Computation of Taxable Income Chapter- 06
(h) capital assets owned by a provincial government or a local government; or
(i) capital assets owned by a local authority, a development authority, builders and
developers for land development and construction, subject to the condition that
such persons are registered with Directorate General of Designated Non Financial
Businesses and Professions.
The Federal Government may include or exclude any person or property for the
purpose of this section.
In this section–
(a) “capital asset” means property of any kind held by a person, whether or not connected
with a business, but does not include–
(i) any stock-in-trade, consumable stores or raw materials held for the purpose of business;
(ii) any shares, stocks or securities;
(iii) any property with respect to which the person is entitled to a depreciation deduction under
section 22 or amortization deduction under section 24; or
(iv) any movable asset not mentioned in clauses (i), (ii) or (iii)
(b) “farmhouse” means a house constructed on a total minimum area of 2000 square yards
with a minimum covered area of 5000 square feet used as a single dwelling unit with or
without an annex:
Provided that where there are more than one dwelling units in a compound and the
average area of the compound is more than 2000 square yards for a dwelling unit, each
one of such dwelling units shall be treated as a separa te farmhouse.- General provisions relating to taxes imposed under Final Tax Regime / Separate Block [U/s 8]
Subject to this ordinance, where the tax imposed under Final Tax Regime / Separate Block of Income
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 for any expenditure incurred in deriving the amount;
(c) The amount shall not be reduced by any deductible allowance or the set off of any loss;
(d) The tax payable by a person under final tax regime / separate block of income shall not be
reduced by any tax credits allowed under this Ordinance; and
(e) The liability of a person under final tax regime / separate block of income shall be discharged to
the extent that the tax has been paid in accordance with the relevant section or the tax payable
has been deducted at source.- Taxable Income (U/s 9)
The taxable income of a person for a tax year shall be the total income (other than exempt income) of
the person for the year (but not below zero) less Zakat, Worker’s Profit Participation Fund (WPPF),
Worker’s Welfare Fund (WWF), deductible allowance for education expenses (u/s 60D).Example: If the total income of Mr. Ali is Rs.500,000 then you are required to compute the taxable
income of Mr. Ali, if he paid the following amounts:
Zakat Rs. 18,000, WWF Rs. 5,000, WPPF Rs. 8,000 and education expenses (u/s 6 0 D) Rs.
20,000Solution: Rs.
Total of income as per question 500,000
Less: deductible allowances: (18,000 + 5,000 + 8,000 +20,000) = ( 51 ,000)
Taxable income 44 9,000- Total Income (U/s 10)