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TAXATIONMANAGEMENTChapter No.1: Concepts of taxation & Taxstructure in Pakistan

This Chapter contains the suar! of thefo""o#in$ chapters of the text %ookChapter 1: Intro'uction & histor! of Incoe

Tax (a#Chapter ): Incoe Tax AuthoritiesChapter 1*: Appea"s

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Concept of Tax & Taxation

Tax: Compulsory contributions of wealth

levied upon the persons by the state, to

meet the expenses incurred in providingcommon benets to the nation

Taxation Mana$eent: The strategy where by a person manages its

business and other activities in such a way so

as to legally minimize his tax liability, notthrough illegal concealments, but throughlegal compliance to avail tax credits, rebates,

exemptions, reductions and deductions etc.

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Cannons of Taxation

Cannons of Taxation revolve around #ho #i""

contribute ho#uch +ip"icit!:Tax laws must be simple

Con,enience:Tax procedures must be convenient

Certaint!: Tax amount must be certain

-u'iciousness:Tax system must be just

ene/t:Taxes must be imposed on the beneciaries

usiness frien'"!:Taxes must encourage business

Capacit! to Pa!0orionta" E2uit!: ersons having the same income should

pay the same taxes

3ertica" E2uit!:Those who have more income should paytaxes at high rates whereas those who have low income,

they should pay taxes at lower rates

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T!pes of Taxes

4irect Tax: !urden of taxation is on the person on

whom levied. ".g income tax

In'irect Tax: !urden of tax is shifted by the person

on whom levied to other persons. ".g. sale tax Proportiona" Tax: #evied with the same

percentage. ".g. sales tax is levied at the rate of $%&

Pro$ressi,e Tax: 'ate of tax increases as the

income increases. ".g income tax

3a"ue A''e' Tax: #evied at each stage of value

addition. ".g. sales tax

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5isca" Po"ic!

(trategy adopted by government to collect therevenue and ma)e the expenditures so that social andeconomic stability could be attained 6e,enue:Taxes * Tari+s, nternal * "xternal !orrowing,

enalties * -ines, ids * /rants, ncome from governmentowned enterprises, rinting of currency, (ale of state assets

Expen'itures: 0evelopmental * 1on2developmental"xpenditures, (ubsidies, Transfer ayments3li)e4nemployment llowances, 0ebt (ervicing, ension,

0efence, 'unning of government, (0 5isca" 4e/cit: "xpenditures5'evenue 5isca" +urp"us:"xpenditures6'evenue 5isca" Neutra"it!: "xpenditures7'evenue

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4i7erent Taxes inPakistan 5e'era" Taxes: #evied by the federal government

ncome tax

(ales tax on goods -ederal "xcise 0uty

Customs duty Pro,incia" Taxes:#evied by the provincial government

(tamps 0uty

roperty Tax

8otor vehicle tax

(ales tax on services (oca" taxes: #evied by the local government

Toll tax 8unicipal taxes

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6o"e of Pi""ars of the +tate in taxations!ste in Pakistan

(e$is"ati,e

Executi,e

-u'iciar

!

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(e$is"ature888Par"iaent

8a)es substantive legislation to impose di+erent

taxes in the light of cannons of taxation . ".g. ncome Tax ct of $9, ncome Tax ;rdinance $9%9, ncome Tax

;rdinance

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Executi,e888Tax Authorities

dminister taxes with eAciency *e+ectiveness. ".g. -ollowing uthoritiesadminister ncome Tax, (ales Tax * -"0

5inance Minister & 5inance +ecretar! 6e,enue 4i,ision of 5e'era" Go,t.: 56

"stablished under -!' ct

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Executi,e888TaxAuthorities

ncome Tax 'ules

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Executi,e888TaxAuthorities

Authorities in 5ie"' 5orations: n?#arge Taxpayers 4nits, $ 'egional Tax

;Aces * DB Taxpayer -acilitation Centers,following tax authorities are practicing Chief Commissioner nland 'evenue EFead of

'T;G#T4H /rade $

Commissioner nland 'evenue EFead of IoneH/rade