Taxation System Chapter- 04
“Amalgamation" [U/s 2(1B) means the merger of one or more banking companies or non-banking
financial institutions, or insurance companies, or companies owning and managing industrial undertakings
or companies engaged in providing services and not being a trading company or companies in either case
at least one of them being a public company, or a company incorporated under any law, other than
Companies Act, 2017 , for the time being in force, (the company or companies which so merge being
referred to as the “amalgamating company” or companies and the company with which they merge or which
is formed as a result of merger, as the “amalgamated company”) in such manner that –
(a) the assets of the amalgamating company or companies immediately before the amalgamation
become the assets of the amalgamated company by virtue of the amalgamation, otherwise
than by purchase of such assets by the amalgamated company or as a result of distribution of
such assets to the amalgamated company after the winding up of the amalgamating company
or companies; and
(b) the liabilities of the amalgamating company or companies immediately before the amalgamation
become the liabilities of the amalgamated company by virtue of the amalgamation"Appellate Tribunal" [U/s 2(2)] means the Appellate Tribunal Inland Revenue established u/s130;
Explanation: The Tribunal, established u/s130 of the Ordinance enjoys jurisdiction to hear cases of income
tax, sales tax and federal excise. The Customs Tribunal, however, remains separate and independent.
Tribunal is the final fact finding forum. Its decisions on law point are also final if not further contested or
entertained by High Court u/s133 of the Ordinance.
"Approved gratuity fund" [U/s 2(3)] means a gratuity fund approved by the Commissioner Inland
Revenue in accordance with Part III of the Sixth Schedule;
"Approved Annuity Plan" [U/s 2(3A)] means an Annuity Plan approved by Securities and Exchange
Commission of Pakistan (SECP) under Voluntary Pension System Rules, 2005 and offered by a Life
Insurance Company registered with the SECP under Insurance Ordinance, 2000;
"Approved Income Payment Plan" [U/s 2 (3B)] means an income Payment Plan approved by Securities
and Exchange Commission of Pakistan (SECP) under Voluntary Pension System Rules, 2005 and offered
by a Pension Fund Manager registered with the SECP under Voluntary Pension System Rules, 2005;
"Approved Pension Fund" [U/s 2(3C)] means Pension Fund approved by Securities and Exchange
Commission of Pakistan (SECP) under Voluntary Pension System Rules, 2005, and managed by a
Pension Fund Manager registered with the SECP under Voluntary Pension System Rules, 2005;Explanation of u/s 2(3A) (3B) and (3C): In terms of section 63, eligible persons are allowed tax credit for
depositing an amount in the fund, which is lesser of 25% of their taxable income a person joining at the age
of 41 or above is allowed from 1st July 2006 to additional contribution of 2% for the first 10 years for each
year exceeding 41 but his contribution should not exceed 3 0% of his taxable income or up to Rs. 500,000.
This regime allows tax credit to contributions and exemption to investment income and then taxes the
benefits at the time of premature or excessive withdrawals, Existing asset management companies and life
insurance companies are eligible to apply for licenses to set up pension funds and EFU Life Insurance
Company and three leading asset management companies including Arif Habib Investments and Atlas
Asset Management Company are running such schemes.
"Approved Employment Pension or Annuity Scheme" [U/s 2(3D)] means any employment related
retirement scheme approved under this Ordinance, which makes periodical payment to a beneficiary i.e.
pension or annuity such as approved superannuation fund, public sector pension scheme and Employees
Old-Age Benefit Scheme;
"Approved Occupational Savings Scheme" [U/s 2(3E)] means any approved gratuity fund or
recognized provident fund;Explanation of u/s 2(3D) and (3E): The schemes include pension scheme and Employee Old-Age Benefit
Scheme. No approval for the second type of scheme is mentioned in Schedule to the Ordinance.