Taxation PresentationTaxation Presentation

DefinitionsDefinitionsTopic:

“Income Tax”• Income Tax is governed by Income Tax

Act, 1961 and Rules .

• Every year the Union Budget is announced, which incorporates taxation changes for the next financial year.

• Income tax always deals with financial year. The current financial year is called Previous Year and the next financial year is called the Assessment Year.

Heads of Income• There are Five Heads of

Income. – Income from Salary– Income from House Property– Income from Business– Income from Capital Gains– Income from Other Sources

“Income exempt from tax”Agriculture income means any income derived from land which is used for agriculture purpose and which is assessed to land Revenue.

“Income Exempt from tax Cont’d”Partner’s share in the profit of the firm:In case of a person who is a partner of a firm which is separately assessed in that case the amount of this share in the profits of the firm ascertain as per the partnership deed is exempted from tax.

Income exempt from Tax Cont’dPensions:• Pension received by a prior employee of

Pakistan Armed Forces, federal Government or Provincial government is not taxable.

• Any pension granted under the rules to the families and dependents of “Shaheeds”, belonging to Pakistan Armed forces is fully exempt.

Income Exempt from Tax Cont’d• If a person receives more than one pension,

only the amount of high Pension will be exempt.

• The pension received from the United nations or its specialized agencies by the citizen of Pakistan is exempt provided that salary of such person was also not taxable under Pakistan tax law.

Income Exempt from Tax Cont’d

Scholarships:Any scholarship given to a person to meet the cost of the persons education is exempt from the tax.

Income of Federal Board of Revenue FoundationThrough finance Act 2012, the income earned by federal board of revenue foundation has been fully exempted from the Tax.

Income Exempt from Tax Cont’dIncome of Trust, Welfare Institution or Non Profit organization:Income derives by the above mentioned institutions from donations, subscription house property and investment in the securities of federal Government in non taxable provide that either: 1. the trust is approved by the Federal

Government.2. the trust is approved by the board.

Income Exempt from Tax Cont’dFacility of Accommodation:the facility of rent free accommodation provided to the following person is not taxable:a) President of Pakistanb) Provincial Government c) Corps Commandersd) Federal Government Ministere) Chief of Staff of Pakistan Army, Navy and

Air forcesf) Judges of Supreme court and high Court.

“Expenditure”• The use of goods and services in order

to earn revenue is the expense.

• By Hendrickson, "expenses are the using or consuming of goods and services in the process of obtaining revenues".

• "Expense is the expired cost, directly or indirectly related to given fiscal period, of the flow of goods or services into the market and of related operations."

Types of Expenditure