Income from sources other than salary
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Income Tax is an annual charge on a person's income during the tax year that is liable to tax under income tax law. A person may be liable to pay tax, deduct or collect tax, pay tax in advance, and pay penalties. Total income is the sum of a person's income under various heads including salary, property income, business income, capital gains, and other income. These heads of income are used to classify all income for imposing tax and computing total income. The document then provides details on the taxation of property income, business income, capital gains, and income from other sources.
![HEAD OF INCOME:
INCOME FROM PROPERTY
1.
2.
3.
The rent received or receivable by a person 1[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‖.
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.
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‖.](https://image.slidesharecdn.com/incomefromsourcesotherthansalary-131207134233-phpapp01/85/Income-from-sources-other-than-salary-5-320.jpg)
![HEAD OF INCOME:
INCOME FROM PROPERTY
4.
5.
6.
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.
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‖.
Income under this section shall be liable to tax
at the rate specified in Division VI of Part I of the
First Schedule.]](https://image.slidesharecdn.com/incomefromsourcesotherthansalary-131207134233-phpapp01/85/Income-from-sources-other-than-salary-6-320.jpg)
![HEAD OF INCOME:
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;
(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.
(e) any management fee derived by a management company (including
a modaraba 3[management company] ).](https://image.slidesharecdn.com/incomefromsourcesotherthansalary-131207134233-phpapp01/85/Income-from-sources-other-than-salary-8-320.jpg)
![HEAD OF INCOME:
INCOME FROM BUSINESS
2.
3.
4.
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.
1[(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‖.]
2[(4) Any amount received by a banking company or a non-banking
finance company, where such amount represents distribution by a
mutual fund 3[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](https://image.slidesharecdn.com/incomefromsourcesotherthansalary-131207134233-phpapp01/85/Income-from-sources-other-than-salary-9-320.jpg)
![HEAD OF INCOME:
CAPITAL GAINS
3.
Where a capital asset has been held by a
person for more than one year, 1[other than
shares of public companies including the
vouchers of Pakistan Telecommunication
Corporation, modaraba certificates or any
instrument of redeemable capital as defined in
the Companies Ordinance, 1984 (XLVII of
1984),] the amount of any gain arising on
disposal of the asset shall be computed in
accordance with the following formula, namely:
Ax¾
where A is the amount of the gain determined under
sub-section (2). .](https://image.slidesharecdn.com/incomefromsourcesotherthansalary-131207134233-phpapp01/85/Income-from-sources-other-than-salary-11-320.jpg)
![HEAD OF INCOME:
CAPITAL GAINS
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
amortization deduction under section 24;
(c) any immovable property; 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 5[.] .
5.](https://image.slidesharecdn.com/incomefromsourcesotherthansalary-131207134233-phpapp01/85/Income-from-sources-other-than-salary-13-320.jpg)
![HEAD OF INCOME:
INCOME FROM OTHER SOURCES
1.
Income of every kind received by a person in a tax year, 1[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;
(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 5[, 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;
and](https://image.slidesharecdn.com/incomefromsourcesotherthansalary-131207134233-phpapp01/85/Income-from-sources-other-than-salary-14-320.jpg)
![HEAD OF INCOME:
INCOME FROM OTHER SOURCES
2.
3.
4.
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.
Subject to sub-section (4), any amount received as a
loan, advance, deposit 2[for issuance of shares] or gift
by a person in 3[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 from a person holding a
National Tax Number 4[ ] shall be treated as income
chargeable to tax under the head ―Income from Other
Sources‖ for the tax year in which it was received.
Sub-section (3) shall not apply to an advance payment
for the sale of goods or supply of services.](https://image.slidesharecdn.com/incomefromsourcesotherthansalary-131207134233-phpapp01/85/Income-from-sources-other-than-salary-15-320.jpg)
![HEAD OF INCOME:
INCOME FROM OTHER SOURCES
2.
3.
4.
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.
Subject to sub-section (4), any amount received as a
loan, advance, deposit 2[for issuance of shares] or gift
by a person in 3[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 from a person holding a
National Tax Number 4[ ] shall be treated as income
chargeable to tax under the head ―Income from Other
Sources‖ for the tax year in which it was received.
Sub-section (3) shall not apply to an advance payment
for the sale of goods or supply of services.](https://image.slidesharecdn.com/incomefromsourcesotherthansalary-131207134233-phpapp01/85/Income-from-sources-other-than-salary-16-320.jpg)
Income from sources other than salary
- 1. Charge to Tax Income Tax is an annual charge upon a person deriving such income, during the tax year, which is chargeable to tax under any provision of income tax ordinance 2001. under the provisions of the ordinance, a person may be liable to: 1. Pay Income Tax 2. Deduct or collect the tax-at-source and deposit it. 3. Pay tax in advance 4. Pay default surcharge and penalties 5. Pay fees
- 2. Tax on taxable income Taxable income. The taxable income of a person for a tax year shall be the total income of the person for the year reduced (but not below zero) by the total of any deductible allowances under Part IX.
- 3. Tax on taxable income Total Income The total income of a person for a tax year shall be the sum of the person‘s income under each of the heads of income for the year.
- 4. Computation of taxable income 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.
- 5. HEAD OF INCOME: INCOME FROM PROPERTY 1. 2. 3. The rent received or receivable by a person 1[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‖. 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. 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‖.
- 6. HEAD OF INCOME: INCOME FROM PROPERTY 4. 5. 6. 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. 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‖. Income under this section shall be liable to tax at the rate specified in Division VI of Part I of the First Schedule.]
- 7. HEAD OF INCOME: INCOME FROM PROPERTY 7. the provisions of sub-section (1), shall not apply in respect of a taxpayer who (i) is an individual or association of persons; (ii) derives income chargeable to tax under this section not exceeding Rs. 150,000 in a tax year; and (iii) does not derive taxable income under any other head.
- 8. HEAD OF INCOME: 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; (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. (e) any management fee derived by a management company (including a modaraba 3[management company] ).
- 9. HEAD OF INCOME: INCOME FROM BUSINESS 2. 3. 4. 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. 1[(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‖.] 2[(4) Any amount received by a banking company or a non-banking finance company, where such amount represents distribution by a mutual fund 3[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
- 10. HEAD OF INCOME: 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. 2. Subject to sub-sections (3) and (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.
- 11. HEAD OF INCOME: CAPITAL GAINS 3. Where a capital asset has been held by a person for more than one year, 1[other than shares of public companies including the vouchers of Pakistan Telecommunication Corporation, modaraba certificates or any instrument of redeemable capital as defined in the Companies Ordinance, 1984 (XLVII of 1984),] the amount of any gain arising on disposal of the asset shall be computed in accordance with the following formula, namely: Ax¾ where A is the amount of the gain determined under sub-section (2). .
- 12. HEAD OF INCOME: CAPITAL GAINS 4. For the purposes of determining component B of the formula in subsection (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 Chapter; or (b) that is referred to in section 21.
- 13. HEAD OF INCOME: CAPITAL GAINS 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 amortization deduction under section 24; (c) any immovable property; 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 5[.] . 5.
- 14. HEAD OF INCOME: INCOME FROM OTHER SOURCES 1. Income of every kind received by a person in a tax year, 1[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; (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 5[, 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; and
- 15. HEAD OF INCOME: INCOME FROM OTHER SOURCES 2. 3. 4. 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. Subject to sub-section (4), any amount received as a loan, advance, deposit 2[for issuance of shares] or gift by a person in 3[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 from a person holding a National Tax Number 4[ ] shall be treated as income chargeable to tax under the head ―Income from Other Sources‖ for the tax year in which it was received. Sub-section (3) shall not apply to an advance payment for the sale of goods or supply of services.
- 16. HEAD OF INCOME: INCOME FROM OTHER SOURCES 2. 3. 4. 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. Subject to sub-section (4), any amount received as a loan, advance, deposit 2[for issuance of shares] or gift by a person in 3[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 from a person holding a National Tax Number 4[ ] shall be treated as income chargeable to tax under the head ―Income from Other Sources‖ for the tax year in which it was received. Sub-section (3) shall not apply to an advance payment for the sale of goods or supply of services.