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Taxation Managment

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Taxation Management ­ FIN 623
VU
MODULE 5
LESSON 5.16
RESIDENTIAL STATUS & TAXATION
Scope of Total Income of a Resident Person Section 11 (5)
Resident Person Changeable to tax on:
The income of a resident person under a head of income shall be computed by taking into account
amounts that are Pakistan-source income and amounts that are foreign-source income.
Pakistan Source Income & Foreign Source Income Sec.11 (5) whereas, non-resident person charged
only on Pakistan Source Income Sec.11 (6)
Important Points Regarding Income:
 Receipt ---- Remittance
 Cash & Kind
 Receipt & Accrual
 Actual Receipt & Constructive Receipt
Geographical Source of Income-Sec101 Pakistan-Source Income:
1) Salary shall be Pakistan-source income to the extent to which the salary-
 Is received from any employment exercised in Pakistan, wherever paid; or
 Is paid by, or on behalf of, the Federal Government, a Provincial Government, or a local authority
in Pakistan, wherever the employment is exercised
2) Business income of a resident person shall be Pakistan-source income to the extent to which the
income is derived from any business carried on in Pakistan.
3) Business income of a non- resident person shall be Pakistan- source income to the extent to which it is
directly or indirectly attributable to-
 A permanent establishment of the non-resident person in Pakistan;
 Sales in Pakistan of goods or merchandise of the same or similar kind as those sold by the person
through a permanent establishment in Pakistan
Other business activities carried on in Pakistan of the same or similar kind as those effected by the non-
resident through a permanent establishment in Pakistan (or)
Any business connection in Pakistan
4) Where the business of a non-resident person comprises the rendering of independent services
(including professional services and the services of entertainers and sports persons), the Pakistan-source
business income of the person shall include [in addition to any amounts treated as Pakistan-source income
under sub-section (3)] any remuneration derived by the person where the remuneration is paid by a resident
person or borne by a permanent establishment in Pakistan of a non-resident person.
5) Any gain from the disposal of any asset or property used in deriving any business income referred to in
sub-section (2), (3) or (4) shall be Pakistan-source income.
6) A dividend shall be Pakistan-source income if it is paid by a resident company.
7) Profit on debt shall be Pakistan-source income if it is-
(1) Paid by a resident person, except where the profit is payable in respect of any debt used for the
purposes of a business carried on by the resident outside Pakistan through a permanent
establishment; or
(2) Borne by a permanent establishment in Pakistan of a non-resident person.
23
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