The amended Finance Bill 2024 has introduced a significant change impacting exporters of goods, both direct and indirect. According to the details issued by Tola & Tola / Tola Associates, the amendment proposes an advance tax of 1 percent on the realization of foreign exchange proceeds for certain payments.
The specific amendments to the Finance Bill 2024 are as follows:
- Section 6C Addition: The new subsection 6C has been added to the ordinance, which mandates the deduction or collection of advance income tax at the rate of 1 percent of foreign exchange proceeds. This tax applies to various scenarios:
- Realization of foreign exchange proceeds
- Realization of proceeds on account of sale of goods
- Export of goods
- Making payment to an indirect exporter
- Clearing of goods exported
- Affected Subsections: The persons specified in sub-sections (1), (3), (3A), (3B), and (3C) of section 154 of the ordinance are required to comply with this new tax obligation.
Read More: Customs Intelligence Detects 8 Ghost Exporting Units
The core impact of this amendment is that exporters, whether they are directly exporting goods or involved in indirect exporting activities, will now be subject to an additional 1 percent advance tax on the realization of foreign exchange proceeds. This is in addition to any other tax collectible or deductible under section 154 of the ordinance.
The new tax measure aims to increase tax revenues from foreign exchange proceeds related to exports, potentially affecting the cash flows and financial planning of exporters who must now account for this additional tax burden.
