Softax (Pvt) Limited

Income Tax Ordinance, 2001

THE SECOND SCHEDULE

EXEMPTIONS AND TAX CONCESSIONS
[See section 53]

PART III
REDUCTION IN TAX LIABILITY
Income, or classes of income, or person or classes of person, enumerated below, shall
be allowed reduction in tax liability to the extent and subject to such conditions as are
specified hereunder:(1)

(1)

Any amount received as(a)

flying allowance by pilots, flight engineers, navigators of Pakistan Armed

Forces, Pakistani Airlines or Civil Aviation Authority, Junior Commissioned
Officers or other ranks of Pakistan Armed Forces; and

(b)

submarine allowance by the officers of the Pakistan Navy.

shall be taxed @ 2.5% as a separate block of income1[:

Provided that the reduction under this clause shall be available to so much of the flying
allowance or the submarine allowance as does not exceed an amount equal to the basis
salary.]
(1A)

Where the taxable income 2[other than income on which the deduction of tax is
final[, in a tax year, of a taxpayer aged 60 years or more on the first day of that
tax year does not exceed 3[one million], his tax liability on such income shall be
reduced by 50%.

(2)

The tax payable by a full time teacher or a researcher, employed in a non-profit

education or research institution duly recognized by Higher Education
Commission, a Board of Education or a University recognized by the Higher
Education Commission, including government training and research institution,
shall be reduced by an amount equal to 4[40]% of tax payable on his income
from salary.

(2)

The amount of tax payable, in a year in which the rupee is revalued or devalued, by a
taxpayer whose profits or gains are computed in accordance with the rules contained in
the Fifth Schedule to this Ordinance and who had entered with the Government into an
agreement which provides for such reduction, shall be reduced to the amount that
would be payable in the absence of the revaluation or devaluation of the rupee.

Proviso inserted by Finance Act, 2013.

Words inserted by Finance Act, 2010.

2
3

Substituted for seven hundred fifty thousand rupees by Finance Act, 2010.

Substituted for 75 by Finance Act, 2013.

Softax (Pvt) Limited

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[(4)

Income Tax Ordinance, 2001

In respect of old and used automotive vehicles, tax under section 148 shall not exceed
the amount specified in Notification No. SRO. 577(I)/2005, dated the 6 th June, 2005.]

(5)

Where the corporatised entities of Pakistan Water and Power Development Authority
(DISCOs) and National Transmission and Dispatch Company (NTDC), are required to pay
minimum tax under section 113, the purchase price of electricity shall be excluded from
turnover liable to minimum tax up to the tax year 2013.

(6)

The tax payable under clause (c) of sub-section (1) of section 39, in respect of any
amount paid as yield or profit on investment in Bahbood Savings Certificate or
pensioners Benefit Account shall not exceed 10% of such profit.

(7)

Where any 2[taxpayer] engaged in the business of distribution of cigarettes

manufactured in Pakistan is required to pay minimum tax on the amount representing
its turnover under section 113, the amount of tax payable under the said section shall
be reduced by eighty percent.

For the distributors of pharmaceuticals products, fertilizers, consumers goods including

fast moving consumers goods, the rate of minimum tax on the amount representing
their annual turnover under section 113 shall be reduced by eighty percent.

[(8)

(9)

In case of oil marketing companies, oil refineries and sui southern gas company limited
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[and Sui northern gas pipelines limited] the rate of minimum tax shall be reduced to
0.5% only for the cases where annual turnover exceeds rupees on billion.]

[(10) For cases of flour mills the rate of minimum tax on the amount representing their
annual turnover under section 113 shall be reduced by eighty percent.]

[(11) The amount of surcharge payable on the income tax liability for the tax year 2011 under
section 4A shall be computed on the proportionate amount of income tax liability for
three and a half months.]

[(12) For the case of M/s Pakistan International Airlines Corporation the rate of minimum tax
on the amount representing their annual turnover under section 113 shall be reduced
by fifty per cent.

(13)

For the petroleum agents and distributors who are registered under the Sales Tax Act,
1990 and rice mills and dealers, the rate of minimum tax under section 113 on the
amount representing their annual turnover under section 113 shall be reduced by fifty
per cent.

Substituted clause (4) by Finance Act, 2011.

Substituted for company by Finance Act, 2013.

Clause (8) and (9) inserted vide SRO # 1086(I)/2010 dated: November 30, 2010.

3
4

Clause (9) the words and Sui northern gas pipelines limited substituted against comma vide SRO #
92(I)/2011 dated: February 07, 2011.

Clause (10) inserted vide SRO # 174(I)/2011 dated: March 05, 2011.

Clause (11) inserted vide SRO # 977(I)/2011 dated: October 19, 2011.

Clause (12), (13) & (14) inserted by SRO # 57(I)/2012 dated: January 24, 2012.

Softax (Pvt) Limited

(14)

Income Tax Ordinance, 2001

For the poultry industry including poultry breeding, broiler production, egg production
and poultry feed production, the rate of minimum tax under section 113 on the amount
representing their annual turnover under section 113 shall be reduced by fifty per cent.]

[(15) for the motorcycle dealers registered under the Sales Tax Act, 1990, the rate of
minimum tax under section 113
(i)

For the tax year 2011 shall be reduced by fifty per cent provided that they
deposit their minimum tax on turnover by the 30th June, 2012; and

(ii)

For the tax year 2012 onwards shall be reduced by seventy-five per cent.]

Clause (15) inserted by SRO # 549(I)/2012 dated: May 22, 2012.