Special Provisions relating to Small and Medium Enterprises Section 100E
Special Provisions relating to Small and Medium Enterprises Section 100E: in order to support small business segment of the society, simplified tax regime with lower rate of tax has been introduced and simplified tax return has been introduced.
The definition of small and medium enterprises can be viewed at start of this document. Requirements under 14th Schedule are as under:
Rules for Computation of profit and gains for Small and Medium Enterprises
- Registration. – Small and medium enterprise shall be required to register with FBR on its Iris web portal or Small and Medium Enterprises Development Authority on its SME registration portal (SMERP).
- Categories and tax rates:
| Category Tax Rate | |
| Category-1: Where annual business turnover does not exceed Rupees 100 million | 7.5% of taxable income |
| Category-2: Where annual business turnover exceeds Rupees 100 million | 15% of taxable income |
Option for FTR
The small and medium enterprises may opt for taxation under final tax regime at the rates given in the table below:
| Category Tax Rate | |
| Category-1: Where annual business turnover does not exceed Rs. 100
million |
0.25% of gross
turnover |
| Category-2: Where annual business turnover exceeds Rs. 100 million | 0.5% of gross
turnover |
The said option shall be irrevocable for three years.
Audit
- SMEs who opt for taxation under normal law under rule 3 may be selected for tax audit through risk based parametric computer ballot under section 214C of the Ordinance if its tax to turnover ratio is below tax rates given in rule 4 of these rules.
- The cases selected under sub-rule (1) of this rule shall not exceed 5% of the total population of SMEs whose tax to turnover ratio is below tax rates given in rule 4 of these rules.
For more information on FBR’s new regulations / circulars/ SROs/ amendments in taxation laws in Pakistan please visit https://www.fbr.gov.pk/
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