Final Tax Regime (FTR) – Part III

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Final Tax Regime (FTR) – Part III

Final Tax Regime - Part III
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Final Tax Definition

The final tax regime (FTR) is the method of taxation where tax deducted is considered as a full and final discharge of the tax liability.

Income from the final tax regime is not reduced by any deductions or allowances nor any tax credit is given or losses are adjusted.

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Final Tax Regime Part I

Final Tax Regime Part II

Small and Medium Size Enterprise (SME)– Section 2(59A), 100E and 14th schedule of the Income Tax Ordinance, 2001.

SME Definition

A Small and Medium Size Enterprise (SME) means a person who is engaged in manufacturing (production or manufacturing of goods) and has a turnover of not more than 250 million.

Comparison of tax rates for SMEs for a normal and final tax

SMEs have the option to go for a final tax regime (FTR) or normal tax on taxable income. The option for a FTR shall be exercised at the time of filing of return of income and cannot be changed for 3 tax years.  


Final Tax table of SME

Category of SME Turnover Normal Tax Final Tax
Category – 1 Annual business turnover of up to – 100 million 7.5% of taxable income 0.25% of gross turnover
Category – 2 Annual business turnover is more than 100 million but up to 250 million 15% of taxable income 0.5% of gross turnover

Minimum tax u/s 113 on turnover is not applicable to SMEs.

Special Provisions related to builders and developers – Section 100D, 11th Schedule

Section 100D and tax rates mentioned in the 11th schedule are applicable for a builder or land developer who opts to tax his income under the FTR.

For the tax year 2020 onwards, tax under the FTR shall be calculated on a project-by-project basis on the income from the sale of buildings or sale of plots from;

  • A new project to be completed by Sept 30, 2023;
  • An incomplete existing project is to be completed by Sept 30, 2023.

No deduction for expenditure, set off of any loss, or tax credit is allowed except for advance tax paid at the time of purchase of an immovable property.

Minimum tax provisions are not allowed.

Refund of other withholding tax not allowed.

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Certification for completion of the project shall be carried out as follows;

For Builders

The grey structure has been completed till Sept 30, 2023, as approved by the map-approving authority of NESPAK.

For Developers

  • Landscaping has been completed till Sept 30, 2023, as certified by the relevant authority;
  • CA firm with satisfactory QCR rating shall certify booking at least 50% of the plots and at least 40% of sale proceeds have been received by Sept 30, 2023; and
  • 50% or more of the land has been laid up to sub-grade level duly certified by the relevant authority.

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Final Tax Rates on Builders and Developers u/s 100D shall be applicable as per the below table:

Area in Square FeetTax onRate per Square FeetLocation
Any SizeCommercial BuildersRs.250Karachi, Lahore, Islamabad
Up to 3,000Residential BuildersRs.80
3,000 and aboveRs.125
Any SizeDevelopersRs.150
Any SizeDevelopment of industrial areaRs.20
Any SizeCommercial BuildersRs.230Hyderabad, Sukkur, Sahiwal, Peshawar, Mardan, Gujranwala, Faisalabad, , Abbottabad, Quetta, Multan, Rawalpindi
Up to 3,000Residential BuildersRs.65
3,000 and aboveRs.110
Any SizeDevelopersRs.130
Any SizeDevelopment of industrial areaRs.20
Any SizeCommercial BuildersRs.210Other Urban Areas
Up to 3,000Residential BuildersRs.50
3,000 and aboveRs.100
Any SizeDevelopersRs.100
Any SizeDevelopment of industrial areaRs.10

FBR Website

Remaining FTR Parts

Final Tax Regime Part I

Final Tax Regime Part II

Also read

Capital Gain – Deemed Income on Immovable Property

Income from Property

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Ali Murtaza

1 Comment

  • Inayat Saleh
    Reply November 2, 2023 at 21:14

    Good article 👍

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