Section 100E: Special provisions relating to small and medium enterprises

Plain-Language Summary

A general explanation to aid understanding. The official statutory text appears below.

This section defines the following terms used in The Income Tax Ordinance, 2001: • declarant — a person filing a statement under sub-section (1) • holder of public office — a person as defined in the Voluntary Declaration of Domestic Assets Act, 2018 • industrial undertaking — a company being a new industrial undertaking setup for the purpose of this section and is not established by the splitting up or reconstruction or reconstitution of an undertaking already in existence or by transfer of machinery or plant from an existing industrial undertaking established in Pakistan • investment — investment in equity and does not include borrowed funds and investment in land; and This is the official statutory text, shown as written — it is not a paraphrase or a legal opinion. Consult a verified lawyer to see how it applies to your specific situation.

2[100E. Special provisions relating to small and medium enterprises.— (1) For tax year 2021 and onwards, the tax payable by a small and medium enterprise as defined in clause (59A) of section 2 shall be computed and paid in accordance with rules made under the Fourteenth Schedule. (2) The Board may prescribe a simplified return for a small and medium enterprise.] 3[ ] 1 “30th The expression day of September, 2022” ” substituted by the Finance Act, 2021. Earlier the substitution was made through Income Tax (Amendment) Ordinance, 2021. (5) Where a declarant has paid tax under this section in respect of funds declared under sub- section (I), the declarant shall be entitled to incorporate the same in his wealth statement, financial statements or books of accounts, as the case may be. (6) For the purposes of this section, eligible person means all persons, except– (a) holders of' public office, their spouses and dependent children; (b) a public company as defined in clause (47) of section 2 of this Ordinance; (c) a person who has filed a declaration under the Voluntary Declaration of Domestic Assets Act, 2018, the Foreign Assets (Declaration and Repatriation) Act, 2018, or the Assets Declaration Act, 2019; (d) a person that has been declared a bank loan defaulter by a bank or a financial institution within the last three years; or (e) a director of a company who has been declared a bank loan defaulter by a bank or a financial institution within the last three years. (7) The provisions of this section shall not apply to — (a) any proceeds of crime, corruption, money laundering and terror financing; (b) any amount which is subject of any departmental or court proceedings; (c) the investments made in following sectors, namely:— (i) arms and ammunitions; (ii) explosives; (i) sugar; (ii) cigarettes; (iii) aerated beverages; (iv) flour mills; (v) vegetable ghee; and (vi) cooking oil manufacturing excluding extraction units. (8) Notwithstanding the provisions of any other law for the time being in force including sub- section (3) of section 216 of this Ordinance excluding clauses (a) and (g) of sub-section (3) thereof, the National Accountability Ordinance, 1999 (XVIII of 1999), the Federal Investigation Agency Act, 1974 (VIII of 1975) and the Right of Access to Information Act, 2017 (XXXI V of 2017), particulars of any person making a statement under this section or any information received in any statement made under this section shall be confidential. (9) The statement filed under sub-section (1) shall not be valid, if— (a) the newly formed industrial undertaking company fails to prove commercial production in terms of sub-section (3); (b) there is change in ownership of industrial undertaking company prior to the 30th June, 2026; or (c) the newly formed industrial undertaking company disposes of any of its assets prior to the 30th June, 2026. (10) Notwithstanding anything contained in this section, where the provisions of sub-section (7) or (9) apply, or where the statement under sub-section (I) has been made by misrepresentation or suppression of facts, such statement shall be void as if it had never been made and all the provisions of this Ordinance shall apply accordingly: Provided that the Commissioner shall not take any action under this section without providing the declarant an opportunity of being heard. (11) The statement filed under this section shall be made in the form and manner as specified by the Board through a notification in the official Gazette. (12) The provisions of this section shall apply, mutatis mutandis, to an existing company being an industrial undertaking, for investment in expansion and modernization from amount of funds (which have not been declared in any of the returns of income upto tax year 2021 filed by the 31st December, 2021): Provided that such company opens a dedicated bank account to deposit the said funds before the filing of the statement and such funds shall only be used for expansion and modernization by way of purchase or import of plant and machinery including IT hardware through letter of credit, or software and IT services or for construction of building and structure for the manufacturing premises of the existing industrial undertaking: Provided further that the expansion and modernization shall be completed by the 30th June, 2024, and a certificate to that effect, duly issued by the Engineering Development Board, is submitted to the Commissioner along with the return filed for tax year 2024. (13) In this section, unless there is anything repugnant in the subject or context,— (a) "declarant" means a person filing a statement under sub-section (1); (b) "holder of public office" means a person as defined in the Voluntary Declaration of Domestic Assets Act, 2018; (c) "industrial undertaking" means a company being a new industrial undertaking setup for the purpose of this section and is not established by the splitting up or reconstruction or reconstitution of an undertaking already in existence or by transfer of machinery or plant from an existing industrial undertaking established in Pakistan; (d) "investment" means investment in equity and does not include borrowed funds and investment in land; and (e) "modernization" includes acquisition or upgradation of IT hardware, software and IT services.";

Effective date: 2001-09-13

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