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Taxation Managment

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Taxation Management ­ FIN 623
VU
MODULE 4
LESSON 4.10
HEADS OF INCOME (SECTION 11)
Agricultural Income (Section 41) derived by a person shall be exempt from tax under this ordinance.
Agricultural income:
(1) Agricultural income derived by a person shall be exempt from tax under this Ordinance.
(2) In this section, "agricultural income" means,
(a) Any rent or revenue derived by a person from land which is situated in Pakistan and
is used for agricultural purposes;
(b) Any income derived by a person from land situated in Pakistan from ­
(i)
Agriculture;
(ii)
the performance by a cultivator or receiver of rent-in-kind of any process
ordinarily employed by such person to render the produce raised or received
by the person fit to be taken to market; or
(iii)
the sale by a cultivator or receiver of rent-in-kind of the produce raised or
received by such person, in respect of which no process has been performed
other than a process of the nature described in sub-clause (ii); or
(c) Any income derived by a person from:
i)  any building owned and occupied by the receiver of the rent or revenue of any
land described in clause (a) or (b);
ii)  any building occupied by the cultivator, or the receiver of rent-in-kind, of any
land in respect of which, or the produce of which, any operation specified in
sub clauses (ii) or (iii) of clause (b) is carried on, but only where the building is
on, or in the immediate vicinity of the land and is a building which the
receiver of the rent or revenue, or the cultivator, or the receiver of the rent-in-
kind by reason of the person's connection with the land, requires as a
dwelling-house, a store-house, or other out-building.
Agricultural income means:
 Rent or Revenue derived by a person from land.
 Income derived from land situated in Pakistan.
 The land is used for agricultural purposes.
Following Incomes are held to be "Non-Agricultural Income"
Income from spontaneous forest
Income from sale of fruits and flowers growing on land naturally, spontaneously, and without the
intervention of human agency
Interest on arrears of rent payable in respect of agricultural land as it is neither "rent" nor
"revenue" derived from land.
Interest accrued on promissory notes obtained by a zamindar from defaulting tenants.
Income from sale of wild grass and weeds of spontaneous growth
Profit accruing from the purchase of standing crops and resale of it after harvest by a merchant
having no interest in land except a mere licence to enter upon the land and gather upon the
produce, land is not direct, immediate or effective source of income.
Interest received by a money-lender in the form of agriculture produce.
Income from sale of agricultural produce received by way of price for water supplied to land.
Commission earned by the landlord for selling agricultural produce of his tenant.
Dividend paid by a company out of its agriculture income.
Income from fisheries
Royalty income of mines
Income received from land let out for storing crops
Income from butter and cheese making
Income from poultry farming
Maintenance allowance charged on agricultural land.
Following Income are held to be "Agricultural Income"
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Taxation Management ­ FIN 623
VU
 If denuded parts of the forest are replanted and subsequent operations in forestry is carried out the
income arising from the sale of replanted trees.
 The fees collected from owners of cattle (normally used for agricultural purpose) for allowing them to
graze on forest lands covered by jungle and grass grown spontaneously.
 Profit on sale of standing crops or the produce after harvest by a cultivating owner or tenant of land.
 Compensation received from an insurance company for danger caused by hailstorm or another natural
calamity to crops or agricultural produce.
 Income from growing flowers and creepers.
 Share of profit of a partner from a firm engaged in agricultural operation (similarly salary received by
him for services in agricultural operations as salary is only a mode of adjustment of the firm's income).
 Interest on capital received by a partner from a firm engaged in agricultural operation.
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Table of Contents:
  1. AN OVERVIEW OF TAXATION
  2. What is Fiscal Policy, Canons of Taxation
  3. Type of Taxes, Taxation Management
  4. BASIC FEATURES OF INCOME TAX
  5. STATUTORY DEFINITIONS
  6. IMPORTANT DEFINITIONS
  7. DETERMINATION OF LEGAL STATUS OF A PERSON
  8. HEADS OF INCOME
  9. Rules to Prevent Double Derivation of Income and Double Deductions
  10. Agricultural Income
  11. Computation of Income, partly Agricultural,
  12. Foreign Government Officials
  13. Exemptions and Tax Concessions
  14. RESIDENTIAL STATUS & TAXATION 1
  15. RESIDENTIAL STATUS & TAXATION 2
  16. Important Points Regarding Income
  17. Geographical Source of Income
  18. Taxation of Foreign-Source Income of Residents
  19. Exercises on Determination of Income 1
  20. Exercises on Determination of Income 2
  21. SALARY AND ITS COMPUTATION
  22. Definition of Salary
  23. Significant points regarding Salary
  24. Tax credits on Charitable Donations
  25. Investment in Shares
  26. SALARY AND ITS COMPUTATION EXERCISES 1
  27. SALARY AND ITS COMPUTATION EXERCISES 2
  28. SALARY AND ITS COMPUTATION EXERCISES 3
  29. Tax treatment of Gratuity
  30. Gratuity Exercise
  31. PROVIDENT FUND
  32. Exemptions on Business income, Treatment of Speculation Business
  33. Deductions Allowed & Not Allowed
  34. Deductions: Special Provisions, Depreciation
  35. Methods of Accounting
  36. Taxation of Resident Company
  37. Taxation of Companies: Exercises
  38. Computation of Capital Gain
  39. Disposals Not Chargeable To Tax
  40. TAX RETURNS & ASSESSMENT OF INCOME UNIVERSAL SELF ASSESSMENT SCHEME
  41. Normal Assessment, USAS, Provisional Assessment, Best Judgment Assessment
  42. ADVANCE TAX COLLECTION & RECOVERY OF TAX PENALTIES & PROSECUTION
  43. What is Value Added Tax (VAT)?
  44. SALES TAX
  45. SALES TAX RETURNS