Tax Book 2023

Common Rules Chapter- 16

6. Currency conversion (Section 71)

Every amount taken into account under this ordinance shall be in Rupees and if it is not in Pak

rupees then this amount shall be converted to the Rupee at the State Bank of Pakistan rate applying

between the foreign currency and the Rupee on the date the amount is taken into account for the

ordinance.

Example: Ali’s Brother received an amount from his customer of US $ 750 on 01 April 20 23 , an

expense incurred in respect of this income on 02 February 20 23 of 250 Euro. Exchange rate

prescribed by the State Bank of Pakistan are as under:

Date Currency Pak Rs conversion

01 April, 20 23 Dollar RS. 83/Dollar

02 February, 20 23 Euro RS. 122/Euro

Solution: Calculation of Income

Description Amount

$ 750 x Rs. 83 62,250

Euro 250 x Rs.122 (30,500)

Income 31, 750

7. Cessation of source of income (Section 72)

Where any income is derived by a person from any business, activity, investment or other source that

has ceased either before the commencement of the year or during the year then any income derived

before the cessation of source of such income shall be chargeable to tax on the basis that source had

not ceased at the time the income was derived.

8. Rules to prevent double derivation and double taxation (Section 73)

Where any amount is chargeable to tax on the basis that it is receivable then such an amount shall

not be chargeable again on the basis that it is received and vice versa.

Similarly where any expenditure is deductible on the basis that it is payable then such an expenditure

shall not be deductible again on the basis that it is paid and vice versa.

9. Tax year (section 74):

Tax year is of three types, Normal tax year, Special tax year and Transitional tax year.

9.1 Normal tax year:

A period of 12 months from 1 July to 30 June denoted by the calendar year in which the normal tax

year ends. For the year ending 30 June 20 23 the tax year shall be 20 23.

9.2 Special tax year:

Any income year ending other than 30th June is special tax year and denoted by the calendar year

relevant to the normal tax year in which the year-end falls.

The Board has authority to prescribe any special tax year in respect of any particular class of

taxpayers.

If the tax year is not specified by the Board and a taxpayer wants to have any special tax year then

he is required to make an application to the Board specifying the reason for the purpose.

In respect of certain classes of income, following special income years are specified by the Board.

The list of such specified special income year is as under.