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 Pakistan.

(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 Pakistan and is used for agricultural purposes;

(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 Pakistan relating to incorporation of companies; or

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 Pakistan for the registration of co‑operative societies;

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 Pakistan under any provision of this Ordinance,

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 Pakistan in that year;

(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 94[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 Pakistan in the income year by, or on behalf of, such person; or

(ii) accrues or arises, or is deemed to accrue or arise, to him in Pakistan during such year; or

(iii) accrues or arises to him outside Pakistan during such year;

(b) who is a non‑resident, includes all income from whatever source derived, which,---

(i) is received, or is deemed to be received, in Pakistan in the income year by, or on behalf of, such person; or

(ii) accrues or arises, or is deemed to accrue or arise, to him in Pakistan during such year;

(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 Pakistan.__(1) Income which would be chargeable under the head “Salary” shall be deemed to accrue or arise in Pakistan, wherever paid, if it is earned in Pakistan, of if it is paid by, or on behalf of, the Government or a local authority in Pakistan to a person in the service of such Government or authority, as the case may be.

(2) Any income accruing or arising, whether directly or indirectly, through or from,---

(a) any business connection in Pakistan;

(b) any asset, property or source of income in Pakistan; or

(c) transfer of a capital asset situated in Pakistan,

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 Pakistan,

(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 Pakistan.

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 Pakistan or for the purposes of making or earning any income from any sources in Pakistan,

shall be deemed to accrue or arise in Pakistan.

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 Pakistan by a Pakistani company shall be deemed to be income accruing or arising in Pakistan to such share‑holder.

(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 Pakistan 2***.

(xiii) any expenditure laid out or expended on any educational institution or hospital in Pakistan established for the benefit of the employees, their families and dependents;

(xiv) any expenditure laid out or expended on any institute in Pakistan established for the training of industrial workers recognised, aided or run by Government or run by any local authority;

(xv) any expenditure laid out or expended on the training of any person, being a citizen of Pakistan, in connection with a scheme approved by the Central Board of Revenue for the purposes of this clause;

(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 Pakistan for the purposes of the business or profession, including expenditure incurred in respect of,---

(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 Pakistan for the purposes of the business or profession;


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 Pakistan Industrial Credit and Investment Corporation Limited;

(ii) the Industrial Development Bank of Pakistan;

(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 Pakistan;

(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 Pakistan industrial public company as may be approved by the Central Board of Revenue for the purposes of this clause.

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 Pakistan, is (or would, but for the loss or profits or gains, be) chargeable to tax,---

(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 Pakistan.

(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 Pakistan recognised, aided or run by Government or run by a local authority; or

(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 Pakistan of a non-resident 5[banking] company].

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 Islamabad Capital Territory;

(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[55AMethod 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[59AAssessment 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.].

59DTax 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 Pakistan­

(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 Pakistan; or

(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 Pakistan to obtain tax clearance certificate.___(1) Subject to such exceptions as may be made by the Central Board of Revenue, no person who is not domiciled in Pakistan or who, being domiciled in Pakistan at the time of his departure, has no intention of returning to Pakistan or, in the opinion of any income tax authority, is not likely to return to Pakistan, shall leave Pakistan either by land, sea or air, unless he first obtains from the Income‑tax Officer, authorised in this behalf by the Central Board of Revenue, a certificate stating that be has no liabilities under this Ordinance, the repealed Act, the Estate Duty Act, 1950 (X of 1950) 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), or that satisfactory arrangements have been made for the payment of all such taxes and duties which are or may become payable by that person.

(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 Kashmir. Where any person who has, at any time before or after the commencement of the Finance Ordinance, 1980, been assessed to tax for any income year under the law relating to income tax for the time being in force in Azad Jammu and Kashmir has failed or fails to pay such tax and the income tax authorities of Azad Jammu and Kashmir cannot recover such tax on account of the residence of the said person in Pakistan, or on account of there being no movable or immovable property in Azad Jammu and Kashmir belonging to the said person, the 3[Deputy Commissioner] in Azad Jammu and Kashmir may forward to the Tax Recovery Officer in Pakistan a certificate in the prescribed form specifying the place of residence of the said person in Pakistan, the description and location of the movable and immovable property in Pakistan belonging to him and the amount of the said tax due from him; and, where the said certificate is so forwarded, the Tax Recovery Officer shall proceed to recover the said tax in the manner specified in section 93, and all the provisions of the said section and section 95 shall apply accordingly.]

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 Karachi and Hyderabad Talu-kas and Tehsils ofFaisalabad and Lahore and such adjoining areas of Lahore Tehsil as may be notified in this behalf by the Federal Government.

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 Pakistan an approved industrial undertaking owned by it.

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 Pakistan; or

(ii) on or after the first day of July, 1983, in the territories of Pakistan (excluding Talukas of Karachi and Hyderabad, and Tehsils of Faisalabad and Lahore, and such adjoin­ing areas of Lahore Tehsil as may be notified in this behalf by the Federal Government).

(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 78[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 23[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 Pakistan or the Central Board of Revenue to audit income‑tax receipts or refunds; or

(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 Pakistan with which the Federal Government has entered into an agreement under section 163 for the avoidance of double taxation and the prevention of fiscal evasion as may be required to be disclosed in pursuance of that agreement.

(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 Pakistan; or

(v) an accountant; or

(vi) an income‑tax practitioner;


1Subs. by the Finance Act, 1998 (3 of 1998), s. 5.

(b) “accountant“ means,---

(i)