Tax Book 2023

Taxation System Chapter- 01

 To promote science and invention, finance educational activities or maintain and improve

the efficiency of local forces;

 To implement laws which eliminate discrimination among various elements in the markets

/ businesses.

4 .3 Example

Explain what are the objectives of following tax laws:

Sr. Tax Law Objective

1. Tax on Salary income (including income from
   other heads of income) under various sections
   of the Income Tax Ordinance, 2001

Revenue Collection

2. Any amount transferred otherwise than
   banking channel will be deemed as income u/s
   39

Documentation of economy

3. Tax on moveable assets of the taxpayers Fair distribution of wealth


4. Higher taxes on import of luxury Goods Reduction in imports of
   unnecessary goods and create
   good balance of Trade


5. Allowability of expenditure of Research &
   developments

Promotion of Research &

developments

6. Zero rating on Exports, reduced rates of taxes
   on imports

Promotion of Exports

7. Tax credit on donations to approved
   institutions u/c 61 of Part 1 of the 2nd Schedule
   to the Income tax Ordinance, 2001

To promote culture of payment of

donation to only organised and

regulated institutions

8. Tax credit on investments in listed Companies
   shares u/s 6 2

Promote investments in listed

companies

9. Reduced rate of 0.25%Tax on software
   exports u/s 154A of the Income tax Ordinance,
   2001

Promote software Industry

4 .4 Taxes as mean for development

Taxes are one of the main mean for development. This is not because that revenue collected by

the state is used on developmental projects rather taxes can be used in many a ways to bring

development in the country. Some examples are as under:

 The Government can declare some areas as free zone, industrial zone, economic zone

and provide tax incentives to such areas. These under developed area will become focus

of businessman/industrialist. This will bring employment, opportunities and prosperity in

these un-developed areas.

 Taxing the rich at higher rate whereas taxing the low income group at low tax rates

 Imposition of high custom duty rates on luxury items or kind of items which are also

manufactured in Pakistan. This promotes local manufacturers and industry.

 Tax credits on charity/donations to promote welfare activities.

 Tax exemptions to charity organization /educational institutions to promote these

activities.

 Tax incentives for agro based projects to promote agriculture.