Income Tax Pakistan
How to Calculate Income Tax in Pakistan – An Overview
Law concerning taxation of income in Pakistan is stated in the Income Tax Ordinance, 2001 (the Ordinance) and the rules framed thereunder viz. Income Tax Rules, 2002 (the Rules). The Ordinance is a Central statute and is, therefore, applicable to the whole of Pakistan.
Heads of Income in Pakistan
Under the Ordinance income is classified into the following five heads: Salary, Income from property, Income from business, Capital gains and Income from other sources. The income of a person under a head of income shall be the total of the amount derived by the person in a tax year that are chargeable to tax under the head as reduced by the total deductions allowed under the ordinance to the person under that head.
Taxable Income in Pakistan
It is the total income of a person for a tax year reduced by the total of any deductible allowances, under the Ordinance, for the year. A person is entitled to a deductible allowance for the amount of any Zakat paid by the person in a tax year under the Zakat & Ushr Ordinance, 1980.Tax Year in Pakistan
Tax year is a period of twelve months ending on 30th June and shall be denoted by the calendar year in which the said date falls.
Capital Value Tax (CVT) in Pakistan
CVT is payable by individuals, firms and companies which acquire an asset by purchase or a right to use for more than 20 years. It is also payable on import of motor vehicles.