Final Tax Regime and Minimum Tax Chapter- 22
Now the option to exporter or an export indenting agent paying taxes under the Final Tax to opt for
Normal tax regime [NTR] is available under section 154(5).
Example: Compute taxable income and tax liability of Mr. Jamil for the Tax year 20 23 from following
data:
Local sales 600,000
Exports sales (total amount realized) 400,000
Cost of local sales 360,000
Cost of export sales 300,000
Other expenses related to local sales 100,000
Other expenses related to export sales 40,000
Solution:
Computation of taxable income Rs.
Local sales 600,000
Cost of local sales 360,000
Gross profit on local sales 240,000
Other expenses related to local sales 100,000
Taxable profit under NTR 140,000
Computation of tax liability:Tax on taxable income under NTR (140,000 x 0%) -
Tax on export proceeds realized under FTR (400,000 x 1%) 4,000
Total tax liability 4,000
Note: Expenses related to income under FTR shall not be considered for computation of profit under
NTR.- Exports [Section 154A]:
Section (^) payment/transactionNature of Tax rate (^) Exemption (^) paymentStatus Deduction/collecting authority
154A
Every authorized dealer
in foreign exchange
shall, at the time of
realization of foreign
exchange proceeds on
account of the following,
deduct tax from the
proceeds at the rates
specified in Division IVA
of Part III of the First
Schedule –
a) exports of computer
software or IT
services or IT enabled
services where the
exporter is registered
with and duly certified
by the Pakistan
Software Export
Board (PSEB).;
b) services or technical
services rendered
outside Pakistan or
exported from
Pakistan;
1% of the
proceeds of the
export
The applicable tax
rate shall not be
increased by
100% as Rule-1 of
10 th Schedule to
the Ordinance is
not applicable by
virtue of Rule 10 of
the aforesaid
Schedule.
Nil
Final
discharge
Every Authorized
dealer in Foreign
Exchange