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Collection of Income Tax in Pakistan

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rahim sajwani
rahim sajwani

The document summarizes income tax collection in Pakistan. It discusses that income tax is collected by the Federal Board of Revenue and is imposed on taxable income under five heads: salary, property income, business income, capital gains, and other income. It outlines the types of income taxed under each head such as wages, rents, profits, capital asset sales proceeds. The document also mentions that the purpose of taxation is to finance government expenditures like defense, welfare, and development projects. It provides an overview of Pakistan's income tax law and the bodies responsible for taxation.

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TO: SIR RIZWAN UL HASSAN COLLECTION OF INCOME TAX IN PAKISTAN BY: ALISHAN MEGHANI MALIK MANSOOR ALI RAHIM RAFIQ SAJWANI
In this world, nothing is certain but death and taxes -Benjamin Franklin
INTRODUCTION The word tax is derived from the Latin word taxo which means rate. It is a financial charge Upon Taxpayer. Taxpayer may be individual or legal entity. Types of tax: If tax is charged on personal or corporate income, then it is a direct tax. If tax is charged on the price of a good or service, then it is called an indirect tax.
PURPOSE OF TAXATION The purpose of taxation is to finance government expenditure i.e. providing public goods and services, such as defense, public welfare, social security etc. Increase level of standard. It influences the direction and structure of money supply, investments, credits, production, interest rate, inflation, prices and in general, of the national economy etc.
KINDS OF TAXATION INCOME TAX: It is imposed on factors market EXCISE DUTY: It is imposed on product market SALES TAX: It is imposed on buyers & seller side of the market. WITHHOLDING TAX: It is imposed on assets such as motor vehicle and property etc.
INCOME TAX Income tax is a type of tax which is collected by the (FBR) federal board of revenue, It is the semi-autonomous, supreme federal agency of Pakistan that is responsible for auditing, enforcing and collecting revenue for the government of Pakistan. INCOME TAX LAW: Law concerning taxation of income in Pakistan is stated in the Income Tax Ordinance, 2001 (the Ordinance) and the rules framed there under viz. Income Tax Rules, 2002 (the Rules). The Ordinance is a Central statute and is, therefore, applicable to the whole of Pakistan. Under section 4 of the Ordinance, income tax is imposed for each tax year at specified rates on every person who has taxable income for the year.
HEADS OF INCOME TAX IN PAKISTAN Under the Ordinance, income is classified into the following five heads: Salary Income from property Income from business Capital gains Income from other sources
Collection of Income Tax in Pakistan
Income from Salary Salary includes:- Wages Any gratuity Any fees, commission, bonus, perquisite on profits. Any advance of salary Any earned leave Employers contribution (taxable) towards recognized provident fund.
Collection of Income Tax in Pakistan
CONDITIONS TO BE SATISFIED The property must consist of buildings or lands The assesse must be the owner of such house property. The property should not be used by the owner thereof for the purpose of any business or profession carried on by him, the profits of which are chargeable to tax. 5/4/2014 11
5/4/2014 12
BASIS OF CHARGE The following income is chargeable to tax under the head Profits of business or profession Profits of any business or profession; Any compensation or other payments due to or received by any person specified Income derived by a trade, professional or similar association from specific services performed for its members The value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession 5/4/2014 13
Any profit on transfer of the Duty Entitlement Pass Book Scheme. Any profit on the transfer of the duty free replenishment certificate Export incentive available to exporters Any interest, salary, bonus, commission or remuneration received by a partner from firm; Any sum received for not carrying out any activity in relation to any business or not to share any know-how, patent, copyright, trademark, etc. 5/4/2014 14
5/4/2014 15
BASIS OF CHARGE Capital Gains tax liability arises only when the following conditions are satisfied: There should be a capital asset. The capital asset is transferred by the assesse Such transfer takes place during the previous year. Any profit or gains arises as a result of transfer. 5/4/2014 16
5/4/2014 17
GENERAL Income of every kind, which is not to be excluded from the total income and not chargeable to tax under any other head, shall be chargeable under the head Income from Other Sources. 5/4/2014 18
SPECIFIC INCOME Dividends Lottery winnings Income by way of interest on securities Interest on bank deposits and loans 5/4/2014 19
IMPACT OF TAXES Types of taxes affect people differently, depending on their income, three forms of taxes are: Progressive Tax Regressive Tax Proportional Tax
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Collection of Income Tax in Pakistan

  • 1. TO: SIR RIZWAN UL HASSAN COLLECTION OF INCOME TAX IN PAKISTAN BY: ALISHAN MEGHANI MALIK MANSOOR ALI RAHIM RAFIQ SAJWANI
  • 2. In this world, nothing is certain but death and taxes -Benjamin Franklin
  • 3. INTRODUCTION The word tax is derived from the Latin word taxo which means rate. It is a financial charge Upon Taxpayer. Taxpayer may be individual or legal entity. Types of tax: If tax is charged on personal or corporate income, then it is a direct tax. If tax is charged on the price of a good or service, then it is called an indirect tax.
  • 4. PURPOSE OF TAXATION The purpose of taxation is to finance government expenditure i.e. providing public goods and services, such as defense, public welfare, social security etc. Increase level of standard. It influences the direction and structure of money supply, investments, credits, production, interest rate, inflation, prices and in general, of the national economy etc.
  • 5. KINDS OF TAXATION INCOME TAX: It is imposed on factors market EXCISE DUTY: It is imposed on product market SALES TAX: It is imposed on buyers & seller side of the market. WITHHOLDING TAX: It is imposed on assets such as motor vehicle and property etc.
  • 6. INCOME TAX Income tax is a type of tax which is collected by the (FBR) federal board of revenue, It is the semi-autonomous, supreme federal agency of Pakistan that is responsible for auditing, enforcing and collecting revenue for the government of Pakistan. INCOME TAX LAW: Law concerning taxation of income in Pakistan is stated in the Income Tax Ordinance, 2001 (the Ordinance) and the rules framed there under viz. Income Tax Rules, 2002 (the Rules). The Ordinance is a Central statute and is, therefore, applicable to the whole of Pakistan. Under section 4 of the Ordinance, income tax is imposed for each tax year at specified rates on every person who has taxable income for the year.
  • 7. HEADS OF INCOME TAX IN PAKISTAN Under the Ordinance, income is classified into the following five heads: Salary Income from property Income from business Capital gains Income from other sources
  • 9. Income from Salary Salary includes:- Wages Any gratuity Any fees, commission, bonus, perquisite on profits. Any advance of salary Any earned leave Employers contribution (taxable) towards recognized provident fund.
  • 11. CONDITIONS TO BE SATISFIED The property must consist of buildings or lands The assesse must be the owner of such house property. The property should not be used by the owner thereof for the purpose of any business or profession carried on by him, the profits of which are chargeable to tax. 5/4/2014 11
  • 13. BASIS OF CHARGE The following income is chargeable to tax under the head Profits of business or profession Profits of any business or profession; Any compensation or other payments due to or received by any person specified Income derived by a trade, professional or similar association from specific services performed for its members The value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession 5/4/2014 13
  • 14. Any profit on transfer of the Duty Entitlement Pass Book Scheme. Any profit on the transfer of the duty free replenishment certificate Export incentive available to exporters Any interest, salary, bonus, commission or remuneration received by a partner from firm; Any sum received for not carrying out any activity in relation to any business or not to share any know-how, patent, copyright, trademark, etc. 5/4/2014 14
  • 16. BASIS OF CHARGE Capital Gains tax liability arises only when the following conditions are satisfied: There should be a capital asset. The capital asset is transferred by the assesse Such transfer takes place during the previous year. Any profit or gains arises as a result of transfer. 5/4/2014 16
  • 18. GENERAL Income of every kind, which is not to be excluded from the total income and not chargeable to tax under any other head, shall be chargeable under the head Income from Other Sources. 5/4/2014 18
  • 19. SPECIFIC INCOME Dividends Lottery winnings Income by way of interest on securities Interest on bank deposits and loans 5/4/2014 19
  • 20. IMPACT OF TAXES Types of taxes affect people differently, depending on their income, three forms of taxes are: Progressive Tax Regressive Tax Proportional Tax