Losses Chapter- 14
unadjusted during the last tax year.
Required:
Calculate KL’s total tax payable and foreign tax losses to be carried forward to the
next year (if any)Answer^Unadjusted foreign tax credit cannot be refunded, carried back to preceding year or
carried forward to the following year.- Group taxation [Section 59AA]
(1) Holding Company’s and Subsidiary Company’s of 100% owned group may opt to be taxed as
one fiscal unit. In such cases, besides consolidated group accounts as required under the
Companies Act, 2017 computation of income and tax payable shall be made for tax purposes.
(2) The companies in the group shall give irrevocable option for taxation under this section as one
fiscal unit
(3) The group taxation shall be restricted to companies locally incorporated under the Companies
Ordinance, 1984.
(4) The relief under group taxation would not be available to losses prior to the formation of the
group.
(5) The option of group taxation shall be available to those group companies which comply with
such corporate governance requirements and group designation rules or regulations as may be
specified by the Securities and Exchange Commission of Pakistan from time and are
designated as companies entitled to avail group taxation.
(6) Procedure for group taxation RULE 231D
(A) A 100% owned company shall be a Subsidiary Company where another company, owns
all equity shares of such company except those held by nominees to meet the statutory
requirements of the Companies Act, 2017.
(B) A Holding Company and each of its Subsidiary Companies of 100% owned group which
fulfil the conditions of section 59AA shall make separate application containing
declaration of irrevocable option for group taxation as one fiscal unit to the concerned
Commissioner Inland Revenue in prescribed form within the first quarter of the tax year
for which group taxation is opted for.Description Pakistan Total
Source Speculation Non Capital GainOther Total (PSI+FSI)
Income Speculation SourcesIncome for the year 2,500,000 500,000 (1,000,000) 750,000 1,250,000 1, 500,000
Losses brought forward - (250,000) - (1,500,000)
Balance income^ 2,500,000^ 250,000^ (1,000,000)^ (750,000)^ 1,250,000^ 500,000^
Loss adjustments - - 1,000,000 - (1,000,000) -
Taxable income 2,500,000 250,000 - (750,000) 250,000 500,000 3,000,000
Pakistan income tax 370 ,000
Proportionate Pakistan tax ( 370 ,000/3,000,000) X 250,00 0 3 0,833
Foreign tax actually paid 125,000^ 187,500^ 312,500^
Foreign tax credit allowed
(Lower of the two) 3 0,833 3 0,833 (^6 1,666)
Balance tax payable^3 08,334---------------------------Foreign Source----------------------------3 0,833 (^370 ,000/3,000,000) X 250,00^0