Introduction and Geographical Source of Income Chapter- 05
Any gain arising on the disposal of shares:
in a resident company shall be Pakistan source income.
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.
Any amount not mentioned above:
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.
Where amount may be dealt with Pakistan source income business income of non-resident and under any
other above sub-sections, this section shall apply -
(a) by first determining whether the amount is Pakistan source income ; and
(b) if amount is not Pakistan source income under that sub-section, then determining whether it is
Pakistan source income.
Foreign source income
An amount shall be foreign source income to the extent to which it is not Pakistan source income.
Example
Mr. Asif is marketing manager of ABC Pakistan (Pvt.) Ltd. since 2006. His responsibilities include looking
after and supervision of the marketing related matter of Asian region. In the said region, major set ups are
situated in India, Bangladesh and Singapore. The location wise bifurcation of his monthly salary is as
under:
Particulars Pakistan India Bangladesh Singapore
Pay 600,000 530,000 500,000 350,000
House rent 250,000 210,000 200,000 140,000
Utilities 65,000 50,000 45,000 35,000
Medical reimbursements 150,000 10,000 55,000 30,000
Total 1,065,000 800,000 800,000 555,000
However, in the current year, his financial results are as under:
Particulars India Bangladesh Singapore Amount
Net foreign source income 2,205,000 620,000 245,000 3,070,000
You are required to compute the taxable income and tax liability of Mr. Asif for the tax year 20 23.
Solution
Mr. Asif
Tax year 20 23
Computation of taxable income
Particulars Pakistan India Bangladesh Singapore
Pakistan source income
Gross salary 1,065,000 800,000 800,000 555,000
Less: Exempt medical reimbursement 1 50,000 10,000 55,000 30,000
Taxable 915,000 790,000 745,000 525,000
Total of all countries Pakistan source of income 2,975,000
Foreign source income
India Bangladesh Singapore Total gross
Net foreign source income 2,205,0 00 620,000 245,000 3,070,000
Total income (Pakistan + Foreign Source) 6,045,000
Taxpayer is a non-salaried person hence rates for non-salaried persons have been applied.