Insurance Business Chapter- 25
(6A) Exemption of Capital Gains from the sale of shares [Omitted through Finance Act, 2015]
(6B) In computing income under this Schedule, there shall be included capital gains on disposal of
shares and dividend of listed companies, vouchers of Pakistan Telecommunication corporation,
modaraba certificate or instruments of redeemable capital and derivative products and shall be
taxed at the rates specified in Division II of Part I of First Schedule.
(6C) Notwithstanding anything contained in this Ordinance, where loss on disposal of securities is
sustained in a tax year, the loss shall be set off only against the gain from any other securities
chargeable to tax under Rule 6B and no loss shall be carried forward to the subsequent tax year.
(6D) The provisions of section 4B shall apply to the taxpayers under this schedule and taxed at the rates
specified in Division IIA of Part I of the First Schedule.
(6DA) The provisions of section 4C shall apply to the taxpayers under this Schedule and shall be taxed at
the rates specified in Division IIB of Part I of the First Schedule from tax year 2022 onwards.
(6E) Notwithstanding anything contained in this Schedule, the Commissioner shall be authorized to
examine and amend the amount of income as disclosed in the financial statement presented to the
Securities and Exchange Commission of Pakistan with respect to commission paid and claimed for
losses.
Example:
Arshad Insurance Company Ltd. deals in General Insurance business and the company earned an
accounting profit of Rs. 21 million during the tax year 20 23. Perusal of record shows that this profit
includes followings:
No Tax has been deducted from the Legal and professional-charges amounting to Rs. 750,000.
The company claimed provision for bad debts amounting to Rs. 500,000 on account of policies
premium receivable but not received from some recurring parties. Company paid lease rental amounting to Rs. 655,000 to the leasing companies. The
Accounting depreciation on leasehold assets is Rs. 235,000 and lease financial charges
aggregates to Rs. 175,000. The income includes loss due to decline in the value of investments on the date of balance
sheet amounting to Rs. 325,000.
The company claimed a loss due to impairment of fixed assets amounting to Rs. 195,000.
Dividend Income of the company was Rs 2,000,000 during the year.
You are provided with above information for computation of taxable income and tax liability for the
tax year 20 23.Solution
Arshad Insurance Company Ltd
Computation of taxable income and tax liability
For the tax year 20 23 Rs.
Accounting Profit for the Year 21,000,000
Add
Impairment loss on fixed assets 195,000
Inadmissible legal and professional charges 750,000
Loss due to depreciation in value of investment 325,000
Depreciation on leasehold assets 235,000
Lease finance charges 175,000
Provision for bad debts 500,000