Tax Book 2023

Taxation System Chapter- 04

(b) is approved by the Commissioner on an application made in the prescribed form and

manner, accompanied by the prescribed documents and, such other documents as may

be required by the Commissioner:

Provided that this definition shall be applicable from the 1st July, 2019 and onwards.

"House Building Finance Corporation" [U/s 2(28)] means the Corporation constituted under the House

Building Finance Corporation Act, 1952;

Explanation: This refers to statutory corporation viz. House Building Finance Corporation (HBFC)

established under the relevant Act, 1952.

“Imputable income” [U/s 2(28A)] in relation to an amount subject to final tax means the income which

would have resulted in the same tax, had this amount not been subject to final tax;

"Income" [U/s 2(29)] includes any amount chargeable to tax under this Ordinance, any amount subject to

collection or deduction of tax at source covered under final tax regime, any amount treated as income

under any provision of this Ordinance and any loss of income;

Explanation: The Ordinance describes different sources of income and prescribes various modes of

computation under each head. The definition in this clause is inclusive and not exhaustive. It includes all

kinds of profits and gains or receipts that are chargeable to tax under this Ordinance.

In the expression "income" the amounts subjected to collection of tax u/s 148, 150, 152(1), 153, 154, 156,

156A, 233, 234(5) and were included. The word "deduction" has also been added to preclude the possibility

of any benefit by interpreting that only where some tax is collected income will be chargeable to tax and not

otherwise. Likewise after section 234 the words "any amount treated as income under any provision of this

Ordinance" are added to cover those incomes which are artificially made taxable under the Ordinance.

Example: Mr. A is a filer and being as shareholder of S Ltd. In tax year 20 22 he received net dividend of

Rs.1 7 ,000 and bonus shares of having day end (ex-bonus) value on first day of closure of books

Rs.50,000. Calculate his taxable income and tax liability for tax year 20 23.

Solution:

Mr. A

Tax year 20 23

Computation of taxable income and tax liability: Rs.

Dividend (Final Tax Regime) (1 7 ,000 x 100/ 85 ) 20,000

Bonus shares (is not a part of income) -

Computation of tax liability:

Tax on Dividend @ 1 5 % 3 ,000

Less: tax deducted on dividend 3 ,000

Balance tax -

"Income year" [U/s 2(29A)] means income year as defined in the repealed Ordinance;

Explanation: This definition is retained as still used and is relevant under a number of provisions of the

new Ordinance.

"Individual Pension Account" [U/s 2(29B)] means an account maintained by an eligible person with a

Pension Fund Manager approved under the Voluntary Pension System Rules, 2005;

Explanation; See detailed note u/s 2(3A)

"Industrial undertaking" [U/s 2(29C)] means-

(a) an undertaking which is set up in Pakistan and which employs,-