Exemptions Withdrawn under second Schedule

Clause 57(1)(iii)

Exemptions Withdrawn under second schedule: Exemption of income from voluntary contributions, house property and investments in securities of the Federal Government derived by Sheikh Sultan Trust, Karachi.

Clause 61

The said clause provided a list of entities to whom if donor makes a donation was subject to direct deduction from total income. The said clause has been withdrawn and the entities have now been listed in the newly inserted Thirteenth Schedule.

Clause 64A, 64B & 64C

The said clause provided exemption from income tax to the Prime Minister’s Special Fund for victims of terrorism, Chief Minister’s Relief Fund for IDPs and Prime Minster Flood Relief Fund 2010 and Provincial Chief Minister Relief Funds for victims of flood 2010.

Clause 72(A)

Exemption of income derived by Sukuk Holder in relation to Sukuk issued by “The Second Pakistan International Sukuk Company Limited” and “The Third Pakistan International Sukuk Company Limited”, including any gain on disposal of such Sukuk.

Clause 74

Exemption on profit on debt derived by Hub Power Company Limited on its bank deposits or accounts with financial institutions directly connected with financial transactions directly related to the project operations.

Clause 90

Exemption on profit on debt payable by an industrial undertaking in Pakistan:

a) On moneys borrowed under a loan agreement entered into with an approved financial institution in a foreign country; and

b) on moneys borrowed or debts incurred by it in a foreign country in respect of the purchase outside Pakistan of capital plant and machinery in any case where the loan or debt is approved by the Federal Government, having regard to its terms generally and in particular to the terms of its payment, from so much of the tax payable in respect thereof as exceeds the tax or taxes on income paid on such interest in the foreign country.

Clause 90(A)

Exemption on any profit on debt derived by any person on bonds issued by Pakistan Mortgage Refinance Company to refinance the residential housing mortgage market, for a period of five years with effect from the 1st day of July, 2018.

Clause 91

Exemption on any income of a textbook board of a Province established under any law for the time being in force.

Clause 98

Exemption on any income derived by any Board or other organization established by Government in Pakistan for the purposes of controlling, regulating, or encouraging major games and sports recognized by Government.

Clause 100

Exemption on any income, not being income from manufacturing or trading activity, of a Modaraba registered under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980.

Clause 101

Exemption on profits and gains derived between the 1st July, 2000 and the 30th June, 2024, by a venture capital company and venture capital fund registered under Venture Capital Companies and Funds Management Rules, 2000 and a Private Equity and Venture Capital Fund.

Clause 103C

Exemption on dividend income derived by a company, if the recipient of the dividend, for the tax year is eligible for group relief under section 59B. Currently inter corporate dividends are exempt from tax under the following group structure:

(a) Holding company and 100% owned subsidiaries entitled to group taxation and filing group return (Clause 103A) ; and

(b) Holding company and subsidiary companies eligible for group relief under section 59B (Clause 103C).

Through the Amendment Ordinance, the exemption for inter corporate dividend stated in (b) above has been withdrawn.

Clause 104

Exemption on any income derived by the Libyan Arab Foreign Investment Company being dividend of the Pak-Libya Holding Company.

Clause 105

Exemption on any income derived by the Government of Kingdom of Saudi Arabia being dividend of the Saudi-Pak Industrial and Agricultural Investment Company Limited.

Clause 105A

Exemption on any income derived by Kuwait Foreign Trading Contracting and Investment Company or Kuwait Investment Authority being dividend of the Pak-Kuwait Investment Company in Pakistan from the year of incorporation of Pak-Kuwait Investment Company.

Clause 110B

Exemption on any gain on transfer of a capital asset, being a membership right held by a member of an existing stock exchange, for acquisition of shares and trading or clearing rights acquired by such member in new corporatized stock exchange in the course of corporatization of an existing stock exchange.

Clause 110C

Exemption on any gain by a person on transfer of a capital asset, being a bond issued by Pakistan Mortgage Refinance Company to refinance the residential housing mortgage market, during the period from the 1st day of July, 2018 till the 30th day of June, 2023.

Clause 114

Exemption on any income chargeable under the head “capital gains” derived by a person from an industrial undertaking set up in an area declared by the Federal Government to be a “Zone” within the meaning of the Export Processing Zones Authority Ordinance, 1980 (IV of 1980).

Clause 126BA

Exemption on profits and gains derived by a refinery set up between the 1st day of July, 2018 and the 30th day of June, 2023 with minimum 100,000 barrels per day production capacity for a period of twenty years beginning in the month in which the refinery is set up or commercial production is commenced, whichever is later.

Exemption under this clause is also available to existing refineries, if:

1. existing production capacity is enhanced by at least 100,000 barrels per day;
2. the refinery maintains separate accounts for income arising from aforesaid additional production capacity; and
3. the refinery is a deep conversion refinery.

Clause 126G

Exemption on Profit and gains derived for a period of five years from the date of start of commercial production by the companies from specified projects that have been declared ‘Pioneer Industry’ by Economic Coordination Committee of the Cabinet. The Companies and projects are:

M/s. Astro Plastics (Pvt.) Ltd. from their Biaxially Oriented Polyethylene, Terephthalate (BOPET) Project; and

M/s. Novatex Ltd. from their Biaxially Oriented Polyethylene Terephtalate (BOPET) Project

Clause 126I

Exemption on profits and gains derived by a taxpayer, from an industrial undertaking set up by 31st day of December, 2016 and engaged in the manufacture of plant, machinery, equipment and items with dedicated use (no multiple uses) for generation of renewable energy from sources like solar and wind, for a period of five years beginning from first day of July, 2015.

This exemption is also available to such undertaking set up between the 1st March 2019 and the 30th June, 2023 for a period of five years beginning from the date such industrial undertaking is set up.

The concession has been provided as Tax credit under newly inserted section 65G.

Clause 126O

Profits and gains of a company from a greenfield industrial undertaking for a period of five years incorporated on or after the first day of July 2019.

This clause has been omitted and the provisions of the same are incorporated under newly inserted section 65F.

Clause 131

Exemption on any income:

• of company registered under the Companies Ordinance 1984 (XLVII of 1984), and having its registered office in Pakistan, as is derived by it by way of:
• royalty,
• commission or
• iii. fees from a foreign enterprise in consideration for the use outside Pakistan of any patent, invention, model, design, secret process or formula or similar property right, r information concerning industrial, commercial, or scientific knowledge, experience or skill made available or provided to such enterprise by the company or in the consideration of technical services rendered outside Pakistan to such enterprise by the company under an agreement in this behalf, or b. of any other taxpayer as is derived by him, in the income year relevant to assessment year beginning with the first day of July,1982 and any assessment year thereafter, by way of fees for technical services rendered outside Pakistan to a foreign enterprise under an agreement entered into in this behalf: –

The exemption is available subject to condition that income is received in Pakistan.

Clause 132A

Profits and gains derived by Bosicor Oil Pakistan Limited for a period of seven and a half years beginning from the day on which the refinery is set up or commercial production is commenced whichever is later.

Clause 132B

Exemption on Profits and gains derived by a taxpayer from a coal mining project in Sindh, supplying coal exclusively to power generation projects.

Clause 133

Income from exports of computer software or IT services or IT enabled services upto the period ending on 30 the day of June 2025.

This clause has been omitted and the said income is now subject to 100% tax credit under newly inserted section 65F subject to meeting certain conditions.

Clause 135A

Exemption on any income derived by a non-resident from investment in OGDCL exchangeable bonds issued by the Federal Government.

Clause 136

Exemption on any income of a special purpose vehicle as defined in the Asset Backed Securitization Rules, 1999 made under the Companies Ordinance, 1984.

Clause 141

Exemption on profit and gains derived by LNG Terminal Operators and Terminal Owners for a period of five years beginning from the date when commercial operations are commenced.

Clause 143

Profits and gains derived by a start-up as defined in clause (62A) of section 2 for the tax year in which the startup is certified by the Pakistan Software Export Board and the following two tax years.

This clause has been omitted and the said income is now subject to 100% tax credit under newly inserted section 65F subject to meeting certain conditions.

Clause 146

Exemption on any income which was not chargeable to tax prior to the commencement of the Constitution (Twenty-fifth Amendment) Act, 2018 of any individual domiciled or company and association of persons resident in the Tribal Areas forming part of the Provinces of Khyber Pakhtunkhwa and Balochistan under paragraph (d) of Article 246 of the Constitution with effect from the 1st day of June 2018 to the 30th day of June, 2023.

Clause 148

Exemption on any income derived by Islamic Naya Pakistan Certificates Company Limited (INPCCL). INPCCL have been made part of Table I of Clause (66), which means there is no change in exemption status.

Read more blogs here and to contact FBR click here.