SALIENT FEATURES BUDGET 2023-24
INCOME TAX ORDINANCE 2001
1. Rationalization of Super Tax
under section 4C to apply on all persons across the board on income above Rs.
150 (m): insertion of additional three new income slabs of Rs. 350(m) to Rs.
400(m), Rs. 400(m) to Rs. 500(m) and Rs. 500(m) above to be taxed at 6%, 8% and
10% respectively.
2. Re-imposition of 0.6% advance
adjustable withholding tax on non-ATL persons on cash withdrawal.
3. 1% increase in withholding tax
rates on supply of goods other than sale of rice, cotton seed or edible oils,
on rendering of services including service subject to concessionary tax rate of
3% but excluding electronic and print media advertising services and on
execution of contracts excluding sportsperson.
4. 0.5% increase in withholding
tax rate for commercial importer on import of goods falling in Part III of
Twelfth Schedule to the Income Tax Ordinance, 2001.
5. Re-imposition of 10% final
withholding tax on issuance of bonus shares by a company (20% for non-ATL).
6. Increase in withholding tax
rate from 1% to 5% on payment to non-resident through debit/credit or prepaid
cards. (2% to 10% for Non-ATL person).
7. Imposition of an adjustable
advance tax at Rs. 200,000 at the time of issuance of work permit/visa on
employment of a foreign domestic helper.
8. Imposition of additional tax
at the rate not exceeding fifty percent on income profit and gains of a person
or class of persons on account of extraordinary gains due to exogenous factors.
RELIEF MEASURES:
1. Continuation of concessionary
fixed tax rate of 0.25% for IT & ITeS exports for Tax years 2024, 2025 and
2026.
2. Automated issuance of an
exemption certificate for payment to a non-resident person within 30 days of
application.
3. Withdrawal of Sales Tax return
filing requirement for availing concessionary fixed tax rate of 0.25% for IT
& ITeS exports.
4. Increase in business turnover
limit of a manufacturer from Rs. 250 (m) to Rs. 800 (m) to qualify for
concessionary tax regime for SMEs and inclusion of IT & ITeS in SMEs
definition.
5. Concessionary tax rate of 20%
on banking company’s income from additional advances to IT & ITeS sector
instead of standard rate of 39%.
6. Enhancement of monetary limit
of foreign remittance remitted from outside Pakistan from five million rupees
to rupee equivalent of USD 100,000 for the purpose of section 111(4) which
places bar on asking nature and source of unexplained income/assets.
7. Waiver of 2% final withholding
tax on purchase of immovable property for nonresident individual POC/NICOP
holder where immovable property is acquired through foreign remittances
remitted from abroad.
8. 10% reduction in tax liability
or Rs. 5 (m) whichever is lower for a builder and 10% reduction or Rs. 1 (m)
whichever is lower for an individual for own construction of house for three
years.
9. 50% reduction in tax liability
for three years for youth entrepreneurship (maximum limit of Rs 2 million for
Individual / AOP and Rs 5 million for a company). Youth is defined as a natural
person upto the age of 30 years.
10. Extension for two years for
the purpose of concessionary tax rate of 20% for banking company’s income from
additional advances to low cost housing, agriculture, and SMEs including IT
& ITeS.
11. Encouraging export of
commodities (Agriculture produce, gems, metals etc) through online platform by
providing 1% concessionary final tax rate to indirect exporters.
12. Reduction of minimum tax
liability on turnover from 1.25% to 1.0% for companies listed on Pakistan Stock
Exchange.
13. Extension of exemption for
one-year granted to a person to profits and gains on sale of immovable property
or share of special purpose vehicle to any type of REIT scheme i.e. upto 30th
June, 2024.
14. Extension of Income Tax
exemption for one year i.e. upto 30th June, 2024 for resident persons of
FATA/PATA.
15. Five years tax holiday for
agro based industries being SMEs set up on or after 1st July, 2023 from tax
year 2024 to tax year 2028.
STREAMLINING MEASURES:
1. Broadening the scope of
definition of Permanent Establishment in Pakistan of non-resident person.
2. Streamlining the definition of
Associates to make it more succinct and elaborate.
3. Bringing more clarity in carry
forward regime of minimum tax on turnover.
4. Removal of technical mistake
in banking sector super tax regime by substituting tax year 2022 with tax year
2023.
5. Insertion of enabling
provision for computation, collection and payment of super tax under section
4C.
6. Introduction of enabling
provision for the purpose of effecting recovery of outstanding non-tax revenue
under any other statute or law by the Commissioner Inland Revenue.
7. Giving effect to change of
name from “Prime Minister’s Flood Relief Fund 2022” to “Prime Minister’s Relief
Fund for Flood, Earthquake and Other Calamities”.
DOCUMENTATION MEASURES:
1. Re-imposition of advance
adjustable withholding tax from persons not on ATL.