious metal or value of
Registration
of metal clad with precious Gold Import
of IMEI
metal. or local
0.5% of number by
Category Supply
No input tax adjustment to value of CMOs
be allowed except of the tax Diamond
paid on gold plus Amount in PKR
3% of
A. Not exceeding 135 135
making
US$ 30
charges
B. Exceeding US$ 1,320 1,320
Prepared Food, foodstuff 7.5%
30 but
and sweetmeats supplied by
restaurants, bakeries, not exceeding
caterers and sweetmeat US$ 100
shops-
C. Exceeding US$ 1,680 1,680
no input tax shall be 100 but
adjusted
not exceeding
Ginned Cotton 10% US$ 200

Supplies of finished articles 15% D. Exceeding US$ 1,740 1,740


of textile, textile made-ups, 200 but
leather and artificial leather, not exceeding
as made by retailers- US$ 350
If they are integrated with
FBR’s online system and E. Exceeding US$ 5,400 5,400
data is transmitted to the 350 but
FBR’s computerized system not exceeding
in real time in such mode US$ 500
and manner as may be
prescribed by the Board F. Exceeding US$ 9,270 9,270
500
LNG imported for servicing 5%
CNG sector and local
supplies thereof
10th Schedule
Monthly fixed sales tax on bricks is to be
introduced ranging from 12,500 to 7,500 on
the basis of territorial region/area.
9th Schedule 11th Schedule

Budget Precis 2019-2020 | PKF Page 28 of 32


BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty
Withholding tax regime to be introduced in
this Schedule. Significant change is rate for
withholding from unregistered persons
increased from existing 1% to 5%.

12th Schedule
Minimum value addition on imported goods
for commercial importers made part of main
law. Conditions are similar to the existing
provisions.
However, minimum value addition on
mobiles/satellite phones and POL items
imported by licensed Oil Marketing Company
is proposed to be withdrawn.

Budget Precis 2019-2020 | PKF Page 29 of 32


BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty

FEDERAL EXCISE DUTY


Certain Powers conferred to the Federal • FED on ghee and cooking oil sold in retail
Government are proposed to be exercisable by packing is proposed to be 17% of retail
the Federal Board of Revenue with the price.
approval of the Minister-in-charge. In view of • FED on ghee and cooking oil not sold in
this shift, appropriate amendments have been retail packing is proposed to be 17% ad
introduced in sections 2(23a), 7(2) and 22(13), valorem.
of the Federal Excise Act, 2005 • FED on aerated waters is proposed to be
14% ad valorem against present 11.5% ad
It is proposed that FED to be levied on the basis valorem.
of minimum production in the case of Steel
Proposed revision of FED on local cigarettes is as
billets and ingots, Steel bars and other re-rolled
under.
long profiles of steel and Ship plates in the
manner specified in Fourth Schedule Printed Retail Price Proposed
Range (per FED
Powers of Federal Government to exempt or thousand cigarettes)
reduce duty on goods/services are proposed to
be only exercisable in the event of national <5,960 1,650
security, natural disaster, national food security
and for implementation of bilateral and >5,960 5,200
multilateral agreements.
• FED on portland cement, aluminous
Selling of cigarettes at lower price than retail cement, slag cement, super sulphate
price plus the amount of sales tax as printed cement and similar hydraulic cements is
thereon is proposed to be considered as guilty proposed @ Rs. 2/kg in place of existing
of an offence liable to fine/penalty. @Rs. 1.50/kg.
• FED on LNG is proposed to be increased
A provision in the Act is proposed whereby from Rs.17.18 per 100 cubic meter to Rs.10
criminal proceedings can be initiated against per MMBTu.
any authority including any person employed • FED on oilseeds is proposed to be
under such authority for willful and deliberate abolished.
acts of omission and commission and resulting • FED on locally manufactured vehicles is
in undue advantage and personal benefits to proposed to be rationalized as under.
the authority, person or the taxpayer or both.

Schedules (a) of cylinder capacity up to


1000cc
2.5% ad val.

1st Schedule (b) of cylinder capacity from 5% ad val.


1001cc to 2000cc
Following amendments have been proposed in
the First Schedule. (c) of cylinder capacity 2001cc 7.5% ad val.
• FED on edible oil is proposed to be and above
enhanced from 16% to 17%

Budget Precis 2019-2020 | PKF Page 30 of 32


BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty
• FED on fruit juices, syrups and squashes,
waters containing added sugar or
sweetening matter etc. excluding mineral
and aerated waters is proposed at 5% of
retail price.
• FED on Steel Billets, ingots, ship plates, bars
and other long re-rolled products is
proposed at 17% on ad valorem basis.
• FED on local air travel is proposed to be
reduced from existing Rs.2,000 to Rs.1,500
for long routes and from Rs.1,250 to
Rs.900.

2nd Schedule
FED on Steel billets, ingots, ship plates, bars and
other long re-rolled products is proposed to be
levied in Sales Tax Mode with input adjustment.

3rd Schedule
Exemption of FED on internet services is
proposed to be withdrawn.

4th Schedule
FED to be levied on steel products in the
following manner subject to certain conditions
and procedure specified in this Schedule.

S.NO PRODUCT PRODUCTION


CRITERIA

1. Steel billets One metric ton per


and ingots 700 kwh of electricity
consumed

2. Steel bars One metric ton per


and other re- 110 kwh of electricity
rolled long consumed
profiles of
steel

3. Ship plates 75% of the weight of


the vessel imported
for breaking

Budget Precis 2019-2020 | PKF Page 31 of 32


BUDGET PRECIS 2019-2020
Federal
Contents Preface Income Tax Sales Tax ICT
Excise Duty

SALES TAX ON
SERVICES-
ISLAMABAD
CAPITAL
TERRITORY
• Debt collection services and other debt
Tax rate on call center services is proposed to
recovery services
be reduced from 18.5% to 17%.
• Supply chain management or
Following Services are proposed to be added distribution (including delivery) services
in taxable ambit at standard rate of 16%. • Services provided or rendered by
• Advertisement on hoarding boards, pole persons engaged in intercity
signs and signboards, and websites or transportation or carriage of goods by
internet road or through pipeline or conduit
• Services provided by landscape • Ready mix concrete services
designers • Public relations services
• Sponsorship services • Training or coaching services other than
• Services provided or rendered for education services
purchase or sale or hire of immovable
Cleaning services including janitorial services,
property
collection of waste and processing of domestic
• Services provided or rendered by legal
waste
practitioners and consultants
• Services provided by accountants and
auditors
• Service provided or rendered by
Stockbrokers, future brokers and
commodity brokers, money exchanger,
surveyors, outdoor photographers,
event photographers, videographers,
art painters, auctioneers (excluding
value of goods) and registrar to an issue
• Services provided by race clubs: Entry/
admission and other services
• Services provided or rendered by
corporate law consultants
• Visa processing services, including
advisory or consultancy services for
migration or visa application filing
services

Budget Precis 2019-2020 | PKF Page 32 of 32


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