BudgetBrief 2015

KPMG Taseer Hadi & Co.
Chartered Accountants
Budget Brief 2015

An Economic and Tax Commentary
The Budget Brief 2015 contains a review of economic

scenario and highlights of Finance Bill 2015 as they
relate to direct and indirect taxes and certain other
laws.
The provisions of the Finance Bill 2015 are generally
applicable from 01 July 2015, unless otherwise
specified.
The Budget Brief contains the comments, which
represent our interpretation of the legislation, and we
recommend that while considering their application to
any particular case, reference be made to the specific
wordings of the relevant statutes.
5 June 2015
Contents
Contents
Budget at a Glance
Economic Analysis
Economic Scenario
11
Highlights
- Income Tax
17
- Sales Tax
19
- Sales Tax on Services (Islamabad)

- Federal Excise
20
- Customs
21
Significant Amendments
- Income Tax
23
- Sales Tax
- Sales Tax on Services (Islamabad)
- Federal Excise
- Customs
20
63
71
75
77
Budget at a Glance
Budget
Estimate
2014-15
Revised
%
Budget
Estimate
Estimate
2014-15
2015-16
------------------(Rupees in billion) ----------------
Revenue
Tax Revenue
Non Tax Revenue
Public Accounts Receipts - Net
3,129
74.2
2,910
68.6
3,418
74.8
816
19.4
1,042
24.6
895
19.6
3,945
93.6
3,952
93.2
4,313
94.4
271
6.4
288
6.8
254
5.6
4,216
100.0
4,240
100.0
4,567.0
100.0
Less: Provincial Share
1,720
40.8
1,575
37.1
1,849
40.5
Net Revenue
2,496
59.2
2,665
62.9
2,718
59.5
Expenditure
Development
839
19.9
754
17.8
969
21.2
3,527
83.7
3,558
83.9
3,615
79.2
4,366
103.6
4,312
101.7
4,584
100.4
1,870
44.4
1,647
38.8
1,866
40.9
Capital Receipts
484
25.9
393
23.9
485
26.0
Domestic Debt - Banks
228
12.2
402
24.4
283
15.2
External Debt
671
35.9
692
42.0
751
40.2
Privatization Proceeds
198
10.6
18
1.1
50
2.7
Current
Deficit
Funded by
Surplus from Provinces
289
15.4
142
8.6
297
15.9
1,870
100.0
1,647
100.0
1,866
100.0
2015 KPMG Taseer Hadi & Co., a Partnership firm registered in Pakistan and a member
firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved.
Budget Brief 2015
Budget Brief 2015
Economic Analysis
GDP Growth
14-15
13-14
12-13
11-12
10-11
09-10
08-09
07-08
06-07
05-06
(P)
269
253
225
224
214
177.0
168
170
143.0
127.4
27,384
25,068
22,379
20,047
18,276
14,867
13,200
10,638
8,673
7,623
4.24*
4.03*
3.65*
3.84*
3.62*
2.58*
0.36*
4.99*
5.54*
5.8
Agriculture
2.9*
2.7*
2.7*
3.6*
2.0*
0.2*
3.5*
1.8*
3.4*
6.3
Manufacturing
3.2*
4.5*
4.6*
2.1*
2.5*
1.4*
-4.2*
6.1*
9.0*
8.7
Services
5.0*
4.4*
5.1*
4.4*
3.9*
3.2*
1.3*
4.9*
5.6*
6.5
Agriculture
20.9
21.1
21.4
21.6
21.7
22
22.5
21.9
22.5
23
Manufacturing
13.3
13.4
13.4
13.2
13.4
13.6
13.8
14.4
14.3
13.8
Services
58.9
58.4
58.2
57.4
57.1
56.9
56.6
56
56.1
56
Nominal GDP US$ billion

Nominal GDP Rs. billion
Real GDP Growth %
Sectoral GDP Growth %
Sectoral Share in GDP %
*Base year 2005-06

Source: Pakistan Economic Survey 2014-15
GDP Growth (% Points)

7.00%
30,000
6.00%
5.54%
25,000
5.80%
5.00%
20,000
4.24%
4.99%
4.03%
3.84%
3.65%
3.62%
4.00%
15,000
3.00%
2.58%
10,000
2.00%
5,000
1.00%
0.00%
0.36%
14-15 (P)
13-14 (P)
12-13 (P)
11-12 (P)
10-11
GDP
09-10
08-09
07-08
06-07
05-06
GDP Growth
Budget Brief 2015
GDP Growth
Sectoral GDP Growth (% Points)
10.0
9.0
8.7
8.0
6.1
5.0
6.0
4.4
3.9
3.6
4.0
2.9
3.2
3.2
2.7
2.7
6.3
4.9
4.6
4.5 4.4
6.3
5.6
5.1
2.1
2.0
3.4
3.5
2.5
2.0
1.8
1.4
1.3
0.2
14-15
13-14
12-13
11-12
10-11
09-10
08-09
07-08
06-07
05-06
07-08
06-07
05-06
(2.0)
(4.0)
(4.2)
(6.0)
Agriculture
Manufacturing
Services
Sectoral Share in GDP (% Points)

100
90
80
70
60
50
40
30
20
10
0
14-15
13-14
12-13
11-12
Agriculture
Budget Brief 2015
10-11
Manufacturing
09-10
Services
08-09
Others
Public Debt
14-15
(Mar)
13-14
12-13
11-12
10-11
09-10
08-09
07-08
04-05
Public Debt (Rs. billion)
16,936
15,996
14,293
12,695
10,767
9,006
7,731
6,126
4,802
Domestic
11,932
10,920
9,522
7,638
6,017
4,654
3,860
3,275
2,601
5,004
5,076
4,771
5,057
4,750
4,352
3,871
2,852
2,201
Public Debt (% of GDP)
61.8
63.8
63.9
63.3
58.9
60.6
57.8
56.8
62.9
Domestic
43.6
43.6
42.5
38.1
32.9
31.3
29.2
30.7
33.5
Foreign currency
18.3
20.3
21.3
25.2
26.0
29.3
28.6
26.1
29.4
Foreign currency
Public Debt (in Rs. billion)

18,000
70
63.3
62.9
63.8
16,000
63.9
61.8
60.6
14,000
60
56.8
58.9
57.8
50
12,000
43.6
43.6
42.5
40
38.1
10,000
32.9
31.3
29.2
8,000
30.7
6,000
29.3
25.2
4,000
30
26.1
26
20
21.3
20.5
18.3
29.4
33.5
28.6
10
2,000
0
14-15
13-14
Public Debt
12-13
11-12
Public Debt (% of GDP)
10-11
09-10
08-09
Domestic % of GDP
07-08
04-05
Foreign currency - % of GDP
Budget Brief 2015
Overall Deficit
14-15P
(Jul-Mar)
13-14
(Jul-Mar)
Exports
18,122
Imports
13-14
12-13
11-12
10-11
09-10
08-09
07-08
06-07
05-06
18,746
25,078
24,802
24,718
25,356
19,673
19,121
20,427
17,278
16,553
30,875
31,226
41,668
40,157
40,370
35,872
31,209
31,747
35,397
26,989
25,017
Trade Balance
-12,753
-12,480
-16,590
-15,355
-15,652
-10,516
-11,536
-12,627
-14,970
-9,711
-8,464
Services net
-1,381
-2,129
-2,657
-1,564
-3,305
-1,940
-1,690
-3,381
-6,457
-4,170
-7,304
Current Transfer
net
15,974
14,852
20,222
18,183
17,686
15,687
12,562
11,163
11,476
10,585
10,548
(Workers
remittances)
13,328
11,586
15,837
13,922
13,186
11,201
8,906
7,811
6,451
5,494
4,600
Income Account
Balance net
-3,121
-2,865
-3,948
-3,669
-3,245
-3,017
-3,281
-4,407
-3,923
-3,582
-2,667
Current Account
-1,456
-2,692
-3,130
-2,496
-4,658
214
-3,946
-9,252
-13,874
-6,878
-5,015
5.0
6.3
5.5
8.2
6.8
6.5
6.2
5.2
7.3
4.1
4.0
(US $ million)
Overall deficit
(% of GDP)
8.2%
30,000
25,000
20,000
Overall Deficit
6.8%
5.5%
8.0%
7.3%
6.5%
7.0%
5.0%
6.0%
5.2%
6.2%
15,000
Rs. Billion
9.0%
4.1%
4.3%
4.0%
3.0%
10,000
2.0%
5,000
1.0%
0.0%
0
14-15
13-14
(E)
12-13
11-12
GDP(mp)
Budget Brief 2015
5.0%
10-11
09-10
08-09
07-08
Overall Deficit
06-07
05-06
Social Indicators
14-15
13-14
12-13
191.71
188.02
184.35
178.9
175.3
171.7
168.2
*6.0
6.0
6.2
6.0
6.0
5.5
1,512.4
1,383.5
1,333.3
1,320.5
1,274.1
Total investment - % of GDP
15.1
15
15
15
National Savings - % of GDP
14.5
13.7
13.9
13
Population (millions)
Unemployment rate (%)
GNP per capita US$
11-12
10-11
09-10
08-09
07-08
06-07
05-06
164.7
158.2
155.4
5.2
5.2
6.2
7.6
1,072.4
1,026.1
1,053.2
979.9
897.4
14.1
15.8
17.5
19.2
18.8
19.3
14.2
13.6
12.0
11.0
14.0
15.2
* 2014-15 unemployment figures not provided. Therefore 2013-14 level used.

Social Indicators - 1
250
200
8
6.2
6.2
6.2
7.6
Rs. Billion
5.2
5.5
150
5.2
5
4
100
3
2
50
1
0
0
14-15
13-14
12-13
11-12
10-11
09-10
Population
08-09
07-08
06-07
05-06
Unemployment Rate (%)
Social Indicators - 2
25.0%
1,600
1,400
19.2%
Rs. Billion
1,200
15.1%
15.0%
1,000
800
18.8%
20.0%
17.5%
14.5%
15.0%
13.7%
15.0%
19.3%
15.2%
15.8%
14.1%
15.0%
13.6%
13.9%
600
13.0%
14.2%
14.0%
12.0%
10.0%
11.0%
400
5.0%
200
0
0.0%
14-15
13-14
12-13
11-12
GNP Per Capital - US$
10-11
09-10
08-09
07-08
Total investment - % of GDP
06-07
05-06
National Savings - % of GDP
Budget Brief 2015
Exchange Reserves
Exchange reserves (US$ billion)

Imports Cover (months)
Rupee to USD parity
14-15
13-14
12-13
11-12
10-11
09-10
08-09
07-08
06-07
05-06
17.5
14.1
11.5
16.5
17.1
12.2
11.5
16.4
12.8
11.2
4.0
3.8
3.5
5.7
4.6
4.3
5.6
5.7
5.4
101.9
98.77
99.66
89.2
85.5
83.8
78.5
62.5
60.6
59.9
5.6
5.7
Exchange Reserves (in USD million)
20
5.7
18
5.4
4.6
16
4.3
14
12
3.5
3.4
10
8
2
6
4
2
0
0
14-15
13-14
12-13
11-12
Exchange Reserves
Budget Brief 2015
10-11
09-10
08-09
07-08
06-07
Imports Cover (months)
05-06
Inflation
14-15
(JulApr)
13-14
(Jul-Apr)
13-14
12-13
11-12
10-11
09-10
08-09
07-08
06-07
05-06
CPI
4.8
8.7
8.6
7.4
11.0
13.7
10.1
17.0
12.0
7.8
7.9
Food *
3.6
9.3
9.0
7.1
11.0
18.0
12.9
23.1
17.6
10.3
6.9
Non Food *
5.7
8.2
8.4
7.5
11.0
10.7
8.3
13.4
7.9
6.0
8.6
Core
6.9
8.3
8.3
9.6
10.5
9.4
7.6
11.4
8.4
5.9
7.5
Inflation
25
20
15
10
0
14-15
13-14
12-13
11-12
CPI
10-11
Food *
09-10
08-09
07-08
06-07
05-06
Non Food *
Budget Brief 2015
10
Budget Brief 2015
Economic Scenario
The crowning accomplishment of the government,

since the previous commentary a year ago, on the
economic front, is the fortuitous and momentous
accord on the China Pakistan Economic Corridor
(CPEC). During the Chinese Presidents celebrated
recent visit in April 2015, Memorandum of
Understandings (MOUs) worth US$ 46 billion were
signed. According to the State Bank of Pakistan
(SBP), direct investment in Pakistan, since
independence, currently stands at USD 30.8 billion;
this perhaps is a valid benchmark to gauge the
quantum of the expected Chinese investment in
Pakistan.
As of very late, the exact details of the MOUs have
been kept quite close to the chest by the government,
for whatever compulsions, with summarized
disclosures only forthcoming at the All Parties
Conference (APC) a few days ago. Fortunately for
the nation, a consensus was achieved during the
APC thereby addressing the blighting opposition from
the provinces over perceived biases in the planned
investment.
Nonetheless, from the information currently available,
a big chunk of this investment is earmarked for power
generation, approximately 15000 MW, of which half
are Coal fired, with a derisory amount set aside for
Hydel generation. Load shedding and circular debt
have been the nemesis of at least the last two
governments and is also the key irritant for the
incumbents; especially considering the ambitious
promises made during the election campaign and in
the party manifesto; which perhaps was the blueprint
behind the disparate allocation towards power
generation and specifically from coal.
Undoubtedly, power is the biggest hurdle Pakistan
faces in achieving economic stability, albeit the
solution is not electricity at any cost, the elusive
Fountain of youth in this case is cheap electricity.
According to Power System Statistics issued by
National Transmission & Dispatch Company (NTDC),
as of 2014 Pakistans electricity generation stood at
24,953MW, of which 16,963MW, was thermal and
only 6902MW was hydel, the rest were alternate

forms of energy. Why and how is this capacity
insufficient to meet an undiversified demand of
23505MW is left for the technocrats to argue about,
however, what is noticeable is that almost 34% of the
95148GWh generated in 2014 was from furnace oil.
To get a flavour of how this impacts the economy, the
cost of generation from Tarbela is 0.96 kWh and from
Mangla is 0.64 kWh, compared to which the cost of
fuel alone, for GenCos stands at Rs. 15.60 kWh. On
top of this, transmission and dispatch losses alone
stood at 19.6% in 2014.
Considering that the government is currently able to
recover around Rs. 11 per unit only, it would appear
prudent to estimate the cost of generation from coal
and solar projects and their future impact upon the
quantum of circular debt, prior to taking such
initiatives. It is providential that international fuel
prices have collapsed, however, something as fickle
as oil prices cannot be relied upon to balance the
electricity budget indefinitely. Approximately 46% of
the generation is utilized by the Domestic consumer,
which cannot be deemed productive and who hardly
have surplus disposable income to finance inexorable
rise in electricity cost. The problem for any sitting
government is that this segment of consumers is their
electoral polity and cannot be ignored. Already the
subsidies, primarily to this segment, have resulted in
an increase in circular debt, once again, to around
Rs. 250 billion; although certain quarters dispute the
governments claim about the size of this debt.
Another, perhaps as formidable, hurdle with
generating electricity from imported fuel is the
pressure on the foreign exchange reserves and the
associated investment required in related logistics to
transport the fuel. The cost of environmental
protection is also a prohibitive consideration.
Notwithstanding the development and installation
phase, which can possibly extend beyond 3 years,
the key question when all this generation comes on
line is: will the cost of generation be sufficiently
reasonable to enable the domestic manufacturer to
compete in international markets? The economic
benefits of this investment will only accrue to
Budget Brief 2015
11
Pakistan through expansion of exports; electricity is

only an enabler, manufacturing is the revenue earner.
Considering the Governments success with APCs,
perhaps it is advisable to hold one on development of
Big Dams, which as technocrats keep pointing out
are critical, not only for cheap electricity, but for water
security in the very near future. Already water riots
have started in the largest metropolitan of the
country. Perhaps the APC could also discuss
cooperation between the Federal and KPK
government to develop on fast track hydel projects up
north.
The famed corridor, the route to Gwadar from
Kashgar, deemed to be absolutely imperative for
China, is envisaged to cost, road and rail, around
USD 10 billion. There are a multitude of estimates,
which is indeed bewildering, on how much distance
the Chinese save through this investment, but if all
this hype is true, China will surely build this particular
infrastructure in the shortest time possible. As
mentioned earlier, the conditions precedent for
individual investments remain unclear at this point,
and accordingly it is impractical to comment on the
ability of the Government to cater to that wish list, but
to venture a guess the corridor itself, by default, is not
expected to have any inherent deal breakers.
Depending upon the conditions attached to the
Gwadar route, the BOOT period in particular, or for
that matter if it is on BOOT at all, the only way
Pakistan can in substance gain from this investment
is through access to Chinese markets for the
domestic industry. Contrarily Pakistans only gain will
be windfalls, perhaps similar to those which accrued
when NATO supplies crossed over to Afghanistan;
assuming Pakistan owns the trucks and railways.
And there is an associated risk that Pakistan markets
get flooded with Chinese products; consumer
preference for cheaper products cannot be curtailed
by patriotic slogans alone. It would therefore be
advisable for Pakistan to negotiate setting up of
downstream industry in and around the route for
Chinese manufacture, at the minimum, concomitant
with this investment.
Finally a Lilliputian portion, as a percentage of the
overall amount but not in isolation, of USD 1.6 billion
12
Budget Brief 2015
from the CPEC has been earmarked for a Mass

Transit Project in Lahore. Maintenance and upgradation of revenue earning regions is an adroit
strategy and needs also to be extended to Karachi,
the biggest, by far, contributor to the nations
economy; Karachi is arguably, amongst other things,
on a downward trajectory as far as infrastructure is
concerned.
Fundamentally, irrespective of the debate on how
much of this USD 46 billion will actually be spent in
Pakistan, primary gains from these multitude projects
will materialize after their respective commercial
operations date. Keynesian economics might
increase economic activity during the spending
phase, but whether or not it kicks starts the economy
thereafter is entirely dependent upon future positive
economic benefits flowing from the underlying
projects. In the interim, Chinas economy will get a
boost from supplying, perhaps, all the factors of
production, assuming that the Government can find a
solution to bypass Pakistan Procurement Regulatory
Authority (PPRA) rules, if at all applicable.
The debate around debt or investment, which did get
noisome now and then, was ab initio irrelevant. In
essence equity is generally more expensive than
debt, and if the former is secured by sovereign
guarantees, which is unclear at this point, risk free as
well. No one invests to make a loss, debt or equity;
the money will need to be paid back over time, with
interest or dividends. In the worst scenario Pakistan
might be looking at a even more humongous circular
debt issue a few years down the road.
There is no denying that the investment under CPEC
is a Knight in shining armour for Pakistan, and kudos
to the government for pursuing its fruition, however
henceforth, and even more assiduous supervision
and monitoring is necessary to ensure it does not
become a Trojan horse.
Another milestone, definitely a first, deserving
unfettered encomiums and unbridled accolades,
achieved by the Government during the year, was the
successful conclusion of the IMF seventh review.
Regarding the program, all end of March
performance criteria have been met, including on
the budget deficit and accumulation of net

international reserves. The indicative target on social
spending under the Benazir Income Support Program
was also met. While the indicative target for federal
tax revenue was missed by a small margin, due to
legal challenges to some measures and the adverse
impact of declining commodity prices, the authorities
are taking measures to meet the end-June budget
deficit target (4.9 percent of GDP). The mission
welcomed the authorities plans to further reduce the
fiscal deficit in 2015/16, while accommodating
extraordinary expenditures related to flood
rehabilitation, security enhancements to fight
terrorism, and resettlement of internally displaced
persons. IMF Press Release No. 15/206, May 11,
2015. (Highlighted and underlined for emphasis)
This perhaps is an appropriate assessment of the
financial managers performance during the year. The
worrisome part is what comes next, as set out in the
same press release, Key priorities for the second
half of the program include improving the energy
sector; widening the tax net to create space for
infrastructure investment and social assistance;
improving the business climate; and further
strengthening external reserve buffers. The agenda
is not just challenging, achieving it seems improbable
if not impossible.
The SBP State of Pakistan Economy, second
quarterly report 2014-15, which was issued around
the same time, provides an insight on the factors
leading to this roaring appreciation by IMF. The
convenient fall in international oil prices, Pakistan
being one of the big beneficiaries, and the continued
magnanimity of overseas Pakistani were the key
contributors to the rising foreign exchange reserves.
As at 15 May 2015, total liquid foreign exchange
reserves stood at USD 17.75 billion of which net
reserves with SBP stood at USD 12.51 billion,
possibly highest ever since 2011.
The SBP estimates that savings due to falling oil
prices could be around USD 3 billion for the year
2014-15; the fall in prices having an inverse impact
on consumption, restricting further savings. Whether
or not this bonanza will be long term remains
unpredictable, forecasting oil prices is a much more
malignant task, compared with predicting the
economy. It might perhaps be prescient for the

government to set up a cell of experts who have the
capacity, in time, to at least follow the movement of
oil prices and attempt to hedge adverse movements.
Oil is the single most critical factor for Pakistans
economy and a wait and see policy might even be
suicidal.
Workers remittance for the period July 2014 to April
2015 stood as USD 14.9 billion compared with USD
12.9 billion for the same period last year, a whopping
increase of 15.5% compared with an increase of
11.2% last year. The country-wise break up of
workers remittance is however extremely worrying for
the future, 65% of all receipts originate from Saudi
Arabia, UAE and other GCC countries. Whether or
not Pakistans principled stand on Yemen has any
adverse fallout, falling oil prices in the medium term
can in any case impact this treasure trove. While the
SBP believes that Middle East countries have
sufficient sovereign funds to continue with their
prodigious spending on infrastructure, falling oil
prices will eventually puncture the euphoria. If that
happens not only will there be a significant fall in
remittances, there will be a consequent increase in
unemployment, which for some inexplicable reason
remains firm at around 6% in spite of an increasing
and ageing population.
The foreign exchange reserves were further
supplemented by issuance of Sukuk amounting to
USD 1 billion, privatization proceeds from UBL and
HBL, CSF receipts of USD 1.5 billion and tranches
from IMF totalling USD 1.1 billion; although there was
a net retirement of external debt during the first half
of the year. The concern is that even after selling two
tranches of valuable assets, gross external debt
remains largely unchanged. As of 15 March
2015,according to SBP total debt and liabilities stood
at Rs. 19.3 trillion compared with Rs. 18.3 trillion on
June 2014; with external debt continuing to hover
around USD 63 billion. The total debt and liabilities as
a percentage of GDP reached the dangerous level of
66.4%. The strategy of filling coffers with borrowed
money will adversely affect future debt servicing;
already the SBP notes that there was a 25.6%
increase in external interest payments during the six
months period ended 31 December 2014.
Budget Brief 2015
13
Between July 2014 to March 2015, total public debt

increased by Rs. 1 trillion approximately, however the
government managed to meet IMFs condition of
reducing borrowings from SBP for budgetary support.
This was accomplished by resorting to borrowing
from Private Banks thereby squeezing private credit,
with the Banks supplementing their liquidity through
Open Market Operations of the SBP. All this resulted
in the Banks making super profits through arbitrage in
PIBs when the interest rates were on a decline.
Consequentially, while the Governments debt profile
tilted in favour of medium to long term maturities,
there will likely be an increase in future interest
payments by the Government.
Overall, the increased inflows of dollars due to
workers remittance, with lower outflow due to
declining oil import bill, resulted in the Rupee Dollar
parity lingering within a band of Rs. 102.70 and Rs.
98.60 for USD 1. Irrespective of the mystery around
the rupee continuing to maintain its position, this did
result in a loss of competitiveness from the Real
Effective Exchange Rate (REER); an indicator
derived, broadly, from quantum of trade with, and
respective currency exchange rates of trading
partners. Admittedly REER is imperfect; however
empirical data has proven that it does to an extent
establish overvalued currencies and a ballpark
assessment of by how much. According to SBP,
REER stood at Rs. 118.54 as at March 2015.
While a strong rupee is a positive for translating
external public debt, it is apocalyptical for exports.
According to the SBP National Data Summary Page
on 29 May 2015, the trade deficit from goods alone
stood at USD 13.9 billion compared with USD 16.5
billion for the full year 2013-14; even after a reduction
of USD 2 billion till April 2015 in imports under the
petroleum group; benefits, if any, from the GSP Plus
status hardly evident. The overall balance on goods,
services and primary income had a deficit of USD
19.3 billion for the same period compared with a
deficit of USD 23.2 billion for the complete last year.
But for workers remittances of USD 14.9 billion, even
IMFs program would have come short on all counts.
On a commodity basis, for the period July-April 2015,
increase in export of fruits and vegetables outshone
the increase in the entire textile group; manufacture
14
Budget Brief 2015
remained at broadly the same level. Unfortunately,

and strangely considering Pakistan claims to be self
sustaining in food, import of all other food items stood
at USD 1,269 billion; we as a nation imported cars
and their spare parts worth approximately USD 1
billion, which call into question the deletion
programmes of the automobile sector; telecom
equipment of USD 1 billion, the nation seems to be
obsessed with talking; and finally spent USD 1.1
billion on travel, which was probably paid to the
Emirates, Etihad and Qatar Air. Pakistan International
Airline could be on its feet with half this amount;
perhaps something to think about.
This high level of trade deficit is the primary reason
that the government has to keep borrowing dollars all
the time. Perhaps it is time that imports were
monitored and kept in check.
A net deficit in trade obviously has an adverse impact
on the size of a national GDP, for Pakistan negative
net exports result in a reduction of 6% from the
domestic components of the GDP; which is a lot
considering that with an expected annual growth of
less than 4.5 %, GDP for 2014-15 might be above
around USD 250 billion. What is worrying is that an
estimated 80% of GDP is composed of household
consumption with investment in fixed capital around
15% only. The Government had set a target for under
the 3 year Medium Term Economic Framework to
increase investment to 20% of GDP; this seems
extremely challenging after 2 years together with the
GDP target of 7.1%. Even more worrying is the
sector wise composition of real GDP; manufacturing
as a percentage of real GDP is cemented around
13% and is in fact down from 14% from a few years
ago. The increase in real GDP has been brought
about primarily by the services sector amongst which
Wholesale and Retail trade and Transport Storage
and Communication were the heroes.
Serendipitously, if the entire nation chatted 24 hours
for 365 days on their cell phones, then theoretically
the GDP could go through the roof; but what good will
that be?
On the other hand, more good news for the year; the
appreciable fall of around 390 basis points in annual
inflation, attributable once again to the fall in
international oil prices, and other commodities in
general; where would the economy be without

declining oil prices, is a question best ignored. Low
inflation allowed the SBP to successively bring the
interest rate down by 300 basis points during the
year, which now stands at 7%. While shrinking
interest rates has already done wonders to curtail
government expenditure, it is envisaged that lower
spreads will also push Banks out of their comfort
zone, of taking deposits and lending it to the
government, and spur growth. The monetary policy
otherwise remained prudent, with due credit to the
SBP.
Considering the state of the economy, the political
instability all through their tenure and the time and
resources employed, which all have a cost, in Zarb-eAzb, the governments achievements thus far are
laudable. CPEC and a focus on financial reforms,
most boxes ticked, have positioned the country at an
advantage for the future. However, as pointed out
above, there are some extremely critical steps which
need to be initiated, without which there is a credible
risk that all these initiatives will turn to naught. A lot
more needs to be done.
As pointed out last year, the age old formula of export
oriented and import substituting manufacture needs
to be the prime directive going forward. Even SBP
suggests this strategy in their half year report on the
economy. On the taxation front the policy of
increasing tax collection through existing share
holders and/or indirect taxation is likely to have
further adverse affects on the formal economy.
The Fraser Institute annually publishes Economic
Freedom of The World Index. They claim that the
index measures the degree to which the policies and
institutions of countries are supportive of economic
freedom. Countries are assessed on the following 5
criteria:
Regulation of Credit, Labour, and Business.
Their 2014 report which contained rankings for the

year 2012, overall ranked Pakistan 124th out of 152
countries, worse off than 2011 when the ranking was
111 out of the same sample countries. The worst sub
rankings for Pakistan are in the area of legal structure
and security of property rights, and access to sound
money. It is extremely doubtful that things have
improved in the former or even the later for that
matter. Dewani courts keep essential capital, a
critical factor of production and economic growth,
strangulated in a strait jacket for decades. If Banks
will decline to lend on the basis of projects, and
continue to lend only to the government and those
who dont need to borrow in the first place, broad
based growth and employment will remain a fantasy.
If budding entrepreneurs are forced to borrow from
the informal sector, their businesses will remain in the
informal sector indefinitely, and tax to GDP ratio will
keep lagging.
The Global Competitiveness Report is a yearly report
published by the World Economic Forum, since 2004.
This report ranks countries on 12 pillars of
competitiveness. Pakistan in 2014-15 has been
ranked 129th out of 144 countries, compared with
133rd out of 148 last year; in substance status quo.
India, Bangladesh, SriLanka, Nepal and Bhutan are
all ranked above Pakistan. A synopsis of Pakistans
ranking is reproduced below:
Risk
Score
Basic requirements (40.0%)
112
3.8
Institutions
133
2.9
Infrastructure
117
2.7
Macroeconomic environment
54
5.0
Size of Government: Expenditures, Taxes, and

Enterprises;
Health and primary education
111
4.8
Legal Structure and Security of Property Rights;
Efficiency enhancers (50.0%)
112
3.5
Access to Sound Money;
Higher education and training
112
3.3
Freedom to Trade Internationally;
Budget Brief 2015
15
Risk
Score
Goods market efficiency
92
4.2
Labour market efficiency
115
3.8
Financial market
development
93
3.7
Technological readiness
110
2.9
Market size
92
3.3
Reducing corruption on a war footing, on the

lines being done by the current Chinese
President.
Spending the development budget on education,

with a focus on higher education and vocational
training.
Increasing the number of courts and judges,

sufficiently, to settle Dewani cases, the entire
plethora, within the next 3 years.
Innovation and sophistication

factors (10.0%)
132
2.9
Should the current government achieve results on

these priorities in its remaining term that will indeed
by history in the making.
Business sophistication
121
3.4
Preamble
Innovation
134
2.4
A careful analysis of these results identifies education

as the core problem. Institutions, efficiency
enhancers, labour efficiency, technological readiness,
innovation and business sophistication all have to do
with education, obviously in addition to primary and
higher education and vocational training.
Finally the most regularly quoted but never taken
seriously index in Pakistan, the Corruption Perception
Index of Transparency International. As perhaps
everybody is aware, Pakistan was ranked 126th out of
174 countries in 2014, with Bangladesh being ranked
below us, the only saving grace, if at all. Surprisingly,
eradication of corruption was, after load shedding,
the key slogan during the last election. The absolute
apathy towards a fundamental building block of the
economy is inexplicable. Attracting investment,
foreign or domestic, is well neigh impossible in an
environment where contracts are not enforced and
property rights remain nebulous.
The Pakistan Economy (PE) walks to the tee, its a

great day and the environment is conducive for PE;
equipped with the latest equipment, curtsey, a
Chinese friend; checks the wind, the tee is positioned
and the ball is placed on it, gets into the stance very
carefully, takes a practise swing and looks at the
coach, IMF; the coach gives a thumbs up; except the
caddy (independent well wishers) points out that the
laces are untied; tie the laces, and all systems go!
There is definitely anxiety, PE has already used the
mulligan, and the margin for error is zero. As the
back swing starts, the Pakistani audience hopes and
desperately prays that the ball goes over 300 yards,
whizzing down the fairway.....
Admittedly, it is impossible for any government to

address all of the above 17 criteria or pillars
simultaneously. A bit of ratiocination identifies the
following four priorities for policy formulation:
16
Export oriented/ import substituting

industrialization.
Budget Brief 2015
Highlights
Income Tax
Super tax proposed to be imposed for Tax Year

2015 for rehabilitation of displaced persons. This
tax is to be paid by banking companies at the
rate of 4% of income and by all other taxpayers
at 3% of income; the latter being required to pay
only if income is equal to or in excess of Rs. 500
million.
Tax at the rate of 10% on undistributed reserves
of companies is proposed to be levied where a
profit making company doesnt pay cash dividend
or its reserves after distribution of dividend
exceed 100 percent of its paid-up capital. This
provision shall not apply to companies where fifty
percent or more shares are held by the
Government.
Graduated tax slabs introduced for taxation of
profit on debt earned by taxpayers other than
banking companies and insurance companies at
the rate of 12.5% and 15% in addition to the
existing rate of 10%. The enhanced rates will
apply where profit exceeds Rs. 25 million and Rs.
50 million respectively. The withholding tax rate is
also proposed to be increased to 17.5% for nonfilers where their annual profit is in excess of Rs.
500,000.
Tax rate on dividend received from a REIT
scheme enhanced to 25%; however where a
development REIT is set up by 30 June 2018,
dividend received from such REIT will be reduced
by 50% for three years from 30 June 2018.
Preparation of estimate of income for the year
proposed to be made mandatory before payment
of second installment of advance tax. 50% of the
estimated liability is to be paid by second
installment.
approval of Economic Coordination Committee of

Cabinet. All notifications issued after 01 July
2015 shall stand rescinded at the end of the
financial year in which issued, unless rescinded
earlier. FBRs power to change withholding tax
rates also withdrawn.
The investment limit for shares / insurance

premium proposed to be enhanced to Rs. 1.5
million from earlier Rs. 1 million for purposes of
tax credit.
Tax credit for profit on house loan proposed to be

substituted by straight deduction from income for
up to Rs. 1 million or 50% of taxable income;
whichever is less.
Shipping income of resident persons proposed to

be subjected to final tax to 30 June 2020.
New manufacturing units set up between 01 July

2015 to 30 June 2018 proposed to be given tax
credit for 10 years; the credit being 1% of tax
payable for every 50 employees registered under
labor laws during the year; subject to a maximum
of 10% of tax payable. The credit apparently
would not apply to expansion plans of existing
manufacturers.
Tax credit for enlistment proposed to be

enhanced from 15% to 20% in the year of
enlistment.
The condition to seek Commissioners approval

for revision of return waived off in case the
revised return is filed within 60 days of filing of
original return.
The Commissioner Inland Revenue (Appeals)

empowered to grant further stay of 30 days,
subject to deciding the appeal within such
extended time.
The period for payment of tax demand under an

amended assessment order to be enhanced to
30 days as against 15 days at present, whereas
CNIC made NTN with effect from Tax Year 2015.

Federal Government power to notify exemption
through an order has been made subject to
Budget Brief 2015
17
14% withholding income tax levied on bill for

internet services and on sale of internet pre-paid
cards.
The anomaly removed for issuance of exemption

or reduced rate certificate by the Commissioner
to Permanent Establishments of non-resident
persons on sale of goods, rendering of services
and execution of contract where such tax is
adjustable.
Withholding income tax of 5% on domestic air

tickets withdrawn on routes of AJ&K, GligitBaltistan, Baluchistan Coastal Belt, and FATA.
Non-residents exempted from collection of

advance tax on school fee, chargeable otherwise
at 5% of fee where fee exceeds Rs. 200,000 per
annum.
Withholding income tax at 0.6% of the value of

transaction proposed to be imposed on non-filers
on transactions in a bank; where the value of
transaction exceeds Rs. 50,000 in a day.
Royalty paid to a resident person against right to

use industrial, commercial or scientific equipment
or rent of machinery proposed to be subjected to
withholding tax at 10% which will also be final
discharge of tax liability
Remittance of education expenses abroad

proposed to be subjected to adjustable
withholding tax of 5%.
Tax rate reduced by 3% for persons earning

between Rs. 400,000 to Rs. 500,000 annually.
Corporate tax rate for non-banking companies

reduced to 32% from existing rate of 33% for Tax
Year 2016.
The rate of tax on dividend proposed to be

enhanced to 12.5% from existing 10% with
increase in withholding tax rate to 17.5% for nonfilers. The tax rate on dividend received from a
stock fund also proposed to be enhanced from
12.5% at present to 15% effective Tax Year
2015, in case dividend receipts of such stock
fund are less than its capital gains.
Tax rates on capital gain arising on sale of listed

securities held for up to 12 months proposed to
be enhanced to 15% from 12.5% and for the
listed securities held up to 24 months proposed
to be enhanced to 12.5%, whereas a separate
Withholding tax on services rendered by

companies made adjustable with effect from Tax
Year 2009.
Tax withheld on payment under contract with a

sportsperson made final with effect from Tax
Year 2013.
Tax withheld on exports proposed to be treated

minimum tax provided the taxpayer files an
irrevocable option for taxation on net income
basis.
FBR given powers to seek information from

financial institutions about non-resident persons,
as required to be provided to another country
under a tax treaty.
The rate of compensation payable by FBR on

delayed payment of refund changed from 15% to
KIBOR plus 0.5%.
18
period for payment of tax under provisional

assessment to be reduced from 60 days to 45
days.
FBR empowered to constitute special audit

panels comprising of its own officers and
Chartered Accountants, Cost and Management
Accountant firms or any other person directed by
FBR to jointly carry out tax audits.
Penalty for non-furnishing of wealth statement

changed from Rs. 100 for each day of default to
0.1% of taxable income per week or Rs. 20,000
whichever is higher.
Rate of additional tax reduced from 18% to 12%.
Special rules for tax audit selection of a person

registered as retailer under the Sales Tax Special
Procedure Rules, 2007 introduced.
Budget Brief 2015
rate of 7.5% is proposed on capital gain on listed

securities held for more than 24 months but for
less than 4 years.
LNG terminal operators and terminal owners;

for 05 years from commencement commercial
operations.
Minimum tax exemption given for Tax Years

2010 to 2012 to taxpayers located in most and
moderately affected areas of KPK.
Withholding tax rates on goods and services

brought at par for residents and non-residents
filers and non-filers.
Dividend and capital gains income of banks

made subject to tax at 35% with effect from Tax
Year 2015.
Tax rate on commission enhanced to 15% from

12% in case of non-filers.
Sales Tax
Withholding tax rate of international air tickets

changed to Rs. 16,000 for first class travel from
existing 4% of ticket price.
Separate withholding tax rate introduced for filers

and non-filers with respect to capital gains tax.
Definition of active taxpayer is proposed to be

inserted under section 2(1) of the Act.
The limit of annual utility bills is proposed to be

enhanced from Rs.700,000 to Rs.800,000 in
order to treat an industry as cottage industry
under provisions of the Act.
Condition of annual turnover of a retailer

engaged in making taxable supplies is proposed
to be withdrawn for determining his eligibility for
registration under the Act.
The scope of definition of supply is proposed to

be broadened by including transfer or delivery of
goods to the owner or person nominated by him
by a person manufacturing the goods belonging
to the owner.
The concept and definition of whistleblower is

proposed to be added under the Act to mean a
person who reports concealment or evasion of
sales tax and tax fraud leading to detection or
collection of taxes, fraud, corruption or
misconduct.
It is proposed to sanction rewards to

whistleblowers; related procedure to be
prescribed by the Board.
The rate of further tax on taxable supplies made

by a sales tax registered person to an
unregistered person is proposed to be enhanced
from 1% to 2%.
Profits and gains of following industrial

undertakings proposed to be exempted from tax
including minimum tax:
Those set up by 31 Dec 2016 to manufacture

plant, machinery and equipment with
dedicated use for generation of renewable
energy; for 05 years from 01 July 2015.
Set up between 01 July 2015 to 30 June 2016

to operate warehouse or cold chain facilities;
for 03 years from the date of setup or
commencement
commercial
operation
whichever is later.
Set up between 01 July 2015 to 31 Dec 2016

and engaged in operating halal meat
production; for 4 years from the date of setup
or commencement of commercial production
whichever is later.
Manufacturing unit set up in KPK between

July 1 July 2015 and 30 June 2018; for 5 years
from the date of setup or commencement of
commercial production whichever is later.
Transmission line project set up in Pakistan

after 01 July 2015 and before 30 June 2018.
Budget Brief 2015
19
Input tax paid against goods used in prefabricated buildings is proposed to be allowed as
an input tax adjustment.
Restriction on claim of input tax on services in

respect of which input tax adjustment is barred
under the provincial sales tax laws, import of
agricultural machinery and equipment at reduced
rate or any others goods which the Board may
notify are proposed to be enhanced.
The facility of zero-rating presently available on

local supply of plant and machinery to Export
Processing Zone is proposed to be made
available on meeting of certain conditions and
restrictions.
It is proposed to introduce a prize scheme to

encourage general public to make purchases
from registered persons, in order to promote tax
culture.
The burden of proof is being proposed to be

shifted to the department for not depositing of
input tax claimed by registered persons in a
supply chain.
To encourage construction industry growth it is

proposed to exempt sales tax on supply of bricks
and crushed stones for three years up to 30 June
2018.
The powers of FBR exempting imports or supply

of goods have been withdrawn , whereas,
Federal Government may continue to issue
exemptions in exigencies, , however, Bill
proposes that such exemption may only be
issued subject to approval of ECC and National
Assembly. Furthermore, the foregoing exemption
notifications will nonetheless stand rescinded on
expiry of the financial year in which it is issued.
It is proposed to exempt the aviation sector from

sales tax.
Reduced rate of sales tax in respect of taxable

supplies of soyabean meal, oil seeds meant for
sowing and plant and machinery not
manufactured locally is proposed to be enhanced
from 5% to 10%.
Exemption on certain items is proposed to be

withdrawn and brought into the tax net at reduced
rates under the Eighth Schedule to the Act.
Rate of sales tax on import of cell phones and

activation of sim cards is proposed to be
enhanced from Rs. 150, Rs. 250, Rs. 500 to Rs.
300, Rs. 500 and Rs. 1,000 depending upon the
value and specification.
The concept of tax audit by Special Audit Panels

is being proposed to be introduced with
Chartered Accountants and Cost and
Management Accounts to be on these panels.
Electronic monitoring system is proposed to be

introduced to monitor production of specified
sectors such as cigarettes, beverages, cement,
fertilizer, and sugar.
Federal Government to enter into bilateral or

multilateral agreements with provincial
governments and governments of foreign
countries for sharing of information on sales tax
and FED matters.
20
To strengthen compliance with provisions of the

Act, penalty provisions are to be made more
stringent by reducing the time period from 15
days to 10 days in order to impose minimum
penalty.
Budget Brief 2015
Sales tax on services (Islamabad)
Certain services rendered in the Islamabad

Capital Territory are proposed to be brought into
the sales tax net in order to align it with the
services taxation regime followed by other
provinces.
Federal Excise
FED is proposed to be increased from 9% to 12%

on aerated waters, concentrates for aerated
beverages and aerated waters containing sugar
or other sweetening matters.
Average rate of FED is increased from 58% to

63%.
Zero customs duty on import of aircrafts and their

parts proposed.
FED is proposed to be levied on local supply and

import of filter rods of cigarettes at the rate of
Rs. 0.75 per filter rod.
2% customs duty on certain agricultural

machineries proposed.
Amendments on similar lines with sales tax have

been proposed in the FE Act regarding special
audit panels, electronic monitoring, powers to
enter into bilateral or multilateral agreements and
rewards to whistleblowers and empowering
Economic Coordination Committee to issue
exemptions in special set of circumstances.
Reduced rate of 15% on items imported by call

centers, etc., is proposed to be withdrawn and
now 20% customs duty is applicable.
Reduced rate of 10% on complete plants for

relocated industries is proposed to be withdrawn
and now various rates upto maximum rate of
20% are applicable.
The Finance Minister in his speech of budget

2014-15, declared the policy of Government to
gradually phase out SRO culture. On the
contrary, the changes in Fifth Schedule are
proposed to be made without notifying any
withdrawal of any existing SRO.
Customs
Various provisions are introduced to regularize

the trans-shipment of goods.
Maximum general tariff rate of customs duty is

proposed to be reduced from 25% to 20% except
vehicles and their certain parts.
It is proposed to increase customs duty to 2%

from 1% under various tariff headings of the First
Schedule.
Budget Brief 2015
21
22
Budget Brief 2015
Income tax
Super tax for rehabilitation of

temporarily displaced persons
Section 4B
A one-time levy for tax year 2015 is proposed at the
following rates:
Banking companies 4% of income
filing of return, assessments, appeals, collection and

recovery of tax etc. contained in chapter X shall
apply.
The Commissioner has been empowered for
assessment and recovery of super tax.
Tax on undistributed reserves

Section 5A
Other tax payers having income equal to or

exceeding Rs. 500 million 3 percent of income
For this purpose, the term income shall constitute

the following:
(i)
Profit on debt, dividend, capital gain, brokerage

and commission;
(ii)
Taxable income of a person for a tax year under

all heads of income determined under section 9;
(iii) Imputable income defined in section 2(28A); and

(iv) Income computed under:
a. Fourth Schedule - Insurance business;
b. Fifth Schedule - Production of oil and natural
gas and extraction and exploration of other
mineral deposits;
In order to encourage payment of cash dividend, the

Bill proposes tax at 10 percent on the excess
reserves of public company that derives profits for a
tax year but does not distribute cash dividend within
six months of the end of the tax year or distributes
dividend to such an extent that its reserves after such
distribution are in excess of its paid up capital. In
such cases, the reserves exceeding 100 percent of
the paid up capital shall be treated as income of the
company.
However, this tax shall not apply to a scheduled
bank, a modaraba or a company in which not less
than fifty percent shares are held by the Government.
It has further been proposed that cash dividend for
tax year 2015 may be distributed before the due date
of filing of return as per section 118(2) of the
Ordinance.
c. Seventh Schedule Banking business; and
For the purpose of this section the term reserves

include any amounts set-aside out of revenue or
other surpluses, excluding:
d. Eighth Schedule - Capital gain on listed

securities.
capital reserves;
The Bill also defines the term imputable income in

relation to an amount subject to final tax means the
income which would have resulted in the same tax
had this amount not been subjected to final tax.
share premium reserves; and
reserves required to be created under any law,

rules or regulations.
The super tax shall be paid, collected and deposited

alongwith return of income as specified in section 137
of the Ordinance and the provisions pertaining to
In view of the definition of the public company given

in section 2(47) and the exclusions provided in the
proposed section 5A, in summary, this tax shall apply
to:
Budget Brief 2015
23
(i)
companies listed on stock exchange including

mutual funds and
(ii)
a company in which not less than fifty percent

shares are held by a foreign Government or a
foreign Government owned companies.
Tax on profit on debt

Section 7B, 151(3), Division IIIA of Part I of the First
Schedule
Profit on debt made liable to tax as a separate block
of income. The Bill proposes to change the scheme
of taxation in respect of profit on debt for all
taxpayers and for this purpose a new section 7B is
proposed to be inserted. Further, sub-section (3) of
section 151 is proposed to be substituted and division
IIIA is proposed to be inserted in Part I of the First
Schedule.
An accumulated effect of the existing provisions
contained in section 151 and the proposed changes
would be that henceforth taxable profit on debt
received by any taxpayer, including a company (other
than a banking company and insurance company),
shall be subjected to withholding tax at the rate of 10
percent if the recipient is a filer and at the rate of 17.5
percent (as against current rate of 15 percent) if the
recipient of such profit on debt is a non-filer.
Whereas, profit on debt received by any taxpayer (an
individual, AOP or a company) shall be subjected to
tax as a separate block of income at the following
rates:
24
Where profit on debt does

not exceed Rs. 25,000,000
10 percent
Where profit on debt

exceeds Rs. 25,000,000 but
does not exceed Rs.
50,000,000
2,500,000 plus 12.5

percent of the
amount exceeding
Rs. 25,000,000
Where profit on debt

exceeds Rs. 50,000,000
Rs. 5,625,000 plus

15 percent of the
amount exceeding
Rs. 50,000,000
Budget Brief 2015
In case of a filer, the tax withheld under section 151

will be adjusted against the final tax payable at the
above stated rates and the recipient of the profit on
debt will be liable to pay the differential amount of
tax.
Whereas, in case of a non-filer, tax withheld at the
rate of 17.5 percent will be adjusted against the final
tax liability at the above rates and any excess
deduction can be claimed refundable by filing a tax
return.
It is pertinent to mention that substituted sub-section
(3) of section 151 and Division IIIA of Part of First
Schedule contain reference to section 5A instead of
section 7B which may be a typographical error.
Real Estate Investment Trust

Regulations 2015
Sections 2(47A), 2(47B), 2(47C), Division III of Part I
First Schedule and clause (99A) of Part I of the
Second Schedule
The Bill seeks to define the term Real Estate
Investment Trust REIT, Real Estate Investment
Trust Management Company RMC to bring these
definitions in line with the Real Estate Investment
Trust Regulations, 2015.
The Bill also proposes to insert definition of terms
Development REIT Scheme and Rental REIT
Scheme as defined under Real Estate Investment
Trust Regulations, 2015.
Further profits and gains accruing on sale of
immovable property to a REIT Scheme are exempt
upto 30 June 2015. A proviso is proposed to be
inserted for exemption of gains on such sale to
Development REIT Scheme for development and
construction of residential buildings upto 30 June
2020.
The Bill also proposes revision in rate of tax on
capital gain on disposal of specified securities in the
hands of REIT in line with capital gain on disposal of
securities under section 37A.
The Bill also seeks to provide the reduction of 50

percent on taxation of dividend income for the period
of three years from the Development REIT scheme
established with the object of development and
construction of residential buildings set up by 30
June 2018.
The Bill seeks to allow an option to exporter for

taxation under normal tax regime by filing an
irrevocable option at the time of filing of return subject
to the condition that tax deducted under this section
shall be treated as minimum tax. However, due to
minimum tax liability, the possibility of exporters
opting under this provision seems unlikely.
CNIC to be deemed NTN

Taxation of resident shipping
company
Section 181
The Bill seeks to propose Computerized National
Identity Card be used as NTN with effect from tax
year 2015.
Basis for payment of advance tax by

companies and AOPs revised
Section 7A Clause (21) Part II of Second Schedule

The Bill seeks to transpose the existing clause (21)
provided under Part II of Second Schedule pertaining
to the reduced rate of final taxation of resident person
engaged in the shipping business with the proposed
newly inserted section.
Section 147
Hitherto companies and AOPs are required to pay
advance tax for the first three quarters on the basis of
tax to turnover ratio assessed for the latest tax year
multiplied by current quarters turnover after adjusting
tax deducted at source etc.
The taxpayers, being companies and AOPs, are
however, required to estimate the tax payable for the
relevant tax year before the last installment is due
and pay the tax based on such estimate.
Similar provision is placed under the newly inserted

section 7A where by the income of the resident
shipping company is subject to Final taxation and the
said reduction shall not available after 30 June 2020
Powers of FBR to grant exemptions

and amendments in withholding tax
provisions withdrawn
Section 159
The Bill now seeks to provide that companies and

AOPs will estimate the tax payable for the relevant
year before the second installment is due and pay
fifty percent of the estimated amount of tax by the
due date for the second quarter and remaining fifty
percent of the estimated tax payable shall be paid in
two equal installments payable by due dates for third
and fourth quarters.
Consequent to amendments proposed in section 53

withdrawing the powers of the Federal Government
to grant exemptions or issue concessionary
notifications, the powers given to FBR under section
159 are proposed to be withdrawn.
Option to exporters for taxation under

normal tax regime
The Bill proposes to reduce the rate of default

surcharge from 18 percent to 12 percent.
Default surcharge reduced

Sections 161 and 205
Section 154
Hitherto tax deducted from proceeds realization on
account of export of goods is treated as final tax in
respect of income from such exports.
Budget Brief 2015
25
Furnishing of information by Financial

Institutions including Banks in respect
of non-resident persons
Section 165B
The Bill proposes to insert new section 165B to
empower FBR to call for information from Banks and
Financial Institutions regarding non-resident persons
for the purpose of automatic exchange of information
under bilateral agreement or multilateral conventions
subject to the condition that information received
shall be used only for tax purposes and kept
confidential.
Rate of compensation on refunds

Section 171
The Bill proposes to revise the rate of compensation
on delayed refunds from 15 percent to KIBOR plus 5
percent per annum.
Special audit panel

Sections 121, 176, 177 and 210(1B)
taxpayer to obtain any information or record etc. and

examine such information within business premises.
Further, if specifically delegated by the
Commissioner, special audit panel may exercise the
powers as are vested in a Court under the Code of
Civil Procedures, 1908.
Further, the powers to enter into business premises
and to obtain information or evidence for the purpose
of conducting an audit shall only be exercised by
Officers of Inland Revenue, being members of
special audit panel.
On failure to produce information or records before
the Commissioner or the special audit panel, the
Commissioner and special audit panel may proceed
to make best judgment assessment and the
assessment treated to have been made on the basis
of return or revised return shall have no legal effect.
FBR has been empowered to prescribe the mode
and manner constitution, procedure and working of
the special audit panel.
Penalties revised
Section 182
The Bill seeks to empower FBR to appoint audit

panels to conduct an audit under section 177
including a forensic audit of the income tax affairs of
taxpayers. Such panel is proposed to be headed by a
Chairman, being an Officer of Inland Revenue, and to
comprise two or more members from the following:
(i)
An Officer or Officers of Inland Revenue
(ii)
A firm of Chartered Accountants
(iii) A firm of Cost and Management Accountants; or
The Bill propose to revise following penalties:

Penalty for
Existing
Revised
Non-filing of
withholding tax
statement,
statement of final
taxation and nonfurnishing of
information by
banks
Rs. 2,500 for

each day of
default
subject to a
minimum
penalty of Rs.
50,000
Rs. 2,500 for

each day of
default subject
to a minimum
penalty of Rs.
10,000
Failure to furnish
wealth statement
or wealth
reconciliation
Rs. 100 for

each day of
default
0.1 percent of
taxable
income per
week or Rs.
20,000
whichever is
higher
(iv) Any other person as directed by FBR

The scope of such audit shall be as determined by
the Board or the Commissioner on case to case
basis.
The special audit panel may, with delegation of
powers in writing and prior approval of the
Commissioner, enter the business premises of a
26
Budget Brief 2015
Consumer goods and fast moving

consumer goods defined
Section 2(13AA) and 2(22A)
The Bill seeks to define the two terms as follows:
(i)
(ii)
consumer goods means goods that are

consumed by the end consumer rather than
used in the production of another goods
fast moving consumer goods means consumer
goods which are supplied in retail marketing as
per daily demand of a consumer
Further, the reference of consumer goods for the

purpose of minimum tax rate of 0.2 percent is
proposed to be deleted consequently making them
liable to minimum tax at the standard rate of 1
percent.
Threshold of capital revised for small

company
Tax year 2015

Holding
period
Less than
twelve months
Existing
Proposed
Tax year
2016
Proposed
12.5
15
Twelve months
or more but less
than twenty four
months
10
12.5
Twenty four
months or more
but less than
four years
No
change
7.5
Powers of Federal Government for

grant of exemptions / tax concession
curtailed
Section 53
Section 2(59A)
The Bill proposes to enhance the threshold of
maximum amount of paid up capital and undistributed
reserves from Rs. 25 million to Rs. 50 million.
Holding period of specified securities

extended
Section 37A
Currently, capital gain on specified securities is
taxable at zero percent if the holding period of such
securities is more than two years.
The Bill proposes to extend this period to four years
so that capital gain on such securities shall be
taxable at zero percent if held for four years or more.
Section 53(2) empowered the Federal Government to

amend the provisions of the Second Schedule to the
Income Tax Ordinance, 2001 by notification in the
official gazette and all such amendments were
effective in respect of any tax year beginning at a
date before or after the commencement of the
financial year in which the notification is issued.
Pursuant to the stated policy of the Government that
all amendments in fiscal statutes should be made by
the parliament, the President of Pakistan issued an
Ordinance No. IX of 2015 dated 30 April 2015 which
provided that the Federal Government may make
amendment in the Second Schedule to the
Ordinance with the approval of the Economic
Coordination Committee of Cabinet wherever
circumstances exist to take immediate action for the
purpose of:
national security,
natural disaster,
national food security in emergency situations,
Budget Brief 2015
27
protection of national economic interest in

situations arising out of abnormal fluctuation in
the international commodity prices,
Tax credit for employment generation
removal of anomalies in taxes,
development of backward areas and

implementation of bilateral and multilateral
agreements
With the objective of employment generation, the Bill

seeks to introduce tax credit for companies formed
for establishing and operating a new manufacturing
unit set up between 01 July 2015 till 30 June 2018.
The salient features of the scheme are as follows:
The Bill now seeks to incorporate the provisions of

the aforesaid Ordinance in sub-section (2) of section
53.
Section 64B
(i)
tax credit will be allowed for a period of ten

years
(ii)
tax credit shall be equal to one percent of the

tax payable by every fifty employees registered
with EOBI and Employee Social Security
Institution of provincial Governments during a
tax year subject to maximum of 10 percent of
the tax payable by the company.
(iii)
manufacturing unit is not established by setting

up or reconstruction or reconstitution of an
existing undertaking or by the transfer of
machinery or plant from an existing
undertaking established in Pakistan on or
before 01 July 2015.
Further, the Bill seeks to insert sub-section (4) in

section 53 to provide that any notification issued after
promulgation of Finance Act, 2015 shall stand
rescinded on expiry of the financial year in which it is
issued except where it has been rescinded earlier.
Threshold on investment in shares

and insurance for the purpose of tax
credit enhanced
Section 62
The Bill proposes to increase the limit of investment
in shares and insurance for the purpose of tax credit
from Rs. 1,000,000 to Rs. 1,500,000
Tax credit for profit on debt

substituted with deductible allowance
Section 64
For the purpose of this section, a manufacturing unit

shall be treated to have been set up when it is ready
to go into trial or commercial production.
Section 64 entitles a person for a tax credit in respect

of profit on debt paid on a loan by a scheduled bank
or NBFI for the purpose of construction of a new
house or acquisition of a house.
Tax credits for BMR, new and existing

undertaking to be available against
minimum tax and final tax
The Bill seeks to substitute tax credit with a

deductible allowance to the individual taxpayers.
Section 65B, 65D and 65E
The deductible allowance shall not exceed fifty

percent of taxable income of such individual or Rs.
1,000,000 whichever is lower. The Bill further
provides that any allowance or part thereof that is not
able to be deducted for the year shall not be carried
forward to a subsequent tax year.
28
The Commissioner is empowered to withdraw the tax

credit and re-compute the tax payable for the relevant
tax year on discovery that conditions specified in this
section were not fulfilled.
Budget Brief 2015
The Ordinance currently provides for following tax

credits:
Section 65B 10 percent tax credit for

investment in plant and machinery for the
purposes of extension, expansion, balancing,
modernization and replacement
Section 65D 100 percent tax credit for

investment in newly established industrial
undertaking
Section 65E - 100 percent tax credit for

investment in existing established industrial
undertaking
Powers of Federal Government for

exchange of information enhanced
Sections 107 and 176
The above tax credits are allowed against minimum

tax and final tax as well. Whereas section 169
dealing with principles of final taxation and section
113 dealing with minimum tax provide that no credit
shall be allowed against final tax and minimum tax.
Thus this created anomalies.
The Bill seeks to remove the anomalies by inserting
new sub-section (6) in section 65 to provide that tax
credit under sections 65B, 65D and 65E shall be
available against final tax as well as minimum tax.
Tax credit for listing on stock

exchange
Section 65C
The Bill seeks to enhance the limit of tax credit from
15% to 20% of tax payable for a tax year in which the
company is enlisted on a stock exchange in Pakistan
Time limit for tax credit for industrial

undertaking to start with
commencement of commercial
production
The Bill seeks to empower the Federal Government

to enter into bilateral or multilateral agreements with
Governments of foreign countries or tax jurisdictions
for avoidance of double taxation and prevention of
fiscal evasion and exchange of information including
automatic exchange of information with respect to
taxes imposed under this Ordinance or under
corresponding law enforced in other country.
The Bill also seeks to empower the Federal Board of
Revenue to obtain and collect information when
solicited by another country under a tax treaty,
information exchange agreement, multilateral
convention, inter-governmental agreement or similar
arrangement or mechanism.
Similarly corresponding amendments have also been
proposed in section 176(1)(a) empowering the
Commissioner to require any person whether or not
liable under the Ordinance to furnish to the
Commissioner or an authorized officer any
information relevant to tax leviable under this
Ordinance or to fulfill any obligation under an
agreement with a foreign government or tax
jurisdiction.
The amendments appear to have been proposed in
the wake of recent legislations like FATCA.
Minimum tax on builders deferred until

2018
Section 65E
The existing provisions allow tax credit in respect of
the tax year in which plant and machinery is installed
and for subsequent four years. The Bill seeks to
provide that time limit of five years will begin from the
date of setting up or commencement of commercial
production from the new plant or expansion project,
whichever is later.
Section 113A
The Finance Act, 2013 imposed minimum tax on
income from business of construction, sale of
residential, commercial or other buildings at the rates
to be notified by the Federal Government. However,
the Federal Government had not notified any rates
for the purpose of this section.
The Bill now proposes to defer application of this
section till 30 June 2018.
Budget Brief 2015
29
Minimum tax on land developers

specified
Section 113B
The Finance Act, 2013 inserted section 113B to
provide for minimum tax on income from business of
development and sale of residential, commercial or
other plots at the rates to be notified by the Federal
Government. However, no such rates not been
prescribed to date.
The Bill now proposes a rate of 2 percent of the value
of land notified by the Authority for the purpose of
stamp duty as minimum tax rate.
Revision of return of income

Section 114
A taxpayer is entitled to revise the return of income
on discovery of any omission or wrong statement
subject to certain specified conditions. The Finance
Act, 2013 prescribed another condition that a return
can only be revised if it is accompanied by approval
of the Commissioner in writing for revision of such
return. One of the conditions for revision of return is
that taxable income should not be less than or loss
should not be more than income or loss, as the case
may be, declared in the return. There was a demand
that this condition and the condition of the
Commissioners approval are not fair and just,
therefore, both need to be removed.
The Bill now proposes partial acceptance of the
demand by proposing that Commissioners approval
shall not be required if the revised return is filed
within sixty days of the filing of the return sought to
be revised.
Powers of the Commissioner

(Appeals) to grant stay against
recovery extended
Section 128
Section 128(1A) empowers the Commissioner
(Appeals) to stay recovery of tax demand for
aggregate period of thirty days.
30
Budget Brief 2015
The Bill seeks to insert sub-section (1AA)

empowering the Commissioner (Appeals) for stay of
recovery for a further period of thirty days subject to
the condition that appeal is decided within the
extended period of thirty days.
Due dates for payment of tax revised

Section 137
Under the existing provisions, tax payable under an
assessment order or amended assessment order is
payable within fifteen days from the date of service of
notice of demand. The Bill seeks to extend the
aforesaid time limit to thirty days.
Further, the Bill proposes to reduce the time limit of
payment of tax demand under provisional
assessment from sixty days to forty five days from
the date of service of the notice of demand.
Powers of FBR to grant exemptions

on imports withdrawn
Section 148(2)
Consequent to amendments proposed in section 53
withdrawing the powers of the Federal Government
to grant exemptions or issue concessionary
notifications, the powers given to FBR under subsection (2) of section 148 are proposed to be
withdrawn. Resultantly, FBR cannot specify goods or
classes of goods or persons or classes of persons
importing goods to whom withholding tax provisions
shall not apply.
Manufacturers of cooking oil or

vegetable ghee made liable to final
tax
Section 148A Clause 13(c ) of Part II of Second
Schedule
The Bill proposes to transpose the reduced rate of
taxation for manufacturers of cooking oil or vegetable
ghee or both from clause (13C) of Part II of the
Second Schedule to a newly inserted section 148A
whereby such manufacturers are chargeable to tax at
the rate of 2 percent on purchase of locally produced
edible oil. Such tax is final tax in respect of income

accruing from locally produced edible oil.
Withholding tax on payment to

sportsperson made final tax
Permanent establishments of nonresidents entitled to seek

exemption/reduction in withholding tax
rates
Section 153(3)(d)
Section 152(4A)
Until 2012, a PE of a non-resident person was liable
to withholding tax at par with a resident person under
section 153 and was accordingly entitled to make an
application for exemption from withholding tax.
However, the Finance Act, 2012 moved the
provisions relating to withholding tax from PE of a
non-resident to section 152(2A). Yet such PE of a
non-resident was not entitled to seek exemption or
reduction from withholding tax on its own.
The Bill proposes to make tax deduction from

payment to sportsperson as final tax liability in
respect of income of such sportsperson with effect
from tax year 2013.
Automatic selection of audit

Section 214D
The Bill proposes to introduce automatic selection of
audit of retailers falling under Sales Tax Special
Rules, 2007 other than persons meeting following
conditions:
(i)
Name of such registered person appears in the

sales tax active payers list;
The Bill now proposes to allow PE of a non-resident

to seek exemption / reduction in withholding tax rate
by making an application to the Commissioner.
(ii)
Complete return of total income has been filed

within the due date including the date extended
by FBR;
Withholding tax on payment on

account of services made adjustable
for companies
(iii)
The tax payable based on the return of total

income has been paid;
Section 153(3)
(iv)
Consequent to the amendments made vide Finance

Act, 2009 a dispute arose as to whether tax deducted
from payment on account of services was to be
treated as minimum tax or adjustable in case of
companies. The FTO in its order held the provisions
as discriminatory and invalid.
2 percent tax on turnover under section 113

has been paid by such registered person who
files the return below taxable limit and in the
preceding tax year has either not filed the
return or had declared income below taxable
limit; and
(v)
25 percent higher tax than the previous tax

year has been paid by such registered person
and had declared taxable income in the return
for immediately preceding tax year.
The Bill now proposes to clarify that tax deducted at

source from payment on account of services to
companies shall be minimum tax with effect from tax
year 2009.
Such registered persons shall also not be subject to

selection of their cases for audit by the Commissioner
under section 177 or FBR under section 214C.
Audit of the income tax affairs of such persons shall
be conducted as per the procedures given in section
177 and all the provisions of the Ordinance shall
apply except the powers of the Commissioner to call
for record or documents.
Budget Brief 2015
31
This section shall have effect from the date appointed

by the Board through notification in official gazette.
Whistleblower
The Bill also proposes to explain date of first

registration for the purpose of withholding tax under
section 231B as:
(i)
the date of issuance of broad arrow number in

case a vehicle is acquired from the Armed
Forces of Pakistan;
(ii)
the date of registration by the Ministry of

Foreign Affairs in case the vehicle is acquired
from a foreign diplomat or a diplomatic mission
in Pakistan;
(iii)
the last day of the year of manufacture in case

of acquisition of an unregistered vehicle from
the Federal or a Provincial Government; and
(iv)
in all other cases the date of first registration by

the Excise and Taxation Department.
Sections 2(75) and 227B

The Bill proposes to define the term whistleblower
as person who reports concealment or evasion of
income tax leading to detection or collection of taxes
fraud, corruption or misconduct to the competent
authority having power to take action against the
person or an income tax authority committing fraud,
corruption, misconduct or involved in concealment or
evasion of taxes.
The Bill proposes to introduce the concept of
whistleblower whereby FBR may sanction reward to
whistleblowers in providing credible information
leading detection of taxes.
The entitlement of whistleblower for reward shall be
rejected if:
(i)
the information provided is of no value
(ii)
the Board already had the information
(iii)
the information was available in public records
(iv)
no collection of taxes is made from the

information provided from which the Board can
pay the reward
FBR may prescribe the procedures and also specify

the apportionment of reward for whistleblower.
Advance tax on private motor vehicles

Sections 231B and 234
The Bill proposes to define the term motor vehicle
for the purpose of withholding tax on private motor
vehicles under sections 231B and withholding tax on
subsequent payment of tax on motor vehicles under
234 as including car, jeep, van, sports utility vehicle,
pick-up trucks for private use, caravan automobile,
limousine, wagon and any other automobile used for
private purpose.
32
Budget Brief 2015
Withholding tax on internet usage

Section 236
The Bill proposes to introduce adjustable withholding
tax on the internet bill and prepaid internet cards at
the rate of 14 percent of the amount of bill or sale
price of the internet prepaid cards.
Withholding tax on purchase of air

tickets
Section 236B
The Bill proposes to exempt air routes of Baluchistan
coastal belt, Azad Jammu and Kashmir, FATA, GilgitBaltistan and Chitral from withholding tax under
section 236B.
Withholding tax on sales to retailers

and wholesalers
Section 236H
The Bill proposes to exclude sale of fertilizer to
retailers from the ambit of withholding tax.
The Bill also proposes to impose withholding tax on

sale of specified goods excluding fertilizer to
wholesalers at the time of sale.
Withholding tax on banking

transactions other than through cash
Section 236P
Collection of withholding tax by

educational institutions
Section 236I
The Bill proposes to exclude non-residents from
withholding tax under this section who:
(i)
The Bill proposes to require every banking company

to withhold tax at the rate of 0.6 percent of the value
of following transactions from a non-filer where the
sum of total payments exceeds Rs. 50,000 in a day:
(i)
at the time of sale of any instrument including

demand draft, pay order, special deposit
receipt, cash deposit receipt, short term deposit
receipt, call deposit receipt, rupee travelers
cheque or any other instrument of such nature
(ii)
at the time of transfer of any sum through

cheque or clearing, interbank or intra bank
transfers through cheques, online transfer,
telegraphic transfer, mail transfer, direct debit,
payments through internet, payments through
mobile phones, account to account funds
transfer, third party account to account funds
transfers, real time account to account funds
transfer, real time third party account to
account fund transfer
furnishes copy of passport as an evidence to

the educational institution that during previous
tax year, his stay in Pakistan was less than one
hundred eighty three days;
(ii)
furnishes a certificate that he has no Pakistansource income; and
(iii)
the fee is remitted directly from abroad through

normal banking channels to the bank account
of the educational institution.
Exemption from withholding tax under

chapter XII
Section 236O
The Bill proposes to provide exemption to following
person from withholding tax under chapter XII
including withholding tax on cash withdrawals,
purchase of air tickets, telephone bills, electricity bills,
registration of motor vehicles, registration of
immovable property etc.:
(i)
The Federal Government or a Provincial

Government;
(ii)
A foreign diplomat or a diplomatic mission in

Pakistan; and
(iii)
A person who produces a certificate from the

Commissioner that his income during the tax
year is exempt.
The aforesaid withholding tax is proposed to be

adjustable. Further, this section is proposed to be not
applicable on Pakistan real time inter-bank settlement
mechanism (PRISM) or payments made for Federal,
Provincial or Local Government taxes.
Withholding tax from payment to

residents for use of machinery and
equipment
Section 236Q
The Bill proposes to introduce withholding tax at the
rate of 10 percent from payment in full or part by
prescribed persons (as defined under section 153(7))
to resident persons on account of:
(i)
use or right to use industrial, commercial and

scientific equipment; and
(ii)
rent of machinery.
Budget Brief 2015
33
The said withholding tax is proposed to be final tax

on income of resident persons deriving income from
aforementioned payments.
(iv)
Withholding tax on education related

expenses remitted abroad
The tax so collected shall be minimum tax on the

income of members.
Section 236R
Second Schedule
The Bill proposes that every banking company,

financial institutions, foreign exchange companies or
any other person to withhold tax at the rate of 5
percent of total education related expenses remitted
outside Pakistan.
For the purpose of this section, the term education
related expenses is proposed to be defined as
including tuition fee, boarding and lodging expenses,
any payment for distant learning to any institution or
university in a foreign country and any other expense
related or attributable to foreign education.
This withholding tax is proposed to be adjustable in
the hands of the person remitting the aforesaid
expenses.
Part I
The Finance Bill proposes to insert, withdraw and
modify certain exemptions in Part I of the Second
Schedule as listed below:
New Exemptions
The Indus Hospital Clause (61)(xlv)
Withholding tax on dividend in specie
The Bill proposes withholding tax on dividend in

specie at the rate of 10% of gross amount of dividend
in specie for filers and 17.5% for non-filers.
Withholding tax by Pakistan Mercantile Exchange
Limited Section 236T
34
on purchase of futures commodity contracts;
(ii)
on sale of future commodity contracts;
(iii)
on purchase of futures commodity contracts in

lieu of tax on the commission earned by such
members; and
Budget Brief 2015
Income of The Indus Hospital shall be exempt

from tax.
Various industrial undertakings Clauses (126I) to

(126L)
The Finance Bill proposes to exempt profits and
gains derived by an industrial undertaking:
Generation of renewable energy - Clause (126I)

Engaged in the manufacture of plant, machinery,
equipment and items exclusively used in
generation of renewable energy from sources like
solar and wind, for 5 years from 1 July 2015
provided that the said undertaking is set up by 31
December 2016. The provisions of section 113
(minimum tax) are proposed not to be applicable
on an undertaking manufacturing plant,
machinery and equipment used in generation of
renewable energy.
The Bill proposes that Pakistan Mercantile Exchange

Limited (PMEX) shall collect advance tax from its
members at the rate of 0.1 percent of the amounts of
the following transactions:
(i)
Donation to The Indus Hospital, Karachi is

proposed to be allowable tax deduction for the
donors.
The Indus Hospital Clause (66)(xxxiii)
Section 236S
on sale of futures commodity contracts in lieu

of tax on the commission earned by such
members.
Warehousing or cold chain facilities - Clause

(126J)
registered under the Companies Ordinance,

1984 having registered office in Pakistan;
Engaged in operating warehousing or cold chain

facilities for storage of agriculture produce, for 3
years from setting up of undertaking or
commencement of commercial operations,
whichever is later, provided that such undertaking
is set-up during 01 July 2015 to 30 June 2016.
Minimum tax provisions are proposed not to be
applicable on such undertaking.
The company has not been formed by

splitting up or reconstruction or
reconstitution of an already existing
business or by transfer to a new business of
any plant or machinery used in a business
which was carried on in Pakistan at any time
before the commencement of the new
business.
iii)
Fifty percent shares of the company (owning

the project) are neither owned by nor it is
controlled by the Federal / Provincial / Local
governments.
iv)
Project is not set up on or after 30 June

2018.
Production of halal meat - Clause (126K)

Engaged in production of halal meat upon
obtaining of halal certification, for 4 years from
setting up of undertaking or commencement of
commercial production, whichever is later, if the
undertaking is set up during 1 July 2015 to 31
December 2016. The provisions of sections 113
(minimum tax) and 154 (export) are also
proposed not to be applicable on undertaking
producing halal meat.
ii)
Manufacturing unit in Khyber Pakhtunkhwa Clause (126L)
LNG Terminal Operators and Terminal Owners

Clause (141)
A manufacturing unit in the province of Khyber

Pakhtunkhwa, for 5 years beginning from setting
up of said undertaking or commencement of
commercial production, whichever is later, subject
to the conditions that:
(i)
(ii)
The unit is set up during 1 July 2015 to 30

June 2018; and
It is not established by splitting up or
reconstruction or reconstitution of an
existing undertaking or by transfer of plant
or machinery from a Pakistani undertaking
established prior to 1 July 2015.
The Bill proposes to exempt profits and gains of

LNG Terminal Operators and Terminal Owners
for a period of 5 years beginning from the date of
commencement of commercial operations. The
provisions relating to minimum tax are also
proposed not to be applicable on such
undertaking.
Employees Social Security Institutions Clause

(142)
The Bill proposes to exempt income from social

security contributions as derived by Employees
Social Security Institutions of Baluchistan, Khyber
Pakhtunkhwa, Punjab and Sindh.
Transmission line project Clause (126M)
Exemptions Withdrawn
Pakistan Postal Annuity Certificate Scheme - Clause

(20)
Profits and gains from a transmission line project

set up in Pakistan on or after 1 July 2015, are
also proposed to be exempt subject to the
following conditions:
i)
Income from an annuity issued under the

Pakistan Postal Annuity Certificate Scheme.
The project is owned and managed by a

company formed for this purpose and
Budget Brief 2015
35
Capital gains on sale of shares of entities in the

notified Special Industrial Zone - Clause (113)
Capital gains on sale of shares of public

company set up in any Special Industrial Zone
notified by the Federal Government.
New clauses for reduced rate

Exchange companies - Clause (28B)
Effected areas of KPK, FATA and PATA - Clause

(126F)
Now withholding of tax under this section on cash

withdrawals exclusively for own business of
Exchange Company is proposed to be introduced
with reduced rate of 0.15% but subject to the
condition that certificate is issued by the
Commissioner mentioning particulars of the bank
account(s) used for its own business
transactions.
Profit and gains derived by a taxpayer of most /

moderately effected areas of Khyber
Pakhtunkhwa, FATA and PATA.
Exemptions Modified
Developmental REIT Scheme - Clause (99A)
Profits and gains accruing on sale of immoveable

property to a REIT Scheme are exempt upto 30
June 2015. A proviso is proposed to be inserted
for exemption of gains on such sale to
Developmental REIT Scheme for development
and construction of residential buildings upto 30
June 2020.
Exemptions Transposed / Withdrawn

Manufacturer of cooking oil and ghee - Clause (13C)
Exemption to group - Clause (103A)
Income derived from inter-corporate dividend

within the group companies entitled to group
taxation under section 59AA or group relief under
section 59B is exempt without any other
condition. Now, an amendment is proposed to
make this exemption conditional upon filing of
return for that tax year by the group.
China Overseas Ports Holding Company Limited Clause (126A)
Income derived by China Overseas Ports Holding

Company Limited from Gwadar Port operations
are currently exempt for 20 years from 6
February 2007. This limitation of 20 years is
proposed to be extended to 23 years.
Part II
36
Budget Brief 2015
Reduced tax rate of 2 percent of the purchase

price of locally produced edible oil for
manufacturer of cooking oil and / or ghee is now
proposed to be omitted from Part I [Clause (13C)]
so as to introduce new section 148A in the main
statute.
Shipping income of resident - Clause (21)
Scheme of reduced taxation of shipping income

of a resident person is currently provided under
Clause (21) which is now proposed to be omitted
so as to introduce section 7A in the main statue.
Goods transport vehicles - Clause (14)
Reduced rate of tax of Rs. 2 per kilogram of the

laden weight for owner of goods transport
vehicles as given in Clause (14) is proposed to
be omitted so as to propose related reduced rate
of Rs 2.50 within the First Schedule.
Passenger transport vehicles - Clause (14A)
The Finance Bill proposes to insert and withdraw

certain clauses in Part II of the Second Schedule for
reduction in tax rates:
Currently withholding tax provisions of section

231A are not applicable in the case of exchange
companies in view of clause (61A) of Part IV of
Second Schedule.
Reduced rate of Rs 250 per seat per annum in

case of passenger transport vehicles is also
proposed to be omitted.
a. under clause (126I) engaged in

manufacture of equipment to be used
for renewable energy generation. [subclause (xxii)];
Goods transport vehicles - Clause (14B)
Being redundant, the reduced tax rate of Rs 2 per

kilogram of the laden weight during a specified
time limit is proposed to be omitted.
b. under clause (126J) engaged in deriving

income from operating warehousing or
cold chain facilities for storage of
agriculture produce. [sub-clause (xxiv)];
Part III
Reduction in penalty transposed - Clause (16)
c.
The Finance Bill seeks to withdraw Clause (16) in

Part III of the Second Schedule so as to introduce
such reduced penalty from Rs. 50,000 to Rs. 10,000
within legal provision of serial No. 1A of sub-section
(1) of section 182.
d. under clause (126L) engaged in deriving

income from operating manufacturing
unit set-up in Khyber Pakhtunkhwa
province during 1 July 2015 and 30
June 2018. [sub-clause (xxv)];
Part IV
The Finance Bill seeks to insert, withdraw and modify
certain clauses in Part IV of the Second Schedule
providing for exemption from specific provisions as
listed below:
New clauses for exemptions from specific

provisions
LNG Terminal Operators and LNG Terminal Owners Clause (11D)
Exemption from minimum tax under section 113
under clause (126K) engaged in

deriving income from operating halal
meat production. [sub-clause (xxiv)];
and
The Bill proposes to exempt LNG Terminal

Operators and LNG Terminal Owners from
application of Alternative Corporate Tax under
section 113C.
The Finance Bill proposes to exempt certain

entities from application of section 113 regarding
minimum tax under clause (11A) to:
Oil Marketing Companies and Refineries - Clause

(56)(ia)
i)
LNG Terminal Operators and LNG Terminal

Owners. [sub-clause (xix)];
ii)
Taxpayers in most / moderately effected

areas of Khyber Pakhtunkhwa, FATA and
PATA for tax years 2010, 2011 and 2012
other than manufacturers and suppliers of
cement, sugar, beverages and cigarettes.
[sub-clause (xx)];
iii)
Rice mills for the tax year 2015. [sub-clause

(xxi)];
iv)
Taxpayers qualifying for exemption under

proposed clauses in Part I of Second
Schedule:
The Bill proposes to exempt collection of tax

under section 148 from import of bituminous
mineral crude (PCT code 2709.000), Furnace Oil
(PCT code 2710.1941), High Speed Diesel Oil
(PCT code 2710.1931), Motor Spirit (PCT code
2710.1210), J.P.1 (PCT code 2710.1912) and
Base Oil for lubricating oil (PCT code 2710.1993)
imported by Pakistan State Oil Company Limited,
Shell Pakistan Limited, Attock Petroleum Limited,
Byco Petroleum Pakistan Limited, Admore Gas
(Private) Limited, Chevron Pakistan Limited,
Total-PARCO Pakistan (Private) Limited, Hascol
Petroleum Limited and oil refineries.
Budget Brief 2015
37
Agricultural equipments - Clause (91)
Import of potatoes - Clauses (56B) & (56H)
Exemption is proposed from collection of tax at

import stage under section 148 in respect of the
following relating to agriculture under specified
PCT codes under each of below categories:
i)
Hajj Group Operators - Clause (72A)
Tillage and seed bed preparation

equipment;
ii)
Seeding or planting equipment;
iii)
Irrigation, drainage and agro-chemical

application equipment;
iv)
Harvesting, threshing and storage

equipment; and
v)
Post-harvest handling and processing &

miscellaneous machinery.
Aircrafts and aviation equipments - Clause (92)
The Bill proposes to exempt the specified

aircrafts, equipment relating to aircrafts and
aviation under prescribed PCT codes and
headings from collection of tax at import stage
under section 148.
The Finance Bill seeks to omit clauses regarding

exemption from application of section 148 in
respect of import of potatoes as these have
become redundant.
The Finance Bill seeks to withdraw exemption

from applicability of clause (l) of section 21
(expenditure for a transaction under single
account head which in aggregate exceed Rs.
50,000), section 113 (minimum tax), section 152
(payment to non-resident) as available to Hajj
Group Operators upon payment of specified
amount per hajji.
Clauses for exemption from specific

provision modified
In clause (11A), following amendments are

proposed:
i)
REIT Regulations 2015 - sub-clause (i)

Reference to old REIT Rules 2006 is to be
replaced with recently introduced REIT
Regulations 2015.
Export of halal meat production - [Clause (93)]

ii)
The Bill proposes to exempt units producing halal

meat and qualifying for exemption under the
newly proposed clause (126K) from application of
withholding tax under section 154(1) for
taxpayers operating for 4 years.
Clauses for exemption from specific

provisions withdrawn
Electronic and print media - Clause (16A)
38
Exemption from withholding tax on services

under section 153(1)(b) as available to electronic
and print media in respect of advertising services
is proposed to be withdrawn.
Budget Brief 2015
Kot Addu Power Company Limited - subclause (iv)

Being redundant, exemption from minimum
tax under section 113 to Kot Addu Power
Company Limited (KAPCO) is to be omitted.
iii)
Coal mining project in Sindh - sub-clause

(xviii)
Current sub-clause (v) exempts minimum
tax under section 113 to taxpayers deriving
income from a coal mining project in Sindh,
supplying coal exclusively to power
generation project, however, this clause
wrongly refers such exemption on receipts
from sale of electricity. This is now proposed
to be rectified by inserting separate subclause (xviii) for these taxpayers.
commences on or before 30 June 2016. This

date is now proposed to be extended from 2016
to 2017.
Permanent Establishment of non-resident - Clause

(46)
Provisions with respect to income tax withholding

from payment to permanent establishment [PE]
of non-resident were shifted from section 153 to
section 152 vide Finance Act, 2012 but related
reference in clause (46) was not updated. In
order to clarify this position, reference is now
proposed to be made to section 152(2A) for PE
of Petroleum Exploration and Production (E&P)
Companies.
Goods classified in Chapters 27, 86 and 99 - Clause

(56)(i)
Exemption from collection of tax at import stage

under section 148 was available in respect of
goods classified in Chapters 27, 86 and 99 of
Pakistan Customs Tariff. The bill proposes to
withdraw the exemption in respect goods under
Chapter 27 and under PCT heading 9918 (in
Chapter 99).
Taxation regime of Insurance

entities- Fourth Schedule
Mutual Insurance Association Rule 6
The Finance Bill 2015 seeks to omit the Rule

(6A) i.e. Exemption of capital gain from sale of
shares.
Rule (6B):- The bill seeks to amend the rates of

taxation of capital gain as follows:
Holding period
Less than six
Existing
Tax year
2015
%
Proposed
Tax year
2015
%
Proposed
Tax year
2016 %
17.5
12.5
12.5
15
10
12.5
7.5
months
More than six
months but less
Trading Houses - Clause (57)
than twelve months

Twelve months or
The scope of clause (57) is proposed to be

extended by clarifying that in-house preparation
and processing of food and allied items for sale
to customers shall not disqualify a company from
being treated as a Trading House, provided that
all the conditions are fulfilled and sales of such
items does not exceed 2 percent of the total
sales.
Renewable energy resources - Clause (77)
Exemption from collection of tax under section

148 and deduction of tax under section 153 is
available on specified items of renewable energy
resources. Its scope is proposed to be extended
to tubular daylighting devices such as solatube.
more but less than

twenty four months
Twenty four months
or more but less
than four years
Rule 6D - Super Tax [Section 4B]

The Bill proposes to insert Rule 6D to levy super tax
under section 4B for rehabilitation of temporarily
displaced persons and tax at the rate of 3% in case
income equate or exceed Rs. 500 million.
Investments in industrial undertakings - Clause (86)
Provisions of section 111 (Unexplained income or

assets) are not applicable in case investment in
industrial undertakings is made on or after 1
January 2014 and commercial production
Budget Brief 2015
39
Taxation regime of
Exploration and Production of
Petroleum entities- Fifth
Schedule
Rule 4AA in Part I and 2A in Part II - Super Tax
[Section 4B]
The Bill proposes to insert new Rule 4AA in Part I
and 2A in Part II in order to levy super tax under
section 4B for rehabilitation of temporarily displaced
persons and tax at the rate of 3% in case income
equate or exceed Rs. 500 million.
Taxation regime of Banking

companies - Seventh
Schedule
Rule 6, 6A, 6B, 7A and 7B - Taxation on income
computed
Currently different streams of incomes banking
companies are subject to different rates of taxation as
follows:
Business income
35%
Dividend (after allocation of

expenses)
10%
Capital gains on listed securities

(after allocation of expenses)
As per
schedule
Dividend from its asset

management company
20%
Dividend from money market and

income funds
25%
Finance bill proposes amendment in Rule 6 and to

omit Rules 6A & 6B in order to delete separate
taxation of dividend and capital gain.
40
Budget Brief 2015
It is also proposed to include new rule 7B to tax

dividend income and capital gain at corporate tax rate
of 35%.
Rule 7C - Super Tax [Section 4B]
The Bill proposes to insert new Rule 7C in order to
levy super tax under section 4B for rehabilitation of
temporarily displaced persons and tax at the rate of
4% on banking companies.
Eighth Schedule Rule 1,

Sub-rule 7
Manner and basis of computation of capital
gains tax on listed securities
The Bill proposes to insert new sub-rule 7 in rule 1 to
levy super tax on the taxpayers under section 4B for
rehabilitation of temporary displaced person and tax
at the rate given in Division IIA of Part I of First
Schedule as applicable on the taxpayer i.e. on
banking companies at the rate 4%; persons other
than a banking company (having income equal to or
exceed Rs. 500 million) at the rate 3%.
Tax Rate Card

1. Salary Individuals
Clause (1A), Div I, Part I, First Schedule
The tax rate on salary income from Rs 400,000 to
Rs 500,000 is proposed to be reduced from
existing five percent to two percent. This will
result in annual tax saving of Rs. 2,400 for
individuals earning salary from Rs 400,000 to Rs
500,000 and an annual tax saving of
Rs. 3,000 for all salary income above this range.
The comparative table is given below:
S.
No.
Taxable
income (Rs.)
Upto 400,000 0
400,001 to
500,000
2%
Existing
Rate
5%
Proposed
Rate
S.
No.
Taxable
income (Rs.)
Existing
Rate
Proposed
Rate
500,001 to
750,000
Rs. 5,000 + 5% Rs. 2,000 + 5%
1,500,001 to
2,500,000
Rs. 147,500 +
20%
Rs. 144,500
+ 20%
750,001 to
1,400,000
Rs. 17,500 +
10%
Rs.14,500 + 10%
2,500,001 to
4,000,000
Rs. 347,500 +
25%
Rs. 344,500
+ 25%
1,400,001 to
1,500,000
Rs. 82,500 +
12.5%
Rs.79,500 +
12.5%
4,000,001 to
6,000,000
Rs. 722,500 +
30%
Rs. 719,500
+ 30%
1,500,001 to
1,800,000
Rs. 95,000 +
15%
Rs. 92,000 + 15%
6,000,001 and
above
Rs. 1,322,500
+ 35%
1,800,001 to
2,500,000
Rs. 140,000 +
17.5%
Rs. 137,000 +
17.5%
Rs.
1,319,500 +
35%
2,500,001 to
3,000,000
Rs. 262,500 +
20%
Rs. 259,500 +
20%
3,000,001 to
3,500,000
Rs. 362,500 +
22.5%
Rs. 359,500 +
22.5%
10
3,500,001 to
4,000,000
Rs. 475,000 +
25%
Rs. 472,000 +
25%
11
4,000,001 to
7,000,000
Rs. 600,000 +
27.5%
Rs. 597,000 +
27.5%
12
7,000,001
and above
Rs. 1,425,000
+ 30%
Rs. 1,422,000 +
30%
2. Individuals (other than salaried

individuals) and Association of
Persons (AOP)
S.
No.
Taxable income
(Rs.)
Existing
Rate
In case of disabled persons holding CNIC issued

by NADRA or taxpayer with age of not less than
sixty years on first day of tax year, the tax liability
is to be reduced by 50 percent in case the
taxable income does not exceed Rs. 1,000,000.
3. Companies
Div II, Part I, First Schedule
The Finance Bill proposes to reduce corporate
rate of tax for tax year 2016 to 32 percent. The
tax rates after this proposed change for various
categories of corporate taxpayers are tabulated
below:
Clause 1, Div I, Part I, First Schedule
The rate of tax on income from Rs 400,000 to

Rs 500,000 is proposed to be reduced from
existing ten percent to seven percent. This will
result in annual tax saving of Rs. 3,000 across all
income slabs.
The comparative table is given below:
S.
No.
Taxable income
(Rs.)
Proposed
Rate
Existing
Rate
Proposed
Rate
Upto 400,000
400,001 to
500,000
10%
7%
500,001 to
750,000
Rs. 10,000 +
10%
Rs. 7,000 +
10%
750,001 to
1,500,000
Rs. 35,000 +
15%
Rs.32,000 +
15%
Small company
25
Modaraba
25
Banking company
35
Other companies (TY 2015)
33
Other companies (TY 2016)
32
4. Super tax as per newly introduced

section 4B
Div IIA, Part I, First Schedule
The Finance Bill proposes to insert new section
4B to levy super tax. The proposed tax rates are
tabulated below:
Budget Brief 2015
41
Person
Rates of
super tax
Banking Company
4% of the
income
Other person having income of

Rs. 500 million or more
3% of the
income
5. Tax rate on Dividend Income

Div III, Part I, First Schedule
The Finance bill proposes to make following
changes in the taxation of dividend income:
Source of Dividend Receipts
Existing
%
Proposed
%
12.5
15
From a stock fund, if dividend

receipts are less than capital
gains (for tax year 2015 and
onwards)
From a Collective Investment
Scheme, REIT Scheme* or a
Mutual Fund (for tax year 2015
and onwards)
25
Received by banking company
10
Received by a banking company

from its asset management
company
20
25
No Change
35
i)
Rate of tax on dividend received in cases

[other than power projects] is proposed to be
increased from 10 percent to 12.5 percent;
Received by a banking company

from a money market funds and
income funds
ii)
Rate of tax on dividend from a stock fund

[when dividend receipts are less than capital
gains] is proposed to be increased from 12.5
percent to 15 percent;
* REIT Scheme has been proposed to insert

section 2(17)(D) to define REIT scheme.
iii) The Finance Bill proposes to amend the

scheme of taxation of Banking Companies
whereby all income including dividend
income, be subjected to corporate rate of tax
at 35%.
Further the proviso has been inserted that

dividend received by a person from
Developmental REIT Scheme shall be reduced
by fifty percent for three years from thirtieth day
of June, 2018 in the case of REIT that is set-up
by thirtieth day of June 2018 with the object of
development and construction of residential
buildings.
Rate card after proposed changes is as under:
42
Source of Dividend Receipts
Existing
%
From purchaser of power project

privatized by WAPDA
7.5
From a company set up for power

generation
7.5
From a company supplying coal

exclusively to power generation
projects
7.5
Other cases
10
Budget Brief 2015
Proposed
%
6. Rate of Tax on Profit on DebtProposed Section 7B

Div IIIA, Part I, First Schedule
No Change
12.5
The Finance Bill proposes to insert new section

7B specifying taxation of profit on debt. The
proposed tax rates are tabulated below:
S. No.
Profit on Debt
Rate of tax
(1)
(2)
(3)
Upto Rs.
25,000,000
10%
Capital gains tax on redemption of securities is

required to be deducted by mutual fund collective
investment schemes and REIT as follows:
S. No.
Profit on Debt
Rate of tax
(1)
(2)
(3)
Rs.25,000,001
to Rs.
50,000,000
Rs. 2,500,000 + 12.5%

of the amount exceeding
Rs. 25,000,000
Rs. 50,000,001
and above
Rs. 5,625,000 + 15% of

the amount exceeding
Rs. 50,000,000
Category
7. Capital gains on disposal of

securities
The Finance bill proposes to make following

changes in the taxation of capital gains on
securities:
Enhanced rates of taxes
specified for tax year 2016;
ii)
Exempt holding period is proposed

to be increased from above 24
months to more than 4 years; and
Existing
Proposed
NonFiler
%
Stock fund
10
17.5
10
25
Others
10
17.5*
25
25*
8. Minimum Tax
Div IX, Part I, First Schedule
Following changes are proposed in the minimum tax
regime:
Minimum tax for dealers or distributors of

fertilizers has been proposed to be enhanced
from 0.2% to 0.5%.
Reduce rate of minimum tax of 0.2% was

applicable on both Consumer goods as well as
Fasts moving consumer goods. Bill proposes to
restrict reduced rate only for Fasts moving
consumer goods, while Consumer goods are
proposed to be subject to normal rate of one
percent. Consumer goods and fast moving
consumer goods has been defined in clause
(13AA) and (22A) respectively of Section 2 of the
Ordinance respectively.
The proposed applicable position is as follows:
Tax year 2015
Filer
In case of a stock fund if dividend receipts of the

fund are less than capital gains, the rate of tax
deduction shall be 12.5% in which case uniform
rate is applicable across filer and non-filer
categories.
are
iii) Separate slabs are proposed for

redemption of securities of mutual
fund collective investment schemes
and REIT.
Holding
period
Companies
* There appear some mistake in the table

proposed by Finance Bill whereby no rate
appear under the category Others against
Non-Filer.
Div VII, Part I, First Schedule
i)
Individual &
AOPs
Filer
NonFiler
%
%
Tax year
2016
Proposed
Less than twelve

months
12.5
15
Twelve months
or more but less
than twenty four
months
10
12.5
Twenty four
months or more
but less than
four years
No change
7.5
Budget Brief 2015
43
The proposed applicable rates for minimum tax

are tabulated below:
Person(s)
Rate
(a)
Oil marketing companies, Oil

refineries, Sui Southern Gas
Company Limited and Sui Northern
Gas Pipelines Limited ( for the cases
where annual turnover exceeds
rupees one billion.)
(b)
Pakistani Airlines
(c)
Poultry industry including poultry

breeding, broiler production, egg
production and poultry feed
production.
0.5%
(d) Dealers or distributors of fertilizers

(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)
Flour mills
Motorcycle dealers registered under the

Sales Tax Act, 1990
In all other cases
44
Budget Brief 2015
0.2%
0.25%
1%
Withholding tax rates table existing and proposed

The following table summarizes existing and proposed withholding tax rates for all classes of person and treatment
of withholding tax as adjustable or final tax liability.
Sec.
Type of Payment
Rate %
STATUS OF TAX COLLECTED / DEDUCTED

Existing
148
(a)
Proposed
Existing
Proposed
Ind &
AOP
Company
Ind &
AOP
Company
5.5 / 8
No
Change
- Industrial
undertaking
importing
remeltable steel
(PCT Heading
72.04) & directly
reduced iron for
own use.
(Filer / Non filer)
1 / 1.5
No
Change
Adjustable
/ Minimum
in case of
edible oil
& packing
materials
Adjustable
Adjustable
/ Minimum
in case of
edible oil
& packing
materials
Adjustable
Adjustable
/ Minimum
in case of
edible oil
& packing
materials
Adjustable
Adjustable
/ Minimum
in case of
edible oil &
packing
materials
Adjustable
- Person importing
potassic fertilizers
in pursuance of
Economic
Committee of the
Cabinet decision
No. ECC
155/12/2004
dated 9
December 2004.
(Filer / Non filer)
1 / 1.5
No
Change
Final /
adjustable
subject to
conditions
Final /
adjustable
subject to
conditions
Final /
adjustable
subject to
conditions
Final /
adjustable
subject to
conditions
- Person importing
urea
(Filer / Non filer)
1 / 1.5
No
Change
Final /
adjustable
subject to
conditions
Final /
adjustable
subject to
conditions
Final /
adjustable
subject to
conditions
Final /
adjustable
subject to
conditions
Collection of tax
at Imports
Value of goods
inclusive of
customs duty and
sales tax imported
by;
- Industrial
undertaking (Filer
/ Non filer)
Budget Brief 2015
45
Sec.
Type of Payment
Rate %

Existing
(b)
Existing
Proposed
Ind &
AOP
Company
Ind &
AOP
Company
- Person importing
pulses
(Filer / Non filer)
2/3
No
Change
Final /
adjustable
subject to
conditions
Final /
adjustable
subject to
conditions
Final /
adjustable
subject to
conditions
Final /
adjustable
subject to
conditions
- Other companies
(Filer / Non filer)
5.5 / 8
No
Change
Final
Final
- Other taxpayers
(Filer / Non filer)
6/9
Final
Final
Import by persons
covered under
SRO. 1125(I)2011
dated 31 December
2011
- Manufacturer
(Filer / Non filer)
No
Change
1 / 1.5
No
Change
Adjustable
Adjustable
Adjustable
Adjustable
- Commercial
importers
(Filer / Non filer)
3 / 4.5
No
Change
Final /
adjustable
subject to
conditions
Final /
adjustable
subject to
conditions
Final /
adjustable
subject to
conditions
Final /
adjustable
subject to
conditions
(c)
Import of ships by
ship breakers
(Filer / Non filer)
4.5 / 6.5
No
Change
Adjustable
Adjustable
Adjustable
Adjustable
(d)
Persons importing
gold and cotton
- Company
(Filer / Non
filer)
5.5 / 8
1 / 1.5
Final /
adjustable
subject to
conditions
Final /
adjustable
subject to
conditions
6/9
1 / 1.5
Final /
adjustable
subject to
conditions
Final /
adjustable
subject to
conditions
N/A
Adjustable
N/A
N/A
Adjustable
N/A
149
Other
taxpayers
(Filer / Non
filer)
Salary
Director fee
46
Proposed
Budget Brief 2015
Progressi Progressive Adjustable

ve rates
rates
20
No
Adjustable
change
Sec.
Type of Payment
Rate %

Existing
150
(a)
(b)
(c)
(d)
Dividend
Dividend distributed
by purchaser of a
power project
privatized by
WAPDA and
company set up for
power generation.
Dividend payment
by other companies
(Filer / non-filer)
* 12.5% rate
specified for
taxability.
Remittance of after
tax profit by a
branch other than
branch of a E&P
companies (subject
to treaty provisions,
if applicable)
(Filer / non-filer)
Dividend payment
by Collective
Investment
Scheme, REIT
Scheme or mutual
fund
- Stock fund
- Money market
fund, income
fund or any other
fund
(Ind & AOP/
company)
151
(a)
Profit on debt
Yield on an
account, deposit or
a certificate under
the National
Savings Scheme or
Post office saving
Proposed
Existing
Proposed
Ind &
AOP
Company
Ind &
AOP
Company
7.5
No
change
Final
Final
Final
Final
10 / 15
*10 / 17.5
Final /
Adjustable
Final /
Adjustable
Final /
Adjustable
Final /
Adjustable
10 / 15
10 / 17.5
Final /
Adjustable
Final /
Adjustable
Final /
Adjustable
Final /
Adjustable
10 / 12.5
(subject to
condition)
10 / 25
10 / 15
(subject to
condition)
No
Change
Final
Final
Final
Final
Final
Final
Final
Final
10 / 15
(subject to
condition)
10 / 17.5
(subject to
condition)
Final
Adjustable
Adjustable
Adjustable
Budget Brief 2015
47
Sec.
Type of Payment
Rate %

Existing
Proposed
Existing
Proposed
Ind &
AOP
Company
Ind &
AOP
Company
account
(Filer / non-filer)
48
(b)
Profit on a debt,
being an account or
deposit maintained
with a banking
company or a
financial institution
(Filer / non-filer)
10 / 15
(subject to
condition)
10 / 17.5
(subject to
condition0
Final
Adjustable
Adjustable
Adjustable
(c)
Profit on any
security by Federal
Government
issued, a Provincial
Government or a
local Government
other than profit on
National Saving
Scheme or Post
Office Saving
account to any
person
(Filer / non-filer)
10 / 15
(subject to
condition)
10 / 17.5
(subject to
condition)
Final
Adjustable
Adjustable
Adjustable
(d)
Profit on any bond,

certificate,
debenture, security
or instrument of any
kind (excluding loan
agreement between
a borrower and a
banking company
or a development
finance institution)
issued by a banking
company, a
financial institution,
company as
defined in the
Companies
Ordinance, 1984
and a body
corporate formed
by or under any law
for the time being in
force, to any person
other than a
10 / 15
(subject to
condition)
10 / 17.5
(subject to
condition)
Final
Adjustable
Adjustable
Adjustable
Budget Brief 2015
Sec.
Type of Payment
Rate %

Existing
Proposed
Existing
Proposed
Ind &
AOP
Company
Ind &
AOP
Company
Final
Final
Final
financial institution
(Filer / non-filer)
152
Payments to nonresidents
(a)
Royalty and
technical fee
15
No
change
Final
(b)
Execution of a
contract or subcontract under the
construction,
assembly or
installation project
in Pakistan
including a contract
for the supply of
supervisory
activities in relation
to such projects or
any other contract
for construction or
services rendered
relating thereto
No
change
Final
subject to
option
Final
subject to
option
Final
subject to
option
Final
subject to
option
(c)
Contract for
advertisement
services rendered
by TV Satellite
channel
No
change
Final
Final
Final
Final
(d)
Insurance premium
or
re-insurance
premium
No
change
Final
Final
Final
Final
(e)
Advertisement
services relaying
from outside
Pakistan
10
No
change
Final
Final
Final
Final
(e)
Profit on debt to
non-resident
person not having a
PE in Pakistan
10
No
change
Adjustable
/ Final in
specified
situations
Adjustable
/ Final in
specified
situations
Adjustable
/ Final in
specified
situations
Adjustable
/ Final in
specified
situations
(f)
Other payments
20
No
change
Adjustable
Adjustable
Adjustable
Adjustable
Budget Brief 2015
49
Sec.
Type of Payment
Rate %

Existing
152(2
A)
Payments to PE of
a non-resident
(a)
Sale of goods
Proposed
Existing
Proposed
Ind &
AOP
Company
Ind &
AOP
Company
Company
3.5
4/6
Adjustable
Adjustable
Adjustable
Adjustable
Other than
company
3.5
4.5 / 6.5
Adjustable
Adjustable
Adjustable
Adjustable
No
change
Adjustable
Adjustable
Adjustable
Adjustable
(Filer / Non filer)

(b)
Transport services
(c)
Other services
-
Company
8 / 12
Adjustable
Adjustable
Adjustable
Adjustable
Other than
company
10 / 15
Adjustable
Adjustable
Adjustable
Adjustable
(Filer / Non filer)

(d)
Execution of a
contract
-
Company
7 / 10
Adjustable
Adjustable
Adjustable
Adjustable
Other than
company
7.5 / 10
Adjustable
Adjustable
Adjustable
Adjustable
10
Adjustable
Adjustable
1.5
No
change
Final /
adjustable
subject to
conditions
Final /
(Adjustabl
e for
manufactu
rer / listed
company /
subject to
conditions)
Final /
adjustable
subject to
conditions
Final /
(Adjustable
for
manufactur
er / listed
company) /
subject to
conditions
(Filer / Non filer)

(e)
153
(a)
50
Sports Person
Goods, services
and execution of a
contract
Sales of rice, cotton
seed or edible oils
Budget Brief 2015
Sec.
Type of Payment
Rate %

Existing
(d)
Ind &
AOP
Company
Final /
(Adjustable
for
manufactur
er / listed
company)/
subject to
conditions
Final /
adjustable
subject to
conditions
Minimum
Adjustable
Minimum
Adjustable
No
change
Adjustable
Adjustable
10 / 15
No
change
Minimum
Minimum
7 / 10
Final /
Adjustable
for listed
company /
subject to
conditions
- Sports person
10
No
change
7.5
7.5 / 10
Final /
Adjustable
subject to
conditions
Final /
Adjustable
subject to
conditions
- Other tax payer
Final /
Adjustable
subject to
conditions
Final /
Adjustable
subject to
conditions
Final /
Adjustable
for listed
company /
subject to
conditions
-
Sale of any other

goods in the case
of;
Existing
Proposed
Ind &
AOP
4/6
4.5
4.5 / 6.5
Final /
adjustable
subject to
conditions
No
change
8 / 12
Proposed
- Company
(Filer / Non filer)
- Other tax payers

(Filer / Non filer)
(e)
Passenger
transport services
(f)
Other services in
the case of;
- Company
Company
Final /
(Adjustabl
e for
manufactu
rer / listed
company)/
subject to
conditions
(Filer / Non filer)

- Other tax payers
(Filer / Non filer)
(g)
Execution of a
contract in the case
of;
- Company
(Filer / Non filer)
(Filer / Non filer)
Budget Brief 2015
51
Sec.
Type of Payment
Rate %

Existing
(h)
154
(a)
Exports
Export proceeds,
proceeds from
sales of goods to
an exporter under
an inland back-toback letter of credit
or any other
arrangement,
export of goods by
an industrial
undertaking located
in an Export
Processing Zone,
Collection by a
collector of customs
at the time of
clearing of goods
exported
(b)
Indenting
commission
155
Income from
Property
Annual rent of
immovable property
including rent of
furniture and
fixtures and
amounts for
services relating to
such property
Prizes and
winnings
Amount of prize
bond winning
156
(a)
(b)
52
Deduction by
exporter or an
export house on
rendering of certain
services
Prize on cross-word
puzzle
Budget Brief 2015
Proposed
Existing
Proposed
Ind &
AOP
Company
Ind &
AOP
Company
Final /
Adjustable
subject to
conditions
Final /
Adjustable
subject to
conditions
Final /
Adjustable
subject to
conditions
Final /
Adjustable
subject to
conditions
No
change
Final
Final
Final /
Adjustable
(minimum)
subject to
option
Final /
Adjustable
(minimum)
subject to
option
No
change
Final
Final
Final /
Adjustable
(minimum)
subject to
option
Final /
Adjustable
(minimum)
subject to
option
Adjustable
Adjustable
Adjustable
Progressi Progressive Adjustable

ve rates
rates
15
No
change
Final
Final
Final
Final
15
No
change
Final
Final
Final
Final
Sec.
Type of Payment
Rate %

Existing
(c)
Amount of
raffle/lottery
winning, prize on
winning a quiz,
prize offered by a
company for
promotion of sales
156A
Petroleum
products
Commission and
discount to petrol
pump operators
Existing
Proposed
20
No
change
Final
Final
Final
Final
12
12 / 15
Final /
Adjustable
subject to
conditions
Final /
Adjustable
subject to
conditions
Final /
Adjustable
subject to
conditions
Final /
Adjustable
subject to
conditions
Slab rates
Slab rates
Adjustable
N/A
Adjustable
N/A
0.3 / 0.5
of the
amount
withdrawn
0.3 / 0.6
of the
amount
withdrawn
Adjustable
Adjustable
Adjustable
Adjustable
0.3 of the
transactio
n
0.3 / 0.6
of the
transactio
n
Adjustable
Adjustable
Adjustable
Adjustable
(Filer / Non filer)

156B
Ind &
AOP
Company
Cash withdrawal
Cash withdrawal
exceeding
Rs 50,000
(Filer / Non filer)
231A
A
Company
Withdrawal of
balance under
pension fund
Withdrawal of
amount before the
retirement age or it
is in excess of 50%
of the accumulated
balance at or after
the retirement age
231A
Ind &
AOP
Proposed
Transactions in
banks
Withdrawal made
through any mode
of banking
transactions
including Demand
Draft, Payment
Order, Online
Transfer,
Telegraphic
Transfer, CDR,
STDR, RTC
Budget Brief 2015
53
Sec.
Type of Payment
Rate %

Existing
Proposed
Existing
Proposed
Ind &
AOP
Company
Ind &
AOP
Company
Varying
slabs for
filers and
non filers
Varying
slabs for
filers and
non filers
Adjustable
Adjustable
Adjustable
Adjustable
exceeding Rs
25,000 in a day
(Filer / Non filer)
231B
Advance tax on
private motor
vehicle
- On registration of
motor vehicle
- On transfer of
registration or
ownership of a
private motor
vehicle.
- On sale of motor
vehicle
54
233
Brokerage &
Commission
(a)
Payment of
brokerage and
commission
(Filer / Non filer)
12
12 / 15
Final /
Adjustable
subject to
conditions
Final /
Adjustable
subject to
conditions
Final /
Adjustable
subject to
conditions
Final / /
Adjustable
subject to
conditions
(b)
Commission to
advertisement
agent
(Filer / Non filer)
7.5
10 / 15
Final /
Adjustable
subject to
conditions
Final /
Adjustable
subject to
conditions
Final /
Adjustable
subject to
conditions
Final /
Adjustable
subject to
conditions
233A
Collection of tax
by stock
exchange
(a)
On purchase of
shares, in lieu of
commission of the
Member
0.01 of
purchase
value
No
change
Adjustable
Adjustable
Adjustable
Adjustable
(b)
On Sale of shares,
in lieu of
0.01 of
sale value
No
change
Adjustable
Adjustable
Adjustable
Adjustable
Budget Brief 2015
Sec.
Type of Payment
Rate %

Existing
Proposed
Existing
Proposed
Ind &
AOP
Company
Ind &
AOP
Company
10
No
change
Adjustable
Adjustable
Adjustable
Adjustable
Varying
rates for
filer and
non-filer
Varying
rates for
filer and
non-filer
Adjustable
Adjustable
Adjustable
Adjustable
No
change
Final
Final
Final
Final
Slab rates
No
change
Minimum
Adjustable
Minimum
Adjustable
5 /10
No
change
Minimum
/Adjustabl
e if the bill
amount
exceeds
Rs 30,000
Adjustable
Minimum
/Adjustabl
e if the bill
amount
exceeds
Rs 30,000
Adjustable
7.5
No
change
Adjustable
Adjustable
Re. 1 per
unit of
No
change
Nonadjustable
Nonadjustable
Nonadjustable
Nonadjustable
commission of the
Member
233A
A
234
Collection of tax
by NCCPL
On margin
financing, trading
financiers and
lenders
Tax on motor
vehicle
Registered laden
weight/
Seating capacity/
Engine capacity
234A
CNG stations -On

amount of gas bill
235
Electricity bill of
industrial /
commercial
consumers
Electricity bill upto
Rs 20,000.
(a)
(b)
On electricity bill
exceeding
Rs 20,000
(Industrial
consumer /
commercial
consumer)
235A
Domestic
electricity
consumption
On electricity bill
exceeding
Rs 75,000 (2014:
100,000)
235B
Tax on steel
melters, re-rollers
etc.
Budget Brief 2015
55
Sec.
Type of Payment
Rate %

Existing
Existing
On electricity bill of
steel melters, steel
re-rollers,
composite steel
units.
236
(a)
Proposed
Ind &
AOP
Company
Ind &
AOP
Company
10
No
change
Adjustable
Adjustable
Adjustable
Adjustable
14
Adjustable
Adjustable
Adjustable
Adjustable
electricity
consumed
(b)
Subscriber of
internet and
prepaid internet
card or sale of units
through any
electronic medium
or whatever form
(c)
Mobile telephone
and prepaid card
for telephones or
sale of units
through any
electronic medium
or whatever form
Sale by auction /
tender
Sale price of the
property
14
No
change
Adjustable
Adjustable
Adjustable
Adjustable
10
No
change
Adjustable
Adjustable
Adjustable
Adjustable
236B
Purchase of air
ticket - On gross
amount of purchase
of domestic air
ticket
No
change
Adjustable
Adjustable
Adjustable
Adjustable
236C
Sale or transfer of
immovable
property On
gross amount of
consideration
(Filer / non-filer)
0.5 / 1
No
change
Adjustable
Adjustable
Adjustable
Adjustable
236D
Advance tax on
functions and
No
change
Adjustable
Adjustable
Adjustable
Adjustable
236A
56
Telephone &
internet bill
Telephone bill
exceeding
Rs 1,000
Proposed
Budget Brief 2015
Sec.
Type of Payment
Rate %

Existing
Proposed
Existing
Proposed
Ind &
AOP
Company
Ind &
AOP
Company
gatherings On
total amount of bill
of arranging or
holding a function
including payment
of food, service or
facility.
236E
Advance tax on
foreign produced,
TV play and
serials.
Varying
amount
No
change
Adjustable
Adjustable
Adjustable
Adjustable
236F
Advance tax on
cable operators
and other
electronic media.
On issuance or
renewal of license
for distribution
services.
Varying
amount
No
change
Adjustable
Adjustable
Adjustable
Adjustable
236G
Advance tax on
sales of specified
goods to
distributors,
dealers and
wholesalers
- Fertilizer
0.2 / 0.4
0.7 / 1.4
Adjustable
Adjustable
Adjustable
Adjustable
- Other than
fertilizer
(Filer / Non filer)
Advance tax on
sales of specified
goods to retailers
or wholesaler
0.1 / 0.2
No
change
Adjustable
Adjustable
Adjustable
Adjustable
0.5
No
change
Adjustable
Adjustable
Adjustable
Adjustable
No
change
Adjustable
N /A
Adjustable
N/A
236H
236I
Collection of
advance tax by
educational
institutions
On amount of fee
exceeding Rs
200,000
Budget Brief 2015
57
Sec.
Type of Payment
Rate %

Existing
Existing
Proposed
Ind &
AOP
Company
Ind &
AOP
Company
236J
Advance tax on
issuance or
renewal of license
to dealers,
commission
agents and arhatis
etc.
Varying
amount
No
change
Adjustable
Adjustable
Adjustable
Adjustable
236K
Advance tax on
purchase of
immovable
property
On purchaser or
transferee for
registering or
attesting transfer of
any immovable
property exceeding
value Rs. 3 million
(Filer / non-filer)
1 / *2
(*subject
to the
date
notified by
the
Board)
No
change
Adjustable
Adjustable
Adjustable
Adjustable
236L
Advance tax on
purchase of
international air
ticket
Rs.
16,000 /
Rs.
12,000
per
person
Adjustable
Adjustable
Adjustable
Adjustable
On sale of
international air
ticket for first /
executive class.
(First class / others
excluding economy
class)
58
Proposed
236M
Bonus shares
issued
by companies
quoted on stock
exchange
No
Change
Final
Final
Final
Final
236N
Bonus shares
issued
by companies not
quoted on stock
exchange
No
Change
Final
Final
Final
Final
236P
Advance tax on
banking
transactions
0.6
Adjustable
Adjustable
Budget Brief 2015
Sec.
Type of Payment
Rate %

Existing
Proposed
Existing
Proposed
Ind &
AOP
Company
Ind &
AOP
Company
otherwise than
through cash
Advance tax from
non filer on
specified banking
transactions where
the sum of these
transactions
exceed Rs. 50,000
in a day.
236Q
Payment to
residents for use
of machinery and
equipment
-
Payment to
resident person
for use or right
to use industrial,
commercial and
scientific
equipment
10
Final
Final
Payment to
resident person
on account of
rent of
machinery
10
Final
Final
236R
Collection of
advance tax on
education related
expenses remitted
abroad
Adjustable
Adjustable
236S
Dividend in
Specie
(a)
Dividend distributed
by purchaser of a
power project
privatized by
WAPDA and
company set up for
power generation.
7.5
-l
Final
Final
Budget Brief 2015
59
Sec.
Type of Payment
Rate %

Existing
(b)
(c)
(d)
Dividend payment
by other companies
Filer / non-filer
* 12.5% rate
specified for
taxability.
Remittance of after
tax profit by a
branch other than
branch of a E&P
companies (subject
to treaty provisions,
if applicable)
(Filer / non-filer)
Dividend payment
by Collective
Investment
Scheme, REIT
Scheme or mutual
fund
- Stock fund
-
236T
Money market
fund, income
fund or any
other fund
(Ind & AOP/
company)
Existing
Proposed
Ind &
AOP
Company
Ind &
AOP
Company
*10 / 17.5
Final /
Adjustable
Final /
Adjustable
10 / 17.5
Final /
Adjustable
Final /
Adjustable
10 / 15
(subject to
condition)
Final
Final
No
Change
Final
Final
0.1
Minimum
Minimum
0.1
Minimum
Minimum
Collection of tax
by Pakistan
Mercantile
Exchange Limited
- On purchase /
sale of future
commodity
contracts
- Commission
earned on
purchase / sale of
future commodity
contracts
60
Proposed
Budget Brief 2015
Sec.
Type of Payment
Rate %

Existing
37A
Proposed
Existing
Proposed
Ind &
AOP
Company
Ind &
AOP
Company
12.5 / 10 /
0
10 / 25
Adjustable
Adjustable
Adjustable
Adjustable
Adjustable
Adjustable
Adjustable
Adjustable
Adjustable
Adjustable
Adjustable
Adjustable
Capital gain on
redemption of
securities
a) Stock Fund
-
Company
Other
taxpayer
10 / 17.5
12.5 / 10 /
0
b) Other Fund
-
Company
Other
taxpayer
c) Stock Fund if
dividend receipt
of the Fund is
less than
capital gains
12.5 / 10 /
0
25 / 25
10 / 17.5
12.5 / 10 /
0
12.5 / 10 /
0
(subject to
period of
holding)
12.5
(Filer / non-filer)
Budget Brief 2015
61
62
Budget Brief 2015
Sales Tax
Active Taxpayer
Threshold for registration of retailers
Sections 2(1) and 21A
Section 2(28)
The Bill seeks to introduce the definition of term

active taxpayer. Active taxpayer will be considered
a person who does not fall under any of the following
categories:
Blacklisted or whose registration is suspended or

blocked;
Non-filer of sales tax return for two consecutive

tax periods;
The Bill seeks to align the definition of the term

retailer with the new 3-tier regime of retailers
introduced withdrawing exemption threshold of Rs.5
million vide Finance Act, 2014. Since retailers are
subject to sales tax irrespective of exemption
threshold, as such the proposed omission of the
words and his total turnover per annum shall be
taken into account for the purposes of registration
under section 14 seems a consequential
amendment.
Non-filer of annual income tax return or

statement under Section 115 of the Income Tax
Ordinance, 2001 within due date and
Toll manufacturing considered as

supply
Non-filer of two consecutive monthly or an annual

withholding tax statement under Section 165 of
Income Tax Ordinance.
Section 2(33)
The Bill also seeks to insert Section 21A which will

empower the Board to maintain active taxpayers list
in the manner as prescribed in the Rules. These
Rules will also provide the restrictions and limitations
for the persons who cease as active taxpayers.
Exemption threshold for cottage

industry enhanced
Section 2(5AB)
For cottage industry the exemption threshold is either
based on turnover exceeding Rs.5 million during the
last twelve months or utility bills (electricity, gas and
telephone) exceeding Rs.700,000 during the last
twelve months.
A new clause (d) is proposed to be inserted to bring

the toll manufacturing within the ambit of supply.
Accordingly, transfer or delivery of goods
manufactured by toll manufacturer, to the owner or to
a person nominated by the owner, will now be
considered as supply.
Reward for Whistleblowers

Section 2(46A) and 72D
The Bill proposes to introduce a new concept of
whistleblower, who is proposed to be the one who
reports cases of concealment, evasion of sales tax
leading to detection or collection of duty, corruption or
misconduct to the competent authority.
The Bill seeks to propose rewards for whistleblower
and the procedures for claim of such reward by the
whistleblower are yet to be prescribed.
The Bill now proposes to enhance the exemption

threshold limit of utility bills from Rs.700,000 to
Rs.800,000 per annum providing incentive to the
units functioning within the cottage industry.
Budget Brief 2015
63
Rate of further tax enhanced to 2%
Joint and several liability
Section 3(1A)
Section 8A
The further tax of 1% chargeable on supplies by nonregistered persons is proposed to be increased to

2%. Considering the Governments admission on the
size of the informal economy, this may have an
inflationary effect. But due to depressed international
oil prices, inflation may not be a concern for the
moment.
Several notices were issued to registered persons

merely on the basis of cross-matching of return
declarations of buyers and sellers through CREST.
Now, the Bill seeks to bind the department to prove
the element of non-payment under the provisions of
Section 8B of Sales Tax Act. This will considerably
take care of undue hardships faced by registered
persons.
Tax credit not allowed

Board restricted to allow exemptions
Section 8(1)
Section 13
Section 8 of Sales Tax Act provides a negative list of
various items or class of goods on which input tax is
not admissible. Under Clause (h) input tax on
purchases of goods used in, or permanently attached
to immovable property as also specified is not
admissible. The Bill proposes to allow input tax on
the pre-fabricated buildings.
This will be an industry friendly incentive, which will
certainly help in reducing cost of doing business, as
input tax paid on pre-fabricated structures can now
be claimed.
The Bill also seeks to disallow input tax claim under
following scenarios:
Services in respect of which input tax adjustment

is barred under Provincial sales tax laws.
Import or purchase of agricultural machinery or
equipment to sales tax at the rate of 7% under
eight Schedule.
Goods and services, which at the time of filing of
return by the buyer, have not been declared by
the supplier in his return.
The restriction on claim on input tax paid on taxable

services which are subject to Provincial sales tax at
reduced rates seems a harsh step, which will add
cost to the businesses.
The Bill proposes to withdraw Boards power to allow

any exemption.
the Parliament, the President of Pakistan issued an
provided that the Federal Government may issue
exemption notification with the approval of the
Economic Coordination Committee, followed by
approval of National Assembly, wherever
purpose of:
national security,
natural disaster,


agreements
Furthermore, the Bill proposes that any such

notification, if not earlier rescinded, will stand
64
Budget Brief 2015
rescinded on the expiry of the financial year in which

it was issued.
the system has not so far been enforced for any class
of registered persons.
Registration for sales tax
The Bill seeks to insert a new sub-section in Section

40C, whereby the stamps, banderoles, stickers,
labels, barcodes, etc. required to be affixed on goods
manufactured by Registered persons, will be
purchased by registered persons from licensee
appointed by Board on a price approved by the
Board.
Section 14
The Bill seeks to describe Section 14 to bring the
provisions of Rule-4 of Chapter-I of Sales Tax Rules,
2006 into the main statute. This substitution is meant
to describe the categories of persons who are
required to obtain sales tax registration.
Furthermore, the Bill proposes to introduce concept
of temporary registration to facilitate the importerscum-manufacturers, whereby, manufacturers will be
able to import machinery etc. without going through
the lengthy process of sales tax registration.
Special audit panels

Section 32A
According to the salient feature issued by Board, the

foregoing electronic monitoring regime will be
enforced for specified sectors i.e. cigarettes,
beverages, cement, fertilizer, restaurants, etc.,
however, the notification to that effect is yet to be
issued.
Agreement for exchange of

information
Section 56A
Currently Board is empowered to appoint a Chartered

Accountant or Cost and Management Accountant to
conduct a special audit. The Bill seeks to empower
the Board to appoint special audit panels comprising
two or more members from the following:
An officer Inland Revenue;
a firm of the Chartered Accountants;
a firm of Cost and Management Accountants;
Any other person directed by the Board.
It is also proposed that the special audit panel shall

be headed by a chairman who will be an officer of
Inland Revenue.
Electronic monitoring system

revamped
The Bill proposes to authorize Federal government to

enter into agreements with Provincial governments
and governments of foreign countries for sharing of
information. This is a positive step towards capturing
black money trail.
Zero rating facility withdrawn

Fifth Schedule
S. No.
Description of goods
PCT
heading
12(ix)
Flavored Milk
0402.9900
12(x)
Yogurt
0403.1000
12(xi)
Cheese
0406.1010
12(xii)
Butter
0405.1000
12(xiii)
Cream
04.01 and
04.02
12(xiv)
Desi Ghee
0405.9000
12(xv)
Whey
04.04
Section 40C
The Board was empowered to devise systems and
procedures for monitoring or tracking of operations of
registered persons by electronic means vide insertion
of Section 40C through Finance Act, 2013. However,
Budget Brief 2015
65
S. No.
PCT
heading
12(xvi)
Milk and cream, concentrated

and added sugar or other
sweetening matter
0402.1000
Sales tax exemptions introduced

Sixth Schedule Table-I
S. No.
PCT heading
73A

or containing added sugar or
other sweetening matter
excluding that sold in retail
packing under a brand name.
04.01 and
04.02
74
Flavored milk excluding that

sold in retail packing under a
brand name
0402.9900
75
Yogurt excluding that sold in

retails packing under a brand
name
0403.1000
76
Whey excluding that sold in

retails packing under a brand
name
04.04
77
Butter excluding that sold in

retail packing under a brand
name
0405.1000
78
Desi ghee excluding that sold

in retails packing under a
brand name
0405.9000
79
Cheese excluding that sold in

retail packing under a brand
name
0406.1010
80
Processed cheese not grated

or powdered excluding that
brand name
0406.3000
114
Green House Farming and

other Green House Equipment
(if used for agriculture sector)
3920.1000,
3926.9099,
5608.1900
and
5608.9000
(1)
Tunnel farming
equipment consisting of plastic
covering and mulch film, antiinsect net and shade net
66
Budget Brief 2015
S. No.
PCT heading
117
Appliance for colostomy
3006.9100
118
Colostomy and urostomy bags
3926.9050
119
Tubular day lighting devices

(TDDs)
8539.3930
120
Diagnostic kits or equipment

namely:
3822.0000
HIV Kits, 4C Es Trionyx, 5C

Cell control Lnormal, Bovine
precision multi sera,
Pregnancy test, DNA SSP
DRB Generic IC, Reticulocyte
count (control) retic, C Control,
Kit for vitamin B12 estimation,
Ferritin kit, HEV (Hepatitis E
virus), ID-DA Cell, Urine
Analysis Strips, Albumin beg,
Cratinin sysi, Ring, Detektiion
cups, ISE Standard, Alkaline
Phosphatase (Alb), Bilirubin
kit, HDL Cholesterol, Ck
creatinin kinase (mb), Ck nac,
Glulcose kit, Ammonia
Modular, Lac, Ldh kit (lactate
dehydrogenase kit), Urea uv
kit, Ua plus, Tina quant, Crp
control, Aslo tin, Proteins,
Lipids,
HDL/LDL cholesterol, Protein
kit, U, Control Sera,
Pac, Control, HCV, UIBC
(Unsaturated iron binding
capacity), U/CSF, Inorganic
Phosphorus kit, Kit amplicon
kit (for PCR), Ige, Lc hsv,
Oligo, NA/K/CL, Hcy, Standard
[or calibrated], Hla B27,
Liss Coombs, Typhoid kit,
HCV amp, Urine test strips,
Strips for sugar test, Blood
glucose test strips, Kits for
automatic cell separator for
collection of platelets, Elisa or
Eclia kit, PCR kits,
Immunoblast (western blot
test), I.C.T.
(Immunochromatographic kit),
CBC Reagent (For hematology
analyzer) Complete blood
count Reagent.
S. No.
PCT heading
S. No.
PCT heading
121
Blood Bag CPDA-I with blood

transfusion set pack in
aluminum foil with set
Respective
headings
19
Bricks (up to 30th June, 2018)
6901.1000
20
Crushed stone (up to 30th

June,
2517.1000
Urine drainage bags
Respective
headings
122
123
124
125
126
Aircraft, whether imported or

acquired on wet or dry lease
8802.2000,88
02.3000,
8802.4000
Maintenance kits for use in

trainer aircrafts
8802.2000
and
8802.3000
Spare parts for use in aircrafts,

trainer aircrafts or simulators
Respective
headings
Machinery, equipment and

tools for setting up
maintenance, repair and
overhaul (MRO) workshop by
MRO company recognized by
Aviation Division
Respective
headings
127
Operational tools, machinery,

equipment and furniture and
fixtures on one-time basis for
setting up Greenfield airports
by a company authorized by
Aviation Division
Respective
headings
128
Aviation simulators imported

by airline company recognized
by Aviation Division
Respective
headings
2018)
Sales tax exemption withdrawn - Sixth

Schedule
Table-1
S. No.
PCT heading
28
Poultry feed and cattle feed

including their all ingredients
Various as
specified
39
Incinerators of disposal of
waste management, motorized
sweepers and snow ploughs
Various as
specified
56
Re-importation of foreign origin

goods temporarily exported out
of Pakistan subject to similar
condition as applicable for zero
rate of custom duty
99.18
S. No.
PCT heading
13
Reclaimed lead, if supplied to

recognized manufacturers of
lead batteries
Respective
headings
14
Waste paper
Respective
headings
S. No.
PCT heading
10
Machinery, equipment, raw

materials, components and
other capital goods for use in
buildings, fittings, repairing or
refitting of ships, boats or
floating structures imported by
Karachi Shipyard and
Engineering Works Limited
Respective
headings
Table-II
Table-II
S. No.
PCT heading
17
Raw and pickled hides and

skins, wet blue hides and
skins
41.01, 41.02,
41.03,
4104.1000,
4105.1000,
4106.2100,
4106.3000,
4106.9000
18
Supplies made by
manufacturers of marble and
granite having annual turnover
less than five million rupees
even if their annual utility bill is
more than eight hundred
thousand rupees
Respective
headings
Table-III
Budget Brief 2015
67
S. No.
PCT heading
16
Plant, machinery, equipment

and specific items used in
production of bio-diesel
Respective
headings
S. No.
S. No.
Rate of
sales tax
Flavored milk sold in retail

packing under a brand name
(PCT heading 0402.9900)
10%
Yogurt sold in retail packing

under a brand name (PCT
heading 0403.1000)
10%
Cheese sold in retail packing

heading 0406.1010)
10%
Butter sold in retail packing

heading 0405.1000)
10%
Cream sold in retail packing

heading 04.01 and 04.02)
10%
12
Desi ghee sold in retails

packing under a brand name
(PCT heading 0405.9000)
10%
13
Whey sold in retails packing

heading 04.04)
10%
10
11
14
68

or containing added sugar or
other sweetening matter that
brand name (PCT heading
0402.1000)
10%
15
Poultry feed and cattle feed

including their all ingredients
(Various items specified
therein)
5%
16
Incinerators of disposal of
waste management, motorized
sweepers and snow ploughs
5%
Budget Brief 2015
Rate of
sales tax
(PCT heading 8417.8000,

8430.2000 and 8479.8990)
17
Re-importation of foreign origin

goods temporarily exported out
of Pakistan (PCT heading
99.18)
5%
18
Reclaimed lead (Respective

PCT headings)
5%
19
Waste paper (PCT heading

47.07)
5%
20
Plant, machinery, equipment

and specific items used in
production of bio-diesel
(Respective PCT headings)
5%
21
Rapeseed, sunflower seed and

canola seed (PCT heading
1205.0000, 1206.0000)
16%
22
Soya bean seed (PCT heading

1201.1000)
6%
23
Secondhand and worn clothing

or footwear (PCT heading
6309.0000)
5%
25
Agricultural tractors (PCT

heading 8701.9020)
10%
26
Tillage and seed bed

preparation equipment (Items
under various PCT headings
specified therein)
7%
27
Seeding or planting
7%
Goods subjected to reduce rate of

sales tax - Eight Schedule
Table-I
Equipment (Various items

specified therein)
28
Irrigation, drainage and agrochemical application

equipment (Various items
specified therein)
7%
29
Various Machines, equipment

and tools used for harvesting,
threshing etc.
7%
30
Post-harvest handling and

processing & miscellaneous
7%
S. No.
Rate of
sales tax
S. No.
Description of
goods
Rate
Existing
machinery (Various items

specified therein)
other value added

petroleum
products),
petrochemical and
petrochemical
downstream
products including
fibres and heavy
chemical industry,
cryogenic facility for
ethylene storage
and handling
Enhancement in rate of sales tax

Eighth Schedule
Table-I
S. No.
Description of
goods
Rate
Existing
Proposed
Soyabean meal
5%
10%
Oilseeds meant
for sowing
5%
10%
Plant and
machinery not
manufactured
locally and
having no
compatable local
substitute
5%
10%
Table-II
S. No.
Description of
goods
Existing reduced rate of 5% of sales

tax is proposed to be withdrawn on
following items mentioned in Eight
Schedule
S. No.
PCT
heading
3 of
Table-1
Directly reduced iron
72.03
3 of
Table-II
Specified items imported by

Call Centers, Business
Processing Outsourcing
Facilities duly approved by
Pakistan
Telecommunication
Authority
Various as
specified
7 of
Table-II
Propriatary Framework
System for building /
structure of specific height
and its various items /
components as specified
therein
Various as
specified
Rate
Existing
Proposed
Machinery and
equipment for
development of
grain handling and
storage facilities
5%
10%
Complete plant for

relocation
industries
5%
10%
Machinery,
equipment and
other capital goods
meant for initial
installation,
balancing,
modernization,
replacement or
expansion of oil
refining (mineral oil,
hydro-cracking and
5%
10%
Proposed
Budget Brief 2015
69
70
Budget Brief 2015
Sales Tax on Services (Islamabad)

The Bill proposes to bring various services under the

regime of Islamabad Capital Territory Sales Tax
Ordinance, 2001 to bring it in line with sales tax
regime on services followed by provinces.
Following are the additional services proposed to be
subjected to sales tax, if rendered or provided within
the territory of Islamabad, w.e.f. 01 July 2015.
Description of service
Tariff
heading
9809.0000
Contractual execution of work,

excluding:
(i) annual total value of the
contractual works or supplies
does not exceed Rs.50 million;
Sales tax at 16%

Construction services, excluding:

(i) construction projects
(industrial and commercial) 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.
Tariff
heading
9824.0000
and
9814.2000
(ii) the contract involving printing

or supplies of books.
Services provided for personal
care by beauty parlours, clinics
and slimming clinics, body
massage centres, pedicure
centres; including cosmetic and
plastic surgery by such parlours /
clinics, but excluding:
9810.0000
9821.4000
and
9821.5000
(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.
(iii) Government civil works

including Cantonment Boards.
Management consultancy services
9815.4000
9819.9300
(iv) construction of industrial

zones, consular buildings and
other organizations exempt
from income tax.
Services provided by software or

IT-based system development
consultants.
9815.6000
(v) construction work under

international tenders against
foreign grants-in-aid.
Services provided by technical,

scientific and engineering
consultants
9815.5000
(vi) Residential construction

projects where the covered
area does not exceed 10,000
square feet for houses and
20,000 square feet for
apartments
Services provided by other

consultants including but not
limited to human resource and
personnel development services;
9815.9000
9818.3000
9818.2000
Budget Brief 2015
71
Tariff
heading
market research services and

credit rating services.
72
Services provided by tour

operators and travel agents
including all their allied services or
facilities (other than Hajj and
Umrah)
9805.5100
9805.5000
9803.9000
Manpower recruitment agents

including labour and manpower
supplies.
9805.6000
Services provided by security

agencies.
9818.1000
Services provided by advertising

agents
9805.7000
Share transfer or depository

agents including services provided
through manual or electronic bookentry system used to record and
maintain securities and to register
the transfer of shares, securities
and derivatives.
9805.9000
Business support services.
9805.9200
Services provided by fashion

designers, whether relating to
textile, leather, jewellery or other
product regimes, including allied
services, marketing, packing,
delivery and display, etc.
9819.6000
Services provided by architects,

town planners and interior
decorators.
9814.1000
9814.9000
Services provided in respect of

rent-a-car. Services provided by
specialized
9819.3000
Budget Brief 2015
Tariff
heading
Workshops or undertakings (autoworkshops; 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
workshops).
98.2000
Services provided for specified

purposes including fumigation
services, maintenance and repair
(including building and equipment
maintenance and repair including
after sale services) or cleaning
services, janitorial services,
dredging or de- silting services and
other similar services etc.
98.2200
Services provided by underwriters,

indenters, commission agents
including brokers (other than
stock) and auctioneers
9,819.1100
9,819.1200
9819.1300
9819.9100
Services provided by laboratories

other than services relating to
pathological or diagnostic tests for
patients.
98.17
Services provided by health clubs,

gyms, physical fitness centres,
indoor sports and games centres
and body or sauna massage
centres.
9821.1000
and
9821.2000
9821.4000
Services provided by laundries

and dry cleaners.
9811.0000
Services provided by cable TV

operators. Technical analysis and
testing services
9819.9000
9819.9400
Tariff
heading
Tariff
heading
Services provided by TV or radio

program producers or production
houses.
--
Services provided by car /

automobile dealers.
Transportation through pipeline

and conduit services.
--
Sales tax at varied rates
Fund and asset (including

investment) management services.
--
Services provided by inland port

operators (including airports and
dry ports) and allied services
provided at ports and services
provided by terminal operators
including services in respect of
public bonded warehouses,
excluding the amounts received by
way of fee under any law or bylaw.
--
Technical inspection and

certification services and quality
control (standards certification)
services
--
Erection, commissioning and

installation services.
--
Event management services
--
Valuation services (including

competency and eligibility testing
services),
--
Exhibition or convention services
--
Services provided in respect of

mining of minerals, oil & gas
including related surveys and
allied activities
--
Services provided by property

dealers and realtors.
--
--
Description of
service
Tariff
heading
Rate
Services provided by
freight forwarding
agents, and packers
and movers.
9805.3000
16% or
Rs.400
per bill of
lading,
whichever
is higher
and
9819.1400
Call centers
18.5%
Existing taxable services continued or scope

enlarged w.e.f. 01 July 2015
Tariff
heading
Services provided or rendered

by hotels, motels, guest houses,
marriage halls and lawns (by
whatever name called) including
pandal and shamiana
services, clubs including race
clubs, and caterers.
9801.1000
9801.3000
9801.4000
9801.5000
9801.6000
Advertisement on television and

radio, excluding advertisements:
9802.1000
and
9802.2000
(a) sponsored by an agency of

the Federal or Provincial
(b) Government for health
education;
Budget Brief 2015
73
Tariff
heading
(c) sponsored by the Population

Welfare Division relating to
educational promotion
campaign;
(d) financed out of funds
provided by a Government
under grant-in-aid
agreement; and
(e) conveying public service
messages, if telecast on
television by the World Wide
Fund for Nature (WWF) or
United Nations Childrens
Fund (UNICEF).
Services provided by persons
authorized to transact business
on behalf of others:-
9805.2000
9805.4000
and
9805.8000
(a) stevedore;
(b) customs agents; and
(c) ship chandlers.
Courier services and cargo
services by road provided by
courier companies;
74
Budget Brief 2015
9808.0000
9804.9000
Federal Excise
Reward for Whistleblowers

Section 2(24A) and 42D
The Bill seeks to introduce a new concept of
whistleblower, who is the one who reports cases of
concealment, evasion of duty leading to detection or
collection of duty, corruption or misconduct to the
competent authority.
The Bill also seeks to propose rewards for
whistleblower and the procedures for claim of such
reward by the whistleblower are yet to be prescribed.
Board restricted to allow exemptions

Section 16
any exemption.
the Parliament, the President of Pakistan issued an
provided that the Federal Government may issue
exemption notification with the approval of the
Economic Coordination Committee, followed by
approval of National Assembly, wherever
purpose of:
national security,
natural disaster,


agreements.

it was issued.
Revision of decision by Board or

Commissioner
Section 35
Presently, the examination and if needed revision of
decision or order of subordinate officer can be made
only on suo moto basis by the Board or
Commissioner, however, now the bill proposes
examination and if needed revision of decision or
order of subordinate officer additionally on the basis
other than suo moto also.
Electronic monitoring system

revamped
Section 45A
The Board was empowered to devise systems and
procedures for monitoring or tracking of operations of
registered persons by electronic means vide insertion
of Section 45A through Finance Act, 2013. However,
the system has not so far been enforced for any class
of registered persons.
The Bill seeks to insert a new sub-section under
Section 45A, whereby the stamps, banderoles,
stickers, labels, barcodes, etc., required to be affixed
on goods manufactured by registered persons, will be
purchased by registered persons from licensee
appointed by Board on a price approved by the
Board.
According to the salient feature issued by Board, the
foregoing electronic monitoring regime will be
enforced for specified sectors i.e. cigarettes,
beverages, cement, fertilizer, restaurants, etc.,
Budget Brief 2015
75
however, the notification to that effect is yet to be

issued.
Special audit panels

Section 46
Currently Board is empowered to appoint a Chartered
Accountant or Cost and Management Accountant to
conduct a special audit. The Bill seeks to empower
the Board to appoint special audit panels comprising
two or more members from the following:
An officer Inland Revenue;
a firm of the Chartered Accountants;
a firm of Cost and Management; Accountants;
Any other person directed by the Board.
Entry
No.
Description
of goods
Tariff
heading
Existing
FED rate
Revised
/ New
FED
Rate
4,5
and 6
Aerated
waters (all
entries)
Respective
Headings
9% of
retail
price
12% of
retail
price
Locally
produced
cigarettes if
their on-pack
printed retail
price exceeds
Rs.3,350
(existing
Rs.2,706) per
1000
cigarettes
24.02
Rs.2,632
per 1000
cigarettes
Rs.3,030
per 1000
cigarettes
10
Locally
produced
cigarettes if
their on-pack
printed retail
price does not
exceed
Rs.3,350
(existing
Rs.2,706) per
1000
cigarettes
24.02
Rs.1,085
per 1000
cigarettes
Rs.1,320
per 1000
cigarettes
56
(New
Entry)
Filter rod for

cigarettes
5502.
0090
N/A
Rs. 0.75
per filter
rod
It is also proposed that the special audit panel shall

be headed by a chairman who will be an officer of
Inland Revenue.
Agreement for exchange of

information
Section 47A
The Bill proposes to authorize the Federal
Government to enter into agreements with Provincial
governments or governments of foreign countries for
sharing of information. This is a positive step towards
capturing black money trail.
Disclosure of information by a public

servant
Section 47B
A new insertion is proposed to ensure confidentiality
of the information acquired by the public servant.
Rates of FED enhanced / introduced

The Bill seeks to enhance or introduce FED rates on
the following goods under Table-I of the First
Schedule to FE Act w.e.f. 01 July 2015:
76
Budget Brief 2015
Customs
First Schedule to the Customs Act,

1969
S.
No.
The Bill proposes to increase customs duty to 2% in

respect of all goods presently chargeable to customs
duty at the rate of 1% under various tariff headings of
the First Schedule.
Fifth Schedule to the Customs Act,

1969
The Bill proposes to substitute Fifth Schedule where
customs duties on certain imported goods shall be
levied at specified rate.
Salient changes in the Fifth Schedule are
summarized below:
Introduction of Customs Duty at reduced

rate
S.
No.
Description
PCT Code
Rate
Agricultural
Machinery
1.
17.
A) Tillage and
seed bed
preparation
equipment
Respective
Headings
2%
B) Seeding or
Planting
Equipment
Respective
Headings
2%
C) Irrigation,
Drainage and
Agro-Chemical
Application
Equipment
4) Tubewells filters
or strainers
8421.2100
5) Knapsack
sprayers
8424.2010
2%
Description
PCT Code
6) Granular
applicator
8424.2010
7) Boom or field
sprayers
8424.2010
8) Self-propelled
sprayers
8424.2010
9) Orchard sprayers
8424.2010
D) Harvesting,
Threshing and
Storage
Equipment
except
following
Respective
Headings
8) Fodder rake
8201.3000
8433.5900
2%
16) Pruner / sheers
8433.5900
2%
G) Post-harvest
Handling and
Processing and
Miscellaneous
Machinery
Respective
Headings
2%
Machinery,
equipment and
other capital goods
meant for initial
installation,
balancing,
modernization,
replacement or
expansion of oil
refining (mineral
oil, hydro-cracking
and other value
added petroleum
products),
petrochemical and
petrochemical
downstream
products including
fibers and heavy
chemical industry,
cryogenic facility
for ethylene
Respective
Headings
5%
Rate
2%
Budget Brief 2015
77
S.
No.
Description
PCT Code
Rate
S.
No.
storage and
handling.
28.
Description
Following
specialized
vehicles imported
by the
Construction
Companies:
1) Dumpers
designed for off
highway use
8704.1090
2) Super swinger
truck conveyors
8705.9000
3) Mobile canal
lining equipment
8705.9000
4) Transit mixers
8705.4000
5) Concrete placing
trucks
8705.9000
6) Crane lorries
8705.1000
Description
PCT Code
4.
Items imported by
Call Centers,
Business Processing
Outsourcing facilities
duly approved by
Telecommunication
Authority
Respective
Headings
Complete plants for

relocated industries
Respective
Headings
21.
78
20%
S.
No.
Description
PCT Code
1.
Aircraft
8802.2000
8802.3000
8802.4000
2.
Spare parts
Respective
headings
3.
Maintenance Kits
Respective
headings
4.
Machinery equipment & tools
Respective
headings
5.
Machinery equipment
operational tools, furniture &
fixture
Respective
headings
6.
Aviation simulators
Respective
headings
Rate
General power to exempt from customs

duties
Section 19(1) (4) & (5)
Machinery and
equipment imported
by an industrial
concern
Respective
Headings
Proprietary
Formwork system for
building/structures of
a height of 100ft and
Respective
Headings
Budget Brief 2015
m upto
20%
Exemption from Customs Duty
S.
No.
18.
Rate
above and its

various items /
components
Enhancement in the rate of Customs Duty
14.
PCT Code
20%
Various
rates
maximu
m upto
20%
The Bill proposes that the Federal Government can

now allow exemption only through a gazette
notification with the prior approval of the Economic
Coordination Committee followed by approval of
National Assembly wherever circumstances exist to
take immediate action for the purpose of:
national security,
natural disaster,

15%
Various
rates
maximu

agreements

it was issued.
Boards power to grant exemption from duty

in exceptional circumstances
Section 20
Punishment for offices

Section 156(1)
In order to implement the requirement of placement
of invoices and packing list inside the import
container or consignment, a penalty not exceeding
Rs. 50,000 is proposed for its non-compliance as at
Sr. No. 1 (ii) of the Table.
Moreover, under Sr. No. 64 of the Table, a penalty
upto twice the value of the goods as well as
imprisonment upto 5 years and confiscation of the
goods are proposed in case of misdeclaration, illegal
removal or concealment of transit goods.

any exemption
Declaration and assessment for home

consumption or warehousing
Section 79(1)
The Bill proposes to include trans-shipment for
making entry by filing a true declaration of goods and
submission of prescribed documents. However,
assessment and payment of duty, taxes and other
charges for trans-shipment shall be collected at the
port of destination.
Trans-shipment of goods without payment

Section 121(1)
In order to facilitate the Trans-shipment, the Bill
proposes to allow automatically Trans-shipment
Permit (TP) to other customs stations where the
Customs Computerized System is operational subject
to risk criteria.
Entry, etc. of Trans-shipped goods

Section 123
The Bill proposes for the insertion of Explanation to
clarify that the first entry for declaration of goods shall
be the customs station when the goods are deconsolidated in the case of trans-shipment of LCL
goods.
Budget Brief 2015
79
An Economic & Budget Commentary
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Budget Brief 2015

The Budget Brief 2015 contains a review of economic

- Sales Tax on Services (Islamabad)

Public Accounts Receipts - Net

Less: Provincial Share

Domestic Debt - Banks

Surplus from Provinces

Budget Brief 2015

Budget Brief 2015

Nominal GDP US$ billion

Sectoral Share in GDP %

*Base year 2005-06

GDP Growth (% Points)

Source: Pakistan Economic Survey 2014-15

Budget Brief 2015

Source: Pakistan Economic Survey 2014-15

Sectoral Share in GDP (% Points)

Source: Pakistan Economic Survey 2014-15

Budget Brief 2015

Public Debt (Rs. billion)

Public Debt (% of GDP)

Source: Pakistan Economic Survey 2014-15

Public Debt (in Rs. billion)

Source: Pakistan Economic Survey 2014-15

Public Debt (% of GDP)

Foreign currency - % of GDP

Budget Brief 2015

Source: Pakistan Economic Survey 2014-15

Source: Pakistan Economic Survey 2014-15

Budget Brief 2015

Total investment - % of GDP

National Savings - % of GDP

* 2014-15 unemployment figures not provided. Therefore 2013-14 level used.

Unemployment Rate (%)

Source: Pakistan Economic Survey 2014-15

GNP Per Capital - US$

Source: Pakistan Economic Survey 2014-15

Total investment - % of GDP

National Savings - % of GDP

Budget Brief 2015

Exchange reserves (US$ billion)

Source: Pakistan Economic Survey 2014-15

Exchange Reserves (in USD million)

Source: Pakistan Economic Survey 2014-15

Budget Brief 2015

Imports Cover (months)

Source: Pakistan Economic Survey 2014-15

Source: Pakistan Economic Survey 2014-15

Budget Brief 2015

Budget Brief 2015

The crowning accomplishment of the government,

only 6902MW was hydel, the rest were alternate

Budget Brief 2015

Pakistan through expansion of exports; electricity is

Budget Brief 2015

from the CPEC has been earmarked for a Mass

the budget deficit and accumulation of net

economy. It might perhaps be prescient for the

Budget Brief 2015

Between July 2014 to March 2015, total public debt

Budget Brief 2015

remained at broadly the same level. Unfortunately,