Tax Credits Chapter- 15
(a) The employees shall be registered with the Employees Old Age Benefits Institution (EOBI) or
Employees Social Security Institutions (ESSI) of the Provincial Governments during the tax
year.
(b) The said tax credit is allowed up to maximum of 10% of the tax payable.
(c) The manufacturing unit shall be managed by a company formed for operating the said
manufacturing unit and should be registered under the Companies Act, 2017 and have
registered office in Pakistan.
(d) The manufacturing unit is not established by the splitting up or reconstruction or
reconstitution of an existing undertaking or transfer of plant and machinery of an
existing undertaking before 1st July 2015.
Where at any subsequent stage it is discovered that the tax credit allowed under this section
was availed without fulfilment of any one of the above conditions, the Commissioner shall re-
compute the tax payable by the taxpayer on the basis of tax credit wrongly allowed under this section
and shall be recovered under the relevant provisions of the Ordinance.Example: ABC (Pvt.) Ltd. a newly formed Company on July 01, 201 7 has taxable business income
for the tax year 202 3 is Rs. 1,000,000. If the tax payable by the Company is Rs. 290 ,000 then
compute tax credit under section 64B by assuming that the Company has met all the preconditions as
required under the said section and having 160 employees.Solution:
ABC (Pvt.) Ltd.
Computation of taxable income and tax liability: Rs.
Tax payable 290 ,000Less: Tax credit:
6 % of tax payable (For 150 employees) 17 , 400
Balance tax payable 272 , 600- TAX CREDIT FOR PERSONS EMPLOYING FRESH GRADUATES (Section 64C)
This section has been omitted by Finance Act, 2021.
i. A person employing freshly qualified graduates from a university or institution recognized by
Higher Education Commission shall be entitled to a tax credit in respect of the amount of annual
salary paid to the freshly qualified graduates for a tax year in which such graduates are
employed.
ii. The amount of tax credit allowed above for a tax year shall be computed according to the
following formula, namely:
(A/B) x C
Where
A is the amount of tax assessed to the person for the tax year before allowance of tax credit under
this section;
B is the person's taxable income for the tax year; and
C is the lessor of :-
a) the annual salary paid to the freshly qualified graduates referred to in sub-section (1) in the year;
and
b) 5% of the person's taxable income for the year
iii. The tax credit shall be allowed for salary paid to the number of freshly qualified graduates not
exceeding fifteen percent of the total employees of the company in the tax year
a) In this section, "freshly qualified graduate" means a person who has graduated after the first day of
July, 2017 from any institution or university recognized by the Higher Education Commission.”