Faheem Mehboob (ACCA Member)

Cell: 0300-7574731
Email:faheem2288@live.com

Imports – s 148(7)

(a) The collector of customer shall collect income tax from every importer at the prescribed rates
on value as increased by custom duty, federal excise duty and sales tax as under:
 4.5% on import of ships by ship breakers[6.5% for non-filer]
 5.5% in the case of industrial undertaking [8% for non-filer]
 5.5% in case of companies [8% for non-filer]
 6% in other cases [9% for non-filer]
It means that a commercial importer other than a company shall pay tax @ 6% [9% for non-filer]
on import stage.
However, reduced rates shall be collected on certain specified item including gold, cotton and
items mentioned on SRO 1125 of 2011 such a leather and textile and articles thereof, carpets,
sports and surgical goods etc.
(b) Tax on import stage shall not be paid on certain items classified under various chapters of
Pakistan custom tariff-refer clause 56 part IV 2nd schedule
(c) Tax shall not be deducted of source at the time of supply of such items where: [section
153(5)(a)]
A) The sale is made by the importer of the goods;
B) The importer has paid tax u/s 148 respect of such goods; and
C) The goods are sold in the same condition they were in when imported.
It means that local supply of commercial imports is not subject to tax deduction at source at the
time of supply as the income tax paid on import stage has already been treated as final tax.
Circular 5 of 2002 para 4(ii)(iii): The supplier may give a written declaration to the effect that
the above conditions have been fulfilled and no tax should be deducted. The payer may require
furnishing of import documents such as original bill of entry.
(d) FTR or NTR : Except in the case of:
 Import of fertilizer by manufacturer of fertilizer;
 Import of vehicles in completely build unit (CBU) condition by manufacturer of vehicles:
 Large import house; and
 Industrial undertaking importing goods as raw materials, plants, machinery and equipment
for its own use
Tax payable u/s 148 shall become full and final tax on the income of importer arising from such
imports. It means that commercial imports are generally taxable on FTR basis.
Note for students: For the definition of industrial undertaking refer section 2(29C) The courts
have held that an importer importing goods for toll manufacturing cannot be manufacturing/
self-consumption.
(e) Tax pay by ship breaker on import of ship is the final tax and withholding tax under section 153
is not applicable on supply stage as recipient for the ship breaker – clause 9AA part IV 2nd
schedule.
(f) A large import house is an entity who;
I. Has paid up capital exceeding Rs.250 million;
 Faheem Mehboob (ACCA Member)
Cell: 0300-7574731
Email:faheem2288@live.com

II. Has imports exceeding Rs.500 million during the tax year;
III. Owns total assets exceeding Rs.350 million at the case close of the tax year:
IV. Is single object company;
V. Maintains computerized records of import and sale goods;
VI. Maintains a system for issuance of 100% cash receipts on sale;
VII. Presents accounts for tax audit every year;
VIII. Is registered with sales tax department: and
IX. Makes sale of industrial raw material to manufacturer registered for sale tax purpose.
[Large import houses are generally termed as bulk importers of industrial raw materials]