Commentary: Finance Act 2024

The Finance Bill, 2024, presented in the National Assembly on June 12, 2024, and subsequently passed as the Finance Act, 2024, on June 28, 2024, introduces significant amendments to Pakistan’s fiscal laws. These changes, effective from July 1, 2024, encompass a wide range of taxation areas including surcharges, income tax, sales tax, federal excise duty, and the imposition of capital value tax. The modifications aim to streamline tax administration, broaden the tax base, and enhance revenue collection mechanisms. This document presents a detailed compilation of points elucidating the key aspects of the Finance Bill and Finance Act, 2024.

Highlights

Impact of Finance Act 2024 on the Oil, Gas, Mining and Energy Sector

The Finance Act 2024 introduces several provisions that have direct implications for the oil, gas, mining, and energy sectors. These amendments encompass changes to existing levies, tax rates, and regulatory measures aimed at these industries.

Petroleum Levy Amendments: The amendments to the Petroleum Products (Petroleum Levy) Ordinance, 1961, particularly the Fifth Schedule, introduce updated levy rates on various petroleum products. High-speed diesel oil, motor gasoline, and superior kerosene oil are now subject to maximum petroleum levy rates of Rs. 70 per litre, while light diesel oil and E-10 gasoline have a levy rate of Rs. 50 per litre. Additionally, liquefied petroleum gas produced or extracted in Pakistan is now subject to a levy rate of Rs. 30,000 per metric ton .
Customs Act Amendments: Amendments to the Customs Act, 1969, include the introduction of definitions and regulatory measures for nuclear and radioactive materials, which affect the mining and energy sectors, especially those involved in nuclear energy and material handling. The introduction of terms such as “nuclear material” and “radioactive material” aligns with the Pakistan Nuclear Regulatory Authority Ordinance, 2001 .
Income Tax Ordinance Adjustments: Changes in the Income Tax Ordinance, 2001, include specific clarifications and adjustments related to coal mining projects in Sindh. The tax credit is now explicitly available only for income derived from operations supplying coal to power generation projects. This aims to streamline tax benefits and ensure they are correctly applied within the sector .
Import Exemptions for Energy Projects: The Finance Act 2024 extends certain exemptions and special provisions for the import of equipment and materials necessary for the construction, development, and operation of Gwadar Port and its Free Zone Area. This includes machinery, equipment, and vehicles imported by concession holders and their contractors, enhancing the development of energy infrastructure in the region .
Sales Tax and Excise Duty: Amendments to sales tax and excise duty provisions affect the import and local supply of petroleum products and related machinery. For instance, lubricating oils now attract a five percent ad valorem tax, impacting operational costs within the sector .

These provisions collectively aim to enhance regulatory compliance, optimise tax benefits, and support the infrastructure development crucial for Pakistan’s energy and mining sectors.

Companies Operations and Taxation

The Finance Act 2024 introduces several significant changes to the operations and taxation of companies, impacting various aspects of corporate financial management, compliance, and reporting. The notable provisions are as follows:

Taxation of Capital Gains: The Act amends the taxation structure for capital gains arising from the disposal of securities. The tax rates are adjusted based on the holding period, with a higher rate for shorter holding periods and lower rates for longer ones. For example, securities held for less than one year are taxed at 15%, while those held for more than six years are exempt from capital gains tax .
Tax on Builders and Developers: A new section, 7F, has been inserted to impose a tax on builders and developers. This aims to bring more transparency and compliance within the real estate sector, ensuring that profits from development activities are appropriately taxed .
Surcharge on High-Income Individuals and Associations: An additional surcharge of 10% is imposed on individuals and associations of persons whose taxable income exceeds Rs. 10 million. This surcharge is applicable on the income tax imposed under Division I of Part I of the First Schedule .
Significant Economic Presence for Non-Residents: The Act introduces the concept of “significant economic presence” in Pakistan for non-residents. Transactions or business activities conducted digitally and systematically soliciting business from Pakistani users will now be deemed to have a business connection in Pakistan, making such income taxable .
Disallowance of Certain Deductions: New provisions have been introduced to disallow certain deductions for expenses related to royalties paid to associates. If a company fails to justify that no benefit has been conferred on the associate, a portion of the promotional, advertising, and publicity expenses will be disallowed .
Extension of Loss Carry-Forward for PIA: The Pakistan International Airlines Corporation Limited (PIA) is allowed to carry forward its tax losses for a period of ten years. This provision aims to support the national airline in managing its financial losses more effectively .
Tax Collection from Non-Filers: The Act mandates higher tax rates for persons and entities not appearing on the active taxpayers’ list. For instance, non-filers involved in property transactions are subject to a higher tax rate, encouraging more entities to comply with tax filing requirements .
Penalties for Non-Compliance: Provisions for prosecution and penalties have been introduced for companies and associations of persons failing to fully disclose information in their tax returns. This includes fines and imprisonment for submitting incomplete or false information .

These provisions reflect the government’s efforts to enhance tax compliance, ensure equitable taxation, and curb tax evasion within the corporate sector. The changes are designed to streamline tax administration and bolster revenue collection by broadening the tax base and enforcing stricter compliance measures.

Personal taxation

The Finance Act 2024 introduces several changes to personal taxation in Pakistan, focusing on adjusting tax brackets, introducing surcharges, and enhancing compliance measures. Key provisions include:

Revised Tax Brackets and Rates: The Finance Act 2024 updates the tax brackets and corresponding rates for individual taxpayers. The new structure is as follows:
- Income up to Rs. 600,000: 0%
- Income from Rs. 600,001 to Rs. 1,200,000: 5% of the amount exceeding Rs. 600,000
- Income from Rs. 1,200,001 to Rs. 2,200,000: Rs. 30,000 + 15% of the amount exceeding Rs. 1,200,000
- Income from Rs. 2,200,001 to Rs. 3,200,000: Rs. 180,000 + 25% of the amount exceeding Rs. 2,200,000
- Income from Rs. 3,200,001 to Rs. 5,600,000: Rs. 430,000 + 30% of the amount exceeding Rs. 3,200,000
- Income above Rs. 5,600,000: Rs. 1,610,000 + 45% of the amount exceeding Rs. 5,600,000 .
Surcharge on High-Income Individuals: A 10% surcharge is imposed on individuals whose taxable income exceeds Rs. 10 million. This is aimed at ensuring that higher-income earners contribute proportionately to the national revenue .
Simplified Income Tax Return: The Act mandates the Federal Board of Revenue (FBR) to simplify the income tax return filing process for salaried individuals and other taxpayers, making compliance easier and more efficient .
Alternative Dispute Resolution Mechanism: The Act introduces an alternative dispute resolution (ADR) mechanism for individuals. This allows taxpayers to resolve disputes related to tax liabilities, refunds, penalties, or fines through an ADR committee comprising retired judges and tax experts. This provision aims to reduce litigation and expedite dispute resolution .
Penalties for Non-Filers: Higher tax rates are imposed on individuals who do not appear on the active taxpayers’ list. For example, a higher withholding tax rate applies to transactions involving non-filers, incentivizing timely tax return submissions .
Advance Tax on Property Transactions: The Act specifies the advance tax rates on the purchase of immovable property based on its fair market value. For properties with a fair market value up to Rs. 50 million, the tax rate is 3%; for those between Rs. 50 million and Rs. 100 million, the rate is 3.5%; and for properties exceeding Rs. 100 million, the rate is 4% .
Taxation of Dividend Income: The Act maintains a 15% tax rate on dividends received from mutual funds, real estate investment trusts, and other specified entities. However, dividends from mutual funds deriving more than 50% of their income from profit on debt are taxed at 25% .

These provisions aim to streamline personal taxation, promote compliance, and ensure that higher-income individuals contribute more significantly to the tax base.

Tax evasion, Tax Fraud, and Tax Avoidance

The Finance Act 2024 introduces stringent measures to address tax evasion, tax fraud, and tax avoidance. These measures include the establishment of dedicated units for investigating tax fraud, revised penalties for evasion, and enhanced provisions for compliance. Key highlights include:

Tax Fraud Definition and Penalties: Tax fraud is explicitly defined to include various fraudulent activities such as suppression of taxable supplies, false claims of input tax credit, issuance of fake invoices, and evasion of tax by any means. The penalties for tax fraud are severe, with offenders liable to pay a penalty of Rs. 25,000 or 100% of the evaded tax amount, whichever is higher. Additionally, upon conviction by a Special Judge, offenders may face imprisonment up to five years if the evaded tax is less than one billion rupees, and up to ten years if it exceeds one billion rupees, along with a fine equivalent to the evaded tax amount .
Tax Fraud Investigation Wing: The Act establishes the Tax Fraud Investigation Wing within Inland Revenue. This wing is responsible for detecting, analyzing, investigating, combating, and preventing tax evasion and fraud. It comprises several specialized units, including Fraud Intelligence and Analysis Unit, Fraud Investigation Unit, Legal Unit, Accountants Unit, Digital Forensic and Scene of Crime Unit, and Administrative Unit. The Chief Investigator, along with senior investigators, forensic analysts, and data analysts, leads this wing. The Board is empowered to specify the functions and jurisdiction of this wing and its officers .
Failure to Furnish Information: Companies and associations of persons that fail to fully state relevant particulars or information in their tax returns, or provide incomplete annexures and documents, are subject to prosecution. Offenders may face fines or imprisonment for a term not exceeding one year, or both. This measure ensures that all necessary information is accurately reported to the tax authorities .
Tampering with Evidence: The Act criminalizes tampering with or destroying material evidence or documents required to be maintained under tax laws. This includes human or digital means of falsifying invoices or financial records, substituting accounts, or producing fake documents to evade taxes or claim inadmissible refunds .
Enhanced Penalties for Non-Compliance: The Act enhances penalties for various forms of non-compliance, including the failure to withhold sales tax, under-reporting or non-reporting of taxable supplies, and failure to register under tax laws. The officer of Inland Revenue is empowered to issue show-cause notices, determine, and recover unpaid taxes along with penalties and default surcharges .
Limitation Period for Assessments: The Act specifies a limitation period of five years from the end of the financial year for issuing show-cause notices related to tax fraud. This period ensures timely detection and prosecution of tax evasion cases while providing a window for the authorities to assess and recover unpaid taxes .

These measures are designed to enhance tax compliance, deter fraudulent activities, and ensure that tax liabilities are accurately reported and paid. The establishment of a specialized investigation wing and the imposition of stringent penalties reflect the government’s commitment to tackling tax evasion and fraud effectively.

Below is a Q & A on the changes brought about by the Finance Act 2024

The Q&A format is designed to provide clear, precise, and actionable insights into the amendments, assisting legal professionals, taxpayers, and other stakeholders in navigating the updated fiscal landscape. Each question has been meticulously crafted to address specific provisions and their practical implications, ensuring a thorough understanding of the new legal framework.

This resource serves as an indispensable guide for comprehending the intricate changes and their impact on various sectors and taxpayer categories. Whether you are a legal practitioner, tax advisor, or an individual taxpayer, this comprehensive Q&A will equip you with the necessary knowledge to comply with the latest fiscal policies effectively.

Q: What is the effective date for the amendments made in the Finance Act, 2024? A: The amendments made in the fiscal laws by the Finance Act, 2024, are effective from July 1, 2024, unless otherwise specified.
Q: What is the surcharge applicable for individuals and AOPs with taxable income exceeding Rs 10 million? A: For every individual and Association of Persons (AOP) with taxable income exceeding Rs 10 million, a surcharge at the rate of 10% of the income tax on their taxable income is payable.
Q: Are there any changes in the tax rates for salaried individuals proposed through the Finance Bill, 2024? A: There are no changes in the tax rates for salaried individuals as proposed through the Finance Bill, 2024.
Q: How is the surcharge on taxable income calculated for individuals earning Rs 12 million? A: For an individual earning Rs 12 million, the normal income tax is Rs 2,765,000, and a surcharge of 10% on the income tax, amounting to Rs 276,500, is also payable.
Q: Does the surcharge apply to incomes under the final tax regime or special tax rates? A: The surcharge does not apply to incomes falling within the purview of the final tax regime or for which special tax rates are prescribed, such as capital gains on listed securities and immovable properties.
Q: Is the surcharge applicable on super tax for taxpayers with income exceeding Rs 150 million? A: For taxpayers liable to pay super tax due to their income crossing Rs 150 million, the surcharge applies only to their normal income tax liability, not on the super tax amount.
Q: What changes were made to the tax rates for non-salaried individuals and AOPs in the Finance Bill, 2024? A: There are no changes in the tax rates for non-salaried individuals and AOPs proposed through the Finance Bill, except for professional firms, which had their maximum rate reduced from 45% to 40%.
Q: What is the impact of the Finance Bill changes on non-salaried individuals with an income of Rs 1,200,000? A: For non-salaried individuals with an income of Rs 1,200,000, the income tax for Tax Year 2024 is Rs 75,000 (6.25%), and for Tax Year 2025, it is Rs 90,000 (7.50%).
Q: How has the Finance Act, 2024, affected the taxation of exporters of goods? A: The Finance Act introduced a new provision in section 147 requiring specified withholding agents to collect 1% advance income tax from exporters of goods, replacing the collection of advance tax under section 154 proposed through the Finance Bill.
Q: What is the revised tax impact on exporters and other persons post-Finance Act, 2024? A: The revised tax impact on exporters is that they are now subject to a 1% advance income tax collected by banks, EPZA, or Exporters/Export houses at the time of realisation of export proceeds.
Q: What special tax regime is prescribed for builders and developers in the Finance Act, 2024? A: The Finance Act, 2024, prescribes a special tax regime for builders and developers, with taxable profits computed as 10% of gross receipts for construction and sale of buildings, 15% for development and sale of plots, and 12% for income derived from both activities.
Q: Are builders or developers established by an Act of Parliament covered by the special tax regime? A: No, builders or developers established by an Act of Parliament or Provincial Assembly, engaged in activities for the benefit of employees or providing housing and ancillary facilities, are not covered by this special tax regime.
Q: What changes were made regarding the issuance of exemption certificates by the Commissioner? A: The proposal to withdraw the Commissioner’s power to issue tax withholding exemption certificates was dropped, but for payments to resident and non-resident persons not subject to minimum tax, the power to issue exemption certificates remains restricted.
Q: How has the Finance Act addressed the minimum tax on Special Economic Zone entities? A: The Finance Act re-inserted a specific clause exempting Special Economic Zone entities from the minimum tax regime based on turnover, clarifying their exemption status.
Q: What amendments were made to the treatment of sales promotion, advertisement, and publicity expenditure? A: The disallowance of 25% of sales promotion, advertisement, and publicity expenditure is now restricted to cases where the taxpayer fails to substantiate that no benefit has accrued to the associate owning specified intangibles.
Q: What is the reduced CGT rate for stock funds with dividend receipts less than capital gains? A: The CGT rate for stock funds, where dividend receipts are less than capital gains, was reduced from 20% to 15%.
Q: What constitutes ‘significant economic presence’ for non-residents in Pakistan? A: Significant economic presence for non-residents in Pakistan includes transactions with persons in Pakistan exceeding a prescribed amount, systematic soliciting of business activities, or digital interaction with users in Pakistan, irrespective of the location of the agreement or services rendered.
Q: Are non-residents covered by double tax treaties affected by the ‘significant economic presence’ amendment? A: Non-residents covered by applicable double tax treaties are not affected by the ‘significant economic presence’ amendment, as treaty provisions override domestic tax legislation.
Q: What new powers have been given to the Commissioner for best judgment assessments? A: The Commissioner can now determine taxable income based on sectoral benchmark ratios notified by the Board, including financial, production, gross profit, net profit, recovery, and wastage ratios.
Q: How is the year of discovery defined for concealed foreign assets or income? A: The year of discovery for concealed foreign assets or income is defined as the year in which the Commissioner issues a notice requiring the person to explain the nature and source of such assets or income.
Q: Are assets of a spouse included in the wealth statement for the purpose of the Commissioner’s power? A: Assets of a spouse are included in the wealth statement only if the spouse is dependent, as clarified by an explanation added through the Finance Act.
Q: What is the enhanced rate of advance tax collection for late filers on property transactions? A: The enhanced rate of advance tax collection for late filers on property transactions applies only to those who filed their returns for the last three preceding tax years after the respective due dates.
Q: Was the proposal to withdraw the 25% tax credit for full-time teachers and researchers accepted? A: No, the proposal to withdraw the 25% tax credit for full-time teachers and researchers was not accepted, and the tax credit continues to be available.
Q: What is the revised rate of default surcharge as per the Finance Act? A: The revised rate of default surcharge is 12% per annum or KIBOR plus 3%, whichever is higher.
Q: What are the penalties for non-compliance with FBR general orders for disconnection of utilities? A: The penalties for non-compliance are Rs 50 million for the first default and Rs 100 million for each subsequent default, effective from the date notified by the Board.
Q: What amendments were made regarding the two-tier appeal system in the Finance Act? A: Amendments include extending the transfer period of pending cases to December 31, 2024, specifying decision periods, and applying stay deposit conditions on CIRA orders.
Q: What new provisions were introduced to establish the Tax Fraud Investigation Wing (TFIW)? A: Provisions were introduced to establish TFIW with units for fraud intelligence, investigation, legal, accounting, digital forensics, and administration, with functions notified by FBR.
Q: What exemptions were provided to Special Purpose Vehicles (SPVs) buying Diversified Payment Rights? A: Income of SPVs buying Diversified Payment Rights is exempt from tax, and withholding tax provisions on payments to non-residents do not apply to such SPVs.
Q: How was the definition of ‘associate’ amended in the Finance Act? A: The definition of ‘associate’ was amended to align with section 85 of the Income Tax Ordinance, 2001, with necessary editorial corrections.
Q: What changes were made to the definition of ‘input tax’ in the Sales Tax Act? A: The definition of ‘input tax’ was amended to empower the Board to exclude certain services subject to provincial sales tax from admissibility through notification.
Q: What new elements were included in the definition of ‘tax fraud’? A: The definition now includes making taxable supplies without registration and intentional acts or omissions causing tax loss under the Sales Tax Act.
Q: What conditions apply for abatement of best judgment assessments in sales tax matters? A: Abatement of best judgment assessments occurs if the return is filed within sixty days of the assessment order, along with the deposit of due tax.
Q: What powers does the Chief Commissioner have regarding ‘Blacklisting’ and ‘Suspension’ orders? A: The Chief Commissioner can examine and modify ‘Blacklisting’ and ‘Suspension’ orders passed by the Commissioner, with such orders not appealable before the Appellate Tribunal.
Q: How was the ambiguity regarding payments through banking channels addressed? A: The ambiguity was clarified to specify that the threshold of Rs 50,000 is with reference to payments made to a single supplier in a tax period.
Q: Was the proposal to authorize investigative audit for tax fraud retained in the Finance Act? A: No, the proposal for investigative audit was dropped, but a new section authorizing the establishment of TFIW was included.
Q: What penalty amendments were introduced in the Finance Act? A: The Finance Act introduced further amendments to strengthen penal provisions, including editorial corrections and retaining certain penalties proposed through the Finance Bill.
Q: Which exemptions from sales tax were retained in the Finance Act? A: Exemptions retained include imports and supplies for cardiology, oncology, and charitable hospitals, as well as zero rating for raw materials for manufacturing exercise books.
Q: What new exemptions were introduced in the Finance Act regarding sales tax? A: New exemptions include supply/import of electricity to Azad Jammu and Kashmir, import of certain medications, bovine semen, and milk supplied by corporate dairy farms.
Q: What exemptions for erstwhile tribal areas were extended in the Finance Act? A: Exemptions for supplies and imports in tribal areas were extended till June 30, 2025, withdrawing the proposal for reduced rates.
Q: How are locally manufactured hybrid electric vehicles taxed under the Finance Act? A: Locally manufactured hybrid electric vehicles are subject to reduced sales tax rates of 8.5% for vehicles up to 1800 cc and 12.75% for vehicles from 1801 cc to 2500 cc until June 30, 2026.
Q: What is the increased rate of Federal Excise Duty (FED) on Portland cement? A: The rate of FED on Portland cement was increased from Rs 2 per kg to Rs 4 per kg.
Q: What FED has been levied on lubricating oil as per the Finance Act? A: FED at the rate of 5% ad valorem has been levied on lubricating oil under specific tariff headings.
Q: What changes were made to the minimum price restriction on cigarette brands? A: The minimum price restriction for cigarettes was reduced from 60% of the retail price to 55%, with revised descriptions for different tiers.
Q: What is the revised FED on international air travel services? A: FED on international air travel services was increased, with rates varying based on the class of travel and IATA Traffic Conference Areas, effective from July 1, 2024.
Q: What is the new Table III introduced in the Federal Excise Duty schedule? A: Table III aligns the chargeability of FED on items not covered by import/manufacturing of excisable goods or rendering of excisable services, including allotment/transfer of immovable property and sugar supply.
Q: How is CVT on farmhouses and residential houses in Islamabad Capital Territory determined? A: CVT is imposed based on area, with Rs 500,000 for farmhouses between 2000-4000 square yards, Rs 1,000,000 for larger farmhouses, and similar rates for residential houses.
Q: What are the maximum rates of Petroleum Levy (PL) after the Finance Act amendments? A: The maximum rates of PL were reduced from the proposed rates, with specific rates for different petroleum products such as HSDO, motor gasoline, and HOBC.
Q: How does the Finance Act, 2024, address the taxation of sugar supply? A: FED at Rs 15 per kg is levied on the supply of white crystalline sugar by any person to a manufacturing, processing, and packaging entity.
Q: What specific amendments were made to the income tax appeals process? A: Amendments include changes in the transfer and decision timelines for appeals, stay deposit conditions, and clarification on the jurisdiction of the High Court for references.
Q: What units comprise the Tax Fraud Investigation Wing (TFIW)? A: TFIW includes units for fraud intelligence, investigation, legal, accounting, digital forensics, and administration, with functions specified by FBR notification.

Q: How is the exemption for Diversified Payment Rights transactions defined in the Finance Act? A: Exemption is provided for income of Special Purpose Vehicles (SPVs) purchasing Diversified Payment Rights from Authorized Dealers in Pakistan, and the withholding tax provisions on payments to non-residents do not apply to such SPVs.
Q: How does the Finance Act redefine the term ‘associate’? A: The term ‘associate’ has been redefined to align with section 85 of the Income Tax Ordinance, 2001, including necessary editorial amendments for consistency.
Q: What is the amendment regarding the admissibility of input tax in the Sales Tax Act? A: The definition of ‘input tax’ was amended to allow the Board to exclude certain services subject to provincial sales tax from admissibility through notifications with specific conditions, restrictions, or limitations.
Q: How was the definition of ‘tax fraud’ expanded in the Finance Act? A: The definition was expanded to include intentionally understating or underpaying tax liability, overstating entitlement to tax credit or refund, making taxable supplies without registration, and causing loss of tax through intentional acts or omissions.
Q: What is the amended abatement condition for best judgment assessments in sales tax? A: Abatement of best judgment assessments will only occur if the return is filed within sixty days of the assessment order, along with the payment of due tax.
Q: What powers does the Chief Commissioner have regarding blacklisting and suspension orders? A: The Chief Commissioner can examine and modify blacklisting and suspension orders passed by the Commissioner, with such orders not being appealable before the Appellate Tribunal.
Q: How was the ambiguity regarding payments through banking channels resolved? A: The threshold of Rs 50,000 for payments not made through banking channels is now clearly specified to be with reference to payments made to a single supplier in a tax period.
Q: Was the proposal for investigative audit in tax fraud cases retained? A: No, the proposal for investigative audit was dropped, but a new section was included authorizing the establishment of a Tax Fraud Investigation Wing for handling tax fraud cases.
Q: What changes were made to the penalty provisions in the Finance Act? A: Amendments were made to strengthen penal provisions, including editorial corrections and retaining certain penalties proposed through the Finance Bill.
Q: What exemptions from sales tax were retained in the Finance Act? A: Exemptions for imports and supplies for cardiology, oncology, charitable hospitals, and raw materials for manufacturing exercise books were retained.
Q: What new sales tax exemptions were introduced in the Finance Act? A: New exemptions include supply/import of electricity to Azad Jammu and Kashmir, import of certain medications, bovine semen, and milk supplied by corporate dairy farms.
Q: How were exemptions for erstwhile tribal areas addressed in the Finance Act? A: Exemptions for supplies and imports in tribal areas were extended until June 30, 2025, withdrawing the proposal for reduced rates.
Q: What are the sales tax rates for locally manufactured hybrid electric vehicles? A: Reduced sales tax rates for locally manufactured hybrid electric vehicles are 8.5% for vehicles up to 1800 cc and 12.75% for vehicles from 1801 cc to 2500 cc until June 30, 2026.
Q: What is the revised rate of Federal Excise Duty on Portland cement? A: The Federal Excise Duty on Portland cement was increased to Rs 4 per kg.
Q: What is the Federal Excise Duty on lubricating oil as per the Finance Act? A: FED at the rate of 5% ad valorem is levied on lubricating oil under specific tariff headings.
Q: How were the minimum price restrictions on cigarette brands changed? A: The minimum price restriction for cigarettes was reduced from 60% of the retail price to 55%, with revised descriptions for different tiers.
Q: What are the new FED rates for international air travel services? A: FED on international air travel services was increased, with specific rates for different classes and IATA Traffic Conference Areas, effective from July 1, 2024.
Q: What is the purpose of the newly introduced Table III in the FED schedule? A: Table III aligns the chargeability of FED on items not covered by import/manufacturing of excisable goods or rendering of excisable services, including allotment/transfer of immovable property and sugar supply.
Q: How is CVT on farmhouses and residential houses in Islamabad Capital Territory determined? A: CVT is imposed based on area, with Rs 500,000 for farmhouses between 2000-4000 square yards, Rs 1,000,000 for larger farmhouses, and similar rates for residential houses.
Q: What are the maximum rates of Petroleum Levy after the Finance Act amendments? A: The maximum rates of Petroleum Levy were reduced from the proposed rates, with specific rates for different petroleum products such as HSDO, motor gasoline, and HOBC.
Q: How is the supply of white crystalline sugar taxed under the Finance Act? A: FED at Rs 15 per kg is levied on the supply of white crystalline sugar by any person to a manufacturing, processing, and packaging entity.
Q: What specific amendments were made to the income tax appeals process? A: Amendments include changes in the transfer and decision timelines for appeals, stay deposit conditions, and clarification on the jurisdiction of the High Court for references.
Q: What units comprise the Tax Fraud Investigation Wing (TFIW)? A: TFIW includes units for fraud intelligence, investigation, legal, accounting, digital forensics, and administration, with functions specified by FBR notification.
Q: How is the exemption for Diversified Payment Rights transactions defined in the Finance Act? A: Exemption is provided for income of Special Purpose Vehicles (SPVs) purchasing Diversified Payment Rights from Authorized Dealers in Pakistan, and the withholding tax provisions on payments to non-residents do not apply to such SPVs.
Q: How does the Finance Act redefine the term ‘associate’? A: The term ‘associate’ has been redefined to align with section 85 of the Income Tax Ordinance, 2001, including necessary editorial amendments for consistency.
Q: What is the amendment regarding the admissibility of input tax in the Sales Tax Act? A: The definition of ‘input tax’ was amended to allow the Board to exclude certain services subject to provincial sales tax from admissibility through notifications with specific conditions, restrictions, or limitations.
Q: How was the definition of ‘tax fraud’ expanded in the Finance Act? A: The definition was expanded to include intentionally understating or underpaying tax liability, overstating entitlement to tax credit or refund, making taxable supplies without registration, and causing loss of tax through intentional acts or omissions.
Q: What conditions apply for abatement of best judgment assessments in sales tax matters? A: Abatement of best judgment assessments occurs if the return is filed within sixty days of the assessment order, along with the deposit of due tax.
Q: What powers does the Chief Commissioner have regarding blacklisting and suspension orders? A: The Chief Commissioner can examine and modify blacklisting and suspension orders passed by the Commissioner, with such orders not being appealable before the Appellate Tribunal.
Q: How was the ambiguity regarding payments through banking channels resolved? A: The threshold of Rs 50,000 for payments not made through banking channels is now clearly specified to be with reference to payments made to a single supplier in a tax period.
Q: Was the proposal for investigative audit in tax fraud cases retained? A: No, the proposal for investigative audit was dropped, but a new section was included authorizing the establishment of a Tax Fraud Investigation Wing for handling tax fraud cases.
Q: What penalty amendments were introduced in the Finance Act? A: Amendments were made to strengthen penal provisions, including editorial corrections and retaining certain penalties proposed through the Finance Bill.
Q: Which sales tax exemptions were retained in the Finance Act? A: Exemptions for imports and supplies for cardiology, oncology, charitable hospitals, and raw materials for manufacturing exercise books were retained.
Q: What new sales tax exemptions were introduced in the Finance Act? A: New exemptions include supply/import of electricity to Azad Jammu and Kashmir, import of certain medications, bovine semen, and milk supplied by corporate dairy farms.
Q: How were exemptions for erstwhile tribal areas addressed in the Finance Act? A: Exemptions for supplies and imports in tribal areas were extended until June 30, 2025, withdrawing the proposal for reduced rates.
Q: What are the sales tax rates for locally manufactured hybrid electric vehicles? A: Reduced sales tax rates for locally manufactured hybrid electric vehicles are 8.5% for vehicles up to 1800 cc and 12.75% for vehicles from 1801 cc to 2500 cc until June 30, 2026.
Q: What is the revised rate of Federal Excise Duty on Portland cement? A: The Federal Excise Duty on Portland cement was increased to Rs 4 per kg.
Q: What is the Federal Excise Duty on lubricating oil as per the Finance Act? A: FED at the rate of 5% ad valorem is levied on lubricating oil under specific tariff headings.
Q: How were the minimum price restrictions on cigarette brands changed? A: The minimum price restriction for cigarettes was reduced from 60% of the retail price to 55%, with revised descriptions for different tiers.
Q: What are the new FED rates for international air travel services? A: FED on international air travel services was increased, with specific rates for different classes and IATA Traffic Conference Areas, effective from July 1, 2024.
Q: What is the purpose of the newly introduced Table III in the FED schedule? A: Table III aligns the chargeability of FED on items not covered by import/manufacturing of excisable goods or rendering of excisable services, including allotment/transfer of immovable property and sugar supply.
Q: How is CVT on farmhouses and residential houses in Islamabad Capital Territory determined? A: CVT is imposed based on area, with Rs 500,000 for farmhouses between 2000-4000 square yards, Rs 1,000,000 for larger farmhouses, and similar rates for residential houses.
Q: What are the maximum rates of Petroleum Levy after the Finance Act amendments? A: The maximum rates of Petroleum Levy were reduced from the proposed rates, with specific rates for different petroleum products such as HSDO, motor gasoline, and HOBC.
Q: How is the supply of white crystalline sugar taxed under the Finance Act? A: FED at Rs 15 per kg is levied on the supply of white crystalline sugar by any person to a manufacturing, processing, and packaging entity.
Q: What specific amendments were made to the income tax appeals process? A: Amendments include changes in the transfer and decision timelines for appeals, stay deposit conditions, and clarification on the jurisdiction of the High Court for references.
Q: What units comprise the Tax Fraud Investigation Wing (TFIW)? A: TFIW includes units for fraud intelligence, investigation, legal, accounting, digital forensics, and administration, with functions specified by FBR notification.
Q: How is the exemption for Diversified Payment Rights transactions defined in the Finance Act? A: Exemption is provided for income of Special Purpose Vehicles (SPVs) purchasing Diversified Payment Rights from Authorized Dealers in Pakistan, and the withholding tax provisions on payments to non-residents do not apply to such SPVs.
Q: How does the Finance Act redefine the term ‘associate’? A: The term ‘associate’ has been redefined to align with section 85 of the Income Tax Ordinance, 2001, including necessary editorial amendments for consistency.
Q: What is the amendment regarding the admissibility of input tax in the Sales Tax Act? A: The definition of ‘input tax’ was amended to allow the Board to exclude certain services subject to provincial sales tax from admissibility through notifications with specific conditions, restrictions, or limitations.
Q: How was the definition of ‘tax fraud’ expanded in the Finance Act? A: The definition was expanded to include intentionally understating or underpaying tax liability, overstating entitlement to tax credit or refund, making taxable supplies without registration, and causing loss of tax through intentional acts or omissions.
Q: What conditions apply for abatement of best judgment assessments in sales tax matters? A: Abatement of best judgment assessments occurs if the return is filed within sixty days of the assessment order, along with the deposit of due tax.
Q: What powers does the Chief Commissioner have regarding blacklisting and suspension orders? A: The Chief Commissioner can examine and modify blacklisting and suspension orders passed by the Commissioner, with such orders not being appealable before the Appellate Tribunal.
Q: How was the ambiguity regarding payments through banking channels resolved? A: The threshold of Rs 50,000 for payments not made through banking channels is now clearly specified to be with reference to payments made to a single supplier in a tax period.
Q: Was the proposal for investigative audit in tax fraud cases retained? A: No, the proposal for investigative audit was dropped, but a new section was included authorizing the establishment of a Tax Fraud Investigation Wing for handling tax fraud cases.
Q: What penalty amendments were introduced in the Finance Act? A: Amendments were made to strengthen penal provisions, including editorial corrections and retaining certain penalties proposed through the Finance Bill.
Q: Which sales tax exemptions were retained in the Finance Act? A: Exemptions for imports and supplies for cardiology, oncology, charitable hospitals, and raw materials for manufacturing exercise books were retained.
Q: What new sales tax exemptions were introduced in the Finance Act? A: New exemptions include supply/import of electricity to Azad Jammu and Kashmir, import of certain medications, bovine semen, and milk supplied by corporate dairy farms.
Q: How were exemptions for erstwhile tribal areas addressed in the Finance Act? A: Exemptions for supplies and imports in tribal areas were extended until June 30, 2025, withdrawing the proposal for reduced rates.
Q: What are the sales tax rates for locally manufactured hybrid electric vehicles? A: Reduced sales tax rates for locally manufactured hybrid electric vehicles are 8.5% for vehicles up to 1800 cc and 12.75% for vehicles from 1801 cc to 2500 cc until June 30, 2026.
Q: What is the revised rate of Federal Excise Duty on Portland cement? A: The Federal Excise Duty on Portland cement was increased to Rs 4 per kg.
Q: What is the Federal Excise Duty on lubricating oil as per the Finance Act? A: FED at the rate of 5% ad valorem is levied on lubricating oil under specific tariff headings.
Q: How were the minimum price restrictions on cigarette brands changed? A: The minimum price restriction for cigarettes was reduced from 60% of the retail price to 55%, with revised descriptions for different tiers.
Q: What are the new FED rates for international air travel services? A: FED on international air travel services was increased, with specific rates for different classes and IATA Traffic Conference Areas, effective from July 1, 2024.
Q: What is the purpose of the newly introduced Table III in the FED schedule? A: Table III aligns the chargeability of FED on items not covered by import/manufacturing of excisable goods or rendering of excisable services, including allotment/transfer of immovable property and sugar supply.
Q: How is CVT on farmhouses and residential houses in Islamabad Capital Territory determined? A: CVT is imposed based on area, with Rs 500,000 for farmhouses between 2000-4000 square yards, Rs 1,000,000 for larger farmhouses, and similar rates for residential houses.
Q: What are the maximum rates of Petroleum Levy after the Finance Act amendments? A: The maximum rates of Petroleum Levy were reduced from the proposed rates, with specific rates for different petroleum products such as HSDO, motor gasoline, and HOBC.
Q: How is the supply of white crystalline sugar taxed under the Finance Act? A: FED at Rs 15 per kg is levied on the supply of white crystalline sugar by any person to a manufacturing, processing, and packaging entity.
Q: What specific amendments were made to the income tax appeals process? A: Amendments include changes in the transfer and decision timelines for appeals, stay deposit conditions, and clarification on the jurisdiction of the High Court for references.
Q: What units comprise the Tax Fraud Investigation Wing (TFIW)? A: TFIW includes units for fraud intelligence, investigation, legal, accounting, digital forensics, and administration, with functions specified by FBR notification.
Q: How is the exemption for Diversified Payment Rights transactions defined in the Finance Act? A: Exemption is provided for income of Special Purpose Vehicles (SPVs) purchasing Diversified Payment Rights from Authorized Dealers in Pakistan, and the withholding tax provisions on payments to non-residents do not apply to such SPVs.
Q: How does the Finance Act redefine the term ‘associate’? A: The term ‘associate’ has been redefined to align with section 85 of the Income Tax Ordinance, 2001, including necessary editorial amendments for consistency.
Q: What is the amendment regarding the admissibility of input tax in the Sales Tax Act? A: The definition of ‘input tax’ was amended to allow the Board to exclude certain services subject to provincial sales tax from admissibility through notifications with specific conditions, restrictions, or limitations.
Q: How was the definition of ‘tax fraud’ expanded in the Finance Act? A: The definition was expanded to include intentionally understating or underpaying tax liability, overstating entitlement to tax credit or refund, making taxable supplies without registration, and causing loss of tax through intentional acts or omissions.
Q: What conditions apply for abatement of best judgment assessments in sales tax matters? A: Abatement of best judgment assessments occurs if the return is filed within sixty days of the assessment order, along with the deposit of due tax.
Q: What powers does the Chief Commissioner have regarding blacklisting and suspension orders? A: The Chief Commissioner can examine and modify blacklisting and suspension orders passed by the Commissioner, with such orders not being appealable before the Appellate Tribunal.
Q: How was the ambiguity regarding payments through banking channels resolved? A: The threshold of Rs 50,000 for payments not made through banking channels is now clearly specified to be with reference to payments made to a single supplier in a tax period.
Q: Was the proposal for investigative audit in tax fraud cases retained? A: No, the proposal for investigative audit was dropped, but a new section was included authorizing the establishment of a Tax Fraud Investigation Wing for handling tax fraud cases.
Q: What penalty amendments were introduced in the Finance Act? A: Amendments were made to strengthen penal provisions, including editorial corrections and retaining certain penalties proposed through the Finance Bill.
Q: Which sales tax exemptions were retained in the Finance Act? A: Exemptions for imports and supplies for cardiology, oncology, charitable hospitals, and raw materials for manufacturing exercise books were retained.
Q: What new sales tax exemptions were introduced in the Finance Act? A: New exemptions include supply/import of electricity to Azad Jammu and Kashmir, import of certain medications, bovine semen, and milk supplied by corporate dairy farms.
Q: How were exemptions for erstwhile tribal areas addressed in the Finance Act? A: Exemptions for supplies and imports in tribal areas were extended until June 30, 2025, withdrawing the proposal for reduced rates.
Q: What are the sales tax rates for locally manufactured hybrid electric vehicles? A: Reduced sales tax rates for locally manufactured hybrid electric vehicles are 8.5% for vehicles up to 1800 cc and 12.75% for vehicles from 1801 cc to 2500 cc until June 30, 2026.
Q: What is the revised rate of Federal Excise Duty on Portland cement? A: The Federal Excise Duty on Portland cement was increased to Rs 4 per kg.
Q: What is the Federal Excise Duty on lubricating oil as per the Finance Act? A: FED at the rate of 5% ad valorem is levied on lubricating oil under specific tariff headings.
Q: How were the minimum price restrictions on cigarette brands changed? A: The minimum price restriction for cigarettes was reduced from 60% of the retail price to 55%, with revised descriptions for different tiers.
Q: What are the new FED rates for international air travel services? A: FED on international air travel services was increased, with specific rates for different classes and IATA Traffic Conference Areas, effective from July 1, 2024.
Q: What is the purpose of the newly introduced Table III in the FED schedule? A: Table III aligns the chargeability of FED on items not covered by import/manufacturing of excisable goods or rendering of excisable services, including allotment/transfer of immovable property and sugar supply.
Q: How is CVT on farmhouses and residential houses in Islamabad Capital Territory determined? A: CVT is imposed based on area, with Rs 500,000 for farmhouses between 2000-4000 square yards, Rs 1,000,000 for larger farmhouses, and similar rates for residential houses.
Q: What are the maximum rates of Petroleum Levy after the Finance Act amendments? A: The maximum rates of Petroleum Levy were reduced from the proposed rates, with specific rates for different petroleum products such as HSDO, motor gasoline, and HOBC.
Q: How is the supply of white crystalline sugar taxed under the Finance Act? A: FED at Rs 15 per kg is levied on the supply of white crystalline sugar by any person to a manufacturing, processing, and packaging entity.
Q: What specific amendments were made to the income tax appeals process? A: Amendments include changes in the transfer and decision timelines for appeals, stay deposit conditions, and clarification on the jurisdiction of the High Court for references.
Q: What units comprise the Tax Fraud Investigation Wing (TFIW)? A: TFIW includes units for fraud intelligence, investigation, legal, accounting, digital forensics, and administration, with functions specified by FBR notification.
Q: How is the exemption for Diversified Payment Rights transactions defined in the Finance Act? A: Exemption is provided for income of Special Purpose Vehicles (SPVs) purchasing Diversified Payment Rights from Authorized Dealers in Pakistan, and the withholding tax provisions on payments to non-residents do not apply to such SPVs.
Q: How does the Finance Act redefine the term ‘associate’? A: The term ‘associate’ has been redefined to align with section 85 of the Income Tax Ordinance, 2001, including necessary editorial amendments for consistency.
Q: What is the amendment regarding the admissibility of input tax in the Sales Tax Act? A: The definition of ‘input tax’ was amended to allow the Board to exclude certain services subject to provincial sales tax from admissibility through notifications with specific conditions, restrictions, or limitations.
Q: How was the definition of ‘tax fraud’ expanded in the Finance Act? A: The definition was expanded to include intentionally understating or underpaying tax liability, overstating entitlement to tax credit or refund, making taxable supplies without registration, and causing loss of tax through intentional acts or omissions.
Q: What conditions apply for abatement of best judgment assessments in sales tax matters? A: Abatement of best judgment assessments occurs if the return is filed within sixty days of the assessment order, along with the deposit of due tax.
Q: What powers does the Chief Commissioner have regarding blacklisting and suspension orders? A: The Chief Commissioner can examine and modify blacklisting and suspension orders passed by the Commissioner, with such orders not being appealable before the Appellate Tribunal.
Q: How was the ambiguity regarding payments through banking channels resolved? A: The threshold of Rs 50,000 for payments not made through banking channels is now clearly specified to be with reference to payments made to a single supplier in a tax period.
Q: Was the proposal for investigative audit in tax fraud cases retained? A: No, the proposal for investigative audit was dropped, but a new section was included authorizing the establishment of a Tax Fraud Investigation Wing for handling tax fraud cases.
Q: What penalty amendments were introduced in the Finance Act? A: Amendments were made to strengthen penal provisions, including editorial corrections and retaining certain penalties proposed through the Finance Bill.
Q: Which sales tax exemptions were retained in the Finance Act? A: Exemptions for imports and supplies for cardiology, oncology, charitable hospitals, and raw materials for manufacturing exercise books were retained.
Q: What new sales tax exemptions were introduced in the Finance Act? A: New exemptions include supply/import of electricity to Azad Jammu and Kashmir, import of certain medications, bovine semen, and milk supplied by corporate dairy farms.
Q: How were exemptions for erstwhile tribal areas addressed in the Finance Act? A: Exemptions for supplies and imports in tribal areas were extended until June 30, 2025, withdrawing the proposal for reduced rates.
Q: What are the sales tax rates for locally manufactured hybrid electric vehicles? A: Reduced sales tax rates for locally manufactured hybrid electric vehicles are 8.5% for vehicles up to 1800 cc and 12.75% for vehicles from 1801 cc to 2500 cc until June 30, 2026.
Q: What is the revised rate of Federal Excise Duty on Portland cement? A: The Federal Excise Duty on Portland cement was increased to Rs 4 per kg.

Q: How were the minimum price restrictions on cigarette brands changed? A: The minimum price restriction for cigarettes was reduced from 60% of the retail price to 55%, with revised descriptions for different tiers.
Q: What are the new FED rates for international air travel services? A: FED on international air travel services was increased, with specific rates for different classes and IATA Traffic Conference Areas, effective from July 1, 2024.
Q: What is the purpose of the newly introduced Table III in the FED schedule? A: Table III aligns the chargeability of FED on items not covered by import/manufacturing of excisable goods or rendering of excisable services, including allotment/transfer of immovable property and sugar supply.
Q: How is CVT on farmhouses and residential houses in Islamabad Capital Territory determined? A: CVT is imposed based on area, with Rs 500,000 for farmhouses between 2000-4000 square yards, Rs 1,000,000 for larger farmhouses, and similar rates for residential houses.
Q: What are the maximum rates of Petroleum Levy after the Finance Act amendments? A: The maximum rates of Petroleum Levy were reduced from the proposed rates, with specific rates for different petroleum products such as HSDO, motor gasoline, and HOBC.
Q: How is the supply of white crystalline sugar taxed under the Finance Act? A: FED at Rs 15 per kg is levied on the supply of white crystalline sugar by any person to a manufacturing, processing, and packaging entity.
Q: What specific amendments were made to the income tax appeals process? A: Amendments include changes in the transfer and decision timelines for appeals, stay deposit conditions, and clarification on the jurisdiction of the High Court for references.
Q: What units comprise the Tax Fraud Investigation Wing (TFIW)? A: TFIW includes units for fraud intelligence, investigation, legal, accounting, digital forensics, and administration, with functions specified by FBR notification.
Q: How is the exemption for Diversified Payment Rights transactions defined in the Finance Act? A: Exemption is provided for income of Special Purpose Vehicles (SPVs) purchasing Diversified Payment Rights from Authorized Dealers in Pakistan, and the withholding tax provisions on payments to non-residents do not apply to such SPVs.
Q: How does the Finance Act redefine the term ‘associate’? A: The term ‘associate’ has been redefined to align with section 85 of the Income Tax Ordinance, 2001, including necessary editorial amendments for consistency.
Q: What is the amendment regarding the admissibility of input tax in the Sales Tax Act? A: The definition of ‘input tax’ was amended to allow the Board to exclude certain services subject to provincial sales tax from admissibility through notifications with specific conditions, restrictions, or limitations.
Q: How was the definition of ‘tax fraud’ expanded in the Finance Act? A: The definition was expanded to include intentionally understating or underpaying tax liability, overstating entitlement to tax credit or refund, making taxable supplies without registration, and causing loss of tax through intentional acts or omissions.
Q: What conditions apply for abatement of best judgment assessments in sales tax matters? A: Abatement of best judgment assessments occurs if the return is filed within sixty days of the assessment order, along with the deposit of due tax.
Q: What powers does the Chief Commissioner have regarding blacklisting and suspension orders? A: The Chief Commissioner can examine and modify blacklisting and suspension orders passed by the Commissioner, with such orders not being appealable before the Appellate Tribunal.
Q: How was the ambiguity regarding payments through banking channels resolved? A: The threshold of Rs 50,000 for payments not made through banking channels is now clearly specified to be with reference to payments made to a single supplier in a tax period.
Q: Was the proposal for investigative audit in tax fraud cases retained? A: No, the proposal for investigative audit was dropped, but a new section was included authorizing the establishment of a Tax Fraud Investigation Wing for handling tax fraud cases.
Q: What penalty amendments were introduced in the Finance Act? A: Amendments were made to strengthen penal provisions, including editorial corrections and retaining certain penalties proposed through the Finance Bill.
Q: Which sales tax exemptions were retained in the Finance Act? A: Exemptions for imports and supplies for cardiology, oncology, charitable hospitals, and raw materials for manufacturing exercise books were retained.
Q: What new sales tax exemptions were introduced in the Finance Act? A: New exemptions include supply/import of electricity to Azad Jammu and Kashmir, import of certain medications, bovine semen, and milk supplied by corporate dairy farms.
Q: How were exemptions for erstwhile tribal areas addressed in the Finance Act? A: Exemptions for supplies and imports in tribal areas were extended until June 30, 2025, withdrawing the proposal for reduced rates.
Q: What are the sales tax rates for locally manufactured hybrid electric vehicles? A: Reduced sales tax rates for locally manufactured hybrid electric vehicles are 8.5% for vehicles up to 1800 cc and 12.75% for vehicles from 1801 cc to 2500 cc until June 30, 2026.
Q: What is the revised rate of Federal Excise Duty on Portland cement? A: The Federal Excise Duty on Portland cement was increased to Rs 4 per kg.
Q: What is the Federal Excise Duty on lubricating oil as per the Finance Act? A: FED at the rate of 5% ad valorem is levied on lubricating oil under specific tariff headings.
Q: How were the minimum price restrictions on cigarette brands changed? A: The minimum price restriction for cigarettes was reduced from 60% of the retail price to 55%, with revised descriptions for different tiers.
Q: What are the new FED rates for international air travel services? A: FED on international air travel services was increased, with specific rates for different classes and IATA Traffic Conference Areas, effective from July 1, 2024.
Q: What is the purpose of the newly introduced Table III in the FED schedule? A: Table III aligns the chargeability of FED on items not covered by import/manufacturing of excisable goods or rendering of excisable services, including allotment/transfer of immovable property and sugar supply.
Q: How is CVT on farmhouses and residential houses in Islamabad Capital Territory determined? A: CVT is imposed based on area, with Rs 500,000 for farmhouses between 2000-4000 square yards, Rs 1,000,000 for larger farmhouses, and similar rates for residential houses.
Q: What are the maximum rates of Petroleum Levy after the Finance Act amendments? A: The maximum rates of Petroleum Levy were reduced from the proposed rates, with specific rates for different petroleum products such as HSDO, motor gasoline, and HOBC.
Q: How is the supply of white crystalline sugar taxed under the Finance Act? A: FED at Rs 15 per kg is levied on the supply of white crystalline sugar by any person to a manufacturing, processing, and packaging entity.
Q: What specific amendments were made to the income tax appeals process? A: Amendments include changes in the transfer and decision timelines for appeals, stay deposit conditions, and clarification on the jurisdiction of the High Court for references.
Q: What units comprise the Tax Fraud Investigation Wing (TFIW)? A: TFIW includes units for fraud intelligence, investigation, legal, accounting, digital forensics, and administration, with functions specified by FBR notification.
Q: How is the exemption for Diversified Payment Rights transactions defined in the Finance Act? A: Exemption is provided for income of Special Purpose Vehicles (SPVs) purchasing Diversified Payment Rights from Authorized Dealers in Pakistan, and the withholding tax provisions on payments to non-residents do not apply to such SPVs.
Q: How does the Finance Act redefine the term ‘associate’? A: The term ‘associate’ has been redefined to align with section 85 of the Income Tax Ordinance, 2001, including necessary editorial amendments for consistency.
Q: What is the amendment regarding the admissibility of input tax in the Sales Tax Act? A: The definition of ‘input tax’ was amended to allow the Board to exclude certain services subject to provincial sales tax from admissibility through notifications with specific conditions, restrictions, or limitations.
Q: How was the definition of ‘tax fraud’ expanded in the Finance Act? A: The definition was expanded to include intentionally understating or underpaying tax liability, overstating entitlement to tax credit or refund, making taxable supplies without registration, and causing loss of tax through intentional acts or omissions.
Q: What conditions apply for abatement of best judgment assessments in sales tax matters? A: Abatement of best judgment assessments occurs if the return is filed within sixty days of the assessment order, along with the deposit of due tax.
Q: What powers does the Chief Commissioner have regarding blacklisting and suspension orders? A: The Chief Commissioner can examine and modify blacklisting and suspension orders passed by the Commissioner, with such orders not being appealable before the Appellate Tribunal.
Q: How was the ambiguity regarding payments through banking channels resolved? A: The threshold of Rs 50,000 for payments not made through banking channels is now clearly specified to be with reference to payments made to a single supplier in a tax period.
Q: Was the proposal for investigative audit in tax fraud cases retained? A: No, the proposal for investigative audit was dropped, but a new section was included authorizing the establishment of a Tax Fraud Investigation Wing for handling tax fraud cases.
Q: What penalty amendments were introduced in the Finance Act? A: Amendments were made to strengthen penal provisions, including editorial corrections and retaining certain penalties proposed through the Finance Bill.
Q: Which sales tax exemptions were retained in the Finance Act? A: Exemptions for imports and supplies for cardiology, oncology, charitable hospitals, and raw materials for manufacturing exercise books were retained.
Q: What new sales tax exemptions were introduced in the Finance Act? A: New exemptions include supply/import of electricity to Azad Jammu and Kashmir, import of certain medications, bovine semen, and milk supplied by corporate dairy farms.
Q: How were exemptions for erstwhile tribal areas addressed in the Finance Act? A: Exemptions for supplies and imports in tribal areas were extended until June 30, 2025, withdrawing the proposal for reduced rates.

By The Josh and Mak Team

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