Application: These rules shall apply to small and medium enterprises as defined in clause
(59A) of section 2 of the Ordinance. Section 2 clause (59A) Read with Section 153(7)
“Small and Medium Enterprise” means a person who is engaged in manufacturing and his business turnover in a
tax year does not exceed two hundred and fifty million rupees
Registration: Small and medium enterprises are required to register in FBR on its IRIS
portal under the Tax Laws (Amendment) Ordinance, 2021.
Categories and Rates: There shall be two categories of small and medium enterprises for the
purposes of taxation under section 100E as follows:
S. No
Category
Turnover
Rate of Tax
1
Category I
Up to Rs. 100 million
7.5% of Taxable Income
2
Category II
Exceeding Rs. 100 million but not exceeding Rs. 250 million
15% of Taxable Income
Option for Final Tax Regime: (1) The small and medium enterprises may opt for taxation
under final tax regime at rates as given in the table below:
(a) Option of final tax regime shall be exercised at the time of filing of first return. Once option is
exercised, the same shall be irrevocable for three tax years.
(b) The provisions of sections 113 and 113C shall not apply to SMEs who opt for taxation under Final Tax
Regime.
Audit: (1) SMEs who opt for taxation under normal law under rule 3 may be selected for
audit under section 177 of the Ordinance. However, SMEs opting for taxation under the Ordinance shall be
immune from selection for tax audits other than risk-based audits.
Procedure for Filing: SMEs shall file a return of income along with a wealth statement and
financial statements as prescribed under section 114 of the Ordinance.
Failure to File Return: (a) The taxpayer shall be liable to a penalty under section
182 if the return is not filed by the due date.
(b) The default period in respect of filing shall be subject to tax or rates prescribed in the Finance Act.
Exclusion from Minimum Tax on Turnover: The provisions of section 113 of the Ordinance
shall not apply to SMEs.
Tax Year Selection: SMEs may select tax years and the rules under section 74 of the
Ordinance shall apply to SMEs accordingly.
Application of Ordinance to SMEs: The other provisions of the Ordinance shall apply
mutatis mutandis to the SMEs.