Income Tax Ordinance, 2001 — Section 100E: Special provisions relating to small and medium enterprises

2[100E. Special provisions relating to small and medium enterprises.— (1) For tax year 2021 and onwards, the tax payable by a small and medium enterprise as defined in clause (59A) of section 2 shall be computed and paid in accordance with rules made under the Fourteenth Schedule.

(2)The Board may prescribe a simplified return for a small and medium enterprise.] 3[ ] 1 The expression “30th day of September, 2022” ” substituted by the Finance Act, 2021. Earlier the substitution was made through Income Tax (Amendment) Ordinance, 2021. 2 Section 100E inserted by the Finance Act, 2021. 3 Section 100F shall be omitted and shall be deemed to have been omitted with effect from 02nd March, 2022 by the Finance Act, 2022. The omitted section read as follows: "100F. Special provisions relating to investment for industrial promotion. — (1) Any eligible person may file a statement by the 30th September, 2022, declaring therein the amount of funds (which have not been declared in any of the returns of income upto tax year 2021 filed by the 31 st December, 2021) for investment in a new company formed for establishing and operating an industrial undertaking in accordance with this section: Provided that the funds referred to in sub-section (I) shall be deposited in rupees in a dedicated bank account in Pakistan as equity of the newly formed company, incorporated under the Companies Act, 2017 (XIX of 2017), before the filing of the statement and such funds shall only be used for purchase or import of plant and machinery through letter of credit or for construction of building and structure for the industrial undertaking: Provided further that the minimum amount which would qualify for the purposes of this section shall be fifty million rupees.

(2)The provisions of section 111 shall not apply to the funds declared under sub-section (I) subject to fulfilment of conditions as laid down in this section and payment of an amount equal to five percent thereof along with the statement filed under sub-section (1).

(3)The new industrial undertaking in which such investment is made shall commence commercial production by the 30th June, 2024 and a certificate to that effect, duly issued by Engineering Development Board, is submitted to the Commissioner along with the return filed for tax year 2024.

(4)Any amount of tax paid under this section shall not be refundable or adjustable against any other tax liability of the declarant. 186 Chapter VI – Special Industries

(5)Where a declarant has paid tax under this section in respect of funds declared under sub section (I), the declarant shall be entitled to incorporate the same in his wealth statement, financial statements or books of accounts, as the case may be.

(6)For the purposes of this section, eligible person means all persons, except–

(a)holders of' public office, their spouses and dependent children;

(b)a public company as defined in clause (47) of section 2 of this Ordinance;

(c)a person who has filed a declaration under the Voluntary Declaration of Domestic Assets Act, 2018, the Foreign Assets (Declaration and Repatriation) Act, 2018, or the Assets Declaration Act, 2019;

(d)a person that has been declared a bank loan defaulter by a bank or a financial institution within the last three years; or

(e)a director of a company who has been declared a bank loan defaulter by a bank or a financial institution within the last three years.

(7)The provisions of this section shall not apply to

(a)any proceeds of crime, corruption, money laundering and terror financing;

(b)any amount which is subject of any departmental or court proceedings;

(c)the investments made in following sectors, namely:

(i)arms and ammunitions;

(ii)explosives;

(i)sugar;

(ii)cigarettes;

(iii)aerated beverages;

(iv)flour mills;

(v)vegetable ghee; and

(vi)cooking oil manufacturing excluding extraction units.

(8)Notwithstanding the provisions of any other law for the time being in force including sub section (3) of section 216 of this Ordinance excluding clauses (a) and (g) of sub-section (3) thereof, the National Accountability Ordinance, 1999 (XVIII of 1999), the Federal Investigation Agency Act, 1974 (VIII of 1975) and the Right of Access to Information Act, 2017 (XXXI V of 2017), particulars of any person making a statement under this section or any information received in any statement made under this section shall be confidential.

(9)The statement filed under sub-section (1) shall not be valid, if

(a)the newly formed industrial undertaking company fails to prove commercial production in terms of sub-section (3);

(b)there is change in ownership of industrial undertaking company prior to the 30th June, 2026; or

(c)the newly formed industrial undertaking company disposes of any of its assets prior to the 30th June, 2026.

(10)Notwithstanding anything contained in this section, where the provisions of sub-section (7) or (9) apply, or where the statement under sub-section (I) has been made by misrepresentation or suppression of facts, such statement shall be void as if it had never been made and all the provisions of this Ordinance shall apply accordingly: Provided that the Commissioner shall not take any action under this section without providing the declarant an opportunity of being heard.

(11)The statement filed under this section shall be made in the form and manner as specified by the Board through a notification in the official Gazette.

(12)The provisions of this section shall apply, mutatis mutandis, to an existing company being an industrial undertaking, for investment in expansion and modernization from amount of funds (which have not been declared in any of the returns of income upto tax year 2021 filed by the 31 st December, 2021): Provided that such company opens a dedicated bank account to deposit the said funds before the filing of the statement and such funds shall only be used for expansion and modernization by way of purchase or import of plant and machinery including IT hardware through letter of credit, or software and IT services or for construction of building and structure for the manufacturing premises of the existing industrial undertaking: 187 Chapter VI – Special Industries Provided further that the expansion and modernization shall be completed by the 30 th June, 2024, and a certificate to that effect, duly issued by the Engineering Development Board, is submitted to the Commissioner along with the return filed for tax year 2024.

(13)In this section, unless there is anything repugnant in the subject or context,

(a)"declarant" means a person filing a statement under sub-section (1);

(b)"holder of public office" means a person as defined in the Voluntary Declaration of Domestic Assets Act, 2018;

(c)"industrial undertaking" means a company being a new industrial undertaking setup for the purpose of this section and is not established by the splitting up or reconstruction or reconstitution of an undertaking already in existence or by transfer of machinery or plant from an existing industrial undertaking established in Pakistan;

(d)"investment" means investment in equity and does not include borrowed funds and investment in land; and

(e)"modernization" includes acquisition or upgradation of IT hardware, software and IT services."; 188 Chapter VII – International CHAPTER VII INTERNATIONAL PART I GEOGRAPHICAL SOURCE OF INCOME