Withholding Tax on Imports for Industrial Undertaking
The Finance Act, 2022 has brought about certain amendments in the Income Tax Ordinance, 2001 (the Ordinance, hereafter). Some significant amendments on Withholding Tax on Imports for Industrial Undertaking are explained hereunder: –
Withholding Tax on Imports for Industrial Undertaking
Following changes have been incorporated with regard to VVHT on import under section 148 of the Ordinance.
- a) Withholding tax on imports collected at 1% and 2% on goods falling under Part I and II of Twelfth Schedule to the Ordinance respectively is adjustable for an industrial undertaking if goods have been imported for own use.
In numerous circumstance, goods imported by an industrial undertaking for own use may fall under Part III of Twelfth Schedule to the Ordinance on which tax at 5.5% is collectible at import stage.
This resulted in a situation whereby tax collected at 5.5% on import of goods by an industrial undertaking for its own use became minimum tax.
For the purpose of streamlining, tax collectible from an industrial undertaking on import of all goods for own use has been made adjustable.
- b) Tax collectible under section 148 on import of edible oil, packaging material, paper and paper board, and plastics has been made minimum
tax whether imported by an industrial undertaking for own use or by a commercial importer.
- c) The rate of withholding tax on import of goods falling in Part II of Twelfth Schedule of the Ordinance has been enhanced from 2% to 3.5% for commercial importers, which shall be minimum tax.
- d) Certain goods have been shifted from Part II to Part I of the Twelfth The goods included in Part I are subject to tax @ 1% irrespective of import by industrial undertaking or commercial importers.
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