Final Tax Regime and Minimum Tax Chapter- 22
Cost of sales 20,000
Other operating expenses 10,000
Solution
Rs.
Sales 40,000
Cost of sales 20,000
Gross profit 20,000
Other operating expenses 10,000
Taxable income 10,000
Computation of tax liability:Tax on Rs. 10,000 @ 29 %2 , 900
Minimum tax on import of cooking oil
Less:10,000
Tax deducted on import of
Edible oils 10,000
Balance tax (-)- Tax deducted on services (section 153):
a. For a person other than a company, tax deductible on gross amount of services @ 10 % u/s 153
shall be minimum tax. Rate of minimum tax on services for a company is 8%
b. If the person to whom the services are provided is not required to deduct tax u/s 153 then
minimum tax shall not be applicable.Example: Compute the tax liability of Mr. A from following information:
Tax liability under NTR 15 ,000
Tax deducted on services u/s 153 10 ,000
Solution:
As the tax liability under NTR is higher than tax deducted on services, hence tax liability of the Tax
payer is Rs.1 5 ,000.
Advance tax on Electric bills (section 235(4)):
For a person other than a company tax collected on commercial or industrial electric bill up to Rs.
36 0,000 per annum shall be treated as minimum tax. In case of a company or where the amount of
bill is more than Rs. 3 6 0,000 per annum then the tax collected shall not be treated as minimum tax
and shall be adjustable / refundable against the tax liability of the person.
Explanation.— For removal of doubt, it is clarified that for the purposes of this section electricity
consumption bill referred to in sub-section (2) means electricity bill inclusive of sales tax and all
incidental charges.Example: Compute the tax liability of Mr. B from following information:- Tax liability under NTR 10,000
- Tax deducted on electric bills 15,000
Solution: Tax liability of the tax payer shall be higher of Rs. 10,000 or Rs. 15,000.- Tax on certain payments to non-residents [Section 6]
(1) Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division IV of Part I of
the First Schedule, on every non- resident person who receives any Pakistan-source royalty,
fee for offshore services fee for money transfer operations, card network services, payment
gateway services, interbank financial telecommunication services or fee for technical services.
(2) The tax imposed under sub-section (1) on a non-resident person shall be computed by applying
the relevant rate of tax to the gross amount of amounts of receipts mentioned in sub-section
(1).