Tenth Schedule Explains the rules for Tax Rates for persons not appearing on ATL
Rules for Persons Not Appearing in the Active Taxpayers’ List
The Process for Withholding Agents:
Here’s a breakdown of the steps a withholding agent should take when dealing with someone not listed as an active taxpayer:
Exemption Assessment: The withholding agent first needs to determine if the individual, despite not being on the active list, qualifies for exemption from filing a tax return under specific sections (114 or 1) of the Income Tax Ordinance.
Notification to Commissioner (if applicable):
- If the withholding agent believes the person is exempt, they must electronically notify the Commissioner (tax authority) with details about the individual and the transaction.
- This notification includes the individual’s name, ID (CNIC or NTN), address, transaction details (nature and amount), and the reason for believing they are exempt.
Commissioner’s Response: The Commissioner has 30 days to respond to the notification:
- Acceptance: If the Commissioner agrees with the withholding agent’s assessment of exemption, no further action is required.
- Tax Deduction Order: If the Commissioner believes the individual should file a return, they can order the withholding agent to collect tax at the source.
- No Response: If no response is received within 30 days, the Commissioner’s silence is considered acceptance of the withholding agent’s assessment. This means no tax needs to be collected.
This table summarizes the rate of tax deduction or collection applicable to individuals not included in the Active Taxpayers’ List (ATL).
| Provision | Description | Rate for Non-ATL Individuals |
|---|---|---|
| Where tax is to be collected or deducted | Increased by 100% of the standard rate | |
| Section 231B | Tax collected on motor vehicle | Increased by 200% of the rate specified in the First Schedule |
| Section 236K | Tax collected on sale of immovable property | |
| Fair Market Value <= Rs. 50 million | 12% | |
| Fair Market Value > Rs. 50 million but <= Rs. 100 million | 16% | |
| Fair Market Value > Rs. 100 million | 20% | |
| Other Sections | Increased rates apply, see below table |
Additional Tax Rates for Specific Transactions (Non-ATL Individuals):
| Section | Description | Rate |
|---|---|---|
| 151 | Yield or profit on debt | 35% |
| 236C | Sale or transfer of immovable property | 10% |
| 236G | Sale to distributors, dealers, or wholesalers (excluding fertilizer) | 2% |
| 236H | Sale to retailers | 2.5% |
Tax Rates for Purchase of Immovable Property
This table outlines the tax rates applicable to the fair market value of immovable property under Section 236K of the Income Tax Ordinance, 2001 (ITO 2001):
| S. No. | Fair Market Value of Immovable Property | Tax Rate |
|---|---|---|
| 1 | Up to Rs. 50 million | 6% |
| 2 | Over Rs. 50 million but not exceeding Rs. 100 million | 7% |
| 3 | Over Rs. 100 million | 8% |
- This rule does not apply to taxpayers who have filed income tax returns by the due date for the past three (3) consecutive tax years preceding the year in question.
