Pakistan: Finance Supplementary Act 2022

The Government of Pakistan has made amendments in the Income Tax Ordinance,2001 and Sales Tax Act, 1990 through Finance (Supplementary) Act, 2022. Some of the important changes are summarized below: 

1. Introduction of “Digital Means” 

According to section 21 of the Income Tax Ordinance, 2001 every company requires to make payment for a transaction under a single account head exceeding Rs 250,000 through ‘digital means’ from their notified business bank account, subject to certain exclusions. Otherwise, the expense would become inadmissible. 

Through this supplementary Act, the government has introduced the definition of digital means by introducing sub-clause (17B) in section 2 which states that: 

“digital means” means digital payments and financial services 

including but not limited to— 

a. online portals or platforms for digital payments/ receipts; 

b.online interbank fund transfer services; 

c. online bill or invoice presentment and payment services; 

d. over the counter digital payment services or facilities; 

e. card payments using Point of Sale terminals, OR codes, mobile devices, ATMs, Kiosk or any other digital; payments enabled devices; or 

f. any other digital or online payment modes.”; 

The applicability of section 21 shall be effective from a date notified by the Federal Board of Revenue. 

2. Advance Tax On Tv Plays And Advertisements 

To promote the local media industry, the government has introduced a new Section 236CA for the collection of advance tax on foreign TV drama serials, plays dubbed in Urdu or any other language, or any commercial for advertisements featuring foreign actors for screening and viewing on any landing rights channel at the following rates:

3. Enhancement of Advance Tax on Cellular Services 

Advance tax on the subscription of internet, mobile telephone, and pre-paid internet or telephone card has been raised to 15% from 10%. 

4. Enhanced criteria for Tier-1 retailers 

Tier 1 retailers are those retailers who are required to connect their point of sales information with the Federal Board of Revenue for real timing data collection. Through this supplementary act, the criteria of the Tier1 retailers has been extended and the retailers whose withholding tax has been deductible under section 236G or 236H under the Income Tax Ordinance, 2001 by the manufacturer, distributor, dealer, wholesaler, or commercial importer of the specified goods. 

5. Elimination of Computerized National Identification (NIC) or National Tax Number (NTN) in case of digital payments 

Every registered person is required to issue a “Tax Invoice” at the time of supply, however, in the case of retailers, the tax invoice is not applicable on the sale value not exceeding Rs. 100,000. Through this supplementary act, the requirement of obtaining NIC or NTN has been eliminated in case of payment through debit or credit card or digital mode if the sale value is more than Rs. 100,000.

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