Tax Book 2023

Income From Business Chapter- 09

(5) Allowance under this section shall not be taken into account for computation of tax

deduction under section 149.

Pakistan source & Foreign source Income from business

Geographical source of Income from

business

Received by Taxability

Pakistan source business income [Section

101]:

1. A permanent establishment (PE) of the
   non-resident person in Pakistan;


2. Sales in Pakistan of goods merchandise of
   the same or similar kind as sold by the
   person through a PE in Pakistan;


3. Other business activities carried on in
   Pakistan of the same or similar kind as
   those affected by the non-resident through
   a PE in Pakistan; or


4. Any business connection in Pakistan

Resident / non-

resident individual

 Taxable [Section

11(5) and (6)]

 Exemptions, tax credits

and term and

conditions of double

taxation treaty

agreements, if any

shall also be

considered.

Foreign source business income:

Income from business other than above

a. Resident

Individual

 Taxable [Section

11(6)]

 Exemptions, tax credits

and term and

conditions of double

taxation treaty

agreements, if any

shall also be

considered.

b. Short term

resident

[For all foreign

source income]

[Section 50]

An individual shall be

exempt in respect of his

foreign-source income

which is not brought /

received in Pakistan if he

is resident only by reason

of his employment and he

is present in Pakistan for

not exceeding 3 years.

c. Returning

expatriate

[Citizen of

Pakistan coming

back in Pakistan]

[For all foreign

source income]

[Section 51]

If an individual citizen of

Pakistan (returning

expatriate) is resident in

the current tax year but

was non-resident in the 4

preceding tax years, his

foreign-source income

shall be exempt in current

tax year and in the

following tax year.

Non-resident

individual

Not taxable [Section

11(6)]

PART – II (For CA Mod F and ICMAP students)