Final Tax Regime and Minimum Tax Chapter- 22
Exchange Limited and Pakistan Mercantile Exchange Limited, inspection,
certification, testing and training services, oilfield services,
telecommunication services, collateral management services, travel and tour
services
b) In case of rendering or providing of services other than as mentioned at (i)
above - in case of a company 8% of the gross amount.- in any other case 10% of the gross amount
- Electronic & Print Medial for advertising services 1.5% of the gross amount
c) Where payment is made by an exporter or an export house to a resident
person or PE in Pakistan of a non-resident person for services of stitching,
dying, printing, embroidery, washing, sizing and weaving, rate of tax
deduction is 1 % - section 153(2)
Execution of
contract- Tax shall be deducted on gross amount payable.
- Rate of tax is 6.5 for companies and 7 % for other than company.
- Sportspersons contracts 10%.
Tax deductible on sale of good, execution of contract and on rendering of services shall be minimum
tax except in the following cases:- Tax deductible on sale of goods shall not be final tax if sale is made by a company being
manufacturer or public listed company. - Tax deductible on execution of contracts shall not be final tax if payments are received by
public listed company.
Explanation.
For the removal of doubt, it is explained that the income of resident person referred to in sub-section
(3) means the amount on which tax is deductible under sub-section (1) or (2) of this section.
Provided that where the recipient of the payment under clause (b) receives the payment
through an agent or any other third person and the agent or, as the case may be, the third person
retains service charges or fee, by whatever name called, from the payment remitted to the recipient,
the agent or the third person shall be treated to have been paid the service charges or fee by the
recipient and the recipient shall collect tax along with the payment received.
Opting out from Final Tax Regime [Clause (56C), (56D) & (56E) of Part IV of the Second Schedule]
The said options available under the aforesaid clauses are no more available from Tax Year 2020
although the said clauses have been omitted accordingly from tax year 2021.
Example:
Following information relates of Mr. A. He is doing the business of manufacturing of garments for tax
year 20 23.
Rs.
Sales 6,500,000
Expenses 6,050,000
Net Profit 450,000
Note: All the sales amount has been received after tax deduction @ 4 % being as industrial
undertaking.
Solution:
Computation of tax liability: Rs.
Tax deducted u/s 153 (6,500,000 x 4 %) 260 , 000
Total tax liability 260 , 000