Amendment in section 153 and Second Schedule of Income Tax Ordinance, 2001

As per provisions of section 153(1)(b) read with proviso in clause (b) in sub-section (3) of section 153, the tax deductible on payments for the rendering of services shall be the minimum tax on transactions irrespective of the status of recipient of money.

Following amendment has been made through Income Tax (Second Amendment) Ordinance, 2015 dated 31.10.2015:

Section 153

Three new sub-clauses have been introduced to give facility of carry-forward of minimum tax of certain sectors (as given in clause 94 of Part-IV of Second Schedule):

i) Minimum tax in excess of tax payable shall be carried-forward for adjustment of tax liability for the subsequent tax year.
ii) If the tax liability is not wholly adjusted, the amount not adjusted shall be carried-forward in the next year and adjusted against tax liability. This adjustment shall be available only for the five years.
iii) Excess amount of tax paid shall be carried-forward only in the case of company rendering services which have been mentioned in newly inserted clause (94) of Part-IV to Second Schedule. In section 153 new sub-section (4A) has been inserted according to which Commissioner may issue exemption certificate for period of at least 3 months to the companies rendering services mentioned in clause (94) of Part-IV to Second Schedule subject to the following conditions:-

  1. a) Companies are providing services mentioned in clause 94.
  2. b) Company has paid advance tax equal to two percent of the total turnover of corresponding period of immediately preceding tax year.

Clause (94) of Part-IV to Second Schedule

As per newly inserted clause (94) facility given by section 153 in respect of carry-forward of minimum tax shall be available to companies rendering following services:-

a) Freight forwarding services.
b) Air cargo services.
c) Courier services.
d) Manpower out sourcing services.
e) Hotel services.
f) Security guard services.
g) Software development services.
h) Tracking services.
i) Advertising services (other than print or electronic media).
j) Share registrar services.
k) Engineering services.
l) Car rental services.

The facility given by section 153 for tax year 2016 shall be available to companies providing above mentioned services subject to following conditions:-

i) Company is filer.
ii) Tax payable or paid on income from all sources is not less than two percent of gross amount of turnover from all services.
iii) Irrevocable undertaking is given by 15th November, 2015 to present its accounts for audit for tax year 2016 within 30 days of filing of return.

The Income Tax (Second Amendment) Ordinance, 2015 can be accessed on the following page: