This blog is written by Mr. Habib Ullah Khan, Associate Taxation Advisory Services. Please read this blog and provide your valued comments.

Exemptions from Income Tax under SRO 586(I)/91

Central Board of Revenue has given notification related to the exemption from Income Tax on certain services as well as on certain supplies. According to Statutory Regulatory Order no. 586(I)/91 dated 30th June 1991, certain companies and industries are exempt from the withholding of Income Tax. According to the Income Tax Ordinance, 1979, the Central Board of Revenue is pleased to specify the following to be the recipients, or the classes of recipients, to whom the said exemptions are applicable, namely:-

  • a Provincial Government;
  • a local authority;
  • persons who are residents of the Tribal Areas or Azad Kashmir and execute contracts in Tribal Areas, or as the case may be, Azad Kashmir only and produce a certificate to this effect from the Political Agent concerned or the district authority, as the case may be, or in the case of Azad Kashmir, from the Income Tax Officer concerned;
  • persons who produce a certificate from the Commissioner of Income Tax to the effect that their income during the income year is exempt from tax under the Second Schedule to the Income Tax Ordinance, 1979;
  • persons receiving payments from a company exclusively for the supply of agricultural produce which has not been subjected to any process other than that which is ordinarily performed to render such produce fit to be taken to market;
  • companies receiving payments for the supply of electricity and gas;
  • companies receiving payments for the supply of crude oil;
  • Attock Refinery Limited, National Refinery Limited and Pakistan Refinery Limited, receiving payments for the supply of their products;
  • Pakistan State Oil Company Limited, Pakistan Burma Shall Limited, and Caltex Oil (Pakistan) Limited, receiving payments for the supply of petroleum products;
  • Hotels and restaurants receiving payments in cash for providing accommodation or food or both as the case may be;
  • shipping companies and air carries receiving payments for the supply of passenger tickets and for the cargo charges of goods transported;
  • persons receiving payments, for the supply of goods or execution of a contract, not exceeding rupees one thousand for a single transaction and the total of such transactions does not exceed rupees ten thousand in a financial year:

Provided that the total value of payments, on accounts of the aforesaid transactions, exceeds rupees ten thousand during a financial year, the payer shall deduct tax from the payments including the tax on payments of rupees one thousand or less made earlier without deduction of tax during the same financial year. The above notification is applicable from the first day of July, 1991, till now with certain amendments. It was notified by a member of Central Board of Revenue.

  • Hotels and restaurants receiving payments in cash for providing accommodation or food or both as the case may be;
  • shipping companies and air carries receiving payments for the supply of passenger tickets and for the cargo charges of goods transported;
  • persons receiving payments, for the supply of goods or execution of a contract, not exceeding rupees one thousand for a single transaction and the total of such transactions does not exceed rupees ten thousand in a financial year:

Provided that where the total value of payments, on accounts of the aforesaid transactions, exceeds rupees ten thousand during a financial year, the payer shall deduct tax from the payments including the tax on payments of rupees one thousand or less made earlier without deduction of tax during the same financial year.

Habib Ullah Khan