Islamabad, Pakistan – In a significant move, Pakistan’s Minister for Finance and Revenue, Mr. Muhammad Aurangzeb, has put forth a series of amendments to the Finance Bill 2025, currently under consideration by the National Assembly. The proposed changes, dated June 25, 2025, aim to refine various tax provisions, introduce new classifications, and adjust regulatory frameworks across several sectors.
One of the prominent amendments involves a change in nomenclature: the “Carbon Levy” will be replaced with the “Climate Support Levy” throughout Clause 3 of the Bill. This suggests a shift in emphasis towards broader climate initiatives.
Amendments to Clause 4 introduce several adjustments related to customs and schedules. Notably, in the First Schedule, specific PCT Codes for polymers of ethylene are being revised, introducing new sub-categories for “Mineral filled film of Polyolefins for aseptic liquid food packaging” and “Other,” with corresponding duty rates. The Second Schedule sees the insertion of new entries for parts of Solar Dish Stirling Engines, including control panels and Stirling Engine Generators, both proposed to have a 0% duty rate.
Further changes in Clause 4 affect the Second Schedule, Part-III, with a substitution for S. No. 102 concerning “Refrigerated out-door cabinet designed for insertion of and electric and electronic apparatus”. Additionally, S. No. 131, related to “PVC Emulsion grade,” is proposed to be substituted with specific conditions for import by manufacturers registered under the Sales Tax Act, 1990, and a 3% rate for “Release paper”.
In Part-VI of the Second Schedule, the year in the title is to be updated from “2015” to “2023”. Significant alterations are also proposed for the preamble of Part-VI, expanding the scope of entities authorized for concessions to include “, Maintenance, Repair & Overhaul Companies (MROs) and Aircraft Maintenance Organizations (AMOs) duly authorized by the Defence Division, and” and aligning the authority with the “Pakistan Civil Aviation Authority under the Pakistan Civil Aviation Act, 2023 (XLIX of 2023)”. A new condition mandates that “the list of imported items is duly approved by Pakistan Airports Authority, Defence Division, Government of Pakistan for every consignment imported by MRO or AMO in line with Policy Framework approved by the Government of Pakistan”. The word “Aviation” is consistently replaced with “Defence” in various sections and tables within this part.
Furthermore, for S. No. 4, in column (2), the expression “& tools” will be substituted with “, tools, kits and parts”, and in column (5), after the word “workshop”, the words “and for overhauling of aircrafts” shall be inserted and after the word “company”, the expression “and Aircraft Maintenance Organization (AMO)” shall be inserted.
Clause 5 also undergoes substantial revisions. In sub-clause (1), a minor textual change replaces “should be” with “is”. Proposed sections 14AC and 14AD see several omissions and substitutions. The process for imposing and removing bars on the transfer of immovable property is clarified, with “The committee after affording a personal hearing to the person, shall either recommend for imposition of bar on transfer of immovable property or recommend the Commissioner to remove the bar imposed under section 14AC”. A new sub-section (8) in proposed section 14AD states that “The provisions of this section shall come into force on such date as may be notified by the Board”. In proposed section 14AE, “attached” is replaced with “seized” and the wording for reversing orders is amended to “reverse the order issued”.
Further amendments in Clause 5 concern proposed section 37A, where “duly served” is inserted after “three” in sub-section (8), clause (c), paragraph (i) and in sub-section (9), clause (i). A proviso is added to sub-section (13), stating that “no arrest under this section shall be made before the completion of inquiry under sub-section (1) of this section”. A new sub-section (14) is introduced, allowing “The accused arrested may approach the competent court for his release on bail under the provisions contained in sections 497 and 498 of the Code of Criminal Procedure, 1898 (Act V of 1898)”. Sub-section (15) outlines the purpose of prosecution under sections 37A and 37B as creating “sufficient deterrence against tax fraud” and providing “for retribution for commission of tax fraud”.
The Sixth Schedule is also amended in paragraph (a), in sub-paragraph (iv), in the proposed new S. No. 181, in the Table, in column (2), after the word “aircrafts”, the words “and parts thereof” shall be inserted. A significant substitution in sub-clause (30) of Clause 5 impacts the Eleventh Schedule, introducing “and (7A)” after the heading and revising the entry for “Payment intermediaries and couriers in respect of digitally ordered goods from within Pakistan” to a “2% of gross value of supplies”.
Clause 7 sees a substitution in sub-clause (iii), for proposed sub-section (4), allowing “Notwithstanding the provisions of this section, the Board may, whenever deem necessary, subject to such conditions, restrictions and limitations, specify a Negative List of services exempt from tax under this Ordinance in Table-3 to the Schedule, by notification in the official Gazette”.
In Clause 8, in sub-clause (3), in proposed section 6A, in sub-section (1), in the proviso, after the word “section”, the expression “154 and” shall be inserted. Sub-clause (14) is substituted to specify that “persons engaged in coal mining projects in Sindh, to the extent, the income is derived from supplying coal to power generation projects”. In proposed section 114C, in sub-section (1), clause (c) is amended to insert “by an ineligible person” after “investment” and clause (d) specifies that “a banking company shall not allow cash withdrawal from any of the bank accounts of any person, exceeding the threshold as specified in Fifteenth Schedule”.
Amendments to Clause 8 also impact pension and annuity taxation. For sub-clause (47), paragraph (A), a new proviso is added to Division I, clause (1), stating “Provided further that where an individual is deriving income under the head “income from other source” on account of any annuity or pension, such individual shall be charged to tax on his annuity or pension income received at the rate provided in proviso to clause (2) of this Division”. The table for tax rates on pension received by an individual from a former employer is also substituted, introducing a 0% rate for amounts not exceeding rupees ten million and a 5% rate on the amount in excess of rupees ten million.
The proposed Fifteenth Schedule’s heading is set to change from “Value Fixation for Specified Economic Transactions by Ineligible Persons” to “Threshold for economic transactions,” and S. No. 4 and entries relating thereto in columns (2), (3), (4) and (5) shall be omitted and S. No. 5 shall be renumbered as S. No. 4.
Finally, Clause 10 includes amendments related to digital presence. The word “sufficient” is replaced with “significant” in section 3, sub-section (3). In sub-section (5), “permanent establishment” is replaced with “branch office of foreign vendor”. Section 4 is substituted to define “Significant digital presence in Pakistan” for foreign vendors, setting a threshold where the “aggregate amount exceeds one million rupees in a financial year along with one of the following additional factors (a) existence of a user base and the associated data input; (b) billing or collection in local currency or with a local form of payment; (c) responsibility for the final delivery of goods and services to Pakistani consumers; (d) responsibility for the provision by the foreign vendors of other support services (aftersales services, repairs and maintenance); and (e) continued marketing and sales promotion activities, online or not, to attract customers”. Section 5, in sub-section (4), will see the omission of its proviso. Section 6, in sub-section (2), will omit the words “and payment intermediary”. Revisions to section 7 detail personal liability for payment intermediaries and foreign vendors who fail to collect or deposit tax, with a default surcharge of “@ of KIBOR + 3% per annum for the days of default”.
A new section 15 grants “The Federal Government may, by notification in the official Gazette, subject to such conditions and restrictions as may be specified therein, exempt any country, any class of goods or services and class of persons from the chargeability under this Act, as deemed appropriate”.
These proposed amendments, moved by the Minister for Finance and Revenue, indicate a comprehensive effort to update and streamline Pakistan’s financial legislation.
