Income Tax Ordinence 2001 Upto Dated 30.6.2015

7/23/2019 Income Tax Ordinence 2001 Upto Dated 30.6.2015

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F.No.2(1)/2001Pub. The following Ordinance promulga ed b! he Pre"iden i" hereb!publi"hed for general informa ion#

AN

ORDINANCE

To consolidate and amend the law relating to income tax

$%&'& i i" e*pedien o con"olida e and amend he law rela ing o income a* and opro+ide for ma er" ancillar! here o or connec ed herewi h,

$%&'& he Pre"iden i" "a i"fied ha circum" ance" e*i" which render i nece""ar!o a-e immedia e ac ion,

NO$ T%&'&FO'& in pur"uance of he Proclama ion of &mergenc! of he four een hda! of Oc ober 1 and he Pro+i"ional on" i u ion Order No. 1 of 1 read wi h Pro+i"ional

on" i u ional mendmen Order No. of 1 and in e*erci"e of all power" enabling him in ha

behalf he Pre"iden of he "lamic 'epublic of Pa-i" an i" plea"ed o ma-e and promulga e hefollowing Ordinance#

CHAPTER IPRELIMINARY

! "hort title# extent and commencement!$ (1) Thi" Ordinance ma! be called he ncomeTa* Ordinance 2001.

(2) e* end" o he whole of Pa-i" an.

( ) "hall come in o force on "uch da e a" he Federal 3o+ernmen ma! b! no ifica ionin official 3a4e e appoin .

%! De&initions! $ n hi" Ordinance unle"" here i" an! hing repugnan in he "ub5ec or con e*

(1) 6accumula ed profi "6 in rela ion o 7di" ribu ion or pa!men of8 a di+idend 7include8

(a) an! re"er+e made up wholl! or par l! of an! allowance deduc ion or e*emp ion admi""ible und.

er hi" Ordinance,9.:;. 2 0

(b) for he purpo"e" of 7"ub;clau"e" (a) (b) and (e) of clau"e (1 )amalgama ion< mean" he merger of one or more ban-ing companie" or non;ban-ing financial in" i u ion" 7or in"urance companie" 8 7or companie" owning andmanaging indu" rial under a-ing"8 7or companie" engaged in pro+iding "er+ice" andno being a rading compan! or companie"8 in ei her ca"e 7a lea" one of hem8 beinga public compan! or a compan! incorpora ed under an! law o her han ompanie"Ordinance 1 ?@ (ABC of 1 ?@) for he ime being in force ( he compan! or companie" which "o merge being referred o a" he >amalgama ing compan!< or companie" and he compan! wi h which he! merge or which i" formed a" a re"ul of merger a" he >amalgama ed compan!


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(b) he liabili ie" of he amalgama ing compan! or companie" immedia el! beforehe amalgama ion become he liabili ie" of he amalgama ed compan! b! +ir ue

of he amalgama ion 7.8

7 8

7(2) > ppella e Tribunal< mean" he ppella e Tribunal nland 'e+enue e" abli"hed under "ec ion 1 0,8

( ) >appro+ed gra ui ! fund< mean" a gra ui ! fund appro+ed b! he ommi""ioner inaccordance wi h Par of he i* h chedule,

7( ) > ppro+ed nnui ! Plan< mean" an nnui ! Plan appro+ed b! ecuri ie" and&*change ommi""ion of Pa-i" an ( & P) under Colun ar! Pen"ion !" em 'ule"200E and offered b! a Bife n"urance ompan! regi" ered wi h he & P under

n"urance Ordinance 2000 (AAA A of 2000),8

7( ) > ppro+ed ncome Pa!men Plan< mean" an ncome Pa!men Plan appro+ed b!ecuri ie" and &*change ommi""ion of Pa-i" an ( & P) under Colun ar! Pen"ion!" em 'ule" 200E and offered b! a Pen"ion Fund Ganager regi" ered wi h he& P under Colun ar! Pen"ion !" em 'ule" 200E,8

7( ) > ppro+ed Pen"ion Fund< mean" Pen"ion Fund appro+ed b! ecuri ie" and&*change ommi""ion of Pa-i" an ( & P) under Colun ar! Pen"ion !" em 'ule"200E and managed b! a Pen"ion Fund Ganager regi" ered wi h he & P under Colun ar! Pen"ion !" em 'ule" 200E,8

7( H) > ppro+ed &mplo!men Pen"ion or nnui ! cheme< mean" an! emplo!men rela edre iremen "cheme appro+ed under hi" Ordinance which ma-e" periodical pa!men

o a beneficiar! i.e . pen"ion or annui ! "uch a" appro+ed "uperannua ion fund public"ec or pen"ion "cheme and &mplo!ee" Old; ge enefi cheme,8

7( &) > ppro+ed Occupa ional a+ing" cheme< mean" an! appro+ed gra ui ! fund or

recogni4ed pro+iden fund,8

(@) >appro+ed "uperannua ion fund< mean" a "uperannua ion fund or an! par of a"uperannua ion fund appro+ed b! he ommi""ioner in accordance wi h Par of he

i* h chedule,

7(E) >a""e""men < include" 7pro+i"ional a""e""men 8 re;a""e""men and amendeda""e""men and he cogna e e*pre""ion" "hall be con" rued accordingl!,8

7(E ) >a""e""men !ear< mean" a""e""men !ear a" defined in he repealed Ordinance,8

7(E ) >a""e managemen compan!< mean" an a""e managemen compan! a" defined inhe Non; an-ing Finance ompanie" and No ified &n i ie" 'egula ion" 200I,8

(J) >a""ocia ion of per"on"< mean" an a""ocia ion of per"on" a" defined in "ec ion ?0,

(I) >ban-ing compan!< mean" a ban-ing compan! a" defined in he an-ing ompanie"Ordinance 1 J2 (BC of 1 J2) and include" an! bod! corpora e which ran"ac " hebu"ine"" of ban-ing in Pa-i" an,

7(?) > oard< mean" he en ral oard of 'e+enue e" abli"hed under he en ral oard of 'e+enue c 1 2@ ( C of 1 2@) and on he commencemen of Federal oard of 'e+enue c 200I he Federal oard of 'e+enue e" abli"hed under "ec ion

hereof,

( ) >bonu" "hare"< include" bonu" uni " in a uni ru" ,

(10) >bu"ine""< include" an! rade commerce manufac ure profe""ion +oca ion or ad+en ure or concern in he na ure of rade commerce manufac ure profe""ion or +oca ion bu doe" no include emplo!men ,

(11)8 >capi al a""e < mean" a capi al a""e a" defined in "ec ion I,

7(11 ) >chari able purpo"e< include" relief of he poor educa ion medical relief and head+ancemen of an! o her ob5ec of general public u ili !,8


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7(11 ) > hief ommi""ioner< mean" a per"on appoin ed a" hief ommi""ioner nland 'e+enue under "ec ion 20? and include" a 'egional ommi""ioner of ncome

Ta* and a Hirec or;3eneral of ncome Ta* and ale" Ta*,8

7(11 ) > ollec i+e n+e" men cheme< "hall ha+e he "ame meaning" a" are a""ignedunder he Non; an-ing Finance ompanie" (&" abli"hmen and 'egula ion) 'ule"200 ,8

(12) >compan!< mean" a compan! a" defined in "ec ion ?0,

7(1 ) > ommi""ioner< mean" a per"on appoin ed a" ommi""ioner nland 'e+enueunder "ec ion 20? and include" an! o her au hori ! +e" ed wi h all or an! of hepower" and func ion" of he ommi""ioner,8

7(1 ) > ommi""ioner ( ppeal")< mean" a per"on appoin ed a" ommi""ioner nland 'e+enue( ppeal") under "ec ion 20?,8

7(1 ) >con"umer good"< mean" good" ha are con"umed b! he end con"umer ra her hanu"ed in he produc ion of ano her good, on ribu ion o an ppro+ed Pen"ion Fund< mean" con ribu ion a" defined in rule2(5) of he Colun ar! Pen"ion !" em 'ule" 200E7 8,8

(1@) >co;opera i+e "ocie !< mean" a co;opera i+e "ocie ! regi" ered under he o;opera i+e ocie ie" c 1 2E (C of 1 2E) or under an! o her law for he ime beingin force in Pa-i" an for he regi" ra ion of co;opera i+e "ocie ie",

(1E) >deb < mean" an! amoun owing including accoun " pa!able and he amoun " owingunder promi""or! no e" bill" of e*change deben ure" "ecuri ie" bond" or o her financial in" rumen ",

(1J) >deduc ible allowance< mean" an allowance ha i" deduc ible from o al income

under Par A of hap er ,

(1I) >depreciable a""e < mean" a depreciable a""e a" defined in "ec ion 22,

71I .


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7(f) 7remi ance of8 af er a* profi of a branch of a foreign compan! opera ing inPa-i" an,8

bu doe" no include

(i) a di" ribu ion made in accordance wi h 7"ub;clau"e8 (c) or (d) in re"pecof an! "hare for full ca"h con"idera ion or redemp ion of deben ure" or deben ure " oc- where he holder of he "hare or deben ure i" noen i led in he e+en of li=uida ion o par icipa e in he "urplu" a""e ",

(ii) an! ad+ance or loan made o a "hareholder b! a compan! in he ordinar!cour"e of i " bu"ine"" where he lending of mone! i" a "ub" an ial parof he bu"ine"" of he compan!, 7 8

(iii) an! di+idend paid b! a compan! which i" "e off b! he compan! again"he whole or an! par of an! "um pre+iou"l! paid b! i and rea ed a" a

di+idend wi hin he meaning of 7"ub;clau"e8 (e) o he e* en o which i i""o "e off,7and8

7(i+) remi ance of af er a* profi b! a branch of Pe roleum &*plora ion andProduc ion (&KP) foreign compan! opera ing in Pa-i" an.8

7(1 ) >&ligible Per"on< for he purpo"e of Colun ar! Pen"ion !" em 'ule" 200E mean"an indi+idual Pa-i" ani who 7hold"8 a +alid Na ional Ta* Number7or ompu eri4edNa ional den i ! ard7or Na ional den i ! ard for O+er"ea" Pa-i" ani"8 i""ued b!

he Na ional Ha aba"e and 'egi" ra ion u hori !8 7 87#88

7Pro+ided ha he o al a* credi a+ailable for he con ribu ion made o appro+edemplo!men pen"ion or annui ! "cheme and appro+ed pen"ion fund under Colun ar!Pen"ion !" em 'ule" 200E "hould no e*ceed he limi pre"cribed or "pecified in"ec ion J .8

7(1 ) The e*pre""ion" >addre""ee< >au oma ed< >elec ronic< >elec ronic "igna ureinforma ion< >informa ion "!" em< >origina or< and > ran"ac ion< "hall ha+e he"ame meaning" a" are a""igned o hem in he &lec ronic Tran"ac ion" Ordinance2002 (B of 2002),8

7(1 ) >elec ronic record< include" he con en " of communica ion" ran"ac ion" andprocedure" under hi" Ordinance including a achmen " anne*e" enclo"ure"accoun " re urn" " a emen " cer ifica e" applica ion" form" receip "ac-nowledgemen " no ice" order" 5udgmen " appro+al" no ifica ion" circular"ruling" documen " and an! o her informa ion a""ocia ed wi h "uch communica ion"

ran"ac ion" and procedure" crea ed "en forwarded replied o ran"mi eddi" ribu ed broadca" " ored held copied downloaded di"pla!ed +iewed read or prin ed b! one or "e+eral elec ronic re"ource" and an! o her informa ion in elec ronic

form,87(1 H) >elec ronic re"ource< include" elecommunica ion "!" em" ran"mi""ion de+ice"

elec ronic +ideo or audio e=uipmen encoding or decoding e=uipmen inpu ou puor connec ing de+ice" da a proce""ing or " orage "!" em" compu er "!" em""er+er" ne wor-" and rela ed compu er program" applica ion" and "of wareincluding da aba"e" da a warehou"e" and web por al" a" ma! be pre"cribed b! he

oard from ime o ime for he purpo"e of crea ing elec ronic record,8

7(1 &) > elecommunica ion "!" em< include" a "!" em for he con+e!ance hrough heagenc! of elec ric magne ic elec ro;magne ic elec ro;chemical or elec ro;mechanical energ! of "peech mu"ic and o her "ound" +i"ual image" and "ignal""er+ing for he impar a ion of an! ma er o herwi"e han in he form of "ound" or +i"ual image" and al"o include" real ime online "haring of an! ma er in manner andmode a" ma! be pre"cribed b! he oard from ime o ime.8

(20) >emplo!ee< mean" an! indi+idual engaged in emplo!men ,

(21) >emplo!er< mean" an! per"on who engage" and remunera e" an emplo!ee,

(22) >emplo!men < include" D


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(a) a direc or"hip or an! o her office in+ol+ed in he managemen of a compan!,

(b) a po"i ion en i ling he holder o a fi*ed or a"cer ainable remunera ion, or

(c) he holding or ac ing in an! public office,

7(22 ) >fa" mo+ing con"umer good"< mean" con"umer good" which are "upplied in re ailmar-e ing a" per dail! demand of a con"umer,fee for echnical "er+ice"< mean" an! con"idera ion whe her periodical or lump "umfor he rendering of an! managerial echnical or con"ul anc! "er+ice" including he"er+ice" of echnical or o her per"onnel bu doe" no include

(a) con"idera ion for "er+ice" rendered in rela ion o a con" ruc ion a""embl! or li-e pro5ec under a-en b! he recipien , or

(b) con"idera ion which would be income of he recipien chargeable under hehead > alar!filer< mean" a a*pa!er who"e name appear" in he ac i+e a*pa!er"L li" i""ued b! heoard from ime o ime or i" holder of a a*pa!erL" card,8

(2@) >financial in" i u ion< mean" an in" i u ion 7a" defined8 under he ompanie"Ordinance 71 ?@ (ABC of 1 ?@)8 7 8,

(2E) >finance "ocie !< include" a co;opera i+e "ocie ! which accep " mone! on depo"i or o herwi"e for he purpo"e" of ad+ancing loan" or ma-ing in+e" men " in he ordinar!cour"e of bu"ine"",

(2J) >firm< mean" a firm a" defined in "ec ion ?0,

(2I) >foreign;"ource income< mean" foreign;"ource income a" defined in "ub;"ec ion (1J)of "ec ion 101.

(2?) >%ou"e uilding Finance orpora ion< mean" he orpora ion con" i u ed under he%ou"e uilding Finance orpora ion c 1 E2 (AC of 1 E2),

7(2? ) >impu able income< in rela ion o an amoun "ub5ec o final a* mean" he incomewhich would ha+e re"ul ed in he "ame a* had hi" amoun no been "ub5ec o final

a*,income< include" an! amoun chargeable o a* under hi" Ordinance an! amoun"ub5ec o collec ion 7or deduc ion8 of a* under "ec ion 1@? 71E0 1E2(1) 1E 1E@1EJ 1EJ 2 2 87 8 "ub;"ec ion (E) of "ec ion 2 @ 7 2 JG and 2 JN8 7an!amoun rea ed a" income under an! pro+i"ion of hi" Ordinance8 and an! lo"" of income 7 8,

7(2 ) >income !ear< mean" income !ear a" defined in he repealed Ordinance,87(2 ) > ndi+idual Pen"ion ccoun < mean" an accoun main ained b! an eligible per"on wi h

a Pen"ion Fund Ganager appro+ed under he Colun ar! Pen"ion !" em 'ule"200E,8

7(2 ) > ndu" rial under a-ing< mean"

(a) an under a-ing which i" "e up in Pa-i" an and which emplo!"

en or more per"on" in Pa-i" an and in+ol+e" he u"e of elec ricalenerg! or an! o her form of energ! which i" mechanicall! ran"mi edand i" no genera ed b! human or animal energ!, or

wen ! or more per"on" in Pa-i" an and doe" no in+ol+e he u"e of elec rical energ! or an! o her form of energ! which i" mechanicall!

ran"mi ed and i" no genera ed b! human or animal energ!#

and which i" engaged in


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he manufac ure of good" or ma erial" or he "ub5ec ion of good" or ma erial" o an! proce"" which "ub" an iall! change" heir originalcondi ion, or

"hip;building, or

genera ion con+er"ion ran"mi""ion or di" ribu ion of elec ricalenerg! or he "uppl! of h!draulic power, or

he wor-ing of an! mine oil;well or an! o her "ource of mineraldepo"i ", and

(b) an! o her indu" rial under a-ing which he oard ma! b! no ifica ion in heofficial ga4e e "pecif!.8

>in angible< mean" an in angible a" defined in "ec ion 2@,

7( 0 )>in+e" men compan!< mean" an in+e" men compan! a" defined in he Non; an-ingFinance ompanie" (&" abli"hmen and 'egula ion) 'ule" 200 ,8

7( 0 ) M O' mean" Marachi n er an- Offered 'a e pre+alen on he fir" da! of each=uar er of he financial !ear,8

7( 0 ) >lea"ing compan!< mean" a lea"ing compan! a" defined in he Non; an-ing Financeompanie" and No ified &n i ie" 'egula ion 200I,8

>li=uida ion< in rela ion o a compan! include" he ermina ion of a ru" ,

7( 1 ) >Bocal 3o+ernmen < "hall ha+e he "ame meaning a" defined in he Pun5ab Bocal3o+ernmen Ordinance 2001 (A of 2001) he indh Bocal 3o+ernmen Ordinance2001 (AAC of 2001) he N$FP Bocal 3o+ernmen Ordinance 2001 (A C of 2001)and he alochi" an Bocal 3o+ernmen Ordinance 2001 (AC of 2001),8

( 2) >member< in rela ion o an a""ocia ion of per"on" include" a par ner in a firm,

( ) >minor child< mean" an indi+idual who i" under he age of eigh een !ear" a he endof a a* !ear,

( @) >modaraba< mean" a modaraba a" defined in he Godaraba ompanie" andGodaraba" (Floa a ion and on rol) Ordinance 1 ?0 (AAA of 1 ?0),

( E) >modaraba cer ifica e< mean" a modaraba cer ifica e a" defined in he Godarabaompanie" and Godaraba" (Floa a ion and on rol) Ordinance 1 ?0 (AAA of

1 ?0),

7( E ) >Gu ual Fund< mean" a mu ual fund 7regi" ered or appro+ed b! he ecuri ie" and&*change ommi""ion of Pa-i" an8,8

7( E ) >N PB< mean" Na ional learing ompan! of Pa-i" an Bimi ed which i" acompan! incorpora ed under he ompanie" Ordinance 1 ?@ (ABC of 1 ?@) andlicen"ed a" > learing %ou"e< b! he ecuri ie" and &*change ommi""ion of Pa-i" an,8

7( E ) >non;ban-ing finance compan!< mean" an N F a" defined in he Non; an-ingFinance ompanie" (&" abli"hmen and 'egula ion) 'ule" 200 ,8

7( E )>non;filer< mean" a per"on who i" no a filer,8

7( J) >non;profi organi4a ion< mean" an! per"on o her han an indi+idual which i"

(a) e" abli"hed for religiou" educa ional chari able welfare or de+elopmenpurpo"e" or for he promo ion of an ama eur "por ,

(b) formed and regi" ered under an! law a" a non;profi organi4a ion,

(c) appro+ed b! he ommi""ioner for "pecified period on an applica ion made b!"uch per"on in he pre"cribed form and manner accompanied b! hepre"cribed documen " and on re=ui"i ion "uch o her documen " a" ma! bere=uired b! he ommi""ioner,


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and none of he a""e " of "uch per"on confer" or ma! confer a pri+a e benefio an! o her per"on,8

( I) >non;re"iden per"on< mean" a non;re"iden per"on a" defined in ec ion ?1,

( ?) >non;re"iden a*pa!er< mean" a a*pa!er who i" a non;re"iden per"on,

7( ? ) >Officer of nland 'e+enue< mean" an! ddi ional ommi""ioner nland 'e+enueHepu ! ommi""ioner nland 'e+enue ""i" an ommi""ioner nland 'e+enue

nland 'e+enue Officer nland 'e+enue udi Officer or an! o her officer howe+er de"igna ed or appoin ed b! he oard for he purpo"e" of hi" Ordinance,8

( ) >Origina or< mean" Origina or a" defined in he ""e ac-ed ecuri i4a ion 'ule"1 ,

(@0) >Pa-i" an;"ource income< mean" Pa-i" an;"ource income a" defined in "ec ion 101,

7(@0 ) >Pen"ion Fund Ganager< mean" an a""e managemen compan! regi" ered under he Non; an-ing Finance ompanie" (&" abli"hmen and 'egula ion") 'ule" 200

or a life in"urance compan! regi" ered under n"urance Ordinance 2000 (AAA A of 2000) dul! au hori4ed b! he ecuri ie" and &*change ommi""ion of Pa-i" an andappro+ed under he Colun ar! Pen"ion !" em 'ule" 200E o manage he ppro+edPen"ion Fund,8

(@1) >permanen e" abli"hmen < in rela ion o a per"on mean" a 7fi*ed8 place of bu"ine""hrough which he bu"ine"" of he per"on i" wholl! or par l! carried on and include"

D

(a) a place of managemen branch office fac or! or wor-"hop 7premi"e" for "olici ing order" warehou"e permanen "ale" e*hibi ion or "ale" ou le 8 o her

han a liai"on office e*cep where he office engage" in he nego ia ion of con rac " (o her han con rac " of purcha"e),

(b) a mine oil or ga" well =uarr! or an! o her place of e* rac ion of na uralre"ource",

7(ba) an agricul ural pa" oral or fore" r! proper !,8

(c) a building "i e a con" ruc ion a""embl! or in" alla ion pro5ec or "uper+i"or!ac i+i ie" 7connec ed8 wi h "uch "i e or pro5ec 7bu onl! where "uch "i e pro5ecand i " 7connec ed8 "uper+i"or! ac i+i ie" con inue for a period or period"aggrega ing more han nine ! da!" wi hin an! wel+e;mon h" period8 ,

(d) he furni"hing of "er+ice" including con"ul anc! "er+ice" b! an! per"onhrough emplo!ee" or o her per"onnel engaged b! he per"on for "uch

purpo"e 7 8,

(e) a per"on ac ing in Pa-i" an on behalf of he per"on (hereinaf er referred o a" he >agen 7per"on< mean" a per"on a" defined in "ec ion ?0,

7(@2 ) >PG&A< mean" Pa-i" an Gercan ile &*change Bimi ed a fu ure" commodi ! e*changecompan! incorpora ed under he ompanie" Ordinance 1 ?@ (ABC of 1 ?@) and i"licen"ed and regula ed b! he ecuri ie" and &*change ommi""ion of Pa-i" an,pre;commencemen e*pendi ure< mean" a pre;commencemen e*pendi ure a"defined in "ec ion 2E,


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(@@) >pre"cribed< mean" pre"cribed b! rule" made under hi" Ordinance,

7(@@ ) >principal officer< u"ed wi h reference o a compan! or a""ocia ion of per"on"include" D

(a) a direc or a manager "ecre ar! agen accoun an or an! "imilar officer, and

(a) an! per"on connec ed wi h he managemen or admini" ra ion of he compan!or a""ocia ion of per"on" upon whom he ommi""ioner ha" "er+ed a no ice of

rea ing him a" he principal officer hereof,8

(@E) >pri+a e compan!< mean" a compan! ha i" no a public compan!,

7 8

7 8

(@J) >profi on a deb < 7whe her pa!able or recei+able mean"8

(a) an! profi !ield in ere" di"coun premium or o her amoun 7 8 owing under adeb o her han a re urn of capi al, or

(b) an! "er+ice fee or o her charge in re"pec of a deb including an! fee or charge incurred in re"pec of a credi facili ! which ha" no been u ili4ed,

(@I) >public compan!< mean"

(a) a compan! in which no le"" han fif ! per cen of he "hare" are held b! heFederal 3o+ernmen 7or Pro+incial 3o+ernmen 8,

7(ab) a compan! in which 7no le"" han fif ! per cen of he8 "hare" are held b! aforeign 3o+ernmen or a foreign compan! owned b! a foreign 3o+ernmen 7,88

(b) a compan! who"e "hare" were raded on a regi" ered " oc- e*change inPa-i" an a an! ime in he a* !ear and which remained li" ed on hae*change 7 8 a he end of ha !ear, or

7(c) a uni ru" who"e uni " are widel! a+ailable o he public and an! o her ru" a"defined in he Tru" " c 1??2 ( of 1??2),8

7(@I ) >'& T cheme< mean" a '& T cheme a" defined in he 'eal &" a e n+e" men Tru"'egula ion" 201E,'eal &" a e n+e" men Tru" Ganagemen ompan! 7'G 8 mean" 7'G 8 a"defined under he 'eal &" a e n+e" men Tru" 'egula ion" 7201E8,8

7(@I ) >'en al '& T cheme< mean" a 'en al '& T cheme a" definedunder he 'eal &" a e n+e" men Tru" 'egula ion" 201E,recogni"ed pro+iden fund< mean" a pro+iden fund recogni"ed b! he ommi""ioner in accordance wi h Par of he i* h chedule,

7 8

(@ ) >ren < mean" ren a" defined in "ub;"ec ion (2) of "ec ion 1E and include" an amounrea ed a" ren under "ec ion 1J,

7(@ ) >repealed Ordinance< mean" ncome Ta* Ordinance 1 I (AAA of 1 I ),8

(E0) >re"iden compan!< mean" a re"iden compan! a" defined in "ec ion ? ,

(E1) >re"iden indi+idual< mean" a re"iden indi+idual a" defined in "ec ion ?2,

(E2) >re"iden per"on< mean" a re"iden per"on a" defined in "ec ion ?1,

(E ) >re"iden a*pa!er< mean" a a*pa!er who i" a re"iden per"on,

(E@) 7>ro!al !


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(a) he u"e of or righ o u"e an! pa en in+en ion de"ign or model "ecreformula or proce"" rademar- or o her li-e proper ! or righ ,

(b) he u"e of or righ o u"e an! cop!righ of a li erar! ar i" ic or "cien ific wor-including film" or +ideo ape" for u"e in connec ion wi h ele+i"ion or ape" inconnec ion wi h radio broadca" ing bu "hall no include con"idera ion for he"ale di" ribu ion or e*hibi ion of cinema ograph film",

(c) he receip of or righ o recei+e an! +i"ual image" or "ound" or bo hran"mi ed b! "a elli e cable op ic fibre or "imilar echnolog! in connec ion

wi h ele+i"ion radio or in erne broadca" ing,

(d) he "uppl! of an! echnical indu" rial commercial or "cien ific -nowledgee*perience or "-ill,

(e) he u"e of or righ o u"e an! indu" rial commercial or "cien ific e=uipmen ,

(f) he "uppl! of an! a""i" ance ha i" ancillar! and "ub"idiar! o and i"furni"hed a" a mean" of enabling he applica ion or en5o!men of an! "uchproper ! or righ a" men ioned in 7"ub;clau"e"8 (a) hrough (e), 7and8

(g) he di"po"al of an! proper ! or righ referred o in 7"ub;clau"e"8 (a) hrough (e),

(EE) >"alar!< mean" "alar! a" defined in "ec ion 12,

(EJ) > chedule< mean" a chedule o hi" Ordinance,

(EI) >"ecuri i4a ion< mean" "ecuri i4a ion a" defined in he ""e ac-ed ecuri i4a ion'ule" 1 ,

(E?) >"hare< in rela ion o a compan! include" a modaraba cer ifica e and he in ere" of abeneficiar! in a ru" (including uni " in a ru" ),

(E ) >"hareholder< in rela ion o a compan! include" a modaraba cer ifica e holder 7a uniholder of a uni ru" 8 and a beneficiar! of a ru" ,

7(E ) > mall ompan!< mean" a compan! regi" ered on or af er he fir" da! of ul! 200Eunder he ompanie" Ordinance 1 ?@ (ABC ) of 1 ?@ which

(i) ha" paid up capi al plu" undi" ribu ed re"er+e" no e*ceeding 7fif !8million rupee",

7(ia) ha" emplo!ee" no e*ceeding wo hundred and fif ! an! ime during he!ear,8

(ii) ha" annual urno+er no e*ceeding wo hundred 7and fif !8 million rupee",and

(iii) i" no formed b! he "pli ing up or he recon" i u ion of compan! alread!in e*i" ence,8

7(E ) > pecial udge< mean" he pecial udge appoin ed under "ec ion 20 ,8

(J0) > pecial Purpo"e Cehicle< mean" a pecial Purpo"e Cehicle a" defined in he ""eac-ed ecuri i4a ion 'ule" 1 ,

(J1) >"pecula ion bu"ine""< mean" a "pecula ion bu"ine"" a" defined in "ec ion 1 ,

7(J1 ) >" oc- fund< mean" a collec i+e in+e" men "cheme or a mu ual fund where hein+e" ible fund" are in+e" ed b! wa! of e=ui ! "hare" in companie" o he e* en of more han "e+en ! per cen of he in+e" men ,8

(J2) >" oc-;in; rade< mean" " oc-;in; rade a" defined in "ec ion E,

(J ) > a*< mean" an! a* impo"ed under hap er and include" an! penal ! fee or o her charge or an! "um or amoun le+iable or pa!able under hi" Ordinance,

(J@) > a*able income< mean" a*able income a" defined in "ec ion ,


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7 8

(JJ) > a*pa!er< mean" an! per"on who deri+e" an amoun chargeable o a* under hi"Ordinance and include"

(a) an! repre"en a i+e of a per"on who deri+e" an amoun chargeable o a* under hi" Ordinance,

(b) an! per"on who i" re=uired o deduc or collec a* under Par C of hap er A7and hap er A ,8 or

(c) an! per"on re=uired o furni"h a re urn of income or pa! a* under hi"Ordinance,

(JI) > a* rea !< mean" an agreemen referred o in "ec ion 10I,

(J?) > a* !ear< mean" he a* !ear a" defined in "ub;"ec ion (1) of "ec ion I@ and inrela ion o a per"on include" a "pecial !ear or a ran"i ional !ear ha he per"on i"permi ed o u"e under "ec ion I@,

(J ) > o al income< mean" o al income a" defined in "ec ion 10,

(I0) > ru" < mean" a > ru" < a" defined in "ec ion ?0,

7(I0 ) > urno+er< mean" urno+er a" defined in "ub;"ec ion ( ) of "ec ion 11 ,8

(I1) >underl!ing owner"hip< mean" an underl!ing owner"hip a" defined in "ec ion ?,

(I2) >uni "< mean" uni " in a uni ru" ,

(I ) >uni ru" < mean" a uni ru" a" defined in "ec ion ?0, and

7(I@) >Cen ure api al ompan!< and >Cen ure api al Fund< "hall ha+e he "amemeaning" a" are a""igned o hem under he 7Non; an-ing Finance 7 ompanie"8(&" abli"hmen and 'egula ion) 'ule" 200 8,

7(IE) >whi" leblower< mean" whi" leblower a" defined in "ec ion 22I ,


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CHAPTER IICHAR)E O* TA+

,! Tax on taxa-le income!$ (1) ub5ec o hi" Ordinance income a* "hall be impo"ed for each a*!ear a he ra e or ra e" "pecified in 7Hi+i"ion or 8 of Par of he Fir" chedule a" he ca"e ma! beon e+er! per"on who ha" a*able income for he !ear.

(2) The income a* pa!able b! a a*pa!er for a a* !ear "hall be compu ed b! appl!ing hera e or ra e" of a* applicable o he a*pa!er under hi" Ordinance o he a*able income of he a*pa!er for

he !ear and from he re"ul ing amoun "hall be "ub rac ed an! a* credi " allowed o he a*pa!er for he!ear.

( ) $here a a*pa!er i" allowed more han one a* credi for a a* !ear he credi " "hall beapplied in he following order D

(a) an! foreign a* credi allowed under "ec ion 10 , hen

(b) an! a* credi allowed under Par A of hap er , and hen

(c) an! a* credi allowed under "ec ion" 7 8 1@I and 1J?.

(@) er ain cla""e" of income (including he income of cer ain cla""e" of per"on") ma! be"ub5ec o D

(a) "epara e a*a ion a" pro+ided in "ec ion" E J and I, or

(b) collec ion of a* under Hi+i"ion of Par C of hap er A or deduc ion of a* under Hi+i"ion of Par C of hap er A a" a final a* on he income 7of8 he per"on.

(E) ncome referred o in "ub;"ec ion (@) "hall be "ub5ec o a* a" pro+ided for in "ec ion E Jor I or Par C of hap er A a" he ca"e ma! be and "hall no be included in he compu a ion of a*ableincome in accordance wi h "ec ion ? or 1J a" he ca"e ma! be.

7(J) $here b! +ir ue of an! pro+i"ion of hi" Ordinance income a* i" o be deduc ed a"ource or collec ed or paid in ad+ance i "hall a" he ca"e ma! be be "o deduc ed collec ed or paidaccordingl! 7.8 8

7 8.,/! "01er tax &or reha-ilitation o& tem1oraril2 dis1laced 1ersons!3 (1) "uper a* "hall beimpo"ed for rehabili a ion of emporaril! di"placed per"on" for a* !ear 201E a he ra e""pecified in Hi+i"ion of Par of he Fir" chedule on income of e+er! per"on "pecified in he"aid Hi+i"ion.

(2) For he purpo"e" of hi" "ec ion >income< "hall be he "um of he following#

(i) profi on deb di+idend capi al gain" bro-erage and commi""ion,

(ii) a*able income under "ec ion ( ) of hi" Ordinance if no included in clau"e (i),

(iii) impu able income a" defined in clau"e (2? ) of "ec ion 2 e*cluding amoun ""pecified in clau"e (i), and

(i+) income compu ed under Four h Fif h e+en h and &igh h chedule".

( ) The "uper a* pa!able under "ub;"ec ion (1) "hall be paid collec ed and depo"i ed on

he da e and in he manner a" "pecified in "ub;"ec ion (1) of "ec ion 1 I and all pro+i"ion" of hap er A of he Ordinance "hall appl!.

(@) $here he "uper a* i" no paid b! a per"on liable o pa! i he ommi""ioner "hall b!an order in wri ing de ermine he "uper a* pa!able and "hall "er+e upon he per"on a no ice of demand "pecif!ing he "uper a* pa!able and wi hin he ime "pecified under "ec ion 1 I of heOrdinance.

(E) $here he "uper a* i" no paid b! a per"on liable o pa! i he ommi""ioner "hallreco+er he "uper a* pa!able under "ub"ec ion (1) and he pro+i"ion" of Par C A A and A of

hap er A and Par of hap er A of he Ordinance "hall "o far a" ma! be appl! o hecollec ion of "uper a* a" he"e appl! o he collec ion of a* under he Ordinance.

(J) The oard ma! b! no ifica ion in he official 3a4e e ma-e rule" for carr!ing ou hepurpo"e" of hi" "ec ion.8

4! Tax on di(idends!$ (1) ub5ec o hi" Ordinance a a* "hall be impo"ed a he ra e"pecified in Hi+i"ion of Par of he Fir" chedule on e+er! per"on who recei+e" a di+idendfrom a 7 8 compan! 7or rea ed a" di+idend under clau"e (1 ) of "ec ion 28.

(2) The a* impo"ed under "ub;"ec ion (1) on a per"on who recei+e" a di+idend "hallbe compu ed b! appl!ing he rele+an ra e of a* o he gro"" amoun of he di+idend.


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( ) Thi" "ec ion "hall no appl! o a di+idend ha i" e*emp from a* under hi"Ordinance.

.4A! Tax on 0ndistri-0ted reser(es!$ (1) ub5ec o hi" Ordinance a a* "hall be impo"ed ahe ra e of en percen on e+er! public compan! o her han a "cheduled ban- or a modarabaha deri+e" profi " for a a* !ear bu doe" no di" ribu e ca"h di+idend" wi hin "i* mon h" of he

end of he "aid a* !ear or di" ribu e" di+idend" o "uch an e* en ha i " re"er+e" af er "uchdi" ribu ion are in e*ce"" of hundred percen of i " paid up capi al "o much of i " re"er+e" a"e*ceed hundred per cen of i " paid up capi al "hall be rea ed a" income of he "aid compan!#

Pro+ided ha for a* !ear 201E ca"h di+idend" ma! be di" ribu ed before he due da emen ioned in "ub;"ec ion (2) of "ec ion 11? for filing of re urn for a* !ear 201E.

(2) The pro+i"ion" of "ub;"ec ion (1) "hall no appl! o

(a) a public compan! which di" ribu e" profi e=ual o ei her for ! per cen of i " af er a* profi " or fif ! per cen of i " paid up capi al whiche+er i" le"" wi hin "i*

mon h" of he end of he a* !ear,

(a) a compan! =ualif!ing for e*emp ion under clau"e (1 2) of Par of he econdchedule, and

(a)a compan! in which no le"" han fif ! percen "hare" are held b! he 3o+ernmen .

( ) For he purpo"e of hi" "ec ion re"er+e include" amoun " "e a"ide ou of re+enue or o her "urplu"e" e*cluding capi al re"er+e" "hare premium re"er+e" and re"er+e" re=uired o becrea ed under an! law rule" or regula ion".


13/256

( ) Thi" "ec ion "hall no appl! o an! amoun " e*emp from a* under hi"Ordinance.

.7A . Tax on shi11ing o& a resident 1erson!$ (1) n he ca"e of an! re"iden per"on engaged inhe bu"ine"" of "hipping a pre"ump i+e income a* "hall be charged in he following manner

namel!#

"hip" and all floa ing craf " including ug" dredger" "ur+e! +e""el" and o her "peciali4ed craf purcha"ed or bare;boa char ered and fl!ing Pa-i" an flag"hall pa! onnage a* of an amoun e=ui+alen o one Q per gro""regi" ered onnage per annum, and

(b) "hip" +e""el" and all floa ing craf " including ug" dredger" "ur+e! +e""el"and o her "peciali4ed craf no regi" ered in Pa-i" an and hired under an!char er o her han bare;boa char er "hall pa! onnage a* of an amoune=ui+alen o fif een cen " per on of gro"" regi" ered onnage per char ered +o!age pro+ided ha "uch a* "hall no e*ceed one Q per on of gro"" regi" ered onnage per annum#

Explanation !$ For he purpo"e of hi" "ec ion he e*pre""ion>e=ui+alen amoun < mean" he rupee e=ui+alen of a dollar according o

he e*change ra e pre+alen on he fir" da! of Hecember in he ca"e of acompan! and he fir" da! of ep ember in o her ca"e" in he rele+ana""e""men !ear.

(2) The pro+i"ion" of hi" "ec ion "hall no be applicable af er he 0 h une 2020.


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7 8


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CHAPTER IIITA+ ON TA+A/LE INCOME

PART ICOMP:TATION O* TA+A/LE INCOME

;! Taxa-le income!$ The a*able income of a per"on for a a* !ear "hall be he o alincome 7under clau"e (a) of "ec ion 108 of he per"on for he !ear reduced (bu no below 4ero) b!

he o al of an! deduc ible allowance" under Par A of hi" hap er of he per"on for he !ear.

7(b) per"onL" income e*emp from a* under an! of he pro+i"ion" of hi"Ordinance.8

! Heads o& income!$ (1) For he purpo"e" of he impo"i ion of a* and he compu a ionof o al income all income "hall be cla""ified under he following head" namel!#

(a) alar!,

7(b) ncome from Proper !,8

7(c) ncome from u"ine"",8

7(d) api al 3ain", and8

7(e) ncome from O her ource".8

(2) ub5ec o hi" Ordinance he income of a per"on under a head of income for aa* !ear "hall be he o al of he amoun " deri+ed b! he per"on in ha !ear ha are chargeable oa* under he head a" reduced b! he o al deduc ion" if an! allowed under hi" Ordinance o he

per"on for he !ear under ha head.

( ) ub5ec o hi" Ordinance where he o al deduc ion" allowed under hi"Ordinance o a per"on for a a* !ear under a head of income e*ceed he o al of he amoun "deri+ed b! he per"on in ha !ear ha are chargeable o a* under ha head he per"on "hall be

rea ed a" "u" aining a lo"" for ha head for ha !ear of an amoun e=ual o he e*ce"".

(@) lo"" for a head of income for a a* !ear "hall be deal wi h in accordance wi hPar C of hi" hap er.

(E) The income of a re"iden per"on under a head of income "hall be compu ed b!a-ing in o accoun amoun " ha are Pa-i" an;"ource income and amoun " ha are foreign;

"ource income.

(J) The income of a non;re"iden per"on under a head of income "hall be compu edb! a-ing in o accoun onl! amoun " ha are Pa-i" an;"ource income.


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PART IIHEAD O* INCOME= "ALARY

%! "alar2!$ (1) n! "alar! recei+ed b! an emplo!ee in a a* !ear o her han "alar! ha i"e*emp from a* under hi" Ordinance "hall be chargeable o a* in ha !ear under he head> alar! alar!< "hall be gro""ed up b!he amoun of a* pa!able b! he emplo!er.

(@) No deduc ion "hall be allowed for an! e*pendi ure incurred b! an emplo!ee inderi+ing amoun " chargeable o a* under he head > alar!


17/256

(c) o he emplo!ee or o an a""ocia e of he emplo!ee 7or o a hird par ! under anagreemen wi h he emplo!ee or an a""ocia e of he emplo!ee.8

(J) n emplo!ee who ha" recei+ed an amoun referred o in "ub;clau"e (iii) of clau"e(e) of "ub;"ec ion (2) in a a* !ear ma! b! no ice in wri ing o he ommi""ioner elec for heamoun o be a*ed a he ra e compu ed in accordance wi h he following formula namel!#

A>/?where

A i" he o al a* paid or pa!able b! he emplo!ee on he emplo!eeL" o al a*able incomefor he hree preceding a* !ear", and

/ i" he emplo!eeL" o al a*able income for he hree preceding a* !ear".

(I) $here

(a) an! amoun chargeable under he head > alar!< i" paid o an emplo!ee inarrear", and

(b) a" a re"ul he emplo!ee i" chargeable a higher ra e" of a* han would ha+ebeen applicable if he amoun had been paid o he emplo!ee in he a* !ear inwhich he "er+ice" were rendered

he emplo!ee ma! b! no ice in wri ing o he ommi""ioner elec for he amoun o be a*ed ahe ra e" of a* ha would ha+e been applicable if he "alar! had been paid o he emplo!ee inhe a* !ear in which he "er+ice" were rendered.

(?) n elec ion under "ub;"ec ion (J) or (I) "hall be made b! he due da e for furni"hing he emplo!eeL" re urn of income or emplo!er cer ifica e a" he ca"e ma! be for he a*!ear in which he amoun wa" recei+ed or b! "uch la er da e a" he ommi""ioner ma! allow.

'! @al0e o& 1er 0isites!$ (1) For he purpo"e" of compu ing he income of an emplo!ee

for a a* !ear chargeable o a* under he head > alar!< he +alue of an! per=ui"i e pro+ided b!an emplo!er o he emplo!ee in ha !ear ha i" included in he emplo!eeL" "alar! under "ec ion12 "hall be de ermined in accordance wi h hi" "ec ion.

(2) Thi" "ec ion "hall no appl! o an! amoun referred o in clau"e (c) or (d) of "ub;"ec ion (2) of "ec ion 12.

( ) $here in a a* !ear a mo or +ehicle i" pro+ided b! an emplo!er o an emplo!eewholl! or par l! for he pri+a e u"e of he emplo!ee he amoun chargeable o a* o heemplo!ee under he head > alar!< for ha !ear "hall include an amoun compu ed a" ma! bepre"cribed.8

7 8

(E) $here in a a* !ear he "er+ice" of a hou"e-eeper dri+er gardener or o her dome" ic a""i" an i" pro+ided b! an emplo!er o an emplo!ee he amoun chargeable o a* o

he emplo!ee under he head > alar!< for ha !ear "hall include he o al "alar! paid o hedome" ic a""i" an 7"uch hou"e -eeper dri+er gardener or o her dome" ic a""i" an 8 in ha !ear for "er+ice" rendered o he emplo!ee a" reduced b! an! pa!men made 7 o he emplo!er8 for "uch "er+ice".

(J) $here in a a* !ear u ili ie" are pro+ided b! an emplo!er o an emplo!ee heamoun chargeable o a* o he emplo!ee under he head > alar!< for ha !ear "hall include hefair mar-e +alue of he u ili ie" pro+ided a" reduced b! an! pa!men made b! he emplo!ee for

he u ili ie".

7(I) $here a loan i" made on or af er he 1 " da! of ul! 2002 b! an emplo!er o anemplo!ee and ei her no profi on loan i" pa!able b! he emplo!ee or he ra e of profi on loan i"le"" han he benchmar- ra e he amoun chargeable o a* o he emplo!ee under he head> alar!< for a a* !ear "hall include an amoun e=ual o

(a) he profi on loan compu ed a he benchmar- ra e where no profi on loan i"pa!able b! he emplo!ee or


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(a) he difference be ween he amoun of profi on loan paid b! he emplo!ee inha a* !ear and he amoun of profi on loan compu ed a he benchmar- ra e

a" he ca"e ma! be7#8 8

7Pro+ided ha hi" "ub;"ec ion "hall no appl! o "uch benefi ari"ing o anemplo!ee due o wai+er of in ere" b! "uch emplo!ee on hi" accoun wi h heemplo!er7#8 8

7Pro+ided fur her ha hi" "ub;"ec ion "hall no appl! o loan" no e*ceedingfi+e hundred hou"and rupee".8

(?) For he purpo"e" of hi" Ordinance no including "ub;"ec ion (I) where heemplo!ee u"e" a loan referred o in "ub;"ec ion (I) wholl! or par l! for he ac=ui"i ion of 7an!a""e or proper !8producing income chargeable o a* under an! head of income he emplo!ee"hall be rea ed a" ha+ing paid an amoun a" profi e=ual o he benchmar- ra e on he loan or

ha par of he loan u"ed o ac=uire 7 87a""e or proper !.8

( ) $here in a a* !ear an obliga ion of an emplo!ee o pa! or repa! an amounowing b! he emplo!ee o he emplo!er i" wai+ed b! he emplo!er he amoun chargeable o a*

o he emplo!ee under he head > alar!< for ha !ear "hall include he amoun "o wai+ed.

(10) $here in a a* !ear an obliga ion of an emplo!ee o pa! or repa! an amoun7owing8b! he emplo!ee o ano her per"on i" paid b! he emplo!er he amoun chargeable o a*

o he emplo!ee under he head > alar!< for ha !ear "hall include he amoun "o paid.

(11) $here in a a* !ear proper ! i" ran"ferred or "er+ice" are pro+ided b! anemplo!er o an emplo!ee he amoun chargeable o a* o he emplo!ee under he head > alar! alar!6 for ha !ear

"hall include an amoun compu ed a" ma! be pre"cribed.8

(1 ) $here in a a* !ear an emplo!er ha" pro+ided an emplo!ee wi h a per=ui"i ewhich i" no co+ered b! "ub;"ec ion" ( ) hrough (12) he amoun chargeable o a* o heemplo!ee under he head > alar!< for ha !ear "hall include he fair mar-e +alue of heper=ui"i e 7e*cep where he rule" if an! pro+ide o herwi"e 8 de ermined a he ime i i"pro+ided a" reduced b! an! pa!men made b! he emplo!ee for he per=ui"i e.

7(1@) n hi" "ec ion

(a) >benchmar- ra e< mean" ;

(i) for he a* !ear commencing on he fir" da! of ul! 2002 a ra e of fi+e

per cen per annum, and(ii) for he a* !ear" ne* following he a* !ear referred o in "ub;clau"e (i)

he ra e for each "ucce""i+e !ear a-en a one per cen abo+e he ra eapplicable for he immedia el! preceding a* !ear bu no e*ceeding 7 enper cen per annum8 in re"pec of an! a* !ear,

(b) >"er+ice"< include" he pro+i"ion of an! facili !, and

(c) >u ili ie"< include" elec rici ! ga" wa er and elephone.8

,! Em1lo2ee share schemes!$ (1) The +alue of a righ or op ion o ac=uire "hare" under an emplo!ee "hare "cheme gran ed o an emplo!ee "hall no be chargeable o a*.

(2) ub5ec o "ub;"ec ion ( ) where in a a* !ear an emplo!ee i" i""ued wi h"hare" under an emplo!ee "hare "cheme including a" a re"ul of he e*erci"e of an op ion or righ

o ac=uire he "hare" he amoun chargeable o a* o he emplo!ee under he head > alar!< for ha !ear "hall include he fair mar-e +alue of he "hare" de ermined a he da e of i""ue a"

reduced b! an! con"idera ion gi+en b! he emplo!ee for he "hare" including an! amoun gi+ena" con"idera ion for he gran of a righ or op ion o ac=uire he "hare".


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( ) $here "hare" i""ued o an emplo!ee under an emplo!ee "hare "cheme are"ub5ec o a re" ric ion on he ran"fer of he "hare"

(a) no amoun "hall be chargeable o a* o he emplo!ee under he head > alar! alar!< under ho"e "ub;"ec ion".

(E) $here in a a* !ear an emplo!ee di"po"e" of a righ or op ion o ac=uire "hare"under an emplo!ee "hare "cheme he amoun chargeable o a* o he emplo!ee under he head> alar!< for ha !ear "hall include he amoun of an! gain made on he di"po"al compu ed inaccordance wi h he following formula namel!#

A$/

where

A i" he con"idera ion recei+ed for he di"po"al of he righ or op ion, and

/ i" he emplo!eeL" co" in re"pec of he righ or op ion.

(J) n hi" "ub;"ec ion >emplo!ee "hare "cheme< mean" an! agreemen or arrangemen under which a compan! ma! i""ue "hare" in he compan! o

(a) an emplo!ee of he compan! or an emplo!ee of an a""ocia ed compan!, or

(b) he ru" ee of a ru" and under he ru" deed he ru" ee ma! ran"fer he"hare" o an emplo!ee of he compan! or an emplo!ee of an a""ocia ed

compan!.


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PART IIIHEAD O* INCOME= INCOME *ROM PROPERTY

4! Income &rom 1ro1ert2!$ (1) The ren recei+ed or recei+able b! a per"on 7for8 a a*!ear o her han ren e*emp from a* under hi" Ordinance "hall be chargeable o a* in ha !ear under he head > ncome from Proper !ren < mean" an! amoun recei+ed or recei+able b!he owner of land or a building a" con"idera ion for he u"e or occupa ion of or he righ o u"e or

occup! he land or building and include" an! forfei ed depo"i paid under a con rac for he "aleof land or a building.

( ) Thi" "ec ion "hall no appl! o an! ren recei+ed or recei+able b! an! per"on inre"pec of he lea"e of a building oge her wi h plan and machiner! and "uch ren "hall bechargeable o a* under he head > ncome from O her ource" ncome from O her ource" ncomefrom Proper !< for a a* !ear a deduc ion "hall be allowed for he following e*pendi ure" or allowance" namel!#;

(a) n re"pec of repair" o a building an allowance e=ual o one;fif h of he renchargeable o a* in re"pec of he building for he !ear compu ed before an!deduc ion allowed under hi" "ec ion,

(b) an! premium paid or pa!able b! he per"on in he !ear o in"ure he building again"he ri"- of damage or de" ruc ion,

(c) an! local ra e a* charge or ce"" in re"pec of he proper ! or he ren from heproper ! paid or pa!able b! he per"on o an! local au hori ! or go+ernmen in he!ear no being an! a* pa!able under hi" Ordinance,

(d) an! ground ren paid or pa!able b! he per"on in he !ear in re"pec of he proper !,

(e) an! profi paid or pa!able b! he per"on in he !ear on an! mone! borrowed includingb! wa! of mor gage o ac=uire con" ruc reno+a e e* end or recon" ruc heproper !,

(f) where he proper ! ha" been ac=uired con" ruc ed reno+a ed e* ended or recon" ruc ed b! he per"on wi h capi al con ribu ed b! he %ou"e uilding Finance

orpora ion or a "cheduled ban- under a "cheme of in+e" men in proper ! on heba"i" of "haring he ren made b! he orpora ion or ban- he "hare in ren and"hare oward" apprecia ion in he +alue of proper ! (e*cluding he re urn of capi al if an!) from he proper ! paid or pa!able b! he per"on o he "aid orpora ion or heban- in he !ear under ha "cheme,

(g) where he proper ! i" "ub5ec o mor gage or o her capi al charge he amoun of profi or in ere" paid on "uch mor gage or charge,

7(h) an! e*pendi ure no e*ceeding "i* per cen of he ren chargeable o a* in re"pec of he proper ! for he !ear compu ed before an! deduc ion allowed under hi" "ec ion

paid or pa!able b! he per"on in he !ear wholl! and e*clu"i+el! for he purpo"e of deri+ing ren chargeable o a* under he head > ncome from Proper !< includingadmini" ra ion and collec ion charge",


21/256

an! e*pendi ure paid or pa!able b! he per"on in he a* !ear for legal "er+ice" ac=uiredo defend he per"onL" i le o he proper ! or an! "ui connec ed wi h he proper ! in a

cour , and

(5) where here are rea"onable ground" for belie+ing ha an! unpaid ren in re"pec of he proper ! i" irreco+erable an allowance e=ual o he unpaid ren where $

he enanc! wa" bona fide he defaul ing enan ha" +aca ed heproper ! or " ep" ha+e been a-en o compel he enan o +aca e heproper ! and he defaul ing enan i" no in occupa ion of an! o her proper ! of he per"on,

he per"on ha" a-en all rea"onable " ep" o in" i u e legal proceeding"for he reco+er! of he unpaid ren or ha" rea"onable ground" o belie+e

ha legal proceeding" would be u"ele"", and

he unpaid ren ha" been included in he income of he per"onchargeable o a* under he head > ncome from Proper !< for he a* !ear in which he ren wa" due and a* ha" been dul! paid on "uch income.

(2) $here an! unpaid ren allowed a" a deduc ion under clau"e (5) of "ub;"ec ion (1)i" wholl! or par l! reco+ered he amoun reco+ered "hall be chargeable o a* in he a* !ear inwhich i i" reco+ered.

( ) $here a per"on ha" been allowed a deduc ion for an! e*pendi ure incurred inderi+ing ren chargeable o a* under he head > ncome from Proper !< and he per"on ha" nopaid he liabili ! or a par of he liabili ! o which he deduc ion rela e" wi hin hree !ear" of heend of he a* !ear in which he deduc ion wa" allowed he unpaid amoun of he liabili ! "hall bechargeable o a* under he head > ncome from Proper !< in he fir" a* !ear following he end of

he hree !ear".

(@) $here an unpaid liabili ! i" chargeable o a* a" a re"ul of he applica ion of "ub;"ec ion ( ) and he per"on "ub"e=uen l! pa!" he liabili ! or a par of he liabili ! he per"on "hallbe allowed a deduc ion for he amoun paid in he a* !ear in which he pa!men i" made.

(E) n! e*pendi ure allowed o a per"on under hi" "ec ion a" a deduc ion "hall nobe allowed a" a deduc ion in compu ing he income of he per"on chargeable o a* under an!o her head of income.

(J) The pro+i"ion" of "ec ion 21 "hall appl! in de ermining he deduc ion" allowed oa per"on under hi" "ec ion in he "ame manner a" he! appl! in de ermining he deduc ion"allowed in compu ing he income of a per"on chargeable o a* under he head > ncome from

u"ine"" ncome fromProper !< in he a* !ear in which i wa" recei+ed and he following nine a* !ear" in e=ualpropor ion.

(2) $here an amoun (hereinaf er referred o a" he >earlier amoun


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78

PART I@HEAD O* INCOME= INCOME *ROM /:"INE""

Di(ision IIncome &rom /0siness

8! Income &rom -0siness!$ (1) The following income" of a per"on for a a* !ear o her han income e*emp from a* under hi" Ordinance "hall be chargeable o a* under he head

> ncome from u"ine""<

(a) he profi " and gain" of an! bu"ine"" carried on b! a per"on a an! ime in he!ear,

(b) an! income deri+ed b! an! rade profe""ional or "imilar a""ocia ion from he"ale of good" or pro+i"ion of "er+ice" o i " member",

(c) an! income from he hire or lea"e of angible mo+able proper !,

(d) he fair mar-e +alue of an! benefi or per=ui"i e whe her con+er ible in omone! or no deri+ed b! a per"on in he cour"e of or b! +ir ue of a pa"pre"en or pro"pec i+e bu"ine"" rela ion"hip7.8

7Explanation. For he purpo"e" of hi" clau"e i i" declared ha he wordbenefi L include" an! benefi deri+ed b! wa! of wai+er of profi on deb or he

deb i "elf under he a e an- of Pa-i" an an-ing Polic! Hepar men L"ircular No.2 of 2002 or in an! o her "cheme i""ued b! he a e an- of

Pa-i" an,8

(e) an! managemen fee deri+ed b! a managemen compan! (including amodaraba7managemen compan!8 ).8

(2) n! profi on deb deri+ed b! a per"on where he per"onL" bu"ine"" i" o deri+e"uch income "hall be chargeable o a* under he head > ncome from u"ine""< and no under he head > ncome from O her ource"


23/256

per"onL" o her con rac " for he ac ual deli+er! of he good" o be manufac uredor merchandi"e o be "old,

(b) a con rac in re"pec of " oc-" and "hare" i" en ered in o b! a dealer or in+e" or herein o guard again" lo"" in he per"onL" holding of " oc-" and"hare" hrough price fluc ua ion", or

(c) a con rac i" en ered in o b! a member of a forward mar-e or " oc- e*changein he cour"e of an! ran"ac ion in he na ure of 5obbing 7arbi rage8 o guardagain" an! lo"" which ma! ari"e in he ordinar! cour"e of he per"onL"bu"ine"" a" "uch member.

Di(ision IIDed0ctions= )eneral Princi1les

%

a* under he head > ncome from u"ine""< for a a* !ear a deduc ion "hall be allowed for an!

e*pendi ure incurred b! he per"on in he !ear 7wholl! and e*clu"i+el! for he purpo"e" of bu"ine""8.

7(1 ) ub5ec o hi" Ordinance where animal" which ha+e been u"ed for he purpo"e" of he bu"ine"" or profe""ion o herwi"e han a" " oc-;in; rade and ha+e died or become

permanen l! u"ele"" for "uch purpo"e" he difference be ween he ac ual co" o he a*pa!er of he animal" and he amoun if an! reali4ed in re"pec of he carca""e" or animal".8

(2) ub5ec o hi" Ordinance where he e*pendi ure referred o in "ub;"ec ion (1) i"incurred in ac=uiring a depreciable a""e or an in angible wi h a u"eful life of more han one !ear or i" pre;commencemen e*pendi ure he per"on mu" deprecia e or amor i"e he e*pendi ure inaccordance wi h "ec ion" 22 2 2@ and 2E.

7( ) ub5ec o hi" Ordinance where an! e*pendi ure i" incurred b! an amalgama edcompan! on legal and financial ad+i"or! "er+ice" and o her admini" ra i+e co" rela ing oplanning and implemen a ion of amalgama ion a deduc ion "hall be allowed for "uche*pendi ure.8

% ! Ded0ctions not allowed!$ &*cep a" o herwi"e pro+ided in hi" Ordinance nodeduc ion "hall be allowed in compu ing he income of a per"on under he head > ncome from

u"ine""< for

(a) an! ce"" ra e or a* paid or pa!able b! he per"on in Pa-i" an or a foreigncoun r! ha i" le+ied on he profi " or gain" of he bu"ine"" or a""e""ed a" apercen age or o herwi"e on he ba"i" of "uch profi " or gain",

(b) an! amoun of a* deduc ed under Hi+i"ion of Par C of hap er A from anamoun deri+ed b! he per"on,

(c) an! "alar! ren bro-erage or commi""ion profi on deb pa!men o non;re"iden pa!men for "er+ice" or fee paid b! he per"on from which he per"oni" re=uired o deduc a* under Hi+i"ion of Par C of hap er A or "ec ion 2of chap er A 7unle""8 he per"on ha" 7paid or8 deduc ed and paid he a* a"re=uired b! Hi+i"ion C of Par C of hap er A,

(d) an! en er ainmen e*pendi ure in e*ce"" of "uch limi " 7or in +iola ion of "uchcondi ion"8 a" ma! be pre"cribed,

(e) an! con ribu ion made b! he per"on o a fund ha i" no a recogni4edpro+iden fund7 87appro+ed pen"ion fund8 appro+ed "uperannua ion fund or

appro+ed gra ui ! fund,(f) an! con ribu ion made b! he per"on o an! pro+iden or o her fund e" abli"hed

for he benefi of emplo!ee" of he per"on unle"" he per"on ha" madeeffec i+e arrangemen " o "ecure ha a* i" deduc ed under "ec ion 1@ froman! pa!men " made b! he fund in re"pec of which he recipien i" chargeable

o a* under he head 6 alar!6,


24/256

(g) an! fine or penal ! paid or pa!able b! he per"on for he +iola ion of an! lawrule or regula ion,

(h) an! per"onal e*pendi ure" incurred b! he per"on,

(i) an! amoun carried o a re"er+e fund or capi ali"ed in an! wa!,

(5) an! profi on deb bro-erage commi""ion "alar! or o her remunera ion paidb! an a""ocia ion of per"on" o a member of he a""ocia ion,

7 8

7(l) an! e*pendi ure for a ran"ac ion paid or pa!able under a "ingle accounhead which in aggrega e e*ceed" fif ! hou"and rupee" made o her han b!a cro""ed che=ue drawn on a ban- or b! cro""ed ban- draf or cro""ed pa!order or an! o her cro""ed ban-ing in" rumen "howing ran"fer of amounfrom he bu"ine"" ban- accoun of he a*pa!er#

Pro+ided ha online ran"fer of pa!men from he bu"ine"" accoun of he pa!er o he bu"ine"" accoun of pa!ee a" well a" pa!men " hrough credi

card "hall be rea ed a" ran"ac ion" hrough he ban-ing channel "ub5ec ohe condi ion ha "uch ran"ac ion" are +erifiable from he ban- " a emen " of he re"pec i+e pa!er and he pa!ee#

Pro+ided fur her ha hi" clau"e "hall no appl! in he ca"e of

(a) e*pendi ure" no e*ceeding en hou"and rupee",

(b) e*pendi ure" on accoun of $

(i) u ili ! bill",

(ii) freigh charge",

(iii) ra+el fare,

(i+) po" age, and

(+) pa!men of a*e" du ie" fee fine" or an! o her " a u or! obliga ion,8(m) an! "alar! paid or pa!able e*ceeding 7fif een8 hou"and rupee" per mon h

o her han b! a cro""ed che=ue or direc ran"fer of fund" o he emplo!eeL"ban- accoun , and

(n) e*cep a" pro+ided in Hi+i"ion of hi" Par an! e*pendi ure paid or pa!ableof a capi al na ure.

Di(ision IIIDed0ctions= "1ecial Pro(isions

%%! De1reciation!$ (1) ub5ec o hi" "ec ion a per"on "hall be allowed a deduc ion for hedeprecia ion of he per"onL" depreciable a""e " u"ed in he per"onL" bu"ine"" in he a* !ear.

(2) ub5ec o 7"ub;"ec ion8 ( ) 7 8 he deprecia ion deduc ion for a a* !ear "hall becompu ed b! appl!ing he ra e "pecified in Par of he Third chedule again" he wri en down+alue of he a""e a he beginning of he !ear.

( ) $here a depreciable a""e i" u"ed in a a* !ear par l! in deri+ing income frombu"ine"" chargeable o a* and par l! for ano her u"e he deduc ion allowed under hi" "ec ionfor ha !ear "hall be re" ric ed o he fair propor ional par of he amoun ha would be allowed if

he a""e 7wa"8 wholl! u"ed o 7deri+e8 income from bu"ine"" chargeable o a*.

7 8

(E) The wri en down +alue of a depreciable a""e of a per"on a he beginning of hea* !ear "hall be D $

(a) where he a""e wa" ac=uired in he a* !ear he co" of he a""e o heper"on a" reduced b! an! ini ial allowance in re"pec of he a""e under "ec ion 2 , or


25/256

(b) in an! o her ca"e he co" of he a""e o he per"on a" reduced b! he o aldeprecia ion deduc ion" (including an! ini ial allowance under "ec ion 2 )allowed o he per"on in re"pec of he a""e in pre+iou" a* !ear".

(J) $here "ub;"ec ion ( ) applie" o a depreciable a""e for a a* !ear he wri endown +alue of he a""e "hall be compu ed on he ba"i" ha he a""e ha" been "olel! u"ed oderi+e income from bu"ine"" chargeable o a*.

(I) The o al deduc ion" allowed o a per"on during he period of owner"hip of adepreciable a""e under hi" "ec ion and "ec ion 2 "hall no e*ceed he co" of he a""e .

(?) $here in an! a* !ear a per"on di"po"e" of a depreciable a""e nodeprecia ion deduc ion "hall be allowed under hi" "ec ion for ha !ear and

(a) if he con"idera ion recei+ed e*ceed" he wri en down +alue of he a""e a heime of di"po"al he e*ce"" "hall be chargeable o a* in ha !ear under he

head > ncome from u"ine"" ncome fromu"ine""< for ha !ear.

( ) $here "ub;"ec ion ( ) applie" he wri en down +alue of he a""e for hepurpo"e" of "ub;"ec ion (?) "hall be increa"ed b! he amoun ha i" no allowed a" a deduc iona" a re"ul of he applica ion of "ub;"ec ion ( ).

(10) $here clau"e (a) of "ub;"ec ion (1 ) applie" he 7con"idera ion recei+ed ondi"po"al8 of he pa""enger ran"por +ehicle for he purpo"e" of "ub;"ec ion (?) "hall be compu edaccording o he following formula

A x />C

where D

A i" he 7amoun 8 recei+ed on di"po"al of he +ehicle,

/ i" he amoun referred o in clau"e (a) of "ub;"ec ion (1 ), and

C i" he ac ual co" of ac=uiring he +ehicle.

(11) ub5ec o "ub;"ec ion" (1 ) and (1@) he rule" in Par of hap er C "hallappl! in de ermining he co" and con"idera ion recei+ed in re"pec of a depreciable a""e for hepurpo"e" of hi" "ec ion.

7(12) The deprecia ion deduc ion" allowed o a lea"ing compan! or an in+e" men ban- or a

modaraba or a "cheduled ban- or a de+elopmen finance in" i u ion in re"pec of a""e " ownedb! he lea"ing compan! or an in+e" men ban- or a modaraba or a "cheduled ban- or ade+elopmen finance in" i u ion and lea"ed o ano her per"on "hall be deduc ible onl! again" helea"e ren al income deri+ed in re"pec of "uch a""e ".8

(1 ) For he purpo"e" of hi" "ec ion

(a) he co" of a depreciable a""e being a pa""enger ran"por +ehicle no pl!ingfor hire "hall no e*ceed 7 wo87and half8million rupee",

7 8

(b) he co" of immo+able proper ! or a " ruc ural impro+emen o immo+ableproper ! "hall no include he co" of he land,

7(c) an! a""e owned b! a lea"ing compan! or an in+e" men ban- or a modarabaor a "cheduled ban- or a de+elopmen finance in" i u ion and lea"ed o ano her per"on i" rea ed a" u"ed in he lea"ing compan! or he in+e" men ban- or hemodaraba or he "cheduled ban- or he de+elopmen finance in" i u ionL"bu"ine"", and8

(d) where he con"idera ion recei+ed on he di"po"al of immo+able proper !e*ceed" he co" of he proper ! he con"idera ion recei+ed "hall be rea ed a"

he co" of he proper !.


26/256

(1@) $here a depreciable a""e ha ha" been u"ed b! a per"on in Pa-i" an i"e*por ed or ran"ferred ou of Pa-i" an he per"on "hall be rea ed a" ha+ing di"po"ed of hea""e a he ime of he e*por or ran"fer for a con"idera ion recei+ed e=ual o he co" of hea""e .

(1E) n hi" "ec ion

>depreciable a""e < mean" an! angible mo+able proper ! immo+able proper ! (o her han unimpro+ed land) or " ruc ural impro+emen o immo+able proper ! owned b! a

per"on ha

(a) ha" a normal u"eful life e*ceeding one !ear,

(b) i" li-el! o lo"e +alue a" a re"ul of normal wear and ear or ob"ole"cence, and

(c) i" u"ed wholl! or par l! b! he per"on in deri+ing income from bu"ine""chargeable o a*

bu "hall no include an! angible mo+able proper ! immo+able proper ! or " ruc uralimpro+emen o immo+able proper ! in rela ion o which a deduc ion ha" beenallowed under ano her "ec ion of hi" Ordinance for he en ire co" of he proper ! or impro+emen in he a* !ear in which he proper ! i" ac=uired or impro+emen madeb! he per"on, and

>" ruc ural impro+emen < in rela ion o immo+able proper ! include" an! buildingroad dri+ewa! car par- railwa! line pipeline bridge unnel airpor runwa! canaldoc- wharf re aining wall fence power line" wa er or "ewerage pipe" drainageland"caping or dam.

%'! Initial allowance!$ (1) per"on who place" an eligible depreciable a""e in o "er+ice inPa-i" an for he fir" ime in a a* !ear "hall be allowed a deduc ion (hereinaf er referred o a" an>ini ial allowance


27/256

( ) The Federal 3o+ernmen ma! no if! >"pecified area"< for he purpo"e" of "ub;"ec ion (1).8

7%'/! Accelerated de1reciation to alternate energ2 1ro ects!$ (1) n! plan machiner! ande=uipmen " in" alled for genera ion of al erna e energ! b! an indu" rial under a-ing "e upan!where in Pa-i" an and owned and managed b! a compan! "hall be allowed fir" !ear allowance in lieu of ini ial allowance under "ec ion 2 a he ra e "pecified in Par of he Third

chedule again" he co" of he eligible deprecia ion a""e " pu o u"e af er fir" da! of ul!200 .

(2) The pro+i"ion" of "ec ion 2 e*cep "ub;"ec ion" (1) and (2) hereof "hallmutatis mutandis appl!.8

%,! Intangi-les!$ (1) per"on "hall be allowed an amor i"a ion deduc ion inaccordance wi h hi" "ec ion in a a* !ear for he co" of he per"onL" in angible"D

(a) ha are wholl! or par l! u"ed b! he per"on in he a* !ear in deri+ing incomefrom bu"ine"" chargeable o a*, and

(b) ha ha+e a normal u"eful life e*ceeding one !ear.

(2) No deduc ion "hall be allowed under hi" "ec ion where a deduc ion ha" beenallowed under ano her "ec ion of hi" Ordinance for he en ire co" of he in angible in he a* !ear in which he in angible i" ac=uired.

( ) ub5ec o "ub;"ec ion (I) he amor i4a ion deduc ion of a per"on for a a* !ear"hall be compu ed according o he following formula namel!# $

A/

where $

A i" he co" of he in angible, and/ i" he normal u"eful life of he in angible in whole !ear".

(@) n in angible

(a) wi h a normal u"eful life of more han en !ear", or

(b) ha doe" no ha+e an a"cer ainable u"eful life

"hall be rea ed a" if i had a normal u"eful life of en !ear".

(E) $here an in angible i" u"ed in a a* !ear par l! in deri+ing income from bu"ine""chargeable o a* and par l! for ano her u"e he deduc ion allowed under hi" "ec ion for ha!ear "hall be re" ric ed o he fair propor ional par of he amoun ha would be allowed if hein angible were wholl! u"ed o deri+e income from bu"ine"" chargeable o a*.

(J) $here an in angible i" no u"ed for he whole of he a* !ear in deri+ing incomefrom bu"ine"" chargeable o a* he deduc ion allowed under hi" "ec ion "hall be compu edaccording o he following formula namel!# $

A x />Cwhere $

A i" he amoun of 7amor i4a ion8 compu ed under "ub;"ec ion ( ) or (E) a" he ca"e ma! be,

/ i" he number of da!" in he a* !ear he in angible i" u"ed in deri+ing income from

bu"ine"" chargeable o a*, andC i" he number of da!" in he a* !ear.

(I) The o al deduc ion" allowed o a per"on under hi" "ec ion in he curren a*!ear and all pre+iou" a* !ear" in re"pec of an in angible "hall no e*ceed he co" of hein angible.


28/256

(?) $here in an! a* !ear a per"on di"po"e" of an in angible no amor i"a iondeduc ion "hall be allowed under hi" "ec ion for ha !ear and

(a) if he con"idera ion recei+ed b! he per"on e*ceed" he wri en down +alue of he in angible a he ime of di"po"al he e*ce"" "hall be income of he per"on

chargeable o a* in ha !ear under he head > ncome from u"ine"" ncome from

u"ine""< in ha !ear.

( ) For he purpo"e" of "ub;"ec ion (?) $

(a) he wri en down +alue of an in angible a he ime of di"po"al "hall be he co"of he in angible reduced b! he o al deduc ion" allowed o he per"on under

hi" "ec ion in re"pec of he in angible or where he in angible i" no wholl!u"ed o deri+e income chargeable o a* he amoun ha would be allowedunder hi" "ec ion if he in angible were wholl! "o u"ed, and

(b) he con"idera ion recei+ed on di"po"al of an in angible "hall be de ermined inaccordance wi h "ec ion II.

(10) For he purpo"e" of hi" "ec ion an in angible ha i" a+ailable for u"e on a da!(including a non;wor-ing da!) i" rea ed a" u"ed on ha da!.

(11) n hi" "ec ion

>co" < in rela ion o an in angible mean" an! e*pendi ure incurred in ac=uiring or crea ing he in angible including an! e*pendi ure incurred in impro+ing or renewing

he in angible, and

>in angible< mean" an! pa en in+en ion de"ign or model "ecre formula or proce""cop!righ 7 rade mar- "cien ific or echnical -nowledge compu er "of ware mo ionpic ure film e*por =uo a" franchi"e licence in ellec ual proper !8 or o her li-eproper ! or righ con rac ual righ " and an! e*pendi ure ha pro+ide" an ad+an ageor benefi for a period of more han one !ear (o her han e*pendi ure incurred oac=uire a depreciable a""e or unimpro+ed land).

%4! Pre6commencement ex1endit0re!$ (1) per"on "hall be allowed a deduc ion for an!pre;commencemen e*pendi ure in accordance wi h hi" "ec ion.

(2) Pre;commencemen e*pendi ure "hall be amor i4ed on a " raigh ;line ba"i" a hera e "pecified in Par of he Third chedule.

( ) The o al deduc ion" allowed under hi" "ec ion in he curren a* !ear and allpre+iou" a* !ear" in re"pec of an amoun of pre;commencemen e*pendi ure "hall no e*ceedhe amoun of he e*pendi ure.

(@) No deduc ion "hall be allowed under hi" "ec ion where a deduc ion ha" beenallowed under ano her "ec ion of hi" Ordinance for he en ire amoun of he pre;commencemene*pendi ure in he a* !ear in which i i" incurred.

(E) n hi" "ec ion >pre;commencemen e*pendi ure< mean" an! e*pendi ureincurred before he commencemen of a bu"ine"" wholl! and e*clu"i+el! o deri+e incomechargeable o a* including he co" of fea"ibili ! " udie" con" ruc ion of pro o !pe" and rialproduc ion ac i+i ie" bu "hall no include an! e*pendi ure which i" incurred in ac=uiring land or which i" deprecia ed or amor i"ed under "ec ion 22 or 2@.

%5! "cienti&ic research ex1endit0re!$ (1) per"on "hall be allowed a deduc ion for "cien ific re"earch e*pendi ure incurred in Pa-i" an in a a* !ear wholl! and e*clu"i+el! for hepurpo"e of deri+ing income from bu"ine"" chargeable o a*.

(2) n hi" "ec ion

>"cien ific re"earch< mean" an! 7ac i+i !8 7under a-en in Pa-i" an8 in he field" of na ural or applied "cience for he de+elopmen of human -nowledge,


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>"cien ific re"earch e*pendi ure< mean" an! e*pendi ure incurred b! a per"on on"cien ific re"earch 7under a-en in Pa-i" an8 for he purpo"e" of de+eloping heper"onL" bu"ine"" including an! con ribu ion o a "cien ific re"earch in" i u ion ounder a-e "cien ific re"earch for he purpo"e" of he per"onL" bu"ine"" o her hane*pendi ure incurred D

(a) in he ac=ui"i ion of an! depreciable a""e or in angible,

(b) in he ac=ui"i ion of immo+able proper !, or

(c) for he purpo"e of a"cer aining he e*i" ence loca ion e* en or =uali ! of ana ural depo"i , and

>"cien ific re"earch in" i u ion< mean" an! in" i u ion cer ified b! he 7 oard8 a"conduc ing "cien ific re"earch in Pa-i" an.

%7! Em1lo2ee training and &acilities!$ per"on "hall be allowed a deduc ion for an!e*pendi ure (o her han capi al e*pendi ure) incurred in a a* !ear in re"pec of

(a) an! educa ional in" i u ion or ho"pi al in Pa-i" an e" abli"hed for he benefi of he per"onL" emplo!ee" and heir dependen ",

(b) an! in" i u e in Pa-i" an e" abli"hed for he raining of indu" rial wor-er"recogni4ed aided or run b! he Federal 3o+ernmen 7or a Pro+incial3o+ernmen 8 or a 7Bocal 3o+ernmen 8, or

(c) he raining of an! per"on being a ci i4en of Pa-i" an in connec ion wi h a"cheme appro+ed b! he 7 oard8 for he purpo"e" of hi" "ec ion.

%8! Pro&it on de-t# &inancial costs and lease 1a2ments!$ (1) ub5ec o hi" Ordinance adeduc ion "hall be allowed for a a* !ear for

(a) an! profi on deb incurred b! a per"on in he a* !ear o he e* en ha heproceed" or benefi of he deb ha+e been u"ed b! he per"on 7for he purpo"e"of bu"ine""8,

(b) an! lea"e ren al incurred b! a per"on in he a* !ear o a "cheduled ban-financial in" i u ion an appro+ed modaraba an appro+ed lea"ing compan! or a

pecial Purpo"e Cehicle on behalf of he Origina or for an a""e u"ed b! heper"on 7for he purpo"e" of bu"ine""8,

(c) an! amoun incurred b! a per"on in he a* !ear o a modaraba or apar icipa ion erm cer ifica e holder for an! fund" borrowed and u"ed b! heper"on 7for he purpo"e" of bu"ine""8,

(d) an! amoun incurred b! a "cheduled ban- in he a* !ear o a per"onmain aining a profi or lo"" "haring accoun or a depo"i wi h he ban- a" adi" ribu ion of profi " b! he ban- in re"pec of he accoun or depo"i ,

(e) an! amoun incurred b! he %ou"e uilding Finance orpora ion (hereinaf er referred o a" > he orpora ion he an-


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deri+ed b! he 7 G& an-8 on in+e" men " made in "mall bu"ine"" ou of acredi line pro+ided b! he an- on a profi and lo"" "haring ba"i",

(h) an! amoun incurred b! a per"on in he a* !ear o a ban-ing compan! under a"cheme of mu"hari-a repre"en ing he ban-L" "hare in he profi " of hemu"hari-a,

(i) an! amoun incurred b! a per"on in he a* !ear o a cer ifica e holder under amu"hari-a "cheme appro+ed b! he ecuri ie" and &*change ommi""ion and'eligiou" oard formed under he Godaraba ompanie" and Godaraba(Floa a ion and on rol) Ordinance 1 ?0 (AAA of 1 ?0) repre"en ing hecer ifica e holderL" "hare in he profi " of he mu"hari-a, or

(5) he financial co" of he "ecuri i4a ion of recei+able" incurred b! an Origina or in he a* !ear from a pecial Purpo"e Cehicle being he difference be ween

he amoun recei+ed b! he Origina or and he amoun of recei+able""ecuri i4ed from a pecial Purpo"e Cehicle.

(2) No wi h" anding an! o her pro+i"ion in hi" Ordinance where an! a""e " areran"ferred b! an Origina or a" a con"e=uence of "ecuri i"a ion o a pecial Purpo"e Cehicle i

"hall be rea ed a" a financing ran"ac ion irre"pec i+e of he me hod of accoun ing adop ed b!he Origina or.

( ) n hi" "ec ion

>appro+ed lea"ing compan!< mean" a lea"ing compan! appro+ed b! he 7 oard8 for he purpo"e" of clau"e (b) of "ub;"ec ion (1), and

>appro+ed modaraba< mean" a modaraba appro+ed b! he 7 oard8 for he purpo"e"of clau"e (b) of "ub;"ec ion (1).

%;! /ad de-ts!$ (1) per"on "hall be allowed a deduc ion for a bad deb in a a* !ear if hefollowing condi ion" are "a i"fied namel!#

(a) he amoun of he deb wa" D

(i) pre+iou"l! included in he per"onL" income from bu"ine"" chargeable oa*, or

(ii) in re"pec of mone! len b! a financial in" i u ion in deri+ing income frombu"ine"" chargeable o a*,

(b) he deb or par of he deb i" wri en off in he accoun " of he per"on in he a*!ear, and

(c) here are rea"onable ground" for belie+ing ha he deb i" irreco+erable.

(2) The amoun of he deduc ion allowed o a per"on under hi" "ec ion for a a* !ear "hall no e*ceed he amoun of he deb wri en off in he accoun " of he per"on in he a* !ear.

( ) $here a per"on ha" been allowed a deduc ion in a a* !ear for a bad deb and ina "ub"e=uen a* !ear he per"on recei+e" in ca"h or -ind an! amoun in re"pec of ha deb hefollowing rule" "hall appl! namel!#D

(a) where he amoun recei+ed e*ceed" he difference be ween he whole of "uchbad deb and he amoun pre+iou"l! allowed a" a deduc ion under hi" "ec ion

he e*ce"" "hall be included in he per"onL" income under he head > ncomefrom u"ine""< for he a* !ear in which i wa" recei+ed, or

(b) where he amoun recei+ed i" le"" han he difference be ween he whole of "uch bad deb and he amoun allowed a" a deduc ion under hi" "ec ion he"hor fall "hall be allowed a" a bad deb deduc ion in compu ing he per"onL"income under he head > ncome from u"ine""< for he a* !ear in which i wa"recei+ed.

.%;A! Pro(ision regarding cons0mer loans!$ (1) 7 8 7non;ban-ing finance compan! or he%ou"e uilding Finance orpora ion8 "hall be allowed a deduc ion no e*ceeding hree per cen


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of he income for he a* !ear ari"ing ou of con"umer loan" for crea ion of a re"er+e o off;"ebad deb " ari"ing ou of "uch loan".

(2) $here bad deb can no be wholl! "e off again" re"er+e an! amoun of baddeb e*ceeding he re"er+e" "hall be carried forward for ad5u" men again" he re"er+e for hefollowing !ear".8

7Explanation . n hi" "ec ion >con"umer loan< mean" a loan of mone! or i "e=ui+alen made b! 7 8 a non;ban-ing finance compan! or he %ou"e uildingFinance orpora ion o a deb or (con"umer) and he loan i" en ered primaril! for per"onal famil! or hou"ehold purpo"e" and include" deb " crea ed b! he u"e of alender credi card or "imilar arrangemen a" well a" in"urance premium financing.8

'

(2) n! profi deduc ed under "ub;"ec ion (1) ha i" "ub"e=uen l! reco+ered b! heban-ing compan! or de+elopmen finance in" i u ion 7or Non; an-ing Finance ompan! (N F )or modaraba8 "hall be included in he income of he compan! or in" i u ion 7or Non; an-ingFinance ompan! (N F ) or modaraba8 chargeable under he head > ncome from u"ine""< for

he a* !ear in which i i" reco+ered.

' ! Trans&er to 1artici1ator2 reser(e!$ (1) ub5ec o hi" "ec ion a compan! "hall beallowed a deduc ion for a a* !ear for an! amoun ran"ferred b! he compan! in he !ear o apar icipa or! re"er+e crea ed under "ec ion 120 of he ompanie" Ordinance 1 ?@ (ABC of 1 ?@) in accordance wi h an agreemen rela ing o par icipa or! redeemable capi al en ered in obe ween he compan! and a ban-ing compan! a" defined in he 7Financial n" i u ion"('eco+er!

Of Finance") Ordinance 2001 (ABC of 2001).8

(2) The deduc ion allowed under "ub"ec ion (1) for a a* !ear "hall be limi ed o fi+eper cen of he +alue of he compan!L" par icipa or! redeemable capi al.

( ) No deduc ion "hall be allowed under "ub"ec ion (1) if he amoun of he a*e*emp ed accumula ion in he par icipa or! re"er+e e*ceed" en per cen of he amoun of hepar icipa or! redeemable capi al.

(@) $here an! amoun accumula ed in he par icipa or! re"er+e of a compan! ha"been allowed a" a deduc ion under hi" "ec ion i" applied b! he compan! oward" an! purpo"eo her han pa!men of "hare of profi on he par icipa or! redeemable capi al or oward" an!purpo"e no allowable for deduc ion or e*emp ion under hi" Ordinance he amoun "o applied

"hall be included in he income from bu"ine"" of he compan! in he a* !ear in which i i" "oapplied.

Di(ision I@Tax Acco0nting

'%! Method o& acco0nting!$ 7(1) ub5ec o hi" Ordinance a per"onL" income chargeable oa* "hall be compu ed in accordance wi h he me hod of accoun ing regularl! emplo!ed b! "uch

per"on.8

(2) ub5ec o "ub;"ec ion ( ) a compan! "hall accoun for income chargeable o a*under he head > ncome from u"ine""< on an accrual ba"i" while o her per"on" ma! accoun for "uch income on a ca"h or accrual ba"i".

( ) The 7 oard8 ma! pre"cribe ha an! cla"" of per"on" "hall accoun for incomechargeable o a* under he head > ncome from u"ine""< on a ca"h or accrual ba"i".

(@) per"on ma! appl! in wri ing for a change in he per"onL" me hod of accoun ing and he ommi""ioner ma! b! 7order8 in wri ing appro+e "uch an applica ion bu onl!if "a i"fied ha he change i" nece""ar! o clearl! reflec he per"onL" income chargeable o a*under he head > ncome from u"ine""


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(E) f a per"onL" me hod of accoun ing ha" changed he per"on "hall ma-ead5u" men " o i em" of income deduc ion or credi or o an! o her i em" affec ed b! he change"o ha no i em i" omi ed and no i em i" a-en in o accoun more han once.

' '! Cash6-asis acco0nting!$ per"on accoun ing for income chargeable o a* under hehead > ncome from u"ine""< on a ca"h ba"i" "hall deri+e income when i i" recei+ed and "hallincur e*pendi ure when i i" paid.

' ,! Accr0al6-asis acco0nting!$ (1) per"on accoun ing for income chargeable o a*under he head > ncome from u"ine""< on an accrual ba"i" "hall deri+e income when i i" due o

he per"on and "hall incur e*pendi ure when i i" pa!able b! he per"on.

(2) ub5ec o hi" Ordinance an amoun "hall be due o a per"on when he per"onbecome" en i led o recei+e i e+en if he ime for di"charge of he en i lemen i" po" poned or heamoun i" pa!able b! in" almen ".

( ) ub5ec o hi" Ordinance an amoun "hall be pa!able b! a per"on when all hee+en " ha de ermine liabili ! ha+e occurred and he amoun of he liabili ! can be de erminedwi h rea"onable accurac! 7 8.


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7 8

(E) $here a per"on ha" been allowed a deduc ion for an! e*pendi ure incurred inderi+ing income chargeable o a* under he head > ncome from u"ine""< and he per"on ha"no paid he liabili ! or a par of he liabili ! o which he deduc ion rela e" wi hin hree !ear" of heend of he a* !ear in which he deduc ion wa" allowed he unpaid amoun of he liabili ! "hall bechargeable o a* under he head > ncome from u"ine""< in he fir" a* !ear following he end of

he hree !ear".

7(E ) $here a per"on ha" been allowed a deduc ion in re"pec of a rading liabili ! and"uch per"on ha" deri+ed an! benefi in re"pec of "uch rading liabili ! he +alue of "uch benefi"hall be chargeable o a* under 7 he8 head > ncome from u"ine""< for he a* !ear in which "uchbenefi i" recei+ed.8

(J) $here an unpaid liabili ! i" chargeable o a* a" a re"ul of he applica ion of "ub;"ec ion (E) and he per"on "ub"e=uen l! pa!" he liabili ! or a par of he liabili ! he per"on "hallbe allowed a deduc ion for he amoun paid in he a* !ear in which he pa!men i" made.

'4! "toc 6in6trade!$ (1) For he purpo"e" of de ermining a per"onL" income chargeable oa* under he head > ncome from u"ine""< for a a* !ear he co" of " oc-;in; rade di"po"ed of

b! he per"on in he !ear "hall be compu ed in accordance wi h he following formula namel!#

9A F /G Cwhere

A i" he opening +alue of he per"onL" " oc-;in; rade for he !ear,

/ i" co" of " oc-;in; rade ac=uired b! he per"on in he !ear, and

C i" he clo"ing +alue of " oc-;in; rade for he !ear.

(2) The opening +alue of " oc-;in; rade of a per"on for a a* !ear "hall be

(a) he clo"ing +alue of he per"onL" " oc-;in; rade a he end of he pre+iou" !ear,or

(b) where he per"on commenced o carr! on bu"ine"" in he !ear he fair mar-e+alue of an! " oc-;in; rade ac=uired b! he per"on prior o he commencemenof he bu"ine"".

( ) The fair mar-e +alue of " oc-;in; rade referred o in clau"e (b) of "ub;"ec ion (2)"hall be de ermined a he ime he " oc-;in; rade i" +en ured in he bu"ine"".

(@) The clo"ing +alue of a per"onL" " oc-;in; rade for a a* !ear "hall be he lower of co" or 7ne reali"able8+alue of he per"onL" " oc-;in; rade on hand a he end of he !ear.

(E) per"on accoun ing for income chargeable o a* under he head > ncome fromu"ine""< on a ca"h ba"i" ma! compu e he per"onL" co" of " oc-;in; rade on he prime;co"me hod or ab"orp ion;co" me hod and a per"on accoun ing for "uch income on an accrual ba"i""hall compu e he per"onL" co" of " oc-;in; rade on he ab"orp ion;co" me hod.

(J) $here par icular i em" of " oc-;in; rade are no readil! iden ifiable a per"on ma!accoun for ha " oc- on he fir" ;in;fir" ;ou me hod or he a+erage;co" me hod bu oncecho"en a " oc- +alua ion me hod ma! be changed onl! wi h he wri en permi""ion of he

ommi""ioner and in accordance wi h an! condi ion" ha he ommi""ioner ma! impo"e.

(I) n hi" "ec ion

>ab"orp ion;co" me hod< mean" he generall! accep ed accoun ing principle under which he co" of an i em of " oc-;in; rade i" he "um of direc ma erial co" " direclabour co" " and fac or! o+erhead co" ",

>a+erage;co" me hod< mean" he generall! accep ed accoun ing principle under which he +alua ion of " oc-;in; rade i" ba"ed on a weigh ed a+erage co" of uni " onhand,

>direc labour co" "< mean" labour co" " direc l! rela ed o he manufac ure or produc ion of " oc-;in; rade,


34/256

>direc ma erial co" "< mean" he co" of ma erial" ha become an in egral par of he" oc-;in; rade manufac ured or produced or which are con"umed in hemanufac uring or produc ion proce"",

>fac or! o+erhead co" "< mean" he o al co" " of manufac uring or producing " oc-;in; rade o her han direc labour and direc ma erial co" ",

>fir" ;in;fir" ;ou me hod< mean" he generall! accep ed accoun ing principle under which he +alua ion of " oc-;in; rade i" ba"ed on he a""ump ion ha " oc- i" "old in

he order of i " ac=ui"i ion,

>prime;co" me hod< mean" he generall! accep ed accoun ing principle under whichhe co" of " oc-;in; rade i" he "um of direc ma erial co" " direc labour co" " and

+ariable fac or! o+erhead co" ",

>" oc-;in; rade< mean" an! hing produced manufac ured purcha"ed or o herwi"eac=uired for manufac ure "ale or e*change and an! ma erial" or "upplie" o becon"umed in he produc ion or manufac uring proce"" bu doe" no include " oc-" or "hare", and

>+ariable fac or! o+erhead co" "< mean" ho"e fac or! o+erhead co" " which +ar!direc l! wi h change" in +olume of " oc-;in; rade manufac ured or produced.

'5! Long6term contracts!$ (1) per"on accoun ing for income chargeable o a* under hehead > ncome from u"ine""< on an accrual ba"i" "hall compu e "uch income ari"ing for a a*!ear under a long; erm con rac on he ba"i" of he percen age of comple ion me hod.

(2) The percen age of comple ion of a long; erm con rac in a a* !ear "hall bede ermined b! comparing he o al co" " alloca ed o he con rac and incurred before he end of

he !ear wi h he e" ima ed o al con rac co" " a" de ermined a he commencemen of hecon rac .

( ) n hi" "ec ion $ ;

>long; erm con rac < mean" a con rac for manufac ure in" alla ion or con" ruc ionor in rela ion o each he performance of rela ed "er+ice" which i" no comple edwi hin he a* !ear in which wor- under he con rac commenced o her han acon rac e" ima ed o be comple ed wi hin "i* mon h" of he da e on which wor-under he con rac commenced, and

>percen age of comple ion me hod< mean" he generall! accep ed accoun ingprinciple under which re+enue and e*pen"e" ari"ing under a long; erm con rac arerecogni"ed b! reference o he " age of comple ion of he con rac a" modified b!"ub;"ec ion (2).


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PART @HEAD O* INCOME= CAPITAL )AIN"

'7! Ca1ital gains!$ (1) ub5ec o hi" Ordinance a gain ari"ing on he di"po"al of a capi ala""e b! a per"on in a a* !ear o her han a gain ha i" e*emp from a* under hi" Ordinance"hall be chargeable o a* in ha !ear under he head > api al 3ain"


36/256

7 8

.'7A! Ca1ital gain on dis1osal o& sec0rities!$ (1) The capi al gain ari"ing on or af er he fir"da! of ul! 2010 from di"po"al of "ecuri ie" 7 8 7 o her han a gain ha i" e*emp from a* under

hi" Ordinance8 "hall be chargeable o a* a he ra e" "pecified in Hi+i"ion C of Par of heFir" chedule#

78

Pro+ided 78 ha hi" "ec ion "hall no appl! o a ban-ingcompan! and an in"urance compan!.

7(1 ) The gain ari"ing on he di"po"al of a "ecuri ! b! a per"on "hall be compu ed inaccordance wi h he following formula namel!#

D $here

(i) L i" he con"idera ion recei+ed b! he per"on on di"po"al of he "ecuri !, and

(ii) L i" he co" of ac=ui"i ion of he "ecuri !.8

(2) The holding period of a "ecuri ! for he purpo"e" of hi" "ec ion "hall berec-oned from he da e of ac=ui"i ion (whe her before on or af er he hir ie h da! of une 2010)

o he da e of di"po"al of "uch "ecuri ! falling af er he hir ie h da! of une 2010.

( ) For he purpo"e" of hi" "ec ion >"ecuri !< mean" "hare of a public compan!+oucher of Pa-i" an Telecommunica ion orpora ion Godaraba er ifica e an in" rumen of redeemable capi al 7 deb ecuri ie"8 and deri+a i+e produc ".

7( ) For he purpo"e of hi" "ec ion >deb "ecuri ie"< mean" ;

(a) orpora e Heb ecuri ie" "uch a" Term Finance er ifica e" (TF ") u-u-

er ifica e" ( haria omplian ond") 'egi" ered ond" ommercial Paper"Par icipa ion Term er ifica e" (PT ") and all -ind" of deb in" rumen " i""uedb! an! Pa-i" ani or foreign compan! or corpora ion regi" ered in Pa-i" an, and

(b) 3o+ernmen Heb ecuri ie" "uch a" Trea"ur! ill" (T;bill") Federaln+e" men ond" (F ") Pa-i" an n+e" men ond" (P ") Foreignurrenc! ond" 3o+ernmen Paper" Gunicipal ond" nfra" ruc ure ond"

and all -ind" of deb in" rumen " i""ued b! Federal 3o+ernmen Pro+incial3o+ernmen " Bocal u hori ie" and o her " a u or! bodie".8

(@) 3ain under hi" "ec ion "hall be rea ed a" a "epara e bloc- of income.

(E) No wi h" anding an! hing con ained in hi" Ordinance where a per"on "u" ain" a

lo"" on di"po"al of "ecuri ie" in a a* !ear he lo"" "hall be "e off onl! again" he gain of heper"on from an! o her "ecuri ie" chargeable o a* under hi" "ec

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Income Tax Ordinence 2001 Upto Dated 30.6.2015

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