Tax Book 2023

Final Tax Regime and Minimum Tax Chapter- 22

6. Reduced tax
   rate

The provisions of 153 shall not apply to companies operating Trading

Houses which—

(i) have paid up capital of exceeding Rs.2 50 million;

(ii) own fixed assets exceeding Rs.3 00 million at the close of the Tax Year;

(iii) maintain computerized records of imports and sales of goods;

(iv) maintain a system for issuance of 10 0% cash receipts on sales;

(v) present accounts for tax audit every year; and

(vi) is registered under the Sales Tax Act, 1990.

Provided that the exemption under this clause shall not be available if any

of the aforementioned conditions are not fulfilled for a tax year:

Provided further that minimum tax under section 113 shall be 0. 5 % upto

the tax year 2021 and 1% thereafter. [u/c 57 Part IV of 2nd schedule]

Example A: ABC Limited is member of an AOP with 50% share. Sale of AOP for the year is Rs.

100,000 while sale of company for the year is Rs. 50,000 including sales tax of Rs.10,000. What

would be the turnover of the company for the purpose of section 113?

Solution:

Rs.

Sales of the company excluding sales tax 40,000

Add: Share in sales of AOP 50,000

Turnover of company for the purpose of section 113 90,000

Example B: Following data relates to ABC (Pvt.) Ltd:

Year Actual tax liability Minimum tax

u/s 113

2021 10,000 (NTR) 50,000

2022 60,000 (NTR) 55,000

Solution:

Year 20 21 Rs.

Tax payable 50,000

(Higher of actual or minimum tax)

Year 20 22

Tax liability

(Higher of actual or minimum tax) 60,000

Less: adjustment against b/f balance from minimum tax of tax year 20 21 (5,000)

* 55,000

* Tax liability cannot be less than the minimum tax for the year i.e. Rs. 55,000.

Remaining minimum tax shall be carried forward i.e. 40,000 - 5,000 = Rs. 35,000.

18. Alternative Corporate Tax [U/s 113C]

(1) Notwithstanding anything contained in this Ordinance, for tax year 2014 & onwards, tax

payable by a company shall be higher of the corporate tax or alternative corporate tax.

(2) For the purposes of this section

(a) “Accounting income” means the accounting profit before tax for the tax year, as

disclosed in the financial statements or as adjusted under sub section (7) or sub section

(11) excluding share from the Associate recognized under equity method of accounting;