Lahore 25°C
Karachi 30°C
Islamabad 21°C
Income Tax Ordinance, 2001
Amended up to 30 June 2026. Search every section by number, title or keyword — click a section to read it.
Preliminary
s. 1 Short title, extent and commencement
(1) 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) 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 .
Amendment history (2)
- Inserted by the Finance Act, 2003.
- The word “includes” substituted by the Finance Act, 2005.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 2 Definitions
(1) "accumulated profits" in relation to distribution or payment of a dividend, 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 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 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;
(1A) active taxpayer’ list means the list instituted by the Board under Section 181A and includes such list issued by the Azad Jammu and Kashmir Central Board of Revenue or Gilgit-Baltistan Council Board of Revenue; (1AA) algorithmic settlement mechanism means algorithmic settlement mechanism provided under section 134B of this Ordinance;
(1B) amalgamation means the merger of one or more banking companies or non-banking financial institutions, or insurance companies, or companies owning and managing industrial undertakings or companies engaged in providing services and not being a trading company or companies in either case at least one of them being a public company, or a company incorporated under any law, other than Companies Act, 2017 (XIX of 2017) , 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 of the amalgamating company or companies immediately before the amalgamation become the assets of the 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; 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 .
(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;
(3A) Approved Annuity Plan means an Annuity Plan approved by Securities and Exchange Commission of Pakistan (SECP) under Voluntary Pension System Rules, 2005 and offered by a Life Insurance Company registered with the SECP under Insurance Ordinance, 2000 (XXXIX of 2000);
(3B) Approved Income Payment Plan means an Income Payment Plan approved by Securities and Exchange Commission of Pakistan (SECP) under Voluntary Pension System Rules, 2005 and offered by a Pension Fund Manager registered with the SECP under Voluntary Pension System Rules, 2005;
(3C) Approved Pension Fund means Pension Fund approved by Securities and Exchange Commission of Pakistan (SECP) under Voluntary Pension System Rules, 2005, and managed by a Pension Fund Manager registered with the SECP under Voluntary Pension System Rules, 2005;
(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;
(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;
(5) assessment includes provisional assessment, re-assessment , amended assessment and faceless assessment and the cognate expressions shall be construed accordingly;
(5A) assessment year means assessment year as defined in the repealed Ordinance;
(5B) asset management company means an asset management company as defined in the Non-Banking Finance Companies and Notified Entities Regulations, 2007;
(5C) assets move means the transfer of an offshore asset to an unspecified jurisdiction by or on behalf of a person who owns, possesses, controls or is the beneficial owner of such offshore assets for the purpose of tax evasion;
(6) association of persons means an association of persons as defined in section 80;
(6A) authorised shipping agent‖ means a person in Pakistan who is authorised, by a non-resident ship owner, charterer or operator to act on its behalf in respect of a vessel, and who in relation to such vessel or voyage —
(a) is responsible for the receipt, collection, control or accounting of total freight and any related amounts, and undertakes or is responsible for documentation, manifest filing, or reporting of cargo or total freight, including having, directly or indirectly, the control, custody or disposal of any freight or related receipts attributable to such vessel or voyage; and (b) furnishes the return under section 143 of this Ordinance, in respect of such vessel or voyage and such person shall, for the purposes of this Ordinance,—
(i) be treated as the representative of the non-resident under section 172;
(ii) be jointly and severally liable for payment of tax and all obligations, proceedings, assessments and recovery in respect of such vessel or voyage; and (iii) be treated as such, and the provisions of sub-section (3) of section 172 shall apply accordingly;
(7) banking company means a banking company as defined in the Banking Companies Ordinance, 1962 (LVII of 1962) ;
(7A) beneficial owner means a natural person who –
(a) ultimately owns or controls a Company or association of persons, whether directly or indirectly, through at least twenty five percent shares or voting rights; or (b) exercise ultimate effective control, through direct or indirect means, over the company or association of persons including control over the finances or decisions or other affairs of the company or association of persons;
(8) 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 and includes a Member of the Federal Board of Revenue to whom powers of the Board have been delegated under section 8 of the Federal Board of Revenue Act, 2007; ;
(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;
(10A) business bank account means a bank account utilized by the taxpayer for business transaction declared to the Commissioner through original or modified registration form prescribed under section 181;
(11) capital asset means a capital asset as defined in section 37;
(11A) charitable purpose includes relief of the poor, education, medical relief and the advancement of any other object of general public utility;
(11B) Chief Commissioner means a person appointed as Chief Commissioner Inland Revenue under section 208 and includes a Chief Investigator, Regional Commissioner of Income Tax and a Director-General of Income Tax and Sales Tax;
(11C) Collective Investment Scheme shall have the same meanings as are assigned under the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003;
(12) company means a company as defined in section 80;
(13) Commissioner means a person appointed as Commissioner Inland Revenue under section 208 and includes any other authority vested with all or any of the powers and functions of the Commissioner;
(13A) Commissioner (Appeals) means a person appointed as Commissioner Inland Revenue (Appeals) under section 208; (13AA) concealment of income includes –
(a) the suppression of any item of receipt liable to tax in whole or in part, or failure to disclose income chargeable to tax;
(b) claiming any deduction or any expenditure not actually incurred;
(c) any act referred to in sub-section (1) of section 111; and (d) claiming of any income or receipt as exempt which is otherwise taxable. Explanation.- For removal of doubt it is clarified that none of the aforementioned acts would constitute concealment of income unless it is proved that taxpayer has knowingly and willfully committed these acts; (13AB) consumer goods means goods that are consumed by the end consumer rather than used in the production of another good;
(13B) Contribution to an Approved Pension Fund means contribution as defined in rule 2
(j) of the Voluntary Pension System Rules, 2005 ;
(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 under promissory 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; 17A. Developmental REIT Scheme means Developmental REIT Scheme as defined under the Real Estate Investment Trust Regulations, 2015;
(17B) "digital means" means digital payments and financial services including but not limited to— online portals or platforms for digital payments/receipts; online interbank fund transfer services; online bill or invoice presentment and payment services; over the Counter digital payment services or facilities; card payments using Point of Sale terminals, QR codes, mobile devices, ATMs, Kiosk or any other digital; payments enabled devices; or any other digital or online payment modes.
(17C) digitally delivered services means any service delivered over the internet or electronic networks, where the delivery is automated and requires minimal or no human intervention including music, audio and video streaming services, cloud services, online software applications services, services delivered through online inter-personal interaction i.e., tele medicines, e-learning etc., online banking services, architectural design services, research and consultancy reports, accounting services in the form of digital files or any other online facility;
(18) disposal in relation to an asset, means a disposal as defined in section 75;
(18A) distributor means a person appointed by a manufacturer, importer or any other person for a specified area to purchase goods from him for further supply;
(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-stock or deposit certificate in any form, whether with or without profit, 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;
(e) any payment by a private company as defined in the Companies Act, 2017 (XIX of 2017) or trust of any sum (whether as representing a part of the assets of the 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; or (f) remittance of after tax profit of a branch of a foreign company operating in Pakistan; but does not include —
(i) a distribution made in accordance with sub-clause (c) or (d) in respect of any share for full cash consideration, or redemption of debentures or debenture 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 shareholder by a company in the ordinary course of its business, where the lending of money is a substantial part of the business of the company;
(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 sub-clause (e) to the extent to which it is so set off; and (iv) remittance of after tax profit by a branch of Petroleum Exploration and Production (E&P) foreign company, operating in Pakistan.
(19A) Eligible Person, for the purpose of Voluntary Pension System Rules, 2005, means an individual Pakistani who holds a valid National Tax Number or Computerized National Identity Card or National Identity Card for Overseas Pakistanis issued by the National Database and Registration Authority :
Provided that the total tax credit available for the contribution made to approved employment pension or annuity scheme and approved pension fund under Voluntary Pension System Rules, 2005, should not exceed the limit prescribed or specified in section 63. (19AA) e-commerce means sale or purchase of goods and services conducted over computer networks by methods specifically designed for the purpose of receiving or placing of orders either through websites, mobile applications or online marketplace having digital ordering features by using either mobile phone, iPad, Tablet or automated computer-to-computer ordering system;
(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);
(19C) electronic record includes the contents of communications, transactions and procedures under this 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;
(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; (19DA) electronically readable format means any digital format in which data is structured so that it can be automatically read, extracted, validated and processed by computer systems without human intervention, including but not limited to spreadsheet formats (such as CSV or XLSX), XML, XBRL, JSON, and other structured or semistructured data formats but excluding formats primarily designed for human readability, such as PDF, scanned images or photographs;
(19E) telecommunication system includes a system for the conveyance, through the agency of electric, magnetic, electro-magnetic, electro- chemical or electro-mechanical energy, of speech, music and other sounds, visual images 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; (22AA) fair market value means value as provided in section 68;
(22B) fee for offshore digital servicesmeans any consideration for providing or rendering services by a non-resident person for online advertising including digital advertising space, designing, creating, hosting or maintenance of websites, digital or cyber space for websites, advertising, e-mails, online computing, blogs, online content and online data, providing any facility or service for uploading, storing or distribution of digital content including digital text, digital audio or digital video, online collection or processing of data related to users in Pakistan, any facility for online sale of goods or services or any other online facility.
(22C) FBR Refund Settlement Company Limited means the company with this name as incorporated under the Companies Act, 2017 (XIX of 2017), for the purposes of settlement of income tax refund claims including payment by way of issuing refund bonds under section 171A;
(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 under the head Salary;
(24) financial institution means an institution as defined under the Companies Act, 2017 (XIX of 2017) ;
(25) finance society includes a co-operative society which accepts money on deposit or otherwise for the purposes of advancing 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.
(27A) greenfield industrial undertaking means –
(a) a new industrial undertaking which is –
(i) setup on land which has not previously been utilized for any commercial, industrial or manufacturing activity and is free from constraints imposed by any prior work;
(ii) built without demolishing, revamping, renovating, upgrading, remodeling or modifying any existing structure, facility or plant;
(iii) not formed by the splitting up or reconstitution of an undertaking already in existence or by transfer of machinery, plant or building from an undertaking established in Pakistan prior to commencement of the new business and is not part of an expansion project;
(iv) using any process or technology that has not earlier been used in Pakistan and is so approved by the Engineering Development Board; and (b) is approved by the Commissioner on an application made in the prescribed form and manner, accompanied by the prescribed documents and, such other documents as may be required by the Commissioner:
Provided that this definition shall be applicable from the 1st July, 2019 and onwards.
(28) House Building Finance Corporation means the Corporation constituted under the House Building Finance Corporation Act, 1952 (XVIII of 1952);
(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;
(29) income includes any amount chargeable to tax under this Ordinance, any amount subject to collection or deduction of tax under section 148, 150, 152(1), 153, 154, 156, 156A, 233, , sub-section (5) of section 234 , section 236Z and any amount treated as income under any provision of this Ordinance and any loss of income ;
(29A) income year means income year as defined in the repealed Ordinance;
(29B) Individual Pension Account means an account maintained by an eligible person with a Pension Fund Manager approved under the Voluntary Pension System Rules, 2005; (29C)Industrial undertaking means —
(a) an undertaking which is set up in Pakistan and which employs,—
(i) 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 (ii) 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,—
(i) the manufacture of goods or materials or the subjection of goods or materials to any process which substantially changes their original condition; or (ii) ship-building; or (iii) generation, conversion, transmission or distribution of electrical energy, or the supply of hydraulic power; or (iv) the working of any mine, oil-well or any other source of mineral deposits;
(aa) from the 1 day of May, 2020, a person directly involved in the construction of buildings, roads, bridges and other such structures or the development of land, to the extent and for the purpose of import of plant and machinery to be utilized in such activity, subject to such conditions as may be notified by the Board;
(ab) from the first day of July, 2020 a resident company engaged in the hotel business in Pakistan; and (c) telecommunication companies operating under the license of Pakistan Telecommunication Authority (PTA).;
(30) intangible means an intangible as defined in section 24;
(30A) integrated enterprise means a person integrated with the Board‘s computerized system through a licensed integrator , and who fulfills obligations and requirements for integration as may be prescribed; (30AA) investment company means an investment company as defined in the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003; (30AB) KIBOR means Karachi Inter Bank Offered Rate prevalent on the first day of each quarter of the financial year; (30AC) Iris means a web based computer programme for operation and management of Inland Revenue taxes and laws administered by the Board; (30AD) Information Technology (IT) services include but not limited to software development, software maintenance, system integration, web design, web development, web hosting and network design; and (30AE) IT enabled services include but not limited to inbound or outbound call centres, medical transcription, remote monitoring, graphics design, accounting services, Human Resource (HR) services, telemedicine centers, data entry operations, cloud computing services, data storage services, locally produced television programs and insurance claims processing;
(30B) leasing company means a leasing company as defined in the Non- Banking Finance Companies and Notified Entities Regulation, 2007;
(30C) liaison office means a place of business acting for the principal, head office or any entity of which it is a part, and (a) its activities do not result in deriving income in Pakistan; and (b) maintains itself out of any amount remitted from outside Pakistan received through normal banking channels. Explanation,— It is clarified that—
(i) a place of business shall not be treated as liaison office if it engages in -
(a) commercial activities;
(b) trading or industrial activities; or (c) the negotiation and conclusion of contracts;
(ii) the activities shall be treated to be commercial activities, if these include—
(a) providing after sales services for goods or services; or (b) marketing or promoting pharmaceutical and medical products or services;
(iii) subject to clause (i), a place of business shall be treated as a liaison office, if it undertakes activities of—
(a) an exploratory or preparatory nature, to investigate the possibilities of trading with, or in, Pakistan;
(b) exploring the possibility of joint collaboration and export promotion;
(c) promoting products where such products are yet to be supplied to, or sold in, Pakistan;
(d) promoting technical and financial collaborations between its principal and taxpayers in Pakistan; or (e) provision of technical advice and assistance.
(30D) Licensed integrator shall have the same meaning as defined under clause (15A) of section 2 of the Sales Tax Act, 1990 (VII of 1990);
(31) liquidation in relation to a company, includes the termination of a trust;
(31A) Local Government shall have the same meaning for respective provisions and Islamabad Capital Territory as contained in the Balochistan Local Government Act,2010 (V of 2010), the Khyber Pakhtunkhwa Local Government Act, 2013 (XXVIII of 2013), the Sindh Local Government Act, 2013 (XLII of 2013), the Islamabad Capital Territory Local Government Act, 2015 (X of 2015) and the Punjab Local Government Act, 2019(XIII of 2019)
(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);
(35A) Mutual Fund means a mutual fund registered or approved by the Securities and Exchange Commission of Pakistan ; (35)
(1A) National faceless center means National faceless center as defined in section 227D of this Ordinance; (35AA) NCCPL means National Clearing Company of Pakistan Limited, which is a company incorporated under the Companies Act, 2017 (XIX of 2017) and licensed as Clearing House by the Securities and Exchange Commission of Pakistan, or any subsidiary of NCCPL notified by the Board for the purpose of this clause (35B) non-banking finance company means an NBFC as defined in the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003;
(36) non-profit organization means any person other than an individual, which is —
(a) established for religious, educational, charitable, welfare purposes for general public , or for the promotion of an amateur sport excluding recreational clubs where the joining fee for membership exceeds one million for any class of new members ;
(b) formed and registered by or 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 other documents as may be required by the Commissioner; and none of the assets of such 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;
(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, District Taxation Officer Inland Revenue, Assistant Director Audit, or any other officer however designated or appointed by the Board for the purposes of this Ordinance; (38AA) offshore asset in relation to a person, includes any movable or immovable asset held, any gain, profit, or income derived, or any expenditure incurred outside Pakistan; (38AB) offshore evader means a person who owns, possesses, controls, or is the beneficial owner of an offshore asset and does not declare, or under declares or provides inaccurate particulars of such asset to the Commissioners.; (38AC) offshore enabler includes any person who, enables, assists, or advises any person to plan, design, arrange or manage a transaction or declaration relating to an offshore asset, which has resulted or may result in tax evasion;
(38B) online marketplace means an information technology platform run by e-commerce entity over an electronic network that acts as a facilitator in transactions that occur between a buyer and a seller and includes online interfaces that facilitate, for a fee, the direct interaction between multiple buyers and multiple sellers via digital orders for supply of goods and services, with or without the platform taking economic ownership of the goods or providing or rendering the services that are being sold. ;
(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;
(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 place of business through which the business of the person is wholly or partly carried on, and includes –
(a) a place of management, branch, office, factory or workshop, premises for soliciting orders, warehouse, permanent sales exhibition or sales outlet, other than a liaison office except where the office engages in the negotiation of contracts (other than contracts of purchase);
(b) a mine, oil or gas well, quarry or any other place of extraction of natural resources;
(ba) an agricultural, pastoral or forestry property;
(bb) virtual business presence in Pakistan including any business where transactions are conducted through internet or any other electronic medium, with or without having any physical presence;
(c) a building site, a construction, assembly or installation project or supervisory activities connected with such site or project but only where such site, project and its 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 personnel or entity engaged by the person for such purpose ;
(e) a person acting in Pakistan on behalf of the person (hereinafter referred to as the agent ), 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 or habitually concludes contracts or habitually plays the principal role leading to the conclusion of contracts that are routinely concluded without material modification by the person and these contracts are─
(a) in the name of the person; or (b) for the transfer of the ownership of or for the granting of the right to use property owned by that enterprise or that the enterprise has the right to use; or (c) for the provision of services by that person; or (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 Explanation.—For removal of doubt, it is clarified that an agent of independent status acting in the ordinary course of business does not include a person acting exclusively or almost exclusively on behalf of the person to which it is an associate; o ;
(f) any substantial equipment installed, or other asset or property capable of activity giving rise to income;
(g) a place of business that is used or maintained by a person if the person or an associate of a person carries on business at that place or at another place in Pakistan and ─
(i) that place or other place constitutes a permanent establishment of the person or an associate of the person under this sub-clause; or (ii) business carried on by the person or an associate of the person at the same place or at more than one place constitute complementary functions that are part of a cohesive business operation. Explanation.— For the removal of doubt, it is clarified that ─ (A) the term cohesive business operation includes an overall arrangement for the supply of goods, installation, construction, assembly, commission, guarantees or supervisory activities and all or principal activities are undertaken or performed either by the person or the associates of the person; and (B) supply of goods include the goods imported in the name of the associate or any other person, whether or not the title to the goods passes outside Pakistan.
(42) person means a person as defined in section 80;
(42A) PMEX means Pakistan Mercantile Exchange Limited a futures commodity exchange company incorporated under the Companies Act, 2017 (XIX of 2017) and is licensed and regulated by the Securities and Exchange Commission of Pakistan; (42AA) PRAL means Pakistan Revenue Automation Private Limited, a State Owned Enterprise which has been assigned functions related to software development and maintenance of the Board‘s IT infrastructure;
(43) pre-commencement expenditure means a pre-commencement expenditure as defined in section 25;
(44) prescribed means prescribed by rules made under this Ordinance;
(44A) principal officer used with reference to a company or association of persons includes –
(a) a director, a manager, secretary, agent, accountant or any similar officer; and (b) 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;
(46) profit on a debt whether payable or receivable, means —
(a) any profit, yield, interest, discount, premium or other amount , 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) a company in which not less than fifty per cent of the shares are held by the Federal Government or Provincial Government ;
(ab) a company in which not less than fifty per cent of the shares are held by a foreign Government, or a foreign company owned by a foreign Government ;
(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 at the end of that year; or (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);
(47A) REIT Scheme means a REIT Scheme as defined in the Real Estate Investment Trust Regulations, 2015;
(47B) Real Estate Investment Trust Management Company RMC means RMC as defined under the Real Estate Investment Trust Regulations, 2015 ;
(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;
(49) rent means rent as defined in sub-section (2) of section 15 and includes an amount treated as rent under section 16;
(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) 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, or both, 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 sub- clauses
(a) through (e); and (g) the disposal of any property or right referred to in 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, a unit holder of a unit trust and a beneficiary of a trust;
(59A) small and medium enterprise means a person who is engaged in manufacturing as defined in clause (iv) of sub-section (7) of section 153 of the Ordinance and his business turnover in a tax year does not exceed two hundred and fifty million rupees:
Provided that if annual business turnover of a small and medium enterprise exceeds two hundred and fifty million rupees, it shall not qualify as small and medium enterprise in the tax year in which annual turnover exceeds that turnover or any subsequent tax year. (59AB) Small Company means a company registered on or after the first day of July, 2005, under the Companies Act, 2017 (XIX of 2017) , which,—
(i) has paid up capital plus undistributed reserves not exceeding fifty million rupees;
(ia) has employees not exceeding two hundred and fifty any time during the year;
(ii) has annual turnover not exceeding two hundred and fifty million rupees;
(iii) is not formed by the splitting up or the reconstitution of company already in existence; and (iv) is not a small and medium enterprise as defined in clause (59A);
(59B) Special Judge means the Special Judge appointed under section 203;
(60A) specified jurisdiction means any jurisdiction which has committed to automatically exchange information under the Common Reporting Standard with Pakistan;
(61) speculation business means a speculation business as defined in section 19;
(61A) stock fund 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 per cent of the investment;
(62) stock-in-trade means stock-in-trade as defined in section 35;
(62A) startup means,—
(i) a business of a resident individual, AOP or a company that commenced on or after first day of July, 2012 and the person is engaged in or intends to offer technology driven products or services to any sector of the economy provided that the person is registered with and duly certified by the Pakistan Software Export Board (PSEB) and has turnover of less than one hundred million in each of the last five tax years; or (ii) any business of a person or class of persons, subject to the conditions as the Board with the approval of Federal Minister- in-charge may, by notification in the official Gazette, specify.;
(62B) Synchronized Withholding Administration and Payment System agent or SWAPS agent means any person or class of persons notified by Board to collect or deduct withholding taxes through Synchronized Withholding Administration and Payment System;
(63) tax means any tax imposed under Chapter 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;
(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 and Chapter XII; or (b) any person required to furnish a return of income or pay tax under this Ordinance;
(66A) tax invoice means an invoice as prescribed under the Income Tax Rules, 2002;
(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;
(70A) turnover means turnover as 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 (73A) unspecified jurisdiction means a jurisdiction which is not a specified jurisdictions.
(74) Venture Capital Company and Venture Capital Fund shall have the same meanings as are assigned to them under the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003 ;
(75) whistleblower means whistleblower as defined in section 227B;
(a) any reserve made up wholly or partly of any allowance, deduction, or exemption admissible under this Ordinance;- .9230
(b) for the purposes of 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 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;
(1A) active taxpayer’ list means the list instituted by the Board under Section 181A and includes such list issued by the Azad Jammu and Kashmir Central Board of Revenue or Gilgit-Baltistan Council Board of Revenue; (1AA) algorithmic settlement mechanism means algorithmic settlement mechanism provided under section 134B of this Ordinance;
(1B) amalgamation means the merger of one or more banking companies or non-banking financial institutions, or insurance companies, or companies owning and managing industrial undertakings or companies engaged in providing services and not being a trading company or companies in either case at least one of them being a public company, or a company incorporated under any law, other than Companies Act, 2017 (XIX of 2017) , 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 of the amalgamating company or companies immediately before the amalgamation become the assets of the 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; 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 .
(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;
(3A) Approved Annuity Plan means an Annuity Plan approved by Securities and Exchange Commission of Pakistan (SECP) under Voluntary Pension System Rules, 2005 and offered by a Life Insurance Company registered with the SECP under Insurance Ordinance, 2000 (XXXIX of 2000);
(3B) Approved Income Payment Plan means an Income Payment Plan approved by Securities and Exchange Commission of Pakistan (SECP) under Voluntary Pension System Rules, 2005 and offered by a Pension Fund Manager registered with the SECP under Voluntary Pension System Rules, 2005;
(3C) Approved Pension Fund means Pension Fund approved by Securities and Exchange Commission of Pakistan (SECP) under Voluntary Pension System Rules, 2005, and managed by a Pension Fund Manager registered with the SECP under Voluntary Pension System Rules, 2005;
(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;
(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;
(5) assessment includes provisional assessment, re-assessment , amended assessment and faceless assessment and the cognate expressions shall be construed accordingly;
(5A) assessment year means assessment year as defined in the repealed Ordinance;
(5B) asset management company means an asset management company as defined in the Non-Banking Finance Companies and Notified Entities Regulations, 2007;
(5C) assets move means the transfer of an offshore asset to an unspecified jurisdiction by or on behalf of a person who owns, possesses, controls or is the beneficial owner of such offshore assets for the purpose of tax evasion;
(6) association of persons means an association of persons as defined in section 80;
(6A) authorised shipping agent‖ means a person in Pakistan who is authorised, by a non-resident ship owner, charterer or operator to act on its behalf in respect of a vessel, and who in relation to such vessel or voyage —
(a) is responsible for the receipt, collection, control or accounting of total freight and any related amounts, and undertakes or is responsible for documentation, manifest filing, or reporting of cargo or total freight, including having, directly or indirectly, the control, custody or disposal of any freight or related receipts attributable to such vessel or voyage; and (b) furnishes the return under section 143 of this Ordinance, in respect of such vessel or voyage and such person shall, for the purposes of this Ordinance,—
(i) be treated as the representative of the non-resident under section 172;
(ii) be jointly and severally liable for payment of tax and all obligations, proceedings, assessments and recovery in respect of such vessel or voyage; and (iii) be treated as such, and the provisions of sub-section (3) of section 172 shall apply accordingly;
(7) banking company means a banking company as defined in the Banking Companies Ordinance, 1962 (LVII of 1962) ;
(7A) beneficial owner means a natural person who –
(a) ultimately owns or controls a Company or association of persons, whether directly or indirectly, through at least twenty five percent shares or voting rights; or (b) exercise ultimate effective control, through direct or indirect means, over the company or association of persons including control over the finances or decisions or other affairs of the company or association of persons;
(8) 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 and includes a Member of the Federal Board of Revenue to whom powers of the Board have been delegated under section 8 of the Federal Board of Revenue Act, 2007; ;
(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;
(10A) business bank account means a bank account utilized by the taxpayer for business transaction declared to the Commissioner through original or modified registration form prescribed under section 181;
(11) capital asset means a capital asset as defined in section 37;
(11A) charitable purpose includes relief of the poor, education, medical relief and the advancement of any other object of general public utility;
(11B) Chief Commissioner means a person appointed as Chief Commissioner Inland Revenue under section 208 and includes a Chief Investigator, Regional Commissioner of Income Tax and a Director-General of Income Tax and Sales Tax;
(11C) Collective Investment Scheme shall have the same meanings as are assigned under the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003;
(12) company means a company as defined in section 80;
(13) Commissioner means a person appointed as Commissioner Inland Revenue under section 208 and includes any other authority vested with all or any of the powers and functions of the Commissioner;
(13A) Commissioner (Appeals) means a person appointed as Commissioner Inland Revenue (Appeals) under section 208; (13AA) concealment of income includes –
(a) the suppression of any item of receipt liable to tax in whole or in part, or failure to disclose income chargeable to tax;
(b) claiming any deduction or any expenditure not actually incurred;
(c) any act referred to in sub-section (1) of section 111; and (d) claiming of any income or receipt as exempt which is otherwise taxable. Explanation.- For removal of doubt it is clarified that none of the aforementioned acts would constitute concealment of income unless it is proved that taxpayer has knowingly and willfully committed these acts; (13AB) consumer goods means goods that are consumed by the end consumer rather than used in the production of another good;
(13B) Contribution to an Approved Pension Fund means contribution as defined in rule 2
(j) of the Voluntary Pension System Rules, 2005 ;
(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 under promissory 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; 17A. Developmental REIT Scheme means Developmental REIT Scheme as defined under the Real Estate Investment Trust Regulations, 2015;
(17B) "digital means" means digital payments and financial services including but not limited to— online portals or platforms for digital payments/receipts; online interbank fund transfer services; online bill or invoice presentment and payment services; over the Counter digital payment services or facilities; card payments using Point of Sale terminals, QR codes, mobile devices, ATMs, Kiosk or any other digital; payments enabled devices; or any other digital or online payment modes.
(17C) digitally delivered services means any service delivered over the internet or electronic networks, where the delivery is automated and requires minimal or no human intervention including music, audio and video streaming services, cloud services, online software applications services, services delivered through online inter-personal interaction i.e., tele medicines, e-learning etc., online banking services, architectural design services, research and consultancy reports, accounting services in the form of digital files or any other online facility;
(18) disposal in relation to an asset, means a disposal as defined in section 75;
(18A) distributor means a person appointed by a manufacturer, importer or any other person for a specified area to purchase goods from him for further supply;
(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-stock or deposit certificate in any form, whether with or without profit, 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;
(e) any payment by a private company as defined in the Companies Act, 2017 (XIX of 2017) or trust of any sum (whether as representing a part of the assets of the 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; or (f) remittance of after tax profit of a branch of a foreign company operating in Pakistan; but does not include —
(i) a distribution made in accordance with sub-clause (c) or (d) in respect of any share for full cash consideration, or redemption of debentures or debenture 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 shareholder by a company in the ordinary course of its business, where the lending of money is a substantial part of the business of the company;
(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 sub-clause (e) to the extent to which it is so set off; and (iv) remittance of after tax profit by a branch of Petroleum Exploration and Production (E&P) foreign company, operating in Pakistan.
(19A) Eligible Person, for the purpose of Voluntary Pension System Rules, 2005, means an individual Pakistani who holds a valid National Tax Number or Computerized National Identity Card or National Identity Card for Overseas Pakistanis issued by the National Database and Registration Authority :
Provided that the total tax credit available for the contribution made to approved employment pension or annuity scheme and approved pension fund under Voluntary Pension System Rules, 2005, should not exceed the limit prescribed or specified in section 63. (19AA) e-commerce means sale or purchase of goods and services conducted over computer networks by methods specifically designed for the purpose of receiving or placing of orders either through websites, mobile applications or online marketplace having digital ordering features by using either mobile phone, iPad, Tablet or automated computer-to-computer ordering system;
(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);
(19C) electronic record includes the contents of communications, transactions and procedures under this 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;
(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; (19DA) electronically readable format means any digital format in which data is structured so that it can be automatically read, extracted, validated and processed by computer systems without human intervention, including but not limited to spreadsheet formats (such as CSV or XLSX), XML, XBRL, JSON, and other structured or semistructured data formats but excluding formats primarily designed for human readability, such as PDF, scanned images or photographs;
(19E) telecommunication system includes a system for the conveyance, through the agency of electric, magnetic, electro-magnetic, electro- chemical or electro-mechanical energy, of speech, music and other sounds, visual images 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; (22AA) fair market value means value as provided in section 68;
(22B) fee for offshore digital servicesmeans any consideration for providing or rendering services by a non-resident person for online advertising including digital advertising space, designing, creating, hosting or maintenance of websites, digital or cyber space for websites, advertising, e-mails, online computing, blogs, online content and online data, providing any facility or service for uploading, storing or distribution of digital content including digital text, digital audio or digital video, online collection or processing of data related to users in Pakistan, any facility for online sale of goods or services or any other online facility.
(22C) FBR Refund Settlement Company Limited means the company with this name as incorporated under the Companies Act, 2017 (XIX of 2017), for the purposes of settlement of income tax refund claims including payment by way of issuing refund bonds under section 171A;
(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 under the head Salary;
(24) financial institution means an institution as defined under the Companies Act, 2017 (XIX of 2017) ;
(25) finance society includes a co-operative society which accepts money on deposit or otherwise for the purposes of advancing 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.
(27A) greenfield industrial undertaking means –
(a) a new industrial undertaking which is –
(i) setup on land which has not previously been utilized for any commercial, industrial or manufacturing activity and is free from constraints imposed by any prior work;
(ii) built without demolishing, revamping, renovating, upgrading, remodeling or modifying any existing structure, facility or plant;
(iii) not formed by the splitting up or reconstitution of an undertaking already in existence or by transfer of machinery, plant or building from an undertaking established in Pakistan prior to commencement of the new business and is not part of an expansion project;
(iv) using any process or technology that has not earlier been used in Pakistan and is so approved by the Engineering Development Board; and (b) is approved by the Commissioner on an application made in the prescribed form and manner, accompanied by the prescribed documents and, such other documents as may be required by the Commissioner:
Provided that this definition shall be applicable from the 1st July, 2019 and onwards.
(28) House Building Finance Corporation means the Corporation constituted under the House Building Finance Corporation Act, 1952 (XVIII of 1952);
(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;
(29) income includes any amount chargeable to tax under this Ordinance, any amount subject to collection or deduction of tax under section 148, 150, 152(1), 153, 154, 156, 156A, 233, , sub-section (5) of section 234 , section 236Z and any amount treated as income under any provision of this Ordinance and any loss of income ;
(29A) income year means income year as defined in the repealed Ordinance;
(29B) Individual Pension Account means an account maintained by an eligible person with a Pension Fund Manager approved under the Voluntary Pension System Rules, 2005; (29C)Industrial undertaking means —
(a) an undertaking which is set up in Pakistan and which employs,—
(i) 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 (ii) 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,—
(i) the manufacture of goods or materials or the subjection of goods or materials to any process which substantially changes their original condition; or (ii) ship-building; or (iii) generation, conversion, transmission or distribution of electrical energy, or the supply of hydraulic power; or (iv) the working of any mine, oil-well or any other source of mineral deposits;
(aa) from the 1 day of May, 2020, a person directly involved in the construction of buildings, roads, bridges and other such structures or the development of land, to the extent and for the purpose of import of plant and machinery to be utilized in such activity, subject to such conditions as may be notified by the Board;
(ab) from the first day of July, 2020 a resident company engaged in the hotel business in Pakistan; and (c) telecommunication companies operating under the license of Pakistan Telecommunication Authority (PTA).;
(30) intangible means an intangible as defined in section 24;
(30A) integrated enterprise means a person integrated with the Board‘s computerized system through a licensed integrator , and who fulfills obligations and requirements for integration as may be prescribed; (30AA) investment company means an investment company as defined in the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003; (30AB) KIBOR means Karachi Inter Bank Offered Rate prevalent on the first day of each quarter of the financial year; (30AC) Iris means a web based computer programme for operation and management of Inland Revenue taxes and laws administered by the Board; (30AD) Information Technology (IT) services include but not limited to software development, software maintenance, system integration, web design, web development, web hosting and network design; and (30AE) IT enabled services include but not limited to inbound or outbound call centres, medical transcription, remote monitoring, graphics design, accounting services, Human Resource (HR) services, telemedicine centers, data entry operations, cloud computing services, data storage services, locally produced television programs and insurance claims processing;
(30B) leasing company means a leasing company as defined in the Non- Banking Finance Companies and Notified Entities Regulation, 2007;
(30C) liaison office means a place of business acting for the principal, head office or any entity of which it is a part, and (a) its activities do not result in deriving income in Pakistan; and (b) maintains itself out of any amount remitted from outside Pakistan received through normal banking channels. Explanation,— It is clarified that—
(i) a place of business shall not be treated as liaison office if it engages in -
(a) commercial activities;
(b) trading or industrial activities; or (c) the negotiation and conclusion of contracts;
(ii) the activities shall be treated to be commercial activities, if these include—
(a) providing after sales services for goods or services; or (b) marketing or promoting pharmaceutical and medical products or services;
(iii) subject to clause (i), a place of business shall be treated as a liaison office, if it undertakes activities of—
(a) an exploratory or preparatory nature, to investigate the possibilities of trading with, or in, Pakistan;
(b) exploring the possibility of joint collaboration and export promotion;
(c) promoting products where such products are yet to be supplied to, or sold in, Pakistan;
(d) promoting technical and financial collaborations between its principal and taxpayers in Pakistan; or (e) provision of technical advice and assistance.
(30D) Licensed integrator shall have the same meaning as defined under clause (15A) of section 2 of the Sales Tax Act, 1990 (VII of 1990);
(31) liquidation in relation to a company, includes the termination of a trust;
(31A) Local Government shall have the same meaning for respective provisions and Islamabad Capital Territory as contained in the Balochistan Local Government Act,2010 (V of 2010), the Khyber Pakhtunkhwa Local Government Act, 2013 (XXVIII of 2013), the Sindh Local Government Act, 2013 (XLII of 2013), the Islamabad Capital Territory Local Government Act, 2015 (X of 2015) and the Punjab Local Government Act, 2019(XIII of 2019)
(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);
(35A) Mutual Fund means a mutual fund registered or approved by the Securities and Exchange Commission of Pakistan ; (35)
(1A) National faceless center means National faceless center as defined in section 227D of this Ordinance; (35AA) NCCPL means National Clearing Company of Pakistan Limited, which is a company incorporated under the Companies Act, 2017 (XIX of 2017) and licensed as Clearing House by the Securities and Exchange Commission of Pakistan, or any subsidiary of NCCPL notified by the Board for the purpose of this clause (35B) non-banking finance company means an NBFC as defined in the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003;
(36) non-profit organization means any person other than an individual, which is —
(a) established for religious, educational, charitable, welfare purposes for general public , or for the promotion of an amateur sport excluding recreational clubs where the joining fee for membership exceeds one million for any class of new members ;
(b) formed and registered by or 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 other documents as may be required by the Commissioner; and none of the assets of such 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;
(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, District Taxation Officer Inland Revenue, Assistant Director Audit, or any other officer however designated or appointed by the Board for the purposes of this Ordinance; (38AA) offshore asset in relation to a person, includes any movable or immovable asset held, any gain, profit, or income derived, or any expenditure incurred outside Pakistan; (38AB) offshore evader means a person who owns, possesses, controls, or is the beneficial owner of an offshore asset and does not declare, or under declares or provides inaccurate particulars of such asset to the Commissioners.; (38AC) offshore enabler includes any person who, enables, assists, or advises any person to plan, design, arrange or manage a transaction or declaration relating to an offshore asset, which has resulted or may result in tax evasion;
(38B) online marketplace means an information technology platform run by e-commerce entity over an electronic network that acts as a facilitator in transactions that occur between a buyer and a seller and includes online interfaces that facilitate, for a fee, the direct interaction between multiple buyers and multiple sellers via digital orders for supply of goods and services, with or without the platform taking economic ownership of the goods or providing or rendering the services that are being sold. ;
(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;
(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 place of business through which the business of the person is wholly or partly carried on, and includes –
(a) a place of management, branch, office, factory or workshop, premises for soliciting orders, warehouse, permanent sales exhibition or sales outlet, other than a liaison office except where the office engages in the negotiation of contracts (other than contracts of purchase);
(b) a mine, oil or gas well, quarry or any other place of extraction of natural resources;
(ba) an agricultural, pastoral or forestry property;
(bb) virtual business presence in Pakistan including any business where transactions are conducted through internet or any other electronic medium, with or without having any physical presence;
(c) a building site, a construction, assembly or installation project or supervisory activities connected with such site or project but only where such site, project and its 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 personnel or entity engaged by the person for such purpose ;
(e) a person acting in Pakistan on behalf of the person (hereinafter referred to as the agent ), 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 or habitually concludes contracts or habitually plays the principal role leading to the conclusion of contracts that are routinely concluded without material modification by the person and these contracts are─
(a) in the name of the person; or (b) for the transfer of the ownership of or for the granting of the right to use property owned by that enterprise or that the enterprise has the right to use; or (c) for the provision of services by that person; or (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 Explanation.—For removal of doubt, it is clarified that an agent of independent status acting in the ordinary course of business does not include a person acting exclusively or almost exclusively on behalf of the person to which it is an associate; o ;
(f) any substantial equipment installed, or other asset or property capable of activity giving rise to income;
(g) a place of business that is used or maintained by a person if the person or an associate of a person carries on business at that place or at another place in Pakistan and ─
(i) that place or other place constitutes a permanent establishment of the person or an associate of the person under this sub-clause; or (ii) business carried on by the person or an associate of the person at the same place or at more than one place constitute complementary functions that are part of a cohesive business operation. Explanation.— For the removal of doubt, it is clarified that ─ (A) the term cohesive business operation includes an overall arrangement for the supply of goods, installation, construction, assembly, commission, guarantees or supervisory activities and all or principal activities are undertaken or performed either by the person or the associates of the person; and (B) supply of goods include the goods imported in the name of the associate or any other person, whether or not the title to the goods passes outside Pakistan.
(42) person means a person as defined in section 80;
(42A) PMEX means Pakistan Mercantile Exchange Limited a futures commodity exchange company incorporated under the Companies Act, 2017 (XIX of 2017) and is licensed and regulated by the Securities and Exchange Commission of Pakistan; (42AA) PRAL means Pakistan Revenue Automation Private Limited, a State Owned Enterprise which has been assigned functions related to software development and maintenance of the Board‘s IT infrastructure;
(43) pre-commencement expenditure means a pre-commencement expenditure as defined in section 25;
(44) prescribed means prescribed by rules made under this Ordinance;
(44A) principal officer used with reference to a company or association of persons includes –
(a) a director, a manager, secretary, agent, accountant or any similar officer; and (b) 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;
(46) profit on a debt whether payable or receivable, means —
(a) any profit, yield, interest, discount, premium or other amount , 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) a company in which not less than fifty per cent of the shares are held by the Federal Government or Provincial Government ;
(ab) a company in which not less than fifty per cent of the shares are held by a foreign Government, or a foreign company owned by a foreign Government ;
(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 at the end of that year; or (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);
(47A) REIT Scheme means a REIT Scheme as defined in the Real Estate Investment Trust Regulations, 2015;
(47B) Real Estate Investment Trust Management Company RMC means RMC as defined under the Real Estate Investment Trust Regulations, 2015 ;
(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;
(49) rent means rent as defined in sub-section (2) of section 15 and includes an amount treated as rent under section 16;
(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) 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, or both, 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 sub- clauses
(a) through (e); and (g) the disposal of any property or right referred to in 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, a unit holder of a unit trust and a beneficiary of a trust;
(59A) small and medium enterprise means a person who is engaged in manufacturing as defined in clause (iv) of sub-section (7) of section 153 of the Ordinance and his business turnover in a tax year does not exceed two hundred and fifty million rupees:
Provided that if annual business turnover of a small and medium enterprise exceeds two hundred and fifty million rupees, it shall not qualify as small and medium enterprise in the tax year in which annual turnover exceeds that turnover or any subsequent tax year. (59AB) Small Company means a company registered on or after the first day of July, 2005, under the Companies Act, 2017 (XIX of 2017) , which,—
(i) has paid up capital plus undistributed reserves not exceeding fifty million rupees;
(ia) has employees not exceeding two hundred and fifty any time during the year;
(ii) has annual turnover not exceeding two hundred and fifty million rupees;
(iii) is not formed by the splitting up or the reconstitution of company already in existence; and (iv) is not a small and medium enterprise as defined in clause (59A);
(59B) Special Judge means the Special Judge appointed under section 203;
(60A) specified jurisdiction means any jurisdiction which has committed to automatically exchange information under the Common Reporting Standard with Pakistan;
(61) speculation business means a speculation business as defined in section 19;
(61A) stock fund 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 per cent of the investment;
(62) stock-in-trade means stock-in-trade as defined in section 35;
(62A) startup means,—
(i) a business of a resident individual, AOP or a company that commenced on or after first day of July, 2012 and the person is engaged in or intends to offer technology driven products or services to any sector of the economy provided that the person is registered with and duly certified by the Pakistan Software Export Board (PSEB) and has turnover of less than one hundred million in each of the last five tax years; or (ii) any business of a person or class of persons, subject to the conditions as the Board with the approval of Federal Minister- in-charge may, by notification in the official Gazette, specify.;
(62B) Synchronized Withholding Administration and Payment System agent or SWAPS agent means any person or class of persons notified by Board to collect or deduct withholding taxes through Synchronized Withholding Administration and Payment System;
(63) tax means any tax imposed under Chapter 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;
(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 and Chapter XII; or (b) any person required to furnish a return of income or pay tax under this Ordinance;
(66A) tax invoice means an invoice as prescribed under the Income Tax Rules, 2002;
(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;
(70A) turnover means turnover as 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 (73A) unspecified jurisdiction means a jurisdiction which is not a specified jurisdictions.
(74) Venture Capital Company and Venture Capital Fund shall have the same meanings as are assigned to them under the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003 ;
(75) whistleblower means whistleblower as defined in section 227B;
Amendment history (25)
- Inserted by the Finance Act, 2003.
- The word “includes” substituted by the Finance Act, 2005.
- Clauses (a), (d) and (e) of sub-section (20) substituted by the Finance Act, 2002.
- Clause (c) of sub-section (20) substituted by the Finance Act, 2002.
- Clause (1A) inserted through Finance Act, 2019.
- Clause (1AA) inserted by Finance Act, 2026.
- Inserted by the Finance Act, 2002.
- 1A renumbered by 1B by the Finance Act, 2019.
- Inserted by the Finance Act, 2004.
- Inserted by the Finance Act, 2005.
- Inserted by the Finance Act, 2007.
- The expression “Companies Ordinance, 1984 (XLVII of 1984)” substituted by the Finance Act,
- Added by the Finance Act, 2005.
- The semi-colon and word “and” substituted by the Finance Act, 2005.
- Clause (c) omitted by the Finance Act, 2005. The omitted clause (c)
- Substituted by the Finance Act, 2010. The substituted provision has been made effective from
- Inserted by the Finance Act, 2006.
- Inserted by the Finance Act, 2006
- Clause (5) substituted by the Finance Act, 2002. The substituted clause
- Inserted by the Finance Act, 2011.
- Words “and amended assessment” substituted by Finance Act, 2026.
- Inserted by the Finance Act, 2002
- Clause (5B) substituted by the Finance Act, 2008. The substituted clause (5B)
- Clause (5C) inserted by Finance Act, 2019
- Clause (6A) inserted by Finance Act, 2026.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 3 Ordinance to override other laws
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. CHARGE OF TAX
Amendment history (11)
- Inserted by the Finance Act, 2009.
- (73A) inserted through Finance Act, 2019.
- Added by Finance Act, 2002
- Rules, 2001” substituted by the Finance Act, 2004.
- The word “Company” substituted by the Finance Act, 2005.
- Inserted by the Finance Act, 2015.
- The words and letters “Division I or II” substituted by the Finance Act, 2010.
- The expression “IB” omitted through Finance Act, 2020 dated 30 June, 2020
- The figure and comma “140,” omitted by the Finance Act, 2003.
- The expression “in sections 5, 6 and 7” substituted by the Finance Act, 2022.
- The word “or” substituted by the Finance Act, 2010.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
Charge Of Tax
s. 4 Tax on taxable income
(1) Subject to this Ordinance, income tax shall be imposed for each tax year, at the rate or rates specified in Division I or II of Part I of the First Schedule, as the case may be, on every person who has taxable income for the year.
(2) The income tax payable by a taxpayer for a tax year shall be computed by applying the rate or rates of tax applicable to the taxpayer under this Ordinance to the taxable income of the taxpayer for the year, and from the resulting amount shall be subtracted any tax credits allowed to the taxpayer for the year.
(3) Where a taxpayer is allowed more than one tax credit for a tax year, the credits shall be applied in the following order –
(a) any foreign tax credit allowed under section 103; then
(b) any tax credit allowed under Part X of Chapter III; and then
(c) any tax credit allowed under sections 147 and 168.
(4) Certain classes of income (including the income of certain classes of persons) may be subject to –
(a) separate taxation as provided under this chapter ; or (b) collection of tax under Division II of Part V of Chapter X or deduction of tax under Division III of Part V of Chapter X as a final tax on the income of the person.
(5) Income referred to in sub-section (4) shall be subject to tax as provided for under this chapter , or Part V of Chapter X, as the case may be, and shall not be included in the computation of taxable income in accordance with section 8 or 169, as the case may be.
(6) Where, by virtue of any provision of this Ordinance, income tax is to be deducted at source or collected or paid in advance, it shall, as the case may be, be so deducted, collected or paid, accordingly .
(2) The income tax payable by a taxpayer for a tax year shall be computed by applying the rate or rates of tax applicable to the taxpayer under this Ordinance to the taxable income of the taxpayer for the year, and from the resulting amount shall be subtracted any tax credits allowed to the taxpayer for the year.
(3) Where a taxpayer is allowed more than one tax credit for a tax year, the credits shall be applied in the following order –
(a) any foreign tax credit allowed under section 103; then
(b) any tax credit allowed under Part X of Chapter III; and then
(c) any tax credit allowed under sections 147 and 168.
(4) Certain classes of income (including the income of certain classes of persons) may be subject to –
(a) separate taxation as provided under this chapter ; or (b) collection of tax under Division II of Part V of Chapter X or deduction of tax under Division III of Part V of Chapter X as a final tax on the income of the person.
(5) Income referred to in sub-section (4) shall be subject to tax as provided for under this chapter , or Part V of Chapter X, as the case may be, and shall not be included in the computation of taxable income in accordance with section 8 or 169, as the case may be.
(6) Where, by virtue of any provision of this Ordinance, income tax is to be deducted at source or collected or paid in advance, it shall, as the case may be, be so deducted, collected or paid, accordingly .
Amendment history (13)
- The words and letters “Division I or II” substituted by the Finance Act, 2010.
- The expression “IB” omitted through Finance Act, 2020 dated 30 June, 2020
- The figure and comma “140,” omitted by the Finance Act, 2003.
- The expression “in sections 5, 6 and 7” substituted by the Finance Act, 2022.
- The word “or” substituted by the Finance Act, 2010.
- Added by the Finance Act, 2003.
- The semicolon substituted by the Finance Act, 2005.
- Omitted by the Finance Act, 2014. Section 4A was added by Income Tax (Amendment) Ordinance,
- Section (4AB) inserted by the Finance Act, 2024.
- The expression “(4AB)” substituted by the Finance Act, 2026.
- Full stop substituted by semi-colon and a new proviso added by the Finance Act, 2025.
- in a tax year” substituted by the Finance Act, 2026.
- Inserted by the Finance Act, 2015.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 4A Omitted by Finance Act 2014Omitted
Omitted by Finance Act 2014
s. 4AB Subject to this Ordinance, a surcharge payable
4AB Subject to this Ordinance, a surcharge shall be payable by every individual and association of persons at the rate of ten percent of the income tax imposed under Division I of Part I of the First Schedule where the taxable income exceeds rupees ten million :
Provided that in case of an individual deriving income chargeable under the head Salary, no surcharge shall be payable. .
Provided that in case of an individual deriving income chargeable under the head Salary, no surcharge shall be payable. .
Amendment history (8)
- Added by the Finance Act, 2003.
- The semicolon substituted by the Finance Act, 2005.
- Omitted by the Finance Act, 2014. Section 4A was added by Income Tax (Amendment) Ordinance,
- Section (4AB) inserted by the Finance Act, 2024.
- The expression “(4AB)” substituted by the Finance Act, 2026.
- Full stop substituted by semi-colon and a new proviso added by the Finance Act, 2025.
- in a tax year” substituted by the Finance Act, 2026.
- Inserted by the Finance Act, 2015.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 4B Super tax for rehabilitation of temporary displaced persons
(1) A super tax shall be imposed for rehabilitation of temporarily displaced persons, for tax years 2015 and onwards , at the rates specified in Division IIA of Part I of the
(2) For the purposes of this section, income shall be the sum of the following:—
(i) profit on debt, dividend, capital gains, brokerage and commission;
(ii) taxable income (other than brought forward depreciation and brought forward business losses) under section (9) of this Ordinance, if not included in clause (i);
(iii) imputable income as defined in clause (28A) of section 2 excluding amounts specified in clause (i); and (iv) income computed, other than brought forward depreciation, brought forward amortization and brought forward business lossess under Fourth, Fifth, Seventh and Eighth Schedules.
(3) The super tax payable under sub-section (1) shall be paid, collected and deposited on the date and in the manner as specified in sub-section (1) of section 137 and all provisions of Chapter X of the Ordinance shall apply.
(4) Where the super tax is not paid by a person liable to pay it, the Commissioner shall by an order in writing, determine the super tax payable, and shall serve upon the person, a notice of demand specifying the super tax payable and within the time specified under section 137 of the Ordinance.
(5) Where the super tax is not paid by a person liable to pay it, the Commissioner shall recover the super tax payable under subsection (1) and the provisions of Part IV,X, XI and XII of Chapter X and Part I of Chapter XI of the Ordinance shall, so far as may be, apply to the collection of super tax as these apply to the collection of tax under the Ordinance.
(6) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.
(2) For the purposes of this section, income shall be the sum of the following:—
(i) profit on debt, dividend, capital gains, brokerage and commission;
(ii) taxable income (other than brought forward depreciation and brought forward business losses) under section (9) of this Ordinance, if not included in clause (i);
(iii) imputable income as defined in clause (28A) of section 2 excluding amounts specified in clause (i); and (iv) income computed, other than brought forward depreciation, brought forward amortization and brought forward business lossess under Fourth, Fifth, Seventh and Eighth Schedules.
(3) The super tax payable under sub-section (1) shall be paid, collected and deposited on the date and in the manner as specified in sub-section (1) of section 137 and all provisions of Chapter X of the Ordinance shall apply.
(4) Where the super tax is not paid by a person liable to pay it, the Commissioner shall by an order in writing, determine the super tax payable, and shall serve upon the person, a notice of demand specifying the super tax payable and within the time specified under section 137 of the Ordinance.
(5) Where the super tax is not paid by a person liable to pay it, the Commissioner shall recover the super tax payable under subsection (1) and the provisions of Part IV,X, XI and XII of Chapter X and Part I of Chapter XI of the Ordinance shall, so far as may be, apply to the collection of super tax as these apply to the collection of tax under the Ordinance.
(6) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.
Amendment history (11)
- Added by the Finance Act, 2003.
- The semicolon substituted by the Finance Act, 2005.
- Omitted by the Finance Act, 2014. Section 4A was added by Income Tax (Amendment) Ordinance,
- Section (4AB) inserted by the Finance Act, 2024.
- The expression “(4AB)” substituted by the Finance Act, 2026.
- Full stop substituted by semi-colon and a new proviso added by the Finance Act, 2025.
- in a tax year” substituted by the Finance Act, 2026.
- Inserted by the Finance Act, 2015.
- Inserted by the Finance Act, 2016.
- Inserted by the Finance Act, 2019.
- Inserted by the Finance Act, 2022.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 4C Super tax on high earning persons
Related tools:Super tax & rates
(1) A super tax shall be imposed for tax year 2022 and onwards at the rates specified in Division IIB of Part I of the First Schedule, on income of every person:Provided that this section shall not apply to a banking company for tax year 2022.
(2) For the purposes of this section, income shall be the sum of the following:—
(i) profit on debt, dividend, capital gains, brokerage and commission;
(ii) taxable income (other than brought forward depreciation and brought forward business losses) under section 9 of the Ordinance, excluding amounts specified in clause (i);
(iii) imputable income as defined in clause (28A) of section 2 excluding amounts specified in clause (i); and (iv) income computed, other than brought forward depreciation, brought forward amortization and brought forward business losses under Fourth, Fifth , Seventh and Eighth Schedules.
(3) The tax payable under sub-section (1) shall be paid, collected and deposited on the date and in the manner as specified in sub-section (1) of section 137 and all provisions of Chapter X of the Ordinance shall apply.
(4) Where the tax is not paid by a person liable to pay it, the Commissioner shall by an order in writing, determine the tax payable, and shall serve upon the person, a notice of demand specifying the tax payable and within the time specified under section 137 of the Ordinance.
(5) Where the tax is not paid by a person liable to pay it, the Commissioner shall recover the tax payable under sub-section (1) and the provisions of Part IV, X, XI and XII of Chapter X and Part I of Chapter XI of the Ordinance shall, so far as may be, apply to the collection of tax as these apply to the collection of tax under the Ordinance.
(5A) The provisions of section 147 shall apply on tax payable under this section.
(6) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.
Amendment history (7)
- Inserted by the Finance Act, 2016.
- Inserted by the Finance Act, 2019.
- Inserted by the Finance Act, 2022.
- The words “and Seventh” substituted by the Finance Act, 2023.
- The sub-section (5A) inserted by the Finance Act, 2023.
- The word “resident” omitted by the Finance Act, 2003.
- Inserted by the Finance Act, 2009.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 5 Tax on dividends
(1) Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division III of Part I of the First Schedule, on every person who receives a dividend from a company or treated as dividend under clause (19) of section 2 .
(2) The tax imposed under sub-section (1) on a person who receives a dividend shall be computed by applying the relevant rate of tax to the gross amount of the dividend.
(3) This section shall not apply to a dividend that is exempt from tax under this Ordinance.
(2) The tax imposed under sub-section (1) on a person who receives a dividend shall be computed by applying the relevant rate of tax to the gross amount of the dividend.
(3) This section shall not apply to a dividend that is exempt from tax under this Ordinance.
Amendment history (8)
- The words “and Seventh” substituted by the Finance Act, 2023.
- The sub-section (5A) inserted by the Finance Act, 2023.
- The word “resident” omitted by the Finance Act, 2003.
- Inserted by the Finance Act, 2009.
- section 5A substituted by the Finance Act, 2017. The substituted section
- The word “seven and half” substituted by the Finance Act, 2018
- The word “forty” substituted by the Finance Act, 2018
- The word “or bonus shares” omitted by the Finance Act, 2018
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 5A Tax on undistributed Profits
(1) For tax years 2017 to 2019 , a tax shall be imposed at the rate of five percent of its accounting profit before tax on every public company, other than a scheduled bank or a modaraba, that derives profit for a tax year but does not distribute at least twenty percent of its after tax profits within six months of the end of the tax year through cash :
Provided that for tax year 2017, bonus shares or cash dividends may be distributed before the due date mentioned in sub-section (2) of section 118, for filing of a return.
(2) The provisions of sub-section (1) shall not apply to—
(a) a company qualifying for exemption under clause (132) of Part I of the Second Schedule; and (b) a company in which not less than fifty percent shares are held by the Government.
Provided that for tax year 2017, bonus shares or cash dividends may be distributed before the due date mentioned in sub-section (2) of section 118, for filing of a return.
(2) The provisions of sub-section (1) shall not apply to—
(a) a company qualifying for exemption under clause (132) of Part I of the Second Schedule; and (b) a company in which not less than fifty percent shares are held by the Government.
Amendment history (4)
- section 5A substituted by the Finance Act, 2017. The substituted section
- The word “seven and half” substituted by the Finance Act, 2018
- The word “forty” substituted by the Finance Act, 2018
- The word “or bonus shares” omitted by the Finance Act, 2018
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 5AA Tax on return on investments in Sukuks
(1) Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division IIIB of Part I of the First
(a)
(b) Schedule, on every person who receives a return on investment in sukuks from a special purpose vehicle , or a company .
(2) The tax imposed under sub-section (1) on a person who receives a return on investment in sukuks shall be computed by applying the relevant rate of tax to the gross amount of the return on investment in sukuks.
(3) This section shall not apply to a return on investment in sukuks that is exempt from tax under this Ordinance.
(a)
(b) Schedule, on every person who receives a return on investment in sukuks from a special purpose vehicle , or a company .
(2) The tax imposed under sub-section (1) on a person who receives a return on investment in sukuks shall be computed by applying the relevant rate of tax to the gross amount of the return on investment in sukuks.
(3) This section shall not apply to a return on investment in sukuks that is exempt from tax under this Ordinance.
Amendment history (8)
- section 5A substituted by the Finance Act, 2017. The substituted section
- The word “seven and half” substituted by the Finance Act, 2018
- The word “forty” substituted by the Finance Act, 2018
- The word “or bonus shares” omitted by the Finance Act, 2018
- Inserted by the Finance Act, 2017
- Inserted by the Finance Act, 2018
- The expression inserted by the Finance Act, 2022.
- services” substituted by the Finance Act, 2022.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 6 Tax on certain payments to non-residents
(1) Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division IV of Part I of the First Schedule, on every non-resident person who receives any Pakistan- source royalty , fee for offshore digital services , fee for money transfer operations, card network services, payment gateway services, interbank financial telecommunication services or fee for technical services.
(2) The tax imposed under sub-section (1) on a non-resident person shall be computed by applying the relevant rate of tax to the gross amounts of receipts mentioned in sub-section (1) .
(3) This section shall not apply to —
(a) any royalty where the property or right giving rise to the royalty is effectively connected with a permanent establishment in Pakistan of the non-resident person;
(b) any fee where the services giving rise to the fee are rendered through a permanent establishment in Pakistan of the non-resident person; or (c) any royalty or fee for technical services that is exempt from tax under this Ordinance.
(4) Any Pakistani-source royalty or fee received by a non-resident person to which this section does not apply by virtue of clause (a) or (b) of sub- section (3) shall be treated as income from business attributable to the permanent establishment in Pakistan of the person.
(2) The tax imposed under sub-section (1) on a non-resident person shall be computed by applying the relevant rate of tax to the gross amounts of receipts mentioned in sub-section (1) .
(3) This section shall not apply to —
(a) any royalty where the property or right giving rise to the royalty is effectively connected with a permanent establishment in Pakistan of the non-resident person;
(b) any fee where the services giving rise to the fee are rendered through a permanent establishment in Pakistan of the non-resident person; or (c) any royalty or fee for technical services that is exempt from tax under this Ordinance.
(4) Any Pakistani-source royalty or fee received by a non-resident person to which this section does not apply by virtue of clause (a) or (b) of sub- section (3) shall be treated as income from business attributable to the permanent establishment in Pakistan of the person.
Amendment history (6)
- Inserted by the Finance Act, 2017
- Inserted by the Finance Act, 2018
- The expression inserted by the Finance Act, 2022.
- services” substituted by the Finance Act, 2022.
- Section 6A inserted by the Finance Act, 2025.
- Sub-section (3) inserted by the Finance Act, 2026.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 6A Tax on payments for digital transactions in e-commerce platforms
(1) Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division IVA of Part I of the First Schedule, on every person who receives payment for supply of digitally ordered goods or services which are delivered from within Pakistan using locally operated online platforms including online marketplace or websites:
Provided that the export proceeds subjected to withholding under section 154 and 154A shall not fall within the ambit of this section.
(2) The tax imposed under sub-section (1) shall be computed by applying the relevant rate of tax to the gross amounts of receipts mentioned in sub-section (1).
(3) Notwithstanding the provisions of section 8, the tax imposed under this section on a person, whose turnover in a tax year exceeds two hundred million rupees, shall be adjustable:
Provided that a person having turnover up to two hundred million rupees may opt out of the final tax regime at the time of filing of return for the tax year 2027 and onwards.
Provided that the export proceeds subjected to withholding under section 154 and 154A shall not fall within the ambit of this section.
(2) The tax imposed under sub-section (1) shall be computed by applying the relevant rate of tax to the gross amounts of receipts mentioned in sub-section (1).
(3) Notwithstanding the provisions of section 8, the tax imposed under this section on a person, whose turnover in a tax year exceeds two hundred million rupees, shall be adjustable:
Provided that a person having turnover up to two hundred million rupees may opt out of the final tax regime at the time of filing of return for the tax year 2027 and onwards.
Amendment history (3)
- Inserted by the Finance Act, 2018
- Section 6A inserted by the Finance Act, 2025.
- Sub-section (3) inserted by the Finance Act, 2026.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 7 Tax on shipping and air transport income of a non-resident person
(1) Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division V of Part I of the First Schedule, on every non-resident person carrying on the business of operating ships or aircrafts as the owner or charterer thereof in respect of –
(a) the gross amount received or receivable (whether in or out of Pakistan) for the carriage of passengers, livestock, mail or goods embarked in Pakistan; and (b) the gross amount received or receivable in Pakistan for the carriage of passengers, livestock, mail or goods embarked outside Pakistan.
(2) The tax imposed under sub-section (1) on a non-resident person shall be computed by applying the relevant rate of tax to the gross amount referred to in sub-section (1).
(3) This section shall not apply to any amounts exempt from tax under this Ordinance.
(a) the gross amount received or receivable (whether in or out of Pakistan) for the carriage of passengers, livestock, mail or goods embarked in Pakistan; and (b) the gross amount received or receivable in Pakistan for the carriage of passengers, livestock, mail or goods embarked outside Pakistan.
(2) The tax imposed under sub-section (1) on a non-resident person shall be computed by applying the relevant rate of tax to the gross amount referred to in sub-section (1).
(3) This section shall not apply to any amounts exempt from tax under this Ordinance.
Amendment history (7)
- Inserted by the Finance Act, 2018
- Section 6A inserted by the Finance Act, 2025.
- Sub-section (3) inserted by the Finance Act, 2026.
- Inserted by the Finance Act, 2015
- The word “and” omitted through Finance Act, 2020 dated 30 June, 2020
- be added namely through Finance Act, 2020 dated 30 June, 2020
- The word 2020 substituted by 2030 through Finance Act 2020 dated 30 June, 2020
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 7A Tax on shipping of a resident person
(1) In the case of any resident person engaged in the business of shipping, a presumptive income tax shall be charged in the following manner, namely:—
(a) ships and all floating crafts including tugs, dredgers, survey vessels and other specialized craft purchased or bare-boat chartered and flying Pakistan flag shall pay tonnage tax of an amount equivalent to one US $ per gross registered tonnage per annum;
(b) ships, vessels and all floating crafts including tugs, dredgers, survey vessels and other specialized craft not registered in Pakistan and hired under any charter other than bare-boat charter shall pay tonnage tax of an amount equivalent to fifteen US cents per ton of gross registered tonnage per chartered voyage provided that such tax shall not exceed one US $ per ton of gross registered tonnage per annum: Explanation.—For the purpose of this section, the expression equivalent amount means the rupee equivalent of a US dollar according to the exchange rate prevalent on the first day of December in the case of a company and the first day of September in other cases in the relevant assessment year ;and (c) A Pakistan resident ship owning company registered with the Securities and Exchange Commission of Pakistan after the 15 day of November, 2019 and having its own sea worthy vessel registered under Pakistan Flag shall pay tonnage tax of an amount equivalent to seventy five US Cents per ton of gross registered tonnage per annum.
(2) The provisions of this section shall not be applicable after the 30 June, 2030 .
(a) ships and all floating crafts including tugs, dredgers, survey vessels and other specialized craft purchased or bare-boat chartered and flying Pakistan flag shall pay tonnage tax of an amount equivalent to one US $ per gross registered tonnage per annum;
(b) ships, vessels and all floating crafts including tugs, dredgers, survey vessels and other specialized craft not registered in Pakistan and hired under any charter other than bare-boat charter shall pay tonnage tax of an amount equivalent to fifteen US cents per ton of gross registered tonnage per chartered voyage provided that such tax shall not exceed one US $ per ton of gross registered tonnage per annum: Explanation.—For the purpose of this section, the expression equivalent amount means the rupee equivalent of a US dollar according to the exchange rate prevalent on the first day of December in the case of a company and the first day of September in other cases in the relevant assessment year ;and (c) A Pakistan resident ship owning company registered with the Securities and Exchange Commission of Pakistan after the 15 day of November, 2019 and having its own sea worthy vessel registered under Pakistan Flag shall pay tonnage tax of an amount equivalent to seventy five US Cents per ton of gross registered tonnage per annum.
(2) The provisions of this section shall not be applicable after the 30 June, 2030 .
Amendment history (8)
- Inserted by the Finance Act, 2015
- The word “and” omitted through Finance Act, 2020 dated 30 June, 2020
- be added namely through Finance Act, 2020 dated 30 June, 2020
- The word 2020 substituted by 2030 through Finance Act 2020 dated 30 June, 2020
- Sub clause 3 of 7B substituted by Finance Act, 2019, substituted clause read as follow
- The words “thirty six” substituted by the Finance Act, 2021.
- Inserted by the Finance Act, 2016.
- Section 4 substituted by the Finance Act, 2017. The substituted section
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 7B Tax on profit on debt
(1) Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division IIIA of Part I of the First Schedule, on every person, other than a company, who receives a profit on debt from any person mentioned in clauses
(a) to
(d) of sub-section (1)of section 151.
(2) The tax imposed under sub-section (1) on a person, other than a company, who receives a profit on debt shall be computed by applying the relevant rate of tax to the gross amount of the profit on debt.
(3) This section shall not apply to a profit on debt that –
(a) is exempt from tax under this Ordinance; or (b) exceeds five million Rupees.
(a) to
(d) of sub-section (1)of section 151.
(2) The tax imposed under sub-section (1) on a person, other than a company, who receives a profit on debt shall be computed by applying the relevant rate of tax to the gross amount of the profit on debt.
(3) This section shall not apply to a profit on debt that –
(a) is exempt from tax under this Ordinance; or (b) exceeds five million Rupees.
Amendment history (5)
- Inserted by the Finance Act, 2015
- Sub clause 3 of 7B substituted by Finance Act, 2019, substituted clause read as follow
- The words “thirty six” substituted by the Finance Act, 2021.
- Inserted by the Finance Act, 2016.
- Section 4 substituted by the Finance Act, 2017. The substituted section
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 7C Tax on builders
(1) Subject to this Ordinance, a tax shall be imposed on the profits and gains of a person deriving income from the business of construction and sale of residential, commercial or other buildings at the rates specified in Division VIIIA of Part I of the First Schedule.
(2) The tax imposed under sub-section (1) shall be computed by applying the relevant rate of tax to the area of the residential, commercial or other building being constructed for sale.
(3) The Board may prescribe:
(a) the mode and manner for payment and collection of tax under this section;
(b) the authorities granting approval for computation and payment plan of tax; and (c) responsibilities and powers of the authorities approving, suspending and cancelling no objection certificate to sell and the matters connected and ancillary thereto.
(4) This section shall apply to projects undertaken for construction and sale of residential and commercial buildings initiated and approved.─
(a) during tax year 2017 only;
(b) for which payment under rule 13S of the Income Tax Rules, 2002 has been made by the developer during tax year 2017; and (c) the Chief Commissioner has issued online schedule of advance tax installments to be paid by the developer in accordance with rule 13U of the Income Tax Rules, 2002.
(2) The tax imposed under sub-section (1) shall be computed by applying the relevant rate of tax to the area of the residential, commercial or other building being constructed for sale.
(3) The Board may prescribe:
(a) the mode and manner for payment and collection of tax under this section;
(b) the authorities granting approval for computation and payment plan of tax; and (c) responsibilities and powers of the authorities approving, suspending and cancelling no objection certificate to sell and the matters connected and ancillary thereto.
(4) This section shall apply to projects undertaken for construction and sale of residential and commercial buildings initiated and approved.─
(a) during tax year 2017 only;
(b) for which payment under rule 13S of the Income Tax Rules, 2002 has been made by the developer during tax year 2017; and (c) the Chief Commissioner has issued online schedule of advance tax installments to be paid by the developer in accordance with rule 13U of the Income Tax Rules, 2002.
Amendment history (6)
- Inserted by the Finance Act, 2015
- Sub clause 3 of 7B substituted by Finance Act, 2019, substituted clause read as follow
- The words “thirty six” substituted by the Finance Act, 2021.
- Inserted by the Finance Act, 2016.
- Section 4 substituted by the Finance Act, 2017. The substituted section
- Section 7E inserted by the Finance Act, 2022.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 7D Tax on developers
(1) Subject to this Ordinance, a tax shall be imposed on the profits and gains of a person deriving income from the business of development and sale of residential, commercial or other plots at the rates specified in Division VIIIB of Part I of the First Schedule.
(2) The tax imposed under sub-section (1) shall be computed by applying the relevant rate of tax to the area of the residential, commercial or other plots for sale.
(3) The Board may prescribe:
(a) the mode and manner for payment and collection of tax under this section;
(b) the authorities granting approval for computation and payment plan of tax; and (c) responsibilities and powers of the authorities approving, suspending and cancelling no objection certificate to sell and the matters connected and ancillary thereto.
(4) This section shall apply to projects undertaken for development and sale of residential and commercial plots initiated and approved.─
(a) during tax year 2017 only;
(b) for which payment under rule 13S of the Income Tax Rules, 2002 has been made by the developer during tax year 2017; and (c) the Chief Commissioner has issued online schedule of advance tax installments to be paid by the developer in accordance with rule 13ZB of the Income Tax Rules, 2002.;
(2) The tax imposed under sub-section (1) shall be computed by applying the relevant rate of tax to the area of the residential, commercial or other plots for sale.
(3) The Board may prescribe:
(a) the mode and manner for payment and collection of tax under this section;
(b) the authorities granting approval for computation and payment plan of tax; and (c) responsibilities and powers of the authorities approving, suspending and cancelling no objection certificate to sell and the matters connected and ancillary thereto.
(4) This section shall apply to projects undertaken for development and sale of residential and commercial plots initiated and approved.─
(a) during tax year 2017 only;
(b) for which payment under rule 13S of the Income Tax Rules, 2002 has been made by the developer during tax year 2017; and (c) the Chief Commissioner has issued online schedule of advance tax installments to be paid by the developer in accordance with rule 13ZB of the Income Tax Rules, 2002.;
Amendment history (5)
- Inserted by the Finance Act, 2016.
- Section 4 substituted by the Finance Act, 2017. The substituted section
- Section 7E inserted by the Finance Act, 2022.
- Section 7E omitted by the Finance Act, 2026. The omitted section
- Section 7F inserted by the Finance Act, 2024.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 7E Omitted by the Finance Act, 2026Omitted
Omitted by the Finance Act, 2026.
s. 7F Tax on Builders and Developers
(1) A tax shall be imposed at the rate specified in Division I or II of Part-I of the First Schedule on the taxable profit of every person deriving income from the business of –
(a) construction and sale of residential, commercial or other buildings;
(b) development and sale of residential commercial or other plots; or (c) activities as mentioned in (a) and (b) above.
(2) For the purpose of this section, taxable profit shall be –
(a) ten percent of gross receipts in respect of activities specified in clause (a) of sub-section (1);
(b) fifteen percent of gross receipts in respect of activities specified in clause (b) of sub-section (1); and (c) twelve percent of gross receipts in respect of activities specified in clause (c) of sub-section (1). Explanation.- For the removal of doubt, it is clarified that the provisions of this section shall only apply in respect of income accruing from gross receipts from activities specified in sub-section (1) and shall not be applicable to income or incomes from any other source or under any head of income.
(3) Where a taxpayer, while explaining the nature and source of the amount credited or the investment made, money or valuable article owned or the funds from which the expenditure was made, takes into account any source of income which is subject to tax under this section, the taxpayer shall not be allowed to take credit of any sum as is in excess of taxable profit:
Provided that where taxable income under section 9 is more than the taxable profit under this section, taxpayer shall be entitled to take credit of such taxable income subject to the payment of tax at the rate specified in Division I or II of Part- I of First Schedule.
(4) The provisions of this section shall not apply to a builder or developer established by an Act of the Parliament or a Provincial Assembly or by a Presidential Order and who is engaged in activities for the benefit of its employees or otherwise including activities for the planning and development of and for providing and regulating housing and ancillary facilities in a specified or notified area.
(a) construction and sale of residential, commercial or other buildings;
(b) development and sale of residential commercial or other plots; or (c) activities as mentioned in (a) and (b) above.
(2) For the purpose of this section, taxable profit shall be –
(a) ten percent of gross receipts in respect of activities specified in clause (a) of sub-section (1);
(b) fifteen percent of gross receipts in respect of activities specified in clause (b) of sub-section (1); and (c) twelve percent of gross receipts in respect of activities specified in clause (c) of sub-section (1). Explanation.- For the removal of doubt, it is clarified that the provisions of this section shall only apply in respect of income accruing from gross receipts from activities specified in sub-section (1) and shall not be applicable to income or incomes from any other source or under any head of income.
(3) Where a taxpayer, while explaining the nature and source of the amount credited or the investment made, money or valuable article owned or the funds from which the expenditure was made, takes into account any source of income which is subject to tax under this section, the taxpayer shall not be allowed to take credit of any sum as is in excess of taxable profit:
Provided that where taxable income under section 9 is more than the taxable profit under this section, taxpayer shall be entitled to take credit of such taxable income subject to the payment of tax at the rate specified in Division I or II of Part- I of First Schedule.
(4) The provisions of this section shall not apply to a builder or developer established by an Act of the Parliament or a Provincial Assembly or by a Presidential Order and who is engaged in activities for the benefit of its employees or otherwise including activities for the planning and development of and for providing and regulating housing and ancillary facilities in a specified or notified area.
Amendment history (7)
- Section 7F inserted by the Finance Act, 2024.
- Section 7G inserted by the Finance Act, 2026.
- The expression “5, 6 and 7” substituted by the Finance Act, 2021.
- The expression “5, 5AA, 6, 7, 7A and 7B” substituted by the Finance Act, 2022.
- The expression “5, 5AA, 6,” substituted by the Finance Act, 2025.
- The expression “7E” substituted by the Finance Act, 2026.
- The expression ”5, [ ] [ ] [“, 5AA”] 6, 7, 7A [and 7B]”” substituted by the Finance Act, 2022.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 7G Tax on certain payments by life insurance business
(1) For tax year, 2026 and onwards, a tax shall be imposed, at the rate specified in Division IC of Part III of the First Schedule on every individual who receives any payout, benefit, surrender value, maturity proceeds or similar payment (hereinafter referred to as payout) from a life insurance business on account of insurance policy, family takaful certificate, plan or any similar arrangement.
(2) For the purposes of sub-section (1), the amount liable to tax shall be the gross amount of payout reduced by aggregate amount of premiums or contributions paid by the policy holder or participant.
(3) The provisions of sub-section (1) shall not apply where the payout or benefit is made:—
(a) on account of death of the insured or participant;
(b) on account of disability of the insured or participant; or (c) after completion of four years from the date of issuance of the policy, certificate or plan.
(4) Tax deducted under this section shall be treated as final tax on the income arising from such payout or benefit.
(2) For the purposes of sub-section (1), the amount liable to tax shall be the gross amount of payout reduced by aggregate amount of premiums or contributions paid by the policy holder or participant.
(3) The provisions of sub-section (1) shall not apply where the payout or benefit is made:—
(a) on account of death of the insured or participant;
(b) on account of disability of the insured or participant; or (c) after completion of four years from the date of issuance of the policy, certificate or plan.
(4) Tax deducted under this section shall be treated as final tax on the income arising from such payout or benefit.
Amendment history (6)
- Section 7G inserted by the Finance Act, 2026.
- The expression “5, 6 and 7” substituted by the Finance Act, 2021.
- The expression “5, 5AA, 6, 7, 7A and 7B” substituted by the Finance Act, 2022.
- The expression “5, 5AA, 6,” substituted by the Finance Act, 2025.
- The expression “7E” substituted by the Finance Act, 2026.
- The expression ”5, [ ] [ ] [“, 5AA”] 6, 7, 7A [and 7B]”” substituted by the Finance Act, 2022.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 8 General provisions relating to taxes imposed under sections 5, 6 and 7
(1) Subject to this Ordinance, the tax imposed under Sections 5, 5A, 5AA, 6, 6A, 7, 7A, 7B and 7G shall be a final tax on the amount in respect of which the tax is imposed and—
(a) such amount shall not be chargeable to tax under any head of income in computing the taxable income of the person who derives it for any tax year;
(b) no deduction shall be allowable under this Ordinance for any expenditure incurred in deriving the amount;
(c) the amount shall not be reduced by —
(i) any deductible allowance; or (ii) the set off of any loss;
(d) the tax payable by a person under section 5, 5A, 5AA, 6, 6A, 7, 7A, 7B and 7G shall not be reduced by any tax credits allowed under this Ordinance; and (e) the liability of a person under section 5, 6 , 6A or 7 shall be discharged to the extent that —
(i) in the case of shipping and air transport income, the tax has been paid in accordance with section 143 or 144, as the case may be; or (ii) in any other case, the tax payable has been deducted at source under Division III of Part V of Chapter X . TAX ON TAXABLE INCOME PART I COMPUTATION OF TAXABLE INCOME
(a) such amount shall not be chargeable to tax under any head of income in computing the taxable income of the person who derives it for any tax year;
(b) no deduction shall be allowable under this Ordinance for any expenditure incurred in deriving the amount;
(c) the amount shall not be reduced by —
(i) any deductible allowance; or (ii) the set off of any loss;
(d) the tax payable by a person under section 5, 5A, 5AA, 6, 6A, 7, 7A, 7B and 7G shall not be reduced by any tax credits allowed under this Ordinance; and (e) the liability of a person under section 5, 6 , 6A or 7 shall be discharged to the extent that —
(i) in the case of shipping and air transport income, the tax has been paid in accordance with section 143 or 144, as the case may be; or (ii) in any other case, the tax payable has been deducted at source under Division III of Part V of Chapter X . TAX ON TAXABLE INCOME PART I COMPUTATION OF TAXABLE INCOME
Amendment history (17)
- Section 7G inserted by the Finance Act, 2026.
- The expression “5, 6 and 7” substituted by the Finance Act, 2021.
- The expression “5, 5AA, 6, 7, 7A and 7B” substituted by the Finance Act, 2022.
- The expression “5, 5AA, 6,” substituted by the Finance Act, 2025.
- The expression “7E” substituted by the Finance Act, 2026.
- The expression ”5, [ ] [ ] [“, 5AA”] 6, 7, 7A [and 7B]”” substituted by the Finance Act, 2022.
- The word “sections” substituted by the word “section”by the Finance Act, 2014.
- The expression “5, [5A,[“, 5AA”] 6,” substituted by the Finance Act, 2025.
- The expression “7A and 7B” substituted by the Finance Act, 2022.
- The expression inserted by the Finance Act, 2025.
- Colon substituted by the Finance Act, 2013.
- Proviso omitted by the Finance Act, 2013. The omitted proviso
- Inserted by the Finance Act, 2012.
- Clause (b) substituted by the Finance Act, 2002. The substituted clause (b)
- Clause (c) substituted by the Finance Act, 2002. The substituted clause (c)
- Clause (d) substituted by the Finance Act, 2002. The substituted clause (d)
- Clause (e) substituted by the Finance Act, 2002. The substituted clause (e)
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
Tax On Taxable Income
s. 9 Taxable income
Taxable income.—The taxable income of a person for a tax year shall be the total income under clause (a) of section 10 of the person for the year reduced (but not below zero) by the total of any deductible allowances under Part IX of this
Amendment history (5)
- Inserted by the Finance Act, 2012.
- Clause (b) substituted by the Finance Act, 2002. The substituted clause (b)
- Clause (c) substituted by the Finance Act, 2002. The substituted clause (c)
- Clause (d) substituted by the Finance Act, 2002. The substituted clause (d)
- Clause (e) substituted by the Finance Act, 2002. The substituted clause (e)
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 10 Total income
(a) person’s income under all heads of income for the year; and (b) person’s income exempt from tax under any of the provisions of this Ordinance.
Amendment history (5)
- Inserted by the Finance Act, 2012.
- Clause (b) substituted by the Finance Act, 2002. The substituted clause (b)
- Clause (c) substituted by the Finance Act, 2002. The substituted clause (c)
- Clause (d) substituted by the Finance Act, 2002. The substituted clause (d)
- Clause (e) substituted by the Finance Act, 2002. The substituted clause (e)
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 11 Heads of income
(1) For the purposes of the imposition of tax and the computation of total income, all income shall be classified under the following heads, namely: —
(a) Salary;
(b) Income from Property;
(c) Income from Business;
(d) Capital Gains; and (e) Income from Other Sources.
(2) Subject to this Ordinance, the income of a person under a head of income for a tax year shall be the total of the amounts derived by the person in that year that are chargeable to tax under the head as reduced by the total deductions, if any, allowed under this Ordinance to the person for the year under that head.
(3) Subject to this Ordinance, where the total deductions allowed under this Ordinance to a person for a tax year under a head of income exceed the total of the amounts derived by the person in that year that are chargeable to tax under that head, the person shall be treated as sustaining a loss for that head for that year of an amount equal to the excess.
(4) A loss for a head of income for a tax year shall be dealt with in accordance with Part VIII of this Chapter.
(5) The income of a resident person under a head of income shall be computed by taking into account amounts that are Pakistan-source income and amounts that are foreign-source income.
(6) The income of a non-resident person under a head of income shall be computed by taking into account only amounts that are Pakistan-source income. PART II HEAD OF INCOME: SALARY
(a) Salary;
(b) Income from Property;
(c) Income from Business;
(d) Capital Gains; and (e) Income from Other Sources.
(2) Subject to this Ordinance, the income of a person under a head of income for a tax year shall be the total of the amounts derived by the person in that year that are chargeable to tax under the head as reduced by the total deductions, if any, allowed under this Ordinance to the person for the year under that head.
(3) Subject to this Ordinance, where the total deductions allowed under this Ordinance to a person for a tax year under a head of income exceed the total of the amounts derived by the person in that year that are chargeable to tax under that head, the person shall be treated as sustaining a loss for that head for that year of an amount equal to the excess.
(4) A loss for a head of income for a tax year shall be dealt with in accordance with Part VIII of this Chapter.
(5) The income of a resident person under a head of income shall be computed by taking into account amounts that are Pakistan-source income and amounts that are foreign-source income.
(6) The income of a non-resident person under a head of income shall be computed by taking into account only amounts that are Pakistan-source income. PART II HEAD OF INCOME: SALARY
Amendment history (8)
- Inserted by the Finance Act, 2012.
- Clause (b) substituted by the Finance Act, 2002. The substituted clause (b)
- Clause (c) substituted by the Finance Act, 2002. The substituted clause (c)
- Clause (d) substituted by the Finance Act, 2002. The substituted clause (d)
- Clause (e) substituted by the Finance Act, 2002. The substituted clause (e)
- Semi-colon substituted by the Finance Act, 2015.
- Omitted by the Finance Act, 2015. The omitted proviso
- Explanation added by the Finance Act, 2021.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 12 Salary
(1) Any salary received by an employee in a tax year, other than salary that is exempt from tax under this Ordinance, shall be chargeable to tax in that year under the head Salary.
(2) Salary means any amount received by an employee from any employment, whether of a revenue or capital nature, including —
(a) any pay, wages or other remuneration provided to an employee, including leave pay, payment in lieu of leave, overtime payment, bonus, commission, fees, gratuity or work condition supplements (such as for unpleasant or dangerous working conditions) ;
(b) any perquisite, whether convertible to money or not;
(c) the amount of any allowance provided by an employer to an employee including a cost of living, subsistence, rent, utilities, education, entertainment or travel allowance, but shall not include any allowance solely expended in the performance of the employee’s duties of employment. Explanation.– For removal of doubt, it is clarified that the allowance solely expended in the performance of employee’s duty does not include –
(i) allowance which is paid in monthly salary on fixed basis or percentage of salary; or (ii) allowance which is not wholly, exclusively, necessarily or actually spent on behalf of the employer;
(d) the amount of any expenditure incurred by an employee that is paid or reimbursed by the employer, other than expenditure incurred on behalf of the employer in the performance of the employee’s duties of employment;
(e) the amount of any profits in lieu of, or in addition to, salary or wages, including any amount received —
(i) as consideration for a person’s agreement to enter into an employment relationship;
(ii) as consideration for an employee’s agreement to any conditions of employment or any changes to the employee’s conditions of employment;
(iii) on termination of employment, whether paid voluntarily or under an agreement, including any compensation for redundancy or loss of employment and golden handshake payments;
(iv) from a provident or other fund, to the extent to which the amount is not a repayment of contributions made by the employee to the fund in respect of which the employee was not entitled to a deduction; and (v) as consideration for an employee’s agreement to a restrictive covenant in respect of any past, present or prospective employment;
(f) any pension or annuity, or any supplement to a pension or annuity; and (g) any amount chargeable to tax as Salary under section 14.
(2A) In case of pension under clause (f) of sub-section (2),—
(i) the pension shall be charged to tax as a final tax at the rates specified in the proviso to clause (2) of Division I of Part I of the a former employer for a tax year exceeds ten million rupees and the individual who has attained the age of seventy years shall not be charged to tax on pension income; and (ii) the pension of an individual who continues to work for former employer or its associate shall be charged to tax at the rates specified under clause (1) or (2) of Division I of Part I to First Schedule as the case may be.
(3) Where an employer agrees to pay the tax chargeable on an employee’s salary, the amount of the employee’s income chargeable under the head Salary shall be grossed up by the amount of tax payable by the employer.
(4) No deduction shall be allowed for any expenditure incurred by an employee in deriving amounts chargeable to tax under the head Salary.
(5) For the purposes of this Ordinance, an amount or perquisite shall be treated as received by an employee from any employment regardless of whether the amount or perquisite is paid or provided —
(a) by the employee’s employer, an associate of the employer, or by a third party under an arrangement with the employer or an associate of the employer;
(b) by a past employer or a prospective employer; or (c) to the employee or to an associate of the employee or to a third party under an agreement with the employee or an associate of the employee.
(6) An employee who has received an amount referred to in sub-clause (iii) of clause (e) of sub-section (2) in a tax year may, by notice in writing to the Commissioner, elect for the amount to be taxed at the rate computed in accordance with the following formula, namely: — A/B% where — A is the total tax paid or payable by the employee on the employee’s total taxable income for the three preceding tax years; and B is the employee’s total taxable income for the three preceding tax years.
(7) Where —
(a) any amount chargeable under the head Salary is paid to an employee in arrears; and (b) as a result the employee is chargeable at higher rates of tax than would have been applicable if the amount had been paid to the employee in the tax year in which the services were rendered, the employee may, by notice in writing to the Commissioner, elect for the amount to be taxed at the rates of tax that would have been applicable if the salary had been paid to the employee in the tax year in which the services were rendered.
(8) An election under sub-section (6) or (7) shall be made by the due date for furnishing the employee’s return of income or employer certificate, as the case may be, for the tax year in which the amount was received or by such later date as the Commissioner may allow.
(2) Salary means any amount received by an employee from any employment, whether of a revenue or capital nature, including —
(a) any pay, wages or other remuneration provided to an employee, including leave pay, payment in lieu of leave, overtime payment, bonus, commission, fees, gratuity or work condition supplements (such as for unpleasant or dangerous working conditions) ;
(b) any perquisite, whether convertible to money or not;
(c) the amount of any allowance provided by an employer to an employee including a cost of living, subsistence, rent, utilities, education, entertainment or travel allowance, but shall not include any allowance solely expended in the performance of the employee’s duties of employment. Explanation.– For removal of doubt, it is clarified that the allowance solely expended in the performance of employee’s duty does not include –
(i) allowance which is paid in monthly salary on fixed basis or percentage of salary; or (ii) allowance which is not wholly, exclusively, necessarily or actually spent on behalf of the employer;
(d) the amount of any expenditure incurred by an employee that is paid or reimbursed by the employer, other than expenditure incurred on behalf of the employer in the performance of the employee’s duties of employment;
(e) the amount of any profits in lieu of, or in addition to, salary or wages, including any amount received —
(i) as consideration for a person’s agreement to enter into an employment relationship;
(ii) as consideration for an employee’s agreement to any conditions of employment or any changes to the employee’s conditions of employment;
(iii) on termination of employment, whether paid voluntarily or under an agreement, including any compensation for redundancy or loss of employment and golden handshake payments;
(iv) from a provident or other fund, to the extent to which the amount is not a repayment of contributions made by the employee to the fund in respect of which the employee was not entitled to a deduction; and (v) as consideration for an employee’s agreement to a restrictive covenant in respect of any past, present or prospective employment;
(f) any pension or annuity, or any supplement to a pension or annuity; and (g) any amount chargeable to tax as Salary under section 14.
(2A) In case of pension under clause (f) of sub-section (2),—
(i) the pension shall be charged to tax as a final tax at the rates specified in the proviso to clause (2) of Division I of Part I of the a former employer for a tax year exceeds ten million rupees and the individual who has attained the age of seventy years shall not be charged to tax on pension income; and (ii) the pension of an individual who continues to work for former employer or its associate shall be charged to tax at the rates specified under clause (1) or (2) of Division I of Part I to First Schedule as the case may be.
(3) Where an employer agrees to pay the tax chargeable on an employee’s salary, the amount of the employee’s income chargeable under the head Salary shall be grossed up by the amount of tax payable by the employer.
(4) No deduction shall be allowed for any expenditure incurred by an employee in deriving amounts chargeable to tax under the head Salary.
(5) For the purposes of this Ordinance, an amount or perquisite shall be treated as received by an employee from any employment regardless of whether the amount or perquisite is paid or provided —
(a) by the employee’s employer, an associate of the employer, or by a third party under an arrangement with the employer or an associate of the employer;
(b) by a past employer or a prospective employer; or (c) to the employee or to an associate of the employee or to a third party under an agreement with the employee or an associate of the employee.
(6) An employee who has received an amount referred to in sub-clause (iii) of clause (e) of sub-section (2) in a tax year may, by notice in writing to the Commissioner, elect for the amount to be taxed at the rate computed in accordance with the following formula, namely: — A/B% where — A is the total tax paid or payable by the employee on the employee’s total taxable income for the three preceding tax years; and B is the employee’s total taxable income for the three preceding tax years.
(7) Where —
(a) any amount chargeable under the head Salary is paid to an employee in arrears; and (b) as a result the employee is chargeable at higher rates of tax than would have been applicable if the amount had been paid to the employee in the tax year in which the services were rendered, the employee may, by notice in writing to the Commissioner, elect for the amount to be taxed at the rates of tax that would have been applicable if the salary had been paid to the employee in the tax year in which the services were rendered.
(8) An election under sub-section (6) or (7) shall be made by the due date for furnishing the employee’s return of income or employer certificate, as the case may be, for the tax year in which the amount was received or by such later date as the Commissioner may allow.
Amendment history (5)
- Semi-colon substituted by the Finance Act, 2015.
- Omitted by the Finance Act, 2015. The omitted proviso
- Explanation added by the Finance Act, 2021.
- Sub-section (2A) inserted by the Finance Act, 2025.
- Inserted by the Finance Act, 2002
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 13 Value of perquisites
(1) For the purposes of computing the income of an employee for a tax year chargeable to tax under the head Salary, the value of any perquisite provided by an employer to the employee in that year that is included in the employee’s salary under section 12 shall be determined in accordance with this section.
(2) This section shall not apply to any amount referred to in clause (c) or (d) of sub-section (2) of section 12.
(3) Where, in a tax year, a motor vehicle is provided by an employer to an employee wholly or partly for the private use of the employee, the amount chargeable to tax to the employee under the head Salary for that year shall include an amount computed as may be prescribed.
(5) Where, in a tax year, the services of a housekeeper, driver, gardener or other domestic assistant is provided by an employer to an employee, the amount chargeable to tax to the employee under the head Salary for that year shall include the total salary paid to the domestic assistant such house keeper, driver, gardener or other domestic assistant in that year for services rendered to the employee, as reduced by any payment made to the employer for such services.
(6) Where, in a tax year, utilities are provided by an employer to an employee, the amount chargeable to tax to the employee under the head Salary for that year shall include the fair market value of the utilities provided, as reduced by any payment made by the employee for the utilities.
(7) Where a loan is made, on or after the 1 day of July, 2002, by an employer to an employee and either no profit on loan is payable by the employee or the rate of profit on loan is less than the benchmark rate, the amount chargeable to tax to the employee under the head Salary for a tax year shall include an amount equal to—
(a) the profit on loan computed at the benchmark rate, where no profit on loan is payable by the employee, or (d) the difference between the amount of profit on loan paid by the employee in that tax year and the amount of profit on loan computed at the benchmark rate, as the case may be :
Provided that this sub-section shall not apply to such benefit arising to an employee due to waiver of interest by such employee on his account with the employer :
Provided further that this sub-section shall not apply to loans not exceeding one million rupees.
(8) For the purposes of this Ordinance not including sub-section (7), where the employee uses a loan referred to in sub-section (7) wholly or partly for the acquisition of any asset or property producing income chargeable to tax under any head of income, the employee shall be treated as having paid an amount as profit equal to the benchmark rate on the loan or that part of the loan used to acquire asset or property.
(9) Where, in a tax year, an obligation of an employee to pay or repay an amount owing by the employee to the employer is waived by the employer, the amount chargeable to tax to the employee under the head Salary for that year shall include the amount so waived.
(10) Where, in a tax year, an obligation of an employee to pay or repay an amount owing by the employee to another person is paid by the employer, the amount chargeable to tax to the employee under the head Salary for that year shall include the amount so paid.
(11) Where, in a tax year, property is transferred or services are provided by an employer to an employee, the amount chargeable to tax to the employee under the head Salary for that year shall include the fair market value of the property or services determined at the time the property is transferred or the services are provided, as reduced by any payment made by the employee for the property or services.
(12) Where, in the tax year, accommodation or housing is provided by an employer to an employee, the amount chargeable to tax to the employee under the head Salary" for that year shall include an amount computed as may be prescribed.
(13) Where, in a tax year, an employer has provided an employee with a perquisite which is not covered by sub-sections
(3) through (12), the amount chargeable to tax to the employee under the head Salary for that year shall include the fair market value of the perquisite, except where the rules, if any, provide otherwise, determined at the time it is provided, as reduced by any payment made by the employee for the perquisite.
(14) In this section,—
(a) benchmark rate means —-
(i) for the tax year commencing on the first day of July, 2002, a rate of five per cent per annum; and (ii) for the tax years next following the tax year referred to in sub-clause (i), the rate for each successive year taken at one per cent above the rate applicable for the immediately preceding tax year, but not exceeding ten per cent per annum in respect of any tax year;
(b) services includes the provision of any facility; and (c) utilities includes electricity, gas, water and telephone.
(2) This section shall not apply to any amount referred to in clause (c) or (d) of sub-section (2) of section 12.
(3) Where, in a tax year, a motor vehicle is provided by an employer to an employee wholly or partly for the private use of the employee, the amount chargeable to tax to the employee under the head Salary for that year shall include an amount computed as may be prescribed.
(5) Where, in a tax year, the services of a housekeeper, driver, gardener or other domestic assistant is provided by an employer to an employee, the amount chargeable to tax to the employee under the head Salary for that year shall include the total salary paid to the domestic assistant such house keeper, driver, gardener or other domestic assistant in that year for services rendered to the employee, as reduced by any payment made to the employer for such services.
(6) Where, in a tax year, utilities are provided by an employer to an employee, the amount chargeable to tax to the employee under the head Salary for that year shall include the fair market value of the utilities provided, as reduced by any payment made by the employee for the utilities.
(7) Where a loan is made, on or after the 1 day of July, 2002, by an employer to an employee and either no profit on loan is payable by the employee or the rate of profit on loan is less than the benchmark rate, the amount chargeable to tax to the employee under the head Salary for a tax year shall include an amount equal to—
(a) the profit on loan computed at the benchmark rate, where no profit on loan is payable by the employee, or (d) the difference between the amount of profit on loan paid by the employee in that tax year and the amount of profit on loan computed at the benchmark rate, as the case may be :
Provided that this sub-section shall not apply to such benefit arising to an employee due to waiver of interest by such employee on his account with the employer :
Provided further that this sub-section shall not apply to loans not exceeding one million rupees.
(8) For the purposes of this Ordinance not including sub-section (7), where the employee uses a loan referred to in sub-section (7) wholly or partly for the acquisition of any asset or property producing income chargeable to tax under any head of income, the employee shall be treated as having paid an amount as profit equal to the benchmark rate on the loan or that part of the loan used to acquire asset or property.
(9) Where, in a tax year, an obligation of an employee to pay or repay an amount owing by the employee to the employer is waived by the employer, the amount chargeable to tax to the employee under the head Salary for that year shall include the amount so waived.
(10) Where, in a tax year, an obligation of an employee to pay or repay an amount owing by the employee to another person is paid by the employer, the amount chargeable to tax to the employee under the head Salary for that year shall include the amount so paid.
(11) Where, in a tax year, property is transferred or services are provided by an employer to an employee, the amount chargeable to tax to the employee under the head Salary for that year shall include the fair market value of the property or services determined at the time the property is transferred or the services are provided, as reduced by any payment made by the employee for the property or services.
(12) Where, in the tax year, accommodation or housing is provided by an employer to an employee, the amount chargeable to tax to the employee under the head Salary" for that year shall include an amount computed as may be prescribed.
(13) Where, in a tax year, an employer has provided an employee with a perquisite which is not covered by sub-sections
(3) through (12), the amount chargeable to tax to the employee under the head Salary for that year shall include the fair market value of the perquisite, except where the rules, if any, provide otherwise, determined at the time it is provided, as reduced by any payment made by the employee for the perquisite.
(14) In this section,—
(a) benchmark rate means —-
(i) for the tax year commencing on the first day of July, 2002, a rate of five per cent per annum; and (ii) for the tax years next following the tax year referred to in sub-clause (i), the rate for each successive year taken at one per cent above the rate applicable for the immediately preceding tax year, but not exceeding ten per cent per annum in respect of any tax year;
(b) services includes the provision of any facility; and (c) utilities includes electricity, gas, water and telephone.
Amendment history (16)
- Inserted by the Finance Act, 2002
- Substituted by the Finance Ordinance, 2002. The substituted sub-section (3)
- Sub-section (4) omitted by the Finance Act, 2002. The omitted sub-section (4)
- The words “domestic assistant” substituted by the Finance Act, 2002
- The words “by the employee” substituted by the Finance Act, 2002
- Sub-section (7) substituted by the Finance Act, 2002. The substituted sub-section (7) read as
- Full stop substituted by the Finance Act, 2010.
- Added by the Finance Act, 2010.
- Full stop substituted by the Finance Act, 2012.
- Added by the Finance Act, 2012.
- The word “five hundred thousand” substituted by Finance Act, 2017
- The word “property” substituted by the Finance Act, 2002
- The word “the” omitted by the Finance Act, 2014
- The word “owed” substituted by the Finance Act, 2002
- Sub-section (12) substituted by the Finance Act, 2002. The substituted sub-section (12) read as
- Sub-section (14) substituted by the Finance Act, 2002. The substituted sub-section (14) read as
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 14 Employee share schemes
(1) The value of a right or option to acquire shares under an employee share scheme granted to an employee shall not be chargeable to tax.
(2) Subject to sub-section (3), where, in a tax year, an employee is issued with shares under an employee share scheme including as a result of the exercise of an option or right to acquire the shares, the amount chargeable to tax to the employee under the head Salary for that year shall include the fair market value of the shares determined at the date of issue, as reduced by any consideration given by the employee for the shares including any amount given as consideration for the grant of a right or option to acquire the shares.
(3) Where shares issued to an employee under an employee share scheme are subject to a restriction on the transfer of the shares —
(a) no amount shall be chargeable to tax to the employee under the head Salary until the earlier of —
(i) the time the employee has a free right to transfer the shares; or (ii) the time the employee disposes of the shares; and (b) the amount chargeable to tax to the employee shall be the fair market value of the shares at the time the employee has a free right to transfer the shares or disposes of the shares, as the case may be, as reduced by any consideration given by the employee for the shares including any amount given as consideration for the grant of a right or option to acquire the shares.
(4) For purposes of this Ordinance, where sub-section (2) or (3) applies, the cost of the shares to the employee shall be the sum of —
(a) the consideration, if any, given by the employee for the shares;
(b) the consideration, if any, given by the employee for the grant of any right or option to acquire the shares; and (c) the amount chargeable to tax under the head Salary under those sub-sections.
(5) Where, in a tax year, an employee disposes of a right or option to acquire shares under an employee share scheme, the amount chargeable to tax to the employee under the head Salary for that year shall include the amount of any gain made on the disposal computed in accordance with the following formula, namely:— A—B where — A is the consideration received for the disposal of the right or option; and B is the employee’s cost in respect of the right or option.
(6) In this sub-section, employee share scheme means any agreement or arrangement under which a company may issue shares in the company to —
(a) an employee of the company or an employee of an associated company; or (b) the trustee of a trust and under the trust deed the trustee may transfer the shares to an employee of the company or an employee of an associated company. PART III HEAD OF INCOME: INCOME FROM PROPERTY
(2) Subject to sub-section (3), where, in a tax year, an employee is issued with shares under an employee share scheme including as a result of the exercise of an option or right to acquire the shares, the amount chargeable to tax to the employee under the head Salary for that year shall include the fair market value of the shares determined at the date of issue, as reduced by any consideration given by the employee for the shares including any amount given as consideration for the grant of a right or option to acquire the shares.
(3) Where shares issued to an employee under an employee share scheme are subject to a restriction on the transfer of the shares —
(a) no amount shall be chargeable to tax to the employee under the head Salary until the earlier of —
(i) the time the employee has a free right to transfer the shares; or (ii) the time the employee disposes of the shares; and (b) the amount chargeable to tax to the employee shall be the fair market value of the shares at the time the employee has a free right to transfer the shares or disposes of the shares, as the case may be, as reduced by any consideration given by the employee for the shares including any amount given as consideration for the grant of a right or option to acquire the shares.
(4) For purposes of this Ordinance, where sub-section (2) or (3) applies, the cost of the shares to the employee shall be the sum of —
(a) the consideration, if any, given by the employee for the shares;
(b) the consideration, if any, given by the employee for the grant of any right or option to acquire the shares; and (c) the amount chargeable to tax under the head Salary under those sub-sections.
(5) Where, in a tax year, an employee disposes of a right or option to acquire shares under an employee share scheme, the amount chargeable to tax to the employee under the head Salary for that year shall include the amount of any gain made on the disposal computed in accordance with the following formula, namely:— A—B where — A is the consideration received for the disposal of the right or option; and B is the employee’s cost in respect of the right or option.
(6) In this sub-section, employee share scheme means any agreement or arrangement under which a company may issue shares in the company to —
(a) an employee of the company or an employee of an associated company; or (b) the trustee of a trust and under the trust deed the trustee may transfer the shares to an employee of the company or an employee of an associated company. PART III HEAD OF INCOME: INCOME FROM PROPERTY
Amendment history (5)
- Substituted for the word “in” by the Finance Act, 2003.
- Inserted by the Finance Act, 2003.
- Sub-section (6) omitted by the Finance Act, 2013. The omitted sub-section (6)
- Sub-section (7) omitted by the Finance Act, 2013. The omitted sub-section (6)
- Clause (6) inserted by the Finance Act, 2016.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 15 Income from property
(1) The rent received or receivable by a person for a tax year, other than rent exempt from tax under this Ordinance, shall be chargeable to tax in that year under the head Income from Property.
(2) Subject to sub-section (3), 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.
(3) This section shall not apply to any rent received or receivable by any person in respect of the lease of a building together with plant and machinery and such rent shall be chargeable to tax under the head Income from Other Sources.
(3A) Where any amount is included in rent received or receivable by any person for the provision of amenities, utilities or any other service connected with the renting of the building, such amount shall be chargeable to tax under the head Income from Other Sources.
(4) Subject to sub-section (5), where the rent received or receivable by a person is less than the fair market rent for the property, the person shall be treated as having derived the fair market rent for the period the property is let on rent in the tax year.
(5) Sub-section (4) shall not apply where the fair market rent is included in the income of the lessee chargeable to tax under the head Salary.
(2) Subject to sub-section (3), 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.
(3) This section shall not apply to any rent received or receivable by any person in respect of the lease of a building together with plant and machinery and such rent shall be chargeable to tax under the head Income from Other Sources.
(3A) Where any amount is included in rent received or receivable by any person for the provision of amenities, utilities or any other service connected with the renting of the building, such amount shall be chargeable to tax under the head Income from Other Sources.
(4) Subject to sub-section (5), where the rent received or receivable by a person is less than the fair market rent for the property, the person shall be treated as having derived the fair market rent for the period the property is let on rent in the tax year.
(5) Sub-section (4) shall not apply where the fair market rent is included in the income of the lessee chargeable to tax under the head Salary.
Amendment history (11)
- Substituted for the word “in” by the Finance Act, 2003.
- Inserted by the Finance Act, 2003.
- Sub-section (6) omitted by the Finance Act, 2013. The omitted sub-section (6)
- Sub-section (7) omitted by the Finance Act, 2013. The omitted sub-section (6)
- Clause (6) inserted by the Finance Act, 2016.
- Clause (6) omitted by the Finance Act, 2021. The omitted clause
- Clause (7) inserted by the Finance Act, 2016.
- Clause (7) omitted by the Finance Act, 2021. The omitted clause
- Inserted by the Finance Act, 2013.
- The word “person” substituted by the Finance Act, 2016.
- The word “company” substituted by the Finance Act, 2021.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 15A Deductions in computing income chargeable under the head “Income from Property”
(1) In computing the income of a person chargeable to tax under the head Income from Property for a tax year, a deduction shall be allowed for the following expenditures or allowances, namely:-
(a) In respect of repairs to a building, an allowance equal to one-fifth of the rent chargeable to tax in respect of the building for the year, computed before any deduction allowed under this section;
(b) any premium paid or payable by the person in the year to insure the building against the risk of damage or destruction;
(c) any local rate, tax, charge or cess in respect of the property or the rent from the property paid or payable by the person to any local authority or government in the year, not being any tax payable under this Ordinance;
(d) any ground rent paid or payable by the person in the year in respect of the property;
(e) any profit paid or payable by the person in the year on any money borrowed including by way of mortgage, to acquire, construct, renovate, extend or reconstruct the property;
(f) where the property has been acquired, constructed, renovated, extended, or reconstructed by the person with capital contributed by the House Building Finance Corporation or a scheduled bank under a scheme of investment in property on the basis of sharing the rent made by the Corporation or bank, the share in rent and share towards appreciation in the value of property (excluding the return of capital, if any) from the property paid or payable by the person to the said Corporation or the bank in the year under that scheme;
(g) where the property is subject to mortgage or other capital charge, the amount of profit or interest paid on such mortgage or charge;
(h) any expenditure, not exceeding four per cent of the rent chargeable to tax in respect of the property for the year computed before any deduction allowed under this section, paid or payable by the person in the year wholly and exclusively for the purpose of deriving rent chargeable to tax under the head, Income from Property including administration and collection charges;
(i) any expenditure paid or payable by the person in the tax year for legal services acquired to defend the persons ’s title to the property or any suit connected with the property in a court; and (j) where there are reasonable grounds for believing that any unpaid rent in respect of the property is irrecoverable, an allowance equal to the unpaid rent where—
(i) the tenancy was bona fide, the defaulting tenant has vacated the property or steps have been taken to compel the tenant to vacate the property and the defaulting tenant is not in occupation of any other property of the person ;
(ii) the persons has taken all reasonable steps to institute legal proceedings for the recovery of the unpaid rent or has reasonable grounds to believe that legal proceedings would be useless; and (iii) the unpaid rent has been included in the income of the persons chargeable to tax under the head Income from Property for the tax year in which the rent was due and tax has been duly paid on such income.
(2) Where any unpaid rent allowed as a deduction under clause (j) of sub-section (1) is wholly or partly recovered, the amount recovered shall be chargeable to tax in the tax year in which it is recovered.
(3) Where a person has been allowed a deduction for any expenditure incurred in deriving rent chargeable to tax under the head Income from Property and the person has not paid the liability or a part of the liability to which the deduction relates within three years of the end of the tax year in which the deduction was allowed, the unpaid amount of the liability shall be chargeable to tax under the head Income from Property in the first tax year following the end of the three years.
(4) Where an unpaid liability is chargeable to tax as a result of the application of sub-section (3) and the person subsequently pays the liability or a part of the liability, the person shall be allowed a deduction for the amount paid in the tax year in which the payment is made.
(5) Any expenditure allowed to a person under this section as a deduction shall not be allowed as a deduction in computing the income of the person chargeable to tax under any other head of income.
(6) The provisions of section 21 shall apply in determining the deductions allowed to a person under this section in the same manner as they apply in determining the deductions allowed in computing the income of a person chargeable to tax under the head Income from Business.
(a) In respect of repairs to a building, an allowance equal to one-fifth of the rent chargeable to tax in respect of the building for the year, computed before any deduction allowed under this section;
(b) any premium paid or payable by the person in the year to insure the building against the risk of damage or destruction;
(c) any local rate, tax, charge or cess in respect of the property or the rent from the property paid or payable by the person to any local authority or government in the year, not being any tax payable under this Ordinance;
(d) any ground rent paid or payable by the person in the year in respect of the property;
(e) any profit paid or payable by the person in the year on any money borrowed including by way of mortgage, to acquire, construct, renovate, extend or reconstruct the property;
(f) where the property has been acquired, constructed, renovated, extended, or reconstructed by the person with capital contributed by the House Building Finance Corporation or a scheduled bank under a scheme of investment in property on the basis of sharing the rent made by the Corporation or bank, the share in rent and share towards appreciation in the value of property (excluding the return of capital, if any) from the property paid or payable by the person to the said Corporation or the bank in the year under that scheme;
(g) where the property is subject to mortgage or other capital charge, the amount of profit or interest paid on such mortgage or charge;
(h) any expenditure, not exceeding four per cent of the rent chargeable to tax in respect of the property for the year computed before any deduction allowed under this section, paid or payable by the person in the year wholly and exclusively for the purpose of deriving rent chargeable to tax under the head, Income from Property including administration and collection charges;
(i) any expenditure paid or payable by the person in the tax year for legal services acquired to defend the persons ’s title to the property or any suit connected with the property in a court; and (j) where there are reasonable grounds for believing that any unpaid rent in respect of the property is irrecoverable, an allowance equal to the unpaid rent where—
(i) the tenancy was bona fide, the defaulting tenant has vacated the property or steps have been taken to compel the tenant to vacate the property and the defaulting tenant is not in occupation of any other property of the person ;
(ii) the persons has taken all reasonable steps to institute legal proceedings for the recovery of the unpaid rent or has reasonable grounds to believe that legal proceedings would be useless; and (iii) the unpaid rent has been included in the income of the persons chargeable to tax under the head Income from Property for the tax year in which the rent was due and tax has been duly paid on such income.
(2) Where any unpaid rent allowed as a deduction under clause (j) of sub-section (1) is wholly or partly recovered, the amount recovered shall be chargeable to tax in the tax year in which it is recovered.
(3) Where a person has been allowed a deduction for any expenditure incurred in deriving rent chargeable to tax under the head Income from Property and the person has not paid the liability or a part of the liability to which the deduction relates within three years of the end of the tax year in which the deduction was allowed, the unpaid amount of the liability shall be chargeable to tax under the head Income from Property in the first tax year following the end of the three years.
(4) Where an unpaid liability is chargeable to tax as a result of the application of sub-section (3) and the person subsequently pays the liability or a part of the liability, the person shall be allowed a deduction for the amount paid in the tax year in which the payment is made.
(5) Any expenditure allowed to a person under this section as a deduction shall not be allowed as a deduction in computing the income of the person chargeable to tax under any other head of income.
(6) The provisions of section 21 shall apply in determining the deductions allowed to a person under this section in the same manner as they apply in determining the deductions allowed in computing the income of a person chargeable to tax under the head Income from Business.
Amendment history (6)
- Clause (6) omitted by the Finance Act, 2021. The omitted clause
- Clause (7) inserted by the Finance Act, 2016.
- Clause (7) omitted by the Finance Act, 2021. The omitted clause
- Inserted by the Finance Act, 2013.
- The word “person” substituted by the Finance Act, 2016.
- The word “company” substituted by the Finance Act, 2021.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 16 Non-adjustable amounts received in relation to buildings
(1) Where the owner of a building receives from a tenant an amount which is not adjustable against the rent payable by the tenant, the amount shall be treated as rent chargeable to tax under the head Income from Property in the tax year in which it was received and the following nine tax years in equal proportion.
(2) Where an amount (hereinafter referred to as the earlier amount) referred to in sub-section (1) is refunded by the owner to the tenant on termination of the tenancy before the expiry of ten years, no portion of the amount shall be allocated to the tax year in which it is refunded or to any subsequent tax year except as provided for in sub-section (3).
(3) Where the circumstances specified in sub-section (2) occur and the owner lets out the building or part thereof to another person (hereinafter referred to as the succeeding tenant) and receives from the succeeding tenant any amount (hereinafter referred to as the succeeding amount) which is not adjustable against the rent payable by the succeeding tenant, the succeeding amount as reduced by such portion of the earlier amount as was charged to tax shall be treated as rent chargeable to tax under the head Income from Property as specified in sub-section (1). PART IV HEAD OF INCOME: INCOME FROM BUSINESS Division I Income from Business
(2) Where an amount (hereinafter referred to as the earlier amount) referred to in sub-section (1) is refunded by the owner to the tenant on termination of the tenancy before the expiry of ten years, no portion of the amount shall be allocated to the tax year in which it is refunded or to any subsequent tax year except as provided for in sub-section (3).
(3) Where the circumstances specified in sub-section (2) occur and the owner lets out the building or part thereof to another person (hereinafter referred to as the succeeding tenant) and receives from the succeeding tenant any amount (hereinafter referred to as the succeeding amount) which is not adjustable against the rent payable by the succeeding tenant, the succeeding amount as reduced by such portion of the earlier amount as was charged to tax shall be treated as rent chargeable to tax under the head Income from Property as specified in sub-section (1). PART IV HEAD OF INCOME: INCOME FROM BUSINESS Division I Income from Business
Amendment history (3)
- Section 17 omitted by the Finance Act, 2006. The omitted section 17
- Semi colon substituted and Explanation added by the Finance Act, 2021.
- Words inserted by the Finance Act, 2025.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 17 Omitted by the Finance Act, 2006Omitted
Omitted by the Finance Act, 2006.
s. 18 Income from business
(1) The following incomes of a person for a tax year, other than income exempt from tax under this Ordinance, shall be chargeable to tax under the head Income from Business —
(a) the profits and gains of any business carried on by a person at any time in the year;
(b) any income derived by any trade, professional or similar association from the sale of goods or provision of services to its members . Explanation.– For the removal of doubt, it is clarified that income derived by co-operative societies including recreational club from the sale of goods, immoveable property or provision of services to its members is and has always been chargeable to tax under the provisions of this Ordinance;
(c) any income from the hire or lease of tangible movable property;
(d) the fair market value of any benefit or perquisite, whether convertible into money or not, derived by a person in the course of, or by virtue of, a past, present, or prospective business relationship . Explanation. — For the purposes of this clause, it is declared that the word ‘benefit’ includes any benefit derived by way of waiver of profit on debt or the debt itself under the State Bank of Pakistan Banking Policy Department’s Circular No.29 of 2002 or in any other scheme issued by the State Bank of Pakistan;
(e) any management fee derived by a management company (including a modaraba management company ). Explanation.—For the removal of doubt it is clarified that income subject to taxation under sections 5A, 5AA, 6, 7 and 7A shall not be chargeable to tax under this section.
(2) Any profit on debt derived by a person where the person’s business is to derive such income shall be chargeable to tax under the head Income from Business and not under the head Income from Other Sources.
(3) Where a lessor , being a scheduled bank or an investment bank or a development finance institution or a modaraba or a leasing company has leased out any asset, whether owned by it or not, to another person, any amount paid or payable by the said person in connection with the lease of said asset shall be treated as the income of the said lessor and shall be chargeable to tax under the head Income from Business.
(4) Any amount received by a banking company or a non-banking finance company, where such amount represents distribution by a mutual fund or a Private Equity and Venture Capital Fund out of its income from profit on debt, shall be chargeable to tax under the head Income from Business and not under the head Income from Other Sources.
(a) the profits and gains of any business carried on by a person at any time in the year;
(b) any income derived by any trade, professional or similar association from the sale of goods or provision of services to its members . Explanation.– For the removal of doubt, it is clarified that income derived by co-operative societies including recreational club from the sale of goods, immoveable property or provision of services to its members is and has always been chargeable to tax under the provisions of this Ordinance;
(c) any income from the hire or lease of tangible movable property;
(d) the fair market value of any benefit or perquisite, whether convertible into money or not, derived by a person in the course of, or by virtue of, a past, present, or prospective business relationship . Explanation. — For the purposes of this clause, it is declared that the word ‘benefit’ includes any benefit derived by way of waiver of profit on debt or the debt itself under the State Bank of Pakistan Banking Policy Department’s Circular No.29 of 2002 or in any other scheme issued by the State Bank of Pakistan;
(e) any management fee derived by a management company (including a modaraba management company ). Explanation.—For the removal of doubt it is clarified that income subject to taxation under sections 5A, 5AA, 6, 7 and 7A shall not be chargeable to tax under this section.
(2) Any profit on debt derived by a person where the person’s business is to derive such income shall be chargeable to tax under the head Income from Business and not under the head Income from Other Sources.
(3) Where a lessor , being a scheduled bank or an investment bank or a development finance institution or a modaraba or a leasing company has leased out any asset, whether owned by it or not, to another person, any amount paid or payable by the said person in connection with the lease of said asset shall be treated as the income of the said lessor and shall be chargeable to tax under the head Income from Business.
(4) Any amount received by a banking company or a non-banking finance company, where such amount represents distribution by a mutual fund or a Private Equity and Venture Capital Fund out of its income from profit on debt, shall be chargeable to tax under the head Income from Business and not under the head Income from Other Sources.
Amendment history (11)
- Semi colon substituted and Explanation added by the Finance Act, 2021.
- Words inserted by the Finance Act, 2025.
- The semi-colon and the word “and” substituted by the Finance Act, 2011.
- Inserted by the Finance Act, 2011.
- Inserted by the Finance Act, 2002
- Added by the Finance Act, 2018
- Added by the Finance Act, 2003.
- The word “lesser” substituted by the word “lessor” by the Finance Act, 2014.
- Inserted by the Finance Act, 2007.
- The word “stock” substituted by the Finance Act, 2005.
- The word “arbitrate” substituted by the Finance Act, 2005.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 19 Speculation business
(1) Where a person carries on a speculation business –
(a) that business shall be treated as distinct and separate from any other business carried on by the person;
(b) this Part shall apply separately to the speculation business and the other business of the person; b head Income from Business for that year; and (e) any loss of the person arising from the speculation business sustained for a tax year computed in accordance with this Part shall be dealt with under section 58.
(2) In this section, speculation business means any business in which a contract for the purchase and sale of any commodity (including stocks and shares) is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity, but does not include a business in which —
(a) a contract in respect of raw materials or merchandise is entered into by a person in the course of a manufacturing or mercantile business to guard against loss through future price fluctuations for the purpose of fulfilling the person’s other contracts for the actual delivery of the goods to be manufactured or merchandise to be sold;
(b) a contract in respect of stocks and shares is entered into by a dealer or investor therein to guard against loss in the person’s holding of stocks and shares through price fluctuations; or (c) a contract is entered into by a member of a forward market or stock exchange in the course of any transaction in the nature of jobbing arbitrage to guard against any loss which may arise in the ordinary course of the person’s business as such member. Division II Deductions: General Principles
(a) that business shall be treated as distinct and separate from any other business carried on by the person;
(b) this Part shall apply separately to the speculation business and the other business of the person; b head Income from Business for that year; and (e) any loss of the person arising from the speculation business sustained for a tax year computed in accordance with this Part shall be dealt with under section 58.
(2) In this section, speculation business means any business in which a contract for the purchase and sale of any commodity (including stocks and shares) is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity, but does not include a business in which —
(a) a contract in respect of raw materials or merchandise is entered into by a person in the course of a manufacturing or mercantile business to guard against loss through future price fluctuations for the purpose of fulfilling the person’s other contracts for the actual delivery of the goods to be manufactured or merchandise to be sold;
(b) a contract in respect of stocks and shares is entered into by a dealer or investor therein to guard against loss in the person’s holding of stocks and shares through price fluctuations; or (c) a contract is entered into by a member of a forward market or stock exchange in the course of any transaction in the nature of jobbing arbitrage to guard against any loss which may arise in the ordinary course of the person’s business as such member. Division II Deductions: General Principles
Amendment history (7)
- Inserted by the Finance Act, 2002
- The word “stock” substituted by the Finance Act, 2005.
- The word “arbitrate” substituted by the Finance Act, 2005.
- tax” substituted by the Finance Act, 2004.
- Inserted by the Finance Act, 2009.
- Inserted by the Finance Act, 2021.
- Added by the Finance Act, 2002
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 20 Deductions in computing income chargeable under the head “Income from Business”
(1) Subject to this Ordinance, in computing the income of a person chargeable to tax under the head Income from Business for a tax year, a deduction shall be allowed for any expenditure incurred by the person in the year wholly and exclusively for the purposes of business .
(1A) Subject to this Ordinance, where animals which have been used for the purposes of the business or profession otherwise than as stock-in-trade and have died or become permanently useless for such purposes, a deduction shall be allowed equal to the difference between the actual cost to the taxpayer of the animals and the amount, if any, realized in respect of the carcasses or animals.
(2) Subject to this Ordinance, where the expenditure referred to in sub- section (1) is incurred in acquiring a depreciable asset or an intangible with a useful life of more than one year or is pre-commencement expenditure, the person must depreciate or amortise the expenditure in accordance with sections 22, 23, 24 and 25.
(3) Subject to this Ordinance, where any expenditure is incurred by an amalgamated company on legal and financial advisory services and other administrative cost relating to planning and implementation of amalgamation, a deduction shall be allowed for such expenditure.
(1A) Subject to this Ordinance, where animals which have been used for the purposes of the business or profession otherwise than as stock-in-trade and have died or become permanently useless for such purposes, a deduction shall be allowed equal to the difference between the actual cost to the taxpayer of the animals and the amount, if any, realized in respect of the carcasses or animals.
(2) Subject to this Ordinance, where the expenditure referred to in sub- section (1) is incurred in acquiring a depreciable asset or an intangible with a useful life of more than one year or is pre-commencement expenditure, the person must depreciate or amortise the expenditure in accordance with sections 22, 23, 24 and 25.
(3) Subject to this Ordinance, where any expenditure is incurred by an amalgamated company on legal and financial advisory services and other administrative cost relating to planning and implementation of amalgamation, a deduction shall be allowed for such expenditure.
Amendment history (4)
- tax” substituted by the Finance Act, 2004.
- Inserted by the Finance Act, 2009.
- Inserted by the Finance Act, 2021.
- Added by the Finance Act, 2002
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 21 Deductions not allowed
Deductions not allowed.— Except as otherwise provided in this Ordinance, no deduction shall be allowed in computing the income of a person under the head Income from Business for —
(a) any cess, rate or tax paid or payable by the person in Pakistan or a foreign country that is levied on the profits or gains of the business or assessed as a percentage or otherwise on the basis of such profits or gains;
(b) any amount of tax deducted under Division III of Part V of Chapter X from an amount derived by the person;
(c) any expenditure from which the person is required to deduct or collect tax under Part V of Chapter X or Chapter XII, unless the person has paid or deducted and paid the tax as required by Division IV of Part V of Chapter X:
Provided that disallowance in respect of purchases of raw materials and finished goods under this clause shall not exceed twenty per cent of purchases of raw materials and finished goods:
Provided further that recovery of any amount of tax under sections 161 or 162 shall be considered as tax paid.
(ca) any amount of commission paid or payable in respect of supply of products listed in the Third Schedule of the Sales Tax Act, 1990, where the amount of commission paid or payable exceeds 0.2 percent of gross amount of supplies thereof unless the person to whom commission is paid or payable, as the case may be, is appearing in the active taxpayer list under this Ordinance;
(d) any entertainment expenditure in excess of such limits or in violation of such conditions as may be prescribed;
(e) any contribution made by the person to a fund that is not a recognized provident fund , approved pension fund , approved superannuation fund or approved gratuity fund;
(ea) an amount in excess of fifty percent of contribution made by a person to an approved gratuity fund, an approved pension fund or an approved superannuation fund.
(f) any contribution made by the person to any provident or other fund established for the benefit of employees of the person, unless the person has made effective arrangements to secure that tax is deducted under section 149 from any payments made by the fund in respect of which the recipient is chargeable to tax under the head "Salary";
(g) any fine or penalty paid or payable by the person for the violation of any law, rule or regulation;
(h) any personal expenditures incurred by the person;
(i) any amount carried to a reserve fund or capitalised in any way;
(j) any profit on debt, brokerage, commission, salary or other remuneration paid by an association of persons to a member of the association;
(l) any expenditure for a transaction, paid or payable under a single account head which, in aggregate, exceeds two hundred and fifty thousand rupees, made other than by a crossed cheque drawn on a bank or by crossed bank draft or crossed pay order or any other crossed banking instrument showing transfer of amount from the business bank account of the taxpayer:
Provided that online transfer of payment from the business account of the payer to the business account of payee as well as payments through credit card shall be treated as transactions through the banking channel, subject to the condition that such transactions are verifiable from the bank statements of the respective payer and the payee:
Provided further that this clause shall not apply in the case of —
(a) expenditures not exceeding twenty-five thousand rupees;
(b) expenditures on account of —
(i) utility bills;
(ii) freight charges;
(iii) travel fare;
(iv) postage; and (v) payment of taxes, duties, fee, fines or any other statutory obligation : Provided further also that this clause shall not apply to a company from the date clause (la) has been made effective through the notification issued by the Board.
(la) any expenditure by a taxpayer being a company for a transaction, paid or payable under a single account head which, in aggregate, exceeds rupees two hundred and fifty thousand, made other than by digital means from business bank account of the taxpayer notified to the Commissioner under section 114A:
Provided that this clause shall not apply in the case of-
(a) expenditures not exceeding Rupees twenty-five thousand; and (b) expenditures on account of —
(i) utility bills;
(ii) freight charges;
(iii) travel fare;
(iv) postage; and (v) payment of taxes, duties, fee, fines or any other statutory obligation:
Provided further that this clause shall be effective from such date as the Board may notify.
(m) any salary paid or payable exceeding thirty-two thousand rupees per month to an individual other than by a crossed cheque or direct transfer of funds to the employee’s bank account or through digital means ; fifteen
(n) except as provided in Division III of this Part, any expenditure paid or payable of a capital nature;
(o) any expenditure in respect of sales promotion, advertisement and publicity in excess of ten per cent of turnover incurred by pharmaceutical manufacturers ;
(p) any expenditure on account of utility bill in excess of such limits and in violation of such conditions as may be prescribed;
(q) ten percent of the claimed expenditure made attributable to purchases made from persons who are not National Tax Number holders:
Provided that in case of purchase of agricultural produce this clause shall only apply to the purchase made from middle man:
Provided further that the Board may, by notification in the official Gazette, exempt persons or classes of persons from this clause subject to such conditions and limitations as may be specified therein;
(r) three percent of the expenditure claimed by any person, who fails to install electronic resource or to act as an integrated enterprise as required by law, subject to the method, manner, and procedure as may be prescribed; ; and (s) fifty percent of the expenditure claimed in respect of sale where the taxpayer received payment exceeding two hundred thousand rupees otherwise than through a banking channel or digital means against a single invoice containing one or more than one transactions of supply of goods or provisions of services. Division III Deductions: Special Provisions
(a) any cess, rate or tax paid or payable by the person in Pakistan or a foreign country that is levied on the profits or gains of the business or assessed as a percentage or otherwise on the basis of such profits or gains;
(b) any amount of tax deducted under Division III of Part V of Chapter X from an amount derived by the person;
(c) any expenditure from which the person is required to deduct or collect tax under Part V of Chapter X or Chapter XII, unless the person has paid or deducted and paid the tax as required by Division IV of Part V of Chapter X:
Provided that disallowance in respect of purchases of raw materials and finished goods under this clause shall not exceed twenty per cent of purchases of raw materials and finished goods:
Provided further that recovery of any amount of tax under sections 161 or 162 shall be considered as tax paid.
(ca) any amount of commission paid or payable in respect of supply of products listed in the Third Schedule of the Sales Tax Act, 1990, where the amount of commission paid or payable exceeds 0.2 percent of gross amount of supplies thereof unless the person to whom commission is paid or payable, as the case may be, is appearing in the active taxpayer list under this Ordinance;
(d) any entertainment expenditure in excess of such limits or in violation of such conditions as may be prescribed;
(e) any contribution made by the person to a fund that is not a recognized provident fund , approved pension fund , approved superannuation fund or approved gratuity fund;
(ea) an amount in excess of fifty percent of contribution made by a person to an approved gratuity fund, an approved pension fund or an approved superannuation fund.
(f) any contribution made by the person to any provident or other fund established for the benefit of employees of the person, unless the person has made effective arrangements to secure that tax is deducted under section 149 from any payments made by the fund in respect of which the recipient is chargeable to tax under the head "Salary";
(g) any fine or penalty paid or payable by the person for the violation of any law, rule or regulation;
(h) any personal expenditures incurred by the person;
(i) any amount carried to a reserve fund or capitalised in any way;
(j) any profit on debt, brokerage, commission, salary or other remuneration paid by an association of persons to a member of the association;
(l) any expenditure for a transaction, paid or payable under a single account head which, in aggregate, exceeds two hundred and fifty thousand rupees, made other than by a crossed cheque drawn on a bank or by crossed bank draft or crossed pay order or any other crossed banking instrument showing transfer of amount from the business bank account of the taxpayer:
Provided that online transfer of payment from the business account of the payer to the business account of payee as well as payments through credit card shall be treated as transactions through the banking channel, subject to the condition that such transactions are verifiable from the bank statements of the respective payer and the payee:
Provided further that this clause shall not apply in the case of —
(a) expenditures not exceeding twenty-five thousand rupees;
(b) expenditures on account of —
(i) utility bills;
(ii) freight charges;
(iii) travel fare;
(iv) postage; and (v) payment of taxes, duties, fee, fines or any other statutory obligation : Provided further also that this clause shall not apply to a company from the date clause (la) has been made effective through the notification issued by the Board.
(la) any expenditure by a taxpayer being a company for a transaction, paid or payable under a single account head which, in aggregate, exceeds rupees two hundred and fifty thousand, made other than by digital means from business bank account of the taxpayer notified to the Commissioner under section 114A:
Provided that this clause shall not apply in the case of-
(a) expenditures not exceeding Rupees twenty-five thousand; and (b) expenditures on account of —
(i) utility bills;
(ii) freight charges;
(iii) travel fare;
(iv) postage; and (v) payment of taxes, duties, fee, fines or any other statutory obligation:
Provided further that this clause shall be effective from such date as the Board may notify.
(m) any salary paid or payable exceeding thirty-two thousand rupees per month to an individual other than by a crossed cheque or direct transfer of funds to the employee’s bank account or through digital means ; fifteen
(n) except as provided in Division III of this Part, any expenditure paid or payable of a capital nature;
(o) any expenditure in respect of sales promotion, advertisement and publicity in excess of ten per cent of turnover incurred by pharmaceutical manufacturers ;
(p) any expenditure on account of utility bill in excess of such limits and in violation of such conditions as may be prescribed;
(q) ten percent of the claimed expenditure made attributable to purchases made from persons who are not National Tax Number holders:
Provided that in case of purchase of agricultural produce this clause shall only apply to the purchase made from middle man:
Provided further that the Board may, by notification in the official Gazette, exempt persons or classes of persons from this clause subject to such conditions and limitations as may be specified therein;
(r) three percent of the expenditure claimed by any person, who fails to install electronic resource or to act as an integrated enterprise as required by law, subject to the method, manner, and procedure as may be prescribed; ; and (s) fifty percent of the expenditure claimed in respect of sale where the taxpayer received payment exceeding two hundred thousand rupees otherwise than through a banking channel or digital means against a single invoice containing one or more than one transactions of supply of goods or provisions of services. Division III Deductions: Special Provisions
Amendment history (25)
- tax” substituted by the Finance Act, 2004.
- Inserted by the Finance Act, 2009.
- Inserted by the Finance Act, 2021.
- Added by the Finance Act, 2002
- Clause (c) substituted by the Finance Act, 2016. The substituted clause (c)
- New clause (ca) inserted by Finance Act, 2019.
- Inserted by the Finance Act, 2003.
- Inserted by Finance Act, 2014.
- Inserted by the Finance Act, 2005.
- Clause (ea) inserted by the Finance Act, 2022.
- Clause (k) omitted by the Finance Act, 2006. The omitted clause (k)
- Clause (l) substituted by the Finance Act, 2006. The substituted clause (l)
- Expression substituted through Finance Act, 2020 dated 30 June, 2020
- Semi colon substituted by the Finance Act, 2022.
- Inserted by the Finance Act, 2022.
- The word “” substituted by the Finance Act, 2020 dated 30 June, 2020.
- The expression “twenty-five thousand rupees per month” substituted by the Finance Act,
- The word “and” omitted by the Finance Act, 2016.
- The word “and” omitted by the Finance Act, 2020 dated 30 June, 2020.
- Inserted by the Finance Act, 2016
- The word “five” substituted by the Finance Act, 2017
- Full stop substituted by semi colon through Finance Act, 2020 dated 30 June, 2020
- New clauses (p) and (q) added through Finance Act, 2020 dated 30 June, 2020
- The word “and” omitted by the Finance Act, 2025.
- Clause (q) substituted by the Finance Act, 2025. The substituted clause
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 22 Depreciation
(1) Subject to this section, a person shall be allowed a deduction for the depreciation of the person’s depreciable assets used in the person’s business in the tax year :
Provided that the depreciation expense shall not be allowed for the amount paid for addition of capital assets to a seller in all relevant tax years if the tax deductible under sections 152 or 153 of the Ordinance in respect of those payments has not been deducted and deposited in the treasury, by not adding such amount paid for addition in capital assets in the assets for computation of tax depreciation.
(2) Subject to sub-section (3) , the depreciation deduction for a tax year shall be computed by applying the rate specified in Part I of the Third Schedule against the written down value of the asset at the beginning of the year .
(3) Where a depreciable asset is used in a tax year partly in deriving income from business chargeable to tax and partly for another use, the deduction allowed under this section for that year shall be restricted to the fair proportional part of the amount that would be allowed if the asset was wholly used to derive income from business chargeable to tax.
(5) The written down value of a depreciable asset of a person at the beginning of the tax year shall be —
(a) where the asset was acquired in the tax year, the cost of the asset to the person as reduced by any initial allowance in respect of the asset under section 23; or (b) in any other case, the cost of the asset to the person as reduced by the total depreciation deductions (including any initial allowance under section 23) allowed to the person in respect of the asset in previous tax years. Explanation,- For the removal of doubt, it is clarified that where any building, furniture, plant or machinery is used for the purposes of business during any tax year for which the income from such business is exempt, depreciation admissible under sub-section (1) shall be treated to have been allowed in respect of the said tax year and after expiration of the exemption period, written down value of such assets shall be determined after reducing total depreciation deductions (including any initial allowance under section 23) in accordance with clauses
(a) and (b) of this sub-section.
(6) Where sub-section (3) applies to a depreciable asset for a tax year, the written down value of the asset shall be computed on the basis that the asset has been solely used to derive income from business chargeable to tax.
(7) The total deductions allowed to a person during the period of ownership of a depreciable asset under this section and section 23 shall not exceed the cost of the asset.
(8) Where, in any tax year, a person disposes of a depreciable asset, no depreciation deduction shall be allowed under this section for that year and —
(a) if the consideration received exceeds the written down value of the asset at the time of disposal, the excess shall be chargeable to tax in that year under the head Income from Business; or (b) if the consideration received is less than the written down value of the asset at the time of disposal, the difference shall be allowed as a deduction in computing the person’s income chargeable under the head Income from Business for that year :
(9) Where sub-section (3) applies, the written down value of the asset for the purposes of sub-section (8) shall be increased by the amount that is not allowed as a deduction as a result of the application of sub-section (3).
(10) Where clause (a) of sub-section (13) applies, the consideration received on disposal of the passenger transport vehicle for the purposes of sub- section (8) shall be computed according to the following formula — A x B/C where – A is the amount received on disposal of the vehicle; B is the amount referred to in clause (a) of sub-section (13); and C is the actual cost of acquiring the vehicle.
(11) Subject to sub-sections
(13) and (14), the rules in Part III of Chapter IV shall apply in determining the cost and consideration received in respect of a depreciable asset for the purposes of this section.
(12) The depreciation deductions allowed to a leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution in respect of assets owned by the leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution and leased to another person shall be deductible only against the lease rental income derived in respect of such assets.
(13) For the purposes of this section, —
(a) the cost of a depreciable asset being a passenger transport vehicle not plying for hire shall not exceed seven and a half million rupees;
(b) the cost of immovable property or a structural improvement to immovable property shall not include the cost of the land;
(c) any asset owned by a leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution and leased to another person is treated as used in the leasing company or the investment bank or the modaraba or the scheduled bank or the development finance institution’s business; and (d) where the consideration received on the disposal of immovable property exceeds the cost of the property, the consideration received shall be treated as the cost of the property.
(14) Where a depreciable asset that has been used by a person in Pakistan is exported or transferred out of Pakistan, the person shall be treated as having disposed of the asset at the time of the export or transfer for a consideration received equal to the cost of the asset.
(15) In this section, — depreciable asset means any tangible movable property, immovable property (other than unimproved land), or structural improvement to immovable property, owned by a person that —
(a) has a normal useful life exceeding one year;
(b) is likely to lose value as a result of normal wear and tear, or obsolescence; and (c) is used wholly or partly by the person in deriving income from business chargeable to tax, but shall not include any tangible movable property, immovable property, or structural improvement to immovable property in relation to which a deduction has been allowed under another section of this Ordinance for the entire cost of the property or improvement in the tax year in which the property is acquired or improvement made by the person; and structural improvement in relation to immovable property, includes any building, road, driveway, car park, railway line, pipeline, bridge, tunnel, airport runway, canal, dock, wharf, retaining wall, fence, power lines, water or sewerage pipes, drainage, landscaping or dam :
Provided that where a depreciable asset is jointly owned by a taxpayer and an Islamic financial institution licensed by the State Bank of Pakistan or Securities and Exchange Commission of Pakistan, as the case may be, pursuant to an arrangement of Musharika financing or diminishing Musharika financing, the depreciable asset shall be treated to be wholly owned by the taxpayer.
Provided that the depreciation expense shall not be allowed for the amount paid for addition of capital assets to a seller in all relevant tax years if the tax deductible under sections 152 or 153 of the Ordinance in respect of those payments has not been deducted and deposited in the treasury, by not adding such amount paid for addition in capital assets in the assets for computation of tax depreciation.
(2) Subject to sub-section (3) , the depreciation deduction for a tax year shall be computed by applying the rate specified in Part I of the Third Schedule against the written down value of the asset at the beginning of the year .
(3) Where a depreciable asset is used in a tax year partly in deriving income from business chargeable to tax and partly for another use, the deduction allowed under this section for that year shall be restricted to the fair proportional part of the amount that would be allowed if the asset was wholly used to derive income from business chargeable to tax.
(5) The written down value of a depreciable asset of a person at the beginning of the tax year shall be —
(a) where the asset was acquired in the tax year, the cost of the asset to the person as reduced by any initial allowance in respect of the asset under section 23; or (b) in any other case, the cost of the asset to the person as reduced by the total depreciation deductions (including any initial allowance under section 23) allowed to the person in respect of the asset in previous tax years. Explanation,- For the removal of doubt, it is clarified that where any building, furniture, plant or machinery is used for the purposes of business during any tax year for which the income from such business is exempt, depreciation admissible under sub-section (1) shall be treated to have been allowed in respect of the said tax year and after expiration of the exemption period, written down value of such assets shall be determined after reducing total depreciation deductions (including any initial allowance under section 23) in accordance with clauses
(a) and (b) of this sub-section.
(6) Where sub-section (3) applies to a depreciable asset for a tax year, the written down value of the asset shall be computed on the basis that the asset has been solely used to derive income from business chargeable to tax.
(7) The total deductions allowed to a person during the period of ownership of a depreciable asset under this section and section 23 shall not exceed the cost of the asset.
(8) Where, in any tax year, a person disposes of a depreciable asset, no depreciation deduction shall be allowed under this section for that year and —
(a) if the consideration received exceeds the written down value of the asset at the time of disposal, the excess shall be chargeable to tax in that year under the head Income from Business; or (b) if the consideration received is less than the written down value of the asset at the time of disposal, the difference shall be allowed as a deduction in computing the person’s income chargeable under the head Income from Business for that year :
(9) Where sub-section (3) applies, the written down value of the asset for the purposes of sub-section (8) shall be increased by the amount that is not allowed as a deduction as a result of the application of sub-section (3).
(10) Where clause (a) of sub-section (13) applies, the consideration received on disposal of the passenger transport vehicle for the purposes of sub- section (8) shall be computed according to the following formula — A x B/C where – A is the amount received on disposal of the vehicle; B is the amount referred to in clause (a) of sub-section (13); and C is the actual cost of acquiring the vehicle.
(11) Subject to sub-sections
(13) and (14), the rules in Part III of Chapter IV shall apply in determining the cost and consideration received in respect of a depreciable asset for the purposes of this section.
(12) The depreciation deductions allowed to a leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution in respect of assets owned by the leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution and leased to another person shall be deductible only against the lease rental income derived in respect of such assets.
(13) For the purposes of this section, —
(a) the cost of a depreciable asset being a passenger transport vehicle not plying for hire shall not exceed seven and a half million rupees;
(b) the cost of immovable property or a structural improvement to immovable property shall not include the cost of the land;
(c) any asset owned by a leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution and leased to another person is treated as used in the leasing company or the investment bank or the modaraba or the scheduled bank or the development finance institution’s business; and (d) where the consideration received on the disposal of immovable property exceeds the cost of the property, the consideration received shall be treated as the cost of the property.
(14) Where a depreciable asset that has been used by a person in Pakistan is exported or transferred out of Pakistan, the person shall be treated as having disposed of the asset at the time of the export or transfer for a consideration received equal to the cost of the asset.
(15) In this section, — depreciable asset means any tangible movable property, immovable property (other than unimproved land), or structural improvement to immovable property, owned by a person that —
(a) has a normal useful life exceeding one year;
(b) is likely to lose value as a result of normal wear and tear, or obsolescence; and (c) is used wholly or partly by the person in deriving income from business chargeable to tax, but shall not include any tangible movable property, immovable property, or structural improvement to immovable property in relation to which a deduction has been allowed under another section of this Ordinance for the entire cost of the property or improvement in the tax year in which the property is acquired or improvement made by the person; and structural improvement in relation to immovable property, includes any building, road, driveway, car park, railway line, pipeline, bridge, tunnel, airport runway, canal, dock, wharf, retaining wall, fence, power lines, water or sewerage pipes, drainage, landscaping or dam :
Provided that where a depreciable asset is jointly owned by a taxpayer and an Islamic financial institution licensed by the State Bank of Pakistan or Securities and Exchange Commission of Pakistan, as the case may be, pursuant to an arrangement of Musharika financing or diminishing Musharika financing, the depreciable asset shall be treated to be wholly owned by the taxpayer.
Amendment history (20)
- Full stop substituted by the Finance Act, 2025.
- Clause (s) inserted by the Finance Act, 2025.
- Full stop substituted by colon and thereafter the new proviso added by the Finance Act, 2025.
- The word “sub-sections” substituted by the Finance Act, 2005.
- The word, brackets and figure “and (4)” omitted by Finance Act, 2004.
- Full stop substituted by colon and thereafter the new proviso added through Finance Act, 2020
- Colon substituted by the Finance Act, 2025.
- Proviso omitted by the Finance Act, 2022. The omitted proviso
- The word “were” substituted by the Finance Act, 2010.
- The word “derived” substituted by the Finance Act, 2003.
- Sub-section (4) omitted by the Finance Act, 2004. The omitted sub-section (4) reads as follows
- Inserted by the Finance Act, 2016.
- The words “written down value” substituted by the Finance Act, 2004.
- The word “consideration” substituted by the Finance Act, 2004.
- Sub-section (12) substituted by the Finance Act, 2002. The substituted sub-section (12) read as
- The expression “[two][and half]” substituted by the Finance Act, 2022.
- Proviso omitted by the Finance Act, 2009. The omitted proviso
- Clause (c) substituted by the Finance Act, 2002. The substituted clause
- Full stop substituted by Finance Act, 2017.
- Added by the Finance Act, 2017.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 23 Initial allowance
(1) A person who places an eligible depreciable asset into service in Pakistan for the first time in a tax year shall be allowed a deduction (hereinafter referred to as an initial allowance) computed in accordance with sub- section (2), provided the asset is used by the person for the purposes of his business for the first time or the tax year in which commercial production is commenced, whichever is later .
(2) The amount of the initial allowance of a person shall be computed by applying the rate specified in Part II of the Third Schedule against the cost of the asset.
(3) The rules in section 76 shall apply in determining the cost of an eligible depreciable asset for the purposes of this section.
(4) A deduction allowed under this section to a leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution in respect of assets owned by the leasing company or the investment bank or the modaraba or the scheduled bank or the development finance institution and leased to another person shall be deducted only against the leased rental income derived in respect of such assets.
(5) In this section, eligible depreciable asset means a depreciable asset other than —
(a) any road transport vehicle unless the vehicle is plying for hire;
(b) any furniture, including fittings;
(c) any plant or machinery that has been used previously in Pakistan ;
(d) any plant or machinery in relation to which a deduction has been allowed under another section of this Ordinance for the entire cost of the asset in the tax year in which the asset is acquired ; or (e) immovable property or structural improvement to the immovable property.
(2) The amount of the initial allowance of a person shall be computed by applying the rate specified in Part II of the Third Schedule against the cost of the asset.
(3) The rules in section 76 shall apply in determining the cost of an eligible depreciable asset for the purposes of this section.
(4) A deduction allowed under this section to a leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution in respect of assets owned by the leasing company or the investment bank or the modaraba or the scheduled bank or the development finance institution and leased to another person shall be deducted only against the leased rental income derived in respect of such assets.
(5) In this section, eligible depreciable asset means a depreciable asset other than —
(a) any road transport vehicle unless the vehicle is plying for hire;
(b) any furniture, including fittings;
(c) any plant or machinery that has been used previously in Pakistan ;
(d) any plant or machinery in relation to which a deduction has been allowed under another section of this Ordinance for the entire cost of the asset in the tax year in which the asset is acquired ; or (e) immovable property or structural improvement to the immovable property.
Amendment history (11)
- Full stop substituted by Finance Act, 2017.
- Added by the Finance Act, 2017.
- Sub-section (4) substituted by the Finance Act, 2002. The substituted sub-section (4)
- The words and comma “that is plant and machinery,” omitted by the Finance Act, 2003.
- The words “that is acquired second hand” substituted by the Finance Act.2003
- The word “or” omitted by the Finance Act, 2022.
- Inserted by the Finance Act, 2008.
- Section 23A omitted by the Finance Act, 2021. Earlier this omission was made through Tax Laws
- Inserted by the Finance Act, 2009.
- In sub-section 4 of section 24 is substituted by the Finance Act, 2019, the substituted sub-section
- The expression “twenty-five years” substituted by the Finance Act, 2025.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 23A Omitted by the Finance Act, 2021Omitted
Omitted by the Finance Act, 2021.
s. 23B Accelerated depreciation to alternate energy projects
(1) Any plant, machinery and equipments installed for generation of alternate energy by an industrial undertaking set up anywhere in Pakistan and owned and managed by a company shall be allowed first year allowance in lieu of initial allowance under section 23, at the rate specified in Part II of the Third Schedule against the cost of the eligible depreciation assets put to use after first day of July, 2009.
(2) The provisions of section 23 except sub-sections
(1) and (2) thereof, shall mutatis mutandis apply.
(2) The provisions of section 23 except sub-sections
(1) and (2) thereof, shall mutatis mutandis apply.
Amendment history (3)
- Inserted by the Finance Act, 2009.
- In sub-section 4 of section 24 is substituted by the Finance Act, 2019, the substituted sub-section
- The expression “twenty-five years” substituted by the Finance Act, 2025.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 24 Intangibles
(1) A person shall be allowed an amortisation deduction in accordance with this section in a tax year for the cost of the person’s intangibles–
(a) that are wholly or partly used by the person in the tax year in deriving income from business chargeable to tax; and (b) that have a normal useful life exceeding one year.
(2) No deduction shall be allowed under this section where a deduction has been allowed under another section of this Ordinance for the entire cost of the intangible in the tax year in which the intangible is acquired.
(3) Subject to sub-section (7), the amortization deduction of a person for a tax year shall be computed according to the following formula, namely:— A B where — A is the cost of the intangible; and B is the normal useful life of the intangible in whole years.
(4) An intangible that does not have an ascertainable useful life shall be treated as if it had a normal useful life of fifteen years .
(5) Where an intangible is used in a tax year partly in deriving income from business chargeable to tax and partly for another use, the deduction allowed under this section for that year shall be restricted to the fair proportional part of the amount that would be allowed if the intangible were wholly used to derive income from business chargeable to tax.
(6) Where an intangible is not used for the whole of the tax year in deriving income from business chargeable to tax, the deduction allowed under this section shall be computed according to the following formula, namely: — A x B/C where — A is the amount of amortization computed under sub-section (3) or (5), as the case may be; B is the number of days in the tax year the intangible is used in deriving income from business chargeable to tax; and C is the number of days in the tax year.
(7) The total deductions allowed to a person under this section in the current tax year and all previous tax years in respect of an intangible shall not exceed the cost of the intangible.
(8) Where, in any tax year, a person disposes of an intangible, no amortisation deduction shall be allowed under this section for that year and —
(a) if the consideration received by the person exceeds the written down value of the intangible at the time of disposal, the excess shall be income of the person chargeable to tax in that year under the head Income from Business; or (b) if the consideration received is less than the written down value of the intangible at the time of disposal, the difference shall be allowed as a deduction in computing the person’s income chargeable under the head Income from Business in that year.
(9) For the purposes of sub-section (8) —
(a) the written down value of an intangible at the time of disposal shall be the cost of the intangible reduced by the total deductions allowed to the person under this section in respect of the intangible or, where the intangible is not wholly used to derive income chargeable to tax, the amount that would be allowed under this section if the intangible were wholly so used; and (b) the consideration received on disposal of an intangible shall be determined in accordance with section 77.
(10) For the purposes of this section, an intangible that is available for use on a day (including a non-working day) is treated as used on that day.
(11) In this section, — cost in relation to an intangible, means any expenditure incurred in acquiring or creating the intangible, including any expenditure incurred in improving or renewing the intangible; and 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, but shall not include self-generated goodwill or any adjustment arising on account of accounting treatment in the manner as may be prescribed
(a) that are wholly or partly used by the person in the tax year in deriving income from business chargeable to tax; and (b) that have a normal useful life exceeding one year.
(2) No deduction shall be allowed under this section where a deduction has been allowed under another section of this Ordinance for the entire cost of the intangible in the tax year in which the intangible is acquired.
(3) Subject to sub-section (7), the amortization deduction of a person for a tax year shall be computed according to the following formula, namely:— A B where — A is the cost of the intangible; and B is the normal useful life of the intangible in whole years.
(4) An intangible that does not have an ascertainable useful life shall be treated as if it had a normal useful life of fifteen years .
(5) Where an intangible is used in a tax year partly in deriving income from business chargeable to tax and partly for another use, the deduction allowed under this section for that year shall be restricted to the fair proportional part of the amount that would be allowed if the intangible were wholly used to derive income from business chargeable to tax.
(6) Where an intangible is not used for the whole of the tax year in deriving income from business chargeable to tax, the deduction allowed under this section shall be computed according to the following formula, namely: — A x B/C where — A is the amount of amortization computed under sub-section (3) or (5), as the case may be; B is the number of days in the tax year the intangible is used in deriving income from business chargeable to tax; and C is the number of days in the tax year.
(7) The total deductions allowed to a person under this section in the current tax year and all previous tax years in respect of an intangible shall not exceed the cost of the intangible.
(8) Where, in any tax year, a person disposes of an intangible, no amortisation deduction shall be allowed under this section for that year and —
(a) if the consideration received by the person exceeds the written down value of the intangible at the time of disposal, the excess shall be income of the person chargeable to tax in that year under the head Income from Business; or (b) if the consideration received is less than the written down value of the intangible at the time of disposal, the difference shall be allowed as a deduction in computing the person’s income chargeable under the head Income from Business in that year.
(9) For the purposes of sub-section (8) —
(a) the written down value of an intangible at the time of disposal shall be the cost of the intangible reduced by the total deductions allowed to the person under this section in respect of the intangible or, where the intangible is not wholly used to derive income chargeable to tax, the amount that would be allowed under this section if the intangible were wholly so used; and (b) the consideration received on disposal of an intangible shall be determined in accordance with section 77.
(10) For the purposes of this section, an intangible that is available for use on a day (including a non-working day) is treated as used on that day.
(11) In this section, — cost in relation to an intangible, means any expenditure incurred in acquiring or creating the intangible, including any expenditure incurred in improving or renewing the intangible; and 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, but shall not include self-generated goodwill or any adjustment arising on account of accounting treatment in the manner as may be prescribed
Amendment history (6)
- Inserted by the Finance Act, 2009.
- In sub-section 4 of section 24 is substituted by the Finance Act, 2019, the substituted sub-section
- The expression “twenty-five years” substituted by the Finance Act, 2025.
- The word “depreciation” substituted by the Finance Act, 2002
- Inserted by the Finance Act, 2003.
- The words Inserted by the Finance Act, 2019.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 25 Pre-commencement expenditure
(1) A person shall be allowed a deduction for any pre-commencement expenditure in accordance with this section.
(2) Pre-commencement expenditure shall be amortized on a straight-line basis at the rate specified in Part III of the Third Schedule.
(3) The total deductions allowed under this section in the current tax year and all previous tax years in respect of an amount of pre-commencement expenditure shall not exceed the amount of the expenditure.
(4) No deduction shall be allowed under this section where a deduction has been allowed under another section of this Ordinance for the entire amount of the pre-commencement expenditure in the tax year in which it is incurred.
(5) In this section, 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.
(2) Pre-commencement expenditure shall be amortized on a straight-line basis at the rate specified in Part III of the Third Schedule.
(3) The total deductions allowed under this section in the current tax year and all previous tax years in respect of an amount of pre-commencement expenditure shall not exceed the amount of the expenditure.
(4) No deduction shall be allowed under this section where a deduction has been allowed under another section of this Ordinance for the entire amount of the pre-commencement expenditure in the tax year in which it is incurred.
(5) In this section, 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.
Amendment history (2)
- Inserted by the Finance Act, 2003.
- The words Inserted by the Finance Act, 2019.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 26 Scientific research expenditure
(1) A person shall be allowed a deduction for scientific research expenditure incurred in Pakistan in a tax year wholly and exclusively for the purpose of deriving income from business chargeable to tax.
(2) In this section — scientific research means any activity undertaken in Pakistan in the fields of natural or applied science for the development of human knowledge; scientific research expenditure means any expenditure incurred by a person on scientific research undertaken in Pakistan for the purposes of developing the person’s business, including any contribution to a scientific research institution to undertake scientific research for the purposes of the person’s business, other than expenditure incurred –
(a) in the acquisition of any depreciable asset or intangible;
(b) in the acquisition of immovable property; or (c) for the purpose of ascertaining the existence, location, extent or quality of a natural deposit; and scientific research institution means any institution certified by the Board as conducting scientific research in Pakistan.
(2) In this section — scientific research means any activity undertaken in Pakistan in the fields of natural or applied science for the development of human knowledge; scientific research expenditure means any expenditure incurred by a person on scientific research undertaken in Pakistan for the purposes of developing the person’s business, including any contribution to a scientific research institution to undertake scientific research for the purposes of the person’s business, other than expenditure incurred –
(a) in the acquisition of any depreciable asset or intangible;
(b) in the acquisition of immovable property; or (c) for the purpose of ascertaining the existence, location, extent or quality of a natural deposit; and scientific research institution means any institution certified by the Board as conducting scientific research in Pakistan.
Amendment history (4)
- The word “activities” substituted by the Finance Act, 2002
- Inserted by the Finance Act, 2003.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- The words “local authority” substituted by the Finance Act, 2008.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 27 Employee training and facilities
Employee training and facilities.— A person shall be allowed a deduction for any expenditure (other than capital expenditure) incurred in a tax year in respect of—
(a) any educational institution or hospital in Pakistan established for the benefit of the person’s employees and their dependents;
(b) any institute in Pakistan established for the training of industrial workers recognized, aided, or run by the Federal Government or a Provincial Government or a Local Government ; or (c) the training of any person, being a citizen of Pakistan, in connection with a scheme approved by the Board for the purposes of this section.
(a) any educational institution or hospital in Pakistan established for the benefit of the person’s employees and their dependents;
(b) any institute in Pakistan established for the training of industrial workers recognized, aided, or run by the Federal Government or a Provincial Government or a Local Government ; or (c) the training of any person, being a citizen of Pakistan, in connection with a scheme approved by the Board for the purposes of this section.
Amendment history (7)
- The word “activities” substituted by the Finance Act, 2002
- Inserted by the Finance Act, 2003.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- The words “local authority” substituted by the Finance Act, 2008.
- substituted by the Finance Act, 2004.
- Sami colonsubstituted by colon and thereafter the new proviso added through Finance Act, 2020
- Proviso added through Finance Act, 2020 dated 30 June, 2020
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 28 Profit on debt, financial costs and lease payments
(1) Subject to this Ordinance, a deduction shall be allowed for a tax year for —
(a) any profit on debt incurred by a person in the tax year to the extent that the proceeds or benefit of the debt have been used by the person for the purposes of business ;
(b) any lease rental incurred by a person in the tax year to a scheduled bank, financial institution, an approved modaraba, an approved leasing company or a Special Purpose Vehicle on behalf of the Originator for an asset used by the person for the purposes of business :
Provided that for the purpose of determining the deduction on account of lease rentals the cost of a passenger transport vehicle not paying for hire to the extent of principal amount shall not exceed two and a half million rupees;
(c) any amount incurred by a person in the tax year to a modaraba or a participation term certificate holder for any funds borrowed and used by the person for the purposes of business ;
(d) any amount incurred by a scheduled bank in the tax year to a person maintaining a profit or loss sharing account or a deposit with the bank as a distribution of profits by the bank in respect of the account or deposit;
(e) any amount incurred by the House Building Finance Corporation (hereinafter referred to as the Corporation) constituted under the House Building Finance Corporation Act, 1952 (XVIII of 1952), in the tax year to the State Bank of Pakistan (hereinafter referred to as the Bank) as the share of the Bank in the profits derived by the Corporation on its investment in property made under a scheme of partnership in profit and loss, where the investment is provided by the Bank under the House Building Finance Corporation (Issue and Redemption of Certificates) Regulations, 1982;
(f) any amount incurred by the National Development Leasing Corporation Limited (hereinafter referred to as the Corporation) in the tax year to the State Bank of Pakistan (hereinafter referred to as the Bank) as the share of the Bank in the profits derived by the Corporation on its leasing operations financed out of a credit line provided by the Bank on a profit and loss sharing basis;
(g) any amount incurred by the Small and Medium Enterprises Bank (hereinafter referred to as the SME Bank) in the tax year to the State Bank of Pakistan (hereinafter referred to as the Bank) as the share of the Bank in the profits derived by the SME Bank on investments made in small business out of a credit line provided by the Bank on a profit and loss sharing basis;
(h) any amount incurred by a person in the tax year to a banking company under a scheme of musharika representing the bank’s share in the profits of the musharika;
(i) any amount incurred by a person in the tax year to a certificate holder under a musharika scheme approved by the Securities and Exchange Commission and Religious Board formed under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 (XXXI of 1980) representing the certificate holder’s share in the profits of the musharika; or (j) the financial cost of the securitization of receivables incurred by an Originator in the tax year from a Special Purpose Vehicle being the difference between the amount received by the Originator and the amount of receivables securitized from a Special Purpose Vehicle.
(2) Notwithstanding any other provision in this Ordinance, where any assets are transferred by an Originator, as a consequence of securitisation or issuance of sukuks , to a Special Purpose Vehicle, it shall be treated as a financing transaction irrespective of the method of accounting adopted by the Originator.
(3) In this section, — approved leasing company means a leasing company approved by the Board for the purposes of clause (b) of sub-section (1); and approved modaraba means a modaraba approved by the Board for the purposes of clause (b) of sub-section (1).
(a) any profit on debt incurred by a person in the tax year to the extent that the proceeds or benefit of the debt have been used by the person for the purposes of business ;
(b) any lease rental incurred by a person in the tax year to a scheduled bank, financial institution, an approved modaraba, an approved leasing company or a Special Purpose Vehicle on behalf of the Originator for an asset used by the person for the purposes of business :
Provided that for the purpose of determining the deduction on account of lease rentals the cost of a passenger transport vehicle not paying for hire to the extent of principal amount shall not exceed two and a half million rupees;
(c) any amount incurred by a person in the tax year to a modaraba or a participation term certificate holder for any funds borrowed and used by the person for the purposes of business ;
(d) any amount incurred by a scheduled bank in the tax year to a person maintaining a profit or loss sharing account or a deposit with the bank as a distribution of profits by the bank in respect of the account or deposit;
(e) any amount incurred by the House Building Finance Corporation (hereinafter referred to as the Corporation) constituted under the House Building Finance Corporation Act, 1952 (XVIII of 1952), in the tax year to the State Bank of Pakistan (hereinafter referred to as the Bank) as the share of the Bank in the profits derived by the Corporation on its investment in property made under a scheme of partnership in profit and loss, where the investment is provided by the Bank under the House Building Finance Corporation (Issue and Redemption of Certificates) Regulations, 1982;
(f) any amount incurred by the National Development Leasing Corporation Limited (hereinafter referred to as the Corporation) in the tax year to the State Bank of Pakistan (hereinafter referred to as the Bank) as the share of the Bank in the profits derived by the Corporation on its leasing operations financed out of a credit line provided by the Bank on a profit and loss sharing basis;
(g) any amount incurred by the Small and Medium Enterprises Bank (hereinafter referred to as the SME Bank) in the tax year to the State Bank of Pakistan (hereinafter referred to as the Bank) as the share of the Bank in the profits derived by the SME Bank on investments made in small business out of a credit line provided by the Bank on a profit and loss sharing basis;
(h) any amount incurred by a person in the tax year to a banking company under a scheme of musharika representing the bank’s share in the profits of the musharika;
(i) any amount incurred by a person in the tax year to a certificate holder under a musharika scheme approved by the Securities and Exchange Commission and Religious Board formed under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 (XXXI of 1980) representing the certificate holder’s share in the profits of the musharika; or (j) the financial cost of the securitization of receivables incurred by an Originator in the tax year from a Special Purpose Vehicle being the difference between the amount received by the Originator and the amount of receivables securitized from a Special Purpose Vehicle.
(2) Notwithstanding any other provision in this Ordinance, where any assets are transferred by an Originator, as a consequence of securitisation or issuance of sukuks , to a Special Purpose Vehicle, it shall be treated as a financing transaction irrespective of the method of accounting adopted by the Originator.
(3) In this section, — approved leasing company means a leasing company approved by the Board for the purposes of clause (b) of sub-section (1); and approved modaraba means a modaraba approved by the Board for the purposes of clause (b) of sub-section (1).
Amendment history (6)
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- substituted by the Finance Act, 2004.
- Sami colonsubstituted by colon and thereafter the new proviso added through Finance Act, 2020
- Proviso added through Finance Act, 2020 dated 30 June, 2020
- substituted by the Finance Act, 2009.
- The word “Corporation” substituted by the Finance Act, 2011.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 29 Bad debts
(1) A person shall be allowed a deduction for a bad debt in a tax year if the following conditions are satisfied, namely:—
(a) the amount of the debt was –
(i) previously included in the person’s income from business chargeable to tax; or (ii) in respect of money lent by a financial institution in deriving income from business chargeable to tax;
(b) the debt or part of the debt is written off in the accounts of the person in the tax year; and (c) there are reasonable grounds for believing that the debt is irrecoverable.
(2) The amount of the deduction allowed to a person under this section for a tax year shall not exceed the amount of the debt written off in the accounts of the person in the tax year.
(3) Where a person has been allowed a deduction in a tax year for a bad debt and in a subsequent tax year the person receives in cash or kind any amount in respect of that debt, the following rules shall apply, namely:–
(a) where the amount received exceeds the difference between the whole of such bad debt and the amount previously allowed as a deduction under this section, the excess shall be included in the person’s income under the head Income from Business for the tax year in which it was received; or (b) where the amount received is less than the difference between the whole of such bad debt and the amount allowed as a deduction under this section, the shortfall shall be allowed as a bad debt deduction in computing the person’s income under the head Income from Business for the tax year in which it was received.
(a) the amount of the debt was –
(i) previously included in the person’s income from business chargeable to tax; or (ii) in respect of money lent by a financial institution in deriving income from business chargeable to tax;
(b) the debt or part of the debt is written off in the accounts of the person in the tax year; and (c) there are reasonable grounds for believing that the debt is irrecoverable.
(2) The amount of the deduction allowed to a person under this section for a tax year shall not exceed the amount of the debt written off in the accounts of the person in the tax year.
(3) Where a person has been allowed a deduction in a tax year for a bad debt and in a subsequent tax year the person receives in cash or kind any amount in respect of that debt, the following rules shall apply, namely:–
(a) where the amount received exceeds the difference between the whole of such bad debt and the amount previously allowed as a deduction under this section, the excess shall be included in the person’s income under the head Income from Business for the tax year in which it was received; or (b) where the amount received is less than the difference between the whole of such bad debt and the amount allowed as a deduction under this section, the shortfall shall be allowed as a bad debt deduction in computing the person’s income under the head Income from Business for the tax year in which it was received.
Amendment history (7)
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Inserted by the Finance Act, 2003.
- The words “banking company or” omitted by the Finance Act, 2009.
- Inserted by the Finance Act, 2004.
- Added by the Finance Act, 2004.
- The words “a banking company or” omitted by the Finance Act, 2009.
- The words “Non-bank Financial Institutions” substituted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 29A Provision regarding consumer loans
(1) A non-banking finance company or the House Building Finance Corporation shall be allowed a deduction, not exceeding three per cent of the income for the tax year, arising out of consumer loans for creation of a reserve to off-set bad debts arising out of such loans.
(2) Where bad debt cannot be wholly set off against reserve, any amount of bad debt, exceeding the reserves shall be carried forward for adjustment against the reserve for the following years. Explanation.— In this section, consumer loan means a loan of money or its equivalent made by a non-banking finance company or the House Building Finance Corporation to a debtor (consumer) and the loan is entered primarily for personal, family or household purposes and includes debts created by the use of a lender credit card or similar arrangement as well as insurance premium financing.
(2) Where bad debt cannot be wholly set off against reserve, any amount of bad debt, exceeding the reserves shall be carried forward for adjustment against the reserve for the following years. Explanation.— In this section, consumer loan means a loan of money or its equivalent made by a non-banking finance company or the House Building Finance Corporation to a debtor (consumer) and the loan is entered primarily for personal, family or household purposes and includes debts created by the use of a lender credit card or similar arrangement as well as insurance premium financing.
Amendment history (6)
- Inserted by the Finance Act, 2003.
- The words “banking company or” omitted by the Finance Act, 2009.
- Inserted by the Finance Act, 2004.
- Added by the Finance Act, 2004.
- The words “a banking company or” omitted by the Finance Act, 2009.
- The words “Non-bank Financial Institutions” substituted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 30 Profit on non-performing debts of a banking company or development finance institution
(1) A banking company or development finance institution or Non-Banking Finance Company (NBFC) or modaraba shall be allowed a deduction for any profit accruing on a non-performing debt of the banking company or institution or Non-Banking Finance Company (NBFC) or modaraba where the profit is credited to a suspense account in accordance with the Prudential Regulations for Banks or Non-Banking Finance Company or modaraba Non-bank Financial Institutions, as the case may be, issued by the State Bank of Pakistan or the Securities and Exchange Commission of Pakistan .
(2) Any profit deducted under sub-section (1) that is subsequently recovered by the banking company or development finance institution or Non- Banking Finance Company (NBFC) or modaraba shall be included in the income of the company or institution or Non-Banking Finance Company (NBFC) or modaraba chargeable under the head Income from Business for the tax year in which it is recovered.
(2) Any profit deducted under sub-section (1) that is subsequently recovered by the banking company or development finance institution or Non- Banking Finance Company (NBFC) or modaraba shall be included in the income of the company or institution or Non-Banking Finance Company (NBFC) or modaraba chargeable under the head Income from Business for the tax year in which it is recovered.
Amendment history (6)
- Inserted by the Finance Act, 2003.
- The words “banking company or” omitted by the Finance Act, 2009.
- Inserted by the Finance Act, 2004.
- Added by the Finance Act, 2004.
- The words “a banking company or” omitted by the Finance Act, 2009.
- The words “Non-bank Financial Institutions” substituted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 31 Transfer to participatory reserve
(1) Subject to this section, a company shall be allowed a deduction for a tax year for any amount transferred by the company in the year to a participatory reserve created under section 66 of the Companies Act, 2017 (XIX of 2017) in accordance with an agreement relating to participatory redeemable capital entered into between the company and a banking company as defined in the Financial Institutions(Recovery of Finances) Ordinance,2001 (XLVI of 2001).
(2) The deduction allowed under subsection (1) for a tax year shall be limited to five per cent of the value of the company’s participatory redeemable capital.
(3) No deduction shall be allowed under subsection (1) if the amount of the tax exempted accumulation in the participatory reserve exceeds ten per cent of the amount of the participatory redeemable capital.
(4) Where any amount accumulated in the participatory reserve of a company has been allowed as a deduction under this section is applied by the company towards any purpose other than payment of share of profit on the participatory redeemable capital or towards any purpose not allowable for deduction or exemption under this Ordinance the amount so applied shall be included in the income from business of the company in the tax year in which it is so applied. Division IV Tax Accounting
(2) The deduction allowed under subsection (1) for a tax year shall be limited to five per cent of the value of the company’s participatory redeemable capital.
(3) No deduction shall be allowed under subsection (1) if the amount of the tax exempted accumulation in the participatory reserve exceeds ten per cent of the amount of the participatory redeemable capital.
(4) Where any amount accumulated in the participatory reserve of a company has been allowed as a deduction under this section is applied by the company towards any purpose other than payment of share of profit on the participatory redeemable capital or towards any purpose not allowable for deduction or exemption under this Ordinance the amount so applied shall be included in the income from business of the company in the tax year in which it is so applied. Division IV Tax Accounting
Amendment history (4)
- Inserted by the Finance Act, 2003.
- Sub-section (1) substituted by the Finance Act, 2003. The substituted sub-section (1)
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Substituted for the word “notice” by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 32 Method of accounting
(1) Subject to this Ordinance, a person’s income chargeable to tax shall be computed in accordance with the method of accounting regularly employed by such person.
(2) Subject to sub-section (3), a company shall account for income chargeable to tax under the head Income from Business on an accrual basis, while other persons may account for such income on a cash or accrual basis.
(3) The Board may prescribe that any class of persons shall account for income chargeable to tax under the head Income from Business on a cash or accrual basis.
(4) A person may apply, in writing, for a change in the person’s method of accounting and the Commissioner may, by order in writing, approve such an application but only if satisfied that the change is necessary to clearly reflect the person’s income chargeable to tax under the head Income from Business.
(5) If a person’s method of accounting has changed, the person shall make adjustments to items of income, deduction, or credit, or to any other items affected by the change so that no item is omitted and no item is taken into account more than once.
(2) Subject to sub-section (3), a company shall account for income chargeable to tax under the head Income from Business on an accrual basis, while other persons may account for such income on a cash or accrual basis.
(3) The Board may prescribe that any class of persons shall account for income chargeable to tax under the head Income from Business on a cash or accrual basis.
(4) A person may apply, in writing, for a change in the person’s method of accounting and the Commissioner may, by order in writing, approve such an application but only if satisfied that the change is necessary to clearly reflect the person’s income chargeable to tax under the head Income from Business.
(5) If a person’s method of accounting has changed, the person shall make adjustments to items of income, deduction, or credit, or to any other items affected by the change so that no item is omitted and no item is taken into account more than once.
Amendment history (3)
- Sub-section (1) substituted by the Finance Act, 2003. The substituted sub-section (1)
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Substituted for the word “notice” by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 33 Cash-basis accounting
Cash-basis accounting.—A person accounting for income chargeable to tax under the head Income from Business on a cash basis shall derive income when it is received and shall incur expenditure when it is paid.
Amendment history (3)
- Sub-section (1) substituted by the Finance Act, 2003. The substituted sub-section (1)
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Substituted for the word “notice” by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 34 Accrual-basis accounting
(1) A person accounting for income chargeable to tax under the head Income from Business on an accrual basis shall derive income when it is due to the person and shall incur expenditure when it is payable by the person.
(2) Subject to this Ordinance, an amount shall be due to a person when the person becomes entitled to receive it even if the time for discharge of the entitlement is postponed or the amount is payable by instalments.
(3) Subject to this Ordinance, an amount shall be payable by a person when all the events that determine liability have occurred and the amount of the liability can be determined with reasonable accuracy .
(5) Where a person has been allowed a deduction for any expenditure incurred in deriving income chargeable to tax under the head Income from Business and the person has not paid the liability or a part of the liability to which the deduction relates within three years of the end of the tax year in which the deduction was allowed, the unpaid amount of the liability shall be chargeable to tax under the head Income from Business in the first tax year following the end of the three years.
(5A) Where a person has been allowed a deduction in respect of a trading liability and such person has derived any benefit in respect of such trading liability, the value of such benefit shall be chargeable to tax under the head Income from Business for the tax year in which such benefit is received.
(6) Where an unpaid liability is chargeable to tax as a result of the application of sub-section (5) and the person subsequently pays the liability or a part of the liability, the person shall be allowed a deduction for the amount paid in the tax year in which the payment is made.
(2) Subject to this Ordinance, an amount shall be due to a person when the person becomes entitled to receive it even if the time for discharge of the entitlement is postponed or the amount is payable by instalments.
(3) Subject to this Ordinance, an amount shall be payable by a person when all the events that determine liability have occurred and the amount of the liability can be determined with reasonable accuracy .
(5) Where a person has been allowed a deduction for any expenditure incurred in deriving income chargeable to tax under the head Income from Business and the person has not paid the liability or a part of the liability to which the deduction relates within three years of the end of the tax year in which the deduction was allowed, the unpaid amount of the liability shall be chargeable to tax under the head Income from Business in the first tax year following the end of the three years.
(5A) Where a person has been allowed a deduction in respect of a trading liability and such person has derived any benefit in respect of such trading liability, the value of such benefit shall be chargeable to tax under the head Income from Business for the tax year in which such benefit is received.
(6) Where an unpaid liability is chargeable to tax as a result of the application of sub-section (5) and the person subsequently pays the liability or a part of the liability, the person shall be allowed a deduction for the amount paid in the tax year in which the payment is made.
Amendment history (7)
- Sub-section (1) substituted by the Finance Act, 2003. The substituted sub-section (1)
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Substituted for the word “notice” by the Finance Act, 2003.
- The comma and words “, but not before economic performance occurs” omitted by the Finance Act, 2004.
- Sub-section (4) omitted by the Finance Act, 2004. The omitted sub-section (4)
- Inserted by the Finance Act, 2003.
- Inserted by the Finance Act, 2005.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 35 Stock-in-trade
(1) For the purposes of determining a person’s income chargeable to tax under the head Income from Business for a tax year, the cost of stock-in-trade disposed of by the person in the year shall be computed in accordance with the following formula, namely:— (A + B) – C where — A is the opening value of the person’s stock-in-trade for the year; B is cost of stock-in-trade acquired by the person in the year; and C is the closing value of stock-in-trade for the year.
(2) The opening value of stock-in-trade of a person for a tax year shall be —
(a) the closing value of the person’s stock-in-trade at the end of the previous year; or (b) where the person commenced to carry on business in the year, the fair market value of any stock-in-trade acquired by the person prior to the commencement of the business.
(3) The fair market value of stock-in-trade referred to in clause (b) of sub- section (2) shall be determined at the time the stock-in-trade is ventured in the business.
(4) The closing value of a person’s stock-in-trade for a tax year shall be the lower of cost or net realisable value of the person’s stock-in-trade on hand at the end of the year.
(5) A person accounting for income chargeable to tax under the head Income from Business on a cash basis may compute the person’s cost of stock- in-trade on the prime-cost method or absorption-cost method, and a person accounting for such income on an accrual basis shall compute the person’s cost of stock-in-trade on the absorption-cost method.
(6) Where particular items of stock-in-trade are not readily identifiable, a person may account for that stock on the first-in-first-out method or the average- cost method but, once chosen, a stock valuation method may be changed only with the written permission of the Commissioner and in accordance with any conditions that the Commissioner may impose.
(7) In this section, — absorption-cost method means the generally accepted accounting principle under which the cost of an item of stock-in-trade is the sum of direct material costs, direct labour costs, and factory overhead costs; average-cost method means the generally accepted accounting principle under which the valuation of stock-in-trade is based on a weighted average cost of units on hand; direct labour costs means labour costs directly related to the manufacture or production of stock-in-trade; direct material costs means the cost of materials that become an integral part of the stock-in-trade manufactured or produced, or which are consumed in the manufacturing or production process; factory overhead costs means the total costs of manufacturing or producing stock-in-trade, other than direct labour and direct material costs; first-in-first-out method means the generally accepted accounting principle under which the valuation of stock-in-trade is based on the assumption that stock is sold in the order of its acquisition; prime-cost method means the generally accepted accounting principle under which the cost of stock-in-trade is the sum of direct material costs, direct labour costs, and variable factory overhead costs; stock-in-trade means anything produced, manufactured, purchased, or otherwise acquired for manufacture, sale or exchange, and any materials or supplies to be consumed in the production or manufacturing process, but does not include stocks or shares; and variable factory overhead costs means those factory overhead costs which vary directly with changes in volume of stock-in-trade manufactured or produced.
(2) The opening value of stock-in-trade of a person for a tax year shall be —
(a) the closing value of the person’s stock-in-trade at the end of the previous year; or (b) where the person commenced to carry on business in the year, the fair market value of any stock-in-trade acquired by the person prior to the commencement of the business.
(3) The fair market value of stock-in-trade referred to in clause (b) of sub- section (2) shall be determined at the time the stock-in-trade is ventured in the business.
(4) The closing value of a person’s stock-in-trade for a tax year shall be the lower of cost or net realisable value of the person’s stock-in-trade on hand at the end of the year.
(5) A person accounting for income chargeable to tax under the head Income from Business on a cash basis may compute the person’s cost of stock- in-trade on the prime-cost method or absorption-cost method, and a person accounting for such income on an accrual basis shall compute the person’s cost of stock-in-trade on the absorption-cost method.
(6) Where particular items of stock-in-trade are not readily identifiable, a person may account for that stock on the first-in-first-out method or the average- cost method but, once chosen, a stock valuation method may be changed only with the written permission of the Commissioner and in accordance with any conditions that the Commissioner may impose.
(7) In this section, — absorption-cost method means the generally accepted accounting principle under which the cost of an item of stock-in-trade is the sum of direct material costs, direct labour costs, and factory overhead costs; average-cost method means the generally accepted accounting principle under which the valuation of stock-in-trade is based on a weighted average cost of units on hand; direct labour costs means labour costs directly related to the manufacture or production of stock-in-trade; direct material costs means the cost of materials that become an integral part of the stock-in-trade manufactured or produced, or which are consumed in the manufacturing or production process; factory overhead costs means the total costs of manufacturing or producing stock-in-trade, other than direct labour and direct material costs; first-in-first-out method means the generally accepted accounting principle under which the valuation of stock-in-trade is based on the assumption that stock is sold in the order of its acquisition; prime-cost method means the generally accepted accounting principle under which the cost of stock-in-trade is the sum of direct material costs, direct labour costs, and variable factory overhead costs; stock-in-trade means anything produced, manufactured, purchased, or otherwise acquired for manufacture, sale or exchange, and any materials or supplies to be consumed in the production or manufacturing process, but does not include stocks or shares; and variable factory overhead costs means those factory overhead costs which vary directly with changes in volume of stock-in-trade manufactured or produced.
Amendment history (5)
- The comma and words “, but not before economic performance occurs” omitted by the Finance Act, 2004.
- Sub-section (4) omitted by the Finance Act, 2004. The omitted sub-section (4)
- Inserted by the Finance Act, 2003.
- Inserted by the Finance Act, 2005.
- Substituted for the words “fair market” by the Finance Act, 2002
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 36 Long-term contracts
(1) A person accounting for income chargeable to tax under the head Income from Business on an accrual basis shall compute such income arising for a tax year under a long-term contract on the basis of the percentage of completion method.
(2) The percentage of completion of a long-term contract in a tax year shall be determined by comparing the total costs allocated to the contract and incurred before the end of the year with the estimated total contract costs as determined at the commencement of the contract.
(3) In this section, — long-term contract means a contract for manufacture, installation, or construction, or, in relation to each, the performance of related services, which is not completed within the tax year in which work under the contract commenced, other than a contract estimated to be completed within six months of the date on which work under the contract commenced; and percentage of completion method means the generally accepted accounting principle under which revenue and expenses arising under a long-term contract are recognised by reference to the stage of completion of the contract, as modified by sub-section (2). PART V HEAD OF INCOME: CAPITAL GAINS
(2) The percentage of completion of a long-term contract in a tax year shall be determined by comparing the total costs allocated to the contract and incurred before the end of the year with the estimated total contract costs as determined at the commencement of the contract.
(3) In this section, — long-term contract means a contract for manufacture, installation, or construction, or, in relation to each, the performance of related services, which is not completed within the tax year in which work under the contract commenced, other than a contract estimated to be completed within six months of the date on which work under the contract commenced; and percentage of completion method means the generally accepted accounting principle under which revenue and expenses arising under a long-term contract are recognised by reference to the stage of completion of the contract, as modified by sub-section (2). PART V HEAD OF INCOME: CAPITAL GAINS
Amendment history (4)
- Inserted by the Finance Act, 2012.
- Sub-section (1A) substituted by the Finance Act, 2022. Substituted sub-section (1A) reads as
- The expression “sub-sections (3) and” omitted by the Finance Act, 2022.
- Sub-section (3) omitted by the Finance Act, 2022. Omitted sub-section (3) reads as follows
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 37 Capital gains
(1) Subject to this Ordinance, a gain arising on the disposal of a capital asset by a person in a tax year, other than a gain that is exempt from tax under this Ordinance, shall be chargeable to tax in that year under the head Capital Gains.
(1A) Notwithstanding anything contained in sub-section (1), gain arising on disposal of immovable property situated in Pakistan, to a person in a tax year shall be chargeable to tax under the head capital gains at the rates specified in Division VIII of Part I of the First Schedule.
(2) Subject to sub-section (4) , the gain arising on the disposal of a capital asset by a person shall be computed in accordance with the following formula, namely:– A – B where — A is the consideration received by the person on disposal of the asset; and B is the cost of the asset.
(4) For the purposes of determining component B of the formula in sub- section (2), no amount shall be included in the cost of a capital asset for any expenditure incurred by a person –
(a) that is or may be deducted under another provision of this
(b) that is referred to in section 21.
(5) In this section, capital asset means property of any kind held by a person, whether or not connected with a business, but does not include —
(a) any stock-in-trade , consumable stores or raw materials held for the purpose of business;
(b) any property with respect to which the person is entitled to a depreciation deduction under section 22 or amortisation deduction under section 24; or (d) any movable property excluding capital assets specified in sub-section (5) of section 38 held for personal use by the person or any member of the person’s family dependent on the person .
(6) The person acquiring a capital asset, being shares of a company, shall deduct advance adjustable tax from the gross amount paid or payable as consideration for the shares at the time of payment or at the time of registration of shares by the Securities and Exchange Commission of Pakistan or by the State Bank of Pakistan, whichever is earlier at the rate of ten percent of the fair market value of the shares which shall be paid to the Commissioner by way of credit to the Federal Government, within fifteen days of the payment.
(7) Notwithstanding the provisions of section 68, the value of shares, for the purpose of sub-section (6), shall be the fair market value, as prescribed for sub- section (4) of section 101A, without reduction of liabilities.
(8) The Commissioner may, on application made by the person acquiring of the shares, and after making such inquiry as the Commissioner thinks fit, allow to make the payment, without deduction of tax or deduction of tax at a reduced rate.
(9) The provisions of sections 161, 162, entry No. 15 of the Table in section 182, clause (c) of sub-section (1) of section 191 and section 205 shall mutatis mutandis apply to the tax deductible and payable under this section.
(10) The person disposing of the capital asset, being shares of a company, shall furnish to the Commissioner within thirty days of the transaction of disposal, the prescribed information or documents, in a statement as may be prescribed:
Provided that the Commissioner may, by notice in writing, require the said person, to furnish information, documents and statement within a period of less than thirty days as specified in the notice.
(1A) Notwithstanding anything contained in sub-section (1), gain arising on disposal of immovable property situated in Pakistan, to a person in a tax year shall be chargeable to tax under the head capital gains at the rates specified in Division VIII of Part I of the First Schedule.
(2) Subject to sub-section (4) , the gain arising on the disposal of a capital asset by a person shall be computed in accordance with the following formula, namely:– A – B where — A is the consideration received by the person on disposal of the asset; and B is the cost of the asset.
(4) For the purposes of determining component B of the formula in sub- section (2), no amount shall be included in the cost of a capital asset for any expenditure incurred by a person –
(a) that is or may be deducted under another provision of this
(b) that is referred to in section 21.
(5) In this section, capital asset means property of any kind held by a person, whether or not connected with a business, but does not include —
(a) any stock-in-trade , consumable stores or raw materials held for the purpose of business;
(b) any property with respect to which the person is entitled to a depreciation deduction under section 22 or amortisation deduction under section 24; or (d) any movable property excluding capital assets specified in sub-section (5) of section 38 held for personal use by the person or any member of the person’s family dependent on the person .
(6) The person acquiring a capital asset, being shares of a company, shall deduct advance adjustable tax from the gross amount paid or payable as consideration for the shares at the time of payment or at the time of registration of shares by the Securities and Exchange Commission of Pakistan or by the State Bank of Pakistan, whichever is earlier at the rate of ten percent of the fair market value of the shares which shall be paid to the Commissioner by way of credit to the Federal Government, within fifteen days of the payment.
(7) Notwithstanding the provisions of section 68, the value of shares, for the purpose of sub-section (6), shall be the fair market value, as prescribed for sub- section (4) of section 101A, without reduction of liabilities.
(8) The Commissioner may, on application made by the person acquiring of the shares, and after making such inquiry as the Commissioner thinks fit, allow to make the payment, without deduction of tax or deduction of tax at a reduced rate.
(9) The provisions of sections 161, 162, entry No. 15 of the Table in section 182, clause (c) of sub-section (1) of section 191 and section 205 shall mutatis mutandis apply to the tax deductible and payable under this section.
(10) The person disposing of the capital asset, being shares of a company, shall furnish to the Commissioner within thirty days of the transaction of disposal, the prescribed information or documents, in a statement as may be prescribed:
Provided that the Commissioner may, by notice in writing, require the said person, to furnish information, documents and statement within a period of less than thirty days as specified in the notice.
Amendment history (22)
- Inserted by the Finance Act, 2012.
- Sub-section (1A) substituted by the Finance Act, 2022. Substituted sub-section (1A) reads as
- The expression “sub-sections (3) and” omitted by the Finance Act, 2022.
- Sub-section (3) omitted by the Finance Act, 2022. Omitted sub-section (3) reads as follows
- The sub-section (3A) substituted through Finance Act, 2020 dated 30 June, 2020 the substituted
- Sub-sections (3A) omitted by the Finance Act, 2022. Omitted sub-section reads as follows
- 3Sub-section(3B) omitted through Finance Act, 2020 dated 30 June, 2020. The omitted clause read
- Inserted by the Finance Act, 2003.
- Sub-section (4A) omitted through Finance Act, 2022. Omitted sub-section
- The brackets and words “(a) any stock-in-trade;” substituted by the Finance Act, 2002
- The brackets and words “(not being stocks and shares)” omitted by the Finance Act, 2010.
- Clause (c) omitted by the Finance Act, 2012. Omitted clause (c)
- The comma and word “; or” substituted by the Finance Act, 2002
- Clause (e) omitted by the Finance Act, 2001. The omitted clause (e)
- Words inserted by the Finance Act, 2024.
- Expression inserted by the Finance Act, 2024.
- Added by the Finance Act, 2010.
- Omitted by Finance Act, 2015. The omitted words
- The First proviso omitted by Finance Act, 2014. The omitted proviso
- The word “further” omitted by Finance Act, 2014
- Second proviso substituted by the by the Finance Act, 2023. The substituted second proviso read as
- Inserted by the Finance Act,2012.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 37A Capital gain on disposal of securities
(1) The capital gain arising on or after the first day of July 2010, from disposal of securities , other than a gain that is exempt from tax under this Ordinance , shall be chargeable to tax at the rates specified in Division VII of Part I of the First Schedule:
Provided that this section shall not apply to a banking company and an insurance company :
Provided further that this section shall not apply to the disposal of shares –
(i) of a listed company made otherwise than through registered stock exchange and which are not settled through NCCPL;
(ii) through initial public offer during listing process except where the detail of such disposal is furnished to NCCPL for computation of capital gains and tax thereon under this section, and the provisions of section 37 shall apply on such disposal of shares of a listed company or disposal of shares through initial public offer, accordingly.
(1A) The gain arising on the disposal of a security by a person shall be computed in accordance with the following formula, namely: — A – B Where —
(i) ‘A’ is the consideration received by the person on disposal of the security; and (ii) ‘B’ is the cost of acquisition of the security.
(2) The holding period of a security, for the purposes of this section, shall be reckoned from the date of acquisition (whether before, on or after the thirtieth day of June, 2010) to the date of disposal of such security falling after the thirtieth day of June, 2010.
(3) For the purposes of this section security means share of a public company, voucher of Pakistan Telecommunication Corporation, Modaraba Certificate, an instrument of redeemable capital ,debt Securities , unit of exchange traded fund and derivative products.
(3A) For the purpose of this section, debt securities means -
(a) Corporate Debt Securities such as Term Finance Certificates (TFCs), Sukuk Certificates (Sharia Compliant Bonds), Registered Bonds, Commercial Papers, Participation Term Certificates (PTCs) and all kinds of debt instruments issued by any Pakistani or foreign company or corporation registered in Pakistan; and (b) Government Debt Securities such as Treasury Bills (T-bills), Federal Investment Bonds (FIBs), Pakistan Investment Bonds (PIBs), Foreign Currency Bonds, Government Papers, Municipal Bonds, Infrastructure Bonds and all kinds of debt instruments issued by Federal Government, Provincial Governments, Local Authorities and other statutory bodies. Explanation: For removal of doubt it is clarified that derivative products include future commodity contracts entered into by the members of Pakistan Mercantile Exchange whether or not settled by physical delivery.
(3B) For the purpose of this section, shares of a public company shall be considered as security if such company is a public company at the time of disposal of such shares.
(4) Gain under this section shall be treated as a separate block of income.
(5) Notwithstanding anything contained in this Ordinance, where a person sustains a loss on disposal of securities in a tax year, the loss shall be set off only against the gain of the person from any other securities chargeable to tax under this section and no loss shall be carried forward to the subsequent tax year :
Provided that so much of the loss sustained on disposal of securities in tax year 20l9 and onwards that has not been set off against the gain of the person from disposal of securities chargeable to tax under this section shall be carried forward to the following tax year and set off only against the gain of the person from disposal of securities chargeable to tax under this section, but no such loss shall be carried forward to more than three tax years immediately succeeding the tax year for which the loss was first computed.
(6) To carry out purpose of this section, the Board may prescribe rules.
Provided that this section shall not apply to a banking company and an insurance company :
Provided further that this section shall not apply to the disposal of shares –
(i) of a listed company made otherwise than through registered stock exchange and which are not settled through NCCPL;
(ii) through initial public offer during listing process except where the detail of such disposal is furnished to NCCPL for computation of capital gains and tax thereon under this section, and the provisions of section 37 shall apply on such disposal of shares of a listed company or disposal of shares through initial public offer, accordingly.
(1A) The gain arising on the disposal of a security by a person shall be computed in accordance with the following formula, namely: — A – B Where —
(i) ‘A’ is the consideration received by the person on disposal of the security; and (ii) ‘B’ is the cost of acquisition of the security.
(2) The holding period of a security, for the purposes of this section, shall be reckoned from the date of acquisition (whether before, on or after the thirtieth day of June, 2010) to the date of disposal of such security falling after the thirtieth day of June, 2010.
(3) For the purposes of this section security means share of a public company, voucher of Pakistan Telecommunication Corporation, Modaraba Certificate, an instrument of redeemable capital ,debt Securities , unit of exchange traded fund and derivative products.
(3A) For the purpose of this section, debt securities means -
(a) Corporate Debt Securities such as Term Finance Certificates (TFCs), Sukuk Certificates (Sharia Compliant Bonds), Registered Bonds, Commercial Papers, Participation Term Certificates (PTCs) and all kinds of debt instruments issued by any Pakistani or foreign company or corporation registered in Pakistan; and (b) Government Debt Securities such as Treasury Bills (T-bills), Federal Investment Bonds (FIBs), Pakistan Investment Bonds (PIBs), Foreign Currency Bonds, Government Papers, Municipal Bonds, Infrastructure Bonds and all kinds of debt instruments issued by Federal Government, Provincial Governments, Local Authorities and other statutory bodies. Explanation: For removal of doubt it is clarified that derivative products include future commodity contracts entered into by the members of Pakistan Mercantile Exchange whether or not settled by physical delivery.
(3B) For the purpose of this section, shares of a public company shall be considered as security if such company is a public company at the time of disposal of such shares.
(4) Gain under this section shall be treated as a separate block of income.
(5) Notwithstanding anything contained in this Ordinance, where a person sustains a loss on disposal of securities in a tax year, the loss shall be set off only against the gain of the person from any other securities chargeable to tax under this section and no loss shall be carried forward to the subsequent tax year :
Provided that so much of the loss sustained on disposal of securities in tax year 20l9 and onwards that has not been set off against the gain of the person from disposal of securities chargeable to tax under this section shall be carried forward to the following tax year and set off only against the gain of the person from disposal of securities chargeable to tax under this section, but no such loss shall be carried forward to more than three tax years immediately succeeding the tax year for which the loss was first computed.
(6) To carry out purpose of this section, the Board may prescribe rules.
Amendment history (13)
- Added by the Finance Act, 2010.
- Omitted by Finance Act, 2015. The omitted words
- Inserted by the Finance Act, 2012.
- The First proviso omitted by Finance Act, 2014. The omitted proviso
- The word “further” omitted by Finance Act, 2014
- Second proviso substituted by the by the Finance Act, 2023. The substituted second proviso read as
- Inserted by the Finance Act,2012.
- Inserted by the Finance Act, 2014.
- Inserted by the Finance Act, 2021.
- The sub-section (3A) inserted by the Finance Act, 2014.
- Inserted by the Finance Act, 2016.
- New sub-section (3B) inserted through Finance Act, 2020 dated 30 June, 2020
- Added by the Finance Act, 2021.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 38 Deduction of losses in computing the amount chargeable under the head “Capital Gains”
(1) Subject to this Ordinance, in computing the amount of a person chargeable to tax under the head Capital Gains for a tax year, a deduction shall be allowed for any loss on the disposal of a capital asset by the person in the year.
(2) No loss shall be deducted under this section on the disposal of a capital asset where a gain on the disposal of such asset would not be chargeable to tax.
(3) The loss arising on the disposal of a capital asset by a person shall be computed in accordance with the following formula, namely: — A – B where — A is the cost of the asset; and B is the consideration received by the person on disposal of the asset.
(4) The provisions of sub-section (4) of section 37 shall apply in determining component A of the formula in sub-section (3).
(5) No loss shall be recognized under this Ordinance on the disposal of the following capital assets, namely:—
(a) A painting, sculpture, drawing or other work of art;
(b) jewellery;
(c) a rare manuscript, folio or book;
(d) a postage stamp or first day cover;
(e) a coin or medallion; or (f) an antique. PART VI HEAD OF INCOME: INCOME FROM OTHER SOURCES
(2) No loss shall be deducted under this section on the disposal of a capital asset where a gain on the disposal of such asset would not be chargeable to tax.
(3) The loss arising on the disposal of a capital asset by a person shall be computed in accordance with the following formula, namely: — A – B where — A is the cost of the asset; and B is the consideration received by the person on disposal of the asset.
(4) The provisions of sub-section (4) of section 37 shall apply in determining component A of the formula in sub-section (3).
(5) No loss shall be recognized under this Ordinance on the disposal of the following capital assets, namely:—
(a) A painting, sculpture, drawing or other work of art;
(b) jewellery;
(c) a rare manuscript, folio or book;
(d) a postage stamp or first day cover;
(e) a coin or medallion; or (f) an antique. PART VI HEAD OF INCOME: INCOME FROM OTHER SOURCES
Amendment history (6)
- Added by the Finance Act, 2021.
- Inserted by the Finance Act, 2002
- The word “Dividends” substituted by the Finance Act, 2002
- The word “royalties” substituted by the Finance Act, 2002
- Inserted by the Finance Act, 2012.
- Inserted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 39 Income from other sources
(1) Income of every kind received by a person in a tax year, if it is not included in any other head, other than income exempt from tax under this Ordinance, shall be chargeable to tax in that year under the head Income from Other Sources, including the following namely: —
(a) Dividend;
(b) royalty;
(c) profit on debt;
(cc) additional payment on delayed refund under any tax law;
(d) ground rent;
(e) rent from the sub-lease of land or a building;
(f) income from the lease of any building together with plant or machinery;
(fa) income from provision of amenities, utilities or any other service connected with renting of building;
(g) any annuity or pension;
(h) any prize bond, or winnings from a raffle, lottery , prize on winning a quiz, prize offered by companies for promotion of sale or cross-word puzzle;
(i) any other amount received as consideration for the provision, use or exploitation of property, including from the grant of a right to explore for, or exploit, natural resources;
(j) the fair market value of any benefit, whether convertible to money or not, received in connection with the provision, use or exploitation of property;
(k) any amount received by a person as consideration for vacating the possession of a building or part thereof, reduced by any amount paid by the person to acquire possession of such building or part thereof;
(l) any amount received by a person from Approved Income Payment Plan or Approved Annuity Plan under Voluntary Pension System Rules, 2005 ; (Ia) subject to sub-section (3), any amount or fair market value of any property received without consideration or received as gift, other than gift received from relative as defined in sub-section (5) of section 85 ; and (lb) income arising to the shareholder of a company, from the issuance of bonus shares;
(2) Where a person receives an amount referred to in clause (k) of sub- section (1), the amount shall be chargeable to tax under the head Income from Other Sources in the tax year in which it was received and the following nine tax years in equal proportion.
(3) Subject to sub-section (4), any amount received as a loan, advance, deposit for issuance of shares or gift by a person in a tax year from another person (not being a banking company or financial institution) otherwise than by a crossed cheque drawn on a bank or through a banking channel or through digital means as defined in section 2 from a person holding a National Tax Number shall be treated as income chargeable to tax under the head Income from Other Sources for the tax year in which it was received.
(4) Sub-section (3) shall not apply to an advance payment for the sale of goods or supply of services.
(4A) Where —
(a) any profit on debt derived from investment in National Savings Deposit Certificates including Defence Savings Certificate paid to a person in arrears or the amount received includes profit chargeable to tax in the tax year or years preceding the tax year in which it is received; and (b) as a result the person is chargeable at higher rate of tax than would have been applicable if the profit had been paid to the person in the tax year to which it relates, the person may, by notice in writing to the Commissioner, elect for the profit to be taxed at the rate of tax that would have been applicable if the profit had been paid to the person in the tax year to which it relates.
(4B) An election under sub-section (4A) shall be made by the due date for furnishing the person’s return of income for the tax year in which the amount was received or by such later date as the Commissioner may allow by an order in writing.
(5) This section shall not apply to any income received by a person in a tax year that is chargeable to tax under any other head of income or subject to tax under section 5, 5AA, 6, 7 or 7B .
(a) Dividend;
(b) royalty;
(c) profit on debt;
(cc) additional payment on delayed refund under any tax law;
(d) ground rent;
(e) rent from the sub-lease of land or a building;
(f) income from the lease of any building together with plant or machinery;
(fa) income from provision of amenities, utilities or any other service connected with renting of building;
(g) any annuity or pension;
(h) any prize bond, or winnings from a raffle, lottery , prize on winning a quiz, prize offered by companies for promotion of sale or cross-word puzzle;
(i) any other amount received as consideration for the provision, use or exploitation of property, including from the grant of a right to explore for, or exploit, natural resources;
(j) the fair market value of any benefit, whether convertible to money or not, received in connection with the provision, use or exploitation of property;
(k) any amount received by a person as consideration for vacating the possession of a building or part thereof, reduced by any amount paid by the person to acquire possession of such building or part thereof;
(l) any amount received by a person from Approved Income Payment Plan or Approved Annuity Plan under Voluntary Pension System Rules, 2005 ; (Ia) subject to sub-section (3), any amount or fair market value of any property received without consideration or received as gift, other than gift received from relative as defined in sub-section (5) of section 85 ; and (lb) income arising to the shareholder of a company, from the issuance of bonus shares;
(2) Where a person receives an amount referred to in clause (k) of sub- section (1), the amount shall be chargeable to tax under the head Income from Other Sources in the tax year in which it was received and the following nine tax years in equal proportion.
(3) Subject to sub-section (4), any amount received as a loan, advance, deposit for issuance of shares or gift by a person in a tax year from another person (not being a banking company or financial institution) otherwise than by a crossed cheque drawn on a bank or through a banking channel or through digital means as defined in section 2 from a person holding a National Tax Number shall be treated as income chargeable to tax under the head Income from Other Sources for the tax year in which it was received.
(4) Sub-section (3) shall not apply to an advance payment for the sale of goods or supply of services.
(4A) Where —
(a) any profit on debt derived from investment in National Savings Deposit Certificates including Defence Savings Certificate paid to a person in arrears or the amount received includes profit chargeable to tax in the tax year or years preceding the tax year in which it is received; and (b) as a result the person is chargeable at higher rate of tax than would have been applicable if the profit had been paid to the person in the tax year to which it relates, the person may, by notice in writing to the Commissioner, elect for the profit to be taxed at the rate of tax that would have been applicable if the profit had been paid to the person in the tax year to which it relates.
(4B) An election under sub-section (4A) shall be made by the due date for furnishing the person’s return of income for the tax year in which the amount was received or by such later date as the Commissioner may allow by an order in writing.
(5) This section shall not apply to any income received by a person in a tax year that is chargeable to tax under any other head of income or subject to tax under section 5, 5AA, 6, 7 or 7B .
Amendment history (20)
- Inserted by the Finance Act, 2002
- The word “Dividends” substituted by the Finance Act, 2002
- The word “royalties” substituted by the Finance Act, 2002
- Inserted by the Finance Act, 2012.
- Inserted by the Finance Act, 2003.
- The word “and” omitted by the Finance Act, 2014.
- The word “and” omitted by the Finance Act, 2019.
- Added by the Finance Act, 2005.
- The “full stop” substituted by word “;and” by the Finance Act, 2019.
- The word “and” omitted by the Finance Act, 2023.
- New clause (Ia) inserted by the Finance Act, 2019.
- Full stop substituted with a semi-colon and the word “and” added by the Finance Act, 2023.
- Clause added by the Finance Act, 2023.
- Clause (m) added by the Finance Act, 2014.
- Clause (m) omitted by the Finance Act, 2018,the omitted clause(m) reads as follows:-
- The words “an income year” substituted by the Finance Act, 2002
- The expression inserted by the Finance Act, 2025.
- The word “Card” omitted by the Finance Act, 2006.
- The expression “5, 6 or 7” substituted by the Finance Act, 2021.
- Sub-section (6) omitted by the Finance Act, 2002. The omitted sub-section (6)
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 40 Deductions in computing income chargeable under the head “Income from Other Sources”
(1) Subject to this Ordinance, in computing the income of a person chargeable to tax under the head Income from Other Sources for a tax year, a deduction shall be allowed for any expenditure paid by the person in the year to the extent to which the expenditure is paid in deriving income chargeable to tax under that head, other than expenditure of a capital nature.
(2) A person receiving any profit on debt chargeable to tax under the head Income from Other Sources shall be allowed a deduction for any Zakat paid by the person under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), at the time the profit is paid to the person.
(3) A person receiving income referred to in clause (f) of sub-section (1) of section 39 chargeable to tax under the head Income from Other Sources shall be allowed —
(a) a deduction for the depreciation of any plant, machinery or building used to derive that income in accordance with section 22; and (b) an initial allowance for any plant or machinery used to derive that income in accordance with section 23.
(4) No deduction shall be allowed to a person under this section to the extent that the expenditure is deductible in computing the income of the person under another head of income.
(5) The provisions of section 21 shall apply in determining the deductions allowed to a person under this section in the same manner as they apply in determining the deductions allowed in computing the income of the person chargeable to tax under the head "Income from Business".
(6) Expenditure is of a capital nature if it has a normal useful life of more than one year. PART VII EXEMPTIONS AND TAX CONCESSIONS
(2) A person receiving any profit on debt chargeable to tax under the head Income from Other Sources shall be allowed a deduction for any Zakat paid by the person under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), at the time the profit is paid to the person.
(3) A person receiving income referred to in clause (f) of sub-section (1) of section 39 chargeable to tax under the head Income from Other Sources shall be allowed —
(a) a deduction for the depreciation of any plant, machinery or building used to derive that income in accordance with section 22; and (b) an initial allowance for any plant or machinery used to derive that income in accordance with section 23.
(4) No deduction shall be allowed to a person under this section to the extent that the expenditure is deductible in computing the income of the person under another head of income.
(5) The provisions of section 21 shall apply in determining the deductions allowed to a person under this section in the same manner as they apply in determining the deductions allowed in computing the income of the person chargeable to tax under the head "Income from Business".
(6) Expenditure is of a capital nature if it has a normal useful life of more than one year. PART VII EXEMPTIONS AND TAX CONCESSIONS
Amendment history (8)
- The expression inserted by the Finance Act, 2025.
- The word “Card” omitted by the Finance Act, 2006.
- Inserted by the Finance Act, 2003.
- The expression “5, 6 or 7” substituted by the Finance Act, 2021.
- Sub-section (6) omitted by the Finance Act, 2002. The omitted sub-section (6)
- The words “on the profit” omitted by the Finance Act, 2003.
- The brackets, letter and word “(e) or” omitted by the Finance Act, 2003.
- Added by the Finance Act, 2002.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 41 Agricultural income
(1) Agricultural income derived by a person shall be exempt from tax under this Ordinance.
(2) In this section, agricultural income means, —
(a) any rent or revenue derived by a person from land which is situated in Pakistan and is used for agricultural purposes;
(b) any income derived by a person from land situated in Pakistan from —
(i) agriculture;
(ii) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by such person to render the produce raised or received by the person fit to be taken to market; or (iii) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by such person, in respect of which no process has been performed other than a process of the nature described in sub-clause (ii); or (c) any income derived by a person from —
(i) any building owned and occupied by the receiver of the rent or revenue of any land described in clause (a) or (b);
(ii) any building occupied by the cultivator, or the receiver of rent-in-kind, of any land in respect of which, or the produce of which, any operation specified in sub-clauses
(ii) or (iii) of clause (b) is carried on, but only where the building is on, or in the immediate vicinity of the land and is a building which the receiver of the rent or revenue, or the cultivator, or the receiver of the rent-in-kind by reason of the person’s connection with the land, requires as a dwelling-house, a store-house, or other out-building.
(2) In this section, agricultural income means, —
(a) any rent or revenue derived by a person from land which is situated in Pakistan and is used for agricultural purposes;
(b) any income derived by a person from land situated in Pakistan from —
(i) agriculture;
(ii) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by such person to render the produce raised or received by the person fit to be taken to market; or (iii) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by such person, in respect of which no process has been performed other than a process of the nature described in sub-clause (ii); or (c) any income derived by a person from —
(i) any building owned and occupied by the receiver of the rent or revenue of any land described in clause (a) or (b);
(ii) any building occupied by the cultivator, or the receiver of rent-in-kind, of any land in respect of which, or the produce of which, any operation specified in sub-clauses
(ii) or (iii) of clause (b) is carried on, but only where the building is on, or in the immediate vicinity of the land and is a building which the receiver of the rent or revenue, or the cultivator, or the receiver of the rent-in-kind by reason of the person’s connection with the land, requires as a dwelling-house, a store-house, or other out-building.
s. 42 Diplomatic and United Nations exemptions
(1) The income of an individual entitled to privileges under the Diplomatic and Consular Privileges Act, 1972 (IX of 1972) shall be exempt from tax under this Ordinance to the extent provided for in that Act.
(2) The income of an individual entitled to privileges under the United Nations (Privileges and Immunities) Act, 1948 (XX of 1948), shall be exempt from tax under this Ordinance to the extent provided for in that Act.
(3) Any pension received by a person, being a citizen of Pakistan, by virtue of the person’s former employment in the United Nations or its specialised agencies (including the International Court of Justice) provided the person’s salary from such employment was exempt under this Ordinance.
(2) The income of an individual entitled to privileges under the United Nations (Privileges and Immunities) Act, 1948 (XX of 1948), shall be exempt from tax under this Ordinance to the extent provided for in that Act.
(3) Any pension received by a person, being a citizen of Pakistan, by virtue of the person’s former employment in the United Nations or its specialised agencies (including the International Court of Justice) provided the person’s salary from such employment was exempt under this Ordinance.
Amendment history (3)
- Added by the Finance Act, 2002
- The comma and word “,and” substituted by the Finance Act, 2002
- Clause (d) omitted by the Finance Act, 2002. The omitted clause (d) read as under
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 43 Foreign government officials
Foreign government officials.— Any salary received by an employee of a foreign government as remuneration for services rendered to such government shall be exempt from tax under this Ordinance provided —
(a) the employee is a citizen of the foreign country and not a citizen of Pakistan;
(b) the services performed by the employee are of a character similar to those performed by employees of the Federal Government in foreign countries; and (c) the foreign government grants a similar exemption to employees of the Federal Government performing similar services in such foreign country .
(a) the employee is a citizen of the foreign country and not a citizen of Pakistan;
(b) the services performed by the employee are of a character similar to those performed by employees of the Federal Government in foreign countries; and (c) the foreign government grants a similar exemption to employees of the Federal Government performing similar services in such foreign country .
Amendment history (3)
- Added by the Finance Act, 2002
- The comma and word “,and” substituted by the Finance Act, 2002
- Clause (d) omitted by the Finance Act, 2002. The omitted clause (d) read as under
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 44 Exemptions under international agreements
(1) Any Pakistan-source income which Pakistan is not permitted to tax under a tax treaty shall be exempt from tax under this Ordinance.
(2) Any salary received by an individual (not being a citizen of Pakistan) shall be exempt from tax under this Ordinance to the extent provided for in an Aid Agreement between the Federal Government and a foreign government or public international organization, where –
(a) the individual is either not a resident individual or a resident individual solely by reason of the performance of services under the Aid Agreement;
(b) if the Aid Agreement is with a foreign country, the individual is a citizen of that country; and (c) the salary is paid by the foreign government or public international organisation out of funds or grants released as aid to Pakistan in pursuance of such Agreement.
(3) Any income received by any person engaged as a contractor, consultant, or expert on a project in Pakistan shall be exempt from tax under this Ordinance to the extent provided for in a bilateral or multilateral agreement between the Federal Government and a foreign government or public international organisation, where —
(a) the project is financed out of grant funds in accordance with the agreement;
(b) the person is either a non-resident person or a resident person solely by reason of the performance of services under the agreement; and (c) the income is paid out of the funds of the grant in pursuance of the agreement.
(4) Federal Government may, in respect of an official development assistance financed loans and grants-in-aid, subject to such conditions and limitations as it may specify, exempt income of any person on a case to case basis through a notification in the official Gazette.
(2) Any salary received by an individual (not being a citizen of Pakistan) shall be exempt from tax under this Ordinance to the extent provided for in an Aid Agreement between the Federal Government and a foreign government or public international organization, where –
(a) the individual is either not a resident individual or a resident individual solely by reason of the performance of services under the Aid Agreement;
(b) if the Aid Agreement is with a foreign country, the individual is a citizen of that country; and (c) the salary is paid by the foreign government or public international organisation out of funds or grants released as aid to Pakistan in pursuance of such Agreement.
(3) Any income received by any person engaged as a contractor, consultant, or expert on a project in Pakistan shall be exempt from tax under this Ordinance to the extent provided for in a bilateral or multilateral agreement between the Federal Government and a foreign government or public international organisation, where —
(a) the project is financed out of grant funds in accordance with the agreement;
(b) the person is either a non-resident person or a resident person solely by reason of the performance of services under the agreement; and (c) the income is paid out of the funds of the grant in pursuance of the agreement.
(4) Federal Government may, in respect of an official development assistance financed loans and grants-in-aid, subject to such conditions and limitations as it may specify, exempt income of any person on a case to case basis through a notification in the official Gazette.
Amendment history (8)
- Added by the Finance Act, 2002
- The comma and word “,and” substituted by the Finance Act, 2002
- Clause (d) omitted by the Finance Act, 2002. The omitted clause (d) read as under
- The words “a non-resident” substituted by the Finance Act, 2003.
- The expression “a person (not being a citizen of Pakistan)” substituted by the Finance Act, 2022.
- The expression “technical assistance” omitted by the Finance Act, 2022.
- Sub-section (4) inserted by the Finance Act, 2022.
- Section 44A inserted by the Finance Act, 2023.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 44A Exemption under Foreign Investment (Promotion and Protection) Act, 2022 (XXXV of 2022)
(1) Taxes on income (including capital gains), advance tax, withholding taxes, minimum and final taxes under this Ordinance shall, for the period and to the extent provided in the Second and Third Schedules to the Foreign Investment (Promotion and Protection) Act, 2022 (XXXV of 2022) in respect of qualified investment as specified at Sr. No.1 of the First Schedule to the said Act or investors, be exempt or subject to tax at the rate and in the manner specified under the said Act.
(2) All investors and shareholders of the qualified investment, their associates and companies specified in the Second and Third Schedules to the said Act including third party lenders on account of any loan shall also be exempt from taxes and other provisions of this Ordinance or subject to tax at the rate and in the manner specified under the said Act for the period and to the extent provided in the Second and Third Schedules to the said Act.
(3) Provisions of this Ordinance relating to Anti-Avoidance, for the period and to the extent specified in the said Act including sections 106, 106A, 108, 109 and 109A, shall not apply to the persons and amounts mentioned in sub-sections
(1) and (2).
(4) Rates of depreciation, initial allowance and pre-commencement expenditure under sections 22, 23 and 25 as on the 20th day of March, 2022 shall continue to be applicable for thirty years as provided in the Third Schedule to the said Act in respect of persons mentioned in sub-sections
(1) and (2).
(5) For the purpose of this section, the terms defined under the Second and Third Schedules to the said Act shall apply mutatis mutandis to this Ordinance.
(2) All investors and shareholders of the qualified investment, their associates and companies specified in the Second and Third Schedules to the said Act including third party lenders on account of any loan shall also be exempt from taxes and other provisions of this Ordinance or subject to tax at the rate and in the manner specified under the said Act for the period and to the extent provided in the Second and Third Schedules to the said Act.
(3) Provisions of this Ordinance relating to Anti-Avoidance, for the period and to the extent specified in the said Act including sections 106, 106A, 108, 109 and 109A, shall not apply to the persons and amounts mentioned in sub-sections
(1) and (2).
(4) Rates of depreciation, initial allowance and pre-commencement expenditure under sections 22, 23 and 25 as on the 20th day of March, 2022 shall continue to be applicable for thirty years as provided in the Third Schedule to the said Act in respect of persons mentioned in sub-sections
(1) and (2).
(5) For the purpose of this section, the terms defined under the Second and Third Schedules to the said Act shall apply mutatis mutandis to this Ordinance.
Amendment history (6)
- The words “a non-resident” substituted by the Finance Act, 2003.
- The expression “a person (not being a citizen of Pakistan)” substituted by the Finance Act, 2022.
- The expression “technical assistance” omitted by the Finance Act, 2022.
- Sub-section (4) inserted by the Finance Act, 2022.
- Section 44A inserted by the Finance Act, 2023.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 45 President’s honours
(1) Any allowance attached to any Honour, Award, or Medal awarded to a person by the President of Pakistan shall be exempt from tax under this Ordinance.
(2) Any monetary award granted to a person by the President of Pakistan shall be exempt from tax under this Ordinance.
(2) Any monetary award granted to a person by the President of Pakistan shall be exempt from tax under this Ordinance.
Amendment history (1)
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 46 Profit on debt
Profit on debt.— Any profit received by a non-resident person on a security issued by a resident person shall be exempt from tax under this Ordinance where—
(a) the persons are not associates;
(b) the security was widely issued by the resident person outside Pakistan for the purposes of raising a loan outside Pakistan for use in a business carried on by the person in Pakistan;
(c) the profit was paid outside Pakistan; and (d) the security is approved by the Board for the purposes of this section.
(a) the persons are not associates;
(b) the security was widely issued by the resident person outside Pakistan for the purposes of raising a loan outside Pakistan for use in a business carried on by the person in Pakistan;
(c) the profit was paid outside Pakistan; and (d) the security is approved by the Board for the purposes of this section.
Amendment history (1)
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 47 Scholarships
Scholarships.— Any scholarship granted to a person to meet the cost of the person’s education shall be exempt from tax under this Ordinance, other than where the scholarship is paid directly or indirectly by an associate.
Amendment history (5)
- The word “and” substituted by the Finance Act, 2009.
- The words “local authority” substituted by the Finance Act, 2008.
- Added by the Finance Act, 2006.
- Added by the Finance Act, 2007.
- Full stop substituted by a colon by the Finance Act, 2014.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 48 Support payments under an agreement to live apart
Support payments under an agreement to live apart.— Any income received by a spouse as support payment under an agreement to live apart shall be exempt from tax under this Ordinance.
Amendment history (5)
- The word “and” substituted by the Finance Act, 2009.
- The words “local authority” substituted by the Finance Act, 2008.
- Added by the Finance Act, 2006.
- Added by the Finance Act, 2007.
- Full stop substituted by a colon by the Finance Act, 2014.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 49 Federal Governments, Provincial Government and Local Government
(1) The income of the Federal Government shall be exempt from tax under this Ordinance.
(2) The income of a Provincial Government or a Local Government in Pakistan shall be exempt from tax under this Ordinance, other than income chargeable under the head Income from Business derived by a Provincial Government or Local Government from a business carried on outside its jurisdictional area.
(3) Subject to sub-section (2), any payment received by the Federal Government, a Provincial Government or a Local Government shall not be liable to any collection or deduction of advance tax.
(4) Exemption under this section shall not be available in the case of corporation, company, a regulatory authority, a development authority, other body or institution established by or under a Federal law or a Provincial law or an existing law or a corporation, company, a regulatory authority, a development authority or other body or institution set up, owned and controlled, either directly or indirectly, by the Federal Government or a Provincial Government, regardless of the ultimate destination of such income as laid down in Article 165A of the Constitution of the Islamic Republic of Pakistan :
Provided that the income from sale of spectrum licenses and renewal thereof by Pakistan Telecommunication Authority on behalf of the Federal Government after the first day of March 2014 shall be treated as income of the Federal Government and not of the Pakistan Telecommunication Authority.
(2) The income of a Provincial Government or a Local Government in Pakistan shall be exempt from tax under this Ordinance, other than income chargeable under the head Income from Business derived by a Provincial Government or Local Government from a business carried on outside its jurisdictional area.
(3) Subject to sub-section (2), any payment received by the Federal Government, a Provincial Government or a Local Government shall not be liable to any collection or deduction of advance tax.
(4) Exemption under this section shall not be available in the case of corporation, company, a regulatory authority, a development authority, other body or institution established by or under a Federal law or a Provincial law or an existing law or a corporation, company, a regulatory authority, a development authority or other body or institution set up, owned and controlled, either directly or indirectly, by the Federal Government or a Provincial Government, regardless of the ultimate destination of such income as laid down in Article 165A of the Constitution of the Islamic Republic of Pakistan :
Provided that the income from sale of spectrum licenses and renewal thereof by Pakistan Telecommunication Authority on behalf of the Federal Government after the first day of March 2014 shall be treated as income of the Federal Government and not of the Pakistan Telecommunication Authority.
Amendment history (9)
- The word “and” substituted by the Finance Act, 2009.
- The words “local authority” substituted by the Finance Act, 2008.
- Added by the Finance Act, 2006.
- Added by the Finance Act, 2007.
- Full stop substituted by a colon by the Finance Act, 2014.
- Added by the Finance Act, 2014.
- The brackets and words “(other than a citizen of Pakistan)” omitted by the Finance Act, 2003.
- Added by the Finance Act, 2003.
- Section 52 omitted by the Finance Act, 2002. The omitted section 52
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 50 Foreign-source income of short-term resident individuals
(1) Subject to sub-section (2), the foreign-source income of an individual —
(a) who is a resident individual solely by reason of the individual’s employment; and (b) who is present in Pakistan for a period or periods not exceeding three years, shall be exempt from tax under this Ordinance.
(2) This section shall not apply to —
(a) any income derived from a business of the person established in Pakistan; or (b) any foreign-source income brought into or received in Pakistan by the person.
(a) who is a resident individual solely by reason of the individual’s employment; and (b) who is present in Pakistan for a period or periods not exceeding three years, shall be exempt from tax under this Ordinance.
(2) This section shall not apply to —
(a) any income derived from a business of the person established in Pakistan; or (b) any foreign-source income brought into or received in Pakistan by the person.
Amendment history (4)
- Added by the Finance Act, 2014.
- The brackets and words “(other than a citizen of Pakistan)” omitted by the Finance Act, 2003.
- Added by the Finance Act, 2003.
- Section 52 omitted by the Finance Act, 2002. The omitted section 52
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 51 Foreign-source income of returning expatriates
(1) Any foreign- source income derived by a citizen of Pakistan in a tax year who was not a resident individual in any of the four tax years preceding the tax year in which the individual became a resident shall be exempt from tax under this Ordinance in the tax year in which the individual became a resident individual and in the following tax year.
(2) Where a citizen of Pakistan leaves Pakistan during a tax year and remains abroad during that tax year, any income chargeable under the head Salary earned by him outside Pakistan during that year shall be exempt from tax under this Ordinance.
(2) Where a citizen of Pakistan leaves Pakistan during a tax year and remains abroad during that tax year, any income chargeable under the head Salary earned by him outside Pakistan during that year shall be exempt from tax under this Ordinance.
Amendment history (4)
- Added by the Finance Act, 2014.
- The brackets and words “(other than a citizen of Pakistan)” omitted by the Finance Act, 2003.
- Added by the Finance Act, 2003.
- Section 52 omitted by the Finance Act, 2002. The omitted section 52
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 52 Omitted by Finance Ordinance, 2002Omitted
Omitted by Finance Ordinance, 2002
s. 53 Exemptions and tax concessions in the Second Schedule
(1) The income or classes of income, or persons or classes of persons specified in the
(a) exempt from tax under this Ordinance, subject to any conditions and to the extent specified therein;
(b) subject to tax under this Ordinance at such rates, which are less than the rates specified in the First Schedule, as are specified therein;
(c) allowed a reduction in tax liability under this Ordinance, subject to any conditions and to the extent specified therein; or (d) exempted from the operation of any provision of this Ordinance, subject to any conditions and to the extent specified therein.
(2) The Federal Government or the Board with the approval of the Federal Minister-in-charge may, from time to time, pursuant to the approval of the Economic Coordination Committee of the Cabinet whenever circumstances exist to take immediate action for the purposes of national security, natural disaster, national food security in emergency situations, protection of national economic interests in situations arising out of abnormal fluctuation in international commodity prices, , implementation of bilateral and multilateral agreements or granting an exemption from any tax imposed under this Ordinance including a reduction in the rate of tax imposed under this Ordinance or a reduction in tax liability under this Ordinance or an exemption from the operation of any provision of this Ordinance to any international financial institution or foreign Government owned financial institution operating under an agreement, memorandum of understanding or any other arrangement with the Government of Pakistan , by notification in the official Gazette, make such amendment in the Second Schedule by —
(a) adding any clause or condition therein;
(b) omitting any clause or condition therein; or (c) making any change in any clause or condition therein, as the Government may think fit, and all such amendments shall have effect in respect of any tax year beginning on any date before or after the commencement of the financial year in which the notification is issued.
(3) The Federal Government shall place before the National Assembly all amendments made by it to the Second Schedule in a financial year.
(4) Any notification issued under sub-section (2) after the commencement of the Finance Act, 2015, shall, if not earlier rescinded, stand rescinded on the expiry of the financial year in which it was issued :
Provided that all such notifications, except those earlier rescinded, shall be deemed to have been in force with effect from the first day of July, 2016 and shall continue to be in force till the thirtieth day of June, 2018, if not earlier rescinded:
Provided further that all notifications issued on or after the first day of July, 2016 and placed before the National Assembly as required under sub- section (3) shall continue to remain in force till the thirtieth day of June, 2018, if not earlier rescinded by the Federal Government or the National Assembly.
(a) exempt from tax under this Ordinance, subject to any conditions and to the extent specified therein;
(b) subject to tax under this Ordinance at such rates, which are less than the rates specified in the First Schedule, as are specified therein;
(c) allowed a reduction in tax liability under this Ordinance, subject to any conditions and to the extent specified therein; or (d) exempted from the operation of any provision of this Ordinance, subject to any conditions and to the extent specified therein.
(2) The Federal Government or the Board with the approval of the Federal Minister-in-charge may, from time to time, pursuant to the approval of the Economic Coordination Committee of the Cabinet whenever circumstances exist to take immediate action for the purposes of national security, natural disaster, national food security in emergency situations, protection of national economic interests in situations arising out of abnormal fluctuation in international commodity prices, , implementation of bilateral and multilateral agreements or granting an exemption from any tax imposed under this Ordinance including a reduction in the rate of tax imposed under this Ordinance or a reduction in tax liability under this Ordinance or an exemption from the operation of any provision of this Ordinance to any international financial institution or foreign Government owned financial institution operating under an agreement, memorandum of understanding or any other arrangement with the Government of Pakistan , by notification in the official Gazette, make such amendment in the Second Schedule by —
(a) adding any clause or condition therein;
(b) omitting any clause or condition therein; or (c) making any change in any clause or condition therein, as the Government may think fit, and all such amendments shall have effect in respect of any tax year beginning on any date before or after the commencement of the financial year in which the notification is issued.
(3) The Federal Government shall place before the National Assembly all amendments made by it to the Second Schedule in a financial year.
(4) Any notification issued under sub-section (2) after the commencement of the Finance Act, 2015, shall, if not earlier rescinded, stand rescinded on the expiry of the financial year in which it was issued :
Provided that all such notifications, except those earlier rescinded, shall be deemed to have been in force with effect from the first day of July, 2016 and shall continue to be in force till the thirtieth day of June, 2018, if not earlier rescinded:
Provided further that all notifications issued on or after the first day of July, 2016 and placed before the National Assembly as required under sub- section (3) shall continue to remain in force till the thirtieth day of June, 2018, if not earlier rescinded by the Federal Government or the National Assembly.
Amendment history (9)
- Sub-section (1A) omitted by the Finance Act, 2012. The omitted sub-section (1A)
- Inserted by the Finance Act, 2022.
- the expression “Federal Government” substituted by Finance Act, 2017.
- Inserted by the Finance Act, 2015.
- The words “Federal Government may” substituted by the Finance Act, 2021.
- Inserted by the Finance Act, 2016.
- Full stop substituted by the Finance Act, 2017.
- Added by the Finance Act, 2017
- Section 53A inserted by the Finance Act, 2026.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 53A Rationalization of rates of withholding taxes in the nature of minimum tax
(1) The Federal Government may reduce the rate of any of the withholding taxes in the nature of minimum tax as given in First Schedule of this Ordinance, other than minimum tax chargeable under section 113 of this Ordinance, by one percent on the basis of economic viability in cases of persons or class of persons, subject to such restrictions and limitations as the Federal Government may specify.
(2) The Federal Government shall place before the National Assembly all amendments made in rates of withholding taxes in the First Schedule, in a financial year under this section.
(3) In this section, the term economic viability includes an anticipated net loss of business income due to tax burden either directly or indirectly due to non-availability of resources to maintain or increase efficiency of the business as certified by a chartered accountant firm listed as Category A, as per rating issued by the State Bank of Pakistan.
(2) The Federal Government shall place before the National Assembly all amendments made in rates of withholding taxes in the First Schedule, in a financial year under this section.
(3) In this section, the term economic viability includes an anticipated net loss of business income due to tax burden either directly or indirectly due to non-availability of resources to maintain or increase efficiency of the business as certified by a chartered accountant firm listed as Category A, as per rating issued by the State Bank of Pakistan.
Amendment history (8)
- Inserted by the Finance Act, 2016.
- Inserted by the Finance Act, 2015.
- Full stop substituted by the Finance Act, 2017.
- Added by the Finance Act, 2017
- Section 53A inserted by the Finance Act, 2026.
- The colon substituted by the Finance Act, 2008.
- Proviso omitted by the Finance Act, 2008. The omitted proviso
- Sub-section (2) omitted by the Finance Act, 2003. Omitted sub-section (2)
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 54 Exemptions and tax provisions in other laws
(a) an exemption from any tax imposed under this Ordinance;
(b) a reduction in the rate of tax imposed under this Ordinance;
(c) a reduction in tax liability of any person under this Ordinance; or (d) an exemption from the operation of any provision of this Ordinance, shall have legal effect unless also provided for in this Ordinance .
(b) a reduction in the rate of tax imposed under this Ordinance;
(c) a reduction in tax liability of any person under this Ordinance; or (d) an exemption from the operation of any provision of this Ordinance, shall have legal effect unless also provided for in this Ordinance .
Amendment history (3)
- The colon substituted by the Finance Act, 2008.
- Proviso omitted by the Finance Act, 2008. The omitted proviso
- Sub-section (2) omitted by the Finance Act, 2003. Omitted sub-section (2)
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 55 Limitation of exemption
(1) Where any income is exempt from tax under this Ordinance, the exemption shall be, in the absence of a specific provision to the contrary contained in this Ordinance, limited to the original recipient of that income and shall not extend to any person receiving any payment wholly or in part out of that income. PART VIII LOSSES
Amendment history (11)
- The colon substituted by the Finance Act, 2008.
- Proviso omitted by the Finance Act, 2008. The omitted proviso
- Sub-section (2) omitted by the Finance Act, 2003. Omitted sub-section (2)
- Inserted by the Finance Act, 2013.
- The words “or income from property” omitted by the Finance Act, 2021.
- Full stop substituted with a colon and thereafter a new proviso added by the Finance Act, 2025.
- Inserted by the Finance Act, 2002
- Inserted by the Finance Act, 2007.
- The word “company” substituted by the Finance Act, 2019.
- After word “Pakistan” the expression “, Gilgit-Baltistan” inserted by the Finance Act, 2019.
- The word “onward” substituted by the word “onward” by the Finance Act, 2014.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 56 Set off of losses
(1) Subject to sections 58 and 59, where a person sustains a loss for any tax year under any head of income specified in section 11, the person shall be entitled to have the amount of the loss set off against the person’s income, if any, chargeable to tax under any other head of income except income under the head salary for the year :
Provided that the adjustment of business loss shall not be allowed against income from property for the tax year.
(2) Except as provided in this Part, where a person sustains a loss under a head of income for a tax year that cannot be set off under sub-section (1), the person shall not be permitted to carry the loss forward to the next tax year.
(3) Where, in a tax year, a person sustains a loss under the head Income from Business and a loss under another head of income, the loss under the head Income from Business shall be set off last.
Provided that the adjustment of business loss shall not be allowed against income from property for the tax year.
(2) Except as provided in this Part, where a person sustains a loss under a head of income for a tax year that cannot be set off under sub-section (1), the person shall not be permitted to carry the loss forward to the next tax year.
(3) Where, in a tax year, a person sustains a loss under the head Income from Business and a loss under another head of income, the loss under the head Income from Business shall be set off last.
Amendment history (8)
- Inserted by the Finance Act, 2013.
- The words “or income from property” omitted by the Finance Act, 2021.
- Full stop substituted with a colon and thereafter a new proviso added by the Finance Act, 2025.
- Inserted by the Finance Act, 2002
- Inserted by the Finance Act, 2007.
- The word “company” substituted by the Finance Act, 2019.
- After word “Pakistan” the expression “, Gilgit-Baltistan” inserted by the Finance Act, 2019.
- The word “onward” substituted by the word “onward” by the Finance Act, 2014.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 56A Set off of losses of companies operating hotels
Set off of losses of companies operating hotels.— Subject to sections 56 and 57, where a public company as defined in the Companies Act, 2017 and registered in Pakistan ,Gilgit-Baltistan or Azad Jammu and Kashmir (AJ&K), operating hotels in Pakistan ,Gilgit-Baltistan or AJ&K, sustains a loss in Pakistan ,Gilgit-Baltistan or AJ&K for any tax year under the head income from business shall be entitled to have the amount of the loss set off against the company’s income in Pakistan ,Gilgit-Baltistan or AJ&K, as the case may be, from the tax year 2007 onward .
Amendment history (8)
- Inserted by the Finance Act, 2013.
- The words “or income from property” omitted by the Finance Act, 2021.
- Full stop substituted with a colon and thereafter a new proviso added by the Finance Act, 2025.
- Inserted by the Finance Act, 2002
- Inserted by the Finance Act, 2007.
- The word “company” substituted by the Finance Act, 2019.
- After word “Pakistan” the expression “, Gilgit-Baltistan” inserted by the Finance Act, 2019.
- The word “onward” substituted by the word “onward” by the Finance Act, 2014.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 57 Carry forward of business losses
(1) Where a person sustains a loss for a tax year under the head Income from Business (other than a loss to which sub-section (4) or section 58 applies) and the loss cannot be wholly set off under section 56, so much of the loss that has not been set off shall be carried forward to the following tax year and set off against the person’s income chargeable under the head Income from Business for that year.
(2) If a loss sustained by a person for a tax year under the head Income from Business is not wholly set off under sub-section (1), then the amount of the loss not set off shall be carried forward to the following tax year and applied as specified in sub-section (1) in that year, and so on, but no loss can be carried forward to more than six tax years immediately succeeding the tax year for which the loss was first computed.
(2A) Where a loss, referred to in sub-section (2), relating to any assessment year commencing on or after 1 day of July, 1995, and ending on the 30 day of June 2001, is sustained by a banking company wholly owned by the Federal Government as on first day of June, 2002, which is approved by the State Bank of Pakistan for the purpose of this sub-section, the said loss shall be carried forward for a period of ten years.
(2B) Where a loss, referred to in sub-section (2), relating to a tax year commencing on or after the first day of July, 2020 is sustained by a resident company engaged in the hotel business in Pakistan, the said loss shall be carried forward for a period of eight years.
(2C) Where a loss, referred to in sub-section (2), relating to a tax year commencing on or after the first day of January, 2017 is sustained by Pakistan International Airlines Corporation Limited, the said loss shall be carried forward for a period of ten years.
(3) Where a person has a loss carried forward under this section for more than one tax year, the loss of the earliest tax year shall be set off first. (4)The loss attributable to deductions allowed under sections 22, 23, 23B and 24 that has not been set off against income, the loss not set off shall be set off against fifty percent of the person's balance income chargeable under the head "income from business" after setting off loss under sub-section (1), in the following tax year and so on until completely set off:
Provided that such loss shall be set off against hundred percent of the said balance income if the taxable income for the year is less than ten million Rupees.
(5) In determining whether a person’s deductions under sections 22, 23, 23B and 24 have been set off against income, the deductions allowed under those sections shall be taken into account last.
(2) If a loss sustained by a person for a tax year under the head Income from Business is not wholly set off under sub-section (1), then the amount of the loss not set off shall be carried forward to the following tax year and applied as specified in sub-section (1) in that year, and so on, but no loss can be carried forward to more than six tax years immediately succeeding the tax year for which the loss was first computed.
(2A) Where a loss, referred to in sub-section (2), relating to any assessment year commencing on or after 1 day of July, 1995, and ending on the 30 day of June 2001, is sustained by a banking company wholly owned by the Federal Government as on first day of June, 2002, which is approved by the State Bank of Pakistan for the purpose of this sub-section, the said loss shall be carried forward for a period of ten years.
(2B) Where a loss, referred to in sub-section (2), relating to a tax year commencing on or after the first day of July, 2020 is sustained by a resident company engaged in the hotel business in Pakistan, the said loss shall be carried forward for a period of eight years.
(2C) Where a loss, referred to in sub-section (2), relating to a tax year commencing on or after the first day of January, 2017 is sustained by Pakistan International Airlines Corporation Limited, the said loss shall be carried forward for a period of ten years.
(3) Where a person has a loss carried forward under this section for more than one tax year, the loss of the earliest tax year shall be set off first. (4)The loss attributable to deductions allowed under sections 22, 23, 23B and 24 that has not been set off against income, the loss not set off shall be set off against fifty percent of the person's balance income chargeable under the head "income from business" after setting off loss under sub-section (1), in the following tax year and so on until completely set off:
Provided that such loss shall be set off against hundred percent of the said balance income if the taxable income for the year is less than ten million Rupees.
(5) In determining whether a person’s deductions under sections 22, 23, 23B and 24 have been set off against income, the deductions allowed under those sections shall be taken into account last.
Amendment history (21)
- Inserted by the Finance Act, 2013.
- The words “or income from property” omitted by the Finance Act, 2021.
- Full stop substituted with a colon and thereafter a new proviso added by the Finance Act, 2025.
- Inserted by the Finance Act, 2002
- Inserted by the Finance Act, 2007.
- The word “company” substituted by the Finance Act, 2019.
- After word “Pakistan” the expression “, Gilgit-Baltistan” inserted by the Finance Act, 2019.
- The word “onward” substituted by the word “onward” by the Finance Act, 2014.
- Inserted by the Finance Act, 2018.
- Inserted by the Finance Act, 2002.
- New sub-section (2B) inserted through Finance Act, 2020 dated 30 June, 2020
- Sub-section (2C) inserted by the Finance Act, 2024.
- Sub Section (4) substituted by the finance Act 2018,the substituted subsection (4) is
- The expression “23A” omitted by the Finance Act, 2021. Earlier this omission was made through
- Inserted by the Finance Act, 2009.
- The expression “23A” omitted by the Finance Act, 2021. Earlier this omission was made through Tax
- Added by the Finance Act, 2002.
- Sub-section (1) substituted by the Finance Act, 2007. The substituted sub-section (1)
- Inserted by the Finance Act, 2005.
- Full stop substituted by the Finance Act, 2005.
- Inserted by the Finance Act, 2008.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 57A Set off of business loss consequent to amalgamation
(1) The assessed loss (excluding capital loss) for the tax year, other than brought forward and capital loss, of the amalgamating company or companies shall be set off against business profits and gains of the amalgamated company, and vice versa, in the year of amalgamation and where the loss is not adjusted against the profits and gains for the tax year the unadjusted loss shall be carried forward for adjustment upto a period of six tax years succeeding the year of amalgamation.
(2) The provisions of sub-section (4) and (5) of section 57 shall, mutatis mutandis, apply for the purposes of allowing unabsorbed depreciation of amalgamating company or companies in the assessment of amalgamated company and vice versa :
Provided that the losses referred to in sub-section (1) and unabsorbed depreciation referred to in sub-section (2) shall be allowed set off subject to the condition that the amalgamated company continues the business of the amalgamating company for a minimum period of five years from the date of amalgamation. (2A).In case of amalgamation of Banking Company or Non-banking Finance Company, modarabas or insurance company, the accumulated loss under the head Income from Business (not being speculation business losses) of an amalgamating company or companies shall be set off or carried forward against the business profits and gains of the amalgamated company and vice versa, up to a period of six tax years immediately succeeding the tax year in which the loss was first computed in the case of amalgamated company or amalgamating company or companies:
Provided that the provisions of this sub-section shall in the case of Banking companies be applicable from July 1, 2007.
(3) Where any of the conditions as laid down by the State Bank of Pakistan or the Securities and Exchange Commission of Pakistan or any court , as the case may be, in the scheme of amalgamation, are not fulfilled, the set off of loss or allowance for depreciation made in any tax year of the amalgamated company or the amalgamating company or companies shall be deemed to be the income of that amalgamated company or the amalgamating company or companies, as the case may be, for the year in which such default is discovered by the Commissioner or taxation officer, and all the provisions of this Ordinance shall apply accordingly.
(2) The provisions of sub-section (4) and (5) of section 57 shall, mutatis mutandis, apply for the purposes of allowing unabsorbed depreciation of amalgamating company or companies in the assessment of amalgamated company and vice versa :
Provided that the losses referred to in sub-section (1) and unabsorbed depreciation referred to in sub-section (2) shall be allowed set off subject to the condition that the amalgamated company continues the business of the amalgamating company for a minimum period of five years from the date of amalgamation. (2A).In case of amalgamation of Banking Company or Non-banking Finance Company, modarabas or insurance company, the accumulated loss under the head Income from Business (not being speculation business losses) of an amalgamating company or companies shall be set off or carried forward against the business profits and gains of the amalgamated company and vice versa, up to a period of six tax years immediately succeeding the tax year in which the loss was first computed in the case of amalgamated company or amalgamating company or companies:
Provided that the provisions of this sub-section shall in the case of Banking companies be applicable from July 1, 2007.
(3) Where any of the conditions as laid down by the State Bank of Pakistan or the Securities and Exchange Commission of Pakistan or any court , as the case may be, in the scheme of amalgamation, are not fulfilled, the set off of loss or allowance for depreciation made in any tax year of the amalgamated company or the amalgamating company or companies shall be deemed to be the income of that amalgamated company or the amalgamating company or companies, as the case may be, for the year in which such default is discovered by the Commissioner or taxation officer, and all the provisions of this Ordinance shall apply accordingly.
Amendment history (7)
- Inserted by the Finance Act, 2009.
- The expression “23A” omitted by the Finance Act, 2021. Earlier this omission was made through Tax
- Added by the Finance Act, 2002.
- Sub-section (1) substituted by the Finance Act, 2007. The substituted sub-section (1)
- Inserted by the Finance Act, 2005.
- Full stop substituted by the Finance Act, 2005.
- Inserted by the Finance Act, 2008.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 58 Carry forward of speculation business losses
(1) Where a person sustains a loss for a tax year in respect of a speculation business carried on by the person (hereinafter referred to as a speculation loss), the loss shall be set off only against the income of the person from any other speculation business of the person chargeable to tax for that year.
(2) If a speculation loss sustained by a person for a tax year is not wholly set off under sub-section (1), then the amount of the loss not set off shall be carried forward to the following tax year and applied against the income of any speculation business of the person in that year and applied as specified in sub-section (1) in that year, and so on, but no speculation loss shall be carried forward to more than six tax years immediately succeeding the tax year for which the loss was first computed.
(3) Where a person has a loss carried forward under this section for more than one tax year, the loss of the earliest tax year shall be set off first.
(2) If a speculation loss sustained by a person for a tax year is not wholly set off under sub-section (1), then the amount of the loss not set off shall be carried forward to the following tax year and applied against the income of any speculation business of the person in that year and applied as specified in sub-section (1) in that year, and so on, but no speculation loss shall be carried forward to more than six tax years immediately succeeding the tax year for which the loss was first computed.
(3) Where a person has a loss carried forward under this section for more than one tax year, the loss of the earliest tax year shall be set off first.
Amendment history (1)
- Inserted by the Finance Act, 2005.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 59 Carry forward of capital losses
(1) Where a person sustains a loss for a tax year under the head Capital Gains (hereinafter referred to as a capital loss), the loss shall not be set off against the person’s income, if any, chargeable under any other head of income for the year, but shall be carried forward to the next tax year and set off against the capital gain, if any, chargeable under the head Capital Gains for that year.
(2) If a capital loss sustained by a person for a tax year under the head Capital Gains is not wholly set off under sub-section (1), then the amount of the loss not set off shall be carried forward to the following tax year, and so on, but no loss shall be carried forward to more than six tax years immediately succeeding the tax year for which the loss was first computed.
(3) Where a person has a loss carried forward under this section for more than one tax year, the loss of the earliest tax year shall be set off first.
(2) If a capital loss sustained by a person for a tax year under the head Capital Gains is not wholly set off under sub-section (1), then the amount of the loss not set off shall be carried forward to the following tax year, and so on, but no loss shall be carried forward to more than six tax years immediately succeeding the tax year for which the loss was first computed.
(3) Where a person has a loss carried forward under this section for more than one tax year, the loss of the earliest tax year shall be set off first.
Amendment history (7)
- Inserted by the Finance Act, 2005.
- Added by the Finance Act, 2003.
- Sub-section (1) omitted by the Finance Act, 2012. The omitted sub-section (1)
- Sub-section (2) omitted by the Finance Act, 2012. The omitted sub-section (2)
- any loss for such association” substituted by the Finance Act, 2012.
- omitted by the Finance Act, 2012.
- Sub section (5) substituted by the finance Act 2018,the substituted sub section (5) is
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 59A Limitations on set off and carry forward of losses
(3) In case of association of persons any loss shall be set off or carried forward and set off only against the income of the association.
(4) Nothing contained in section 56, 57, 58 or 59 shall entitle —
(a) any member of an association of persons to set off any loss sustained by such association of persons, as the case may be, or have it carried forward and set off, against his income; or (b) any person who has succeeded, in such capacity, any other person carrying on any business or profession, otherwise than by inheritance, to carry forward and set off against his income, any loss sustained by such other person. (5)Subject to sub-section (4) of section 57, sub-section (12) of section 22 and sub-section (6), where in computing the taxable income for any tax year, full effect cannot be given to the loss relating to deductions under section 22, 23, 24 or 25 owing to there being no profits or gains chargeable for that year or such profits or gains as mentioned in sub-section (4) of section 57, being less than the said loss, the loss or part of the loss, as the case may be, shall be set off against fifty percent of the person’s income chargeable under the head income from business for the following year or if there is no income from business for that year, be set off against fifty percent of the person’s income chargeable under the head income from business for the next following year and soon for succeeding years.
(6) Where, under sub-section (5), deduction is also to be carried forward, effect shall first be given to the provisions of section 56 and sub-section (2) of section 58.
(7) Notwithstanding anything contained in this Ordinance, no loss which has not been assessed or determined in pursuance of an order made under section 59, 59A, 62, 63 or 65 of the repealed Ordinance or an order made or treated as made under section 120, 121 or 122 shall be carried forward and set off under section 57, sub-section (2)of section 58 or section 59.
(4) Nothing contained in section 56, 57, 58 or 59 shall entitle —
(a) any member of an association of persons to set off any loss sustained by such association of persons, as the case may be, or have it carried forward and set off, against his income; or (b) any person who has succeeded, in such capacity, any other person carrying on any business or profession, otherwise than by inheritance, to carry forward and set off against his income, any loss sustained by such other person. (5)Subject to sub-section (4) of section 57, sub-section (12) of section 22 and sub-section (6), where in computing the taxable income for any tax year, full effect cannot be given to the loss relating to deductions under section 22, 23, 24 or 25 owing to there being no profits or gains chargeable for that year or such profits or gains as mentioned in sub-section (4) of section 57, being less than the said loss, the loss or part of the loss, as the case may be, shall be set off against fifty percent of the person’s income chargeable under the head income from business for the following year or if there is no income from business for that year, be set off against fifty percent of the person’s income chargeable under the head income from business for the next following year and soon for succeeding years.
(6) Where, under sub-section (5), deduction is also to be carried forward, effect shall first be given to the provisions of section 56 and sub-section (2) of section 58.
(7) Notwithstanding anything contained in this Ordinance, no loss which has not been assessed or determined in pursuance of an order made under section 59, 59A, 62, 63 or 65 of the repealed Ordinance or an order made or treated as made under section 120, 121 or 122 shall be carried forward and set off under section 57, sub-section (2)of section 58 or section 59.
Amendment history (10)
- Added by the Finance Act, 2003.
- Sub-section (1) omitted by the Finance Act, 2012. The omitted sub-section (1)
- Sub-section (2) omitted by the Finance Act, 2012. The omitted sub-section (2)
- any loss for such association” substituted by the Finance Act, 2012.
- omitted by the Finance Act, 2012.
- Sub section (5) substituted by the finance Act 2018,the substituted sub section (5) is
- Inserted by the Finance Act, 2007.
- The expression “Companies Ordinance, 1984 (XLVII of 1984)” substituted by the Finance Act, 2021.
- Inserted by the Finance Act, 2013.
- The words “Central Board of Revenue” substituted by the word “Board” by the Finance Act. 2014.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 59AA Group Taxation
(1) Holding companies and subsidiary companies of 100% owned group may opt to be taxed as one fiscal unit. In such cases, besides consolidated group accounts as required under the Companies Act, 2017 (XIX of 2017) , computation of income and tax payable shall be made for tax purposes.
(2) The companies in the group shall give irrevocable option for taxation under this section as one fiscal unit.
(3) The group taxation shall be restricted to companies locally incorporated under the Companies Act, 2017 (XIX of 2017) .
(4) The relief under group taxation would not be available to losses prior to the formation of the group.
(5) The option of group taxation shall be available to those group companies which comply with such corporate governance requirements and group designation rules or regulations as may be specified by the Securities and Exchange Commission of Pakistan from time to time and are designated as companies entitled to avail group taxation.
(6) Group taxation may be regulated through rules as may be made by the Board .
(2) The companies in the group shall give irrevocable option for taxation under this section as one fiscal unit.
(3) The group taxation shall be restricted to companies locally incorporated under the Companies Act, 2017 (XIX of 2017) .
(4) The relief under group taxation would not be available to losses prior to the formation of the group.
(5) The option of group taxation shall be available to those group companies which comply with such corporate governance requirements and group designation rules or regulations as may be specified by the Securities and Exchange Commission of Pakistan from time to time and are designated as companies entitled to avail group taxation.
(6) Group taxation may be regulated through rules as may be made by the Board .
Amendment history (7)
- Inserted by the Finance Act, 2007.
- The expression “Companies Ordinance, 1984 (XLVII of 1984)” substituted by the Finance Act, 2021.
- Inserted by the Finance Act, 2013.
- The words “Central Board of Revenue” substituted by the word “Board” by the Finance Act. 2014.
- Section 59B substituted by the Finance Act, 2007. The substituted section 59B
- The word “of” substituted by the Finance Act, 2021
- Inserted by the Finance Act, 2016.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 59B Group relief
(1) Subject to sub-section (2), any company, being a subsidiary or a holding company, may surrender its assessed loss as computed in sub-section (1A) (excluding capital loss) for the tax year (other than brought forward losses and capital losses), in favour of its holding company or its subsidiary or between another subsidiary of the holding company:
Provided that where one of the company in the group is a public company listed on a registered stock exchange in Pakistan, the holding company shall directly hold fifty-five per cent or more of the share capital of the subsidiary company. Where none of the companies in the group is a listed company, the holding company shall hold directly seventy-five per cent or more of the share capital of the subsidiary company.
(1A) The loss to be surrendered under sub-section (1) shall be allowed as per following formula, namely:- (A/100) x B where— A is the percentage share capital held by the holding company of its subsidiary company; and B is the assessed loss of the subsidiary company.
(2) The loss surrendered by the subsidiary company may be claimed by the holding company or a subsidiary company for set off against its income under the head Income from Business in the tax year and the following two tax years subject to the following conditions, namely:—
(a) there is continued ownership for five years, of share capital of the subsidiary company to the extent of fifty-five per cent in the case of a listed company, or seventy-five per cent or more, in the case of other companies;
(b) a company within the group engaged in the business of trading shall not be entitled to avail group relief;
(ba) a company or companies within the group whose income from business is chargeable to tax under any provisions of this Ordinance other than Division II of Part I of the First Schedule to the Ordinance shall not be entitled to avail group relief;
(c) holding company, being a private limited company with seventy- five per cent of ownership of share capital gets itself listed within three years from the year in which loss is claimed;
(d) the group companies are locally incorporated companies under the Companies Act, 2017 (XIX of 2017) ;
(e) the loss surrendered and loss claimed under this section shall have approval of the Board of Directors of the respective companies;
(f) the subsidiary company continues the same business during the said period of three years;
(g) all the companies in the group shall comply with such corporate governance requirements and group designation rules or regulations as may be specified by the Securities and Exchange Commission of Pakistan from time to time, and are designated as companies entitled to avail group relief; and (h) any other condition as may be prescribed.
(3) The subsidiary company shall not be allowed to surrender its assessed losses for set off against income of the holding company for more than three tax years.
(4) Where the losses surrendered by a subsidiary company are not adjusted against income of the holding company in the said three tax years, the subsidiary company shall carry forward the unadjusted losses in accordance with section 57.
(5) If there has been any disposal of shares by the holding company during the aforesaid period of five years to bring the ownership of the holding company to less than fifty-five per cent or seventy-five per cent, as the case may be, the holding company shall, in the year of disposal, offer the amount of profit on which taxes have not been paid due to set off of losses surrendered by the subsidiary company.
(6) Loss claiming company shall, with the approval of the Board of Directors, transfer cash to the loss surrendering company equal to the amount of tax payable on the profits to be set off against the acquired loss at the applicable tax rate. The transfer of cash would not be taken as a taxable event in the case of either of the two companies.
(7) The transfer of shares between companies and the share holders, in one direction, would not be taken as a taxable event provided the transfer is to acquire share capital for formation of the group and approval of the Security and Exchange Commission of Pakistan or State Bank of Pakistan, as the case may be, has been obtained in this effect. Sale and purchase from third party would be taken as taxable event. PART IX DEDUCTIBLE ALLOWANCES
Provided that where one of the company in the group is a public company listed on a registered stock exchange in Pakistan, the holding company shall directly hold fifty-five per cent or more of the share capital of the subsidiary company. Where none of the companies in the group is a listed company, the holding company shall hold directly seventy-five per cent or more of the share capital of the subsidiary company.
(1A) The loss to be surrendered under sub-section (1) shall be allowed as per following formula, namely:- (A/100) x B where— A is the percentage share capital held by the holding company of its subsidiary company; and B is the assessed loss of the subsidiary company.
(2) The loss surrendered by the subsidiary company may be claimed by the holding company or a subsidiary company for set off against its income under the head Income from Business in the tax year and the following two tax years subject to the following conditions, namely:—
(a) there is continued ownership for five years, of share capital of the subsidiary company to the extent of fifty-five per cent in the case of a listed company, or seventy-five per cent or more, in the case of other companies;
(b) a company within the group engaged in the business of trading shall not be entitled to avail group relief;
(ba) a company or companies within the group whose income from business is chargeable to tax under any provisions of this Ordinance other than Division II of Part I of the First Schedule to the Ordinance shall not be entitled to avail group relief;
(c) holding company, being a private limited company with seventy- five per cent of ownership of share capital gets itself listed within three years from the year in which loss is claimed;
(d) the group companies are locally incorporated companies under the Companies Act, 2017 (XIX of 2017) ;
(e) the loss surrendered and loss claimed under this section shall have approval of the Board of Directors of the respective companies;
(f) the subsidiary company continues the same business during the said period of three years;
(g) all the companies in the group shall comply with such corporate governance requirements and group designation rules or regulations as may be specified by the Securities and Exchange Commission of Pakistan from time to time, and are designated as companies entitled to avail group relief; and (h) any other condition as may be prescribed.
(3) The subsidiary company shall not be allowed to surrender its assessed losses for set off against income of the holding company for more than three tax years.
(4) Where the losses surrendered by a subsidiary company are not adjusted against income of the holding company in the said three tax years, the subsidiary company shall carry forward the unadjusted losses in accordance with section 57.
(5) If there has been any disposal of shares by the holding company during the aforesaid period of five years to bring the ownership of the holding company to less than fifty-five per cent or seventy-five per cent, as the case may be, the holding company shall, in the year of disposal, offer the amount of profit on which taxes have not been paid due to set off of losses surrendered by the subsidiary company.
(6) Loss claiming company shall, with the approval of the Board of Directors, transfer cash to the loss surrendering company equal to the amount of tax payable on the profits to be set off against the acquired loss at the applicable tax rate. The transfer of cash would not be taken as a taxable event in the case of either of the two companies.
(7) The transfer of shares between companies and the share holders, in one direction, would not be taken as a taxable event provided the transfer is to acquire share capital for formation of the group and approval of the Security and Exchange Commission of Pakistan or State Bank of Pakistan, as the case may be, has been obtained in this effect. Sale and purchase from third party would be taken as taxable event. PART IX DEDUCTIBLE ALLOWANCES
Amendment history (9)
- Section 59B substituted by the Finance Act, 2007. The substituted section 59B
- The word “of” substituted by the Finance Act, 2021
- Inserted by the Finance Act, 2016.
- Clause (ba) inserted by the Finance Act, 2025.
- The expression “Companies Ordinance, 1984 (XLVII of 1984)” substituted by the Finance Act, 2021.
- Inserted by the Finance Act, 2013.
- Added by the Finance Act, 2003.
- Added by the Finance Act, 2021.
- Added by the Finance Act, 2004.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 59C Omitted by Finance Act, 2022Omitted
Omitted by Finance Act, 2022
s. 60 Zakat
(1) A person shall be entitled to a deductible allowance for the amount of any Zakat paid by the person in a tax year under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980).
(2) Sub-section (1) does not apply to any Zakat taken into account under sub-section (2) of section 40.
(3) Any allowance or part of an allowance under this section for a tax year that is not able to be deducted under section 9 for the year shall not be refunded, carried forward to a subsequent tax year, or carried back to a preceding tax year.
(2) Sub-section (1) does not apply to any Zakat taken into account under sub-section (2) of section 40.
(3) Any allowance or part of an allowance under this section for a tax year that is not able to be deducted under section 9 for the year shall not be refunded, carried forward to a subsequent tax year, or carried back to a preceding tax year.
Amendment history (3)
- Added by the Finance Act, 2003.
- Added by the Finance Act, 2021.
- Added by the Finance Act, 2004.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 60A Workers’ Welfare Fund
Workers’ Welfare Fund.— A person shall be entitled to a deductible allowance for the amount of any Workers’ Welfare Fund paid by the person in tax year under Workers’ Welfare Fund Ordinance, 1971 (XXXVI of 1971) or under any law relating to the Workers’ Welfare Fund enacted by Provinces after the eighteenth Constitutional amendment Act, 2010:
Provided that this section shall not apply in respect of any amount of Workers’ Welfare Fund paid to the Provinces by a trans-provincial establishment.
Provided that this section shall not apply in respect of any amount of Workers’ Welfare Fund paid to the Provinces by a trans-provincial establishment.
Amendment history (3)
- Added by the Finance Act, 2003.
- Added by the Finance Act, 2021.
- Added by the Finance Act, 2004.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 60B Workers’ Participation Fund
Workers’ Participation Fund.— A person shall be entitled to a deductible allowance for the amount of any Workers’ Participation Fund paid by the person in a tax year in accordance with the provisions of the Companies Profit (Workers’ Participation) Act, 1968 (XII of 1968) or under any law relating to the Workers’ Profit Participation Fund enacted by Provinces after the eighteenth Constitutional amendment Act, 2010:
Provided that this section shall not apply in respect of any amount of Workers’ Profit Participation Fund paid to the province by a trans-provincial establishment.
Provided that this section shall not apply in respect of any amount of Workers’ Profit Participation Fund paid to the province by a trans-provincial establishment.
Amendment history (7)
- Added by the Finance Act, 2003.
- Added by the Finance Act, 2021.
- Added by the Finance Act, 2004.
- Section 64A is re-numbered by the Finance Act 2017
- Section 60C omitted by Finance Act, 2022 . Omitted section
- Section 64AB is re-numbered by the Finance Act, 2017.
- Inserted by the Finance Act, 2017.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 60C Omitted by the Finance Act, 2022Omitted
Omitted by the Finance Act, 2022.
s. 60D Deductible allowance for education expenses
(1) Every individual shall be entitled to a deductible allowance in respect of tuition fee paid by the individual in a tax year provided that the taxable income of the individual is less than one and a half million rupees.
(2) The amount of an individual‘s deductible allowance allowed under sub-section (1) for a tax year shall not exceed the lesser of —
(a) five per cent of the total tuition fee paid by the individual referred to in sub-section (1) in the year;
(b) twenty-five per cent of the person’s taxable income for the year; and (c) an amount computed by multiplying sixty thousand with number of children of the individual.
(3) Any allowance or part of an allowance under this section for a tax year that is not able to be deducted for the year shall not be carried forward to a subsequent tax year.
(4) Allowance under this section shall be allowed against the tax liability of either of the parents making payment of the feeon furnishing national tax number (NTN) or name of the educational institution.
(5) Allowance under this section shall not be taken into account for computation of tax deduction under section 149. " PART X TAX CREDITS
(2) The amount of an individual‘s deductible allowance allowed under sub-section (1) for a tax year shall not exceed the lesser of —
(a) five per cent of the total tuition fee paid by the individual referred to in sub-section (1) in the year;
(b) twenty-five per cent of the person’s taxable income for the year; and (c) an amount computed by multiplying sixty thousand with number of children of the individual.
(3) Any allowance or part of an allowance under this section for a tax year that is not able to be deducted for the year shall not be carried forward to a subsequent tax year.
(4) Allowance under this section shall be allowed against the tax liability of either of the parents making payment of the feeon furnishing national tax number (NTN) or name of the educational institution.
(5) Allowance under this section shall not be taken into account for computation of tax deduction under section 149. " PART X TAX CREDITS
Amendment history (7)
- Section 64A is re-numbered by the Finance Act 2017
- Section 60C omitted by Finance Act, 2022 . Omitted section
- Section 64AB is re-numbered by the Finance Act, 2017.
- Inserted by the Finance Act, 2017.
- Sub-section (1) substituted by the Finance Act, 2003. The substituted sub-section (1) read as
- Inserted by the Finance Act, 2021. Earlier this insertion was made through Tax Laws (Second
- The words “local authority” substituted by the Finance Act, 2008.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 61 Charitable donations
(1) A person shall be entitled to a tax credit in respect of any sum paid, or any property given by the person in the tax year as a donation , voluntary contribution or subscription to —
(a) any board of education or any university in Pakistan established by, or under, a Federal or a Provincial law;
(b) any educational institution, hospital or relief fund established or run in Pakistan by Federal Government or a Provincial Government or a Local Government ; or (c) any non-profit organization or any person eligible for tax credit under section 100C of this Ordinance; or (d) entities, organizations and funds mentioned in the Thirteenth Schedule to this Ordinance.
(2) The amount of a person’s tax credit allowed under sub-section (1) for a tax year shall be computed according to the following formula, namely:— (A/B) x C where — A is the amount of tax assessed to the person for the tax year before allowance of any tax credit under this Part; B is the person’s taxable income for the tax year; and C is the lesser of —
(a) the total amount of the person’s donations referred to in sub- section (1) in the year, including the fair market value of any property given; or (b) where the person is —
(i) an individual or association of persons, thirty per cent of the taxable income of the person for the year; or (ii) a company, twenty per cent of the taxable income of the person for the year :
Provided that where any sum is paid or any property is given to an associate by a donor, clause (b) of component C shall be, in the case of –
(i) an individual or association of persons, fifteen percent of the taxable income of the person for the year; or (ii) a company, ten percent of the taxable income of the person for the year.
(3) For the purposes of clause (a) of component C of the formula in sub- section (2), the fair market value of any property given shall be determined at the time it is given.
(4) A cash amount paid by a person as a donation shall be taken into account under clause (a) of component C of sub-section (2) only if it was paid by a crossed cheque drawn on a bank.
(5) The Board may make rules regulating the procedure of the grant of approval under sub-clause (c) of clause (36) of section 2 and any other matter connected with, or incidental to, the operation of this section.
(a) any board of education or any university in Pakistan established by, or under, a Federal or a Provincial law;
(b) any educational institution, hospital or relief fund established or run in Pakistan by Federal Government or a Provincial Government or a Local Government ; or (c) any non-profit organization or any person eligible for tax credit under section 100C of this Ordinance; or (d) entities, organizations and funds mentioned in the Thirteenth Schedule to this Ordinance.
(2) The amount of a person’s tax credit allowed under sub-section (1) for a tax year shall be computed according to the following formula, namely:— (A/B) x C where — A is the amount of tax assessed to the person for the tax year before allowance of any tax credit under this Part; B is the person’s taxable income for the tax year; and C is the lesser of —
(a) the total amount of the person’s donations referred to in sub- section (1) in the year, including the fair market value of any property given; or (b) where the person is —
(i) an individual or association of persons, thirty per cent of the taxable income of the person for the year; or (ii) a company, twenty per cent of the taxable income of the person for the year :
Provided that where any sum is paid or any property is given to an associate by a donor, clause (b) of component C shall be, in the case of –
(i) an individual or association of persons, fifteen percent of the taxable income of the person for the year; or (ii) a company, ten percent of the taxable income of the person for the year.
(3) For the purposes of clause (a) of component C of the formula in sub- section (2), the fair market value of any property given shall be determined at the time it is given.
(4) A cash amount paid by a person as a donation shall be taken into account under clause (a) of component C of sub-section (2) only if it was paid by a crossed cheque drawn on a bank.
(5) The Board may make rules regulating the procedure of the grant of approval under sub-clause (c) of clause (36) of section 2 and any other matter connected with, or incidental to, the operation of this section.
Amendment history (13)
- Sub-section (1) substituted by the Finance Act, 2003. The substituted sub-section (1) read as
- Inserted by the Finance Act, 2021. Earlier this insertion was made through Tax Laws (Second
- The words “local authority” substituted by the Finance Act, 2008.
- The word “fifteen” substituted by the Finance Act, 2009.
- Full stop substituted by colon and thereafter new proviso added through Finance Act, 2020 dated
- Inserted by the Finance Act, 2002.
- Added by the Finance Act, 2003.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Section 62 substituted by the Finance Act, 2011. The substituted section 62
- Section 62 omitted by the Finance Act, 2022. Omitted section
- Inserted by the Finance Act, 2016.
- Section 62A omitted by the Finance Act, 2022. The omitted section
- Section 63 substituted by the Finance Act, 2005. The original section 63
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 62 Omitted by the Finance Act, 2022Omitted
Omitted by the Finance Act, 2022.
s. 62A Omitted by the Finance Act, 2022Omitted
Omitted by the Finance Act, 2022.
s. 63 Contribution to an Approved Pension Fund
(1) An eligible person as defined in sub-section (19A) of section 2 deriving income chargeable to tax under the head Salary or the head Income from Business shall be entitled to a tax credit for a tax year in respect of any contribution or premium paid in the year by the person in approved pension fund under the Voluntary Pension System Rules, 2005.
(b)
(2) The amount of a person’s tax credit allowed under sub-section (1) for a tax year shall be computed according to the following formula, namely: — (A/B) x C Where.- A is the amount of tax assessed to the person for the tax year, before allowance of any tax credit under this Part; B is the person’s taxable income for the tax year; and C is the lesser of —
(i) the total contribution or premium referred to in sub-section (1) paid by the person in the year; or (ii) twenty per cent of the eligible person’s taxable income for the relevant tax year;
Provided that an eligible person joining the pension fund at the age of forty-one years or above, during the first ten years starting from July 1, 2006 shall be allowed additional contribution of 2% per annum for each year of age exceeding forty years.
Provided further that the total contribution allowed to such person shall not exceed 50% of the total taxable income of the preceding year :
Provided also that the additional contribution of two percent per annum for each year of age exceeding forty years shall be allowed up to the 30 June, 2019 subject to the condition that the total contribution allowed to such person shall not exceed thirty percent of the total taxable income of the preceding year.
(3) The transfer by the members of approved employment pension or annuity scheme or approved occupational saving scheme of their existing balance to their individual pension accounts maintained with one or more pension fund managers shall not qualify for tax credit under this section.
(b)
(2) The amount of a person’s tax credit allowed under sub-section (1) for a tax year shall be computed according to the following formula, namely: — (A/B) x C Where.- A is the amount of tax assessed to the person for the tax year, before allowance of any tax credit under this Part; B is the person’s taxable income for the tax year; and C is the lesser of —
(i) the total contribution or premium referred to in sub-section (1) paid by the person in the year; or (ii) twenty per cent of the eligible person’s taxable income for the relevant tax year;
Provided that an eligible person joining the pension fund at the age of forty-one years or above, during the first ten years starting from July 1, 2006 shall be allowed additional contribution of 2% per annum for each year of age exceeding forty years.
Provided further that the total contribution allowed to such person shall not exceed 50% of the total taxable income of the preceding year :
Provided also that the additional contribution of two percent per annum for each year of age exceeding forty years shall be allowed up to the 30 June, 2019 subject to the condition that the total contribution allowed to such person shall not exceed thirty percent of the total taxable income of the preceding year.
(3) The transfer by the members of approved employment pension or annuity scheme or approved occupational saving scheme of their existing balance to their individual pension accounts maintained with one or more pension fund managers shall not qualify for tax credit under this section.
Amendment history (12)
- Inserted by the Finance Act, 2016.
- Section 62A omitted by the Finance Act, 2022. The omitted section
- Section 63 substituted by the Finance Act, 2005. The original section 63
- Inserted by the Finance Act, 2006.
- The words “a person” substituted by the Finance Act, 2006.
- substituted by the Finance Act, 2006.
- The semi-colon and the word “or” substituted by the Finance Act, 2011.
- Full stop substituted by the Finance Act, 2016.
- Clause (iii) omitted by the Finance Act, 2011. The omitted clause (iii)
- Added by the Finance Act, 2006.
- Section 63A inserted by the Finance Act, 2025.
- Section 64 omitted by the Finance Act, 2015. Omitted section
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 63A Tax credit for interest paid on low-cost housing loan
(1) An individual shall be entitled to a tax credit for a tax year in respect of any profit on debt or share in rent or share in appreciation for value of house paid by the person in the year on a loan by a scheduled bank or any other financial institution regulated by the Securities and Exchange Commission of Pakistan or advanced by Government or the Local Government or a statutory body or a public company listed on a registered stock exchange in Pakistan where the person utilizes the loan for the construction (including land) or acquisition of one personal house having land area up to two thousand five hundred square feet or flat having total area up to two thousand square feet.
(2) The amount of a person‘s tax credit allowed under sub-section (1) for a tax year shall be computed according to the following formula, namely: — (A/B) x C where — A is the amount of tax assessed to the person for the tax year before allowance of any tax credit under this Part; B is the person‘s taxable income for the tax year; and C is the lesser of —
(a) the total profit on debt referred to in sub-section (1) paid by the person in the year; or (b) thirty per cent of the person‘s taxable income for the year.
(3) The person shall not be entitled to tax credit under this section for any profit deductible under section 15A.
(4) Where an individual has claimed tax credit under this section, he shall not be entitled to claim tax credit for another house or flat under this section during the subsequent fifteen tax years.
(2) The amount of a person‘s tax credit allowed under sub-section (1) for a tax year shall be computed according to the following formula, namely: — (A/B) x C where — A is the amount of tax assessed to the person for the tax year before allowance of any tax credit under this Part; B is the person‘s taxable income for the tax year; and C is the lesser of —
(a) the total profit on debt referred to in sub-section (1) paid by the person in the year; or (b) thirty per cent of the person‘s taxable income for the year.
(3) The person shall not be entitled to tax credit under this section for any profit deductible under section 15A.
(4) Where an individual has claimed tax credit under this section, he shall not be entitled to claim tax credit for another house or flat under this section during the subsequent fifteen tax years.
Amendment history (8)
- Section 63A inserted by the Finance Act, 2025.
- Section 64 omitted by the Finance Act, 2015. Omitted section
- Inserted by the Finance Act, 2016.
- Section 64A is re-numbered as section 60C by Finance Act, 2017
- Section 64AB is re-numbered as section 60D by Finance Act, 2017
- Inserted by the Finance Act, 2015.
- The figure “2018” substituted by the Finance Act, 2016.
- The word “one” substituted by the Finance Act, 2016.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 64 Omitted by Finance Act, 2015Omitted
Omitted by Finance Act, 2015.
s. 64A Section re-numbered as 60COmitted
Section re-numbered as 60C
s. 64AB Section re-numbered as 60DOmitted
Section re-numbered as 60D
s. 64B Tax credit for employment generation by manufacturers
(1) Where a taxpayer being a company formed for establishing and operating a new manufacturing unit sets up a new manufacturing unit between the 1st day of July, 2015 and the 30th day of June, 2019 , (both days inclusive) it shall be given a tax credit for a period of ten years.
(2) The tax credit under sub-section (1) for a tax year shall be equal to two percent of the tax payable for every fifty employees registered with The Employees Old Age Benefits Institution or the Employees Social Security Institutions of Provincial Governments during the tax year, subject to a maximum of ten percent of the tax payable.
(3) Tax credit under this section shall be admissible where—
(a) the company is incorporated and manufacturing unit is setup between the first day of July, 2015 and the 30th day of June, 2018, both days inclusive;
(b) employs more than fifty employees in a tax year registered with The Employees Old Age Benefits Institution and the Employees Social Security Institutions of Provincial Governments;
(c) manufacturing unit is managed by a company formed for operating the said manufacturing unit and registered under the Companies Act, 2017 (XIX of 2017) and having its registered office in Pakistan; and (d) the manufacturing unit is not established by the splitting up or reconstruction or reconstitution of an undertaking already in existence or by transfer of machinery or plant from an undertaking established in Pakistan at any time before the1st July 2015.
(4) Where any credit is allowed under this section and subsequently it is discovered, on the basis of documents or otherwise, by the Commissioner that any of the conditions specified in this section were not fulfilled, the credit originally allowed shall be deemed to have been wrongly allowed and the Commissioner may, notwithstanding anything contained in this Ordinance, re-compute the tax payable by the taxpayer for the relevant year and the provisions of this Ordinance shall, so far as may be, apply accordingly.
(5) For the purposes of this section, a manufacturing unit shall be treated to have been setup on the date on which the manufacturing unit is ready to go into production, whether trial production or commercial production.
(2) The tax credit under sub-section (1) for a tax year shall be equal to two percent of the tax payable for every fifty employees registered with The Employees Old Age Benefits Institution or the Employees Social Security Institutions of Provincial Governments during the tax year, subject to a maximum of ten percent of the tax payable.
(3) Tax credit under this section shall be admissible where—
(a) the company is incorporated and manufacturing unit is setup between the first day of July, 2015 and the 30th day of June, 2018, both days inclusive;
(b) employs more than fifty employees in a tax year registered with The Employees Old Age Benefits Institution and the Employees Social Security Institutions of Provincial Governments;
(c) manufacturing unit is managed by a company formed for operating the said manufacturing unit and registered under the Companies Act, 2017 (XIX of 2017) and having its registered office in Pakistan; and (d) the manufacturing unit is not established by the splitting up or reconstruction or reconstitution of an undertaking already in existence or by transfer of machinery or plant from an undertaking established in Pakistan at any time before the1st July 2015.
(4) Where any credit is allowed under this section and subsequently it is discovered, on the basis of documents or otherwise, by the Commissioner that any of the conditions specified in this section were not fulfilled, the credit originally allowed shall be deemed to have been wrongly allowed and the Commissioner may, notwithstanding anything contained in this Ordinance, re-compute the tax payable by the taxpayer for the relevant year and the provisions of this Ordinance shall, so far as may be, apply accordingly.
(5) For the purposes of this section, a manufacturing unit shall be treated to have been setup on the date on which the manufacturing unit is ready to go into production, whether trial production or commercial production.
Amendment history (12)
- Inserted by the Finance Act, 2016.
- Section 64A is re-numbered as section 60C by Finance Act, 2017
- Section 64AB is re-numbered as section 60D by Finance Act, 2017
- Inserted by the Finance Act, 2015.
- The figure “2018” substituted by the Finance Act, 2016.
- The word “one” substituted by the Finance Act, 2016.
- The expression “Companies Ordinance, 1984 (XLVII of 1984)” substituted by the Finance Act,
- New sub-section 64C inserted by the Finance Act, 2019.
- Section 64C omitted by the Finance Act, 2021. Earlier this omission was made through Tax Laws
- Section 64D inserted by the Finance Act, 2021.
- Section 64D substituted by the Finance Act, 2026. The substituted section
- Inserted by the Finance Act, 2002
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 64C Omitted by Finance Act, 2021Omitted
Omitted by Finance Act, 2021
s. 64D Tax credit for integration
(1) Any person required, under this Ordinance, the Sales Tax Act, 1990 or the Federal Excise Act, 2005, to integrate with the computerized system of the Board for real-time production monitoring, or for the recording or reporting of sales or receipts, shall be entitled to a tax credit in respect of expenditure incurred exclusively on the purchase, acquisition, installation or implementation of such equipment, hardware, software or other electronic components as are directly and exclusively utilized for the purposes of such integration:
Provided that the Board may prescribe limitations, conditions and restrictions for availing the tax credit under this section.
(2) The amount of tax credit allowed under sub-section (1) for a tax year in which electronic resource is installed, integrated and configured with the Board‘s computerized system shall be ten percent of the amount actually invested in the electronic resource.
(3) Such tax credit shall not be allowable against operation and maintenance expenses related to such electronic resource.
(4) This tax credit shall be available only against normal tax payable under Division I or Division II of Part I of the First Schedule.
Provided that the Board may prescribe limitations, conditions and restrictions for availing the tax credit under this section.
(2) The amount of tax credit allowed under sub-section (1) for a tax year in which electronic resource is installed, integrated and configured with the Board‘s computerized system shall be ten percent of the amount actually invested in the electronic resource.
(3) Such tax credit shall not be allowable against operation and maintenance expenses related to such electronic resource.
(4) This tax credit shall be available only against normal tax payable under Division I or Division II of Part I of the First Schedule.
Amendment history (3)
- Section 64D inserted by the Finance Act, 2021.
- Section 64D substituted by the Finance Act, 2026. The substituted section
- Inserted by the Finance Act, 2002
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 65 Miscellaneous provisions relating to tax credits
(1) Where the person entitled to a tax credit under this Part is a member of an association of persons to which sub-section (1) of section 92 applies, the following shall apply—
(a) component A of the formula in sub-section (2) of section 61, sub- section (2) of section 62, sub-section (2) of section 63 and sub- section (2) of section 64 shall be the amount of tax that would be assessed to the individual if any amount derived in the year that is exempt from tax under sub-section (1) of section 92 were chargeable to tax; and (b) component B of the formula in sub-section (2) of section 61, sub- section (2) of section 62, sub-section (2) of section 63 and sub- section (2) of section 64 shall be the taxable income of the individual for the year if any amount derived in the year that is exempt from tax under sub-section (1) of section 92 were chargeable to tax.
(2) Any tax credit allowed under this Part shall be applied in accordance with sub-section (3) of section 4.
(3) Subject to sub-section (4), any tax credit or part of a tax credit allowed to a person under this Part for a tax year that is not able to be credited under sub- section (3) of section 4 for the year shall not be refunded, carried forward to a subsequent tax year, or carried back to a preceding tax year.
(4) Where the person to whom sub-section (3) applies is a member of an association of persons to which sub-section (1) of section 92 applies, the amount of any excess credit under sub-section (3) for a tax year may be claimed as a tax credit by the association for that year.
(5) Sub-section (4) applies only where the member and the association agree in writing for the sub-section to apply and such agreement in writing must be furnished with the association’s return of income for that year.
(6) Where the person is entitled to a tax credit under section 65B, 65D or 65E, provisions of clause (d) of sub-section (2) of section 169 and clause (d) of sub-section (1) of section 113 shall not apply.
(a) component A of the formula in sub-section (2) of section 61, sub- section (2) of section 62, sub-section (2) of section 63 and sub- section (2) of section 64 shall be the amount of tax that would be assessed to the individual if any amount derived in the year that is exempt from tax under sub-section (1) of section 92 were chargeable to tax; and (b) component B of the formula in sub-section (2) of section 61, sub- section (2) of section 62, sub-section (2) of section 63 and sub- section (2) of section 64 shall be the taxable income of the individual for the year if any amount derived in the year that is exempt from tax under sub-section (1) of section 92 were chargeable to tax.
(2) Any tax credit allowed under this Part shall be applied in accordance with sub-section (3) of section 4.
(3) Subject to sub-section (4), any tax credit or part of a tax credit allowed to a person under this Part for a tax year that is not able to be credited under sub- section (3) of section 4 for the year shall not be refunded, carried forward to a subsequent tax year, or carried back to a preceding tax year.
(4) Where the person to whom sub-section (3) applies is a member of an association of persons to which sub-section (1) of section 92 applies, the amount of any excess credit under sub-section (3) for a tax year may be claimed as a tax credit by the association for that year.
(5) Sub-section (4) applies only where the member and the association agree in writing for the sub-section to apply and such agreement in writing must be furnished with the association’s return of income for that year.
(6) Where the person is entitled to a tax credit under section 65B, 65D or 65E, provisions of clause (d) of sub-section (2) of section 169 and clause (d) of sub-section (1) of section 113 shall not apply.
Amendment history (6)
- Section 64D inserted by the Finance Act, 2021.
- Section 64D substituted by the Finance Act, 2026. The substituted section
- Inserted by the Finance Act, 2002
- Inserted by the Finance Act, 2015
- Section 65A omitted by the Finance Act, 2017, Omitted section reads as follows
- Added by the Finance Act, 2010.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 65A Omitted by the Finance Act, 2017Omitted
Omitted by the Finance Act, 2017
s. 65B Tax credit for investment
(1) Where a taxpayer being a company invests any amount in the purchase of plant and machinery, for the purposes of extension, expansion, balancing, modernization and replacement of the plant and machinery, already installed therein, in an industrial undertaking set up in Pakistan and owned by it, credit equal to ten per cent of the amount so invested shall be allowed against the tax payable , including on account of minimum tax and final taxes payable under any of the provisions of this Ordinance, by it in the manner hereinafter provided :
Provided that for the tax year 2019 the rate of credit shall be equal to five percent of the amount so invested:
Provided further that the provisions of sub-section (5) relating to carry forward of the credit to be deducted from tax payable, to the following tax years, as specified in the said sub-section, shall continue to apply after tax year 2019; and (2) The provisions of sub-section (1) shall apply if the plant and machinery is purchased and installed at any time between the first day of July, 2010, and the 30 day of June, 2019 .
(3) The amount of credit admissible under this section shall be deducted from the tax payable by the taxpayer in respect of the tax year in which the plant or machinery in the purchase of which the amount referred to in sub-section (1) is invested and installed.
(4) The provisions of this section shall mutatis mutandis apply to a company setup in Pakistan before the first day of July, 2011, which makes investment, through hundred per cent new equity, during first day of July, 2011 and 30th day of June, 2016, for the purposes of balancing, modernization and replacement of the plant and machinery already installed in an industrial undertaking owned by the company. However, credit equal to twenty per cent of the amount so invested shall be allowed against the tax payable, including on account of minimum tax and final taxes payable under any of the provisions of this Ordinance. The credit shall be allowed in the year in which the plant and machinery in the purchase of which the investment as aforesaid is made, is installed therein. Explanation.— For the purpose of this section the term new equity shall, have the same meaning as defined in sub-section (7) of section 65E.
(5) Where no tax is payable by the taxpayer in respect of the tax year in which such plant or machinery is installed, or where the tax payable is less than the amount of credit as aforesaid, the amount of the credit or so much of it as is in excess thereof, as the case may be, shall be carried forward and deducted from the tax payable by the taxpayer in respect of the following tax year and so on, but no such amount shall be carried forward for more than two tax years in the case of investment referred to in sub-section (1) and for more than five tax years in respect of investment referred to in sub-section (4), however, the deduction made under this section shall not exceed in aggregate the limit specified in sub-section (1) or sub-section (4), as the case may be.
(6) Where any credit is allowed under this section and subsequently it is discovered by the Commissioner Inland Revenue that any one or more of the conditions specified in this section was, or were, not fulfilled, as the case may be, the credit originally allowed shall be deemed to have been wrongly allowed and the Commissioner, notwithstanding anything contained in this Ordinance, shall re- compute the tax payable by the taxpayer for the relevant year and the provisions of this Ordinance shall, so far as may be, apply accordingly.
Provided that for the tax year 2019 the rate of credit shall be equal to five percent of the amount so invested:
Provided further that the provisions of sub-section (5) relating to carry forward of the credit to be deducted from tax payable, to the following tax years, as specified in the said sub-section, shall continue to apply after tax year 2019; and (2) The provisions of sub-section (1) shall apply if the plant and machinery is purchased and installed at any time between the first day of July, 2010, and the 30 day of June, 2019 .
(3) The amount of credit admissible under this section shall be deducted from the tax payable by the taxpayer in respect of the tax year in which the plant or machinery in the purchase of which the amount referred to in sub-section (1) is invested and installed.
(4) The provisions of this section shall mutatis mutandis apply to a company setup in Pakistan before the first day of July, 2011, which makes investment, through hundred per cent new equity, during first day of July, 2011 and 30th day of June, 2016, for the purposes of balancing, modernization and replacement of the plant and machinery already installed in an industrial undertaking owned by the company. However, credit equal to twenty per cent of the amount so invested shall be allowed against the tax payable, including on account of minimum tax and final taxes payable under any of the provisions of this Ordinance. The credit shall be allowed in the year in which the plant and machinery in the purchase of which the investment as aforesaid is made, is installed therein. Explanation.— For the purpose of this section the term new equity shall, have the same meaning as defined in sub-section (7) of section 65E.
(5) Where no tax is payable by the taxpayer in respect of the tax year in which such plant or machinery is installed, or where the tax payable is less than the amount of credit as aforesaid, the amount of the credit or so much of it as is in excess thereof, as the case may be, shall be carried forward and deducted from the tax payable by the taxpayer in respect of the following tax year and so on, but no such amount shall be carried forward for more than two tax years in the case of investment referred to in sub-section (1) and for more than five tax years in respect of investment referred to in sub-section (4), however, the deduction made under this section shall not exceed in aggregate the limit specified in sub-section (1) or sub-section (4), as the case may be.
(6) Where any credit is allowed under this section and subsequently it is discovered by the Commissioner Inland Revenue that any one or more of the conditions specified in this section was, or were, not fulfilled, as the case may be, the credit originally allowed shall be deemed to have been wrongly allowed and the Commissioner, notwithstanding anything contained in this Ordinance, shall re- compute the tax payable by the taxpayer for the relevant year and the provisions of this Ordinance shall, so far as may be, apply accordingly.
Amendment history (17)
- Inserted by the Finance Act, 2015
- Section 65A omitted by the Finance Act, 2017, Omitted section reads as follows
- Added by the Finance Act, 2010.
- Inserted by the Finance Act, 2012.
- The coma and words inserted by Finance Act, 2012
- Full stop” substituted by “colon” by the Finance Act, 2019
- New provisos added by the Finance Act, 2019
- The figure “2015” substituted by Finance Act, 2015.
- The figure “2016” substituted by the Finance Act, 2016.
- The figure “2021” substituted by Finance Act, 2019.
- Sub-section (4) substituted by the Finance Act, 2012. The substituted sub-section (4)
- Sub-section (5) substituted by the Finance Act, 2012. The substituted sub-section (5)
- Added by the Finance Act, 2012.
- Section 65C omitted by the Finance Act, 2021. Earlier this omission was made through Tax Laws
- Added by the Finance Act, 2011.
- Section 65D omitted by the Finance Act, 2021. The omitted section
- Sub-section (1) substituted by the Finance Act, 2012. The substituted sub-section (1) read as
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 65C Omitted by the Finance Act, 2021Omitted
Omitted by the Finance Act, 2021
s. 65D Omitted by the Finance Act, 2021Omitted
Omitted by the Finance Act, 2021
s. 65E Tax credit for industrial undertakings established before the first day of July, 2011
(1) Where a taxpayer being a company, setup in Pakistan before the first day of July, 2011, invests any amount, with at least seventy per cent new equity raised through issuance of new shares, in the purchase and installation of plant and machinery for an industrial undertaking, including corporate dairy farming, for the purposes of-
(i) expansion of the plant and machinery already installed therein; or (ii) undertaking a new project, a tax credit shall be allowed against the tax payable in the manner provided in sub- section (2) and sub-section (3), as the case may be, for a period of five years beginning from the date of setting up or commencement of commercial production from the new plant or expansion project, whichever is later.
(2) Where a taxpayer maintains separate accounts of an expansion project or a new project, as the case may be, the taxpayer shall be allowed a tax credit equal to one an amount as computed in sub-section (3A) of the tax payable, including minimum tax and final taxes payable under any of the provisions of this Ordinance, attributable to such expansion project or new project.
(3) In all other cases, the credit under sub-section (3A) shall be such proportion of the tax payable, including minimum tax and final taxes payable under any of the provisions of this Ordinance, as is the proportion between the new equity and the total equity including new equity.
(3A) The amount of a person’s tax credit allowed under sub-section (1) for a tax year shall be computed according to the following formula, namely: — A x (B/C) where— A is the amount of tax assessed to the person for the tax year before allowance of any tax credit for the tax year; B is the equity raised through issuance of new shares for cash consideration; and C is the total amount invested in the purchase and installation of plant and machinery for the industrial undertaking.
(4) The provisions of sub-section (1) shall apply if the plant and machinery is installed at any time between the first day of July, 2011 and the 30th day of June, 2021 .
(5) The amount of credit admissible under this section shall be deducted from the tax payable, including minimum tax and final taxes payable under any of the provisions of this Ordinance, by the taxpayer , for a period of five years beginning from the date of setting up or commencement of commercial production from the new plant or expansion project, whichever is later.
(6) Where any credit is allowed under this section and subsequently it is discovered, on the basis of documents or otherwise, by the Commissioner Inland Revenue that the business has been discontinued in the subsequent five years after the credit has been allowed or any of the condition specified in this section was not fulfilled, the credit originally allowed shall be deemed to have been wrongly allowed and the Commissioner Inland Revenue may, notwithstanding anything contained in this Ordinance, re-compute the tax payable by the taxpayer for the relevant year and the provisions of this Ordinance shall apply accordingly.
(7) For the purposes of this section, ‘new equity’ means equity raised through fresh issue of shares against cash by the company and shall not include loans obtained from shareholders or directors:
Provided that short term loans and finances obtained from banking companies or non-banking financial institutions for the purposes of meeting working capital requirements shall not disqualify the taxpayer from claiming tax credit under this section.
(i) expansion of the plant and machinery already installed therein; or (ii) undertaking a new project, a tax credit shall be allowed against the tax payable in the manner provided in sub- section (2) and sub-section (3), as the case may be, for a period of five years beginning from the date of setting up or commencement of commercial production from the new plant or expansion project, whichever is later.
(2) Where a taxpayer maintains separate accounts of an expansion project or a new project, as the case may be, the taxpayer shall be allowed a tax credit equal to one an amount as computed in sub-section (3A) of the tax payable, including minimum tax and final taxes payable under any of the provisions of this Ordinance, attributable to such expansion project or new project.
(3) In all other cases, the credit under sub-section (3A) shall be such proportion of the tax payable, including minimum tax and final taxes payable under any of the provisions of this Ordinance, as is the proportion between the new equity and the total equity including new equity.
(3A) The amount of a person’s tax credit allowed under sub-section (1) for a tax year shall be computed according to the following formula, namely: — A x (B/C) where— A is the amount of tax assessed to the person for the tax year before allowance of any tax credit for the tax year; B is the equity raised through issuance of new shares for cash consideration; and C is the total amount invested in the purchase and installation of plant and machinery for the industrial undertaking.
(4) The provisions of sub-section (1) shall apply if the plant and machinery is installed at any time between the first day of July, 2011 and the 30th day of June, 2021 .
(5) The amount of credit admissible under this section shall be deducted from the tax payable, including minimum tax and final taxes payable under any of the provisions of this Ordinance, by the taxpayer , for a period of five years beginning from the date of setting up or commencement of commercial production from the new plant or expansion project, whichever is later.
(6) Where any credit is allowed under this section and subsequently it is discovered, on the basis of documents or otherwise, by the Commissioner Inland Revenue that the business has been discontinued in the subsequent five years after the credit has been allowed or any of the condition specified in this section was not fulfilled, the credit originally allowed shall be deemed to have been wrongly allowed and the Commissioner Inland Revenue may, notwithstanding anything contained in this Ordinance, re-compute the tax payable by the taxpayer for the relevant year and the provisions of this Ordinance shall apply accordingly.
(7) For the purposes of this section, ‘new equity’ means equity raised through fresh issue of shares against cash by the company and shall not include loans obtained from shareholders or directors:
Provided that short term loans and finances obtained from banking companies or non-banking financial institutions for the purposes of meeting working capital requirements shall not disqualify the taxpayer from claiming tax credit under this section.
Amendment history (19)
- Added by the Finance Act, 2011.
- Sub-section (1) substituted by the Finance Act, 2012. The substituted sub-section (1) read as
- The words “hundred per cent” substituted by the Finance Act, 2016.
- Sub-section (2) substituted by the Finance Act, 2012. The substituted sub-section (1) read as
- Sub-section (3) substituted by the Finance Act, 2012. The substituted sub-section (1) read as
- The words “this section” substituted by the Finance Act, 2016.
- Inserted by the Finance Act, 2016.
- Sub-section (4) substituted by the Finance Act, 2012. The substituted sub-section (1)
- The figure “2016” substituted by the Finance Act, 2016.
- The figure “2019” substituted by Finance Act, 2018.
- Inserted by the Finance Act, 2012.
- installed and for the subsequent four years” substituted by Finance Act, 2015.
- Sub-section (5) renumbered by the Finance Act, 2012.
- Added by the Finance Act, 2012.
- Sections 65F and 65G inserted by the Finance Act, 2021. Earlier this insertion was made through
- Clause (a) substituted by the Finance Act, 2025. The substituted clause (a)
- Expression “; and” substituted by the Finance Act, 2024.
- Explanation inserted by the Finance Act, 2024.
- Clause (c) omitted by the Finance Act, 2022. The omitted clause
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 65F Tax credit for certain persons
(1) Following persons or incomes shall be allowed a tax credit equal to one hundred per cent of the tax payable under any provisions of this Ordinance including minimum, alternate corporate tax and final taxes for the period, to the extent, upon fulfillment of conditions and subject to limitations detailed as under:-
(a) persons engaged in coal mining projects in Sindh, to the extent, the income is derived from supplying coal to power generation projects.
(b) a startup as defined in clause (62A) of section 2 for the tax year in which the startup is certified by the Pakistan Software Export Board and the next following two tax years . Explanation. – For the removal of doubt it is clarified that tax credit under clause (a) shall only be available to the income derived from the operations of coal mining projects in Sindh supplying coal to power generation projects.
(2) The tax credit under sub-section (1) shall be available subject to fulfillment of the following conditions, where applicable, namely:-
(a) return has been filed;
(b) withholding tax statements for the relevant tax year have been filed in respect of those provisions of the Ordinance, where the person is a withholding agent; and (c) sales tax returns for the tax periods corresponding to relevant tax year have been filed if the person is required to file Sales Tax Return under any of the Federal or Provincial sales tax laws.
(a) persons engaged in coal mining projects in Sindh, to the extent, the income is derived from supplying coal to power generation projects.
(b) a startup as defined in clause (62A) of section 2 for the tax year in which the startup is certified by the Pakistan Software Export Board and the next following two tax years . Explanation. – For the removal of doubt it is clarified that tax credit under clause (a) shall only be available to the income derived from the operations of coal mining projects in Sindh supplying coal to power generation projects.
(2) The tax credit under sub-section (1) shall be available subject to fulfillment of the following conditions, where applicable, namely:-
(a) return has been filed;
(b) withholding tax statements for the relevant tax year have been filed in respect of those provisions of the Ordinance, where the person is a withholding agent; and (c) sales tax returns for the tax periods corresponding to relevant tax year have been filed if the person is required to file Sales Tax Return under any of the Federal or Provincial sales tax laws.
Amendment history (5)
- Sections 65F and 65G inserted by the Finance Act, 2021. Earlier this insertion was made through
- Clause (a) substituted by the Finance Act, 2025. The substituted clause (a)
- Expression “; and” substituted by the Finance Act, 2024.
- Explanation inserted by the Finance Act, 2024.
- Clause (c) omitted by the Finance Act, 2022. The omitted clause
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 65G Tax credit for specified industrial undertakings
(1) When making certain eligible capital investments as specified in sub-section (2), the eligible taxpayers defined in sub-section (3) shall be allowed to take an investment tax credit of twenty five percent of the eligible investment amount, against tax payable under the provisions of this Ordinance including minimum and final taxes. The tax credit not fully adjusted during the year of investment shall be carried forward to the subsequent tax year subject to the condition that it may be carried forward for a period not exceeding two years.
(2) For the purposes of this section, the eligible investment means investment made in purchase and installation of new machinery, buildings, equipment, hardware and software, except self-created software and used capital goods.
(3) For the purpose of this section, eligible person means —
(a) green field industrial undertaking as defined in clause (27A) of section 2 engaged in —
(i) the manufacture of goods or materials or the subjection of goods or materials to any process which substantially changes their original condition; or (ii) ship building:
Provided that the person incorporated between the 30th day of June, 2019 and the 30th day of June, 2024 and the person is not formed by the splitting up or reconstitution of an undertaking already in existence or by transfer of machinery, plant or building from an undertaking established in Pakistan prior to commencement of the new business and is not part of an expansion project; and (b) industrial undertaking set up by the 30th day of June 2023 and engaged in the manufacture of plant, machinery, equipment and items with dedicated use (no multiple uses) for generation of renewable energy from sources like solar and wind, for a period of five years beginning from the date such industrial undertaking is set up. COMMON RULES PART I GENERAL
(2) For the purposes of this section, the eligible investment means investment made in purchase and installation of new machinery, buildings, equipment, hardware and software, except self-created software and used capital goods.
(3) For the purpose of this section, eligible person means —
(a) green field industrial undertaking as defined in clause (27A) of section 2 engaged in —
(i) the manufacture of goods or materials or the subjection of goods or materials to any process which substantially changes their original condition; or (ii) ship building:
Provided that the person incorporated between the 30th day of June, 2019 and the 30th day of June, 2024 and the person is not formed by the splitting up or reconstitution of an undertaking already in existence or by transfer of machinery, plant or building from an undertaking established in Pakistan prior to commencement of the new business and is not part of an expansion project; and (b) industrial undertaking set up by the 30th day of June 2023 and engaged in the manufacture of plant, machinery, equipment and items with dedicated use (no multiple uses) for generation of renewable energy from sources like solar and wind, for a period of five years beginning from the date such industrial undertaking is set up. COMMON RULES PART I GENERAL
Amendment history (11)
- Sections 65F and 65G inserted by the Finance Act, 2021. Earlier this insertion was made through
- Clause (a) substituted by the Finance Act, 2025. The substituted clause (a)
- Expression “; and” substituted by the Finance Act, 2024.
- Explanation inserted by the Finance Act, 2024.
- Clause (c) omitted by the Finance Act, 2022. The omitted clause
- Substituted by the Finance Act, 2016.
- Inserted by the Finance Act, 2002.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- The figure “232” substituted by the Finance Act, 2002.
- Inserted by the Finance Act, 2016.
- Inserted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 65H Omitted by the Finance Act, 2022Omitted
Omitted by the Finance Act, 2022.
Common Rules
s. 66 Income of joint owners
(1) For the purposes of this Ordinance and subject to sub-section (2), where any property is owned by two or more persons and their respective shares are definite and ascertainable –
(a) the persons shall not be assessed as an association of persons in respect of the property; and (b) the share of each person in the income from the property for a tax year shall be taken into account in the computation of the person’s taxable income for that year.
(2) This section shall not apply in computing income chargeable under the head Income from Business.
(a) the persons shall not be assessed as an association of persons in respect of the property; and (b) the share of each person in the income from the property for a tax year shall be taken into account in the computation of the person’s taxable income for that year.
(2) This section shall not apply in computing income chargeable under the head Income from Business.
Amendment history (6)
- Substituted by the Finance Act, 2016.
- Inserted by the Finance Act, 2002.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- The figure “232” substituted by the Finance Act, 2002.
- Inserted by the Finance Act, 2016.
- Inserted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 67 Apportionment of deductions
(1) Subject to this Ordinance, where an expenditure expenditures, deductions and allowances relates to –
(a) the derivation of more than one head of income; or (ab) derivation of income comprising of taxable income and any class of income to which sub-sections
(4) and (5) of section 4 apply, or;
(b) the derivation of income chargeable to tax under a head of income and to some other purpose, the expenditure expenditures, deductions and allowances shall be apportioned on any reasonable basis taking account of the relative nature and size of the activities to which the amount relates.
(2) The Board may make rules under section 237 for the purposes of apportioning deductions expenditures and allowances .
(a) the derivation of more than one head of income; or (ab) derivation of income comprising of taxable income and any class of income to which sub-sections
(4) and (5) of section 4 apply, or;
(b) the derivation of income chargeable to tax under a head of income and to some other purpose, the expenditure expenditures, deductions and allowances shall be apportioned on any reasonable basis taking account of the relative nature and size of the activities to which the amount relates.
(2) The Board may make rules under section 237 for the purposes of apportioning deductions expenditures and allowances .
Amendment history (6)
- Substituted by the Finance Act, 2016.
- Inserted by the Finance Act, 2002.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- The figure “232” substituted by the Finance Act, 2002.
- Inserted by the Finance Act, 2016.
- Inserted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 68 Fair market value
(1) For the purposes of this Ordinance, the fair market value of any property or rent , asset, service, benefit or perquisite at a particular time shall be the price which the property or rent , asset, service, benefit or perquisite would ordinarily fetch on sale or supply in the open market at that time.
(2) The fair market value of any property or rent , asset, service, benefit or perquisite shall be determined without regard to any restriction on transfer or to the fact that it is not otherwise convertible to cash.
(3) Where the price other than the price of immoveable property referred to in sub-section (1) is not ordinarily ascertainable, such price may be determined by the Commissioner.
(4) Notwithstanding anything contained in sub-sections
(1) and (3), the Board may, from time to time, by notification in the official Gazette, determine the fair market value of immovable property of the area or areas as may be specified in the notification .
(5) Where the fair market value of any immovable property of an area or areas has not been determined by the Board in the notification referred to in sub- section (4), the fair market value of such immovable property shall be deemed to be the value fixed by the District Officer (Revenue) or provincial or any other authority authorized in this behalf for the purposes of stamp duty.
(6) In respect of immovable property—
(i) component A of the formula in sub-section (2) of section 37;
(ii) consideration received" as mentioned in Division X of Part IV of First Schedule;
(iii) value of immovable property" as mentioned in Divisions XVIII of Part IV of the First Schedule; and (iv) valuation for the purposes of section 111,shall not be less than the fair market value as determined under sub-section (4) or (5). Explanation.—
(1) For the removal of doubt, it is clarified that the fair market value as determined under sub-section (4) or
(5) shall be for carrying out the purposes of this Ordinance only.
(2) It is further clarified that for the purposes of clauses
(i) to
(iv) of this sub-section if the fair market value determined under sub-section (4) or (5) is different than the auction price the applicable price shall be the higher of the two.
(2) The fair market value of any property or rent , asset, service, benefit or perquisite shall be determined without regard to any restriction on transfer or to the fact that it is not otherwise convertible to cash.
(3) Where the price other than the price of immoveable property referred to in sub-section (1) is not ordinarily ascertainable, such price may be determined by the Commissioner.
(4) Notwithstanding anything contained in sub-sections
(1) and (3), the Board may, from time to time, by notification in the official Gazette, determine the fair market value of immovable property of the area or areas as may be specified in the notification .
(5) Where the fair market value of any immovable property of an area or areas has not been determined by the Board in the notification referred to in sub- section (4), the fair market value of such immovable property shall be deemed to be the value fixed by the District Officer (Revenue) or provincial or any other authority authorized in this behalf for the purposes of stamp duty.
(6) In respect of immovable property—
(i) component A of the formula in sub-section (2) of section 37;
(ii) consideration received" as mentioned in Division X of Part IV of First Schedule;
(iii) value of immovable property" as mentioned in Divisions XVIII of Part IV of the First Schedule; and (iv) valuation for the purposes of section 111,shall not be less than the fair market value as determined under sub-section (4) or (5). Explanation.—
(1) For the removal of doubt, it is clarified that the fair market value as determined under sub-section (4) or
(5) shall be for carrying out the purposes of this Ordinance only.
(2) It is further clarified that for the purposes of clauses
(i) to
(iv) of this sub-section if the fair market value determined under sub-section (4) or (5) is different than the auction price the applicable price shall be the higher of the two.
Amendment history (8)
- Substituted by the Finance Act, 2016.
- Inserted by the Finance Act, 2002.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- The figure “232” substituted by the Finance Act, 2002.
- Inserted by the Finance Act, 2016.
- Inserted by the Finance Act, 2003.
- Added by the Finance Act, 2003.
- The word “mid-exchange” omitted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 69 Receipt of income
Receipt of income.— For the purposes of this Ordinance, a person shall be treated as having received an amount, benefit, or perquisite if it is —
(a) actually received by the person;
(b) applied on behalf of the person, at the instruction of the person or under any law; or (c) made available to the person.
(a) actually received by the person;
(b) applied on behalf of the person, at the instruction of the person or under any law; or (c) made available to the person.
Amendment history (1)
- The word “mid-exchange” omitted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 70 Recouped expenditure
Recouped expenditure.— Where a person has been allowed a deduction for any expenditure or loss incurred in a tax year in the computation of the person’s income chargeable to tax under a head of income and, subsequently, the person has received, in cash or in kind, any amount in respect of such expenditure or loss, the amount so received shall be included in the income chargeable under that head for the tax year in which it is received.
Amendment history (1)
- The word “mid-exchange” omitted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 71 Currency conversion
(1) Every amount taken into account under this Ordinance shall be in Rupees.
(2) Where an amount is in a currency other than rupees, the amount shall be converted to the Rupee at the State Bank of Pakistan rate applying between the foreign currency and the Rupee on the date the amount is taken into account for the purposes of this Ordinance.
(2) Where an amount is in a currency other than rupees, the amount shall be converted to the Rupee at the State Bank of Pakistan rate applying between the foreign currency and the Rupee on the date the amount is taken into account for the purposes of this Ordinance.
Amendment history (1)
- The word “mid-exchange” omitted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 72 Cessation of source of income
(a) any income is derived by a person in a tax year from any business, activity, investment or other source that has ceased either before the commencement of the year or during the year; and (b) if the income had been derived before the business, activity, investment or other source ceased it would have been chargeable to tax under this Ordinance, this Ordinance shall apply to the income on the basis that the business, activity, investment or other source had not ceased at the time the income was derived.
Amendment history (1)
- The word “mid-exchange” omitted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 73 Rules to prevent double derivation and double deductions
(1) For the purposes of this Ordinance, where –
(a) any amount is chargeable to tax under this Ordinance on the basis that it is receivable, the amount shall not be chargeable again on the basis that it is received; or (b) any amount is chargeable to tax under this Ordinance on the basis that it is received, the amount shall not be chargeable again on the basis that it is receivable.
(2) For the purposes of this Ordinance, where —
(a) any expenditure is deductible under this Ordinance on the basis that it is payable, the expenditure shall not be deductible again on the basis that it is paid; or (b) any expenditure is deductible under this Ordinance on the basis that it is paid, the expenditure shall not be deductible again on the basis that it is payable. PART II TAX YEAR
(a) any amount is chargeable to tax under this Ordinance on the basis that it is receivable, the amount shall not be chargeable again on the basis that it is received; or (b) any amount is chargeable to tax under this Ordinance on the basis that it is received, the amount shall not be chargeable again on the basis that it is receivable.
(2) For the purposes of this Ordinance, where —
(a) any expenditure is deductible under this Ordinance on the basis that it is payable, the expenditure shall not be deductible again on the basis that it is paid; or (b) any expenditure is deductible under this Ordinance on the basis that it is paid, the expenditure shall not be deductible again on the basis that it is payable. PART II TAX YEAR
Amendment history (2)
- The word “mid-exchange” omitted by the Finance Act, 2003.
- Section 74 substituted by the Finance Act, 2002. The substituted section 74
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 74 Tax year
(1) For the purpose of this Ordinance and subject to this section, the tax year shall be a period of twelve months ending on the 30 day of June (hereinafter referred to as ‘normal tax year’) and shall, subject to sub-section (3), be denoted by the calendar year in which the said date falls.
(2) Where a person’s income year, under the repealed Ordinance, is different from the normal tax year, or where a person is allowed, by an order under sub-section (3), to use a twelve months’ period different from normal tax year, such income year or such period shall be that person’s tax year (hereinafter referred to as ‘special tax year’) and shall, subject to sub-section (3), be denoted by the calendar year relevant to normal tax year in which the closing date of the special tax year falls.
(2A) The Board ,—
(i) in the case of a class of persons having a special tax year different from a normal tax year may permit, by a notification in the official Gazette, to use a normal tax year; and (ii) in the case of a class of persons having a normal tax year may permit, by a notification in the official Gazette, to use a special tax year.
(3) A person may apply, in writing, to the Commissioner to allow him to use a twelve months’ period, other than normal tax year, as special tax year and the Commissioner may, subject to sub-section (5), by an order, allow him to use such special tax year.
(4) A person using a special tax year, under sub-section (2), may apply in writing, to the Commissioner to allow him to use normal tax year and the Commissioner may, subject to sub-section (5), by an order, allow him to use normal tax year.
(5) The Commissioner shall grant permission under sub-section (3) or (4) only if the person has shown a compelling need to use special tax year or normal tax year, as the case may be, and the permission shall be subject to such conditions, if any, as the Commissioner may impose.
(6) An order under sub-section (3) or (4) shall be made after providing to the applicant an opportunity of being heard and where his application is rejected the Commissioner shall record in the order the reasons for rejection.
(7) The Commissioner may, after providing to the person concerned an opportunity of being heard, by an order, withdraw the permission granted under sub-section (3) or (4).
(8) An order under sub-section (3) or (4) shall take effect from such date, being the first day of the special tax year or the normal tax year, as the case may be, as may be specified in the order.
(9) Where the tax year of a person changes as a result of an order under sub-section (3) or sub-section (4), the period between the end of the last tax year prior to change and the date on which the changed tax year commences shall be treated as a separate tax year, to be known as the transitional tax year.
(10) In this Ordinance, a reference to a particular financial year shall, unless the context otherwise requires, include a special tax year or a transitional tax year commencing during the financial year.
(11) A person dissatisfied with an order under sub-section (3),
(4) or (7) may file a review application to the Board , and the decision by the Board on such application shall be final. PART III ASSETS
(2) Where a person’s income year, under the repealed Ordinance, is different from the normal tax year, or where a person is allowed, by an order under sub-section (3), to use a twelve months’ period different from normal tax year, such income year or such period shall be that person’s tax year (hereinafter referred to as ‘special tax year’) and shall, subject to sub-section (3), be denoted by the calendar year relevant to normal tax year in which the closing date of the special tax year falls.
(2A) The Board ,—
(i) in the case of a class of persons having a special tax year different from a normal tax year may permit, by a notification in the official Gazette, to use a normal tax year; and (ii) in the case of a class of persons having a normal tax year may permit, by a notification in the official Gazette, to use a special tax year.
(3) A person may apply, in writing, to the Commissioner to allow him to use a twelve months’ period, other than normal tax year, as special tax year and the Commissioner may, subject to sub-section (5), by an order, allow him to use such special tax year.
(4) A person using a special tax year, under sub-section (2), may apply in writing, to the Commissioner to allow him to use normal tax year and the Commissioner may, subject to sub-section (5), by an order, allow him to use normal tax year.
(5) The Commissioner shall grant permission under sub-section (3) or (4) only if the person has shown a compelling need to use special tax year or normal tax year, as the case may be, and the permission shall be subject to such conditions, if any, as the Commissioner may impose.
(6) An order under sub-section (3) or (4) shall be made after providing to the applicant an opportunity of being heard and where his application is rejected the Commissioner shall record in the order the reasons for rejection.
(7) The Commissioner may, after providing to the person concerned an opportunity of being heard, by an order, withdraw the permission granted under sub-section (3) or (4).
(8) An order under sub-section (3) or (4) shall take effect from such date, being the first day of the special tax year or the normal tax year, as the case may be, as may be specified in the order.
(9) Where the tax year of a person changes as a result of an order under sub-section (3) or sub-section (4), the period between the end of the last tax year prior to change and the date on which the changed tax year commences shall be treated as a separate tax year, to be known as the transitional tax year.
(10) In this Ordinance, a reference to a particular financial year shall, unless the context otherwise requires, include a special tax year or a transitional tax year commencing during the financial year.
(11) A person dissatisfied with an order under sub-section (3),
(4) or (7) may file a review application to the Board , and the decision by the Board on such application shall be final. PART III ASSETS
Amendment history (4)
- Section 74 substituted by the Finance Act, 2002. The substituted section 74
- Added by the Finance Act, 2004.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Inserted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 75 Disposal and acquisition of assets
(1) A person who holds an asset shall be treated as having made a disposal of the asset at the time the person parts with the ownership of the asset, including when the asset is —
(a) sold, exchanged, transferred or distributed; or (b) cancelled, redeemed, relinquished, destroyed, lost, expired or surrendered.
(2) The transmission of an asset by succession or under a will shall be treated as a disposal of the asset by the deceased at the time asset is transmitted.
(3) The application of a business asset to personal use shall be treated as a disposal of the asset by the owner of the asset at the time the asset is so applied.
(3A) Where a business asset is discarded or ceases to be used in business, it shall be treated to have been disposed of.
(4) A disposal shall include the disposal of a part of an asset.
(5) A person shall be treated as having acquired an asset at the time the person begins to own the asset, including at the time the person is granted any right.
(6) The application of a personal asset to business use shall be treated as an acquisition of the asset by the owner at the time the asset is so applied.
(7) In this section, - business asset means an asset held wholly or partly for use in a business, including stock-in-trade and a depreciable asset; and personal asset means an asset held wholly for personal use.
(a) sold, exchanged, transferred or distributed; or (b) cancelled, redeemed, relinquished, destroyed, lost, expired or surrendered.
(2) The transmission of an asset by succession or under a will shall be treated as a disposal of the asset by the deceased at the time asset is transmitted.
(3) The application of a business asset to personal use shall be treated as a disposal of the asset by the owner of the asset at the time the asset is so applied.
(3A) Where a business asset is discarded or ceases to be used in business, it shall be treated to have been disposed of.
(4) A disposal shall include the disposal of a part of an asset.
(5) A person shall be treated as having acquired an asset at the time the person begins to own the asset, including at the time the person is granted any right.
(6) The application of a personal asset to business use shall be treated as an acquisition of the asset by the owner at the time the asset is so applied.
(7) In this section, - business asset means an asset held wholly or partly for use in a business, including stock-in-trade and a depreciable asset; and personal asset means an asset held wholly for personal use.
Amendment history (4)
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Inserted by the Finance Act, 2003.
- New section 75A inserted by the Finance Act, 2019.
- Words inserted by the Finance Act, 2025.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 75A Purchase of assets through banking channel
(1) Notwithstanding anything contained in any other law, for the time being in force, no person shall purchase-
(a) immovable property having fair market value greater than five million Rupees; or (b) any other asset having fair market value more than one million Rupees, otherwise than by a crossed cheque drawn on a bank or through crossed demand draft or crossed pay order or any other crossed banking instrument or through digital means showing transfer of amount from one bank account to another bank account.
(2) For the purposes of this section in case of immovable property, fair market value means value notified by the Board under sub-section (4) of section 68 or value fixed by the provincial authority for the purposes of stamp duty, whichever is higher.
(3) In case the transaction is not undertaken in the manner specified in sub-section (1), -
(a) such asset shall not be eligible for any allowance under sections 22, 23, 24 and 25 of this Ordinance; and (b) such amount shall not be treated as cost in terms of section 76 of this Ordinance for computation of any gain on sale of such asset.
(a) immovable property having fair market value greater than five million Rupees; or (b) any other asset having fair market value more than one million Rupees, otherwise than by a crossed cheque drawn on a bank or through crossed demand draft or crossed pay order or any other crossed banking instrument or through digital means showing transfer of amount from one bank account to another bank account.
(2) For the purposes of this section in case of immovable property, fair market value means value notified by the Board under sub-section (4) of section 68 or value fixed by the provincial authority for the purposes of stamp duty, whichever is higher.
(3) In case the transaction is not undertaken in the manner specified in sub-section (1), -
(a) such asset shall not be eligible for any allowance under sections 22, 23, 24 and 25 of this Ordinance; and (b) such amount shall not be treated as cost in terms of section 76 of this Ordinance for computation of any gain on sale of such asset.
Amendment history (2)
- New section 75A inserted by the Finance Act, 2019.
- Words inserted by the Finance Act, 2025.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 76 Cost
(1) Except as otherwise provided in this Ordinance, this section shall establish the cost of an asset for the purposes of this Ordinance.
(2) Subject to sub-section (3), the cost of an asset purchased by a person shall be the sum of the following amounts, namely:—
(a) The total consideration given by the person for the asset, including the fair market value of any consideration in kind determined at the time the asset is acquired;
(b) any incidental expenditure incurred by the person in acquiring and disposing of the asset; and (c) any expenditure incurred by the person to alter or improve the asset, but shall not include any expenditure under clauses
(b) and (c) that has been fully allowed as a deduction under this Ordinance.
(3) The cost of an asset treated as acquired under sub-section (6) of section 75 shall be the fair market value of the asset determined at the date it is applied to business use.
(4) The cost of an asset produced or constructed by a person shall be the total costs incurred by the person in producing or constructing the asset plus any expenditure referred to in clauses
(b) and (c) of sub-section (2) incurred by the person.
(5) Where an asset has been acquired by a person with a loan denominated in a foreign currency and, before full and final repayment of the loan, there is an increase or decrease in the liability of the person under the loan as expressed in Rupees, the amount by which the liability is increased or reduced shall be added to or deducted from the cost of the asset, as the case may be. Explanation.-Difference, if any, on account of foreign currency fluctuation, shall be taken into account in the year of occurrence for the purposes of depreciation.
(6) In determining whether the liability of a person has increased or decreased for the purposes of sub-section (5), account shall be taken of the person’s position under any hedging agreement relating to the loan.
(7) Where a part of an asset is disposed of by a person, the cost of the asset shall be apportioned between the part of the asset retained and the part disposed of in accordance with their respective fair market values determined at the time the person acquired the asset.
(8) Where the acquisition of an asset by a person is the derivation of an amount chargeable to tax, the cost of the asset shall be the amount so charged plus any amount paid by the person for the asset.
(8A) Where an immovable property is acquired by an individual through inheritance, the cost of such property in the hands of that individual shall be the fair market value as defined under this Ordinance, of the property as provided under subsection (5) of section 68 of this Ordinance, on transfer of such property to the beneficiary.
(9) Where the acquisition of an asset by a person is the derivation of an amount exempt from tax, the cost of the asset shall be the exempt amount plus any amount paid by the person for the asset.
(10) The cost of an asset does not include the amount of any grant, subsidy, rebate, commission or any other assistance (other than a loan repayable with or without profit) received or receivable by a person in respect of the acquisition of the asset, except to the extent to which the amount is chargeable to tax under this Ordinance.
(11) Notwithstanding anything contained in this section, the Board may prescribe rules for determination of cost for any asset.
(2) Subject to sub-section (3), the cost of an asset purchased by a person shall be the sum of the following amounts, namely:—
(a) The total consideration given by the person for the asset, including the fair market value of any consideration in kind determined at the time the asset is acquired;
(b) any incidental expenditure incurred by the person in acquiring and disposing of the asset; and (c) any expenditure incurred by the person to alter or improve the asset, but shall not include any expenditure under clauses
(b) and (c) that has been fully allowed as a deduction under this Ordinance.
(3) The cost of an asset treated as acquired under sub-section (6) of section 75 shall be the fair market value of the asset determined at the date it is applied to business use.
(4) The cost of an asset produced or constructed by a person shall be the total costs incurred by the person in producing or constructing the asset plus any expenditure referred to in clauses
(b) and (c) of sub-section (2) incurred by the person.
(5) Where an asset has been acquired by a person with a loan denominated in a foreign currency and, before full and final repayment of the loan, there is an increase or decrease in the liability of the person under the loan as expressed in Rupees, the amount by which the liability is increased or reduced shall be added to or deducted from the cost of the asset, as the case may be. Explanation.-Difference, if any, on account of foreign currency fluctuation, shall be taken into account in the year of occurrence for the purposes of depreciation.
(6) In determining whether the liability of a person has increased or decreased for the purposes of sub-section (5), account shall be taken of the person’s position under any hedging agreement relating to the loan.
(7) Where a part of an asset is disposed of by a person, the cost of the asset shall be apportioned between the part of the asset retained and the part disposed of in accordance with their respective fair market values determined at the time the person acquired the asset.
(8) Where the acquisition of an asset by a person is the derivation of an amount chargeable to tax, the cost of the asset shall be the amount so charged plus any amount paid by the person for the asset.
(8A) Where an immovable property is acquired by an individual through inheritance, the cost of such property in the hands of that individual shall be the fair market value as defined under this Ordinance, of the property as provided under subsection (5) of section 68 of this Ordinance, on transfer of such property to the beneficiary.
(9) Where the acquisition of an asset by a person is the derivation of an amount exempt from tax, the cost of the asset shall be the exempt amount plus any amount paid by the person for the asset.
(10) The cost of an asset does not include the amount of any grant, subsidy, rebate, commission or any other assistance (other than a loan repayable with or without profit) received or receivable by a person in respect of the acquisition of the asset, except to the extent to which the amount is chargeable to tax under this Ordinance.
(11) Notwithstanding anything contained in this section, the Board may prescribe rules for determination of cost for any asset.
Amendment history (6)
- New section 75A inserted by the Finance Act, 2019.
- Words inserted by the Finance Act, 2025.
- Inserted by the Finance Act, 2003.
- Added by the Finance Act, 2009.
- Sub-section (8A) added by the Finance Act, 2026.
- Added by the Finance Act, 2012.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 77 Consideration received
(1) The consideration received by a person on disposal of an asset shall be the total amount received by the person for the asset or the fair market value thereof, whichever is the higher , including the fair market value of any consideration received in kind determined at the time of disposal.
(2) Where an asset has been lost or destroyed by a person, the consideration received for the asset shall include any compensation, indemnity or damages received by the person under —
(a) an insurance policy, indemnity or other agreement;
(b) a settlement; or (c) a judicial decision.
(3) The consideration received for an asset treated as disposed of under sub-section (3) or (3A) of section 75 shall be the fair market value of the asset determined at the time it is applied to personal use or discarded or ceased to be used in business, as the case may be .
(4) The consideration received by a scheduled bank, financial institution, modaraba, or leasing company approved by the Commissioner (hereinafter referred to as a leasing company) in respect of an asset leased by the company to another person shall be the residual value received by the leasing company on maturity of the lease agreement subject to the condition that the residual value plus the amount realized during the term of the lease towards the cost of the asset is not less than the original cost of the asset.
(5) Where two or more assets are disposed of by a person in a single transaction and the consideration received for each asset is not specified, the total consideration received by the person shall be apportioned among the assets disposed of in proportion to their respective fair market values determined at the time of the transaction.
(6) Notwithstanding anything contained in this section, the Board may prescribe rules for determination of consideration received for any asset.
(2) Where an asset has been lost or destroyed by a person, the consideration received for the asset shall include any compensation, indemnity or damages received by the person under —
(a) an insurance policy, indemnity or other agreement;
(b) a settlement; or (c) a judicial decision.
(3) The consideration received for an asset treated as disposed of under sub-section (3) or (3A) of section 75 shall be the fair market value of the asset determined at the time it is applied to personal use or discarded or ceased to be used in business, as the case may be .
(4) The consideration received by a scheduled bank, financial institution, modaraba, or leasing company approved by the Commissioner (hereinafter referred to as a leasing company) in respect of an asset leased by the company to another person shall be the residual value received by the leasing company on maturity of the lease agreement subject to the condition that the residual value plus the amount realized during the term of the lease towards the cost of the asset is not less than the original cost of the asset.
(5) Where two or more assets are disposed of by a person in a single transaction and the consideration received for each asset is not specified, the total consideration received by the person shall be apportioned among the assets disposed of in proportion to their respective fair market values determined at the time of the transaction.
(6) Notwithstanding anything contained in this section, the Board may prescribe rules for determination of consideration received for any asset.
Amendment history (5)
- Sub-section (8A) added by the Finance Act, 2026.
- Added by the Finance Act, 2012.
- Inserted by the Finance Act, 2003.
- Explanation inserted by the Finance Act, 2026.
- Inserted by the Finance Act, 2018.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 78 Non-arm's length transactions
(a) the person disposing of the asset shall be treated as having received consideration equal to the fair market value of the asset determined at the time the asset is disposed; and (b) the person acquiring the asset shall be treated as having a cost equal to the amount determined under clause (a).
Amendment history (3)
- Added by the Finance Act, 2012.
- Explanation inserted by the Finance Act, 2026.
- Inserted by the Finance Act, 2018.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 79 Non-recognition rules
(1) For the purposes of this Ordinance and subject to sub-section (2), no gain or loss shall be taken to arise on the disposal of an asset –
(a) between spouses under an agreement to live apart;
(b) by reason of the transmission of the asset to an executor or beneficiary on the death of a person; Explanation: For the removal of doubt it is clarified that transmission of immovable property, to a beneficiary on the death of a person shall also include the transmission of assets by reason of family settlement amongst the family members consequent upon death of the person.
(c) by reason of a gift of the asset to a relative, as defined in sub-section (5) of section 85 ;
(d) by reason of the compulsory acquisition of the asset under any law where the consideration received for the disposal is reinvested by the recipient in an asset of a like kind within one year of the disposal;
(e) by a company to its shareholders on liquidation of the company; or (f) by an association of persons to its members on dissolution of the association where the assets are distributed to members in accordance with their interests in the capital of the association.
(2) Sub-section (1) shall not apply where the person acquiring the asset is a non-resident person at the time of the acquisition in respect of disposal of an asset as mentioned in clauses (d),
(e) and (f) of sub-section (1) .
(3) Where clause (a), (b), (c),
(e) or (f) of sub-section (1) applies, the person acquiring the asset shall be treated as —
(a) acquiring an asset of the same character as the person disposing of the asset; and (b) acquiring the asset for a cost equal to the cost of the asset for the person disposing of the asset at the time of the disposal.
(4) The person’s cost of a replacement asset referred to in clause (d) of sub-section (1) shall be the cost of the asset disposed of plus the amount by which any consideration given by the person for the replacement asset exceeds the consideration received by the person for the asset disposed of. PROVISIONS GOVERNING PERSONS PART I CENTRAL CONCEPTS Division I Persons
(a) between spouses under an agreement to live apart;
(b) by reason of the transmission of the asset to an executor or beneficiary on the death of a person; Explanation: For the removal of doubt it is clarified that transmission of immovable property, to a beneficiary on the death of a person shall also include the transmission of assets by reason of family settlement amongst the family members consequent upon death of the person.
(c) by reason of a gift of the asset to a relative, as defined in sub-section (5) of section 85 ;
(d) by reason of the compulsory acquisition of the asset under any law where the consideration received for the disposal is reinvested by the recipient in an asset of a like kind within one year of the disposal;
(e) by a company to its shareholders on liquidation of the company; or (f) by an association of persons to its members on dissolution of the association where the assets are distributed to members in accordance with their interests in the capital of the association.
(2) Sub-section (1) shall not apply where the person acquiring the asset is a non-resident person at the time of the acquisition in respect of disposal of an asset as mentioned in clauses (d),
(e) and (f) of sub-section (1) .
(3) Where clause (a), (b), (c),
(e) or (f) of sub-section (1) applies, the person acquiring the asset shall be treated as —
(a) acquiring an asset of the same character as the person disposing of the asset; and (b) acquiring the asset for a cost equal to the cost of the asset for the person disposing of the asset at the time of the disposal.
(4) The person’s cost of a replacement asset referred to in clause (d) of sub-section (1) shall be the cost of the asset disposed of plus the amount by which any consideration given by the person for the replacement asset exceeds the consideration received by the person for the asset disposed of. PROVISIONS GOVERNING PERSONS PART I CENTRAL CONCEPTS Division I Persons
Amendment history (6)
- Added by the Finance Act, 2012.
- Explanation inserted by the Finance Act, 2026.
- Inserted by the Finance Act, 2018.
- Inserted by the Finance Act, 2021.
- Expression inserted by the Finance Act, 2026.
- The expression “Companies Ordinance, 1984 (XLVII of 1984)” substituted by the Finance Act, 2021.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
Provisions Governing Persons
s. 80 Person
(1) The following shall be treated as persons for the purposes of this Ordinance, namely: —
(a) An individual;
(b) a company or association of persons incorporated, formed, organised or established in Pakistan or elsewhere;
(c) the Federal Government, a foreign government, a political sub-Division of a foreign government, or public international organisation.
(2) For the purposes of this Ordinance —
(a) association of persons includes a firm, a Hindu undivided family, any artificial juridical person , limited liability partnership and anybody of persons formed under a foreign law, but does not include a company;
(b) company means —
(i) a company as defined in the Companies Act, 2017 (XIX of 2017) ;
(ii) a body corporate formed by or under any law in force in Pakistan;
(iii) a modaraba;
(iv) a body incorporated by or under the law of a country outside Pakistan relating to incorporation of companies;
(v) a co-operative society, a finance society or any other society;
(va) a non-profit organization;
(vb) a trust, an entity or a body of persons established or constituted by or under any law for the time being in force;
(vi) a foreign association, whether incorporated or not, which the Board has, by general or special order, declared to be a company for the purposes of this Ordinance;
(vii) a Provincial Government;
(viii) a Local Government in Pakistan; or (ix) a Small Company as defined in section 2;
(c) firm means the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all;
(d) trust means an obligation annexed to the ownership of property and arising out of the confidence reposed in and accepted by the owner, or declared and accepted by the owner for the benefit of another, or of another and the owner, and includes a unit trust; and (e) unit trust means any trust under which beneficial interests are divided into units such that the entitlements of the beneficiaries to income or capital are determined by the number of units held. Division II Resident and Non-Resident Persons
(a) An individual;
(b) a company or association of persons incorporated, formed, organised or established in Pakistan or elsewhere;
(c) the Federal Government, a foreign government, a political sub-Division of a foreign government, or public international organisation.
(2) For the purposes of this Ordinance —
(a) association of persons includes a firm, a Hindu undivided family, any artificial juridical person , limited liability partnership and anybody of persons formed under a foreign law, but does not include a company;
(b) company means —
(i) a company as defined in the Companies Act, 2017 (XIX of 2017) ;
(ii) a body corporate formed by or under any law in force in Pakistan;
(iii) a modaraba;
(iv) a body incorporated by or under the law of a country outside Pakistan relating to incorporation of companies;
(v) a co-operative society, a finance society or any other society;
(va) a non-profit organization;
(vb) a trust, an entity or a body of persons established or constituted by or under any law for the time being in force;
(vi) a foreign association, whether incorporated or not, which the Board has, by general or special order, declared to be a company for the purposes of this Ordinance;
(vii) a Provincial Government;
(viii) a Local Government in Pakistan; or (ix) a Small Company as defined in section 2;
(c) firm means the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all;
(d) trust means an obligation annexed to the ownership of property and arising out of the confidence reposed in and accepted by the owner, or declared and accepted by the owner for the benefit of another, or of another and the owner, and includes a unit trust; and (e) unit trust means any trust under which beneficial interests are divided into units such that the entitlements of the beneficiaries to income or capital are determined by the number of units held. Division II Resident and Non-Resident Persons
Amendment history (16)
- Expression inserted by the Finance Act, 2026.
- The expression “Companies Ordinance, 1984 (XLVII of 1984)” substituted by the Finance Act, 2021.
- Clause (v) substituted by the Finance Act, 2013. The substituted Clause (v)
- Inserted by the Finance Act, 2013.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- The word “or” omitted by the Finance Act, 2005.
- The words “local authority” substituted by the Finance Act, 2008.
- Inserted by the Finance Act, 2005.
- Added by the Finance Act, 2005.
- The words “eighty-two” substituted by the Finance Act, 2006.
- The word “or” omitted by the Finance Act, 2019.
- The word “or” added by the Finance Act, 2022.
- New clause (ab) inserted by Finance Act, 2019
- Clause (ab) omitted by the Finance Act, 2021. The omitted clause
- Clause (b) omitted by the Finance Act, 2003. The omitted clause (b)
- The full stop substituted with a semicolon and clause (d) inserted by the Finance Act, 2022.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 81 Resident and non-resident persons
(1) A person shall be a resident person for a tax year if the person is —
(a) a resident individual, resident company or resident association of persons for the year; or (b) the Federal Government.
(2) A person shall be a non-resident person for a tax year if the person is not a resident person for that year.
(a) a resident individual, resident company or resident association of persons for the year; or (b) the Federal Government.
(2) A person shall be a non-resident person for a tax year if the person is not a resident person for that year.
Amendment history (7)
- The words “eighty-two” substituted by the Finance Act, 2006.
- The word “or” omitted by the Finance Act, 2019.
- The word “or” added by the Finance Act, 2022.
- New clause (ab) inserted by Finance Act, 2019
- Clause (ab) omitted by the Finance Act, 2021. The omitted clause
- Clause (b) omitted by the Finance Act, 2003. The omitted clause (b)
- The full stop substituted with a semicolon and clause (d) inserted by the Finance Act, 2022.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 82 Resident individual
(a) is present in Pakistan for a period of, or periods amounting in aggregate to, one hundred and eighty-three days or more in the tax year; or (c) is an employee or official of the Federal Government or a Provincial Government posted abroad in the tax year ;
(d) being a citizen of Pakistan is not present in any other country for more than one hundred and eighty-two days during the tax year or who is not a resident taxpayer of any other country.
(d) being a citizen of Pakistan is not present in any other country for more than one hundred and eighty-two days during the tax year or who is not a resident taxpayer of any other country.
Amendment history (7)
- The words “eighty-two” substituted by the Finance Act, 2006.
- The word “or” omitted by the Finance Act, 2019.
- The word “or” added by the Finance Act, 2022.
- New clause (ab) inserted by Finance Act, 2019
- Clause (ab) omitted by the Finance Act, 2021. The omitted clause
- Clause (b) omitted by the Finance Act, 2003. The omitted clause (b)
- The full stop substituted with a semicolon and clause (d) inserted by the Finance Act, 2022.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 83 Resident company
(a) it is incorporated or formed by or under any law in force in Pakistan;
(b) the control and management of the affairs of the company is situated wholly in Pakistan at any time in the year; or (c) it is a Provincial Government or Local Government in Pakistan.
(b) the control and management of the affairs of the company is situated wholly in Pakistan at any time in the year; or (c) it is a Provincial Government or Local Government in Pakistan.
Amendment history (3)
- The words “or almost wholly” omitted by the Finance Act, 2003.
- The words “local authority” substituted by the Finance Act, 2008.
- Sub-section (1) substituted by the Finance Act, 2023. The substituted sub-section
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 84 Resident association of persons
Resident association of persons. — An association of persons shall be a resident association of persons for a tax year if the control and management of the affairs of the association is situated wholly or partly in Pakistan at any time in the year. Division III Associates
Amendment history (3)
- The words “or almost wholly” omitted by the Finance Act, 2003.
- The words “local authority” substituted by the Finance Act, 2008.
- Sub-section (1) substituted by the Finance Act, 2023. The substituted sub-section
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 85 Associates
(1) Subject to sub-section (2), two persons shall be associates where –
(i) the relationship between the two is such that one may reasonably be expected to act in accordance with the intentions of the other, or both persons may reasonably be expected to act in accordance with the intentions of a third person;
(ii) one person sufficiently influences, either alone or together with an associate or associates, the other person; Explanation. – For the purpose of this section, two persons shall be treated as sufficiently influencing each other, where one or both persons, directly or indirectly, are economically and financially dependent on each other and, decisions are made in accordance with the directions, instructions or wishes of each other for common economic goal; or (iii) one person enters into a transaction, directly or indirectly, with the other who is a resident of jurisdiction with zero taxation regime.
(2) Two persons shall not be associates solely by reason of the fact that one person is an employee of the other or both persons are employees of a third person.
(3) Without limiting the generality of sub-section (1) and subject to sub- section (4), the following shall be treated as associates —
(a) an individual and a relative of the individual;
(b) members of an association of persons;
(c) a member of an association of persons and the association, where the member, either alone or together with an associate or associates under another application of this section, controls fifty per cent or more of the rights to income or capital of the association;
(d) a trust and any person who benefits or may benefit under the trust;
(e) a shareholder in a company and the company, where the shareholder, either alone or together with an associate or associates under another application of this section, controls either directly or through one or more interposed persons —
(i) fifty per cent or more of the voting power in the company;
(ii) fifty per cent or more of the rights to dividends; or (iii) fifty per cent or more of the rights to capital; and (f) two companies, where a person, either alone or together with an associate or associates under another application of this section, controls either directly or through one or more interposed persons —
(i) fifty per cent or more of the voting power in both companies;
(ii) fifty per cent or more of the rights to dividends in both companies; or (iii) fifty per cent or more of the rights to capital in both companies.
(4) Two persons shall not be associates under clause (a) or (b) of sub- section (3) where the Commissioner is satisfied that neither person may reasonably be expected to act in accordance with the intentions of the other.
(5) In this section, –
(i) relative in relation to an individual, means —
(a) an ancestor, a descendant of any of the grandparents, or an adopted child, of the individual, or of a spouse of the individual; or (b) a spouse of the individual or of any person specified in clause (a);
(ii) jurisdiction with zero taxation regime means jurisdiction as may be prescribed. PART II INDIVIDUALS Division I Taxation of Individuals
(i) the relationship between the two is such that one may reasonably be expected to act in accordance with the intentions of the other, or both persons may reasonably be expected to act in accordance with the intentions of a third person;
(ii) one person sufficiently influences, either alone or together with an associate or associates, the other person; Explanation. – For the purpose of this section, two persons shall be treated as sufficiently influencing each other, where one or both persons, directly or indirectly, are economically and financially dependent on each other and, decisions are made in accordance with the directions, instructions or wishes of each other for common economic goal; or (iii) one person enters into a transaction, directly or indirectly, with the other who is a resident of jurisdiction with zero taxation regime.
(2) Two persons shall not be associates solely by reason of the fact that one person is an employee of the other or both persons are employees of a third person.
(3) Without limiting the generality of sub-section (1) and subject to sub- section (4), the following shall be treated as associates —
(a) an individual and a relative of the individual;
(b) members of an association of persons;
(c) a member of an association of persons and the association, where the member, either alone or together with an associate or associates under another application of this section, controls fifty per cent or more of the rights to income or capital of the association;
(d) a trust and any person who benefits or may benefit under the trust;
(e) a shareholder in a company and the company, where the shareholder, either alone or together with an associate or associates under another application of this section, controls either directly or through one or more interposed persons —
(i) fifty per cent or more of the voting power in the company;
(ii) fifty per cent or more of the rights to dividends; or (iii) fifty per cent or more of the rights to capital; and (f) two companies, where a person, either alone or together with an associate or associates under another application of this section, controls either directly or through one or more interposed persons —
(i) fifty per cent or more of the voting power in both companies;
(ii) fifty per cent or more of the rights to dividends in both companies; or (iii) fifty per cent or more of the rights to capital in both companies.
(4) Two persons shall not be associates under clause (a) or (b) of sub- section (3) where the Commissioner is satisfied that neither person may reasonably be expected to act in accordance with the intentions of the other.
(5) In this section, –
(i) relative in relation to an individual, means —
(a) an ancestor, a descendant of any of the grandparents, or an adopted child, of the individual, or of a spouse of the individual; or (b) a spouse of the individual or of any person specified in clause (a);
(ii) jurisdiction with zero taxation regime means jurisdiction as may be prescribed. PART II INDIVIDUALS Division I Taxation of Individuals
Amendment history (5)
- The words “or almost wholly” omitted by the Finance Act, 2003.
- The words “local authority” substituted by the Finance Act, 2008.
- Sub-section (1) substituted by the Finance Act, 2023. The substituted sub-section
- Sub-section (5) substituted by the Finance Act. 2023. The substituted sub-section (5) read as
- Added by the Finance Act, 2010.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 86 Principle of taxation of individuals
Principle of taxation of individuals.— Subject to this Ordinance, the taxable income of each individual shall be determined separately.
Amendment history (1)
- Added by the Finance Act, 2010.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 87 Deceased individuals
(1) The legal representative of a deceased individual shall be liable for —
(a) any tax that the individual would have become liable for if the individual had not died; and (b) any tax payable in respect of the income of the deceased’s estate.
(2) The liability of a legal representative under this section shall be limited to the extent to which the deceased’s estate is capable of meeting the liability.
(2A) The liability under this Ordinance shall be the first charge on the deceased’s estate.
(3) For the purpose of this Ordinance, —
(a) any proceeding taken under this Ordinance against the deceased before his or her death shall be treated as taken against the legal representative and may be continued against the legal representative from the stage at which the proceeding stood on the date of the deceased’s death; and (b) any proceeding which could have been taken under this Ordinance against the deceased if the deceased had survived may be taken against the legal representative of the deceased.
(4) In this section, legal representative means a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased and where a party sues or is sued in representative character the person on whom the estate devolves on the death of the party so suing or sued. Division II Provisions Relating to Averaging
(a) any tax that the individual would have become liable for if the individual had not died; and (b) any tax payable in respect of the income of the deceased’s estate.
(2) The liability of a legal representative under this section shall be limited to the extent to which the deceased’s estate is capable of meeting the liability.
(2A) The liability under this Ordinance shall be the first charge on the deceased’s estate.
(3) For the purpose of this Ordinance, —
(a) any proceeding taken under this Ordinance against the deceased before his or her death shall be treated as taken against the legal representative and may be continued against the legal representative from the stage at which the proceeding stood on the date of the deceased’s death; and (b) any proceeding which could have been taken under this Ordinance against the deceased if the deceased had survived may be taken against the legal representative of the deceased.
(4) In this section, legal representative means a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased and where a party sues or is sued in representative character the person on whom the estate devolves on the death of the party so suing or sued. Division II Provisions Relating to Averaging
Amendment history (2)
- Added by the Finance Act, 2010.
- Section 88A omitted by Finance Act, 2014. The omitted section
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 88 An individual as a member of an association of persons
An individual as a member of an association of persons.— If, for a tax year, an individual has taxable income and derives an amount or amounts exempt from tax under sub-section (1) of section 92, the amount of tax payable on the taxable income of the individual shall be computed in accordance with the following formula, namely: — (A/B) x C where — A is the amount of tax that would be assessed to the individual for the year if the amount or amounts exempt from tax under sub-section (1) of section 92 were chargeable to tax; B is the taxable income of the individual for the year if the amount or amounts exempt from tax under sub-section (1) of section 92 were chargeable to tax; and C is the individual’s actual taxable income for the year.
Amendment history (1)
- Section 88A omitted by Finance Act, 2014. The omitted section
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 88A Omitted by Finance Act, 2014Omitted
Omitted by Finance Act, 2014
s. 89 Authors
Authors. — Where the time taken by an author of a literary or artistic work to complete the work exceeds twenty-four months, the author may elect to treat any lump sum amount received by the author in a tax year on account of royalties in respect of the work as having been received in that tax year and the preceding two tax years in equal proportions. Division III Income Splitting
Amendment history (1)
- Section 88A omitted by Finance Act, 2014. The omitted section
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 90 Transfers of assets
(1) For the purposes of this Ordinance and subject to sub-section (2), where there has been a revocable transfer of an asset, any income arising from the asset shall be treated as the income of the transferor and not of the transferee.
(2) Sub-section (1) shall not apply to any income derived by a person by virtue of a transfer that is not revocable during the lifetime of the person and the transferor derives no direct or indirect benefit from such income.
(3) For the purposes of this Ordinance, where there has been a transfer of an asset but the asset remains the property of the transferor, any income arising from the asset shall be treated as the income of the transferor.
(4) For the purposes of this Ordinance and subject to sub-section (5), any income arising from any asset transferred by a person directly or indirectly to—
(a) the person’s spouse or minor child; or (b) any other person for the benefit of a person or persons referred to in clause (a), shall be treated as the income of the transferor.
(5) Sub-section (4) shall not apply to any transfer made —
(a) for adequate consideration; or (b) in connection with an agreement to live apart.
(6) For the purposes of clause (a) of sub-section (5), a transfer shall not be treated as made for adequate consideration if the transferor has provided, by way of loan or otherwise, to the transferee, directly or indirectly, with the funds for the acquisition of the asset.
(7) Sub-section (5) does not apply where the transferor fails to produce evidence of the transfer of the asset by way of its registration or mutation in the relevant record and the income arising from the asset shall be treated as the income of the transferor for the purposes of this Ordinance.
(8) For the purposes of this section, —
(a) a transfer of an asset shall be treated as revocable if —
(i) there is any provision for the re-transfer, directly or indirectly, of the whole or any part of the asset to the transferor; or (ii) the transferor has, in any way, the right to resume power, directly or indirectly, over the whole or any part of the asset;
(b) minor child shall not include a married daughter; and (c) transfer includes any disposition, settlement, trust, covenant, agreement or arrangement.
(2) Sub-section (1) shall not apply to any income derived by a person by virtue of a transfer that is not revocable during the lifetime of the person and the transferor derives no direct or indirect benefit from such income.
(3) For the purposes of this Ordinance, where there has been a transfer of an asset but the asset remains the property of the transferor, any income arising from the asset shall be treated as the income of the transferor.
(4) For the purposes of this Ordinance and subject to sub-section (5), any income arising from any asset transferred by a person directly or indirectly to—
(a) the person’s spouse or minor child; or (b) any other person for the benefit of a person or persons referred to in clause (a), shall be treated as the income of the transferor.
(5) Sub-section (4) shall not apply to any transfer made —
(a) for adequate consideration; or (b) in connection with an agreement to live apart.
(6) For the purposes of clause (a) of sub-section (5), a transfer shall not be treated as made for adequate consideration if the transferor has provided, by way of loan or otherwise, to the transferee, directly or indirectly, with the funds for the acquisition of the asset.
(7) Sub-section (5) does not apply where the transferor fails to produce evidence of the transfer of the asset by way of its registration or mutation in the relevant record and the income arising from the asset shall be treated as the income of the transferor for the purposes of this Ordinance.
(8) For the purposes of this section, —
(a) a transfer of an asset shall be treated as revocable if —
(i) there is any provision for the re-transfer, directly or indirectly, of the whole or any part of the asset to the transferor; or (ii) the transferor has, in any way, the right to resume power, directly or indirectly, over the whole or any part of the asset;
(b) minor child shall not include a married daughter; and (c) transfer includes any disposition, settlement, trust, covenant, agreement or arrangement.
s. 91 Income of a minor child
(1) Any income of a minor child for a tax year chargeable under the head "Income from Business" shall be chargeable to tax as the income of the parent of the child with the highest taxable income for that year.
(2) Sub-section (1) shall not apply to the income of a minor child from a business acquired by the child through an inheritance. PART III ASSOCIATIONS OF PERSONS
(2) Sub-section (1) shall not apply to the income of a minor child from a business acquired by the child through an inheritance. PART III ASSOCIATIONS OF PERSONS
Amendment history (9)
- The words, brackets, figure and comma “Subject to sub-section (2)” omitted by the Finance Act, 2007.
- Inserted by the Finance Act, 2003.
- Full stop substituted by a colon by the Finance Act, 2014.
- Added by the Finance Act, 2014.
- Full stop substituted and new proviso inserted by the Finance Act, 2024.
- Explanation added by the Finance Act, 2022.
- Explanation omitted by the Finance Act, 2026. The omitted explanation
- Sub-section (2) omitted by the Finance Act, 2007. The omitted sub-section (2)
- Sub-section (3) omitted by the Finance Act, 2007. The omitted sub-section (3)
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 92 Principles of taxation of associations of persons
(1) An association of persons shall be liable to tax separately from the members of the association and where the association of persons has paid tax the amount received by a member of the association in the capacity as member out of the income of the association shall be exempt from tax :
Provided that if at least one member of the association of persons is a company, the share of such company or companies shall be excluded for the purpose of computing the total income of the association of persons and the company or the companies shall be taxed separately, at the rate applicable to the companies, according to their share :
Provided further that the share of a member of an association of persons having turnover of three hundred million rupees or above during the tax year or any of the preceding tax years shall not be exempt if financial statements duly audited by a firm of Chartered Accountants as defined under the Chartered Accountants Ordinance, 1961 (X of 1961), or a firm of Cost and Management Accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966) have not been filed along with return of income by the association of persons to whom he is a member:
(4A) Where the income of a limited liability partnership is exempt from tax, any amount received by a member as share from profits earned by such limited liability partnership shall be included in the income of that member. PART IV COMPANIES
Provided that if at least one member of the association of persons is a company, the share of such company or companies shall be excluded for the purpose of computing the total income of the association of persons and the company or the companies shall be taxed separately, at the rate applicable to the companies, according to their share :
Provided further that the share of a member of an association of persons having turnover of three hundred million rupees or above during the tax year or any of the preceding tax years shall not be exempt if financial statements duly audited by a firm of Chartered Accountants as defined under the Chartered Accountants Ordinance, 1961 (X of 1961), or a firm of Cost and Management Accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966) have not been filed along with return of income by the association of persons to whom he is a member:
(4A) Where the income of a limited liability partnership is exempt from tax, any amount received by a member as share from profits earned by such limited liability partnership shall be included in the income of that member. PART IV COMPANIES
Amendment history (15)
- The words, brackets, figure and comma “Subject to sub-section (2)” omitted by the Finance Act, 2007.
- Inserted by the Finance Act, 2003.
- Full stop substituted by a colon by the Finance Act, 2014.
- Added by the Finance Act, 2014.
- Full stop substituted and new proviso inserted by the Finance Act, 2024.
- Explanation added by the Finance Act, 2022.
- Explanation omitted by the Finance Act, 2026. The omitted explanation
- Sub-section (2) omitted by the Finance Act, 2007. The omitted sub-section (2)
- Sub-section (3) omitted by the Finance Act, 2007. The omitted sub-section (3)
- Sub-section (4) omitted by the Finance Act, 2007. The omitted sub-section (4)
- Sub-section (4A) inserted by the Finance Act, 2026.
- Sub-section (5) omitted by the Finance Act, 2007. The omitted sub-section (5)
- Section 93 omitted by the Finance Act, 2007. The omitted section
- The word “resident” omitted by the Finance Act, 2015
- Sub-section (3) omitted by the Finance Act 2017. Omitted sub-section reads as follows
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 93 Omitted by the Finance Act, 2007Omitted
Omitted by the Finance Act, 2007.
s. 94 Principles of taxation of companies
(1) A company shall be liable to tax separately from its shareholders.
(2) A dividend paid by a company shall be taxable in accordance with Section 5.
(2) A dividend paid by a company shall be taxable in accordance with Section 5.
Amendment history (6)
- Sub-section (4) omitted by the Finance Act, 2007. The omitted sub-section (4)
- Sub-section (4A) inserted by the Finance Act, 2026.
- Sub-section (5) omitted by the Finance Act, 2007. The omitted sub-section (5)
- Section 93 omitted by the Finance Act, 2007. The omitted section
- The word “resident” omitted by the Finance Act, 2015
- Sub-section (3) omitted by the Finance Act 2017. Omitted sub-section reads as follows
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 95 Disposal of business by individual to wholly-owned company
(1) Where a resident individual (hereinafter referred to as the transferor) disposes of all the assets of a business of the transferor to a resident company, no gain or loss shall be taken to arise on the disposal if the following conditions are satisfied, namely:—
(a) The consideration received by the transferor for the disposal is a share or shares in the company (other than redeemable shares);
(b) the transferor must beneficially own all the issued shares in the company immediately after the disposal;
(c) the company must undertake to discharge any liability in respect of the assets disposed of to the company;
(d) any liability in respect of the assets disposed of to the company must not exceed the transferor’s cost of the assets at the time of the disposal;
(e) the fair market value of the share or shares received by the transferor for the disposal must be substantially the same as the fair market value of the assets disposed of to the company, less any liability that the company has undertaken to discharge in respect of the assets; and (f) the company must not be exempt from tax for the tax year in which the disposal takes place.
(2) Where sub-section (1) applies —
(a) each of the assets acquired by the company shall be treated as having the same character as it had in the hands of the transferor;
(b) the company’s cost in respect of the acquisition of the assets shall be —
(i) in the case of a depreciable asset or amortised intangible, the written down value of the asset or intangible immediately before the disposal;
(ii) in the case of stock-in-trade valued for tax purposes under sub-section (4) of section 35 , that value; or (iii) in any other case, the transferor’s cost at the time of the disposal;
(c) if, immediately before the disposal, the transferor has deductions allowed under sections 22, 23 and 24 in respect of the assets transferred which have not been set off against the transferor’s income, the amount not set off shall be added to the deductions allowed under those sections to the company in the tax year in which the transfer is made; and (d) the transferor’s cost in respect of the share or shares received as consideration for the disposal shall be —
(i) in the case of a consideration of one share, the transferor’s cost of the assets transferred as determined under clause (b), less the amount of any liability that the company has undertaken to discharge in respect of the assets; or (ii) in the case of a consideration of more than one share, the amount determined under sub-clause (i) divided by the number of shares received.
(3) In determining whether the transferor’s deductions under sections 22, 23 or 24 have been set off against income for the purposes of clause (c) of sub- section (2), those deductions shall be taken into account last.
(a) The consideration received by the transferor for the disposal is a share or shares in the company (other than redeemable shares);
(b) the transferor must beneficially own all the issued shares in the company immediately after the disposal;
(c) the company must undertake to discharge any liability in respect of the assets disposed of to the company;
(d) any liability in respect of the assets disposed of to the company must not exceed the transferor’s cost of the assets at the time of the disposal;
(e) the fair market value of the share or shares received by the transferor for the disposal must be substantially the same as the fair market value of the assets disposed of to the company, less any liability that the company has undertaken to discharge in respect of the assets; and (f) the company must not be exempt from tax for the tax year in which the disposal takes place.
(2) Where sub-section (1) applies —
(a) each of the assets acquired by the company shall be treated as having the same character as it had in the hands of the transferor;
(b) the company’s cost in respect of the acquisition of the assets shall be —
(i) in the case of a depreciable asset or amortised intangible, the written down value of the asset or intangible immediately before the disposal;
(ii) in the case of stock-in-trade valued for tax purposes under sub-section (4) of section 35 , that value; or (iii) in any other case, the transferor’s cost at the time of the disposal;
(c) if, immediately before the disposal, the transferor has deductions allowed under sections 22, 23 and 24 in respect of the assets transferred which have not been set off against the transferor’s income, the amount not set off shall be added to the deductions allowed under those sections to the company in the tax year in which the transfer is made; and (d) the transferor’s cost in respect of the share or shares received as consideration for the disposal shall be —
(i) in the case of a consideration of one share, the transferor’s cost of the assets transferred as determined under clause (b), less the amount of any liability that the company has undertaken to discharge in respect of the assets; or (ii) in the case of a consideration of more than one share, the amount determined under sub-clause (i) divided by the number of shares received.
(3) In determining whether the transferor’s deductions under sections 22, 23 or 24 have been set off against income for the purposes of clause (c) of sub- section (2), those deductions shall be taken into account last.
Amendment history (1)
- The words “at fair market value” omitted by the Finance Act, 2007.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 96 Disposal of business by association of persons to wholly-owned company
(1) Where a resident association of persons disposes of all the assets of a business of the association to a resident company, no gain or loss shall be taken to arise on the disposal if the following conditions are satisfied, namely: —
(a) The consideration received by the association for the disposal is a share or shares in the company (other than redeemable shares);
(b) the association must own all the issued shares in the company immediately after the disposal;
(c) each member of the association must have an interest in the shares in the same proportion to the member’s interest in the business assets immediately before the disposal;
(d) the company must undertake to discharge any liability in respect of the assets disposed of to the company;
(e) any liability in respect of the assets disposed of to the company must not exceed the association’s cost of the asset at the time of the disposal;
(f) the fair market value of the share or shares received by the association for the disposal must be substantially the same as the fair market value of the assets disposed of to the company, as reduced by any liability that the company has undertaken to discharge in respect of the assets; and (g) the company must not be exempt from tax for the tax year in which the disposal takes place.
(2) Where sub-section (1) applies —
(a) each of the assets acquired by the company shall be treated as having the same character as it had in the hands of the association;
(b) the company’s cost in respect of the acquisition of the assets shall be —
(i) in the case of a depreciable asset or amortised intangible, the written down value of the asset or intangible immediately before the disposal;
(ii) in the case of stock-in-trade valued for tax purposes under sub-section (4) of section 35 , that value; or (iii) in any other case, the association’s cost at the time of the disposal;
(c) if, immediately before the disposal, the association is subject to tax in accordance with sub-section (1) of section 92 and the association has deductions allowed under sections 22, 23 and 24 in respect of the assets transferred which have not been set off against the association’s income, the amount not set off shall be added to the deductions allowed under those sections to the company in the tax year in which the transfer is made; and (d) the association’s cost in respect of the share or shares received as consideration for the disposal shall be —
(i) in the case of a consideration of one share, the association’s cost of the assets transferred as determined under clause (b), as reduced by the amount of any liability that the company has undertaken to discharge in respect of the assets; or (ii) in the case of a consideration of more than one share, the amount determined under sub-clause (i) divided by the number of shares received.
(3) In determining whether the association’s deductions under Sections 22, 23 or 24 have been set off against income for the purposes of clause (c) of sub-section (2), those deductions are taken into account last.
(a) The consideration received by the association for the disposal is a share or shares in the company (other than redeemable shares);
(b) the association must own all the issued shares in the company immediately after the disposal;
(c) each member of the association must have an interest in the shares in the same proportion to the member’s interest in the business assets immediately before the disposal;
(d) the company must undertake to discharge any liability in respect of the assets disposed of to the company;
(e) any liability in respect of the assets disposed of to the company must not exceed the association’s cost of the asset at the time of the disposal;
(f) the fair market value of the share or shares received by the association for the disposal must be substantially the same as the fair market value of the assets disposed of to the company, as reduced by any liability that the company has undertaken to discharge in respect of the assets; and (g) the company must not be exempt from tax for the tax year in which the disposal takes place.
(2) Where sub-section (1) applies —
(a) each of the assets acquired by the company shall be treated as having the same character as it had in the hands of the association;
(b) the company’s cost in respect of the acquisition of the assets shall be —
(i) in the case of a depreciable asset or amortised intangible, the written down value of the asset or intangible immediately before the disposal;
(ii) in the case of stock-in-trade valued for tax purposes under sub-section (4) of section 35 , that value; or (iii) in any other case, the association’s cost at the time of the disposal;
(c) if, immediately before the disposal, the association is subject to tax in accordance with sub-section (1) of section 92 and the association has deductions allowed under sections 22, 23 and 24 in respect of the assets transferred which have not been set off against the association’s income, the amount not set off shall be added to the deductions allowed under those sections to the company in the tax year in which the transfer is made; and (d) the association’s cost in respect of the share or shares received as consideration for the disposal shall be —
(i) in the case of a consideration of one share, the association’s cost of the assets transferred as determined under clause (b), as reduced by the amount of any liability that the company has undertaken to discharge in respect of the assets; or (ii) in the case of a consideration of more than one share, the amount determined under sub-clause (i) divided by the number of shares received.
(3) In determining whether the association’s deductions under Sections 22, 23 or 24 have been set off against income for the purposes of clause (c) of sub-section (2), those deductions are taken into account last.
Amendment history (2)
- The words “at fair market value” omitted by the Finance Act, 2007.
- Inserted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 97 Disposal of asset between wholly-owned companies
(1) Where a resident company (hereinafter referred to as the transferor) disposes of an asset to another resident company (hereinafter referred to as the transferee), no gain or loss shall be taken to arise on the disposal if the following conditions are satisfied, namely:-
(a) Both companies belong to a wholly-owned group of resident companies at the time of the disposal;
(b) the transferee must undertake to discharge any liability in respect of the asset acquired;
(c) any liability in respect of the asset must not exceed the transferor’s cost of the asset at the time of the disposal; and (d) the transferee must not be exempt from tax for the tax year in which the disposal takes place.
(2) Where sub-section (1) applies —
(a) the asset acquired by the transferee shall be treated as having the same character as it had in the hands of the transferor;
(b) the transferee’s cost in respect of the acquisition of the asset shall be —
(i) in the case of a depreciable asset or amortized intangible, the written down value of the asset or intangible immediately before the disposal;
(ii) in the case of stock-in-trade valued for tax purposes under sub-section (4) of section 35 , that value; or (iii) in any other case, the transferor’s cost at the time of the disposal;
(c) if, immediately before the disposal, the transferor has deductions allowed under sections 22, 23 and 24 in respect of the asset transferred which have not been set off against the transferor’s income, the amount not set off shall be added to the deductions allowed under those sections to the transferee in the tax year in which the transfer is made; and (d) the transferor’s cost in respect of any consideration in kind received for the asset shall be the transferor’s cost of the asset transferred as determined under clause (b), as reduced by the amount of any liability that the transferee has undertaken to discharge in respect of the asset.
(3) In determining whether the transferor’s deductions under sections 22, 23 or 24 in respect of the asset transferred have been set off against income for the purposes of clause (c) of sub-section (2), those deductions shall be taken into account last.
(4) The transferor and transferee companies belong to a wholly-owned group if —
(a) one company beneficially holds all the issued shares of the other company; or (b) a third company beneficially holds all the issued shares in both companies.
(a) Both companies belong to a wholly-owned group of resident companies at the time of the disposal;
(b) the transferee must undertake to discharge any liability in respect of the asset acquired;
(c) any liability in respect of the asset must not exceed the transferor’s cost of the asset at the time of the disposal; and (d) the transferee must not be exempt from tax for the tax year in which the disposal takes place.
(2) Where sub-section (1) applies —
(a) the asset acquired by the transferee shall be treated as having the same character as it had in the hands of the transferor;
(b) the transferee’s cost in respect of the acquisition of the asset shall be —
(i) in the case of a depreciable asset or amortized intangible, the written down value of the asset or intangible immediately before the disposal;
(ii) in the case of stock-in-trade valued for tax purposes under sub-section (4) of section 35 , that value; or (iii) in any other case, the transferor’s cost at the time of the disposal;
(c) if, immediately before the disposal, the transferor has deductions allowed under sections 22, 23 and 24 in respect of the asset transferred which have not been set off against the transferor’s income, the amount not set off shall be added to the deductions allowed under those sections to the transferee in the tax year in which the transfer is made; and (d) the transferor’s cost in respect of any consideration in kind received for the asset shall be the transferor’s cost of the asset transferred as determined under clause (b), as reduced by the amount of any liability that the transferee has undertaken to discharge in respect of the asset.
(3) In determining whether the transferor’s deductions under sections 22, 23 or 24 in respect of the asset transferred have been set off against income for the purposes of clause (c) of sub-section (2), those deductions shall be taken into account last.
(4) The transferor and transferee companies belong to a wholly-owned group if —
(a) one company beneficially holds all the issued shares of the other company; or (b) a third company beneficially holds all the issued shares in both companies.
Amendment history (3)
- Inserted by the Finance Act, 2003.
- The words “at fair market value” omitted by the Finance Act, 2007.
- Inserted by the Finance Act, 2007.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 97A Disposal of asset under a scheme of arrangement and reconstruction
(1) No gain or loss shall be taken to arise on disposal of asset from one company (hereinafter referred to as the transferor) to another company (hereinafter referred to as the transferee) by virtue of operation of a Scheme of Arrangement and Reconstruction under sections 282L and 284 to 287 of the Companies Act, 2017 (XIX of 2017) or section 48 of the Banking Companies Ordinance, 1962 (LVII of 1962), if the following conditions are satisfied, namely:—
(a) the transferee must undertake to discharge any liability in respect of the asset acquired;
(b) any liability in respect of the asset must not exceed the transferor’s cost of the asset at the time of the disposal;
(c) the transferee must not be exempt from tax for the tax year in which the disposal takes place; and (d) scheme is approved by the High Court, State Bank of Pakistan or Securities and Exchange Commission of Pakistan, as the case may be, on or after first day of July, 2007.
(2) No gain or loss shall be taken to arise on issue, cancellation, exchange or receipt of shares as a result of Scheme of Arrangement and Reconstruction under sections 282L and 284 to 287 of the Companies Act, 2017 (XIX of 2017) or section 48 of the Banking Companies Ordinance, 1962 (LVII of 1962) and approved by:—
(a) the High Court;
(b) State Bank of Pakistan; or (c) Securities and Exchange Commission of Pakistan, as the case may be, on or after first day of July, 2007.
(3) Where sub-section (1) applies—
(a) the asset acquired by the transferee shall be treated as having the same character as it had in the hands of the transferor;
(b) the transferee’s cost in respect of acquisition of the asset shall be—
(i) in the case of a depreciable asset or amortised intangible, the written down value of the asset or intangible immediately before the disposal;
(ii) in the case of stock-in-trade valued for tax purposes under sub-section (4) of section 35, that value; or (iii) in any other case, the transferor’s cost at the time of the disposal;
(c) if, immediately before the disposal, the transferor has deductions allowed under sections 22, 23 and 24 in respect of the asset transferred which have not been set off against the transferor’s income, the amount not set off shall be added to the deduction allowed under those sections to the transferee in the tax year in which the transfer is made.
(4) In determining whether the transferor’s deductions under sections 22, 23 or 24 in respect of the asset transferred have been set off against income for the purposes of clause (c) of sub-section (2), those deductions shall be taken into account last.
(5) Where sub-section (2) applies and the shares issued vested by virtue of the Scheme of Arrangement and Reconstruction under sections 282L and 284 to 287 of the Companies Act, 2017 (XIX of 2017) or section 48 of the Banking Companies Ordinance, 1962 (LVII of 1962) and approved by the Court or State Bank of Pakistan or Securities and Exchange Commission of Pakistan as the case may be, are disposed of, the cost of shares shall be the cost prior to the operation of the said scheme. PART V COMMON PROVISIONS APPLICABLE TO ASSOCIATIONS OF PERSONS AND COMPANIES
(a) the transferee must undertake to discharge any liability in respect of the asset acquired;
(b) any liability in respect of the asset must not exceed the transferor’s cost of the asset at the time of the disposal;
(c) the transferee must not be exempt from tax for the tax year in which the disposal takes place; and (d) scheme is approved by the High Court, State Bank of Pakistan or Securities and Exchange Commission of Pakistan, as the case may be, on or after first day of July, 2007.
(2) No gain or loss shall be taken to arise on issue, cancellation, exchange or receipt of shares as a result of Scheme of Arrangement and Reconstruction under sections 282L and 284 to 287 of the Companies Act, 2017 (XIX of 2017) or section 48 of the Banking Companies Ordinance, 1962 (LVII of 1962) and approved by:—
(a) the High Court;
(b) State Bank of Pakistan; or (c) Securities and Exchange Commission of Pakistan, as the case may be, on or after first day of July, 2007.
(3) Where sub-section (1) applies—
(a) the asset acquired by the transferee shall be treated as having the same character as it had in the hands of the transferor;
(b) the transferee’s cost in respect of acquisition of the asset shall be—
(i) in the case of a depreciable asset or amortised intangible, the written down value of the asset or intangible immediately before the disposal;
(ii) in the case of stock-in-trade valued for tax purposes under sub-section (4) of section 35, that value; or (iii) in any other case, the transferor’s cost at the time of the disposal;
(c) if, immediately before the disposal, the transferor has deductions allowed under sections 22, 23 and 24 in respect of the asset transferred which have not been set off against the transferor’s income, the amount not set off shall be added to the deduction allowed under those sections to the transferee in the tax year in which the transfer is made.
(4) In determining whether the transferor’s deductions under sections 22, 23 or 24 in respect of the asset transferred have been set off against income for the purposes of clause (c) of sub-section (2), those deductions shall be taken into account last.
(5) Where sub-section (2) applies and the shares issued vested by virtue of the Scheme of Arrangement and Reconstruction under sections 282L and 284 to 287 of the Companies Act, 2017 (XIX of 2017) or section 48 of the Banking Companies Ordinance, 1962 (LVII of 1962) and approved by the Court or State Bank of Pakistan or Securities and Exchange Commission of Pakistan as the case may be, are disposed of, the cost of shares shall be the cost prior to the operation of the said scheme. PART V COMMON PROVISIONS APPLICABLE TO ASSOCIATIONS OF PERSONS AND COMPANIES
Amendment history (1)
- Inserted by the Finance Act, 2007.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 98 Change in control of an entity
(1) Where there is a change of fifty per cent or more in the underlying ownership of an entity, any loss incurred for a tax year before the change shall not be allowed as a deduction in a tax year after the change, unless the entity —
(a) continues to conduct the same business after the change as it conducted before the change until the loss has been fully set off; and (b) does not, until the loss has been fully set off, engage in any new business or investment after the change where the principal purpose of the entity or the beneficial owners of the entity is to utilise the loss so as to reduce the income tax payable on the income arising from the new business or investment.
(2) In this section, — entity means a company or association of persons to which sub- section (1) of section 92 applies; ownership interest means a share in a company or the interest of a member in an association of persons; and underlying ownership in relation to an entity, means an ownership interest in the entity held, directly or indirectly through an interposed entity or entities, by an individual or by a person not ultimately owned by individuals. PART VA TAX LIABILITY IN CERTAIN CASES
(a) continues to conduct the same business after the change as it conducted before the change until the loss has been fully set off; and (b) does not, until the loss has been fully set off, engage in any new business or investment after the change where the principal purpose of the entity or the beneficial owners of the entity is to utilise the loss so as to reduce the income tax payable on the income arising from the new business or investment.
(2) In this section, — entity means a company or association of persons to which sub- section (1) of section 92 applies; ownership interest means a share in a company or the interest of a member in an association of persons; and underlying ownership in relation to an entity, means an ownership interest in the entity held, directly or indirectly through an interposed entity or entities, by an individual or by a person not ultimately owned by individuals. PART VA TAX LIABILITY IN CERTAIN CASES
Amendment history (1)
- Inserted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 98A Change in the constitution of an association of persons
Change in the constitution of an association of persons.—Where, during the course of a tax year, a change occurs in the constitution of an association of persons, liability of filing the return on behalf of the association of persons for the tax year shall be on the association of persons as constituted at the time of filing of such return but the income of the association of persons shall be apportioned among the members who were entitled to receive it and, where the tax assessed on a member cannot be recovered from him it shall be recovered from the association of persons as constituted at the time of filing the return.
Amendment history (1)
- Inserted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 98B Discontinuance of business or dissolution of an association of persons
(1) Subject to the provisions of section 117, where any business or profession carried on by an association of persons has been discontinued, or where an association of persons is dissolved, all the provisions of this Ordinance, shall, so far as may be, apply as if no such discontinuance or dissolution had taken place.
(2) Every person, who was, at the time of such discontinuance or dissolution, a member of such association of persons and the legal representative of any such person who is deceased, shall be jointly and severally liable for the amount of tax payable by the association of persons.
(2) Every person, who was, at the time of such discontinuance or dissolution, a member of such association of persons and the legal representative of any such person who is deceased, shall be jointly and severally liable for the amount of tax payable by the association of persons.
Amendment history (1)
- Inserted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 98C Succession to business, otherwise than on death
(1) Where a person carrying on any business or profession has been succeeded in any tax year by any other person (hereafter in this section referred to as the predecessor and successor respectively), otherwise than on the death of the predecessor, and the successor continues to carry on that business or profession,-
(a) the predecessor shall be liable to pay tax in respect of the income of the tax year in which the succession took place upto the date of succession and of the tax year or years preceding that year; and (b) the successor shall be liable to pay tax in respect of the income of such tax year after the date of succession.
(2) Notwithstanding anything contained in sub-section (1), where the predecessor cannot be found, the tax liability in respect of the tax year in which the succession took place upto the date of succession and of the tax year or years preceding that year shall be that of the successor in like manner and to the same extent as it would have been that of the predecessor, and all the provisions of this Ordinance shall, so far as may be, apply accordingly.
(3) Where any tax payable under this section in respect of such business or profession cannot be recovered from the predecessor, it shall be recoverable from the successor, who shall be entitled to recover it from the predecessor. SPECIAL INDUSTRIES PART I INSURANCE BUSINESS
(a) the predecessor shall be liable to pay tax in respect of the income of the tax year in which the succession took place upto the date of succession and of the tax year or years preceding that year; and (b) the successor shall be liable to pay tax in respect of the income of such tax year after the date of succession.
(2) Notwithstanding anything contained in sub-section (1), where the predecessor cannot be found, the tax liability in respect of the tax year in which the succession took place upto the date of succession and of the tax year or years preceding that year shall be that of the successor in like manner and to the same extent as it would have been that of the predecessor, and all the provisions of this Ordinance shall, so far as may be, apply accordingly.
(3) Where any tax payable under this section in respect of such business or profession cannot be recovered from the predecessor, it shall be recoverable from the successor, who shall be entitled to recover it from the predecessor. SPECIAL INDUSTRIES PART I INSURANCE BUSINESS
Amendment history (3)
- Inserted by the Finance Act, 2003.
- Section 99A substituted by the Finance Act, 2022. The substituted section
- substituted through Tax Laws (Second Amendment) Ordinance, 2022 (VI of 2022) dated 22.08.2022.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
Special Industries
s. 99 Special provisions relating to insurance business
Special provisions relating to insurance business. — The profits and gains of any insurance business shall be computed in accordance with the rules in the Fourth Schedule.
Amendment history (2)
- Section 99A substituted by the Finance Act, 2022. The substituted section
- substituted through Tax Laws (Second Amendment) Ordinance, 2022 (VI of 2022) dated 22.08.2022.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 99A Special provisions relating to payment of tax through electricity connections
Special provisions relating to payment of tax through electricity connections.
(1) Notwithstanding anything contained in the Ordinance, a tax shall be charged and collected from retailers other than Tier-I retailers as defined in the Sales Tax Act, 1990 (VII of 1990) and specified service providers on commercial electricity connections at the rates specified in the income tax general order issued in terms of sub-section (2).
(2) For the purposes of this section, the Federal Government or the Board with the approval of the Minister in-charge pursuant to the approval of the Economic Coordination Committee of the Cabinet may, issue an income tax general order to —
(a) provide the scope, time, payment, recovery, penalty, default surcharge, adjustment or refund of tax payable under this section in such manner and with such conditions as may be specified;
(b) provide the collection of tax on the amount of bill or on any basis of consumption, in addition to or in lieu of advance tax collectible under sub-section (1) of section 235, at such rates or amounts, from such date and with such conditions as may be specified;
(c) provide record keeping, filing of return, statement and assessment in such manner and with such conditions as may be specified;
(d) provide mechanism of collection, deduction and payment of tax in respect of any person;
(e) include or exempt any person or classes of persons, any income or classes of income from the application of this section, in such manner and with such conditions as may be specified; and (f) provide that tax collected under this section shall in respect of such persons or classes of persons be adjustable, final or minimum, in respect of any income to such extent and with such conditions as may be specified.
(3) The provisions of sub-section (1) of section 235 shall apply to the persons as specified therein unless specifically exempted under the income tax general order issued under sub-section (2).
(4) The provisions of section 100BA and rule 1 of the Tenth Schedule shall not apply to the tax collectible under this section unless specifically provided in respect of the person or class of persons mentioned in the income tax general order issued under sub-section (2).
(1) Notwithstanding anything contained in the Ordinance, a tax shall be charged and collected from retailers other than Tier-I retailers as defined in the Sales Tax Act, 1990 (VII of 1990) and specified service providers on commercial electricity connections at the rates specified in the income tax general order issued in terms of sub-section (2).
(2) For the purposes of this section, the Federal Government or the Board with the approval of the Minister in-charge pursuant to the approval of the Economic Coordination Committee of the Cabinet may, issue an income tax general order to —
(a) provide the scope, time, payment, recovery, penalty, default surcharge, adjustment or refund of tax payable under this section in such manner and with such conditions as may be specified;
(b) provide the collection of tax on the amount of bill or on any basis of consumption, in addition to or in lieu of advance tax collectible under sub-section (1) of section 235, at such rates or amounts, from such date and with such conditions as may be specified;
(c) provide record keeping, filing of return, statement and assessment in such manner and with such conditions as may be specified;
(d) provide mechanism of collection, deduction and payment of tax in respect of any person;
(e) include or exempt any person or classes of persons, any income or classes of income from the application of this section, in such manner and with such conditions as may be specified; and (f) provide that tax collected under this section shall in respect of such persons or classes of persons be adjustable, final or minimum, in respect of any income to such extent and with such conditions as may be specified.
(3) The provisions of sub-section (1) of section 235 shall apply to the persons as specified therein unless specifically exempted under the income tax general order issued under sub-section (2).
(4) The provisions of section 100BA and rule 1 of the Tenth Schedule shall not apply to the tax collectible under this section unless specifically provided in respect of the person or class of persons mentioned in the income tax general order issued under sub-section (2).
Amendment history (6)
- Section 99A substituted by the Finance Act, 2022. The substituted section
- substituted through Tax Laws (Second Amendment) Ordinance, 2022 (VI of 2022) dated 22.08.2022.
- The words “Federal Government” substituted by the Finance Act, 2021.
- Expression “and payment of tax, filing of return” substituted by the Finance Act, 2026.
- New section 99C inserted through Finance Act, 2019
- New section 99D inserted by the Finance Act, 2023.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 99B Special procedure for small traders and shopkeepers
Special procedure for small traders and shopkeepers:- Notwithstanding anything contained in this Ordinance the Board with the approval of the Minister- in-charge may, by notification in the official Gazette, prescribe special procedure for scope , rate and payment of tax including fixed tax, filing of return, audit and assessment in respect of such small traders and shopkeepers, in such cities or territories, as may be specified therein.
Amendment history (4)
- The words “Federal Government” substituted by the Finance Act, 2021.
- Expression “and payment of tax, filing of return” substituted by the Finance Act, 2026.
- New section 99C inserted through Finance Act, 2019
- New section 99D inserted by the Finance Act, 2023.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 99C Special procedure for certain persons
Special procedure for certain persons.- Notwithstanding anything contained in this Ordinance, the Board with the approval of the Minister-in- charge may, by notification in the official Gazette, prescribe special procedure for scope and payment of tax, record keeping, filing of return and assessment in respect of small businesses, construction businesses, medical practitioners, hospitals, educational institutions and any other sector specified by Board with the approval of the Minister-in-charge , in such cities or territories, as may be specified therein.
Amendment history (4)
- The words “Federal Government” substituted by the Finance Act, 2021.
- Expression “and payment of tax, filing of return” substituted by the Finance Act, 2026.
- New section 99C inserted through Finance Act, 2019
- New section 99D inserted by the Finance Act, 2023.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 99D Additional tax on certain income, profits and gains
(1) Notwithstanding anything contained in this Ordinance or any other law for the time being in force, for any of the last three tax years preceding the tax year 2023 and onwards, in addition to any tax charged or chargeable, paid or payable under any of the provisions of this Ordinance, an additional tax shall be imposed on every person being a company who has any income, profit or gains that have arisen due to any economic factor or factors that resulted in windfall income, profits or gains.
(2) The Federal Government may, by notification in the official Gazette, –
(a) specify sector or sectors, for which this section applies;
(b) determine windfall income, profits or gains and economic factor or factors including but not limited to international price fluctuation having bearing on any commodity price in Pakistan or any sector of the economy or difference in income, profit or gains on account of foreign currency fluctuation;
(c) provide the rate not exceeding fifty percent of such income, profits or gains;
(d) provide for the scope, time and payment of tax payable under this section in such manner and with such conditions as may be specified in the notification; and (e) exempt any person or classes of persons, any income or classes of income from the application of this section, subject to any conditions as may be specified in the notification.
(3) The Federal Government shall place before the National Assembly the notification issued under this section within ninety days of the issuance of such notification or by the 30th day of June of the financial year, whichever is earlier. PART II OIL, NATURAL GAS AND OTHER MINERAL DEPOSITS
(2) The Federal Government may, by notification in the official Gazette, –
(a) specify sector or sectors, for which this section applies;
(b) determine windfall income, profits or gains and economic factor or factors including but not limited to international price fluctuation having bearing on any commodity price in Pakistan or any sector of the economy or difference in income, profit or gains on account of foreign currency fluctuation;
(c) provide the rate not exceeding fifty percent of such income, profits or gains;
(d) provide for the scope, time and payment of tax payable under this section in such manner and with such conditions as may be specified in the notification; and (e) exempt any person or classes of persons, any income or classes of income from the application of this section, subject to any conditions as may be specified in the notification.
(3) The Federal Government shall place before the National Assembly the notification issued under this section within ninety days of the issuance of such notification or by the 30th day of June of the financial year, whichever is earlier. PART II OIL, NATURAL GAS AND OTHER MINERAL DEPOSITS
Amendment history (7)
- The words “Federal Government” substituted by the Finance Act, 2021.
- Expression “and payment of tax, filing of return” substituted by the Finance Act, 2026.
- New section 99C inserted through Finance Act, 2019
- New section 99D inserted by the Finance Act, 2023.
- Full stop substituted by the Finance Act 2017.
- Inserted by the Finance Act, 2017.
- Inserted by the Finance Act, 2007.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 100 Special provisions relating to the production of oil and natural gas, and exploration and extraction of other mineral deposits
(1) Subject to sub- section (2), the profits and gains from —
(a) the exploration and production of petroleum including natural gas and from refineries set up at the Dhodak and Bobi fields;
(b) the pipeline operations of exploration and production companies; or (c) the manufacture and sale of liquefied petroleum gas or compressed natural gas, and the tax payable thereon shall be computed in accordance with the rules in Part I of the Fifth Schedule.
(2) Sub-section (1) shall not apply to the profits and gains attributable to the production of petroleum including natural gas discovered before the 24 day of September, 1954 :
Provided that the for tax year 2017 and onward the provisions of this sub-section shall not apply on profit and gains derived from sui gas field.
(3) The profits and gains of any business which consists of, or includes, the exploration and extraction of such mineral deposits of a wasting nature (not being petroleum or natural gas) as may be specified in this behalf by the Board with the approval of the Minister-in-charge carried on by a person in Pakistan shall be computed in accordance with the rules in Part II of the Fifth Schedule.
(a) the exploration and production of petroleum including natural gas and from refineries set up at the Dhodak and Bobi fields;
(b) the pipeline operations of exploration and production companies; or (c) the manufacture and sale of liquefied petroleum gas or compressed natural gas, and the tax payable thereon shall be computed in accordance with the rules in Part I of the Fifth Schedule.
(2) Sub-section (1) shall not apply to the profits and gains attributable to the production of petroleum including natural gas discovered before the 24 day of September, 1954 :
Provided that the for tax year 2017 and onward the provisions of this sub-section shall not apply on profit and gains derived from sui gas field.
(3) The profits and gains of any business which consists of, or includes, the exploration and extraction of such mineral deposits of a wasting nature (not being petroleum or natural gas) as may be specified in this behalf by the Board with the approval of the Minister-in-charge carried on by a person in Pakistan shall be computed in accordance with the rules in Part II of the Fifth Schedule.
Amendment history (4)
- Full stop substituted by the Finance Act 2017.
- Inserted by the Finance Act, 2017.
- The words “Federal Government” substituted by the Finance Act, 2021.
- Inserted by the Finance Act, 2007.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 100A Special provisions relating to banking business
(1) Subject to sub- section (2), the income, profits and gains of any banking company as defined in clause (7) of section 2 and tax payable thereon shall be computed in accordance with the rules in the Seventh Schedule.
(2) Sub-section (1) shall apply to the profits and gains of the banking companies relevant to tax year 2009 and onwards.
(3) Notwithstandinganything contained in sub-section (1), income, profits and gains and tax payable thereon shall be computed subject to the limitations and provisions contained in Chapters VII and VIII.
(2) Sub-section (1) shall apply to the profits and gains of the banking companies relevant to tax year 2009 and onwards.
(3) Notwithstandinganything contained in sub-section (1), income, profits and gains and tax payable thereon shall be computed subject to the limitations and provisions contained in Chapters VII and VIII.
Amendment history (15)
- Full stop substituted by the Finance Act 2017.
- Inserted by the Finance Act, 2017.
- The words “Federal Government” substituted by the Finance Act, 2021.
- Inserted by the Finance Act, 2007.
- Added by the Finance Act, 2018.
- Added by the Finance Act, 2012.
- Words inserted by the Finance Act, 2023.
- Expression “, a non-banking finance company” omitted by the Finance Act, 2026.
- The word “and” added by the Finance Act, 2026.
- Clause (c) omitted by the Finance Act, 2026. The omitted clause read as follow
- Clause (d) substituted by new clause (d) by the Finance Act, 2014. The substituted clause read as
- Clause (d) omitted by the Finance Act, 2026. The omitted clause read as follow
- Sub-section (3) added by the Finance Act, 2026.
- New section 100BA inserted through Finance Act, 2019.
- Words inserted through Finance Act, 2020 dated 30 June, 2020.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 100B Special provision relating to capital gain tax
(1) Capital gains on disposal of listed securities and tax thereon including super tax under section 4C , subject to section 37A, shall be computed, determined, collected and deposited in accordance with the rules laid down in the Eighth Schedule.
(2) The provisions of sub–section (1) shall not apply to the following persons or class of persons, namely:-
(a) a mutual fund;
(b) banking company and an insurance company subject to tax under the Fourth Schedule; and (e) any other person or class of persons notified by the Board.
(3) NCCPL, in case of banking company, insurance company and mutual funds, shall compute and determine the capital gain as per the mechanism prescribed under section 37A; however, these entities shall continue to deposit tax on the amount of capital gain as per the applicable provisions of this Ordinance.
(2) The provisions of sub–section (1) shall not apply to the following persons or class of persons, namely:-
(a) a mutual fund;
(b) banking company and an insurance company subject to tax under the Fourth Schedule; and (e) any other person or class of persons notified by the Board.
(3) NCCPL, in case of banking company, insurance company and mutual funds, shall compute and determine the capital gain as per the mechanism prescribed under section 37A; however, these entities shall continue to deposit tax on the amount of capital gain as per the applicable provisions of this Ordinance.
Amendment history (11)
- Added by the Finance Act, 2018.
- Added by the Finance Act, 2012.
- Words inserted by the Finance Act, 2023.
- Expression “, a non-banking finance company” omitted by the Finance Act, 2026.
- The word “and” added by the Finance Act, 2026.
- Clause (c) omitted by the Finance Act, 2026. The omitted clause read as follow
- Clause (d) substituted by new clause (d) by the Finance Act, 2014. The substituted clause read as
- Clause (d) omitted by the Finance Act, 2026. The omitted clause read as follow
- Sub-section (3) added by the Finance Act, 2026.
- New section 100BA inserted through Finance Act, 2019.
- Words inserted through Finance Act, 2020 dated 30 June, 2020.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 100BA Special provisions relating to persons not appearing in active taxpayers’ list
(1) The collection or deduction of advance income tax, computation of income and tax payable thereon in respect of a person not appearing on the active taxpayers’ list or persons appearing on the active taxpayers’ list who have not filed return by the due date specified in section 118 or by the due date as extended under section 119 or 214A shall be determined in accordance with the rules in the Tenth Schedule.
(2) The provisions of the Tenth Schedule shall have effect notwithstanding anything to the contrary contained in this Ordinance.
(2) The provisions of the Tenth Schedule shall have effect notwithstanding anything to the contrary contained in this Ordinance.
Amendment history (14)
- Added by the Finance Act, 2018.
- Added by the Finance Act, 2012.
- Words inserted by the Finance Act, 2023.
- Expression “, a non-banking finance company” omitted by the Finance Act, 2026.
- The word “and” added by the Finance Act, 2026.
- Clause (c) omitted by the Finance Act, 2026. The omitted clause read as follow
- Clause (d) substituted by new clause (d) by the Finance Act, 2014. The substituted clause read as
- Clause (d) omitted by the Finance Act, 2026. The omitted clause read as follow
- Sub-section (3) added by the Finance Act, 2026.
- New section 100BA inserted through Finance Act, 2019.
- Words inserted through Finance Act, 2020 dated 30 June, 2020.
- Expression inserted by the Finance Act, 2024.
- Inserted by the Finance Act, 2014.
- Section 100C substituted by the Finance Act, 2021. Earlier this substitution was made through Tax
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 100C Tax credit for certain persons
(1) The persons mentioned in sub-section (2) shall be allowed a tax credit equal to one hundred percent of tax payable under any of the provisions of this Ordinance including minimum and final taxes in respect of incomes mentioned in sub-section (3) subject to the conditions and limitations laid down in subsection (4).
(2) The provisions of this section shall apply to the following persons, namely:—
(a) persons specified in clause (66) of Part I of the Second Schedule to this Ordinance;
(b) a trust administered under a scheme approved by the Federal Government and established in Pakistan exclusively for the purposes of carrying out such activities as are for the welfare of ex-employees and serving personnel of the Federal Government or a Provincial Government or armed forces including civilian employees of armed forces and their dependents where the said trust is administered by a committee nominated by the Federal Government or a Provincial Government;
(c) a trust;
(d) a welfare institution registered with Provincial or Islamabad Capital Territory (ICT) social welfare department;
(e) a not for profit company registered with the Securities and Exchange Commission of Pakistan under section 42 of the Companies Act, 2017;
(f) a welfare society registered under the provincial or Islamabad Capital Territory (ICT) laws related to registration of co-operative societies;
(g) a waqf registered under Mussalman Waqf Validating Act, 1913 (VI of 1913) or any other law for the time being in force or in the instrument relating to the trust or the institution;
(h) a university or education institutions being run by nonprofit organization existing solely for educational purposes and not for the purposes of profit;
(i) a religious or charitable institution for the benefit of public registered under any law for the time being in force; and (j) international non-governmental organizations (INGOs) approved by the Federal Government.
(3) The following income is eligible for tax credit, namely:—
(a) income from donations, voluntary contributions and subscriptions;
(b) income from house property;
(c) income from investments in the securities of the Federal Government;
(d) profit on debt from scheduled banks and microfinance banks;
(e) grant received from Federal, Provincial, Local or foreign Government;
(f) so much of the income chargeable under the head income from business as is expended in Pakistan for the purposes of carrying out welfare activities:
Provided that in the case of income under the head income from business, only so much of such income shall be eligible for tax credit under this section that bears the same proportion as the said amount of business income bears to the aggregate of income from all sources; and (g) any income of the persons mentioned in clauses (a),
(b) and (h) of sub- section (2) of this section.
(4) Eligibility for tax credit shall be subject to the following conditions, namely:—
(a) return has been filed;
(b) tax required to be deducted or collected has been deducted or collected and paid;
(c) withholding tax statements for the relevant tax year have been filed;
(d) the administrative and management expenditure does not exceed 15% of the total receipts:
Provided that clause (d) shall not apply to a nonprofit organization, if—
(i) charitable and welfare activities of the non-profit organization have commenced for the first time within last three years; or (ii) total receipts of the non-profit organization during the tax year are less than one hundred million Rupees;
(e) approval of Commissioner has been obtained as per requirement of clause (36) of section 2:
Provided that the condition of approval in respect of persons mentioned in clause (66) of Part I of the Second Schedule to this Ordinance, shall take effect from the first day of July, 2023 and the requirements of clause (36) of section 2, shall not be applicable for earlier years;
(f) none of the assets of trusts or welfare institutions confers, or may confer, a private benefit to the donors or family, children or author of the trust or his descendants or the maker of the institution or to any other person:
Provided that where such private benefit is conferred, the amount of such benefit shall be added to the income of the donor; and (g) a statement of voluntary contributions and donations received in the immediately preceding tax year has been filed in the prescribed form and manner.
(5) Notwithstanding anything contained in sub-section (1), surplus funds of organizations to which this section applies shall be taxed at a rate of ten percent.
(6) For the purpose of sub-section (5), surplus funds mean funds or monies—
(a) not spent on charitable and welfare activities during the tax year;
(b) received during the tax year as donations, voluntary contributions, subscriptions and other incomes;
(c) which are more than twenty-five percent of the total receipts of the non- profit organization received during the tax year; and (d) are not part of restricted funds. Explanation.—For the purpose of this clause, restricted funds mean any fund received by the organization but could not be spent and treated as revenue during the year due to any obligation placed by the donor or funds received in kind.
(2) The provisions of this section shall apply to the following persons, namely:—
(a) persons specified in clause (66) of Part I of the Second Schedule to this Ordinance;
(b) a trust administered under a scheme approved by the Federal Government and established in Pakistan exclusively for the purposes of carrying out such activities as are for the welfare of ex-employees and serving personnel of the Federal Government or a Provincial Government or armed forces including civilian employees of armed forces and their dependents where the said trust is administered by a committee nominated by the Federal Government or a Provincial Government;
(c) a trust;
(d) a welfare institution registered with Provincial or Islamabad Capital Territory (ICT) social welfare department;
(e) a not for profit company registered with the Securities and Exchange Commission of Pakistan under section 42 of the Companies Act, 2017;
(f) a welfare society registered under the provincial or Islamabad Capital Territory (ICT) laws related to registration of co-operative societies;
(g) a waqf registered under Mussalman Waqf Validating Act, 1913 (VI of 1913) or any other law for the time being in force or in the instrument relating to the trust or the institution;
(h) a university or education institutions being run by nonprofit organization existing solely for educational purposes and not for the purposes of profit;
(i) a religious or charitable institution for the benefit of public registered under any law for the time being in force; and (j) international non-governmental organizations (INGOs) approved by the Federal Government.
(3) The following income is eligible for tax credit, namely:—
(a) income from donations, voluntary contributions and subscriptions;
(b) income from house property;
(c) income from investments in the securities of the Federal Government;
(d) profit on debt from scheduled banks and microfinance banks;
(e) grant received from Federal, Provincial, Local or foreign Government;
(f) so much of the income chargeable under the head income from business as is expended in Pakistan for the purposes of carrying out welfare activities:
Provided that in the case of income under the head income from business, only so much of such income shall be eligible for tax credit under this section that bears the same proportion as the said amount of business income bears to the aggregate of income from all sources; and (g) any income of the persons mentioned in clauses (a),
(b) and (h) of sub- section (2) of this section.
(4) Eligibility for tax credit shall be subject to the following conditions, namely:—
(a) return has been filed;
(b) tax required to be deducted or collected has been deducted or collected and paid;
(c) withholding tax statements for the relevant tax year have been filed;
(d) the administrative and management expenditure does not exceed 15% of the total receipts:
Provided that clause (d) shall not apply to a nonprofit organization, if—
(i) charitable and welfare activities of the non-profit organization have commenced for the first time within last three years; or (ii) total receipts of the non-profit organization during the tax year are less than one hundred million Rupees;
(e) approval of Commissioner has been obtained as per requirement of clause (36) of section 2:
Provided that the condition of approval in respect of persons mentioned in clause (66) of Part I of the Second Schedule to this Ordinance, shall take effect from the first day of July, 2023 and the requirements of clause (36) of section 2, shall not be applicable for earlier years;
(f) none of the assets of trusts or welfare institutions confers, or may confer, a private benefit to the donors or family, children or author of the trust or his descendants or the maker of the institution or to any other person:
Provided that where such private benefit is conferred, the amount of such benefit shall be added to the income of the donor; and (g) a statement of voluntary contributions and donations received in the immediately preceding tax year has been filed in the prescribed form and manner.
(5) Notwithstanding anything contained in sub-section (1), surplus funds of organizations to which this section applies shall be taxed at a rate of ten percent.
(6) For the purpose of sub-section (5), surplus funds mean funds or monies—
(a) not spent on charitable and welfare activities during the tax year;
(b) received during the tax year as donations, voluntary contributions, subscriptions and other incomes;
(c) which are more than twenty-five percent of the total receipts of the non- profit organization received during the tax year; and (d) are not part of restricted funds. Explanation.—For the purpose of this clause, restricted funds mean any fund received by the organization but could not be spent and treated as revenue during the year due to any obligation placed by the donor or funds received in kind.
Amendment history (6)
- Expression inserted by the Finance Act, 2024.
- Inserted by the Finance Act, 2014.
- Section 100C substituted by the Finance Act, 2021. Earlier this substitution was made through Tax
- The expression “Table - II of” omitted by the Finance Act, 2025.
- The figure 2022 substituted by the Finance Act, 2022.
- New section (100D) inserted through Finance Act, 2020 dated 30 June, 2020
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 100D Special provisions relating to builders and developers
(1) For tax year 2020 and onwards, the tax payable by a builder or a developer, as defined in sub-section (9), who opt to pay tax under this section shall be computed and paid in accordance with the rules in the Eleventh Schedule on a project by project basis on the income, profits and gains derived from the sale of buildings or sale of plots, as the case may be, from –
(a) a new project to be completed by the 30 day of September, 2023 ; or (b) an incomplete existing project to be completed by the 30 day of September, 2023 :
Provided that any income, profits and gains of a builder or developer of an incomplete existing project earned up to tax year 2019 or tax year 2020, as the case may be shall be subject to the provisions of this Ordinance as were in force prior to the commencement of the Tax Laws (Amendment) Ordinance, 2020 (Ordinance I of 2020):
Provided further that any income of a builders or developer other than income, profits and gains subject to this section shall be subject to tax as per the provisions of this Ordinance.
(2) Where sub-section (1) applies,-
(a) the income shall not be chargeable to tax under any head of income in computing the taxable income of the person;
(b) no deduction shall be allowed under this Ordinance for any expenditure incurred in deriving the income:
(c) the amount of the income shall not be reduced by –
(i) any deductible allowance under Part IX of Chapter III: or (ii) the set off of any loss;
(d) no tax credit shall be allowed against the tax payable under sub-section (1) except credit for tax under section 236A or 236K collected from the builder or developer after the commencement of the Tax Law (Amendment) Ordinance, 2020 (1 of 2020) on purchase of immoveable property utilized in a project;
(e) there shall be no refund of any tax collected or deducted under this Ordinance;
(f) if the tax payable has not been paid or short paid, the said amount of tax may be recovered and all the provisions of this Ordinance shall apply accordingly; and (g) section 113 and 113C shall not apply on the turnover, income, profits and gains of a builder or developer from a project.
(3) The provisions of section 111 shall not apply to capital investment made in a new project under clause (a) of sub-section (1) in the form of money or land, subject to the following conditions, namely:-
(a) if the investment is made by a builder or developer being an individual-
(i) in the form of money, such builder or developer shall open a new bank account and deposit such amount in it on or before the 30th day of June, 2021 ; or (ii) in the form of land, such builder or developer shall have the ownership title of the land at the time of commencement of the Tax Laws (Amendment) Ordinance, 2020 (I of 2020);
(b) if the investment is made by a person in a project through a company or an association of persons,-
(i) such company or association of person shall be a single object (builder or developer) company or association of persons registered under the Companies Act, 2017 (XIX of 2017), the Limited Liability Partnership Act, 2017 (XV of 2017) or the Partnership Act 1932 (IX of 1932), as the case may be, after the date of commencement of the Tax Laws (Amendment) Ordinance, 2020 (I of 2020) and on or before the 30th day of June, 2021 ; and (ii) the person shall be a member or shareholder of such association of persons or company, as the case may be; and if the capital investment is made,-
(i) in the form of money, such amount shall be invested through a crossed banking instrument deposited in the bank account of such association of persons or company, as the case may be, no or before the 30th day of June, 2021 ; or (ii) in the form of land, such land shall be transferred to such association of persons or company, as the case may be, on or before the 30th day of June, 2021 :
Provided that the person shall have the ownership title of the land at the time of commencement of the Tax Laws (Amendment) Ordinance, 2020 (I of 2020)
(c) a person making an investment under clause (a) or (b) shall submit a prescribed form on Iris web portal by 30th day of June, 2021 ;
(d) the money or land invested under clause (a) or (b) shall be wholly utilized in a project; and (e) completion of the project shall be certified in the following manner, namely:-
(i) in case of a builder, the map approving authority or NESPAK shall certify that grey structure as per the approved map has been completed by the builder on or before the 30 day of September, 2023 ; and (ii) in case of a develop,- (A) the map approving authority or NESPAK shall certify that landscaping has been completed on or before the 30 day of September, 2023 ; (B) a firm of chartered accountants having an ICAP QCR rating of ‘satisfactory’, notified by the Board for this purpose, shall certify that at least 50% of the plots have been booked for sale and at least 40% of the sale proceeds have been received by the 30 day of September, 2023 ; and (C) at least 50% of the roads have been laid up to sub-grade level as certified by the approving authority of NESPAK.
(4) The provisions of section 111 shall also not apply to.-
(a) the first purchaser of a building or a unit of the building purchased from the builder in respect of purchase price of the building or unit of the building subject to the following conditions, namely:-
(i) full payment is made through a crossed banking instrument to the builder during a period starting from the date of registration of the project with the Board under this section and ending on the 31st day of March, 2023 , in case the purchase is from a new project; and (ii) full or balance amount of payment is made through a crossed banking instrument to the builder during a period starting from the date of registration of the project with the Board under this section and ending on the 31st day of March, 2023 , in case the purchase is from an existing incomplete project; and (b) the purchaser of a plot who intends to construct a building thereon, if-
(i) the purchase is made on a before the 30 day of June, 2021 ;
(ii) the full payment is made on or before the 30 day of June, 2021 through a crossed banking instrument;
(iii) construction on such plot is commenced on or before the 31 day of December, 2021 ;
(iv) such construction is completed on or before the 30 day of September, 2023 ; and (v) the person registers himself with the Board on the online Iris werb portal.
(5) Where sub-section (3) or (4) apply, the value or price of land or building, as the case may be, shall be the higher of clause (a) or (b) below:-
(a) 130% of the fair market value as determined by the Board under sub- section (4) of section 68; or (b) at the option of the person making investment, the lower of the values as determined by at least two independent valuers from the list of valuers approved by the State Bank of Pakistan.
(6) Sub-sections
(3) and (4) shall not apply to -
(a) holder of any public office as defined in the Voluntary Declaration of Domestic Assets Act, 2018 or his benamidar as defined in the Benami Transactions (Prohibition) Act, 2017 (V of 2017) or his spouse or dependents;
(b) a public listed company, a real estate investment trust or a company whose income is exempt under any provision of this Ordinance; or (c) any proceeds derived from the commission of a criminal offence including the crimes of money laundering extortion or terror financing but excluding the offences under this Ordinance.
(7) Divided income paid to a person by a builder or developer being a company out of the profits and gains derived from a project shall be exempt from tax.
(8) Notwithstanding anything contained in this section or the Eleventh Schedule, where a return or declaration has been made through misrepresentation or suppression of facts, such return or declaration shall be void and all the provisions of this Ordinance shall apply:
Provided that no action under this sub-section shall be taken if such misrepresentation has been made on account of a bona fide mistake:
Provided further that no action under this sub-section shall be taken without providing an opportunity of being heard and without prior approval of the Board.
(9) In this section.-
(a) builder means a person who is registered as a builder with the Board and is engaged in the construction and disposal of residential or commercial buildings;
(b) capital investment means investment as equity resources and does not include borrowed funds;
(c) developer means a person who is registered as a developer with the Board and is engaged in the development of land in the form of plots of any kind either for itself or otherwise;
(d) existing project means a construction or development project, which-
(i) has commenced before the date of commencement of the Tax Laws (Amendment) Ordinance, 2020;
(ii) is incomplete;
(iii) is completed on or before the 30 day of September, 2023 ;and (iv) a declaration is provided in the registration from under Eleventh Schedule to the effect of percentage of the project completed up to the last day of the accounting period pertaining to tax year 2019 or tax year 2020 at the option of the taxpayer ;
(e) first purchaser means a person who purchases a building or a unit, as the case may be, directly from the builder and does not include a subsequent or a substituted purchaser;
(f) new project means a construction or development project, which-
(i) is commenced during the period starting from the date of commencement of the Tax Laws (Amendment) Ordinance, 2020 and ending on the 31 day of December, 2021 ; and (ii) is competed on or before the 30 day of September, 2023 ;
(g) project means a project for construction of a building with the object of disposal, or a project for development of land into plots with the object of disposal or otherwise;
(h) registered with the Board means registered after submission of form on project-by-project basis on the online Iris web portal;
(10) The provisions of the Ordinance not specifically dealt with in this section or the rules made thereunder shall apply mutatis mutandis to builders and developers in so far as they are not inconsistent with this section or the rules made thereunder.
(a) a new project to be completed by the 30 day of September, 2023 ; or (b) an incomplete existing project to be completed by the 30 day of September, 2023 :
Provided that any income, profits and gains of a builder or developer of an incomplete existing project earned up to tax year 2019 or tax year 2020, as the case may be shall be subject to the provisions of this Ordinance as were in force prior to the commencement of the Tax Laws (Amendment) Ordinance, 2020 (Ordinance I of 2020):
Provided further that any income of a builders or developer other than income, profits and gains subject to this section shall be subject to tax as per the provisions of this Ordinance.
(2) Where sub-section (1) applies,-
(a) the income shall not be chargeable to tax under any head of income in computing the taxable income of the person;
(b) no deduction shall be allowed under this Ordinance for any expenditure incurred in deriving the income:
(c) the amount of the income shall not be reduced by –
(i) any deductible allowance under Part IX of Chapter III: or (ii) the set off of any loss;
(d) no tax credit shall be allowed against the tax payable under sub-section (1) except credit for tax under section 236A or 236K collected from the builder or developer after the commencement of the Tax Law (Amendment) Ordinance, 2020 (1 of 2020) on purchase of immoveable property utilized in a project;
(e) there shall be no refund of any tax collected or deducted under this Ordinance;
(f) if the tax payable has not been paid or short paid, the said amount of tax may be recovered and all the provisions of this Ordinance shall apply accordingly; and (g) section 113 and 113C shall not apply on the turnover, income, profits and gains of a builder or developer from a project.
(3) The provisions of section 111 shall not apply to capital investment made in a new project under clause (a) of sub-section (1) in the form of money or land, subject to the following conditions, namely:-
(a) if the investment is made by a builder or developer being an individual-
(i) in the form of money, such builder or developer shall open a new bank account and deposit such amount in it on or before the 30th day of June, 2021 ; or (ii) in the form of land, such builder or developer shall have the ownership title of the land at the time of commencement of the Tax Laws (Amendment) Ordinance, 2020 (I of 2020);
(b) if the investment is made by a person in a project through a company or an association of persons,-
(i) such company or association of person shall be a single object (builder or developer) company or association of persons registered under the Companies Act, 2017 (XIX of 2017), the Limited Liability Partnership Act, 2017 (XV of 2017) or the Partnership Act 1932 (IX of 1932), as the case may be, after the date of commencement of the Tax Laws (Amendment) Ordinance, 2020 (I of 2020) and on or before the 30th day of June, 2021 ; and (ii) the person shall be a member or shareholder of such association of persons or company, as the case may be; and if the capital investment is made,-
(i) in the form of money, such amount shall be invested through a crossed banking instrument deposited in the bank account of such association of persons or company, as the case may be, no or before the 30th day of June, 2021 ; or (ii) in the form of land, such land shall be transferred to such association of persons or company, as the case may be, on or before the 30th day of June, 2021 :
Provided that the person shall have the ownership title of the land at the time of commencement of the Tax Laws (Amendment) Ordinance, 2020 (I of 2020)
(c) a person making an investment under clause (a) or (b) shall submit a prescribed form on Iris web portal by 30th day of June, 2021 ;
(d) the money or land invested under clause (a) or (b) shall be wholly utilized in a project; and (e) completion of the project shall be certified in the following manner, namely:-
(i) in case of a builder, the map approving authority or NESPAK shall certify that grey structure as per the approved map has been completed by the builder on or before the 30 day of September, 2023 ; and (ii) in case of a develop,- (A) the map approving authority or NESPAK shall certify that landscaping has been completed on or before the 30 day of September, 2023 ; (B) a firm of chartered accountants having an ICAP QCR rating of ‘satisfactory’, notified by the Board for this purpose, shall certify that at least 50% of the plots have been booked for sale and at least 40% of the sale proceeds have been received by the 30 day of September, 2023 ; and (C) at least 50% of the roads have been laid up to sub-grade level as certified by the approving authority of NESPAK.
(4) The provisions of section 111 shall also not apply to.-
(a) the first purchaser of a building or a unit of the building purchased from the builder in respect of purchase price of the building or unit of the building subject to the following conditions, namely:-
(i) full payment is made through a crossed banking instrument to the builder during a period starting from the date of registration of the project with the Board under this section and ending on the 31st day of March, 2023 , in case the purchase is from a new project; and (ii) full or balance amount of payment is made through a crossed banking instrument to the builder during a period starting from the date of registration of the project with the Board under this section and ending on the 31st day of March, 2023 , in case the purchase is from an existing incomplete project; and (b) the purchaser of a plot who intends to construct a building thereon, if-
(i) the purchase is made on a before the 30 day of June, 2021 ;
(ii) the full payment is made on or before the 30 day of June, 2021 through a crossed banking instrument;
(iii) construction on such plot is commenced on or before the 31 day of December, 2021 ;
(iv) such construction is completed on or before the 30 day of September, 2023 ; and (v) the person registers himself with the Board on the online Iris werb portal.
(5) Where sub-section (3) or (4) apply, the value or price of land or building, as the case may be, shall be the higher of clause (a) or (b) below:-
(a) 130% of the fair market value as determined by the Board under sub- section (4) of section 68; or (b) at the option of the person making investment, the lower of the values as determined by at least two independent valuers from the list of valuers approved by the State Bank of Pakistan.
(6) Sub-sections
(3) and (4) shall not apply to -
(a) holder of any public office as defined in the Voluntary Declaration of Domestic Assets Act, 2018 or his benamidar as defined in the Benami Transactions (Prohibition) Act, 2017 (V of 2017) or his spouse or dependents;
(b) a public listed company, a real estate investment trust or a company whose income is exempt under any provision of this Ordinance; or (c) any proceeds derived from the commission of a criminal offence including the crimes of money laundering extortion or terror financing but excluding the offences under this Ordinance.
(7) Divided income paid to a person by a builder or developer being a company out of the profits and gains derived from a project shall be exempt from tax.
(8) Notwithstanding anything contained in this section or the Eleventh Schedule, where a return or declaration has been made through misrepresentation or suppression of facts, such return or declaration shall be void and all the provisions of this Ordinance shall apply:
Provided that no action under this sub-section shall be taken if such misrepresentation has been made on account of a bona fide mistake:
Provided further that no action under this sub-section shall be taken without providing an opportunity of being heard and without prior approval of the Board.
(9) In this section.-
(a) builder means a person who is registered as a builder with the Board and is engaged in the construction and disposal of residential or commercial buildings;
(b) capital investment means investment as equity resources and does not include borrowed funds;
(c) developer means a person who is registered as a developer with the Board and is engaged in the development of land in the form of plots of any kind either for itself or otherwise;
(d) existing project means a construction or development project, which-
(i) has commenced before the date of commencement of the Tax Laws (Amendment) Ordinance, 2020;
(ii) is incomplete;
(iii) is completed on or before the 30 day of September, 2023 ;and (iv) a declaration is provided in the registration from under Eleventh Schedule to the effect of percentage of the project completed up to the last day of the accounting period pertaining to tax year 2019 or tax year 2020 at the option of the taxpayer ;
(e) first purchaser means a person who purchases a building or a unit, as the case may be, directly from the builder and does not include a subsequent or a substituted purchaser;
(f) new project means a construction or development project, which-
(i) is commenced during the period starting from the date of commencement of the Tax Laws (Amendment) Ordinance, 2020 and ending on the 31 day of December, 2021 ; and (ii) is competed on or before the 30 day of September, 2023 ;
(g) project means a project for construction of a building with the object of disposal, or a project for development of land into plots with the object of disposal or otherwise;
(h) registered with the Board means registered after submission of form on project-by-project basis on the online Iris web portal;
(10) The provisions of the Ordinance not specifically dealt with in this section or the rules made thereunder shall apply mutatis mutandis to builders and developers in so far as they are not inconsistent with this section or the rules made thereunder.
Amendment history (11)
- The expression “Table - II of” omitted by the Finance Act, 2025.
- The figure 2022 substituted by the Finance Act, 2022.
- New section (100D) inserted through Finance Act, 2020 dated 30 June, 2020
- The expression “30 day of September, 2022” substituted by the Finance Act, 2021. Earlier the
- This expression inserted by the Finance Act, 2021. Earlier this expression was made through Income
- The expression “31 day of December, 2020” substituted by the Finance Act, 2021. Earlier the
- The expression inserted by the Finance Act, 2021. Earlier this insertion was made through Income
- The expression “31 day of December, 2020” ” substituted by the Finance Act, 2021. Earlier the
- The expression “30 day of September, 2022” ” substituted by the Finance Act, 2021. Earlier the
- This expression inserted ” by the Finance Act, 2021. Earlier this insertion was made through Income
- Section 100E inserted by the Finance Act, 2021.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 100E Special provisions relating to small and medium enterprises
(1) For tax year 2021 and onwards, the tax payable by a small and medium enterprise as defined in clause (59A) of section 2 shall be computed and paid in accordance with rules made under the Fourteenth Schedule.
(2) The Board may prescribe a simplified return for a small and medium enterprise.
(i)
(ii)
(iii)
(iv)
(v)
(vi) INTERNATIONAL PART I GEOGRAPHICAL SOURCE OF INCOME
(2) The Board may prescribe a simplified return for a small and medium enterprise.
(i)
(ii)
(iii)
(iv)
(v)
(vi) INTERNATIONAL PART I GEOGRAPHICAL SOURCE OF INCOME
Amendment history (3)
- Section 100E inserted by the Finance Act, 2021.
- The words “local authority” substituted by the Finance Act, 2008.
- The word “or” omitted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 100F Omitted by the Finance Act, 2022Omitted
Omitted by the Finance Act, 2022
International
s. 101 Geographical source of income
(1) Salary shall be Pakistan-source income to the extent to which the salary —
(a) is received from any employment exercised in Pakistan, wherever paid; or (b) is paid by, or on behalf of, the Federal Government, a Provincial Government, or a Local Government in Pakistan, wherever the employment is exercised.
(2) Business income of a resident person shall be Pakistan-source income to the extent to which the income is derived from any business carried on in Pakistan.
(3) Business income of a non-resident person shall be Pakistan-source income to the extent to which it is directly or indirectly attributable to –
(a) a permanent establishment of the non-resident person in Pakistan;
(b) sales in Pakistan of goods merchandise of the same or similar kind as those sold by the person through a permanent establishment in Pakistan;
(c) other business activities carried on in Pakistan of the same or similar kind as those effected by the non-resident through a permanent establishment in Pakistan ; or (d) any business connection in Pakistan ; or (e) import of goods, whether or not the title to the goods passes outside Pakistan, if the import is part of an overall arrangement for the supply of goods, installation, construction, assembly, commission, guarantees or supervisory activities and all or principal activities are undertaken or performed either by the associates of the person supplying the goods or its permanent establishment, whether or not the goods are imported in the name of the person, associate of the person or any other person. Explanation. — For the removal of doubt, it is clarified that where the income is subject to taxation under sections 5A, 5AA, 6, 7 and 7A, the income shall not be chargeable to tax under the head income from business.
(3A) For the purposes of clause (d) of sub-section (3), business connection in Pakistan shall include significant economic presence in Pakistan of a non- resident.
(3B) significant economic presence in Pakistan shall mean –
(a) transaction in respect of any goods, services or property carried out by a non-resident with any person in Pakistan including provision of download of data or software in Pakistan, if the aggregate of payments arising from such transaction or transactions during the tax year exceeds such amount as may be prescribed; and (b) systematic and continuous soliciting of business activities or engaging in interaction through digital means with such number of users in Pakistan as may be prescribed, irrespective of whether or not —
(i) the agreement for such transactions or activities is signed in Pakistan;
(ii) the non-resident has a residence or place of business in Pakistan; or (iii) the non-resident renders services in Pakistan:
Provided that only so much of income as is attributable to the transactions or activities referred to in clause (a) or clause (b) shall be deemed to accrue or arise from a business connection in Pakistan.
(4) Where the business of a non-resident person comprises the rendering of independent services (including professional services and the services of entertainers and sports persons), the Pakistan-source business income of the person shall include in addition to any amounts treated as Pakistan-source income under sub-section (3) any remuneration derived by the person where the remuneration is paid by a resident person or borne by a permanent establishment in Pakistan of a non-resident person.
(5) Any gain from the disposal of any asset or property used in deriving any business income referred to in sub-section (2),
(3) or (4) shall be Pakistan- source income.
(6) A dividend shall be Pakistan-source income if it is — ( a) paid by a resident company; or (b) dividend as per provisions of sub-clause (f) of clause (19) of section 2.
(7) Profit on debt shall be Pakistan-source income if it is —
(a) paid by a resident person, except where the profit is payable in respect of any debt used for the purposes of a business carried on by the resident outside Pakistan through a permanent establishment; or (b) borne by a permanent establishment in Pakistan of a non- resident person.
(8) A royalty shall be Pakistan-source income if it is —
(a) paid by a resident person, except where the royalty is payable in respect of any right, property, or information used, or services utilised for the purposes of a business carried on by the resident outside Pakistan through a permanent establishment; or (b) borne by a permanent establishment in Pakistan of a non- resident person.
(9) Rental income shall be Pakistan-source income if it is derived from the lease of immovable property in Pakistan whether improved or not, or from any other interest in or over immovable property, including a right to explore for, or exploit, natural resources in Pakistan.
(10) Any gain from the alienation of any property or right referred to in sub- section (9) or from the alienation of any share in a company the assets of which consist wholly or principally, directly or indirectly, of property or rights referred to in sub-section (9) shall be Pakistan-source income.
(11) A pension or annuity shall be Pakistan-source income if it is paid by a resident or borne by a permanent establishment in Pakistan of a non-resident person.
(12) A technical fee shall be Pakistan-source income if it is –
(a) paid by a resident person, except where the fee is payable in respect of services utilised in a business carried on by the resident outside Pakistan through a permanent establishment; or (b) borne by a permanent establishment in Pakistan of a non- resident person.
(12A) A fee for offshore digital services shall be Pakistan- source income, if it is –
(a) paid by a resident person, except where the fee is payable in respect of services utilised in a business carried on by the resident outside Pakistan through a permanent establishment; or (b) borne by a permanent establishment in Pakistan of a non- resident person.
(13) Any gain arising on the disposal of shares in a resident company shall be Pakistan-source income. (13A).Any amount paid on account of insurance or re-insurance premium by an insurance company to an overseas insurance or re-insurance company shall be deemed to be Pakistan source income.
(14) Any amount not mentioned in the preceding sub-sections shall be Pakistan-source income if it is paid by a resident person or borne by a permanent establishment in Pakistan of a non-resident person.
(15) Where an amount may be dealt with under sub-section (3) and under another sub-section (other than sub-section (14)), this section shall apply—
(a) by first determining whether the amount is Pakistan-source income under that other sub-section; and (b) if the amount is not Pakistan-source income under that sub- section, then determining whether it is Pakistan-source income under sub-section (3).
(16) An amount shall be foreign-source income to the extent to which it is not Pakistan-source income.
(a) is received from any employment exercised in Pakistan, wherever paid; or (b) is paid by, or on behalf of, the Federal Government, a Provincial Government, or a Local Government in Pakistan, wherever the employment is exercised.
(2) Business income of a resident person shall be Pakistan-source income to the extent to which the income is derived from any business carried on in Pakistan.
(3) Business income of a non-resident person shall be Pakistan-source income to the extent to which it is directly or indirectly attributable to –
(a) a permanent establishment of the non-resident person in Pakistan;
(b) sales in Pakistan of goods merchandise of the same or similar kind as those sold by the person through a permanent establishment in Pakistan;
(c) other business activities carried on in Pakistan of the same or similar kind as those effected by the non-resident through a permanent establishment in Pakistan ; or (d) any business connection in Pakistan ; or (e) import of goods, whether or not the title to the goods passes outside Pakistan, if the import is part of an overall arrangement for the supply of goods, installation, construction, assembly, commission, guarantees or supervisory activities and all or principal activities are undertaken or performed either by the associates of the person supplying the goods or its permanent establishment, whether or not the goods are imported in the name of the person, associate of the person or any other person. Explanation. — For the removal of doubt, it is clarified that where the income is subject to taxation under sections 5A, 5AA, 6, 7 and 7A, the income shall not be chargeable to tax under the head income from business.
(3A) For the purposes of clause (d) of sub-section (3), business connection in Pakistan shall include significant economic presence in Pakistan of a non- resident.
(3B) significant economic presence in Pakistan shall mean –
(a) transaction in respect of any goods, services or property carried out by a non-resident with any person in Pakistan including provision of download of data or software in Pakistan, if the aggregate of payments arising from such transaction or transactions during the tax year exceeds such amount as may be prescribed; and (b) systematic and continuous soliciting of business activities or engaging in interaction through digital means with such number of users in Pakistan as may be prescribed, irrespective of whether or not —
(i) the agreement for such transactions or activities is signed in Pakistan;
(ii) the non-resident has a residence or place of business in Pakistan; or (iii) the non-resident renders services in Pakistan:
Provided that only so much of income as is attributable to the transactions or activities referred to in clause (a) or clause (b) shall be deemed to accrue or arise from a business connection in Pakistan.
(4) Where the business of a non-resident person comprises the rendering of independent services (including professional services and the services of entertainers and sports persons), the Pakistan-source business income of the person shall include in addition to any amounts treated as Pakistan-source income under sub-section (3) any remuneration derived by the person where the remuneration is paid by a resident person or borne by a permanent establishment in Pakistan of a non-resident person.
(5) Any gain from the disposal of any asset or property used in deriving any business income referred to in sub-section (2),
(3) or (4) shall be Pakistan- source income.
(6) A dividend shall be Pakistan-source income if it is — ( a) paid by a resident company; or (b) dividend as per provisions of sub-clause (f) of clause (19) of section 2.
(7) Profit on debt shall be Pakistan-source income if it is —
(a) paid by a resident person, except where the profit is payable in respect of any debt used for the purposes of a business carried on by the resident outside Pakistan through a permanent establishment; or (b) borne by a permanent establishment in Pakistan of a non- resident person.
(8) A royalty shall be Pakistan-source income if it is —
(a) paid by a resident person, except where the royalty is payable in respect of any right, property, or information used, or services utilised for the purposes of a business carried on by the resident outside Pakistan through a permanent establishment; or (b) borne by a permanent establishment in Pakistan of a non- resident person.
(9) Rental income shall be Pakistan-source income if it is derived from the lease of immovable property in Pakistan whether improved or not, or from any other interest in or over immovable property, including a right to explore for, or exploit, natural resources in Pakistan.
(10) Any gain from the alienation of any property or right referred to in sub- section (9) or from the alienation of any share in a company the assets of which consist wholly or principally, directly or indirectly, of property or rights referred to in sub-section (9) shall be Pakistan-source income.
(11) A pension or annuity shall be Pakistan-source income if it is paid by a resident or borne by a permanent establishment in Pakistan of a non-resident person.
(12) A technical fee shall be Pakistan-source income if it is –
(a) paid by a resident person, except where the fee is payable in respect of services utilised in a business carried on by the resident outside Pakistan through a permanent establishment; or (b) borne by a permanent establishment in Pakistan of a non- resident person.
(12A) A fee for offshore digital services shall be Pakistan- source income, if it is –
(a) paid by a resident person, except where the fee is payable in respect of services utilised in a business carried on by the resident outside Pakistan through a permanent establishment; or (b) borne by a permanent establishment in Pakistan of a non- resident person.
(13) Any gain arising on the disposal of shares in a resident company shall be Pakistan-source income. (13A).Any amount paid on account of insurance or re-insurance premium by an insurance company to an overseas insurance or re-insurance company shall be deemed to be Pakistan source income.
(14) Any amount not mentioned in the preceding sub-sections shall be Pakistan-source income if it is paid by a resident person or borne by a permanent establishment in Pakistan of a non-resident person.
(15) Where an amount may be dealt with under sub-section (3) and under another sub-section (other than sub-section (14)), this section shall apply—
(a) by first determining whether the amount is Pakistan-source income under that other sub-section; and (b) if the amount is not Pakistan-source income under that sub- section, then determining whether it is Pakistan-source income under sub-section (3).
(16) An amount shall be foreign-source income to the extent to which it is not Pakistan-source income.
Amendment history (13)
- The words “local authority” substituted by the Finance Act, 2008.
- The word “or” omitted by the Finance Act, 2003.
- Full stop substituted by the Finance Act, 2003.
- Inserted by the Finance Act, 2003.
- Full stop substituted by the Finance Act, 2018.
- Added by the Finance Act, 2018.
- Sub-sections (3A) and (3B) added by the Finance Act, 2024.
- Sub-section (4) substituted by the Finance Act, 2003. The substituted sub-section (4) read as
- The words and full stop “paid by a resident company.” substituted by the Finance Act, 2012.
- Added by the Finance Act, 2012.
- Inserted by the Finance Act, 2018.
- Inserted by the Finance Act, 2008.
- Inserted by the finance Act 2018.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 101A Gain on disposal of assets outside Pakistan
(1) Any gain from the disposal or alienation outside Pakistan of an asset located in Pakistan of a non- resident company shall be Pakistan-source.
(2) The gain under sub-section (1) shall be chargeable to tax at the rate and in the manner as specified in sub-section (10).
(3) Where the asset is any share or interest in a non-resident company, the asset shall be treated to be located in Pakistan, if ─
(a) the share or interest derives, directly or indirectly, its value wholly or principally from the assets located in Pakistan; and (b) shares or interest representing ten per cent or more of the share capital of the non-resident company are disposed or alienated.
(4) The share or interest, as mentioned in sub-section (3), shall be treated to derive its value principally from the assets located in Pakistan, if on the last day of the tax year preceding the date of transfer ofa share or an interest, the value of such assets exceeds one hundred million Rupees and represents at least fifty per cent of the value of all the assets owned by the non- resident company.
(5) Notwithstanding the provisions of section 68, the value as mentioned in sub-section (4) shall be the fair market value, as may be prescribed, for the purpose of this section without reduction of liabilities.
(6) Where the entire assets by the non-resident company are not located in Pakistan, the income of the non-resident company, from disposal or alienation outside Pakistan of a share of, or interest in, such non-resident company shall be treated to be located in Pakistan, to the extent it is reasonably attributable to assets located in Pakistan and determined as may be prescribed.
(7) Where the asset of a non-resident company derives, directly or indirectly, its value wholly or principally from the assets located in Pakistan and the non-resident company holds, directly or indirectly, such assets through a resident company, such resident company shall, for the purposes of determination of gain and tax thereon under sub-section (8)or, as the case may be, sub-section (9), shall furnish to the Commissioner within sixty days of the transaction of disposal or alienation of the asset by the non-resident company, the prescribed information or documents, in a statement as may be prescribed:
Provided that the Commissioner may, by notice in writing, require the resident company, to furnish information, documents and statement within a period of less than sixty days as specified in the notice.
(8) The person acquiring the asset from the non-resident person shall deduct tax from the gross amount paid as consideration for the asset at the rate of ten percent of the fair market value of the asset and shall be paid to the Commissioner by way of credit to the Federal Government through remittance to the Government Treasury or deposit in an authorized branch of the State Bank of Pakistan or the National Bank of Pakistan, within fifteen days of the payment to the non-resident.
(9) The resident company as referred to in sub-section (7) shall collect advance tax as computed in sub-section (10) from the non-resident company within thirty days of the transaction of disposal or alienation of the asset by such non-resident company:
Provided that where the tax has been deducted and paid by the person acquiring the asset from the non-resident person under sub- section (8), the said tax shall be treated as tax collected and paid under this sub-section and shall be allowed a tax credit for that tax in computing the tax under sub-section (10).
(10) The tax to be collected under sub-section (9) shall be the higher of ─
(a) 20% of A, where A – fair market value less cost of acquisition of the asset; or (b) 10% of the fair market value of the asset.
(11) Where tax has been paid under sub-section (8) or (9), no tax shall be payable by the non-resident company in respect of gain under sub-section (8) of section 22 or capital gains under section 37 or 37A.
(12) Where any gain is taxable under this section and also under any other provision of this Ordinance, the said gain shall be taxable under other provision of the Ordinance. PART II TAXATION OF FOREIGN-SOURCE INCOME OF RESIDENTS
(2) The gain under sub-section (1) shall be chargeable to tax at the rate and in the manner as specified in sub-section (10).
(3) Where the asset is any share or interest in a non-resident company, the asset shall be treated to be located in Pakistan, if ─
(a) the share or interest derives, directly or indirectly, its value wholly or principally from the assets located in Pakistan; and (b) shares or interest representing ten per cent or more of the share capital of the non-resident company are disposed or alienated.
(4) The share or interest, as mentioned in sub-section (3), shall be treated to derive its value principally from the assets located in Pakistan, if on the last day of the tax year preceding the date of transfer ofa share or an interest, the value of such assets exceeds one hundred million Rupees and represents at least fifty per cent of the value of all the assets owned by the non- resident company.
(5) Notwithstanding the provisions of section 68, the value as mentioned in sub-section (4) shall be the fair market value, as may be prescribed, for the purpose of this section without reduction of liabilities.
(6) Where the entire assets by the non-resident company are not located in Pakistan, the income of the non-resident company, from disposal or alienation outside Pakistan of a share of, or interest in, such non-resident company shall be treated to be located in Pakistan, to the extent it is reasonably attributable to assets located in Pakistan and determined as may be prescribed.
(7) Where the asset of a non-resident company derives, directly or indirectly, its value wholly or principally from the assets located in Pakistan and the non-resident company holds, directly or indirectly, such assets through a resident company, such resident company shall, for the purposes of determination of gain and tax thereon under sub-section (8)or, as the case may be, sub-section (9), shall furnish to the Commissioner within sixty days of the transaction of disposal or alienation of the asset by the non-resident company, the prescribed information or documents, in a statement as may be prescribed:
Provided that the Commissioner may, by notice in writing, require the resident company, to furnish information, documents and statement within a period of less than sixty days as specified in the notice.
(8) The person acquiring the asset from the non-resident person shall deduct tax from the gross amount paid as consideration for the asset at the rate of ten percent of the fair market value of the asset and shall be paid to the Commissioner by way of credit to the Federal Government through remittance to the Government Treasury or deposit in an authorized branch of the State Bank of Pakistan or the National Bank of Pakistan, within fifteen days of the payment to the non-resident.
(9) The resident company as referred to in sub-section (7) shall collect advance tax as computed in sub-section (10) from the non-resident company within thirty days of the transaction of disposal or alienation of the asset by such non-resident company:
Provided that where the tax has been deducted and paid by the person acquiring the asset from the non-resident person under sub- section (8), the said tax shall be treated as tax collected and paid under this sub-section and shall be allowed a tax credit for that tax in computing the tax under sub-section (10).
(10) The tax to be collected under sub-section (9) shall be the higher of ─
(a) 20% of A, where A – fair market value less cost of acquisition of the asset; or (b) 10% of the fair market value of the asset.
(11) Where tax has been paid under sub-section (8) or (9), no tax shall be payable by the non-resident company in respect of gain under sub-section (8) of section 22 or capital gains under section 37 or 37A.
(12) Where any gain is taxable under this section and also under any other provision of this Ordinance, the said gain shall be taxable under other provision of the Ordinance. PART II TAXATION OF FOREIGN-SOURCE INCOME OF RESIDENTS
Amendment history (2)
- Inserted by the Finance Act, 2008.
- Inserted by the finance Act 2018.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 102 Foreign source salary of resident individuals
(1) Any foreign-source salary received by a resident individual shall be exempt from tax if the individual has paid foreign income tax in respect of the salary.
(2) A resident individual shall be treated as having paid foreign income tax in respect of foreign-source salary if tax has been withheld from the salary by the individual’s employer and paid to the revenue authority of the foreign country in which the employment was exercised.
(2) A resident individual shall be treated as having paid foreign income tax in respect of foreign-source salary if tax has been withheld from the salary by the individual’s employer and paid to the revenue authority of the foreign country in which the employment was exercised.
s. 103 Foreign tax credit
(1) Where a resident taxpayer derives foreign source income chargeable to tax under this Ordinance in respect of which the taxpayer has paid foreign income tax, the taxpayer shall be allowed a tax credit of an amount equal to the lesser of –
(a) the foreign income tax paid; or (b) the Pakistan tax payable in respect of the income.
(2) For the purposes of clause (b) of sub-section (1), the Pakistan tax payable in respect of foreign source income derived by a taxpayer in a tax year shall be computed by applying the average rate of Pakistan income tax applicable to the taxpayer for the year against the taxpayer’s net foreign-source income for the year.
(3) Where, in a tax year, a taxpayer has foreign income under more than one head of income, this section shall apply separately to each head of income.
(4) For the purposes of sub-section (3), income derived by a taxpayer from carrying on a speculation business shall be treated as a separate head of income.
(5) The tax credit allowed under this section shall be applied in accordance with sub-section (3) of section 4.
(6) Any tax credit or part of a tax credit allowed under this section for a tax year that is not credited under sub-section (3) of section 4 shall not be refunded, carried back to the preceding tax year, or carried forward to the following tax year.
(7) A credit shall be allowed under this section only if the foreign income tax is paid within two years after the end of the tax year in which the foreign income to which the tax relates was derived by the resident taxpayer.
(8) In this section,— average rate of Pakistan income tax in relation to a taxpayer for a tax year, means the percentage that the Pakistani income tax (before allowance of the tax credit under this section) is of the taxable income of the taxpayer for the year; foreign income tax includes a foreign withholding tax; and net foreign-source income in relation to a taxpayer for a tax year, means the total foreign-source income of the taxpayer charged to tax in the year, as reduced by any deductions allowed to the taxpayer under this Ordinance for the year that –
(a) relate exclusively to the derivation of the foreign-source income; and (b) are reasonably related to the derivation of foreign-source income in accordance with sub-section (1) of section 67 and any rules made for the purposes of that section.
(a) the foreign income tax paid; or (b) the Pakistan tax payable in respect of the income.
(2) For the purposes of clause (b) of sub-section (1), the Pakistan tax payable in respect of foreign source income derived by a taxpayer in a tax year shall be computed by applying the average rate of Pakistan income tax applicable to the taxpayer for the year against the taxpayer’s net foreign-source income for the year.
(3) Where, in a tax year, a taxpayer has foreign income under more than one head of income, this section shall apply separately to each head of income.
(4) For the purposes of sub-section (3), income derived by a taxpayer from carrying on a speculation business shall be treated as a separate head of income.
(5) The tax credit allowed under this section shall be applied in accordance with sub-section (3) of section 4.
(6) Any tax credit or part of a tax credit allowed under this section for a tax year that is not credited under sub-section (3) of section 4 shall not be refunded, carried back to the preceding tax year, or carried forward to the following tax year.
(7) A credit shall be allowed under this section only if the foreign income tax is paid within two years after the end of the tax year in which the foreign income to which the tax relates was derived by the resident taxpayer.
(8) In this section,— average rate of Pakistan income tax in relation to a taxpayer for a tax year, means the percentage that the Pakistani income tax (before allowance of the tax credit under this section) is of the taxable income of the taxpayer for the year; foreign income tax includes a foreign withholding tax; and net foreign-source income in relation to a taxpayer for a tax year, means the total foreign-source income of the taxpayer charged to tax in the year, as reduced by any deductions allowed to the taxpayer under this Ordinance for the year that –
(a) relate exclusively to the derivation of the foreign-source income; and (b) are reasonably related to the derivation of foreign-source income in accordance with sub-section (1) of section 67 and any rules made for the purposes of that section.
s. 104 Foreign losses
(1) Deductible expenditures incurred by a person in deriving foreign-source income chargeable to tax under a head of income shall be deductible only against that income.
(2) If the total deductible expenditures referred to in sub-section (1) exceed the total foreign source income for a tax year chargeable to tax under a head of income (hereinafter referred to as a foreign loss), the foreign loss shall be carried forward to the following tax year and set off against the foreign source income chargeable to tax under that head in that year, and so on, but no foreign loss shall be carried forward to more than six tax years immediately succeeding the tax year for which the loss was computed.
(3) Where a taxpayer has a foreign loss carried forward for more than one tax year, the loss for the earliest year shall be set off first.
(4) Section 67 shall apply for the purposes of this section on the basis that —
(a) income from carrying on a speculation business is a separate head of income; and (b) foreign source income chargeable under a head of income (including the head specified in clause (a)) shall be a separate head of income. PART III TAXATION OF NON-RESIDENTS
(2) If the total deductible expenditures referred to in sub-section (1) exceed the total foreign source income for a tax year chargeable to tax under a head of income (hereinafter referred to as a foreign loss), the foreign loss shall be carried forward to the following tax year and set off against the foreign source income chargeable to tax under that head in that year, and so on, but no foreign loss shall be carried forward to more than six tax years immediately succeeding the tax year for which the loss was computed.
(3) Where a taxpayer has a foreign loss carried forward for more than one tax year, the loss for the earliest year shall be set off first.
(4) Section 67 shall apply for the purposes of this section on the basis that —
(a) income from carrying on a speculation business is a separate head of income; and (b) foreign source income chargeable under a head of income (including the head specified in clause (a)) shall be a separate head of income. PART III TAXATION OF NON-RESIDENTS
s. 105 Taxation of a permanent establishment in Pakistan of a non- resident person
(1) The following principles shall apply in determining the income of a permanent establishment in Pakistan of a non-resident person chargeable to tax under the head Income from Business, namely: —
(a) The profit of the permanent establishment shall be computed on the basis that it is a distinct and separate person engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the non-resident person of which it is a permanent establishment;
(b) subject to this Ordinance, there shall be allowed as deductions any expenses incurred for the purposes of the business activities of the permanent establishment including executive and administrative expenses so incurred, whether in Pakistan or elsewhere;
(c) no deduction shall be allowed for amounts paid or payable by the permanent establishment to its head office or to another permanent establishment of the non-resident person (other than towards reimbursement of actual expenses incurred by the non-resident person to third parties) by way of:
(i) royalties, fees or other similar payments for the use of any tangible or intangible asset by the permanent establishment;
(ii) compensation for any services including management services performed for the permanent establishment; or (iii) profit on debt on moneys lent to the permanent establishment, except in connection with a banking business; and (d) no account shall be taken in the determination of the income of a permanent establishment of amounts charged by the permanent establishment to the head office or to another permanent establishment of the non-resident person (other than towards reimbursement of actual expenses incurred by the permanent establishment to third parties) by way of:
(i) royalties, fees or other similar payments for the use of any tangible or intangible asset;
(ii) compensation for any services including management services performed by the permanent establishment; or (iii) profit on debt on moneys lent by the permanent establishment, except in connection with a banking business.
(2) No deduction shall be allowed in computing the income of a permanent establishment in Pakistan of a non-resident person chargeable to tax under the head Income from Business for a tax year for head office expenditure in excess of the amount as bears to the turnover of the permanent establishment in Pakistan the same proportion as the non-resident’s total head office expenditure bears to its worldwide turnover.
(3) In this section, head office expenditure means any executive or general administration expenditure incurred by the non-resident person outside Pakistan for the purposes of the business of the Pakistan permanent establishment of the person, including —
(a) any rent, local rates and taxes excluding any foreign income tax, current repairs, or insurance against risks of damage or destruction outside Pakistan;
(b) any salary paid to an employee employed by the head office outside Pakistan;
(c) any travelling expenditures of such employee; and (d) any other expenditures which may be prescribed.
(4) No deduction shall be allowed in computing the income of a permanent establishment in Pakistan of a non-resident person chargeable under the head Income from Business for —
(a) any profit paid or payable by the non-resident person on debt to finance the operations of the permanent establishment; or (b) any insurance premium paid or payable by the non-resident person in respect of such debt.
(a) The profit of the permanent establishment shall be computed on the basis that it is a distinct and separate person engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the non-resident person of which it is a permanent establishment;
(b) subject to this Ordinance, there shall be allowed as deductions any expenses incurred for the purposes of the business activities of the permanent establishment including executive and administrative expenses so incurred, whether in Pakistan or elsewhere;
(c) no deduction shall be allowed for amounts paid or payable by the permanent establishment to its head office or to another permanent establishment of the non-resident person (other than towards reimbursement of actual expenses incurred by the non-resident person to third parties) by way of:
(i) royalties, fees or other similar payments for the use of any tangible or intangible asset by the permanent establishment;
(ii) compensation for any services including management services performed for the permanent establishment; or (iii) profit on debt on moneys lent to the permanent establishment, except in connection with a banking business; and (d) no account shall be taken in the determination of the income of a permanent establishment of amounts charged by the permanent establishment to the head office or to another permanent establishment of the non-resident person (other than towards reimbursement of actual expenses incurred by the permanent establishment to third parties) by way of:
(i) royalties, fees or other similar payments for the use of any tangible or intangible asset;
(ii) compensation for any services including management services performed by the permanent establishment; or (iii) profit on debt on moneys lent by the permanent establishment, except in connection with a banking business.
(2) No deduction shall be allowed in computing the income of a permanent establishment in Pakistan of a non-resident person chargeable to tax under the head Income from Business for a tax year for head office expenditure in excess of the amount as bears to the turnover of the permanent establishment in Pakistan the same proportion as the non-resident’s total head office expenditure bears to its worldwide turnover.
(3) In this section, head office expenditure means any executive or general administration expenditure incurred by the non-resident person outside Pakistan for the purposes of the business of the Pakistan permanent establishment of the person, including —
(a) any rent, local rates and taxes excluding any foreign income tax, current repairs, or insurance against risks of damage or destruction outside Pakistan;
(b) any salary paid to an employee employed by the head office outside Pakistan;
(c) any travelling expenditures of such employee; and (d) any other expenditures which may be prescribed.
(4) No deduction shall be allowed in computing the income of a permanent establishment in Pakistan of a non-resident person chargeable under the head Income from Business for —
(a) any profit paid or payable by the non-resident person on debt to finance the operations of the permanent establishment; or (b) any insurance premium paid or payable by the non-resident person in respect of such debt.
Amendment history (2)
- Inserted by the Finance Act, 2002
- Inserted by the Finance Act, 2008.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 106 Thin capitalization
(1) Where a foreign-controlled resident company (other than a financial institution or a banking company) or a branch of a foreign company operating in Pakistan, has a foreign debt-to-foreign equity ratio in excess of three to one at any time during a tax year, a deduction shall be disallowed for the profit on debt paid by the company in that year on that part of the debt which exceeds the three to one ratio.
(2) In this section, — foreign-controlled resident company means a resident company in which fifty per cent or more of the underlying ownership of the company is held by a non-resident person (hereinafter referred to as the foreign controller) either alone or together with an associate or associates; foreign debt in relation to a foreign-controlled resident company, means the greatest amount, at any time in a tax year, of the sum of the following amounts, namely: —
(a) The balance outstanding at that time on any debt obligation owed by the foreign-controlled resident company to a foreign controller or non-resident associate of the foreign controller on which profit on debt is payable which profit on debt is deductible to the foreign-controlled resident company and is not taxed under this Ordinance or is taxable at a rate lower than the corporate rate of tax applicable on assessment to the foreign controller or associate; and (b) the balance outstanding at that time on any debt obligation owed by the foreign-controlled resident company to a person other than the foreign controller or an associate of the foreign controller where that person has a balance outstanding of a similar amount on a debt obligation owed by the person to the foreign controller or a non-resident associate of the foreign controller; and foreign equity in relation to a foreign-controlled resident company and for a tax year, means the sum of the following amounts, namely: —
(a) The paid-up value of all shares in the company owned by the foreign controller or a non-resident associate of the foreign controller at the beginning of the tax year;
(b) so much of the amount standing to the credit of the share premium account of the company at the beginning of the tax year as the foreign controller or a non-resident associate would be entitled to if the company were wound up at that time; and (c) so much of the accumulated profits and asset revaluation reserves of the company at the beginning of the tax year as the foreign controller or a non-resident associate of the foreign controller would be entitled to if the company were wound up at that time; reduced by the sum of the following amounts, namely: —
(i) the balance outstanding at the beginning of the tax year on any debt obligation owed to the foreign- controlled resident company by the foreign controller or a non-resident associate of the foreign controller; and (ii) where the foreign-controlled resident company has accumulated losses at the beginning of the tax year, the amount by which the return of capital to the foreign controller or non-resident associate of the foreign controller would be reduced by virtue of the losses if the company were wound up at that time.
(2) In this section, — foreign-controlled resident company means a resident company in which fifty per cent or more of the underlying ownership of the company is held by a non-resident person (hereinafter referred to as the foreign controller) either alone or together with an associate or associates; foreign debt in relation to a foreign-controlled resident company, means the greatest amount, at any time in a tax year, of the sum of the following amounts, namely: —
(a) The balance outstanding at that time on any debt obligation owed by the foreign-controlled resident company to a foreign controller or non-resident associate of the foreign controller on which profit on debt is payable which profit on debt is deductible to the foreign-controlled resident company and is not taxed under this Ordinance or is taxable at a rate lower than the corporate rate of tax applicable on assessment to the foreign controller or associate; and (b) the balance outstanding at that time on any debt obligation owed by the foreign-controlled resident company to a person other than the foreign controller or an associate of the foreign controller where that person has a balance outstanding of a similar amount on a debt obligation owed by the person to the foreign controller or a non-resident associate of the foreign controller; and foreign equity in relation to a foreign-controlled resident company and for a tax year, means the sum of the following amounts, namely: —
(a) The paid-up value of all shares in the company owned by the foreign controller or a non-resident associate of the foreign controller at the beginning of the tax year;
(b) so much of the amount standing to the credit of the share premium account of the company at the beginning of the tax year as the foreign controller or a non-resident associate would be entitled to if the company were wound up at that time; and (c) so much of the accumulated profits and asset revaluation reserves of the company at the beginning of the tax year as the foreign controller or a non-resident associate of the foreign controller would be entitled to if the company were wound up at that time; reduced by the sum of the following amounts, namely: —
(i) the balance outstanding at the beginning of the tax year on any debt obligation owed to the foreign- controlled resident company by the foreign controller or a non-resident associate of the foreign controller; and (ii) where the foreign-controlled resident company has accumulated losses at the beginning of the tax year, the amount by which the return of capital to the foreign controller or non-resident associate of the foreign controller would be reduced by virtue of the losses if the company were wound up at that time.
Amendment history (4)
- Inserted by the Finance Act, 2002
- Inserted by the Finance Act, 2008.
- The words “corporate tax” substituted by the Finance Act, 2002
- New section 106A inserted through Finance Act, 2020 dated 30 June, 2020
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 106A Restriction on deduction of profit on debt payable to associated enterprise
(1) Subject to sections 108 and 109, a part of deduction for foreign profit on debt claimed by a foreign-controlled resident company(other than an insurance company, or a banking company) during a tax year, shall be disallowed according to the following formula, namely:- B – (A+B) x 0.15 where- A is the taxable income before depreciation and amortization; and B is the foreign profit on debt claimed as deduction
(2) This section shall not apply to a foreign-controlled resident company if the total foreign profit on debt claimed as deduction is less than ten million rupees for a tax year.
(3) Where in computing the taxable income for a tax year, full effect cannot be given to a deduction for foreign profit on debt, the excessive amount shall be added to the amount of foreign profit on debt for the following tax year and shall be treated to be part of that deduction, or if there is no such deduction for that tax year, be treated to be the deduction for that tax year, be treated to be the deduction for that tax year and so on for three tax years.
(4) Notwithstanding the provisions of section 106, where deduction of foreign profit on debt is disallowed under this section and also under section 106, the disallowed amount shall be the higher of the disallowed amount under this section and section 106.
(5) This section shall apply in respect of foreign profit on debt accrued with effect from the first day of July, 2020, ever if debts were contracted before the first day of July, 2020.
(6) In this section-
(a) foreign-controlled resident company means a resident company in which fifty per cent or more of the underlying ownership of the company is held by a non-resident person either alone or together with an associate or association; and (b) foreign profit on debt means interest paid or payable to a non- resident person or an associate of the foreign-controlled resident company and includes-
(i) interest on all forms of debt;
(ii) payments made which are economically equivalent to interest;
(i) expenses incurred in connection with the raising of finance;
(ii) payments under profit participating loans;
(iii) imputed interest on instruments such as convertible bonds and zero coupon bonds;
(iv) amounts under alternative financing arrangements such as Islamic finance;
(v) the finance cost element of finance lease payments;
(vi) capitalized interest included in the balance sheet value of related asset, or the amortisation of capitalised interest;
(vii) amounts measured by reference to a funding return under transfer pricing rules;
(viii) where applicable, national interest amounts under derivative instruments or hedging arrangements related to an entity’s borrowings;
(ix) certain foreign exchange gains and losses on borrowings and instruments connected with the raising of finance;
(x) guarantee fees with respect to financing arrangements; and (xi) arrangements fee and similar cost related to the borrowing funds. PART IV AGREEMENTS FOR THE AVOIDANCE OF DOUBLE TAXATION AND PREVENTION OF FISCAL EVASION
(2) This section shall not apply to a foreign-controlled resident company if the total foreign profit on debt claimed as deduction is less than ten million rupees for a tax year.
(3) Where in computing the taxable income for a tax year, full effect cannot be given to a deduction for foreign profit on debt, the excessive amount shall be added to the amount of foreign profit on debt for the following tax year and shall be treated to be part of that deduction, or if there is no such deduction for that tax year, be treated to be the deduction for that tax year, be treated to be the deduction for that tax year and so on for three tax years.
(4) Notwithstanding the provisions of section 106, where deduction of foreign profit on debt is disallowed under this section and also under section 106, the disallowed amount shall be the higher of the disallowed amount under this section and section 106.
(5) This section shall apply in respect of foreign profit on debt accrued with effect from the first day of July, 2020, ever if debts were contracted before the first day of July, 2020.
(6) In this section-
(a) foreign-controlled resident company means a resident company in which fifty per cent or more of the underlying ownership of the company is held by a non-resident person either alone or together with an associate or association; and (b) foreign profit on debt means interest paid or payable to a non- resident person or an associate of the foreign-controlled resident company and includes-
(i) interest on all forms of debt;
(ii) payments made which are economically equivalent to interest;
(i) expenses incurred in connection with the raising of finance;
(ii) payments under profit participating loans;
(iii) imputed interest on instruments such as convertible bonds and zero coupon bonds;
(iv) amounts under alternative financing arrangements such as Islamic finance;
(v) the finance cost element of finance lease payments;
(vi) capitalized interest included in the balance sheet value of related asset, or the amortisation of capitalised interest;
(vii) amounts measured by reference to a funding return under transfer pricing rules;
(viii) where applicable, national interest amounts under derivative instruments or hedging arrangements related to an entity’s borrowings;
(ix) certain foreign exchange gains and losses on borrowings and instruments connected with the raising of finance;
(x) guarantee fees with respect to financing arrangements; and (xi) arrangements fee and similar cost related to the borrowing funds. PART IV AGREEMENTS FOR THE AVOIDANCE OF DOUBLE TAXATION AND PREVENTION OF FISCAL EVASION
Amendment history (7)
- New section 106A inserted through Finance Act, 2020 dated 30 June, 2020
- The sub-section (1) substituted by Finance Act, 2015. Substituted sub-section (1)
- Sub-section (1) substituted by the Finance Act, 2016. The substituted sub-section (1) reads as
- Inserted by the Finance Act, 2021.
- The words “and spontaneous” inserted through Finance Act, 2020 dated 30 June, 2020
- Inserted by the Finance Act, 2015
- The words inserted by the Finance Act, 2019.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 107 Agreements for the avoidance of double taxation and prevention of fiscal evasion
(1) The Federal Government may enter into a tax treaty, a tax information exchange agreement, a multilateral convention, an inter- governmental agreement or similar agreement or mechanism for the avoidance of double taxation or assistance in the recovery of taxes or for the exchange of information for the prevention of fiscal evasion or avoidance of taxes including automatic and spontaneous exchange of information with respect to taxes on income imposed under this Ordinance or any other law for the time being in force and under the corresponding laws in force in that country and may, by notification in the official Gazette, make such provisions as may be necessary for implementing the said instruments.; and (1A) Notwithstanding anything contained in any other law to the contrary, the Board shall have the powers to obtain and collect information when solicited by another country under a tax treaty, a tax information exchange agreement, a multilateral convention, an inter-governmental agreement, a similar arrangement or mechanism.
(1B) Notwithstanding the provisions of the Freedom of Information Ordinance, 2002 (XCVI of 2002), subject to clause (a) of sub-section (3) of section 216 of this Ordinance any information received or supplied, and any concomitant communication or correspondence made, under a tax treaty, a tax information exchange agreement, a multilateral convention, a similar arrangement or mechanism, shall be confidential .
(2) Subject to section 109, where any agreement is made in accordance with sub-section (1), the agreement and the provisions made by notification for implementing the agreement shall, notwithstanding anything contained in any law for the time being in force, have effect in so far as they provide for at least one of the following –
(a) relief from the tax payable under this Ordinance;
(b) the determination of the Pakistan-source income of non- resident persons;
(c) where all the operations of a business are not carried on within Pakistan, the determination of the income attributable to operations carried on within and outside Pakistan, or the income chargeable to tax in Pakistan in the hands of non-resident persons, including their agents, branches, and permanent establishments in Pakistan;
(d) the determination of the income to be attributed to any resident person having a special relationship with a non-resident person; and (e) the exchange of information for the prevention of fiscal evasion or avoidance of taxes on income chargeable under this Ordinance and under the corresponding laws in force in that other country.
(3) Notwithstanding anything contained in sub-sections
(1) or (2), any agreement referred to in sub-section (1) may include provisions for the relief from tax for any period before the commencement of this Ordinance or before the making of the agreement. ANTI-AVOIDANCE
(1B) Notwithstanding the provisions of the Freedom of Information Ordinance, 2002 (XCVI of 2002), subject to clause (a) of sub-section (3) of section 216 of this Ordinance any information received or supplied, and any concomitant communication or correspondence made, under a tax treaty, a tax information exchange agreement, a multilateral convention, a similar arrangement or mechanism, shall be confidential .
(2) Subject to section 109, where any agreement is made in accordance with sub-section (1), the agreement and the provisions made by notification for implementing the agreement shall, notwithstanding anything contained in any law for the time being in force, have effect in so far as they provide for at least one of the following –
(a) relief from the tax payable under this Ordinance;
(b) the determination of the Pakistan-source income of non- resident persons;
(c) where all the operations of a business are not carried on within Pakistan, the determination of the income attributable to operations carried on within and outside Pakistan, or the income chargeable to tax in Pakistan in the hands of non-resident persons, including their agents, branches, and permanent establishments in Pakistan;
(d) the determination of the income to be attributed to any resident person having a special relationship with a non-resident person; and (e) the exchange of information for the prevention of fiscal evasion or avoidance of taxes on income chargeable under this Ordinance and under the corresponding laws in force in that other country.
(3) Notwithstanding anything contained in sub-sections
(1) or (2), any agreement referred to in sub-section (1) may include provisions for the relief from tax for any period before the commencement of this Ordinance or before the making of the agreement. ANTI-AVOIDANCE
Amendment history (11)
- The sub-section (1) substituted by Finance Act, 2015. Substituted sub-section (1)
- Sub-section (1) substituted by the Finance Act, 2016. The substituted sub-section (1) reads as
- Inserted by the Finance Act, 2021.
- The words “and spontaneous” inserted through Finance Act, 2020 dated 30 June, 2020
- Inserted by the Finance Act, 2015
- The words inserted by the Finance Act, 2019.
- The expression “subject to sub-section (3) of section 216” omitted by the Finance Act, 2016
- The word “where” substituted by the Finance Act, 2018.
- Inserted by the Finance Act, 2016.
- Added by the Finance Act, 2016.
- The words “and maintain” substituted by the Finance Act, 2018
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
Anti-Avoidance
s. 108 Transactions between associates
(1) The Commissioner may, in respect of any transaction between persons who are associates, distribute, apportion or allocate income, deductions or tax credits between the persons as is necessary to reflect the income that the persons would have realised in an arm’s length transaction.
(2) In making any adjustment under sub-section (1), the Commissioner may determine the source of income and the nature of any payment or loss as revenue, capital or otherwise.
(3) Every taxpayer who has entered into a transaction with its associate shall:
(a) maintain a master file and a local file containing documents and information as may be prescribed;
(b) keep , maintain and furnish to the Board prescribed country-by- country report, where applicable;
(c) keep and maintain any other information and document in respect of transaction with its associate as may be prescribed; and (d) keep the files, documents, information and reports specified in clauses
(a) to
(c) for the period as may be prescribed.
(4) A taxpayer who has entered into a transaction with its associate shall furnish, within thirty days the documents and information to be kept and maintained under clause (a),
(c) or (d) of sub-section (3) if required by the Commissioner in the course of any proceedings under this Ordinance.;
(5) The Commissioner may, by an order in writing, grant the taxpayer an extension of time for furnishing the documents and information under sub-section (4), if the taxpayer applies in writing to the Commissioner for an extension of time to furnish the said documents or information:
Provided that the Commissioner shall not grant an extension of more than forty-five days, when such information or documents were required to be furnished under sub-section (4), unless there are exceptional circumstances justifying a longer extension of time.
(6) Notwithstanding the provisions of sub-section (1), for the tax year 2024 and onwards, where any amount is claimed as deduction for the tax year or for any of the two preceding tax years on account of royalty paid or payable to an associate directly or indirectly in respect of use of any brand name, logo, patent, invention, design or model, secret formula or process, copyright, trademark, scientific or technical knowledge, franchise, license, intellectual property or other like property or right or contractual right and on a notice issued by the Commissioner, the taxpayer fails to furnish any explanation or evidence that no benefit has been conferred on the associate, twenty five percent of the total expenditure for the tax year in respect of sales promotion, advertisement and publicity shall be disallowed and allocated to the said associate.
(2) In making any adjustment under sub-section (1), the Commissioner may determine the source of income and the nature of any payment or loss as revenue, capital or otherwise.
(3) Every taxpayer who has entered into a transaction with its associate shall:
(a) maintain a master file and a local file containing documents and information as may be prescribed;
(b) keep , maintain and furnish to the Board prescribed country-by- country report, where applicable;
(c) keep and maintain any other information and document in respect of transaction with its associate as may be prescribed; and (d) keep the files, documents, information and reports specified in clauses
(a) to
(c) for the period as may be prescribed.
(4) A taxpayer who has entered into a transaction with its associate shall furnish, within thirty days the documents and information to be kept and maintained under clause (a),
(c) or (d) of sub-section (3) if required by the Commissioner in the course of any proceedings under this Ordinance.;
(5) The Commissioner may, by an order in writing, grant the taxpayer an extension of time for furnishing the documents and information under sub-section (4), if the taxpayer applies in writing to the Commissioner for an extension of time to furnish the said documents or information:
Provided that the Commissioner shall not grant an extension of more than forty-five days, when such information or documents were required to be furnished under sub-section (4), unless there are exceptional circumstances justifying a longer extension of time.
(6) Notwithstanding the provisions of sub-section (1), for the tax year 2024 and onwards, where any amount is claimed as deduction for the tax year or for any of the two preceding tax years on account of royalty paid or payable to an associate directly or indirectly in respect of use of any brand name, logo, patent, invention, design or model, secret formula or process, copyright, trademark, scientific or technical knowledge, franchise, license, intellectual property or other like property or right or contractual right and on a notice issued by the Commissioner, the taxpayer fails to furnish any explanation or evidence that no benefit has been conferred on the associate, twenty five percent of the total expenditure for the tax year in respect of sales promotion, advertisement and publicity shall be disallowed and allocated to the said associate.
Amendment history (4)
- Added by the Finance Act, 2016.
- The words “and maintain” substituted by the Finance Act, 2018
- Sub-section (6) added by the Finance Act, 2024.
- New sections (108A) & (108B) inserted through Finance Act, 2019
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 108A Report from independent chartered accountant or cost and management accountant
(1) Where the Commissioner is of the opinion that a transaction has not been declared at arm’s length, the Commissioner may obtain report from an independent chartered accountant or cost and management accountant to determine the fair market value of asset, product, expenditure or service at the time of transaction.
(2) The scope, terms and conditions of the report shall be as may be prescribed.
(3) Where the Commissioner is satisfied with the report of the independent chartered accountant or cost and management accountant, the fair market value of asset, product, expenditure or service determined in the report shall be treated as definite information for the purpose of sub-section (8) of section 122.
(4) Where the Commissioner is not stratified with the report of the independent chartered accountant or cost and management accountant, the Commissioner may record reasons for being not satisfied with the report and seek report from another independent chartered accountant or cost and management accountant, to determine the fair market value of asset, product, expenditure or service at the time of transaction.
(5) The Commissioner shall seek report under sub-section (1) or sub- section (3), as the case may be, with prior approval of the Board.
(2) The scope, terms and conditions of the report shall be as may be prescribed.
(3) Where the Commissioner is satisfied with the report of the independent chartered accountant or cost and management accountant, the fair market value of asset, product, expenditure or service determined in the report shall be treated as definite information for the purpose of sub-section (8) of section 122.
(4) Where the Commissioner is not stratified with the report of the independent chartered accountant or cost and management accountant, the Commissioner may record reasons for being not satisfied with the report and seek report from another independent chartered accountant or cost and management accountant, to determine the fair market value of asset, product, expenditure or service at the time of transaction.
(5) The Commissioner shall seek report under sub-section (1) or sub- section (3), as the case may be, with prior approval of the Board.
Amendment history (2)
- Sub-section (6) added by the Finance Act, 2024.
- New sections (108A) & (108B) inserted through Finance Act, 2019
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 108B Transactions under dealership arrangements
(1) Where a person supplies products listed in the Third Schedule to the Sales Tax Act, 1990 or any other products as prescribed by the Board, under a dealership arrangement with the dealers who are not registered under Sales Tax Act, 1990 and are not appearing in the active taxpayers’ list under this Ordinance, an amount equal to seventy-five percent of the dealer’s margin shall be added to the income of the person making such supplies.
(2) For the purposes of operation of this section, ten percent of the sale price of the manufacturer shall be treated as dealers margin.
(2) For the purposes of operation of this section, ten percent of the sale price of the manufacturer shall be treated as dealers margin.
Amendment history (7)
- Sub-section (6) added by the Finance Act, 2024.
- New sections (108A) & (108B) inserted through Finance Act, 2019
- The word “or” omitted by the finance Act 2022.
- Full stop substituted with a semicolon by the finance Act 2022.
- Inserted by the finance Act 2018
- Full stop substituted and a new clause (e) added by the Finance Act 2022.
- Added by the finance Act 2018
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 109 Recharacterisation of income and deductions
(1) For the purposes of determining liability to tax under this Ordinance, the Commissioner may –
(a) recharacterise a transaction or an element of a transaction that was entered into as part of a tax avoidance scheme;
(b) disregard a transaction that does not have substantial economic effect;
(c) recharacterise a transaction where the form of the transaction does not reflect the substance ;
(d) from tax year 2018 and onwards, disregard an entity or a corporate structure that does not have an economic or commercial substance or was created as part of the tax avoidance scheme ; or (e) from tax year 2018 and onwards, treat a place of business in Pakistan as a permanent establishment, if the said place fulfills the conditions as specified in sub-clause (g) of clause (41) of section 2.
(2) In this section, tax avoidance scheme means any transaction where one of the main purposes of a person in entering into the transaction is the avoidance or reduction of any person’s liability to tax under this Ordinance.
(3) Reduction in a person's liability to tax as referred to in sub-section (2) means a reduction, avoidance or deferral of tax or increase in a refund of tax and includes a reduction, avoidance or deferral of tax that would have been payable under this Ordinance, but are not payable due to a tax treaty for the avoidance of double taxation as referred to in section 107.
(a) recharacterise a transaction or an element of a transaction that was entered into as part of a tax avoidance scheme;
(b) disregard a transaction that does not have substantial economic effect;
(c) recharacterise a transaction where the form of the transaction does not reflect the substance ;
(d) from tax year 2018 and onwards, disregard an entity or a corporate structure that does not have an economic or commercial substance or was created as part of the tax avoidance scheme ; or (e) from tax year 2018 and onwards, treat a place of business in Pakistan as a permanent establishment, if the said place fulfills the conditions as specified in sub-clause (g) of clause (41) of section 2.
(2) In this section, tax avoidance scheme means any transaction where one of the main purposes of a person in entering into the transaction is the avoidance or reduction of any person’s liability to tax under this Ordinance.
(3) Reduction in a person's liability to tax as referred to in sub-section (2) means a reduction, avoidance or deferral of tax or increase in a refund of tax and includes a reduction, avoidance or deferral of tax that would have been payable under this Ordinance, but are not payable due to a tax treaty for the avoidance of double taxation as referred to in section 107.
Amendment history (5)
- The word “or” omitted by the finance Act 2022.
- Full stop substituted with a semicolon by the finance Act 2022.
- Inserted by the finance Act 2018
- Full stop substituted and a new clause (e) added by the Finance Act 2022.
- Added by the finance Act 2018
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 109A Controlled foreign company
(1) There shall be included in the taxable income of a resident person for a tax year an income attributable to controlled foreign company as defined in sub- section (2).
(2) For the purpose of this section, controlled foreign company means a non-resident company, if ─
(a) more than fifty percent of the capital or voting rights of the non- resident company are held, directly or indirectly, by one or more persons resident in Pakistan o more than forty percent of the capital of the or voting rights of the non-resident company are held, directly or indirectly, by a single resident person in Pakistan;
(b) tax paid, after taking into account any foreign tax credits available to the non-resident company, on the income derived or accrued, during a foreign tax year, by the non-resident company to any tax authority outside Pakistan is less than sixty percent of the tax payable on the said income under this Ordinance;
(c) the non-resident company does not derive active business income as defined under sub-section (3); and (d) the shares of the company are not traded on any stock exchange recognized by law of the country or jurisdiction of which the non- resident company is resident for tax purposes.
(3) A company shall be treated to have derived active income if─
(a) more than eighty percent of income of the company does not include income from dividend, interest, property, capital gains, royalty, annuity payment, supply of goods or services to an associate, sale or licensing of intangibles and management, holding or investment in securities and financial assets; and (b) principally derives income under the head income from business in the country or jurisdiction of which it is a resident.
(4) Income of a controlled foreign company is an amount equal to the taxable income of that company determined in accordance with the provisions of this Ordinance as if that controlled foreign company is a resident taxpayer and shall be taxed at the rate specified in Division III of Part I of the First Schedule.
(5) The amount of attributable income under sub-section (1) for a tax year shall be computed according to the following formula, namely:— A x (B/100) Where - A is the amount of income of a controlled foreign company under sub- section (2); and B is the percentage of capital or voting rights, whichever is higher, held by the person, directly or indirectly, in the controlled foreign company.
(6) The amount of attributable income shall be treated as zero, if the capital or voting rights of the resident person is less than ten percent.
(7) Income of a controlled foreign company shall be treated as zero, if it is less than ten million Rupees.
(8) The income of a controlled foreign company in respect of a foreign tax year, as defined in sub-section (9), shall be determined in the currency of that controlled foreign company and shall, for purposes of determining the amount to be included in the income of any resident person during any tax year under the provisions of this section, be converted into Rupees at the State Bank of Pakistan rate applying between that foreign currency and the Rupee on the last day of the tax year.
(9) Foreign tax year, in relation to a non-resident company, means any year or period of reporting for income tax purposes by that non-resident company in the country or jurisdiction of residence or, if that company is not subject to income tax, any annual period of financial reporting by that company.
(10) The income attributable to controlled foreign company under sub- section (1) and taxed in Pakistan under this section shall not be taxed again when the same income is received in Pakistan by the resident taxpayer.
(11) Where tax has been paid by the resident person on the income attributable to controlled foreign company and in a subsequent tax year the resident person receives dividend distributed by the controlled foreign company, after deduction of tax on dividend, the resident person shall be allowed a tax credit equal to the lesser of, —
(i) foreign tax paid, as defined in sub-section (8) of section 103, on dividends; and (ii) Pakistan tax payable, as defined in section 103, for the tax year in which the dividend is received by the resident taxpayer.
(2) For the purpose of this section, controlled foreign company means a non-resident company, if ─
(a) more than fifty percent of the capital or voting rights of the non- resident company are held, directly or indirectly, by one or more persons resident in Pakistan o more than forty percent of the capital of the or voting rights of the non-resident company are held, directly or indirectly, by a single resident person in Pakistan;
(b) tax paid, after taking into account any foreign tax credits available to the non-resident company, on the income derived or accrued, during a foreign tax year, by the non-resident company to any tax authority outside Pakistan is less than sixty percent of the tax payable on the said income under this Ordinance;
(c) the non-resident company does not derive active business income as defined under sub-section (3); and (d) the shares of the company are not traded on any stock exchange recognized by law of the country or jurisdiction of which the non- resident company is resident for tax purposes.
(3) A company shall be treated to have derived active income if─
(a) more than eighty percent of income of the company does not include income from dividend, interest, property, capital gains, royalty, annuity payment, supply of goods or services to an associate, sale or licensing of intangibles and management, holding or investment in securities and financial assets; and (b) principally derives income under the head income from business in the country or jurisdiction of which it is a resident.
(4) Income of a controlled foreign company is an amount equal to the taxable income of that company determined in accordance with the provisions of this Ordinance as if that controlled foreign company is a resident taxpayer and shall be taxed at the rate specified in Division III of Part I of the First Schedule.
(5) The amount of attributable income under sub-section (1) for a tax year shall be computed according to the following formula, namely:— A x (B/100) Where - A is the amount of income of a controlled foreign company under sub- section (2); and B is the percentage of capital or voting rights, whichever is higher, held by the person, directly or indirectly, in the controlled foreign company.
(6) The amount of attributable income shall be treated as zero, if the capital or voting rights of the resident person is less than ten percent.
(7) Income of a controlled foreign company shall be treated as zero, if it is less than ten million Rupees.
(8) The income of a controlled foreign company in respect of a foreign tax year, as defined in sub-section (9), shall be determined in the currency of that controlled foreign company and shall, for purposes of determining the amount to be included in the income of any resident person during any tax year under the provisions of this section, be converted into Rupees at the State Bank of Pakistan rate applying between that foreign currency and the Rupee on the last day of the tax year.
(9) Foreign tax year, in relation to a non-resident company, means any year or period of reporting for income tax purposes by that non-resident company in the country or jurisdiction of residence or, if that company is not subject to income tax, any annual period of financial reporting by that company.
(10) The income attributable to controlled foreign company under sub- section (1) and taxed in Pakistan under this section shall not be taxed again when the same income is received in Pakistan by the resident taxpayer.
(11) Where tax has been paid by the resident person on the income attributable to controlled foreign company and in a subsequent tax year the resident person receives dividend distributed by the controlled foreign company, after deduction of tax on dividend, the resident person shall be allowed a tax credit equal to the lesser of, —
(i) foreign tax paid, as defined in sub-section (8) of section 103, on dividends; and (ii) Pakistan tax payable, as defined in section 103, for the tax year in which the dividend is received by the resident taxpayer.
Amendment history (1)
- Inserted by the finance Act 2018
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 110 Salary paid by private companies
Salary paid by private companies. — Where, in any tax year, salary is paid by a private company to an employee of the company for services rendered by the employee in an earlier tax year and the salary has not been included in the employee’s salary chargeable to tax in that earlier year, the Commissioner may, if there are reasonable grounds to believe that payment of the salary was deferred, include the amount in the employee’s income under the head Salary in that earlier year.
Amendment history (5)
- The word “or” omitted by the Finance Act, 2011.
- Comma substituted by the Finance Act, 2011.
- Added by the Finance Act, 2011
- Inserted by the Finance Act, 2011.
- adequately explained” substituted through Finance Act, 2020 dated 30 June, 2020
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 111 Unexplained income or assets
(1) Where —
(a) any amount is credited in a person’s books of account;
(b) a person has made any investment or is the owner of any money or valuable article;
(c) a person has incurred any expenditure ; or (d) any person has concealed income or furnished inaccurate particulars of income including —
(i) the suppression of any production, sales or any amount chargeable to tax; or (ii) the suppression of any item of receipt liable to tax in whole or in part, and the person offers no explanation about the nature and source of the amount credited or the investment, money, valuable article, or funds from which the expenditure was made suppression of any production, sales, any amount chargeable to tax and of any item of receipt liable to tax or the explanation offered by the person is not, in the Commissioner’s opinion, satisfactory-
(a) the amount credited, value of the investment, money, value of the article, or amount of expenditure shall be included in the person’s income chargeable to tax under the head Income from Other Sources to the extent it is not adequately explained; and (b) the suppressed amount of production, sales or any amount chargeable to tax or of any item of receipt liable to tax shall be included in the person’s income chargeable to tax under the head Income from Business to the extent it is not adequately explained :
Provided that where a taxpayer explains the nature and source of the amount credited or the investment made, money or valuable article owned or funds from which the expenditure was made, by way of agricultural income, such explanation shall be accepted to the extent of agricultural income worked back on the basis of agricultural income tax paid under the relevant provincial law.
(2) The amount referred to in sub-section (1) shall be included in the person’s income chargeable to tax:
(i) in the tax year to which such amount relates if the amount representing investment, money, valuable article or expenditure is situated or incurred in Pakistan or concealed income is Pakistan-source; and (ii) in the tax year immediately preceding the tax year in which the investment, money, valuable article or expenditure is discovered by the Commissioner and is situated or incurred outside Pakistan or concealed income is foreign-source. Explanation.—For the removal of doubt, it is clarified that where the investment, money, valuable article or expenditure is acquired or incurred outside Pakistan in a prior tax year and is liable to be included in the income of tax year 2018 and onwards on the basis of discovery made by the Commissioner during tax year 2019 and onwards and the person explains the acquisition of such asset or expenditure from sources relating to tax year in which such asset was acquired or expenditure was incurred, such explanation shall not be rejected on the basis that the source does not relate to the tax year in which the amount chargeable to tax is to be included.
(2A) For the purposes of clause (ii) of sub-section (2) of this section, the year of discovery of foreign assets or expenditure or concealed income, shall mean the year in which the Commissioner has issued a notice requiring the person to explain the nature and source of such foreign assets, expenditure or concealed income.
(3) Where the declared cost of any investment or valuable article or the declared amount of expenditure of a person is less than reasonable cost of the investment or the valuable article, or the reasonable amount of the expenditure, the Commissioner may, having regard to all the circumstances, include the difference in the person’s income chargeable to tax under the head Income from Other Sources in the tax year to which the investment, valuable article or the expenditure relates .
(4) Sub-section (1) does not apply to any amount of foreign exchange remitted from outside Pakistan through normal banking channels not exceeding five million Rupees in a tax year that is en-cashed into rupees by a scheduled bank and a certificate from such bank is produced to that effect. Explanation.— For removal of doubt, it is clarified that the remittance through money service bureaus, exchange companies or money transfer operators shall be deemed to constitute foreign exchange remitted from outside Pakistan through normal banking channels as provided under this sub-section.
(4A) Where a taxpayer, while explaining the nature and source of any amount referred to in sub-section (1), takes into account any source of income which is subject to final tax under any provision of the Ordinance, the taxpayer shall not be entitled to take credit of any sum as is in excess of imputable income, unless the excess amount is reasonably attributed to the business activities subject to final tax and the taxpayer furnishes financial statements and accounts duly audited by a chartered accountant.
(5) The Board may make rules under section 237 for the purposes of this section. Explanation.— For the removal of doubt, it is clarified that a separate notice under this section is not required to be issued if the explanation regarding nature and sources of;
(i) any amount credited in a person’s books of account; or (ii) any investment made or ownership of money or valuable article; or (iii) funds from which expenditure was made; or (iv) suppression of any production, sales, or any amount chargeable to tax; or (v) suppression of any item of receipt liable to tax in whole or in part has been confronted to the taxpayer through a notice under sub-section (9) of section 122 of the Ordinance.
(a) any amount is credited in a person’s books of account;
(b) a person has made any investment or is the owner of any money or valuable article;
(c) a person has incurred any expenditure ; or (d) any person has concealed income or furnished inaccurate particulars of income including —
(i) the suppression of any production, sales or any amount chargeable to tax; or (ii) the suppression of any item of receipt liable to tax in whole or in part, and the person offers no explanation about the nature and source of the amount credited or the investment, money, valuable article, or funds from which the expenditure was made suppression of any production, sales, any amount chargeable to tax and of any item of receipt liable to tax or the explanation offered by the person is not, in the Commissioner’s opinion, satisfactory-
(a) the amount credited, value of the investment, money, value of the article, or amount of expenditure shall be included in the person’s income chargeable to tax under the head Income from Other Sources to the extent it is not adequately explained; and (b) the suppressed amount of production, sales or any amount chargeable to tax or of any item of receipt liable to tax shall be included in the person’s income chargeable to tax under the head Income from Business to the extent it is not adequately explained :
Provided that where a taxpayer explains the nature and source of the amount credited or the investment made, money or valuable article owned or funds from which the expenditure was made, by way of agricultural income, such explanation shall be accepted to the extent of agricultural income worked back on the basis of agricultural income tax paid under the relevant provincial law.
(2) The amount referred to in sub-section (1) shall be included in the person’s income chargeable to tax:
(i) in the tax year to which such amount relates if the amount representing investment, money, valuable article or expenditure is situated or incurred in Pakistan or concealed income is Pakistan-source; and (ii) in the tax year immediately preceding the tax year in which the investment, money, valuable article or expenditure is discovered by the Commissioner and is situated or incurred outside Pakistan or concealed income is foreign-source. Explanation.—For the removal of doubt, it is clarified that where the investment, money, valuable article or expenditure is acquired or incurred outside Pakistan in a prior tax year and is liable to be included in the income of tax year 2018 and onwards on the basis of discovery made by the Commissioner during tax year 2019 and onwards and the person explains the acquisition of such asset or expenditure from sources relating to tax year in which such asset was acquired or expenditure was incurred, such explanation shall not be rejected on the basis that the source does not relate to the tax year in which the amount chargeable to tax is to be included.
(2A) For the purposes of clause (ii) of sub-section (2) of this section, the year of discovery of foreign assets or expenditure or concealed income, shall mean the year in which the Commissioner has issued a notice requiring the person to explain the nature and source of such foreign assets, expenditure or concealed income.
(3) Where the declared cost of any investment or valuable article or the declared amount of expenditure of a person is less than reasonable cost of the investment or the valuable article, or the reasonable amount of the expenditure, the Commissioner may, having regard to all the circumstances, include the difference in the person’s income chargeable to tax under the head Income from Other Sources in the tax year to which the investment, valuable article or the expenditure relates .
(4) Sub-section (1) does not apply to any amount of foreign exchange remitted from outside Pakistan through normal banking channels not exceeding five million Rupees in a tax year that is en-cashed into rupees by a scheduled bank and a certificate from such bank is produced to that effect. Explanation.— For removal of doubt, it is clarified that the remittance through money service bureaus, exchange companies or money transfer operators shall be deemed to constitute foreign exchange remitted from outside Pakistan through normal banking channels as provided under this sub-section.
(4A) Where a taxpayer, while explaining the nature and source of any amount referred to in sub-section (1), takes into account any source of income which is subject to final tax under any provision of the Ordinance, the taxpayer shall not be entitled to take credit of any sum as is in excess of imputable income, unless the excess amount is reasonably attributed to the business activities subject to final tax and the taxpayer furnishes financial statements and accounts duly audited by a chartered accountant.
(5) The Board may make rules under section 237 for the purposes of this section. Explanation.— For the removal of doubt, it is clarified that a separate notice under this section is not required to be issued if the explanation regarding nature and sources of;
(i) any amount credited in a person’s books of account; or (ii) any investment made or ownership of money or valuable article; or (iii) funds from which expenditure was made; or (iv) suppression of any production, sales, or any amount chargeable to tax; or (v) suppression of any item of receipt liable to tax in whole or in part has been confronted to the taxpayer through a notice under sub-section (9) of section 122 of the Ordinance.
Amendment history (19)
- The word “or” omitted by the Finance Act, 2011.
- Comma substituted by the Finance Act, 2011.
- Added by the Finance Act, 2011
- Inserted by the Finance Act, 2011.
- adequately explained” substituted through Finance Act, 2020 dated 30 June, 2020
- Full stop substituted by the Finance Act, 2013.
- Added by the Finance Act, 2013.
- Sub-section (2) substituted by the Finance Act, 2018. The substituted sub-section (2)
- The word “and” substituted by the Finance Act, 2021.
- Sub-section (2A) inserted by the Finance Act, 2024.
- Sub-section (3) substituted by the Finance Act, 2003. The substituted sub-section (3) read as
- Sub-section (4) substituted by the Finance Act, 2004. The substituted sub-section (4)
- Sub-section (4) substituted by the Finance Act, 2021. The substituted sub-section
- The explanation and sub-section (4A) inserted by the Finance Act, 2022.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- The figure “232” substituted by the Finance Act, 2002.
- Added by the Finance Act, 2021.
- The explanation substituted by the Finance Act, 2022. The substituted Explanation
- Inserted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 112 Liability in respect of certain security transactions
(1) Where the owner of any security disposes of the security and thereafter re-acquires the security and the result of the transaction is that any income payable in respect of the security is receivable by any person other than the owner, the income shall be treated, for all purposes of the Ordinance, as the income of the owner and not of the other person.
(2) In this section, security includes bonds, certificates, debentures, stocks and shares. MINIMUM TAX
(2) In this section, security includes bonds, certificates, debentures, stocks and shares. MINIMUM TAX
Amendment history (14)
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- The figure “232” substituted by the Finance Act, 2002.
- Added by the Finance Act, 2021.
- The explanation substituted by the Finance Act, 2022. The substituted Explanation
- Inserted by the Finance Act, 2003.
- Inserted by the Finance Act, 2009.
- The expressions inserted through Finance Act, 2020 dated 30 June, 2020
- Inserted by the Finance Act, 2010.
- The word “fifty” substituted by the Finance Act, 2016.
- The word “ten” substituted by the Finance Act, 2021.
- The figure “2009” substituted by the Finance Act, 2016
- The figure “2007” substituted by the Finance Act, 2016
- The word “one-half” substituted by the Finance Act, 2013.
- The word “one per cent” substituted by the Finance Act, 2017.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
Minimum Tax
s. 113 Minimum tax on the income of certain persons
(1) This section shall apply to a resident company, permanent establishment of a non-resident company, , an individual (having turnover of hundred million rupees or above in the tax year 2017 or in any subsequent tax year) and an association of persons (having turnover of hundred million rupees or above in the tax year 2017 or in any subsequent tax year) where, for any reason whatsoever allowed under this Ordinance, including any other law for the time being in force —
(a) loss for the year;
(b) the setting off of a loss of an earlier year;
(c) exemption from tax;
(d) the application of credits or rebates; or (e) the claiming of allowances or deductions (including depreciation and amortization deductions) no tax is payable or paid by the person for a tax year or the tax payable or paid by the person for a tax year is less than the percentage as specified in column
(3) of the Table in Division IX of Part-I of the First Schedule of the amount representing the person’s turnover from all sources for that year: Explanation.-For the purpose of this sub-section, the expression tax payable or paid does not include-
(a) tax already paid or payable in respect of deemed income which is assessed as final discharge of the tax liability under section 169 or under any other provision of this Ordinance; and (b) tax payable or paid under section 4B or 4C .
(2) Where this section applies:
(a) the aggregate of the person’s turnover as defined in sub-section (3) for the tax year shall be treated as the income of the person for the year chargeable to tax . Explanation.—For the removal of doubt, it is clarified that the definition of turnover covers receipts from all business activities in line with expression turnover from all sources used in sub- section (1) including but not limited to receipts from sale of immoveable property where such receipt is taxable under the head Income from Business;
(b) the person shall pay as income tax for the tax year (instead of the actual tax payable under this Ordinance), minimum tax computed on the basis of rates as specified in Division IX of Part I of First Schedule ;
(c) where tax paid under sub-section (1) exceeds the actual tax payable under Part I, clause (1) of Division I, or Division II of the First Schedule, the excess amount of tax paid shall be carried forward for adjustment against tax liability under the aforesaid Part of the subsequent tax year:
Provided that if tax is paid under sub-section (1) due to the fact that no tax is payable or paid for the year, the entire amount of tax paid under sub-section (1) shall be carried forward for adjustment in the manner stated aforesaid:
Provided further that the amount under this clause shall be carried forward and adjusted against tax liability for two tax years immediately succeeding the tax year for which the amount was paid. Explanation. – For the removal of doubt it is clarified that the aforesaid Part referred to in this clause means clause (1) of Division I or Division II of Part I of the First Schedule.
(3) turnover means,-
(a) the gross sales or gross receipts, exclusive of Sales Tax and Federal Excise duty or any trade discounts shown on invoices, or bills, derived from the sale of goods, and also excluding any amount taken as deemed income and is assessed as final discharge of the tax liability for which tax is already paid or payable;
(b) the gross fees for the rendering of services for giving benefits including commissions; except covered by final discharge of tax liability for which tax is separately paid or payable;
(c) the gross receipts from the execution of contracts; except covered by final discharge of tax liability for which tax is separately paid or payable; and (d) the company’s share of the amounts stated above of any association of persons of which the company is a member.
(a) loss for the year;
(b) the setting off of a loss of an earlier year;
(c) exemption from tax;
(d) the application of credits or rebates; or (e) the claiming of allowances or deductions (including depreciation and amortization deductions) no tax is payable or paid by the person for a tax year or the tax payable or paid by the person for a tax year is less than the percentage as specified in column
(3) of the Table in Division IX of Part-I of the First Schedule of the amount representing the person’s turnover from all sources for that year: Explanation.-For the purpose of this sub-section, the expression tax payable or paid does not include-
(a) tax already paid or payable in respect of deemed income which is assessed as final discharge of the tax liability under section 169 or under any other provision of this Ordinance; and (b) tax payable or paid under section 4B or 4C .
(2) Where this section applies:
(a) the aggregate of the person’s turnover as defined in sub-section (3) for the tax year shall be treated as the income of the person for the year chargeable to tax . Explanation.—For the removal of doubt, it is clarified that the definition of turnover covers receipts from all business activities in line with expression turnover from all sources used in sub- section (1) including but not limited to receipts from sale of immoveable property where such receipt is taxable under the head Income from Business;
(b) the person shall pay as income tax for the tax year (instead of the actual tax payable under this Ordinance), minimum tax computed on the basis of rates as specified in Division IX of Part I of First Schedule ;
(c) where tax paid under sub-section (1) exceeds the actual tax payable under Part I, clause (1) of Division I, or Division II of the First Schedule, the excess amount of tax paid shall be carried forward for adjustment against tax liability under the aforesaid Part of the subsequent tax year:
Provided that if tax is paid under sub-section (1) due to the fact that no tax is payable or paid for the year, the entire amount of tax paid under sub-section (1) shall be carried forward for adjustment in the manner stated aforesaid:
Provided further that the amount under this clause shall be carried forward and adjusted against tax liability for two tax years immediately succeeding the tax year for which the amount was paid. Explanation. – For the removal of doubt it is clarified that the aforesaid Part referred to in this clause means clause (1) of Division I or Division II of Part I of the First Schedule.
(3) turnover means,-
(a) the gross sales or gross receipts, exclusive of Sales Tax and Federal Excise duty or any trade discounts shown on invoices, or bills, derived from the sale of goods, and also excluding any amount taken as deemed income and is assessed as final discharge of the tax liability for which tax is already paid or payable;
(b) the gross fees for the rendering of services for giving benefits including commissions; except covered by final discharge of tax liability for which tax is separately paid or payable;
(c) the gross receipts from the execution of contracts; except covered by final discharge of tax liability for which tax is separately paid or payable; and (d) the company’s share of the amounts stated above of any association of persons of which the company is a member.
Amendment history (25)
- Inserted by the Finance Act, 2009.
- The expressions inserted through Finance Act, 2020 dated 30 June, 2020
- Inserted by the Finance Act, 2010.
- The word “fifty” substituted by the Finance Act, 2016.
- The word “ten” substituted by the Finance Act, 2021.
- The figure “2009” substituted by the Finance Act, 2016
- The figure “2007” substituted by the Finance Act, 2016
- The word “one-half” substituted by the Finance Act, 2013.
- The word “one per cent” substituted by the Finance Act, 2017.
- Proviso omitted by the Finance Act, 2016. The omitted proviso reads as follows:-
- Added by the Finance Act, 2012.
- Explanation substituted by the Finance Act, 2016. The substituted Explanation reads as follows:-
- Inserted by the Finance Act, 2022.
- Semi colon substituted and explanation added by the Finance Act, 2021.
- Inserted by the Finance Act, 2013.
- The proviso substituted by the Finance Act, 2021. The substituted proviso
- The word “five” substituted by the Finance Act, 2022.
- The word “three” substituted by the Finance Act, 2025.
- The explanation added by the Finance Act, 2023.
- Inserted by the Finance Act, 2011.
- Section 113A substituted by the Finance Act, 2013. The substituted section 113A
- Section 113A omitted by the Finance Act, 2016. The omitted section 113a reads as follows:-
- Section 113B substituted by the Finance Act, 2013. The substituted section 113B
- Section 113B omitted by the Finance Act, 2016. The omitted section reads as follows:-
- Section 113C inserted by the Finance Act, 2014.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 113A Omitted by the Finance Act, 2016Omitted
Omitted by the Finance Act, 2016
s. 113B Omitted by the Finance Act, 2016Omitted
Omitted by the Finance Act, 2016
s. 113C Alternative Corporate Tax
(1) Notwithstanding anything contained in this Ordinance, for tax year 2014 and onwards, tax payable by a company in respect of income which is subject to tax under Division II of Part I of the First Schedule or minimum tax under any of the provisions of this Ordinance shall be higher of the Corporate Tax or Alternative Corporate Tax.
(2) For the purposes of this section.-
(a) Accounting Income means the accounting profit before tax for the tax year, as disclosed in the financial statements or as adjusted under sub-section (7) or sub-section (11) excluding share from the associate recognized under equity method of accounting;
(b) "Alternative Corporate Tax" means the tax at a rate of seventeen per cent of a sum equal to accounting income less the amounts, as specified in sub-section (8), and determined in accordance with provisions of sub-section (7) hereinafter;
(c) corporate tax means higher of tax payable by the company under Division II of Part I of the First Schedule and minimum tax payable under any of the provisions of this Ordinance.
(3) The sum equal to accounting income, less any amount to be excluded there from under sub-section (8), shall be treated as taxable income for the purpose of this section.
(4) The excess of Alternative Corporate Tax paid over the Corporate Tax payable for the tax year shall be carried forward and adjusted against the tax payable under Division II of Part I of the First Schedule, for following year.
(5) If the excess tax, as mentioned in sub-section (4), is not wholly adjusted, the amount not adjusted shall be carried forward to the following tax year and adjusted as specified in sub-section (4) in that year, and so on, but the said excess cannot be carried forward to more than ten tax years immediately succeeding the tax year for which the excess was first computed. Explanation.- For the purpose of this sub-section the mechanism for adjustment of excess of Alternative Corporate Tax over Corporate Tax, specified in this section, shall not prejudice or affect the entitlement of the taxpayer regarding carrying forward and adjustment of minimum tax referred to in section 113 of this Ordinance.
(6) If Corporate Tax or Alternative Corporate Tax is enhanced or reduced as a result of any amendment, or as a result of any order under the Ordinance, the excess amount to be carried forward shall be reduced or enhanced accordingly.
(7) For the purposes of determining the Accounting Income, expenses shall be apportioned between the amount to be excluded from accounting income under sub-section (8) and the amount to be treated as taxable income under sub- section (2).
(8) The following amounts shall be excluded from accounting income for the purposes of computing Alternative Corporate Tax:-
(i) exempt income;
(ii) income which is subject to tax other than under Division II of Part I of the First Schedule or minimum tax under any of the provisions of this Ordinance;
(xii) income subject to tax credit under section 65D ,65E and 100C
(9) The provisions of this section shall not apply to taxpayers chargeable to tax in accordance with the provisions contained in the Fourth, Fifth and Seventh Schedules.
(10) Tax credit under sections 64B and 65B shall be allowed against Alternative Corporate Tax.
(11) The Commissioner may make adjustments and proceed to compute accounting income as per historical accounting pattern after providing an opportunity of being heard.; Explanation.— For the removal of doubt, it is clarified that taxes paid or payable other than payable under Division II of Part I of the First Schedule shall remain payable in accordance with the mode or manner prescribed under the respective provisions of this Ordinance. PROCEDURE PART I RETURNS
(2) For the purposes of this section.-
(a) Accounting Income means the accounting profit before tax for the tax year, as disclosed in the financial statements or as adjusted under sub-section (7) or sub-section (11) excluding share from the associate recognized under equity method of accounting;
(b) "Alternative Corporate Tax" means the tax at a rate of seventeen per cent of a sum equal to accounting income less the amounts, as specified in sub-section (8), and determined in accordance with provisions of sub-section (7) hereinafter;
(c) corporate tax means higher of tax payable by the company under Division II of Part I of the First Schedule and minimum tax payable under any of the provisions of this Ordinance.
(3) The sum equal to accounting income, less any amount to be excluded there from under sub-section (8), shall be treated as taxable income for the purpose of this section.
(4) The excess of Alternative Corporate Tax paid over the Corporate Tax payable for the tax year shall be carried forward and adjusted against the tax payable under Division II of Part I of the First Schedule, for following year.
(5) If the excess tax, as mentioned in sub-section (4), is not wholly adjusted, the amount not adjusted shall be carried forward to the following tax year and adjusted as specified in sub-section (4) in that year, and so on, but the said excess cannot be carried forward to more than ten tax years immediately succeeding the tax year for which the excess was first computed. Explanation.- For the purpose of this sub-section the mechanism for adjustment of excess of Alternative Corporate Tax over Corporate Tax, specified in this section, shall not prejudice or affect the entitlement of the taxpayer regarding carrying forward and adjustment of minimum tax referred to in section 113 of this Ordinance.
(6) If Corporate Tax or Alternative Corporate Tax is enhanced or reduced as a result of any amendment, or as a result of any order under the Ordinance, the excess amount to be carried forward shall be reduced or enhanced accordingly.
(7) For the purposes of determining the Accounting Income, expenses shall be apportioned between the amount to be excluded from accounting income under sub-section (8) and the amount to be treated as taxable income under sub- section (2).
(8) The following amounts shall be excluded from accounting income for the purposes of computing Alternative Corporate Tax:-
(i) exempt income;
(ii) income which is subject to tax other than under Division II of Part I of the First Schedule or minimum tax under any of the provisions of this Ordinance;
(xii) income subject to tax credit under section 65D ,65E and 100C
(9) The provisions of this section shall not apply to taxpayers chargeable to tax in accordance with the provisions contained in the Fourth, Fifth and Seventh Schedules.
(10) Tax credit under sections 64B and 65B shall be allowed against Alternative Corporate Tax.
(11) The Commissioner may make adjustments and proceed to compute accounting income as per historical accounting pattern after providing an opportunity of being heard.; Explanation.— For the removal of doubt, it is clarified that taxes paid or payable other than payable under Division II of Part I of the First Schedule shall remain payable in accordance with the mode or manner prescribed under the respective provisions of this Ordinance. PROCEDURE PART I RETURNS
Amendment history (16)
- Section 113C inserted by the Finance Act, 2014.
- Inserted by the Finance Act, 2015
- Clause (c) Substituted by the Finance Act, 2015. The substituted clause (c)
- 1Sub-Clause (ii) substituted by Finance Act, 2015. The substituted clause
- The word and figure “and 65E” substituted by the Finance Act, 2015
- Sub-clause (iv) and (v) omitted by Finance Act, 2015. The omitted clause
- The words “section” substituted by Finance Act, 2015.
- Added by Finance Act, 2015.
- Clause (a) substituted by the Finance Act, 2003. The substituted clause (a)
- Inserted by the Finance Act, 2003.
- Inserted by the Finance Act, 2011.
- Inserted by the Finance Act, 2006.
- The word “and” omitted by the Finance Act, 2011.
- Clause (ad) Inserted by the Finance Act, 2006.
- Clause (ad) omitted by the Finance Act, 2021. The omitted clause
- Added through Finance Act, 2020
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
Procedure
s. 114 Return of income
Related tools:How to file your return
(1) Subject to this Ordinance, the following persons are required to furnish a return of income for a tax year, namely:– (a) every company;
(ab) every person (other than a company) whose taxable income for the year exceeds the maximum amount that is not chargeable to tax under this Ordinance for the year; or (ac) any non-profit organization as defined in clause (36) of section 2;
(ae) every person whose income for the year is subject to final taxation under any provision of this Ordinance;
(b) any person not covered by clause (a), (ab),
(ac) or (ad) who,—
(i) has been charged to tax in respect of any of the two preceding tax years;
(ii) claims a loss carried forward under this Ordinance for a tax year;
(iii) owns immovable property with a land area of five hundred square yards or more or owns any flat located in areas falling within the municipal limits existing immediately before the commencement of Local Government laws in the provinces; or areas in a Cantonment; or the Islamabad Capital Territory ;
(iv) owns immoveable property with a land area of five hundred square yards or more located in a rating area;
(v) owns a flat having covered area of two thousand square feet or more located in a rating area;
(vi) owns a motor vehicle having engine capacity above 1000 CC;
(vii) has obtained National Tax Number ; or (viii) is the holder of commercial or industrial connection of electricity where the amount of annual bill exceeds rupees five hundred thousand ;
(ix) is a resident person registered with any chamber of commerce and industry or any trade or business association or any market committee or any professional body including Pakistan Engineering Council, Pakistan Medical and Dental Council, Pakistan Bar Council or any Provincial Bar Council, Institute of Chartered Accountants of Pakistan or Institute of Cost and Management Accountants of Pakistan ; or (x) is a resident person being an individual required to file foreign income and assets statement under section 116A.
(c) persons or classes of persons notified by the Board with the approval of the Minister in-charge.
(1A) Every individual whose income under the head ‘Income from business’ exceeds rupees three hundred thousand but does not exceed rupees four hundred thousand in a tax year is also required to furnish return of income from the tax year.
(2) A return of income -
(a) shall be in the prescribed form and shall be accompanied by such annexures, statements or documents as may be prescribed :
Provided that the Board may prescribe different returns for different classes of income or persons including persons subject to final taxation;
(b) shall fully state all the relevant particulars or information as specified in the form of return, including a declaration of the records kept by the taxpayer;
(c) shall be signed by the person, being an individual, or the person’s representative where section 172 applies ;
(d) shall be accompanied with evidence of payment of due tax as per return of income;
(e) shall be accompanied with a wealth statement as required under section 116 ; and (f) shall be accompanied with a foreign income and assets statement as required under section 116A.
(2A) A return of income shall be filed electronically on IRIS as may be prescribed by the Board for the purpose of sub-section (1) and sub-section (1A) of this section and the Board may, by notification in the official Gazette, make rules for such filing and determine the process of verification, digital signatures and other matters relating to electronic filing of returns, statements or documents, etc.:
Provided that in case of companies for tax year 2026 and onwards the financial statements accompanying the return shall only be filed in electronically readable file format.
(3) The Commissioner may, by notice in writing, require a person, or a person’s representative, as the case may be, to furnish a return of income by the date specified in the notice for a period of less than twelve months, where -
(a) the person has died;
(b) the person has become bankrupt or gone into liquidation;
(c) the person is about to leave Pakistan permanently;
(e) the Commissioner otherwise considers it appropriate to require such a return to be furnished.
(4) Subject to sub-section (5), the Commissioner may, by notice in writing, require any person who, in the Commissioner’s opinion, is required to file a return of income under this section for a tax year or assessment year but who has failed to do so to furnish a return of income for that year within thirty days from the date of service of such notice or such longer or shorter period as may be specified in such notice or as the Commissioner may allow.
(5) A notice under sub-section (4) may be issued in respect of one or more of the last five completed tax years or assessment years :
Provided that in case of a person who has not filed return for any of the last five completed tax years, notice under sub-section (4) may be issued in respect of one or more of the last ten completed tax years :
Provided further that the time-limitation provided under this sub- section shall not apply if the Commissioner is satisfied on the basis of reasons to be recorded in writing that a person who failed to furnish his return has foreign income or owns foreign assets.
(6) Subject to sub-section (6A), any person who, having furnished a return, discovers any omission or wrong statement therein or avails a settlement offered by an algorithmic settlement mechanism , may file revised return subject to the following conditions, namely: —
(a) it is accompanied by the revised accounts or revised audited accounts, as the case may be :
Provided that Commissioner may waive this condition if the Commissioner is satisfied that filing of revised accounts or audited accounts is not necessary;
(b) the reasons for revision of return, in writing, duly signed, by the taxpayers are filed with the return ;
(ba) it is accompanied by approval of the Commissioner in writing for revision of return; and (c) taxable income declared is not less than and loss declared is not more than income or loss, as the case may be, determined by an order issued under sections 121, 122, 122A, 129, 132, 133 or 221:-
Provided that if any of the above conditions is not fulfilled, the return furnished shall be treated as an invalid return as if it had not been furnished :
Provided further that the condition specified in clause (ba) shall not apply if revised return is filed within sixty days of filing of return:
Provided also that where the Commissioner has not made an order of approval in writing, for revision of return, before the expiration of sixty days from the date when the revision of return was sought, the approval required under clause (ba) shall be deemed to have been granted by the Commissioner, and condition specified in clause (ba) shall not apply:
Provided also that condition specified in clause (ba) shall not apply and the approval required thereunder shall be deemed to have been granted by the Commissioner, if-
(a) the Commissioner has not made an order of approval in writing, for revision of return, before the expiration of sixty days from the date when the revision of return was sought; or (b) taxable income declared is more than or the loss declared is less than the income or loss, as the case may be, determined under section 120 :
Provided also that the Commissioner shall grant approval in case of a bonafide omission or wrong statement.
(6A) If a taxpayer files a revised return voluntarily along with deposit of the amount of tax short paid or amount of tax sought to be evaded along with the default surcharge, whenever it comes to his notice, before receipt of notice under sections 177 or sub-section
(9) of 122, no penalty shall be recovered from him:
Provided that in case the taxpayer deposits the amount of tax as pointed out by the Commissioner during the audit or before the issuance of notice under sub-section (9) of section 122, he shall deposit the amount of tax sought to be evaded, the default surcharge and twenty-five per cent of the penalties leviable under the Ordinance along with the revised return:
Provided further that in case the taxpayer revises the return after the issuance of a show cause notice under sub-section (9) of section 122, he shall deposit the amount of tax sought to be evaded, default surcharge and fifty per cent of the leviable penalties under the Ordinance along with the revised return and thereafter, the show cause notice shall stand abated.
(6B) Notwithstanding anything contained in subsections
(6) and (6A) of this section, if a taxpayer avails a settlement offered by the algorithmic settlement mechanism, he may file a revised return, and the —
(a) approval of the Commissioner shall not be required to file the revised return;
(b) taxpayer shall pay the amount of tax determined by the mechanism and no separate penalty or default surcharge shall be payable; and (c) return so filed shall be accompanied by such documents as required under sub-section (6) and shall be treated as a revised return under this section.
(7) Every return purporting to be made or signed by, or on behalf of a person shall be treated as having been duly made by the person or with the person’s authority until the person proves the contrary.
Amendment history (25)
- Clause (a) substituted by the Finance Act, 2003. The substituted clause (a)
- Inserted by the Finance Act, 2003.
- Inserted by the Finance Act, 2011.
- Inserted by the Finance Act, 2006.
- The word “and” omitted by the Finance Act, 2011.
- Clause (ad) Inserted by the Finance Act, 2006.
- Clause (ad) omitted by the Finance Act, 2021. The omitted clause
- Added through Finance Act, 2020
- Clause (b) substituted by the Finance Act, 2005. The substituted clause (b)
- The letters and word “(a) or (ab)” substituted by the Finance Act, 2006.
- The words “two hundred and fifty” substituted by “five hundred” through Finance Act, 2019.
- Full stop substituted by the Finance Act, 2009.
- Inserted by the Finance Act, 2009.
- Full stop substituted by the Finance Act, 2011.
- The words “one million” substituted by the Finance Act, 2013.
- Full stop substituted by the Finance Act, 2013.
- The word “or” omitted by the Finance Act, 2018.
- Added by the Finance Act, 2013.
- The words “a resident person” inserted by the Finance Act, 2014.
- Full stop substituted by the Finance Act, 2018.
- Added by the Finance Act, 2018.
- The word “every” substituted through Finance Act, 2020 dated 30 June, 2020
- The words “three hundred and fifty thousand” substituted by the Finance Act, 2013.
- Sub-section (2) substituted by the Finance Act, 2003. The substituted sub-section (2)
- Proviso added through Finance Act, 2020 dated 30 June, 2020
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 114A Business bank account
(1) Every taxpayer shall declare to the Commissioner the bank account utilized by the taxpayer for business transactions.
(2) Business bank account shall be declared through original or modified registration form prescribed under section 181.
(2) Business bank account shall be declared through original or modified registration form prescribed under section 181.
Amendment history (4)
- Section 114A substituted by the Finance Act, 2021. The substituted section
- New section 114B added through Finance Act, 2022.
- The word “or” omitted by the Finance Act, 2024.
- Full stop substituted and clause (d) added by the Finance Act, 2024.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 114B Powers to enforce filing of returns
(1) Notwithstanding anything contained in any other law for the time being in force, the Board shall have the powers to issue income tax general order in respect of persons who are not appearing on active taxpayers’ list but are liable to file return under the provisions of the Ordinance.
(2) The income tax general order issued under sub-section (1) may entail any or all of the following consequences for the persons mentioned therein, namely:–
(a) disabling of mobile phones or mobile phone SIMS;
(b) discontinuance of electricity connection;
(c) discontinuance of gas connection ; or (d) restriction on foreign travel from the country for a citizen of Pakistan, excluding persons holding National Identity Card for Overseas Pakistanis (NICOP), minors, students, persons proceeding abroad for Hajj or Umrah and such other classes of persons as notified by the Board.
(3) The Board or the Commissioner having jurisdiction over the person mentioned in the income tax general order may order restoration of mobile phones, mobile phone SIMS and connections of electricity and gas, in cases where he is satisfied that —
(a) the return has been filed; or (b) person was not liable to file return under the provisions of the Ordinance.
(4) No person shall be included in the general order under sub-section (1) unless following conditions have been met with, namely:–
(a) notice under sub-section (4) of section 114 has been issued;
(b) date of compliance of the notice under sub-section (4) of section 114 has elapsed; and (c) the person has not filed the return.
(5) The action under this section shall not preclude any other action provided under the provisions of the Ordinance.
(2) The income tax general order issued under sub-section (1) may entail any or all of the following consequences for the persons mentioned therein, namely:–
(a) disabling of mobile phones or mobile phone SIMS;
(b) discontinuance of electricity connection;
(c) discontinuance of gas connection ; or (d) restriction on foreign travel from the country for a citizen of Pakistan, excluding persons holding National Identity Card for Overseas Pakistanis (NICOP), minors, students, persons proceeding abroad for Hajj or Umrah and such other classes of persons as notified by the Board.
(3) The Board or the Commissioner having jurisdiction over the person mentioned in the income tax general order may order restoration of mobile phones, mobile phone SIMS and connections of electricity and gas, in cases where he is satisfied that —
(a) the return has been filed; or (b) person was not liable to file return under the provisions of the Ordinance.
(4) No person shall be included in the general order under sub-section (1) unless following conditions have been met with, namely:–
(a) notice under sub-section (4) of section 114 has been issued;
(b) date of compliance of the notice under sub-section (4) of section 114 has elapsed; and (c) the person has not filed the return.
(5) The action under this section shall not preclude any other action provided under the provisions of the Ordinance.
Amendment history (5)
- Section 114A substituted by the Finance Act, 2021. The substituted section
- New section 114B added through Finance Act, 2022.
- The word “or” omitted by the Finance Act, 2024.
- Full stop substituted and clause (d) added by the Finance Act, 2024.
- Section 114C inserted by Finance Act, 2025.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 114C Restriction on economic transactions by certain persons
(1) Notwithstanding anything contained in any law for the time being in force, —
(a) any application, by any ineligible person, for booking, purchase or registration of a motor vehicle of the value exceeding the threshold given in Fifteenth Schedule, shall not be accepted or processed by any manufacturer of a motor vehicle or vehicle registering authority of Excise and Taxation Department, as the case may be;
(b) any application or request by any ineligible person, to any authority responsible for registering, recording or attesting transfer of any immovable property, of the value exceeding the threshold given in Fifteenth Schedule, shall not be accepted or processed by such authority;
(c) Any person authorized to open and maintain an account in respect of securities, units of mutual fund or similar investment, shall not open an account or maintain such account if the total investment by an ineligible person in any such account exceeds the threshold specified in Fifteenth Schedule; and (d) a banking company shall not allow cash withdrawal from any of the bank account of any person, exceeding the threshold as specified in Fifteenth Schedule.
(2) The provisions of sub-section (1), shall not apply on transactions made by a non-resident person or a public company except that mentioned in clause (d) of sub-section (1).
(3) The sources of investment and expenditure statement filed by the person and sufficient resources mentioned in sub-section (5), shall not be construed as nature and source of income for the purposes of section 111.
(4) For the purposes of this section, –
(a) eligible person shall mean a person who has filed –
(i) a return of income for the tax year immediately preceding the year of transaction mentioned in sub-section (1) and has sufficient resources in the wealth statement in case of an individual, or financial statement in case of a company or an association of persons, as the case may be, for such transaction; or (ii) sources of investment and expenditure statement declaring sufficient resources and furnishing explanation thereof for a particular purchase or investment transaction covered in clauses (a),
(b) and (c) of sub- section (1):
Provided that in case of an individual, the eligible person shall include his immediate family members.;
(b) immediate family members in respect of an individual, shall include his parents, spouse and dependent children;
(c) ineligible person shall mean a person who is not an eligible person as defined in clause (a) of this sub-section;
(d) sources of investment and expenditure statement shall mean a declaration by a person filed on the Board‘s web portal, specifying the sources of funds for making such transaction; and (e) sufficient resources shall mean one hundred and thirty percent of the cash and equivalent assets comprising cash denominated in local or foreign currency, fair market value of gold, net realizable value of stocks, bonds, receivables or any other cash equivalent asset as may be prescribed, declared by a person either in his sources of investment and expenditure statement, or wealth statement filed for the latest tax year and in the case of a company or association of persons, cash and equivalent assets, declared in the financial statements attached with the income tax return for the latest tax year:
Provided that where an asset mentioned in sub-section (1), other than clause (d) of this sub-section, has been purchased by way of exchange of capital assets already declared in the wealth statement, or financial statement, or sources of investment and expenditure statement, the disposal of such capital assets shall be treated to be part of cash equivalent assets to the extent of the value mentioned in the agreement.
(5) All or any of the restrictions or limitations imposed on the ineligible person under this section shall come into force on such date as the Federal Government may, by notification in official Gazette, appoint with such reductions and enhancements in the thresholds specified in the Fifteenth Schedule as deemed appropriate.
(a) any application, by any ineligible person, for booking, purchase or registration of a motor vehicle of the value exceeding the threshold given in Fifteenth Schedule, shall not be accepted or processed by any manufacturer of a motor vehicle or vehicle registering authority of Excise and Taxation Department, as the case may be;
(b) any application or request by any ineligible person, to any authority responsible for registering, recording or attesting transfer of any immovable property, of the value exceeding the threshold given in Fifteenth Schedule, shall not be accepted or processed by such authority;
(c) Any person authorized to open and maintain an account in respect of securities, units of mutual fund or similar investment, shall not open an account or maintain such account if the total investment by an ineligible person in any such account exceeds the threshold specified in Fifteenth Schedule; and (d) a banking company shall not allow cash withdrawal from any of the bank account of any person, exceeding the threshold as specified in Fifteenth Schedule.
(2) The provisions of sub-section (1), shall not apply on transactions made by a non-resident person or a public company except that mentioned in clause (d) of sub-section (1).
(3) The sources of investment and expenditure statement filed by the person and sufficient resources mentioned in sub-section (5), shall not be construed as nature and source of income for the purposes of section 111.
(4) For the purposes of this section, –
(a) eligible person shall mean a person who has filed –
(i) a return of income for the tax year immediately preceding the year of transaction mentioned in sub-section (1) and has sufficient resources in the wealth statement in case of an individual, or financial statement in case of a company or an association of persons, as the case may be, for such transaction; or (ii) sources of investment and expenditure statement declaring sufficient resources and furnishing explanation thereof for a particular purchase or investment transaction covered in clauses (a),
(b) and (c) of sub- section (1):
Provided that in case of an individual, the eligible person shall include his immediate family members.;
(b) immediate family members in respect of an individual, shall include his parents, spouse and dependent children;
(c) ineligible person shall mean a person who is not an eligible person as defined in clause (a) of this sub-section;
(d) sources of investment and expenditure statement shall mean a declaration by a person filed on the Board‘s web portal, specifying the sources of funds for making such transaction; and (e) sufficient resources shall mean one hundred and thirty percent of the cash and equivalent assets comprising cash denominated in local or foreign currency, fair market value of gold, net realizable value of stocks, bonds, receivables or any other cash equivalent asset as may be prescribed, declared by a person either in his sources of investment and expenditure statement, or wealth statement filed for the latest tax year and in the case of a company or association of persons, cash and equivalent assets, declared in the financial statements attached with the income tax return for the latest tax year:
Provided that where an asset mentioned in sub-section (1), other than clause (d) of this sub-section, has been purchased by way of exchange of capital assets already declared in the wealth statement, or financial statement, or sources of investment and expenditure statement, the disposal of such capital assets shall be treated to be part of cash equivalent assets to the extent of the value mentioned in the agreement.
(5) All or any of the restrictions or limitations imposed on the ineligible person under this section shall come into force on such date as the Federal Government may, by notification in official Gazette, appoint with such reductions and enhancements in the thresholds specified in the Fifteenth Schedule as deemed appropriate.
Amendment history (5)
- Section 114C inserted by Finance Act, 2025.
- Sub-section (1) and the proviso there under omitted by the Finance Act, 2013. The omitted sub-
- Sub-section (2) omitted by the Finance Act, 2004. Omitted sub-section (2)
- The words, brackets and figures “sub-clauses (iii) through (vii)” substituted by the Finance Act, 2008.
- Inserted by the Finance Act, 2017
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 115 Persons not required to furnish a return of income
(3) The following persons shall not be required to furnish a return of income for a tax year solely by reason of sub-clause (iii) , (iv),
(v) and (vi) of clause (b) of sub-section (1) of section 114 –
(a) A widow;
(b) an orphan below the age of twenty-five years;
(c) a disabled person; or (d) in the case of ownership of immovable property, a non-resident person.
(v) and (vi) of clause (b) of sub-section (1) of section 114 –
(a) A widow;
(b) an orphan below the age of twenty-five years;
(c) a disabled person; or (d) in the case of ownership of immovable property, a non-resident person.
Amendment history (10)
- Sub-section (1) and the proviso there under omitted by the Finance Act, 2013. The omitted sub-
- Sub-section (2) omitted by the Finance Act, 2004. Omitted sub-section (2)
- The words, brackets and figures “sub-clauses (iii) through (vii)” substituted by the Finance Act, 2008.
- Inserted by the Finance Act, 2017
- Sub-section (4) omitted by Finance Act, 2020. The omitted sub-section (4)
- Sub-section(4A) omitted through Finance Act, 2020. The omitted sub-section (4A)
- Sub-section (4B) omitted by the Finance Act, 2010. The omitted sub-section (4B)
- Sub section (5) and (6) omitted through Finance Act, 2020 dated 30 June, 2020 the omitted sub-
- Inserted by the Finance Act, 2013.
- The words “assets and liabilities” substituted by the Finance Act, 2024.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 116 Wealth statement
Related tools:How to file your return
(1) The Commissioner may, by notice in writing, require any person being an individual to furnish, on the date specified in the notice, a statement (hereinafter referred to as the "wealth statement") in the prescribed form and verified in the prescribed manner giving particulars of — (a) the person’s total assets including foreign assets and liabilities including foreign liabilities as on the date or dates specified in such notice;
(b) the total assets including foreign assets and liabilities including foreign liabilities of the person’s spouse, minor children, and other dependents as on the date or dates specified in such notice; Explanation. – For removal of doubt, it is clarified that assets of spouse shall only be included in the wealth statement of the person if the spouse is dependent;
(c) any assets including foreign assets transferred by the person to any other person during the period or periods specified in such notice and the consideration for the transfer;
(d) the total expenditures incurred by the person, and the person’s spouse, minor children, and other dependents during the period or periods specified in the notice and the details of such expenditures ; and (e) the reconciliation statement of wealth.
(2) Every resident taxpayer being an individual filing a return of income for any tax year shall furnish a wealth statement and wealth reconciliation statement for that year along with such return :
Provided that every member of an association of persons shall also furnish wealth statement and wealth reconciliation statement for the year along with return of income of the association.
(3) Where a person, who has furnished a wealth statement, discovers any omission or wrong statement therein, he may, without prejudice to any liability incurred by him under any provision of this Ordinance, furnish a revised wealth statement along with the revised wealth reconciliation and the reasons for filing revised wealth statement, under intimation to the Commissioner in the prescribed form and manner, at any time before the receipt of notice under sub- section (9) of section 122, for the tax year to which it relates :
Provided that where the Commissioner is of the opinion that the revision under this sub-section is not for the purpose of correcting a bona fide omission or wrong statement, he may declare such revision as void through an order in writing after providing an opportunity of being heard. Explanation.- For the removal of doubt it is clarified that wealth statement cannot be revised after the expiry of five years from the due date of filing of return of income for that tax year.
Amendment history (23)
- Sub-section (4) omitted by Finance Act, 2020. The omitted sub-section (4)
- Sub-section(4A) omitted through Finance Act, 2020. The omitted sub-section (4A)
- Sub-section (4B) omitted by the Finance Act, 2010. The omitted sub-section (4B)
- Sub section (5) and (6) omitted through Finance Act, 2020 dated 30 June, 2020 the omitted sub-
- Inserted by the Finance Act, 2013.
- The words “assets and liabilities” substituted by the Finance Act, 2024.
- Explanation inserted by the Finance Act, 2024.
- Words inserted by the Finance Act, 2024.
- The word “and” omitted by the Finance Act, 2009.
- Full stop substituted by the Finance Act, 2009.
- Inserted by the Finance Act, 2009.
- Inserted by the Finance Act, 2011.
- is one million rupees or more” omitted by the Finance Act, 2013. Note: This amendment shall be
- Full stop substituted by the Finance Act, 2011.
- for the year is one million rupees or more” omitted by the Finance Act, 2013. Note: This amendment
- Sub-section (2A) substituted by the Finance Act, 2011. The substituted sub-section (2A) read as
- Section (2A) omitted by Finance Act 2017,the omitted section is read as under
- Added by the Finance Act, 2003.
- The expressions inserted through Finance Act, 2020 dated 30 June, 2020
- sub-section (4) of section 122”substituted by the Finance Act, 2017.
- Full stop substituted by colon and provision and explanation inserted through Finance Act, 2020
- Sub section (4) omitted through Finance Act, 2020 dated 30 June 2020 omitted sub-section read
- Inserted by the Finance Act 2018.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 116A Foreign income and assets statement
(1) Every resident taxpayer being an individual having foreign income of not less than ten thousand United States dollars or having foreign assets with a value of not less than one hundred thousand United States dollars shall furnish a statement, hereinafter referred to as the foreign income and assets statement, in the prescribed form and verified in the prescribed manner giving particulars of—
(a) the person’s total foreign assets and liabilities as on the last day of the tax year;
(b) any foreign assets transferred by the person to any other person during the tax year and the consideration for the said transfer; and (c) complete particulars of foreign income, the expenditure derived during the tax year and the expenditure wholly and necessarily for the purposes of deriving the said income.
(2) The Commissioner may by a notice in writing require any person being an individual who, in the opinion of the Commissioner on the basis of reasons to be recorded in writing, was required to furnish a foreign income and assets statement under sub-section (1) but who has failed to do so to furnish the foreign income and assets statement on the date specified in the notice.
(a) the person’s total foreign assets and liabilities as on the last day of the tax year;
(b) any foreign assets transferred by the person to any other person during the tax year and the consideration for the said transfer; and (c) complete particulars of foreign income, the expenditure derived during the tax year and the expenditure wholly and necessarily for the purposes of deriving the said income.
(2) The Commissioner may by a notice in writing require any person being an individual who, in the opinion of the Commissioner on the basis of reasons to be recorded in writing, was required to furnish a foreign income and assets statement under sub-section (1) but who has failed to do so to furnish the foreign income and assets statement on the date specified in the notice.
Amendment history (9)
- Added by the Finance Act, 2003.
- Inserted by the Finance Act, 2013.
- The expressions inserted through Finance Act, 2020 dated 30 June, 2020
- sub-section (4) of section 122”substituted by the Finance Act, 2017.
- Full stop substituted by colon and provision and explanation inserted through Finance Act, 2020
- Sub section (4) omitted through Finance Act, 2020 dated 30 June 2020 omitted sub-section read
- Inserted by the Finance Act 2018.
- The word ‘or” ssubstituted by Finance Act, 2018.
- Inserted by the Finance Act, 2018.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 117 Notice of discontinued business
(1) Any person discontinuing a business shall give the Commissioner a notice in writing to that effect within fifteen days of the discontinuance.
(2) The person discontinuing a business shall, under the provisions of this Ordinance or on being required by the Commissioner by notice, in writing, furnish a return of income for the period commencing on the first day of the tax year in which the discontinuance occurred and ending on the date of discontinuance and this period shall be treated as a separate tax year for the purposes of this Ordinance.
(3) Where no notice has been given under sub-section (1) but the Commissioner has reasonable grounds to believe that a business has discontinued or is likely to discontinue, the Commissioner may serve a notice on the person who has discontinued the business or is likely to discontinue the business to furnish to the Commissioner within the time specified in the notice a return of income for the period specified in the notice.
(4) A return furnished under this section shall be treated for all purposes of this Ordinance as a return of income, including the application of Section 120.
(2) The person discontinuing a business shall, under the provisions of this Ordinance or on being required by the Commissioner by notice, in writing, furnish a return of income for the period commencing on the first day of the tax year in which the discontinuance occurred and ending on the date of discontinuance and this period shall be treated as a separate tax year for the purposes of this Ordinance.
(3) Where no notice has been given under sub-section (1) but the Commissioner has reasonable grounds to believe that a business has discontinued or is likely to discontinue, the Commissioner may serve a notice on the person who has discontinued the business or is likely to discontinue the business to furnish to the Commissioner within the time specified in the notice a return of income for the period specified in the notice.
(4) A return furnished under this section shall be treated for all purposes of this Ordinance as a return of income, including the application of Section 120.
Amendment history (2)
- The word ‘or” ssubstituted by Finance Act, 2018.
- Inserted by the Finance Act, 2018.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 118 Method of furnishing returns and other documents
(1) A return of income under section 114, , a wealth statement under section 116 or a foreign income and assets statement under 116A, if applicable shall be furnished in the prescribed manner.
(2) A return of income under section 114 of a company shall be furnished —
(a) in the case of a company with a tax year ending any time between the first day of January and the thirtieth day of June, on or before the thirty-first day of December next following the end of the tax year to which the return relates; or (b) in any other case, on or before the thirtieth day of September next following the end of the tax year to which the return relates.
(2A) Where salary income for the tax year is five hundred thousand rupees or more, the taxpayer shall file return of income electronically in the prescribed form and it shall be accompanied by the proof of deduction or payment of tax and wealth statement as required under section 116 or a foreign income and assets statement under 116A, if applicable :
Provided that the Board may amend the condition specified in this sub-section or direct that the said condition shall not apply for a tax year. *
(3) A return of income for any person (other than a company) shall be furnished as per the following schedule, namely:—
(a) in the case of a return required to be filed through e-portal in the case of a salaried individual, on or before the 30 day of September next following the end of the tax year to which the statement or return relates; or (b) in the case of a return of income for any person (other than a company), as described under clause (a), on or before the 30th day of September next following the end of the tax year to which the return relates.
(4) A wealth statement shall be furnished by the due date specified in the notice requiring the person to furnish such statement or, where the person is required to furnish the wealth statement for a tax year under sub-section (2) of section 116, by the due date for furnishing the return of income for that year.
(5) A return required to be furnished by a notice issued under section 117 shall be furnished by the due date specified in the notice.
(6) Where a taxpayer is not borne on the National Tax Number Register and fails to file an application in the prescribed form and manner with the taxpayer’s return of income , such return shall not be treated as a return furnished under this section.
(2) A return of income under section 114 of a company shall be furnished —
(a) in the case of a company with a tax year ending any time between the first day of January and the thirtieth day of June, on or before the thirty-first day of December next following the end of the tax year to which the return relates; or (b) in any other case, on or before the thirtieth day of September next following the end of the tax year to which the return relates.
(2A) Where salary income for the tax year is five hundred thousand rupees or more, the taxpayer shall file return of income electronically in the prescribed form and it shall be accompanied by the proof of deduction or payment of tax and wealth statement as required under section 116 or a foreign income and assets statement under 116A, if applicable :
Provided that the Board may amend the condition specified in this sub-section or direct that the said condition shall not apply for a tax year. *
(3) A return of income for any person (other than a company) shall be furnished as per the following schedule, namely:—
(a) in the case of a return required to be filed through e-portal in the case of a salaried individual, on or before the 30 day of September next following the end of the tax year to which the statement or return relates; or (b) in the case of a return of income for any person (other than a company), as described under clause (a), on or before the 30th day of September next following the end of the tax year to which the return relates.
(4) A wealth statement shall be furnished by the due date specified in the notice requiring the person to furnish such statement or, where the person is required to furnish the wealth statement for a tax year under sub-section (2) of section 116, by the due date for furnishing the return of income for that year.
(5) A return required to be furnished by a notice issued under section 117 shall be furnished by the due date specified in the notice.
(6) Where a taxpayer is not borne on the National Tax Number Register and fails to file an application in the prescribed form and manner with the taxpayer’s return of income , such return shall not be treated as a return furnished under this section.
Amendment history (14)
- The word ‘or” ssubstituted by Finance Act, 2018.
- Inserted by the Finance Act, 2018.
- Inserted by the Finance Act, 2003.
- Inserted by the Finance Act, 2013.
- Added the Finance Act, 2018.
- Substituted by Finance Act, 2015
- Sub-section (3) substituted by the Finance Act, 2010. The substituted sub-section (3)
- employer of an individual” omitted by the Finance Act, 2013.
- Clause (a) substituted by the Finance Act, 2013. The substituted clause (a)
- The expression “31day of August” substituted through Finance Act, 2019.
- The words “or employer’s certificate” omitted by the Finance Act, 2013.
- The words “or certificate” omitted by the Finance Act, 2013.
- Clause (b) omitted by the Finance Act, 2013. The omitted clause (b)
- Clause (c) omitted through Finance Act, 2020 dated 30 June, 2020 the omitted clause read as
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 119 Extension of time for furnishing returns and other documents
(1) A person required to furnish —
(a) a return of income under section 114 or 117;
(d) a wealth statement under section 116, may apply, in writing, to the Commissioner for an extension of time to furnish the return, or statement, as the case may be.
(2) An application under sub-section (1) shall be made by the due date for furnishing the return of income, or statement to which the application relates.
(3) Where an application has been made under sub-section (1) and the Commissioner is satisfied that the applicant is unable to furnish the return of income, or statement to which the application relates by the due date because of —
(a) absence from Pakistan;
(b) sickness or other misadventure; or (c) any other reasonable cause, the Commissioner may, by order , in writing, grant the applicant an extension of time for furnishing the return, or statement, as the case may be.
(4) An extension of time under sub-section (3) should not exceed fifteen days from the due date for furnishing the return of income, employer’s certificate, or statement, as the case may be, unless there are exceptional circumstances justifying a longer extension of time :
Provided that where the Commissioner has not granted extension for furnishing return under sub-section (3) or sub-section (4), the Chief Commissioner may on an application made by the taxpayer for extension or further extension, as the case may be, grant extension or further extension for a period not exceeding fifteen days unless there are exceptional circumstances justifying a longer extension of time.
(6) An extension of time granted under sub-section (3) shall not , for the purpose of charge of default surcharge under sub-section (1) of section 205, change the due date for payment of income tax under section 137. PART II ASSESSMENTS
(a) a return of income under section 114 or 117;
(d) a wealth statement under section 116, may apply, in writing, to the Commissioner for an extension of time to furnish the return, or statement, as the case may be.
(2) An application under sub-section (1) shall be made by the due date for furnishing the return of income, or statement to which the application relates.
(3) Where an application has been made under sub-section (1) and the Commissioner is satisfied that the applicant is unable to furnish the return of income, or statement to which the application relates by the due date because of —
(a) absence from Pakistan;
(b) sickness or other misadventure; or (c) any other reasonable cause, the Commissioner may, by order , in writing, grant the applicant an extension of time for furnishing the return, or statement, as the case may be.
(4) An extension of time under sub-section (3) should not exceed fifteen days from the due date for furnishing the return of income, employer’s certificate, or statement, as the case may be, unless there are exceptional circumstances justifying a longer extension of time :
Provided that where the Commissioner has not granted extension for furnishing return under sub-section (3) or sub-section (4), the Chief Commissioner may on an application made by the taxpayer for extension or further extension, as the case may be, grant extension or further extension for a period not exceeding fifteen days unless there are exceptional circumstances justifying a longer extension of time.
(6) An extension of time granted under sub-section (3) shall not , for the purpose of charge of default surcharge under sub-section (1) of section 205, change the due date for payment of income tax under section 137. PART II ASSESSMENTS
Amendment history (22)
- Clause (a) substituted by the Finance Act, 2013. The substituted clause (a)
- The expression “31day of August” substituted through Finance Act, 2019.
- The words “or employer’s certificate” omitted by the Finance Act, 2013.
- The words “or certificate” omitted by the Finance Act, 2013.
- Clause (b) omitted by the Finance Act, 2013. The omitted clause (b)
- Clause (c) omitted through Finance Act, 2020 dated 30 June, 2020 the omitted clause read as
- The word and comma “certificate,” omitted by the Finance Act, 2013.
- The words and comma “employer’s certificate,” omitted by the Finance Act, 2013.
- The word “wealth” omitted by the Finance Act, 2002
- Substituted for the word “notice” by the Finance Act, 2002
- The word “wealth” omitted by the Finance Ordinance, 2002
- Full stop substituted by the Finance Act, 2017.
- Added by the Finance Act, 2017.
- Sub-section (5) omitted by the Finance Act, 2002. The omitted sub-section (5)
- Inserted by the Finance Act, 2002
- The words “additional tax” substituted by the Finance Act, 2010. The substituted provision has been
- Section 120 substituted by the Finance Act, 2003. The substituted section 120
- The expression inserted by the Finance Act, 2025.
- The expressions “return was furnished” substituted through Finance Act, 2020
- The expression “adjustments were made under sub-section (2A)” substituted by the Finance Act,
- 2021. ” substituted by the Finance Act, 2021. Earlier the substitution was made through Income Tax
- Full stop substituted and provisos added by the Finance Act, 2021. Earlier the substitution and
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 120 Assessments
(1) Where a taxpayer has furnished a complete return of income (other than a revised return under sub-section (6) of section 114) for a tax year ending on or after the 1 day of July, 2002,—
(a) the Commissioner shall be taken to have made an assessment of taxable income for that tax year, and the tax due thereon equal to the respective amounts adjusted under sub-section (2A) ; and (b) the return shall be taken for all purposes of this Ordinance to be an assessment order issued to the taxpayer by the Commissioner on the day the adjustments were made under sub-section (2A) return was furnished :
Provided that until the date specified under the fourth proviso to sub-section (2A) is notified, this subsection shall be in force as if sub- section (2A) is not in operation:
Provided further that once the date under the fourth proviso to sub-section (2A) is notified, clauses
(a) and (b) shall only apply when the provisions of sub-section (2A), if invoked, are first complied with: Provided further once compliance is made under the second proviso,—
(i) the adjusted amount under sub-section (2A) shall be construed to be the tax payable and due under clause (a); and (ii) the date of the compliance under sub-section (2A) shall be the date for the purposes of clause (b).
(1A) Notwithstanding the provisions of sub-section (1), the Commissioner may conduct audit of the income tax affairs of a person under section 177 and all the provisions of that section shall apply accordingly.
(2) A return of income shall be taken to be complete if it is in accordance with the provisions of sub-section (2) of section 114.
(2A) A return of income furnished under sub-section (2) of section 114 shall be processed through automated system to arrive at correct amounts of total income, taxable income and tax payable by making adjustments for-
(i) any arithmetical error in the return;
(ii) any incorrect claim, if such incorrect claim is apparent from any information in the return;
(iii) disallowance of any loss, deductible allowance or tax credit under Parts VIII, IX and X respectively of Chapter III; and (iv) disallowance of carry forward of any loss under clause (b) of sub- section (I)of section 182A:
Provided that no such adjustments shall be made unless a system generated notice is given to the taxpayer specifying the adjustments intended to be made:
Provided further that the response received from the taxpayer, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such notice, adjustments shall be made.
Provided also that where no such adjustments have been made within six month of filing of return, the amounts specified in the return as declared by the taxpayer shall be deemed to have been taken as adjusted amounts on the day the return was filed and the taxpayer shall be intimated automatically through Iris :
Provided also that the provisions of this sub-section shall apply from the date notified by the Federal Board of Revenue in the official Gazette.
(3) Where the return of income furnished is not complete, the Commissioner shall issue a notice to the taxpayer informing him of the deficiencies (other than incorrect amount of tax payable on taxable income, as specified in the return, or short payment of tax payable) and directing him to provide such information, particulars, statement or documents by such date specified in the notice.
(4) Where a taxpayer fails to fully comply, by the due date, with the requirements of the notice under sub-section (3), the return furnished shall be treated as an invalid return as if it had not been furnished.
(5) Where, in response to a notice under sub-section (3), the taxpayer has, by the due date, fully complied with the requirements of the notice, the return furnished shall be treated to be complete on the day it was furnished and the provisions of sub-section (1) shall apply accordingly.
(6) No notice under sub-section (3) shall be issued after the expiry of one hundred and eighty days from the end of the financial year in which return was furnished , and the provisions of sub-section (1) shall apply accordingly.
(7) For the purposes of this section,-
(a) arithmetical error includes any wrong or incorrect calculation of tax payable including any minimum or final tax payable.
(b) an incorrect claim apparent from any information in the return shall mean a claim, on the basis of an entry, in the return,-
(i) of an item, which is inconsistent with another entry of the same or some other item in such return;
(ii) regarding any tax payment which is not verified from the collection system; or (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction.
(a) the Commissioner shall be taken to have made an assessment of taxable income for that tax year, and the tax due thereon equal to the respective amounts adjusted under sub-section (2A) ; and (b) the return shall be taken for all purposes of this Ordinance to be an assessment order issued to the taxpayer by the Commissioner on the day the adjustments were made under sub-section (2A) return was furnished :
Provided that until the date specified under the fourth proviso to sub-section (2A) is notified, this subsection shall be in force as if sub- section (2A) is not in operation:
Provided further that once the date under the fourth proviso to sub-section (2A) is notified, clauses
(a) and (b) shall only apply when the provisions of sub-section (2A), if invoked, are first complied with: Provided further once compliance is made under the second proviso,—
(i) the adjusted amount under sub-section (2A) shall be construed to be the tax payable and due under clause (a); and (ii) the date of the compliance under sub-section (2A) shall be the date for the purposes of clause (b).
(1A) Notwithstanding the provisions of sub-section (1), the Commissioner may conduct audit of the income tax affairs of a person under section 177 and all the provisions of that section shall apply accordingly.
(2) A return of income shall be taken to be complete if it is in accordance with the provisions of sub-section (2) of section 114.
(2A) A return of income furnished under sub-section (2) of section 114 shall be processed through automated system to arrive at correct amounts of total income, taxable income and tax payable by making adjustments for-
(i) any arithmetical error in the return;
(ii) any incorrect claim, if such incorrect claim is apparent from any information in the return;
(iii) disallowance of any loss, deductible allowance or tax credit under Parts VIII, IX and X respectively of Chapter III; and (iv) disallowance of carry forward of any loss under clause (b) of sub- section (I)of section 182A:
Provided that no such adjustments shall be made unless a system generated notice is given to the taxpayer specifying the adjustments intended to be made:
Provided further that the response received from the taxpayer, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such notice, adjustments shall be made.
Provided also that where no such adjustments have been made within six month of filing of return, the amounts specified in the return as declared by the taxpayer shall be deemed to have been taken as adjusted amounts on the day the return was filed and the taxpayer shall be intimated automatically through Iris :
Provided also that the provisions of this sub-section shall apply from the date notified by the Federal Board of Revenue in the official Gazette.
(3) Where the return of income furnished is not complete, the Commissioner shall issue a notice to the taxpayer informing him of the deficiencies (other than incorrect amount of tax payable on taxable income, as specified in the return, or short payment of tax payable) and directing him to provide such information, particulars, statement or documents by such date specified in the notice.
(4) Where a taxpayer fails to fully comply, by the due date, with the requirements of the notice under sub-section (3), the return furnished shall be treated as an invalid return as if it had not been furnished.
(5) Where, in response to a notice under sub-section (3), the taxpayer has, by the due date, fully complied with the requirements of the notice, the return furnished shall be treated to be complete on the day it was furnished and the provisions of sub-section (1) shall apply accordingly.
(6) No notice under sub-section (3) shall be issued after the expiry of one hundred and eighty days from the end of the financial year in which return was furnished , and the provisions of sub-section (1) shall apply accordingly.
(7) For the purposes of this section,-
(a) arithmetical error includes any wrong or incorrect calculation of tax payable including any minimum or final tax payable.
(b) an incorrect claim apparent from any information in the return shall mean a claim, on the basis of an entry, in the return,-
(i) of an item, which is inconsistent with another entry of the same or some other item in such return;
(ii) regarding any tax payment which is not verified from the collection system; or (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction.
Amendment history (14)
- Section 120 substituted by the Finance Act, 2003. The substituted section 120
- The expression inserted by the Finance Act, 2025.
- The expressions “return was furnished” substituted through Finance Act, 2020
- The expression “adjustments were made under sub-section (2A)” substituted by the Finance Act,
- 2021. ” substituted by the Finance Act, 2021. Earlier the substitution was made through Income Tax
- Full stop substituted and provisos added by the Finance Act, 2021. Earlier the substitution and
- Inserted by the Finance Act, 2005.
- The words “select a person for an audit of his income tax affairs” substituted by the Finance Act, 2010.
- New sub-section (2A) inserted through Finance Act, 2020 dated 30 June, 2020
- Full stop substituted and proviso added by the Finance Act, 2021. Earlier the substitution and
- New sub-section 7 added through Finance Act, 2020
- Section 120A omitted by the Finance Act, 2013. The omitted section 120A
- New Section (120B) inserted though Finance Act, 2019.
- Section 121 substituted by the Finance Act, 2003. The substituted section 121
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 120A Omitted by Finance Act, 2013Omitted
Omitted by Finance Act, 2013
s. 120B Restriction of proceedings
(1) Where any person entitled to declare undisclosed assets, expenditure and undisclosed sales under the Assets Declaration Act, 2019 declares such assets, expenditures or sales to pay tax, no proceedings shall be undertaken under this Ordinance in respect of such declaration.
(2) Notwithstanding anything contained in any other law, for the time being in force, sub-section (3) of section 216, except the provisions of clauses
(a) and (g) of sub-section (3) of section 216, particulars of the persons making declaration under the Assets Declaration Act, 2019 or any information received in any declaration made under the said Act shall be confidential.
(2) Notwithstanding anything contained in any other law, for the time being in force, sub-section (3) of section 216, except the provisions of clauses
(a) and (g) of sub-section (3) of section 216, particulars of the persons making declaration under the Assets Declaration Act, 2019 or any information received in any declaration made under the said Act shall be confidential.
Amendment history (3)
- Section 120A omitted by the Finance Act, 2013. The omitted section 120A
- New Section (120B) inserted though Finance Act, 2019.
- Section 121 substituted by the Finance Act, 2003. The substituted section 121
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 121 Best judgment assessment
(1) Where a person fails to —
(ab) furnish return of income in response to notice under sub- section (3) or sub-section (4) of section 114; or;
(ac) furnish return of income in response to notice under sub-section (3) of section 117; or (b) furnish a return as required under section 143 or section 144; or (c) furnish the statement as required under section 116; or (d) produce before the Commissioner, or a special audit panel appointed under sub-section (11) of section 177 or any person employed by a firm of chartered accountants or a firm of cost and management accountants under section 177, accounts, documents and records required to be maintained under section 174, or any other relevant document or evidence that may be required by him for the purpose of making assessment of income and determination of tax due thereon, the Commissioner may, based on any available information or material and to the best of his judgement, make an assessment of the taxable income or income of the person and the tax due thereon and the assessment, if any, treated to have been made on the basis of return or revised return filed by the taxpayer shall be of no legal effect .
(1A) For the purposes of making a best judgment assessment under sub- section (1), the Commissioner may determine taxable income on the basis of sectoral benchmark ratios prescribed by the Board. Explanation.- The expression sectoral benchmark ratios means standard business sector ratios notified by the Board on the basis of comparative cases and includes financial ratios, production ratios, gross profit ratio, net profit ratio, recovery ratio, wastage ratio and such other ratios in respect of such sectors as may be prescribed.
(2) As soon as possible after making an assessment under this section, the Commissioner shall issue the assessment order to the taxpayer stating—
(a) the taxable income;
(b) the amount of tax due;
(c) the amount of tax paid, if any; and (d) the time, place and manner of appealing the assessment order.
(3) An assessment order under this section shall only be issued within six years after the end of the tax year or the income year to which it relates :
Provided that where notice for furnishing a return of income under sub-section (4) of section 114 is issued in respect of one or more of the last ten completed tax years in pursuance of proviso to sub-section (5) of section 114 an assessment order under this section shall only be issued within two years from the end of tax year in which such notice is issued.
(ab) furnish return of income in response to notice under sub- section (3) or sub-section (4) of section 114; or;
(ac) furnish return of income in response to notice under sub-section (3) of section 117; or (b) furnish a return as required under section 143 or section 144; or (c) furnish the statement as required under section 116; or (d) produce before the Commissioner, or a special audit panel appointed under sub-section (11) of section 177 or any person employed by a firm of chartered accountants or a firm of cost and management accountants under section 177, accounts, documents and records required to be maintained under section 174, or any other relevant document or evidence that may be required by him for the purpose of making assessment of income and determination of tax due thereon, the Commissioner may, based on any available information or material and to the best of his judgement, make an assessment of the taxable income or income of the person and the tax due thereon and the assessment, if any, treated to have been made on the basis of return or revised return filed by the taxpayer shall be of no legal effect .
(1A) For the purposes of making a best judgment assessment under sub- section (1), the Commissioner may determine taxable income on the basis of sectoral benchmark ratios prescribed by the Board. Explanation.- The expression sectoral benchmark ratios means standard business sector ratios notified by the Board on the basis of comparative cases and includes financial ratios, production ratios, gross profit ratio, net profit ratio, recovery ratio, wastage ratio and such other ratios in respect of such sectors as may be prescribed.
(2) As soon as possible after making an assessment under this section, the Commissioner shall issue the assessment order to the taxpayer stating—
(a) the taxable income;
(b) the amount of tax due;
(c) the amount of tax paid, if any; and (d) the time, place and manner of appealing the assessment order.
(3) An assessment order under this section shall only be issued within six years after the end of the tax year or the income year to which it relates :
Provided that where notice for furnishing a return of income under sub-section (4) of section 114 is issued in respect of one or more of the last ten completed tax years in pursuance of proviso to sub-section (5) of section 114 an assessment order under this section shall only be issued within two years from the end of tax year in which such notice is issued.
Amendment history (18)
- Section 120A omitted by the Finance Act, 2013. The omitted section 120A
- New Section (120B) inserted though Finance Act, 2019.
- Section 121 substituted by the Finance Act, 2003. The substituted section 121
- Omitted by the Finance Act, 2010. The omitted clause (a)
- Clause “(aa)” omitted through Finance Act, 2020 dated 30 June, 2020 the omitted clause read as
- Inserted by the Finance Act, 2017.
- Clause (ac) inserted by the Finance Act, 2024.
- Inserted by the Finance Act, 2015
- Inserted by the Finance Act, 2010.
- Inserted by the Finance Act, 2012.
- Sub-section (1A) inserted by the Finance Act, 2024.
- The word “five” substituted by the Finance Act, 2022.
- Full stop substituted by the Finance Act 2018.
- Added by the Finance Act, 2018.
- The expressionor issued under section 122C,”omitted by the Finance Act, 2017
- Inserted by the Finance Act, 2002
- Ordinance “ omitted by the Finance Act, 2012.
- assessment order relates” omitted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 122 Amendment of assessments
(1) Subject to this section, the Commissioner may amend an assessment order treated as issued under section 120 or issued under section 121 , or , by making such alterations or additions as the Commissioner considers necessary .
(2) No order under sub-section (1) shall be amended by the Commissioner after the expiry of five years from the end of the financial year in which the Commissioner has issued or treated to have issued the assessment order to the taxpayer.
(3) Where a taxpayer furnishes a revised return under sub-section (6) or (6A) of section 114 —
(a) the Commissioner shall be treated as having made an amended assessment of the taxable income and tax payable thereon as set out in the revised return; and (b) the taxpayer’s revised return shall be taken for all purposes of this Ordinance to be an amended assessment order issued to the taxpayer by the Commissioner on the day on which the revised return was furnished.
(4) Where an assessment order (hereinafter referred to as the original assessment) has been amended under sub-section (1) ,
(3) or (5A) , the Commissioner may further amend, as many times as may be necessary, the original assessment within the later of —
(a) five years from the end of the financial year in which the Commissioner has issued or is treated as having issued the original assessment order to the taxpayer; or (b) one year from the end of the financial year in which the Commissioner has issued or is treated as having issued the amended assessment order to the taxpayer.
(4A) In respect of an assessment made under the repealed Ordinance, nothing contained in sub-section (2) or, as the case may be, sub-section (4) shall be so construed as to have extended or curtailed the time limit specified in section 65 of the aforesaid Ordinance in respect of an assessment order passed under that section and the time-limit specified in that section shall apply accordingly.
(5) An assessment order in respect of tax year, or an assessment year, shall only be amended under sub-section (1) and an amended assessment for that year shall only be further amended under sub-section (4) where, on the basis of audit or on the basis of definite information the Commissioner is satisfied that —
(i) any income chargeable to tax has escaped assessment; or (ii) total income has been under-assessed, or assessed at too low a rate, or has been the subject of excessive relief or refund; or (iii) any amount under a head of income has been mis-classified.
(5A) Subject to sub-section (9), the Commissioner may , amend, or further amend, an assessment order, if he considers that the assessment order is erroneous in so far it is prejudicial to the interest of revenue. (5AA) In respect of any subject matter which was not in dispute in an appeal the Commissioner shall have and shall be deemed always to have had the powers to amend or further amend an assessment order under sub-section (5A).
(5B) Any amended assessment order under sub-section (5A) may be passed within the time-limit specified in sub-section (2) or sub-section (4), as the case may be.
(6) As soon as possible after making an amended assessment under sub- section (1), sub-section (4) or sub-section (5A) , the Commissioner shall issue an amended assessment order to the taxpayer stating –
(a) the amended taxable income of the taxpayer;
(b) the amended amount of tax due;
(c) the amount of tax paid, if any; and (d) the time, place, and manner of appealing the amended assessment.
(7) An amended assessment order shall be treated in all respects as an assessment order for the purposes of this Ordinance, other than for the purposes of sub-section (1).
(8) For the purposes of this section, definite information includes information on sales or purchases of any goods made by the taxpayer, receipts of the taxpayer from services rendered or any other receipts that may be chargeable to tax under this Ordinance, and on the acquisition, possession or disposal of any money, asset, valuable article or investment made or expenditure incurred by the taxpayer.
(9) No assessment shall be amended, or further amended, under this section unless the taxpayer has been provided with an opportunity of being heard :
Provided that order under this section shall be made within one year of issuance of show cause notice or within such extended period as the Commissioner may, for reasons to be recorded in writing, so however, such extended period shall in no case exceed ninety days. This proviso shall be applicable to a show cause notice issued on or after the first day of July, 2021:
Provided further that any period during which the proceedings are adjourned on account of a stay order or Alternative Dispute Resolution proceedings or agreed assessment proceedings under section 122D or the time taken through adjournment by the taxpayer not exceeding sixty days shall be excluded from the computation of the period specified in the first proviso.
(2) No order under sub-section (1) shall be amended by the Commissioner after the expiry of five years from the end of the financial year in which the Commissioner has issued or treated to have issued the assessment order to the taxpayer.
(3) Where a taxpayer furnishes a revised return under sub-section (6) or (6A) of section 114 —
(a) the Commissioner shall be treated as having made an amended assessment of the taxable income and tax payable thereon as set out in the revised return; and (b) the taxpayer’s revised return shall be taken for all purposes of this Ordinance to be an amended assessment order issued to the taxpayer by the Commissioner on the day on which the revised return was furnished.
(4) Where an assessment order (hereinafter referred to as the original assessment) has been amended under sub-section (1) ,
(3) or (5A) , the Commissioner may further amend, as many times as may be necessary, the original assessment within the later of —
(a) five years from the end of the financial year in which the Commissioner has issued or is treated as having issued the original assessment order to the taxpayer; or (b) one year from the end of the financial year in which the Commissioner has issued or is treated as having issued the amended assessment order to the taxpayer.
(4A) In respect of an assessment made under the repealed Ordinance, nothing contained in sub-section (2) or, as the case may be, sub-section (4) shall be so construed as to have extended or curtailed the time limit specified in section 65 of the aforesaid Ordinance in respect of an assessment order passed under that section and the time-limit specified in that section shall apply accordingly.
(5) An assessment order in respect of tax year, or an assessment year, shall only be amended under sub-section (1) and an amended assessment for that year shall only be further amended under sub-section (4) where, on the basis of audit or on the basis of definite information the Commissioner is satisfied that —
(i) any income chargeable to tax has escaped assessment; or (ii) total income has been under-assessed, or assessed at too low a rate, or has been the subject of excessive relief or refund; or (iii) any amount under a head of income has been mis-classified.
(5A) Subject to sub-section (9), the Commissioner may , amend, or further amend, an assessment order, if he considers that the assessment order is erroneous in so far it is prejudicial to the interest of revenue. (5AA) In respect of any subject matter which was not in dispute in an appeal the Commissioner shall have and shall be deemed always to have had the powers to amend or further amend an assessment order under sub-section (5A).
(5B) Any amended assessment order under sub-section (5A) may be passed within the time-limit specified in sub-section (2) or sub-section (4), as the case may be.
(6) As soon as possible after making an amended assessment under sub- section (1), sub-section (4) or sub-section (5A) , the Commissioner shall issue an amended assessment order to the taxpayer stating –
(a) the amended taxable income of the taxpayer;
(b) the amended amount of tax due;
(c) the amount of tax paid, if any; and (d) the time, place, and manner of appealing the amended assessment.
(7) An amended assessment order shall be treated in all respects as an assessment order for the purposes of this Ordinance, other than for the purposes of sub-section (1).
(8) For the purposes of this section, definite information includes information on sales or purchases of any goods made by the taxpayer, receipts of the taxpayer from services rendered or any other receipts that may be chargeable to tax under this Ordinance, and on the acquisition, possession or disposal of any money, asset, valuable article or investment made or expenditure incurred by the taxpayer.
(9) No assessment shall be amended, or further amended, under this section unless the taxpayer has been provided with an opportunity of being heard :
Provided that order under this section shall be made within one year of issuance of show cause notice or within such extended period as the Commissioner may, for reasons to be recorded in writing, so however, such extended period shall in no case exceed ninety days. This proviso shall be applicable to a show cause notice issued on or after the first day of July, 2021:
Provided further that any period during which the proceedings are adjourned on account of a stay order or Alternative Dispute Resolution proceedings or agreed assessment proceedings under section 122D or the time taken through adjournment by the taxpayer not exceeding sixty days shall be excluded from the computation of the period specified in the first proviso.
Amendment history (25)
- Sub-section (1A) inserted by the Finance Act, 2024.
- The word “five” substituted by the Finance Act, 2022.
- Full stop substituted by the Finance Act 2018.
- Added by the Finance Act, 2018.
- Inserted by the Finance Act, 2012.
- The expressionor issued under section 122C,”omitted by the Finance Act, 2017
- Inserted by the Finance Act, 2002
- Ordinance “ omitted by the Finance Act, 2012.
- assessment order relates” omitted by the Finance Act, 2003.
- Sub-section (2) substituted by the Finance Act, 2009. The substituted sub-section (2) read as
- Substituted by the Finance Act, 2010. The substituted provision has been made effective from
- The word “or” substituted by the Finance Act, 2010.
- Inserted by the Finance Act, 2010. Amendment made in sub-section (4) has been validated through
- The word “after” substituted by the Finance Act, 2009.
- Inserted by the Finance Act, 2003. Earlier sub-section (4A) was inserted by S.R.O. 633(I)/2002, dated
- Sub-section (5) substituted by the Finance Act, 2003. The substituted sub-section (5)
- Inserted by the Finance Act, 2003. Earlier sub-section (5A) was inserted by S.R.O. 633(I)/2002, dated
- Added by Finance Act, 2012.
- omitted by the Finance Act, 2021.
- Added by the Finance Act, 2010.
- Inserted by the Finance Act, 2003.
- The words, brackets and figures “sub-section (1) or (4)” substituted by the Finance Act, 2003.
- Added by the Finance Act, 2002
- Full stop substituted and two provisos added by the Finance Act, 2021.
- Provisos substituted by the Finance Act, 2025.Substituted provisos
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 122A Revision by the Commissioner
(1) The Commissioner may , suomoto, call for the record of any proceeding under this Ordinance or under the repealed Ordinance in which an order has been passed by any Officer of Inland Revenue .
(2) Subject to sub-section (3), where, after making such inquiry as is necessary, Commissioner considers that the order requires revision, the Commissioner may suomoto make such revision to the order as the Commissioner deems fit.
(3) An order under sub-section (2) shall not be prejudicial to the person to whom the order relates.
(4) The Commissioner shall not revise any order under sub-section (2) if—
(a) an appeal against the order lies to the Commissioner (Appeals) or to the Appellate Tribunal, the time within which such appeal may be made has not expired; or (b) the order is pending in appeal before the Commissioner (Appeals) or has been made the subject of an appeal to the Appellate Tribunal.
(5) If any order is remanded back to any lower authority by the Commissioner for modification, alteration, implementation of directions or de novo proceedings, the order giving effect to the directions of the Commissioner shall be issued within one hundred and twenty days.
(2) Subject to sub-section (3), where, after making such inquiry as is necessary, Commissioner considers that the order requires revision, the Commissioner may suomoto make such revision to the order as the Commissioner deems fit.
(3) An order under sub-section (2) shall not be prejudicial to the person to whom the order relates.
(4) The Commissioner shall not revise any order under sub-section (2) if—
(a) an appeal against the order lies to the Commissioner (Appeals) or to the Appellate Tribunal, the time within which such appeal may be made has not expired; or (b) the order is pending in appeal before the Commissioner (Appeals) or has been made the subject of an appeal to the Appellate Tribunal.
(5) If any order is remanded back to any lower authority by the Commissioner for modification, alteration, implementation of directions or de novo proceedings, the order giving effect to the directions of the Commissioner shall be issued within one hundred and twenty days.
Amendment history (12)
- Added by the Finance Act, 2003.
- Inserted by the Finance Act, 2004.
- The word “suomoto” substituted by the Finance Act, 2005.
- The words “Taxation Officer” substituted by the Finance Act, 2010. The substituted provision has been
- case may be, refund of the tax does not exceed twenty million rupees,]” omitted by the Finance Act,
- Words added by Finance Act, 2004.
- Added by the Finance Act, 2021.
- Added by the Finance Act, 2006.
- The words “Regional Commissioner” Substituted by “Chief Commissioner” by Finance Act, 2014.
- The words “Regional Commissioner” Substituted by “Chief Commissioner” by Finance Act, 2014
- Substituted by the Finance Act, 2010. The substituted provision has been made effective from 05.06.2010 by
- Section 122C omitted by Finance Act 2017,the omitted section 122C is read as under
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 122B Revision by the Chief Commissioner
(1) The Chief Commissioner may, either of his own motion or on an application made by the taxpayer for revision, call for the record of any proceedings relating to issuance of an exemption or lower rate certificate with regard to collection or deduction of tax at source under this Ordinance, in which an order has been passed by any authority subordinate to him.
(2) Where, after making such inquiry as is necessary, Chief Commissioner considers that the order requires revision, the Chief Commissioner may, after providing reasonable opportunity of being heard to the taxpayer, make such order as he may deem fit in the circumstances of the case.
(2) Where, after making such inquiry as is necessary, Chief Commissioner considers that the order requires revision, the Chief Commissioner may, after providing reasonable opportunity of being heard to the taxpayer, make such order as he may deem fit in the circumstances of the case.
Amendment history (6)
- Added by the Finance Act, 2006.
- The words “Regional Commissioner” Substituted by “Chief Commissioner” by Finance Act, 2014.
- The words “Regional Commissioner” Substituted by “Chief Commissioner” by Finance Act, 2014
- Substituted by the Finance Act, 2010. The substituted provision has been made effective from 05.06.2010 by
- Section 122C omitted by Finance Act 2017,the omitted section 122C is read as under
- New Section 122D inserted through Finance Act, 2020 dated 30 June, 2020
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 122C Omitted by the Finance Act, 2017Omitted
Omitted by the Finance Act, 2017
s. 122D Agreed assessment in certain cases
(1) Where a taxpayer, in response to a notice under sub-section (9) of section 122, intends to settle his case, he may file offer of settlement in the prescribed form before the assessment oversight committee, hereinafter referred to as the Committee, in addition to filing reply to the Commissioner.
(2) The Committee after examining the aforesaid offer may call for the record of the case and after affording opportunity of being heard to the taxpayer, may decide to accept or modify the offer of the taxpayer through consensus and communicate its decision to the taxpayer.
(3) Where the taxpayer is stratified with the decision of the Committee,-
(a) the taxpayer shall deposit the amount of tax payable including any amount of penalty and default surcharge as per decision of the Committee;
(b) the Commissioner shall amend assessment in accordance with the decision of the Committee after tax payable including any amount of penalty and default surcharge as per decision of the Committee has been paid;
(c) the taxpayer shall waive the right to prefer appeal against such amended assessment; and (d) no further proceedings shall be undertaken under this Ordinance in respect of issues decided by the Committee unless the tax as per clause (c) has not been deposited by the taxpayer.
(4) Where the Committee has not been able to arrive at a consensus or where the taxpayer is not satisfied with the decision of the Committee, the case shall be referred back to the Commissioner for decision on the basis of reply of the taxpayer in response to notice under sub-section (9) of section 122 notwithstanding proceedings or decision, if any, of the Committee.
(5) The Committee shall comprise the following income tax authorities having jurisdiction over the taxpayer, namely:-
(a) the Chief Commissioner Inland Revenue;
(b) the Commissioner Inland Revenue; and (c) the Additional Commissioner Inland Revenue.
(6) This section shall not apply in cases involving concealment of income or where interpretation of question of law is involved having effect on other cases.
(7) The Board may make rules regulating the procedure of the Committee and for any matter connected with, or incidental to the proceedings of the Committee.
(2) The Committee after examining the aforesaid offer may call for the record of the case and after affording opportunity of being heard to the taxpayer, may decide to accept or modify the offer of the taxpayer through consensus and communicate its decision to the taxpayer.
(3) Where the taxpayer is stratified with the decision of the Committee,-
(a) the taxpayer shall deposit the amount of tax payable including any amount of penalty and default surcharge as per decision of the Committee;
(b) the Commissioner shall amend assessment in accordance with the decision of the Committee after tax payable including any amount of penalty and default surcharge as per decision of the Committee has been paid;
(c) the taxpayer shall waive the right to prefer appeal against such amended assessment; and (d) no further proceedings shall be undertaken under this Ordinance in respect of issues decided by the Committee unless the tax as per clause (c) has not been deposited by the taxpayer.
(4) Where the Committee has not been able to arrive at a consensus or where the taxpayer is not satisfied with the decision of the Committee, the case shall be referred back to the Commissioner for decision on the basis of reply of the taxpayer in response to notice under sub-section (9) of section 122 notwithstanding proceedings or decision, if any, of the Committee.
(5) The Committee shall comprise the following income tax authorities having jurisdiction over the taxpayer, namely:-
(a) the Chief Commissioner Inland Revenue;
(b) the Commissioner Inland Revenue; and (c) the Additional Commissioner Inland Revenue.
(6) This section shall not apply in cases involving concealment of income or where interpretation of question of law is involved having effect on other cases.
(7) The Board may make rules regulating the procedure of the Committee and for any matter connected with, or incidental to the proceedings of the Committee.
Amendment history (2)
- New Section 122D inserted through Finance Act, 2020 dated 30 June, 2020
- 1Section 122E inserted by the Finance Act, 2026.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 122E Faceless audit and assessment
(1) Notwithstanding anything to the contrary contained in any other provision of this Ordinance, any audit under sections 177 or 214C, any order made under section 111, any assessment under this Part and rectification under section 221, with respect to the cases referred to in sub-section (2), may be made in a faceless manner as may be prescribed by the Board.
(2) The faceless assessment under sub-section (1) shall be made in respect of such persons or class of persons, or incomes or class of incomes, or cases or class of cases, as may be specified by the Board.
(3) The provisions of section 177 shall apply to the audit conducted in a faceless manner under this section:
Provided that where opportunity of being heard is to be provided to the taxpayer during the course of this audit or a statement under oath is required to be obtained from a taxpayer or any other person under section 176 of this Ordinance, the same shall be done through E-hearing under section 227E of this Ordinance:
Provided further that the identity of the officer, including facial and voice identity, conducting such E-hearing shall be kept confidential.
(2) The faceless assessment under sub-section (1) shall be made in respect of such persons or class of persons, or incomes or class of incomes, or cases or class of cases, as may be specified by the Board.
(3) The provisions of section 177 shall apply to the audit conducted in a faceless manner under this section:
Provided that where opportunity of being heard is to be provided to the taxpayer during the course of this audit or a statement under oath is required to be obtained from a taxpayer or any other person under section 176 of this Ordinance, the same shall be done through E-hearing under section 227E of this Ordinance:
Provided further that the identity of the officer, including facial and voice identity, conducting such E-hearing shall be kept confidential.
Amendment history (1)
- 1Section 122E inserted by the Finance Act, 2026.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 123 Provisional assessment in certain cases
(1) Where a concealed asset of any person is impounded by any department or agency of the Federal Government or a Provincial Government, the Commissioner may, at any time before issuing any assessment order under section 121 or any amended assessment order under section 122, issue to the person a provisional assessment order or provisional amended assessment order, as the case may be, for the last completed tax year of the person taking into account the concealed asset.
(1A) Where an offshore asset of any person, not declared earlier, is discovered by the Commissioner or any department or agency of the Federal Government or a Provincial Government, the Commissioner may at any time before issuing any assessment order under section 121 or amended assessment order under section 122, issue to the person a provisional assessment order or provisional amended assessment order, as the case may be, for the last completed tax year of the person taking into account the offshore asset discovered.
(2) The Commissioner shall finalise a provisional assessment order or a provisional amended assessment order as soon as practicable .
(3) In this section, concealed asset means any property or asset which, in the opinion of the Commissioner, was acquired from any income subject to tax under this Ordinance.
(1A) Where an offshore asset of any person, not declared earlier, is discovered by the Commissioner or any department or agency of the Federal Government or a Provincial Government, the Commissioner may at any time before issuing any assessment order under section 121 or amended assessment order under section 122, issue to the person a provisional assessment order or provisional amended assessment order, as the case may be, for the last completed tax year of the person taking into account the offshore asset discovered.
(2) The Commissioner shall finalise a provisional assessment order or a provisional amended assessment order as soon as practicable .
(3) In this section, concealed asset means any property or asset which, in the opinion of the Commissioner, was acquired from any income subject to tax under this Ordinance.
Amendment history (7)
- 1Section 122E inserted by the Finance Act, 2026.
- The words “after making it” omitted by the Finance Act, 2003.
- The words “Commissioner (Appeals)” omitted by the Finance Act, 2010.
- Inserted by the Finance Act, 2003.
- Inserted by the Finance Act, 2008.
- The word “make” substituted by the Finance Act, 2010.
- The words “six months from the date” substituted by the Finance Act, 2002.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 124 Assessment giving effect to an order
(1) Except where sub-section (2) applies, where, in consequence of, or to give effect to, any finding or direction in any order made under Part III of this Chapter by the Commissioner (Appeals), if the value of the assessment or, as the case may be, refund of the tax does not exceed twenty million rupees, Appellate Tribunal, High Court, or Supreme Court an assessment order or amended assessment order is to be issued to any person, the Commissioner shall issue the order within two years from the end of the financial year in which the order of the Commissioner (Appeals), if the value of the assessment or, as the case may be, refund of the tax does not exceed twenty million rupees, Appellate Tribunal, High Court or Supreme Court, as the case may be, was served on the Commissioner.
(2) Where, by an order made under Part III of this Chapter by the Appellate Tribunal, High Court, or Supreme Court, an assessment order is set aside wholly or partly, and the Commissioner or Commissioner (Appeals), as the case may be, if the value of the assessment or, as the case may be, refund of the tax does not exceed twenty million rupees, is directed to pass a new assessment order, the Commissioner or Commissioner (Appeals), as the case may be, if the value of the assessment or, as the case may be, refund of the tax does not exceed twenty million rupees, shall pass the new order within one year from the end of the financial year in which the Commissioner or I I I I Commissioner (Appeals), as the case may be, if the value of the assessment or, as the case may be, refund of the tax does not exceed twenty million rupees, is served with the order :
Provided that limitation under this sub-section shall not apply, if an appeal or reference has been preferred, against the order , passed by Appellate Tribunal or a High Court.
(3) Where an assessment order has been set aside or modified, the proceedings may commence from the stage next preceding the stage at which such setting aside or modification took place and nothing contained in this Ordinance shall render necessary the re-issue of any notice which had already been issued or the re-furnishing or re-filing of any return, statement, or other particulars which had already been furnished or filed.
(4) Where direct relief is provided in an order under section 129 or 132, the Commissioner shall issue appeal effect orders within two months of the date the Commissioner is served with the order.
(4A) Where the Commissioner (Appeals), Appellate Tribunal, High Court or Supreme Court has confirmed the tax payable as determined in the order appealed against no appeal effect order will be required to be issued and the Commissioner shall proceed to effect recovery.
(4B) Subject to the provisions of sub-section (2) where the Appellate Tribunal, High Court or Supreme Court has partly set aside the order and confirmed or modified the order on some other issues that were subject matter of the appeal, the Commissioner shall issue an appeal effect order on the prescribed form determining the tax payable as a result of the confirmation or modification by the Appellate Tribunal, High Court or Supreme Court and excluding the tax payable on the matters that have been set aside or remanded and the tax payable on the basis of the issues that have been confirmed or modified shall be paid or recovered under the provisions of the Ordinance.
(5) Where, by any order referred to in sub-section (1), any income is excluded — I
(a) from the computation of the taxable income of a taxpayer for any year and held to be included in the computation of the taxable income of the taxpayer for another year; or (b) from the computation of the taxable income of one taxpayer and held to be included in the computation of the taxable income of another taxpayer, the assessment or amended assessment relating to that other tax year or other taxpayer, as the case may be, shall be treated as an assessment or amended assessment to be made in consequence of, or to give effect to, a finding or direction contained in such order.
(6) Nothing in this Part shall prevent the issuing of an assessment order or an amended assessment order to give effect to an order made under Part III of this Chapter by the Commissioner (Appeals), if the value of the assessment or, as the case may be, refund of the tax does not exceed twenty million rupees, Appellate Tribunal, High Court, or Supreme Court.
(7) The provisions of this section shall in like manner apply to any order issued by any High Court or the Supreme Court in exercise of original or appellate jurisdiction.
(2) Where, by an order made under Part III of this Chapter by the Appellate Tribunal, High Court, or Supreme Court, an assessment order is set aside wholly or partly, and the Commissioner or Commissioner (Appeals), as the case may be, if the value of the assessment or, as the case may be, refund of the tax does not exceed twenty million rupees, is directed to pass a new assessment order, the Commissioner or Commissioner (Appeals), as the case may be, if the value of the assessment or, as the case may be, refund of the tax does not exceed twenty million rupees, shall pass the new order within one year from the end of the financial year in which the Commissioner or I I I I Commissioner (Appeals), as the case may be, if the value of the assessment or, as the case may be, refund of the tax does not exceed twenty million rupees, is served with the order :
Provided that limitation under this sub-section shall not apply, if an appeal or reference has been preferred, against the order , passed by Appellate Tribunal or a High Court.
(3) Where an assessment order has been set aside or modified, the proceedings may commence from the stage next preceding the stage at which such setting aside or modification took place and nothing contained in this Ordinance shall render necessary the re-issue of any notice which had already been issued or the re-furnishing or re-filing of any return, statement, or other particulars which had already been furnished or filed.
(4) Where direct relief is provided in an order under section 129 or 132, the Commissioner shall issue appeal effect orders within two months of the date the Commissioner is served with the order.
(4A) Where the Commissioner (Appeals), Appellate Tribunal, High Court or Supreme Court has confirmed the tax payable as determined in the order appealed against no appeal effect order will be required to be issued and the Commissioner shall proceed to effect recovery.
(4B) Subject to the provisions of sub-section (2) where the Appellate Tribunal, High Court or Supreme Court has partly set aside the order and confirmed or modified the order on some other issues that were subject matter of the appeal, the Commissioner shall issue an appeal effect order on the prescribed form determining the tax payable as a result of the confirmation or modification by the Appellate Tribunal, High Court or Supreme Court and excluding the tax payable on the matters that have been set aside or remanded and the tax payable on the basis of the issues that have been confirmed or modified shall be paid or recovered under the provisions of the Ordinance.
(5) Where, by any order referred to in sub-section (1), any income is excluded — I
(a) from the computation of the taxable income of a taxpayer for any year and held to be included in the computation of the taxable income of the taxpayer for another year; or (b) from the computation of the taxable income of one taxpayer and held to be included in the computation of the taxable income of another taxpayer, the assessment or amended assessment relating to that other tax year or other taxpayer, as the case may be, shall be treated as an assessment or amended assessment to be made in consequence of, or to give effect to, a finding or direction contained in such order.
(6) Nothing in this Part shall prevent the issuing of an assessment order or an amended assessment order to give effect to an order made under Part III of this Chapter by the Commissioner (Appeals), if the value of the assessment or, as the case may be, refund of the tax does not exceed twenty million rupees, Appellate Tribunal, High Court, or Supreme Court.
(7) The provisions of this section shall in like manner apply to any order issued by any High Court or the Supreme Court in exercise of original or appellate jurisdiction.
Amendment history (13)
- The words “after making it” omitted by the Finance Act, 2003.
- The words “Commissioner (Appeals)” omitted by the Finance Act, 2010.
- Inserted by the Finance Act, 2003.
- Inserted by the Finance Act, 2008.
- The word “make” substituted by the Finance Act, 2010.
- The words “six months from the date” substituted by the Finance Act, 2002.
- The full stop substituted by the Finance Act, 2005.
- Inserted by the Finance Act, 2005.
- The words “setting aside the assessment” omitted by the Finance Act, 2010.
- The words “a Commissioner (Appeals)” omitted by the Finance Act, 2010.
- Sub-sections (4A) and (4B) inserted by the Finance Act, 2025.
- Added by the Finance Act, 2003.
- Inserted by the Finance Act, 2002.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 124A Powers of tax authorities to modify orders, etc
(1) Where a question of law has been decided by a High Court or the Appellate Tribunal in the case of a taxpayer, on or after first day of July 2002, the Commissioner may, notwithstanding that he has preferred an appeal against the decision of the High Court or made an application for reference against the order of the Appellate Tribunal, as the case may be, follow the said decision in the case of the said taxpayer in so far as it applies to said question of law arising in any assessment pending before the Commissioner until the decision of the High Court or of the Appellate Tribunal is reversed or modified.
(2) In case the decision of High Court or the Appellate Tribunal, referred to in sub-section (1), is reversed or modified, the Commissioner may, notwithstanding the expiry of period of limitation prescribed for making any assessment or order, within a period of one year from the date of receipt of decision, modify the assessment or order in which the said decision was applied so that it conforms to the final decision.
(2) In case the decision of High Court or the Appellate Tribunal, referred to in sub-section (1), is reversed or modified, the Commissioner may, notwithstanding the expiry of period of limitation prescribed for making any assessment or order, within a period of one year from the date of receipt of decision, modify the assessment or order in which the said decision was applied so that it conforms to the final decision.
Amendment history (2)
- Added by the Finance Act, 2003.
- Inserted by the Finance Act, 2002.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 125 Assessment in relation to disputed property
Assessment in relation to disputed property.— Where the ownership of any property the income from which is chargeable to tax under this Ordinance is in dispute in any Civil Court in Pakistan, an assessment order or amended I assessment order in respect of such income may be issued at any time within one year after the end of the financial year in which the decision of the Court is made.
Amendment history (3)
- Added by the Finance Act, 2003.
- Inserted by the Finance Act, 2002.
- The word “notice” substituted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 126 Evidence of assessment
(1) The production of an assessment order or a certified copy of an assessment order shall be conclusive evidence of the due making of the assessment and, except in proceedings under Part III of this Chapter relating to the assessment, that the amount and all particulars of the assessment are correct.
(2) Any order of assessment or other document purporting to be made, issued, or executed under this Ordinance may not be –
(a) quashed or deemed to be void or voidable for want of form; or (b) affected by reason of any mistake, defect, or omission therein, if it is, in substance and effect, in conformity with this Ordinance and the person assessed, or intended to be assessed or affected by the document, is designated in it according to common understanding. PART III APPEALS
(2) Any order of assessment or other document purporting to be made, issued, or executed under this Ordinance may not be –
(a) quashed or deemed to be void or voidable for want of form; or (b) affected by reason of any mistake, defect, or omission therein, if it is, in substance and effect, in conformity with this Ordinance and the person assessed, or intended to be assessed or affected by the document, is designated in it according to common understanding. PART III APPEALS
Amendment history (11)
- The word “notice” substituted by the Finance Act, 2003.
- Section 126A omitted by the Finance Act, 2025. The omitted section
- Sub-section (1) substituted by the Finance Act, 2002. The substituted sub-section (1)
- The word “Any” substituted by the Finance Act, 2024.
- The expression “Subject to section 126A, any person” substituted by the Finance Act, 2025.
- The words “Taxation officer” substituted by the Finance Act, 2014.
- The expressions inserted through Finance Act, 2020 dated 30 June, 2020
- Inserted by the Finance Act, 2004.
- The figures and commas “183, 184, 185, 186, 187, 188 and 189” omitted by the Finance Act, 2010.
- The word and figure “or 189” substituted by the Finance Act, 2009.
- The word “treating” substituted by the Finance Act, 2003
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 126A Omitted by the Finance Act, 2025Omitted
Omitted by the Finance Act, 2025
s. 127 Appeal to the Commissioner (Appeals)
(1) Any person, other than State-Owned Enterprise (SOE), dissatisfied with any order passed by a Commissioner or an Officer of Inland Revenue under sub-section (2A) of section 120, section 121,122, 143, 144, 162, 170, 182, or 205 , or an order under sub- section (1) of section 161 holding a person to be personally liable to pay an amount of tax, or an order under clause (f) of sub-section (3) of section 172 declaring a person to be the representative of a non-resident person or an order giving effect to any finding or directions in any order made under this Part by the Commissioner (Appeals), I Appellate Tribunal, High Court or Supreme Court , or an order under section 221 refusing to rectify the mistake, either in full or in part, as claimed by the taxpayer or an order having the effect of enhancing the assessment or reducing a refund or otherwise increasing the liability of the person , may prefer an appeal to the Commissioner (Appeals) against the order :
Provided that an aggrieved person under sub-section (1) may have the option to either file appeal before Commissioner Inland Revenue (Appeals) directly or may surrender his right of appeal before Commissioner Inland Revenue (Appeals) and avail the next statutory appellate forum by filing the appeal directly before the Appellate Tribunal Inland Revenue.
(2) No appeal under sub-section (1), shall be made by a taxpayer against an order of assessment unless the taxpayer has paid the amount of tax due under sub section (1) of section 137.
(3) An appeal under sub-section (1) shall —
(a) be in the prescribed form;
(b) be verified in the prescribed manner;
(c) state precisely the grounds upon which the appeal is made;
(d) be accompanied by the prescribed fee specified in sub-section (4); and (e) be lodged with the Commissioner (Appeals) within the time set out in sub-section (5).
(3A) The Board may prescribe mechanism for electronic filing of the appeals.
(4) The prescribed fee shall be —
(a) in the case of appeal against an assessment-
(i) where the appellant is a company, five thousand rupees; or (ii) where the appellant is not a company, two thousand and five hundred rupees; or (b) in any other case —
(i) where the appellant is a company, five thousand rupees; or (ii) where the appellant is not a company, one thousand rupees.
(5) An appeal shall be preferred to the Commissioner (Appeals) within thirty days of the following—
(a) where the appeal relates to any assessment or penalty, the date of service of the notice of demand relating to the said assessment or penalty, as the case may be; and (b) in any other case, the date on which the order to be appealed against is served.
(6) The Commissioner (Appeals) may, upon application in writing by the appellant, admit an appeal after the expiration of the period specified in sub-section (5) if the Commissioner (Appeals) is satisfied that the appellant was prevented by sufficient cause from lodging the appeal within that period.
Provided that an aggrieved person under sub-section (1) may have the option to either file appeal before Commissioner Inland Revenue (Appeals) directly or may surrender his right of appeal before Commissioner Inland Revenue (Appeals) and avail the next statutory appellate forum by filing the appeal directly before the Appellate Tribunal Inland Revenue.
(2) No appeal under sub-section (1), shall be made by a taxpayer against an order of assessment unless the taxpayer has paid the amount of tax due under sub section (1) of section 137.
(3) An appeal under sub-section (1) shall —
(a) be in the prescribed form;
(b) be verified in the prescribed manner;
(c) state precisely the grounds upon which the appeal is made;
(d) be accompanied by the prescribed fee specified in sub-section (4); and (e) be lodged with the Commissioner (Appeals) within the time set out in sub-section (5).
(3A) The Board may prescribe mechanism for electronic filing of the appeals.
(4) The prescribed fee shall be —
(a) in the case of appeal against an assessment-
(i) where the appellant is a company, five thousand rupees; or (ii) where the appellant is not a company, two thousand and five hundred rupees; or (b) in any other case —
(i) where the appellant is a company, five thousand rupees; or (ii) where the appellant is not a company, one thousand rupees.
(5) An appeal shall be preferred to the Commissioner (Appeals) within thirty days of the following—
(a) where the appeal relates to any assessment or penalty, the date of service of the notice of demand relating to the said assessment or penalty, as the case may be; and (b) in any other case, the date on which the order to be appealed against is served.
(6) The Commissioner (Appeals) may, upon application in writing by the appellant, admit an appeal after the expiration of the period specified in sub-section (5) if the Commissioner (Appeals) is satisfied that the appellant was prevented by sufficient cause from lodging the appeal within that period.
Amendment history (21)
- Section 126A omitted by the Finance Act, 2025. The omitted section
- Sub-section (1) substituted by the Finance Act, 2002. The substituted sub-section (1)
- The word “Any” substituted by the Finance Act, 2024.
- The expression “Subject to section 126A, any person” substituted by the Finance Act, 2025.
- The words “Taxation officer” substituted by the Finance Act, 2014.
- The expressions inserted through Finance Act, 2020 dated 30 June, 2020
- Inserted by the Finance Act, 2004.
- The figures and commas “183, 184, 185, 186, 187, 188 and 189” omitted by the Finance Act, 2010.
- The word and figure “or 189” substituted by the Finance Act, 2009.
- The word “treating” substituted by the Finance Act, 2003
- Inserted by the Finance Act, 2011.
- The words “a provisional” substituted by the word “an” by the Finance Act, 2012.
- Full stop substituted and new proviso added by the Finance Act, 2025.
- Sub-section (2) substituted by the Finance Ordinance, 2002. The substituted sub-section (2) read as
- Sub-section (2) substituted by the Finance Act, 2021. The substituted sub-section (2)
- Sub-section (3) inserted by the Finance Act, 2021.
- The word “is” substituted by the Finance Act, 2002
- Clause (a) substituted through Finance Act, 2020 dated 30 June, 2020 the substituted clause read
- The word “one” substituted through Finance Act, 2020 dated 30 June, 2020
- The word “two hundred” substituted through Finance Act, 2020 dated 30 June, 2020
- Sub-section (5) substituted by the Finance Act, 2002. The substituted sub-section (5)
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 128 Procedure in appeal
(1) The Commissioner (Appeals) shall give notice of the day fixed for the hearing of the appeal to the appellant and to the Commissioner against whose order the appeal has been made.
(1A) Where in a particular case, the Commissioner (Appeals) is of the opinion that the recovery of tax levied under this Ordinance, shall cause undue hardship to the taxpayer, he, after affording opportunity of being heard to the Commissioner against whose order appeal has been made, may stay the recovery of such tax for a period not exceeding thirty days in aggregate. (1AA) The Commissioner (Appeals), after affording opportunity of being heard to the Commissioner against whose order appeal has been made, may stay the recovery of such tax for a further period of thirty days, provided that the order on appeal shall be passed within the said period of thirty days.
(2) The Commissioner (Appeals) may adjourn the hearing of the appeal from time to time.
(3) The Commissioner (Appeals) may, before the hearing of an appeal, allow an appellant to file any new ground of appeal not specified in the grounds of appeal already filed by the appellant where the Commissioner (Appeals) is satisfied that the omission of the ground from the form of the appeal was not wilful or unreasonable.
(4) The Commissioner (Appeals) may, before disposing of an appeal, call for such particulars as the Commissioner (Appeals) may require respecting the matters arising in the appeal or cause further enquiry to be made by the Commissioner.
(5) The Commissioner (Appeals) shall not admit any documentary material or evidence which was not produced before the Commissioner unless the Commissioner (Appeals) is satisfied that the appellant was prevented by sufficient cause from producing such material or evidence before the Commissioner.
(1A) Where in a particular case, the Commissioner (Appeals) is of the opinion that the recovery of tax levied under this Ordinance, shall cause undue hardship to the taxpayer, he, after affording opportunity of being heard to the Commissioner against whose order appeal has been made, may stay the recovery of such tax for a period not exceeding thirty days in aggregate. (1AA) The Commissioner (Appeals), after affording opportunity of being heard to the Commissioner against whose order appeal has been made, may stay the recovery of such tax for a further period of thirty days, provided that the order on appeal shall be passed within the said period of thirty days.
(2) The Commissioner (Appeals) may adjourn the hearing of the appeal from time to time.
(3) The Commissioner (Appeals) may, before the hearing of an appeal, allow an appellant to file any new ground of appeal not specified in the grounds of appeal already filed by the appellant where the Commissioner (Appeals) is satisfied that the omission of the ground from the form of the appeal was not wilful or unreasonable.
(4) The Commissioner (Appeals) may, before disposing of an appeal, call for such particulars as the Commissioner (Appeals) may require respecting the matters arising in the appeal or cause further enquiry to be made by the Commissioner.
(5) The Commissioner (Appeals) shall not admit any documentary material or evidence which was not produced before the Commissioner unless the Commissioner (Appeals) is satisfied that the appellant was prevented by sufficient cause from producing such material or evidence before the Commissioner.
Amendment history (9)
- Sub-section (3) inserted by the Finance Act, 2021.
- The word “is” substituted by the Finance Act, 2002
- Clause (a) substituted through Finance Act, 2020 dated 30 June, 2020 the substituted clause read
- The word “one” substituted through Finance Act, 2020 dated 30 June, 2020
- The word “two hundred” substituted through Finance Act, 2020 dated 30 June, 2020
- Sub-section (5) substituted by the Finance Act, 2002. The substituted sub-section (5)
- Inserted by the Finance Act, 2012.
- Inserted by the Finance Act, 2015
- Clause (a) substituted by the Finance Act, 2005. The original clause (a)
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 129 Decision in appeal
(1) In disposing of an appeal lodged under section 127, the Commissioner (Appeals) may –
(a) make an order to confirm, modify or annul the assessment order after examining such evidence as required by him respecting the matters arising in appeal or causing such further enquires to be made as he deems fit; or (b) in any other case, make such order as the Commissioner (Appeals) thinks fit.
(2) The Commissioner (Appeals) shall not increase the amount of any assessment order or decrease the amount of any refund unless the appellant has been given a reasonable opportunity of showing cause against such increase or decrease, as the case may be.
(3) Where, as the result of an appeal, any change is made in the assessment of an association of persons or a new assessment of an association of persons is ordered to be made, the Commissioner (Appeals) may authorise the Commissioner to amend accordingly any assessment order made on a member of the association and the time limit in sub-section (2) of section 122 shall not apply to the making such amended assessment.
(4) As soon as practicable after deciding an appeal, the Commissioner (Appeals) shall specify in the order the amount of tax upheld and serve his order on the appellant and the Commissioner :
Provided that such order shall be passed not later than one hundred and twenty days from the date of filing of appeal or within an extended period of sixty days, for reasons to be recorded in writing by the Commissioner (Appeals):
Provided further that any period during which the hearing of an appeal is adjourned at the request of the appellant or is postponed due to any appeal or proceedings or stay order, remand or alternative dispute resolution proceedings or for any other reason, shall be excluded in the computation of the aforementioned periods.
(a) make an order to confirm, modify or annul the assessment order after examining such evidence as required by him respecting the matters arising in appeal or causing such further enquires to be made as he deems fit; or (b) in any other case, make such order as the Commissioner (Appeals) thinks fit.
(2) The Commissioner (Appeals) shall not increase the amount of any assessment order or decrease the amount of any refund unless the appellant has been given a reasonable opportunity of showing cause against such increase or decrease, as the case may be.
(3) Where, as the result of an appeal, any change is made in the assessment of an association of persons or a new assessment of an association of persons is ordered to be made, the Commissioner (Appeals) may authorise the Commissioner to amend accordingly any assessment order made on a member of the association and the time limit in sub-section (2) of section 122 shall not apply to the making such amended assessment.
(4) As soon as practicable after deciding an appeal, the Commissioner (Appeals) shall specify in the order the amount of tax upheld and serve his order on the appellant and the Commissioner :
Provided that such order shall be passed not later than one hundred and twenty days from the date of filing of appeal or within an extended period of sixty days, for reasons to be recorded in writing by the Commissioner (Appeals):
Provided further that any period during which the hearing of an appeal is adjourned at the request of the appellant or is postponed due to any appeal or proceedings or stay order, remand or alternative dispute resolution proceedings or for any other reason, shall be excluded in the computation of the aforementioned periods.
Amendment history (12)
- Inserted by the Finance Act, 2012.
- Inserted by the Finance Act, 2015
- Clause (a) substituted by the Finance Act, 2005. The original clause (a)
- The words inserted through Finance Act, 2020 dated 30 June, 2020
- The words “notice of” omitted by the Finance Act, 2002
- Full stop substituted by the Finance Act, 2009.
- Inserted by the Finance Act, 2009.
- Sub-section (5) omitted by the Finance Act, 2012. The omitted sub-section (5)
- Sub-section (6) omitted by the Finance Act, 2012. The omitted sub-section (6)
- Sub-section (7) omitted by the Finance Act, 2012. The omitted sub-section (7)
- 1Section 129A inserted by the Finance Act, 2026.
- 2Section 130 substituted through Tax Laws (Second Amendment) Ordinance, 2019 dated 26
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 129A Faceless appeals
(1) Notwithstanding anything contained in this Ordinance, any appeal filed under section 127 may be processed through the National faceless center as may be prescribed by the Board.
(2) The provisions of sections 127, 128 and 129 of this Ordinance shall apply to faceless appeals accordingly.
(2) The provisions of sections 127, 128 and 129 of this Ordinance shall apply to faceless appeals accordingly.
Amendment history (2)
- 1Section 129A inserted by the Finance Act, 2026.
- 2Section 130 substituted through Tax Laws (Second Amendment) Ordinance, 2019 dated 26
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 130 Appellate Tribunal
(1) There shall be established an Appellate Tribunal Inland Revenue hereinafter called as the Appellate Tribunal to exercise jurisdiction, conferred on it under this Ordinance:
Provided that the existing members including Chairman of the Appellate Tribunal shall continue to hold office, on the same terms and conditions as applicable to them prior to the commencement of the Tax Laws (Amendment) Act, 2024 ( of 2024), till the completion of their term of office unless resigned or removed earlier on the grounds provided in the proviso to sub-section (5).
(2) The Appellate Tribunal shall consist of members who shall be appointed by the Federal Government in such numbers, in accordance with such procedure and on such terms and conditions as the Federal Government may prescribe by rules, which shall be made and take effect notwithstanding anything contained in section 237 of this Ordinance or the Federal Public Service Commission Ordinance, 1977 (XLV of 1977) or any other law or rules, for the time being in force.
(3) A person shall be eligible to be appointed as a member of the Appellate Tribunal, if he —
(a) is an advocate of a High Court for not less than fifteen years and possesses such other qualifications as may be prescribed by rules under this section;
(b) has, for an aggregate period of not less than ten years, been –
(i) in practice as a chartered accountant, either individually or in a firm of the chartered accountants, within the meaning of Chartered Accountants Ordinance, 1961 (X of 1961); or (ii) a chartered accountant, within the meaning of the Chartered Accountants Ordinance, 1961 (X of 1961), and has been in employment of a chartered accountant in practice as specified in sub-clause (i) above at least for a period of ten years;
(c) has for a period of not less than ten years practiced professionally as a cost and management accountant within the meaning of the Cost and Management Accountants Act, 1966 (XIV of 1966);
(d) is an officer of the Inland Revenue in BS-21 or above; or (e) is an officer of the Inland Revenue in BS-20, having served in such grade for three years or more.
(4) The Federal Government shall appoint any member possessing qualifications provided in clauses (a),
(13) and (c) of sub-section (3) as Chairman of the Appellate Tribunal. The Chairman shall hold office for a period of three years provided that the Federal Government may reappoint the Chairman for such further term or terms as it may deem appropriate.
(5) The members including the Chairman shall cease to hold office on attaining the age of sixty-two years provided that the members falling under clauses
(c) and (d) of sub-section (3) shall cease to hold office on attaining the age of superannuation, under the law regulating their service:
Provided that a member including the Chairman may resign or may be removed by the Federal Government, on the recommendation of performance review committee, to be constituted by the rules made under sub-section (2), at any time before the expiry of his term or attaining the age of superannuation, as the case may be, on grounds, interalia, of inefficiency or misconduct, as prescribed by the rules made under sub-section (2).
(6) The procedure of the Appellate Tribunal Inland Revenue including constitution of benches, case management system, distribution of cases and other matters ancillary or incidental thereto shall be regulated by the rules made under sub-section (2).
Provided that the existing members including Chairman of the Appellate Tribunal shall continue to hold office, on the same terms and conditions as applicable to them prior to the commencement of the Tax Laws (Amendment) Act, 2024 ( of 2024), till the completion of their term of office unless resigned or removed earlier on the grounds provided in the proviso to sub-section (5).
(2) The Appellate Tribunal shall consist of members who shall be appointed by the Federal Government in such numbers, in accordance with such procedure and on such terms and conditions as the Federal Government may prescribe by rules, which shall be made and take effect notwithstanding anything contained in section 237 of this Ordinance or the Federal Public Service Commission Ordinance, 1977 (XLV of 1977) or any other law or rules, for the time being in force.
(3) A person shall be eligible to be appointed as a member of the Appellate Tribunal, if he —
(a) is an advocate of a High Court for not less than fifteen years and possesses such other qualifications as may be prescribed by rules under this section;
(b) has, for an aggregate period of not less than ten years, been –
(i) in practice as a chartered accountant, either individually or in a firm of the chartered accountants, within the meaning of Chartered Accountants Ordinance, 1961 (X of 1961); or (ii) a chartered accountant, within the meaning of the Chartered Accountants Ordinance, 1961 (X of 1961), and has been in employment of a chartered accountant in practice as specified in sub-clause (i) above at least for a period of ten years;
(c) has for a period of not less than ten years practiced professionally as a cost and management accountant within the meaning of the Cost and Management Accountants Act, 1966 (XIV of 1966);
(d) is an officer of the Inland Revenue in BS-21 or above; or (e) is an officer of the Inland Revenue in BS-20, having served in such grade for three years or more.
(4) The Federal Government shall appoint any member possessing qualifications provided in clauses (a),
(13) and (c) of sub-section (3) as Chairman of the Appellate Tribunal. The Chairman shall hold office for a period of three years provided that the Federal Government may reappoint the Chairman for such further term or terms as it may deem appropriate.
(5) The members including the Chairman shall cease to hold office on attaining the age of sixty-two years provided that the members falling under clauses
(c) and (d) of sub-section (3) shall cease to hold office on attaining the age of superannuation, under the law regulating their service:
Provided that a member including the Chairman may resign or may be removed by the Federal Government, on the recommendation of performance review committee, to be constituted by the rules made under sub-section (2), at any time before the expiry of his term or attaining the age of superannuation, as the case may be, on grounds, interalia, of inefficiency or misconduct, as prescribed by the rules made under sub-section (2).
(6) The procedure of the Appellate Tribunal Inland Revenue including constitution of benches, case management system, distribution of cases and other matters ancillary or incidental thereto shall be regulated by the rules made under sub-section (2).
Amendment history (2)
- Clause (b) substituted by the Finance Act, 2025. The substituted clause
- Sub-section (1) substituted by the Finance Act, 2025. The substituted sub-section
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 131 Appeal to the Appellate Tribunal
(1) Where the taxpayer, or the Commissioner objects to an order passed by the Commissioner (Appeals), the taxpayer or Commissioner may appeal to the Appellate Tribunal against such order within thirty days of the receipt of such order:
Provided that the taxpayer may directly appeal against the order of the Officer Inland Revenue or the Commissioner as the case may be to the Appellate Tribunal by exercising the option as provided in sub-section (1) of section 127.
(2) An appeal under sub-section (1) shall be —
(a) in the prescribed form;
(b) verified in the prescribed manner;
(c) accompanied, by the prescribed fee specified in sub-section (3); and (d) preferred to the Appellate Tribunal within thirty days of the date of service of order on the taxpayer.
(3) The prescribed fee shall be twenty thousand rupees in case of a company and five thousand rupees in case other than a company.
(4) The Appellate Tribunal may, upon application in writing, admit an appeal after the expiration of the period specified in clause (d) of sub-section (2) if it is satisfied that the person preferring appeal was prevented by sufficient cause from filing the appeal within that period.
(5) Notwithstanding that an appeal has been filed under this section, tax shall, unless recovery thereof has been stayed by the Appellate Tribunal, be payable in accordance with the assessment made in the case:
Provided that on filing of application in a particular case, the Appellate Tribunal may after affording an opportunity of being heard to the Commissioner having jurisdiction, for reasons to be recorded, stay the recovery of tax for ninety days:
Provided further that the stay order shall cease to have effect, and the Commissioner shall be entitled to recover tax, if the taxpayer does not adhere to the hearing schedule for the appeal, as determined by the Appellate Tribunal in accordance with the rules made under sub-section (2) of section 130:
Provided also that where an appeal is not decided within the statutory period by the Appellate Tribunal, the stay order under the second proviso shall not cease to have effect till finalization of the appeal by the Appellate Tribunal.
Provided that the taxpayer may directly appeal against the order of the Officer Inland Revenue or the Commissioner as the case may be to the Appellate Tribunal by exercising the option as provided in sub-section (1) of section 127.
(2) An appeal under sub-section (1) shall be —
(a) in the prescribed form;
(b) verified in the prescribed manner;
(c) accompanied, by the prescribed fee specified in sub-section (3); and (d) preferred to the Appellate Tribunal within thirty days of the date of service of order on the taxpayer.
(3) The prescribed fee shall be twenty thousand rupees in case of a company and five thousand rupees in case other than a company.
(4) The Appellate Tribunal may, upon application in writing, admit an appeal after the expiration of the period specified in clause (d) of sub-section (2) if it is satisfied that the person preferring appeal was prevented by sufficient cause from filing the appeal within that period.
(5) Notwithstanding that an appeal has been filed under this section, tax shall, unless recovery thereof has been stayed by the Appellate Tribunal, be payable in accordance with the assessment made in the case:
Provided that on filing of application in a particular case, the Appellate Tribunal may after affording an opportunity of being heard to the Commissioner having jurisdiction, for reasons to be recorded, stay the recovery of tax for ninety days:
Provided further that the stay order shall cease to have effect, and the Commissioner shall be entitled to recover tax, if the taxpayer does not adhere to the hearing schedule for the appeal, as determined by the Appellate Tribunal in accordance with the rules made under sub-section (2) of section 130:
Provided also that where an appeal is not decided within the statutory period by the Appellate Tribunal, the stay order under the second proviso shall not cease to have effect till finalization of the appeal by the Appellate Tribunal.
Amendment history (1)
- Sub-section (1) substituted by the Finance Act, 2025. The substituted sub-section
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 132 Disposal of appeals by the Appellate Tribunal
(1) The Appellate Tribunal shall decide the appeal within ninety days of its filing:
Provided that appeals pending before the Appellate Tribunal on the date of commencement of the Tax Laws (Amendment) Act, 2024 (ACT NO. V of 2024), shall be decided within one hundred and eighty days:
Provided further that where an appeal is not decided within the aforesaid period, the Appellate Tribunal shall seek condonation from the Minister of Law and Justice and such condonation shall not extend beyond ninety days.
(2) At the first hearing of appeal, the Appellate Tribunal shall —
(a) bring to the notice of the taxpayer, the provisions relating to alternative dispute resolution under section 134A of this Ordinance; and (b) if the taxpayer declines the option of alternative dispute resolution and wishes to continue with the appeal, fix date or dates for hearing and decision of the appeal in consultation with the taxpayer and Commissioner and in accordance with the rules.
(3) The Appellate Tribunal shall ensure strict adherence by the taxpayer and the Commissioner, to the hearing schedule as prescribed, and shall hear and decide the appeal on the date or dates fixed, and no adjournment shall be granted, except —
(a) where there are compelling reasons for adjournment, to be recorded by the Appellate Tribunal; and (b) on mandatory payment of such cost as the Appellate Tribunal may deem fit, which shall not be less than fifty thousand rupees.
(4) Where the appeal relates to an assessment order, the Appellate Tribunal may, without prejudice to the powers specified in sub-section (3), make an order to —
(a) affirm, modify or annul the assessment order;
(b) remand the case to the Commissioner for making such enquiry or taking such action as the Tribunal may direct; or (c) make such order as the Appellate Tribunal may deem fit.
(5) The Appellate Tribunal shall not increase the amount of any assessment or penalty or decrease the amount of any refund unless the taxpayer has been given a reasonable opportunity of showing cause against such increase or decrease, as the case may be.
(6) Where, as the result of an appeal, any change is made in the assessment of an association of persons or a new assessment of an association of persons is ordered to be made, the Appellate Tribunal may authorize the Commissioner to amend accordingly any assessment order made on a member of the association and the time limit in sub-section (2) of section 122 shall not apply to the making of such amended assessment.
(7) Where the appeal relates to a decision other than in respect of an assessment, the Appellate Tribunal may make an order to affirm, vary or annul the decision, and issue such consequential directions as the case may require.
(8) The Appellate Tribunal shall communicate its order to the taxpayer and the Commissioner.
(9) Save as provided in section 133, the decision of the Appellate Tribunal on an appeal shall be final.
Provided that appeals pending before the Appellate Tribunal on the date of commencement of the Tax Laws (Amendment) Act, 2024 (ACT NO. V of 2024), shall be decided within one hundred and eighty days:
Provided further that where an appeal is not decided within the aforesaid period, the Appellate Tribunal shall seek condonation from the Minister of Law and Justice and such condonation shall not extend beyond ninety days.
(2) At the first hearing of appeal, the Appellate Tribunal shall —
(a) bring to the notice of the taxpayer, the provisions relating to alternative dispute resolution under section 134A of this Ordinance; and (b) if the taxpayer declines the option of alternative dispute resolution and wishes to continue with the appeal, fix date or dates for hearing and decision of the appeal in consultation with the taxpayer and Commissioner and in accordance with the rules.
(3) The Appellate Tribunal shall ensure strict adherence by the taxpayer and the Commissioner, to the hearing schedule as prescribed, and shall hear and decide the appeal on the date or dates fixed, and no adjournment shall be granted, except —
(a) where there are compelling reasons for adjournment, to be recorded by the Appellate Tribunal; and (b) on mandatory payment of such cost as the Appellate Tribunal may deem fit, which shall not be less than fifty thousand rupees.
(4) Where the appeal relates to an assessment order, the Appellate Tribunal may, without prejudice to the powers specified in sub-section (3), make an order to —
(a) affirm, modify or annul the assessment order;
(b) remand the case to the Commissioner for making such enquiry or taking such action as the Tribunal may direct; or (c) make such order as the Appellate Tribunal may deem fit.
(5) The Appellate Tribunal shall not increase the amount of any assessment or penalty or decrease the amount of any refund unless the taxpayer has been given a reasonable opportunity of showing cause against such increase or decrease, as the case may be.
(6) Where, as the result of an appeal, any change is made in the assessment of an association of persons or a new assessment of an association of persons is ordered to be made, the Appellate Tribunal may authorize the Commissioner to amend accordingly any assessment order made on a member of the association and the time limit in sub-section (2) of section 122 shall not apply to the making of such amended assessment.
(7) Where the appeal relates to a decision other than in respect of an assessment, the Appellate Tribunal may make an order to affirm, vary or annul the decision, and issue such consequential directions as the case may require.
(8) The Appellate Tribunal shall communicate its order to the taxpayer and the Commissioner.
(9) Save as provided in section 133, the decision of the Appellate Tribunal on an appeal shall be final.
Amendment history (6)
- Section 133 substituted by the Finance Act, 2005. The original section 133
- The word “Within” substituted by the Finance Act, 2024.
- The expression “Subject to section 126A, within thirty” substituted by the Finance Act, 2025.
- The expression “or, as the case may be, the Commissioner (Appeals)” omitted by the Finance Act,
- The expression “or a mixed question of law and facts” omitted by the Finance Act, 2025.
- Expression inserted by the Finance Act, 2024.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 133 Reference to High Court
(1) Within sixty days of the communication of the order of the Appellate Tribunal , the aggrieved person or the Commissioner may file a reference, in the prescribed form along with a statement of the case, before the High Court, stating any question of law arising out of such order:
Provided that the applicant shall also file complete record of the Appellate Tribunal within fifteen days of preferring an application under this section.
(2) The statement to the High Court referred to in sub-section (1), shall set out the facts, the determination of the Appellate Tribunal and the question of law which arises out of its order.
(3) Where, on an application made under sub-section (1), the High Court is satisfied that a question of law arises out of such order referred to in sub- section (1), it may proceed to hear the case.
(4) A reference to the High Court under this section shall be heard by Special Bench or the Special Benches, as the case may be, to be constituted by the Chief Justice, as deemed necessary for hearing cases under this section, comprising of not less than two judges of the High Court and, in respect of the reference, the provisions of section 98 of the Code of Civil Procedure, 1908 (Act V of 1908), shall apply, so far as may be, notwithstanding anything contained in any other law for the time being in force.
(5) The Special Bench shall decide a reference within six months from the date of its filing.
(6) The High Court shall establish a case management system to ensure that sufficient number of Special Benches are constituted, so as to ensure that a reference filed under this section is decided within the stipulated six months.
(7) The High Court upon hearing a reference under this section shall decide the question of law raised by the reference and pass judgment thereon specifying the grounds on which such judgment is based and the Appellate Tribunal's order shall stand modified accordingly.
(8) The High Court shall send a copy of the judgment under the seal of the High Court to the Appellate Tribunal .
(9) Notwithstanding that a reference has been made to the High Court, the tax shall be payable in accordance with the order of the Appellate Tribunal :
Provided that the tax recovery shall not be made by the Commissioner for thirty days from the date of communication of the order of the Appellate Tribunal :
Provided further that, if the amount of tax is reduced as a result of the judgment in the reference by the High Court and some amount of tax is found to be refundable, the High Court may, on application by the Commissioner within thirty days of the receipt of the judgment of the High Court that he wants to prefer petition for leave to appeal to the Supreme Court, make an order authorizing the Commissioner to postpone the refund until the disposal of the appeal by the Supreme Court.
(10) On an application filed in a particular reference and after affording an opportunity of being heard to the Commissioner, the High Court may stay recovery of tax, subject to deposit with the assessing authority of not less than thirty percent of the tax determined by the Appellate Tribunal . Where recovery of tax has been stayed by the High Court by an order, such order shall cease to have effect on the expiration of a period of six months following the day on which it was made unless the reference is decided or such order is withdrawn by the High Court earlier.
(11) Section 5 of the Limitation Act, 1908 (IX of 1908), shall apply to an application made to the High Court under sub-section (1).
(12) An application under sub-section (1) , by the aggrieved person other than the Commissioner, shall be accompanied by a fee of fifty thousand rupees.
(13) No application filed by the Commissioner under subsection (1) shall be entertained unless it is accompanied by a written authorization by the relevant Chief Commissioner.
Provided that the applicant shall also file complete record of the Appellate Tribunal within fifteen days of preferring an application under this section.
(2) The statement to the High Court referred to in sub-section (1), shall set out the facts, the determination of the Appellate Tribunal and the question of law which arises out of its order.
(3) Where, on an application made under sub-section (1), the High Court is satisfied that a question of law arises out of such order referred to in sub- section (1), it may proceed to hear the case.
(4) A reference to the High Court under this section shall be heard by Special Bench or the Special Benches, as the case may be, to be constituted by the Chief Justice, as deemed necessary for hearing cases under this section, comprising of not less than two judges of the High Court and, in respect of the reference, the provisions of section 98 of the Code of Civil Procedure, 1908 (Act V of 1908), shall apply, so far as may be, notwithstanding anything contained in any other law for the time being in force.
(5) The Special Bench shall decide a reference within six months from the date of its filing.
(6) The High Court shall establish a case management system to ensure that sufficient number of Special Benches are constituted, so as to ensure that a reference filed under this section is decided within the stipulated six months.
(7) The High Court upon hearing a reference under this section shall decide the question of law raised by the reference and pass judgment thereon specifying the grounds on which such judgment is based and the Appellate Tribunal's order shall stand modified accordingly.
(8) The High Court shall send a copy of the judgment under the seal of the High Court to the Appellate Tribunal .
(9) Notwithstanding that a reference has been made to the High Court, the tax shall be payable in accordance with the order of the Appellate Tribunal :
Provided that the tax recovery shall not be made by the Commissioner for thirty days from the date of communication of the order of the Appellate Tribunal :
Provided further that, if the amount of tax is reduced as a result of the judgment in the reference by the High Court and some amount of tax is found to be refundable, the High Court may, on application by the Commissioner within thirty days of the receipt of the judgment of the High Court that he wants to prefer petition for leave to appeal to the Supreme Court, make an order authorizing the Commissioner to postpone the refund until the disposal of the appeal by the Supreme Court.
(10) On an application filed in a particular reference and after affording an opportunity of being heard to the Commissioner, the High Court may stay recovery of tax, subject to deposit with the assessing authority of not less than thirty percent of the tax determined by the Appellate Tribunal . Where recovery of tax has been stayed by the High Court by an order, such order shall cease to have effect on the expiration of a period of six months following the day on which it was made unless the reference is decided or such order is withdrawn by the High Court earlier.
(11) Section 5 of the Limitation Act, 1908 (IX of 1908), shall apply to an application made to the High Court under sub-section (1).
(12) An application under sub-section (1) , by the aggrieved person other than the Commissioner, shall be accompanied by a fee of fifty thousand rupees.
(13) No application filed by the Commissioner under subsection (1) shall be entertained unless it is accompanied by a written authorization by the relevant Chief Commissioner.
Amendment history (8)
- The word “Within” substituted by the Finance Act, 2024.
- The expression “Subject to section 126A, within thirty” substituted by the Finance Act, 2025.
- The expression “or, as the case may be, the Commissioner (Appeals)” omitted by the Finance Act,
- The expression “or a mixed question of law and facts” omitted by the Finance Act, 2025.
- Expression inserted by the Finance Act, 2024.
- Explanation added by the Finance Act, 2024.
- Explanation omitted by the Finance Act, 2025. The omitted Explanation
- 1Section 133A inserted by the Finance Act, 2026.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 133A Independent case scrutiny committee
(1) A reference under section 133 of this Ordinance before the High Court or an appeal or review before the Federal Constitutional Court or the Supreme Court of Pakistan shall only be filed by the Commissioner Inland Revenue after the same has been approved by an independent case scrutiny committee as constituted by the Board.
(2) The Board may constitute one or more such committees and assign them cases or classes of cases decided by the Appellate Tribunal Inland Revenue or the High Court, as the case may be.
(3) The Committee shall comprise of the following Members as nominated by the Board –
(a) a retired judge of the Supreme Court of Pakistan, the Federal Constitutional Court, or any of the High Courts of Pakistan who shall also act as Chairman of the Committee;
(b) an Advocate having not less than fifteen years of experience in tax and commercial litigation before the High Court or Supreme Court of Pakistan, to be nominated from a panel notified by the Board from time to time; and (c) a senior serving or retired officer of the FBR (BS 20 or above):
Provided that the committee may co-opt a chartered accountant as a non-voting member, whenever required.
(4) The powers, functions and procedure of the committee along with remuneration of its Members shall be governed as may be prescribed by the Board.
(5) Recommendations of the committee shall be binding upon the Commissioner Inland Revenue having jurisdiction over the case.
(6) Notwithstanding anything contained in any other law for the time being in force, no suit, prosecution or other legal proceedings shall lie against the Members of the committee and the Commissioner Inland Revenue having jurisdiction over the case, in relation to the decisions made under this section.
(7) The Committee constituted under this sub-section shall exercise its powers and functions with effect from the date of its constitution as notified by the Board.
(8) Notwithstanding anything contained in this Ordinance or the Limitation Act, 1908 (IX of 1908), for purposes of determining whether a matter referred to in sub-section (1) has been filed within time, the period from the date from which time begins to run to the date on which the committee gives it approval, which period shall in each case be certified by the chairman, shall stand excluded:
Provided that in cases where time has already begun to run when this section comes into force the period as aforesaid shall commence from the date on which the Finance Act, 2026 comes into force.
(2) The Board may constitute one or more such committees and assign them cases or classes of cases decided by the Appellate Tribunal Inland Revenue or the High Court, as the case may be.
(3) The Committee shall comprise of the following Members as nominated by the Board –
(a) a retired judge of the Supreme Court of Pakistan, the Federal Constitutional Court, or any of the High Courts of Pakistan who shall also act as Chairman of the Committee;
(b) an Advocate having not less than fifteen years of experience in tax and commercial litigation before the High Court or Supreme Court of Pakistan, to be nominated from a panel notified by the Board from time to time; and (c) a senior serving or retired officer of the FBR (BS 20 or above):
Provided that the committee may co-opt a chartered accountant as a non-voting member, whenever required.
(4) The powers, functions and procedure of the committee along with remuneration of its Members shall be governed as may be prescribed by the Board.
(5) Recommendations of the committee shall be binding upon the Commissioner Inland Revenue having jurisdiction over the case.
(6) Notwithstanding anything contained in any other law for the time being in force, no suit, prosecution or other legal proceedings shall lie against the Members of the committee and the Commissioner Inland Revenue having jurisdiction over the case, in relation to the decisions made under this section.
(7) The Committee constituted under this sub-section shall exercise its powers and functions with effect from the date of its constitution as notified by the Board.
(8) Notwithstanding anything contained in this Ordinance or the Limitation Act, 1908 (IX of 1908), for purposes of determining whether a matter referred to in sub-section (1) has been filed within time, the period from the date from which time begins to run to the date on which the committee gives it approval, which period shall in each case be certified by the chairman, shall stand excluded:
Provided that in cases where time has already begun to run when this section comes into force the period as aforesaid shall commence from the date on which the Finance Act, 2026 comes into force.
Amendment history (4)
- 1Section 133A inserted by the Finance Act, 2026.
- Section 134 omitted by the Finance Act, 2005. The omitted section 134
- The section 134A substituted by the Finance Act 2020 dated 30 June, 2020, the substituted section
- Section 134A substituted by the Finance Act, 2023. The Substituted section
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 134 Omitted by Finance Act, 2005Omitted
Omitted by Finance Act, 2005
s. 134A Alternative Dispute Resolution
(1) Notwithstanding anything contained in this Ordinance, or the rules made thereunder, an aggrieved person in connection with any dispute pertaining to —
(a) the liability of tax of fifty million rupees or above or admissibility of refund, as the case may be;
(b) the extent of waiver of default surcharge and penalty; or (c) other specific relief required to resolve the dispute, may apply, except where criminal proceedings have been initiated, to the Board for the appointment of an alternative dispute resolution committee Committee under this section for the resolution of any dispute:
Provided that where the aggrieved person is a state-owned enterprise SOE, the limit of tax liability mentioned in clause (a) of sub-section (1) shall not apply and it shall be mandatory for such aggrieved SOE to apply to the Board for the appointment of a Committee for the resolution of any dispute under this section:
Provided further that no suit, prosecution, or other legal proceedings shall lie against the SOE or the Committee in relation to the dispute resolved under this section. Explanation.—State-owned enterprise shall have the same meaning as assigned thereto in the State-Owned Enterprises (Governance and Operations) Act, 2023 (VII of 2023).
(2) The application for alternative dispute resolution under sub-section (1) shall be accompanied by –
(a) initial proposition for resolution of the dispute; and (b) an undertaking that if the applicant accepts the decision of the Committee, it shall be binding on him in all respects and shall on receipt of the decision within fifteen days withdraw any and all pending cases of any kind in respect of the dispute, mentioning details thereof:
Provided that in case of SOE which is, directly or indirectly, wholly owned by the Federal Government, the decision of the Committee shall be final and binding on the Commissioner and the SOE.
(3) The Chairman of the Board, after examination of the application of an aggrieved person, appoint a committee, within fifteen days of receipt of such application by the Board, comprising, –
(a) a retired judge of a High Court, the Federal Constitutional Court or the Supreme Court having adequate experience in dealing with tax or commercial matters, who shall also be the Chairperson of the Committee, to be nominated by the Chairman of the Board from a panel of three names proposed by the nominee of the taxpayer under clause (c) of this sub-section. In case the Chairman disagrees with the names proposed by the persons nominated by the taxpayer in terms of clause (c), the Chairman of the Board shall require the nominees appointed under clause (b) and (c) to propose one name each of a retired judge of a High Court, the Federal Constitutional Court or the Supreme Court having adequate experience in dealing with tax or commercial matters, whereupon the Chairman shall forward such names to the Federal Minister for Law and Justice for nomination of one of such person as Chairperson of the Committee;
(b) an officer of the Inland Revenue not below BS 21, other than, the Chief Commissioner Inland Revenue having jurisdiction over the case; and (c) a person to be nominated by the taxpayer from amongst –
(i) accountants within the meaning of the Chartered Accountants Ordinance, 1961 (X of 1961); or (ii) cost and management accountants within the meaning of the Cost and Management Accountant Act, 1966 (Act No. XIV of 1966); or (iii) advocates having a minimum of fifteen years’ experience in the field of taxation or commercial matters; or (iv) officers of the Inland Revenue who retired in BS 21 or above; or (v) businessmen from a list notified by the Board as recommended by the Federation of Pakistan Chamber of Commerce and Industry:
Provided that the taxpayer shall not nominate a chartered accountant or an advocate if the said chartered accountant or the advocate is or has been an auditor or an authorized representative of the taxpayer.
(4) The Chairman of the Board shall communicate the order of appointment of Committee to the aggrieved person, court of law or Appellate Tribunal or tax authority where dispute is pending and to the Commissioner concerned.
(5) The Committee appointed under sub-section (3) shall examine the issue and may, if it deems necessary, conduct inquiry, seek expert opinion, direct any officer of the Inland Revenue or any other person to conduct an audit and shall decide the dispute by majority, within ninety days of its appointment.
(6) The decision by the Committee under sub-section (5) shall not be cited or taken as a precedent in any other case or in the same case for a different tax year.
(7) The recovery of tax payable by a taxpayer in connection with any dispute for which a Committee has been appointed under sub-section (3) shall be deemed to have been stayed on the constitution of Committee till the final decision or dissolution of the Committee, whichever is earlier.
(8) The decision of the Committee under sub-section (5) shall be binding on the Commissioner when the aggrieved person, being satisfied with the decision, has withdrawn the appeal pending before the court of law or Appellate Tribunal or tax authority in respect of dispute as mentioned in sub-section (1) and has communicated the order of withdrawal to the Commissioner:
Provided that if the order of withdrawal is not communicated to the Commissioner within sixty days of the service of decision of the Committee upon the aggrieved person, the decision of the Committee shall not be binding on the Commissioner.
(9) Subject to sub-section (10), the Commissioner shall also withdraw the appeal, if any, pending before any court of law or Appellate Tribunal or tax authority in respect of dispute as mentioned in sub-section (1) within thirty days of the communication of the order of withdrawal by the aggrieved person to the Commissioner.
(10) The aggrieved person shall make the payment of income tax and other taxes and within such time as decided by the Committee under sub-section (5) and all decisions and orders made or passed shall stand modified to that extent.
(10A) Notwithstanding the dissolution of the committee, the committee may, by an order in writing, rectify any mistake apparent from the record on its own motion or any mistake brought to its notice by the taxpayer or the Commissioner, within thirty days of the receipt of the decision of the committee by the taxpayer or the Commissioner, as the case may be.
(11) If the Committee fails to decide within the period of ninety days under sub-section (5), the Chairman of the Board shall dissolve the Committee by an order in writing and the matter shall be decided by the court of law or Appellate Tribunal or tax authority, as the case may be:
Provided that in case of SOE, except an SOE, which is, directly or indirectly, wholly owned by the Federal Government, either party may prefer an appeal to the Federal Constitutional Court or the Supreme Court, as the case may be, within a period of sixty days against a decision of the Committee or where no decision is made, upon receiving order of dissolution of the Committee :
Provided further that where, at any stage of the proceedings, any member of the committee becomes unavailable or is unable to perform his functions for any reason whatsoever, the Chairman of the Board shall, within fifteen days of the occurrence of such vacancy, appoint another person in accordance with the provisions of subsection (3) of this section to fill such vacancy, and the committee so reconstituted shall continue to function subject to the same terms, conditions and limitations as were applicable to the original committee:
Provided also that upon such reconstitution, the committee shall be allowed a further period of sixty days to conclude the proceedings and perform its functions under this section:
Provided also that the total period available to the committee, including the period already consumed prior to such reconstitution, shall in no case be less than ninety days from the date of its original constitution.
(12) All petitions filed by the SOEs, directly or indirectly, wholly owned by the Federal Government, against the decision of the Committee made prior to commencement of the Income Tax (Amendment) Act, 2026 (Act No. IX of 2026) and pending before the Federal Constitutional Court, the Supreme Court or a High Court shall, upon commencement of the Income Tax (Amendment) Act, 2026 (Act No. IX of 2026), abate.
(13) Notwithstanding anything contained in sub-section (12), petitions filed by SOEs, which are not wholly owned by the Federal Government, against the decision of the Committee made prior to commencement of the Income Tax (Amendment) Act, 2026 (Act No. IX of 2026) and pending before a High Court, shall upon commencement of the Income Tax (Amendment) Act, 2026 (Act No. IX of 2026) abate:
Provided that such SOEs may prefer an appeal to the Federal Constitutional Court or the Supreme Court, as the case may be, against the decision of the Committee, within a period of sixty days from commencement of the Income Tax (Amendment) Act, 2026 (Act No. IX of 2026).
(14) The Chairman of the Board shall communicate the order of dissolution of the Committee to the aggrieved person, the Commissioner concerned and the court of law or Appellate Tribunal or tax authority, where the case was previously pending.
(15) On receipt of the order of dissolution, the court of law or Appellate Tribunal or tax authority, as the case may be, shall decide the case within ninety days of the communication of the said order.
(16) The Board may, from time to time, prescribe the amount to be paid as remuneration to the Chairperson of the Committee, which remuneration shall be paid by the Board and the taxpayer equally within a period of fifteen days from the constitution of the Committee under sub-section (3).
(17) The taxpayer shall be responsible for remuneration of a nominee under clause (c) of sub-section (3).
(18) Notwithstanding anything contained in this section: -
(a) The Federal Constitutional Court, the Supreme Court or a High Court, on its own motion or on the application of either party, may refer the dispute pending before it to the Board for resolution by the Committee to be appointed under sub- section (3):
Provided that where both parties agree to refer the dispute for resolution by the Committee, the court of law or Appellate Tribunal or tax authority seized of the dispute shall record the consent of both the parties and shall refer the dispute to the Board for appointment of the Committee under sub-section (3):
Provided further that all disputes of SOEs pending before any court of law or Appellate Tribunal or tax authority shall stand transferred to the Board for resolution by the Committee to be appointed under sub-section (3) upon commencement of the Income Tax (Amendment) Act, 2026 (Act No. IX of 2026); and (b) whenever any dispute is referred or transferred under clause (a) for resolution by the Committee, the Board shall within fifteen days from the date of such order or transfer, appoint the Committee under sub-section (3).
(19) The provisions of the Income Tax (Amendment) Act, 2026 (Act No. IX of 2026) shall be subject to the provisions of section 6 of the General Clauses Act, 1897 (X of 1897) provided that the applicant including a SOE may make a fresh application for reconstitution of the Committee in accordance with the provisions of the Income Tax (Amendment) Act, 2026 (Act No. IX of 2026), if the Committee has not rendered its decision prior to its enactment.
(20) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.
(a) the liability of tax of fifty million rupees or above or admissibility of refund, as the case may be;
(b) the extent of waiver of default surcharge and penalty; or (c) other specific relief required to resolve the dispute, may apply, except where criminal proceedings have been initiated, to the Board for the appointment of an alternative dispute resolution committee Committee under this section for the resolution of any dispute:
Provided that where the aggrieved person is a state-owned enterprise SOE, the limit of tax liability mentioned in clause (a) of sub-section (1) shall not apply and it shall be mandatory for such aggrieved SOE to apply to the Board for the appointment of a Committee for the resolution of any dispute under this section:
Provided further that no suit, prosecution, or other legal proceedings shall lie against the SOE or the Committee in relation to the dispute resolved under this section. Explanation.—State-owned enterprise shall have the same meaning as assigned thereto in the State-Owned Enterprises (Governance and Operations) Act, 2023 (VII of 2023).
(2) The application for alternative dispute resolution under sub-section (1) shall be accompanied by –
(a) initial proposition for resolution of the dispute; and (b) an undertaking that if the applicant accepts the decision of the Committee, it shall be binding on him in all respects and shall on receipt of the decision within fifteen days withdraw any and all pending cases of any kind in respect of the dispute, mentioning details thereof:
Provided that in case of SOE which is, directly or indirectly, wholly owned by the Federal Government, the decision of the Committee shall be final and binding on the Commissioner and the SOE.
(3) The Chairman of the Board, after examination of the application of an aggrieved person, appoint a committee, within fifteen days of receipt of such application by the Board, comprising, –
(a) a retired judge of a High Court, the Federal Constitutional Court or the Supreme Court having adequate experience in dealing with tax or commercial matters, who shall also be the Chairperson of the Committee, to be nominated by the Chairman of the Board from a panel of three names proposed by the nominee of the taxpayer under clause (c) of this sub-section. In case the Chairman disagrees with the names proposed by the persons nominated by the taxpayer in terms of clause (c), the Chairman of the Board shall require the nominees appointed under clause (b) and (c) to propose one name each of a retired judge of a High Court, the Federal Constitutional Court or the Supreme Court having adequate experience in dealing with tax or commercial matters, whereupon the Chairman shall forward such names to the Federal Minister for Law and Justice for nomination of one of such person as Chairperson of the Committee;
(b) an officer of the Inland Revenue not below BS 21, other than, the Chief Commissioner Inland Revenue having jurisdiction over the case; and (c) a person to be nominated by the taxpayer from amongst –
(i) accountants within the meaning of the Chartered Accountants Ordinance, 1961 (X of 1961); or (ii) cost and management accountants within the meaning of the Cost and Management Accountant Act, 1966 (Act No. XIV of 1966); or (iii) advocates having a minimum of fifteen years’ experience in the field of taxation or commercial matters; or (iv) officers of the Inland Revenue who retired in BS 21 or above; or (v) businessmen from a list notified by the Board as recommended by the Federation of Pakistan Chamber of Commerce and Industry:
Provided that the taxpayer shall not nominate a chartered accountant or an advocate if the said chartered accountant or the advocate is or has been an auditor or an authorized representative of the taxpayer.
(4) The Chairman of the Board shall communicate the order of appointment of Committee to the aggrieved person, court of law or Appellate Tribunal or tax authority where dispute is pending and to the Commissioner concerned.
(5) The Committee appointed under sub-section (3) shall examine the issue and may, if it deems necessary, conduct inquiry, seek expert opinion, direct any officer of the Inland Revenue or any other person to conduct an audit and shall decide the dispute by majority, within ninety days of its appointment.
(6) The decision by the Committee under sub-section (5) shall not be cited or taken as a precedent in any other case or in the same case for a different tax year.
(7) The recovery of tax payable by a taxpayer in connection with any dispute for which a Committee has been appointed under sub-section (3) shall be deemed to have been stayed on the constitution of Committee till the final decision or dissolution of the Committee, whichever is earlier.
(8) The decision of the Committee under sub-section (5) shall be binding on the Commissioner when the aggrieved person, being satisfied with the decision, has withdrawn the appeal pending before the court of law or Appellate Tribunal or tax authority in respect of dispute as mentioned in sub-section (1) and has communicated the order of withdrawal to the Commissioner:
Provided that if the order of withdrawal is not communicated to the Commissioner within sixty days of the service of decision of the Committee upon the aggrieved person, the decision of the Committee shall not be binding on the Commissioner.
(9) Subject to sub-section (10), the Commissioner shall also withdraw the appeal, if any, pending before any court of law or Appellate Tribunal or tax authority in respect of dispute as mentioned in sub-section (1) within thirty days of the communication of the order of withdrawal by the aggrieved person to the Commissioner.
(10) The aggrieved person shall make the payment of income tax and other taxes and within such time as decided by the Committee under sub-section (5) and all decisions and orders made or passed shall stand modified to that extent.
(10A) Notwithstanding the dissolution of the committee, the committee may, by an order in writing, rectify any mistake apparent from the record on its own motion or any mistake brought to its notice by the taxpayer or the Commissioner, within thirty days of the receipt of the decision of the committee by the taxpayer or the Commissioner, as the case may be.
(11) If the Committee fails to decide within the period of ninety days under sub-section (5), the Chairman of the Board shall dissolve the Committee by an order in writing and the matter shall be decided by the court of law or Appellate Tribunal or tax authority, as the case may be:
Provided that in case of SOE, except an SOE, which is, directly or indirectly, wholly owned by the Federal Government, either party may prefer an appeal to the Federal Constitutional Court or the Supreme Court, as the case may be, within a period of sixty days against a decision of the Committee or where no decision is made, upon receiving order of dissolution of the Committee :
Provided further that where, at any stage of the proceedings, any member of the committee becomes unavailable or is unable to perform his functions for any reason whatsoever, the Chairman of the Board shall, within fifteen days of the occurrence of such vacancy, appoint another person in accordance with the provisions of subsection (3) of this section to fill such vacancy, and the committee so reconstituted shall continue to function subject to the same terms, conditions and limitations as were applicable to the original committee:
Provided also that upon such reconstitution, the committee shall be allowed a further period of sixty days to conclude the proceedings and perform its functions under this section:
Provided also that the total period available to the committee, including the period already consumed prior to such reconstitution, shall in no case be less than ninety days from the date of its original constitution.
(12) All petitions filed by the SOEs, directly or indirectly, wholly owned by the Federal Government, against the decision of the Committee made prior to commencement of the Income Tax (Amendment) Act, 2026 (Act No. IX of 2026) and pending before the Federal Constitutional Court, the Supreme Court or a High Court shall, upon commencement of the Income Tax (Amendment) Act, 2026 (Act No. IX of 2026), abate.
(13) Notwithstanding anything contained in sub-section (12), petitions filed by SOEs, which are not wholly owned by the Federal Government, against the decision of the Committee made prior to commencement of the Income Tax (Amendment) Act, 2026 (Act No. IX of 2026) and pending before a High Court, shall upon commencement of the Income Tax (Amendment) Act, 2026 (Act No. IX of 2026) abate:
Provided that such SOEs may prefer an appeal to the Federal Constitutional Court or the Supreme Court, as the case may be, against the decision of the Committee, within a period of sixty days from commencement of the Income Tax (Amendment) Act, 2026 (Act No. IX of 2026).
(14) The Chairman of the Board shall communicate the order of dissolution of the Committee to the aggrieved person, the Commissioner concerned and the court of law or Appellate Tribunal or tax authority, where the case was previously pending.
(15) On receipt of the order of dissolution, the court of law or Appellate Tribunal or tax authority, as the case may be, shall decide the case within ninety days of the communication of the said order.
(16) The Board may, from time to time, prescribe the amount to be paid as remuneration to the Chairperson of the Committee, which remuneration shall be paid by the Board and the taxpayer equally within a period of fifteen days from the constitution of the Committee under sub-section (3).
(17) The taxpayer shall be responsible for remuneration of a nominee under clause (c) of sub-section (3).
(18) Notwithstanding anything contained in this section: -
(a) The Federal Constitutional Court, the Supreme Court or a High Court, on its own motion or on the application of either party, may refer the dispute pending before it to the Board for resolution by the Committee to be appointed under sub- section (3):
Provided that where both parties agree to refer the dispute for resolution by the Committee, the court of law or Appellate Tribunal or tax authority seized of the dispute shall record the consent of both the parties and shall refer the dispute to the Board for appointment of the Committee under sub-section (3):
Provided further that all disputes of SOEs pending before any court of law or Appellate Tribunal or tax authority shall stand transferred to the Board for resolution by the Committee to be appointed under sub-section (3) upon commencement of the Income Tax (Amendment) Act, 2026 (Act No. IX of 2026); and (b) whenever any dispute is referred or transferred under clause (a) for resolution by the Committee, the Board shall within fifteen days from the date of such order or transfer, appoint the Committee under sub-section (3).
(19) The provisions of the Income Tax (Amendment) Act, 2026 (Act No. IX of 2026) shall be subject to the provisions of section 6 of the General Clauses Act, 1897 (X of 1897) provided that the applicant including a SOE may make a fresh application for reconstitution of the Committee in accordance with the provisions of the Income Tax (Amendment) Act, 2026 (Act No. IX of 2026), if the Committee has not rendered its decision prior to its enactment.
(20) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.
Amendment history (3)
- 1Sub-section (10A) inserted by the Finance Act, 2026.
- 2Full stop substituted and provisos added by the Finance Act, 2026.
- 1Section 134B inserted by the Finance Act, 2026.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 134B Algorithmic settlement mechanism
(1) Notwithstanding anything contained in this Ordinance, the Board may establish digitally operated algorithmic settlement mechanism (hereinafter referred to as the mechanism) for settlement of tax proceedings at any stage before any assessment or amendment of assessment order under sections 121, 122 or 122E of this Ordinance through revision of return under subsection (6) of section 114 in certain cases.
(2) In case the mechanism calculates and presents to the taxpayer a settlement offer for voluntary revision of return as per the criteria provided under sub-section (3), the taxpayer may avail the offer as provided in sub-section (4).
(3) The system generated settlement offer shall be calculated on the basis including but not limited to—
(a) the stage of proceedings at which settlement is offered;
(b) the taxpayer‘s compliance history, as maintained in FBR‘s data;
(c) the nature and character of the discrepancy, including whether it involves a valuation or legal interpretation dispute, unexplained income or assets, or concealment; and (d) any other basis the Board may consider relevant to ensure revenue adequacy and equitable treatment of taxpayers.
(4) A taxpayer who opts to avail this mechanism shall, within ten days from the date of settlement offer to—
(a) accept the settlement offer on IRIS;
(b) deposit the settlement offer amount along with revised return; and (c) revise the relevant return of income to incorporate the settled amount.
(5) The issues confronted to the taxpayer through notice of selection of audit, a notice under section 111, an audit report under sub-section (6) of section 177, a notice under sub-section (9) of section 122, as the case may be, shall stand abated, if the taxpayer revises the return by accepting the offer as provided in sub-section (4).
(6) Revision of return consequent upon acceptance of offer under sub-section (4) of this section shall not preclude proceedings in respect of any other issue or discrepancy not covered by the settlement offer, nor shall it affect proceedings for any other tax year.
(2) In case the mechanism calculates and presents to the taxpayer a settlement offer for voluntary revision of return as per the criteria provided under sub-section (3), the taxpayer may avail the offer as provided in sub-section (4).
(3) The system generated settlement offer shall be calculated on the basis including but not limited to—
(a) the stage of proceedings at which settlement is offered;
(b) the taxpayer‘s compliance history, as maintained in FBR‘s data;
(c) the nature and character of the discrepancy, including whether it involves a valuation or legal interpretation dispute, unexplained income or assets, or concealment; and (d) any other basis the Board may consider relevant to ensure revenue adequacy and equitable treatment of taxpayers.
(4) A taxpayer who opts to avail this mechanism shall, within ten days from the date of settlement offer to—
(a) accept the settlement offer on IRIS;
(b) deposit the settlement offer amount along with revised return; and (c) revise the relevant return of income to incorporate the settled amount.
(5) The issues confronted to the taxpayer through notice of selection of audit, a notice under section 111, an audit report under sub-section (6) of section 177, a notice under sub-section (9) of section 122, as the case may be, shall stand abated, if the taxpayer revises the return by accepting the offer as provided in sub-section (4).
(6) Revision of return consequent upon acceptance of offer under sub-section (4) of this section shall not preclude proceedings in respect of any other issue or discrepancy not covered by the settlement offer, nor shall it affect proceedings for any other tax year.
Amendment history (1)
- 1Section 134B inserted by the Finance Act, 2026.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 135 Omitted by the Finance Ordinance, 2002Omitted
Omitted by the Finance Ordinance, 2002
s. 136 Burden of proof
Burden of proof.— In any appeal by a taxpayer under this Part, the burden shall be on the taxpayer to prove, on the balance of probabilities —
(a) in the case of an assessment order, the extent to which the order does not correctly reflect the taxpayer’s tax liability for the tax year; or (b) in the case of any other decision, that the decision is erroneous. PART IV COLLECTION AND RECOVERY OF TAX
(a) in the case of an assessment order, the extent to which the order does not correctly reflect the taxpayer’s tax liability for the tax year; or (b) in the case of any other decision, that the decision is erroneous. PART IV COLLECTION AND RECOVERY OF TAX
Amendment history (14)
- Inserted by the Finance Act, 2003.
- Inserted by the Finance Act, 2003. Earlier this was inserted by S.R.O. 633(I)/2002, dated 14.09.2002
- The words and figure “section 113 or” omitted by the Finance Act, 2008.
- Inserted by the Finance Act, 2004.
- Inserted by the Finance Act, 2009.
- Substituted by the Finance Act, 2003. The substituted sub-section (2)
- The word “thirty” substituted by the Finance Act, 2008.
- The word “fifteen” substituted by the Finance Act, 2015.
- Full stop substituted by the Finance Act, 2018
- substituted by the Finance Act, 2017.
- Added by the Finance Act, 2018.
- Added by the Finance Act, 2010.
- Proviso omitted by the Finance Act, 2017. The omitted provision
- Added by the Finance Act, 2012.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 137 Due date for payment of tax
(1) The tax payable by a taxpayer on the taxable income of the taxpayer including the tax payable under section 113 or 113A for a tax year shall be due on the due date for furnishing the taxpayer’s return of income for that year.
(2) Where any tax is payable under an assessment order or an amended assessment order or any other order issued by the Commissioner under this Ordinance, a notice shall be served upon the taxpayer in the prescribed form specifying the amount payable and thereupon the sum so specified shall be paid within thirty days from the date of service of the notice :
Provided that the due date for payment of tax payable under sub- section (7) of section 147 shall be the date specified in sub-section (5) or sub-section (5A) or first proviso to sub-section (5B) of section 147.
(3) Nothing in sub-section (2) or (4) shall affect the operation of sub- section (1).
(4) Upon written application by a taxpayer, the Commissioner may, where good cause is shown, grant the taxpayer an extension of time for payment of tax due under sub-section (2) or allow the taxpayer to pay such tax in instalments of equal or varying amounts as the Commissioner may determine having regard to the circumstances of the case.
(5) Where a taxpayer is permitted to pay tax by instalments and the taxpayer defaults in payment of any instalments, the whole balance of the tax outstanding shall become immediately payable.
(6) The grant of an extension of time to pay tax due or the grant of permission to pay tax due by instalments shall not preclude the liability for default surcharge arising under section 205 from the due date of the tax under sub- section (2) .
(2) Where any tax is payable under an assessment order or an amended assessment order or any other order issued by the Commissioner under this Ordinance, a notice shall be served upon the taxpayer in the prescribed form specifying the amount payable and thereupon the sum so specified shall be paid within thirty days from the date of service of the notice :
Provided that the due date for payment of tax payable under sub- section (7) of section 147 shall be the date specified in sub-section (5) or sub-section (5A) or first proviso to sub-section (5B) of section 147.
(3) Nothing in sub-section (2) or (4) shall affect the operation of sub- section (1).
(4) Upon written application by a taxpayer, the Commissioner may, where good cause is shown, grant the taxpayer an extension of time for payment of tax due under sub-section (2) or allow the taxpayer to pay such tax in instalments of equal or varying amounts as the Commissioner may determine having regard to the circumstances of the case.
(5) Where a taxpayer is permitted to pay tax by instalments and the taxpayer defaults in payment of any instalments, the whole balance of the tax outstanding shall become immediately payable.
(6) The grant of an extension of time to pay tax due or the grant of permission to pay tax due by instalments shall not preclude the liability for default surcharge arising under section 205 from the due date of the tax under sub- section (2) .
Amendment history (19)
- Inserted by the Finance Act, 2003. Earlier this was inserted by S.R.O. 633(I)/2002, dated 14.09.2002
- The words and figure “section 113 or” omitted by the Finance Act, 2008.
- Inserted by the Finance Act, 2004.
- Inserted by the Finance Act, 2009.
- Substituted by the Finance Act, 2003. The substituted sub-section (2)
- The word “thirty” substituted by the Finance Act, 2008.
- The word “fifteen” substituted by the Finance Act, 2015.
- Full stop substituted by the Finance Act, 2018
- substituted by the Finance Act, 2017.
- Added by the Finance Act, 2018.
- Added by the Finance Act, 2010.
- Proviso omitted by the Finance Act, 2017. The omitted provision
- Added by the Finance Act, 2012.
- Inserted by the Finance Act, 2003.
- The words “any tax due” substituted by the Finance Act, 2003.
- The word s “additional tax” substituted by the Finance Act, 2010.
- The brackets and figure “(1)” substituted by the Finance Act, 2003.
- Sub-section (7) omitted by the Finance Act, 2002. The omitted sub-section (7) read as under
- Section 138 substituted by Finance Act, 2002. The substituted section 138
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 138 Recovery of tax out of property and through arrest of taxpayer
(1) For the purpose of recovering any tax due by a taxpayer, the Commissioner may serve upon the taxpayer a notice in the prescribed form requiring him to pay the said amount within such time as may be specified in the notice.
(2) If the amount referred to in the notice issued under sub-section (1) is not paid within the time specified therein or within the further time, if any, allowed by the Commissioner, the Commissioner may proceed to recover from the taxpayer the said amount by one or more of the following modes, namely:—
(a) attachment and sale of any movable or immovable property of the taxpayer;
(b) appointment of a receiver for the management of the movable or immovable property of the taxpayer;
(c) arrest of the taxpayer and his detention in prison for a period not exceeding six months ; and (d) as specified under clauses (a),
(ca) and (d) of sub-section (I) of section 48 of the Sales Tax Act, 1990.
(3) For the purposes of recovery of tax under sub-section (2), the Commissioner shall have the same powers as a Civil Court has under the Code of Civil Procedure, 1908 (Act V of 1908), for the purposes of the recovery of any amount due under a decree.
(3A) Notwithstanding anything contained in this Ordinance or any other law or any rule, any decision or judgment of any court, forum or authority, the tax payable under any provision of this Ordinance or any assessment order shall become immediately payable subject to the following conditions —
(a) that the case has been decided in the favor of the department at three appellate forums including the High Court;
(b) that the recovery under this section shall only be made to the extent of lowest amount of demand which has been confirmed by any of the three appellate forums; and (c) that the tax payable exceeds rupees two hundred million, and the Commissioner shall proceed to recover the said amount irrespective of the time provided under any other provision or the said decision or judgment.
(4) The Board may make rules regulating the procedure for the recovery of tax under this section and any other matter connected with, or incidental to, the operation of this section.
(2) If the amount referred to in the notice issued under sub-section (1) is not paid within the time specified therein or within the further time, if any, allowed by the Commissioner, the Commissioner may proceed to recover from the taxpayer the said amount by one or more of the following modes, namely:—
(a) attachment and sale of any movable or immovable property of the taxpayer;
(b) appointment of a receiver for the management of the movable or immovable property of the taxpayer;
(c) arrest of the taxpayer and his detention in prison for a period not exceeding six months ; and (d) as specified under clauses (a),
(ca) and (d) of sub-section (I) of section 48 of the Sales Tax Act, 1990.
(3) For the purposes of recovery of tax under sub-section (2), the Commissioner shall have the same powers as a Civil Court has under the Code of Civil Procedure, 1908 (Act V of 1908), for the purposes of the recovery of any amount due under a decree.
(3A) Notwithstanding anything contained in this Ordinance or any other law or any rule, any decision or judgment of any court, forum or authority, the tax payable under any provision of this Ordinance or any assessment order shall become immediately payable subject to the following conditions —
(a) that the case has been decided in the favor of the department at three appellate forums including the High Court;
(b) that the recovery under this section shall only be made to the extent of lowest amount of demand which has been confirmed by any of the three appellate forums; and (c) that the tax payable exceeds rupees two hundred million, and the Commissioner shall proceed to recover the said amount irrespective of the time provided under any other provision or the said decision or judgment.
(4) The Board may make rules regulating the procedure for the recovery of tax under this section and any other matter connected with, or incidental to, the operation of this section.
Amendment history (13)
- Inserted by the Finance Act, 2003. Earlier this was inserted by S.R.O. 633(I)/2002, dated 14.09.2002
- Inserted by the Finance Act, 2003.
- The words “any tax due” substituted by the Finance Act, 2003.
- The word s “additional tax” substituted by the Finance Act, 2010.
- The brackets and figure “(1)” substituted by the Finance Act, 2003.
- Sub-section (7) omitted by the Finance Act, 2002. The omitted sub-section (7) read as under
- Section 138 substituted by Finance Act, 2002. The substituted section 138
- The word “and” omitted through Finance Act, 2020 dated 30 June, 2020
- Sub-section (3A) inserted by the Finance Act, 2025.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Inserted by the Finance Act, 2002.
- Added by the Finance Act, 2010.
- The expression “Companies Ordinance, 1984 (XLVII of 1984)” substituted by the Finance Act, 2021.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 138A Recovery of tax by District Officer (Revenue)
(1) The Commissioner may forward to the District Officer (Revenue) of the district in which the taxpayer resides or carries on business or in which any property belonging to the taxpayer is situated, a certificate specifying the amount of any tax due from the taxpayer, and, on receipt of such certificate, the District Officer (Revenue) shall proceed to recover from the taxpayer the amount so specified as, it were an arrear of land revenue.
(2) Without prejudice to any other power of the District Officer (Revenue) in this behalf, he shall have the same powers as a Civil Court has under the Code of Civil Procedure, 1908 (Act V of 1908), for the purpose of the recovery of the amount due under a decree.
(2) Without prejudice to any other power of the District Officer (Revenue) in this behalf, he shall have the same powers as a Civil Court has under the Code of Civil Procedure, 1908 (Act V of 1908), for the purpose of the recovery of the amount due under a decree.
Amendment history (3)
- Inserted by the Finance Act, 2002.
- Added by the Finance Act, 2010.
- The expression “Companies Ordinance, 1984 (XLVII of 1984)” substituted by the Finance Act, 2021.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 138B Estate in bankruptcy
(1) If a taxpayer is declared bankrupt, the tax liability under this Ordinance shall pass on to the estate in bankruptcy.
(2) If tax liability is incurred by an estate in bankruptcy, the tax shall be deemed to be a current expenditure in the operations of the estate in bankruptcy and shall be paid before the claims preferred by other creditors are settled.
(2) If tax liability is incurred by an estate in bankruptcy, the tax shall be deemed to be a current expenditure in the operations of the estate in bankruptcy and shall be paid before the claims preferred by other creditors are settled.
Amendment history (3)
- Inserted by the Finance Act, 2002.
- Added by the Finance Act, 2010.
- The expression “Companies Ordinance, 1984 (XLVII of 1984)” substituted by the Finance Act, 2021.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 139 Collection of tax in the case of private companies and associations of persons
(1) Notwithstanding anything in the Companies Act, 2017 (XIX of 2017) , where any tax payable by a private company (including a private company that has been wound up or gone into liquidation) in respect of any tax year cannot be recovered from the company, every person who was, at any time in that tax year —
(a) a director of the company, other than an employed director; or (b) a shareholder in the company owning not less than ten per cent of the paid-up capital of the company, shall be jointly and severally liable for payment of the tax due by the company.
(2) Any director who pays tax under sub-section (1) shall be entitled to recover the tax paid from the company or a share of the tax from any other director.
(3) A shareholder who pays tax under sub-section (1) shall be entitled to recover the tax paid from the company or from any other shareholder to whom clause (b) of sub-section (1) applies in proportion to the shares owned by that other shareholder.
(4) Notwithstanding anything in any law, where any tax payable by a member of an association of persons in respect of the member’s share of the income of the association in respect of any tax year cannot be recovered from the member, the association shall be liable for the tax due by the member.
(5) Notwithstanding anything contained in any other law, for the time being in force, where any tax payable by an association of persons in respect of any tax year cannot be recovered from the association of persons, every person who was, at any time in that year, a member of the association of persons, shall be jointly and severally liable for payment of the tax due by the association of persons.
(6) Any member who pays tax under sub-section (5) shall be entitled to recover the tax paid from the association of persons or a share of the tax from any other member.
(7) The provisions of this Ordinance shall apply to any amount due under this section as if it were tax due under an assessment order.
(a) a director of the company, other than an employed director; or (b) a shareholder in the company owning not less than ten per cent of the paid-up capital of the company, shall be jointly and severally liable for payment of the tax due by the company.
(2) Any director who pays tax under sub-section (1) shall be entitled to recover the tax paid from the company or a share of the tax from any other director.
(3) A shareholder who pays tax under sub-section (1) shall be entitled to recover the tax paid from the company or from any other shareholder to whom clause (b) of sub-section (1) applies in proportion to the shares owned by that other shareholder.
(4) Notwithstanding anything in any law, where any tax payable by a member of an association of persons in respect of the member’s share of the income of the association in respect of any tax year cannot be recovered from the member, the association shall be liable for the tax due by the member.
(5) Notwithstanding anything contained in any other law, for the time being in force, where any tax payable by an association of persons in respect of any tax year cannot be recovered from the association of persons, every person who was, at any time in that year, a member of the association of persons, shall be jointly and severally liable for payment of the tax due by the association of persons.
(6) Any member who pays tax under sub-section (5) shall be entitled to recover the tax paid from the association of persons or a share of the tax from any other member.
(7) The provisions of this Ordinance shall apply to any amount due under this section as if it were tax due under an assessment order.
Amendment history (8)
- Inserted by the Finance Act, 2002.
- Added by the Finance Act, 2010.
- The expression “Companies Ordinance, 1984 (XLVII of 1984)” substituted by the Finance Act, 2021.
- New sub-sections (5) and (6) inserted through Finance Act, 2019.
- Sub-section (5) re-numbered as sub-section (7) through Finance Act, 2019.
- Full-stop substituted by the Finance Act, 2016.
- Added by the Finance Act, 2016.
- The expression “twenty-five” substituted by the Finance Act, 2018
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 140 Recovery of tax from persons holding money on behalf of a taxpayer
(1) For the purpose of recovering any tax due by a taxpayer, the Commissioner may, by notice, in writing, require any person –
(a) owing or who may owe money to the taxpayer; or (b) holding or who may hold money for, or on account of the taxpayer;
(c) holding or who may hold money on account of some other person for payment to the taxpayer; or (d) having authority of some other person to pay money to the taxpayer, to pay to the Commissioner so much of the money as set out in the notice by the date set out in the notice :
Provided that the Commissioner shall not issue notice under this sub-section for recovery of any tax due from a taxpayer if the said taxpayer has filed an appeal under section 127 in respect of the order under which the tax sought to be recovered has become payable and the appeal has not been decided by the Commissioner (Appeals), subject to the condition that ten per cent of the said amount of tax due has been paid by the taxpayer.
(2) Subject to sub-section (3), the amount set out in a notice under sub- section (1) —
(a) where the amount of the money is equal to or less than the amount of tax due by the taxpayer, shall not exceed the amount of the money; or (b) in any other case, shall be so much of the money as is sufficient to pay the amount of tax due by the taxpayer.
(3) Where a person is liable to make a series of payments (such as salary) to a taxpayer, a notice under sub-section (1) may specify an amount to be paid out of each payment until the amount of tax due by the taxpayer has been paid.
(4) The date for payment specified in a notice under sub-section (1) shall not be a date before the money becomes payable to the taxpayer or held on the taxpayer’s behalf.
(5) The provisions of sections 160, 161, 162 and 163, so far as may be, shall apply to an amount due under this section as if the amount were required to be deducted from a payment under Division III of Part V of this Chapter.
(6) Any person who has paid any amount in compliance with a notice under sub-section (1) shall be treated as having paid such amount under the authority of the taxpayer and the receipt of the Commissioner constitutes a good and sufficient discharge of the liability of such person to the taxpayer to the extent of the amount referred to in such receipt.
(6A) Notwithstanding anything contained in this Ordinance or any other law or any rule, any decision or judgment of any court, forum or authority, the tax payable under any provision of this Ordinance or any assessment order shall become immediately payable subject to the following conditions —
(a) that the case has been decided in the favor of the department at three appellate forums including the High Court;
(b) that the recovery under this section shall only be made to the extent of lowest amount of demand which has been confirmed by any of the three appellate forums; and (c) that the tax payable exceeds rupees two hundred million, and the Commissioner shall proceed to recover the said amount irrespective of the time provided under any other provision or the said decision or judgment.
(10) In this section, "person" includes any Court, Tribunal or any other authority.
(a) owing or who may owe money to the taxpayer; or (b) holding or who may hold money for, or on account of the taxpayer;
(c) holding or who may hold money on account of some other person for payment to the taxpayer; or (d) having authority of some other person to pay money to the taxpayer, to pay to the Commissioner so much of the money as set out in the notice by the date set out in the notice :
Provided that the Commissioner shall not issue notice under this sub-section for recovery of any tax due from a taxpayer if the said taxpayer has filed an appeal under section 127 in respect of the order under which the tax sought to be recovered has become payable and the appeal has not been decided by the Commissioner (Appeals), subject to the condition that ten per cent of the said amount of tax due has been paid by the taxpayer.
(2) Subject to sub-section (3), the amount set out in a notice under sub- section (1) —
(a) where the amount of the money is equal to or less than the amount of tax due by the taxpayer, shall not exceed the amount of the money; or (b) in any other case, shall be so much of the money as is sufficient to pay the amount of tax due by the taxpayer.
(3) Where a person is liable to make a series of payments (such as salary) to a taxpayer, a notice under sub-section (1) may specify an amount to be paid out of each payment until the amount of tax due by the taxpayer has been paid.
(4) The date for payment specified in a notice under sub-section (1) shall not be a date before the money becomes payable to the taxpayer or held on the taxpayer’s behalf.
(5) The provisions of sections 160, 161, 162 and 163, so far as may be, shall apply to an amount due under this section as if the amount were required to be deducted from a payment under Division III of Part V of this Chapter.
(6) Any person who has paid any amount in compliance with a notice under sub-section (1) shall be treated as having paid such amount under the authority of the taxpayer and the receipt of the Commissioner constitutes a good and sufficient discharge of the liability of such person to the taxpayer to the extent of the amount referred to in such receipt.
(6A) Notwithstanding anything contained in this Ordinance or any other law or any rule, any decision or judgment of any court, forum or authority, the tax payable under any provision of this Ordinance or any assessment order shall become immediately payable subject to the following conditions —
(a) that the case has been decided in the favor of the department at three appellate forums including the High Court;
(b) that the recovery under this section shall only be made to the extent of lowest amount of demand which has been confirmed by any of the three appellate forums; and (c) that the tax payable exceeds rupees two hundred million, and the Commissioner shall proceed to recover the said amount irrespective of the time provided under any other provision or the said decision or judgment.
(10) In this section, "person" includes any Court, Tribunal or any other authority.
Amendment history (9)
- New sub-sections (5) and (6) inserted through Finance Act, 2019.
- Sub-section (5) re-numbered as sub-section (7) through Finance Act, 2019.
- Full-stop substituted by the Finance Act, 2016.
- Added by the Finance Act, 2016.
- The expression “twenty-five” substituted by the Finance Act, 2018
- Sub-section (6A) inserted by the Finance Act, 2025.
- Sub-section (7) omitted by the Finance Act, 2003. The omitted sub-section (7)
- Sub-section (8) omitted by the Finance Act, 2003. The omitted sub-section (8)
- Sub-section (9) omitted by the Finance Act, 2003. The omitted sub-section (9)
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 141 Liquidators
(1) Every person (hereinafter referred to as a liquidator) who is –
(a) a liquidator of a company;
(b) a receiver appointed by a Court or appointed out of Court;
(c) a trustee for a bankrupt; or (d) a mortgagee in possession, shall, within fourteen days of being appointed or taking possession of an asset in Pakistan, whichever occurs first, give written notice thereof to the Commissioner.
(2) The Commissioner shall, within three months of being notified under sub-section (1), notify the liquidator in writing of the amount which appears to the Commissioner to be sufficient to provide for any tax which is or will become payable by the person whose assets are in the possession of the liquidator.
(3) A liquidator shall not, without leave of the Commissioner, part with any asset held as liquidator until the liquidator has been notified under sub-section (2).
(4) A liquidator —
(a) shall set aside, out of the proceeds of sale of any asset by the liquidator, the amount notified by the Commissioner under sub- section (2), or such lesser amount as is subsequently agreed to by the Commissioner;
(b) shall be liable to the extent of the amount set aside for the tax of the person who owned the asset; and (c) may pay any debt that has priority over the tax referred to in this section notwithstanding any provision of this section.
(5) A liquidator shall be personally liable to the extent of any amount required to be set aside under sub-section (4) for the tax referred to in sub-section (2) if, and to the extent that, the liquidator fails to comply with the requirements of this section.
(6) Where the proceeds of sale of any asset are less than the amount notified by the Commissioner under sub-section (2), the application of sub-sections
(4) and (5) shall be limited to the proceeds of sale.
(7) This section shall have effect notwithstanding anything contained in any other law for the time being in force.
(8) The provisions of this Ordinance shall apply to any amount due under this section as if it were tax due under an assessment order.
(a) a liquidator of a company;
(b) a receiver appointed by a Court or appointed out of Court;
(c) a trustee for a bankrupt; or (d) a mortgagee in possession, shall, within fourteen days of being appointed or taking possession of an asset in Pakistan, whichever occurs first, give written notice thereof to the Commissioner.
(2) The Commissioner shall, within three months of being notified under sub-section (1), notify the liquidator in writing of the amount which appears to the Commissioner to be sufficient to provide for any tax which is or will become payable by the person whose assets are in the possession of the liquidator.
(3) A liquidator shall not, without leave of the Commissioner, part with any asset held as liquidator until the liquidator has been notified under sub-section (2).
(4) A liquidator —
(a) shall set aside, out of the proceeds of sale of any asset by the liquidator, the amount notified by the Commissioner under sub- section (2), or such lesser amount as is subsequently agreed to by the Commissioner;
(b) shall be liable to the extent of the amount set aside for the tax of the person who owned the asset; and (c) may pay any debt that has priority over the tax referred to in this section notwithstanding any provision of this section.
(5) A liquidator shall be personally liable to the extent of any amount required to be set aside under sub-section (4) for the tax referred to in sub-section (2) if, and to the extent that, the liquidator fails to comply with the requirements of this section.
(6) Where the proceeds of sale of any asset are less than the amount notified by the Commissioner under sub-section (2), the application of sub-sections
(4) and (5) shall be limited to the proceeds of sale.
(7) This section shall have effect notwithstanding anything contained in any other law for the time being in force.
(8) The provisions of this Ordinance shall apply to any amount due under this section as if it were tax due under an assessment order.
Amendment history (5)
- Sub-section (7) omitted by the Finance Act, 2003. The omitted sub-section (7)
- Sub-section (8) omitted by the Finance Act, 2003. The omitted sub-section (8)
- Sub-section (9) omitted by the Finance Act, 2003. The omitted sub-section (9)
- Expression inserted by the Finance Act, 2026.
- Sub-sections (1A) and (1B) inserted by the Finance Act, 2026.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 142 Recovery of tax due by non-resident member of an association of persons
(1) The tax due by a non-resident member of an association of persons in respect of the member’s share of the profits of the association shall be assessable in the name of the association or of any resident member of the association and may be recovered out of the assets of the association or from the resident member personally.
(2) A person making a payment under this section shall be treated as acting under the authority of the non-resident member and is hereby indemnified in respect of the payment against all proceedings, civil or criminal, and all processes, judicial or extra-judicial, notwithstanding any provisions to the contrary in any written law, contract or agreement.
(3) The provisions of this Ordinance shall apply to any amount due under this section as if it were tax due under an assessment order.
(2) A person making a payment under this section shall be treated as acting under the authority of the non-resident member and is hereby indemnified in respect of the payment against all proceedings, civil or criminal, and all processes, judicial or extra-judicial, notwithstanding any provisions to the contrary in any written law, contract or agreement.
(3) The provisions of this Ordinance shall apply to any amount due under this section as if it were tax due under an assessment order.
Amendment history (2)
- Expression inserted by the Finance Act, 2026.
- Sub-sections (1A) and (1B) inserted by the Finance Act, 2026.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 143 Non-resident ship owner or charterer
(1) Before the departure of a ship owned or chartered by a non-resident person from any port in Pakistan, the master of the ship , or the authorised shipping agent as defined in clause (6A) of section 2, shall furnish to the Commissioner a return showing the gross amount specified in sub-section (1) of section 7 in respect of the ship.
(1A) Notwithstanding anything contained in this Ordinance, only one return shall be furnished for each vessel or voyage and such return shall cover the total freight and all related amounts attributable to the ship.
(1B) The master of ship or the authorised shipping agent responsible for manifest filing and freight handling in respect of a vessel shall furnish the return under this section and no other person shall furnish such return for that vessel or voyage.
(2) Where the master of a ship or authorised shipping agent has furnished a return under sub-section (1), the Commissioner shall , after calling for such particulars, accounts or documents as he may require, determine the amount of tax due under section 7 in respect of the ship and, as soon as possible, notify the master or authorised shipping agent , in writing, of the amount payable.
(3) The master of a ship or authorised shipping agent shall be jointly and severally liable for the tax notified under sub-section (2) and the provisions of this Ordinance shall apply to such tax as if it were tax due under an assessment order.
(4) Where the Commissioner is satisfied that the master of a ship or non- resident owner or charterer of the ship or authorised shipping agent is unable to furnish the return required under sub-section (1) before the departure of the ship from a port in Pakistan, the Commissioner may allow the return to be furnished within thirty days of departure of the ship provided the non-resident owner or charterer or authorised shipping agent has made satisfactory arrangements for the payment of the tax due under section 7 in respect of the ship.
(5) The Collector of Customs or other authorised officer shall not grant a port clearance for a ship owned or chartered by a non-resident person until the Collector or officer is satisfied that any tax due under section 7 in respect of the ship has been paid or that arrangements for its payment have been made to the satisfaction of the Commissioner and electronic confirmation of filing of return and payment of tax under this section has been received in the prescribed manner .
(6) This section shall not relieve the non-resident owner or charterer of the ship from liability to pay any tax due under this section that is not paid by the master of the ship or authorised shipping agent .
(1A) Notwithstanding anything contained in this Ordinance, only one return shall be furnished for each vessel or voyage and such return shall cover the total freight and all related amounts attributable to the ship.
(1B) The master of ship or the authorised shipping agent responsible for manifest filing and freight handling in respect of a vessel shall furnish the return under this section and no other person shall furnish such return for that vessel or voyage.
(2) Where the master of a ship or authorised shipping agent has furnished a return under sub-section (1), the Commissioner shall , after calling for such particulars, accounts or documents as he may require, determine the amount of tax due under section 7 in respect of the ship and, as soon as possible, notify the master or authorised shipping agent , in writing, of the amount payable.
(3) The master of a ship or authorised shipping agent shall be jointly and severally liable for the tax notified under sub-section (2) and the provisions of this Ordinance shall apply to such tax as if it were tax due under an assessment order.
(4) Where the Commissioner is satisfied that the master of a ship or non- resident owner or charterer of the ship or authorised shipping agent is unable to furnish the return required under sub-section (1) before the departure of the ship from a port in Pakistan, the Commissioner may allow the return to be furnished within thirty days of departure of the ship provided the non-resident owner or charterer or authorised shipping agent has made satisfactory arrangements for the payment of the tax due under section 7 in respect of the ship.
(5) The Collector of Customs or other authorised officer shall not grant a port clearance for a ship owned or chartered by a non-resident person until the Collector or officer is satisfied that any tax due under section 7 in respect of the ship has been paid or that arrangements for its payment have been made to the satisfaction of the Commissioner and electronic confirmation of filing of return and payment of tax under this section has been received in the prescribed manner .
(6) This section shall not relieve the non-resident owner or charterer of the ship from liability to pay any tax due under this section that is not paid by the master of the ship or authorised shipping agent .
Amendment history (6)
- Expression inserted by the Finance Act, 2026.
- Sub-sections (1A) and (1B) inserted by the Finance Act, 2026.
- Inserted by the Finance Act, 2002.
- Words inserted by the Finance Act, 2026.
- The words “shall be” substituted by the Finance Act, 2026.
- The words “shall be” omitted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 144 Non-resident aircraft owner or charterer
(1) A non-resident owner or charterer of an aircraft liable for tax under section 7, or an agent authorised by the non-resident person for this purpose, shall furnish to the Commissioner, within forty- five days from the last day of each quarter of the financial year, a return, in respect of the quarter, showing the gross amount specified in sub-section (1) of section 7 of the non-resident person for the quarter.
(2) Where a return has been furnished under sub-section (1), the Commissioner shall , after calling for such particulars, accounts or documents as he may require, determine the amount of tax due under section 7 by the non- resident person for the quarter and notify the non-resident person, in writing, of the amount payable.
(3) The non-resident person shall be liable to pay the tax notified under sub-section (2) within the time specified in the notice and the provisions of this Ordinance shall apply to such tax as if it were tax due under an assessment order.
(4) Where the tax referred to in sub-section (3) is not paid within three months of service of the notice, the Commissioner may issue to the authority by whom clearance may be granted to the aircraft operated by the non-resident person a certificate specifying the name of the non-resident person and the amount of tax due.
(5) The authority to whom a certificate is issued under sub-section (4) shall refuse clearance from any airport in Pakistan to any aircraft owned or chartered by the non-resident until the tax due has been paid.
(2) Where a return has been furnished under sub-section (1), the Commissioner shall , after calling for such particulars, accounts or documents as he may require, determine the amount of tax due under section 7 by the non- resident person for the quarter and notify the non-resident person, in writing, of the amount payable.
(3) The non-resident person shall be liable to pay the tax notified under sub-section (2) within the time specified in the notice and the provisions of this Ordinance shall apply to such tax as if it were tax due under an assessment order.
(4) Where the tax referred to in sub-section (3) is not paid within three months of service of the notice, the Commissioner may issue to the authority by whom clearance may be granted to the aircraft operated by the non-resident person a certificate specifying the name of the non-resident person and the amount of tax due.
(5) The authority to whom a certificate is issued under sub-section (4) shall refuse clearance from any airport in Pakistan to any aircraft owned or chartered by the non-resident until the tax due has been paid.
Amendment history (7)
- Expression inserted by the Finance Act, 2026.
- Inserted by the Finance Act, 2002.
- Words inserted by the Finance Act, 2026.
- The words “shall be” substituted by the Finance Act, 2026.
- The words “shall be” omitted by the Finance Act, 2003.
- Inserted by the Finance Act, 2002
- Section 145 substituted by the Finance Act, 2003. The substituted section 145
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 145 Assessment of persons about to leave Pakistan
(1) Where any person is likely to leave Pakistan during the currency of tax year or shortly after its expiry with no intention of returning to Pakistan, he shall give to the Commissioner a notice to that effect not less than fifteen days before the probable date of his departure (hereinafter in this section referred to as the ‘said date’).
(2) The notice under sub-section (1) shall be accompanied by a return or returns of taxable income in respect of the period commencing from the end of the latest tax year for which an assessment has been or, where no such assessment has been made, a return has been made, as the case may be, and ending on the said date, or where no such assessment or return has been made, the tax year or tax years comprising the period ending on the said date; and the period commencing from the end of the latest tax year to the said date shall, for the purposes of this section, be deemed to be a tax year (distinct and separate from any other tax year) in which the said date falls.
(3) Notwithstanding anything contained in sub-sections
(1) and (2), the Commissioner may serve a notice on any person who, in his opinion, is likely to leave Pakistan during the current tax year or shortly after its expiry and has no intention of returning to Pakistan, to furnish within such time as may be specified in such notice, a return or returns of taxable income for the tax year or tax years for which the taxpayer is required to furnish such return or returns under sub-section (2).
(4) The taxable income shall be charged to tax at the rates applicable to the relevant tax year and all the provisions of this Ordinance shall, so far as may be, apply accordingly.
(5) Notwithstanding anything contained in any other law, for the time being in force, where on the basis of information received from any offshore jurisdiction, the Commissioner has reason to believe that such person who is likely to leave Pakistan may be involved in offshore tax evasion or such person is about to dispose of any such asset, the Commissioner may freeze any domestic asset of the person including any asset beneficially owned by the person for a period of one hundred and twenty days or till the finalization of proceeding including but not limited to recovery proceedings under this Ordinance whichever is earlier.
(2) The notice under sub-section (1) shall be accompanied by a return or returns of taxable income in respect of the period commencing from the end of the latest tax year for which an assessment has been or, where no such assessment has been made, a return has been made, as the case may be, and ending on the said date, or where no such assessment or return has been made, the tax year or tax years comprising the period ending on the said date; and the period commencing from the end of the latest tax year to the said date shall, for the purposes of this section, be deemed to be a tax year (distinct and separate from any other tax year) in which the said date falls.
(3) Notwithstanding anything contained in sub-sections
(1) and (2), the Commissioner may serve a notice on any person who, in his opinion, is likely to leave Pakistan during the current tax year or shortly after its expiry and has no intention of returning to Pakistan, to furnish within such time as may be specified in such notice, a return or returns of taxable income for the tax year or tax years for which the taxpayer is required to furnish such return or returns under sub-section (2).
(4) The taxable income shall be charged to tax at the rates applicable to the relevant tax year and all the provisions of this Ordinance shall, so far as may be, apply accordingly.
(5) Notwithstanding anything contained in any other law, for the time being in force, where on the basis of information received from any offshore jurisdiction, the Commissioner has reason to believe that such person who is likely to leave Pakistan may be involved in offshore tax evasion or such person is about to dispose of any such asset, the Commissioner may freeze any domestic asset of the person including any asset beneficially owned by the person for a period of one hundred and twenty days or till the finalization of proceeding including but not limited to recovery proceedings under this Ordinance whichever is earlier.
Amendment history (5)
- Inserted by the Finance Act, 2002
- Section 145 substituted by the Finance Act, 2003. The substituted section 145
- New sub-section (5) added through Finance Act, 2019.
- Inserted by the Finance Act, 2017.
- Inserted by the Finance Act 2017.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 146 Recovery of tax from persons assessed in Azad Jammu and Kashmir
(1) Where any person assessed to tax for any tax year under the law relating to income tax in the Azad Jammu and Kashmir or Gilgit- Baltistan has failed to pay the tax and the income tax authorities of the Azad Jammu and Kashmir or Gilgit-Baltistan cannot recover the tax because —
(a) the person’s resi44dence is in Pakistan; or (b) the person has no movable or immovable property in the Azad Jammu and Kashmir or Gilgit-Baltistan , the Deputy Commissioner in the Azad Jammu and Kashmir or Gilgit-Baltistan may forward a certificate of recovery to the Commissioner and, on receipt of such certificate, the Commissioner shall recover the tax referred to in the certificate in accordance with this Part.
(2) A certificate of recovery under sub-section (1) shall be in the prescribed form specifying —
(a) the place of residence of the person in Pakistan;
(b) the description and location of movable or immovable property of the person in Pakistan; and (c) the amount of tax payable by the person.
(a) the person’s resi44dence is in Pakistan; or (b) the person has no movable or immovable property in the Azad Jammu and Kashmir or Gilgit-Baltistan , the Deputy Commissioner in the Azad Jammu and Kashmir or Gilgit-Baltistan may forward a certificate of recovery to the Commissioner and, on receipt of such certificate, the Commissioner shall recover the tax referred to in the certificate in accordance with this Part.
(2) A certificate of recovery under sub-section (1) shall be in the prescribed form specifying —
(a) the place of residence of the person in Pakistan;
(b) the description and location of movable or immovable property of the person in Pakistan; and (c) the amount of tax payable by the person.
Amendment history (6)
- New sub-section (5) added through Finance Act, 2019.
- Inserted by the Finance Act, 2017.
- Inserted by the Finance Act 2017.
- Inserted by the Finance Act, 2002.
- Inserted by the Finance Act, 2008.
- The word “additional tax” substituted by the Finance Act, 2010. The substituted provision has been
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 146A Initiation, validity, etc., of recovery proceedings
(1) Any proceedings for the recovery of tax under this Part may be initiated at any time.
(2) The Commissioner may, at any time, amend the certificate issued under section 138A, or recall such certificate and issue fresh certificate, as he thinks fit.
(3) It shall not be open to a taxpayer to question before the District Officer (Revenue) the validity or correctness of any certificate issued under section 138A, or any such certificate as amended, or any fresh certificate issued, under sub- section (2).
(4) The several modes of recovery provided in this Part shall be deemed to be neither mutually exclusive nor affect in any way any other law for the time being in force relating to the recovery of debts due to the Government and the Commissioner may have recourse to any such mode of recovery notwithstanding that the tax due is being recovered from a taxpayer by any other mode.
(2) The Commissioner may, at any time, amend the certificate issued under section 138A, or recall such certificate and issue fresh certificate, as he thinks fit.
(3) It shall not be open to a taxpayer to question before the District Officer (Revenue) the validity or correctness of any certificate issued under section 138A, or any such certificate as amended, or any fresh certificate issued, under sub- section (2).
(4) The several modes of recovery provided in this Part shall be deemed to be neither mutually exclusive nor affect in any way any other law for the time being in force relating to the recovery of debts due to the Government and the Commissioner may have recourse to any such mode of recovery notwithstanding that the tax due is being recovered from a taxpayer by any other mode.
Amendment history (4)
- Inserted by the Finance Act 2017.
- Inserted by the Finance Act, 2002.
- Inserted by the Finance Act, 2008.
- The word “additional tax” substituted by the Finance Act, 2010. The substituted provision has been
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 146B Tax arrears settlement incentives scheme
(1) Subject to provisions of this Ordinance, the Board may make scheme in respect of recovery of tax arrears or withholding taxes and waiver of default surcharge or penalty levied thereon.
(2) The Board may make rules under section 237 for implementation of such scheme.
(2) The Board may make rules under section 237 for implementation of such scheme.
Amendment history (6)
- Inserted by the Finance Act 2017.
- Inserted by the Finance Act, 2002.
- Inserted by the Finance Act, 2008.
- The word “additional tax” substituted by the Finance Act, 2010. The substituted provision has been
- Section 146C inserted by the Finance Act, 2021.
- Section 146D inserted by the Finance Act, 2023.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 146C Assistance in the recovery and collection of taxes
Assistance in the recovery and collection of taxes.— The provisions of sections 138, 138A, 138B, 139, 140, 141, 142, 143, 144, 145, 146, 146A, and 146B shall mutatis mutandis apply in respect of assistance in collection and recovery of taxes in pursuance of a request from a foreign jurisdiction under a tax treaty, a multilateral convention, an intergovernmental agreement or similar arrangement or mechanism.
Amendment history (2)
- Section 146C inserted by the Finance Act, 2021.
- Section 146D inserted by the Finance Act, 2023.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 146D Recovery of liability outstanding under other laws
(1) Where any outstanding liability in or under any other statute or law for the time being in force enacted through an Act of Parliament, in respect of any defaulter is –
(a) treated as Income Tax arrears in that law;
(b) required to be recovered or collected by Commissioner (Inland Revenue); or (c) is referred to Commissioner (Inland Revenue) for the recovery – the Commissioner (Inland Revenue) shall recover the said liability and deposit the receipts in the designated account specified in that law. PART V ADVANCE TAX AND DEDUCTION OF TAX AT SOURCE Division I Advance Tax Paid by the Taxpayer
(a) treated as Income Tax arrears in that law;
(b) required to be recovered or collected by Commissioner (Inland Revenue); or (c) is referred to Commissioner (Inland Revenue) for the recovery – the Commissioner (Inland Revenue) shall recover the said liability and deposit the receipts in the designated account specified in that law. PART V ADVANCE TAX AND DEDUCTION OF TAX AT SOURCE Division I Advance Tax Paid by the Taxpayer
Amendment history (13)
- Section 146C inserted by the Finance Act, 2021.
- Section 146D inserted by the Finance Act, 2023.
- year” substituted by the Finance Act, 2003.
- Clause (a) omitted by the Finance Act, 2010. Omitted clause (a)
- Clause (ba) omitted by the Finance Act, 2013. The omitted clause (ba)
- The word “or” substituted by the Finance Act, 2009.
- Clause (ca) omitted by the Finance Act, 2009. The omitted clause (ca)
- Inserted by the Finance Act, 2009.
- The words “or association of persons” omitted by the Finance Act, 2010.
- The words “(a), (b),(ba)” substituted by (b) through Finance Act, 2020 dated 30 June, 2020
- The words “one hundred and fifty thousand” substituted by the Finance Act, 2003.
- The word “two” substituted by the Finance Act, 2010.
- The words “five hundred thousand” substituted by the Finance Act, 2017.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 147 Advance tax paid by the taxpayer
(1) Subject to sub-section (2), every taxpayer whose income was charged to tax for the latest tax year under this Ordinance or latest assessment year under the repealed Ordinance other than –
(b) income chargeable to tax under sections 5, 6 and 7;
(c) income subject to deduction of tax at source under section 149; and (d) income from which tax has been collected under Division II or deducted under Division III or deducted or collected under sub-section (3) of section 168, shall be liable to pay advance tax for the year in accordance with this section.
(2) This section does not apply to an individual where the individual’s latest assessed taxable income excluding income referred to in clauses (b),
(c) and (d) of sub-section (1) is less than one million rupees.
(4) Where the taxpayer is an association of persons or a company, the amount of advance tax due for a quarter shall be computed according to the following formula, namely:- (A x B/C) –D Where – A is the taxpayer’s turnover for the quarter :
Provided that where the taxpayer fails to provide turnover or the turnover for the quarter is not known, it shall be taken to be one-fourth of one hundred and twenty percent of the turnover of the latest tax year for which a return has been filed; B is the tax assessed to the taxpayer for the latest tax year Explanation.- For removal of doubt it is clarified that tax assessed includes tax under sections 4C, 113 and 113C. C is the taxpayer’s turnover for the latest tax year; and D is the tax paid in the quarter for which a tax credit is allowed under section 168 .
(4A) Any taxpayer including a banking company who is required to make payment of advance tax in accordance with sub-section (4), shall estimate the tax payable for the relevant tax year, at any time before the second installment is due. In case the tax payable is likely to be more than the amount that the taxpayer including a banking company is required to pay under sub-section (4), the taxpayer including a banking company shall furnish to the Commissioner on or before the due date of the second quarter an estimate of the amount of tax payable by the taxpayer including a banking company and thereafter pay fifty per cent of such amount by the due date of the second quarter of the tax year after making adjustment for the amount, if any, already paid in terms of sub-section (4). The remaining fifty per cent of the estimate shall be paid after the second quarter in two equal installments payable by the due date of the third and fourth quarter of the tax year. (4AA) Tax liability under sections 4C, 113 and 113C shall also be taken into account while working out payment of advance tax liability under this section. ( 4B ) Where the taxpayer is an individual having latest assessed income of one million rupees or more as determined under sub-section (2), the amount of advance tax due for a quarter shall be computed according to the following formula, namely: - (A/4) - B Where – A is the tax assessed to the taxpayer for the latest tax year or latest assessment year under the repealed Ordinance; and B is the tax paid in the quarter for which a tax credit is allowed under section 168, other than tax deducted under section 149 . Explanation. – For removal of doubt, it is clarified that tax assessed includes tax liability under section 4C.
(5) Advance tax is payable by an individual to the Commissioner—
(a) in respect of the September quarter, on or before the 15th day of September ;
(b) in respect of the December quarter, on or before the 15th day of December ;
(c) in respect of the March quarter, on or before the 15th day of March ; and (d) in respect of the June quarter, on or before the 15th day of June .
(5A) Advance tax shall be payable by an association of persons or a company to the Commissioner —
(a) in respect of the September quarter, on or before the 25 day of September;
(b) in respect of the December quarter, on or before the 25 day of December;
(c) in respect of the March quarter, on or before the 25 day of March; and (d) in respect of the June quarter, on or before the 15 day of June.
(5B) Adjustable advance tax on capital gain from sale of securities shall be chargeable as under, namely:— TABLE ________________________________________________________________ S.No. Period Rate of Advance Tax ----------------------------------------------------------------------------------------------------------- 1 2 3 ----------------------------------------------------------------------------------------------------------- 1. Where holding period of a security is less than six months. 2% of the capital gains derived during the quarter. 2. Where holding period of a security is more than six months but less than twelve months. 1.5% of the capital gains derived during the quarter: ------------------------------------------------------------------------------------------------------------
Provided that such advance tax shall be payable to the Commissioner within a period of twenty-one days after the close of each quarter:
Provided further that the provisions of this sub-section shall not be applicable to individual investors.
(5C) Notwithstanding anything contained in this section, every person deriving income from the business of –
(i) construction and disposal of residential, commercial or other buildings; or (ii) development and sale of residential, commercial or other plots for itself or otherwise, shall be liable to pay adjustable advance tax on Project-by-Project basis, as may be prescribed, for the tax year as per the rates specified in Part IIB of the First Schedule in four equal installments:
Provided that such advance tax shall be payable to the Commissioner in accordance with sub-sections
(5) and (5A):
Provided further that the provisions of sub-sections
(7) to
(10) shall mutatis mutandis apply.
(6) If any taxpayer who is required to make payment of advance tax under sub-section (1) estimates at any time before the last installment is due, that the tax payable by him for the relevant tax year is likely to be less than the amount he is required to pay under sub-section (1), the taxpayer may furnish to the Commissioner an estimate of the amount of the tax payable by him, and thereafter pay such estimated amount, as reduced by the amount, if any, already paid under sub-section (1), in equal installments on such dates as have not expired :
Provided that an estimate of the amount of tax payable shall contain turnover for the completed quarters of the relevant tax year, estimated turnover of the remaining quarters along with reasons for any decline in estimated turnover, documentary evidence of estimated expenses or deductions which may result in lower payment of advance tax and the computation of the estimated taxable income of the relevant tax year .
(6A) Notwithstanding anything contained in this section, where the taxpayer is a company or an association of persons, advance tax shall be payable by it in the absence of last assessed income or declared turnover also. The taxpayer shall estimate the amount of advance tax payable on the basis of quarterly turnover of the company or an association of persons, as the case may be, and thereafter pay such amount after, —
(a) taking into account tax payable under sections 113 and 113C as provided in sub-section (4AA); and (b) making adjustment for the amount (if any) already paid.
(6B) Where an estimate of the amount of tax payable has been filed by the taxpayer under sub-section (6) as the case may be, the estimate shall contain turnover for the completed quarters of the relevant tax year, estimated turnover for the remaining quarters, supporting evidence of expenses or deductions in computing income, evidence of tax payments and tax credits and computation of estimated taxable income:
Provided that where the Commissioner is not satisfied with the documentary evidence provided or where an estimate of the amount of tax payable is not accompanied by details mentioned in this sub-section, the Commissioner may reject the estimate after providing an opportunity of being heard to the taxpayer and the taxpayer shall pay advance tax according to the formula set out in sub- section (4) or sub-section (4B), as the case may be.
(7) The provisions of this Ordinance shall apply to any advance tax due under this section as if the amount due were tax due under an assessment order.
(7A) The Board may prescribe the manner for furnishing of the estimate and calculation of the amount of tax payable under this section through Iris or any other automated system specified by the Board.
(8) A taxpayer who has paid advance tax under this section for a tax year shall be allowed a tax credit for that tax in computing the tax due by the taxpayer on the taxable income of the taxpayer for that year.
(9) A tax credit allowed for advance tax paid under this section shall be applied in accordance with sub-section (3) of section 4.
(10) A tax credit or part of a tax credit allowed under this section for a tax year that is not able to be credited under sub-section (3) of section 4 for the year shall be refunded to the taxpayer in accordance with section 170.
(b) income chargeable to tax under sections 5, 6 and 7;
(c) income subject to deduction of tax at source under section 149; and (d) income from which tax has been collected under Division II or deducted under Division III or deducted or collected under sub-section (3) of section 168, shall be liable to pay advance tax for the year in accordance with this section.
(2) This section does not apply to an individual where the individual’s latest assessed taxable income excluding income referred to in clauses (b),
(c) and (d) of sub-section (1) is less than one million rupees.
(4) Where the taxpayer is an association of persons or a company, the amount of advance tax due for a quarter shall be computed according to the following formula, namely:- (A x B/C) –D Where – A is the taxpayer’s turnover for the quarter :
Provided that where the taxpayer fails to provide turnover or the turnover for the quarter is not known, it shall be taken to be one-fourth of one hundred and twenty percent of the turnover of the latest tax year for which a return has been filed; B is the tax assessed to the taxpayer for the latest tax year Explanation.- For removal of doubt it is clarified that tax assessed includes tax under sections 4C, 113 and 113C. C is the taxpayer’s turnover for the latest tax year; and D is the tax paid in the quarter for which a tax credit is allowed under section 168 .
(4A) Any taxpayer including a banking company who is required to make payment of advance tax in accordance with sub-section (4), shall estimate the tax payable for the relevant tax year, at any time before the second installment is due. In case the tax payable is likely to be more than the amount that the taxpayer including a banking company is required to pay under sub-section (4), the taxpayer including a banking company shall furnish to the Commissioner on or before the due date of the second quarter an estimate of the amount of tax payable by the taxpayer including a banking company and thereafter pay fifty per cent of such amount by the due date of the second quarter of the tax year after making adjustment for the amount, if any, already paid in terms of sub-section (4). The remaining fifty per cent of the estimate shall be paid after the second quarter in two equal installments payable by the due date of the third and fourth quarter of the tax year. (4AA) Tax liability under sections 4C, 113 and 113C shall also be taken into account while working out payment of advance tax liability under this section. ( 4B ) Where the taxpayer is an individual having latest assessed income of one million rupees or more as determined under sub-section (2), the amount of advance tax due for a quarter shall be computed according to the following formula, namely: - (A/4) - B Where – A is the tax assessed to the taxpayer for the latest tax year or latest assessment year under the repealed Ordinance; and B is the tax paid in the quarter for which a tax credit is allowed under section 168, other than tax deducted under section 149 . Explanation. – For removal of doubt, it is clarified that tax assessed includes tax liability under section 4C.
(5) Advance tax is payable by an individual to the Commissioner—
(a) in respect of the September quarter, on or before the 15th day of September ;
(b) in respect of the December quarter, on or before the 15th day of December ;
(c) in respect of the March quarter, on or before the 15th day of March ; and (d) in respect of the June quarter, on or before the 15th day of June .
(5A) Advance tax shall be payable by an association of persons or a company to the Commissioner —
(a) in respect of the September quarter, on or before the 25 day of September;
(b) in respect of the December quarter, on or before the 25 day of December;
(c) in respect of the March quarter, on or before the 25 day of March; and (d) in respect of the June quarter, on or before the 15 day of June.
(5B) Adjustable advance tax on capital gain from sale of securities shall be chargeable as under, namely:— TABLE ________________________________________________________________ S.No. Period Rate of Advance Tax ----------------------------------------------------------------------------------------------------------- 1 2 3 ----------------------------------------------------------------------------------------------------------- 1. Where holding period of a security is less than six months. 2% of the capital gains derived during the quarter. 2. Where holding period of a security is more than six months but less than twelve months. 1.5% of the capital gains derived during the quarter: ------------------------------------------------------------------------------------------------------------
Provided that such advance tax shall be payable to the Commissioner within a period of twenty-one days after the close of each quarter:
Provided further that the provisions of this sub-section shall not be applicable to individual investors.
(5C) Notwithstanding anything contained in this section, every person deriving income from the business of –
(i) construction and disposal of residential, commercial or other buildings; or (ii) development and sale of residential, commercial or other plots for itself or otherwise, shall be liable to pay adjustable advance tax on Project-by-Project basis, as may be prescribed, for the tax year as per the rates specified in Part IIB of the First Schedule in four equal installments:
Provided that such advance tax shall be payable to the Commissioner in accordance with sub-sections
(5) and (5A):
Provided further that the provisions of sub-sections
(7) to
(10) shall mutatis mutandis apply.
(6) If any taxpayer who is required to make payment of advance tax under sub-section (1) estimates at any time before the last installment is due, that the tax payable by him for the relevant tax year is likely to be less than the amount he is required to pay under sub-section (1), the taxpayer may furnish to the Commissioner an estimate of the amount of the tax payable by him, and thereafter pay such estimated amount, as reduced by the amount, if any, already paid under sub-section (1), in equal installments on such dates as have not expired :
Provided that an estimate of the amount of tax payable shall contain turnover for the completed quarters of the relevant tax year, estimated turnover of the remaining quarters along with reasons for any decline in estimated turnover, documentary evidence of estimated expenses or deductions which may result in lower payment of advance tax and the computation of the estimated taxable income of the relevant tax year .
(6A) Notwithstanding anything contained in this section, where the taxpayer is a company or an association of persons, advance tax shall be payable by it in the absence of last assessed income or declared turnover also. The taxpayer shall estimate the amount of advance tax payable on the basis of quarterly turnover of the company or an association of persons, as the case may be, and thereafter pay such amount after, —
(a) taking into account tax payable under sections 113 and 113C as provided in sub-section (4AA); and (b) making adjustment for the amount (if any) already paid.
(6B) Where an estimate of the amount of tax payable has been filed by the taxpayer under sub-section (6) as the case may be, the estimate shall contain turnover for the completed quarters of the relevant tax year, estimated turnover for the remaining quarters, supporting evidence of expenses or deductions in computing income, evidence of tax payments and tax credits and computation of estimated taxable income:
Provided that where the Commissioner is not satisfied with the documentary evidence provided or where an estimate of the amount of tax payable is not accompanied by details mentioned in this sub-section, the Commissioner may reject the estimate after providing an opportunity of being heard to the taxpayer and the taxpayer shall pay advance tax according to the formula set out in sub- section (4) or sub-section (4B), as the case may be.
(7) The provisions of this Ordinance shall apply to any advance tax due under this section as if the amount due were tax due under an assessment order.
(7A) The Board may prescribe the manner for furnishing of the estimate and calculation of the amount of tax payable under this section through Iris or any other automated system specified by the Board.
(8) A taxpayer who has paid advance tax under this section for a tax year shall be allowed a tax credit for that tax in computing the tax due by the taxpayer on the taxable income of the taxpayer for that year.
(9) A tax credit allowed for advance tax paid under this section shall be applied in accordance with sub-section (3) of section 4.
(10) A tax credit or part of a tax credit allowed under this section for a tax year that is not able to be credited under sub-section (3) of section 4 for the year shall be refunded to the taxpayer in accordance with section 170.
Amendment history (25)
- year” substituted by the Finance Act, 2003.
- Clause (a) omitted by the Finance Act, 2010. Omitted clause (a)
- Clause (ba) omitted by the Finance Act, 2013. The omitted clause (ba)
- The word “or” substituted by the Finance Act, 2009.
- Clause (ca) omitted by the Finance Act, 2009. The omitted clause (ca)
- Inserted by the Finance Act, 2009.
- The words “or association of persons” omitted by the Finance Act, 2010.
- The words “(a), (b),(ba)” substituted by (b) through Finance Act, 2020 dated 30 June, 2020
- The words “one hundred and fifty thousand” substituted by the Finance Act, 2003.
- The word “two” substituted by the Finance Act, 2010.
- The words “five hundred thousand” substituted by the Finance Act, 2017.
- Sub-section (3) omitted by the Finance Act, 2004. The omitted sub-section (3)
- Sub-section (4) substituted by the Finance Act, 2009. The substituted sub-section (4) read as
- Inserted by the Finance Act, 2010.
- The semi colon substituted by the Finance Act, 2018
- Added by the Finance Act, 2018.
- The word “ten” substituted by the Finance Act, 2024.
- Semicolon substituted by the Finance Act, 2016.
- Added by the Finance Act, 2016.
- Expression inserted by the Finance Act, 2023.
- Sub-section (4A) omitted by Finance Act, 2015. The substituted sub-section
- Inserted by the Finance Act, 2018
- Inserted by the Finance Act, 2018.
- The expression “section 113” substituted by the Finance Act, 2016.
- Inserted by Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 147A Advance tax from provincial sales tax registered person
(1) Every provincial sales tax registered person shall be liable to pay adjustable advance tax at the rate of three per cent of the turnover declared before the provincial revenue authority.
(2) The advance tax under sub-section (1) shall be paid monthly at the time when sales tax return is to be filed with the provincial revenue authority.
(3) Advance tax paid under this section may be taken into account while working out advance tax payable under section 147.
(4) The provisions of this Ordinance shall apply to any advance tax due under this section as if the amount due were tax due under an assessment order.
(5) A taxpayer who has paid advance tax under this section for a tax year shall be allowed a tax credit for that tax in computing the tax due by the taxpayer on the taxable income of the taxpayer for that year.
(6) A tax credit allowed for advance tax paid under this section shall be applied in accordance with sub-section (3) of section 4.
(7) A tax credit or part of a tax credit allowed under this section for a tax year that is not able to be credited under sub-section (3) of section 4 for the year shall be refunded to the taxpayer in accordance with section 170.
(8) This section shall not apply to a person whose name was appearing in the active taxpayers’ list on the thirtieth day of June of the previous tax year. Division II Advance Tax Paid to a Collection Agent
(2) The advance tax under sub-section (1) shall be paid monthly at the time when sales tax return is to be filed with the provincial revenue authority.
(3) Advance tax paid under this section may be taken into account while working out advance tax payable under section 147.
(4) The provisions of this Ordinance shall apply to any advance tax due under this section as if the amount due were tax due under an assessment order.
(5) A taxpayer who has paid advance tax under this section for a tax year shall be allowed a tax credit for that tax in computing the tax due by the taxpayer on the taxable income of the taxpayer for that year.
(6) A tax credit allowed for advance tax paid under this section shall be applied in accordance with sub-section (3) of section 4.
(7) A tax credit or part of a tax credit allowed under this section for a tax year that is not able to be credited under sub-section (3) of section 4 for the year shall be refunded to the taxpayer in accordance with section 170.
(8) This section shall not apply to a person whose name was appearing in the active taxpayers’ list on the thirtieth day of June of the previous tax year. Division II Advance Tax Paid to a Collection Agent
Amendment history (7)
- New sub-section (7A) inserted through Finance Act, 2020 dated 30 June, 2020
- Sub-section (11) omitted by the Finance Act, 2004. The omitted sub-section (11)
- Inserted by the Finance Act, 2016.
- Words “who was filer” substituted from Finance Act, 2019
- The expression inserted through Finance Act, 2020 dated 30 June, 2020
- The “full stop” substituted by “colon” and thereafter proviso added through Finance Act, 2020 dated
- Full stop substituted and a new proviso inserted by the Finance Act, 2025.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 148 Imports
(1) The Collector of Customs shall collect advance tax from every importer of goods on the value of the goods at the rate specified in Part II of the First Schedule in respect of goods classified in Parts I to III of the Twelfth Schedule :
Provided that the Board may, by a notification in the official Gazette, add in the Twelfth Schedule any entry thereto or omit any entry therefrom or amend any entry therein:
Provided further that in case of goods classified under Part III of the Twelfth Schedule which are used both as raw material and finished goods, the Board may, by notification in the official Gazette, specify that goods imported by a person or class of persons as raw material for its own use shall be treated as classified under Part II of the Twelfth Schedule, subject to such conditions and procedure as may be prescribed :
Provided also that the Collector of Customs, shall not collect tax under this section, where the recipient of goods is also liable under the Digital Presence Proceeds tax, Act, 2025 and same has been collected by the payment intermediary as defined in section 153.
(2A) Notwithstanding omission of sub-section (2), any notification issued under the said sub-section and for the time being in force, shall continue to remain in force, unless amended or rescinded by the Board through notification in the official Gazette.;
(5) Advance tax shall be collected in the same manner and at the same time as the customs-duty payable in respect of the import or, if the goods are exempt from customs-duty, at the time customs-duty would be payable if the goods were dutiable.
(6) Subject to sub-section (6A), the provisions of the Customs Act, 1969 (IV of 1969), in so far as relevant, shall apply to the collection of tax under this section.
(6A) The Board may, by notification in the official Gazette, determine the minimum value of goods for the purpose of collection of advance tax under this section.
(7) The tax required to be collected under this section shall be minimum tax on the income of the importer arising from the imports subject to sub-section (1) and this sub-section shall not apply in the case of import of goods on which tax is required to be collected under this section by an industrial undertaking for its own use.
(7A) Notwithstanding anything contained in sub-section (7), the tax required to be collected under this section shall be minimum tax on the income every person arising from imports of following goods –
(i) edible oil;
(ii) packaging material;
(iii) paper and paper board; or (iv) plastics:
Provided that the Board with the approval of Minister in-charge may, by a notification in the official Gazette, add any entry thereto or omit any entry therefrom or amend any entry therein this sub-section.
(9) In this section – Collector of Customs means the person appointed as Collector of Customs under section 3 of the Customs Act, 1969 (IV of 1969), and includes a Deputy Collector of Customs, an Additional Collector of Customs, or an officer of customs appointed as such under the aforesaid section; Value of goods means –
(a) in case of goods chargeable to tax at retail price under the Third Schedule of the Sales Tax Act, 1990, the retail price of such goods increased by sales tax payable in respect of the import and taxable supply of the goods;
(b) in case of goods other than those specified in clauses
(a) and (c) ; the value of the goods as determined under the Customs Act, 1969 (IV of 1969), as if the goods were subject to ad valorem duty increased by the custom-duty, federal excise duty and sales tax, if any, payable in respect of the import of the goods ; and ; and (c) minimum value as notified by the Board under subsection (6A) as if such goods were subject to ad valorem duty as increased by the custom-duty, federal excise duty and sales tax, payable in respect of the import of the goods. Division III Deduction of Tax at Source
Provided that the Board may, by a notification in the official Gazette, add in the Twelfth Schedule any entry thereto or omit any entry therefrom or amend any entry therein:
Provided further that in case of goods classified under Part III of the Twelfth Schedule which are used both as raw material and finished goods, the Board may, by notification in the official Gazette, specify that goods imported by a person or class of persons as raw material for its own use shall be treated as classified under Part II of the Twelfth Schedule, subject to such conditions and procedure as may be prescribed :
Provided also that the Collector of Customs, shall not collect tax under this section, where the recipient of goods is also liable under the Digital Presence Proceeds tax, Act, 2025 and same has been collected by the payment intermediary as defined in section 153.
(2A) Notwithstanding omission of sub-section (2), any notification issued under the said sub-section and for the time being in force, shall continue to remain in force, unless amended or rescinded by the Board through notification in the official Gazette.;
(5) Advance tax shall be collected in the same manner and at the same time as the customs-duty payable in respect of the import or, if the goods are exempt from customs-duty, at the time customs-duty would be payable if the goods were dutiable.
(6) Subject to sub-section (6A), the provisions of the Customs Act, 1969 (IV of 1969), in so far as relevant, shall apply to the collection of tax under this section.
(6A) The Board may, by notification in the official Gazette, determine the minimum value of goods for the purpose of collection of advance tax under this section.
(7) The tax required to be collected under this section shall be minimum tax on the income of the importer arising from the imports subject to sub-section (1) and this sub-section shall not apply in the case of import of goods on which tax is required to be collected under this section by an industrial undertaking for its own use.
(7A) Notwithstanding anything contained in sub-section (7), the tax required to be collected under this section shall be minimum tax on the income every person arising from imports of following goods –
(i) edible oil;
(ii) packaging material;
(iii) paper and paper board; or (iv) plastics:
Provided that the Board with the approval of Minister in-charge may, by a notification in the official Gazette, add any entry thereto or omit any entry therefrom or amend any entry therein this sub-section.
(9) In this section – Collector of Customs means the person appointed as Collector of Customs under section 3 of the Customs Act, 1969 (IV of 1969), and includes a Deputy Collector of Customs, an Additional Collector of Customs, or an officer of customs appointed as such under the aforesaid section; Value of goods means –
(a) in case of goods chargeable to tax at retail price under the Third Schedule of the Sales Tax Act, 1990, the retail price of such goods increased by sales tax payable in respect of the import and taxable supply of the goods;
(b) in case of goods other than those specified in clauses
(a) and (c) ; the value of the goods as determined under the Customs Act, 1969 (IV of 1969), as if the goods were subject to ad valorem duty increased by the custom-duty, federal excise duty and sales tax, if any, payable in respect of the import of the goods ; and ; and (c) minimum value as notified by the Board under subsection (6A) as if such goods were subject to ad valorem duty as increased by the custom-duty, federal excise duty and sales tax, payable in respect of the import of the goods. Division III Deduction of Tax at Source
Amendment history (25)
- Words “who was filer” substituted from Finance Act, 2019
- The expression inserted through Finance Act, 2020 dated 30 June, 2020
- The “full stop” substituted by “colon” and thereafter proviso added through Finance Act, 2020 dated
- Full stop substituted and a new proviso inserted by the Finance Act, 2025.
- Sub-section (2) substituted by the Finance Act, 2007. The substituted sub-section (2) read as
- Omitted by Finance act, 2015. The omitted sub-section (2)
- Inserted by Finance Act, 2015.
- Inserted by the Finance Act, 2018.
- Sub-section (3) omitted by the Finance Act, 2007. The omitted sub-section (3)
- Sub-section (4) omitted by the Finance Act, 2007. The omitted sub-section (4)
- Sub-section (4A) omitted by the Finance Act, 2008. The omitted sub-section (4A)
- The word “The” substituted by the Finance Act, 2024.
- Sub-section (6A) inserted by the Finance Act, 2024.
- Sub-section (7) substituted by the Finance Act, 2006. The substituted sub-section (7) read as
- Inserted by the Finance Act, 2012.
- Words “a final” substituted through Finance Act, 2019.
- Expression “except as provided under sub-section (8)” omitted through Finance Act, 2019.
- Words “at the rate of 1% or 2%” omitted by the Finance Act, 2022.
- The hyphen and clauses (a),(c),(d)and (e) omitted through Finance Act 2020 dated 30 June, 2020
- The sub-section (7A) inserted by the Finance Act, 2022.
- Sub-section (8) and (8A) omitted through Finance Act, 2020 dated 30 June 2020 the omitted sub-
- The word “and” omitted by the Finance Act, 2004.
- The expressions substituted by the Finance Act, 2020 dated 30 June, 2020 the substituted
- The word “and” omitted by the Finance Act, 2024.
- The words “all other goods” substituted by the Finance Act, 2024.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 148A Omitted through Finance Act, 2020Omitted
Omitted through Finance Act, 2020
s. 149 Salary
(1) Every person responsible for paying salary to an employee shall, at the time of payment, deduct tax from the amount paid at the employee’s average rate of tax computed at the rates specified in Division I of Part I of the First Schedule on the estimated income of the employee chargeable under the head Salary for the tax year in which the payment is made including tax under section 4AB after making adjustment of tax withheld from employee under other heads and tax credit admissible under section 61 and 63 during the tax year after obtaining documentary evidence , as may be necessary, for :
(i) tax withheld from the employee under this Ordinance during the tax year;
(ii) any excess deduction or deficiency arising out of any previous deduction; or (iii) failure to make deduction during the year;
(1A) Notwithstanding the provisions of sub-section (1), any person responsible for paying pension to a former employee who is below the age of seventy years and deriving pension income during a tax year in which the payment exceeds rupees ten million, shall at the time of payment, deduct tax from the amount which is over and above rupees ten million at the rate provided in Division I of Part I of the First Schedule of the Ordinance, along with tax deducted under section 4AB after making adjustment of tax withheld from former employee under other heads and tax credit admissible under sections 61 and 63 of the Ordinance during the tax year after obtaining documentary evidence, as may be necessary, for –
(i) tax withheld from the former employee under this Ordinance during the tax year; or (ii) any excess deduction or deficiency arising out of any previous deduction; or (iii) failure to make deduction during the year.
(2) The average rate of tax of an employee for a tax year for the purposes of sub-section (1) shall be computed in accordance with the following formula, namely:– A/B where – A is the tax that would be payable if the amount referred to in component B of the formula were the employee’s taxable income for that year plus tax chargeable under section 4AB ; and B is the employee’s estimated income under the head Salary for that year.
(3) Notwithstanding anything contained in sub-sections
(1) and (2), every person responsible for making payment for directorship fee or fee for attending board meeting or such fee by whatever name called, shall at the time of payment, deduct tax at the rate of twenty percent of the gross amount payable.
(4) Tax deductible under sub-section (3) shall be adjustable.
(i) tax withheld from the employee under this Ordinance during the tax year;
(ii) any excess deduction or deficiency arising out of any previous deduction; or (iii) failure to make deduction during the year;
(1A) Notwithstanding the provisions of sub-section (1), any person responsible for paying pension to a former employee who is below the age of seventy years and deriving pension income during a tax year in which the payment exceeds rupees ten million, shall at the time of payment, deduct tax from the amount which is over and above rupees ten million at the rate provided in Division I of Part I of the First Schedule of the Ordinance, along with tax deducted under section 4AB after making adjustment of tax withheld from former employee under other heads and tax credit admissible under sections 61 and 63 of the Ordinance during the tax year after obtaining documentary evidence, as may be necessary, for –
(i) tax withheld from the former employee under this Ordinance during the tax year; or (ii) any excess deduction or deficiency arising out of any previous deduction; or (iii) failure to make deduction during the year.
(2) The average rate of tax of an employee for a tax year for the purposes of sub-section (1) shall be computed in accordance with the following formula, namely:– A/B where – A is the tax that would be payable if the amount referred to in component B of the formula were the employee’s taxable income for that year plus tax chargeable under section 4AB ; and B is the employee’s estimated income under the head Salary for that year.
(3) Notwithstanding anything contained in sub-sections
(1) and (2), every person responsible for making payment for directorship fee or fee for attending board meeting or such fee by whatever name called, shall at the time of payment, deduct tax at the rate of twenty percent of the gross amount payable.
(4) Tax deductible under sub-section (3) shall be adjustable.
Amendment history (10)
- The words “all other goods” substituted by the Finance Act, 2024.
- Full stop substituted by the Finance Act, 2024.
- Clause (c) added by the Finance Act, 2024.
- The Explanation omitted through Finance Act, 2020 dated 30 June, 2020 the omitted explanation
- Section 148(A) omitted through Finance Act, 2020 dated 30 June, 2020 the omitted section read as
- The word “employer” substituted by the Finance Act, 2013.
- Expression inserted by the Finance Act, 2024.
- The words “such adjustment” substituted by the Finance Act, 2007.
- The expression “62, 63 and 64” substituted by the Finance Act, 2022.
- Inserted by the Finance Act, 2007.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 150 Dividends
Dividends. — Every person paying a dividend shall deduct tax from the gross amount of the dividend paid or collect tax from the amount of dividend in specie at the rate specified in Division I of Part III of the First Schedule.
Amendment history (11)
- The words “resident company” substituted by the Finance Act, 2009.
- Inserted by the Finance Act, 2021.
- Section 150A omitted by the Finance Act, 2021. The omitted section
- Clause (a) substituted by the Finance Act, 2003. The substituted clause (a)
- The word “and” substituted by the Finance Act, 2003.
- The word “or” omitted by the Finance Act, 2002.
- Clause (c) substituted by the Finance Act, 2002. The substituted clause (c)
- The words “local authority” substituted by the Finance Act, 2008.
- The commas and words “, other than a financial institution,” omitted by the Finance Act, 2003.
- Inserted by the Finance Act, 2003.
- Added by the Finance Act, 2002.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 150A Omitted by the Finance Act, 2021Omitted
Omitted by the Finance Act, 2021
s. 151 Profit on debt
(1) Where –
(a) a person pays yield on an account, deposit or a certificate under the National Savings Scheme or Post Office Savings Account;
(b) a banking company or financial institution pays any profit on a debt, being an account or deposit maintained with the company or institution;
(c) the Federal Government, a Provincial Government or a Local Government pays to any person profit on any security other than that referred to in clause (a) issued by such Government or authority; or (d) a banking company, a financial institution, a company referred to in sub-clauses
(i) and (ii) of clause (b) of sub-section (2) of section 80, or a finance society pays any profit on any bond, certificate, debenture, security or instrument of any kind (other than a loan agreement between a borrower and a banking company or a development finance institution) to any person other than financial institution. the payer of the profit shall deduct tax at the rate specified in Division IA of Part III of the First Schedule from the gross amount of the yield or profit paid as reduced by the amount of Zakat, if any, paid by the recipient under the Zakat and Ushr Ordinance, 1980 (XVII of 1980), at the time the profit is paid to the recipient.
(1A) Every special purpose vehicle or a company, at the time of making payment of a return on investment in sukuks to a sukuk holder shall deduct tax from the gross amount of return on investment at the rate specified in Division IB of Part III of the First Schedule.
(2) This section shall not apply to any profit on debt that is subject to sub- section (2) of section 152.
(3) Tax deductible under this section shall be a minimum tax on the profit on debt arising to a taxpayer, except where —
(a) taxpayer is a company; or (b) profit on debt is taxable under section 7B.
(a) a person pays yield on an account, deposit or a certificate under the National Savings Scheme or Post Office Savings Account;
(b) a banking company or financial institution pays any profit on a debt, being an account or deposit maintained with the company or institution;
(c) the Federal Government, a Provincial Government or a Local Government pays to any person profit on any security other than that referred to in clause (a) issued by such Government or authority; or (d) a banking company, a financial institution, a company referred to in sub-clauses
(i) and (ii) of clause (b) of sub-section (2) of section 80, or a finance society pays any profit on any bond, certificate, debenture, security or instrument of any kind (other than a loan agreement between a borrower and a banking company or a development finance institution) to any person other than financial institution. the payer of the profit shall deduct tax at the rate specified in Division IA of Part III of the First Schedule from the gross amount of the yield or profit paid as reduced by the amount of Zakat, if any, paid by the recipient under the Zakat and Ushr Ordinance, 1980 (XVII of 1980), at the time the profit is paid to the recipient.
(1A) Every special purpose vehicle or a company, at the time of making payment of a return on investment in sukuks to a sukuk holder shall deduct tax from the gross amount of return on investment at the rate specified in Division IB of Part III of the First Schedule.
(2) This section shall not apply to any profit on debt that is subject to sub- section (2) of section 152.
(3) Tax deductible under this section shall be a minimum tax on the profit on debt arising to a taxpayer, except where —
(a) taxpayer is a company; or (b) profit on debt is taxable under section 7B.
Amendment history (16)
- The words “resident company” substituted by the Finance Act, 2009.
- Inserted by the Finance Act, 2021.
- Section 150A omitted by the Finance Act, 2021. The omitted section
- Clause (a) substituted by the Finance Act, 2003. The substituted clause (a)
- The word “and” substituted by the Finance Act, 2003.
- The word “or” omitted by the Finance Act, 2002.
- Clause (c) substituted by the Finance Act, 2002. The substituted clause (c)
- The words “local authority” substituted by the Finance Act, 2008.
- The commas and words “, other than a financial institution,” omitted by the Finance Act, 2003.
- Inserted by the Finance Act, 2003.
- Added by the Finance Act, 2002.
- The words, letters and brackets “clauses (a) and (b)” substituted by the Finance Act, 2003.
- Sub-section (1A) inserted by the Finance Act, 2021.
- Substituted by the Finance Act, 2015. The substituted sub-section (3)
- The word “final” substituted through Finance Act, 2019.
- Section 151A inserted by the Finance Act, 2025.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 151A Gain arising on disposal of certain debt securities
(1) Every custodian of debt securities including a banking company responsible to maintain Investor Portfolio Securities (IPS) Account on behalf of holder of a debt security shall at the time of disposal of debt securities including government securities deduct tax at the rate specified in Division IIIAA of Part III of the First Schedule on the gross amount of capital gain arising to such holder and deposit the same in government treasury:
Provided that this section shall not apply on disposal of debt securities made through registered stock exchange and which are settled through NCCPL.
(2) The capital gain arising to the holder on disposal of debt security mentioned in sub-section (1) shall be computed in accordance with the formula provided in sub-section (1A) of section 37A of the Ordinance.
Provided that this section shall not apply on disposal of debt securities made through registered stock exchange and which are settled through NCCPL.
(2) The capital gain arising to the holder on disposal of debt security mentioned in sub-section (1) shall be computed in accordance with the formula provided in sub-section (1A) of section 37A of the Ordinance.
Amendment history (8)
- The words, letters and brackets “clauses (a) and (b)” substituted by the Finance Act, 2003.
- Sub-section (1A) inserted by the Finance Act, 2021.
- Substituted by the Finance Act, 2015. The substituted sub-section (3)
- The word “final” substituted through Finance Act, 2019.
- Section 151A inserted by the Finance Act, 2025.
- Section 151B inserted by the Finance Act, 2026.
- Substituted for the word “royalties” by the Finance Act, 2002.
- Inserted by the Finance Act, 2006.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 151B Certain payments by life insurance companies and takaful operators
(1) Every life insurance company, including a family takaful operator or a window takaful operator, making any payout, benefit, surrender value, maturity proceeds or similar payment to an individual under a life insurance policy, family takaful certificate, plan or arrangement shall, at the time of making such payment, deduct tax at the rate specified in Division IC of Part III of the First Schedule.
(2) For the purposes of sub-section (1), the amount liable to tax deduction shall be the gross amount of payout or benefit reduced by the aggregate amount of premiums or contributions paid by the policyholder or participant.
(3) The provisions of sub-section (1) shall not apply where the payout or benefit—
(a) is made on account of death of the insured or participant;
(b) is made on account of disability of the insured or participant; or (c) is made after completion of four years from the date of issuance of the policy, certificate or plan.
(4) Tax deducted under this section shall be treated as final tax on the income arising from such payout or benefit.
(2) For the purposes of sub-section (1), the amount liable to tax deduction shall be the gross amount of payout or benefit reduced by the aggregate amount of premiums or contributions paid by the policyholder or participant.
(3) The provisions of sub-section (1) shall not apply where the payout or benefit—
(a) is made on account of death of the insured or participant;
(b) is made on account of disability of the insured or participant; or (c) is made after completion of four years from the date of issuance of the policy, certificate or plan.
(4) Tax deducted under this section shall be treated as final tax on the income arising from such payout or benefit.
Amendment history (3)
- Section 151B inserted by the Finance Act, 2026.
- Substituted for the word “royalties” by the Finance Act, 2002.
- Inserted by the Finance Act, 2006.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 152 Payments to non-residents
(1) Every person paying an amount of royalty or fees for technical services to a non-resident person that is chargeable to tax under section 6 shall deduct tax from the gross amount paid at the rate specified in Division IV of Part I of the First Schedule.
(1A) Every person making a payment in full or part (including a payment by way of advance) to a non-resident person on the execution of –
(a) a contract or sub-contract under a construction, assembly or installation project in Pakistan, including a contract for the supply of supervisory activities in relation to such project; or (b) any other contract for construction or services rendered relating thereto; or (c) a contract for advertisement services rendered by T.V. Satellite Channels, shall deduct tax from the gross amount payable under the contract at the rate specified in Division II of Part III of the First Schedule. (1AA) Every person making a payment of insurance premium or re- insurance premium to a non-resident person shall deduct tax from the gross amount paid at the rate specified in Division II of Part III of the First Schedule. (1AAA) Every person making a payment for advertisement services to a non-resident media person relaying from outside Pakistan shall deduct tax from the gross amount paid at the rate specified in Division II of Part III of the First Schedule.
(1B) The tax deductible under sub-sections (1A), (1AA) and (1AAA) shall be a minimum tax on the income of the non-resident persons in respect of payments mentioned therein. (1BA) Every person responsible for making payment directly or through an agent or intermediary to a non-resident person for foreign produced commercial for advertisement on any television channel or any other media, shall deduct tax at the rate of twenty percent from the gross amount paid. The tax deductible under this sub-section shall be final tax on the income of non-resident person arising out of such payment.
(1C) Every banking company or a financial institution remitting outside Pakistan an amount of fee for offshore digital services, chargeable to tax under section 6, to a non-resident person on behalf of any resident or a permanent establishment of a non-resident in Pakistan shall deduct tax from the gross amount paid at the rate specified in Division IV of Part I of the First Schedule :
Provided that the banking company and financial institution shall not deduct the tax under this sub-section where the recipient is also liable to Digital Presence Proceeds tax and same has been collected.
(1D) Every banking company or a financial institution maintaining , for a period not less than six months, special convertible rupee account (SCRA) of a non-resident company having no permanent establishment in Pakistan shall deduct tax from capital gain arising on the disposal of debt instruments and Government securities including treasury bills and Pakistan investment bonds invested through SCRA at the rate specified in Division II of Part III of the First Schedule :
Provided that in case of holding period of debt instruments and Government securities including treasury bills and Pakistan investment bonds is less than six months, the capital gain arising on the disposal of such securities to the non- resident person shall be taxed at the rates provided in paragraph
(2) of Division II of Part III of the First Schedule of the Ordinance. (1DA) Every banking company maintaining a Foreign Currency Value Account (FCVA), Foreign Currency Business Value Account (FCBVA), Non- Resident Rupee Value Account (NRVA), or Non-Resident Rupee Business Value Account (NRBVA) shall deduct tax from capital gain arising on the disposal of debt instruments and Government securities and certificates (including Shariah compliant variant) invested through aforesaid accounts at the rate specified in Division II of Part III of the First Schedule. (1DB) Every special purpose vehicle or a company, at the time of making payment of a return on investment in sukuks to a non-resident sukuk holder shall deduct tax from the gross amount of return on investment at the rate specified in Division IB of Part III of the First Schedule. (1DC) Every exchange company licensed by the State Bank of Pakistan shall deduct tax at the time of making payment of service charges or commission or fee, by whatever name called, to the global money transfer operators, international money transfer operators or such other persons engaged in international money transfers or cross-border remittances for facilitating outward remittances, at the rates given in Division IV, Part I of the First Schedule:
Provided that where such person retains service charges or commission or fee, by whatever name called from the amount payable to the exchange company on any account, the exchange company shall be deemed to have paid the service charges or commission or fee, by whatever name called and the exchange company shall collect the tax accordingly. (1DD) Every banking company while making payment to card network company or payment gateway or any other person, of any transaction fee or licensing fee or service charges or commission or fee by whatever name called or interbank financial telecommunication services, shall deduct tax at the rates given in Division IV, Part I of the First Schedule:
Provided that where card network company or payment gateway or any other person retains money in relation to aforementioned services from the amount payable to the banking company on any account, the banking company shall be deemed to have paid the amount and the banking company shall collect the tax accordingly
(1E) The tax deductible under sub-sections (1D), (1DA) (IDB), (1DC) and (IDD) shall be a final tax in respect of persons and income mentioned therein.
(2) Subject to sub-section (3), every person paying an amount to a non-resident person (other than an amount to which sub-section (1) or sub- section (1A) , (1AA) , (1AAA),
(1C) or (2A) applies) shall deduct tax from the gross amount paid at the rate specified in Division II of Part III of the First Schedule.
(2A) Every prescribed person making a payment in full or part including a payment by way of advance to a permanent establishment in Pakistan of a non- resident person—
(a) for the sale of goods except where the sale is made by the importer of the goods and tax under section 148 in respect of such goods has been paid and the goods are sold in the same condition as they were when imported ;
(b) for the rendering of or providing services; and (c) on the execution of a contract, other than a contract for the sale of goods or the rendering of or providing services, shall, at the time of making the payment, deduct tax from the gross amount payable (including sales tax, if any) at the rate specified in Division II of Part III of the First Schedule. (2AA) sub-section (1AA) shall not apply to an amount, with the written approval of the Commissioner, hat is taxable to a permanent establishment in Pakistan of the non-resident person.
(2B) the tax deductible under sub-section (2A) shall be minimum tax:
Provided that tax deductible under clause (a) of sub-section (2A) shall not be minimum tax where payments are received for sale of goods by a company being a manufacturer of such goods.
(3) Sub-section (2) does not apply to an amount —
(a) that is subject to deduction of tax under section 149, 150, 156 or 233 ;
(b) with the written approval of the Commissioner, that is taxable to a permanent establishment in Pakistan of the non-resident person;
(c) that is payable by a person who is liable to pay tax on the amount as representative of the non-resident person under sub- section (3) of section 172; or (d) where the non-resident person is not chargeable to tax in respect of the amount.
(4) Where a person claims to be a representative of a non-resident person for the purposes of clause (c) of sub-section (3), the person shall file a declaration to that effect with the Commissioner prior to making any payment to the non-resident person.
(4A) The Commissioner may, on application made in the prescribed form by the recipient of payment referred to in sub-section (1A) having permanent establishment in Pakistan, or by a recipient of payment referred to in sub-section (2A), as the case may be, and after making such inquiry as the Commissioner thinks fit, allow by order in writing, in cases where the tax deductable under sub- section (1) or sub-section (2A) is not minimum tax , any person to make the payment after deduction of tax at a reduced rate but such reduction shall not exceed eighty percent of the rate specified in the said Division .
(4B) The Commissioner may, in case of payment that constitutes part of an overall arrangement of a cohesive business operation as referred to in paragraph
(ii) of sub-clause (g) of clause (41) of section 2, on application made by the person making payment and after making such inquiry, as the Commissioner thinks fit, allow by order in writing, the person to make payment after deduction of tax equal to twenty percent of the tax chargeable on such payment under sub- section (1A):
Provided that the credit of the tax so deducted shall be available to the permanent establishment of the non-resident accounting for overall profits arising on the overall cohesive business operation.
(5) Where a person intends to make a payment to a non-resident person without deduction of tax under this section, other than payments liable to reduced rate under relevant agreement for avoidance of double taxation, the person shall, before making the payment, furnish to the Commissioner a notice in writing setting out —
(a) the name and address of the non-resident person;
(b) the nature and amount of the payment ;and (c) such other particulars as may be prescribed.
(5A) The Commissioner on receipt of notice shall , within thirty days, pass an order accepting the contention or making the order under sub-section (6) :
Provided that the Commissioner shall be deemed to have issued the exemption certificate upon the expiry of thirty days and the certificate shall be automatically processed and issued by Iris subject to the condition that in computing the said period of thirty days, there shall be excluded days taken for adjournment by the applicant:
Provided further that the Commissioner may modify or cancel the certificate issued automatically by Iris on the basis of reasons to be recorded in writing after providing an opportunity of being heard.
(6) Where a person has notified the Commissioner of a payment under sub-section (5) and the Commissioner has reasonable grounds to believe that the non-resident person is chargeable to tax under this Ordinance in respect of the payment, the Commissioner may, by order in writing, direct the person making the payment to deduct tax from the payment in accordance with sub-section (2).
(7) Sub-section (5) shall not apply to a payment on account of –
(a) an import of goods where title to the goods passes outside Pakistan and is supported by import documents, except where —
(i) the supply is made in connection with the overall arrangement for the supply of goods, installation, construction, assembly, commission, guarantees or supervisory activities and all or principal activities are undertaken or performed either by the associates of the person supplying the goods or its permanent establishment, whether or not the title passes outside Pakistan and whether or not the goods are imported in the name of the associate or any other person; or (ii) the supply is made by a resident person or a Pakistan permanent establishment of a non-resident person in connection with the overall arrangement as referred to in sub-clause (i); or (b) educational and medical expenses remitted in accordance with the regulations of the State Bank of Pakistan.
(8) In this section prescribed person means a prescribed person as defined in sub-section (7) of section 153.
(1A) Every person making a payment in full or part (including a payment by way of advance) to a non-resident person on the execution of –
(a) a contract or sub-contract under a construction, assembly or installation project in Pakistan, including a contract for the supply of supervisory activities in relation to such project; or (b) any other contract for construction or services rendered relating thereto; or (c) a contract for advertisement services rendered by T.V. Satellite Channels, shall deduct tax from the gross amount payable under the contract at the rate specified in Division II of Part III of the First Schedule. (1AA) Every person making a payment of insurance premium or re- insurance premium to a non-resident person shall deduct tax from the gross amount paid at the rate specified in Division II of Part III of the First Schedule. (1AAA) Every person making a payment for advertisement services to a non-resident media person relaying from outside Pakistan shall deduct tax from the gross amount paid at the rate specified in Division II of Part III of the First Schedule.
(1B) The tax deductible under sub-sections (1A), (1AA) and (1AAA) shall be a minimum tax on the income of the non-resident persons in respect of payments mentioned therein. (1BA) Every person responsible for making payment directly or through an agent or intermediary to a non-resident person for foreign produced commercial for advertisement on any television channel or any other media, shall deduct tax at the rate of twenty percent from the gross amount paid. The tax deductible under this sub-section shall be final tax on the income of non-resident person arising out of such payment.
(1C) Every banking company or a financial institution remitting outside Pakistan an amount of fee for offshore digital services, chargeable to tax under section 6, to a non-resident person on behalf of any resident or a permanent establishment of a non-resident in Pakistan shall deduct tax from the gross amount paid at the rate specified in Division IV of Part I of the First Schedule :
Provided that the banking company and financial institution shall not deduct the tax under this sub-section where the recipient is also liable to Digital Presence Proceeds tax and same has been collected.
(1D) Every banking company or a financial institution maintaining , for a period not less than six months, special convertible rupee account (SCRA) of a non-resident company having no permanent establishment in Pakistan shall deduct tax from capital gain arising on the disposal of debt instruments and Government securities including treasury bills and Pakistan investment bonds invested through SCRA at the rate specified in Division II of Part III of the First Schedule :
Provided that in case of holding period of debt instruments and Government securities including treasury bills and Pakistan investment bonds is less than six months, the capital gain arising on the disposal of such securities to the non- resident person shall be taxed at the rates provided in paragraph
(2) of Division II of Part III of the First Schedule of the Ordinance. (1DA) Every banking company maintaining a Foreign Currency Value Account (FCVA), Foreign Currency Business Value Account (FCBVA), Non- Resident Rupee Value Account (NRVA), or Non-Resident Rupee Business Value Account (NRBVA) shall deduct tax from capital gain arising on the disposal of debt instruments and Government securities and certificates (including Shariah compliant variant) invested through aforesaid accounts at the rate specified in Division II of Part III of the First Schedule. (1DB) Every special purpose vehicle or a company, at the time of making payment of a return on investment in sukuks to a non-resident sukuk holder shall deduct tax from the gross amount of return on investment at the rate specified in Division IB of Part III of the First Schedule. (1DC) Every exchange company licensed by the State Bank of Pakistan shall deduct tax at the time of making payment of service charges or commission or fee, by whatever name called, to the global money transfer operators, international money transfer operators or such other persons engaged in international money transfers or cross-border remittances for facilitating outward remittances, at the rates given in Division IV, Part I of the First Schedule:
Provided that where such person retains service charges or commission or fee, by whatever name called from the amount payable to the exchange company on any account, the exchange company shall be deemed to have paid the service charges or commission or fee, by whatever name called and the exchange company shall collect the tax accordingly. (1DD) Every banking company while making payment to card network company or payment gateway or any other person, of any transaction fee or licensing fee or service charges or commission or fee by whatever name called or interbank financial telecommunication services, shall deduct tax at the rates given in Division IV, Part I of the First Schedule:
Provided that where card network company or payment gateway or any other person retains money in relation to aforementioned services from the amount payable to the banking company on any account, the banking company shall be deemed to have paid the amount and the banking company shall collect the tax accordingly
(1E) The tax deductible under sub-sections (1D), (1DA) (IDB), (1DC) and (IDD) shall be a final tax in respect of persons and income mentioned therein.
(2) Subject to sub-section (3), every person paying an amount to a non-resident person (other than an amount to which sub-section (1) or sub- section (1A) , (1AA) , (1AAA),
(1C) or (2A) applies) shall deduct tax from the gross amount paid at the rate specified in Division II of Part III of the First Schedule.
(2A) Every prescribed person making a payment in full or part including a payment by way of advance to a permanent establishment in Pakistan of a non- resident person—
(a) for the sale of goods except where the sale is made by the importer of the goods and tax under section 148 in respect of such goods has been paid and the goods are sold in the same condition as they were when imported ;
(b) for the rendering of or providing services; and (c) on the execution of a contract, other than a contract for the sale of goods or the rendering of or providing services, shall, at the time of making the payment, deduct tax from the gross amount payable (including sales tax, if any) at the rate specified in Division II of Part III of the First Schedule. (2AA) sub-section (1AA) shall not apply to an amount, with the written approval of the Commissioner, hat is taxable to a permanent establishment in Pakistan of the non-resident person.
(2B) the tax deductible under sub-section (2A) shall be minimum tax:
Provided that tax deductible under clause (a) of sub-section (2A) shall not be minimum tax where payments are received for sale of goods by a company being a manufacturer of such goods.
(3) Sub-section (2) does not apply to an amount —
(a) that is subject to deduction of tax under section 149, 150, 156 or 233 ;
(b) with the written approval of the Commissioner, that is taxable to a permanent establishment in Pakistan of the non-resident person;
(c) that is payable by a person who is liable to pay tax on the amount as representative of the non-resident person under sub- section (3) of section 172; or (d) where the non-resident person is not chargeable to tax in respect of the amount.
(4) Where a person claims to be a representative of a non-resident person for the purposes of clause (c) of sub-section (3), the person shall file a declaration to that effect with the Commissioner prior to making any payment to the non-resident person.
(4A) The Commissioner may, on application made in the prescribed form by the recipient of payment referred to in sub-section (1A) having permanent establishment in Pakistan, or by a recipient of payment referred to in sub-section (2A), as the case may be, and after making such inquiry as the Commissioner thinks fit, allow by order in writing, in cases where the tax deductable under sub- section (1) or sub-section (2A) is not minimum tax , any person to make the payment after deduction of tax at a reduced rate but such reduction shall not exceed eighty percent of the rate specified in the said Division .
(4B) The Commissioner may, in case of payment that constitutes part of an overall arrangement of a cohesive business operation as referred to in paragraph
(ii) of sub-clause (g) of clause (41) of section 2, on application made by the person making payment and after making such inquiry, as the Commissioner thinks fit, allow by order in writing, the person to make payment after deduction of tax equal to twenty percent of the tax chargeable on such payment under sub- section (1A):
Provided that the credit of the tax so deducted shall be available to the permanent establishment of the non-resident accounting for overall profits arising on the overall cohesive business operation.
(5) Where a person intends to make a payment to a non-resident person without deduction of tax under this section, other than payments liable to reduced rate under relevant agreement for avoidance of double taxation, the person shall, before making the payment, furnish to the Commissioner a notice in writing setting out —
(a) the name and address of the non-resident person;
(b) the nature and amount of the payment ;and (c) such other particulars as may be prescribed.
(5A) The Commissioner on receipt of notice shall , within thirty days, pass an order accepting the contention or making the order under sub-section (6) :
Provided that the Commissioner shall be deemed to have issued the exemption certificate upon the expiry of thirty days and the certificate shall be automatically processed and issued by Iris subject to the condition that in computing the said period of thirty days, there shall be excluded days taken for adjournment by the applicant:
Provided further that the Commissioner may modify or cancel the certificate issued automatically by Iris on the basis of reasons to be recorded in writing after providing an opportunity of being heard.
(6) Where a person has notified the Commissioner of a payment under sub-section (5) and the Commissioner has reasonable grounds to believe that the non-resident person is chargeable to tax under this Ordinance in respect of the payment, the Commissioner may, by order in writing, direct the person making the payment to deduct tax from the payment in accordance with sub-section (2).
(7) Sub-section (5) shall not apply to a payment on account of –
(a) an import of goods where title to the goods passes outside Pakistan and is supported by import documents, except where —
(i) the supply is made in connection with the overall arrangement for the supply of goods, installation, construction, assembly, commission, guarantees or supervisory activities and all or principal activities are undertaken or performed either by the associates of the person supplying the goods or its permanent establishment, whether or not the title passes outside Pakistan and whether or not the goods are imported in the name of the associate or any other person; or (ii) the supply is made by a resident person or a Pakistan permanent establishment of a non-resident person in connection with the overall arrangement as referred to in sub-clause (i); or (b) educational and medical expenses remitted in accordance with the regulations of the State Bank of Pakistan.
(8) In this section prescribed person means a prescribed person as defined in sub-section (7) of section 153.
Amendment history (25)
- Section 151B inserted by the Finance Act, 2026.
- Substituted for the word “royalties” by the Finance Act, 2002.
- Inserted by the Finance Act, 2006.
- Inserted by the Finance Act, 2008.
- Inserted by the Finance Act, 2012.
- The expression “Division IIIA” substituted by the Finance Act, 2017.
- Sub-section (1B) inserted by the Finance Act, 2006.
- Sub-sections (1B), (1BB) and (1BBB) substituted by the Finance Act, 2021. The substituted sub-
- Proviso omitted by the Finance Act, 2019 omitted proviso read as follow
- Sub-section (1BB) inserted by the Finance Act, 2008.
- The new Sub-section (1BBB) inserted through Finance Act, 2020 dated 30 June, 2020.
- Inserted by the Finance Act, 2018.
- Full stop substituted with a colon and thereafter a new proviso added by the Finance Act, 2025.
- Words inserted by the Finance Act, 2025.
- Sub-section (1DA) inserted by the Finance Act, 2021. Earlier this insertion was made through Tax
- Sub-section (1DA) substituted by the Finance Act, 2026. The substituted sub-section
- Sub-section (1DB) inserted by the Finance Act, 2021.
- Sub-sections (1DC) and (1DD) inserted by the Finance Act, 2022.
- Sub-section (1E) substituted by the Finance Act, 2021. Earlier an amendment was made through
- The expression “and (1DB)” substituted by the Finance Act, 2022.
- Inserted by the Finance Act, 2007.
- Inserted by the Finance Act, 2010.
- Inserted by the Finance Act, 2019
- Added by the Finance Act, 2012.
- Clause (i) re-numbered by Finance Act 2017.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 152A Omitted by the Finance Act, 2021Omitted
Omitted by the Finance Act, 2021
s. 153 Payments for goods, services and contracts
(1) Every prescribed person making a payment in full or part including a payment by way of advance to a resident person —
(a) for the sale of goods including toll manufacturing , except where payment is less than seventy-five thousand Rupees in aggregate, during a financial year ;
(b) for the rendering of or providing of services except where payment is less than thirty thousand Rupees in aggregate, during a financial year ;
(c) on the execution of a contract, including contract signed by a sportsperson but not including a contract for the sale of goods or the rendering of or providing services, shall, at the time of making the payment, deduct tax from the gross amount payable (including sales tax, if any) at the rate specified in Division III of Part III of the First Schedule ;
Provided that where the recipient of the payment under clause (b) receives the payment through an agent or any other third person and the agent or, as the case may be, the third person retains service charges or fee, by whatever name called, from the payment remitted to the recipient, the agent or the third person shall be treated to have been paid the service charges or fee by the recipient and the recipient shall collect tax along with the payment received.
(2) Every exporter or an export house making a payment in full or part including a payment by way of advance to a resident person or permanent establishment in Pakistan of a non-resident person for rendering of or providing services of stitching, dying, printing, embroidery, washing, sizing and weaving, shall at the time of making the payment, deduct tax from the gross amount payable at the rate specified in Division IV of Part III of the First Schedule.
(2A) Notwithstanding the provision of sub-section (1), –
(i) every payment intermediary at the time of processing payment through digital means, on behalf of a seller of digitally ordered goods or services through locally operated e-commerce platforms (including websites); and (ii) every courier business providing courier services collecting cash from a buyer under Cash on Delivery (CoD) payment terms on behalf of a seller for the supply of digitally ordered goods and services through e-commerce platforms (including websites); shall collect tax from the gross amount payable (including sales tax, if any) to the seller at the rate specified in Division IVA of Part I of the First Schedule to the Ordinance and deposit to government treasury.
(3) The tax deductible under sub-section (1) and under sub-section (2) of this section, on the income of a resident person or , shall be minimum tax.
Provided that,—
(a) tax deducted under clause (a) of sub-section (1) shall not be minimum tax where payments are received on sale or supply of goods, by a, —
(i) company being a manufacturer of such goods; or (ii) public company listed on a registered stock exchange in Pakistan;
(c) tax deducted under clause (c) of sub-section (1) shall be adjustable if payments are received by a public company listed on a registered stock exchange in Pakistan, on account of execution of contracts . "Explanation.— For the removal of doubt, it is explained that the income of resident person referred to in sub-section (3) means the amount on which tax is deductible under sub-section (1) or (2) of this section.
(4) The Commissioner may, on application made by the recipient of a payment referred to in sub-section (1) and after making such inquiry as the Commissioner thinks fit, may allow in cases where tax deductible under sub- section (1) is not minimum, by an order in writing, any person to make the payment after deduction of tax at reduced rate but such reduction shall not exceed eighty percent of the rate specified in the said Division except in cases of public limited companies where the Commissioner may allow payment without deduction of any tax :
Provided that the Commissioner shall issue reduced rate certificate within fifteen days of filing of application to a company if advance tax liability has been discharged:
Provided further that the Commissioner shall be deemed to have issued the reduced rate certificate upon the expiry of fifteen days to the aforesaid company and the certificate shall be automatically processed and issued by Iris:
Provided also that the Commissioner may modify or cancel the certificate issued automatically by Iris on the basis of reasons to be recorded in writing after providing an opportunity of being heard.
(5) Sub-section (1) shall not apply to —
(a) a sale of goods where the sale is made by the importer of the goods and tax under section 148 in respect of such goods has been paid and the goods are sold in the same condition as they were when imported;
(c) a refund of any security deposit;
(d) a payment made by the Federal Government, a Provincial Government or a Local Government to a contractor for construction materials supplied to the contractor by the said Government or the authority;
(f) the purchase of an asset under a lease and buy back agreement by a modaraba, leasing company, banking company or financial institution; or (g) any payment for securitization of receivables or issuance of sukuks by a Special Purpose Vehicle to the Originator.
(6) Where any tax is deducted by a person making a payment for a Special Purpose Vehicle, on behalf of the Originator, the tax is credited to the Originator.
(7) In this section, —
(i) prescribed person means—
(a) the Federal Government;
(b) a company;
(c) an association of persons constituted by, or under law;
(d) a non-profit organization;
(e) a foreign contractor or consultant;
(f) a consortium or joint venture;
(g) an exporter or an export house for the purpose of sub- section (2);
(h) an association of persons, having turnover of one hundred million rupees or above in any of the preceding tax years ;
(i) an individual, having turnover of one hundred million rupees or above in any of the preceding tax years ;
(j) a person registered under the Sales Tax Act, 1990 having turnover of one hundred million rupees or more in any of the preceding tax years ;
(k) a person deriving income from the business of construction and sale of residential, commercial or other buildings (builder);
(l) a person deriving income from the business of development and sale of residential, commercial or other plots (developer) ;
(m) for the purpose of sub-section (2A), a payment intermediary; or (n) for the purpose of sub-section (2A), a courier service.
(ii) services includes the services of accountants, architects, dentists, doctors, engineers, interior decorators and lawyers, otherwise than as an employee;
(iia) courier service means any specialized entity that provides fast, secure and often tracked transportation of documents, packages and small freight, typically offering door-to-door delivery solutions of goods within specific timeframes and in case of digitally ordered goods in e-commerce delivery and collection of cash (CoD) on behalf of the seller and such delivery service provider includes but not limited to –
(a) Logistics services;
(b) ride-haling services;
(c) food delivery platforms; and (d) e-commerce services;
(iib) payment intermediary means any third party entity including a banking company, financial institution, a licensed foreign exchange company or payments gateways that facilitate the transfer of funds or payment instructions between two or more parties to enable, process, route or settle payments in a financial transaction, without being the ultimate source or recipient of the payment;
(iii) sale of goods includes a sale of goods for cash or on credit, whether under written contract or not; and (iv) manufacturer means a person who is engaged in production or manufacturing of goods, which includes—
(a) any process in which an article singly or in combination with other articles, material, components, is either converted into another distinct article or product is so changed, transferred, or reshaped that it becomes capable of being put to use differently or distinctly; or (b) a process of assembling, mixing, cutting or preparation of goods in any other manner; and (v) turnover means—
(a) the gross sales or gross receipts, inclusive of sales tax and federal excise duty or any trade discounts shown on invoices, or bills, derived from the sale of goods;
(b) the gross fees for the rendering of services for giving benefits including commissions;
(c) the gross receipts from the execution of contracts; and (d) the company’s share of the amounts stated above of any association of persons of which the company is a member.
(a) for the sale of goods including toll manufacturing , except where payment is less than seventy-five thousand Rupees in aggregate, during a financial year ;
(b) for the rendering of or providing of services except where payment is less than thirty thousand Rupees in aggregate, during a financial year ;
(c) on the execution of a contract, including contract signed by a sportsperson but not including a contract for the sale of goods or the rendering of or providing services, shall, at the time of making the payment, deduct tax from the gross amount payable (including sales tax, if any) at the rate specified in Division III of Part III of the First Schedule ;
Provided that where the recipient of the payment under clause (b) receives the payment through an agent or any other third person and the agent or, as the case may be, the third person retains service charges or fee, by whatever name called, from the payment remitted to the recipient, the agent or the third person shall be treated to have been paid the service charges or fee by the recipient and the recipient shall collect tax along with the payment received.
(2) Every exporter or an export house making a payment in full or part including a payment by way of advance to a resident person or permanent establishment in Pakistan of a non-resident person for rendering of or providing services of stitching, dying, printing, embroidery, washing, sizing and weaving, shall at the time of making the payment, deduct tax from the gross amount payable at the rate specified in Division IV of Part III of the First Schedule.
(2A) Notwithstanding the provision of sub-section (1), –
(i) every payment intermediary at the time of processing payment through digital means, on behalf of a seller of digitally ordered goods or services through locally operated e-commerce platforms (including websites); and (ii) every courier business providing courier services collecting cash from a buyer under Cash on Delivery (CoD) payment terms on behalf of a seller for the supply of digitally ordered goods and services through e-commerce platforms (including websites); shall collect tax from the gross amount payable (including sales tax, if any) to the seller at the rate specified in Division IVA of Part I of the First Schedule to the Ordinance and deposit to government treasury.
(3) The tax deductible under sub-section (1) and under sub-section (2) of this section, on the income of a resident person or , shall be minimum tax.
Provided that,—
(a) tax deducted under clause (a) of sub-section (1) shall not be minimum tax where payments are received on sale or supply of goods, by a, —
(i) company being a manufacturer of such goods; or (ii) public company listed on a registered stock exchange in Pakistan;
(c) tax deducted under clause (c) of sub-section (1) shall be adjustable if payments are received by a public company listed on a registered stock exchange in Pakistan, on account of execution of contracts . "Explanation.— For the removal of doubt, it is explained that the income of resident person referred to in sub-section (3) means the amount on which tax is deductible under sub-section (1) or (2) of this section.
(4) The Commissioner may, on application made by the recipient of a payment referred to in sub-section (1) and after making such inquiry as the Commissioner thinks fit, may allow in cases where tax deductible under sub- section (1) is not minimum, by an order in writing, any person to make the payment after deduction of tax at reduced rate but such reduction shall not exceed eighty percent of the rate specified in the said Division except in cases of public limited companies where the Commissioner may allow payment without deduction of any tax :
Provided that the Commissioner shall issue reduced rate certificate within fifteen days of filing of application to a company if advance tax liability has been discharged:
Provided further that the Commissioner shall be deemed to have issued the reduced rate certificate upon the expiry of fifteen days to the aforesaid company and the certificate shall be automatically processed and issued by Iris:
Provided also that the Commissioner may modify or cancel the certificate issued automatically by Iris on the basis of reasons to be recorded in writing after providing an opportunity of being heard.
(5) Sub-section (1) shall not apply to —
(a) a sale of goods where the sale is made by the importer of the goods and tax under section 148 in respect of such goods has been paid and the goods are sold in the same condition as they were when imported;
(c) a refund of any security deposit;
(d) a payment made by the Federal Government, a Provincial Government or a Local Government to a contractor for construction materials supplied to the contractor by the said Government or the authority;
(f) the purchase of an asset under a lease and buy back agreement by a modaraba, leasing company, banking company or financial institution; or (g) any payment for securitization of receivables or issuance of sukuks by a Special Purpose Vehicle to the Originator.
(6) Where any tax is deducted by a person making a payment for a Special Purpose Vehicle, on behalf of the Originator, the tax is credited to the Originator.
(7) In this section, —
(i) prescribed person means—
(a) the Federal Government;
(b) a company;
(c) an association of persons constituted by, or under law;
(d) a non-profit organization;
(e) a foreign contractor or consultant;
(f) a consortium or joint venture;
(g) an exporter or an export house for the purpose of sub- section (2);
(h) an association of persons, having turnover of one hundred million rupees or above in any of the preceding tax years ;
(i) an individual, having turnover of one hundred million rupees or above in any of the preceding tax years ;
(j) a person registered under the Sales Tax Act, 1990 having turnover of one hundred million rupees or more in any of the preceding tax years ;
(k) a person deriving income from the business of construction and sale of residential, commercial or other buildings (builder);
(l) a person deriving income from the business of development and sale of residential, commercial or other plots (developer) ;
(m) for the purpose of sub-section (2A), a payment intermediary; or (n) for the purpose of sub-section (2A), a courier service.
(ii) services includes the services of accountants, architects, dentists, doctors, engineers, interior decorators and lawyers, otherwise than as an employee;
(iia) courier service means any specialized entity that provides fast, secure and often tracked transportation of documents, packages and small freight, typically offering door-to-door delivery solutions of goods within specific timeframes and in case of digitally ordered goods in e-commerce delivery and collection of cash (CoD) on behalf of the seller and such delivery service provider includes but not limited to –
(a) Logistics services;
(b) ride-haling services;
(c) food delivery platforms; and (d) e-commerce services;
(iib) payment intermediary means any third party entity including a banking company, financial institution, a licensed foreign exchange company or payments gateways that facilitate the transfer of funds or payment instructions between two or more parties to enable, process, route or settle payments in a financial transaction, without being the ultimate source or recipient of the payment;
(iii) sale of goods includes a sale of goods for cash or on credit, whether under written contract or not; and (iv) manufacturer means a person who is engaged in production or manufacturing of goods, which includes—
(a) any process in which an article singly or in combination with other articles, material, components, is either converted into another distinct article or product is so changed, transferred, or reshaped that it becomes capable of being put to use differently or distinctly; or (b) a process of assembling, mixing, cutting or preparation of goods in any other manner; and (v) turnover means—
(a) the gross sales or gross receipts, inclusive of sales tax and federal excise duty or any trade discounts shown on invoices, or bills, derived from the sale of goods;
(b) the gross fees for the rendering of services for giving benefits including commissions;
(c) the gross receipts from the execution of contracts; and (d) the company’s share of the amounts stated above of any association of persons of which the company is a member.
Amendment history (25)
- Section 153 substituted by the Finance Act, 2011. The substituted section 153
- The word “or” omitted through Finance Act, 2020 dated 30 June, 2020
- The words inserted through Finance Act, 2020 dated 30 June, 2020
- Inserted by the Finance Act, 2018
- Inserted by the Finance Act, 2014
- The words “other than” substituted by the words “but not including” by the Finance Act, 2014.
- Full stop substituted by the Finance Act, 2017
- Added by the Finance Act, 2017
- Sub-section (2A) inserted by the Finance Act, 2025
- The words “deducted” substituted by the Finance Act, 2012.
- The words “clauses (a) and (c) of” omitted through Finance Act, 2020 dated 30 June, 2020
- The word “final” substituted by the Finance Act, 2019
- The words “be adjustable” substituted through Finance Act, 2019.
- Clause (b) omitted through Finance Act, 2020 dated 30 June, 2020 the omitted clause reads as
- substituted “.” by the Finance Act, 2015
- The word “and” omitted by the Finance Act, 2016.
- Claude (d) omitted through Finance Act, 2020 dated 30 June, 2020 the omitted clause read as
- Claude (e) omitted through Finance Act, 2020 dated 30 June, 2020 the omitted clause read as
- Sub-section (4) substituted by the Finance Act, 2024. The substituted sub-section
- Words inserted by the Finance Act, 2025.
- Sub-section (4A) omitted through Finance Act, 2019, omitted sub-section
- Clause (b) omitted by the Finance Act, 2021. The omitted clause
- Clause (e) omitted by the Finance Act, 2016. The omitted clause (e)
- The word “fifty” substituted through Finance Act, 2020 dated 30 June, 2020
- The expression “tax year 2007 or in any subsequent tax year” substituted by the finance Act 2018.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 153A Omitted by Finance Act, 2013Omitted
Omitted by Finance Act, 2013
s. 153B Omitted by Finance Act, 2021Omitted
Omitted by Finance Act, 2021
s. 154 Exports
Related tools:Export tax rates
(1) Every authorised dealer in foreign exchange shall, at the time of realisation of foreign exchange proceeds on account of the export of goods by an exporter, deduct tax including advance tax from the proceeds at the rate specified in Division IV of Part III of the First Schedule. (3) Every banking company shall, at the time of realisation of the proceeds on account of a sale of goods to an exporter under an inland back-to- back letter of credit or any other arrangement as prescribed by the Board , deduct tax from the amount of the proceeds at the rate specified in Division IV of Part III of the First Schedule.
(3A) The Export Processing Zone Authority established under the Export Processing Zone Authority Ordinance, 1980 (VI of 1980), shall at the time of export of goods by an industrial undertaking located in the areas declared by the Federal Government to be a Zone within the meaning of the aforesaid Ordinance, collect tax at the rate specified in Division IV of Part III of the First Schedule.
(3B) Every direct exporter and an export house registered under the Duty and Tax Remission for Exports Rules, 2001 provided in Sub-Chapter 7 of Chapter XII of the Customs Rules, 2001 and Export Facilitation Scheme, 2021 shall, at the time of making payment for a firm contract to an indirect exporter defined under the said rules, deduct tax at the rates specified in Division IV of Part III of the First Schedule.
(3C) The Collector of Customs at the time of clearing of goods exported shall collect tax from the gross value of such goods at the rate specified in Division IV of Part III of the First Schedule.
(4) The tax deductible under this section shall be a minimum tax on the income arising from the transactions referred to in this section .
Amendment history (18)
- Section 153A omitted by the Finance Act, 2013. Earlier it was substituted by the Finance Act, 2012,
- which was inserted by the Finance Act, 2008. The omitted section 153A
- New section 153B inserted through Finance Act, 2019.
- Section 153B omitted by the Finance Act, 2021. The omitted section
- Words inserted by the Finance Act, 2024.
- Sub-sections (2) omitted by the Finance Act, 2022. The omitted sub-section
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Inserted by the Finance Act, 2003.
- Expression inserted by the Finance Act, 2023.
- Inserted by the Finance Act, 2009.
- The words “deducted” substituted by the Finance Act, 2012.
- The word “final” substituted by the Finance Act, 2024.
- The words ”export or sale to an exporter” substituted by the Finance Act, 2007.
- Sub-section (5) inserted by the Finance Act, 2015.
- Sub-section (5) omitted by the Finance Act, 2024. The omitted sub-section
- Section 154A inserted by the Finance Act, 2021.
- The expression “in case tax credit under section 65F is not available” substituted by the Finance Act,
- The expression “; and“ substituted with colon and new clause (da) inserted by the Finance Act, 2022.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 154A Export of Services
(1) Every authorized dealer in foreign exchange shall, at the time of realization of foreign exchange proceeds on account of the following, deduct tax from the proceeds at the rates specified in Division IVA of Part III of the First Schedule –
(a) exports of computer software or IT services or IT enabled services where the exporter is registered with and duly certified by the Pakistan Software Export Board (PSEB). ;
(b) services or technical services rendered outside Pakistan or exported from Pakistan;
(c) royalty, commission or fees derived by a resident company from a foreign enterprise in consideration for the use outside Pakistan of any patent, invention, model, design, secret process or formula or similar property right, or information concerning industrial, commercial or scientific knowledge, experience or skill made available or provided to such enterprise;
(d) construction contracts executed outside Pakistan :
(da) foreign commission due to an indenting commission agent;
(e) other services rendered outside Pakistan as notified by the Board from time to time;
(2) The tax deductible under this section shall be a final tax on the income arising from the transactions referred to in this section, upon fulfilment of the following conditions –
(a) return has been filed;
(b) withholding tax statements for the relevant tax year have been filed if required under the Ordinance; and (c) sales tax returns under Federal or Provincial laws have been filed, if required under the law :
Provided that this condition shall not apply in case of an exporter mentioned in clause (a) of sub-section (1) of this section.
(d) no credit for foreign taxes paid shall be allowed.
(3) The provisions of sub-section (2) shall not apply to a person who does not fulfill the specified conditions or who opts not to be subject to final taxation:
Provided that the option shall be exercised every year at the time of filing of return under section 114.
(5) The Board in consultation with State Bank of Pakistan shall prescribe mode, manner and procedure of payment of tax under this section.
(6) The Board shall have power to include or exclude certain services for applicability of provisions of this section.
(a) exports of computer software or IT services or IT enabled services where the exporter is registered with and duly certified by the Pakistan Software Export Board (PSEB). ;
(b) services or technical services rendered outside Pakistan or exported from Pakistan;
(c) royalty, commission or fees derived by a resident company from a foreign enterprise in consideration for the use outside Pakistan of any patent, invention, model, design, secret process or formula or similar property right, or information concerning industrial, commercial or scientific knowledge, experience or skill made available or provided to such enterprise;
(d) construction contracts executed outside Pakistan :
(da) foreign commission due to an indenting commission agent;
(e) other services rendered outside Pakistan as notified by the Board from time to time;
(2) The tax deductible under this section shall be a final tax on the income arising from the transactions referred to in this section, upon fulfilment of the following conditions –
(a) return has been filed;
(b) withholding tax statements for the relevant tax year have been filed if required under the Ordinance; and (c) sales tax returns under Federal or Provincial laws have been filed, if required under the law :
Provided that this condition shall not apply in case of an exporter mentioned in clause (a) of sub-section (1) of this section.
(d) no credit for foreign taxes paid shall be allowed.
(3) The provisions of sub-section (2) shall not apply to a person who does not fulfill the specified conditions or who opts not to be subject to final taxation:
Provided that the option shall be exercised every year at the time of filing of return under section 114.
(5) The Board in consultation with State Bank of Pakistan shall prescribe mode, manner and procedure of payment of tax under this section.
(6) The Board shall have power to include or exclude certain services for applicability of provisions of this section.
Amendment history (8)
- Sub-section (5) omitted by the Finance Act, 2024. The omitted sub-section
- Section 154A inserted by the Finance Act, 2021.
- The expression “in case tax credit under section 65F is not available” substituted by the Finance Act,
- The expression “; and“ substituted with colon and new clause (da) inserted by the Finance Act, 2022.
- Clause (b) substituted by the Finance Act, 2022. The substituted clause
- Full stop substituted with a colon and proviso added by the Finance Act, 2023.
- Sub-section (4) omitted by the Finance Act, 2022. The omitted sub-section
- Section 154B inserted by the Finance Act, 2026.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 154B Withholding tax on revenues received from social media platforms
(1) Every banking and non-banking financial institution shall, at the time of credit or receipt of any amount in an account of a person, deduct tax at the rate specified in Division IIIAB of Part III of the First Schedule, where such amount represents revenues received from social media platforms.
(2) For the purposes of this section—
(a) digital content creator or social media influencer means any individual or entity deriving income from creation, publication, or monetization of content on digital platforms including but not limited to YouTube, Facebook, Instagram, Tik Tok or such other similar platforms; and (b) payment includes any inward remittance, transfer, or credit received through banking channels, including through intermediaries such as online payment service providers or digital financial platforms.
(3) The tax deducted under this section shall be –
(a) minimum in the case of a resident person; and (b) final tax in the case of a non-resident person not having a permanent establishment in Pakistan.
(4) The Board may, by notification in the official Gazette, prescribe rules for implementation, including identification and reporting mechanisms.
(2) For the purposes of this section—
(a) digital content creator or social media influencer means any individual or entity deriving income from creation, publication, or monetization of content on digital platforms including but not limited to YouTube, Facebook, Instagram, Tik Tok or such other similar platforms; and (b) payment includes any inward remittance, transfer, or credit received through banking channels, including through intermediaries such as online payment service providers or digital financial platforms.
(3) The tax deducted under this section shall be –
(a) minimum in the case of a resident person; and (b) final tax in the case of a non-resident person not having a permanent establishment in Pakistan.
(4) The Board may, by notification in the official Gazette, prescribe rules for implementation, including identification and reporting mechanisms.
Amendment history (9)
- Clause (b) substituted by the Finance Act, 2022. The substituted clause
- Full stop substituted with a colon and proviso added by the Finance Act, 2023.
- Sub-section (4) omitted by the Finance Act, 2022. The omitted sub-section
- Section 154B inserted by the Finance Act, 2026.
- The words “income from” substituted by the Finance Act, 2021.
- Inserted by the Finance Act, 2006.
- Added by the Finance Act, 2021.
- Sub-section (2) omitted by the Finance Act, 2010. The omitted sub-section (2)
- Sub-section (3) substituted by the Finance Act, 2006. The substituted sub-section (3)
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 155 Rent of immoveable property
Related tools:Rent WHT rates
(1) Every prescribed person making a payment in full or part (including a payment by way of advance) to any person on account of rent of immovable property (including rent of furniture and fixtures, and amounts for services relating to such property) shall deduct tax from the gross amount of rent paid at the rate specified in Division V of Part III of the First Schedule. Explanation.- gross amount of rent includes the amount referred to in sub- section (1) or (3) of section 16, if any. Explanation.— For removal of doubt, it is clarified that the sub section (1) shall apply when a payment is made on account of rent of immoveable property irrespective of head of income (3) In this section, prescribed person means –
(i) the Federal Government;
(ii) a Provincial Government;
(iii) Local Government ;
(iv) a company;
(v) a non-profit organization or a charitable institution ;
(vi) a diplomatic mission of a foreign state;
(via) a private educational institution, a boutique, a beauty parlour, a hospital, a clinic or a maternity home;
(vib) individuals or association of persons paying gross rent of rupees one and a half million and above in a year; or (vii) any other person notified by the Board for the purpose of this section.
Amendment history (14)
- The words “income from” substituted by the Finance Act, 2021.
- Inserted by the Finance Act, 2006.
- Added by the Finance Act, 2021.
- Sub-section (2) omitted by the Finance Act, 2010. The omitted sub-section (2)
- Sub-section (3) substituted by the Finance Act, 2006. The substituted sub-section (3)
- The words “local authority” substituted by the Finance Act, 2008.
- Inserted by the Finance Act, 2013.
- The word “or” omitted by the Finance Act, 2013.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Inserted by the Finance Act, 2002.
- Inserted by the Finance Act, 2003.
- Sub-section (3) substituted by the Finance Act, 2002. The substituted sub-section (3)
- The words “deducted” substituted by the Finance Act, 2012.
- Inserted by the Finance Act, 2014.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 156 Prizes and winnings
Related tools:Prize WHT rates
(1) Every person paying prize on a prize bond, or winnings from a raffle, lottery, prize on winning a quiz, prize offered by companies for promotion of sale, or cross-word puzzle shall deduct tax from the gross amount paid at the rate specified in Division VI of Part III of the First Schedule. (2) Where a prize, referred to in sub-section (1), is not in cash, the person while giving the prize shall collect tax on the fair market value of the prize.
(3) The tax deductible under sub-section (1) or collected under sub- section (2) shall be final tax on the income from prizes or winnings referred to in the said sub-sections.
Amendment history (13)
- The words “local authority” substituted by the Finance Act, 2008.
- Inserted by the Finance Act, 2013.
- The word “or” omitted by the Finance Act, 2013.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Inserted by the Finance Act, 2002.
- Inserted by the Finance Act, 2003.
- Sub-section (3) substituted by the Finance Act, 2002. The substituted sub-section (3)
- The words “deducted” substituted by the Finance Act, 2012.
- Inserted by the Finance Act, 2014.
- Added by the Finance Act, 2004.
- Section 156B omitted through Finance Act, 2020 dated 30 June, 2020 the omitted section read as
- Omitted by the Finance Act, 2002. The omitted section 157
- Substituted by the Finance Act, 2002. The substituted section 158
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 156A Petroleum products
(1) Every person selling petroleum products to a petrol pump operator shall deduct tax from the amount of commission or discount allowed to the operator at the rate specified in Division VIA of Part III of the First schedule.
(2) The tax deductible under sub-section (1) shall be a final tax on the income arising from the sale of petroleum products to which sub-section (1) applies.
(2) The tax deductible under sub-section (1) shall be a final tax on the income arising from the sale of petroleum products to which sub-section (1) applies.
Amendment history (5)
- Added by the Finance Act, 2004.
- The words “deducted” substituted by the Finance Act, 2012.
- Section 156B omitted through Finance Act, 2020 dated 30 June, 2020 the omitted section read as
- Omitted by the Finance Act, 2002. The omitted section 157
- Substituted by the Finance Act, 2002. The substituted section 158
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 156B Omitted by Finance Act, 2020Omitted
Omitted by Finance Act, 2020
s. 157 Omitted by the Finance Ordinance, 2002Omitted
Omitted by the Finance Ordinance, 2002
s. 158 Time of deduction of tax
(a) in the case of deduction under section 151, at the time the amount is paid or credited to the account of recipient , whichever is earlier ; and (b) in other cases, at the time the amount is actually paid ;and (c) amount actually paid shall have the meaning as may be prescribed. Division IV General Provisions Relating to the Advance Payment of Tax or the Deduction of Tax at Source
Amendment history (15)
- Added by the Finance Act, 2004.
- The words “deducted” substituted by the Finance Act, 2012.
- Section 156B omitted through Finance Act, 2020 dated 30 June, 2020 the omitted section read as
- Omitted by the Finance Act, 2002. The omitted section 157
- Substituted by the Finance Act, 2002. The substituted section 158
- Inserted by the Finance Act, 2003.
- Substituted “.” By Finance Act, 2015.
- Added by the Finance Act, 2015.
- The words “paid to a person” omitted by the Finance Act, 2003.
- Inserted by the Finance Act, 2002.
- Comma substituted by a semi colon and a new clause (c) added by the Finance Act, 2014.
- The expression “section 100C” substituted by the Finance Act, 2021.
- The words inserted through Finance Act, 2020 dated 30 June, 2020
- Full stop substituted and three provisos added by the Finance Act, 2021.
- The word “the” omitted by the Finance Act, 2004.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 159 Exemption or lower rate certificate
(1) Where the Commissioner is satisfied that an amount to which Division II or III of this Part or Chapter XII applies is –
(a) exempt from tax under this Ordinance; or (b) subject to tax at a rate lower than that specified in the First Schedule ; or (c) is subject to hundred percent tax credit under under this Ordinance , the Commissioner shall, upon application in writing by the person, in the prescribed form issue the person with an exemption or lower rate certificate :
Provided that in case of a company, the Commissioner shall issue exemption or lower rate certificate under this section within fifteen days of filing of application by the company:
Provided further that the Commissioner shall be deemed to have issued the exemption certificate upon the expiry of fifteen days from filing of application by the aforesaid company and the certificate shall be automatically processed and issued by Iris:
Provided also that the Commissioner may modify or cancel the certificate issued automatically by Iris on the basis of reasons to be recorded in writing after providing an opportunity of being heard.
(1A) The Commissioner shall, upon application from a person, in the prescribed form whose income is not likely to be chargeable to tax under this Ordinance, issue exemption certificate for the profit on debt referred to in clause (c) of sub-section (1) of section 151.
(1B) The Commissioner shall, upon application from a person, in the prescribed form whose income from capital gains is not chargeable to tax under sub-section (1A) of section 37, issue exemption certificate for collection of advance tax under section 236C, in respect of a residential immovable property, which —
(a) has been in the personal use for the last fifteen years;
(b) has been declared by the person in his wealth statement under section 116 for the last fifteen years; and (c) appears as residence for personal use in tax record of the person:
Provided that the exemption certificate under this section shall be issued once in fifteen years.
(1C) Where a person has distributed ninety percent or more of its accounting income amongst the unit or certificate holders or shareholders, as the case may be, in accordance with the provisions of clauses
(99) and (99C) of Part I of the Second Schedule for the year immediately preceding the last tax year, the person shall be eligible for issuance of exemption certificate under sub-section (1) and the certificate shall be issued for the subsequent whole tax year:
Provided that in the case of a person who has started business for the first time, the certificate under sub-section (1) shall be issued on the basis of an undertaking furnished to the Commissioner that the person shall distribute ninety percent of his accounting income to the unit or shareholders for the tax year.
(1D) Where a person has been issued approval under the provision of sub- clause (c) of clause (36) of section 2 of this Ordinance for a tax year, the person shall be eligible for issuance of exemption certificate under sub-section (1), and the certificate shall be issued for the said whole tax year.
(2) A person required to collect advance tax under Division II of this Part or deduct tax from a payment under Division III of this Part or deduct or collect tax under Chapter XII shall collect or deduct the full amount of tax specified in Division II or III or Chapter XII , as the case may be, unless there is in force a certificate issued under sub-section (1) relating to the collection or deduction of such tax, in which case the person shall comply with the certificate.
(6) Notwithstanding omission of sub-sections (3),
(4) and (5), any notification issued under the said sub-sections and for the time being in force, shall continue to remain in force, unless rescinded by the Board through notification in the official Gazette.
(a) exempt from tax under this Ordinance; or (b) subject to tax at a rate lower than that specified in the First Schedule ; or (c) is subject to hundred percent tax credit under under this Ordinance , the Commissioner shall, upon application in writing by the person, in the prescribed form issue the person with an exemption or lower rate certificate :
Provided that in case of a company, the Commissioner shall issue exemption or lower rate certificate under this section within fifteen days of filing of application by the company:
Provided further that the Commissioner shall be deemed to have issued the exemption certificate upon the expiry of fifteen days from filing of application by the aforesaid company and the certificate shall be automatically processed and issued by Iris:
Provided also that the Commissioner may modify or cancel the certificate issued automatically by Iris on the basis of reasons to be recorded in writing after providing an opportunity of being heard.
(1A) The Commissioner shall, upon application from a person, in the prescribed form whose income is not likely to be chargeable to tax under this Ordinance, issue exemption certificate for the profit on debt referred to in clause (c) of sub-section (1) of section 151.
(1B) The Commissioner shall, upon application from a person, in the prescribed form whose income from capital gains is not chargeable to tax under sub-section (1A) of section 37, issue exemption certificate for collection of advance tax under section 236C, in respect of a residential immovable property, which —
(a) has been in the personal use for the last fifteen years;
(b) has been declared by the person in his wealth statement under section 116 for the last fifteen years; and (c) appears as residence for personal use in tax record of the person:
Provided that the exemption certificate under this section shall be issued once in fifteen years.
(1C) Where a person has distributed ninety percent or more of its accounting income amongst the unit or certificate holders or shareholders, as the case may be, in accordance with the provisions of clauses
(99) and (99C) of Part I of the Second Schedule for the year immediately preceding the last tax year, the person shall be eligible for issuance of exemption certificate under sub-section (1) and the certificate shall be issued for the subsequent whole tax year:
Provided that in the case of a person who has started business for the first time, the certificate under sub-section (1) shall be issued on the basis of an undertaking furnished to the Commissioner that the person shall distribute ninety percent of his accounting income to the unit or shareholders for the tax year.
(1D) Where a person has been issued approval under the provision of sub- clause (c) of clause (36) of section 2 of this Ordinance for a tax year, the person shall be eligible for issuance of exemption certificate under sub-section (1), and the certificate shall be issued for the said whole tax year.
(2) A person required to collect advance tax under Division II of this Part or deduct tax from a payment under Division III of this Part or deduct or collect tax under Chapter XII shall collect or deduct the full amount of tax specified in Division II or III or Chapter XII , as the case may be, unless there is in force a certificate issued under sub-section (1) relating to the collection or deduction of such tax, in which case the person shall comply with the certificate.
(6) Notwithstanding omission of sub-sections (3),
(4) and (5), any notification issued under the said sub-sections and for the time being in force, shall continue to remain in force, unless rescinded by the Board through notification in the official Gazette.
Amendment history (15)
- The words “paid to a person” omitted by the Finance Act, 2003.
- Inserted by the Finance Act, 2002.
- Comma substituted by a semi colon and a new clause (c) added by the Finance Act, 2014.
- The expression “section 100C” substituted by the Finance Act, 2021.
- The words inserted through Finance Act, 2020 dated 30 June, 2020
- Full stop substituted and three provisos added by the Finance Act, 2021.
- Inserted by the Finance Act, 2003.
- The word “the” omitted by the Finance Act, 2004.
- Sub-section (1B) inserted by the Finance Act, 2025.
- Sub-sections (1C) and (1D) inserted by the Finance Act, 2026.
- Sub-section (3) substituted by the Finance Act, 2008. The substituted sub-section (3)
- Omitted by Finance Act, 2015. The omitted sub-section (3)
- Omitted by Finance Act, 2015. The omitted sub-section (4)
- Inserted by the Finance Act, 2015
- Inserted by the Finance Act, 2003. Earlier this was inserted by S.R.O. 633(I)/2002, dated 14.09.2002
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 160 Payment of tax collected or deducted
Payment of tax collected or deducted.— Any tax that has been collected or purported to be collected under Division II of this Part or deducted or purported to be deducted under Division III of this Part or deducted or collected, or purported to be deducted or collected under Chapter XII shall be paid to the Commissioner by the person making the collection or deduction within the time and in the manner as may be prescribed.
Amendment history (7)
- Sub-section (3) substituted by the Finance Act, 2008. The substituted sub-section (3)
- Omitted by Finance Act, 2015. The omitted sub-section (3)
- Omitted by Finance Act, 2015. The omitted sub-section (4)
- Inserted by the Finance Act, 2015
- Inserted by the Finance Act, 2002.
- Inserted by the Finance Act, 2003.
- Inserted by the Finance Act, 2003. Earlier this was inserted by S.R.O. 633(I)/2002, dated 14.09.2002
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 161 Failure to pay tax collected or deducted
(1) Where a person–
(a) fails to collect tax as required under Division II of this Part or Chapter XII or deduct tax from a payment as required under Division III of this Part or Chapter XII or as required under section 50 of the repealed Ordinance ; or (b) having collected tax under Division II of this Part or Chapter XII or deducted tax under Division III of this Part or Chapter XII fails to pay the tax to the Commissioner as required under section 160, or having collected tax under section 50 of the repealed Ordinance pay to the credit of the Federal Government as required under sub-section (8) of section 50 of the repealed Ordinance, the person shall be personally liable to pay the amount of tax to the Commissioner who may pass an order to that effect and proceed to recover the same.
(1A) No recovery under sub-section (1) shall be made unless the person referred to in sub-section (1) has been provided with an opportunity of being heard.
(1B) Where at the time of recovery of tax under sub-section (1) it is established that the tax that was to be deducted from the payment made to a person or collected from a person has meanwhile been paid by that person, no recovery shall be made from the person who had failed to collect or deduct the tax but the said person shall be liable to pay default surcharge at the rate of twelve per cent per annum from the date he failed to collect or deduct the tax to the date the tax was paid.
(2) A person personally liable for an amount of tax under sub-section (1) as a result of failing to collect or deduct the tax shall be entitled to recover the tax from the person from whom the tax should have been collected or deducted.
(3) The Commissioner may, after making, or causing to be made, such enquiries as he deems necessary, amend or further amend an order of recovery under sub-section (1), if he considers that the order is erroneous in so far it is prejudicial to the interest of revenue:
Provided that the order recovery shall not be amended, unless the person referred to in sub-section (1) has been provided an opportunity of being heard.
(a) fails to collect tax as required under Division II of this Part or Chapter XII or deduct tax from a payment as required under Division III of this Part or Chapter XII or as required under section 50 of the repealed Ordinance ; or (b) having collected tax under Division II of this Part or Chapter XII or deducted tax under Division III of this Part or Chapter XII fails to pay the tax to the Commissioner as required under section 160, or having collected tax under section 50 of the repealed Ordinance pay to the credit of the Federal Government as required under sub-section (8) of section 50 of the repealed Ordinance, the person shall be personally liable to pay the amount of tax to the Commissioner who may pass an order to that effect and proceed to recover the same.
(1A) No recovery under sub-section (1) shall be made unless the person referred to in sub-section (1) has been provided with an opportunity of being heard.
(1B) Where at the time of recovery of tax under sub-section (1) it is established that the tax that was to be deducted from the payment made to a person or collected from a person has meanwhile been paid by that person, no recovery shall be made from the person who had failed to collect or deduct the tax but the said person shall be liable to pay default surcharge at the rate of twelve per cent per annum from the date he failed to collect or deduct the tax to the date the tax was paid.
(2) A person personally liable for an amount of tax under sub-section (1) as a result of failing to collect or deduct the tax shall be entitled to recover the tax from the person from whom the tax should have been collected or deducted.
(3) The Commissioner may, after making, or causing to be made, such enquiries as he deems necessary, amend or further amend an order of recovery under sub-section (1), if he considers that the order is erroneous in so far it is prejudicial to the interest of revenue:
Provided that the order recovery shall not be amended, unless the person referred to in sub-section (1) has been provided an opportunity of being heard.
Amendment history (7)
- Sub-section (3) substituted by the Finance Act, 2008. The substituted sub-section (3)
- Omitted by Finance Act, 2015. The omitted sub-section (3)
- Omitted by Finance Act, 2015. The omitted sub-section (4)
- Inserted by the Finance Act, 2015
- Inserted by the Finance Act, 2002.
- Inserted by the Finance Act, 2003.
- Inserted by the Finance Act, 2003. Earlier this was inserted by S.R.O. 633(I)/2002, dated 14.09.2002
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 162 Recovery of tax from the person from whom tax was not collected or deducted
(1) Where a person fails to collect tax as required under Division II of this Part or Chapter XII or deduct tax from a payment as required under Division III of this Part or Chapter XII, the Commissioner may pass an order to that effect and recover the amount not collected or deducted from the person from whom the tax should have been collected or to whom the payment was made.
(2) The recovery of tax under sub-section (1) does not absolve the person who failed to deduct tax as required under Division III of this Part or Chapter XII from any other legal action in relation to the failure, or from a charge of default surcharge or the disallowance of a deduction for the expense to which the failure relates, as provided for under this Ordinance.
(2) The recovery of tax under sub-section (1) does not absolve the person who failed to deduct tax as required under Division III of this Part or Chapter XII from any other legal action in relation to the failure, or from a charge of default surcharge or the disallowance of a deduction for the expense to which the failure relates, as provided for under this Ordinance.
Amendment history (4)
- Inserted by the Finance Act, 2003.
- Inserted by the Finance Act, 2002.
- The words “challan of payment“ substituted by the Finance Act, 2022.
- The Full stop substituted with colon and proviso added by the Finance Act, 2022.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 163 Recovery of amounts payable under this Division
Recovery of amounts payable under this Division.— The provisions of this Ordinance shall apply to any amount required to be paid to the Commissioner under this Division as if it were tax due under an assessment order.
Amendment history (4)
- Inserted by the Finance Act, 2003.
- Inserted by the Finance Act, 2002.
- The words “challan of payment“ substituted by the Finance Act, 2022.
- The Full stop substituted with colon and proviso added by the Finance Act, 2022.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 164 Certificate of collection or deduction of tax
(1) Every person collecting tax under Division II of this Part or deducting tax from a payment under Division III of this Part or deducting or collecting tax under Chapter XII shall, at the time of collection or deduction of the tax, furnish to the person from whom the tax has been collected or to whom the payment from which tax has been deducted has been made, copies of the Computerized Payment Receipt (CPR) or any other equivalent document along with a certificate setting out the amount of tax collected or deducted and such other particulars as may be prescribed :
Provided that in case of persons or class of persons notified as SWAPS agent, SWAPS Payment Receipt (SPR) shall be replaced with Computerized Payment Receipt (CPR).
(2) A person required to furnish a return of taxable income for a tax year shall attach to the return copies of the Computerized Payment Receipt (CPR) or SWAPS Payment Receipt (SPR) on the basis of which a certificate is provided to the person under this section in respect of tax collected or deducted in that year
Provided that in case of persons or class of persons notified as SWAPS agent, SWAPS Payment Receipt (SPR) shall be replaced with Computerized Payment Receipt (CPR).
(2) A person required to furnish a return of taxable income for a tax year shall attach to the return copies of the Computerized Payment Receipt (CPR) or SWAPS Payment Receipt (SPR) on the basis of which a certificate is provided to the person under this section in respect of tax collected or deducted in that year
Amendment history (7)
- Inserted by the Finance Act, 2003.
- Inserted by the Finance Act, 2002.
- The words “challan of payment“ substituted by the Finance Act, 2022.
- The Full stop substituted with colon and proviso added by the Finance Act, 2022.
- Section 164A inserted by the Finance Act, 2022.
- The words “Payment of tax collected or deducted by SWAPS agents” substituted by the Finance Act,
- After expression “Chapter XII” the words “or the Tenth Schedule” inserted by the Finance Act, 2019.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 164A Settlement of transactions liable to Withholding Tax by SWAPS agents
(1) Subject to the Ordinance, the Board may, by notification in the official gazette, notify any person or class of persons required to deduct or collect tax under the Ordinance to integrate with Synchronized Withholding Administration and Payment System and to act as SWAPS agent within the time and in the manner as may be prescribed.
(2) The tax collected or purported to be collected or deducted or purported to be deducted under the Ordinance by a notified SWAPS agent and credited to the Commissioner through digital mode, shall be treated to have been paid under section 160 of the Ordinance.
(3) Where tax has been paid by a notified SWAPS agent in accordance with sub-section (2) of this section, copy or number of SWAPS Payment Receipt (SPR) shall replace copy or number of Computerized Payment Receipts (CPR) for the purposes of the Ordinance.
(4) Any notified SWAPS agent shall not be eligible for tax credit under Part X of Chapter III of the Ordinance and exemption under any of the provisions of the Ordinance if notified SWAPS agent fails to integrate with Board.
(5) All persons from whom the tax has been collected or deducted by the notified SWAPS agents shall be eligible for credit of tax withheld against SPR issued by SWAPS Agent.
(6) All other provisions of the Ordinance, not specifically dealt with in this section, shall, mutatis mutandis, apply to the notified SWAPS agents.
(2) The tax collected or purported to be collected or deducted or purported to be deducted under the Ordinance by a notified SWAPS agent and credited to the Commissioner through digital mode, shall be treated to have been paid under section 160 of the Ordinance.
(3) Where tax has been paid by a notified SWAPS agent in accordance with sub-section (2) of this section, copy or number of SWAPS Payment Receipt (SPR) shall replace copy or number of Computerized Payment Receipts (CPR) for the purposes of the Ordinance.
(4) Any notified SWAPS agent shall not be eligible for tax credit under Part X of Chapter III of the Ordinance and exemption under any of the provisions of the Ordinance if notified SWAPS agent fails to integrate with Board.
(5) All persons from whom the tax has been collected or deducted by the notified SWAPS agents shall be eligible for credit of tax withheld against SPR issued by SWAPS Agent.
(6) All other provisions of the Ordinance, not specifically dealt with in this section, shall, mutatis mutandis, apply to the notified SWAPS agents.
Amendment history (4)
- The words “challan of payment“ substituted by the Finance Act, 2022.
- Section 164A inserted by the Finance Act, 2022.
- The words “Payment of tax collected or deducted by SWAPS agents” substituted by the Finance Act,
- After expression “Chapter XII” the words “or the Tenth Schedule” inserted by the Finance Act, 2019.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 165 Statements
(1) Every person collecting tax under Division II of this Part or Chapter XII or the Tenth Schedule or deducting tax from a payment under Division III of this Part or Chapter XII or the Tenth Schedule shall, furnish to the Commissioner a quarterly statement in the prescribed form setting out—
(a) the name, Computerized National Identity Card Number, National Tax Number and address of each person from whom tax has been collected under Division II of this Part or Chapter XII or the Tenth Schedule or to whom payments have been made from which tax has been deducted under Division III of this Part or Chapter XII or the Tenth Schedule in each quarter
(b) the total amount of payments made to a person from which tax has been deducted under Division III of this Part or Chapter XII or the Tenth Schedule in each quarter
(c) the total amount of tax collected from a person under Division II of this Part or Chapter XII or the Tenth Schedule or deducted from payments made to a person under Division III of this Part or Chapter XII or the Tenth Schedule in each quarter ; and (d) such other particulars as may be prescribed :
Provided that every person as provided in sub-section (1) shall be required to file withholding statement even where no withholding tax is collected or deducted during the period :
Provided further that this section shall not apply where information required under sub-section (1) has been furnished under section 165A.;
(1A) Every person involved or engaged in economic transactions as prescribed by the Board shall furnish to the Commissioner a quarterly statement in the prescribed form and manner. ;and (2) Every prescribed person collecting tax under Division II of this Part or Part of Chapter XII or the Tenth Schedule shall furnish statements under sub- section (l) or (1A) as per the following schedule, namely:-
(a) in respect of quarter ending on the 31 day of March, on or before the 20 day of April;
(b) in respect of quarter year ending on the 30 day of June, on or before the 20 day of July;
(c) in respect of quarter ending on the 30 day of September, on or before the 20 day of October; and (d) in respect of quarter ending on or before the 31 day of December, on or before the 20 day of January.
(2A) Any person who, having furnished statement under sub-section (1) or sub-section (2), discovers any omission or wrong statement therein, may file a revised statement within sixty days of filing of statement under sub-section (1) or sub-section (2), as the case may be.
(2B) Notwithstanding anything contained in this section, the Commissioner as he deems lit may by notice in writing require any person, collecting or deducting tax under this Ordinance, to furnish a statement for any period specified in the notice within such period of time as may be specified in the notice.
(3) Board may prescribe a statement requiring any person to furnish information in respect of any transactions in the prescribed form and verified in the prescribed manner .
(4) A person required to furnish a statement under sub-section (1) , may apply in writing, to the Commissioner for an extension of time to furnish the statement after the due date and the Commissioner if satisfied that a reasonable cause exists for non-furnishing of the statement by the due date may, by an order in writing, grant the applicant an extension of time to furnish the statement.
(5) The Board may make rules relating to electronic furnishing of statements under this section including,-
(a) mandatory electronic filing of statements; and (b) determination of eligibility of the data of such statements and e- intermediaries, etc.
(6) Every person deducting tax from payment under section 149 shall furnish to the Commissioner an annual statement in the prescribed form and manner .
(7) Every prescribed person collecting tax under Division II of this Part, III of this Part, Chapter XII or the Tenth Schedule shall, e-file to the Commissioner an annual statement for the relevant tax year within thirty days of the end of tax year in addition to statement to be filed under sub-section (6) of this section.
(8) Every prescribed person collecting tax under Division II of this Part or III of this Part, Chapter XII or the Tenth Schedule shall also e-file to the Commissioner a statement in the prescribed form reconciling the amounts mentioned in annual statement filed under sub-section (7) with the amounts declared in the return, audited accounts or financial statements by the due date of filing of return of income as provided under section 118 of the Ordinance.
(a) the name, Computerized National Identity Card Number, National Tax Number and address of each person from whom tax has been collected under Division II of this Part or Chapter XII or the Tenth Schedule or to whom payments have been made from which tax has been deducted under Division III of this Part or Chapter XII or the Tenth Schedule in each quarter
(b) the total amount of payments made to a person from which tax has been deducted under Division III of this Part or Chapter XII or the Tenth Schedule in each quarter
(c) the total amount of tax collected from a person under Division II of this Part or Chapter XII or the Tenth Schedule or deducted from payments made to a person under Division III of this Part or Chapter XII or the Tenth Schedule in each quarter ; and (d) such other particulars as may be prescribed :
Provided that every person as provided in sub-section (1) shall be required to file withholding statement even where no withholding tax is collected or deducted during the period :
Provided further that this section shall not apply where information required under sub-section (1) has been furnished under section 165A.;
(1A) Every person involved or engaged in economic transactions as prescribed by the Board shall furnish to the Commissioner a quarterly statement in the prescribed form and manner. ;and (2) Every prescribed person collecting tax under Division II of this Part or Part of Chapter XII or the Tenth Schedule shall furnish statements under sub- section (l) or (1A) as per the following schedule, namely:-
(a) in respect of quarter ending on the 31 day of March, on or before the 20 day of April;
(b) in respect of quarter year ending on the 30 day of June, on or before the 20 day of July;
(c) in respect of quarter ending on the 30 day of September, on or before the 20 day of October; and (d) in respect of quarter ending on or before the 31 day of December, on or before the 20 day of January.
(2A) Any person who, having furnished statement under sub-section (1) or sub-section (2), discovers any omission or wrong statement therein, may file a revised statement within sixty days of filing of statement under sub-section (1) or sub-section (2), as the case may be.
(2B) Notwithstanding anything contained in this section, the Commissioner as he deems lit may by notice in writing require any person, collecting or deducting tax under this Ordinance, to furnish a statement for any period specified in the notice within such period of time as may be specified in the notice.
(3) Board may prescribe a statement requiring any person to furnish information in respect of any transactions in the prescribed form and verified in the prescribed manner .
(4) A person required to furnish a statement under sub-section (1) , may apply in writing, to the Commissioner for an extension of time to furnish the statement after the due date and the Commissioner if satisfied that a reasonable cause exists for non-furnishing of the statement by the due date may, by an order in writing, grant the applicant an extension of time to furnish the statement.
(5) The Board may make rules relating to electronic furnishing of statements under this section including,-
(a) mandatory electronic filing of statements; and (b) determination of eligibility of the data of such statements and e- intermediaries, etc.
(6) Every person deducting tax from payment under section 149 shall furnish to the Commissioner an annual statement in the prescribed form and manner .
(7) Every prescribed person collecting tax under Division II of this Part, III of this Part, Chapter XII or the Tenth Schedule shall, e-file to the Commissioner an annual statement for the relevant tax year within thirty days of the end of tax year in addition to statement to be filed under sub-section (6) of this section.
(8) Every prescribed person collecting tax under Division II of this Part or III of this Part, Chapter XII or the Tenth Schedule shall also e-file to the Commissioner a statement in the prescribed form reconciling the amounts mentioned in annual statement filed under sub-section (7) with the amounts declared in the return, audited accounts or financial statements by the due date of filing of return of income as provided under section 118 of the Ordinance.
Amendment history (25)
- The words “challan of payment“ substituted by the Finance Act, 2022.
- Section 164A inserted by the Finance Act, 2022.
- The words “Payment of tax collected or deducted by SWAPS agents” substituted by the Finance Act,
- After expression “Chapter XII” the words “or the Tenth Schedule” inserted by the Finance Act, 2019.
- The word “biannual” substituted through Finance Act 2020 dated 30 June, 2020
- Inserted by the Finance Act, 2011.
- Inserted by the Finance Act, 2003.
- Inserted by the Finance Act, 2002.
- The words “the year” substituted by the Finance Act, 2010.
- The word ”half year” substituted through Finance Act, 2020 dated 30 June, 2020
- The word “half year” substituted through Finance Act, 2020 dated 30 June, 2020
- Full stop substituted by the Finance Act, 2010.
- Inserted by the Finance Act, 2010.
- Full stop substituted by colon and thereafter new provision added through Finance Act 2020 dated
- Added by the Finance Act, 2013.
- New sub-section (1A) inserted through Finance Act, 2020 dated 30 June 2020.
- The expression added through Finance Act, 2020 dated 30 June, 2020
- The clauses (a) and (b) substituted through Finance Act, 2020 dated 30 June, 2020 the substituted
- Inserted by the Finance Act, 2017.
- Inserted by the Finance Act, 2006.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- The word “periodically” omitted by the Finance Act, 2011.
- Colon substituted by the Finance Act, 2011.
- The figure “(2)” substituted by the Finance Act, 2010.
- Added by the Finance Act, 2011.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 165A Furnishing of information by banks
(1) Notwithstanding anything contained in any law for the time being in force including but not limited to the Banking Companies Ordinance, 1962 (LVII of 1962), the Protection of Economic Reforms Act, 1992 (XII of 1992), the Foreign Exchange Regulation Act, 1947 (VII of 1947) and the regulations made under the State Bank of Pakistan Act, 1956 (XXXIII of 1956), if any, on the subject every banking company shall make arrangements to provide to the Board in the prescribed form and manner,—
(a) a list of persons containing particulars of cash withdrawals exceeding fifty thousand Rupees in a day and tax deductions thereon , aggregating to Rupees one million or more during each preceding calendar month.";
(b) a list containing particulars of deposits aggregating rupees ten million or more made during the preceding calendar month;
(c) a list of payments made by any person against bills raised in respect of a credit card issued to that person, aggregating to rupees two hundred thousand or more during the preceding calendar month;
(d) a list of persons receiving profit on debt and tax deductions thereon during preceding financial year ; and (f) a list of persons containing particulars of their business accounts opened or re-designated during each preceding calendar month.
(2) Each banking company shall also make arrangements to nominate a senior officer at the head office to coordinate with the Board for provision of any information and documents in addition to those listed in sub-section (1), as may be required by the Board.
(3) The banking companies and their officers shall not be liable to any civil, criminal or disciplinary proceedings against them for furnishing information required under this Ordinance.
(4) Subject to section 216, all information received under this section shall be used only for tax purposes and kept confidential.
(a) a list of persons containing particulars of cash withdrawals exceeding fifty thousand Rupees in a day and tax deductions thereon , aggregating to Rupees one million or more during each preceding calendar month.";
(b) a list containing particulars of deposits aggregating rupees ten million or more made during the preceding calendar month;
(c) a list of payments made by any person against bills raised in respect of a credit card issued to that person, aggregating to rupees two hundred thousand or more during the preceding calendar month;
(d) a list of persons receiving profit on debt and tax deductions thereon during preceding financial year ; and (f) a list of persons containing particulars of their business accounts opened or re-designated during each preceding calendar month.
(2) Each banking company shall also make arrangements to nominate a senior officer at the head office to coordinate with the Board for provision of any information and documents in addition to those listed in sub-section (1), as may be required by the Board.
(3) The banking companies and their officers shall not be liable to any civil, criminal or disciplinary proceedings against them for furnishing information required under this Ordinance.
(4) Subject to section 216, all information received under this section shall be used only for tax purposes and kept confidential.
Amendment history (11)
- Added by the Finance Act, 2011.
- Semi-colon substituted by the Finance Act, 2013.
- Proviso omitted by the Finance Act, 2013. The omitted proviso
- Sub-sections (7) and (8) added by the Finance Act, 2021.
- Added by the Finance Act, 2013.
- Clause (a) substituted by the Finance Act, 2018 ,the substituted clause is
- Words “for filers and non-filers” omitted through Finance Act, 2019.
- The word “one” substituted by the Finance Act, 2018.
- The expressions “exceeding [ ] five hundred thousand rupees” omitted through Finance Act, 2020
- Words “for non-filers” omitted through Finance Act, 2019.
- Section 165AB inserted by the Finance Act, 2026.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 165AB Reporting of financial transaction data by banking companies and financial institutions
(1) Notwithstanding anything contained in the Banking Companies Ordinance, 1962 (LVII of 1962), the State Bank of Pakistan Act, 1956 (XXXIII of 1956), the Protection of Economic Reforms Act, 1992 (XII of 1992), or any other law for the time being in force, every banking company and Electronic Money Institutions (EMIs) shall electronically upload the information, as mentioned in sub-section (2), to the Central Data Hub, for algorithmic cross-matching of tax and bank information.
(2) Information in respect of an account holders having deposits or withdrawals exceeding one hundred million Rupees during a reporting period in any or all of the bank accounts maintained by the account holder, specifying particulars of deposits or withdrawals, including opening and closing balances, peak credits, and total credits during the reporting period.
(3) This information as shared above shall be digitally processed and shall not be visible to any of the Income Tax Authorities during this cross-matching process.
(4) In case of gross mismatch in the information in respect of an account holder, the digital system of the Board shall feed the information so required into the Compliance Risk Management (CRM) system of the Board, and further proceedings shall be conducted by the National faceless centre as provided in this Ordinance.
(5) The Board shall ensure that such information, shared by the banks, remains strictly confidential and in no case is disclosed or misused in a manner to disregard the confidentiality measures provided in the statutes and rules governing commercial banking, save as provided in this section.
(6) In this section—
(a) reporting period means, in respect of a Financial Year, a period of six months, starting from:
(i) 1st day of July and ending on 31st day of December; and (ii) 1st day of January and ending on 30th day of June,;
(b) specified date means the—
(i) 31st day of January in case of reporting period ending on 31st day of December; and (ii) 31st day of July in case of reporting period ending on 30th day of June;
(c) accounts means bank accounts maintained by a person including current deposits, call deposits, saving deposits, fix deposits, term deposits, or any other such deposits by whatever name called;
(d) peak credits means the highest credit balance in all the bank accounts of the account holder on any given date during the reporting period;
(e) Central Data Hub means a virtual repository of data and information maintained by the Board through PRAL; and (f) compliance risk management (CRM) means a computer programme for identification and communication of compliance risks, including understatement of sales, overstatement of expenses, nonreporting or under-reporting of incomes, assets, and transactions.
(2) Information in respect of an account holders having deposits or withdrawals exceeding one hundred million Rupees during a reporting period in any or all of the bank accounts maintained by the account holder, specifying particulars of deposits or withdrawals, including opening and closing balances, peak credits, and total credits during the reporting period.
(3) This information as shared above shall be digitally processed and shall not be visible to any of the Income Tax Authorities during this cross-matching process.
(4) In case of gross mismatch in the information in respect of an account holder, the digital system of the Board shall feed the information so required into the Compliance Risk Management (CRM) system of the Board, and further proceedings shall be conducted by the National faceless centre as provided in this Ordinance.
(5) The Board shall ensure that such information, shared by the banks, remains strictly confidential and in no case is disclosed or misused in a manner to disregard the confidentiality measures provided in the statutes and rules governing commercial banking, save as provided in this section.
(6) In this section—
(a) reporting period means, in respect of a Financial Year, a period of six months, starting from:
(i) 1st day of July and ending on 31st day of December; and (ii) 1st day of January and ending on 30th day of June,;
(b) specified date means the—
(i) 31st day of January in case of reporting period ending on 31st day of December; and (ii) 31st day of July in case of reporting period ending on 30th day of June;
(c) accounts means bank accounts maintained by a person including current deposits, call deposits, saving deposits, fix deposits, term deposits, or any other such deposits by whatever name called;
(d) peak credits means the highest credit balance in all the bank accounts of the account holder on any given date during the reporting period;
(e) Central Data Hub means a virtual repository of data and information maintained by the Board through PRAL; and (f) compliance risk management (CRM) means a computer programme for identification and communication of compliance risks, including understatement of sales, overstatement of expenses, nonreporting or under-reporting of incomes, assets, and transactions.
Amendment history (9)
- The word “one” substituted by the Finance Act, 2018.
- The expressions “exceeding [ ] five hundred thousand rupees” omitted through Finance Act, 2020
- Words “for non-filers” omitted through Finance Act, 2019.
- Section 165AB inserted by the Finance Act, 2026.
- Inserted by the Finance Act, 2015.
- Inserted by the Finance Act, 2017.
- The word and figure “Subject to section 216, all” substituted by the Finance Act, 2016.
- Added by the Finance Act, 2017
- Section 165C inserted by the Finance Act, 2025.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 165B Furnishing of information by financial institutions including banks
(1) Notwithstanding anything contained in any law for the time being in force including but not limited to the Banking Companies Ordinance, 1962 (LVII of 1962), the Protection of Economic Reforms Act,1992 (XII of 1992), the Foreign Exchange Regulation Act, 1947 (VII of1947) and any regulations made under the State Bank of Pakistan Act,1956 (XXXIII of 1956) on the subject, every financial institution shall make arrangements to provide information regarding non-resident or any other reportable persons to the Board in the prescribed form and manner for the purpose of automatic exchange of information under bilateral agreement or multilateral convention.
(2) All information received under this section shall be used only for tax and related purposes and kept confidential.
(3) For the purpose of this section, the terms "reportable person" and "financial institution" shall have the meaning as provided in Chapter XIIA of the Income Tax Rules, 2002.
(2) All information received under this section shall be used only for tax and related purposes and kept confidential.
(3) For the purpose of this section, the terms "reportable person" and "financial institution" shall have the meaning as provided in Chapter XIIA of the Income Tax Rules, 2002.
Amendment history (5)
- Inserted by the Finance Act, 2015.
- Inserted by the Finance Act, 2017.
- The word and figure “Subject to section 216, all” substituted by the Finance Act, 2016.
- Added by the Finance Act, 2017
- Section 165C inserted by the Finance Act, 2025.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 165C Furnishing of information by online marketplace, payment intermediary and courier service
(1) Notwithstanding the provisions of section 165 of the Ordinance, every payment intermediary and courier service responsible for deducting tax under sub-section (2A) of section 153 of the Ordinance shall file a quarterly withholding statement to the Commissioner for tax deduction regarding sale of digitally ordered goods and services for each quarter of a tax year in the prescribed form setting out –
(a) name, identification number (NTN/CNIC) and address of the seller;
(b) transaction date, unique identifier (invoice number) and total transaction value;
(c) the total amount of tax deducted at the time of payments to the seller; and (d) any other particular may be prescribed.
(2) Every online marketplace in Pakistan shall submit a monthly statement containing name, address, Sales Tax and Income Tax registration number of every vendor registered on its platform supplying digitally ordered goods and services in e-commerce, transactional and aggregated quantum of seller‘s monthly turnover and the amount deposited into the vendor‘s bank account against such sale transactions.
(3) All the provisions of the section 165 excluding sub-sections (1),
(1A) and (6) shall mutatis mutandis apply with respect to the due date of the filing of the withholding statements, revision of the statements, power to call for statement by the Commissioner, extension of time to furnish the statement after due date, power of the Board, filing of annual withholding statement and reconciliation of the withholding statement with the annual income tax return.
(a) name, identification number (NTN/CNIC) and address of the seller;
(b) transaction date, unique identifier (invoice number) and total transaction value;
(c) the total amount of tax deducted at the time of payments to the seller; and (d) any other particular may be prescribed.
(2) Every online marketplace in Pakistan shall submit a monthly statement containing name, address, Sales Tax and Income Tax registration number of every vendor registered on its platform supplying digitally ordered goods and services in e-commerce, transactional and aggregated quantum of seller‘s monthly turnover and the amount deposited into the vendor‘s bank account against such sale transactions.
(3) All the provisions of the section 165 excluding sub-sections (1),
(1A) and (6) shall mutatis mutandis apply with respect to the due date of the filing of the withholding statements, revision of the statements, power to call for statement by the Commissioner, extension of time to furnish the statement after due date, power of the Board, filing of annual withholding statement and reconciliation of the withholding statement with the annual income tax return.
Amendment history (8)
- Inserted by the Finance Act, 2015.
- Inserted by the Finance Act, 2017.
- The word and figure “Subject to section 216, all” substituted by the Finance Act, 2016.
- Added by the Finance Act, 2017
- Section 165C inserted by the Finance Act, 2025.
- Inserted by the Finance Act, 2003.
- Inserted by the Finance Act, 2002.
- The words “tax under Division II of this Part” omitted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 166 Priority of tax collected or deducted
(1) Tax collected by a person under Division II of this Part or Chapter XII or deducted from a payment under Division III of this Part or Chapter XII shall be —
(a) held by the person in trust for the Federal Government; and (b) not subject to attachment in respect of any debt or liability of the person.
(2) In the event of the liquidation or bankruptcy of a person who has collected or deducted tax from a payment under Division III of this Part or the person in liquidation or bankruptcy and the Commissioner shall have a first claim for that amount before any distribution of property is made.
(3) Every amount that a person is required to deduct from a payment under Division III of this Part or Chapter XII shall be –
(a) a first charge on the payment; and (b) deducted prior to any other amount that the person may be required to deduct from the payment by virtue of an order of any Court or under any other law.
(a) held by the person in trust for the Federal Government; and (b) not subject to attachment in respect of any debt or liability of the person.
(2) In the event of the liquidation or bankruptcy of a person who has collected or deducted tax from a payment under Division III of this Part or the person in liquidation or bankruptcy and the Commissioner shall have a first claim for that amount before any distribution of property is made.
(3) Every amount that a person is required to deduct from a payment under Division III of this Part or Chapter XII shall be –
(a) a first charge on the payment; and (b) deducted prior to any other amount that the person may be required to deduct from the payment by virtue of an order of any Court or under any other law.
Amendment history (5)
- Inserted by the Finance Act, 2003.
- Inserted by the Finance Act, 2002.
- The words “tax under Division II of this Part” omitted by the Finance Act, 2003.
- Substituted for the words, figure and comma “Division II, Division III” by the Finance Act, 2003.
- Inserted by the Finance Act, 2018.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 167 Indemnity
Indemnity.— A person who has deducted tax from a payment under Division III of this Part or Chapter XII and remitted the deducted amount to the Commissioner shall be treated as having paid the deducted amount to the recipient of the payment for the purposes of any claim by the recipient for payment of the deducted tax.
Amendment history (4)
- Substituted for the words, figure and comma “Division II, Division III” by the Finance Act, 2003.
- Inserted by the Finance Act, 2002.
- Inserted by the Finance Act, 2003.
- Inserted by the Finance Act, 2018.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 168 Credit for tax collected or deducted
(1) For the purposes of this Ordinance —
(a) the amount of any tax deducted from a payment under Division III of this Part or Chapter XII shall be treated as income derived by the person to whom the payment was made; and (b) the amount of any tax collected under Division II of this Part or shall be treated as tax paid by the person from whom the tax was collected or deducted.
(2) Subject to sub-sections (2A), (2B),
(3) and (4), where an amount of tax has been collected from a person under Division II of this Part or Chapter XII or deducted from a payment made to a person under Division III of this Part or tax due by the person on the taxable income of the person for the tax year in which the tax was collected or deducted.
(2A) Where a company is a member of an association of persons which is taxed in accordance with section 92 and an amount of tax has been collected from an association of persons under Division II of this Part or Chapter XII or deducted from a payment made to the said association under Division III of this Part or or deducted from the association of persons, according to the following formula, namely:— (A/B) x C Where — A is the amount of share of profits before tax received by the company as a member from the association of persons; B is the taxable income of the association of persons; and C is the amount of tax withheld in the name of the association of persons.
(2B) No tax credit shall be allowed for any tax collected or deducted from an association of persons in respect of an amount for which credit has been allowed under sub-section (2A) to a company being a member of the association.
(3) No tax credit shall be allowed for any tax collected or deducted that is a final tax under—
(ca) sub-section (1E) of section 152;
(cb) sub-section (2) of section 152A;
(ea) sub-section (2) of section 154A;
(f) sub-section (3) of section 156;
(g) sub-section (2) of section 156A; and (j)
(k) sub-section (7) of section 236Z.
(4) A tax credit allowed under this section shall be applied in accordance with sub-section (3) of section 4.
(5) A tax credit or part of a tax credit allowed under this section for a tax year that is not able to be credited under sub-section (3) of section 4 for the year shall be refunded to the taxpayer in accordance with section 170.
(6) Notwithstanding anything contained in any other law or any rules for the time being in force, no amount shall be deducted on account of service charges from the tax withheld or collected by any person under the provisions of this Ordinance.
(7) In case any amount is deducted on account of service charges, by the person, the said person will be liable to pay the said amount to the Federal Government and all the provisions of this Ordinance shall apply in so far as they apply to the recovery of tax.
(a) the amount of any tax deducted from a payment under Division III of this Part or Chapter XII shall be treated as income derived by the person to whom the payment was made; and (b) the amount of any tax collected under Division II of this Part or shall be treated as tax paid by the person from whom the tax was collected or deducted.
(2) Subject to sub-sections (2A), (2B),
(3) and (4), where an amount of tax has been collected from a person under Division II of this Part or Chapter XII or deducted from a payment made to a person under Division III of this Part or tax due by the person on the taxable income of the person for the tax year in which the tax was collected or deducted.
(2A) Where a company is a member of an association of persons which is taxed in accordance with section 92 and an amount of tax has been collected from an association of persons under Division II of this Part or Chapter XII or deducted from a payment made to the said association under Division III of this Part or or deducted from the association of persons, according to the following formula, namely:— (A/B) x C Where — A is the amount of share of profits before tax received by the company as a member from the association of persons; B is the taxable income of the association of persons; and C is the amount of tax withheld in the name of the association of persons.
(2B) No tax credit shall be allowed for any tax collected or deducted from an association of persons in respect of an amount for which credit has been allowed under sub-section (2A) to a company being a member of the association.
(3) No tax credit shall be allowed for any tax collected or deducted that is a final tax under—
(ca) sub-section (1E) of section 152;
(cb) sub-section (2) of section 152A;
(ea) sub-section (2) of section 154A;
(f) sub-section (3) of section 156;
(g) sub-section (2) of section 156A; and (j)
(k) sub-section (7) of section 236Z.
(4) A tax credit allowed under this section shall be applied in accordance with sub-section (3) of section 4.
(5) A tax credit or part of a tax credit allowed under this section for a tax year that is not able to be credited under sub-section (3) of section 4 for the year shall be refunded to the taxpayer in accordance with section 170.
(6) Notwithstanding anything contained in any other law or any rules for the time being in force, no amount shall be deducted on account of service charges from the tax withheld or collected by any person under the provisions of this Ordinance.
(7) In case any amount is deducted on account of service charges, by the person, the said person will be liable to pay the said amount to the Federal Government and all the provisions of this Ordinance shall apply in so far as they apply to the recovery of tax.
Amendment history (18)
- Substituted for the words, figure and comma “Division II, Division III” by the Finance Act, 2003.
- Inserted by the Finance Act, 2002.
- Inserted by the Finance Act, 2003.
- Inserted by the Finance Act, 2018.
- Sub-section (3) substituted by the Finance Act, 2011. The substituted sub-section (3) read as
- In section 168 in sub-section (3) clause (a) omitted by the Finance Act, 2019. The omitted clause
- In section 168 in sub-section (3) clause (b) omitted by the Finance Act, 2019 the omitted clause read
- In section 168 in sub-section (3) clause (c) omitted by the Finance Act, 2019 the omitted clause read
- After omitted clause (c) new clauses (ca) and (cb) inserted through Finance Act, 2020 dated 30
- In section 168 in sub-section (3) clause (d) omitted by the Finance Act, 2019 the omitted clause read
- The words, comma and brackets “clauses (a), (c) and (d) of” omitted by the Finance Act, 2013.
- Clause (e) omitted by the Finance Act, 2024. The omitted clause read as follow
- Clause (ea) inserted by the Finance Act, 2021.
- Added by the Finance Act, 2013.
- Clause (i) omitted by the Finance Act, 2013. The omitted clause (i)
- In section 168 in sub-section (3) clause (b) omitted by the Finance Act, 2019 the omitted clause
- Clause (k) added by the Finance Act, 2023.
- Added by the Finance Act, 2009.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 169 Tax collected or deducted as a final tax
(1) This section shall apply where —
(b) the tax required to be deducted is a final tax under sub- section (1E) of section 152, 152A , sub-section (2) of section 154A , clause (b) of sub-section (3) of section 154B, sub-section (3) of section 156, sub-section (2) or section 156A or sub-section (7) of section 236Z on the income from which it was deductible .
(2) Where this section applies —
(a) the income shall not be chargeable to tax under any head of income in computing the taxable income of the person;
(b) no deduction shall be allowable under this Ordinance for any expenditure incurred in deriving the income;
(c) the amount of the income shall not be reduced by —
(i) any deductible allowance under Part IX of Chapter III; or (ii) the set off of any loss;
(d) the tax deducted shall not be reduced by any tax credit allowed under this Ordinance;
(e) there shall be no refund of the tax collected or deducted unless the tax so collected or deducted is in excess of the amount for which the taxpayer is chargeable under this Ordinance ; and .
(f) tax deductible has not been deducted, or short deducted, the said non-deduction or short deduction may be recovered under section 162, and all the provisions of this Ordinance shall apply accordingly.
(3) Where all the income derived by a person in a tax year is subject to final taxation under the provisions referred to in sub-section (1) or under sections 5, 6 and 7 an assessment shall be treated to have been made under section Explanation.— The expression, an assessment shall be treated to have been made under section 120 means,—
(a) the Commissioner shall be taken to have made an assessment of income for that tax year, and the tax due thereon equal to those respective amounts specified in the return ; and (b) the return shall be taken for all purposes of this Ordinance to be an assessment order.
(4) Where the tax collected or deducted is final tax under any provision of this Ordinance and hundred percent higher tax rate has been prescribed for the said tax under the Tenth Schedule, the final tax shall be the tax rate prescribed in the First Schedule and the excess tax collected under the Tenth Schedule specified for persons not appearing in the active taxpayers’ list shall be adjustable in case the return is filed before finalization of assessment as provided in rule 4 of the Tenth Schedule. PART VI REFUNDS
(b) the tax required to be deducted is a final tax under sub- section (1E) of section 152, 152A , sub-section (2) of section 154A , clause (b) of sub-section (3) of section 154B, sub-section (3) of section 156, sub-section (2) or section 156A or sub-section (7) of section 236Z on the income from which it was deductible .
(2) Where this section applies —
(a) the income shall not be chargeable to tax under any head of income in computing the taxable income of the person;
(b) no deduction shall be allowable under this Ordinance for any expenditure incurred in deriving the income;
(c) the amount of the income shall not be reduced by —
(i) any deductible allowance under Part IX of Chapter III; or (ii) the set off of any loss;
(d) the tax deducted shall not be reduced by any tax credit allowed under this Ordinance;
(e) there shall be no refund of the tax collected or deducted unless the tax so collected or deducted is in excess of the amount for which the taxpayer is chargeable under this Ordinance ; and .
(f) tax deductible has not been deducted, or short deducted, the said non-deduction or short deduction may be recovered under section 162, and all the provisions of this Ordinance shall apply accordingly.
(3) Where all the income derived by a person in a tax year is subject to final taxation under the provisions referred to in sub-section (1) or under sections 5, 6 and 7 an assessment shall be treated to have been made under section Explanation.— The expression, an assessment shall be treated to have been made under section 120 means,—
(a) the Commissioner shall be taken to have made an assessment of income for that tax year, and the tax due thereon equal to those respective amounts specified in the return ; and (b) the return shall be taken for all purposes of this Ordinance to be an assessment order.
(4) Where the tax collected or deducted is final tax under any provision of this Ordinance and hundred percent higher tax rate has been prescribed for the said tax under the Tenth Schedule, the final tax shall be the tax rate prescribed in the First Schedule and the excess tax collected under the Tenth Schedule specified for persons not appearing in the active taxpayers’ list shall be adjustable in case the return is filed before finalization of assessment as provided in rule 4 of the Tenth Schedule. PART VI REFUNDS
Amendment history (25)
- Clause (e) omitted by the Finance Act, 2024. The omitted clause read as follow
- Clause (ea) inserted by the Finance Act, 2021.
- In section 168 in sub-section (3) clause (b) omitted by the Finance Act, 2019 the omitted clause read
- Added by the Finance Act, 2013.
- Clause (i) omitted by the Finance Act, 2013. The omitted clause (i)
- In section 168 in sub-section (3) clause (b) omitted by the Finance Act, 2019 the omitted clause
- Clause (k) added by the Finance Act, 2023.
- Added by the Finance Act, 2009.
- Clause (a) omitted through Finance Act, 2020 the substituted clause
- The words “deduction of tax” substituted by the Finance Act, 2012.
- 152”substituted by Finance Act, 2020 dated 30 June, 2020
- The expression “sub-section (4) of section 154,” omitted by the Finance Act, 2024.
- Inserted by the Finance Act, 2021.
- Expression inserted by the Finance Act, 2026.
- The word, digit and comma “section 155,” omitted by the Finance Act, 2010.
- The words, figures and brackets “or sub-section (2) of section 157” omitted by the Finance Act,
- Inserted by the Finance Act, 2004.
- The word “of” substituted by the word “or” by the Finance Act, 2014.
- Expression inserted by the Finance Act, 2023.
- The expressions omitted through Finance Act, 2020 dated 30 June, 2020 the omitted expressions
- 233A” omitted by the Finance Act, 2008.
- The words “has been deducted” substituted by the Finance Act, 2012.
- The word “and” omitted by the Finance Act, 2012.
- Added by the Finance Act, 2002.
- Full stop substituted by the Finance Act, 2012.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 170 Refunds
(1) A taxpayer who has paid tax in excess of the amount which the taxpayer is properly chargeable under this Ordinance may apply to the Commissioner for a refund of the excess.
(1A) Where any advance or loan, to which sub-clause (e) of clause (19) of section 2 applies, is repaid by a taxpayer, he shall be entitled to a refund of the tax, if any, paid by him as a result of such advance or loan having been treated as dividend under the aforesaid provision.
(2) An application for a refund under sub-section (1) shall be –
(a) made in the prescribed form;
(b) verified in the prescribed manner; and (c) made within three years of the later of -
(i) the date on which the Commissioner has issued the assessment order to the taxpayer for the tax year to which the refund application relates; or (ii) the date on which the tax was paid.
(3) Where the Commissioner is satisfied that tax has been overpaid, the Commissioner shall —
(a) apply the excess in reduction of any other tax due from the taxpayer under this Ordinance;
(b) apply the balance of the excess, if any, in reduction of any outstanding liability of the taxpayer to pay other taxes; and (c) refund the remainder, if any, to the taxpayer.
(4) The Commissioner shall, within sixty days of receipt of a refund application under sub-section (1), serve on the person applying for the refund an order in writing of the decision after providing the taxpayer an opportunity of being heard .
(5) A person aggrieved by—
(a) an order passed under sub-section (4); or (b) the failure of the Commissioner to pass an order under sub- section (4) within the time specified in that sub-section, may prefer an appeal under Part III of this Chapter.
(6) The Board may make rules regulating procedure for expeditious processing and automatic payment of refunds through centralized processing system with effect from a date to be notified by the Board.
(1A) Where any advance or loan, to which sub-clause (e) of clause (19) of section 2 applies, is repaid by a taxpayer, he shall be entitled to a refund of the tax, if any, paid by him as a result of such advance or loan having been treated as dividend under the aforesaid provision.
(2) An application for a refund under sub-section (1) shall be –
(a) made in the prescribed form;
(b) verified in the prescribed manner; and (c) made within three years of the later of -
(i) the date on which the Commissioner has issued the assessment order to the taxpayer for the tax year to which the refund application relates; or (ii) the date on which the tax was paid.
(3) Where the Commissioner is satisfied that tax has been overpaid, the Commissioner shall —
(a) apply the excess in reduction of any other tax due from the taxpayer under this Ordinance;
(b) apply the balance of the excess, if any, in reduction of any outstanding liability of the taxpayer to pay other taxes; and (c) refund the remainder, if any, to the taxpayer.
(4) The Commissioner shall, within sixty days of receipt of a refund application under sub-section (1), serve on the person applying for the refund an order in writing of the decision after providing the taxpayer an opportunity of being heard .
(5) A person aggrieved by—
(a) an order passed under sub-section (4); or (b) the failure of the Commissioner to pass an order under sub- section (4) within the time specified in that sub-section, may prefer an appeal under Part III of this Chapter.
(6) The Board may make rules regulating procedure for expeditious processing and automatic payment of refunds through centralized processing system with effect from a date to be notified by the Board.
Amendment history (10)
- Inserted by the Finance Act, 2003.
- The word “two” substituted by the Finance Act, 2016.
- The word “forty five” substituted by the Finance Act, 2009.
- Sub-section (5) substituted by the Finance Act, 2003. The substituted sub-section (5)
- New sub-section (6) added through Finance Act, 2020 dated 30 June,2020
- Section 170A inserted by the Finance Act, 2021.
- The word “KIBOR” substituted by the Finance Act, 2012.
- The word “fifteen” substituted by Finance Act, 2015.
- Full stop substituted by the Finance Act, 2009.
- Inserted by the Finance Act, 2009.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 170A Electronic processing and electronic issuance of Refunds by the Board
Electronic processing and electronic issuance of Refunds by the Board.—Notwithstanding anything contained in section 170 of this Ordinance, commencing from tax year 2021, the Board may process and issue refund to the taxpayer who has filed the return of income without requiring refund application by the taxpayer to the extent of tax credit verified by the Board’s computerized system as may be prescribed. The refund amount sanctioned under this section shall be electronically transferred in the taxpayer’s notified bank account.
Amendment history (7)
- Sub-section (5) substituted by the Finance Act, 2003. The substituted sub-section (5)
- New sub-section (6) added through Finance Act, 2020 dated 30 June,2020
- Section 170A inserted by the Finance Act, 2021.
- The word “KIBOR” substituted by the Finance Act, 2012.
- The word “fifteen” substituted by Finance Act, 2015.
- Full stop substituted by the Finance Act, 2009.
- Inserted by the Finance Act, 2009.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 171 Additional payment for delayed refunds
(1) Where a refund due to a taxpayer is not paid within three months of the date on which it becomes due, the Commissioner shall pay to the taxpayer a further amount by way of compensation at the rate of KIBOR plus 0.5 per cent per annum of the amount of the refund computed for the period commencing at the end of the three month period and ending on the date on which it was paid :
Provided that where there is reason to believe that a person has claimed the refund which is not admissible to him, the provision regarding the payment of such additional amount shall not apply till the investigation of the claim is completed and the claim is either accepted or rejected.
(2) For the purposes of this section, a refund shall be treated as having become due —
(a) in the case of a refund required to be made in consequence of an order on an appeal to the Commissioner (Appeals), an appeal to the Appellate Tribunal, a reference to the High Court or an appeal to the Supreme Court, on the date of receipt of such order by the Commissioner; or (b) in the case of a refund required to be made as a consequence of a revision order under section 122A , on the date the order is made by the Commissioner; or (c) in any other case, on the date the refund order is made. Explanation.—For the removal of doubt, it is clarified that where a refund order is made on an application under sub- section (1) of section 170, for the purpose of compensation, the refund becomes due from the date refund order is made and not from the date the assessment of income treated to have been made by the Commissioner under section 120.
Provided that where there is reason to believe that a person has claimed the refund which is not admissible to him, the provision regarding the payment of such additional amount shall not apply till the investigation of the claim is completed and the claim is either accepted or rejected.
(2) For the purposes of this section, a refund shall be treated as having become due —
(a) in the case of a refund required to be made in consequence of an order on an appeal to the Commissioner (Appeals), an appeal to the Appellate Tribunal, a reference to the High Court or an appeal to the Supreme Court, on the date of receipt of such order by the Commissioner; or (b) in the case of a refund required to be made as a consequence of a revision order under section 122A , on the date the order is made by the Commissioner; or (c) in any other case, on the date the refund order is made. Explanation.—For the removal of doubt, it is clarified that where a refund order is made on an application under sub- section (1) of section 170, for the purpose of compensation, the refund becomes due from the date refund order is made and not from the date the assessment of income treated to have been made by the Commissioner under section 120.
Amendment history (11)
- Sub-section (5) substituted by the Finance Act, 2003. The substituted sub-section (5)
- New sub-section (6) added through Finance Act, 2020 dated 30 June,2020
- Section 170A inserted by the Finance Act, 2021.
- The word “KIBOR” substituted by the Finance Act, 2012.
- The word “fifteen” substituted by Finance Act, 2015.
- Full stop substituted by the Finance Act, 2009.
- Inserted by the Finance Act, 2009.
- Inserted by the Finance Act, 2003.
- Substituted for the figure “135” by the Finance Act, 2003.
- Added by the Finance Act, 2013.
- New Section 171A inserted through Finance Act, 2019.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 171A Payment of refund through income tax refund bonds
(1) Notwithstanding anything contained in sections 170 and 171, the income tax refunds payable under this Ordinance may also be paid through income tax refund bonds to be issued by FBR Refund Settlement Company Limited, in book-entry form through an establishment licensed by the Securities and Exchange Commission of Pakistan as a central depository under the Securities Act, 2015 (III of 2015), in lieu of payment to be made through issuance of cheques or bank debit advice.
(2) The Board shall issue a promissory note to FBR Refund Settlement Company Limited, hereinafter referred to as the company, incorporating the details of refund claimants and the amount of refund determined as payable to each for issuance of income tax refund bonds, hereinafter referred to as the bonds, of the same amount.
(3) The bonds shall be issued in value in multiples of one hundred thousand rupees.
(4) The bonds so issued have maturity period of three years and shall bear annual simple profit at ten percent.
(5) The bonds shall be traded freely in the country’s secondary markets.
(4) The bonds shall be approved security for calculating the statutory liquidity reserve.
(5) The bonds shall be accepted by the banks as collateral.
(6) There shall be no compulsory deduction of Zakat against bonds and Sahib-e-Nisab may pay Zakat voluntarily according to Shariah.
(7) After period of maturity, the company shall return the promissory note to the Board and the Board shall make the payment of amount due under the bonds, along with profit due, to the bond holders.
(8) The bonds shall be redeemable in the manner as in sub-section (9) before maturity only at the option of the Board along with simple profit payable at the time of redemption in the light of general or specific policy to be formulated by the Board.
(9) The refund under sub-section (1) shall be paid in the aforesaid manner to the claimants who opt for payment in such manner.
(10) The Federal Government may notify procedure to regulate the issuance, redemption and other matters relating to the bonds, as may be required. PART VII REPRESENTATIVES
(2) The Board shall issue a promissory note to FBR Refund Settlement Company Limited, hereinafter referred to as the company, incorporating the details of refund claimants and the amount of refund determined as payable to each for issuance of income tax refund bonds, hereinafter referred to as the bonds, of the same amount.
(3) The bonds shall be issued in value in multiples of one hundred thousand rupees.
(4) The bonds so issued have maturity period of three years and shall bear annual simple profit at ten percent.
(5) The bonds shall be traded freely in the country’s secondary markets.
(4) The bonds shall be approved security for calculating the statutory liquidity reserve.
(5) The bonds shall be accepted by the banks as collateral.
(6) There shall be no compulsory deduction of Zakat against bonds and Sahib-e-Nisab may pay Zakat voluntarily according to Shariah.
(7) After period of maturity, the company shall return the promissory note to the Board and the Board shall make the payment of amount due under the bonds, along with profit due, to the bond holders.
(8) The bonds shall be redeemable in the manner as in sub-section (9) before maturity only at the option of the Board along with simple profit payable at the time of redemption in the light of general or specific policy to be formulated by the Board.
(9) The refund under sub-section (1) shall be paid in the aforesaid manner to the claimants who opt for payment in such manner.
(10) The Federal Government may notify procedure to regulate the issuance, redemption and other matters relating to the bonds, as may be required. PART VII REPRESENTATIVES
Amendment history (5)
- Inserted by the Finance Act, 2003.
- Substituted for the figure “135” by the Finance Act, 2003.
- Added by the Finance Act, 2013.
- New Section 171A inserted through Finance Act, 2019.
- The words “local authority” substituted by the Finance Act, 2008.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 172 Representatives
(1) For the purposes of this Ordinance and subject to sub-sections
(2) and (3), representative in respect of a person for a tax year, means –
(a) where the person is an individual under a legal disability, the guardian or manager who receives or is entitled to receive income on behalf, or for the benefit of the individual;
(b) where the person is a company (other than a trust, a Provincial Government, or Local Government in Pakistan), the principal officer of the company;
(c) where the person is a trust declared by a duly executed instrument in writing whether testamentary or otherwise (including any Wakf deed which is valid under the MussalmanWakf Validation Act, 1913 (VI of 1913)), any trustee of the trust;
(d) where the person is a Provincial Government, or Local Government in Pakistan, any individual responsible for accounting for the receipt and payment of moneys or funds on behalf of the Provincial Government or Local Government ;
(e) where the person is an association of persons, the principal officer of the association or, in the case of a firm, any partner in the firm;
(f) where the person is the Federal Government, any individual responsible for accounting for the receipt and payment of moneys or funds on behalf of the Federal Government; or (g) where the person is a public international organisation, or a foreign government or political sub-Division of a foreign government, any individual responsible for accounting for the receipt and payment of moneys or funds in Pakistan on behalf of the organisation, government, or political sub-Division of the government.
(2) Where the Court of Wards, the Administrator General, the Official Trustee, or any receiver or manager appointed by, or under, any order of a Court receives or is entitled to receive income on behalf, or for the benefit of any person, such Court of Wards, Administrator General, Official Trustee, receiver, or manager shall be the representative of the person for a tax year for the purposes of this Ordinance.
(3) Subject to sub-sections
(4) and (5), where a person is a non-resident person, the representative of the person for the purposes of this Ordinance for a tax year shall be any person in Pakistan –
(a) who is employed by, or on behalf of, the non-resident person;
(b) who has any business connection with the non-resident person : Explanation.— In this clause the expression business connection includes transfer of an asset or business in Pakistan by a non-resident;
(c) from or through whom the non-resident person is in receipt of any income, whether directly or indirectly;
(d) who holds, or controls the receipt or disposal of any money belonging to the non-resident person;
(e) who is the trustee of the non-resident person; or (f) who is declared by the Commissioner by an order in writing to be the representative of the non-resident person.
(4) A bonafide independent broker in Pakistan who, in respect of any transactions, does not deal directly with, or on behalf of, a non-resident principal but deals with, or through a non-resident broker, shall not be treated as a representative of the non-resident principal in respect of such transactions, if –
(a) the transactions are carried on in the ordinary course of business through the first-mentioned broker; and (b) the non-resident broker is carrying on such transactions in the ordinary course of its business and not as a principal.
(5) No person shall be declared as the representative of a non- resident person unless the person has been given an opportunity by the Commissioner of being heard.
(2) and (3), representative in respect of a person for a tax year, means –
(a) where the person is an individual under a legal disability, the guardian or manager who receives or is entitled to receive income on behalf, or for the benefit of the individual;
(b) where the person is a company (other than a trust, a Provincial Government, or Local Government in Pakistan), the principal officer of the company;
(c) where the person is a trust declared by a duly executed instrument in writing whether testamentary or otherwise (including any Wakf deed which is valid under the MussalmanWakf Validation Act, 1913 (VI of 1913)), any trustee of the trust;
(d) where the person is a Provincial Government, or Local Government in Pakistan, any individual responsible for accounting for the receipt and payment of moneys or funds on behalf of the Provincial Government or Local Government ;
(e) where the person is an association of persons, the principal officer of the association or, in the case of a firm, any partner in the firm;
(f) where the person is the Federal Government, any individual responsible for accounting for the receipt and payment of moneys or funds on behalf of the Federal Government; or (g) where the person is a public international organisation, or a foreign government or political sub-Division of a foreign government, any individual responsible for accounting for the receipt and payment of moneys or funds in Pakistan on behalf of the organisation, government, or political sub-Division of the government.
(2) Where the Court of Wards, the Administrator General, the Official Trustee, or any receiver or manager appointed by, or under, any order of a Court receives or is entitled to receive income on behalf, or for the benefit of any person, such Court of Wards, Administrator General, Official Trustee, receiver, or manager shall be the representative of the person for a tax year for the purposes of this Ordinance.
(3) Subject to sub-sections
(4) and (5), where a person is a non-resident person, the representative of the person for the purposes of this Ordinance for a tax year shall be any person in Pakistan –
(a) who is employed by, or on behalf of, the non-resident person;
(b) who has any business connection with the non-resident person : Explanation.— In this clause the expression business connection includes transfer of an asset or business in Pakistan by a non-resident;
(c) from or through whom the non-resident person is in receipt of any income, whether directly or indirectly;
(d) who holds, or controls the receipt or disposal of any money belonging to the non-resident person;
(e) who is the trustee of the non-resident person; or (f) who is declared by the Commissioner by an order in writing to be the representative of the non-resident person.
(4) A bonafide independent broker in Pakistan who, in respect of any transactions, does not deal directly with, or on behalf of, a non-resident principal but deals with, or through a non-resident broker, shall not be treated as a representative of the non-resident principal in respect of such transactions, if –
(a) the transactions are carried on in the ordinary course of business through the first-mentioned broker; and (b) the non-resident broker is carrying on such transactions in the ordinary course of its business and not as a principal.
(5) No person shall be declared as the representative of a non- resident person unless the person has been given an opportunity by the Commissioner of being heard.
Amendment history (1)
- The words “local authority” substituted by the Finance Act, 2008.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 173 Liability and obligations of representatives
(1) Every representative of a person shall be responsible for performing any duties or obligations imposed by or under this Ordinance on the person, including the payment of tax.
(2) Subject to sub-section (4), any tax that, by virtue of sub-section (1), is payable by a representative of a taxpayer shall be recoverable from the representative only to the extent of any assets of the taxpayer that are in the possession or under the control of the representative.
(3) Every representative of a taxpayer who pays any tax owing by the taxpayer shall be entitled to recover the amount so paid from the taxpayer or to retain the amount so paid out of any moneys of the taxpayer that are in the representative’s possession or under the representative’s control.
(3A) Any representative, or any person who apprehends that he may be assessed as a representative, may retain out of any money payable by him to the person on whose behalf he is liable to pay tax (hereinafter in this section referred to as the principal), a sum equal to his estimated liability under this Ordinance, and in the event of disagreement between the principal and such a representative or a person as to the amount to be so retained, such representative or person may obtain from the Commissioner a certificate stating the amount to be so retained pending final determination of the tax liability, and the certificate so obtained shall be his authority for retaining that amount.
(4) Every representative shall be personally liable for the payment of any tax due by the representative in a representative capacity if, while the amount remains unpaid, the representative -
(a) alienates, charges or disposes of any moneys received or accrued in respect of which the tax is payable; or (b) disposes of or parts with any moneys or funds belonging to the taxpayer that is in the possession of the representative or which comes to the representative after the tax is payable, if such tax could legally have been paid from or out of such moneys or funds.
(5) Nothing in this section shall relieve any person from performing any duties imposed by or under this Ordinance on the person which the representative of the person has failed to perform. PART VIII RECORDS, INFORMATION COLLECTION AND AUDIT
(2) Subject to sub-section (4), any tax that, by virtue of sub-section (1), is payable by a representative of a taxpayer shall be recoverable from the representative only to the extent of any assets of the taxpayer that are in the possession or under the control of the representative.
(3) Every representative of a taxpayer who pays any tax owing by the taxpayer shall be entitled to recover the amount so paid from the taxpayer or to retain the amount so paid out of any moneys of the taxpayer that are in the representative’s possession or under the representative’s control.
(3A) Any representative, or any person who apprehends that he may be assessed as a representative, may retain out of any money payable by him to the person on whose behalf he is liable to pay tax (hereinafter in this section referred to as the principal), a sum equal to his estimated liability under this Ordinance, and in the event of disagreement between the principal and such a representative or a person as to the amount to be so retained, such representative or person may obtain from the Commissioner a certificate stating the amount to be so retained pending final determination of the tax liability, and the certificate so obtained shall be his authority for retaining that amount.
(4) Every representative shall be personally liable for the payment of any tax due by the representative in a representative capacity if, while the amount remains unpaid, the representative -
(a) alienates, charges or disposes of any moneys received or accrued in respect of which the tax is payable; or (b) disposes of or parts with any moneys or funds belonging to the taxpayer that is in the possession of the representative or which comes to the representative after the tax is payable, if such tax could legally have been paid from or out of such moneys or funds.
(5) Nothing in this section shall relieve any person from performing any duties imposed by or under this Ordinance on the person which the representative of the person has failed to perform. PART VIII RECORDS, INFORMATION COLLECTION AND AUDIT
Amendment history (8)
- Inserted by the Finance Act, 2003.
- The word “excuse” substituted by the Finance Act, 2003.
- The word “five” substituted by the Finance Act, 2010.
- Full stop substituted by the Finance Act, 2010.
- Added by the Finance Act, 2010.
- Full stop substituted and proviso added by the Finance Act, 2022.
- Added by the Finance Act, 2003.
- Added by the Finance Act, 2008.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 174 Records
(1) Unless otherwise authorised by the Commissioner, every taxpayer shall maintain in Pakistan such accounts, documents and records as may be prescribed.
(2) The Commissioner may disallow or reduce a taxpayer’s claim for a deduction if the taxpayer is unable, without reasonable cause , to provide a receipt, or other record or evidence of the transaction or circumstances giving rise to the claim for the deduction.
(3) The accounts and documents required to be maintained under this section shall be maintained for six years after the end of the tax year to which they relate :
Provided that where any proceeding is pending before any authority or court the taxpayer shall maintain the record till final decision of the proceedings. Explanation.— Pending proceedings include proceedings for assessment or amendment of assessment, appeal, revision, reference, petition or prosecution and any proceedings before an Alternative Dispute Resolution Committee :
Provided that limitation prescribed under this sub-section shall not apply to the records pertaining to income, assets, expenses or transactions to which clause (ii) of sub-section (2) of section 111 applies.
(4) For the purpose of this section, the expression deduction means any amount debited to trading account, manufacturing account, receipts and expenses account or profit and loss account.
(5) The Board may require any person or class of persons to install and use an electronic resource of such type and description as may be prescribed, or to act as an integrated enterprise through a notification in the official Gazette for the purpose of receiving, storing, matching and accessing information regarding any transaction that has a bearing on the tax liability of such person.
(2) The Commissioner may disallow or reduce a taxpayer’s claim for a deduction if the taxpayer is unable, without reasonable cause , to provide a receipt, or other record or evidence of the transaction or circumstances giving rise to the claim for the deduction.
(3) The accounts and documents required to be maintained under this section shall be maintained for six years after the end of the tax year to which they relate :
Provided that where any proceeding is pending before any authority or court the taxpayer shall maintain the record till final decision of the proceedings. Explanation.— Pending proceedings include proceedings for assessment or amendment of assessment, appeal, revision, reference, petition or prosecution and any proceedings before an Alternative Dispute Resolution Committee :
Provided that limitation prescribed under this sub-section shall not apply to the records pertaining to income, assets, expenses or transactions to which clause (ii) of sub-section (2) of section 111 applies.
(4) For the purpose of this section, the expression deduction means any amount debited to trading account, manufacturing account, receipts and expenses account or profit and loss account.
(5) The Board may require any person or class of persons to install and use an electronic resource of such type and description as may be prescribed, or to act as an integrated enterprise through a notification in the official Gazette for the purpose of receiving, storing, matching and accessing information regarding any transaction that has a bearing on the tax liability of such person.
Amendment history (11)
- Inserted by the Finance Act, 2003.
- The word “excuse” substituted by the Finance Act, 2003.
- The word “five” substituted by the Finance Act, 2010.
- Full stop substituted by the Finance Act, 2010.
- Added by the Finance Act, 2010.
- Full stop substituted and proviso added by the Finance Act, 2022.
- Added by the Finance Act, 2003.
- Added by the Finance Act, 2008.
- Sub-section (5) substituted by the Finance Act, 2026. The substituted sub-section
- The expression inserted through Finance Act, 2020 dated 30 June, 2020
- Sub-section (2) substituted by the Finance Act, 2003. The substituted sub-section (2) read as
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 175 Power to enter and search premises
(1) In order to enforce any provision of this Ordinance (including for the purpose of making an audit of a taxpayer or a survey of persons liable to tax), the Commissioner or any officer authorised in writing by the Commissioner for the purposes of this section –
(a) shall, at all times and without prior notice, have full and free access including real-time electronic access to any premises, place, accounts, documents or computer;
(b) may stamp, or make an extract or copy of any accounts, documents or computer-stored information to which access is obtained under clause (a);
(c) may impound any accounts or documents and retain them for so long as may be necessary for examination or for the purposes of prosecution;
(d) may, where a hard copy or computer disk of information stored on a computer is not made available, impound and retain the computer for as long as is necessary to copy the information required; and (e) may make an inventory of any articles found in any premises or place to which access is obtained under clause (a).
(2) The Commissioner may authorize any valuer or expert to enter any premises and perform any task assigned to him by the Commissioner.
(3) The occupier of any premises or place to which access is sought under sub-section (1) shall provide all reasonable facilities and assistance for the effective exercise of the right of access.
(4) Any accounts, documents or computer impounded and retained under sub-section (1) shall be signed for by the Commissioner or an authorised officer.
(5) A person whose accounts, documents or computer have been impounded and retained under sub-section (1) may examine them and make extracts or copies from them during regular office hours under such supervision as the Commissioner may determine.
(6) Where any accounts, documents or computer impounded and retained under sub-section (1) are lost or destroyed while in the possession of the Commissioner, the Commissioner shall make reasonable compensation to the owner of the accounts, documents or computer for the loss or destruction.
(7) This section shall have effect notwithstanding any rule of law relating to privilege or the public interest in relation to access to premises or places, or the production of accounts, documents or computer-stored information.
(8) In this section, occupier in relation to any premises or place, means the owner, manager or any other responsible person on the premises or place.
(9) For the purpose of clause (a) of sub-section (1), the Board may make rules relating to electronic real-time assess for audit or a survey of persons liable to tax.
(a) shall, at all times and without prior notice, have full and free access including real-time electronic access to any premises, place, accounts, documents or computer;
(b) may stamp, or make an extract or copy of any accounts, documents or computer-stored information to which access is obtained under clause (a);
(c) may impound any accounts or documents and retain them for so long as may be necessary for examination or for the purposes of prosecution;
(d) may, where a hard copy or computer disk of information stored on a computer is not made available, impound and retain the computer for as long as is necessary to copy the information required; and (e) may make an inventory of any articles found in any premises or place to which access is obtained under clause (a).
(2) The Commissioner may authorize any valuer or expert to enter any premises and perform any task assigned to him by the Commissioner.
(3) The occupier of any premises or place to which access is sought under sub-section (1) shall provide all reasonable facilities and assistance for the effective exercise of the right of access.
(4) Any accounts, documents or computer impounded and retained under sub-section (1) shall be signed for by the Commissioner or an authorised officer.
(5) A person whose accounts, documents or computer have been impounded and retained under sub-section (1) may examine them and make extracts or copies from them during regular office hours under such supervision as the Commissioner may determine.
(6) Where any accounts, documents or computer impounded and retained under sub-section (1) are lost or destroyed while in the possession of the Commissioner, the Commissioner shall make reasonable compensation to the owner of the accounts, documents or computer for the loss or destruction.
(7) This section shall have effect notwithstanding any rule of law relating to privilege or the public interest in relation to access to premises or places, or the production of accounts, documents or computer-stored information.
(8) In this section, occupier in relation to any premises or place, means the owner, manager or any other responsible person on the premises or place.
(9) For the purpose of clause (a) of sub-section (1), the Board may make rules relating to electronic real-time assess for audit or a survey of persons liable to tax.
Amendment history (5)
- Sub-section (5) substituted by the Finance Act, 2026. The substituted sub-section
- The expression inserted through Finance Act, 2020 dated 30 June, 2020
- Sub-section (2) substituted by the Finance Act, 2003. The substituted sub-section (2) read as
- New sub-section (9) added through Finance Act, 2020 dated 30 June, 2020
- New section 175A inserted through Finance Act, 2020 dated 30 June, 2020
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 175A Real-time access to information and databases
(1) Notwithstanding anything contained in any law for the time being in force, including but not limited to the National Database and Registration Authority Ordinance, 2000 (Ordinance VIII of 2000), and the Emigration Ordinance, 1979(Ordinance XVIII of 1979), arrangements shall be made to provide real-time access of information and database to the Board in the prescribed form and manner by-
(a) the National Database and Registration Authority with respect to information pertaining to National Identity Card, Pakistan Origin Card, Overseas Identity Card, Alien Registration Card, and other particulars contained in the Citizen Database.
(b) the Federal Investigation Agency and the Bureau of Emigration and Overseas Employment with respect to details of international travel;
(c) the Federal Investigation Agency and the Bureau of Emigration and Overseas Employment with respect to details of international entry and exit of all persons and information pertaining to work permits, employment visas and immigration visas;
(d) the Islamabad Capital Territory and provincial and local land record and development authorities with respect to record-of-rights including digitized edition of record-of-rights, periodic record, record of mutations and report of acquisition of right;
(e) the Islamabad Capital Territory and provincial Excise and Taxation Departments with respect to information regarding registration of vehicles, transfer of ownership and other associated record;
(f) All electricity suppliers and gas transmission and distribution companies with respect to particulars of a consumer, the units consumed and the amount of bill charged or paid:
Provided that where the connection is shared or is used by a person other than the owner, the name and CNIC of the owner and the user shall also be furnished:
Provided further that all electricity suppliers and gas transmission and distribution companies shall make arrangements by the 1 day of January, 2021 for allowing consumers to update the ratio of sharing of a connection or the particulars of users, as the case may be; and (g) any other agency, authority, institution or organization notified by the Board.
(2) The Board shall make arrangements for laying the infrastructure for real-time access to information and database under sub-section (1) and aligning it with its own database in the manner as may be prescribed.
(3) Until real-time access to information and database is made available under sub-section (1), such information and data shall be provided periodically in such form and manner as may be prescribed.
(4) Subject to section 216, all information received under this section shall be used only for tax purposes and kept confidential.
(a) the National Database and Registration Authority with respect to information pertaining to National Identity Card, Pakistan Origin Card, Overseas Identity Card, Alien Registration Card, and other particulars contained in the Citizen Database.
(b) the Federal Investigation Agency and the Bureau of Emigration and Overseas Employment with respect to details of international travel;
(c) the Federal Investigation Agency and the Bureau of Emigration and Overseas Employment with respect to details of international entry and exit of all persons and information pertaining to work permits, employment visas and immigration visas;
(d) the Islamabad Capital Territory and provincial and local land record and development authorities with respect to record-of-rights including digitized edition of record-of-rights, periodic record, record of mutations and report of acquisition of right;
(e) the Islamabad Capital Territory and provincial Excise and Taxation Departments with respect to information regarding registration of vehicles, transfer of ownership and other associated record;
(f) All electricity suppliers and gas transmission and distribution companies with respect to particulars of a consumer, the units consumed and the amount of bill charged or paid:
Provided that where the connection is shared or is used by a person other than the owner, the name and CNIC of the owner and the user shall also be furnished:
Provided further that all electricity suppliers and gas transmission and distribution companies shall make arrangements by the 1 day of January, 2021 for allowing consumers to update the ratio of sharing of a connection or the particulars of users, as the case may be; and (g) any other agency, authority, institution or organization notified by the Board.
(2) The Board shall make arrangements for laying the infrastructure for real-time access to information and database under sub-section (1) and aligning it with its own database in the manner as may be prescribed.
(3) Until real-time access to information and database is made available under sub-section (1), such information and data shall be provided periodically in such form and manner as may be prescribed.
(4) Subject to section 216, all information received under this section shall be used only for tax purposes and kept confidential.
Amendment history (3)
- New sub-section (9) added through Finance Act, 2020 dated 30 June, 2020
- New section 175A inserted through Finance Act, 2020 dated 30 June, 2020
- Section 175AA inserted by the Finance Act, 2025.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 175AA Exchange of banking and tax information related to high-risk persons
(1) Notwithstanding anything contained in any law for the time being in force, including but not limited to the Banking Companies Ordinance, 1962 (LVII of 1962), section 216 of this Ordinance and any regulations made under the State Bank of Pakistan Act,1956 (XXXIII of 1956), —
(a) the Board may share information obtained from the tax declarations with scheduled banks in Pakistan, in respect of persons or classes of persons, for the purpose of cross-matching with the bank data through the data-based algorithms, as may be prescribed; and (b) the Scheduled banks shall provide to the Board the final results where the banking data is at variance with the algorithms provided under clause (a) of this sub-section ; and (c) the State Bank of Pakistan may establish, operate and maintain a secure centralized virtual repository of banking data, comprising such information, records, and financial transactions of persons maintained by Scheduled banks on the basis of unique identifiers, as may be prescribed by the Board and collect and provide data and results as per clauses
(a) and (b) of this sub-section.
(2) All information received under this section shall be used only for tax and related purposes and kept confidential.
(a) the Board may share information obtained from the tax declarations with scheduled banks in Pakistan, in respect of persons or classes of persons, for the purpose of cross-matching with the bank data through the data-based algorithms, as may be prescribed; and (b) the Scheduled banks shall provide to the Board the final results where the banking data is at variance with the algorithms provided under clause (a) of this sub-section ; and (c) the State Bank of Pakistan may establish, operate and maintain a secure centralized virtual repository of banking data, comprising such information, records, and financial transactions of persons maintained by Scheduled banks on the basis of unique identifiers, as may be prescribed by the Board and collect and provide data and results as per clauses
(a) and (b) of this sub-section.
(2) All information received under this section shall be used only for tax and related purposes and kept confidential.
Amendment history (3)
- Section 175AA inserted by the Finance Act, 2025.
- Full stop substituted and paragraph (c) inserted by the Finance Act, 2026.
- New section 175B inserted through Finance Act, 2022.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 175B National Database and Registration Authority (NADRA)
National Database and Registration Authority (NADRA).
(1) The National Database and Registration Authority shall, on its own motion or upon application by the Board, share its records and any information available or held by it, with the Board, for broadening of the tax base or carrying out the purposes of the Ordinance.
(2) The National Database and Registration Authority may —
(i) submit proposals and information to the Board with a view to broadening the tax base;
(ii) identify in relation to any person, whether a taxpayer or not –
(a) income, receipts, assets, properties, liabilities, expenditures, or transactions that have escaped assessment or are under-assessed or have been assessed at a low rate, or have been subjected to excessive relief or refund or have been misdeclared or misclassified under a particular head of income or otherwise;
(b) the value of anything mentioned in sub-clause (a) of clause (ii), if such value is at variance with the value notified by the Board or the district authorities, as the case may be, or if no such value has been notified the true or market value; and (iii) enter into a memorandum of understanding with the Board for a secure exchange and utilization of a person's information.
(3) The Board may use and utilize any information communicated to it by the National Database and Registration Authority and forward such information to an income tax authority having jurisdiction in relation to the subject matter regarding the information, who may utilize the information for the purposes of the Ordinance.
(4) The National Database and Registration Authority may compute indicative income and tax liability of anyone mentioned under sub-sections
(1) or (2) by use of artificial intelligence, mathematical or statistical modeling or any other modern device or calculation method.
(5) The indicative income and tax liability computed by the National Database and Registration Authority under sub-section (4) shall be notified by the Board to the person in respect of whom such indicative income and tax liability has been determined, who shall have the option to pay the determined amount on such terms, conditions, installments, discounts, reprieves pertaining to penalty and default surcharge, and time limits that may be prescribed by the Board.
(6) In case the person against whom a liability has been determined under sub-section (4), does not pay such liability within the time prescribed under sub-section (5), the Board shall take action under the Ordinance, upon the basis of tax liability computed under sub-section (4).
(7) If the person against whom the liability has been determined under sub-section (4) pays such liability in terms of sub-section (5), such payment shall be construed to be an amended assessment order under section 120 or sub- section (1) of section 122 or sub-section (4) of section 122, as the case may be.
(8) For the purposes of sub-sections
(4) and (5), the Board may prescribe the extent of installments, reprieves pertaining to penalty and default surcharge and time limits.
(1) The National Database and Registration Authority shall, on its own motion or upon application by the Board, share its records and any information available or held by it, with the Board, for broadening of the tax base or carrying out the purposes of the Ordinance.
(2) The National Database and Registration Authority may —
(i) submit proposals and information to the Board with a view to broadening the tax base;
(ii) identify in relation to any person, whether a taxpayer or not –
(a) income, receipts, assets, properties, liabilities, expenditures, or transactions that have escaped assessment or are under-assessed or have been assessed at a low rate, or have been subjected to excessive relief or refund or have been misdeclared or misclassified under a particular head of income or otherwise;
(b) the value of anything mentioned in sub-clause (a) of clause (ii), if such value is at variance with the value notified by the Board or the district authorities, as the case may be, or if no such value has been notified the true or market value; and (iii) enter into a memorandum of understanding with the Board for a secure exchange and utilization of a person's information.
(3) The Board may use and utilize any information communicated to it by the National Database and Registration Authority and forward such information to an income tax authority having jurisdiction in relation to the subject matter regarding the information, who may utilize the information for the purposes of the Ordinance.
(4) The National Database and Registration Authority may compute indicative income and tax liability of anyone mentioned under sub-sections
(1) or (2) by use of artificial intelligence, mathematical or statistical modeling or any other modern device or calculation method.
(5) The indicative income and tax liability computed by the National Database and Registration Authority under sub-section (4) shall be notified by the Board to the person in respect of whom such indicative income and tax liability has been determined, who shall have the option to pay the determined amount on such terms, conditions, installments, discounts, reprieves pertaining to penalty and default surcharge, and time limits that may be prescribed by the Board.
(6) In case the person against whom a liability has been determined under sub-section (4), does not pay such liability within the time prescribed under sub-section (5), the Board shall take action under the Ordinance, upon the basis of tax liability computed under sub-section (4).
(7) If the person against whom the liability has been determined under sub-section (4) pays such liability in terms of sub-section (5), such payment shall be construed to be an amended assessment order under section 120 or sub- section (1) of section 122 or sub-section (4) of section 122, as the case may be.
(8) For the purposes of sub-sections
(4) and (5), the Board may prescribe the extent of installments, reprieves pertaining to penalty and default surcharge and time limits.
Amendment history (3)
- Full stop substituted and paragraph (c) inserted by the Finance Act, 2026.
- New section 175B inserted through Finance Act, 2022.
- Section 175C inserted by the Finance Act, 2025.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 175C Posting of officer of Inland Revenue
Posting of officer of Inland Revenue. — Subject to such conditions and restrictions, as deemed fit to be imposed, the Board or the Chief Commissioner may post an officer of Inland Revenue or such other officials with any designation working under the control of the Board or the Chief Commissioner, to the business premises of any person or class of such persons, to monitor production, supply of goods or rendering of services and the stock of goods not sold at any time for determining tax payable under this Ordinance.
Amendment history (9)
- Section 175C inserted by the Finance Act, 2025.
- Substituted by the Finance Act, 2015. The substituted clause (a)
- Full stop substituted by the Finance Act, 2009.
- Inserted by the Finance Act, 2009.
- Inserted by the Finance Act, 2017.
- Comma omitted by the Finance Act, 2022.
- The word “Board” substituted by the Finance Act, 2010. The substituted provision has been made
- The words and comma “selected for audit,” omitted by the Finance Act, 2012.
- Added by the Finance Act, 2015.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 176 Notice to obtain information or evidence
(1) The Commissioner may, by notice in writing, require any person, whether or not liable for tax under this Ordinance –
(a) to furnish to the Commissioner or an authorised officer, any information relevant to any tax leviable under this Ordinance or to fulfill any obligation under any agreement with foreign government or governments or tax jurisdiction, as specified in the notice; or; and (b) to attend at the time and place designated in the notice for the purpose of being examined on oath by the Commissioner or an authorised officer concerning the tax affairs of that person or any other person and, for that purpose, the Commissioner or authorised officer may require the person examined to produce any accounts, documents, or computer-stored information in the control of the person ; or (c) the firm of chartered accountants or a firm of cost and management accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966) , as appointed by the Board or the Commissioner , to conduct audit under section 177, for any tax year, may with the prior approval of the Commissioner concerned, enter the business premises of a taxpayer, to obtain any information, require production of any record, on which the required information is stored and examine it within such premises; and such firm may if specifically delegated by the Commissioner, also exercise the powers as provided in sub-section (4).
(1A) A special audit panel appointed under sub-section (11)of section 177, for any tax year, may, with the prior approval of the Commissioner concerned, enter the business premises of a taxpayer, to obtain any information, require production of any record, on which the required information is stored and examine it within such premises and such panel may if specifically delegated by the Commissioner, also exercise the powers as provided in subsection(4).
(2) The Commissioner may impound any accounts or documents produced under sub-section (1) and retain them for so long as may be necessary for examination or for the purposes of prosecution.
(3) The person from whom information is required, may at his option, furnish the same electronically in any computer readable media. Where a hard copy or computer disk of information stored on a computer is not made available as required under sub-section (1), the Commissioner may require production of the computer on which the information is stored, and impound and retain the computer for as long as is necessary to copy the information required.
(4) For the purposes of this section, the Commissioner shall have the same powers as are vested in a Court under the Code of Civil Procedure, 1908 (Act V of 1908), in respect of the following matters, namely: —
(a) enforcing the attendance of any person and examining the person on oath or affirmation;
(b) compelling the production of any accounts, records, computer- stored information, or computer;
(c) receiving evidence on affidavit; or (d) issuing commissions for the examination of witnesses.
(5) This section shall have effect notwithstanding any law or rules relating to privilege or the public interest in relation to the production of accounts, documents, or computer-stored information or the giving of information.
(a) to furnish to the Commissioner or an authorised officer, any information relevant to any tax leviable under this Ordinance or to fulfill any obligation under any agreement with foreign government or governments or tax jurisdiction, as specified in the notice; or; and (b) to attend at the time and place designated in the notice for the purpose of being examined on oath by the Commissioner or an authorised officer concerning the tax affairs of that person or any other person and, for that purpose, the Commissioner or authorised officer may require the person examined to produce any accounts, documents, or computer-stored information in the control of the person ; or (c) the firm of chartered accountants or a firm of cost and management accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966) , as appointed by the Board or the Commissioner , to conduct audit under section 177, for any tax year, may with the prior approval of the Commissioner concerned, enter the business premises of a taxpayer, to obtain any information, require production of any record, on which the required information is stored and examine it within such premises; and such firm may if specifically delegated by the Commissioner, also exercise the powers as provided in sub-section (4).
(1A) A special audit panel appointed under sub-section (11)of section 177, for any tax year, may, with the prior approval of the Commissioner concerned, enter the business premises of a taxpayer, to obtain any information, require production of any record, on which the required information is stored and examine it within such premises and such panel may if specifically delegated by the Commissioner, also exercise the powers as provided in subsection(4).
(2) The Commissioner may impound any accounts or documents produced under sub-section (1) and retain them for so long as may be necessary for examination or for the purposes of prosecution.
(3) The person from whom information is required, may at his option, furnish the same electronically in any computer readable media. Where a hard copy or computer disk of information stored on a computer is not made available as required under sub-section (1), the Commissioner may require production of the computer on which the information is stored, and impound and retain the computer for as long as is necessary to copy the information required.
(4) For the purposes of this section, the Commissioner shall have the same powers as are vested in a Court under the Code of Civil Procedure, 1908 (Act V of 1908), in respect of the following matters, namely: —
(a) enforcing the attendance of any person and examining the person on oath or affirmation;
(b) compelling the production of any accounts, records, computer- stored information, or computer;
(c) receiving evidence on affidavit; or (d) issuing commissions for the examination of witnesses.
(5) This section shall have effect notwithstanding any law or rules relating to privilege or the public interest in relation to the production of accounts, documents, or computer-stored information or the giving of information.
Amendment history (12)
- Substituted by the Finance Act, 2015. The substituted clause (a)
- Full stop substituted by the Finance Act, 2009.
- Inserted by the Finance Act, 2009.
- Inserted by the Finance Act, 2017.
- Comma omitted by the Finance Act, 2022.
- The word “Board” substituted by the Finance Act, 2010. The substituted provision has been made
- The words and comma “selected for audit,” omitted by the Finance Act, 2012.
- Added by the Finance Act, 2015.
- Inserted by the Finance Act, 2005.
- The words “rule of law” substituted by the Finance Act, 2011.
- Section 177 substituted by the Finance Act, 2004. The Substituted section 177
- Sub-section (1) substituted by the Finance Act, 2010. The substituted sub-section (1)
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 177 Audit
(1) The Commissioner may call for any record or documents including books of accounts maintained under this Ordinance or any there law for the time being in force for conducting audit of the income tax affairs of the person and where such record or documents have been kept on electronic data, the person shall allow access to the Commissioner or the officer authorized by the Commissioner for use of machine and software on which such data is kept and the Commissioner or the officer may have access to the required information and data and duly attested hard copies of such information or data for the purpose of investigation and proceedings under this Ordinance in respect of such person or any other person:
Provided that—
(a) the Commissioner may, after recording reasons in writing call for record or documents including books of accounts of the taxpayer; and (b) the reasons shall be communicated to the taxpayer while calling record or documents including books of accounts of the taxpayer:
Provided further that the Commissioner shall not call for record or documents of the taxpayer after expiry of six years from the end of the tax year to which they relate.
(2) After obtaining the record of a person under sub-section (1) or where necessary record is not maintained, the Commissioner shall conduct an audit of the income tax affairs (including examination of accounts and records, enquiry into expenditure, assets and liabilities) of that person or any other person and may call for such other information and documents as he may deem appropriate.
(2A) For the purpose of sub-section (2), the Commissioner may conduct audit proceedings electronically through video links, or any other facility as prescribed by the Board. (2AA) Where a taxpayer—
(a) has not furnished record or documents including books of accounts;
(b) has furnished incomplete record or books of accounts; or (c) is unable provide sufficient explanation regarding the defects in records, documents or books of accounts, it shall be construed that taxable income has not been correctly declared and the Commissioner shall determine taxable income on the basis of sectoral benchmark ratios prescribed by the Board. Explanation.—The expression sectoral benchmark ratios means standard business sector ratios notified by the Board on the basis of comparative cases and includes financial ratios, production ratios, gross profit ratio, not profit ratio, recovery ratio, wastage ratio and such other ratios in respect of such sectors as may be prescribed.
(6) After compilation of the audit, the Commissioner shall, after obtaining taxpayer’s explanation on all the issues raised in the audit, issue an audit report containing audit observations and finding.
(6A) After issuing the audit report, the Commissioner may, if considered necessary, amend the assessment under sub-section (1) or sub-section (4) of section 122, as the case may be, after providing an opportunity of being heard to the taxpayer under sub-section (9) of section 122.
(6B) If, at any stage of the proceedings before him, if the Commissioner is of the opinion that, having regard to,—
(a) the nature and complexity of the accounts; or (b) volume of the accounts; or (c) doubts about the correctness of the accounts; or (d) multiplicity of transactions in the accounts; or (e) specialised nature of business activity of the taxpayer; is of the opinion that it is necessary so to do, he may, after giving the taxpayer a reasonable opportunity of being heard, and with the previous approval of the Chief Commissioner, direct the taxpayer to get either or all of the following to get the —
(i) accounts re-audited by an accountant, and to furnish a report of such audit duly signed and verified by such accountant including answers to the specific queries as the Commissioner may require;
(ii) inventory re-valued by a cost accountant, and to furnish a report of such inventory valuation duly signed and verified by such cost accountant including answers to the specific queries as the Commissioner may require; and (iii) actuarial values in the accounts determined by an actuary and to furnish a report of such valuation duly signed and verified by such actuary including answers to the specific queries as the Commissioner may require; Explanation: The accountant, the cost accountant, or actuary as referred to in sub-section (6B) shall be nominated by the Commissioner for the purposes of this sub-section from amongst the panel of such accountants, valuers, or actuaries nominated by the Board:
Provided that after the first nomination, if the registered person objects to the nomination of a particular accountant or cost accountant within fifteen days of such nomination, the Commissioner, if agreed with objections, may change the said accountant or cost accountant with another accountant or cost accountant.
(7) The fact that a person has been audited in a year shall not preclude the person from being audited again in the next and following years where there are reasonable grounds for such audits .
(8) The Board may appoint a firm of Chartered Accountants as defined under the Chartered Accountants Ordinance, 1961 (X of 1961) or a firm of Cost and Management Accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966) , or a firm of Cost and Management Accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966) to conduct an audit of the income tax affairs of any person or classes of persons and the scope of such audit shall be as determined by the Board or the Commissioner on a case to case basis.
(9) Any person employed by a firm referred to in sub-section (8) may be authorized by the Commissioner, in writing, to exercise the powers in sections 175 and 176 for the purposes of conducting an audit under that sub-section.
(10) Notwithstanding anything contained in sub-sections
(2) and (6) where a person fails to produce before the Commissioner or a firm of Chartered Accountants or a firm of Cost and Management Accountants appointed by the Board or the Commissioner under sub-section (8) to conduct an audit, any accounts, documents and records, required to be maintained under section 174 or any other relevant document, electronically kept record, electronic machine or any other evidence that may be required by the Commissioner or the firm of Chartered Accountants or the firm of Cost and Management Accountants for the purpose of audit or determination of income and tax due thereon, the Commissioner may proceed to make best judgment assessment under section 121 of this Ordinance and the assessment treated to have been made on the basis of return or revised return filed by the taxpayer shall be of no legal effect. Explanation.— For the removal of doubt, it is declared that the powers of the Commissioner under this section are independent of the powers of the Board under section 214C and nothing contained in section 214C restricts the powers of the Commissioner to call for the record or documents including books of accounts of a taxpayer for audit and to conduct audit under this section.
(11) The Board may appoint as many special audit panels as may be necessary, comprising two or more members from the following:—
(a) an officer or officers of Inland Revenue;
(b) a firm of chartered accountants as defined under the Chartered Accountants Ordinance, 1961 (X of 1961);
(c) a firm of cost and management accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966); or (d) any other person including a foreign expert or specialist as directed by the Board, to conduct an audit, including a forensic audit, of the income tax affairs of any person or classes of persons and the scope of such audit shall be as determined by the Board or the Commissioner on case-to-case basis.
(e) a tax audit expert deployed under an audit assistance programme of an international tax organization or a tax authority outside Pakistan:
Provided that in case the member is not an officer of Inland Revenue, the person shall only be included as a member in the special audit panel if an agreement of confidentiality has been entered into between the Board and the person, international tax organization or a tax authority, as the case may be.
(12) Special audit panel under sub-section (1) shall be headed by a Chairman who shall be an officer of Inland Revenue.
(13) Powers under sections 175 and 176 for the purposes of conducting an audit under sub-section (11), shall only be exercised by an officer or officers of Inland Revenue, who are member or members of the special audit panel, and authorized by the Commissioner.
(14) Notwithstanding anything contained in sub-sections
(2) and(6), where a person fails to produce before the Commissioner or a special audit panel under sub-section (11) to conduct an audit, any accounts, documents and records, required to be maintained under section 174 or any other relevant document, electronically kept record, electronic machine or any other evidence that may be required by the Commissioner or the panel, the Commissioner may proceed to make best judgment assessment under section 121 and the assessment treated to have been made on the basis of return or revised return filed by the taxpayer shall be of no legal effect.
(15) If any one member of the special audit panel, other than the Chairman, is absent from conducting an audit, the proceedings of the audit may continue, and the audit conducted by the special audit panel shall not be invalid or be called in question merely on the ground of such absence.
(16) Functions performed by an officer or officers of Inland Revenue as members of the special audit panel, for conducting audit, shall be treated to have been performed by special audit panel.
(17) The Board may prescribe the mode and manner of constitution, procedure and working of the special audit panel.
Provided that—
(a) the Commissioner may, after recording reasons in writing call for record or documents including books of accounts of the taxpayer; and (b) the reasons shall be communicated to the taxpayer while calling record or documents including books of accounts of the taxpayer:
Provided further that the Commissioner shall not call for record or documents of the taxpayer after expiry of six years from the end of the tax year to which they relate.
(2) After obtaining the record of a person under sub-section (1) or where necessary record is not maintained, the Commissioner shall conduct an audit of the income tax affairs (including examination of accounts and records, enquiry into expenditure, assets and liabilities) of that person or any other person and may call for such other information and documents as he may deem appropriate.
(2A) For the purpose of sub-section (2), the Commissioner may conduct audit proceedings electronically through video links, or any other facility as prescribed by the Board. (2AA) Where a taxpayer—
(a) has not furnished record or documents including books of accounts;
(b) has furnished incomplete record or books of accounts; or (c) is unable provide sufficient explanation regarding the defects in records, documents or books of accounts, it shall be construed that taxable income has not been correctly declared and the Commissioner shall determine taxable income on the basis of sectoral benchmark ratios prescribed by the Board. Explanation.—The expression sectoral benchmark ratios means standard business sector ratios notified by the Board on the basis of comparative cases and includes financial ratios, production ratios, gross profit ratio, not profit ratio, recovery ratio, wastage ratio and such other ratios in respect of such sectors as may be prescribed.
(6) After compilation of the audit, the Commissioner shall, after obtaining taxpayer’s explanation on all the issues raised in the audit, issue an audit report containing audit observations and finding.
(6A) After issuing the audit report, the Commissioner may, if considered necessary, amend the assessment under sub-section (1) or sub-section (4) of section 122, as the case may be, after providing an opportunity of being heard to the taxpayer under sub-section (9) of section 122.
(6B) If, at any stage of the proceedings before him, if the Commissioner is of the opinion that, having regard to,—
(a) the nature and complexity of the accounts; or (b) volume of the accounts; or (c) doubts about the correctness of the accounts; or (d) multiplicity of transactions in the accounts; or (e) specialised nature of business activity of the taxpayer; is of the opinion that it is necessary so to do, he may, after giving the taxpayer a reasonable opportunity of being heard, and with the previous approval of the Chief Commissioner, direct the taxpayer to get either or all of the following to get the —
(i) accounts re-audited by an accountant, and to furnish a report of such audit duly signed and verified by such accountant including answers to the specific queries as the Commissioner may require;
(ii) inventory re-valued by a cost accountant, and to furnish a report of such inventory valuation duly signed and verified by such cost accountant including answers to the specific queries as the Commissioner may require; and (iii) actuarial values in the accounts determined by an actuary and to furnish a report of such valuation duly signed and verified by such actuary including answers to the specific queries as the Commissioner may require; Explanation: The accountant, the cost accountant, or actuary as referred to in sub-section (6B) shall be nominated by the Commissioner for the purposes of this sub-section from amongst the panel of such accountants, valuers, or actuaries nominated by the Board:
Provided that after the first nomination, if the registered person objects to the nomination of a particular accountant or cost accountant within fifteen days of such nomination, the Commissioner, if agreed with objections, may change the said accountant or cost accountant with another accountant or cost accountant.
(7) The fact that a person has been audited in a year shall not preclude the person from being audited again in the next and following years where there are reasonable grounds for such audits .
(8) The Board may appoint a firm of Chartered Accountants as defined under the Chartered Accountants Ordinance, 1961 (X of 1961) or a firm of Cost and Management Accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966) , or a firm of Cost and Management Accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966) to conduct an audit of the income tax affairs of any person or classes of persons and the scope of such audit shall be as determined by the Board or the Commissioner on a case to case basis.
(9) Any person employed by a firm referred to in sub-section (8) may be authorized by the Commissioner, in writing, to exercise the powers in sections 175 and 176 for the purposes of conducting an audit under that sub-section.
(10) Notwithstanding anything contained in sub-sections
(2) and (6) where a person fails to produce before the Commissioner or a firm of Chartered Accountants or a firm of Cost and Management Accountants appointed by the Board or the Commissioner under sub-section (8) to conduct an audit, any accounts, documents and records, required to be maintained under section 174 or any other relevant document, electronically kept record, electronic machine or any other evidence that may be required by the Commissioner or the firm of Chartered Accountants or the firm of Cost and Management Accountants for the purpose of audit or determination of income and tax due thereon, the Commissioner may proceed to make best judgment assessment under section 121 of this Ordinance and the assessment treated to have been made on the basis of return or revised return filed by the taxpayer shall be of no legal effect. Explanation.— For the removal of doubt, it is declared that the powers of the Commissioner under this section are independent of the powers of the Board under section 214C and nothing contained in section 214C restricts the powers of the Commissioner to call for the record or documents including books of accounts of a taxpayer for audit and to conduct audit under this section.
(11) The Board may appoint as many special audit panels as may be necessary, comprising two or more members from the following:—
(a) an officer or officers of Inland Revenue;
(b) a firm of chartered accountants as defined under the Chartered Accountants Ordinance, 1961 (X of 1961);
(c) a firm of cost and management accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966); or (d) any other person including a foreign expert or specialist as directed by the Board, to conduct an audit, including a forensic audit, of the income tax affairs of any person or classes of persons and the scope of such audit shall be as determined by the Board or the Commissioner on case-to-case basis.
(e) a tax audit expert deployed under an audit assistance programme of an international tax organization or a tax authority outside Pakistan:
Provided that in case the member is not an officer of Inland Revenue, the person shall only be included as a member in the special audit panel if an agreement of confidentiality has been entered into between the Board and the person, international tax organization or a tax authority, as the case may be.
(12) Special audit panel under sub-section (1) shall be headed by a Chairman who shall be an officer of Inland Revenue.
(13) Powers under sections 175 and 176 for the purposes of conducting an audit under sub-section (11), shall only be exercised by an officer or officers of Inland Revenue, who are member or members of the special audit panel, and authorized by the Commissioner.
(14) Notwithstanding anything contained in sub-sections
(2) and(6), where a person fails to produce before the Commissioner or a special audit panel under sub-section (11) to conduct an audit, any accounts, documents and records, required to be maintained under section 174 or any other relevant document, electronically kept record, electronic machine or any other evidence that may be required by the Commissioner or the panel, the Commissioner may proceed to make best judgment assessment under section 121 and the assessment treated to have been made on the basis of return or revised return filed by the taxpayer shall be of no legal effect.
(15) If any one member of the special audit panel, other than the Chairman, is absent from conducting an audit, the proceedings of the audit may continue, and the audit conducted by the special audit panel shall not be invalid or be called in question merely on the ground of such absence.
(16) Functions performed by an officer or officers of Inland Revenue as members of the special audit panel, for conducting audit, shall be treated to have been performed by special audit panel.
(17) The Board may prescribe the mode and manner of constitution, procedure and working of the special audit panel.
Amendment history (2)
- Section 177 substituted by the Finance Act, 2004. The Substituted section 177
- Sub-section (1) substituted by the Finance Act, 2010. The substituted sub-section (1)
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 178 Assistance to Commissioner
Assistance to Commissioner.— Every Officer of Customs, Provincial Excise and Taxation, District Coordination Officer, District Officers including District Officer – Revenue, the Police and the Civil Armed Forces is empowered and required to assist the Commissioner in the discharge of the Commissioner’s functions under this Ordinance.
Amendment history (2)
- The words and commas “Federal Excise, Sales Tax,” omitted by the Finance Act, 2013.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 179 Accounts, documents, records and computer-stored information not in Urdu or English language
Accounts, documents, records and computer-stored information not in Urdu or English language.— Where any account, document, record or computer-stored information referred to in section 174, 175 or 176 is not in the Urdu or English language, the Commissioner may, by notice in writing, require the person keeping the account, document, record or computer-stored information to provide, at the person's expense, a translation into the Urdu or English language by a translator approved by the Commissioner for this purpose.
Amendment history (2)
- The words and commas “Federal Excise, Sales Tax,” omitted by the Finance Act, 2013.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 180 Power to collect information regarding exempt income
Power to collect information regarding exempt income.— The Board may, by notification in the official Gazette, authorise any department or agency of the Government to collect and compile any data in respect of incomes from industrial and commercial undertakings exempt from tax under this Ordinance. 1 PART IX TAXPAYER’S REGISTRATION
Amendment history (10)
- The words and commas “Federal Excise, Sales Tax,” omitted by the Finance Act, 2013.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Part IX ssubstituted by the Finance Act, 2008. The substituted “Part IX”
- Expression inserted by the Finance Act, 2025.
- Section (1A) inserted by the Finance Act, 2025.
- Full stop substituted by the Finance Act, 2013.
- Substituted “:” by the Finance Act, 2015.
- Added by the Finance Act, 2013.
- Omitted by the Finance Act, 2015. The omitted proviso
- Added by the Finance Act, 2015.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 181 Taxpayer’s Registration
Related tools:Filer vs non-filer
(1) Every taxpayer including a person selling digitally ordered goods or services from within Pakistan using online marketplace or a courier service, as the case may be, shall apply in the prescribed form and in the prescribed manner for registration. (1A) Every online marketplace or courier service, involved in e-commerce by supplying or delivering digitally ordered goods or services from within Pakistan, shall not allow any vendor to use its platform services to carry out e-commerce transactions unless such vendors have been registered under this Ordinance.
(2) The Commissioner having jurisdiction over a case, where necessitated by the facts of the case, may also register a taxpayer in the prescribed manner.
(3) Taxpayers’ registration scheme shall be regulated through the rules to be notified by the Board .
(4) From tax year 2015 and onwards, in case of individuals having Computerized National Identity Card (CNIC) issued by the National Database and Registration Authority, CNIC shall be used as National Tax Number.
Amendment history (12)
- Part IX ssubstituted by the Finance Act, 2008. The substituted “Part IX”
- Expression inserted by the Finance Act, 2025.
- Section (1A) inserted by the Finance Act, 2025.
- Full stop substituted by the Finance Act, 2013.
- Substituted “:” by the Finance Act, 2015.
- Added by the Finance Act, 2013.
- Omitted by the Finance Act, 2015. The omitted proviso
- Added by the Finance Act, 2015.
- Inserted by the Finance Act, 2010.
- Inserted by the Finance Act, 2014.
- Added by the Finance Act, 2012.
- New Section (181D) inserted through Finance Act, 2019.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 181A Active taxpayers’ list
(1) The Board shall have the power to institute active taxpayers’ list.
(2) Active taxpayers’ list shall be regulated as may be prescribed.
(2) Active taxpayers’ list shall be regulated as may be prescribed.
Amendment history (5)
- Inserted by the Finance Act, 2010.
- Inserted by the Finance Act, 2014.
- Added by the Finance Act, 2012.
- Added by the Finance Act, 2013.
- New Section (181D) inserted through Finance Act, 2019.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 181AA Compulsory registration in certain cases
(1) Notwithstanding anything contained in any law, for the time being in force, any application for commercial or industrial connection of electricity or natural gas, shall not be processed and such connection shall not be provided unless the person applying for electricity or gas connection is registered under section 181.
Amendment history (5)
- Inserted by the Finance Act, 2010.
- Inserted by the Finance Act, 2014.
- Added by the Finance Act, 2012.
- Added by the Finance Act, 2013.
- New Section (181D) inserted through Finance Act, 2019.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 181B Taxpayer card
Taxpayer card.— Subject to this Ordinance, the Board may make a scheme for introduction of a tax-payer honour card for individual taxpayers, who fulfill a minimum criteria to be eligible for the benefits as contained in the scheme.
Amendment history (5)
- Inserted by the Finance Act, 2010.
- Inserted by the Finance Act, 2014.
- Added by the Finance Act, 2012.
- Added by the Finance Act, 2013.
- New Section (181D) inserted through Finance Act, 2019.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 181C Displaying of National Tax Number
Displaying of National Tax Number.— Every person deriving income from business chargeable to tax, who has been issued a National Tax Number, shall display his National Tax Number at a conspicuous place at every place of his business.
Amendment history (5)
- Inserted by the Finance Act, 2010.
- Inserted by the Finance Act, 2014.
- Added by the Finance Act, 2012.
- Added by the Finance Act, 2013.
- New Section (181D) inserted through Finance Act, 2019.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 181D Business licence scheme
(1) Every person engaged in any business, profession or vocation shall be required to obtain and display a business licence as prescribed by the Board.
(2) Where a person fails to obtain business licence under sub-section (1), the Commissioner may, in addition to and not in derogation of any punishment to which the person may be liable under this Ordinance or any other law, impose a fine of –
(a) twenty thousand Rupees, in case of a taxpayer deriving income chargeable to tax under this Ordinance; or (b) five thousand Rupees, in all other cases.
(3) The Commissioner may, by an order in writing, cancel a business licence issued under sub-section (1) after providing an opportunity of being heard to the person, if –
(a) such person fails to notify any change in particulars within thirty days of such charge; or (b) such person is convicted of any offence under any federal tax law.
(2) Where a person fails to obtain business licence under sub-section (1), the Commissioner may, in addition to and not in derogation of any punishment to which the person may be liable under this Ordinance or any other law, impose a fine of –
(a) twenty thousand Rupees, in case of a taxpayer deriving income chargeable to tax under this Ordinance; or (b) five thousand Rupees, in all other cases.
(3) The Commissioner may, by an order in writing, cancel a business licence issued under sub-section (1) after providing an opportunity of being heard to the person, if –
(a) such person fails to notify any change in particulars within thirty days of such charge; or (b) such person is convicted of any offence under any federal tax law.
Amendment history (6)
- Inserted by the Finance Act, 2010.
- Inserted by the Finance Act, 2014.
- Added by the Finance Act, 2012.
- Added by the Finance Act, 2013.
- New Section (181D) inserted through Finance Act, 2019.
- New Section 181E inserted by the Finance Act, 2022.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 181E Record of beneficial owners
(1) Every company and association of persons shall electronically furnish particulars of its beneficial owners in such form and manner as may be prescribed.
(2) Every company and association of persons shall update the particulars of its beneficial owners as and when there is a change in the particulars of the beneficial owners. PART X PENALTY
(2) Every company and association of persons shall update the particulars of its beneficial owners as and when there is a change in the particulars of the beneficial owners. PART X PENALTY
Amendment history (2)
- New Section 181E inserted by the Finance Act, 2022.
- Section 182 substituted by the Finance Act, 2010. The substituted section 182
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 182 Offences and penalties
Related tools:Filer vs non-filer
(1) Any person who commits any offence specified in column (2) of the Table below shall, in addition to and not in derogation of any punishment to which he may be liable under this Ordinance or any other law, be liable to the penalty mentioned against that offence in column
(3) thereof:— TABLE S. No. Offences Penalties Section of the Ordinance to which offence has reference
(1)
(2)
(3)
(4) 181E
(2) The penalties specified under sub-section (1) shall be applied in a consistent manner and no penalty shall be payable unless an order in writing is passed by the Commissioner, Commissioner (Appeals) or the Appellate Tribunal after providing an opportunity of being heard to the person concerned :
Provided that where the taxpayer admits his default he may voluntarily pay the amount of penalty due under this section. Explanation.—For the removal of doubt, it is clarified that establishing mens rea is not necessary for levying of penalty under this section.
(3) Where a Commissioner (Appeals) or the Appellate Tribunal makes an order under sub-section (2), the Commissioner (Appeals) or the Appellate Tribunal, as the case may be, shall immediately serve a copy of the order on the Commissioner and thereupon all the provision of this Ordinance relating to the recovery of penalty shall apply as if the order was made by the Commissioner.
(4) Where in consequence of any order under this Ordinance, the amount of tax in respect of which any penalty payable under sub-section (1) is reduced, the amount of penalty shall be reduced accordingly.
Amendment history (25)
- Section 182 substituted by the Finance Act, 2010. The substituted section 182
- due date” substituted by the Finance Act, 2013
- respect of that tax year” substituted by the Finance Act, 2013.
- made under section 120, 121, 122 or 122C.” substituted by the Finance Act, 2022.
- Explanation substituted by the Finance Act, 2026. The substituted Explanation
- Inserted by the Finance Act, 2013.
- In column (2) the figure “115” omitted through Finance Act, 2020 dated 30 June, 2020
- The expression “165, or 165A,165A or 165B” substituted by the Finance Act, 2025.
- minimum penalty of ten thousand rupees” substituted by the Finance Act, 2018.
- The figure “5000” substituted by the Finance Act, 2025.
- Full stop substituted and proviso added by the Finance Act, 2021. Earlier these amendments were
- In column (4) the figure “115” omitted through Finance Act, 2020 dated 30 June, 2020
- The expression “165 and 165A,165A and 165B” substituted by the Finance Act, 2025.
- Substituted “Rs.100 for each day of default.” by the Finance Act, 2015.
- Figure “20,000” substituted by “100,000” though Finance Act, 2019.
- Inserted by the Finance Act, 2018.
- Inserted by the Finance Act, 2024.
- S. Nos. 2A and 2B inserted by the Finance Act, 2026.
- Word “five” substituted by “ten” through Finance Act, 2019.
- New serials “4A” and “4B” inserted through Finance Act, 2020 dated 30 June, 2020
- S. No. 4A and entries relating thereto in column (2), (3) and (4) omitted by the Finance Act, 2021.
- The figure “10,000” substituted by the Finance Act, 2021.
- Inserted by the Finance Act, 2011.
- Inserted by the Finance Act, 2021. Earlier this amendment was made through Tax Laws (Second
- The words “is paid” omitted by the Finance Act, 2021. Earlier this amendment was made through Tax
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 182A Return not filed within due date
(1) Notwithstanding anything contained in this Ordinance, where a person fails to file a return of income under section 114 by the due date as specified in section 118 or by the date as extended by the Board under section 214A or extended by the Commissioner under section 119, as the case may be, such person shall—
(a) not be included in the active taxpayers' list for the year for which return was not filed within the due date :
Provided that without prejudice to any other liability under this Ordinance, the person shall be included in the active taxpayer ‘ list on filing return after the due date, if the person pays surcharge at Rupees-
(i) one hundred thousand in case of a company;
(ii) fifty thousand in case of an association of persons;
(iii) twenty-five thousand in case of an individual. Explanation.—For the removal of doubt it is clarified that the provisions of this section shall apply from tax year 2018 and onwards for which the first Active Taxpayers List is to be issued on first day of March, 2019 under Income Tax Rules, 2002.; and (b) not be allowed, for that tax year, to carry forward any loss under Part VIII of Chapter IV ;
(c) not be issued refund during the period the person is not included in the active taxpayers’ list; and (d) not be entitled to additional payment for delayed refund under section 171 and the period the person is not included in the active taxpayers’ list, shall not be counted for computation of additional payment for delayed refund.
(3) The conditions of payment of surcharge mentioned in sub-section (1), shall not apply to an individual who furnishes an undertaking before the Commissioner by declaring that he shall not purchase, acquire, or otherwise obtain ownership or beneficial interest in any property for a period of six months commencing from the date of furnishing such undertaking in such form as may be prescribed.
(a) not be included in the active taxpayers' list for the year for which return was not filed within the due date :
Provided that without prejudice to any other liability under this Ordinance, the person shall be included in the active taxpayer ‘ list on filing return after the due date, if the person pays surcharge at Rupees-
(i) one hundred thousand in case of a company;
(ii) fifty thousand in case of an association of persons;
(iii) twenty-five thousand in case of an individual. Explanation.—For the removal of doubt it is clarified that the provisions of this section shall apply from tax year 2018 and onwards for which the first Active Taxpayers List is to be issued on first day of March, 2019 under Income Tax Rules, 2002.; and (b) not be allowed, for that tax year, to carry forward any loss under Part VIII of Chapter IV ;
(c) not be issued refund during the period the person is not included in the active taxpayers’ list; and (d) not be entitled to additional payment for delayed refund under section 171 and the period the person is not included in the active taxpayers’ list, shall not be counted for computation of additional payment for delayed refund.
(3) The conditions of payment of surcharge mentioned in sub-section (1), shall not apply to an individual who furnishes an undertaking before the Commissioner by declaring that he shall not purchase, acquire, or otherwise obtain ownership or beneficial interest in any property for a period of six months commencing from the date of furnishing such undertaking in such form as may be prescribed.
Amendment history (15)
- Full stop substituted by the Finance Act, 2012.
- Added by the Finance Act, 2011.
- Added by the Finance Act, 2021.
- Inserted by the Finance Act, 2018.
- Word “;and” substituted by colon through Finance Act, 2019.
- New proviso inserted through Finance Act, 2019.
- The word “twenty” substituted by the Finance Act, 2026.
- The word “ten” substituted by the Finance Act, 2026.
- The word “one” substituted by the Finance Act, 2026.
- Full stop substituted by semicolon through Finance Act, 2019.
- New clauses (c) & (d) added through Finance Act, 2019.
- New sub-section (2) added through Finance Act, 2020 dated 30 June, 2020.
- Sub-section (2) omitted by the Finance Act, 2021. The omitted sub-section
- Sub-section (3) added by the Finance Act, 2026.
- Section 183 substituted by the Finance Act, 2010. The substituted section 183
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 183 Exemption from penalty and default surcharge
Exemption from penalty and default surcharge.— The Federal Government may, by notification in the official Gazette, or the Board by an order published in the official Gazette for reasons to be recorded in writing, exempt any person or class of persons from payment of the whole or part of the penalty and default surcharge payable under this Ordinance subject to such conditions and limitations as may be specified in such notification or, as the case may be, order. PART XI OFFENCES AND PROSECUTIONS
Amendment history (22)
- The word “one” substituted by the Finance Act, 2026.
- Full stop substituted by semicolon through Finance Act, 2019.
- New clauses (c) & (d) added through Finance Act, 2019.
- New sub-section (2) added through Finance Act, 2020 dated 30 June, 2020.
- Sub-section (2) omitted by the Finance Act, 2021. The omitted sub-section
- Sub-section (3) added by the Finance Act, 2026.
- Section 183 substituted by the Finance Act, 2010. The substituted section 183
- Section 184 omitted by the Finance Act, 2010. The omitted section 184
- Section 185 omitted by the Finance Act, 2010. The omitted section 185
- Section 186 omitted by the Finance Act, 2010. The omitted section 186
- Section 187 omitted by the Finance Act, 2010. The omitted section 187
- Section 188 omitted by the Finance Act, 2010. The omitted section 188
- Section 189 omitted by the Finance Act, 2010. The omitted section 189
- Section 190 omitted by the Finance Act, 2010. The omitted section 190
- Substituted by the Finance Act, 2003. The substituted clause (a)
- Inserted by the Finance Act, 2017
- Inserted by the Finance Act, 2024.
- New clause (ca) inserted through Finance Act, 2019.
- Inserted by the Finance Act, 2003.
- The word “or” omitted by the Finance Act, 2021.
- Comma substituted, the word “and” inserted and clause (g) added by the Finance Act, 2021.
- The word “and” omitted by the Finance Act, 2022.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 184 Omitted by the Finance Act, 2010Omitted
Omitted by the Finance Act, 2010.
s. 185 Omitted by the Finance Act, 2010Omitted
Omitted by the Finance Act, 2010.
s. 186 Omitted by the Finance Act, 2010Omitted
Omitted by the Finance Act, 2010.
s. 187 Omitted by the Finance Act, 2010Omitted
Omitted by the Finance Act, 2010.
s. 188 Omitted by the Finance Act, 2010Omitted
Omitted by the Finance Act, 2010.
s. 189 Omitted by the Finance Act, 2010Omitted
Omitted by the Finance Act, 2010.
s. 190 Omitted by the Finance Act, 2010Omitted
Omitted by the Finance Act, 2010.
s. 191 Prosecution for non-compliance with certain statutory obligations
(1) Any person who, without reasonable excuse, fails to —
(a) comply with a notice under sub-section (3) and sub-section (4) of section 114 or sub-section (1) of section 116;
(b) pay advance tax as required under section 147;
(c) comply with the obligation under Part V of this Chapter or chapter XII to collect or deduct tax and pay the tax to the Commissioner;
(ca) furnish particulars or complete or accurate particulars of persons mentioned in sub-section (1) of section 165;
(d) comply with a notice served under section 140 or 176;
(e) comply with the requirements of sub-section (3) or sub-section (4) of section 141; (f ) provide reasonable facilities and assistance as required under sub- section (3) of section 175 ;
(g) declare business bank account
(s) in the registration form or updated registration form or return of income or wealth statement ;
(h) integrate his business with Board’s computerized system; or (i) generate tax invoice verifiable by the Board’s system;; shall commit an offence punishable on conviction with a fine or imprisonment for a term not exceeding one year, or both.
(2) If a person convicted of an offence under clause (a) of sub-section (1) fails, without reasonable excuse, to furnish the return of income or wealth statement to which the offence relates within the period specified by the Court, the person shall commit a further offence punishable on conviction with a fine not exceeding fifty thousand rupees or imprisonment for a term not exceeding two years, or both.
(a) comply with a notice under sub-section (3) and sub-section (4) of section 114 or sub-section (1) of section 116;
(b) pay advance tax as required under section 147;
(c) comply with the obligation under Part V of this Chapter or chapter XII to collect or deduct tax and pay the tax to the Commissioner;
(ca) furnish particulars or complete or accurate particulars of persons mentioned in sub-section (1) of section 165;
(d) comply with a notice served under section 140 or 176;
(e) comply with the requirements of sub-section (3) or sub-section (4) of section 141; (f ) provide reasonable facilities and assistance as required under sub- section (3) of section 175 ;
(g) declare business bank account
(s) in the registration form or updated registration form or return of income or wealth statement ;
(h) integrate his business with Board’s computerized system; or (i) generate tax invoice verifiable by the Board’s system;; shall commit an offence punishable on conviction with a fine or imprisonment for a term not exceeding one year, or both.
(2) If a person convicted of an offence under clause (a) of sub-section (1) fails, without reasonable excuse, to furnish the return of income or wealth statement to which the offence relates within the period specified by the Court, the person shall commit a further offence punishable on conviction with a fine not exceeding fifty thousand rupees or imprisonment for a term not exceeding two years, or both.
Amendment history (11)
- Section 190 omitted by the Finance Act, 2010. The omitted section 190
- Substituted by the Finance Act, 2003. The substituted clause (a)
- Inserted by the Finance Act, 2017
- Inserted by the Finance Act, 2024.
- New clause (ca) inserted through Finance Act, 2019.
- Inserted by the Finance Act, 2003.
- The word “or” omitted by the Finance Act, 2021.
- Comma substituted, the word “and” inserted and clause (g) added by the Finance Act, 2021.
- The word “and” omitted by the Finance Act, 2022.
- Comma substituted and clauses (h) and (i) added by the Finance Act, 2022.
- Inserted by the Finance Act, 2009.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 191A Prosecution for failure to furnish information in return of income
Prosecution for failure to furnish information in return of income. – Any company including a banking company and an association of persons who –
(a) fails to fully state all the relevant particulars or information as specified in the form of return, including a declaration of the records kept by the taxpayer;
(b) furnishes blank or incomplete particulars or information as specified in the return of income; or (c) attaches blank or incomplete annexures, statements or documents where such annexures, statements or records were required to be filed, shall commit an offence punishable on conviction with a fine or imprisonment for a term not exceeding one year or both.
(a) fails to fully state all the relevant particulars or information as specified in the form of return, including a declaration of the records kept by the taxpayer;
(b) furnishes blank or incomplete particulars or information as specified in the return of income; or (c) attaches blank or incomplete annexures, statements or documents where such annexures, statements or records were required to be filed, shall commit an offence punishable on conviction with a fine or imprisonment for a term not exceeding one year or both.
Amendment history (3)
- Comma substituted and clauses (h) and (i) added by the Finance Act, 2022.
- Inserted by the Finance Act, 2009.
- Inserted by the Finance Act, 2024.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 191B Prosecution for non-registration
Prosecution for non-registration. – Any person specified in section 99B who is required to apply for registration but fails to do so shall commit an offence punishable on conviction with imprisonment for a term not exceeding six months or fine or both.
Amendment history (3)
- Comma substituted and clauses (h) and (i) added by the Finance Act, 2022.
- Inserted by the Finance Act, 2009.
- Inserted by the Finance Act, 2024.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 192 Prosecution for false statement in verification
Prosecution for false statement in verification. — Any person who makes a statement in any verification in any return or other document furnished under this Ordinance which is false and which the person knows or believes to be false, or does not believe to be true, the person shall commit an offence punishable on conviction with a fine upto hundred thousand rupees or imprisonment for a term not exceeding three years, or both.
Amendment history (6)
- Comma substituted and clauses (h) and (i) added by the Finance Act, 2022.
- Inserted by the Finance Act, 2009.
- Inserted by the Finance Act, 2024.
- New sub section 192B inserted through Finance Act, 2019.
- Inserted by the Finance Act, 2008.
- The word “Card” substituted by the Finance Act, 2005.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 192A Prosecution for concealment of income
(1) Where, in the course of any proceedings under this Ordinance, any person has either in the said proceedings or in any earlier proceedings concealed income or furnished inaccurate particulars of such income and revenue impact of such concealment or furnishing of inaccurate particulars of such income is five hundred thousand rupees or more shall commit an offence punishable on conviction with imprisonment upto two years or with fine or both.
(2) For the purposes of sub-section (1), concealment of income or the furnishing of inaccurate particulars of income shall include–
(a) the suppression of any income or amount chargeable to tax;
(b) the claiming of any deduction for any expenditure not actually incurred; or (c) any act referred to in sub-section (1) of section 111.
(2) For the purposes of sub-section (1), concealment of income or the furnishing of inaccurate particulars of income shall include–
(a) the suppression of any income or amount chargeable to tax;
(b) the claiming of any deduction for any expenditure not actually incurred; or (c) any act referred to in sub-section (1) of section 111.
Amendment history (4)
- Inserted by the Finance Act, 2009.
- New sub section 192B inserted through Finance Act, 2019.
- Inserted by the Finance Act, 2008.
- The word “Card” substituted by the Finance Act, 2005.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 192B Prosecution for concealment of and offshore assets
(1) Any person who fails to declare an offshore asset to the Commissioner or furnished inaccurate particulars of an offshore asset and revenue impact of such concealment or furnishing of inaccurate particulars is ten million rupees or more shall commit an offence punishable on conviction with imprisonment up to three years or with a fine up to five hundred thousand Rupees or both.
Amendment history (4)
- Inserted by the Finance Act, 2009.
- New sub section 192B inserted through Finance Act, 2019.
- Inserted by the Finance Act, 2008.
- The word “Card” substituted by the Finance Act, 2005.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 193 Prosecution for failure to maintain records
Prosecution for failure to maintain records.—A person who fails to maintain records as required under this Ordinance shall commit an offence punishable on conviction with –
(a) where the failure was deliberate, a fine not exceeding fifty thousand rupees or imprisonment for a term not exceeding two years, or both; or (b) in any other case, a fine not exceeding fifty thousand rupees .
(a) where the failure was deliberate, a fine not exceeding fifty thousand rupees or imprisonment for a term not exceeding two years, or both; or (b) in any other case, a fine not exceeding fifty thousand rupees .
Amendment history (4)
- Inserted by the Finance Act, 2009.
- New sub section 192B inserted through Finance Act, 2019.
- Inserted by the Finance Act, 2008.
- The word “Card” substituted by the Finance Act, 2005.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 194 Prosecution for improper use of National Tax Number Certificate
Prosecution for improper use of National Tax Number Certificate .— A person who knowingly or recklessly uses a false National Tax Number Certificate including the National Tax Number Certificate of another person on a return or other document prescribed or used for the purposes of this Ordinance shall commit an offence punishable with a fine not exceeding fifty thousand rupees or imprisonment for a term not exceeding two years, or both.
Amendment history (7)
- Inserted by the Finance Act, 2009.
- New sub section 192B inserted through Finance Act, 2019.
- Inserted by the Finance Act, 2008.
- The word “Card” substituted by the Finance Act, 2005.
- The words “a taxation officer” substituted by the Finance Act, 2002.
- Substituted “Sub-section (3) of section 187” by the Finance Act, 2015.
- New sub-sections (195A) & (195B) inserted through Finance Act, 2019.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 195 Prosecution for making false or misleading statements
(1) A person who –
(a) makes a statement to an income tax authority that is false or misleading in a material particular; or (b) omits from a statement made to an income tax authority any matter or thing without which the statement is misleading in a material particular, shall commit an offence punishable on conviction –
(i) where the statement or omission was made knowingly or recklessly, with a fine or imprisonment for a term not exceeding two years, or both; or (ii) in any other case, with a fine.
(2) A person shall not commit an offence under sub-section (1) if the person did not know and could not reasonably be expected to have known that the statement to which the prosecution relates was false or misleading.
(3) Entry against S. No 10 in column
(2) of the Table in sub-section (1) of section 182 shall apply in determining whether a person has made a statement to an income tax authority .
(a) makes a statement to an income tax authority that is false or misleading in a material particular; or (b) omits from a statement made to an income tax authority any matter or thing without which the statement is misleading in a material particular, shall commit an offence punishable on conviction –
(i) where the statement or omission was made knowingly or recklessly, with a fine or imprisonment for a term not exceeding two years, or both; or (ii) in any other case, with a fine.
(2) A person shall not commit an offence under sub-section (1) if the person did not know and could not reasonably be expected to have known that the statement to which the prosecution relates was false or misleading.
(3) Entry against S. No 10 in column
(2) of the Table in sub-section (1) of section 182 shall apply in determining whether a person has made a statement to an income tax authority .
Amendment history (4)
- Inserted by the Finance Act, 2009.
- The words “a taxation officer” substituted by the Finance Act, 2002.
- Substituted “Sub-section (3) of section 187” by the Finance Act, 2015.
- New sub-sections (195A) & (195B) inserted through Finance Act, 2019.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 195A Prosecution for non-compliance with notice under section 116A.—
Prosecution for non-compliance with notice under section 116A.— Any person who, without reasonable excuse, fails to comply with a notice under sub-section (2) of section 116A; shall commit an offence punishable on conviction with imprisonment up to one year or with a fine up to fifty thousand Rupees or both.
Amendment history (4)
- Inserted by the Finance Act, 2009.
- The words “a taxation officer” substituted by the Finance Act, 2002.
- Substituted “Sub-section (3) of section 187” by the Finance Act, 2015.
- New sub-sections (195A) & (195B) inserted through Finance Act, 2019.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 195B Prosecution for enabling offshore tax evasion
Prosecution for enabling offshore tax evasion.– Any enabler who enables, guides or advises any person to design, arrange or manage a transaction or declaration in such a manner which results in offshore tax evasion, shall commit an offence punishable on conviction with imprisonment for a term not exceeding seven years or with a fine up to five million Rupees or both.
Amendment history (8)
- Inserted by the Finance Act, 2009.
- The words “a taxation officer” substituted by the Finance Act, 2002.
- Substituted “Sub-section (3) of section 187” by the Finance Act, 2015.
- New sub-sections (195A) & (195B) inserted through Finance Act, 2019.
- Inserted by the Finance Act, 2016.
- Inserted by the Finance Act, 2013.
- The words “six months” substituted by the Finance Act, 2013.
- Inserted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 196 Prosecution for obstructing an income tax authority
Prosecution for obstructing an income tax authority. — A person who obstructs an income tax authority in discharge of functions under this Ordinance shall commit an offence punishable on conviction with a fine or imprisonment for a term not exceeding one year, or both.
Amendment history (6)
- The words “a taxation officer” substituted by the Finance Act, 2002.
- Inserted by the Finance Act, 2009.
- Inserted by the Finance Act, 2016.
- Inserted by the Finance Act, 2013.
- The words “six months” substituted by the Finance Act, 2013.
- Inserted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 197 Prosecution for disposal of property to prevent attachment
Prosecution for disposal of property to prevent attachment. — Where the owner of any property, or a person acting on the owner’s behalf or claiming under the owner, sells, mortgages, charges, leases or otherwise deals with the property after the receipt of a notice from the Commissioner with a view to preventing the Commissioner from attaching it, shall commit an offence punishable on conviction with a fine upto hundred thousand rupees or imprisonment for a term not exceeding three years, or both.
Amendment history (6)
- The words “a taxation officer” substituted by the Finance Act, 2002.
- Inserted by the Finance Act, 2009.
- Inserted by the Finance Act, 2016.
- Inserted by the Finance Act, 2013.
- The words “six months” substituted by the Finance Act, 2013.
- Inserted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 198 Prosecution for unauthorised disclosure of information by a public servant
Prosecution for unauthorised disclosure of information by a public servant.— A person who discloses any particulars in contravention of sub- section 1B of section 107 or section 216 shall commit an offence punishable on conviction with a fine of not less than five hundred thousand rupees or imprisonment for a term not exceeding one year , or both.
Amendment history (6)
- The words “a taxation officer” substituted by the Finance Act, 2002.
- Inserted by the Finance Act, 2009.
- Inserted by the Finance Act, 2016.
- Inserted by the Finance Act, 2013.
- The words “six months” substituted by the Finance Act, 2013.
- Inserted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 199 Prosecution for abetment
Prosecution for abetment. — Where a person knowingly and wilfully aids, abets, assists, incites or induces another person to commit an offence under this Ordinance, the first-mentioned person shall commit an offence punishable on conviction with a fine or imprisonment for a term not exceeding three years, or both.
Amendment history (6)
- The words “a taxation officer” substituted by the Finance Act, 2002.
- Inserted by the Finance Act, 2009.
- Inserted by the Finance Act, 2016.
- Inserted by the Finance Act, 2013.
- The words “six months” substituted by the Finance Act, 2013.
- Inserted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 200 Offences by companies and associations of persons
(1) Where an offence under this Part is committed by a company, every person who, at the time the offence was committed, was –
(a) the principal officer, a director, general manager, company secretary or other similar officer of the company; o
(b) acting or purporting to act in that capacity, shall be, notwithstanding anything contained in any other law, guilty of the offence and all the provisions of this Ordinance shall apply accordingly.
(2) Where an offence under this Part is committed by an association of persons, every person who, at the time the offence was committed, was a member of the association shall be, notwithstanding anything contained in any other law, guilty of the offence and all the provisions of this Ordinance shall apply accordingly.
(3) Sub-sections
(1) and (2) shall not apply to a person where –
(a) the offence was committed without the person’s consent or knowledge; and (b) the person has exercised all diligence to prevent the commission of the offence as ought to have been exercised having regard to the nature of the person’s functions and all the circumstances.
(a) the principal officer, a director, general manager, company secretary or other similar officer of the company; o
(b) acting or purporting to act in that capacity, shall be, notwithstanding anything contained in any other law, guilty of the offence and all the provisions of this Ordinance shall apply accordingly.
(2) Where an offence under this Part is committed by an association of persons, every person who, at the time the offence was committed, was a member of the association shall be, notwithstanding anything contained in any other law, guilty of the offence and all the provisions of this Ordinance shall apply accordingly.
(3) Sub-sections
(1) and (2) shall not apply to a person where –
(a) the offence was committed without the person’s consent or knowledge; and (b) the person has exercised all diligence to prevent the commission of the offence as ought to have been exercised having regard to the nature of the person’s functions and all the circumstances.
Amendment history (11)
- The words “a taxation officer” substituted by the Finance Act, 2002.
- Inserted by the Finance Act, 2009.
- Inserted by the Finance Act, 2016.
- Inserted by the Finance Act, 2013.
- The words “six months” substituted by the Finance Act, 2013.
- Inserted by the Finance Act, 2003.
- Section 202 substituted by the Finance Act, 2009. The substituted sub-section “202”
- The words “Director General” substituted by Finance Act, 2012.
- The words “additional tax” substituted by Finance Act, 2010.
- Sub-section (1) substituted by Finance Act, 2010. The substituted sub-section (1)
- Full stop substituted by a colon and a proviso added by the Finance Act, 2014.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 201 Institution of prosecution proceedings without prejudice to other action
Institution of prosecution proceedings without prejudice to other action.— Notwithstanding anything contained in any law for the time being in force, a prosecution for an offence against this Ordinance may be instituted without prejudice to any other liability incurred by any person under this Ordinance.
Amendment history (5)
- Section 202 substituted by the Finance Act, 2009. The substituted sub-section “202”
- The words “Director General” substituted by Finance Act, 2012.
- The words “additional tax” substituted by Finance Act, 2010.
- Sub-section (1) substituted by Finance Act, 2010. The substituted sub-section (1)
- Full stop substituted by a colon and a proviso added by the Finance Act, 2014.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 202 Power to compound offences
Power to compound offences.—Notwithstanding any provisions of this Ordinance, where any person has committed any offence, the Chief Commissioner may, with the prior approval of the Board, either before or after the institution of proceedings, compound such offence subject to payment of tax due along with default surcharge and penalty as is determined under the provisions of this Ordinance.
Amendment history (5)
- Section 202 substituted by the Finance Act, 2009. The substituted sub-section “202”
- The words “Director General” substituted by Finance Act, 2012.
- The words “additional tax” substituted by Finance Act, 2010.
- Sub-section (1) substituted by Finance Act, 2010. The substituted sub-section (1)
- Full stop substituted by a colon and a proviso added by the Finance Act, 2014.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 203 Trial by Special Judge
(1) The Federal Government may, by notification in the official Gazette, appoint as many Special Judges as it may consider necessary, and where it appoints more than one Special Judge, it shall specify in the notification the territorial limits within which each of them shall exercise jurisdiction :
Provided that the Federal Government may, by notification in official Gazette, declare that a special judge appointed under section 185 of the Customs Act 1969 (IV of 1969) shall have jurisdiction to try offences under this Ordinance.
(1A) A Special Judge shall be a person who is or has been a Sessions Judge and shall, on appointment, have the jurisdiction to try exclusively an offence punishable under this Part other than an offence referred to in section 198.
(1B) The provisions of the Code of Criminal Procedure, 1898 (Act V of 1898), except those of Chapter XXXVIII, thereof shall apply to the proceedings of the court of a Special Judge and, for the purposes of the said provisions, the court of Special Judge shall be deemed to be a Court of Sessions trying cases, and a person conducting prosecution before the court of a Special Judge shall be deemed to be a Public Prosecutor.
(2) A Special Judge shall take cognisance of, and have jurisdiction to try, an offence triable under sub-section (1) only upon a complaint in writing made by the Commissioner :
Provided that where the offence of concealment of income which has resulted in non-payment of tax of rupees one hundred and above in case of a filer and rupees twenty five million or above in case of non-filer, the procedure provided in section 203B shall be applicable.
(3) The Federal Government may, by order in writing, direct the transfer, at any stage of the trial, of any case from the court of one Special Judge to the court of another Special Judge for disposal, whenever it appears to the Federal Government that such transfer shall promote the ends of justice or tend to the general convenience of parties or witnesses.
(4) In respect of a case transferred to a Special Judge by virtue of sub-section (1) or under sub-section (3), such Judge shall not, by reason of the said transfer, be bound to recall and record again any witness who has given evidence in the case before the transfer and may act on the evidence already recorded by or produced before the court which tried the case before the transfer.
Provided that the Federal Government may, by notification in official Gazette, declare that a special judge appointed under section 185 of the Customs Act 1969 (IV of 1969) shall have jurisdiction to try offences under this Ordinance.
(1A) A Special Judge shall be a person who is or has been a Sessions Judge and shall, on appointment, have the jurisdiction to try exclusively an offence punishable under this Part other than an offence referred to in section 198.
(1B) The provisions of the Code of Criminal Procedure, 1898 (Act V of 1898), except those of Chapter XXXVIII, thereof shall apply to the proceedings of the court of a Special Judge and, for the purposes of the said provisions, the court of Special Judge shall be deemed to be a Court of Sessions trying cases, and a person conducting prosecution before the court of a Special Judge shall be deemed to be a Public Prosecutor.
(2) A Special Judge shall take cognisance of, and have jurisdiction to try, an offence triable under sub-section (1) only upon a complaint in writing made by the Commissioner :
Provided that where the offence of concealment of income which has resulted in non-payment of tax of rupees one hundred and above in case of a filer and rupees twenty five million or above in case of non-filer, the procedure provided in section 203B shall be applicable.
(3) The Federal Government may, by order in writing, direct the transfer, at any stage of the trial, of any case from the court of one Special Judge to the court of another Special Judge for disposal, whenever it appears to the Federal Government that such transfer shall promote the ends of justice or tend to the general convenience of parties or witnesses.
(4) In respect of a case transferred to a Special Judge by virtue of sub-section (1) or under sub-section (3), such Judge shall not, by reason of the said transfer, be bound to recall and record again any witness who has given evidence in the case before the transfer and may act on the evidence already recorded by or produced before the court which tried the case before the transfer.
Amendment history (7)
- Section 202 substituted by the Finance Act, 2009. The substituted sub-section “202”
- The words “Director General” substituted by Finance Act, 2012.
- The words “additional tax” substituted by Finance Act, 2010.
- Sub-section (1) substituted by Finance Act, 2010. The substituted sub-section (1)
- Full stop substituted by a colon and a proviso added by the Finance Act, 2014.
- Inserted by Finance Act, 2010.
- Full stop substituted and proviso added by the Finance Act, 2021.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 203A Appeal against the order of a Special Judge
Appeal against the order of a Special Judge.— An appeal against the order of a Special Judge shall lie to the respective High Court of a Province within thirty days of the passing of the order and it shall be heard as an appeal under the Code of Criminal Procedure 1898 (Act V of 1898) by a single Judge of the High Court.
Amendment history (3)
- Inserted by Finance Act, 2010.
- Full stop substituted and proviso added by the Finance Act, 2021.
- Sections 203B to 203I added by the Finance Act, 2021.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 203B Power to arrest and prosecute
(1) Where on the basis of material evidence brought on record, as a result of audit conducted by the auditors in terms of sub-section (8) of section 177 read with section 214C of this Ordinance, an assessment is made or amended under section 121 or 122 of this Ordinance, as the case may be, and the assessing officer records a finding that the taxpayer has committed the offence of concealment of income which has resulted in non- payment of tax of Rupees one hundred million and above in case of a filer and rupees twenty five million or above in case of non-filer, the taxpayer may be arrested after obtaining written approval of the committee specified under sub- section (2).
(2) The committee under sub-section (1) shall comprise the Minister for Finance and Revenue, the Chairman of the Board and the senior most member of the Board.
(3) All arrests made under this Ordinance shall be carried out in accordance with the relevant provisions of the Code of Criminal Procedure, 1898 (Act V of 1898).
(4) Notwithstanding anything contained in sub-sections
(1) and (2) or any other provision of this Ordinance, where any person has committed offence of concealment of income or any offence warranting prosecution under this Ordinance, the Chief Commissioner with the prior approval of the Board may, either before or after the institution of any proceedings for recovery of tax, compound the offence if such person pays the amount of tax due along with such default surcharge and penalty as is determined under the provisions of this Ordinance.
(5) Where the person suspected of offence of concealment of income or any offence warranting prosecution under this Ordinance is a company, every director or officer of that company whom the authorised officer has reason to believe is personally responsible for actions of the company contributing to offence of concealment of income or any offence warranting prosecution under this Ordinance shall be liable to arrest:
Provided that any arrest under this sub-section shall not absolve the company from the liabilities of payment of tax, default surcharge and penalty imposed under this Ordinance.
(2) The committee under sub-section (1) shall comprise the Minister for Finance and Revenue, the Chairman of the Board and the senior most member of the Board.
(3) All arrests made under this Ordinance shall be carried out in accordance with the relevant provisions of the Code of Criminal Procedure, 1898 (Act V of 1898).
(4) Notwithstanding anything contained in sub-sections
(1) and (2) or any other provision of this Ordinance, where any person has committed offence of concealment of income or any offence warranting prosecution under this Ordinance, the Chief Commissioner with the prior approval of the Board may, either before or after the institution of any proceedings for recovery of tax, compound the offence if such person pays the amount of tax due along with such default surcharge and penalty as is determined under the provisions of this Ordinance.
(5) Where the person suspected of offence of concealment of income or any offence warranting prosecution under this Ordinance is a company, every director or officer of that company whom the authorised officer has reason to believe is personally responsible for actions of the company contributing to offence of concealment of income or any offence warranting prosecution under this Ordinance shall be liable to arrest:
Provided that any arrest under this sub-section shall not absolve the company from the liabilities of payment of tax, default surcharge and penalty imposed under this Ordinance.
Amendment history (1)
- Sections 203B to 203I added by the Finance Act, 2021.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 203C Procedure to be followed on arrest of a person
(1) When an officer of Inland Revenue authorized under sub-section (1) of section 203B in this behalf arrests a person under section 203B, he shall immediately intimate the fact of the arrest of that person to the Special Judge who may direct such officer to produce that person at such time and place and on such date as the Special Judge considers expedient and such Officer shall act accordingly.
(2) Notwithstanding anything contained in the sub-section (1), any person arrested under this Ordinance shall be produced before the Special Judge or, if there is no Special Judge within a reasonable distance, to the nearest Judicial Magistrate, within twenty-four hours of such arrest, excluding the time necessary for the journey from the place of arrest to the Court of the Special Judge or, as the case may be, of such Magistrate.
(3) When any person is produced under sub-section (2) before the Special Judge, he may, on the request of such person, after perusing the record, if any and after giving the prosecution an opportunity of being heard, admit him to bail on his executing a bond, with or without sureties, or refuse to admit him to bail and direct his detention at such place as he deems fit:
Provided that nothing herein contained shall preclude the Special Judge from cancelling the bail of any such person at a subsequent stage if, for any reason, he considers such cancellation necessary, but before passing such order he shall afford such person an opportunity of being heard, unless for reasons to be recorded he considers that the affording of such opportunity shall defeat the purposes of this Ordinance.
(4) When such person is produced under sub-section (2) before a Judicial Magistrate, such Magistrate may, after authorising his detention in such custody at such place and for such period as he considers necessary or proper for facilitating his earliest production before the Special Judge, direct his production before the Special Judge on a date and time to be fixed by him or direct such person to be forthwith taken to, and produced before, the Special Judge and he shall be so taken.
(5) Nothing in sub-section (3) or sub-section (4) shall preclude the Special Judge or the Judicial Magistrate from remanding any such person to the custody of an officer of Inland Revenue holding inquiry against that person if such officer makes a request in writing to that effect, and the Special Judge or the Judicial Magistrate, after perusing the record, if any, and hearing such person, is of the opinion that for the completion of inquiry or investigation it is necessary to make such order:
Provided that the period of such custody shall not exceed more than fourteen days.
(6) When any person is arrested under this Ordinance, an officer of Inland Revenue shall record the fact of arrest and other relevant particulars in the register specified in sub-section (10) and shall immediately proceed to inquire into the charge against such person and if he completes the inquiry within twenty four hours of his arrest, excluding the time necessary for journey as aforesaid, he may, after producing such person before the Special Judge or the nearest Judicial Magistrate, make a request for his further detention in his custody.
(7) While holding an inquiry under sub-section (6), an officer of Inland Revenue shall exercise the same powers as are exercisable by an officer in charge of a police station under the Code of Criminal Procedure, 1898 (Act V of 1898), but such officer shall exercise such powers subject to the foregoing provisions of this section while holding an inquiry under this Ordinance.
(8) If an officer of Inland Revenue, after holding an inquiry as aforesaid, is of the opinion that there is no sufficient evidence or reasonable ground for suspicion against such person, he shall release him on his executing a bond, with or without sureties, and shall direct such person to appear, as and when required, before the Special Judge, and make a report to the Special Judge for the discharge of such person and shall make a full report of the case to his immediate superior.
(9) The Special Judge to whom a report has been made under sub-section,
(8) may, after the perusal of record of the inquiry, and hearing the prosecution, agree with such report and discharge the accused or, if he is of the opinion that there is sufficient ground for proceedings against such person, proceed with his trial and direct the prosecution to produce evidence.
(10) An officer of Inland Revenue empowered to hold inquiry under this section shall maintain a register to be called Register of Arrests and Detentions in the prescribed form in which he shall enter the name and other particulars of every person arrested under this Ordinance, together with the time and date of arrest, the details of the information received, the details of things, goods or documents, recovered from his custody, the name of the witnesses and the explanation, if any, given by him and the manner in which the inquiry has been conducted from day to day and, such register or authenticated copies of its aforesaid entries shall be produced before the Special Judge, whenever such Officer is so directed by him.
(11) After completing the inquiry, an officer of Inland Revenue shall, as early as possible, submit to Special Judge a complaint in the same form and manner in which the officer in-charge of a police station submits a report, before a court.
(12) Magistrate of the first class may record any statement or confession during inquiry under this Ordinance, in accordance with the provisions of section 164 of the Code of Criminal Procedure, 1898 (Act V of 1898).
(13) Without prejudice to the foregoing provisions of this section, Board, with the approval of the Federal Minister-in-charge, may, by notification in the official Gazette, authorize any other officer working under the Board to exercise the powers and perform the functions of an officer of Inland Revenue under this section, subject to such conditions, if any, that it may deem fit to impose.
(2) Notwithstanding anything contained in the sub-section (1), any person arrested under this Ordinance shall be produced before the Special Judge or, if there is no Special Judge within a reasonable distance, to the nearest Judicial Magistrate, within twenty-four hours of such arrest, excluding the time necessary for the journey from the place of arrest to the Court of the Special Judge or, as the case may be, of such Magistrate.
(3) When any person is produced under sub-section (2) before the Special Judge, he may, on the request of such person, after perusing the record, if any and after giving the prosecution an opportunity of being heard, admit him to bail on his executing a bond, with or without sureties, or refuse to admit him to bail and direct his detention at such place as he deems fit:
Provided that nothing herein contained shall preclude the Special Judge from cancelling the bail of any such person at a subsequent stage if, for any reason, he considers such cancellation necessary, but before passing such order he shall afford such person an opportunity of being heard, unless for reasons to be recorded he considers that the affording of such opportunity shall defeat the purposes of this Ordinance.
(4) When such person is produced under sub-section (2) before a Judicial Magistrate, such Magistrate may, after authorising his detention in such custody at such place and for such period as he considers necessary or proper for facilitating his earliest production before the Special Judge, direct his production before the Special Judge on a date and time to be fixed by him or direct such person to be forthwith taken to, and produced before, the Special Judge and he shall be so taken.
(5) Nothing in sub-section (3) or sub-section (4) shall preclude the Special Judge or the Judicial Magistrate from remanding any such person to the custody of an officer of Inland Revenue holding inquiry against that person if such officer makes a request in writing to that effect, and the Special Judge or the Judicial Magistrate, after perusing the record, if any, and hearing such person, is of the opinion that for the completion of inquiry or investigation it is necessary to make such order:
Provided that the period of such custody shall not exceed more than fourteen days.
(6) When any person is arrested under this Ordinance, an officer of Inland Revenue shall record the fact of arrest and other relevant particulars in the register specified in sub-section (10) and shall immediately proceed to inquire into the charge against such person and if he completes the inquiry within twenty four hours of his arrest, excluding the time necessary for journey as aforesaid, he may, after producing such person before the Special Judge or the nearest Judicial Magistrate, make a request for his further detention in his custody.
(7) While holding an inquiry under sub-section (6), an officer of Inland Revenue shall exercise the same powers as are exercisable by an officer in charge of a police station under the Code of Criminal Procedure, 1898 (Act V of 1898), but such officer shall exercise such powers subject to the foregoing provisions of this section while holding an inquiry under this Ordinance.
(8) If an officer of Inland Revenue, after holding an inquiry as aforesaid, is of the opinion that there is no sufficient evidence or reasonable ground for suspicion against such person, he shall release him on his executing a bond, with or without sureties, and shall direct such person to appear, as and when required, before the Special Judge, and make a report to the Special Judge for the discharge of such person and shall make a full report of the case to his immediate superior.
(9) The Special Judge to whom a report has been made under sub-section,
(8) may, after the perusal of record of the inquiry, and hearing the prosecution, agree with such report and discharge the accused or, if he is of the opinion that there is sufficient ground for proceedings against such person, proceed with his trial and direct the prosecution to produce evidence.
(10) An officer of Inland Revenue empowered to hold inquiry under this section shall maintain a register to be called Register of Arrests and Detentions in the prescribed form in which he shall enter the name and other particulars of every person arrested under this Ordinance, together with the time and date of arrest, the details of the information received, the details of things, goods or documents, recovered from his custody, the name of the witnesses and the explanation, if any, given by him and the manner in which the inquiry has been conducted from day to day and, such register or authenticated copies of its aforesaid entries shall be produced before the Special Judge, whenever such Officer is so directed by him.
(11) After completing the inquiry, an officer of Inland Revenue shall, as early as possible, submit to Special Judge a complaint in the same form and manner in which the officer in-charge of a police station submits a report, before a court.
(12) Magistrate of the first class may record any statement or confession during inquiry under this Ordinance, in accordance with the provisions of section 164 of the Code of Criminal Procedure, 1898 (Act V of 1898).
(13) Without prejudice to the foregoing provisions of this section, Board, with the approval of the Federal Minister-in-charge, may, by notification in the official Gazette, authorize any other officer working under the Board to exercise the powers and perform the functions of an officer of Inland Revenue under this section, subject to such conditions, if any, that it may deem fit to impose.
Amendment history (1)
- Sections 203B to 203I added by the Finance Act, 2021.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 203D Special Judges
(1) The Federal Government shall by notification in the official Gazette, appoint as many Special Judges as it considers necessary and, where it appoints more than one Special Judge, it shall specify in the notification the headquarter of each Special Judge and the territorial limits within which he shall exercise jurisdiction under this Ordinance.
(2) No person shall be appointed as a Special Judge unless he is or has been a Sessions Judge.
(2) No person shall be appointed as a Special Judge unless he is or has been a Sessions Judge.
s. 203E Cognizance of offences by Special Judges
(1) Notwithstanding anything contained in this Ordinance or any other law for the time being in force, a Special Judge may, within the limits of his jurisdiction, take cognizance of any offence punishable under this Ordinance upon—
(a) a report in writing made by an officer of Inland Revenue or by any other officer especially authorized in this behalf by the Federal Government; or (b) receiving a complaint or information of facts constituting such offence made or communicated by any person; or (c) his own knowledge acquired during any proceeding before him under this Ordinance or under any other law for the time being in force.
(2) Upon the receipt of report under clause (a) of sub-section (1), the Special Judge shall proceed with the trial of the accused.
(3) Upon the receipt of a complaint or information under clause (b), or acquired in the manner referred to in clause (c) of subsection (1), the Special Judge may, before issuing a summon or warrant for appearance of the person complained against, hold a preliminary inquiry for the purpose of ascertaining the truth or falsehood of the complaint, or direct any magistrate or any officer of Inland Revenue or any police officer to hold such inquiry and submit a report, and such Magistrate or officer shall conduct such inquiry and make report accordingly.
(4) If, after conducting such inquiry or after considering the report of such Magistrate or officer, the Special Judge is of the opinion that there is—
(a) no sufficient ground for proceeding, he may dismiss the complaint, or (b) sufficient ground for proceeding, he may proceed against the person complained against in accordance with law.
(5) A special Judge or a Magistrate or an officer holding inquiry under sub- section (3) may hold such inquiry, as early as possible, in accordance with the provision of section 202 of the Code of Criminal Procedure, 1898 (Act V of 1898).
(a) a report in writing made by an officer of Inland Revenue or by any other officer especially authorized in this behalf by the Federal Government; or (b) receiving a complaint or information of facts constituting such offence made or communicated by any person; or (c) his own knowledge acquired during any proceeding before him under this Ordinance or under any other law for the time being in force.
(2) Upon the receipt of report under clause (a) of sub-section (1), the Special Judge shall proceed with the trial of the accused.
(3) Upon the receipt of a complaint or information under clause (b), or acquired in the manner referred to in clause (c) of subsection (1), the Special Judge may, before issuing a summon or warrant for appearance of the person complained against, hold a preliminary inquiry for the purpose of ascertaining the truth or falsehood of the complaint, or direct any magistrate or any officer of Inland Revenue or any police officer to hold such inquiry and submit a report, and such Magistrate or officer shall conduct such inquiry and make report accordingly.
(4) If, after conducting such inquiry or after considering the report of such Magistrate or officer, the Special Judge is of the opinion that there is—
(a) no sufficient ground for proceeding, he may dismiss the complaint, or (b) sufficient ground for proceeding, he may proceed against the person complained against in accordance with law.
(5) A special Judge or a Magistrate or an officer holding inquiry under sub- section (3) may hold such inquiry, as early as possible, in accordance with the provision of section 202 of the Code of Criminal Procedure, 1898 (Act V of 1898).
s. 203F Special Judge, etc. to have exclusive jurisdiction
Special Judge, etc. to have exclusive jurisdiction.— Notwithstanding anything contained in this Ordinance or in any other law for the time being in force no,–
(a) court other than the Special Judge having jurisdiction, shall try an offence punishable under this Ordinance;
(b) other court or officer, except in the manner and to the extent specifically provided for in this Ordinance, shall exercise any power, or perform any function under this Ordinance;
(c) court, other than the High Court, shall entertain, hear or decide any application, petition or appeal under chapters XXXI and XXXII of the Code of Criminal Procedure, 1898 (Act V of 1898), against or in respect of any order or direction made under this Ordinance; and (d) no court, other than the Special Judge or the High Court, shall entertain any application or petition or pass any order or give any direction under chapters XXXVII, XXXIX, XLIV or XLV of the aforesaid Code.
(a) court other than the Special Judge having jurisdiction, shall try an offence punishable under this Ordinance;
(b) other court or officer, except in the manner and to the extent specifically provided for in this Ordinance, shall exercise any power, or perform any function under this Ordinance;
(c) court, other than the High Court, shall entertain, hear or decide any application, petition or appeal under chapters XXXI and XXXII of the Code of Criminal Procedure, 1898 (Act V of 1898), against or in respect of any order or direction made under this Ordinance; and (d) no court, other than the Special Judge or the High Court, shall entertain any application or petition or pass any order or give any direction under chapters XXXVII, XXXIX, XLIV or XLV of the aforesaid Code.
s. 203G Provisions of Code of Criminal Procedure, 1898, to apply
(1) The provision of the Code of Criminal procedure, 1898 (Act V of 1898), so far as they are not inconsistent with the provisions of this Ordinance, shall apply to the proceedings of the court of a Special Judge and such court shall be deemed to be a court of Sessions for the purpose of the said Code and the provisions of Chapter XXIIA of the foresaid Code, so far as applicable and with the necessary modifications, shall apply to the trial of cases by the Special Judge under this Ordinance.
(2) For the purposes of sub-section (1), the Code of Criminal Procedure, 1898 (Act V of 1898), shall have effect as if an offence punishable under this Ordinance were one of the offences referred to in sub-section (1) of section 337 of the said Code.
(2) For the purposes of sub-section (1), the Code of Criminal Procedure, 1898 (Act V of 1898), shall have effect as if an offence punishable under this Ordinance were one of the offences referred to in sub-section (1) of section 337 of the said Code.
s. 203H Transfer of cases
(1) Where more than one Special Judge are appointed within the territorial jurisdiction of a High Court, the High Court, and where not more than one Special Judge is so appointed, the Federal Government, may by order in writing direct the transfer, at any stage of the trial, of any case from the court of one Special Judge to the Court of another Special Judge for disposal, whenever it appears to the High Court or, as the case may be, the Federal Government, that such transfer may promote the ends of justice or tend to the general convenience of the parties or witnesses.
(2) In respect of a case transferred to a Special Judge under subsection (1), such Special Judge shall not by reason of the said transfer, be bound to recall and rehear any witness whose evidence has been recorded in the case before the transfer and may act upon the evidence already recorded or produced before the court which tried the case before the transfer.
(2) In respect of a case transferred to a Special Judge under subsection (1), such Special Judge shall not by reason of the said transfer, be bound to recall and rehear any witness whose evidence has been recorded in the case before the transfer and may act upon the evidence already recorded or produced before the court which tried the case before the transfer.
Amendment history (3)
- The words “Federal Government” substituted by the Finance Act, 2021.
- The words “ADDITIONAL TAX” substituted by the Finance Act, 2010. The substituted provision has
- The words “Additional tax” substituted by the Finance Act, 2010. The substituted provision has been
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 203I Place of sittings
Place of sittings.—A Special Judge shall ordinarily hold sittings at his headquarters but, keeping in view the general convenience of the parties or the witnesses, he may hold sittings at any other place.
Amendment history (3)
- The words “Federal Government” substituted by the Finance Act, 2021.
- The words “ADDITIONAL TAX” substituted by the Finance Act, 2010. The substituted provision has
- The words “Additional tax” substituted by the Finance Act, 2010. The substituted provision has been
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 204 Power to tender immunity from prosecution
(1) The Board with the approval of the Minister-in-charge may, for the purpose of obtaining the evidence of any person appearing to have been directly or indirectly concerned in, or privy to the concealment of income or to the evasion of tax, tender to such person immunity from prosecution for any offence under this Ordinance or under the Pakistan Penal Code (Act XLV of 1860), or under any other Federal Law on condition of the person making full and true disclosure of the whole circumstances relating to the concealment of income or evasion of tax.
(2) A tender of immunity made to, and accepted by, the person concerned shall render the person immune from prosecution for any offence in respect of which the tender was made and to the extent specified in the immunity.
(3) If it appears to the Board with the approval of the Minister-in-charge that any person to whom immunity has been tendered under this section has not complied with the conditions on which the tender was made or is concealing anything or giving false evidence, the Board with the approval of the Minister-in- charge may withdraw the immunity, and any such person may be tried for the offence in respect of which the tender of immunity was made or for any other offence of which the person appears to have been guilty in connection with the same matter. PART XII DEFAULT SURCHARGE
(2) A tender of immunity made to, and accepted by, the person concerned shall render the person immune from prosecution for any offence in respect of which the tender was made and to the extent specified in the immunity.
(3) If it appears to the Board with the approval of the Minister-in-charge that any person to whom immunity has been tendered under this section has not complied with the conditions on which the tender was made or is concealing anything or giving false evidence, the Board with the approval of the Minister-in- charge may withdraw the immunity, and any such person may be tried for the offence in respect of which the tender of immunity was made or for any other offence of which the person appears to have been guilty in connection with the same matter. PART XII DEFAULT SURCHARGE
Amendment history (3)
- The words “Federal Government” substituted by the Finance Act, 2021.
- The words “ADDITIONAL TAX” substituted by the Finance Act, 2010. The substituted provision has
- The words “Additional tax” substituted by the Finance Act, 2010. The substituted provision has been
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 205 Default surcharge
(1) A person who fails to pay –
(a) any tax, excluding the advance tax under section 147 and default surcharge under this section;
(b) any penalty; or (c) any amount referred to in section 140 or 141, on or before the due date for payment shall be liable for default surcharge at a rate equal to twelve percent or KIBOR plus three percent per annum, whichever is higher on the tax, penalty or other amount unpaid computed for the period commencing on the date on which the tax, penalty or other amount was due and ending on the date on which it was paid :
Provided that if the person opts to pay the tax due on the basis of an order under section 129 on or before the due date given in the notice under sub- section (2) of section 137 issued in consequence of the said order, and does not file an appeal under section 131, he shall not be liable to pay default surcharge for the period beginning from the due date of payment in consequence of an order appealed against to the date of payment in consequence of notice under sub-section (2) of section 137.
(1A) A person who fails to pay advance tax under section 147 shall be liable for default surcharge at a rate equal to 12 per cent per annumon the amount of tax unpaid computed for the period commencing on the date on which it was due and ending on the date on which it was paid or date on which the return of income for the relevant tax year was due, whichever is earlier.
(1B) Where, in respect of any tax year, any taxpayer fails to pay tax under sub-section (4A), or (6) of section 147 or the tax so paid is less than ninety per cent of the tax chargeable for the relevant tax year, he shall be liable to pay default surcharge at the rate of 12 per cent per annum on the amount of tax so chargeable or the amount by which the tax paid by him falls short of the ninety per cent, as the case may be; and such default surcharge shall be calculated from the first day of April in that year to the date on which assessment is made or the thirtieth day of June of the financial year next following, whichever is the earlier :
Provided that in the case of person having a special tax year, the default surcharge shall be calculated on and from the first day of the fourth quarter of the special tax year till the date on which assessment is made or the last day of special tax year, whichever is earlier.
(2) Any default surcharge paid by a person under sub-section (1) shall be refunded to the extent that the tax, penalty or other amount to which it relates is held not to be payable.
(3) A person who fails to collect tax, as required under Division II of Part V of this Chapter or Chapter XII or deduct tax as required under Division III of Part V of this Chapter or Chapter XII or fails to pay an amount of tax collected or deducted as required under section 160 on or before the due date for payment shall be liable for default surcharge at a rate equal to 12 per cent per annum on the amount unpaid computed for the period commencing on the date the amount was required to be collected or deducted and ending on the date on which it was paid to the Commissioner :
Provided that if the person opts to pay the tax due on the basis of an order under section 129 on or before the due date given in the notice under sub-section (2) of section 137 issued in consequence of the said order and does not file an appeal under section 131, he shall not be liable to pay default surcharge for the period beginning from the date of order under section 161 to the date of payment.
(5) The Commissioner shall make an assessment of any default surcharge imposed under this Part in accordance with the provisions of Part II of this Chapter as if the default surcharge were tax.
(6) The provisions of Parts III and IV apply to an assessment of default surcharge as if it were an assessment of tax.
(7) Where a person is liable for default surcharge under this Part, the Commissioner may, at his discretion, make assessment of default surcharge for the period of default or part thereof, notwithstanding that the tax due has not actually been paid.
(a) any tax, excluding the advance tax under section 147 and default surcharge under this section;
(b) any penalty; or (c) any amount referred to in section 140 or 141, on or before the due date for payment shall be liable for default surcharge at a rate equal to twelve percent or KIBOR plus three percent per annum, whichever is higher on the tax, penalty or other amount unpaid computed for the period commencing on the date on which the tax, penalty or other amount was due and ending on the date on which it was paid :
Provided that if the person opts to pay the tax due on the basis of an order under section 129 on or before the due date given in the notice under sub- section (2) of section 137 issued in consequence of the said order, and does not file an appeal under section 131, he shall not be liable to pay default surcharge for the period beginning from the due date of payment in consequence of an order appealed against to the date of payment in consequence of notice under sub-section (2) of section 137.
(1A) A person who fails to pay advance tax under section 147 shall be liable for default surcharge at a rate equal to 12 per cent per annumon the amount of tax unpaid computed for the period commencing on the date on which it was due and ending on the date on which it was paid or date on which the return of income for the relevant tax year was due, whichever is earlier.
(1B) Where, in respect of any tax year, any taxpayer fails to pay tax under sub-section (4A), or (6) of section 147 or the tax so paid is less than ninety per cent of the tax chargeable for the relevant tax year, he shall be liable to pay default surcharge at the rate of 12 per cent per annum on the amount of tax so chargeable or the amount by which the tax paid by him falls short of the ninety per cent, as the case may be; and such default surcharge shall be calculated from the first day of April in that year to the date on which assessment is made or the thirtieth day of June of the financial year next following, whichever is the earlier :
Provided that in the case of person having a special tax year, the default surcharge shall be calculated on and from the first day of the fourth quarter of the special tax year till the date on which assessment is made or the last day of special tax year, whichever is earlier.
(2) Any default surcharge paid by a person under sub-section (1) shall be refunded to the extent that the tax, penalty or other amount to which it relates is held not to be payable.
(3) A person who fails to collect tax, as required under Division II of Part V of this Chapter or Chapter XII or deduct tax as required under Division III of Part V of this Chapter or Chapter XII or fails to pay an amount of tax collected or deducted as required under section 160 on or before the due date for payment shall be liable for default surcharge at a rate equal to 12 per cent per annum on the amount unpaid computed for the period commencing on the date the amount was required to be collected or deducted and ending on the date on which it was paid to the Commissioner :
Provided that if the person opts to pay the tax due on the basis of an order under section 129 on or before the due date given in the notice under sub-section (2) of section 137 issued in consequence of the said order and does not file an appeal under section 131, he shall not be liable to pay default surcharge for the period beginning from the date of order under section 161 to the date of payment.
(5) The Commissioner shall make an assessment of any default surcharge imposed under this Part in accordance with the provisions of Part II of this Chapter as if the default surcharge were tax.
(6) The provisions of Parts III and IV apply to an assessment of default surcharge as if it were an assessment of tax.
(7) Where a person is liable for default surcharge under this Part, the Commissioner may, at his discretion, make assessment of default surcharge for the period of default or part thereof, notwithstanding that the tax due has not actually been paid.
Amendment history (23)
- The words “Federal Government” substituted by the Finance Act, 2021.
- The words “ADDITIONAL TAX” substituted by the Finance Act, 2010. The substituted provision has
- The words “Additional tax” substituted by the Finance Act, 2010. The substituted provision has been
- Substituted by the Finance Act, 2003. The substituted clause (a)
- The words “additional tax” substituted by the Finance Act, 2010. The substituted provision has been
- The words “KIBOR plus three per cent per quarter” substituted by the Finance Act, 2012.
- The figure “18” substituted by Finance Act, 2015.
- The expression “12 per cent per annum” substituted by Finance Act, 2024.
- Added by the Finance Act, 2012.
- Inserted by the Finance Act, 2003.
- The figure “18” substituted by Finance Act, 2015
- Inserted by the Finance Act, 2004.
- Inserted by the Finance Act, 2006.
- The word “eighty” substituted by the Finance Act, 2006.
- Full stop substituted by the Finance Act, 2017
- Added by the Finance Act, 2017
- Full stop substituted by the Finance Act, 2012.
- Sub-section (4) omitted by the Finance Act, 2003. The omitted sub-section (4)
- New sub-section (7) added through Finance Act, 2020 dated 30 June, 2020.
- Added by the Finance Act, 2003.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Sub-section (2) substituted by the Finance Act, 2006. The substituted sub-section (2)
- Inserted by the Finance Act, 2002.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 205A Reduction in default surcharge, consequential to reduction in tax or penalty
Reduction in default surcharge , consequential to reduction in tax or penalty.— Where, in consequence of any order made under this Ordinance, the amount of tax or penalty in respect of which default surcharge is chargeable under section 205 is reduced, the default surcharge , if any, levied under the aforesaid section shall be reduced accordingly. PART XIII CIRCULARS
Amendment history (5)
- Added by the Finance Act, 2003.
- The words “additional tax” substituted by the Finance Act, 2010. The substituted provision has been
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Sub-section (2) substituted by the Finance Act, 2006. The substituted sub-section (2)
- Inserted by the Finance Act, 2002.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 206 Circulars
(1) To achieve consistency in the administration of this Ordinance and to provide guidance to taxpayers and officers of the Board , the Board may issue Circulars setting out the Board’s interpretation of this Ordinance.
(2) A circular issued by the Board shall be binding on all Income Tax Authorities and other persons employed in the execution of the Ordinance, under the control of the said Board other than Commissioners of Income Tax (Appeals).
(3) A Circular shall not be binding on a taxpayer.
(2) A circular issued by the Board shall be binding on all Income Tax Authorities and other persons employed in the execution of the Ordinance, under the control of the said Board other than Commissioners of Income Tax (Appeals).
(3) A Circular shall not be binding on a taxpayer.
Amendment history (10)
- Added by the Finance Act, 2003.
- The words “additional tax” substituted by the Finance Act, 2010. The substituted provision has been
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Sub-section (2) substituted by the Finance Act, 2006. The substituted sub-section (2)
- Inserted by the Finance Act, 2002.
- The word “blinding” substituted by the Finance Act, 2005.
- Full stop substituted by the Finance Act, 2011.
- The colon substituted by the Finance Act, 2017.
- Inserted by the Finance Act, 2011.
- The proviso omitted by the Finance Act, 2017. The omitted proviso
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 206A Advance ruling
(1) The Board may, on application in writing by a non-resident taxpayer, issue to the taxpayer an advance ruling setting out the Commissioner’s position regarding the application of this Ordinance to a transaction proposed or entered into by the taxpayer.
(2) Where the taxpayer has made a full and true disclosure of the nature of all aspects of the transaction relevant to the ruling and the transaction has proceeded in all material respects as described in the taxpayer’s application for the ruling, the ruling is binding on the Commissioner with respect to the application to the transaction of the law as it stood at the time the ruling was issued.
(3) Where there is any inconsistency between a circular and an advance ruling, priority shall be given to the terms of the advance ruling . ADMINISTRATION PART I GENERAL
(2) Where the taxpayer has made a full and true disclosure of the nature of all aspects of the transaction relevant to the ruling and the transaction has proceeded in all material respects as described in the taxpayer’s application for the ruling, the ruling is binding on the Commissioner with respect to the application to the transaction of the law as it stood at the time the ruling was issued.
(3) Where there is any inconsistency between a circular and an advance ruling, priority shall be given to the terms of the advance ruling . ADMINISTRATION PART I GENERAL
Amendment history (8)
- Added by the Finance Act, 2003.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- The word “blinding” substituted by the Finance Act, 2005.
- Full stop substituted by the Finance Act, 2011.
- The colon substituted by the Finance Act, 2017.
- Inserted by the Finance Act, 2011.
- The proviso omitted by the Finance Act, 2017. The omitted proviso
- Section 207 substituted by the Finance Act, 2010. The substituted provision has been made effective
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
Administration
s. 207 Income tax authorities
(1) There shall be the following Income Tax authorities for the purposes of this Ordinance and rules made thereunder, namely:—
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(ga)
(h)
(i)
(ia)
(ib)
(j)
(k)
(l)
(m) Board: Chief Commissioner Inland Revenue; Commissioner Inland Revenue; Commissioner Inland Revenue (Appeals); Additional Commissioner Inland Revenue; Deputy Commissioner Inland Revenue; Assistant Commissioner Inland Revenue; Special audit panel; Inland Revenue Officer; Inland Revenue Audit Officer; District Taxation Officer Inland Revenue; Assistant Director Audit. Superintendent Inland Revenue; Inspector Inland Revenue; Auditor Inland Revenue; and auditor appointed under section 222.
(2) The Board shall examine, supervise and oversee the general administration of this Ordinance.
(3) The income tax authorities specified in sub-section (1) except in clause (a) shall be subordinate to the Board.
(3A) Commissioners Inland Revenue, Additional Commissioners Inland Revenue, Deputy Commissioners Inland Revenue, Assistant Commissioners Inland Revenue, Inland Revenue Officers, Inland Revenue Audit Officers District Taxation Officer Inland Revenue, Assistant Director Audit , Superintendents Inland Revenue, Auditors Inland Revenue and Inspectors Inland Revenue, shall be subordinate to the Chief Commissioners Inland Revenue.
(4) Subject to sub-section (5), Additional Commissioners Inland Revenue, Deputy Commissioner Inland Revenue, Assistant Commissioners Inland Revenue, Inland Revenue Officers, Inland Revenue Audit Officers , District Taxation Officer Inland Revenue, Assistant Director Audit , Superintendents Inland Revenue, Auditors Inland Revenue and Inspectors Inland Revenue shall be subordinate to the Commissioners Inland Revenue.
(4A) Deputy Commissioners Inland Revenue, Assistant Commissioners Inland Revenue, Inland Revenue Officers, Inland Revenue Audit Officers , District Taxation Officer Inland Revenue, Assistant Director Audit , Superintendents Inland Revenue, Auditors Inland Revenue and Inspectors Inland Revenue shall be subordinate to the Additional Commissioners Inland Revenue.
(5) An officer vested with the powers and functions of Commissioner shall be subordinate to the Chief Commissioner Inland Revenue.
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(ga)
(h)
(i)
(ia)
(ib)
(j)
(k)
(l)
(m) Board: Chief Commissioner Inland Revenue; Commissioner Inland Revenue; Commissioner Inland Revenue (Appeals); Additional Commissioner Inland Revenue; Deputy Commissioner Inland Revenue; Assistant Commissioner Inland Revenue; Special audit panel; Inland Revenue Officer; Inland Revenue Audit Officer; District Taxation Officer Inland Revenue; Assistant Director Audit. Superintendent Inland Revenue; Inspector Inland Revenue; Auditor Inland Revenue; and auditor appointed under section 222.
(2) The Board shall examine, supervise and oversee the general administration of this Ordinance.
(3) The income tax authorities specified in sub-section (1) except in clause (a) shall be subordinate to the Board.
(3A) Commissioners Inland Revenue, Additional Commissioners Inland Revenue, Deputy Commissioners Inland Revenue, Assistant Commissioners Inland Revenue, Inland Revenue Officers, Inland Revenue Audit Officers District Taxation Officer Inland Revenue, Assistant Director Audit , Superintendents Inland Revenue, Auditors Inland Revenue and Inspectors Inland Revenue, shall be subordinate to the Chief Commissioners Inland Revenue.
(4) Subject to sub-section (5), Additional Commissioners Inland Revenue, Deputy Commissioner Inland Revenue, Assistant Commissioners Inland Revenue, Inland Revenue Officers, Inland Revenue Audit Officers , District Taxation Officer Inland Revenue, Assistant Director Audit , Superintendents Inland Revenue, Auditors Inland Revenue and Inspectors Inland Revenue shall be subordinate to the Commissioners Inland Revenue.
(4A) Deputy Commissioners Inland Revenue, Assistant Commissioners Inland Revenue, Inland Revenue Officers, Inland Revenue Audit Officers , District Taxation Officer Inland Revenue, Assistant Director Audit , Superintendents Inland Revenue, Auditors Inland Revenue and Inspectors Inland Revenue shall be subordinate to the Additional Commissioners Inland Revenue.
(5) An officer vested with the powers and functions of Commissioner shall be subordinate to the Chief Commissioner Inland Revenue.
Amendment history (10)
- Section 207 substituted by the Finance Act, 2010. The substituted provision has been made effective
- Inserted by Finance Act, 2015
- Inserted by Finance Act, 2017
- The word “and” omitted by the Finance Act, 2025
- Sub-section (3) substituted by the Finance Act, 2012. The substituted sub-section (3) read as
- Inserted by the Finance Act, 2012.
- The word “officer” substituted by finance act 2017.
- Section 208 substituted by the Finance Act, 2002. The substituted section 208
- Sub-section (1) substituted by the Finance Act, 2010. The substituted provision has been made effective from
- Inserted by Finance Act 2017.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 208 Appointment of income tax authorities
(1) The Board may appoint as many Chief Commissioners Inland Revenue, Commissioners Inland Revenue, Commissioners Inland Revenue (Appeals), Additional Commissioners Inland Revenue, Deputy Commissioners Inland Revenue, Assistant Commissioners Inland Revenue, Inland Revenue Officers, Inland Revenue Audit Officers , District Taxation Officer Inland Revenue, Assistant Director Audit ,Superintendents Inland Revenue, Inspectors Inland Revenue, Auditors Inland Revenue and such other executive or ministerial officers and staff as may be necessary.
(2) Subject to such orders or directions as may be issued by the Board , any income tax authority may appoint any income tax authority subordinate to it and such other executive or ministerial officers and staff as may be necessary.
(3) All appointments, other than of valuers, chartered accountants or experts, made under this Ordinance, shall be subject to rules and orders of the Federal Government regulating the terms and conditions of persons in public services and posts.
(2) Subject to such orders or directions as may be issued by the Board , any income tax authority may appoint any income tax authority subordinate to it and such other executive or ministerial officers and staff as may be necessary.
(3) All appointments, other than of valuers, chartered accountants or experts, made under this Ordinance, shall be subject to rules and orders of the Federal Government regulating the terms and conditions of persons in public services and posts.
Amendment history (11)
- The word “officer” substituted by finance act 2017.
- Inserted by Finance Act, 2017
- Section 208 substituted by the Finance Act, 2002. The substituted section 208
- Sub-section (1) substituted by the Finance Act, 2010. The substituted provision has been made effective from
- Inserted by Finance Act 2017.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Section 209 substituted by the Finance Act, 2002. The substituted section 209
- Substituted by the Finance Act, 2003. The substituted sub-section (1)
- The words “Regional Commissioners” substituted by the Finance Act, 2010.
- Full stop substituted by the Finance Act, 2011.
- Inserted by the Finance Act, 2011.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 209 Jurisdiction of income tax authorities
(1) Subject to this Ordinance, the Chief Commissioners , the Commissioners and the Commissioners (Appeals) shall perform all or such functions and exercise all or such powers under this Ordinance as may be assigned to them in respect of such persons or classes of persons or such areas as the Board may direct :
Provided that the Board or the Chief Commissioner, as the case may be, may transfer jurisdiction in respect of cases or persons from one Commissioner to another.
(2) The Board or the Chief Commissioner may, by an order, confer upon or assign to any officer of Inland Revenue all or any of the powers and functions conferred upon or assigned to the Commissioner, under this Ordinance, in respect of any person or persons or classes of persons or areas as may be specified in the order ;
Provided that the Board may also confer upon or assign to any Officer of Inland Revenue the aforesaid powers and functions through Automated Case Selection System:
Provided further that the Board may make rules for conferment or assignment of such powers and functions through Automated Case Selection System. Explanation.--- For the purpose of this sub-section, the expression Automated Case Selection System means an algorithm for randomized allocation of cases by using suitable technological modes.
(3) An order under sub-section (2) by the Chief Commissioner shall be made only with the approval of the Board .
(4) The Officer of Inland Revenue referred to in sub-section (2) shall, for the purposes of this Ordinance, be treated to be the Commissioner.
(5) Within the area assigned to him, the Commissioner shall have jurisdiction, —
(a) in respect of any person carrying on business, if the person’s place of business is within such area, or where the business is carried on in more than one place, the person’s principal place of business is within such area; or in respect of any other person, if the person resides in such area:
(6) Where a question arises as to whether a Commissioner has jurisdiction over a person, the question shall be decided by the Chief Commissioner or Chief Commissioners concerned and, if they are not in agreement, by the Board .
(7) No person shall call into question the jurisdiction of a Commissioner after that person has furnished a return of income to the Commissioner or, where the person has not furnished a return of income, after the time allowed by any notice served on the person for furnishing such return has expired.
(8) Notwithstanding anything contained in this section, every Commissioner shall have all the powers conferred by, or under, this Ordinance on him in respect of any income arising within the area assigned to him.
(8A) The power to confer jurisdiction under this section shall include the power to transfer jurisdiction from one income tax authority to another.
(9) Where, in respect of any proceedings under this Ordinance, an income tax authority is succeeded by another, the succeeding authority may continue the proceedings from the stage it was left by that authority’s predecessor.
Provided that the Board or the Chief Commissioner, as the case may be, may transfer jurisdiction in respect of cases or persons from one Commissioner to another.
(2) The Board or the Chief Commissioner may, by an order, confer upon or assign to any officer of Inland Revenue all or any of the powers and functions conferred upon or assigned to the Commissioner, under this Ordinance, in respect of any person or persons or classes of persons or areas as may be specified in the order ;
Provided that the Board may also confer upon or assign to any Officer of Inland Revenue the aforesaid powers and functions through Automated Case Selection System:
Provided further that the Board may make rules for conferment or assignment of such powers and functions through Automated Case Selection System. Explanation.--- For the purpose of this sub-section, the expression Automated Case Selection System means an algorithm for randomized allocation of cases by using suitable technological modes.
(3) An order under sub-section (2) by the Chief Commissioner shall be made only with the approval of the Board .
(4) The Officer of Inland Revenue referred to in sub-section (2) shall, for the purposes of this Ordinance, be treated to be the Commissioner.
(5) Within the area assigned to him, the Commissioner shall have jurisdiction, —
(a) in respect of any person carrying on business, if the person’s place of business is within such area, or where the business is carried on in more than one place, the person’s principal place of business is within such area; or in respect of any other person, if the person resides in such area:
(6) Where a question arises as to whether a Commissioner has jurisdiction over a person, the question shall be decided by the Chief Commissioner or Chief Commissioners concerned and, if they are not in agreement, by the Board .
(7) No person shall call into question the jurisdiction of a Commissioner after that person has furnished a return of income to the Commissioner or, where the person has not furnished a return of income, after the time allowed by any notice served on the person for furnishing such return has expired.
(8) Notwithstanding anything contained in this section, every Commissioner shall have all the powers conferred by, or under, this Ordinance on him in respect of any income arising within the area assigned to him.
(8A) The power to confer jurisdiction under this section shall include the power to transfer jurisdiction from one income tax authority to another.
(9) Where, in respect of any proceedings under this Ordinance, an income tax authority is succeeded by another, the succeeding authority may continue the proceedings from the stage it was left by that authority’s predecessor.
Amendment history (15)
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Section 209 substituted by the Finance Act, 2002. The substituted section 209
- Substituted by the Finance Act, 2003. The substituted sub-section (1)
- The words “Regional Commissioners” substituted by the Finance Act, 2010.
- Full stop substituted by the Finance Act, 2011.
- Inserted by the Finance Act, 2011.
- The words “Regional Commissioner” substituted by the Finance Act, 2010. The substituted provision
- The words “taxation officer” substituted by Finance Act, 2010. The substituted provision has been
- Inserted by the Finance Act, 2003.
- added through Finance Act, 2020 dated 30 June, 2020.
- Explanation added through Finance act, 2020 dated 30 June, 2020
- The words “taxation officer” substituted by the Finance Act, 2010. The substituted provision has been
- Inserted by the Finance Act, 2022.
- Section 209A omitted by the Finance Act, 2026. The omitted section
- Section 209B inserted by the Finance Act, 2026.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 209A OmittedOmitted
s. 209B Faceless jurisdiction of income-tax authorities
(1) Notwithstanding anything contained in this Ordinance, the Inland Revenue tax authorities appointed in National faceless center shall perform all or such functions, and exercise all or such powers under this Ordinance as may be assigned to them in respect of such persons, or classes of persons, for such tax years of a person through algorithms developed by the Board.
(2) The jurisdiction so assigned under this Ordinance may be exclusive or concurrent. In case of concurrent jurisdiction, the powers and functions not assigned to the National faceless centre shall remain with the Commissioner having jurisdiction under section 209 of this Ordinance.
(3) The Board may transfer jurisdiction in respect of persons or classes of persons, for a specific tax year, for which the jurisdiction has already been assigned under this section, from the National faceless center to the Commissioner having jurisdiction under section 209 of this Ordinance, on recommendation of the Chief Commissioner or on its own accord.
(4) The Chief Commissioner appointed in the National faceless center may request the Board to direct the Commissioner having jurisdiction under section 209 or any other Income Tax Authority, as it may deem fit to conduct physical verification including nature and size of the business, assets, investments, expenditures, and any other information or verification required by the Chief Commissioner for conducting any proceedings assigned to the National faceless centre:
Provided that the Board may exercise its power of allocation of verification through an algorithm-based system.
(5) Notwithstanding anything contained in any law for the time being in force, the identity of the authority exercising jurisdiction in the National faceless centre shall be kept confidential from the taxpayer, the authorized representative of the taxpayer, and any unauthorized person.
(6) No notice, order, demand, or assessment passed by an authority appointed at the National faceless centre shall be called in question or set aside merely on the ground that such authority did not have jurisdiction over the taxpayer under section 209 of this Ordinance, or lack of notified delegation of power under section 210 of this Ordinance, or because of the fact that identity of the authority has been kept confidential from the taxpayer as per sub-section (5).
(2) The jurisdiction so assigned under this Ordinance may be exclusive or concurrent. In case of concurrent jurisdiction, the powers and functions not assigned to the National faceless centre shall remain with the Commissioner having jurisdiction under section 209 of this Ordinance.
(3) The Board may transfer jurisdiction in respect of persons or classes of persons, for a specific tax year, for which the jurisdiction has already been assigned under this section, from the National faceless center to the Commissioner having jurisdiction under section 209 of this Ordinance, on recommendation of the Chief Commissioner or on its own accord.
(4) The Chief Commissioner appointed in the National faceless center may request the Board to direct the Commissioner having jurisdiction under section 209 or any other Income Tax Authority, as it may deem fit to conduct physical verification including nature and size of the business, assets, investments, expenditures, and any other information or verification required by the Chief Commissioner for conducting any proceedings assigned to the National faceless centre:
Provided that the Board may exercise its power of allocation of verification through an algorithm-based system.
(5) Notwithstanding anything contained in any law for the time being in force, the identity of the authority exercising jurisdiction in the National faceless centre shall be kept confidential from the taxpayer, the authorized representative of the taxpayer, and any unauthorized person.
(6) No notice, order, demand, or assessment passed by an authority appointed at the National faceless centre shall be called in question or set aside merely on the ground that such authority did not have jurisdiction over the taxpayer under section 209 of this Ordinance, or lack of notified delegation of power under section 210 of this Ordinance, or because of the fact that identity of the authority has been kept confidential from the taxpayer as per sub-section (5).
Amendment history (4)
- Section 209B inserted by the Finance Act, 2026.
- Added by the Finance Act, 2004.
- The expression inserted through Finance Act, 2020 dated 30 June, 2020
- Substituted by Finance Act, 2015. The substituted sub-section (1B)
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 210 Delegation
(1) The Commissioner subject to sub-section (1A), may, by an order in writing, delegate to any Officer of Inland Revenue, subordinate to the Commissioner all or any of the powers or functions conferred upon or assigned to the Commissioner under this Ordinance, other than the power of delegation.
(1A) The Commissioner shall not delegate the powers of amendment of assessment contained in sub-section (5A) of section 122 and amendment of an order of recovery under sub-section (3) of section 161 to an officer of Inland Revenue below the rank of Additional Commissioner Inland Revenue.
(1B) The Commissioner may, by an order in writing, delegate to a special audit panel appointed under sub-section (11) of section 177, or to a firm of chartered accountants or a firm of cost and management accountants appointed by the Board or the Commissioner to conduct an audit of person under section 177, all or any of the powers or functions to conduct an audit under this Ordinance.
(2) An order under sub-section (1) may be in respect of all or any of the persons, classes of persons or areas falling in the jurisdiction of the Commissioner.
(3) The Commissioner shall have the power to cancel, modify, alter or amend an order under sub-section (1).
(1A) The Commissioner shall not delegate the powers of amendment of assessment contained in sub-section (5A) of section 122 and amendment of an order of recovery under sub-section (3) of section 161 to an officer of Inland Revenue below the rank of Additional Commissioner Inland Revenue.
(1B) The Commissioner may, by an order in writing, delegate to a special audit panel appointed under sub-section (11) of section 177, or to a firm of chartered accountants or a firm of cost and management accountants appointed by the Board or the Commissioner to conduct an audit of person under section 177, all or any of the powers or functions to conduct an audit under this Ordinance.
(2) An order under sub-section (1) may be in respect of all or any of the persons, classes of persons or areas falling in the jurisdiction of the Commissioner.
(3) The Commissioner shall have the power to cancel, modify, alter or amend an order under sub-section (1).
Amendment history (11)
- Added by the Finance Act, 2004.
- The expression inserted through Finance Act, 2020 dated 30 June, 2020
- Substituted by Finance Act, 2015. The substituted sub-section (1B)
- Substituted by the Finance Act, 2002. The substituted section 211
- The words “a taxation officer” substituted by Finance Act, 2010. The substituted provision has been
- Inserted by the Finance Act, 2015.
- The words “a taxation officer” substituted by Finance (amendment) ordinance, 2009.
- Added by the Finance Act, 2012.
- Substituted by the Finance Act, 2002. The substituted section 212
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- The words “Regional Commissioner” substituted by the Finance Act, 2021.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 211 Power or function exercised
(1) Where, by virtue of an order under section 210, a an officer of Inland Revenue or by a special audit panel appointed under sub-section (11) of section 177 exercises a power or performs a function of the Commissioner, such power or function shall be treated as having been exercised or performed by the Commissioner.
(2) The exercise of a power, or the performance of a function, of the Commissioner by a an officer of Inland Revenue shall not prevent the exercise of the power, or the performance of the function, by the Commissioner.
(3) The Board or, with the approval of the Board, an authority appointed under this Ordinance, shall be competent to exercise all powers conferred upon any authority subordinate to it.
(2) The exercise of a power, or the performance of a function, of the Commissioner by a an officer of Inland Revenue shall not prevent the exercise of the power, or the performance of the function, by the Commissioner.
(3) The Board or, with the approval of the Board, an authority appointed under this Ordinance, shall be competent to exercise all powers conferred upon any authority subordinate to it.
Amendment history (8)
- Substituted by the Finance Act, 2002. The substituted section 211
- The words “a taxation officer” substituted by Finance Act, 2010. The substituted provision has been
- Inserted by the Finance Act, 2015.
- The words “a taxation officer” substituted by Finance (amendment) ordinance, 2009.
- Added by the Finance Act, 2012.
- Substituted by the Finance Act, 2002. The substituted section 212
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- The words “Regional Commissioner” substituted by the Finance Act, 2021.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 212 Authority of approval
Authority of approval.— The Board may, by a general or special order, authorise the Chief Commissioner Inland Revenue or the Commissioner to grant approval in any case where such approval is required from the Board under any provision of this Ordinance.
Amendment history (13)
- Substituted by the Finance Act, 2002. The substituted section 211
- The words “a taxation officer” substituted by Finance Act, 2010. The substituted provision has been
- Inserted by the Finance Act, 2015.
- The words “a taxation officer” substituted by Finance (amendment) ordinance, 2009.
- Added by the Finance Act, 2012.
- Substituted by the Finance Act, 2002. The substituted section 212
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- The words “Regional Commissioner” substituted by the Finance Act, 2021.
- Substituted by the Finance Act, 2002. The substituted section 213
- Section 214 substituted by the Finance Act, 2002. The substituted section 214
- Inserted by the Finance Act, 2009.
- Colon substituted by the Finance Act, 2012.
- Inserted by the Finance Act, 2012.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 213 Guidance to income tax authorities
Guidance to income tax authorities.— In the course of any proceedings under this Ordinance, the Commissioner or any taxation officer may be assisted, guided or instructed by any income tax authority to whom he is subordinate or any other person authorised in this behalf by the Board .
Amendment history (6)
- Substituted by the Finance Act, 2002. The substituted section 213
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Section 214 substituted by the Finance Act, 2002. The substituted section 214
- Inserted by the Finance Act, 2009.
- Colon substituted by the Finance Act, 2012.
- Inserted by the Finance Act, 2012.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 214 Income tax authorities to follow orders of the Board
(1) Subject to sub-section (2), all income tax authorities and other persons employed in the execution of this Ordinance shall observe and follow the orders, instructions and directions issued by the Board .
(2) No orders, instructions or directions shall be given by the Board that will interfere with the discretion of the Commissioner (Appeals) in the exercise of his appellate function.
(2) No orders, instructions or directions shall be given by the Board that will interfere with the discretion of the Commissioner (Appeals) in the exercise of his appellate function.
Amendment history (6)
- Substituted by the Finance Act, 2002. The substituted section 213
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Section 214 substituted by the Finance Act, 2002. The substituted section 214
- Inserted by the Finance Act, 2009.
- Colon substituted by the Finance Act, 2012.
- Inserted by the Finance Act, 2012.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 214A Condonation of time limit
Condonation of time limit.— Where any time or period has been specified under any of the provisions of the Ordinance or rules made there-under within which any application is to be made or any act or thing is to be done, the Board may, at any time before or after the expiry of such time or period, in any case or class of cases, permit such application to be made or such act or thing to be done within such time or period as it may consider appropriate . Explanation,— For the purpose of this section, the expression any act or thing is to be done includes any act or thing to be done by the taxpayer or by the authorities specified in section 207.
Provided that the Board may, by notification in the official Gazette, and subject to such limitations or conditions as may be specified therein, empower any Commissioner or Chief Commissioner under this Ordinance to exercise the powers under this section in any case or class of cases :
Provided further that regardless of anything stipulated in this section, or any provision of this Ordinance, or any other applicable law currently in force, and notwithstanding any decision, order or judgment issued by any forum, authority or court, the maximum period of extension under this section by the Board or the Commissioner, as the case may be, shall not exceed two years in aggregate:
Provided also that where there are reasons to believe that significant loss to exchequer or the taxpayer has been caused by an act of omission or commission by the person or by the Commissioner, a committee of members as notified by the Board may further condone the limitation specified for a period as it may deem fit, after providing a reasonable opportunity of being heard to the person concerned.
Provided that the Board may, by notification in the official Gazette, and subject to such limitations or conditions as may be specified therein, empower any Commissioner or Chief Commissioner under this Ordinance to exercise the powers under this section in any case or class of cases :
Provided further that regardless of anything stipulated in this section, or any provision of this Ordinance, or any other applicable law currently in force, and notwithstanding any decision, order or judgment issued by any forum, authority or court, the maximum period of extension under this section by the Board or the Commissioner, as the case may be, shall not exceed two years in aggregate:
Provided also that where there are reasons to believe that significant loss to exchequer or the taxpayer has been caused by an act of omission or commission by the person or by the Commissioner, a committee of members as notified by the Board may further condone the limitation specified for a period as it may deem fit, after providing a reasonable opportunity of being heard to the person concerned.
Amendment history (10)
- Substituted by the Finance Act, 2002. The substituted section 213
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- Section 214 substituted by the Finance Act, 2002. The substituted section 214
- Inserted by the Finance Act, 2009.
- Colon substituted by the Finance Act, 2012.
- Inserted by the Finance Act, 2012.
- The words “Director General” substituted by the Finance Act, 2012.
- Full stop substituted with a colon and thereafter two new provisos added by the Finance Act, 2025.
- Added by the Finance Act, 2010.
- Added by the Finance Act, 2013.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 214B Power of the Board to call for records
(1) The Board may, of its own motion, call for and examine the record of any departmental proceedings under this Ordinance or the rules made there-under for the purpose of satisfying itself as to the legality or propriety of any decision or order passed therein and may pass such order as it may think fit:
Provided that no order imposing or enhancing any tax or penalty than the originally levied shall be passed unless the person affected by such order has been given an opportunity of showing cause and of being heard.
(2) No proceedings under this section shall be initiated in a case where an appeal is pending.
(3) No order shall be made under this section after the expiry of three years from the date of original decision or order.
Provided that no order imposing or enhancing any tax or penalty than the originally levied shall be passed unless the person affected by such order has been given an opportunity of showing cause and of being heard.
(2) No proceedings under this section shall be initiated in a case where an appeal is pending.
(3) No order shall be made under this section after the expiry of three years from the date of original decision or order.
Amendment history (5)
- The words “Director General” substituted by the Finance Act, 2012.
- Full stop substituted with a colon and thereafter two new provisos added by the Finance Act, 2025.
- Inserted by the Finance Act, 2009.
- Added by the Finance Act, 2010.
- Added by the Finance Act, 2013.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 214C Selection for audit by the Board
(1) The Board may select persons or classes of persons for audit of Income Tax affairs through computer ballot which may be random or parametric as the Board may deem fit.
(1A) Notwithstanding anything contained in this Ordinance or any other law, for the time being in force, the Board shall keep the parameters confidential.
(2) Audit of Income Tax affairs of persons selected under sub-section (1) shall be conducted as per procedure given in section 177 and all the provisions of the Ordinance, except the first proviso to sub-section (1) of section 177, shall apply accordingly.
(3) For the removal of doubt it is hereby declared that Board shall be deemed always to have had the power to select any persons or classes of persons for audit of Income Tax affairs. Explanation.— For the removal of doubt, it is declared that the powers of the Commissioner under section 177 are independent of the powers of the Board under this section and nothing contained in this section restricts the powers of the Commissioner to call for the record or documents including books of accounts of a taxpayer for audit and to conduct audit under section 177.
(1A) Notwithstanding anything contained in this Ordinance or any other law, for the time being in force, the Board shall keep the parameters confidential.
(2) Audit of Income Tax affairs of persons selected under sub-section (1) shall be conducted as per procedure given in section 177 and all the provisions of the Ordinance, except the first proviso to sub-section (1) of section 177, shall apply accordingly.
(3) For the removal of doubt it is hereby declared that Board shall be deemed always to have had the power to select any persons or classes of persons for audit of Income Tax affairs. Explanation.— For the removal of doubt, it is declared that the powers of the Commissioner under section 177 are independent of the powers of the Board under this section and nothing contained in this section restricts the powers of the Commissioner to call for the record or documents including books of accounts of a taxpayer for audit and to conduct audit under section 177.
Amendment history (6)
- The words “Director General” substituted by the Finance Act, 2012.
- Full stop substituted with a colon and thereafter two new provisos added by the Finance Act, 2025.
- Inserted by the Finance Act, 2009.
- Added by the Finance Act, 2010.
- Added by the Finance Act, 2013.
- Section 214D Inserted by the Finance Act, 2015.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 214D Omitted by the Finance Act, 2018Omitted
Omitted by the Finance Act, 2018
s. 214E Closure of audit
(1) Notwithstanding the omission of section 214D, audit of income tax affairs of a taxpayer under sub-section (2) of section 214D shall be deemed to have been concluded, if ─
(i) taxpayer has been selected for audit under sub-section (1) of the omitted section 214D;
(ii) notice under section 122 has not been issued;
(iii) the taxpayer has revised return voluntarily, by thirty first day of December, 2018, alongwith payment of 25% higher tax than the tax paid with return on the basis of taxable income and where no tax is payable 2% of the turnover and where no turnover is declared penalty under entry at Serial No. 1 of sub-section (1) of section 182 has been paid voluntarily:
Provided that the condition of revision, 25% higher tax or 2% of the turnover shall not apply, if the taxable income of the taxpayer includes only salary income or income subject to final taxation under sub-section (1) of section 169 or subject to taxation under section 5, 5AA, 6, 7, 7A or 7B. Explanation.— For the removal of doubt it is clarified that only audit initiated as a result of automatic selection under the omitted section 214D shall stand abated under this section and audit initiated or to be initiated on the basis of definite information or otherwise as per provisions of section 177 or 214C shall be conducted independently.
(2) Notwithstanding anything contained in sub-section (1), the Board may prescribe procedure for conclusion of audit of income tax affairs of a person automatically selected for audit under omitted section 214D.
(3) The prescribed procedure under sub-section (2) may include acceptance of declared income of a taxpayer for a tax year subject to conditions specified therein.
(i) taxpayer has been selected for audit under sub-section (1) of the omitted section 214D;
(ii) notice under section 122 has not been issued;
(iii) the taxpayer has revised return voluntarily, by thirty first day of December, 2018, alongwith payment of 25% higher tax than the tax paid with return on the basis of taxable income and where no tax is payable 2% of the turnover and where no turnover is declared penalty under entry at Serial No. 1 of sub-section (1) of section 182 has been paid voluntarily:
Provided that the condition of revision, 25% higher tax or 2% of the turnover shall not apply, if the taxable income of the taxpayer includes only salary income or income subject to final taxation under sub-section (1) of section 169 or subject to taxation under section 5, 5AA, 6, 7, 7A or 7B. Explanation.— For the removal of doubt it is clarified that only audit initiated as a result of automatic selection under the omitted section 214D shall stand abated under this section and audit initiated or to be initiated on the basis of definite information or otherwise as per provisions of section 177 or 214C shall be conducted independently.
(2) Notwithstanding anything contained in sub-section (1), the Board may prescribe procedure for conclusion of audit of income tax affairs of a person automatically selected for audit under omitted section 214D.
(3) The prescribed procedure under sub-section (2) may include acceptance of declared income of a taxpayer for a tax year subject to conditions specified therein.
Amendment history (6)
- Added by the Finance Act, 2013.
- Section 214D Inserted by the Finance Act, 2015.
- Section 215 substituted by the Finance Act, 2002. The substituted section 215
- The words “taxation officer” substituted by the Finance Act, 2010. The substituted provision has been
- The words “or persons or class of persons (hereinafter called ‘filer’),” omitted through Finance Act, 2019.
- The word “filer” substituted by “person” through Finance Act, 2019.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 215 Furnishing of returns, documents etc
(1) Where, by virtue of an order under section 210, the Commissioner has delegated to any an officer of Inland Revenue the function and power to receive, or to call for and receive, any returns of income, certificates, documents, accounts and statements from any person the person shall furnish such returns, certificates, documents, accounts and statements to that officer of Inland Revenue and, when furnished, shall be treated as having been furnished to the Commissioner.
(2) where a person is allowed, under any provision of this Ordinance, to make an application to the Commissioner and the Commissioner has delegated to any officer of Inland Revenue the function or power to receive the application, such application, when made, shall be treated as having been made to the Commissioner.
(2) where a person is allowed, under any provision of this Ordinance, to make an application to the Commissioner and the Commissioner has delegated to any officer of Inland Revenue the function or power to receive the application, such application, when made, shall be treated as having been made to the Commissioner.
Amendment history (5)
- Section 215 substituted by the Finance Act, 2002. The substituted section 215
- The words “taxation officer” substituted by the Finance Act, 2010. The substituted provision has been
- The words “or persons or class of persons (hereinafter called ‘filer’),” omitted through Finance Act, 2019.
- The word “filer” substituted by “person” through Finance Act, 2019.
- The Sub-section (2) substituted by the Finance Act, 2022. The substituted sub-section read as
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 216 Disclosure of information by a public servant
(1) All particulars contained in –
(a) any statement made, return furnished, or accounts or documents produced under the provisions of this Ordinance;
(b) any evidence given, or affidavit or deposition made, in the course of any proceedings under this Ordinance, other than proceedings under Part XI of Chapter X; or (c) any record of any assessment proceedings or any proceeding relating to the recovery of a demand, shall be confidential and no public servant save as provided in this Ordinance may disclose any such particulars.
(2) Notwithstanding anything contained in the Qanun-e-Shahadat, 1984 (P.O. No. 10 of 1984), the National Accountability Ordinance, 1999 (XVIII of 1999), the Federal Investigation Agency Act, 1974 (VIII or 1975) and the Right of Access to Information Act, 2017 (XXXIV of 2017), or any other law for the time being in force, no court or any other authority shall, save as provided in the Ordinance, require any public servant to produce before it any return, accounts, or documents contained in, or forming a part of the records relating to any proceedings under the Ordinance, or declarations made under the Voluntary Declaration of Domestic Assets Act, 2018, the Foreign Assets (Declaration and Repatriation) Act, 2018 or the Assets Declaration Act, 2019 or any records of the Income Tax Department generally, or any part thereof, or to give evidence before it in respect thereof;
(3) Nothing contained in sub-section (1) shall preclude the disclosure of any such particulars –
(a) to any person acting in the execution of this Ordinance, where it is necessary to disclose the same to him for the purposes of this Ordinance;
(b) to any person authorised by the Commissioner in this behalf, where it is necessary to disclose the same to such person for the purposes of processing of data and preparation of computer printouts relating to returns of income or calculation of tax;
(ba) to an auditor, audit mentors and sectoral experts appointed on contractual basis or engaged through a third party including a payroll firm in the Federal Board of Revenue, after a non- disclosure agreement is made with such auditor as may be prescribed, to assist any authority mentioned in clauses
(b) to
(g) of sub-section (1) of section 207;
(c) where the disclosure is occasioned by the lawful employment under this Ordinance of any process for the service of any notice or the recovery of any demand;
(d) to the Auditor-General of Pakistan for the purpose of enabling the Auditor-General to discharge his functions under the Constitution;
(e) to any officer appointed by the Auditor-General of Pakistan or the Commissioner to audit income tax receipts or refunds; (f ) to any officer of the Federal Government or a Provincial Government authorised by such Government in this behalf as may be necessary for the purpose of enabling that Government to levy or realise any tax imposed by it;
(g) to any authority exercising powers under the Federal Excise Act, 2005 , the Sales Tax Act, 1990, the Wealth Tax Act, 1963 (XV of 1963), or the Customs Act, 1969 (IV of 1969), as may be necessary for the purpose of enabling its duty to exercise such powers;
(h) occasioned by the lawful exercise by a public servant of powers under the Stamp Act, 1899 (II of 1899) to impound an insufficiently stamped document;
(i) to the State Bank of Pakistan to enable it to compile financial statistics of international investment and balance of payment;
(j) as may be required by any order made under sub-section (2) of section 19 of the Foreign Exchange Regulation Act, 1947 (VII of 1947), or for the purposes of any prosecution for an offence under section 23 of that Act;
(k) to the Securities and Exchange Commission or the Monopolies Control Authority for the purposes of the Securities and Exchange Ordinance, 1969 (XVII of 1969), the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 (VI of 1970), the Companies Act, 2017 (XIX of 2017) or the Securities and Exchange Commission of Pakistan Act, 1997, as the case may be;
(ka) Employees Old Age Benefit Institution in respect of information regarding salaries in statements furnished under section 165;
(kc) to National Database and Registration Authority to process and analyze such data for the purposes of broadening of tax base;
(kd) to the Tax Policy Office for the purpose of processing and analyzing data for research and policy analysis; and (ke) to the recognized universities , international research institutions and international donor agencies subject to the conditions that before sharing, the taxpayer‘s data shall be anonymized.
(l) relevant to any inquiry into a charge of misconduct in connection with income tax proceedings against a legal practitioner or an accountant;
(m) to a Civil Court in any suit or proceeding to which the Federal Government or any income tax authority is a party which relates to any matter arising out of any proceedings under this Ordinance;
(n) for the purposes of a prosecution for any offence under the Pakistan Penal Code, 1860 (XLVI of 1860), in respect of any such statement, returns, accounts, documents, evidence, affidavit or deposition, or for the purposes of a prosecution for any offence under this Ordinance;
(o) relevant to any inquiry into the conduct of an official of the Income Tax Department to any person or officer appointed to hold such inquiry, or to a Public Service Commission, established under the Federal Public Service Commission Ordinance, 1977 (XLV of 1977), when exercising its functions in relation to any matter arising out of such inquiry;
(p) as may be required by any officer or department of the Federal Government or of a Provincial Government for the purpose of investigation into the conduct and affairs of any public servant, or to a Court in connection with any prosecution of the public servant arising out of any such investigation;
(q) to an authorised officer of the government of any country outside Pakistan with which the Government has entered into an agreement under section 107 for the avoidance of double taxation and the prevention of fiscal evasion as may be required to be disclosed in pursuance of that agreement; or (r) to the Federal Tax Ombudsman appointed under the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000 (XXXV of 2000) ; or (s) to the Financial Monitoring Unit (FMU) for the purpose of performing functions as laid down in the Anti-Money Laundering Act, 2010 (VII of 2010) ; or (t) in respect of any high-level public officials and public servants in BPS-17 and above, their spouses, children or benamidars, or any person in relation to whom the afore-mentioned persons are beneficial owner:
Provided that nothing in clause (t) shall apply to those who are expressly excepted under clause (iv) of sub-section (m) of section 5 of the National Accountability Ordinance, 1999 (Ordinance No. XVIII of 1999). Explanation.— "High-level public officials" mean politically exposed persons as defined by a rule, regulation, executive order or instrument; or under any law for the time being in force.
(4) Nothing in this section shall apply to the production by a public servant before a Court of any document, declaration, or affidavit filed or the giving of evidence by a public servant in respect thereof.
(5) Nothing contained in sub-section (1) shall prevent the Board from publishing, with the prior approval of the Federal Government , any such particulars as are referred to in that sub-section.
(6) Nothing contained in sub-section (1) shall prevent the Federal Government from publishing particulars and the amount of tax paid by a holder of a public office as defined in the National Accountability Bureau Ordinance, 1999 (XVIII of 1999).
(6A) Nothing contained in sub-section (1) shall prevent the Board from providing data to any person approved by the Federal Government to process and analyze such data for broadening of tax base or for checking evasion:
Provided that such data shall be anonymized before transmission to the person and identifying particulars of the taxpayers shall be kept confidential.
(6B) Nothing contained in sub-section (1) shall prevent the Board from publishing the names of offshore evaders, in the print and electronic media who have evaded offshore tax equal to or exceeding rupees two and half million Rupees.
(6C) Nothing contained in sub-section (1) shall prevent the Board from publishing the names of offshore tax enablers, in the print and electronic media who have enabled offshore tax evasion.
(7) Any person to whom any information is communicated under this section, and any person or employee under the first-mentioned person’s control, shall be, in respect of that information, subject to the same rights, privileges, obligations, and liabilities as if the person were a public servant and all the provisions of this Ordinance, so far as may be, shall apply accordingly.
(8) No prosecution may be instituted under this section except with the previous sanction of the Board .
(a) any statement made, return furnished, or accounts or documents produced under the provisions of this Ordinance;
(b) any evidence given, or affidavit or deposition made, in the course of any proceedings under this Ordinance, other than proceedings under Part XI of Chapter X; or (c) any record of any assessment proceedings or any proceeding relating to the recovery of a demand, shall be confidential and no public servant save as provided in this Ordinance may disclose any such particulars.
(2) Notwithstanding anything contained in the Qanun-e-Shahadat, 1984 (P.O. No. 10 of 1984), the National Accountability Ordinance, 1999 (XVIII of 1999), the Federal Investigation Agency Act, 1974 (VIII or 1975) and the Right of Access to Information Act, 2017 (XXXIV of 2017), or any other law for the time being in force, no court or any other authority shall, save as provided in the Ordinance, require any public servant to produce before it any return, accounts, or documents contained in, or forming a part of the records relating to any proceedings under the Ordinance, or declarations made under the Voluntary Declaration of Domestic Assets Act, 2018, the Foreign Assets (Declaration and Repatriation) Act, 2018 or the Assets Declaration Act, 2019 or any records of the Income Tax Department generally, or any part thereof, or to give evidence before it in respect thereof;
(3) Nothing contained in sub-section (1) shall preclude the disclosure of any such particulars –
(a) to any person acting in the execution of this Ordinance, where it is necessary to disclose the same to him for the purposes of this Ordinance;
(b) to any person authorised by the Commissioner in this behalf, where it is necessary to disclose the same to such person for the purposes of processing of data and preparation of computer printouts relating to returns of income or calculation of tax;
(ba) to an auditor, audit mentors and sectoral experts appointed on contractual basis or engaged through a third party including a payroll firm in the Federal Board of Revenue, after a non- disclosure agreement is made with such auditor as may be prescribed, to assist any authority mentioned in clauses
(b) to
(g) of sub-section (1) of section 207;
(c) where the disclosure is occasioned by the lawful employment under this Ordinance of any process for the service of any notice or the recovery of any demand;
(d) to the Auditor-General of Pakistan for the purpose of enabling the Auditor-General to discharge his functions under the Constitution;
(e) to any officer appointed by the Auditor-General of Pakistan or the Commissioner to audit income tax receipts or refunds; (f ) to any officer of the Federal Government or a Provincial Government authorised by such Government in this behalf as may be necessary for the purpose of enabling that Government to levy or realise any tax imposed by it;
(g) to any authority exercising powers under the Federal Excise Act, 2005 , the Sales Tax Act, 1990, the Wealth Tax Act, 1963 (XV of 1963), or the Customs Act, 1969 (IV of 1969), as may be necessary for the purpose of enabling its duty to exercise such powers;
(h) occasioned by the lawful exercise by a public servant of powers under the Stamp Act, 1899 (II of 1899) to impound an insufficiently stamped document;
(i) to the State Bank of Pakistan to enable it to compile financial statistics of international investment and balance of payment;
(j) as may be required by any order made under sub-section (2) of section 19 of the Foreign Exchange Regulation Act, 1947 (VII of 1947), or for the purposes of any prosecution for an offence under section 23 of that Act;
(k) to the Securities and Exchange Commission or the Monopolies Control Authority for the purposes of the Securities and Exchange Ordinance, 1969 (XVII of 1969), the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 (VI of 1970), the Companies Act, 2017 (XIX of 2017) or the Securities and Exchange Commission of Pakistan Act, 1997, as the case may be;
(ka) Employees Old Age Benefit Institution in respect of information regarding salaries in statements furnished under section 165;
(kc) to National Database and Registration Authority to process and analyze such data for the purposes of broadening of tax base;
(kd) to the Tax Policy Office for the purpose of processing and analyzing data for research and policy analysis; and (ke) to the recognized universities , international research institutions and international donor agencies subject to the conditions that before sharing, the taxpayer‘s data shall be anonymized.
(l) relevant to any inquiry into a charge of misconduct in connection with income tax proceedings against a legal practitioner or an accountant;
(m) to a Civil Court in any suit or proceeding to which the Federal Government or any income tax authority is a party which relates to any matter arising out of any proceedings under this Ordinance;
(n) for the purposes of a prosecution for any offence under the Pakistan Penal Code, 1860 (XLVI of 1860), in respect of any such statement, returns, accounts, documents, evidence, affidavit or deposition, or for the purposes of a prosecution for any offence under this Ordinance;
(o) relevant to any inquiry into the conduct of an official of the Income Tax Department to any person or officer appointed to hold such inquiry, or to a Public Service Commission, established under the Federal Public Service Commission Ordinance, 1977 (XLV of 1977), when exercising its functions in relation to any matter arising out of such inquiry;
(p) as may be required by any officer or department of the Federal Government or of a Provincial Government for the purpose of investigation into the conduct and affairs of any public servant, or to a Court in connection with any prosecution of the public servant arising out of any such investigation;
(q) to an authorised officer of the government of any country outside Pakistan with which the Government has entered into an agreement under section 107 for the avoidance of double taxation and the prevention of fiscal evasion as may be required to be disclosed in pursuance of that agreement; or (r) to the Federal Tax Ombudsman appointed under the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000 (XXXV of 2000) ; or (s) to the Financial Monitoring Unit (FMU) for the purpose of performing functions as laid down in the Anti-Money Laundering Act, 2010 (VII of 2010) ; or (t) in respect of any high-level public officials and public servants in BPS-17 and above, their spouses, children or benamidars, or any person in relation to whom the afore-mentioned persons are beneficial owner:
Provided that nothing in clause (t) shall apply to those who are expressly excepted under clause (iv) of sub-section (m) of section 5 of the National Accountability Ordinance, 1999 (Ordinance No. XVIII of 1999). Explanation.— "High-level public officials" mean politically exposed persons as defined by a rule, regulation, executive order or instrument; or under any law for the time being in force.
(4) Nothing in this section shall apply to the production by a public servant before a Court of any document, declaration, or affidavit filed or the giving of evidence by a public servant in respect thereof.
(5) Nothing contained in sub-section (1) shall prevent the Board from publishing, with the prior approval of the Federal Government , any such particulars as are referred to in that sub-section.
(6) Nothing contained in sub-section (1) shall prevent the Federal Government from publishing particulars and the amount of tax paid by a holder of a public office as defined in the National Accountability Bureau Ordinance, 1999 (XVIII of 1999).
(6A) Nothing contained in sub-section (1) shall prevent the Board from providing data to any person approved by the Federal Government to process and analyze such data for broadening of tax base or for checking evasion:
Provided that such data shall be anonymized before transmission to the person and identifying particulars of the taxpayers shall be kept confidential.
(6B) Nothing contained in sub-section (1) shall prevent the Board from publishing the names of offshore evaders, in the print and electronic media who have evaded offshore tax equal to or exceeding rupees two and half million Rupees.
(6C) Nothing contained in sub-section (1) shall prevent the Board from publishing the names of offshore tax enablers, in the print and electronic media who have enabled offshore tax evasion.
(7) Any person to whom any information is communicated under this section, and any person or employee under the first-mentioned person’s control, shall be, in respect of that information, subject to the same rights, privileges, obligations, and liabilities as if the person were a public servant and all the provisions of this Ordinance, so far as may be, shall apply accordingly.
(8) No prosecution may be instituted under this section except with the previous sanction of the Board .
Amendment history (2)
- The words “taxation officer” substituted by the Finance Act, 2010. The substituted provision has been
- The Sub-section (2) substituted by the Finance Act, 2022. The substituted sub-section read as
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 216A Omitted by the Finance Act, 2022Omitted
Omitted by the Finance Act, 2022
s. 217 Forms and notices; authentication of documents
(1) Forms, notices, returns, statements, tables and other documents required under this Ordinance may be in such form as determined by the Board for the efficient administration of this Ordinance and publication of such documents in the official Gazette shall not be required.
(2) The Commissioner shall make the documents referred to in sub- section (1) available to the public in the manner prescribed.
(3) A notice or other document issued, served or given by the Commissioner under this Ordinance shall be sufficiently authenticated if the name or title of the Commissioner, or authorised Officer of Inland Revenue , is printed, stamped or written on the notice or document or if it is computer generated and bears the authentication in the manner prescribed by the Board .
(2) The Commissioner shall make the documents referred to in sub- section (1) available to the public in the manner prescribed.
(3) A notice or other document issued, served or given by the Commissioner under this Ordinance shall be sufficiently authenticated if the name or title of the Commissioner, or authorised Officer of Inland Revenue , is printed, stamped or written on the notice or document or if it is computer generated and bears the authentication in the manner prescribed by the Board .
Amendment history (5)
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- The words “taxation officer” substituted by the Finance Act, 2010. The substituted provision has been
- Added by the Finance Act, 2010. The substituted provision has been made effective from 05.06.2010
- Inserted by the Finance Act, 2003.
- The word “or” omitted by the Finance Act 2022.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 218 Service of notices and other documents
(1) Subject to this Ordinance, any notice, order or requisition required to be served on a resident individual (other than in a representative capacity) for the purposes of this Ordinance shall be treated as properly served on the individual if –
(a) personally served on the individual or, in the case of an individual under a legal disability or a non-resident individual, the representative of the individual;
(b) sent by registered post or courier service to the place specified in clause (b) of sub-section (2) or to the individual’s usual or last known address in Pakistan;
(c) served on the individual in the manner prescribed for service of a summons under the Code of Civil Procedure, 1908 (V of 1908) ; or (d) served on the individual electronically in the prescribed manner.
(2) Subject to this Ordinance, any notice, order or requisition required to be served on any person (other than a resident individual to whom sub-section (1) applies) for the purposes of this Ordinance shall be treated as properly served on the person if –
(a) personally served on the representative of the person;
(b) sent by registered post or courier service to the person’s registered office or address for service of notices under this Ordinance in Pakistan, or where the person does not have such office or address, the notice is sent by registered post to any office or place of business of the person in Pakistan;
(c) served on the person in the manner prescribed for service of a summons under the Code of Civil Procedure, 1908 (V of 1908) ; or (d) served on the person electronically in the prescribed manner.
(3) Where an association of persons is dissolved, any notice, order or requisition required to be served under this Ordinance on the association may be served on any person who was the principal officer or a member of the association immediately before such dissolution.
(4) Where section 117 applies, any notice, order or requisition required to be served under this Ordinance on the person discontinuing the business may be served on the person personally or on any individual who was the person’s representative at the time of discontinuance.
(5) The validity of any notice issued under this Ordinance or the validity of any service of a notice under this Ordinance shall not be called into question after the return to which the notice relates has been furnished or the notice has been otherwise complied with.
(a) personally served on the individual or, in the case of an individual under a legal disability or a non-resident individual, the representative of the individual;
(b) sent by registered post or courier service to the place specified in clause (b) of sub-section (2) or to the individual’s usual or last known address in Pakistan;
(c) served on the individual in the manner prescribed for service of a summons under the Code of Civil Procedure, 1908 (V of 1908) ; or (d) served on the individual electronically in the prescribed manner.
(2) Subject to this Ordinance, any notice, order or requisition required to be served on any person (other than a resident individual to whom sub-section (1) applies) for the purposes of this Ordinance shall be treated as properly served on the person if –
(a) personally served on the representative of the person;
(b) sent by registered post or courier service to the person’s registered office or address for service of notices under this Ordinance in Pakistan, or where the person does not have such office or address, the notice is sent by registered post to any office or place of business of the person in Pakistan;
(c) served on the person in the manner prescribed for service of a summons under the Code of Civil Procedure, 1908 (V of 1908) ; or (d) served on the person electronically in the prescribed manner.
(3) Where an association of persons is dissolved, any notice, order or requisition required to be served under this Ordinance on the association may be served on any person who was the principal officer or a member of the association immediately before such dissolution.
(4) Where section 117 applies, any notice, order or requisition required to be served under this Ordinance on the person discontinuing the business may be served on the person personally or on any individual who was the person’s representative at the time of discontinuance.
(5) The validity of any notice issued under this Ordinance or the validity of any service of a notice under this Ordinance shall not be called into question after the return to which the notice relates has been furnished or the notice has been otherwise complied with.
Amendment history (5)
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- The words “taxation officer” substituted by the Finance Act, 2010. The substituted provision has been
- Added by the Finance Act, 2010. The substituted provision has been made effective from 05.06.2010
- Inserted by the Finance Act, 2003.
- The word “or” omitted by the Finance Act 2022.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 219 Tax or refund to be computed to the nearest Rupee
Tax or refund to be computed to the nearest Rupee.—In the determination of any amount of tax or refund payable under this Ordinance, fractions of a rupee less than fifty paisa shall be disregarded and fractions of a rupee equal to or exceeding fifty paisa shall be treated as one rupee.
Amendment history (5)
- The word “them” substituted by the Finance Act, 2003.
- The word “their” substituted by the Finance Act, 2003.
- Inserted by the Finance Act, 2003. Earlier sub-section (1A) was inserted by S.R.O. 633(I)/2002, dated
- Comma substituted by the Finance Act, 2003.
- The words “or the Appellate Tribunal” omitted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 220 Receipts for amounts paid
Receipts for amounts paid.— The Commissioner shall give a receipt for any tax or other amount paid or recovered under this Ordinance.
Amendment history (5)
- The word “them” substituted by the Finance Act, 2003.
- The word “their” substituted by the Finance Act, 2003.
- Inserted by the Finance Act, 2003. Earlier sub-section (1A) was inserted by S.R.O. 633(I)/2002, dated
- Comma substituted by the Finance Act, 2003.
- The words “or the Appellate Tribunal” omitted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 221 Rectification of mistakes
(1) The Commissioner, the Commissioner (Appeals) or the Appellate Tribunal may, by an order in writing, amend any order passed by him to rectify any mistake apparent from the record on his or its own motion or any mistake brought to his or its notice by a taxpayer or, in the case of the Commissioner (Appeals) or the Appellate Tribunal, the Commissioner.
(1A) The Commissioner may, by an order in writing, amend any order passed under the repealed Ordinance by the Deputy Commissioner, or an Income Tax Panel, as defined in section 2 of the repealed Ordinance to rectify any mistake apparent from the record on his own motion or any mistake brought to his notice by a taxpayer and the provisions of sub-section (2), sub-section (3) and sub- section (4) shall apply in like manner as these apply to an order under sub-section (1).
(2) No order under sub-section (1) which has the effect of increasing an assessment, reducing a refund or otherwise applying adversely to the taxpayer shall be made unless the taxpayer has been given a reasonable opportunity of being heard.
(3) Where a mistake apparent on the record is brought to the notice of the Commissioner or Commissioner (Appeals) , as the case may be, and no order has been made under sub-section (1) before the expiration of the financial year next following the date on which the mistake was brought to their notice, the mistake shall be treated as rectified and all the provisions of this Ordinance shall have effect accordingly.
(4) No order under sub-section (1) may be made after five years from the date of the order sought to be rectified.
(1A) The Commissioner may, by an order in writing, amend any order passed under the repealed Ordinance by the Deputy Commissioner, or an Income Tax Panel, as defined in section 2 of the repealed Ordinance to rectify any mistake apparent from the record on his own motion or any mistake brought to his notice by a taxpayer and the provisions of sub-section (2), sub-section (3) and sub- section (4) shall apply in like manner as these apply to an order under sub-section (1).
(2) No order under sub-section (1) which has the effect of increasing an assessment, reducing a refund or otherwise applying adversely to the taxpayer shall be made unless the taxpayer has been given a reasonable opportunity of being heard.
(3) Where a mistake apparent on the record is brought to the notice of the Commissioner or Commissioner (Appeals) , as the case may be, and no order has been made under sub-section (1) before the expiration of the financial year next following the date on which the mistake was brought to their notice, the mistake shall be treated as rectified and all the provisions of this Ordinance shall have effect accordingly.
(4) No order under sub-section (1) may be made after five years from the date of the order sought to be rectified.
Amendment history (5)
- The word “them” substituted by the Finance Act, 2003.
- The word “their” substituted by the Finance Act, 2003.
- Inserted by the Finance Act, 2003. Earlier sub-section (1A) was inserted by S.R.O. 633(I)/2002, dated
- Comma substituted by the Finance Act, 2003.
- The words “or the Appellate Tribunal” omitted by the Finance Act, 2003.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 222 Appointment of expert
(1) The Commissioner may appoint any expert as the Commissioner considers necessary for the purposes of this Ordinance, including for the purposes of audit or valuation.
(2) The Board may also appoint as many auditors , audit mentors and sectoral experts on contractual basis or through a third-party arrangement, as the case may be, as it deems fit for carrying out the purposes of this Ordinance:
Provided that the total number of auditors appointed under this section shall not be more than two thousand.
(2) The Board may also appoint as many auditors , audit mentors and sectoral experts on contractual basis or through a third-party arrangement, as the case may be, as it deems fit for carrying out the purposes of this Ordinance:
Provided that the total number of auditors appointed under this section shall not be more than two thousand.
Amendment history (6)
- The existing provision re-numbered as sub-section (1) thereof, by the Finance Act 2025.
- Sub-section (2) added by the Finance Act 2025.
- Expression inserted by the Finance Act, 2026.
- New section 222A added through Finance Act, 2019.
- Re-numbered as sub-section (1) of section 222A by the by the Finance Act, 2021.
- Sub-section (2) added by the Finance Act, 2021.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 222A Fee and service charges
(1) The Board with the approval of Federal Minister-in-charge may, be notification in the official Gazette, and subject to such conditions, limitations or restrictions as it may deem fit to impose, levy fee and services charges for valuation or in respect of any other service or control mechanism provided by any formation under the control of the Board, including ventures of public-private partnership at such rates as may be specified in the notification.
(2) The Board may authorize and prescribe the manner in which fee and service charges collected including by ventures of public-private partnership under this section are expended.
(2) The Board may authorize and prescribe the manner in which fee and service charges collected including by ventures of public-private partnership under this section are expended.
Amendment history (6)
- The existing provision re-numbered as sub-section (1) thereof, by the Finance Act 2025.
- Sub-section (2) added by the Finance Act 2025.
- Expression inserted by the Finance Act, 2026.
- New section 222A added through Finance Act, 2019.
- Re-numbered as sub-section (1) of section 222A by the by the Finance Act, 2021.
- Sub-section (2) added by the Finance Act, 2021.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 223 Appearance by authorized representative
(1) Any taxpayer who is entitled or required to attend before the Commissioner, the Commissioner (Appeals) or the Appellate Tribunal in connection with any proceeding under this Ordinance may, except when required under section 176 to attend personally, attend by an authorised representative.
(2) For the purposes of this section and subject to sub-section (3), an authorised representative of a taxpayer shall be a person who is a representative of the person under section 172 and any of the following persons, namely:–
(a) A relative of the taxpayer;
(b) a current full-time employee of the taxpayer;
(c) any officer of a scheduled bank with which the taxpayer maintains a current account or has other regular dealings;
(d) any legal practitioner entitled to practice in any Civil Court in Pakistan;
(e) any accountant; or (f) any income tax practitioner.
(3) For the purposes of this section —
(a) no person who has been dismissed or removed from service in the Income Tax Department shall be entitled to represent a taxpayer under sub-section (1);
(b) no person having resigned from service after having been employed in the Income Tax Department for not less than two years shall be entitled to represent a taxpayer under sub-section (1) for a period of two years from the date of resignation;
(c) no person having retired from service in the Income Tax Department shall be entitled to represent a taxpayer under sub- section (1) for a period of one year from the date of retirement in any case in which the person had made or approved, as the case may be, any order of assessment, refund or appeal within one year before the date of retirement; or (d) no person who has become insolvent shall be entitled to represent a taxpayer under sub-section (1) for so long as the insolvency continues;
(e) no person who has been convicted of an offence in relation to any income tax proceedings under this Ordinance shall be entitled to represent a taxpayer under sub-section (1) for such period as the Commissioner may, by order in writing, determine.
(4) Where any legal practitioner or accountant is found guilty of misconduct in a professional capacity by any authority entitled to take disciplinary action against the legal practitioner or accountant, an order passed by that authority shall have effect in relation to any right to represent a taxpayer under sub-section (1) as it has in relation to the person’s right to practice as a legal practitioner or accountant.
(5) Where any person (other than a person to whom sub-section (4) applies) is found guilty of misconduct in relation to any income tax proceeding, the Commissioner may, by an order in writing, direct that the person cease to represent a taxpayer under sub-section (1) before the Commissioner, Commissioner (Appeals) or Appellate Tribunal.
(6) The Commissioner shall not make an order under clause (e) of sub- section (3) or sub-section (5) in respect of any person, unless the Commissioner has given the person a reasonable opportunity to be heard.
(7) Any person against whom an order under clause (e) of sub-section (3) or sub-section (5) has been made may, within thirty days of service of notice of the order, appeal to the Board to have the order cancelled.
(8) The Board may admit an appeal after the expiration of the period specified in sub-section (7) if satisfied that the appellant was prevented by sufficient cause from lodging the appeal within the period.
(9) No order made under clause (e) of sub-section (3) or sub-section (5) shall take effect until thirty days after notice of the order is served on the person or, where an appeal has been lodged under sub-section (7), until the disposal of the appeal.
(10) The Board may make rules under section 237 for the registration of income tax practitioners and related matters, including establishing a code of conduct for such practitioners.
(11) In this section – accountant means –
(a) a chartered accountant within the meaning of the Chartered Accountants Ordinance, 1961 (X of 1961);
(b) a cost and management accountant within the meaning of the Cost and Management Accountants Act, 1966 (XIV of 1966); or (c) a member of any association of accountants recognised for the purposes of this section by the Board ; and income tax practitioner means a person who is registered as such by the Board , being a person who possesses such qualifications as may be prescribed for the purposes of this section or who has retired after putting in satisfactory service in the Income Tax Department for a period of not less than ten years in a post or posts not below that of Income Tax Officer.
(2) For the purposes of this section and subject to sub-section (3), an authorised representative of a taxpayer shall be a person who is a representative of the person under section 172 and any of the following persons, namely:–
(a) A relative of the taxpayer;
(b) a current full-time employee of the taxpayer;
(c) any officer of a scheduled bank with which the taxpayer maintains a current account or has other regular dealings;
(d) any legal practitioner entitled to practice in any Civil Court in Pakistan;
(e) any accountant; or (f) any income tax practitioner.
(3) For the purposes of this section —
(a) no person who has been dismissed or removed from service in the Income Tax Department shall be entitled to represent a taxpayer under sub-section (1);
(b) no person having resigned from service after having been employed in the Income Tax Department for not less than two years shall be entitled to represent a taxpayer under sub-section (1) for a period of two years from the date of resignation;
(c) no person having retired from service in the Income Tax Department shall be entitled to represent a taxpayer under sub- section (1) for a period of one year from the date of retirement in any case in which the person had made or approved, as the case may be, any order of assessment, refund or appeal within one year before the date of retirement; or (d) no person who has become insolvent shall be entitled to represent a taxpayer under sub-section (1) for so long as the insolvency continues;
(e) no person who has been convicted of an offence in relation to any income tax proceedings under this Ordinance shall be entitled to represent a taxpayer under sub-section (1) for such period as the Commissioner may, by order in writing, determine.
(4) Where any legal practitioner or accountant is found guilty of misconduct in a professional capacity by any authority entitled to take disciplinary action against the legal practitioner or accountant, an order passed by that authority shall have effect in relation to any right to represent a taxpayer under sub-section (1) as it has in relation to the person’s right to practice as a legal practitioner or accountant.
(5) Where any person (other than a person to whom sub-section (4) applies) is found guilty of misconduct in relation to any income tax proceeding, the Commissioner may, by an order in writing, direct that the person cease to represent a taxpayer under sub-section (1) before the Commissioner, Commissioner (Appeals) or Appellate Tribunal.
(6) The Commissioner shall not make an order under clause (e) of sub- section (3) or sub-section (5) in respect of any person, unless the Commissioner has given the person a reasonable opportunity to be heard.
(7) Any person against whom an order under clause (e) of sub-section (3) or sub-section (5) has been made may, within thirty days of service of notice of the order, appeal to the Board to have the order cancelled.
(8) The Board may admit an appeal after the expiration of the period specified in sub-section (7) if satisfied that the appellant was prevented by sufficient cause from lodging the appeal within the period.
(9) No order made under clause (e) of sub-section (3) or sub-section (5) shall take effect until thirty days after notice of the order is served on the person or, where an appeal has been lodged under sub-section (7), until the disposal of the appeal.
(10) The Board may make rules under section 237 for the registration of income tax practitioners and related matters, including establishing a code of conduct for such practitioners.
(11) In this section – accountant means –
(a) a chartered accountant within the meaning of the Chartered Accountants Ordinance, 1961 (X of 1961);
(b) a cost and management accountant within the meaning of the Cost and Management Accountants Act, 1966 (XIV of 1966); or (c) a member of any association of accountants recognised for the purposes of this section by the Board ; and income tax practitioner means a person who is registered as such by the Board , being a person who possesses such qualifications as may be prescribed for the purposes of this section or who has retired after putting in satisfactory service in the Income Tax Department for a period of not less than ten years in a post or posts not below that of Income Tax Officer.
Amendment history (6)
- The existing provision re-numbered as sub-section (1) thereof, by the Finance Act 2025.
- Sub-section (2) added by the Finance Act 2025.
- Expression inserted by the Finance Act, 2026.
- New section 222A added through Finance Act, 2019.
- Re-numbered as sub-section (1) of section 222A by the by the Finance Act, 2021.
- Sub-section (2) added by the Finance Act, 2021.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 224 Proceedings under the Ordinance to be judicial proceedings
Proceedings under the Ordinance to be judicial proceedings. —Any proceedings under this Ordinance before the Commissioner, Commissioner (Appeals) or Appellate Tribunal shall be treated as judicial proceedings within the meaning of sections 193 and 228 of the Pakistan Penal Code, 1860 (Act XLV of 1860), and for the purposes of section 196 of the Pakistan Penal Code, 1860 (Act XLV of 1860).
Amendment history (4)
- Clause (b) substituted by the Finance Act, 2010. The substituted clause (b)
- Expression inserted by the Finance Act 2025.
- Re-numbered as sub-section (1) by the Finance Act, 2010.
- Inserted by the Finance Act, 2018.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 225 Proceedings against companies under liquidation
Proceedings against companies under liquidation. —Notwithstanding anything contained in section 310 of the Companies Act, 2017 (XIX of 2017) , leave of the Court shall not be required for continuing with or commencing any proceeding under this Ordinance against a company in respect of which a winding up order has been made or Provisional Liquidator appointed.
Amendment history (4)
- Clause (b) substituted by the Finance Act, 2010. The substituted clause (b)
- Expression inserted by the Finance Act 2025.
- Re-numbered as sub-section (1) by the Finance Act, 2010.
- Inserted by the Finance Act, 2018.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 226 Computation of limitation period
(a) in the case of an appeal or an application under this Ordinance, the day on which the order complained of was served and, if the taxpayer was not furnished with a copy of the order when the notice of the order was served on the taxpayer, the time requisite for obtaining a copy of such order; and (b) in the case of an assessment or other proceeding under this Ordinance,—
(i) the period, if any, for which such proceedings were stayed by any Court, Appellate Tribunal or any other authority; or (ii) the period, if any, for which any proceeding for the tax year remained pending before any Court, Appellate Tribunal , Alternate Dispute Resolution Committee (ADRC) or any other authority.
(i) the period, if any, for which such proceedings were stayed by any Court, Appellate Tribunal or any other authority; or (ii) the period, if any, for which any proceeding for the tax year remained pending before any Court, Appellate Tribunal , Alternate Dispute Resolution Committee (ADRC) or any other authority.
Amendment history (4)
- Clause (b) substituted by the Finance Act, 2010. The substituted clause (b)
- Expression inserted by the Finance Act 2025.
- Re-numbered as sub-section (1) by the Finance Act, 2010.
- Inserted by the Finance Act, 2018.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 227 Bar of suits in Civil Courts
(1) No suit or other legal proceeding shall be brought in any Civil Court against any order made or any notice issued under this Ordinance, and no prosecution, suit or other proceedings shall be made against any person for anything which is in good faith done or intended to be done under this Ordinance or any rules or orders made or notices issued thereunder. Explanation.—For the removal of doubt, it is clarified that Civil Court includes any court exercising power of the civil court.
(2) Notwithstanding anything contained in any other law for the time being in force, no investigation or inquiry shall be undertaken or initiated by any governmental agency against any officer or official for anything done in his official capacity under this Ordinance, rules, instructions or direction made or issued there-under without the prior approval of the Board.
(2) Notwithstanding anything contained in any other law for the time being in force, no investigation or inquiry shall be undertaken or initiated by any governmental agency against any officer or official for anything done in his official capacity under this Ordinance, rules, instructions or direction made or issued there-under without the prior approval of the Board.
Amendment history (11)
- Clause (b) substituted by the Finance Act, 2010. The substituted clause (b)
- Expression inserted by the Finance Act 2025.
- Re-numbered as sub-section (1) by the Finance Act, 2010.
- Inserted by the Finance Act, 2018.
- Added by the Finance Act, 2018.
- Added by the Finance Act, 2010.
- Added by the Finance Act, 2013.
- Inserted by the Finance Act, 2017.
- Inserted by the Finance Act, 2017
- inserted by the Finance Act, 2015.
- inserted by the Finance Act, 2017.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 227A Reward to officers and officials of Inland Revenue
(1) In cases
(i) involving concealment or evasion of income tax and other taxes, cash reward shall, only after realization of part or whole of the taxes involved in such cases, be sanctioned to the officers and officials of Inland Revenue for their meritorious conduct in such cases and (ii) for other meritorious services and to the informer providing credible information leading to such detection.
(2) The Board may, by notification in the official Gazette, prescribe the procedure in this behalf and also specify the apportionment of reward sanctioned under this section for individual performance or to collective welfare of the officers and officials of Inland Revenue.
(i) involving concealment or evasion of income tax and other taxes, cash reward shall, only after realization of part or whole of the taxes involved in such cases, be sanctioned to the officers and officials of Inland Revenue for their meritorious conduct in such cases and (ii) for other meritorious services and to the informer providing credible information leading to such detection.
(2) The Board may, by notification in the official Gazette, prescribe the procedure in this behalf and also specify the apportionment of reward sanctioned under this section for individual performance or to collective welfare of the officers and officials of Inland Revenue.
Amendment history (8)
- Inserted by the Finance Act, 2018.
- Added by the Finance Act, 2018.
- Added by the Finance Act, 2010.
- Added by the Finance Act, 2013.
- Inserted by the Finance Act, 2017.
- Inserted by the Finance Act, 2017
- inserted by the Finance Act, 2015.
- inserted by the Finance Act, 2017.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 227B Reward of whistleblowers
(1) The Board may sanction reward to whistleblowers in cases of concealment or evasion of income tax, fraud, corruption or misconduct providing credible information leading to such detection of tax.
(2) The Board may, by notification in the official Gazette, prescribe the procedure in this behalf and also specify the apportionment of reward sanctioned under this section for whistleblowers.
(3) The claim for reward by the whistleblower shall be rejected, if—
(a) the information provided is of no value;
(aa) the information is not supported by any evidence;
(b) the Board already had the information;
(c) the information was available in public records; or (d) no collection of taxes is made from the information provided from which the Board can pay the reward.
(4) For the purpose of this section, whistleblower means a person who reports concealment or evasion of income tax leading to detection or collection of taxes, fraud, corruption or misconduct, to the competent authority having power to take action against the person or an income tax authority committing fraud, corruption, misconduct, or involved in concealment or evasion of taxes.
(2) The Board may, by notification in the official Gazette, prescribe the procedure in this behalf and also specify the apportionment of reward sanctioned under this section for whistleblowers.
(3) The claim for reward by the whistleblower shall be rejected, if—
(a) the information provided is of no value;
(aa) the information is not supported by any evidence;
(b) the Board already had the information;
(c) the information was available in public records; or (d) no collection of taxes is made from the information provided from which the Board can pay the reward.
(4) For the purpose of this section, whistleblower means a person who reports concealment or evasion of income tax leading to detection or collection of taxes, fraud, corruption or misconduct, to the competent authority having power to take action against the person or an income tax authority committing fraud, corruption, misconduct, or involved in concealment or evasion of taxes.
Amendment history (10)
- Inserted by the Finance Act, 2018.
- Added by the Finance Act, 2018.
- Added by the Finance Act, 2010.
- Added by the Finance Act, 2013.
- Inserted by the Finance Act, 2017.
- Inserted by the Finance Act, 2017
- inserted by the Finance Act, 2015.
- inserted by the Finance Act, 2017.
- Section 227BA inserted by the Finance Act, 2021.
- Section 227C omitted through Finance Act 2019, omitted section
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 227BA Reward and benefits for certain persons
(1) The Board may sanction rewards to e-intermediaries for filing of returns of new taxpayers.
(2) The Board with the approval of Federal Minister in-charge may announce benefits, rebates, tax credits, allowances and any other incentive in cash or otherwise for class or classes of persons.
(3) The Board with the approval of the Federal Minister in-charge may, by notification in the official Gazette, prescribe the procedure in this behalf and also notify the class or classes of persons eligible under this section. The provisions of this section shall take effect from the date notified by the Board.
(2) The Board with the approval of Federal Minister in-charge may announce benefits, rebates, tax credits, allowances and any other incentive in cash or otherwise for class or classes of persons.
(3) The Board with the approval of the Federal Minister in-charge may, by notification in the official Gazette, prescribe the procedure in this behalf and also notify the class or classes of persons eligible under this section. The provisions of this section shall take effect from the date notified by the Board.
Amendment history (5)
- Section 227BA inserted by the Finance Act, 2021.
- Section 227C omitted through Finance Act 2019, omitted section
- New section 227D inserted through Finance Act, 2009.
- Section 227D substituted by the Finance Act, 2026. The substituted section
- Section 227E inserted by the Finance Act, 2021.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 227C Omitted through Finance Act 2019Omitted
Omitted through Finance Act 2019
s. 227D National faceless centre
(1) Notwithstanding anything to the contrary contained in any of the provisions of this Ordinance, the Board may, for the purposes of proceedings under this Ordinance in faceless manner, establish a National faceless center (hereinafter referred to as the centre) and specify its jurisdiction, powers and functions.
(2) The centre shall comprise a Director General and as many Chief Commissioners, Commissioners, Additional Commissioners, Deputy Commissioners, Assistant Commissioners, and any of the Income Tax Authorities mentioned in section 207 along with support staff, as the Board may deem fit for the purposes of this section.
(3) The Board may design algorithms for assigning any function or jurisdiction under this section to any of the authorities mentioned in sub-section (2).
(4) The Centre shall comprise as many wings and units as may be prescribed by the Board.
(5) The functions of audit, assessment, and quality control in a specific case for a specific tax year shall be performed by separate officers.
(6) All communications, among the units, or with the taxpayer, or an authorized representative of the taxpayer, or with any other person with respect to the information or documents or evidence or any other details, as may be necessary, shall be through electronic means.
(2) The centre shall comprise a Director General and as many Chief Commissioners, Commissioners, Additional Commissioners, Deputy Commissioners, Assistant Commissioners, and any of the Income Tax Authorities mentioned in section 207 along with support staff, as the Board may deem fit for the purposes of this section.
(3) The Board may design algorithms for assigning any function or jurisdiction under this section to any of the authorities mentioned in sub-section (2).
(4) The Centre shall comprise as many wings and units as may be prescribed by the Board.
(5) The functions of audit, assessment, and quality control in a specific case for a specific tax year shall be performed by separate officers.
(6) All communications, among the units, or with the taxpayer, or an authorized representative of the taxpayer, or with any other person with respect to the information or documents or evidence or any other details, as may be necessary, shall be through electronic means.
Amendment history (3)
- New section 227D inserted through Finance Act, 2009.
- Section 227D substituted by the Finance Act, 2026. The substituted section
- Section 227E inserted by the Finance Act, 2021.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 227E E-hearing
(1) The Board may design and prescribe e-hearing module for the purpose of conducting hearings, granting opportunity of being heard and electronically receiving any information for the purpose of this Ordinance.
(2) The recording of e-hearing proceedings shall be admissible as evidence before any forum or court of law for the purpose of this Ordinance.
(3) The Board may make rules for the purpose of this section. PART II DIRECTORATES-GENERAL
(2) The recording of e-hearing proceedings shall be admissible as evidence before any forum or court of law for the purpose of this Ordinance.
(3) The Board may make rules for the purpose of this section. PART II DIRECTORATES-GENERAL
Amendment history (7)
- New section 227D inserted through Finance Act, 2009.
- Section 227D substituted by the Finance Act, 2026. The substituted section
- Section 227E inserted by the Finance Act, 2021.
- The heading “DIRECTORATE-GENERAL OF INTERNAL AUDIT” substituted by the Finance Act, 2013.
- Section 228 substituted by the Finance Act, 2005. The substituted section 228
- The words “Inspection and” omitted by the Finance Act, 2007.
- Section 228A inserted by the Finance Act, 2026.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 228 The Directorate-General of Internal Audit
(1) The Directorate General of Internal Audit shall consist of a Director-General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and such other officers as the Board, may by notification in the official Gazette, appoint.
(2) The Board may, by notification in the official Gazette, specify the functions, jurisdiction and powers of the Directorate General of Internal Audit.
(2) The Board may, by notification in the official Gazette, specify the functions, jurisdiction and powers of the Directorate General of Internal Audit.
Amendment history (4)
- The heading “DIRECTORATE-GENERAL OF INTERNAL AUDIT” substituted by the Finance Act, 2013.
- Section 228 substituted by the Finance Act, 2005. The substituted section 228
- The words “Inspection and” omitted by the Finance Act, 2007.
- Section 228A inserted by the Finance Act, 2026.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 228A Directorate General (Field Compliance), Inland Revenue
(1) The Directorate General (Field Compliance) Inland Revenue shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and such other officers as the Board, may by notification in the official Gazette, appoint.
(2) The Board may, by notification in the official Gazette, —
(a) specify the functions and jurisdiction of the Directorate General and its officers; and (b) confer the powers of authorities specified in section 207 upon the Directorate General and its officers.
(2) The Board may, by notification in the official Gazette, —
(a) specify the functions and jurisdiction of the Directorate General and its officers; and (b) confer the powers of authorities specified in section 207 upon the Directorate General and its officers.
Amendment history (7)
- The heading “DIRECTORATE-GENERAL OF INTERNAL AUDIT” substituted by the Finance Act, 2013.
- Section 228 substituted by the Finance Act, 2005. The substituted section 228
- The words “Inspection and” omitted by the Finance Act, 2007.
- Section 228A inserted by the Finance Act, 2026.
- Added by the Finance Act, 2010. Earlier section 229 was omitted by the Finance Act, 2005. Which
- The words “Directorate General of Training and Research” substituted by the Finance Act, 2022.
- Inserted by the Finance Act, 2012. Earlier it was omitted by the Finance Act, 2005, which read as
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 229 Directorate General of Training and Research
(1) The Inland Revenue Service Academy shall consist of a Director-General, Additional Director-General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors and such officers as the Board, may, by notification in the official Gazette, appoint.
(2) The Board may, by notification in the official Gazette, specify the functions, jurisdiction and powers of the Inland Revenue Service Academy and its officers.
(2) The Board may, by notification in the official Gazette, specify the functions, jurisdiction and powers of the Inland Revenue Service Academy and its officers.
Amendment history (3)
- Added by the Finance Act, 2010. Earlier section 229 was omitted by the Finance Act, 2005. Which
- The words “Directorate General of Training and Research” substituted by the Finance Act, 2022.
- Inserted by the Finance Act, 2012. Earlier it was omitted by the Finance Act, 2005, which read as
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 230 Directorate General (Intelligence and Investigation), Inland Revenue
(1) The Directorate General (Intelligence and Investigation) Inland Revenue shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and such other officers as the Board, may by notification in the official Gazette, appoint.
(2) The Board may, by notification in the official Gazette,—
(a) specify the functions and jurisdiction of the Directorate General and its officers; and (b) confer the powers of authorities specified in section 207 upon the Directorate General and its officers. PART III DIRECTORATES-GENERAL
(2) The Board may, by notification in the official Gazette,—
(a) specify the functions and jurisdiction of the Directorate General and its officers; and (b) confer the powers of authorities specified in section 207 upon the Directorate General and its officers. PART III DIRECTORATES-GENERAL
Amendment history (6)
- Added by the Finance Act, 2010. Earlier section 229 was omitted by the Finance Act, 2005. Which
- The words “Directorate General of Training and Research” substituted by the Finance Act, 2022.
- Inserted by the Finance Act, 2012. Earlier it was omitted by the Finance Act, 2005, which read as
- Added by the Finance Act, 2008.
- Added by the Finance Act, 2013.
- Inserted by the Finance Act, 2017.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 230A Directorate-General of Withholding Taxes
(1) The Directorate-General of Withholding Taxes shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and such other officers as the Board, may by notification in the official Gazette, appoint.
(2) The Board may, by notification in the official Gazette, specify the functions, jurisdiction and powers of the Directorate-General of Withholding Taxes.
(2) The Board may, by notification in the official Gazette, specify the functions, jurisdiction and powers of the Directorate-General of Withholding Taxes.
Amendment history (3)
- Added by the Finance Act, 2008.
- Added by the Finance Act, 2013.
- Inserted by the Finance Act, 2017.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 230B Directorate-General of Law
Directorate-General of Law.— The Directorate-General of Law shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors, Law Officers and such other officers as the Board may, by notification in the official Gazette, appoint.
(2) The Board may, by notification in the official Gazette, specify the functions, jurisdiction and powers of the Directorate-General of Law.
(2) The Board may, by notification in the official Gazette, specify the functions, jurisdiction and powers of the Directorate-General of Law.
Amendment history (3)
- Added by the Finance Act, 2008.
- Added by the Finance Act, 2013.
- Inserted by the Finance Act, 2017.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 230C Directorate-General of Research and Development
(1) The Directorate-General of Research and Development shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors and such other officers as the Board may, by notification in the official Gazette, appoint.
(2) The Board may, by notification in the official Gazette, specify the functions, jurisdiction and powers of the Directorate-General of Research and Development.
(2) The Board may, by notification in the official Gazette, specify the functions, jurisdiction and powers of the Directorate-General of Research and Development.
Amendment history (3)
- Added by the Finance Act, 2008.
- Added by the Finance Act, 2013.
- Inserted by the Finance Act, 2017.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 230D Directorate-General of Broadening of Tax Base
(1) The Directorate- General of Broadening of Tax Base shall consist of a Director-General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors and such other officers as the Board may, by notification in the official Gazette, appoint.
(2) The Board may, by notification in the official Gazette, specify the functions, jurisdiction and powers of the Directorate-General of Broadening of Tax Base.
(2) The Board may, by notification in the official Gazette, specify the functions, jurisdiction and powers of the Directorate-General of Broadening of Tax Base.
Amendment history (4)
- Added by the Finance Act, 2008.
- Added by the Finance Act, 2013.
- Inserted by the Finance Act, 2017.
- The word “Tar” substituted by the Finance Act, 2019.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 230E Directorate-General of Transfer Pricing
(l) The Directorate General of international Tax Operations shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors and such other officers as the Board may, by notification in the official Gazette, appoint.
(2) The Board may, by notification in the official Gazette,
(a) specify the functions and jurisdiction of the Directorate General and its officers; and (b) confer the powers of authorities specified in section 207 upon the Directorate General and its officers.
(3) The functions and powers of the Directorate General of International Tax Operations shall include but not limited to-
(a) receive and send information from other jurisdictions under spontaneous, automatic and on demand exchange of information under exchange of information agreements;
(b) levy and recover tax by passing an assessment order under section I23
(1A) in case of undeclared off-shore assets and incomes;
(c) receive, transmit and exchange country reports to the jurisdictions that are parties to international by country agreements with Pakistan; and (d) conduct transfer pricing audit in cases selected for such audit by the Director General of international Tax Operations.
(4) The Board may, by notification in the official Gazette, specify the criteria for selection of the taxpayer for transfer pricing audit. Explanation- For the removal of doubt, it is clarified that transfer pricing audit refers to the audit for determination of transfer price at arm's length in transactions between associates and is independent tax audit under section 177 and 2l4C which is audit of the income tax affairs of the taxpayer.
(5) Transfer pricing audit of cases selected under clause (d) of sub- section (3) shall be conducted as per procedure given in section 177 and all the provisions of the Ordinance, except the first proviso to sub-section (1), sub-section (6A),
(10) and (14) of section 177, shall apply accordingly.
(6) Nothing contained in this section shall prevent the Commissioner from determination of transfer price at arm’s length in transactions between associates while conducting audit of income tax affairs of a taxpayer under section 177 or 214C or during proceedings under section 122.
(2) The Board may, by notification in the official Gazette,
(a) specify the functions and jurisdiction of the Directorate General and its officers; and (b) confer the powers of authorities specified in section 207 upon the Directorate General and its officers.
(3) The functions and powers of the Directorate General of International Tax Operations shall include but not limited to-
(a) receive and send information from other jurisdictions under spontaneous, automatic and on demand exchange of information under exchange of information agreements;
(b) levy and recover tax by passing an assessment order under section I23
(1A) in case of undeclared off-shore assets and incomes;
(c) receive, transmit and exchange country reports to the jurisdictions that are parties to international by country agreements with Pakistan; and (d) conduct transfer pricing audit in cases selected for such audit by the Director General of international Tax Operations.
(4) The Board may, by notification in the official Gazette, specify the criteria for selection of the taxpayer for transfer pricing audit. Explanation- For the removal of doubt, it is clarified that transfer pricing audit refers to the audit for determination of transfer price at arm's length in transactions between associates and is independent tax audit under section 177 and 2l4C which is audit of the income tax affairs of the taxpayer.
(5) Transfer pricing audit of cases selected under clause (d) of sub- section (3) shall be conducted as per procedure given in section 177 and all the provisions of the Ordinance, except the first proviso to sub-section (1), sub-section (6A),
(10) and (14) of section 177, shall apply accordingly.
(6) Nothing contained in this section shall prevent the Commissioner from determination of transfer price at arm’s length in transactions between associates while conducting audit of income tax affairs of a taxpayer under section 177 or 214C or during proceedings under section 122.
Amendment history (2)
- The word “Tar” substituted by the Finance Act, 2019.
- Inserted by the Finance Act, 2018.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 230F Directorate-General of Immovable Property
(1) The Directorate- General of Immovable Property, (hereinafter referred to as Directorate-General in this section, shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors and Assistant Directors and such other officers as the Board may, by notification in the official Gazette, appoint.
(2) The Board may, by notification in the official Gazette, specify the functions and jurisdiction of the Directorate-General and its officers.
(3) The Directorate-General may, subject to the provisions and conditions as may be prescribed, initiate proceedings for the acquisition of property for the reasons and purposes specified in sub-section (4).
(4) The proceedings under sub-section (3) shall be initiated, where the Directorate-General, on the basis of valuation made by it, has reason to believe that any immovable property of a fair market value has been transferred by a person, hereinafter referred to as the transferor, to another person, hereinafter referred to as the transferee, for a consideration which is less than the fair market value of the immovable property and that the consideration for such transfer as agreed to between the transferor and transferee has been understated in the instrument of transfer for the purposes of ─
(a) the avoidance or reduction of withholding tax obligations under this Ordinance;
(b) concealment of unexplained amount referred to in sub- section (1) of section 111 representing investment in immovable property; or (c) avoidance or reduction of capital gains tax under section 37.
(5) The Directorate-General may appoint any valuer or expert as it considers necessary for the purposes of determination of valuation including fair market value of immovable property.
(6) The mode and manner of appointment of a valuer or expert shall be as may be prescribed.
(7) The valuation made under sub-section (4) and reasons that consideration is less than the fair market value shall be recorded in writing.
(8) No proceedings shall be initiated in respect of any immovable property after expiration of a period of six months from the end of the month in which the instrument of transfer in respect of such property is registered, recorded or attested.
(9) The mode and manner of initiation of proceedings and acquisition of immovable property under this section shall be as may be prescribed:
Provided that the proceedings shall not be initiated unless the transferee is provided with an opportunity of being heard and where the objection by the transferee, if any, is rejected by the Directorate-General, it shall record in writing the reasons for rejection through an order.
(10) If the Directorate-General is satisfied with the objections or reasons furnished by the transferee or the transferor, it shall, by order in writing, declare that the property shall not be acquired under this section.
(11) If after hearing the objections, if any, and after taking into account all the relevant material on record, the Directorate-General is satisfied that the fair market value of such property exceeds the consideration by more than fifty per cent of such consideration and that transfer as agreed to between the transferor and the transferee has not been truly stated in the instrument of transfer it may, after obtaining approval of the Board, make an order for acquisition of the immovable property under this section.
(12) The transferee may prefer express appeal to the Appellate Tribunal of Immovable Property against the order of acquisition of any immovable property under sub-section (11) within sixty days of service of a copy of such order.
(13) There shall be established an Appellate Tribunal of Immovable Property to exercise the powers conferred on the Tribunal under this section.
(14) The appointment of members of the Tribunal, powers, functions, constitution of the Tribunal and mode and manner of disposal of appeals shall be as may be prescribed.
(15) The Appellate Tribunal may, after giving the appellant and the Directorate-General an opportunity of being heard, pass such order as it thinks fit.
(16) The transferee or the Directorate-General aggrieved by any order of the Tribunal may, within sixty days of the date on which the order under sub-section (15) is served, prefer an appeal against such order to the High Court.
(17) As soon as may be after the order for acquisition of immovable property made under sub-section (11) becomes final, the Directorate-General may, by notice in writing, order the transferee or any other person who may be in possession of the immovable property to surrender or deliver possession thereof to the Directorate-General within thirty days of the date of the service of the notice.
(18) The order referred to in sub-section (11) becomes final if either no appeal has been there against filed or on appeal filed before the Tribunal, the order is confirmed and no appeal is filed before the High Court or on appeal filed before the High Court the order is confirmed.
(19) Notwithstanding anything contained in any law or any agreement for the time being in force, where order referred to in sub-section (11) becomes final, the immovable property and all rights including ownership rights thereof shall be vested in the Federal Government and shall be treated to be in the same position in relation to such rights as the person in whom such rights would have continued to vest if such order had not become final.
(20) Where any immovable property is acquired under this section, the Board shall make the payment of consideration for acquisition to the person or persons entitled thereto, as soon as may be, after the property becomes vested in the Federal Government.
(21) Notwithstanding the provisions of section 68, for the purpose of this section,—
(a) consideration for acquisition means a sum equal to the aggregate of the amount of the consideration for the transfer of immovable property and hundred per cent of such consideration;
(b) fair market value in relation to an immovable property means the price that the immovable property would ordinarily fetch on sale in the open market on the date of execution of the instrument of transfer of such property;
(c) "immovable property" means any land with or without a superstructure or any building or part of a building or any rights therein and includes, where any land or any building or part of a building is transferred along with any machinery, plant, equipment, furniture and fittings; and (d) "transfer" in relation to any immovable property means transfer of such property by way of sale or exchange or lease for a term of not less than ten years.
(22) The provisions of this section shall come into force on such date as the Federal Government may, by notification in official Gazette, appoint.
(2) The Board may, by notification in the official Gazette, specify the functions and jurisdiction of the Directorate-General and its officers.
(3) The Directorate-General may, subject to the provisions and conditions as may be prescribed, initiate proceedings for the acquisition of property for the reasons and purposes specified in sub-section (4).
(4) The proceedings under sub-section (3) shall be initiated, where the Directorate-General, on the basis of valuation made by it, has reason to believe that any immovable property of a fair market value has been transferred by a person, hereinafter referred to as the transferor, to another person, hereinafter referred to as the transferee, for a consideration which is less than the fair market value of the immovable property and that the consideration for such transfer as agreed to between the transferor and transferee has been understated in the instrument of transfer for the purposes of ─
(a) the avoidance or reduction of withholding tax obligations under this Ordinance;
(b) concealment of unexplained amount referred to in sub- section (1) of section 111 representing investment in immovable property; or (c) avoidance or reduction of capital gains tax under section 37.
(5) The Directorate-General may appoint any valuer or expert as it considers necessary for the purposes of determination of valuation including fair market value of immovable property.
(6) The mode and manner of appointment of a valuer or expert shall be as may be prescribed.
(7) The valuation made under sub-section (4) and reasons that consideration is less than the fair market value shall be recorded in writing.
(8) No proceedings shall be initiated in respect of any immovable property after expiration of a period of six months from the end of the month in which the instrument of transfer in respect of such property is registered, recorded or attested.
(9) The mode and manner of initiation of proceedings and acquisition of immovable property under this section shall be as may be prescribed:
Provided that the proceedings shall not be initiated unless the transferee is provided with an opportunity of being heard and where the objection by the transferee, if any, is rejected by the Directorate-General, it shall record in writing the reasons for rejection through an order.
(10) If the Directorate-General is satisfied with the objections or reasons furnished by the transferee or the transferor, it shall, by order in writing, declare that the property shall not be acquired under this section.
(11) If after hearing the objections, if any, and after taking into account all the relevant material on record, the Directorate-General is satisfied that the fair market value of such property exceeds the consideration by more than fifty per cent of such consideration and that transfer as agreed to between the transferor and the transferee has not been truly stated in the instrument of transfer it may, after obtaining approval of the Board, make an order for acquisition of the immovable property under this section.
(12) The transferee may prefer express appeal to the Appellate Tribunal of Immovable Property against the order of acquisition of any immovable property under sub-section (11) within sixty days of service of a copy of such order.
(13) There shall be established an Appellate Tribunal of Immovable Property to exercise the powers conferred on the Tribunal under this section.
(14) The appointment of members of the Tribunal, powers, functions, constitution of the Tribunal and mode and manner of disposal of appeals shall be as may be prescribed.
(15) The Appellate Tribunal may, after giving the appellant and the Directorate-General an opportunity of being heard, pass such order as it thinks fit.
(16) The transferee or the Directorate-General aggrieved by any order of the Tribunal may, within sixty days of the date on which the order under sub-section (15) is served, prefer an appeal against such order to the High Court.
(17) As soon as may be after the order for acquisition of immovable property made under sub-section (11) becomes final, the Directorate-General may, by notice in writing, order the transferee or any other person who may be in possession of the immovable property to surrender or deliver possession thereof to the Directorate-General within thirty days of the date of the service of the notice.
(18) The order referred to in sub-section (11) becomes final if either no appeal has been there against filed or on appeal filed before the Tribunal, the order is confirmed and no appeal is filed before the High Court or on appeal filed before the High Court the order is confirmed.
(19) Notwithstanding anything contained in any law or any agreement for the time being in force, where order referred to in sub-section (11) becomes final, the immovable property and all rights including ownership rights thereof shall be vested in the Federal Government and shall be treated to be in the same position in relation to such rights as the person in whom such rights would have continued to vest if such order had not become final.
(20) Where any immovable property is acquired under this section, the Board shall make the payment of consideration for acquisition to the person or persons entitled thereto, as soon as may be, after the property becomes vested in the Federal Government.
(21) Notwithstanding the provisions of section 68, for the purpose of this section,—
(a) consideration for acquisition means a sum equal to the aggregate of the amount of the consideration for the transfer of immovable property and hundred per cent of such consideration;
(b) fair market value in relation to an immovable property means the price that the immovable property would ordinarily fetch on sale in the open market on the date of execution of the instrument of transfer of such property;
(c) "immovable property" means any land with or without a superstructure or any building or part of a building or any rights therein and includes, where any land or any building or part of a building is transferred along with any machinery, plant, equipment, furniture and fittings; and (d) "transfer" in relation to any immovable property means transfer of such property by way of sale or exchange or lease for a term of not less than ten years.
(22) The provisions of this section shall come into force on such date as the Federal Government may, by notification in official Gazette, appoint.
Amendment history (3)
- Inserted by the Finance Act, 2018.
- In section 230F, sub-section (23) omitted through Finance Act 2019, omitted sub-section read as
- New section (230G) & (230H) inserted through Finance Act, 2019.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 230G Directorate General of Special Initiative
(1) The Directorate General of Special Initiative shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors and such other officers as the Board may, by notification in the official Gazette, appoint.
(2) The Board may, by notification in the official Gazette,-
(a) specify the functions, jurisdiction and powers of the Directorate General of Special Initiative and its officers; and (b) confer the powers of authorities specified in section 207 upon the Directorate General and its officers.
(2) The Board may, by notification in the official Gazette,-
(a) specify the functions, jurisdiction and powers of the Directorate General of Special Initiative and its officers; and (b) confer the powers of authorities specified in section 207 upon the Directorate General and its officers.
Amendment history (4)
- In section 230F, sub-section (23) omitted through Finance Act 2019, omitted sub-section read as
- New section (230G) & (230H) inserted through Finance Act, 2019.
- Section 230I inserted by the Finance Act, 2021.
- Section 230J inserted by the Finance Act 2023.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 230H Directorate General of Valuation
(1) The Directorate General of Valuation shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors and such other officers as the Board may, by notification in the official Gazette, appoint.
(2) The Board may, by notification in the official Gazette,-
(a) specify the functions, jurisdiction and powers of the Directorate General of Valuation and its officers; and (b) confer the powers authorities specified in section 207 upon the Directorate General and its officers.
(2) The Board may, by notification in the official Gazette,-
(a) specify the functions, jurisdiction and powers of the Directorate General of Valuation and its officers; and (b) confer the powers authorities specified in section 207 upon the Directorate General and its officers.
Amendment history (2)
- Section 230I inserted by the Finance Act, 2021.
- Section 230J inserted by the Finance Act 2023.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 230I Directorate General of Compliance Risk Management
(1) The Directorate General of Compliance Risk Management shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors and such other officers as the Board may, by notification in the official Gazette, appoint.
(2) The Board may, by notification in the official Gazette —
(a) specify the functions, jurisdiction and powers of the Directorate General of Compliance Risk Management and its officers; and (b) confer the powers of authorities specified in section 207 upon the Directorate General and its officers.
(2) The Board may, by notification in the official Gazette —
(a) specify the functions, jurisdiction and powers of the Directorate General of Compliance Risk Management and its officers; and (b) confer the powers of authorities specified in section 207 upon the Directorate General and its officers.
Amendment history (2)
- Section 230I inserted by the Finance Act, 2021.
- Section 230J inserted by the Finance Act 2023.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 230J International Centre of Tax Excellence
(1) There shall be established an Institute to be known as International Centre of Tax Excellence.
(2) The functions of the Institute shall be to help contribute to the development of tax policy, prepare model national tax policy, deliver inter- disciplinary research in tax administration and policy, international tax cooperation, revenue forecasting, conduct international seminars, workshops and conferences on the current issues faced by tax authorities in the field of international taxation, capacity building of Inland Revenue Officers, tax analysis, improve the design and delivery of tax administration for maximising revenue within existing provisions to close the tax gap or any other function as directed by the Board or the Federal Government.
(3) There shall be a Nominating Committee comprising the Minister-in- Charge, Secretary Revenue Division and Secretary Finance which shall be responsible for recommending a panel to the Federal Government for the appointment of an Executive Director and independent members of the Executive Committee.
(4) There shall an Executive Committee comprising Chairman, Federal Board of Revenue, Member (IR-Policy), Member (IR-Operations) and two independent members to be appointed by the Federal Government. Executive Director shall act as Secretary of the Executive Committee.
(5) The Nominating Committee shall apply the prescribed criteria for making recommendations of the panel for Executive Director and independent members of the Executive Committee.
(6) Executive Director and independent members of the Executive Committee shall be appointed by the Federal Government.
(7) Executive Director shall also be the Chief Executive of the Institute and shall work to ensure efficient functioning and day to day administrative functions of the Institute and shall be independent in the discharge of its functions specified under sub-section (8).
(8) Executive Committee, for every fiscal year, shall assign the requirements of the Board to be undertaken by the Institute, during the year.
(9) The Executive Committee shall prescribe rules for recruitment of the employees of the Institute and Executive Director shall act in accordance with the rules. At least fifty per cent of the employees shall be serving Inland Revenue officers having at least 5 years of experience of tax policy or tax administration.
(10) The remuneration and term of employment of the employees of the Institute shall be as prescribed by the Federal Government.
(11) The Board may establish a committee to monitor the establishment of the Institute including appointment of the Project Director for the purpose.
(12) The Board may, provide such data to the Institute as is necessary for processing and analysis and for discharging its obligations under sub-section (8):
Provided that such data shall be anonymized before transmission to the Institute and identifying particulars of the taxpayers shall be kept confidential and provisions of sub-section (7) of section 216 shall apply accordingly.
(13) The Executive Committee may by notification in the official gazette make rules for carrying out the purposes of this section.
(2) The functions of the Institute shall be to help contribute to the development of tax policy, prepare model national tax policy, deliver inter- disciplinary research in tax administration and policy, international tax cooperation, revenue forecasting, conduct international seminars, workshops and conferences on the current issues faced by tax authorities in the field of international taxation, capacity building of Inland Revenue Officers, tax analysis, improve the design and delivery of tax administration for maximising revenue within existing provisions to close the tax gap or any other function as directed by the Board or the Federal Government.
(3) There shall be a Nominating Committee comprising the Minister-in- Charge, Secretary Revenue Division and Secretary Finance which shall be responsible for recommending a panel to the Federal Government for the appointment of an Executive Director and independent members of the Executive Committee.
(4) There shall an Executive Committee comprising Chairman, Federal Board of Revenue, Member (IR-Policy), Member (IR-Operations) and two independent members to be appointed by the Federal Government. Executive Director shall act as Secretary of the Executive Committee.
(5) The Nominating Committee shall apply the prescribed criteria for making recommendations of the panel for Executive Director and independent members of the Executive Committee.
(6) Executive Director and independent members of the Executive Committee shall be appointed by the Federal Government.
(7) Executive Director shall also be the Chief Executive of the Institute and shall work to ensure efficient functioning and day to day administrative functions of the Institute and shall be independent in the discharge of its functions specified under sub-section (8).
(8) Executive Committee, for every fiscal year, shall assign the requirements of the Board to be undertaken by the Institute, during the year.
(9) The Executive Committee shall prescribe rules for recruitment of the employees of the Institute and Executive Director shall act in accordance with the rules. At least fifty per cent of the employees shall be serving Inland Revenue officers having at least 5 years of experience of tax policy or tax administration.
(10) The remuneration and term of employment of the employees of the Institute shall be as prescribed by the Federal Government.
(11) The Board may establish a committee to monitor the establishment of the Institute including appointment of the Project Director for the purpose.
(12) The Board may, provide such data to the Institute as is necessary for processing and analysis and for discharging its obligations under sub-section (8):
Provided that such data shall be anonymized before transmission to the Institute and identifying particulars of the taxpayers shall be kept confidential and provisions of sub-section (7) of section 216 shall apply accordingly.
(13) The Executive Committee may by notification in the official gazette make rules for carrying out the purposes of this section.
Amendment history (3)
- Section 230I inserted by the Finance Act, 2021.
- Section 230J inserted by the Finance Act 2023.
- Section 230K inserted by the Finance Act 2024.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 230K Tax Fraud Investigation Wing Inland Revenue
(1) There shall be established a wing to be known as Tax Fraud Investigation Wing Inland Revenue.
(2) The functions of the Tax Fraud Investigation Wing Inland Revenue shall be to detect, analyze, investigate, combat and prevent tax evasion and fraud.
(3) The Tax Fraud Investigation Wing Inland Revenue shall comprise Fraud Intelligence and Analysis Unit, Fraud Investigation Unit, Legal Unit, Accountants Unit, Digital Forensic and Scene of Crime Unit, Administrative Unit or any other Unit as may be approved by the Board or the Federal Government.
(4) The Tax Fraud Investigation Wing Inland Revenue shall consist of a Chief Investigator and as many following officers, as may be notified by the Board –
(a) Senior Investigators, Investigators, Junior Investigators or any other officer of Inland Revenue with any other designation;
(b) a Senior Forensic Analyst and as many Forensic Analysts and Junior Forensic Analysts; and (c) a Senior Data Analyst and as many Data Analysts and Junior Data Analysts.
(5) The Board may, by notification in the official Gazette, -
(a) specify the functions and jurisdiction of the Tax Fraud Investigation Wing Inland Revenue and its officers; and (b) confer the powers of authorities specified in section 207 upon the Tax Fraud Investigation Wing Inland Revenue and its officers in clause (a) of sub-section 4.
(6) Nothing contained in this section shall prevent the authorities appointed under sections 207 and 208 or any other authority or officer conferred with the power of authorities under sections 207 and 208 from conducting prosecution Part XI of Chapter X of the Ordinance. TRANSITIONAL ADVANCE TAX PROVISIONS
(2) The functions of the Tax Fraud Investigation Wing Inland Revenue shall be to detect, analyze, investigate, combat and prevent tax evasion and fraud.
(3) The Tax Fraud Investigation Wing Inland Revenue shall comprise Fraud Intelligence and Analysis Unit, Fraud Investigation Unit, Legal Unit, Accountants Unit, Digital Forensic and Scene of Crime Unit, Administrative Unit or any other Unit as may be approved by the Board or the Federal Government.
(4) The Tax Fraud Investigation Wing Inland Revenue shall consist of a Chief Investigator and as many following officers, as may be notified by the Board –
(a) Senior Investigators, Investigators, Junior Investigators or any other officer of Inland Revenue with any other designation;
(b) a Senior Forensic Analyst and as many Forensic Analysts and Junior Forensic Analysts; and (c) a Senior Data Analyst and as many Data Analysts and Junior Data Analysts.
(5) The Board may, by notification in the official Gazette, -
(a) specify the functions and jurisdiction of the Tax Fraud Investigation Wing Inland Revenue and its officers; and (b) confer the powers of authorities specified in section 207 upon the Tax Fraud Investigation Wing Inland Revenue and its officers in clause (a) of sub-section 4.
(6) Nothing contained in this section shall prevent the authorities appointed under sections 207 and 208 or any other authority or officer conferred with the power of authorities under sections 207 and 208 from conducting prosecution Part XI of Chapter X of the Ordinance. TRANSITIONAL ADVANCE TAX PROVISIONS
Amendment history (10)
- Section 230K inserted by the Finance Act 2024.
- Section 231 omitted by the Finance Act, 2005. The omitted section 231
- Inserted by the Finance Act, 2005.
- Section 231A omitted by the Finance Act, 2021. The omitted section
- Sub-section (2) omitted by Finance Act, 2015. The omitted sub-section (2)
- Added by the Finance Act, 2010.
- Section 231AA omitted by the Finance Act, 2021. The omitted section
- Sub-section (4) omitted by Finance Act, 2015. Omitted sub-section (4)
- Section 231AB inserted by the Finance Act, 2023.
- The expression “0.6%” substituted by the Finance Act 2025.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 231 Omitted by Finance Act, 2005Omitted
Omitted by Finance Act, 2005
Transitional Advance Tax Provisions
s. 231A Omitted by the Finance Act, 2021Omitted
Omitted by the Finance Act, 2021
s. 231AA Omitted by the Finance Act, 2021Omitted
Omitted by the Finance Act, 2021
s. 231AB Advance tax on cash withdrawal
(1) Every banking company shall deduct advance adjustable tax at the rate of 0.8% of the cash withdrawal from a person whose name is not appearing in the active taxpayers’ list on the sum total of the payments for cash withdrawal in a day, exceeding fifty thousand rupees. Explanation. – For removal of doubt, it is clarified that the said fifty thousand rupees shall be aggregate cash withdrawals in a single day.
Amendment history (14)
- Inserted by the Finance Act, 2005.
- Section 231A omitted by the Finance Act, 2021. The omitted section
- Sub-section (2) omitted by Finance Act, 2015. The omitted sub-section (2)
- Added by the Finance Act, 2010.
- Section 231AA omitted by the Finance Act, 2021. The omitted section
- Sub-section (4) omitted by Finance Act, 2015. Omitted sub-section (4)
- Section 231AB inserted by the Finance Act, 2023.
- The expression “0.6%” substituted by the Finance Act 2025.
- Section 231B substituted by the Finance Act, 2014. The substituted section 231B
- The word “private” omitted by the Finance Act, 2022.
- Full-stop substituted by the Finance Act 2016.
- Added by the Finance Act, 2016.
- Sub-section (1A) substituted by the Finance Act, 2017. The substituted sub-section (1A) read as
- The word “non-filer” substituted though Finance Act, 2019.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 231B Advance tax on private motor vehicles
(1) Every motor vehicle registering authority of Excise and Taxation Department shall collect advance tax at the time of registration of a motor vehicle, at the rates specified in Division VII of Part IV of the First Schedule :
Provided that no collection of advance tax under this sub- section shall be made after five years from the date of first registration as specified in clauses (a),
(b) and (c) of sub-section (6).
(1A) Every leasing company or a scheduled bank or a non-banking financial institution or an investment bank or a modaraba or a development finance institution, whether shariah compliant or under conventional mode, at the time of leasing of a motor vehicle to a person whose name is not appearing in the active taxpayers’ list , either through ijara or otherwise, shall collect advance tax at the rate of four per cent of the value of the motor vehicle.
(2) Every motor vehicle registering authority of Excise and Taxation Department shall collect advance tax at the time of transfer of registration or ownership of a motor vehicle, at the rates specified in Division VII of Part IV of the First Schedule:
Provided that no collection of advance tax under this sub- section shall be made on transfer of vehicles after five years from the date of first registration in Pakistan.
(2A) Every motor vehicle registration authority of Excise and Taxation Department shall, at the time of registration, collect tax at the rates specified in Division VII of Part IV of the First Schedule, if the locally manufactured motor vehicle has been sold prior to registration by the person who originally purchased it from the local manufacturer.
(3) Every manufacturer of a motor vehicle shall collect, at the time of sale of a motor car or jeep, advance tax at the rate specified in Division VII of Part IV of the First Schedule from the person to whom such sale is made.
(4) Sub-section (1) shall not apply if a person produces evidence that tax under sub-section (3) in case of a locally manufactured vehicle or tax under section 148 in the case of imported vehicle was collected from the same person in respect of the same vehicle.
(5) The advance tax collected under this section shall be adjustable:
Provided that the provisions of this section shall not be applicable in the case of –
(a) the Federal Government;
(b) a Provincial Government;
(c) a Local Government;
(d) a foreign diplomat; or (e) a diplomatic mission in Pakistan.
(6) For the purposes of this section the expression date of first registration means—
(a) the date of issuance of broad arrow number in case a vehicle is acquired from the Armed Forces of Pakistan;
(b) the date of registration by the Ministry of Foreign Affairs in case the vehicle is acquired from a foreign diplomat or a diplomatic mission in Pakistan; and (d) in all other cases the date of first registration by the Excise and Taxation Department.
(7) For the purpose of this section, motor vehicle includes car, caravan automobiles, jeep, limousine, pickup, sports utility vehicle, trucks, vans, wagon and any other automobile excluding–
(i) a motor vehicle used for public transportation, carriage of goods and agriculture machinery;
(ii) a rickshaw or a motorcycle rickshaw and (iii) any other motor vehicle having engine capacity upto 200cc.
Provided that no collection of advance tax under this sub- section shall be made after five years from the date of first registration as specified in clauses (a),
(b) and (c) of sub-section (6).
(1A) Every leasing company or a scheduled bank or a non-banking financial institution or an investment bank or a modaraba or a development finance institution, whether shariah compliant or under conventional mode, at the time of leasing of a motor vehicle to a person whose name is not appearing in the active taxpayers’ list , either through ijara or otherwise, shall collect advance tax at the rate of four per cent of the value of the motor vehicle.
(2) Every motor vehicle registering authority of Excise and Taxation Department shall collect advance tax at the time of transfer of registration or ownership of a motor vehicle, at the rates specified in Division VII of Part IV of the First Schedule:
Provided that no collection of advance tax under this sub- section shall be made on transfer of vehicles after five years from the date of first registration in Pakistan.
(2A) Every motor vehicle registration authority of Excise and Taxation Department shall, at the time of registration, collect tax at the rates specified in Division VII of Part IV of the First Schedule, if the locally manufactured motor vehicle has been sold prior to registration by the person who originally purchased it from the local manufacturer.
(3) Every manufacturer of a motor vehicle shall collect, at the time of sale of a motor car or jeep, advance tax at the rate specified in Division VII of Part IV of the First Schedule from the person to whom such sale is made.
(4) Sub-section (1) shall not apply if a person produces evidence that tax under sub-section (3) in case of a locally manufactured vehicle or tax under section 148 in the case of imported vehicle was collected from the same person in respect of the same vehicle.
(5) The advance tax collected under this section shall be adjustable:
Provided that the provisions of this section shall not be applicable in the case of –
(a) the Federal Government;
(b) a Provincial Government;
(c) a Local Government;
(d) a foreign diplomat; or (e) a diplomatic mission in Pakistan.
(6) For the purposes of this section the expression date of first registration means—
(a) the date of issuance of broad arrow number in case a vehicle is acquired from the Armed Forces of Pakistan;
(b) the date of registration by the Ministry of Foreign Affairs in case the vehicle is acquired from a foreign diplomat or a diplomatic mission in Pakistan; and (d) in all other cases the date of first registration by the Excise and Taxation Department.
(7) For the purpose of this section, motor vehicle includes car, caravan automobiles, jeep, limousine, pickup, sports utility vehicle, trucks, vans, wagon and any other automobile excluding–
(i) a motor vehicle used for public transportation, carriage of goods and agriculture machinery;
(ii) a rickshaw or a motorcycle rickshaw and (iii) any other motor vehicle having engine capacity upto 200cc.
Amendment history (14)
- Section 231B substituted by the Finance Act, 2014. The substituted section 231B
- The word “private” omitted by the Finance Act, 2022.
- Full-stop substituted by the Finance Act 2016.
- Added by the Finance Act, 2016.
- Sub-section (1A) substituted by the Finance Act, 2017. The substituted sub-section (1A) read as
- The word “non-filer” substituted though Finance Act, 2019.
- Sub-section (2A) inserted by the Finance Act, 2021. Earlier sub-section (2A) was inserted through
- The word “car or jeep” substituted by the Finance Act, 2015.
- Added by the Finance Act, 2015.
- Word Added by the Finance Act, 2026.
- Clause (c) omitted by the Finance Act, 2026. The omitted clause
- Sub-section (7) substituted by the Finance Act, 2022. The substituted sub-section
- Section 231C inserted by the Finance Act, 2023.
- 4Omitted by the Finance Act, 2002. The omitted section 232
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 231C Advance tax on foreign domestic workers
(1) Any authority issuing or renewing domestic aide visa to any foreign national as a domestic worker at the time of issuing or renewing such visa shall collect from the agency, sponsor or the person as the case may be, employing the services of such foreign national a tax of two hundred thousand rupees.
(2) The tax collected or collectible under this section shall be adjustable advance tax for the tax year to which it relates on the income of such agency, sponsor or a person, as the case may be, employing the services of such foreign national.
(2) The tax collected or collectible under this section shall be adjustable advance tax for the tax year to which it relates on the income of such agency, sponsor or a person, as the case may be, employing the services of such foreign national.
Amendment history (9)
- Clause (c) omitted by the Finance Act, 2026. The omitted clause
- Sub-section (7) substituted by the Finance Act, 2022. The substituted sub-section
- Section 231C inserted by the Finance Act, 2023.
- 4Omitted by the Finance Act, 2002. The omitted section 232
- Section 233 substituted by the Finance Act, 2005. The substituted section 233
- The words “local authority” substituted by the Finance Act, 2008.
- The word “resident” omitted by the Finance Act, 2006.
- Inserted by the Finance Act, 2010.
- Inserted by the Finance Act, 2017.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 232 Omitted by the Finance Ordinance, 2002Omitted
Omitted by the Finance Ordinance, 2002
s. 233 Brokerage and Commission
Related tools:Commission WHT rates
(1) Where any payment on account of brokerage or commission is made by the Federal Government, a Provincial Government, a Local Government , a company or an association of person or individual having turnover of hundred million rupees or more (hereinafter called the principal) to a person (hereinafter called the agent), the principal shall deduct advance tax at the rate specified in Division II of Part IV of the First Schedule from such payment. (2) If the agent retains Commission or brokerage from any amount remitted by him to the principal, he shall be deemed to have been paid the commission or brokerage by the principal and the principal shall collect advance tax from the agent.
(2A) Notwithstanding the provisions of sub-section (1), where the principal is making payment on account of commission to an advertising agent, directly or through electronic or print media, the principal shall deduct tax (in addition to tax required to be deducted under clause (b) of sub-section (1) of section 153 on advertising services excluding commission), at the rate specified in Division II of Part IV of the First Schedule on the amount equal to- A x 15 Where A = amount paid or to be paid to electronic or print media for advertising services (excluding commission) on which tax is deductible under clause (b) of sub-section (I) of section 153.
(2B) Tax deducted under sub-section (2A) shall be minimum tax on the income of the advertising agent.
(3) Where any tax is required to be collected from a person under sub- section (1), such tax shall be the minimum tax on the income of such persons. Explanation.— For the removal of doubt, it is explained that the income of person referred to in sub-sections
(2B) and (3) means the amount on which tax is deductible under sub-sections
(1) or (2A) of this section.
Amendment history (5)
- Section 233 substituted by the Finance Act, 2005. The substituted section 233
- The words “local authority” substituted by the Finance Act, 2008.
- The word “resident” omitted by the Finance Act, 2006.
- Inserted by the Finance Act, 2010.
- Inserted by the Finance Act, 2017.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 233A Omitted by the Finance Act, 2021Omitted
Omitted by the Finance Act, 2021
s. 233AA Omitted by the Finance Act, 2021Omitted
Omitted by the Finance Act, 2021
s. 234 Tax on motor vehicles
(1) Any person at the time of collecting motor vehicle tax shall also collect advance tax at the rates specified in Division III of Part IV of the First Schedule.
(2) If the motor vehicle tax is collected in instalments or lump sum the advance tax may also be collected in instalments or lump sum in like manner.
(2A) In respect of motor cars used for more than ten years in Pakistan, no advance tax shall be collected after a period of ten years.
(3) In respect of a passenger transport vehicle with registered seating capacity of ten or more persons, advance tax shall not be collected after a period of ten years from the first day of July of the year of make of the vehicle.
(4) In respect of a goods transport vehicle with registered laden weight of less than 8120 kilograms, advance tax shall not be collected after a period of ten years from the date of first registration of vehicle in Pakistan.
(5) Advance tax collected under this section shall be adjustable.
(6) For the purpose of sub-sections
(1) and (2) motor vehicle shall include the vehicles specified in sub-section (7) of section 231B.
(2) If the motor vehicle tax is collected in instalments or lump sum the advance tax may also be collected in instalments or lump sum in like manner.
(2A) In respect of motor cars used for more than ten years in Pakistan, no advance tax shall be collected after a period of ten years.
(3) In respect of a passenger transport vehicle with registered seating capacity of ten or more persons, advance tax shall not be collected after a period of ten years from the first day of July of the year of make of the vehicle.
(4) In respect of a goods transport vehicle with registered laden weight of less than 8120 kilograms, advance tax shall not be collected after a period of ten years from the date of first registration of vehicle in Pakistan.
(5) Advance tax collected under this section shall be adjustable.
(6) For the purpose of sub-sections
(1) and (2) motor vehicle shall include the vehicles specified in sub-section (7) of section 231B.
Amendment history (16)
- The words “Transport business” substituted by the Finance Act, 2008.
- Inserted by the Finance Act, 2002.
- Inserted by the Finance Act, 2013.
- Comma substituted by the Finance Act, 2013.
- The words “2030 kilogram or more but” omitted by the Finance Act, 2003.
- Sub-section (5) substituted by the Finance Act, 2013. The substituted sub-section (5) read as
- Added by the Finance Act, 2015.
- Inserted by the Finance Act, 2007.
- Section 234A omitted by the Finance Act, 2021. The omitted section
- Sub-section (4) omitted by the Finance Act, 2017. The omitted sub-section (4) is
- Expression inserted through Finance Act, 2020 dated 30 June, 2020
- Inserted by the Finance Act, 2021.
- Full stop substituted and proviso added by the Finance Act, 2021.
- Sub-section (1A) added by the Finance Act, 2022.
- omitted through Tax Laws (Second Amendment) Ordinance, 2022 (VI of 2022) dated 22.08.2022.
- Added by Finance Act 2017.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 234A Omitted by the Finance Act, 2021Omitted
Omitted by the Finance Act, 2021
s. 235 Electricity Consumption
(1) There shall be collected advance tax at the rates specified in Division IV of Part-IV of the First Schedule on the amount of electricity bill of a commercial or industrial or domestic consumer :
Provided that the provisions of sub-section (1) shall not apply to a domestic consumer of electricity if his name appears on the Active Taxpayers’ List.
(2) The person preparing electricity consumption bill shall charge advance tax under sub-section (1) in the manner electricity consumption charges are charged. Explanation.— For removal of doubt, it is clarified that for the purposes of this section electricity consumption bill referred to in sub-section (2) means electricity bill inclusive of sales tax and all incidental charges.
(3) Advance tax under this section shall not be collected from a person who produces a certificate from the Commissioner that his income during tax year is exempt from tax or that he has discharged advance tax liability under section 147 or whose entire income is subject to final tax regime or minimum tax regime under any provisions of this Ordinance other than this section .
(4) Under this section, —
(a) in the case of a taxpayer other than a company, tax collected upto bill amount of three hundred and sixty thousand Rupees per annum shall be treated as minimum tax on the income of such persons and no refund shall be allowed;
(b) in the case of a taxpayer other than a company, tax collected on monthly bill over and above thirty thousand rupees per month shall be adjustable; and (c) in the case of a company, tax collected shall be adjustable against tax liability.
Provided that the provisions of sub-section (1) shall not apply to a domestic consumer of electricity if his name appears on the Active Taxpayers’ List.
(2) The person preparing electricity consumption bill shall charge advance tax under sub-section (1) in the manner electricity consumption charges are charged. Explanation.— For removal of doubt, it is clarified that for the purposes of this section electricity consumption bill referred to in sub-section (2) means electricity bill inclusive of sales tax and all incidental charges.
(3) Advance tax under this section shall not be collected from a person who produces a certificate from the Commissioner that his income during tax year is exempt from tax or that he has discharged advance tax liability under section 147 or whose entire income is subject to final tax regime or minimum tax regime under any provisions of this Ordinance other than this section .
(4) Under this section, —
(a) in the case of a taxpayer other than a company, tax collected upto bill amount of three hundred and sixty thousand Rupees per annum shall be treated as minimum tax on the income of such persons and no refund shall be allowed;
(b) in the case of a taxpayer other than a company, tax collected on monthly bill over and above thirty thousand rupees per month shall be adjustable; and (c) in the case of a company, tax collected shall be adjustable against tax liability.
Amendment history (24)
- Sub-section (4) omitted by the Finance Act, 2017. The omitted sub-section (4) is
- Expression inserted through Finance Act, 2020 dated 30 June, 2020
- Inserted by the Finance Act, 2021.
- Full stop substituted and proviso added by the Finance Act, 2021.
- Sub-section (1A) added by the Finance Act, 2022.
- omitted through Tax Laws (Second Amendment) Ordinance, 2022 (VI of 2022) dated 22.08.2022.
- Added by Finance Act 2017.
- The words “for the tax year” substituted by the Finance Act, 2021.
- Sub-section (4) substituted by the Finance Act, 2009. The substituted sub-section (4)
- The word “thirty thousand rupees per month” substituted by the Finance Act 2017.
- Clause (d) re-numbered by the Finance Act 2017.
- Sections 235A and 235B inserted by the Finance Act, 2014.
- Section 235A omitted by the Finance Act, 2021. The omitted section
- Section 235B omitted through Finance Act, 2020 dated 30 June, 2020 the omitted section read as
- Inserted by the Finance Act, 2015.
- The word “and” omitted by the Finance Act, 2010.
- The word “mobile“ omitted by the Finance Act, 2002.
- Full stop substituted by the Finance Act, 2010.
- The word “and” omitted by Finance Act, 2015.
- Substituted by the Finance Act, 2015
- Added by the Finance Act, 2015.
- The word “mobile” omitted by the Finance Act, 2002.
- The word “called” substituted by the Finance Act, 2003.
- Added by the Finance Act, 2010.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 235A Omitted by the Finance Act, 2021Omitted
Omitted by the Finance Act, 2021
s. 235B Omitted through Finance Act, 2020Omitted
Omitted through Finance Act, 2020
s. 236 Telephone and internet users
Related tools:Telecom WHT rates
(1) Advance tax at the rates specified in Division V Part IV of the First Schedule shall be collected on the amount of – (a) telephone bill of a subscriber;
(b) prepaid cards for telephones ;
(c) sale of units through any electronic medium or whatever form ; and (d) internet bill of a subscriber; and (e) prepaid cards for internet.
(2) The person preparing the telephone or internet bill shall charge advance tax under sub-section (1) in the manner telephone or internet charges are charged.
(3) The person issuing or selling prepaid cards for telephones or internet shall collect advance tax under sub-section (1) from the purchasers at the time of issuance or sale of cards.
(3A) The person issuing or selling units through any electronic medium or whatever form shall collect advance tax under sub-section (1) from the purchaser at the time of issuance of sale of units.
(4) Advance tax under this section shall not be collected from Government, a foreign diplomat, a diplomatic mission in Pakistan, or a person who produces a certificate from the Commissioner that his income during the tax year is exempt from tax.
Amendment history (19)
- Inserted by the Finance Act, 2015.
- Inserted by the Finance Act, 2021.
- The word “and” omitted by the Finance Act, 2010.
- The word “mobile“ omitted by the Finance Act, 2002.
- Full stop substituted by the Finance Act, 2010.
- The word “and” omitted by Finance Act, 2015.
- Substituted by the Finance Act, 2015
- Added by the Finance Act, 2015.
- The word “mobile” omitted by the Finance Act, 2002.
- The word “called” substituted by the Finance Act, 2003.
- Added by the Finance Act, 2010.
- Added by the Finance Act, 2009.
- Inserted by the Finance Act, 2011.
- The words “confiscated or attached” substituted by the Finance Act, 2010.
- The words “Income Tax” substituted by the Finance Act, 2011.
- Explanation added through Finance Act, 2020 dated 30 June, 2020.
- Added by the Finance Act, 2016.
- Section 236B added by the Finance Act, 2010.
- Sub-section (4) omitted by the Finance Act, 2015. The omitted sub-section (4)
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 236A Advance tax at the time of sale by auction
Related tools:Auction WHT rates
(1) Any person making sale by public auction or auction by a tender , of any property or goods (including property or goods confiscated or attached) either belonging to or not belonging to the Government, local Government, any authority, a company, a foreign association declared to be a company under sub-clause (vi) of clause (b) of sub- section (2) of section 80, or a foreign contractor or a consultant or a consortium or Collector of Customs or Commissioner of Inland Revenue or any other authority, shall collect advance tax, computed on the basis of sale price of such property and at the rate specified in Division VIII of Part IV of the First Schedule, from the person to whom such property or goods are being sold. Explanation.--- For the removal of doubt it is clarified for the purpose of this section that--- (a) the expression sale by public auction or auction by a tender includes renewal of a license previously sold by public auction or auction by a tender; and (b) where payment is received in instalments, advance tax is to be collected with each instalment.
(2) The credit for the tax collected under sub-section (1) in that tax year shall, subject to the provisions of section 147, be given in computing the tax payable by the person purchasing such property in the relevant tax year or in the case of a taxpayer to whom section 98B or section 145 applies, the tax year, in which the said date as referred to in that section, falls or whichever is later. Explanation.- For the purposes of this section, sale of any property includes the awarding of any lease to any person, including a lease of the right to collect tolls, fees or other levies, by whatever name called.
(3) Notwithstanding the provisions of sub-section (2), tax collected on a lease of the right to collect tolls shall be final tax.
Amendment history (15)
- Added by the Finance Act, 2009.
- Inserted by the Finance Act, 2011.
- The words “confiscated or attached” substituted by the Finance Act, 2010.
- The words “Income Tax” substituted by the Finance Act, 2011.
- Explanation added through Finance Act, 2020 dated 30 June, 2020.
- Added by the Finance Act, 2016.
- Section 236B added by the Finance Act, 2010.
- Sub-section (4) omitted by the Finance Act, 2015. The omitted sub-section (4)
- Section 236B omitted by the Finance Act, 2021. The omitted section
- Inserted by the Finance Act, 2012.
- The words “Any person” substituted by the Finance Act, 2023.
- Inserted by the Finance Act, 2017.
- Added by the Finance Act, 2017.
- Inserted by the Finance Act, 2021.
- Expression inserted by the Finance Act, 2024.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 236B Omitted by the Finance Act, 2021Omitted
Omitted by the Finance Act, 2021
s. 236C Advance Tax on sale or transfer of immovable Property
(1) Subject to sub-section (2A), any person responsible for registering , recording or attesting transfer of any immovable property shall at the time of registering ,recording or attesting the transfer shall collect from the seller or transferor advance tax at the rate specified in Division X of Part IV of the First Schedule : Explanation,—For removal of doubt, it is clarified that the person responsible for registering, recording or attesting transfer includes person responsible for registering, recording or attesting transfer for local authority, housing authority, housing society, co-operative society , public and private real estate projects registered/governed under any law, joint ventures, private commercial concerns and registrar of properties.
Provided that this sub-section shall not apply to a seller, being the dependant of a Shaheed belonging to Pakistan Armed Forces or a person who dies while in the service of the Pakistan Armed Forces or the service of Federal or Provincial Government or a war wounded person while in service of Pakistan Armed Forces or Federal or Provincial Government or an ex-serviceman and serving personnel of armed forces or ex-employees or serving personnel of Federal and Provincial Government , in respect of first sale of immovable property acquired from or allotted by the Federal Government or Provincial Government or any authority duly certified by the official allotment authority, and the property acquired or allotted is in recognition of or for services rendered by the Shaheed or the person who dies in service or a war wounded person while in service of Pakistan Armed Forces or Federal or Provincial Government or an ex-serviceman and serving personnel of armed forces or ex-employees or serving personnel of Federal and Provincial Government :
Provided further that if the seller or transferor is a non-resident individual holding Pakistan Origin Card (POC) or National ID Card for Overseas Pakistanis (NICOP) or Computerized National ID Card (CNIC) who had acquired the said immovable property through a Foreign Currency Value Account (FCVA) or NRP Rupee Value Account (NRVA) maintained with authorized banks in Pakistan under the foreign exchange regulations issued by the State Bank of Pakistan, the tax collected under this section from such persons shall be final discharge of tax liability in lieu of capital gains taxable under section 37 earned by the seller or transferor from the property so disposed of.
(2) The Advance tax collected under sub-section (1) shall be adjustable :
Provided that where immovable property referred to in sub- section (1) is acquired and disposed of within the same tax year, the tax collected under this section shall be minimum tax.
(2A) Notwithstanding anything contained in any other law, for the time being in force, any person responsible for registering, recording or attesting transfer of any immovable property shall not register, record or attest transfer unless the seller or transferor has discharged its tax liability under section 7E and evidence to this effect has been furnished to the said person in the prescribed mode, form and manner.;
(4) Sub-section (1) shall not apply to:—
(a) a seller, if the seller is dependent of:
(i) a seller, if the seller is dependent of: a Shaheed belonging to Pakistan Armed Forces; or (ii) a person who dies while in the service of the Pakistan Armed Forces or the Federal and Provincial Governments; and (b) to the first sale of immovable property which has been acquired or allotted as an original allottee, duly certified by the official allotment authority.
Provided that this sub-section shall not apply to a seller, being the dependant of a Shaheed belonging to Pakistan Armed Forces or a person who dies while in the service of the Pakistan Armed Forces or the service of Federal or Provincial Government or a war wounded person while in service of Pakistan Armed Forces or Federal or Provincial Government or an ex-serviceman and serving personnel of armed forces or ex-employees or serving personnel of Federal and Provincial Government , in respect of first sale of immovable property acquired from or allotted by the Federal Government or Provincial Government or any authority duly certified by the official allotment authority, and the property acquired or allotted is in recognition of or for services rendered by the Shaheed or the person who dies in service or a war wounded person while in service of Pakistan Armed Forces or Federal or Provincial Government or an ex-serviceman and serving personnel of armed forces or ex-employees or serving personnel of Federal and Provincial Government :
Provided further that if the seller or transferor is a non-resident individual holding Pakistan Origin Card (POC) or National ID Card for Overseas Pakistanis (NICOP) or Computerized National ID Card (CNIC) who had acquired the said immovable property through a Foreign Currency Value Account (FCVA) or NRP Rupee Value Account (NRVA) maintained with authorized banks in Pakistan under the foreign exchange regulations issued by the State Bank of Pakistan, the tax collected under this section from such persons shall be final discharge of tax liability in lieu of capital gains taxable under section 37 earned by the seller or transferor from the property so disposed of.
(2) The Advance tax collected under sub-section (1) shall be adjustable :
Provided that where immovable property referred to in sub- section (1) is acquired and disposed of within the same tax year, the tax collected under this section shall be minimum tax.
(2A) Notwithstanding anything contained in any other law, for the time being in force, any person responsible for registering, recording or attesting transfer of any immovable property shall not register, record or attest transfer unless the seller or transferor has discharged its tax liability under section 7E and evidence to this effect has been furnished to the said person in the prescribed mode, form and manner.;
(4) Sub-section (1) shall not apply to:—
(a) a seller, if the seller is dependent of:
(i) a seller, if the seller is dependent of: a Shaheed belonging to Pakistan Armed Forces; or (ii) a person who dies while in the service of the Pakistan Armed Forces or the Federal and Provincial Governments; and (b) to the first sale of immovable property which has been acquired or allotted as an original allottee, duly certified by the official allotment authority.
Amendment history (15)
- Section 236B omitted by the Finance Act, 2021. The omitted section
- Inserted by the Finance Act, 2012.
- The words “Any person” substituted by the Finance Act, 2023.
- Inserted by the Finance Act, 2017.
- Added by the Finance Act, 2017.
- Inserted by the Finance Act, 2021.
- Expression inserted by the Finance Act, 2024.
- Full stop substituted and proviso added by the Finance Act, 2021. Earlier this substitution and addition
- Full stop substituted by the Finance Act, 2017
- inserted by the Finance Act, 2017
- Sub-section (2A) inserted by the Finance Act, 2023.
- Sub-section (3) omitted by the Finance Act 2015. The omitted sub-section
- Added by the Finance Act, 2016.
- Sub-section (3) omitted by the Finance Act, 2022. The omitted sub-section
- Section 236CA omitted by the Finance Act, 2026. The omitted section
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 236CA Omitted by the Finance Act, 2026Omitted
Omitted by the Finance Act, 2026
s. 236CB Advance tax on functions and gatherings
(1) Every prescribed person shall collect advance tax at the rate specified in Division Xl of Part IV of the function in a marriage hall, marquee, hotel, restaurant, commercial lawn, club, a
(a)
(b) community place or any other place used for such purpose, subject to such conditions or limitations as may be prescribed.
(2) Where the food, service or any other facility is provided by any other person, the prescribed person shall also collect advance tax on the payment for such food, service or facility at the rate specified in Division Xl of Part IV of the First Schedule from the person arranging or holding the function.
(3) The advance tax collected under sub-section (1) and subsection (2) shall be adjustable.
(4) ln this section –
(a) "function" includes any wedding related event, a seminar, a workshop, a session, an exhibition, a concert, a show, a party or any other gathering held for such purpose; and (b) "prescribed person" includes the owner, a lease-holder, an operator or a manager of a marriage hall, marquee, hotel, restaurant, commercial lawn, club, a community place or any other place used for such purpose.
(a)
(b) community place or any other place used for such purpose, subject to such conditions or limitations as may be prescribed.
(2) Where the food, service or any other facility is provided by any other person, the prescribed person shall also collect advance tax on the payment for such food, service or facility at the rate specified in Division Xl of Part IV of the First Schedule from the person arranging or holding the function.
(3) The advance tax collected under sub-section (1) and subsection (2) shall be adjustable.
(4) ln this section –
(a) "function" includes any wedding related event, a seminar, a workshop, a session, an exhibition, a concert, a show, a party or any other gathering held for such purpose; and (b) "prescribed person" includes the owner, a lease-holder, an operator or a manager of a marriage hall, marquee, hotel, restaurant, commercial lawn, club, a community place or any other place used for such purpose.
Amendment history (3)
- Section 236CA omitted by the Finance Act, 2026. The omitted section
- Section 236D and 236F omitted through Finance Act, 2020 dated 30 June, 2020 the omitted sections
- Added by the Finance Act, 2013.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 236D Omitted by the Finance Act, 2020Omitted
Omitted by the Finance Act, 2020
s. 236E Omitted by the Finance Act, 2016Omitted
Omitted by the Finance Act, 2016
s. 236F Omitted through Finance Act, 2020Omitted
Omitted through Finance Act, 2020
s. 236G Advance tax on sales to distributors, dealers and wholesalers
Related tools:Distribution WHT rates
(1) Every manufacturer or commercial importer at the time of sale to distributors, dealers and wholesalers, shall collect advance tax at the rate specified in Division XIV of Part IV of the First Schedule, from the aforesaid person to whom such sales have been made. (2) Credit for tax collected under sub-section (1) shall be allowed in computing the tax due by the distributor, dealer or wholesaler on the taxable income for the tax year in which the tax was collected.
Amendment history (6)
- Section 236D and 236F omitted through Finance Act, 2020 dated 30 June, 2020 the omitted sections
- Added by the Finance Act, 2013.
- Inserted by the Finance Act, 2015.
- Inserted by the Finance Act, 2018
- Section 236HA omitted by the Finance Act, 2021. The omitted section
- Section 236I omitted by the Finance Act, 2022. The omitted section
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 236H Advance tax on sales to retailers
Related tools:Retail WHT rates
(1) Every manufacturer, distributor, dealer, wholesaler or commercial importer at the time of sale to retailers , and every distributor or dealer to another wholesaler in respect of the said sectors , shall collect advance tax at the rate specified in Division XV of Part IV of the First Schedule, from the aforesaid person to whom such sales have been made. (2) Credit for the tax collected under sub-section (1) shall be allowed in computing the tax due by the retailer on the taxable income for the tax year in which the tax was collected.
Amendment history (11)
- Added by the Finance Act, 2013.
- Inserted by the Finance Act, 2015.
- Inserted by the Finance Act, 2018
- Section 236HA omitted by the Finance Act, 2021. The omitted section
- Section 236I omitted by the Finance Act, 2022. The omitted section
- The section 236J omitted through Finance Act, 2020 dated 30 June, 2020 the omitted section read
- Sections 236K, 236L, 236M and 236N inserted by the Finance Act, 2014.
- Inserted by the Finance Act, 2017.
- Added by the Finance Act, 2017
- Inserted by the Finance Act, 2021.
- Full stop substituted and proviso added by the Finance Act, 2021. Earlier this substitution and
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 236HA Omitted by the Finance Act, 2021Omitted
Omitted by the Finance Act, 2021
s. 236I Omitted by the Finance Act, 2022Omitted
Omitted by the Finance Act, 2022
s. 236J Omitted through Finance Act, 2020Omitted
Omitted through Finance Act, 2020
s. 236K Advance tax on purchase or transfer of immovable property
(1) Any person responsible for registering ,recording or attesting transfer of any immovable property shall at the time of registering ,recording or attesting the transfer shall collect from the purchaser or transferee advance tax at the rate specified in Division XVIII of Part IV of the First Schedule. Explanation,—For removal of doubt, it is clarified that the person responsible for registering, recording or attesting transfer includes person responsible for registering, recording or attesting transfer for local authority, housing authority, housing society, co-operative society , public and private real estate projects registered/governed under any law, joint ventures, private commercial concerns and registrar of properties.
(2) The advance tax collected under sub-section (1) shall be adjustable :
Provided that if the buyer or transferee is a non-resident individual holding a Pakistan Origin Card (POC) or National ID Card for Overseas Pakistanis (NICOP) or Computerized National ID Card (CNIC) who has acquired the said immovable property through a Foreign Currency Value Account (FCVA) or NRP Rupee Value Account (NRVA) maintained with authorized banks in Pakistan under the foreign exchange regulations issued by the State Bank of Pakistan, the tax collected under this section from such persons shall be final discharge of tax liability for such buyer or transferee.
(3) Any person responsible for collecting payments in installments for purchase or allotment of any immovable property where the transfer is to be effected after making payment of all installments, shall at the time of collecting installments collect from the allotee or transferee advance tax at the rate specified in Division XVIII of Part IV of the First Schedule :
Provided that where tax has been collected along with installments, no further tax under this section shall be collected at the time of transfer of property in the name of buyer from whom tax has been collected in installments which is equal to the amount payable in this section.
(4) Nothing contained in this section shall apply to a scheme introduced by the Federal Government, or Provincial Government or an Authority established under a Federal or Provincial law for expatriate Pakistanis :
Provided that the mode of payment by the expatriate Pakistanis in the said scheme or schemes shall be in the foreign exchange remitted from outside Pakistan through normal banking channels.
(2) The advance tax collected under sub-section (1) shall be adjustable :
Provided that if the buyer or transferee is a non-resident individual holding a Pakistan Origin Card (POC) or National ID Card for Overseas Pakistanis (NICOP) or Computerized National ID Card (CNIC) who has acquired the said immovable property through a Foreign Currency Value Account (FCVA) or NRP Rupee Value Account (NRVA) maintained with authorized banks in Pakistan under the foreign exchange regulations issued by the State Bank of Pakistan, the tax collected under this section from such persons shall be final discharge of tax liability for such buyer or transferee.
(3) Any person responsible for collecting payments in installments for purchase or allotment of any immovable property where the transfer is to be effected after making payment of all installments, shall at the time of collecting installments collect from the allotee or transferee advance tax at the rate specified in Division XVIII of Part IV of the First Schedule :
Provided that where tax has been collected along with installments, no further tax under this section shall be collected at the time of transfer of property in the name of buyer from whom tax has been collected in installments which is equal to the amount payable in this section.
(4) Nothing contained in this section shall apply to a scheme introduced by the Federal Government, or Provincial Government or an Authority established under a Federal or Provincial law for expatriate Pakistanis :
Provided that the mode of payment by the expatriate Pakistanis in the said scheme or schemes shall be in the foreign exchange remitted from outside Pakistan through normal banking channels.
Amendment history (16)
- The section 236J omitted through Finance Act, 2020 dated 30 June, 2020 the omitted section read
- Sections 236K, 236L, 236M and 236N inserted by the Finance Act, 2014.
- Inserted by the Finance Act, 2017.
- Added by the Finance Act, 2017
- Inserted by the Finance Act, 2021.
- Full stop substituted and proviso added by the Finance Act, 2021. Earlier this substitution and
- Sub-section (3) omitted by the Finance Act, 2015. The omitted sub-section (3)
- Sub-section (3) inserted by the Finance Act, 2018.
- Full stop substituted and proviso added by the Finance Act, 2021.
- Full stop substituted by the finance Act, 2015.
- Added by the Finance Act, 2015.
- Section 236L omitted by the Finance Act, 2021. The omitted section
- Section 236M omitted by the Finance Act, 2018. The omitted section 236M
- Section 236N omitted by the Finance Act, 2018. The omitted section 236N
- Section “236O” inserted by the Finance Act, 2015.
- The words “in the case of withdrawals made by” substituted by the Finance Act, 2016.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 236L Omitted by the Finance Act, 2021Omitted
Omitted by the Finance Act, 2021
s. 236M Omitted by the Finance Act, 2018Omitted
Omitted by the Finance Act, 2018
s. 236N Omitted by the Finance Act, 2018Omitted
Omitted by the Finance Act, 2018
s. 236O Advance tax under this chapter
(a) the Federal Government or a Provincial Government;
(b) a foreign diplomat or a diplomatic mission in Pakistan; or (c) a person who produces a certificate from the Commissioner that his income during the tax year is exempt.
(b) a foreign diplomat or a diplomatic mission in Pakistan; or (c) a person who produces a certificate from the Commissioner that his income during the tax year is exempt.
Amendment history (22)
- Section 236M omitted by the Finance Act, 2018. The omitted section 236M
- Section 236N omitted by the Finance Act, 2018. The omitted section 236N
- Section “236O” inserted by the Finance Act, 2015.
- The words “in the case of withdrawals made by” substituted by the Finance Act, 2016.
- Section “236P” inserted by the Finance Act, 2015.
- Section 236P omitted by the Finance Act, 2021. The omitted section
- Section “236Q” inserted by the Finance Act, 2015.
- Section “236Q” omitted by the Finance Act, 2022. The omitted section
- Section “236R” omitted through Finance Act, 2020 dated 30 June, 2020 the omitted section read as
- Section “236S” inserted by the Finance Act, 2015.
- Section 236S omitted by the Finance Act, 2021. The omitted section
- Section “236T” inserted by the Finance Act, 2015.
- Section “236T” omitted by the Finance Act, 2016. Omitted section
- Section 236U omitted through Finance Act, 2020 dated 30 June, 2020 the omitted section read as
- Inserted by the Finance Act, 2016.
- Section 236V omitted by the Finance Act, 2021. The omitted section
- Section 236W omitted through Finance Act, 2019, omitted section read as follow
- Section 236X omitted through Finance Act, 2020 dated 30 June, 2020 omitted section read as
- Inserted by the Finance Act, 2018.
- Section 236Y omitted by the Finance Act, 2021. The omitted section
- Section 236Y inserted by the Finance Act, 2022.
- Section 236Z inserted by the Finance Act, 2023.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 236P Omitted by the Finance Act, 2021Omitted
Omitted by the Finance Act, 2021
s. 236Q Omitted by the Finance Act, 2022Omitted
Omitted by the Finance Act, 2022
s. 236R Omitted through Finance Act, 2020Omitted
Omitted through Finance Act, 2020
s. 236S Omitted by the Finance Act, 2021Omitted
Omitted by the Finance Act, 2021
s. 236T Omitted by the Finance Act, 2016Omitted
Omitted by the Finance Act, 2016
s. 236U Omitted through Finance Act, 2020 0Omitted
Omitted through Finance Act, 2020 0
s. 236V Omitted by the Finance Act, 2021Omitted
Omitted by the Finance Act, 2021
s. 236W Omitted through Finance Act, 2019Omitted
Omitted through Finance Act, 2019
s. 236X omitted through Finance Act, 2020Omitted
omitted through Finance Act, 2020
s. 236Y Advance tax on persons remitting amounts abroad through credit or debit or prepaid cards
(1) Every banking company shall collect advance tax, at the time of transfer of any sum remitted outside Pakistan, on behalf of any person who has completed a credit card or debit card or prepaid card transaction with a person outside Pakistan at the rate specified in Division XXVII of Part IV of the First Schedule.
(2) The advance tax collected under this section shall be adjustable.
(2) The advance tax collected under this section shall be adjustable.
Amendment history (6)
- Section 236W omitted through Finance Act, 2019, omitted section read as follow
- Section 236X omitted through Finance Act, 2020 dated 30 June, 2020 omitted section read as
- Inserted by the Finance Act, 2018.
- Section 236Y omitted by the Finance Act, 2021. The omitted section
- Section 236Y inserted by the Finance Act, 2022.
- Section 236Z inserted by the Finance Act, 2023.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 236Z Bonus shares issued by companies
(1) Notwithstanding anything contained in any law for the time being in force, every company, issuing bonus shares to the shareholders of the company, shall withhold ten percent of the bonus shares to be issued.
(2) Bonus shares withheld under sub-section (1) shall only be issued to a shareholder, if the company collects from the shareholder, tax equal to ten percent of the value of the bonus shares issued to the shareholder including bonus share withheld, determined on the basis of day-end price on the first day of closure of books in the case of listed company and the value as prescribed in case of other companies.
(3) Tax under sub-section (2), shall be deposited by the company, within fifteen days of closure of books, whether or not tax has been collected by the company under subsection (2).
(4) A company liable to deposit tax under this section shall be entitled to collect and recover the tax deposited from the shareholder, on whose behalf the tax has been deposited, before the issuance of bonus shares.
(5) If a shareholder neither makes payment of tax to the company nor collects its bonus shares, within fifteen days of the date of issuance of bonus shares, the company may proceed to dispose of its bonus shares to the extent it has paid tax on its behalf under this section.
(6) Issuance of bonus shares shall be deemed to be the income of the shareholder and the tax collected by a company under this section or proceeds of the bonus shares disposed of and paid under this section shall be treated to have been paid on behalf of the shareholder.
(7) Tax paid under this section shall be final tax on the income of the shareholder of the company arising from issuing of bonus shares. MISCELLANEOUS
(2) Bonus shares withheld under sub-section (1) shall only be issued to a shareholder, if the company collects from the shareholder, tax equal to ten percent of the value of the bonus shares issued to the shareholder including bonus share withheld, determined on the basis of day-end price on the first day of closure of books in the case of listed company and the value as prescribed in case of other companies.
(3) Tax under sub-section (2), shall be deposited by the company, within fifteen days of closure of books, whether or not tax has been collected by the company under subsection (2).
(4) A company liable to deposit tax under this section shall be entitled to collect and recover the tax deposited from the shareholder, on whose behalf the tax has been deposited, before the issuance of bonus shares.
(5) If a shareholder neither makes payment of tax to the company nor collects its bonus shares, within fifteen days of the date of issuance of bonus shares, the company may proceed to dispose of its bonus shares to the extent it has paid tax on its behalf under this section.
(6) Issuance of bonus shares shall be deemed to be the income of the shareholder and the tax collected by a company under this section or proceeds of the bonus shares disposed of and paid under this section shall be treated to have been paid on behalf of the shareholder.
(7) Tax paid under this section shall be final tax on the income of the shareholder of the company arising from issuing of bonus shares. MISCELLANEOUS
Amendment history (10)
- Section 236W omitted through Finance Act, 2019, omitted section read as follow
- Section 236X omitted through Finance Act, 2020 dated 30 June, 2020 omitted section read as
- Inserted by the Finance Act, 2018.
- Section 236Y omitted by the Finance Act, 2021. The omitted section
- Section 236Y inserted by the Finance Act, 2022.
- Section 236Z inserted by the Finance Act, 2023.
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- The word “of” omitted by the Finance Act, 2005.
- Inserted by the Finance Act, 2003.
- The words “additional tax ” substituted by the Finance Act, 2010.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
Miscellaneous
s. 237 Power to make rules
(1) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this Ordinance.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:–
(a) the manner in, and procedure by, which the income, profits and gains chargeable to tax and the tax payable thereon under this Ordinance shall be determined in the case of –
(i) income derived partly from agriculture and partly from other business; or (ii) non-resident persons;
(ab) ascertainment or determination of any income or class of income to be included in the total income of a taxpayer and any deduction from such income;
(b) fees and other charges to be paid in respect of any matter referred to in this Ordinance;
(c) anything which is to be or may be prescribed under this Ordinance;
(d) the procedure for furnishing returns and other documents as required under this Ordinance, including on computer media or through electronic medium or for issuance of orders or notices, or levy of default surcharge or penalty through electronic medium;
(da) the procedure for approval of a non-profit organization;
(e) contain provisions of a saving or transitional nature consequent upon the making of this Ordinance; and (f) penalties for the contravention of the rules made under this Ordinance.
(3) The power to make rules conferred by this section shall be, except on the first occasion of the exercise thereof, subject to the condition of previous publication.
(4) Where rules made under this section –
(a) adversely affect a person;
(b) are of a transitional nature; and (c) are made within twelve months after commencement of this Ordinance, these may provide that they shall take effect from the date on which this Ordinance comes into force or a later date.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:–
(a) the manner in, and procedure by, which the income, profits and gains chargeable to tax and the tax payable thereon under this Ordinance shall be determined in the case of –
(i) income derived partly from agriculture and partly from other business; or (ii) non-resident persons;
(ab) ascertainment or determination of any income or class of income to be included in the total income of a taxpayer and any deduction from such income;
(b) fees and other charges to be paid in respect of any matter referred to in this Ordinance;
(c) anything which is to be or may be prescribed under this Ordinance;
(d) the procedure for furnishing returns and other documents as required under this Ordinance, including on computer media or through electronic medium or for issuance of orders or notices, or levy of default surcharge or penalty through electronic medium;
(da) the procedure for approval of a non-profit organization;
(e) contain provisions of a saving or transitional nature consequent upon the making of this Ordinance; and (f) penalties for the contravention of the rules made under this Ordinance.
(3) The power to make rules conferred by this section shall be, except on the first occasion of the exercise thereof, subject to the condition of previous publication.
(4) Where rules made under this section –
(a) adversely affect a person;
(b) are of a transitional nature; and (c) are made within twelve months after commencement of this Ordinance, these may provide that they shall take effect from the date on which this Ordinance comes into force or a later date.
Amendment history (7)
- The words “Central Board of Revenue” substituted by the Finance Act, 2007.
- The word “of” omitted by the Finance Act, 2005.
- Inserted by the Finance Act, 2003.
- The words “additional tax ” substituted by the Finance Act, 2010.
- Added by the Finance Act, 2008.
- Sub-section (3) added by the Finance Act, 2022.
- Section 237B added by the Finance Act, 2022.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 237A Electronic record
(1) The Board may require any person to use its information system and electronic resource, in order to replace or supplement, its manual business processes by automated business processes and substitute its paper based records by electronic record.
(2) Electronic record generated, maintained, issued, served, received, filed or requisitioned through the electronic resource of the Board shall by itself sufficiently and conclusively prove its validity, authenticity and integrity and shall be treated to have been done so according to the provisions of this Ordinance.
(3) In case of an integrated enterprise, no sale shall be made or service shall be rendered, as the case may be, without generating fiscal invoices as prescribed.
(2) Electronic record generated, maintained, issued, served, received, filed or requisitioned through the electronic resource of the Board shall by itself sufficiently and conclusively prove its validity, authenticity and integrity and shall be treated to have been done so according to the provisions of this Ordinance.
(3) In case of an integrated enterprise, no sale shall be made or service shall be rendered, as the case may be, without generating fiscal invoices as prescribed.
Amendment history (3)
- Added by the Finance Act, 2008.
- Sub-section (3) added by the Finance Act, 2022.
- Section 237B added by the Finance Act, 2022.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 237B Prize schemes to promote tax culture
(1) The Board may prescribe prize schemes to encourage the general public to make purchases, or avail services only from integrated enterprises issuing tax invoices.
(2) The Board may prescribe procedure for mystery shopping in respect of invoices issued by integrated enterprises randomly and in case of any discrepancy, all the relevant provisions of the Ordinance shall apply accordingly.
(2) The Board may prescribe procedure for mystery shopping in respect of invoices issued by integrated enterprises randomly and in case of any discrepancy, all the relevant provisions of the Ordinance shall apply accordingly.
Amendment history (10)
- Added by the Finance Act, 2008.
- Sub-section (3) added by the Finance Act, 2022.
- Section 237B added by the Finance Act, 2022.
- Section 237C inserted by the Finance Act, 2026.
- Sub-section (1) substituted by the Finance Act, 2002. The substituted sub-section (1)
- Sub-section (2) substituted by the Finance Act, 2002. The substituted sub-section (2)
- Inserted by the Finance Act, 2003. Earlier this was inserted by S.R.O. 633(I)/2002, dated 14.09.2002
- Sub-section (3) substituted by the Finance Act, 2002. The substituted sub-section (3)
- The word “sub-section” substituted by the Finance Act, 2005.
- The words “additional tax” substituted by the Finance Act, 2010. The substituted provision has been
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 237C Uniform
Uniform.— The Board may by notification in the official Gazette, prescribe rules for wearing of uniform by officers and staff of Inland Revenue Service of Pakistan.
Amendment history (7)
- Section 237C inserted by the Finance Act, 2026.
- Sub-section (1) substituted by the Finance Act, 2002. The substituted sub-section (1)
- Sub-section (2) substituted by the Finance Act, 2002. The substituted sub-section (2)
- Inserted by the Finance Act, 2003. Earlier this was inserted by S.R.O. 633(I)/2002, dated 14.09.2002
- Sub-section (3) substituted by the Finance Act, 2002. The substituted sub-section (3)
- The word “sub-section” substituted by the Finance Act, 2005.
- The words “additional tax” substituted by the Finance Act, 2010. The substituted provision has been
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 238 Repeal
Repeal. — The Income Tax Ordinance, 1979 (XXXI of 1979), shall stand repealed on the date this Ordinance comes into force in pursuance of sub-section (3) of section 1.
Amendment history (7)
- Section 237C inserted by the Finance Act, 2026.
- Sub-section (1) substituted by the Finance Act, 2002. The substituted sub-section (1)
- Sub-section (2) substituted by the Finance Act, 2002. The substituted sub-section (2)
- Inserted by the Finance Act, 2003. Earlier this was inserted by S.R.O. 633(I)/2002, dated 14.09.2002
- Sub-section (3) substituted by the Finance Act, 2002. The substituted sub-section (3)
- The word “sub-section” substituted by the Finance Act, 2005.
- The words “additional tax” substituted by the Finance Act, 2010. The substituted provision has been
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 239 Savings
(1) Subject to sub-section (2), in making any assessment in respect of any income year ending on or before the 30 day of June, 2002, the provisions of the repealed Ordinance in so far as these relate to computation of total income and tax payable thereon shall apply as if this Ordinance had not come into force.
(2) The assessment, referred to in sub-section (1), shall be made by an income tax authority which is competent under this Ordinance to make an assessment in respect of a tax year ending on any date after the 30 day of June, 2002, and in accordance with the procedure specified in section 59 or 59A or 61 or 62 or 63, as the case may be, of the repealed Ordinance.
(3) The provisions of sub-sections
(1) and (2) shall apply, in like manner, to the imposition or charge of any penalty, default surcharge or any other amount, under the repealed Ordinance, as these apply to the assessment, so however that procedure for such imposition or charge shall be in accordance with the corresponding provisions of this Ordinance.
(4) Any proceeding under the repealed Ordinance pending on the commencement of this Ordinance before any income tax authority, the Appellate Tribunal or any Court by way of appeal, reference, revision or prosecution shall be continued and disposed of as if this Ordinance has not come into force.
(5) Where the period prescribed for any application, appeal, reference or revision under the repealed Ordinance had expired on or before the commencement of this Ordinance, nothing in this Ordinance shall be construed as enabling such application, appeal, reference or revision to be made under this Ordinance by reason only of the fact that a longer period is specified or provision for an extension of time in suitable cases by the appropriate authority.
(6) Any proceeding for prosecution in respect of an assessment for an income year ending on or before the 30 day of June 2002 shall be taken and continued as if this Ordinance has not come into force.
(7) Any income tax, super tax, surcharge, penalty, default surcharge , or other amount payable under the repealed Ordinance may be recovered under this Ordinance, but without prejudice to any action already taken for the recovery of the amount under the repealed Ordinance.
(8) Any election or declaration made or option exercised by any person under any provision of the repealed Ordinance and in force immediately before the commencement of this Ordinance shall be treated as an election or declaration made, or option exercised under the corresponding provisions, if any, of this Ordinance.
(9) Anything done or action taken under the repealed Ordinance in so far as it is not inconsistent with the provisions of this Ordinance shall, without prejudice to anything already done or any action already taken, be treated as having been done or taken under this Ordinance.
(10) Any agreement entered into, appointment made, approval given, recognition granted, direction, instruction, notification, notice, order or rule issued or made under any provision of the repealed Ordinance and in force or valid at the commencement of this Ordinance shall, so far as it is not inconsistent with the corresponding provision of this Ordinance or any agreement, appointment entered into, approval given, recognition granted, direction, instruction, notification, notice, order or rule issued or made under this Ordinance, be treated as entered into, made, given, granted or issued, as the case may be, under that corresponding provision and shall unless revoked, cancelled or repealed by, or under, this Ordinance, continue in force accordingly.
(11) Any appointment, act of authority or other thing made or done by any authority or person and subsisting or in force at the commencement of this Ordinance which would have been made or done under any substantially corresponding provision of this Ordinance by any authority or person other than the one specified in the repealed Ordinance, or in any manner other than as specified in the repealed Ordinance shall continue in force and have effect as if it has been made or done under the corresponding provision of this Ordinance by the authority or person, or in the manner specified in the corresponding provision as if such provision had been in force when it was made or done.
(12) Any notification issued under section 50 of the repealed Ordinance and in force on the commencement of this Ordinance shall continue to remain in force, unless amended, modified , cancelled or repealed by, or under, this Ordinance.
(13) The authority which issued any notification, notice, direction or instruction, or made any rule, agreement or appointment, or granted any approval or recognition, referred to in sub-sections
(10) and (12), shall have the power to amend, modify , cancel or repeal any such notification, notice, direction, instruction, rule, agreement, appointment, approval or recognition.
(14) Any yield from National Saving Schemes of Directorate of National Savings where investment was made on or before 30 June, 2001 and any income derived from Mahana Amdani Account where monthly instalment does not exceed one thousand rupees shall continue to remain exempt and any person paying such yield or income shall not deduct tax under section 151 therefrom and the recipient of such yield or income shall not be required to produce an exemption certificate under section 159 in support of the said exemption.
(15) Section 107AA of the repealed Ordinance shall continue to apply until the 30 day of June, 2002.
(16) The Income Tax Rules made under the repealed Ordinance, on the valuation of perquisites shall continue to apply in respect of any income year ending on or before the 30th day of June 2002.
(17) Item 8(5)
(h) of the Third Schedule to the repealed Ordinance shall continue to apply to assets covered by the item. (18)The period of limitation provided in clause (d) of subsection (2) of section 131 and sub-section (1) of section 133 shall continue to apply where any decision of the Commissioner (Appeals) or the Appellate Tribunal is received prior to the date of commencement of the Tax Laws (Amendment) Act, 2024.
(2) The assessment, referred to in sub-section (1), shall be made by an income tax authority which is competent under this Ordinance to make an assessment in respect of a tax year ending on any date after the 30 day of June, 2002, and in accordance with the procedure specified in section 59 or 59A or 61 or 62 or 63, as the case may be, of the repealed Ordinance.
(3) The provisions of sub-sections
(1) and (2) shall apply, in like manner, to the imposition or charge of any penalty, default surcharge or any other amount, under the repealed Ordinance, as these apply to the assessment, so however that procedure for such imposition or charge shall be in accordance with the corresponding provisions of this Ordinance.
(4) Any proceeding under the repealed Ordinance pending on the commencement of this Ordinance before any income tax authority, the Appellate Tribunal or any Court by way of appeal, reference, revision or prosecution shall be continued and disposed of as if this Ordinance has not come into force.
(5) Where the period prescribed for any application, appeal, reference or revision under the repealed Ordinance had expired on or before the commencement of this Ordinance, nothing in this Ordinance shall be construed as enabling such application, appeal, reference or revision to be made under this Ordinance by reason only of the fact that a longer period is specified or provision for an extension of time in suitable cases by the appropriate authority.
(6) Any proceeding for prosecution in respect of an assessment for an income year ending on or before the 30 day of June 2002 shall be taken and continued as if this Ordinance has not come into force.
(7) Any income tax, super tax, surcharge, penalty, default surcharge , or other amount payable under the repealed Ordinance may be recovered under this Ordinance, but without prejudice to any action already taken for the recovery of the amount under the repealed Ordinance.
(8) Any election or declaration made or option exercised by any person under any provision of the repealed Ordinance and in force immediately before the commencement of this Ordinance shall be treated as an election or declaration made, or option exercised under the corresponding provisions, if any, of this Ordinance.
(9) Anything done or action taken under the repealed Ordinance in so far as it is not inconsistent with the provisions of this Ordinance shall, without prejudice to anything already done or any action already taken, be treated as having been done or taken under this Ordinance.
(10) Any agreement entered into, appointment made, approval given, recognition granted, direction, instruction, notification, notice, order or rule issued or made under any provision of the repealed Ordinance and in force or valid at the commencement of this Ordinance shall, so far as it is not inconsistent with the corresponding provision of this Ordinance or any agreement, appointment entered into, approval given, recognition granted, direction, instruction, notification, notice, order or rule issued or made under this Ordinance, be treated as entered into, made, given, granted or issued, as the case may be, under that corresponding provision and shall unless revoked, cancelled or repealed by, or under, this Ordinance, continue in force accordingly.
(11) Any appointment, act of authority or other thing made or done by any authority or person and subsisting or in force at the commencement of this Ordinance which would have been made or done under any substantially corresponding provision of this Ordinance by any authority or person other than the one specified in the repealed Ordinance, or in any manner other than as specified in the repealed Ordinance shall continue in force and have effect as if it has been made or done under the corresponding provision of this Ordinance by the authority or person, or in the manner specified in the corresponding provision as if such provision had been in force when it was made or done.
(12) Any notification issued under section 50 of the repealed Ordinance and in force on the commencement of this Ordinance shall continue to remain in force, unless amended, modified , cancelled or repealed by, or under, this Ordinance.
(13) The authority which issued any notification, notice, direction or instruction, or made any rule, agreement or appointment, or granted any approval or recognition, referred to in sub-sections
(10) and (12), shall have the power to amend, modify , cancel or repeal any such notification, notice, direction, instruction, rule, agreement, appointment, approval or recognition.
(14) Any yield from National Saving Schemes of Directorate of National Savings where investment was made on or before 30 June, 2001 and any income derived from Mahana Amdani Account where monthly instalment does not exceed one thousand rupees shall continue to remain exempt and any person paying such yield or income shall not deduct tax under section 151 therefrom and the recipient of such yield or income shall not be required to produce an exemption certificate under section 159 in support of the said exemption.
(15) Section 107AA of the repealed Ordinance shall continue to apply until the 30 day of June, 2002.
(16) The Income Tax Rules made under the repealed Ordinance, on the valuation of perquisites shall continue to apply in respect of any income year ending on or before the 30th day of June 2002.
(17) Item 8(5)
(h) of the Third Schedule to the repealed Ordinance shall continue to apply to assets covered by the item. (18)The period of limitation provided in clause (d) of subsection (2) of section 131 and sub-section (1) of section 133 shall continue to apply where any decision of the Commissioner (Appeals) or the Appellate Tribunal is received prior to the date of commencement of the Tax Laws (Amendment) Act, 2024.
Amendment history (21)
- Section 237C inserted by the Finance Act, 2026.
- Sub-section (1) substituted by the Finance Act, 2002. The substituted sub-section (1)
- Sub-section (2) substituted by the Finance Act, 2002. The substituted sub-section (2)
- Inserted by the Finance Act, 2003. Earlier this was inserted by S.R.O. 633(I)/2002, dated 14.09.2002
- Sub-section (3) substituted by the Finance Act, 2002. The substituted sub-section (3)
- The word “sub-section” substituted by the Finance Act, 2005.
- The words “additional tax” substituted by the Finance Act, 2010. The substituted provision has been
- The words “the imposition of penalty or” omitted by the Finance Act, 2002.
- The word “provision” substituted by the Finance Act, 2005.
- Sub-section (12) substituted by the Finance Act, 2002. The substituted sub-section (12) read as
- The word “revoked” substituted by the Finance Act, 2005.
- Sub-section (13) substituted by the Finance Ordinance, 2002. The substituted sub-section (13) read
- The word “revoke” substituted by the Finance Act, 2005.
- Sub-section (14) substituted by the Finance Act, 2003. The substituted sub-section (14) read as
- The word “exceeds” substituted by the Finance Act, 2005.
- The word “until” substituted by the Finance Act, 2002.
- Sub-section (18) added by the Finance Act, 2024.
- Omitted by the Finance Act, 2003. Earlier this was omitted by S.R.O. 633(I)/2002, dated 14.09.2002
- Earlier this was substituted by Finance Act, 2002. The substituted sub-section (18) read as
- Inserted by the Finance Act, 2007.
- Substituted by the Finance Act, 2010. The substituted provision has been made effective from
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 239A Transition to Federal Board of Revenue
Transition to Federal Board of Revenue.—Any reference to the Central Board of Revenue, wherever occurring, in this Ordinance and the rules made thereunder and Notifications, Orders, or any other instrument issued thereunder shall be construed as a reference to the Federal Board of Revenue on the commencement of the Federal Board of Revenue Act, 2007.
Amendment history (6)
- The word “until” substituted by the Finance Act, 2002.
- Sub-section (18) added by the Finance Act, 2024.
- Omitted by the Finance Act, 2003. Earlier this was omitted by S.R.O. 633(I)/2002, dated 14.09.2002
- Earlier this was substituted by Finance Act, 2002. The substituted sub-section (18) read as
- Inserted by the Finance Act, 2007.
- Substituted by the Finance Act, 2010. The substituted provision has been made effective from
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 239B Reference to authorities
(1) Any reference to the Regional Commissioner of Income Tax, Commissioner of Income Tax, Commissioner of Income Tax (Appeals) and Taxation Officer, wherever occurring, in this Ordinance and the rules made thereunder and in any other law in force at the time of promulgation of this Ordinance and notifications, orders, circulars or clarifications or any instrument issued thereunder shall be construed as reference to the Chief Commissioner Inland Revenue, Commissioner Inland Revenue, Commissioner Inland Revenue (Appeals) and officer of Inland Revenue, respectively.
Amendment history (14)
- The word “until” substituted by the Finance Act, 2002.
- Sub-section (18) added by the Finance Act, 2024.
- Omitted by the Finance Act, 2003. Earlier this was omitted by S.R.O. 633(I)/2002, dated 14.09.2002
- Earlier this was substituted by Finance Act, 2002. The substituted sub-section (18) read as
- Inserted by the Finance Act, 2007.
- Substituted by the Finance Act, 2010. The substituted provision has been made effective from
- (Amendment) Ordinance, 2010 and remained effective till 05.06.2010.Added by the Finance Act,
- Inserted by the Finance Act, 2013.
- The word “no” substituted by the Finance Act, 2002.
- Sub-section (2) omitted by the Finance Act, 2010. The omitted sub-section (2)
- Added by Finance Act 2017.
- Re-numbered by the Finance Act, 2018.
- Added by the Finance Act, 2018.
- Section 242 added by the Finance Act, 2021. Earlier this amendment was made through Tax Laws
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 240 Removal of difficulties
(1) Subject to sub-section (2), if any difficulty arises in giving effect to any of the provisions of this Ordinance, the Federal Government may, by notification in the official Gazette, make such order, not inconsistent with the provisions of this Ordinance, as may appear to it to be necessary for the purpose of removing the difficulty.
Amendment history (8)
- (Amendment) Ordinance, 2010 and remained effective till 05.06.2010.Added by the Finance Act,
- Inserted by the Finance Act, 2013.
- The word “no” substituted by the Finance Act, 2002.
- Sub-section (2) omitted by the Finance Act, 2010. The omitted sub-section (2)
- Added by Finance Act 2017.
- Re-numbered by the Finance Act, 2018.
- Added by the Finance Act, 2018.
- Section 242 added by the Finance Act, 2021. Earlier this amendment was made through Tax Laws
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 241 Validation
(1) All notifications and orders issued and notified, in exercise of the powers conferred upon the Federal Government, before the commencement of Finance Act, 2017 shall be deemed to have been validly issued and notified in exercise of those powers.
(2) Notwithstanding any omission, irregularity or deficiency in the establishment, or conferment of powers and functions, of the Directorate-General (Intelligence and Investigation), Inland Revenue and authorities specified in section 230, all orders passed, notices issued and actions taken in exercise or purported exercise of the powers and functions of the Commissioner under this Ordinance by the Directorate-General (Intelligence and Investigation), Inland Revenue or the authorities specified in section 230 shall be deemed to have been validly passed, issued and taken under this Ordinance.
(2) Notwithstanding any omission, irregularity or deficiency in the establishment, or conferment of powers and functions, of the Directorate-General (Intelligence and Investigation), Inland Revenue and authorities specified in section 230, all orders passed, notices issued and actions taken in exercise or purported exercise of the powers and functions of the Commissioner under this Ordinance by the Directorate-General (Intelligence and Investigation), Inland Revenue or the authorities specified in section 230 shall be deemed to have been validly passed, issued and taken under this Ordinance.
Amendment history (8)
- (Amendment) Ordinance, 2010 and remained effective till 05.06.2010.Added by the Finance Act,
- Inserted by the Finance Act, 2013.
- The word “no” substituted by the Finance Act, 2002.
- Sub-section (2) omitted by the Finance Act, 2010. The omitted sub-section (2)
- Added by Finance Act 2017.
- Re-numbered by the Finance Act, 2018.
- Added by the Finance Act, 2018.
- Section 242 added by the Finance Act, 2021. Earlier this amendment was made through Tax Laws
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
s. 242 Benefits of repealed provisions
Benefits of repealed provisions.— The existing beneficiaries of exemptions or concessionary provisions of the Ordinance, already expired or expiring, on thirtieth day of June, 2021 or repealed by Tax Laws (Second Amendment) Ordinance, 2021 shall continue to enjoy benefits of the repealed provisions for the periods prescribed therein and subject to conditions and limitations specified therein.
Amendment history (8)
- (Amendment) Ordinance, 2010 and remained effective till 05.06.2010.Added by the Finance Act,
- Inserted by the Finance Act, 2013.
- The word “no” substituted by the Finance Act, 2002.
- Sub-section (2) omitted by the Finance Act, 2010. The omitted sub-section (2)
- Added by Finance Act 2017.
- Re-numbered by the Finance Act, 2018.
- Added by the Finance Act, 2018.
- Section 242 added by the Finance Act, 2021. Earlier this amendment was made through Tax Laws
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
No section matches that search.
Unofficial reference, compiled from the FBR’s consolidated Income Tax Ordinance 2001 (amended up to 30 June 2026). Repealed provisions are marked “Omitted”. Provided for general information only — not an official FBR publication and not legal or tax advice. Always verify against the official FBR text before relying on it for filing or any decision.