16 of 212015-06-30

Finance Act, 2015, as published 30 June 2015

This is the Finance Act, 2015, as published by the Federal Board of Revenue on 30 June 2015. It runs to 236 pages and contains 18 sections.

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1. Short title, extent and commencement

(1) This Act may be called the Finance Act, 2015.

(2) It extends to the whole of Pakistan.

(3) It shall come into force from the first day of July, 2015, except clauses (9) and (10) of section 2 which shall have effect from the next day of assent given to this Act by the President of the Islamic Republic of Pakistan.

2. Amendments of Act IV of 1969

In the Customs Act, 1969 (IV of 1969), the following further amendments shall be made, namely:-

(303) Price : Rs. 156.50

983(2015)/Ex. Gaz.]

(1) in section 19,-

(a) for sub-section (1), the following shall be substituted, namely:-

“(1) The Federal Government pursuant to the approval of the Economic Coordination Committee of Cabinet, whenever circumstances exist to take immediate action for the purposes of national security, natural disaster, national food security in the emergency situations, protection of national economic interests in situations arising out of abnormal fluctuation in international commodity prices, removal of anomalies in duties, development of backward areas and implementation of bilateral and multilateral agreements, subject to such conditions, limitations or restrictions, if any, as it deems fit to impose, may, by notification in the official Gazette, exempt any goods imported into, or exported from, Pakistan or into or from any specified port or station or area therein, from the whole or any part of the customs-duties chargeable thereon and may remit fine, penalty, charge or any other amount recoverable under this Act.”; and

(b) after sub-section (3), the following new sub-sections shall be added, namely:-

“(4) The Federal Government shall place before the National Assembly all notifications issued under this section in a financial year.

(5) Any notification issued under sub-section (1) after the commencement of the Finance Act, 2015 shall, if not earlier rescinded, stand rescinded on the expiry of the financial year in which it was issued.“;

(2) section 20 shall be omitted;

(3) in section 32, in sub-section (3), in the proviso, for the words “one hundred”, the words “twenty thousand” shall be substituted;

(4) in section 79, in sub-section (1),-

(a) after the word “warehousing”, the words “or transhipment” shall be inserted; and

(b) in clause (b), after the second proviso, the following explanation shall be added, namely:-

“Explanation.-For the purposes of this clause, the assessment and paying of duty, taxes and other charges in respect of transhipment shall be at the port of destination.”;

(5) in section 80, in sub-section (4), after the words “examined” the words “and assessed” shall be inserted”.

(6) in section 121, in sub-section (1), for the full stop at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that at customs-station where the Customs Computerized System is operational, the system may automatically

authorize transhipment to other customs-station subject to risk selectivity criteria.“;

(7) in section 123, after sub-section (2), the following shall be added, namely:-

“Explanation.-For the purpose of transhipment of LCL goods, the customs-station of first entry shall be the customs-station where the goods are de-consolidated.”;

(8) in section 156, in sub-section (1), in the Table,-

(a) S.No.1 shall be re-numbered as S.No.1(i) of that Table and thereafter the following new clause and the entries relating thereto in columns (1), (2) and (3) shall be added, namely:-

(b) against serial number 64, in column (1), for the existing entry, the following shall be substituted:-

“If any person contravenes any rule or condition relating to section 128 or section 129, or makes an untrue declaration relating to transit goods or illegally removes or conceals any transit goods,”;

(9) the amendments set out in the First Schedule to this Act shall be made in the First Schedule to the Customs Act, 1969 (IV of 1969); and

(10) the Fifth Schedule to the Customs Act, 1969 (IV of 1969), shall be substituted in the manner specified in the Second Schedule to this Act.

3. Amendment of Ordinance, XXXVI OF 1971

In the Workers Welfare Fund Ordinance, 1971 (XXXVI Of 1971), in section 2, in clause (f), for the semi-colon occurring at the end, the expression “or mutual funds and collective investment schemes including National Investment (Unit) Trust or REIT Scheme” shall be substituted;

4. Amendment of Act XXVII of 1974

In the Members of Parliament (Salaries and Allowances) Act, 1974 (XXVII of 1974),-

(1) in section 3, for the words “twenty-seven thousand three hundred seventy-seven” the words “thirty-six thousand four hundred and twenty-three” shall be substituted.

(2) in section 10, in sub-section (1),-

(i) the words “within Pakistan” shall be omitted; and

(ii) for the words “by air or by rail”, the words “by Pakistan International Airlines or by Pakistan Railways” shall be substituted.

(3) in section 13A, in the explanation, the commas and words “, namely, the Committee on Government Assurances, Committee on problems of Less Developed Areas, Committee on Human Rights and Committee on Rules of Procedure and Privileges” shall be omitted.;

5. Amendments of the Sales Tax Act, 1990

In the Sales Tax Act, 1990, the following further amendments shall be made, namely:-

(1) in section 2,-

(a) for clause (1), the following shall be substituted, namely:-

“(1) “active taxpayer” means a registered person who does not fall in any of the following categories, namely:-

(a) who is blacklisted or whose registration is suspended or is blocked in terms of section 21;

(b) who fails to file the return under section 26 by the due date for two consecutive tax periods;

(c) who fails to file an Income Tax return under section 114 or statement under section 115, of the Income Tax Ordinance, 2001(XLIX of 2001), by the due date; and

(d) who fails to file two consecutive monthly or an annual withholding tax statement under section 165 of the Income Tax Ordinance, 2001(XLIX of 2001);

(1A) “Appellate Tribunal” means the Appellate Tribunal Inland Revenue established under section 130 of the Income Tax Ordinance, 2001 (XLIX of 2001);“;

(b) in clause (5AB), for the word “seven”, the word “eight” shall be substituted;

(c) in clause (28), the comma, words and figures “, and his total turnover per annum shall be taken into account for the purposes of registration under section 14” shall be omitted; and

(d) in clause (33),-

(a) in sub-clause (b), the word “and” at the end shall be omitted; and

(b) in sub-clause (c), for the colon at the end, a semi-colon and the word “and” shall be substituted, and thereafter the following new clause shall be added, namely:-

“(d) in case of manufacture of goods belonging to another person, the transfer or delivery of such goods to the owner or to a person nominated by him:”;

(e) after clause (46), the following new clause shall be added, namely:-

“(46A) “whistleblower” means whistleblower as defined in section 72D of the Sales Tax Act, 1990”;

(2) in section 3,-

(a) in sub-section (1A), for the word “one”, the word “two” shall be substituted;

(b) in sub-section (2), for clause (b), the following shall be substituted, namely:-

“(b) the Federal Government may, subject to such conditions and restrictions as it may impose, by notification in the official Gazette, declare that in respect of any taxable goods, the tax shall be charged, collected and paid in such manner and at such higher or lower rate or rates as may be specified in the said notification.”; and

(c) in sub-section (8), after the word “thereunder”, the comma and words “, but subject to the provisions of clause (b) of sub-section (2)” shall be inserted;

(3) in section 6, in sub-section (1), after the word “enforcement”, the words “including recovery” shall be inserted;

(4) in section 7, in sub-section (2), in clause (ii), after the figure “79”, the expression “, section 81” shall be inserted;

(5) in section 8, in sub-section (1),-

(a) in clause (h),-

(a) after the word “excluding”, the words “pre-fabricated buildings and” shall be inserted; and

(b) the word “and” occurring at the end shall be omitted;

(b) in clause (i), for full stop at the end a semi-colon shall be substituted and thereafter the following new clauses shall be added, namely:-

“(j) services in respect of which input tax adjustment is barred under the respective provincial sales tax law;

(k) import or purchase of agricultural machinery or equipment subject to sales tax at the rate of 7% under Eighth Schedule to this Act; and

(l) from the date to be notified by the Board, such goods and services which, at the time of filing of return by the buyer, have not been declared by the supplier in his return.“;

(6) in section 8A, after the word “unpaid”, occurring for the first time, the expression “, of which the burden to prove shall lie on the department” shall be inserted;

(7) in section 13,-

(a) in sub-section (2),-

(i) in clause (a), after the word “may”, the commas and the words “, pursuant to the approval of the Economic Coordination Committee of Cabinet, whenever circumstances exist to take immediate action for the purposes of national security, natural disaster, national food security in emergency situations, protection of national economic interests in situations arising out of abnormal fluctuation in international commodity prices, removal of anomalies in taxes, development of backward areas and implementation of bilateral and multilateral agreements” shall be inserted and thereafter the word “and” at the end shall be omitted; and

(ii) clause (b) shall be omitted;

(b) in sub-section (3), the expression “or, as the case may be, order made under clause (b) of that sub-section” shall be omitted;

“(6) The Federal Government shall place before the National Assembly all notifications issued under this section in a financial year.

(7) Any notification issued under sub-section (2), after the 1st July, 2015 shall, if not earlier rescinded, stand rescinded on the expiry of the financial year in which it was issued.“;

(8) for section 14, the following shall be substituted, namely:-

“14. Registration.-(1) Every person engaged in making taxable supplies in Pakistan, including zero-rated supplies, in the course or furtherance of any taxable activity carried on by him, falling in any of the following categories, if not already registered, is required to be registered under this Act, namely:-

(a) a manufacturer who is not running a cottage industry;

(b) a retailer who is liable to pay sales tax under this Act or rules made thereunder, excluding such retailer required to pay sales tax through his electricity bill under sub-section (9) of section 3;

(d) an exporter who intends to obtain sales tax refund against his zero-rated supplies;

(e) a wholesaler, dealer or distributor; and

(f) a person who is required, under any other Federal law or Provincial law, to be registered for the purpose of any duty or tax collected or paid as if it were a levy of sales tax to be collected under this Act;

(2) Persons not engaged in making of taxable supplies in Pakistan, if required to be registered for making imports or exports, or under any provisions of this Act, or any other Federal law, may apply for registration.

(3) The registration under this Act shall be regulated in such manner as the Board may, by notification in the official Gazette, prescribe.“;

(9) after section 21, the following new section shall be inserted, namely:-

“21A. Active taxpayers list.-The Board shall have the power to maintain active taxpayers list in the manner as may be prescribed by rules and such rules may provide for the restrictions and limitations to be imposed on a person who ceases to be an active taxpayer.”;

(10) in section 25, in sub-section (3), the words, figures and comma “or section 36, as the case may be” shall be omitted;

(11) in section 32A,-

(a) in the heading, for the words “Special Audit by Chartered Accountants or Cost Accountants”, the words “Audit by Special Audit Panels” shall be substituted;

(b) for sub-section (1) the following shall be substituted, namely:-

“(1) The Board may appoint as many special audit panels as may be necessary, comprising two or more members from the following,-

(a) an officer or officers of Inland Revenue;

(b) a firm of chartered accountants as defined under the Chartered Accountants Ordinance, 1961 (X of 1961);

(c) a firm of cost and management accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966); or

(d) any other person as directed by the Board,

to conduct audit of a registered person or persons, including audit of refund claims and forensic audit and the scope of such audit shall be determined by the Board or the Commissioner Inland Revenue on a case-to-case basis. In addition, the Board may, where it considers appropriate, also get such audit conducted jointly with similar audits being conducted by provincial administrations of sales tax on services.“;

(d) in sub-section (3), for the words “An auditor”, the words “Every member of special audit panel” shall be substituted; and

(e) after sub-section (3), amended as aforesaid, the following new sub-sections shall be added, namely:-

“(4) Each special audit panel shall be headed by a chairman who shall be an officer of Inland Revenue.

(5) If any one member of the special audit panel, other than the chairman, is absent from conducting an audit, the proceedings of the audit may continue and the audit conducted by the special audit panel shall not be invalid or be called in question merely on the ground of such absence.

(6) The Board may prescribe rules in respect of constitution, procedure and working of special audit panel.“;

(12) in section 33, in the Table, in column (1), -

(a) against serial number 1, in column (2), in the proviso, for the word “fifteen”, the word “ten” shall be substituted; and

(b) against serial number 5, in column (2), in the first proviso, for the word “fifteen”, the word “ten” shall be substituted;

(13) in section 40C,-

(a) in sub-section (2), after the word “labels”, the word and comma “barcodes,” shall be inserted; and

(b) after sub-section (2), amended as aforesaid, the following new sub-section shall be added, namely:-

“(3) Such tax stamps, banderoles, stickers, labels, barcodes etc., shall be acquired by the registered person referred to in sub-section (2) from a licensee appointed by the Board for the purpose, against price approved by the Board, which shall include the cost of equipment installed by such licensee in the premises of the said registered person.”;

(14) in section 45A, in sub-section (1), after the word “motion”, the words “, or otherwise,” shall be inserted;

(15) after section 56, the following new sections shall be inserted, namely:-

“56A. Agreement for the exchange of information.-(1) The Federal Government may enter into bilateral or multilateral agreements with provincial governments or with governments of foreign countries for the exchange of information, including electronic exchange of information, with respect to sales tax imposed under this Act or any other law of Pakistan and under the corresponding laws of such countries and may, by notification in the official Gazette, make such provisions as may be necessary for implementing such agreements.

(2) The provisions of section 107 of the Income Tax Ordinance, 2001 (XLIX of 2001) shall, mutatis mutandis, apply to the provisions of this section.

7. Amendment of Ordinance XXIII of 2001

In the Auditor-General’s (Functions, Powers and Terms and Conditions of Service) Ordinance, 2001 (XXIII of 2001), after section 19, the following new section shall be inserted, namely:-

“19A. Sanctions accorded by the Auditor-General.-The President may appoint an independent officer to audit sanctions to expenditure accorded by the Auditor-General. The Auditor-General shall produce for inspection by that officer all books and other documents relating thereto and give him such information as he may require for the purpose of audit;”

8. Amendment of Islamabad Capital Territory (Tax on Services) Ordinance, 2001 (XLII of 2001)

In the Islamabad Capital Territory (Tax on Services) Ordinance, 2001 (XLII of 2001), the following further amendments shall be made, namely:-

(1) in section 3,-

(a) in sub-section (1), for the words “rate of sixteen per cent” the words “rates specified in column (4) of the Schedule to this Ordinance” shall be substituted;

(b) in sub-section (2), after the words “specified in”, the words brackets and figure “column (2) of” shall be inserted; and

(2) for the Schedule, the following shall be substituted, namely:-

“THE SCHEDULE

[See section 3(2)]

9. Amendment of Income Tax Ordinance, (XLIX of 2001)

In the Income Tax Ordinance, 2001 (XLIX of 2001), the following further amendments shall be made, namely:-

(1) in section 2,-

(a) after clause (13A), the following new clause shall be inserted, namely:-

“(13AA) “consumer goods” means goods that are consumed by the end consumer rather than used in the production of another good;“;

(b) after clause (17), the following new clause shall be inserted, namely:-

“17A. “Developmental REIT Scheme” means Developmental REIT Scheme as defined under the Real Estate Investment Trust Regulations, 2015”;

“(22A) “fast moving consumer goods” means consumer goods which are supplied in retail marketing as per daily demand of a consumer;“;

(d) after clause (28), the following new clause shall be inserted, namely:-

“(28A) “imputable income” in relation to an amount subject to final tax means the income which would have resulted in the same tax, had this amount not been subject to final tax;“;

(e) in clause (29), for the word and figure “and 236M” a comma, the word and figures “, 236M and 236N” shall be substituted;

(f) after clause (42), the following new clause shall be inserted, namely:-

“(42A) “PMEX” means Pakistan Mercantile Exchange Limited a futures commodity exchange company incorporated under the Companies Ordinance, 1984 (XLVII of 1984) and is licensed and regulated by the Securities and Exchange Commission of Pakistan;“;

(g) for clause (47A), the following shall be substituted, namely:-

“(47A) “REIT Scheme” means a REIT Scheme as defined in the Real Estate Investment Trust Regulations, 2015;“;

(h) in clause (47B),-

(i) for the letters “REITMC” the letters “RMC” shall be substituted;

(ii) for the figure “2008” the figure “2015” shall be substituted;

(i) after clause (47B), amended as aforesaid, the following new clauses shall be inserted, namely:-

“(47C) “Rental REIT Scheme” means a Rental REIT Scheme as defined under the Real Estate Investment Trust Regulations, 2015;“;

(j) in clause (59A), in sub-clause (i), for the word “twenty-five”, the word “fifty” shall be substituted; and

(k) after clause (74), the following new clause shall be added, namely:-

“(75) “whistleblower” means whistleblower as defined in section 227B;“;

(2) after section 4, the following new section shall be inserted, namely:-

“4B. Super tax for rehabilitation of temporarily displaced persons.-(1) A super tax shall be imposed for rehabilitation of temporarily displaced persons, for tax year 2015, at the rates specified in Division IIA of Part I of the First Schedule, on income of every person specified in the said Division.

(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 under section (9) of this 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 under Fourth, Fifth, Seventh and Eighth Schedules.

(3) The super 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 super tax is not paid by a person liable to pay it, the Commissioner shall by an order in writing, determine the super tax payable, and shall serve upon the person, a notice of demand specifying the super tax payable and within the time specified under section 137 of the Ordinance.

(5) Where the super tax is not paid by a person liable to pay it, the Commissioner shall recover the super 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 super 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.“;

(3) after section 5, the following new section shall be inserted, namely:-

“5A. Tax on undistributed reserves.-(1) Subject to this Ordinance, a tax shall be imposed at the rate of ten percent, on every public company other than a scheduled bank or a modaraba, that derives profits for a tax year but does not distribute cash dividends within six months of the end of the said tax year or distributes dividends to such an extent that its reserves, after such distribution, are in excess of hundred

percent of its paid up capital, so much of its reserves as exceed hundred per cent of its paid up capital shall be treated as income of the said company:

Provided that for tax year 2015, cash dividends may be distributed before the due date mentioned in sub-section (2) of section 118, for filing of return for tax year 2015.

(2) The provisions of sub-section (1) shall not apply to-

(a) a public company which distributes profit equal to either forty per cent of its after tax profits or fifty per cent of its paid up capital , whichever is less, within six months of the end of the tax year;

(b) a company qualifying for exemption under clause (132) of Part I of the Second Schedule; and

(3) For the purpose of this section, ‘reserve’ includes amounts set-aside out of revenue or other surpluses excluding capital reserves, share premium reserves and reserves required to be created under any law, rules or regulations.“;

(4) after section 7, the following new section shall be inserted, namely:-

“7A. Tax on shipping of a resident person.-(1) In the case of any resident person engaged in the business of shipping, a presumptive income tax shall be charged in the following manner, namely:-

(a) ships and all floating crafts including tugs, dredgers, survey vessels and other specialized craft purchased or bare-boat chartered and flying Pakistan flag shall pay tonnage tax of an amount equivalent to one US $ per gross registered tonnage per annum; and

(b) ships, vessels and all floating crafts including tugs, dredgers, survey vessels and other specialized craft not registered in Pakistan and hired under any charter other than bare-boat charter shall pay tonnage tax of an amount equivalent to fifteen US cents per ton of gross registered tonnage per chartered voyage provided that such tax shall not exceed one US $ per ton of gross registered tonnage per annum:

Explanation.- For the purpose of this section, the expression “equivalent amount” means the rupee equivalent of a US dollar according to the exchange rate prevalent on the first day of December in the case of a company and the first day of September in other cases in the relevant assessment year.

(2) The provisions of this section shall not be applicable after the 30th June, 2020.“;

(5) after section 7A, inserted as aforesaid, the following new section shall be added, namely,-

“7B. Tax on profit on debt.-(1) Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division IIIA of Part I of the First Schedule, on every person, other than a company, who receives a profit on debt from any person mentioned in clauses (a) to (d) of sub-section (1) of section 151.

(2) The tax imposed under sub-section (1) on a person, other than a company, who receives a profit on debt shall be computed by applying the relevant rate of tax to the gross amount of the profit on debt.

(3) This section shall not apply to a profit on debt that is exempt from tax under this Ordinance.“;

(6) in section 8,-

(a) for the word and figures “6 and 7”, wherever occurring, the expression “5A, 6, 7, 7A and 7B” shall be substituted; and

(b) in clause (d) for the word and figures “6 or 7”, the expression “5A, 6, 7, 7A or 7B” shall be substituted;

(7) in section 12, in sub-section (2), in clause (a), for the colon at the end a semicolon shall be substituted and thereafter the proviso shall be omitted;

(8) in section 15A, in sub-section (1), for clause (h), the following shall be substituted, namely:-

“(h) any expenditure, not exceeding six per cent of the rent chargeable to tax in respect of the property for the year computed before any deduction allowed under this section, paid or payable by the person in the year wholly and exclusively for the purpose of deriving rent chargeable to tax under the head, “Income from Property” including administration and collection charges;“;

(9) in section 23A, in sub-section (1), after the word “areas” the words “or engaged in the manufacturing of cellular mobile phones and qualifying for exemption under clause (126N) of Part I of the Second Schedule” shall be inserted;

(10) in section 37A, in sub-section (1), the words “held for a period of less than a year” shall be omitted;

(11) in section 53;-

(a) in sub-section (2), after the word “time”, occurring for the second time, the commas and words “pursuant to the approval of the

Economic Coordination Committee of Cabinet, whenever circumstances exist to take immediate action for the purposes of national security, natural disaster, national food security in emergency situations, protection of national economic interests in situations arising out of abnormal fluctuation in international commodity prices, removal of anomalies in taxes, development of backward areas and implementation of bilateral and multilateral agreements” shall be inserted;

(b) after sub-section (3), the following new sub-section shall be added, namely:-

“(4) Any notification issued under sub-section (2) after the commencement of the Finance Act, 2015, shall, if not earlier rescinded, stand rescinded on the expiry of the financial year in which it was issued.”;

(12) in section 62, in sub-section (2), in clause (c), after the word “one”, the words “and a half” shall be inserted;

(13) section 64 shall be omitted and thereafter the following new sections shall be inserted, namely:-

“64A. Deductible allowance for profit on debt. - (1) Every individual shall be entitled to a deductible allowance for the amount of any profit or share in rent and share in appreciation for value of house paid by the individual in a tax year on a loan by a scheduled bank or non-banking finance institution regulated by the Securities and Exchange Commission of Pakistan or advanced by Government or the Local Government, Provincial Government or a statutory body or a public company listed on a registered stock exchange in Pakistan where the individual utilizes the loan for the construction of a new house or the acquisition of a house.

(2) The amount of an individual’s deductible allowance allowed under sub-section (1) for a tax year shall not exceed fifty percent of taxable income or one million rupees, whichever is lower.

(3) Any allowance or part of an allowance under this section for a tax year that is not able to be deducted for the year shall not be carried forward to a subsequent tax year.

10. Amendments of the Federal Excise Act, 2005

In the Federal Excise Act, 2005, the following further amendments shall be made, namely:-

(1) In section 2, after clause (24), the following new clause shall be added, namely:-

“(24A) “whistleblower” means whistleblower as defined in section 42D of the Federal Excise Act, 2005”;

(2) in section 16,-

(a) in sub-section (2), after the word “may”, occurring for the first time, the commas and words “, pursuant to the approval to the Economic Coordination Committee of Cabinet, whenever circumstances exist to take immediate action for the purposes of national security, natural disaster, national food security in emergency situations, protection of national economic interests in situations arising out of abnormal fluctuation in international commodity prices, removal of anomalies in duties, development of backward areas and implementation of bilateral and multilateral agreements,” shall be inserted;

(b) sub-section (3) shall be omitted;

(c) in sub-section (4), for the words, figures and brackets “sub-sections (2) and (3)”, the word, figure and brackets “sub-section (2)” shall be substituted; and

(d) after sub-section (4), amended as aforesaid, the following new sub-sections shall be added, namely:-

“(5) The Federal Government shall place before the National Assembly all notifications issued under this section in a financial year.

(6) Any notification issued under sub-section (2) after 1st July, 2015, shall, if not earlier rescinded, stand rescinded on the expiry of the financial year in which it was issued.“;

(3) in section 35, in sub-section (1), after the words “suo moto”, the comma and words “, or otherwise” shall be inserted;

(4) after section 42C, the following new section 42D shall be added, namely:-

“42D. Reward to whistleblowers.-(1) The Board may sanction reward to whistleblowers in cases of concealment or evasion of duty, corruption or misconduct providing credible information leading to such detection of evasion of duty.

(2) The Board may, by notification in the official Gazette, prescribe the procedure in this behalf and also specify the apportionment of reward sanctioned under this section for whistleblowers.

(3) The claim for reward by the whistleblower shall be rejected, if-

(a) the information provided is of no value;

(b) the Board already had the information;

(d) no collection of duty is made from the information provided from which the Board can pay the reward.

(4) For the purpose of this section, “whistleblower” means a person who reports concealment or evasion of duty leading to detection or collection of duty, corruption or misconduct, to the competent authority having power to take action against the person or a federal excise authority committing fraud, corruption, misconduct, or involved in concealment or evasion of duty.“;

(5) in section 45A,-

(a) in sub-section (2), after the word “labels”, the word and comma “barcodes,” shall be inserted; and

(b) after sub-section (2), amended as aforesaid, the following new sub-section shall be added, namely:-

(6) in section 46,-

(a) in the heading, the word “Departmental” shall be omitted;

(b) for sub-section (4), the following shall be substituted, namely:-

“(1) The Board may appoint as many special audit panels as may be necessary, comprising two or more members from the following -

(a) an officer or officers of Inland Revenue;

(b) a firm of chartered accountants as defined under the Chartered Accountants Ordinance, 1961 (X of 1961);

(c) a firm of cost and management accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966); or

(d) any other person as directed by the Board,

(c) after sub-section (4), substituted as aforesaid, the following new sub-sections shall be inserted and the existing sub-section (5) shall be re-numbered as sub-section (9), namely:-

“(5) Each special audit panel shall be headed by a chairman who shall be an officer of Inland Revenue;

(6) If any one member of the special audit panel, other than the chairman, is absent from conducting an audit, the proceedings of the audit may continue and the audit conducted by the special audit panel shall not be invalid or be called in question merely on the ground of such absence.

(7) The Board may prescribe rules in respect of constitution, procedure and working of special audit panel.

(8) Every member of the special audit panel shall have the powers of officers of Inland Revenue under sections 23 and 45 and sub-sections (1) to (3) of section 46.“;

(7) after section 47, the following new sections shall be inserted, namely:-

“47A. Agreements for the exchange of information.- (1) The Federal Government may enter into bilateral or multilateral agreements with provincial governments or with governments of foreign countries for the exchange of information, including electronic exchange of information, with respect to excise duty imposed under this Act or any other law of Pakistan, or under the corresponding laws of that country and may, by notification in the official Gazette, make such provisions as may be necessary for implementing such agreements.

(2) The provisions of section 107 of the Income Tax Ordinance, 2001 (XLIX of 2001) shall, mutatis mutandis, apply to this section.

47B. Disclosure of information by a public servant

(1) Any information acquired under any provision of this Act or in pursuance of a bilateral or multilateral agreement or tax information exchange agreement shall be confidential and no public servant shall disclose any such information, except as provided under section 216 of the Income Tax Ordinance, 2001 (XLIX of 2001).

The provisions of section 216 of Income Tax Ordinance 2001 (XLIX of 2001) shall, mutatis mutandis, apply to this section.“;

(8) in the First Schedule,-

(a) in Table I, in column (1),-

(i) against serial numbers 4, 5 and 6, in column (4), for the word “nine”, the word “ten and a half” shall be substituted;

(ii) for serial numbers 9 and 10 and the corresponding entries relating thereto in columns (2), (3) and (4), the following shall be substituted, namely:-

(iii) after serial number 55, the following new serial number and entries relating thereto in columns (2), (3) and (4) shall be added, namely:-

(b) in Table II, in column (1), against serial number 3, in column (2), in clause (a),-

(i) sub-clause (iii) and the entry relating thereto in column (4) shall be omitted; and

(ii) after sub-clause (iii), omitted as aforesaid, in the Explanation, for the expression “, and “socio-economic routes” means journeys along the Balochistan coastal belt”,

the expression “as defined in S. No. 9 of Table II of the Third Schedule” shall be substituted;

(9) in the Third Schedule,-

(a) in Table I, in column (1), after S. No. 17 and the entries relating thereto in columns (2) and (3), the following new S. Nos and the corresponding entries relating thereto in columns (2) and (3) shall be added, namely: -

(b) in Table II, in column (1), after omitted S. No. 8 and the entries relating thereto in columns (2) and (3), the following new S. Nos and the corresponding entries relating thereto in columns (2) and (3) shall be added, namely: -

THE FIRST SCHEDULE [see section 2( 9) ]

In the Customs Act, 1969 (IV of 1969), in the First Schedule, for the corresponding entries against “PCT Code”, “Description” and “CD%” specified in columns (1), (2), (3) and (4) appearing in chapters 1 to 99, the following corresponding entries relating to “PCT Code”, “Description” and “CD%” specified below shall be substituted, namely :-

THE SECOND SCHEDULE [see clause (10) of section 2]

In the Customs Act, 1969 (IV of 1969), for Fifth Schedule, the following shall be substituted, namely:-

“FIFTH SCHEDULE [see section 18]

Part-I

Imports of Plant, Machinery, Equipment and Apparatus, including Capital Goods for various Industries/sectors

Note:- For the purposes of this Part, the following conditions shall apply besides the conditions as specified in column (5) of the Table below:-

(i). the imported goods as are not listed in the locally manufactured items, notified through a Customs General Order issued by the Federal Board of Revenue (FBR) from time to time or, as the case may be, certified as such by the Engineering Development Board;

(ii) except for S. No. 1(E), 15, 23 and 24 of the Table, the Chief Executive, or the person next in hierarchy duly authorized by the Chief Executive or Head of the importing company shall certify in the prescribed manner and format as per Annex-A that the imported items are the company’s bonafide requirement. He shall furnish all relevant information online to Pakistan Customs Computerized System against a specific user ID and password obtained under section 155D of the Customs Act, 1969 IV of 1969). In already computerized Collectorates or Customs stations where the Pakistan Customs Computerized System is not operational, the Director Reforms and Automation or any other person authorized by the Collector in this behalf shall enter the requisite information in the Pakistan Customs Computerized System on daily basis, whereas entry of the data obtained from the customs stations which have not yet been computerized shall be made on weekly basis; and

(iii) in case of partial shipments of machinery and equipment for setting up a plant, the importer shall, at the time of arrival of first partial shipment, furnish complete details of the machinery, equipment and components required for the complete plant, duly supported by the contract, lay out plan and drawings.

Explanation.- Capital Goods mean any plant, machinery, equipment, spares and accessories, classified in chapters 84, 85 or any other chapter of the Pakistan Customs Tariff, required for-

(a) the manufacture or production of any goods, and includes refractory bricks and materials required for setting up a furnace,

catalysts, machine tools, packaging machinery and equipment, refrigeration equipment, power generating sets and equipment, instruments for testing, research and development, quality control, pollution control and the like; and

(b) use in mining, agriculture, fisheries, animal husbandry, floriculture, horticulture, livestock, dairy and poultry industry;

TABLE

Annex-A

CERTIFICATE. It is certified that the description and quantity mentioned above are commensurate with the project requirement and that the same are not manufactured locally. It is further certified that the above items shall not be used for any other purpose.

Signature of Chief Executive, or the person next in hierarchy duly authorized by the Chief Executive Name ____________________ N.I.C. No. ____________________

NOTE:- In case of clearance through Pakistan Customs Computerized System, the above information shall be furnished on line against a specific user I.D. and password obtained under section 155D of the Customs Act, 1969( IV of 1969).

Explanation.-

Chief Executive means.-

owner of the firm, in case of sole proprietorship; or
partner of firm having major share, in case of partnership firm; or
Chief Executive Officer or the Managing Director in case of limited company or multinational organization; or
Principal Officer in case of a foreign company.

Annex-B

CERTIFICATE. Before certifying the above-authorized officer of the Regulatory Authority shall ensure that the goods are genuine and bonafide requirement of the project and that the same are not manufactured locally. Signature ____________________ Designation ____________________ NOTE:- In case of clearance through Pakistan Customs Computerized System, the above information shall be furnished on line against a specific user I.D. and password obtained under section 155D of the Customs Act, 1969( IV of 1969).

Part-II

Import of Active Pharmaceutical Ingredients, Excepients/Chemicals, Drugs, Packing Material/ Raw Materials for Packing and Diagnostic Kits and Equipments, Components and other Goods

The Imports under this part shall be subject to following conditions, namely.-

(i) The active pharmaceutical ingredients, Excepients /chemicals, packing material and raw material for packing shall be imported only for in-house use in the manufacture of specified pharmaceutical substances, as approved by the Drug Regulatory Agency of Pakistan.

(ii) The requirement for active pharmaceutical ingredients and Excepients/chemicals, drugs as specified in Table A, B & C, shall be determined by the Drug Regulatory Agency of Pakistan;

(iii) The requirement for packing materials/raw materials for packing, as specified in Table-D, shall be determined by Input Output Coefficient Organization,

(iv) The designated/authorized representative person of Drug Regulatory Agency of Pakistan shall furnish all relevant information, as set out in this part, online to the Customs computerized system, accessed through the unique user identifier obtained under section 155 d of the Customs Act, 1969, along with the password thereof.

Table A (Active Pharmaceutical Ingredients)

Table B (Excepients/Chemicals)

Table C (Drugs)

Table D

(Packing Materials/Raw Materials for Packing/Bandages)

Table E (Diagnostic Kits/Equipments)

Part-III Import of Raw Materials, Inputs for Poultry and Textile Sector and Other Goods

The imports under this part shall be subject to following conditions, besides the conditions specified in the Table given below namely:-

(i) The designated/authorized person of the following Ministries, or as the case may be, companies shall furnish all relevant information as detailed in the table below on line to the Customs Computerized System, accessed through the unique users identifier obtained under section 155d of the Customs Act, 1969, along with the password thereof, namely:-

(a) Ministry of Industries, Production and Special Initiatives, in case of imported goods specified against serial numbers 19 of Table;

(b) M/s Lotte Chemical Pakistan Ltd, in case of imported goods specified against serial number 20 of Table;

(ii) The importer shall file the Goods Declaration online through Pakistan Customs Computerized System where operational, and through a normal hard copy in the Collectorates/Custom-stations, in which the Pakistan Customs Computerized System is not operational as yet.

(iii) In already computerized Collectorates and Custom-stations where the Customs Computerized System is not yet operational, the Director Reforms and Automation or any other authorized officer shall feed the requisite information about clearance/release of goods under this notification in the Customs Computerized System on daily basis, and the data obtained from the Custom-stations, which have not yet been computerized, on weekly basis.

Table

Part-IV Miscellaneous

Part-V

Imports of Aviation Related Goods i.e., Aircrafts and Parts etc by Airline Companies / Industry

Note:- For the purposes of this Part, under National Aviation Policy - 2015, the Federal Government is pleased to exempt the goods or items specified in column (2) of the Table below, falling under PCT Code in column (3) of that Table, from so much of customs-duty leviable under the First Schedule to the Customs Act, 1969, as in excess of the rates specified in column (4) thereof, subject to the following conditions, besides the special conditions specified in column (5) of the Table, namely:-

(i) the Chief Executive, or the person next in hierarchy duly authorized by the Chief Executive or Head of the importing company shall certify that the imported goods/items are the company’s bonafide requirement. He shall furnish all relevant information online to Pakistan Customs Computerized System against a specific user ID and password obtained under section

155D of the Customs Act, 1969 (IV of 1969). In already computerized Collectorates or Customs stations where the Pakistan Customs Computerized System is not operational, the Director Reforms and Automation or any other person authorized by the Collector in this behalf shall enter the requisite information in the Pakistan Customs Computerized System on daily basis, whereas entry of the data obtained from the customs stations which have not yet been computerized shall be made on weekly basis;

(ii) the exemption shall be admissible on production of certificate by the Aviation Division, Government of Pakistan to the effect that the intending importer is operating in the country or intends to operate in the county in the airline sector;

(iii) the list of imported items is duly approved by the Aviation Division, Government of Pakistan in line with Policy Framework approved by the Government of Pakistan;

(iv) the Chief Executive, or the person next in hierarchy duly authorized by the Chief Executive or Head of the importing company shall furnish an undertaking to the customs authority at the time of import that the goods imported shall be used for the purpose as defined/notified by the Aviation Division, Government of Pakistan under the Aviation Policy; and

(v) in case of deviation from the above stipulations, the Collector of Customs shall initiate proceedings for recovery of duty and taxes under the relevant laws.

TABLE

MOHAMMAD RIAZ, Secretary.

PRINTED BY THE MANAGER, PRINTING CORPORATION OF PAKISTAN PRESS, ISLAMABAD. PUBLISHED BY THE DEPUTY CONTROLLER, STATIONERY AND FORMS, UNIVERSITY ROAD, KARACHI.

56B. Disclosure of information by a public servant

(2) The provisions of section 216 of the Income Tax Ordinance, 2001 (XLIX of 2001), shall, mutatis mutandis, apply to the provisions of this section.

56C. Prize schemes to promote tax culture

The Board may prescribe prize schemes to encourage general public to make purchases only from registered persons issuing tax invoices.“;

(16) after section 72C, the following new section 72D shall be added, namely:-

“72D. Reward to whistleblowers.-(1) The Board may sanction reward to whistleblowers in cases of concealment or evasion of tax, tax fraud, corruption or misconduct providing credible information leading to such detection of tax fraud.

(2) The Board may, by notification in the official Gazette, prescribe the procedure in this behalf and also specify the apportionment of reward sanctioned under this section for whistleblowers.

(3) The claim for reward by the whistleblower shall be rejected, if-

(a) the information provided is of no value;

(b) the Board already had the information;

(d) no collection of taxes is made from the information provided from which the Board can pay the reward.

(4) For the purpose of this section, “whistleblower” means a person who reports concealment or evasion of sales tax and tax fraud leading to detection or collection of taxes, fraud, corruption or misconduct, to the competent authority having power to take action against the person or a sales tax authority committing fraud, corruption, misconduct or involved in concealment or evasion of taxes.“;

(17) in the Fifth Schedule, in column (1),-

(a) against serial number 6, in column (2), the words “to the Export Processing Zones and” shall be omitted;

(b) after serial number 6, amended as aforesaid, the following new serial number and the entry relating thereto in column (2) shall be inserted, namely:-

“6A. Supplies of locally manufactured plant and machinery of the following specifications, to manufacturers in the Export Processing Zone, subject to the conditions, restrictions and procedure given below, namely:-

(i) Plant and machinery, operated by power of any description, as is used for the manufacture or production of goods by that manufacturer;

(ii) Apparatus, appliances and equipments specifically meant or adapted for use in conjunction with the machinery specified in clause (i);

(iii) Mechanical and electrical control and transmission gear, meant or adapted for use in conjunction with machinery specified in clause (i); and

(iv) Parts of machinery as specified in clauses (i), (ii) and (iii) identifiable for use in or with such machinery.

Conditions, restrictions and procedures:-

(a) the supplier of the machinery is registered under the Act;

(b) proper bill of export is filed showing registration number;

(c) the purchaser of the machinery is an established manufacturer located in the Export Processing Zone and holds a certificate from the Export Processing Zone Authority to that effect;

(d) the purchaser submits an indemnity bond in proper form to the satisfaction of the concerned Commissioner Inland Revenue that the machinery shall, without prior permission from the said Commissioner, not be sold, transferred or otherwise moved out of the Export Processing Zone before a period of five years from the date of entry into the Zone;

(e) if the machinery is brought to tariff area of Pakistan, sales tax shall be charged on the value assessed on the bill of entry; and

(f) breach of any of the conditions specified herein shall attract legal action under the relevant provisions of the Act, besides recovery of the amount of sales tax along with default surcharge and penalties involved.“;

(c) against serial number 9, in column (2), the words “who makes local supplies of both taxable and exempt goods” shall be omitted;

(d) against serial number 12, in column (2), in clause (ix), the words “including flavored milk” and the word and figure “and 0402.9900” shall be omitted; and thereafter clauses (x) to (xvi) shall be omitted;

(18) in the Sixth Schedule, -

(a) in Table-1,in column (1), -

(i) against serial number 19, in column (3), the comma and figure “1006.1010,” shall be omitted;

(ii) against serial number 20, in column (3), for the figure “1209.1000”, the figures and comma “1006.1010, 1209.1000” shall be substituted;

(iii) serial numbers 28, 39 and 56 and entries relating thereto in columns (2) and (3) shall be omitted;

(iv) for serial numbers 73 to 80 and the entries relating thereto in columns (2) and (3), the following serial numbers and the entries relating thereto shall be substituted, namely:-

(v) against serial number 105, in column (2), after the word “Schedule”, the words “or Fifth Schedule” shall be inserted;

(vi) against serial number 114,-

(A) in column (2), in clause (1), after the word “equipment”, the words and comma “consisting of plastic covering and mulch film, anti-insect net and shade net” shall be inserted; and

(B) in column (3), for the figures and comma “8430.3100, 8430.3900”, the figures and commas “3920.1000, 3926.9099, 5608.1900, 5608.9000” shall be substituted;

(vii) after serial number 116 and the entries relating thereto in columns (2) and (3), the following new serial numbers and entries relating thereto in columns (1), (2) and (3) shall be added, namely:-

(b) in Table-2, in column (1), -

(a) serial numbers 13 and 14 and the etntries relating thereto in columns (2) and (3) shall be omitted;

(b) after serial number 16 and entries relating thereto in columns (2) and (3), the following new serial numbers and entries

relating thereto in columns (1), (2) and (3) shall be added, namely;-

and

(c) in Table-3, in the Annexure, in column (1), serial numbers 10 and 16 and entries relating thereto in columns (2), (3) and (4) shall be omitted;

(19) in the Eighth Schedule, -

(a) in Table-1, in column (1), -

(i) against serial No. 1, in column (4), for the figure “5%”, the figure “10%” shall be substituted;

(ii) serial number 3 and entries relating thereto in columns (2), (3), (4) and (5) shall be omitted;

(iii) against serial number 6, in column (4), for the figure “5%”, the figure “10%” shall be substituted; and

(iv) after serial number 6 and the entries relating thereto in columns (2), (3), (4) and (5), amended as aforesaid, the following new serial numbers and entries relating thereto in columns (1), (2), (3), (4) and (5) shall be inserted; namely:-

; and

(b) in Table-2,-

(i) in the preamble, after the words “five percent”, the commas and words “, except goods mentioned in serial numbers 1, 5 and 6 of the Annexure which shall be charged at the rate of ten percent,” shall be inserted; and

(ii) in the Annexure, in column (1), serial numbers 3 and 7 and entries relating thereto in columns (2), (3) and (4) shall be omitted; and

(20) in the Ninth Schedule,-

(a) in the Table,-

(i) in column (3), in the heading, for the expression “(payable by importer at the time of import)”, the words “or local supply” shall be substituted; and

(ii) in column (1), against S. No. 2, in columns (3) and (4), -

(A) for the figure “150”, the figure “300” shall be substituted;

(B) for the figure “250”, the figure “500” shall be substituted; and

(b) under the heading “LIABILITY, PROCEDURE AND CONDITIONS”, after clause (vi), the following new clause shall be inserted, namely:-

“(via) The sales tax as indicated in column (3) of the Table above shall be paid by the importer, in case of imports and by the manufacturer, in case of locally manufactured cellular mobile phones;”.

64B. Tax credit for employment generation by manufacturers

(1) Where a taxpayer being a company formed for establishing and operating a new manufacturing unit sets up a new manufacturing unit between the 1st day of July, 2015 and the 30th day of June, 2018, (both days inclusive) it shall be given a tax credit for a period of ten years.

(2) The tax credit under sub-section (1) for a tax year shall be equal to one percent of the tax payable for every fifty employees registered with

The Employees Old Age Benefits Institution or the Employees Social Security Institutions of Provincial Governments during the tax year, subject to a maximum of ten percent of the tax payable.

(3) Tax credit under this section shall be admissible where-

(a) the company is incorporated and manufacturing unit is setup between the first day of July, 2015 and the 30th day of June, 2018, both days inclusive;

(b) employs more than fifty employees in a tax year registered with The Employees Old Age Benefits Institution and the Employees Social Security Institutions of Provincial Governments;

(c) manufacturing unit is managed by a company formed for operating the said manufacturing unit and registered under the Companies Ordinance, 1984 (XLVII of 1984) and having its registered office in Pakistan; and

(d) the manufacturing unit is not established by the splitting up or reconstruction or reconstitution of an undertaking already in existence or by transfer of machinery or plant from an undertaking established in Pakistan at any time before the 1st July 2015.

(4) Where any credit is allowed under this section and subsequently it is discovered, on the basis of documents or otherwise, by the Commissioner that any of the conditions specified in this section were not fulfilled, the credit originally allowed shall be deemed to have been wrongly allowed and the Commissioner may, notwithstanding anything contained in this Ordinance, re-compute the tax payable by the taxpayer for the relevant year and the provisions of this Ordinance shall, so far as may be, apply accordingly.

(5) For the purposes of this section, a manufacturing unit shall be treated to have been setup on the date on which the manufacturing unit is ready to go into production, whether trial production or commercial production.“;

(14) in section 65, after sub-section (5), the following new sub-section shall be added, namely:-

“(6) Where the person is entitled to a tax credit under section 65B, 65D or 65E, provisions of clause (d) of sub-section (2) of section 169 and clause (d) of sub-section (1) of section 113 shall not apply.”;

(15) in section 65B, in sub-section (2), for the figure “2015” the figure “2016” shall be substituted;

(16) in section 65C, in sub-section (1), for the word “fifteen”, the word, “twenty” shall be substituted;

(17) in section 65E, in sub-section (5), for the words, brackets and figure “in respect of the tax year in which the plant or machinery referred to in sub-section (1) is installed and for the subsequent four years” the commas and words “, for a period of five years beginning from the date of setting up or commencement of commercial production from the new plant or expansion project, whichever is later” shall be substituted;

(18) in section 94, in sub-section (2), the word “resident” shall be omitted;

(19) in section 100C,-

(a) in sub-section (1), before the word “Non-profit” the words “The income of” shall be inserted; and

(b) in sub-section (2),

(i) after the word “Persons” the word “and incomes” shall be inserted; and

(ii) in clause (c), the word and hyphen “sub-” shall be omitted;

(20) in section (107),-

(a) for sub-section (1), the following shall be substituted, namely:-

“(1) The Federal Government may enter into an agreement, bilateral or multilateral with the government or governments of foreign countries or tax jurisdictions for the avoidance of double taxation and the prevention of fiscal evasion and exchange of information including automatic exchange of information with respect to taxes on income imposed under this Ordinance or any other law for the time being in force and under the corresponding laws in force in that country, and may, by notification in the official Gazette, make such provisions as may be necessary for implementing the agreement.”; and

(b) after sub-section (1), the following new sub-sections shall be inserted, namely:-

“(1A) Notwithstanding anything contained in any other law to the contrary, the Board shall have the powers to obtain and collect information when solicited by another country under a tax treaty, a tax information exchange agreement, a multilateral convention, an inter-governmental agreement, a similar arrangement or mechanism.

(1B) Notwithstanding the provisions of the Freedom of Information Ordinance, 2002 (XCVI of 2002), any information

received or supplied, and any concomitant communication or correspondence made, under a tax treaty, a tax information exchange agreement, a multilateral convention, a similar arrangement or mechanism, shall be confidential subject to sub-section (3) of section 216.“;

(21) in section 113A, after sub-section (2), the following new sub-section shall be added, namely:-

“(3) This section shall not have effect till the 30th June, 2018.”;

(22) in section 113B, for the expression “at the rates as the Federal Government may notify in the official Gazette” the words “at the rate of two per cent of the value of land notified by any authority for the purpose of stamp duty” shall be substituted;

(23) in section 113C,-

(a) in sub-section (1), after the word “company” the expression “in respect of income which is subject to tax under Division II of Part I of the First Schedule or minimum tax under any of the provisions of this Ordinance” shall be inserted;

(b) in sub-section (2), for clause (c), the following shall be substituted, namely:-

“(c) “corporate tax” means higher of tax payable by the company under Division II of Part I of the First Schedule and minimum tax payable under any of the provisions of this Ordinance.“;

(i) for clause (ii), the following shall be substituted, namely:-

“ (ii) Income which is subject to tax other than under Division II of Part I of the First Schedule or minimum tax under any of the provisions of this Ordinance;“;

(ii) in clause (iii), for the expression “ and 65E;” the expression “, 65E and 100C” shall be substituted;

(iii) clauses (iv) and (v) shall be omitted;

(d) in sub-section (10), for the word “section” the words and figures “sections 64B and” shall be substituted;

(e) after sub-section (11), the following explanation shall be added, namely:-

“Explanation.- For the removal of doubt, it is clarified that taxes paid or payable other than payable under Division II of Part I of the First Schedule shall remain payable in

accordance with the mode or manner prescribed under the respective provisions of this Ordinance.“;

(24) in section 114, in sub-section (6), in the proviso, for full stop at the end, a colon shall be substituted and thereafter the following new provisos shall be added, namely:-

“Provided further that the condition specified in clause (ba) shall not apply if revised return is filed within sixty days of filing of return:

Provided also that where the Commissioner has not made an order of approval in writing, for revision of return, before the expiration of sixty days from the date when the revision of return was sought, the approval required under clause (ba) shall be deemed to have been granted by the Commissioner, and condition specified in clause (ba) shall not apply:

Provided further that the mode and manner for seeking the revision shall be as prescribed by the Board.“;

(25) in section 118, in sub-section (2A), for full stop at the end a colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that the Board may amend the condition specified in this sub-section or direct that the said condition shall not apply for a tax year.”;

(26) in section 121, in sub-section (1), in clause (d), after the word “or”, occurring for the first time, the expression “a special audit panel appointed under sub-section (11) of section 177 or” shall be substituted;

(27) in section 128, after sub-section (1A), the following new sub-section shall be inserted, namely:-

“(1AA) The Commissioner (Appeals), after affording opportunity of being heard to the Commissioner against whose order appeal has been made, may stay the recovery of such tax for a further period of thirty days, provided that the order on appeal shall be passed within the said period of thirty days.”;

(28) in section 137, in sub-section (2),-

(a) for the word “fifteen” the word “thirty” shall be substituted;

(b) in the first proviso, for the word “sixty”, the word, “forty-five” shall be substituted; and

(29) in section 147, for sub-section (4A), the following shall be substituted, namely:-

“(4A) Any taxpayer who is required to make payment of advance tax in accordance with sub-section (4), shall estimate the tax payable for the relevant tax year, at any time before the second installment is due. In case the tax payable is likely to be more than the amount that the taxpayer is required to pay under sub-section (4), the taxpayer shall furnish to the Commissioner on or before the due date of the second quarter an estimate of the amount of tax payable by the taxpayer and thereafter pay fifty per cent of such amount by the due date of the second quarter of the tax year after making adjustment for the amount, if any, already paid in terms of sub-section (4). The remaining fifty per cent of the estimate shall be paid after the second quarter in two equal installments payable by the due date of the third and fourth quarter of the tax year.”;

(30) in section 148, sub-section (2) shall be omitted and thereafter the following new sub-section shall be inserted namely:-

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

(31) after section 148, the following new section shall be inserted, namely:-

“148A. Tax on local purchase of cooking oil or vegetable ghee by certain persons.- (1)The manufacturers of cooking oil or vegetable ghee, or both, shall be chargeable to tax at the rate of two percent on purchase of locally produced edible oil.

(2) The tax payable under sub-section (1) shall be final tax in respect of income accruing from locally produced edible oil.“;

(32) in section 151, for sub-section (3), the following shall be substituted, namely:-

“(3) Tax deductible under this section shall be a final tax on the profit on debt arising to a taxpayer, except where -

(a) taxpayer is a company; or

(b) profit on debt is taxable under section 7B.“;

(33) in section 152, after sub-section (4), the following new sub-section shall be inserted; namely:-

“ (4A) The Commissioner may, on application made by the recipient of a payment referred to in sub-section (2A) and after making such inquiry as the Commissioner thinks fit, may allow in cases where the tax deductable under sub-section (2A) is adjustable, by order in writing, any

person to make the payment, without deduction of tax or deduction of tax at a reduced rate.“;

(34) in section 153, in sub-section (3), in the proviso, in clause (c), for full stop, at the end, a semicolon and the word “and” shall be substituted and thereafter the following new clause shall be added, namely:-

“(d) tax deducted under clause (c) of sub-section (1) in respect of a sportsperson shall be final tax with effect from tax year 2013.”;

(35) in section 154, after sub-section (4), the following new sub-section shall be added, namely:-

“(5) The provisions of sub-section (4) shall not apply to a person who opts not to be subject to final taxation:

Provided that this sub-section shall be applicable from tax year 2015 and the option shall be exercised every year at the time of filing of return under section 114:

Provided further that the tax deducted under this sub-section shall be minimum tax.“;

(36) in section 158, in clause (b) for full stop a semicolon and the word “and” shall be substituted and thereafter, the following new clause shall be added, namely:-

“(c) amount actually paid shall have the meaning as may be prescribed.”;

(37) in section 159, sub-sections (3), (4) and (5) shall be omitted and thereafter the following new sub-section shall be inserted, namely:-

“(6) Notwithstanding omission of sub-sections (3), (4) and (5), any notification issued under the said sub-sections and for the time being in force, shall continue to remain in force, unless rescinded by the Board through notification in the official Gazette.”;

(38) in section 161, in sub-section (1B), for the word “eighteen” the word “twelve” shall be substituted;

(39) after section 165A, the following new section shall be inserted, namely:-

“165B. Furnishing of information by financial institutions including banks.-(1) Notwithstanding anything contained in any law for the time being in force including but not limited to the Banking Companies Ordinance, 1962 (LVII of 1962), the Protection of Economic Reforms Act, 1992 (XII of 1992), the Foreign Exchange Regulation Act, 1947 (VII of 1947) and any regulations made under the State Bank of Pakistan Act, 1956 (XXXIII of 1956) on the subject, every financial institution shall make arrangements to provide information regarding non-resident persons to the Board in the prescribed form and manner for the purpose of automatic

exchange of information under bilateral agreement or multilateral convention.

(2) Subject to section 216, all information received under this section shall be used only for tax and related purposes and kept confidential.“;

(40) in section 169, in sub-section (1),-

(a) after the word “collected” the words “or paid” shall be inserted; and

(b) in clause (a), after the figure “148”, the comma and figure “, 148A” shall be inserted;

(41) in section 171, in sub-section (1), for the word “fifteen” the expression “KIBOR plus 0.5 per cent” shall be substituted;

(42) in section 176,-

(a) in sub-section (1), for clause (a), the following shall be substituted, namely:-

“(a) to furnish to the Commissioner or an authorised officer, any information relevant to any tax leviable under this Ordinance or to fulfill any obligation under any agreement with foreign government or governments or tax jurisdiction, as specified in the notice; or”; and

(b) after sub-section (1), amended as aforesaid, the following new sub-section shall be added, namely:-

“(1A) A special audit panel appointed under sub-section (11) of section 177, for any tax year, may, with the prior approval of the Commissioner concerned, enter the business premises of a taxpayer, to obtain any information, require production of any record, on which the required information is stored and examine it within such premises and such panel may if specifically delegated by the Commissioner, also exercise the powers as provided in sub-section (4).”;

(43) in section 177, after sub-section (10), the following new sub-sections shall be added, namely:-

“(11) The Board may appoint as many special audit panels as may be necessary, comprising two or more members from the following:-

(a) an officer or officers of Inland Revenue;

(b) a firm of chartered accountants as defined under the Chartered Accountants Ordinance, 1961 (X of 1961);

(c) a firm of cost and management accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966); or

(d) any other person as directed by the Board,

to conduct an audit, including a forensic audit, of the income tax affairs of any person or classes of persons and the scope of such audit shall be as determined by the Board or the Commissioner on case-to-case basis.

(12) Special audit panel under sub-section (1) shall be headed by a Chairman who shall be an officer of Inland Revenue.

(13) Powers under sections 175 and 176 for the purposes of conducting an audit under sub-section (11), shall only be exercised by an officer or officers of Inland Revenue, who are member or members of the special audit panel, and authorized by the Commissioner.

(14) Notwithstanding anything contained in sub-sections (2) and (6), where a person fails to produce before the Commissioner or a special audit panel under sub-section (11) to conduct an audit, any accounts, documents and records, required to be maintained under section 174 or any other relevant document, electronically kept record, electronic machine or any other evidence that may be required by the Commissioner or the panel, the Commissioner may proceed to make best judgment assessment under section 121 and the assessment treated to have been made on the basis of return or revised return filed by the taxpayer shall be of no legal effect.

(15) If any one member of the special audit panel, other than the Chairman, is absent from conducting an audit, the proceedings of the audit may continue, and the audit conducted by the special audit panel shall not be invalid or be called in question merely on the ground of such absence.

(16) Functions performed by an officer or officers of Inland Revenue as members of the special audit panel, for conducting audit, shall be treated to have been performed by special audit panel.

(17) The Board may prescribe the mode and manner of constitution, procedure and working of the special audit panel.“;

(44) in section 181, in sub-section (3), for colon at the end a full stop shall be substituted and the proviso thereafter shall be omitted and thereafter the following new sub-section shall be added, namely:-

“(4) From tax year 2015 and onwards, in case of individuals having Computerized National Identity Card (CNIC) issued by the National Database and Registration Authority, CNIC shall be used as National Tax Number.”;

(45) in section 182, in sub-section (1), in the Table, in column (1),-

(a) against S.No. (1A), in column (3), for the word “fifty”, the word “ten” shall be substituted;

(b) against S.No. (IAA), in column (3), for the expression “Rs.100 for each day of default.”, the expression “0.1% of the taxable income per week or Rs.20,000, whichever is higher.” shall be substituted;

(46) in section 195, in sub-section (3), for the expression “Sub-section (3) of section 187” the expression “Entry against S.No 10 in column (2) of the Table in sub-section (1) of section 182” shall be substituted;

(47) in section 205, for the figure “18”, wherever occurring, the figure “12” shall be substituted;

(48) in section 207, in sub-section (1), after clause (g), the following new clause (ga) shall be inserted, namely:-

“(ga) special audit panel;”;

(49) in section 210, for sub-section (1B), the following shall be substituted, namely:-

“(1B) The Commissioner may, by an order in writing, delegate to a special audit panel appointed under sub-section (11) of section 177, or to a firm of chartered accountants or a firm of cost and management accountants appointed by the Board or the Commissioner to conduct an audit of person under section 177, all or any of the powers or functions to conduct an audit under this Ordinance.”;

(50) in section 211, in sub-section (1), after the word “Revenue” the words, brackets and figures “or by a special audit panel appointed under sub-section (11) of section 177” shall be inserted;

(51) after section 214C, the following new section shall be inserted, namely:-

“214D. Automatic selection for audit.-(1) A person shall be automatically selected for audit of its income tax affairs for a tax year, if-

(a) the return is not filed within the date it is required to be filed as specified in section 118, or, as the case may be, not filed within the time extended by the Board under section 214A or further extended for a period not exceeding thirty days by the Commissioner under section 119; or

(b) the tax payable under sub-section (1) of section 137 has not been paid.

(2) Audit of income tax affairs of persons automatically selected under sub-section (1) shall be conducted as per procedure given in section 177 and all the provisions of this Ordinance shall apply accordingly:

Provided that audit proceedings shall only be initiated after the expiry of ninety days from the date as mentioned in sub-section (1).

(3) Subject to section 182, 205 and 214C, sub-section (1) shall not apply if the person files the return within ninety days from the date as mentioned in sub-section (1) and-

(a) twenty-five percent higher tax, than the tax paid during immediately preceding tax year, has been paid by a person on the basis of taxable income and had declared taxable income in the return for immediately preceding tax year; or

(b) tax at the rate of two percent of the turnover or the tax payable under Part I of the First Schedule, whichever is higher, has been paid by a person alongwith the return and in the immediately preceding tax year has either not filed a return or had declared income below taxable limit:

Provided that where return has been filed for the immediately preceding tax year, turnover declared for the tax year is not less than the turnover declared for the immediately preceding tax year.

(4) The provisions of sub-section (1) and sections 177 and 214C shall not apply, for a tax year, to a person registered as retailer under rule (4) of the Sales Tax Special Procedure Rules, 2007 subject to the condition that name of the person registered under rule (4) of the Sales Tax Special Procedure Rules, 2007 remained on the sales tax active taxpayers’ list throughout the tax year.

(5) Sub-section (4) shall have effect from the date as the Board may, by notification in the official Gazette, appoint.“;

(52) after section 227A, the following new section shall be inserted, namely:-

“227B. Reward to whistleblowers.-(1) The Board may sanction reward to whistleblowers in cases of concealment or evasion of income tax, fraud, corruption or misconduct providing credible information leading to such detection of tax.

(2) The Board may, by notification in the official Gazette, prescribe the procedure in this behalf and also specify the apportionment of reward sanctioned under this section for whistleblowers.

(3) The claim for reward by the whistleblower shall be rejected, if-

(a) the information provided is of no value;

(b) the Board already had the information;

(d) no collection of taxes is made from the information provided from which the Board can pay the reward.

(4) For the purpose of this section, “whistleblower” means a person who reports concealment or evasion of income tax leading to detection or collection of taxes, fraud, corruption or misconduct, to the competent authority having power to take action against the person or an income tax authority committing fraud, corruption, misconduct, or involved in concealment or evasion of taxes.“;

(53) in section 231A, sub-section (2) shall be omitted;

(54) in section 231AA, in sub-section (1),-

(a) for colon at the end a full stop shall be substituted and thereafter the proviso shall be omitted; and

(b) sub-section (4) shall be omitted;

(55) in section 231B,-

(a) in sub-section (3), for the words “car or jeep” the word “vehicle” shall be substituted; and

(b) after sub-section (5), the following new sub-sections shall be added, namely:-

“(6) For the purposes of this section the expression “date of first registration” means-

(a) the date of issuance of broad arrow number in case a vehicle is acquired from the Armed Forces of Pakistan;

(b) the date of registration by the Ministry of Foreign Affairs in case the vehicle is acquired from a foreign diplomat or a diplomatic mission in Pakistan;

(c) the last day of the year of manufacture in case of acquisition of an unregistered vehicle from the Federal or a Provincial Government; and

(d) in all other cases the date of first registration by the Excise and Taxation Department.

(7) For the purpose of this section “motor vehicle” includes car, jeep, van, sports utility vehicle, pick-up trucks for private use, caravan automobile, limousine, wagon and any other automobile used for private purpose.“;

(56) in section 234, after sub-section (5), the following new sub-section shall be added, namely:-

“(6) For the purpose of sub-sections (1) and (2) “motor vehicle” shall include the vehicles specified in sub-section (7) of section 231B.“;

(57) in section 236,-

(a) in the marginal note, after the word “Telephone”, the words “and internet” shall be inserted;

(b) in sub-section (1),-

(i) In clause (b), the word “and” shall be omitted; and

(ii) in clause (c), for full stop at the end, a semi-colon and the word “; and” shall be substituted and thereafter the following clauses shall be added, namely:-

“(d) internet bill of a subscriber; and

(e) prepaid cards for internet.“;

(d) in sub-section (3), after the word “telephones”, the words “or internet” shall be inserted;

(58) in section 236B,

(a) in sub-section (1), for full stop at the end, a colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that this section shall not apply to routes of Baluchistan coastal belt, Azad Jammu and Kashmir, Federally Administered Tribal Areas, Gilgit-Baltistan and Chitral.”; and

(b) sub-section (4) shall be omitted;

(59) in section 236C, sub-section (3) shall be omitted;

(60) in section 236H, in sub-section (1),-

(i) the word and comma “fertilizer,” shall be omitted;

(ii) after the word “retailers”, the words “, and every distributor or dealer to another wholesaler in respect of the said sectors” shall be inserted;

(61) in section 236I, after sub-section (5), the following new sub-section shall be added, namely:-

“(6) Advance tax under this section shall not be collected from a person who is a non-resident and,-

(i) furnishes copy of passport as an evidence to the educational institution that during previous tax year, his stay in Pakistan was less than one hundred eighty-three days;

(ii) furnishes a certificate that he has no Pakistan-source income; and

(iii) the fee is remitted directly from abroad through normal banking channels to the bank account of the educational institution.“;

(62) in section 236K,-

(a) sub-section (3) shall be omitted;

(b) in sub-section (4), for full stop at the end a colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that the mode of payment by the expatriate Pakistanis in the said scheme or schemes shall be in the foreign exchange remitted from outside Pakistan through normal banking channels.”;

(63) after section 236N, the following new sections shall be inserted, namely:-

“236O. Advance tax under this chapter.-The advance tax under this chapter shall not be collected in the case of withdrawals made by-

(a) the Federal Government or a Provincial Government;

(b) a foreign diplomat or a diplomatic mission in Pakistan; or

236P. Advance tax on banking transactions otherwise than through cash

(1) Every banking company shall collect advance adjustable tax from a non-filer at the time of sale of any instrument, including demand draft, pay order, special deposit receipt, cash deposit receipt, short term deposit receipt, call deposit receipt, rupee traveller’s cheque or any other instrument of such nature.

(2) Every banking company shall collect advance adjustable tax from a non-filer at the time of transfer of any sum through cheque or clearing, interbank or intra bank transfers through cheques, online transfer, telegraphic transfer, mail transfer, direct debit, payments through internet, payments through mobile phones, account to account funds transfer, third party account to account funds transfers, real time account to account funds transfer, real time third party account to account fund transfer, automated teller machine (ATM) transfers, or any other mode of electronic or paper based funds transfer.

(3) The advance tax under this section shall be collected at the rate specified in Division XXI of Part IV of the First Schedule, where the sum total of payments for all transactions mentioned in sub-section (1) or sub-section (2), as the case may be, exceed fifty thousand rupees in a day.

(4) Advance tax under this section shall not be collected in the case of Pakistan Realtime Interbank Settlement Mechanism (PRISM) transactions or payments made for Federal, Provincial or local Government taxes.

236Q. Payment to residents for use of machinery and equipment

(1) Every prescribed person making a payment in full or in part including a payment by way of advance to a resident person for use or right to use industrial, commercial and scientific equipment shall deduct tax from the gross amount at the rate specified in Division XXIII of Part IV of the First Schedule.

(2) Every prescribed person making a payment in full or in part including a payment by way of advance to a resident person on account of rent of machinery shall deduct tax from the gross amount at the rate specified in Division XXIII of Part IV of the First Schedule.

(3) The tax deductible under sub-sections (1) and (2) shall be final tax on the income of such resident person.

(4) In this section “prescribed person” means a prescribed person as defined in sub-section (7) of section 153.

(5) The provisions of sub-section (1) and (2) shall not apply to-

(a) agricultural machinery; and

(b) machinery leased by a leasing company, an investment bank or a modaraba or a scheduled bank or a development finance institution in respect of assets owned by the leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution.

(1) There shall be collected advance tax at the rate specified in Division XXIIV of Part-IV of the First Schedule on the amount of education related expenses remitted abroad.

(2) Banks, financial institutions, foreign exchange companies or any other person responsible for remitting foreign currency abroad shall collect advance tax from the payer of education related expenses.

(3) Tax collected under this section shall be adjustable against the income of the person remitting payment of education related expenses.

(4) For the purpose of this section, “education related expenses” includes tuition fee, boarding and lodging expenses, any payment for

distant learning to any institution or university in a foreign country and any other expense related or attributable to foreign education.

236S. Dividend in specie

Every person making payment of dividend-in-specie shall collect tax from the gross amount of the dividend in specie paid at the rate specified in Division I of Part III of the First Schedule.

236T. Collection of tax by Pakistan Mercantile Exchange Limited (PMEX)

(1) Pakistan Mercantile Exchange Limited(PMEX) shall collect advance tax-

(a) at the rates specified in Division XXII of Part IV of First Schedule from its members on purchase of futures commodity contracts;

(b) at the rates specified in Division XXII of Part IV of First Schedule from its members on sale of futures commodity contracts; and

(2) The tax collected under clauses (a) and (b) of sub-section (1) shall be an adjustable tax.“;

(64) in the First Schedule,-

(A) in Part I,-

(a) in Division-I,-

(I) in paragraph (1),-

(i) for the TABLE, the following shall be substituted, namely:-

“TABLE

(ii) for the proviso the following shall be substituted, namely:-

“Provided that in the case of an association of persons that is a professional firm prohibited from incorporating by any law or the rules of the body regulating their profession, the 35% rate of tax mentioned against serial number 8 of the Table shall be 32% for tax year 2016 and onwards.;

(II) in paragraph (1A),-

(i) for the TABLE, the following shall be substituted, namely:-

“TABLE

(ii) the proviso, the semicolon at the end of proviso and the word “and” shall be omitted;

(III) in paragraph (1B), for sub-paragraph (ii), the following shall be substituted, namely:-

“(ii) a taxpayer of the age of not less than sixty years on the first day of that tax year, the tax liability on such income shall be reduced by fifty per cent.”;

(b) in Division II, in paragraph (i), in the second proviso for the full stop at the end, a colon shall be substituted and thereafter the following new proviso shall be added, namely:-

“Provided further that the rate of tax imposed on taxable income of a company, other than banking company shall be 32% for the tax year 2016, 31% for tax year 2017 and 30% for tax year 2018 and onwards.”;

“Division IIA

Rates of Super Tax

(d) in Division-III,

(i) for clause (b), the following shall be substituted, namely:-

“(b) 12.5%, in cases other than mentioned in clauses (a) and (c);

(ii) in the second proviso, after the word “scheme”, the comma and words, “, REIT Scheme” shall be inserted; and

(iii) for full stop at the end of second proviso, a colon shall be substituted and thereafter the following new proviso shall be added, namely:-

“Provided also that if a Developmental REIT Scheme with the object of development and construction of residential buildings is set up by thirtieth day of June, 2018, tax imposed on dividend received by a person from such Developmental REIT Scheme shall be reduced by fifty percent for three years from thirtieth day of June, 2018.”;

(e) after Division III, the following new Division shall be inserted, namely:-

“Division IIIA

Rate for Profit on Debt

The rate of tax for profit on debt imposed under section 7B shall be-

TABLE

(f) for Division-VII, the following shall be substituted, namely:-

“Division VII

Capital Gains on disposal of Securities

The rate of tax to be paid under section 37A shall be as follows-

Provided that the rate for companies shall be as specified in Division II of Part I of First Schedule, in respective of debt securities;

Provided further that a mutual fund or a collective investment scheme or a REIT scheme shall deduct Capital Gains Tax at the rates as specified below, on redemption of securities as prescribed, namely:-

Provided further that in case of a stock fund if dividend receipts of the fund are less than capital gains, the rate of tax deduction shall be 12.5%:

Provided further that no capital gains tax shall be deducted, if the holding period of the security is more than four years.“;

(g) In Division IX, in the Table, in column (1),-

(i) against S.No 1, in column (2), after clause (c), following new clause shall be inserted, namely:-

“(d) Dealers or distributors of fertilizers.”; and

(ii) against S.No 2, in column (2), in clause (a), the word “fertilizers” and “consumer goods including” shall be omitted;

(B) For Part II, the following shall be substituted, namely:-

“PART II

RATES OF ADVANCE TAX

[See Division II of Part V of Chapter X]

The rate of advance tax to be collected by the Collector of Customs under section 148 shall be-

(I) in Division I,-

(i) after the figure “150” the word and figure “ and 236S” shall be inserted; and

(ii) in paragraph (b), for the figure “10” the figure “12.5” shall be substituted and in paragraph (c),-

(a) for the figure “15” the figure “17.5” shall be substituted; and

(b) in the first proviso,

(i) after the word “scheme” a comma and words “, REIT Scheme” shall be inserted; and

(ii) in the Table, in the third column, in the heading, after the word “or” the expression “REIT Scheme or” shall be inserted; and

(iii) for full stop at the end of second proviso a colon shall be substituted and thereafter the following new proviso shall be added, namely:-

“Provided further that if a Developmental REIT Scheme with the object of development and construction of residential buildings is set up by thirtieth day of June, 2018, rate of tax on dividend received by a person from such Developmental REIT Scheme shall be reduced by fifty percent for three years from thirtieth day of June, 2018.”;

(II) in Division IA, for the figure “15%” the figure “17.5%” shall be substituted;

(III) in Division II,-

(i) for paragraph (4), the following shall be substituted, namely:-

“(4) The rate of tax to be deducted from a payment referred to in clause (a) of sub-section (2A) of section 152 shall be-

(i) in case of a company, 4% of the gross amount payable, if the company is a filer and 6% if the company is a non-filer; and

(ii) in any other case, 4.5% of the gross amount payable, if the person is a filer and 6.5% if the person is a non-filer.“;

(ii) in paragraph (5), for sub-paragraph (ii), the following shall be substituted, namely:-

“(ii) in cases other than transport,-

(a) in case of a company, 8% of the gross amount payable, if the company is a filer and 12% if the company is a non-filer; and

(b) in any other case, 10% of the gross amount payable, if the person is a filer and 15% if the person is a non-filer;“;

(iii) for paragraph (6), the following shall be substituted, namely:-

“(6) The rate of tax to be deducted from a payment referred to in clause (c) of sub-section (2A) of section 152 shall be,-”

(i) 10% of the gross amount payable in case of sportspersons;

(ii) in case of a company, 7% of the gross amount payable, if the company is a filer and 10% if the company is a non-filer; and

(iii) in any other case, 7.5% of the gross amount payable, if the person is a filer and 10% if the person is a non-filer.“;

(IV) in Division III,-

(i) in paragraph (1), in sub-paragraph (b), for clauses (i) and (ii), the following shall be substituted, namely:-

“(i) in case of a company, 4% of the gross amount payable, if the company is a filer and 6% if the company is a non-filer; and

(ii) in any other case, 4.5% of the gross amount payable, if the person is a filer and 6.5% if the person is a non-filer”;

(ii) in paragraph (2), in sub-paragraph (ii) , for clauses (a) and (b), the following shall be substituted, namely:-

“(a) in case of a company, 8% of the gross amount payable, if the company is a filer and 12% if the company is a non-filer; and

(b) in any other case, 10% of the gross amount payable, if the person is a filer and 15% if the person is a non-filer;

(i) in case of a filer, 1% of the gross amount payable; and

(ii) in case of a non-filer, 12% of the gross amount payable, if the non-filer is a company and 15% if the non-filer is other than a company;“;

(iii) in paragraph (3), for sub-paragraphs (i), (ii) and (ii), the following shall be substituted, namely:-

“(i) 10% of the gross amount payable in case of sportspersons;

(ii) in case of a company, 7% of the gross amount payable, if the company is a filer and 10% if the company is a non-filer; and

(iii) in any other case, 7.5% of the gross amount payable, if the person is a filer and 10% if the person is a non-filer.“;

(V) in Division VIA, after the word “payment” the word and figure “ for filers and 15% for non-filers” shall be inserted;

(D) in Part IV,-

(a) for Division II, the following shall be substituted, namely:-

“Division II

Brokerage and Commission

The rate of collection under sub-section (1) of section 233 shall be,-

(i) in case of filers, -

(a) 10% of the amount of the payment, in case of advertising agents; and

(b) 12% of the amount of payment in all other cases; and

(ii) in case of non-filers, 15% of the amount of payment.“;

(b) in Division III,-

(i) for paragraph “(i)” the following shall be substituted, namely:-

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

(ii) in paragraph (2),for the Table, the following shall be substituted, namely:-

(iii) in paragraph (3),-

(a) for the word “cars”, the word “vehicles” shall be substituted; and

(b) for the Table, the following shall be substituted, namely:-

(d) in Division VI, for the figure “0.5” the figure “0.6” shall be substituted;

(e) in Division VIA, after the word “transactions” the words and figure “ for filers and 0.6% for non-filers” shall be inserted;

(f) for Division VII, the following shall be substituted, namely:-

“DIVISION VII

Advance Tax on Purchase, Registration and Transfer of Motor Vehicles

(1) The rate of tax under sub-sections (1) and (3) of section 231B shall be as follows:-

(2) The rate of tax under sub-section (2) of section 231B shall be as follows:-

Provided that the rate of tax to be collected shall be reduced by 10% each year from the date of first registration in Pakistan.“;

(g) in Division XIV, in the Table, in the first column, against the entry “Fertilizers” ,-

(a) in the second column, for the figure “0.2”, the figure “0.7” shall be substituted;

(b) in the third column, for the figure “0.4”, the figure “ 1.4” shall be substituted;

(h) in Division XIX, in clause (i), for the figure “100,000”, the figure“75,000” shall be substituted;

(i) in Division XX, for the Table, the following shall be substituted, namely:-

(j) after Division XX, amended as aforesaid, the following new Divisions shall be added, namely:-

“Division XXI

Advance Tax On Banking Transactions Otherwise Than Through Cash

The rate of tax to be collected under section 236P shall be 0.6% of the transaction for non-filers.

Division XXII

Rate of Collection of Tax by Pakistan Mercantile Exchange Limited

The rate of tax to be collected under section 236T shall be as follows:-

in case of sale or purchase of future commodity contract as per clause (a) and (b) of sub-section (1) of section 236T shall be 0.05%.

DIVISION XXIII

Payment to a resident person for right to use machinery and equipment

Rate of collection of tax under section 236Q shall be 10 percent of the amount of payment.

DIVISION XXIV

Collection of advance tax on education related expenses remitted abroad

Rate of collection of tax under section 236R shall be 5 percent of the amount of total education related expenses.“;

(65) in the Second Schedule,-

(A) in Part I,-

(i) clause (20) shall be omitted;

(ii) in clause (57), in sub-clause (3), after paragraph (xiii), the following new paragraph shall be added, namely:-

“(xiv) Punjab General Provident Investment Fund established under the Punjab General Provident Investment Fund Act, 2009 (V of 2009) and the trust established thereunder.”;

(iii) in clause (61),after sub-clause (xliv), the following new sub-clause shall be added, namely:-

“(xlv) The Indus Hospital, Karachi.”

(iv) in clause (66),-

(a) sub-clause (xxx) occurring for the second time shall be renumbered as “(xxxii)”;

(b) after sub-clause (xxxii) renumbered as aforesaid, the following new sub-clause shall be added, namely:-

“(xxxiii) The Indus Hospital, Karachi.”;

(v) in clause (99A), for the full stop at the end a colon shall be substituted and thereafter the following proviso shall be added, namely:-

“Provided that profit and gains on sale of immovable property to a Developmental REIT Scheme with the object of development and construction of residential buildings shall be exempt upto thirtieth day of June, 2020”

(vi) in clause (103A), after the figure “59B” the words “subject to the condition that return of the group has been filed for the tax year.” shall be inserted;

(vii) clause (113) shall be omitted;

(viii) in clause (126A) for the figure, “twenty” the figure, “twenty three” shall be substituted;

(ix) clause (126F) shall be omitted;

(x) after clause (126H), the following new clauses shall be added, namely:-

“(126I) Profits and gains derived by a taxpayer, from an industrial undertaking set up by 31st day of December, 2016

and engaged in the manufacture of plant, machinery, equipment and items with dedicated use (no multiple uses) for generation of renewable energy from sources like solar and wind, for a period of five years beginning from first day of July, 2015.

(126J) Profits and gains derived by a taxpayer, from an industrial undertaking set up between 1st day of July, 2015 and 30th day of June, 2016 engaged in operating warehousing or cold chain facilities for storage of agriculture produce for a period of three years beginning with the month in which the industrial undertaking is set up or commercial operations are commenced, whichever is later.

(126K) Profits and gains derived by a taxpayer, from an industrial undertaking set up between the first day of July, 2015 and the 30th day of June, 2017 for establishing and operating a halal meat production unit, for a period of four years beginning with the month in which the industrial undertaking commences commercial production. The exemption under this clause shall apply if the industrial undertaking is -

(a) owned and managed by a company formed for operating the said halal meat production unit and registered under the Companies Ordinance, 1984 (XLVII of 1984), and having its registered office in Pakistan;

(b) not formed by the splitting up, or the re construction or re constitution, of a business already in existence or by transfer to a new business of any machinery or plant used in a business which was being carried on in Pakistan at any time before the commencement of the new business; and

(c) halal meat production unit is established and obtains a halal certification within the period between the first day of July, 2015 and the 30th day of June, 2017.

(126L) Profits and gains derived by a taxpayer, from an industrial undertaking set up in the Provinces of Khyber Pukhtunkhwa and Baluchistan between 1st day of July, 2015 and 30th day of June, 2018 for a period of five years beginning with the month in which the industrial undertaking is set up or commercial production is commenced, whichever is later:

Provided that exemption under this clause shall be admissible where-

(a) the industrial undertaking is setup between the first day of July, 2015 and 30th day of June, 2018, both days inclusive; and

(b) the industrial undertaking is not established by the splitting up or reconstruction or reconstitution of an undertaking already in existence or by transfer of machinery or plant from an undertaking established in Pakistan at any time before 1st July 2015.

(126M) Profits and gains derived by a taxpayer from a transmission line project set up in Pakistan on or after the 1st day of July, 2015 for a period of ten years. The exemption under this clause shall apply to such project which is-

(a) owned and managed by a company formed for operating the said project and registered under the Companies Ordinance, 1984 (XLVII of 1984), and having its registered office in Pakistan;

(b) not formed by the splitting up, or the reconstruction or reconstitution, of a business already in existence or by transfer to a new business of any machinery or plant used in a business which was being carried on in Pakistan at any time before the commencement of the new business; and

(c) owned by a company fifty per cent of whose shares are not held by the Federal Government or Provincial Government or a Local Government or which is not controlled by the Federal Government or a Provincial Government or a Local Government:

Provided that the exemption under this clause shall not apply to projects set up on or after the thirtieth day of June, 2018.

(126N) Profits and gains derived by a taxpayer from an industrial undertaking, duly certified by the Pakistan Telecommunication Authority, engaged in the manufacturing of cellular mobile phones, for a period of five years, from the month of commencement of commercial production:

Provided that the industrial undertaking has been set up and commercial production has commenced between the first day of July, 2015 and the thirtieth day of June, 2017 and the industrial undertaking is not formed by the splitting up, or the reconstruction or reconstitution, of a business already in existence or by transfer to a new business of any machinery or plant used in a business which was being carried on in Pakistan.“; and

(xi) after clause (140), the following new clauses shall be added, namely:-

“(141) Profit and gains derived by LNG Terminal Operators and Terminal Owners for a period of five years beginning from the date when commercial operations are commenced.

(142) Income from social security contributions derived by Balochistan Employees’ Social Security Institution, Employees’ Social Security Institution Khyber Pakhtunkhwa, Punjab Employees’ Social Security Institution and Sindh Employees’ Social Security Institution.

Explanation.- For the removal of doubt, it is clarified that all incomes other than social security contributions shall not be exempt”;

(B) in Part II,-

(i) clauses (13C), (14), (14A) (14B) and (21) shall be omitted; and

(ii) after clause (28A), the following new clause shall be added, namely:-

“(28B) The rate of tax shall be 0.15% under section 231A on cash withdrawal by an exchange company, duly licensed and authorized by the State Bank of Pakistan, exclusively dedicated for its authorized business related transactions, subject to the condition that a certificate issued by the concerned Commissioner Inland Revenue for a financial year mentioning details and particulars of its Bank Account being used entirely for business transactions is provided.”;

(D) in Part IV,-

(a) in clause (11A),-

(i) in sub-clause (i), for the word, comma and figures “Rules, 2006” the word, comma and figures “Regulations, 2015” shall be substituted;

(ii) sub-clause (iv) shall be omitted;

(iii) in sub-clause (v), the words “and 132B” shall be omitted;

(iv) in sub-clause (xvi), the word “and” shall be omitted; and

(v) in sub-clause (xvii), for the full stop at the end a semi-colon and word “; and” shall be substituted and thereafter the following new sub-clauses shall be added, namely,-

“(xviii) companies, qualifying for exemption under clause (132B) of Part-I of this Schedule, in respect of receipts from a coal mining project in Sindh, supplying coal exclusively to power generation projects.

(xix) LNG Terminal Operators and LNG Terminal Owners.

(xx) taxpayers located in the most affected and moderately affected areas of Khyber Pakhtunkhwa, FATA and PATA for tax year 2010, 2011 and 2012 excluding manufacturers and suppliers of cement, sugar, beverages and cigarettes.

(xxi) Rice Mills for the Tax Year 2015.

(xxii) taxpayers qualifying for exemption under clauses (126I) of Part-I of this Schedule in respect of income from manufacture of equipment with dedicated use for generation of renewable energy.

(xxiii) taxpayers qualifying for exemption under clauses (126J) of Part-I of this Schedule in respect of income from operating warehousing or cold chain facilities for storage of agriculture produce.

(xxiv) taxpayers qualifying for exemption under clauses (126K) of Part-I of this Schedule in respect of income from operating halal meat

production, during the period mentioned in clause (126K).

(xxv) taxpayers qualifying for exemption under clauses (126L) of Part-I of this Schedule in respect of income from a manufacturing unit set up in Khyber Pukhtunkhwa Province between 1st day of July, 2015 and 30th day of June, 2018.“;

(b) in both clauses (11B) and (11C), after the figure “59B” the words “subject to the condition that the return of the group has been filed for the latest completed tax year” shall be substituted;

“(11D) The provisions of section 113C shall not apply to LNG Terminal Operators and LNG Terminal Owners.”;

(d) clause (16A) shall be omitted;

(e) in clause (46), for the word “or” occurring for the second time, the expression “and provisions of sub-section (2A) of section 152 shall not apply to” shall be substituted;

(f) in clause (56),-

(i) in sub-clause (i), for the commas, figures and words “Chapters 27, 86 and 99”, the figures and words “Chapter 86 and 99 except PCT Heading 9918” shall be substituted;

(ii) after sub-clause (i), amended as aforesaid, the following new sub-clause shall be inserted, namely,-

“(ia) Petroleum oils and oils obtained from bituminous minerals crude (PCT Code 2709.0000), Furnace-oil (PCT Code 2710.1941), High speed diesel oil (PCT) Code 2710.1931), Motor spirit (PCT Code 2710.1210), J.P.1 (PCT Code 2710.1912), base oil for lubricating oil (PCT Code 2710.1993), Light diesel oil (PCT Code 2710.1921) and Super Kerosene Oil imported by Pakistan State Oil Company Limited, Shell Pakistan Limited, Attock Petroleum Limited, Byco Petroleum Pakistan Limited, Admore Gas Private Limited, Chevron Pakistan Limited, Total-PARCO Pakistan(Private) Limited, Hascol Petroleum Limited, Bakri Trading Company Pakistan (Pvt) Ltd, Overseas Oil Trading Company (Pvt) Ltd, Gas and Oil Pakistan (Pvt) Ltd and oil refineries.”;

(g) in clause (56B), the expression “(56B) Provisions of section 148 shall not apply in respect of import of potatoes between 5th of May, 2014 and 31st of July, 2014, provided that such imports shall not exceeds 200,000 metric tons in aggregate during the said period.” shall be omitted;

(h) clause (56H) shall be omitted;

(i) in clause (57), the Explanation at the end shall be numbered as paragraph(i) of that Explanation and thereafter the following new paragraph shall be added, namely:-

“(ii) It is further clarified that in-house preparation and processing of food and allied items for sale to customers shall not disqualify a company from being treated as a Trading House, provided that all the conditions in this clause are fulfilled and sale of such items does not exceed two per cent of the total sales.”;

(j) in clause (59), sub-clause (iii) shall be omitted;

(k) clauses (61A) shall be omitted

(l) after clause (67), the following new clause shall be inserted, namely:-

“(67A) The provisions of section 100B and Eighth Schedule shall not apply to transactions carried on upto 30th day of June, 2015, on any Stock Exchange of Pakistan, by International Finance Corporation established under the International Finance Corporation Act, 1956 (XXVIII of 1956).”;

(m) in clause (72A), after the figure “2014” the word and figure “and 2015” shall be inserted;

(n) in clause (77), after the word and comma “torches,”, a comma and the words “tubular daylighting devices such as solatube,” shall be inserted;

(o) clauses (79) and (83) shall be omitted;

(p) in clause (86), for the figure “2016” the figure “2017” shall be substituted;

(q) clauses (89) and (90) shall be omitted; and

(r) after clause (90), omitted as aforesaid, the following new clauses shall be added, namely:-

“(91) The provisions of section 148 shall not apply to-

(i) Tillage and seed bed preparation equipment as specified below

(ii) Seeding or planting equipment

(iii) Irrigation, drainage and agro-chemical application equipment

(iv) Harvesting, threshing and storage equipment

(v) Post-harvest handling and processing & miscellaneous machinery

(92) The provisions of section 148 shall not apply to.-

(93) The provisions of sub-section (1) of section 154 shall not apply to taxpayers operating halal meat production and qualifying for exemption under clause (126K) of Part-I of this Schedule for the period specified in clause (126K).“;

(66) in the Fourth Schedule,-

(a) rule (6A) shall be omitted;

(b) in rule (6B),-

(i) for the Table, the following shall be substituted, namely:-

(ii) the proviso shall be omitted;

“6D. The provisions of section 4B shall apply to the taxpayers under this schedule and taxed at the rates specified in Division IIA of Part I of the First Schedule.”;

(67) in the Fifth Schedule,-

(A) in Part I, after rule 4A, the following new rule shall be inserted, namely:-

“4AA. The provisions of section 4B shall apply to the taxpayers under this Part and taxed at the rates specified in Division IIA of Part I of the First Schedule.”;

(B) in Part II, after rule 2, the following new rule shall be inserted, namely:-

“2A. The provisions of section 4B shall apply to the taxpayers under this Part and taxed at the rates specified in Division IIA of Part I of the First Schedule.”;

(68) in the Seventh Schedule,-

(i) in rule 6, the expression “The net income from Dividend and net income from Capital Gains on sale of shares of listed companies shall be taxed at the rate of ten and twelve and a half, respectively” and the three provisos thereafter shall be omitted;

(ii) rules (6A) and (6B) shall be omitted; and

(iii) after rule (7A), the following new rules shall be inserted, namely:-

“(7B) From tax year 2015 and onwards, income from Dividend and income from Capital Gains shall be taxed at the rate specified in Division II of Part I of First Schedule.

(7C) For tax year 2015, the provisions of section 4B shall apply to banking companies and shall be taxed at the rate specified in Division IIA of Part I of First Schedule.“; and

(69) in the Eighth Schedule, in rule 1, after sub-rule (7) , the following new sub-rule shall be added, namely:-

“(8) The provisions of section 4B shall apply to the taxpayers under this schedule and taxed at the rates specified in Division IIA of Part I of the First Schedule.”;

Finance Act, 2015, as published 30 June 2015

What this document is

The shape of this document

The source file

A note on these figures

The full text of this document

1. Short title, extent and commencement

2. Amendments of Act IV of 1969

3. Amendment of Ordinance, XXXVI OF 1971

4. Amendment of Act XXVII of 1974

5. Amendments of the Sales Tax Act, 1990

7. Amendment of Ordinance XXIII of 2001

8. Amendment of Islamabad Capital Territory (Tax on Services) Ordinance, 2001 (XLII of 2001)

9. Amendment of Income Tax Ordinance, (XLIX of 2001)

10. Amendments of the Federal Excise Act, 2005

47B. Disclosure of information by a public servant

56B. Disclosure of information by a public servant

56C. Prize schemes to promote tax culture

64B. Tax credit for employment generation by manufacturers

236P. Advance tax on banking transactions otherwise than through cash

236Q. Payment to residents for use of machinery and equipment

236R. Collection of advance tax on education related expenses remitted abroad

236S. Dividend in specie

236T. Collection of tax by Pakistan Mercantile Exchange Limited (PMEX)