Income From Salary Chapter- 07
(a) any income derived from a business of the person established in Pakistan; or
(b) any foreign-source income brought into or received in Pakistan by the person.- Foreign-source income of returning expatriates [51]
- Any foreign source income derived by a citizen of Pakistan in a tax year who was not a resident
individual in any of the four tax years preceding the tax year in which the individual became a
resident shall be exempt from tax under this Ordinance in the tax year in which the individual
became a resident individual and in the following tax year. - Citizen of Pakistan who leaves Pakistan
Where a citizen of Pakistan leaves Pakistan during a tax year and remains abroad during that tax
year, any income chargeable under the head Salary earned by him outside Pakistan during that
year shall be exempt from tax under this Ordinance.
- Any foreign source income derived by a citizen of Pakistan in a tax year who was not a resident
EXEMPTIONS OF TOTAL INCOME UNDER PART I OF SECOND SCHEDULE TO THE INCOME TAX
ORDINANCE, 2001
SR. CLAUSE PARTICULARS OF EXEMPTION^
1 (3) Salary of employees of Institutions of Agha Khan Development Network, (Pakistan)^(^2) (4) Salary of employee of Pakistani seafarer working on a foreign vessel^
This exemption has been withdrawn by Finance Act, 2021.
3 (5) Allowances and perquisites of Govt. employees posted abroad^
4 (8) Pension
5 (9) Pension of Govt. and Armed forces employees^
6 (12) Commutation of pension
7 (13) Gratuity
8 (16) Pension to dependents of Armed Forces Shaheeds^
9 (17) Income of dependents of Civil Armed Forces Shaheeds
10 (19) Encashment of leave preparatory to retirement
11 (20) Exemption omitted from tax year 2016^
(^12) (23A) (^) Receipt of amount under voluntary pension system
13
(23B) Receipt of monthly instalment from a payment plan out of accumulated balance^ –^
(Exemption under this clause has been withdrawn by Finance Act, 2022)
(^14) (23C) (^) Withdrawal accumulated balance of exempt approved provident Fund
15 (22) TO (26) Funds^
(^16) (39) & (40) Special allowance^
The exemption u/c (39) has been withdrawn by Finance Act, 2021.
17 39A Specified allowances for Armed Forces personnel
18 (51) TO (56) Different perquisites
19 (53A) Perquisites by virtue of employment^
20 (139) Medical expenditure by individuals
- Exemptions under 2nd Schedule Part I:
1.1 Salary of employees of institutions of Agha Khan Development Network, (Pakistan) –
clause 3
Any income chargeable under the head "Salary" received by a person who is not a citizen of
Pakistan, and engaged as an expert or technical, professional, scientific advisor or consultant
or senior management staff by institutions of the Agha Khan Development Network, (Pakistan).
1.2 Income of a Pakistani Seafarer – clause 4
This exemption has been withdrawn by Finance Act, 2021.
1.3 Allowances or perquisites to citizen of Pakistan by Government – clause 5
Any allowance or perquisite paid or allowed as such outside Pakistan by the Government to a
citizen of Pakistan for rendering service outside Pakistan.
1.4 Pension Received by a citizen of Pakistani – clause 8 & Pension of Govt. and Armed
forces employees – clause 9