MASTER

STT SOLUTIONS ACADEMY CAF 2 TAX PRACTICES MASTER SHEETS BY SIR TARIQ TUNIO STUDY TAX FROM SHEET
THE TAXMAN
CA COLLEGE WITH SOLUTIONS
CHARGE OF TAX & 4 KEY CONCEPTS OF INCOME TAX 0347 2655 905 1

Income tax shall be imposed for each tax year, at rate or rates specified
CHARGE OF TAX in First Schedule, on every person who has taxable income for the year.

PERSON TAXABLE INCOME TAX YEAR TAX RATES

(i) Individual (ii) AOP (iii) Company (iv) Fed Govt (v) Foreign Govt (vi) MR. TARIQ TUNIO TYPE PROVISION NON-SALARIED PERSON
Political Subdivision of Foreign Govt (vii) Public International Organization COMPUTATION OF TAXABLE INCOME & TAX LIABILITY Normal Tax w Period of 12 months S# Taxable Income Rate of Tax
FOR TAX YEAR 20X1 ending on 30th June 1. Where taxable income does 0%
Year
PERSON WHEN RESIDENT A SALARY w denoted by calendar
not exceed Rs. 600,000/-
B INCOME FROM PROPERTY 2. Where taxable income exceeds 15% of the amount
Individual w Presence in Pakistan of 183 days or more in year in which said Rs. 600,000 but does not exceeding Rs. 600,000
C INCOME FROM BUSINESS date falls
aggregate in a TY, or exceed Rs. 1,200,000
D CAPITAL GAIN Special Tax w Period of 12-months 3. Where taxable income exceeds Rs. 90,000 + 20% of the
w Employee/official of Federal/Provincial Govt. E INCOME FROM OTHER SOURCES
Year different from NTY Rs. 1,200,000 but does not amount exceeding Rs.
posted abroad F SUM OF ALL HEADS exceed Rs. 1,600,000 1,200,000
w Being citizen of Pakistan is not present in any that person is allowed
Add: Exempt Income XX 4. Where taxable income exceeds Rs. 170,000 + 30% of the
other country for more than 182 days during tax by CIR by order, &
G TOTAL INCOME XX Rs. 1,600,000 but does not amount exceeding Rs.
year or who is not resident taxpayer of any other w denoted by calendar exceed Rs. 3,200,000 1,600,000
Less: Exempt Income (XX)
country. year relevant to NTY 5. Where taxable income exceeds Rs. 650,000 + 40% of the
H NET TOTAL INCOME XX
AOP w Control & Management of the affairs of AOP is in which the closing Rs. 3,200,000 but does not amount exceeding Rs.
Less: Deductible Allowances [Cannot Reduce T/I Before Zero]
situated wholly or partly in Pakistan at any time date of the STY falls exceed Rs. 5,600,000 3,200,000
→ Zakat paid under Zakat and Ushar Ordinance, 1980 6. Where taxable income exceeds Rs. 1,610,000 + 45% of the
during the year → Workers’ Welfare Fund Transitional w Period that comes
Rs. 5,600,000 amount exceeding Rs.
Company Company incorporated/ formed by or under → Workers’ Participation Fund (XX) Tax Year between end of last
w w 5,600,000
Pakistani law I TAXABLE INCOME XX TY prior to change & Max rate for AOP, being professional firm prohibited from incorporating as
w Control & Management of the affairs of date on which coy by law or rules regulating their profession, shall be 40% and not 45%.
company is situated wholly in Pakistan at any changed TY
INDIVIDUAL Individual for tax purpose mean an natural person i.e. a human being. commences SALARIED PERSON
time in the year
w Provincial Government S# Taxable Income Rate of Tax
Local Government PROCEDURE FOR TRANSITION 1. Where taxable income does 0%
w includes a firm, a Hindu undivided family, any artificial juridical person and anybody
AOP → Person having NTY/STY apply to CIR not exceed Rs. 600,000/-
Fed. Govt. w Always Resident Person of persons formed under a foreign law, but does not include a company
to allow him to use STY/NTY 2. Where taxable income 5% of the amount
→ CIR by order allow/reject request. exceeds Rs. 600,000 but does exceeding Rs. 600,000
Foreign Govt. w Always Non-resident Person not exceed Rs. 1,200,000
After giving opportunity of being
COMPANY 3. Where taxable income Rs. 30,000 + 15% of the
Political Sub-division w Always Non-resident Person heard to the taxpayer exceeds Rs. 1,200,000 but amount exceeding Rs.
of Foreign Govt. → CIR to allow only when compelling does not exceed Rs. 2,200,000 1,200,000
Means need is shown by taxpayer 4. Where taxable income Rs. 180,000 + 25% of the
Public International w Always Non-resident Person → In case of acceptance conditions by exceeds Rs. 2,200,000 but amount exceeding Rs.
Organization CIR may apply does not exceed Rs. 3,200,000 2,200,000
Body corporate formed by/ under Pakistani → In case of rejection, order to be 5. Where taxable income Rs. 430,000 + 30% of the
Company as defined in CA 2017 exceeds Rs. 3,200,000 but amount exceeding Rs.
COMPUTING DAYS AN INDIVIDUAL IS PRESENT IN PAKISTAN law passed after recording reasons for does not exceed Rs. 4,100,000 3,200,000
→ Days Counted as Whole Days rejection in writing 6. Where taxable income Rs. 700,000 + 35% of the
- Part of a day an individual is present in Pakistan (day of arrival and day of Modaraba Body incorporated by/ under company law of
exceeds Rs. 4,100,000 amount exceeding Rs.
departure) foreign country relating to incorporation of 4,100,000
- Public holiday company Board may permit class of persons
SALARIED PERSON
- Day of leave (including sick leave) having NTY to use STY or vice versa If “salary” exceeds 75% of taxable income, individual is ‘Salaried Indv’
- Day an individual’s activity in Pakistan is interrupted because of strike, lock-out Co-operative society, Non-profit Organization
or delay in receipt of supplies SURCHARGE
- Holiday spent in Pakistan before, during or after any activity in Pakistan. Finance society or
REJECTION
If Txbl Inc of Indv/AOP > Rs. 10 M, surcharge is payable at 10%
→Review by FBR →FBR’s decision is final
→ Day Not Counted: Day or part of day an individual is in transit in Pakistan Foreign association, incorporated or not, of tax lia payable under progressive tabular rates (Division I).
Trust, anAny other
entity or a society
body of persons WITHDRAWN
declared by the Board (by general or special CIR may withdraw permission to
established or constituted by or under §
COMPANY TAX RATES
order) to be a company for purposes of ITO
Pakistan Source Income (PSI) any law for the time being in force use STY/NTY by order after giving COY → 29% | SMALL COY → 20% | BANKING COMPANY → 39%
2001
Resident
Chargeable to Tax in Pakistan
opportunity of being heard.
Person SMALL COMPANY (Def)
§ Against this order, taxpayer may
Provincial Government Local Govt. in Pakistan “Small Company” means coy registered on or after 01/07/2005
Foreign Source Income (FSI) in Pakistan file review application to the under CA 2017, and which 1 has paid up capital + undistributed
Board. reserves not > Rs. 50 M 2 has employees not > 250 3 has annual
NRP Pakistan Source Income (PSI) Chargeable to Tax in Pakistan Small Company § Board’s decision on review shall turnover not > Rs. 250,000 4 not formed by splitting up or
in Pakistan be final. reconstitution of company already in existence; and 5 is not SME.