Tax Book 2023

Taxation System Chapter- 01

1979 should be replaced by Income Tax Ordinance, 2001. This new Income Tax Ordinance

was promulgated on 13- 09 - 2001 and it has became effective from 01-072002. The Central

Board of Revenue (now FBR) has claimed that the new Ordinance is a justifiable, pragmatic,

easy to understand and in accordance with the global environment. All the income tax returns

for the income earned from 01- 07 - 2002 onwards are being taxed under this law.

The tabular presentation of laws in Pakistan is as under:

SR. Name of prevailing Law Remarks

1. Income tax Act, 1860 Repealed in 1865


2. Income tax Act, 1886 Effective till 191 7


3. Income tax Act, 1918 including Super Tax Act, 1917 Enforced till 1920


4. Income tax Act, 1922 (Merged Income Tax Act, 1918
   with Super Tax Act, 1917)

Effective till 30- 06 - 1979

5. Income tax Ordinance, 1979 Effective till 30- 06 - 2002


6. Income tax Ordinance, 2001 Enforced from 01- 07 - 2002

2. INTRODUCTION TO DIFFERENT TAXATION LAWS OF PAKISTAN

2 .1 Brief overview of different direct and indirect taxes

Federal taxes in Pakistan like most of the taxation systems in the world are classified into two

broad categories, viz., direct and indirect taxes. A broad description regarding the nature of

administration of these taxes is explained below:

DIRECT TAXES

SR. Name of prevailing Law Remarks

1. Income tax Ordinance, 2001 Being as direct tax the income Tax Ordinance,
   2001, tax is levied on the taxable income of a
   taxpayer earned during a tax year computed by
   applying the specified tax rates as applicable to
   respective Taxpayer.
   For the purpose of the charge of tax and the
   computation of total income, all income is classified
   under the following five heads:
    Income from salary
    Income from property
    Income from business
    Capital gains; and
    Income from other sources


2. Income Support Act, 2013
   Although effective from tax year 2013 on every
   individual whose net moveable wealth as per wealth
   statement exceeds from Rs. 1 Million, he has to pay
   income support levy @ 0.5%.


3. Capital Value Tax
   Capital Value Tax on different transaction such as
   transfer of specified motor vehicles, immoveable
   property, transfer of rights and acquisition of shares
   of listed Companies etc.