1. 01 Basics TAXATION

2. TAX Imposition of compulsory levies on individuals or entities by governments. Source of Govt. revenue Funds public expenditure made by the Govt. Failure to pay, evasion is punishable by law From the view of economists, a tax is a compulsory transfer of resources from the private to the public sector levied on a basis of predetermined criteria and without reference to specific benefit received.

3. DEVELOPMENT & CONTROL Tax exemptions to Educational and Charitable Organizations Tax Free Zones to establish industries in rural areas High custom duty to protect local industry Tax credit to give money in charity Increase Tax Depreciation rate to spur employment Charge higher tax on pollutants to save environment

4. TYPES Direct Taxes: (on a person – due to ownership) a)Income Tax b)Capital Value Tax (CVT) Indirect Taxes: (on transactions) a)Value Added Tax b)Sales Tax c)Excise

5. Income Tax Ordinance, 2001 (Section 1): Income tax shall be imposed for each tax year, … … on every person who has taxable income for the year. Section 80: Following shall be treated as persons a)An individual; b)a company or association of persons incorporated, formed, organised or established in Pakistan or elsewhere; c)the Federal Government, a foreign government, a political sub-Division of a foreign government, or public international organisation

6. “Association of persons” includes a firm, a Hindu undivided family, any artificial juridical person and any body of persons formed under a foreign law, but does not include a company. “firm” means the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all;

7. Company” means — Company as defined in CO1984; a body corporate formed by or under any law; a modaraba; Body incorporated under the law of a foreign country; Co-operative society, a finance society, or any other society; a non-profit organization;

8. a trust, an entity or a body of persons …; a foreign association, whether incorporated or not, which the Board has declared to be a company; a Provincial Government; a Local Government in Pakistan; or a Small Company as defined in section 2;

9. (SEC-11) HEADS OF INCOME a)SalaryXXX b)Income from propertyXXX c)Income from businessXXX d)Capital gains XXX e)Income from other sourcesXXX

10. Section 10: The total income of a person for a tax year shall be the sum of the: a)person’s income under all heads of income for the year b)person’s income exempt from tax Section 9: The taxable income of a person for a tax year shall be the total income of the person for the year reduced (but not below zero) by the total of any deductible allowances

11. a)SalaryXXX b)Income from propertyXXX c)Income from businessXXX d)Capital gains XXX e)Income from other sourcesXXX f)Less: Zakat (XXX) g)Less: WWF (for companies only) (XXX) h)Less: WPPF (for companies only) (XXX) i)Taxable IncomeXXX

12. Section 74: “Tax year” shall be a period of twelve months ending on the 30 th day of June (hereinafter referred to as ‘normal tax year’) and shall be denoted by the calendar year in which the said date falls. 1.7.2014 – 30.6.2015Tax Year 2015 1.7.2015 – 30.6.2016Tax Year 2016

13. Special Tax Years: Sugar: 1.10.2014 – 30.9.2015Tax Year 2015 Banks: 1.1.2016 – 31.12.2016Tax Year 2016 Insurance Companies: 1.1.2016 – 31.12.2016Tax Year 2016 Atlas Honda Limited (special permission) 1.4.2015 – 31.3.2016Tax Year 2016