ISLAMABAD: The Federal Board of Revenue (FBR) has granted a 100 percent tax credit to coal mining projects in Sindh that exclusively supply coal to power generation projects within the province. This update is part of the amendments introduced in the Finance Act 2024, as detailed in the FBR’s income tax circular number 1 of 2024 issued on Monday.
The amendment to Section 65F clarifies that this tax credit applies solely to income derived from coal mining operations in Sindh, intended exclusively for power generation projects. Other income sources are not eligible for this credit.
Additionally, builders and developers must submit a statement of computation on each due date for quarters, detailing advance tax computation, gross receipts, and business bank account details, certified by a Chartered Accountant or a Cost and Management Accountant.
For the taxation of capital gains (Section 37), the new amendment requires the acquirer of shares to deduct a 10 percent tax at the time of payment or registration, whichever comes first, even if the payment is not yet made.
The FBR has also updated the taxation principles for Associations of Persons (AOPs). Members’ shares in AOPs with a turnover of Rs 300 million or more are not tax-exempt unless financial statements are audited by a recognized firm.
For those not on the active taxpayers’ list, Section 100BA now includes higher withholding tax rates for individuals who filed their returns late, broadening the scope of the Tenth Schedule.
The geographical source of income (Section 101) has been updated to define “significant economic presence in Pakistan” for non-residents, encompassing transactions exceeding prescribed amounts.
The tax rate on dividends from mutual funds has increased to 25 percent if the fund derives 50 percent or more of its income from profit on debt.
The rate for toll manufacturing has also been raised to nine percent for companies and 11 percent for others.
Moreover, income from Special Purpose Vehicles (SPVs) involved in purchasing Diversified Payment Rights through authorized dealers is now tax-exempt under the State Bank of Pakistan’s regulations.
Lastly, the tax exemption for individuals and entities in the erstwhile Tribal Areas of Khyber Pakhtunkhwa and Balochistan has been extended until June 30, 2025.
Story by Sohail Sarfaraz
