1. Lecture 12 Exemptions & Tax Concessions on Agricultural Income

2. EXEMPTIONS AND TAX CONCESSIONS Agricultural Income – Sec.41 Diplomatic and United Nations Exemptions – Sec. 42

3. Section 43 – Foreign Government Officials Salary of an employee of foreign government exempt Provided: a.Employee citizen of foreign country and not a citizen of Pakistan. b.Services performed are similar to services performed by employees of the Federal Government in foreign countries and c.Foreign government also grants similar exemptions to employees of Federal Government.

4. Exemptions under International Agreements – Sec 44  Exemptions under Tax Treaty  Any salary received by an individual (not being a citizen of Pakistan) shall be exempt from Tax to the extent provided for in an Aid Agreement.

5. Section 45 President’s Honour Any allowance attached to any Honour, Award or Medal awarded by the President exempt from tax Any monetary award granted by the President is exempt from tax.

6. Section 46 – Profit on Debt Any profit received by a non – resident person on a security issued by a resident person shall be exempt from tax Provided:

7. Section 46 – Profit and Debt (Contd…) Provided: Persons not associates Security widely issued by resident person outside Pakistan Profit on security was paid outside Pakistan Security approved by Central Board of Revenue (CBR)

8. Section 47 – Scholarships Any scholarship granted to a person to meet the cost of person’s education shall be exempt from tax Proviso: Scholarship paid should be by a person other than an Associate of the recipient.

9. Exemptions and Tax Concessions  Support Payments under an agreement to live apart. Section 48

10. Section 49 – Federal & Provincial Govt, and Local Authority Income Income of Federal Government exempt from tax Income of Provincial Government or a Local Authority in Pakistan shall be exempt under all heads of income other than income from Business, derived outside its jurisdictional area, that shall be taxable. Federal Government, a Provincial Government or a Local Authority shall not be liable to any collection or deduction of advance tax.

11. Section 50 – Foreign source income of Short- Term Resident Individuals 1.Subject to sub-section-2, the foreign-source income of an individual shall be exempt: a.Who is a resident individual solely by reason of the individual’s employment; and b.Who is present in Pakistan for a period or periods not exceeding three years, 2.This section shall not apply to a.Any income derived from a business of the person established in Pakistan; or b.Any foreign-source income brought into or received in Pakistan by the person.

12. Section 51 – Foreign source income of returning expatriates 1.Any foreign-source income derived by a citizen of Pakistan in a tax year who was not a resident individual in any of the four tax years preceding the tax year in which the individual became a resident shall be exempt from tax under this Ordinance in the tax year in which the individual became a resident individual and in the following tax year. 2.Where a citizen of Pakistan leaves Pakistan during a tax year and remains abroad during that tax year, any income chargeable under the head :Salary” earned by him outside Pakistan during that year shall be exempt from tax under the Ordinance.

13. Exemptions and tax Concessions in second Schedule - Sec 53

14. EXEMPTIONS AND TAX CONCESSIONS Certain receipts of charitable institution [Clause (60), Part I of the Second Schedule]. “Any income of a religious or charitable institution derived from voluntary contributions applicable solely to religious or charitable purposes of the institution: Provided that nothing contained in clauses (61) or this clause shall apply to the income of a private religious trust which does not **ensure for the benefit of the public.”

15. EXEMPTIONS AND TAX CONCESSIONS Income is exempt from income tax derived from voluntary contributions, to charitable or religious institutions. The exemption is conditional to: a. must be solely applied for the purposes of the objects of the institution b. no benefit for private religious trust which do not ensure for public benefit.

16. EXEMPTIONS AND TAX CONCESSIONS Donation to certain institution [Clause (61), Part I of the Second Schedule]. “[Any] amount paid as donation to the following institution, foundations, societies, boards, trusts and funds, namely: i. any Sports Board or Institution recognized by the Federal Government for the purposes of promoting, controlling or regulating any sport or game; ii. Fund for Promotion of Science and Technology in Pakistan iii. Fund for Retarded and Handicapped Children; Proviso, Individual 30, Co.15p.c

17. EXEMPTIONS AND TAX CONCESSIONS Donation to the President’s Relief Fund for Earthquake Victims 2005 [Clause (63A),] “Any amount paid as donation to the President’s Relief Fund for Earthquake Victims 2005.”

18. EXEMPTIONS & TAX CONCESSIONS Foreign Currency Accounts [Clause (80), Part I of the Second Schedule] “Any income derived from a private foreign currency account held with an authorized bank in Pakistan, [or certificates of investment issued by Investment Banks,] in accordance with the Foreign Currency Accounts Scheme introduced by the State Bank of Pakistan, by a resident individual who is a citizen of Pakistan. Provided that the exemption under this clause shall not be available in respect of any incremental deposits made in the said accounts on the after the 16 th day of December, 1999, or in respect of any accounts opened under the said scheme on or after the said date.”