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Taxation Managment

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Taxation Management ­ FIN 623
VU
MODULE 4
LESSON 4.13
HEADS OF INCOME (SECTION 11)
Exemptions and Tax Concessions
 Foreign Currency Bearer Certificates] (81A)
 Profits on Special US Dollar Bonds, 1998 rules [Clause (82), Part I of Second Schedule].
 Income of Text-Book Boards [Clause (91), Part I of the Second Schedule]
 Income of certain educational institutions [Clause (92), Part I of the Second Schedule] "income of
any university or other educational institution established solely for educational purposes and not
for purposes of profit"
 Income of Sports Boards [Clause (98), Part 1 of the Second Schedule] "Any income derived by any
Board or other organization established in Pakistan for the purposes of controlling, regulating or
encouraging major games and sports recognized by Government."
 Mutual Funds [Clause (99), Part 1 of the Second Schedule]
 Encashment of Special US Dollar Bond [Clause (135), Part 1 of the Second Schedule] "Any
amount received on encashment of Special US Dollar Bond issued under the Special US Dollar
Bonds Rules, 1998."
Medical Expenditure by individuals, [Clause (139), Part 1 of the Second Schedule]
"(a) benefit represented by free provision to the employee of medical treatment or hospitalization or both
by an employer or the reimbursement received by the employee of the medical charges or hospital charges
or both paid by him, where such provision or reimbursement is in accordance with the terms of
employment:
Provided that National Tax Number of the hospital or clinic, as the case may be, is given and the employer
also certifies and attests the medical or hospital bills to which this clause applies;
any medical allowance received by an employee not exceeding ten per cent of the basic salary of the
employee if free medical treatment or hospitalization or reimbursement of medical or hospitalization
charges is not provided for in the terms of employment;
or
Provided that the receipts of such expenditure bearing name, National Tax Number and complete address
of the medical practitioners are furnished along with his return of income.
Exemptions from Total Income under Second Schedule-- Part 1:
 Allowance and perquisites of Govt. employees posted abroad
 Salary of foreign employees of British Council
 Pension Clause (9):
Pension of Federal, Provincial Govt. & Armed Forces employees & Families
 Commutation of pension Clause (12)
 Perquisites to President, Governors and Chiefs of Staff-Residence (51)
 Perquisites of Governors, Chiefs of Staff and Corps Commanders-Conveyance and Entertainment
(52)
 Perquisites of Federal Ministers
 Perquisites of Judges (56)
 Allowances and privileges of Judges
 Income of Sports Boards (61)
Reduction in Tax Rates under Second Schedule Part 2
 Profit on Special US Dollar Bonds or out of new account opened after December 16, 1999.At the
Rate of 10 percent of amount of profit by Resident Person
 Presumptive tax for business of shipping of resident persons
Reduction in Tax Liability under Second Schedule Part 3
 Any amount received as flying allowance by pilots etc. and junior commissioned officers or other
ranks shall be taxed @2.5% as separate block.
 Senior citizen-age 60 years &above where taxable income not exceeding Rs.400,000/- tax liability
reduced by 50%.
20
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