Sectoin 101 - Geographical Source of Income
Sunday, March 24, 2013
All incomes, which are chargeable to tax under Income Tax Ordinance, 2001 may broadly be classified into the following two categorize:
Salary:
Dividend Income:
- Pakistan Source Income
- Foreign Source Income (that is not Pakistan Source income )
Status wise Taxable income:
Resident: Both Pakistan Source Income and Foreign Source income are Taxable
Non-Resident: Pakistan Source Income is Taxable only.
Head wise detail of Pakistan Source Income is as follows;
Salary:
- Received from any employment exercised in Pakistan, wherever Paid.
- Paid by or on behalf of the Fed. Govt., Provincial Govt. or local Govt. in Pakistan wherever the employment is exercised
Business Income - Resident:
- Income is derived from any business carried on in Pakistan
Business Income - Non Resident:
Income is directecly or indirectly attributable to -
- Permanent establishment (PE) of non resident person in Pakistan
- Sales in Pakistan of goods marchandise of the same or similar kind as those sold by the person through PE in Pakistan
- Other business activities carried on in Pakistan of the same or similar kind as those effected by the non resident through a PE in Pakistan
- Any business conncection in Pakistan
- Any remuneration derived by a person where the remuneration is paid by the resident person or borne by the PE in Pakistan of non-resident person on account of independent services including
- Professional services
- Services of entertainers
- Services of sportsman
- Gain from disposal of any asset or property used in driving business income referred above.
Dividend Income:
- When it is paid by resident company
Capital Gain:
- Any Gain arising on disposal of shares in a resident company
Rental Income:
- If it is derived from
- the lease of immovable property or
- any interest in or over immovable property including right to explore or exploit natural resouces
- Any Gain arising from
- From alienation of any property or right mentioned above
- From alienation of any share in a company the assets of which consist wholly or principally, directly or indirectly, of property or right mentioned above.
Profit / Royalty / Technical Fee:
- If it is paid by resident person except Where the profit / royalty / technical fee is payable in respect of any debt / right & property / services for the purpose of business carried on by resident outside Pakistan through a PE.
- borne by PE in Pakistan of a non-resident person
Pension / Annuity:
- If it is paid by resident or borne by PE in Pakistan of a non-resident person
Insurance / Reinsurance Premium:
- If it is paid by insurance company to an overseas insurance / re insurance company
Any amount not covered above:
- If it is paid by resident or borne by PE in Pakistan of a non-resident person
Labels: Geographical source of Income, Introduction to Taxation, Section 101
posted @ 5:48 PM,
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Introduction to Taxation
Sunday, March 17, 2013
Constitution of Pakistan empowers Federal Government to Levy Tax (for the purpose of federation) through Act or Ordinance.
Act: is approved by the Parliament (eg: Sales Tax Act, 1990)
Ordinance: is promulgated by the President (eg: I.Tax ordinance, 2001)
Income Tax aims at two Roles:
1- Redistribution of wealth: (Through progressive taxation means higher level of income is subject to higher rate of tax)
2- Serve as an instrument of fiscal policy: (through granting exemptions to a particular class of income / person)
Scheme of the Income Tax Ordinance, 2001
- Chapters (total number are 13 and each chapter deals with particular subject
- Parts
- Divisions
- Section
- Sub section
- Clauses
Paper – C7: TAXATION - (Syllabus)
Income Tax
|
Marks
|
a. Basic concepts of taxation
|
15
|
b. Heads of income, Computation of income, Determination of tax liability
|
40
|
c. Types of persons and their taxation
|
10
|
d. Procedures and Administration
e. Income Tax Rules 2002
|
10
|
Sales Tax
| |
Prescribe chapters of Sales Tax Act and Rules.
|
25
|
Total
|
100
|
* Indicative Grid but not final
(a) Source of Income Tax Law
1- Legislative Law (I Tax Ordin.)
2- Procedural Law (I Tax Rules)
3- Notification, Circulars issued by the board
4- Case Laws: Judgments of tribunal and courts.
(b) Purpose of Income Tax Law: In the society is
- To levy and collect tax
- On income of person and
- Use it for the welfare purpose
Labels: Introduction to Taxation, Taxation
posted @ 12:40 PM,
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