Tax Book 2023

Oil, Natural Gas and Other Mineral Deposits Chapter- 26

Section

Topic covered

(For CA Mod F & ICMAP students)

100

Special provisions relating to the production of oil and natural gas & exploration & extraction

of other mineral deposits

5 th

Schedule

Rules for the computation of the profits & gains from the exploration & production of

petroleum PART I & II

Practical example

MCQ’s with answers

Special provisions relating to the production of oil and natural gas, and exploration and extraction
of other mineral deposits [Sec. 100]

(1) Rues in Part I of 5th schedule shall apply in calculating the profits and gains from the exploration and
production of petroleum including natural gas, from refineries set up at Dhodak and Bobi fields, the
pipeline operations of exploration and production companies, the manufacture and sale of liquefied
petroleum gas or compressed natural gas and in calculating tax payable thereon.

(2) Sub section (1) shall only apply after 24th day of September, 1954 and onward. Provided that the for
tax year 2017 and onward the provisions of this sub-section shall not apply on profit and gains
derived from sui gas field.

(3) Rues in Part II of 5th schedule shall apply in calculating the profits and gains from the exploration and
extraction of such mineral deposits of a wasting nature (not being petroleum or natural gas) as may
be specified by the Board with the approval of the Minister-in-charge, carried on by the person in
Pakistan.
The Fifth Schedule

Part I

Rules for the computation of the profits and gains from the exploration and production of petroleum

1. Exploration and production of petroleum as a separate business

Where any person carries on, or is treated as carrying on, under an agreement with the Federal

Government, any business which consists of, or includes, the exploration or production of petroleum

in Pakistan or setting up refineries at Dhodak and Bobi fields, income of exploration and production

companies from pipeline operations, and manufacture and sale of liquefied petroleum gas or

compressed natural gas, such business or part thereof, as the case may be, shall be, for the

purposes of this Ordinance, treated as a separate business undertaking and the profits and gains of

such undertaking shall be computed separately from the income, profits, or gains from any other

business, if any, carried on by the person.

2. Computation of profits

(1) The profits and gains shall be computed in the manner applicable to income, profits and gains

chargeable under the head “Income from Business”.

(2) Where such person incurs any expenditure on searching for or discovering and testing a

petroleum deposit or winning access thereto but the search exploration, enquiry upon which

OIL, NATURAL GAS AND OTHER

MINERAL DEPOSITS

26

Chapter