Taxation Presentation

Topic:

Definitions

Income Tax
Income Tax is governed by Income Tax Act, 1961 and Rules .

Every year the Union Budget is announced, which incorporates taxation changes for the next financial year. Income tax always deals with financial year. The current financial year is called Previous Year and the next financial year is called the Assessment Year.

Heads of Income
There are Five Heads of Income.
Income from Salary Income from House Property Income from Business Income from Capital Gains Income from Other Sources

Income exempt from tax

Agriculture income means any income derived from land which is used for agriculture purpose and which is assessed to land Revenue.

Income Exempt from tax Contd

Partners share in the profit of the firm: In case of a person who is a partner of a firm which is separately assessed in that case the amount of this share in the profits of the firm ascertain as per the partnership deed is exempted from tax.

Income exempt from Tax Contd

Pensions:
Pension received by a prior employee of Pakistan Armed Forces, federal Government or Provincial government is not taxable. Any pension granted under the rules to the families and dependents of Shaheeds, belonging to Pakistan Armed forces is fully exempt.

Income Exempt from Tax Contd

If a person receives more than one pension, only the amount of high Pension will be exempt. The pension received from the United nations or its specialized agencies by the citizen of Pakistan is exempt provided that salary of such person was also not taxable under Pakistan tax law.

Income Exempt from Tax Contd

Scholarships:
Any scholarship given to a person to meet the cost of the persons education is exempt from the tax. Income of Federal Board of Revenue Foundation Through finance Act 2012, the income earned by federal board of revenue foundation has been fully exempted from the Tax.

Income Exempt from Tax Contd

Income of Trust, Welfare Institution or Non Profit organization: Income derives by the above mentioned institutions from donations, subscription house property and investment in the securities of federal Government in non taxable provide that either: 1. the trust is approved by the Federal Government. 2. the trust is approved by the board.

Income Exempt from Tax Contd

Facility of Accommodation:
the facility of rent free accommodation provided to the following person is not taxable: a) President of Pakistan b) Provincial Government c) Corps Commanders d) Federal Government Minister e) Chief of Staff of Pakistan Army, Navy and Air forces f) Judges of Supreme court and high Court.

Expenditure
The use of goods and services in order to earn revenue is the expense.
By Hendrickson, "expenses are the using or consuming of goods and services in the process of obtaining revenues".

"Expense is the expired cost, directly or indirectly related to given fiscal period, of the flow of goods or services into the market and of related operations."

Types of Expenditure