Updated: Thursday May 26, 2016/AlKhamis
Sha'ban 19, 1437/Bruhaspathivara
Jyaistha 05, 1938, at 07:09:04 PM
The Income Tax Ordinance, 1979
ORDINANCE XXXI OF 1979
[30th June, 1979]
An Ordinance to consolidate and amend the
law relating to income‑tax and super tax
WHEREAS it is expedient to
consolidate and amend the law relating to Income tax and Super tax for the
purpose hereinafter appearing;
AND WHEREAS the President
is satisfied that circumstances exist which render it necessary to take
immediate action;
NOW, THEREFORE, in
pursuance of the Proclamation of the fifth day of July, 1977 read with the Laws
(Continuance in Force) Order, 1977 (C. M. L. A. Order No. 1 of 1977), and in
exercise of all powers enabling him in that behalf, the President is pleased to
make and promulgate the following Ordinance:---
1. Short title, extent and
commencement.- (1)
This Ordinance may be called the Income‑tax Ordinance, 1979.
(2) It extends to the whole
of
(3) It shall come into
force on the first day of July, 1979.
2. Definitions. In this Ordinance, unless the
context otherwise requires,‑
(1) “agricultural income”
means,---
(a) any rent or revenue derived from land which is situated in
(b) any income derived from such land by,---
(i) agriculture; or
(ii) the performance by a cultivator .or receiver of rent‑in‑kind
of any process ordinarily employed by a cultivator or receiver of rent‑kind
to render the produce raised or received by him fit to be taken to market; or
(iii) the sale by a cultivator or receiver of rent‑in‑kind
of the produce raised or received by him, in respect of which no process has
been performed other than a process of the nature described in paragraph (ii);
(c) any income derived from any building owned and occupied by
the receiver of the rent or revenue of any such land, or occupied by the
cultivator, or the receiver of rent‑in‑kind, of any land with
respect to which, or the produce of which, any operation mentioned in
paragraphs (it) and (f) of sub‑clause (b) is carried on:---
Provided that the building
is on, or in the immediate vicinity of, the land, and is a building which the
receiver of the rent or revenue or the cultivator, or the receiver of the rent‑in‑kind
by reason of his connection with the land, requires as a dwelling‑house,
or as a store‑house, or other out‑building;
(2) “Appellate 1[Additional
Commissioner]” means a person appointed to be an Appellate Assistant
Commissioner of Income‑tax under section 4;
(3) “Appellate Tribunal”
means the Appellate Tribunal constituted under section 133;
(4) “approved gratuity
fund” means a gratuity fund which has been, and continues to be, approved by
the Commissioner in accordance with the rules contained in Part III of the
Sixth Schedule;
(5) “approved
superannuation fund” means a superannuation fund, or any part of a
superannuation fund, which has been, and continues to be, approved by the
Commissioner in accordance with the rules contained in Part II of the Sixth Schedule;
(6) “assessee” means a
person by whom any tax or any other sutra of money is payable under this
Ordinance, and includes,---
(a) every person in respect of whom any proceeding under this
Ordinance has been taken for the assessment of his income or the income of any
other person in respect of which he is assessable or of the amount of refund
due to him or to such other person;
(b) every person who is required to file a return of total
income under section 55, section 72 or section 81; and
(c) every person who is deemed to be an assessee, or an assessee
in default, under any provision of this Ordinance;
(7) “assessment” includes
re‑assessment and additional assessment and the cognate expressions shall
be construed accordingly;
(8) “assessment year” means
the period of twelve months beginning on the first day of July next following
the income year and includes any such period which is deemed, under any
provision of this Ordinance, to be the assessment year in respect of any income
or any income year;
(9) “average rate of tax”
means the rate arrived at by dividing the amount of tax calculated on the total
income by such income;
1Subs. by the Finance Act, 1993 (10 of
1993), s. 5, for “Assistant Commissioner”.
(10) “banking company” has
the same meaning as in the Banking Companies Ordinance, 1962 (LVII of 1962),
and includes any body corporate formed by, or under, any law for the time being
in force which transacts the business of banking in Pakistan;
(11) “business” includes
any trade, commerce or manufacture, or any adventure or concern in the nature
of trade, commerce or manufacture;
(12) “capital asset” means
property of any kind held by an assessee, whether or not connected with his
business or profession, but does not include,---
(i) any stock‑in‑trade (not being stocks and
shares), consumable stores or raw materials held for the purposes of his
business or profession;
(ii) personal effects, that is to say, movable property
(including wearing apparel, jewellery and furniture) held for personal use by
the assessee or any member of his family dependent on him; and
(iii) any land from which the income derived by
the assessee is agricultural income;
(13) “Central Board of
Revenue” means the Central Board of Revenue constituted under the Central Board
of Revenue Act, 1924 (IV of 1924);
(14) “charitable purpose”
includes relief of the poor, education, medical relief and the advancement of
any other object of general public utility;
(15) “Commissioner” means a
person appointed to be a Commissioner of Income‑tax under section 4;
1[(16) “company” means,---
(a) company as defined in the Companies Act, 1913 (VII of 1913);
or
(b) a body corporate formed by or under any law for the time
being in force; or
2[(bb) a trust formed by or under any law for the time being
in force; or]
(c) a body corporate incorporated by or under the law of a
country outside
3[(cc) a modraba as defined in the Modaraba Companies and
Modarabas (Floatation and Control) Ordinance, 1980 (XXXI of 1980); and]
(d) the Government of a Province;
(e) a foreign association, whether incorporated or not, which
the Central Board of Revenue may, by general or special order, declare to be
company for the purposes of this Ordinance for such Assessment year or years
(whether commencing before, on or after the first day of July, 1979) as may be
specified in the said order;]
(17) “co‑operative
society” means a co‑operative society registered under the Co‑operative
Societies Act, 1912 (XI of 1912) or under any other law for the time being in
force in
4[(17A) “Deputy Commissioner” means a
person appointed to be a Deputy Commissioner of Income Tax under section 4 and
includes an Assistant Commissioner of Income Tax, an Income Tax Officer, a
Special Officer and a Tax Recovery Officer;]
1Subs. by the Finance Ordinance, 1980 (25
of 1980), s. 6, for CI. (16).
2Ins. by the Finance Ordinance, 1983 (14
of 1983), s. 5.
3Ins. by the Finance Act, 1992 (7 of
1992), s. 7.
4Ins. by the Finance Act, 1993 (10
of 1993), s. 5.
(18) “director” and
“manager”, in relation to a company, have the meaning assigned to them in the
Companies Act, 1913 (VII of 1913);
1[(19) “Director-General of Intelligence
and Investigation” means a person appointed to be a Director-General of
Intelligence and Investigation under Section; 4 and includes a person appointed
to be a Director of Intelligence and Investigation, an Additional Director of
Intelligence and Investigation, a Deputy Director of Intelligence and
Investigation, and Assistant Director of Intelligence and Investigation or any
other officer, howsoever designated, appointed by the Central Board of Revenue
for the purposes of any or all functions performed by the Director-General of
Intelligence and Investigation and any other function that may be assigned to
him;]
2[(I9A) “Director-General of Training and
Research” means a person appointed to be a Director-General of Training and
Research under section 4 and includes a person appointed to be a Director of
Training and Research, an Additional Director of Training and Research, a
Deputy Director of Training and Research, an Assistant Director of Training
arid Research or any other officer, howsoever designated, appointed by the Central
Board of Revenue for the purposes of any or all functions performed by the
Director-General of Training and Research and any other function that may be
assigned to him;]
(20) “dividend” included,---
(a) any distribution by a company of accumulated Profits to its
shareholders,3[or
modaraba certificate holders] whether apitalized or not, if such distribution
entails the release by the company to its shareholders 3[or
modaraba certificate holders] of all or any part of the assets of the company;
(b) any distribution by a company, to its shareholders 3[or
modaraba certificate holders] of debentures, debenture-stock or deposit
certificates in any form, whether with or without interest, and any
distribution to its
1Subs. by the Finance Act, 1995 (I of
1995), s. 9, for cl. (19), which was previously amended various enactments.
2New cl. (19A) ins. ibid.
3Ins. by the Finance Act, 1992 (7 of
1992), s. 7.
preference shareholders 1[or
modaraba certificate holders] of shares by way of bonus, to the extent to which
the company , possesses accumulated profits whether capitalised or not;
(c) any distribution made to the
shareholders 1[or
modaraba certificate holders] of a company on its liquidation, to the extent to
which the distribution is attributable to the accumulated profits of the
company immediately before its liquidation, whether capitalised or not;
(d) any distribution by a company to its
shareholders 1[or
modaraba certificate holders] on the reduction of its capital to the extent to
which the company possesses accumulated profits, whether such accumulated
profits have been capitalised or not; and
(e) any payment by a private company of
any sum (whether as representing a part of the assets of the company or
otherwise) by way of advance or loan to a shareholder or any payment by any
such company on behalf, or for the individual benefit, of any such shareholder-
to the extent to which the company, in either case, possesses-accumulated
profits;
but does not include
(i) a distribution made in accordance with sub-clause (c) or
sub-clause (d) in respect of any share for full cash consideration or
redemption of debentures or debenture stock, where the holder of the share or
debenture is not entitled in the: event of liquidation to participate in the
surplus assets;
(ii) any advance or loan made to a shareholder by a
company in the ordinary course of its business, where the lending of money is a
substantial part of the business of the company;
(iii) any dividend paid’ by a company which is set off by
the company against the whole or any part of any sum previously paid by it and
treated as a dividend within the meaning of sub-clause (c), to the extent to
which it is so set off.
Explanation.___The
expression “accumulated profits”,---
(a) wherever it occurs in this clause, includes any reserve made
up wholly or partly of any allowance, deduction or exemption admissible under
this Ordinance or the repealed Act, but does not include capital gains arising
before the first day of April, 1946 or after the thirty‑first day of
March, 1949 and before the eighth day of June, 1963;
(b) as used in sub‑clauses (a), (b), (d) and (e), includes
all profits of the company up to the date of such distribution or such payment,
as the case may be; and
(c) as used in sub‑clause (e), includes all profits of the
company up to the date of its liquidation.
1Ins. by the Finance Act, 1992 (7 of
1992), s. 7.
(21) “domestic company”
means a Pakistani company and includes any company which, in respect of its
income liable to tax under this Ordinance had made the prescribed arrangements
for the declaration and payment, within Pakistan, of the dividends (including
dividends on preference shares) payable out of such income and for the
deduction of tax from such dividends;
1[(21A) “finance society” includes a
co-operative society which accepts money on deposit or otherwise for the
purpose of advancing loans or making investments in the ordinary course of
business];
(22) “firm”, “partner”, and
“partnership” have the meanings respectively assigned to them in the
Partnership Act, 1932 (IX of 1932) sand the expression “partner” Includes any
person, who being a minor, has been admitted to the benefits of partnership;
(23) “foreign company”
means a company which is not a domestic company;
(24) “income includes”,---
(a) any income, profits or gains, from whatever source derived,
chargeable to tax under any provision of this Ordinance under any head
specified in section 15;
(b) any loss of such income, profits or gains; and
(c) any sum deemed to be income, or income accruing or arising
or received in
but does not include, in
the case of a share‑holder of a domestic company, the amount representing
the face value of any bonus shares or the amount of any bonus declared, issued
or paid by the company to its shareholders with a view to increasing its paid‑up
share‑capital.
1Ins. by the Finance Act, 1991 (12 of
1991), s. 5.
* * * * * * *
2[(25A) “Income Tax Panel” means a panel
comprising an Inspecting 3[Additional
Commissioner] as its Chairman, and one or more 4[Deputy
Commissioners];
(26) “income year”, in
relation to any assessment year (hereafter in this clause, referred to as the
said assessment year’), means—
(a) the financial year next preceding the said assessment year;
or
5* * * * * * *
(c) such period as the Central Board of Revenue may, in the case
of any person or class of persons or any source of income, specify by
notification in the official Gazette;
and includes any period
which, under any provision of this Ordinance, is deemed to be an income year,
or in respect of which a return of total income is required to be furnished or
any income is liable to be determined or assessed, or any tax is payable.
Explanation,---
(a) where, in any case,---
6* * * * * * *
7[(iii) both sub-clause (a) and sub-clause (c) apply, the
income, year as specified under clause (c) shall be deemed to be the income
year of the assessee in respect of his income from all sources; and
1CI. (25) omitted by the Finance Act,
1993 (10 of 1993), s. 5.
2Ins. by the Finance Act, 1988 (6 of
1988), s. 6.
3Subs. by the Finance Act, 1993 (10 of
1993), s. 5, for “Assistant Commissioner”.
4Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officers”.
5Sub-clause (b) omitted by the Finance
Act, 1995 (1 of 1995), s. 9, which was previously amended by various
enactments.
6Sub-paragraphs (i) and (ii) omitted
ibid., s. 9, which was previously amended by Ord. 25 of 1980, s. 6.
7Sub-clauses (iii) and (iv) ins. by the
Finance Ordinance, 1980 (25 of 1980), s. 6.
(iv) the sources of income of an assessee include two or
more sources in respect of which income years have been specified under clause
(c), the income year of the said income years ending last shall be deemed to be
the income year of the assessee in respect of his income from all sources
except the sources to which clause (c) applies; and]
(b) as used in sub‑clause (c), “period” means any period
of twelve months, or any period of more or less than twelve months, and
includes any such period as may commence from, or end on, any date, including a
date falling before the commencement, or after the end, as the case may be, of
the financial year next preceding the said assessment year;
(27) “Inspecting 1[Additional
Commissioner]” means a person appointed to be an Inspecting Assistant
Commissioner of Income‑tax under section 4;
(28) “Inspector of Income‑tax”
means a person appointed to be an Inspector of Income‑tax under section
4;
(29) “interest” means
interest payable in any manner in respect of any money borrowed or debt
incurred (including a deposit, claim or other similar right or obligation) and
includes any service fee or other charge in respect of the money borrowed or
debt incurred or in respect of any credit facility which has not been utilised;
2[(29A) “modaraba”, “modaraba company” and
“Modaraba Certificate” have the meaning respectively assigned to them in the
Modaraba Companies and Modarabas (Floatation and Control) Ordinance, 1980 (XXXI of 1980);
(30) “non‑resident”
means a person who is not resident;
(31) “Pakistani company”
means a company formed and registered under the Companies Act, 1913, or a body
corporate; formed by, or under any law for the time being in force in Pakistan,
having in either case its registered office in Pakistan, and includes 3[a
trust formed by or under any law for the time being in force and] the
government of a Province of Pakistan;
1Subs. by the Finance Act, 1993 (10 of
1993), s. 5, for “Assistant Commissioner”.
2Clause 29A ins. by the Finance
Ordinance, 1981 (24 of 1981), s. 5.
3Ins. by the Finance Ordinance, 1983 (14
of 1983), s. 5.
(32) “person” includes an
individual, a firm, an association of persons, a Hindu undivided family, a
company, a local authority and every other artificial juridical person;
(33) “prescribed” means
prescribed by rules made under this Ordinance;
(34) “principal officer”,
used with reference to a local authority, of a company or any association of
persons, includes,---
(a) managing director, secretary, treasurer, manager, agent or
accountant, by whatever designation known, of the authority, company or
association; and
(b) any person connected with the management or administration
of the local authority, company, or association upon whom the 1[Deputy
Commissioner] has served a notice of his intention of treating him as the
principal officer thereof;
(35) “profession” includes
vocation;
(36) “public servant” has
the same meaning as in the Pakistan Penal Code (XLV of 1860), and includes any income‑tax authority
and any person employed in the execution of this Ordinance;
(37) “recognised provident
fund” means h provident fund which has been, and continues to be, recognised by
the Commissioner in accordance with the rules contained in Part I of the Sixth
Schedule;
2[(37A) “Regional Commissioner” means a
person appointed to be a Regional Commissioner of Income Tax under section 4;]
(38) “registered firm”
means a firm which has been, and continues to be, registered under section 68;
(39) “repealed Act” means
the Income‑tax Act, 1922 (XI of 19,22);
(40) “resident”, in relation
to any income year, means,---
(a) an individual, who,---
(i) is in Pakistan in that year for a period of, or for periods
amounting in all to, one hundred and eighty‑two days or more; or
1Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officers”.
2Ins. by the Finance Ordinance, 1980 (25
of 1980), s. 6.
(ii) is in Pakistan for a period of, or periods amounting
in all to, 1[ninety]
days or more in that year and who, within the four years preceding that year,
has been in Pakistan for a period of, or periods amounting in all to, three
hundred and sixty‑five days or more; or
(b) a Hindu undivided family, firm, or other association of
persons, the control and management of whose affairs is situated wholly or
partly in Pakistan in that year; or
(c) a Pakistani company or any other company, the control and
management of whose affairs is situated wholly in
(41) “return of total
income” means the return of total income in the prescribed form, setting forth
such particulars and accompanied by such statements, certificates and other
documents, and verified in such manner, as may be prescribed;
(42) “share‑holder”
includes a preference share‑holder;
(43) “tax” means income‑tax,
super‑tax, surcharge and additional tax chargeable or payable under this
Ordinance, and includes any penalty, fee or other charge or any sum or amount
leviable or payable under this Ordinance;
(44) “total income” means
the total amount of income referred to in section 11 computed in the manner
laid down in this Ordinance; and includes any income which, under any provision
of this Ordinance, is to be included in the total income of an assessee;
(45) “unregistered firm”
means a firm which is not a registered firm; and
(46) “valuer” means a
person appointed to be a valuer under section 4.
1Subs. by the Finance Ordinance, 1981 (24
of 1981), s. 5, for “sixty”.
CHAPTER II
ADMINISTRATION
3. Income tax authorities.—(1) There shall be the following classes of income tax
authorities for the purposes of this Ordinance, namely:---
(a) Central Board of Revenue;
1[(aa) Regional Commissioners of Income Tax;]
(b) 2[Director-General
of Investigation and Intelligence]
3[(bb) Director-General of Training and Research;]
(c) Commissioners of Income Tax;
(d) 4[Additional
Commissioners] of Income Tax, who may be either Appellate 4[Additional
Commissioners] of Income Tax or Inspecting 4[Additional
Commissioners] of Income Tax;
5[(dd) Income Tax Panels;]
(e) 6[Deputy
Commissioners of Income Tax]; and (0 Inspectors of Income Tax;
7[(1A) 8 *
* * commissioners of Income Tax 9* 4[Additional
Commissioners] of Income Tax 5[Income
Tax Panels], 6[Deputy
Commissioners of Income Tax] and Inspectors of Income Tax shall be subordinate
to the Regional Commissioners of Income Tax within whose jurisdiction they
perform their functions.]
(2) Inspecting 4[Additional
Commissioners] 5[Income
Tax Panels] 6[Deputy
Commissioners of Income Tax] and Inspectors of Income Tax shall be subordinate
to the commissioners within whose jurisdiction they perform their functions.
1CI. (aa) ins. by the Finance Ordinance,
1980 (25 of 1980), s. 6.
2Subs. by the Finance Act, 1995 (1 of
1995), s. 9, for certain words, which was previously amended by various enactments.
3 New cl. (bb) ins. ibid.
4Subs. by the Finance Act, 1993 (10 of
1993), s. 5, for “Assistant Commissioner”.
5 Ins. by the Finance Act, 1988 (6
of 1988), s. 6.
6Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officers”.
7 Sub-section (IA) ins. by
Ordinance, 25 of 1980, s. 6.
8 The certain words omitted by Act 1
of 1995, s. 9.
9 Omitted by the Finance Act 1986 (1
of 1986), s. 12.
(3) 1[Deputy
Commissioner of Income‑tax] and Inspectors of Income‑tax shall be
subordinate to the Inspecting2[Additional
Commissioners] within whose jurisdiction they perform their functions.
(4) Inspectors of Income‑tax
shall be subordinate to the 1[Deputy
Commissioner of Income‑tax] within whose jurisdiction they perform their
functions.
4. Appointment of income
tax authorities etc.—(1)
The Central Board of Revenue may appoint as many3[Regional
Commissioners] of Income Tax,] 4[Director-General
of Training and Research, Directors-General of Investigation and Intelligence]
Commissioners of Income Tax Appellate and Inspecting 2[Additional
Commissioners] of Income Tax, 1[Deputy
Commissioners of Income Tax] and other executive or ministerial officers and
staff as may be necessary.
5[(1A) The Regional Commissioner, or where
the Board directs, the Commissioner may appoint as many Income Tax Panels as
may be necessary.
(1B) The Central Board of
Revenue may make rules in respect of the constitution, procedure and working of
the Income Tax Panels];
(2)Subject to such orders
or directions as may be issued by the Central Board of Revenue from time to
time, any other income tax authority may appoint any income tax authority
subordinate to it and such other executive or ministerial officers and staff as
may be necessary.
(3) The Central Board of
Revenue 6[or
the Regional Commissioner of Income Tax] may appoint a sufficient number of
qualified persons to act as valuers for the purposes of this Ordinance
and 6[the
Central Board of Revenue] shall fix a scale of charges for the remuneration of
such persons.
(4) All appointments under
this Ordinance shall be subject to the rules and orders of the Federal
Government regulation the terms and conditions of service of persons in public
services and posts.
1Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officers”.
2Subs. by the Finance Act, 1993 (10 of
1993), s. 5, for “Assistant Commissioner”.
3Ins. by the Finance Ordinance, 1980 (25
of 1980), s. 6.
4Subs. by the Finance Act. 1995 (1 of
1995) s. 9, for certain words, which was previously amended by various
enactments.
5Ins. by the Finance Act, 1988 (6 of
1988), s. 6.
6Ins. by the Finance Ordinance, 1984 (28
of 1984), s. 6.
[4A. Appointment of
firms of accountants.—(1) Notwithstanding anything contained in this
Ordinance, the Central Board of Revenue may appoint a firm of Chartered
Accountants as defined under Chartered Accountants Ordinance, 1961 (Ordinance
of 1961) to conduct the audit of any person.
(2) Any persons authorized
by the firm referred to in subsection (I), while conducting an audit under
that sub-section may, for the purposes of such audit enter into any premises
belonging to or in the occupation of the person to whom the audit relates and
call for and inspect and seize books of accounts or documents in possession of
such person and wherever deemed necessary for conducting the said audit may be
authorized in writing, by the Commissioner to exercise the powers laid down
under sections 144, 145, 146 and 148 of the Ordinance.
(3) The scope of audit
under this section shall be such as the Central Board of Revenue may determine
on case to case basis.]
5. Jurisdiction of
income tax authorities.—(1) Subject to the provisions of this
Ordinance,---
(a) the 2[Regional
Commissioners and the] 3[Director-General
of Training and Research, Directors-General of Investigation and Intelligence]
shall perform such functions 4[,
in respect of such persons or classes of persons or such areas,] as may be
assigned to them by the Central Board of Revenue;
(b) the Commissioners and the Appellate 5[Additional
Commissioners] shall perform their functions in respect of such persons or
classes of persons or such areas as the Central Board of Revenue may
direct; 2[and
the Central Board of Revenue may, by general or special order in writing direct
that the powers conferred on the Appellate 5[Additional
Commissioner] by or under this Ordinance shall, in respect of appeals relating
to specified cases or classes of cases or specified persons or classes of
persons, be exercised by the Commissioners and for the purposes of any
proceedings in respect of such cases or
1Subs. by the Finance Act, 1998 (3 of
1998), s. 5, for section 4A, which was previously amended by various
enactments.
2Ins. by the Finance Ordinance, 1980 (25
of 1980), s. 6.
3Subs. by the Finance Act, 1995 (1 of
1995), s. 9, for certain words, which was previously amended by various
enactments.
4Ins. by the Finance Act, 1988 (6 of
1988), s. 6.
5Subs. by the Finance Act, 1993 (10 of
1993), s. 5, for “Assistant Commissioner”.
persons references in this Ordinance or in
any rules made thereunder to ‘“Appellate 1[Additional
Commissioner]” shall be deemed to be references to “Commissioner” 2[:]
3[Provided that the Central Board of
Revenue may, by general or special order in writing, direct that the
jurisdiction of the 4[Commissioners
exercising the powers of an Appellate 1[Additional
Commissioner and the] Appellate2[Additional
Commissioners] shall be determined by the Regional Commissioner 5*
* * 6[:]
7[Provided further that the Regional
Commissioner may transfer jurisdiction in respect of cases or persons from one
Commissioner subordinate to him to another];
(c) the Inspecting 1[Additional
Commissioners] and the 8[Deputy
Commissioners] shall perform their functions in respect of such persons or
classes of persons or such areas as the Commissioners, to whom they are subordinate,
may direct; and ,9[the
Commissioner may, with the prior approval of the Central Board of Revenue 10[or,
if the Central Board of Revenue so directs, of the Regional Commissioner,] by
general or special order in writing direct that the powers conferred on
the 8[Deputy
Commissioner] and the Inspecting 1[Additional
Commissioner] by or under this Ordinance shall, in respect of all or any
proceedings relating to specified cases or classes of cases or specified
persons or classes of persons, be exercised by the Inspecting 1[Additional
Commissioner] and the Commissioner, respectively, and, for the purposes of any
proceedings in respect of such cases or persons references in this Ordinance or
in any rules made thereunder to 8[Deputy
Commissioner] and “Inspecting 1[Additional
Commissioner] shall be deemed to be references to “Inspecting 1[Additional
Commissioner] and “Commissioner”, respectively; 11*
1Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officers”.
2Subs. by the Finance Ordinance, 1981 (24
of 1981), s. 5, for a semi-colon.
3Proviso added ibid.
4Ins. by the Finance Act. 1986 (1 of
1986), s. 12.
5The words “or the Commissioners” omitted
ibid.
6Subs. ibid., for a semi- colon.
7Proviso added ibid.
8Subs. by the Finance Act, 1993 (10 of
1993), s. 5, for “Assistant Commissioner”.
9Ins. by the Finance Ordinance, 1980 (25
of 1980), s. 6.
10The words and commas ins. by the Finance
Ordinance, 1984 (28 of 1984). s. 6.
11Omitted by the Finance Act, 1988 (6 of
1988), s.6.
[(cc) Notwithstanding anything contained in clause (c), the
Commissioner may, by general or special order in writing, direct that all or
any of the powers conferred on the 2[Deputy
Commissioner] and the Inspecting 3[Additional
Commissioner] shall, in respect of all or any proceedings relating to specified
cases or classes of cases or specified persons or classes of persons, be
exercised by the Income Tax Panel and the commissioner, respectively, and, for
the. purposes of any proceedings in respect of such cases or persons,
references in this Ordinance or in any rules made thereunder to 2[Deputy
Commissioner] and “Inspecting 3[Additional
Commissioner]” shall be deemed to be references to “Income Tax Panel” and
“Commissioner”, respectively:---
Provided that, any function
performed by the 2[Deputy
Commissioners] as members of the Income Tax Panel, of the directions of the
said Inspecting 3[Additional
Commissioner], shall be deemed to have been performed in exercise of the powers
conferred on the Income Tax Panel:---
Provided further that an
order made by the Income Tax Panel under any provision of this Ordinance shall
be made only by the said Inspecting 3[Additional
Commissioner]:---
Provided further that, if any
one member of the Income Tax Panel, other than the chairman, is absent from any
sitting of the Income Tax Panel, the proceedings of the Panel may continue,
and no act, proceedings or order of* the Panel shall be invalid or be called in
question merely on the ground of such absences and];
(d) the Inspectors of Income Tax shall perform such functions
as may be assigned to them by the income tax authority under whom they are
appointed to Work.
Explanation.—The power to confer jurisdiction under
this sub-section shall include the power to transfer jurisdiction from one
income tax authority to another.
(2) Where any directions
issued under sub-section (1) have assigned to two or more income tax
authorities the same functions or
1Ins. by the Finance Act, 1988 (6 of
1988), s. 6.
2Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officers”.
3Subs. by the Finance Act, 1993 (10 of
1993), s. 5, for “Assistant Commissioner”.
functions in respect of the same persons or classes of persons or
the same area, they shall perform their functions in accordance with such
orders as the Central board of Revenue or any other authority to whom they are
sub-ordinate, may make for the allocation of functions and the distribution of
the work to be performed.
(3) Within the area
assigned to him, the 1[Deputy
Commissioner] shall have jurisdiction,---
(a) in respect of any person carrying on business or profession,
if the place of business or profession is situated within such area, or where
the business or profession is carried on in more places than one, if the
principal place of the business or profession is situated within such area; and
(b) in respect of any other person, if he resides within the
area.
(4) Where a question arises
as to whether 1[Deputy
Commissioner] has jurisdiction to assess any person, the question shall be
determined by the Commissioner, or where the question is one relating to the
jurisdiction of different Commissioners, 2[by
the Regional Commissioner or Regional Commissioners concerned] and, if they are
not in agreement, by the Central Board of Revenue.
(5) No person shall be
entitled to call in question the jurisdiction of a 1[Deputy
Commissioner] after he has made the return of total income or, where he has not
made such return, after the time allowed by any notice served on him for making
such return has expired.
(6) Notwithstanding
anything contained in this section every 1[Deputy
Commissioner] shall have all the powers conferred by, or under, this Ordinance
on a 1[Deputy
Commissioner] in respect of any income accruing or arising or received or
deemed, under any provision of this Ordinance, to accrue or arise or be
received within the area assigned to him.
6. Exercise of
jurisdiction by a successor. Whenever, in respect of any proceedings under this Ordinance, an
income tax authority is succeeded by another, the income tax authority so
succeeding may continue any proceeding from the stage at which it was left by
his predecessor.
1Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officers”.
2Subs. by the Finance Ordinance, 1980 (25
of 1980), s. 6 for certain words.
7. Guidance to 1[Deputy
Commissioner]. In
the course of any proceedings under this Ordinance, the 1[Deputy
Commissioner] may be assisted, guided or instructed by any other income tax
authority to whom he is subordinate or any other person authorised in this
behalf by the Central Board of Revenue.
8. All officers to
follow the orders of the Central Board of Revenue. All officers and persons, employed in the
execution of this Ordinance, shall observe and follow the orders, instructions
and directions of the Central Board of Revenue:---
Provided that no such
orders instructions or directions shall be given so as to interfere with the
discretion of the Appellate 2[Additional
Commissioner] in the exercise of his appellate functions or any valuer in the
exercise of his functions under this Ordinance.
CHAPTER III
CHARGE OF TAX
9. Charge of income tax.___(1) Subject to the provisions of this
Ordinance, there shall be charged, levied and paid for each assessment year
commencing on or after the first day of July, 1979, income tax in respect of
the total income of the income year or years, as the case may be, of every
person at the rate or rates specified in the First Schedule 3[:].
3[Provided that where, by virtue of an
amendment in the First Schedule, the rate of income tax, for the purpose of
assessment in respect of any assessment year, is altered, the rate of income
tax existing prior to the said alteration shall continue to apply in respect of
any assessment year to which the said existing rate is applicable.
4[(1A) Notwithstanding anything contained
in section 37 of the Modaraba Companies and Modaraba (Floatation and Control)
Ordinance, 1980 (XXXI of 1980.), or any other law for the time being in force,
there shall be charged, levied and paid for each assessment year commencing on
or after the first day of July, 1993, income tax in respect of the total income
of a modaraba at the rate specified in the First Schedule:
Provided that the total
income of a modaraba shall not be chargeable to tax for the first three
assessment years after commencement of its business if not less than ninety per
cent of its profits in a year is distributed to the modaraba certificate
holders.].
(2) Where, by virtue of any
provision of this Ordinance, income tax is to be deducted at source or
collected or paid in advance, it shall be so deducted, collected or paid, as
the case may be, accordingly.
1Subs. by the Finance Act, 1993 (10 of
1993), s. 5, for “Assistant Commissioner”.
2Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officers”.
3 Subs. and added and shall be
deemed always to have been so added by the Finance Act, 1991 (12 of 1991), s.
7.
4 Ins. by the Finance Act, 1992 (7
of 1992), s.7.
10. Charge of super tax
and surcharge.___(1) In addition to the income tax charged
for any year, there shall be charged, levied and paid for that year in respect
of the total income, or any part thereof, of the income year or years, as the
case may be, of every person, an additional duty of income tax (in this
Ordinance referred to as ‘super‑tax’) and surcharge at the rate or rates
specified in the First Schedule 1[:]
2[Provided that where, by virtue of an
amendment in the First Schedule, the rate of super tax and surcharge, for the
purpose of assessment in respect of any assessment year, is altered, the rate
of super tax and surcharge existing prior to the said alternation shall
continue to apply in respect of any assessment year to which the said existing
rate is applicable.];
(2) Subject to the
provisions of this Ordinance, the total income of any person shall, for the
purposes of super tax and surcharge, be the total income as assessed for the
purposes of income tax, and where an assessment has become final and conclusive
for the purposes of income‑tax for any year, the assessment shall also be
final and conclusive for the purposes of super tax or surcharge, as the case
may be, for the same year.
(3) All the provisions of
this Ordinance relating to the charge, assessment, deduction at source,
collection, or payment in advance, recovery and refund of income tax shall
apply, so far as may be, to the charge, assessment, deduction at source,
collection, payment in advance, recovery and refund of super tax and surcharge,
as the case may be.
11. Scope of total
income.____(1) Subject to the provisions of this
Ordinance, the total income, in relation to any assessment year, or a person,---
(a) who is a resident, includes all income from whatever source
derived, which,---
(i) is received, or is deemed to be received, in
(ii) accrues or arises, or is deemed to accrue or arise,
to him in
(iii) accrues or arises to him outside
(b) who is a non‑resident, includes all income from
whatever source derived, which,---
(i) is received, or is deemed to be received, in
(ii) accrues or arises, or is deemed to accrue or arise,
to him in
(2) Notwithstanding
anything contained in sub-section (1), where any amount consisting of either
the whole or a part of any income has been included in the total income of a
person on the basis that it has accrued or arisen, or is deemed to have accrued
or arisen, to him in any year, it shall not be included again in his total
income on the basis that it is received, or is deemed to be received, by him in
Pakistan in any other year.
1 Subs. by the Finance Act, 1991 (12
of 1991), s. 5, for full-stop.
2 Proviso added and deemed always to
have been so added ibid.
12. Income deemed to
accrue or arise in
(2) Any income accruing or
arising, whether directly or indirectly, through or from,---
(a) any business connection in
(b) any asset, property or source of income in
(c) transfer of a capital asset situated in
shall be deemed to accrue
or arise in Pakistan:---
Provided that, in the case
of a business all the operations of which are not carried out in Pakistan, the
income of the business deemed under this sub-section to accrue or arise in
Pakistan shall be only such part of the income as is reasonably attributable to
the operations carried out in Pakistan.
(3) Any income by way of
interest payable by,---
(a) a person who is a resident, except where the interest is
payable in respect of any debt incurred, or moneys borrowed and used, for the
purposes of a business or profession carried on by such person outside Pakistan
or for the purposes of making or earning any income from any source outside
Pakistan; or
(b) a person who is a non‑resident, where the interest is
payable in respect of any debt incurred, or moneys borrowed and used, for the
purposes of a business or profession carried on by such person in Pakistan or
for the purposes of making or earning any income from any source in Pakistan,
shall be deemed to accrue
or arise in
(4) Any income by way of
royalty payable by,---
(a) a person who is a resident, except where the royalty is
payable in respect of any right, property or information used or services
utilised for the purposes of a business or profession carried on by such person
outside Pakistan or for the purposes of making or earning any income from any
source outside Pakistan; or
(b) a person who is a non‑resident, where the royalty is
payable in respect of any right, property or information used or services
utilised for the purposes of a business or profession carried on by such person
in Pakistan or for the purposes of making in earning any income from any source
in Pakistan,
shall be deemed to accrue
or arise in
Explanation.____For
the purposes of this sub-section and sub-section (4) of section 31, “royalty”
means consideration (including any lump-sum consideration but excluding any
consideration which would be the income of the recipient chargeable under the
head “Capital gains”) for,---
(i) the transfer of all or any rights (including the granting of
a licence) in respect of a patent, invention, model, design, secret process or
formula, or trade mark or similar property;
(ii) the imparting of any information concerning the
working of, or the use of, a patent, invention, model, design, secret process
or formula, or trade mark or similar property;
(iii) the use of any patent, invention, model, design,
secret process or formula, or trade mark or similar property;
(iv) the imparting of any information concerning
technical, industrial, commercial or scientific knowledge, experience or skill;
(v) the transfer of all or any rights (including the granting of
a licence) in respect of any copy‑right, literary, artistic or scientific
work including films or video tapes for use in connection with television or
tapes for use in connection with radio broadcasting but not including
consideration for the sale, distribution or exhibition of cinematograph firms;
or
(vi) the rendering of any services in connection with the
activities referred to in clauses (i) to (v).
(5) Any income by way of
fees for technical services payable by,---
(a) a person who is a resident, except where the fees are
payable in respect of services utilised in a business or profession carried on
by such person outside Pakistan or for the purposes of making or earning any
income from any source outside Pakistan; or
(b) a person who is a non‑resident, where the fees are
payable in respect of services utilised in a business or profession carried on
by such person in
shall be deemed to accrue
or arise in
Explanation.___For
the purposes of this sub-section 1[,
clause (b) of section 24, sub-section (2) of section 30, sub-section (3A) of
section 50 and section 80AA] “fees for technical services” means any
consideration (including any lump-sum consideration) for the rendering of any managerial,
technical or consultancy services (including the
1 Subs. by the Finance Act, 1987 (1
of 1987), s. 10 for certain words.
provision of the services of technical or
other personnel) but does not include consideration for any construction,
assembly or like project undertaken by the recipient or consideration which
would be income of the recipient chargeable under the bead “Salary”.
(6) As used in sub-sections
(3), (4) and (5), the expression “a person who is resident” includes
Government.
(7) Where an assessee has
made any loan or advance to any person on which no interest has been charged or
the rate at which interest has been charged is less than the rate (hereinafter
referred to as the ‘said rate’) arrived at by adding two percent to the bank
rate notified by the State Bank of Pakistan as applicable on the date on which
the loan or advance was made, the amount not charged or the amount equal to the
interest computed at the said rate as reduced by the interest actually charged
shall be deemed to be the income of the assessee and shall be included in his
total income:---
Provided that nothing
contained in this sub-section shall apply to,---
(a) any loan or advance made by an assessee to an employee in
accordance with the terms and conditions of his employment and for such
purpose or purposes; or .
(b) such assessee or persons or class or classes of assessees or
persons, as may be specified in this behalf by the Central Board of Revenue by
notification in the official Gazette 1[:]
(8) Any income derived by
as assesses in any income year (hereafter in this sub-section referred to as
the ‘said income year’) from any business or profession, which has been or was,
discontinued, or any other source which has ceased, as the case may be, at any
time before the commencement, or during the course, of the said income year
shall, if such income would have been chargeable to tax if it had been received
in the income year in which it accrued or arose, be deemed to be income
chargeable to tax from such business or profession or other source, which shall,
for the purposes of this Ordinance; be
1 Subs. and added by the Finance
Act, 1985 (1 of 1985), s. 4.
deemed to have been carried on, or not
ceased, as the case may be, before the commencement, or during the course, of
the said income year.
(9) Where any bonus or
bonus share is declared, issued or paid by a Pakistani Company to its share‑holders
in any year wholly or partly out of reserves or profits of the company of that
year or accumulated profits of earlier years, whether capitalised or out of the
share premium or other account, the amount of the bonus or the face value of
the bonus share, as the case may be, shall be deemed to be income accruing to
the company during that year.
(10) Any dividend paid to
any share‑holder without
(11) Any dividend declared
or distributed by a company shall be deemed to be the income of the income year
in which it is declared 1**
* and shall be included in the total income of the assessee of that year.
2[Provided that, where any dividend is
declared within six weeks of the end of the income year, it shall be deemed to
be the income of the income year in which it is distributed and included in the
total income of that year.]
(12) Where any assets not
being stock‑in‑trade 3***
are purchased by an assessee from any company and the4[Deputy
Commissioner] has reason to believe that the price paid by the assessee is less
than the fair market value thereof, the difference between the price so paid
and the fair market value shall, be deemed to be income of the assessee
chargeable to tax under this Ordinance [:]5
6[Provided that in the case of an asset
leased by a scheduled bank, a financial institution, modaraba or a leasing
company the fair market value shall mean the residual value paid by the
assessee, being the first lessee, on the maturity of the lease agreement and
the amount paid by way of lease rentals and other charges so however that the
aggregate of such payments and the residual value is not less than the original
cost of the asset.]
1 Omitted by the Finance Ordinance,
1981 (24 of 1981), s. 5.
2 Subs. and added by the Finance
Ordinance, 1980 (25 of 1980), s. 6.
3 Omitted by the Finance Act, 1992
(7 of 1992), s. 7.
4 Subs. by Act 10 of 1993, s. 5. for
“Income Tax Officer”.
5 Subs. by the Finance Act, 1998 (3
of 1998), s. 5, for full-stop.
6 Proviso added ibid.
[(13) Where as assessee,
being the owner of a building, receives from any person to whom such building
or any part thereof is let out on rent any amount 2*
* * which is not adjustable against the rent payable by such person, such
amount shall be deemed to be the income of the assessee and chargeable to tax
under the head “Income from house property” in the income year in which such
amount is received and the nine income years next following the said income
year in equal proportion; and the amount so allocated to each income year shall
be deemed to be the rent received in respect of such building or a part
thereof.
(14) Where the 3[amount]
mentioned in sub-section (13) is refunded by the assessee to the tenant on
termination of the tenancy before expiry of ten years as aforementioned, no
portion of such 3[amount]
shall be allocated to the income year in which it is refunded or any income
year thereafter except in a case mentioned in sub-section (15).
4[(15) Where, on the termination of the
tenancy of one person and refund to that person of the amount mentioned in sub-section
(13), the assessee lets out such building or such part thereof, as the case may
be, to another person and receives from such other person any amount
(hereinafter called the “succeeding amount”) which is not adjustable against
the rent payable by such other person, the succeeding amount as reduced by
such portion of the earlier, amount as was charged to tax, shall be deemed to
be the income of the assessee chargeable under the head ‘Income from house
property’ and charged to tax as laid down in sub-section (13).]
(16) Where an assessee
receives any amount in consideration for vacating the possession of a building
or a part thereof of which he is a tenant, the said amount as reduced by the
amount, if any, paid by the assessee for acquiring possession of such building
or part thereof shall be deemed to be the income of the assessee and chargeable
to tax under the head “Income from other sources” in the income year in which
it is received and nine income years next following the said income year in equal
proportion.
(17) The provisions of
sub-sections (13) to (16) shall also apply to an assessee who has received the
amount referred to in sub-section (13), (15) or (16) in the income
1 Sub-section (13) to (17) added by
the Finance Ordinance 1980 (25 of 1980), s. 6.
2 The words “by way of advance or
security” omitted by the Finance Ordinance 1981 (24 of 1981), s. 5.
3 Subs. ibid., for the words
“advance or security”.
4 Subs. ibid, for sub-section (15).
year relevant to the assessment year
commencing on the first day of July, 1980, or in any earlier income year so,
however, that income chargeable to tax in the manner laid down in the said
sub-section shall be charged to tax only in respect of the income year relevant
to the assessment year commencing on the first day of July, 1980, or any
assessment year thereafter.]
1[(18) Where any sum claimed, or shown, to
have been received as loan or advance or gift by an assessee during any income
year commencing on or after the first day of July, 1998, from any person, not
being a banking company, or a financial institution notified by the Central
Board of Revenue for this purpose, otherwise than by a crossed cheque drawn on
a bank or through a banking channel from a person holding a National Tax
Number, the said sum shall be deemed to be the income of the assessee for the
said income year chargeable to tax under this Ordinance: Provided that, where
the said loan or advance to in sub-section (1) of section 13, in a case to
which the first proviso to the said sub-section applies, the income under this
sub-section shall relate to the assessment year referred to in the said
proviso.]
2* * * * * * *
3[(19) Where an assessee, being a scheduled
bank, a financial institution, or such modaraba or leasing
company as is approved by the Central Board of Revenue for the purposes of the
Third Schedule, has leased out, on or after the first day of July, 1985, any
asset, whether owned by it or not, to another person, any amount paid or
payable by the said person in connection with the lease of the said asset shall
be deemed to be the income of the said assessee.];
13. Un-explained In
investments etc., deemed to be income.___(1) Where 4*
* *,---
(a) any sum is found to be credited in the books of an assessee
maintained for any income year; or
5[(aa) the assessee is found to have made any investment or
is found to be the owner of any money or valuable article, in any year; or
1 Subs. by the Finance Act, 1998 (3
of 1998), s. 5, for sub-section (18), which was previously amended by various
enactments.
2 Sub-section (18A) omitted by the
Finance Act, 1996 (9 of 1996), s. 13.
3 Added by the Finance Act, 1988 (6
of 1988), s. 6.
4 The certain words omitted by the
Finance Act, 1987 (6 of 1987), s. 10.
5 Clause (aa) ins. by the Finance
Ordinance, 1980 (25 of 1980), s. 6.
(b) the assessee is found to have made any investment in any
income year which is not recorded in the books of account maintained for that
income year 1[or
is not] shown in the wealth statement furnished under section 58 in respect of
that year; or
(c) the assessee is found in respect of any income year to be
the owner of any money or valuable article which is not recorded in the books
of account, if any, maintained by him 1[or
is not] shown by him in any wealth statement furnished under section 58 in
respect of that year; or
(d) the assessee has made investment in any income year or is
found in respect of any such year to be the owner of any valuable article and
the 2[Deputy
Commissioner] finds that the amount expended on making such investment or in
acquiring such valuable article exceeds the amount recorded in this behalf in
the books of account maintained by him or shown in the wealth statement
furnished under section 58 in respect of that year; or
(e) an asses has, during any income year, incurred any
expenditure,
and the assessee offers no
explanation about the nature and source of such sum, investment, acquisition of
the money or valuable article, excess amount or the money from which the
expenditure was met, as the case may be, or the explanation offered by him is
not, in the opinion of the 2[Deputy
Commissioner] satisfactory, the sum so credited, the value of the investment,
the money or the value of the article, the excess amount or the amount of the
expenditure, as the case may be, shall be deemed to be the income of the
assessee of such income year chargeable to tax under this Ordinance 3[:]---
4[Provided that, where any act referred to
in clauses (a) to (e) is discovered after the assessment of income of the
income year to which the said act relates has been made the income chargeable
to tax under this section shall be included in the total income of the income
year relevant to the assessment year in which the said discovery is made:]
1Subs, by the Finance Ordinance, 1980 (25
of 1980) for the word “nor”.
2 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
3Subs. by Ordinance, 25 of 1980, s. 6,
for full-stop.
4 Subs. by the Finance Act, 1987 (6
of 1987), s. 10, for proviso which was previously amended by Ordinance 25 of
1980, s. 10.
Provided further that in
cases referred to in clauses (aa) to (e) such income shall not be chargeable to
tax unless 1*
approved of the Inspecting 2[Additional
Commissioner] has been obtained.]
(2) Where the value of any
investment or article referred to in 3[clauses
(aa), (b)], (c) or (d), or the amount of expenditure referred to in clause (e)
of sub-section (1) is, in the opinion of the 4[Deputy
Commissioner] too low, the Income tax Officer may determine, after giving a
reasonable opportunity to the assessee of being heard 5*
* *, a reasonable value or the amount thereof, as the case may
be, and all the provisions of subsection (1) shall have effect accordingly.
6[(3) The Central Board of Revenue may by
rules provide for the determination of the value of any property or article for
the purposes of this section.]
14. Exemptions.___7[(1) 8[The]
incomes or classes or classes of income, or persons or classes of persons
specified in the Second Schedule shall be,---
(a) exempt from tax under this Ordinance, subject to the
conditions and to the extent specified therein; or
(b) liable to tax at such rates, which are less than the rates
specified in the First Schedule, as are specified therein;
(c) allowed a reduction in tax liability, subject to the conditions
and to the extent specified therein; or
(d) exempt from the operation of any provision ofthis Ordinance,
subject to the conditions and to the extent specified therein 9[:]
9[Provided that, where any income which is
exempt from tax under any provision of the Second Schedule, such income, as may
be specified in the said Schedule and subject to such conditions as may be
specified therein, shall be included in the total income, so however that the tax
shall not be payable in respect of such income.
1 The word “prior” omitted by the
Finance Act, 1992 (7 of 1992), s. 7.
2 Subs. by Act 10 of 1993, s. 5, for
“Assistant Commissioner".
3Subs, by the Finance Ordinance 1980 (25
of 1980). s. 6, for clause (b).
2 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
5Certain words which were previously
inserted by Ordinance 25 of 1980 have been omitted by the Finance Act, 1992 (7
of 1992), s. 7.
6 Sub-section (3) added by the
Finance Act, 1997 (22 of 1997), s. 7.
7 Sub-section (1) subs, by Ord. 25
of 1980. s. 6.
8 Subs, by the Finance Act. 1988 (6
of 1988). s. 6, for certain words.
9 Subs. ins. and added ibid., s. 6.
* * * * * * *
2* * * * * * *
3[(2) The Federal Government may, from time
to time, by notification in the official Gazette, make such amendment in the
Second Schedule by___
(a) adding any clause or condition therein;
(b) omitting any clause or condition therein; and
(c) making any change in any clause or condition therein,
as it may think fit, and
all such amendments shall have effect in respect of any assessment year, as may
be specified in this behalf, including any such year beginning on any date
before or after the commencement of the financial year in which the said
notification is issued:---
Provided that the Federal
Government shall place before the National Assembly all amendments made by it
in the Second Schedule during a financial year.]
CHAPTER IV
COMPUTATION OF TOTAL INCOME
15. Heads of
income. All income
shall, for the purposes of the charge of tax and the computation of total
income, be classified under the following heads, namely:---
(a) Salary;
(b) Interest on securities;
(c) Income from house property;
(d) Income from business or profession;
(e) Capital gains; and
(f) Income from other sources.
16. Salary.___(1) The following incomes shall be
chargeable under the head “Salary”, namely:---
(a) any salary due to the assessee from an employer in the
income year, whether paid or not; and
1Omitted by the Finance Act, 1989 (5 of
1989), s. 6, which was previously ins. by Act 6 of 1988, s. 6.
2Sub-section (2) omitted by the Finance
Act, 1994 (12 of 1994), s. 7, which was previously amended by various enactments.
3 New sub-section (2) added by the
Finance Act. 1995 (1 of 1995). s. 8.
(b) any salary (including arrears 1[or
advances] of salary) paid to the assessee in the income year by an employer:---
Provided that where any
salary is included in the total income on the basis that it has become due to
an assessee, it shall not be included again on the basis that it is paid.
(2) For the purposes of
subsection (1),---
(a) “salary” includes,---
(i) any wages;
(ii) any annuity, pension or gratuity;
(iii) any fees, commissions, allowances, perquisites or
profits in lieu of, or in addition to, salary or wages;
(b) “perquisite” includes,---
(i) the value of rent free accommodation;
(ii) the value of any concession in the matter of rent
respecting any accommodation;
(iii) any sum payable by the employer, whether directly or
indirectly, to effect an insurance on the life of, or to effect a contract for
any annuity for the benefit of, the assessee, or his spouse or any dependent
child;
(iv) the value of any benefit provided free of cost or at
a concessional rate;
(v) any sum paid by an employer in respect of any obligation of
an employee;
(c) “profits in lieu of salary” includes,---
(i) the amount of any compensation due to, or received by an
assessee from his employer at, or in connection with, the termination of, or
the modification of any terms or conditions relating to, his employment;
(ii) any payment due to, or received by, an assessee from
a provident or other fund to the extent to which it does not consist of
contributions by the assessee and the interest on such contributions;
1 Ins. by the Finance Ordinance,
1981 (24 of 1981), s. 5.
(d) “employer” includes a former employer; and
(e) “employee”, in relation to a company, includes a managing
director or any other director or other individual, who, irrespective of his
designation, performs any duties or functions in connection with the management
of the affairs of the company.
17. Interest on
securities.___(1) The following income shall be
chargeable under the head “Interest on securities”, namely:---
(a) interest on any securities of the Federal Government or a
Provincial Government receivable by an assessee in any income year; and
(b) interest on debentures or other securities for money issued
by, or on behalf of, a local authority or a Pakistani company receivable by an
assessee in any income year.
(2) Notwithstanding
anything contained in subsection (1),---
(a) where any security of the Federal Government is issued with
the condition that the interest thereon shall not be liable to 1[tax],
the interest receivable on such security shall be exempt from tax in accordance
with such condition; and
(b) 1[tax]
payable on the interest receivable on any security of a Provincial Government
issued with the same condition as aforesaid shall be payable by that Provincial
Government.
18. Deductions.___(1) In computing the income under the head
“interest on securities” the following allowances and deductions shall be made,
namely:---
(a) any interest paid by the assessee to any banking company or
other persons on money borrowed by him for the purpose of investment in
securities; and
(b) any commission paid to a banking company for realising
interest on such securities on behalf of the assessee.
(2) For the purposes of
sub-section (1),---
(a) “moneys borrowed” shall, in the case of a banking company,
include moneys received by way of deposits; and
1Subs. for the words “income-tax” by the
Finance Ordinance, 1980 (25 of 1980), s. 6. These words were deemed to be subs.
by S.R.O., 885(I)/79, dated 2-10-79.
(b) the amount to be regarded as interest pail on moneys
borrowed shall not exceed an amount which bears to the amount of interest paid
on all moneys borrowed by the assessee the same proportion as the total amount
of interest on securities (inclusive of tax deducted under subsection (2) of
section 50) beers to the gross receipts from all sources included in the profit
and loss account of the assessee.
(3) Where the securities in
respect of which any interest is receivable by an assessee consist of, or
include, any securities to which clause (a) of subsection (2) of section 17
applies, no allowance or deduction on account of any interest or commission
paid under clause (a) or clause (b) of subsection (1), as the case may be, in
respect of, or allocable to, the said securities shall be made in computing the
income under the said subsection (1).
(4) The allowances and
deductions made under subsection (1) shall not be admissible for the purpose of
computing the income of the assessee under any other head.
(5) The provisions of
section 24 shall, so far as may be, apply to the allowances and deductions
under this section as they apply to the allowances and deductions in respect of
income chargeable under the head “Income from business or profession”.
19. Income from house
property.___(1) The annual value of property shall be
chargeable under the head “Income from house property”.
(2) For the purposes of
subsection (1),---
(a) “house property” means any property consisting of any
buildings or lands appurtenant thereto of which the assessee is the owner, but
does not include any such property (or any portion thereof) which is occupied
by the assesses for purposes of any business or profession carried on by him
the profits whereof are chargeable to tax under this Ordinance; and
(b) “annual value” of any property shall be deemed to be the sum
for which the property might reasonably be expected to let from year to year:
Provided that where the
property is let on rent, the annual value shall not be less than the rent
payable by the tenant.
(3) Nothing contained in
this section shall apply in the case of any such property which is in the
occupation of the owner for purposes of his own residence.
1[Explanation.___ For
the purpose of this section, any property, the owner of which is in receipt of
any rent, whether in cash or otherwise, whether from employer or otherwise,
shall not be taken to be in the occupation of such owner for the purpose of his
own residence.]
20. Deductions.___(1)
In computing the income under the head “income from house property” the
following allowances and deductions shall be made, namely:---
(a) in respect of repairs, an allowance equal to 2[one-fifth]
of the annual value;
(b) the amount of any premium paid to insure the property
against risk of damage or destruction;
(c) the amount of any local rate, tax, charge or cess (being
owner’s burden) in respect of property or income from property paid to any
local authority or Government, not being any tax payable under this Ordinance;
(d) where the property is subject to a ground rent, the amount
paid on account of such ground rent;
(e) where the property has been acquired, constructed, renovated
.or reconstructed with borrowed capital, the amount of any interest paid on
such capital;
3[(ee) where the property has been acquired, constructed,
renovated, extended or re-constructed with capital contributed by the House
Building Finance Corporation constituted under the House Building Corporation
Act, 1952 (XVIII of 1952), or a schedule bank, under a scheme of
investment in property on the basis of sharing the rental income made by the
said Corporation or the bank, the amount representing share in rental income
(excluding return of capital, if any) from the said pro-perty paid to the said
Corporation or the bank;]
1 Explanation added and shall be
deemed always to have been so added by the Finance Act, 1996 (9 of 1996), s.
13.
2Subs. for “one-sixth” by the Finance
Ordinance, 1980 (25 of 1980). s. 6, (w.e.f. the assessment year 1981-82).
3 Sub-clause (ee) added by the
Finance Ordinance, 1982 (12 of 1982), s. 7.
(f) where the property is subject to mortgage or other capital
charge, the amount of interest paid on such mortgage or charge;
(g) any expenditure (not exceeding six per cent of the annual
value) incurred by the assessee for the purpose of collecting the rent of the
property;
1[(gg) any expenditure incurred by the assessee on legal
services acquired to defend title of the property or any suit connected
therewith in a court of law;]
(h) where the property is vacant during a part of the year, an
allowance equal to that part of the annual value, which is proportionate to the
period during which the property was vacant or, where the property is let out
in parts, that part of the annual value which is proportionate to the period
during which such part was vacant; and
(i) subject to such rules as may be made in this behalf, an
allowance on account of unrealised rent.
(2) The allowances and
deductions under subsection (1) shall not be admissible for the purpose of
computing the income of the assessee under any other head.
(3) The provisions of
section 24 shall, so far as may be, apply to the allowances and deductions
under this section as they apply to the allowances and deductions in respect of
income chargeable under the head “Income from business or profession”.
2[(4) Where is any income year the assessee
had paid any amount referred to in clauses (b) to (g) of sub-section (1) which
relates to any earlier income year and the said amount has not been allowed as
deduction in that year, the said amount shall be allowed as deduction in the
income year in which it is paid or, at the written option of the assessee, in
the income year to which it relates.]
21. Liability in the
case of co‑owners. Where any property to which section 19 applies is owned by two or
more persons and their respective shares are definite and ascertainable, such
persons shall not, in respect of such property, be assessed as an association
of persons, but the share of each such person in the income from the property
shall be included in his total income.
1 Ins. by the Finance Act, 1990, (7
of 1990), s. 7.
2 Sub-section (4) added by the
Finance Ordinance, 1980 (25 of 1980), s. 6.
22. Income from business
or profession. The
following incomes shall be chargeable under the head “Income from business or
profession”, namely:---
(a) profits and gains of any business or profession carried on,
or deemed to be carried on, by the assessee at any time during the income year;
(b) income derived by any trade, professional and similar
association from specific services performed for its members; and
(c) value of any benefit or perquisite, whether convertible into
money or not, arising from business or the exercise of a profession.
Explanation.___Where
speculative transactions carried on by an assessee are of such a nature as to
constitute a business, the business (hereinafter referred to as “speculation
business”) shall be deemed to be distinct and separate from any other business
carried on by the assessee.
23. Deductions.‑(1) In computing the income under the head
“Income from business or profession”, the following allowances and deductions
shall be made, namely:---
(i) any rent paid for the premises in which such business or
profession is carried on;
(ii) any local rate, tax, charge or cess in respect of
such premises paid to any local authority or Government, not being any tax
payable under this Ordinance;
(iii) any amount paid on account of current repairs to any
such premises or any machinery, plant, furniture or fittings used for purposes
of business or profession;
(iv) any premium paid in respect of insurance against risk
of damage or destruction to any building, machinery, plant, furniture or
fittings, or stocks and stores used for the purposes of business or profession;
(v) in respect of depreciation 1[includingFirst
Year Allowance or Reinvestment Allowance or Industrial Building Allowance,] of
any such building, machinery, plant, furniture or fittings, being the
1 Ins. by the Finance Act, 1998 (3
of 1998), s. 5.
property of the assessee, the allowance
admissible under the Third Schedule 1[except
depreciation on assets given on lease shall be allowed against income from
lease rentals only];
(vi) in respect of animals which have been used for the
purposes of the business or profession (otherwise than as stock‑in‑trade)
and have died or become permanently useless for such purposes, the difference
between the original cost to the assessee of the animals and the amount, if
any, realised in respect of the carcases or animals;
2[(via) any sum paid on or after the first day of July, 1985,
to a scheduled bank, a financial institution, or such modaraba or
leasing company as is approved by the Central Board of Revenue for the purposes
of the Third Schedule, by way of lease money in respect of an asset taken on
lease by the assessee and used for the purposes of any business or profession
carried on by him;]
(vii) any interest paid in respect of capital borrowed for
the purposes of the business or profession;
3[(viia) any sum paid to a modaraba or to a
Participation Term Certificate holder for any funds borrowed for the purposes
of the business or profession;]
4[(viib) any sum paid or credited to any person maintaining a
profit and loss sharing account or deposit with a scheduled bank by way of
distribution of profits by the said bank in respect of the said account or
deposit;]
5[(viic) any sum paid by the House Building Finance
Corporation constituted under the House Building Finance Corporation Act, 1952
(XVII of 1952) to the State Bank of Pakistan (hereinafter referred to as the
‘Bank’) as the share of the Bank in the profits earned by the said Corporation
on its investment in the property made under a Scheme of investment in property
on partnership in profit and loss, where such investment is provided by the
Bank under the House Building Finance Corporation (Issue and Redemption of
Certificates) Regulations, 1982 “;]
1 Added by the Finance Act. 1994 (12
of 1994), s. 7.
2 Ins. by the Finance Act, 1988 (6
of 1988), s. 6.
3 CI. (vii a) ins. by the Finance
Ordinance, 1980 (25 of 1980), s. 6.
4 C1. (vii b) ins. by the Finance
Ordinance, 1981 (24 of 1981), s. 5.
5 CI. (vii c) ins. by the Finance
Ordinance, 1982 (12 of 1982), s. 7.
[(viicc) any sum paid by the National Development leasing
Corporation Limited to the State Bank of Pakistan (hereinafter referred to as
the ‘Bank’) as the share of the Bank in the profits earned by the said
Corporation on its leasing operations financed out of a credit line provided
by the Bank on a profit and loss sharing basis;”];
2[(viid) any sum paid to a bank under a scheme of musharika representing
its share in the profits of thatmusharika;]
3[(viie) any sum paid to a certificate holder under a Musharika scheme
approved by the Corporate Law Authority and Religious Board formed under
the Modaraba Companies and Modarabas (Floatation
and Control) Ordinance, 1980 (XXXI of 1980) representing his share in the profits of
that Musharika;]
(viii) any sum paid to an employee as bonus or commission
for services rendered, where such sum would not have been payable to him as
profits or dividend if it had not been paid as bonus or commission:
Provided that the amount of
the bonus or commission is of a reasonable amount with reference to‑
(a) the pay of the employee and the conditions of his service;
(b) the profits of the business or profession for the year in
question; and
(c) the general practice in similar businesses or professions;
(ix) in respect of any special reserve created by such
financial institutions and for such purposes as may be approved by the Central
Board of Revenue for the purposes of this clause, the amount, not exceeding ten
per cent of the total income including such amount, carried to such reserve:---
Provided that no allowance
under this clause shall be made where the aggregate amount standing in such
reserve exceeds the paid‑up capital of the institution;
1CI. (viicc) ins. by the Finance Act.
1985 (I of 1985), s. 4.
2CI. (viid) ins. by the Finance
Ordinance, 1983 (14 of 1983), s. 5.
3New CI. (viie) ins. by the Finance Act,
1998 (3 of 1998), s. 5.
(x) in respect of bad debts, such amount (not exceeding the
amount actually written off by the assessee) as may be determined by the 1[Deputy
Commissioner] to be irrecoverable;
(xi) any sum paid to a scientific research institute,
polytechnic, college or other institution in Pakistan affiliated to any
University or Board of Education established or incorporated by, or under, any
Federal or Provincial law, or recognised, aided or run by Government or run by
any local authority, to be used for scientific research or technical training
in Pakistan 2***.
(xii) any expenditure laid out or expended on scientific
research in
(xiii) any expenditure laid out or expended on any
educational institution or hospital in
(xiv) any expenditure laid out or expended on
any institute in
(xv) any expenditure laid out or expended on the training
of any person, being a citizen of
(xvi) any sums paid on account of annual membership
subscription to a registered trade organization within the meaning of the Trade
Organizations Ordinance, 1961 (XLV of 1961);
(xvii) any expenditure incurred by an assessee wholly and
exclusively in connection with his visit abroad as a member of a trade
delegation sponsored by the Federal Government.
(xviii) any expenditure (Not being in the nature of capital
expenditure or personal expenses of the assessee) laid out or expended wholly
and exclusively for the purpose of such business or profession 3[:]
1Subs. by Act 10 of 1993, s. 5, for
"Income Tax Officer".
2Omitted by the Finance Act, 1993 (10 of
1993), s. 5.
3 Subs, by the Finance Ordinance,
1981 (24 of 1981), s. 5, for full-stop.
[Provided that, where a
domestic company has, in any income year, incurred any expenditure on advertisement
or publicity outside Pakistan in respect of such goods as may be specified by
the Federal Government by notification in the official Gazette and as are
exported in the said income year, or on furnishing of samples of such goods to
a person outside Pakistan, deduction in respect of the said expenditure
allowable under this clause shall be of a sum equal to one and one-third times
the amount of actual expenditure so incurred.]
Explanation.---
(a) the expression “any expenditure”, as used in clauses (xii),
(xiii) and (xiv), includes expenditure in the nature of capital expenditure;
and
(b) the expression “paid”, as used in this section and sections
18, 2*
20, 24 and 31, means actually paid or incurred according to the method of accounting
upon the basis of which the income is computed.
3[(xix) any transfer to a participatory reserve created by a
company under section 120 of the Companies Ordinance, 1984 (XLVII of 1984), in accordance with an agreement relating to
participatory redeemable capital entered into between the company and. a
banking company as defined in the Banking Tribunals Ordinance, 1984:---
Provided that, out of the
amount so transferred in any income year, not more than five per cent of the
value of participatory redeemable capital shall qualify for deduction under
this sub-section:
Provided furthers that no
deduction shall be allowed if the amount of the tax-exempted accumulation in
the participatory reserve exceeds ten per cent of the amount of participatory
redeemable capital:]
4[(xx) any expenditure incurred by an assessee in the
purchase of one machine 5with
permanent sealed memory system, used for recording and printing cash sales made
by him during the regular course of his business:---
1 Proviso added by the Finance
Ordinance 1981 (24 of 1981), s. 5.
2 The figure “20” omitted by the
Finance Ordinance, 1980 (25 of 1980), s. 6.
3 Added by the Banking and Financial
Services (Amendment of Law) Ordinance, 1984 (57 of 1984). s. 2 and Sch.,
4 Added by the Finance Act, 1987 (6
of 1987), si 10. ‘5Ins. by the Finance Act, 1988 (6 of 1988), s. 6.
* * * * * * *
(2) Where any such
premises, building, machinery, plant, furniture or fittings is or are not
wholly used for the purposes of the business or profession, any allowance or
deduction admissible under this section shall be restricted to the fair
proportional part of the amount which would be allowable if such premises,
building, machinery, plant, furniture or fittings were wholly so used.
24. Deductions not
admissible. Nothing
contained in section 23 shall be so construed as to authorise the allowance or
deduction of,---
(a) any sum paid on account of any cess, rate or tax levied on the
profits or gains of any business or profession or assessed as a percentage, or
otherwise on the basis, of any such profits or gains;
(b) any sum paid to a non‑resident on account of
interest, 2[fee
for technical services,] brokerage or commission or any other sum chargeable
under the provisions of this Ordinance, unless tax thereon has been paid or
deducted and paid under section 50, as the case may be;
3[(c) any sum paid to any person on account of salary,
interest or profit, services rendered, brokerage or commission or rent of house
property on which tax is deductible under section 50, unless such tax has been
paid or deducted and paid under section 50, unless such tax has been paid or
deducted and paid under section 50, as the case may be;]
4[(cc) any expenditure or allowance which results directly
or indirectly in the provision of salaries of directors of a domestic company,
not being a public company as defined in the First Schedule, which exceeds5[forty]
per cent of total income of the company before the charge of such expenditure
or allowance:
Provided that the deduction
in respect of the aggregate of such expenditure or allowance in respect of any
director shall not exceed,---
1 Omitted by the Finance Act, 1988(6
of 1988), s.6.
2Ins. by the Finance Act, 1987 (6 of
1987), s. 10.
3 Subs, by the Finance Act, 1995 (1
of 1995), s. 9, for cl. (c).
4 Ins. by the Finance Act, 1990 (7
of 1990), s. 7.
5Subs, by the Finance Act, 1991 (12 of
1991), s. 5, for “thirty”.
(i) where such expenditure or allowance relates to a period
exceeding eleven months comprised in an income year, the amount of 1[three
hundred and sixty] thousand rupees; and
(ii) where such expenditure or allowance relates to a
period not exceeding eleven months comprised in an income year, an amount
calculated at the rate of 1[thirty]
thousand rupees for each month or part thereof comprised in that period [:]2
2[Provided further that nothing contained
in this clause shall apply in respect of any assessment year commencing on or
after the first day of July, 1991.]
(d) any sum paid, on account of interest, brokerage, commission,
salary or other remuneration, by a firm or an association of persons to any
partner of the firm or any member of the association of persons, as the case
may be;
(e) any expenditure in the nature of head office expenditure, in
the case of an assessee, being a non‑resident, in excess of such limits
as may be prescribed.
Explanation.---
As used in this clause,
“head office expenditure” means executive and general administration
expenditure incurred by the assessee outside
(a) any rent, local rates and taxes (excluding any foreign tax
corresponding to any tax leviable under this Ordinance), current repairs or
insurance against risks of damage or destruction of any premises outside
Pakistan used for the purposes of the business or profession;
(b) any salary paid to an employee employed by the head office
outside
1 Subs. by the Finance Act, 1991 (12
of 1991), s. 5, for “two hundred and forty”.
2 Subs. and added by the Finance
Act, 1992 (7 of 1992), s. 7.
(c) any travelling by such employee for the purposes of business
or profession; and
(d) such other matters connected with executive and general
administration as may be prescribed;
(f) any allowance in respect of expenditure on entertainment in
excess of such limits and in contravention of such conditions as may be prescribed:
1[(ff) any payments, made on or after the first day of July,
1998, on account of expenditure under a single account head which, in
aggregate, exceed fifty thousand rupees made otherwise than through a crossed
bank cheque or by a crossed, bank draft except transactions not exceeding five
hundred rupees or payments on account of . postage or utility bills.
(fff) notwithstanding anything contained in clause (ff),
any payment made on or after the first day of July, 1998, on account of salary
if,---
(i) it exceeds five thousand rupees, through a crossed cheque or
transfer to the employee’s bank account;
(ii) it does not exceed five thousand
rupees, made through a bearer cheque.]
(g) any sum paid to any provident fund,
superannuation fund or gratuity fund, not being a recognised provident fund, an
approved superannuation fund or an approved gratuity fund;
(h) any sum paid to any provident fund or
other fund established for the benefit of employees of the assessee, unless
the assessee has made effective arrangements to secure that tax shall be
deducted at source from any payments made from the fund which are chargeable to
tax under the head “Salary”; or
(i) any expenditure incurred by an
assessee on the provision of perquisites 2[,allowances]
or other benefits to any employee, in excess of 3[fifty]
per cent of his salary excluding perquisites 2[,
allowances or other benefits];
1 Subs. by the Finance Act, 1998, (3
of 1998), s. 5, for cl. (ff), which was previously amended by Act 7 of 1990, s.
7.
2 Ins. by the Finance Ordinance,
1980 (25 of 1980), s. 6.
3 Subs. ibid., for “thirty” (w.e.f.
the assessment year 1981-82.
* * * * * * *
Explanation.___As
used in this clause,---
(i) “salary” means remuneration or compensation for services
rendered paid, or to be paid, at regular intervals, and includes dearness or
cost of living allowance and bonus or commission payable to an employee in
accordance with the terms of his employment as remuneration or compensation
for services but does not include the employer’s contribution to a recognised
provident fund or an approved superannuation or gratuity fund or any other sum
which does not enter into the computation for pensionary or retirement benefits;
(ii) “perquisite”, “employee”, and “employer” have the
same meaning as in subsection (2) of section 16; and
(iii) “other benefits” does not include employer’s
contribution to a recognised provident fund or an approved superannuation or
gratuity fund.
25. Amounts subsequently
recovered in respect of deductions, etc. Notwithstanding anything contained in this
Ordinance, where an allowance or deduction has been made under section 23 for
any year in respect of any loss, bad debt, expenditure or trading liability
incurred by the assessee, and subsequently,---
(a) during any income year, the assessee has received, whether
in cash or in any other manner whatsoever any amount in respect of such loss,
bad debt or expenditure, the amount so received shall be deemed to be income
from business or profession of that income year;
3[(aa) during any income years, the assessee has received,
whether in cash or in any other manner whatsoever, any amount in respect of
such bad debt,---
(i) where
the said amount is greater than the difference between the whole of such bad
debt and the amount of bad debt allowed as deduction under section 23, the
excess shall be deemed to be income from business or profession of that income
year; and;
1 Proviso omitted by the Finance
Act, 1996 (9 of 1996), s. 13.
2 The comma and words, “bad debt”
omitted by the Finance Ordinance, 1981 (24 of 1981), s. 5.
3 New cl. (aa) ibid.
(ii) where the said amount is less than the difference
between the whole of such bad debt and the amount of bad debt allowed as
deduction under section 23, the deficiency shall be deemed to be a business
expense of that year;]
(b) during any income year, the assessee has derived any benefit
in respect of such trading liability, the value of such benefit shall be deemed
to be income from business or profession of that income year;
(c) such trading liability or a portion thereof is found not to
have been paid within three years of the expiration of the income year in which
it was allowed, such liability or portion thereof, as the case may be, shall be
deemed to be income from business or profession of the year in which such
finding is made or any other year (not being a year commencing after the
expiration of five years from the end of the said three years) as the 1[Deputy
Commissioner] may thing fit 2[;]
2[(d) where any amount accumulated in the participatory
reserve of a company which has been allowed as a deduction under clause (xix)
of sub-section (1) of section 23 is applied by the company towards any purpose
other than payment of share of profit on the participatory redeemable capital
or towards any purpose not allowable for deduction or exemption under this
Ordinance, the amount so applied shall be added to the income of the company in
the income year, during which it is so applied.].
and the business or
profession in respect of which such allowance or deduction was made shall, for
the purposes of section 22, be deemed to be carried on by the assessee in that
year:---
Provided that where a
trading liability referred to in clause (c) is paid in a subsequent year, the
amount so paid shall be deducted in computing the income in respect of that
year.
1 Subs. by Act 10 of 1993, s. 5. for
“Income Tax Officer”.
2 Subs. and ins. by the Banking and
Financial Services (Amendment of Law) Ordinance, 1984 (57 of 1984), s. 2 and
Sch.
26. Special provisions
regarding business of insurance and production of oil and natural gas and
exploration and extraction of other mineral deposits 1[etc]. Notwithstanding anything contained in
this Ordinance,---
(a) the profits and gains of any business of
insurance and the tax payable thereon shall be computed in accordance with the
rules contained in the Fourth Schedule;
(b) the profits and gains from the exploration and production of
petroleum (including natural gas) 2[and
from refineries to be set up Dhodak and Bobi field; income of exploration and
production companies from pipeline operations, and manufacture and sale of
liquefied petroleum] gas or compressed natural gas] and the tax payable thereon
shall be computed in accordance with the rules contain in Part I of the Fifth
Schedule:---
Provided that nothing in
this clause shall apply to the profits and gains attributable to the production
of petroleum (including natural gas) which was discovered before the twenty‑fourth
day of September, 1954; and
(c) the profits and gains of any business which consists of, or
includes, the exploration and extraction of such mineral deposits of a wasting
nature was being petroleum and natural gas) as may be specified in this behalf
by the Federal Government carried on by an assessee in Pakistan shall be
computed in accordance with the rules contained in Part II of the Fifth
Schedule 3[:]
3Provided that nothing contained in this
clause shall apply in the case of an assessee whose income has at any time been
exempt from tax under clause (123A) of Part I of the Second Schedule.];
27. Capital gains.___(1) Any profits or gains arising from the
transfer of a capital asset shall be chargeable under the head “Capital gains”
and shall be deemed to be income of the income year in which the transfer took
place.
1 Added by the Finance Act, 1994 (12
of 1994), s.7.
2 Ins. ibid.,
3 Subs. and added by the Finance
Act, 1987 (6 of 1987), s. 10.
(2) For the purposes of
subsections (1) and sections 28 and 29,---
(a) “capital asset” does not include,---
(i) any asset or class of assets in respect of which the
assessee is entitled to an allowance for depreciation under the Third Schedule;
and
(ii) immovable property; and
(b) “transfer” includes the sale, disposition, exchange or
relinquishment of the asset, or the extinguishment of any rights therein, but
does not include,---
(i) any transfer by reason of the compulsory acquisition of any
capital asset under any law for the time being in force;
(ii) any transfer of a capital asset under a gift, bequest
or will or an irrevocable trust;
(iii) any distribution of the assets of a company to its
share-holders on its liquidation; and
(iv) any distribution of capital assets on the dissolution
of a firm or other association of persons or the partition of a Hindu undivided
family.
28. Computation of
capital gauss.___(1) In computing the income under the head
“Capital gains”, the cost of acquisition of the capital asset and any
expenditure incurred wholly and exclusively in connection with the transfer
thereof shall be deducted.
(2) The provisions of
section 24 shall, so far as may be, apply to the allowances and deductions
under this section as they apply to the allowances and deductions in respect of
income chargeable under the head “Income from business or profession”.
29. Cost of acquisition,
and consideration for transfer, how determined.___ (1) Where the capital asset became the
property of the assessee,---
(a) under a gift, bequest or will; or
(b) by succession, inheritance or devolution; or
(c) on any distribution of assets on the dissolution of a firm
or other association of persons or the partition of a Hindu undivided family;
or
(d) on any distribution of assets on the liquidation of a
company; or
(e) under a transfer to a revocable or an irrevocable trust, the
fair market value of the asset, as on the date on which it became the property
of the assessee, shall, for the purposes of subsection (1) of section 28, be
deemed to be the cost of acquisition.
(2) Where the person who
acquires a capital asset from an assessee is directly or indirectly connected
with him and the 1[Deputy
Commissioner] has reason to believe that the transfer was effected with the
object of avoiding or reducing the liability of the assessee, the fair market
value of the capital asset, as on the date of the transfer, shall be deemed to
be the consideration received by the assessee for its transfer.
(3) For the purposes of
subsections (1) and (2) and subsection (12) of section 12, “fair market value”
means,---
(a) the price which the capital asset would ordinarily fetch on
sale in the open market on the relevant date; and
(b) where the price referred to in clause (a) is not
ascertainable, such price as may be determined by the1[Deputy
Commissioner] after obtaining the approval of the Inspecting 2[Additional
Commissioner] in writing.
30. Income from other
sources.___(1) Income of every kind which may be
included in the total income of an assessee under this Ordinance shall be
chargeable under the head “Income from other sources”, if it is not included in
his total income under any other head.
(2) In particular, and
without prejudice to the generality of the provisions of sub-section (1), the following
incomes shall, save as otherwise provided in this Ordinance, be chargeable
under the head “Income from other sources”, namely:---
(a) dividend;
(b) interest, royalties and fees for technical services;
(c) ground rent;
(d) income from the hire of machinery, plant or furniture
belonging to the assessee and also of buildings belonging to him if the letting
of the buildings is inseparable from the letting of the said machinery, plant
or furniture; and
1 Subs. by Act 10 of 1993, s. 5. for
“Income Tax Officer”.
2 Subs.by the Finance Act, 1993 (10
of 1993), s. 5, for “Assistant Commissioner”.
(e) any income to which sub-section (12) of section 12 or
section 13 applies.
31. Deductions.___(1) In computing the income under the head
“Income from other sources”, the following allowances and deductions shall be
made, namely:---
(a) in the case of dividends, any sum paid by way of commission
to a banking company realising such dividends on behalf of the assessee; 1*
(b) any expenditure (not being in the nature of capital
expenditure or personal expenses of the assessee) laid out or expended wholly
and exclusively for the purpose of earning such income 2[;
and]
3[(c) in the case of income to which clause (d) of
sub-section (2) of section 30 applies, any allowance or deduction computed in
accordance with the provisions of clauses (iii), (iv) and (v) of sub-section
(1) of section 23.]
(2) Nothing contained in
subsection (1) shall apply,---
(a) to any such sum paid or expenditure laid out or expended
which is allocable to any income exempt from tax under this Ordinance;
(b) in computing the income by way of dividends in the case of
an assessee, being a foreign company.
(3) The provisions of
section 24 shall, so far as may be, apply to the allowances and deductions
under this section as they apply to the allowances and deductions in respect of
income chargeable under the head “Income from business or profession”.
(4) Notwithstanding
anything contained in sub-section (1) or sections 22 and 23, in the case of an
assessee, being a foreign company, 4[or
a foreign association], the income by way of royalty 5***
received from a Pakistani concern in pursuance of any agreement made by the
foreign company 4[or
the foreign association as the case may be] with the Pakistani concern shall be
computed in such manner as may be prescribed.
1 The word “and” omitted by the
Finance Ordinance, 1980 (25 of 1980), s. 6.
2 Subs. ibid; for full stop.
3 Clause (c) added ibid., This
clause was deemed to have been added by S.R.O. 761(I)/79, dated the 23rd
August, 1979. for the assessment year 1979-80.
4 Ins. by the Finance Ordinance,
1981 (24 of 1981), s. 5.
5 Omitted by the Finance Act, 1987
(6 of 1987), s. 10.
32. Method of
accounting.___(1) Income, profits and gains 1[except
income from dividends] shall be computed for purposes of sections 17, 19, 22, 27
and 30 in accordance with the method of accounting regularly employed by the
assessee.
(2) Notwithstanding any
thing contained in sub-section (1), the Central Board of Revenue may, in the
case of any business or profession, or class of business, or profession, or any
other source of income or any class of persons,---
(a) require, by a general or special order published in the
official Gazette that the accounts shall be maintained in such form and in such
manner as may be prescribed; and
(b) prescribe the manner in which payments of commercial nature
shall be made or commercial transactions recorded;
and thereupon, the income,
profits and gains of the assessee shall be computed on the basis of the
accounts or records maintained or payments made accordingly.
(3) Where no method of
accounting has been regularly employed, or if the method employed is such that,
in the opinion of the 2[Deputy
Commissioner], the income, profits and gains cannot be properly deduced
therefrom, or where, in any case to which subsection (2) applies, the assessee.
fails to maintain accounts, make payments or record transactions in the form or
manner, as the case may be, prescribed under the said subsection, then, the
income, profits and gains of the assessee shall be computed on such basis and
in such manner as the 2[Deputy
Commissioner] thinks fit.
3[(4) For the purpose of sub-section (3),
where the Central Board of Revenue deems necessary, it may, by a general or special
order in writing, prescribe rates of net profit or gross profit and conditions
of their applicability in respect of any trade, business or profession for any
assessment year or years:---
Provided that such rates
shall be applicable in case of an assessee at his option to be exercised in
writing before finalisation of assessment proceedings for an assessment year
[.]4
1 Ins. by the Finance Ordinance 1982
(12 of 1982), s. 5.
2 Subs. by Act 10 of 1993, s. 5. for
“Income Tax Officer”.
3 Added by the Finance Act, 1993 (10
of 1993)), s. 5.
4 Subs, by the Finance Act, 1995 (1
of 1995), s. 9, for colon.
1* * * * * * *
2[32A. Documents certificates, etc., to be furnished by
certain companies.—(1) Every private company as defined in the Companies
Act, 1913 (VII of 1913), whose paid up capital on the last day of any income
year is 3[five
hundred thousand] rupees or more shall, with the return of total income for
that year, furnish a copy of the balance sheet and profit and loss account for
that year 4[and
an auditors’ report for that year, in Form 35A of the Companies (General
Provisions and Forms) Rules, 1985, prepared and signed] by a person who is a
chartered accountant within the meaning of the Chartered Accountants Ordinance,
1961 (X of 1961), or a cost and management accountant within the meaning of the
Cost and Management Accountants Act, 1966 (XIV of 1966).
(2) Where a company has not
complied with the requirements of sub-section (1), its income, profits and
gains shall be computed upon such basis and in such manner as the 5[Deputy
Commissioner] may determine.]
33. Assessment of
royalties or copy‑right fees for literary or artistic work. Where the time taken by the author of a
literary or artistic work in the making thereof exceeds twenty‑four
months, the amount received by him during any income year in lump-sum on
account of any royalties or copy‑right fees in respect of that work,
shall, if he so claims, be deemed to be the income of the income year in which
it is received and the two immediately preceding income years and shall be
allocated thereto in equal proportions and all the provisions of this Ordinance
shall apply accordingly.
34. Set‑off of
losses. Where an.
assessee sustains a loss (not being a loss to which section 36 or section 37
applies) in any assessment year under any head of income specified in section
15, he shall 6[subject
to clause (v) of sub-section (1) of section 23,] be entitled to have the amount
of the loss set off against his income (other than income to which sub-section
(7) or (9) of section 12 applies), if, any, under any other head assessable for
that assessment year.
7[34A. Set off of losses of certain
companies.___(1) Where an assessee, being a company
listed on a registered stock exchange in Pakistan, owns the entire share
capital of another company (hereinafter called the ‘subsidiary company’) in any
income year, being an income year relevant to the assessment year ending on
the thirtieth day of June, 1982, or any
1Omitted by the Finance Act, 1995 (1 of
1995), s. 9.
2 Section 32A ins. by the Finance
Ordinance, 1981 (24 of 1981) (w.e.f. assessment year 1982-83).
3Subs, by the Finance Act, 1998 (3 of
1998), s. 5, for “three million”.
4Subs, by the Finance Act, 1987 (6 of
1987), s. 10.
5 Subs. by Act 10 of 1993, s. 5. for
“Income Tax Officer”.
6 Ins. by the Finance Act, 1994 (12
of 1994), s. 7.
7 Section 34A ins. by the Finance
Ordinance, 1980 (25 of 1980). s. 6.
assessment year thereafter, the loss of
the subsidiary company under the head ‘Income from business or profession’ (not
being a loss on account of depreciation allowed under clause (v) of sub‑section
(1) of section 23 or a loss to which section 36 applies) in respect of the said
assessment year as has been determined by an order under section 62, 63 or 65
and as had net been set off under section 34 shall, at the option of the
assessee and subject to the provisions of sub-section (2), be set off against the.
income, if any, of the assessee in respect of the said assessment year, and
where the said loss cannot wholly be so set off, so much of the loss as had not
been set off, or the whole of the loss where the assessee has no income
chargeable to tax in that year, shall be carried forward by the subsidiary
company in accordance with the provisions of section 35, and the said loss of
the subsidiary company in respect of the two assessment years immediately
succeeding the said assessment year shall, at the option of the assessee, be
set off and carried forward in the manner as aforesaid:---
Provided that nothing
contained in this sub‑section shall prevent the assessee from claiming
set off of the said loss of the subsidiary company in respect of the said
assessment year or years if it has not been determined as aforesaid at the time
of filling of return or returns of income by the assessee in respect of the
said assessment year or years.
(2) Nothing contained in
sub‑section (1) shall apply unless,---
(a) income of the subsidiary company under the head ‘Income from
business or profession’ is liable to tax under this Ordinance in the income
year in which it has sustained loss under that head;
(b) a scheme for the profitable operation of the business of the
subsidiary company submitted by the assessee has been approved, before the
commencement of the income year referred to in sub‑section (1) , by,---
(i) the
(ii) the Industrial Development Bank of
(iii) the National Development Finance Corporation; or
(iv) the Bankers Equity Limited; and
(c) the assessee has, by the first day of October of the
assessment year or years referred to in sub‑section (1), submitted to the
institution to which the said scheme was submitted by the assessee a report on
the implementation of the scheme referred to in clause (b).]
35. Carry-forward of
business losses. Where
an assessee sustains a loss in any assessment year under the bead ‘Income from
business or profession’ (not being a loss to which section 36 applies) and the
loss cannot be wholly set off under section 34, so much of the loss as has not
been set off, or the whole of the loss where the assessee has no income under
any other head, shall be carried forward 1[subject
to clause (v) of sub-section (1) of section 23] to the following assessment
year and set off against the profits and gains, if any, of such business or
profession assessable for that year if such business or profession continues to
be carried on by the assessee for that assessment year; and if the loss cannot
be wholly set off in this manner, the amount of the loss not so set off shall
be carried forward to the following assessment year, and so on, but no loss
shall be carried forward to more than six assessment years immediately
succeeding the assessment year for which the loss was first computed 2[:]
3[Provided that, where the said loss
relates to an assessment year commencing on or after the first day of July,
1976, and is sustained by any such assessee, being the owner of an industrial
unit which is declared sick and is being rehabilitated under a scheme approved
by the Federal Government, as may be notified by the Central Board of Revenue
in the official Gazette, this section shall have effect as if for the words
“six assessment years” the words “ten assessment years” were substituted.]
36. Speculation losses.___(1) Where an assessee sustains a loss in
any assessment year in respect of any speculation business carried on by him,
it shall not be set off, except against profits or gains, if any, of another
speculation business carried on by him and assessable for that assessment year.
(2) Where, for any
assessment year, any loss computed in respect of a speculation business has not
been wholly set off under subsection (1), so much of the loss as is not so set
off, or the whole of the loss where the assessee has no income from any other
speculation business, shall be carried forward to the following assessment year
and set off against the profits and gains, if any, of speculation business
carried on by him and assessable for that assessment year; and if the loss
cannot be wholly set off in this manner, the amount of the loss not so set off
shall be carried forward to the following assessment year and so on, but no
loss shall be carried
1Ins. by the Finance Act. 1994 (12 of
1994), s. 7.
2 Subs. by the Finance Ordinance,
1982 (12 of 1982), s. 7, for full stop.
3Proviso added ibid..
forward for more than six assessment years
immediately succeeding the assessment year for which the loss was first
computed.
Explanation.___The
expression “speculation business”, as used in this section and section 22,
means business in which a contract for the purchase and sale of any commodity
(including stocks and shares) is periodically or ultimately settled otherwise
than by the actual delivery or transfer of the commodity or scripts, but does
not include business in which,---
(a) a contract in respect of raw materials or merchandise is
entered into by a person in the course of his manufacturing or mercantile
business to guard against loss through future price fluctuations for the
purpose of fulfilling his other contracts for the actual delivery of the goods
to be manufactured or the merchandise to be sold by him;
(b) a contract in respect of stocks and shares is entered into
by a dealer or investor therein to guard against toss in his holdings of stocks
and shares through price fluctuations; and
(c) a contract is entered into b; a member of a forward market
or a stock exchange in the course of any transaction in the nature of jobbing
or arbitrage to guard against loss which may arise in the ordinary course of
his business as such member.
37. Capital
losses. Where an
assessee sustains a loss in any assessment year under the head “capital gains”,
such loss shall be carried forward to the following assessment year and set off
against the capital gains chargeable for that assessment year under the said
head, and if it cannot be set off in this manner, the amount of the loss not so
set off shall be carried forward to the following assessment year, and so on,
but no loss shall be carried forward for more than six assessment years immediately
succeeding the assessment year for which the loss was first computed:---
Provided that where the
loss sustained by any assessee in any income year does not exceed five thousand
rupees, it shall not be carried forward and, where it exceeds five thousand
rupees, only so much of such loss shall be carried forward as exceeds five
thousand rupees:
Provided further that as
respects the assessments for the years beginning on the first day of July 1975,
and ending on the thirtieth day of June 1[1984]
this section shall have effect as if
1 Subs. By the Finance Ordinance,
1980 (25 of 1980), s. 6, for “1981”.
the assessment year beginning on the first
day of July 1[1984],
were the next following assessment year to any assessment year ending at any
time between the thirtieth day of June 1975, and the thirtieth day of
June 2[1983],
and the first proviso were omitted 3[;]
4[Provided further that as respects the
assessments, in respect of loss arising from sale of shares of a public company
(as defined in the First Schedule), for the years beginning on the first day of
July, 1984, and ending on the thirtieth day of June, 1989, this section shall
have effect as if the assessment year beginning on the first day of July, 1989,
were the next following assessment year to any assessment year ending at any
time between the thirtieth day of June, 1984, and the thirtieth day of June,
1988, and the first proviso were omitted.]
38. Limitations as to
set‑off and carry forward of losses in the case of firms, partners, etc.___(1) Where the assessee is a registered
firm, any loss which cannot be set off against any other income of the firm
shall be apportioned among the partners of the firm and they alone shall be
entitled to have the amount of the loss set off and carried forward for set off
under sections 34, 35, 36 and 37.
(2) Nothing contained in
section 35, sub-section (2) of section 36 or section 37 shall entitle any
assessee, being a registered firm, to have its loss carried forward and set off
under the provisions of the aforesaid sections.
(3) In the case of an
unregistered firm assessed as a registered firm under the provisions of sub‑clause
(ii) of clause (b) of subsection (1) of section 69 in respect of any assessment
year, its losses for that assessment year shall be dealt with as if it were a
registered firm.
(4) Where the assessee is
an unregistered firm which has not been assessed as a registered firm under the
provisions of sub‑clause (ii) of clause (b) of subsection (1) of section
69, any loss of the firm shall be set off or carried forward and set off only
against the income of the firm.
(5) Nothing contained in
sections 34, 35, 36 and 37 and subsections (1), (2), (3) and (4) of this
section shall entitle,---
(a) any partner of an unregistered firm which has not been
assessed as a registered firm under the provisions of sub‑clause (ii) of
clause (b) of subsection (1) of
1 Subs, by the Finance Ordinance,
1980 (25 of 1980), s. 6, for “1981
2 Subs, ibid, for “1980”.
3 Subs, by the Finance Ordinance,
1983 (14 of 1983), s. 5, for full stop.
4 Proviso added ibid..
section 69, or any member of an
association of persons to set‑off any loss sustained by such firm or
association of persons, as the case may be, or have it carried forward and set
off, against his income; or
(b) any firm in the constitution of which any change has
occurred to have carried forward and set off so much of the loss proportionate
to the share of a retired or deceased partner computed in accordance with the
provisions of subsection (4) of section 69 as exceeds his share of profits, if
any, of the income year in the firm, of entitle any partner to the benefit of
any portion of the said loss which is not apportionable to him under section
69; or
(c) any person who has succeeded, in such capacity, any other
person carrying on any business or profession, otherwise than by inheritance,
to carry forward and set off against his income, any loss sustained by such
other person.
(6) Where, in making an
assessment for any year, full effect cannot be given to the allowances referred
to in clause (v) of subsection (1) of section 23 owing to there being no profits
or gains chargeable for that year or such profits or gains being less than the
allowance, then, subject to 1[clause
(v) of sub-section (1) of section 23 and] the provisions of subsection (7), the
allowance or part of the allowance to which effect has not been given, as the
case may be, shall be added to the amount of the allowance for depreciation for
the following year and be deemed to be part of that allowance, or if there is
no such allowance for that year, be deemed to be the allowance for that year
and so on for succeeding years.
(7) Where, under
sub-section (6), depreciation allowance is also to be carried forward, effect
shall first be given to the provisions of section 35 and sub-section (2) of
section 36.
(8) Notwithstanding
anything contained in this Ordinance, no loss which has not been determined in
pursuance of an order made under section 59, 2[59A.]
62, 63 or 65 shall be carried forward and set off under section 35, subsection
(2) of section 36 or section 37.
1 Ins. by the Finance Act, 1994 (12
of 1994), s. 7.
2 Ins. by the Finance Ordinance,
1980 (25 of 1980), s. 6.
CHAPTER V
ALLOWANCES AND RELIEFS
39. Allowances for life
insurance.___(1) Subject to the provisions of section
45,---
(a) an assessee, being an individual, shall be entitled to an
allowance for life insurance in respect of any premium paid by him in any
income year to effect an insurance, including a contract for deferred annuity,
on his own life or the life of his spouse; and
(b) where the assessee is a Hindu undivided family, it shall be
entitled to an allowance for life insurance in respect of any premium paid by
it in the income year to effect an insurance on the life of any male member of
the family or the wife of any such male member.
(2) The provisions of
subsection (1) shall not apply,---
(a) in respect of so much of any premium paid to effect an
insurance other than a contract for deferred annuity as exceeds ten percent of
the capital sum assured; and
(b) unless the premium and the proceeds of the life insurance
policy or the contract for deferred annuity, as the case may be, are both
payable in Pakistan.
(3) Where any insurance
policy to which sub-section (1) applies lapses or is surrendered or paid up
within thirty‑six months of the date on which it became effective, then,
notwithstanding anything contained in this Ordinance, the amount of tax payable
by the assessee under the provisions of this Ordinance in respect of the income
year in which such policy lapses or is surrendered or paid up, as the case may
be, shall be increased by an amount equal to the relief in tax allowed to the
assessee in respect of such policy (hereinafter referred to as the ‘said
amount’) and the sum so arrived at, or where no tax is payable by the assessee
under the other provisions of this Ordinance in respect of that income year,
the said amount, shall be deemed to be the tax payable in respect of that
income year and all the provisions of this Ordinance shall, so far as may be,
apply accordingly.
(4) No order under
subsection (3) shall be made without giving the assessee a reasonable
opportunity of being heard.
40. Allowance for
contributions to Provident Funds, etc. Subject to the provisions of section 45, an assessee shall
be entitled to an allowance in respect of,---
(a) any sum deducted in the income year from the salary payable
to him by Government, being a sum deducted in accordance with the conditions of
his service, for the purpose of securing to him a deferred annuity or making
provision for his wife or children, in so far as the sum so deducted does not
exceed twenty percent of the salary;
(b) any contribution made by him in the income year to any
provident fund to which the Provident Funds Act, 1925 (XIX of 1925) applies;
(c) any contribution (not exceeding twenty percent. of his
salary) made by him in the income year to a recognised provident fund.
Explanation.___As
used in this clause “salary”) shall have the meaning assigned to it in clause
(h) of rule 14 of Part I of the Sixth Schedule;
(a) any contribution made by him in the income year to any approved
superannuation fund.
41. Allowance for
investment in Defence Savings and NIT Certificates etc.___(1) Subject to the provisions of section 45,
an assessee (not being a company) shall be entitled to an allowance in respect
of any sum invested by him in the income year in the purchase of,---
(a) Defence Savings Certificates;
(b) Unit (Trust) certificates (not being Bearer Certificates)
issued by the National Investment (Unit) Trust of Pakistan and such Government
Securities (including Development Loans) as may be specified by the Central
Board of Revenue in this behalf;
(c) Certificates (other than Certificates acquired by purchase
or otherwise from a previous holder thereof) of Mutual Funds issued by the
Investment Corporation of
(d) such shares of such Pakistani investment companies (other
than shares acquired by purchase or otherwise from a previous holder thereof)
as may be specified by the Central Board of Revenue for the purposes of this
clause;
(e) such debentures or debentures stock (other than debentures
or debenture stock acquired by purchase or otherwise from a previous holder
thereof) issued by such public companies as may be approved by the Central
Board of Revenue for the purposes of this clause; 1*
(f) such stocks and shares (other than stocks and shares
acquired by purchase or otherwise from a previous holder thereof) of such a
Explanation.___As
used in this clause, and sub-section (2) of section 43, “Pakistani industrial
public company” means a public company 2[with
in the meaning of clauses (a) and (b) of sub-paragraph (2) of paragraph B of
Part IV of the First Schedule] which is formed for the purpose of, or is
actually engaged in, the carrying on of an industrial undertaking set up in Pakistan
on or after the fourteenth day of August 1947, provided such undertaking (i) is
owned by such company and (ii) fulfils the conditions specified in clauses (a),
(d) and (e) of subsection (2) of section 48; and includes any public company
engaged in, or formed for the purpose of, carrying on insurance or transport
business or the business of building residential houses for sale in Pakistan or
any business in the case of a Government sponsored finance corporation approved
by the Central Board of Revenue or the Controller of Capital Issues for the
purposes of this section 3[;]
4[(g) Modaraba Certificates (other than
Certificates acquired by purchase or otherwise from a previous holder thereof)
of a modaraba of specific value issued by a modaraba company;
and
(h) Modaraba Certificates of a Modaraba of
non-specific value issued by a modaraba company; and
(i) Participation Term Certificates (other than Certificates
acquired by purchase or otherwise from a previous holder thereof) issued by a
company]
5[(1A) Notwithstanding anything contained
in sub-section (1), the Central Board of Revenue may, in the case of any
company applying for approval, grant approval under this
1 The word “and” omitted by the
Finance Ordinance 1981 (24 of 1981). s. 5.
2 lns. by the Finance Act, 1985 (1
of 1985), s. 4.
3 Subs. by the Finance Ordinance,
1981 (24 of 1981), s. 5, for full-stop.
4 Clauses (g), (h) and (i) ins.
ibid.
5 Sub-section (1 A) ins. by the
Finance Ordinance, 1984 (28 of 1984), s. 6.
section before the industrial undertaking
for the purpose of which it is formed is set up or has commenced commercial
production, 1[or
may grant approval from such date, whether preceding or following the date on
which the approval is granted, as it may specify in this behalf].
(3) Where any 3[certificate,
security, share, debentures or debenture stock (hereinafter referred to as the
‘Certificate’) to which clauses (a), (b) 4[(c),
(h) and (i)] of sub-section (1)] applies and in respect of which any relief in
tax has been allowed to the assessee is disposed of by sale, transfer or in any
other manner within thirty‑six months of the date of its purchase, then,
notwithstanding anything contained in this Ordinance, the amount of tax payable
by the assessee under the other provisions of this Ordinance in respect of the
income year in which such Certificate was so disposed of shall be increased by
an amount equal to the relief in tax allowed to the assesses in respect of such
certificate (hereinafter referred to as the ‘said amount’), and the sum so
arrived at or, where no tax is payable by the assessee under the other
provisions of this Ordinance in respect of that income year, the said amount
shall be deemed to be the tax payable in respect of that income year and all
the provisions of this Ordinance shall, so far as may be, apply accordingly.
5[(3A) Where a company has been approved
for purposes of clause (f) of sub-section (1) on the basis of an undertaking
given by such company to the effect that its shares shall be made subject of
dealing in a registered stock exchange in Pakistan within the period specified
in the said undertaking, and it is subsequently found that the said company has
not complied with the terms of the said undertaking, the Central Board of
Revenue may cancel the approval already given from the date it took effect, and
the amount of tax payable by an assessee under the other provisions of this
Ordinance in respect of the income year in which the approval, was cancelled
shall be increased by an amount equal to the relief in tax allowed to the
assessee in respect of the purchase of stocks and shares of the said company,
and the sum so arrived at or, where no tax is payable by the assessee under the
other provisions of this Ordinance in respect of that income year, the said
amount shall be deemed to be the tax payable in respect of that income year and
all the provisions of this Ordinance shall, so far as may be, apply
accordingly.].
1 Added and shall be deemed always
to have been so added by the Finance Act. 1985 (1 of 1985), s. 4.
2 Sub-section (2) omitted by the
Finance Ordinance, 1980 (25 of 1980), s. 6. This sub-section was deemed to be
omitted by S.R.O. 885(I)/79 dated 7-10-1979 for assessment year 1979-80.
3 Subs, for “certificate to which
sub-section (2) applies, by Finance, Ordinance 1980 (25 of 1980), s. 6. These
words etc. were earlier deemed to have been substituted by S.R.O. 885(1)/79,
dated 2-10-79 for the assessment year 1979-80.
4 Subs, by the Finance Ordinance,
1981 (24 of 1981), s. 5, for “and (e)”.
5 Ins. by the Finance Act, 1986 (1
of 1986), s. 12.
(4) No order under 1[sub-section
(3) and (3A)] shall be made without giving the assessee a reasonable
opportunity of being heard.
(5) The Central Board of
Revenue may make rules regulating the procedure for the grant of approval under
this section and any other matter connected with, or incidental to, the
operation of this section.
42. Allowance for
purchase of books. 2[An] allowance in respect of any sum
expended by him in the income year on the purchase of books of 3[religious
or] professional or technical nature or of scientific or general knowledge:---
4[Provided that purchase receipt is
furnished containing National Tax Number of the book seller. This proviso shall
not apply in case of books imported by the assessee for his own use.].
43. Exemption of
Investments in the share‑capital of approved Investment, holding and
industrial companies.___(1) Subject to the provisions of section
45, the tax shall not be payable by an assessee, not being a company, on such
portion of his total income as is invested by him in the income year on the
acquisition (otherwise than from the previous shareholders) of the shares of a
Pakistani company which fulfills the conditions specified in subsection (2).
(2) The following are the
conditions referred to in subsection (1), namely:---
(a) that it is,---
(i) an investment company; or
(ii) a holding company; or
(iii) a Pakistani industrial public company, the share‑capital
of which is owned, wholly or in part, and the management of whose affairs is
controlled, directly or indirectly by the Federal Government; and
1 Subs. By the Finance Act, 1986 (1
of 1986), s. 12.
2Subs, by the Finance Act. 1997 (22 of
1997), s. 7, for certain words.
3 Ins. by the Finance Ordinance,
1984 (28 of 1984), s. 6.
4 Proviso added by Act 22 of 1997 s,
7.
(b) that it is approved by the Central Board of Revenue for the
purposes of this section.
(3) The Central Board of
Revenue may make rules regulating the procedure for the grant of approval under
this section and any other matter connected with, or incidental to, the
operation of this section.
44. Retirement annuity
contracts and trust schemes.___1[(1)] Subject to such rules as may be made
in this behalf, where an individual, being a resident of
(a) in respect of any salary or remuneration from an office or
employment held by him, which is not a pensionable office or employment or
which does not provide any other retirement benefits; or
(b) in respect of profits or gains accruing or arising from any
business or profession carried on by him,
he shall, subject to the
provisions of section 45, be entitled to an allowance in respect of any sum
paid, by him in the income year under a contract of annuity with the State Life
Insurance Corporation of Pakistan or the Pakistan Post Office Life Insurance
Department having for its main object the provision for him of an annuity in
old age, provided such contract is approved by the Commissioner for the
purposes of this section.
2[(2) Nothing contained in this section
shall apply to any amount in respect of which an allowance has been made under
section 44A.]
3[44A. Retirement annuity contract for
professional.___(1) Where an assessee, being an individual
who is resident in Pakistan, derives income from the exercise of a profession
as an accountant, actuary, lawyer, architect, medical or veterinary physician
or surgeon, or from such other professions as may be notified by the Central
Board of Revenue for the purpose of this section, either independently or as a
partner in a registered firm carrying on such profession, and has paid, out of
his income from such profession in any income year, any amount in that year as
a premium under an annuity contract scheme, approved by the Central Board of
Revenue, having for it main object the provision to the assessee of a life
annuity in old age, he shall, subject to the
1 Section 44 renumbered as
sub-section (1) of that section by the Finance Ordinance, 1980 (25 of 1980), s.
6.
2 Sub-section (2) added, by the
Finance Ordinance, 1980 (25 of 1980), s. 6.
3 Section 44A ins. ibid.,
provisions of sub‑sections (2), (3),
(4) and (5), be allowed an allowance in respect of the said amount in that
year.
(2) The amount of the
allowance under sub‑section (1) shall not exceed five per cent of the
income from such profession or ten thousand rupees, whichever is the less.
(3) No assessee shall be
entitled to the allowance under sub‑section (1) if he is entitled, on his
retirement, to a pension or other benefits.
(4) No allowance shall be
made under sub‑section (1) in respect of a contract which provides:---
(a) for the payment during the life of the assessee of any sums
besides the sums payable as annuity;
(b) for the annuity payable to the assessee to commence before
he attains the age of sixty or after he attain; the age of seventy;
(c) that the annuity shall be capable, in whole or in part, of
surrender, commutation or assignment; or
(d) for payment of the annuity outside
(5) Nothing contained in
this section shall apply to any amount in respect of which an allowance has
been made under section 44.]
45. Limitation as to relief. The aggregate of the allowances under
sections 39, 40, 41, 1*
43 and 44 shall not exceed 2[one-third]
of the total income of the assessee or 3[fifty]
thousand rupees whichever is the less.
46. Contributions to
benevolent fund and group insurance. An assessee shall be entitled to an allowance in respect of
any sum paid, in order to make provision for his spouse or children or other
persons dependent on him, to a benevolent fund or any premium paid under a
group insurance scheme, if such fund or scheme is approved by the Central Board
of Revenue for the purposes of this section.
1 The figure and comma “42”, omitted
by the Finance Act, 1997 (22 of 1997). s. 7.
2 Subs. for “thirty per cent” by the
Finance Ordinance, 1980 (25 of 1980), s. 6. (w.e.f. assessment year 1981-82).
3 Subs. for “forty five” by the
Finance Ordinance, 1982 (12 of 1982), s. 7, (w.e.f. assessment year 1983-84),
this was earlier subs, for “forty” by Ordinance 24 of 1981 (w.e.f. assessment
year 1982-83); which was earlier subs, for “thirty five” by Ordinance, 25 of
1980 (w.e.f. assessment year 1981-82).
47. Allowance for donations for
charitable purposes.___(1)
An assessee shall be entitled to an allowance in respect of any sum paid by
him 1[by
a crossed cheque drawn on a bank] 2[or
such value of such articles or goods as may be prescribed given] in any income
year as donation to,---
(a) any Board of Education in Pakistan or any University in
Pakistan established or incorporated by or under, any Federal or Provincial Act
or any educational Institution in Pakistan affiliated to any such Board of
Education or University, or recognised, aided or run by Government or run by
any local authority; or
(b) any hospital in
(c) any relief fund sponsored or approved by Government; or
(d) any other institution or fund which is established in
Pakistan for a religious or charitable purpose and is approved by the Central
Board of Revenue for the purposes of this section 3[;
or]
3[(e) institutions, foundations, societies, boards, trusts
or funds referred to in clause (91) of Part I of the Second Schedule.];
(2) Nothing contained in
subsection (1) shall apply to any donation made to a private religious
institution or fund which does not ensure for the benefit of the public.
4* * * * * * *
(3A) The aggregate of
allowances, under sub-section (1), in respect of donations 5*
* * shall not exceed,---
(i) in the case of a company 6[fifteen]
per cent of the total income; and
(ii) in any other case 7[thirty]
per cent of the total income.];
1 Ins. by the Finance Act, 1993 (10
of 1993), s. 5.
2 Ins. by the Finance, Act, 1998 (3
of 1998) s. 5.
3 Subs, and added by the Finance
Act, 1992 (7 of 1992). s. 7.
4Sub-section (3) omitted by the Finance
Act, 1998 (3 of 1998), s. 5, which was previously subs, by Act 12 of 1991, s.
12, for the original sub-section (3).
5 The certain words omitted ibid.,
6 Subs, ibid., for “ten”.
7 Subs, ibid., for “twenty-five”.
[(4) Nothing contained in
sub-section (3) or sub-section (3A) shall apply in respect of any donation made
to the Quaid-e-Azam Memorial Fund 2[or
to an institution, museum, library or monument referred to in sub-clause
(xxxii) of clause (91) of Part I of the Second Schedule.];
(5) The Central Board of
Revenue may make rules regulating the procedure for the grant of approval
under this section and any other matter connected with, or incidental to, the
operation of this section.
48. Exemption from tax
of newly established industrial undertakings.___(1) Subject to the provisions of this
section, there shall be exemption from the tax payable under this Ordinance so
much of the profits and gains derived by an assessee from an industrial
undertaking, to which this section applies, as does not exceed an amount
computed with reference to the capital employed in the undertakings as
hereinafter provided.
(2) This section applies to
an industrial undertaking (hereinafter referred to as the “said undertaking”)
which fulfils the following conditions, namely:---
(a) that it is an undertaking engaged in the manufacture of
goods or materials, or the subjection of goods or materials to any such
process, shipbuilding and navigation, or the generation, transformation,
conversion, transmission, distribution, or supply of electrical energy or
hydraulic power; or
(b) that it is an industrial undertaking which is approved by
the Central Board of Revenue for the purposes of this section;
3[(c) that it is set up by a Pakistani company in the areas
specified in clauses (119), (120), (121) and (122) of the Second Schedule or in
an industrial estate approved by the Central Board of Revenue and located in
the territories of Pakistan (excluding Talukas of Karachi and
Hyderabad and the Tehsils of Faisalabad and Lahore and such
adjoining areas of Lahore Tehsil as may be notified in this
behalf by the Federal Government);]
(d) that it employs ten or more workers and involves the use of
electrical energy or
1 Subs, by the Finance Act, 1989 (5
of 1989), s. 6.
2 Added by the Finance Act, 1993 (10
of 1993), s.5. .
3 Cl (c) subs, by the Finance
Ordinance, 1983 (14 of 1983), s. 5.
any other form of energy which is
mechanically transmitted and is not generated by human or animal agency; or
twenty or more workers and does not involve the use of electrical energy or any
other form of energy which is mechanically transmitted;
(e) that it is not formed by the splitting up or the
reconstruction or reconstitution of business already in existence or by
transfer to a new business of any machinery or plant used in a business which
was being carried on in Pakistan at any time before the commencement of the new
business; and
(f) that it has commenced commercial production at any time
between the first day of July 1975, and the thirtieth day of June, 1[1988]
(both dates inclusive).
(3) The amount referred to
in subsection (1) is a sum (hereafter is this subsection and subsection (4)
referred to as the “said sum”) equal to ten percent of the capital employed in
the said undertaking;
(4) The said sum shall be
subject to an adjustment where the profits and gains of the said undertaking,
computed for any year of assessment, cover a period which is less than, or
exceeds, twelve months, the adjustment decreasing or increasing, as the case
may be, the said sum to an amount bearing the same proportion to the said sum
as the said period bears to a period of twelve months.
(5) The profits and gains
of the said undertaking shall be computed in the same manner as is applicable
to income chargeable under the head “income from business or profession”.
(6) Nothing contained in
this section shall be so construed as to exempt from tax any dividend paid,
credited or distributed or deemed to have been paid, credited or distributed,
by a company to its shareholders out of profits or gains exempt from tax under
this section.
2[(7) The provisions of this section shall
apply in respect of the assessment years commencing with the assessment year
relevant to the income year in which the said undertaking has commenced
commercial production and ending with,---
(a) the assessment year ending on the thirtieth day of June,
1985, or
(b) the assessment year which is the last of the four assessment
years next following the assessment year relevant to the income year in which
commercial production has commenced, whichever is the later :
Provided that where
assessment year referred to in clause (a) is the later, no exemption under this
section shall be allowed in respect of any income accruing or arising after the
thirtieth day of June, 1983.]
1Subs, by the Finance Ordinance, 1983 (14
of 1983), s. 5, for “1983”.
2 Subs. by the Finance Ordinance,
1980 (25 of 1980), s. 6.
(8) Where any exemption is
allowed under this section and subsequently it is discovered by the 1[Deputy
Commissioner] that any one or more of the conditions specified in this section
was, or were, not fulfilled, as the case may be, the exemption originally
allowed shall be deemed to have been wrongly allowed and the 1[Deputy
Commissioner] may, notwithstanding anything contained in this Ordinance,
recompute the tax payable by the assessee for the relevant year and the
provisions of section 65 shall, so far as may be, apply accordingly, the period
of ten years specified in subsection (3) of that section being reckoned from
the end of the assessment year relevant to the income year in which the
condition or conditions was or were discovered not to have been fulfilled.
(9) The Central Board of Revenue
may make rules regulating the procedure for the grant of approval under
sub-section (2) and providing for the computation of capital employed in an
undertaking for the purposes of sub-section (3) and any other matter connected
with, or incidental to, the operation of this section.
49. Allowances to be
treated as deductions from Income. Save as otherwise provided in this Ordinance, any allowance
admissible or any sum exempt from tax under any provision contained in this
Ordinance shall be included in the total income, but may be deducted from such
income for the purposes of computing the tax payable by an assessee.
CHAPTER VI
PAYMENT OF TAX BEFORE ASSESSMENT
50. Deduction of tax at
source.___(1) Any person responsible for paying, any
income chargeable under the head “Salary” shall, at the time of payment deduct
tax on the amount payable at the average rate of tax computed at the rates
specified in the First Schedule on the estimated income of the assessee under
this head for the financial year in which the payment is made after making such
adjustment, as may be necessary, for any excess deduction or deficiency arising
out of any previous deduction or failure to make such deduction during the said
financial year.
1 Subs. by Act 10 of 1993, s.5, for
“Income Tax Officer”.
(2) Any person responsible
for paying any income chargeable under the head “Interest on securities” shall,
except in cases to which clause (a) of subsection (2) of section 17 applies,
deduct, at the time of payment, tax at the rates specified in the First
Schedule 1[:]
2[Provided that tax under this sub-section
shall be deducted from the said income as reduced by the amount of Zakat, if
any payable thereon under the Zakat and Ushr Ordinance, 1980 (XVIII of
1980) 3[:]
4[Provided further that, where the 5[Deputy
Commissioner] gives a certificate in writing (which certificate he shall give
in every proper case on the application of the assessee) that to the best of
his belief the assessee shall not be liable to pay any tax under this Ordinance
or shall be liable to pay tax at a rate which is less than the rate specified
in the First Schedule, the person responsible for paying any income referred to
in this sub-section shall, until such certificate is cancelled by the 5[Deputy
Commissioner] pay the amount involved without deduction or deduct the tax at
such less rate, as the case may be.]
6[(2A) Any person responsible for paying
any sum by way of interest 7[or
profit] on an account or deposit maintained with any banking company 8[,
or any 9[financial
institutions] shall deduct, at the time of credit of such interest 7[or
profit] to the account of the recipient, 10*
* or at the time of payment thereof, whichever is earlier, tax at the rates
specified in the First Schedule:---
11* * * * * * *
1Subs. by the Finance Ordinance 1981 (24
of 1981), s. 5, for full-stop. :
2 Proviso ins. ibid., The proviso
was earlier deemed to have been inserted vide S.R.O. 923(0/80 dated 14-9-1980
(w.e.f. assessment year 1980-81).
3 Subs, by the Finance Ordinance,
1982 (12 of 1982), s. 7. for full-stop .
4 Proviso ins. ibid., s. 7.
5Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
6 Sub-section (2A) inserted by the
Finance Ordinance, 1984 (28 of 1984), s. 6.
7 Ins. by the Finance Act, 1989 (5
of 1989), s. 6.
8 Ins. by the Finance Act, 1991 (12
of 1991), s. 5.
9Subs, by the Finance Act, 1995 (1 of
1995). s. 9, for certain words.
10Omitted, by the Finance Act, 1992 (7 of
1992), s. 7.
11Proviso omitted by the Finance Act, 1994
(12 of 1994), s. 7.
1[Provided further that nothing contained
in this sub-section shall apply to any sum paid or credited 2[before
the first day of July, 1989]
3[(2B) Any person responsible for clearing
an outstation cheque for an amount exceeding fifty thousand rupees or issuing a
demand draft or pay order or special deposit receipt 4or cash deposit receipts
or rupee travelers cheques] or effecting a telegraphic or electronic transfer
of funds shall collect tax from the drawer of such cheque, draft, pay order,
receipt or, as the case may be,-transfer of funds at the rates specified in the
First Schedule; and the credit for the tax collected in any financial year
shall, subject to the provisions of section 53, be given in computing the tax
payable by the person from whom tax has been collected, for the assessment year
commencing on the first day of July next following the said financial year,
and in the case of an assessee to whom section 72 or section 81 applies, the
assessment year as reckoned in accordance with these provisions:---
Provided that the
provisions of this sub-section shall not apply to, the payments made by the
Federal Government and Provincial Governments, statutory bodies, universities,
approved charitable institutions,, industrial .undertakings and institutions
exempt under the Second Schedule, listed public limited companies, foreign
diplomats and foreign diplomatic missions in Pakistan 5[*]
the intra-company financial transactions 6[and
the payments in respect of which the drawer furnishes a statement to the bank
in the prescribed, manner providing particulars of payment, including the name
and address of payer and payee, the national identity card number, national tax
number, the amount and purpose of payment and nature of instrument].
(3) Any person responsible
for paying to a non‑resident any sum chargeable under the provisions of
this Ordinance (other than income to which sub-section (1) or sub-section
(2) 7[or
sub-section (2A) or sub-section (3A) or sub-section (4) 8[or
sub-section (4A) or sub-section (6A) or sub-section (7A)] or sub-section (D)]
applies) shall, unless such person is himself liable to pay tax thereon as an
agent, deduct, at the time of payment, tax at the rates specified in the First
Schedule:
1 Added by the Finance Act, 1985 (I
of I985),”s. 4.
2 Subs. by the Finance Act, 1989 (5
of 1989) s. 6.
3 New sub-section (2B) ins. ibid.,
4 Ins. by the Finance Act, 1996 (9
of 1996), s. 13.
5 The word “and” omitted by the
Finance Act, 1995 (I of 1995), s. 9.
6 Added ibid
7 Subs, by the Finance Act, 1992 (7
of 1992), s. 7. “Subs, by Act I of 1995, s. 9 for certain words.
Provided that where
the 1[Deputy
Commissioner] gives a certificate in writing (which certificate he shall give
in every proper case on the application of the assessee) that to the best of
his knowledge and belief, the assessee shall not be liable to pay any tax under
this Ordinance or shall be liable to pay tax at a rate which is less than the
rate specified in the First Schedule, the person responsible for paying any
income referred to in this sub-section 2*
* * to such recipient shall, until such certificate is cancelled by the 1[Deputy
Commissioner] pay the amount involved without deduction or deduct the tax at
such less rate, as the case may be 3[:]
4[Provided that nothing contained in this
sub-section shall apply to any payment made to a branch in
3[(3A) Any person responsible for paying to
a non-resident any sum by way of fees for technical services shall, unless such
person is himself liable to pay tax thereon as an agent, deduct, at the time of
payment, tax at the rate specified in the First Schedule 6[:]
6[Provided that, where on an application of
an assessee the Deputy Commissioner gives a certificate in writing that the
assessee is liable to pay tax under any treaty or convention for avoidance of
double taxation, entered into between the Government of Pakistan and the
country of residence of the assessee, at a rate which is lower than the rate
specified in the First Schedule, the person responsible for paying any sum as
fees for technical services to such assessee shall, until such certificate is
cancelled by the Deputy Commissioner, deduct tax at such lower rate.]
(4) Notwithstanding
anything.; contained in this Ordinance,---
(a) any person responsible for making any payment in full or in
part (including a
1 Subs. by Act 10 of 1993, s.5, for
“Income Tax Officer”.
2The words “and sub-section (2)” omitted
by the Finance Ordinance. 1982 (12 of 1982), s. 7.
3Subs, and Ins. by the Finance Act, 1987
(6 of 1987), s. 10.
4 Subs, by the Finance Act, 1995 (1
of 1995), s. 9, for second proviso which was previously added by Act 6 of 1987,
s. 10.
5 Ins. by the Finance Act, 1998 (3
of 1998), s. 5.
6 Subs. and added by the Finance
Act, 1993 (10 of 1993), s. 5.
Payment by way of an advance) to any
person 1[,
being resident,] (hereinafter referred to respectively as “payer” and
“recipient”), on account of the supply of goods or for service rendered to, or
the execution of a contract with the Government, or a local authority, or 2[a
company], 3[or
a registered firm,] or any foreign contractor or consultant or consortium
shall 4*
* * deduct advance tax, at the time of making such payment, at the rate
specified in the First Schedule, and credit for the tax so deducted in any
financial year shall, subject to the provisions of section 53, be given in computing
the tax payable by the recipient for the assessment year commencing on the
first day of July next following the said financial year, or in the case of an
assessee to whom section 72 or section 81 applies, the assessment year, if any,
in which the “said date,” as referred to therein, falls whichever is the
later 4[:]5*
6[Provided that the provisions of this
clause shall apply, mutatis mutandis, to any payment made on or
after the first day of July, 1998, to a non-resident person on account of
execution of a turnkey contract, a contract or sub-contract for designing,
supply of plant and equipment and construction of power projects, a contract
for construction, assembly or like project in Pakistan or any other contract
for construction or for services rendered other than that to which the
provisions of sub-sections (3A) and (4A) apply].
7Explanation.—For the purposes of clause (a) the
expression “supply of goods” includes both cash and credit purchases of goods
by the payer, whether under a contract or not, on credit or in cash.]
(b) the Commissioner may, on an application made by any such
recipient and after making such enquiry as he thinks fit, allow, by an order in
writing, any person responsible for making such payment not to deduct any tax
from any payment or payments made to such recipient in any financial year; and
where such order is made, the person responsible for making any payment shall
thereafter, and until
1 Ins. by the Finance Ordinance 1980
(25 of 1980), s. 6.
2 Subs, ibid for certain words
(w.e.f. 1-7-1980).
3 Ins. and omitted by the Finance
Act, 1991 (12 of 1991). s. 5.
4 Subs. by the Finance Act, 1992 (7
of 1992), s. 7, for semi-colon.
5 The word “and” omitted by
Ordinance 1980 (25 of 1980), s. 6.
6 Subs. by the Finance Act 1998 (3
of 1998), s. 5, for the original proviso.
7 Explanation added ibid.,
Such order is cancelled, make such payment
without deduction tax under clause (a) 1[;
and]
2* * * * * * *
3[Provided that,---
(i) nothing contained in clause (a) or clause (b) shall apply to
any payment made on account of the refund of any security deposit 4[or
to the purchase of an asset under a lease and buy back agreement by a modaraba
or a leasing company]; and
(ii) nothing contained in sub-section (10) shall apply to
companies as payers.].
5* * * * * * *
6[(4A) Any person responsible for making
any payment in full or in part (including a payment by way of an advance) to
any person, on account of brokerage or commission on behalf of Government, a
local authority, a company, 7[a
registered firm,] a foreign contractor or consortium shall 8*
* * deduct advance tax, at the time of making such payment, at the rate
specified in the First Schedule and credit for the tax so deducted in any
financial year shall, subject to the provisions of section 53, be given in
computing the tax payable by the recipient for the assessment year commencing
on the first day of July next following the said financial year, on in the case
of an assessee to whom section 72 or section 81 applies, the assessment year,
if any, in which the “said date”, as referred to therein, falls, whichever is
the later 8[:]
9* * * * * * *
(5) Notwithstanding
anything contained in any law for the time being in force,---
(a) the Collector of Customs shall, in the case of every
importer of goods, collect advance tax computed, on the basis of the value of
such goods as increased
1Subs, by the Finance Ordinance. 1980 (25
of 1980), s. 6, for the colon.
2 Cl. (c) Committed by the Finance
Act, 1994 (12 of 1994), s. 7.
3 Subs, by the Finance Act, 1995 (I
of 1995), s. 9, for proviso, which was previously subs, by Act 12 of 1994, s.
7, for the original proviso.
4 Ins. by the Finance Act,1998 (3 of
1998), s. 5.
5Explanation omitted by the Finance Ordinance,
1981 (24 of 1981), s. 5. [w.e.f. 1-7-1981),
6 Ins. by the Finance Act, 1989 (5
of 1989), s. 6. .
7Ins. by the Finance Act, 1991 (12 of
199.1), s. 5.
8 Omitted and subs, ibid., .
9 Proviso omitted by the Finance
Act, 12 of 1994, s. 7.
by the customs duty and sales‑tax,
if any 1[levied]
thereon, at the rates specified in the First Schedule, and credit for the tax
so collected in any financial year shall, subject to the provisions of section
53, be given to computing the tax payable by such importer for the assessment
year commencing on the first day of July next following the said financial
year, or in the case of an assessee to whom section 72 or section 81 applies,
the assessment year, in which the “said date”, as referred to therein, falls
whichever is the later;
(b) the tax under clause (a) shall be collected in the same
manner and at the same time as the customs duty, as if such goods (even though
exempt from such duty) were liable to such duty, and all the provisions of the
Customs Act, 1969 (IV of 1969) shall, so far as may be, apply accordingly. [:]2
3[Provided that in the case of a
manufacturer importing raw materials exclusively for its own use, the Regional
Commissioner of Income Tax may certify reduction of the rate of collection
under this sub-section 4[upto
one hundred] per cent, if the aggregate of tax paid or collected 5*
* * during that year equals the amount of tax paid by such assessee in the
immediately preceding year and the certificate is riot issued during the first
year of assessee’s business:
6[Provided further that the provisions of
this sub-section shall not apply to,---
(i) any person re-importing re-usable
containers for re-export qualifying for customs and sales tax exemption on
temporary import under Customs Notification S.R.O. 344(I)/95, dated the 25th
April, 1995; or
(ii) any person importing the following petroleum
products, namely:---
“Motor Spirit (MS), Furnace
Oil (FO), JP-1 and MTBE.]
Provided also that if at any
stage it is known that the provisions of this proviso have been misused, such
person shall be treated as an assessee in default in respect of such tax and be
treated accordingly.]
1 Subs, by the Finance Act, 1995 (1
of 1995), s. 9, for “Leviable”.
2 Subs. by the Finance Act, 1996 (9
of 1996), s. 13, for colon.
3 Provisos added ibid.,
4 Subs, by the Finance Act, 1997 (22
of 1997), s. 7. for “by fifty”.
5 The certain words omitted ibid.,
6 Subs, ibid., for second proviso.
1* * * * * * *
Explanation.____As
used in this subsection,---
(i) “value”, in relation to any goods, means the value as
determined under section 25 of the Customs Act, 1969 (IV of 1969), as if the
goods were subject to ad valorem duty; and
(ii) “Collector of Customs” means a person appointed as
Collector of Customs under section 3 of the Customs Act, 1969 (IV of 1969) and
include a Deputy Collector of Customs, an Assistant Collector of Customs or an
officer of Customs appointed as such under the aforesaid section.
2[(5A) Any person, being an authorised
dealer in foreign exchange, shall at the time of realisation of foreign
exchange proceeds on account of export of goods by a person, being an exporter,
deduct tax at the rates specified in the First Schedule:
3* * * * * * *
4[(5B) On encashment of any bearer
certificate (whether in Pakistan rupee or foreign currency) purchased on or
after the 15th day of June, 1995, issued by or on behalf of the Government,
banking company, financial institution or any company referred to in sub-clause
(a) or sub-clause (b) of clause (16) of section 2, any local authority or any
finance society, any person responsible for encashment of such certificate
shall deduct advance tax, at the time of encashment of such certificate, at the
rate specified in the First Schedule.]
(6) Any person responsible
for the collection of motor vehicles tax shall, at the time of collecting the
said tax, collect income tax at the rates specified in the First Schedule in
respect of any transport vehicle 5***:
Provided that where the
motor vehicles tax is collected in instalments, income tax may also be
collected in like manner:
1 Proviso omitted by the Finance
Act, 1994 (12 of 1994), s. 7.
2 Ins. by the Finance Act, 1992 (7
of 1992), s. 7.
3 Proviso omitted by Act 12 of 1994,
s. 7.
4 Sub-section (5B) ins. by the
Finance Act, 1995 (1 of 1995), s. 9, which was previously amended by various
enactments.
5Omitted by Act 7 of 1992, s. 7.
Provided further that the
collection of tax in respect of passenger transport vehicles with registered
seating capacity of not less than 1[ten]
persons shall be made 2[for
a period of ten years commencing with the first day of July of the year of make
of such vehicles]
3[6A) The principal officer of a company
shall, at the time of making payment to a shareholder, not being a company, on
account of dividends, deduct tax at the rate specified in the First Schedule.]
4* * * * * * *
(7) The principal officer
of any domestic company shall, before the company issues bonus shares or bonus
to its shareholders, pay to the credit of the Federal Government the tax at the
rates specified in the First Schedule; and where the principal officer fails to
do so the company of which he is the principal officer shall, without prejudice
to any other liability which it may incur under this Ordinance, be deemed to be
an assessee in default in respect of the said tax:---
Provided that the tax
payable in respect of bonus shares or bonus, as the case may be, may be
recovered from the shareholder receiving such bonus or bonus shares, if it
cannot be recovered from the company and all the provisions of this Ordinance
shall, so far as may be, apply accordingly.
5[(7A) Any person making sale, by public
auction, of any property 6*
* * belonging to the Government, a local authority, a public company, a foreign
association declared to be a company under clause (16) of section 2, or a
foreign contractor or consultant or consortium shall collect advance tax
computed on the basis of sale price of such property and at the rate specified
in the First Schedule, from any person to whom such property is sold, and
credit for the tax so collected in any financial year shall, subject to the
provisions of section 53 be given in computing the tax payable by the person
purchasing such property for the assessment year commencing on the first day
of July next following the said financial year, or in the case of an assessee
to whom section 72 or section 81 applies, the assessment year, if any, in
which the “said date” as referred to therein, falls, whichever is the later.]
1 Subs, by the Finance Act, 1989 (5
of 1989), s. 6. “for twenty”
2 Subs, by the Finance Ordinance,
J980 (25 of J980), s. 6, for certain words
3 Subs, by the Finance Act, 1991 (12
of 1991), s. 5.
4 Proviso omitted by the Finance
Act, 1994 (12 of 1994), s. 7.
5 Sub-section (7A) ins. by the
Finance Act, 198) (24 of 1981). s. 5.
6 The certain words omitted by the
Finance Act, 1992 (7 of 1992). s. 7.
1[Explanation.—For the purposes of
this sub-section, sale of any property includes the awarding of any lease to
any person, including a lease of the right to collect octroi duties, tools,
fees or other levies, by whatever name called.]
2[(7B) Any person responsible for making
any payment in full or in part (including a payment by way of an advance) to
any person, on account of the rent of house property (including rent of
furniture 3[fixtures
and services] if any) on behalf of Government, a local authority, a company or
the diplomatic mission of a foreign state shall, where the annual rent of such
property exceeds one hundred thousand rupees, deduct advance tax, at the time
of making such payment, payment, at the rate specified in the First Schedule,
and credit for the tax so deducted in any financial year shall, subject to the
provisions of section 53, be given in computing the tax payable by the
recipient for the assessment year commencing on the first day of July next
following the said financial year, on in the case of an assessee to whom
section 72 or section 81 applies, the assessment year, if any, in which the
“said date”, as referred to therein, falls, whichever is the later 4[:]
5* * * * * * *
6[(7BB) (a) At the time of approving any
building plan for construction in respect of any building, not being a
residential house, the person responsible for such approval, shall collect
advance tax from the owner of such property on the estimated cost of
construction of such building at one-half of the rates specified in the First
Schedule, and the credit for the tax so collected in any financial year shall,
subject to the provisions of section 53, be given in computing the tax payable
by such owner for the assessment year commencing on the first day of July
next-following such financial year, or in the case of an assessee to whom
section 72 or section 81 applies, the assessment year in which the “said date”
as referred to therein, falls, whichever is the later; and
(b) At the time of issuing completion certificate for the
building referred to in clause (a), the person responsible for issuance of such
certificate shall collect advance tax from the owner of such property on the
estimated cost of construction of such building at one half of the rates
specified in the First Schedule, and the credit for the tax so collected in any
financial year shall, subject to the provisions of section 53, be given in
computing the tax payable by the owner of the building for the assessment year
commencing on the first day of July next following such financial year, or in
the case of an assessee to whom section 72 or section 81 applies, the
assessment year in which the “said date” as referred to therein, fails,
whichever is the later:
1 Explanation inserted by the
Finance Ordinance, 1984 (28 of 1984), s. 6.
2 Ins. by the Finance Act, 1989 (5
of 1989), s. 6.
3 Subs, by the Finance Act, 1994 (12
of 1994), si 7. for “and Fixtures”.
4Subs. by the Finance Act, 1991 (12 of
1991), s. 5. for “full stop”.
5 Proviso omitted by Act 12 of 1994,
s. 7.
6Ins. by the Finance Act, 1993 (10 of
1993), s. 5.
Provided that the Central
Board of Revenue may, by notification in the official Gazette, specify,---
1* * * * * * *
(ii) the method for the determination of the “estimated
cost-of construction.];
2[(7C) Any person responsible for making
any payment of 3*
* * to any person (hereinafter called the ‘recipient’) by way of prize on prize
bond or on account of winnings from a raffle, lottery or crossword puzzle shall
deduct from the said payment (in case the payment is made in cash) or collect
from the recipient (in case the payment is made in any other form) advance tax
at the time of such payment at the rate specified in the First Schedule.]
4[(7D) Any person responsible for making
any payment by way of profit or interest on bonds, certificates, debentures,
securities or instruments of any kind issued by any banking company, or any
company referred to in sub-clause (a), or sub-clause (b) of clause (16) of
section 2, or any local authority, or any finance society, not being a payment
to which sub-section (2) of section 50 applies, shall deduct advance tax, at
the time of making such payment, at the rate specified in the First
Schedule 5[:]
6[Provided that where the Deputy
Commissioner gives a certificate in writing (which certificate he shall give
in every proper case for a period of three years, on the application of a
recognized provident fund) that to the best of his knowledge and belief, it
shall not be liable to pay any tax under this Ordinance or shall be liable to
pay tax at a rate which is less than the rate specified in the First Schedule,
the person responsible for paying any income referred to in this sub-section to
such recognized provident fund shall, until such certificate is cancelled by
the Deputy Commissioner, pay the amount involved without deduction or deduct
tax at such less rate, as the case may be].
1 Cl. (i), omitted by the Finance
Act, 1994 (12 of 1994), s. 7.
2 Ins. by the Finance Act, 1990 (7
of 1990), s. 7.
3 The certain words omitted by the
Finance Act, 1998 (3 of 1998), s. 5.
4 lns. by the Finance Act, 1991 (12
of 1991), s. 5.
5 Subs. by the Finance Act, 1997 (22
of 1997), s. 7, for full stop.
6 Proviso added ibid.,
1[(7E) At the time, of preparing
electricity consumption bills in respect of any commercial or industrial
consumer, the person responsible for preparing such bills, shall charge tax on
the amount of the electricity bill at the rates specified in the First
Schedule, and the credit for the tax so collected in any financial year shall,
subject to the provisions of section 53, be given in computing the tax payable
by such consumer for the assessment year commencing on the first day of July
next following the said financial year, or in the case of an assessee to whom
section 72 or section 81 applies, the assessment year in which the “said date”
as referred to therein falls, whichever is the later,];
2[(7F) At the time of preparing 3[telephone
bills or issuing or selling prepaid telephone cards for mobile telephone, the
person responsible for preparing such bills or issuing or selling such prepaid
telephone cards shall charge tax on the amount of such bill or card, as the
case may be] at; the rates specified in the First Schedule, and the credit for
the tax so collected in any financial year shall, subject to the provisions of
section 53, be given in computing the tax payable by such subscriber for the
assessment year commencing on the first day of July next following the said
financial year, or in the case of an assessee to whom section 72 or section 81
applies, the assessment year in which the “said date” as referred to therein
falls, whichever is the later:---
Provided that nothing
contained in this sub-section shall apply where the Government or a diplomat is
the subscriber,].
(8) Any sum deducted or
collected, or purported to be deducted or collected, under this section shall
be,---
(a) deemed, in cases to which subsections (1), (2) and (3)
apply, to be income received by the assessee;
(b) treated as payment of tax on behalf of the assessee; and
(c) paid within the prescribed time and in the prescribed manner
by the person making the deduction or collection, as the case may be, to the
credit of the Federal Government.
1 Ins. by the Finance Act, 1992 (7
of 1992), s. 2.
2 New sub-section (7F), ins. by the
Finance Act, 1996 (9 of 1996), s. 13.
3Subs, by the Finance Act, 1998 (1 of
1998), s. 5, for “certain words”.
(9) For the purpose of this
section,---
(a) “person responsible” means the prescribed person and
includes,---
(i) in the case of a company, local authority or an association
of persons, the principal officer thereof; and
(ii) in every other case, the payer himself; and
(b) any sum from which tax is deductible under this section
shall be deemed to be income chargeable to tax under this Ordinance.
1[(10) Notwithstanding the omission of the
first proviso to subsection (2A), clause (c) of sub-section (4), and the
provisos to subsection (4A), sub-section (5), sub-section (5A), sub-section
(6A), sub-section (7B) and sub-section (7BB), and substitution of the proviso
to sub-section (4), under the Finance Act, 1994 (XII of 1994), and without
prejudice to the provisions of section 6 or section 24 of the General Clauses
Act, 1897 (X of 1897), all the notifications issued under the aforesaid
provisions till the 30th day of June, 1994, shall be deemed to have been
validly made and continue to remain in force until specifically repealed or
amended.].
51. Certificate of
deduction of tax. Every
person deducting or collecting tax under section 50 shall, at the time of
making payment of the sum from which tax has been deducted, or at the time of
the collection of tax, as the case may be, furnish to the person to or from
such payment or collection has been made, a certificate to the effect that tax
has been so deducted or collected and such other particulars as may be
prescribed.
52. Liability of persons
failing to deduct or pay tax. Where any person fails to deduct or collect, or having deduced tar
collected, as the case may be, fails to pay the tax as required by, or under,
section 50, he shall, without prejudice to any other liability which he may
incur under this Ordinance, be deemed to be an assessee in default in respect
of such tax.
2[53. Advance payment of tax.___(1) An assessee,---
(a) other than a company or a registered firm, whose total
income (excluding income to which section 27, section 80B, section 80C, section
80CC or sub-sections (1) and (2) of section 50 applies) for the latest
assessment year in respect of which the tax payable by him has been determined
under sections 59, 59A, 60, 62, 63 or 65, is not less than one hundred and
fifty thousand rupees shall be liable to pay by way of 1[advance
tax to the credit of the Federal Government, on or before the seventh day of
October, the seventh day of January, the seventh day of April and the
twenty-first day of June in each financial year] an amount equal to one-fourth
of the full amount of income tax and super-tax so determined to be payable in
respect of that assessment year (without making any adjustment for any tax
already paid by way of advance tax or otherwise), as reduced by the tax, if
any, already collected or deducted and paid under section 50 in the said financial
year; and
1 Sub-section (10) added by the
Finance Act, 1995 (1 of 1995), s. 9.
2 Subs. by the Finance Act, 1997 (22
of 1997), s. 7, for the original section 53.
(b) being a company or a registered firm shall, in respect of
its income (excluding income to which section 27, section 80C, 2[or
section 80CC] applies) be liable to pay by way of advance tax an amount which
bears the same proportion to the company’s or a registered firm’s turnover for
that year as the tax assessed, bears to the turnover assessed, for the latest
assessment year in respect of which the tax payable by the company or
registered firm has been determined under sections 59, 59A, 60, 62, 63 or 65,
as reduced by the tax already paid under section 50 3[other
than the tax attributable to income covered by sections 80C and 80CC] in the
said financial year.
(2) The tax payable,---
4* * * * * * *
(ii) under clause (b) of sub-section (1) (i.e. by
companies and registered firms) shall be paid to the credit of the Federal
Government in each financial year, according to the following schedule:
TURNOVER RELATING TAX TO BE PAID
TO THE PERIOD ON OR BEFORE
From 1st of July to 30th of September. the
seventh day of October
From 1st of October to [31st of December.]5 the
seventh day of January
From 1st of January to [31st of March.]5 the
seventh day of April
From 1st of April to 30th of June. the
seventh day of June
(Turnover for 16th June to 30th June shall
[twenth-first day of June]6
be taken equal to the turnover of between
1st of June to 15th of June).]
1 Subs, by the Finance Act, 1998 (3
of 1998), s. 5. for “advance tax”.
2 Subs, ibid., for certain words.
3 Ins. ibid.,
4 Clause (i) omitted ibid.,
5 Subs, ibid., for “30th of December
and 30th of March”.
6 Subs, ibid., for “fifteenth day of
June”.
54. Payment of tax with
return of Income. Every
person who is required, under this Ordinance to furnish a return of total
income shall pay the tax payable, on the basis of such return, on or before
the date on which he is so required to furnish such return 1[:]
2[Provided that where such person has paid
any sum under subsection (1) or sub-section (2) of section 53, the3[Deputy
Commissioner] shall adjust the said sum against the tax payable under this
section.]
4[Explanation.—For the removal of
any doubt, it is declared that the expression “tax payable” as used in this
section includes the tax under section 80D.];
CHAPTER VII
ASSESSMENT
55. Return of total
income.___(1) Every person,---
(a) whose total income or the total income of any other person,
in respect of which he is assessable under this Ordinance, for any income year
(hereinafter referred to as the ‘said income year’) exceeds the maximum amount
which is not chargeable to tax under this Ordinance; or
(b) who has been charged to tax for any of the four income years
immediately preceding the said income year, 5[or]
6[(c) who fulfills any of the following conditions, namely:---
(i) owns immovable property, with land area of 250 sq. yards or
more, located in areas falling in the limits of a Metropolitan/Municipal
Corporation, a Cantonment Board or the
(ii) owns a motor vehicles;
(iii) subscribes a telephone; or
1Subs, by the Finance Ordinance, 1980 (25
of 1980), s. 6. for full stop.
2 Proviso added ibid., this proviso
was earlier deemed to have been added by S.R.O. 949(I)/79, dated 18-10-1979,
for the assessment year 1979-80.
3 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
4 Ins. by the Finance Act, 1993 (10
of 1993), s. 5.
5 Added by the Finance Supplementary
(Amdt.) Act, 1997.(4 of 1997). s. 4.
6 New cl. (c) ins. ibid.,
(iv) has undertaken foreign travel (except for the purposes
of Haj 1[,
Umrah] or Ziarat) during the income year,]
shall furnish a return of
his total income or the total income of such other person, as the case may
be 2[alongwith
the return of wealth-tax in accordance with the Wealth-tax Act, 1963 (XV of
1963) 3[;]
3[Provided that, where the entire total
income of an assessee during the income year consists of income chargeable
under the head “Salary”, he may, instead of furnishing a return as aforesaid,
file a certificate from his employer in the prescribed form setting forth such
particulars, and accompanied by such statements, and verified in such manner,
as may be prescribed, and the said certificate shall be deemed to be a return
under this sub-section [:]4
5[Provided further that the persons
otherwise not required to file return of total income under the first proviso,
or section 80C or section 80CC shall, except in the case of firms, associations
of persons, or bodies of individuals, whether incorporated or not, and
companies who are otherwise not chargeable to wealth-tax under the Wealth-tax
Act, 1963 (XV of 1963), 6[and
persons whose declared income for the relevant year or the last declared or
assessed income is less than one hundred thousand rupees,] file return of
wealth alongwith the certificate of statement of their income in lieu of such
return of total income.]
7[Provided also that clause (c) of this
section shall not apply to a person, who is:---
(a) widow;
(b) orphan below the age of 25 years;
(c) pensioner;
(d) disabled; or
(e) non-resident Pakistani in the case of foreign travel 8[and
ownership of immovable property].
1Ins. by the Finance Act, 1997 (22 of
1997), s. 7.
2 Added by the Finance Act, 1994 (12
of 1994), s. 7.
3 Subs, and added by the Finance
Act, 1987 (6 of 1987), s. 10.
4Subs, by the Finance Act, 12 of 1994, s.
7, for full-stop.
5 Proviso added ibid.,
6 Ins. by the Finance Act, 1995 (1
of 1995), s. 9.
7 Proviso added by the Finance
Supplementary (Amdt.) Act, 1997 (4 of 1997), S. 4
8 Added by the Finance Act, 22 of
1997, s. 7.
1[(2) The return of total income under
subsection (1) shall be furnished,---
(a) in the case of a company, in respect of the income year
ending at any time between the first day of January and the thirtieth day of
June, both days inclusive, on or before the thirty-first day of December next
following the income year; and
(b) in the case of an assessee other than referred to in clause
(a), on or before the thirtieth day of September next following the income
year.]
2[(3) The 3[Deputy
Commissioner] may, on sufficient cause being shown, extend the date for the
delivery of the return so, however, that no extension of time for a period or
periods amounting in all to more than fifteen days from the dates specified in
sub-section (2) shall be allowed except with the approval of the
Inspecting 4[Additional
Commissioner.]
5[Explanation.—Non-furnishing of
wealth tax return alongwith the return of total income, certificate or
statement of income shall render such return, certificate or statement as
invalid.]
6[55A. Method of furnishing return of total income. Where
an assessee is required by section 55 to furnish a return of his total income,
such return shall be furnished by registered post, with acknowledgement due,
or delivered by hand, to 7[the
officer having jurisdiction or such other officer which the Commissioner of
Income tax may specify.]
56. Notice for
furnishing return of total income. The 3[Deputy
Commissioner] may, at any time by notice in writing, require any person who, in
his opinion, is 8[or
is required to file return of total income under section 55] for any income
year to furnish a return of total income for such year within thirty days from
the date of service of such notice or such longer or shorter period as may be
specified in such notice or as the 3[Deputy
Commissioner] may allow.
1Subs, by the Finance Act, 1995 (I of
1995), s. 9, for “sub-section (2)”, which was previously amended by the various
enactments.
2 Sub-section (3) added by the
Finance Ordinance, 1980 (25 of 1980). s. 6.
3Subs. by Act 10 of 1993, s. 5, for
"Income Tax Officers".
4 Subs. by the Finance Act, 1993 (10
of 1993), s. 5, for "Assistant Commissioner".
5Explanation added by the Finance Act,
1994 (12 of 1994). s. 7.
6 Subs, by the Finance Act, 1988, (6
of 1988), s. 6.
7 Subs, by Act 1 of 1995, s. 9, for
certain words.
8Ins. by the Finance Act, 1997 (22 of
1997), s. 7.
57. Revised returns of
total income. If any
person has not furnished a return of total income as required by, or under, any
provision of this Ordinance (hereafter in this section referred to as
‘return’), or having furnished a return, discovers any omission or wrong
statement therein, he may, without prejudice to any liability incurred by him
under any provision of this Ordinance or the repealed Act, furnish a return or
a revised return, as the case may be, at any time before the assessment is
made.
58. Wealth statement.___(1) The 1[Deputy
Commissioner] may, by notice in writing, require any assessee to furnish, on a
date to be specified in the notice, a statement (hereinafter referred to as the
‘wealth statement’) in the prescribed form and verified in the prescribed
manner giving particulars,---
(a) his total assets and liabilities as on the date or dates
specified in such notice;
(b) the total assets and liabilities of his spouse, minor
children and dependents as on the date or dates specified in such notice; *2
(c) any assets transferred by him to any
person during the period or periods specified in such notice and the
consideration therefor 3[;]
4[(d) the total expenses incurred by the assessee, his
spouse, minor children and dependents during the period or periods specified in
the notice and the details thereof.]
5* * * * * * *
59. Self‑assessment.___6[(1) Where the return of total income for
any income year has been furnished by an assessee 7[being
an individual, an unregistered firm, a registered firm, an association of
persons or a Hindu undivided family] under section 55 qualifies for acceptane
in accordance with the provisions of a scheme of self-assessment made by the
Central Board of Revenue for that year or under any instructions or orders
issued thereunder, the 1[Deputy
Commissioner] shall assess, by an order in writing, the total income of the
assessee on the basis of such return and determine the tax payable on the basis
of such assessment.
1 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
2 The word “and” omitted by the
Finance Act, 1996 (9 of 1996), s. 13.
3 Subs, ibid., s. 13, for full-stop.
4 Newel, (d) added ibid.,
5 Sub-section (2) omitted ibid.,
6Sub-section (1) subs, by the Finance
Ordinance, 1980 (25 of 1980), s. 6.
7 Ins. by the Finance Act, 1990 (7
of 1990), s. 7.
1[Explanation.—For the removal of doubt it
is hereby declared that a return of total income furnished under section 55
does not include a return of total income furnished under section 57.]
2[(1A) Notwithstanding anything contained
in sub-section (1). the Central Board of Revenue or any authority subordinate
to it, if so authorised by the Central Board of Revenue in this behalf, may, in
accordance with a scheme referred to in sub-section (1), select out of returns
referred to in that subjection any cases or classes of cases or persons or
classes of persons, howsoever determined, for assessment under section 62, and
the 3[Deputy
Commissioner] shall proceed to make the assessment under that section or, if
the circumstances so warrant, under section 63, accordingly.]:
4* * * * * * *
5* * * * * * *
(3) In 6[assessing
the total income and determining the tax payable under sub-section (1), 3[Deputy
Commissioner] may make such adjustments as may be necessary, including any
adjustment under section 34, 35, 36, 37, 38,50,53 or 54, the rules made under
section 165, the First Schedule and the Third Schedule.
(4) No order under
sub-section (1) shall be made in any case after the thirtieth day of June of the
financial year next following the income year in respect of which a return of
total income has been furnished under section 55 [:]7
8[Provided that if such order is not passed
by such date, the acknowledgement issued under section 55A in respect of the
return of total income shall be deemed to be the assessment order and notice of
demand referred to in section 85.]
4* * * * * * *
9[59A. Assessment on the basis of return—(1) If
the 3[Deputy
Commissioner] is satisfied without requiring the presence of the assessee or
the production by him of any evidence that a return furnished under section 55
is correct and complete, he shall by an order in writing
1 Added by the Finance Act, 1985 (1
of 1985), s. 4.
2 Ins. ibid.,
3 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
4 Omitted by the Finance Act, 1990
(7 of 1990). s. 7.
5 Omitted by the Finance Ordinance,
1980 (25 of 1980), s. 6.
6Subs. ibid., for certain words, etc.
7 Subs, by the Finance Act, 1995 (1
of 1995), s. 9. for full-stop.
8 Proviso added ibid.;
9Section 59A ins. by Ord. 25 of 1980.
s.6.
assess the total income of the assessee and determine the tax
payable on the basis of such return.
(2) The provisions of 1[sub-section
(3) of section 59 shall apply to an assessment and determination under this
section as they apply to an assessment and determination under that section.]
2[59B. Assessment under Simplified Procedure for
Assessment.—(1) Where the return of total income of an assessee, being an
individual, an unregistered firm, a registered firm, an association of persons
or a Hindu undivided family, for the income year relevant to the assessment
year commencing on or after the first day of July, 1988 3[and
ending on or before the thirtieth day of June, 1990,] qualifies for acceptance
in accordance with the provisions of a scheme of Simplified Procedure for
Assessment made by the Central Board of Revenue for that year, or under any
instructions or orders issued thereunder, the total income of the assessee
shall be assessed on the basis of the said return.
(2) After receipt of a
return of total income referred to in sub-section (1), an acknowledgement of
its receipt, in the prescribed from, shall be issued by such income tax
authority subordinate to the Commissioner as may be authorised in this behalf
by the Commissioner.
(3) The acknowledgement
referred to in sub-section (2) shall be deemed to be an order of assessment in
respect of the return of total income referred to in sub-section (1).]
4[59C. Fixed tax.— 5[(1)
Notwithstanding anything contained in this Ordinance, the Central Board of
Revenue, may make a scheme or schemes of fixed tax 6[or
minimum fixed tax],---
(a) for persons maintaining small establishments to carry on
business or profession whereunder an assessee may opt to pay fixed amount of
tax without being required to furnish a return of his total income under
section 55 or 56 and receipt obtained for payment of such tax shall deem to be
an order of assessment under section 59A; *7
1 Subs, by the Finance Act, 1983 (14
of 1983), s. 5.
2 Ins. by the Finance Act. 1988 (6
of 1988)s. 6.
3 Ins. by the Finance Act, 1990 (7
of 1990), s. 7.
4 Ins. by the Finance Act, 1991 (12
of 1991), s. 5.
5 Subs, by the Finance Act, 1992 (7
of 1992), s. 7.
6 Ins. by the Finance Act. 1996 (9
of 1996), s. 13.
7The word “and” omitted ibid.
(b) for persons carrying on any business or profession in
shopping centres and commercial markets whereunder an assessee shall pay fixed
amount of tax [; and]1
2[(c) for persons engaged in or carrying on any business or
profession, whereunder an assessee may be required to pay a minimum fixed
amount of tax without being required to furnish a return of his total income
under section 55 or 56 and receipt obtained for payment of such tax shall be
deemed to be an order of assessment under section 59A;]
(2) The scheme 3[or
schemes] referred to in sub-section (1) may provide for such classes of persons
by whom fixed tax may become payable, at such rates, and in such areas, as may
be specified in the scheme 3[or
schemes].
(3) The Central Board of
Revenue may, by notification in the official Gazette, make provisions relating
to the payment and collection of, or any other matter connected with or
incidental to, the fixed tax.].
59D. Tax undisclosed income.— (1)
Notwithstanding anything contained in this Ordinance, the Central Board of
Revenue may, make scheme of payment of tax in respect of undisclosed income.
(2) Where any person
declares his undisclosed income in accordance with the scheme and the rules the
tax on such income shall be charged at the rate of seven and half per cent of
such income.
(3) Where a person has paid
tax on his undisclosed income in accordance with the scheme, the rules, he
shall,---
(a) be entitled to incorporate in his books of account such
undisclosed income in tangible form; and
(b) not be liable to pay any tax, charge, levy, penalty or
prosecution in respect of such income under this Ordinance.
(4) For the purpose of this
section “undisclosed income” shall mean any income (including any investment to
be deemed as income under section 13 or any other deemed income) for any year
or years relevant to any assessment year or years ending on or before the
1 Added by the Finance Act, 1996 (9
of 1996), s. 13.
2 New clause (c) added ibid.,
3 Ins. by the Finance Act, 1992 (7
of 1992), s. 7.
thirtieth day of June, 1997, which was chargeable to tax but was
not so charged.]
1[60. Provisional assessment. Where no return of total income has
been furnished by an assessee for any income year, the 2[Deputy
Commissioner] may, by an order in writing made before any assessment is made
under section 62, 63 or 65 assess provisionally the total income of the
assessee and the tax payable by him on the basis of the assessment, if any,
made under any of the said sections or under section 59 or section 59A for the
latest preceding assessment year.
3[60A. Provisional assessment in certain
cases. Where a
concealed asset of any person comes to the knowledge of the 2[Deputy
Commissioner] or such asset is impounded by any department or agency of the
Federal or Provincial Government, the 2[Deputy
Commissioner] may, at any time, by an order in writing before making any
assessment under section 62, 63 or 65, assess provisionally the total income of
such person and the tax payable by him on the basis of the assessment:---
Provided that proceedings
under this section shall not be initiated without prior permission in writing
of the Commissioner.
Explanation.—For the purpose of this section,
“concealed asset” means any property or asset which, in the opinion of
the 2[Deputy
Commissioner] was required from any income liable to tax.]
61. Notice for
production of books of accounts, etc. The 2[Deputy
Commissioner] may serve upon any person who has furnished a return of total
income for any income year, or upon whom a notice has been served to furnish
such return, a notice requiring him, on a date specified therein, to attend at
the2[Deputy
Commissioner’s] office or to produce, or cause to be produced, any evidence on
which such person may rely in support of the return, if furnished and such
accounts, documents or evidence (including accounts or documents relating to
any period prior or subsequent to the said income year) as the 2[Deputy
Commissioner] may require:---
Provided that the 2[Deputy
Commissioner] shall not require the production of any accounts relating to a
period more than three years prior to the income year.
1 Sections 60 to 62 subs, by the
Finance Ordinance 1980 (25 of 1980), s. 6.
2 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”..
3Ins. by the Finance Act, 1992 (7 of
1992), s. 7
62. Assessment on
production of accounts, evidence. The 1[Deputy
Commissioner] after considering the evidence on record (including evidence, if
any, produced under section 60 or section 61) and such other evidence as the1[Deputy
Commissioner] may require, on specific points, shall by an order in writing,
assess, the total income of the assessee and determine the tax payable by him
on the basis of such assessment 2[:]
2[Provided that where the assessee produces
books of account as evidence in support of the return, the 1[Deputy
Commissioner] shall, before disagreeing with such accounts, give a notice to
the assessee of the defects in the accounts and provide an opportunity to the
assessee to explain his point of view about such defects and record such
explanation and the basis of computation of total income of the assessee in the
assessment order.];
(2) Where a person is
authorised by the Central Board of Revenue under section 7 to assist the 1[Deputy
Commissioner] in making an assessment and the 1[Deputy
Commissioner] disagrees with the opinion of such person on any point concerning
assessment, the 1[Deputy
Commissioner] shall record in the order under subsection (1), the opinion of
such person and the reasons for his disagreement with such opinion.]
3[62A. Assessment after appellate decision. Where an assessment or re-assessment
or any order made under this Ordinance, has been annulled, set aside, cancelled
or modified, the proceedings may commence from the stage next preceding the
stage at which such annulment, setting aside, cancellation or modification
took place and nothing contained in this Ordinance shall render necessary the
re-issue of any notice which had already been issued or the re-furnishing or
re-filing of any return, statement, or other particulars which had already been
furnished or filed, as the case may be.]:
4[62B. In making any assessment for the year
beginning on the first day of July, 1995, the ‘income year’ shall be deemed to
include the period, if any comprised in the ‘income year’ as defined in the
repealed clause (b) of sub-section (26) of section 2, for which, the assessment
would have been made if the said clause had not been repealed and where such
income year exceeds a period of twelve months, the total income and the tax
payable shall be prorated on the basis of the average income of a period of
twelve months.]
1 Subs. by Act 10 of 1993, s. 5. for
“Income Tax Officer”.
2 Subs, and Added by the Finance
Act, 1993 (10 of 1993), s. 5.
3 Added by the Finance Act, 1987 (6
of 1987), s. 10.
4 New Section 62B ins. by the
Finance Act, 1995 (1 of 1995),-s. 9.
63. Best judgment
assessment. Where
any person,---
(a) fails to furnish a return of total income required to be
furnished by him under section 56, subsection (3) of section 72 or subsection
(3) of section 81; or
(b) fails to comply with any of the terms of a notice issued
under section 58 1**or
61.
the 2[Deputy
Commissioner] may, by an order in writing, assess the total income of the assessee
to the best of his judgment and determine the amount of tax payable by him.
3[64. Limitation for assessment. No assessment under section 4[59A]
section 62 or section 63 shall be made after the expiration of two years from
the end of the assessment year in which the total income was first assessable.
Provided that where for any
income year, an assessee has failed to furnish the return of total income under
section 55, the said period of two years shall commence from the end of the
financial year in which notice under section 56, subsection (3) of section 72
or subsection (3) of section 81, as the case may be, was served.
(2) Notwithstanding
anything contained in sub-section (1), where a return of total income 5*
* * has been filed after the end of the financial year in which the last date
of filing of such return specified in 6[section
55] falls, no assessment under section 4[59A],
62 or section 63 shall be made after the expiration of two years from the end
of the financial year in which the said return is filed.
(3) Notwithstanding
anything contained in sub-section (1), where, for any income year, an assessee
has failed to furnish the return of total income, no assessment under section
62 or section 63 shall be made after the expiration of two years from the end
of the financial year in which notice under section 56, sub-section (3) of
section 72 or sub-section (3) of section 81, as the case may be, was served.
65. Additional
assessment.____(1) 1f, in any year, for any reason,---
(a) any income chargeable to tax under this Ordinance has
escaped assessment; or
(b) the total income of an assessee has been under assessed, or
assessed at too low a rate, or has been the subject of excessive relief or
refund under this Ordinance; or
1 The comma and figure “60” omitted by
the Finance Act, 1980 (25 of 1980), s. 6.
2 Subs. by Act 10 of 1993, s. 5. for
“Income Tax Officer”.
3 Subs, by the Finance Ordinance,
1982 (12 of 1982), s.7.
4 Ins. by the Finance Ordinance,
1983 (14 of 1983), s. 5.
5 Omitted by the Finance Act, 1986
(I of 1986), s. 12.
6 Subs. ibid; for “that section”.
1[(c) the total income of an assessee or the tax payable by
him has been determined under subsection (1) of section 59 or section 59A or
deemed to have been so assessed or determined under sub-section (1) of section
59 or section 59A.]
the 2[Deputy
Commissioner] may, at any time, subject to the provisions of sub-sections (2),
(3) and (4), issue a notice to the assessee containing all or any of the
requirements of a notice under section 56 3***
and may proceed to assess or determine, by an order in writing, the total
income of the assessee or the tax payable by him, as the case may be, and all
the provisions of this Ordinance shall, so far as may be, apply accordingly:---
Provided that the tax shall
be charged at the rate or rates applicable to the assessment year for which the
assessment is made.
(2) No proceedings under
sub-section (1) shall be initiated unless definite information has come into
the possession of the 2[Deputy
Commissioner] 4[and]
he has obtained the previous approval of the inspecting 5[Assistant
Commissioner] of Income tax in writing to do so.
4[Explanation.___As
used in this sub-section, “definite information” includes information in
respect of sales and purchases, made by the assessee, of any goods, and any
information regarding acquisition, possession or transfer, by the assessee, of
any money, asset or valuable article, or any investment made or expenditure
incurred by him.]
6[(3) Notice under sub-section (1), in
respect of any income year, may be issued within ten years from the end of the
assessment year in which the total income of the said income year was first
assessable 4[:]]
4[Provided that, where the said notice is
issued on or after the first day of July, 1987, this sub-section shall have
effect as if for the words “ten years” the words “five years” were
substituted.]
1 Subs, by the Finance Act, 1992 (7
of 1992), s. 7.
2 Subs. by Act 10 of 1993, s. 5. for
“Income Tax Officer”.
3 The words and figure “or section
58” omitted by the Finance Ordinance, 1980, (25 of 1980), s. 6. These words
were earlier deemed to have been omitted by S.R.O. 885(I)/79, dated 2-10-1979,
for the assessment year 1979-80.
4 Subs, and added by the Finance
Act, 1987 (6 of 1987), s. 10
5 Subs. by Finance Act, 1993 (10 of
1993), s. 5. for “Assistant Commissioner”.
6 Sub-section (3) subs, by the
Finance Ordinance, 1982 (12 of 1982), s. 7.
1[(3A) Where a notice under sub-section (1)
is issued on or after the first day of July, 1982, no order under the said
sub-section shall be made after the expiration of one year from the end of the
financial year in which such notice was served.]
2* * * * * * *
66. Limitation for
assessment in certain cases.___(1) Notwithstanding anything contained in
section. 64 and sub-section (3) of section 65 where in consequence of, or to
give effect to, any finding or direction contained in any order made under this
Chapter or Chapter VIII, XIII or XIV or any order made by any High Court or the
Supreme Court of Pakistan in exercise of its original or appellate
jurisdiction,---
(a) an assessment is to be made on any firm or a partner of any
firm; or
(b) an assessment is to be made on the assessee or any other
person; or
(c) an assessment has been set aside, in full or in part, by an
order under section 132 or section 135 and no appeal is filed under section 134
against such order or no 3[appeal
filed] under section 136 in respect thereof, as the case may be,
such assessment may be made
at any time within two years in any case to clause which (a) or clause (b)
applies, and within one year in any case to clause which (c) applies, from the
end of the financial year in which such order is received by the 4[Deputy
Commissioner].
(2) Where, by any such
order, as is referred to in sub-section (1), any income is excluded,---
(i) from the total income of the assessee for any year and held
to be the income of another year;
(ii) from the total income of on person and held to be the
income of another person.
1 Sub-section (3A) subs, by the
Finance Ordinance, 1984 (28 of 1984), s. 6.
This shall be deemed to have been so substituted on the
fourteenth day of June, 1982.
This sub-section was earlier substituted by Ordinance XII of
1982.
2 Sub-section (4) omitted by the
Finance Act, 1995 (1 of 1995), 9.
3 Subs, by the Finance Act, 1997 (22
of 1997), s. 7, for “reference made”
4 Subs. by Act 10 of 1993, s. 5. for
“Income Tax Officer”.
the assessment of such
income ass income of another income year or of another person, as the case may
be, shall, for the purposes of the said sub section, be deemed to be an
assessment made in consequence of, or to give effect to, a finding or direction
contained in such order.
(3) Notwithstanding
anything contained in this Ordinance, where the ownership of any property the
income from which is chargeable under this Ordinance is in dispute in any civil
Court in Pakistan, the assessment on any person in respect of such income may
be made at any time within one year of the end of the financial year in which
the decision of such Court is brought, or otherwise comes, to the notice of
the 1[Deputy
Commissioner].
2[66A. Powers of Inspecting 3[Additional
Commissioner] to revise 1[Deputy
Commissioner].___(1) The Inspecting 3[Additional
Commissioner] may call for and examine the record of any proceedings under this
Ordinance, and if be considers that any order passed therein by the 1[Deputy
Commissioner] is erroneous in so far as it is prejudicial to the interests of
revenue, he may, after giving the assessee an opportunity of being heard and
after making, or causing to be made, such enquiry as he deems necessary, pass
such order thereon as the circumstances of the case justify, including an order
enhancing or modifying the assessment, or cancelling the assessment and
directing a fresh assessment to be made.
4[(1A) The provisions of sub-section (1)
shall, in like manner, apply,---
(a) where an appeal has been filed under sections 129, 134 and
137 or 5[an
appeal has been filed] under section 136, against an order passed by the 1[Deputy
Commissioner]; and
(b) where an appeal 6*
* * referred to in clause (a) has been decided, in respect of any point or
issue which was not the subject matter of such appeal 6*
* *
(2) No order under sub‑section
(1) shall be made after the expiry of four years from the date of the order
sought to be revised.
1 Subs. by Act 10 of 1993, s. 5. for
“Income Tax Officer”.
2Ins. by the Finance Ordinance, 1980 (25
of 1980), s. 6.
3Subs. by Finance Act, 1993 (10 of 1993),
s. 5. for “Assistant Commissioner”.
4 Ins. by the Finance Act, 1991 (12
of 1991), s,5.
5 Subs, by the Finance Act, 1997 (22
of 1997), s. 7, for certain words.
6 The words “or reference” omitted,
ibid., s.7.
1[Explanation___ For
the purpose of this section, an order prejudicial to the interests of revenue
shall include an order passed without lawful jurisdiction.];
67. Reference to
valuers.___(1) Where, in the course of any assessment
proceedings, the 2[Deputy
Commissioner] is of the opinion that the value of any capital asset shown in
any return, statement or other document furnished by an assessee is not
correct, he may, either on an application by the assessee or otherwise, refer
the matter to a valuer or valuers for ascertaining the proper value of such
assets.
(2) Nothing contained in
sub-section (1) shall be so construed as to make it obligatory on the 2[Deputy
Commissioner] to make a reference to a valuer or valuers, as the case may be,
or to adopt the value as determined by any valuer or valuers.
(3) The Central Board of
Revenue may make rules to give effect to the provisions of this section and to
provide for any matter connected with, or incidental to, the operation of this
section.
CHAPTER VIII
TAX LIABILITY IN SPECIAL CASES
68. Registration of
firms.____(1) An application may be made to
the 2[Deputy
Commissioner] on behalf of a firm for registration of the firm for the purposes
of this Ordinance.
(2) No application shall be
made under subsection (1) unless, before the end of the income year relevant to
the year for which assessment is to be made,---
(a) the firm had been constituted by an instrument of
partnership;
(b) the said instrument specifies, among other things, the
shares of the partners; and
(c) the said 3[firm]
had been registered under the Partnership Act, 1932 (IX of 1932), or an
application for registration under the said Act had been made.
1 Added by the Finance Act, 1992 (7
of 1992), s, 7.
2Subs. by Act 10 of 1993, s. 5. for
“Income Tax Officer”.
3 Subs, by the Finance Ordinance,
1980 (25 of 1980), s. 6, for “instrument”
(3) An application under
sub-section (1) shall be in such form, be accompanied by such documents, be
verified in such manner and be made on or before such date as may be
prescribed.
(4) Where the 1[Deputy
Commissioner], after making such enquiry or requiring the firm to furnish such
particulars, documents or evidence as he may think fit, is satisfied that the
requirements of subsections (1) and (3) have been fulfilled and that there is,
or was, a genuine firm in existence in the relevant income year constituted as
shown in the instrument of partnership, he may, by an order in writing, made
within three months of the date on which the return of total income was filed
under section 55 or six months of the end of the income year, whichever is the
earlier, register the firm for the purposes of this Ordinance and, subject to
the provisions of subsection (5), such firm shall be treated as a registered
firm for the income year for which it is first registered and for all
subsequent income years for so long as there is no change in the constitution
of the firm; and if he is not so satisfied, he may, by an order in writing made
within the aforesaid period, refuse to register the firm:---
Provided that, where no
such order is made; within the aforesaid period, the firm shall be treated as a
registered firm and all the provisions of this Ordinance shall, so far as may
be, apply as they apply in the case of a firm registered under this
sub-section.
(5) If, at any time after a
firm has been registered or treated as a registered firm under sub-section (4)
for any income year, the 1[Deputy
Commissioner] has reason to believe that,---
(a) there was no genuine firm in existence in such income year
constituted is as shown in the instrument of partnership; or
(b) the requirements of subsections (2) and (3) had not been
fulfilled in respect of the said income year,
he may cancel the
registration after giving a reasonable opportunity to the firm of being heard.
69. Assessment of firms
and partners.____(1) Notwithstanding anything contained in
this Ordinance, where the assessee is a firm and the total income of the firm
has been determined or assessed under sections 59, 2[59A,
60,] 62, 63 and 65, as the case may be,---
1 Subs. by Act 10 of 1993, s. 5. for
“Income Tax Officer”.
2 Ins. by the Finance Ordinance,
1980 (25 of 1980), s. 6.
(a) in the case of a registered firm,---
(i) the tax payable by the firm itself shall be determined; and
(ii) the total income of each partner of the firm,
including therein his share of its income, profits and gains of the income year
shall be assessed and the sum payable by him on the basis of such assessment
shall be determined;
(iii) if such share of any partner is a loss, it shall be
set‑off against his other income or carried forward and set off in
accordance with the provisions of sections 34, 35, 36, 37 and 38;
(iv) where any of such partners is a non‑resident,
his share of the income, profits and gains of the firm shall be assessed on the
firm at the rates which would be applicable if it were assessed on him
personally, and the sum so determined as payable shall be paid by the firm; and
(b) in the case of an unregistered firm, the 1[Deputy
Commissioner]
(i) may determine the tax payable by the firm on the basis of
the total income of the firm; or
(ii) may proceed in the manner laid down in clause (a) as
applicable to a registered firm, if, in his opinion, the aggregate amount of
tax (including the tax payable under sub‑clause (i) of that clause) would
be greater than the aggregate amount which would be payable by the firm and the
partners individually if the firm were assessed as an unregistered firm 2[:]
2[Provided that this sub-clause shall not
apply in respect of any assessment year commencing on or after the first day of
July, 1986.]
(2) Whenever, the 1[Deputy
Commissioner] makes a determination in accordance with the provisions of
subsection (1), he shall notify to the firm, by an order in writing, the amount
of
1 Subs. by Act 10 of 1993, s. 5. for
“Income Tax Officer”.
2 Subs. and added by the Finance
Act, 1986 (I of 1986), s. 12.
tax payable by it, if any
and the amount of the total income on which the determination has been based
and the apportionment thereof between the several partners.
1[(3) Notwithstanding anything contained in
sub-section (1) of this section or sub-section (4) of section 83, there shall
be included in the total income of an assessee, being a partner in a firm,---
(a) shares income of the spouse or a minor child of the assessee
from the firm in which the assessee is a partner; and
(b) share income of the spouse of the assessee from a firm in
which the assessee is not a partner unless the capital contribution, in any
form, of the spouse in such firm is not provided, directly or indirectly, by
the assessee 2*
* *;
(c) share income of a minor child of the assessee from a firm in
which the assessee is not a partner unless the capital contribution, in any
form, of the minor child in such firm is derived from inheritance passed on to
him 2*
* *;
Provided that nothing in
this sub-section shall apply unless the assessee, in the cases referred to in
clauses (b) and (c), and the spouse in the case referred to in clause (b), has
been given a reasonable opportunity of being heard.]
(4) For the purposes of
this section, the share of a partner in the income of any firm means the
aggregate of,---
(a) the proportionate share in the total income of the firm as
reduced by the tax, if any, payable by the firm and any sum referred to in
clause (b); and
(b) any salary, brokerage, interest or commission receivable by
the partner from the firm.
70. Change in the
constitution of a firm.___(1) Where, at the time of making an
assessment on a firm under section 62, 63 or 65 it is found that a change has
occurred in the constitution of the firm, the assessment shall be made on the
firm as constituted at the time of
1Subs, by the Finance Ordinance 1980 (25
of 1980), s. 6. This sub-section was earlier deemed to be amended by S.R.O.
751(1)/79, dated 23-8-79 and S.R.O. 885(l)/79, dated 2-10-79 for assessment
year 1979-80.
2 Certain words omitted by the
Finance Act, 1992 (7 of 1992), s. 7.
making the assessment, but the income of
the firm shall be apportioned among the partners who were entitled to receive
it and, where the tax assessed upon a partner cannot be recovered from him, it
shall be recovered from the arm as constituted at the time of making the
assessment.
(2) The provisions of
subsection (1) shall, so far as may be, apply to the determination of total
income and the tax payable under section 59 1[for
section 59A] as they apply to an assessment under section 62, 63 or 65.
71. Discontinuance of
business or dissolution of a firm or association of persons.___(1) Subject to the provisions of section
72, where any business or profession carried on by a firm or an association of
persons has been discontinued or where a firm or an association of persons is
dissolved, all the provisions of this Ordinance, shall, so far as may be,
apply as if no such discontinuance or dissolution had taken place.
(2) Every person, who was,
at the time of such discontinuance or dissolution, a partner of such firm or a
member of such association and the legal representative of any such person who
is deceased, shall be jointly and severally liable for the amount of tax
payable by the firm or the association, as the case may be.
72. Assessment in the
case of discontinued business or profession.____(1) Where, any business or profession is
discontinued, the person discontinuing such business or profession shall give
to the 2[Deputy
Commissioner] a notice of such discontinuance within fifteen days of the date
of such discontinuance (hereinafter referred to as the “said date”).
(2) 3[The
person discontinuing such business or profession shall, under the provisions of
this Ordinance or upon being required by the 2[Deputy
Commissioner] by a notice in writing, furnish] a return or returns of total
income in respect of the period commencing from the end of the latest income
year for which an order has been made under sub-section. (1) of section
59 4[section
59A, 62] 63 or 65, or, where no such order has been made, a return has been
made under section 55,56 or 57, as the case may be, and ending on the said
date, or where no such order or return has been made, the income year or years
comprising the period ending on the said date; and the period commencing from
the end of the latest income year to the said date shall, for purposes of this
section; be deemed to be an income year (distinct and separate from any
1 Ins. by the Finance Ordinance,
1980 (25 of 1980); s. 6.
2 Subs. by Act 10 of 1993, s. 5. for
“Income Tax Officer”.
3 Subs, by Ordinance, 25 of 1980, s.
6
4 Subs. ibid., for “section 62.”.
Other income year) for the assessment year in which the said date
falls.
(3) Notwithstanding
anything contained in sub-sections (1) and (2), the 1[Deputy
Commissioner] may serve a notice on any person who, in his opinion, has
discontinued, or is likely to discontinue, in any year, any business or profession,
to furnish, within such time as may be specified in such notice, a return or
returns of total income for the income year or years for which the assessee is
required to furnish such return or returns under sub-section (2).
(4) The assessment shall be
made at the rates applicable to the relevant assessment year and all the
provisions of this Ordinance shall, so far as may be, apply accordingly.
73. Succession to
business, otherwise than on death.___(1) Where a person carrying on any
business or profession has been succeeded in any, income year by any other
person (hereafter in this section referred to as the “predecessor” and
“successor” respectively), otherwise than on the death of the predecessor, and
the successor continues to carry on that business or profession,---
(a) the predecessor shall be assessed in respect of the income
of the income year in which the succession took place up to the date of
succession and of the income year or years preceding that year; and
(b) the successor shall be assessed in respect of the income of
such income year after the date of succession.
(2) Notwithstanding
anything contained in sub-section (1), where the predecessor cannot be found,
the assessment of the income of the income year In which the succession took
place up to the date of succession and of the income year or years preceding
that year shall be made on the successor in like manner and to the same extent
as it would have been made on the predecessor, and all the provisions of this
Ordinance shall, so far as may be, apply accordingly.
(3) Where any tax payable
under this section in respect of such business or profession cannot be
recovered from the predecessor, it shall be recoverable from the successor, who
shall be entitled to recover it from the predecessor.
74. Liability in the
case of a deceased person.___(1) Where a person dies, his legal
representative shall be liable to pay any tax which the deceased would have
been liable to pay if he had not died, in the like manner and to the same
extent as the deceased.
1 Subs. by Act 10 of 1993, s. 5. for
“Income Tax Officer”.
(2) For the purpose of making an assessment of
the income of the deceased and recovery of tax,---
(a) any proceeding taken against the deceased before his death
shall be deemed to have been taken against the legal representative and may be
continued against the legal representative from the stage at which it stood on
the date of the death of the deceased; and
(b) any proceeding which could have been taken against the
deceased if he had survived may be taken against the legal representative,
and all the provisions of
this Ordinance shall, so far as may be, apply accordingly.
(3) The legal
representative of the deceased shall, for the purposes of this Ordinance, be
deemed to be an assessee.
(4) The liability of a
legal representative under this section or section 71 shall be limited to the
extent to which the estate of the deceased person is capable of meeting the
liability.
(5) For, the purposes of
this section and sections 71 and 97, “legal representative” includes an
executor, administrator and any person administering the estate of a deceased
person.
75. Partition of a Hindu
undivided family.___(1) Where it is claimed by, or on behalf
of, any member of a Hindu family, hitherto assessed as undivided, that a
partition has taken place among the members of such family, the1[Deputy
Commissioner] shall, after giving a notice to all the member of the family and
making such enquiry as he thinks fit, make an order holding either that a
partition has taken place with effect from a date specified in such order or
that no partition has taken place.
(2) Where, according to an
order under subsection (1), the partition has taken place, the total income of
the joint family in respect of the income year or years comprising the period
up to the date of partition shall be assessed as if no partition had taken
place and each member or group of members shall, in addition to any tax for
which he or it may be separately liable, be jointly and severally liable for
the tax on the income so assessed.
1 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
76. Liability fn the
case of a private company going into liquidation.___(1) Every person who is a liquidator of a
private company which is wound up, of who has been appointed the receiver of
any assets of such company (hereinafter referred to as the “liquidator”),
shall, within thirty days of his having become such liquidator, give notice of
his appointment to the Income‑tax Officer who has jurisdiction to assess
the company.
(2) The 1[Deputy
Commission] shall, after making such enquiries or calling for such information
as he may deem fit, notify to the liquidator, within three months of the date
of receipt of the notice referred to in subsection (1), the amount which, in
his opinion, would be sufficient to provide for any tax which is then, or is
likely thereafter to become, payable by the company.
(3) On being notified by
the 1[Deputy
Commission] under subsection (2) the liquidator shall set aside an amount equal
to the amount so notified and until he sets aside such amount, he shall not
part with any of the assets of the company, except for the purpose aforesaid or
for making any payment to secured creditors whose debts are entitled under the
law to priority of payment over debts due to Government.
(4) If the liquidator fails
to comply with or contravenes any provision of subsection (1) or subsection (3)
he shall be personally liable for the payment of the tax payable by the
company, not exceeding the amount, if any, notified under subsection (2), and
all the provisions of this Ordinance shall, so far as may be, apply as if he
were an assessee in default.
(5) The provisions of this
section shall have effect notwithstanding anything contained in any other law
for the time being in force.
77. Liability for
payment of tax in the case of private companies, firms and associations of
persons.____(1) Notwithstanding anything contained in
the Companies Act, 1913 (VII of 1913) where any tax payable by a private
company (including a private company which is wound up or has gone into
liquidation) in respect of any income year (whether ending before or after the
date of commencement of the winding‑up or liquidation proceedings) cannot
be recovered, every person who is, or was at any time during the said income
year, a director of the company every share‑holder owning not less than
ten percent of its paid‑up share capital at any time during the said
income year shall be jointly and severally liable for the payment of such tax,
and such person shall be entitled to recover the amounts so paid by him from
the company on
1 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
whose behalf it is paid or any other
director or share‑holder of the company in proportion to the shares owned
by him.
(2) No proceedings under
subsection (1) shall be commenced except with the prior approval in writing of
the Commissioner.
(3) Where any tax payable
by a partner of a firm or a member of an association of persons in respect of
his share of income from the firm or the association, as the case may be,
cannot be recovered from him, the 1[Deputy
Commissioner] may notify the amount of such tax to the firm or association and
thereupon, notwithstanding anything contained in any law for the time being in
force, the tax shall be payable by the firm or the association, as the case may
be, and such firm or association shall, for purposes of recovery of such tax,
be treated as an assessee; and in the case of default in making the payment of
such tax, the provisions of sections 91, 92, 93, 94 and 95, shall, so far as
may be, apply accordingly.
78. Liability of agents
representing assessee.___(1) Every agent shall, in respect of the
income for which he is, or is declared to be, or is treated as, an agent, be
deemed to be an assessee for the purposes of this Ordinance and be subject to
the same obligations and liabilities as if he were the assessee, and shall be
liable to assessment in his own name in respect of that income.
(2) Every agent who pays
any tax under this Ordinance, shall be entitled to recover the tax so paid from
the person on whose behalf it is paid, or to retain an equivalent amount out of
any moneys due or belonging to the said person which may be in his possession
or come into his possession at any time.
(3) Any agent, or any
person who apprehends that he may be assessed as an agent, may retain out of
any money payable by him to the person on whose behalf he is liable to pay tax
(hereinafter in this section referred to as the ‘principal’), a sum equal to
his estimated liability under this Ordinance, and in the event of any
disagreement between the principal and such agent or person as to the amount to
be so retained, such agent or person may secure from the1[Deputy
Commissioner] a certificate stating the amount to be so retained pending final
determination of the tax liability, and the certificate so obtained shall be
his authority for retaining that amount.
Explanation.___ For
the purposes of this section and section 80, “agent” includes___
1 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
(1) in respect of the
income of a minor, lunatic or idiot, the guardian or manager who is entitled to
receive, or is in receipt of, such income on behalf of such minor, lunatic or
idiot;
(2) in respect of income
which the Court of Wards, the Administrator-General, the Official Trustee or
any receiver or manager appointed by, or under, any order of a Court receives
or is entitled to receive on behalf of, or for the benefit of, any person, such
Court of Wards, Administrator‑General, Official Trustee, receiver or
manager;
(3) in respect of income
which a trustee, appointed under a trust declared by a duly executed instrument
in writing whether testamentary or otherwise (including any Wakf deed which is
valid under the Musalman Wakf Validating Act, 1913) (VI of 1913), receives or
is entitled to receive on behalf, or for the benefit, of any person, such
trustee or trustee; and
(4) in respect of the
income of a non‑resident,---
(a) any person in
(i) who is employed by, or on behalf of, the non‑resident;
or
(ii) who has any business connection with the non‑resident;
or
(iii) from or through whom the non‑resident is in
receipt of any income, whether directly or indirectly; or
(iv) who holds, or controls the receipt or disposal of,
any money belonging to the non‑resident; or
(v) who is the trustee of the non‑resident; or
(b) any person, whether a resident or a non‑resident, who
has acquired, by means of a transfer, a capital asset in
(c) any person, who is declared or treated as an agent of the
nonresident:---
Provided that,---
(a) a bonafide independent broker in Pakistan
who, in respect of any transactions, does not deal directly with, or on behalf,
of, a non‑resident principal but deals with, or through, a non‑resident
broker, shall not be treated as an agent under this section in respect of such
transactions, if,---
(i) the transactions are carried on in the ordinary course of
business through the first‑mentioned broker; and
(ii) the non‑resident broker is carrying on such
transactions in the ordinary course of his business and not as a principal; and
(b) no person shall be declared or treated as the agent of a non‑resident
unless he has been given an opportunity, by the 1[Deputy
Commissioner], of being heard.
(5) Nothing in this section
shall prevent either the direct assessment of the person on whose behalf, or
for whose benefit, any such income is receivable, or the recovery from such
person of the tax payable in respect of such income.
2[79. Income from transactions with non‑residents. Where business is carried on between a
resident and a non‑resident and it appears to the 1[Deputy
Commission] that, owing to the close connection between them, the course of
business is so arranged that the business transacted between them produces to
the resident either no profits or less than the ordinary profits which might be
expected to arise in that business, the 1[Deputy
Commission] shall determine the amount of profits which may reasonably be
deemed to have accrued to the resident and include such amount in the total
income of the resident.
80. Shipping business of
non‑residents.___(1) Notwithstanding anything contained in
this Ordinance, whose a non‑resident carries on business of operation of
ships as the owner or charterer thereof (hereinafter in this section referred
to as the ‘principal’) tax shall be levied and collected in respect of such
business in accordance with the provisions of this section.
(2) Before the departure from
any port in Pakistan of any ship, the master of the ship shall prepare and
furnish to the1[Deputy
Commission] a return showing (a) the amount paid or payable (whether in or out
of Pakistan) to the principal, or to any person on his behalf, on account of
the carriage of passengers, livestock, mail or goods shipped at that port since
the last arrival of the ship and (b) the amount received, or deemed to be
received, in Pakistan by, or on behalf of, the principal on account of the
carriage of passengers, livestock, mail or goods at any port outside Pakistan.
1 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
2 Subs. by the Finance Act, 1992 (7
of 1992), s. 7.
1[(3) On receipt of the return, the 2[Deputy
Commissioner] shall determine the aggregate of the amounts referred to in
subsection (2) and, for this purpose, may call for such particulars, accounts
or documents as he may require, and one‑sixth of the aggregate of the
said amounts so determined shall be deemed to be the income accruing in
Pakistan to the principal from the said business chargeable to tax under this
Ordinance under the head ‘Income from business or profession’, and tax thereon
shall be charged at the rate of eight per cent of such income.]
(4) Where the 2[Deputy
Commissioner] is satisfied that it is not possible for the master of the ship
or the principal to furnish the return required under subsection (2) before
the departure of the ship from the port and the principal has made satisfactory
arrangements for the filing of the return and payment of the tax by any other
person on his behalf, the2[Deputy
Commissioner] may, if the return is filed within thirty days of the departure
of the ship, deem the filing of the return by the person so authorised by the
principal as sufficient compliance with sub-section (2).
(5) No port clearance shall
be granted to the ship until the Collector of Customs, or other officer duly
authorised to grant the same, is satisfied that the tax payable under
subsection (3) has been duly paid or that satisfactory arrangements have been
made for the payment thereof.
3[(6) Nothing contained in this Ordinance
shall be so construed as to allow any expense against the aggregate amount of
receipts as determined under sub-section (3)].
3[(7) The ta paid under this section shall
be deemed to be the final discharge of the tax liability of the assessee under
this Ordinance, and the assessee shall not be required to file the return of
total income under section 55 or shall he be entitled to claim any refund or
adjustment on the basis of such return.]
1Subs, by the Finance Ordinance. 1980 (25
of 1980), s. 6 (w.e.f. assessment year 1981-82). This sub-section was earlier
deemed to be amended by S.R.O. 1063(0/79, dated 21-11-1979.
2Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
3 Subs, by Ordinance, 25 of 1980
(w.e.f assessment year 1981-82).
1[80A. Air transport business of
non-residents.___2[(1) Notwithstanding anything contained in
this Ordinance, where a non‑resident person carries on the business of
operation of aircrafts as the owner or charterer thereof (hereafter to this
section referred to us the “principal”), the aggregate of the receipts
specified in sub-section (1A) shall be deemed to be income received in Pakistan
by the principal from the said business chargeable to tax under the head
“Income from business or profession” and tax thereon shall be charged at the
rate of three per cent of such income.
(1A) The receipts, referred
to in sub-section (1), shall, be the following, namely:---
(a) the amount paid or payable (whether in or out of Pakistan)
to the principal or to any person on his behalf on account of the carriage of
passengers, livestock, mail or goods loaded from any place in Pakistan; and
(b) the amount received or deemed to be received in Pakistan by
or on behalf of the principal on account of the carriage of passengers,
livestock, mail or goods from any place outside Pakistan.]
2[(2) The principal or any agent authorised
by him in this behalf shall prepare and furnish to the 3[Deputy
Commissioner] with forty-five days from the last day of each quarter of every
financial year, that is to say, the thirtieth day of September, the
thirty-first day of December, the thirty-first day of March and the thirtieth
day of June, respectively, a return, in respect of each quarter as aforesaid,
showing the receipts referred to in sub-section (1A).].
(3) On receipt of the
return, the 3[Deputy
Commissioner] may, after calling for such particulars, accounts or documents as
he may require, determine the aggregate of the amounts referred to in sub‑section 2[(1A)]
and charge tax as laid down in sub‑section (1).
(4) Where the principal
foils to pay tax as determined under sub‑section (1), for more than three
months, the Commissioner of Income Tax may issue to the authority by whom
clearance may be granted to that aircraft a certificate containing the name of
the principal and the amount of tax payable by him; and, on receipt of such
certificate, the said authority shall be empowered and required to refuse
clearance from any airport in Pakistan to any aircraft owned or chartered by
such person until the tax payable has been paid.
1 Section 80A ins. by the Finance
Ordinance, 1980 (25 of 1980), s. 6.
2 Subs, by the Finance Act, 1988 (6
of 1988), s. 6
3 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
(5) Nothing contained in
this Ordinance shall be so construed as to allow any expense against the
aggregate amount of receipts as determined under sub‑section 1[(1A)].
(6) The tax paid under this
section shall be deemed to be the final discharge of the tax liability of the
assessee under this Ordinance, and the assessee shall not be required to file
the return of total income under section 55 nor shall he be entitled to claim
any refund or adjustment on the basis of such return.]
2[(80AA.Tax on income of non-residents from fees for technical
services.— (1) Notwithstanding anything contained in this Ordinance, where
any consideration by way of fees for technical services referred to in theExplanation to
sub-section (5) of section 12 is received or is deemed to be received by, or
accrues or arises or is deemed to accrue or arise to a non-resident, the whole
of such consideration shall be deemed to be income of the non-resident and tax
thereon shall be charged at the rate of [fifteen]3 per
cent of such income.
(2) A non-resident referred
to in sub-section (1), or an agent authorised by him in this behalf, shall
prepare and furnish to the 4[Deputy
Commissioner] within thirty days from the last day of each period of six months
in every financial year, that is to say, the thirty-first day of December and
the thirtieth day of June, respectively, a return, in respect of each such
period of six months as aforesaid, showing therein full particulars of the
income referred to in the said sub-section:---
Provided that, where such
non-resident is likely to leave Pakistan in any six month period as aforesaid
or shortly after its expiry and he has no present intention of returning to
Pakistan, the provisions of section 81 shall, so far as may be, apply as if
references to financial year, the return of total income; the income year, the
order of assessment, the assessment year and rate of tax were references to
the corresponding provisions of this section.
(3) On receipt of such
return, the 4[Deputy
Commissioner] may, after calling for such particulars, accounts or documents as
he may require, determine the income referred to in sub-section (2) and charge
tax thereon in accordance with the provisions of this section.
(4) Nothing contained in
this Ordinance shall be so construed as to allow any expense against the
income determined under sub-section (3).
1 Subs, by the Finance Act, 1988 (6
of 1988). s. 6.
2 Ins. by the Finance Act, 1987 (6
of 1987), s. 10
3 Subs, by the Finance Act, 1994 (12
of 1994), s. 7, for “twenty”.
4 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
(5) The tax paid under this
section shall, to the extent that the income of the non-resident is chargeable
under this section, be deemed to be the final discharge of his tax liability
under this Ordinance, and he shall not be required to file the return of total
income under section 55 or be entitled to claim any refund or adjustment on
the basis of such return.
(6) The provisions of this
section shall not apply to a nonresident in respect of any consideration
referred to in sub-section (1) for rendering technical services under an
agreement entered into on or before the thirtieth day of June, 1987.];
1[80B. Tax pm income of certain persons
from dividends and bunk profits, etc.— (1) Notwithstanding anything contained in. this Ordinance or any
other law for the time being in force, where any amount referred to in
sub-section (2) is received by or accrues or arises or is deemed to accrue or
arise to 2*
* * an individual, unregistered firm, association of persons, Hindu undivided
family or artificial juridical person referred to in clause (32) of section 2,
the whole of such amount shall be deemed to be income of such person and tax
thereon shall be charged at the rates specified in the First Schedule.
(2) The amount referred to
in sub-section (1) shall be the following, namely:---
(a) dividend on which tax is deductible under sub-section (6A)
of section 50;
(b) interest or profit on which tax is deductible under subsection
(2A) of section 50;
3[(bb) the amount received on encashment of bearer
certificates on which tax is deductible under sub-section (5B) of section 50;];
(c) interest or profit on which tax is deductible under subsection
(7D) of section 50; and
(d) prizes and winnings on which tax is deductible or
collectable under sub-section (7C) of section 50.
(3) Nothing contained in
this Ordinance shall be so construed as to authorise any allowance or deduction
against the income as determined under sub-section (1) or any refund of
1Ins. by the Finance Act, 1991 (12 of
1991), s. 5.
2Omitted by the Finance Act, 1992 (7 of
1992), s. 7.
3 New Cl. (bb) ins. by the Finance
Act, 1995 (1 of 1995), s. 9.
deducted or collected under section 50 or
set off of any loss under any provision of this Ordinance.
(4) Where the assessee has
no income other than the income referred to in sub-section (1) in respect of
which tax has been deducted or collected, the tax deducted or collected under
section 50 shall be deemed to be the final discharge of the tax liability of
the assessee under this Ordinance and he shall not be required to file the
return of total income under section 55.
(5) In a case to which
sub-section (4) applies, an order under section 59A shall be deemed to have
been made in respect of income referred to in sub-section (1).]
1[80C. Tax on income of certain contractors
and importers.—(1)
Notwithstanding anything contained in this Ordinance or any other law for the
time being in force, where any amount referred to in sub-section (2) is
received by or accrues or arises or is deemed to accrue or arise to any
person 2*
* * the whole of such amount shall be deemed to be income of the said person
and tax thereon shall be charged at the rate specified in the First Schedule.
3[(2) The amount referred to in sub-section
(1) shall be the following, namely:---
(a) Where the person is a Resident,---
(i) the amount representing payments on which tax is deductible
under sub-section (4) of section 50, other than payments on account of services
rendered;
(ii) the amount as computed for the purpose of collection
of tax under sub-section (5) of section 50 in respect of goods imported, not
being goods imported by an industrial undertaking as raw material for its own
consumption; and
4[(iii) the amount on which tax is deductible under subsection
(7A) of section 50 in respect of lease of right to collect octroi duties,
tolls, fees or other levies, by whatever name called and].
1Ins. by the Finance Act, 1991 (12 of
1991), s. 5.
2Omitted by the Finance Act. 1992 (7 of
1992), s. 7.
3Subs, ibid.,
4 New sub-cl. (iii) added by the
Finance Act, 1996 (9 of 1996) s. 13.
(b) where the person is a non-resident, the amount representing
payments on account of execution of a contract for construction, assembly or
like project in Pakistan on which tax is deductible under sub-section (4) of
section 50.];
(3) Nothing contained in.
this Ordinance shall be so construed as to authorise any allowance or deduction
against the income as determined under sub-section (1) or any refund of tax
deducted or collected under section 50 or set off of any loss under any
provision of this Ordinance.
(4) Where the assessee has
no income other than the income referred to in sub-section (1) in respect of
which tax has been deducted or collected, the tax deducted or collected under
section 50 shall be deemed to be the final discharge of his tax liability under
this 1 Ordinance and he shall not be required to file the return of total
income under section 55:
Provided that, in respect
of the assessment year commencing on the first day of July, 1991, where the tax
deducted or collected in the preceding financial year under sub-section (4) or
sub-section (5) of section 50 is less than the tax payable under this section,
the tax so deducted or collected shall not constitute full and final discharge
of the tax liability of the assessee and he shall be required to pay the amount
representing the difference between the tax payable under this section and the
tax so deducted or collected and all the provisions of this Ordinance shall
apply accordingly.
(5) Where an assessee,
while explaining the nature and source of any sum, investment, money, valuable
article, excess amount or expenditure, referred to in section 13, takes into
account any source of income which is subject to tax in accordance with the
provisions of this section, he shall not be entitled to take credit of any sum
as is in excess of an amount which if taxed at a rate or rates other than the
rate applicable to income chargeable to tax under this section, would have
resulted in tax liability equal to the tax payable in respect of income under
section.
(6) For the purpose of
determining the share of a partner of a firm out of such income of the firm as
is determined under section 80B or this section, the said income of the firm
shall be taken to be an amount which if taxed at the rate or rates, other than
the rate applicable to income chargeable to tax under section 80B or this section,
would have resulted in tax liability equal to the tax payable in respect of
income under section 80B or this section.
(7) In a case to which
sub-section (4) applies, an order under section 59A shall be deemed to have
been made in respect of income referred to in sub-section (1)].
[80CC. Tax on income of
certain exporters.— (1)
Notwithstanding anything contained in this Ordinance or any other law for the
time being in force, where any amount referred to in sub-section (5A), of
section 50 is received by any person, the whole of such amount shall be deemed
to be the income of the said person and tax thereon shall be charged at the
rates specified in the First Schedule.
(2) Nothing contained in
this Ordinance shall be so construed as to authorise any allowance or deduction
against the income as determined under sub-section (1) or any refund of tax
deducted under sub-section (5A) of section 50 or set off of any loss under any
provision of this Ordinance.
(3) Where the assessee has
no income other than the income referred to in sub-section (1) in respect of
which tax has been deducted under sub-section (5A) of section 50, the tax so
deducted shall be deemed to be the final discharge of his tax liability under
this Ordinance and he shall not be required to file the return of total income
under Section 55.]
2[(4) Where an assessee, while explaining
the nature and source of any sum, investment, money, valuable article, excess
amount or expenditure, referred to in section 13, takes into account any source
of income which is subject to tax in accordance with the provisions of this
section, he shall not be entitled to credit of any sum as is in excess of an
amount which if taxed at a rate or rates, other than the rate applicable to
income chargeable to tax under this section, would have resulted in tax
liability equal to the tax payable in respect of income under this section.
(5) For the purpose of
determining the share of a partner of a firm out of such income of the firm as
is determined under this section, the income of the firm shall be taken to be
an amount which if taxed at the rate or rates, other than the rate applicable
to income chargeable to tax under this section, would have resulted in tax
liability equal to the tax payable in respect of income under this section.
(6) In a case to which
sub-section (3) applies, an order under section 59 A shall be deemed to have
been made in respect of income referred to in sub-section (1).]:
1 Ins. by the Finance Act, 1992 (7
of 1992), s. 7.
2 Added by the Finance Act, 1993 (10
of 1993), s. 5.
[80D. Minimum tax on
income of certain companies 2[and
registered firm] —(1)
Notwithstanding anything contained in this Ordinance or any other law for the
time being in force, where no tax is payable 2[or
paid] by a company 2[or
a registered firm] resident in Pakistan or the tax payable2[or
paid] is less than one-half percent of the amount representing its turnover
from all sources, the aggregate of the declared turnover shall be deemed to be
the income of the said company 2[of
a registered firm] and tax thereon shall be charged in the manner specified in
sub-section (2).
2Explanation.—For the removal of doubt, it is declared
that the expressions “where no tax is payable, or paid” and “or the tax payable
or paid” apply to all cases where tax is not payable or paid for any reason
whatsoever including any loss of income, profits or gains or set off of loss of
earlier years, exemption from tax, credits or rebates in tax, and allowances
and deductions (including depreciation) admissible under any provision of this
Ordinance or any other law for the time being in force.]; and
(2) The company 3[or
a registered firm] referred to in subsection (1) shall pay as income tax,---
(a) an amount, where no tax is payable, 4[or
paid] equal to one-half percent of the said turnover; and
(b) an amount, where tax payable 4[or
paid] is less than one-half percent of the said turnover, equal to the
difference between the tax payable 4[or
paid] and the amount calculated in accordance with clause (a).
Explanation.—For the removal of doubt it is declared
that “turnover” means the gross receipts, exclusive of trade discount shown on
invoices or bills, derived from sale of goods or from rendering, giving or
supplying services or benefits or from execution of contracts.]
81. Assessment of
persons about leave Pakistan.—(1) Where any person is likely to leave Pakistan in the current
financial year or shortly after its expiry and has no present, intention of
returning to Pakistan, he shall give to the5[Deputy
Commissioner] a notice to that effect not less than fifteen days before the
probable date of his departure (hereinafter in this section referred to as the
said date).
1 Ins. by the Finance Act, 1991 (12
of 1991), s. 5.
2 Ins. and shall be deemed always to
have been so Ins. by the Finance Act, l992 (7 of 1992), s. 7.
3 Subs, by the Finance Act, 1993
(10.of 1993), s. 5
4 Added ibid.,
5 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
(2) The notice under
subsection (1) shall be accompanied by a return or returns of total income in
respect of the period commencing from the end of the latest income year for
which an order has been made under subsection (1) of section 59, sections 62,
63 or 65, or, where no such order has been made, a return has been made under
section 55, 56 or 57, as the case may be, and ending on the said date, or where
no such order or return has been made, the income year or years comprising the
period ending on the said date; and the period commencing from the end of the
latest income year to the said date shall, for purposes of this section, be
deemed to be an income year (distinct and separate from any other income year)
for the assessment year in which the said date falls.
(3) Notwithstanding
anything contained in subsections (1) and (2), the 1[Deputy
Commissioner] may serve a notice on any person who, in his opinion, is likely
to leave Pakistan during the current financial year or shortly after its expiry
and has no present intention of returning to Pakistan to furnish, within such
time as may be specified in such notice, a return or returns of total income
for the income year or years for which the assessee is required to furnish such
return or returns under subsection (2).
(4) The assessment shall be
made at the rates applicable to the relevant assessment year and all the
provisions of this Ordinance shall, so far as may be, apply accordingly.
82. Persons leaving
(2) Notwithstanding
anything contained in subsection (1), in the case of a person not domiciled in
Pakistan, the1[Deputy
Commissioner] may, if he is satisfied that such person intends to return to
Pakistan, issue an exemption certificate in respect of any journey or journeys
to be undertaken by that person within such period as may be specified in
certificate.
1 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
(3) If the owner or
charterer of any ship or aircraft carrying person from any place in Pakistan to
any place outside Pakistan allows any person to whom subsection (1) applies to
travel by such ship or aircraft without first satisfying himself that such
person is in possession of a certificate as required by subsection (1) or
subsection (2), he shall be personally liable to pay the amount of tax, if any,
payable by such person and all the provisions of this ordinance shall, so far
as may be, apply accordingly.
(4) For the purposes of the
section, the expression “owner” and “charterer” include any representative,
agent or employee empowered by the owner or charterer to allow persons to
travel by the ship or aircraft, as the case may be.
83. Income from
revocable transfer of assets, etc.___(1) All income arising to any person by
virtue of a revocable transfer of assets shall be chargeable to tax as the
income of the transferor and shall be included in his total income.
(2) The provisions of
subsection (1) shall not apply to any income arising to any person by virtue of
a transfer which is not revocable during the life time of the beneficiary and
the transferor derives no direct or indirect benefit from such income.
(3) All income arising by
virtue of a transfer, whether revocable or not, and whether effected before or
after the commencement of this Ordinance shall, where the assets remain the
property of the transferor be chargeable to tax as the income of the transferor
and shall be included in his total income.
(4) All income derived from‑
any asset transferred by an answer directly or indirectly to,---
(a) his spouse, otherwise than 1***
for adequate consideration, or in connection with an agreement to live apart;
or
(b) any minor child of the assessee otherwise than 1*
* * for adequate consideration; or
(c) any person for the benefit of his spouse or any minor child,
or both, otherwise than 1***
for adequate consideration, shall be chargeable to tax as the income of the
transferor, and shall be included in his total income.
Shall, be chargeable to tax
as the income of the transferor, and shall be included in his total income.
1 Omitted by the Finance Act, 1992
(7 of 1992), s. 7.
(5) For the purpose of this
section,---
(a) a transfer shall be deemed to be revocable if,---
(i) it contains any provision for the re-transfer directly or
indirectly of the whole or any part of the assets to the transferor, or
(ii) it gives, in any way, the transferor a right to
resume power, directly or indirectly over the whole or any part of the assets;
(b) “transfer” includes any disposition, settlement, trust,
covenant agreement or arrangement; and
(c) “minor child” does not include a married daughter.
1[83A. Income of minor child. Any income chargeable under the head
“Income from business or profession” which is received by or arises or accrues,
or is deemed to arise or accrue to any minor child of the assessee, such income
shall be deemed to be the income of the assessee:---
Provided that the
provisions of this section shall not apply where the income of the minor child
is derived from a business acquired by him through inheritance.
Explanation.—For the purpose of this section,
“assessee” shall be the parent determined by the 2[Deputy
Commissioner];
84. Liability in certain
transactions in securities.—
(1) Where the owner of any securities sells or transfers in any manner those
securities and thereafter buys back or reacquires them and the result of the
transaction is that any interest becoming payable in respect thereof is
receivable by any person other than the said owner, the interest so payable
shall be deemed to be the income of the said owner and not of any other person
and all the provisions of this Ordinance shall, so far as may be, apply
accordingly.
(2) For the purpose of
sub-section (1), “interest” includes dividends, and “securities” includes
stocks and shares.
1 Ins. by the Finance Act, 1992 (7
of 1992), s. 7.
2Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
CHAPTER IX
RECOVERY OF TAX
85. Payment of tax on demand.___1[(1)] Where any tax is payable in
consequence of any assessment or other order under this Ordinance, the 2[Deputy
Commissioner] shall serve upon the assessee, or any other person liable to any
such tax on behalf of the assessee, a notice of demand in the prescribed form
specifying the sum payable; and thereupon the sum so specified shall be paid to
the credit of the Federal Government within the time specified in the said
notice.
3[(2) Notwithstanding anything contained in
sub-section (1), where the assessee or any other person on whom a notice under
the said sub-section has been served makes an application for granting stay of
payment of tax or for allowing payment in installments, the Inspecting 4[Additional
Commissioner] may, subject to the provisions of section 89, stay the payment
of tax till such time as he thinks fit or allow the payment of tax in such
installments as he may determined] 5[:].
6* * * * * * *
86. Charge of additional
tax for failure to deduct and pay tax. Where any person fails to deduct, or having deducted fails
to pay any tax, as required by section 50, such person shall without prejudice
to any other liability which he may incur, be Habit to pay additional tax at
the rate of 7[twenty-four]
per cent per annum on the amount not paid for the period commencing from the
date of which he was required to pay such tax to the date of the payment
thereof.
87. Charge of additional tax for failure
to pay advance tax.—(1) Where an assessee who was required to pay tax under
sub-section (1) of section 53,---
(a) fails to pay installment; or
(b) fails to pay any installment on or before the specified
(c) fails to pay the full amount payable by him,
1Section 85 renumbered as sub-section (1)
of that section by the Finance Ordinance, 1980 (25 of 1980), s. 6.
2 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
3 Sub-section (2) added of that
section by the Finance Ordinance, 1980 (25 of 1980), s. 6.
4 Subs. by Finance Act, (10 of
1993), s. 5, for “Assistant Commissioner”.
5 Subs, by the Finance Act, 1996 (9
of 1996), s. 13. for colon.
6 Proviso omitted ibid..
7 Subs, ibid., for “fifteen”
he shall, without prejudice
to any other liability which he may incur under this Ordinance, be liable to
pay additional tax at the rate of twenty‑four per cent per annum on the
amount not paid, and such additional tax shall be calculated from the date on
which such amount was payable to the date on which it is paid or the thirtieth
day of September of the financial year next following, whichever is the
earlier.
(2) Where, in respect of
any year, any assessee fails to pay tax under subsection (2) of section 53 or
the tax so paid is less than eighty per cent of the tax chargeable for the
relevant assessment year, he shall be liable to pay additional tax at the rate
of twenty‑four per cent per annum on the amount of tax so chargeable or
the amount by which the tax paid by him falls short of the said eighty percent.
as the case may be; and such additional tax shall be calculated from the first
day of April in that year to the date on which assessment is made or the
thirtieth day of June of the financial year next following, whichever is the
earlier.
88. Charge of additional
tax for failure to pay tax with the return. Where any assessee fails to pay tax under
section 54 or the tax so paid is less than the tax payable under that section,
he shall be liable to pay additional tax at the rate of fifteen per cent per
annum on the amount not paid or the amount by which the tax paid by him falls
short of the tax payable under that section, as the case may be, and such
additional tax shall be calculated from the first day of October or the date on
which the tax was payable, whichever is the later, to the date on which the tax
is paid or the date on which an order under subsection (1) of section 59,3[section
59A], section 62, section 63 or section 65, as the case may be, is made,
whichever is the earlier.
89. Charge of additional
tax for failure to pay tax or penalty. Where any assessee fails to pay the whole or any part of
the tax levied under Chapter VII or the whole or any part of any penalty levied
under Chapter XI 3[or
has been allowed stay of payment or payment in installments of the tax under
sub-section (2) of section 85], he shall be liable to pay additional tax at the
rate of 2[twenty
four] per cent per annum on the amount of such tax or penalty or any part
thereof, as the case may be, which has not been paid; and such additional tax
shall be calculated from the date on which such tax or penalty or part thereof,
as the case may be, was
1 Subs, by the Finance Act,! 997 (22
of 1997), s. 7, for “(2)”.
2 Subs, by the Finance Act, 1996 (9
of J996), s. 13, for “fifteen”.
3 Ins. by the Finance Ordinance,
1980 (25 of 1980), s. 6.
originally payable to the
date on which it is paid 1[or,
in respect of each installment, the date on which it is paid]2[:]
3* * * * * * *
90. Reduction in
additional tax, consequential to reduction to tax or penalty. Where, in consequence of any order under
this Ordinance, the amount of tax or penalty in respect of which additional tax
is chargeable under section 86, 87, 88 or 89 is reduced, the additional tax, if
any, levied under any of the aforesaid sections shall be reduced accordingly.
91. Penalty for non‑payment
of tax.___(1) Where any assessee is in default in
making payment of any tax (other than the tax payable under section 53)
the 4[Deputy
Commissioner] may impose on him a penalty not exceeding an amount equal to the
said tax.
(2) The 4[Deputy
Commissioner] may impose a penalty under subsection (1) by one order or, in the
case of a continuing default, by several orders, so, however, that the total
amount of penalty does not exceed the amount of such tax.
(3) For the purpose of
subsection (1), any penalty imposed under that subsection or any additional tax
levied under section 86, 87, 88 or 89 shall be excluded from the amount of tax
in respect of which the penalty is imposed.
(4) Where, after an order
under subsection (1) has been made, the 4[Deputy
Commissioner] discovers, or the assessee proves to the satisfaction of
the 4[Deputy
Commissioner], that the amount of tax, or any part thereof, in respect of which
the said order was made, had been paid or any refund due to the assessee had
not been set off under section 104, before the date on which the said order was
made, the 4[Deputy
Commissioner] shall cancel or modify the said order, as may be necessary, and
the provisions of section 156 shall, so far as may be, apply as they apply to
the rectification of any mistake apparent from the record.
5[(4A) Where, in consequence of any order
under this Ordinance, the amount of tax in respect of which penalty under this
section was imposed is reduced, the amount of the said penalty shall be reduced
accordingly.]
1 Ins. by the Finance Ordinance.
1980 (25 of 1980), s. 6.
2 Subs. ibid., for colon.
3 Omitted ibid..
4 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
5 Ins. by the Finance Act, 1987 (6
of 1987), s. 10.
(5) Notwithstanding
anything contained in any law for the time being in force, no order of penalty
made under subsection (1) shall be called in question in any Court or tribunal
or before any authority on the ground that,---
(a) no show‑cause notice was issued before the said order
was made; or
(b) an application for stay of recovery of tax or the payment of
tax in installments had been pending before any Court or tribunal or any other
authority.
92. Recovery of tax from
persons holding money on behalf of an assessee.___(1) For the purpose of recovering any tax
payable by an assessee, the 1[Deputy
Commissioner] may, by notice in writing, require any person,---
(a) from whom any money is due or may become due to the assessee;
or
(b) who holds, or controls the receipt or disposal of, or may
subsequently hold, or control the receipt or disposal of, any money belonging
to the assessee or on account of the assessee; or
(c) who is responsible for payment of any sum to the assessee to
which section 50 applies,
to pay to the 1[Deputy
Commissioner], in any case to which clause (a) or clause (b) applies, the sum
specified in the notice on or before such date as may be so specified, or to
deduct, in any case to which clause (c) applies, from any payment subsequent to
the date of such notice any arrears of tax dues from the assessee as specified
in the said notice and the provisions of subsections (8) and (9) of section 50
and section 52 shall, so far as may be, apply as if the sum or the arrears of
tax specified in the said notice, as the case may be, were a sum deductible
under section 50.
(2) Any person who has paid
any sum in compliance with a notice under subsection (1) shall be deemed to
have paid such sum under the authority of the assessee and the receipt of
the 1[Deputy
Commissioner] shall constitute a good and sufficient discharge of the liability
of such person to the assessee to the extent of the sum referred to in such
receipt.
1Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
(2A) If any person on whom
a notice under sub-section (1) is served fails to pay, or to deduct, as the
case may be, the amount specified in the said notice such person shall be
treated as an assessee in default and the amount specified in the said notice
shall be recoverable from him by the Tax Recovery Officer or the Collector in
accordance with the provisions of sections 93 and 94.
(3) For the purpose of this
section, “person” includes any Court, tribunal or any other authority.
93. Recovery of tax by
Tax Recovery Officer.___(1) Where any assessee is in default in
making payment of tax, the 2[Deputy
Commissioner] may forward to the Tax Recovery Officer a certificate in the
prescribed form specifying the amount of tax due from the assessee.
(2) Where such certificate
is received by the Tax Recovery Officer, he shall serve upon the assessee a
notice in the prescribed form requiring him to pay the amount specified in the
certificate within such time as may be specified in the notice.
(3) If the amount referred
to in the notice issued under subsection (2) is not paid within the time
specified therein or within the further time, if any, allowed by the Tax
Recovery Officer, the Tax Recovery Officer may proceed to recover from the
assessee the said amount by one or more of the following modes, namely:---
(a) attachment and sale of any movable or immovable property of
the assessee;
(b) appointment of a receiver for the management of the movable
or immovable property of the assessee; and
(c) arrest of the assessee and his detention in person for a
period not exceeding six months.
(4) For the purposes of
recovery of tax under subsection (3), the Tax Recovery Officer shall have the
same powers which, under the Code of Civil Procedure, 1908 (V of 1908), a civil
Court has for the purposes of the recovery of an amount due under a decree.
(5) The Central Board of
Revenue may make rules regulating the procedure for the recovery of tax under
this section and any other matter connected with, or incidental to, the
operation of this section.
1 Sub-section (2A) ins. by the
Finance Ordinance, 1981 (24 of 1981), s. 5.
2 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
1[93A. Recovery of tax from persons
assessed in Azad Jammu
94. Recovery of tax by
Collector. The 3[Deputy
Commissioner] may forward to the Collector of the District in which the
assessee resides or carries oil business, or in which any property belonging to
the assessee is situate, a certificate specifying the amount of any tax payable
by the assessee; and, on receipt of such certificate, the Collector shall
proceed to recover from the assessee the amount so specified as if it were an
arrear of land revenue:
Provided that, without
prejudice to any other powers of the Collector in this behalf, he shall, for
the purposes of recovering the amount so specified, have the powers which,
under the Code of Civil Procedure, 1908 (V of 1908), a civil Court has for the
purpose of the recovery of an amount due under a decree.
95. Initiation,
validity, etc., of recovery proceedings. Notwithstanding anything contained in any
other law for the time being in force,---
(a) any proceedings for the recovery of tax under this Chapter
may be initiated at anytime;
(b) the 2[Deputy
Commissioner] may, at any time, amend any certificate issued under section 93
or section 94, or recall such certificate and issue a fresh certificate, as he
thinks fit;
1 Section 93A ins. by the Finance
Ordinance, 1980 (25 of 1980), s. 6.
2 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
(c) it shall not be open to an assessee to question, before the
Tax Recovery Officer or the Collector, as the case may be, the validity or correctness
of any certificate issued under section 93 or section 94, or any such
certificate as amended, or any fresh certificate issued, under clause (b); and
(d) the several modes of recovery specified in this Chapter
shall be deemed to be neither mutually exclusive nor affect in any way any
other law for the time being in force relating to the recovery of debts due to
Government, and the 1[Deputy
Commissioner] may have recourse to any such mode of recovery notwithstanding
that the tax due is being recovered from an assessee by any other mode.
CHAPTER X
REFUND AND TAX CREDIT
96. Refunds.___(1)
Where any person satisfies the 1[Deputy
Commissioner] that the amount of tax paid by him, or on his behalf, for any
year exceeds the amount with which he is properly chargeable under this
Ordinance for that year, he shall be entitled to a refund of the amount so paid
in excess.
(2) Where any advance or
loan, to which sub‑clause (e) of clause (20) of section 2 applies, is
repaid by an assessee, he shall be entitled to a refund of the tax, if any,
paid by him as a result of such advance or loan having been treated as dividend
under the aforesaid provision.
97. Persons entitled to
claim refund in certain cases.___(1) Where the income of any person is
included under any provision of this Ordinance in the total income of any other
person, such other person only shall be entitled to a refund under section 96
or section 98, as the case may be, in respect of such income.
(2) Where any person is
unable to claim or receive any refund under section 96 or section 98, as the
case may be, on account of incapacity, insolvency, liquidation, death or any
other cause, his legal representative or the trustee, or guardian or receiver,
as the case may be, shall be entitled to claim or receive such refund for the
benefit of such person or his estate.
1Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
98. Refund where salary,
etc. is paid ire arrears. Where, by reason of,---
(a) income chargeable under the head “Salary” being paid in
arrears or in advance; or
(b) any interest chargeable under the head “Interest on
securities” being received in arrears,
an assessee’s total
income 1[is
assessable] at a rate higher than that at which it would otherwise have been
assessed, the 2[Deputy
Commissioner] may, on an application made by the assessee within one year of
the date of receipt thereof, determine the tax payable as if the said income or
interest had been received by him during the income year to which it relates
and may refund the amount of tax, if any, paid in excess thereof.
99. Form of application,
disposal of claims for refund and limitation.___(1) An application for refund under
section 96 97 or 98 shall be made in the prescribed form and verified in the
prescribed manner.
(2) An application under
subsection (1) shall be made,---
(a) in any case to which sub-section (2) or section 96 applies,
within one year or the end of the income year in which the advance or loan is
repaid; and
(b) in other cases, within two years of the end of the
assessment year to which it relates:
Provided that an 2[Deputy
Commissioner] may, after obtaining the previous approval in writing of the
Inspecting Assistant Commissioner, admit an application made after the
expiration of the aforesaid period, if he is satisfied that the assessee was
prevented by sufficient cause from making the application within that period.
(3) When an application for
refund is made under subsection (1), the 2[Deputy
Commissioner] shall, subject to the provisions of this Ordinance, determine, by
an order in writing, the amount of refund on being satisfied that such amount
is due to the assessee, and, where he is not so satisfied, he may, by an order
in writing, reject the application.
(4) The 2[Deputy
Commissioner] may, before making an order under sub-section (3), call for such
particulars, documents or evidence as he may require.
1 Subs. for the words “is assessed”
by the Finance Ordinance, 19809 (25 of 1980), s. 6.
2 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
(5) Where no order is made
under subsection (3) on or before the thirtieth day of June of the financial
year next following the date on which the application for refund under
sub-section (2) was made, the amount of refund claimed in the said application
shall be deemed to be due to the assessee.
(6) The provisions of
subsection (5) shall not apply unless a notice stating that no order under subsection
(3) has been made is served on the Commissioner on or before the thirty‑first
day of May of the said financial year.
1[100. Refund on assessment and appeal etc. Whereas as a result of any order
passed under section 59, 59A, 62 or 63 or in appeal, revision 2*
* * or other proceedings under the Ordinance (not being an order setting aside
an assessment), refund of any amount becomes due to the assessee, the 3[Deputy
Commissioner] shall, except as otherwise provided in this Ordinance, refund the
amount to the assessee irrespective of whether he has or has not made any claim
in that behalf.] 4[:]
5[Provided that where a refund becomes due
to an assessee, who had paid the tax under section 85 read with section 129, as
a result of the decision of the Income Tax Appellate Tribunal, a sum at the
rate of fifteen per cent per annum shall be payable to him after the months
from the receipt of such decision.]
101. Correctness of
assessment, etc. not to be questioned through refund applications. Nothing in this Chapter shall entitle any
assessee to question the correctness of any assessment or other matter which
has become final.
102. Additional payment
for delayed refunds.___(1) Where a refund due, or deemed under
subsection (5) of section 99 to be due, to an assessee is not paid within three
months of the date on which it becomes due, there shall be paid to the
assessee, a further sum 1[by
way of compensation at the rate of 6[fifteen] per
cent per annum] of the amount of refund from the expiration of the said
three months up to the date on which the refund order is made.
1 Subs. by the Finance Act, 1985 (I
of 1985), s. 4.
2 The word “reference” omitted by
the Finance Act, 1997 (22 of 1997), s. 7. :
3 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
4 Subs. by the Finance Act, 1994 (12
of 1994), s. 7, for full slop.
5 Proviso added ibid.,
6 Subs, by the Finance Act, 1986 (1
of 1986), s. 12.
(2) For the purposes of
this section, a refund shall be deemed to have become due,‑--
(a) in any case where the refund is required to be made in
consequence of any order on an appeal or a revision or 1[an
appeal] to the High Court or an appeal to the Supreme Court, on the date of
receipt of such order by the 2[Deputy
Commissioner];
(b) in any case to which subsection (5) of section 99 applies,
on the thirtieth day of June of the financial year next following the date on
which the application for refund was made; and
(c) in other cases, on the date on which the refund order is
made.
(3) In computing the,
period: for which the further sum referred to in subsection (1) is payable, the
period for which the refund is withheld under section 103 shall be excluded.
(4) Nothing contained in
this: section shall apply in any case where any refund becomes due as a result
of an order on appeal, revision or reference setting aside the assessment.
103. Power to withhold
refund in certain cases. Where an order giving rise to a refund is the subject matter of an
appeal or further proceedings under this Ordinance, the 2[Deputy
Commissioner] may, with the prior approval of the Commissioner, withhold the
refund till such time as the Commissioner may determine.
104. Adjustment of
refund against tax. Where,
under the provisions of this Ordinance, the repealed Act, the Sales Tax Act,
1951 (III of 1951), the Gift Tax Act, 1963 (XIV of 1963), or the Wealth Tax
Act, 1963 (XV of 1963), any refund is due to any person, the amount to be
refunded or any part thereof, may be set off against the tax parable by that person
under this Ordinance, or the repealed Act.
105. Tax credit for
investment in shares or debentures of Equity Participation Fund.___(1) Where an assessee, being a Pakistani
Company invests 3[at
any time before the first day of July, 1991], any amount in the purchase of
shares or debentures issued by the Equity Participation Fund established under
the Equity Participation Fund Ordinance, 1970 (I of 1970), and approved by the
Central Board of Revenue for the purposes of this section, a credit equal to
fifty per cent of the amount so invested shall be allowed against the tax
payable by the assessee in the manner hereinafter provided.
1 Subs, by the Finance Act, 1997 (22
of 1997), s. 7, for a “reference”.
2 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
3 Ins. by the Finance Act, 1991 (12
of 1991), s. 5.
(2) The amount of the
credit admissible under subsection (1) shall be deducted from the tax payable
by the assessee in respect of the income year in which the investment was made.
(3) Where no tax is payable
by the assessee in respect of the assessment year relevant to the income year
in which such investment was made, on where the amount of the tax payable is
less than the amount of the credit, the amount of the credit or so, much of it
as is in excess thereof, as the case may be, shall be carried forward and
deducted in the manner laid down in subsection (2) from the tax payable by the
assessee in the following assessment year and so on, so, however, that the
deductions made under subsection (2) and this subsection shall not exceed in
the aggregate the limit specified in subsection (1).
(4) Nothing contained in
subsection (1) shall apply in respect of any shares or debentures acquired by
an assessee by purchase or transfer from a previous holder thereof, or in
respect of any shares or debentures sold, transferred or otherwise disposed of
by an assessee within the income year in which they were purchased.
(5) Where any shares or
debentures in respect of which any credit has been allowed under subsections
(1), (2) and (3) are sold, transferred or otherwise disposed of in any
subsequent year, the assessee shall, notwithstanding anything to the contrary
contained in this Ordinance, be liable to pay, in addition to any tax otherwise
payable by it in respect of the income year in which such sale, transfer or
disposal took place, additional tax equal to the amount of such credit, and
where no such tax is otherwise payable by the assessee in respect of the said
income year, the said additional tax shall be deemed to be the tax payable by
it in respect of the said income year.
(6) The provisions of
sections 96, 97, 99, 100, 103 and 104 shall, so far as may be, apply to tax
credit under this section as they apply to refunds.
(7) The Central Board of
Revenue may make rules regulating the procedure for the grant of approval under
this section and any other matter connected with, or incidental to, the
operation, of this section.
[105A. Tax credit for
investment in debentures or negotiable bonds.— (1) Where an assessee invests 2[,
at any time before the first day of July, 1991,] any amount in the purchase of
debentures or negotiable bonds issued by the Government or a corporation owned
by the Government and approved by the Central Board of Revenue for the purposes
of this section, a credit equal to five per cent of nominal value of such
debenture or bond shall be allowed against the tax payable by the assessee in
the manner hereinafter provided.
(2) The amount of the
credit admissible under sub-section (1) shall be deducted from the tax payable
by the assessee in respect of the income year in which the investment is made
and in any subsequent year in which the said investment is retained.
(3) Where no tax is payable
by the assessee in respect of the assessment year relevant to the income year
in which such investment was made, or where the amount of the tax payable is
less than the amount of the credit, the amount of the credit or so much of it
as is in excess thereof, as the case may be, shall be carried forward and
deducted in the manner laid down in sub-section (2) from the tax payable by the
assessee in the following assessment year and so on, so, however, that the
deductions made under sub-section (2) and this sub-section shall not exceed in
the aggregate the limits specified in sub-section (1).
(4) Nothing contained in
sub-section (1) shall apply in respect of any debenture or bond,---
(a) sold, transferred or otherwise disposed of by an assessee
before the 31st December, in any year; and
(b) after fifteen years of the date of its issue.
(5) The provisions of
sections 96, 97, 99, 100, 103, and 104 shall, so far as may be, apply to tax
credit under this section as they apply to refunds.
(6) The Central Board of
Revenue may make rules regulating the procedure for the grant of approval under
this section and any other matter connected with, or incidental to the
operation of this section.]
1 Ins. by the Finance Ordinance,
1980 (25 of .1980), s. 6.
2 Ins. by the Finance Act, 1991 (12
of 1991), s. 5.
106. Tax credit for
investment in share-capital of industrial companies.—(1) Where in assessee, being a1[company],
invests 2[at
any time before the first day of July, 1991,] any amount in the purchase of
shares issued by any other Pakistani company which fulfils the conditions
specified in sub-section (7), credit for the amount so invested shall be
allowed to the assessee against the tax payable by it in the manner and to the
extent hereinafter provided.
(2) The credit under
sub-section (1) shall be allowed at the following rates, namely:---
Where the industrial
undertaking set up by the company is located in,---
|
|
|
Rates |
|
(a) |
Balochistan,
Tribal areas, Northern areas or Azad Kashmir; |
Thirty per cent of the amount invested. |
|
3[(aa) |
the
district of Mansehra, Kohistan, Dera Ismail Khan, Bannu or Karak in the North
West Frontier Province, the district of Dera Ghazi Khan or Rajanpur in the
Punjab or the district of Jacobabad or Shikar-pur in Sindh; |
Twenty per cent of the amount invested. |
|
(b) |
other
places excluding the |
Fifteen per cent of the amount invested. |
(3) The amount of the
credit admissible under this section shall be deducted from the tax payable by
the assessee in respect of the income year in which the investment was made.
(4) Where no tax is payable
by an assessee in respect of the assessment year relevant to the income year in
which such investment was made, or where the amount of the tax payable in less
than the amount of the credit, the amount of the credit, or so much of it as is
in excess thereof, as the case may be, shall be carried forward and deducted
from the tax payable by the company in the following assessment year and so on,
so, however, that the deductions made under sub-section (3) and this
sub-section shall not exceed in the aggregate the limits specified in
sub-section (2).
1Subs. by the Finance Ordinance, 1980 (25
of 1980), s. 6, for the words “Pakistani company”. These words were earlier
deemed to be substituted by S.RO. 885(0/79. dated 2-10-79. for the assessment
year 1979-80.
2Ins. by the Finance Act, 1991 (12 of
1991), s. 5.
3Clause (aa) inserted by the Finance.
Ordinance, 1984 (28 of 1984), s. 6.
(5) Nothing contained in
sub-section (1) shall apply in respect of any shares acquired by an assessee by
purchase or transfer from a previous holder thereof or in respect of any shares
sold or transferred or otherwise disposed of by an assessee within five years
from the date of their purchase.
1[(5A) Notwithstanding anything contained
in this section, a banking company or a financial institution shall not be
entitled to tax credit under this section.]
2[(6) Where any credit is allowed under
this section and it is subsequently discovered by the 3[Deputy
Commissioner] that,---
(a) any shares, investment in which has resulted in the said
credit, are sold, transferred or otherwise disposed of within five years of the
date of their purchase; or
(b) the approved industrial undertaking referred to in subsection
(7),---
(i) was not set up within the period specified in the order of
approval; or
(ii) was set up in an area other than that specified in
the order of approval and in consequence of that the assessee was not entitled
to any credit; or
(iii) was set up in an area other than that specified in
the order of approval and in consequence of that the assessee was entitled to
an amount of credit which is less than the amount actually allowed; or
(iv) has not started commercial production within the
period specified in the order of approval,
the assessee shall,
notwithstanding anything contained in this Ordinance, be liable to pay, in
addition to any tax otherwise payable by it in respect of the income year in
which such infringement was discovered, additional tax equal to,---
1Ins. by the Finance Act, 1987 (6 of
1987), s. 10.
2Sub-section (6) subs, by the Finance
Ordinance, 1982 (12 of 1982), s. 7.
3Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
(i) in the case referred to in sub-section (iii) of clause (b),
the difference in the amount actually allowed and the amount of credit allowable;
and
(ii) in other cases, the full amount of credit actually
allowed, and
where no such tax is
otherwise payable by the assessee in respect of the said income year, the said
additional tax shall be deemed to be the tax payable by it in respect of the
said income year.]
(7) The following are the
conditions referred to in subsection (1), namely:---
(a) that the company is a public company; and
(b) that the company is formed for the purpose of, and is
actually engaged in, carrying on in
Explanation.— As used in this sub-section,---
(a) “approved industrial undertaking” means an industrial
undertaking which is set up in Pakistan after the fourteenth day of August,
1947 and is approved by the Central Board of Revenue for the purposes of this1
section; and
(b) “industrial undertaking” means,---
(i) any undertaking which fulfills the conditions specified in
clauses (a), (d) and (e) of sub-section (2) of section 48; and
(ii) any other industrial undertaking, which is approved
by the Central Board of Revenue for the purposes of this section,
and includes any expansion
of an industrial undertaking to which this section applies, where such
expansion constitutes—
(a) an identifiable industrial unit for the production of any
goods or class of goods; or
(b) a similar unit for the carrying on of an identifiable
industrial process.
1[(7A) Notwithstanding anything contained
in this section, the Central Board of Revenue may, in the case of any company
applying for approval of an industrial undertaking owned by it, grant approval
under this section before the said undertaking is set up or has commenced commercial
production] 2[or
may grant approval from such date, whether preceding or following the date on
which the approval is granted, as it may specify in this behalf].
(8) The provisions of
sections 96, 97, 99, 100, 103 and 104 shall, so far as may be, apply to tax
credit under this section as they apply to refunds.
(9) The Central Board of
Revenue may make rules regulating the procedure for the grant of approval
under this section and any other matter connected with, or incidental to, the
operation of this section.
107. Tax credit for
replacement, balancing and modernization of machinery or plant.—(1) Where an assessee being a Pakistani
company invests any amount in the purchase of plant and machinery for
installation at any time between the first day of July, 1976 and the thirtieth
day of June, 3[1988] 4[or
between the first day of July, 1990, and the thirtieth day of June, 5[1991],
in an industrial undertaking set up in Pakistan and owned by it, for the
purposes of replacement, balancing or modernisation of the machinery and plant
already installed therein, credit at the rate of fifteen per cent of the amount
so invested shall be allowed against the tax payable by it in the manner
hereinafter provided.
6[Explanation.— As used in this
sub-section,---
(a) “amount”, in case of plant and machinery acquired on lease,
means the amount expended by the lessor in the purchase of the said plant and
machinery; and
(b) “purchase of plant and. machinery” includes acquisition of
plant and machinery on lease from a scheduled bank, a financial institution or
a leasing company on such terms and conditions as may be approved by the
Central Board of Revenue.]
(2) The amount of credit
admissible under this section shall be deducted from the tax payable by the
assessee in respect of the income year in which the machinery or plant in the
purchase of which the amount referred to in sub-section (1) is invested is
installed.
1 Sub-section (7A) added by the
Finance Ordinance, 1982 (12 of 1982), s. 7.
‑Added and shall be deemed to have been
so added by the Finance Act, 1985 (1 of 1985), s. 4.
3 Subs. by the Finance Act, 1989 (5
of 1989), s. 6.
4 Ins. by the Finance Act, 1990 (7
of 1990), s. 7.
5 Subs. by the Finance Act, 1991 (12
of 1991), s. 5.
6 Added by the Finance Act, 1986 (I
of 1986), s. 12.
(3) Where no tax is payable
by the assessee in respect of the assessment year relevant to the income year
in which such plant or machinery is installed, or where the tax payable is less
than the amount of the credit, the amount of the credit or so much of it as is
in excess thereof, as the case may be; shall be carried forward and deducted
from the tax payable by the assessee in respect, of the following assessment
year and so on, but no such amount shall be carried forward for more than two
assessment years so, however, that the deductions made under sub-section (2)
and this sub-section shall not exceed in the aggregate the limit specified in
sub-section (1).
1[(4) The provisions of sub-sections (1)
and (2) shall also apply in the like manner to any plant and machinery
installed, for the purposes of extension of the industrial undertaking,---
(i) on or after the first day of July, 1978, and before, the
thirtieth day of June, 1983 in the territories of
(ii) on or after the first day of July, 1983, in the
territories of
(5) Where any credit is
allowed under this section and subsequently it is discovered by the 2[Deputy
Commissioner] that any one or more of the conditions specified in this section
was or were not fulfilled, as the case may, the credit originally allowed shall
be deemed to have been wrongly allowed and the 2[Deputy
Commissioner] may, notwithstanding anything contained in this Ordinance,
recompute the tax payable by the assessee for the relevant year and the
provisions of section 65 shall, so far as may be, apply accordingly, the period
of ten years specified in sub-section (3) of-that section being reckoned from
the end of the assessment year relevant to the income year in which the
infringement was discovered.
(6) The provisions of
sections 96, 97, 99, 100, 103 and 104 shall, so far as may be, apply to tax
credit under this section as they apply to refunds.
(7) As used in this
section, “industrial undertaking” means an undertaking which fulfills the
conditions laid down in clauses (a), (d) and (e) of sub-section (2) of section
48 ‘[or which is engaged in the business of exploration or extraction of coal
deposits] and includes any such undertaking which is approved by the Central
Board of Revenue for the purposes of this section.
1 Sub-section (4) substituted by the
Finance Ordinance, 1983 (14 of 1983), s. 5.
2 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
3 Ins. by the Finance Act, 1987 (6
of 1987), s. 10.
(8) The Central Board of
Revenue may make rules regulating the procedure for the grant of approval
under this section and any other matter connected with, or incidental to, the
operation of this section.
1[107A. Tax Credit.—(1)
Notwithstanding anything contained in this Ordinance, the Central Board of
Revenue may make scheme or schemes for the provisions of tax credit, and such
credit shall be available to such persons or classes of persons, in such
manner, at such rates and in such areas as may be specified in such scheme
or-schemes.
(2) The Central Board of
Revenue may, by notification in the official Gazette, make provisions relating
to the adjustment of tax credit, or any other matter connected with or
incidental to, the tax credit.]
CHAPTER XI
PENALTIES
108. Penalty for failure
to furnish return of total income and certain statements. Where any person has, without
reasonable cause, failed to furnish, within the time allowed for the
purpose,---
(a) any return of total income under section 55 or 56, sub-section
(1) of section 65, sub-section (3) of section 72 or sub-section (3) of section
81; or
(b) any certificate, statement, accounts or information under
section 51,139, 140, 141, 142, 143,2[143A],3[143B]
or 144.
the 4[Deputy
Commissioner] 5[shall]
impose upon such person a 6[penalty,---
7[(i) 8[in
case of default specified in clause (a), an] amount equal to one: tenth of one
per cent of the tax payable for each day of default subject to a minimum of
five hundred rupees and a maximum of twenty-five per cent of the tax payable].
(ii) in case of default specified in clause (b), an amount
equal to two thousand rupees and a further sum equal to two hundred rupees for
every day during which the default continues.]
1New section (107A) ins. by the Finance
Act, 1996, (9 of 1996), s. 10.
2The figure (143A) added by the Finance
Ordinance. 1982, (12 of 1982), s. 7.
3The figures (143B) ins. by the Finance
Act, 1991 (12 of 1991), s. 5.
4 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
5Subs. by the Finance Act. 1994 (12 of
1994), s. 7. for “May”.
6Subs. ibid., for certain words.
7Subs. by the Finance Act, 1997 (22 of
1997), s. 7, for “clause (i), which was previously amended by various
enactments.
8Subs. by the Finance Act, 1998 (3 of
1998), s. 5, for “an”.
109. Penalty for failure
to maintain prescribed accounts. Where any person has, without reasonable cause, failed to
comply with the provisions of any order or rule made under or in pursuance of
sub-section (2) of section 32, the 1[Deputy
Commissioner] may impose on him a penalty 2[equal
to fifteen per cent of the tax payable, subject to a minimum of two thousand
rupees.]
110. Penalty for
non-compliance with notice. Where any person has, without reasonable cause, failed to comply
with any notice issued under section 58 3*
or 61, the 1[Deputy
Commissioner] may impose on him a penalty4[2[equal
to fifty per cent of] the amount of tax which would have been avoided if the
income as returned by such person had been accepted as the correct income.]
111. Penalty for
concealment of income, etc.—(1)
Where, in the course of any proceedings under this Ordinance, the 1[Deputy
Commissioner] the Appellate 5[Additional
Commissioner] or the Appellate Tribunal is satisfied that any person has,
either in the said proceedings or in any earlier proceedings relating to an
assessment in respect of the same income year, concealed his income or
furnished inaccurate particulars of such income, he or it may impose upon such
person a penalty 2[equal
to the] the amount of tax which 6[the
said person sought to evade by concealment of his income or furnishing of inaccurate
particulars of such income, as aforesaid].
(2) For the purposes of
sub-section (1) and section 119, concealment of income or the furnishing of
inaccurate particulars of income shall include,---
(a) the suppression of any item of receipt liable to tax in
whole or in part 7[or
failure to disclose income chargeable to tax]; 8*
(b) claiming any deduction for, or showing any expenditure not
actually incurred 9[;
and]
1 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
2Subs. by the Finance Act. 1997 (22 of
1997), s. 7 for certain words.
3The figure “60” omitted by the Finance
Ordinance, 1980 (25 of 1980), s. 6.
4Subs. ibid, for certain words which was
previously amended by various enactments.
5See footnote 1 on page 116, supra.
6Subs. by the Finance Act, 1987 (6 of
1987), s. 10.
7Ins. by Act, 22 of 1997 s. 7.
8The word “or” omitted by the Finance
Ordinance, 1984 (28 of 1984), s. 6.
9Ins. ibid.
[(c) any act referred to in clauses (aa), (b), (c), (d)
and (e) of sub-section (1) of section 13.]
2[(2A) Notwithstanding anything contained
in sub-section (1) or sub-section (2), where any item of receipt declared by
the assessee is claimed by him as exempt from tax, or where any deduction in
respect of any expenditure is claimed by him, mere disallowance of such claim
shall not constitute concealment of income or the furnishing of inaccurate
particulars of income, unless it is proved that the assessee deliberately
claimed exemption from tax in respect of the aforesaid item of receipt or
claimed deduction in respect of such expenditure not actually incurred by him.]
(3) An Appellate 3[Additional
Commissioner] or the Appellate Tribunal, on making an order under sub-section
(1), shall forthwith send a copy thereof to the 4[Deputy
Commissioner] and thereupon all the provisions of this Ordinance relating to
the recovery of penalty shall apply as if such order were made by the Income
Tax Officer.
112. Penalty for failure
to give notice of discontinuance of business or profession. Where any person fails to comply with the
provisions of sub-section (1) or sub-section (2) of section 72 the 4[Deputy
Commissioner] may impose on him a penalty not exceeding the amount of the tax
payable for the income year in which the business was discontinued.
113. Penalty in the case
of registered firms. Where
a person liable to penalty under sections 109, 110, 111 or 112 is a registered
firm, the amount of penalty shall, notwithstanding anything contained in this
Ordinance, be calculated as if” such registered firm were an unregistered firm.
114. Penalty for failure
to give notice by liquidator. Where a liquidator of a private company fails to give notice
of his appointment as required by sub-section (1) of section 76, the 4[Deputy
Commissioner] may impose on him a penalty not exceeding ten thousand rupees.
115. Penalty for
obstruction. Where
any person obstructs any income tax authority in the discharge of his functions
under this Ordinance, the 5[Commissioner]
may impose on such person a penalty not exceeding ten thousand rupees.
1 New Cl. (c) added by the Finance
Act, 1984 (28 of 1984), s. 6.;
2 Ins. by the Finance Act, 1988 (6
of 1988), s. 6.
3 Subs. by Finance Act, (10 of
1993), s. 5, for “Assistant Commissioner”.
4 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
5 Subs. by the Finance Ordinance.
1980 (25 of 1980), s. 6, for “Income Tax Officer”.
116. Imposition of
penalty after notice of hearing, etc. No penalty under this Chapter shall be imposed on any
person,---
(a) by an 1[Deputy
Commissioner] except with the prior approval in writing of the Inspecting 2[Additional
Commissioner]; and
(b) unless such person has been given a reasonable opportunity
of being heard,
and the imposition of such
penalty shall be without prejudice to any other liability incurred by such
person under this Ordinance, the repealed Act or any other law for the time
being in force 3[:]
3[Provided that where a notice for hearing
is given on or after the first day of July, 1990, no order of penalty shall be
passed after the expiration of two years from the end of the financial year in
which such notice was served.]
CHAPTER XII
OFFENCES AND PROSECUTIONS
117.Prosecution for noncompliance
of certain statutory obligations. Where any person, without reasonable cause,---
(a) fails to comply with the provisions of section 50 or section
53; or
(b) fails to furnish the return of total income required to be
furnished under section 56, sub-section (3) of section 72 or sub-section (3) or
section 81; or
(c) fails to comply with the requirements of any notice served
upon him under section 58, 61, 65 or 144; or
(d) fails to comply with the notice under section 92 or section
148; or
(e) obstructs any income tax authority in the discharge of his
functions under this Ordinance,
he shall be punishable with
imprisonment for a term which may extend to one year, or with fine, or with
both.
1Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
2 Subs. by Finance Act, (10 of
1993), s. 5, for “Assistant Commissioner”.
3 Subs. and added by the Finance
Act, 1990 (7 of 1990), s. 7.
118. Prosecution for
false statement in verification. Where any person makes a statement in any verification in
any return or any other document furnished under any provision of this
Ordinance which is false and which he either knows or believes to be false or
does not believe to be true, he shall be punishable with imprisonment for a
term which may extend to three years, or with line, or with both.
119. Prosecution for
concealment of income, etc. Where any person conceals his income or deliberately furnishes
inaccurate particulars thereof, he shall be punishable with imprisonment for a
term which may extend to five years, or with fine, or with both.
120. Prosecution for
abetment. Where any
person knowingly and wilfully aids, abets, assists, incites or induces another
person to make or deliver a false return, account, statement, certificate or
declaration under this Ordinance, or himself knowledgly and wilfully makes or
delivers such false return, accounts, statement, certificate or declaration on
behalf of another person, lie shall be punishable with imprisonment for a term
which may extend to three years, or with fine, or with both.
121. Prosecution for
disposal of property to prevent attachment, etc. Where the owner of any property, or a
person acting on his behalf or claiming under him, sells, mortgages, charges or
leases or otherwise deals with the property after the receipt of a notice from
the Tax Recovery Officer with a view to preventing that Officer from attaching
it, he shall be punishable with imprisonment for a term which may extend to
three years, or with fine, or with both.
122. Prosecution for
unauthorized disclosure of information by a public servant. Where any person discloses any
particulars in contravention of the provisions of sub-section (1) of section
150, he shall be punishable with imprisonment for a term which may extend to
six months, or with fine, or with both.
123. Liability for
prosecution in the case of company, etc. Where any offence referred to in this Chapter has been
committed by a company, or an association of persons or a firm or a Hindu
undivided family, every person, who, at the time the offence was committed, was
the principal officer thereof, or was acting or purporting to act, in such
capacity, or a member of the association of persons, or a partner in the firm,
or the manager or a male adult member of the family, he shall, notwithstanding
anything contained in any other law for the time being in force, be deemed to
be guilty of such offence and all the provisions of this Ordinance shall apply
accordingly.
124. Institution of
prosecution proceedings without prejudice to other action. Notwithstanding anything contained
in any law for the time being in force, a prosecution for an offence against
this Ordinance may be instituted without prejudice to any other liability
incurred by any person under this Ordinance or the repealed Act.
125. Sanction of
prosecution, etc. No
prosecution in respect of any offence referred to in this Chapter shall be
instituted except with the previous sanction of the 1[Commissioner].
126. Power to compound
offence. Where any
person has committed any offence referred to in this Chapter, the Commissioner
may, either before or after the institution of proceedings compound such
offence and order that such person shall pay the amount for which the offence
may be compounded.
127. Trial by Special
Judge. — (1)
Notwithstanding anything contained in the Code of Criminal Procedure, 1898 (V
of 1898), or in any other law for the time being in force, an offence
punishable under this Chapter (other than an offence under section 122) shall
be tried exclusively by a Special Judge appointed by the Federal Government
under the Pakistan Criminal Law Amendment Act, 1958 (XL of 1958), as if such
offence were an offence specified in the Schedule to that Act.
(2) A Special Judge shall
take cognizance of, and have jurisdiction to try, an offence tribal under
sub-section (1) only upon a complaint in writing made by an income tax
authority authorised by the Central Board of Revenue in this behalf.
128. Power to tender
immunity from prosecution.—(1)
The Federal Government may, for the purpose of obtaining the evidence of any
person appearing to have been directly or indirectly concerned in, or privy
to, the concealment of income or to the evasion of tax, tender to such person
immunity from prosecution for any offence under this Ordinance or under the
Pakistan Penal Code (XLV of 1860), or under any other Federal law on condition
of his making a full and true disclosure of the whole circumstances relating
to the concealment of income or evasion of tax.
(2) A tender of immunity
made to, and accepted by, the person concerned shall, to the extent to which
the immunity extends, render him immune from prosecution for any offence in
respect of which the tender was made.
(3) If it appears to the
Federal Government that any person to whom immunity has been tendered under
this section has not complied with the condition on which the tender was made
or is concealing anything or giving false evidence, the Federal Government may
withdraw the immunity, and any such person may be tried for the offence in
respect of which the tender of immunity was made or for any other offence of
which he appears to have been guilty in connection with the same matter.
1Subs. by the Finance Act, 1995 (1 of
1995) s. 9, for “Central Board of
CHAPTER XIII
APPEALS AND REVISION
129. Appeal to the
Appellate 1[Additional
Commissioner].—(1) Any
assessee objecting to an order made by an 2[Deputy
Commissioner] under section 3[59
or 59A (where any adjustment has been made under sub-section (3) or sub-section
(2), respectively, of those sections)] 62,63,65, 68, 75,4[80,
80A,] 91,98, 99, 105 to 112 (inclusive), 1145**
or sub-section (2) of section 148, 6[or
an order under section 52, treating a person to be an assessee in default,] or
an order under section 78, treating the assessee as an agent of a non-resident,
or an order under section 156 7[refusing
to rectify the mistake, either in full or in part, as claimed by the assessee
or] having the effect of enhancing the assessment or reducing a refund or
otherwise increasing the liability of the assessee may appeal to the Appellate1[Additional
Commissioner] against such order.
(2) No appeal under
sub-section (l) shall lie against any order of assessment unless the tax
payable under section 54 8*
* * has been paid 9[.]
10* * * * * * *
130. Form of appeal and
limitation.—(1) Every
appeal under section 129 shall be in the prescribed form and shall be verified
in the prescribed manner, and shall be accompanied by a fee of1 11[12[one
thousand] rupees or ten per cent of tax levied,
1 Subs. by Finance Act, (10 of 1993),
s. 5, for “Assistant Commissioner”.
2 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
3Ins. by the Finance Ordinance, 1980 (25
of 1980), s. 6.
4Ins. by the Finance Act, 1986 (1 of
1986), s. 12.
5The word and figure or 115 omitted by
the Finance Ordinance, 1982 (12 of 1982), s. 7.
6Ins. by the Finance Act, 1987 (6 of
1987), s. 10.
7Ins. by Ordinance XXV of 1980. These
words were deemed to have been inserted by S.R.O. 885(I)/79, dt. 2-10-79, for
the assessment year 1979-80.
8The certain words omitted by the Finance
Act, 1996 (9 of 1996), s. 13 which was previously ins. by Act, 12 of 1994, s.
7.
9Subs. ibid., for colon.
10Proviso omitted ibid.
11Subs. by the Finance Act, 1994 (12 of
1994), s. 7, for “twenty-five rupees”.
12Subs. by Act 9 of 1996, s. 13, for “two
thousand five hundred”.
whichever is less, provided that where no
tax is levied, 1[a
fee of one thousand rupees in case of companies and two hundred rupees in case
of other assessees] shall be paid.]
(2) The appeal shall be
presented within thirty days of the following date, namely:---
(a) where the appeal relates to any assessment or penalty, the
date of service of the notice of demand relating to the said assessment or
penalty, as the case may be; and
(b) in any other case, the date on which intimation of the order
to be appealed against is served.
(3) The Appellate 2[Additional
Commissioner] may admit an appeal after the expiration of the period specified
in sub-section (2) if he is satisfied that the appellant was prevented by
sufficient cause from presenting the appeal within that period.
131. Procedure in
appeal.—(1) The
Appellate 2[Additional
Commissioner] shall give notice of the day fixed for the hearing of the appeal
to the appellant and to the 3[Deputy
Commissioner] against whose order the appeal is preferred and may adjourn the
hearing of the appeal from time to time.
(2) The Appellate 2[Additional
Commissioner] may, before the hearing of an appeal, allow an appellant to file
any new ground of appeal not specified in the grounds of appeal already filed
by him on being satisfied that the omission of that ground from the form of
appeal was not wilful or unreasonable.
(3) The Appellate 2[Additional
Commissioner] may, before disposing of any appeal, call for such-particulars as
he may require respecting matters arising in the appeal or cause further
inquiry to be made by the 3[Deputy
Commissioner].
(4) The Appellate 3[Deputy
Commissioner] shall not admit any documentary material or evidence which was
not produced before the 3[Deputy
Commissioner] unless he is satisfied that the appellant was prevented by
sufficient cause from producing such material or evidence before the 3[Deputy
Commissioner].
1Subs. by the Finance Act, 1996 (9 of
1996), s. 13 for certain words.
2 Subs. by Finance Act, (10 of
1993), s. 5, for “Assistant Commissioner”.
3Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
132. Decision in appeal.—(1) In disposing of an appeal, the
Appellate 1[Additional
Commissioner] may,---
(a) in the case of an order of assessment,---
(i) set aside the assessment and direct the assessment to be
made afresh after making such further inquiry as the Appellate Assistant
Commissioner may direct or the 2[Deputy
Commissioner] thinks fit;
(ii) confirm, reduce, enhance or annual the assessment;
(b) in the case of an order imposing a penalty, confirm, set
aside or cancel such order or enhance or reduce the penalty; and
(c) in any other case, pass such order as he thinks fit.
(2) The Appellate 1[Additional
Commissioner] shall not enhance an assessment or a penalty or reduce the amount
of refund unless the appellant has been given a reasonable opportunity of
showing cause against such enhancement or reduction, as the case may be.
(3) Where, as the result of
an appeal, any change is made in the assessment of a firm or an association of
persons or a new assessment of a firm or an association of persons is ordered
to be made, the Appellate 1[Additional
Commissioner] may authorise the 2[Deputy
Commissioner] to amend accordingly any assessment made on any partner of the
firm or any member of the association.
(4) On the disposal of an
appeal, the Appellate 1[Additional
Commissioner] shall communicate the order passed by him to the appellant and to
the 2[Deputy
Commissioner] and the Commissioner.
3[(5) Where no order under sub-section (1)
is made before the expiration of three months from the end of the month in
which the appeal is presented, the relief sought through the said appeal shall
be deemed to have been given and all the provisions of this Ordinance shall
have effect accordingly:---
1 Subs. by Finance Act, (10 of
1993), s. 5, for “Assistant Commissioner”.
2Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
3New sub-section (5) and (6) added by the
Finance Act, 1991 (12 of 1991). s. 5.
Provided that, where the
hearing of appeal is adjourned for any period on the request of the appellant,
the said period shall be excluded while computing the aforesaid period of three
months:---
Provided further that
nothing contained in this sub-section shall apply to any appeal presented
before the first day of January 1992.
(6) The provisions of
sub-section (5) shall not apply unless a notice by the appellant stating that
no order under sub-section (1) has been made is personally served by the
appellant on the Appellate Assistant Commissioner not less than thirty days
before the expiration of the period of three months.]
133. Appointment of the
Appellate Tribunal.—(1)
The Federal Government shall appoint an Appellate Tribunal to exercise the
functions conferred on the Appellate Tribunal by this Ordinance.
(2) The Appellate Tribunal
shall consist of as many judicial members and accountant members, as may be
necessary:---
Provided that the Tribunal
shall not be deemed to be invalidly constituted merely by reason of the absence
of a judicial or an accountant member.
1[(3) A judicial member shall be,---
(a) a person who has exercised the powers of a District Judge
and is qualified to be a Judge of a High Court; or
(b) a person who is or has been an advocate of a High Court and
is qualified to be a Judge of a High Court; and
an accountant member shall
be,---
(a) an officer of the Income Tax Group equivalent in rank to
that of a Regional Commissioner of Income Tax; or
(b) a Commissioner of Income Tax, with at least two years
experience of performing appellate work; or
(c) a person who has, for a period of not less than ten years,
practiced professionally as a Chartered Accountant within the meaning of the
Chartered Accountants Ordinance, 1961 (X of 1961), 2[;
or]]
1New sub-section (3) subs, by the Finance
Act, 1997 (22 of 1997), s. 7, which was previously amended by various
enactments.
2Subs. by the Finance Act, 1998 (3 of
1998), s. 5, for full-stop.
[(d) a person who is or has been an advocate and has as
such for a period of, or of periods aggregating, not less than twenty years
been an income tax practitioner.]
2* * * * * * *
(4) The Federal Government
shall 3[ordinarily]
appoint a judicial member of the Tribunal to be 4[Chairman]
thereof.
(5) The powers and
functions of the Appellate Tribunal may be exercised and discharged by Benches
constituted from members of the Tribunal by the 4[Chairman]
of the Tribunal.
(6) A Bench shall consist
of not less than two members of the Tribunal and shall be constituted so as to
contain an equal number of judicial members and accountant members, or so that
the number of members of one class does not exceed the number of members of the
other class by more than one:---
Provided that the Federal
Government may direct that all or any of the powers of the Appellate Tribunal
shall be exercised (a) by any one member, or (b) by more members than one,
severally and singly.
(7) If the members of a
Bench differ in opinion on any point, the point shall be decided according to
the opinion of the majority, if there is a majority; but if the members are
equally divided, they shall be referred by the 4[Chairman]
of the Tribunal for hearing on such point or points by one or more of the other
members of the Tribunal, and such point or points shall be decided according to
the opinion of the majority of the members of the Tribunal who have heard the
case including those two who first heard it:---
Provided that if there are
only two members of the Tribunal the Federal Government may appoint an
additional member for the purpose of deciding the case on which there is a
difference of opinion.
(8) Subject to the
provisions of this Ordinance, the Appellate Tribunal shall have power to
regulate its own procedure, and the procedure of Benches of the Tribunal in all
matters arising out of the discharge of its function including the places at
which the Benches shall hold their sittings.
1New cl. (d) added by the Finance Act.
1998, (3 of 1998), s. 5.
2Proviso omitted by the Finance Act, 1991
(12 of 1991), s. 5.
3Ins. by the Finance Ordinance, 1980 (25
of 1980), s. 6.
4Subs. by the Finance Ordinance, 1982 (12
of 1982), s. 7, for “President”.
134. Appeal to the
Appellate Tribunal.—(1)
An assessee objecting to an order passed by an Appellate1[Additional
Commissioner] under section 111 or 132, or sub-section (2) of section 148, or
an Order made by the Appellate 1[Additional
Commissioner] under section 156 2*
* * having the effect of enhancing the assessment of reducing a refund of
otherwise increasing the liability of the assessee 3[or
an order made by an Inspecting Additional Commissioner under section 66A] may
appeal to the Appellate Tribunal against such order.
(2) The Commissioner may,
if he objects to any order passed by an Appellate 1[Additional
Commissioner] under section 132 direct the 4[Deputy
Commissioner] to appeal to the Appellate Tribunal against such order:
(3) Every appeal under
sub-section (1) or sub-section (2) shall, be filed within sixty days of the
date on which the impugned order is communicated to the assessee or the
Commissioner; as the case may be 5[.]
6* * * * * * *
(4) The Appellate Tribunal
may admit an appeal after the expiration of the period specified in sub-section
(3) if it is satisfied that the appellant was prevented by sufficient cause
from presenting it within that period.
(5) An appeal to the
Appellate Tribunal shall be in the prescribed form and shall be verified in
the prescribed manner, and shall, except in the case of ah appeal tinder
sub-section (2), be accompanied by a fee of 7[ 8[two
thousand five hundred] rupees or ten per cent of the tax levied, whichever is
less, provided that where no tax is levied, 9[a
fee of two thousand rupees in case of companies and five hundred rupees in case
of other assessees] shall be paid.]
(6) Notwithstanding that an
appeal has been filed under this section, tax shall, unless recovery thereof
has been stayed by the Appellate Tribunal, be payable in accordance with the
assessment made in the case 10[:]
1 Subs. by Finance Act, (10 of
1993), s. 5, for “Assistant Commissioner”.
2The certain words omitted by the Finance
Act, 1994 (12 of 1994), s. 7, which was previously amended by various
enactments.
3Ins. ibid.
4Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
5Subs. by the Finance Act, 1996 (9 of
1996), s. 13, for colon.
6Proviso omitted ibid.
7Subs. by Act, 12 of 1994, s. 7, for “one
hundred rupees”.
8Subs. by Act, 9 of 1996, s. 13, for
“five thousand”.
9Subs. ibid., for certain words.
10Subs. by the Finance Ordinance, 1984 (28
of 1984), s. 6, for full stop.
[Provided that where
recovery of tax has been stayed by the Appellate Tribunal by an order, such order
shall cease to have effect on the expiration of a period of three months
following the day on which it is made, unless the appeal is decided, or such
order is withdrawn, by the Appellate Tribunal earlier:---
Provided further that the
Appellate Tribunal shall not make an order which has the effect of staying the
recovery of tax beyond the period of 2[six]
months in the aggregate.]
135. Disposal of appeals
by the Appellate Tribunal.—(1)
The Appellate Tribunal may, before disposing of any appeal, call for such
particulars as it may require respecting the matters arising in the appeal or
cause further enquiry to be made by the 3[Deputy
Commissioner].
(2) The Appellate Tribunal
shall give both parties to the appeal an opportunity of being heard either in
person or through an authorised representative.
(3) If the Appellate
Tribunal is not satisfied that the assessment or the order which is the
subject of the appeal ought to be interfered with, it shall reject the appeal.
(4) If the Appellate
Tribunal is satisfied that an assessment which is the subject of appeal,---
(a) ought to be reduced or annulled, it shall reduce or annual
the assessment accordingly; or
(b) is insufficient, it shall enhance the assessment accordingly;
or
(c) ought to be set aside, it shall set aside the assessment and
direct the 3[Deputy
Commissioner] to make a fresh assessment.
(5) If the Appellate
Tribunal is satisfied that an order which is the subject of appeal ought to be
interfered with, it shall cancel or vary the order accordingly and shall issue
such consequential directions as the case may require.
Explanation.—In the case of an order imposing a
penalty, the power to vary the order shall include the power to enhance the
penalty.
1Provisos added by the Finance Ordinance,
1984 (28 of 1984), s. 6.
2Subs. by the Finance Act, 1991 (12 of
1991), s. 5, for “Three”.
3Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
(6) The Appellate Tribunal
shall not enhance an assessment or a penalty or reduce the amount of refund,
unless the assessee has been given a reasonable opportunity of showing cause
against such enhancement or reduction, as the case may be.
(7) Where, as the result of
an appeal, any change is made in the assessment of a firm or an association of
persons or a fresh assessment of a firm or an association of persons is ordered
to be made, the Appellate Tribunal may authorise the 1[Deputy
Commissioner] to amend accordingly any assessment made on any partner of the
firm or any member of the association, as the case may be.
2[(7A) Where no order this section is made
before the expiration of six months from the end of the month in which the
appeal under sub-section (1) of section 134 is presented, the relief sought
through the said appeal shall be deemed to have been given and all the
provisions of this Ordinance shall have effect accordingly:---
Provided that, where the
hearing of appeal is adjourned for any period on the request of the appellant,
the said period shall be excluded while computing the aforesaid period of six
months:---
Provided further that the
provisions of this sub-section shall come into force on such date 3*
* * as may be notified by the Income Tax Appellate Tribunal in the official
Gazette.]
(8) The Appellate Tribunal
shall communicate its order to the assessee and to the Commissioner.
(9) Save as provided in
section 136, an order passed by the Appellate Tribunal on appeal shall be
final.
4[136. Reference to High Court.—(1)
An appeal shall lie to the High Court in respect of any question of law arising
out of an order under section 135.
(2) The appeal under
this-section shall be filed within sixty days of the date upon which an
assessee or the Commissioner is served with notice of an order under section
135.
(3) Where an appeal under
sub-section (1) is filed by the assessee, it shall be accompanied by a fee of
one hundred rupees.
1Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
2Ins. by the Finance Act, 1991 (12 of
1991), s. 5.
3Omitted by the Finance Act, 1992 (7 of
1992), s. 7.
4New Section 136, subs. by the Finance
Act, 1997 (22 of 1997), s. 7, which was previously amended by Act 1 of 1985, s.
4.
(4) An appeal filed under
this section shall be heard by a Bench of not less than two Judges of the High
Court.
(5) The High Court upon the
hearing of an appeal under this section shall decide the question of law raised
therein an shall deliver its judgment thereon containing the grounds on which
such decision is founded and shall send a copy of such judgment under the seal
of the Court and the signature of the Registrar to the appellate Tribunal,
which shall pass such orders as are necessary to dispose of the case
conformably to such judgment.
(6) Subject to sub-section
(7), notwithstanding that an appeal has been filed under this section, tax
shall, unless recovery thereof has been stayed by the High Court, be payable in
accordance with the assessment made in the case as modified by the order of the
Appellate Additional Commissioner or, as the case may be, the Appellate
Tribunal.
(7) Where recovery of tax
has been stayed by the High Court by an order, such order shall cease to have
effect on the expiration of a period of six months following the day on which
it is made, unless the appeal is decided, or such order is withdrawn, by the
High Court earlier.
(8) The costs of the appeal
shall be in the discretion of the Court.]
137. Appeal to the
Supreme Court. — (1)
An appeal shall lie to the Supreme Court from any judgment of the High Court
delivered on 1[an
appeal filed] under section 136 in any case, which the High Court certifies to
be a fit one for appeal to the Supreme Court.
(2) The provisions of the
Code of Civil Procedure, 1908 relating to appeals to the Supreme Court shall,
so far as may be apply in the case of appeals under this section in like manner
as they apply in the ease of appeals from decrees of a High Court.
(3) Where the judgment of
the High Court is varied or reversed in appeal under this section, effect shall
be given to the order of the Supreme Court in the manner provided in
sub-section (5) of section 136 in the case of a judgment of the High Court.
1Subs.by the Finance Act, 1997 (22 of
1997), s. 7, for certain words.
(4) The provisions of
subsections (6) and (7) of section 136 shall apply in the case of an appeal to
the Supreme Court made under this section as they apply to a reference made
under the said section 136.
138. Revision by
Commissioner.‑(1)
The Commissioner may, either of his own motion or on an application made by the
assessee for revision, call for the record of any proceeding under this
Ordinance in which an order has been passed by any authority subordinate to him
and may make such inquiry or cause such inquiry to be made and, subject to the
provisions of this Ordinance, may pass such order thereon, not being an order
prejudicial to the assessee, as he thinks fit.
(2) The Commissioner shall
not revise any order under subsection (1) if,‑--
(a) where an appeal against the order lies to the Appellate
Assistant Commissioner or to the Appellate Tribunal, the time within which
such appeal may be made has not expired, or the assessee has not waived his
right of appeal; or
(b) the order is pending on appeal before the Appellate 1[Additional
Commissioner] or has been made the subject of an appeal to the Appellate
Tribunal; or
(c) in the case of an application made by the assessee, the
application has not been made within ninety days of the date on which such
order was communicated to him, unless the Commissioner is satisfied that the
assessee was prevented by sufficient cause from making the application within
the said period.
(3) No application for
revision shall lie under subsection (1) unless the tax payable under section 54
has been paid.
(4) Every application by an
assessee under subsection (1) shall be accompanied by a fee of 2[ 3[one
thousand] rupees or ten per cent of tax levied, whichever is less, provided
that where no tax is levied, 3[a
fee of one thousand rupees in case of companies and two hundred rupees in case
of other assessee] shall be paid].
(5) For the purposes of
this section,
(a) an order by the Commissioner declining to interfere shall be
deemed not to be an order prejudicial to the assessee; 4*
1Subs. by Finance Act, (10 of 1993), s.
5, for “Assistant Commissioner”.
2 Subs. by the finance Act, 1994 (12
of 1994), s. 7, for ““twenty-five thousand rup0ees”“.
3Subs. by the Finance Act, 1996 (9 of
1996), s. 13 for certain words.
4The word ““and”“ omitted by the finance
Ordinance, 1981 (24 of 1981), s. 5.
(b) the Appellate 1[Additional
Commissioner] shall be deemed to be an authority subordinate to the 2[Central
Board of Revenue] 3[:] 4*
5[(c) where, in pursuance of an order by the Central Board
of Revenue under clause (b) of sub-section (1) of section 5, a Commissioner
exercises the powers of an Appellate 1[Additional
Commissioner] references to“Commissioner“ shall be deemed to be references
to 2[Central
Board of Revenue] 6[:]7*
7[(cc) where, in pursuance of an order by the Commissioner
under clause (cc) of sub-section (1) of section 5, an Income Tax Panel
exercises the powers of an 8[Deputy
Commissioner], references to“Commissioner“ shall be deemed to be references
to “Regional Commissioner“.9*
[(ccc) where, in pursuance of an order by the
Commissioner under clause (c) of sub-section (1) of section 5, an
Inspecting 1[Additional
Commissioner] exercises the powers of an 9[Deputy
Commissioner], references to“Commissioner“ shall be deemed to be references to
Regional Commissioner“ 10*
11[(d) where an order is passed under section 115, reference
to “Commissioner“ shall be deemed to be references to “Regional
Commissioner 10[;
and]
10[(e) where an order is passed by an Appellate 1[Additional
Commissioner] on or after the first day of July, 1991, reference
to “Commissioner“ shall be deemed to be reference to “ Central Board
of Revenue“].
1Subs. by Finance Act, (10 of 1993), s.
5, for “Assistant Commissioner”.
2Subs, by the Finance Act, 1989 (5 of
1989), s. 6, for ““Commissioner”“.
3 Subs, by the Finance Ordinance,
1981 (24 of 1981), s. 5, for full stop.
4The word ““and”“ omitted by the Finance
Ordinance, 1982 (12 of 1982), s. 7.
5CI. (c) added by Ord. 24 of 1981.
6Subs, by the Finance Ordinance, 1982 (12
of 1982), s. 7, for full stop.
7Omitted and ins. by the Finance Act,
1988 (6 of 1988), s. 6.
8 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
9Omitted and ins. by the Finance Act,
1991 (12 of 1991), s. 5.
10Omitted, subs, and added by the Finance
Act, 1992 (7 of 1992), s. 7.
11Clause (d) added by Ord. 12 of 1982, s.
7.
[CHAPTER XIIIA]
SETTLEMENT OF CASES
138A. Income Tax Settlement
Commission.—(1) The Federal Government shall appoint an Income Tax Settlement
Commission to exercise powers and discharge the functions conferred on it under
this Chapter.
(2) The Commissioner shall
consist of a Chairman and as many members 2[and
associate members] as may be necessary and shall function within the Division
of the Federal Government dealing with revenue.
(3) The members of the
Commission shall be appointed by the Federal Government from amongst persons of
integrity and outstanding ability having special knowledge of, and experience
in, matters relating to income tax law and accounts.
3[(3A) The Federal Government may also
appoint from amongst person of integrity and outstanding ability a person
within such experience as may be prescribed, being a Chartered Accountant or a
Cost and Management Accountant or possessing such qualification as may be
prescribed by the Federal Government, as an associate member of the
Commission:---
Provided that the number of
associate members shall not exceed the number of benches of the Commission.
(3B) The terms, conditions
and tenure of service of the associate members shall be determined by the
Federal Government.]
(4)The Federal Government
shall ordinarily appoint the senior most member of the Commission to be the
Chairman thereof.
138B Definitions. In this Chapter, unless the context
otherwise requires,---
4[(i) “associate member” means an associate member
appointed under sub-section (3A) of section 138A;]
5[(ii)] “case” means any proceedings under this Ordinance for
the assessment, including additional assessment, appeal or revision in
connection with such proceedings, of any person in respect of any year or
years, which may be pending before an income tax authority, Income Tax
Appellate Tribunal or any court on the date of making the application under
sub-section (1) of section 138D :
1New Chapter XIIIA ins. by the Finance
Act, 1993 (10 of 1993), s. 5,
2Ins. by the Finance Act, 1996 (9 of
1996), s. 13:
3New sub-sections (3A) and (3B), Ins.
ibid.
4New CI. (i) ins. ibid..
5C!s. (i), (ii) and (iii) re-numbered as
els. (ii) (iii) and (iv) ins. ibid.,
Provided that where any appeal or
application for revision or reference has been filed after the period of
limitation and which has not been admitted, such appeal, application for
revision or reference shall hot be deemed to be a proceeding pending within the
meaning of this clause:---
1[(iii)] “Chairman” means the Chairman of the Commission;
1[(iv)] “Member” means a member of the Commission, and
includes the Chairman thereof; and
2[(v)] “Commission” means the Income Tax
Settlement Commission appointed under section 138A.
138C. Powers and
functions of the Commission.___(1)
The powers and functions of the Commission may be exercised and discharged by
benches constituted from amongst members of the Commission by the Chairman.
(2) A bench shall
ordinarily consist of two members and shall be presided over by the Chairman:---
Provided that, where the
Chairman is not a member of the bench the Chairman may authorise any member to
discharge the functions of the Chairman 3[:]
4[Provided further that where the applicant
makes an application under section 138D in writing for settlement of his case
with the inclusion of associate member in the bench, the bench shall be so
constituted.]
5[(2A) The functions of the Commission
shall be,---
(a) to process and decide applications filed by assessees
declaring income not hitherto declared;
(b) to process and decide applications filed by the assessees
regarding tax disputes arising out of an assessment order or an order passed by
an Appellate Additional Commissioner;
1 CIs. (i) (ii) and (iii)
re-numbered as els. (ii) (iii) and (iv) ins. by the Finance Act 1996 (9 of
1996), s. 13.
2CI. (iv) re-numbered as cl. (v) ins.
ibid.
3 Subs, ibid., for full-stop.
4 Proviso added ibid.,
5New Sub-section (2A) ins. by the Finance
Act, 1995 (1 of 1995), s. 9.
(c) to process departmental appeals filed before the Income Tax
Appellate Tribunal for settlement or withdrawal thereof; and
(d) any other function specifically assigned by the Federal
Government to the Commission.]
(3) Subject to the
provisions of this ordinance, the Commission shall have power to regulate its
own procedure, and the procedure of benches in all matters arising out of the
discharge of its functions, including the places at which the benches shall
hold their sittings.
(4) If the members of a
bench differ in opinion as to the
decision to be given on any point,---
(a) the point shall be decided according to the opinion of the
majority, if there is a majority;
(b) if the members are equally divided and the Chairman of the
Commission is not himself a member of the bench, the case shall be referred to
the Chairman and the decision of the Commission shall be expressed in terms of
the opinion of the Chairman; and
(c) if the members are equally divided and the Chairman of the
Commission is himself a member of the bench, the opinion of the Chairman shall
prevail and the decision of the Commission shall be expressed in terms of the
opinion of the Chairman.
(5) In addition to powers
conferred on the Commission under this Chapter, it shall have all the powers
which are vested in an income tax authority under this Ordinance.
138D. Application for
settlement of cases.
—(1) An assessee 1[whose
case falls under clause (a) of sub-section (2A) of section 138C] may, at any
stage of his case, make an application in such form and in such manner as may
be prescribed, containing full and true disclosure of his income which he may
not have disclosed before the assessing officer, the manner in which such
income has been derived, the additional amount of income tax payable on such
income and such other particulars as may be prescribed, to the Commission to
have the case settled and any such application shall be disposed of in the
manner provided hereinafter:---
1 Ins. by the Finance Act 1996 (9 of
1996), s. 13.
Provided that no such
application shall be made unless the assessee has filed the return of income
which he was or is required to furnish under the Ordinance and the income tax
payable on the basis of 1[such
application exceeds twenty-five thousand rupees]
2* * * * * * *
3[(1A) An assessee whose case falls under
clause (b) of subsection (2A) of section I38C may make an application in such
form and in such manner as may be prescribed against an assessment order or an
order passed by an appellate authority, not being the Income Tax Appellate
Tribunal or any court of law, to the Commission, to have the case settled and
any such application shall be disposed of in the manner provided hereinafter:---
Provided that the tax
payable under such order exceeds twenty-five thousand rupees.]
(2) Every application made
under sub-section (1) shall be accompanied by the such fees as may be
prescribed by the Commission.
(3) An assessee once having
made an application under subsection (1) shall not be entitled to withdraw it.
138E Disposal of applications by the
Commission.—(1) The Commission may, before disposing of any application4[filed
under sub-section (1) or sub-section (1A) of section 138D] call for such
particulars as it may require in respect of the case in the application brought
before it or cause further enquiries to be made by the Commissioner and on the
basis of his report and having regard to the nature and circumstances of the
case, the Commission may, by order; allow the application to be proceeded with
or reject the application:---
Provided that an
application shall not be rejected under this sub-section unless an opportunity
has been given to the applicant of being heard.
(2) Notwithstanding
anything contained in sub-section (1), an application shall not be proceeded
with under that sub-section if the Commissioner objects to such application on
the ground that concealment of particulars of income on the part of the
applicant or perpetration of fraud by him for evading any tax under this. Ordinance,
has been established or is likely to be established by any income tax
authority:---
1 Subs, by the Finance Act, 1995 (I
of 1995), s. 9, for certain words. –
2Second proviso omitted ibid..
3New Sub-section (I A) ins. by the
Finance Act, 1996 (9 of 1996), s. 13.
4 Ins. ibid..
Provided that where the
Commission does not agree with the objections raised by the Commissioner, it
may, after giving the Commissioner an opportunity of being heard, accept the
application for being proceeded with under sub-section (1).
(3) Where an application is
allowed to be proceeded with under sub-section (1), the Commission may call for
the relevant records from the Commissioner and after examination of such
records, if the Commissioner is of the opinion that any further inquiry in the
matter is necessary, if may direct the Commissioner to make or cause to be made
such further enquiry, and furnish a report on the matters within such time as
it may fix.
(4) After examination of
the records and the report of the Commissioner received under sub-section (1)
or sub-section (3), and after giving an opportunity to the applicant and to the
Commissioner to be heard, in person or through their authorised representatives
and after examining such further evidence as may be placed before it or
obtained by it,, the Commission may, in accordance with the provisions of this
Ordinance, pass such order as it thinks fit on the matters enumerated in the
application and reported to it by the Commissioner under sub-section (1) or
sub-section (3).
(5) Every order passed
under sub-section (4) shall provide for the terms of settlement including any
demand of tax, penalty or interest, the manner in which any sum due under the
settlement shall be paid and all other matters to make the settlement effective
and shall also provide that the settlement shall be void if it is subsequently
found by the Commission that it has been obtained by fraud or
misrepresentation.
(6) Where a settlement,
becomes void the proceedings with respect to the matters relating to the
settlement, shall be revived from the stage at which the application was
allowed except a matter pending in appeal or revision before making an
application under sub-section (1) of section 138D, to be proceeded with and
the concerned income tax authority may, notwithstanding anything contained in
any other provision of this Ordinance, complete such proceedings within two
years from the end of the financial year in which the settlement became void.
(7) The Commission may, if
it is of the opinion that any person who made an application under section 138D
does not cooperate with the Commission in the proceedings before, it, send the
case back to the assessing officer, if such case was pending for assessment at
the time application under that section was made, who shall thereupon dispose
of the case in accordance with the provisions of this Ordinance as if no
application under section 138D had been made.
1[138EE Disposal of second appeal cases.—(1) The Commission
may, by an order, direct the Commissioner to withdraw an appeal preferred by
him before the Income Tax Appellate Tribunal.
(2) The Commission may,
before making an order under sub-section (1), call for such particulars,
records or report as it may require or cause further enquiries to be made by
the Commissioner.
(3) No order under
sub-section (I), shall be made unless the Commissioner has been given a
reasonable opportunity of being hear.]
138F. Recovery of sums due under order of
settlement. Any sum specified in an order of settlement passed under
sub-section (4) of section 138E shall, subject to such conditions as may be
specified therein, be recovered, and any penalty for default in making payment
of such sum may be imposed and recovered in accordance with the provisions of
this Ordinance by the Deputy Commissioner having jurisdiction in the case.
138G. Bar on subsequent application for
settlement in certain cases. Where,---
(i) an order of the settlement passed under section 138E
provides for the imposition of a penalty on the person on the ground of
concealment of particulars of his income; or
(ii) a person is convicted of any offence under Chapter
XII in pursuance of settlement of a case; or
(iii) a case is sent back to the Deputy Commissioner by the
Commission for assessment or reassessment for any reason or where the
settlement becomes void under this Chapter, any fresh application for
settlement shall not be admissible.
1New Section 138EE ins. By the Finance
Act, 1996 (9 of 1996), s. 13.
138H. Order of settlement
to be conclusive. Every order of Commission passed under section 138E shall be
conclusive as to the matters stated therein and no matter covered by such
order shall, save as otherwise provided in this Chapter be reopened in any
proceeding under this Ordinance or under any law for the time being in force.
1381. Power of commission
to re-open proceedings. If Commission is, for reasons to be recorded in
writing, of the opinion that for the proper disposal of the case pending before
it, it is essential to re-open any proceedings connected with the case but
which have been completed under this Ordinance by any income tax authority
before the application under section 138D was made, it may, with the
Concurrence of the applicant, reopen such proceedings and pass such order
thereon as it thinks fit, as if the case in relation to which the application
for settlement had been made by the applicant under that section covered such
proceedings as well :
Provided that no
proceedings shall be re-opened by the Commission under this section if the
period between the end of the assessment year to which such proceedings relate
and the date of application for settlement under section 138D exceeds five
years.
138J. Proceedings before
Commission to be judicial proceeding. Any proceedings before the Commission
shall be deemed to be judicial proceedings within the meaning of sections 193
and 228 and for the purposes of section 196 of the Pakistan Penal Code (Act XLV
of I860).
138K. Communications of
orders. The Commission shall communicate its order to the applicant, the Deputy
Commissioner and the Commissioner.]
1[CHAPTER-XIII-B
DIRECTORATE GENERAL OF INSPECTION
138L. Appointment of
Directorate General of Inspection.—(1) The Federal Government shall appoint a
Directorate General of Inspection to exercise the powers and discharge the
functions conferred on it under this Chapter.
(2) The Directorate-General
shall consist of a Director-General and as many Directors, Additional
Directors, Deputy Directors, Assistant Directors, Extra-Assistant Directors and
Inspectors, as the Director-General may deem necessary to be appointed from
amongst the officers of Income Tax Group.
1New Chapter XIII-B ins. By the Finance
Act, 1995 (1 of 1995), s. 9.
138M. Definitions. In this Chapter, unless the context
otherwise requires,---
(a) “Director-General” means a person appointed to be the
Director-General of Inspection;
(b) “Director” means a person appointed to be a Director of
Inspection;
(c) “Additional Director” means a person appointed to be an
Additional Director of Inspection;
(d) “Deputy Director” means a person appointed to be a Deputy
Director of Inspection and includes an Assistant Director of Inspection and an
Extra Assistant Director of Inspection; and
(e) “Inspector” means a person appointed to be an Inspector of
Inspection.
138N. inspection authorities.—(1) There
shall be the following classes of inspection authorities for the purposes of
this Ordinance, namely:---
(a) Director-General of Inspection;
(b) Directors of Inspection;
(c) Additional Directors of Inspection;
(d) Deputy Directors of Inspection; and
(e) Inspectors of Inspection.
(2) The Directors of
Inspection, Additional Directors of Inspection, Deputy Directors- of Inspection
and Inspectors of Inspection shall be subordinate to theDirector-General of
Inspection.
(3) Additional Directors of
Inspection, Deputy Directors of Inspection and Inspectors of Inspection shall
be subordinate to the Director of Inspection within whose jurisdiction they
perform their functions.
(4) Deputy Directors of
Inspection and Inspectors of Inspection shall be subordinate to the Additional
Director of Inspection within whose jurisdiction they perform their functions.
(5) Inspectors of
inspection shall be subordinate to the Deputy Director of Inspection within
whose jurisdiction they perform their functions.
1380. Jurisdiction of Inspection Authorities.—(1)
Subject to the Provisions of this Chapter,---
(a) the Directors of Inspection, Additional Directors of
Inspection, Deputy Directors of Inspection and Inspectors of Inspection shall
perform their functions in respect of such persons or classes of persons or
such areas as may be assigned to them by the Director-General;
(b) the Additional Directors of Inspection, Deputy Directors of
Inspection and Inspectors of Inspection shall perform their functions in
respect of such persons or classes of persons or such areas as may be assigned
to them by the Director of Inspection.
(2) The Director-General or
the Director may assign‘ any function or functions in respect of any area,
office or offices located within an area, case, class of cases, person or
classes of persons, to any inspection authority working under his control.
138P. Functions and
Powers of Directorate-General.—(1) The functions of the Directorate-General
of Inspection shall be,---
(a) to carry out inspections of income tax cases and offices;
(b) to investigate or cause investigation to be carried out in
respect of—
(i) cases involving leakage of revenue or evasion of taxes; and
(ii) officers and staff of the income tax offices allegedly
involved in corruption and malpractice and recommend to competent authority
appropriate disciplinary action;
(c) to carry out audit of cases or offices involving income tax
revenues;
(d) to recommend the Central Board of Revenue in matters of tax
policy, tax administration and tax operations;
(e) to furnish an annual report about the working of Income Tax
Offices to the Central Board of Revenue by the thirty-first day of December,
following the end of .the financial year to which it relates; and
(f) any other work or function that may be assigned to it by the
Federal Government
(2) In discharge of its
functions under sub-section (1), the Directorate-General shall have the powers
specified in section 148.]
CHAPTER XIV
MISCELLANEOUS
139. Statement regarding
salary. Every person
responsible for paying any income chargeable under the head ‘Salary’
shall, 1*
* * furnish to the 2[Deputy
Commissioner] or any other officer authorised in this behalf by the Central
Board of Revenue, a statement 1*
* * in the prescribed manner, showing.
(a) the name and address of every person who has been paid, or
to whom was due, during the 3[period
for which each statement is being furnished] any income chargeable under head
‘Salary’ exceeding such amount as maybe prescribed;
(b) the amount so paid, or due to such person;
(c) the amount of tax deducted from the income of such person;
and
(d) such other particulars as may be prescribed.
140. Statement regarding
dividends.‑The
principal officer of every domestic company shall,1*
* * furnish to the2[deputy
Commissioner] or any other officer authorised in this behalf by the Central
Board of Revenue, a statement, 1*
* * in the prescribed manner, showing,---
(a) the name and address (as entered in the register of
shareholders maintained by the company) or every shareholder to whom 4[bonus
shares or bonus or] a dividend or aggregate dividends exceeding such amount as
may be prescribed in this behalf has or have been distributed during 1[the
period for which each statement is being furnished]
1The certain words, omitted by the
Finance Act, 1995 (1 of 1995), s. 9.
2Subs. by Act 10 of 1993, s.5 for “Income
Tax Officer”.
3Subs. by Act 1 of 1995, s. 9. for
certain words.
4 ins. By the Finance Act, 1994 (12
of 1994), s. 7.
(b) the total amount of dividend or dividends so distributed to
such shareholder; and
(c) such other particulars as may be prescribed.
141. Statement regarding
interest, rent, etc. Every
person responsible for paying any intere6t (not being interest on securities),
brokerage, commission, rent, or professional fee (exceeding such amount as may
be prescribed) on behalf of Government, a local authority, public company, a
foreign contractor, consultant or consortium shall on or before the first day
of September in each year, furnish to the Income‑tax Officer or any other
officer authorised in this behalf by the Central Board of Revenue, a statement
in the prescribed form and verified in the prescribed manner, showing,---
(a) the name and address of every person to whom such interest,
brokerage, commission, rent or professional foe, was paid during the preceding
financial year;
(b) the total amount of such interest, brokerage, commission,
rent or professional fee was paid to such person;
(c) the date on which such payment was made; and
(d) such other particulars as may be prescribed,---
Explanation.‑As used in this section,
8* * * * * * *
(2) “professional fee”
includes fee paid for services performed by a doctor, architect, lawyer,
Chartered Accountant or a Management and Cost Accountant, and such other
persons as may be prescribed.
1Subs. by the Finance Act, 1995 (1 of
1995), s. 9, for “preceding financial year”.
2Ins. By the finance Act, 1994 (12 of
1994), s. 7.
3 Subs. ibid., for “not being”.
4 Ins. by the Finance Act, 1987 (6
of 1987), s. 10.
5 Subs. by the Finance Ordinance,
1982 (12 of 1982), s. 7, for “public company”.
6The certain words omitted by Act 1 of
1995, s. 9.
7 Subs. by Act 10 of 1993, s.5 for
“Income Tax Officer”.
8Clause (1) omitted by Ordinance, 1982
(12 of 1982), s. 7.
142. Statement regarding
payments to non‑residents and’ contractors. Every person responsible for paying
to any person any sum to which subsection (3) 1[sub-section
(3A)] of sub-section (4) of section 50 applies shall, 2*
* * furnish to the 3[Deputy
Commissioner] or any other officer authorised in this behalf by the Central
Board of Revenue, a statement 2*
* * in the prescribed manner showing,---
(a) the name and address of every person to whom any such sum
was paid during 4[the
period for which each statement is being furnished];
(b) the amount so paid;
(c) the amount of tax deducted; and
(d) such other particulars as may be prescribed.
5[143. Statement regarding certain
contracts. Every person responsible to dieduct or collect advance tax
under sub-section (2B), (5A), (6), (7C) 6[(7E)
or (7f)] of section 50 shall, 2*
* * furnished to the Deputy commissioner or any torher officer authorized
inthis behalf by the Central Board of Revenue, a statement showing
particular 2*
* * in the prescribed manner.]
7[143A.Statement regarding certain properties.—(1) Every
Registering Officer, Revenue Officer or other officer appointed to register any
documents relating to property, other than agricultural land, under the
Registration Act, 1908,(XVI of 1908), shall on or before the first day of
September in each year, furnish to the 3[Deputy
Commissioner] or any other officer authorised in this behalf by the Central
Board of Revenue, a statement regarding the properties the value of which is
not less than fifty thousand rupees, registered with him during the preceding
financial year, in the prescribed form and verified in the prescribed manner,
showing,---
(a) the names and addresses of the buyer and the seller;
(b) the registered value of the property.
(c) the address of the property;
1Ins. by the Finance Act, 1994 (12 of
1994), s. 7.
2The certain words omitted by the Finance
Act, 1995 (I of 1995), s. 9.
3 Subs. by Act 10 of 1993, s.5 for
“Income Tax Officer”.
4Subs, by Act I of 1995, s. 9. for “preceding
financial year”.
5Subs, by Act 12 of 1994, s. 7, for
section 143, which was previously amended by various enactments.
6Subs, by the Finance Act, 1996 (9 of
1996), s. 13, for “or (7E)”.
7Section 143A, ins. by the Finance
Ordinance, 1982 (12 of 1982), s. 7.
(d) the date of registration; and
(e) such other particulars as may be prescribed.
(2) Every person
responsible for the assessment of capital gains tax arising from the sale,
exchange or transfer of immovable property situated within the urban areas
specified by the Government under the West Pakistan Urban Immovable Property
Tax Act, 1958, (West Pakistan Act No. Vof 1958)shall, on or before the first
day of September in each year, furnish to the 1[Deputy
Commissioner] or any other officer authorised in this behalf by the Central
Board of Revenue, a statement regarding the properties assessed to capital
gains tax by him during the preceding financial year, in the prescribed form
and verified in the prescribed manner, showing,---
(a) the name and address of the buyer and the seller;
(b) the assessed value of the property;
(c) the addressed of the property;
(d) the date of assessment; and
(e) such other particulars as may be prescribed.]
2[(3) Every person responsible to collect
advance tax under sub-section (7A) or sub-section (7BB) of section 50 shall, on
or before the first day of September in each year, furnish to the Deputy
Commissioner or any other officer authorized in this behalf by the Central
Board of Revenue, a statement in the prescribed form and verified in the
prescribed manner.
3[143B. Statement regarding certain
assessees. Every person whose income is chargeable under section 80B4[,section
80C or section 80CC] shall, on or before the thirtieth day of September in
each year, furnish to the 1[Deputy
Commissioner], or any other officer authorised in this behalf by the Central
Board of Revenue, a statement showing such particulars relating to his income
for the preceding financial year, and in such form, and verified in such
manner, as may be prescribed.]Statement regarding certain assessees.
5[143C. Displaying of
National Tax Number Certificate.—(1) All assessees having income from
business or profession shall display their National Tax Number certificate at
some conspicuous place of their business premises.
1Subs. by Act 10 of 1993, s.5 for “Income
Tax Officer”.
2 New Sub-section (3) added by the
Finance Act, 1994 (12 of 1994), s. 7.
3Ins. by the Finance Act, 1991 (12 of
1991), s; 5-
4 Subs, by Act 12 of 1994, s. 7, for
or section 80C.
5New sections I43C and 143D added by the
Finance-Act. 1996 (9 of 1996), s. 13.
(2) Where any person has,
without reasonable cause, failed to comply with, the provisions of sub-section
(1), the Deputy Commissioner may, with the prior approval of Commissioner
impose a fine which may not exceed two thousand rupees.
(3) No action under
sub-section (2) shall be taken unless the assessee has been given a reasonable
opportunity of being heard.
143D. Obtaining of
National Tax Number Card.—(1)
All assessees shall obtain National Tax Number Card on payment of a prescribed
fee.
(2) Where any person has,
without reasonable cause, failed to comply with the provisions of sub-section
(1), the Deputy Commissioner may, with the prior approval of the Commissioner,
impose a fine not exceeding two thousand rupees.
(3)No action under
sub-section (2) shall be taken unless the assessee has been given a reasonable
opportunity of being heard.]
144. Power to call for
information.The 1[Deputy
Commissioner] 2[the
Inspecting 3[Additional
Commissioner] the Commissioner,] or any other officer authorised in the behalf
by the Commissioner or the Central Board of Revenue, may, by notice in writing,
require,---
(a) any assessee to furnish within such time as may be specified
in such notice a statement showing the names and addresses of all persons to
whom he has paid in any income year rent, interest, commission,4[fee,]
royalty or brokerage, or any annuity amounting to not less than four hundred
rupees together with particulars of all such payments 5[or
remuneration in the nature of valuable consideration, under whatever
nomenclature];
(b) any dealer, broker or agent or any person concerned in the
management of a Stock or Commodity Exchange to furnish, within such time as
may be specified in such notice, a statement showing the names and addresses of
all persons to or from whom he, or the Exchange, has paid or received in any
income year any sum amounting to not less than five thousand rupees in the
aggregate, in connection with the transfer of assets, together with particulars
of all such payments and receipts;
1 Subs. by Act 10 of 1993, s.5 for
“Income Tax Officer”.
2Ins. by the Finance Ordinance, 1980 (25
of 1980), s. 6.
3Subs. by the Finance Act, 1993 (10 of
1993), s. 5, for "Assistant Commissioner".
4 Ins. by the Finance Act, 1994 (12
of 1994), s. 7.
5Added, ibid..
(c) any person, including a banking company, to furnish such
information or such statement or accounts as may be specified in such notice:---
Provided that no such
notice shall be issued to any banking company as respects any client, except
with the prior approval of the Commissioner in the case of an Income‑tax
Officer, or the Central Board of Revenue or any other income‑tax
authority authorised by it in this behalf in the case of the other officer.
145. Power of survey.‑Notwithstanding anything contained
in any other provision of this Ordinance and subject to such directions as may,
from time to time, be issued by the Central Board of Revenue in this behalf,
the Inspecting Assistant Commissioner, the Income‑tax Officer or an
Inspector of Income‑tax may enter any premises within the area assigned
to him for the purpose of making a survey of persons liable to tax under this
Ordinance and,---
(a) inspect any accounts or documents;
(b) stamp such accounts and documents;
(c) take extracts from such accounts and documents; and
(d) make such enquiries as may be necessary.
146. Power to enter and
search business premises.‑ (1) The Inspecting Assistant Commissioner or the Income‑tax
Officer or any other officer authorised in this behalf by the Central Board of
Revenue or if so authorised in writing by the Inspecting Assistant Commissioner
or the Income‑tax Officer to whom he is subordinate, an Inspector of
Income tax may, for the purpose of making any inquiry, enter the premises in
which a person carries on, or is believed to carry on, his business or
profession, and may,---
(a) search such premises and inspect any accounts or documents;
(b) stamp such accounts or documents or take extracts or copies
thereof;
(c) impound such accounts or documents and retain them for so
long as may be necessary for examination thereof or for the purposes of Prosecution;
and
(d) make any inventory of any articles found in such premises.
1Subs. by Act 10 of 1993, s.5 for “Income
Tax Officer”.
2Subs. by Finance Act, (10 of 1993), s.5
for “Assistant Commissioner”.
(2) The 1[Director-General
of Investment and Intelligence] the Commissioner and the Inspection 2[Additional
Commissioner] of Inspection, the Commissioner and the Inspecting Assistant
Commissioner may make any enquiry which they consider necessary as respects any
person liable or believed to be liable to assessment under this Ordinance or
require any such person to produce or cause to be produced any accounts or
documents which they consider necessary, and shall have the same powers for the
purpose of making any such enquiry of requiring the production of accounts or
documents under this Ordinance as the 3[Deputy
Commissioner] Income‑tax Officer has.
(3) Notwithstanding
anything contained in this Ordinance, the 3[Deputy
Commissioner]Incometax Officer may, with the prior approval of the
Commissioner, authorise any valuer to enter any place and inspect such accounts
and documents as may be necessary to enable him to make a valuation of any
asset for the purposes of section 67.
147. Assistance to income‑tax
authorities. ‑All
officers of Customs, Central Excise, Provincial Excise and Taxation, Police and
the Civil Armed Forces are hereby empowered and required to assist income‑tax
authorities in the discharge of their functions under this Ordinance.
148. Power to take
evidence on oath, etc. ‑(1)
The Income‑tax Office3[rDeputy
Commissioner] 4[the
Inspecting2[Additional
Commissioner], the Appellate 2[Additional
Commissioner], Assistant Commissioner, the Commissioner and any other officer
under the administrative control of the Central Board of Revenue authorised by
it in this behalf, and the Appellate Tribunal shall, for the purposes of this
Ordinance, have the same powers as are vested in a Court under the Code of
Civil Procedure, 1908 (V of 1908), when trying a suit in respect of the following
matters, namely:‑--
(a) enforcing the attendance of any person and examining him on
oath or affirmation;
(b) compelling the production of any accounts of documents;
(c) receiving evidence on affidavit; and
(d) issuing commissions for the examination of witnesses.
1 Subs, by the Finance Act, 1995 (I
of 1995), s. 9, for certain words, which was previously amended by various
enactments.
2 Subs. by Finance Act, (10 of
1993), s. 5, for “Assistant Commissioner”.
3 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
4 Ins. by the Finance Ordinance,
1980 (25 of 1980), s. 6.
(2) Where a person to whom
a summons is issued under subsection (1) either to attend to give evidence or
to produce accounts or documents at the place and time specified in such
summons fails to do so without any reasonable cause, the authority issuing such
summons may, without prejudice to the provisions of any other law for the time
being in force, impose upon him such fine not exceeding one thousand rupees as
it thinks fit, and the fine so imposed may be recovered in the manner provided
in Chapter IX.
(3) The provisions of
subsection (3) of section 111 shall mutatis mutandis apply in
the case of an order made under subsection (2) by any authority (other than
the 1[Deputy
Commissioner]) as they apply to an order made under subsection (1) of the said
section 111.
149. Power to impound
and retain books of account, etc.‑Any authority referred to in subsection (1) of section 148
may impound and retain in its custody for such period as it thinks fit any
books of accounts or other documents produced before it in any proceeding
under this Ordinance.
150. Disclosure of
information by a public servant.‑‑(1) All particulars contained in,---
(a) any statement made, return furnished or accounts or
documents produced tinder the provisions of this Ordinance; or
(b) any evidence given, or affidavit or deposition made, in the
course of any proceedings under this Ordinance other than proceedings under
Chapter XI; or
(c) any record of any assessment proceedings or any proceeding
relating to the recovery of a demand;
shall be treated as
confidential, and no public servant shall, save as provided in this Ordinance, shall
disclose any such particulars.
(2) Notwithstanding
anything contained in the Evidence Act, 1872 (I of 1872), or any other law for
the time being in force, no Court or other authority shall, save as provided in
this Ordinance, be entitled to require any public servant, to produce before it
any return, accounts or documents contained in, or forming a part of, the
records relating to any proceeding under this Ordinance, or any records of the
Income‑tax Department generally, or any part thereof, or to give evidence
before it in respect thereof.
1Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
(3) Nothing contained in
subsection (1) shall apply to the disclosure,---
(a) of any such particulars to any person acting in the
execution of this Ordinance, where it is necessary to disclose the same to him
for the purposes of this Ordinance; or
1[(aa) of any such particulars to any person authorized by
the Central Board of Revenue in this behalf, where it is necessary to disclose
the same to him for the purposes of processing of data and preparation of
computer printouts relating to returns of income or calculation of tax; or]
(b) of any such particulars, where the disclosure is occasioned
by the lawful employment under this Ordinance of any process for the service of
any notice or the recovery of any demand; or
(c) of any such particulars to the Auditor‑General of
Pakistan for the purpose of enabling him to discharge his functions under the
Constitution; or
(d) of any such particulars to any officer appointed by the
Auditor-General of
(e) of such facts to an officer of a Provincial Government or
the Federal Government authorised by such Government in this behalf as may be
necessary for the purpose of enabling that Government to levy or realise any
tax imposed by it; or
(f) of such facts to any authority exercising powers under the
Central Excise and Salt Act, 1944 (I of 1944),2*
* * the Sales Tax Act, 1951 (III of 1951), the Gift Tax Act, 1963 (XIV of
1963), the Wealth Tax Act, 1963 (XV of 1963), or the Customs Act, 1969 (IV of
1969), as may be necessary for the purpose of enabling it duly to exercise such
powers; and
(g) of any such particulars occasioned by the lawful exercise by
a public servant of his powers under the Stamp Act, 1899 (II of 1899), to
impound au insufficiently stamped document; or
1Clause (aa) ins. by the finance
Ordinance, 1984 (28 of 1984), s. 6.
2Omitted by the Federal laws (Revision
and Declaration) Ordinance, 1981 (27 of 1981), s. 3 and Sch. II.
(h) of such particulars to the State Bank of Pakistan as are
required by the said Bank to enable it to compile financial statistics of
international investment and balance of payments; or
(i) of any such particulars as may be required by any order made
under subsection (2) of section 19 of the Foreign Exchange Regulation Act, 1947
(VII of 1947), or for the purposes of any prosecution for an offence under
section 23 of that Act; or
(j) of any such particulars as may be required by the [Corporate
law Authority] Securities and Exchange Authority or the Monopolies Control
Authority for the purposes of the securities and Exchange Ordinance, 1969 (XVII
of 1969), or the Monopolies and Restrictive Trade Practices (Control and
Prevention) Ordinance, 1970 (V of 1970), as the case may be; or
(k) of any such particulars relevant to any inquiry into a
charge of misconduct in connection with income‑tax proceedings against a
legal practitioner or an accountant to the authority referred to in subsection
(4) of section 157, when exercising the functions referred to in that section;
or
(l) of any such particulars to a Civil Court in any suit of
proceeding to which the Government or any income‑tax authority is a
party, which relates to any matter arising out of any proceeding under this
Ordinance; or
(m) of any such particulars for the purposes of a prosecution
for any offence under the Pakistan Penal Code (Act XLV of 1860) in respect of
any such statement, returns, accounts, documents, evidence, affidavit or
deposition, or for the purposes of a prosecution for any offence under this
Ordinance; or
(n) of any such particulars, relevant to any inquiry into the
conduct of an official of the Income‑tax Department to any 2[persons
or officer] appointed to hold such inquiry Commissioners under the Public
Servants (Inquiries) Act. 1850 (XXXVII of 1850) or to an officer otherwise
appointed to hold such inquiry, or to a Public Service Commission, established
under the Constitution, when exercising its functions in relation to any matter
arising out of such inquiry; or
1Subs. by the finance Ordinance, 1984 (28
of 1984), s. 6, for the words “Securities and Exchange Authority”.
2Subs. by the Federal laws (Revision and
Declaration) Ordinance, 1981 (27 fo 1981), s. 3 and Sch. II.
(o) of such information as may be required by any officer or
Department of the Federal Government or of a Provincial Government for the
purpose of investigation into the conduct and affairs of any public servant, or
to a Court in connection with any prosecution of the public servant arising out
of any such investigation; or
(p) of such facts to an authorised officer of the Government of
any country outside
(4) Nothing in this section
shall apply to the production by a public servant before a Court of any
document, declaration or affidavit filed, or the record of any statement or
deposition made in a proceeding under section 68 or section 75 or the giving of
evidence by a public servant in respect thereof.
1[(5) Nothing contained in subsection (1)
shall prevent the Central Board of Revenue from publishing, with the prior
approval of the Federal Government, andy such particulars as are referred to in
that sub-section.]
(6) Any person to whom any
information is communicated under this section, and any person or employee
under his control, shall, in respect of that information, be subject to the
same rights, privileges, obligations and liabilities as if he were a public
servant and all the provisions of this Ordinance shall, so far as may be, apply
accordingly.
(7) No prosecution shall be
instituted under this section except with the previous sanction of the Central
Board of Revenue.
151. Limitation of
exemption. Where any
income is exempt from tax, the exemption shall, in the absence of a specific
provision to the contrary contained in this Ordinance, be limited to the
original recipient of that income and shall not extend to any person receiving
any payment wholly or in part out of that income.
1Subs. by the Finance Ordinance, 1981 (24
of 1981), s. 5.
152. Tax or refund to be
calculated to the nearest rupee.‑In the determination of the amount of tax or a refund
payable under this Ordinance, fractions of a rupee less than fifty paisa shall
be disregarded, and fractions of a rupee equal to or exceeding fifty paisa
shall be regarded as one rupee.
153. Receipts to be
given for moneys paid or recovered under this Ordinance.‑A receipt shall be given for any money
paid or recovered under this Ordinance.
154. Service of notice.‑(1) A notice, order or requisition
(hereinafter referred to as ‘notice‘) under this Ordinance may be served
on the person therein named either by post or in the manner provided for
service of a summons issued by a Court under the Code of Civil Procedure, 1908
(V of 1908).
(2) Any such notice may be
addressed,‑--
(a) in the case of a firm or a Hindu undivided family, to any
member of the firm or to the manager or any adult male member of the family;
(b) in the case of a local authority, a company or an
association of persons, to the principal officer thereof; and
(c) in the case of any other person (not being an individual),
to the person who manages or controls its affairs.
(3) Where a firm or other
association of persons is dissolved, any such notice may be served on any
person who was a member of the firm or the association, as the case may be,
immediately before such dissolution.
(4) In any case to which
section 72 applies such notice may be served on the person whose income .is to
be assessed, or in the case of a firm or an association of persons, on any
person who was a member of such firm or association as the case may be at the
time of the discontinuance of business or profession, or in the case of a
company, on the principal officer thereof.
(5) Where an order is mode
under subsection (1) of section 75 holding that a partition of any Hindu
undivided family has taken place, any such notice may be served on the; person
who was the last manager of the family or, if such person is dead, on all adult
male persons who were members of the family immediately before the partition.
(6) The validity of any
notice: issued under this Ordinance or the validity of service of any such
notice hall not be called in question after the return in response to such
notice has been filed or compliance thereto has beer made.
155. Certain mistakes
not to vitiate assessment, etc.‑No assessment order, notice, warrant or other document
made, issued or executed or purporting to be made, issued or executed under
this Ordinance shall be void or otherwise inoperative merely for want of
form, 1[or
for having been generated through a computer,]or for a mistake, defect of
omission therein, if such want of form 1[or
for having been generated through a computer], or mistake, defect or omission,
is not of a substantial hat re prejudicially affecting as assessee.
156. Rectification of
mistakes.‑(1) Any
income‑tax authority or the Appellate Tribunal may amend any order passed
by it to rectify any mistake apparent from the record on its own motion or on
such mistake being brought to its notice by any other income‑tax
authority or by the assessee.
(2) No order under
subsection (1), which has the effect of enhancing an assessment or reducing a
refund or otherwise increasing the liability of the assessee, shall be made
unless the parties affected thereby have been given a reasonable opportunity of
being heard.
(3) Where any such mistake
is brought to the notice of any income‑tax authority by the assessee and
no order under subsection (1) is made by such authority before the expiration
of the financial year next following the date in which it was so brought to its
notice, the mistake shall be deemed to have been rectified and all the
provisions of this Ordinance shall have effect accordingly.
(4) No order under subsection
(1) shall he made after the expiation of four years from the date of the order
sought to be amended.
157. Appearance by
authorised representative.‑(1)
Any assessee who is entitled or required to attend before any income‑tax
authority or the Appellate Tribunal in connection with any proceeding under
this Ordinance, may, except when required under section 148 to attend
personally, attend by an authorised representative.
(2) For the purpose of this
section,‑--
(a) authorised representative“ means a person authorised by the
assessee in writing to appear on his behalf, being,---
(i a relative of the assessee; or
(ii) a person in the employment of the assessee on a whole
time basis; or
(iii) any officer of a Scheduled Bank with which the
assessee maintains a current account or has other regular dealings; or
(iv) any legal practitioner who is entitled to practice in
any civil Court in
(v) an accountant; or
(vi) an income‑tax practitioner;
1Subs. by the Finance Act, 1998 (3 of
1998), s. 5.
(b) “accountant“ means,---
(i) a chartered accountant within the meaning of the Chartered
Accountants Ordinance, 1961 (X of 1961); or
(ii) a cost and management accountant within the meaning
of the Cost and Management Accountants Act, 19 6 (XIV of 1966); or
(iii) a member of any association of accountants recognised
in this behalf by the Central Board of Revenue; and
(c) income‑tax practitioner“ means a person who is
registered as such by the Central Board of Revenue, being a person who
possesses such 1*
* *qualifications as may be prescribed in this behalf or who has retired after
putting in satisfactory service in the Income Tax Department for a period
of not less than ten years2[in
a post or posts not inferior to that of an Income‑tax Officer] and
includes any person who was, and had continued to be, registered as an income‑tax
practitioner immediately before the commencement of this Ordinance.
(3) Notwithstanding
anything contained in this section,‑--
(a) no person who has been dismissed or removed from service
after the first day of April 1938, shall be qualified to represent an assessee
under subsection (1);
(b) no person who has become an insolvent shall be qualified to
represent an assessee under subsection (1) for so long as the insolvency
continues;
(c) no person other than a person to whom clause (a) applies,
who is disqualified to represent an assessee by virtue of the provisions of subsection
(3) of section 61 of the repealed Act shall be qualified to represent an
assessee under subsection (1);
(d) no person having resigned from service after having been
employed in the Income‑tax Department for not less than two years shall
be entitled to represent an assessee under subsection (1) for a period of two
years from the date of his resignation;
(e) no person having retired from service in the Income‑tax
Department shall be entitled to represent an assessee under subsection (1) for
a period of one year from the date of his retirement in any case in which he
had made or approved, as the case may be, any order of assessment, refund or
appeal within a period of one year before the said date; and
1The certain words omitted by the finance
Act, 1995 (1 of 1995), s. 9.
2Subs. by the Finance Act, 1998 (3 of
1998), s. 5, for certain words, which was previously amended by various
enactments.
(f) no person who has been convicted of any offence connected
with any income‑tax proceedings under this Ordinance, or the repealed
Act, shall be qualified to represent an assessee under subsection (1) for such
time as the Commissioner may, by order in writing, determine.
(4) If any person, being a
legal practitioner or an accountant, is found guilty of misconduct in his
professional capacity by any authority entitled to take disciplinary action
against him, an order passed by that authority shall have effect in relation to
his right to represent an assessee under subsection (1) as it has in relation
to his right to practice as legal practitioner or accountant, as the case may
be.
(5) If any person, not being
a person to whom subsection (4) applies, found guilty of misconduct in
connection with income‑tax proceedings by any Commissioner, the
Commissioner may, by an order in writing direct that the said person shall
thenceforward be disqualified to represent an assessee under subsection (l)
before any income‑tax authority and the Appellate Tribunal.
(6) No order under clause
(f) of subsection (3) or subsection (5) shall be made in respect of any person
unless he has been given a reasonable opportunity of being heard.
(7) Any person against whom
any order under clause (f) of subsection (3) or subsection (5) has been made
may, within thirty days of such order, appeal to the Central Board of Revenue
to have the order cancelled.
(8) The Central Board of
Revenue may admit an appeal after the expiration of the period specified in
subsection (7), if it is satisfied that the appellant was prevented by
sufficient cause from presenting it within that period.
(9) No order made under
clause (f) of subsection (3) or subsection (5) shall take effect until the
expiration of thirty days from the making thereof, or, where an appeal has been
preferred under subsection (7), until the disposal of the appeal, whichever is
the later.
(10) The Central Board of
Revenue may make rules for the registration of income‑tax practitioners
and matters connected therewith or incidental thereto, including matters
relating to their code of conduct.
158. Proceedings under
the Ordinance to be judicial proceedings.‑Any proceedings under this Ordinance
before an Income‑tax Officer, Assistant Commissioner, Commissioner or
the Appellate Tribunal shall be deemed to be judicial proceedings within the
meaning of sections 193 and 228 and for the purposes of section 196 of the
Pakistan Penal Code (Act XLV of 1860).
159. Proceedings against
companies under liquidation.‑ Notwithstanding anything contained in section 171 of the
Companies Act, 1913 (VJI of 1913), leave of the Court shall not be required for
proceeding with or commencing any proceeding under this Ordinance against a
company in respect of which a winding up order has been made or provisional
liquidator appointed.
1Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
160. Computation of
limitation period.‑In
computing the period of limitation, there shall be excluded,‑--
(a) in the case of an appeal or an application under this
Ordinance, the day on which the order complained of was served and, if the
assesses was not furnished with a copy of the order when the notice of the
order was served upon him, the time requisite for obtaining a copy of such
order; and
(b) in the case of any assessment or other proceedings under
this Ordinance, the period, if any, for which such proceedings were stayed by
any Court, tribunal or any other authority.
161. Indemnity.‑Every person deducting, retaining or
paying any tax in pursuance of this Ordinance in respect of income belonging to
another person is hereby indemnified for the deduction, retention or payment
thereof.
162. Bar of suits in
civil Courts. No
suit shall be brought in any civil Court against any order made under this
Ordinance, and no prosecution, suit or other proceeding shall lie against any
person for anything in good faith done or intended to be done under this
Ordinance.
163. Avoidance of double
taxation and prevention of fiscal evasion.‑(1) The Federal Government may enter into an
agreement with the Government of any country for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income
leviable under this Ordinance and under the corresponding law in force in that
country, and may, by notification in the official Gazette, make such provisions
as may be necessary for implementing the agreement.
(2) Where any agreement is
made in accordance with subsection (1), the agreement and the provisions made
by notification for implementing the said agreement shall, notwithstanding
anything contained in any law for the time being in force, have effect in so
far as they provide for,---
(a) relief from the tax payable under this Ordinance; or
(b) determining the income accruing or arising, or deemed to
accrue or arise, to non‑residents from sources within
(c) where all the operations of business or profession are not
carried on within Pakistan, determining the income attributable to operations
carried on within and outside Pakistan, or the income chargeable to tax in
Pakistan in the hands of such persons, including their agents, branches or
establishments in Pakistan; or
(d) determining the income to be attributed to any person
resident in Pakistan having any special relationship with a non‑resident;
or
(e) exchange of information for the prevention of fiscal evasion
or avoidance of taxes on income chargeable under this Ordinance and under the
corresponding law in force in that other country.
(3) The provisions of the
Seventh Schedule shall have effect where an agreement provides that the tax
payable under the laws of the country concerned shall be allowed as a credit
against the tax payable in
(4) Notwithstanding
anything contained in subsections (1), (2) and (3) any such agreement may
include provisions for relief from tax for any period before the commencement
of this Ordinance or before the making of the agreement.
164. Unilateral relief. If any person who is resident in
3[164A. Power to collect information regarding exempt
income. The Central Board of Revenue may, by notification in the
official Gazette, authorise any department or agency of the Federal Government
to collect and compile any data in respect of incomes from industrial and
commercial undertakings which are exempt under the Second Schedule.]
165. Power to make
rules.___(1) The Central Board of Revenue may, by
notification in the official Gazette, make rules for carrying out the purposes
of this Ordinance.
(2) In particular, and
without prejudice to the generality of subsection (1), such rules may,---
(a) prescribe the manner in, and the procedure by, which the
income, profits and gains liable to tax and the tax payable under this
Ordinance shall be determined in the case of‑
(i) income derived in part from agriculture and in pact from
business; or
(ii) persons to whom section 59 applies; or
(iii) non‑residents;
1 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
2Subs. by the Finance Ordinance. 1981 (24
of 1981), s. 5, for certain words.
3Ins. by the Finance Act, 1991 (12 of
1991), s..5.
(b) provide for the determination of the value of any
allowances, benefits or perquisites;
(c) provide for the ascertainment or determination of any income
or class of income to be included in the total income of an assessee, and any
deduction from such income;
(d) prescribe fees and other charges to be paid in respect of
any matter referred to in this Ordinance; 1*
or provide for anything which is to be or may be prescribed under this
Ordinance [; or]2
3[(f) prescribe forms for return of total income, or
statements, which may include details of personal expenses [; and]4]
5[(g) prescribe the format and procedure for filing of
returns of income, documents or statements on computer media or through
electronic medium or for the issuance of orders or notices or levy of
additional tax or penalty through computer.]
(3) In cases coming under
clause (a) of subsection (2), the rules may prescribe methods by which an
estimate of such income, profits and gains may be made and prescribe the
proportion of the income which shall be deemed to be income liable to tax under
this Ordinance, and an assessment based on such estimate or proportion, as the
case may be, shall be deemed to be duly made in accordance with the provisions
of this Ordinance.
(4) The power to make rules
conferred by this section shall, except on the first occasion of the exercise
thereof, be subject to the condition of previous publication.
6[165A. Authority of approval. The
Central Board of Revenue may, by general or special order in writing,
authorise the Regional Commissioner or the Commissioner to grant approval in
any case where such approvals required from the Central Board of Revenue under
any provision of this Ordinance.].
166. Repeal and savings.‑(1) The Income‑tax Act, 1922
(XI of 1922) is hereby repealed.
(2) Notwithstanding the
repeal of the Income‑tax Act, 1922 (XI of 1922) and without prejudice to
the provisions of section 6 or section 24 of the General Clauses Act, 1897 (X
of 1897),‑--
‘The word “or” omitted by the Finance
Act, 1996 (9 of 1996), s. 13.
2 Subs, ibid, for full-stop.
3New CI. (f) added, ibid. .
4 Subs. by the Finance Act, 1998 (3
of 1998), s. 5, for full-stop.
5New CI. (g) added, ibid.
6Ins. by the Finance Act, 199.1 (12 of
1991), s. 5.
(a) where a return of income has been filed before the
commencement of this Ordinance by any person for any assessment year,
proceedings for the assessment of that person for that year may be taken and
continued as if this Ordinance had not come into force;
(b) where a return of income is filed after the commencement of
this Ordinance otherwise than in pursuance of any notice under section 34 of
the repealed Act, by any person for any assessment year ending on or before the
thirtieth day of June 1979, the assessment of the person for that year shall be
made in accordance with the procedure specified in this Ordinance;
(c) where in respect of any assessment year,‑--
(i) a notice under section 34 of the repealed Act had been
issued before the commencement of this Ordinance, the proceedings in pursuance
of such notice may be continued and disposed of as if this Ordinance had not
come into force;
(ii) any income chargeable to tax had escaped assessment,
or had been under assessed or assessed at too low a rate, or had been the
subject of excessive relief or refund or the total income or the total world
income and the tax payable had been determined under subsection (1) of section
23 of the repealed Act and no proceedings under section 34 of the said Act in
respect of any such income are pending at the commencement of this Ordinance a
notice under section 65 may be issued with respect to that assessment year and
all the provisions of this Ordinance shall apply accordingly;
(d) in making any assessment for any year ending on or before
the thirtieth day of June 1979, the provisions of the repealed Act relating to
the computation of total income and the tax payable shall apply as if this
Ordinance had not come into force;
(e) in making any assessment for the year beginning on the first
day of July 1979, the income year shall be deemed to include the period, if
any, comprised in the previous year, as defined in clause (11) of section 2 of
the repealed Act, for which the assessment would have been made if this
Ordinance had not come into force and where such income year exceeds a period
of twelve months, the total income and the tax payable shall be prorated on the
basis of the average income of a period of twelve months;
(f) in making any assessment for any year beginning on or before
the first day of July 1979, the provisions of section 18‑A and section 26‑A
of the repealed Act shall apply as if this Ordinance had not come into force;
(g) any proceedings for the imposition of a penalty or
prosecution in respect of any assessment completed before the first day of July
1979, may be initiated and any such penalty may be imposed or prosecution
proceedings continued as if this Ordinance had not come into force;
(h) any proceeding for the imposition of a penalty or
prosecution in respect of any assessment for any year ending on or before the
thirtieth day of June, 1979, which is completed on or after the first day of
July, 1979, may be initiated and any such penalty may be imposed or prosecution
proceeding continued as if this Ordinance had not come into force;
(i) any proceeding pending on the commencement of this Ordinance
before any income‑tax authority, the Appellate Tribunal or any Court or
tribunal by way of appeal, reference, revision or prosecution, shall be
continued and disposed of as if this Ordinance had not come into force;
(j) where the period prescribed for any application, appeal,
reference or revision under the repealed Act expired on or before the
commencement of this Ordinance, nothing contained in this Ordinance shall be
construed as enabling any such application, appeal, reference or revision to be
made under this Ordinance by reason only of the fact that a longer period therefore
is prescribed or provision is made for extension of time in suitable cases by
the appropriate authority;
(k) any sum payable by way of income‑tax, super‑tax,
interest, additional tax, surcharge, penalty or otherwise under the repealed
Act may be recovered under this Ordinance but without prejudice to any action
already taken for the recovery of such sum under the repealed Act;
(l) where, in respect of any assessment completed before the
commencement of this Ordinance, any default is made after such commencement in
the payment of any sum due under such completed assessment or any refund falls
due after such commencement, the provisions of section 89 or section 102 of
this Ordinance, as the case may be, shall apply;
(m) any notification issued under subsection (1) of section 60
of the repealed Act and in force immediately before the commencement of this
Ordinance, shall, to the extent to which provision has not been made under this
Ordinance, continue in force until rescinded by the Federal Government;
(n) any election or declaration made or option exercised by an
assessee before the commencement of this Ordinance shall be deemed to hale been
an election or a declaration made or an option exercised under the
corresponding provision of this Ordinance;
(o) anything done or any action taken under the repealed Act in
so far as it is not inconsistent with the provisions of this Ordinance shall,
Without prejudice to anything already done or any action already taken, be
deemed to have been done or taken under this Ordinance;
(p) any agreement entered into, appointment made, approval
given, recognition granted. direction, instruction, notification, notice, order
or rule issued or made under any provision of the repealed Act and in force or
valid at the commencement of this Ordinance shall, so far as it is not
inconsistent with the corresponding provision of this Ordinance or any
agreement, appointment, approval, recognition, direction, instruction,
notification, notice, order or rule entered into, made, given, granted, issued
or made under this Ordinance, be deemed to have been entered into, made, given,
granted, or issued or made, as the case may be, under the corresponding
provision aforesaid and shall, unless revoked, cancelled or replaced by, or
under, this Ordinance, continue in force accordingly; and
(q) any appointment or any act of authority or other thing made
or done by any authority or person and subsisting or in force at the
commencement of this Ordinance which could have been made or done under any substantially
corresponding provision of this Ordinance by any authority or person other than
the one specified in the repealed Act, or in any manner other than that so
specified, shall, continue in force and have effect as if it had been made or
done under the corresponding provision of this Ordinance by the authority or
person or in the manner specified in the corresponding provision as if such
provision had been in force when it was made or done.
167. Removal of
difficulties.___(1) If any difficulty arises in giving
effect to any of the provisions of this Ordinance, the Federal Government may,
by notification in the official Gazette, make such provision as it thinks fit
for removing that difficulty.
(2) No order under this
section shall be made after the thirtieth day of June, 1981.
1Subs, by the Finance Ordinance. 1981 (24
of 1981), s. 5.
THE FIRST SCHEDULE
(See sections, 9,
10 and 50)
PART I‑RATE OF INCOME‑TAX
1[(A) In the case of every individual,
unregistered firm, association of persons, Hindu undivided family and
artificial juridical person referred to in clause (32), Of section 2, not being
a case to which paragraph B. of this part applies the income tax shall be
charged, on’’ the ‘total’ income, excluding income to which sections 80B, 80C
and 80CC apply, at the following rates:---
|
|
|
|
|
1. |
Where
the total income does not exceed Rs.l00,000 |
5%
of total income. |
|
2. |
Where
the total income exceeds Rs. 100,000
but does not exceed . Rs 200,000. |
Rs.5,000
plus 10% of the amount exceeding Rs. 100,000. |
|
3. |
Where
the total income exceeds Rs. 200,000
but does not exceed Rs. 300,000. |
Rs.
15,000 plus 15% of the amount exceeding Rs. 200,000. |
|
4. |
Where
the .total income exceeds Rs.
300.000 ‘ |
Rs.
30,000 plus 20% of the amount’ exceeding Rs: 300,000. |
Provided that:‑--
(a) no income‑tax shall be payable by an assessee where
his total income does not exceed Rs. 12,000;
(ii).Rs. 60,000, in the case of a working woman where the total
income consists of, or includes, any income, chargeable under the head
“Salary”, “(excluding salary’ received as director of a company) and such
income constitutes more than 50’% of her total income; and
(iii) 40,000, in other cases,
1Subs, by the Finance Supplementary
(Amendment) Act, 1997.(4 of 1,997.), s. 4, for paragraph A, which was
previously amended by various enactments.
(b) the income tax payable shall be reduced by,---
(i) Rs. 2500, in case the total income consists of, or includes,
any income chargeable under the head “Salary”, and such income “constitutes more
than 50% of his total income;
(ii) Rs. 3000, in the case of a working woman where the
total income consists of, or includes, any income chargeable under the head
“Salary”, (excluding salary received as director of a company) and such income
constitutes more than 50% of her total income;
(iii) Rs. 2000, in other cases; and .
(iv) Special tax rebate of an amount equal to 1[50%]
of the tax payable by an assessee of 65 years of age or above as on first day
of the relevant income year and earning income upto Rs. 200,000, in addition to
any other rebate admissible under the
2 * * * * * * *
(d) notwithstanding anything contained in this Ordinance, no
rebate for any allowance under sections 39,40, 41,.2*
43, 44,44A or 46 shall be admissible;
(e) notwithstanding anything contained in this Ordinance, the
rebate for any allowance under section 47 shall be computed at the average of
tax and allowed accordingly;
(f) where the total income includes any income from a share of
the income, profits and gains of a firm to which paragraph C of Part II
applies, such portion of the super tax payable under the said paragraph as
bears to the total amount of such super tax the same proportion as his share of
income, profits and gains of the firm bears to the total income of the firm
shall be added to the income tax payable by such partner under this paragraph,
and, if the sum so arrived at exceeds 20%, of the total income of such partner
(including his share of income, profits and gains of the firm before the
deduction of super tax), the amount of income tax payable by him under this
paragraph shall be reduced by the amount such excess; and
1Subs, by the Finance Act, 1997 (22 of
1997), s. 7, for 25%”.
2Clause (c) omitted ibid.,
(g) in the case of an assessee whose income consisting of, or
including any income, chargeable under, the head salary, (inclusive or
allowances and perquisites) exceeds Rs. 300,000, income tax shall be charged in
respect of income representing allowances, and perquisites, at the following
rates:---
Where the amount representing the value of allowance and
perquisites:---
|
1[l. does not exceed Rs. 100,000. |
3% bf such amount |
|
2.
exceeds Rs 100,000 but rides not exceed Rs. 200,000.Rs. 300 plus 5% of the |
amount exceeding Rs. 100,000 |
|
3.
exceeds Rs. 200,000 but does not exceed Rs. 300,000. Rs.8000. plus 10% of the |
amount exceeding Rs; 200,000 |
|
4.
exceeds Rs. 300,000 |
Rs. 18,000 plus 15% exceeding Rs. 300,000: |
(a) the tax liability of an assessee in whose case valuation of
perquisites, allowances and benefits for the purposes of computingincomerider
the headsalaryis made under sub-role(1A) of rule 3 of the Income Tax Rules, be;
(i) the tax computed on. total income on the basis of valuation
of perquisites under sub-rule (1) of rule 3 of the said rules.
(ii) three percent of the amount representing the
difference between the value of perquisites, benefits and allowance computed
under sub-rule (1A) and the value computed under sub-rule (1) of the rule 3
said Rules; and
(b) for the purposes of computing the income chargeable under
the head “Salary”, the value of perquisites, allowances and benefits in the
case of employees of Pakistan International Airlines and journalists covered
under the Wage Board Awards shall be computed under the provisions of sub-rule
(1) of the rule 3 of the said Rules;]
1Subs, by the Finance Act; 1997 (22 of
1997). S. 7 for the rates specified.
[(h) Notwithstanding anything in clause (g), for the
purpose of assessment for the assessment year 1999-2000, in the case of an
assessee whose income consisting of, or including any income chargeable under
the head “salary” (inclusive of allowances and perquisites) exceeds Rs.
300,000, income tax shall be charged in respect of income representing
allowances and perquisites, at the following rates:---
Where the amount
representing the value of allowances and perquisites,---
|
(a) |
does
not exceed Rs. 100,000. |
5%
of such amount; |
|
(b) |
exceeds
Rs. 100,000 but does not exceed
Rs. 200,000. |
Rs.
5,000 plus 10% of the amount exceeding Rs. 100,000; |
|
(c) |
exceeds
Rs. 200,000 but does not exceed Rs. 300,000. |
Rs.15,000
plus 15% of the amount exceeding Rs. 200,000; |
|
(d) |
exceeds
Rs. 300,000 |
Rs.
30,000 plus 20% of the amount exceeding Rs.
300,000; and |
(i) For the purpose of deduction of tax at source under subsection
(1) of section 50, the tax in respect of the income for the financial year
1998-1999 covered by clause (h) shall be computed at the rates specified in
that clause.]
|
B.In the case of every local authority. |
30 per cent of the total income. |
1New cls. (h) and (i) added by the
Finance Act, 1998 (3 of 1998), s. 5.
|
C.
In the case of every company [including a foreign association declared to be
a company by the Central Board of . Revenue under clause (16) of section 2],
on the total income excluding such part of the total income as consists of
any dividends or bonus or bonus shares to which subparagraph (2) or
sub-paragraph (3) of paragraph A of Part II applies and income to which
Chapter V applies. |
30
per cent of such income. |
1[CC. In the case of every individual,
un-registered firm, association of persons, Hindu undividend family and
artificial juridical person referred to in clause (32) of section 2,2*
* * not being a case ‘to which paragraph B of this Part applies,---
|
(a) on the dividend income; |
Ten per cent of such income. |
|
(b) on the income by way of prize on a prize bond or
income representing winnings from a raffle, lottery or cross-word puzzle; |
Seven and one-half per cent of such income. |
|
(c) on the income representing profit or interest on
an account or deposit maintained with any banking company, or any ‘[financial
institutions]; and |
Ten per cent of such income. |
|
(d) on the income representing profit or interest on
bonds, certificates debentures, and instruments of every kind issued by any
banking company, or any company referred to in sub-clause (a) and (b) of
clause (16) of section 2, or any local authority, or any finance society; |
Ten per cent of such income.]” |
1Subs, by the Finance Act, 1991 (12 of
1991), s. 5.
2Omitted by the Finance Act, 1992 (7 of
1992), s. 7.
3Subs, by the Finance Act, 1997 (22 of
1997), s. 7, for certain words.
[(e) on the amount received
on encashment of:---
|
(i)
bearer certificates (other than the foreign exchange Bearer Certificated)
issued on behalf of the Government, banking company, financial institution or
any company referred to in sub-clause (a or sub-clause (b) of clause (16) of
section 2, any local authority or any finance society. |
2%
of the amount. |
|
(ii)
Foreign Exchange Bearer Certificates. |
1%
of the amount.] |
2[CCC. 3[(i)
In the case of every 3[resident]
person to whom section 80C applies,---
4[(a) From the assessment year commencing on or after the
first day of July, 1999, the amount representing payments on account of execution
of contracts, other than those mentioned in sub-clauses (b), (c) and (d);
|
(i)
where the value of contract does not exceed thirty million rupees. |
five
per cent of such income. |
|
(ii)
where the value of contract exeeds thirty million rupees. |
six
per cent of such income.] |
|
(b)
on the income representing payments on account of supply of rice, cotton,
cotton seed and edible oils; |
One
and one-half per cent of such income. |
|
(c)
on the income representing payments on account of supplies other than those
refered to in sub-paragraph (b); and |
5[Three] and one-half per cent of
such income. |
1New cl. (e) added by the finance Act,
1995 (1 of 1995), s. 9.
2Ins. by the Finance Act, 1991 (12 of
1991), s. 5.
3 Ins. by the Finance Act, 1994 (12
of 1994), s. 7.
4 Subs. by the Finance Act, 1998 (3
of 1998), s. 5, for cl. (a).
5 Subs. by the finance Supplementary
(Amendment) Act, 1997 (4 of 1997), s. 4, for “two”.
|
(d)
on the income representing value of goods imported; |
[Five]
percent of the value of such goods as determined for the purposes of
deduction of advance tax under sub-section (5) of section 50.]; |
|
2[(e) on the income representing lease money on
account of octroi duties, tolls, fees or |
Five
per cent of the sale price.] |
3[(ii) In the case of every non-resident
person, to whom section 80G applies; on the income representing payments on
account of:---
4[(a) From the assessment year commencing on or after the
first day of July, 1999. the account representing payments on account of
execution of contracts, other than those mentioned in sub-clauses (b), (c) and
(d);
|
(i) where
the value of contract docs not exceed thirty million rupees. |
five
per cent of such income. |
|
(ii) where
the value of contract exceed thirty million |
six
per cent of such income |
|
(b) execution
of turn-key contracts; |
[eight
per cent of amount of payment. |
|
(c) execution
of contracts or sub-contracts for designing, supply of plant and equipment
and construction of power projects ‘‘[other than (hydel power projects) and
transmission line project |
four
per cent of the amount of payment] |
1Subs, by the Finance Supplementary
(Amdt..) Act. 1997 (4 of 1997). s.4. for two
2New sub-cl. lei added by the Finance
Act. 1996 (9 of 1996). s. I3”
3New cl, (ii) added by the Finance Act.
1994 (12 Of 1994) s. 7.
4Subs. by the Finance Act. IWS (3 of
1998). s. 5. for clause (a).
5Subs by the Finance Act. 1995 (I of
1995). 9. for “seven”.
6Added ibid.
|
1[(d) execution of contracts, or sub-contractors for
designing, supply of plant and equipment and construction of hyde] power
project. |
five
per cent of the amount of payment] |
|
(a) Part
I of the Eighth Schedule; |
0.50%
of income. |
|
(b) Part
H of the Eighth Schedule; |
0.75%
of income. |
|
(c) Part
HI of the Eighth Schedule; |
1
% of such income.] |
3[D. Rates of income tax for deduction under
sub-section (2) section 50,---
|
(i) Residents.—On
the whole of income chargeable under the head ‘Interest on securities’ (not
being interest payable on debentures issued by or on behalf of a local
authority or a company). |
30%
of such income |
|
(ii) Non-Residents.—On
the whole of income chargeable under the head ‘Interest on securities’ paid
to a non resident— |
|
|
(a) where
such person is a company. |
4[thirty per cent]; and |
|
(b) where
such person is not a company. |
the
rate applicable to a resident person not being a company.] |
|
5[DD. Rate of income tax for the purposes of
deduction under sub-section (2A) of section 50. |
Ten per
cent of such income; |
1New cl. (d) added by the Finance Act,
1995 (1 of 1995), s. 9.
2Subs. by the Finance Act, 1997 (22 of
1997), s. 7, for “paragraph CCCC”, which was previously amended by Act, 7 of
1992 s. 7.
3Subs, by Act, 1 of 1995 s. 9, for the
original paragraph D.
4Subs. by the Finance Act. 1998 (3 of
1998), s. 5, for certain words.
5Subs, by the Finance Act, 1991 (12 of
1991), s. 5, for paragraph DD.
|
l[DDA. Rate of income tax for the purposes of
collection of tax under subsection (2B) of section 50. |
0.20
per cent the sum;] |
2[DDD. Rate of income tax for the purposes
of deduction wider sub-section (3) of section 50,---
|
(i)
in cases of payments on account of royalty. |
Fifteen
per cent of such payment. |
|
(ii)
in any other case. |
Thirty
percent of the sum chargeable or at the rate applicable to a resident, whichever
is the greater.] |
|
3[DDDD. Rate of income tax for purposes of deduction
under sub-section (3 A) of section 50 |
4[15] per cent of the sum.] |
5[E. Rates for collection of income tax
under sub section (4) of section 50.
6[(i) Where the payment is made to a
resident assessee, on account of—]
|
7[(a) execution
of contracts other than the payments to which sub-clause (b), (c) or (d)
applies. |
|
|
|
(i)
where the value of contract does not exceed thirty million rupees, five per
cent of such income. (ii)
where the value of contract exceeds thirty million rupees, six per cent of
such income.] |
1New paragraph DDA added by the Finance
Act, 1994 (12 of 1994), s. 7.
2Subs. by the Finance Act, 1998 (3 of
1998), s. 5, for the original paragraph DDD.
3Added by the Finance Act, 1987 (6 of
1987), s. 10.
4Subs. by Act, 12 of 1994 s. 7, for “20”.
5Subs, by the Finance Act, 1991 (12 of
1991), s. 5, for paragraph E.
6New cl. (i) ins. ibid.,
7Subs, by Act, 3 of 1998 s. 5, for the
original sub-cl. (a).
|
(b) 1*
* * supply of rice, cotton. cotton seed or edible oils; |
One
and one percent of the amount of |
|
(c) 1*
* * supply of goods: other than those referred to in sub-paragraph (b); and |
2[Three] and one half Per
cent of the payment. |
|
(d) 1*
* * services rendered |
Five
Per cent of the payment. |
3[(ii) Where the payment is made to a
non-resident, on account of,---
|
4[(a) execution
of contract, other than those mentioned in sub-clause (b) (c) and (d) |
|
|
|
(i)
where the value of contract exceeds thirty million rupees six percent of such
income. (ii)
where the value of contract exceeds thirty million rupees six percent of such
income.] |
|
(b) execution
of turn-key contracts |
5[Eight] per cent of the amount of payment. |
|
(c) execution of contrancts or sub-contracts for
designing, supply of plant and equipment and construction of power
projects 6[other
than (hydel power projects) and transmission line projects] |
four
per cent of the amount of payment.] |
1The Certain was omitted by Finance Act,
1994 (12 of 1994) s.7
2Subs. By the Finance Supplementary
(Amdt) Act, 1997 (4 of 1997), S. 4 for two
3New cl. (ii) added by Act, 12 of 1994,s.
9.
4Subs. by the finance Act, 1998 (3 of
1998), s. 5 for sub-cl. (a).
5Subs by the finance Act, 1995 (1 of
1995) s. 9, for seven.
6Added ibid
|
1[(d) execution
of contracts or sub-contractors for designing supply of plant and equipment
and construction of hydel power project. |
Five
per cent of amount of payment.] |
|
2[EE. Rate for collection of income tax under
sub-section (4A) of section 50. |
Ten
per cent of the, amount of payment.] |
|
3[F. Rate for collection of income tax under
sub-section (5) of section 50. |
4[Five] per cent.]; |
5[FF. Rates for collection of income tax
under sub-section (5 A) of section 50;
|
(a) where the income pertains to exports covered under: |
Rates |
|
(b) part I of the Eighth Schedule |
0.50%
of such income |
|
(c) part II of the Eighth Schedule |
0.75%.of
such income |
|
(d) part IIII of the Eighth Schedule |
1
% of such income.] |
6[FFF. Rates for collection of income tax
under sub-section (5B) of section 50 at the time of encashment of,---
|
(i) bearer
certificates other than Foreign Exchange Bearer Certificates. |
2%
of the amount. |
|
(ii) Foreign
Exchange Bearer Certificates |
1%
of the amount.] |
1New sub-cl. (d) added by the Finance Act,
1995 (I of 1995), s. 9-
2Ins. by the Finance Act, 1989 (5 of
1989), s. 6.
3Subs, by the Finance Act, 1991 (12 of
1991), s. 5, for paragraph, F.
4Subs. by the Finance Supplementary (Amdt.)
Act, 1997 (4 of 1997) s. 4, for “Four” which was previously amended by Act, 1
of 1995 s. 9.
5Subs, by the Finance Act, 1997 (22 of
1997), s. 7 for the original paragraph “FF”, which was previously ins. by Act,
7 of 1992, s. 7.
6New paragraph FFF, ins. by Act, 1’ of
1995, s. 9, which was previously added by Act, 10 of 1993, s. 5.
[G. Rates for collection of
income tax under sub-section (6) of section 50,---
2[( 1) Goods transport vehicles with
registered laden weight of,---
|
(a) less
than 2030 kilograms; |
One
thousand two hundred rupees per annum. |
|
(b) 2030 kilograms or more but less than 8120
kilograms; |
Seven
thousand two hundred rupees per annum. |
|
(c) 8120 kilograms or more but less than 15000
kilograms; 3* |
Twelve
thousand rupees per annum. |
|
(d) 15000 kilograms 4[but
less than 30,000 kilograms;] |
Eighteen
thousand rupees per annum: |
Provided that no collection
shall be made in respect of goods transport vehicles falling under sub-clause
(b) after ten years from the date of first registration of such vehicle with a
motor vehicle registration authority in
|
5[(e) 30,000
kilograms or more but less than 45,000 kilograms; |
Twenty-four
thousand rupees per annum. |
|
(f) 45,000 kilograms or more but less than 60,000
kilograms; and |
Thirty-thousand
rupees per annum. |
|
(g) 60,000 kilograms or more. |
Thirty-six
thousand rupees per annum.”. |
(g) for clause (3), the following shall be substituted,
namely:---
(2) passenger
transport-vehicles plying for hire with registered seating capacity of,---
|
(a) four or more persons but less than ten persons; |
Twenty-five
rupees per seat per annum. |
|
(b) ten
or more persons but less than twenty persons; and |
Sixty
rupees per seat per annum. |
|
(c) twenty
persons or more. |
One
hundred rupees per seat per annum.] |
‘Subs, by the Finance Act, 1989 (5 of
1989), s. 6.
2Subs. by the Finance Act, 1996 (9 of
1996), s. 13 for sub-paragraphs (1) and (2).
3The word “and” omitted by the Finance
Act, 1998 (3 of 1998), s. 5.
4Subs. ibid., for “or more”. ‘
5New cls. (e), (f) and (g) added ibid..
[(3) Other private motor
cars with engine capacity of:---
|
(a) 1000
CC to 1199 CC |
Five
hundred rupees per annum.. |
|
(b) 1200
CC to 1299 CC |
Seven
hundred fifty rupees per annum. |
|
(c) 1300
CC to 1599 CC |
Fifteen
hundred rupees per annum. |
|
(d) 1600CCtol999CC |
Two
thousand rupees per annum. |
|
(e) 2000 CC and above. |
Three thousand rupees per annum.] |
|
2[GG. Rate
of deduction of income tax under sub-section (6A) of section 50. |
Ten
per cent of such amount..] |
3[GGG. Rates of withholding of income tax
under sub-section (7) of section 50,---
|
(a) Where
the company which issued bonus shares or the bonus is a public company. |
10
per cent of such amount. |
|
(b) in
other cases |
15
per cent of such amount] |
4[H. Rates of collection of income tax
under sub-section (7A) of section 50,---
|
(i) Sale
of property consisting of lease of right to collect octroi duties, tolls fee
or other levies, by whatever name called. |
Five
per cent of the sale price. |
‘Subs, by the Finance Act, 1998 (3 of
1998), s. 5, for sub-paragraph (3) which was previously ins. by Act, 7 of 1992,
s. 7.
2Subs. by the Finance Act, 1991 (12 of
1991), s. 5.
3New paragraph GGG ins. by the Finance
Act, 1995 (1 of 1995), s. 9.
4Subs, by the Finance Act, 1996 (9 of
1996), s. 13, for paragraph (H) which was previously added by the Ordinance, 24
of 1981, s. 5 {w.e.f. 1-7-I98I).
|
(ii). In others cases. |
Three
per cent of the sale price.] |
|
1[HH. Rate
for collection of income tax under sub-section (7B) of section 50. |
2[Seven and one half] per cent of such amount] |
3[HHH. Rate for collection of income tax
under sub-section (7BB) of section 50:---
(i) In cities of
(a) Not exceeding 500 square yards;
|
(a) Not exceeding 500
square yards; |
Nil. |
|
(b) Exceeding 500 square yards. |
Two
per cent of the estimated cost |
(ii) At other places, in case of buildings, located on
plot size,---
|
(a) Not
exceeding 1000 square yards; |
Nil. |
|
(b) Exceeding
1000 square yards. |
Two
per cenf of the estimated cost |
|
4[5[HHHH]. Rate of deduction or collection of income tax
under sub-section (7C) of section 50. |
Seven
and one half per centof such . amount.]; |
|
6[J. Rate
of deduction of income tax under subsection (7D) of section 50. |
Ten
per cent of such amount.] |
7[K. Rate of collection of income tax under
sub-section (7E) of section 50,---
8[(a) in the case of commercial consumer if the electricity
bill,---
|
(i) does
not exceed Rs. 400 |
Rs.
60 |
|
(ii) exceeds Rs. 400 but does not exceeded Rs 600. |
Rs.
80 |
1New paragraph HH in§, by the Finance
Act, 1989 (5 of 1989), s. 6
2subs. by the Finance Act, 1996 (9 of
1996), s. 13 for “Five”.
3New paragraph HHH ins. by the Finance
Act, 1993 (10 of 1993), s. 5
4Paragraph HHH added by the Finance Act,
1990 (7 of 1990), s. 7.
5Paragraph HHH added renamed as paragraph
HHHH, by the Finance Act, 10 of 1993, s.5 .
6Added by the Finance Act, 1991 (12 of
1991), s. 5.
7Added by the Finance Act, 1992 (7 of
1992), s. 7.
8Subs, by Act, 9 of 1996, s. 13, for the
original sub-paragraph (a), which was previously subs, by Act, 10 of \993, s.
5.
|
(iii) exceeds Rs. 600 but does not exceed Rs. 800 |
Rs.
100 |
|
(iv) exceeds Rs. 800 but does not exceed Rs. 1000. |
Rs.
160 |
|
(v) exceeds Rs. 1000 but does not exceed Rs.1500. |
Rs.
240 |
|
(vi) exceeds Rs. 1500 but does not exceed Rs. 2000. |
Rs.
360 |
|
(vii) exceeds Rs. 2000 but does not exceed Rs. 2500. |
Rs.
480 |
|
(viii) exceeds Rs. 2500 but does not exceed Rs. 3000. |
Rs.600 |
|
(ix) exceeds.
Rs. 3000 |
Rs.720]. |
(b) in the case of an industrial consumer if the electricity
bill,---
|
1[(i) does
not exceed Rs. 500; |
Rs.
30 |
|
(ii) exceeds Rs. 500 but does not exceed Rs. 750; |
Rs.
40] |
|
(iii) exceeds Rs. 750 but does not exceed Rs. 1000; |
Rs.
50 |
|
(iv) exceeds Rs. 1000 but does not exceed Rs. 1500. |
Rs.
80 |
|
(v) exceeds Rs. 500 but does not exceed Rs. 2000; |
Rs.
120 |
|
(vi) exceeds Rs. 2000 but does not exceed Rs. 3000; |
Rs.
180 |
|
(vii) exceeds Rs. 3000 but does not exceed Rs. 4000; |
Rs.
240 |
|
(viii) exceeds Rs.4000 but does not exceed Rs. 5000;
and |
Rs.
300 |
|
(ix) exceeds Rs. 500 |
Rs.
360]; |
1Subs, by the Finance Act. 1993 (10 of
1993). s. 5.
[L. Rates of collection of
income tax under sub-section (7F) of section 50,---
a. in the case of telephone subscriber where the monthly
bill,---
|
(i) exceeds Rs. 1000 but does not exceed Rs. 2000. |
Fifty
rupees, |
|
(ii) exceeds Rs. 2000 but does not exceed Rs. 3000 |
One
hundred rupees. |
|
(iii) exceeds Rs. 3000 but does not exceed Rs. 5000. |
Two
hundred rupees. |
|
(iv) exceeds Rs. 5000 |
Three
hundred rupees. |
(b) In the case of mobile telephone subscribers if the monthly
bill or the issue or sale price of prepaid telephone card,---
|
(i) does not exceed Rs. 2000. |
One
hundred twenty-five rupees. |
|
(ii) exceeds Rs. 2000 but does not exceed Rs. 5000. |
Two
hundred fifty rupees. |
|
(iii) exceeds Rs. 5000. |
Four
hundred rupees.] |
PARTE II
RATES OF SUPER TAX
2* * * * * * *
|
B. In the case of every local authority on the
whole of the total income. |
12.5
per cent of the income. |
3[C. In the case of every registered firm,—
|
(1). Where the total income does not exceed Rs.
30,000. |
Nil. |
1Subs, by the Finance Act, 1998 (3 of
1998), s. 5, for the original paragraph L, which was previously amended by
various enactments.
2Paragraph A omitted by the Finance Act,
1994 (12 of 1994) s. 7, which was previously amended by various enactments.
3Subs, by the Finance Act, 1991 (12 of
1991), s. 5.
|
(2)
Where the total income exceeds Rs. 30,000 but does not exceed Rs. 80,000. |
5
per cent of the amount exceeding Rs. 30,000: |
|
(3)
Where the total income exceeds Rs. 80,000 but does not exceed Rs. 130,000. |
Rs.
2,500 plus 10 per cent of the amount exceeding Rs. 80,000. |
|
(4)
Where the total income exceeds Rs. 130,000 but does not exceed Rs. 180,000. |
Rs,
7.500; plus 15 per cent of the amount exceeding Rs. 130,000. |
|
(5)
Where the total income exceeds Rs. 180,000. |
Rs.
15,000 plus 25 percent of the amount exceeding Rs. 180,000. |
1Explanation.—For the removal of doubt, it is hereby
declared that the term “total income” referred to in this paragraph does not
include income to which section 80C ‘[or section 80CC] applies.]”
2* * * * * * *
3[E. Rate of super tax for purposes of
deduction under subsection (3) of Section 50,---
4* * * * * * *
|
(ii) 5[in
cases other than companies |
The
rate applicable to resident person, not being a company on the sum chargeable.
, |
6[PART III
RATES OF SURCHARGE
7* * * * * * *
B. In respect of the income
year relevant to the assessment year commencing on or after the first day of
July, 1990,---
7* * * * * * *
7* * * * * * *
1Ins. by the Finance Act, 1992 (7 of
1992), s. 7.
2Paragraph D omitted by the Finance Act,
1994 (12 of 1994), s. 7
3Added by the Finance Ordinance, 1980 (25
.of 1980), s. 6.
4Sub-para (i) omitted by Act 12 of 1994,
s. 7.
5Subs, by ibid., for the original
sub-paragraph (ii). ‘‘Part III subs, by the Finance Act, 1990 (7 of 1990), s. 7
which was previously amended by various enactments.
6Paragraph A, sub-paragraphs (a) and (b) of
paragraph B omitted by the Finance Supplementary (Amdt.) Act, 1997 (4 of 1997),
s. 4.
(c) Where the total income of any person (not being a person
whose total income consists of, or includes, any income chargeable under the
head ‘Salary’ and such income constitute more than 50 per. cent of the total
income) does not exceed one hundred thousand rupees and the return of total-
income qualified for acceptance under a scheme of self-assessment made under
subsection (1) of section 59 for that year, the amount of surcharge payable
shall be three hundred rupees.];
‘[(d) any individual, unregistered firm, association of
persons
and Hindu undivided family shall pay surcharge, in addition to the amount
specified in sub-paragraph (c), equal to ten per cent of the amount of income
tax payable not being the amount of presumptive income tax payable under
section 80B, 80C or 80CC].
PART IV
A. Notwithstanding anything contained in
this Schedule 2[ 3*
* *
(1) where the assessee is
a.cooperative society, the tax shall be payable at the rates specified in
paragraph A of Part I, or 4[paragraph
A of Part V of this Schedule relevant to the rates of public companies]
whichever treatment is more beneficial to the assessee;
5[(2) Tax rebate at the rate of five per
cent shall be allowed in the case of a person other than a company who,---
(i) derives income chargeable under the head “income from
business or profession”; and
(ii) issues to the customers, for each transaction of sale
or receipt, a cash memo with his name, or the name of his business and address,
National Tax Number and serial number of the memo printed thereon.]
6[(2A) where an assessee,---
(a) being a company registered under the companies Act, 1913
(VII of 1913), and having its registered office in Pakistan repatriates to
Pakistan any income chargeable Pakistan repatriates to Pakistan any income
chargeable to tax under the head ‘Income from business or profession in any
income year which has been derived by it from a construction work executed by
it outside Pakistan, no super tax shall be payable by it on such income;
(b) not being a company, who is resident in Pakistan,
repatriates in any income year any income earned abroad by way of fees for any
technical or consultancy services rendered outside Pakistan, he shall be
entitled to a rebate equal to thirty per cent of income tax or super tax
payable on the income so repatriated:---
Provided that,---
(i) such income is received in Pakistan in accordance with the
law for the time being in force for regulating payments and dealings in
foreign exchange; and
(ii) where the assessee is a registered firm, super tax
payable by it shall be reduced by an amount calculated on the basis of the
income tax payable on its total income if it were the total income of an
unregistered firm as does not exceed the said super tax;
1Added by the Finance Act, 1998 (3 of
1998), s. 5.
2Added by the Finance Act, 1988 (6 of
1988), s. 6.
3The certain words omitted by the Finance
Act, 1997 (22 of 1997), s. 7.
4Subs, by the Finance Act, 1996 (9 of
1996), s. 13, for certain words.
5Subs, by Act 22 of 1997 s. 7 for the
Original CI. (2) which was previously amended by various enactments.
6Cls. (2A) and (2B), Ins. by the Finance
Ordinance, 1980 (25 of 1980), s. 6, (w.e.f. assessment year 1981 -82).
(2B) No super tax shall be
payable by a registered firm in respect of the income, profits and gains
derived by it from the exercise of a profession if such income, profits, and
gains depend wholly or mainly on the professional qualifications of its
partners who are prevented by any law for the time .being in force or by
convention or rules or regulations of the professional association, society or
similar body of which they are members to constitute themselves into a
corporate body with a limited liability which can be registered as a company
under the Companies Act, 1913 (VII of 1913), unless such profession consists
wholly or mainly in the making of contracts on behalf of other persons or the
giving to other persons of advice of a commercial nature in connection with the
making of contracts.]
1[2C) Where the total income of an assessee
includes any profits and gains derived from import of goods or wholesale business,
the tax payable by him 2[in
respect of such import or whole sale] shall be reduced by an amount equal to
five per cent of the said tax, if the furnishes complete details of sales
indicating the amount Of sales and the names 3[National
Tax Number] and full addresses of the purchasers.
(2D) Where as assessee,
being an individual and resident in
5[(2E) where an assessee, incurs any
expenditure on education of his dependent children, the tax payable by him
shall be reduced by five per cent of such expenditure, subject to the
conditions that:---
(i) the educational expense does not exceed Rs. 30,000 per annum
per child; and
(ii) the receipt of such expense bears National Tax
Numberof the educational institution,]
(3) where a person, not
being a company, is not resident in Pakistan, the tax, including super tax
payable by him or on his behalf on his total income shall be an amount equal
to,---
(a) the income tax which would be payable on his total income at
the rate of 6[Twenty]
per cent or the income tax which would be payable on his total income if it
were the total income of the person resident in
(b) the super tax which would be payable on his total income if
it were the total income of the person resident in
Provided that any such
person may, on the first occasion subsequent to the thirty-first day of March,
1956, on which he is, under this Ordinance or the repealed Act, assessable for
any year by notice in writing given to the 7[Deputy
Commissioner] before the thirtieth day of September in the year of assessment
declare (such declaration being final and being applicable to all assessments
thereafter that the tax, payable by him or on
1New sub-paragraphs (2C) and (2D) ins. by
the Finance Act, 1991 (12 of 1991), s. 5.
2Ias. by the Finance Act, 1997 (22 of 1997),
s. 7.
3Ins. by the Finance Act, 1997 (22 of
1997), s. 7.
4Omitted by the Finance Act, 1993 (10 of
1993), s. 5.
5New cl. (2E) added by Act 22 of 1997 s.
7.
6Subs. by the Finance Act, 1994 (12 of
1994) s. 7, for “Thirty”.
7 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
his behalf on his total income shall be
determined with reference to his total world income, and thereupon such tax
shall be an amount bearing to the total amount of tax, which would have been
payable on his total world income had it been his total income, the same
proportion as his total income bears on his total world income:---
Provided further that where
any such person satisfies the 1[Deputy
Commissioner] that he was prevented by sufficient cause from making such
declaration on the first occasion on which he became assessable and his failure
to make such declaration has not resulted in reducting his liability to tax for
any year, the 1[Deputy
Commissioner] may, with the previous approval of the Inspecting 2[Additional
Commissioner], allow such person to make the declaration at any time on or
after the expiry of the period specified, and such declaration shall have
effect in relation to the assessment for the year in which the declaration is
made (if such assessment has not been completed before such declaration), and
all assessments thereafter 3[.]
3[Explanation.—For the removal of
doubt, it is hereby declared that the term “total income” referred to in this
sub-paragraph does not include income to which sections 80B, 80C and 80CC
apply; and]
(4) where the total income
of an assessee includes any income chargeable under the head ‘Capital gains’
(hereinafter referred to as the said income), the tax including super tax payable
by him on his total income shall be,---
where the said income has
arisen as a result of disposal by the assessee of his capital assets after not
more than twelve months from the date of their acquisition by him,---
income tax and super tax
payable on the total income (including the said income);
where the said income
consists of capital gains which have arisen on account of the disposal by the
assessee of his capital assets after twelve months from the date of their
acquisition by him,---
(i) in the case of company or a firm registered under section 68
(including a firm treated as a registered firm under sub-clause (ii) of clause
(b) of subsection (1) of section 69),---
subsection (1) of section
69),---
(1) Income tax and super
tax payable on the total income, as reduced by the said income had such reduced
income been the total income; plus
(2) income tax at the rate
of twenty-five per cent on the whole amount of the said income;
(ii) in the case of other assessees income tax payable on,---
1Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
2 Subs. by Finance Act, (10 of
1993), s. 5, for “Assistant Commissioner”.
3Subs, and added by the Finance Act, 1992
(7 of 1992), s. 7.
(1) the total income, as
reduced by the said income had such reduced income been the total income; plus
(2) the amount of the said
income as reduced by,---
(i) an amount equal to sixty per cent of the amount of the said
income, or
(ii) five thousand rupees, whichever is the greater:
Provided that as respects
the assessments for the years ending on the thirtieth day of June, 1981; income
tax and super tax shall, subject to the other provisions of this Ordinance, be
payable on the total income as reduced by the said income.
B. As used in this
Schedule,---
(1) “industrial
undertaking” means an undertaking which is set up or commenced in Pakistan on
or after the 14th day of August, 1947, and which employs (i) ten or more persons
in Pakistan and involves the use of electrical energy or any other form of
energy which is mechanically transmitted and is not generated by human or
animal agency; or (ii) the use of electrical energy or any other form of energy
which is mechanically transmitted and is not generated by human or animal
agency and which is,---
(i) engaged in,---
(a) the manufacture of goods or materials or the subjections of
goods or materials to any process, which substantially changes their original
condition;
(b) ship-building;
(c) generation, transmission, conversion, trans-i mission or
distribution of electrical energy, or the supply of hydraulic power; or
(d) the working of any mine, oil-well or other source of mineral
deposits not being an undertaking to which the Fifth Schedule applies or;
(ii) any
other industrial undertaking which may be approved by the Central Board of
Revenue for the purposes of this clause;
1[(2) “Public company” means,---
(a) a company in which not less than fifty per cent of the
shares are held by the Government;
(b) a company whose shares were the subject of dealing in a
registered stock exchange in Pakistan at any time during the income year and
remained listed on the stock exchange till the close of that year; and
(c) a trust formed by or under any law for the time being in
force;]
(3) “registered firm” means
a firm registered under section 68 or a firm treated as a registered firm under
sub-clause (ii) of clause (b) of sub-section (1) of section 69;
2 * * * * * * *
(5) “total world income”
includes all income, profits and gains wherever accruing or arising except any
income which is not includible in the total income of an assessee.
1Sub-paragraph (2) subs, by the Finance
Ordinance, 1983 (14 of 1983), s. 5.
2Sub-paragraph (4), omitted by the
Finance Act, 1991 (12 of 1991), s. 5.
[PART V
RATES OF INCOME TAX FOR COMPANIES
A. Notwithstanding anything
contained in this Schedule, except Part IV, in the case of a company, not being
a modaraba, the rates of income tax on total income excluding such part of
total income to which paragraph D and E or section 80C and 80CC apply, shall be
as under :—
(1) in respect of the
assessment year commencing on the first day of July, 1992,---
(a) in the case of a banking company 66 per cent
(b) in the case of a public company 44 per cent other than a
banking company; and
(c) in the case of any other company 55 per cent
(2) In respect of the
assessment year commencing on or after the first day of July, 1993, as set out
in the table below:---
2[TABLE
|
Assessment year |
Banking company |
Public company other than a banking company |
Other company |
|
1993-94 |
64 per cent |
42 per cent |
52 per cent |
|
1994-95 |
62 per cent |
39 per cent |
49 per cent |
|
1995-96 |
60 per cent |
36 per cent |
46 per cent |
|
1996-97 |
60 per cent |
36 per cent |
46 per cent |
|
1997-98 |
58 per cent |
33 per cent |
43 per cent |
|
1998-99 |
58 per cent |
33 per cent |
43 per cent |
1Added by the Finance Act, 1992, (7 of
1992), s. 7.
2Subs. by the Finance Act, 1998 (3 of
1998), s. 5, for the original Table which was previously amended by various
enactments.
[(2A) The rates applicable
to the assessment year 2[l?99-2000]
will be reduced to the rates given below, in the case of companies which
allocate 2% of their net profits as contribution to education, health, pensions
and gratuity payments of their workers:---
|
Assessment
year |
Banking
company |
Public
company |
Other
company |
|
2[ 1999-2000] |
55% |
30% |
35%] |
3[(3) in respect of the assessment
year 4[1999-2000]
and thereafter,---
|
(a) in
the case of a banking company |
50 per
cent |
|
(b) in
the case of a public company other than a banking company; and |
30 per
cent |
|
(c) in
the case of any other company |
35 per
cent |
B. In the case of a modaraba
in respect of any assessment year commencing on or after the first day of July,
1993, the rate of income lax shall be 25 per cent of total income excluding
such part of total income to which paragraph D and E applies [:]5
5[Provided that, for any assessment year
commencing on or after the first day of July, 1993, and ending on or before the
thirtieth day of June, 1995, this paragraph shall have effect as if for the figure
“25” the figure “12.5” was substituted :
Provided further that in
case of the total income of a modaraba becoming chargeable to tax for the first
time in any assessment year commencing on or after the first day of July,
1994, the rate of income tax in the case of such modaraba for such assessment
year and the assessment year next following shall be 12.5 per cent of total
income.];
1New Sub-paragraph (2A), ins. by the
Finance supplementary (Amdt.) Act, 1997 (4 of 1997), s. 4.
2Subs. by the Finance Act 1998 (3 of
1998), s. 5 for 1998-99.
3Added by the Finance Act, 1993 (10 of
1993), s. 5.
4Subs, by the Finance Act, 1996 (9 of
1996), s. 13, for “1998-99”.
5Subs and added by Act, 10 of 1993, s. 5.
C. No super tax and surcharge shall be
payable by a company in respect of any assessment year beginning on or after
the first day of July, 1992.
“D. The rates of income tax in respect of
the amount representing income from dividends declared or distributed by a
Pakistani company or a modaraba shall be as under:---
|
(a) Where such dividends are received by a public
company |
5 percent of
such amount. |
|
(b) where such dividends are received by a body
corporate referred to in sub-clause (c) of clause (16) of section 2 or a
foreign association declared to be a company under sub-clause (e) of clause
(16) of section 2. |
15 percent of such
amount. |
|
(c) in
other cases. |
20 percent of
such amount[:]1 |
2[Provided that rates of tax specified in
clause (b) and clause (c) shall be reduced to 7.5% in case of dividends
declared or distributed on shares of a company set up for power
generation 3[and
transmission line projects].
E. The rates of income tax
on the amount representing the face value of any bonus shares or the amount of
any bonus issued by the company, with a view to increasing its paid-up
capital,---
|
(a) Where
a company which issued bonus shares or the bonus is a public company. |
10 percent such
amount. |
|
(b) in
other cases |
15 percent such
amount.”; |
1Subs, by the Finance Act, 1994 (12 of
1994), s. 7, for full-stop.
2Provided added ibid.
3Added by the Finance Act, 1995 (I of
1995), s. 9.
[THE SECOND SCHEDULE
[SEE SECTION 14(1)]
PART-I
2[EXEMPTTONS] FROM TOTAL INCOME
Incomes, or classes of
income, or persons or classes of persons enumerated below, shall be exempt from
tax, subject to the conditions and to the extent specified hereunder:---
Agricultural income:
(1) Agricultural income 2[:]
2[Provided that, in case an assessee has,
in any income year, any income (other than the agricultural income) which is
chargeable to tax (hereinafter called “chargeable income”), the agricultural
income shall be included in the total income, so however that the tax payable
on the chargeable income shall be an amount which bears the same proportion to
the chargeable income as the tax on total income bears to the total income:---
Provided further that
nothing contained in the first proviso shall apply in the case of an
individual, not being a director of a company, whose chargeable income does not
consist of, or include, income chargeable under the head ‘income from business
or profession’.]
Salary income:
(2) Any income chargeable
under the head “Salary” derived by any employee of a foreign Government
(including a consular or other officer or a non-diplomatic representative) as
remuneration for services to such Government, if,---
(a) such employee is a citizen of the foreign country and not a
citizen of
(b) the services performed by him are of a character similar to
those performed by employees of the Government of Pakistan in foreign countries;
and
1The Second Schedule subs, by the Finance
Ordinance, 1981 (24 of 1981), s.5.
2Subs. and added by the Finance Act, 1988
(6 of 1988), s. 6.
(c) the foreign Government grants a similar exemption to
employees of the Government of Pakistan performing similar services in such
foreign country.
table table-striped table-bordered
table-hover
1 * * * * * * *
2 * * * * * * *
3 * * * * * * *
4 * * * * * * *
5 * * * * * * *
6 * * * * * * *
1[“The Expatriate Employees of the
International Irrigation Management Institute (IIMI),
(7B) Any income chargeable
under the head “Salary” received by, or due to, any person being an employee of
the International Irrigation Management Institute (EMI) in
6[(7G) Any income chargeable under the head
“Salary” received by or due to, any person (who is neither a citizen of
Pakistan nor was resident in Pakistan in any of the four years immediately
preceding the year in which he arrived in Pakistan) for the period ending the
thirtieth day of June, 1999, from the date of his arrival in Pakistan, as
remuneration for services rendered by him during such period as an expert under
a contract of service approved by the Commissioner of Income Tax for the
purposes of this clause, employed by the Agha Khan Hospital and Medical College
Foundation, Karachi:---
1CIs. (3), (4) and (5) omitted by
S.R.0.447(I)/93,dt. 19-5-1993, see Gaz. of R, 1993 Ext., Pt. II. p. 573.
2CI. (6) omitted by the Finance Act, 1996
(9 of 1996), s. 13.
3CI. (7) omitted by S.R.O. 1136(i)/91,
dt. 7-11-1991, see Gaz. of P 1991, Ext., Pt. II, p. 2717 {w.e.f. 1-7-1991).
4C1. (7A) omitted by S.R.O. !278(I)/91,
dt. 31-12-1991, see Gaz. of P., 1991, Ext., Pt. II, p. 2890.
5CI. (7B) ins. by S.R.O. 896(l)/88, dt.
10-10-1988, see Gaz. of P., 1988, Ext., Pt. II, p. 2380.
6CI. (7C) ins. by S.R.O. 621(I)/94. dt.
23-6-1994, see Gaz. of P., 1994, Ext., Pt. II, pp. 968-969, which was
previously amended by various S.R.Os.
Provided that the total
number of expatriate employees enjoying exemption under this clause shall not
exceed seventeen in number.
Explanation.—For the purpose of this clause, the
expression “expert” means a professionally qualified person who possesses
specialized knowledge in the fields of medicine, surgery, including general
medicine pathology, pharmacy, obstetrics, pediatrics, nursing intensive care,
central sterile supply, consulting clinic, medical record, health/hospital
administration, community health sciences and all branches of basic health
sciences, including biochemistry, cellular biology, anatomy, physiology,
psychiatry, microbiology, pharmacology, anesthesiology, radiology and allied
fields of health, hospital management or administration, or in other branches
of higher learning in aforesaid educational fields, teacher training and educational
research and whose employment in Pakistan, irrespective of his designation or
capacity in which he is employed to impart such specialized knowledge and
experience].
1[(7D) Any income chargeable under the head
“Salary” received by, or due to, any person, not being a citizen of Pakistan of
a person resident in Pakistan, as remuneration for services rendered by him as
a health professional under the contract of service concluded with Shaukat
Khanum Memorial Hospital and Research Centre, Lahore, and approved by the
Federal Government for the purposes of this clause.]
2[(7E) Any income chargeable under the head
“Salary” due to, or received by a person who, not being a citizen of Pakistan,
is engaged as an expert or technical, professional, scientific advisor or
consultant or senior management staff by institutions of the Agha Khan
Development Network, (Pakistan) listed in Schedule 1 of the Accord and Protocol
dated November 13, 1994 executed between the Government of the Islamic Republic
of Pakistan and Agha Khan Development Network.]
3 * * * * * * *
(9) Any allowance or
perquisite paid or allowed as such outside
4 * * * * * * *
1CI. (7D) ins. by S.R.O. 87(I)/95, dt:
3I-I-1995,.«?e Gaz. of P., 1995, Ext., Pi. II, p. 159.
2CI. (7E) added by S.R.O. 433(I)/95, dt.
29-5-1995, see Gaz. of P., 1995, Ext.. Pt. II, pp. 929-930.
3CI. (8) omitted by S.R.O. 1136(I)/9I,
dt. 7-11-1991, see Gaz. of P., 1991, Ext., Pt., II. p. 2717 {w.e.f. 1-7-1991).’
4C1. (10) omitted by the Finance Act,
1996 (9 of 1996), s. 13.
(12) Any income chargeable
under the head “Salary” of persons 2*
* * who are stationed in Pakistan in accordance with the terms of an Aid
Agreement entered into by the Government of Pakistan with the Government of the
country to which such persons belong or with any international agency and whose
salary is paid by such Government or agency out of funds or grants released as
aid to Pakistan in pursuance of such Agreement.
3[(12A) Any income of a person who, not
being a citizen of Pakistan 4*
* * is engaged as a contractor, consultant or expert on a project in Pakistan
financed out of a grant funds in accordance with the terms of a bilateral or
multilateral technical assistance agreement entered into by the Government of
Pakistan with any foreign government, international donor agency or bank or
other aid-giving organisation and derives such income out of the funds of the
grant in pursuance of such agreement:
5 * * * * * * *
(13) Any salary received by
a person, not being a citizen of
6 * * * * * * *
7 * * * * * * *
8 * * * * * * *
(16) Any pension received
by a person, being a citizen of Pakistan, by virtue of his former employment,
with the approval of the Federal Government, in the United Nations or its
specialised agencies (including the International Court of Justice):---
1 CI,. (II) omitted by the Finance
Act, 1996 (9 of 1996), s. 13. !
2The certain words omitted by
S.R.0.755(I)/95, dt. 26-7-1995, see Gaz. of P., 1995, Ext., Pt. II, p. 1724.
31ns. by S.R.O. l86(l)/92, dt. I4-3-1992,
see Gaz. of P., 1992, Ext., Pt. II, p. 361.
4The certain words omitted by S.R.O.
23(I)/98, dt. I6-I-I998, see Gaz. of P., I998, Ext., Pt. II, pp. 56-57.
5Proviso omitted ibid..
6Cl. (14) deleted by S.R.O. l08l(I)/93,
dt. I-11-93, see Gaz. of P., I993, Ext.. Pt. II, p. 2156.
7Cl. (15) deleted by S.R.O. 1136(I)/9I,
dt. 7-11-91, see Gaz. of P., 1991, Ext., Pt. II, p. 2717 due./ 1-7-1991).
8CI. (I5A) deleted by S.R.O. I278(I)/9I,
dt. 31-12-91, see Gaz. of P., 1991, Ext., Pt. II, p. 2890.
Provided that this clause
shall not apply if the emoluments drawn by any such person during the course of
such employment were not exempt from tax payable under this Ordinance or the
repealed Act.
(17) Any pension due to, or
received by, an assessee being a citizen of
1[Provided that, with effect from an
assessment year commencing on or after the first day of July, 1992, this clause
shall have effect as if the words “over sixty years of age” were omitted, so
however that exemption under this clause shall apply in respect of pension from
one employer only:---
Provided further that
exemption under this clause shall not apply in respect of a retired person who
works for the same employer in any capacity for any remuneration or reward];
2[(17A) Any pension due to, or received by,
an assessee in respect of any service rendered as a member of the Armed Forces
of Pakistan or as an employee of the Federal Government or a Provincial
Government.];
3[(17AA) Leave encashment or
retirement.—Any sum representing encashment of leave preparatory to
retirement of a member of the Armed Forces of Pakistan or an employee of the
Federal Government or a Provincial Government.];
(18) Any pension granted to
any public servant [to whom clause (48) does not apply] in respect of injuries
received in the performance of his duties.
(19) Any pension granted to
any public servant (to whom clause (49) does not apply) who has been invalided
from service on account of any bodily disability.”
4 * * * * * * *
(22) Any income received by
an assessee from an annuity issued under the Pakistan Postal Annuity
Certificate Scheme on or after the 27th July, 1977:---
1Subs, and added by the Finance Act, 1991
(12 of 1991), s. 5.
2CI. (17A) subs, by the Finance Act, 1985
(1 of 1985), s. 4.
3CI.(17AA) ins. ibid..
4Cls. (20), (21) and (21 A) deleted by
S.R.O. l266(l)/90, dt. 11-12-1990. see Gaz. of.P. 1990, Ext., Pt. 11, p. 2211
(w.e.f. 1-7-1991).
Provided that nothing in
this clause shall apply to so much of the income received by an assessee from
any annuity or annuities issued after the 1st May, 3980, as exceeds seven
thousand and two hundred rupees per annum ‘[and in respect of any assessment
year commencing on or after the first day of July, 1986, as exceeds ten
thousand rupees per annum].
1[(22A) Any income received by an assessee
from an annuity or annuities issued by the State Life Insurance Corporation of
Pakistan 2[or
a life insurance company registered under section 3 of the Insurance Act,
1938]:---
Provided that this clause
shall not apply to so much of the income received by an assessee form an
annuity or annuities which, .together with the income from any annuity or
annuities referred to in clause (22), exceeds ten thousand rupees per annum]:
(23) Any payment from a
provident fund to which the Provident funds Act, 1925 (XIX of 1925) applies.
Benevolent grant:
3[(23A) Any benevolent grant paid from the
Benevolent Fund to the employees or members of their families in accordance
with the provisions of the Central Employees Benevolent Fund and Group
Insurance Act, 1969].
(24) The accumulated
balance due and becoming payable to an employee participating in a recognised
provident fund.
(25) Any payment form an
approved superannuation fund made on the death of a beneficiary or in lieu of
or in commutation of any annuity, or by way of refund of contribution in the
death of a beneficiary.
(26) Any payment in the
nature of commutation of pension received from Government or under any pension
scheme approved by the Central Board of Revenue for the purpose of this clause.
(27) Any income
representing any payment received by way of gratuity or commutation of pension
by an employee on his retirement or in the event of his death, by his heirs as
does not exceed,---
1Ins. by the: Finance Act, 1986 (I of
1986) s. 12.
2Added by S.R.O. 925(I)/93, dt.
25-9-1993, see Gaz. of P., 1993 Ext. Pt. II, p. 1672.
3CI. (23A) ins. by S.R.O. 768(I)/81, dt.
7-7-1981, see Gaz. of P., 1981, Ext., Pt. II, p. 1783.
(i) in the case of an employee of the government or a local
authority or a statutory body or corporation established by any law for the
time being in force, the amount I receivable in accordance with the rules and
conditions of his service;
(ii) any amount receivable from any gratuity fund approved
by the Commissioner of Income Tax in accordance with the rules contained in
part III of the Sixth Schedule;
(iii) in the case of any other employee, the amount not
exceeding ‘[two hundred] thousand rupees receivable under any scheme applicable
to all employees of the employer and approved by the Central Board of Revenue
for the purposes of this sub-clause; and
(iv) in the case of any employee to whom sub-clause (i),
(ii) and (iii) do not apply, fifty per cent of the amount receivable or
‘[seventy five thousand] rupees, whichever is the less:---
Provided that nothing in
this sub-clause shall apply,---
(a) to any payment which is not received in
(b) to any payment received from a company by a director of such
company who is not a regular employee of such company;
(c) to any payment received by an employee who is not a resident
of
(d) to any gratuity received by an employee who has already
received any gratuity from the same of any other employer.
(28) Any income of a person
representing the sums received by him as a worker from out of the Workers
Participation Fund established under the Companies Profits (Workers
Participation) Act, 1968 (XII of 1968).
(29) Any income of an
officer representing the sum received by him as Entertainment Allowance
admissible to him under the Ministry of Finance and Provincial Coordination
(Finance Division) Office Memorandum No. F. 2(2) Imp-I/77, dated the 29th
April, 1977.
1Subs, by the Finance Act. 1993 (10 of
1993), s. 5.
[(29A) Any income of an
officer representing the sum received by him as Entertainment Allowance
admissible to him under the Ministry of Finance (Finance Division) Office
Memorandum No. F. l(l)-Imp 83, dated the 18th August, 1983.]
(30) Any income of an
officer of the Pakistan Armed Forces representing the sum received as
Entertainment Allowance admissible to him under the Ministry of Defence Office
Memorandum No. 716(D) B 77, dated the 29th April, 1977.
(31) Any income of an
officer representing the sum received by him as Entertainment Allowance
admissible to him under the Cabinet Secretariat (Establishment Division) Office
Memorandum No. I8/2/78-CV, dated the 13th July, 1978.
(32) Any income of an
officer representing the sum received by him as Senior Post allowance
admissible to him, under the Ministry of Finance, Planning and Development
(Finance Division) Officer Memorandum No. F. 1(36) Gaz-Imp-I/73, dated the 18th
August, 1973.
(33) Any income of an
officer representing the sum received by him as Senior Post allowance
admissible to him under the Ministry of Finance and Provincial Coordination
(Finance Division) Office Memorandum No. F. 1(1) Imp-I/77, dated the 28th
April,1977.
2[(33A) Any income of an officer
representing the sum received by him as Orderly Allowance admissible to him
under the Finance Division O.M. No. F. i(3)-IMP, JI/85, dated the 24th October,
1985.].
3[(33B) Any income of an employee of a
recognised University in Pakistan representing the sums received by him as
Senior Post Allowance, Entertainment allowance or Orderly Allowance Admissible
under -the terms and conditions of his service.]
4 * * * * * * *
1Cl. (29A) ins. by S.R.O. lOO(I)/83, dl.
24-10-83, see Gaz. of P., 1983, Ext. Pt. II, p. 1785.
2 Cl (33A) ins. by S.R.O. 51(l)/86,
dt. 9-1-86, see Gaz. of P., 1986, Ext. Pt. II, p. 149.
3Ins. by S.R.O. 337(I)/93, dt. 25-4-93,
see Gaz. of P., 1993. Ext., P. II, p.424.
4 Cl. (34), (35), (36), (36A).
(36B), (36C) and (36D) omitted by S.R.O. !266(I)/90, dt. 11-12-90, see Gaz. of
P., 1990, Ext. Pt. II, p. 2211 (w.ef. 1-7-91)
(37) Any income
representing compensatory allowance payable to a citizen of Pakistan locally
recruited in a Pakistan Mission abroad as does not exceed 1[75]
per cent of his gross salary.
(38) Any income of an
officer representing the sum received by him as Personal Staff Subsidy
admissible to him under the Cabinet Secretariat (Establishment Division) Office
Memorandum No. 18/2/78-CV dated the 13th July, 1978.
2[Cost of living allowance:
(38A) Any income
representing cost of living allowance admissible to the Government employees at
the rate of 7% with effect from the first day of July, 1995.]
(2) Any income representing
dearness allowance at the rate of Rs. 200 per month admissible to a civil
servant and employees of corporations/autonomous/semi-autonomous bodies/banks/DFIs
under the Ministry of Finance (Finance Division’s) Office Memorandum No. FI
(23)-IMP. D790, dated 15th December, 1990.]
Special allowance to meet certain
expenses:
(39) Any special allowance
or benefit (not being entertainment or conveyance allowance or other perquisite
within the meaning of sub-section (2) of section (16) specially granted to meet
expenses wholly an necessarily incurred in the performance of the duties of an
office or employment of profit.
3[(39A) Any income of a newspaper employee
representing Local Travelling Allowance paid in accordance with the decision of
the Third Wage Board for Newspaper Employees constituted under the Newspaper
Employees (Conditions of Service Act 1973, published in Part II of the Gazette
of Pakistan, Extraordinary, dated the 28th June, 1980.]
4[(39B) Any amount received as flying
allowance by pilots, flight engineers and navigators employed by any Pakistani
airline;]
Allowances attached to Honours, awards,
etc.:
(40) Any allowance attached
to any Honour, Award or Medal; awarded by the
1Subs, by S.R.O. 919(1)92, dt. 24-9-92,
see Gaz. of P., 1992, Ext. Pt. II, p. 1685.
2Subs. by the Finance Act, 1995 (1 of
1995) s. 9 which was previously iris, by S.R.O. 683(0/93, dt. 9-7-93.
3CI..(39A) ins. by S.R.O. 691(I)/84, dt.
6-8-1984, see Gaz., of P., 1984, Ext. Pt. II, pp. 1361-1362.
4 New Cl. (39B) ins. by the Finance
Act, 1998 (3 of 1998) s.” 5.
President of
1[(41) Disturbance pay of the armed forces
personnel for the assessment year 1997-98.]
2* * * * * * *
Contribution to mess, etc. funds:
(42) Such portion of the
income of a member of Pakistan Armed Forces as is compulsorily payable by him
under any orders issued by Government to mess, entertainment or band fund.
3[(42A) Any amount notified as flying
allowance payable to . pilots, flight engineers and navigators of the Pakistan
Air Force.]
4[(42B) Any amount notified as flying
allowance payable to pilots, flight engineers and navigators of the Pakistan
Army and the Pakistan Navy.
(42C) Any amount notified
as submarine allowance payable to officers of the Pakistan Navy].
5[(42D) Any amount received as flying
allowance by junior commissioned officers or other ranks of Pakistan Armed
Forces;]
Free rations:
(43) The value of rations
issued in kind, or cash allowance paid in lieu thereof, to members of Pakistan
Armed Forces or of Territorial force. ,
Rent-free quarters:
(44) The value of rent free
quarters occupied by, or cash allowance paid in lieu thereof, 1o members of the
Pakistan Armed Forces, including Territorial Forces.
1Added by the Finance Act, 1997 (22 of
1997) s. 7, which was previously omitted by Act 9 of 1996, s. 13.
2CI. (41 A) omitted by the Finance Act,
1996 (9 of 1996) s. 13, which was previously added by Ord. 12 of 1982, s. 7.
3Cl: (42A) ins. by S.R.O. 80O(I)/91, dt.
5-8-1991, see Gaz. of R, 1991, Ext., P. II, p. 2249.
4Cls. (42B) and (42C) ins. by S.R.O.
388(l)/94, dt. 9-5-1994, see Gaz., of P., 1994, Ext., Pt. II. p. 661.
5New cl. (42D) ins. by the Finance Act
1998 (3 of 1998), s. 5.
Conservancy allowance:
(45) The conservancy
allowance granted in lieu of free conservancy to personnel below commissioned
rank of Pakistan Armed Forces and Territorial Forces.
Deferred pay:
(46) Deferred pay
admissible to Armed Forces personnel under the new Pay Code.
Salary of Khasadars,
etc.:
(47) Any income chargeable
under the head “Salary” paid by Government to Khasadars, levies and badraggas
employed in the tribal territory on the North West Frontier and of all persons
employed in the tribal levy services in Balochistan.
Pensions for injuries,
etc.:
(48) Any pension granted to
the personnel of Armed Forces of Pakistan (including personnel-of the
Territorial Forces and the National Service of Pakistan) in respect of injuries
received in the performance of their duties as such.
Invalid pensions:
(49) Any pension granted to
the personnel of the Armed Forces of Pakistan (including personnel of the
Territorial Forces and the National Service of Pakistan) invalided from service
with such Forces on account of bodily disability attributable to, or aggravated
by, such service.
Pensions to dependents
of Shaheeds:
(50) Any income derived by
the families and dependents of the Shaheeds belonging to Pakistan Armed Forces
from the special family pension, dependents pension or children’s allowance
granted under the provisions of the Joint Services Instruction No. 5/66.
(51) Any income derived by
the families and dependents of the Shaheeds belonging to Civil Armed Forces of
Pakistan to whom the provisions of the Joint Services Instruction No. 5/66
would have applied had they belonged to the Pakistan Armed Forces from any like
payment made to them.
-----------------------------------------
[Pension of dependents of
public servants :
(51 A) Any pension granted
under the relevant rules to the families and dependents of public servants or
members of the Armed Forces of Pakistan who die during service.]
Perquisites to President,
Provincial Governors, etc. :
(52) The perquisite
represented by the right of the President of Pakistan, the Provincial Governors
and the Chiefs of Staff, Pakistan Armed Forces to occupy free of rent as a
place of residence any premises provided by Government.
(53) The perquisite
represented by free conveyance provided and the sumptuary (entertainment)
allowance granted by Government to Provincial Governors, the Chiefs of Staff,
Pakistan Armed Forces and the Corps Commanders.
(54) The following
perquisites and allowances provided or granted by Government to the Ministers
of the Federal Government namely :—
(a) rent-free accommodation in so far as the value thereof
exceeds ten per cent of the basic salary of the Minister concerned;
(b) house-rent allowance paid by government in lieu of rent-free
accommodation in so far as it exceeds five hundred and fifty rupees per mensum;
(c) free conveyance; and
(d) sumptuary allowance.
2[Free provision of utilities :
(54A) Any sum paid, for
purpose of meeting the charges for gas, water, and electricity, to
(a) the Federal and Provincial Ministers; and
(b) an employee up to ten per cent of the minimum of time scale,
and where there is no time scale, up to ten per cent of the basic salary.
1CI. (51 A) ins. by the Finance
Ordinance, 1984 (28 of 1984), s. 6.
2Cl.s (54A) and (54B) ins. by the Finance
Ordinance, 1983 (14 of 1983), s. 5.
(54B) The value of gas,
water and electricity provided free of charge to—
(a) the Federal and Provincial Ministers; and
(b) an employee up to ten per cent of the minimum of time scale
and where there is no time scale, up to ten per cent of the basic salary.]
(55) The perquisite
represented by the right of a Judge of the supreme court of Pakistan or of a
Judge of a High Court to occupy free of rent as a place of residence any
premises provided by the Federal or the Provincial Government, as the case may
be, or in case no such residence is provided, or a Judge chooses to reside in
his own house, so much of income which represents the sum paid to him as house
rent allowance, but not exceeding seven hundred and fifty rupees per mensum.
1[(55A) The following allowance and
privileges provided to a Judge of a High Court vide the
Transfer of High Court Judges (Allowance and Privileges) Order, 1983 (P.O. No.
2 of 1983, namely :—
(a) monthly allowance of one thousand and five hundred rupees,
and
(b) if the family of a Judge does not join him at the place to
which he is transferred or at which he is posted, he shall be provided at such
place with—
(i) single rent free accommodation by Government;
(ii) an official car maintained at Government expense,
including the supply of petrol not exceeding one hundred and fifty liters per
month for use in such car.
(2) This notification shall
have effect in respect of any assessment year beginning on or after the first
day of July, 1982.]
Income of provident funds, etc.;
2[(56) (1) Any income from voluntary
contributions, house property and investments in securities of the Federal
Government derived by the following namely:—
1CI. (55A) ins. by S.R.O. 34I(I)/83, dt.
11-4-1983, see Gaz. of P., 1983. Ext., Pt. II, p. 521.
2 Subs, by the Finance Act,
1993(10of 1993) s. 5, and second sch. forcl., (56), which was previously subs,
by Act, 7 of 1992, s. 7, for the original cl. (56).
i. National Investment (Unit) Trust of Pakistan established by
the National Investment Trust Limited, if not less than ninety Per cent of its
Units at the end of that year are held by the public and not less than ninety
per cent of its income of the year is distributed among the Unit-holders;
ii. Any Mutual Fund approved by the Controller of Capital Issues
and set up by the Investment Corporation of Pakistan, if not less than ninety
per cent of its Certificates at the end of that year are held by the public and
not less than ninety per cent of its income of that year is distributed among
the Certificate-holders;
iii. Shaukat Khanum Memorial Trust, Lahore; and
iv. Sheikh Sultan Trust, Karachi.
1[(1 A) Any income derived by any Mutual
Fund 2[investment
company, or a collective investment scheme approved by the Corporate law
Authority] or the National investment (Unit) Trust of Pakistan established by
the National Investment Trust Limited from any instrument of redeemable capital
as defined in the companies Ordinance, 1984 (XLVII of 1984), if not less than
ninety per cent of its income of that year is distributed amongst the
Unit-holders.]
2. Any income of the
following funds and institutions, namely :—
(i) a provident fund to which the Provident Funds Act, 1925 (XIX
of 1925), applies;
(ii) trustees on behalf of a recognized provide4dnt fund
or an approved superannuation fund or an approved gratuity fund
3[(iia) Overseas Pakistanis Pension Trust;]
(iii) a benevolent fund or group insurance scheme approved
by the Central Board of Revenue for the purposes of this sub-clause;
(iv) Service Fund;
1New sub-cl. (1 A) ins. by the Finance
Act, 1994 (12 of 1994) s. 7. :
2Ins. by the Finance Act, 1997 (22 of
1997) s. 7.
3New item (iia) ins. by S.R.O. 529(I)/98,
dt. 9-6-1998, see Gaz., of P., 1998, Ext., Pt. II. p. 1215.
(v) Employees Old-Age Benefits Institution established under the
Employees Old -Age Benefit Act, 1976 (XIV of 1976);
(vi) any Unit, Station or Regimental Institute; and
(vii) any recognised Regimental Thrift and Savings Fund,
the assets of which consist solely of deposits made by members and profits
earned by investment thereof.
Explanation.—For the
purpose of this sub-clause, “Service Fund” means a fund which is established
under the authority, or with the approval, of the Federal Government for the
purpose of—
a. securing deferred annuities to the subscribers or payment to
them in the event of their leaving the service in which they are employed; or
b. making provision for their wives or children after their
death; or
c. making payment to their estate or their nominees upon their
death.]
1 * * * * * * *
Income of Welfare Trusts
for ex-servicemen :
2[62(1) Any income of a trust 3[or
welfare institution] specified in 3[sub-clauses
(2) and (3)] from donations, voluntary contribution, subscriptions, house
property, investments in the securities of the Federal Government and so much
of the income chargeable under the head “Income from business or profession” as
is expended in Pakistan for the purposes of carrying out welfare activities :
Provided that in the case
of income under the head “Income from business or profession”, the exemption in
respect of income under the said head shall not exceed an amount which bears to
the income under the said head the same proportion as the said amount bears to
the aggregate of the incomes from the aforesaid sources of income.
1Cls. (57), (58), (59), (60) and (6-1)
omitted by the Finance Act, 1992 (7 of 1992) s. 7.
2Subs., ibid.,
3Ins. and subs, by the Finance Act, 1993
(10 of 1993) s. 5.
(2) A trust administered
under a scheme approved by the Federal Government in this behalf and
established in Pakistan exclusively for the purposes of carrying out such
activities as are for the benefit and welfare of—
i. ex-servicemen and serving personnel, including civilian
employees of the Armed Forces, and their dependents; or
ii. ex-employees and serving personnel of the Federal Government
or a Provincial Government and their dependents, where the said trust is
administered by a committee nominated by the Federal Government or, as the case
may be, a Provincial Government.”];
1[(3) A trust or welfare institution
approved by the Central Board of Revenue for the purposes of this sub-clause.];
2* * * * * * *
Income of trust for
benefit of ex-Government employees :
3* * * * * * *
2* * * * * * *
Income of Regimental
Institutes, etc. :—
3* * * * * * *
Casual receipts :
4* * * * * * *
5* * * * * * *
6* * * * * * *
7* * * * * * *
1Added by the Finance Act, 1993 (10 of
1993) s. 5.
2Proviso omitted by S.R.O. 1042(I)/83,
dt. 3-11-1983, see Gaz., of P. 1983 Ext., Pt. Hp. 1894.
3CIs. (62A), (63) and (64) omitted by the
Finance Act, 1992 (7 of 1992), s. 7.
4Cl. (65) omitted by the Finance Act,
1996 (9 of 1996), s. 13, which was previously added by Act, 7 of 1990, s. 7.
5CI. (66) omitted by S.R.O. 1266(I)/90,
dt. 11-12-1990, see Gaz., of P. 1990, Ext., Pt. II p. 2211 (w.e.f. 1-7-91).
6CIs. (67), (68), (69), (70) and (71)
omitted by S.R.O. 1136(1)/9I, dt. 7-11-1991, see Gaz., of P. 1991, Ext., Pt. 11
p. 2717.
7CI. (71 A) omitted by Act, 9 of 1996, s.
13, which was previously ins. by Act, 6 of 1988, s. 6.
Interest income :
(72) The yield of National
Savings or/Deposit Certificate, including Defence Savings Certificate, issued
under the National Savings Schemes [:]1
1[Provided that exemption under this clause
shall not apply in respect of any profit received on the reinvestment of Khaas
Deposit Certificates made under the National Savings Schemes on or after the
tenth day of November, 1991 [:1
3[Provided further that exemption under
this clause shall not be available in respect of bearer certificates (under
whatever nomenclature) purchased on or after the 15th June, 1995.]
(73) Any interest on
deposits in the Post Office, saving bank or National Savings Centres under the
National Saving Schems 1[:]
1[Provided that exemption under this clause
shall not apply in respect of any profit received on the redeposit of Khass
Deposit Accounts made under the National Savings Scheme on or after the tenth
day of November, 1991,]
4 * * * * * * *
(75) Any interest payable
to a non-resident in respect of such private loan to be utilised on such
project in Pakistan as may be approved by the Federal Government for the
purposes of this clause; having regard to the rate of interest and the terms of
repayment of the loan and the nature of the project on which it is to be
utilised.
5[(75A) Any interest payable to a
non-resident on a loan in foreign exchange against export letter of credit
which is used exclusively for export of goods manufactured or processed for
exports in Pakistan],
(76) Any interest payable by an industrial undertaking in
Pakistan— .
i. on moneys borrowed by it under a loan agreement_ entered
into with any such financial institution in a foreign country as may 6e
approved in this behalf by the Federal Government by a general or special order;
and
1 Subs, and added by S.R.O.
1135(0/91, dt. 7-11-1991, see Gaz., of P., 1991, Ext., Pt. 11, pp. 2716-2717;
2Subs. by the Finance Act, 1995, (1 of
1995), s. 9, for full-stop
3Proviso added, ibid.,
4CI. (74) omitted by S.R.O. 447(I)/93,
dt. 19-5-1993, see Gaz., of P., 1993, Ext. Pt. II, p. 573 (w.e.f. 13-5-93)
5New cl.(75A) ins. by S.R.O. 1014(I)/95,
dt. 16-10-95, see Gaz., of P., 1995, Ext ,Pt II, p. 2191
(ii) on moneys borrowed on debts incurred by it in a
foreign country in respect of the purchase outside Pakistan of capital plant
and machinery in any case where the loan or debt is approved by the Federal
Government, having regard to its terms generally and in particular to the terms
of its payment from so much of the tax payable in respect thereof as exceeds
the tax or taxes on income paid on such interest in the foreign country from
which the loan emanated or in which the debt was incurred (hereinafter referred
to as the said country’):
Provided that, where the
amount of such tax or taxes paid in the said country exceeds the amount of the
tax payable in Pakistan no refund of the amount paid in excess shall be allowed
:
Provided further that,
where the said country exempts such interest or allows credit against its own
tax for the tax which would have been payable in Pakistan if the said interest
were liable to tax in Pakistan, no tax shall be payable in Pakistan in respect
of such interest.
1[(76A) Any interest or profit derived by
Hub Power Company Limited on or after the first day of July, 1991, on its bank
deposits or accounts with financial institutions directly connected with financial
transactions relating to the Project operations.]
2[(77) Any income of an agency of a Foreign
Government, a foreign national (company, firm or association of persons), or
any other non-resident person approved by the Federal Government for the
purposes of this clause, from interest on moneys borrowed under a loan
agreement or in respect of foreign currency instrument approved by the Federal Government.]
3[(77A) Any interest payable to a
nonresident being a foreign individual, company, firm’ or association of
persons in respect of a foreign loan as is utilized for industrial investment
in Pakistan provided that the agreement for such loan is concluded on or after
the First day of February 1991, and is duly registered with the State Bank of
Pakistan.]
1 New CI. (76A) ins. by S.R.O.
13(I)/95. dt. 4-1-1995, see Gaz., of P., 1995, Ext., Pt. II, p. 48.
2Subs, by S.R.O. 1196(I)/94, dt.
4-12-1994, see Gaz., of P., 1994, Ext., Pt. II, p. 2317, this clause was
previously amended by S.R.O. 768(I)/8I, dt. 14-7-1981.
3CI. (77A) ins. by S.R.O. 125l(l)/92, dt.
24-12-1992, see Gaz., of P., 1992. Ext., Pt. II, p. 2166.
1[(77B) Any profit derived by a
non-resident, 2[(whether
a citizen of Pakistan or otherwise)] in respect of the Islamic mode of
financing, including istisna, morabaha and musharika[:]3]
4[Provided that in the case of Hub Power
Company Limited, this clause shall apply to such Islamic modes of financing
agreements which have been concluded on or after the 30th day of November,
1992.]
(78) Any interest derived
from foreign currency accounts held with the authorised banks in Pakistan, in
accordance with the Foreign Currency Accounts Scheme introduced by the State
Bank of Pakistan, by citizens of Pakistan and foreign nationals residing
abroad, foreign associations of persons, companies registered and operating
abroad and foreign nationals residing in Pakistan.
5[(78A) Any interest 6[or
profit] derived from a rupee account held with a scheduled bank in Pakistan by
a citizen of Pakistan residing abroad 7[,
where the deposits in the said account are made exclusively from foreign
exchange remitted into the said account;]
8[(78B) Any income derived from a private
foreign currency account held with an authorised bank in Pakistan, in
accordance with the Foreign Currency Accounts Scheme introduced by the State
Bank of Pakistan by a resident citizen of Pakistan.];
9[(78C) The income of an individuals firm,
an institution or a body corporate, other than a bank or a financial
institution, by way of interest on Foreign Currency Bearer Certificates issued
under the Three-Years Foreign Currency Bearer Certificate Rules, 1997.]
10[(78D) Any profit on Special U.S. Dollar
Bonds issued under the Special U.S. Dollar Bonds Rules, 1998.
1CI. (77B) ins. by S.R.O. l22(I)/95, dt.
19-2-1995, see Gaz., of P., 1995, Ext., Pt. II, p. 243.
2Subs. by the Finance Act, 1998 (3 of
1998), s. 5, for certain words.
3Subs, by S.R.O. 92 (l)/ 96, dt.
1-2-1996, see Gaz., of P., 1996, Ext., Pt. II, p. 214 for full-stop.
4Proviso added Ibid., this proviso was
previously amended by S.R.O. I3(I)/95, dt. 4-1-1995.
5C1.(78A) ins. by the Finance Act, 1985
(1 of 1985), s. 4.
6Ins. by S.R.O. l98(l)/86, dt. 27-2-1986,
see Gaz., of P., 1986, Ext., Pt. II, p. 320.
7Added by the Finance Act, 1992 (7 of
1992), s. 7.
8CI. (78B) ins. by S.R.O. 219(I)/91, dt.
I6-3-I99I, see Gaz., of P., 1991, Ext., Pt. II, p. 657.
9CI. (78C) ins. by S.R.O. 11 l(I)/98, dt.
19-12-1998, see Gaz., of P.. 1998, Ext., Pt. II, p. 220.
10CIs. (78D) and (78E) ins. by S.R.O.
871(I)/98, dt. 5-8-1998, see Gaz., of P., 1998, Ext., Pt. II, p. 1917.
(78E) Any profit or
interest derived from Pak rupee account or certificates of deposit which have
been created by conversion of a foreign currency account or deposit held on the
28th day of May, 1998, with a bank authorised under the Foreign Currency
Accounts Scheme of State Bank of Pakistan :
Provided that nothing
contained in this clause shall apply to such Pak rupee account or certificates
which are created out of foreign currency deposits which are not exempt under
clause (78).]
(79) Any interest income
received from a Pakistani bank by a foreign bank approved by the Federal
Government for the purposes of this clause, of such period as may be determined
by the Federal Government:
Provided that —
(i) the
interest income is earned on deposits comprising of remittances from abroad
held in a rupee account opened with a Pakistani bank with the prior approval of
the State Bank of Pakistan;
(ii) the
Pakistani bank maintaining the said rupee account holds 20 per cent or more of
the equity capital of the said foreign bank and the management of the latter
vests in the Pakistani bank; and
(iii) the
rate of interest chargeable on the said deposits does not exceed the rate of interest
chargeable on the deposits in the foreign currency accounts allowed to be
opened with banks in Pakistan by the State Bank of Pakistan.
1[79A) Any income derived by any person,
not being a bank, a banking company, a financial institution, a development
financing institution or a company engaged in the business of insurance, by way
of return on bearer bonds issued by the Pakistan Water and Power Development
Authority, established under the Pakistan Water and Power Development Authority
Act, 1958 (West Pakistan Act No. XXXI of 1958) 2[:]
2[Provided that nothing contained in this
clause shall apply in respect of return on bonds issued on or after the first
day of July, 1991.]
1CI. (79A) ins. by S.R.O. 796(I)/87, dt.
4-10-1987. see Gaz., of P., 1987, Exti, Pt. II. pp. 1564-1565.
2Subs, and Added by the Finance Act, 1991
(12 of 1991), s. 5. ,
1[(79B) Any income derived by any person,
being an individual, by way of return on bearer or registered bonds (Second
Issue, 1989), issued by the Pakistan Water and Power Development Authority,
established under the Pakistan Water and Power Authority Act, 1958 (West
Pakistan Act No. XXXI of 1958] 2[:].
2[Provided that nothing contained in this
clause shall apply in-respect of return on bonds issued on or after the first
day of July, 1991.]
3[(79C) Any income derived by a
non-resident from foreign investment in 7th issue of Pak Rupee denominated
WAPDA Energy Bonds issued under the WAPDA Energy Bonds (7th Issue)
.Regulations, 1997.]
Dividend Income :
4[(80) Any income derived by a non-resident
(excluding local branches, subsidiaries or offices of foreign banks, companies,
associations of persons or any other person operating in Pakistan) from Federal
Government securities and redeemable capital, as defined in the Companies
Ordinance, 1984, (XLVTI of 1984) listed on a registered stock exchange, where
the investments are made exclusively from foreign exchange remitted into,
Pakistan through a Special Convertible Rupee Account maintained with a bank in
Pakistan.]
5[(80A) Any income derived by an,
individual, unregistered firm, association of persons, Hindu undivided family
or an artificial juridical person, other than a company, from rated and listed
Term Finance certificates, being the instruments of redeemable capital under
the Companies Ordinance, 1984, issued on or after the 14th day
of September, 1997.]
6 * * * * * * *
6 * * * * * * *
1New CI. (79B) ins. by S.R.O. 603(I)/89,
dt. 6-6-1989, see Gaz., of P., 1989, Ext., Pt. II, p. 773.
2Subs. and Added by the Finance Act, 1991
(12 of 1991), s. 5.
3New CI. (79C) ins. by S.R.O. 406(I)/97,
dt. 3-8-1997 see Gaz., of P., 1997, Ext., Pt. II, p. 944.
4New CI. (80) added by the Finance Act,
1997 (22 of 1997) s. 7, which was previously amended by various enactments.
5’Subs, by S.R.O. 171(I)/98, dt.
17-3-1998, for CI. (80A), see Gaz., of P., 1998, Ext., Pt. II, p. 320, which
was previously amended by S.R.O. 703(I)/97. dt. 13-9-1997.
6CIs. (81) and (82) omitted by S.R.O.
103(I)/92, dt. 15-2-1992, see Gaz. nf P.. 1992, Ext., Pt. II, p. 235.
1 * * * * * * *
2 * * * * * * *
2 * * * * * * *
2 * * * * * * *
3[Income text- book boards ]
(85A) Any income of a
text-book board of a Province established under any law for the time being in
force, accruing or arising from the date of its establishment.];
Income of Universities and
educational institutions :
(86) Any income of any
university or other educational institution established solely for educational
purposes and not for purposes of profit.
4[(86A) Profits and gains derived by an
assessee from the running of any educational institution set-up between the
first day of July, 1991, and the thirtieth day of June, 1995, both days
inclusive, for a period of five years beginning with the month in which
institution is set-up.];
5[(86B) Profits and gains derived by an
assessee from the running of any computer training institution or computer
training scheme, approved by the Central Board of Revenue, set up between the
first day of July, 1997, and the thirtieth day of June, 2000 both days
inclusive, for a period of five years beginning with the month in which such institution
is set up.]
Scholarships :
(87) Scholarships granted
to meet the cost of education.
Local authorities :
(88) Any income of a local
authority not being income from business, if any, carried on by it outside its
jurisdictional area.
1Cl. (82A) omitted by S.R.O. 447(0/93,
dt. 19-5-1993, see Gaz., of P., 1993, Ext.,Pt. .11, p.573.
2CIs. (83) (84) and (85) omitted by the
Finance Act, 1996 (9 of 1996) s. 13, which was previously amended by Act 7 of
1992, s. 7.
3 Ins. by the Finance Act, 1986(1 of
1986), s. 12.
4C1. (86A) added by the Finance Act, 1991
(12 of 1991), s. 5.
5New cl. (86B), ins. by the Finance Act,
1997 (22 of 1997) s. 7.
Chambers of Commerce :
1 * * * * * * *
Sports Boards, etc. :
(90) Any income derived by any Board or other organization
established 2[by
Government] in Pakistan for the purposes of controlling, regulating or
encouraging major games and sports recognised by Government.
3[(91) Subject to the provisions of
sub-section (3 A) of section 47, any amount paid as donation to the following
institutions, foundations, societies, boards, trusts and funds, namely :—
(i) any Sports Board or institution recognised by the Federal
Government for the purposes of promoting, controlling or regulating any sport
or game;
(ii) President’s Fund for Afghan Refugees;
(iii) Fund for Promotion of Science and Technology in Pakistan;
(iv) Fund for Retarded and Handicapped Children;
(v) National Trust Fund for the Disabled;
(vi) Bangladesh Flood Relief Fund, 19881
(vii) Fund for Development of Mazar of Hazarat Barri Imam;
(viii) Rabita-Islami’s Project for printing copies of the
Holy Quran;
(ix) Fatimid Foundation,-Karachi;
(x) Al-Shifa Trust.
(xi) Bank of Commerce and Credit International Foundation
for Advancement of Science and Technology;
(xii) Society for the Promotion of Engineering Sciences and
Technology in Pakistan;
1CI. (89) omitted by S.R.O. 1081(0/93,
dt. 1-11-1993, see Gaz., of R, 1993, Ext.Pt. II, p. 2156.
2 Ins. by the Finance Act, 1997 (22
of 1997), s. 7.
3Subs, by the Finance Act. 1992 (7 of 1992),
s. 7, for cl. (91).
(xiii) President’s Fund for Assistance to Palestine;
(xiv) President’s Famine Relief Fund for Africa;
(xv) Bangladesh Cyclone Relief Fund, 1985;
(xvii) Prime Minister’s Disaster Relief Fund, 1987;
(xviii) Chief Minister Punjab’s Flood Relief Fund, 1988;
(xix) Prime Minister’s Fund for Welfare and Relief for
Kashmiris;
(xx) Prime Minister’s Bangladesh Cyclone Relief
Fund, 1991;
(xxi) Sindh Governor’s Relief Fund, 1990, for the Relief
and Rehabilitation of Victims of Violence in Sindh;
(xxii) Citizens — Police Liaison Committee, Central
Reporting Cell, Sindh Governor House, Karachi;
(xxiii) ICIC Foundation;
(xiv) BCCI Foundation;
(xxv) National Management Foundation;
(xxvi) 1[Endowment
Fund of the institutions of the Agha Khan Development Network (Pakistan) listed
in Schedule 1 of the Accord and Protocol, dated November 13, 1994, executed
between the Government of the Islamic Republic of Pakistan and Agha Khan
Development Network.]
(xxvii) Shaheed Zulfiqar Ali Bhutto Memorial Awards Society;
(xxviii) Iqbal Memorial Fund;
(xxix) Cancer Research Foundation of Pakistan, Lahore; and
(xxx) Shaukat Khanum Memorial Trust, Lahore.]
1Subs, by S.R.O. 433(I)/95, dt.
29-5-1995, see Gaz., of R, 1995, Ext., Pt. II. pp. 929-930, for certain words.
1[(xxxi) Christian Memorial Hospital, Sialkot; and]
2[(xxxii) National Museums, National Libraries and Monuments or
Institutions declared to be National Heritage by the Federal Government].
3[(xxxiii) Mumtaz Bakhtawar Memorial Trust
Hospital, Lahore.] -
4[(xxxiv) Kashmir Fund for Rehabilitation of Kashmir Refugees
and Freedom Fighters.] .
5[(xxxv) Institutions of the Agha Khan Development Network
(Pakistan) listed in Schedule 1 of the Accord and Protocol, dated November 13,
1994, executed between the Government of the Islamic Republic of Pakistan and
Agha Khan Development Network.]
6[(xxxvi) Azad. Kashmir President’s Mujahid Fund, 1972;
National Institute of Cardiovascular Diseases, (Pakistan) Karachi; Businessmen
Hospital Trust, Lahore; Premier Trust Hospital, Mardan; Faisal Shaheed Memorial
Hospital Trust, Gujranwala;; Khair-un-Nisa
Hospital Foundation, Lahore; Sind and Baluchistan Advocates’ Benevolent Fund;
Rashid Minhas Memorial Hospital Fund; and
7[(xxxviA) Mohatta Palace Gallery Trust;]
(xxxvii) Any relief or welfare fund established by the Federal
Government.].
8[(91A) Any amount paid as donation to the
Prime Minister’s Fund for National Debt Retirement.]-
9[(91B) Any amount paid as donation to the
National Self Reliance Fund.];
1Sub. cl. (xxxi) ins. by S.
R.0.164(0/93-, dt. 17-2-1993, see Gaz., of P.,.1993, Ext. Pt. II, p. 242.
2Ins. by the Finance Act, 1993 (10 of
1993) s. 5.
3Sub. cl. (xxxiii) added by S. R.O.
1085(I)/94, dt. 3-11-1994, see Gaz.. of P.. Ext. Pt. II, p. 2073.
4Sub. cl. (xxxiv) added by S. R.O.
350(0/95, dt. 24-4-1995, see Gaz., of P., Ext. Pt. II, p. 751.
5Sub. cl. (xxxv) added by S. R.O.
433(0/95, dt. 29-5-1995, see Gaz., of P., 1995, Ext. Pt. II, pp. 929-930.
6Sub-cls. (xxxvi) and (xxxvii) added by
the Finance Act, 1996 (9 of 1996) S. 13.
7Sub. cl. (xxxviA) added by the Finance
Act, 1997 (22 of. 1997) s: 7.
8Cl. (91 A) ins. by S.R.O. 181(I)/97, dt.
23-3-1997 see Gaz., of P., 1997, Ext., Pt. II, p. 343.
9Ct. (9IB) ins. by S.R.O. 529(I)/98, dt.
9r6-1998,.see Gaz., of P., 1998, Ext., Pt. II, p. 1215.
1 * * * * * * *
Income of religious or
charitable trusts, etc. :
(93) Any income which is
derived from 2[3*
* * investments in; securities of the Federal Government and]4[house
property] 5*
* held under trust or other legal obligations wholly, or in part only, for 6[religious
or] .charitable purposes and is actually or finally set apart for application
thereto :
7 * * * * * * *
8[Provided that nothing in this clause
shall apply to so much of the income as is not expended within Pakistan:]
Provided further that if
any sum out of the amount so set apart is expended outside Pakistan, it shall
be included in the total income of the income year in which it is so expended
or of the year in which it was set apart, whichever is the greater, and the
provisions of subsection (3) of section 65 shall not apply to any assessment
made or to be made in pursuance of this proviso.
9[Explanation.—Notwithstanding
anything contained in the Mussalman Wakf Validating Act, 1913, (VI of 1913), or
any other law for the time being in force or the instrument relating to the
trust or the institution, if any amount is set apart, expended or disbursed for
the maintenance and support wholly or partially of the family, children or
descendants of the author of the trust or the donor or the maker of the
institution or for his own maintenance and support-during his life time or
payment to himself or his family children, relations or descendants or for the
payment of his or their debts out of the income from house property dedicated
or if any expenditure is made other than for charitable purposes, in each case
such expenditure, provision, setting apart, payment or disbursement shall not
be deemed, for the purposes of this clause, to be for religious or charitable
purposes.
1Cl. (92) omitted by S.R.O. !08I(I)/93,
dt. 1-11-1993. see Gaz., of R, 1993. Ext, Pt.H,p.2156.
2Ins. by the Finance Act, 1992 (7 of
1992) s. 7.
3The certain words omitted by the Finance
Act, 1993 (10 of 1993) s. 5.
4Subs. by the Finance Act, 1989 (5 of
1989), s. 6. for “property”.
5’The words “or business” omitted ibid.,
6Subs, by Act 10 of 1993, s. 5, for
“religious and”.
7Proviso omitted by Act 5 of 1989, s. 6.
8Subs, ibid., for proviso.
9Subs, and shall be deemed always to have
been so subs, ibid., for “explanation”.
1[(93A) Any income derived from donations
made by non-official or private sector sources in Pakistan to the Waqf for
Research on Islamic History, Art and Culture, Istanbul set up toy the Research
Centre for Islamic History, Art and Culture (IRCICA)].
(94) Any income of a
religious or charitable institution derived from voluntary 2[contributions] 3*
* * applicable solely to religious or charitable purposes of the institution :
Provided that nothing
contained in clause (93) or this clause shall apply to the income of a private
religious trust which does not ensure for the benefit of the public.
4* * * * * * *
5* * * * * * *
6* * * * * * *
7* * * * * * *
(102C) Any income derived
by an assessee from the business of fish catching or fish processing, where the
fish catching business or fish processing unit is established by the assessee
for the first time between first day of July, 1993,and 30th day of June “[1997]
for a period of five years from the date of such establishment, subject to the
condition that the said date shall be determined by the Commissioner on an
application made by the assessee];
[income of Mutual
Funds :
(102D) Any income derived
by a Mutual Fund or an investment company registered under the Investment
Companies and Investment Advisors Rules, 1971 or a unit trust scheme
constituted by an asset management company registered under the Assets
Management Companies Rules, 1995, if not less than ninety percent of its income
of that year is distributed amongst the unit or certificate holders or
share-holders, as the case may be.]
1New Cl. (93A) ins. by S.R.O. 19#l)/95,
dt. 1-3-1995 see Gaz., of P., 1995, Ext., Pt. II. p. 340. this cl. was
previously amended by SJLO. 447(I)/93, dt. 19-5-1993.
2Subs. by the Finance Act. 1992 (7 of
1992) s. 7, for certain words.
3The certain words omitted by the Finance
Act, 1993 (10 of 1993) s. 5, which was previously amended by Act 7 of 1992, s.
7.
4Cls. (95), (95B), (96), (98), (99),
(100), (101) and (102) deleted by S.R-O. 1136(1)/9I, dt. 7-11-1991, see Gaz.,
of P., 1991, Ext., Pt. II,p. 2717.
5C1. (95A) omitted by S.R.O. 447(I)/93,
dt. 19-5-1993, see Gaz., of P., 1993, Ext., Pt. II, p. 573.
6C1. (97) omitted by S.R.O. 768(I)/81, dL
7-7-1981, see Gaz., of P., 1981, Ext., Pt. II. p. 1783.
7Cl, (I02A) and (102B) omitted by the
Finance Act, 1995 (1 of 1995), s. 9, which was previously amended by various
enactments.
8Subs, by the Finance Act, 1996 (9 of
1996) s. 13, for “1998”.
9Subs, by the Finance Act, 1997 (22 of
1997), s. 7, for cl. (102D), which was previously added by S.R.O. I399(I)/96,
dt. 24-12-1996.
1[Income of modarabas :
(102E) Any income of a
modaraba, not being a trading modaraba, registered under the Modaraba Companies
and Modaraba (Floatation and Control) Ordinance, 1980, for any assessment year
commencing on or after the first day of July, 1999, provided that not less than
ninety per cent of its total profits, in a year, are distributed to its
certificate holders;]
2* * * * * * *
3* * * * * * *
4* * * * * * *
5* * * * * * *
6[(107A) Any dividends received on or after
the first day of July, 1982, by the Investment Corporation of Pakistan from any
other company which has paid or will pay tax in respect of the profits out of
which such dividends are paid.].
7[Tax Exemption on Bonus Shares :
(108) Any income of a.
company registered under the Companies Ordinance, 1984, (XLVTI of 1984) or a
body corporate formed by or under any law for the time being in force, as
represents the face value of any bonus shares issued between the first day of
July, 1997 and the thirtieth day of June, 2000 (both days inclusive), by the
company or the body corporate].
Income of partners of
firms, etc. :
(109) Any sum received by
an assessee as a member of a Hindu undivided-family out of the income of the
family.
1New cl. (102E) ins. by the Finance Act,
1998 (3 of 1998) s. 5.
2Cl. (103) omitted by S.R.O, J081(I)/93,
dt. 1-11-1993, see Gaz., of P., 1993, Ext., Pt. II, p. 2156. which was
previously subs, by Act, 7 of 1990, s. 7.
3Cl. (I03A) omitted by the Finance Act,
1992 (7 of 1992) s. 7, which was ins. by S.R.O. 799(I)/90.
4Cls. (104), (105), and (106) omitted
ibid. -
5CI. (107) omitted by S.R.O. 103(I)/92,
dt. 15-2-1992, see Gaz., of P., 1992, Ext.,Pt. II, p. 235.
6Cl. (I07A) ins. by S.R;0. H69(I)/90, dt.
I1-IM990 see Gaz., of P., 1990, Ext., Pt. II, p. 235.
7CI. (108) added by the Finance Act,
1997, (22 of 1997) s. 7. This cl. was previously amended by various enactments.
(110) Any sum which the
assessee is entitled to receive out of the income of an association of person
(other than a Hindu undivided family.a company or a firm) on which tax has
already been paid by the association :
Provided that such sum
shall be included in the total income of I the assessee for computing the
average rate of tax applicable to the total income including such sum.
(111) Any sum being the
share of the assessee (or any portion thereof) in the profits and gains of an
unregistered firm, not being a firm treated as a registered firm under
sub-clause (ii) of clause (b) of sub-section (1) of section 69, computed in the
manner laid down in sub-section (4) of section 69,on which tax has already been
paid by the firm :
Provided that such sum
shall be included in the total income of the assessee for computing the average
rate of tax applicable to the total income excluding such sum
1[(111 A) Any sum being the share of the
assessee (or any portion thereof) in such profits and gains of a registered
firm as are liable to be assessed under the provisions of section 80C 2[or
section 80CC]. .
(112) Any distribution
received by an assessee from the National Investment (Unit) Trust or a Mutual
Fund established by the Investment Corporation of Pakistan out of the capital
gains of the said Trust or Fund on which tax has already been paid.
3* * * * * * *
4* * * * * * *
Income from transport
business :
(115) Any income derived by
a person from plying of any vehicle registered in the territories of Azad Jammu
and Kashmir, excluding income arising from the operation of such vehicle in
Pakistan to a person who is resident in Pakistan and non-resident in those
territories.
1Ins. by S.R.O. 679(I)/9I, dt. 24-7-1991,
see Gaz., of P., 1991, Ext. Pt. II, p. 2003.
2Added by the Finance Act. 1992 (7 of
1992), s. 7.
3CI. (113) omitted by the Finance Act,
1996 (9 of 1996) s. 13.
4Cl. (114) omitted by S.R.O. l08l(I)/93,
dt. I-1I-I993, see Gaz., of P., 1993, EXt., Pt. II, p. 2156.
1[Income of Water and Power Development
Authority :
(115A) Any income derived
by the Pakistan Water and Power Development Authority, established under the
Pakistan Water and Power Development Authority Act, 1958.] (W.P. Act No. XXXI
of 1958).
2[(115B) The income derived by a company
being a holding company of which more than ninety-nine per cent shares are
owned and held by the Water and Power Development Authority specified in entry
(115A) for the assessment years 1998-99, 1999-2000 and 2000-2001.]
(115C) The Income derived
by subsidiary company in which more than ninety-nine per cent shares are held
by a company specified in entry (115B), engaged in generation of thermal power
or transmission or distribution of electricity, for assessment years ‘ 1998-99,
1999-2000 and 2000-2001.]
Capital gains:
(116) Any income chargeable
under the head Capital gains’ , 3[being
income from the sale of 4[Modaraba
Certificates or] 5[any
instrument of redeemable capital as defined in the Companies Ordinance, 1984
(XLVII of 1984), listed on any stock exchange in Pakistan or], shares of a
public company (as defined in the First Schedule) 6[and
the Pakistan Telecommunications Corporation vouchers issued by the Government
of Pakistan]] derived by an assessee in respect of any assessment year ending
on or before the thirtieth day of June, [2002]7
8[(116A) Any income chargeable under the
head ‘capital gains’, being income from the sale of shares of a public company
(as defined in the First Schedule), derived by any foreign institutional
investor as is approved by the Federal Government for the purposes of this
clause].
1Subs, by S.R.O. 529(I)/83, dt.
24-5-1983, see Gaz., of P., 1983, Ext. Pt. II. p. 737, for the original cl.
(115A).
2Cls. (115B) and 115(c) ins. by S. R.O.
169(I)/98, dt. 16-3-1998, see Gaz., of P., 1998, Ext., Pt. II. p. 318.
3Ins. by the Finance Ordinance, 1983 (14
of 1983), s. 5.
4Ins. by the Finance Act, 1992 (7 of
1992), s. 7.
5Ins. by the Finance Act. 1994, (12 of
1994) s. 7.
6Ins. by S.R.O. 1 !97(I)/94. dt.
11-12-1994, see Gaz, of P., 1994, Ext., Pt. II, p. 2318.
7Subs, by the Finance Act, 1997 (22 of
1997), s. 7 for “1999.” which was previously amended by various enactments.
8Cl. (116A) his. by S.R.O. 900(1)91, dt.
8-9-1991, see Gaz., of P., 1991, Ext., Pt. II, p. 2373.
1[(116B) Any income chargeable under the
head ‘capital gains’ arising to an assessee for any assessment year commencing
on or after the first day of July, 1991, from the sale of shares of industrial
units of public sector corporations by the Privatization Commission.]
2[(1I6C) Any income chargeable under the
head “capital gains”, being income from the sale of shares of a public company
(as defined in the First Schedule) set up in any Special Industrial Zone
referred to in clause (126C) derived by an assessee for a period of five years
from the date of commencement of its commercial production 3[:]]
4[Provided that the exemption under this
clause shall not be available to an assessee from the sale of shares of such
companies, which are not eligible for exemption from tax under clause (126C).]
(117) Any income chargeable
under the head ‘Capital gains’ derived by an assessee from an industrial
undertaking set up in an area declared by the Federal Government to be a ‘Zone’
within the meaning of the Export Processing Zones Authority Ordinance, 1980 (IV
of 1980).
5[(117A) Any income derived by an
individual from transfer of his membership rights or share of a stock exchange
in Pakistan to a company at any time between thel st day of July, 1998, and the
30th day of June, 1999.]
(118) Any share of income
received by an assessee out of capital gains on which tax has been paid by the
firm of which he is a partner.
6* * * * * * *
7* * * * * * *
8* * * * * * *
1New cl. (116B) ins. by S.R.O. 64(I)/95,
dt. 19-1-1995, see Gaz., of P., 1995, Ext., Pt. II, p. 111.
2New cl. (116C) added by S.R.O. 65(I)/95,
dt. 19-1-1995, see Gaz., of P., 1995.
3Subs. by S.R.O. 86(I)/96, dt. 30-1-1996,
for “full stop”, see Gaz., of P., 1996, Ext., Pt. II, p. 206.
4Added ibid.
5New cl, (117A) ins. by the Finance Act,
1998 (3 of 1998), s. 5.
6Cl. (118A) omitted by S.R.O. 1136(I)/91.
dt. 7-11-1991, see Gaz., of P., 1991, Ext., Pt. II, p. 2717.
7Cl. (118B) omitted by S.R.O. 1081(1)793,
dt. 1-11-1993, see Gaz., of P., 1993, Ext., Pt. II, p. 2156.
8Explanation omitted by the Finance Act,
1989 (5 of 1989), s. 6.
1* * * * * * *
2* * * * * * *
3* * * * * * *
4* * * * * * *
5[(I21A) Profits and gains derived by an
assessee from a, pioneer industrial undertaking 6[which
is set up by 30th day of June, 1997,] for a period of five years from the date
of commencement of commercial production;
The exemption under this
clause shall apply to a pioneer industrial undertaking which—
(a) is owned and managed by a company formed and registered
under the Companies Act, 1913 (VII of 1913), having its registered office in
Pakistan;
(b) is an undertaking the income, profits and
gains of which are not liable to be computed in accordance with the rules
contained in the Fifth Schedule;
7[(c) fulfills the following conditions, namely :—
(i) that the undertaking is based on highly sophisticated
technology;
(ii) that the technology employed has fast obsolescence;
(iii) that investment in the undertaking involves high
risk; and
1CIs. (1I8C), (118D), (1I8E), (118F),
(118G), (I18H) and (118I) omitted by the Finance Act, 1995 (1 of 1995) s. 9,
which was previously amended by various enactments.
2CIs. (119) and (120) omitted by S.R.O.
1136(I)/91, dt. 7-11-1991, see Gaz., of P., 1991, Ext., Pt. II, p. 2717.
3Cl. (120A) omitted by the Finance Act,
1992 (7 of 1992) s. 7.
4C1. (121) omitted by S.R.O. 1136(I)/91,
dt. 7-11-1991.
5CI. (121 A) ins. by the Finance Act,
1984 (28 of 1984), s. 6.
6Ins. by the Finance Act, 1996 (9 of
1996), s. 13.
7Sub-cl. (c) subs. by the Finance Act,
1987 (6 of 1987), s. 10 for the original cl. (c).
(iv) that the goods produced, or to be produced, are such
that neither these goods, nor identical or close substitutes thereof, are being
produced in Pakistan; and
1[(d) is approved, on an application made
by the assessee in such form and manner and accompanied by such statements,
certificates, documents and undertakings, arid in accordance with such
procedure, as may be prescribed, by the Central Board of Revenue.]
2[121B) Profits arid gains derived by an
assessee, being a Pakistani company, from an industrial undertaking engaged in
the manufacture of electronic equipment or components thereof which is set up
in the North-West Frontier Province or in the Islamabad Capital Territory 3[by
30th day of June, 1997] and is approved by the Central Board of Revenue for
purposes of this clause, for a period of five years from the date of
commencement of commercial production.]
4[Income from ships:
(121C) Profits and gains
derived by an assessee being a Pakistani company from a ship registered in
Pakistan between the first day of July, 1993, and 31st day of December, 1995,
for a period of five years from the date of registration of such ship in
Pakistan.]
5* * * * * * *
6* * * * * * *
7* * * * * * *
8* * * * * * *
9* * * * * * *
1Sub. cl. (d) subs. by the Finance Act,
1987 (6 of 1987), s. 10 for the original cl. (d).
2CI. (121B) ins by the Finance Act, 1985
(1 of 1985), s. 4.
3Ins. by the Finance Act, 1996 (9 of
1996), s. 13.
4CI. (12IC) ins. by the Finance Act, 1993
(10 of 1993), s. 5.
5Cls. (122) and (122A) omitted by S.R.O.
1I36(I)/91, dt. 7-11-1991, see Gaz., of P., 1991. Ext., Pt. II, p. 2717.
6Cls. (122B), (122C) and (122D) omitted
by S.R.O. 1081(I)/93, dt. 1-11-1993, see Gaz., of P., 1993, Ext., Pt. 11, p.
2156.
7C1. (122E) omitted by S.R.O. 1136(I)/91,
dt. 7-11-1991.
8Cls. (122F), 123 and (123A) omitted by
S.R.O. 1081(I)/93, dt. 1-11-1993, see Gaz., of P., 1993 Ext., Pt. II p. 2156.
9Cl. (124) omitted by S.R.O. 1136(I)/91,
dt. 7-11-1991.
1* * * * * * *
2[Fruit Processing :
(125C).—(1) Profits and
gains derived by an assessee from an industrial undertaking for a period of
five years from the date of commencement of commercial production.
(2) The exemption under
this clause shall apply to an undertaking which is—
(a) set up between the first day of July, 1994, and the
thirtieth day of June, 3[2000],
both days inclusive;
(b) owned and managed by a company formed exclusively for
operating the said industrial undertaking engaged in fruit processing and
registered under the Companies Ordinance, 1984 (XLVH of 1984), and having its
registered office in Pakistan; and
(c) is not formed by splitting up or the reconstruction or
reconstitution of business already in existence or by transfer to a new
business of any machinery or plant in Pakistan at any time before the
commencement of the new business.
Manufacture of soft and
stuffed toys :
(125D).—(1) Profits and
gains derived by an assessee from an industrial undertaking for a period of
five years from the date of commencement of commercial production.
(2) The exemption under
this clause shall apply to an industrial undertaking which is —
(a) set up between die first day of July, 1994, and the
thirtieth day of June, 3[2000],
both days inclusive;
(b) owned and managed by a company formed exclusively for
operating the said industrial undertaking engaged in the manufacture of soft
and stuffed toys; and
(c) not formed by splitting up, reconstruction or reconstitution
of business already in existence or by transfer to a new business of any
machinery or plant in Pakistan at any time before the commencement of the new
business.]
1CIs. (I24A), (125), (I25A), and (125B)
omitted by the Finance Act, 1995 (1 of 1995) s. 9, which was previously amended
by various enactments.
2New cls. (125C) and (125D) ins. by the
Finance Act, 1994 (12 of 1994), s. 7.
3Subs. by the Finance Act, 1997 (22 of
1997), s. 7 for “1997”.
1[Manufacture of Solar Energy Equipment:
(125E).—(1) Profits and
gains derived by an assessee from an industrial undertaking for a period of
five years from the date of commencement of commercial production.
(2) The exemption under
this clause shall apply to an industrial undertaking which is—
(a) engaged in the manufacture of solar thermal, photovoltaic
equipment for production of solar energy and solar appliances;
(b) set up between the first day of July, 1997 and the thirtieth
day of June, 2000; and
(c) is not formed by splitting up or the reconstruction or
reconstitution of business already in existence or by transfer to a new
business of any machinery or plant in Pakistan at any time before the
commencement of the new business.]
(126) Profits and gains
derived by an assessee from an industrial undertaking set up in an area
declared by the Federal Government to be a ‘Zone’ within the meaning of the
Export Processing Zones Authority Ordinance, 1980 (IV of 1980), for a period of
five years form the date of commencement of production, and for such further
period as may be allowed by the Federal Government [:]2
3[Provided that nothing contained in this
clause shall apply to an industrial undertaking set up after the 30th June,
1997.]
4[126A) Profits and gains derived by an
assessee upto the 5[thirtieth
day of June, 1997], from an industrial undertaking set up in the Karachi Export
Processing Zone, declared by the Federal Government as a ‘Zone’ within the
meaning of the Export Processing Zones Authority Ordinance, 1980 (IV of 1980).]
1New cl. (125E) ins. by the Finance Act.
1997 (22 of 1997), s. 7.
2Subs. by the Finance Act, 1996 (9 of
1996) s. 13, for “full stop”
3Proviso added ibid.
4Ins. by S.R.O. 958(I)/88, dt.
23-10-1988, see Gaz., of P., 1988, Ext., Pt. II, p. 2439.
5Subs. by Act 9 of 1996, s. 13 for certain
words.
1[(126B) (i) Profits and gains derived by a
company for a period of five years from an industrial undertaking set up in
such area and within such period and on such conditions as the Federal
Government may, by notification in the official Gazette, specify [:]2
3[Provided that the exemption under this
sub-clause shall not be available after the 31st January, 1996, except to such
companies, otherwise qualifying under this clause, which have established
letters of credit for the import of plant and machinery for such industrial
undertaking by the 31st January, 1996.]
(ii) Income chargeable
under the head “Capital gains” derived by an assessee from the sale of shares
representing foreign equity in such company and on such conditions as the
Federal Government may, by notification in the official Gazette, specify 2[:]
3[Provided that the exemption under this
sub-clause shall not be available to an assessee from the sale of shares
representing foreign equity in such companies which do not qualify for
exemption under sub-clause (i).]
4[(126C).—(1) Profits and gains derived by
an assessee from an industrial undertaking set up between the first day of
July, 1995, and the thirtieth day of June, 1999, both days inclusive, for a
period of ten years beginning with the month in which the undertaking is set up
or commercial production is commenced, whichever is the later.
(2) The exemption under
this clause shall apply to an industrial undertaking which fulfills the
following conditions, namely :—
(a) that it is set up in such area as may be notified by the
Federal Government to be a Special Industrial Zone;
(b) that it is not informed by the splitting up, or the
reconstruction or reconstitution of a business already in existence or by
transfer to a new business of any machinery or plant used in a business which
was being carried on in Pakistan at any time before the commencement of the
new business;
1Added by die Finance Act, 1992, (7 of
1992) s. 7.
2Subs. by S.R.O. 86(l)/96, dt. 30-1-1996,
see Gaz., of P., 1996, for full stop. Ext., Pt. II, pp. 205-206.
3Proviso added ibid.
4New cl. (I26C) added by S.R.O. 66(I)/95,
dt. 18-1-1995, see Gaz., of P., 1995, Ext., Pt. II, p. 112.
(c) that it is owned and managed by a company formed exclusively
for operating such industrial undertaking and registered under the Companies
Ordinance, 1984 (XLVII of 1984), having its registered office in Pakistan; and
(d) that it is not engaged in the manufacture of aims and
ammunition, security printing, currency and mint, high explosives, radioactive
substances, alcohol (except industrial alcohol), cotton ginning, spinning
(except as part of integrated textile unit), sugar manufacturing (white), flour
milling, steel re-rolling and furnace, tobacco industry, ghee or vegetable oil
industry, plastic bags (including Polypropylene and Polyethylene), beverages
(excluding fruit, juices), polyester industry, automobile assembly and cement
industry][:]1
2[Provided that the exemption under this
clause shall not be available after the 31st January, 1996, except to such
assessees, otherwise qualifying under this clause, who have established letters
of credit for the import of plant and machinery for such industrial undertaking
by the 31st January, 1996.]
3[126D).—(1) Profit and gains derived by an
assessee from an industrial undertaking set up between the first day of July,
1995, and the thirtieth day of June, 4[1997], both days inclusive for a period
of eight years beginning with the month in which commercial production is commenced.
(2) The exemption under
this clause shall apply to an industrial undertaking which fulfills the
following conditions, namely :—
(i) It is set up in a rural area i.e. outside the limits of any
municipal corporation, municipal committee, cantonment board or Islamabad
Capital Territory and in no case within the following areas namely :—
(a) upto
thirty kilometers from the municipal or cantonment limits of Karachi or Lahore
: and
1Subs, by S.R.O. 86(l)/96, dt. 31-1-1996,
see Gaz.. of P., 1996, for full stop, Ext., Pt. II, pp. 205-206.
2Proviso added ibid.
3New cl. (I26D) added by S.R.O.
810(l)/95, dt. 7-8-1995, see Gaz., of P., 1995, Ext., Pt. II, p. 1818.
4Subs. by the Finance Act, 1996 (9 of
1996) s. 13 for “1999”.
(b) upto ten kilometers from the existing limits of municipal
corporations or cantonment boards;
Explanation.—The distance between an industrial
undertaking and the outer boundary of a municipal or cantonment limit shall be
measured in a straight line on horizontal plane as provided in section 11 of
the General Clauses Act, (X of 1897), and the said distance, wherever required,
will be defined and determined by the concerned officer of the District
Administration.
(ii) It is not formed by the splitting up, or the
reconstruction or reconstitution of a business already in existence or by
transfer to a new business of any machinery or plant used in a business which
was being carried on in Pakistan at any time before the commencement of the new
business.
(iii) It is owned and managed by a Company formed for
operating such industrial undertaking and registered under the Companies
Ordinance, 1984 (XLVTI of 1984), having its registered office in Pakistan.
(iv) It is an undertaking engaged in any of the following
agro-based industries :—
(a) cultivation, production, processing and preservation of
flowers and ornamental plants;
(b) cattle, sheep and goat farming for the production and
processing of meat. It will cover rearing, sale and slaughtering of animals and
processing and packing of meat and meat products;
(c) dairy farming for the production of milk;
(d) processing, packing, preservation and canning of milk and
milk products with or without addition of other things;
(e) processing, packing preservation and canning of meat and
meat products;
(f) processing, packing, preservation and canning of fruits and
vegetable;
(g) inland farming and preservation, packing and canning of fish
and seafood with or without addition of other things;
(h) cultivation, production and multiplication of high yielding
seeds of cereals, pulses, vegetables, fruits, oilseeds, and cash crops like
sugarcane, cotton cocoa, coffee, tea, herbs and spices;
(i) cultivation, production and extraction of edible oils;
(j) poultry farming and processing, packing, preservation and
canning of poultry meat with or without addition of other things; and
(k) manufacture of cattle and poultry feeds.]
1* * * * * * *
2* * * * * * *
(128) Any income accruing
or arising outside Pakistan to an industrial undertaking set up in an area
declared by the Federal Government to be a ‘Zone’ within the meaning of the
Export Processing Zones Authority Ordinance, 1980 (TV of 1980), provided the
said income accrues or arises from such activities of the said undertaking as
are approved by the Federal Government [:]3
4[Provided that nothing contained in this
clause shall apply to an industrial undertaking set up after the 30th June,
1997.]
Wealth Tax :
5* * * * * * *
Medical expenditure by
individuals :
6[(129A) Any amount paid by an assessee,
being an individual and resident in Pakistan, by way of personal expenditure on
medical services:
1CI. (126E) omitted by S.R.O. 150(I)/96,
dt. 28-2-1996, see Gaz., of P. 1996, Ext., Pt. II, p. 312, which was previously
added by S.R.O. 85(I)/96, dt. 29-1-1996.
2Cl. (127) omitted by the Finance Act,
1996 (9 of 1996), s. 13.
3Subs. ibid., for full stop.
4Proviso added ibid.
5Cl. (129) omitted by the Finance Act,
1994 (12 of 1994), s. 7.
6Ins. by the Finance Act, 1993 (10 of
1993), s. 5.
Provided that the receipts
in respect of such expenditure bearing names 1[,
National Tax Number] and complete addresses of the medical practitioners are
furnished alongwith his return of total income;]
2[(129B) Any amount paid by way of Federal
Educational Fee or expended on setting up and managing or running of a middle,
high or technical school in accordance with the conditions laid down in the
Federal Educational Fee Scheme.]
3* * * * * * *
4[Income of returning expatriates.—(130A)
Any income which accrue or arises outside Pakistan to a resident (who is a citizen
of Pakistan but was not resident in any of the four years preceding the year
in which he became resident) for two years, that is to say, in respect of the
income year in which he became resident and the income year next following.]
Income of Pakistan
Security Printing Corporation Limited, Karachi:
5* * * * * * * *
6* * * * * * * *
Income of Pakistan
Agricultural Research Council:
(133) Income of Pakistan
Agricultural Research Council, Islamabad.
7[(133A) Any income of the Institutions of
the Agha Khan Development Network, (Pakistan) as contained in Schedule 1 of the
Accord and Protocol, dated November 13, 1994, executed between the Government
of the Islamic Republic of Pakistan and the Agha Khan Development Network.]
Income of Pak-Libya
Holding Company:
8|(l 34) Any income of pak-Libya Holding
Company in Pakistan up to the fourteenth day of October, 1998, subject to the
conditions that—
1Ins. by the Finance Act, 1997 (22 of
1997) s. 7.
2New cl. (I29B) ins. by the Finance Act,
1994 (12 of 1994), s. 7.
3Cl. (130) omitted by the Finance Act, 1996
(9 of 1996), s. 13, which was previously amended by various enactments.
4Ins. by the Finance Act, 1985 (I of
1985) s. 4.
5Cl. (131) omitted by S.R.O. 1136(l)/91,
dt. 7-11-1991, see Gaz., of P., 1991, Ext., Pt. II, p. 2717.
6Cl. (132) omitted by the Finance Act,
1986 (I of 1986), s. 12.
7New cl. (133A) added by S.R.O.
433(I)/95, dt. 29-5-95, see Gaz., of P., 1995. Ext. Pt. II, p. 930.
8Subs. by S.R.O. 1144(I)/90 dt.
5-11-1990, see Gaz., of P., 1990, Ext., Pt. II, pp. 2076-2077.
(i) the Libyan contribution in foreign exchange shall be
deposited with the State Bank of Pakistan or in a foreign currency account with
a nationalized commercial bank in Pakistan;
(ii) the said contribution in foreign exchange shall be
converted into Pak rupee unless it is invested in a project in Pakistan; and
(iii) the return payable to Libyans shall not be covered by
the exchange risk facility in Pakistan.]
1[Income of Saudi-Pak Industrial and
Agricultural Investment Company Limited:
(134A) Any income of
Saudi-Pak Industrial and Agricultural Investment company Limited in Pakistan
for a period of 2[twenty
years] commencing with the thirty-first day of December, 1982.]
Income of Pakistan
Kuwait Investment Company:
(135) Any income of
Pakistan Kuwait Investment Company in Pakistan for a period of 3[twenty
years] from the date of its incorporation.
Income of Gas
Development (GDC) International Inc. :
4* * * * * * *
5[(135B) Any income of the Liaquat National
Hospital Association, Karachi.]
6[(135C) Any income derived by:—
(i) Abdul Sattar Edhi Foundation, Karachi; and
(ii) Bilquis Edhi Foundation, Karachi.]
7* * * * * * *
1Cl. (134A) ins. by S.R.O. 449(I)/88,
20-6-1988, see Gaz., of P., 1988, Ext. Pt. II, pp. 883-884.
2Subs. by S.R.O. 390(l)/94, dt.
18-5-1994, see Gaz., of P. 1994, Ext., Pt. II p. 663 for “ten years”.
3Subs. by S.R.O. 249(I)/94, dt.
21-3-1994, see Gaz., of P. 1994, Ext., Pt. II p. 425 for “Fifteen years”.
4C1. (135A) omitted by S.R.O. 1136(I)/9l,
dt. 7-11-1991, see Gaz., of P., 1991, Ext., Pt. II, p. 2717.
5Cl. (I35B) ins. by S.R.O. 902(I)/91, dt.
7-9-1991, see Gaz., of P., 1991, Ext., Pt. II, p. 2376.
6CI. (135C) ins. by S.R.O. 620(I)/94, dt.
9-6-1994, see Gaz., of P., 1994, Ext., Pt. II, p. 968.
7Cls. (136), (136A) and (137) omitted by
S.R.O. 447(I)/93, dt. 19-5-1993, see Gaz., of P., 1993, Ext. Pt. II, p. 573.
Income from Technical
Services :
1* * * * * * *
2* * * * * * *
(139) Any income—
(a) of a
company registered under the Companies Act, 1913 (VIJ of 1913), and having its
registered office in Pakistan,, as is derived by it by way of royalty,
commission or fees from a foreign enterprise in consideration for the use
outside Pakistan of any patent, invention, model, design, secret process or
formula or similar property right, or information concerning industrial,
commercial, or scientific knowledge, experience or skill made available or
provided to such enterprise by the company or in consideration of technical
services rendered outside Pakistan to such enterprise by the company under an
agreement * * *3in
this behalf, or
(b) of
any other assessee as is derived by him, in the income year relevant to the
assessment year beginning with the first day of July, 1982 and any assessment
year thereafter, by way of fees for technical services rendered outside
Pakistan to a foreign enterprise under an agreement 4[entered
into] in this behalf:
Provided that—
(i) such income is received in Pakistan by or on behalf of the
said company or other assessee, as the case may be, in accordance with the law
for the time being in force for regulating payments and dealings in foreign
exchange; [and]5
(ii) where any income as aforesaid is not brought
into-Pakistan in the year in which it is earned and tax is paid thereon, an
amount equal to the tax so paid shall be deducted from the tax payable for the
year in which it is brought into Pakistan and, where no tax is payable for that
year or the tax payable is less than the amount to be
1Cl. (138) omitted by S.R.O. 1136(001,
dt. 7-11-1991.
2CIs. (138A), (I38B) and (I38C) omitted
by S.R.O. I266(I)/90, dt.11-12-1990 see Gaz., of P. 1990, Ext Pt. II, p. 2211,
(w.e.f. 1-7-I99I).
3Omitted by the Finance Act, 1995 (1 of
1995) s. 9
4Subs. by Act, I of 1995, s. 9, for
certain words.
5Added ibid.
deducted, the whole or such part of the said amount as it not
deducted shall be carried forward and deducted from the tax payable for the
year next following and so on [.]1
2* * * * * * *
(140) Any income of an
assessee being a partner in a registered firm, as represents his share of such
income of the said firm as is exempt under clause (139).
3[Pakistan Telecommunication
Corporation:
(140A) Any income derived
by the Pakistan Telecommunication Corporation from the 1st July, 1994, till the
incorporation of its successor company, namely, the Pakistan ,
Telecommunication Company Limited.]
4[Pakistan Telecommunications Company
(Pvt.) Limited:
(140B) Any income derived
by the Pakistan Telecommunication Company (Pvt.) Limited, for a period of three5[complete
financial] years from the date of its establishment as a company under the
Companies Ordinance, 1984 (XLVII of 1984).]
Income of foreign air
and shipping enterprises:
(141) Any income of a
foreign enterprise, for the time being approved by the Federal Government for
the purpose of this clause, from the operation of ships and aircraft in
international traffic except” where such income is earned from ships and
aircraft used principally to transport passengers and goods exclusively between
places in Pakistan :
Provided that exemption
under this clause shall not be available to an enterprise of a country which
does not allow similar exemption to a like enterprise of Pakistan.
Explanation.— “Foreign enterprise” means an
enterprise which is carried on by a person who is not resident in Pakistan and
the effective management of which is situated outside Pakistan.
1Subs. by the Finance Act, 1995 (1 of
1995), s. 9 for “and”.
2Omitted ibid.
3New cl. (140A) added by S.R.O.
293(I)/95, dt. 10-4-1995, see Gaz., of P., 1995, Ext., Pt. II, p. 527.
4New cl. (140B) added by S.R.O.
860(I)/95, dt. 29-8-95, see Gaz., of P., 1995, Ext. Pt. II, p. 1934.
5Ins. by S.R.O. 60(I)/96 dt. 17-1-1996,
see Gaz., of P., 1996. Ext., Pt. II. p. 152.
1* * * * * * *
2* * * * * * *
3* * * * * * *
4[Donations to the Liaquat National
Hospital Association, Karachi:
(147B) Such portion of the
total income of an assessee as is paid by him during the income year as
donation to the Liaquat National Hospital Association. Karachi:
Provided that the amount so
donated shall be included in computing the total income of the assessee:
Provided further that the
amount by which the tax payable by an assessee is reduced on account of the
exemption under this clause shall be equal to the sum which bears the same
proportion to the sum exempted from tax under this clause as the tax payable on
the total income of the assessee bears to the said total income.]
5[Income of subsidiary of Islamic
Development Bank:
(148) Any income derived by
any subsidiary of the Islamic Development bank wholly owned by it and set up in
Pakistan and engaged in owning and leasing of tankers.]
6* * * * * * *
7* * * * * * *
8* * * * * * *
9[(152) Any income derived by the Libyan
Arab Foreign Investment company, being dividend of the Pak-Libya Holding
Company.
1CIs. (142), (143), (144) and (145)
omitted by the Finance Act, 1992 (7 of 1992), s. 7.
2Cls. (146) and (146A) omitted by S.R.O.
1266(l)/90. dt.11-12-1990. see Gaz., of P. 1990, Ext. Pt, p. 2211, (iv.e./
1-7-1991).
3CIs. (I46B), (I46C), (147) and (I47A)
omitted by Act 7 of 1992. s. 7.
4CI. (I47B) ins. by S.R.O. 902(0/91. dt.
7-9-1991, see Gaz., of P., 1991, Ext., Pt. II, p. 2376-2377.
5Cl. (148) added by S.R.O. 166(0/82, dt.
15-2-1982, see Gaz., of P., 1982, Ext. Pt. II, p. 226.
6Cls. (149), (I49A), (149B), (I49C),
(149D), (149E), (149F), (149G), (149H) and (149J), omitted by Act 7 of 1992, s.
7.
7Cls. (149K) and (I49L), omitted by the
Finance Act 1996 (9 of 1996), s. 13, which was previously amended by various
S.R.O’s.
8CIs. (150), (151), (151 A), (151B) and
(151C), omitted by Act 7 of 1992, s. 7.
9CIs. (152) and (153), ins. by the S.R.O.
755(I)/82, dt. 2-8-1982, see Gaz., of P. 1982, Ext.. Pt. Hp. 1283.
(153) Any income derived by
the Government of Kingdom of Saudi Arabia being dividend of the Saudi Pak
Industrial and Agricultural Investment Company Limited.]
1[(154) Any income derived by the Pakistan
Council of Scientific and Industrial Research.]
2[(154A) Any income derived by Expo Centers
Limited from its investment in, operations of and any trade and business
activities conducted by it in World Trade Centre Complex (Complex), Port Qasim
for a period of seven years beginning on the first day of July, 1997.]
3* * * * * * *
4[Income of North South Roundtable :
(155A) Any income derived
by North South Roundtable.]
4* * * * * * *
5* * * * * * *
6* * * * * * *
7* * * * * * *
8* * * * * * *
9[Income from Monthly Income Savings
Account Scheme of the Directorate of National Savings :
(160) Any income derived by
a person from his investment in Monthly Income Savings Account Scheme of the
Directorate of National Savings, provided that the monthly instalment in an
account does not exceed Rs. 500.]
10* * * * * * *
1CI. (154) ins. by S.R.O. 1043(I)/82, dt.
18-10-1982, see Gaz., of P., 1982, Ext. Pt. II, p. 1613.
2New cl. (I54A) ins. by S.R.O. 227(I)/95,
dt. 21-3-95, see Gaz., of P., 1995, Ext. Pt. II, p. 405.
3CIs. (155) omitted by S.R.O.
l266(I)/90,dt.II-12-I990, see Gaz.,ofP. 1990, Ext. Pt. II, p. 2211, (w.e.f.
I-7-I99I).
4CI. (I55A) ins. by S.R.O. 954(I)/85, dt.
1-10-1985, see Gaz., of P., 1985, Ext., Pt. H, p. 1724.
5CIs. (155B), (155C) and (155D) omitted by
S.R.O. 1278(I)/9I, dt. 31-12-1991, see Gaz., of P., 1991, Ext. Pt. II, p. 2890.
6CIs. (156) and (157) omitted by S.R.O.
1266(I)/90, dt.l 1-12-1990.
7CI. (158) omitted by the Finance Act,
1992 (7 of 1992), s. 7.
8Cl. (159) omitted by S.R.O. I278(l)/91,
dt. 31-12-1991.
9CI. (160) ins. by S.R.O. 164(1)83, dt.
12-2-1983, see Gaz., of P., 1983, Ext. Pt. II, p. 209.
10CIs. (161) and (162) omitted by S.R.O.
I278(I)/9I, dt. 31-12-1991.
1* * * * * * *
2* * * * * * *
3* * * * * * *
Commonwealth Development
Corporation :
4* * * * * * *
5[( 167C) Any amount deemed to be income of
an employer for the purposes of tax on tax in respect of an expatriate employee
whose services are engaged as a technician, consultant or adviser in connection
with any project in Pakistan.]
6[7[Institution
of Engineers, Pakistan, Lahore]
(168) Any income derived by
the 8[Institution
of Engineers, Pakistan, Lahore]]
9* * * * * * *
10* * * * * * *
11[12* * * * * * *
(171) Any amount received
on encashment of any certificate issued in pursuance of the Foreign Exchange
Bearer Certificate Rules, 1985[:] 13]
1CIs. (163) and (164) omitted by S.R.O.
1266(I)/90, dt. 11 -12-1990.
2C1. (165) omitted by S.R.O. 130(I)/92,
dt. 15-2-1992, see Gaz., of P., 1992, Ext. Pt. II, p. 23 (w.e.f. 1-7-1992),
which was previously ins. by S.R.O. 464(I)/83, dt. 8-5-1983.
3CIs. (166) and (167) omitted by S.R.O.
1278(I)/91, dt. 31-12-1991, see Gaz., of P., 1991, Ext. Pt. II, p. 2890.
4Cl. (I67B) omitted by S.R.O. 447(I)/93,
dt. 19-5-1993, see Gaz., of P., 1993, Ext. Pt. II, p. 573.
5Cl. (167C) added by the Finance Act,
1992 (7 of 1992) s. 7.
6CI. (168) ins. by S.R.O. 6l9(I)/83, dt.
8-6-1983, see Gaz., of P., 1983, Ext. Pt. II, p. 846.
7Subs. by S.R.O. 107(I)/84. dt.
18-1-1984, see Gaz., of P., 1984, Ext., Pt. II, p. 318, for the Heading Pakistan
Institute of Engineers, Islamabad.
8Subs. ibid., for “Pakistan Institute of
Engineers, Islamabad.” •
9Cl. (169) omitted by S.R.O. I278(I)/91,
dt. 31-12-1991.
10C1. (169A) omitted by Act 7 of 1992, s.
7.
11CIs. (170 and 171) ins. by S.R.O.
654(I)/85, dt. 1-7-1985, see Gaz., of P., 1985, Ext. Pt. II, p. 1215.
12Cl. (170) omitted by S.R.O. 447(I)/93,
dt. 19-5-1993.
13Subs. by the Finance Act, 1995 (I of
1995) s. 9.
1[Provided that exemption under this clause
shall not be available in respect of certificates purchased on or after the
15th June, 1995.]
2[(171A) Any amount received on encashment
of any certificate issued in pursuance of the U.S Dollar Bearer Certificate
Rules 1991 [:]1
1[Provided that exemption under this clause
shall not be available in respect of certificates purchased on or after the 15
June, 1995.]
3* * * * * * *
4* * * * * * *
5[The International Irrigation
Management Institute, Pakistan :
(174) Any income derived by
the International Irrigation Management Institute (IIMI), Pakistan.]
6* * * * * * *
7[Private Sector Power Projects :
(176) Profits and gains
derived by an assessee from an electric power generation project set up in
Pakistan on or after the 1st day of July, 1988.
The exemption under this clause
shall apply to such project which is—
8[(a) owned and managed by a company formed for operating
the said project and registered under the Companies Ordinance, 1984 (XLVTI of
1984), and having its registered office in Pakistan.];
1Subs. and added by the Finance Act, 1995
(1 of 1995) s. 9.
2Cl. (17IA) ins. by S.R.O. 31 l(I)/91,
dt. 2-4-1991, see Gaz., of P., 1991, Ext., Pt. II p. 786.
3CI. (172) omitted by S.R.O. 1136(I)/9I,
dt. 7-11-1991, see Gaz., of P. 1991, Ext. Pt. II, p. 2711 (w.e.f. 1-7-1991).
4CI. (173) omitted by the Finance Act
1992(7 of 1992), s. 7.
5Cl. (174) ins. by S.R.O. 897(I)/88 dt.
10-10-1988, see Gaz., of P., 1988. Ext., Pt. II, pp. 2380.
6Cl. (175) omitted by S.R.O. 1278(I)/91,
dt. 31-12-1991, see Gaz., of P., 1991, Ext. Pt. II, p. 2890.
7New cl. (176) ins. by S.R.O. 1046(I)/88,
dt. 21-11-1988, see Gaz., of P., 1988, Ext. Pt. II, p. 2546.
8Sub. cl (a) added by S.R.O. I22(I)/95,
dt. 19-2-1995, see Gaz., of P., 1995, Ext., Pt. II. pp. 243-244, which was
previously, omitted by S.R.O. 13(I)/95, dt. 4-1-1995.
(b) not formed by the splitting up.or the
reconstruction or reconstitution, of a business already in existence or by
transfer to a new business of any machinery or plant used in a business which
was being carried on in Pakistan at any time before the commencement of the new
business; and –
(c) owned by a company fifty per cent of whose shares are not
held by the Federal Government or Provincial Government or a local authority or
which is not controlled by the Federal Government or a Provincial Government or
a local authority[:]1]
1[Provided that the condition laid down in
sub-clause (a) shall not apply to the Hub Power Company Limited.]
2[(177) Payments made on or after the first
day of July, 1991, for the supply of plant, equipment and machinery to Hub
Power company Limited by a non-resident being a foreign individual, company,
firm or association of persons.]
3* * * * * * *
4[Private Transmission Line Project:
(178) Profits and gains
derived by an assessee from transmission line project set up in Pakistan on or
after the 1st day of July, 1995.
The exemption under this
clause shall apply to such project which is—
(a) owned and managed by a company formed for operating the said
project and registered under the Companies Ordinance, 1984 (XLVII of 1984), and
having its registered office in Pakistan;
1Subs. and added by S.R.O 92(I)/96, dt.
1-2-1996, see Gaz., of P. 1996, Ext., Pt. II. p. 214.
2Cl. (177) subs, by S.R.O. l3(I)/95, dt”.
4-1-95, see Gaz., of R, 1995, Ext. Pt. II, p. 48, which was previously amended
by various enactments.
3Cl. (I77A) omitted by the Finance Act,
1992 (7 of 1992), s. 7.
4C1. (178) ins. by the Finance Act, 1995
(1 of 1995) s. 9 which was previously amended by various S.R.O’s.
(b) not formed by splitting up, reconstruction or reconstitution
of a business already in existence or by transfer to a new business of any
machinery or plant used in a business which was being carried on in Pakistan at
any time before the commencement of the new business; and
(c) owned by a company fifty per cent of whose shares are not
held by the Federal Government or Provincial Government or a local authority or
which is not controlled by the Federal Government or a Provincial Government or
a local authority.]
1[(179) Income from export of computer
software and its related services developed in Pakistan.]
2* * * * * * *
3* * * * * * *
4[(182) Any income referred to in Section
3.4 (a) of the Facilitation Agreement between the President of the Islamic
Republic of Pakistan and the assessee purchasing the Kot Addu power Station
from Pakistan Water and Power Development Authority for a period of ten years
from 28th June, 1996; provided, however, that the exemption under this clause
shall only be available subject to the business of the said assessee being
restricted to owing . and operating the Kot Addu power station.]
5(183) Any amount collected by the Civil
Aviation Authority upto the thirty-first December, 1998, on account of security
charges.]
PART II
REDUCTION IN TAX RATES
Incomes or classes of
income, or persons or classes of persons, enumerated below, shall be liable to
tax at such rates which are less than the rates specified in the First
Schedule, as are specified hereunder:
1Cl. (179) subs, by the Finance Act, 1997
(22 of 1997) s. 7, which was previously amended by various enactments.
2Cl (180) omitted by S.R.O. 1136(I)/91,
dt. 7-4-1991 see Gaz., of P. 1991, Ext. Pt. 11, p. 2711 (me./. 1-7-1991).
3CI. (181) omitted by the Finance Act
1996 (9 of 1996), s. 13, which was previously amended by various S.R.O’s.
4New cl. (182) added by S.R.O. 597(l)/96,
dt. 9-7-1996, .vee Gaz., of P., 1996, Ext., Pt. II. P. 1162.
5New cl. (183) added by the Finance Act,
1998 (3 of 1998), s. 5.
Rates of tax for companies engaged in exploration and extraction
of mineral deposits:
(1) In respect of such
profits and gains of such company as are referred to in clause (123) of Part I,
the rates of income tax and super tax as specified in the First Schedule and as
applicable to the said profits and gains of the said company accruing or
arising after the expiry of the period of five years referred to in the said
clause, shall be reduced by fifty per cent for a period of five years
immediately next following the exemption period.
Rate of tax in respect
of undertakings in the export Processing Zone:
(2) In the case of an
industrial undertaking set up in an area declared by the Federal Government to
be a ‘Zone’ within the meaning of the Export Processing Zones Authority
Ordinance, 1980 (IV of 1980), the income, profits and gains of such undertaking
accruing or arising after the expiry of the period of exemption under clause
(126) of Part I shall be charged to tax 1[for
a period of five years thereafter] at the rates equal to twenty-five per cent
of the rates specified in the First Schedule [:]2
2[Provided that nothing contained in this
clause shall apply in respect of undertakings whose period of exemption under
clause (126) of Part I will expire after the 30th June, 1997.]
1[Income from Letting out Pipeline for
Petroleum :
(3) Any income of persons
whose profits or gains from business are computed under the Fifth Schedule to
this Ordinance as is derived from letting out to other similar persons any
pipeline for the purpose of carriage of petroleum shall be charged to tax at
the same rate as is applicable to such persons in accordance with the
provisions of the said Schedule.]
3[(4) In the case of a resident being an
individual, unregistered firm, association of persons, Hindu undivided family
or artificial juridical person referred to in clause (32) of section 2, the
profit on Federal Investment Bonds issued under the Federal Investment Bonds
Rules, 1991, shall be liable to deduction of income tax under sub-section (2)
of section 50 at the rate of ten per cent of the amount of the said profit.]
4[(5) In the case of any person referred to
in clause (32) of section 2, being a resident, profit on the reinvestment or
the redeposit of Khaas Deposit Certificates or Khaas Deposit Accounts made
under the National Savings Scheme on or after the tenth day of November, 1991,
shall be liable to deduction of income tax under sub-section (2) of section 50
at the rate of ten per cent of the amount of the said profit.]
1Ins. by S.R.O. 768(I)/81, dated
14-7-1981, see Gaz., of R, 1981, Ext. Pt. II, p. 1783.
2Subs. and added by the Finance Act, 1996
(9 of 1996) s. 13.
3Added by S.R.O. 662(I)/91, dt.
16-7-1991, see Gaz., of P., 1991, Ext., Pt. II, p. 2009.
4Added by S.R.O. 1135(I)/9l, dt.
7-1I-I991 see Gaz., of P., 1991, Ext. Pt. II, p. 2717.
1[Rate of tax in respect of
Lahore-Islamabad Motorway Project:
(6) In the case of Daewoo
Corporation, Seoul, Korea (hereinafter referred to as the Contractor), payments
received in full or in part (including a payment by way of an advance) in
pursuance of the contract agreements made with the National Highway Authority
on the thirtieth day of December, 1991, for design and construction of
Lahore-Islamabad Motorway shall be deemed to be the income of the Contractor
and charged to tax at the rate of three per cent of such payment which shall
constitute final discharge of his tax liability under this Ordinance and the
Contractor shall not be required to file the return of total income under
section 55.]
2[(6A) Tax shall be collected at 3/4th of
the rate applicable under sub-section (5) of section 50 on the goods imported
under the Afghan Transit Trade Agreement, 1965, and subject to Notification S.
R. O. 368 (I)/95, dated the 2nd May, 1995.].
3* * * * * * *
4* * * * * * *
5[Rate in respect of certain Trusts
falling under clause (62) of Part I.
(9) In the case of Messrs
Fauji Foundation and Army Welfare Trust, so much of the income chargeable under
the head “Income from business or profession” as is not exempt under clause
(62) of Part I, shall be charged to tax at the rate of 20% of such income.]
1Ins. by S.R.O. 187(I)/92, dt. 14-3-1992,
see Gaz., of P., 1992, Ext. Pt. II, p. 362.
2 Cl. (6A) ins. by S.R.0.4l2 (l)/95,
dt. 23-5-1995, see Gaz. of P. 1995, Ext. II. P. 878.
3Cl. (7) omitted by the Finance Act, 1996
(9 of 1996) s. 13, which was previously amended by S.R.O. 757 (l) /92, dt.
13-8-1992.
4 CIs. (7 A) and (8) omitted by the
Finance Act, 1998 (3 of 1998), s. 5, which was previously amended, by S.R.O.
307(1) /93, dt. 22-4-1993.
5 Added by the Finance Act, 1993 (10
of 1993) s. 5.
1[Rate of tax in respect of O&M
contractors of private sector power projects:
(10) In the case of a
non-resident O&M Contractor payments, received in full or in part including
a payment by way of an advance, for the operation and maintenance of a private
sector power project 2[and
transmission line projects] approved by the Federal Government shall be deemed
to be the income of the said O&M Contractor and charged to tax at the rate
of five per cent of such payments for a period of three years beginning with
the date of commencement of 3[company’s
operations] which shall constitute the final discharge of tax liability by the
O&M Contractor under this Ordinance in respect of the said project.]
4[11) In the case of a non-resident, being
a company, rate of deduction of tax under sub-section (3) of section 50 on
dividends received from a company engaged exclusively in mining operations,
other than petroleum, shall be 7.5 per cent of the gross amount of dividend.]
5[12) The rates of tax as specified in
clause (b) and clause (c) of paragraph D of Part V of the First Schedule shall
be reduced to 7.5% in case of dividends declared or distributed by purchaser of
a power project privatized by WAPDA.]
6[13) In case of consortium of M/s. STFA
Construction Company of Turkey and M/s. JDN of Belgium (hereinafter referred to
as the contractor) all payments received in pursuance of the contract agreement
No. CEN-126/93, made with the Ormara Naval harbour Project Board, on the
fourteenth day of June, 1993, for the construction of a Naval Harbour at Ormara
(including off-shore and land development works), chargeable to tax in any
assessment year, shall be deemed to be the income of the contractor and charged
to tax at the rate of three per cent which shall constitute final discharge of
contractor’s tax liability under this Ordinance.]
7[(14) In the case of any person engaged in
the business of shipping, a presumptive income tax of an amount equivalent to
one US $ per tonne of Gross Registered Tonnage per annum shall be charged on
ships, including bareboats, registered under Pakistan flag. In addition a flat
charter capacity tax of an amount equivalent to fifteen US cents per tonnes of
Gross Registered Tonnage per annum shall be charged per charter if the vessel
is chartered.
Explanation.—For the purposes of this clause,
‘equivalent amount’ means the rupee equivalent of a US dollar according to the
exchange rate prevalent on the first day of December in the case of a company
and the first day of September in other cases in the relevant assessment year.]
1New cl. (10) added by S.R.O. 175(l)/95,
dt. 1-3-1995, see Gaz. of p; 1995, Ext.. Pt. II. p. 340.
2 Ins, by the Finance Act, 1995 (1
of 1995) s. 9.
3Subs. by S.R.O. 333(I)/95, dt.
18-4-1995, see Gaz. of p. 1995. Ext., Pt. II. p. 725.
4 New cl. (11) added by S.R.O.
115I(l)/95, dt. 5-11-1995, see Gaz. of p. 1995, Ext. Pt. II. p. 2673.
5 New cl. (12) added by the Finance
Act, 1996, (9 of 1996), s. 13.
6 New cl. (13) added by S.R.O.
1313(I)/97, dt. 20-12-1997, see Gaz, of p. 1997, Ext., Pt. II. pp. 3389-3390.
7 New cl. (14) added by the Finance
Act, 1998 (3 of 1998) s. 5,
PART III
REDUCTION IN TAX LIABILITY
Incomes, or classes of
income, or persons or classes of persons, enumerated below, shall be allowed
reduction in tax liability to the extent and subject to such conditions as are
specified hereunder:—
Limit on the income tax
payable:
(1) Where any person for
any year—
(a) is liable to income tax and also to the wealth-tax payable
under the Wealth-tax Act, 1963 (XV of 1963); and
(b) his taxable income under this Ordinance exceeds one hundred
rupees; and
(c) the aggregate amount of income tax and wealth-tax payable by
him exceeds seventy-five per cent of his total income.
the income tax payable by
him shall be reduced by the amount by which the said aggregate amount exceeds
seventy-five per cent of his total income.
Reduction in tax in
consequence of devaluation or revaluation of rupee:
(2) The amount of tax
payable, in a year in which the rupee is revalued or devalued, by an assessee
whose profits or gains are computed in accordance with the rules contained in
the Fifth Schedule to this Ordinance and who had entered with the Government
into an agreement which provides for such reduction, shall be reduced to the
amount that would be payable in the absence of the revaluation or devaluation
of the rupee.
1* * * * * * *
2*
* * * * * *
3*
* * * * * *
4[(11) Where any company engaged in the
business of distribution of cigarettes manufactured in Pakistan is required to
pay minimum tax on the amount representing its turnover under section 80D, the
amount of tax payable under the said section shall be reduced by eighty per
cent.]
5* * * * * * *
6*
* * * * * *
7*
* * * * * *
1Cl. (3) omitted by the Finance Act, 1998
(3 of 1998), s. 5.
2 Cls. (4), (5), (6), (7), (8) and
(9) omitted by the Finance Act, 1997 (22 of 1997) s. 7, which was previously
amended by various S.R.O’s.
3 Cl. (10) omitted by Act, 3 of 1998
s.5, which was previously ins. by S.R.O. 856 (l) /90, dt. 28-8-1991.
4 Ins. by S.R.O. 1092(1)/9I, dt.
24-10-1991, see Gaz., of P., 1991, Ext. Pt. II, p. 2667.
5 CL (12) omitted by Act, 22 of 1997
s. 7, which was previously amended by various S.R.O’s.
6 Cl. (13) omitted ibid., s. 7.
7CIs. (14) and (15) omitted by the
Finance supplementary (Amdt.) Act, 1997 (4 of 1997), s. 4, which was previously
amended by various enactments.
PART IV
EXEMPTION FROM SPECIFIC PROVISIONS
Incomes, or classes of
income, or persons or classes of persons, enumerated below, shall be exempt
from the operation of such provisions of this Ordinance, subject to such
conditions and to the extent, as are specified hereunder :—
Carry forward of losses
of undertakings in Export Processing Zone:
(1) In the case of losses
referred to in section 35 in respect of an industrial undertaking set up in an
area declared by the Federal Government to be a ‘Zone’ within the meaning of
Export Processing Zones Authority Ordinance, 1980 (IV of 1980), the period of
six assessment years specified in the said section shall not apply.
Certain payments made by
private companies not to attract deduction of tax at source:
1[(2) The provisions of section 80D shall
not apply to National Investment (Unit) Trust or a Mutual Fund established by
the Investment Corporation of Pakistan or an investment Company registered
under the investment companies and Investment Advisors Rules, 1971 or any other
company in respect of turnover representing transactions in shares, or
securities listed on a registered stock exchange.]
2[Allowance of perquisites paid by
certain corporations:
(3) The provisions of
clause (i) of section 24 shall not apply to any expenditure incurred by a
banking company or a financial institution 3[owned
and] controlled by the Federal Government on the provision of perquisites,
allowances or other benefits to any employee in pursuance of any law.]
4[Certain provisions of the Ordinance not
to apply in the case of Fauji Fertilizer Company Limited:
4* * * * * * *
5[(5) The provisions of section 13, Chapter
XI or Chapter XII shall not apply in respect of any amount invested in the
acquisition of Special National Fund Bonds issued under the Special National
Fund Bonds Rules, 1985:
(6) The provisions of
section 13, Chapter XI or Chapter XII shall not apply in respect of any amount
invested in the acquisition of Foreign Exchange Bearer Certificates issued
under the Foreign Exchange Bearer Certificates Rules, 1985.]
6[(6A) The provisions of section 13,
Chapter XI or Chapter XII shall not apply in respect of any amount of foreign
exchange deposited in a private Foreign Currency account held with an
authorised bank in Pakistan in accordance with the Foreign Currency Accounts
Scheme introduced by the State Bank of Pakistan.]
7[(6B) The provisions of section 13,
Chapter XI or Chapter XII shall not apply in respect of any amount invested in
the acquisition of U.S. Dollar Bearer Certificates issued under the U.S. Dollar
Bearer Certificates Rules, 1991.]
1 Cl. (2) subs, by the Finance Act,
1997 (22 of 1997) s. 7, which was previously amended by various enactments.
2 Ins. by S.R.0.940(I)/8I, dt.
20-8-1981, .see Gaz. of P. 1981 Ext. Pt. II P. 1992.
3 Subs, by the Finance Act, 1995 (I
of 1995) s. 9, for “owned or”.
4 Cl. (4) omitted by the Finance
Act, 1998 (3 of 1998) s. 5, which was previously ins. by S.R.O. 607(I)/82, dt.
27-6-1982.
5 Cls. (5) and (6) ins. by S.R.O.
654(I)/85, dt. I -7-1985, see Gaz of P. 1985. Ext. Pt. II p. 1214.
6 CI. (6A) ins. by S.R.O. 2I9(1)/91,
dt. 16-3-1991, see Gaz. of P. 1991. Ext. Pt. II p. 651.
7 New cl. (6B) ins. by S.R.O.
311(I)/9I, dt. 2-4-1991, see Gaz. of P. 1991, Ext. Pt. II p. 786.
1[(6C) The provisions of section 13 or
Chapter XI or Chapter XII shall not apply in respect of any amount invested in
the acquisition of “Three-Years Foreign Currency Bearer Certificates issued
under the Foreign Currency Bearer Certificate Rules, 1997.]
2[(6D) The provision of section 13 or
section 65 or Chapters XI and XII shall not apply in respect of rupees
with-drawn or assets created out of such withdrawal in rupees from private
foreign currency accounts, or encashment of Foreign Exchange- Bearer
Certificates, U.S. Dollar Bearer Certificates and Foreign Currency Bearer
Certificates.]
3[(6E) The provisions of section 13 or
Chapter XI or Chapter XII shall not apply in respect of any amount invested in
acquisition of ownership or management and control of any state owned enterprise
privatized by the Government.
(6F) The provisions of
section 13 or Chapter XI or Chapter XII shall not apply in respect of any
amount invested in purchasing of any land or any other assets sold through
public auction by the Federal Government or a Provincial Government or a body
established or controlled by such Government.]
4[(6FA) The provisions of section 13 or
Chapter XI or Chapter XII of the Income Tax Ordinance, 1979 (XXXI of 1979),
shall not apply in respect of any amount invested in purchase of any plots of
land sold by the Capital Development Authority, Islamabad through public
auctions conducted on the 16th, 17th, 23rd and 26th days of February, 1998.]
5[6G) The provisions of section 13 or
Chapter XI or Chapter XII shall not apply in respect of any amount invested by
a sponsor or an original allottee in the purchase of shares of a company owning
and managing an industrial under-taking specified in rule 5A of the Third Schedule.]
6[6H) The provisions of section 13 or
Chapter XI or Chapter XII shall not apply in respect of any amount invested in
the purchase of assets auctioned or sold as a consequence of a Court order or
decree in a case filed by a banking company or a DFI whose management or
control vests in the Federal or a Provincial Government.]
1 New cl. (6C) ins. by S.R.O. 11
I(l)/98, dt. 19-2-1998, Ext. Pt. II p. 220.
2 Subs, by S.R.O. 871(I)/98, dt. 5-8-1998,
see Gaz of P. 1998, Ext. Pt. II PP. 1917-1918 which was previously ins. by
S.R.O. 5 !6(I)/98, dt. 5-6-1998.
3 New cl. (6E) and 6F) ins. by the
Finance Act, 1998 (3 of 1998) s. 5.
4 New cl. (6FA) ins. by S.R.O.
98I(I)/98 dt. 14-9-1998, see Gaz. of P. 1998, Ext. Pt. II p. 2123.
5 New cl. (6G) ins. by Act, 3 of
1998 s. 5.
6 New cl. (6H) Ins. by S.R.O.
829(I)/98, dt. 22-7-1998, see Gaz of P. 1998, Ext. Pt. II. p. 1811.
1[(6HA) The provisions of section 13 and
Chapters XI and XII shall not apply in respect of any amount invested by a
Foreign Currency Account holder in the purchase of Special U.S. Dollar Bonds,
issued under the the Special U.S. Dollar Bond Rules, 1998.]
2[(7) The provisions of 3*
* * the first proviso to sub-section (1) of section 13 and section 62A shall
not apply in respect of any person.]
4[(7A) The provisions of section 13,
Chapter XI and Chapter XIII of this Ordinance shall not apply in respect of any
amount as is invested in the purchase of a ship, by an assessee being a
Pakistani and resident in Pakistan; provided that the ship has been imported
and registered in Pakistan or will be imported and registered upto the 30th day
of June, 2000.]
5* * * * * * *
6[(8) The provisions of sub-section (7) of
section 50 shall not apply in respect of any person.]
7[(9) The provisions of section 80C in so
far as they relate to payments on account of the supply of goods on which tax
is deductible under sub-section (4) of section 50 shall not apply in respect of
any person, being a manufacturer of such goods, 8[unless
he opts for] the presumptive tax regime :
9[Provided that a declaration of option is
furnished in writing within three months of the commencement of the income year
and such declaration shall be irrevocable and shall remain in force for three
years.]
Provided further that
nothing contained in this clause shall apply to any manufacturer of goods for
which special rates of deduction of tax specified under clause (c) of
sub-section (4) of section 50.]
1New cl. (6HA) ins. by S.R.O. 871(1)798,
dt. 5-8-1998.
2 New cl. (7) added by S.R.O.
838(l)/87, dt. 26-10-1987, see Gaz. of P. 1987, Ext. Pt. II. p. 639.
3 Certain words omitted by the
Finance Act, 1990 (7 of 1990) s. 7.
4 New cl. (7A) ins. by S.R.O.
877(I)/95, dt. 28-8-1995, see Gaz. of P. 1995, Ext. Pt. II. p. 1971.
5 CIs. (8) and (8A) omitted by the
Finance Act, 1995, (1 of 1995) s. 9. which was previously amended by various
enactments.
6 New cl. (8) added by S.R.O.
I399(I)/96, dt. 24-12-1996, see Gaz. of P. 1996, Ext. Pt. II p. 2746.
7 New cl. (9) ins. by S.R.O.
829(I)/91, dt. 24-8-1991 see Gaz. of P. 1991. Ext. Pt. II p. 2278.
8 Subs, by the Finance Act 1996 (9
of 1996) s. 13 for “who opts out of.
9Proviso subs. by Act 3 of 1998 s. 5, for
first proviso.
1[(9A) The provisions of section 80C shall
not apply in respect of a non-resident person 2*
* * 3[unless
he opts for] the presumptive tax regime:
4[Provided that a declaration of option is
furnished in writing within three months of the commencement of the income year
and such declaration shall be irrevocable and shall remain in force for three
year.]
5[(9B) The provisions of section 80C in so
far as they relate to the payments on account of the supply of goods on which
tax is deductible under sub-section (4) of section 50 shall not apply to any
person, being an importer of goods, from whom tax is collectable under
sub-section (5) of section 50 if supplies are made by the same importer under
the same name and title and he opts out of the presumptive tax regime:
Provided that a declaration
of final and irrevocable option is furnished in writing alongwith the return of
total income under section 55:
Provided further that
nothing contained in this clause shall apply to any manufacturer of goods for
which special rates of deduction of tax are specified under clause (c) of
sub-section (4) of section 50:
Provided also that the
aggregate overall tax liability in respect of such goods shall not be less than
four per cent of the value of goods supplied.]
6* * * * * * *
7[(10B) The provisions of sub-section (7D)
of section 50 shall not apply to any payment made by way of profit or interest
to an individual, unregistered firm, association of persons, Hindu company, or
rated and listed Term Finance person, other than a company, on rated and listed
Term Finance Certificates being the instruments of redeemable capital under the
Companies Ordinance, 1984, issued on or after the 14th day of September, 1997.]
1New cl. (9A) ins. by the Finance Act,
1994 (12 of 1994), s. 7.
2Certain words omitted by the Finance
Act, 1996 (9 of 1996) s. 13.
3Subs. ibid, for “who opts out of.”
4Subs. by the Finance Act, 1998 (3 of
1998) s. 5. for original proviso.
5New cl. (9B) added by Act 9 of 1996 s.
13.
6Cl. (10) omitted by the Finance Act,
1995 (I of 1995) s. 9.
7C1. (10B) subs, by S.R.O. 171(I)/98. dt.
7-3-1998. see Gaz. of 1998 Ext. Pt 11 p. 321.
1[(10C) The provisions of sub-section (2)
of section 50 shall not apply to any payment made by way of interest earned by
banks on Foreign Currency Bearer Certificates issued under the Three-Years
Foreign Currency Bearer Certificates Rules, 1997, discounted by them and help
in their own portfolios.]
2* * * * * * *
3[(12) The provisions of clause (30) of
section 2 in so far as these relate to the application of rate of tax under
sub-paragraph (3) of paragraph A of Part IV of the First Schedule shall not
apply to an individual being—
(i) a Government servant staying abroad on official assignment
or with the permission of the Federal Government or Provincial Government; and
(ii) a Pakistani student, teacher or scholar staying
abroad for studies or research * * *4
5[(iii) a Pakistani national who is not resident in Pakistan
in any year and not earning any income abroad.]
6* * * * * * *
7[(14) The provisions of section 80D, in so
far as they relate to turnover on account of sale of petroleum and petroleum
products shall not apply to petroleum dealers, notwithstanding their status as
a company, a registered firm or an individual, engaged in retail sale of
petroleum and petroleum products through petrol pumps for the purposes of
assessment of their income and determination of tax thereon:
Provided that this exemption
shall not apply to the sale of petroleum and petroleum products through petrol
pumps which are directly operated or managed by companies and registered firms
engaged in distribution of petroleum and petroleum products.
Explanation.—For the removal of doubt it is declared
that the companies and registered firms engaged in distribution of petroleum
and petroleum products other than through petrol pumps shall not be entitled to
the benefits of this exemption.]
1 New cl. (10C) ins. by S.R.O. II
l(l)/98, dated 19-2-1998, see Gaz. of P. 1998 Ext. Pt. II P. 221.
2 Cl. (11) omitted by the Finance
Act. 1995 (1 of 1995) s.9.
3 New Cl. (12) ins. by S.R.O. 917
(l)/92, dt. 21-9-1992, see Gaz. of p. 1992. Ext. Pt. II. p. 1684.
4 Certain words omitted by the
Finance Act, 1994 (12 of 1994), s. 7.
5 New sub. cl. (iii) added ibid.
6 Cl. (13) omitted by Act, 1 of
1995, s 9, which was previously amended by various enactments.
7 New cl. (14) added by S.R.O.
622(I)/94, dt. 23-6-1994, see Gaz. of P. 1994, Ext. Pt. II pp. 969-970.
1[(15) the provisions of sub-sections (4)
and (5) of section 50 and section 80C shall not apply to tractors imported and
supplied by the Agricultural Development Bank of Pakistan or by the importers
authorized by the Ministry of Food, Agriculture and Livestock or the
Agriculture Development Bank of Pakistan under the Awami Tractors Scheme.]
2[(16) A company registered and authorised
by the Federal Government to import gold and silver shall be liable to pay tax
on import of gold at the rate of two rupees per eleven grams six hundred and
sixty-four milligrams and five rupees per kilogram in the case of silver in
accordance with the provisions of sub-section (5) of section 50 and such
payment of tax shall be deemed to be full and final liability of tax in
respect of income accruing from such import including liability of tax under
sections 80C and 80D.
3[(17) The provisions of sub-section (5) of
section 50 shall not apply to goods or classes of goods imported by contractors
and subcontractors engaged in the execution of power project under the
agreement between the Islamic Republic of Pakistan and Hub Power Company
Limited.
(18) The provisions of
section 80D shall not apply to Hub Power Company Limited so far as they relate
to its receipts on account of sale of electricity.
4[(19) The provisions of section 50 read
with sections 80C and 80CC of the Income Tax Ordinance, 1979, shall not apply
to Expo Centers Limited in respect of income for the period of exemption under
clause (154A) of Part I of this Schedule.]
1 New cl. (15) added by
S.R.0.1122(0/94, dt. 20-11-1994, see Gaz. of P. 1994. Ext. Pt. II, p. 2151.
2 New cl. (16) added by S.R.O.
88(I)/95, dt. 31-1-1995, see Gaz., of P., 1995, Ext. Pt., II, p. 160.
3 New cls. (17) and (18) added by
S.R.O. 122 (I)/95, dt. 19-2-1995, see Gaz. of P., 1995, Ext. Pt. II, pp.
243—244.
4 New cl. (19) added by S.R.O.
227(I)/95, dt. 21-3-1995, see Gaz. of P. 1995, Ext. Pt. II pp. 405-406.
1[(20) The provisions of section 80D shall
not apply to companies, qualifying for exemption under clause (176)2[and
(178)] of Part-I of this Schedule, in respect of receipts from sale of
electricity.]
3[(21) The provisions of section 50 and
section 80D shall not apply to the institutions of the Agha Khan Development
Network (Pakistan) listed in Schedule 1 of the Accord and Protocol dated
November 13, 1994, executed between the Government of the Islamic Republic of
Pakistan and Agha Khan Development Network:
Provided that such
institutions shall continue to collect and deduct tax under section 50 from
others persons, wherever required thereunder.]
4[Provided further that in respect of
application of section 80D, this clause shall take effect from the 17th
September, 1992.]
5[(22) The provisions of sub-section (5) of
section 50 shall not apply to vehicles imported under the Yellow-Cab Scheme and
sold to serving and retired civil and armed forces personnel.]
6[(23) The provisions of section 80D, shall
not apply to local authorities, qualifying for exemption under clause (88) and
other than corporate, Government or semi-Governmental bodies, not otherwise
liable to income tax:
Provided that nothing
contained in this clause shall be construed to authorize any refund of tax
already paid or the collection of any outstanding demand created under the said
section.
(24) The provisions of
sections 56, 65 or section 66A shall not apply to a registered person under the
Sales Tax Act, 1990, deriving income under the head “business or profession”,
in respect of an assessment year prior no 7[1999-2000],
on account of suppression or non-declaration of sales detected on the basis of
sales tax returns filed by such person.
1New cl. (20) added by S.R.O. 411(0/95,
dt. 23-5-1995, see Gaz. of P. 1995, Ext. Pt. II p. 878.
2 Ins. by the Finance Act, 1995, (1
of 1995) s. 9.
3 New cl. (21) added by S.R.O.
433(I)/95, dt. 29-5-1995, see Gaz. of P. 1995, Ext. Pt. II pp. 929—931.
4 Proviso added by S.R.O. 1173(1)96,
dt. 8-10-1996, see Gaz., of P. 1996. Ext., PL, II, p. 2393.
5 New cl. (22) added by S.R.O.
1158(I)/95, dt. 10-12-1995, see Gaz., of P., 1995, Ext., Pt. II. p. 2678.
6 New cls. (23), (24), (25) and (26)
added by the Finance Act, 1996 (9 of 1996) s. 13.
7 Subs. by the Finance Act, 1998, (3
of 1998), s. 5.
1* * * * * * *
(26) An expatriate individual,
who by virtue of his stay in Pakistan in connection with his employment becomes
a resident, shall not be liable to tax in respect of income accruing or arising
to him outside Pakistan other than the income derived from a business
controlled in or a profession or vocation set up in Pakistan or unless it is
brought into or received in Pakistan by him during such income year.]
2[(27) The provisions of section 80D shall
not apply to the assessee exempted from tax under clause (182) of Part I of
this Schedule for the period the said assessee continues to be entitled to the
benefit of the exemption under that clause.]
3[(28) In the case of companies engaged in
the manufacture of fertilizers, the provisions of clause (c) of sub-rule (1) of
rule 5 of the Third Schedule shall apply with effect from the income year
commencing on or after the 1st day of July, 1996.]
4[(29) The provisions of section 80D shall
not apply to Pakistan Red Crescent Society.]
5[(30) The provisions of sub-sections (2)
and (7D) of section 50 and 80D shall not apply to non residents, (excluding
local branches or subsidiaries or offices of foreign banks, companies
associations of persons or any other person operating in Pakistan), in respect
of their receipts from Pak rupees denominated Government and corporate
securities and redeemable capital, as defined in the Companies Ordinance, 1984
(XLVII of 1984), listed on a registered stock exchange, where the investments
are made exclusively from foreign exchange remitted into Pakistan through a
Special Convertible Rupee Account maintained with a bank in Pakistan.]
6[(31) The provisions of section 13,
Chapter XI or Chapter XII shall not apply in respect of any amount deposited in
the Qarz-e-Hasna Scheme under the Prime Minister’s Fund for National Debt
Retirement.]
1 Cl. (25) omitted by the Finance
Act, 1998 (3 of 1998), s. 5.
2 New cl. (27) added by S.R.O.
596(I)/96, dt. 9-7-1996, see Gaz., of P., 1996, Ext., Pt. II, p. 1162.
3 New cl. (28) ins. by S.R.O.
653(0/96, dt. 31-7-1996, see. Gaz., of P., 1996, Ext., Pt. 11 pp. 1230-1231.
4 New cl. (29) added by S.R.O.
1207(f)/96, dt. 16-10-1996, see Gaz., of P., 1996, Ext., Pt. II p. 2447.
5 New cl. (30) added by the Finance
Act, 1997 (22 of 1997) s. 7.
6 New cl. (31) ins. ibid.
1[(31 A) The provisions of section 13,
Chapter XI or Chapter XII shall not apply in respect of any amount donated to
the National Self Reliance Fund.]
2[(32) The Provisions of section 80D shall
not apply to the companies specified in entries (115B) and (115C) of Part-I of
this Schedule, for the assessment years 1998-99, 1999-2000 and, 2000-2001.]
3[(33) The provisions of sub-section (4) of
section 50, in so far as they relate to the obligation of a registered firm to
deduct tax, shall not apply to a registered firm whose capital (total of
closing balances of capital accounts of partners) as per the balance sheet in
respect of the latest assessment year is less than one million rupees :
Provided that, this exemption shall cease to be applicable to a registered firm
if, at the end of any income year, its capital exceeds the aforementioned
amount.]
4[(34) The provisions of clause (ff) of
section 24 shall not apply in respect of payments made on account of—
(a) transactions which do not exceed five thousand rupees;
(b) any amount credited by. direct transfer of funds to the
assessee’s employee’s bank account for re-imbursement of expenses - incurred on
behalf of such assessee;
(c) freight charges or passenger fare to an airline or railways
or a goods carriage company; and
(d) discharge of a statutory obligation like payment of duties,
taxes, octroi, export tax, fines, fees, cesses or levies.
(35) Notwithstanding
anything contained in clause (fff) of section 24, the provisions of the said
clause shall not apply to any salaries except salary exceeding Rs. 5,000 per
month which is not paid through a crossed cheque or by direct transfer of funds
to such employee’s account.
(36) The provisions of
sub-section (7F) of section 50 shall not apply where the subscriber is a
non-taxable charitable institution.]
1New cl. (31 A) ins. by S.R.O. 529(I)/98,
dt. 9-6-1998, see Gaz., of P., 1998, Ext., Pt. II, pp. 1215-1216.
2 New cl. (32) added by S.R.O.
169(I)/98, dt. 16-3-1998, see Gaz., of P., 1998, Ext., Pt. II, pp. 318-319.
3 New cl. (33) added by the Finance
Act, 1998 (3 of 1998), s. 5.
4New cls. (34), (35) and (36) added by
S.R.O. 848(I)/98, dt. 25-7-1998, see Gaz. of P. 1998. Ext., Pt. II p. 1861.
1[2[(37)]
The provisions of sub-section (4) of section 50 shall not apply to an indirect
exporter as defined in the No Duty No Drawback Rules, 1998, issued under
Notification No. S.R.O. 844(I)/98, dated the 23rd July, 1998.
2[(38)] The provisions of sub-section (5)
of section 50 shall not apply to goods imported by direct and indirect
exporters covered under:—
(i) the Manufacturing in Bond Rules, 1997, issued under
Notification No. S.R.O. 1140(I)/97, dated the 6th November, 1997.]
3[(39) The provisions of sub-section (2) of
section 50 shall not apply in respect of any amount paid as interest or profit
on Special U.S. Dollar Bonds issued under the Special U.S. Dollar Bonds Rules,
1998.
(40) The provisions of
sub-section (2A) and (7D) of section 50 shall not apply to Pak rupee accounts
or certificates referred to in clause (78E) of Part I of this Schedule.]
4[(41) The provisions of sub-section (7A)
of section 50 of the Income Tax Ordinance, 1979, shall not apply to the assets
auctioned by Provincial Privatization Boards.]
5[(41A) The provisions of sub-section (7A)
of section 50 of the Income Tax Ordinance, 1979, shall not apply to the sale of
surplus land made by Pakistan Railway through public auction.]
6[(41B) The provisions of sub-section (7A)
of section 50 of the Income Tax Ordinance, 1979, shall not apply to the
Privatization Commission in respect of sale of public sector units, by public
auction made on or after the 22nd day of January, 1991.]
7[(42) The provisions of sub-section (1) of
section 50 of the Ordinance shall not apply, to an employer in so far as they
relate to deduction of the amount of surcharge payable under clause (d) of
paragraph B of Part HI of the First Schedule to the Ordinance, in respect of
income for the income year 1998-99.
1 New cls. (34) and (35) added by
S.R.O. 854(I)/98, dt. 28-7-1998, see Gaz., of P., 1998, Ext., Pt. II p. 1871.
2 Subs, by S.R.O. 883(I)/98. dt.
6-8-1998, see Gaz., of P., 1998, Ext., Pt. II p. 1959, for cls. (34) and (35).
3 New cls. (39) and (40) added by
S.R.O. 871(I)/98, dt. 5-8-1998, see Gaz., of P., 1998, Ext., Pt. II pp.
1917-1918.
4 New cl. (41) added by S.R.O.
907(I)/98, dt. 17-8-1998, see Gaz., of P., 1998, Ext., Pt. II p. 1999.
5 New cl. (41 A) ins. by S.R.O.
1333(I)/98, dt. 30-11-1998, see Gaz. of P., 1998. Ext., Pt. II p. 2443.
6 New cl. (41B) ins. by S.R.O.
1385(I)/98, dt. 21-12-1998, see Gaz., of P., 1998, Ext., Pt. II p. 2335.
7 New Cls. (42) and (43) added by
S.R.O. 937(I)/98, dt. 29-8-1998, see Gaz., of P., 1998, Ext., Pt. II pp.
2031-2032.
(43) The provisions of
section 54 and section 88 shall not apply, in respect of income chargeable to
tax under the head “Salary”, in so far as they relate to the payment of surcharge
payable under clause (d) of paragraph B of Part DI of the First Schedule to the
Ordinance, provided that the employer deducts and pays such amount in monthly
instalments by the 31st day of May, 1999.]
1[(44) The provisions of sub-section (3A)
of section 47 shall not apply in case of donations made to Agha Khan Hospital
and Medical College, Karachi:
Provided that this clause
shall take effect from the l3th day of June, 1996.]
2[(45) The provisions of sub-section (6) of
section 50 of the Income Tax Ordinance, 1979, shall not apply to a person who
produces a certificate from the Commissioner of Income Tax concerned to the
effect that his income during the income year is exempt from tax under the
Income Tax Ordinance, 1979.]
3[(46) The provisions of sub-section (7B)
of section 50 of the Income Tax Ordinance, 1979, shall not apply to a person
who produces a certificate from the Commissioner of Income Tax concerned to the
effect that his income during the income year is exempt from tax under the
Income Tax Ordinance, 1979.]
4[(47) The provisions of sub-section (7D)
of section 50 of the Income Tax Ordinance, 1979, shall not apply to a person
who produces a certificate from the Commissioner of Income Tax concerned to the
effect that his income during the income year is exempt from tax under the
Income Tax Ordinance, 1979.]
5[(48) The provisions of sub-section (7E)
of section 50 of the Income Tax Ordinance, 1979, shall not apply to a person
who produces a certificate from the Commissioner of Income Tax concerned to the
effect that his income during the income year is exempt from tax under the
Income Tax Ordinance, 1979.]
1New cl. (44) added by S.R.O. 94l (I)/98,
dt. 1-9-1998, see Gaz., of P., 1998, Ext.,Pt. II p. 2037.
2 New cl. (45) added by S.R.O. 1264
(IV98, dt. 2-11-1998, see Gaz., of P., 1998, Ext., Pt. II p. 2361.
3New cl. (46) added by S.R.O. I265
(I)/98, dt. 4-11-1998, see Gaz., of P., 1998, Ext., Pt. II p. 2362.
4 New cl. (47) added by S.R.O. I266
(I)/98, dt. 4-11-1998, see Gaz., of P., 1998, Ext.Pt. II p. 2362.
5 New cl. (48) added by S.R.O. I267
(I)/98, dt. 4-11-1998, see Gaz., of P., 1998, Ext., Pt. II p. 2362
1[(49) The provisions of sub-section (7F)
of section 50 of the Income Tax Ordinance, J979, shall not apply to a person
who produces a certificate from the Commissioner of Income Tax concerned to the
effect that his income during the income year is exempt from tax under the
Income Tax Ordinance, 1979.]
2[(50) The provisions of sub-sections (.1)
and (3A) of section 50 of Income Tax Ordinance, 1979, shall not apply to M/s.
Crescent Industrial chemicals Limited and M/s. Siddiq Sons Tin Plate Limited in
respect of salaries of expatriate employees, royalty or technological and
know-how fee for technical assistance for projects located in Special
Industrial Zone, Windher, Balochistan, who have established L/Cs prior to the
31st January, 1996.]
3[(51) The provisions of sections 80C shall
not apply in so far as they relate to income from import and supply of palm oil
or edible oil imported by Trading Corporation of Pakistan from Malaysia under
IDB Export Financing Scheme to the extent of U.S. $ 44 million and supplied to
manufacturers of oil or ghee for their own consumption according to their rated
capacity on no profit no loss basis.
(52) The provisions of
sub-section (4) of section 50 shall not apply in respect of supply of palm oil
or edible oil by trading Corporation of Pakistan imported from Malaysia under
IDB Export Financing Scheme to the extent of U.S. $ 44 million to manufacturers
of oil or ghee for their own manufacturing allocated to them on the basis of
their rated capacity.
(53) The provisions of
sub-section (5) of section 50 shall not apply in respect of palm oil or edible
oil imported by trading Corporation of Pakistan imported from Malaysia under
IDB Export Financing Scheme to the extent of U.S. $ 44 million, provided that
entire oil is allocated to manufacturers of oil/ghee for their own manufacturing.]
1New cl. (49) added by S.R.O. 1268(I)/98,
dt. 4-11-1998, see Gaz., of P., 1998. Ext., Pt. II p. 2363.
2 New cl. (50) added by S.R.O.
l308(I)/98, dt. 20-11-1998, see Gaz., of P., 1998, Ext., Pt. II p. 2415.
3 New cls. (51), (52) and (53) added
by S.R.O. 1370(I)/98, dt. 17-12-1998. see Gaz. of P., 1998, Ext., Pt. II pp.
2507-2508.
THE THIRD SCHEDULE
RULES FOR THE COMPUTATION OF DEPRECIATION
ALLOWANCE
(See Section 23)
1. Allowances for
depreciation.— 1[(1)
Where, in any income year, any building, machinery, plant of furniture owned by
an assessee is used for purposes of any business or profession carried on by
him, or in any income year commencing on or after the first day of July, 1982,
any machinery or plant is given on lease by the assessee, being a schedule
bank, a financial institution 2[or
such modaraba or leasing company as is] approved by the Central Board of
Revenue for purposes of this Schedule, on such conditions as may be specified,
an allowance for depreciation shall be made in computing the profits and gains
of the business or profession of the assessee in the manner hereinafter
provided.]
3[(1A) The provisions of sub-rule (1) shall
in the like manner apply to a building given on lease in any income year
commencing on or after the first day of July, 1986, provided that the said
building is used by the lessee for the purposes of his business or
profession.];
(2) Where any such
building, machinery, plant or furniture is not wholly used for the purposes of
the business or profession, the allowance under sub-rule (1) shall be
restricted to the fair proportional part of the amount which would be
admissible if such building, machinery, plant or furniture were wholly so used.
(3) No allowance under this
rule shall be made unless—
(a) 4[at
the time of filing a return of total income] such particulars as may be
prescribed and such further information or documents as the 5[Deputy
Commissioner] may require, are furnished; and
(b) such building, machinery, plant or furniture has been so
used 6*
* * during the income year.
7[(3A) Where any building, furniture,
machinery or plant is used for the purposes of business or profession during
any income year for which the income from such business or profession is
exempt from tax, depreciation admissible under sub-rule (1) shall be deemed to
have been allowed in respect of the said income year and after expiration of
the exemption period written down value of such assets shall be determined in
accordance with sub-clause (ii) of clause (b) of sub-rule (7) of rule 8.]
1Subs, by the Finance Act, 1985 (1 of
1985), s. 4.
2 Subs. by the Finance Act, 1988 (6
of 1988), s. 6.
3 Ins. by the Finance Act. 1986 (1
of 1986), s. 12.
4Subs. by the Finance Ordinance, 1981 (24
of 1981), s. 5.
5 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
6Omitted by the Finance Ordinance, 1980
(25 of 1980), s. 6.
7 Ins. by the Finance Act, 1992 (7
of 1992), s. 7.
1[(4) No allowance under this rule shall be
made in respect of a machine referred to in clause (xx) of sub-section (1) of
section 23.]
2. Rates of depreciation
allowance.___(1) The allowance under rule 1 shall be
computed at the rates specified in the Table annexed hereto:___
TABLE
|
Class
of asset |
Description |
Rate
per cent of the written down value |
|
1 |
2 |
3 |
|
|
BUILDING |
|
|
I. |
Building
(not otherwise specified). |
5
(general rate) |
|
II. |
Factory
or workshop (excluding godowns 2[and
Offices]. |
10 |
|
3[II-A |
Residential
quarters for labour. |
10]. |
|
|
FURNITURE |
|
|
III. |
Furniture |
10 |
|
|
MACHINERY
AND PLANT |
|
|
IV |
Machinery
and plant (not otherwise specified). |
10
(general rate) |
|
4[IV-A |
Technical
or professional books. |
20] |
|
V |
Slips. (i)
New (ii)
Second hand. Age
at the time of purchase: (a)
not more than ten years. (b)
more than ten years. |
5 10 20 |
|
VI |
Batteries,
X-Ray and electrotherapeutics apparatus and accessories |
20 |
|
5[VI-A |
Labouratory
equipment used in educational institutions. |
25] |
|
VII. |
Machinery
used in the production and exhibition of cinematograph fils. |
20 |
|
VIII. |
Motor-Vehicles,
all sorts. |
20 |
1 Added by the Finance Act, 1988 (6
of 1988), s. 6.
2 Subs. by the Finance Ordinance
1980 (25 of 1980), s. 6.
3 Ins. ibid.
4Ins. ibid., (w.e.f. assessment year
1981-82).
5 Ins. by the Finance Act, 1990 (7
of 1990), s. 7.
|
1 |
2 |
3 |
|
IX |
Aircraft,
aeroengines and aerial photographic apparatus. |
30 |
|
X |
Moulds
used in the manufacture of glass or concrete pipes. |
30 |
|
XI. |
1[Below ground installations in mineral oil concerns
the income of which is liable to be computed in accordance with the rules
contained in Part I of the Fifth Schedule.] |
100 |
|
2[XII |
Below
ground installations, including but not limited to the cost of drilling,
casing, ementing, logging and testing of wells, in offshore mineral oil
concerns the income of which is liable to be computed in accordance with the
rules contained in Part I of the fifth Schedule. |
100 |
|
XIII |
Offshore
platforms and production installations in mineral oil concern the income of
which is liable to be computed in accordance with the rules contained in Part
I of the Fifth Schedule. |
20] |
3* * * * * * *
3. Extra depreciation
allowance for multiple shift working.—(1) In the case of machinery and plant, to which the general rate
applies, an extra depreciation allowance, equal to fifty per cent of the
allowance computed under sub-rule (1) of rule 2 shall be allowed on account of
double shift working and hundred per cent of such allowance on account of
triple shift working.
(2) The extra depreciation
allowance under sub-rule (1) shall be proportionate to the number of days
during which the double or triple shifts are worked, and, for the purpose of
computing this allowance, the normal working days throughout the year shall be
taken as three hundred.
(3) The provisions of
sub-rules (2) and (3) of rule 1 shall, so far as may be, apply to this rule as
they apply to the said rule.
4. Depreciation not to
be allowed in cases where the cost of renewal or replacement is allowed.—(1) Notwithstanding anything contained
in this Ordinance, no allowance under rule 1 or rule 3 shall be made in the
case of any asset falling under the description “Machinery and Plant” the
normal useful life of which does not exceed one year; but the cost of renewal
or replacement thereof shall be allowed as a revenue expenditure.
1Subs, by the Finance Act, 1986 (1 of 1986),
s. 12.
2 New numbers (XII) and (XIII) added
by the Finance Act, 1998 (3 of 1998) s. 5.
3 Sub-rule (2) and (3) omitted by
the Finance Act, 1994 (12 of 1994) s. 7.
5. Initial Depreciation.—(1) Where any building has been newly erected, or any machinery
or plant has been installed, in Pakistan at any time between the first day of
July, 1976, and the thirtieth day of June, 1[2000]
(both dates inclusive), further depreciation allowance in respect of the year
of erection or installation or the year in which such building, machinery or
plant is used by the assessee for the first time for the purposes of his
business or profession or the year in which commercial production is commenced,
whichever is the later, shall be allowed at the following rates, namely :—
|
(a) in
the case of residential building for industrial labour the erection of which
is begun and completed between the first day of July 1979 and the thirtieth
day of June, -[ 1991] (both dates inclusive). |
Rates Twenty-five
per. cent of the written down value. |
|
Explanation.—The expression ‘residential building for
industrial labour means building constructed for use as dwelling houses by
workmen and other persons, employed on monthly wages not exceeding one-
thousand rupees in an industrial undertaking which fulfills the conditions
specified in clauses (a), (d) and (e) of sub-section (2) of section 48 or
any other industrial undertaking which is approved by the Central Board of
Revenue for the purposes of this rule. |
|
|
3[(aa) in
the case of a building given on lease by the assessee, being a scheduled
bank, a financial institution 4[,
or such modaraba or leasing company as is] approved by the Central Board of
Revenue for purposes of this Schedule, on or after the first day of July,
1986, if the said building is used by the lessee for purposes of his business
or profession. |
Ten
per cent of the written down value.] |
|
5[(aaa) in
the case of a building owned and used by an educational institution. |
25
per cent of the written down value.] |
|
(b) in
the case of other building. |
Ten
per cent of the written down value. |
1Subs, by the Finance Act, J995, (I of
1995) s. 9, for “1991”. –
2 Subs, by the Finance Act, 1988, (6
of 1988), s. 6.
3 Ins. by the Finance Act, 1986 (1
of 1986), s. 12. .
4 Subs. and shall be deemed always
have been so 5subs, by Act, 6 of 1988, s. 6.
5C1. (aaa) ins. by the Finance Act, 1990
(7 of 1990), s. 7.
|
(c) in
the case of machinery or plant (other than 1[X-Ray
and electrotherapeutics apparatus and accessories, or] ships or motor
vehicles not plying for hire). |
|
|
4[Provided that in addition to the initial depreciation
allowance admissible under this clause to an industrial undertaking, an
additional allowance of initial depreciation, shall be admissible for the
next year (following the first year of admissibility of such allowance),
which: (a) is
set-up after the 30 June, 1995; and (b) manufactures
engineering goods.] 5[Explanation.—As used in this clause, “industrial
undertaking” has the same meaning as in the First Schedule.] 6[(cc) in
the case of machinery or plant (other than ships or motor vehicles not plying
for hire), given on lease by the assessee, being a scheduled bank, a
financial institution7[or
such modaraba or leasing company as is] approved by the Central Board of
Revenue for purposes of 8[this
schedule] on or after the first day of July, 1982. |
Forty
per cent of the written down value 9[and
in respect of any assessment year commencing on or after the first day of July,
1989, twenty five per cent of the written down value.] |
|
10[(ccc) in
the case of X-Ray and electrotherapeutic apparatus and accessories. |
Forty
per cent of the written down value 9[and
in respect of any assessment year commencing on or after the first day of
July, 1989, twenty five per cent of the written down value.] |
|
(d) in
the case of ships whose port of registry is in Pakistan. |
Thirty
per cent of the written down value. |
|
11[(e) in
the case of library books owned and used by an educational institution. |
25
per cent of the written down value.] |
1Ins. by the Finance Act, 1986 (1 of
1986), s. 12.
2 Certain words omitted by the
Finance Act, 1996 (9 of 1996) s. 13 (w.e.f. assessment year 1994-95) which was
previously amended by various enactments.
3 Subs, by the Finance Act, 1995 (1
of 1995), s. 9 for full stop,
4 added ibid.
5 Explanation ins. by the Finance
Act 1981 (24 of 1981), s. 5.
6Subs, by the Finance Act, 1985 (I of
1985) s. 12 (w.e.f. 1-7-1979).
7Subs, by the Finance Act, 1988 (6 of
1988), s. 6.
8 Subs, by Act, 1 of 1986, s. 12.
9 Ins. by the Finance Act, 1989 (5
of 1989), s. 6.
10 lns. By Act 1 of 1986, s. 12.
11Added by the Finance Act. 1990 (7 of
1990), s. 7.
(2) Nothing contained in sub-rule (1) shall apply in the case of—
(a) any road transport vehicle not plying for hire; 1*
(b) any machinery or plant which has previously been used in
Pakistan 2[:]
3[(ba) any plant, machinery, equipment and industrial
buildings to which rules 5A, 5B and 5C apply;]
4[(c) any building, plant or machinery owned or used by an
industrial undertaking to which clause (118J3) of the Second Schedule applies;
and
(d) a machine referred to in clause (xx) of sub-section (1) of
section 23.]
(3) The provisions of
sub-rules (2) and (3) of rule 1 shall, so far as may be, apply to this rule as
they apply to the said rule.
5[5A. First Year Allowance.—Where
any machinery, plant and equipment is installed by any industrial undertaking
set-up in Pakistan on or after the twenty-first day of November, 1997, and
owned and managed by a company formed after the said date, exclusively for
operating the said industrial undertaking engaged in the manufacture of goods
and materials or the subjection of goods or materials to a manufacturing
process, further depreciation by way of First Year Allowance in respect of the
year of installation or the year in which such machinery, plant or equipment is
used by the assessee for the first time for the purposes of his business or
profession or the year in which commercial production is commenced, whichever is
the later, shall be allowed at the rates specified in the table below :—
TABLE
|
Categories
of Industries |
Rates |
|
A.
Industries for the manufacture of leather, (value added), textiles (value
added), cent of the footwear, surgical and sports goods, carpets,
electronics, soft, stuffed and battery operated toys, frozen concentrated
citrus juices, seafood industry (farming, catching, processing and
preservation of fish, shrimp and |
Eighty
per cent of the written down value. |
1Omitted by the Finance Act, 1988 (6 of
1988), s. 6.
2Subs. ibid.
3New cl. (ba) Ins. by the Finance Act,
1998 (3 of 1998) s. 5.
4 Added by Act 6 of 1988 s. 6.
5 New rules 5A, 5B and 5C ins. by
Act, 3 of 1998 s. 5.
|
Categories
of Industries |
Rates |
|
other
marine products), mining and value added mineral processing. |
|
|
B.
Industries for the manufacture of process control equipment or system, power
and pneumatic tools, powder metallurgical industry and manufacture of alloys
and stainless steel, information technology equipment, solar technology
equipment and solar cell industry, aerospace industry, defence production,
hermetical sealing technology, mineral oil refining and hydro cracking and
other value added petroleum products production industries. |
Eighty
per cent of the written down value. |
|
C(i)
Industries for the manufacture of plants, machinery and equipment including
mining or mineral processing, agricultural and earthmoving machinery, valves
and controls for fluids and gas, high pressure or temperature piping and
fittings, specialized pumps for chemical or petroleum industry, elevators or
escalators, locomotives, ship building, turbines, seamless high pressure gas
cylinders. |
Sixty-five
per cent of the written down value. |
|
C(ii)
Industries for the manufacture of rubber, and textile chemicals, dyes,
pigments, specialized paints or coatings, basic manufacture of pesticides;
pharmaceutical raw materials, manufacture of basic chemicals; tire-fighting
foam, petrochemicals and their down stream products (including fibers),
safety (auto) glass, float glass, chloro-alkali, fertilizers, pulp and paper
(integrated unit). |
Sixty-five
per cent of the written down value. |
|
C(iii)
Industries for the development and production of fibre-optic communication
equipment, treatment and disposal of toxic and hazardous and industrial wastes,
sewerage, effluent and solid waste management, water supply, laboratory,
chemical or industrial ware, optical goods and equipment, x-ray and
photographic films, manufacture of biomedical and medical diagnostic
equipment |
Sixty-five
per cent of the written down value. |
|
Categories
of Industries |
Rates |
|
or
devices, research and development or technical testing facilities. |
|
|
D.
Industries for the production of quality and hybrid seeds, edible oil
extraction or refining, livestock or poultry feed, integrated poultry,
livestock complex including the facility for processing and packing, milk
processing and milk products or dairy products, fruits, vegetables and
flowers-grading, packing or processing etc., agro-based value-added products,
by-products and chemicals (e.g. cotton, sugar cane, rice, corn-based like
cattle feed , cellulose and its products, industrial alcohol, glycerin, fructose,
furfural, xylose, etc.). |
Sixty-five
per cent of the written down value. |
|
E.
Other industries. |
Forty
per cent of the written down value. |
5B. Re-investment
Allowance.—Where any
expenditure or investment is made by an industrial undertaking on or after the
twenty-first day of November, 1997, for the purposes of balancing,
modernization and replacement (BMR) and expansion of the machinery and plant
already installed therein, further depreciation allowance equal to forty per
cent of the written down value shall be allowed in respect of the year in which
such machinery, plant or equipment is used by the assessee for the first time
for the purposes of his business or profession or the year in which commercial
production is commenced, whichever is the later.
5C. Industrial Building
Allowance.— Where any
industrial sheds or structures are erected by an industrial undertaking
referred to in rule 5A, a further depreciation allowance shall be allowed equal
to twenty per cent of the written down value in respect of the year of erection
of such structures.]
6. Limitation as to
allowance for depreciation.—
The aggregate of the allowance for depreciation allowed under this Ordinance
and the repealed Act shall not exceed the original cost of any asset1*
* *.
1Certain words omitted by the Finance
Act, 1991 (12 of 1991) s. 5.
7. Disposal of assets
and treatment of resultant gains or losses. Notwithstanding anything contained in this Ordinance
or the repealed Act, where, in any income year,__
(a) any asset 1*
* * is disposed of by an assessee, no allowance under rule 1, 3, 4, or 5 shall
be made in respect thereof in that year;
(b) any 2[asset]
is disposed of by an assessee,__
(i) if the sale proceeds thereof exceed the written down value,
the excess shall be deemed to be the income of the assessee of that year
chargeable under the head “income from business or professions”; and
(ii) if the sale proceeds are less than the written down
value, the deficit shall be deemed to be an expenditure deductible from the
profits and gains of the business or profession of that year; 3*
4* * * * * * *
and the business or profession for the purposes of which the said 5[asset]
was used before its disposal, shall be deemed to be carried on by the assessee
during that year and all the provisions of this Ordinance shall apply
accordingly [:]6
7* * * * * * *
8. Definitions. For the purpose of this Schedule,__
8* * * * * * *
(2) “fair market value” has
the same meaning as in subsection (3) of section 29;
(3) “furniture” includes
fittings;
(4) “plant” means any ship,
aircraft or vehicle registered in Pakistan and includes books (other than books
in respect of which an allowance has been made under section 42 of this
Ordinance or section 15F of the repealed Act), scientific apparatus and
surgical equipment used for the purposes of business or profession;
1Certain words omitted by the Finance
Act, 1991 (12 of 1991), s.5.
2Subs. ibid.
3Word “and” omitted ibid.
4Cl. (e) omitted ibid.
5Subs. ibid., for certain words.
6Subs. by the Finance Act, 1985 (1 of
1985), s.4 for full stop.
7Proviso omitted by Act 12 of 1991, s.5.
8Sub-rule (1) omitted ibid.
(5) “sale proceeds” means__
(a) where the asset is actually sold, the sale price thereof or
the fair market value, whichever is the higher;
(b) where the asset is transferred by way of exchange, the fair
market value of the asset acquired through such transfer;
(c) where the asset is transferred otherwise than by sale or
exchange, the consideration for such transfer;
(d) where an asset is discarded, demolished, destroyed or lost,
the scrap value, or the amount realised by the disposal thereof together with
any insurance, compensation or salvage money received or receivable in respect
thereof;
(e) where the asset is compulsorily acquired under any law for
the time being in force in Pakistan, the compensation paid therefore;
(f) where the asset ceases to be used by the assessee for
purposes of his business or profession, the fair market value thereof at the
time of such cessation; 1*
(g) where the asset 2[,
other than an asset to which sub-clause (h) or sub-clause (i)] 3[or
sub-clause (j)] applies, is exported or transferred outside Pakistan, the original
cost thereof, or the fair market value at the time of export, whichever is the
higher,
4[(h) where an asset, after having been used in Pakistan in
the execution of a contract entered into by the assessee before the first day
of July, 1979, is exported or transferred outside Pakistan, the original cost
thereof less all depreciation allowed
1Word “and” omitted by the Finance
Ordinance, 1980 (25 of 1980), s.6.
2Ins. ibid., (w.e.f. assessment year,
1980-81).
3Ins. by the Finance Ordinance, 1981 (24
of 1981), s.5.
4Cls. (h) and (i) ins. by Ordinance 25 of
1980, s.6.
5Word “and” omitted by the Finance
Ordinance, 1981 (24 of 1981), s.5.
excepting the sum allowed in pursuance of rule 5; 1*
(i) where an asset, 2[not
being an asset to which sub-clause (j) applies], after having been used in
Pakistan in the execution of a contract entered into by the assessee or
transferred outside Pakistan the original cost thereof 3* 4[and
]]
5[(j) where an asset, after having been used in Pakistan in
the execution of a contract for exploration and production of petroleum (such
contract having been entered into by the assessee on or after the first day of
July, 1981), is exported or transferred outside Pakistan, the original cost
thereof less all depreciation allowed excepting the sum allowed in pursuance of
rule 5.]
and in each such case, the asset shall, for purposes of rule 7, be
deemed to have been disposed of by the assessee;
7[Provided that in the case of a building
the term “sale proceeds” shall mean an amount equal to the lower of the
following, namely :—
(a) original cost, and
(b) sale price or fair market value, whichever is higher :
Provided further that,
where the actual cost of a road transport vehicle is, in accordance with
sub-clause (a) of clause (8), taken to be 8[9[six
hundred] thousand] rupees, the sale proceeds thereof shall be taken to be a sum
which bears to the amount for which the said vehicle is sold together with any
insurance, salvage or compensation money received or receivable, or, as the
1Word “and” omitted by the Finance
Ordinance, 198! (24 of 1981), s. 5.
2Ins. ibid.
3The word “less all depreciation allowed”
omitted ibid. These words were earlier deemed to have been omitted by S.R.O.
923(I)/80, dated 25-8-1980 for assessment year 1980-81, see Gaz. of P., 1980,
Ext. Pt. II, P. 1967.
4Subs. ibid., for comma.
5Sub-clause (j) ins. ibid.
6Subs. for a semi-colon by the Finance
Ordinance, 1980 (25 of 1980), s. 6.
7Provisos and Explanation added ibid., s.
6. Certain provisos and Explanation were earlier deemed to have been inserted
by S.R.O. 885(I)/79, dated 2-10-1979 and S.R.O. 175(0/80, dated 10-2-1980 for
the assessment year 1979-80. see Gaz. of P., 1980, Ext. Pt. II. P. 171.
8Subs. by the Finance Act, 1990 (7 of
1990), s. 7.
9Subs. by the Finance Act, 1991 (12 of
1991), s. 5.
case may be, scrap value in respect thereof the same proportion as
the said sum of 1[2[six
hundred] thousand] rupees bears to the actual cost of the said vehicle to the
assessee had the said sub-clause not been applicable to such vehicle [:]3
4[Provided also that in case of an asset
leased by a scheduled bank, a financial institution or any modaraba or leasing
company which is approved by the Central Board of Revenue the term “sale
proceeds” shall mean the residual value received by such leasing company on
maturity of lease agreement with the first lessee, subject to the condition
that the residual value plus the amount realized during the currency of the
agreement towards cost of the asset is not less than the original cost to the
lessor.]
Explanation.—The expression
‘sold’, as used in the second proviso, includes a transfer by way of exchange
or otherwise or a compulsory acquisition under any law for the time being in
force].
(6) “ship” includes a
steamer, motor vessel, sail, tug, boat, iron or steel float for cargo, wooden
cargo boat, motor launch and speed boat;
(7) “written down value,”
means—
5[(a) in the case of a ship or any asset to which sub-rule
(3) of rule 2 applies,—
(i) for purpose of rule 7, as in sub-clause (b), and
(ii) for
any other purpose, the actual cost thereof to the assessee; and]
(b) in the case of other assets6*
* *
(i) where
the asset6*
* * was acquired in the income year, the actual cost thereof to the assessee;
and
1Subs, by the Finance Act. 1990 (7 of
1990). s. 7.
2Subs. by the Finance Act, 1991 (12 of
1991). s. 5.
3Subs, by the Finance Act. 1994 (12 of
1994), s. 7, for full stop.
4Proviso added ibid.
5Sub-clause (a) subs, by the Finance
Ordinance, 1981 (24 of 1981), s. 5, (w.e.f. assessment year 1982-83) which was
earlier amended by Ordinance XXV of 1980. This sub-clause was deemed to be
substituted by S.R-.O. 923(I).80, dt. 14-9-80.
6Certain words omitted by Act 12 of 1991,
s. 5.
(ii) where
the asset 1*
* * was acquired before the income year, the actual cost thereof to the
assessee as reduced by the aggregate of the allowance for depreciation allowed
to him under this Ordinance or the repealed Act in respect of the assessments
of earlier years.
(8) For the purposes
of 2[clause
(7)],—
(a) in the case of road transport vehicles 3[,
being passenger transport vehicles], not plying for hire, the actual cost to
the assessee shall be deemed not to exceed 4[ 5[six
hundred] thousand]rupees;
(b) in computing the actual cost of an asset, the amount of any
grant, subsidy, rebate or commission and the value of any assistance (not being
in the nature of any loan repayable with or without interest) received by an
assessee from Government or any other authority or person and any deduction or
allowance admissible under this Ordinance or the repealed Act shall be excluded;
(c) where, before the date of acquisition by the assessee, any
such asset had at any time been used by any person for the purposes of his
business or profession, the actual cost to the assessee shall, except in any
case where 6[sub-clause
(d)] applies, be deemed not to exceed the fair market value thereof;
(d) where any assessee has succeeded another person in business
or profession, the written down value of an asset shall be computed as if no
succession had taken place; .
(e) where an assessee has acquired any plant or machinery
(hereafter referred to as ‘asset’) from a country outside Pakistan for
installation in Pakistan for the purposes of his business or profession and, in
consequence of a change in the rate of exchange at any time after the
acquisition of such asset and before full and final repayment of any foreign
loan, there is an. increase or reduction in the liability of the assessee as
expressed in Pakistan currency for making payment towards the whole or a part
of the moneys borrowed by him from any person directly or indirectly, in any
foreign currency specifically for the purposes of acquiring the asset (being in
either case the liability existing immediately before the date on which change
in the rate of exchange takes effect), the amount by which the liability
aforesaid is so increased or reduced during the income year shall be added to
or , as the case may be, deducted from the actual cost of the asset and the
amount arrived at after such addition or deduction shall be taken to be the
actual cost of the asset;
1Certain words omitted by the Finance
Act, 1991 (12 of 1991), s. 5.
2Subs. by the Finance Ordinance 1981 (24
of 1981), s. 5, for “sub-rule (7)”.
3Ins. ibid..
4Subs. by the Finance Act, 1990.(7 of
1990), s. 7 for “one hundred and seventy five thousand”.
5Subs. by Act 12 of 1991, s. 5, for “two
hundred and fifty”.
6Subs. by the Finance Ordinance, 1981 (24
of 1981), s. 5, for “paragraph (d)”.
(f) where the whole or any part of the liability aforesaid is
met, not by the assessee, but, directly or indirectly, by any other person or
authority, the liability so met shall not be taken into account for the
purposes of1[sub-clause
(c)];
(g) where the assessee has entered into a contract with an
authorised dealer for providing him with a specified sum in a foreign currency
on or after a stipulated future date at the rate of exchange specified in the
contract to enable him to meet the whole or any part of the liability
aforesaid, the amount, if any, to be added to, or deducted from the actual cost
of the asset or the amount of expenditure of a capital nature or, as the case
may be, the cost of acquisition of the capital asset under this sub-clause
shall, in respect of so much of the sum specified in the contract as is available
for discharging the liability aforesaid, be computed with reference to the rate
or exchange specified therein; and
(h) for the purposes of making an assessment for the year
beginning on the first day of July, 1979, the written down value of such asset
shall be increased or reduced by the amount by which the liability aforesaid
was so increased or reduced during any income year for the assessment year
beginning on the first day of July, 1975, the first day of July, 1976, the
first day of July, 1977 or the first day of July, 1978.
Explanation.—As used in this clause,—
(a) “rate of exchange” means the rate of exchange determined or
recognised by the Federal Government for the conversion of Pakistan currency
into foreign currency or foreign currency into Pakistan currency; and
(b) “authorised dealer”, “foreign currency” and “Pakistan
currency” have the same meaning as in the Foreign Exchange Regulation Act, 1947
(VII of 1947).
(9) The provisions of
clauses (5) and (7) shall, so far as may be, apply to a class of assets as they
apply to an asset.
_____
1Subs. by the Finance Ordinance, 1981 (24
of 1981), s. 5, for cl. (e).
THE FOURTH SCHEDULE
[See section 26(a)]
RULES FOR THE COMPUTATION OF THE PROFITS
AND
GAINS OF INSURANCE BUSINESS
1. Profits of life insurance to be computed separately.__The profits and gains of an assessee
carrying on life insurance business shall, from whatever source derived, be
chargeable under the head “Income from business or profession” and shall be
computed separately from his income from any other business.
2. Computation of profits and gains of life insurance business.__The
profits and gains of life insurance business, 1*
* * shall be taken to be the annual average of the surplus arrived at by
adjusting the surplus or deficit disclosed by the actuarial valuation made for
the last inter‑valuation period ending before the year for which the
assessment is to be made, so as to exclude from it any surplus or deficit
included therein which was made in any earlier inter‑valuation period and
any expenditure other than expenditure which may, under the provisions of
section 23 of this Ordinance, be allowed for computing the profits and gains of
a business.
3. In computing the surplus for purposes of rule 2,__
(a) the amounts paid to, or reserved for, or expended on behalf
of, policyholders shall be allowed as a deduction:
Provided that in the first
such computation made under this rule of any such surplus, no account shall be
taken of any such amount to the extent to which they are paid out, or in
respect, of any surplus brought forward from a previous inter‑valuation
period:
Provided further that if
any amount so reserved for policy‑holders ceases to be so reserved, and
is not paid to, or expended on behalf of, policy‑holders, the sums
previously allowed as a deduction under this Ordinance or under the repealed
Act shall be treated as part of the surplus for the period in which the said
amount ceased to be so reserved;
(b) any amount either written off or reserved in the accounts or
through the actuarial valuation balance sheet to meet depreciation, or loss on
the realisation, of investments, shall be allowed as a deduction, and any sums
taken credit for in the accounts or actuarial valuation balance sheet on
account of appreciation, or gains on the realisation, of investment shall be
included in the surplus:
1Certain words omitted by the Finance
Ordinance, 1980 (25 of 1980), s.6.
Provided that if it appears
to the 1[Deputy
Commissioner] after consultation with the Controller of Insurance that the rate
of interest or other factors employed in determining the liability in respect
of outstanding policies is inconsistent with the valuation of investments so
as artificially to reduce the surplus, he may make such adjustment to the
allowance for depreciation, or in respect of appreciation, of such investment
as he thinks reasonable; and
(c) interest received during the inter‑valuation period in
respect of any securities of the Federal Government which have been issued or
declared to be income‑tax‑free, shall not be excluded; but such
interest shall be exempt from tax in accordance with the provisions of subsection
(2) of section 17.
4. Adjustment of tax
paid by deduction at source.__Where for any year an assessment of the
profits and gains of life insurance business is made in accordance with the
annual average of a surplus disclosed by a valuation for an inter‑valuation
period exceeding twelve months, then, in computing the tax payable for that
year, credit shall not be given for the tax paid in the income year but credit
shall be given for the annual average of the tax paid by deduction at source
from interest on securities or otherwise during such period.
5. General insurance.__ The profits and gains of any
business of insurance other than life insurance shall be taken to be the
balance of the profits disclosed by the annual accounts required under the
Insurance Act, 1938 (IV of 1938) to be furnished to the Controller of
Insurance, subject to the following adjustments, namely :‑
(a) any expenditure or allowance 2[or
any reserve or provision for any expenditure, or the amount of any tax deducted
at source from any dividends or interest received] which is not deductible in
computing the income chargeable under the head “Income from business or
profession” shall be excluded;
(b) any amount either written off or taken to reserve to meet
depreciation or loss on the realisation, of investments shall be allowed as a
deduction, and any sums taken credit for in the accounts on account of
appreciation, or gains on the realisation, of investments shall be treated as
part of the profits and gains:
Provided that the 1[Deputy
Commissioner] is satisfied about the reasonableness of the amount written off or
taken to reserve in the accounts to meet depreciation, or loss on the
realisation, of investments, as the case may be.
6. Mutual Insurance
associations.__ These rules shall also apply to the
assessment of the profits of any business of insurance carried on by a mutual
insurance association and such profits shall be deemed to be liable to tax
under the head `Income from business or profession.
3[6A. Exemption of capital gains from
sale of shares.- In computing income under this Schedule, there shall not
be included “capital gains” being income from the sale of any instrument of
redeemable capital as defined in clause (30A) of sub-section (1) of section 2
of the Companies Ordinance, 1984 (XLVII of 1984), listed on any stock exchange
in Pakistan or shares of a public company, as defined in sub-paragraph (2) of
part IV of the First Schedule to this Ordinance, derived in respect of any
assessment year ending on or before the thirtheth day of June, 4[1999].
1Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
2Ins.by the Finance Ordinance, 1980 (25
of 1980), s. 6.
3Ins. by the Finance Supplementary
(Amdt.) Act, 1997 (4 of 1997), s. 4.
4Subs. by the Finance Act, 1998 (3 of
1998), s. 5, for “1998”.
7. Definitions.__For the purposes of these rules,__
(a) “investments” includes securities, stocks and shares; and
(b) “life insurance business” means life insurance business as
defined in clause (11) of section 2 of the Insurance Act, 1938 (IV of 1938).
8. Application of this
Schedule.__ This provisions of this Schedule
shall apply notwithstanding anything contained in this Ordinance or any law for
the time being in force.
______
THE FIFTH SCHEDULE
PART I
[See section 26 (b)]
RULES FOR THE COMPUTATION OF THE PROFITS
AND GAINS FROM THE EXPLORATION AND PRODUCTION OF PETROLEUM
1. Exploration and
production of petroleum to be treated as a separate business undertaking.__ Where any person carries on, or is deemed
to carry on, under an agreement with the Government, any business, which
consists of, or includes, the exploration or production of petroleum in
Pakistan, 1[or
setting up of refineries at Dhodak and Bobi fields, income of exploration and
production companies from pipe-line operations, and manufacture and sale of
liquefied petroleum gas or compressed natural gas] such business or part
thereof, as the case may be, shall, for the purposes of this Ordinance, be
deemed to be a separate business undertaking hereinafter referred to as “such
undertaking” and the profits and gains of such undertaking shall be computed
separately from his income, profits or gains from any other business, if any,
carried on by him.
2. Computation of
profits.__ (1) Subject to the provisions of
this Part, the profits and gains of such undertaking shall be computed in the
manner applicable to income, profits and gains chargeable under the head
“Income from business or profession”.
(2) Where such person
incurs any expenditure on searching for or on discovering and testing a
petroleum deposit or winning access thereto but the search exploration or
enquiry upon which the expenditure is incurred is given up before the
commencement of commercial production, the expenditure allocable to a
surrendered area or to the drilling of dry‑hole shall be deemed to be
lost at the time of the surrender of the area or the completion of the dry‑hole,
as the case may be.
(3) Where the agreement
provides that any portion of the expenditure deemed to be lost under sub‑rule
(2) (such portion hereinafter referred to as the said loss) shall be allowed
against any income of such undertaking, it shall be allowed in either of the
following two ways, as may be provided for in agreement, namely :__
1Ins. by the Finance Act, 1994 (12 of
1994), s. 7.
(a) the said loss in any year shall be set off against the
income of that year chargeable under the head “income from business or
profession” or any income (other than income from dividends) chargeable under
any other head and where the loss cannot be wholly set off in this manner, the
portion not so set off shall be carried forward to the following year and set
off in the same manner, and so on, but no loss shall be carried forward for
more than six years; or
(b) the said loss in any year shall be set off against the
income of such undertaking of the income year in which commercial production
has commenced and where the loss cannot be wholly set off against the income
of such undertaking of that year, the portion not so set off shall be carried
forward to the following year and set off against the income, if any, of such
undertaking of that year, and if it cannot be wholly so set off, the amount of
loss not so set off shall be carried forward to the following year, and so on,
but no loss shall be carried for more than ten years.
(4) After the commencement
of commercial production, all expenditure incurred prior thereto and not deemed
to be lost under sub‑rule (2) and not represented by physical assets in
use at the time the commercial production commenced shall be allowed as a
deduction, so, however, that the portion of such deduction to be so allowed in
any year shall be such amount (not exceeding ten percent. of the aggregate
amount deductible) 1[in
respect of onshore areas and twenty-five per cent for offshore areas] as may be
selected by the assessee.
(5) Any expenditure (not
being in the nature of capital expenditure or personal expenses of the
assessee) laid out or expended after the commencement of commercial prodution
wholly and exclusively for the purpose of the business of production and
exploration of petroleum carried on by such undertaking shall be allowed as a
deduction:
Provided that‑
(i) no deduction shall be allowed in respect of expenditure
incurred on the acquisition of assets in respect of which depreciation
allowance is admissible under the Third Schedule;
(ii) depreciation allowance admissible under the Third
Schedule shall be deducted in respect of the assets referred to in paragraph
(i);
(iii) depreciation allowance admissible under the Third
Schedule shall also be deducted in respect of such expenditure incurred on the
acquisition of the physical assets, which were acquired before the date of the
commencement of commercial production and were being used by such undertaking on
and after that date, as if such assets had been acquired at the time of the
commencement of commercial production at their original cost, as reduced by the
amount of depreciation allowance, if any, previously allowed to be deducted
under this Ordinance or the repealed Act.
1Ins. by the Finance Act, 1998 (3 of
1998), s. 5.
(6) If in any year the
deductions admissible under section 23 and sub-rules (3) and (4) exceed the
gross receipts from the sale of petroleum produced in Pakistan, such excess
shall be set off against other income (not being income from dividends) and
carried forward in the manner and subject to the limitation laid down in
sections 35 and 38 and the Third Schedule, so however, that no portion of such
excess shall be carried forward for more than six years 1[:]
2[Provided that the limitation of six years
prescribed in this sub-rule shall not apply to depreciation allowance
admissible to a person carrying on the business of offshore petroleum
exploration and production, in respect of any machinery, plant or other
equipment used in such exploration or production.]
3. Depletion allowance.__In determining the income of such
undertaking year ending after the date on which commercial production has
commenced, an allowance for depletion shall be made equal to fifteen percent of
the gross receipts representing the well‑head value of the production:
Provided that such allowance
shall not exceed fifty percent. of the profits or gains of such undertaking
before the deduction of such allowance.
4. Limitation on payment
to Government and taxes.__ (1) The aggregate of the taxes on
income and other payments to the Government in respect of the profits or gains
derived from an undertaking to which this Part applies for any assessment year
shall not exceed the limits provided for in the agreement:
1[Provided that the said aggregate shall
not be less than fifty per cent of the profits or gains derived by an onshore
petroleum exploration and production undertaking and forty per cent of the
profits or gains derived by an offshore petroleum exploration and production
undertaking before the deduction of the payment to the Government.]
(2) If in respect of any
year, the aggregate of the taxes on income and payments to the Government is
greater or less than the amount provided for in the agreement, an additional
tax shall be payable by the assessee or an abatement of tax shall be allowed to
the assessee, as the case may be, so as to make the aggregate of the taxes on
income and payments to the Government equal to the amount provided for in the
agreement.
(3) If in respect of any
year the payments to the Government exceed the amount provided for in the
agreement, so much of the excess as consists of any tax or levy referred to in
sub‑clause (b) of clause (5) of rule 6 shall be carried forward and
treated, for the purposes of this rule, as payments t, the Government for the
succeeding year:
Provided that the whole of
the payments to the Government exceeding this amount provided for in such
agreement may be so carried forward if so provided for in any agreement with an
assessee made before the first day of July 1970.
5. Provision relating to
rules.__The Central Board of Revenue may make
rules for the purposes of any matter connected with, or incidental to, the
operation of this Part.
1Subs. by the Finance Act, 1998 (3 of
1998), s. 5 for full stop.
2Proviso added ibid.
6. Definitions.__For the purpose of this Part,__
(1) “agreement” means an
agreement entered into between the Government and an assessee for the
exploration and production of petroleum in Pakistan;
(2) “commercial production”
means production as determined by the Government;
(3) “Government” means the
Government of Pakistan;
(4) “Part” means Part of
this Schedule;
(5) “payments to the
Government” means amounts payable to the Government or to any Governmental
authority in Pakistan‑
(a) in respect of royalties as specified in the Pakistan
Petroleum (Production) Rules, 1949 1[or
the Pakistan Petroleum (Exploration and Production) rules,1986]; and
(b) in respect of any tax or levy imposed in Pakistan peculiarly
applicable to oil production or to extractive industries or any of them and not
generally imposed upon all industrial and commercial activities;
(6) “petroleum” means crude
oil, natural gas and casing‑head petroleum spirit as defined in the
Pakistan Petroleum (Production) Rules, 1949, but does not include refined
petroleum products;
(7) “surrender” means the
termination of rights with respect to an area including the expiration of
rights according to the terms of an agreement;
(8) “surrendered area”
means an area with respect to which the rights of a person have terminated by
surrender or by assignment or by termination of the business;
(9) “taxes on income” and
“tax” includes income‑tax and super‑tax but does not include
payments to Government; and
(10) “well‑head value
has the meaning assigned to it in the agreement between the assessee and the
Government and, in the absence of any such w definition in the agreement, the
meaning assigned to it in the Pakistan Petroleum (Production) Rules, 1949 1[or
the Pakistan Petroleum (Exploration and Production) Rules, 1986].
1Ins. by the Finance Act, 1994 (12 of
1994), s. 7.
PART II
[See section 26(c)]
RULES FOR THE COMPUTATION OF PROFITS AND
GAINS FROM THE EXPLORATION AND EXTRACTION OF MINERAL DEPOSITS (OTHER THAN
PETROLEUM)
1. Exploration and
extraction of mineral deposits to be treated a separate undertaking.__Where any person carries on, or is deemed
to carry on, any business which consists of or includes the exploration or
extraction of mineral deposits of a wasting nature (other than petroleum) in
Pakistan, such business or part thereof, as the case may be, shall, for the
purpose of this Ordinance, be deemed to be a separate undertaking (hereinafter
referred to as `such undertaking’) and the profits and gains of such undertaking
shall be computed separately from his income, profits or gains from other
business, if any, carried on by him.
2. Computation of
profits. (1) Subject
to the provisions of this Part, the profits and gains of such undertaking shall
be computed in the manner applicable to income, profits and gains chargeable
under the head “Income from business or profession”.
(2) All expenditure on
prospecting and exploration incurred by such undertaking, after the thirty‑first
day of March, 1958, up to the date of commercial production shall, to the
extent it cannot be set off against any other income of the said undertaking,
be treated as a loss.
(3) The loss referred to in
sub-rule (2) shall be carried forward and set off: against the income of such
undertaking after the commencement of commercial production, so however. that
if it cannot be wholly set off against the income of the said undertaking of
the income year in which the commercial production had commenced, the portion
not so set off shall be carried forward to the following year and so on, but no
such loss shall be carried forward for more than ten years beginning with the
year in which commercial production bad commenced.
(4) After the commencement
of commercial production, depreciation allowance in respect of machinery and
plant purchased or acquired after the thirty‑first day of March, 1958 for
extracting the ore shall be allowed as a deduction from profits and gains of
the year in which they are used for the first time in an amount equal to the
original cost of such asset and all the provisions of the Third Schedule shall,
so far as may be, apply accordingly.
3. Depletion Allowance.__ (1) In determining the profits and
gains of such undertaking for any year an additional allowance (hereinafter
referred to as the ‘depletion allowance’) shall be made equal to 1[twenty]
per cent of the total income of such undertaking (before the deduction of such
allowance) 2*
* *.
(2) No deduction under sub‑rule
(1) shall be made unless an amount equal to the depletion allowance is set
apart and left as a reserve to be utilised for the development and expansion of
such undertaking.
1Subs. by the Finance Act, 1985 (1 of
1985), s. 4 for “fifteen”.
2Certain words omitted by the Finance
Act, 1993 (10 of 1993), s. 5.
(3) Where an allowance by
way of depletion allowance has been made in any year and subsequently it is
utilised for any purpose contrary to the provisions of sub‑rule (2), the
amount originally allowed under this Ordinance, or the repealed Act shall be
deemed to have been wrongly allowed and the 1[Deputy
Commissioner] may, notwithstanding anything contained in this Ordinance or the
repealed Act, recompute the total income of the assessee for the relevant
income years and the provisions of section 65 shall, so far as may be, apply
thereto, the period of ten years specified in subsection (3) of that section
being reckoned from the end of the assessment year relevant to the income year
in which the amount was so utilised.
4. Tax exemption of
profits front refining or concentrating mineral deposits.__ (1 ) Where such undertaking is also
engaged in the business of refining or concentrating in Pakistan the mineral
deposits extracted by it in Pakistan, so much of the profits and ‘gains
(hereinafter referred to in sub-rule (2) as ‘the said amount’] derived from
such business as does not exceed ten per cent of the capital employed in such
business (such capital being computed in accordance with such rules as may be
made by the Central Board of Revenue for the purposes of this rule), shall be
exempt from tax.
(2) Where the profits and
gains of such business computed for any assessment year cover a period which is
less or more than one year. the amount of profits and gains exempt under sub‑rule
(1) shall be the amount which bears the same proportion to the said amount of
profits and gains the same proportion as the said period bears to a period of
one year.
(3) The profits and gains
of the business to which this rule applies shall be computed in accordance with
the provisions of sections 23 and 24.
(4) Nothing contained in
this rule shall apply to an undertaking which is formed by the splitting up or
the reconstruction or reconstitution of business already in existence or by the
transfer to a new business of any building, machinery or plant used in a
business which was being carried on before the 1st day of July, 1975.
(5) The provisions of this
rule shall apply to the assessment year next following the income year in which
commercial production is commenced or the loss or allowance, if any, under sub
rules (3) and (4) of rule 2, as the case may be, has been set off or deducted
in full, whichever is the later, and for the next following four years.
5. Provision relating to
rules.__The Central Board of Revenue, may make
rules providing for any matter connected with, or incidental to the operation
of this Part.
6. Definitions.__For the purposes of this Part,‑
(1) “commercial production”
means production as determined by the Income‑tax Officer;
(2) “Part” means Part of
this Schedule; and
(3) “petroleum” has the same meaning as in clause (6) of rule 6 of
Part I.
___________
1Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
THE SIXTH SCHEDULE
PART I
[See sections 2(37), 24 and 40]
RECOGNISED PROVIDENT FUNDS
1. Recognition of
provident funds.__ (1) The Commissioner may accord
recognition to any provident fund which, in his opinion, complies with the
requirements of rule 2, and may, at any time, withdraw such recognition if, in
his opinion. the circumstances of the fund cease to warrant the continuance of
the recognition.
(2) An order according
recognition shall take effect on such date as the Commissioner may fix in
accordance with such rules as the Central Board of Revenue may make in this
behalf, such date not being later than the last day of the financial year in
which the order is made.
(3) An order according
recognition to a provident fund shall not, unless the Commissioner otherwise
directs, be affected by the fact that the fund is subsequently amalgamated
with another provident fund on the occurrence of an amalgamation of the
undertakings in connection with which the two funds are maintained, or that it
subsequently absorbs the whole or a part of another provident fund belonging to
an undertaking which is wholly or in part transferred to, or merged in, the
undertaking of the employer maintaining the first‑mentioned fund.
(4) An order withdrawing
recognition shall take effect from such date as the Commissioner may fix.
(5) The Commissioner shall
neither refuse nor withdraw recognition of any provident fund, unless he has
given to the trustees of the fund a reasonable opportunity of being heard.
2. Conditions for
approval.__ (1) In order that a provident fund
may receive and retain recognition it shall satisfy the conditions hereinafter
specified and any other conditions which the Central Board of Revenue may, by
rules, prescribe__
(a) all employees shall be employed in Pakistan, or shall be
employed by an employer whose principal place of business is in Pakistan:
Provided that the
Commissioner may, if he thinks fit, and subject to such conditions, if any as
he thinks proper to attach to the recognition, accord recognition to a fund
maintained by an employer whose principal place of business is not in Pakistan,
provided the proportion of employees outside Pakistan does not exceed ten per
cent;
(b) the contributions of an employee in any year shall be a
definite proportion of his salary for that year, and shall be deducted by the
employer from the employee’s salary in that proportion, at each periodical
payment of such salary in that year, and credited to the employee’s individual
account in the fund:
Provided that an employee,
who retains his employment while serving in the armed forces of Pakistan or
when taken into, or employed in, the national service under any law for the
time being in force, may, whether he receives from the employer any salary or
not contribute to the fund during his services in the armed forces of Pakistan
or while so taken into, or employed in, the national service a sum not
exceeding the amount b. a would have contributed had he continued to serve the
employer;
(c) the contributions of an employer to the individual account
of an employee in any year shall not exceed the amount of the contributions of
the employee in that year, and shall be credited to the employees individual
account at intervals not exceeding one year:
Provided that, subject to
any rules which the Central Board of Revenue may make in this behalf, the
Commissioner may, in respect of any particular fund, relax the provisions of
this clause__
(i) so as to permit the payment of larger contributions by an
employer to the individual accounts of employees whose salaries do not, in each
case, exceed five hundred rupees per mensum;
(ii) so as to permit the crediting by employers to the
individual accounts of employees of periodical bonuses or other contributions
or, a contingent nature, where the calculation and payment or such bonuses of
other contributions is provided for on definite principles by the regulations
of the fund;
(d) the employer shall not be entitled to recover any sum
whatsoever from the fund, save in cases where the employee is dismissed for
misconduct or voluntarily leaves his employment otherwise that on account off,
ill‑health or other unavoidable cause before the expiration of the term
of service specified in this behalf in the regulations of the fund:
Provided that in such cases
the recoveries made by the employer shall be limited to the contributions ma6e
by him to the individual amount of the employee, and to interest credited in
respect of such contributions in accordance with the regulations of the fund
and accumulations thereof;
(e) the fund shall be vested in two or more trustees or in the
Official Trustee under a trust which shall not be revocable save with the
consent of all the beneficiaries;
(f) the fund shall consist of contributions as above specified
received by the trustees, or accumulations thereof, and of interest credited in
respect of such contributions and accumulations, and of securities purchased
therewith and of any capital gains arising from the transfer of capital assets
of the fund, arid of no other sums;
(g) the accumlated balance due to an employee shall be payable
on the day he ceases to be an employee of the employer maintaining, the fund:
Provided that
notwithstanding anything contained in clause (f) or clause (g) :__
(i) at the request made in writing by the employee who ceases to
be an employee of the employer maintaining the fund, the trustees of the fund
may consent to retain the whole or any part of the accumulated balance due to
the employee to be drawn by him at any time on demand;
(ii) where the accumulated balance due to an employee who
has ceased to be an employee is retained in the fund in accordance with the
preceding clause, the fund may consist also of interest in respect of such
accumulated balance;
(iii) the fund may also consist of any amount transferred
froze the individual account of an employee in any recognised provident fund
maintained by his former employer and the interest in respect thereof;
(h) save as provided in clause (g) or in accordance with such conditions
and restrictions as the Central Board of Revenue may, by rules, specify, no
portion of the balance to the credit or an employee shall be payable to him:
Provided that in order to
enable an employee to pay the amount of tax assessed on his total income as
determined under sub-rule (4) of rule 7, he shall be entitled to withdraw from
the balance to his credit in the recognised provident fund a sum not exceeding
the difference between such amount and the amount to which he would have been
assessed if the transferred balance referred to in sub‑rule (2) of rule 7
had not been included in his total income.
3. Employer’s annual
contributions, when deemed to be income received by employee.__That portion of the annual accretion in
any year to the balance at the credit of an employee participating in a
recognised provident fund as consists of__
(a) contributions made by the employer in excess of ten per cent
of the salary of the employee; and
(b) interest credited on the balance to the credit of the
employee in so far as it exceeds one‑third of the salary of the employee
or is allowed at a rate exceeding such rate as may be fixed by the Federal
Government in this behalf by notification in the official Gazette.
shall be deemed to have been received by the employee in that year
and shall be included in his total income for that year and shall be liable to
income
4. Explanation from
total income of accumulated balance.__ (1) Subject to such rules as may be
made by the Central Board of Revenue in this behalf, the accumulated balance
due and becoming payable to an employee participating in a recognised
provident fund shall be excluded from the computation of his total income.
(2) The provisions of sub‑rule
(1) shall also apply where, on the cessation of his employment, the employee
obtains employment with any other employer and the accumulated balance due and
becoming payable to him is transferred to his individual account in any
recognised provident fund maintained by such other employer.
5. Tax on accumulated
balance.__Where the accumulated balance due to an
employee participating in a recognised provident fund is included in his total
income, the 1[Deputy
Commissioner] shall calculate the total of the various sums of tax which would
have been payable by the employee in respect of his total income for each of
the years concerned if the fund had not been a recognised provident fund and
the amount by which such total exceeds the total of all suns paid by, or on
behalf of such employee by way of tax for such years shall be payable by the employee
in addition to any other as for which he may be liable for the income year in
which the accumulated balance due to him becomes payable.
6. Deduction at source
of tax payable on accumulated balance.__The trustees of a recognised provident
fund, or any person authorised by the regulations of the fund to make payment
of accumulated balance due to employees shall, in cases where rule 5 applies,
at the time an accumulated balance due to an employee is paid, deduct there
from the amount payable under that rule and the provisions of Chapter VI shall,
so far as may be, apply as if the accumulated balance were income chargeable
under the head “Salary”.
7. Treatment of balance
in newly‑recognised provident fund.__ (1) Where recognition is accorded to
a provident fund with existing balances, an account shall be made of the fund
up to the day immediately preceding the day on which the recognition takes
effect showing the balance to the credit of each employee on such day and
containing such further particulars as the Central Board of Revenue may prescribe.
(2) The account referred to
in sub-rule (1) shall also show in respect of the balance the credit of an
employee the amount thereof which is to be transferred to that employee’s
account in the recognised provident fund, and such amount (hereinafter called
his ‘transferred balance’) shall be shown as the balance to his credit in the
recognised provident fund on the date on which the recognition of the fund
takes effect, and the provisions of sub‑rule (4) and the proviso to
clause (h) of rule 3 shall apply thereto.
(3) Any portion of the
balance to the credit of an employee in the existing fund which is not
transferred to the recognised fund shall be excluded from the accounts of the
recognised fund and shall be liable to income tax in accordance with the provisions
of this Ordinance, other than this Part.
(4) Subject to such rules
as the Central Board of Revenue may make in this behalf, the 1[Deputy
Commissioner] shall make a calculation of the aggregate of all sums comprised
in a transferred balance which would have been liable to income‑tax if
this Part had been in force from the date of the institution of the fund,
without regard to any tax which may have been paid on any sum, and such
aggregate, if any, shall be deemed to be income received by the employee in the
income year in which the recognition of the fund takes effect and shall be
included in the employee’s total income for that year, and, for the purposes of
assessment, the remainder of the transferred balance shall be disregarded, but
no other exemption or relief, by way of refund or otherwise, shall be granted
in respect of any sum comprised in such transferred balance:
1Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
Provided that, in cases of
serious accounting difficulty, the Commissioner may, subject to the said rules,
make summary calculation of such aggregate.
(5) Nothing in this rule
shall affect the rights of the persons administering an un-recognised
provident fund or dealing with it, or with the balance to the credit of any
individual employees, before recognition is accorded, in any manner which may
be lawful.
8. Accounts of
recognised provident funds.__ (1) The accounts of a recognised
provident fund shall be maintained by the trustees of the fund and (2) The
accounts shall be open to inspection at all reasonable times by income tax
authorities, and the trustees shall furnish to the 1[Deputy
Commissioner] such abstracts thereof as may be prescribed.
9. Treatment of fund
transferred by employer to trustees.__ (1) Where an employer, who maintains
a provident fund (whether recognised or not) for the benefit of his employees
and has not transferred the fund or any portion of it, transfers such fund or
portion to trustees in trust for the employees participating in the fund, the
amount so transferred shall be deemed to be of the nature of capital
expenditure.
(2) When an employee
participating in such fund is paid the accumulated balance due to him
therefrom, any portion of such balance as represents his share in the amount so
transferred to the trustees (without addition of interest, and exclusive of the
employee’s contributions and interest thereon) shall, if the employer has made
effective arrangement, to secure that tax shall be deducted at source from the
amount of such share when paid to the employee, be deemed to be an expenditure
by the employer, within the meaning of clause (xviii) of subsection (1) of
section 23, incurred in the income year in which the accumulated balance due to
the employee is paid.
10. Particulars to be
furnished in respect of recognised provided funds.__ The trustees of a recognised provident
fund and any employer who contributes, to a recognised provident fund shall, when
required by notice from the Income tax Officer, within such period (not being
less than twenty‑one days from the date of the notice), as may be
specified in the notice, furnish such return, statement, particulars or
information, as the 1[Deputy
Commissioner] may require.
11. Provisions of this
Part to prevail against regulations of the fund.__ Where there is a repugnance between
any regulation of a recognised provident fund and any provision of this Part or
of the rules made thereunder, the regulation shall, to the extent of the
repugnance, be of no effect, and the Commissioner may, at any time, require
that such repugnance shall be removed from the regulations of the fund.
12. Appeals.__ (1) An employer objecting to an
order of Commissioner refusing to recognise, or an order withdrawing
recognition from, a provident fund may appeal, within sixty days of the making
of such order, to the Central Board of Revenue.
1Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
(2) The Central Board of
Revenue may admit an appeal after the expiration of the period specified in
sub‑rule (I), if it is satisfied that the appellant was (3) The appeal
shall be in such form and shall be verified in such manner and shall be
accompanied by such fee as may be prescribed.
13. Provisions relating to rules.__In addition to any power conferred by this
Part, the Central Board of Revenue may make rules :‑
(a) prescribing the form of application for recognition and the
statement and other particulars and documents to be submitted therewith;
(b) limiting the contributions to a recognised provident fund by
employees of a company, who are shareholders in the company;
(c) providing for the assessment by way of penalty of any
consideration received by an employee for an assignment of, or creation of a
charge upon, his beneficial interest in a recognised provident fund:
(d) determining the extent to, and the manner in, which
exemption from payment of tax may be granted in respect of contributions and
interest credited to the individual accounts of employees in a provident fund
from which recognition has been withdrawn;
(e) regulating the investment of the moneys of a recognised
provident fund; and
(f) generally, to carry out the purposes of this Part and to
secure such further control over the recognition of provident funds and the
administration of recognised provident funds as it may deem requisite.
14. Definitions.__In this Part, unless the context otherwise
requires,__
(a) “accumulated balance due to an employee” means the balance
to his credit, or such portion thereof as may be claimable by him under the
regulations of the fund, on the day he ceases to be an employee of the
employer maintaining the funds;
(b) “annual accretion” in relation to the balance to the credit
of an employee, means the increase to such balance in any year, arising from
contributions and interest;
(c) “balance to the credit of an employee” means the total
amount to the credit of his individual account in a provident fund at any time;
(d) “contribution” means any sum credited by or on behalf of,
any employee out of his salary, or by an employer of his own money, to the
individual account of an employee, but does not include any sum credited as
interest;
(e) “employee” means an employee participating in a provident
fund, but does not include a personal or domestic servant;
(f) “employer” means any person who maintains a provident fund
for the benefit of his or its employees, being an individual, a company, a
Hindu undivided family, a firm or other association of persons engaged in any
business or profession the profits and gains whereof are chargeable to Income tax
under the head “Income from business or profession”;
(g) “regulations of a fund” means the special body of
regulations governing the constitution and administration of a particular
provident fund; and
(h) “salary” includes dearness allowance, if the terms of employment
so provide, but excludes all other allowances and perquisites.
15. Application of this
Part. __This
Part shall not apply to any provident fund to which the Provided Funds Act,
1925 (XIX of 195 applies.
_______
PART II
[See sections 2(5), 24 and 40]
APPROVED SUPERANNUATION FUNDS
1. Approval of
superannuation funds.—(1)
The Commissioner may accord approval to any superannuation fund or any part of
a superannuation fund which, in his opinion, complies with the requirements of
rule 2, and may, at any time withdraw such approval, if in his opinion the
circumstances of the fund or the part as the case may be cease to warrant the
continuance of the approval.
(2) An order according
approval or withdrawing approval shall take effect from such date as the
commissioner may fix.
(3) The commissioner shall
neither refuse nor withdraw approval any superannuation fund or any part of a
superannuation fund unless he has given the trustee of that fund a reasonable
opportunity.
2. Conditions for
approval.__In order that a superannuation fund may
receive and retain approval, it shall satisfy the conditions hereinafter
specified and any other conditions which the Central Board of Revenue may, by
rules prescribe__
(a) the fund shall be a fund established under an irrevocable
trust, in connection with a trade or undertaking carried .on in Pakistan, and
not less than ninety percent. of the employees shall be employed in Pakistan;
(b) the fund shall have for its sale purpose the provision of
annuities for employees in the trade or undertaking on their retirement at or
after a specified age or on their becoming incapacitated prior to such
retirement, or for widows, children or dependents of persons who are or have
been such employees on the death of these persons;
(c) the employer in the trade or undertaking shall be a
contributor to the fund; and
(d) all annuities, pensions and other benefits granted from the
fund shall be payable only in Pakistan.
3. Application for
approval.__ (1) An application for approval of a
superannuation fund, or part of a superannuation fund, shall be made in writing
by the trustees of the fund to the 1[Deputy
Commissioner] by whom the employer is assessable, and shall be accompanied by a
copy of the instrument under which the fund is established and by two copies of
the regulations and, where the fund has been in existence during any year or
years prior to the financial year in which the application for approval is
made, also two copies of the accounts of ‘the fund relating to such prior year
or years (not being more than three years immediately preceding the year in
which the said application is made) for which such accounts have been made up,
but the Commissioner may require such further information to be supplied as he
thinks proper.
(2) If any alteration in
the regulations, constitution, objects or conditions of the fund is made at any
time after the date of the application for approval, the trustees of the fund
shall forthwith communicate such alteration to the 1[Deputy
Commissioner] mentioned in sub‑rule (1), in default of such communication,
any approval given shall, unless the Commissioner otherwise directs, be deemed
to have been withdrawn from the date on which the alternation took effect.
4. Contributions by
employer, when deemed to be his income.__Where any contributions by an employer
(including the interest thereon, if any), are repaid to the employer, the
amount so repaid shall be deemed for the purpose of tax to be the income of the
employer of the income year in which it is so repaid.
1Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
5. Deduction of tax on
contributions paid to an employee. __Where contributions made by an employer
(including interest on contributions, if any) are repaid to an employee during
his lifetime in circumstances other than those referred to in 1[clause
(20) of the Second Schedule], tax on the amount so repaid shall be deducted by
the trustees at the average rate of tax at which the employee was liable to tax
during the preceding three years or during such period, if less than three
years, as he was a member of the fund, and shall be paid by the trustees to the
credit of the Federal Government within such time and in such manner as may be
prescribed.
6. Deduction from pay of
and contributions on behalf of employees to be included in return under section
139.__Where an employer deducts from the
emoluments paid to an employee or pays on his behalf any contributions of that
employee to an approved superannuation fund, he shall include all such
deductions or payments in return which he is required to furnish under section
139.
7. Liability of trustees
on cessation of approval. __If a fund, or a part of a fund, for any
reason ceases to be an approved superannuation fund, the trustees of the fund
shall nevertheless remain liable to tax on any sum paid on account of returned
contributions (including interest on contributions, if any), in so far as the
sum so paid is in respect of contributions made before the fund or part of the
fund, as the case may be ceased to be an approved superannuation fund under the
provisions of this Part.
8. Particulars to be
furnished in respect of superannuation fund.__The
trustees of an approved superannuation fund and any employer who contributes to
an approved superannuation fund shall, when required by notice from the Income‑tax
Officer, within such period (not being less than twenty‑one days from the
date of the notice), as may be specified in the notice, furnish such return,
statement, particulars .or information, as the 2[Deputy
Commissioner] may require.
9. Provisions of the
Part to prevail against regulations of the fund.__Where there is a repugnance between any
regulation of an approved superannuation fund and any provision of this Part or
of the rules made thereunder, the regulation shall, to the extent of the
repugnance, be of no effect; and the Commissioner may, at any time, require
that such repugnance shall be removed from the regulations of the fund.
10. Appeals.__ (1) An employer objecting to an
order of the Commissioner refusing to accord approval to a superannuation fund
or an order withdrawing such approval may appeal, within sixty days of the
making of such order, to the Central Board of Revenue.
1Subs. by S.R.O. 1025(1)/81, dt.
9-9-1081, see Gaz., of P. 1981, Ext. Pt. II, p.
2 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
(2) The Central Board of Revenue may admit an appeal after the
expiration of the period specified in sub‑rule (1), if it is satisfied
that the appellant was prevented by sufficient cause from presenting it within
that period.
(3) The appeal shall be in such form and shall be verified in such
manner and shall be accompanied by such fee as may be prescribed.
11. Provisions relating to rules.__ (1) In addition to any power
conferred by this Part, the Central Board of Revenue may make rules‑
(a) prescribing the statements and other information to be
submitted along with an application for approval;
(b) prescribing the returns, statements, particulars, or
information which the 1[Deputy
Commissioner] may require from the trustees of an approved superannuation fund
or from the employer;
(c) limiting the ordinary annual contribution and any other
contributions to an approved superannuation fund by an employer;
(d) regulating the investment or deposit of the moneys of any
approved superannuation fund;
(e) providing for the assessment by way of penalty of any
consideration received by an employee for an assignment of, or creation of a
charge upon, his beneficial interest in an approved superannuation fund;
(f) providing for the withdrawal of approval in the case of a
fund which ceases to satisfy the requirements of this Part or of the rules made
thereunder; and
(g) generally, to carry out the purposes of this Part and to
secure such further control over the approval of superannuation funds and the
administration of approved superannuation funds as it may deem requisite.
12. Definitions.__In this Part, unless the context otherwise
requires “contributions”, “employee”, “employer”, “regulations of a fund” and
“salary” have, in relation to superannuation funds, the meanings assigned to
those expressions in rule 14 of Part I in relation to provident funds.
_______
1 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
PART III
[See sections 2(4) and 24]
APPROVED GRATUITY FUNDS
1. Approval of Gratuity
Funds.__The Commissioner may accord approval to
any gratuity fund which, in his opinion, complies with the requirements of
rule 2 and may, at any time, withdraw such approval if, in his opinion the
circumstances of the fund cease to warrant the continuance of the approval.
(2) An order according
approval or withdrawing approval shall take effect from such date as the
Commissioner may fix.
(3) The Commissioner shall
neither refuse nor withdraw approval to any gratuity fund unless be has given
the trustees of that fund a reasonable opportunity of being heard.
2. Conditions for
approval.__In order that a gratuity fund may receive
and retain approval, it shall satisfy the conditions hereinafter specified and
any other conditions which the Central Board of Revenue may, be rules,
prescribe‑
(a) the fund shall be a fund established under an irrevocable
trust in connection with trade or undertaking carried on in Pakistan, and not
less than ninety per cent of the employees shall be employed in Pakistan;
(b) the fund shall have for its sole purpose the provision of a
gratuity to employees in the trade or undertaking on their retirement at or
after a specified age or on their becoming incapacitated prior to such
retirement, or on termination of their employment after a minimum period of
service specified in the regulations of the fund or to the widows, children or
dependents of such employees on their death;
(c) the employer in the trade or undertaking shall be a
contributor to the fund; and
(d) all benefits granted by the fund shall be payable only in
Pakistan.
3. Application for
approval.__ (1) An application for approval of a
gratuity fund shall be made in writing by the trustees of the fund to the 1[Deputy
Commissioner] by whom the employer is assessable and shall be accompanied by a
copy of the instrument under which the fund is established and by two copies of
the rules and, where the fund has been in existence during any year or years
prior to the financial year in which the application for approval is made, also
two copies of the accounts of the fund relating to such prior year or years
(not being more than three years immediately proceeding the year in which the
said application is made) for which such accounts have been made up, but the
Commissioner may require such further information to be supplied as he thinks
proper.
1Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
(2) If any alteration in
the rules, constitution, objects or conditions of the fund is made at any time
after the date of the application for approval, the trustees of the fund shall
forthwith communicate such alterations to the Income‑tax Officer
mentioned in sub‑rule (1), and in default of such communication, any
approval given shall, unless the Commissioner otherwise orders, be deemed to
have been withdrawn from the date on which the alteration took effect.
4. Gratuity deemed to be
salary.__Where any gratuity is paid to an employee
during his lifetime, the gratuity shall be treated as salary paid to the
employee for the purposes of this Ordinance.
5. Liability of trustees
on cessation of approval.__If a gratuity fund for any reason ceases
to be an approved gratuity fund, the trustees of the fund shall nevertheless
remain liable to tax on any gratuity paid to any employee.
6. Contributions by
employer, when deemed to be his income.__Where any contributions by an employer
(including the interest thereon, if any), are repaid to the employer, the
amount so repaid shall be deemed for the purpose of tax to be the income of the
employer of the income year in which they are so repaid.
7. Particulars to be
furnished in respect of gratuity funds.__The trustees of an approved gratuity fund
and any employer who contributes to an approved gratuity fund shall, when
required by notice from the Income‑tax Officer, furnish, within such
period, not being less than twenty‑one days from the date of the notice
as may be specified in the notice, such return, statement, particulars or
information, as the 1[Deputy
Commissioner] may require.
8. Provisions of the
Part to prevail against regulations of the fund.__Where there is a repugnance between any
rule of an approved gratuity fund and any provision of this Part or of the
rules made thereunder, the said rule shall, to the extent of repugnance, be of
no effect and the Commissioner may at any time, require that such repugnance
shall be removed from the rules of the fund.
9. Appeals.__ (1) An employer objecting to an
order of the Commissioner refusing to accord approval to a gratuity fund or an
order withdrawing such approval may appeal, within sixty days of the making of
such order, to the Central Board of Revenue.
(2) The Central Board of
Revenue may admit an appeal after the expiration of the period specified in sub‑rule
(1), if it is satisfied that the appellant was prevented by sufficient cause
from presenting it within that period.
(3) The appeal shall be in
such form and shall be verified in such manner and shall be accompanied by such
fee as may be prescribed.
1 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
10. Provisions relating
to rules.__ (1) In addition to any power
conferred in this Part, the Central Board of Revenue may make rules‑
(a) prescribing the statements and other information to be submitted
alongwith an application for approval;
(b) limiting the ordinary annual and other contributions of an
employer to the fund;
(c) regulating the investment or deposit of the moneys of any
approved gratuity fund:
(d) providing for the assessment by way of penalty of any
consideration received by an employee for an assignment of, or the creation of
a charge upon, his beneficial interest in an approved gratuity fund;
(e) providing for withdrawal of the approval in the case of a
fund which ceases to satisfy the requirements of this Part or the rules made
thereunder; and
(f) generally, to carry out the purposes of this Part and to
secure such further control over the approval of gratuity funds and the
administration of gratuity funds as it may deem requisite.
11. Definitions.__In this Part, unless the context otherwise
requires, “contribution”, “employer”, “regulations of a fund” and “salary” have
in relation to gratuity funds, the meaning assigned to those expressions in
rule 14 of Part I in relation to provident funds.
_______
THE SEVENTH SCHEDULE
[See section 163 (2)]
RULES FOR THE COMPUTATION OF RELIEF TAX BY
WAY OF CREDIT IN RESPECT OF FOREIGN TAX
1. Credit against
Pakistan tax.__Subject to the provisions of this
Schedule, under an agreement concluded under section 163, credit is to be
allowed against Pakistan tax chargeable in respect of any income, the amount of
the Pakistan tax so chargeable shall, subject to the provisions of the said
agreement, be reduced by the amount of the credit.
2. Credit admissible to
residents.__No credit under rule 1 shall be allowed
against Pakistan tax for any assessment year unless the person in respect of
whose income the tax is chargeable is resident in Pakistan in the relevant
income year.
3. Computation of
credit.__The amount of the credit to be allowed for
foreign tax against Pakistan tax in respect of any income shall not exceed the
amount which would be arrived at by applying the average rate of such tax to
the doubly taxed income.
4. Tax credit in respect
of dividends.__ (1) Where the income includes a
dividend and, under .the agreement, foreign tax, whether chargeable directly or
by deduction in respect of the dividend is to be taken into account in
considering whether any, and if so what, credit is to be allowed against
Pakistan tax in respect of the dividend, the amount of the income shall be
treated as increased by the amount of the foreign tax appropriate to the
dividend which falls to be taken into account in computing the amount of the
credit.
(2) Where the amount of the
income is to be treated as increased under sub-rule (1), the foreign tax not
chargeable directly or by deduction which is to be taken into account shall be
that borne by the company paying the dividend upon the profits for the period
for which the dividend is paid, or, if the dividend is not paid for a specified
period, the profits of the last period for which accounts of the company were
made up which ended before the dividend became payable.
Explanation.‑In this sub-rule, “paid” means
paid, credited or distributed or deemed to have been paid, credited or
distributed, as the case may be.
(3) Notwithstanding
anything contained in sub‑rules (1) and (2) and section 24, where any
part of the foreign tax in respect of the income cannot be allowed as a credit
against Pakistan tax, the amount of the income shall be treated for the
purposes of Pakistan tax as reduced by that part of the foreign tax.
(4) Where Pakistan tax
payable depends on the amount received in Pakistan, the said amount shall be
treated as increased by the amount of the credit allowable against Pakistan
tax.
(5) In computing the total
income of a person for the purpose of determining the rate mentioned in rule 3,
sub‑rules (1) and (3) shall not apply and, for the reference in sub‑rule
(4) to the amount of the credit allowable against Pakistan tax, there shall be
substituted a reference to the amount of the foreign tax in respect of the
income.
5. Limitation.__ (1) Subject to the provisions of sub‑rule
(2), any claim for an allowance by way of credit for foreign tax in respect of
any income shall be made to the 1[Deputy
Commissioner] not later than two years from the end of the assessment year for
which that income falls to be charged to Pakistan tax or would fall so to be
charged if any such tax were chargeable in respect thereof.
(2) Where the amount of any
credit given under the agreement is rendered excessive or insufficient by
reason of any adjustment of the amount of any tax payable either in Pakistan or
under the law of any other territory, nothing in this Ordinance limiting the
time for the making of assessment or claims for refund shall apply to any
assessment or claims to which the adjustment gives rise, being an assessment or
claim made not later than two years from the time when all such assessments,
adjustments and other determinations have been made, whether in, Pakistan or
elsewhere, as are material in determining whether any, and if so what, credit
falls to be given.
(3) The provisions of
sections 96 and 97, subsections (1), (3) and (4) of section 99 and sections 100
and 103 shall, as far as may be, apply to tax credit under this Schedule as
they apply to refunds.
1 Subs. by Act 10 of 1993, s. 5, for
“Income Tax Officer”.
6. Provisions as the
deduction of tax at source.__ (1) The provisions of this rule
shall have effect where an agreement concluded under section 163 provides for
the exemption from Pakistan tax of any class of income arising to persons
resident in the territory with the Government of which the agreement is made,
being income from which deduction of tax is required to be made under this
Ordinance.
(2) Any person who pays
income of any such class (hereinafter referred to in this rule as ‘the Pakistan
payer’) to a person in the said territory who is beneficially entitled to the
income (hereinafter referred to in this rule as `the non‑resident’) may
be required, by notice given by or under the direction of the Commissioner, to
pay any such income to the non‑resident without deduction of tax, and
where such notice is given any income from any source specified in the notice,
being income for a year for which the agreement has effect, which the Pakistan
payer, after the date on which the notice was communicated, pays to the non‑resident
whose name is specified wherein shall, subject to the provisions of sub‑rules
(3), (4), (5) and (6), be paid without deduction of tax.
(3) Any notice given under
sub‑rule (2) may be expressed to become ineffective if Certain specified
events happen or, whether so expressed or not, may be cancelled by a notice of
cancellation given by, or under, the direction of the Commissioner, and if, to
the knowledge of the Pakistan payer, any of those events happens or if such
notice of cancellation is given, any payment made to the nonresident by the
Pakistan payer after the happening of that event becomes known to the Pakistan
payer or after the date on which that notice was communicated to the Pakistan
payer, as the case may be, shall be subject to deduction of tax in accordance
with this Ordinance.
(4) If it is discovered,
after a notice has been given under sub‑rule (2), that the non‑resident
is not entitled to exemption from tax in respect of income from any source
specified in the notice, any tax which, but for the notice, would have been
deductible from any payment made to the non‑resident by the Pakistan
payer but by virtue of the notice has not been so deducted, shall, if a
direction to that effect is given by or under the direction of the
Commissioner, be deducted by the Pakistan payer out of so much of the first
payment made to the non‑resident after the date on which the direction
was communicated to the Pakistan payer as remains after the deduction of any
tax deductible therefrom under this Ordinance and any balance which cannot be
deducted out of the first such payment shall be deducted, subject to the same
limitation, out of the next such payment, and so on until the whole of the tax
(the amount of which shall be specified in the direction) has been deducted.
(5) Any tax which the
Pakistan payer is required to deduct under sub-rule (4) shall be paid to the
Federal Government and the provisions of section 50 shall, so far as may be,
apply accordingly.
(6) A notice may be given
under sub‑rule (2) where income is paid to a person authorised to receive
that income on behalf of the non‑resident, and in such a case the
reference in this rule to payment to the non‑resident shall be deemed to
include reference to payment to that person.
7. Definitions.__ (1) In these rules,‑
(a) “Pakistan tax” means Income‑tax, super tax and
surcharge chargeable in accordance with the provisions of this Ordinance; and
(b) “foreign tax”, in relation to any territory with which an
agreement for the avoidance of double taxation has been concluded under section
163, means any tax corresponding to Pakistan tax which is chargeable under the
laws of that territory and for which credit may be allowed under the agreement.
(2) Where an agreement
concluded under section 163 provides for any tax chargeable under the laws of
the territory concerned being treated as income tax, that tax shall,
notwithstanding any thing contained in clause (b) of sub-rule (1) be treated
as foreign tax.
(3) Any reference in this
Schedule to foreign tax shall be construed, in relation to credit to be allowed
under any agreement concluded under section 163, as a reference only to tax
chargeable under the laws of the territory with the Government of which the
agreement was made.
_____
1[THE EIGHTH SCHEDULE
(See Part I of the First Schedule)
Rates of Tax on Income from Export of
Goods.
The rate of tax payable
under section 80CC and sub-section (5A) of section 50, in respect of income of
a person (being a resident), from export of goods shall be__
|
Where
the income pertains to exports covered under: |
The
rate |
|
(a) Part
I |
0.50%
of such income. |
|
(b) Part
I |
0.75%
of such income. |
|
(c) Part
I |
1%
of such income. |
1Subs. by the Finance Act, 1997 (22 of
1997), s. 7, for “The Original Eighth Schedule.”
PART I
(Specified goods manufactured in Pakistan)
|
S.No. |
Description |
|
1. |
Leather
and textile made ups. |
|
2. |
Engineering
goods including electrical goods. |
|
3. |
Goods
specified under heading No. 90.18 of the Fifth Schedule to the Customs Act,
1969 (IV of 1969). |
|
4. |
Jewellery,
pharmaceuticals, sports goods, toilet linen, including terry towels, durries,
horticulture products. |
|
5. |
Ceramic
tiles and wares. |
|
6. |
Cutlery. |
|
7. |
Engineering
goods manufactured in Pakistan as specified in Import of Engineering Goods
(Control) Order, 1983. |
|
8. |
Wooden
furniture and wooden doors and windows. |
|
9. |
Goods
specified in the following table: |
|
S.No. |
Goods
specified under Chapters, Heading and Sub-Heading Nos. of the Pakistan Custom
Tariff |
Description |
|
(i) |
42.05 |
Other
articles of leather. |
|
(ii) |
57.01 |
Hand-knotted
carpets and rugs. |
|
(iii) |
61.01 |
Men
and boys overcoats, jackets knitted or crocheted. |
|
(iv) |
61.02 |
Women
and girls overcoats, jackets knitted or crocheted. |
|
(v) |
61.03 |
Men
and boys suits, jackets, trousers, shirts knitted or crocheted. |
|
(vi) |
61.05 |
Men
and boys shirts knitted or crocheted. |
|
(vii) |
61.06 |
Women
and girls shirts knitted or crocheted. |
|
(viii) |
61.09 |
T-shirts
knitted or crocheted. |
|
(ix) |
61.12 |
Track
suits, swim wear knitted or crocheted. |
|
(x) |
63.01,2000,
3000, 4000 |
Blankets,
wool, cotton and MMF. |
|
(xi) |
63.02 |
Bed
linen, table linen and kitchen linen. |
10. The rate of tax under this part is part is applicable to
Vegetables, fresh fruits and cut flowers also.
PART II
(Goods manufactured in Pakistan)
|
S.No. |
Description |
|
1. |
Export
of goods manufactured in Pakistan subject to other provisions of this
Schedule. |
|
2. |
(i)
Refined/treated salt (ii)
Ground barytes (iii)
Granite blocks and slabs (iv)
Heating insulating bricks (v)
Magnesite refractory. |
|
3. |
Sale
in Pakistan of goods manufactured in Pakistan against an international
tender, where the contract under which such sale is made is approved by the
Commissioner of Income Tax. |
(Goods not covered by Part I and Part II)
|
S.No. |
Description |
|
1. |
All
other good not covered under Part I and Part II of this Schedule; |
|
2. |
The
following goods or class of goods produced in Pakistan, namely,---
|
|
3. |
Such
other goods as may be notified by the Central Board of Revenue.] |
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| LL. B. – III | LL. B.
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