Income tax ordinance (updated 01.07.15) open

GOVERNMENT OF PAKISTAN FEDERAL BOARD OF REVENUE
(REVENUE DIVISION)
INCOME TAX
ORDINANCE, 2001
AMENDED UPTO 30TH JUNE, 2015 (Finance Act, 2015)
Formatted and Re-arranged by Syed Asad Mehmood (asad_19722000@yahoo.com)
1/2/2015

CHAPTER I - PRELIMINARY ________________________________________________ 38
1. Short title, extent and commencement _______________________________________________38
2. Definitions.— _________________________________________________________________38
3. Ordinance to override other laws ___________________________________________________48
CHAPTER II - CHARGE OF TAX _____________________________________________ 49
4. Tax on Taxable Income ___________________________________________________________49
4B. Super tax for rehabilitation of temporarily displaced persons____________________________49
5. Tax on Dividends ________________________________________________________________50
5A. Tax on undistributed reserves _____________________________________________________50
6. Tax on certain payments to non-residents ____________________________________________50
7. Tax on shipping and air transport income of a non-resident person _______________________51
7A Tax on shipping income of a resident person _________________________________________51
"7B. Tax on profit on debt____________________________________________________________52
8. General provisions relating to taxes imposed under sections 5, 5A, 6, 7, 7A or 7B ___________52
CHAPTER III – TAX ON TAXABLE INCOME __________________________________ 53
Part I – Computation of Taxable Income ______________________________________ 53
9. Taxable Income _________________________________________________________________53
10. Total Income ___________________________________________________________________53
11. Head of Income_________________________________________________________________53
Part II – Head of Income: Salary______________________________________________ 53
12. Salary_________________________________________________________________________54
13. Value of perquisites _____________________________________________________________55
14. Employee share schemes ________________________________________________________57
Part III – Head of Income: Income from Property _______________________________ 58
15. Income from property. ___________________________________________________________58
16. Non-adjustable amount received in relation to buildings. _______________________________59
17. Deductions in computing income chargeable under the head “Income from Property”
(OMITTED by the Finance Act,2006) __________________________________________________61
Part IV – Head of Income: Income from Business_______________________________ 61
Division I - Income from Business_______________________________________________________61
18. Income from Business ___________________________________________________________61
19. Speculation business ____________________________________________________________61
Division II – Deductions: General Principles ______________________________________________62
20. Deductions in computing income chargeable under the head “Income from business”. ______62
21. Deductions not allowed __________________________________________________________62
Division III – Deductions: Special Principles ______________________________________________64
22. Depreciation ___________________________________________________________________64
23. Initial allowance_________________________________________________________________65
24. Intangibles _____________________________________________________________________66
25. Pre-commencement expenditure __________________________________________________68
26. Scientific research expenditure ____________________________________________________68
27. Employee training and facilities ____________________________________________________69
28. Profit on debt, financial costs and lease payments ____________________________________69
29. Bad debts _____________________________________________________________________70
30. Profit on non-performing debts of a banking company or development finance institutions ___71

31. Transfer to participatory reserve ___________________________________________________71
Division IV – Tax Accounting ___________________________________________________________71
32. Method of accounting ____________________________________________________________72
33. Cash-basis accounting ___________________________________________________________72
34. Accrual-basis accounting _________________________________________________________72
35. Stock-in-trade __________________________________________________________________72
36. Long-term contracts _____________________________________________________________74
Part V – Head of Income: Capital Gains _______________________________________ 75
37. Capital Gains___________________________________________________________________75
38. Deduction of losses in computing the amount chargeable under the head “Capital Gains” ___77
Part VI – Head of Income: Income from other Sources __________________________ 77
39. Income from other sources _______________________________________________________77
40. Deductions in computing income chargeable under the head “Income from other sources” ___79
Part VII – Exemptions and Tax Concessions___________________________________ 80
41. Agricultural income ______________________________________________________________80
42. Diplomatic and United Nations exemptions __________________________________________80
43. Foreign government officials ______________________________________________________80
44. Exemptions under international agreements _________________________________________81
45. President honors________________________________________________________________81
46. Profit on debt – Received by a non-resident on resident person security __________________81
47. Scholarships ___________________________________________________________________82
48. Support payments under an agreement to live apart __________________________________82
49. Federal [Government] Provincial Government and [local Government] income. ____________82
50. Foreign-source income of short-term resident individuals ______________________________82
51. Foreign-source income of returning expatriates ______________________________________83
52. Non-resident shipping and airline enterprises (OMITTED by Finance Act, 2002) ___________83
53. Exemptions and tax concessions in the Second Schedule______________________________83
54. Exemptions and tax provisions in other laws _________________________________________84
55. Limitation of exemptions _________________________________________________________84
Part VIII – Losses__________________________________________________________ 84
56. Set off of losses ________________________________________________________________85
57. Carry forward of business losses __________________________________________________85
59. Carry forward of Capital losses ____________________________________________________86
Part IX – Deductible Allowances _____________________________________________ 88
60. Zakat _________________________________________________________________________88
60A. Workers’ Welfare Fund _________________________________________________________89
60B. Workers’ Participation Fund _____________________________________________________89
Part X – Tax Credits________________________________________________________ 90
61. Charitable donations ____________________________________________________________90
62. Tax Credit for investment in shares and insurance ____________________________________90
63. Contribution to an Approved Pension Fund __________________________________________91
64. Profit on debt___________________________________________________________________92
64B. Tax credit for employment generation by manufacturers ______________________________93
65. Miscellaneous provisions relating to tax credits _______________________________________93
65A Tax credit to a person registered under Sales Tax Act,1990 ___________________________94

65B Tax credit for investment ________________________________________________________94
65C Tax credit for enlistment _________________________________________________________95
65D Tax credit for newly established industrial undertakings _______________________________95
65E Tax credit for industrial undertakings established before the firsday of Jul’2011 ___________96
CHAPTER IV – Common Rules______________________________________________ 97
Part I – General ___________________________________________________________ 97
66. Income of joint owners ___________________________________________________________97
67. Apportionment of deductions ______________________________________________________97
68. Fair Market value _______________________________________________________________97
69. Receipt of income _______________________________________________________________97
70. Recouped expenditure ___________________________________________________________98
71. Currency conversion ____________________________________________________________98
72. Cessation of Source of Income ____________________________________________________98
73. Rules to prevent double derivation and double deductions _____________________________98
Part II – Tax Year __________________________________________________________ 99
74. Tax year_______________________________________________________________________99
Part III – Assets __________________________________________________________ 100
75. Disposal and acquisition of assets ________________________________________________100
76. Cost _________________________________________________________________________100
77. Consideration received _________________________________________________________101
78. Non-arm’s length transactions____________________________________________________102
79. Non-recognition rules ___________________________________________________________102
CHAPTER V – Provisions Governing Persons_______________________________ 104
Part I – Central Concepts __________________________________________________ 104
Division I - Persons__________________________________________________________________104
80. Person _______________________________________________________________________104
Division II – Resident and Non-Resident Persons_________________________________________105
81. Resident and non-resident persons _______________________________________________105
82. Resident individual _____________________________________________________________105
83. Resident company _____________________________________________________________105
84. Resident association of persons __________________________________________________105
Division III – Associates ______________________________________________________________105
85. Associates____________________________________________________________________106
Part II – Individuals _______________________________________________________ 108
Division I – Taxation of Individuals _____________________________________________________108
86. Principle of taxation of Individuals _________________________________________________108
87. Deceased individuals ___________________________________________________________108
Division II – Provisions Relating to Averaging ____________________________________________108
88. An individual as a member of an association of persons ______________________________108
89. Authors ______________________________________________________________________109
Division III – Income Splitting__________________________________________________________109
90. Transfers of assets_____________________________________________________________109
91. Income of a minor child _________________________________________________________110
Part III – Associations of Persons___________________________________________ 111

92. Principles of taxation of associations of persons _____________________________________111
93. Taxation of members of an association of persons (OMITTED by the Finance Act, 2007. ___111
Part IV – Companies ______________________________________________________ 111
94. Principles of taxation of companies________________________________________________111
95. Disposal of business by individual to wholly-owned company. _________________________111
96. Disposal of business by association of persons to wholly-owned company. ______________112
97. Disposal of asset between wholly-owned companies _________________________________113
97A. Disposal of asset under a scheme of arrangement and reconstruction _________________114
Part V – Common Provisions Applicable to Associations of Persons and Companies115
98. Change in control of an entity ____________________________________________________115
[Part VA] Tax Liability in Certain Cases ______________________________________ 117
98A Change in the constitution of an association of persons.— ___________________________117
98B. Discontinuance of business or dissolution of an association of persons.— ___________117
98C. Succession to business, otherwise than on death.— _______________________________117
CHAPTER VI – Special Industries __________________________________________ 118
Part I – Insurance Business ________________________________________________ 118
99. Special provisions relating to insurance business ____________________________________118
Part II – Oil, Natural Gas and other mineral deposits ___________________________ 119
100. Special provisions relating to production of oil and natural gas, and exploration and extraction
of other mineral deposits.___________________________________________________________119
100A. Special provisions relating to banking business.___________________________________119
100B. Special provisions relating to capital gain tax _____________________________________119
100C. Tax credit for certain persons.-_________________________________________________120
CHAPTER VII – International_______________________________________________ 122
Part I – Geographical source of income ______________________________________ 122
101. Geographical source of income__________________________________________________122
Part II – Taxation of Foreign-Source Income of Residents_______________________ 124
102. Foreign source salary of resident individuals _______________________________________124
103. Foreign tax credit _____________________________________________________________124
104. Foreign losses________________________________________________________________125
Part III – Taxation of Non-Residents _________________________________________ 126
105. Taxation of a permanent establishment in Pakistan of a non-resident __________________126
106. Thin Capitalisation. ____________________________________________________________127
PART IV – Agreement for the avoidance of double taxation and prevention of fiscal
evasion _________________________________________________________________ 129
107. Agreements for the avoidance of double taxation and prevention of fiscal evasion. — _____129
CHAPTER VIII - Anti-Avoidance ____________________________________________ 130
108. Transactions between associates. — ___________________________________________130
109. Recharacterisation of income and deductions. — _________________________________130
110. Salary paid by private companies. ______________________________________________130
111. Unexplained income or assets. — ______________________________________________130

112. Liability in respect of certain security transactions. — ______________________________131
CHAPTER IX - Minimum Tax _______________________________________________ 132
113. Minimum tax on the income of certain persons.-____________________________________132
113A Minimum tax on builders.— ____________________________________________________133
113B.Minimum tax on land developers.— _____________________________________________133
113c. Alternative corporate tax.— ____________________________________________________134
CHAPTER X - PROCEDURE _______________________________________________ 135
PART I - Returns _________________________________________________________ 135
114. Return of income. — _________________________________________________________135
115. Persons not required to furnish a return of income. — [ ] __________________________137
116. Wealth statement.— _________________________________________________________138
117. Notice of discontinued business. —_____________________________________________138
118. Method of furnishing returns and other documents. — _____________________________139
119. Extension of time for furnishing returns and other documents.— _____________________139
PART II - Assessments ____________________________________________________ 140
120. Assessments.— ______________________________________________________________140
121. Best judgement assessment ____________________________________________________141
122. Amendment of assessments.— ________________________________________________141
122A.Revision by the Commissioner.— _______________________________________________143
122B. Revision by the [Chief Commissioner].— ________________________________________143
122C. Provisional assessment.— ____________________________________________________144
123. Provisional assessment in certain cases.— ______________________________________144
124. Assessment giving effect to an order. —_________________________________________144
124A. Powers of tax authorities to modify orders, etc.—__________________________________145
125. Assessment in relation to disputed property.— ___________________________________145
126. Evidence of assessment.— ___________________________________________________145
PART III – Appeals________________________________________________________ 146
127. Appeal to the Commissioner (Appeals).— _________________________________________146
128. Procedure in appeal.— _______________________________________________________147
129. Decision in appeal.— ________________________________________________________147
130. Appointment of the Appellate Tribunal.— ________________________________________148
131. Appeal to the Appellate Tribunal.— _____________________________________________149
132. Disposal of appeals by the Appellate Tribunal.— __________________________________150
133. Reference to High Court.— _____________________________________________________150
134 Appeal to Supreme Court (Omitted by the Finance Act, 2005) _________________________151
134A. Alternative] Dispute Resolution.— ______________________________________________151
135. Revision by the Commissioner _________________________________________________152
136. Burden of proof_____________________________________________________________152
PART IV – Collection and Recovery of Tax ___________________________________ 152
137. Due date for payment of tax.— ________________________________________________152
138. Recovery of tax out of property and through arrest of taxpayer. — _____________________153
138A. Recovery of tax by District Officer (Revenue). — __________________________________153
138B. Estate in bankruptcy.— _______________________________________________________154
139. Collection of tax in the case of private companies and associations of persons.— ______154
140. Recovery of tax from persons holding money on behalf of a taxpayer.— ______________154

141. Liquidators.—_______________________________________________________________155
142. Recovery of tax due by non-resident member of an association of persons.____________156
143. Non-resident ship owner or charterer.— ________________________________________156
144. Non-resident aircraft owner or charterer. —______________________________________157
146. Recovery of tax from persons assessed in Azad Jammu and Kashmir.— _____________158
146A. Initiation, validity, etc., of recovery proceedings.— _________________________________158
146B. Tax arrears settlement incentives scheme.— _____________________________________158
PART V – Advance Tax and Deduction of Tax at source ________________________ 159
Division I - Advance Tax Paid by the Taxpayer ___________________________________________159
147. Advance tax paid by the taxpayer.— ____________________________________________159
Division II - Advance Tax Paid to a Collection Agent ______________________________________161
148. Imports.— _________________________________________________________________161
148A. Tax on local purchase of cooking oil or vegetable ghee by certain persons ____________162
Division III- Deduction of Tax at Source _________________________________________________163
149. Salary. —__________________________________________________________________163
150. Dividends. —_______________________________________________________________163
151. Profit on debt. —____________________________________________________________163
152. Payments to non-residents. — _________________________________________________164
153. Payments for goods, services and contracts.—_____________________________________166
154. Exports. — ________________________________________________________________168
155. Income from property.— ______________________________________________________169
156. Prizes and winnings.— _______________________________________________________169
156A. Petroleum Products.— _______________________________________________________171
156B. Withdrawal of balance under Pension Fund.— ____________________________________171
157. Time of deduction of tax. (Omitted by finance act, 2002) _____________________________171
158. Time of deduction of tax. _______________________________________________________171
Division IV - General Provisions Relating to the Advance Payment of Tax or the Deduction of Tax at
Source ____________________________________________________________________________171
159. Exemption or lower rate certificate.— ___________________________________________171
160. Payment of tax collected or deducted.— ________________________________________172
161. Failure to pay tax collected or deducted.— ______________________________________172
162. Recovery of tax from the person from whom tax was not collected or deducted.—______173
163. Recovery of amounts payable under this Division.— ______________________________173
164. Certificate of collection or deduction of tax.— ____________________________________173
165. Statements.— ______________________________________________________________173
165A. Furnishing of information by banks.—___________________________________________174
165B. Furnishing of information by financial institutions including banks. - ________________175
166. Priority of tax collected or deducted. — _________________________________________175
167. Indemnity.— ________________________________________________________________175
168. Credit for tax collected or deducted. — __________________________________________176
169. Tax collected or deducted as a final tax.— ______________________________________177
PART VI – Refunds _______________________________________________________ 178
170. Refunds.— ________________________________________________________________178
171. Additional payment for delayed refunds.— _______________________________________178
PART VII Representatives__________________________________________________ 179
172. Representatives.____________________________________________________________179
173. Liability and obligations of representatives. —____________________________________180

PART VIII – Records, Information Collection and Audit _________________________ 181
174. Records.— ________________________________________________________________181
175. Power to enter and search premises.— _________________________________________181
176. Notice to obtain information or evidence.— ______________________________________182
[177. Audit.— [____________________________________________________________________183
178. Assistance to Commissioner.— ________________________________________________185
179. Accounts, documents, records and computer-stored information not in Urdu or English
language.— ______________________________________________________________________185
180. Power to collect information regarding exempt income.— __________________________185
PART IX – Taxpayer’s Registration__________________________________________ 185
181. Taxpayer’s registration.— ______________________________________________________185
181A. Active taxpayers’ list.— _______________________________________________________185
181AA. Compulsory registration in certain cases.- ______________________________________185
[181B. Taxpayer card.— __________________________________________________________186
[181C. Displaying of National Tax Number.— __________________________________________186
PART X – PENALTY_______________________________________________________ 186
[182. Offences and penalties.— _____________________________________________________186
[183. Exemption from penalty and default surcharge.— _______________________________191
[ ]184 Penalty for Concealment of Income (Omited by Finance Act, 2010) __________________192
[ ]185 Penalty for failuar to maintain Record (Omitted by Fiance Act, 2010) _________________192
[ ]186 Penalty for non-compliance with notice (Omitted by Finance Act, 2010) _______________192
[ ]187 Penalty for making false or misleading statements (Omitted by Finance Act, 2010) _____192
[ ]188 Penalty for failure to give notice (Omitted by Finance Act’ 2010) _____________________192
[ ]189 Penalty for obstruction (Omitted by Finance Act’ 2010)_____________________________192
[ ]190 Imposition of penalty. (Omitted by Finance Act’ 2010)______________________________192
PART XI – Offences and Prosecutions_______________________________________ 193
191. Prosecution for non-compliance with certain statutory obligations. — _________________193
192. Prosecution for false statement in verification. — _________________________________193
[192A. Prosecution for concealment of income.— _______________________________________193
193. Prosecution for failure to maintain records.— ____________________________________194
194. Prosecution for improper use of National Tax Number [Certificate].— ________________194
195. Prosecution for making false or misleading statements. — _________________________194
196. Prosecution for obstructing [an income tax authority. —] ___________________________194
197. Prosecution for disposal of property to prevent attachment. — ______________________194
198. Prosecution for unauthorised disclosure of information by a public servant.— _________195
199. Prosecution for abetment. —__________________________________________________195
200. Offences by companies and associations of persons. — ___________________________195
201. Institution of prosecution proceedings without prejudice to other action. — ____________195
[202. Power to compound offences. — ________________________________________________195
203. Trial by Special Judge.— [____________________________________________________196
[203A. Appeal against the order of a Special Judge.— ___________________________________196
204. Power to tender immunity from prosecution.— ___________________________________196
PART XII - [DEFAULT SURCHARGE] ________________________________________ 197
205. [Default surcharge]. — _______________________________________________________197
[205A. Reduction in [default surcharge], consequential to reduction in tax or penalty.— _______198
PART XIII - CIRCULARS ___________________________________________________ 198

206. Circulars. — _______________________________________________________________198
[206A. Advance ruling. —___________________________________________________________198
CHAPTER XI – Administrations ____________________________________________ 199
PART I – General _________________________________________________________ 199
[207. Income tax authorities.— ___________________________________________________199
[208. Appointment of income tax authorities.— [(_______________________________________199
[209. Jurisdiction of income tax authorities.— [(_________________________________________200
[210. Delegation. — _______________________________________________________________201
[211. Power or function exercised. — ________________________________________________201
[212. AUTHORITY of approval.— ____________________________________________________201
[213. GUIDANCE to income tax authorities.— __________________________________________201
[214. Income tax authorities to follow orders of the [Board]. — ____________________________201
[214A. Condonation of time limit. — __________________________________________________202
[214B. Power of the Board to call for records. —________________________________________202
[214C. Selection for audit by the Board.— _____________________________________________202
214D. Automatic selection for audit. __________________________________________________202
[215. Furnishing of returns, documents etc. — _________________________________________203
216. Disclosure of information by a public servant.- ___________________________________203
217. Forms and notices; authentication of documents. — ______________________________205
218. Service of notices and other documents. — _____________________________________205
219. Tax or refund to be computed to the nearest Rupee. — ____________________________206
220. Receipts for amounts paid. — _________________________________________________206
221. Rectification of mistakes. — ___________________________________________________206
222. Appointment of expert. — ____________________________________________________207
223. Appearance by authorised representative. — ____________________________________207
224. Proceedings under the Ordinance to be judicial proceedings. — ____________________208
225. Proceedings against companies under liquidation. — _____________________________209
226. Computation of limitation period. — ____________________________________________209
227. Bar of suits in Civil Courts.— [_________________________________________________209
[227A. Reward to officers and officials of Inland Revenue.— ______________________________209
227B. Reward to whistleblowers.— ____________________________________________________209
PART II [DIRECTORATES-GENERAL]________________________________________ 210
[228. The Directorate General of [ ] Internal Audit. — ____________________________________210
[229. Directorate General of Training and Research.— __________________________________210
[230. Directorate General (Intelligence and Investigation), Inland Revenue.—________________210
[PART III - [DIRECTORATES-GENERAL] _____________________________________ 210
230A. Directorate-General of Withholding Taxes. —_____________________________________211
[230B. Directorate-General of Law.— _________________________________________________211
[230C. Directorate-General of Research and Development.—_____________________________211
CHAPTER XII - TRANSITIONAL ADVANCE TAX PROVISIONS ________________ 212
[231A. Cash withdrawal from a bank. —_______________________________________________212
[231AA. Advance tax on transactions in bank.— ________________________________________212
[231B. Advance tax on private motor vehicles.— _______________________________________212
[233. Brokerage and commission. — _________________________________________________213
[233A. Collection of tax by a stock exchange registered in Pakistan.— _____________________213
[233AA. Collection of tax by NCCPL.— _______________________________________________214

234. [Tax on motor vehicles].— ____________________________________________________214
[234A CNG Stations.—_____________________________________________________________214
235. Electricity consumption.-______________________________________________________214
[235A. Domestic electricity consumption.- _____________________________________________215
235B. Tax on steel melters, re-rollers etc.-_____________________________________________215
236. Telephone users.- _________________________________________________________215
[236A. Advance tax at the time of sale by auction. — ___________________________________216
[236B. Advance tax on purchase of air ticket.— ________________________________________216
[236C. Advance Tax on sale or transfer of immovable Property.— _________________________216
[236D. Advance tax on functions and gatherings.— _____________________________________217
[236E. Advance tax on foreign-produced TV plays and serials.— __________________________217
[236F. Advance tax on cable operators and other electronic media.— ______________________217
[236G. Advance tax on sales to distributors, dealers and wholesalers.— ____________________217
[236H. Advance tax on sales to retailers.— ____________________________________________218
[236I. Collection of advance tax by educational institutions.— _____________________________218
[236J. Advance tax on dealers, commission agents and arhatis etc.—______________________218
[236K. Advance tax on purchase or transfer of immovable property.—______________________219
236L. Advance tax on purchase of international air ticket.— ______________________________219
236M. Bonus shares issued by companies quoted on stock exchange .- ____________________219
236N. Bonus shares issued by companies not quoted on stock exchange .- _________________220
(________________________________________________________________________________220
236O. Advance tax under this chapter.- _______________________________________________220
236P. Advance tax on banking transactions otherwise than through cash.—_________________220
236Q. Payment to residents for use of machinery and equipment.- ________________________221
236R. Collection of advance tax on education related expenses remitted abroad.― __________221
236S. Dividend in specie.― _________________________________________________________221
236T. Collection of tax by Pakistan Mercantile Exchange Limited (PMEX) .—________________221
CHAPTER XIII - MISCELLANEOUS _________________________________________ 223
237. Power to make rules. —(1) ___________________________________________________223
237A. Electronic record. — ________________________________________________________223
238. Repeal. — _________________________________________________________________224
239. Savings. — [ _______________________________________________________________224
[239A. Transition to Federal Board of Revenue.— ______________________________________225
[239B. Reference to authorities.— ___________________________________________________225
240. Removal of difficulties.— _____________________________________________________225
THE FIRST SCHEDULE____________________________________________________ 227
PART I - RATES OF TAX (See Chapter II) _____________________________________ 227
Division I __________________________________________________________________________227
Rates of Tax for Individuals [and Association of Persons] ________________________________227
[Division II _________________________________________________________________________228
Rates of Tax for Companies ________________________________________________________229
[Division IIA ________________________________________________________________________229
[Division III_________________________________________________________________________229
Rate of Dividend Tax ______________________________________________________________229
[Division IIIA _______________________________________________________________________229
Division IV _________________________________________________________________________230
Rate of Tax on Certain Payments to Non-residents _____________________________________230

Division V__________________________________________________________________________230
Rate of Tax on Shipping or Air Transport Income of a Non-resident Person _________________230
[Division VII ________________________________________________________________________230
Capital Gains on disposal of Securities________________________________________________230
[Division VIII _______________________________________________________________________231
Capital Gains on disposal of Immovable Property _______________________________________231
[Division IX ________________________________________________________________________232
Minimum tax under section 113] _____________________________________________________232
PART II RATES OF ADVANCE TAX [See Division II of Part V of Chapter X] ________ 233
The rate of advance tax to be collected by the Collector of Customs under section 148 shall be- 233
PART III DEDUCTION OF TAX AT SOURCE (See Division III of Part V of Chapter X)_ 233
Division I __________________________________________________________________________233
Advance Tax on Dividend __________________________________________________________234
Division IA _________________________________________________________________________234
Profit on Debt ____________________________________________________________________234
[Division II _________________________________________________________________________234
Payments to non-residents _________________________________________________________234
Division III _________________________________________________________________________235
Payments for Goods or Services _____________________________________________________235
Division IV _________________________________________________________________________236
Exports__________________________________________________________________________236
[Division V _________________________________________________________________________236
Income from Property ______________________________________________________________236
Division VI _________________________________________________________________________237
Prizes and Winnings _______________________________________________________________237
Division VIA ________________________________________________________________________237
Petroleum Products _______________________________________________________________237
[Division VIB _______________________________________________________________________237
CNG STATIONS __________________________________________________________________237
PART IV (See Chapter XII) DEDUCTION OR COLLECTION OF ADVANCE TAX______ 238
DIvision I (Omitted by Finance Act, 2002) _______________________________________________238
[Division II _________________________________________________________________________238
Brokerage and Commission_________________________________________________________238
[Division IIA ________________________________________________________________________239
Rates for Collection of Tax by a Stock Exchange Registered in Pakistan____________________239
[Division IIB ________________________________________________________________________239
Rates for collection of tax by NCCPL _________________________________________________239
Division III _________________________________________________________________________239
[Tax on Motor Vehicles] ____________________________________________________________239
Division IV _________________________________________________________________________240
Electricity Consumption ____________________________________________________________240
Division V__________________________________________________________________________242
Telephone users __________________________________________________________________242
Division VI _________________________________________________________________________242
Cash withdrawal from a bank________________________________________________________242
[Division VIA _______________________________________________________________________242
Advance tax on Transactions in Bank_________________________________________________242

[] [DIVISION VII] ____________________________________________________________________242
[] Advance Tax on Purchase, Registration and Transfer of Motor Vehicles __________________242
[Division VIII _______________________________________________________________________243
Advance tax at the time of sale by auction _____________________________________________243
[Division IX ________________________________________________________________________243
Advance tax on Purchase of Air Ticket ________________________________________________243
[Division X _________________________________________________________________________243
Advance tax on sale or transfer of Immovable property __________________________________243
[Division XI ________________________________________________________________________244
Advance tax on functions and gatherings ______________________________________________244
[Division XII ________________________________________________________________________244
Advance tax on foreign-produced films and TV plays ____________________________________244
[Division XIII _______________________________________________________________________244
[Division XIV _______________________________________________________________________245
Advance tax on sale to distributors, dealers or wholesalers. ______________________________245
[Division XV ________________________________________________________________________245
Advance tax on sale to retailers ______________________________________________________245
[Division XVI _______________________________________________________________________245
Collection of advance tax by educational institutions ____________________________________245
[Division XVII_______________________________________________________________________245
Advance tax on dealers, commission agents and arhatis, etc._____________________________245
[Division XVIII ______________________________________________________________________246
Advance tax on purchase of immovable property _______________________________________246
Division XIX________________________________________________________________________246
Advance tax on Domestic Electricity Consumption ______________________________________246
Division XX ________________________________________________________________________246
Advance tax on international air ticket ________________________________________________246
Division XXI ________________________________________________________________________247
Advance tax on Banking Transactions otherwise than through Cash _______________________247
Division XXII _______________________________________________________________________247
Rate of Collection of Tax by Pakistan mercantile exchange limited _________________________247
Division XXIII_______________________________________________________________________247
Payment to a resident person for right to use machinery and equipment ____________________247
Division XXIV ______________________________________________________________________247
Collection of Advance tax on education related expenses remitted abroad __________________247
THE SECOND SCHEDULE EXEMPTIONS AND TAX CONCESSIONS [See section
53]_______________________________________________________________________ 248
PART I EXEMPTIONS FROM TOTAL INCOME _________________________________ 248
(1)(Omitted by finance Act, 2003)____________________________________________________248
(2) (Omitted by Finance Act, 2008) __________________________________________________248
(3) ______________________________________________________________________________248
(4) ______________________________________________________________________________248
(5) ______________________________________________________________________________248
(6) (Omitted by Finance Act, 2006) __________________________________________________248
(7) Omitted by Finance Act, 2003) ___________________________________________________248
(8) ______________________________________________________________________________249
[(9) Any pension –_________________________________________________________________249

[10] _____________________________________________________________________________249
[11] _____________________________________________________________________________249
(12)_____________________________________________________________________________249
(13)_____________________________________________________________________________249
[14] _____________________________________________________________________________250
[15] _____________________________________________________________________________250
(16)_____________________________________________________________________________250
(17)_____________________________________________________________________________250
[18] _____________________________________________________________________________250
(19)_____________________________________________________________________________250
(20)_____________________________________________________________________________250
[21] _____________________________________________________________________________250
(22)_____________________________________________________________________________250
(23)_____________________________________________________________________________251
[(23A) ___________________________________________________________________________251
[(23B) ___________________________________________________________________________251
[(23C) ___________________________________________________________________________251
(24)_____________________________________________________________________________251
(25)_____________________________________________________________________________252
(26)_____________________________________________________________________________252
[28] _____________________________________________________________________________252
[29] _____________________________________________________________________________252
[30] _____________________________________________________________________________252
[31] _____________________________________________________________________________252
[33] _____________________________________________________________________________252
[34] _____________________________________________________________________________252
[35] _____________________________________________________________________________253
[36] _____________________________________________________________________________253
[37] _____________________________________________________________________________253
[38] _____________________________________________________________________________253
(39)_____________________________________________________________________________253
(40)_____________________________________________________________________________253
[41] _____________________________________________________________________________253
[42] _____________________________________________________________________________253
[43] _____________________________________________________________________________253
[44] _____________________________________________________________________________253
[45] _____________________________________________________________________________253
[46] _____________________________________________________________________________254
[47] _____________________________________________________________________________254
[48] _____________________________________________________________________________254
[49] _____________________________________________________________________________254
[50] _____________________________________________________________________________254
(51)_____________________________________________________________________________254
(53)_____________________________________________________________________________254
[(53A) ___________________________________________________________________________255
[54] _____________________________________________________________________________255
(55)_____________________________________________________________________________255
(56)_____________________________________________________________________________255

(57)_____________________________________________________________________________255
[58],[58A],[59] and [60] Omitted by finance act, 2014 ____________________________________257
(61)_____________________________________________________________________________257
[62] _____________________________________________________________________________259
[63] _____________________________________________________________________________259
[63A]____________________________________________________________________________259
[63B]____________________________________________________________________________259
[64] _____________________________________________________________________________259
[(64A) ___________________________________________________________________________259
[(64B) ___________________________________________________________________________259
[(64C) ___________________________________________________________________________260
(65)_____________________________________________________________________________260
[(65A) ___________________________________________________________________________260
[(66) ____________________________________________________________________________260
[67] _____________________________________________________________________________262
[68] _____________________________________________________________________________262
[69] _____________________________________________________________________________262
[70] _____________________________________________________________________________262
[71] _____________________________________________________________________________262
[(72) ____________________________________________________________________________262
[73] _____________________________________________________________________________262
(74)_____________________________________________________________________________262
[74A]____________________________________________________________________________263
(75)_____________________________________________________________________________263
(78)_____________________________________________________________________________263
(79)_____________________________________________________________________________263
(80)_____________________________________________________________________________263
(90)_____________________________________________________________________________264
(91)_____________________________________________________________________________264
(98)_____________________________________________________________________________265
[(99) ____________________________________________________________________________265
[(99A) ___________________________________________________________________________265
(100)____________________________________________________________________________265
(101)____________________________________________________________________________266
[(102A) __________________________________________________________________________266
[(103) ___________________________________________________________________________266
[(103A) __________________________________________________________________________266
(104)____________________________________________________________________________266
(105)____________________________________________________________________________266
[(105A) __________________________________________________________________________266
[(105B) __________________________________________________________________________267
(107)____________________________________________________________________________267
[(107A) __________________________________________________________________________267
[(110B) __________________________________________________________________________267
(113)____________________________________________________________________________267
(114)____________________________________________________________________________267
(117)____________________________________________________________________________268
[(126) ___________________________________________________________________________268

[(126A) __________________________________________________________________________269
[(126B) __________________________________________________________________________269
[(126C) __________________________________________________________________________269
[(126D) __________________________________________________________________________269
[(126E) __________________________________________________________________________269
[] (126F) _________________________________________________________________________269
[(126G)__________________________________________________________________________269
[(126H) __________________________________________________________________________270
[(126I)___________________________________________________________________________270
[(126J) __________________________________________________________________________270
[(126K) __________________________________________________________________________270
[(126L) __________________________________________________________________________270
[(126M)__________________________________________________________________________271
(131) Any income- ________________________________________________________________271
(132)____________________________________________________________________________271
[(132A) __________________________________________________________________________273
[(132B) __________________________________________________________________________273
[(133) ___________________________________________________________________________273
[(135A) __________________________________________________________________________273
(136)____________________________________________________________________________273
[(139) ___________________________________________________________________________274
[(140) ___________________________________________________________________________274
(141)____________________________________________________________________________274
(142)____________________________________________________________________________274
PART II REDUCTION IN TAX RATES_________________________________________ 276
(2) ______________________________________________________________________________276
(3) ______________________________________________________________________________276
[(5A) ____________________________________________________________________________276
[(5B) ____________________________________________________________________________276
[] [(13C)] ________________________________________________________________________277
[[14A) ___________________________________________________________________________277
[(14B) ___________________________________________________________________________277
[(18) ____________________________________________________________________________278
[(18A) ___________________________________________________________________________278
[(21)____________________________________________________________________________279
[(24A) ___________________________________________________________________________279
[(27) ____________________________________________________________________________279
[(28A) ___________________________________________________________________________280
[(28B) ___________________________________________________________________________280
PART III REDUCTION IN TAX LIABILITY______________________________________ 281
[(1) Any amount received as- _____________________________________________________281
(2) ______________________________________________________________________________281
[(4) _____________________________________________________________________________282
[([6]) ____________________________________________________________________________282
[] (16) ___________________________________________________________________________283
PART IV EXEMPTION FROM SPECIFIC PROVISIONS___________________________ 284
(2) ______________________________________________________________________________284

(3) ______________________________________________________________________________284
[(5) _____________________________________________________________________________284
[(9A) ____________________________________________________________________________285
[(9AA)___________________________________________________________________________285
[(11A) ___________________________________________________________________________286
[(11B) ___________________________________________________________________________288
[(11C) ___________________________________________________________________________288
[(11D) ___________________________________________________________________________288
[(12) ____________________________________________________________________________288
(16)_____________________________________________________________________________290
[] (16A) __________________________________________________________________________290
(19)_____________________________________________________________________________290
[(36A) ___________________________________________________________________________292
(38)_____________________________________________________________________________292
[(38A) ___________________________________________________________________________292
[(38C) ___________________________________________________________________________293
(41)_____________________________________________________________________________293
(42)_____________________________________________________________________________293
[(43A) ___________________________________________________________________________294
[(43B) ___________________________________________________________________________294
[(43C) ___________________________________________________________________________294
[(43D) ___________________________________________________________________________294
[(43E) ___________________________________________________________________________294
(45)_____________________________________________________________________________294
[(45A) ___________________________________________________________________________295
[(46) ____________________________________________________________________________296
[(46A) ___________________________________________________________________________296
[(47A) ___________________________________________________________________________296
[(47B) ___________________________________________________________________________296
[(47C) ___________________________________________________________________________297
[(47D) ___________________________________________________________________________297
[(56) ____________________________________________________________________________297
[(56A) ___________________________________________________________________________298
[] (56B) __________________________________________________________________________298
[(56E) ___________________________________________________________________________299
[(56F) ___________________________________________________________________________299
[(56G)___________________________________________________________________________299
[(57) ____________________________________________________________________________299
[(57A) ___________________________________________________________________________300
[(59) ____________________________________________________________________________300
[(60) ____________________________________________________________________________301
[(61) ____________________________________________________________________________301
[] [(61A)] ________________________________________________________________________301
[(62) ____________________________________________________________________________301
[(63) ____________________________________________________________________________302
[(65) ____________________________________________________________________________302
[(66) ____________________________________________________________________________302
[(67) ____________________________________________________________________________302

[(68) ____________________________________________________________________________303
[(69) ____________________________________________________________________________303
[(70) ____________________________________________________________________________303
[(71) ____________________________________________________________________________303
[(72) ____________________________________________________________________________303
[] [(72A)] _________________________________________________________________________303
[(72B) ___________________________________________________________________________303
[(73) ____________________________________________________________________________303
[(74) ____________________________________________________________________________304
[(75) ____________________________________________________________________________304
[(77) ____________________________________________________________________________304
[(78) [Coal Mining and Coal based Power Generation Projects in Sindh],— ______________304
[] [(79)] __________________________________________________________________________304
[(81) ____________________________________________________________________________305
[(82) ____________________________________________________________________________305
[] [(83)] __________________________________________________________________________305
[(86) (a) _________________________________________________________________________305
[] [(89)]__________________________________________________________________________306
[] [(90)] __________________________________________________________________________306
[] (91) ___________________________________________________________________________307
[] (92) ___________________________________________________________________________308
[] (93) ___________________________________________________________________________309
THE THIRD SCHEDULE ___________________________________________________ 310
PART-I DEPRECIATION (See Section 22)_____________________________________ 310
PART II INITIAL ALLOWANCE [AND FIRST YEAR ALLOWANCE]_________________ 310
(1) ______________________________________________________________________________311
[(2) _____________________________________________________________________________311
PART III PRE-COMMENCEMENT EXPENDITURE (See Section 25)________________ 312
THE FOURTH SCHEDULE (See Section 99) _________________________________ 314
RULES FOR THE COMPUTATION OF THEPROFITS AND GAINS OF INSURANCE
BUSINESS_______________________________________________________________ 314
Profits on Life Insurance to be Computed Separately ____________________________________314
Computation of Profits and Gains of Life Insurance Business _____________________________314
Computing the Surplus under Rule 2 _________________________________________________314
General Insurance ________________________________________________________________315
Mutual Insurance Association _______________________________________________________316
Definitions _______________________________________________________________________316
THE FIFTH SCHEDULE (See Section 100)___________________________________ 318
PART I - RULES FOR THE COMPUTATION OF THE PROFITS AND GAINS FROM THE
EXPLORATION AND PRODUCTION OF PETROLEUM __________________________ 318
Exploration and Production of Petroleum a Separate Business ____________________________318
Computation of Profits _____________________________________________________________318
Depletion Allowance _______________________________________________________________320
Limitation on Payment to Federal Government and Taxes ________________________________320

Provision Relating to Rules _________________________________________________________321
Definitions _______________________________________________________________________322
PART II - RULES FOR THE COMPUTATION OF THE PROFITS AND GAINS FROM THE
EXPLORATION AND EXTRACTION OF MINERAL DEPOSITS (OTHERTHAN
PETROLEUM)____________________________________________________________ 323
Exploration and Extraction of Mineral Deposits a Separate Business _______________________323
Computation of Profits _____________________________________________________________323
Depletion Allowance _______________________________________________________________324
Tax Exemption of Profits from Refining or Concentrating Mineral Deposits __________________324
Provisions Relating to Rules ________________________________________________________325
Definitions _______________________________________________________________________325
THE SIXTH SCHEDULE____________________________________________________ 327
PART I - RECOGNISED PROVIDENT FUNDS [See sections 2( [48] ) and 21(e)] _____ 327
Recognition of provident funds.— ____________________________________________________327
2. Conditions for approval. — ______________________________________________________327
3. Employer's annual contributions, when deemed to be income received by employee. — ___330
4. Exclusion from total income of accumulated balance. — _____________________________330
5. Tax on accumulated balance. — _________________________________________________330
6. Deduction at source of tax payable on accumulated balance. — _______________________331
7. Treatment of balance in newly recognised provident fund. — _________________________331
8. Accounts of recognised provident funds. — ________________________________________332
9. Treatment of fund transferred by employer to trustee. — _____________________________332
10. Particulars to be furnished in respect of recognised provident funds.—________________332
11. Provisions of this Part to prevail against regulations of the fund. — ___________________332
12. Appeals. —_________________________________________________________________333
13. Provisions relating to rules. — _________________________________________________333
14. Definitions. —_______________________________________________________________334
15. Application of this Part. —_____________________________________________________335
PART II – Approved Superannuation Funds [SEE sections [12] (5) and 21(e), and the
Second Schedule] ________________________________________________________ 335
1. Approval of superannuation funds.— _____________________________________________335
3. Application for approval.— ______________________________________________________336
4. Contributions by employer, when deemed to be his income. — ________________________336
5. Deduction of tax on contributions paid to an employee. — ____________________________336
6. Deduction from pay of and contributions on behalf of employees to be included in a statement
under section 165. — ______________________________________________________________336
7. Liability of trustees on cessation of approval. — ____________________________________337
8. Particulars to be furnished in respect of superannuation fund. — ______________________337
9. Provisions of the Part to prevail against regulations of the fund. — _____________________337
10. Appeals. —_________________________________________________________________337
12. Definitions.— _______________________________________________________________338
PART III – Approved Gratuity Funds [SEE sections 2(4) and 21(e), and the Second
Schedule] _______________________________________________________________ 340

1. Approval of Gratuity Funds. —___________________________________________________340
3. Application for approval. — _____________________________________________________341
4. Gratuity deemed to be salary. — _________________________________________________341
5. Liability of trustees on cessation of approval. — ____________________________________341
6. Contributions by employer, when deemed to be his income. — ________________________341
7. Particulars to be furnished in respect of gratuity funds. — ____________________________341
8. Provisions of the Part to prevail against regulations of the fund. — _____________________342
9. Appeals. — __________________________________________________________________342
11. Definitions.— _______________________________________________________________343
THE SEVENTH SCHEDULE ________________________________________________ 344
RULES FOR THE COMPUTATION OF THEPROFITS AND GAINS OF A BANKING
COMPANY AND TAX PAYABLE THEREON ___________________________________ 344
THE EIGHTH SCHEDULE [Section 100B] ___________________________________ 350
RULES FOR THE COMPUTATION OF CAPITAL GAINS ON LISTED SECURITIES ___ 350
1. Manner and basis of computation of capital gains and tax thereon.— ____________________350
2. Sources of Investment.—_________________________________________________________350
3. Certain provisions of this Ordinance not to apply.— ___________________________________351
4. Payment of tax collected by NCCPL to the Board.— __________________________________352
5. Persons to whom this Schedule shall not apply.— ____________________________________352
6. Responsibility and obligation of NCCPL.— __________________________________________352
7. Transitional Provisions.— ________________________________________________________352

CHAPTER I - PRELIMINARY
1. SHORT TITLE, EXTENT AND COMMENCEMENT
This Ordinance may be called the Income Tax Ordinance, 2001.
(2) It extends to the whole of Pakistan.
(3) It shall come into force on such date as the Federal Government may, by notification in official
Gazette, appoint 
.
2. Definitions.—
In this Ordinance, unless there is anything repugnant in the subject or context —
(1) "accumulated profits" in relation to 1[distribution or payment of] a dividend, 2[include] —
(A) any reserve made up wholly or partly of any allowance, deduction, or exemption admissible under this
Ordinance;+.*-.9230
(B) for the purposes of 3[sub-clauses (a), (b) and (e) of clause (19)”] all profits of the company including
income and gains of a trust up to the date of such distribution or such payment, as the case may be; and
(c) for the purposes of 4[sub-clause (c) of clause (19)], includes all profits of the company including income
and gains of a trust up to the date of its liquidation;
5[(1A) “amalgamation” means the merger of one or more banking companies or non-banking financial
institutions, 6[or insurance companies,] 7[or companies owning and managing industrial undertakings]
8[or companies engaged in providing services and not being a trading company or companies] in either
case 9[at least one of them] being a public company, or a company incorporated under any law, other
than Companies Ordinance, 1984 (XLVII of 1984), for the time being in force, (the company or
companies which so merge being referred to as the “amalgamating company” or companies and the
company with which they merge or which is formed as a result of merger, as the “amalgamated
company”) in such manner that –
(a) the assets ofthe amalgamating company or companies immediately before the amalgamation become the
assets ofthe amalgamated company by virtue of the amalgamation, otherwise than by purchase of such assets by the
amalgamated company or as a result of distribution of such assets to the amalgamated company after the winding up
of the amalgamating company or companies; 10[and]
(b) the liabilities of the amalgamating company or companies immediately before the amalgamation become
the liabilities of the amalgamated company by virtue of the amalgamation 11[.]
12[ ]
13[(2) “Appellate Tribunal” means the Appellate Tribunal Inland Revenue established under section 130;]

(3) “approved gratuity fund” means a gratuity fund approved by the Commissioner in accordance with Part III
of the Sixth Schedule;
14[(3A) “Approved Annuity Plan” means an Annuity Plan approved by Securities and Exchange Commission of
Pakistan (SECP) underVoluntary Pension System Rules, 2005 and offered by a Life Insurance Company registered
with the SECP under Insurance Ordinance, 2000 (XXXIX of 2000);]
15[(3B) “Approved Income Payment Plan” means an Income Payment Plan approved by Securities and Exchange
Commission of Pakistan (SECP) under Voluntary Pension SystemRules, 2005 and offered by a Pension Fund
Manager registered with the SECP underVoluntary Pension System Rules, 2005;]
16[(3C) “Approved Pension Fund” means Pension Fund approved by Securities and Exchange Commission of
Pakistan (SECP) underVoluntary Pension System Rules, 2005, and managed by a Pension Fund Managerregistered
with the SECP under Voluntary Pension SystemRules, 2005;]
17[(3D) “Approved Employment Pension or Annuity Scheme” means any employment related retirement
scheme approved under this Ordinance, which makes periodical payment to a beneficiary i.e. pension
or annuity such as approved superannuation fund, public sector pension scheme and Employees Old -
Age Benefit Scheme;]
18[(3E) “Approved Occupational Savings Scheme” means any approved gratuity fund or recognized provident
fund;]
(4) “approved superannuation fund” means a superannuation fund,or any part of a superannuation fund,
approved by the Commissioner in accordance with Part II of the Sixth Schedule;
19[(5) “assessment” includes 20[provisional assessment,]re-assessment and amended assessment and the cognate
expressions shall be construed accordingly;]
21[(5A) “assessment year” means assessment yearas defined in the repealed Ordinance;]
22[(5B) “asset management company” means an asset management company as defined in the Non-Banking
Finance Companies and Notified Entities Regulations, 2007;]
(6) “association of persons” means an association of persons as defined in section 80;
(7) “banking company” means a banking company as defined in the Banking Companies Ordinance, 1962
(LVII of 1962) and includes any body corporate which transacts the business ofbanking in Pakistan;
23[(8) “Board” means the Central Board of Revenue established underthe Central Board of Revenue Act, 1924
(IV of 1924), and on the commencement of Federal Board of Revenue Act, 2007, the Federal Board of Revenue
established undersection 3 thereof;
(9) “bonus shares” includes bonus units in a unit trust;
(10) “business” includes any trade, commerce, manufacture, profession, vocation or adventure or concern in
the nature of trade, commerce, manufacture, profession or vocation, but does not include employment;

(11)] “capital asset” means a capital asset as defined in section 37;
24[(11A) “charitable purpose” includes relief of the poor, education,medical relief and the advancement of any other
object of general public utility;]
25[(11B) “Chief Commissioner” means a person appointed as Chief Commissioner Inland
Revenue under section 208 and includes a Regional Commissioner of Income Tax and a Director-General of Income
Tax and Sales Tax;]
26[(11C) “Collective Investment Scheme” shall have the same meanings as are assigned underthe Non-Banking
Finance Companies (Establishment and Regulation) Rules, 2003;]
(12) “company” means a company as defined in section 80;
27[(13) “Commissioner” means a person appointed as Commissioner Inland Revenue undersection 208 and
includes any other authority vested with all or any of the powers and functions of the Commissioner;]
28[(13A) “Commissioner (Appeals)” means a person appointed as Commissioner Inland Revenue (Appeals) under
section 208;]
29
[(13AA) “Consumer goods” means goods that are consumed by the end consumer rather than used in the
production of another good.]
30[(13B) “Contribution to an Approved Pension Fund” means contribution as defined in rule 2(j) of the Voluntary
Pension SystemRules, 2005 31[ ];]
(14) “co-operative society” means a co-operative society registered under the Co-operative Societies Act,
1925 (VII of 1925) or under any other law for the time being in force in Pakistan for the registration of
co-operative societies;
(15) “debt” means any amount owing, including accounts payable and the amounts owing underpromissory
notes,bills of exchange, debentures,securities,bonds or other financial instruments;
(16) “deductible allowance” means an allowance that is deductible from total income under Part IX of Chapter
III;
(17) “depreciable asset” means a depreciable asset as defined in section 22;
32 (17A) "Developmental REIT Scheme” means Developmental REIT Scheme as defined under the Real Estate
Investment Trust Regulations, 2015.
(18) “disposal” in relation to an asset,means a disposalas defined in section 75;
(19) “dividend” includes —
(a) any distribution by a company of accumulated profits to its shareholders,whether capitalised or not, if such
distribution entails the release by the company to its shareholders of all or any part of the assets including money of
the company;

(b) any distribution by a company, to its shareholders of debentures,debenture-stockordeposit certificate in
any form, whether with or without profit, 33[ ] to the extent to which the company possesses accumulated profits
whether capitalised or not;
(c) any distribution made to the shareholders of a company on its liquidation, to the extent to which the
distribution is attributable to the accumulated profits of the company immediately before its liquidation, whether
capitalised or not;
(d) any distribution by a company to its shareholders on the reduction of its capital, to the extent to which the
company possesses accumulated profits, whether such accumulated profits have been capitalised or not; 34[ ]
any payment by a private company 35[as defined in the Companies Ordinance, 1984 (XLVII of 1984)] or trust of any
sum (whether as representing a part of the assets ofthe company or trust,or otherwise) by way of advance or loan to
a shareholder or any payment by any such company or trust on behalf, or for the individual benefit, of any such
shareholder, to the extent to which the company or trust, in either case, possesses accumulated profits; 36[or]
37[(f) 38[remittance of] after tax profit of a branch of a foreign company operating in Pakis tan;]
but does not include —
(i) a distribution made in accordance with 39[sub-clause] (c) or (d) in respect of any share for full cash
consideration, or redemption of debentures ordebenture stock, where the holder of the share or debenture is not
entitled in the event of liquidation to participate in the surplus assets;
(ii) any advance or loan made to a shareholderby a company in the ordinary course of its business,where the
lending of money is a substantialpart of the business ofthe company; 40[ ]
(iii) any dividend paid by a company which is set off by the company against the whole or any part of any sum
previously paid by it and treated as a dividend within the meaning of 41[sub-clause] (e) to the extent to which it is so
set off; 42[and]
43[(iv) remittance of after tax profit by a branch of Petroleum Exploration and Production (E&P) foreign
company, operating in Pakistan.]
44[(19A) “Eligible Person”, for the purpose of Voluntary Pension System Rules, 2005, means an individual Pakistani
who 45[holds] a valid National Tax Number 46[or Computerized National Identity Card 47[or National Identity Card
for Overseas Pakistanis] issued by the National Database and Registration Authority] 48[ ] 49[:]]
50[Provided that the total tax credit available for the contribution made to approved employment pension or annuity
scheme and approved pension fund underVoluntary Pension System Rules, 2005, should not exceed the limit
prescribed or specified in section 63.]
51[(19B) The expressions “addressee”,“automated”,“electronic”, “electronic signature”, “information”,
“information system”, “originator” and “transaction”, shall have the same meanings as are assigned to them in the
Electronic Transactions Ordinance, 2002 (LI of 2002);]
52[(19C) “electronic record” includes the contents of communications, transactions and procedures underthis
Ordinance, including attachments,annexes, enclosures,accounts,returns,statements,certificates, applications,
forms, receipts, acknowledgements, notices,orders, judgments, approvals,notifications, circulars, rulings,
documents and any other information associated with such communications, transactions and procedures,created,
sent,forwarded, replied to, transmitted, distributed,broadcast,stored, held, copied, downloaded, displayed, viewed,
read, or printed, by one or several electronic resources and any other information in electronic form;]

53[(19D) “electronic resource” includes telecommunication systems,transmission devices, electronic video or audio
equipment, encoding or decoding equipment, input, output or connecting devices,data processing or storage
systems,computer systems,servers,networks and related computer programs, applications and software including
databases,data warehouses and web portals as may be prescribed by the Board from time to time, for the purpose of
creating electronic record;]
54[(19E) “telecommunication system” includes a systemfor the conveyance,through the agency of electric,
magnetic, electro-magnetic, electro-chemical or electro-mechanical energy, of speech,music and other
sounds,visualimages and signals serving for the impartation of any matter otherwise than in the form of sounds or
visual images and also includes real time online sharing of any matter in manner and mode as may be prescribed by
the Board from time to time.]
(20) “employee” means any individual engaged in employment;
(21) “employer” means any person who engages and remunerates an employee;
(22) “employment” includes –
(a) a directorship or any other office involved in the management of a company;
(b) a position entitling the holder to a fixed or ascertainable remuneration; or
(c) the holding or acting in any public office;
55 (22A) "Fast moving consumer goods” means consumer goods which are supplied in retail marketing as per daily
demand of a consume
(23) “fee for technical services” means any consideration, whether periodical or lump sum, for the rendering of
any managerial, technical or consultancy services including the services of technical or other personnel,but does not
include —
(a) consideration for services rendered in relation to a construction,assembly or like project undertaken by the
recipient; or
(b) consideration which would be income of the recipient chargeable underthe head “Salary”;
56[(23A) “filer” means a taxpayer whose name appears in the active taxpayers’ list issued by the Board
from time to time or is holder of a taxpayer’s card;]
(24) “financial institution” means an institution 57[as defined] underthe Companies Ordinance, 58[1984 (XLVII
of 1984)] 59[ ];
(25) “finance society” includes a co-operative society which accepts money on deposit or otherwise for the
purposes ofadvancing loans or making investments in the ordinary course of business;
(26) “firm” means a firm as defined in section 80;
(27) “foreign-source income” means foreign-source income as defined in sub-section (16) of section 101.
(28) “House Building Finance Corporation” means the Corporation constituted under the House Building
Finance Corporation Act, 1952 (XVIII of 1952);
60 (28A) "Imputable income” in relation to an amount subject to final tax means the income which would have
resulted in the same tax, had this amount not been subject to final tax.
61[(29) “income” includes any amount chargeable to tax underthis Ordinance, any amount subject to collection
62[or deduction]of tax under section 148, 63[150, 152(1), 153, 154, 156, 156A, 233, 233A,] 64[,] sub-section (5) of

section 234 65[ and 236M], 66[any amount treated as income under any provision of this Ordinance] and any loss of
income 67[ ];
68[(29A) “income year” means income year as defined in the repealed Ordinance;]
69[(29B) “Individual Pension Account” means an account maintained by an eligible person with a Pension Fund
Manager approved underthe Voluntary Pension System Rules, 2005;]
70[(29C) “Industrial undertaking” means —
(a) an undertaking which is set up in Pakistan and which employs,—
ten or more persons in Pakistan and involves the use of electrical energy or any other form of energy which is
mechanically transmitted and is not generated by human or animal energy; or
twenty or more persons in Pakistan and does not involve the use of electrical energy or any other form of energy
which is mechanically transmitted and is not generated by human or animal energy:
and which is engaged in,—
the manufacture of goods or materials or the subjection of goods ormaterials to any process which substantially
changes their original condition; or
ship-building; or
generation, conversion,transmission or distribution of electrical energy, or the supply of hydraulic power; or
the working of any mine, oil-well or any othersource of mineral deposits; and
(b) any otherindustrial undertaking which the Board may by notification in the official gazette, specify.]
“intangible” means an intangible as defined in section 24;
71[(30A) “investment company” means an investment company as defined in the Non-Banking Finance Companies
(Establishment and Regulation) Rules, 2003;]
72[(30AA) KIBOR means Karachi Inter Bank Offered Rate prevalent on the first day of each quarter of the
financial year;]
73[(30B) “leasing company” means a leasing company as defined in the Non-Banking Finance Companies and
Notified Entities Regulation, 2007;]
“liquidation” in relation to a company, includes the termination of a trust;
74[(31A) “Local Government” shall have the same meaning as defined in the Punjab Local Government Ordinance,
2001 (XIII of 2001), the Sindh Local Government Ordinance, 2001 (XXVII of 2001), the NWFP Local Government
Ordinance, 2001 (XIV of 2001) and the Balochistan Local Government Ordinance, 2001 (XVIII of 2001);]
(32) “member” in relation to an association of persons,includes a partner in a firm;
(33) “minor child” means an individual who is under the age of eighteen years at the end of a tax year;

(34) “modaraba” means a modaraba as defined in the Modaraba Companies and Modarabas (Floatation and
Control) Ordinance, 1980 (XXXI of 1980);
(35) “modaraba certificate” means a modaraba certificate as defined in the Modaraba Companies and
Modarabas (Floatation and Control) Ordinance, 1980 (XXXI of 1980);
75[(35A) “Mutual Fund” means a mutual fund 76[registered or approved by the Securities and Exchange
Commission of Pakistan];]
77[(35AA) “NCCPL” means National Clearing Company of Pakistan Limited, which is a company
incorporated underthe Companies Ordinance, 1984 (XLVII of 1984) and licensed as “Clearing House” by the
Securities and Exchange Commission of Pakistan;]
78[(35B) “non-banking finance company” means an NBFC as defined in the Non-Banking Finance Companies
(Establishment and Regulation) Rules, 2003;]
79[(35C) “non-filer” means a person who is not a filer;]
80[(36) “non-profit organization” means any person other than an individual, which is —
(a) established for religious, educational, charitable, welfare or development purposes,or for the promotion of
an amateur sport;
(b) formed and registered under any law as a non-profit organization;
(c) approved by the Commissioner for specified period, on an application made by such person in the
prescribed form and manner, accompanied by the prescribed documents and, on requisition, such otherdocuments
as may be required by the Commissioner;
and none of the assets ofsuch person confers,or may confer, a private benefit to any other person;]
(37) “non-resident person” means a non-resident person as defined in Section 81;
(38) “non-resident taxpayer” means a taxpayer who is a non-resident person;
81[(38A) “Officer of Inland Revenue” means any Additional Commissioner Inland Revenue,
Deputy Commissioner Inland Revenue, Assistant Commissioner Inland Revenue, Inland Revenue Officer, Inland
Revenue Audit Officer or any otherofficer however designated or appointed by the Board for the purposes ofthis
Ordinance;]
(39) “Originator” means Originator as defined in the Asset Backed Securitization Rules, 1999;
(40) “Pakistan-source income” means Pakistan-source income as defined in section 101;
82[(40A) “Pension Fund Manager” means an asset management company registered under the Non-Banking
Finance Companies (Establishment and Regulations) Rules, 2003, or a life insurance company registered under
Insurance Ordinance, 2000 (XXXIX of 2000), duly authorized by the Securities and Exchange Commission of
Pakistan and approved under the Voluntary Pension System Rules, 2005, to manage the Approved Pension Fund;]
(41) “permanent establishment” in relation to a person,means a 83[fixed] place of business through which the
business ofthe person is wholly or partly carried on, and includes –
(a) a place of management, branch, office, factory or workshop, 84[premises for soliciting orders, warehouse,
permanent sales exhibition or sales outlet,] otherthan a liaison office except where the office engages in the
negotiation of contracts (otherthan contracts of purchase);
a mine, oil or gas well, quarry or any other place of extraction of natural resources;

85[(ba) an agricultural, pastoral or forestry property;]
(c) a building site, a construction,assembly or installation project or supervisory activities 86[connected]with
such site or project 87[but only where such site, project and its 88[connected]supervisory activities continue for a
period or periods aggregating more than ninety days within any twelve-months period] ;
(d) the furnishing of services, including consultancy services,by any person through employees or other
personnelengaged by the person for such purpose 89[ ];
(e) a person acting in Pakistan on behalf of the person (hereinafter referred to as the “agent 90[”),] other
than an agent of independent status acting in the ordinary course of business as such,if the agent –
(i) has and habitually exercises an authority to conclude contracts on behalf of the other person;
(ii) has no such authority,but habitually maintains a stock-in-trade or other merchandise from which the agent
regularly delivers goods or merchandise on behalf of the other person; or
(f) any substantialequipment installed, or other asset orproperty capable of activity giving rise to income;
(42) “person” means a person as defined in section 80;
91
(42A) "PMEX” means Pakistan Mercantile Exchange Limited a futures commodity exchange company
incorporated underthe Companies Ordinance, 1984 (XLVII of 1984) and is licensed and regulated by the Securities
and Exchange Commission of Pakistan.
(43) “pre-commencement expenditure” means a pre-commencement expenditure as defined in section 25;
“prescribed” means prescribed by rules made under this Ordinance;
92[(44A) “principal officer” used with reference to a company or association of persons includes –
a director, a manager, secretary, agent, accountant orany similar officer; and
any person connected with the management or administration of the company or association of persons upon whom
the Commissioner has served a notice of treating him as the principal officer thereof;]
(45) “private company” means a company that is not a public company;
93[ ]
94[ ]
(46) “profit on a debt” 95[whether payable or receivable, means] —
(a) any profit, yield, interest, discount,premium or other amount 96[,] owing under a debt, other than a return of
capital; or
(b) any service fee or other charge in respect of a debt, including any fee or charge incurred in respect of a
credit facility which has not been utilized;
(47) “public company” means —
a company in which not less than fifty per cent of the shares are held by the Federal Government 97[or Provincial
Government];
98[(ab) a company in which 99[not less than fifty per cent of the] shares are held by a foreign Government, or a
foreign company owned by a foreign Government 100[;]]

(b) a company whose shares were traded on a registered stock exchange in Pakistan at
any time in the tax year and which remained listed on that exchange 101[ ] at the end of
that year; or
102[(c) a unit trust whose units are widely available to the public and any other trust as defined in the Trusts Act,
1882 (II of 1882);]
103[(47A) “Real Estate Investment Trust (REIT) Scheme” means a REIT Scheme as defined in the Real
Estate Investment Trust Regulations, 2008;]
104[(47B) “Real Estate Investment Trust Management Company (REITMC)” means REITMC as defined
under the Real Estate Investment Trust Regulations, 2008;]
105 (47C) "Rental REIT Scheme” means a Rental REIT Scheme as defined under the Real Estate Investment Trust
Regulations, 2015.]
(48) “recognised provident fund” means a provident fund recognised by the Commissioner in accordance with
Part I of the Sixth Schedule;
106[ ]
(49) “rent” means rent as defined in sub-section (2) of section 15 and includes an amount treated as rent under
section 16;
107[(49A) “repealed Ordinance” means Income Tax Ordinance, 1979 (XXXI of 1979);]
(50) “resident company” means a resident company as defined in section 83;
(51) “resident individual” means a resident individual as defined in section 82;
(52) “resident person” means a resident person as defined in section 81;
(53) “resident taxpayer” means a taxpayer who is a resident person;
(54) 108[“royalty”] means any amount paid or payable, however described or computed, whether periodical or a
lump sum, as consideration for —
(a) the use of, or right to use any patent,invention, design or model, secret formula or process,trademark or
other like property or right;
(b) the use of, or right to use any copyright of a literary, artistic or scientific work, including films or video
tapes for use in connection with television or tapes in connection with radio broadcasting,but shall not include
consideration for the sale, distribution or exhibition of cinematograph films;
(c) the receipt of, or right to receive, any visual images or sounds,orboth, transmitted by satellite, cable, optic
fibre or similar technology in connection with television, radio or internet broadcasting;
(d) the supply of any technical, industrial, commercial or scientific knowledge, experience or skill;
(e) the use of or right to use any industrial, commercial or scientific equipment;
(f) the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the
application or enjoyment of, any such property or right as mentioned in 109[sub-clauses](a) through (e); 110[and]
(g) the disposalof any property or right referred to in 111[sub-clauses](a) through (e);

(55) “salary” means salary as defined in section 12;
(56) “Schedule” means a Schedule to this Ordinance;
(57) “securitization” means securitization as defined in the Asset Backed Securitization Rules, 1999;
(58) “share” in relation to a company, includes a modaraba certificate and the interest of a beneficiary in a trust
(including units in a trust);
(59) “shareholder” in relation to a company, includes a modaraba certificate holder, 112[a unit holder of a unit
trust]and a beneficiary of a trust;
113[(59A) “Small Company” means a company registered on or after the first day of July, 2005, under the
Companies Ordinance, 1984 (XLVII) of 1984, which,—
114 (i) has paid up capital plus undistributed reserves not exceeding fifty million rupees;
115 [(ia) has employees not exceeding two hundred and fifty any time during the year;]
(ii) has annual turnover not exceeding two hundred 116[and fifty] million rupees; and
(iii) is not formed by the splitting up or the reconstitution of company already in existence;]
117[(59B) “Special Judge” means the Special Judge appointed under section 203;]
(60) “Special Purpose Vehicle” means a Special Purpose Vehicle as defined in the Asset Backed Securitization
Rules, 1999;
(61) “speculation business” means a speculation business as defined in section 19;
118[(61A) “stockfund” means a collective investment scheme or a mutual fund where the investible funds are
invested by way of equity shares in companies, to the extent of more than seventy percent of the investment;]
(62) “stock-in-trade” means stock-in-trade as defined in section 35;
(63) “tax” means any tax imposed underChapter II, and includes any penalty, fee or other charge or any sum or
amount leviable or payable under this Ordinance;
(64) “taxable income” means taxable income as defined in section 9;
119[ ]
(66) “taxpayer” means any person who derives an amount chargeable to tax under this Ordinance, and includes
—
(a) any representative of a person who derives an amount chargeable to tax under this Ordinance;
(b) any person who is required to deduct or collect tax under Part V of Chapter X 120[and Chapter XII;] or
(c) any person required to furnish a return of income or pay tax under this Ordinance;
(67) “tax treaty” means an agreement referred to in section 107;

(68) “tax year” means the tax year as defined in sub-section (1) of section 74 and, in relation to a person,
includes a special year or a transitional year that the person is permitted to use under section 74;
(69) “total income” means total income as defined in section 10;
(70) “trust” means a “trust” as defined in section 80;
121[(70A) “turnover” means turnoveras defined in sub-section (3) of section 113;]
(71) “underlying ownership” means an underlying ownership as defined in section 98;
(72) “units” means units in a unit trust;
(73) “unit trust” means a unit trust as defined in section 80; and
122[(74) “Venture Capital Company” and “Venture Capital Fund” shall have the same meanings as are assigned
to them under the 123[Non-Banking Finance 124[Companies] (Establishment and Regulation) Rules,
2003];
3. ORDINANCE TO OVERRIDE OTHER LAWS
The provisions of this Ordinance shall apply notwithstanding anything to the contrary contained in any other law for
the time being in force.

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