Income Tax Ordinance, 2001 — Section 60A: Workers’ Welfare Fund

1[60A. Workers’ Welfare Fund.— A person shall be entitled to a deductible allowance for the amount of any Workers’ Welfare Fund paid by the person in tax and brought forward assessed business losses excluding capital loss of the acquired company subject to provisions of section 57 for a period of three years.

(2)Sub-section (I) shall apply subject to the following conditions, namely:– (a) there is continued ownership for five years starting from the 30th June, 2023 and there is no change in share capital of the acquiring company;

(b)the assets of the acquired company shall not be sold upto the 30" June, 2026; and

(c)the acquired company continues the same business till the 30th June, 2026.

(3)Where the losses surrendered by the acquired company are not adjusted against income of the acquiring company in the said three tax years, the acquired company shall carry forward the unadjusted losses in accordance with section 57.

(4)The loss of the acquired company referred to in sub-section (1) shall be adjusted against income under the head "income from business" of the acquiring company as per following formula, namely: (A/I00) x B where A is the percentage share capital held by the acquiring company of the acquired company; and B is the loss of the acquired company referred to in sub-section (I).

(5)If the acquiring company fails to revive the acquired company by tax year 2026, the acquiring company shall, in tax year 2027 offer the amount of profit on which taxes have not been paid due to set off of losses surrendered by the acquired company.

(6)For the removal of doubt, this section shall not apply to any scheme of amalgamation or merger.

(7)For the purposes of this section,

(a)a sick industrial unit referred to as acquired company in sub-section (I), shall be deemed to be revived if the said company attains maximum production capacity that was obtained before the industrial unit vent sick: Provided that the acquired company produces a certificate to the effect that it stands revived, duly issued by Engineering Development Board, along with the return of income filed for tax year 2026.

(b)"sick industrial unit" means a company being an industrial undertaking, which –

(i)has accumulated losses, for a continuous period of three years prior to the I" July, 2022, equal to or exceeding its entire capital and reserves at the time of acquisition, as the ease may be; or

(ii)has defaulted towards repayment of outstanding debts owing to banking companies or non banking financial institutions for a consecutive period of three years immediately before acquisition, as the case may be, or

(iii)has been declared as such by the Federal Government in a notification published in the official Gazette."; Chapter III – Tax on Taxable Income year under Workers’ Welfare Fund Ordinance, 1971 (XXXVI of 1971) 1[or under any law relating to the Workers’ Welfare Fund enacted by Provinces after the eighteenth Constitutional amendment Act, 2010: Provided that this section shall not apply in respect of any amount of Workers’ Welfare Fund paid to the Provinces by a trans-provincial establishment.]