Lahore 24°C
Karachi 29°C
Islamabad 20°C
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.
Source FBR PDF page 104
Unofficial reference, compiled from the FBR’s consolidated Income Tax Ordinance 2001 (amended up to 30 June 2026). 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.