budget commentry 2015-16
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BudgetTRANSCRIPT
Advocates & VAT Consultants
PAKISTAN BUDGET CHEMISTRY 2015-16
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{ INDEX }
HEADINGS SECTIONS PAGE
SALIENT FEATURES
INCOME TAX
DEFINATION 01
SUPER TAX 01
PUBLIC COMPANY 01
CAPITAL GAINS 01
POWERS OF FEDERAL GOVERNMENT 02
TAX CREDITS 02
OTHERS 02-05
INCOME TAX SCHEDULE SECTION 2(1) 05-07
SECOND SCHEDULE 08
EXEMPTIONS WITHDRAWN FROM THE SECOND
SCHEDULE 08-09
3rd TO 8th SCHEDULE 09
SALES TAX
ACTIVE TAXPAYER SECTION 2(1) 10
APPELLATE TRIBUNAL SECTION 2(1A) 10
COTTAGE INDUSTRY SECTION 2(5AB) 11
RETAILER SECTION 2(28) 11
SUPPLY SECTION 2(33) 11-12
WHISTLE BLOWER SECTION 2(46-) 12
FURTHER SALES TAX SECTION 3(1A) 12
POWER TO COLLECT SALES TAX AT HIGHER RATE SECTION 3(2B) 13
TIME AND MANNER OF PAYMENT SECTION 6(1) 13
DETERMINATION OF TAX LIABILITY SECTION 7(2)II 13-14
TAX CREDIT NOT ALLOWED SECTION 8(1)H 14
TAX CREDIT NOT ALLOWED SECTION 8(1)J-K-L & 8A 14
EXEMPTION SUBJECT TO APPROVAL SECTION 13 (2)A 15
EXEMPTION SUBJECT TO APPROVAL SECTION 13 (2)B 16
EXEMPTION THROUGH NOTIFICATION TO PLACE
BEFORE NATIONAL ASSEMBLY
SECTION 13 (6)(7) 16
REGISTRATION SECTION 14 (1), (2) & (3) 16-17
ACTIVE TAXPAYERS LIST SECTION 21 (A) 17
ACCESS TO RECORD, DOCUMENTS SECTION 25 (3) 17
SPECIAL AUDIT BY AUIT PANELS SECTION 32A (1)&(4) 17-18
OFFENCES AND PENALTIES SECTION 33 SERIAL (1) (5) 18
MONITORING OR TRACKING BY ELECTRONIC OR
OTHER MEANS
SECTION 40C (2) 19
AFFIXING STAMPS, STICKERS, BANDROLE AND
LABELS IN RESPECT OF SPECIFIED GOODS
SECTION 40D 19
POWER OF THE BOARD AND COMMISSIONER TO
CALL FOR RECORDS
SECTION 45A (4) 19
AGREEMENT FOR THE EXCHANGE OF INFORMATION SECTION 56A 20
DISCLOSURE OF INFORMATION BY A PUBLIC
SERVANT
SECTION 56B 20
PRICE SCHEME TO PROMOTE TAX CUTURE SECTION 56C 20-21
REWARD TO WHISTLEBLOWERS SECTION 72(D) 21
FIFTH SCHEDULE SERIAL NO 12 21-23
EXEMPTIONS SIXTH SCHEDULE TABLE 1 23-25
SIXTH SCHEDULE TABLE 3 25
EIGHT SCHEDULE TABLE 1 26-31
EIGHT SCHEDULE TABLE 2 31
NINHT SCHEDULE 31
SALES TAX ON SERVICES ON FEDERAL CAPTIAL
ISLAMBAD TERITORRY
I.C.T ORDINANCE 31-39
FEDERAL EXCISE DUTY
PROVISIONS ARE INSERTED /MODIFIED IN ACCORDANCE WITH SALES TAX ACT
39 DUTIABLE ITEM FIRST SCHEDULE 39
EXEMPTION FROM F.E.D. THIRD SCHEDULE 39-40
SALIENT FEATURES
PAKISTAN BUDGET CHEMISTRY 2015-16
SALIENT FEATURES OF THE BUDGET
BUDGETARY ALLOCATIONS AND TARGETS
The total outlay for Budget FY16 is estimated at PKR 4.45tn, higher 3.5% then actual budget estimates of
FY15.
GOP has estimated a GDP growth of rate of 5.5% in FY16, compared to actual/revised growth rate of
5.1/4.2% in FY15. Furthermore, the GoP plans to bring the reach the 7% growth mark by FY18.
Total revenue receipts for FY16 are estimated at PKR 4.16trn compared to budgeted receipts of PKR
4.07trn in FY15, up by 2.23%. On the other hand, total expenditures are budgeted at PKR 4.45trn as
compared to PKR 4.30trn budgeted for in FY15, up by 3.48%. Consequently, GoP plans to resort to bank
borrowing of 283bn to meet its budget deficit.
On the expenditure front, subsidies have been slashed by 32% from last year’s targets to PKR 138bn.
Bulk of the cost cutting can be attributed to reduction in subsidies to power sector, including
WAPDA/PEPCO and KEL.
Collection from tax revenues have been budgeted to increase by 9.24% to PKR 3.4trn, whereas non tax
revenue is budgeted to increase by 9.58% in FY16.
Current expenditure for FY16 has been estimated at PKR 3.48tn, against PKR 3.46tn budgeted for in
FY15.
Public Sector Development Program (PSDP) has been estimated at PKR 1,513bn (4.9% of GDP), up
27%/29% compared to FY15R/FY15 allocations. On a comparative basis, Federal PSDP has been raised by
33% YoY to PKR 700bn, whereas provincial share of PSDP has been jacked up 25% to PKR 813.7bn. Major
beneficiaries of increase in Federal PSDP include NHA, whose allocation has been increased by 43%, and
introduction of Special Development Program for IDPs which has been allocated PKR 100bn.
TAXATION MEASURES
Corporate taxation rate has been reduced from 33% to 32%.
WHT on dividends has been increased by 2.5% to 12.5% for filers, whereas tax for non-filers has been
increased from the current 15% to 17.5%.
SALIENT FEATURES
PAKISTAN BUDGET CHEMISTRY 2015-16
Currently, banking sector income is taxed at 35% besides dividend income (10-25%) and income on
capital gains (10-12.5%). Under the FY16 budget, all income sources of banks have been proposed to be
taxed at 35%.
Super tax has been introduced in FY16 budget with a view to provide funding for temporary displaced
persons. Accordingly, a one-off tax would be charged to companies, individuals and AoPs with income
exceeding PKR 500mn @ 4% for banks and 3% for income for all others.
Under the FY16 budget, companies (with the exception of banks and modarbas) that do not pay
dividends within six months of the end of a tax year, or make distributions in a manner that their reserve
position post distribution exceeds 100% of such company’s paid up capital, will have to pay tax at the
rate of 10% on such excess earnings.
The current taxation measures do not address the issue of taxation of dividends to unit holders of REITs.
To bridge the gap, FY16 budget proposes dividends from REITs be treated @ 10%.
After already having passed on the burden of increased CGT to investors in the previous year, the
current budget saw the GOP deciding to further increase the quantum and rates on sale of securities.
CGT on sale of securities disposed off within one year of holding has been increased from 12.5% to 15%,
whereas securities sold between 1-2 years will now be charged CGT @ 12.5% compared to 10%
previously. Additionally, the GoP has proposed the introduction of a new slab of CGT for disbursement
of securities between 2-4 year period @ 7.5%
SALES TAX
The budgetary measures pertaining to Sales Tax& Federal Excise are primarily aimed at:
1. The rate of further tax for supplies to unregistered persons is being enhanced to 2%.
2. Restriction of zero-rating on dairy products to milk for baby formula.
3. Exemption of sales tax on local supply of raw hides and skins to be granted.
4. Sales Tax Rules – provisions for temporary registration are introduced to facilitate the
manufacturers. (Amending notifications are awaited)
5. The limit of utility bills for cottage industry is being enhanced from 700,000 to 800,000 rupees.
6. Input tax adjustment on Pre-fabricated buildings being allowed.
7. The refund on monthly basis to be allowed to persons making reduced rate supplies under SRO
1125(I)/2011 dated 31.12.2011 (Amending notification are awaited)
8. Sales tax exemption on appliances for colostomy, colostomy / urosotomy bags and tubular
daylight devices is being granted
9. Rationalization of sales tax on steel sector melters, re-rollers and, ship breakers. (Amending
notifications is awaited to be issued)
10. sales tax on rates on mobile phones are doubled to Rs. 300, 500 and 1000, from Rs. 150, 250
and 500, respectively, depending on features in the mobile set
SALIENT FEATURES
PAKISTAN BUDGET CHEMISTRY 2015-16
11. Certain services to be added in the Islamabad Capital Territory in order to align the taxation
regime on services with provinces.
12. Sales Tax Exemption is granted to bricks and crushed stones up-till June 2018.
FEDERAL EXCISE DUTY
1. Enhancement of rates of Federal Excise Duty on locally produced cigarettes. Average tax
incidence to increase from 58% to 63%
2. The rate of Federal Excise Duty on aerated waters is being enhanced from 9% to 12% of retail
price.
3. The electronic monitoring system is proposed to be introduced to monitor the production of
specified sectors i.e. cigarettes, beverages, cement, fertilizer and sugar; and also to monitor the
sales of restaurants etc.
OTHER MAJOR FEATURES
Tax credit for companies planning to get listing on the stock exchange has been raised from 15%
currently to 20%.
To promote a culture of investments, tax credit on investments in shares of new securities has been
raised from PKR 1mn to PKR 1.5mn.
FY16 budget aims at widening the tax net of the country. Accordingly, additional rate of tax would being
charged to non-filers of income tax, where commission agents and contractors will have to pay
additional tax @ 3%, while suppliers would pay additional tax @ 2%.
Salary and pensions have been budgeted to increase by 7.5%
SALIENT FEATURES
PAKISTAN BUDGET CHEMISTRY 2015-16
FY16 Budget Snapshot
PKR bn Rev. Budget
FY14 Rev.
Budget
FY15
Budget FY16
Total Budget Outlay 3,985 4,235 4,451
Resources 3,681 3,833 4,168
Internal Resources 2 966 3 122 3 367
Revenue Receipts 2,184 2,378 2,463
Capital Receipts 600 603 606
Estimated Provincial Surplus 183 141 297
External Resources 714 710 802
Expenditure 4 057 4 235 4 451
Current Expenditure 3,198 3,481 3,482
Development Expenditure 858 754 969
• Federal PSDP including ERRA 425 542 700
• Development loans & Grants to
Provinces
144 132 164
Other Development Expenditure 289 80 105
Bank borrowing 376 402 283
INCOME TAX
PAKISTAN BUDGET CHEMISTRY 2015-16 Page 1
DEFINATION
The definition of “Consumer Goods” and “Fast Moving Consumer Goods” has been introduced and will
give clarity for the eligibility for the reduction in Minimum Tax.
Definitions related to “Real Estate Investment Trust” and “Pakistan Mercantile Exchange Limited” have
been introduced with regard to new taxation measures.
SUPER TAX
For the Tax Year 2015, Banking Company, and Other Person having income equal to or exceeding to
Rs.500 million, will additionally be subjected to Super Tax for Rehabilitation of Temporarily Displaced
Persons (Super Tax) at the rate of 4% and 3% respectively. Final tax related income will be calculated
through imputable tax basis for the calculation of Super Tax chargeability.
PUBLIC COMPANY
From Tax Year 2015, the Public Company (excluding banking companies, public companies in which not
less than 50% shares are held by the Government and a modaraba) derives profit for tax year and having
undistributed tax reserves exceeding 100% of its paid up capital after paying dividend (if any), so much
of its reserves as exceed 100% of its paid up capital shall be treated as income and will be subjected to
tax at the rate 10%.
Fixed Tax regime on Profit on Debt has been revised where maximum tax rate has been increased to
15% from earlier 10% in case the profit on debt exceeds Rs 25 million; in a progressive manner and will
be treated as separate block of income.
CAPITAL GAINS
Rates on Capital Gains on disposal of securities have been revised. Such gains are subject to 12.50% and
15% tax for Tax Year 2015 & 2016 respectively if the security sold having holding period of one year or
less. Whereas, if the holding period of security is between twelve months and twenty four months, gains
are subject to 10% and 12.50% tax for Tax Year 2015 & 2016 respectively. However, for the Tax Year
2015, there will be no tax if the holding period of the security sold exceeds twenty four months but for
the Tax Year 2016, such gains will attract tax at the rate 7.5%.
POWERS OF FEDERAL GOVERNMENT
INCOME TAX
PAKISTAN BUDGET CHEMISTRY 2015-16 Page 2
The power of the Federal Government for allowing exemptions and concession under the Income Tax
Ordinance, 2001(ITO) have been made subjected to the approval for Economic Coordination Committee
of Cabinet, that too, on the basis of specific purposes and circumstances as defined in the law.
TAX CREDITS
The maximum limit of Rs.1.000 Million has been increased to Rs.1.500 Million for taxThe Tax Credit
available for Profit on House Loan/Debt has been replaced by deductible allowance for house loan/debt
and its maximum limit has been enhanced to Rs.1.000 million for Rs.0.750 million.
A new Tax Credit has been introduced for Employment Generation by Manufacturers. Setting up new
manufacturing units (between July 1, 2015 to June 30th, 2018), will be eligible for a tax credit of 1% of
tax payable (subject to maximum of 10% of tax payable) for every fifty employees’ registration with EOBI
and ESSI. The company can avail the Tax Credit for a period of ten years.Tax credit under section 65B,
65D and 65E were allowed against the final/minimumtaxation but due to section 169(2) and 113(1)
there was confusion in eligibility of such tax credit. A new sub section has now been introduced for the
resolution of said ambiguity as tax credits under said sections are already allowed against
final/minimum tax.
Tax Credit for the Company Opting for Enlistment in any registered stock exchanges in Pakistan has
been increased to 20% from existing 15%.
The time frame for the Tax Credit under Section 65E of ITO has been rationalized by allowing five years
from the date of setting up or commencement of commercial production from the new plant or
expansion project, whichever is later.
OTHERS
In order to exchange information with regard to double taxation and prevention of fiscal evasion, the
Federal Government will be authorized to enter into agreements with Government or Governments of
foreign countries or tax jurisdictions. In addition, the Federal Government is seeking the confidentiality
of such sort of information under the cover of “Notwithstanding” clause. Similar authority has also been
introduced in the Sales Tax as well as Federal Excise laws.
Tax on Builders introduced through Finance Act, 2013 has been suspended till June 30th, 2018.
INCOME TAX
PAKISTAN BUDGET CHEMISTRY 2015-16 Page 3
Minimum Tax on Land Developers has been introduced at the rate of 2% of the value of land notified by
any authority for the purpose of stamp duty.
Taxpayer has been authorized to revise the Tax Return without the prior approval of Commissioner, if
the Revised Tax Return is filed within 60 days of filing of the Original Tax Return.
The Commissioner (Appeals) may extend the stay for another thirty days after hearing the
Commissioner against whose order and appeal has been made, provided that order on appeal shall be
passed within the said period of thirty days.
The period for the recovery of tax under an assessment order or an amended assessment order or any
other order issued by the Commissioner has been extended to thirty days from existing 15 days.
However, the period of sixty days allowed for the provisional assessment under Section 122C of the ITO
has been reduced to forty five days.
Tax payer is now required to estimate its Tax Liability for the Tax Year before the end of its second
quarter instead of the prevailing requirement before the end of fourth quarter. In case, the tax payable
for the tax year is likely to be more than the amount required to be paid as per provisions of law, the tax
payer is required to pay 50% of such tax liability by due date of second installment and the balance 50%
in two equal installments payable by the due dates of third and fourth quarters of the Tax Year.
The Permanent Establishment in Pakistan of a Non-Resident Person is now entitled to apply
Commissioner for tax exemption/reduction certificate on account of payments made under Section
152(2A) of the ITO.
Tax deducted while making payment to companies on account of services rendered has been made
adjustable for the Companies Rendering Services with effect from tax year 2009 and such payments to
other than companies shall be minimum. This seems to be a settlement of an old issue account of
proper amendment proposed in the ITO, 2001.
Tax deducted at the rate of 10% while making payment to a Sportsperson has been declared Final Tax
with effect of Tax Year 2013. This seems to be a settlement of an old issue account of proper
amendment proposed in the ITO, 2001.
Exporters have been provided with an irrevocable option to opt for filing of normal income tax return
under Section 114 of the ITO, 2001 instead of filing statement of final taxation under Section 115(4) of
the ITO, 2001. However, no incentives have been provided in this regard as tax deducted on the exports
proceeds shall be minimum tax for such tax year.
Rate of Default Surcharge on account of non-deduction/payment of tax has been reduced to 12% from
18% whereas additional payment for delayed refund payable by Board has also been reduced to KIBOR
plus 0.5% from 15%.
INCOME TAX
PAKISTAN BUDGET CHEMISTRY 2015-16 Page 4
A new section 165B has been introduced to empower the Board to procure information related to non-
resident persons from financial institutions including banks to discharge its duties under bilateral or
multilateral treaties/agreements.
The concept of “Special Audit Panels(SAP)” has been introduced this year which will be comprising of
two or more members, consisting of an officer of the Inland Revenue, a firm of Chartered Accountants, a
firm of Cost and Management Accountants or any persons as directed by Board. SAP will be headed by
the chairman who shall be an Officer of Inland Revenue. Such SAPs, after getting approvals from the
Commissioner, may exercise powers under Sections 121, 176, 177, 210 and 211 of the ITO, 2001.
Individuals’ Computerized National Identity shall be used as National Tax Number from the tax year
2015.
Minimum Penalty of ten thousand rupees instead of fifty thousand rupees for Non-Filing of statement
of final taxation and withholding tax statements has been brought in the main section from the
respective schedule. The penalty for non-filing of wealth statement and wealth reconciliation statement
has been enhanced from 100/per day of default to the higher of0.1% of the taxable income per week or
Rs.20,000.
A Retailer registered under Special Procedure Rules, 2007, will automatically be selected for Audit of its
Income Tax affairs to be conducted under section 177 of the ITO, 2001, in case of non- compliance of
the parameters specified under section 214D(3) which require that the retailer should be an active
taxpayer, duly filing of Income Tax Return along-with tax.
A concept of whistle blower has been introduced in Income Tax, Sales Tax and Federal Excise laws for
the person who reports concealment or evasion of income tax, fraud, corruption or misconduct by
providing credible information leading towards detection of tax and related recovery. The Board may
sanction reward to such whistle blowers subject procedures to be prescribed in this behalf.
For the purpose of collection of advance tax from the domestic consumers monthly limit of electricity
bill is proposed to be reduced from Rs. 100,000 to Rs. 75,000.
Advance tax rates applicable on telephone services expanded to include internet services in their ambit
for deduction of tax.
Collection of advance tax has been abolished on purchase of air tickets for travelling to Baluchistan
Coastal Belt, Azad Jammu and Kashmir, FATA, Gilgit-Baltistan and Chitral.
Fertilizer has been excluded from the ambit of advance tax on sales to retailers or wholesalers. The
Finance Bill has included the wholesalers simultaneously in the ambit of advance tax; if the transaction is
between the wholesalers.
INCOME TAX
PAKISTAN BUDGET CHEMISTRY 2015-16 Page 5
Collection of advance tax by Educational Institutions from non-resident person has been relaxed on the
premise that the non-resident has no Pakistan source income and fee is remitted directly to the bank
account of educational institution from abroad through normal banking channels.
For Non-Filers, all banking transactions related to transfer and purchase of banking instruments,
exceeding fifty thousand rupees a day, will be liable to adjustable advance tax at the rate of
0.6%.
Payment to a resident person for rent to use commercial, industrial, scientific equipment or machinery
has been made subject to deduction of Income Tax at the rate of 10% which would be Final Tax on such
income.
Education related expenses remitted abroad will also be made liable subjected to deduction of
adjustable advance tax at the rate of 5%. Tax shall be collected from the payer of education related
expenses.
Dividend in specie has also been made liable for deduction of advance tax at the rates applicable to cash
dividend i.e. 12.50% on filers while 17.50% on Non-Filers.
Pakistan Mercantile ExchangeLimited is required to collect advance tax from purchase, sale and
commission on future commodity contracts at the rate of 0.1%. The aforementioned collection of tax
shall be a minimum tax.
INCOME TAX SCHEDULE SECTION 2(1)
Finance bills proposes to provide a slight reduction of Income tax to tax payers having their income from
Rs. 400,000-Rs. 500,000 by reducing their tax rate.
Salaried individuals tax rates are reduced from 5% to 2% while other individuals tax rates are reduced
from 10% to 7%.
� REDUCTION OF TAX RATES FOR COMPANIES
Tax rate on Company, other than Banking Company, has been reduced to 32% for the Tax Year 2016.
� RATES OF SUPER TAX (TY 2015 only)
Banking Company 4%
Other than Banking Company (having income ≥ Rs. 500 Million) 3%
� INCREASE IN WITHHOLDING RATES FOR NON-FILERS
INCOME TAX
PAKISTAN BUDGET CHEMISTRY 2015-16 Page 6
After introduction of concept of Filer & Non filer in Finance Bill 2014, it has been proposed to further
expand its scope to encourage filing of returns. The details of additions and enhancement of withholding
rates are as follows:
Category Filer Non Filer
Capital Gains Tax Company
� Stock Funds 10% 25%
� Other than Stock Funds 25% 25%
Capital Gains Tax Individuals & AOPs 10% 17.5%
Specified Imports 1% 1.5%
Import Pulses 2% 3%
Commercial Imports 3% 4.5%
Import of Ships 4.5% 6.5%
Execution of Contracts
� Company 7% 10%
� Others 7.5% 10%
� Sports Person 10% 10%
Commission on Petroleum products 12% 15%
Brokerage & Commission
� Advertisements 10% 15%
� Others 12% 15%
Other industries & Companies 5.5% 8%
Other Persons 6% 9%
Dividend 10% 17.5%
Profit for Debt 10% 17.5%
Permanent Establishment
� Company 4% 6%
� Other 4.5% 6.5%
Non Resident Other than Transport
� Company 8% 12%
� Others 10% 15%
Non Resident Contracts
� Company 7% 10%
� Others 7.5% 10%
� Sports Person 10% 10%
Supply of Goods (Local)
� Company 4% 6%
� Other 4.5% 6.5%
Goods Transport Vehicles(per kg) Rs.2.5 Rs.4
Passenger Transport Vehicles
INCOME TAX
PAKISTAN BUDGET CHEMISTRY 2015-16 Page 7
� Per Seat Capacity (Rs.) 50-300 100-500
� Private Vehicles (Rs.) 800-10000 1200-30000
Cash Withdrawal Bank 0.3% 0.6%
Other transactions with Bank 0.3% 0.6%
Advance Tax on Purchase of vehicles
� Minimum up to 850 CC (Rs.) 10000 10000
� Maximum above 3000 CC (Rs.) 250000 450000
Advance Tax on Transfer of vehicles
� Minimum up to 850 CC (Rs.) 0 5000
� Maximum above 3000 CC (Rs.) 62500 300000
Fertilizer dealer/wholesaler 0.7% 1.4%
Transaction other than cash through Bank (exceeding 50,000
in a day)
Nil 0.6%
Services (Local)
� Company 8% 12%
� Other 10% 15%
WITHHOLDING RATES FOR CERTAIN TRANSACTIONS
In addition to the enhancement of Tax Withholding rates for non- filers, following rates have been
modified in the finance bill:
Particulars Proposed Rate
Mobile, Internet and cards 14%
Rental of Machinery 10%
International Travel
First/Executive Class Rs. 16,000
Other than economy Rs. 12,000
Sale/purchase of future commodity 0.1%
Commission on above 0.1%
Education expenses remittance abroad 5%
Withdrawal of cash by licensed Exchange Companies 0.15%
SECOND SCHEDULE
INCOME TAX
PAKISTAN BUDGET CHEMISTRY 2015-16 Page 8
Income tax exemption is proposed to be granted to profit and gains of the following:
Description Period of Exemption
China Overseas Ports Holding Company from
Gwadar port
Upto February 06, 2030
Developmental REIT scheme Upto June 30,2020
Manufacture of Plant and Machinery used for
renewable energy resources
Five years from July 01, 2015
Operation of warehousing or Cold Chain
facilities for agricultural produce
03 years of commercial operations.
Industrial undertaking involved in Halal Meat
production including export receipts
04 years of commercial operations.
Manufacturing unit setup in the Province of KPK
(setup between July, 2015 to June 2018)
05 years of commercial operation
/Production.
Operators and Owners of LNG Terminals 05 years of commercial operation /
Production.
Taxpayers establishing Transmission Line
Project setup on or after July 01, 2015 to June
30, 2018.
No specific period mentioned
Following major emptions are also proposed to be included in the Second Schedule:
� Contribution on account of Social Security to Social Security Departments shall be exempt.
� Minimum Tax Exemption to following persons and business:
� Coal supplies from Sindh for Power Generation.
� Operators and Owners of LNG Terminals
� Taxpayers In most affected areas of KPK, FATA or PATA from
� Rice Mills (for Tax Year 2015 only)
� Tax on Cash withdrawal by exchange companies @ reduced rate of 0.15%.
� Incentive available to green field undertakings in the form of Non-disclosure of source of income
has been extended to June 30, 2017.
� Finance bill proposed that section 113 and 153 remain not applicable to trading houses where
sale of in house produced and processed food and allied items to customers doesn’t exceed 2%
of total sales.
EXEMPTIONS WITHDRAWN FROM THE SECOND SCHEDULE
� Capital Gains from sale of shares of Public Companies set up in Special Industrial Zone.
INCOME TAX
PAKISTAN BUDGET CHEMISTRY 2015-16 Page 9
� Payment to electronic and Print Media.
� Import of Petroleum Products.
� Income from Hajj Operations.
� Rate of Income tax (2%) on purchase of locally produce Oil and ghee manufacturer purchases.
� Minimum tax exemption is withdrawn from KAPCO
3RD TO 8TH SCHEDULE
The finance bill seeks to tax the Capital gains and chargeability of super tax on the dividend income of
different sectors.
SALES TAX
PAKISTAN BUDGET CHEMISTRY 2015-16 Page 10
ACTIVE TAXPAYER SECTION 2(1)
Bill proposed to insert definition of active tax payer in the Sales Tax Act through amendment in
subsection 2(1). Earlier the definition was provided under sales tax general order.
According to the definition Active Taxpayers persons means a person who does not fall under
following category :-
(a) A person who is blacklisted or whose registration is suspended or is blocked in terms of
section 21;
(b) A person who fails to file the return under section 26 by the due date for two consecutive
tax periods;
(c) A person who fails to file an Income Tax return under section 114 or statement under
section 115, of the Income Tax Ordinance, 2001(XLlX of 2001), by the due date;
and
(d) A person who fails to file two consecutive monthly or an annual withholding tax statement
under section 165 of the Income Tax Ordinance, 2001;
In our opinion linking compliance of income tax statement for a registered person to remain as
active taxpayer in sales tax is not correct considering the impact of penalties provided in both
the law for non-compliance. Furthermore, the mere non filing of income tax withholding
stamen in this case may cause serious implication such as non-availability of input tax
adjustment, inadmissibility of supplies under reduced rate etc.
APPELLATE TRIBUNAL SECTION 2(1A)
Definition of “Appellate Tribunal” is proposed to be renumbered only.
SALES TAX
PAKISTAN BUDGET CHEMISTRY 2015-16 Page 11
COTTAGE INDUSTRY SECTION 2(5AB)
The bill is proposed increase for threshold of cottage industry. At present persons having
annual utility bills during the last 12 months of Rs. 700,000/- are define as “Cottage Industry”,
The limit of utility billsare proposed to be increase to Rs. 800,000/- considering the inflationary
impact and increasing utility cost.
RETAILER SECTION 2(28)
Bill proposed exclusion of threshold limit for retailer having combine business of importer or
manufacturer. Earlier the threshold limit of 5 million is also available to importer cum retailer or
manufacturer cum retailer. However since threshold limit for both manufacturer and retailer
were already been withdrawn. The limit for retailer having joint business of import or
manufacturing is also proposed to be omitted.
SUPPLY SECTION 2(33)
The bill is proposed to amend definition of supply in order to give legal cover for sales tax
collection on supply upon toll manufacturing.
A new sub section “d” is accordingly proposed defining expanded scope of supply in cases of
manufacture of goods belonging to another person, the transfer or delivery of such goods to
the owner or to a person nominated by him.
Here it is important to note the dispute over rights to claim sales tax on toll manufacturing
service is prevailing among provinces and Federal Government. The board though has
strengthened their stance on their right to collect sales tax on toll manufacturing. The issue will
not resolve until unless provincial governments delete the entry of Sales Tax on Toll
manufacturing from their charging Schedule of respective Sales tax Act.
SALES TAX
PAKISTAN BUDGET CHEMISTRY 2015-16 Page 12
Having said that in our opinion, the right to collect and levy sales tax on toll manufacturing
activity was always rest with Federal Government since in its law under section 2(16) and 2(17)
the activity was already well covered.
WHISTLE BLOWER SECTION 2(46-)
The bill is proposed to insert definition of whistle blower under S.T.A. 1990. Accordingly to
proposed definition under section 2(46)A whistle blower means a person who reports
concealment or evasion of sales tax and tax fraud leading to detection or collection of taxes,
fraud, corruption or misconduct, to the competent authority having power to take action
against the person or a sales tax authority committing fraud, corruption, mis-conduct or
involved in concealment or evasion of sales tax.
FURTHER SALES TAX SECTION 3(1A)
The bill proposed increase in rates of further sales tax from 1% to 2%. The further sales tax
requires to be paid by a registered person on supplies to un-registered person. The
rationale behind increase of further sales tax is burdening additional cost on unregistered
segment of the trade as well as to recover some contribution of taxes indirectly.
The board has provided some exclusion to person who are liable to pay sales tax on their
end consumer price such as person falling under third schedule of the S.T.A. 1990,
However, we have observe some industrial segments who are paying sales taxes at
incremental value addition up-to final stage are not given exclusion from levy of further
sales tax, the board is therefore requires to review the case in extend exclusion to them as
well. The controversy on this account is already been brought up before High Court.
The further sales tax is not adjustable from excessive input in sales tax return during the tax
period and thus the amount of further tax is requires to be paid in full. The further tax in
our opinion is made adjustable as it was prevails in past
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PAKISTAN BUDGET CHEMISTRY 2015-16 Page 13
POWER TO COLLECT SALES TAX AT HIGHER RATE SECTION 3(2B)
The power to collect sales tax at higher rate granted to the board under clause b of the sub-
section 3(2)is proposed to be modified. The amendment is technical in nature to align the
existing provision of the law only.
TIME AND MANNER OF PAYMENT SECTION 6(1)
The Bill is proposed to extend powers of recovery of sales tax to Customs authority.
Accordingly, amendment to insert provision of recovery is inserted under section 6 of the Sales
Tax Act., 1990.
The amendment though apparently seems to be a technical nature to broaden the scope for
time and manner of payment along with recovery for sales tax collected at Customs stage, it’s
implications are very interesting.
In our opinion, it suggests in case of short payment of sales tax on Customs Stage, the Custom
authorities may initiate legal proceeding for its recovery by virtue of this amendment.
DETERMINATION OF TAX LIABILITY SECTION 7(2)II
The bill proposed to allow input tax adjustment on provisionally cleared bill of entry under
section 7 of the S.T.A 1990..
At present under section 7 of the Sales Tax Act., 1990 the input tax adjustment is admissible
against bill of entries cleared under section 79 or 104 of the customs Act., 1990 only. Therefore
bill of entries cleared under provisional assessment could not be taken into account and
number of taxpayers were unable to report their import in their sales tax returns. The issue was
comes into lime light in a recent past year when the reporting of the import and export were
electronically linked with the systems operative at Customs station to curb incorrect reporting.
However while introducing the measure due to legal restriction under section 7 the system did
not auto upload bill of entries cleared in customs under section 81 of the Customs Act., related
to provisional clearance and assessment.
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PAKISTAN BUDGET CHEMISTRY 2015-16 Page 14
The board upon representation of various tax bodies and experts has reviewed the matter and
accordingly proposed amendment under section 7 of the Sales Tax Act., 1990 to give legitimacy
to claim input tax adjustment and reporting of bill of entry cleared under section 81 of the
Customs Act., 1969.
The amendment is beneficial in nature and address anomaly of the law under this section.
TAX CREDIT NOT ALLOWED SECTION 8(1)H
The bill proposed to exclude restriction on input tax adjustment placed under section 8(1) h
from pre-fabricated buildings.
The amendment is beneficial in nature as well as quite interesting. Earlier, the tax officers are
on a view that input tax adjustment on building material is not admissible. Now if the legislation
is made allowing input tax adjustment on fabricated building, We believe on same grounds and
rationale there is no reason to disallow input tax adjustment on construction material used to
build a factory or premises used for production and taxable activity.
TAX CREDIT NOT ALLOWED SECTION 8(1)J-K-L
The bill proposed to place restriction on input tax adjustment against services in respect of
which adjustment is barred by the respective provincial sales tax laws. The amendment seems
to bring harmony between Provincial and Federal Sales Tax law.
Likewise, since the rate of sales tax on agricultural machinery and equipment are reduced to 7%
from 17%, input tax adjustment is also restricted on it.
The restriction is also proposed to put such goods and service which at the time of filing of
return by the buyer have not be declared by the supplier in their return. The effective date of
this particular restriction will be notified by the board.
Here it is important to note that similar sort of restriction is already provided under 8(1)( c a)
and interestingly, Lahore High Court has already declared the provision ultra vires and un-
constitutional.
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PAKISTAN BUDGET CHEMISTRY 2015-16 Page 15
SECTION 8-A
The bill is proposed to place burden on tax department to discharge onus of burden in respect
of unpaid amount of sales tax under section 8-A. The amendment is very important in nature
considering the frequent abuse of this section by the field formation in past against the spirit of
the law.
The responsibility were usually placed frequently on both buyer and seller as well it expanded
to entire supply chain without discharging the onus of burden to prove that all the person(s) all
involved jointly in cases where the amount of sales tax remain unpaid.
This simple amendment of law promises more equitable and fair exercise of vast powers
granted under this particular section of the law.
EXEMPTION SUBJECT TO APPROVAL SECTION 13 (2)A
The bill proposed made Federal Governments power to grant exemption subject to to the
approval of the Economic Coordination Committee of Cabinet.
The exemption can be granted by the Federal Government through a notification whenever
circumstances exist to take immediate action for the purposes of national security, natural
disaster, national food security in emergency situations, protection of national economic
interests in situations arising out of abnormal fluctuation in international commodity prices,
removal of anomalies in taxes, development of backward areas and implementation of bilateral
and multilateral agreements, by notification in the official Gazette, exempt any taxable supplies
made orimport or supply of any goods or class of goods, from the whole or any part of the tax
chargeable under this Act, subject to the conditions and limitations specified therein after
approval of the economic coordination committee of the cabinet.
The amendment seems good and an effort to bring transparency and supremacy of the law.
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PAKISTAN BUDGET CHEMISTRY 2015-16 Page 16
EXEMPTION SUBJECT TO APPROVAL SECTION 13 (2)B
The bill proposed to withdraw powers to grant sales tax exemptions available under section
13(2)(b) to the Federal Board of Revenue. The powers to grant exemption in rest with the
Federal Government only subject to certain condition and approval as explained above.
EXEMPTION THROUGH NOTIFICATION TO PLACE
BEFORE NATIONAL ASSEMBLY
SECTION 13 (6)(7)
The Bill proposed to bound Federal Government to place all notifications granting exemption
issued in a financial year under this section before the National Assembly to seek it’s
confirmation or to made it a part of Act.
The exemption notifications under this section are now become time bound expiry and stands
withdrawn if not already rescinded.
The amendment is positive in nature and seems to bring transparency and supremacy of
the law.
The bill proposed to bring basic registration law within the ambit of Sales Tax Act., 1990.
Earlier in 2004, even the basic sales tax registration laws were transferred into sales tax
rules. -Every person engaged in making taxable supplies in Pakistan, including zero-rated
supplies, in the course or furtherance of any taxable activity carried on by him, falling in
any of the following categories, if not already registered, is required to be registered under
section 14 of this Act, namely:-
(a) a manufacturer who is not running a cottage industry;
(b) a retailer who is liable to pay sales tax under the Act or rules made thereunder,
excluding such retailer required to pay sales tax through his electricity bill under
sub-section (9) of section 3;
(c) an importer;
REGISTRATION SECTION 14 (1), (2) & (3)
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PAKISTAN BUDGET CHEMISTRY 2015-16 Page 17
(d) an exporter who intends to obtain sales tax refund against his zero-rated supplies;
(e) a wholesaler, dealer or distributor; and
(f) a person who is required, under any other Federal law or Provincial law, to be
registered for the purpose of any duty or tax collected or paid as if it were a levy of
sales tax to be collected under the Act;
(2) Persons not engaged in making of taxable supplies in Pakistan, if required to be
registered for making imports or exports, or under any provisions of the Act, or any other
Federal law, may apply for registration.
The powers to regulate the sales tax registration under this Act shall were also provided to
the Board who may by notification define complete process in sales tax rules.
The bill proposed to delegate powers to the board to prepare and maintain active
taxpayers list in the manner as prescribed through rules.
The rules under this section with condition and limitation are supposed to be formulate by
the board shortly.
The bill proposed to omit reference of section 36 from section 25. The amendment seems to a
mere technical correction of law, since section 36 was omitted way back in 2012.
The bill proposed to expend the scope of Special Audit to the panel of persons. Earlier the
provisions of special audit were restricted to the extent of Chartered and Cost Accountants.
Now following persons were declared to be included in a panel for conducting special audit.
ACTIVE TAXPAYERS LIST SECTION 21 (A)
ACCESS TO RECORD, DOCUMENTS SECTION 25 (3)
SPECIAL AUDIT BY AUIT PANELS SECTION 32A (1)&(4)
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PAKISTAN BUDGET CHEMISTRY 2015-16 Page 18
(a) An officer or officers of Inland Revenue;
(b) A firm of chartered accountants as defined under the Chartered Accountants
Ordinance, 1961 (X of 1961);
(c) A firm of cost and management accountants as defined under the Cost and
Management Accountants Act, 1966 (XIV of 1966); or
(d) Any other person as directed by the Board,
The bill proposed to grant authority to board or Commissioner to conduct audit of a registered
person, including refund claim and forensic audit. The scope of the audit shall be determined by
the board or Commissioner on case to case bases.
The concept of joint audit is further introduced in this bill. The board where consider
appropriate get the special audit or the forensic audit conducted jointly through a penal of
special audit headed by the Chairman who shall be an officer of the Inland Revenue. The
proceeding will remain continue even in absence of any one member of the panel and could
not be termed invalid on this ground.
The bill proposed to reduce the time limit of fifteen days to ten days for application of
minimum amount of penalty in delay in filing of sales tax return.
The minimum amount of Rs. 100/- per day penalty is now provided if the sales tax return is filed
delayed up-till next ten days.
Likewise,minimum penalty amount of Rs. 500/- per day is now provided if the due amount of
sale tax is paid within next ten days. Earlier this provision is available up-to 15 days.
OFFENCES AND PENALTIES SECTION 33 SERIAL (1) (5)
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PAKISTAN BUDGET CHEMISTRY 2015-16 Page 19
The bill proposed to replace labels with barcode under the condition provided in section 40-C
deals with the goods which cannot be sold without affixing the tax stamp, banderole, sticker by
the manufacturer, importer or any other person from such date as prescribed by the board.
Bill proposed addition of a new section 40-D in the sales tax Act., empowering the board to
require the registered person to provide tax stamp, banderole, stickers, barcode, etc. acquire
from a licensee appointed by the board for the purpose, against price approved by the board
which shall include the cost of equipment install by such licensee in the premises of the said
registered person.
The amendment seems to be special in nature and only applies in specific scenario, the same is
yet be revealed through further notifications.
However apparent it seems against the spirit of the self-assessment scheme which is the
essence of the prevailing value added sales tax regime.it’s merits and demerits are yet to be
assess once the board reveals complete details.
The bill proposed to clarify the powers for recalling of an order under this section in exercise of
its own motion or otherwise well.
The amendment seems corrective in nature. Earlier the tax officer appears confused while
exercising these powers upon request of a taxpayer who point outs apparent glaring mistake
and mis-understood that powers under this section can only be exercise upon its own motion.
MONITORING OR TRACKING BY ELECTRONIC OR
OTHER MEANS
SECTION 40C (2)
AFFIXING STAMPS, STICKERS, BANDROLE AND LABELS
IN RESPECT OF SPECIFIED GOODS
SECTION 40D
POWER OF THE BOARD AND COMMISSIONER TO CALL
FOR RECORDS
SECTION 45A (4)
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PAKISTAN BUDGET CHEMISTRY 2015-16 Page 20
The bill proposed to grant powers to the Federal Government who may enter into agreement,
bilateral or multilateral with the government or governments of foreign countries for the
exchange of information including automatic exchange of information with respect to sales tax
imposed under this Act or any other law for the time being in force and under the
corresponding laws in force in that country, and may, be notification in the official Gazette
make such provisions as may be necessary for implementing the agreement.
In this connection the existent provisions under section 107 of the Income Tax Ordinance, 2001
shall, mutatis mutandis, apply;
The bill proposed bar on public servant to disclose the material information in terms of bilateral
or multilateral agreement or tax information exchange agreement. The information shall be
considered confidential and no public servant save as provided under section 216 of the Income
Tax Ordinance, 2001 may disclosure any such information;
In this connection existent provisions of section 216 of Income Tax Ordinance 2001 shall,
mutatis mutandis, apply;
The bill propose to authorized Federal Board of Revenue to introduce prize schemes to
promote tax culture.-
In order to encourage the general public to make purchases only from registered persons
against issuing tax invoices the board may introduce incentive in terms of cash, prize or as they
deem fit.
AGREEMENT FOR THE EXCHANGE OF INFORMATION SECTION 56A
DISCLOSURE OF INFORMATION BY A PUBLIC SERVANT SECTION 56B
PRICE SCHEME TO PROMOTE TAX CUTURE SECTION 56C
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PAKISTAN BUDGET CHEMISTRY 2015-16 Page 21
The provision seems to be a positive approach by the government to use policy of carrot and
stick together.
The bill proposed to grant powers to Federal Board of Revenue to sanction reward to
whistleblowers in cases of concealment or evasion of tax, tax fraud, corruption or misconduct
providing credible information leading to such detection of tax fraud.
The detail procedure on this regard are expected to be notify soon by the board through official
Gazette. The reward however would not be allowed if:-
• The information provided is of no value
• The Board already had the information
• The information was available in public records; or
• No collection of taxes is made from the information provided from which the Board can
pay the reward
The definition of the “whistleblower” also provided by inserting sub section 4 which includes
whistle blower means a person:-
• who reports concealment or evasion of sales tax and tax fraud leading to detection or
collection of taxes, fraud, corruption or misconduct, to the competent authority having
power to take action against and
• The person or a sales tax authority committing fraud, corruption, misconduct, or involved
in concealment or evasion of taxes.”
Zero rating facility proposed to be withdrawn form following items:-
REWARD TO WHISTLEBLOWERS SECTION 72(D)
FIFTH SCHEDULE SERIAL NO 12
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PAKISTAN BUDGET CHEMISTRY 2015-16 Page 22
1. Flavoured milk 0402.9900
2. Yogurt 0403.1000
3. Cheese 0406.1010
4. Butter 0405.1000
5. Cream 04.01 and 04.02
6. Desi ghee 0405.9000
7. Whey 04.04
8. Milk and cream, concentrated and added sugar or other sweetening matter 0402.1000
Following entries relating to supplies made to Export Processing Zones also
proposed to be deleted.
A. Supplies of locally manufactured plant and machinery of the following specifications, to
manufacturers in the Export Processing Zone, subject to the conditions, restrictions and
procedure given below, namely
(i) Plant and machinery, operated by power of any description, as is used for the manufacture or
production of goods by that manufacturer;
(ii) Apparatus, appliances and equipments specifically meant or adapted for use in conjunction
with the machinery specified in clause (i);
(iii) Mechanical and electrical control and transmission gear, meant or adapted for use in
conjunction with machinery specified in clause (i); and
(iv) Parts of machinery as specified in clauses (i), (ii) and (iii) identifiable for use in or with such
machinery.
All the above entries were proposed to be added in fifth Schedule subject to conditions mentioned
below:
Conditions, restrictions and procedures:-
(a) the supplier of the machinery is registered under the Act;
(b) proper bill of export is filed showing registration number;
(c) the purchaser of the machinery is an established manufacturer located in the Export
Processing Zone and holds a certificate from the Export Processing Zone Authority to that
effect;
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PAKISTAN BUDGET CHEMISTRY 2015-16 Page 23
(d) the purchaser submits an indemnity bond in proper form to the satisfaction of the concerned
Commissioner Inland Revenue that the machinery shall, without prior permission from the
said Commissioner, not be sold, transferred or otherwise moved out of the Export Processing
Zone before a period of five years from the date of entry into the Zone;
(e) if the machinery is brought to tariff area of Pakistan, sales tax shall be charged on the value
assessed on the bill of entry; and
(f) breach of any of the conditions specified herein shall attract legal action under the relevant
provisions of the Act, besides recovery of the amount of sales tax along with default surcharge
and penalties involved.”;
The Bill proposed withdrawal of Sales Tax exemptions from following items:-
1
Poultry feed and Cattle feed including their all ingredients except soyabean meal of PCT heading 2304.0000 and oil-cake of cottonseed falling under PCT heading 2306.1000.
2301.2090, 2305.0000, 2306.2000, 2306.3000, 2306.4100, 2306.5000, 2309.9010, 2309.9020, 2309.9090, 2936.2100, 2936.2200, 2936.2300, 2936.2400, 2936.2500, 2936.2600, 2936.2700 and 2936.2800
2 Incinerators of disposal of waste management, motorized sweepers and snow ploughs.
8417.8000, 8430.2000 and 8479.8990
3 Re-importation of foreign origin goods which were temporarily exported out of Pakistan subject to similar conditions as are envisaged for the purposes of applying zero-rate of customs duty under the Customs Act, 1969.
99.18
4 Reclaimed lead, if supplied to recognized manufacturers of lead batteries.
Respective Heading
5 Waste Paper. Respective Heading
Exemption given to following items were restricted with subject to condition if sold without
brand name and retail packing :-
EXEMPTIONS SIXTH SCHEDULE TABLE 1
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PAKISTAN BUDGET CHEMISTRY 2015-16 Page 24
1 Milk 4.01
2 Milk and cream, concentrated or containing added sugar or
other sweetening matter, excluding that sold in retail packing
under a brand name
04.01, 04.02
3. Flavored milk, excluding that sold in retail packing under a
brand name
402.99
4 Yogurt, excluding that sold in retail packing under a brand name 0403.1000
5 Whey, excluding that sold in retail packing under a brand name 04.04
6 Butter, excluding that sold in retail packing under a brand name 0405.1000
7 Desi ghee, excluding that sold in retail packing under a brand
name
0405.9000
8 Cheese, excluding that sold in retail packing under a brand
name
0406.1010
9 Processed cheese not grated or powdered, excluding that sold
in retail packing under a brand name
0406.3000
Exemption of Sales Tax were granted to following Items in sixth schedule of the
S.T.A. 1990:-
1 Appliances for colostomy 3006.9100
2 Colostomy and urostomy bags 3926.9050
3 Tubular day lighting devices (TDDs) 8539.3930
4 Diagnostic kits or equipment, namely:-
HIV Kits,4C EsTrionyx, 5C Cell control Lnormal, Bovine precision
multi sera, Pregnancy test, DNA SSP DRB Generic IC, Reticulocyte
count (control) retic, C Control, Kit for vitamin B12 estimation,
Ferritin kit, HEV (Hepatitis E virus), ID-DA Cell, Urine Analysis
Strips, Albumin beg, Cratininsysi, Ring, Detektiion cups, ISE
Standard, Alkaline phosphatase (Alb), Bilirubin kit, HDL
Cholesterol, Ckcreatinin kinase (mb), Cknac, Glulcose kit,
Ammonia Modular, Lac, Ldh kit (lactate dehydrogenase, kit), Urea
uv kit, Ua plus, Tina quant, Crp control,Aslo tin, Proteins, Lipids,
HDL/LDL cholesterol, Protein kit, U, Control Sera, Pac, Control,
HCV, UIBC (Unsaturated iron binding, capacity), U/CSF, Inorganic
Phosphorus kit, Kit amplicon kit (for PCR), Ige, Lchsv, Oligo,
NA/K/CL, Hcy, Standard [or calibrated], Hla B27, Liss Coombs,
Typhoid kit, HCV amp, Urine test strips, Strips for sugar test,
Blood glucose test strips, Kits for automatic cell separator, for
collection of platelets, Elisa or Eclia kit, PCR kits, Immunoblast
(western blot test), I.C.T. (Immunochromatographic kit), CBC
Reagent (For hematologyanalyzer) Complete blood count reagent
3822.0000
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PAKISTAN BUDGET CHEMISTRY 2015-16 Page 25
5 Blood Bag CPDA-1 with blood transfusion set pack in aluminum
foil with set.
Respective headings
6 Urine drainage bags Respective headings
7 Aircraft, whether imported or acquired on wet or dry lease 8802.2000, 8802.3000, 8802.4000
8 Maintenance kits for use in trainer aircrafts of PCT headings
8802.2000 and 8802.3000
Respective headings
9 Spare parts for use in aircrafts, trainer aircrafts or simulators Respective headings
10 Machinery, equipment and tools for setting up maintenance,
repair and overhaul (MRO) workshop by MRO company
recognized by Aviation Division
Respective headings
11 Operational tools, machinery, equipment and furniture and
fixtures on one-time basis for setting up Greenfield airports by a
company authorized by Aviation Division
Respective headings
12 Aviation simulators imported by airline company recognized by
Aviation Division
Respective headings
13 Raw Cotton and Pickled hides and skins, wet blue hides and skins 41.01, 41.02, 41.03, 4104.1000,
4105.1000, 4106.2100,4106.3000
and 4106.9000
14. Supplies made by manufacturers of marble and granite having
annual turnover less than five million rupees even if their annual
utility bill is more than eight hundred thousand rupees
Respective headings
15 Bricks (up to 30th June, 2018) 6901.1000
16 Crushed stone (up to 30th June, 2018) 2517.1000
(3) in Table-3, serial numbers 10 and 16 in column (1) and entries relating
thereto in columns (2), (3) and (4) shall be omitted;
(
(1) in Table-1,–
SIXTH SCHEDULE TABLE 3
EIGHT SCHEDULE TABLE 1
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PAKISTAN BUDGET CHEMISTRY 2015-16 Page 26
(i) serial number 3, in column (1) and entries relating thereto in
columns (2), (3), (4) and (5) shall be omitted;
(ii) in serial numbers 1, 4 and 6, in column (1), the figure “5%” in
column (4), the figure “10%” shall be substituted;
Sales Tax at reduced rates were proposed to be introduced on following item:-
1. Soyabean Meal 0402.9900 10% Sold in retail packing
under a brand name
2. Oilseeds meant for sowing Respective Headings 10% Import thereof subject to
the condition that the
concerned department of
the Division dealing with
the subject-matter of oil
seed certifies that the
imported seeds are
fungicide and insecticides
treated and are meant for
sowing.
3. Plant and machinery not manufactured locally
and having no compatible local substitutes
Respective Headings 10%
4. Flavoured milk 0402.9900 10% Sold in retail packing
under a brand name
5. Yogurt 0403.1000 10% Sold in retail packing
under a brand name
6. Cheese 0406.1010 10% Sold in retail packing
under a brand name
7. Butter 0405.1000 10% Sold in retail packing
under a brand name
8. Cream 04.01 and 04.02 10% Sold in retail packing
under a brand name
9. Desi ghee 0405.9000 10% Sold in retail packing
under a brand name
10. Whey 04.04 10% Sold in retail packing
under a brand name
11. Milk and cream, concentrated and added sugar
or other sweetening matter
0402.1000 10% Sold in retail packing
under a brand name
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PAKISTAN BUDGET CHEMISTRY 2015-16 Page 27
12. Poultry feed, cattle feed, and their ingredients
except soya bean meal of PCT heading 2304.0000
and oilcake of cottonseed falling under PCT
heading 2306.1000
2301.2090,2305.0000, 2306.2000,
2306.3000,2306.4100, 2306.5000,
2309.9010,2309.9020, 2309.9090,
2936.2100,2936.2200, 2936.2300,
2936.2400,2936.2500, 2936.2600,
2936.2700,2936.2800,and
2306.4900 (Rape Seed Meal),
2308.9000 (Guar Meal),
2303.1000 (Corn Gluton Feed/Meal),
2303.1000 (Residues of starch
manufacture and similar residues),
3507.9000 (Enzymesother),
2302.1000 (Maize Bran),
2302.2000 (Rice Bran),
2302.3000 (Wheat Bran),
2302.4000 (Other Cereals),
2302.5000 (Bran of Leguminous
Plants),
2306.7000 (Oil- cake and other solid
residues of Maize (corn) germ),
2306.4900 (Sesame Cake),
2306.9000 (Sesame Meal/other
Meal),
2842.1000 (Double or complex
silicates, including aluminosilicates
whether or not chemically defined),
2301.2010 (Fish Meal),
0505.9000 (Poultry by product
Meal),
and the following items only of Feed
Grade:
2827.6000 (Potassium Lodide),
2833.2990 (Manganese Sulphate),
2833.2600 (Zinc Sulphate),
2817.4000 (Zinc Oxide),
2833.2500 (Copper Sulphate),
2833.2910 (Ferrous Sulphate),
2915.5000 (Propionic acid, its salts
and esters),
2930.4000 (DL Methionine),
2930.4000 (Methionine Hydroxy
Analogue (liquid)),
2922.4100 (Lysine Monohydro
Chloride /sulphate),
2923.2000 (Lecithins),
2923.9000 (Betafin),
2922.4290 (Arganine),
2934.9910 (Furazolidone),
2922.5000 (Threonine),
2835.2600 (Mono Calcium
Phosphate),
2835.2500 (Di Calcium Phosphate) ,
and 2835.2600 (Mono Di Calcium
Phosphate)
5%
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PAKISTAN BUDGET CHEMISTRY 2015-16 Page 28
13. Incinerators of disposal of waste management,
motorized sweepers and snow ploughs
8417.8000, 8430.2000 and
8479.8990
5%
14. Re-importation of foreign origin goods which
were temporarily exported out of Pakistan
99.18 5% Subject to
similarconditions as are
envisaged for the
purposes of customs duty
under the Customs
Act,1969, and taxable
value shall be the value
determined under PCT
heading 99.18 of the said
Act increased by customs
duty payable
15. Reclaimed lead Respective headings 5% If supplied to recognized
manufacturers of lead
and lead batteries
16. Waste paper 47.07 5%
17. Plant, machinery, equipment and specific items
used in production of bio-diesel
Respective headings 5% Alternative Energy
Development Board
(AEDB), Islamabad shall
certify in the prescribed
manner and format as
per Annex-B, as given in
the Sixth Schedule, that
the imported goods are
bonafide project
requirement. The goods
shall not be sold or
otherwise disposed of
within a period of five
years of their import
except with the prior
approval of the FBR and
payment of customs
duties and taxes leviable
at the time of import
18. Rapeseed, sunflower seed and canola seed 1205.0000, 1206.0000 16% On import by solvent
extraction industries
19. Soya bean seed 1201.1000 6% On import by solvent
extraction industries,
subject to the condition
that no refund of input
tax shall be admissible”;
20. Secondhand and worn clothing or footwear 6309.0000 5%
21. Agricultural tractors 8701.9020 10%
22. Tillage and seed bed preparation equipment: 7%
(i) Rotavator 8432.8010
(ii) Cultivator 8432.2910
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PAKISTAN BUDGET CHEMISTRY 2015-16 Page 29
(iii) Ridger 8432.8090
(iv) Sub soiler 8432.3090
(v) Rotary slasher 8432.8090
(vi) Chisel plow 8432.1010
(vii) Ditcher 8432.1090
(viii) Border disc 8432.2990
(ix) Disc harrow 8432.2100
(x) Bar harrow 8432.2990
(xi) Mould board plow 8432.1090
(xii) Tractor rear or front blade 8430.6900
(xiii) Land leveller or land planer 8430.6900
(xiv) Rotary tiller 8432.8090
(xv) Disc plow 8432.1090
(xvi) Soil-scrapper 8432.8090
(xvii) K.R.Karundi 8432.8090
(xviii) Tractor mounted trancher 8701.9020
(xix) Land leveler 8430.6900
23. Seeding or planting equipment: 7%
(i) Seed-cumfertilizer drill (wheat, rice barley,
etc.)
8432.3010
(ii) Cotton or maize planter with fertilizer
attachment
8432.3090
(iii) Potato planter 8432.3090
(iv) Fertilizer or manure spreader or broadcaster 8432.4000
(v) Rice transplanter 8432.3090
(vi) Canola or sunflower drill 8432.3010
(vii) Sugarcane planter 8432.3090
24. Irrigation, drainage and agro-chemical
application equipment:
8421.2100, 8421.9990 8424.2010 7%
(i) Tubewells filters or strainers 8424.2010, 8424.2010, 8424.2010
(ii) Knapsack sprayers 8424.2010
(iii) Granular applicator
(iv) Boom or field sprayers
(v) Self propelled sprayers
(vi) Orchard sprayer
25. (i) Harvesting, threshing and storage equipment: 8433.5200, 8433.5200, 8433.5900 7%
(ii) Wheat thresher 8433.5300,8433.5200
(iii) Maize or groundnut thresher or sheller 8433.5900, 8433.4000, 8433.5900,
8433.5900
(iv) Groundnut digger 8433.5900, 8433.5900
SALES TAX
PAKISTAN BUDGET CHEMISTRY 2015-16 Page 30
(v) Potato digger or harvester 8433.5200, 8433.5200
(vi) Sunflower thresher 8716.8090 8433.5900
(vii) Post hole digger 8433.5100, 8433.5900
(viii) Straw balers
(ix) Fodder rake
(x) Wheat or rice reaper
(xi) Chaff or fodder cutter
(xii) Cotton picker
(xiii) Onion or garlic harvester
(xiv) Sugar harvester
(xv) Tractor trolley or forage wagon
(xvi) Reaping machines
(xvii) Combined harvesters
(xviii) Pruner/shears
26. Post-harvest handling and processing &
miscellaneous machinery:
7%
(i) Vegetables and fruits cleaning and sorting or
grading equipment
8437.1000
(ii) Fodder and feed cube maker equipment 8433.4000
In the Table 2 of the EightShedule which was previously for the charging of sales tax @ of five percent
was now charge to 10 % on supplies of goods mentioned At SrNo1,5&6 of Soyabeen meal ,Raw &
Ginned Cotton & plant and machinery not manufactured locally.
Sales Tax rates on Cellular Mobile Phones are proposed to be enhance to hundred percent from
existing rates of Rs.150, Rs250 &Rs 500 on imports and supplies.
In line with sales tax on services prevailed at provinces. It is proposed to imposed sales tax on
services falling within Islamabad Capital territory. The services includes:-
EIGHT SCHEDULE TABLE 2
NINHT SCHEDULE
SALES TAX ON SERVICES ON FEDERAL CAPTIAL
ISLAMBAD TERITORRY
I.C.T ORDINANCE
SALES TAX
PAKISTAN BUDGET CHEMISTRY 2015-16 Page 31
“THE SCHEDULE”
S.No Description PCT Heading, if applicable Rate of Tax
(1) (2) (3) (4)
1 Services provided or rendered by
hotels, motels, guest houses,
marriage halls and lawns (by
whatever name called) including
“pandal” and “shamiana” services,
clubs including race clubs, and
caterers.
9801.1000, 9801.3000,
9801.4000, 9801.5000,
9801.6000
Sixteen per
cent
2 Advertisement on television and
radio, excluding advertisements–
9802.1000,9802.2000 Sixteen per
and cent
(a) sponsored by an agency of the
Federal or Provincial Government
for health education;
(b) sponsored by the Population
Welfare Division relating to
educational promotion campaign;
(c) financed out of funds provided
by a Government under grant-in-aid
agreement; and
(d) conveying public service
messages, if telecast on television
by the World Wide Fund for Nature
(WWF) or United Nations Children’s
Fund (UNICEF)
3 Services provided by persons
authorized to transact business on
behalf of others–
9805.200, 9805.4000,
9805.8000
Sixteen per
(a) stevedore;
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PAKISTAN BUDGET CHEMISTRY 2015-16 Page 32
(b) customs agents; and
(c) ship chandlers.
4 Courier services and cargo services
by road provided by courier
companies;
9808.0000, 9804.9000 Sixteen per
cent
5 Construction services, excluding: 9824.0000 and 9814.2000 Sixteen per
cent
(i) construction projects (industrial
and commercial) of the value
(excluding actual and documented
cost of land) not exceeding Rs. 50
million per annum.
(ii) the cases where sales tax is
otherwise paid as property
developers or promoters.
(iii) Government civil works
including Cantonment Boards.
(iv) construction of industrial zones,
consular buildings and other
organizations exempt from income
tax.
(v) construction work under
international tenders against
foreign 9824.0000 and 9814.2000
Sixteen per cent 44 grants-in-aid.
(vi) Residential construction projects
where the covered area does not
exceed 10,000 square feet for
houses and 20,000 square feet for
apartments
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PAKISTAN BUDGET CHEMISTRY 2015-16 Page 33
6 Services provided by property
developers and promoters
(including allied services) excluding
the actual purchase value or
documented cost of land.
9807.0000 and respective
subheadings of heading 98.14
Rs.100 per
square yard
for land
development
, and Rs.50
per square
feet for
building
construction
7 Services provided by persons
engaged in contractual execution of
work, excluding:
9809.0000 Sixteen per
cent
(i) annual total value of the
contractual works or supplies does
not exceed Rs.50 million;
(ii) the contract involving printing or
supplies of books.
8 Services provided for personal care
by beauty parlours, clinics and
slimming clinics, body massage
centres, pedicure centres; including
cosmetic and plastic surgery by such
parlours/clinics, but excluding:
9810.0000 9821.4000 and
9821.5000
Sixteen per
cent
(i) annual turnover does not exceed
Rs.3.6 million; or
(ii) the facility of air-conditioning is
not installed or available in the
premises.
9 Management consultancy services 9815.4000, 9819.9300 Sixteen per
cent
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PAKISTAN BUDGET CHEMISTRY 2015-16 Page 34
10 Services provided by freight
forwarding agents, and packers and
movers.
9805.3000, 9819.1400 Sixteen per
cent or Rs.
400 per bill
of lading,
whichever is
higher
11 Services provided by software or IT-
based system development
consultants.
9815.6000 Sixteen per
cent
12 Services provided by technical,
scientific and engineering
consultants
9815.5000 Sixteen per
cent
13 Services provided by other
consultants including but not
limited to human resource and
personnel development services;
market research services and credit
rating services.
9815.9000 9818.3000
9818.2000
Sixteen per
cent
14 Services provided by tour operators
and travel agents including all their
allied services or facilities (other
than Hajj and Umrah)
9805.5100 9805.5000
9803.9000
Sixteen per
cent
15 Manpower recruitment agents
including labour and manpower
supplies.
9805.6000 Sixteen per
cent
16 Services provided by security
agencies.
9818.1000 Sixteen per
cent
17 Services provided by advertising
agents
9805.7000 Sixteen per
cent
SALES TAX
PAKISTAN BUDGET CHEMISTRY 2015-16 Page 35
18 Share transfer or depository agents
including services provided through
manual or electronic book-entry
system used to record and maintain
securities and to register the
transfer of shares, securities and
derivatives.
9805.9000 Sixteen per
cent
19 Business support services. 9805.9200 Sixteen per
cent
20 Services provided by fashion
designers, whether relating to
textile, leather, jewellery or other
product regimes, including allied
services, marketing, packing,
delivery and display, etc.
9819.6000 Sixteen per
cent
21 Services provided by architects,
town planners and interior
decorators
9814.1000, 9814.9000 Sixteen per
cent
22 Services provided in respect of rent-
a-car.
9819.3000 Sixteen per
cent
23 Services provided by specialized
workshops or undertakings
(autoworkshops; workshops for
industrial machinery, construction
and earth- moving machinery or
other special purpose machinery
etc; workshops for electric or
electronic equipments or appliances
etc. including computer hardware;
car washing or similar service
98.20 Sixteen per
cent
SALES TAX
PAKISTAN BUDGET CHEMISTRY 2015-16 Page 36
stations and other workshops).
24 Services provided for specified
purposes including fumigation
services, maintenance and repair
(including building and equipment
maintenance and repair including
after sale services) or cleaning
services, janitorial services, dredging
or desilting services and other
similar services etc
98.22 Sixteen per
cent
25 Services provided by underwriters,
indenters, commission agents
including brokers (other than stock)
and auctioneers
9819.1100, 9819.1200,
9819.1300, and,9819.9100
Sixteen per
cent
26 Services provided by laboratories
other than services relating to
pathological or diagnostic tests for
patients.
98.17 Sixteen per
cent
27 Services provided by health clubs,
gyms, physical fitness centres,
indoor sports and games centres
and body or sauna massage centres
9821.1000 and 9821.2000
9821.4000
Sixteen per
cent
28 Services provided by laundries and
dry cleaners.
9811.0000 Sixteen per
cent
29 Services provided by cable TV
operators.Technical analysis and
testing services
9819.9000,9819.9400 Sixteen per
cent
SALES TAX
PAKISTAN BUDGET CHEMISTRY 2015-16 Page 37
30 Services provided by TV or radio
program producers or production
houses.
-- Sixteen per
cent
31 Transportation through pipeline and
conduit services.
-- Sixteen per
cent
32 fund and asset (including
investment) management services.
-- Sixteen per
cent
33 Services provided by inland port
operators (including airports and
dry ports) and allied services
provided at ports and services
provided by terminal operators
including services in respect of
public bonded warehouses,
excluding the amounts received by
way of fee under any law or bylaw.
-- Sixteen per
cent
34 Technical inspection and
certification services and quality
control (standards’ certification)
services
-- Sixteen per
cent
35 Erection, commissioning and
installation services.
-- Sixteen per
cent
36 Event management services -- Sixteen per
cent
37 Valuation services (including
competency and eligibility testing
services),
-- Sixteen per
cent
38 Exhibition or convention services -- Sixteen per
cent
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PAKISTAN BUDGET CHEMISTRY 2015-16 Page 38
39 Services provided in respect of
mining of minerals, oil & gas
including related surveys and allied
activities
-- Sixteen per
cent
40 Services provided by property
dealers and realtors.
-- Sixteen per
cent
41 Call centres -- Eighteen and
a half per
cent
42 Services provided by
car/automobile dealers.
-- Sixteen per
cent”;.
FEDERAL EXCISE DUTY
PAKISTAN BUDGET CHEMISTRY 2015-16 Page 39
Federal Excise Duty
Following provisions are inserted /modified in accordance with Sales Tax Act and same comment may be
refer on these provisions includes:-
Whistle Blower Sec. 2(24-A)
Exemption Sec. 16
Powers of Board or Commissioner for recalling an order Sec. 35
Reward to whistleblowers Sec. 42-D
Affixing Stamps, Stickers, Banderole Sec. 45-A
Special /Panel Audit Section 46(4)
Agreements for the Exchange of information Sec. 47-A
Disclosure of information by a public servant Sec. 47-B
Bill proposed to increase / levy duty on following items:-
(I) Rates of FED is increased from existing 9% to 12% on Aerated water,
(II) Rates for Federal Excise duty on cigarettes have been enhanced.
(III) Adjustable Federal excise duty on Filter Rods of cigarettes has been levied @ Rs.0.75
per filter rod.
The bill proposed exemption from Federal Excise Duty on following items:-
(I) White Cement;
(II) Motor cars and other Motor vehicles for transport of persons of engine capacity of
850cc and above
(III) Services of air travelling on Socio economic routs located in Makran coastal region,
FATA, AzadJammu Kashmir, Gilgit- Baltistan or Chitral
(IV) Services of air travel by Haj passengers, Diplomats &supernumerary crew.
DUTIABLE ITEM FIRST SCHEDULE
EXEMPTION FROM F.E.D.
THIRD SCHEDULE
FEDERAL EXCISE DUTY
PAKISTAN BUDGET CHEMISTRY 2015-16 Page 40
Advertisement in newspaper and periodicals
(V) Services in relation to Hajand Ummrah, cheque book, insurance, Musharika and
Modaraba financing and utility bill collection .
It is to be noted that entries mentioned at Sr. (III) to (VI) were previously also exempted
from the levy of FED under respective F.E.D Rules.