Tax Book 2023

Income From Business Chapter- 09

Rupees

Net profit as per accounts 1,200,000

Add: Inadmissible deductions:

Depreciation as per accounts

600,000

Salary to partner (Mr. Khan) 250,000

Brokerage to partner (Mr. Khan) 100,000

2,150,000

Less: Tax depreciation 900,000

Taxable Income 1,250,000

Income Tax [ 60 ,000 + 17. 5 % (1,250,000 – 1,200,000)] 68 , 750

Divisible Income 1, 181 , 250

Share of profit from AOP shall be computed as under:

Partner Ajmal

Partner

Khan

Total

Salary Nil 250,000 250,000

Brokerage Nil 100,000 100,000

Balance 332 , 500 498 , 750 831 , 250

332 , 500 848 , 750 1, 172 , 500

Although share of profit from AOP (after tax) is exempt in the hands of individual members but the

same shall be included for rate purpose in other taxable income except income taxed under FTR /

SBI. One should observe that salary is included in the share of profit from AOP in the above

calculation. In fact, if a member of an AOP receives salary or other remuneration, interest,

commission or brokerage from the same AOP it becomes part and parcel of share of profit

from AOP and not considered as a separate Income.

12. Deductible Allowances

The following allowances shall be deducted from total income for computation of taxable income for

the tax year.

1. Zakat (u/s 60):
   Where a person has paid any amount as Zakat (other than Zakat deducted on profit on debt)
   then he shall be entitled to deduct this amount from his income chargeable to tax.
   If the amount of Zakat is more than the income chargeable to tax then excess shall not be
   refunded, carried forward or carried back.


2. Worker’s Welfare Fund (u/s 60A):
   A person shall be entitled to a deductible allowance for the amount of any Workers’ Fund paid
   by the person in tax year under Workers’ Welfare Fund Ordinance, 1971 or under any law
   relating to the Workers’ Welfare Fund enacted by Provinces after the eighteenth Constitutional
   amendment Act, 2010:
   Provided that this section shall not apply in respect of any amount of Workers’ Welfare Fund
   paid to the Provinces by a trans-provincial establishment.
   WWF is now chargeable and payable to PRA within 30 days from the end of the financial year.
   [Ref: Punjab Workers Welfare Act, 2019]
   Section 4 of the said Act covers the following:
   Every establishment, the total income of which in any year of account commencing on or after
   December 10, 2019 is not less than Rs. 500,000 shall pay to the fund in respect of that year a sum
   equal to 2% of so much of its total income.
   Every establishment which is liable as above shall pay the amount due from it to the respective
   province having jurisdiction over the establishment for purposes of the PWWF, 2019.