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

Income from Salary

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.

Income from
House Property

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.

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Income from
Business & Profession

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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

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.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.

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Income from Capital

Gains
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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.

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Income from
Other Sources

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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.

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SPECIFIC INCOME
.Dividends
.Lottery winnings
.Income by way of interest on securities
.Interest on bank deposits and loans

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IMPACT OF TAXES
Types of taxes affect people differently, depending on their

income, three forms of taxes are:

Progressive Tax
Regressive Tax
Proportional Tax

THANK YOU