Minimum
Tax on Turnover under section 113
To clarify significant changes
made to the Income Tax Ordinance of 2001 by the Finance Act of 2022, the FBR
released Income Tax Circular No. 15 of 2022-23.
Minimum tax on turnover under
section 113 is payable by a resident company, permanent establishment of a
non-resident company, an individual or an AOP having turnover of Rs. 100
million and above under certain specific situations mentioned therein.
Following major changes have been
introduced in the minimum tax on turnover regime:
Previously, a person who had paid
minimum tax on turnover under section 113 was allowed to carry forward the said
tax for five succeeding tax years. Now this carry forward has been restricted
to three years.
The rate of minimum tax on
turnover of Oil Marketing Companies have been brought down from 0.75% to 0.5%.
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1. The following person’s liable to a 0.75% tax on turnover for the year:
(a) Sui Southern Gas Company Limited and Sui Northern Gas Pipelines Limited (for the cases where annual turnover exceeds rupees one billion.)
(b) Pakistani Airlines Corporation; and
(c)
Poultry industry including poultry
breeding, broiler production, egg production and poultry feed production.
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2. The following person’s liable to a 0.5% tax on turnover for the year:
(a) Oil refineries
(b) Motorcycle dealers registered under the Sales Tax Act, 1990
(c)
Oil
marketing companies
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3. The following person’s liable to a 0.25% tax on turnover for the year:
(a) Distributors of pharmaceutical products, fast moving consumer goods and cigarettes;
(b) Petroleum agents and distributors who are registered under the Sales Tax Act, 1990;
(c) Rice mills and dealers;
(d) Tier-1 retailers of fast moving consumer goods who are integrated with Board or its computerized system for real time reporting of sales and receipts;
(e) Person’s turnover from supplies through e-commerce including from running an online marketplace as defined in clause (38B) of section 2.
(f) Persons engaged in the sale and purchase of used vehicles; and
(g)
Flour mills
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4. The following
person’s liable to a 1.25% tax on turnover for the year:
(a)
In all other cases.
