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FBR announces advance tax exemption

Staff Report

ISLAMABAD: Federal Board of Revenue (FBR) on Monday announced that only those export-oriented units would be falling within the definition of manufacturer-cum-exporter whose exports for the preceding tax year constitute 80 percent or more of the goods manufactured by him. Advance tax would not be withheld from the electricity bills of the manufacturer-cum-exporter falling within this definition whose bills exceeds Rs 20,000 per month.

In this regard the FBR authorities have issued Income Tax Circular No. 10 of 2008 for giving the final definition of manufacturer-cum-exporter for advance tax collection purposes, under Income Tax Ordinance, 2001. The final definition of manufacturer-cum-exporter would exclude those export-oriented units from this category whose exports for the preceding tax year do not constitute 80 percent or more of the goods manufactured by him. Subsequently, they would not be enjoying the benefits available to manufacturer-cum-exporter whose exports for the preceding tax year constitute 80 percent or more of the goods manufactured by him.

The Circular No. 10 of 2008 states that vide the Finance Act, 2008, a new clause (66) of Part IV of the Second Schedule has been inserted in the Income Tax Ordinance, 2001, which provides exemption from withholding tax to ‘manufacturer-cum-exporter’ from the provisions of section 235 of the Income Tax Ordinance, 2001, where the electricity bill exceeds Rs 20,000 per month. The Board has received queries regarding the term ‘manufacturer-cum-exporter’.

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