Income Tax Ordinance, 2001 — Section 236L: Advance tax on purchase of international air ticket

236L. Advance tax on purchase of international air ticket.— (1) Every airline, issuing ticket for journey originating from Pakistan, shall collect advance tax at the rates specified in Division XX of Part IV of the First Schedule, on the gross amount of international air tickets issued to passengers booking one-way or return, from Pakistan.

(2)The airline issuing air ticket shall collect or charge advance tax under sub-section (1) in the manner air ticket charges are collected or charged, either manually or electronically.

(3)The mode, manner and time of collection under sub-section (1) and time of collection shall be as may be prescribed.

(4)The advance tax collected under sub-section (1) shall be adjustable.” 3 Section 236M omitted by the Finance Act, 2018. The omitted section 236M read as follows: “236M. Bonus shares issued by companies quoted on stock exchange .- (1) Notwithstanding anything contained in any law for the time being in force, every company, quoted on stock exchange, issuing bonus shares to the shareholders of the company, shall withhold five percent of the bonus shares to be issued.

(2)Bonus shares withheld under sub-section (1) shall only be issued to a shareholder, if the company collects from the shareholder, tax equal to five percent of the value of the bonus shares issued to the shareholder including bonus share withheld, determined on the basis of day-end price on the first day of closure of books.

(3)Tax under sub-section (2), shall be collected by the company, within fifteen days of the first day of closure of books.

(4)If the shareholder fails to make the payment of tax under sub-section (2) within fifteen days or the company fails to collect the said tax within fifteen days, the company shall deposit the bonus share withheld under sub-section (1) in the Central Depository Company of Pakistan Limited or any other entity as may be prescribed.

(5)Bonus share deposited in the Central Depository Company of Pakistan Limited or the entity prescribed under sub-section (4) shall be disposed of in the mode and manner as may be prescribed and the proceeds thereof shall be paid to the Commissioner, by way of credit to the Federal Government.

(6)Issuance of bonus shares shall be deemed to be the income of the shareholder and the tax collected by a company under sub-section (2) or proceeds of the bonus shares disposed of and paid under sub-section (5) shall be treated to have been paid on behalf of shareholder.

(7)Tax paid under this section shall be final tax on the income of the shareholder of the company arising from issuing of bonus shares.” 4Section 236N omitted by the Finance Act, 2018. The omitted section 236N read as follows: “236N. Bonus shares issued by companies not quoted on stock exchange .- (1) Notwithstanding anything contained in any law for the time being in force, every company, not quoted on stock exchange, issuing bonus shares to the shareholders of the company, shall deposit tax, within fifteen days of the closure of books, at the rate of five percent of the value of the bonus shares on the first day of closure of books, whether or not tax has been collected by the company under sub-section (3).

(2)Issuance of bonus shares shall be deemed to be the income of the shareholder and tax deposited under sub-section (1) shall be treated to have been deposited on behalf of the shareholder. 474 Chapter XII – Transitional Advance Tax Provisions 1 [236O. Advance tax under this chapter.—The advance tax under this chapter shall not be collected 2[“or deducted from”]

(a)the Federal Government or a Provincial Government;

(b)a foreign diplomat or a diplomatic mission in Pakistan; or

(c)a person who produces a certificate from the Commissioner that his income during the tax year is exempt.”] 3 [ ] 4[ ] 5 [ ] 6[ ]

(3)A company liable to deposit tax under sub-section (1), shall be entitled to collect and recover the tax deposited under sub-section (1),from the shareholder, on whose behalf the tax has been deposited, before the issuance of bonus shares.

(4)If a shareholder neither makes payment of tax to the company nor collects its bonus shares, within three months of the date of issuance of bonus shares, the company may proceed to dispose of its bonus shares to the extent it has paid tax on its behalf under sub-section (1).

(5)Tax paid under this section shall be a final tax on the income of the shareholder of the company arising from issuance of bonus shares.

(6)The Board may prescribe rules for determination of value of shares under sub-section (1).]” 1 Section “236O” inserted by the Finance Act, 2015. 2 The words “in the case of withdrawals made by” substituted by the Finance Act, 2016. 3 Section “236P” inserted by the Finance Act, 2015. 4 Section 236P omitted by the Finance Act, 2021. The omitted section read as follows: “236P. Advance tax on banking transactions otherwise than through cash.— (1) Every banking company shall collect advance adjustable tax from a 4[person whose name is not appearing in the active taxpayers’ list] at the time of sale of any instrument, including demand draft, pay order, special deposit receipt, cash deposit receipt, short term deposit receipt, call deposit receipt, rupee traveller‘s cheque or any other instrument of such nature.

(2)Every banking company shall collect advance adjustable tax from a 4[ person whose name is not appearing in the active taxpayers’ list] at the time of transfer of any sum through cheque or clearing, interbank or intra bank transfers through cheques, online transfer, telegraphic transfer, mail transfer, direct debit, payments through internet, payments through mobile phones, account to account funds transfer, third party account to account funds transfers, real time account to account funds transfer, real time third party account to account fund transfer, automated teller machine (ATM) transfers, or any other mode of electronic or paper based funds transfer.

(3)The advance tax under this section shall be collected at the rate specified in Division XXI of Part IV of the First Schedule, where the sum total of payments for all transactions mentioned in sub section (1) or subsection (2), as the case may be, exceed fifty thousand rupees in a day. 4 [“Explanation.- For removal of doubt, it is clarified that the said fifty thousand rupees shall be aggregate transfers from all the bank accounts in a single day.”]

(4)Advance tax under this section shall not be collected in the case of 4[ ] payments made for Federal, Provincial or local Government taxes.”]” 5 Section “236Q” inserted by the Finance Act, 2015. 6 Section “236Q” omitted by the Finance Act, 2022. The omitted section read as follows: “236Q. Payment to residents for use of machinery and equipment.—(1) Every prescribed person making a payment in full or in part including a payment by way of advance to a resident person 475 Chapter XII – Transitional Advance Tax Provisions 1 [ ] 2 [ ] 3[ ] 4[ 5[ ] ] for use or right to use industrial, commercial and scientific equipment shall deduct tax from the gross amount at the rate specified in Division XXIII of Part IV of the First Schedule.

(2)Every prescribed person making a payment in full or in part including a payment by way of advance to a resident person on account of rent of machinery shall deduct tax from the gross amount at the rate specified in Division XXIII of Part IV of the First Schedule.

(3)The tax deductible under sub-sections (1) and (2) shall be 6[minimum] tax on the income of such resident person. [Explanation.— For the removal of doubt, it is explained that the income of person referred to in sub-section (3) means the amount on which tax is deductible under sub-section (1) or (2) of this section.]

(4)In this section ―prescribed person‖ means a prescribed person as defined in sub-section

(7)of section 153.

(5)The provisions of sub-section (1) and (2) shall not apply to

(a)agricultural machinery; and

(b)machinery leased by a leasing company, an investment bank or a modaraba or a scheduled bank or a development finance institution in respect of assets owned by the leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution.” Chapter XII – Transitional Advance Tax Provisions 1[ ] 2 [ ] 3[ ] 4[ ] 5[ ] 6 [ ] 7[ ] 1 Section 236U omitted through Finance Act, 2020 dated 30th June, 2020 the omitted section read as follows: “236U. Advance tax on insurance premium.- (1) Every insurance company shall collect advance tax at the time of collection of insurance premium from 1[person whose name is not appearing in the active taxpayers’ list] in respect of general insurance premium and life insurance premium, at the rates specified in Division XXV of Part IV of the First Schedule.

(2)Insurance premium collected through agents of the insurance company shall be treated to have been collected by the insurance company.

(3)Advance tax collected under this section shall be adjustable.” 2 Inserted by the Finance Act, 2016. 3 Section 236V omitted by the Finance Act, 2021. The omitted section read as follows: “236V. Advance tax on extraction of minerals.- (1) There shall be collected advance tax at the rate specified in Division XXVI of Part-IV of the First Schedule on the value of minerals extracted, produced, despatched and carried away from the licensed or leased areas of the mines.

(2)Advance tax under sub-section (1) shall be collected by the provincial authority collecting royalty per metric ton from the lease-holder of mines or any person extracting minerals.

(3)Advance tax collected under this section shall be adjustable.

(4)The value of the minerals for the purpose of this section shall be as specified by the Board.”]” 4 Section 236W omitted through Finance Act, 2019, omitted section read as follow: