Tax Book 2023

Final Tax Regime and Minimum Tax Chapter- 22

 5 .5% of Assessed value of goods specified in Part III of 12th

Schedule. (Other than capital goods and raw material specified in

Part I and Part II of the 12th Schedule).

2. Minimum tax on
   import of specified
   items for own use or as
   commercial import

The tax required to be collected under this section shall be minimum

tax on the income every person arising from imports of following goods

(i) edible oil;

(ii) packaging material;

(iii) paper and paper board; or

(iv) plastics:

Provided that the Board with the approval of Minister in charge may, by

a notification in the official Gazette, add any entry thereto or omit any

entry there from or amend any entry therein this sub-section.”;

3. Reduced tax rate Although the specified rates of tax has been given in 12th Schedule

however, the Board may specified reduced rate other than specified in

12 th Schedule.

4. Value of goods Means value as increased by sales tax, federal excise duty and custom

duty.

5. Exceptions from Final

tax Regime

Tax required to be collected on import of goods is minimum tax except

the in the case of import of goods on which tax is required to be

collected under this section at the rate of 1% or 2% by an industrial

undertaking for its own use.

6. Opting out from Final

Tax Regime

Option to commercial importers u/c 56 of Part IV of Second Schedule

has been deleted from tax year 2019.

Example:

Following information relates to Mr. Kamran for tax year 20 23. He imports garments goods from

America and sells goods in the same condition in which they were imported.

Rs.

Sales 500,000

Expenses 350,000

Net Profit 150,000

Note: Expenses include imports of Rs. 300,000. For certain reasons, tax on half of the imports were

not collected by collector of custom duty.

Solution:

In this case tax required to be collected shall be treated as minimum tax liability of the taxpayer and

further the taxable income is below taxable limit.

Tax required to be collected (300,000 x 5.5%) 16 , 500

Tax collected at import stage (8,250)

Balance tax payable 8 , 250

2. Dividends & Dividend in Specie (Section 5 and 150):

Tax shall be deducted from gross dividend which shall be considered full and final tax for a person.

This section is not applicable in case where dividend is exempt from tax e.g. dividend received from

agricultural business u/c 105B of Part I of second schedule.

Particulars Rate of tax

a) In case of dividend paid by Independent Power Purchasers where such 7.5%