CSV Flashcards
<div>Export of Goods [Section 154]: Realization of foreign proceeds from export of goods by an exporter (WHT agent, WHT tax, Regime) [3]</div>
<ul><li>WHT Agent: Authorized dealer in foreign exchange</li></ul>
<ul><li>WHT Tax rate: 1% of export proceeds</li></ul>
<ul><li>Tax regime: MTR</li></ul>
<div>Export of Goods [Section 154]: Realization of foreign proceeds from <strong>sale of goods to Exporter</strong> under Inland B2B LOC, Other arrangement prescribed by FBR (WHT agent, WHT tax, Regime) [3]</div>
<ul><li>WHT Agent: Banking Company</li></ul>
<ul><li>WHT Tax rate: 1% of export proceeds realized by indirect exporter</li></ul>
<ul><li>Tax regime: MTR</li></ul>
<div>Export of Goods [Section 154]: Export of goods by industrial undertaking located in EPZ (WHT agent, WHT tax, Regime) [3]</div>
<ul><li>WHT Agent: EPZ Authority</li></ul>
<ul><li>WHT Tax rate: 1% of export proceeds</li></ul>
<ul><li>Tax regime: MTR</li></ul>
<div>Export of Goods [Section 154]: Making payment for a firm contract to an indirect exporter (WHT agent, WHT tax, Regime) [3]</div>
<ul><li>WHT Agent: <br></br>- Direct exporter<br></br>- Export house registered under Duty and Tax Remission for Export Rules<br></br></li></ul>
<ul><li>WHT Tax rate: 1% of payment</li></ul>
<ul><li>Tax regime: MTR</li></ul>
<div>Export of Goods [Section 154]: At the time of clearing of goods exported [Circular 3 of 2009 – In case of export of goods to Afghanistan whereby goods are exported without Form-E, export proceeds are received in cash instead of inward remittance through authorized dealer in foreign exchange] [3]</div>
<ul><li>WHT Agent: Collector of Customs</li></ul>
<ul><li>WHT Tax rate: 1% of value of such goods</li></ul>
<ul><li>Tax regime: MTR</li></ul>
<div>Other relevant circulars (points) pertaining to Export of Goods [4]</div>
<ul><li>Banks deduct tax when they discount export bills.</li></ul>
<ul><li>Advance payments for future exports are considered realized and deducted for withholding.</li></ul>
<ul><li>Goods sold through international tenders are exports.</li></ul>
<ul><li>Tax doesn't apply to exports by tax-exempt manufacturers.</li></ul>
<div>Who would be required to collect/deduct advance income (at what %) tax along with WHT? [5+1]</div>
<ul><li><strong>Authorized dealers in foreign exchange:</strong> Collect tax when converting foreign currency.</li></ul>
<ul><li><strong>Banking companies:</strong> Collect tax on export proceeds.</li></ul>
<ul><li><strong>Export Processing Zones Authority:</strong> Collect tax on exports from EPZs.</li></ul>
<ul><li><strong>Direct exporters and export houses:</strong> Collect tax on payments to indirect exporters.</li></ul>
<ul><li><strong>Collector of Customs:</strong> Collect tax on exported goods.</li></ul>
<p>Collect<strong> 1% advance income tax</strong> in addition to withholding tax at time of realization of foreign proceeds of export. (directly/indirectly)</p>
<div>Provision of Textile Value Added Services to Exporter [Section 153(2)]: Withholding agent, withholding amount, tax payer (resident and non resident)? [3]</div>
<ol><li>Withholding Agent: Exporter/Export House</li></ol>
<ol><li>Withholding amount: (Value of Services + Sales tax) * 1%</li></ol>
<ol><li>Taxpayer: Service provider of value addition (MTR if Resident, NTR if PE of non resident)<br></br><br></br></li></ol>
<div>Imports [Section 148]: On what amount IMPORTS shall income tax and withholding apply?</div>
<p>Value for the purpose of income tax: (Value of goods + Custom Duty + FED + Sales Tax)<br></br>Each cess is applied in the sequence written above.<br></br></p>
<div>Imports [Section 148]: Who would be the withholding agent for imports?</div>
<p><strong>Collector of Customs; s</strong>hall collect advance income tax in the same manner and at the same time as customs duty is paid on imports.</p>
<div>Imports [Section 148]: Who would be the income taxpayer?</div>
<p>Importer</p>
<div>Imports [Section 148]: What tax regime shall apply for importers? [3]</div>
<ul><li><strong>Normal Tax:</strong> For industrial undertakings (MANUFACTURERS) using imported goods. </li></ul>
<ul><li><strong>Minimum tax:</strong><ul><li>On income from imports of edible oil, packaging material, paper and paperboard, or plastics. (Manufacturers and Commercial Importers)</li></ul><ul><li>In all other cases.</li></ul></li></ul>
<div><strong>Withholding Tax Rates for Imported Goods for persons:<br></br>1. Persons importing goods classified in Part I of 12th Schedule<br></br>2. Persons importing goods classified in Part II of 12th Schedule<br></br>3. Persons importing goods classified in Part III of 12th Schedule<br></br>4. <br></br></strong>Manufacturer of goods covered under SRO 1125(1)/2011<strong><br></br>5. Persons importing finished pharmaceutical products<br></br>6. <br></br></strong>Importers of CKD kits of electric vehicles</div>
PersonWHT Tax RatePersons importing goods classified in Part I of 12th Schedule1% of import value + customs duty + sales tax + federal excise dutyPersons importing goods classified in Part II of 12th Schedule2% of import value + customs duty + sales tax + federal excise duty; or 3.5% for <strong>commercial importers</strong>Persons importing goods classified in Part III of 12th Schedule5.5% of import value + customs duty + sales tax + federal excise duty; or 6% for commercial importersManufacturer of goods covered under SRO 1125(1)/20111% of import value + customs duty + sales tax + federal excise dutyPersons importing finished pharmaceutical products4% of import value + customs duty + sales tax + federal excise dutyImporters of CKD kits of electric vehicles1% of import value + customs duty + sales tax + federal excise duty
<div><strong>Withholding Tax Rates for Import of Mobile Phone - where to look for them?</strong></div>
<p>First Schedule Part II</p>
<div>Value of goods [148.9]: Definition [4]</div>
<ul><li><strong>Retail price goods:</strong> Retail price + sales tax on import and supply.</li></ul>
<ul><li><strong>Other goods:</strong> Customs Act value + customs duty + FED + sales tax.</li></ul>
<ul><li><strong>Minimum value:</strong> As notified by the FBR, including customs duty, FED, and sales tax.</li></ul>
<p><strong>FBR may notify minimum value</strong> for advance tax collection on imports.</p>
<div><strong>Industrial Undertaking (Section 2(29C)) Definition [5]</strong></div>
<ul><li><strong>An undertaking in Pakistan employing:</strong><ul><li>10+ people with electrical energy</li></ul><ul><li>20+ people without electrical energy</li></ul></li></ul>
<ul><li><strong>Engaged in:</strong><ul><li>Manufacturing or processing goods</li></ul><ul><li>Shipbuilding</li></ul><ul><li>Generating, converting, transmitting, or distributing electricity or hydraulic power</li></ul><ul><li>Mining</li></ul></li></ul>
<ul><li><strong>Additional criteria (from May 1, 2020):</strong><ul><li>Construction or land development companies importing plant and machinery</li></ul></li></ul>
<ul><li><strong>Additional criteria (from July 1, 2020):</strong><ul><li>Resident hotel companies</li></ul></li></ul>
<ul><li><strong>Telecommunication companies</strong> operating under PTA license</li></ul>
<div>Exemption from Withholding tax collection on imports on what goods? - Part IV of Second Schedule [HUGE LIST, JUST READ]</div>
<ul><li><strong>16:</strong> Institutions of the Agha Khan Development Network (Pakistan)</li></ul>
<ul><li><strong>56:</strong><ul><li>Goods under Chapter 86 and 99 of Pakistan Customs Tariff</li></ul><ul><li>Petroleum oils</li></ul><ul><li>Goods imported by direct or indirect exporters</li></ul><ul><li>Goods temporarily imported for re-exportation</li></ul><ul><li>Goods temporarily imported by international athletes</li></ul></li></ul>
<ul><li><strong>Circular 14 of 1997:</strong> Re-imported goods rejected by foreign buyers or unsold consignments bought back.</li></ul>
<ul><li><strong>56:</strong><ul><li>Manufacturing Bond</li></ul><ul><li>Mineral oil for pesticide manufacturers</li></ul><ul><li>Government entities (Federal, Provincial, Local)</li></ul><ul><li>Foreign companies with majority foreign government shareholding</li></ul><ul><li>Plant and machinery for government contracts</li></ul><ul><li>High-speed diesel, light diesel, high octane blending component, kerosene, or crude oil for refining</li></ul><ul><li>Petroleum (E&P) companies (excluding motor vehicles)</li></ul><ul><li>Goods exported and re-imported within one year</li></ul><ul><li>Plant and machinery for bagasse/biomass cogeneration power projects</li></ul><ul><li>Goods under Export Facilitation Scheme 2021</li></ul><ul><li>Motor vehicles up to 1000cc</li></ul><ul><li>Printed books (excluding brochures, leaflets)</li></ul><ul><li>Newspapers, journals, periodicals</li></ul><ul><li>Blind talking mobile phones</li></ul></li></ul>
<ul><li><strong>60:</strong> Fully or partly designed/assembled cipher devices</li></ul>
<ul><li><strong>60D:</strong> Fire-fighting equipment in special economic zones</li></ul>
<ul><li><strong>60DA:</strong> Capital equipment in Special Technology Zones</li></ul>
<ul><li><strong>60E:</strong> Mobile phones in personal baggage</li></ul>
<ul><li><strong>77:</strong> Renewable energy items</li></ul>
<ul><li><strong>91:</strong> Agricultural equipment</li></ul>
<ul><li><strong>92:</strong> Aviation-related items</li></ul>
<ul><li><strong>98:</strong> Ships and crafts (until 2030), subject to conditions</li></ul>
<ul><li><strong>99:</strong> Aircraft leased by Pakistan International Airlines Corporation</li></ul>
<ul><li><strong>123:</strong> Goods for flood relief (certified by authorities)</li></ul>
<div>Sale of Goods [Section 153]: Amount taxable for income tax (and WHT)</div>
<p>Income tax (WHT u/s 153) = (Value of goods (or toll manufacturing service fee) + Sales tax) * WHT rate</p>
<div>Sale of Goods [Section 153]: Withholding tax rates for each type of goods [3]</div>
<strong>Payment on Account of (DIVISION 3, PART 3 OF FIRST SCHEUDLE)</strong><strong>Supplier</strong>Sale of rice, cotton seed, or edible oils1.5% (Co.), 1.5% (Ind/AOP)Toll manufacturing9% (Co.), 11% (Ind/AOP)Sale of other goods5% (Co.), 5.5% (Ind/AOP)
<div>Sale of Goods [Section 153]: Tax regime for each type seller [5]</div>
SupplierTax RegimeManufacturing company (manufacturer of such goods)Adjustable (NTR)Public company listed on stock exchange in PakistanAdjustable (NTR)IndividualMinimum TaxAOPMinimum TaxUnlisted trading companyMinimum Tax
<div>Sale of Goods [Section 153]: Taxpayer</div>
<p>Resident Seller of Goods</p>
<div>Provision of Services [Section 153]: Amount taxable for income tax (and WHT)</div>
<p>Income tax (WHT u/s 153) = (Value of services + Sales tax) * WHT rate<br></br><br></br></p>
<div>Provision of Services [Section 153]: Taxpayer</div>
<p>Resident Service Provider</p>
<div>Provision of Services [Section 153]: WHT Rates for each type of service (where to look for them?</div>
<p><strong>Withholding Tax Rates for Services (Division III, Part III of First Schedule)</strong></p>
Service ProviderWHT Rate (Co.)WHT Rate (Ind./AOP)Electronic & print media for advertising services1.5%1.5%Transport services4%4%Freight forwarding services4%4%Air cargo services4%4%Courier services4%4%Manpower outsourcing services4%4%Hotel services4%4%Security guard services4%4%Software development services4%4%IT services & IT enabled services4%4%Warehousing services4%4%Services rendered by asset management companies4%4%Oilfield services4%4%Telecommunication services4%4%REIT Management Services4%4%Rendering of or providing of other services9%11%
Minimum Tax Regime
Income tax (WHT u/s 153) = (Fee for contract + Sales tax) * WHT rate
Resident Contractor
Withholding Tax Rates for Services (Division III, Part III of First Schedule)
ContractorWHT Rate (Co.)WHT Rate (Ind./AOP)Sportspersons N/A 10%Execution of contracts 7.5% 8%- AOP
- Unlisted Company
Minimum Tax
- If a service provider receives payment through an agent who retains their fees, the service provider must collect withholding tax on those fees.
- This applies when the principal is a "prescribed person."
- Commissioner may allow reduced withholding tax rate:
- If tax deductible under Section 153 is not minimum tax
- Upon application and inquiry
- Reduction cannot exceed 80%
- For companies:
- Commissioner must issue certificate within 15 days if advance tax liability is discharged
- Certificate is deemed issued after 15 days, automatically processed by IRIS
- Commissioner may modify or cancel the certificate with written reasons and a hearing opportunity
- Withholding tax not deducted for payments under:
- Rs. 75,000 (goods) or Rs. 30,000 (services) per financial year
- Excess payments: Tax deducted from subsequent payments if annual limit exceeded
- Sale of goods by importer (COMMERCIAL):
- If tax paid under Section 148
- If goods sold in original condition
- Circular 5 of 2002: Exemption certificate not required for commercial importers; written undertaking may be given
- Refund of security deposit
- Government payments to contractors for construction materials
- Asset purchase under lease and buy-back agreement by modaraba, leasing company, bank, or financial institution
- Securitization of receivables by Special Purpose Vehicle (SPV): Tax deducted by payer is credited to the Originator
Clause 46AA Part IV, 2nd Schedule
- Companies operating Trading Houses with:
- Paid-up capital exceeding Rs. 250 million
- Fixed assets exceeding Rs. 300 million at the end of the tax year
- Computerized records of imports and sales
- 100% cash receipts on sales
- Annual tax audits
- Registration under the Sales Tax Act, 1990
Explanation:
- Exemption applies to Trading Houses as recipients, not withholding agents.
- In-house preparation and processing of food items (up to 2% of total sales) does not disqualify a company as a Trading House if other conditions are met.
Minimum tax under Section 113:
- 1% TURNOVER TAX for companies operating Trading Houses
- Withholding tax rate: 1% for local sales, supplies, and services to the following taxpayers:
- Textile and articles
- Carpets
- Leather and articles (including footwear)
- Surgical goods
- Sports goods
Explanation:
- Reduced rate applies only to local sales, supplies, and services by the specified taxpayers.
- For yarn traders: 0.5% withholding tax rate on sales to the above-mentioned categories.
- Federal Government
- Company
- Association of Persons (AOP) constituted by or under law
- Non-profit organization
- Foreign contractor or consultant
- Consortium or joint venture
- Exporter or export house (for purposes of Section 153(2))
- Individual or AOP with turnover of Rs. 100 million or more in any preceding tax year
- Person registered under Sales Tax Act, 1990 with turnover of Rs. 100 million or more in any preceding tax year
- Builder (construction and sale of residential, commercial, or other buildings)
- Developer (development and sale of residential, commercial, or other plots)
- Gross sales or gross receipts: Including sales tax, federal excise duty, and trade discounts
- Gross fees: For rendering services or giving benefits (including commissions)
- Gross receipts: From contract execution
- Company's share: Of the above amounts for associations where the company is a member
WHT on Commission under Section 233 = Commission Agreed * WHT Rate
Minimum Tax Regime
- Federal Government
- Provincial Government
- Local Government
- Company
- Individual / Association of Persons (AOP) with turnover of Rs. 100M or more
- Principal deducts tax:
- In addition to Section 153(1)(b) tax on advertising services (@1.5%)
- At prescribed rate on the amount calculated by the formula:
- Amount paid to electronic or print media for advertising services (excluding commission) x 15/85
- Amount calculated above x 10%
- Formula applies universally: Regardless of actual commission amount.
- Tax deduction: Serves as minimum tax on the advertising agent's income.
5% withholding tax for online marketplaces (commission to be intermediary in e-commerce)
- Special Purpose Vehicles (for securitization or sukuk issuance): Section 233 doesn't apply.
- Venture Capital Companies: Section 233 doesn't apply.
- Islamic Development Bank: Section 233 doesn't apply.
- Investment Schemes, Pension Funds, REIT Schemes, Provident/Superannuation/Gratuity Funds: Section 233 doesn't apply.
- International Finance Corporation: Section 233 doesn't apply.
- Asian Development Bank: Section 233 doesn't apply.
- M/s TAISEI Corporation (under the agreement with the National Highway Authority): Provisions of ITO-2001 don't apply.
- Licensing Authority collects Advance Tax:
- Foreign TV drama serial or play - dubbed:
- Rs. 1,000,000 per episode (serial)
- Rs. 3,000,000 (single episode)
- Foreign actor in commercials: Rs. 500,000 per second
- Foreign TV drama serial or play - dubbed:
- Tax is Minimum Tax: For income arising from such drama serials, plays, or advertisements.
For person appearing in both Active Taxpayer Lists issued under ITO-2001 & STA-1990
0.25%N/AFertilizer - Other Wise0.7%1.4%Other than fertilizer0.1%2%
- Sale to Retailers (by Manufacturer, Distributor, dealer, wholesaler, or Commercial Importer): 0.5% (2.5% for Non-ATL)
- Sale to Wholesalers (by Distributor/Dealer only): 0.5% (1% for Non-ATL)
