Amendments Through FINANCE ACT 2016

Prepared By
Nadeem Butt (FCA)

Chartered Accountant
Principal
Taj Arcade, 3rd Floor, Office # 06, Opposite Services Hospital, 73-Main Jail Road, Lahore Pakistan
Ph: +92-42-35408635-36, 35408638 Cell: +92-333-4245240, +92-301-4245240
URL: www.nbandco.com E-mail: nbco2007@yahoo/gmail/hotmail.com info@nbandco.com &

nadeembutt@nbandco.com
Nadeem Butt (FCA) - Principal

Nadeem & Co. Chartered Accountants
AMENDMENTS THROUGH FINANCE ACT,

2016
The amendments through these laws are effective as the same have already formed part of law and
would therefore be effective from July 01, 2016 (Tax Year 2017) unless otherwise stated within this
document.
This tax related document is intended to provide general guidance to our clients, staff, students and
other persons related to taxation in any way and the same should not be deemed as an expert advice
relating to any particular case, issue or matter as the case may be. Further for effective and better
understanding of amendments, reference should be made to the appropriate wording to the relevant
law, circulars, notifications, sales tax general orders issued there under and judgments given by the
various appellate bodies within Pakistan.
This document has been prepared only for the aforesaid persons based on the information available
with us till June 30, 2016. No responsibility whatsoever related to any mistake or material contained in
this document shall be undertaken. The document should not be published or issued in any manner
without taking written permission from the Firm.
Page
Nadeem & Co.

Chartered Accountants
Taj Arcade, 3rd Floor, Office # 06, Opposite Services Hospital, 73-Main Jail Road, Lahore.
Ph: +92-42-35408635-36, 35408638 Cell: +92-333-4245240, +92-301-4245240

CONTENTS TABLE
ABOUT THE AUTHOR
2.
AMENDMENTS RELATED TO INCOME TAX ORDINANCE, 2001
3.
AMENDMENTS RELATED TO SALES TAX ACT, 1990
4.
AMENDMENTS RELATED TO SALES TAX RULES, 2006
5.
AMENDMENTS RELATED TO SALES TAX SPECIAL PROCEDURE RULES, 2007
6.
AMENDMENTS RELATED TO CUSTOM ACT, 1969
7.
AMENDMENTS RELATED TO FEDERAL EXCISE ACT, 2005
8.
AMENDMENTS RELATED TO ISLAMABAD CAPITAL TERRITORY (SALES TAX ON SERVICES)

2000
Page
1.
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4-50
51-72
73-76
77-79
80-91
92-99
100103

ABOUT THE AUTHOR

1. Eighteen (18) years post qualification practical / teaching / notes / book writing experience of
Taxation after qualifying as a Chartered Accountant in 1998 and practicing as Fellow Member of
ICAP under the name and style of Nadeem & Co. Chartered Accountants mainly in audit,
income tax & sales tax.
2. Handling more than two hundred and fifty (250) various corporate and non corporate clients
related to accounting, financial matters, audit (internal and external) and income tax / sales tax
laws in Pakistan.
3. Member, (special invitees) Taxation Committee of Lahore Chamber of Commerce & Industry
(LCCI).
4. Tax & audit advisor of all Pakistan Cottage Industry & Small Traders Association.
5. Life Member of Lahore Tax Bar Association.
6. Provided professional training on Financial and Taxes to various businessmen at Pakistan
Readymade Garments & Technical Training Institute (PRGTTI).
7. Appointed on behalf of the income tax department by the Central Board of Revenue (now FBR)
for Special Audit Under section 4A of the repealed Income Tax Ordinance, 1979 of various
concerns.
8. Visiting faculty member of the Professional Academy of Commerce (PAC), Punjab Group of
Colleges and ICMAP in providing facilities for the preparation of exams of Business Taxation.
9. Professional author of following two books on taxes in Pakistan:
a. Conceptual Approach to Taxes
b. Principles of taxes in Pakistan
10. The Book on Conceptual Approach to Taxes has the following status:
Recommended book all over Pakistan by:
The Institute of Chartered Accountants of Pakistan

Institute of Cost & Management Accountants of Pakistan
Punjab Group of Colleges
st
ND
11. His two students of ICMAP got 1 and 2 positions all over Pakistan by scoring 98% and 97%
marks in the subject of Business Taxation
Page
12. His one student of ICAP got gold medal from ICAP in Module C in the subject of Financial
Accounting.
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AMENDMENTS THROUGH FINANCE ACT

2016, RELATED TO INCOME TAX
ORDINANCE, 2001 FOR THE TAX YEAR 2017
[EFFECTIVE FROM 01-07-2016 UNLESS
OTHERWISE SPECIFIED]
Page
TABLE OF CONTENTS
SR.
PARTICULARS
1.
Super Tax for rehabilitation of temporarily displaced persons [Section 4B]
2.
Tax on Builders [u/s 7C]
3.
Tax on Developers [Section 7D]
4.
General provisions relating to taxes imposed under sections 5, 5A, 6, 7, 7A

and 7B [Section 8]
5.
Income from Property [Section 15]
6.
Deductions in computing income chargeable under the head income from

property [Section 15A]
7.
Deductions not allowed [Section 21]
8.
Depreciation [Section 22]
9.
Capital Gain on Disposal of Immovable Property [Read 1st Schedule With

Section 37(1A)]
10.
Capital gain on Disposal of Securities [Section 37A]
11.
Exemptions and tax concessions in the Second Schedule [Section 53]
12.
Group Relief [Section 59B]
13.
Tax credit for investment in health insurance. [Section 62A]
14.
Contribution to an Approved Pension Fund [63]

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15.
Deductible allowance for profit on debt [Section 64A]
16.
Deductible allowance for education expenses [Section 64AB]
17.
Tax credit for employment generation by manufacturers [Section 64B]
18.
Tax credit to a person registered under the Sales Tax Act, 1990 [Section
65A]
19.
Tax credit for investment [Section 65B]
20.
Tax credit for enlistment [Section 65C]
21.
Tax credit for newly established industrial undertakings. [Section 65D]
22.
Tax credit for industrial undertakings established before the first day of
July, 2011 [Section 65E]
23.
Apportionment of deductions [Section 67]
24.
Fair market value [Section 68]
25.
Person [Section 80]
26.
Agreements for the avoidance of double taxation and prevention of fiscal

evasion. [Section 107]
27.
Transactions between associates [Section 108]
28.
Minimum tax on the income of certain persons [Section 113]
29.
Minimum tax on builders & Minimum tax on land developers [Section 113A
& 113B]
30.
Return of income [Section 114]
31.
Provisional assessment [Section 122C]
32.
Alternative Dispute Resolution [Section 134A]
33.
Recovery of tax from persons holding money on behalf of a taxpayer

[Section 140]
34.
Advance tax paid by the taxpayer [Section 147]
35.
Advance Tax from Provincial sales tax registered person [Section 147A]
36.
DIVIDEND [READ 1ST SCHEDULE WITH SECTION 150]

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37.
Payments to non-residents [SECTION 152]
38.
Payment for foreign produced commercials [Section 152A]
39.
Payments for goods, services and contracts [Section 153]
40.
Prizes and Winnings [Read 1st Schedule with Section 156]
41.
Tax collected or deducted as a final tax [Section 169]
42.
Furnishing of information by Financial Institutions Including Banks

[Section 165B]
43.
Refunds [Section 170]
44.
Offences and penalties [Section 182]
45.
Prosecution for unauthorized disclosure of information by a public servant

[Section 198]
46.
Cash withdrawal from a bank. [Section 231A]
47.
Advance tax on private motor vehicles [Section 231B]
48.
Brokerage and Commission [Read 1st Schedule with Section 233]
49.
Collection of Tax by a Stock Exchange registered in Pakistan [Read First

Schedule with Section 233A]
50.
Electricity Consumption [Read 1st Schedule with Section 235]
51.
Advance Tax on Domestic Electricity Consumption [Read 1st Schedule

with Section 235A]
52.
Advance tax at the time of sale by auction [Section 236A]
53.
Advance Tax on sale or transfer of immovable Property [Section 236C]
54.
Advance Tax on Foreign-Produced TV plays and serials. [Section 236E]
55.
Advance tax on cable operators and other electronic media. [Read 1st
Schedule with Section 236F]
56.
Advance Tax on Purchase or Transfer of Immovable Property [Read 1st

Schedule with Section 236K]
57.
Advance Tax under this Chapter [Section 236O]

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58.
Advance tax on Banking Transactions otherwise than through Cash

[Section 236P]
59.
Collection of tax by Pakistan Mercantile Exchange Limited (PMEX).

[Section 236T]
60.
Advance tax on insurance premium [Section 236U]
61.
Advance tax on extraction of minerals. [Section 236V]
62.
Advance tax from provincial sales tax registered person. [Section 236W]
63.
Amendments in Second Schedule [Part I & II]
64.
Amendments in Second Schedule [Part IV]
65.
Amendments in Fourth Schedule
66.
Amendments in Sixth Schedule
67.
Amendments in Seventh Schedule
68.
Amendments in Eighth Schedule
NOTE
Page
(The amendments made through Finance Bill 2016, have been shown in red
color whereas amendments made through Finance Act 2016, have been
shown in green color)
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1) Super Tax for rehabilitation of temporarily displaced persons [Section 4B]

SECTION
AMENDMENTS THROUGH
FINANCE ACT 2016
4B
1. A super tax shall be imposed

for
rehabilitation
of
temporarily
displaced
persons, for tax years 2015
and 2016, at the rates
specified in Division IIA of
Part I of the Second
Schedule, on income of
every person specified in the
said Division.
2. (2) For the purposes of this
section, income (other than
brought
forward
depreciation and brought
forward business losses)
shall be the sum of the
following:
(i) profit on debt, dividend,
capital gains, brokerage and
commission;
(ii) taxable income under
section (9) of this Ordinance, if
not included in clause (i);
(iii) imputable income as
defined in clause (28A) of
section 2 excluding amounts
specified in clause (i); and
(iv) income computed under
Fourth, Fifth, Seventh and
Eighth Schedules.
COMMENTS
A new onetime tax was imposed vide Finance Act 2015

for rehabilitation of temporarily displaced persons on
income earners exceeding Rs. 500 million to pay super
tax for the tax year 2015 along with the return of
income.
The Finance Bill 2016 has also proposed the levy of
super tax for the tax year 2016.
Computation of Super Tax is proposed to be
extended by excluding depreciation and business
losses from the definition of income for purposes of
Super Tax. For Tax year 2015 depreciation and
business losses were deducted to compute the income
for the purposes of super tax computation under
section 9 of the Income Tax Ordinance, 2001. However
no amendment has been proposed in the following rate
of super tax under DIV IIA, Part I, of First Schedule.
Particulars
Banking Company
Person other than a
banking company having
income equal to or
exceeding Rs. 500 million
Rate
4% of Income
3% of Income
Through the Bill, the Federal Government whilst

extending the levy of super tax to tax year 2016 also
proposed to amend the definition of 'income' for the
purpose of computing Super Tax to exclude the impact
of depreciation and business losses. The language of
proposed amendment was ambiguous as regards the
treatment
of
current
year's
depreciation.
Through the Act, the aforesaid ambiguity has been
removed and it has been clarified that only brought
forward depreciation losses (and not current year's
depreciation) will be excluded along with brought
forward business losses for computing income for the
purposes of levying super tax.
Page
2) Tax on Builders [u/s 7C]

SECTION
AMENDMENTS THROUGH FINANCE ACT 2016
7C
(1) Subject to this Ordinance, a tax shall be imposed on the profits and gains of a person
deriving income from the business of construction and sale of residential, commercial
or other buildings at the rates specified in Division VIIIA of Part I of the First Schedule.
(2) The tax imposed under sub-section (1) shall be computed by applying the relevant rate
of tax to the area of the residential, commercial or other building being constructed for
sale.
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(3) The Board may prescribe:

(a) the mode and manner for payment and collection of tax under this section;
(b) the authorities granting approval for computation and payment plan of tax; and
(c) responsibilities and powers of the authorities approving, suspending and cancelling
no objection certificate to sell and the matters connected and ancillary thereto.
(4) This section shall apply to business or projects undertaken for construction and sale
of residential, commercial or other buildings initiated and approved after the 1st
July, 2016.
COMMENTS
Now on proposal to omit section 113A, the following proposed section shall be inserted for
final taxation of income of builders on per unit (sqft) area and location basis given at the end
of this section.
However during the process of proposed amendment the non application of section 113A for
three years vide sub section (3) for tax year 2016 to tax year 2018 has not been considered
which will create disputes between the taxpayers and the Inland Revenue Department.
deriving income from the business of construction and sale of residential, commercial
or other buildings at the rates specified in Division VIIIA of Part I of the First
Schedule.
(2) The tax imposed under sub-section (1) shall be computed by applying the relevant rate of
tax to the area of the residential, commercial or other building being constructed for sale.
(c) responsibilities of the authorities approving, suspending and cancelling no objection
certificate to sell and the matters connected and ancillary thereto.
(4) This section shall apply to business or projects undertaken for construction and
st
sale of residential, commercial or other buildings initiated and approved after the 1 July,
2016.
The proposed tax rates are as follows;
(LOCATION)
(A) Karachi, Lahore and

Islamabad
(B) Hyderabad, Sukkur,

Multan, Faisalabad,
Rawalpindi, Gujranwala,
Sahiwal, Peshawar,
Mardan, Abbottabad,
Quetta
(C) Urban Areas not

specified in A and B
(For commercial buildings)

Rs. 210/ Sq. Ft
Rs. 210/ Sq. Ft
Rs. 210/ Sq. Ft
(For residential buildings)

Area in Sq.Ft Rate/Sq. Ft
Rs. 20
Rs. 40
Rs. 70
Rate/ Sq. Ft
Up to750
Rs. 15
751 to 1500
Rs. 35
1501 and More Rs. 55
Area in Sq. Ft Rate/Sq. Ft

Up to 750
751 to 1500
1501 & more
Rs. 10
Rs. 25
Rs. 35
Page
Up to750
751 to 1500
1501 & more
Area in Sq. Ft
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3) Tax on Developers [Section 7D]

SECTION
7D
deriving income from the business of development and sale of residential, commercial or
other plots at the rates specified in Division VIIIA of Part I of the First Schedule.
(2) The tax imposed under sub-section (1) shall be computed by applying the relevant rate
of tax to the area of the residential, commercial or other plots for sale.
(c) responsibilities of the authorities approving, suspending and cancelling no objection
certificate to sell and the matters connected and ancillary thereto.
(4) This section shall apply to projects undertaken for development and sale of residential,
commercial or other plots initiated and approved after the 1st July, 2016.
COMMENTS
Now on proposal to omit section 113B, the following proposed section shall be inserted
for final taxation of income of land developers on per unit (sqyd) area and on location
basis given at the end of this section.
(1)
Subject to this Ordinance, a tax shall be imposed on the profits and gains of a
person deriving income from the business of development and sale of residential,
commercial or other plots at the rates specified in Division VIIIB of Part I of the First
Schedule.
(2)
The tax imposed under sub-section (1) shall be computed by applying the relevant
rate of tax to the area of the residential, commercial or other plots for sale.
(3)
The Board may prescribe:

(b) the authorities granting approval for computation and payment plan of tax;
and
(c) responsibilities of the authorities approving, suspending and cancelling no
objection certificate to sell and the matters connected and ancillary
thereto.
(4)
This section shall apply to projects undertaken for development and sale of
st
residential, commercial or other plots initiated and approved after the 1 July, 2016.
The proposed tax rates are as follows;

(LOCATION)
(A) Karachi, Lahore and

Islamabad
Page
10
Rs. 210/ Sq. Yd

Area in Sq. Yd
Rate/ Sq. Yd
Up to120
121 to 200
201 & more
Rs. 20
Rs. 40
Rs. 70
(B) Hyderabad, Sukkur,

Multan, Faisalabad,
Rawalpindi, Gujranwala,
Sahiwal, Peshawar,
Mardan, Abbottabad,
Quetta
(C) Urban Areas not

specified in A and B
(For commercial buildings)

Rs. 210/ Sq. Yd
(For residential buildings)
Area in Sq. Yd
Up to120
121 to 200
201 and More
Rs. 210/ Sq. Yd
Rate/ Sq. Yd
Area in Sq. Yd
Rate/Sq. Yd
Rs. 15
Rs. 35
Rs. 55
Up to 120
121 to 200
201 & more
Rs. 10
Rs. 25
Rs. 35
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4) General provisions relating to taxes imposed under sections 5, 5A, 6, 7, 7A

and 7B [Section 8]
SECTION
8

2016
(1)-Subject to this Ordinance, the tax imposed
under Sections 5, [5A, 6, 7, 7A, 7B, 7C and 7D]
shall be a final tax on the amount in respect of
which the tax is imposed and
COMMENTS
The purpose of proposed amendment
under this section shall be to provide for
final taxation under newly added
sections 7C and 7D as above.
(d) the tax payable by a person under section

5, 5A, 6 7, 7A, 7B , 7C and 7D shall not
be reduced by any tax credits allowed
under this Ordinance; and
5) Income from Property [Section 15]

SECTIO
N
15
AMENDMENTS THROUGH
FINANCE ACT 2016
in section 15, after sub-section

(5), the following new subsections shall be added,
namely:(6) Income under this
section derived by an
individual or an association
of persons shall be liable to
tax at the rate specified in
Division VIA of Part I of the
First Schedule.
(7) The provisions of subsection (1), shall not apply in
respect of an individual or
association of persons who
derive income chargeable to
tax under this section not
exceeding
two
hundred
thousand rupees in a tax year
and does not derive taxable
income under any other
head.;
COMMENTS
The proposed amendment shall provide separate slab
rates as under for the taxability to property income
under final tax regime without allowing admissible
deductions under section 15A with a threshold of Rs.
200,000 in a tax year for chargeability of tax for
individuals and AOPs and does not derive taxable
income under any other head.
The rate of tax to be paid under section 15, in the case
of individual and association of persons, shall be as
follows. The under stated rates are brought in line to be
deducted by the withholding agents under section 155
of the Income Tax Ordinance, 2001 on payments
against property rental payments.
S.
Gross amount of rent
Rate of tax
No.
(1)
(2)
(3)
1.
2.
3.
Page
11
4.
Where
the
gross
amount of rent does
not
exceed Rs.
200,000
Where
the
gross
amount of rent exceeds
Rs. 200,000 but does
not
exceed
Rs.
600,000.
Where
the
gross
Rs. 600,000 but does
not
exceed
Rs.
1,000,000.
Where
the
gross
Rs. 1,000,000 but does
not
exceed
Rs.
2,000,000.
NIL
5% per cent of the

gross
amount
exceeding
Rs.
200,000.
Rs. 20,000 plus 10%
of the gross amount
exceeding
Rs.
600,000.
Rs. 60,000 plus 15%
of the gross amount
exceeding
Rs.
1,000,000.
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5.
Where
the
gross
Rs. 2,000,000.
Rs. 210,000 plus 20

per cent of the gross
amount
exceeding
Rs. 2,000,000;
6) Deductions in Computing Income Chargeable under the Head Income From

Property [Section 15A]
SECTION
15A

(1) In computing the income of a company chargeable to tax under the
head Income from Property for a tax year, a deduction shall be
allowed for the following expenditures or allowances, namely:(a) In respect of repairs to a building, an allowance equal to onefifth of the rent chargeable to tax in respect of the building for
the year, computed before any deduction allowed under this
section;
(b) any premium paid or payable by the company in the year to
insure the building against the risk of damage or destruction;
(c) any local rate, tax, charge or cess in respect of the property or
the rent from the property paid or payable by the company to
any local authority or government in the year, not being any tax
payable under this Ordinance;
(d) any ground rent paid or payable by the company in the year in
respect of the property;
(e) any profit paid or payable by the company in the year on any
money borrowed including by way of mortgage, to acquire,
construct, renovate, extend or reconstruct the property;
COMMENTS
The
proposed
amendment
shall
substitute the word
person with the
word Company with
the intention to allow
the
deductions
in
computing the Income
from Property only in
case of companies
however still it will be
taxable under normal
tax regime for a
company being as
recipient of property
income.
However
individuals and AOPs
as proposed above will
be taxable under final
tax regime.
(f) where the property has been acquired, constructed, renovated,

extended, or reconstructed by the company with capital
contributed by the House Building Finance Corporation or a
scheduled bank under a scheme of investment in property on
the basis of sharing the rent made by the Corporation or bank,
the share in rent and share towards appreciation in the value of
property (excluding the return of capital, if any) from the
property paid or payable by the company to the said
Corporation or the bank in the year under that scheme;
(g) where the property is subject to mortgage or other capital
charge, the amount of profit or interest paid on such mortgage
or charge;
[(h) any expenditure, not exceeding six per cent of the rent
chargeable to tax in respect of the property for the year
computed before any deduction allowed under this section,
Page
12
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paid or payable by the company in the year wholly and

exclusively for the purpose of deriving rent chargeable to tax
under the head, Income from Property including
administration and collection charges;]
(i) any expenditure paid or payable by the company in the tax year
for legal services acquired to defend the companys title to the
property or any suit connected with the property in a court;
and
(j) where there are reasonable grounds for believing that any
unpaid rent in respect of the property is irrecoverable, an
allowance equal to the unpaid rent where
(i) the tenancy was bona fide, the defaulting tenant has vacated
the property or steps have been taken to compel the tenant
to vacate the property and the defaulting tenant is not in
occupation of any other property of the company;
(ii) the company has taken all reasonable steps to institute
legal proceedings for the recovery of the unpaid rent or has
reasonable grounds to believe that legal proceedings would
be useless; and
(iii) the unpaid rent has been included in the income of the
company chargeable to tax under the head Income from
Property for the tax year in which the rent was due and tax
has been duly paid on such income.
7) Deductions not allowed [Section 21]

SECTION
AMENDMENTS THROUGH FINANCE

ACT 2016
21
for clause (c), the following shall be

substituted, namely:(c) any expenditure from which the
person is required to deduct or collect tax
under Part V of Chapter X or Chapter XII,
unless the person has paid or deducted
and paid the tax as required by Division
IV of Part V of Chapter X: 23
Provided that disallowance in respect of
purchases of raw materials and
finished goods under this clause shall
not exceed twenty per cent of purchases
of raw materials and finished goods:
Page
13
Provided further that recovery of any

amount of tax under sections 161 or 162
shall be considered as tax paid.
COMMENTS
The proposed amendment purpose shall
substitute clause (c) of section 21 to limit the
disallowance of expenditure on account of
non deduction / payment of tax under 148 to
156B and 231A to 236T, unless the person
has paid or deducted and paid the tax, to
specify the limit in case of purchase of goods
to 20% and to clarify that recovery of tax
under sub-section 161 and 162 is not to be
considered as payment.
Through the Bill, the provision regarding
disallowance of expenditure on account of
non-deduction of tax was clarified that if tax
under section 161 or 162 has been collected,
the same will be considered as taxes paid for
the purposes of the said provision, and the
disallowance would not be made. It was also
proposed through the Bill to restrict the limit of
disallowance to 20% of purchases of raw
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material and finished goods which was
ambiguous.
There had been a circular in the past where
disallowance in respect of purchases was not
allowed, inter alia in certain mode, despite
non-compliance of certain provisions. This
amendment appears to be an extension of
that concept that purchases of raw materials
and finished goods cannot be disallowed for
any non-compliance of withholding provision
over and above the percentage prescribed in
the law. At present, this percentage as per
the proviso is 20% of the amount of total
purchases of raw materials and finished
goods. This would mean that if the
compliance exceeds 20% on transaction-wise
basis, there will not be a disallowance of
expenses beyond 20% of total purchases.
The objective
corrections.
is
to
make
grammatical
in clause (n), for full stop at the end a The objective

semicolon and the word and shall be corrections.
substituted and thereafter the following
new clause shall be added, namely:-
is
to
make
grammatical
in clause (m), the word and at the end

shall be omitted;
(o) any expenditure in respect of sales

promotion, advertisement and publicity
in excess of five per cent of turnover
incurred
by
pharmaceutical
manufacturers.;
Further proposed to add a new clause (o) to

disallow any expenditure by pharmaceutical
companies for promotion purposes in excess
of 5% of turnover.
Page
14
8) Depreciation [Section 22]

SECTION

ACT 2016
22
in section 22, after sub-section (5), the

following explanation shall be added,
namely:Explanation,- For the removal of doubt,
it is clarified that where any building,
furniture, plant or machinery is used for
the purposes of business during any tax
year for which the income from such
business is exempt, depreciation
admissible under sub-section (1) shall
be treated to have been allowed in
respect of the said tax year and after
expiration of the exemption period,
written down value of such assets shall
be determined after reducing total
COMMENTS
Although it has been held in number of appellate
bodies judgments that the taxpayer is entitled to
claim depreciation in the temporary exemption
period under normal tax regime therefore the
following proposed explanation shall be added
after sub section (5) to this section to clarify
depreciation allowance in exempt period.
For the removal of doubt, it is clarified that where
any building, furniture, plant or machinery is
used for the purposes of business during any tax
year for which the income from such business is
exempt, depreciation admissible under sub-section
(1) shall be treated to have been allowed in
respect of the said tax year and after expiration of
the exemption period, written down value of
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depreciation deductions including any

initial allowance under section 23) in
accordance with clauses (a) and (b) of
this sub-section.
such assets shall be determined after reducing

total depreciation deductions (including any
initial allowance under section 23) in accordance
with clauses (a) and (b) of this sub-section.
9) Capital Gain on Disposal of Immovable Property [Read 1st Schedule With

Section 37(1A)]
SECTION
AMENDMENTS THROUGH
FINANCE ACT 2016
C OMMENTS
The bill proposes to increase the holding period for
immoveable property from 2 years to 5 years in order to
avail the benefit of 0% tax on capital gains on disposal of
immoveable property. Gain on disposal of immoveable
property within 5 years shall be charged tax @ 10%. Capital
gains on disposal of immoveable property after 5 years
shall be taxed at 0%.
Provided that gain arising on the disposal of
immovable property by a person in a tax year to a
Rental REIT Scheme shall be taxed at the rate of five
percent upto thirtieth day of June, 2019, irrespective of
the holding period.
37(1A)
Gain arising on the disposal of immovable property by a

person in a tax year to the Rental REIT Scheme will be
taxed at the rate of 5% upto June 30, 2019 irrespective of
holding period. The general rate of tax on gain on disposal
of immovable property is 10%, whereas no tax is payable
where holding period of immovable property is more than 5
years. It may be noted that gain on disposal of immoveable
property to developmental REIT is exempt from tax upto
June 30, 2020 under Clause (99A) of Part I of the second
schedule.
Page
15
10) Capital gain on Disposal of Securities [SECTION 37A]

SECTION
AMENDMENTS
THROUGH FINANCE
ACT 2016
37A
in section 37A, in subsection (3A), after clause

(b),
the
following
explanation
thereto shall be added,
namely:Explanation:
For
removal of doubt it is
clarified that derivative
products include future
commodity
contracts
entered into by the
embers 24 of Pakistan
COMMENTS
The following explanation is proposed to be added to section

37A, in sub section (3A) after clause (b) to clarify that
derivative products include future commodity contracts by
members of Pakistan Mercantile Exchange.
For removal of doubt it is clarified that derivative products
include future commodity contracts entered into by the
members of Pakistan Mercantile Exchange whether or not
settled by physical delivery.
The legislature has accordingly proposed omission of
st
section 236T and its old rates given in 1 Schedule relevant
to Collection of Advance Tax of Future Sale and
purchase of Commodity Contract. Income under Future
commodity contracts entered into by the members of
Pakistan Mercantile Exchange shall be taxed @ 5%.
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Mercantile
Exchange The tax rates for capital gains on disposal of securities have
whether or not settled been increased as under:
SR.
Period
2015
2016
Rates 2017
by physical delivery.;
Filer
1.
2.
3.
4.
5.
Where holding period of a

security is less than 12
months.
security is 12 months or more
but less than 24
months.
security is 24 months or m ore
but security was acquired on
st
or after 1 July, 2012.
Where the security was
st
acquired before 1 July, 2012
Future commodity contracts
entered into by the members
of
Pakistan
Mercantile
Exchange
12.5%
15%
15%
Non
Filer
18%
10%
12.5%
12.5%
16%
0%
7.5%
7.5%
11%
0%
0%
0%
0%
0%
0%
5%
5%
11) Exemptions and tax concessions in the Second Schedule [Section 53]
SECTION
C OMMENTS
53
(a) for the word "and", occurring for the first time, a
comma shall be substituted;
The objective is to make

grammatical correction.
(b) after the word "agreements" the words and comma

"or granting an exemption from any tax imposed under
this Ordinance including a reduction in the rate of tax
imposed under this Ordinance or a reduction in tax
liability under this Ordinance or an exemption from the
operation of any provision of this Ordinance to any
international financial institution or foreign Government
owned financial institution operating under an
agreement, memorandum of understanding or any other
arrangement with the Government of Pakistan" shall be
inserted
Page
16
(2) The Federal Government may, from time to time pursuant

to the approval of the Economic Coordination Committee of
Cabinet, 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 or
granting an exemption from any tax imposed under this

Ordinance including a reduction in the rate of tax
imposed under this Ordinance or a reduction in tax
liability under this Ordinance or an exemption from the
operation of any provision of this Ordinance to any
international financial institution or foreign Government
owned financial institution operating under an
The
following
proposed
amendment shall make a
technical correction and to
extend
the
scope
of
conditions in which the
Federal Government can
grant exemptions, pursuant
to approval of the ECC.
in sub-section (2) clause (b)
after
the
word
"agreements" the words
and comma "or granting
an exemption from any tax
imposed
under
this
Ordinance
including
a
reduction in the rate of tax
imposed
under
this
Ordinance or a reduction in
tax liability under this
Ordinance or an exemption
from the operation of any
provision of this Ordinance
to any international financial
institution
or
foreign
Government
owned
financial
institution
operating
under
an
agreement, memorandum
of understanding or any
other arrangement with the
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agreement, memorandum of understanding or any other

arrangement with the Government of Pakistan, by
Government of
shall be inserted.
Pakistan"
notification in the official Gazette, make such amendment in

the Second Schedule by
12) Group Relief [Section 59B]

SECTION

2016
59B
(a) in sub-section (1), after the word loss,

occurring
for
the
first
time,
the
expression as computed in sub-section
(1A)
shall
be
inserted;
and
(b) after sub-section (1), amended as
aforesaid, the following new subsection shall
be inserted, namely:(1A) The loss to be surrendered under subsection
(1)
shall
be
allowed as per following formula, namely:(A/100)
x
B
where
A is the percentage share capital held by the
holding
company of its subsidiary company; and
B is the assessed loss of the subsidiary
company.;
COMMENTS
The proposed amendment shall make
technical correction and to add a new sub
section (1A) to provide for allowance of
loss to the extent of holding only for
purposes of Group Relief under this
section.
The following new subsection (1A) shall be
inserted:The loss to be surrendered under subsection (1) shall be allowed as per
following formula, namely:(A/100) x B
WhereA is the percentage share capital held by
the holding company of its subsidiary
company; and
B is the assessed loss of the subsidiary
company.
Page
17
13) Tax credit for investment in health insurance. [Section 62A]

SECTION

2016
62A
after section 62, the following new section

shall
be
inserted,
namely:
62A. Tax credit for investment in health
insurance. (1) A resident person being a
filer other than a company shall be entitled to
a tax credit for a tax year in respect of any
health insurance premium or contribution paid
to any insurance company registered by the
Securities and Exchange Commission of
Pakistan under the Insurance Ordinance, 2000
(XXXIX of 2000), provided the resident person
being a filer is deriving income chargeable to
tax under the head salary or income from
business.
(2) The amount of a persons tax credit
allowed under subsection (1) for a tax year
COMMENTS
The following newly added proposed
section shall introduce tax credit for
investment in health insurance and its
computation.
(1) A resident person other than a
company shall be entitled to a tax credit
for a tax year in respect of any health
insurance premium or contribution
paid to any insurance company
registered by the Securities and
Exchange Commission of Pakistan
under the Insurance Ordinance, 2000,
provided the resident person is deriving
income chargeable to tax under the
head salary or income from
business.
(2) The amount of a persons tax
credit allowed under subsection (1)
for a tax year shall be computed
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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 persons taxable income for the tax
year;
and
C
is
the
lesser
of
(a) the total contribution or premium paid by

the person referred to in sub-section (1) in the
year;
(b) five per cent of the persons taxable
income
for
the
year;
and
(c) one hundred thousand rupees.;
according to
namely:
the following formula,
(A/B) x C
WhereA is the amount of tax assessed to
the person for the tax year before
allowance of tax credit under this
section;
B is the persons taxable income for
the tax year; and
C is the lesser of
(a) the total contribution or premium
paid by the person referred to in subsection (1) in the year;
(b) 5% of the persons taxable income
for the year; and
(c) Rs. 100,000.
14) Contribution to an Approved Pension Fund [63]

SECTION
COMMENTS
63
in section 63, in sub-section (2), in component C,

in clause (ii), in the second proviso, for full stop
at the end, a colon shall be substituted and
thereafter the following new proviso shall be
added, namely:-
The objective is to make grammatical

correction.
Provided also that the additional contribution of

two percent per annum for each year of age
exceeding forty years shall be allowed upto the
30th June, 2019 subject to the condition that the
total contribution allowed to such person shall not
exceed thirty percent of the total taxable income
of the preceding year.
The purpose of following new

proposed proviso to clause (ii) of
component C of sub section (2) of this
section is to specify the time period
and to reduce the specified limit from
50% to 30% for contribution to an
approved Pension fund.
15) Deductible allowance for profit on debt [Section 64A]

SECTION
64A
AMENDMENTS THROUGH
FINANCE ACT 2016
COMMENTS
Presently the amount of an individual deductible
in section 64A, in sub-section (2), for allowance allowed under this section for a tax
the word one the word two shall year shall not exceed 50% of taxable income or
be substituted;
Rs. 1,000,000, whichever is lower.
The proposed amendment shall increase the limit
of deductible allowance for profit on debt from Rs.
1,000,000 to Rs. 2,000,000.
Page
18
16) Deductible allowance for education expenses [Section 64AB]

SECTION
64AB

2016
COMMENTS
The purpose of the following newly
after section 64A, the following new section added proposed section is to provide
shall
be
inserted,
namely:-
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64AB. Deductible allowance for education
expenses. (1) Every individual shall be
entitled to a deductible allowance in respect
of
tuition
fee
paid
by the individual in a tax year provided that
the taxable income of the individual is less
than one million rupees.
(4) The amount of an individuals deductible
allowance allowed under sub-section (1)
for a tax year shall not exceed the lesser
of
(a) five per cent of the total tuition fee
paid by the individual referred to in subsection
(1)
in
the
year;
(b) twenty-five per cent of the persons
taxable income for the year; and
(c) an amount computed by multiplying
sixty thousand with number of children of
the individual.
(5) Any allowance or part of an allowance
under this section for a tax year that is
not able to be deducted for the year shall
not be carried forward to a subsequent
tax year.
(6) Allowance under this section shall be
allowed against the tax liability of either
of the parents making payment of the fee
on furnishing national tax number (NTN)
or name of the educational institution.

deductible allowance for education
expenses in case of taxable income of
individuals is less than Rs. 1,000,000
and is also subject to other specified
limitations.
(1) Every individual shall be entitled to a
deductible allowance in respect of tuition
fee paid by the individual in a tax year
provided that the taxable income of the
individual is less than Rs. 1,000,000.
(2)
The amount of an individuals
deductible allowance allowed under subsection (1) for a tax year shall not
exceed the lesser of
(a) 5% of the total tuition fee paid by the
individual referred to in sub-section (1)
in the year;
(b) 25% of the persons taxable income
for the year; and
(c) an amount computed by multiplying
60,000 with number of children of the
individual.
(3)
Any allowance or part of an
allowance under this section for a tax
year that is not able to be deducted for
the year shall not be carried forward to a
subsequent tax year.
(4) Allowance under this section shall
be allowed against the tax liability of
either of the parents making payment of
the fee on furnishing national tax
number (NTN) or name of the
educational institution.
(7) Allowance under this section shall not be (5) Allowance under this section shall
taken into account for computation of tax not be taken into account for
computation of tax deduction under
deduction under section 149.
section 149.
17) Tax credit for employment generation by manufacturers [Section 64B]

SECTION
Page
19
64B

C OMMENTS
1) Where a taxpayer being a company formed for In order to promote industrial
and
employment
establishing and operating a new manufacturing unit sets growth
up a new manufacturing unit between the 1st day of July, generation tax credit at 1% of the
2015 and the 30th day of June, 2019, (both days inclusive) tax payable for a period of 10
years that is allowed for every 50
it shall be given a tax credit for a period of ten years.
employees
in
an
industrial
(2) The tax credit under sub-section (1) for a tax year shall undertaking to be set up by June
be equal to two percent of the tax payable for every fifty 2018, is proposed to be increased
employees registered with The Employees Old Age to 2%, subject to a maximum 10%
the tax payable.
This
Benefits Institution or the Employees Social Security of
Institutions of Provincial Governments during the tax concession will be made available
year, subject to a maximum of ten percent of the tax for 10 years to the industrial
undertakings set up by June 2019.
payable.
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18) Tax credit to a person registered under the Sales Tax Act, 1990 [Section
65A]
SECTION
65A

(1) Every manufacturer, registered under the
Sales Tax Act, 1990, shall be entitled to a tax
credit of three per cent of tax payable for a tax
year, if ninety per cent of his sales are to the
person who is registered under the aforesaid Act
during the said tax year.
COMMENTS
Presently a manufacturer registered
under sales tax who is making over
90% sales to registered sales tax
persons is entitled to a tax credit of
2.5% of tax payable, the tax credit is
proposed to be enhanced from 2.5%
to 3% of tax payable.
19) Tax credit for investment [Section 65B]

SECTION
AMENDMENTS THROUGH
FINANCE ACT 2016
65B
(2)
The provisions of sub-section
(1) shall apply if the plant and
machinery is purchased and installed
at any time between the first day of
th
July, 2010, and the 30 day of June,
[2019].
COMMENTS
Presently tax credit on BMR is allowable at the
rate of 10% of investment against tax payable for
2 years. In case of investment through 100% new
equity, tax credit on BMR is allowable at the rate
of 20% of investment against tax payable for 5
years.
The period of tax credit is proposed to be
extended to 30th June 2019.
20) Tax credit for enlistment [Section 65C]

SECTION
65C
AMENDMENTS THROUGH
FINANCE ACT 2016
(1) Where a taxpayer being a
company opts for enlistment in any
registered
stock
exchange
in
Pakistan, a tax credit equal to [twenty]
percent of the tax payable shall be
allowed for the tax year in which the
said company is enlisted and for the
following tax year.
COMMENTS
Presently a taxpayer being a company opts for
enlistment in any registered stock exchange in
Pakistan, a tax credit equal to 20% of the tax
payable shall be allowed for the tax year in which
the said company is enlisted.
The period of tax credit for enlistment is proposed
to be extended to the next following tax year.
21) Tax credit for newly established industrial undertakings. [Section 65D]
SECTION
Page
20
65D

(1) Where a taxpayer being a company formed for
establishing and operating a new industrial
undertaking [including corporate dairy farming] sets up
a new industrial undertaking [including a corporate
dairy farm], it shall be given a tax credit equal to an
amount as computed in sub-section (1A) of the
tax payable [, including on account of minimum tax
and final taxes payable under any of the provisions of
this Ordinance,] on the taxable income arising from
such industrial undertaking for a period of five years
beginning from the date of setting up or
commencement of commercial production, whichever
is later.
COMMENTS
Uptill 30-06-2016, 100% tax
credit on tax payable is allowed if
100% fresh equity is raised for
establishing
new
industry
through issuance of new shares.
This tax credit is allowable for 5
years from start of commercial
production.
It is proposed to reduce the
condition of 100% fresh equity to
at least 70% equity. In addition,
period of setting up of new
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after sub-section (1), the following new subsection shall be inserted, namely:(1A) The amount of a persons tax credit
allowed under sub-section (1) for a tax year
shall be computed according to the following
formula, namely:
A x B/C
where
A is the amount of tax assessed to the person
for the tax year before allowance of any tax
credit for the tax year; and
B is the equity raised through issuance of new
shares for cash consideration.
C is the total amount invested in setting up the
new industrial undertaking;
(2)
Tax credit under this section
admissible where
shall
be
(a)
the company is incorporated and industrial

undertaking is setup between the first day of
th
July, 2011 and 30 day of June, 2019;
(b)
industrial undertaking is managed by a

company formed for operating the said
industrial undertaking and registered under
the Companies Ordinance, 1984 (XLVII of
1984) and having its registered office in
Pakistan;
(c)
the industrial undertaking is set up with at

least seventy per cent equity [raised
through issuance of new shares for cash
consideration:]
Under sections 65D of the

Ordinance, tax credits for
investments
are
presently
available to companies making
100% equity based investments
for industrial undertaking and
corporate dairy farm upto June
30, 2106. It was proposed
through the Bill to not only
increase the time period of
investments to June 30,2019 but
also the credit was allowed (on
proportionate basis) where the
equity investment is 70% or
more. However, the formula
proposed for that purpose had a
mathematical error which has
now been corrected. The credit
is now allowable as per the
following
formula:
A x (B/C)
where
A is the amount of tax assessed

for the tax year before allowance
of any tax credit for the tax year;
B is the equity raised through
issuance of new shares for cash
consideration;
and
C is the total amount invested in
setting up the new industrial
undertaking
/
plant
and
machinery, as the case may be.
Page
21
(d)
the industrial undertaking is not established

by the splitting up or reconstruction or
reconstitution of an undertaking already in
existence or by transfer of machinery or plant
from an industrial undertaking established in
Pakistan at any time before 1st July 2011;
and
industrial undertaking, which is

going to expire on 30-06-2016 is
also proposed to be extended to
30-06-2019 with further limitation
to revoke credit under this
section
if
business
is
discontinued in the subsequent 5
years after availing the credit.
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(4)
Where any credit is allowed under this section
and subsequently it is discovered, on the basis of
documents or otherwise, by the Commissioner Inland
Revenue that the business has been discontinued
in the subsequent five years after the credit

has been allowed or any of the [conditions]
specified in this section [were] not fulfilled, the credit
originally allowed shall be deemed to have been
wrongly allowed and the Commissioner Inland
Revenue may, notwithstanding anything contained in
this Ordinance, re-compute the tax payable by the
taxpayer for the relevant year and the provisions of
this Ordinance shall, so far as may be, apply
accordingly.]
22) Tax credit for industrial undertakings established before the first day of July,
2011 [Section 65E]
SECTION
65E

(1) Where a taxpayer being a company, setup in Pakistan
before the first day of July, 2011, invests any amount, with at
least seventy per cent new equity raised through issuance
of new shares, in the purchase and installation of plant and
machinery for an industrial undertaking, including corporate
dairy farming, for the purposes of(i)
expansion of the plant and machinery already
installed therein; or
(ii)
undertaking a new project,
a tax credit shall be allowed against the tax payable in the manner
provided in sub-section (2) and sub-section (3), as the case may be,
for a period of five years beginning from the date of setting up or
commencement of commercial production from the new plant or
expansion project, whichever is later.]
(2) Where a taxpayer maintains separate accounts of an expansion
project or a new project, as the case may be, the taxpayer shall be
allowed a tax credit equal to an amount as computed in subsection (3A) of the tax payable, including minimum tax and final
taxes payable under any of the provisions of this Ordinance,
attributable to such expansion project or new project.
Page
22
(3) In all other cases, the credit under sub-section (3A) shall be
such proportion of the tax payable, including minimum tax and
final taxes payable under any of the provisions of this Ordinance,
as is the proportion between the new equity and the total equity
including new equity.
(3A) The amount of a persons tax credit allowed under

subsection (1) for a tax year shall be computed according to
the following formula, namely:
AxB/C
where
COMMENTS
At present, 100% tax
credit on tax payable is
allowed for expansion of
existing plant or new
project if 100% fresh
equity is raised through
issuance of new shares.
This tax credit is allowable
for 5 years from start of
commercial production.
It is proposed to reduce
the condition of 100%
fresh equity to at least
70% equity. Tax credit
would
be
allowed,
proportionately, on owned
new equity. In addition,
last date for installation of
the plant and machinery
which is going to expire on
30th June 2016 is also
proposed to be extended
to June, 2019 and with
further limitation to revoke
credit under this section if
business is discontinued in
the subsequent 5 years
after availing the credit.
Under sections 65E of the
Ordinance, tax credits for
investments are presently
available to companies
making
100%
equity
based investments for
industrial undertaking and
corporate dairy farm upto
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A is the amount of tax assessed to the person for the tax

year before allowance of any tax credit for the tax year; and
B is the equity raised through issuance of new shares for
cash consideration.
C is the total amount invested in the purchase and
installation of plant and machinery for the industrial
undertaking;
(4) The provisions of sub-section (1) shall apply if the plant and
machinery is installed at any time between the first day of July,
2011 and the 30th day of June, 2019.
(5) The amount of credit admissible under this section shall be
deducted from the tax payable, including minimum tax and final
taxes payable under any of the provisions of this Ordinance, by the
taxpayer [, for a period of five years beginning from the date of
setting up or commencement of commercial production from the
new plant or expansion project, whichever is later.
(6) Where any credit is allowed under this section and
subsequently it is discovered, on the basis of documents or
otherwise, by the Commissioner Inland Revenue that the
business has been discontinued in the subsequent

five years after the credit has been allowed or any of
the condition specified in this section was not fulfilled, the
credit originally allowed shall be deemed to have been
wrongly allowed and the Commissioner Inland Revenue may,
notwithstanding anything contained in this Ordinance, recompute the tax payable by the taxpayer for the relevant year
and the provisions of this Ordinance shall apply accordingly.
June 30, 2106. It was

proposed through the Bill
to not only increase the
time period of investments
to June 30,2019 but also
the credit was allowed (on
proportionate basis) where
the equity investment is
70% or more. However,
the formula proposed for
that purpose had a
mathematical error which
has now been corrected.
The
credit
is
now
allowable as per the
following
formula:
A x (B/C)
where
A is the amount of tax

assessed for the tax year
before allowance of any
tax credit for the tax year;
B is the equity raised
through issuance of new
shares
for
cash
consideration;
and
C is the total amount
invested in setting up the
new industrial undertaking
/ plant and machinery, as
the case may be.
23) Apportionment of deductions [Section 67]

SECTION
67

(1) Subject to this Ordinance, where an expenditures, deductions and
allowances relates to
(a)
the derivation of more than one head of income; or
(ab) derivation of income comprising of taxable income and any

class of income to which sub-sections (4) and (5) of section 4
apply, or;
the derivation of income chargeable to tax under a head of
income and to some other purpose,
the expenditures, deductions and allowances shall be apportioned on
any reasonable basis taking account of the relative nature and size of
the activities to which the amount relates.
(2) The [Board] may make rules under section [237] for the purposes of
apportioning expenditures and allowances.
Page
23
(b)
COMMENTS
The
proposed
amendment in this
section shall allow
apportionment
of
deductions
and
allowances
under
this section as the
word
expenditure
replaced with the
words expenditures,
deductions
and
allowances.
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24) Fair market value [Section 68]

SECTION
68
AMENDMENTS THROUGH
FINANCE ACT 2016
(1)
For the purposes of this
Ordinance, the fair market value of
2
any property [or rent], asset,
service, benefit or perquisite at a
particular time shall be the price
which the property [or rent], asset,
service, benefit or perquisite would
ordinarily fetch on sale or supply in
the open market at that time.
(2) The fair market value of any
property [or rent], asset, service,
benefit or perquisite shall be
determined without regard to any
restriction on transfer or to the
fact that it is not otherwise
convertible to cash.
(3) Where the price other than the
price of immovable property
referred to in sub-section (1) is not
ordinarily ascertainable, such price
may be determined by the
Commissioner.
(4) Notwithstanding anything
contained in sub-sections
(1) and (3), the fair market
value of immovable property
shall be determined on the
basis of valuation made by a
panel of approved valuers of
the State Bank of Pakistan.
COMMENTS
At present under section 68(2) the FMV of any
property or rent, asset, service, benefit or
perquisite shall be determined without regard to
any restriction on transfer or to the fact that it is not
otherwise convertible to cash.
It is now proposed that in the above sub-section the
FMV of a property shall be determined without regard
to any value of property fixed or notified by any
provincial authority for the purpose of stamp duty or
for any other purpose.
However this amendment will have conflict with
section 111(5) of the Income Tax Ordinance, 2001
where FBR may make Rules under section 237 for
the purposes of section 111. Therefore Rule 228 of
Income Tax Rules, 2002 related to valuation of
immoveable properties for the purpose of section 111
will have conflict with the aforesaid amendment.
Although it is held in number of judgments that in
case of any conflict between a section of the
Ordinance and Rule then, preference of section over
Rule will prevail. But here the clash will be between
amended section 68(2) and 237 that empowers FBR
to make Rules under any section of the Income Tax
Ordinance, 2001. Further none of the section is a non
obstante under the Income Tax Ordinance, 2001.
Through the Bill, it has now been provided that the
fair market value of immovable property will be
determined on the basis of valuation made by a panel
of approved valuers of the State Bank of Pakistan.
The proposal through the Bill that the value fixed or
notified by any Provincial authority for the stamp duty
or any other purpose shall not be taken into
consideration for determining the fair market value of
an asset for the purpose of the Ordinance, has not
been
finally
adopted.
Page
24
This is a major deviation as deemed / practical

acceptance of single value has been dispensed with
and the possibility of different valuation by various
persons within the panel cannot be overruled.
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25) Person [Section 80]

SECTION
AMENDMENTS THROUGH
FINANCE ACT 2016
COMMENTS
To enlarge the scope of definition of a person this
80
in section 80, in sub-section (2), in amendment is proposed to clarify that the

clause (vb), for semicolon a full stop definition of Trust includes the Foreign Trusts.
shall be substituted and thereafter
the following explanation shall be However proposed explanation omitted by
added,
namely:- Finance Act, 2016.
Explanation.- For removal of doubt
it is clarified that a trust under this The explanation proposed to be inserted through
clause does not includes includes a the Bill for clarifying that a foreign trust is also
covered by the definition of company has been
foreign trust.;
deleted. Effectively, deletion of this amendment
has made no change in the law and even under
the existing provisions; a 'foreign trust' is a
company.
26) Agreements for the avoidance of double taxation and prevention of fiscal
evasion. [Section 107]
SECTION
107
(1) The Federal Government may enter into a tax treaty, a tax
information exchange agreement, a multilateral convention, an
inter-governmental agreement or similar agreement or mechanism
for the avoidance of double taxation or for the exchange of
information for the prevention of fiscal evasion or avoidance of taxes
including automatic exchange of information 30 with respect to
taxes on income imposed under this Ordinance or any other law for
the time being in force and under the corresponding laws in force in
that country and may, by notification in the official Gazette, make
such provisions as may be necessary for implementing the said
instruments.
(1A) Notwithstanding anything contained in any other law to the contrary,
the Board shall have the powers to obtain and collect information when
solicited by another country under a tax treaty, a tax information exchange
agreement, a multilateral convention, an inter-governmental agreement, a
similar arrangement or mechanism.
Page
25
(1B) Notwithstanding the provisions of the Freedom of Information

Ordinance, 2002 (XCVI of 2002), any information received or supplied, and
any concomitant communication or correspondence made, under a tax
treaty, a tax information exchange agreement, a multilateral convention, a
similar arrangement or mechanism, shall be confidential.
C OMMENTS
The
proposed
amendments
shall
substitute
sub-section
(1)
of section 107
to provide
for
more
instruments and
arrangements of
international
taxation
and
avoidance
of
double taxation
agreements and
to make technical
corrections.
Amendment in
sub section (1)
and (1B) shall
be omitted
(2) Where any agreement is made in accordance with sub-section (1), the
agreement and the provisions made by notification for implementing the
agreement shall, notwithstanding anything contained in any law for the
time being in force, have effect in so far as they provide for at least one of
the following:
(a)
relief from the tax payable under this Ordinance;
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(b)
the determination of the Pakistan-source income of non-resident

persons;
(c)
where all the operations of a business are not carried on within

Pakistan, the determination of the income attributable to
operations carried on within and outside Pakistan, or the income
chargeable to tax in Pakistan in the hands of non-resident persons,
including their agents, branches, and permanent establishments in
Pakistan;
(d)
the determination of the income to be attributed to any resident

person having a special relationship with a non-resident person;
and
(e)
the exchange of information for the prevention of fiscal evasion or

avoidance of taxes on income chargeable under this Ordinance and
under the corresponding laws in force in that other country.
(3)
Notwithstanding anything contained in sub-sections (1) or (2), any
agreement referred to in sub-section (1) may include provisions for the
relief from tax for any period before the commencement of this Ordinance
or before the making of the agreement.
27) Transactions between associates [Section 108]

SECTION
108
in section 108, after sub-section (2), the following new sub-sections

shall be added, namely:(3) Every taxpayer who has entered into a transaction with its
associate shall:
(a) maintain a master file and a local file containing documents
and information as may be prescribed;
(b) keep and maintain prescribed country-by-country report,
where applicable;
(c) keep and maintain any other information and document in
respect of transaction with its associate as may be prescribed; and
(d) keep the files, documents, information and reports specified
in clauses (a) to (c) for the period as may be prescribed.
Page
26
(4) A taxpayer who has entered into a transaction with its associates
shall furnish, within thirty days the documents and information to
be kept and maintained under sub-section (3) if required by the
Commissioner in the course of any proceedings under this
Ordinance.;
C OMMENTS
In order to have
the check and
balance
the
following
proposed inserted
sub-sections that
shall provide for
documentation
requirement
in
case
of
transactions with
associates
and
furnishing of the
same,
if
so
required
within
specified time by
the Commissioner
in the course of
any proceedings
under
this
Ordinance.
(5) The Commissioner may, by an order in writing, grant the

taxpayer an extension of time for furnishing the documents and
information under subsection (4), if the taxpayer applies in writing
to the Commissioner for an extension of time to furnish the said
documents or information:
Provided that the Commissioner shall not grant an extension of
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more than forty-five days, when such information or documents

were required to be furnished under sub-section (4), unless there
are exceptional circumstances justifying a longer extension of time.
28) Minimum tax on the income of certain persons [Section 113]

SECTION
113

(1) This section shall apply to a resident company, an
individual (having turnover of ten million rupees or above in
the tax year 2017 or in any subsequent tax year) and an
association of persons (having turnover of ten million rupees
or above in the tax year 2017 or in any subsequent tax year)]
where, for any reason whatsoever allowed under this
Ordinance, including any other law for the time being in
force
(a)
loss for the year;
(b)
the setting off of a loss of an earlier year;
(c)
exemption from tax;
(d)
the application of credits or rebates; or
(e)
the claiming of allowances or deductions (including
depreciation and amortization deductions) no tax is payable
or paid by the person for a tax year or the tax payable or paid
by the person for a tax year is less than [one]per cent of the
amount representing the persons turnover from all sources
for that year:
[Explanation.- For the purpose of this sub-section, the
expression tax payable or paid does not include tax already
paid or payable in respect of deemed income which is
assessed as final discharge of the tax liability under section
169 or under any other provision of this Ordinance.]
Explanation.- For the purpose of this sub-section, the
expression tax payable or paid does not include(a) tax already paid or payable in respect of deemed
income which is assessed as final discharge of the tax
liability under section 169 or under any other provision
of this Ordinance; and
(b) tax payable or paid under section 4B.;
COMMENTS
The
proposed
amendments shall reduce
the condition of having
turnover from Rs. 50
million to Rs.10 million for
individuals and AOPs
from tax year 2017 for
applicability of minimum
Tax under his section.
Further, proviso to subsection
113(1)
is
proposed to be omitted
resulting that even in case
of a company declared
gross loss as per tax they
shall be required to pay
minimum tax.
Further the explanation
for the expression tax
payable or paid, at the
end shall be substituted to
exclude taxes already
paid or payable under
section 4B (Super tax)
and taxes already paid or
payable in respect of
deemed income which s
assessed
as
final
discharge of the tax
liability under section 169
or under any other
provision of the Income
tax Ordinance, 2001.
29) Minimum tax on builders & Minimum tax on land developers [Section 113A
& 113B]
SECTION
Page
27
113A &
113B
AMENDMENTS THROUGH
FINANCE ACT 2016
COMMENTS
The
proposed
amendments
shall
omit
sections
after
the
insertion
7D in place of these sections
Sections 113A and 113B aforesaid

shall be omitted
7C and
both
the
of
sections
as discussed
above.
However during the process of proposed amendment
the non application of section 113A for three years
vide sub section (3) for tax year 2016 to tax year
2018
has
not
been
considered
which
will
create
disputes
between
the
taxpayers
and
the
Inland
Revenue Department.
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30) Return of income [Section 114]

SECTION
114

(5) A notice under sub-section (4) may be issued in respect of one
or more of the last five completed tax years or assessment years;
Provided that in case of a person who has not filed return for any
of the last five completed tax years, notice under sub-section (4)
may be issued in respect of one or more of the last ten
completed tax years.
(6)
Subject to sub-section (6A), any person who, having
furnished a return, discovers any omission or wrong statement
therein, may file revised return subject to the following conditions,
namely:
(a) it is accompanied by the revised accounts or revised
audited accounts, as the case may be;
(b) the reasons for revision of return, in writing, duly signed,
by the taxpayers are filed with the return
(ba) it is accompanied by approval of the
Commissioner in writing for revision of return; and]
(c) taxable income declared is not less than and loss declared
is not more than income or loss, as the case may be,
determined by an order issued under sections 121, 122,
122A, 122C, 129, 132, 133 or 221:Provided that if any of the above conditions is not fulfilled, the
return furnished shall be treated as an invalid return as if it had not
been furnished]
Provided further that the condition specified in clause (ba) shall
not apply if revised return is filed within sixty days of filing of
return:
Provided also that condition specified in clause (ba) shall not apply
and the approval required thereunder shall be deemed to have
been granted by the Commissioner, if(a) the Commissioner has not made an order of approval in
writing, for revision of return, before the expiration of sixty days
from the date when the revision of return was sought;
or
(b) taxable income declared is more than or the loss declared is
less than the income or loss, as the case may be, determined
under section 120.
COMMENTS
The
proposed
amendments
shall
substitute as under vide
third proviso of clause (c)
to sub-section (6) of
section 114 to provide
that written approval by
the Commissioner for
revision of income tax
Return
will
not
be
required if
(a) the Commissioner
has not made an order
of approval in writing, for
revision of return, before
the expiration of 60 days
from the date when the
revision of return was
sought; or
(b)
taxable income
declared is more than or
the loss declared is less
than the income or loss,
as the case may be.
Through the Act, a new

proviso has been added
to
section
114
empowering the FBR to
issue a notice for filing of
return of income for one
or more of the last ten
completed tax years in
case of a person who has
not filed return for any of
the last five completed
years. The retrospective
impact of this amendment
to past and closed years
requires examination.
31) Provisional assessment [Section 122C]

SECTION
Page
28
122C

(1) Where in response to a notice under sub-section (3) or sub-section
(4) of section 114 a person fails to furnish return of income for any tax
year, the Commissioner may, based on any available information or
material and to the best of his judgment, make a provisional
assessment of the taxable income or income of the person and issue a
provisional assessment order specifying the taxable income or income
assessed and the tax due thereon.
COMMENTS
The proposed under
mentioned
amendments seeks
to substitute the first
and second provisos
to section 122C(2)
to amend the
conditions in which
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(2) Notwithstanding anything contained in this Ordinance, the

provisional assessment order completed under sub-section (1) shall
3
be treated as the final assessment order after the expiry of [fortyfive] days from the date of service of order of provisional assessment
and the provisions of this Ordinance shall apply accordingly:
Provided that the provisions of this sub-section shall not apply,

if
(a) return of income along with wealth statement, wealth
reconciliation statement and other documents required
under sub-section (2A) of section 116 are filed by the
person being an individual or an association of persons
for the relevant tax year during the said period of fortyfive days; and
(b) the individual or an association of persons presents
accounts and documents for conducting audit of income
tax affairs for that tax year:
the Provisional
Assessment may not
be treated as final
even on filing of return
of income with
required documents
within specified 45
days and from tax
year 2017 such
individuals, AOPs or
Company shall also
presents accounts /
audited accounts and
documents for
conduct of audit of
income tax affairs for
that tax year.
Provided further that the provisions of sub-section (2) shall not

apply
(a) to a company, if return of income tax alongwith audited
accounts or final accounts, as the case may be, for the
relevant tax year are filed by the company electronically
during the said period of forty-five days; and
(b) if the company presents accounts and documents for
conducting audit of its income tax affairs for that tax year.;
32) Alternative Dispute Resolution [Section 134A]

SECTION
134A
COMMENTS
With a view to improve the Alternate
(2) The Board after examination of the application of
Dispute
Resolution
mechanism,
an aggrieved person, shall within sixty days of receipt following amendments have been
of such application in the Board appoint a committee introduced:
consisting of an officer of Inland Revenue not below
the rank of Commissioner and two persons from a Alternate
Dispute
Resolution
9[panel comprising of Chartered or Cost Accountants, committee
would
include
a
Advocates, Income Tax Practitioners or reputable Commissioner Inland Revenue instead
taxpayers for the resolution of the hardship or of Additional Commissioner Inland
Revenue;
dispute.
Provided that if such order is not passed

within
the
aforesaid
period,
recommendations of the committee shall be
treated to be an order passed by the Board
under this sub-section.
- In case order is not passed by the

Board
within
90
days,
the
recommendation of the committee
shall be treated as an order passed by
the Board.
Page
29
(4) The Board may, on the recommendation of

the committee, pass such order, as it may deem - Board is required to pass an order on
the recommendation of the Committee
appropriate within ninety five days of the receipt within 90 days instead of 45 days; and
of recommendations of the Committee;
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33) Recovery of tax from persons holding money on behalf of a taxpayer

[Section 140]
SECTION
140
(1) For the purpose of recovering any tax due by a taxpayer, the
Commissioner may, by notice, in writing, require any person
(a) owing or who may owe money to the taxpayer; or
(b) holding or who may hold money for, or on account of the
taxpayer;
(c) holding or who may hold money on account of some other
person for payment to the taxpayer; or
(d) having authority of some other person to pay money to the
taxpayer,
to pay to the Commissioner so much of the money as set out in the
notice
by
the
date set out in the notice;
Provided that the Commissioner shall not issue

notice under this sub-section for recovery of any tax
due from a taxpayer if the said taxpayer has filed an
appeal under section 127 in respect of the order
under which the tax sought to be recovered has
become payable and the appeal has not been
decided by the Commissioner (Appeals), subject to
the condition that 25% of the said amount of tax due
has been paid by the taxpayer.
COMMENTS
In order to curb the practice of
taking
coercive
measures
including freezing of bank
accounts even in those cases
where the matter is subjudice in
appeals, an amendment is
made to section 140 whereby
no action under the said
provision will be taken if the
appeal filed by the taxpayer
relating to such tax is pending
before the Commissioner Appeals
subject
to
the
condition that 25% of the said
tax is paid by the taxpayer. This
also means that if 25% of
demand has been paid, there
cannot be recovery by way of
freezing of bank accounts.
In cases where the taxpayer
would not be willing to pay 25%
of the said tax, he will remain
entitled to approach the
Commissioner - Appeals / High
Court for stay of full demand.
34) Advance tax paid by the taxpayer [Section 147]

SECTION
147
in section 147,
(a) in sub-section (4), in component B, for semicolon a full
stop shall be substituted and thereafter, the following
explanation shall be added, namely:-
Page
30
Explanation.- For removal of doubt it is clarified that tax assessed

includes tax under sections 113 and 113C.
(4AA) Tax liability under section 113 and 113C shall also be taken into
account while working out payment of advance tax liability under this
section.
(6A) Notwithstanding anything contained in this section, where the
taxpayer is a company or an association of persons, advance tax shall be
payable by it in the absence of last assessed income or declared
turnover also. The taxpayer shall estimate the amount of advance tax
payable on the basis of quarterly turnover of the company or an
association of persons, as the case may be, and thereafter pay such
amount after,
(a)
taking into account tax payable under section 113 and 113C as
provided in sub-section (4AA); and
COMMENTS
The
proposed
amendment purpose
to
add
an
explanation to clarify
that tax assessed for
calculation
of
Advance
Tax
includes
alternate
Corporate Tax and
amend the section
accordingly.
However, presently
advance
tax
payment for alternate
corporate tax has
been required by the
tax department from
the corporate sector
(where applicable) at
the time of issuance
of
exemption
certificates.
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35) Advance Tax from Provincial sales tax registered person [Section 147A]
SECTION
147A
(1) Every provincial sales tax registered person shall be liable

to pay adjustable advance tax at the rate of three per cent of
the turnover declared before the provincial revenue authority.
(2) The advance tax under sub-section (1) shall be paid
monthly at the time when sales tax return is to be filed with
the provincial revenue authority.
(3) Advance tax paid under this section may be taken into
account while working out advance tax payable under section
147.
(4) The provisions of this Ordinance shall apply to any
advance tax due under this section as if the amount due were
tax due under an assessment order.
(5) A taxpayer who has paid advance tax under this section
for a tax year shall be allowed a tax credit for that tax in
computing the tax due by the taxpayer on the taxable income
of the taxpayer for that year.
(6) A tax credit allowed for advance tax paid under this
section shall be applied in accordance with sub-section (3) of
section 4.
(7) A tax credit or part of a tax credit allowed under this
section for a tax year that is not able to be credited under
sub-section (3) of section 4 for the year shall be refunded to
the taxpayer in accordance with section 170.
(8) This section shall not apply to a person who was filer on
the thirtieth day of June of the previous tax year.
COMMENTS
Tax collection from
such non-filers has
now been substituted
by a new section
147A. Under the new
mechanism, monthly
adjustable advance
tax at 3% of turnover
will be payable by the
non-filer of FBR, who
is registered with
provincial
revenue
authority.
Advance
tax
paid
under
section 147A will be
payable at the time
when provincial sales
tax return is filed, and
the tax so paid will be
taken into account
while working out
advance tax payable
under section 147 of
the Ordinance. The
requirement to pay
advance tax will not
be applicable on a
person who was filer
on 30th June of the
previous tax year.
Practical application
of
this
provision
would have to be
prescribed.
36) Dividend [Read 1st Schedule With Section 150]

SECTION
Page
31
150
COMMENTS
Withholding tax rate
In the first proviso, for the Table the following shall be
for dividend under
substituted, namely:this section has
been proposed to
increase to 20% in
Person
Stock
Money market fund, income fund case of non filer,
Fund
or REIT scheme or any other fund however for filer it
will remain at 12.5%.
Filer
Non- Filer
(1)
(2)
(3)
(4)
Individual
10%
10%
15%
Company
10%
25%
25%
AOP
10%
10%
15%
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37) Payments to non-residents [SECTION 152]

SECTION
152
(2A) Every prescribed person making a payment in

full or part including a payment by way of advance to
a permanent establishment in Pakistan of a nonresident person
(i) for the sale of goods except where the sale is
made by the importer of the goods and tax under
section 148 in respect of such goods has been
paid and the goods are sold in the same condition
as they were when imported
in paragraph (1), for the expression "6% of the

gross amount payable" the expression "7% of
the gross amount payable in case a person
is a filer and 12% in case the person is a
non-filer"
in paragraph (6),-(i) for sub-paragraph (ii),

the following shall be substituted, namely:"(ii) in case a person is a filer, 7% of the
gross amount payable and 12% if the
person is a non-filer."; and
(ii) sub-paragraph (iii) shall be omitted;";
COMMENTS
The rate of withholding tax on
payments to non-residents for
execution of certain contracts and
advertisement services rendered by
TV Satellite channels is presently
prescribed at 6% irrespective of the
filer status. Now, separate rates of
7% and 12% are prescribed for filers
and non-filers respectively. Similarly,
payments
to
Permanent
Establishments of non-residents for
execution of contracts, sale of goods
and services rendered will also be
subject to withholding tax of 7% and
12% for filers and non-filers
respectively.
In order to remove the ambiguity,

section 152 has been amended (in
line with section 153) to exclude the
payments for sale of imported goods
of non-residents from the purview of
withholding tax deduction subject to
the collection of tax at import stage
and supply of goods in similar state.
This is a corrective measure.
38) Payment for foreign produced commercials [Section 152A]

SECTI
COMMENTS
ON
152A
The purpose of the following proposed
after section 152, the following new section shall inserted section is to introduce
be inserted, namely:withholding tax on foreign produced
(1) Every person responsible for making payment
directly or through an agent or intermediary to a
non resident person for foreign produced
commercial
for
advertisement on any television channel or any
other media shall deduct tax at the rate of twenty
percent from the gross amount paid.
(2) The tax deductable under sub-section (1),
shall be final tax on the income of non-resident
person arising out of such payment.
commercials.
Every person responsible for making
payment directly or through an agent or
intermediary to a non resident person
for foreign produced commercial for
advertisement on any television
channel or any other media shall
deduct tax at the rate of 20% from the
gross amount paid.
The tax deductable as above shall be
final tax on the income of non-resident
person arising out of such payment.
Page
32
39) Payments for goods, services and contracts [Section 153]

SECTION
153
AMENDMENTS THROUGH
FINANCE ACT 2016
COMMENTS
in section 153, (a) in sub-section The
objective of amendment
grammatical correction.
is
to
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make

(3),(i) in clauses (b) and (c), the word
and at the end shall be omitted;
(ii) in clause (d) for full stop at the
end a semicolon and the word
;and shall be substituted and
thereafter the following new clause
shall be added, namely:-
(e) tax deducted under clause (b)

of sub-section (1) by person
making payments to electronic
and print media for advertising
services shall be final tax with
effect from the 1st July, 2016.; and
The purpose of the proposed amendment is to

make tax deducted for advertising services a final
st
tax with effect from 1 July, 2016 and omission of
clause (e) of sub section (5) of this section which
allowed option of self-withholding to cotton ginners.
Electronic and Print Media
It is proposed that tax deducted (now proposed
1.5% as compared to last year 1%) on account of
payment to electronic and print media for
advertising services shall be Final Tax from tax
year 2017 as the same was under normal tax
regime last year.
Cotton Ginners
Relaxation was granted to cotton ginners to
deposit the amount equal to Tax deductible in
the Government Treasury by themselves. Now,
the same concession is proposed to be omitted.
Fast
moving
consumer
goods
[Read Division III, Part III of 1st Schedule]
The bill proposes to include withholding tax in
the case of the supplies made by the
distributors of fast moving consumer goods. FMCG
was defined in Finance Act 2015. It is proposed
that withholding tax @ 3% of the gross amount
payable, if the supplier is a company and @ 3.5% if
the supplier is other than a company shall be
collected.
in sub-section (5), clause (e) shall To make technical correction by sub-section (5),
clause (e).
be omitted;
40) PRIZES AND WINNINGS [READ 1ST SCHEDULE WITH SECTION 156]
SECTION
156
AMENDMENTS THROUGH
FINANCE ACT 2016
C OMMENTS
Withholding tax rate for prizes and winnings under
this section has been proposed to increase to 20%
in case of non filer, however for filer it will remain
at 15%.
41) Furnishing of information by financial institutions including banks [Section

165B]
SECTION
Page
33
165B

(1) Notwithstanding anything contained in any law for the
time being in force including but not limited to the Banking
Companies Ordinance, 1962 (LVII of 1962), the Protection
of Economic Reforms Act, 1992 (XII of 1992), the Foreign
Exchange Regulation Act, 1947 (VII of 1947) and any
regulations made under the State Bank of Pakistan Act,
1956 (XXXIII of 1956) on the subject, every financial
institution shall make arrangements to provide information
regarding non-resident persons to the Board in the
COMMENTS
The purpose of the proposed
amendment
is
to
amend
conditions provided in this
section with reference to section
216.
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prescribed form and manner for the purpose of automatic

exchange of information under bilateral agreement or
multilateral convention.
(2) All information received under this section shall be
used only for tax and related purposes and kept
confidential.]
42) Tax collected or deducted as a final tax [Section 169]

SECTION
169

COMMENTS
The purpose of the following proposed new subin section 169, after sub-section section (4) to this section is to clarify that where
(3), the following new sub- separate rates for filers and non filers are given in
section shall be added, namely:case of final taxation then the excess tax for non filers
will be adjustable.
(4) Where the tax collected or

deducted is final tax under any
provision of the Ordinance and
separate rates for filer and nonfiler have been prescribed for the
said tax, the final tax shall be the
tax rate for filer and the excess
tax deducted or collected on
account of higher rate of nonfiler shall be adjustable in the
return filed for the relevant tax

year.
Where the tax collected or deducted is final tax under

any provision of the Ordinance and separate rates for
filer and non-filer have been prescribed for the said
tax, the final tax shall be the tax rate for filer and the
excess tax deducted or collected on account of higher
rate of non-filer shall be adjustable.
In the Bill, it was proposed that where the tax
collected or deducted is final tax and separate
rates are prescribed for filer and non-filer, the
final tax shall be the tax rate for a filer and the
excess tax deducted or collected on account of
higher rate of a non-filer shall be adjustable.
While accepting this proposal, a clarificatory
amendment has been made by adding in the
relevant section that such excess collection of tax
will be adjustable only in the tax return filed for
the relevant tax year.
43) REFUNDS [Section 170]

SECTION
Page
34
170

(1) A taxpayer who has paid tax in excess of the amount which the
taxpayer is properly chargeable under this Ordinance may apply to
the Commissioner for a refund of the excess.
COMMENTS
The
proposed
amendment seeks to
extend the time period
for applying for Income
[(1A) Where any advance or loan, to which sub-clause (e) of clause Tax refunds under this
(19) of section 2 applies, is repaid by a taxpayer, he shall be entitled to three years instead of
to a refund of the tax, if any, paid by him as a result of such advance two tax years.
or loan having been treated as dividend under the aforesaid
provision.
(2) An application for a refund under sub-section (1) shall be
(a)
made in the prescribed form;
(b)
verified in the prescribed manner; and
(c)
made within three years of the later of (i)
the date on which the Commissioner has issued the
assessment order to the taxpayer for the tax year to which the
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refund application relates; or

(ii)
the date on which the tax was paid.
44) Offences and penalties [Section 182]

SECTION
182
in section 182, in the table, in column (1), against S.No.1A, (a) in the second column for the comma, word and figure or
165A the word and figures , 165A or 165B shall be
inserted;
(b) in the fourth column, after the word and figure and
165A the comma, word and figure , 165A and 165B shall
be added;
COMMENTS
The purpose of this
proposed amendment is
to provide penalty for
default in furnishing of
information by financial
institutions
including
banks as required under
section 165B.
45) Prosecution for unauthorized disclosure of information by a public servant

[Section 198]
SECTION
198
A person who discloses any particulars in contravention of

sub-section 1B of section 107 or section 216 shall
commit an offence punishable on conviction with a fine [of
not less than five hundred thousand rupees] or
imprisonment for a term not exceeding [one year], or both.
COMMENTS
amendment is to provide for
persecution for default made by
a public servant for unauthorized
disclosure of information under
section 107(1B).
46) Cash withdrawal from a bank. [Section 231A]

SECTION
231A

2016
COMMENTS
Through
proposed
amendment
an
in section 231A, after sub-section (1), the explanation added to sub section (1) of
following explanation shall be added, this section to clarify that the withholding
namely:on cash withdrawals are applicable on
aggregate amount, if exceeding Rs.
Explanation.- For removal of doubt, it is 50,000, from all the bank accounts in one
clarified that the said fifty thousand rupees day.
shall be aggregate withdrawals from all the
bank accounts in a single day.
47) Advance tax on private motor vehicles [Section 231B]

SECTION
Page
35
231B

2016
COMMENTS
(a) in sub-section (1), for full stop at the end

a colon shall be substituted and
thereafter the following new proviso
shall be added, namely:-
The purpose of this proposed

amendment is to make a technical
correction and to add a proviso to sub
section (1) of this section to exempt the
vehicles from advance tax on
registration after 5 years of the date of
first registration.
Provided that no collection of advance

tax under this sub-section shall be made
The purpose of this proposed

amendment is to add following new
in section 231B,
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after five years from the date of first

registration as specified in clauses (a), (b)
and (c) of sub-section (6).; and
(b) after sub-section (1), the following
new sub-section shall be added,
namely:
sub-section (1A) in this section to

stipulate that every leasing company or
institution leasing a motor vehicle shall
also deduct advance tax.
Every leasing company or a scheduled
bank or an investment bank or a
development finance institution or a
modaraba shall, at the time of leasing
of a motor vehicle to a non filer, collect
advance tax at the rate of 3% of the
value of the motor vehicle.
(1A) Every leasing company or a

scheduled bank or an investment bank or
a development finance institution or a
modaraba shall, at the time of leasing of
a motor vehicle to a non-filer, collect This proposed sub section (1A) has
advance tax at the rate of three per cent been omitted by Finance Act, 2016.
of the value of the motor vehicle.
48) Brokerage and Commission [Read 1st Schedule with Section 233]
SECTION
AMENDMENTS THROUGH
FINANCE ACT 2016
COMMENTS
The bill has proposed to include Life Insurance
Agents in the ambit of withholding, where commission
received is less than Rs.500,000 p. a. Withholding tax
shall be 8% for filer & 12% for non filer. If commission is
equal or exceeds Rs. 500,000, the withholding rate shall
be 12% for filer & 15% for non filer.
233
49) Collection of tax by a stock exchange registered in Pakistan [Read First

Schedule with Section 233A]
SECTION

ACT 2016
COMMENTS
The
bill
has proposed
to
increase
withholding tax on sale & purchase value
of shares from 0.01% to 0.02%.
233A
50) Electricity Consumption [Read 1st Schedule with Section 235]

SECTION

ACT 2016
COMMENTS
The bill has proposed to increase withholding
tax from 10% to 12% on commercial electricity
consumption charges where bill exceeds Rs.
100,000 per month.
235
51) Advance Tax on Domestic Electricity Consumption [Read 1st Schedule with
Section 235A]
SECTION
Page
36
235a
AMENDMENTS THROUGH
FINANCE ACT 2016
COMMENTS
The bill has proposed to reduce the minimum monthly
domestic electricity bill if less than Rs. 75,000
(previously Rs. 100,000) then 0% tax shall be charged.
If the monthly bill is equal or more than Rs. 75,000 then
7.5% of the monthly bill amount is already fixed.
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52) Advance Tax at the time of Sale by Auction [Section 236A]

SECTION
236A

2016
COMMENTS
in section 236A, in sub-section (2), after full The objective of amendment is to make
stop at the end, the following new sub-section grammatical correction.
shall be added, namely:(3) Notwithstanding the provisions of subsection (2), tax collected on a lease of the right
to collect tolls shall be final tax.;

amendment is to add a new sub
section (3) in this section to make it as
non obstante and the tax collected on
lease of right to collect toll, a final tax.
53) Advance Tax on sale or transfer of immovable Property [Section 236C]

SECTION

ACT 2016
236C
in section 236C, after sub-section (2), the

following new sub-section shall be added,
namely:-
COMMENTS
The purpose of the proposed amendment is
to provide non application of advance tax
under this section if the immovable property
is held for a period exceeding five years.
(3) Advance tax under sub-section (1) [Read with 1st Schedule]
shall not be collected if the immovable Further, the bill has proposed to doubled
property is held for a period exceeding withholding tax as follows:
2016
2017
five years.;
Filer
0.5%
1%
Non Filer
1%
2%
54) Advance Tax on Foreign-produced TV plays and serials. [Section 236E]

AMENDMENTS THROUGH
FINANCE ACT 2016
236E
(1) Any licensing authority certifying

any foreign TV drama serial or a play in
any language other than English, for
screening and viewing on any channel,
shall collect advance tax at the rates
specified in Division XII of Part IV of the
First Schedule.
COMMENTS
section 236E shall be omitted;

The purpose of the proposed amendment is to
amend this section to broaden the scope of foreign
TV plays dubbed in any language other than
English that are subject to withholding tax.
Section 236E inserted through Finance Act 2013
whereby adjustable advance tax was required to
be collected by the licensing authority from foreign
produced TV plays has now been deleted.
However, PEMRA will now be required to collect
adjustable advance tax under section 236F at the
rate of 50% of the permission fee or renewal fee
from every TV Channel on which foreign TV drama
serial or a play in any language, other than
English, is screened or viewed. Modalities and
effects of the same need to be examined.
Page
37
SECTION
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55) Advance tax on cable operators and other electronic media. [Read 1st
Schedule with Section 236F]
SECTION
236F
The rate of tax to be collected under section 236F in the case of Cable
Television Operator shall be as follows:
License Category as provided in Tax on License Fee
Tax on Renewal
PEMRA Rules
H
H-I
H-II
R
B
B-1
B-2
B-3
B-4
B-5
B-6
B-7
B-8
B-9
B-10
Rs. 7,500
Rs. 10,000
Rs. 25,000
Rs. 5,000
Rs. 5,000
Rs. 30,000
Rs. 40,000
Rs. 50,000
Rs. 75,000
Rs. 87,500
Rs. 175,000
Rs. 262,500
Rs. 437,500
Rs. 700,000
Rs. 875,500
C OMMENTS
Rs. 10,000
Rs. 15,000
Rs. 30,000
Rs. 12,000
Rs. 40,000
Rs. 35,000
Rs. 45,000
Rs. 75,000
Rs. 100,000
Rs. 150,000
Rs. 200,000
Rs. 300,000
Rs. 500,000
Rs. 800,000
Rs. 900,000
the following new paragraph shall be inserted, namely:"(3) In addition to tax collected under paragraph (2) Pakistan Electronic
Media Regulatory Authority shall collect tax at the rate of fifty per cent
of the permission fee or renewal fee, as the case may be, from every TV
Channel on which foreign TV drama serial or a play in any language,
other than English, is screened or viewed.";
56) Advance Tax on Purchase or Transfer of Immovable Property [Read 1st

Schedule with Section 236K]
SECTION
236K

2016
The bill has proposed to doubled the
withholding tax as follows:
2016
2017
Filer
1%
2%
Non Filer
2%
4%
COMMENTS
There shall be no tax where the
value of immoveable property does
not exceed Rs.3 million.
Page
38
57) Advance Tax under this Chapter [Section 236O]

SECTION
AMENDMENTS THROUGH
FINANCE ACT 2016
236O
The advance tax under this chapter

shall not be collected or deducted
from
COMMENTS
The purpose of this proposed amendment is to
make a technical correction by including tax
already deducted transactions as non deductible
tax again in order to avoid double taxation.
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58) Advance Tax on Banking Transactions otherwise than through Cash

[Section 236P]
SECTION

ACT 2016
236P
in section 236P, after sub-section (3), the

following explanation shall be added,
namely:Explanation.- For removal of doubt, it is
clarified that the said fifty thousand
rupees shall be aggregate transfers from
all the bank accounts in a single day.
COMMENTS
The purpose of the proposed amendment is
to add an explanation to sub section (3) of
this section to clarify that the tax deduction
will be applicable on aggregate amount, if
exceeding Rs. 50,000, from all the bank
accounts in one day.
59) Collection of tax by Pakistan Mercantile Exchange Limited (PMEX). [Section

236T]
SECTION
236T
AMENDMENTS THROUGH
FINANCE ACT 2016
section 236T shall be omitted
COMMENTS
The purpose of proposed amendments is to delete
section 236T to provide new regime of collection
of tax by PMEX (covered now under section 37A)
as above, insert new section 236U to introduce
taxation of Insurance Premium, insert new
section 236V for taxation of extraction of minerals
and new section 236W for taxation of non-filers
registered with provincial sales tax authorities.
60) Advance tax on insurance premium [Section 236U]

SECTION
236U
(1) Every insurance company shall collect

advance tax at the time of collection of
insurance premium from non-filers in respect of
general insurance premium and life insurance
premium, at the rates specified in Division XXV
of Part IV of the First Schedule.
(2) Insurance premium collected through agents
of the insurance company shall be treated to
have been collected by the insurance company.
COMMENTS
(3) Advance tax collected under this section

shall be adjustable.
Page
39
Every insurance company shall

collect advance tax at the time of
collection of insurance premium
from non-filers 4% in respect of
general insurance premium and
life insurance premium (1% of
life
insurance
premium
exceeding Rs. 200,000 per
annum) and 0% for others.
Insurance premium collected
through agents of the insurance
company shall be treated to
have been collected by the
insurance company.
Advance tax collected under this
section shall be adjustable.
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61) Advance tax on extraction of minerals. [Section 236V]

SECTION

2016
236V
(1) There shall be collected advance tax at

the rate specified in Division XXVI of PartIV of the First Schedule on the value of
minerals extracted, produced, dispatched
and carried away from the licensed or
leased areas of the mines.
(2) Advance tax under sub-section (1) shall be

collected by the provincial authority
collecting royalty per metric ton from the
lease-holder of mines or any person
extracting minerals.
(3) Advance tax collected under this section

shall be adjustable.
(4) The value of the minerals for the purpose
of this section shall be as specified by the
Board.
COMMENTS
There shall be collected advance

tax at the rate of [5% for non filers
and 0% for filers] on the value of
minerals extracted, produced,
dispatched and carried away from
the licensed or leased areas of the
mines.
Advance tax as above shall be
collected by the provincial
authority collecting royalty per
metric ton from the lease-holder
of mines or any person extracting
minerals.
Advance tax collected under this
section shall be adjustable.
The value of the minerals for the
purpose of this section shall be as
specified by the Board.
62) Advance tax from provincial sales tax registered person. [Section 236W]
SECTION
C OMMENTS
236W
(1) Every provincial revenue authority shall collect

advance adjustable tax at the rate of three per cent of the
turnover from a non-filer who is a provincial sales tax
registered person.
The proposed section

236W
omitted
by
Finance Act, 2016
(2) The advance tax under sub-section (1) shall be

collected along with the sales tax return filed with the
provincial revenue authority.
3) The provincial revenue authority shall not accept return
for sales tax unless the tax required to be collected under
this section has been collected or deposited.;
63) Amendments in Second Schedule [Part I & II]

PART CLAUSE
Page
40

ACT 2016
13
in clause (13), in sub-clause (iii), for the
word "two" the word "three" shall be
substituted;
COMMENTS
Any payment received by an
employee on his retirement, or by
his heirs in the event of his death,
by way of gratuity from an
Approved
Unfunded
Gratuity
Scheme is presently exempt upto
Rs. 200,000. Through the Act, this
limit has been increased to Rs.
300,000.
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I
66
in clause (66), sub-clause (xviii) shall be

omitted
98
Any income derived by any Board or other

organization established by Government in
Pakistan for the purposes of controlling,
regulating or encouraging major games and
sports recognised by Government
103A
[(103A) Any income derived from intercorporate dividend within the group
companies entitled to group taxation under
section 59AA subject to the condition that
return of the group has been filed for the tax
year.
126A
for clause (126A), the following shall be

substituted, namely:(126A) Income derived by China Overseas
Ports Holding Company Limited, China
Overseas Ports Holding Company Pakistan
(Private) Limited, Gawadar International
Terminal Limited, Gawadar Marine Services
Limited and Gawadar Free Zone Company
Limited from Gawadar Port operations for a
period of twenty-three years, with effect
from the sixth day of February, 2007.
126AA
(126AA) Profit and gains derived by a

taxpayer from businesses set up in the
Gawadar Free Zone Area for a period of
twenty three years with effect from the
first day of July, 2016.
126AB
(126AB) Profit on debt derived by(a) any foreign lender; or

(b) any local bank having more than 75
per cent shareholding of the
Government or the State Bank of
Pakistan,
Page
41
under a Financing Agreement with

the China Overseas Ports Holding
Company Limited , for a period of
twenty three years with effect from
the first day of July, 2016.;
I
126AC
(126AC) Income derived by contractors

The five year exemption for Micro
Finance Banks has been expired
hence exemption period in tax year
2013.
The exemption under this clause is
proposed to be restricted only to
the
Board
or Organization
established by the Government.
The exemption under this clause is
proposed to be restricted only to
the Board or Organization established
by the Government.
Presently income derived by China

Overseas Ports Holding Company Limited
from Gawadar Port operations is exempt
for 23 years. The Bill now proposes to also
extend the above exemption to its
following four operating companies: China Overseas Ports Holding
Company (Private) Limited
Gawadar International Limited
Gawadar Marine Services Limited and
Gowanda Free Zone Company Limited.
In order to bring investment in
Pakistan and industrial growth the
Govt. of Pakistan has developed
another Free Trade Zone. To achieve
the aforesaid objective the bill has
proposed exemption to profit and
gains derived by a taxpayer from
businesses set up in the Gawadar
Free Zone Area for a period of 23
years with effect from the first day
of July, 2016.
In order to support clause (126A) an
exemption on profit on debt to the
lenders of China Overseas Port
Holding Company Ltd. the bill has
proposed to insert this new clause to
exempt the income of Profit on debt
derived by any foreign lender or any
local bank having more than 75%
shareholding of the Government or the
State Bank of Pakistan, under
a
Financing Agreement with the China
Overseas Ports Holding Company
Limited.
In order to support clause (126A) a
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and subcontractors of China Overseas
Ports Holding Company Limited, China
Pakistan (Private) Limited, Gawadar
International Terminal Limited, Gawadar
Marine Services Limited and Gawadar
Free Zone Company Limited from
Gawadar Port operations for a
period of twenty years, with effect from
the first day of July, 2016.; and
126AD
(1) Any income derived by China

Overseas Ports Holding Company Limited
being
dividend
received
from
China Overseas Ports Holding Company
Pakistan (Private) Limited , Gwadar
International Terminal Limited Gwadar
Marine Services Limited and Gwadar Free
Zone Company Limited, for a period of
first
day
of
July,
2016.
(2) Any income derived by China
Pakistan (Private) Limited being dividend
received from, Gwadar International
Terminal Limited Gwadar Marine Services
Limited
and
Gwadar
Free
Zone Company Limited , for a period of
first day of July, 2016.
Page
42
II
133
(133) Income from exports of computer

software or IT services or IT enabled services
th
upto the period ending on 30 day of June,
2019;
Provided that eighty per cent of the

export proceeds is brought into Pakistan
in foreign exchange remitted from
outside Pakistan through normal banking
channels.;
for clause (3), the following shall be
substituted, namely:(3) (a) The tax in respect of income from
services rendered outside Pakistan and

new clause proposed to be inserted
for exemption on income derived by
contractors and sub contractors of
China Overseas Port Holding
Company Limited,
China Overseas Ports Holding
Company Limited,
Company Pakistan (Private) Limited,
Gawadar International Terminal
Limited,
Gawadar Marine Services Limited
and
Gawadar Free Zone Company
Limited
from
Gawadar
Port
operations
for a period of 23 years, with effect
from the first day of July, 2016.
Any income derived by China
Limited being dividend received from
Company
Pakistan
(Private)
Limited,
Gwadar International Terminal
Limited
Gwadar Marine Services Limited
and
Gwadar Free Zone Company
Limited.
Any income derived by China
Pakistan (Private) Limited being
dividend received from,
Gwadar International Terminal
Limited Gwadar Marine Services
Limited and
Gwadar Free Zone Company
Limited.
The bill proposes to extend the

exemption period up to June 2019
which was expiring on June 30, 2016.
However, the bill also proposes that
the exemption shall only be available
subject to the condition that 80% of
the export proceeds is brought into
Pakistan into foreign exchange
through normal banking channel.
Tran
spor
t
Serv
For
services
other
than
For
constr
uction
contra
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construction contracts executed outside
Pakistan shall be charged at the rates as
specified in sub-clause (b), provided that
receipts from services and income from
contracts are brought into Pakistan in
foreign exchange through normal
banking channel.
(b) The rates in respect of income from
services rendered outside Pakistan shall
be 50% of the rates as specified in
clause (2) of Division III of Part III of the
First Schedule and the rates in respect of
contracts executed outside Pakistan shall
be 50% of the rates as specified in clause
(3) of Division III of Part III of the First
Schedule.;
after clause (3), substituted as aforesaid,
the following new clause shall be
inserted, namely:-
Page
43
(3B) The income of Pakistan Cricket Board

derived from sources outside Pakistan
including media rights, gate money,
sponsorship fee, in-stadium rights, outstadium rights, payments made by
International Cricket Council, Asian
Cricket Council or any other Cricket Board
shall be taxed at a rate of four per cent of
the gross receipts from such sources:
Provided that Pakistan Cricket Board may

opt to pay tax at the rate of four per cent
of the gross receipts from tax year 2010
Corpora
te
Filer
Corpora
te - Non
Filer
Non
corporat
e- Filer
Non
corporat
e- non
filer
ices
transport
services
cts
1%
4%
3.5%
1%
6%
5%
1%
5%
3.75
1%
7.5%
5%
At present the tax in respect of

income from services rendered and
construction
contracts
outside
Pakistan
are charged to tax at
reduced rate of 1% of the gross
receipts, provided that receipts from
services and income from contracts
are brought into Pakistan in foreign
exchange through normal banking
channel.
The bill has proposed that in respect of
income from services rendered outside
Pakistan shall be 50% of the rates as
specified in clause (2) of Division III of
Part III of the First Schedule. The
position under the amended clause
shall be as under.
A new proposed clause has been

inserted with the intention that the
income of PCB derived from sources
outside Pakistan including media
rights, gate money, sponsorship fee,
in-stadium rights, out-stadium rights,
payments made by International
Cricket Council, Asian Cricket Council
or any other Cricket Board shall be
taxed @ 4% of the gross receipts from
such sources:
The above option may be exercised by
PCB from tax year 2010 and onwards
but subject to the condition that PCB
has to withdraw its appeals,
references and petitions on the issue
of tax rate pending before any
appellate forum or tax authority and on
payment till 30-6-2016 of its all the
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and onwards:

outstanding tax liability payable under
this clause up to tax year 2015.
Provided further that this option shall be

available subject to withdrawal of
appeals, references and petitions on the
issue of tax rate pending before any
appellate forum or tax authority:
Provided further that the outstanding tax
liability payable under this clause up to
tax year 2015 is paid by 30th June, 2016.;
II
18B
The rate of tax as specified in Division

II of Part 1 of the First
Schedule shall be reduced by 2% in
case of a company whose shares are
traded on stock exchange if:
(a) it fulfils prescribed shari'ah
compliant criteria approved by State
Bank of Pakistan, Securities and
Exchange Commission of Pakistan and
the Board;
(b) derives income from manufacturing
activities only;
(c) has declared taxable income for the
last three consecutive tax years; and
(d) has issued dividend for the last five
consecutive tax years.
A new clause (18B) is now inserted in

Part II of the Second Schedule
whereby the corporate rate of tax
specified in First schedule will be
reduced by 2% in case of listed
companies
subject
to following
conditions:
(a) it fulfils prescribed shari'ah
compliant criteria approved by State
Bank of Pakistan, Securities and
Exchange Commission of Pakistan
and
the
Board;
(b) derives income from manufacturing
activities
only;
(c) has declared taxable income for the
last three consecutive tax years; and
(d) has issued dividend for the last five
consecutive
tax
years.
It appears that shari'ah compliant
criteria is being developed jointly by
the regulators.
Page
44
64) Amendments in Second Schedule [Part IV]

PART
CLAUSE
IV
11A

ACT 2016
in clause (11A), in sub-clause (xxv), for full

stop at the end a semicolon and the word
; and shall be substituted and thereafter
the
following new sub-clauses shall be added,
namely:(xxvi) China Overseas Ports Holding
Company Limited, China Overseas Ports
Holding Company Pakistan (Private)
Limited, Gwadar International Terminal
Limited, Gwadar Marine Services Limited
and Gwadar Free Zone Company 51
COMMENTS
In order to support investment in
Pakistan a new sub clause proposed
to be inserted for non application of
minimum tax under section 113 to
the followings
China Overseas Port Holding
Company Limited,
Company Limited,
Company Pakistan (Private)
Limited,
Gawadar International Terminal
Limited,
Gawadar
Marine
Services
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Limited for a period of twenty three years,
with effect from the sixth day of February,
2007.
(xxvii)
companies,
qualifying
for
exemption under clause (126M) of Part-I
of this Schedule, in respect of profits and
gains derived from a transmission line
project.
IV
11B
and
11C
in clauses (11B) and (11C), the words or

section 59B shall be omitted;
IV
38A
after clause (38A), the following new

clause
shall
be
inserted,
namely:(38AA) The provisions of section 150 shall
not apply to China Overseas Ports Holding
Company Limited, China Overseas Ports
Holding Company Pakistan (Private)
Limited, Gwadar International Terminal
Limited, Gwadar Marine Services Limited
and Gwadar Free Zone Company Limited
for a period of twenty-three years.
IV
57
in clause (57),
Page
45
(a) for the expression sections 113

and the word section shall
substituted; and
(b) for the second proviso the
following shall be substituted,
namely:Provided further that minimum tax
under section 113 shall be 0.5% upto
the tax year 2019 and one per cent

Limited and
Gawadar Free Zone Company
Limited from Gawadar Port
operations
for a period of 23 years, with
th
effect from the 6 day of February,
2007.
Transmission line project
Through Finance Act, 2015 a new
clause (126M) was inserted in Part I
of the First Schedule in order to
provide exemption on profits and
gains derived by a taxpayer from a
transmission line project set up in
Pakistan on or after the 1st day of
July, 2015 for a period of ten years.
Now Finance Bill 2016 has proposed
that
companies
qualifying for
exemption Part-I from taxable
income under clause (126M) in
respect of profits and gains derived
from a transmission line project
shall also exempt from minimum tax
u/s 113.
The exemption of inter corporate
dividend and profit on debt available
to companies opting for group relief
under section 59B has been
proposed to be withdrawn.
In order to support newly proposed
clause (126AD) in Part I of the First
Schedule the aforesaid clause and
therefore accordingly proposal is to
insert a new clause by stating that
the provisions of section 150 shall
not apply to China Overseas Ports
Holding Company Limited, China
Pakistan (Private) Limited, Gwadar
International
Terminal
Limited,
Gwadar Marine Services Limited and
Gwadar Free Zone Company Limited
for a period of 23 years.
The provisions of minimum tax
sections113 and payments for
withholding tax provisions under
section 153 shall not apply to
companies
operating
Trading
Houses on fulfillment of certain
conditions.
The bill proposes to bring trading
houses under minimum tax under
section 113 with reduced rate of
0.5% up to tax year 2019 and 1%
thereafter.
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thereafter.
IV
59(i)
in clause (59), sub-clause (i) shall be

omitted;
IV
72A
The provisions of clause (l) and section 21,

sections 113 and 152 shall not apply in case of
a Hajj Group Operator in respect of Hajj
operations provided that the tax has been paid
at the rate of Rs. 3,500 per Hajji for the tax
year 2013 and Rs. 5,000 per Hajji for the tax
year 2014 [to 2016] in respect of income from
Hajj operations.]
The withholding provisions under

section 151 were not applicable in
respect of profit or interest paid
on a Term Finance Certificate held
by a company which has been
issued on, or after, the first day of
July, 1999;
The bill proposes to withdraw the
aforesaid exemption.
The provisions of section 21(l),
sections 113 and 152 shall not apply
in case of a Hajj Group Operator in
respect of Hajj operations provided
that the tax has been paid at the rate
of Rs.3,500 per Hajji for the tax year
2013 and Rs.5,000 per Hajji for the
tax year 2014 and 2015 in respect
of income from Hajj operations.
It is proposed that the aforesaid
concession be extended also for Tax
year 2016 on payment of Rs.5,000
per Hajji for the tax year 2016 in
respect of income from Hajj
operations.
IV
72B
in clause (72B), in the proviso, for full stop

at the end, a colon shall be substituted
and thereafter the following new provisos
shall be added, namely:Provided further that the quantity of raw
material to be imported which is sought to
be exempted from tax under section 148
shall not exceed 110 per cent of the
quantity of raw material imported and
consumed during the previous tax year:
Page
46
Provided also that the Commissioner shall

conduct audit of taxpayers accounts
during the financial year in which the
certificate is issued in respect of
consumption, production and sales of the
latest tax year for which return has been
filed and the taxpayer shall be treated to
have been selected for audit under section
214C:
Provided also if the taxpayer fails to
present accounts or documents to the
Commissioner or the officer authorized by
the Commissioner, the Commissioner
shall, by an order in writing, cancel the
The bill seeks to impose further

limitations on the exemption from
withholding tax on imports for self use
by inserting the following provisos in
the aforesaid clause:
Quantity of raw material to be
imported shall not exceed 110%
from previous year.
The taxpayer shall be
deemed to be selected for audit
u/s 214C for the latest tax year.
If the taxpayer fails to
present accounts or documents
to the Commissioner or the
officer
authorized
by
the
Commissioner,
the
Commissioner shall, by an order
in writing, cancel the certificate
issued and shall proceed to
recover the tax not collected u/s
148 for the period prior to such
cancellation
and
all
the
provisions of the Ordinance shall
apply accordingly.
It is worthwhile to mention here that
the Lahore High Court in its recent
judgment has already decided that
clause 72B as null and void.
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certificate issued and shall proceed to

recover the tax not collected under
section 148 for the period prior to 53 such
cancellation and all the provisions of the
Ordinance shall apply accordingly.
IV
82
IV
86
IV
Unnum
bered
IV
94
clause (82) shall be omitted;
in clause (86), in paragraph (a), in subparagraph (iii), for the figure 2017 the
figure 2019 shall be substituted;
in clause (94),(a) for the figure 2016, occurring for the

first time, the figure 2017 shall be
substituted;
(b) after the words and comma
development services, the words IT
services and IT enabled services as defined
in clause (133) of Part I of this Schedule
shall
be
inserted;
and
The provisions of section 116(2) shall

not apply for the tax the tax year
2014 to an individual or a member
of an association of persons whose
last declared or assessed income, or
the declared income for the year is
less than Rs. 1,000,000.
Now Finance Bill 2016 has proposed
to withdraw this facility by omitting this
clause and further the same facility
was also not extended for Tax year
2015.
Presently on fulfillment of specified
conditions immunity is allowed under
section 111 for investment in an
industrial undertaking made by an
individual, AOP and a company that
is now proposed to be extended from
June 2017 to 2019 if the commercial
production commences before 30
June 2019.
The purpose is to make a technical
correction by renumbering clauses
(91), (92) and (93), as clauses (95),
(96), (97) respectively.
The tax deducted under section
153(1)(b) shall be adjustable tax in
case
of
companies
providing
services of freight forwarding, air
cargo,
courier,
man power
outsourcing, hotel, security guard,
software development, IT services
and IT enables services, tracking,
advertising (other by print or
electronic media), share registrar,
engineering or car rentals for the tax
year 2016.
It is now proposed that exemption
granted to companies providing
services as minimum tax should be
extended from 2016 to 2017.
Page
47
(c) in the proviso, for the full stop at the

end a colon shall be substituted and
thereafter the following new proviso shall
Further
proposed
to
insert
be added, namely:development services, words IT
Provided further that for tax year 2017,
the company shall furnish irrevocable
undertaking by November, 2016, to
present its accounts to the Commissioner.
services and IT enabled services as

st
defined in clause (133) of Part I of 1
Schedule and irrevocable option is
furnished to the Commissioner by
November 2016 to furnish its
accounts for the tax year 2016 to the
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Commissioner.
IV
98
"(98) The provisions of section 148 shall

not apply to import of ships and other
floating crafts including tugs, survey
vessels and other specialized crafts
purchased or bare-boat chartered by a
Pakistani entity and flying Pakistani flag:
Provided that exemption under this clause
shall be available up to the year 2020,
subject to the condition that the ships and
crafts are used for the purpose for which
they were procured, and in case such
ships and crafts are used for demolition
purposes, tax collectible under section
148, applicable to ships and crafts
purchased for demolition purposes, shall
be chargeable.
IV
99
The provisions of section 148 shall not

apply to import or acquisition of aircraft on
wet or dry lease by M/s Pakistan
International Airlines Corporation with
effect from 19th March, 2015.
Newly inserted by Finance Act

2016
Collection of withholding tax at import

stage will not be applicable in the
following
cases:
(a) Import of ships and other floating
crafts including tugs, survey vessels
and
other
specialized
crafts
purchased or bare-boat chartered by
a Pakistani entity and flying Pakistani
flag upto the year 2020 subject to the
condition that imports ships, etc are
used for the purpose for which they
were imported. In case of ships and
crafts used for demolition purposes,
the import tax will be applicable.
(b) Import or acquisition of aircraft on
wet or dry lease by PIA with effect
from March 19, 2015. Corresponding
concessions have also been provided
in Sales Tax and Customs Law,
wherever applicable.
65) Amendments in Fourth Schedule

PART
CLAUSE
Page
48
6B

2016
in the Fourth Schedule, for rule 6B, the

following shall be substituted, namely:6B. In computing income under this
Schedule, there shall be included capital
gains on disposal of shares and dividend of
listed companies, vouchers of Pakistan
COMMENTS
In order to compute insurance
business income from capital gains
on disposal of shares and dividend
of listed companies, vouchers of
Pakistan
Telecommunication
corporation, modaraba certificate
or instruments of redeemable
capital and derivative products
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now proposal is that shall be taxed
at rates specified for all other
taxpayers. The rate is proposed to
be correlated with normal tax rates.
Telecommunication corporation, modaraba

certificate or instruments of redeemable
capital and derivative products and shall be
taxed at the rates specified in Division II of
Part I of First Schedule.
66) Amendments in Sixth Schedule

PART
CLAUSE
3a

ACT 2016
in the Sixth Schedule, in Part I, in rule 3, in

clause (a), for the figure 100,000 the
figure 150,000 shall be substituted;
COMMENTS
The limit on contribution made by
any employer when deemed to be
income of the employee is proposed
to be enhanced to Rs. 150,000
from Rs. 100.000 or 1/10 th of the
salary, whichever is lower.
67) Amendments in Seventh Schedule

PART
RULE
7C

ACT 2016
(7C) For tax year 2015 and 2016, the
provisions of section 4B shall apply to
banking companies and shall be taxed at
the rate specified in Division IIA of Part I of
First Schedule.
COMMENTS
Rule 7C, section 4B (super tax for rehabilitation
of temporarily displaced persons) was inserted
by Finance Act 2015, whereby Super Tax was
applied to Banking Companies at 4%. It is
proposed that the same shall be applicable for
tax year 2016 as well.
68) Amendments in Eight Schedule

PART
RULE
Page
49
in the Eighth Schedule in rule 1,

(a) after sub-rule (1), the following new sub-rules
shall be inserted, namely:(1A) Capital gains on disposal of units of open
ended mutual funds and to which section 100B
apply, shall be computed and determined under
this Schedule and tax thereon shall be collected
and deposited by NCCPL in the prescribed
manner;
Provided that second and third proviso in
Division VII of Part I of the First Schedule
regarding capital gains arising on
redemption of securities shall continue to
apply.
(1B) Gain or loss arising to persons through
trading of future commodity contracts on
Pakistan Mercantile Exchange, subject to tax
under section 37A and to which section 100B
apply, shall be computed and determined under
this Schedule and tax thereon shall be collected
and deposited on behalf of taxpayers by NCCPL in
COMMENTS
It has been proposed to
insert new Rule 1(1A) to
provide for taxation of capital
gain on disposal of unit of
open ended mutual fund and
to which section 100B apply
and clause (1B) to provide for
taxation of gain or loss through
trading of future commodity
contract
on
Pakistan
mercantile Exchange.
Proposed to make a
technical reference correction
in Rule 1(2).
Further proposed to amend
Rule 1(3) to add a proviso
regarding
provision
of
information to NCCPL.
It is also proposed add new
sub Rule 1(3A) to bind the
Asset
Management
Companies,
Pakistan
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the
prescribed.;

manner
(b) in sub-rule (2), after the expression (1) the

expression , (1A) and (IB) shall be inserted;
(c) in sub-rule (3), for full stop at the end a colon
shall be substituted and thereafter the following
proviso shall be added, namely:Provided that if the said information is not
furnished under this sub-rule or sub-rule (3A),
NCCPL shall forward the details to the
Commissioner who shall exercise powers under
the Ordinance to enforce furnishing of the said
information including all penalty provisions.; and
Through
Bill,
gain
on
redemption of units of open
ended mutual funds was
subjected to collection of tax
under the mechanism as laid
down in the Eighth Schedule.
For that purpose, it has now
been clarified that a mutual
fund or collective investment
scheme shall continue to
collect capital gains tax at the
prescribed
rates
on
redemption of securities. It
has been noted that separate
rates which were earlier
prescribed for such collection
of tax on capital gains have
been
omitted
due
to
substitution of the relevant
Division.
Page
50
(d) after sub-rule (3), amended as aforesaid, the

following new sub-rule shall be inserted, namely:(3A) The Asset Management Companies, Pakistan
Mercantile Exchange and any other person shall
furnish information when required by NCCPL for
discharging obligations under this Schedule.
mercantile
exchange
and
any other person to furnish
information
required
by
NCCPL.
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2016, RELATED TO SALES TAX ACT 1990
FOR THE TAX YEAR 2017
Page
51
TABLE OF CONTENTS
SR.
1.
2.
3.
4.
5.
PARTICULARS
Cottage industry
Due date
Input tax
Time and manner of payment
Determination of tax liability
6.
Tax credit not allowed
7.
8.
Assessment of tax and recovery of tax not levied or short levied or erroneously
refunded
Exemptions
9.
Returns
10.
Directorate of general of input output co-efficient organization
11.
Offences and penalties
12.
Alternative Dispute Resolution
13.
Transfer of taxable activity or transfer of ownership
14.
Disclosure of information by a public servant
15.
3rd schedule
16.
5th schedule
17.
6th schedule
18.
8th schedule
19.
9th schedule
20.
Changes in SRO
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1) Cottage industry
SECTION
2 (5AB)

Manufacturer whose annual turnover from taxable
supplies made in any tax period during the last twelve
months ending in any tax period does not exceed ten
million rupees or whose annual utility (electricity, gas and
telephone) bills during the last twelve months ending
any tax period do not exceed eight hundred thousand
rupees; was given status of cottage industry.
COMMENTS
The objective is to provide incentive to

units functioning in cottage industry. The
threshold about utility bills remains eight
hundred thousand rupees whereas
threshold limit of turnover is proposed to
enhance from Rs. Five (5) million to Rs.
Ten (10) million.
2) Due date
SECTION
2 (9)

2016
due date in relation to the furnishing of a
th
return under section 26 means the 15 day of
the month following the end of the tax period, or
such other date as the Board may by notification
in the official Gazette specify.
The bill proposes to omit and section 26AA
COMMENTS
The bill proposes to provide different due dates

for furnishing normal return and return filled by
retailer. Retailers are not filling returns under
section 26AA of sales tax act hence the
expression 26AA has been omitted and
The bill proposes to provide multiple due dates
for furnishing of different parts of sales tax return
where the sellers and buyers will be required to
file furnish their respective returns or annexure
of purchase and sales in different due dates.
Current system of return is causing problems
while cross matching the declarations of buyers
and sellers.
New system will require early submission of
invoices.
There will be no need to separately file the
refund claim which will expedite the refund
payment process.
3) Input tax
Section
Page
52
2 (14)
AMENDMENTS THROUGH
FINANCE ACT 2016
Sub-Clause (d) omitted.
Comments
Clause d of section 2(14) which is Provincial sales

tax levied on services rendered or provided to the
person is omitted and it is expected to have bearing
on provincial budget to be announced.
This proposal would distort VAT principles and it will
affect business severely.
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4) Time and Manner of payment
SECTION
6(2)

2016
The tax in respect of taxable supplies made
during a tax period shall be paid by the date
as prescribed in this respect.
COMMENTS
The bill proposes to omit prevailing time

and manner of filling of return and bill now
seeks to propose any other date in this
regard.
5) Determination of tax liability
SECTION
7(2)

2016
A registered person shall not be entitled to
deduct input tax from output tax unless
The supplier declares the supplies in his
return or pays the due tax as shown in this
return.
COMMENTS
The bill seeks to add one more condition

for claiming input tax.
in sub-clause (1), paragraph (iii), shall

be omitted.
6) Tax credit not allowed
SECTION
8[1(I)]

2016
Notwithstanding anything contained in
this Act, a registered person shall not be
entitled to reclaim or deduct input tax
paid on
(l) From the date to be notified by the Board,
such goods and services which, at the time
of filing of return by the buyer, have not been
declared by the supplier in his return.]
Whereas the bill proposes to add or he has
not paid amount of tax due as indicated in
his return.
COMMENTS
Section 8 provides conditions under which

a registered person will not to be entitled
to reclaim input tax. The bill proposes to
add one more condition.
The same amendment is proposed in
2(9), 6(2), 7(2) and 8(1) which enable
taxpayers to cross match supplies
declared by suppliers in their return. The
new system aims to resolve controversies
arising from CREST and to ensure that
taxpayer claim their input tax on timely
basis.
7) Assessment of Tax & Recovery of Tax not levied or short levied or erroneously refunded
Page
53
SECTION
11(4)

2016
Assessment of Tax & Recovery of Tax not
levied or short levied or erroneously
refunded
The budget proposes to insert sub section
4(A) after sub-section 4 of section 11
COMMENTS
Under the existing provisions of sales tax

act the OIR is not empowered to recover
the principle amount of tax from the payer
which is not deducted or paid into
government treasury.
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4(a): Where any person is required to
withhold sales tax under the provision of this
act or the rules made there under , fails to
withhold the tax or withholds the same but
fails to deposit the same in the prescribed
manner, an OIR shall after a notice to such
person to show cause, determine the amount
in default.

The sub section 4(a) is inserted in order
to empower the OIR to recover the
amount of default.
8) Exemption
SECTION
13(2)

2016
Comma is substituted by the word and;
And following is inserted in after the word
agreement
And matters relating to international
financial institutions or foreign governmentowned financial institutions.
COMMENTS
Section 13 empowers the federal Govt. to

exempt any taxable supplies or imports of
goods from the levy of sales tax through a
notification.
Amendment is made in order to show
commitments of govt. to international
community
Proviso added through Finance Act,

Provided that such international 2016 in order to impose limitation on
financial
institution
or
foreign the scope of work of specified
government
owned
financial institutions..
institution
operating
under
a
memorandum of understanding, an
agreement or any other arrangement
with the Government of Pakistan
should limit work for natural disaster
or prescribed Pakistani citizens
welfare purposes and should not have
type of work in any meaning against
national
security
and
national
economic interests.
9) Returns
SECTION
COMMENTS
Section 2 deals with filling of return and

sub section 2 require filing separate return
for change of rate in tax period hence due
to electronic filling of return it subsection
becomes redundant.
Page
54
26 (2)

2016
26 (2) is omitted
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10) Directorate General of input Output Co-efficient organization
SECTION
30DDD

ACT 2016
30DDD is added after 30DD
30DDD: Directorate General of input
Output Co-efficient organization- The
Directorate General of Input Output
Coefficient Organization (IOCO)- Inland
revenue shall consist of a Director General
and as many Directors, additional
Directors, Deputy Directors, Assistant
Directors and such other officer as the
Board may, by notification in official
Gazette, appoint
COMMENTS
FBR plans to establish a new Directorate

i.e.
Directorate General of Input Output Coefficient Organization (IOCO) under Inland
Revenue Wing. Such Directorates already
exist under the Customs Wing of FBR, who
is engaged in determination/fixation of duty
drawback rates of various imported
goods within the industrial segments
involved in exports of goods. It is expected
that the functions that may be assigned
to the proposed establishment would
ultimately help to improve the quality of
sales tax audits.
11) Offences and penalties
SECTION
33

ACT 2016
Offences and penalties
The bill proposes to insert the following in
section 33 of column 1 against serial
number 19
Or the rules made there under after the
word act.
COMMENTS
Section 33 provides mechanism regarding

penalties against different offences
Serial number 19 contains penalties
regarding offences not mentioned in section
33 in which the phrase or the rules made
there under after the word act has been
proposed to add.
The bill now seeks to expand the scope of
section.
12) Alternative Dispute Resolution
SECTION
Page
55
47A

ACT 2016
(2) The Board may, after examination

of the application of a registered
person, appoint a committee
within 30 days of receipt of such
application in the Board, consisting
of an officer of [Inland Revenue
not below the rank of an
Commissioner] and two persons
from the notified panel consisting
COMMENTS

Dispute Resolution mechanism, following
amendments have been introduced:
- Alternate Dispute Resolution committee
would include a Commissioner Inland
Revenue
instead
of
Additional
Commissioner
Inland
Revenue;
- Board is required to pass an order on the
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of retired Judges not below District
and Sessions Judge, chartered or
cost
accountants,
advocates,
representatives of trade bodies or
associations,
or
any
other
reputable taxpayers, for the
resolution of dispute.
(4)
The Board may, on the
recommendation of the committee,
pass such order, as it may deem
appropriate within 90 days of the
receipt of the recommendations of
the Committee;

recommendation of the Committee within 90
days
instead
of
45
days;
and
- In case order is not passed by the Board
within 90 days, the recommendation of the
committee shall be treated as an order
passed by the Board.
Provided that if such order is

not passed by the Board
within the aforesaid period,
the recommendation of the
Committee shall be treated to
be an order passed by the
Board under this sub-section.
13) Transfer of taxable activity or transfer of ownership
49(2)
Sales of taxable activity or transfer of ownership

The bill proposes to substitute the existing sub
section 2 of section 49.
In the case of sale or transfer of ownership of a
taxable activity or part thereof to another registered
person as an ongoing concern, sales tax chargeable
on taxable goods or part thereof shall be accounted
for and paid by the registered person to whom such
sale is made or ownership is transferred ,
Is substituted by
In the case of sale or transfer of ownership of a
taxable activity or part thereof to another registered
person as an ongoing concern, the taxable goods or
part thereof shall transferred to the new owner
through a zero-rated invoice and the sales tax
chargeable thereon shall be accounted for and paid
by the registered person to whom such taxable
activity or part thereof is transferred.
COMMENTS
Sub section 2 of section 49

provides that in case of transfer of
ownership of taxable goods of
business unit between registered
person shall be accounted for and
paid by the registered buyer.
The bill now proposes to substitute
the above by classifying them zero
rated.
Page
56
SECTION
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14) Disclosure of information by a public servant
SECTION
COMMENTS
56(B)
Disclosure of information by a public servant.
The proposal is due to add

one more restriction on the
information obtained under
this act shall be confidential
and this is protected now by
Freedom
of
Information
Ordinance 2002.
The bill proposes that section 56(B) shall be

substituted as
(1) Any information acquired under any provision of this
Act may be confidential and no public servant shall
disclose any such information, except as provided under
section 216 of the Income Tax Ordinance, 2001 (XLIX of
2001).
in sub-clause (11), in
the proposed section
56B, subsection (2)
shall be omitted.
rd
15) 3 schedule
SECTION
3rd
schedule

2016
Mineral / bottled water
COMMENTS
the sub-clause (13), shall be omitted.
th
16) 5 schedule
SECTION

Clause
Description
PTC heading
(i)
Colors in sets
3213.1000
(ii)
Writing,
. 3215.9010 and 3215.9090
no.
drawing
COMMENTS
Although the zero rating facility

was deleted through Finance bill,
2016 however the same has
been resorted through Finance
Act, 2016.
and
iii)
Erasers
4016.9210 and 4016.9290
iv)
Exercise books
4820.2000
v)
Pencil
8214.1000
sharpeners
Page
57
marking inks
Ph: +92-42-35408635-36, 35408638 Cell: +92-333-4245240, +92-301-4245240

vi)
Geometry

9017.2000
boxes
vii)
Pens,
ball
96.08
pens, markers
and
porous
tipped pens
viii)
Pencils
96.09
including color
pencils
ix)
Milk
04.01
xviii)
Fat filled milk
1901.9090
17) 6th schedule
SECTION
th
Page
58
6
schedule

The bill proposes to insert new entries after serial
number 100 in column(1) in table-1 in sixth schedule
COMMENTS
Sixth schedule deals with exemption of

goods from levy of sales tax. The bill
proposes to include items listed in below
table
S. NO
DESCRIPTION
100A
Materials and equipments for construction and operation

of Gawadar Port and development of Free Zone for
Gawadar Port as imported by or supplied to China
Overseas Ports Holding Company Limited (COPHCL)
and its operating companies namely (i) China Overseas
Ports Holding Company Pakistan (Private) Limited (ii)
Gwadar International Terminal Limited, (iii) Gwadar
Marin Services Limited and (iv) Gwadar Free Zone
Company Limited. their contractors and sub-contractors;
and Ship Bunker Oils bought and sold to the ships
calling on/visiting Gawadar Port, having Concession
Agreement with the Gwadar Port Authority, for a period
of twenty year, subject to the following conditions and
procedure, namely,
Respective Headings
(A). Conditions and procedure for imports.

(i) This exemption shall be admissible only to China
Overseas Ports Holding Company Limited (COPHCL)
and its operating companies; (ii) Ministry of Ports and
under the heading "(A) Conditions

and procedure for imports", in
paragraph (i) the words " their
TARIFF HEADING
after the words "Gawadar Free

Zones Company Limited", comma
"," shall be substituted with full
stop.
(the words and expressions "their
contractors, sub-contractors; and
Ship Bunker Oils bought and sold
to the ships calling on/visiting
Gawadar Port," shall be deleted.
for the words "40 years", the
words "20 years" shall be
substituted.
Ph: +92-42-35408635-36, 35408638 Cell: +92-333-4245240, +92-301-4245240
Page
59

Shipping shall certify in the prescribed manner and

format as per Annex-I that the imported materials and
equipments are bonafide requirement for construction
and operation of Gawadar Port and development of Free
Zone for Gawadar Port. The authorized officer of that
Ministry shall furnish all relevant information online to
Pakistan Customs against a specific user ID and
password obtained under section 155D of the Customs
Act, 1969 (IV of 1969). In already computerized
Collectorate or Customs station, where the computerized
system is not operational, the Project Director or any
other person authorized by the Collector in this behalf
shall enter the requisite information in the Customs
Computerized System on daily basis,
whereas entry of the data obtained from the customs
stations which have not yet been computerized shall be
made on weekly basis, provided that this condition shall
not apply to ship bunker oils; and (iii) The goods so
imported shall not be sold or disposed of without prior
approval of the FBR and payment of sales tax leviable at
the time of import, provided that this condition shall not
apply
to
ship
bunker
oils.
(B).
Conditions
and
procedure
for
local
supply. (i) This exemption shall be admissible only to
China Overseas Ports Holding Company Limited
(COPHCL) and its operating companies. which hold
Concession Agreement; (ii) for claiming exemption on
goods which are otherwise taxable in Pakistan, the
operating companies will purchase the materials and
equipments for the construction of Gawadar Port and
development of Free Zone for Gawadar Port from the
sales tax registered persons only; (iii) invoice of the
exempt supply, containing the particulars required under
section 23 of the aforesaid Act, shall for each supply be
issued by the registered person to the operating
company mentioning thereon that the said invoice is
being issued under this notification; (iv) a monthly
statement summarizing all the particulars of the supplies
made in the month against invoices issued to the
operating companies shall be prepared in triplicate by
the registered persons making the exempt supplies and
shall be signed by the authorized person of the
registered person. All three copies of the said signed
monthly statement shall be got verified by the registered
person from the person authorized to receive the
supplies in the office of operating company, confirming
that supplies mentioned in the monthly
statement have been duly received; (v) after verification
from the operating company, original copy of the monthly
statement will be retained by the registered person,
duplicate by the operating company and the triplicate
provided by the registered person to the Collector of
Sales Tax having jurisdiction, by twentieth day of the
month following the month in which exempt supplies to
the operating companies were made; and (vi) the
registered person making the exempt supplies shall
keep the aforesaid record for presentation to the sales
tax department as and when required to do so.
contractors which hold the

concession agreement" shall be
deleted.
under the heading "(B) Conditions

and procedure for local supply",
in paragraph (i), after the words
"operating companies" for a coma
"," a full stop shall be substituted
and the words and expressions ",
their contractors and subcontractors" shall be deleted.
Ph: +92-42-35408635-36, 35408638 Cell: +92-333-4245240, +92-301-4245240

Page
60
100B
Supplies made by the businesses to be established in

the Gwadar Free Zone for a period of twenty years
within the Gwadar Free Zone, subject to the condition
that the sales and supplies outside the Gwadar Free
Zone and into the territory of Pakistan shall be subjected
to sales tax.
Respective Headings
for the words "twenty three", the

word
"twenty"
shall
be
substituted.
SECTION
6th
schedule
103. Import and supply thereof, up to the year 2020, of ships of

and all floating crafts including tugs, dredgers, survey vessels
and other specialized crafts purchased or bare-boat chartered by
a Pakistan entity and flying the Pakistan flag, except ships or
crafts acquired for demolition purposes or are designed or
adapted for use for recreation or pleasure purposes, subject to
the condition that such ships or crafts are used only for the
purpose for which they were procured and in case such ships or
crafts are used only for the purpose for which they were
procured, and in case such ships or crafts are used for
demolition purposes within a period of five years of their
acquisition, sales tax applicable to such ships purchased for
demolition purposes shall be chargeable.
105. Raw materials for the basic manufacture of pharmaceutical
active ingredients and for manufacture of pharmaceutical
products, provided that in case of import, only such raw
materials shall be entitled to exemption which are liable to
customs duty not exceeding eleven per cent ad valorem, either
under the First Schedule [or Fifth Schedule] to the Customs Act,
1969 (IV of 1969) or under a notification issued under section 19
thereof.
SECTION
6th
schedule
110. The following items with

dedicated use of renewable source of
energy like solar and wind, subject to
certification by the Alternative Energy
Development
Board
(AEDB),
COMMENTS
against serial number 103,

in
column
(2),
the
expression
"of
gross
tonnage of less than 15
LDT" shall be omitted;
Import and supply of ships with
gross tonnage of over 15 LDT
have also been extended
exemption from sales tax.
against serial number 105,

in column (2), for the word
"ten", the word "eleven"
shall be substituted;
Imports of raw materials for the
basic
manufacture
of
pharmaceutical
active
ingredients and for manufacture
of pharmaceutical products have
been extended exemption which
are liable to customs duty not
exceeding 11%, instead of the
earlier limit of 10%.
COMMENTS
(a) against subserial (b), in

column (3), for
the figure
Ph: +92-42-35408635-36, 35408638 Cell: +92-333-4245240, +92-301-4245240

Islamabad:-(a) Solar PV panels;
(b) LVD induction lamps;
(c) SMD, LEDs, with or without
ballast, with fittings and fixtures;
(d)
Wind
turbines
including
alternators and mast;
(e) Solar Torches;
(f) Lanterns and related instruments;
(g) PV modules along with related
components, including invertors,
charge controllers and batteries.
(h) Tubular day lighting device
(i) Energy saver lamps and tube
lights of varying voltages (operating
on AC or DC)

8541.5000
8539.3290
8539.3290,
8543.7090
9405.4090
8502.3100
"8539.3990",
the figure
"8539.3290"
and
shall be
substituted;
8513.1040
8513.1090
8541.4000 , 8504.4090,
9032.8990
and
8507.0000
9405.5010
8539.3110
8539.3120
(j) Invertors (off-grid/on grid/hybrid) 8504.4090

with provision for direct connection
/ input from renewable energy
source and with Maximum Power
Point Tracking (MPPT)
Imports of raw
materials for the
basic manufacture
of pharmaceutical
active ingredients
and for manufacture
of pharmaceutical
products have been
extended exemption
which are liable to
customs duty not
exceeding 11%,
instead of the earlier
limit of 10%.
(c) Following further
items with dedicated
use for renewable
source of energy
subject to
certification by
Alternative Energy
Development Board
(AEDB) have been
included in the lists
of exemption:
- Tubular day light
device
- Specified invertors
Page
61
- Energy saver
lamps and tube
lights of varying
voltages (operating
on AC or DC)
Ph: +92-42-35408635-36, 35408638 Cell: +92-333-4245240, +92-301-4245240

SECTION
th
6
schedule

2016
The bill proposes to omit serial number 111
and entries relating thereto in column (2) and
(3) in column (1) in table -1 in sixth schedule.
COMMENTS

proposes to omit the items described
earlier.
White crystalline sugar is now in the list
of 8th schedule to be taxed at reduced
rate of 8% .
"(iia) serial number 119 and the Tubular day lighting devices
entries relating thereto in columns exemption
withdrawn
and
(2) and (3) shall be omitted;
inserted at serial no 110
(iib) in serial number 123, after the
word "lease", a colon and the following
proviso shall be added,
Provided that in case of import or
acquisition on wet or dry lease by
Pakistan
International
Airlines
Corporation, this exemption shall be
available with effect from 19th
March, 2015.
SECTION
BUDGET PROPOSAL FOR TAX YEAR 2016
COMMENTS
6
schedule
The bill proposes to include certain new entries

after serial number 129 of table-1 if the sixth
schedule to the sales tax act

proposes to omit the items described
earlier.
S. No
Description
Heading Nos. of the first schedule

to the customs act
130
Premixes for growth stunting
Respective Headings, and subject

to conditions imposed for
importation under the Customs Act,
1969;
131
Laptop computers, notebooks whether or not

incorporating multimedia kit
8471.3010
132
Personal computers
8471.3020
133
Pesticides and their active ingredients registered by

the Department of Plant Protection under the
38.08 change in serial number
62
th
Page
A proviso inserted vides Finance

Act, 2016 that exemption to import or
acquisition of aircrafts on wet or dry
lease by PIA has been made
effective from March 19, 2015.
Ph: +92-42-35408635-36, 35408638 Cell: +92-333-4245240, +92-301-4245240

Xylol (xylenes)
2707.3000
- Beta Pinene / Agrotin 527 / Terpenic derivative
2902.1990
Toluene
2902.3000
Mixed xylene isomers
2902.4400
Naphthalene
2902.9010
Solvesso-100, 150, 200
2902.9090
Ingredients for pesticides
2903.3040
Cadusafos Technical Material
2903.6900
Methanol (methyl alcohol)
2905.1100
Propylene glycol (propane-1, 2-diol)
2905.3200
- Adhesives Polyvinyl Acetate - Polyvinyl Alcohol
2905.4900
2906.2910
Other Ingredients for pesticides
2906.2990
- Solvenon MP / 1-Methoxy 2-Propanol Methyglycol Acetate
2909.4910
Methanal (formaldehyde)
2912.1100
Cyclo-hexanone and methyl- cyclohexanones
2914.2200
- Cyclohexanon - Cyclohexanone Mixed petroleum

Xylene (1,2 & 1,3 & 1,4 dimethyl benzene and
ethyle benzene
2914.2990
Acetic anhydride
2915.2400
2916.3920
Dioctyl orthophthalates
2917.3200
2918.9010
2919.0010
2919.0090
Endosulfan Technical Material
2920.9020
Page
63
Agricultural Pesticides Ordinance, 1971 (II of 1971),

stabilizers, emulsifiers and solvents, namely:
Ph: +92-42-35408635-36, 35408638 Cell: +92-333-4245240, +92-301-4245240
Page
64

2920.9090
Diethylamine and its salts
2921.1200
2921.4310
2921.4390
2921.5110
Triethanolamine and its salts
2922.1300
Dimethyl Formamide (DMF)
2924.1990
2924.2930
2924.2990
Alpha cyano, 3-phenoxybenzyl (-) cis, trans 3-(2,2diclord vinyl) 2,2 dimethyl cyclopropane carboxylate
2926.9010
(S) Alpha cyano, 3-phenoxybenzyl (S)-2- (4, chloro

phenyl)-3 mehtyl butyrate
2926.9020
Cyano, 3-phenony benzyl 2,2,3,3 tetra methyl

cyclopropane carboxalate
2926.9030
- Cypermethrin, Alpha Cypermethrin, BetaCypermethrin, Zeta-Cypermethrin, Lambda

Cylalothrin, Deltamethrin, Fenpropathrin,
Esfenvalerate, Bifenthrin Technical MaterialAcetamiprid, Imidacloprid Technical
MaterialMonomehypo, Chlorothalonil Technical
MaterialBromoxynil Technical Material
2926.9050
Other nitrite compoundsCyfluthrin, Beta Cyfluthrin

Technical Material
2926.9090
2-N, N-Dimethyl amino-I sodium thiosulphate, 3thiosulfourropane
2930.2010
2930.2020
2- N,N-dimethyamino 1,3 disodium thiosulphate

propane
2930.9010
O,S-dimethyl phosphoramidothioate
2930.9020
S-S (2 dimethyl amino (trimethylene) bis (thio

carbamate)
2930.9030
Diafethiuran technical (itertbutyl) 3-2-6 disopropyl

(4-phenoxyphenyl) thiourene
2930.9040
Ph: +92-42-35408635-36, 35408638 Cell: +92-333-4245240, +92-301-4245240

O-O diethyl O-(3,5,6 trichloro pyridinyl)

phosphorothioate
2930.9050
O-(4-bromo, 2-chloro phenyl) o-ethyl spropyl

(phosphorothioate)
2930.9060
O,O duethyl O-(3,5,6-trichloro 2-pyridyl)

phosphorothioate
2930.9070
2930.9080
Other orgonosulpher compounds - Ethion,

Methamidophos Technical Material
2930.9090
Dimethysulfoxid
2931.0010
2931.0010
2931.0090
2932.2920
2,3 Dihydro 2-2 dimethyl-7 benzo furanyl methylcarbamate
2932.9910
Other ingredients for pesticides - Carbosulfan

Technical Material
2932.9990
Fipronil
2933.1900
2933.3930
2933.3990
- Chlorpyrifos, Triazophos, Diazinon
2933.5950
2933.5990
Pyrimethanine
2933.6910
2933.6940
- Atrazine Technical Material
2933.6990
Isatin (lactam of istic acid)
2933.7910
1-Vinyl-2-pyrrol-idone
2933.7920
Page
65
Technical Material
Ph: +92-42-35408635-36, 35408638 Cell: +92-333-4245240, +92-301-4245240

- Triazophos Technical Material
2933.9910
- Triazophos Technical Material
2933.9910
2934.1010
2934.9920
-Methyl benzimidazol
2938.9010
2 ylcarbamate. -Dicopper chloride trihydroxide

2939.9910
- Abamectin, Emamectin Technical Material
2941.9050
2941.9090
Sulphonic acid (Soft)
3402.1110
Other surface active agents
3402.1190
Catonic
3402.1290
Non ionic surface active agents
3402.1300
Other organic surface active agents
3402.1990
3402.9000
SECTION
th
6
Schedule
Chemical preparations
3824.9099
Solvent C-9
2707.5000

In table-3 in the annexure, in column (1),
(i) against serial number (2), after the word pick-ups the word and dump
trunk shall be inserted
(ii) against serial number 14, in column (2),a. against sub-serials (c) and (d), in column (3), for the figures
Page
66
"8539.3910", occurring twice, the figure "8539.3110" shall be

substituted; and
b. against sub-serial (i), in column (3), for the figure
"8539.3920", the figure "8539.3120" shall be substituted;";
COMMENTS
The word dump

trunk is inserted for
the Thar coal field.
Correction of few
clerical errors by
substituting their
serial numbers.
White crystalline sugar falling under heading Nos. 1701.9910 and

1701.9920 of the First Schedule to the Customs Act, 1969 (IV of 1969)
fixed by FBR via S.R.O. 492(I)/2016 on the following values.
S. No. Description
Value
(1)
(2)
(3)
1.
Domestically produced white
Rs. 56 per kg
crystalline sugar
2.
Imported white crystalline sugar
US$ 725 per MT
Ph: +92-42-35408635-36, 35408638 Cell: +92-333-4245240, +92-301-4245240

Rates for the following are substituted by FBR vide S.R.O. 490(I)/2016
S. No.
Description
PCT heading
Rate
(1)
(2)
(3)
(4)
1.
Motor spirit excluding HOBC 2710.1210
17% ad valorem
2.
HOBC
2710.1210
17% ad valorem
3.
Kerosene
2710.1911
7% ad valorem
4.
High speed diesel oil
2710.1931
28% ad valorem
5.
Light diesel oil
2710.1921
5% ad valorem
Further tax at the rate of two percent shall not be charged, levied or
th
paid on the taxable supplies, 7 addition made vide S.R.O 487(I)/2016
by the FBR.
S. No.
Description of goods
(1)
(2)
1.
Electrical energy supplied to domestic and agricultural
consumers
2.
Natural gas supplied to domestic consumers
3.
Motor spirit, diesel oil, jet fuel, kerosene oil and fuel oil
4.
Goods sold by retailers to the end consumers
5.
Supply of goods directly to the end consumers including
food and beverages, fertilizers and vehicles
6.
Items falling in the Third Schedule to the Sales Tax Act,
1990
Second hand worn clothing and other worn articles falling
7.
Page
67
under PCT heading 6309.0000.
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th
18) 8 schedule
SECTION
COMMENTS
th
1. In Table-1, in column (1),
8th
schedule
S.NO
Description
Existing Rate of
Sales tax
Proposed rate of sales

tax
15
Ingredients of
poultry feed, cattle
feed except soya
bean meal of PCT
heading2301.0000
and oil cake of
cottonseed falling
under PCT
heading
2306.1000
5%
10%
(A) against serial number 15,

(a) in column (3),
(i) for the figure 2301.2090, the figure 2301.1000 (Meat and Bone Meal) shall be
substituted;
(ii) for the figure 2301.2010, the figure 2301.2090 shall be substituted;
(iii) for the figure 2833.2600, the figure 2833.2940 shall be substituted; and (iv)
for the figure 2923.9000 (Betafin), the figure 2923.9010 (Betaine) shall be
substituted; and
Existing
S. No
Description
Proposed
Tariff
Description
Page
68
heading
Tarrif
heading
15
Others( floor
meals etc)
2301.2090
Meat and bone

meals
2301.1000
20
Plant machinary
equipment and
specific items
used in
production of
bio-diesel
Respective
heading
Plant machinary
equipment used in
production of biodiesel
Respective
heading
(B) against serial number 20, in column (2), for the words equipment and specific
items, the words and equipment shall be substituted; and
Ph: +92-42-35408635-36, 35408638 Cell: +92-333-4245240, +92-301-4245240
8
schedule
deals
with
items that are
liable to tax at
reduced rate.
The
bill
proposes to
enhance the
rate of tax of
the
items
shown
in
table.
Although
the sales
rate was
proposed at
10%
through
Finance bill,
2016
however the
same has
been
resorted to
reduced rate
of 5%
through
Finance
Act, 2016.
Sales
tax

"(BA) against serial number 25, in column (4), for the figure
"10%", the figure "5%" shall be substituted; and
"(BB) against serial number 26, in column (2), after entry (xix)
and the entries relating thereto in column (3), the following new
entries shall be added, namely:(xx) Laser Land leveler 8432.8090
(C) serial number 31 and entries relating thereto in columns (2), (3) and (4)
rate
on
agricultural
tractors has
been
reduced
from 10% to
5%. SR. 25
Laser land
leveler has
been
extended
reduced
sales tax of
7%.
shall be omitted and thereafter the following new serial numbers and
corresponding entries relating thereto shall be inserted, namely:
S. No
Description
Tariff Heading
Rate
32
White crystalline
1701.9910 and
sugar
1701.9920
33
Urea whether or not in aqueous

solution
3102.1000
5%
34.
1. Set top Subject to type

boxes for approval by gaining
PEMRA access to this
concession internet shall be
available
8517.6950
5%
2. TV upto 30th broadcast

June, 2017 transmitter
8525.5020
3. Reception apparatus for and

receiving satellite signals of a
kind used with TV (satellite
dish receivers)
8527.7220
8%
8527.71100
8528.7190
4. Other set
8528.7290
Page
69
top boxes and
"(II) in Table-2, in the Annexure, in column (1),(A) against serial number 1, in column (2), after the word
Ph: +92-42-35408635-36, 35408638 Cell: +92-333-4245240, +92-301-4245240
Serial
34
added
through
Finance Act,
2016
for
reduced rate
of sales tax
@ 5%

"facilities", the words "including silos" shall be inserted; and

(B) after serial number 7 and the entries relating thereto in
columns (2), (3) and (4), the following new serial number and the
entries relating thereto shall be added, namely:
S. No
7
Description
Tariff Heading
8418.6910
1. Milk chillers.
Rate
10%
8418.6990
If imported by and registered

manufacturer
2. Tubular heat who is
member exchanger (for of
Pakistan pasteurization).
Dairy
Milk chillers,
Tubular heat
exchanger
(for
pasteurizatio
n),
milk
processing
plant,
milk
spray drying
plant,
milk
UHT
plant,
milk
filters
and
other
machinery
and
equipment for
manufacturin
g of dairy
products
have
also
been
extended
reduced
sales tax of
5%.
8419.500
8419.3900
3. Milk processing
Association
plant, milk spray and drying
plant, Milk UHT plant.
4. Milk filters.
8419.8100
8421.2900
5. Any other machinery and

Chapter 84 equipment for
and 85 manufacturing of
dairy products.
th
19) 9 schedule
SECTION

TH
th
9
schedule
Description
Sales
tax
on
Sales tax at the

time of registration
70
import
Page
COMMENTS
of IMEI
Existing
Propose
Existing
Propose
9 Schedule deals with the levy of

sales tax on import and supply of
cellular phones at the rates of sales tax
for cellular phones listed in the table at
the fixed amount of tax.
The bill proposes to enhancement in
the rates of sales tax for cellular
phones listed in the table to the ninth
Ph: +92-42-35408635-36, 35408638 Cell: +92-333-4245240, +92-301-4245240

B. Medium
rate
rate
rate
rate
Rs.500
Rs.1000
Rs.500
Rs.1000
Rs.1000
Rs.1500
Rs.1000
Rs.1500
schedule
priced
cellular
mobile
phones or
satellite
phones
C.
Smart
cellular
mobile
phones or
satellite
phones
20) Changes in SROs
SRO
1125

FBR vide its Notification No. S.R.O 491(I)/2016 shall be made following further amendments in
its Notification No. S.R.O. 1125(1)/2011, dated the 31st December, 2011, namely
in Table-I, against S. No. 2 in column (1), in column (3), for the phrase and 60, the phrase 60,
6306.1210 and 6306.1910 shall be substituted;
for table-II, the following shall be substituted, namely;
S.
No.
Description of goods and point of taxation
(1)
1.
(2)
Goods usable as industrial inputs, specified in
Table I, including fabric
(i)
(ii)
Page
71
(iii)
(iv)
Import for in-house consumption by

registered manufacturers of the five sectors
mentioned in condition (i) below
Commercial imports
Supplies to registered or unregistered

persons of the said five sectors, excluding
supplies of finished fabric
Supplies to persons outside the said five
sectors
PCT
Heading
No.
(3)
As
specified in
column (3)
of Table-I
Rate of Sales
Tax
(4)
0%
0% plus 0%
value addition
tax
0%
17%
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(v)
2.
3.
4.
Import by, or supply to, registered

manufacturers whether or not of the said
five sectors, for the manufacture of goods
specified in Table-I or Table-II
(vi)
Supplies of finished fabric to manufacturers
of five sectors specified in condition (i)
below
(vii) Supplies of finished fabric to and by
retailers; supplies of finished fabric to end
consumers; other supplies of finished fabric
Processed goods, including fabrics
Processing of goods owned by other persons, by
registered manufacturers of the five sectors
mentioned in condition (i) below
Locally manufactured finished articles of
(a) Textiles and textile made-ups.
(b) Leather and artificial leather
Supplies to any person, including retail sales
Imported finished goods of five sectors
mentioned in condition (i) below, ready for use
by the general public
(i)
Import
0%
0%
5%
Respective
headings
0% of the
processing
charges
Respective
headings
5%
Respective
headings
17%, plus 2%
value addition
tax
17%
Page
72
(ii)
Supply thereof
for condition (x), the following shall be substituted, namely:
"(x) a registered person who has consumed inputs acquired on payment of sales tax, shall be
entitled to input tax adjustment, subject to the relevant provisions of the Sales Tax Act, 1990 and
Rules made thereunder:
Provided that no input tax credit or refund shall be admissible on the packing material of all
sorts;
Provided further that post-refunded audit and scrutiny shall be conducted and finalized in the
manner as provided in the Sales Tax Rules, 2006.
In condition (xi), the word and at the end shall be omitted; and
In condition (xi), the word and at the end shall be omitted; and
In condition (xii), for the full stop at the end, a semi-colon and word and shall be substituted,
and thereafter, the following new condition shall be added, namely:=
(xiii) supply of furnace oil, diesel oil and coal to the registered manufacturers of the fix sectors
specified in condition (i), shall be charged at the rate of zero percent subject to the issuance of a
general order by the Board.
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AMENDMENTS THROUGH FINANCE ACT 2016,

RELATED TO SALES TAX RULES, 2006 FOR
THE TAX YEAR 2017
[EFFECTIVE FROM 01-07-2016]
TABLE OF CONTENTS
Sr.
1.
Particulars
Electronic filing of Sales Tax Return [Rule 18]
1. Electronic filing of Sales Tax Return [Rule 18]

RULE
18

(2) The proviso to clause (i) of sub-section (2) of section 7
and clause (1) of sub-section (1) of section 8 of the Sales Tax
Act, 1990 and sub-section (2A) of section 6 of the Federal
Excise Act, 2005 shall be applicable for sales tax and federal
excise returns for the tax periods from July, 2016 and onwards.
COMMENTS
In rule 18 after subrule (1), the following

new sub-rules shall be
inserted, from 2 to 7,
and the existing subrules (2) and (3) shall
(3) A registered person shall enter data of supplies in be re-numbered as
Annexure-C and data of Debit or Credit Notes in Annexure-I sub-rules (8) and (9)
and submit the said data by the 1 0th day of the month respectively.
following the end of the tax period. As soon as, the registered
person (supplier) submits partial or complete data of Inserted by S.R.O
Annexure-C and Annexure-I, the said data shall be 493(I)/2016
immediately available to the respective registered person
(buyer) in his "Purchase Data" and "Debit or Credit Note
Data". The registered person (buyer) shall load the data in his
Annexure-A from "Purchase Data" and in his Annexure-l from
"Debit or Credit Note Data" to prepare his return.
Page
73
Provided that the data relating to purchases made from unregistered person or from such registered persons as allowed
by the Board in this respect, shall be manually entered by the
registered person in Annexure-A.
(4)
In case registered person's all suppliers have declared
their supplies made to him and have filed their monthly sales
tax and federal excise returns for the same tax period, he shall
be informed by the automated system of the Board that his all
suppliers have filed their monthly sales tax and federal excise
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returns.
Page
74
(5)
In case,-(i)
supplier of the registered person has not filed
his monthly sales tax and federal excise return till the
filing of his own return, he shall be communicated
regarding his supplier who has not so far declared
supplies made to him in sales tax and federal excise
return. He shall, however, be allowed provisional
adjustment of input tax against said invoices but if the
supplier fails to file his return by the l 0th day of the
next month, registered person's said inadmissible input
tax credit shall be adjusted or recovered in terms of
clause (I) of sub-section (1) of section 8 read with
proviso to clause (i) of sub-section (2) of section 7 of
the Sales Tax Act, 1990 and sub-section (2A) of
section 6 of the Federal Excise Act, 2005. He shall,
therefore, be advised by the automated system of the
Board to contact the supplier and persuade him to
declare said supplies made to him and file return so that
registered person could get input tax credit relating to
said supplies. In case registered person's supplier
declares said supplies and files monthly sales tax and
federal excise return for the same tax period, he shall
be informed that the objection raised by the automated
system of the Board on the invoices of the said supplier
stands settled;
(ii)
any- buyer of the registered person has not
declared sales tax withheld amount in the monthly sales
tax and federal excise return till the filing of return by
the supplier, the supplier shall be allowed provisional
reduction in his output tax against the said amount but
if the buyer fails to declare the said withheld amount of
sales tax by the 10th day of the next month in the
monthly sales tax and federal excise return, registered
person's said reduction in output tax shall be adjusted
or recovered. The registered person shall, therefore, be
advised by the automated system of the Board to
contact the said buyer and persuade him to declare the
said withheld amount of sales tax in the monthly sales
tax and federal excise return so that the registered
person could get benefit of reduction of output tax. In
case the registered person's buyer has declared
withheld amount of sales tax for the same tax period in
his sales tax and federal excise return, the objection
raised, in this regard, shall stand settled and the
registered person shall be informed accordingly;
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(iii) any buyer of the registered person has not accepted

a Credit Note issued by him, the supplier shall be
allowed provisional reduction in his output tax against
the said Credit Note but if the buyer fails to so accept
such Credit Note in the sales tax and federal excise
return by the 10th day of the next month, the registered
person's said reduction in output tax shall be adjusted
or recovered. The registered person shall, therefore, be
advised by the automated system of the Board to
contact the said buyer and persuade him to accept such
Credit Note in the return so that the registered person
could get benefit of reduction of output tax. In case
registered person's buyer has accepted such Credit Note
in his monthly sales tax and federal excise return for
the same tax period, the objection raised, in this regard,
shall stand settled and the registered person shall be
informed accordingly; and
(iv) action required at Para (I), (ii) and (iii) is not done,
the inadmissible input tax credit in terms of clause (I)
of sub-section (1) of section 8 read with proviso to
clause (i) of sub-section (2) of section 7 of the Sales
Tax Act, 1990 and sub-section (2A) of section 6 of the
Federal Excise Act, 2005 and reduction in output tax in
respect of withholding of sales tax or Credit Note shall
be adjusted or recovered through column 7(a) in the
next return of the registered person.
Page
75
(6)
In case,-(i) registered person's supplier has declared his supplies

made to him in his same monthly sales tax and federal
excise return, the input tax credit relating to the said
supplies shall be allowed to the registered person;
(ii) registered person's buyer has declared sales tax
withheld amount in his same monthly sales tax and
federal excise return, the reduction in output tax shall
be allowed to the registered person;
(iii) registered person's buyer has accepted the Credit
Note issued by him, the reduction in output tax shall be
allowed to the registered person; and
(iv) the action required at para (i), (ii) and (iii) is done,
the input tax credit and reduction of output tax in
respect of withholding of sales tax or Credit Note shall
be allowed to the registered person through column
7(b) in his next return.
(7) The balance of earlier disallowed input tax credit in terms

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Page
76
of clause (I) of sub-section (1) of section 8 read with proviso to

clause (i) of sub-section (2) of section 7 of the Sales Tax Act,
1990 and sub-section (2A) of section 6 of the Federal Excise
Act, 2005 and disallowed reduction of output tax in respect of
withholding of sales tax or Credit Notes shall appear in column
7(c) of the monthly sales tax and federal excise return of the
registered person with the advice to contact and persuade the
respective supplier or buyer to declare his supplies made to the
registered person and file monthly sales tax and federal excise
return or to accept relevant Credit Note or to declare sales tax
withheld amount as the case may be.
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RELATED TO SALES TAX SPECIAL
PROCEDURE RULES, 2007 FOR THE TAX
YEAR 2017
TABLE OF CONTENTS
Sr.
1.
Particulars
Retailers required to pay tax on standard rate
2.
Special procedure for payment of sales tax by the marble industry [chapter
XVI]
NOTE
Page
77
(The amendments made through Finance Act 2016, have been shown in red
color amendments made through Finance Act 2016, have been shown in
green color)
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1. Retailers required to pay tax on standard rate [Rule 5]

RULE
5
AMENDMENTS THROUGH
FINANCE ACT 2016
Provided further that the retailers
specified in this sub-rule shall, in lieu of
the net tax payable at the applicable rate,
have an option to pay sales tax under the
turnover regime at the rate of two per cent
of their total turnover, including turnover
relating to exempt supplies, without
adjustment of any input tax whatsoever:
COMMENTS
In rule 5, in sub-rule (1) in the

proviso, for the full stop at the end, a
colon shall be substituted, and
thereafter a further provisos shall be
added namely
Inserted by S.R.O 488(I)/2016
Provided also that the aforesaid retailers

shall furnish an option to the Chief
Commissioner of the Regional Tax Office
or the Large Taxpayers Unit having
jurisdiction by fifteenth day of July, 2016
opting to pay sales tax on the basis of
turnover and such an option shall remain
enforce for the whole financial year.
2. Special procedure for payment of sales tax by the marble industry [chapter
XVI]
CHAPT
ER
Page
78
XVI
COMMENTS
58ZC. Application.- The provisions of this Chapter shall apply

to
(a) marble and granite manufacturing and polishing units,
hereinafter referred to as marble and granite manufacturer,
operating on electric power regardless of the type of
electricity connection; and
(b) units having valid registration with All Pakistan Marble
Industries Association (APMIA).
after
Chapter
XV,
the
following new
Chapter
XVI
shall be added,
namely:-
58ZD. Payment of tax.(1) Every manufacturer specified in rule 58ZC shall pay sales
tax at the rate of one rupee and twenty five paisa per unit of
electricity consumed as a final discharge of his net sales tax
liability to the extent of marble and granite manufacturing,
grinding and polishing process.
(2) The electricity distribution companies shall charge and
collect sales tax at the rate specified in sub-rule (1) above,
from the manufacturers specified therein, in addition to sales
tax payable at standard rate and any other tax leviable under
Sales Tax Act, 1990, including extra tax and further tax
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chargeable under sub-section (1A) of section 3.

(3) The electricity distribution company shall deposit the sales
tax as specified in sub-rule (1) without any adjustment
against the same along with their relevant monthly sales tax
return.
(4) The Regional Tax Office in whose jurisdiction such
manufacturing units fall shall provide a list of these units to
the concerned electricity distribution company for charging
sales tax on electricity consumption basis as specified above.
(5) In case the due amount of sales tax mentioned in sub-rule (1)
is not mentioned in the electricity bill issued to any marble or
granite manufacturer, he shall deposit the due amount of tax
for the relevant tax period at the rate of one rupees and
twenty five paisa per unit of electricity consumed through his
monthly sales tax return.
(6) No input tax adjustment shall be allowed to the marble and
granite manufacturer paying sales tax at the rate specified in
sub-rule (1). Such marble industry shall be required to issue
sales tax invoice showing the total amount which shall be
deemed to be inclusive of sales tax, however, such invoice
shall not be admissible for input tax adjustment at any
subsequent stage by any person.
(7) Every marble and granite manufacturer paying sales tax
under these rules shall, if registered, be required to maintain
records specified under section 22 of the Act, and file
monthly return.
Page
79
58ZE. Responsibility of All Pakistan Marble Industries

Association.
The All Pakistan Marble Industries Association shall be
responsible to ensure that the marble industries pay sales tax in
the manner specified in these rules, and in case of noncompliance, the Association shall actively assist the concerned
Commissioner for enforcement and recovery of sales tax due
alongwith default surcharge calculated thereon, besides any
other proceedings that may be initiated against the defaulting
unit of marble industry under the Act. All Pakistan Marble
Industries Association shall be authorized to authenticate the
paid electricity bills of marble industries paying sales tax under
these rules.
58ZF. Treatment for units engaged in exports.Subject to permission of Commissioner concerned, the option to
exclude sales tax amount as specified in sub-rule (1) of rule
58ZD from the electricity bill shall be available to marble and
granite manufacturer exporting more than fifty percent of his
supplies.
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RELATED TO CUSTOMS ACT, 1969 FOR THE
TAX YEAR 2017
TABLE OF CONTENTS
Sr.
1.
Particulars
General power to exempt from customs-duty [Section 19(1)]
2.
Confidentiality of information [Section 155H clause (c)]
3.
Alternative Dispute Resolution [Section 195C]
4.
First Schedule amendments- changes in rates of custom duty
5.
Second Schedule amendments- changes in rates of custom duty [Section 18]
6.
Fifth Schedule amendments- changes in rates of custom duty
7.
Changes in rates in Tabular Form - Fifth Schedule
NOTE
Page
80
green color)
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1. General power to exempt from customs-duty [Section 19(1)]

SECTION

2016
COMMENTS
19(1)
The Federal Government pursuant to the approval of

the Economic Coordination Committee of Cabinet,
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 duties, development of backward areas,
implementation of bilateral and multilateral
agreements and to any International Financial
Institution or foreign government owned Financial
Institution operating under a memorandum of
understanding, and agreement or any other
arrangement with the Government of Pakistan subject
to such conditions, limitations or restrictions, if any,
as it deems fit to impose, may, by notification in the
official Gazette, exempt any goods imported into, or
exported from, Pakistan or into or from any specified
port or station or area therein, from the whole or any
part of the customs-duties chargeable thereon and may
remit fine, penalty, charge or any other amount
recoverable under this Act.
The bill extends the scope of this

section by providing of exemption
to
International
Financial
Institution or foreign government
owned
Financial
Institution
operating under a memorandum of
understanding, and agreement or
any other arrangement with the
Government of Pakistan. The
Federal Government pursuant to
the approval of the Economic
Coordination
Committee
of
Cabinet, whenever circumstances
exist to take immediate action for
specified
purposes
or
implementation of bilateral or
multilateral agreements exempt
any goods from customs duty
imported into or exported from
Pakistan through notification. The
proposal
is
made
fulfill
Government
international
obligations and commitments.
Provided that such international financial institution or

foreign government owned financial institution
operating under a memorandum of understanding, an
agreement or any other arrangement with the
Government of Pakistan must limit the work for
natural disaster or prescribed Pakistani citizens
welfare purposes and should not have type of work in
any meaning against national security and national
economic interests.
Proviso added through Finance

Act, 2016 in order to impose
limitation on the scope of work of
specified institutions.
Page
81
2. Confidentiality of information [Section 155H clause (c)]

SECTION

2016
COMMENTS
155H
(c) Duty due for the dutiable supplies made or

services rendered during a month shall be
deposited by the registered person in the
designated branch of the bank by the date as
By insertion of these sections, all trade

information gathered by Customs during
clearance of goods shall be confidential
and shall not be used except for specified
Clause
(c)
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prescribed in this respect. Or
purposes.
(d) sharing of data to the extent of agreed data

contents under a memorandum of understanding,
bilateral, regional, multilateral agreements or
conventions; or
The Bill proposes to include confidential

information in relation to sharing of data
contents under a memorandum of
understanding,
bilateral,
regional,
multilateral agreements or conventions
as well as public disclosure of valuation
data without disclosing name and
address of the importer or exporter or
their suppliers.
(e) public disclosure of valuation data through any

medium containing description of items, origin,
currency, declared and assessed unit value without
disclosing name and address of the importer or
exporter or their suppliers
3. Alternative Dispute Resolution [Section 195C]

SECTION

2016
COMMENTS
195C
(2) Subject to the provision of sub-section (1), the Board,

after examination of the application of an aggrieved
person, may appoint a committee, within 30 days of
receipt of such application, consisting of an officer of
customs not below the rank of Collector and
two persons from a notified panel of retired District
and Sessions judge and retired judges of High Court
or Chartered or Cost Accountants, Advocates, Tax
consultants or reputable taxpayers for the resolution
of the hardship or dispute.]

Dispute Resolution mechanism, following
amendments have been introduced:
- Alternate Dispute Resolution committee
would include an office of customs not
below
the
rank
of
collector;
- Board is required to pass an order on the
recommendation of the Committee within
90 days instead of 45 days; and
(4) The Board may, on the recommendation of the

committee, pass such order, as it may deem - In case order is not passed by the Board
appropriate ,within 90 days of the receipt of within 90 days, the recommendation of the
recommendations of the committee;
committee shall be treated as an order
Page
82
Provided that if such order is not passed within

the aforesaid period, recommendations of the
committee shall be treated to be an order
passed by the Board under this sub-section.
passed by the Board.
(5) The aggrieved person may make the payment of

customs duty and other taxes as determined [if any]
by the Board in its order under sub-section (4) or as
per recommendations of the committee in terms
of proviso to sub-section (4), as the case may
be, and all decisions, orders and judgments made or
passed shall stand modified to that extent and all
proceedings under this Act or the rules made there
under by any authority shall abate:
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4. First Schedule amendments- changes in rates of custom duty [Section 18(1)]
Tariff slabs to be reduced from 5 to 4.

Slab rates of 2% and 5% to be replaced with 3%.
Slab rates of 10% and 15% to be increased by 1% each i.e 11% and 16% respectively.
New proposed slab rates, applicable to all goods other than vehicles, are 3%, 11%
16%, 20%.
REFERENCE
First
Schedule
Heading
Number
9912
AMENDMENTS THROUGH
FINANCE ACT 2016
Exemption from Custom Duty and taxes It is proposed that the ambulances already
on disposal of old & used ambulances imported or to be imported by Edhi
imported by Edhi Foundation.
Foundation may be disposed of after expiry
of seven years from the date of importation
without payment duty and taxes leviable at
the time of import with the prior approval of
FBR.
Comments
PCT Code
CD %
against PCT Code "2917.3500", in column (4), for the

figure "16", the figure "11" shall be substituted;
2917.3500
11
against PCT codes "4411.1200 to 4411.9400", in column 4411.1200

(4), for the figure "20", the figure "16" shall be to
4411.9400
substituted;
16
against PCT codes "5205.1100 to 5206.4500", in column 5205.1100 to

(4), for the figure "3", the figure "11" shall be substituted; 5206.4500
11
PCT Code Description
83
9903
Page
COMMENTS
CD %
Imports by Privileged personnel / organisation: 0

Goods imported by privileged personnel or by
organisations or by any person authorised by the
contracting
parties,
under grant-in- aid agreements (including those
agreements which cover off budget foreign
contributions
or
funds brought by registered INGO's without any
financial liabilities to the Government of Pakistan)
signed
by
the
Economic Affairs Division (EAD) and or by any
Ministry authorised by the Government of Pakistan
and duly concurred by the Federal Board of
Comments
for PCT code
"9903", and the
entries relating
thereto in
column (2), (3)
and (4), the
following shall
be substituted,
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Page
84
Revenue (FBR)
9912
Following goods imported by Abdul Sattar Edhi 0

Foundation and Bilques Edhi Foundation, subject to
furnishing of a certificate by Maulana Abdul Sattar Edhi
son of Haji Abdul Shakoor Edhi or Mr Faisal Edhi, Vice
Managing Trustee and Qubra Edhi, Trustee, Edhi
Foundation
at
the
time
of
import
of
each consignment to the effect that the goods are
meant
for use by Edi Foundation or, as the case may be, by
Bilquis Edhi Foundation. (In the case of goods at serial
No. 14,15,16, the words "Edhi Foundation" or "as the
case
may be , Bilquis Edhi Foundation "are inscribed at some
prominent place on the body of each vehicle, aeroplane
or helicopter);
9917
"(3) Construction, development and operations 0

of Gwadar port and Free Zone Area:
Newly inserted
by Finance Act
2016
Following imports subject to such conditions,

limitations and restrictions as may be
prescribed by the Board from time to time: (i)
Equipments and materials (plant, machinery,
equipment, appliances and accessories),
imported by the Concession holder, its
operating
companies
and
contractors/subcontractors
exclusively
for
construction and operation of the terminals and
the Free Zone Area for a period of forty (40)
years; (ii) Ship bunker oils imported by the
Concession holder for the sole purposes of
supplying fuels and lubricants to the ships
used in the port and its terminals for a period
of forty (40) years; (iii) Vehicles imported by
the concession holder and its operating
companies for a period of twenty three (23)
years for construction, development and
operations of Gwadar Port and Free Zone
Area under the regulatory mechanism. The
regulatory mechanism for such vehicles,
including the number and types importable,
shall be devised by the Ministry of Port &
Shipping and FBR (in consultation with the
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Provincial Government if so required) and

notified by the FBR; and (iv) Imports for portrelated businesses established in the Free
Zone Area for a period of 23 years."; and
5. Second Schedule amendments- changes in rates of custom duty [Section 18]

REFER
ENCE
AMENDMENTS THROUGH
FINANCE ACT 2016
1 to 7
of
COMMENTS
Part-I
in sub-serial (B),against entries (1)

to (7), in column (4), for the figure
"2", the figure "0" shall be
substituted;
1C of
Part-I
against sub-serial (C), the entry in

column (5), shall be omitted;
Condition: If used for agriculture sector,
will be removed.
1D of
Part-I
in sub-serial (D), against entries (4),

(12), (13) and (15), in column (4), for
the figure "2", the figure "0" shall be
substituted
10 of
Part-I
(10) any other Ch. 3% If imported

by machinery and 84 & 85
manufacturers
equipment
for
which are manufacturing members
of dairy Pakistan Dairy products
Association and
in sub-serial (F), after entry (9) and

the corresponding entries relating
thereto in column (3),(4) and (5), the
following new entry and the
corresponding
entries
relating
thereto in columns (3), (4) and (5)
shall be added, namely:
22 of
Part-I
20 Following items for Nil use with

solar energy:-
for S. No 20 and corresponding

entries relating thereto in columns
(2),(3),(4) and (5), the following
shall be substituted, namely:
Solar Power 8501.3110 0%

Systems. 8501.3210
Page
85
(1) Off-grid/On-grid solar power

system(with or without provision for
USB/charging
port) comprising of
(i) PV Module. 8541.4000 0%
(ii) Charge 9032.8990
controller. 8507.2090
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(iii)
Batteries
for
8507.3000
specific
utilisation
8507.6000
with the system (not exceeding 50 Ah
in
case
of
portable system). 8544.4990
(iv) Essential connecting wires
(with
or
without
8504.4090
switches).
(v)
Inverters
(off-grid/ on-grid/
hybrid with provision for direct
connection/ input renewable energy
(c) a source and with Maximum
Power Point Tracking (MPPT).
(vi) Bulb holder (2) Water purification
plants operating on solar energy
22 of
Part-I
after sub-serial (xiv) and the entries in sub-serial (i),relating thereto in column (3), (4) and (A) after the word ballast, for the
(5),
word with the comma shall be
the following new sub-serial numbers substituted; and (B) in column
and the entries relating thereto in (3), after PCT code 9405.1090 the
codes
8539.3290
and
columns (3), (4) and (5) shall be PCT
8543.7090 , shall be added; and
added, namely:(xv) Invertors (off- 8504.4090 0%
grid/on grid/hybrid) with provision
for direct connection / input from
renewable energy source and with
Maximum Power Point Tracking
(MPPT).
in sub-serial (ii),
(A) for the expression having in
built/
integral PV module with or without

solar batteries the words with or
without ballast, PV module, fitting
(xvi) Charge 9032.8990 0%"; and and fixtures shall be substituted;
controller / Current controller.
and (B) in column (3), after PCT
code 9405.4090 the PCT codes
8539.3290 and 8543.7090 , shall be
added; and
Page
86
against sub-serial (vii), in column

(3), for the PCT code 8539.3900 ,
the PCT code 8539.3290, shall be
substituted; and
after sub-serial (xiv) and the entries
relating thereto in column (3), (4)
and (5),
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the
following
new
sub-serial
numbers and the entries relating
thereto in columns (3), (4) and (5)
shall be added,
63 of
Part-III
63. (i) Set top boxes for 8517.6950

11% Subject to type gaining access
to approval by internet PEMRA. This
concession will
(ii)TV broadcast 8525.5020 be
available till transmitter 30.06.2017
(iii)Reception 8528.7110 apparatus
for 8528.7220 receiving satellite
signals of a kind used with TV
(satellite dish receivers)
(iv) Other set
boxes 8528.7290
top
in Part-III, in the Table, in column

(1), after Sr. No 62 and the entries
relating thereto in column (2), (3),
(4) and (5), the following new Sr.
Nos. and the entries relating
thereto in columns (2), (3), (4) and
(5) shall be inserted and the
existing Sr. Nos. 63 and 64 shall
be renumbered as Sr. Nos. 66
and 67, respectively, namely:-
8528.7190
64. Ships and other 8901.1000 0%

The exemption floating crafts shall be
including tugs, 8901.2000 available
up to survey vessels and the year
2020 other specialised 8901.3000
subject to the crafts purchased or
condition that bare-boat chartered
8901.9000 the ships and by a
Pakistani crafts are used entity and
flying 8902.0000 for the purpose
Pakistani flag. for which they
8904.0000 were procured and in
case 8905.1000 such ships and
crafts are used 8905.2000 for
demolition purposes, full 8905.9000
customs duties and other 8906.1000
charges to applicable and 8906.9000
ships for crafts shall 8907.9000
purchased chargeable demolition
purposes be
Set top boxes for gaining access to

internet, TV broadcast transmitter,
reception apparatus for receiving
satellite signals used for television and
other set top boxes have been extended
reduced sales tax of 5%.
Page
87
65. (i)Electronic 8542.3900 0% If

imported by integrated circuits SIM
and Smart (SIM Chip) Card
(ii) Magnetic sheets 8519.8190 5%
manufacturers
(iii) Glue Tape 5807.1030 Lamination
for dye registered bonding of chip 5%
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under Sales
(iv) Polyvinyl 3920.4910 Tax Act,
1990, Chloride (PVC) as per quota
Rigid Film 5% determined by IOCO
and
(v) Biaxially 3920.2040 procedure
Oriented prescribed in Polypropylene
SRO (BOPP) film, 5% 565(I)/2006
laminated and
in Part-VI, in the Table, against S.
No 1, in column (5), after the
expression Whether imported or
acquired on wet or dry lease. ,
the expression In case of M/s
Pakistan International Airlines
Corporation this exemption shall
be admissible w.e.f. 19th March,
2015. shall be added;
8 of
Table B
Part VII
against Sr. No 8, in the fifth

column, for the expression, If
imported
by
newspaper
publishers certified by the
Ministry
of
Information,
Broadcasting
and
National
Heritage. , the words If imported
by newspaper or periodical
publishers certified by the All
Pakistan
Newspaper
Society
(APNS) , shall be substituted;
9 Cotton yarn 52.05 5 Nil ; and

9 of
Table B
Part VII
after Sr. No 8 and the entries

relating thereto in the second,
third, fourth and fifth columns the
following new serial number and
the entries relating thereto shall
be inserted and the existing Sr.
Nos. 9 to 22, shall be renumbered as Sr. Nos.10 to 23
respectively
Page
88
1 of
Part-VI
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6. Fifth Schedule amendments- changes in rates of custom duty [Section 18 (1A)]

The fifth Schedule to the Act provides the reduced rate/exemption of customs duty with
certain conditions, limitations or restrictions. The following significant propositions are being
introduced alongwith tabular form appearing below, where applicable.
Part-I (Plant, machinery, equipment, apparatus including capital goods)
Custom duty is reduced from 5% to 3% in case of diary, livestock and poultry.
Customs Duty is reduced from 5% to 3% in case of certain machinery related to green
house farming, grain handling and storage facilities including silos, cool chain
machinery equipment, desalination plants, coal firing system, gas processing plants
and oil and gas field prospecting, gymnasim equipment, mine construction equipment,
plant and machinery for power generation through oil, gas, coal hydel, wind and wave
energy, plant and machinery for power transmission and grid stations, machine and
tool for stone work, sand blasting machines, machinery, equipment and other project
related items for setting up of hotels located in an area of 30 km around the zero point
in Gwader and effluent plants.
Part-II (Active pharmaceutical ingredients, chemical, drugs etc)
Custom duty is reduced from 5% to 3% in case of certain pharma ingredients like
Moaxiflocacin, Alfacalcidole, Lactulose etc.
Part-III (Raw Materials/inputs for Poultry and Textile Sector, Other Goods)
Custom duty is proposed at 0% on certain goods including seeds of sun flower,
mustard and canola, Sodium iron and other premixes of vitamins, minerals and micronutrients (food grade).
Certain raw material, including paper and paper board, Chrysotile asbestos etc.
enjoying concessionary duty of 15% under SRO 565 (1)/2006 are proposed to be
moved in part-111, without any changes in the rate of duty.
Customs duty is proposed at various reduced rates on certain new items.
Part-IV (Imports of Machinery and equipment for textiles Sectors)
It is proposed to charge customs duty at 0% on import of certain machinery and
equipment items, not manufactured locally, if imported by textile industrial units
registered with Ministry of Textile Industry.
Page
89
Previously part IV was designated to deal with miscellaneous goods, which is now
proposed to be renumbered as Part VII, with certain new entries.
Part-V (Import of Automotive Vehicles (CBUs) under Automotive Development Policy
2016-21
It is proposed to reduce custom duty from 2% to 1% for LNG/LPG/CNG buses if
imported in CBU condition.
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Custom duty is proposed to be reduced to 1% on Hybrid Electric Vehicles if imported

in CBU condition.
Previously Part V was designated to Imports of aviation related goods, which is
now proposed to be renumbered as Part IV.
A new condition is proposed to explain the applicability of rate of custom duty in respect of
goods for which two rates of custom duty (i.e 3% and 5%) have been mentioned. It explains
the rate of tax of 3% shall only apply such goods which are mentioned in the First Schedule
goods subject to levy of duty @ 3%.
7. Changes in rates in Tabular Form - Fifth Schedule

Description
Page
90
Dairy, Livestock and

Poultry, machinery
Fish Farming, fish feed pellet
(floating type) machines
Fish / shrimp feed
5%
Proposed
Concessio Rationalizati Zero
ns
on
rated
Reduced
/ Increase
Rate
2%
5%
2%
Existing
10%
&20%
Import of Premixes to prevent 5-20%
growth stunting
Water Quality Testing Kits
20%
Local manufacturing of LED 20%
Lights
Linear Akyl Benzene
2%
Raw material of PVC Resin
5%
White Spirits
10%
Stamping Foil
20%
Fatty Alcohol Ethoxylate
15%
CFC Free Gases
15%
Aluminum Sheet in Coil
20%
Thermostats of Deepfreezers 20%
Betel nuts and Betel Leaves
10 Rs. 300/
Kg
Almonds
10%
Frozen fish
10%
Medium Density Fiber board 15%
Cement Clinker
2%
Semi Printed/Printed Security 5%
Paper
Live Chicken stock and Eggs 5%
of chicken
Birds eggs(not in shell)
5%
Exemptio
n
available
0%
0%
Yes
5%
Yes
3%
3%
16%
5%
11%
11%
3%
20 Rs. 600/
Kg
20%
20%
20%
11%
16%
11%
16%
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RD 10%
0%
RD 17.5%
0%
20%
20+2
5 RD
20+2
5 RD
20%
Page
91
Bead Wire for tyres

Manufacturers
Carbon Steel Strips used by
Razor blade manufacturers
Levy of RD on Powdered
Milk
Levy of RD on Whey Powder
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RELATED TO FEDERAL EXCISE ACT, 2005
FOR THE TAX YEAR 2017
TABLE OF CONTENTS
Sr.
1.
Particulars
Filing of annexures of return in different dates [Section 2(8a)]
2.
Time and manner of payment of duty and filling of return [Section 4(2)]
3.
Filling of separate sales tax returns [Section 4(3)]
4.
Adjustment of duties of excise [Section 6(2A)]
5.
Exemptions [Section 16(2)]
6.
Offences, penalties, fines and allied matters [Section 19(13)]
7.
Alternative dispute resolution [Section 38]
8.
Disclosure of information by a public servant [Section 47B]
9.
Rates of FED enhanced [First Schedule, Table 1]
10.
Withdrawal of duty on certain exercisable services [Table-II of the first schedule]
11.
Omission from second schedule (Excisable goods)
12.
Exemption under Table-I of the Third Schedule (Goods)
green color)
Page
92
NOTE
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1. Filing of annexures of return in different dates [Section 2(8a)]

SECTION
AMENDMENTS THROUGH
FINANCE ACT 2016
2 (8A)
Due date, in relation to furnishing a

return under section 4, means the 15th
day of the month following the end of
the month, or such other date as the
Federal
Government
may,
by
notification in the official Gazette,
specify and different dates may be
specified for furnishing of different
parts or annexures of the return.
COMMENTS
Bill proposes to amend the definition of

due date for filling of Sales Tax and
Federal Excise return. It prescribes
multiple due dates for furnishing of
different parts or annexures of the return.
Amendment is made to comply with the
new automated system scheme for efiling of returns with effect from 1 July,
2016, where the sellers and buyers will
be required to file their respective returns
or annexures of sales and purchases on
different due dates.
2. Time and manner of payment of duty and filling of return [Section 4(2)]
SECTION
4(2)
AMENDMENTS THROUGH
FINANCE ACT 2016
Duty due for the dutiable supplies
made or services rendered during a
month shall be deposited by the
registered person in the designated
branch of the bank by the date as
prescribed in this respect.
COMMENTS
Previously due date for payment of

duty was at the time of filling of
return. Now Bill specifies date of
payment of duty at the date
prescribed by the Federal Excise Act,
2005.
3. Filling of separate sales tax returns [Section 4(3)]

SECTION
4(3)
AMENDMENTS THROUGH
FINANCE ACT 2016
Section omitted.
COMMENTS
In past, section required separate date-wise

returns to be filed whenever any change in
FED rates occurs during the tax period. The
requirement was to file a special return in
case of different rates of duty. Now above
requirement is proposed to be omitted from
the Federal Excise Act, 2005.
4. Adjustment of duties of excise [Section 6(2A)]
Page
93
SECTION
6(2A)
AMENDMENTS THROUGH
COMMENTS
FINANCE ACT 2016
From the date to be notified by Bill proposes newly inserted sub section
the Board, adjustment of duty of 6(2A) to allow adjustment of FED only if the
excise under sub-section (1) shall supplier of goods and services has declared
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be admissible only if the supplier
of input goods and services has
declared such supply in his return
and he has paid amount of tax due
as indicated in his return.

such supply in his return and has paid the
amount of duty due as indicated in his return.
On basis of above, new system will require
early submission of sale invoice data,
enabling buyers to claim the same. This
inclusion also serves to separate the input to
be calculated in respect of goods and
services. Section 7 covers input tax on
services entirely.
5. Exemptions [Section 16(2)]

SECTION
16(2)
AMENDMENTS THROUGH
FINANCE ACT 2016
The Federal Government may, pursuant
to the approval to the Economic
Coordination Committee of Cabinet,
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 duties,
development of backward areas,
implementation of bilateral and
multilateral agreements and matters
relating to international financial
institution or foreign governmentowned financial institutions by
notification in the official Gazette,
exempt subject to such conditions as may
be specified therein, any goods or class
of goods or any services or class of
services from the whole or any part of
the duty leviable under this Act.
COMMENTS
In order to expand the scope of this

section it is proposed to include any
international financial institution or
foreign government owned financial
institution
operating
under
a
memorandum of understanding, an
agreement or any other arrangement
with the Government of Pakistan.
Approval under section 16(2) of
Federal Excise Act, 2005 is exercised
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 duties,
development of backward areas,
implementation of bilateral and
multilateral agreements and matters
relating to international financial
institution or foreign governmentowned financial institutions
6. Offences, penalties, fines and allied matters [Section 19(13)]
Page
94
SECTION
19(13)

ACT 2016
Any person who contravenes any provision of
this Act of rules made thereunder for which no
penalty as specifically been provided in this
section shall be liable to pay a penalty of five
COMMENTS
The Bill proposes a penalty at

the rate of Rs. 5,000 or 3% of
duty involved, whichever is
higher, in case of non-
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thousand rupees or three percent of the amount compliance of the Federal

of duty involved, whichever is higher,
Excise Act, 2005 or allied rule,
Provided that the person concerned for which no specific penalty
shall be given reasonable opportunity of was provided.
hearing and chance to rectify the
mistake, if any, before imposing penalty.
7. Alternative dispute resolution [Section 38]

SECTION
38

ACT 2016
COMMENTS
(2) The Board may, after examination of the

application of a registered person, appoint a
committee within thirty days of receipt of such
application in the Board, consisting of an officer of
Inland revenue not below the rank of an
Commissioner and two persons from the notified
panel consisting of retired Judges not below District
and Sessions Judge, chartered or cost accountants,
advocates, representatives of trade bodies or
associations, or any other reputable taxpayers, for
the resolution of dispute.
With a view to improve the

Alternate Dispute Resolution
mechanism,
following
amendments
have
been
introduced:
(4) The Board may, on the recommendation of the

Committee, pass such order, as it may deem
appropriate within ninety days of the receipt
thereof;
Provided that if such order is not passed by the
Board within the aforesaid period, the
recommendation of the Committee shall be
treated to be an order passed by the Board
under this subsection.
- Alternate Dispute Resolution

committee would include an
office of customs not below the
rank
of
collector;
- Board is required to pass an
order on the recommendation of
the Committee within 90 days
instead of 45 days; and
- In case order is not passed by
the Board within 90 days, the
recommendation
of
the
committee shall be treated as an
order passed by the Board.
8. Disclosure of information by a public servant [Section 47B]

SECTION
Page
95
47B

ACT 2016
(1) Any information acquired under any
provision of this Act shall be confidential and no
public servant shall disclose any such
information, except as provided under section
216 of the Income Tax Ordinance, 2001 (XLIX
of 2001).
COMMENTS
This substitution of section

restricts the public servant to
disclose the
confidential
information
in
specified
matters. It also overrides and
extends the scope of the
Freedom
of
Information
(2) Notwithstanding anything contained in sub- Ordinance, 2002 in this regard
section (1) and the Freedom of Information apart from other changes.
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Ordinance, 2002 (XCVI of 2002), any

information received or supplied in pursuance of
bilateral or multilateral agreements with
government of foreign countries for exchange of
information under section 47A may be
confidential.
9. Rates of FED enhanced

Table-1 of the first schedule (excisable goods) on which FED rates proposed to be enhanced
Rate of duty on Aerated waters

enhanced
S
No.
4
Aerated waters
2201.1020,
Aerated waters, containing added

sugar or other sweetening matter or
flavored
Aerated waters if manufactured
wholly from juices or pulp of 4[ ]
vegetables, food grains or fruits and
which do not contain any other
ingredient, indigenous or imported,
other than sugar, coloring materials,
preservatives or additives in
quantities prescribed under the West
Pakistan Pure Food Rules, 1965.
For the period from 01-07-2016 to
30-11- 2016, locally produced
cigarettes if their on-pack printed
retail price exceeds Rs. 4,000
(existing Rs. 3,600) per 1,000
cigarettes
2202.1010
9a
9b
Existing
Rate of
Duty
Proposed
Rate of
Duty
10.5%
retail price
10.5%
retail price
of 11.5% of
retail price
of 11.5% of
retail price
Respective
headings
10.5%
retail price
of 11.5% of
retail price
24.02
Rs. 3,155 per

1,000
cigarettes (as
notified vide
SRO
1181(1)/2015
dated 30
November
2015
-
For the period from 01-12-2016 24.02

onwards, locally produced cigarettes
if their on pack printed retail price
Rs. 3,436
*per 1,000
cigarettes
Rs. 3,705
per 1,000
cigarettes
Page
96
Rate of duty on cigarettes

modified
Respective
Headings
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10a
10b
Rate on
duty of
13
SERIAL NO.
53 of the
First
Schedule
exceeds Rs. 4,400 per 1,000

cigarettes.
For the period from 01-07-2016 to 24.02
30-11- 2016, locally Produced
cigarettes if their on-pack printed
retail price does not exceed Rs.
4,000 (existing Rs. 3,600) per 1,000
cigarettes
For the period from 01-12-2016

onwards, locally produced cigarettes
if their on pack printed retail price
does not exceeds Rs. 4,400 per
1,000 cigarettes
Portland cement, aluminous cement,
slag cement, super sulphate cement
and similar hydraulic cements,
whether or not coloured or in the
form of clinkers
AMENDMENTS THROUGH
FINANCE ACT 2016
Omitted
Rs. 1,420 per

1,000
cigarettes (as
notified
vide SRO
1181(1)/20
15 dated 30
November
2015
-
Rs. 1,534 *
per 1,000
cigarettes
Rs. 1,649
per 1,000
cigarettes
5% of the retail 1 Rs. per

price
Kg
COMMENTS
White crystalline sugar is omitted from

Federal Excise Act, 2005 and through
proposed insertion in Sr. No. 32 in the Eighth
Schedule to the Sales Tax Act, 1990 to levy
sales tax @ 8% will be attracted on the same.
10. Withdrawal of duty on certain exercisable services [Table-II of the first

schedule]
Note The duty on the services as specified against following serial numbers shall not
be levied on services provided in a Province where the Provincial sales tax has been
levied thereon.
Page
97
S
No.
1
2
2a
Respective
Headings
Advertisement on closed circuit T.V.

9802.3000
Advertisements on cable T.V. network 9802.5000
Advertisements in news papers and 9802.4000
periodicals (excluding and
Existing Rate of Duty

Sixteen percent of the charges
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11
13
14
15
Classified
advertisements)
of 9802.9000
hoarding boards, poles Signs and sign
boards.
Shipping agents
9804.1000
Services provided or rendered by

banking companies, cooperative
financing g societies, modarbas,
musharikas,
leasing
companies,
foreign exchange dealers, nonbanking financial institutions, Assets
Management Companies and other
persons dealing in any such services.
Franchise services
Services provided of rendered by
stock brokers
Services provided or rendered by
port and terminal operators in
relation to imports excluding
stevedoring services.
Chartered flights
(i) Two hundred rupees per

house-bill of lading issued in
case of Non-Vessel Operating
Common Carriers (NVOCC),
International Freight.
98.13
ii) sixteen per cent of the

charges in case of other
categories of shipping agents.
9812.9410
9819.1000
Ten percent of the charges

9819.9090
98.03
11. Omission from second schedule (excisable goods)

SERIAL NO.
COMMENTS
White crystalline sugar is omitted from

Federal Excise Act, 2005 and through
proposed insertion in Sr. No. 32 in the
Eighth Schedule to the Sales Tax Act,
1990 to levy sales tax @ 8% will be
attracted on the same.
Page
98
3 of the
Second
Schedule
AMENDMENTS THROUGH
FINANCE ACT 2016
Omitted
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12. Exemption under Table-1 of the third schedule (goods)

S. NO
18
19
COMMENTS
Exemption available under Sr. No. 18 of

the Third Schedule of Federal Excise
Act, 2005 to white cement is withdrawn
by the Board.
The Government is interested in
development of the Gwadar Port,
therefore it has allowed exemption of
duty on material and equipment to be
used in the construction and development
of Gwadar Port imported by and for
China Overseas Ports Holding Company
Limited and its operating companies for a
period of 40 years.
Materials and equipment for construction

and
operation of Gawadar Port and
development
of
Free Zone for Gawadar Port as imported
by
or
supplied to China Overseas Ports
Holding
Company Limited (COPHCL) and its
operating
companies namely,
in the table for entries relating to
proposed Sr. no.19, in column (2).(i) China Overseas Ports Holding
(i) after the words "Gawadar Free
Company Pakistan (Private) Limited,
Zones Company Limited", comma
(ii) Gwadar International Terminals "," shall be substituted with full
stop.
Limited,
(ii) the words and expressions

(iii) Gwadar Marine Services Limited "their
contractors,
suband
contractors; and Ship Bunker Oils
bought and sold to the ships
(iv) Gwadar Free Zone Company
calling on/visiting Gawadar Port,"
Limited. having Concession Agreement
shall be deleted.
with the Gwadar Port Authority, for a
period of twenty years, subject to the
conditions and procedure as specified
under
S.No.
100A
of
Table-1 of Sixth Schedule to the Sales
Tax Act, 1990.
Supplies made by the businesses to be Businesses are also encouraged to invest
established in the Gwadar Free Zone for in Gwader Free Zone by providing
a period of twenty-three years within the exemption of duty. It is proposed that
Gwadar Free Zone, subject to the supplies made by the businesses to be
condition that the sales and supplies established in Gwader Free Zone will be
outside the Gwadar Free Zone and into provided exemption of duty for a period
the territory of Pakistan shall be of 23 years subject to certain conditions.
subjected to Federal Excise Duty.
Page
99
20
AMENDMENTS THROUGH
FINANCE ACT 2016
Omitted
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RELATED TO ISLAMABAD CAPITAL
TERRITORY (TAX ON SERVICES)
ORDINANCE, 2001 FOR THE TAX YEAR 2017
TABLE OF CONTENTS
Sr.
1.
Particulars
Linkage of charging and exemption provisions of Sales Tax Act[Section 3(2A)]
2.
Sales tax not applicable on services by Federal regulatory and licensing authorities
[Section 3(2B)]
NOTE
Page
100
(The amendments made through Finance Act 2016, have been shown in red
green color)
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1. Linkage of charging and exemption provisions of Sales Tax Act [Section 3(2A)]
SECTION
AMENDMENTS THROUGH
FINANCE ACT 2016
3(2A)
The following provisions of the Sales Tax

Act, 1990, shall apply, mutandis
mutandis, to the services rendered or
provided under this Ordinance, namely:
a) clause (b) of sub-section (2) and subsections (6) and (7) of section 3;
COMMENTS
For collection and payment of sales

tax on taxable services under the
Islamabad Capital Territory (Tax on
Services) Ordinance, 2001, all the
provisions of Sales Tax Act, allied
Rules and notifications apply
mutatis mutandis.
b) serial number 2, in column (1), and the

The Finance Bill seeks to develop
entries relating thereto of the Fifth
linkage of the aforementioned
Schedule read with section 4;
statutes for charge of sales tax, zero
c) sub-sections (2), (3), (6) and (7) of rating and exemptions by proposed
insertion of Section 3(2A) under
section 13; and
ICT Ordinance.
(d) serial number 48, in column (1), and
entries relating thereto of Table 1 of Sixth
Schedule read with section 13; and
"(2) in the schedule, for S. No 37, in
column (1), and the entries relating
thereto in columns (2), (3) and (4), the
following shall be substituted, namely:
Valuation services; - Sixteen per
competency and eligibility cent"; testing
services excluding education testing
services provided or rendered under a
bilateral or multilateral agreement signed
by the Government of Pakistan
Education testing services provided

or rendered under a bilateral or
multilateral agreement signed by the
Government
of
Pakistan
are
excluded from the levy of Federal
Sales Tax.
2. Sales tax not applicable on services by Federal regulatory and licensing

authorities [Section 3(2b)]
SECTION
COMMENTS
The Bill seeks to provide immunity

from levy of sales tax on services
rendered or provided by regulatory
and licensing body established by or
under a Federal statute.
Page
101
3(2B)
AMENDMENTS THROUGH
FINANCE ACT 2016
The tax levied under sub-section (1) shall
not be applicable to regulatory and
licensing services rendered or provided by
an organization established by or under a
Federal statute.
Ph: +92-42-35408635-36, 35408638 Cell: +92-333-4245240, +92-301-4245240

3. TABLE ADDED
S. NO.
DESCRIPTION
PCT
CONDITIONS
HEADING
(1)
1.
(2)
Construction services, excluding
(i) construction projects (industrial and commercial)
(3)
9824.0000
and
9814.2000
(4)
Five percent subject to
the condition that no
input tax adjustment or
refund shall be
admissible
9810.0000 ,
9821.400
and
9821.5000
Five per cent subject to

refund
shall
be
admissible
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
buildings
of
industrial
zones,
consular
and other organizations exempt from
income tax.
(v) Residential construction projects where the
covered area does not exceed 10,000 square feet for
houses and 20,000 square feet for apartments
3.
4.
Page
102
5.
Services provided for personal care by beauty parlours,

clinics and slimming clinics, body massage centers,
pedicure centres; including cosmetic and plastic surgery
by such parlours/ clinics, but excluding case where:
(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
Services provided by freight forwarding agents, and
packers and movers.
9805.3000
and
9819.1400
Services provided by tour operators and travel agents 9805.5100,
including all their allied services or facilities (other than 9805.5000
Hajj and Umrah)
and
9803..9000
Services provided by specialized workshops or 98.20
undertakings
(auto-workshops;
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 stations and other
Rs. 1000 per bill of

lading, whichever is
higher
refund
shall
be
admissible
refund
shall
be
admissible
Ph: +92-42-35408635-36, 35408638 Cell: +92-333-4245240, +92-301-4245240

6.
workshops)
Services provided by health clubs, gyms, physical fitness
centres, indoor sports and games centres and body or
sauna massage centres
9821.1000,
9821.2000
and
9821.4000
Services provided by laundries and dry cleaners
9811.0000
8.
Services provided by property dealers and realtors.
--
9.
Services provided by car/automobile dealers.
--
Page
103
7.

refund
shall
be
admissible
refund
shall
be
admissible
refund
shall
be
admissible
refund
shall
be
admissible
Ph: +92-42-35408635-36, 35408638 Cell: +92-333-4245240, +92-301-4245240

Amendments Through FINANCE ACT 2016

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Amendments Through FINANCE ACT 2016

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Prepared By

Nadeem Butt (FCA)

URL: www.nbandco.com E-mail: nbco2007@yahoo/gmail/hotmail.com info@nbandco.com &

Nadeem Butt (FCA) - Principal

Nadeem & Co. Chartered Accountants