Mr. Muhammad Younus Ghazi PAKISTAN TAX BAR ASSOCIAITON Presentation on Income from other source and deductions at PTBA Summer Camp-2009 Mr. Muhammad Younus Ghazi B.Com (Hons); M. Com; FCA Chartered Accountant Multan

Income from other source and deductions Scope of ‘Income from Other Sources’ (Sec. 39) What are the incomes which can be charged to tax under this head (Sec. 39) “Dividend” – Scope and chargeability (Sec. 2(19), 5 & 101(6)) Dividend in common parlance and Company Ordinance

Income from other source and deductions Dividend under the Ordinance Dividend paid when considered Pakistan-source income (Sec. 101 (6)) Grossing up of dividend Tax treatment or dividends Dividends received by ICP (CI.(102), Part 1,2nd Sch.)

Income from other source and deductions Distribution received from Mutual Trust Funds (CI.(103), Part 1,2nd Sh.) Other points for consideration (Sec. 55 (1)) Incomes generally chargeable to tax under section 29 “Royalty” (Sec. 39 (1)(b)) Royalty when a Pakistan source income (Sec. 101 (8))

Income from other source and deductions Royalty income in the hands if non-resident taxpayers (Sec. 6 Read with Sec. 152(1)) Authors of literary or artistic work (Sec. 89) Profit on debt (Sec. 39 (1) (c)) Deduction at source Profit on debt when considered Pakistan-source income (Sec.101 (6))

Income from other source and deductions Exemptions (Sec. 46 & CIs.(72) to (90),Part 1,2nd Sch.) Fee for technical services Fee for technical services when considered Pakistan-source income (Sec. 101 (2)) Fee for technical services in the hands of non-resident taxpayers. (Sec. 6 with 152 (10))

Income from other source and deductions Income from lease of building together with machinery, plant or furniture. (Sec. 39 (1) (f)) Amounts received as a loan, advance, deposit or gift through undocumented and non-banking channels. (Sec. 39 (2)) Income to which section 111 applies.

Income from other source and deductions Undisclosed income/investments (Sec. 111 (1)) Additions in the year of discovery (Sec. 111 (2)) Section 111 not applicable on foreign exchange remittance (Sec. 111 (4)) Rules for determination of property, assets etc. (Sec. 111 (5)) Deduction from “income from Other Sources” (Sec. 40)

Income from other source and deductions Points to remember Expenditure allocate to exempt income (Sec. 67) Expenses not admissible. (Sec.40 (5))