presentation

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2. Lecture No. 02
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3. Definitions & Terminologies
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4. The definition of term “income” uses the word “includes” therefore,
it is inclusive definition and not exhaustive. An inclusive definition
is that which not only extends to those things which are included in
it, but also covers all such things which the term signifies according
to its general and natural meaning.
Definition: Income includes
Any amount chargeable to tax under the Income Tax
Ordinance,2001
Any amount subject to collection or deduction of tax under final tax
regime;
Any amount treated as income under any provision of the
Ordinance, and
Any loss of income
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5. The total income of a person for a tax year shall be
the sum of the
 Person’s income under all heads of income for that
tax year; and
 Person’s income exempt from tax for that tax year
under any of the provisions of Income Tax
Ordinance, 2001.
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6. The taxable income of a person for a tax year
shall be the total income other than exempt
income of the person for the year reduced (but
not below zero) by the sum of any deductible
allowances of the person for that tax year.
Total Income other than exempt xxxxx
Less: Deductible Allowances (xxxx)
Taxable Income xxxxx
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7. • An individual;
• A company or association of persons
incorporated, formed, organized or
established in Pakistan or elsewhere;
• The Federal Government, a foreign
government, a political subdivision of a
foreign government, or public
international organization.
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8. Taxpayer means any person
• who derives an amount chargeable to tax
under the Income Tax Ordinance, 2001
• may be a representative of a person who
derives an amount chargeable to tax
• is required to deduct or collect tax under
Part V of Chapter X and Chapter XII of the
Ordinance; or
• is required to furnish a return of income or
pay tax under the Ordinance;
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9. “Rent” means any amount received
or receivable by the owner of land or
a building as consideration for the
use or occupation of, or the right to
use or occupy, the land or building,
and includes any forfeited deposit
paid under a contract for the sale of
land or a building.
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10. 1. Any reserve made up wholly or partly of any allowance,
deduction, or exemption admissible under this Ordinance.
2. 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.
3. Includes all profits of the company including income and gains
of a trust up to the date of its liquidation.
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11. “Assessment includes re-assessment and amended assessment and
the cognate expressions shall be constructed accordingly”
The data of a person is collected for the determination of taxability.
It includes the following.
1. Computation of total income
2. Computation of payable tax
3. Computation of refund
4. Adjustment of loss or carry forward loss
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12. Assessment Year means the period of 12
months beginning first day of July next
following the income year and includes
any m such period that is deemed under
the provisions of this ordinance, to be
assessment year in respect of tax year.
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13. Board means the Central Board of Revenue
established under the 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 under section 3 thereof.
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14. 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.
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15. Charitable purpose includes relief of the poor,
education, medical relief and the
advancement of any other object of general
public utility.
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16. 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.
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17. Consumer goods means goods that are
consumed by the end consumer rather than
used in the production of another good.
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18. Debt means any amount owing, including
accounts payable and the amounts owing
under promissory notes, bills of exchange,
debentures, securities, bonds or other
financial instruments.
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19. Employee means any individual engaged in employment.
Employer means any person who engages and remunerates an
employee.
Employment includes –
1. A directorship or any other office involved in the management of a
company;
2. A position entitling the holder to a fixed or ascertainable
remuneration; or
3. The holding or acting in any public office
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20. Fast moving consumer goods‖ means consumer
goods which are supplied in retail marketing as
per daily demand of a consumer.
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21. 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.
Non-filer means a person who is not a
filer.
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22. KIBOR means Karachi Inter Bank Offered
Rate prevalent on the first the first day of
each quarter of the financial year.
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23. “Intangible” means any patent, invention,
design or model, secret formula or process,
copyright, trade mark, scientific or technical
knowledge, computer software, motion
picture film, export quotas, franchise, licence,
intellectual property, or other like property or
right, contractual rights and any expenditure
that provides an advantage or benefit for a
period of more than one year (other than
expenditure incurred to acquire a depreciable
asset or unimproved land).
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24. “Pre-Commencement Expenditure”means any
expenditure incurred before the
commencement of a business wholly and
exclusively to derive income chargeable to tax,
including the cost of feasibility studies,
construction of prototypes, and trial
production activities, but shall not include
any expenditure which is incurred in
acquiring land, or which is depreciated or
amortised under section 22 or 24 of the
Ordinance.
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25. Capital asset means property of every kind held by a person,
whether or not connected with a business, but does not
include:
• any stock-in-trade, consumable stores or raw materials held
for the purpose of business;
• any property with respect to which the person is entitled to
a depreciation deduction under section 22 or amortization
deduction under section 24; or
• any movable property held for personal use by the person
or any member of person’s family dependent on the person
excluding capital assets mentioned under section 38(5)) i.e.
painting, sculpture, drawing or other work of art, jewellery,
rare manuscript, folio, book, postage stamp, first day cover,
coin, medallion or an antique.
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26. • any profit, yield, interest, discount,
premium or other amount, owing under a
debt, other than a return of capital; or
• 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;
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27. Tax practitioners and taxpayer normally adopts any
of the following technique to lessen tax burden:
Tax avoidance is generally the legal exploitation of
the tax regime to one's own advantage, to attempt to
reduce the amount of tax that is payable by means
that are within the law whilst making a full
disclosure of the material information to the tax
authorities. Examples of tax avoidance involve using
tax deductions, changing one's business structure
through incorporation or establishing an offshore
company in a tax haven.
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28. By contrast tax evasion is the general term for
efforts by individuals, firms, trusts and other
entities to evade the payment of taxes by illegal
means. Tax evasion usually entails taxpayers
deliberately misrepresenting or concealing the
true state of their affairs to the tax authorities to
reduce their tax liability, and includes, in
particular, dishonest tax reporting (such as under
declaring income, profits or gains; or overstating
deductions).
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29. THANK YOU
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