Insertion of Section 65H in the Ordinance
This is an explanatory blog on Insertion of Section 65H in the Ordinance via amendments made in Income Tax Ordinance, 2001 and in case of any conflict between the Circular and the letter of the law, the latter would prevail.
The Income Tax (Amendment) Ordinance, 2022, (hereinafter “the Amendment Ordinance”) has brought about certain amendments in the Income Tax Ordinance, 2001 (hereinafter “the Ordinance”). Some significant amendments are explained as under: –
In order to provide incentive for industrial promotion, section 65H has been inserted in the Ordinance whereby all non-resident Pakistani citizens having non-resident status for more than five years and resident Pakistani citizens can avail the benefit of one hundred percent one-time tax credit equal to the amount invested as equity from foreign exchange remitted into Pakistan through normal banking channel in a dedicated rupee account opened by a company incorporated on or 15th after March, 2022 to establish an industrial undertaking.
The said industrial undertaking is required to commence its commercial production by 30 June, 2024 and tax credit shall be available for adjustment against tax payable for the year in which commercial production commence and can be carried forward, if unadjusted, upto a period of maximum five years.
The resident person can remit foreign exchange into Pakistan out of declared assets in terms of section 116 or 116A of the Ordinance. The minimum equity investment to avail benefit under this section shall be Rs. 50 million and procedure for remittance of foreign exchange into Pakistan shall be laid down by State Bank of Pakistan.
The scheme offered under this section will not be applicable to a company or an industrial undertaking established by splitting up or reconstitution of a company or an industrial undertaking already in existence or by transfer of machinery or plant from an industrial undertaking established at any time before rt March, 2022.
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