Charge to Tax

Income Tax is an annual charge upon a person deriving such income, during the tax year, which is chargeable to tax under any provision of income tax ordinance 2001. under the provisions of the ordinance, a person may be liable to: 1. ay Income Tax 2. !educt or collect the tax"at"source and deposit it. #. ay tax in advance $. ay default surcharge and penalties %. ay fees

Tax on taxable income

Taxable income. The taxable income of a person for a tax year shall be the total income of the person for the year reduced &but not below 'ero( by the total of any deductible allowances under art I).

Tax on taxable income

Total Income The total income of a person for a tax year shall be the sum of the person*s income under each of the heads of income for the year.

Computation of taxable income

Heads of income: 1. +or the purposes of the imposition of tax and the computation of total income, all income shall be classified under the following heads, namely:, &a( -alary. &b( Income from roperty. &c( Income from /usiness. &d( 0apital 1ains. and &e( Income from 2ther -ources.

HEAD O I!CO"E:
I!CO"E #O" $#O$E#T%
1. The rent received or receivable by a person 13for4 a tax year, other than rent exempt from tax under this 2rdinance, shall be chargeable to tax in that year under the head 5Income from roperty. -ub6ect to sub"section &#(, 5rent means any amount received or receivable by the owner of land or a building as consideration for the use or occupation of, or the right to use or occupy, the land or building, and includes any forfeited deposit paid under a contract for the sale of land or a building. This section shall not apply to any rent received or receivable by any person in respect of the lease of a building together with plant and machinery and such rent shall be chargeable to tax under the head 5Income from 2ther -ources.

2.

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HEAD O I!CO"E:
I!CO"E #O" $#O$E#T%
$. -ub6ect to sub"section &%(, where the rent received or receivable by a person is less than the fair mar7et rent for the property, the person shall be treated as having derived the fair mar7et rent for the period the property is let on rent in the tax year. -ub"section &$( shall not apply where the fair mar7et rent is included in the income of the lessee chargeable to tax under the head 5-alary. Income under this section shall be liable to tax at the rate specified in !ivision 9I of art I of the +irst -chedule.4

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HEAD O I!CO"E:
I!CO"E #O" $#O$E#T%
:. the provisions of sub"section &1(, shall not apply in respect of a taxpayer who &i( is an individual or association of persons. &ii( derives income chargeable to tax under this section not exceeding ;s. 1%0,000 in a tax year. and &iii( does not derive taxable income under any other head.

HEAD O I!CO"E: I!CO"E #O" &'(I!E((

1. The following incomes of a person for a tax year, other than income exempt from tax under this 2rdinance, shall be chargeable to tax under the head 5Income from /usiness. the profits and gains of any business carried on by a person at any time in the year. &a(

&b( any income derived by any trade, professional or similar association from the sale of goods or provision of services to its members. &c( any income from the hire or lease of tangible movable property. &d( the fair mar7et value of any benefit or per<uisite, whether convertible into money or not, derived by a person in the course of, or by virtue of, a past, present, or prospective business relationship. &e( any management fee derived by a management company &including a modaraba #3management company4 (.

HEAD O I!CO"E: I!CO"E #O" &'(I!E((

2. #. =ny profit on debt derived by a person where the person*s business is to derive such income shall be chargeable to tax under the head 5Income from /usiness and not under the head 5Income from 2ther -ources. 13&#( >here a lessor, being a scheduled ban7 or an investment ban7 or a development finance institution or a modaraba or a leasing company has leased out 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 said asset shall be treated as the income of the said lessor and shall be chargeable to tax under the head 5Income from /usiness.4 23&$( =ny amount received by a ban7ing company or a non"ban7ing finance company, where such amount represents distribution by a mutual fund #3or a rivate ?<uity and 9enture 0apital +und4 out of its income from profit on debt, shall be chargeable to tax under the head 5Income from /usiness and not under the head 5Income from 2ther -ources

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HEAD O I!CO"E:

CA$ITA) *AI!(
1. -ub6ect to this 2rdinance, a gain arising on the disposal of a capital asset by a person in a tax year, other than a gain that is exempt from tax under this 2rdinance, shall be chargeable to tax in that year under the head 50apital 1ains. 2. -ub6ect to sub"sections &#( and &$(, the gain arising on the disposal of a capital asset by a person shall be computed in accordance with the following formula, namely:, A+& where , A is the consideration received by the person on disposal of the asset. and & is the cost of the asset.

HEAD O I!CO"E:

CA$ITA) *AI!(
#. >here a capital asset has been held by a person for more than one year, 13other than shares of public companies including the vouchers of a7istan Telecommunication 0orporation, modaraba certificates or any instrument of redeemable capital as defined in the 0ompanies 2rdinance, 1@A$ &)B9II of 1@A$(,4 the amount of any gain arising on disposal of the asset shall be computed in accordance with the following formula, namely: Axwhere A is the amount of the gain determined under sub"section &2(. .

HEAD O I!CO"E:

CA$ITA) *AI!(
$. +or the purposes of determining component & of the formula in sub" section &2(, no amount shall be included in the cost of a capital asset for any expenditure incurred by a person , &a( that is or may be deducted under another provision of this 0hapter. or &b( that is referred to in section 21.

HEAD O I!CO"E:

CA$ITA) *AI!(
%. In this section, 5capital asset means property of any 7ind held by a person, whether or not connected with a business, but does not include , &a( any stoc7"in"trade consumable stores or raw materials held for the purpose of business.4 &b( any property with respect to which the person is entitled to a depreciation deduction under section 22 or amorti'ation deduction under section 2$. &c( any immovable property. or &d( any movable property excluding capital assets specified in sub"section &%( of section #A4 held for personal use by the person or any member of the person*s family dependent on the person %3.4 .

HEAD O I!CO"E:
I!CO"E #O" OTHE# (O'#CE(
1. Income of every 7ind received by a person in a tax year, 13if it is not included in any other head,4 other than income exempt from tax under this 2rdinance, shall be chargeable to tax in that year under the head 5Income from 2ther -ources, including the following namely: , &a( !ividend. &b( royalty. &c( profit on debt. &d( ground rent. &e( rent from the sub"lease of land or a building. &f( income from the lease of any building together with plant or machinery. &fa( income from provision of amenities, utilities or any other service connected with renting of building.4 &g( any annuity or pension. &h( any pri'e bond, or winnings from a raffle, lottery %3, pri'e on winning a <ui', pri'e offered by companies for promotion of sale4 or cross"word pu''le. &i( any other amount received as consideration for the provision, use or exploitation of property, including from the grant of a right to explore for, or exploit, natural resources. &6( the fair mar7et value of any benefit, whether convertible to money or not, received in connection with the provision, use or exploitation of property. and

HEAD O I!CO"E:
I!CO"E #O" OTHE# (O'#CE(
2. >here a person receives an amount referred to in clause &7( of sub"section &1(, the amount shall be chargeable to tax under the head 5Income from 2ther -ources in the tax year in which it was received and the following nine tax years in e<ual proportion. -ub6ect to sub"section &$(, any amount received as a loan, advance, deposit 23for issuance of shares4 or gift by a person in #3a tax year4 from another person &not being a ban7ing company or financial institution( otherwise than by a crossed che<ue drawn on a ban7 or through a ban7ing channel from a person holding a Cational Tax Cumber $3 4 shall be treated as income chargeable to tax under the head 5Income from 2ther -ources for the tax year in which it was received. -ub"section &#( shall not apply to an advance payment for the sale of goods or supply of services.

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HEAD O I!CO"E:
I!CO"E #O" OTHE# (O'#CE(
2. >here a person receives an amount referred to in clause &7( of sub"section &1(, the amount shall be chargeable to tax under the head 5Income from 2ther -ources in the tax year in which it was received and the following nine tax years in e<ual proportion. -ub6ect to sub"section &$(, any amount received as a loan, advance, deposit 23for issuance of shares4 or gift by a person in #3a tax year4 from another person &not being a ban7ing company or financial institution( otherwise than by a crossed che<ue drawn on a ban7 or through a ban7ing channel from a person holding a Cational Tax Cumber $3 4 shall be treated as income chargeable to tax under the head 5Income from 2ther -ources for the tax year in which it was received. -ub"section &#( shall not apply to an advance payment for the sale of goods or supply of services.

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