Final Tax Regime and Minimum Tax Chapter- 22
Gross amount of Rate of tax
Prize on prize bond and cross-word puzzle 15 %Any other prize (Raffle, Lottery, Prize on winning a quiz or Prize offered by
companies for promotion of sales)20%
Where a prize or winning, is not in cash, the person while giving the prize shall collect tax on the fair
market value of the prize.
Tax deductible under this section shall be final tax.
Example: A person received prize of Rs. 5,000 (gross) on winning a cross word puzzle. Compute the
amount of tax liability on such income for the tax year 20 23.
Solution:
Tax on prize on winning a cross word puzzle (Rs. 5,000 x 1 5 %) Rs. 750
Note: It is to be noted that tax liability shall be equal to amount tax required to be deducted, whether
tax has been deducted or not.- Petroleum products [Section 156A(1) and (2)]:
Every person selling petroleum products to a petrol pump operators shall deduct tax from the amount
of commission or discount allowed to the operator at the rate of 1 2 %. Amount deductible under this
section shall be treated as final tax.
Opting out from Final Tax Regime [Clause (56F) of Part IV of the Second Schedule]
In case of petroleum products, the said person paying tax under the Final Tax Regime of the
Ordinance may opt for Normal tax regime [NTR], provided the tax liability under NTR does not fall
below 100% of the tax deducted under this section.
Example: Ali is operating a petrol pump. Rs. 12,000 Tax deducted @ 12% on commission on sale of
petrol. What will be his tax liability?
Solution: In this case tax deductible on commission on sale of petrol is treated as full and final
discharge of his tax liability and no other tax is payable by him, however option for equal amount of
tax is available under normal tax regime.- Brokerage or commission [Section 233(3) & 233(2A)]:
12 % tax shall be deducted by the principal (being as Federal / Provincial / local Govt., a company or
an AOP or individual having turnover of Rs. 100 million or more) at the time of payment of
commission to agent. If the agent retains Commission or brokerage from any amount remitted by him
to the principal, he shall be deemed to have been paid the commission or brokerage by the principal
and the principal shall collect advance tax @ 1 2 % from the agent.
Tax rates for various transactions are as under.S. No. Person Rate of Tax
(a) In case of advertising agent 10%
(b) Life insurance agents where Commission received is less than Rs.
0.5 million p.a.8%
(c) Any other agent 12%
Where any tax is required to be collected from a person as above, such tax shall be the Minimum Tax
on the income of such person.11 .1 Tax on commission to an advertising agent 233(2A)
Where the principal is making payment on account of commission to an advertising agent, directly or
through electronic or print media, the principal shall deduct tax (in addition to tax required to be
deducted under clause (b) of sub-section (1) of section 153 on advertising services excluding
commission), at the rate specified in Division II of Part IV of the First Schedule on the amount equal to
A x 15 / 85