Mostly Used Terminologies
Before registering and completing your Income Tax Return, it is recommended that one should establish a basic understanding of these processes. Knowing basic concepts would not only ensure that tasks are performed easily but also in a limited way.
Taxable Earnings means the Total Minimum Amount Reduced by eligible contributions for certain discounts and allowances.
Total Income is the sum of taxable income under each income head.
Head of Income
Under the Income tax Ordinance, 2001, all income is broadly divided into the following five income categories:
Salary; Net income from property; Revenue from business; andI recommend from Other Sources
The organization of the people is subjected to a tax year if the administration and administration of its affairs are fully or partially acquired in Pakistan at any time during that year;
The company is liable for the tax year if:
Inserted or formed under or under any law applicable in Pakistan; The administration and administration of its affairs is fully available in Pakistan at any time of the year; either the Provincial Government or Local Government of Pakistan. Each person lives in the tax year if he or she: is present in Pakistan for a period, or periods are equal, 183 days or more in Tax year.
The People’s Association, Company and Individual are not residents – one year of tax if they are not residents that year.
Pakistan Source Income
It is defined in section 101 of the Income tax Ordinance, 2001, which covers Revenue under different headings and circumstances. Some of the common sources of Pakistani origin are as follows: –
Salary received or received from any work done in Pakistan wherever payment is made; The salary is paid by, or, on behalf of the State Government, Provincial Government, or Local Government of Pakistan, wherever employed; on debt paid by Residential; Property or rent Revenue from leasing of immovable property in Pakistan; Pension or remuneration paid or paid by a citizen or permanent establishment of Non-resident Citizens.
Foreign Source Income
Is there any income, which is not income from Pakistan.
Person; A Company or People’s Organization is incorporated, formed, organized or founded in Pakistan or elsewhere.The Federal Government, a foreign government, a political subdivision of a foreign government, or an international public body
Company as defined in the Companies Ordinance, 1984 (XLVII of 1984); An amendment was made by the Finance Act, 2013 to increase the size of the company’s definition. Now in accordance with the Income tax Ordinance, 2001 the company includes:
A cooperative society, a community that uses money or any other community; Nonprofit organization; Trust, organization or group of persons established or formed under or under any law for the time being in force. The foreign corporation, whether incorporated or not, the Board shall, by general or special order, declare that it is a corporation for the purposes of this Ordinance;
Provincial Government Local Government of PakistanA Limited Company
Association of Persons
It includes a firm (a relationship between people who have agreed to share the profits of a business of all or some of their common employees), a Hindu family that is not classified, or any person legally formed by any person established under foreign law, but excludes the Company.
The twelve-month period ending on the 30th of June i.e. is a financial year and is shown in the calendar year when that date falls. For example, a tax year for a twelve month period from July 1, 2017 to June 30, 2018 will be shown in the calendar year 2018 and a twelve month period from July 01, 2018 to June 30, 2019 will be shown in the calendar year 2019. It is called a normal tax year.