What are the changes you observed in this

budget which are relevant to company taxes?

Answer: After having a brief look on budget, I got
to know the following changes that are found
relevant to company taxes:
50% of Full years Tax liability is required to
estimated and paid in second Quarter for Advance
tax.
Federal Government Powers to grant
exemptions is no more without approval by ECC
except in the case of emergency etc.
1% Tax credit for every 50 employees applicable
to New manufacturing units set up between 1 Jul
15 to 30 Jun 18. Subject to 10% max.
Tax Credit for enlistment is now 20% of tax
payable in the year of enlistment.
Withholding tax on services rendered by
companies is minimum tax with effects from Tax
year 2009.
Rate of compensation payable by FBR on
delayed refund is now reduced from 15% to
KIBOR+0.5%.
FBR is empowered to constitute Special Audit
panel comprising its own officers and CA firms or
CMA firms or any other person directed by FBR to
carryout tax audits.

 Penalty for non-filing of wealth statement is Rs.

20,000 minimum.
Royalty paid to resident person against right to
use industrial, commercial or scientific equipment
or rent of machinery is subject to 10% withholding
tax.

 Remittance of education expenses abroad is not

subject to Income tax @ 5%.
Tax Rate reduced for Income range Rs. 400,000
to 500,000.
Corporate tax rate for non-banking companies is
now 32%
Withholding tax on first class international air
tickets is enhanced from 4% of price to Rs. 16,000/fixed
Profits and gains of certain Industries are
exempt from tax
No minimum Tax to taxpayers located in most
and moderately affected areas of KPK
Definition of ACTIVE TAXPAYERS included in
Sales Act, 1990.
Limit of Utility bills is now Rs.800,000 per year to
qualify for COTTAGE industry

Question 2
What are the changes you observed relevant
to stock market which will
positively/negatively impact on investor
decisions?
I have identified following changes which are
relevant to Stock Market:
Dividend from REIT is taxable @25% however it
may be reduced by 50% with having a negative

impact on companies whereas new shares issuing

may fall a just a bit as compared with the trend.
Dividends and Capital Gains of Bank are now
taxable @ 35% thus implies negative impact for
less risk averse individuals.
Tax rate on dividend is now 12.5% (Fillers) and
17.5% (non-fillers) providing negative impact on a
fast moving index KSE yet positive for Government
to bring more people into the tax net.
Tax on capital gains is now increased, although
certain tax
advantages might come into play but yet falls
under negative effect.
Limit on Investment in shares/Life Insurance
premiums is enhanced to Rs. 1.5 million for tax
credit purpose reflecting positive increase under
investment.
Paid up capital + Reserves to qualify as small
company is enhanced to Rs. 50 m from Rs.25 m
puts negative impact on these emerging
companies.
Tax @ 10% of undistributed profits by listed
company could be positive for stock market as an
effect of which companies might increase their
dividend payout ratios.

Question 3

What is the concept of filler and non- filler of

tax in Pakistan? Is there any change in tax
rate for both?

I have identified the following changes in tax rates

for fillers and non fillers of tax:
0.6% of the value of Banking transactions
exceeds Rs.50,000 per day.
Tax rate on commission is enhanced to 15%
from 12%
Withholding Tax rates for Resident / Non
Resident are brought at par filer/non-filers
Moreover through following calculations/ tables we
can further analyze the difference in both fillers
and non fillers tax.

What would be the role of CNIC from current

year in Income Tax return?
Answer:
The government has decided to make CNIC holders
as NTN holders from next fiscal year and their CNIC
numbers would be considered as the NTN numbers.
The estimates showed that there are around 91.2
million CNIC holders as against 3.6 million NTN
holders. Another surprising and astonishing part
has been that among 3.6 million NTN holders only
880,000 people have been filing tax returns out of
them only 80,000 people are filing tax returns
above Rs 10 million.

Question 5
Budget 2015-2016 is aimed to spur growth in
Pakistan, what specific steps where proposed
in budget 2015-2016 that will led to faster
economic growth.
Answer: The following steps represents the pace
for economic growth through budget 2015-16:
Rs.1.5 trillion worth of annual development
program has been approved for the next fiscal
year. Meantime, Rs.700 billion has been specified
for federal development projects.
The provinces will be issued Rs.814 billion.
Amount of Rs.194 billion has been put aside for
Pak-Sino Economic Corridor.
Rs.780 billion will be set aside for defense;
Rs.1.31 trillion for debt-servicing and Rs.11.1 billion
has been fixed to be spent on health.
Higher Education Commission will receive Rs.20
billion. Export target has been set at $25.5 billion
with GDP growth target fixed at 5.5 percent.
The target of growth rate in agriculture has been
set at 3.9 percent with production target in the
industrial sector pegged at 6.1 percent.
Taxes on Rice Mills to be removed.
Pension of all Government employees increased
by 7.5%

4 years Income Tax exemption for FIRMS verifying

Halal meat
7.5% increment in the salaries of federal
employees
Tax on salaried class reduced from 5% to 2%
Custom duty reduced from 30% to 20 % on
import of Used Housing Machinery
71.5 billion allocated for higher Education,14 %
more than the previous year.
GDP growth target for financial year 2015-16 set
at 5.5%. The last time GDP growth was at this level
was in financial year 2006-07. Long term
sustainable GDP growth is targeted at 7.0% by
financial year 2017-18.
Tax revenue budgeted to increase by 17% in
financial year 2015-16.
Fiscal deficit for financial year 2015-16 is
targeted at 4.3% compared to 5.0% in financial
year 2014-15.
Government of Pakistan is also targeting PKR1.5
trillion expenditure under the National
Development program (Federal plus Provincial) for
financial year 2015-16, with PKR700 billion.
After the lowest inflation in last 11 years in
financial year 2014-15, the Government targets
inflation to be 6% in financial year 2015-16.
Subsidies budgeted to decline by 43% in
financial year 2015-16.

Question 6
Historically, 42 to 44 percent of our budget
aimed at debt servicing, do you think this
budget is any different for previous and how?
Answer:
While the burden of debt servicing is (Rs.1.2 trillion
for 2015-16) has already become unsustainable for
an economy such as Pakistan, the budget 2015-16
continues to follow the same trend as by targeting
Rs.751 billion from external sources and expecting
domestic bank borrowings of Rs.282.9 billion. It
simply means we are again heading towards
another trillion rupees plus burden, added to the
already huge total of public debt, as a result higher
requirement for expenditure on servicing, in years
ahead.

What particular initiatives have been taken to

address power issues in year ahead.
Answer:
Considering the multi dimensional energy sector
crisis that the country is faced with, the Budget
attempts to tackle the sectors expansion. The
budget suggested that the following strategy for
energy sector was adopted:
Energy sector taken up as one of the key
priorities of government To bring 7000 MW on
stream besides setting up 3600 MW LNG- based
projects to fill current demand-supply gap

 Bring 10600 MW in the system by Dec 2017.

Dasu, Diamer-Basha, Karachi Civil Nuclear
Energy etc. to be completed beyond 2017.
The total budget outlay for the energy sector
comes to the total of Rs.248 billion. The focus on
hydro projects and improvement of the
transmission lines are certain good steps. However,
a clear strategy to deal with the once again
burgeoning Circular Debt and from Rs.221 billion in
2014-15 to Rs.118 billion is will lead burden the
consumers again. Moreover, in case of energy, the
budget deals with the power sector only; and there
are neither any developmental allocations for oil
and gas sector, nor any incentives to attract local
and foreign investors.