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GOVERNMENT OF PAKISTAN
FEDERAL BOARD OF REVENUE
(REVENUE DIVISION)
INCOME TAX MANUAL
PART II
INCOME TAX RULES, 2002
AMENDED UPTO
TH
10 FEBRUARY, 2017
Table of Content
INCOME TAX RULES, 2002
ARRANGEMENT OF RULES
Table of Contents
Rules Page No.
CHAPTER - I............................................................................................................................... 1
01. Short title and commencement ............................................................................................................................................. 1
02. Definitions ............................................................................................................................................................................ 1
CHAPTER - II.............................................................................................................................. 3
DETERMINATION OF INCOME - HEADS OF INCOME ............................................................................................... 3
PART-l: SALARY ............................................................................................................................................................................... 3
03. Valuation of perquisites, allowances and benefits ................................................................................................................. 3
04. Valuation of accommodation ................................................................................................................................................ 3
05. Valuation of conveyance ...................................................................................................................................................... 3
06 Employee includes a director of a company . ....................................................................................................................... 3
07 Applicable for salary income ................................................................................................................................................. 3
08 Omitted……………………………………………………………………………………………………………………………………..
09 Omitted……………………………………………………………………………………………………………………………………..
PART-II : INCOME FROM BUSINESS ............................................................................................................................................... 4
10. Entertainment expenditure ................................................................................................................................................... 4
11. Agricultural produce as raw materials ................................................................................................................................... 4
12. Particulars required to be furnished for claiming depreciation deduction or initial allowance amortization deduction ............. 5
12A. Decommissioning certificate ................................................................................................................................................. 6
13. Apportionment of expenditures ............................................................................................................................................. 6
PART-III : COMPUTATION OF CAPITAL GAIN ON DISPOSAL OF SECURITIES ........................................................................... 7
13A. Acquisition of securities ........................................................................................................................................................ 7
13B. Disposal of securities ........................................................................................................................................................... 8
13C. Holding period ...................................................................................................................................................................... 8
13D. Computation of capital gain or loss ....................................................................................................................................... 8
13E. Computation of capital gain or loss on derivatives ................................................................................................................ 9
13F. Capital loss adjustment disallowed in certain cases .............................................................................................................. 9
13G. Exemption from tax on capital gain ..................................................................................................................................... 10
13H. Payment of tax on capital gain............................................................................................................................................ 10
13I. Maintenance of records ...................................................................................................................................................... 10
13J. Exchange of information ..................................................................................................................................................... 11
13K. Violations and penalties...................................................................................................................................................... 11
13L. Definitions .......................................................................................................................................................................... 11
13M. Quarterly statements .......................................................................................................................................................... 13
13N. Special procedures for computation of capital gains and collection of tax ........................................................................... 16
13O. Statements and forms ........................................................................................................................................................ 22
13P. Clarifications and explanations ........................................................................................................................................... 25
PART-IV : COMPUTATION AND COLLECTION OF TAX UNDER SECTIONS 7C AND 7D
13Q. Application……………………………………………………………………………………………………………………………….45
13R. Definitions…………………………………………………………………………………………………………………………….….45
13S. Advance tax on builders and developers……………………………………………………………………………………………..45
Income Tax Rules, 2002 i
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13T. Mode and manner for payment and collection of tax from builders………………………………………………………………..46
13U. Schedule of Installments for builders……..…………………………………………………………………………………………..46
13V. Application for payment of tax in installments by builders…………………………………………………………………………..46
13W. Responsibilities of the Authority…………………….…………………………………………………………………………….…..47
13X. Responsibilities of the Inspector General of Registration…………………………………………………………………………47
13Y. Responsibilities of the Builders………..……………………………………………………………………………………………..47
13Z. Adjustment of withholding taxes by builders………………………………………………………………………………………..47
13ZA. Mode and manner for payment and collection of tax from land developers………………………………………………….....47
13ZB. Schedule of Installments for land developers……………………………………………………………………………………....47
13ZC. Application for payment of tax in Installments by land developers………..…………………………………………………......48
13ZD. Responsibilities of the Authority……………………………………………….…………………………………………………......48
13ZE. Responsibilities of the Inspector General of Registration………………….…………………………………………………...... 49
13ZF. Responsibilities of the Land Developers………………………………………………………………………………………….....49
13ZG. Adjustment of withholding taxes ……………………………………………..…………………………………………………..... .49
13ZH. General provisions for builders developers..………………………………..…………………………………………………..... .49
CHAPTER - III........................................................................................................................... 50
PERSONS .................................................................................................................................................................... 50
14. Resident individual ............................................................................................................................................................. 50
CHAPTER – IV ......................................................................................................................... 51
TAXATION OF FOREIGN-SOURCE INCOME OF RESIDENTS .................................................................................51
15. Foreign income tax ............................................................................................................................................................. 51
16. Foreign tax credit ............................................................................................................................................................... 52
CHAPTER - V ........................................................................................................................... 53
TAXATION OF NON-RESIDENTS ...............................................................................................................................53
17. Application of chapter ......................................................................................................................................................... 53
18. Income from royalties ......................................................................................................................................................... 53
19. Fees for technical services ................................................................................................................................................. 54
19A. Certificate of residence ....................................................................................................................................................... 54
19B. Certificate of payment of tax in Pakistan ............................................................................................................................. 57
19C. Certificate for tax sparing credit .......................................................................................................................................... 59
19D. Application for initiation of Mutual Agreement Procedure (MAP) ......................................................................................... 62
19E. Action by the Competent Authority of Pakistan on an application received through the Competent Authority of a treaty
partner country ................................................................................................................................................................... 63
19F. Form of application for initiation of MAP Proceedings ......................................................................................................... 64
19G. Form of Irrevocable Bank Guarantee .................................................................................................................................. 66
CHAPTER - VI .......................................................................................................................... 69
TRANSFER PRICING ..................................................................................................................................................69
20. Application of this chapter .................................................................................................................................................. 69
21. Interpretation ...................................................................................................................................................................... 69
22. Subject to the other rules in this ......................................................................................................................................... 69
23. Arm's length standard......................................................................................................................................................... 69
24. Comparable uncontrolled price method .............................................................................................................................. 70
25. Resale price method .......................................................................................................................................................... 70
26. Cost plus method ............................................................................................................................................................... 70
27. Profit split method .............................................................................................................................................................. 70
Income Tax Rules, 2002 ii
Table of Content
CHAPTER - VII ......................................................................................................................... 72
RECORDS AND BOOKS OF ACCOUNTS ..................................................................................................................72
PART-I : PRELIMINARY .................................................................................................................................................................. 72
28. Application of Chapter ........................................................................................................................................................ 72
PART-II : BOOKS OF ACCOUNT PRESCRIBED ............................................................................................................................ 72
29. Books of account, documents and records to be maintained .............................................................................................. 72
30. In particular, and without prejudice to the generality of the provisions of Rule 29, every taxpayer, other than companies,
deriving income chargeable under the head "Income from business" shall issue and maintain the following minimum books
of account, documents and records .................................................................................................................................... 73
30A. Electronic tax registers ....................................................................................................................................................... 75
31. Every taxpayer deriving income chargeable under the head income from salary property, capital gains or other sources
shall issue and maintain the following minimum documents and records ............................................................................ 75
PART-III : GENERAL INSTRUCTIONS ABOUT MAINTAINING BOOKS OF ACCOUNTS, DOCUMENTS AND RECORDS .......... 77
32. General form of books of accounts, documents and records .............................................................................................. 77
33. Books of account documents and records to be kept at the specified place ........................................................................ 77
CHAPTER - VIII ........................................................................................................................ 78
RETURNS, EMPLOYER'S CERTIFICATE, WEALTH STATEMENT AND STATEMENT TO BE FILED BY CERTAIN
PERSONS ....................................................................................................................................................................78
34. Return of income ................................................................................................................................................................ 78
35. Employer's certificate in lieu of return of income ................................................................................................................. 78
36. Wealth statement ............................................................................................................................................................... 79
37. Return to be furnished by a non-resident ship owner or charterer ....................................................................................... 79
38. Return to be furnished by a non-resident aircraft owner or charterer .................................................................................. 80
39. Statement in lieu of Return of income ................................................................................................................................. 80
CHAPTER - VIIIA...................................................................................................................... 81
BANKING COMPANIES REPORTING REQUIREMENTS...........................................................................................81
39A. This chapter contains rules for banking companies ............................................................................................................ 81
39B. Definitions .......................................................................................................................................................................... 81
39C. Furnishing of information .................................................................................................................................................... 81
39D. Authorized Persons ............................................................................................................................................................ 82
39E. Time of furnishing information ............................................................................................................................................ 82
39F. Exclusions .......................................................................................................................................................................... 82
CHAPTER - IX .......................................................................................................................... 85
CERTIFICATES, STATEMENTS AND PROCEDURE FOR PAYMENT OF ADVANCE TAX .....................................85
PART I - SECTION 159 .................................................................................................................................................................... 85
CERTIFICATE .................................................................................................................................................................................. 85
40. Exemption or lower rate certificate u/s 159 ......................................................................................................................... 85
PART II............................................................................................................................................................................................. 85
COLLECTION OR DEDUCTION OF TAX AT SOURCE ................................................................................................................... 85
DIVISION I ........................................................................................................................................................................................ 85
EMPLOYER'S CERTIFICATE........................................................................................................................................................... 85
41. Omitted…………………………………………………………………………………………………………………………………………
DIVISION II ....................................................................................................................................................................................... 85
CERTIFICATE FOR COLLECTION OR DEDUCTION OF TAX......................................................................................................... 85
(OTHER THAN FROM SALARY) ...................................................................................................................................................... 85
42. Certificate of collection or deduction of tax ......................................................................................................................... 85
DIVISION III ...................................................................................................................................................................................... 86
Income Tax Rules, 2002 iii
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PAYMENT OF TAX COLLECTED OR DEDUCTED .......................................................................................................................... 86
43. Payment of tax collected or deducted ................................................................................................................................. 86
Division IIIA....................................................................................................................................................................................... 86
ADVANCE TAX ON AIR TICKETS ................................................................................................................................................... 86
43A. Advance tax on air tickets................................................................................................................................................... 86
43B. Amount actually paid under section158…………………………………………………………………………………………… 88
DIVISION IV ..................................................................................................................................................................................... 88
ANNUAL AND [MONTHLY] STATEMENTS OF TAX COLLECTED .................................................................................................. 88
44. Annual statement of tax collected or deducted ................................................................................................................... 88
45. Statement of tax deducted under the Sixth Schedule to the Ordinance............................................................................... 89
46. Certificate issuing authorities .............................................................................................................................................. 89
47 to 66 Omitted……………………………………………………………………………………………………………………………………..
CHAPTER - X ........................................................................................................................... 90
PRESCRIBED FORMS.................................................................................................................................................90
67. Application of Chapter ........................................................................................................................................................ 90
68. Amended assessment notice.............................................................................................................................................. 90
69. Section 140 notice .............................................................................................................................................................. 90
70. Section 145 certificate ........................................................................................................................................................ 90
71. Section 170 application ...................................................................................................................................................... 90
72. Section 175 authorization ................................................................................................................................................... 90
CHAPTER - XI .......................................................................................................................... 91
FURNISHING OF DOCUMENTS; SERVICE OF DOCUMENTS; FORMS AND NOTICES .........................................91
73. Furnishing of documents and returns etc ............................................................................................................................ 91
74. Service of documents electronically.................................................................................................................................... 92
75. Forms and notices .............................................................................................................................................................. 93
CHAPTER - XII .......................................................................................................................... 94
APPEALS ..................................................................................................................................................................... 94
76. Prescribed form of appeal to the Commissioner (Appeals) ................................................................................................. 94
77. Prescribed form for appeal to the Appellate Tribunal .......................................................................................................... 97
78. Prescribed form for reference to the High COurt…………………………………………………………………………….………98
CHAPTER - XIII ...................................................................................................................... 100
TAXPAYER’S REGISTRATION] ................................................................................................................................ 100
79. Application of Chapter ...................................................................................................................................................... 100
80. Registration……………………………………………………………………………………………………………………………100
80A. e-enrolment………………………………………………..…………………………………………………………………………100
80B. Requirement of e-enrolment ............................................................................................................................................. 101
81. Decision on application of registration or e-enrolment …………………………………………………………………………....102
81A. Taxpayer‟s registration by the Commissioner ................................................................................................................... 102
81B. Active Taxpayers List ....................................................................................................................................................... 103
81C. Taxpayer Card ................................................................................................................................................................. 104
82. Modification or cancellation of registration ........................................................................................................................ 105
83. Displaying and quoting of National Tax Number [Certificate] ............................................................................................ 105
CHAPTER - XIV ...................................................................................................................... 107
REGISTRATION OF INCOME TAX PRACTITIONERS .............................................................................................107
Income Tax Rules, 2002 iv
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84. Application of Chapter XIV ............................................................................................................................................... 107
85. Application for registration as an income tax practitioner .................................................................................................. 107
86. Prescribed qualification for registration as an income tax practitioner ............................................................................... 107
87. Registration of income tax practitioners ............................................................................................................................ 108
88. Duration of registration ..................................................................................................................................................... 108
89. Cancellation of registration ............................................................................................................................................... 109
90. Appeal to Federal Board of Revenue ................................................................................................................................ 110
CHAPTER - XV ....................................................................................................................... 111
RECOGNISED PROVIDENT FUNDS, APPROVED SUPERANNUATION FUNDS AND APPROVED GRATUITY
FUNDS........................................................................................................................................................................111
PART I............................................................................................................................................................................................ 111
RECOGNISED PROVIDENT FUNDS ............................................................................................................................................. 111
91. Application for recognition of provident fund ..................................................................................................................... 111
92. Decision on application .................................................................................................................................................... 111
93. Withdrawal of recognition ................................................................................................................................................. 112
94. Form of appeal in case of non-recognition or withdrawal of recognition ............................................................................ 112
95. Accounts required to be maintained by a recognized provident fund ................................................................................ 113
96. Time limit for submission of accounts kept outside Pakistan ............................................................................................. 115
97. Limit on contribution by employers ................................................................................................................................... 115
98. Limit on contributions by certain employees ..................................................................................................................... 115
99. Exclusion from total income of accumulated balances ...................................................................................................... 115
100. Treatment of consideration for dealings with beneficial interest ........................................................................................ 115
101. Treatment in certain cases where recognition is withdrawn .............................................................................................. 115
102. Investment of moneys of a recognized provident fund ...................................................................................................... 116
103. Permitted withdrawals ...................................................................................................................................................... 116
104. Limits on Withdrawals ...................................................................................................................................................... 117
105. Second withdrawals ......................................................................................................................................................... 118
106. Repayment of amounts withdrawn.................................................................................................................................... 119
107. Power to relax conditions ................................................................................................................................................. 120
PART II........................................................................................................................................................................................... 120
APPROVED SUPERANNUATION FUNDS .................................................................................................................................... 120
108. Application for approval of a superannuation fund ............................................................................................................ 120
109. Returns, statements and other documents that may be required to be furnished .............................................................. 120
110. Limits on contribution by the employer ............................................................................................................................. 121
111. Investment and deposit of moneys of superannuation fund .............................................................................................. 121
112. Treatment of consideration for dealings with beneficial interest ........................................................................................ 121
113. Circumstances in which approval may be withdrawn ........................................................................................................ 121
114. Form of appeal in case of refusal to approve or withdrawal of approval ............................................................................ 122
PART III.......................................................................................................................................................................................... 122
APPROVED GRATUITY FUNDS ................................................................................................................................................... 122
115. Application for approval of a gratuity fund ......................................................................................................................... 122
116. Returns, statements and other documents that may be required to be furnished .............................................................. 123
117. Limits on contribution by the employer ............................................................................................................................. 123
118. Investment or deposits of moneys of a gratuity fund ......................................................................................................... 123
119. Treatment of consideration for dealings with beneficial interest ........................................................................................ 123
120. Circumstances in which approval may be withdrawn ........................................................................................................ 124
121. Form of appeal in case of refusal to approve or withdrawal of approval ............................................................................ 124
Income Tax Rules, 2002 v
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CHAPTER - XVI ...................................................................................................................... 125
INCOME TAX RECOVERY RULES ...........................................................................................................................125
PART - I ......................................................................................................................................................................................... 125
122. Definitions ........................................................................................................................................................................ 125
123. Form of notice of recovery to be issued by Commissioner ................................................................................................ 125
124. Mode of service of notice.................................................................................................................................................. 125
125. Time limit for execution of the notice ................................................................................................................................ 125
126. Disposal of proceeds of execution .................................................................................................................................... 126
127. Determination of disputes ................................................................................................................................................. 126
128. Exemption from attachment .............................................................................................................................................. 127
129. Investigation by Commissioner ......................................................................................................................................... 127
130. Removal of attachment on satisfaction or cancellation of Certificate ................................................................................. 128
131. Officer entitled to attach and sell ...................................................................................................................................... 128
132. Adjournment or stoppage of sale ...................................................................................................................................... 128
133. Defaulter not to mortgage, etc., any property .................................................................................................................... 129
134. Prohibition against biding or purchase by officer ............................................................................................................... 129
135. Assistance by police ......................................................................................................................................................... 129
PART - II ........................................................................................................................................................................................ 129
ATTACHMENT AND SALE OF MOVABLE PROPERTY ATTACHMENT ...................................................................................... 129
136. Person authorized to act, etc ............................................................................................................................................ 129
137. Service of copy of warrant ................................................................................................................................................ 129
138. Attachment ....................................................................................................................................................................... 130
139. Property in defaulter's possession .................................................................................................................................... 130
140. Debts and shares, etc ...................................................................................................................................................... 130
141. Share in movable property ............................................................................................................................................... 131
142. Attachment of negotiable instrument ................................................................................................................................ 131
143. Attachment of property in custody of public officer ............................................................................................................ 131
144. Attachment of property in partnership ............................................................................................................................... 131
145. Inventory .......................................................................................................................................................................... 132
146. Attachment not to be excessive ........................................................................................................................................ 132
147. Seizure between sunrise and sunset ................................................................................................................................ 132
148. Entry into building by officer, etc ....................................................................................................................................... 132
149. Sale.................................................................................................................................................................................. 132
150. Issue of proclamation ....................................................................................................................................................... 132
151. Proclamation how made ................................................................................................................................................... 132
152. Sale after fifteen days ....................................................................................................................................................... 133
153. Sale to be by auction or by tender .................................................................................................................................... 133
154. Sale by public auction ...................................................................................................................................................... 133
155. Irregularity not to vitiate sale ............................................................................................................................................. 133
156. Negotiable instruments or share in a corporation .............................................................................................................. 133
157. Order for payment of coin or currency notes to the Commissioner of Income-tax ............................................................. 134
PART - III ....................................................................................................................................................................................... 134
ATTACHMENT AND SALE OF IMMOVABLE PROPERTY ATTACHMENT .................................................................................. 134
158. Attachment ....................................................................................................................................................................... 134
159. Service of notice of attachment ........................................................................................................................................ 134
160. Proclamation of attachment .............................................................................................................................................. 134
161. Sale and proclamation of sales......................................................................................................................................... 135
162. Contents of proclamation.................................................................................................................................................. 135
163. Mode of making proclamation........................................................................................................................................... 135
Income Tax Rules, 2002 vi
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164. Time of sale ..................................................................................................................................................................... 135
165. Sale to be by auction or by tender .................................................................................................................................... 135
166. Deposit by purchaser and re-sale in default ...................................................................................................................... 136
167. Procedure in default of payment ....................................................................................................................................... 136
168. Amount recoverable from purchaser in default ................................................................................................................. 136
169. Authority to bid ................................................................................................................................................................. 136
170. Application to set aside sale of immovable property on deposit ........................................................................................ 136
171. Application to set aside sale of immovable property on ground of non-service of notice or irregularity .............................. 137
172. Setting aside sale where defaulter has no saleable interest .............................................................................................. 137
173. Confirmation of sale ......................................................................................................................................................... 137
174. Return of purchase money in certain cases ...................................................................................................................... 137
175. Sale certificate.................................................................................................................................................................. 137
176. Postponement of sale to enable defaulter to raise amount due under notice .................................................................... 138
177. Fresh proclamation before resale ..................................................................................................................................... 138
178. Bid of co-sharer to have preference.................................................................................................................................. 138
PART - IV ....................................................................................................................................................................................... 138
APPOINTMENT OF RECEIVER ..................................................................................................................................................... 138
179. Appointment of receiver for business ................................................................................................................................ 138
180. Appointment of receiver for immovable property ............................................................................................................... 138
181. Power of receivers, etc ..................................................................................................................................................... 139
182. Withdrawal of management .............................................................................................................................................. 139
PART - V ........................................................................................................................................................................................ 139
ARREST AND DETENTION OF THE DEFAULTER ....................................................................................................................... 139
183. Notice to show cause ....................................................................................................................................................... 139
184. Hearing ............................................................................................................................................................................ 141
185. Custody pending hearing.................................................................................................................................................. 141
186. Order of detention ............................................................................................................................................................ 141
187. Detention in and release from prison ................................................................................................................................ 142
188. Release ............................................................................................................................................................................ 143
189. Release on ground of illness ............................................................................................................................................ 143
190. Entry into dwelling house.................................................................................................................................................. 143
191. Prohibition against arrest of woman or minor, etc ............................................................................................................. 143
PART - VI ....................................................................................................................................................................................... 144
MISCELLANEOUS ......................................................................................................................................................................... 144
192. Continuance of Notice ...................................................................................................................................................... 144
193. Procedure on death of defaulter ....................................................................................................................................... 144
194. Appeal .............................................................................................................................................................................. 144
195. Reviews ........................................................................................................................................................................... 145
196. Recovery from surety ....................................................................................................................................................... 145
197. Receipt to be given........................................................................................................................................................... 145
198. Subsistence allowance ..................................................................................................................................................... 145
199. The sum under rule 198……………………………………………………………………………………………………......145
200. Delivery of property in occupancy of defaulter .................................................................................................................. 145
201. Delivery of property in occupancy of tenant ...................................................................................................................... 145
202. Resistance or obstruction to possession of immovable property ....................................................................................... 145
203. Resistance or obstruction by defaulter .............................................................................................................................. 146
204. Resistance or obstruction by bona fide Claimant .............................................................................................................. 146
205. Dispossession by certificate holder or purchaser .............................................................................................................. 146
206. Bona fide claimant to be restored to possession ............................................................................................................... 146
Income Tax Rules, 2002 vii
Table of Content
207. Rules not applicable to transferee lite pendent ................................................................................................................. 146
208. Delivery of movable property, debts and shares ............................................................................................................... 146
209. Execution of documents and endorsement of negotiable instruments ............................................................................... 147
210. Forms............................................................................................................................................................................... 147
CHAPTER - XVII ..................................................................................................................... 148
NON-PROFIT ORGANIZATIONS ...............................................................................................................................148
211. Procedure for the approval of a non-profit organization .................................................................................................... 148
212. Decision on application .................................................................................................................................................... 151
213. Refusal to grant approval ................................................................................................................................................. 151
214. Validity of the approval ..................................................................................................................................................... 153
215. Finalization of applications ............................................................................................................................................... 153
217. Power to withdraw approval ............................................................................................................................................. 153
218. Appeal against a decision of Commissioner ..................................................................................................................... 154
219. Organization granted approval before commencement of these rules .............................................................................. 156
220. Relaxation of requirements or conditions .......................................................................................................................... 156
220A. Procedure for approval [ ] for purpose of clause (c) of sub section (2) of section 100C of the Ordinance ......................... 156
220B. Approval and appointment of certification agencies .......................................................................................................... 162
CHAPTER - XVIII .................................................................................................................... 165
TAX CLEARANCE CERTIFICATE .............................................................................................................................165
221. Tax clearance certificate................................................................................................................................................... 165
222. Form of tax clearance certificate under section 145 .......................................................................................................... 166
223. Form of tax exemption certificate ...................................................................................................................................... 167
CHAPTER – XIX ..................................................................................................................... 168
MISCELLANEOUS .....................................................................................................................................................168
224. Conditions for approval of leasing companies for claim of depreciation deduction ............................................................ 168
225. Recognized Associations of Accountants for the purpose of section 223 .......................................................................... 168
226. Appointment of valuers ..................................................................................................................................................... 168
227. Scale of remuneration, fees and allowances for a valuer .................................................................................................. 169
228. Valuation of assets ........................................................................................................................................................... 170
229. Filing of returns, statements and documents and issuance of orders, notices through computers..................................... 171
230. Charges for various forms ................................................................................................................................................ 172
231. Computation of export profits attributable to export sales ................................................................................................. 172
231A. Procedure for issuance of advance ruling under section 206A ..................................................................................... 173
231B. Withdrawal of application ............................................................................................................................................. 173
231C. Income tax [alternative] dispute resolution ................................................................................................................... 175
231D. Procedure for group taxation under section 59AA ........................................................................................................ 180
231E Special Audit Panel………………………………………………………………………………………………………………..182
231F Selection and conduct of audit……………………………………………………………………………………………………183
231G Determination of value of bonus shares issued by a company not quoted on the stock exchange, to the shareholders
of the company..................................................................................................................................................................... 184
231H Reduced rate of tax for Shari'ah compliant companies in terms of Sub-Clause (a) of clause (18B) of Part-II of the Second
Schedule to the Ordinance .................................................................................................................................................... 185
232. Repeal & Savings ........................................................................................................................................................ 185
------ Inland Revenue Reward Rules, 2016………………………………………………………………………………………… 185
------ Inland Revenue Welfare Fund Rules, 2016....................................................................................................................189
Part-I of the First Schedule ............................................................................................................................................................. 193
Part-II of the First Schedule ............................................................................................................................................................ 194
Income Tax Rules, 2002 viii
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Part-III of the First Schedule ........................................................................................................................................................... 195
Part-IV of the First Schedule ........................................................................................................................................................... 196
Part-V of the First Schedule ............................................................................................................................................................ 197
Part-VI of the First Schedule ........................................................................................................................................................... 198
Part-VII of the First Schedule .......................................................................................................................................................... 199
Part-VII(A) of the First Schedule ..................................................................................................................................................... 200
Part-VIII of the First Schedule ......................................................................................................................................................... 201
Part-VIII(A) of the First Schedule .................................................................................................................................................... 202
Part-IX of the First Schedule ........................................................................................................................................................... 203
Part-X of the First Schedule ............................................................................................................................................................ 205
Part-XI of the First Schedule ........................................................................................................................................................... 207
Part-XII of the First Schedule .......................................................................................................................................................... 207
Part-XIII of the First Schedule ......................................................................................................................................................... 209
Part-XIV of the First Schedule ........................................................................................................................................................ 209
Second Schedule
Part-I of the Second Schedule……………………………………………………………………………………………………………….…212
Part-II of the Second Schedule…………………………………………………………………………………………………………………212
Part-IV of the Second Schedule…………………………………………………………………………………………………………….….290
Part-VII of the Second Schedule………………………………………………………………………………………………………….……291
Part-VIII of the Second Schedule………………………………………………………………………………………………………………293
Part-IX of the Second Schedule……………………………………………………………………………………………………………..…296
Part-X of the Second Schedule…………………………………………………………………………………………………… ………..…298
Part-XA of the Second Schedule…………………………………….…………………………………………………………………….…. 300
Part-XI of the Second Schedule…………………………………………………………………………………………………………….… 304
Part-XII of the Second Schedule……………………………………………………………………………………………………………… 305
Part-XIII of the Second Schedule……………………………………………………………………………………………………………. 307
Income Tax Rules, 2002 ix
CHAPTER - I
GOVERNMENT OF PAKISTAN
REVENUE DIVISION
1
[FEDERAL] BOARD OF REVENUE
***
Notification No.S.R.O. 428(1)/2002, Islamabad, the July 1, 2002.- ln exercise of powers conferred by section
2
237 of the Income Tax Ordinance, 2001 (XLIV of 2001), the [Federal Board of Revenue] is pleased to make
the following rules, namely-
INCOME TAX RULES, 2002
CHAPTER - I
1. Short title and commencement.-
(1) These rules may be called the Income Tax Rules, 2002.
(2) They extend to the whole of Pakistan.
(3) They shall come into force on the first day of July, 2002; except rules 3 to 9 which shall be
applicable in respect of income earned on or after first day of July. 2002, and other rules
covered by the rule on "Saving".
2. Definitions.-
(1) In these rules, unless there is anything repugnant in the subject or context,-
3
(a) [“Federal Board of Revenue” means the Federal Board of Revenue,
established under the Federal Board of Revenue Act, 2007;]
Note: Notification No. SRO.1102 (I)/91(Oct 5, 1991) - The reference "Board"
wherever appearing in the Rules includes a reference to "Regional Commissioners of
Tax'" and "Commissioner of Tax", as the case may be.
4
[(aa) "Computerized Payment Receipt" means a computer generated receipt issued by the
State Bank of Pakistan or the National Bank of Pakistan acknowledging payment of
tax;
(ab) "digital certificate" or "digital signatures" means a digital certificate or digital
5
signatures issued by an agency approved by the Federal Board of Revenue to issue
such certificate or signatures;
1
The words “Central Board of Revenue” substituted by the Finance Act, 2007.
2
The words “Central Board of Revenue” substituted by the Finance Act, 2007.
3
Substituted by the Finance Act, 2007. The substituted definition read as follows:"Central Board of Revenue" means the
Central Board of Revenue, established under the Central Board of Revenue Act, 1924 (IV of 1924); “
4 Clauses "(aa) to (ac)" inserted by SRO 516(I)/2006, dated June 01, 2006.
5
The words “Central Board of Revenue” substituted by the Finance Act, 2007
Income Tax Rules, 2002 1
CHAPTER - I
(ac) "e-intermediary" means a person registered as,-
(i) Chartered Accountant with the Institute of Chartered Accountants of
Pakistan;
(ii) Cost and Management Accountant with the Institute of Cost and
Management Accountants of Pakistan;
(iii) a legal practitioner entitled to practice in any Court in Pakistan;
(iv) a member of the Association of Chartered Certified Accountants, UK; or
(v) an Income Tax Practitioners, registered with Tax Bar affiliated with All
Pakistan Tax Bar Association.]
(b) "electronic transmission" means a facsimile or electronic-mail transmission;
(c) "Ordinance" means Income Tax Ordinance, 2001 (XLIX of 2001), where however,
context so provides, Income Tax Ordinance, 1979 (XXXI of 1979) till its relevance in a
particular context; 1[ ]
2 3
(d) "section" means section of the Ordinance [; [ ]]
4 5
[(e) “schedule" means a schedule to these rules [; and]]
6
[(f) “transmission" means to transmit data through a computer network.]
(2) All other expressions used but not defined in these rules shall have the meaning assigned to
them under the Income Tax Ordinance, 2001.
1 Word "and" omitted by Notification No. SRO 651(I)/2004, dated July 30, 2004.
2 Substituted for full stop by Notification No. SRO 651(I)/2004, dated July 30, 2004.
3 Word "and" omitted by Notification No. SRO 516(I)/2006, dated June 01, 2006.
4 Clause "(e)" inserted by Notification No. SRO 651(I)/2004, dated July 30, 2004.
5 Substituted for full stop by Notification No. SRO 516(I)/2006, dated June 01, 2006.
6 Clause "(f)" inserted by Notification No. SRO 516(I)/2006, dated June 01, 2006.
Income Tax Rules, 2002 2
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
CHAPTER - II
DETERMINATION OF INCOME - HEADS OF INCOME
1
[PART-l: SALARY
3. Valuation of perquisites, allowances and benefits.-
For the purposes of computing the income chargeable to tax under the head "salary", the value of all
perquisites, allowances and benefits provided by the employer to the employee shall be included in the
said income in accordance with the rules 4 to 7.
4. Valuation of accommodation.-
The value of accommodation provided by an employer to the employee shall be taken equal to the
amount that would have been paid by the employer in case such accommodation was not provided.
Provided that the value taken for this purpose shall, in any case, not be less than forty five percent of
the minimum of the time scale of the basic salary or the basic salary where there is no time scale. 2[:]
2
[Provided further that where House Rent Allowance is admissible @ thirty percent, the value taken for
the purpose of this rule shall be an amount not less than thirty percent of minimum of the time scale of
basic salary or the basic salary where there is no time scale.]
5. Valuation of conveyance.-
The value of conveyance provided by the employer to the employee shall be taken equal to an amount
as below:-
(i) Partly for personal and 5% of:
partly for official use
(a) the cost to the employer for acquiring the motor vehicle; or,
(b) the fair market value of the motor vehicle at the
commencement of the lease, if the motor vehicle is taken on
lease by the employer;
(ii) For personal use only 10% of:
(a) the cost to the employer for acquiring the motor vehicle; or,
(b) the fair market value of the motor vehicle at the
commencement of the lease, if the motor vehicle is taken on
lease by the employer; and
6. For the purpose of this part, "employee" includes a director of a company.
7. These rules shall be applicable for the salary income received after thirtieth of June, 2006.]
3
[ ]
4
[ ]
1 Part I substituted by Notification No. SRO 668(I)/2006, dated June 27, 2006, earlier it was substituted by Notification
No. SRO 609(I)/2002, dated September 10, 2002.
2 Proviso inserted and before it colon substituted for full stop by SRO 716(I)/2008, dated July 02, 2008.
3 Rule “8” omitted due to substitution of “Part-I” vide SRO 668(I)/2006, dated 27.06.2006.
4 Rule “9” omitted due to substitution of “Part-I” vide SRO 668(I)/2006, dated 27.06.2006
Income Tax Rules, 2002 3
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
PART-II : INCOME FROM BUSINESS
10. Entertainment expenditure.-
(1) For the purpose of clause (d) of section 21, which provides for a limitation on the deduction of
entertainment expenditure, and subject to sub-rule (2), a deduction for entertainment
expenditure shall be limited to expenditure incurred by a person that satisfies the conditions
laid down in sub-section (1) of section 20 and which is-
(a) expenditure incurred outside Pakistan on entertainment in connection with business
transactions or where such expenditure is allocated as head office expenditure;
(b) expenditure incurred in Pakistan on entertainment of foreign customers and suppliers;
(c) expenditure incurred on entertainment of customers and clients at the person's
business premises;
(d) expenditure incurred on entertainment at a meeting of shareholders, agents, directors
or employees; or
(e) expenditure incurred on entertainment at the opening of branches.
1
[ ]
(2) A person shall be allowed a deduction under sub-rule (1) only for expenditure incurred on the
entertainment of persons related directly to the person's business.
(3) In this rule, "entertainment" means the provision of meals, refreshments, and reasonable
leisure facilities in accordance with the tradition of business and subject to overall norms and
customs of business in Pakistan.
11. Agricultural produce as raw materials.-
(1) This rule applies to a person who is a cultivator or receiver of agricultural produce as rent-in-
kind and who uses agricultural produce raised or received as raw materials in a business the
income from which is chargeable to tax under the head "Income from Business".
(2) In determining the amount of income of a person to whom this section applies, the market
value of any agricultural produce raised or received as rent-in-kind by the person and used as
raw materials in the person's business shall be allowed as a deduction.
(3) For the purposes of sub-rule (2), the market value of agricultural produce shall be-
(a) where the agricultural produce is ordinarily sold in the market in its raw state or after
application of any process ordinarily employed by a cultivator or receiver of
agricultural produce as rent-in-kind to render it fit to be taken to market, the market
price for the produce at the time it is used as raw materials in the person's business;
or
(b) in any other case, the sum of the following amounts, namely:-
(i) the expenses of cultivation; and
(ii) the land revenue rent paid for the area in which the produce is grown.
(4) No deduction shall be allowed for any expenditure incurred by a person as cultivator or
receiver of agricultural produce as rent-in-kind, other than as specified in sub-rule (2).
1 Clause "(f)" omitted by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 4
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
12. Particulars required to be furnished for claiming depreciation deduction or initial allowance
amortization deduction.-
(1) The following particulars shall be furnished by a taxpayer at the time of furnishing a return of
income for any tax year in order to claim a depreciation deduction under section 22, an initial
allowance under section 23 or an amortization deduction under section 24 read with the Third
Schedule to the Ordinance, namely:-
(a) a description of each depreciable asset and intangible in respect of which a deduction
is claimed;
(b) where a depreciable asset or intangible is used in the tax year only partly in deriving
income from business chargeable to tax, the extent of such part use;
1
[ ]
(d) if the depreciable asset or intangible was acquired in the tax year, the date of
acquisition;
(e) the written down value of each depreciable asset at the beginning of the tax year
computed in accordance with sub-section (5) of section 22 and the cost of each
intangible as determined under sub-section (11) of section 24;
(f) the amount of capital expenditure incurred in the tax year on additions, alterations.
improvements or extensions in relation to any depreciable asset or intangible and
where the depreciable or amortizable amount of such expenditure is limited under the
Ordinance, the lower amount shall also be stated;
(g) the total value of each depreciable asset for which a depreciation deduction is
allowable for the tax year (this is the sum of the amounts specified in clauses (e) and
(f), less any initial allowance allowed for the asset in that year;
(h) the prescribed rate of depreciation and initial allowance (if any) for each depreciable
asset or class of asset for the tax year, and the normal useful life for each intangible;
(i) the amount of depreciation deduction and initial allowance (if any) for each
depreciable asset for the year and the amount of amortization deduction for each
intangible for the year;
(j) the total depreciation deduction, initial allowance and amortization deduction allowed
for the tax year; and
(k) the written down value of each depreciable asset and the cost of intangible at the end
of the tax year, and the remaining normal useful life.
Explanation: Addition to intangible to be separately shown.
(2) The following particulars shall be furnished by a taxpayer at the time of furnishing a return of
income for any tax year in which a depreciable asset or intangible is disposed of in the year,
namely:-
(a) the consideration received for the asset or intangible;
(b) the written down value of the asset or intangible disposed of at the beginning of the
tax year; and
(c) the excess or deficit of the consideration received in relation to the written down value
(i.e., clause (b) less clause (a) or clause (a) less clause (b), as the case may be).
1 Clause "(c)" omitted by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 5
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
1
[12A. Decommissioning certificate.-
As required under sub-rule (4A) of rule 2 of Part-I of Fifth Schedule to the Income Tax Ordinance,
decommissioning certificate shall be submitted, as set out in Part-XA of the Second Schedule to these
rules.]
13. Apportionment of expenditures 2[, deductions and allowances].-
(1) This rule applies for the purposes of section 67, which provides for apportionment of
expenditure 3[, deductions and allowances] incurred for more than one purposes.
(2) Any expenditure 4[, deductions and allowances] that is incurred for a particular class or classes
of income shall be allocated to that class or classes, as the case may be.
5
[(3) (a) Any common expenditure excluding financial expenses relatable or attributable to
non-business advances or loans and the amount referred to in sub-rule(2) relatable to
business including presumptive and exempt income, shall be allocated to each class
of income according to the following formula, namely:-
A x B/C
where-
A is the amount of the expenditure incurred;
B is the total amount of gross receipts (without deduction of expenditures) for the
tax year for the class of income; and
C is the total amount of gross receipts (without deduction of expenses
6
[, deductions and allowances]) and net gains for the tax year of all classes of
income;
(b) Where, however, net gain, brokerage, commission and other income is to be taken
into account on turnover of such transactions, such income shall be compared with
gross profit from business for adopting figures for components "B" and "C" of the
formula at (a) above 7[:] ]
8
[Explanation.- The terms gross receipt means net off receipts or turnover of Sales
Tax or EFD paid.”]
(4) Where expenditures 9[, deductions and allowances] are to be allocated among different
classes of income under sub-rule (3) consideration shall be given to the nature and source of
each class of income, on reasonable basis to earn each class of income (particularly, in
allocating selling expenses).
(5) Where the allocation of expenditures 10[, deductions and allowances] is made in accordance
with sub-rule (3) a certificate by the Chartered Accountants or Cost and Management
Accountant stating the basis of allocation shall be accepted unless significant variations are
1 Rule 12A inserted by SRO 357(I)/2011, dated May 04, 2011.
2 th
Added by the S.R.O. 754(I)/2016 dated 15 August, 2016.
3 th
Inserted by the S.R.O. 754(I)/2016 dated 15 August, 2016.
4 th
Inserted by the S.R.O. 754(I)/2016 dated 15 August, 2016.
5 Sub-rule (3) substituted by SRO 392(I)/2009, dated May 19, 2009.
6 th
Inserted by the S.R.O. 754(I)/2016 dated 15 August, 2016.
7
The full stop substituted by SRO 1218(I)/2015 dated 08.12.2015.
8
Inserted by SRO 1218(I)/2015 dated 08.12.2015.
9 th
Inserted by the S.R.O. 754(I)/2016 dated 15 August, 2016.
10 th
Inserted by the S.R.O. 754(I)/2016 dated 15 August, 2016.
Income Tax Rules, 2002 6
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
found; and where books 1[of accounts] are not required to be audited, the reasonable basis
based on the 2[sub-rules] (3) and (4) may be adopted which would be accepted by 3[the]
Commissioner, unless variation is found. Significant variations would be beyond the limits of
10 ± in collection as in sub-rule (3) under any head of account.
3
[(6)] In this rule.-
"class of income" means -
(a) Pakistan-source income chargeable under the head "Salary";
(b) foreign-source income chargeable under the head "Salary";
(c) Pakistan-source income chargeable under the head "Income from Property";
(d) foreign-source income chargeable under the head "Income from Property";
(e) Pakistan-source income chargeable under the head "Income from Business" (other
than income subject to section 19);
(f) foreign-source income chargeable under the head "Income from Business" (other
than income subject to section 19);
(g) Pakistan-source income from a speculation business chargeable under the head
"Income from Business";
(h) foreign-source income from a speculation business chargeable under the head
"Income from Business";
(i) Pakistan-source income chargeable under the head "Capital Gains";
(j) foreign-source income chargeable under the head "Capital Gains";
(k) Pakistan-source income chargeable under the head "Income from Other Sources";
(I) foreign-source income chargeable under the head "Income from Other Sources";
(m) income exempt from tax;
(n) Chargeable to tax under section 5, 6 or 7; and
(o) amounts to which section 169 applies 4[ ] and "common expenditure" means
expenditure 5[, deductions and allowances] that is not clearly allocable to any
particular class or classes of income, such as general administrative and other such
allocable expenditures 6[, deductions and allowances].
7
[PART-III: COMPUTATION OF CAPITAL GAIN ON DISPOSAL OF SECURITIES
UNDER SECTION 37A
OF THE INCOME TAX ORDINANCE, 2001
13A. Acquisition of securities.-
1 Inserted by SRO 392(I)/2009, dated May 19, 2009.
2 Substituted for "sub-rule" by SRO 392(I)/2009, dated May 19, 2009.
3 Substituted for "(8)" by SRO 392(I) 2009, dated May 19, 2009.
4 Words etc. "except proceed realised from exports from which separate provision is made as sub-rule (8)" omitted by SRO
392(I)/2009, dated May 19, 2009.
5 th
Inserted by the S.R.O. 754(I)/2016 dated 15 August, 2016.
6 th
Inserted by the S.R.O. 754(I)/2016 dated 15 August, 2016.
7 Part III inserted by SRO 112(I)/2011, dated February 11, 2011.
Income Tax Rules, 2002 7
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
(1) A security may be acquired through purchase, exchange, bonus issue, right issue, gift,
bequest, inheritance, leverage schemes and derivative contracts.
(2) A security may be acquired in the electronic book entry form or in the form of physical
certificate.
(3) A security may be acquired through the trading platform provided by a stock exchange or
through off market transactions.
(4) In case of securities other than units of an open mutual fund, broker's bill for the purchase,
broker generated computerized ledger statement of the investor's brokerage account, CDC
statement of the investor's CDC sub account and payment of cost of acquisition through
cheques shall be supportive evidence of acquisition of securities.
(5) In case of units of an open end mutual fund, certified statement of investor's account provided
by the asset management company shall be supportive evidence of acquisition of securities.
13B. Disposal of securities.-
(1) A security may be disposed of through sale, gift, exchange or transfer by the security holder in
any other way.
(2) A security may be disposed of in the electronic book entry form or in the form of physical
certificate.
(3) A security may be disposed of through the trading platform provided by a stock exchange or
through off market transactions.
(4) In case of securities other than units of an open mutual fund, broker's sale proceeds or
difference bill, broker generated computerized ledger statement of the investor's brokerage
account, CDC statement of the investor's CDC sub-account and proof of payment through
cheques shall be supportive evidence of disposal of securities.
(5) In case of units of an open end mutual fund, certified statement of investor's account provided
by the asset management company shall be supportive evidence of disposal of securities.
13C. Holding period.-
(1) Securities held for a period upto a maximum of one eighty-two days and for a period upto
maximum of three sixty-five days shall be taken as held for six months and one year
respectively.
(2) In case of short positions, holding period shall be the period intervening between the date
when a security is sold short and the date when the security is purchased to cover the short
position.
(3) In case of futures contracts, holding period shall be the period intervening between the date of
entry into a futures contract and the date of exit from such contract.
13D. Computation of capital gain or loss.-
(1) Capital gain or loss arising on the disposal of any security shall be computed on the basis of
First In First Out (FIFO) inventory accounting method.
(2) Capital loss arising on disposal of securities in any tax year shall be set off against capital gain
arising from the disposal of securities during that tax year to determine the taxable capital gain
arising from the disposal of securities.
(3) Capital loss arising on disposal of securities in any tax year shall not be carried to a
subsequent tax year.
Income Tax Rules, 2002 8
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
13E. Computation of capital gain or loss on derivatives.-
(1) In case of long position in deliverable futures contracts, capital gain or loss shall be computed
as the difference between cost of acquisition of securities underlying the futures contract and
the consideration from disposal of those securities to close the long position at or before
maturity of the contract.
(2) In case of short position in deliverable futures contracts, capital gain or loss shall be computed
as the difference between the consideration from short sale of securities underlying the futures
contract and the cost of acquisition to purchase those securities to close the short position on
or before maturity of the contract.
(3) In case of cash settled futures contracts, capital gain or loss shall be the cash payment which
the investor respectively receives from or makes to the other party to such contract to settle
the contract on or before maturity of the contract.
(4) In case of options, capital gain or loss shall be the difference between exercise price of the
options and the consideration from disposal of the securities underlying such options.
(5) In case of contracts of right, capital gain or loss shall be the difference between cost of
acquisition of right shares underlying the contract and the consideration from disposal of those
shares.
1
[(6) Profit made on sale of borrowed shares shall be treated as capital gain when such shares are
acquired for their return to Authorized Intermediary. Period intervening between acquisition
and disposal of such borrowed shares shall determine the holding period in which the capital
gain or loss falls. Specific Identification Method shall be used to determine the acquisition cost
and consideration for disposal of such securities. The difference between cost of acquisition
and consideration received against disposal (net off all borrowing costs) of such shares shall
be treated as capital gain or loss. This rule shall be applicable to the securities borrowed in
accordance with the Securities Lending and Borrowing Scheme approved by Securities and
Exchange Commission of Pakistan.
(7) Profit made on disposal of shares acquired under Margin Finance Scheme, Margin Trading
Scheme or other Financing or Leverage schemes approved by Securities and Exchange
Commission of Pakistan shall be treated as capital gain. The difference between cost of
acquisition (inclusive of borrowing cost) and consideration received against disposal of such
shares shall determine the quantum of capital gain or loss.]
13F. Capital loss adjustment disallowed in certain cases.-
(1) Capital loss adjustment as provided in rules 13D and 13E shall not be admissible in the
following cases, namely:-
2
[(a) Wash Sales where capital loss realized on sale of specific security by an investor in
preceded or followed in one month's period by purchase of the same securities by the
same investor whereby the transaction falls within one month between same two
parties or their related parties where one was seller and other was buyer and they
change places becoming buyer and seller respectively, thus, maintaining the
portfolio.];
Explanation.- Wash sale is sale of security at loss and repurchase of the
same security soon before or afterwards the sale so as to realize an unrealized loss
to make it claimable as a set off against capital gain. The security sold in a wash sale
is repurchased with the aim to re-acquiring it at or near its sale value in order to
maintain the risk return profile of portfolio;
1 Sub-rules (6) and (7) inserted by SRO 1149(I)/2011, dated December 27, 2011.
2 Clause "(a)" substituted by SRO 1149(I)/2011, dated December 27, 2011.
Income Tax Rules, 2002 9
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
(b) Cross Trades where coordinated reshuffle of securities between two related
accounts of the same investor. between two related accounts of the related investors
between two membership cards of the same broker or between two related brokerage
houses is undertaken and securities accumulating unrealized losses are sold to
related accounts to artificially realize capital losses in one account without actually
selling the securities to an outsider and the artificial losses so realized in an account
are then used to minimize capital gain tax liability on the capital gain realized in the
same account; and
(d) Tax Swap Sales where the investor having realized loss (as in the case of a wash sale)
on a particular security does not repurchase the same security but chooses another
similar security in the same sector thus not only minimizing or eliminating altogether
liability on account of tax on capital gain. but also maintaining the portfolio broadly at the
same risk return profile.
13G. Exemption from tax on capital gain.-
Exemption shall be applicable as provided under the Ordinance.
13H. Payment of tax on capital gain.-
(1) Every investor shall calculate tax on capital gain arising on securities 1[ ] at the prescribed
rates.
(2) Every investor other than individual investor shall e-file statement of advance tax on capital
gain on the prescribed format within 2[twenty one] days after the end of each quarter with the
tax authority having jurisdiction in the case.
(3) The liability to pay the due tax on capital gain shall lie on the investor who held the securities
during the period for which tax on capital gain is to be paid and, in case of any benami
accounts, on the investor who de facto owns the securities carried in such accounts.
13I. Maintenance of records.-
(1) Every investor shall maintain accounts and records separately for each of his brokerage
accounts regarding his securities business which sufficiently enable for verification of the
discharge of his obligations under these rules.
(2) Without prejudice to the generality of the foregoing provision, every investor shall maintain in
particular the following accounts and records, namely:-
(a) fortnightly ledger statements of the investor's brokerage account or each
brokerage account if there are more than one account whether in the investor's
own name or any benami accounts, generated by his broker;
(b) fortnightly CDC statements of the investor's CDC sub account or each CDC sub
account corresponding to each brokerage account, if there are more than one
brokerage account whether held in the investor's own name or any benami
accounts;
(c) record of security holdings and their value carried in the investor's brokerage
account on 30th June of each year;
(d) record of cash carried in the investor's brokerage account as on 30th June of
each year;
(e) record of funds deposited in the investor's brokerage account; and
1 The words and commas “held for a period upto six months, and above six months to one year, after the end of each tax year”
omitted by the SRO 1145(I)/2016 dated 7th December, 2016.
2 Substituted for "seven" by SRO 1149(I)/2011, dated December 27, 2011.
Income Tax Rules, 2002 10
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
(f) record of funds withdrawn from the investors brokerage account.
1
[13J. Exchange of information.-
Information regarding member, broker, investor of a stock exchange 2[“, members of PMEX, unit
holders in mutual funds”] required by the 3Federal Board of Revenue shall be obtained directly from
National Clearing Company of Pakistan Limited (NCCPL).]
13K. Violations and penalties.-
Any investor who, in discharge of his obligations under these rules, violates any provision of the
rules shall be liable to penalty and other charges provided in the Ordinance.
13L. Definitions.-
(1) In this Part, unless the context otherwise requires,-
(a) borrowed security means a security which an investor borrows under any
security lending and borrowing scheme approved by the Securities and Exchange
Commission of Pakistan, with an aim to returning the security to its lender, at any
later date;
(b) capital gain means the difference between consideration from disposal of a
security and the price paid or would have been paid for acquisition of such
security when former exceeds the later, provided that capital gain, in case of a
borrowed security, means the difference between consideration received from
short selling of the borrowed security and the price paid or payable to purchase it
for its return to the lender of such security;
(c) capital loss means the difference between cost of acquisition of a security and
the consideration from disposal of that security when the former exceeds the
later;
(d) cost of acquisition of any security means the market price of the security which
the investor pays or would have paid to purchase such security, provided that
cost of acquisition,-
(i) in case of a right share, means the discounted price at which the right
shares are issued to a shareholders by the issue;
(ii) in case of a security acquired through bequest or inheritance means the
market price of security at which the deceased person making bequest or
leaving the inheritance, as the case may be, paid or would have paid to
purchase such security;
4
[ 5[“(iii)”] in case of bonus shares:
(i) shall be ex-bonus price if tax has already been paid under
section 236M;
(ii) the value determined under section 236N, if tax is paid under
section 236N; and
1 Rule 13J substituted by SRO 1149(I)/2011, dated December 27, 2011.
2 th
The expression inserted by the SRO 1145(I)/2016 dated 7 December, 2016.
3
The words “Central Board of Revenue” substituted by the Finance Act, 2007
4 Clause "(d)(iii)" substituted by SRO 161(I)/2015, dated February 23, 2015.
5
The letter “(d)” re-numbered by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 11
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
(iii) shall be zero, if no tax is paid under section 236M and 236N.
(iv) in case of initial public offering, the actual price paid to the issuer shall be
treated as the cost of acquisition of such securities.]
(e) consideration from disposal of any security means the market price of a
security which the investor receives or would have received on the sale of that
security;
(f) derivative products means a financial product which derives its value from the
underlying security or other asset, may be t r a de d on a stock exchange of
Pakistan and includes deliverable futures contracts, cash settled futures
contracts, contracts of rights and options 1[and future commodity contracts traded at
PMEX];
(g) date o f acquisition shall be determined as under, namely:-
(i) in case of security in electronic book entry form, earlier of the dates on
which the investor makes the purchase or otherwise gets title to the
security and the security is transferred to the investor's brokerage
account, CDC sub account or the concerned broker's or stock exchange's
member's CDC Group Account;
(ii) in case of any security in the physical certificate form, earlier of the dates
on which selling broker or stock exchange's member sells the security,
the date on which an investor acquires physical possession of the
security, the date on which investor's name is entered on the security or
the date on which the issuing company enters the investor's name in the
record of its security holders;
(iii) in case of acquisition of a security on account of a nomination under
section 80 of the Companies Ordinance, 1984 (XLVII of 1984) under
bequest or inheritance, the date of death of the person making such
bequest or leaving such inheritance, or the date of transmission by
succession or under a will by the deceased, as the case may be,
whichever is earlier;
(iv) in case of acquisition of a security under a futures contract, the date of
entry into the futures contract;
(v) in case of a borrowed security, the date on which the investor purchases
the security to cover his short position and to return the security to the
security lender; and
(vi) in case of conversion of global depository receipts into shares, the closing
price of shares on the day of such conversion shall be treated as
acquisition cost of such shares.
(h) date of disposal of any security in the electronic book entry form means,-
(i) the date on which the investor sells or otherwise disposes of the security
and the security is transferred from the investor's brokerage account,
CDC sub-account or the concerned broker's or stock exchange's
member's CDC Group Account, whichever is earlier;
(ii) in case of any security in the physical certificate form means the date on
which selling broker sells the security or the date on which the issuing
company deletes the seller's name from the record of its security holders,
whichever is earlier;
1 th
The words added by the SRO 1145(I)/2016 dated 7 December, 2016.
Income Tax Rules, 2002 12
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
(iii) in the case of a security underlying a futures contract, means the date of exit
from futures contract; and
(iv) in the case of a borrowed security means the date on which the borrower
short sells the borrowed security after borrowing it from the security lender;
(i) date of entry into futures contract means, in case of a long position, the date
on which securities underlying the futures contract are purchased and are
transferred to the investor's brokerage account and, in case of a short position,
the date on which securities underlying the futures contract are sold short;
(j) date of exit from futures contract means, in case of a long position, the date on
which securities underlying the futures contract are sold and are transferred from
the investor's brokerage account and, in case of a short position, the date on
which securities underlying the futures contract are purchased to cover the short
position;
(k) date of exercise of option means the date of acquisition of a security underlying
an option and is the date on which option is exercised to acquire the underlying
security;
(l) exercise price is the cost of acquisition of a security underlying an option and is
the price of securities underlying an option which the investor paid to purchase
the underlying securities on exercise of the option;
(m) holding period shall be calculated as prescribed under the provisions of sub-
section (2) of section 37A of the Income Tax Ordinance, 2001;
(n) investor means every person who invests in securities and includes every broker
who makes investments in such securities; and
(o) jurisdiction of tax authority means the jurisdiction of the tax office in which
business of the securities is being carried on by a person and where such
business is carried on in more than one place, the person's principal place of
business.
(2) All other words and expressions not specifically defined in these rules shall have the
meanings assigned to them under the Ordinance.
13M. Quarterly statements.-
Quarterly statements shall be e-filed in the following format, namely1[:]
2
[“Provided that these statements shall not be applicable in the case of investors falling under
Eighth Schedule to the Ordinance read with rule 13N.”]
Statement of Capital gains tax liability
Part-I
Particulars of Investor’s account
1. Investor‟s Name(s)
(i)
(ii)
1 th
The colon and hyphen substituted by the SRO 1145(I)/2016 dated 7 December, 2016.
2 th
The proviso added by the SRO 1145(I)/2016 dated 7 December, 2016.
Income Tax Rules, 2002 13
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
(iii)
2. Complete Address(es)
(i)
(ii)
(iii)
3. Brokerage Account No. ________________________________________________________
4. Date of Opening of Brokerage Account ____________________________________________
5. Type of Account (individual, joint, AOP, firm, company) _______________________________
6. Name of Brokerage Firm/ Company ______________________________________________
7. Contact No. and Address of Brokerage Firm/ Company _______________________________
8. CDC sub account No. _________________________________________________________
9. Total value of shares carried in account as on 30th June_ _____________________________
10. Total cash carried in account as on 30th June ______________________________________
11. Tax period (tax year/quarter) ____________________________________________________
12. Capital gain during the tax period ________________________________________________
13. Capital loss during the tax period ________________________________________________
14. Net gain/loss ________________________________________________________________
15. Tax on capital gain payable for the tax period _______________________________________
(Calculated in part II, III & IV of summary of transactions)
Investor‟s Name ____________________________
Signature __________________________________
Date ______________________________________
1
[ ]
1 th
Part-II, Part-III, Part-IV and Part-V substituted by the SRO 1145(I)/2016 dated 7 December, 2016. The
substituted Part-II, Part-III, Part-IV and Part-V read as follows:-
Part-II
Summary of shares held upto six months – tax payable @ 10%
Sales Purchases Capital CGT
Gain Payable
(Loss)
Date of sale Particulars No. of Sale Sale Date of Particulars No. of Purchase Total
of shares shares Price Proceeds purchase of shares Price Purchase
per shares per price
Share Share
Investor‟s Name ____________________________________
Brokerage Account No. _______________________________
Signature __________________________________________
Date ______________________________________________
Income Tax Rules, 2002 14
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
Part II
Summary of Capital Gain on Securities as per Division VII of Part I of
First Schedule
Sales Purchases Holding Filer/Non Applicable Capital CGT
period * -Filer Rate as per Gain Payable
Division VII (Loss)
(1) (2) (3) (4) (5) (6) (7)
Date of Particulars No. of Sale Sale Date of Particulars No. of Purchase Total
sale of Securities Price Proceeds Purchase of Securities Price Purchase
Securities per Securities per price
security security
Part-III
Summary of shares held above six months to one year - tax payable @ 7.5%
Sales Purchases Capital CGT
Gain Payable
(Loss)
Date of sale Particulars No. of Sale Sale Date of Particulars No. of Purchase Total
of shares shares Price Proceeds purchase of shares Price Purchase
per shares per price
Share Share
Investor‟s Name ____________________________________
Brokerage Account No. _______________________________
Signature __________________________________________
Date ______________________________________________
Part-IV
Summary of shares held for more than one year – no tax payable
Sales Purchases Capital CGT
Gain Payable
(Loss)
Date of sale Particulars No. of Sale Sale Date of Particulars No. of Purchase Total
of shares shares Price Proceeds purchase of shares Price Purchase
per shares per price
Share Share
Investor‟s Name ____________________________________
Brokerage Account No. _______________________________
Signature __________________________________________
Date ______________________________________________
PART-V
Affidavit
I _____________________________ S/o. _____________________________ CNIC No. ________________ resident of
_________________________________________________________ holding brokerage account No.___________________ with
the brokerage firm __________________________ and holding CDC sub account No.____________________ with Central
Depositary Company do hereby solemnly affirm that particulars of my account given in Part I and the particulars of share
transactions conducted during the tax period given in Part-II, III and IV of the summary of share transactions are true and correct and
in accordance with the ledger statements and CDC statements of my account for the above mentioned tax period.
I further affirm that nothing has been concealed or incorrectly stated regarding my account. I know that in case any particulars of my
account and share transactions conducted during the above mentioned tax period and given under rule 13M of the Income Tax
Rules, 2002 as mentioned above are found to be false being not in conformity with ledger statements and CDC statements of my
account, I am liable to be penalized in accordance with rule 13K of the Income Tax Rules, 2002.
Deponent (Investor‟s Name) ___________________________
Signature __________________________________________
Date
Income Tax Rules, 2002 15
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
* Applicable in case the security is acquired after 1 July 2012
Investor‟s Name ………………………………………
Brokerage Account No………………………………..
Signature………………………………………………
Date……………………………………………………]
1
[Part – III
Affidavit
I ………………………… S/O …………………….. CNIC No…………………….. resident of
………………………………….......................................................................holding brokerage
account No. …….......... with the brokerage firm…………and holding CDC sub account
No…………………with Central Depositary Company do hereby solemnly affirm that particulars of my
account given in Part I and the particulars of securities transactions conducted during the tax period
given in Part – II of the summary of securities transactions are true and correct and in accordance with
the ledger statements and CDC statements of my account for the above mentioned tax period.
I further affirm that nothing has been concealed or incorrectly stated regarding my account. I know that
in case any particulars of my account and share transactions conducted during the above mentioned
tax period and given under rule 13M of the Income Tax Rules, 2002 as mentioned above are found to
be false being not in conformity with ledger statements and CDC statements of my account, I am liable
to be penalized in accordance with rule 13K of the Income Tax Rules, 2002.
Deponent (investor‟s name)
Signature……………………
Date:……………………….”]
2
[13N. Special procedures for computation of capital gains and collection of tax.-
(1) NCCPL shall, in accordance with this rule, collect tax on capital gains as provided in Eighth
Schedule to the Ordinance, hereinafter in this Part called as the said Eight Schedule.
(2) The provisions of the said Eighth Schedule and these rules shall apply to capital gains derived
from listed securities on or after the 24th April, 2012, except in the case of instrument of
redeemable capital where such provisions shall be applicable on capital gain derived from the
1st July, 2012 3[:]
4
[Provided that in case of Foreign Institutional Investors, provisions of the said Eighth
Schedule and these rules shall be applicable on capital gain derived from the first day of July,
2014.
Explanation: For the removal of doubt, it is clarified that all Foreign Institutional Investors
shall be subject to the regime as laid down in Eighth Schedule and no exemption whatsoever
from withholding tax under Eighth Schedule or under these rules is available to Foreign
Institutional Investors for any reason.]
5
(3) [In computing capital gains, NCCPL shall take into account transactions and their values as
reported to or provided to or extracted from the systems or procedures in place with NCCPL,
1
Substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
2
New Rules inserted vide SRO 1119(I)/2012 dated 12th September, 2012
3
Substituted for full stop by SRO 161(I)/2015, dated February 23, 2015.
4
Proviso and explanation inserted by SRO 161(I)/2015, dated February 23, 2015.
5
Sub-rule (3) substituted by the SRO 1145(I)/2016 dated 7th December, 2016. The substituted sub-rule (3) read as follows:-
In computing capital gains, NCCPL shall take into account transactions and their values as reported to or provided to or
extracted from the systems or procedures in place with NCCPL, stock exchanges. The Central Depository Company of
Pakistan Limited and clearing members in case of Foreign Institutional Investors:
Provided that, where any discrepancy or error is pointed out or found in recording the date of acquisition of security,
NCCPL may, with the prior approval of the Commissioner Inland Revenue, rectify such date based on the relevant
Income Tax Rules, 2002 16
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
stock exchange and the Central Depository Company of Pakistan Limited, the clearing
members in case of Foreign Institutional Investors, PMEX in case of future commodity
contracts and Asset Management Companies in case of open ended mutual funds:
Provided that, where any discrepancy or error is pointed out or found in recording the
date of acquisition of security, NCCPL may, with prior approval of the Commissioner Inland
Revenue, rectify such date based on the relevant information provided by CDC as obtained
from concerned issuer or its share registrar or clearing members in case of Foreign
Institutional Investors and accordingly re-compute the capital gain tax liability in the financial
year in which such security has been disposed of.;]
1
[(3A) Notwithstanding the sub-rule (1), Asset Management Companies and PMEX shall continue to
determine, compute and collect Capital gains tax on open ended mutual funds and future
commodity contracts respectively, and shall deposit the same with NCCPL within ten working
days of the month end.]
2
[(3B) NCCPL shall verify the liability of the investor calculated by Asset Management Companies
and PMEX as above, and will compute the net capital gains tax liability or refund for each
investor to be collected from or refunded to the Asset Management Companies or PMEX.
Provided that where cumulative refund per investor for the year to date does not exceed Rs
1,000 per investor, it will be carried forward for adjustment in next month(s), however, any
refunds, irrespective of amount, shall be refunded at the year end:
Provided that the information to be reported to or provided to NCCPL as above shall
be required to be in a manner and time deemed necessary for NCCPL to discharge its
obligation under the law and provisions of Rule 3 and 3A of Eight Schedule to the Ordinance
shall be applicable in this respect.]
(4) The gain arising on the disposal of a security by a person shall be computed in accordance
with the following formula, namely:-
A-B
Where –
A is the consideration received by the person on disposal of the security; and
B is the cost of acquisition of the security.
(5) Capital gain or loss arising on the disposal of listed securities shall be computed on the basis
of First In First Out (FIFO) inventory accounting method:
Provided that while applying FIFO method, market based transactions shall be taken
into account first:
Provided further that the FIFO method shall not apply in respect of sale of shares
purchased on the same trading day or in same futures or derivative contract 3[, except traded
on PMEX,] and capital gain or loss shall be computed by applying average method 4[:]
5
[Provided further that the FIFO shall be applied on aggregate inventory held by an
investor at UIN level.]
1
[(5A). For the purposes of computation and collection of capital gains tax in this rule applicable rate
shall be taken from Division VII of Part I of the First Schedule based on whether the investor is
filer or non-filer as per ATL at the time of transaction.]
information provided by CDC as obtained from concerned issuer or its share registrar and accordingly re-compute the capital
gain tax liability in the financial year in which such security has been disposed of.
1
Substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
2
Substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
3
Inserted by the SRO 1145(I)/2016 dated 7th December, 2016.
4
Full stop substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
5
Added by the SRO 1145(I)/2016 dated 7th December, 2016.
Income Tax Rules, 2002 17
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
2
[(5B) For the purpose of computation of capital gains tax liability on stock fund the applicable rate of
tax as per third proviso of the Division VII of Part I of the First Schedule shall be taken on
month on month basis.]
(6) Capital loss arising on disposal of listed securities as determined by NCCPL in any financial
year shall be set off against capital gain arising from the disposal of securities during that
financial year to determine the taxable capital gain arising from the disposal of listed
securities.
(7) Capital loss arising on disposal of listed securities in any financial year shall not be carried to a
subsequent financial year.
(8) NCCPL shall deduct or add 0.5 percent for client‟s trade and 0.25 percent for broker‟s
proprietary trade of the consideration received on disposal or cost of acquisition of securities
respectively, in lieu of brokerage, commission, transaction fee, levy, Laga or any other similar
incidental expenses incurred by the person while disposing or acquiring a security, subject to
the condition that such deduction shall only be allowed in respect of market based
transactions3[:]
4
[Provided that the above deductions shall not be applicable in case of units of open
ended mutual funds and future contracts entered into by the members of PMEX.]
(9) NCCPL shall also deduct financing cost from the consideration received if financing is availed
through NCCPL‟s leveraged market products.
(10) NCCPL shall collect an amount as computed in the manner laid down in the said Eighth
Schedule and these rules on monthly basis in respect of transactions settled in a month, after
adjustment of losses and repayment of amount collected in previous month or months of same
financial year, to ensure that at the end of any given month NCCPL possesses an amount
equal to the estimated amount of tax liability on capital gains.
(11) Amount computed in the manner laid down in the said Eighth Schedule and these rules shall
be collected by NCCPL from or through the clearing member 5[PMEX and Asset Management
Companies] on net capital gains derived by person, taxable under the said Eighth Schedule.
(12) Any person, if not satisfied with the computation of capital gain or tax thereon or both made by
NCCPL for the purpose of the said Eighth Schedule, such person may re-compute the capital
gain and lodge claim of refund, if any, with the Commissioner after filing of return of income
and the Commissioner shall refund the amount of tax in accordance with provisions of Part VI
of Chapter X of the Ordinance.
(13) For the purpose of the said Eighth Schedule and this rule, the provisions of rules 13F, 13H
and 13I shall not apply.
(14) The provisions of rule 13J shall not apply to the person whose tax liability on capital gains is
discharged under the said Eighth Schedule, however the brokerage account of the investor
6
[, account of unit holder of open ended mutual fund with Asset Management Companies and
account of member of PMEX as the case may be] shall not be closed until and unless such
person obtains a clearance certificate from NCCPL 7[:]
8
[Provided that accounts of unit holders of open ended mutual funds with Asset
Management Companies and account of member of PMEX, if closed without obtaining
clearance certificate from NCCPL, Asset Management Company or PMEX shall remain
1
Inserted by the SRO 1145(I)/2016 dated 7th December, 2016.
2
Inserted by the SRO 1145(I)/2016 dated 7th December, 2016.
3
Full stop substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
4
Added by the SRO 1145(I)/2016 dated 7th December, 2016.
5
Inserted by the SRO 1145(I)/2016 dated 7th December, 2016.
6
Inserted by the SRO 1145(I)/2016 dated 7th December, 2016.
7
Full stop substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
8
Added by the SRO 1145(I)/2016 dated 7th December, 2016.
Income Tax Rules, 2002 18
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
responsible to ensure that any outstanding liability in respect of Capital Gain Tax which has
arisen or may arise, has been collected from respective investor and deposited with NCCPL:]
1
[Provided further that in case Asset Management Company or PMEX is unable to
recover such tax from investor, these non-payments should be reported on monthly basis to
NCCPL for onward reporting to Board in terms of rule 6(3) of the Eight Schedule to the
Ordinance.]
(15) NCCPL shall issue certificate as provided in clause (4) of rule 1 of the said Eighth Schedule,
as set out in Part I of rule 13O, 2[verifying] capital gains and tax thereon, if any, to each person
subject to tax under the said Eighth Schedule within thirty days from the end of the financial
year.
(16) NCCPL shall furnish electronically to the Board a quarterly statement of amount collected,
within thirty days from the end of each quarter as set out in Part II of rule 13O.
(17) The person who has opted out of the scheme of taxation provided in the said Eighth Schedule
shall file an undertaking to NCCPL in the form prescribed in Part III of rule 13O 3[along with the
evidence of obtaining prior approval of Commissioner under rule 5 of the said Eighth
Schedule].
4
[Provided that the Commissioner shall not accord prior approval, unless the taxpayer
is a filer]
(18) Statements referred in rule 2 of the said Eighth Schedule shall be furnished on the format
prescribed in Part IV of rule 13O.
5
[(18A) Where an irrevocable option has been filed to NCCPL by a person, after obtaining prior
approval of the Commissioner to opt out of Eighth Schedule for determination and payment of
capital gains tax, NCCPL shall submit to the Board details of capital gains and tax thereon of
such person or persons for the tax year or part thereof in respect of which capital gain tax
collection has not been made by NCCPL.]
(19) The period of forty-five days or one hundred twenty days, as the case may be, as referred in
rule 2 of the said Eighth Schedule, shall be the period or periods in aggregate to, forty-five
days or one hundred twenty days, as the case may be, during the period as provided in rule
2(1)(b) and 2(2)(b) of the said Eight Schedule.
(20) For the purpose of rule 2 of the said Eighth Schedule, the investment shall be the time
weighted average of the invested amount arranged in descending order for forty-five days or
one hundred twenty days, as the case may be. The amount of investment at any particular day
shall be netted off with the market value of net open sale position in futures and derivative
contract of the same security to the extent of the amount of investment representing such
security, before calculating aforementioned time weighted average.
(21) For the purpose of clarity in computing, determining, collecting and depositing the tax on
6
[capital gains by Asset Management Companies and PMEX] capital gains by NCCPL, certain
transactions and their tax treatments as well as the amount and period of investment referred
to in rule 2 of the said Eighth Schedule are as enunciated in rule 13P:
Provided that in case of any confusion in respect of such computation, determination,
collection or deposit, NCCPL, after computing, determining, collecting or depositing, may refer
the case to the Board for clarification and make adjustments, if required, after such
clarification.
1
Added by the SRO 1145(I)/2016 dated 7th December, 2016.
2 Substituted for "showing computation of" by SRO 161(I)/2015, dated February 23, 2015.
3 Words inserted by SRO 161(I)/2015, dated February 23, 2015.
4 Proviso inserted by SRO 161(I)/2015, dated February 23, 2015.
5 Sub-rule (18A) inserted by SRO 161(I)/2015, dated February 23, 2015
6
Inserted by the SRO 1145(I)/2016 dated 7th December, 2016.
Income Tax Rules, 2002 19
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
(22) Definitions
For the purposes of this part,-
(a) “clearing member‖ shall have meaning as defined in NCCPL Regulations, 2003;
(b) ―leveraged market‖ shall have the meaning as defined in the Securities (Leveraged
Markets and Pledging) Rules, 2011;
(c) “market based transaction‖ means transaction executed at any registered stock
exchange in Pakistan or NCCPL‟s platform; and
(d) “UIN‖ means Unique Identification Number as defined in NCCPL Regulations, 2003.
(23) Notwithstanding anything contained in these rules, for the purpose of computation of capital
gains and collection of tax thereon, the date of acquisition 1[, except in the case of foreign
institutional investors,] and disposal, the consideration received and cost of acquisition shall
be determined in the following manner, namely:-
(a) for the purpose of computation of capital gains, securities held on the 23rd April, 2011
shall be deemed as having held for a period of more than one year and the cost of
such securities shall be deemed to be the market price (day-end price) of the
securities, as on the 23rd April 2011;
(b) where physical securities have been deposited in an account maintained with Central
Depository Company of Pakistan Limited between the 24th April, 2011 and the 23rd
April, 2012 (both days inclusive), the date of acquisition of such securities shall be
deemed as the 23rd April, 2011 and the cost of securities shall be deemed as market
price (day-end price) as on the 23rd April, 2011;
(c) where securities have been acquired or disposed between the 24th April, 2011 and
the 23rd April, 2012 (both days inclusive), the cost of acquisition and consideration
received for disposal shall be determined in the following manner, namely:-
(i) in case of market-based transactions, the transaction price of the securities;
(ii) in case of transactions other than market-based transactions deal price
provided by the stock exchange; and
(iii) in all other cases, the market price (day-end price);
(d) where physical securities are deposited on or after the 24th April, 2012 in an account
maintained with Central Depository Company of Pakistan Limited, the actual date of
acquisition and market price (day-end price) prevailing on such date shall be taken
into account for computation of capital gains tax; 2[ ]
3
[(dd) where securities of unlisted company are converted into 4[listed] form, the cost of
acquisition of such securities shall be the market price at which the security is listed on
the stock exchange and the date of acquisition shall be the date of acquisition as
available with CDC 5[:]
6
[Provided that cost of acquisition of securities in case of securities acquired
during book building process and initial public offer (IPO) period shall be the
applicable IPO price.”;] and
1 Words etc. inserted by SRO 161(I)/2015 dated February 23, 2015.
2 th
The word “and” omitted by the S.R.O. 498(I)/2016 dated 27 July, 2016.
3 th
Inserted by the S.R.O. 498(I)/2016 dated 27 July, 2016.
4 th
The word “electronic” substituted by the S.R.O. 1145(I)/2016 dated 7 December, 2016.
5 th
Semi colon substituted by the SRO 1145(I)/2016 dated 7 December, 2016.
6
Added by the SRO 1145(I)/2016 dated 7th December, 2016.
Income Tax Rules, 2002 20
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
(e) in all other cases, where actual or deal price is not known to NCCPL, the market price
(day-end price) shall be taken into account for computation of capital gains tax.
1
[(24) Notwithstanding anything contained in these rules, for the purpose of computation of capital
gains and collection of tax thereon with respect to foreign institutional investors, the date of
acquisition and disposal, the consideration received and cost of acquisition shall be
determined in the following manner, namely:-
(a) for the purpose of computation of capital gains, securities held on the 30th June, 2012
shall be deemed as having held for a period of more than two years and the cost of
such securities shall be deemed to be the market price (day-end price) of the
securities, as on the 30th June 2012;
(b) where securities have been acquired or disposed of between the 1 st July, 2012 and
the 30th June, 2014 (both days inclusive), the cost of acquisition and consideration
received for disposal shall be determined in the following manner, namely:-
(i) in case of market-based transactions, the transaction price of the securities;
(ii) in case of transactions other than market-based transactions deal price
provided by the stock exchange; and
(iii) in all other cases, the market price (day-end price);
(c) where physical securities are deposited on or after the 1st July, 2014 in an account
maintained with Central Depository Company of Pakistan Limited, date and cost of
acquisition shall be taken into account as follows:-
(i) the actual date of acquisition and market price (day-end price) prevailing on
such date shall be taken into account for computation of capital gains tax,
where such securities are acquired after April 23, 2011; and
(ii) the cost of such securities and date of acquisition shall be deemed to be the
market price (day-end price) of the securities, as on the 23rd April 2011,
where such securities are acquired on or before April 23, 2011; and
(iii) in all other cases, where actual or deal price is not known to NCCPL, the
market price (day-end price) shall be taken into account for computation of
capital gains tax.
(25) Foreign Institutional Investor may apply to NCCPL for separate Unique Identification Numbers
(UIN) for each of its sub-funds under its umbrella.
(26) Where separate UINs have been obtained by Foreign Institutional Investor for each of the sub-
funds under its umbrella, capital gain or loss shall be computed separately for each sub-fund
and loss under one UIN shall not be allowed to be set off against capital gain arising to
another sub- fund with separate UIN.
(27) Where a Foreign Institutional Investor opts not to apply to NCCPL under sub-rule (25), loss
arising to any sub-fund shall not be allowed to be set off against capital gain of any sub- fund.
However, such loss of a sub-fund may be adjusted against gain arising to such sub-fund at the
time of filing of return by the sub-fund.]
2
(28) [A new UIN shall not be assigned to unit holders of open ended mutual funds and members of
PMEX if they already have been assigned a UIN by NCCPL.]
1 Sub-rules (24) and (27) inserted by SRO 161(I)/2015, dated February 23, 2015.
2
Added by the SRO 1145(I)/2016 dated 7th December, 2016.
Income Tax Rules, 2002 21
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
13O. Statements and forms.-
Statements and forms as mentioned in sub-rules (15), (16),(17) and (18) of rule 13N, shall be filled in
the following format, namely:-
1
[Part-I
Format of annual certificate of capital gains to be issued by NCCPL to taxpayer
under rule 1(4) of the Eighth Schedule to the Ordinance
[See rule 13N(15)]
Original/Duplicate Date of issue__________________
Sr. No
1. Name of taxpayer
2. UIN
3. CNIC/NTN
4. Period July 1, 20___ to June 30, 20___
5. Amount of net capital gains on securities
6. Amount of tax liability on capital gains
collected and deposited by NCCPL Rupees________________
7. Amount of tax liability on capital gains
collected and deposited by NCCP Rupees________________
1
Part-I substituted by the SRO 1145(I)/2016 dated 7th December, 2016. The substituted Part-I read as follows:-
[Part-I
Format of annual certificate of capital gains to be issued by NCCPL to taxpayer
under rule 1(4) of the Eighth Schedule to the Ordinance
[See rule 13N(15)]
Original/Duplicate Date of issue__________________
Sr. No
1. Name of taxpayer
2. UIN
3. CNIC/NTN
4. Period July 1, 20___ to June 30, 20___
5. Clearing members Name (a)
(b)
(c)
6. Amount of capital gains for holding period:
(i) Less than 12 months Rupees________________
(ii)12 months or more but less than 24 months Rupees________________
(iii) 24 months or more but less than 48 months Rupees________________
(iv) 48 months or more Rupees________________
7. Amount of capital loss for holding period :
(i) Less than 12 months Rupees_____(_____)____
(ii) 12 months or more but less than 24 months Rupees_____(_____)____
(iii) 24 months or more but less than 48 months Rupees ____(______)____
(iv) 48 months or more Rupees_____(_____)____
8. Amount of tax liability on capital gains:
(i) Less than 12 months (15%) Rupees________________
(ii) 12 months or more but less than 24 months
(12.5%) Rupees________________
(iii) 24 months or more but less than 48 months Rupees_______________
(7.5%)
(iv) 48 months or more (0%) Rupee_______________
(v) Adjustment of tax liability due to capital loss Rupees_______________
(vi) Total Liability (i+ii+iii+v) (________%) Rupees_____________]
9. Amount of tax liability on capital gains collected and Rupees ____________
deposited by NCCPL
This is to further certify that the tax collected has been deposited in the Federal Government Account.
Name of authorized person ___________________________
Signature
Income Tax Rules, 2002 22
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
This is to further certify that the tax collected has been deposited in the Federal Government
Account.
Name of authorized person ___________________
Signature __________________________________ ]
1
[Part-II
Format of quarterly Statement to be filed by NCCPL to the Board
under rule 1(5) of the Eighth Schedule to the Ordinance
[See rule 13N(16)]
NTN No. Address _________ _________________
Telephone Fax________________ Email________________________
2
S.No. Name UIN Provisional amount of
[Net amount of capital gains as at quarter
capital gains tax
ended
liability as at quarter
ended
______________
Holding period Holding period of Holding period of 24
of less than 12 12 months or months or more]
months more but less
than 24 months
I, ____________________________ holder of CNIC No._________________ in my capacity as Principal
Officer / Representative of NCCPL do hereby solemnly declare that to the best of my knowledge and belief the
information given in this statement is correct and complete and in accordance with the applicable provisions of
the Income Tax Ordinance, 2001 and Income Tax Rules, 2002.
Date ______________________________ (dd/mm/yyyy)
Signature ___________________________]
1
Part-II substituted by the SRO 1145(I)/2016 dated 7th December, 2016. The substituted Part-II read as follows:-
[Part-II
Format of quarterly Statement to be filed by NCCPL to the Board
under rule 1(5) of the Eighth Schedule to the Ordinance
[See rule 13N(16)]
NTN No. Address
Telephone Fax________________ Email________________________
1
S.No. Name UIN Provisional amount of
[Net amount of capital gains as at quarter ended
capital gains tax liability
as at quarter ended
_______________
Holding period of Holding period of Holding period of 24
less than 12 12 months or more months or more]
months but less than 24
months
I, ____________________________ holder of CNIC No._________________ in my capacity as Principal Officer / Representative
of NCCPL do hereby solemnly declare that to the best of my knowledge and belief the information given in this statement is correct
and complete and in accordance with the applicable provisions of the Income Tax Ordinance, 2001 and Income Tax Rules, 2002.
Date ______________________________ (dd/mm/yyyy)
Signature ______________________________]
2 Column (4) of Table II substituted by SRO 161(I)/2015, dated February 23, 2015.
Income Tax Rules, 2002 23
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
Part-III
Format of irrevocable option to be filed by the taxpayer under rule 5 of the
Eighth Schedule to the Ordinance, who opts out of the mechanism for determination and payment
of tax liability on capital gains laid down in the
Eighth Schedule to the Ordinance
[See rule 13N(17)]
To, (NCCPL)
In terms of rule 5 of the Eighth Schedule to the Ordinance, I / we (name of person), hereby undertake to
opt out of the mechanism for determining and payment of tax liability laid down in the said Eighth
Schedule.
My other particulars are as under:
UIN
NTN / CNIC
Business address
Residence address
Telephone No.
E-mail address
I do hereby solemnly declare that information stated above is complete and correct to the best of my
knowledge and belief.
____________________________
Signature of the authorized person
Dated: ______________________
Part-IV
Statement of investments to be filed by taxpayer with
the Commissioner under rule 2(1) of the Eighth Schedule to the Ordinance
[See rule 13N(18)]
To,
The Commissioner, Inland Revenue.
I hereby declare my investments in listed securities as of __________ 1[20____], in terms of rule 2(1) of the
Eighth Schedule to the Ordinance, as under:-
S.No. Name of Security Rupees
My other particulars are as under:
Name
NTN / CNIC
Business address
Residence address
1 Substituted for "2012" by SRO 161(I)/2015, dated February 23, 2015.
Income Tax Rules, 2002 24
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
Telephone No.
E-mail address
I do hereby solemnly declare that information stated above is complete and correct to the best of my knowledge
and belief.
_____________________________
Signature of the authorized person
Dated ___________________________
13P. Clarifications and explanations.-
Clarification and explanation as mentioned in sub-rule (21) of rule 13N regarding computation of capital
gains and tax payable thereon under the Eighth Schedule to the Ordinance, and the amount and
period of investment referred to in rule 2 of the said Eighth Schedule are as under:-
(a) Sales transactions:-
(i) Details of the transaction
An investor, holding securities, sells such securities in a stock exchange. The
transaction is settled by transferring the securities sold from his account maintained in
Central Depository System to the investor(s) buying the securities with credit of sale
proceeds to the account of investor disposing of the securities.
(ii) Tax treatment
Disposal of security is to be taken as taxable event, at settlement date. Capital gain
will be computed by applying FIFO method. If the securities holding period is more
than one year, then no CGT shall be collected, otherwise, as per holding period, CGT
shall be collected as per the holding period.
(iii) Example
A, being a client of a broker, has 2,000 shares of company ABC in his account. He
acquired 1,000 shares on the 1st January, 2011 at Rs.15 per share, 500 on the 1st
July, 2012 at Rs.16 per share and 500 on the 1st January, 2012 at Rs.14 per share.
He disposed off 500 shares on the 1st February, 2012 at Rs.13 per share, 500 shares
on the 7th February, 2012 at Rs.14 per share, 500 shares on the 21st February, 2012
at Rs.15 per share and 500 shares on the 28th February, 2012 at Rs.22 per share.
The cost of acquisition is deemed to include 0.50% of the acquisition cost as
incidental expenses incurred.
NCCPL shall collect CGT as per following example 1[(below rates are hypothetical
and used solely for understanding purposes, therefore, rate as per Division VII of Part
I of First Schedule will be applicable in case of actual transactions)]:
Purchases / Acquisitions Disposal
No. of 1st Feb, 7th Feb, 21st Feb, 28th Feb,
Date shares Price Cost* 2012 2012 2012 2012 Total
1-Jan-11 1,000 15 15,000 500 500 1,000
1-Jul-11 500 16 8,000 500 500
1-Jan-12 500 14 7,000 500 500
2,000 30,000 500 500 500 500 500
Selling price per share 13 14 15 22
Sale proceed Less: 6,500 7,000 7,500 11,000 32,000
1
Inserted by the SRO 1145(I)/2016 dated 7th December, 2016.
Income Tax Rules, 2002 25
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
Cost 7,500 7,500 8,000 7,000 30,000
(1,000) (500) (500) 4,000 2,000
Less: 0.50% of sale proceeds as expense 32.50 35 37.50 55 160
(1,032.50) (535) (537.50) 3,945 1,840
Adjustment of eligible losses 537.50 (537.50)
Loss not eligible for set-off 1,032.50 535
0 0 0 3,407.50
Holding period 396 402 235 58
Tax rate applicable 0% 0% 8% 10%
Tax to be collected 340.75
3,066.75
* Cost has been deemed to include 0.50% of cost of acquisition for ancillary expenses, hence
not separately mentioned.
(b) Squaring up transactions in ready, futures and derivatives
(i) Details of the transaction
An investor holding shares disposes of such shares, but on the same day or in same
futures or derivative contract he buys same quantity of shares. The system does not
change the inventory balances of the person in his account. The net difference of sale
and purchase is either paid being profit or recovered being loss from the investor.
(ii) Tax treatment
Since there is no movement in the account, the net difference is payable to the
investor, the same shall be taken as capital gain for holding period less than 6 months
and the net difference will be subject to tax collection at 10%. If the net difference is
recoverable, then the same shall be treated as loss and no tax shall be collected.
(iii) Example
In the example given in clause (a)(iii), in addition to the above, if A on the 28th
February 2013 sold 500 shares, at Rs.23, purchased 500 shares at Rs.21 and then
sold 500 shares at Rs.22.
In this case, the average selling price of the two sales would be Rs.22.5 per share
which will be taken as the basis for computing capital gains. Consequently, gain of
Rs.750 (500 x (22.5-21)) shall be taken as taxable at 10%. Whereas, on remaining
500 shares sold the taxable gain, if any, will be computed by taking sale consideration
at Rs.22.5 per share by apply FIFO method on inventory held by A in his account.
(c) Transfer owing to privatization
(i) Details of the transaction
Owing to privatization, the shares of Government owned entities may be offered to
public through stock exchanges. In such case, the Government shareholding is
placed in the account of Privatization Commission and, after subscription, the shares
are transferred from Privatization Commission‟s account to the accounts of the
buyers.
(ii) Tax treatment
Transfer of shares by the Federal or Provincial Government in an entity will not be
subject to capital gains tax due to exemption contained in section 49 of the
Ordinance.
Income Tax Rules, 2002 26
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
Acquisition of shares shall not be subject to any tax. The cost of acquisition of the
shares shall be the price paid by the buyers to acquire the shares and such cost base
shall be taken into account for computation of capital gain on any subsequent
disposal of shares by the buyers.
(d) Negotiated deal transactions
(i) Details of the transaction
Certain investors holding shares may sell through negotiated deal at a price agreed
with the buyer e.g. a strategic sale and purchase of shares to acquire or dispose of
controlling shares. Such transactions are reported as negotiated deal transactions at
the relevant stock exchange through a stock broker in the manner prescribed by such
stock exchange.
(ii) Tax treatment
The price reported as selling price or the market price, whichever is higher, shall be
taken into account to compute capital gain on the basis of holding period of such
securities.
(iii) Example
A holding 51% shares in company ABC (51,000 shares acquired at Rs.10). He
negotiated a price of Rs.30 per share with a foreign investor who intends to hold
company ABC. The transaction is reported to the stock exchange through the broker.
In case the market price of such shares on that date of transaction is Rs.25, the
capital gain shall be computed at the price of Rs.30 being higher of reported selling
price and market price. Gain will be computed at Rs.20 per share (Rs.30 less Rs.10).
In case the market price of such shares on that date of transaction is Rs.35, the
capital gain shall be computed at the price of Rs.35 being higher of reported selling
price and market price. In this case gain will be computed at Rs.25 per share (Rs.35
less Rs.10).
(e) Transfer owing to acquisition
(i) Details of the transaction
Certain transactions in listed securities, fulfilling the rules and regulations, are entered
into to acquire voting shares and takeovers under the Listed Companies (Substantial
Acquisition of Voting Shares and Takeovers) Ordinance, 2002. Such transaction may
be entered into at negotiated price or may be executed through the pricing
mechanism of stock exchange.
(ii) Tax treatment
The actual selling price, negotiated or quoted, whichever is higher, in accordance with
the provisions of relevant laws, as reduced by the cost of securities on FIFO basis,
shall be taken as capital gain or loss and considering the example given in clause
(a)(iii), any taxable gain shall attract collection of tax at applicable rate.
(f) Buy-back of shares
(i) Details of the transaction
Pursuant to section 95A of the Companies Ordinance, 1984, a company may buy
back its shares from its shareholders. If an investor holding shares exercise
option then shares held by him are transferred to the company.
(ii) Tax treatment
Income Tax Rules, 2002 27
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
The transfer of shares under buy-back arrangement will be taken as disposal and
the price paid by the company to acquire the shares shall be taken as sale price
to compute capital gain and collect tax thereon, if such gain is taxable.
(g) Transfer from one account of investor to his another account
1
[(i) Details of the transaction
An investor holding securities in his one account transfers such securities to another.
In case where securities are transferred from singly owned account to another singly
owned account that may be maintained with same or different participant or from a
joint account to another joint account with same combination of joint holders this will
be treated as portfolio transfer as no change has occurred in overall portfolio of the
investor. However, in case of transfer of securities from a singly owned or joint
account to an account where ownership structure is different, such transfers shall be
treated as disposal.
(ii) Tax treatment
In case of portfolio transfer where ownership of securities does not change, no capital
gain tax shall be computed. In such a case the date and cost of acquisition of the
securities shall not be changed owing to such portfolio transfer.
In all other cases, including transfer by investor from one fund in an Asset
Management Company to another fund maintained by same or another Asset
Management Company, such transfer shall be treated as disposal and shall be taxed
accordingly.]
(h) Securities lending and borrowing (SLB)
(i) Details of the transaction
An investor borrows securities from a person holding such security for a specified
period under an outright purchase and re-sale contract. Investor sells the
borrowed security in the market and on or before contract completion date
repurchases it to return to the lender. The borrowing investor while returning the
security to the lender pays financial charges for the period of use of security.
(ii) Tax treatment
In accordance with rule 13L(1)(b), the net difference in the hands of the borrower
resulting in completing the whole transaction, including the financial charges
incurred on borrowing the securities, is to be treated as capital gain or loss, as
the case may be. The income of the lender, being mark-up income, shall not be
subject to capital gain tax.
(iii) Example
1
Sub-clauses (i) and (ii) substituted by the SRO 1145(I)/2016 dated 7th December, 2016. The substituted sub-clauses read
as follows:-
[(i) Details of the transaction
An investor holding shares in his one account transfers shares to another. In case where shares are transferred from
singly owned account to another singly owned account that may be maintained with different participant or from a
joint account to another joint account with same combination of joint holders this will be treated as portfolio transfer
as no change has occurred in overall portfolio of the investor. However, in case of transfer of shares from a singly
owned or joint account to an account where ownership structure is different, such transfers shall be treated as
disposal.
(ii) Tax treatment
In case of portfolio transfer where ownership of shares does not change, no capital gain tax shall be computed.
Whereas in all other cases, such transfer shall be treated as disposal and shall be taxed accordingly.]
Income Tax Rules, 2002 28
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
A borrowed 1,000 shares from B for short term. The agreed value of the
borrowed shares is Rs.100 per share on which mark-up for the specified period is
to be paid by the borrower at the time of returning the borrowed securities. A sold
such borrowed securities at Rs.101 per share and subsequently on the date
agreed to return the shares to the lender, re-purchased 1000 shares at Rs.90. At
the time of settlement, the borrower also paid a sum of Rs.2 per share as mark
up on borrowed security to the lender 1[(below rates are hypothetical and used
solely for understanding purposes, therefore, rate as per Division VII of Part I of First
Schedule will be applicable in case of actual transactions)].
No of
Net gain / loss of the borrower shares Price Amount
Sale of borrowed shares 1,000 101 101,000
Repurchase of shares and returned to the lender (1,000) 90 (90,000)
O.50% of sale proceeds as incidental expenses on sale (505)
0.50% of repurchase price being incident expenses on (450)
acquisition
Financial cost paid to the lender 2 (2,000)
Net gain / (loss) 0 8,045
Tax to be collected @ 10% on net gain 804.50
Financial income of the lender 2,000
No CGT to be collected 0
For the lender, on return of the borrowed shares by the borrower, the cost and date of
acquisition shall remain the same as was before lending the shares to the borrower.
(i) Transfer / transmission upon death
(i) Details of the transaction
Upon death of an individual, the securities held are transferred to the executor or
beneficiary.
(ii) Tax treatment
In accordance with section 79 of the Ordinance, no gain or loss is recognized on
transmission of an asset to an executor or the beneficiary on the death of a person.
Accordingly, no capital gain tax is required to be computed and collected at the time
of such transfer. The date of acquisition and cost of the 2[securities] in the hands of
executor or beneficiary will be the same as was in the hands of deceased person.
(j) Transfer for / against GDRs
(i) Details of the transaction
A person holding shares of a company, for which GDR is issued, may deposit the
shares with the Depository for issuance of shares. Conversely, the GDR issued may
1
Added by the SRO 1145(I)/2016 dated 7th December, 2016.
2
The word “shares” substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
Income Tax Rules, 2002 29
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
either be redeemed at specified time or cancelled before time in which case the
Depository issues shares to the GDR holder.
(ii) Tax treatment
When the person deposits shares into the Depository and get issued GDRs, the
shares will be taken as disposed of and consequently, capital gain will be required to
be computed. Since the value of GDRs issued will not be available to NCCPL,
therefore, the market price (day-end price) of the date of transfer shall be taken as
consideration received by the person for the purpose of computation and collection of
capital gain tax.
Similarly, when GDRs are converted into shares, the deposit of shares in the person‟s
account shall not be a taxable event, being an acquisition of shares. However, as the
value for which GDRs converted into shares will not be available with NCCPL,
therefore, the cost of acquisition for such shares shall be taken the market price (day-
end price) of the date on which the shares are deposited.
(k) Gift (to family members or to members other than family members)
(i) Details of the transaction
Securities may be transferred from an investor‟s account to another account
belonging to his family or another member not belonging to family by reason of a gift,
by use of reason code established under Central Depository System 1[or similar code
in Asset Management Companies and PMEX system].
(ii) Tax treatment
In accordance with section 79 of the Ordinance, no gain or loss is recognized on
disposal of an asset by reason of a gift of the asset. Accordingly, such transfer will not
attract capital gain tax. The date of acquisition and cost of the securities shall remain
same in the hands of transferee as were in the hands of transferor.
(l) Reversal of erroneous transfers
(i) Details of the transaction
Sometime, securities may be transferred from one investor‟s account erroneously,
which are then returned from the participants account to whom such erroneous
delivery is made.
(ii) Tax treatment
If at the time of transaction such an error is not identified, NCCPL will compute and
collect tax on transfer of 2[securities] at first stage, if applicable. However, since
subsequent reversal of erroneous transfers is not due to disposal therefore such
rectification of mistake to correct the inventory in participants‟ accounts will not be
considered as taxable event.
(iii) Example
A sold 500 shares which were bought by B. Erroneously, 5,000 shares were
transferred from A‟s account to C‟s account. On detection of error, C‟ returns 5,000
shares to A and then A transfers 500 shares to B.
At the time of first transfer of 5,000 shares the system will record the transaction and
compute capital gain tax, if applicable. Subsequent reversals, will be made through
erroneous transfer reason code, and being there no actual disposal involved, no gain
1
Inserted by the SRO 1145(I)/2016 dated 7th December, 2016.
2
The word “shares” substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
Income Tax Rules, 2002 30
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
or loss shall be computed in the case of transfer of shares from C to A and then A to
B.
The respective persons, if need arises, may seek adjustments for actual results in
their return of income, including refund for excess collection of tax due to erroneous
transfer by the investor.
(m) Global custodian related market based transaction
(i) Details of the transaction
Foreign institutional investors not only deal in shares for their own account but also on
behalf of other investors through global custodians.
(ii) Tax treatment
1
[CGT shall be charged to the final settlement account of the person settling the
underlying trade and such clearing member shall be responsible to collect and deposit
with NCCPL, CGT computed on such transactions].
2
[(iii) Example:
ABC Company, a foreign institutional investor, sells 20,000 shares of XYZ Company
on its own behalf and on behalf of other investors as follows 3[(below rates are
hypothetical and used solely for understanding purposes, therefore, rate as per
Division VII of Part I of First Schedule will be applicable in case of actual
transactions)]:
Final
Settlement
Holding First Account for
Capital Gain/ Period Capital Settlement CGT
Name Qty (Loss) (days) Rate Gain Tax Account Collection
ABC Co. 8,000 Rs.35,000 300 12.5% Rs.4,375 ABC ABC
Company– Company
Proprietary
UIN
Mr. P 5,000 Rs.31,000 390 10% Rs.3,100 ABC Mr. P
Company–
IBD UIN
Mr. Q 3,000 Rs.(11,000) 410 NA NA ABC Mr. Q
Company–
IBD UIN
Mr. R 4,000 Rs.27,000 750 0% 0 ABC Mr. R
Company–
IBDUIN
Total 20,000 Rs,7,475
As illustrated above, foreign institutional investors (ABC Company) sold shares, on its
own behalf and on behalf of other investors. Thus, capital gain tax shall be charged to
the final settlement account of the person settling the underlying trade and such
clearing member shall be responsible to collect and deposit with NCCPL CGT
computed on such transactions. Further, IBD UIN of foreign institutional investor used
as a transitional account shall be exempt from capital gain tax.
1 Substituted for "Provisions of Eighth Schedule to the Ordinance shall not apply on the transactions of foreign institutional
investor" by SRO 161(I)/2015, dated February 23, 2015.
2 Sub-clause (iii) inserted by SRO 161(I)/2015, dated February 23, 2015.
3
Inserted by the SRO 1145(I)/2016 dated 7th December, 2016.
Income Tax Rules, 2002 31
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
Similarly, for purchase transactions, final settlement account shall be used for the
purpose of inventory maintenance of the clients of foreign institutional investors and
inventory shall not be maintained for the IBD UIN of foreign institutional investor.]
(n) Failure in delivery or payment
(i) Details of the transaction
Where a person has sold the securities but unable to settle the transaction by
delivery, as per stock market mechanism, the securities are bought from another
investor and delivered to the buyer(s). The person in default is charged with certain
penalties or charges for his failure to complete the transaction.
Similarly, a buyer may default in making payment for securities purchased. The
securities so purchased by him are retrieved and sold to settle his liability towards the
seller.
(ii) Tax treatment
Where the seller fails to deliver securities, and the transaction is settled by purchase
of securities from another investor to settle the transaction, the person in default shall
not be treated as seller of the securities in accordance with criteria of section 75 of the
Ordinance. Rather, the person from whom the securities were purchased to settle the
transaction is to be taken as person disposing the securities and accordingly he will
be subject to capital gain tax, if applicable.
Where a buyer defaults in taking the delivery of security by not making payment due,
the securities sold on his behalf will be taken as disposal by him and if any gain arises
in the hands of buyer in default such gain will be subject to capital gain tax, if
applicable.
(o) Failed/ un-affirmed transaction
(i) Details of the transaction
Clearing Member (CM) of one stock exchange (Originating CM) deals with a CM of
another stock exchange (Transacting CM) for sale or purchase of shares. When, the
Originating CM does not confirm the transaction to the NCCPL, NCCPL completes
the transaction by executing sale or purchase through Transacting CM. To complete
the transaction, shares are delivered to/from the account of Transacting CM.
(ii) Tax treatment
Since such transactions are settled by the Transacting CM, NCCPL shall compute
capital gain in respect of such transaction from such Transacting CM.
(p) Pledge call
(i) Details of the transaction
When a borrower defaults in payment to the lender, and 1[securities] were pledged as
collateral, the borrower is entitled to transfer such 2[securities] from the person in
default to his own account.
(ii) Tax treatment
When the 3[securities] are transferred from the account of person in default to the
lender‟s account, such transfer will be treated as disposal for tax purposes. The
1
The word “shares” substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
2
The word “shares” substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
3
The word “shares” substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
Income Tax Rules, 2002 32
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
system price (day-end price) will be taken as deemed consideration for the purpose of
computation of capital and tax thereon. Since no proceeds will be due to the person in
default, thus, NCCPL may not be able to collect tax from such person. However,
NCCPL shall report such capital gain and the amount tax, if any, in the statements.
1
[(q) Disposal of bonus shares
(i) Details of the transaction.-
A company issues bonus shares to its shareholders, which are subsequently sold by
the shareholder in the market.
(ii) Tax treatment.-
Effective from July 1, 2014 for computation of capital gain tax, the cost of bonus
shares would be the price prevailing on first day of book closure (ex-bonus price).
Subsequently, when such bonus shares are disposed of, such cost will be taken for
computation of capital gain and tax thereon. Similarly, the cost of old shares would
remain same before and after bonus shares are issued, and when the old shares are
disposed of, such cost will be taken for computation of capital gain and tax thereon,
even if these are sold prior to the crediting of bonus shares in the shareholder‟s
account, but after the date of entitlement of bonus shares.
(iii) Example:-
A, being a client of a broker, has 4 shares of company A in his account. He acquired
these shares on the 1st January, 2015 at Rs.20 per share. On the same day i.e. 01-
01-2015, the company declared bonus shares @ 25%, and date of entitlement of the
shares was declared as 1-04-2015 and the shares were to be credited in the account
of A on 15-5-2015. The market value (ex-bonus price) of these shares on 31-03-2015
is Rs.25 per share. He disposed of 2 shares on the 15th April, 2015 at Rs.20 per share
and the remaining 3 shares (including bonus share) @ Rs.20 on the 18th May 2015.
The cost of acquisition is deemed to include 0.50% of the acquisition cost as
incidental expenses incurred and sale proceeds are deemed to include 0.5% of the
consideration as incidental expenses.
NCCPL shall collect CGT as per following example 2[(below rates are hypothetical
and used solely for understanding purposes, therefore, rate as per Division VII of Part
I of First Schedule will be applicable in case of actual transactions)]:
Purchases /Acquisitions Disposal
No. of 15 Apr 18 May
Date shares Price Cost* 2015 2015 Total
1-Jan-15 4 20 80 2 2
Bonus shares issued @ 25%
1-Jan-15 (Date of entitlement 01-04-15) 3 3
(Date of credit 15-05-2015)
1-Apr-15 4 20 80
15-May-15 1 25 25
2 3 5]
Selling price per share 20 20
Sale proceed 40 60 100
Less: Cost 40 65 105
1 Clause (q) substituted by SRO 161(I)/2015, dated February 23, 2015.
2
Inserted by the SRO 1145(I)/2016 dated 7th December, 2016.
Income Tax Rules, 2002 33
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
0 (5) (5)
(r) Right issue
(i) Details of the transaction
A Company may grant letter of rights to its shareholders to acquire further shares in
the company at a given price. Such rights are credited to the respective shareholders
account and such rights are also traded on stock exchange. A shareholder granted
the right, or an investor who bought the right from the stock market, subscribe the
shares of the company by making payment of given price of the shares. Shares so
acquired may then be disposed of.
(ii) Tax treatment
When a person disposes of Letter of Rights (LORs) before subscription, the sale
proceeds shall be treated as capital gain. Upon expiry/exercise of right, the disposal
of LORs shall be recorded at zero price for the purpose of computation of CGT.
Whereas normal sale/purchase of LORs shall be treated in a same manner as
provided in clause (a).
When a person disposes shares acquired through right, the subscription cost of the
right shares shall be treated as cost of acquisition of such shares and capital gain or
loss shall be computed accordingly.
(s) Merger
(i) Details of the transaction
Securities are moved pursuant to order or directive of authorities like SECP, SBP,
High Court etc.
(ii) Tax treatment
Since no change of ownership of the shareholder is involved therefore such transfer
will not be taken as taxable event and no CGT will be collected on such transfer.
(iii) Example
A holds 1,000 shares in ABC which he acquired at Rs.10 each on the 1st January,
2013. ABC merged into company XYZ through scheme approved by the High Court.
XYZ issues 1 share for each 2 shares of company ABC. Consequently, in A‟s
account, 1,000 shares in company ABC are replaced with 500 shares of company
XYZ. The extinguishment of 1,000 shares in company ABC will be treated as tax
neutral event, and 500 shares in XYZ will have the same cost base i.e. Rs.10,000
(Rs.20 per share). If subsequently, A sells shares of XYZ, capital gain will be
computed taking into account the date of acquisition i.e. the 1st January, 2013.
1
[Similar treatment shall be applicable in case of merger of funds consequent of an
order of court or SECP.]
(t) De-merger
(i) Details of the transaction
Consequent to the order of the court, SECP or State Bank of Pakistan, a company
may de-merged and split into two companies. Consequently, the shareholding of
existing company is also divided into shares of the two companies i.e. existing
company and the new company. In Central Depository System, in a shareholders
account the existing company‟s shareholding is reduced to the revised shareholding
whereas new shareholding in the new company is also recognized.
1
Added by the SRO 1145(I)/2016 dated 7th December, 2016.
Income Tax Rules, 2002 34
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
(ii) Tax treatment
Pursuance to section 97A of the Ordinance, the splitting will be tax neutral event. The
cost base of existing shareholding shall be divided in proportion to the revised
shareholding in the existing company and the new company. The date of acquisition
of shares in the existing company will remain same for the revised shareholding in the
two companies 1[Similar treatment shall be applicable in case of demerger of funds
consequent of an order of court or SECP.]
(u) Capital reduction / Splitting of shares / Conversion
(i) Details of the transaction
A company may consider reducing its paid capital or splitting the 2[securities] under
the relevant laws. In such, the existing 3[investors] are either required to surrender the
existing 4[securities] and obtain new 5[securities] in the ratio approved, or the existing
6
[securities] are divided into specified numbers of new 7[securities].
(ii) Tax treatment
Since the existing 8[investors] are issued with new 9[securities] in exchange of their
existing 10[securities] due to the corporate requirements, and no change in ownership
occurs, therefore, the cancellation of existing 11[securities] is not to be treated as
„disposal‟ for tax purposes. Further, the cost and date of acquisition of new
12
[securities] will remain same, as it was for existing 13[securities].
(v) Specie dividend
(i) Details of the transaction
A company declares dividend in specie, whereby, the dividend is paid in the form of
shares in a company (other than the shares of the company declaring dividend). Such
shares held in the account of the company are transferred to the respective
shareholders‟ account. The shareholders who received such shares in other company
may then dispose of such shares.
(ii) Tax treatment
When a person will be transferring shares in other company to its shareholders as
specie dividend, then such shares will be taken as disposed of and will be subject to
capital gain tax.
The shares will be added in the share holders‟ account and the cost 14[of such shares
shall be taken as zero], whereas, the acquisition date will be the date on which shares
1
Added by the SRO 1145(I)/2016 dated 7th December, 2016.
2
The word “shares” substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
3
The word “shareholders” substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
4
The word “shares” substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
5
The word “shares” substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
6
The word “shares” substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
7
The word “shares” substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
8
The word “shareholders” substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
9
The word “shares” substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
10
The word “shares” substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
11
The word “shares” substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
12
The word “shares” substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
13
The word “shares” substituted by the SRO 1145(I)/2016 dated 7th December, 2016.
14 Substituted for "will be calculated as calculated for Bonus shares in Example 1.17.3," by SRO 161(I)/2015, dated
February 23, 2015.
Income Tax Rules, 2002 35
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
are credited. Such cost base shall be taken into account for computation of gain or
loss at the time of disposal of shares received as specie dividend and original shares.
(w) Offer for sale
(i) Details of the transaction
Pursuant to section 61 of the Companies Ordinance, 1984, transactions for issuance
or sale of securities can be carried out as offer for sale.
(ii) Tax treatment
When securities are issued by the company under offer for sale, the issuance is not a
taxable event. The date on which such securities are credited to the investor‟s
account shall be taken as acquisition date and the price paid for acquiring such
securities shall be taken as cost of acquisition of such securities. Such date and cost
base shall then be considered for computation of capital gains tax if such securities
are disposed of by the investor subsequently.
If under offer for sale, a person disposes of securities held by him, then such disposal
will be taxable event and subject to capital gains tax.
(x) Court orders
(i) Details of the transaction
There could be certain orders of the courts whereby transfer of securities may be
required from an investor‟s account to another investor‟s account or any other person,
e.g. deposit of securities with Nazir of the Court, transfer of securities in case of
dispute among legal heirs, award of decree etc. etc.
(ii) Tax treatment
Capital gains tax on transfer under a court order will depend on the contents of the
order. For example, in case of an order in dispute among legal heirs, the transfer of
securities may not be taxable being covered under section 79 of the Ordinance.
Similarly, in case of mergers or de-mergers, transfers would be tax neutral event.
Whereas, in case of a decree against an investor, transfer of securities from his
account may constitute taxable event.
NCCPL shall be responsible to compute capital gains tax, where a clearing member
report transfer under a court order as taxable event through Central Depository
System.
(y) Computation of investment amount for the purpose of rule 2 of the Eighth Schedule to
the Ordinance
The period of investment and amount eligible under rule 2 of Eighth Schedule to the
Ordinance shall be determined as per following examples 1[(below rates are hypothetical and
used solely for understanding purposes, therefore, rate as per Division VII of Part I of First
Schedule will be applicable in case of actual transactions)]:
Example-1
Statement of Net Investment With Age - clause 2(1) of Eighth Schedule
Value of open No
Cost of Derivatives Net of Accumulative
Date Description Investment Sale Position Investment days Investment
23-Apr-12 Opening Balance 5,000,000 1,000,000 4,000,000 24 4,000,000
1
Inserted by the SRO 1145(I)/2016 dated 7th December, 2016.
Income Tax Rules, 2002 36
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
17-May-12 Disposal (2,000,000) - (2,000,000) 8 3,000,000
25-May-12 Disposal - 1,500,000 (1,500,000) 12 1,500,000
06-Jun-12 Acquisition 4,000,000 - 4,000,000 17 7,000,000
23-Jun-12 Disposal (5,000,000) - (5,000,000) 7 2,000,000
30-Jun-12 Closing balance 2,000,000
Sorted in Descending Order Calculation of Time Weighted Average
Time
Accumulative No of Accumulative Weighted
No of days Investment days Investment Product Average
17 7,000,000 17 7,000,000 119,000,000
24 4,000,000 24 4,000,000 96,000,000
8 3,000,000 4 3,000,000 12,000,000
7 2,000,000 45 227,000,000
Time Weighted Average = Total product/No
12 1,500,000 5,044,444
of days
As per clause 2(1), of the Eighth Schedule, amount of investment made prior to April 23, 2012
shall be considered as investment for the purposes of the said clause. The investment has to
remain invested for at least 45 days. The above example indicate that amount invested has
increased during the 45 days and therefore it is established that the amount of investment as
on April 23, 2012 i.e. Rs.4,000,000 remains invested for 45 days till June 30, 2012. If it has
been decreased from Rs.4,000,000, the decreased amount should have been taken for the
purposed of the said clause 2(1).
Example-2
Statement of Net Investment With Age - clause 2(2) of the Eighth Schedule
Value of
open
Cost of Derivatives Net No of Accumulative
Date Description Investment Sale Position Investment days Investment
24-Apr-12 Acquisition 10,000,000 - 10,000,000 14 10,000,000
08-May-12 Disposal (2,000,000) 500,000 (2,500,000) 17 7,500,000
25-May-12 Disposal (3,000,000) - (3,000,000) 30 5,000,000
24-Jun-12 Acquisition 4,000,000 - 4,000,000 29 9,000,000
23-Jul-12 Disposal (1,000,000) 1,500,000 (2,500,000) 258 6,500,000
07-Apr-13 Acquisition 500,000 - 500,000 416 8,500,000
28-May-14 Disposal (6,000,000) - (6,000,000) 31 2,500,000
28-Jun-14 Acquisition 12,000,000 - 12,000,000 1 14,500,000
29-Jun-14 Disposal (2,000,000) 3,000,000 (5,000,000) 1 9,500,000
30-Jun-14 Closing balance 12,500,000 5,000,000 7,500,000
Sorted in Descending Order Calculation of Time Weighted Average
Time
Accumulative No of Accumulative Weighted
No of days Investment days Investment Product Average
1 14,500,000 1 14,500,000 14,500,000
14 10,000,000 14 10,000,000 140,000,000
1 9,500,000 1 9,500,000 9,500,000
29 9,000,000 29 9,000,000 261,000,000
416 8,500,000 75 8,500,000 637,500,000
Income Tax Rules, 2002 37
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
17 7,500,000 120 1,062,500,000
258 6,500,000
30 5,000,000
31 2,500,000 8,854,167
Time Weighted Average = Total product/No
:]
of days
1
[(z) Free of Payment transactions (transactions executed outside Pakistan).
Certain foreign institutional investors holding shares may sell through negotiated deal at a
price agreed with the buyer outside Pakistan e.g. a strategic sale and purchase of shares to
acquire or dispose of controlling shares. Such transactions are reported to respective clearing
member of foreign institutional investors to transfer the shares from seller account to buyer
account. In such transactions, respective clearing member does not know the transaction price
and merely transfers shares from one account to other on the instructions of its foreign client.
Respective clearing member receiving the instructions from foreign institutional investors shall
be responsible to report such transactions in the negotiated deal market at the relevant stock
exchange through a stock broker in the manner prescribed by such stock exchange or through
reporting interface provided by NCCPL for this purpose. The price reported as selling price or
the market price (day-end price of the date of transaction), whichever is higher, shall be taken
into account to compute capital gain on the basis of holding period of such securities as
illustrated in clause (d).
(za) Capital gains on disposal of debt security
Tax treatment
By including debt securities in the definition of security in section 37A, the gain or loss on
disposal of debt securities shall be computed, collected and paid as provided in Eighth
Schedule, unless opted out with the approval of Commissioner. However companies shall not
be subject to this regime and will continue to be taxed as in the past with the rates applicable
to the companies and not the rates as amended in Division VII of Part I of First Schedule.
Individuals on the other hand shall be subject to mechanism as laid down in the Eighth
Schedule to the Ordinance, in respect of debt securities for which settlements are undertaken
by NCCPL.]
2
[“(zb) Sales transactions of securities of private/public unlisted company after its conversion
into listed company:-
(i) Detail of the transaction
An investor, holding such securities, sells securities in a stock exchange. The transaction is
settled by transferring the securities sold from his account maintained in Central Depository
System to the investor buying the securities with credit of sale proceeds to the account of
investor disposing of the securities.
(ii) Tax treatment
Disposal of security is to be taken as taxable event, at settlement date. Capital gain will be
computed by applying FIFO method. Capital Gain shall be chargeable to tax as per section
37A read with rates specified in Division VII of Part I of the First Schedule of the Income Tax
Ordinance, 2001.
(iii) Example
1 Clauses “(z) and (za)” inserted by SRO 161(I)/2015, dated February 23, 2015.
2 th
Inserted by the S.R.O. 498(I)/2016 dated 27 July, 2016.
Income Tax Rules, 2002 38
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
(a) A, being a client of a broker, has 1,000 shares of company ABC in his account. He
acquired 1,000 shares on the 1st January, 2013 at Rs. 10 per share when the
Company was private/public unlisted company having face value of share of Rs. 10
and transfers the same in electronic form with CDC on 1st February, 2013. ABC
Company listed on stock exchange on 1st July, 2015 at a listing price of Rs. 20. He
disposed of 500 shares on 1st January, 2016 at Rs. 25 per share and 500 shares on
8th February, 2017 at Rs. 30 per share.
(b) NCCPL shall compute capital gain and tax thereon, if any in the following manners:
(c) Date of acquisition will be based on CDS data while face value will be entered as cost
of acquisition from ready board quotations:
Purchases / Acquisitions Disposal
Date No. of Price Cost* 1st Jan, 2016 8th Feb, 2017 Total
shares
1-Jan-13 1,000 10 10,000 500 500 1,000
Selling price per share 25 30
======================
Sale proceed 12,500 15,000 27,500
Less: Cost 5,000 5,000 10,000
Difference 7,500 10,000 17,500
Less: 0.50% of sale proceeds as expense 62.50 75 137.5
Capital gain 7,437.5 9,925 17,362.5
=================
Holding period 1,095 1,499
======================
Tax rate applicable 7.5% 0%
======================
Tax to be collected 557.81 - ]
1
[(zc) Setoff of losses in case of investors having securities of multiple categories: Details of
transaction:
An investor holds various securities i.e. shares of company listed in Pakistan Stock Exchange [PSX],
units of open ended mutual funds and future commodity contracts traded at PMEX exchange. The
investor has arrived at capital gain in case of certain securities while also incurred capital loss on other
securities that is eligible for setoff with capital gain arrived at during the period on other securities.
(i) Tax Treatment:
Effective from 1 July 2016, units of open ended mutual funds and future commodity contracts are brought
in the ambit of Eighth Schedule under NCCPL. Accordingly the investors will be entitled to have the
capital loss adjusted against the capital gain in terms of Rule 13N(6) while NCCPL will calculate capital
gain tax liability of net capital gain position i.e. after adjustment of capital losses for the year in terms of
Rule 13N(10).
(ii) Example:
The examples in respect of above are given below (below rates are hypothetical and used solely for
understanding purposes, therefore, rate as per Division VII of Part I of First Schedule will be applicable in
case of actual transactions):
1
Inserted by the SRO 1145(I)/2016 dated 7th December, 2016.
Income Tax Rules, 2002 39
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
Example 1:
Client Name: Ahmed Ali
UIN: 3520211111119
Financial Year: July 2016 to June 2017
Month: September 2016
Description Tax Obligation Tax Obligation Tax Obligation Net Tax Obligation
I AMC-FUND-1 PMEX PSX
n Gain/ Tax Gain/ Tax Gain/ Tax Gain/ Tax
Tax Position (Loss) (Loss) (Loss) (Loss)
computed
t
by NCCPL
h 100,000 10,000 200,000 20,000 (150,000) 0 150,000 15,000
e
Loss (50,000) (100,000) 150,000 0
Allocation
Net a
Tax 50,000 5,000 100,000 10,000 0 0 150,000 15,000
Tax 5,000 10,000
Collection
Demand
In the above example, after adjustment of capital loss proportionally (In proportion of capital gains) during
the month, NCCPL shall demand Rs 5,000 from AMC-1 and Rs 10,000 from PMEX.
Example 2:
Client Name: Ahmed Ali
UIN: 3520211111119
Financial Year: July 2016 to June 2017
Month: February 2017
Balance as of December CGT Computation CGT Computation- Net CGT as of
31, 2016 PSX- February PMEX- January February 2017
2017 2017
Gain/ CGT collection Gain/ CGT Gain/(Loss) CGT Gain/(Loss) CGT
(Loss) from PMEX (Loss)
100,000 10,000 50,000 5,000 (70,000) NIL 80,000 8,000
In the above example, it is assumed that CGT of Rs. 10,000 has been collected by NCCPL from PMEX
till December, 31 2016. Now, in the month of February, the investor has capital gains arising on disposal
of listed securities at PSX and resulting tax liability on such gains Rs 5,000. However, due to net loss of
Rs. (70,000) as reported by PMEX for respective investor, NCCPL will determine net capital gain of Rs.
80,000 (100,000+50,000-70,000) as at February 28, 2017 with net tax liability of Rs. 8,000. But as
NCCPL has already collected Rs 10,000 from PMEX as at December 31, 2016 therefore, NCCPL will
refund Rs. 2,000 (10,000-8000) to the PMEX.]
1
[(zd)Future Commodity contracts entered into by the member of PMEX:
(i) Details of transaction:
A member of PMEX has entered into future commodity contracts which are traded at PMEX. These
can either be settled in cash or through actual settlement. Capital gains tax would have to be worked
out in accordance with applicable legal framework.
1
Inserted by the SRO 1145(I)/2016 dated 7th December, 2016.
Income Tax Rules, 2002 40
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
(ii) Tax Treatment:
Effective from 1 July 2016, future commodity contracts entered into by the member of PMEX are
brought in the ambit of Eighth Schedule under NCCPL. Accordingly NCCPL will calculate and
determine capitals gain tax liability on these contracts in terms of Rule 13N.
(iii) Examples:
The examples in respect of above are as under (below rates are hypothetical and used solely for
understanding purposes, therefore, rate as per Division VII of Part I of First Schedule will be
applicable in case of actual transactions):
Example 1. Cash settled future commodity contracts:
Capital Gain Loss and CGT Working
Day
Exchange Gain/ Gain/
No of Contract end CGT
Date Transaction Rate (USD (Loss) in (Loss) in
contracts Price $ Price @ 5%
to PKR) USD PKR
($)
A B C
7/1/2016 Purchase 1 14.5 15 105 0.50 52.50 2.63
7/2/2016 15.5 105.5 0.50 52.75 2.64
7/3/2016 14.9 105.3 (0.60) (63.18) (3.16)
7/4/2016 Sale 1 16 16.5 105.3 1.10 115.83 5.79
Total 1.50 157.90 7.90
Example 2. Delivery settled future commodity contract- Contract sold before settlement date without physical
delivery:
Investor Date Transaction Contract Name Quantity Price Rs
A 1-Jul-16 Purchase TOLA GOLD MON 1 50,100
A 4-Jul-16 Sale GOLD GOLD MON 1 52,500
Gain on sale 2,400
5%
Applicable tax rate
Capital gain 120
Example 3. Delivery settled future commodity contract- Settled at settlement dates:
Settlement
Investor Trade Date Date Transaction Contract Name Quantity Price PKR
A 1-Jul-16 8-Jul-16 Purchase TOLA GOLD FRI 1 50,100
A 4-Jul-16 11-Jul-16 Purchase TOLA GOLD MON 1 51,000
A 11-Jul-16 13-Jul-16 Sale TOLA GOLD WED 1 Tola 52,500
Commodity Name Units Inventory Date Inventory Value
Tola Gold 1 Tola 8-Jul-16 50,100
Tola Gold 1 Tola 11-Jul-16 51,000
Average value 50,550
Income Tax Rules, 2002 41
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
Monday Contract is settled on next Monday and Tuesday contract on next Tuesday. Upon settlement, funds
and inventory is moved.
Capital Gain Loss Computation
Sale Quantity 1 Tola
Selling Price 52,500
Sale Value 52,500
Less : Cost 50,100
Capital Gain / (Loss) 2,400
Tax rate applicable 5%
Tax to be collected 120
Example 4. Delivery settled future commodity contract- Settled at settlement dates:
Opening Inventory at June 30, 2016
Commodity Name Units Inventory Date Purchase Price Inventory Value
Tola Gold 5 tola 5-Jan-16 52,000 260,000
Tola Gold 10 tola 12-Mar-16 51,500 515,000
Purchase after June 30, 2016
Commodity Name Units Inventory Date Purchase Price Inventory Value
Tola Gold 1 Tola 8-Jul-16 50,100 50,100
Tola Gold 1 Tola 11-Jul-16 51,000 51,000
Total Inventory for sale
Commodity Name Units Inventory Date Purchase Price Inventory Value
Tola Gold 5 tola 5-Jan-16 52,000 260,000
Tola Gold 10 tola 12-Mar-16 51,500 515,000
Tola Gold 1 Tola 8-Jul-16 50,100 50,100
Tola Gold 1 Tola 11-Jul-16 51,000 51,000
17 876,100
In this case, capital gain loss in the above mentioned example 3, on 13-Jul-2016 shall be computed as
under :
Capital Gain Loss Computation
Sale Quantity 1 Tola
Selling Price 52,500
Sales Value 52,500
Less : Cost 52,000
Capital Gain / (Loss) 500
Tax rate applicable 5%
Tax to be collected 25
Example 5. Deposit of commodity and sale thereof:
Income Tax Rules, 2002 42
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
Contract Day end Price
1-July-2016 Monday 50,150
In this case deemed value of 10 tola gold deposited on July 1, 2016 shall be as under :
Commodity Inventory Deemed Purchase
Name Units Date Price Inventory Value
Tola Gold 10 Tola 1-Jul-16 50,150 501,500
Capital Gain Loss Computation
Sale Quantity 4 Tola
Selling Price 52,500
Sale Value 210,000
Less : Cost 200,600
Capital Gain / (Loss) 9,400
Tax rate applicable 5%
Tax to be collected 470
Example 6. Physical commodity deposited but withdrawn later:
An investor deposits 10 tola gold on July 1, 2016 in the vault and withdraws 5 Tola after 4 days.
The withdrawal would be considered as a tax neutral event. No capital gains tax implications would arise. The
remaining inventory would be valued at applicable cost for the purpose of any future capital gains tax
calculation.]
1
[(ze) Acquisition of shares in Book Building /Initial Public Offer (IPO) and subsequent sale:
(i) Details of the transaction:
Shares are offered by company in an IPO including book building. The shares are subscribed and
allotted at the applicable price. These can later be sold by the investors.
(ii) Tax treatment:
Capital gain will be computed by applying FIFO method. Capital Gain shall be chargeable to tax as per
section 37A read with rates specified in Division VII of Part I of the First Schedule of the Income Tax
Ordinance, 2001.
(iii) Example:
XYZ Company offered shares in an IPO on 1 June 2016 and the company‟s shares started trading at
PSX from 15 July 2016. Mr. A, has acquired 1,000 shares having a face value of Rs 10 each at Rs20
per share being the publically offered IPO price. The shares have been sold at PSX on 30 June 2019
at Rs 70 per share.
Capital gains tax will be calculated as follows. (The tax rate used in this example is hypothetical. In
case of actual transaction the rates as per Division VII of Part I of the First Schedule at the time of sale
shall be applicable).
1
Inserted by the SRO 1145(I)/2016 dated 7th December, 2016.
Income Tax Rules, 2002 43
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
Cost of acquisition (1,000 x 20) Rs 20,000
Sales proceeds (1,000 x 70) Rs. 70,000
0.5% of sales proceeds as expense Rs 350
Capital gain Rs 49,650
Holding period 1124 days
Applicable rate 7.5%
Capital gains tax liability Rs 3,724]
Income Tax Rules, 2002 44
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
1
[PART IV
COMPUTATION AND COLLECTION OF TAX
UNDER SECTIONS 7C AND 7D
13Q. Application.- This Chapter provides for the mode and manner for collection of tax under sections
7C and 7D from builders and developers, the functions and responsibilities of the authorities approving,
suspending and cancelling No Objection Certificates (NOC) to sell and the matters connected and ancillary
thereto.
13R. Definitions.- For the purpose of sections 7C and 7D and for this Chapter, -
(a) “authority” includes:–
(i) the Chief Executive of a building control authority as defined in respective Federal or
Provincial law regarding approval, construction and completion of buildings and
development of land; or
(ii) the Executive Officer of the Cantonment where the Cantonments Act, 1924 (Act II of
1924) applies; or
(iii) the Executive Officer of a municipal corporation or municipal committee responsible for
approving land development or building construction plan within municipality; or
(iv) the District Officer (Revenue) of a district responsible for approving land development
or building construction plan within district; or
(v) a body corporate or council, or any department of such body corporate or council, or
any Government department or functionary or any organization which acts as an
authority for approving the building or land development plans for such area by or
under any law.
(b) “builder” means a builder as defined in the Federal and respective Provincial laws
regarding approval, construction and completion of buildings and includes any person
engaged in the construction of building or otherwise and disposes of newly constructed or
renovated building within a year of its construction or renovation;
(c) “building” means a building or part thereof and includes all fittings, fixtures, installations,
signs and display structures of the building, but does not include any building notified by
the Board.
Explanation.- It is hereby declared and without limiting the generality of this
clause that building includes any building whether house, apartment, residential plaza,
shopping plaza, office, shop, banglow, villa, duplex or any built up structure under whatever
name.
(d) “developer” means a developer as defined in the Federal and respective Provincial laws
regarding development of land for the purposes of residential or commercial plotting and
includes any person engaged in developing of plot or plots of any kind either for itself or
otherwise but does not include any land development notified by the Board.
(e) “Inspector General of Registration” means Inspector General of Registration as defined in
Part II of Registration Act, 1908 (XVI of 1908) and includes Provincial Inspector Generals of
Registration, Registrars and Sub-Registrars of districts and sub districts, towns as notified
by the provincial governments.
13S. Advance tax on builders and developers.- Every authority prescribed under sub-rule (a) of rule
13R shall, at the time of approval of a land development plan or of a building construction plan and before
issuing NOC to sell, collect advance tax at the rate of five percent of the tax liability computed at the rates
specified in Division VIIIA or Division VIIIB of Part I of the First Schedule to the Ordinance, from a builder or a
developer as the case may be.
1 th
Added by the S.R.O 787(I)/2016 dated 24 August, 2016.
Income Tax Rules, 2002 45
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
13T. Mode and manner for payment and collection of tax from builders.— Every builder after
obtaining approval of a building plan or of a revised building plan from the authority and NOC to sell, shall
furnish on line a copy of building plan and evidence of partial payment of five percent tax to the Chief
Commissioner along with computation of final tax liability on the basis of covered area as per rates provided in
Division VIIIA of the First Schedule to the Ordinance. The Chief Commissioner shall, after being satisfied that
the rates are applied correctly and after making such inquiry as he thinks fit, shall online issue a schedule of
advance tax installments to be paid by the builder in accordance with rule 13U.
13U. Schedule of Installments for builders.-The Chief Commissioner shall, upon online application of
the builder as prescribed in rule 13V, online issue the schedule of equal Installments on four-monthly basis
within thirty days of the application:
Provided that the duration of payment of tax shall commence from the date of issuance of
NOC to sell till the date of completion of building or building project in the approval plan:
Provided further that provisions of this rule shall not apply if a builder opts to pay the entire
tax liability in lump sum.
13V. Application for payment of tax in installments by builders.- The builder shall online apply for the
payment of installments under this Chapter through the following application form.-
APPLICATION FOR ISSUANCE OF SCHEDULE OF INSTALLMENTS FOR
PAYMENT OF TAX U/S 7C OF THE INCOME TAX ORDINANCE 2001 READ WITH RULE
13T OF INCOME TAX RULES 2002
1. Name of the builder/ owner
2. NTN/CNIC (Attach copy of CNIC)
3. Name of project/ building (if any)
4. Address of the project/ building
5. Phone Number
6. Mobile Number of builder/ owner
7. Email Address
8. Name(s), CNIC and office Address(es) of Member(s)/
Director(s) of AOP/ Company (if applicable)
9. Category (commercial/ residential &
offices/ dual)
10. Commercial area of building
11. Residential area of building
12. Total Area of building
13 Total final tax liability Rs.
14. Less Tax paid @ 5% on approval Rs.
15. Balance tax to be paid in equal four monthly installments Rs.
16. Duration of the project in months Months
17. Amount of each installment Rs.
i. 1st installment due on - / - / - Rs.
ii. 2nd installment due on - / - / - Rs.
iii. 3rd installment due on - / - / - Rs.
iv. 4th installment due on - / - / - Rs.
v. Rs.
vii.
viii.
I, ____________________, CNIC No ____________________, in my capacity as self/Member/Member
of Association of Persons/Director or Principal officer of company do solemnly declare that to the best of
my knowledge and belief, the information given in this application under Rule 4 of Part II of the Tenth
Schedule to the Income Tax Ordinance 2001 is/ are correct and complete in accordance with the
provisions of section 99B read with Tenth Schedule to the Income Tax Ordinance, 2001.
Name __________________
CINC ___________________
Date ___________________
Income Tax Rules, 2002 46
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
13W. Responsibilities of the Authority.- The authority shall have the following responsibilities.-
(i) No approval plan shall be issued unless five percent of the tax has been collected under rule 3;
(ii) The authority shall inform the Chief Commissioner Inland Revenue in writing about approval of
new land development and building construction plans on quarterly basis;
(iii) The authority shall suspend or cancel the building plan on the written request of the Chief
Commissioner in case of default in payment of installments under these rules;
Provided that the Chief Commissioner shall take this action after consultation with
Association of Builders and Developers (ABAD); and
(iv) The authority may revoke suspension or cancellation under sub-rule (ii) above as the case may
be, on the written direction of the Chief Commissioner.
13X. Responsibility of the Inspector General of Registration.- (1) No transfer of building or built up
units to the buyers shall be effected unless the builder shall furnish NOC from the Chief Commissioner for
payment of tax dues.
(2) Provisions of sub-rule (1) shall not apply in case a builder pays one hundred and fifty percent of the
tax liability to be computed in accordance with Division VIIIA of the First Schedule.
(3) For the purpose of sub-rule (2) the Inspector General of Registration shall be responsible to collect
and deposit tax and all the provisions of section 161 shall apply mutatis mutandis.
13Y. Responsibilities of the Builder.- (1) The builder shall online furnish to the Chief Commissioner a
copy of approved construction plan and evidence of tax collection by the authority on the last day of the
calendar month in which such plan is approved or within a week if the approved plan in issued in the last week
of the calendar month.
(2) The builder shall furnish to the Chief Commissioner a copy of tax payment challan within one week of
due date of each installment as per the schedule of payment of installment.
(3) The builder shall be tax withholding agent on making any payment for which tax withholding is
provided under Chapter X and Chapter XII to the Ordinance which includes payment on account of salaries to
employees, supplies, services and contract.
13Z. Adjustment of withholding taxes by builders.- The builder shall not be entitled to claim
adjustment of withholding tax collected or deducted under any other head during the year.
13ZA. Mode and manner for payment and collection of tax from land developers.— (1) Every land
developer after obtaining the approval of the development plan or a revised development plan from the
authority and NOC to sell, shall online furnish copy of development plan and evidence of payment of five
percent tax to the Chief Commissioner along with computation of final tax liability on the basis of area proposed
to be developed as per rates provided in Division VIIIB of the First Schedule to the Ordinance. The Chief
Commissioner shall, after being satisfied that the rates are applied correctly and after making such inquiry as he
thinks fit, online issue a schedule of advance tax installments to be paid by the developer in accordance with
rule 13ZB.
13ZB. Schedule of Installments for land developers.- The Chief Commissioner shall, upon online
application of the developer as prescribed in rule 13ZC, online issue the schedule of equal Installments on four
monthly basis within thirty days of the application:
Provided that the duration of payment of tax shall commence from the date of issuance of NOC
to sell till the date of completion of development project:
Provided further that provisions of this rule shall not apply if a developer opts to pay the entire
tax liability in lump sum.
Income Tax Rules, 2002 47
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
13ZC. Application for payment of tax in installments by land developers: The developer shall online
apply for payment of installments under these rules through the following form.-
APPLICATION FOR ISSUANCE OF SCHEDULE OF INSTALLMENTS FOR PAYMENT OF
TAX U/S 7D OF THE INCOME TAX ORDINANCE 2001 READ WITH RULE 13ZA OF
INCOME TAX RULES 2002
1. Name of the developer
2. NTN/CNIC (Attach copy of CNIC)
3. Name of land development project (if any)
4. Address of the project
5. Phone Number
6. Mobile Number of developer/ owner
7. Email Address
8. Name(s), CNIC and office Address(es) of
Member(s)/ Director(s) of AOP/ Company (if
applicable)
9. Category (commercial/ residential & offices/ dual)
10. Commercial area of project (Sq. yd)
11. Residential area of project (Sq. yd)
12. Total development area
13. Final tax liability Rs.
14. Less Tax paid @ 5% on approval Rs.
15. Balance tax to be paid in equal four monthly installments Rs.
16. Duration of the project in months Months
17. Amount of each installment Rs.
i. 1st installment due on - / - / - Rs.
ii. 2nd installment due on - / - / - Rs.
iii. 3rd installment due on - / - / - Rs.
iv. 4th installment due on - / - / - Rs.
v. Rs.
vii.
viii.
I, ____________________, CNIC No ____________________, in my capacity as self/Member/Director of
Association of Persons/ company do solemnly declare that to the best of my knowledge and belief, the
information given in this application under Rule 4 of Part II of the Tenth Schedule to the Income Tax Ordinance
2001 is/ are correct and complete in accordance with the provisions of section 99B read with Tenth Schedule to
the Income Tax Ordinance, 2001.
Name __________________
CINC ___________________
Date ___________________
13ZD. Responsibilities of the Authority.- The authority shall have the following responsibilities:
(i) No approval of development plan shall be issued unless five percent of the tax has been collected
under Rule 13W;
(ii) The authority shall suspend or cancel the development plan on the written request of the Chief
Commissioner in case of default in payment of installments under these rules:
Provided that the Chief Commissioner shall take this action after consultation with ABAD.
(iii) The authority may revoke suspension or cancellation made under rule (ii) above as the case may
be, on the written request of the Chief Commissioner.
Income Tax Rules, 2002 48
CHAPTER - II DETERMINATION OF INCOME - HEADS OF INCOME
13ZE. Responsibility of the Inspector General of Registration.- (1) No transfer of developed units to
the buyers shall be effected unless the developer shall furnish NOC from the Chief Commissioner for payment
of tax dues.
(2) Provisions of sub-rule (1) shall not apply in case a developer pays one hundred and fifty percent of the
tax liability to be computed in accordance with rule Division VIIIB of the Ordinance.
(3) For the purpose of sub-rule (2) the Inspector General of Registration shall be responsible to collect and
deposit tax and all the provisions of section 161 shall apply mutatis mutandis.
13ZF. Responsibilities of the Land Developer.- (1) The developer shall online furnish to the Chief
Commissioner a copy of approved land development plan and evidence of tax collection by it on the last day of
the calendar month in which such plan is approved or within a week if the approved plan in issued in the last
week of the calendar month.
(2)The developer shall furnish to the Chief Commissioner a copy of tax payment challan within one week
of due date of each installment as per the schedule of payment of installment.
(3) The developer shall be tax withholding agent on making any payment for which tax withholding is
provided under Chapter X and Chapter XII to the Ordinance which includes payment on account of salaries to
employees, supplies, services and contract, etc.
13ZG. Adjustment of withholding taxes.- The land developer shall not be entitled to claim adjustment
of withholding tax collected or deducted under any other head during the year.
13ZH. General provisions for builders and developers.- (1) If a building or a land development project
is stopped by any court order or by any government agency during construction of building or land
development, the payment of subsequent installments shall stand suspended till the time the stay order is
vacated.
(2) If a builder or a developer fails to pay three consecutive installments within due time, the
Commissioner shall issue a notice in writing and copy thereof shall be endorsed to Association of Builders and
Developers ABAD. In case of no response or unsatisfactory reply, a committee of three members shall be
constituted by the Chief Commissioner which shall comprise one member from ABAD. The committee shall
decide further action as deemed fit.
(3) If a building or land development project is disposed off during construction or development, the seller
and purchaser shall jointly submit an application in writing to the Chief Commissioner. The Chief Commissioner
shall issue NOC after satisfying that the due tax was paid by the seller. The remaining installments of tax shall
be paid by the successor-purchaser of the under construction building or under developed land on the terms of
schedule of payment of installments issued earlier to the predecessor-seller by the Chief Commissioner. There
after all the provisions of this schedule shall apply to the successor-purchaser.
(4) The Commissioner shall exercise all powers relating to provisions containing recovery of tax, advance
tax, default surcharge and prosecution as laid down in Chapter X and in Chapter XII to the Ordinance, in case
of any default of non-payment, short payment or late payment of any tax collected or collectable, paid or
payable under this Chapter.]
Income Tax Rules, 2002 49
CHAPTER - III PERSONS
CHAPTER - III
PERSONS
14. Resident individual.-
(1) This rule applies for the purposes of section 82, which provides for the determination of
persons as resident individuals.
(2) The following rules apply for the purposes 1[ ] of section 82 in computing the number of days
an individual is present in Pakistan in a tax year, namely:-
(a) subject to clause (c), a part of a day that an individual is present in Pakistan (including
the day of arrival in, and the day of departure from, Pakistan) counts as a whole day
of such presence;
(b) the following days in which an individual is wholly or partly present in Pakistan count
as a whole day of such presence, namely:-
(i) a public holiday;
(ii) a day of leave, including sick leave;
(iii) a day that the individual‟s activity in Pakistan is interrupted because of a
strike, lock-out or delay in receipt of supplies; or
(iv) a holiday spent by the individual in Pakistan before, during or after any
activity in Pakistan; and
(c) a day or part of a day where an individual is in Pakistan solely by reason of being in
transit between two different places outside Pakistan does not count as a day present
in Pakistan.
1 Words "of clauses (a) and (b)" omitted by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 50
CHAPTER - IV TAXATION OF FOREIGN-SOURCE INCOME OF RESIDENTS
CHAPTER – IV
TAXATION OF FOREIGN-SOURCE INCOME OF RESIDENTS
15. Foreign income tax.-
(1) This rule applies for the purposes of sections 102 and 103, which provide resident persons
with relief from international double taxation.
(2) A foreign levy is a foreign income tax if the following conditions are satisfied, namely:-
(a) the levy is a tax; and
(b) the tax is substantially equivalent to the income tax imposed by the Ordinance.
(3) Subject to sub-rules (4) and (5), a foreign levy is a tax if it requires a compulsory payment
pursuant to the authority of the foreign country to levy taxes.
(4) A penalty, fine, interest or similar obligation is not a tax for the purposes of this Chapter.
(5) A foreign levy is not a tax to the extent that a person subject to the levy receives or is entitled
to receive, directly or indirectly, a specific economic benefit from the foreign country in
exchange for the payment pursuant to the levy.
(6) Subject to sub-rule (7), a foreign tax is substantially equivalent to the income tax imposed
under the Ordinance if the following conditions are satisfied, namely:-
(a) the tax is imposed in respect of events that would result in the derivation of income,
gains or profits under the Ordinance;
(b) the taxable amount is computed under the foreign tax by subtracting from gross
receipts any significant expenses and the depreciation or amortization of capital costs
attributable to such receipts, or, where the tax is imposed under the foreign law or any
other basis; and
(c) Dividend or interest income earned from foreign source, on being so taken by the
FBR, may be treated to have same character for the resident person, as it has under
the Ordinance.
(7) The following foreign taxes are substantially equivalent to the income tax imposed under the
Ordinance, namely:-
(a) a withholding tax imposed on dividends, gross receipts payable to non-resident
persons as final tax; or
(b) tax on wages by withholding imposed as a final tax on salary.
(8) In this rule,
(a) "economic benefit" includes -
(i) any property;
(ii) any service;
(iii) any fee or other payment;
(iv) any right to use, acquire or extract natural resources, patents, or other
property owned or controlled by the foreign country; or
(v) any reduction or discharge 1[of ] or a contractual obligation; and
1 Substituted for "or" by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 51
CHAPTER - IV TAXATION OF FOREIGN-SOURCE INCOME OF RESIDENTS
(b) "specific economic benefit" means an economic benefit that is not available on
substantially the same terms -
(i) all persons subject to the income tax generally imposed by the foreign
country; or
(ii) if there is no generally imposed income tax, the population of the country in
general.
16. Foreign tax credit.-
(1) This rule applies for the purposes of section 103, which provides for the foreign tax credit.
(2) A resident taxpayer claiming a foreign tax credit for a tax year shall submit an application for
the credit with the taxpayer's return of income for that year.
(3) An application for a foreign tax credit shall be in the form as specified in Part I of the First
Schedule to these rules.
(4) Subject to sub-rule (5), an application for a foreign tax credit shall be accompanied by the
1
following [documents], namely:-
(a) where the tax has been deducted at source, a declaration by the payer of the
income tax has been deducted and a certified copy of the receipt that the payer
has received from the foreign tax authority for the deducted tax; or
(b) in any other case, the original or a certified copy of the receipt that the taxpayer
has received from the foreign tax authority for the tax paid.
(5) Where a resident taxpayer cannot obtain evidence of the deduction of tax from the payer
of income as required under clause (a) of sub-rule (4), the Commissioner may accept
such secondary evidence of the deduction as is determined by him.
1 Substituted for "documentation" by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 52
CHAPTER - V TAXATION OF NON-RESIDENTS
CHAPTER - V
TAXATION OF NON-RESIDENTS
17. Application of chapter.-
The rules in this Chapter apply for the purposes of sub-clause (ii) of clause (a) of sub-section (2)
of section 237, which provides for the making of rules concerning the manner in, and procedure
by, which the income, profits and gains chargeable to tax, and the tax payable thereon, under the
Ordinance shall be determined in the case of non-resident persons.
18. Income from royalty.-
The income of a non-resident person by way of 1[royalty] received from a resident person or a
permanent establishment in Pakistan of a non-resident person shall be-
(a) in the case a royalty received in pursuance of an agreement made before the 8th day of
March, 1980, or an agreement made on or after the said date the proposal in respect of
which was approved by the Government before the said date, the gross amount of the
royalty less the deductions allowed under section 40; or
(b) in any other case, to which sub-section (2) of section 6 does not apply, the gross amount
of the royalty less 2[than] the following expenditure-
(i) any expenditure incurred In Pakistan to earn such royalty, wherever paid;
(ii) any expenditure incurred outside Pakistan in pursuance of such agreement not
exceeding ten percent of gross amount of royalty.
3
[ ]
(c) in the case of royalty received in pursuance to any other agreement, the gross amount of
the royalty less the following expenditures only, namely:-
(i) any expenditure incurred in Pakistan in earning such income;
(ii) any expenditure incurred in Pakistan in respect of any work done in pursuance of
such agreement; and
(iii) any expenditure incurred outside Pakistan in respect of any work done in
pursuance of such agreement not exceeding ten percent of the gross amount of
such royalty.
4
(d) The provisions of [clauses] (b) and (c) would not apply where, royalty is covered by
section 169.
1 Substituted for "royalties" by SRO 392(I)/2009, dated May 19, 2009.
2 Substituted for "then" by SRO 392(I)/2009, dated May 19, 2009.
3 Proviso omitted by SRO 590(I)/2004, dated July 07, 2004.
4 Substituted for "sub-rule" by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 53
CHAPTER - V TAXATION OF NON-RESIDENTS
1
19. [Fee] for technical services.-
(1) The income of a non-resident person by way of 1[fee] for technical services received from
a resident person or a permanent establishment in Pakistan of a non-resident person
shall be-
(a) in the case of 1[fee] received in pursuance of an agreement made before the 8th
day of March, 1980, or an agreement made on or after the said date the proposal
in respect of which was approved by the Government before the said date only in
such cases, the gross amount of the 1[fee] less the deductions allowed under
section 40;
(b) in the case of 1[fee] received in pursuance of an agreement made on or after 8th
day of March, 1980 but before the 4th day of May, 1981, the gross amount of the
[fee] less the deductions allowed under section 40 with a maximum total
deduction equal to twenty percent of the gross amount of such 1[fee]; or
(c) in any other case to which sub-section (2) of 2[Section 6] of the Income Tax
Ordinance, 2001 does not apply, the gross amount of 3[fee for technical services]
less the following perquisites:-
(i) any expenditure incurred in Pakistan to earn such 3[fee for technical
services], wherever paid.
(ii) any expenditure incurred outside Pakistan in pursuance of such
agreement not exceeding ten percent of gross amount of 3[fee for
technical services].
Provided that a non-resident may opt for taxation under section 6 of Income Tax
Ordinance, 2001, by filing a written declaration option within 15 days of the
commencement of contract. Such option shall remain operative till completion of
the said contract.
4
(d) [clause] (c) would not apply where the fee for technical service is covered by the
provisions of section 169.
5
[19A. Certificate of residence.-
(1) Where any person, resident in Pakistan, seeks to obtain a certificate of residence from the
Competent Authority of Pakistan for its presentation before the tax authorities of another
country with which Pakistan has signed an Agreement for the Avoidance of Double
Taxation and Fiscal Evasion, for the purposes of obtaining tax credit or fiscal relief, the
person may submit an application in this behalf in the Form prescribed below, namely:-
1 Substituted for "fees" by SRO 392(I)/2009, dated May 19, 2009.
2 Substituted for "Section 5" by SRO 392(I)/2009, dated May 19, 2009.
3 Substituted for "royalty" by SRO 392(I)/2009, dated May 19, 2009.
4 Substituted for "sub-rule" by SRO 392(I)/2009, dated May 19, 2009.
5 Rules 19A, 19B and 19C inserted by SRO 619(I)/2006, dated June 08, 2006. Later Rules 19A to 19D have been inserted
by SRO 714(I)/2006, dated July 05, 2006. Due to confusion both sets of Rules 19A to 19C have been reproduced till
clarification by CBR.
Income Tax Rules, 2002 54
CHAPTER - V TAXATION OF NON-RESIDENTS
Form of Application
for Obtaining Certificate of Residence
To
The Competent Authority of Pakistan,
1
Federal Board of Revenue,
Constitution Avenue,
Islamabad.
Sir,
Whereas the applicant is resident in Pakistan by way of [INSERT: Entitlement to
residence………………………………….] in respect of the Tax year ending on [INSERT:
Date…………], and has earned [INSERT: Type/Head of Income…………………….………….]
income in [INSERT: Name of the country……………….], during the period [INSERT:
From…………….To……………….…]; and that Pakistan and [INSERT: Name of the other country
…………………….….] have signed an Agreement for the Avoidance of Double Taxation and
Fiscal Evasion, dated…………………., which entitles the applicant to a reduced tax rate/tax
credit/tax sparing credit/fiscal relief in [INSERT: Name of the Country………………………….]
upon issuance of a Certificate of Residence by the Competent Authority of Pakistan, for which
purpose, all relevant particulars are as under, namely:-
1 Name / Nomenclature of the Applicant
2 Whether Individual, AOP or Company?
3 CNIC / Registration / Incorporation No
4 Address in Pakistan
5 Telephone / Fax / email address
6 National Tax Number
7 Income declared for the Tax Year
8 Name and Designation of Tax Authority to
which the Certificate is intended for
presentation
9 Type (s) / Particulars of Income Earned
Copies of the following documents in support of our claim are enclosed, namely:-
(1) Proof of earning of income in the foreign country;
(2) Copy of NIC;
(3) Copy of NTN Certificate;
(4) Copy of the Certificate of Incorporation (if applicable) ; and
(5) Copy of the Income Tax Return for the latest tax year (if applicable)
Verification
I _____________________________________ son/daughter/wife of Mr. solemnly declare
that to the best of my knowledge and belief, the information given in this application and the
annexures and statements accompanying it is correct.
1
The words “Central Board of Revenue” substituted by the Finance Act, 2007
Income Tax Rules, 2002 55
CHAPTER - V TAXATION OF NON-RESIDENTS
2. I also declare that to the best of my knowledge, I have not concealed any fact or
information which could be relevant for deciding my application.
3. I further declare that I am making this application in my capacity as (designation)
and that I am competent to make this application and verify it.
Date Signatures:
Place Name:
(2) The Competent Authority of Pakistan, if required, shall cause to call for a report from the
Commissioner concerned.
(3) The Commissioner after verifying all the relevant facts as stated by the taxpayer in the
application shall submit his report 1[within thirty days of the receipt of the application by
him from the 2Federal Board of Revenue].
(4) The Competent Authority of Pakistan shall decide upon the request of the taxpayer and
issue the Certificate of Residence as per the Form prescribed below within forty five days
of the submitting of the application, namely:-
Form of Certificate of Residence
Issued by the Competent Authority
[CERTIFICATE OF RESIDENCE FOR PRESENTATION
BEFORE THE TAX AUTHORITIES OF
IN RESPECT OF THE TAX YEAR]
I certify that Mr./Ms/M/s. __________________________ is resident in Pakistan by way of
________________________________, and subject to taxes in Pakistan covered in the
Agreement for Avoidance of Double Taxation and Fiscal Evasion between Pakistan and
________________________. The particulars relating to his/ her/ its person and the details
of economic activities and tax paid in Pakistan during the Tax Year are as under, namely:-
(a) Name:
(b) Address:
(i) Residence:
(ii) Office:
(c) Telephone: (Res)________ (Off) ________ (Fax)________
(d) CNIC/Registration/Passport No.
(e) National Tax No. -
(f) Personal Status
(g) Main Sources of Income:
(h) Other Source(s) of Income:
1 Substituted for "within fifteen days of the receipt of the application by him" by SRO 392(I)/2009, dated May 19, 2009.
2
The words “Central Board of Revenue” substituted by the Finance Act, 2007
Income Tax Rules, 2002 56
CHAPTER - V TAXATION OF NON-RESIDENTS
(i) Income Declared/Assessed for
the Tax year:
(j) Total Tax Paid/Payable for the
Tax year:
(k) LTU/ RTO:
THE COMPETENT AUTHORITY
1
[Member (Inland Revenue) or his Authorized Officer]
(5) In respect of each tax year a separate application shall be submitted by the taxpayer, and
a separate Certificate shall be issued by the Competent Authority of Pakistan 2[or his
Authorized Officer].
(6) In case the Competent Authority of Pakistan decides not to issue a Certificate of
Residence, it shall communicate its decision along with reasons of rejection thereof to the
applicant taxpayer within forty five days of the submitting of the application.
19B. Certificate of payment of tax in Pakistan.-
(1) Where any person, non-resident in Pakistan, seeks to obtain a certificate of payment of
tax in Pakistan by way of deduction, collection or otherwise, which attains finality or which
is a final tax under any provision of the Ordinance or that of the Agreement for the
Avoidance of Double Taxation and Fiscal Evasion between Pakistan and the country of
residence of the applicant taxpayer, for presentation before the tax authorities of the
country of his residence, the person may submit an application to the Competent
Authority of Pakistan in the Form prescribed below, namely:-
Form of application for obtaining certificate
of payment of tax in Pakistan
To
The Competent Authority of Pakistan,
3
Federal Board of Revenue,
Constitution Avenue,
Islamabad.
Sir,
Whereas the applicant was resident in [INSERT: Name of the country………………….], by
reason of [INSERT: Nationality, Incorporation, Situs of Management………………………],
and thus non-resident in Pakistan in respect of the Tax year ending on ………………….;
and that Pakistan and [INSERT: Name of the country of residence………………….] have
signed an Agreement for the Avoidance of Double Taxation and Fiscal Evasion
dated…………………., which entitles the applicant to a tax credit / fiscal relief in respect of
the tax paid in Pakistan, in the country of his residence upon issuance of a Certificate of
Payment of Tax Paid by the Competent Authority of Pakistan. The relevant details in this
regard are as under, namely:-
1. Name / Nomenclature of the
Applicant
1 Substituted for "Member (Direct Taxes)" by SRO 725(I)/2011, dated July 28, 2011.
2 Words inserted by SRO 725(I)/2011, dated July 28, 2011.
3
The words “Central Board of Revenue” substituted by the Finance Act, 2007
Income Tax Rules, 2002 57
CHAPTER - V TAXATION OF NON-RESIDENTS
2. Country of Residence
3. Personal Status [Individual, AOP,
Company]
4. Tax Year
5. Particulars / details of income earned
in Pakistan
6. Total tax paid in Pakistan for the Tax
Year
7. Has any appeal been filed against
the imposition of the aforementioned
tax in Pakistan?
8. Have you applied or intend to apply
for the refund or adjustment of the
tax paid against demand of any other
year?
Copies of the following documents in support of our claim are enclosed, namely:-
(i) Proof of income earned in Pakistan
(ii) Proof of tax paid in Pakistan
(iii) Proof of residence in the other country
Verification
I son/daughter/wife of Mr. solemnly declare that to
the best of my knowledge and belief, the information given in this application and the annexures
and statements accompanying it is correct.
2. I also declare that to the best of my knowledge, I have not concealed any fact or
information which could be relevant for deciding my application.
3. I further declare that I am making this application in my capacity as (designation)
and that I am competent to make this application and verify it.
Date Signatures:
Place Name:
(2) The Competent Authority of Pakistan, if required, shall cause to call for a report from the
Commissioner concerned.
(3) The Commissioner after verifying all the relevant facts as stated by the taxpayer in the application
shall submit his report 1[within thirty days of the receipt of the application by him from the Federal
Board of Revenue].
(4) The Competent Authority of Pakistan shall decide upon the request of the taxpayer, and issue a
certificate of payment of tax in Pakistan, as per the Form prescribed below within forty five days of
the submitting of the application, namely:-
1 Substituted for "within fifteen days of the receipt of the application by him" by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 58
CHAPTER - V TAXATION OF NON-RESIDENTS
Form of Certificate of Payment of Tax in Pakistan
Issued by the Competent Authority
[CERTIFICATE OF TAX PAID IN PAKISTAN FOR PRESENTATION BEFORE
THE TAX AUTHORITIES OF _______________ IN RESPECT OF THE TAX YEAR ________
I certify that Mr./Ms/M/s………………………………………….being non-resident in Pakistan has
paid income tax in Pakistan in respect of the Tax Year ending on ………………………as per the
following details:-
1. Name:
2. Address:
(i) Residence:
(ii) Office:
3. Telephone: (Res)________ (Off) ________ (Fax)________
4. National Tax No. (if any)
5. Personal Status
6. Main Sources of Income:
7. Other Source(s) of Income:
8. Total Income Declared/Assessed
9. Total Tax Paid/Payable during the year:
10. Tax Office: LTU/ RTO:
Note: Average exchange rate prevalent during the year was US$ 1 = PKR
THE COMPETENT AUTHORITY
1
[Member (Inland Revenue) or his
Authorized Officer]
(5) After issuance of the certificate of payment of tax in Pakistan, the Commissioner shall earmark the
amount of tax covered by the certificate against refund or adjustment in lieu of tax demand of the
taxpayer in respect of any prior or subsequent tax year, under any circumstances.
(6) In case the Competent Authority of Pakistan decides not to issue a certificate of payment of tax in
Pakistan, it shall communicate its decision along with the reasons of rejection thereof to the
applicant taxpayer within sixty days of the submitting of the application at the available address in
Pakistan.
19C. Certificate for tax sparing credit.-
2
[(1)] Where any person, non-resident in Pakistan, seeks to obtain a certificate for tax sparing
credit in respect of income earned through a permanent establishment situated in
Pakistan, under a provision, if any contained therein, of the Agreement for the Avoidance
1 Substituted for "Member (Direct Taxes)" by SRO 725(I)/2011, dated July 28, 2011.
2 Figure and bracket inserted by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 59
CHAPTER - V TAXATION OF NON-RESIDENTS
of Double Taxation and Fiscal Evasion between Pakistan and the country of residence of
such taxpayer, may submit an application to the Competent Authority of Pakistan in the
Form prescribed below namely:-
Form of Application for Obtaining Certificate
for Tax Sparing Credit
To
The Competent Authority of Pakistan,
1
Federal Board of Revenue,
Constitution Avenue,
Islamabad.
Sir,
Whereas the applicant was resident in [INSERT: Name of the country……………..……………….],
by reason of [INSERT: Nationality, Incorporation, Situs of Management………..…………………],
and thus non-resident in Pakistan in respect of the Tax year ending on …………………….; and
that Pakistan and [INSERT: Name of the country of residence ……….………………….] have
signed an Agreement for the Avoidance of Double Taxation and Fiscal Evasion dated
…….…………., which entitles the applicant to a tax credit / fiscal relief in respect of the tax paid in
Pakistan, in the country of his residence upon issuance of a Certificate of Payment of Tax Paid by
the Competent Authority of Pakistan. The relevant details in this regard are as under, namely: -
1. Name / Nomenclature of the Applicant
2. Country of Residence
3. Personal Status
[Individual, AOP, Company]
4. Tax Year
5. Particulars/ details of income earned in
Pakistan
6. Admitted tax liability paid / payable in
Pakistan
Total tax payable in Pakistan in case tax
incentives / fiscal benefits would not have
been allowed
Has any appeal been filed against any order
of any tax authority in Pakistan?
7. Amount qualifying for normal tax credit
8. Amount qualifying for tax sparing credit
Copies of the following documents in support of our claim are enclosed, namely:-
(i) Proof of income earned in Pakistan
(ii) Proof of tax paid in Pakistan
(iii) Proof of residence in the other country
1
The words “Central Board of Revenue” substituted by the Finance Act, 2007
Income Tax Rules, 2002 60
CHAPTER - V TAXATION OF NON-RESIDENTS
Verification
I _______________________________ son/daughter/wife of Mr. solemnly declare that to the best
of my knowledge and belief, the information given in this application and the annexures and statements
accompanying it is correct.
2. I also declare that to the best of my knowledge, I have not concealed any fact or
information which could be relevant for deciding my application.
3. I further declare that I am making this application in my capacity as (designation) and that
I am competent to make this application and verify it.
Date Signatures:
Place Name:
(2) The Competent Authority of Pakistan, if required, shall cause to call for a report from the
Commissioner concerned.
(3) The Commissioner after verifying all the relevant facts as stated by the taxpayer in the
application shall submit his report 1[within sixty days of the receipt of the application by
him from the Federal Board of Revenue].
(4) The Competent Authority of Pakistan shall decide upon the request of the taxpayer, and
issue a certificate for tax sparing credit, as per the Form prescribed below within 2[ninety]
days of the submitting of the application, namely:-
Form of Certificate for Tax Sparing
Credit issued by the Competent Authority
[CERTIFICATE FOR TAX SPARING CREDIT FOR PRESENTATION BEFORE THE TAX
AUTHORITIES OF …………………IN RESPECT OF THE TAX YEAR ……………]
I certify that Mr/Ms/M/s…………………………………………. being non-resident in Pakistan has
paid income tax in Pakistan in respect of the Tax Year ending on ………………………as per the
following details:-
(a) Name:
(b) Address:
(i) Residence:
(ii) Office:
(c) Telephone: (Res)_______ (Off) _______ (Fax) _______
(d) National Tax No. (if any)
(e) Personal Status
(f) Main Source(s) of Income:
(g) Other Source(s) of Income:
(h) Total Income Declared/Assessed:
1 Substituted for "within fifteen days of the receipt of the application by him" by SRO 392(I)/2009, dated May 19, 2009.
2 Substituted for "45" by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 61
CHAPTER - V TAXATION OF NON-RESIDENTS
(i) Total tax paid during the year:
(j) Total amount of tax spared:
(k) Tax Office : LTU/ RTO:
Note: Average exchange rate prevalent during the year was US$ 1 = PKR
THE COMPETENT AUTHORITY
1
[Member (Inland Revenue) or his
Authorized Officer]
(5) In case the Competent Authority of Pakistan decides not to issue a certificate for tax
sparing credit, it shall communicate its decision along with the reasons of rejection thereof
to the applicant taxpayer within sixty days of the submitting of the application at the
available address in Pakistan.]
2
[19D]. Application for initiation of Mutual Agreement Procedure (MAP).-
(1) Where a resident taxpayer, or a Pakistani national residing abroad is aggrieved by any
action of the tax authorities of any country outside Pakistan with which Pakistan has
signed an Agreement for the Avoidance of Double Taxation for the reason that, according
to him, such action is not in accordance with the terms of the agreement with such other
country outside Pakistan, he may make an application to the Competent Authority in
Pakistan seeking to invoke the provision of the Mutual Agreement Procedure, if any,
provided therein, in the Form prescribed in rule 3[19F].
(2) The Competent Authority of Pakistan upon satisfaction that,-
(a) the taxpayer has reasonable grounds to justify Competent Authority" assistance;
(b) the application has been made within two years from the date of notification of the
cause of grievance; and
(c) the double taxation or other impending grievance is more than a mere possibility;
shall cause to take up the matter with the Competent Authority of the country
concerned and endeavor to resolve the matter through consultative measures.
(3) In case the Competent Authority in Pakistan decides not to intervene in the matter, it will
inform the taxpayer applicant within thirty days of the receipt of the application, of its
decision and grounds thereof in writing.
(4) If during the course of mutual agreement proceedings, the Competent Authority of the
other country requires any clarification, verification of facts, or guarantees, that shall be
communicated to the applicant taxpayer, and after the receipt of the same shall be
passed on to the Competent Authority of the other country.
(5) At any time, if the terms and conditions of the impending resolution are not satisfactory to
the taxpayer, he may withdraw from the MAP proceedings and pursue any right of appeal
under the normal course available.
(6) The Competent Authority of Pakistan would communicate the outcome of the Mutual
Agreement Proceedings taken up with the other country to the applicant taxpayer in
writing.]
1 Substituted for "Member (Direct Taxes)" by SRO 725(I)/2011, dated July 28, 2011.
2 Rule inserted by SRO 714(I)/2006, dated July 05, 2006, originally numbered as "19A", erroneously, later renumbered as
"19D" by SRO 1032(I)/2006, October 03, 2006.
3 Substituted for "19C" by SRO 1032(I)/2006, October 03, 2006.
Income Tax Rules, 2002 62
CHAPTER - V TAXATION OF NON-RESIDENTS
1
[19E]. Action by the Competent Authority of Pakistan on an application received through the
Competent Authority of a treaty partner country.-
(1) Where a reference is received from the Competent Authority of a country outside Pakistan
under an agreement with that country with regard to any action taken by any income-tax
authority in Pakistan, the Competent Authority in Pakistan shall call for a report from the
Commissioner concerned and, if required, examine the relevant records, and shall
endeavour to arrive at a resolution of the case on unilateral basis in terms of the liberal
interpretation of the legal provisions applicable.
(2) The Competent Authority of Pakistan shall entertain all such requests from the Competent
Authority of a treaty partner country that are about but not limited to –
(a) tax demands that have arisen or are likely to arise as a result of a tax audit,
assessment or re-assessment proceedings, or a tax appeal, or a review by a
Commissioner of Income Tax of an assessment or re-assessment proceedings
on the grounds that it is prejudicial to the interest of the revenue;
(b) Withholding tax on income or other similar advance taxes that are levied under
the Ordinance; and.
(c) interpretation and application of any provision of the laws governing the taxes
covered in the relevant treaty as applicable to the non-resident person.
(3) The Competent Authority of Pakistan may decline a MAP request made by the Competent
Authority of a treaty partner country, if it is not received within two years from the date of
notification of the order or notice giving rise to the cause of grievance.
(4) In case the Competent Authority of Pakistan cannot resolve the matter on unilateral basis,
it would cause to communicate with the Competent Authority of the other country, and
both authorities would endeavor to resolve the matter through a consultative process, and
arrive at a mutually agreed settlement.
(5) If during the course of the mutual agreement proceedings, the Competent Authority of
Pakistan requires any clarification, verification of facts, or an irrevocable bank guarantee,
the same shall be communicated to the applicant taxpayer, under intimation to the
Competent Authority of the country through which the reference for mutual agreement
proceedings was received.
(6) Wherever required the Competent Authority of Pakistan shall give an opportunity of being
heard to the applicant taxpayer in person, through an authorized representative or a
counsel.
(7) The resolution arrived at under mutual agreement procedure, in consultation with the
competent authority of the country outside Pakistan, shall be communicated, wherever
necessary, to the Commissioner concerned, in writing.
(8) During the pendency of the Mutual Agreement proceedings the Competent Authority of
Pakistan may, depending on the merits of each case, direct the Commissioner concerned
to put on hold the recovery proceedings of any amount of tax, additional tax or penalty
that may be outstanding against such taxpayer, if the taxpayer furnishes, as security, an
irrevocable Bank Guarantee issued by any scheduled bank, or a Pakistani branch of a
foreign bank approved by the State Bank of Pakistan to carry out business of banking in
Pakistan as prescribed in rule 2[19G].
1 Rule inserted by SRO 714(I)/2006, dated July 05, 2006, originally numbered as "19B", erroneously, later renumbered as
"19E" by SRO 1032(I)/2006, October 03, 2006.
2 Substituted for "19D" by SRO 1032(I)/2006, dated October 03, 2006.
Income Tax Rules, 2002 63
CHAPTER - V TAXATION OF NON-RESIDENTS
(9) The amount of the irrevocable Bank Guarantee shall be equal to –
(a) the amount of tax, additional tax or penalty as has been imposed through the
order or notice that is the subject matter of MAP proceedings; or
(b) if no amount has yet been imposed through an order or notice, the amount
determined by the Commissioner concerned.
(10) The Competent Authority of Pakistan shall endeavor to resolve or close the case within a
period of one year from the date on which it receives the reference under the Mutual
Agreement Procedure provision as contained in the Agreement for Avoidance of Double
Taxation between Pakistan and that other state.
(11) The effect to the resolution arrived at under Mutual Agreement Procedure shall be given
by the Commissioner, notwithstanding any time limitations contained in the Ordinance,
within thirty days of receipt of the same, if the taxpayer-
(a) gives his acceptance to the resolution delivered under the Mutual Agreement
Procedure; and
(b) withdraws his appeal, if any, pending on the issue which was the subject
matter for adjudication under Mutual Agreement Procedure.
(12) The amount of tax, additional tax or penalty already determined shall be recomputed in
accordance with the decision taken under the Mutual Agreement Procedure in the
manner laid down in the Ordinance and the rules in such a way it does not contravene or
negate the resolution arrived at.
(13) The Commissioner concerned shall draw-down upon the Bank Guarantee as specified in sub-
rule (8) in writing within ten days from the notice of acceptance of MAP resolution given by the
application in pursuance to the issuance of the resolution or notification of closure of the MAP
proceedings by the Competent Authority of Pakistan].
1
[19F]. Form of application for initiation of MAP Proceedings.-
Application under rule 19A shall be submitted on the form prescribed as under:
To
The Competent Authority of Pakistan,
2
Federal Board of Revenue,
Constitution Avenue,
Islamabad.
Sir,
Whereas the applicant is aggrieved by the action of the tax authority of
_______________________________________________ (name of the country) in respect of the
tax year ending on _____________________ for the reasons given hereunder, the matter may
kindly be taken up with the competent authority of ______________________________________
(name of the country) under Article ___________________________________ of the
__________________________________________________________ (specify the agreement)
between Pakistan and country). The relevant details in this regard are as under:-
1 Rule inserted by SRO 714(I)/2006, dated July 05, 2006, originally numbered as "19C", erroneously, later renumbered as
"19F" by SRO 1032(I)/2006, October 03, 2006.
2
The words “Central Board of Revenue” substituted by the Finance Act, 2007
Income Tax Rules, 2002 64
CHAPTER - V TAXATION OF NON-RESIDENTS
Name of the applicant
Present and permanent address in Pakistan
Residential status or nationality
CNIC and NTN
Entitlement to invoke MAP Proceedings
(Residence or Nationality)
Telephone No.
Name and designation of Tax Authority in the
foreign country (Treaty Partner)
Date of the notice or order giving rise to the
action
Is the order or action of the income-tax authority
of the country outside Pakistan not in
accordance with the agreement? If so, the
reasons thereof (attach separate sheet if
required).
Have you filed any appeal in the foreign country
against the order or notice giving rise to the
cause of grievance?
Copies of the following documents in support of our claim are enclosed, namely:-
(1) Order or Notice giving rise to the cause of grievance
(2) Computerized National Identity Card
(3) ………….
Verification
I. ____________________________ son/ daughter/ wife of Mr. _____________________________
solemnly declare that to the best of my knowledge and belief, the information given in this application
and the annexures and statements accompanying it is correct.
2. I also declare that to the best of my knowledge, I have not concealed any fact or
information which could be relevant for deciding my application.
3 I further declare that I am making this application in my capacity as (designation) and that
I am competent to make this application and verify it.
Date Signatures:
Place Name:
Income Tax Rules, 2002 65
CHAPTER - V TAXATION OF NON-RESIDENTS
1
[19G]. Form of Irrevocable Bank Guarantee.-
An irrevocable Bank Guarantee shall be furnished in all cases, unless specifically exempted by
the Competent Authority of Pakistan, on the format as prescribed as under:
To,
The President of Pakistan
acting through and represented
by the Commissioner 2[“Inland Revenue”],
[INSERT: LTU/RTO]
Government of Pakistan
[INSERT: City]
Bank Guarantee
Bank Guarantee as security for keeping the recovery of Tax Demand in abeyance during the
pendency of the proceedings of Mutual Agreement Procedure (MAP) under the Agreement for
Avoidance of Double Taxation.
This Deed of Bank Guarantee made this __________ day of ______________, 20___, by
[INSERT: Name and Address of Guaranteeing Bank] (hereinafter called "the Bank", which
expression shall, unless excluded by or repugnant to the context, include its successors and
assignees) to the President of Pakistan acting through and represented by the Commissioner 3[ ]
[INSERT: LTU/RTO], Government of Pakistan, [INSERT: City], (hereinafter called "the
Government")
WHEREAS the Government has agreed that [INSERT: Name, Address, and National Tax Number
of the Taxpayer] (hereinafter called "the Taxpayer", which expression shall, unless excluded by or
repugnant to the context, include its successors and assignees) shall furnish a Bank Guarantee in
respect of a demand of Rs.[INSERT: Amount of Tax in dispute] for the tax year(s)..., in lieu of
which the recovery of any part of such demand shall not be enforced until thirty days after the
Commissioner receives written notice of the MAP Agreement arrived at between the Competent
Authorities of the Governments of Pakistan and the [INSERT: Name of the Country]
AND WHEREAS THE Bank has, at the request of the Taxpayer, agreed to execute these
presents:
NOW THEREFORE THIS DEED WITNESSES AS FOLLOWS:
In consideration of the Government agreeing to treat the Taxpayer as not in default for
Rs.[INSERT: Amount of Tax in dispute, plus interest specified in paragraph 1 below] for the tax
year(s)....,
1. The Bank irrevocably guarantees and undertakes, for the term provided in paragraph 2
that the Bank shall indemnify and keep indemnified the Government to the extent of the
said sum of Rs.[INSERT: Amount of Tax in dispute] (Rupees [written text] and the
recurring additional tax accruing at the rate specified in the Ordinance. The Bank further
guarantees and undertakes that on advice from the Government that the Taxpayer has
failed and neglected to observe any of its obligations to the Government with regard to the
terms and conditions of any agreements between the Taxpayer and the Government or
between the Competent Authority of Pakistan and that of the country on whose request
MAP proceedings were initiated that may underlie or subsequently cover and encompass
this Bank Guarantee, the decision of the Government as to whether any amount should
be paid out by the Bank to the Government hereunder shall be final and binding.
2. The Bank further agrees that the guarantee herein contained shall remain in full force and
effect for a period of one year from the date hereof or till [INSERT: date]; and if the
1 Rule inserted by SRO 714(I)/2006, dated July 05, 2006, originally numbered as "19D", erroneously, later renumbered as
"19G" by SRO 1032(I)/2006, October 03, 2006.
2
The words “Income Tax Enforcement” substituted by SRO 1218(I)/2015 dated 08.12.2015.
3
The words “Income Tax Enforcement” omitted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 66
CHAPTER - V TAXATION OF NON-RESIDENTS
Government, in case the MAP proceedings are not finalized till the aforementioned date,
does not receive a renewal of this Bank Guarantee or a substitute Bank Guarantee for the
amounts of tax and interest in dispute prior to thirty days before the expiration date of this
Bank Guarantee, the Government may instruct the Bank to pay the guaranteed amounts
prior to expiration of the Bank Guarantee.
Provided that, notwithstanding any other thing contained herein, the liabilities of
the Bank shall be limited to the maximum of the guaranteed amount of Rs.[INSERT:
Amount of tax in dispute] (Rupees [INSERT: written text] ), as increased by interest
pursuant to paragraph 1 during the term of this Bank Guarantee; and unless a claim i n
writing is lodged with the Bank, or action to enforce the claim under the guarantee is filed
or initiated against the Bank, within six months from the date of expiry of the guarantee
period fixed hereunder or where such period is extended under the terms of this
guarantee from the date of such extended period as the case may be, all the rights of the
Government under this guarantee shall be forfeited and the Bank shall be relieved and
discharged from liabilities hereunder.
3. The obligations of the Bank to the Government under this Bank Guarantee will terminate
on issuance of the Notification by the Commissioner drawing down upon the bank
guarantee upon the occurrence of any of the following; namely:-
(i) the payment by the Bank or the Taxpayer to the Government of the guaranteed
amounts;
(ii) the payment by the taxpayer to the government of all amounts owed, as agreed
to by the Competent Authorities in a MAP Agreement;
(iii) a MAP Agreement by the Competent Authorities proclaiming that the government
will not seek to recover any part of the previously-demanded amount; or
(iv) the taxpayer furnishes to the Government afresh security from the Bank, or a
similar security from another Bank.
4. The guarantee herein contained shall not be discharged or affected by any change in the
constitution either of the taxpayer or of the Bank.
5. The Government shall have the fullest liberty without affecting the guarantee to postpone
for any time, or from time to time, any of the powers exercisable by it against the taxpayer,
or to either enforce or forbear any of the terms and conditions under this guarantee or
under the Ordinance and the rules, and the Bank shall not be released from its liabilities
under this guarantee by any exercise by the government of the liberty with reference to
the matter aforesaid or by reasons of time being given to the taxpayer, or by any other act
of forbearance or enforcement on the part of the Government, or by any indulgence by
the Government to the taxpayer, or by any other matter or thing whatsoever which under
the law relating to sureties would but for these provision have the effect of so releasing
the Bank from its such liability.
6. The Bank hereby agrees and undertakes that any claim which the Bank may have against
the taxpayer shall be subject and subordinate to the prior payment and performance in full
of all the obligations of the Bank hereunder and the Bank will not without prior written
consent of the Government exercise any legal rights or remedies of any kind in respect of
any such payment or performance so long as the obligations of the Bank hereunder
remain owing and outstanding, regardless of the insolvency, liquidation or bankruptcy of
the taxpayer or otherwise howsoever. The Bank will not counter claim or set off against its
liabilities to the Government hereunder any sum outstanding to the credit of the
Government with it.
7. This Bank Guarantee shall be governed by and construed in accordance with the laws of
the Islamic Republic of Pakistan (without regard to its principles of conflict of laws).
8. The Bank undertakes not to revoke this guarantee during its currency except with the
prior consent of the Government in writing.
Income Tax Rules, 2002 67
CHAPTER - V TAXATION OF NON-RESIDENTS
9. Notwithstanding anything hereinbefore contained liability of the Bank under this guarantee
is restricted to Rs.[INSERT: Amount of Tax in dispute, plus interest specified in paragraph
1 above] (Rupees [written text]) and is valid for the period(s) described in paragraph 2
above. Unless a demand or claim under this guarantee is lodged with the Bank on or
before [INSERT: date, as established in paragraph 2 above], all rights of the Government
under the said guarantee shall be forfeited and the Bank shall be relieved and discharged
from all liabilities there under whether or not this document shall have been returned to
the Bank.
IN WITNESS WHEREOF, the Bank, through its duly authorized representative, has set its hand
stamp on this ________________.day of ________________ at ________________
i. Witness For and on behalf of the Bank
Signature Signature
Name Name
Date Designation
ii. Witness [Attorney per power of Attorney No .___________
Signature
Name
Date
Income Tax Rules, 2002 68
CHAPTER - VI TRANSFER PRICING
CHAPTER - VI
TRANSFER PRICING
20. Application of this chapter.-
This chapter applies for the purposes of section 108 mainly, which provide the Commissioner with
the power to distribute, apportion or allocate income, expenditures or tax credits between
associates in respect of transactions not made in accordance with the arm's length principle.
21. Interpretation.-
(1) In this Chapter,-
(a) "comparable uncontrolled transaction", in relation to a controlled transaction,
means an uncontrolled transaction that satisfies one of the following conditions,
namely:-
(a) the differences (if any) between the two transactions or between persons
undertaking the transactions do not materially affect the price in the open
market, the resale price margin or the cost plus mark up, as the case may
be; or
(b) if the differences referred to in sub-clause (i) do materially affect the price in
the open market, the resale price margin or the cost plus mark up, as the
case may be, then reasonably accurate adjustments can be made to
eliminate the material effects of such differences;
(b) "controlled transaction" means a transaction between associates;
(c) "transaction" means any sale, assignment, lease, license, loan, contribution, right
to use property or performance of services;
(d) "uncontrolled persons" means persons who are not associates; and
(e) "uncontrolled transaction" means a transaction between uncontrolled persons.
22. Subject to the other rules in this Chapter, the Commissioner, in applying this Chapter shall also
be guided by international standards, case law and guidelines issued by the various tax-related
internationally recognized organizations.
23. Arm's length standard.-
(1) In determining the income of a person from a transaction with an associate, the standard
to be applied by the Commissioner shall be that of a person dealing at arm's length with a
person who is not an associate (referred to as the "arm's length standard").
(2) A controlled transactions shall meet the arm's length standard if the result of the
transaction is consistent with the result (referred to as the "arm's length result") that would
have been realized if uncontrolled persons had engaged in the same transaction under
the same conditions.
(3) Subject to sub-rule (6), the following methods shall apply for the purposes of determining
an arm's length result, namely:-
(a) the comparable uncontrolled-price method;
(b) the resale price method;
(c) the cost plus method; or
(d) the profit split method.
Income Tax Rules, 2002 69
CHAPTER - VI TRANSFER PRICING
(4) The method in clause (d) shall apply only where the methods in clauses (a), (b) and (c)
cannot be reliably applied.
(5) As between clauses (a), (b) and (c), the method that, having regard to all the facts and
circumstances, provides the most reliable measure of the arm's length result as in the
opinion of Commissioner shall be applied.
(6) Where the arm's length result cannot be reliably determined under one of the methods in
sub-rule (3) the Commissioner may use any method provided it is consistent with the
arm's length standard.
24. Comparable uncontrolled price method.-
The comparable uncontrolled price method determines whether the amount charged in a
controlled transaction gives rise to an arm's length result by reference to the amount charged in a
comparable uncontrolled transaction.
25. Resale price method.-
(1) The resale price method determines whether the amount charged in a controlled
transaction gives rise to an arm's length result by reference to the resale gross margin
realized in a comparable uncontrolled transaction.
(2) The following steps shall apply in determining the arm's length result under the resale
price method, namely:-
(a) determine the price that a product purchased from an associate has been sold to
a person who is not an associate (referred to as the "resale price"); and
(b) from the resale price is subtracted a gross margin (referred to as the "resale
gross margin") representing the amount that covers the person's selling and other
operating expenses and, in light of the functions performed (taking into account
assets used and risks assumed), make an appropriate profit;
(c) from that amount is subtracted any other costs associated with the purchase of
the product, such as customs duty; and
(d) the amount remaining is the arm's length result.
(3) The resale price margin of a person in a controlled transaction may be determined by
reference to:-
(a) the resale price margin that the person earns on products purchased and sold in
a comparable uncontrolled transaction; or
(b) the resale price margin that an independent person earns in comparable
uncontrolled transaction.
26. Cost plus method.-
(1) The cost plus method determines whether the amount charged in a controlled transaction
gives rise to an arm's length result by reference to the cost plus markup realised in a
comparable uncontrolled transaction.
Income Tax Rules, 2002 70
CHAPTER - VI TRANSFER PRICING
(2) The following steps shall apply in determining the arm's length result under the cost plus
method, namely:-
(a) determine the costs incurred by the person in a controlled transaction;
(b) to this amount is added a mark up (referred to as the "cost plus mark up" to make
an appropriate profit in light of the functions performed and market conditions;
and
(c) the sum of the amounts referred to in clauses (a) and (b) is the arm's length
result.
(3) The cost plus mark up of a person in a controlled transaction may be determined by
reference to:-
(a) the cost plus mark up that the person earns in a comparable uncontrolled
transaction; or
(b) the cost plus mark up that an independent person earns In comparable
uncontrolled transaction.
27. Profit split method.-
(1) The profit split method may be applied where transactions are so interrelated that the
arm's length result cannot be determined on a separate basis.
(2) The profit split method determines the arm's length result on the basis that the associates
form a firm and agree to divide profits in the manner that independent persons would
have agreed on the basis that they are dealing with each other at arm's length.
(3) The Commissioner may determine the division of profits on the basis of a contribution
analysis, a residual analysis or on any other basis as appropriate having regard to the
facts and circumstances.
(4) Under contribution analysis, the total profits from controlled transactions shall be divided
on the basis of the relative value of the functions performed by each person participating
in the controlled transactions.
(5) Under residual analysis, the total profits from controlled transactions shall be divided as
follows:-
(a) each person shall be allocated sufficient profit to provide the person with a basic
return appropriate for the type of transactions in which the person is engaged;
and
(b) any residual profit remaining after the allocation in clause (a) shall be allocated
on the basis of division between independent persons determined having regard
to all the facts and circumstances.
(6) For the purposes of clause (a) of sub-rule (5), the basic return shall be determined by
reference to market returns achieved for similar types of transactions by independent
persons.
Income Tax Rules, 2002 71
CHAPTER - VII RECORDS AND BOOKS OF ACCOUNTS
CHAPTER - VII
RECORDS AND BOOKS OF ACCOUNTS
PART-I : PRELIMINARY
28. Application of Chapter.-
(1) The rules in this Chapter apply for the purposes of section 174.
(2) The purpose of this Chapter is to prescribe the minimum level of books of accounts,
documents and records to be maintained by taxpayers
(3) Nothing in this Chapter shall preclude a taxpayer accounting for income chargeable under
the head "Income from Business" from
(a) maintaining any books of account, documents or records in addition to those
prescribed in these rules;
(b) adding such further columns or particulars in the forms prescribed in these rules
for the taxpayer's own requirement; or
(c) maintaining the books of account. documents or records in the manner
prescribed keeping in view the nature of the taxpayer's business.
Interpretation.- ln this Chapter-
(a) "legal practitioner" includes an advocate. pleader, tax practitioner and advisor or
consultant on income tax, sales tax. customs. central excise or salt tax laws.
(b) "medical practitioner" includes a doctor, surgeon, Physician, dentist, psychiatrist,
Physiotherapist, tabib, homeopath, vaid, veterinarian and any person practicing
medicine under any other name.
PART-II: BOOKS OF ACCOUNT PRESCRIBED
29. Books of account, documents and records to be maintained.-
(1) Every taxpayer deriving income chargeable under the head "Income from Business" shall
maintain proper books of account, documents and records with respect to-
(a) all sums of money received and expended by the taxpayer and the matters in
respect of which the receipt and expenditure takes place;
(b) all sales and purchases of goods and all services provided and obtained by the
taxpayer;
(c) all assets of the taxpayer;
(d) all liabilities of the taxpayer; and
(e) in case of a taxpayer engaged in assembly. Production processing,
manufacturing, mining or like activities, all items of cost relating to the utilization
of materials, labour and other inputs.
(2) If a taxpayer uses fiscal electronic cash register or computerized accounting software. it
may issue cash-memo invoice/receipt generated by the electronic cash register or
computer.
(3) Duplicate copies and electronic or computer records of the cash-memo invoice receipt
patient-slip to be issued under this chapter, shall be retained by the taxpayer and form
part of the records to be maintained under this chapter.
Income Tax Rules, 2002 72
CHAPTER - VII RECORDS AND BOOKS OF ACCOUNTS
(4) The books of account documents and records to be maintained under this chapter shall
be maintained for 1[“six”] years after the end of the tax year to which they relate.
2
(5) [“The provision of sub rule (4) shall not apply where any proceeding under the Ordinance
is pending before any authority or court the taxpayer shall maintain the record till final
decision of the proceedings.”]
30. In particular, and without prejudice to the generality of the provisions of Rule 29, every
taxpayer, other than companies, deriving income chargeable under the head "Income from
business" shall issue and maintain the following minimum books of account, documents
and records.-
(1) Taxpayers with business income upto Rs. 3[“500,000”] and new taxpayers deriving
income from business (excluding taxpayers to whom sub-rules (2). (3) or (4) apply):
(a) Serially numbered and dated cash-memo/ invoice / receipt for each transaction of
sale or receipt containing the following:-
(i) taxpayer's name or the name of his business, address national tax
number 4[“or CNIC”] and sales tax registration number, if any; and
(ii) the description quantity and value of goods sold or services rendered:
Provided that where each transaction does not exceed Rs.100, one or more
cash-memos per day for all such transactions may be maintained;
(b) Daily record of receipts, sales, payments purchases and expenses: a single entry
in respect of daily receipts, sales, purchases and different heads of expenses will
suffice; and
(c) Vouchers of purchases and expenses.
(2) Taxpayers with business income exceeding Rs. 5[“500,000”] (excluding taxpayers to
whom sub-rules (1), (3) or (4) apply) and wholesalers, distributors, dealers and
commission agents:-
(a) Serially numbered and dated cash-memo / invoice / receipt for each transaction
of sale or receipt containing the following:-
(i) taxpayer's name or the name of his business, address, national tax
number 6[or CNIC] and sales tax registration number, If any;
(ii) the description, quantity and value of goods sold or services rendered;
and
(iii) in case of a wholesaler, distributor, dealer and commission agent, where
a single transaction exceeds Rs.10,000, the name and address of the
customer;
Provided that where each transaction does not exceed Rs.100, one or more
cash-memos per day for all such transactions may be maintained;
(b) Cash book and/or bank book or daily record of receipts, sales, payments.
1
The word “five” substituted by SRO 1218(I)/2015 dated 08.12.2015.
2
Sub-rule (5) inserted by SRO 1218(I)/2015 dated 08.12.2015.
3
The figure “200,000” substituted by SRO 1218(I)/2015 dated 08.12.2015.
4
Inserted by SRO 1218(I)/2015 dated 08.12.2015
5
The figure “200,000” substituted by SRO 1218(I)/2015 dated 08.12.2015.
6 th
Inserted by the S.R.O. 754(I)/2016 dated 15 August, 2016.
Income Tax Rules, 2002 73
CHAPTER - VII RECORDS AND BOOKS OF ACCOUNTS
purchases and expenses; a single entry in respect of daily receipts, sales,
purchases and different heads of expenses will suffice;
(c) General ledger or annual summary of receipts, sales, payments, purchases and
expenses under distinctive heads;
(d) Vouchers of purchases and expenses and where a single transaction exceeds
Rs.10.000 with the name and address of the payee; and
(e) Where the taxpayer deals in purchase and sale of goods, quarterly inventory of
stock-in-trade showing description, quantity and value.
(3) Professionals (like medical practitioners, legal practitioners, accountants, auditors,
architects, engineers etc.):-
(a) Serially numbered and dated patient-slip/ invoice/ receipt for each transaction of
sale or receipt containing the following:-
(i) taxpayer's name or the name of his business or profession, address
national tax number 1[or CNIC] and sales tax registration number, if any;
(ii) the description, quantity and value of medicines supplied or details of
treatment /case/ services rendered (confidential details are not required)
and amount charged; and
(iii) the name and address of the patient/client:
Provided that the condition of recording address of the patient on the patient slip
under this clause shall not apply to general medical practitioners;
(b) Daily appointment and engagement diary in respect of clients and patients:
Provided that this clause-shall not apply to general medical practitioners;
(c) Daily record of receipts, sales, payments, purchases and expenses; a single
entry in respect of daily receipts, sales, purchases and different heads of
expenses will suffice; and
(d) Vouchers of purchases and expenses.
(4) Manufacturers (with turnover exceeding Rs.2.5 million):
(a) Serially numbered and dated cash-memo/ invoice/ receipt for each transaction of
sale or receipt containing the following:-
(i) taxpayer's name or the name of his business, Address, national tax
number 2[or CNIC] and sales tax registration number, if any;
(ii) the description, quantity and, value of goods sold; and
(iii) where a single transaction exceeds Rs.10,000 with the name and
address of the customer;
(b) Cash book and/or bankbook;
(c) Sales day book and sales ledger (where applicable);
(d) Purchases day book and purchase ledger (where applicable);
(e) General ledger;
1 th
Inserted by the S.R.O. 754(I)/2016 dated 15 August, 2016.
2 th
Inserted by the S.R.O. 754(I)/2016 dated 15 August, 2016.
Income Tax Rules, 2002 74
CHAPTER - VII RECORDS AND BOOKS OF ACCOUNTS
(f) Vouchers of purchases and expenses and where a single transaction exceeds
Rs.10,000 with the name and address of the payee; and
(g) Stock register of stock-in-trade (major raw materials and finished goods)
supported by gate in-ward and outward records and quarterly inventory of all
items of stock-in-trade including work-in-process showing description, quantity
and value.
1
[30A. Electronic tax register.-
A person required to use an electronic tax register shall -
(a). install the electronic tax register (ETR) within seven days of its authentication by
Commissioner holding jurisdiction over such case and obtain a register identification
number (RIN) for permanent affixture on the Electronic tax register;
(b). use the electronic tax register to record only his own sales and ensure that each sale is
made through it and print the receipt of each sale containing the information in
accordance with sub-rules(3) and (4) of rule 29 and rule 30, and to deliver the original
receipt to the purchaser;
(c). in case of non-availability for use of the electronic tax register, the sales may be recorded
with the use of a substitute electronic tax register, duly authenticated by the
Commissioner;
(d). prepare a daily and a monthly Accounting report containing the information as prescribed
in Chapter VII of these rules;
(e). ensure that the electronic tax register operates correctly with particular regard to correct
programming of the names of goods and services and the correct allocation of their tax
rates;
(f). promptly report any malfunctioning of the electronic tax register to the person responsible
for its servicing;
(g). on demand by an authorized person, produce the electronic tax register for inspection;
(h). ensure the inspection of the electronic tax register before the authorized service
management after six months;
(i). keep copies of electronic tax register reports for a period of five years and produce the
same for inspection by the Commissioner whenever required to do so;
(j). safely keep the electronic tax register ledger in the electronic tax register‟s casing and
produce it whenever required by the Commissioner to do so; and
(k). ensure the inspection before further use of an electronic register which has been or is
suspected to have been interfered or tempered with.]
31. Every taxpayer deriving income chargeable under the head income from salary 2[,] property,
capital gains or other sources shall issue and maintain the following minimum documents
and records.-
(1) Taxpayers deriving income from Salary:
Salary certificate indicating the amount of salary and tax deducted there from.
1 Rule 30A inserted by SRO 895(I)/2008 dated August 27, 2008.
2 th
Inserted by the S.R.O. 754(I)/2016 dated 15 August, 2016.
Income Tax Rules, 2002 75
CHAPTER - VII RECORDS AND BOOKS OF ACCOUNTS
(2) Taxpayers deriving income from property:
(a) Tenancy agreement. if executed;
(b) Tenancy termination agreement, if executed;
(c) Receipt for amount of rent received; and
(d) Evidence of deductions claimed in respect of premium paid to insure the building,
local rate, tax, charge or cess, ground rent, profit/interest or share in rent on
money borrowed, expenditure on collecting the rent, legal services and unpaid
rent.
(3) Taxpayers deriving income from capital gains:
(a) Evidence of cost of acquiring the capital asset;
(b) Evidence of deduction for any other costs claimed; and
(c) Evidence in respect of consideration received on disposal of the capital asset.
(4) Taxpayers deriving income from other sources:
1
[(a)] Dividends:
Dividend warrants.
1
[(b)] Royalty:
Royalty agreement
1
[(c)] Profit on debt:
(i) Evidence and detail of profit yielding debt;
(ii) Evidence of profit on debt and tax deducted thereon, like certificate in the
prescribed form or bank account statement; and
(iii) Evidence of Zakat deducted, if any.
1
[(d)] Ground rent, rent from the sub-lease of land or building, income from the lease of
any building together with plant or machinery and consideration for vacating the
possession of a building or part thereof:
(i) Lease agreement; and
(ii) Lease termination agreement.
1
[(e)] Annuity or Pension: Evidence of amount received.
1
[(f)] Prize money on bond, winning from a raffle, lottery or cross word puzzle:
Evidence of income and tax deducted thereon, like certificate in the prescribed
form.
1
[(g)] Provision use or exploitation of property:
Agreement.
1
[(h)] Loan, advance, deposit or gift:
1 Clauses re-lettered by SRO 392(I)/2009 dated May 19, 2009.
Income Tax Rules, 2002 76
CHAPTER - VII RECORDS AND BOOKS OF ACCOUNTS
Evidence of mode of receipt of a loan, advance, deposit or gift i.e. by a crossed
cheque or through a banking channel
1
[(i)] General:
Evidence of deduction for any other expenditure claimed.
PART-III : GENERAL INSTRUCTIONS ABOUT MAINTAINING BOOKS OF
ACCOUNTS, DOCUMENTS AND RECORDS
32. General form of books of accounts, documents and records.-
(1) The books of accounts, records and other documents required to be maintained by a taxpayer
in accordance with this Chapter may be kept on electronic media, provided sufficient steps
have been taken to ensure the sanctity and safe keeping of such accounts, documents and
records.
(2) The books of accounts, documents and records required to be maintained by a company in
accordance with this Chapter shall be maintained in accordance with international accounting
standards and as required under the Companies Ordinance, 1984.
33. Books of account documents and records to be kept at the specified place.-
(1) The books of accounts, documents and records required to be maintained by a taxpayer in
accordance with this Chapter shall be kept at the place where the taxpayer is carrying on the
business or, where the business is carried on in more places than one, at the principal place of
business or at each of such places if separate books of accounts are maintained in respect of
each place.
(2) Where a person derives income from sources other than from business, the books of
accounts, documents and records shall be kept at the person's place of residence or such
other place as may be so declared by such person.
(3) The place or places where the books of accounts, documents and records are kept shall be
clearly stated on the tax return form in the column requiring the details of the records
maintained.
Income Tax Rules, 2002 77
RETURNS, EMPLOYER'S CERTIFICATE, WEALTH STATEMENT
CHAPTER - VIII AND STATEMENT TO BE FILED BY CERTAIN PERSONS
CHAPTER - VIII
RETURNS, EMPLOYER'S CERTIFICATE, WEALTH STATEMENT
AND STATEMENT TO BE FILED BY CERTAIN PERSONS
1
[34. Return of income.-
(1) This rule shall apply to provide for the furnishing of returns of income.
2
[(2) A return of income as required to be furnished under section 114 shall be in the form as
specified in Annexure-XIII of Part VI of the Second Schedule.]
(3) A return of income shall be verified in the manner specified in the form.
(4) A return of income shall be accompanied by the following, namely:-
(a) applicable documents;
(b) statements;
(c) certificates; 3[ ]
(d) annexes; 4[and]
4
[(e) in case of companies, the return of income shall be accompanied by audited accounts
and reconciliation of profits as per accounts and taxable income as declared in the
return.]
5
[ ]
6 7
[ [ ] ]
1 Rule 34 substituted by SRO 651(I)/2004, dated July 30, 2004.
2 Sub-rule (2) substituted by SRO 392(I)/2009, dated May 19, 2009.
3 Word "and" omitted by SRO 392(I)/2009, dated May 19, 2009.
4 Word "and" and clause "(e)" inserted by SRO 392(I)/2009, dated May 19, 2009.
5 Word etc. "as are specified in Part-VI of the Second Schedule." Earlier the words "the annexures to" appearing after the
word "in" were omitted by SRO 1032(I)/2006, dated October 03, 2006.
6 Rule 35 substituted by Notification No. SRO 651(I)/2004, dated July 30, 2004.
7
Rule 35 omitted by SRO 1218(I)/2015 dated 08.12.2015. The omitted rule read as under:
“ 35. Employer's certificate in lieu of return of income.-
(1) This rule shall apply to provide for the furnishing of an employer's certificate in lieu of return of
income.
(2) An employer's certificate in lieu of return of income as required under section 115 shall be in the
form specified in Part III of the Second Schedule.
(3) An employer's certificate in lieu of return of income shall be accompanied by the following, namely:-
(a) applicable documents;
(b) statements;
(c) certificates; and
(d) annexes;
as are specified in the annexures to Part VI of the Second Schedule.”
Income Tax Rules, 2002 78
RETURNS, EMPLOYER'S CERTIFICATE, WEALTH STATEMENT
CHAPTER - VIII AND STATEMENT TO BE FILED BY CERTAIN PERSONS
36. Wealth statement.-
(1) This rule shall provide for the furnishing of a wealth statement.
(2) A wealth statement shall be-
1
(a) in the form specified In Part [IV] of the Second Schedule to these rules;
2
(b) verified in the manner specified in the form; [ ]
(c) accompanied by such documents, statements and certificates as specified in the
form, and in the Ordinance, these rules and circulars issued under the Ordinance
3
[and]
3
[(d) accompanied by a wealth reconciliation statement.]
37. Return to be furnished by a non-resident ship owner or charterer.-
(1) This rule shall apply for the Purposes of section 143, which provides for the furnishing of
returns by non-resident ship owners or charterers.
(2) A return required to be furnished under section 143 shall be in the following form,
namely:-
Remarks whether
Total freight containers charges
earned for Total in Respect and other charges
goods, 5[of] freight received separately shown in
Receipts for services in Pakistan the Normal Return of
freight and passengers embarked outside income. If received by
passenger, Pakistan (whether 6[Tax amount the agent or assigned Challan
Name of Dates of cargo livestock 5[,livestock]em covered by the tax on earnings as to other Person, in that No. &
Owner / Arrival / etc. embarked barked outside treaty. Please per columns 4, case rent/lease or Date of
Name of ship 4[charterer]. departure from Pakistan Pakistan specify) 5 and 6.] assignment charges payment Remarks
1 2 3 4 5 6 7 8 9 10
Authorized/Representative Signature ____________
Name. ____________________________________
Designation ________________________________
Seal _____________________________________
Date ______________________________________
(3) A return required to be furnished under section 143 shall be accompanied by such
documents, statements and certificates as specified in the form, and in the Ordinance,
these rules and circulars issued under the Ordinance.
(4) A return required to be furnished under section 143 may be furnished by any of the
methods specified in rules 73 and 74.
1 Substituted for "V" by Notification No. SRO 861(I)/2003, dated September 01, 2003.
2 Word "and" omitted by SRO 392(I)/2009, dated May 19, 2009.
3 Word "and" and clause "(d)" inserted by SRO 392(I)/2009, dated May 19, 2009.
4 Substituted for "Charter" by SRO 392(I)/2009, dated May 19, 2009.
5 Words inserted by SRO 392(I)/2009, dated May 19, 2009.
6 Substituted for "Tax amount on earnings as Col:6" by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 79
RETURNS, EMPLOYER'S CERTIFICATE, WEALTH STATEMENT
CHAPTER - VIII AND STATEMENT TO BE FILED BY CERTAIN PERSONS
38. Return to be furnished by a non-resident aircraft owner or charterer.-
(1) This rule shall apply for the purposes of section 144, which provides for the furnishing of
quarterly returns by non-resident aircraft owners or charterers.
(2) A return required to be furnished under section 144 shall be in the following form,
namely:-
Remarks whether
Total in Respect containers Charges
Total freight 3[of] freight and other charges
Quarterly earned for received in separately shown in
receipts for goods, services Pakistan embarked the Normal Return of
freight and passengers outside Pakistan income. If Received by
Dates of passenger, 3[,livestock] (whether covered 4[Tax amount on the agent or assigned Challan
1[specificati Name of arrival. cargo lives tock embarked by the tax earnings as per to other Person, in that No.&
on of the owner 3[/departur etc. embarked outside treaty. Please columns 4, 5 and case rent/ lease or Date of
aircraft] 2[charterer] e] from Pakistan. Pakistan. specify). 6.] assignment charges. payment. Remarks
1 2 3 4 5 6 7 8 9 10
Authorized/Representative Signature ____________
Name. ____________________________________
Designation ________________________________
Seal _____________________________________
Date ______________________________________
(3) A return required to be furnished under section 144 shall be accompanied by such
documents, statements and certificates as specified in the form, and in the Ordinance,
these rules and circulars issued under the Ordinance.
(4) A return required to be furnished under section 144 may be furnished in any of the
methods specified in rules 73 and 74.
5
[ ]
1 Substituted for "Name of Air-craft" by SRO 392(I)/2009 dated May 19, 2009.
2 Substituted for "Charter" by SRO 392(I)/2009, dated May 19, 2009.
3 Words inserted by SRO 392(I)/2009, dated May 19, 2009.
4 Substituted for "Tax amount on earnings as Col:6" by SRO 392(I)/2009, dated May 19, 2009.
5
Rule 39 omitted by SRO 1218(I)/2015 dated 08.12.2015. The omitted rule read as under:
“39. Statement in lieu of Return of income.-
(1) Where in lieu of Return of income statement is required to be filed namely incomes covered by sections
5,6 and 7 or where tax deduction is to be taken as final discharge of tax liability u/s 169 a statement in the
prescribed form shall be filed as prescribed in Part 5[IV] of the Second Schedule to the Rules.
(2) Where a taxpayer has income from a source which does not form part of total income and also income under
any head of income given in section 11 (except salary), Return is specifically required to be filed on a prescribed
statement as well as shall be filed.”
Income Tax Rules, 2002 80
CHAPTER - VIIIA BANKING COMPANIES REPORTING REQUIREMENTS
1
[CHAPTER - VIIIA
BANKING COMPANIES REPORTING REQUIREMENTS
39A. This chapter contains rules for banking companies reporting requirements for the purpose of section
165A of the Ordinance.
39B. Definitions.-
(1) In this Chapter, unless there is anything repugnant in the subject or context,-
(a) "Account Holders Deposits Statement" means Account Holders Deposits Statement
as specified in Form „A';
(b) "Banking Company Officer" means a senior officer stationed at the head office and
nominated by a banking company to coordinate with the Board for provision of any
information and documents required by the Board;
(c) “Credit Card Payments Statement" means Credit Card Payments Statement as
specified in Form „B';
(d) “Currency Transactions Report" means currency transactions report generated and
submitted by a banking company to the Financial Monitoring Unit under the Anti-
Money Laundering Act, 2010 (VII of 2010)
(e) "Information" includes Account Holders Deposits Statement, Credit Card Payments
Statement, Written Off Loans Statement, currency transactions report, suspicious
transactions report, details of any information or data through online access to central
data base of the banking company or any other information as required by the Board
from the banking company;
(f) "Reporting Banking Company" means a banking company required under section
165A of the Ordinance to provide to the Board all the information and documents
electronically or otherwise, mentioned in the said section;
(g) "Suspicious Transactions Report" means suspicious transactions report generated
and submitted by a banking company to the Financial Monitoring Unit under the Anti-
Money Laundering Act, 2010 (VII of 2010); and
(h) "Written off Loans Statement" means Written off loans Statement as specified in Form
„C';
39C. Furnishing of information.-
(1) The information, required to be furnished under section 165A of the Ordinance (other than
information required under clause (a) of sub-section (1) of section 165A) shall be provided, by
the reporting banking company, in the manner as specified in Account Holders Deposits
Statement, Credit Card Payments Statement, Written Off Loans Statement, currency
transactions report and suspicious transactions report.
(2) The information and online access required to be provided under clause (a) of sub-section (1)
of section 165A, shall be provided by the reporting banking company, through online access to
1 Chapter VIIIA inserted by SRO 115(I)/2014 dated February 19, 2014.
Income Tax Rules, 2002 81
CHAPTER - VIIIA BANKING COMPANIES REPORTING REQUIREMENTS
its central database containing details of its account holders and all transactions made in their
accounts.
(3) The information other than information provided in sub-rule (1) and (2), shall be provided by
the reporting banking company as specified in a notice issued in terms of section 165A(2) of
the Ordinance.
39D. Authorized Persons.-
(1) Banking company officer, shall be nominated by the reporting banking company not later than
thirty days of coming into force of rules contained in this chapter.
(2) Where a banking company officer is not nominated within the time allowed as specified in sub-
rule (1), the President or any Principal Officer of the reporting banking company, stationed at
the head office shall be treated as banking company officer.
(3) The information required to be reported to the Board shall be provided by the banking
company officer to the Chairman, 1Federal Board of Revenue or any officer authorized by the
Chairman in this behalf.
Provided that the officer authorized by the Chairman shall not be below the rank of Member of
the Board.
39E. Time of furnishing information.-
(1) Every banking company officer, shall furnish to the Board a monthly Account Holders Deposits
Statement and Credit Card Payments Statement as specified in Form „A‟ and Form 'B'
respectively, for immediately preceding calendar month within seven days of the end of the
preceding calendar month.
(2) Every banking company officer shall furnish to the Board an annual Written off Loans
Statement as specified in Form „C' for immediately preceding calendar year within three
months of the end of the preceding calendar year.
(3) Every banking company officer, shall furnish to the Board a copy of each currency
transactions report and suspicious transactions report generated by it at the time it is
submitted to the Financial Monitoring Unit under the Anti-Money Laundering Act, 2010 (VII of
2010).
(4) Every banking company officer, shall furnish to the Board any information and documents in
addition to those mentioned in sub-rules (1) to (3) within the time allowed by the Board.
39F. Exclusions.-
(1) The information may not be provided by the banking company officer in respect of a person
who holds National Tax Number and has also filed return of income for the immediately
preceding tax year.
(2) The information regarding the person mentioned in sub-rule (1) may be provided to the
reporting banking company by the Board, on 10th of every month.
1
The words “Central Board of Revenue” substituted by the Finance Act, 2007
Income Tax Rules, 2002 82
CHAPTER - VIIIA BANKING COMPANIES REPORTING REQUIREMENTS
FORM-A
[See rule 39B(1)(a)]
ACCOUNT HOLDERS DEPOSITS STATEMENT
REPORTING BANKING COMPANY: ________________________________________________
BANKING COMPANY OFFICER: ___________________________________________________
INFORMATION OF PERSONS WHO HAVE DEPOSITED RS. ONE MILLION
OR MORE DURING THE MONTH OF:____________________________
Most recent Amount
particulars deposited
including during the
S.No. Name CNIC address(es) month Remarks
(1) (2) (3) (4) (5) (6)
VERIFICATION
I, the undersigned, solemnly declare that to the best of my knowledge and belief, the information
given in this statement is correct and complete;
I, further declare that I am competent to make his declaration and verify it in my capacity as
nominee of the reporting Banking Company __________________________.
Signature. _________________________________
Name _____________________________________
CNIC _____________________________________
FORM-B
[See rule 39B(1)(c)]
CREDIT CARDS PAYMENTS STATEMENT
REPORTING BANKING COMPANY: ________________________________________________
BANKING COMPANY OFFICER: ___________________________________________________
INFORMATION OF PERSONS WHO HAVE MADE CREDIT CARD PAYMENTS OF
RS.ONE HUNDRED THOUSAND OR MORE DURING THE MONTH OF:_____________
Amount
Most recent deposited
particulars including during the
S.No. Name CNIC address(es) month Remarks
(1) (2) (3) (4) (5) (6)
VERIFICATION
I, the undersigned, solemnly declare that to the best of my knowledge and belief, the information given
in this statement is correct and complete;
I, further declare that I am competent to make his declaration and verify it in my capacity as nominee of
the reporting Banking Company _____________________________.
Signature. _________________________________
Name _____________________________________
CNIC _____________________________________
Income Tax Rules, 2002 83
CHAPTER - VIIIA BANKING COMPANIES REPORTING REQUIREMENTS
FORM-C
[See rule 39B(1)(h)]
WRITTEN OFF LOANS STATEMENT
REPORTING BANKING COMPANY: ________________________________________________
BANKING COMPANY OFFICER: ___________________________________________________
INFORMATION IN RESPECT OF LOANS WRITTEN OFF EXCEEDING
RS ONE MILLION OR MORE DURING THE CALENDER YEAR:_______________
Amount
deposited
Most recent particulars during the Remarks
S.No. Name CNIC including address(es) month (if any)
(1) (2) (3) (4) (5) (6)
VERIFICATION
I, the undersigned, solemnly declare that to the best of my knowledge and belief, the information given
in this statement is correct and complete;
I, further declare that I am competent to make his declaration and verify it in my capacity as nominee of
the reporting Banking Company _____________________________.
Signature. _________________________________
Name _____________________________________
CNIC _____________________________________
Income Tax Rules, 2002 84
CERTIFICATES, STATEMENTS AND PROCEDURE FOR PAYMENT OF
CHAPTER - IX
ADVANCE TAX
CHAPTER - IX
CERTIFICATES, STATEMENTS AND PROCEDURE FOR PAYMENT OF ADVANCE TAX
PART I - SECTION 159
CERTIFICATE
40. Exemption or lower rate certificate u/s 159.-
(1) An application for a certificate under sub-section (1) of section 159 shall be made in the
form specified in Part-VII of the First Schedule to these rules.
(2) A certificate issued by the Commissioner under sub-section (1) of section 159 shall be in
the form specified in Part VIII of the First Schedule to these rules.
1
[(3) An application for a certificate under sub-section (1) of section 159 read with clause (v) of
paragraph 1 of Notification No. S.R.O. 947(I)/2008, dated the 5th September, 2008, shall
be in the form specified in Part VII(a) of the First Schedule to these rules.
(4) A system based exemption certificate issued by the Commissioner for goods specified
under clause (v) of paragraph 1 of Notification No. S.R.O. 947(I)/2008, dated the 5th
September, 2008 shall be in the form specified in Part-VIII (a) of the First Schedule to these
rules.]
2
[PART II
COLLECTION OR DEDUCTION OF TAX AT SOURCE
DIVISION I
EMPLOYER'S CERTIFICATE
3
[ ]
DIVISION II
CERTIFICATE FOR COLLECTION OR DEDUCTION OF TAX
(OTHER THAN FROM SALARY)
4
42. Certificate of collection or deduction of tax 5[ ].-
(1) As required under sub-section (1) of section 164, any person responsible for-
(a) Collecting tax under Division II of Part V of Chapter X of the Ordinance;
(b) Deducting tax from a payment under Division III of Part V of Chapter X of
the Ordinance, except in the case of salary;
(c) Collecting or deducting tax under Chapter XII of the Ordinance; or
(d) Deducting tax under the Sixth Schedule to the Ordinance,
1 Sub-rules "(3) and (4)" inserted by SRO 1139(I)/2008, dated October 31, 2008.
2 Part II comprising of rules 41 to 45 substituted by SRO 641(I)/2005, dated June 27, 2005.
3 Rule "41" omitted by SRO 1062(I)/2007, dated October 27, 2007.
4 Part II comprising of rules 41 to 45 substituted by SRO 641(I)/2005, dated June 27, 2005.
5 Words "other than from salary" omitted by SRO 1062(I)/2007, dated October 27, 2007.
Income Tax Rules, 2002 85
CERTIFICATES, STATEMENTS AND PROCEDURE FOR PAYMENT OF
CHAPTER - IX
ADVANCE TAX
shall issue a certificate to the person from whom tax has been collected or deducted, in
the form as set out in Part VII of the Second Schedule to these rules, within fifteen days
after the end of the financial year or discontinuation of business etc.
(2) Where the person from whom tax has been collected or deducted requests for the
issuance of the certificate before the end of the financial year, the certificate under sub-
rule (1) shall be issued for the period in that year within seven days of the request made.
(3) Where the certificate issued under sub-rule (1) or sub-rule (2) has been lost, stolen or
destroyed the recipient of the certificate may request, in writing, to the issuer of the
certificate to issue a duplicate thereof.
(4) Where a request has been made under sub-rule (3), the issuer of the certificate shall
comply with the request and the certificate so issued shall be clearly marked "duplicate".
(5) The certificate issued under sub-rules (1), (2) or sub-rule (3) shall be in duplicate and
serially numbered.
DIVISION III
PAYMENT OF TAX COLLECTED OR DEDUCTED
1
43. Payment of tax collected or deducted.-
As required under section 160 and under the Sixth Schedule to the ordinance the tax collected
or deducted under Division II or Division III of Part V of Chapter X of the Ordinance, Chapter XII of
the Ordinance or Sixth Schedule to the Ordinance shall be paid to the Commissioner by way of
credit to the Federal Government,-
(a) where the tax has been collected or deducted by the Federal Government or a Provincial
Government on the day the tax was collected or deducted; or
(b) where the tax has been collected or deducted by a person other than the Federal Government
or a Provincial Government, by remittance to the Government Treasury or deposit in an
authorized branch of the State Bank of Pakistan or the National Bank of Pakistan, within
2
[Seven days from the end of each week ending on every Sunday]3[:]
3
[Provided that the tax collected by a banking company upto 19th July, 2015 in respect of
advance tax on banking transactions under section 236P of Ordinance may be deposited into
the Government Treasury by 31st July, 2015.]
4
[Division IIIA
ADVANCE TAX ON AIR TICKETS
43A. Advance tax on air tickets.-
(1) This rule shall apply for the purposes of section 236B and 236L.
(2) Airlines issuing tickets directly to passengers, either manually or electronically, shall
charge and collect advance tax, at the rates applicable for sections 236B and 236L,
directly from the passengers and shall be paid within the time as prescribed in sub-rule
(4).
1 Part II comprising of rules 41 to 45 substituted by SRO 641(I)/2005, dated June 27, 2005.
2 Substituted for "seven days from the end of each fortnight" by SRO 392(I)/2009, dated May 19, 2009.
3 Substituted for full stop and after that proviso inserted by SRO 498(I)/2015, dated July 24, 2015.
4 Division IIIA inserted by SRO 817(I)/2014 dated September 15, 2014.
Income Tax Rules, 2002 86
CERTIFICATES, STATEMENTS AND PROCEDURE FOR PAYMENT OF
CHAPTER - IX
ADVANCE TAX
Explanation: For the purpose of this rule, airline means airline issuing tickets for uplifting
passengers of any airline, whether having its head office or registered office or an agent
in Pakistan or not, if the journey originates in Pakistan. The obligation to charge, collect
and deposit tax is in respect of the airline uplifting the passengers in respect of the
journey originating in Pakistan.
(3) Where the tickets are issued by persons, other than the Airlines, and the persons
issuing tickets on behalf of the Airlines, are charging and collecting advance tax from the
passengers and making payment of tax to the Airline directly, or through IATA, or
through any other entity authorized in that behalf, the tax so collected by the airlines
from such persons shall be paid as per sub-rule (4).
(4) Tax collected by the airlines under sub-rule (3), shall be paid by the 15th day of the
following second month in respect of tickets issued upto the last working day of each
calendar month:
Provided that for the month of May and June, the tax shall be paid by 15th day of June on
the basis of average tax paid in respect of July to April. Any short or excess tax paid, in
respect of tickets issued during May and June, shall be adjusted in the tax required to be
paid by the 15th day of July.
(5) Every Airline issuing international air tickets shall make adequate arrangements for
collection of tax under this rule from the persons issuing tickets on its behalf or through
electronic means, and in case of default, the said tax shall be collected from the airline,
without prejudice to any other liability which it may incur under the Ordinance.
(6) Notwithstanding anything contained in Second Schedule to the Income Tax Rules,
2002, monthly and annual statements of tax collected under section 236B and 236L, shall
be submitted by every airline to the respective Commissioner Inland Revenue, in the form
and verified in the manner as indicated in sub-rule (8).
(7) Monthly statement for the tax deposited by 15th of each month, under sub-rule (4), shall
be filed by 21st of the month:
Provided that the monthly statement for the month of September, 2014 shall be
furnished along with the monthly statement of October, 2014.
(8) The forms and manner in which the monthly and annual statements are to be filed, are
as below:
FORM
Monthly statement of tax collected under section (236B/236L) ___________ of the Income
Tax Ordinance, 2001, during the month of _______________, 20____
Airline/Uplifting Airline:
Tax
Name of Airline for which Gross @ 5% Date of Date of
SN tickets issued. Fare or 4% collection Deposit CPR No.
I certify that the above statement contains complete information of tax collectible under section
236B of the Income Tax Ordinance, 2001, during the month/year ending on the
_______________, 20____
Name and Signature of person responsible _______________________
Signature: _______________________
Date: _______________________
Seal _______________________
Income Tax Rules, 2002 87
CERTIFICATES, STATEMENTS AND PROCEDURE FOR PAYMENT OF
CHAPTER - IX
ADVANCE TAX
Annual statement of tax collected under section (236B/236L) ___________ of the Income Tax
Ordinance, 2001, for the year ending on the _______________, 20____
Airline/Uplifting Airline:
Name of
Airline Document NIC/ Date Date
for which tickets or Passenger Passport Route/ Gross Tax of of CPR
SN issued Ticket No. Name No. Sector Fare @ 5% collection Deposit No.
I certify that the above statement contains complete information of tax collectible under section
236B of the Income Tax Ordinance, 2001, during the month/year ending on the
_______________, 20____
Name and Signature of person responsible _______________________
Signature: _______________________
Date: _______________________
Seal _______________________
(9) Provisions of section 236G and 236L, shall not be applicable in the case of a foreign
diplomat or a diplomatic mission in Pakistan.]
1
[―43B.- Amount actually paid under section 158.- The amount actually paid as per clause (c) of
section 158 the Ordinance includes,-Payment of tax collected or deducted,-
(a) amount paid by the person, as withholding agent;
(b) amount paid on behalf of the person, as withholding agent;
(c) amount paid at the instruction of the person, as withholding agent; and
(d) gross amount settled or discharged by the person, as withholding agent, to other person before
netting off or adjusting such against any receivable from the said other person.”]
DIVISION IV
2
[ ] 3[MONTHLY] STATEMENT4[ ] OF TAX COLLECTED
OR DEDUCTED
5
[44. Annual statement of tax collected or deducted.-
6
[ ]
7
[(2) Pursuant to sub-section (2) of section 165, a person responsible for collecting or deducting tax
under Division II or Division III of Part V of Chapter X of the Ordinance or under Chapter XII of
the Ordinance shall furnish 8[“or e-file”] a monthly statement 9[“by the 15th day of the month
following the month to which withholding tax pertains”] as set out in part X of the Second
Schedule to these rules.]
(3) The statement referred to in sub-rule (2) shall be accompanied by the evidence of deposit of
tax collected or deducted to the credit of the Federal Government.
1 th
Rule 43B inserted by the SRO 958(I)/2015 dated 29 September, 2015.
2
The words “Annual and” omitted by SRO 1218(I)/2015 dated 08.12.2015.
3 Substituted for "Quarterly" by SRO 1032(I)/2006, dated October 03, 2006.
4
The letter “s” omitted by SRO 1218(I)/2015 dated 08.12.2015.
5 Part II comprising of rules 41 to 45 substituted by SRO 641(I)/2005, dated June 27, 2005.
6
Rule (1) omitted by SRO 1218(I)/2015 dated 08.12.2015. The omitted rule read as under:-
“ (1) An annual statement required to be furnished under sub-section (1) of section 165 for a financial
year shall be in the form as set out in Part VIII and Part IX of the Second Schedule to these rules.”
7 Sub-rule (2) substituted by SRO 790(I)/2006 dated August 03, 2006.
8
Inserted by SRO 1218(I)/2015 dated 08.12.2015.
9
The words “within twenty days of the end of each month” substituted by SRO 1218(I)/2015 dated
08.12.2015.
Income Tax Rules, 2002 88
CERTIFICATES, STATEMENTS AND PROCEDURE FOR PAYMENT OF
CHAPTER - IX
ADVANCE TAX
(4) A person required to furnish the 1[statement] under sub-rule 2[ ] (2) shall, wherever required
by the Commissioner, furnish a reconciliation of the amounts mentioned in the aforesaid 3[ ]
4
[monthly] statements with the amounts mentioned in the return of income, statements, related
annexes and other documents submitted from time to time.
5
[(5) Pursuant to sub-section (6), a person responsible for deducting tax under section 149 shall
furnish or e-file annual statement by the 31st day of the month of July after the end of a
financial year in the form set out in Part IX of the Second Schedule to these rules.]
45. Statement of tax deducted under the Sixth Schedule to the Ordinance.-
The statement required to be furnished under sub-clause (b) of clause 11 of Part II of the
Sixth Schedule to the Ordinance for a financial year shall be in the form as set out in Part XI of
the Second Schedule to these rules.]
6
[ ]
7
[ ]
1
The word “statements” substituted by SRO 1218(I)/2015 dated 08.12.2015.
2
The word “(1) or” omitted by SRO 1218(I)/2015 dated 08.12.2015.
3
Omitted by SRO 1218(I)/2015 dated 08.12.2015.
4 Substituted for "Quarterly" by SRO 1032(I)/2006, dated October 03, 2006.
5 th
Added by the S.R.O. 754(I)/2016 dated 15 August, 2016.
6
Omitted “rule 46” due to substitution by S.R.O. 651(I)/2004, dated 30th July, 2004.
7
Omitted “Part III” by S.R.O. 641(I)/2005, dated 27.06.2005.
Income Tax Rules, 2002 89
CHAPTER - X PRESCRIBED FORMS
CHAPTER - X
PRESCRIBED FORMS
67. Application of Chapter.-
This chapter prescribes forms to be used for the purposes of the Ordinance.
68. Amended assessment notice.-
An amended assessment order related issue notice or/ letter issued by the Commissioner under
section 122 shall be in the manner or proforma specified in Part II of the First Schedule to these
rules.
69. Section 140 notice.-
A notice issued by the Commissioner under section 140 shall be in the form specified in Part IV of
the First Schedule to these rules.
70. Section 145 certificate.-
A certificate issued by the Commissioner to the Director of Immigration or immigration authority
under section 145 shall be in the form specified in Part V of the First Schedule to these rules.
71. Section 170 application.-
(1) An application under section 170 for a refund of tax shall be in the proforma specified in
Part VI of the First Schedule to these rules.
(2) The application shall be verified in the manner specified in the form.
(3) The application shall be accompanied by such documents, statements and certificates as
specified in the form, and in the Ordinance and these rules.
72. Section 175 authorization.-
The authorization of a 1[“officer of Inland Revenue”] for the purposes of section 175 shall be in the
manner specified in Part XIII of the First Schedule to these rules.
1
The words “taxation officer” substituted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 90
FURNISHING OF DOCUMENTS; SERVICE OF DOCUMENTS; FORMS
CHAPTER - XI
AND NOTICES
CHAPTER - XI
FURNISHING OF DOCUMENTS; SERVICE OF DOCUMENTS; FORMS AND NOTICES
73. Furnishing of documents and returns etc.-
(1) This rule applies for the purposes of furnishing of documents under the Ordinance or
these rules.
(2) Except as provided in the Ordinance or these rules, any application, statement or other
document to be furnished to the Commissioner shall be furnished in the following
manner, namely:-
(a) by post or courier service;
(b) delivered by hand to the officer having jurisdiction over the person or to such
other officer as the Commissioner may specify; or
1
[(c) on computer or by electronic transmission using the specified software in
accordance with the specified format or any other requirements including
safety valve, security and verification considerations as may be specified by the
2
Federal Board of Revenue from time to time.]
3
[(2A) In the case of a Company, electronic filing of income tax return and withholding tax
statements shall be mandatory from the first day of July 2007 onwards.]
4
[(2AA) In case of Federal Government departments, electronic filing of withholding statements
shall be mandatory from the first day of July, 2009 onwards.]
5
[(2B) In the case of a non-resident ship owner and aircraft owner or charterer thereof, the
electronic filing of the income tax return and application for port clearance shall be
mandatory from the 1st day of July 2008 onward.]
6
[(2C) In case a person registered for sales tax, electronic filing of income tax return 7[“and
withholding tax statements”] shall be mandatory from the first day of July, 2009 onwards.
(2D) In case of an Association of Persons, electronic filing of income tax return and withholding
tax statements shall be mandatory from the first day of July, 2009 onwards.]
8
[(2DD) In case of an individual declaring taxable income one million rupees and more or turnover
or receipts exceeding fifty million rupees electronic filing of income tax return and
withholding statement shall be mandatory from the first day of July, 2016 onwards.]
9
[(2E) From Tax Year 2009 onwards, wherever refund of tax is claimed in a non-company case,
income tax return shall be filed electronically, and in all cases, whether relating to a
company or a non-company, electronic filing of refund application as prescribed in Part-VI
of the First Schedule shall be mandatory.]
(3) A return, statement, certificate, application or other document furnished by a person that
includes the 10[digital] signature of the person or the person's 7[e-intermediary] shall be
1 Clause (c) substituted by SRO 516(I)/2006, dated June 01, 2006.
2
The words “Central Board of Revenue” substituted by the Finance Act, 2007
3 Sub-rule (2A) inserted by SRO 708(I)/2007, dated July 14, 2007.
4 Sub-rule (2AA) inserted by SRO 392(I)/2009, dated May 19, 2009.
5 Sub-rule (2B) inserted by SRO 695(I)/2008, dated June 26, 2008.
6 Sub-rules (2C) & (2D) inserted by SRO 684(I)/2009 dated July 23, 2009.
7
Inserted by SRO 1218(I)/2015 dated 08.12.2015.
8 th
Inserted by S.R.O. 754(I)/2016 dated 15 August, 2016.
9 Sub-rule (2E) inserted by SRO 986(I)/2009, dated November 17, 2009.
10 Substituted for "electronic" and "representative", respectively by SRO 516(I)/2006, dated June 01, 2006.
Income Tax Rules, 2002 91
FURNISHING OF DOCUMENTS; SERVICE OF DOCUMENTS; FORMS
CHAPTER - XI
AND NOTICES
taken to be signed by that person.
(4) A person who furnishes a return, statement, certificate, application or other document by
electronic transmission which includes the electronic signature of another person who has
not consented to the inclusion of the signature shall commit an offence punishable on
conviction with a fine or imprisonment not exceeding one year, or both.
1
[(5) An Electronic Income Tax Return filed under these rules shall be deemed to be a return for
the purposes of sub-section (2A) of section 114 of the Ordinance.]
2
[(6) The e-intermediary shall get the authority letter in the manner specified below, from the
taxpayer and produce it before the concerned income tax authority whenever demanded,
namely:-
AUTHORITY LETTER
I/We _______________________________ S/o. resident of/having registered office at
_______________________________, holder of CNIC No/company registration number
____________________, solemnly declare that a signed copy of the return/ certificate/
statement/ document/ annexure/ etc. have been provided to my/our e-intermediary Mr./Ms.
_______________________________ (Name & Address) who is a Chartered Accountant
/Cost and Management Accountant/ a legal practitioner entitled to practice in any civil Court in
Pakistan/ a member of the Association of Chartered Certified Accountants, UK/ ITP registered
with Tax Bar affiliated with All Pakistan Tax Bar Association of Pakistan. I/We further authorize
the said e-intermediary to transmit my/our return/ certificate/ statement/document/
annexure/etc to the designated officer of 3Federal Board of Revenue.
(Signatures) _______________________________
Name: ____________________________________
Address: __________________________________
(7) The return/certificate/statement/document/annexure/ etc and all supporting documents of the
taxpayers shall be retained by the e- intermediary who shall provide them to the taxation
officer concerned whenever demanded.]
4
[(8) The Board may direct that provisions of any of the sub-rules of this rule shall not apply for a
tax year.]
74. Service of documents electronically.-
(1) This rule applies for the purposes of the service of documents under the Ordinance or these
rules.
(2) Where a person has notified the Commissioner in writing of an electronic address for service
of documents under the Ordinance or rules a document required to be served on the person
by the Commissioner or 5[“Chief”] Commissioner shall be considered sufficiently served if sent
to that address.
(3) For the purposes of sub-rule (2), a document is considered sent to an electronic address if the
sender receives-
(a) in the case of a message sent to a facsimile number, confirmation from the sending
facsimile machine that the transmission is sent; 6[ ]
1 Sub-rule (5) substituted by SRO 516(I)/2006, dated June 01, 2006.
2 Sub-rules (6) and (7) substituted by SRO 516(I)/2006, dated June 01, 2006.
3
The words “Central Board of Revenue” substituted by the Finance Act, 2007
4 Sub-rule (8) inserted by SRO 498(I)/2015, dated July 24, 2015.
5
The word “Regional” substituted by SRO 1218(I)/2015 dated 08.12.2015.
6 Word and omitted by SRO 516(I)/2006, dated June 01, 2006.
Income Tax Rules, 2002 92
FURNISHING OF DOCUMENTS; SERVICE OF DOCUMENTS; FORMS
CHAPTER - XI
AND NOTICES
(b) in the case of a message sent to an electronic mail address, confirmation from the
server of the recipient that the message has been received 1[; and]
2
[(c) from the Board a digitally signed e-mail acknowledging the receipt of Electronic
Income Tax Return 3[or electronic withholding tax statement.].]
(4) In this rule-
(a) "document" means any notice, order or requisition under the Ordinance; and
(b) "electronic address" means a facsimile number or electronic mail address.
75. Forms and notices.-
Any order, notice, assessment, computation or other document required to be issued under the
Ordinance or these rules may be generated by computer and the order, notice, assessment,
4
computation or other document shall not require the signature of the [officer of Inland Revenue] whose
name and designation is specified thereon.
1 Substituted for full stop by SRO 516(I)/2006, dated June 01, 2006.
2 Clause "(c)" inserted by SRO 516(I)/2006, dated June 01, 2006.
3 Words inserted by SRO 392(I)/2009, dated May 19, 2009.
4 th
The words “taxation officer” substituted by the S.R.O. 754(I)/2016 dated 15 August, 2016.
Income Tax Rules, 2002 93
CHAPTER - XII APPEALS
CHAPTER XII
APPEALS
76. Prescribed form of appeal to the Commissioner (Appeals).- An appeal under section 127 shall be in the
following form and verified in the manner indicated therein, namely:-
Form of Appeal to the Commissioner (Appeals)
FORM OF APPEAL
APPEAL NO.____________
APPEAL DATE__________
(For office use only)
To
THE COMMISSIONER
(APPEALS) ZONE________
Amount of appeal fee paid Date of payment of appeal fee
Amount of tax demand based
Date of payment of
on return of income.
Amount of tax levied additionally whether requirement
of tax payment for filing of appeal met or not? Yes No
National Tax Number Of Appellant - -
1
[“or CNIC”]
Tax Year
Zone____________________ Circle_____________________
Jurisdiction________________
Name of Appellant
2
Appellants Status” Individual AOP Company [ ]
(Pl. encircle the appropriate box)
Address of Appellant
Name of Authorized
Representative (if any)
Status of Representative CA C&MA ADV ITP AR (Pl. encircle the appropriate box)
Address to which the
Notice may be sent
Name of the Commissioner
(who passed the order)
CIT Code
INCOME DECLARED ASSESSED
Signature of the official _____________________
Who received the appeal _____________________
1
Added by SRO 1218(I)/2015 dated 08.12.2015.
2
The entry “Any other for appeals for AY 2002-2003” omitted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 94
CHAPTER - XII APPEALS
Name ____________________________________
(in capital letter)
Designation _______________________________
TAX ASSESSED
a) Income tax General Guidelines1. Indicate the section
b) 1[“Default Surcharge”] and sub-section of the Income
Tax Ordinance under which appeal filed.
2. Where payment made on more than one
c) Penalty
date
2 please give details on a separate Sheet.
[ ]
3. AOP: Association of Persons
e) Others 4. CMA: Cost & Management Accountant.
5. ADV Advocate
(g) Total 6. AR: Authorized Representative
(i) Undisputed liability. This shall
not be less than the tax due on the
basis of return.
(j) 3[ ] Tax Demand 4[“u/s 137 (2)”]
5
[ ]
N.B. (i) The appeal should be filed in duplicate.
(ii) The appeal should be accompanied by the Notice of Demand and/or a copy of the
assessment appeal against, as the case may be.
GROUNDS OF APPEAL
(Attach separate sheets, if required)
1.
2.
3.
4.____________________________________________________________________________
BRIEF CLAIM IN APPEAL/ PAYER
VERIFICATION
1. I,__________________ S/o____________ the proprietor/partner/managing director/member of
M/s._______________ the appellant, do hereby declare that whatever is stated above is true to the best of my
knowledge and belief.
2. I am competent to file the appeal in my capacity as _______________________.
3. I further certify that a true copy of this form of appeal has been sent by Registered Post/ AD/
Courier service, or delivered to the concerned officer personally to the Commissioner/ Circle ________ Zone/
Jurisdiction _______ on _________ (date).
Signature of Appellant________________________
Name (in capital letters)________________________
NIC Number of person signing the appeal____________________
1
The words “Additional Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
2
Serial “d) Surcharge” omitted by SRO 1218(I)/2015 dated 08.12.2015.
3
The word “Disputed” omitted by SRO 1218(I)/2015 dated 08.12.2015.
4
Inserted by SRO 1218(I)/2015 dated 08.12.2015.
5 th
Serial (K) and (I) omitted by the S.R.O. 754(I)/2016 dated 15 August, 2016. Omitted serials read as under:-
“(k) Amount out of (j) paid ____________________
(l) Total amount of (i) and (k) paid ____________________”
Income Tax Rules, 2002 95
CHAPTER - XII APPEALS
The form of appeal and verification form appended thereto shall be signed:-
(a) in case of an individual by the individual himself
(b) in case of a company by the principal officer.
(c) In case of AOP by member/partner.-
______________________________________________________________________________
This portion is for official use
Appeal received by transfer Date appeal received In ward register No.
From Zone/Range by transfer
_____________________
Appeal transferred to Date of appeal Outward register No.
Zone/Range transferred out
_______________________
UDC/LDC/ Officer of Appeal Section _____________ CIT(Appeal) _______________
(Initial) (Initial)
APPEAL ACKNOWLEDGEMENT RECEIPT
Appeal Zone/ __________. ________________
City
National Tax No. Appeal No. ______________
Appellant” Name_____________________
Signature of Appellant Date of receipt of Signature, and name of receiving
Appeal Official
Designation_________________
Income Tax Rules, 2002 96
CHAPTER - XII APPEALS
77. Prescribed form for appeal to the Appellate Tribunal.-
An appeal under section 131 shall be in the following form and verified in the manner indicated therein,
namely:-
FORM OF APPEAL TO THE TRIBUNAL UNDER SECTION 131
OF THE INCOME TAX ORDINANCE, 2001
(RULE 77)
NO._________ OF 20____
APPELLANT Vs. RESPONDENT
1
[Inland Revenue Office] in which assessment
was made and one in which it is located
Tax year to which the appeal relates
Section of the Income Tax Ordinance, 2001
under which Commissioner passed the order
Commissioner (Appeals) passing the appellate
order
Date of communication of the order appealed
against
Address to which notices may be sent to the
appellant
Address to which notices may be sent to the
respondent
Claim in appeal
2
GROUNDS OF APPEAL
-- AS PER SEPARATE SHEET ATTACHED --
x
_______________________________
(Appellant)
_______________________________
(Authorised Representative, if any)
VERIFICATION
We _____________________________________, the appellant do hereby declare that what is
stated above is true to the best of our information and belief.
Verified today, the __________ day of ______________________, 20____.
x
______________________________
(Appellant)
1 th
The words “Income Tax Office” substituted by the S.R.O. 754(I)/2016 dated 15 August, 2016.
2 Substituted for "GROUND OF APPEAL" BY SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 97
CHAPTER - XII APPEALS
N.B.
1. The memorandum of appeal (including the Grounds of Appeal when filed on a separate paper)
must be in triplicate and should be accompanied by two copies (at least one of which should
be a certified copy) of the order appealed against and two copies of the order of the
Commissioner.
2. The memorandum of appeal in the case of an appeal by the taxpayer must be accompanied
by a fee. The appeal fee must be credited in the Treasury or a Branch of the National Bank of
Pakistan or the State Bank of Pakistan and the triplicate portion of the challan sent to the
Tribunal with the memorandum of appeal. The Appellate Tribunal will not accept cheques,
hundies or other negotiable instruments.
3. The memorandum of appeal should be set forth, concisely and under distinct heads, the
grounds of appeal without any argument or narrative and such grounds should be numbered
consecutively.
1
[78. Prescribed Form for reference to High Court. An application under sub-section (1) of section 133 to refer
to the High Court any question of law shall be in the following form, namely:-
FORM OF REFERENCE APPLICATION UNDER
SECTION 133 OF THE INCOME TAX ORDINANCE, 2001
Year _______
Before the High Court of _______________________.
Income Tax
Reference Application No.________ of 20
APPELLANT………………………………………………………………………………
VERSUS
RESPONDENT …………………………………………………………………………
Title and number of appeal which
gives rise to the reference ___________________________________
The applicant (s) state (s) as follows:-
1. That the appeal noted above was decided by the ____________ Bench of the Income Tax Appellate
Tribunal on ___________________
2. That the order under sub-section (3) of section 132 of the Income Tax Ordinance, 2001 was served on
the applicant on ________________
3. That the facts which are admitted and/or found by the Tribunal, the determination of the Tribunal and
the question(s) of law which arises out of its order have been truly stated in the attached statement of
the case.
4. That the following questions of law arise out of the order of the Tribunal:-
(1)
(2)
(3)
1 Rule 78 substituted by Notification No. 678(I)/2005, dated July 04, 2005.
Income Tax Rules, 2002 98
CHAPTER - XII APPEALS
5. That the following documents are attached with this application:
(1) Statement of the case signed by the Appellant.
(2) Certified copy of the order of the Appellate Tribunal from which the question(s) of law stated
above arises.
(3) First Appellate Order (by the Commissioner (Appeals).
(4) Original assessment or other order.
6. That other document (s) or copies thereof, as specified below (the translation in English of the
document, where necessary are annexed with the statement of the case.
________________________________
Signed
(Appellant)
________________________________
Signed
(Authorized Representative, if any)
N.B:- 1. The application must be made in triplicate.
2. The application made by taxpayer must be accompanied by a fee of one hundred rupees. The
fee be deposited in the Treasury or a Branch of the National Bank of Pakistan or the State Bank
of Pakistan alongwith the income tax challan (in quadruplicate) and one copy of the challan be
attached with the application.
Income Tax Rules, 2002 99
CHAPTER - XIII TAXPAYER’S REGISTRATION
CHAPTER - XIII
1
[TAXPAYER’S REGISTRATION]
2
[79. Application of Chapter.-
The rules in this Chapter apply for the purposes of section 181 which provides for registration of
taxpayers.]
3
[―80. Registration.-
(1) An individual having CNIC required to file return of total income manually shall be treated as
registered under sub-section (4) of section 181 on the day he files the return manually.
(2) An individual having CNIC required to e-file return of total income shall be treated as
registered, when the individual is e-enrolled.
(3) A company, an association of persons (AOP) or foreign national shall be treated as
registered when the company, AOP or the foreign national, is e-enrolled.
(4) An individual having CNIC who failed to file return, shall be registered by the Commissioner
having jurisdiction on the basis of CNIC or NICOP when he is satisfied after providing
opportunity to be heard that the income of the individual is taxable and is required to file
return of income.
(5) An individual not having CNIC and required to file return of total income manually shall be
registered in the same manner as specified in sub-rules (1) and (4), either on application by
the individual or if Commissioner is satisfied that income of individual is taxable after
providing opportunity to be heard.
(6) A company, an AOP or foreign national shall be treated as registered as per sub-rule (3), if
the Commissioner, having jurisdiction over the company, an AOP or foreign national, is
satisfied after providing opportunity to be heard that the company, the AOP or foreign
national requires registration.”]
1
[―80A e-enrolment.- Every individual, an AOP or a company required to e-file return of total income shall
submit form of e-enrolment as specified in Part IX of the First Schedule to these rules through Board‟s online
system.”]
1 Heading substituted for "NATIONAL TAX NUMBER CARD" by SRO 392(I)/2009, dated May 19, 2009.
2 Rule 79 substituted by SRO 392(I)/2009, dated May 19, 2009.
3
Rule 80 substituted by SRO 1076(I)/2015 dated 02.11.2015. the substituted Rule 80 read as follows:
80. Application for National Tax Number Certificate.-
(1) An application for a National Tax Number Certificate shall be in the form specified in 3[Part IX] of the First
Schedule to these rules and shall be accompanied by documentary evidence of the applicant's identity.
(2) The following shall be provided as documentary evidence of an applicant's identity-
(a) in the case of an individual-
(i) NIC or a current passport; or
(ii) other documents with photo-identification-driver's licence.
(b) in the case of a company other than a trust), the certificate of incorporation or registration of the
company;
(c) in the case of a trust, the trust deed;
(d) in the case of a firm, the instrument of partnership; or
3
[(e) in the case of an association of persons (other than a firm), the instrument of partnership or
copies of NICs of the members of the association of persons. Detail of non-resident members be
provided along with copies of their passports.]
(3) An application for a National Tax Number Certificate shall be lodged-
(a) by post or delivery by hand to the Commissioner having jurisdiction over the applicant; or
by inclusion with the applicant's first return of income or first employer's statement furnished in lieu of
a return of income.
Income Tax Rules, 2002 100
CHAPTER - XIII TAXPAYER’S REGISTRATION
2
[―80B Requirement of e-enrolment.-(1) An individual required to be registered under sub-rule (2) of rule 80
shall provide-
(a) number of CNIC,NICOP or Passport;
(b) cell phone number in his name ;
(c) e-mail address;
(d) nationality;
(e) residential address;
(f) accounting period;
(g) in case of business income,
(i) business name;
(ii) business address; and
(iii) principal business activity;
(h) name and NTN of employer in case of salary income;
(i) address of property in case of property income;
(2) A company and an AOP required to be registered under sub-rules (3) and (6) of rule 80 shall provide-
(a) name of company or AOP;
(b) business name;
(c) business address;
(d) accounting period;
(e) phone No of business;
(f) e-mail;
(g) cell phone of principal officer of the company or AOP;
(h) principal business activity;
(i) address of industrial establishment or principal place of business;
(j) company type, like public limited, private limited, unit trust, trust, NGO, society, small
company, modaraba or any other;
(k) date of registration;
(l) incorporation certificate by Securities and Exchange Commission of Pakistan (SECP) in
case of company;
(m) registration certificate and partnership deed in case of registered firm;
(n) partnership deed in case firm is not registered;
(o) trust deed in case of trust;
(p) registration certificate in case of society;
3
[ ]
(r) name of representative with his CNIC or NTN;
(s) following particulars of every director and major shareholder having 10% or more shares in
case of company or partners in case of an AOP, namely:-
(i) Name;
(ii)CNIC/NTN/Passport; and
(ii)Share % “]
4
[“(3) A non-resident company having permanent establishment in Pakistan, required to be registered
under sub-rules (3) and (6) of rule 80, shall provide –
(a) name of company;
(b) business address;
1
Rule 80A inserted by SRO 1076(I)/2015 dated 02.11.2015.
2
Rule 80B inserted by SRO 1076(I)/2015 dated 02.11.2015.
3
Clause (q) omitted by SRO 466(I)/2016 dated 31.05.2016. omitted clause read as follows:-
“(q) registration or incorporation from concerned country in case of non- resident company or AOP”
4
Added by SRO 466(I)/2016 dated 31.05.2016.
Income Tax Rules, 2002 101
CHAPTER - XIII TAXPAYER’S REGISTRATION
(c) accounting period;
(d) phone number of business;
(e) principal business activity;
(f) address of principal place of business;
(g) registration number and date of the branch with the Securities and Exchange Commission
of Pakistan (SECP);
(h) name and address of principal officer or authorized representative of the company;
(i) authority letter for appointment of principal officer or authorized representative of the
company;
(j) cell phone number of principal officer or authorized representative of the company; and
(k) email address of principal officer or authorized representative of the company.
(4) A non-resident company not having permanent establishment in Pakistan, required to be
registered under sub-rules (3) and (6) of rule 80, shall provide –
(a) name of company;
(b) business address in the foreign country;
(c) name and nationality of directors or trustees of the company;
(d) accounting period;
(e) name and address of authorized representative of the company;
(f) authority letter for appointment of authorized representative of the company.
(g) cell phone number of authorized representative of the company;
(h) email address of authorized representative of the company;
(i) principal business activity; and
(j) tax registration or incorporation document from concerned regulatory authorities of the
foreign country.”]
1
[―81. Decision on application of registration or e-enrolment.
(1) The Commissioner may, where a person has filed a form of registration or e-enrolment under
rule 80 or 80A, after examining available information, particulars, data or documents and
making such inquiry as he may deem necessary, grant registration or e-enrolment to the
person or after recording reasons, refuse registration or e-enrolment to the person within
fifteen days of filing of form of registration or e-enrolment.
(2) Person aggrieved by any decision of the Commissioner under sub-rule (1) may file
representation before the concerned Chief Commissioner within thirty days of the said
decision. The Chief Commissioner after making such inquiry if necessary shall decide the
representation as he deems fit.”]
2
[81A. Taxpayer’s registration by the Commissioner.-
(1) The Commissioner having jurisdiction over a case may register a person as a taxpayer
where he is satisfied that the income of the person is taxable and is required to file a return
of income under section 114.
(2) The Commissioner shall issue to the taxpayer a letter under sub-section(2) of section 181
to submit an application for registration prescribed under rule 80 along with documents
specified therein within a reasonable time given in the said letter. In case of compliance
NTN certificate shall be issued accordingly.
(3) In case of failure of the taxpayer to comply with the letter issued under sub-section (2) of
section 181, the Commissioner shall register the taxpayer on a Trial Registration Number
1
Rule 81 substituted by SRO 1076(I)/2015 dated 02.11.205. The substituted Rule 81 read as follows:
81. Decision on application for a National Tax Number Certificate.-
(1) The Commissioner shall make a decision on an application for a National Tax Number 1[Certificate] within
fifteen days of the application being properly lodged.
(2) Where the Commissioner decides not to grant a National Tax Number 1[Certificate], the Commissioner shall
give the applicant notice in writing of the decision and the reasons for the decision.
2 Rule 81A inserted by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 102
CHAPTER - XIII TAXPAYER’S REGISTRATION
(TRN) for which a serially numbered Trial Register shall be maintained by the
Commissioner. The Trial Register shall contain the basic information of the taxpayer like
name of the person or business, available address, CNIC 1[“if provided”], nature of
income generating activity and any other information regarded useful by the
Commissioner. In such case, statutory notices shall be issued for assessment of income
or other legal obligation of the taxpayer under the Ordinance on TR Number:
Provided that before allotment of Trial Registration Number the Commissioner shall verify
and match the particulars of the taxpayer from the NTN Master Index to avoid duplication of
registration.
(4) In case any assessment is made or any liability is created by the Commissioner under the
Income Tax Ordinance, 2001 against the taxpayer, the Commissioner on the basis of
information as contained in Trial Register, allot an NTN to the taxpayer within fifteen
days of the date of completion of assessment or creation of a liability under the
Ordinance.]
2
[81B. Active Taxpayers List.-
(1) This rule shall apply for the purposes of clauses (23A) and (35C) of section 2 and section
181A.
(2) The Board shall publish Active Taxpayers List, hereinafter referred to as ATL,
comprising persons who meet the criteria as laid down under sub-rule (4) and shall be
made available on the Board's web portal, by first day of March in each financial year:
Provided that for financial year 2014-15, Active Taxpayers List shall be published and made
available on the Board's web portal, by first day of July, 20143[:]
4
[Provided further that for financial year 2014-15, Active Taxpayers List shall be published
and made available at Board's web portal by the 11th April, 2015.]
1 th
Inserted by the SRO 30(I)/2017 dated 18 January, 2017.
2 Rule 81B substituted by SRO 765(I)/2014, dated August 26, 2014. Earlier it was inserted by SRO 328(I)/2011, dated April
27, 2011.
3 Colon substituted for full stop by SRO 267(I)/2015, dated April 02, 2015.
4 Proviso inserted by SRO 267(I)/2015, dated April 02, 2015.
Income Tax Rules, 2002 103
CHAPTER - XIII TAXPAYER’S REGISTRATION
(3) ATL published in any financial year shall be valid for the period beginning on the date
of publish and ending on last day of February, next following 1[:]
2
[Provided that Active Taxpayers List published during financial year 2013-14, shall be
valid upto the 10th April, 2015.]
(4) ATL shall be updated on 3[every Sunday at 24:00 hours], hereinafter referred to as
updation date.
(5) A person's name shall be included in ATL, if the person has filed a return under
section 114 or a statement under section 115 for the tax year for which the last date as
specified in section 118 falls during immediately preceding twelve month4[:]
5
[Provided that name of a company or an AOP in whose case return is not due to be filed
because of incorporation or formation after 30th day of June relevant to the tax year
referred above, shall be included in Active Taxpayers List.]
(6) In case a joint account is held in a bank by more than one person, the joint account
holders as an entity shall be deemed to have met the criteria as laid down under sub-rule
(5), if any of the persons in the joint account meets the criteria as laid down under the said
sub-rule (5).
(7) In case an account is held in a bank in the name of a minor, the minor shall be
deemed to have met the criteria as laid down under sub-rule (5), if the parent, guardian or
any person who has made deposits in the minor's account meet the criteria as laid down
under said sub-rule (5).
(8) A person's name shall be included in ATL on the: immediately following updation date, if
at any time the criteria as laid down under sub-rule (5), is fulfilled by that person.]
6
[81C. Taxpayer Card.-
(1) This rule shall apply for the purposes of clauses (23A) and (35C) of section 2.
(2) Subject to sub-rule (5), the Board may issue Taxpayer Card by first of March, each year,
to a person who meets the criteria as laid down in sub-rule (3):
Provided that for the returns filed after the 31st of December. Taxpayer card shall be
issued within sixty days of the filing of Return.
(3) A person shall be issued Taxpayer Card, if the person has filed a return under section 114
or a statement under section 115 for the tax year for which the last date as specified in
section 118 falls during immediately preceding twelve months.
(4) Taxpayer Card shall be valid for one year, beginning on the date of issue and ending on
last day of February of the following year:
Provided that Taxpayers Cards issued in respect of tax year 2013, shall be valid upto 28th
day of February, 2015.
(5) The Board may authorize National Database and Registration Authority (NADRA), for the
purpose of printing and issuing taxpayers cards.]
1 Colon substituted for full stop by SRO 267(I)/2015, dated April 02, 2015.
2 Proviso inserted by SRO 267(I)/2015, dated April 02, 2015.
3 Substituted for “fifteenth day of every month” by SRO 831(I)/2015, dated August 21, 2015.
4 Substituted for full stop by SRO 831(I)/2015, dated August 21, 2015.
5 Proviso inserted by SRO 831(I)/2015, dated August 21, 2015.
6 Rule 81C inserted by SRO 765(I)/2014, dated August 26, 2014.
Income Tax Rules, 2002 104
CHAPTER - XIII TAXPAYER’S REGISTRATION
1
[―82. Modification or cancellation of registration.-
(1) A person, who after being registered under rule 80 or e-enrolled under rule 80A discovers
any omission or wrong statement therein, or notices subsequent occurrence of any change in any
information, particulars, data or documents already filed, may, without prejudice to any liability incurred
by him under any provision of the Ordinance, file a form of modification as specified in Part IX of the
First Schedule to these rules.
(2) The Commissioner may, where a person has filed a form of modification of registration
under sub-rule (1), after examining available information, particulars, data or documents and making
such inquiry as he may deem necessary, grant or refuse modification to the person.
(3) Person aggrieved by any decision of the Commissioner under sub-rule (2) may file
representation before the concerned Chief Commissioner within thirty days of the said decision. The
Chief Commissioner after making such inquiry if necessary shall decide the representation as he
deems fit.
(4) The Commissioner may, after examining available information, particulars, data or
documents, making such inquiry as he may deem necessary and providing reasonable opportunity of
being heard to a person, make modifications in registration of a person.
(5) The Commissioner may, based on available information, particulars, data or documents, after
making such inquiry as he may deem necessary, after discharge of all outstanding liabilities, without
prejudice to any other liability which such person may incur under the Ordinance and after providing
reasonable opportunity of being heard to a person, by an order in writing, cancel registration of a
taxpayer.”]
83. Displaying and quoting of National Tax Number 2[Certificate].-
(1) Every person deriving income from business chargeable to tax who has been issued with a
National Tax Number 3[Certificate] shall display the person's National Tax Number at a
conspicuous place at every place of business of the person.
(2) Every person referred to in sub-rule (1) shall quote the person's National Tax Number in the
following circumstances, namely:-
(a) in all commercial transactions entered into by the person;
(b) in cash memos issued under rule 30;
(c) in all returns, statements and other documents required to be furnished under the
Ordinance and in any correspondence with the Commissioner; and
(d) in all documents relating to the person's business on the following matters, namely:-
(i) all new connections of utilities, including water, gas, electricity and
1
Substituted by SRO 1076(I)/2015 dated 02.11.2015. The substituted Rule 82 read as follows:
―82. Cancellation of National Tax Number Certificate.-
(1) Where the Commissioner decides that a National Tax Number Certificate was issued to a person under an
identity that was not the person's true identity, the Commissioner may, by notice in writing served on the
person, cancel the Certificate.
(2) The Commissioner shall set out in the notice the reasons for the Commissioner‟s decision to cancel the
Certificate.
2
Words substituted by SRO 392(I)/2009, dated May 19, 2009.
3
Words subsituted by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 105
CHAPTER - XIII TAXPAYER’S REGISTRATION
telephone;
(ii) the entering into a loan with a banking company or financial institution;
(iii) the opening of letters of credit; and
(iv) the transfer of urban immovable property.
Income Tax Rules, 2002 106
CHAPTER - XIV REGISTRATION OF INCOME TAX PRACTITIONERS
CHAPTER - XIV
REGISTRATION OF INCOME TAX PRACTITIONERS
84. Application of Chapter XIV.-
This chapter applies for the purposes of section 223, which provides for the registration and regulation
of income tax practitioners.
85. Application for registration as an income tax practitioner.-
(1) A person satisfying the requirements in rule 86 and desiring to be registered as an income tax
practitioner shall make an application 1[to the 2[“Chief Commissioner”], Regional Tax Office] in
the form specified in Part X of the First Schedule to these rules.
(2) Every application under this rule shall be accompanied by-
(a) Treasury receipt for five hundred rupees required to be deposited as a non-
refundable application fee in any Government Treasury; and
(b) such documents, statements and certificates as specified in the form.
86. Prescribed qualification for registration as an income tax practitioner.-
(1) For the purposes of the definition of "income tax practitioner" in sub-section (11) of section
223, a person applying for registration as an income tax practitioner shall:-
(a) possess one of the following qualifications, namely:-
(i) a degree in Law at least in the second division, a degree in Commerce (with
Income Tax Law and Accounting or Higher Auditing as subjects or parts of
subjects, whether compulsory or optional) or a degree in Business
Administration or Business Management (with Accounting and Income Tax
Law as subjects or parts of subjects, whether compulsory or optional)
conferred by a prescribed institution; or
(ii) a pass in a prescribed accounting examination.
(b) have worked for a continuous period of one year as an apprentice under the
supervision of a chartered accountant, cost and management accountant, legal
practitioners entitled to practice in a civil court in Pakistan 3[or] a registered income
tax practitioner 4[and having been registered as a chartered accountant, cost and
management accountant, legal practitioner and income tax practitioner] for a period of
not less than ten years.
(2) For the purposes of sub-clause (i) of clause (a) of sub-rule (1), a degree conferred by a
prescribed institution that is a foreign university or institution shall only qualify if the degree is
equivalent to a degree conferred by a Pakistani university and is recognized as such by a
Pakistani university.
(3) In this rule,-
(a) "Institute of Chartered Accountants of Pakistan" means the Institute of Chartered
Accountants of Pakistan constituted under the Chartered Accountants Ordinance,
1961;
1 Words inserted by SRO 392(I)/2009, dated May 19, 2009.
2
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
3 Substituted for ",and" by SRO 67(I)/2003, dated January 11, 2003.
4 Substituted for "registered" by SRO 67(I)/2003, dated January 11, 2003.
Income Tax Rules, 2002 107
CHAPTER - XIV REGISTRATION OF INCOME TAX PRACTITIONERS
(b) "foreign institution" means any institution in a foreign country authorised to grant a
degree under the laws of the country;
(c) "foreign university" means any university in a foreign country incorporated by law, or
accredited or affiliated by any association of universities or college in the country or
by any authority formed for that purpose under the laws of that country;
(d) "prescribed accounting examination" means any of the following examinations,
namely:-
(i) an examination equivalent to the intermediate examination conducted by the
Institute of Chartered accountants of Pakistan;
(ii) an examination equivalent to the intermediate examination conducted by any
foreign institute of chartered accountants and recognized by the Institute of
Chartered Accountants of Pakistan as equivalent to its intermediate
certificate;
(iii) an examination equivalent 1[to] the final examination conducted by the
Association of 2[Chartered Certified Accountants, United Kingdom;] or
(iv) Part-III of examination for Cost and Management Accountants conducted by
the Institute of Cost and Management Accountants under the Cost and
Management Accountants Act, 1966 (XIV of 1966); and
(v) Certified public accountants of USA.
(e) "Prescribed institution" means a university incorporated by any law in force in
Pakistan or Azad Kashmir, a foreign university or a foreign institution.
87. Registration of income tax practitioners.-
(1) On receipt of an application under rule 85, the 3[ 4[“Chief Commissioner”], Regional Tax Office]
may make such further enquiries and call for such further information or evidence as may be
considered necessary.
(2) If the 3[ 5[“Chief Commissioner”], Regional Tax Office] is satisfied that an applicant qualifies to
be registered as an income tax practitioner, the 3[ 6[“Chief Commissioner”], Regional Tax
Office] shall cause the applicant's name to be entered in a register to be maintained for the
purpose in the office.
(3) The name of a person entered on the register of income tax practitioners shall be notified to
the Commissioner and the Appellate Tribunal.
(4) The 3[ 7[“Chief Commissioner”], Regional Tax Office] shall notify 'the applicant, in writing, of the
decision on the application.
(5) Where the 8[ 9[“Chief Commissioner”], Regional Tax Office] decides to refuse an application for
registration, the notice referred to in sub-rule (4) shall include a statement of reasons for the
refusal.
88. Duration of registration.-
1 Words inserted by SRO 392(I)/2009, dated May 19, 2009.
2 Substituted for "Certified and Corporate Accountants, London;" by SRO 392(I)/2009, dated May 19, 2009.
3 Substituted for "Regional Commissioner" By SRO 392(I)/2009, dated May 19, 2009.
4
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
5
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
6
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
7
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
8 Substituted for "RCIT" by SRO 392(I)/2009, dated May 19, 2009.
9
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 108
CHAPTER - XIV REGISTRATION OF INCOME TAX PRACTITIONERS
Registration of a person as an Income Tax Practitioner shall remain in force until any of the following
occurs, namely:-
(a) the person surrenders the registration by notice in writing to the 1[ 2[“Chief Commissioner”],
Regional Tax Office].
(b) the person dies; or
(c) the person's registration is terminated by the 1[ 3[“Chief Commissioner”], Regional Tax Office].
89. Cancellation of registration.-
(1) Any person (including an income tax authority) who considers that an income tax practitioner is
guilty of misconduct in a professional capacity may file a complaint in writing with the 4[ 5[“Chief
Commissioner”], Regional Tax Office].
(2) A complaint filed under sub-rule (1) shall be accompanied by affidavits and other documents
as necessary to sustain the complaint.
(3) On receipt of a complaint in writing under sub-rule (1), the 2[6[“Chief Commissioner”], Regional
Tax Office] shall fix a date, hour and place which shall be no later than twenty one days from
the receipt of the complaint for enquiry into the complaint.
(4) Within seven days of receipt of the complaint, the 2[7[“Chief Commissioner”], Regional Tax
Office] shall serve a notice of the complaint on the Income Tax Practitioner to whom the
complaint relates and such notice shall-
(a) in form the practitioner of the date, hour and place of the enquiry; and
(b) be accompanied by a copy of the complaint and any affidavits and other
documents accompanying the complaint.
(5) If, at the date fixed for enquiry, it appears that the notice and accompanying documents
referred to in sub-rule (4) have not been served as provided for in that sub-rule, the 2[8[“Chief
Commissioner”], Regional Tax Office] shall adjourn the enquiry to a date then to be fixed and
may direct that the notice and accompanying documents shall be served by registered post or
such other means as the 2[9[“Chief Commissioner”], Regional Tax Office] sees fit.
(6) Not less than two days before the date or adjourned date fixed for the enquiry, the
income tax practitioner concerned shall file with the 2[10[“Chief Commissioner”], Regional
Tax Office] a signed explanation in writing and any affidavit in reply intended to be used in
the enquiry.
(7) On the date or adjourned date of the enquiry, the complainant shall file any affidavits in
reply intended to be used at the enquiry.
(8) The 2[11[“Chief Commissioner”], Regional Tax Office] may adjourn the enquiry from time to
time to a date and place to be fixed at the time of adjournment and may make such
orders and give such directions in regard to the enquiry and all matters relating thereto
1 Substituted for "Regional Commissioner of Income Tax" by SRO 392(I)/2009 dated May 19, 2009.
2
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
3
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
4 Substituted for "Commissioner" by SRO 392(I)/2009 dated May 19, 2009.
5
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
6
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
7
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
8
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
9
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
10
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
11
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 109
CHAPTER - XIV REGISTRATION OF INCOME TAX PRACTITIONERS
as the 2[1[“Chief Commissioner”], Regional Tax Office] may think fit.
(9) On the date or adjourned date fixed for the enquiry, the 2[2[“Chief Commissioner”], Regional
Tax Office] may-
(a) hear and determine the complaint upon the affidavit and other documents, if any,
filed and may allow the complainant and income tax practitioner to be cross-
examined on their affidavits; or
(b) hear and determine the complaint upon oral evidence.
(10) If the 3[“Chief Commissioner”], Regional Tax Office decides to hear oral evidence, the
procedure generally and as far as practicable shall be that which is followed at the hearing
of suits by Civil Courts, provided that the record of oral evidence shall be kept in such
manner as the 4[ 5[“Chief Commissioner”], Regional Tax Office] may direct and, if a
shorthand writer is employed to take down evidence, the transcript of the writer's notes
shall be a record of deposition of the witnesses.
(11) If the 1[6[“Chief Commissioner”], Regional Tax Office] decides that the income tax
practitioner to whom the complaint relates is guilty of professional misconduct, the
7
[“Chief Commissioner”], Regional Tax Office shall cancel the practitioner's registration.
(12) The 1[8[“Chief Commissioner”], Regional Tax Office] shall give the complainant and the
income tax practitioner to whom the complaint relates notice, in writing, of the 9[“Chief
Commissioner”], Regional Tax Office's decision on the complaint.
10
[90. Appeal to Federal Board of Revenue.-
(1) The appeal against the decision of the 11[“Chief Commissioner”], Regional Tax Office shall
lie with the Federal Board of Revenue. However, the FBR on filing of an appeal may,
pending decision of appeal, allow the ITP to represent cases pending, before decision is
made by the 12[“Chief Commissioner”].
(2) The FBR shall decide the case of the ITP within sixty days of the filing of the appeal.]
1
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
2
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
3
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
4 Substituted for "Commissioner" by SRO 392(I)/2009 dated May 19, 2009.
5
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
6
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
7
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
8
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
9
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
10 Rule 90 substituted by SRO 392(I)/2009, dated May 19, 2009.
11
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
12
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 110
RECOGNISED PROVIDENT FUNDS, APPROVED SUPERANNUATION
CHAPTER – XV
FUNDS AND APPROVED GRATUITY FUNDS
CHAPTER - XV
RECOGNISED PROVIDENT FUNDS, APPROVED SUPERANNUATION FUNDS
AND APPROVED GRATUITY FUNDS
PART I
RECOGNISED PROVIDENT FUNDS
91. Application for recognition of provident fund.-
1. An application for recognition of a provident fund shall be made, in writing, by the employer
maintaining the fund, setting out the following information, namely:-
(a) the employer's name and the address of the employer's principal place of business;
(b) the name of all employees, whether in or outside Pakistan subscribing to the fund;
(c) the place where the accounts of the fund are or will be maintained; and
(d) where the fund is already in existence, a copy of the last balance sheet of the fund
and details of the investments of the fund.
2. A verification in the following form shall be annexed to the application, namely:-
"We/ I, the trustee(s) of the above named fund, do declare that what is stated in the
above application is true to the best of our/my information and belief, and that the
documents sent herewith are the originals or true copies thereof."
3. Subject to sub-rule (4), the application shall be accompanied by the following documents,
namely:-
(a) the original of trust deed to be sighted by the Commissioner;
(b) a copy of the trust deed to be retained by the Commissioner; and
(c) the rules of the fund.
Provided that if the original of the trust deed cannot conveniently be produced, the
Commissioner may accept, in lieu of the original, a true copy certified either by a Magistrate or
in any manner provided for in the Companies Rules, 1984, in which case, an additional copy
shall be furnished for retention by the Commissioner.
4. The application shall be lodged with the Commissioner responsible for the area/ jurisdiction in
which the accounts of the fund are kept, or, if the accounts are kept outside Pakistan, lodged
with the Commissioner responsible for the area/ jurisdiction in which the local headquarters for
the employer are situated.
92. Decision on application.-
(1) The Commissioner may make such enquiries and call for such further information or evidence
as the Commissioner may consider necessary to decide the application.
(2) The Commissioner shall notify the applicant, in writing, of the Commissioner's decision on the
application.
(3) Where the Commissioner decides to refuse an application under 1[this] rule, the notice referred
to in sub-rule (2) shall include a statement of reasons for the refusal.
1 Inserted by SRO 392(I)/2009, dated May 19, 2009.
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1
(4) [Unless” otherwise specified by the Commissioner], an order according recognition to a
provident fund shall take effect from the last day of the month in which the application for
recognition is received by the Commissioner or, at the request of the employer, the last day of
any later month in the same financial year.
93. Withdrawal of recognition.-
Where the Commissioner decides to withdraw recognition of a provident fund, the Commissioner shall
notify the applicant, in writing, of the Commissioner's decision and such notice shall include a
statement of reasons for the withdrawal.
94. Form of appeal in case of non-recognition or withdrawal of recognition.-
(1) An appeal under sub-rule (1) of rule 12 of Part I of the Sixth Schedule to the Ordinance
2
[against] the Commissioner's decision to refuse an application for recognition or to withdraw
recognition shall be 1[made to Federal Board of Revenue] in the following form 1[and] shall be
verified in the manner indicated therein, namely:-
FORM OF APPEAL IN CASE OF
NON-RECOGNITION OR "WITHDRAWAL OF RECOGNITION
To
The 3Federal Board of Revenue,
Islamabad/Before the Commissioner (Appeals)
The petition of _____________________________ employer(s) carrying on business,
profession or vocation _______________________ at _______________________
Your petitioner(s) applied to/obtained sanction from the Commissioner under Part I of the Sixth
Schedule to the Income Tax Ordinance, 2001 for the recognition of the provident fund
maintained by him (them) for the benefit of his (their) employees. The Commissioner has
refused recognition/withdrawn recognition for the reason stated in his order, dated of which a
copy is attached.
For the reasons set out below your petitioner(s) submit(s) that the fund should be contained to
be recognized and pray(s) that the 4Federal Board of Revenue may be pleased to.
Accord recognition
Continue the recognition.
GROUND(s) OF APPEAL
__________________________________________________________________________
(1)
(2)
(3)
(4)
(5)
1 Substituted for "Subject to sub-rule (5)" by SRO 392(I)/2009, dated May 19, 2009.
2 Substituted for "to" by SRO 392(I)/2009, dated May 19, 2009.
3
The words “Central Board of Revenue” substituted by the Finance Act, 2007
4
The words “Central Board of Revenue” substituted by the Finance Act, 2007
Income Tax Rules, 2002 112
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__________________________________________________________________________
I/ We named above petition to declare that whatever is stated above is true to the best of our
information and belief.
Name ____________________
Signature ____________________
Address ____________________
Date ____________________
(2) An appeal referred to in sub-rule (1) shall be accompanied by a copy of a challan for Rs.100/-
paid in Government treasury.
95. Accounts required to be maintained by a recognized provident fund.-
(1) A recognized provident fund shall prepare accounts at intervals of not more than twelve
months.
(2) An account shall be maintained for each subscriber to the fund and it shall include the
particulars shown in the following form, namely:-
Account closed.
Date
Paid to employee
Lapsed to the employer
Or to fund
Recovery by employer
Name _______________________ Date of joining Fund _______________________
Annex
Contribution by the Employer
Total Interest on the
Month and By Of contingent Total in amount shown in
year Salary employees Normal nature columns 3,4,5 column 6
I 2 3 4 5 6 7
Balance brought forward
July ____________________
August ____________________
June ____________________
Total: ____________________
Exempt Not exempt
Employer‟s Interest on sum in Contribution Interest Additions to
contribution not Column 6 at % but Column Column 7 total income
exceeding not exceeding 4+5 minus minus 10 plus
statutory limit statutory limit Column 8 Column 9 Column 11 Remarks
8 9 10 11 12 13
Adjustment on account of temporary
Income Tax Rules, 2002 113
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Withdrawals account (Column 8 and 9 only).
Adjustment on account of non-payable
Withdrawals account Columns 10 and 11.
Total carried over.
If desired column 7 may be divided into sub-columns showing separately the interest on
columns and columns 4 and 5 respectively.
Non-payable withdrawals Account Temporary withdrawal Account
Amount Advance Repayment
July Balance brought
Forward __________________
July __________________
August August __________________
June June __________________
Total ____________________
(3) The trustees of a recognised provident fund shall furnish to the Commissioner an abstract for
the fund's accounting period of the individual account of each employee participating in the
fund whose income under the head "Salary" is Rs.24,000 or more per annum.
(4) The abstract shall-
(a) be in the form prescribed in sub-rule (2), but shall show only the total of the various
columns thereof for fund's accounting period; and
(b) include an account of any temporary withdrawals by the employees during the year
and of the repayment thereof.
(5) The abstract shall be furnished by the trustees to the Commissioner responsible for the area in
which the accounts of the fund are kept or to such jurisdiction or functional Division as the
Commissioner may, in each case, direct.
(6) Subject to rule, the abstract shall be furnished-
(a) in the case of a company, on or before the first day of August next following the fund's
accounting period or within fifteen days of the expiry of six months from the end of the
fund's accounting period, whichever is later; and
(b) in any other case-
(i) where the fund's accounting period ends at any time between the first day of
July and the thirty-first day of December (both days inclusive), on or before
the first day of August next following; or
(ii) in any other case, on or before the first day of October next following the end
of the fund's accounting period.
(7) The account to be made under the provisions of sub-rule (1) of rule 7 of Part I of the Sixth
Schedule to the Ordinance shall show in respect of each employee-
(a) the total salary paid to the employee during the period of participation in the provident
fund;
(b) the total contributions made by, or in respect of, the employee;
(c) the total interest which has accrued thereon; and
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(d) so far as may be, the percentage of the employee's salary in accordance with which
contributions have been made by the employer and the employee.
96. Time limit for submission of accounts kept outside Pakistan.-
(1) Where the accounts of a recognized provident fund are kept outside Pakistan, certified copies
of the accounts shall be supplied not later than the 15th September in each year to a local
representative of the employer in Pakistan.
(2) The Commissioner may, upon application in writing, fix a date later than the 15th September
as the date by which the certified copies shall be supplied.
97. Limit on contribution by employers.-
The Commissioner may relax the limits fixed under clause (c) of sub-rule (1) of rule 2 of Part I of the
Sixth Schedule to the Ordinance for contribution of an employer to the individual account of an
employee in any year provided that such contribution shall not exceed the following limits, namely:-
(a) the employer's aggregate contribution in any year including the normal contribution to the
individual account of any one employee 1[ ] shall not exceed double the amount of the
contribution of the employee in that year; and
(b) the amount of the periodical bonuses and other contribution of a contingent nature which may
be credited by an employer in any year to the individual account of anyone employee shall not
exceed the amount of the contribution of the employee in that year.
98. Limit on contributions by certain employees.-
Where an employee of a company owns shares in the company with a voting power exceeding ten
percent of the whole of such power, the sum of the exempted contributions of the employee and
employer to the recognized provident fund maintained by the company shall not exceed Rs.1,000 in
any month.
99. Exclusion from total income of accumulated balances.-
For the purpose of rule 4 of Part I of the Sixth Schedule to the Ordinance, the accumulated balance
due and becoming payable to an employee participating in a recognized provident fund shall be
exempt from income tax and shall be excluded from the computation of total income.
100. Treatment of consideration for dealings with beneficial interest.-
If an employee assigns or creates a charge upon his beneficial interest in a recognized provident fund,
the Commissioner shall, on the fact of the assignment or charge coming to his knowledge, give notice
to the employee that if he does not secure the cancellation of the assignment or charge within two
months of the date of receipt of the notice, the consideration received for such assignment or charge
shall be treated as salary received by him in the year in which the fact became known to the
Commissioner and shall be assessed accordingly.
101. Treatment in certain cases where recognition is withdrawn.-
If the Commissioner withdraws recognition from a recognized provident fund, the balance to the credit
of each employee at the end of the financial year prior to the date of the withdrawal of recognition shall
be paid to the employee free of tax at the time when such employee receives the accumulated balance
due to him and the remainder of the accumulated balance due to him shall be liable to tax as if the fund
1 Commas, words etc. "whose salary does not exceed Rs. 1000 per month," omitted by SRO 392(I)/2009, dated May 19,
2009.
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had never been recognized.
102. Investment of moneys of a recognized provident fund.-
(1) Where the employer is not company as defined in clause (7) of section 2 of the Companies
Ordinance, 1984, the contributions made by employees after the date of recognition of a
provident fund and the interest on the accumulated balance of such contribution shall be
wholly invested either in securities of the nature specified in clause (2)(b), (c), (d) or (e) of
section 20 of the Trusts Act, 1882, and payable both in respect of capital and interest in
Pakistan or in a Post Office Savings Bank Account in Pakistan or deposited in National
Savings, Federal Government securities or deposits in NCBs or NBP, or, in the other
government securities or any other established financial institutions including mutual funds
subject to maximum of 20% of such deposits or investment at any time in the year.
(2) Where the employer is a company as defined in clause (7) of section 2 of the Companies
Ordinance, 1984, all moneys contributed to a provident fund (whether by the company or by
the employees or accruing by way of interest or otherwise to such fund) shall be wholly
invested in accordance with the provisions of section 227 of the Companies Ordinance, 1984,
or deposited or invested as in sub-rule (1) or with the prior approval of the Commissioner, in
purchase of shares of a public limited company offered for sale inviting public offer by the
Federal Government so, however, that the securities and deposits in which the contributions
made by the employees after the date of recognition of a provident fund and the interest on
the accumulated balance on such contributions are invested or deposited are payable in
respect of capital, deposit and interest in Pakistan.
103. Permitted withdrawals.-
(1) Subject to these rules, withdrawals by employees from accumulated balance may be allowed
by the trustees of a recognized provident fund in the following circumstances, namely:-
(a) to pay expenses in connection with the illness of a subscriber or a member of his
family;
1
[(aa) to transfer the balance or a part thereof to an approved pension fund, established
under Voluntary Pension System Rules, 2005]
(b) to meet the expenditure on purchase of a motor cycle or scooter provided
that authenticated copies of documents substantiating such purchase are
deposited with the trustees of the fund;
(c) to pay the overseas passage by reason of health or education of a subscriber
or a member of his family;
(d) to pay expenses in connection with marriages, funerals or ceremonies, which, by
the religion of the subscriber, it is incumbent upon him to perform and in
connection with which it is obligatory that expenditure should be incurred;
(e) to pay expenses in connection with the performance of Haj by the subscriber;
(f) to meet the expenditure on building or purchasing a house or a site for a house,
provided that the documents substantiating the building or purchase of such
house, or the purchase of such site, are deposited with the trustees of the fund;
(g) to meet the expenditure on repairs, renovation or extension of a residential
house belonging to the subscriber;
(h) to pay premiums on policies of insurance on the life of the subscriber or of his
wife provided that the policy is assigned to the trustees of the fund or at their
1 Clause "(aa)" inserted by SRO 815(I)/2008, dated August 01, 2008.
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discretion deposited with them and that the receipt granted by the insurance
company for the premiums is from time to time handed over to the trustees
for inspection by the Commissioner;
(i) to purchase shares of a public limited company for investment as per rules of
this Chapter;
(j) in the case of a subscriber who has attained the age of fifty years on the date on
which withdrawal is permitted-
(i) subject to sub-rule (2), to meet the expenditure on the purchase of a
house or construction of a house on land owned by him or a member
of his family anywhere in Pakistan;
(ii) subject to sub-rule (3), to meet expenditure on the purchase of
agricultural land from Government;
(iii) to repay a loan taken from a financial institution, provided that the
subscriber shall, within a period of two weeks from the date of
withdrawal produce satisfactory evidence before the trustees to show
that the advance has been utilized for the purpose for which it was drawn
failing which the entire amount of withdrawal together with interest
accrued thereon shall forth with become repayable to the fund in a lump-
sum; and
(iv) without assigning any reason; or
(k) in the case of an employee proceeding on leave preparatory to retirement, at the
discretion of the trustees of the fees, without assigning any reason, provided
that where an employee rejoins duty on the expiry of his leave, the amount
withdrawn together with the interest accruing thereon at the rate allowed by the
fund shall be repaid forthwith in to the fund in a lump-sum.
(2) The first installment of a withdrawal under sub-clause (i) or clause (j) of sub-rule (1) shall
be allowed to be drawn only after an agreement has been executed between the
subscriber and the trustees of the fund to the effect that the subscriber shall expend
the full amount of the said advance towards the purchase or the building of a houses as
claimed at the earliest possible opportunity and if the actual amount so expended is less
than the amount of permitted withdrawal the subscriber shall repay the difference into the
fund forthwith and further that if the said house is sold or otherwise alienated by its owner
to any other person while the subscriber is still in service, the subscriber shall forthwith
repay into the fund the entire amount of the withdrawal together with interest accrued
thereon in lump-sum.
(3) The first installment of a withdrawal under sub-clause (ii) of clause (j) of sub-rule (1) shall be
allowed to be drawn only after an agreement has been executed between the subscriber and
the trustees of the fund to the effect that the subscriber shall expend the full amount of the
said advance towards the purchase of the said piece of land at the earliest possible
opportunity and if the actual amount so expended is less than the amount of permitted
withdrawal the subscriber shall repay the difference into the fund forthwith and further that if
the said house is sold or otherwise alienated by its owner to any other person while the
subscriber is still in service, the subscriber shall forthwith repay into the fund the entire amount
of the withdrawal together with interest accrued thereon in lump-sum.
104. Limits on Withdrawals.-
(1) Withdrawals permitted under these rules shall not exceed the following limits, namely:-
(a) in the case of withdrawals permitted under clauses (a), (b), (c) or (d) of sub-rule (1) of
rule 103, six months‟ salary of the subscriber or the total of accumulated balance to
his credit, whichever is the less;
Income Tax Rules, 2002 117
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1
[(aa) in the case of withdrawals permitted under clause (aa) of sub-rule (1) of rule 103, the
accumulated balance to the credit of subscriber;]
(b) in the case of withdrawals permitted 2[under clause (e) of sub-rule (1) of rule 103], six
months salary of the subscriber or twenty five thousand rupees or/ of the total of the
accumulated balance to his credit, whichever is the lowest;
(c) in the case of withdrawals permitted under clause (f) or (g) of sub-rule (1) of rule
3
[103], thirty-six month‟s salary of the subscriber or the total of the accumulated
balance to his credit, whichever is the less;
(d) in the case of withdrawals permitted under clause (h) of sub-rule (1) of rule 3[103],
eighteen months salary of the subscriber or the total of the accumulated balance to
his credit, whichever is the less, provided that this restriction shall apply to each
withdrawal and not to the total withdrawal;
(e) in the case of withdrawals permitted under clause (i) of sub-rule (1) of rule 3[103], six
months‟ salary of the subscriber or ten thousand rupees or the total of the
accumulated balance to his credit, whichever is the lowest;
(f) in the case of withdrawals permitted under sub-clauses (i), (ii) and (iii) of clause (j) of
sub-rule (1) of rule 3[103], twenty-four months‟ salary of the subscriber or eighty
percent of the total of the accumulated balance to his credit, whichever is the less;
(g) in the case of withdrawals permitted under sub-clause (iv) of clause (j) of sub-rule (1)
of rule 3[103], sixty percent of the total of the accumulated balance to 3[credit of] the
subscriber; and
(h) in the case of withdrawals permitted under clause (k) of sub-rule (1) of rule 3[103],
ninety percent of the accumulated balance to the subscriber.
(2) For the purpose of rule and this rule:-
(a) "accumulated balance" means the total of the accumulations of exempted
contributions and exempted interest contained in the balance to the credit of the
employee at the time of withdrawals;
(b) "family" means the employee's wife, legitimate children, step children, parents, sisters
and brothers who reside with the employee and are wholly dependent on him; and
(c) "salary" means the salary as defined in clause (h) of rule 14 of Part I of the Sixth
Schedule to the Ordinance to which the employee is entitled at the time when the
withdrawal is granted.
105. Second withdrawals.-
(1) Save as provided in sub-rules (2), (3), (4) and (5), no second withdrawal from a recognized
provident fund shall be permitted until the sum first withdrawn has been fully repaid.
(2) A withdrawal may be permitted for the purposes specified in clause (h) of sub-rule (1) of rule
110, notwithstanding that the sum withdrawn for any other purpose has not been repaid.
(3) Subsequent withdrawals for the purposes specified in clause (h) of sub-rule (1) of rule 103
may be permitted, notwithstanding that the sum or sums previously drawn for the same
1 Clause "(aa)" inserted by SRO 815(I)/2008, dated August 01, 2008.
2 Substituted for "under clause (d) of sub-rule (1) of rule" by SRO 392(I)/2009 dated May 19, 2009.
3 Inserted by SRO 392(I)/2009, dated May 19, 2009.
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purpose has or have not been repaid.
(4) A withdrawal for anyone of the purposes specified in sub-rule (1) of rule 103 other than that
specified in clause (a) of that sub-rule may be permitted notwithstanding that the sum or sums
withdrawn for the purposes of clause (e) of sub-rule (1) has or have not been repaid.
(5) A withdrawal for any of the purposes specified in sub-rule (1) of rule 103 other than those
specified in clauses (f) and (h) of that sub-rule may be permitted notwithstanding that the sum
previously withdrawn for the purposes of clause (d) of sub-rule (1) has not been repaid.
1
[(6) Subsequent withdrawals for the purposes specified in clause (aa) of sub-rule (1) of rule 103
shall be permitted.]
106. Repayment of amounts withdrawn.-
(1) Where any withdrawal is allowed for a purpose specified in clauses 2[(aa),] (f), (h), (i), (j) or (k)
of sub-rule (1) of rule 103, the amount withdrawn need not be repaid.
(2) Subject to sub-rules (3) and (4), where a withdrawal is allowed for a purpose other than those
referred to in sub-rule (1), the amount withdrawn shall be repaid in not more than forty- eight
equal monthly installments and shall bear profit in accordance with the following, namely:-
(a) Withdrawals which are repaid The rate of mark-up fixed by the Federal
in not more than twelve Government under rule 3(b) of Part-I of the Sixth
monthly installments Schedule to the Ordinance payable in the form of
one additional installment.
(b) Withdrawals which are repaid
The rate of mark-up fixed by the Federal Government
in more than twelve but not under rule 3(b) of Part-I of the Sixth Schedule to the
more than twenty-four monthly Ordinance payable in the form of two additional
installments installments.
(c) Withdrawals which are repaid The rate of mark-up fixed by the Federal
in more than twenty-four but Government under rule 3(b) of Part-I of the Sixth
not more than thirty-six Schedule to the Ordinance payable in the form of
monthly installments. three additional installments.
(d) Withdrawals which are repaid The rate of mark-up fixed by the Federal
in more than thirty-six Government under rule 3(b) of Part-I of the Sixth
3
[monthly] installments. Schedule to the Ordinance payable in the form of
four additional installments.
(3) For the purposes of sub-rule (2) and at the discretion of the trustees of the fund, profit may be
recovered on the amount withdrawn or the balance thereof outstanding from time to time at 1
percent above the rate which is payable for the time being on the balance in the fund to the
credit of the subscriber.
(4) Where an employee contributing to the fund elects not to receive any profit accruing on his
accumulated balance, no profit shall be charged on the amount withdrawn by him from the
fund.
(5) The employer shall deduct such installments payable under sub-rule (2) from the employee's
salary and pay them to the trustees commencing from the second monthly payment made
after the withdrawal or, in the case of an employee on leave without pay, from the second
monthly installment after his return to duty.
1 Sub-rule (6) inserted by SRO 815(I)/2008, dated August 01, 2008.
2 Inserted by SRO 815(I)/2008, dated August 01, 2008.
3 Substituted for "months" by SRO 392(I)/2009, dated May 19, 2009.
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In the case of default of repayment of installments under sub-rules (2) and (5), the Commissioner may at his
discretion, order that the amount of withdrawal or the amount outstanding shall be added to the total income of
the employee for the year in which the default occurs and the employee shall be assessed accordingly.
107. Power to relax conditions.-
Notwithstanding anything contained in rules 103, 104, 105 or 106, the Commissioner may in special
circumstances to be recorded in writing relax the conditions for withdrawals from and repayment to the
fund.
PART II
APPROVED SUPERANNUATION FUNDS
108. Application for approval of a superannuation fund.-
(1) The application required to be made under sub-rule (1) of rule 3 of Part II of the Sixth
Schedule to the Ordinance for approval of a superannuation fund shall contain the
following information, namely:-
(a) the employer's name and the address of the employer's principal place of
business;
(b) the classes and number of employees, whether in Pakistan or outside Pakistan,
entitled to the benefits of the fund;
(c) the age of retirement prescribed in the fund's regulations;
(d) the place where the accounts of the fund are or will be maintained; and
(e) where the fund is already in existence, details of investments of the fund.
(2) A verification in the following form shall be annexed to the application, namely:-
"We/I, the trustees of the above named fund, do declare that what is stated in
the application is true to the best of our/my information and belief and that
the documents sent herewith are the originals or true copies thereof ”.
109. Returns, statements and other documents that may be required to be furnished.-
The trustees of an approved superannuation fund and any employer who contributes to an
approved superannuation fund may be required by notice, in writing, from the Commissioner
under rule 8 of Part II of the Sixth Schedule to the Ordinance to-
(a) furnish a return containing such particulars of contributions as the notice may require;
(b) prepare and deliver a return containing -
(i) the name and place of residence of every person in receipt of an annuity from the
fund;
(ii) the amount of the annuity payable to each annuitant;
(iii) particulars of every contribution (including interest on contributions), if any, returned to
the employer or to employees; and
(iv) particulars of sums paid in commutation or in lieu of annuities; and
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(c) furnish a copy of the accounts of the fund to the last date prior to such notice in which such
amounts have been made up together with such other information and particulars as may be
reasonably required with the permission of the 1Federal Board of Revenue.
110. Limits on contribution by the employer.-
(1) The ordinary annual contribution by the employer to an approved superannuation fund in
respect of any particular employee shall be made on a reasonable definite basis as may be
approved by the Commissioner with regard to the earnings, the contributions or the number of
members of the said fund so however that such contributions shall not exceed twenty percent
of the employee's salary for each year.
(2) Subject to any condition which the Commissioner may think fit to specify under this rule, the
amount to be allowed as a deduction on account of initial contribution which an employer may
make in respect of the past service of an employee admitted to the benefits of a fund shall not
exceed twenty percent of the employee's salary for each year of his past services with the
employer.
(3) Notwithstanding the provisions of sub-rules (1) and (2), an employer may, with the prior
approval of the Commissioner, make a special contribution to an approved superannuation
fund to meet the deficit in the fund, if any.
111. Investment and deposit of moneys of superannuation fund.-
All moneys contributed to an approved superannuation fund and interest on the accumulated balance
of such contributions, if any, shall be utilized for making payments under a scheme of insurance or a
contract of annuity with the State Life Insurance Corporation of Pakistan, an insurance company
carrying on life insurance business and registered under section 3 of the Insurance Act, 1938 (IV of
1938), or the Pakistan Post Office Insurance Department having for its main object the provision of
annuities for the beneficiaries, or deposited or invested in accordance with the provisions 2[ ] of rule
102.
112. Treatment of consideration for dealings with beneficial interest.-
If an employee assigns or creates a charge upon his beneficial interest in an approved superannuation
fund, the Commissioner shall, on the fact of the assignment or charge coming to his knowledge, give
notice to the employee that if he does not secure the cancellation of the assignment or charge within
two months of the date or receipt of the notice, the consideration received for such assignment or
charge shall be treated as salary received by him in the year in which the fact became known to the
Commissioner and shall be assessed accordingly.
113. Circumstances in which approval may be withdrawn.-
The Commissioner may withdraw approval accorded under Part II of the Sixth Schedule to the
Ordinance in the case of a fund which ceases to satisfy the requirements of the said Part or fails to
fulfill the requirements of rules 110, 111 and 112.
1
The words “Central Board of Revenue” substituted by the Finance Act, 2007
2 Words etc omitted for "of sub-rule (1)" by SRO 1209(I)/2005, dated 6 December 2005.
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114. Form of appeal in case of refusal to approve or withdrawal of approval.-
(1) An appeal under sub-rule (1) of rule 10 of Part II of the Sixth Schedule to the Ordinance shall
be in the following form and shall be verified in the manner indicated therein, namely:-
FORM OF APPEAL IN CASE OF NON-APPROVAL
OR WITHDRAWAL OF APPROVAL
To
The 1Federal Board of Revenue,
Islamabad.
The petition of __________________ employer(s) carrying on business, profession or
vocation __________________ at your petitioner(s) applied to/obtained sanction from the
Commissioner under Part II of the Sixth Schedule to the Income Tax Ordinance, 2001 for the
approval of the superannuation fund maintained him (them) for the benefit of his (their)
employees. The Commissioner has refused/ _____________________ withdrawn the
approval for the reasons stated in his order, dated of which a copy is attested.
For the reasons set out below your petition(s) submit(s) that the fund should be recognised
and pray(s) that the 2Federal Board of Revenue may be pleased to.
GROUNDS OF APPEAL
We/l ____________________________________ the petitioner(s) named in the above
petition do declare that stated therein is true to the best of our my information and belief.
Signature ____________________
Name ____________________
Address ____________________
(2) An appeal shall be accompanied by a copy of a challan for Rs.100 paid in the Government
treasury.
PART III
APPROVED GRATUITY FUNDS
115. Application for approval of a gratuity fund.-
(1) The application required to be made under sub-rule (1) of rule 3 of Part III of the Sixth
Schedule to the Ordinance for approval of gratuity fund shall contain the following information,
namely:-
(a) the employer's name and the address of employer's principal place of business;
(b) the classes and number of employees, whether in Pakistan or outside Pakistan,
entitled to the benefits of the fund;
(c) the age of retirement prescribed in the fund's regulations;
(d) the minimum period of service prescribed in the fund's regulation as a condition of
eligibility to receive the gratuity in case of termination of employment;
1
The words “Central Board of Revenue” substituted by the Finance Act, 2007
2
The words “Central Board of Revenue” substituted by the Finance Act, 2007
Income Tax Rules, 2002 122
RECOGNISED PROVIDENT FUNDS, APPROVED SUPERANNUATION
CHAPTER – XV
FUNDS AND APPROVED GRATUITY FUNDS
(e) the place where the accounts of the fund are or will be maintained; and
(f) where the fund is already in existence, details of investments of the fund.
(2) A verification in the following form shall be annexed to the application, namely:-
"We/ I, the trustees of the above named fund, do declare what is stated 1[in]
that the application is true to the best of our/my information and belief and that
the comments sent herewith are the original or true copies thereof."
116. Returns, statements and other documents that may be required to be furnished.-
The trustees of an approved gratuity fund and ,an employer who contributes to an approved gratuity
fund may be required by notice, in writing, from the Commissioner under rule 7 of Part III of the Sixth
Schedule to the Ordinance to:-
(a) furnish a return containing such particulars of contributions as the notice may require;
(b) prepare and deliver a return containing:
(i) the name and place of residence of every person in receipt of a gratuity from the fund;
and
(ii) the amount of the gratuity paid to each employee; and
(c) furnish a copy of the accounts of the fund to the last date prior to such notice in which such
accounts have been made up together with such other information and particulars as may be
reasonably required with the permission of the Commissioner.
117. Limits on contribution by the employer.-
(1) The ordinary annual contribution by the employer to an approval gratuity fund in respect of any
particular employee shall be made on a reasonable definite basis, as may be approved by the
Commissioner, with regard to the length of service of the employee so however that such
contribution shall not exceed salary of the employee for the last month of each financial year.
(2) Subject to any condition which the Commissioner may think fit to specify under this rule, the
amount to be allowed as a deduction on account of initial contribution which an employer may
make in respect of the past services of an employee admitted to the benefits of a fund shall not
exceed salary of the employee for the last month of each financial year during the course of his
past services with the employer.
(3) Notwithstanding the provisions of sub-rules (1) and (2), an 2[employer] may with the prior
approval of the Commissioner, make a special contribution to an approved gratuity fund to
meet the deficit in the fund, if any.
118. Investment or deposits of moneys of a gratuity fund.-
All money contributed to an approved gratuity fund and interest on the accumulated balances of such
contributions shall be deposited or invested in accordance with the provisions of 3[rule 102].
119. Treatment of consideration for dealings with beneficial interest.-
1 Substituted for "that" by SRO 392(I)/2009, dated May 19, 2009. The SRO mentions substitution of the word "that"
appearing for the first time while it is clearly intended to replace the word appearing for the second time. The amendment
has been made accordingly.
2 Substituted for "employee" by SRO 392(I)/2009, dated May 19, 2009.
3 Substituted for "sub-rule (1) of rule 109" by Notification No. SRO 590(I)/2004, dated July 7, 2004.
Income Tax Rules, 2002 123
RECOGNISED PROVIDENT FUNDS, APPROVED SUPERANNUATION
CHAPTER – XV
FUNDS AND APPROVED GRATUITY FUNDS
If an employee assigns or creates a charge upon his beneficial interest in an approved gratuity fund,
the Commissioner shall, on the fact of the assignment or charge coming to his knowledge, give notice
1
[to] the employee that if he does not secure the cancellation of the receipt of the notice, the
consideration received for such assignment of charge shall be treated as salary received by him in the
year in which the fact became 2[known] to the Commissioner and shall be assessed accordingly.
120. Circumstances in which approval may be withdrawn.-
The Commissioner may withdraw approval awarded under Part III of the Sixth Schedule to the
Ordinance in the case of a fund which ceases to satisfy the requirements of the said Part or fails to
fulfill the requirements of rule.
121. Form of appeal in case of refusal to approve or withdrawal of approval.-
An appeal under sub-rule (1) of rule 9 of Part III of the Sixth Schedule to the Ordinance shall be in the
following form and shall be verified in the manner indicated therein, namely:-
FORM OF APPEAL IN CASE OF NON-APPROVAL
OR WITHDRAWAL OF APPROVAL
To
The 3Federal Board of Revenue,
Islamabad.
The petition of employer(s) carrying on business, profession or vocation _______________ at your
petitioner(s) applied to/obtained sanction from the Commissioner under Part III of the Sixth Schedule to
the Income Tax Ordinance, 2001 for the approval of the gratuity fund maintained him (them) for the
benefit of his (their) employees. The Commissioner has refused/ _______________ withdrawn the
approval for the reasons stated in his order, dated ______________________ of which a copy is
attested.
For the reasons set out below your petition(s) submit(s) that the fund should be recognized and pray(s)
that the 4Federal Board of Revenue may be pleased to.
GROUNDS OF APPEAL
We/ l ___________________:______________________ the petitioner(s) named in the above petition
do declare that stated therein is true to the best of our/my information and belief.
Signature ____________________
Name ____________________
Address ____________________
(2) An appeal shall be accompanied by a copy of a challan for Rs.100/- paid in the Government
treasury.
1 Words inserted by SRO 392(I)/2009, dated May 19, 2009.
2 Substituted for "know" by SRO 392(I)/2009, dated May 19, 2009.
3
The words “Central Board of Revenue” substituted by the Finance Act, 2007
4
The words “Central Board of Revenue” substituted by the Finance Act, 2007
Income Tax Rules, 2002 124
CHAPTER - XVI INCOME TAX RECOVERY RULES
CHAPTER - XVI
INCOME TAX RECOVERY RULES
PART - I
122. Definitions.-
For the purposes of 1[these] rules, unless there is anything repugnant in the subject or context,-
(a) "Tax Recovery" means recovery of debt due to the Federal Government under the Income Tax
Ordinance, 2001;
(b) "defaulter" means the taxpayer mentioned in the notice;
(c) "execution", in relation to a Notice, means steps taken for the recovery of arrears under these
rules;
2
[(ca) “notice”, in this Chapter means a notice under sub-section (1) of section 138 of the Income
Tax Ordinance 2001.]
(d) "officer" means a person authorized by the commissioner to execute an order of attachment or
sale under these rules; and
(e) "share in a corporation" includes stock, debenture stock, debentures or bonds.
(f) for the purpose of this Chapter, "Commissioner" means Commissioner of 3[“Inland Revenue”]
4
as defined under clause 13 of section 2 and includes any [Officer of Inland Revenue or
Inspector Inland Revenue] taxation officer delegated powers by the Commissioner to act,
exercise powers and functions under this Chapter, in respect of a taxpayer(s) by general or
specific orders, or under scheme of enforcement in the tax recovery matters designed by the
FBR 5[:]
6
[Provided that the Commissioner Inland Revenue shall not delegate powers and functions
under this Chapter to any Inspector Inland Revenue in respect of taxpayer having tax demand
exceeding five million rupees.]
123. Form of notice of recovery to be issued by Commissioner.-
7
[(1) The notice required to be served upon the taxpayer under sub-section (1) of section 138 shall
be in the form as prescribed in part-III of First Schedule to these rules.]
124. Mode of service of notice.-
The notice referred to in rule 123 and other notices under rules contained in this part shall be served as
provided in section 218 of the Income Tax Ordinance, 2001.
125. Time limit for execution of the notice.-
No step in execution of the notice referred to in rule 123 shall be taken until the period specified in the
said notice has elapsed since the date of service of the notice.
1 Words inserted by SRO 392(I)/2009, dated May 19, 2009.
2 Clause "(ca)" inserted by SRO 392(I)/2009, dated May 19, 2009.
3
The words “Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
4 th
The words “taxation officer” substituted by the S.R.O. 754(I)/2016 dated 15 August, 2016.
5 th
Full stop substituted by the S.R.O. 754(I)/2016 dated 15 August, 2016.
6 th
Added by the S.R.O. 754(I)/2016 dated 15 August, 2016.
7 Sub-rule (1) substituted by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 125
CHAPTER - XVI INCOME TAX RECOVERY RULES
Provided that if the Commissioner is satisfied that the defaulter is to cancel, remove or dispose
of the whole or any part of such of his moveable property as would be liable to attachment in execution
of a notice that the realization of the amount of Notice would in consequence be delayed or
obstructed, he may at any time after the issue of the notice under rule direct, for reasons to
be recorded in writing, an attachment of the whole or part of such property:
Provided further that if the defaulter whose property has been so attached furnishes security
to the satisfaction of the Commissioner, such attachment shall be cancelled from the date on
which such security is accepted by the Commissioner.
126. Disposal of proceeds of execution.-
Whenever assets are realized, by sale or otherwise in execution of a Notice, they shall be
disposed of in the following manner, namely:-
1
(a) there shall be paid to the Commissioner the amount due under the [notice] in
execution of which the assets were realized; and
(b) the balance, if any, shall be paid to the defaulter.
127. Determination of disputes.-
Except as otherwise expressly provided in these rules, every question arising between the
Commissioner and the defaulter or their representatives, relating to the execution, discharge or
satisfaction of a 2[notice duly issued] under these rules, or relating to confirmation or setting
aside by an order under these rules of a sale held in execution of such Certificate, shall be
determined by order of the Commissioner before whom such question arise.
128. Exemption from attachment.-
The following shall not be liable to attachment and sale under these rules, namely:-
(a) the necessary wearing apparel, cooking vessels, beds and bedding of the defaulter, his
wife and children, and such personal ornaments, as, in accordance with religious
usage, cannot be parted with by any women;
(b) tools of artisans, and, where the defaulter is an agriculturist, his implements of
husbandry and such cattle and seed grain as may, in the opinion of the Commissioner, be
necessary to enable him to earn his livelihood as such;
(c) houses and other buildings (with the materials and the sites thereof and the land
immediately appurtenant thereto and necessary for their enjoyment) belonging to an
agriculturist and occupied by him;
(d) books of account;
(e) a mere right to sue for damages;
(f) any right of personal service;
(g) stipends and gratuities allowed to a pensioner of the Government, or payable out of any
service family pension fund notified in official Gazette by the Federal Government or the
Provincial Government in this behalf, and political pensions;
(h) the wages of labourers and domestic servants, whether payable in money or in kind;
1 Substituted for "certificate" by SRO 392(I)/2009, dated May 19, 2009.
2 Substituted for "Certificate duly filed" by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 126
CHAPTER - XVI INCOME TAX RECOVERY RULES
(i) salary to the extent of the first hundred rupees and one half of the remainder:
Provided that where such salary is the salary of the servant of Government or
servant of a railway or local authority, and 1[ ] whole or any part of the portion of such
salary liable 2[to] attachment has been under attachment, whether continuously
intermittently for a total period of twenty four months, portion shall be exempt from
attachment until the expiry of further period of twelve months and, where such
attachment been made in execution of one and the same certificate, shall be finally
exempt from attachment in execution of that notice;
(j) the pay and allowances of persons to whom the Pakistan 1[Army] Act, 1952 (XXXIX of
1952), applies, or of persons other than Commissioned Officers to whom the Pakistan
Navy Ordinance, 1961 (XXXV of 1961), applies;
(k) all compulsory deposits and other sums in or derived from fund to which the Provident
Funds Act, 1925 (XIX of 1925), the time being applies in so far as they are declared by the
Act not to be liable to attachment;
(l) any allowance forming part of the emoluments of any servant of Government or of any
servant of a railway or local authority which the appropriate Government may, by
notification in the official Gazette, declare to be exempt from attachment, and any
subsistence grant or allowance made to any such servant while under suspension;
3
(m) any expectancy of succession by survivorship or other [merely] contingent or
possible right or interest; and
(n) a right to future maintenance.
Explanation 1.- The particulars mentioned in clauses (g), (h), (i), (j) and (l) are exempt from
attachment or sale whether before or 4[after] they are actually payable, and in
the case of salary other 5[than] salary of a servant of the Government or a
servant of railway local authority the attachable portion thereof is exempt from
attachment until it is actually payable.
Explanation 2.- ln clauses (h) and (i), "wages" or "salary" means the total monthly
emoluments, excluding any allowance declared exempt from attachment
under the provisions of clause (l), derived by a person from his employment
whether on duty or on leave.
Explanation 3.- ln clause (l), "appropriate Government" means-
(i) as respects any person in the service of the Federal Government, or
any servant of Railway Board, a cantonment! authority or of the port
authority or a major port, the Federal Government; and
(ii) as respect any person in the service of a Provincial Government or a
servant of any local authority, the Provincial Government.
129. Investigation by Commissioner.-
(1) Where any claim is preferred to, or any objection is made to the attachment or sale of,
any property in execution of a 6[notice] on the ground that such property is not liable to
1 Letter "III" omitted by SRO 392(I)/2009, dated May 19, 2009.
2 Word inserted by SRO 392(I)/2009 dated May 19, 2009.
3 Substituted for "me" by SRO 392(I)/2009, dated May 19, 2009.
4 Words inserted by SRO 392(I)/2009, dated May 19, 2009.
5 Substituted for "t" by SRO 392(I)/2009, dated May 19, 2009.
6 Substituted for "Certificate" by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 127
CHAPTER - XVI INCOME TAX RECOVERY RULES
such attachment or sale, the Commissioner shall proceed to investigate the claim or
objection:
Provided that no such investigation shall be made when the Commissioner considers
that the claim or objection was designedly or unnecessarily delayed.
(2) Where the property to which the claim or objection relates has been advertised for sale,
the Commissioner ordering the sale may postpone it during the investigation of the
claim or objection, upon such terms as to security or otherwise as the Commissioner may
deem fit.
(3) The claimant or objector shall adduce evidence to show that at the date on which the
Notice was originally issued by the Commissioner for the recovery of the arrears, he had
some interest in, or was possessed of the property in question.
(4) Where, upon the said investigation the Commissioner is satisfied that, for the reason
stated in the claim or objection, such property was at the said date in the possession of the
defaulter or of some person in trust for him or in the occupancy of a tenant or other person
paying rent to him, or being in the possession of the defaulter at the said date, it was so
in his possession, not on his own account or as his own property, but on account of or in
trust for some other person the Commissioner shall make an order releasing the property,
wholly or to such extent as it was not 1[ ] in possession of the defaulter on his own
account, from attachment or sale.
(5) Where the Commissioner is satisfied that the property was, at that date, in the possession of
the defaulter as his own property and not on account of any other person, or was in
possession of some other person in trust for him or in the occupancy of a tenant or other
person paying rent to him, the Commissioner shall disallow the claim.
130. Removal of attachment on satisfaction or cancellation of Certificate.-
Where the amount due is paid to the Commissioner 2[the attachment] shall be deemed to be withdrawn
and, in case of immovable property, the withdrawal shall, if the defaulter so desired, be proclaimed at
his expense, and a copy of the proclamation shall be affixed in manner provided by these rules for a
proclamation of sale of immovable property.
131. Officer entitled to attach and sell.-
The attachment and sale of immovable property may be made by such officer as the Commissioner
may from time to time direct.
132. Adjournment or stoppage of sale.-
(1) The Commissioner may adjourn sale hereunder to a specified day and hour; and the officer
conducting any such sale may adjourn the sale, recording his reasons for such adjournment:
3
[Provided that, where the sale is being conducted in or within the precincts of the
office of the concerned Commissioner 4[ ], the officer shall not adjourn the sale without prior
permission of the Commissioner.]
(2) Where a sale of immovable property is adjourned under sub-rule (1) for a longer period than
one calendar month, a fresh proclamation of sale under rules shall be made unless the
defaulter consents to waive it.
1 Word "it" omitted by SRO 392(I)/2009, dated May 19, 2009.
2 Words inserted by SRO 392(I)/2009, dated May 19, 2009.
3 Proviso substituted by SRO 392(I)/2009, dated May 19, 2009.
4
The words “of income tax” omitted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 128
CHAPTER - XVI INCOME TAX RECOVERY RULES
(3) Every sale shall be stopped if, before the lot is knocked down, the amount 1[due is] tendered to
the officer conducting the sale, or proof is given to his satisfaction 2[that the] amount has been
paid to the Commissioner who ordered the sale.
133. Defaulter not to mortgage, etc., any property.-
Where a notice has been served on a defaulter under rule 123 the defaulter or his representative in
interest shall nor sell, mortgage, charge, lease or otherwise deal with any property belonging to him
except with the permission of the Commissioner.
134. Prohibition against biding or purchase by officer.-
No officer or other person having any duty to perform in connection with any sale under these rules
shall, either directly or indirectly, bid for, acquire or attempt to acquire any interest in the property sold.
135. Assistance by police.-
Any officer authorized to attach or sell any property or to arrest the defaulter or charged with any duty
to be performed under these rules, may apply to the officer-in-charge of the nearest police station for
such assistance as may be necessary in the discharge of his duties.
PART - II
ATTACHMENT AND SALE OF MOVABLE PROPERTY ATTACHMENT
136. Person authorized to act, etc.-
(1) The Commissioner may authorize any person to execute an order of attachment or sale under
the rules in this part and in Part III and, where he does not so authorize any person
references, in the said rules to "officer", so far as may be, be construed 3[as] references to the
Commissioner.
(2) Except as otherwise provided in these rules, when any movable property is to be attached, the
officer shall be furnished by the Commissioner with a warrant in writing and signed with his
name specifying the name of the defaulter and the amount to be realized.
4
[(3) The warrant of attachment of movable property to be issued by the Commissioner under sub-
rule (2) shall be in the following form, namely:-
WARRANT OF ATTACHMENT OF MOVEABLE PROPERTY
(Rule 136(2) of the Income Tax Rules, 2002)
Commissioner ___________________________
No._____________ dated _______________
To
____________________________
S/O. ________________________
1 Words inserted by SRO 392(I)/2009, dated May 19, 2009.
2 Substituted for "e" by SRO 392(I)/2009, dated May 19, 2009.
3 Words inserted by SRO 392(I)/2009, dated May 19, 2009.
4 Sub-rule (3) substituted by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 129
CHAPTER - XVI INCOME TAX RECOVERY RULES
You Mr./Mrs.M/s. ___________________________________________________ have failed to pay
Rs._______ (Rupees ____________________) which was due as income tax arrears in spite of
service of a notice under section 138(1) of the Income Tax Ordinance, 2001, dated ____________.
In view of the said default and in pursuance of recovery of tax arrears, it is hereby ordered to attach
moveable property belonging to Mr/Mrs/M/s._________________, the defaulter of the said amount.
Mr. __________________________ is authorized under rule 136(1) of the Income Tax Rules, 2002,
to execute this warrant. This order is given under my hand and seal at (name of city)
_____________________ on this day of __________ (month) ________________ (year) _____.
Commissioner of 1[“Inland Revenue”]]
137. Service of copy of warrant.-
The officer shall cause a copy of the warrant to be served on the defaulter.
138. Attachment.-
If, after service of the copy of warrant, the amount is not paid forthwith, the officer shall proceed to
attach the movable property of the defaulter.
Provided that the standing crops of the agricultural produce lying in the field stored in or near the
dwelling house of the defaulter or stored on the land owned or cultivated by the defaulter, which
represents the agricultural produce of the land owned, leased or cultivated by the defaulter, shall not
be attached.
139. Property in defaulter's possession.-
Where the property to be attached is movable property in the possession of the defaulter, the
attachment shall be made by actual seizure and the officer shall keep the property in his own custody
or in the custody of one of his subordinates and shall be responsible for due custody thereof.
Provided that when the property seized is subject to speedy and natural decay or when the expense of
keeping it in custody is likely to exceed its value, the officer may sell it at once.
140. Debts and shares, etc.-
(1) In the case of-
(a) a debt not secured by a negotiable instrument,
(b) a share in a corporation, or
(c) other movable property not in the possession of the defaulter except property
deposited in, or in the custody of, any court, the attachment shall be made by a
written order, prohibiting,-
(i) in the case of the debt, the creditor from recovering the debt and the debtor
from making payment thereof until the further order or the Commissioner;
1
The words “Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 130
CHAPTER - XVI INCOME TAX RECOVERY RULES
(ii) in the case of the share, the person in whose name the share may be
standing from transferring the same or receiving any dividend thereon; and
(iii) in the case of other movable property except as aforesaid, the person in
possession of the same from giving it over to the defaulter.
(2) A copy of such order shall be affixed on some conspicuous part of the office of the
Commissioner, and another copy shall be sent, in the case of the debt, to the debtor, in the
case of the share in a corporation, to the proper officer of the corporation and in the case of
other movable property (except as aforesaid), to the person in possession of the same.
(3) A debtor prohibited under clause (i) of sub-rule (1) shall, on receipt of order of the
Commissioner, pay the amount of his debt to the Commissioner, and such payment shall
discharge him as effectually as payment to the party entitled to receive the same.
(4) Where the execution of a document or the endorsement of the defaulter in whose name a
negotiable instrument or a share in a corporation is standing is required to transfer such
negotiable instrument or share, the Commissioner such other officer as he may authorize in
this behalf may execute such document or make such endorsement as may be necessary,
and such execution or endorsement have the effect as an execution or endorsement by the
defaulter.
(5) Until the transfer of such negotiable instrument or share, the Commissioner or any other
officer authorized by him in this behalf may receive any interest or dividend due thereon and
sign a receipt for the same. Any receipt so signed shall be as valid and effectual for all
purposes as if the same had been signed by the defaulter himself.
141. Share in movable property.-
Where the property to be attached consists of the share or interest of the defaulter in movable property
belonging to him and another as co-owners, the attachment shall be made by a notice to the defaulter
prohibiting him from transferring such share or interest or subjecting same to a charge in any manner.
142. Attachment of negotiable instrument.-
Where the property is a 1[negotiable] instrument not deposited in a Court, nor in the custody of a public
officer, the attachment shall be made by actual seizure, and the instrument shall be brought before the
Commissioner and held subject to 2[his] orders.
143. Attachment of property in custody of public officer.-
Where the property to be attached is in the custody of any public officer, the attachment be made by a
notice to such officer requesting that such property and any interest or dividend becoming payable
thereon may be held subject to the further 3[orders] of the Commissioner by whom the notice is issued.
144. Attachment of property in partnership.-
(1) Where the property to be attached consists of an interest of the defaulter, being a partner, in
1 SRO 392(I)/2009 dated May 19, 2009 seeks to substitute the word "liable" by "negotiable", whereas the word "negotiable"
already appears there.
2 Substituted for "this" by SRO 392(I)/2009, dated May 19, 2009.
3 Substituted for "s" by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 131
CHAPTER - XVI INCOME TAX RECOVERY RULES
the partnership property, the Commissioner may make an order charging the 1[share] of such
partner in the partnership property and profits, with payment of amount due under the notice,
and may, by the same or a subsequent 1[order], appoint a receiver the share of such partner in
the profits, whether already declared or accruing, and of any other money which may become
due to in respect of the partnership, and direct maintenance or rendition of accounts and
inquiries and make an order for the sale of such interest or such order as the circumstances of
the case may require.
(2) The other partners shall be at liberty at any time to redeem the interest charged or; in the case
of a sale being directed, to purchase the same.
145. Inventory.-
In the case of attachment of movable property by actual seizure the officer shall, after attachment of
the property prepare an inventory of all the property attached, specifying in it the place where it is
lodged or kept, and shall forward the same to the Commissioner and deliver a copy thereof to the
defaulter.
146. Attachment not to be excessive.-
The attachment by seizure shall not be excessive, that is to say, the property attached shall be as
nearly as possible proportionate to the amount specified in the warrant.
147. Seizure between sunrise and sunset.-
Attachment by seizure shall be made after sunrise and before sunset and not otherwise.
148. Entry into building by officer, etc.-
The officer may break open any inner or other door or window of any building and enter any building in
order to seize any movable property if the officer has reasonable grounds to believe that such building
contains movable property liable to seizure under the warrant and the officer has notified his authority
and intention of breaking open if admission is not given. He shall, however, give all reasonable
opportunity to women 1[to] withdraw.
149. Sale.-
The Commissioner may direct that any movable property attached under these rules or such portion
thereof as may seem necessary to satisfy the certificate shall be sold.
150. Issue of proclamation.-
When any sale of movable property is ordered by the Commissioner, he shall issue a proclamation of
the intended sale specifying the time and place of sale and whether the sale is subject to confirmation
or not.
151. Proclamation how made.-
(1) The proclamation shall be made by the beat of drum or other customary mode, and the
contents of the proclamation shall be explained in the language of the district-
(a) in the case of property attached by actual seizure-
1 Words inserted by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 132
CHAPTER - XVI INCOME TAX RECOVERY RULES
(i) in the village in which the property was seized or, if the property was seized
in a town or city, then, in the locality in which it was seized; and
(ii) at such other places as the Commissioner of Tax may direct; and
(b) in the case of property attached otherwise than by actual seizure, in such places, if
any, as the Commissioner may direct.
(2) A copy of the proclamation shall also be affixed at a conspicuous place in the office of the
Commissioner.
(3) Where the Commissioner so directs, such proclamation may also be published in one or two
newspapers.
152. Sale after fifteen days.-
Except where the property is subject to speedy and natural decay or when the expense of keeping it in
custody is likely to exceed its value, no sale of movable property under these rules shall, without the
consent in writing of the defaulter, take place until after the expiry of at least fifteen days from the date
on which a copy of the proclamation of sale was affixed in the office of the Commissioner.
153. Sale to be by auction or by tender.-
The property shall be sold by public auction or by tender, in one or more lots, as the officer may
consider advisable and, if the amount to be realized by sale may be satisfied by the sale of a portion of
the property, the sale shall be only with respect to that portion of the property.
154. Sale by public auction.-
(1) Where movable property is sold by public 1[auction], the price of each lot shall be paid at the
time of sale or as soon thereafter the officer holding the sale directs and in default of payment
the property shall 2[ ] be re-sold.
(2) On payment of the purchase money, the officer holding the sale shall grant to the purchaser a
certificate specifying the property purchased, the price paid the name of the purchaser, and
the sale shall thereupon become absolute.
(3) Where the movable property to be sold is a share in goods belonging to defaulter and a co-
owner, and two or more persons, of whom one is such co-owner, respectively bid the same
sum for such property or for any lot, the bid of co-owner shall have preference.
155. Irregularity not to vitiate sale.-
Any error or irregularity in publishing or conducting the sale of movable property shall not vitiate the
sale if provisions of these rules have been substantially complied with.
156. Negotiable instruments or share in a corporation.-
Notwithstanding anything contained in these rules, where the property to be sold 3[is] negotiable
instrument or a share in a corporation, the Commissioner instead of directing the sale to be made by
public auction, authorize the sale of such instrument or share through a broker.
1 Substituted for "on" by SRO 392(I)/2009, dated May 19, 2009.
2 Word "with" omitted by SRO 392(I)/2009, dated May 19, 2009.
3 Word inserted by SRO 392(I)/2009 dated May 19, 2009.
Income Tax Rules, 2002 133
CHAPTER - XVI INCOME TAX RECOVERY RULES
157. Order for payment of coin or currency notes to the Commissioner 1[ ].-
Where the property attached is current coin or currency notes, the Commissioner may, at any time
during the continuance of the attachment, direct that such coin or notes, or a part thereof sufficient to
satisfy the Notice, be paid over to the Commissioner.
PART - III
ATTACHMENT AND SALE OF IMMOVABLE PROPERTY ATTACHMENT
158. Attachment.-
2
[(1)] Attachment of the immovable property of the defaulter be made by an order prohibiting the
defaulter from transferring or subjecting the property to a charge in any manner and
prohibiting all persons from taking any benefit under such transfer or charge.
1
[(2) The order of attachment of immovable property to be issued by the Commissioner under
this rule shall be in the following form, namely:-
ORDER OF ATTACHMENT OF IMMOVABLE PROPERTY
(Rule 158 of the Income Tax Rules, 2002)
To,
_____________________________
S/o.__________________________
You have failed to pay a sum of Rs.__________ (Rupees ___________________________________)
payable by you, for which a notice under section 138(1) of the Income Tax Ordinance, 2001, dated has
already been served upon you.
In view of the said default and in pursuance of recovery of income tax arrears you Mr/Mrs/M/s.
___________________________ are hereby prohibited and restrained until further orders of the
undersigned from transferring of immovable property No.________________ located at (address)
____________________________ or subjecting the same to a charge in any manner and, that all
persons are prohibited from taking any benefit under such transfer or charge.
Given under my hand and seal at (name of city) __________________ on this day of (month)
__________ (year) _______________
Commissioner of 3[“Inland Revenue”]]
159. Service of notice of attachment.-
A copy of the order of attachment be served on the defaulter.
160. Proclamation of attachment.-
The order of attachment shall be 4[proclaimed] at some place on or adjacent to the property attached
1
The words “of Income Tax” omitted by SRO 1218(I)/2015 dated 08.12.2015.
2 Rule 158 renumbered as sub-rule (1) and sub-rule (2) by SRO 392(I)/2009, dated May 19, 2009.
3
The words “Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
4 Substituted for "aimed" by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 134
CHAPTER - XVI INCOME TAX RECOVERY RULES
by beat of drum or customary mode, and a copy of the order shall be affixed at a conspicuous of the
property and also at a conspicuous place of the office of the Commissioner.
161. Sale and proclamation of sales.-
(1) The Commissioner of Tax may direct that any immovable property which has been attached,
or such portion of as may seem necessary to satisfy the notice, shall be sold.
(2) Where any immovable property is ordered to be sold, the Commissioner shall cause a
proclamation of the intended sale to be made in the language of the district.
162. Contents of proclamation.-
(1) A proclamation of sale of immovable property shall be drawn up after service of notice to the
defaulter, and shall state time and place of sale and also specify-
(a) the location of the property to be sold;
(b) as fairly and accurately as possible the revenue or rent, if any, assessed upon the
property or any part thereof; and
(c) the amount for the recovery of which the sale is ordered.
(2) The proclamation may also specify any other thing which the Commissioner considers
material for a purchaser to know in order to judge the nature and value of the property.
163. Mode of making proclamation.-
(1) Every proclamation for the sale of immovable property shall be made at some place on or near
such property by beat of drum or other customary mode, and a copy of the proclamation shall
be affixed at a conspicuous place of the property and also at a conspicuous 1[part] of the office
of the Commissioner.
(2) Where the Commissioner so directs, such proclamation may be published in one or two
newspapers.
(3) Where the property is divided into lots for the purpose of being sold separately, it shall not be
necessary to make a separate proclamation for each lot, unless proper notice of the sale
cannot, in the opinion of the Commissioner otherwise be given.
164. Time of sale.-
No sale of immovable property under these rules shall, without the consent in writing of the defaulter,
take place until after 2[the] expiration of at least thirty days from the date on which a copy of the
proclamation of sale has been affixed on the property or in the office of the Commissioner, whichever
is later.
165. Sale to be by auction or by tender.-
The sale shall be made by public auction or by tender to the highest bidder and shall be subject to
confirmation by the Commissioner.
1 Word inserted by SRO 392(I)/2009 dated May 19, 2009.
2 Substituted for "tile" by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 135
CHAPTER - XVI INCOME TAX RECOVERY RULES
166. Deposit by purchaser and re-sale in default.-
(1) On every sale of immovable property, the person declared to be the purchaser shall pay,
immediately after such declaration, a deposit of twenty-five percent of the amount of his
purchase money to the officer conducting the sale; and in default of such deposit the property
shall forthwith be resold.
(2) The full amount of purchase money payable shall be paid by the purchaser to the
Commissioner on or before the fifteenth day from the date of the sale of the property.
167. Procedure in default of payment.-
In default of payment within the period mentioned in rule 166 twenty percent of deposit made
under sub-rule (1) of that rule shall be forfeited and the rest shall be kept as deposit to be dealt
with as mentioned in dealt 168 and the property shall be re-sold and the defaulting purchaser
shall forfeit all claims to the property or to any part of the, sum for which it may be subsequently
sold except to such sums as may be found refundable to him under rule 168.
168. Amount recoverable from purchaser in default.-
Any deficiency of price which may happen on a re-sale by reason of the purchaser's default including
all expenses attending such re-sale, shall be recoverable from the defaulting purchaser upto the
maximum of eighty percent of the deposit made by him under sub-rule (1) of rule 173 and kept as
a deposit under rule 166 and if there is any surplus after meeting the deficiency the same shall be
refunded to the defaulting purchaser.
169. Authority to bid.-
All persons bidding at the sale shall be required to declare if they are bidding on their own
behalf, or on behalf of their principals and, in the latter case, they shall be required to deposit their
authority, and in default their bids shall be rejected.
170. Application to set aside sale of immovable property on deposit.-
(1) Where immovable property has been sold in execution of a 1[notice], the defaulter, or any
person whose interests are affected by the sale, may, at any 2[time] within thirty days
from the date of the sale, apply to the Commissioner to set aside the sale, on his
depositing-
(a) for payment to the Commissioner, the amount specified in the proclamation of sale
as that for the recovery of which the sale was ordered with interest thereon at the
rate of eight percent per annum, calculated from the date of proclamation of sale
to the date when the deposit is made; and
(b) for payment to the purchaser, as penalty, a sum equal to ten percent of the
purchase money.
(2) Where a person makes an application under rule 171 for setting aside the sale of his
immovable property, he shall not, unless he withdraws that application, be entitled to
make or prosecute an application under this rule.
1 Substituted for "Certificate" by SRO 392(I)/2009, dated May 19, 2009.
2 Word inserted by SRO 392(I)/2009 dated May 19, 2009.
Income Tax Rules, 2002 136
CHAPTER - XVI INCOME TAX RECOVERY RULES
171. Application to set aside sale of immovable property on ground of non-service of notice or
irregularity.-
Where immovable property has been 1[sold] in execution of a notice, 2[ ] the defaulter, or any
person whose interests are affected by the sale, may, at any time within thirty days from the date
of the sale, apply to the Commissioner to set aside the sale of the immovable property on the
ground that notice was not served on the defaulter to pay the arrears as required by these rules or
on the ground of a material irregularity in publishing or conducting the sale:
Provided that-
(a) no sale shall be set aside on any such ground unless the Commissioner is satisfied on the
basis of evidence, produced before him that the applicant has sustained loss by reason
of the non-service or irregularity; and
(b) an application made by a defaulter under this rule shall be disallowed unless he
deposits the amount recoverable from him in execution of the notice.
172. Setting aside sale where defaulter has no saleable interest.-
At 3[any] time within thirty days of the sale, the purchaser may apply to the Commissioner to set
aside the sale on the ground that the defaulter had no saleable interest in the property sold.
173. Confirmation of sale.-
(1) Where no application is made for setting 4[aside] the sale under the foregoing rules or
where such an application is made and 5[disallowed] by the Commissioner, he shall, if the
full amount of the purchase money has been paid, make 6[an] order confirming the sale,
and 7[thereupon] the sale shall become absolute.
(2) Where such application is made and allowed, and where, in the case of application made
to set aside the sale on deposit of the amount 8[of tax penalty and additional tax], the
deposit is made within thirty days from the date of sale, the Commissioner shall make an
order setting aside the sale.
Provided that no such order shall be made unless notice of the application has been given to the
persons affected thereby.
174. Return of purchase money in certain cases.-
Where a sale of immovable property is set aside, any money paid or deposited by the
purchaser on account of the purchase, together with the penalty, if any, deposited for payment to
the purchaser, shall be paid to the purchaser.
175. Sale certificate.-
1 Word inserted by SRO 392(I)/2009 dated May 19, 2009.
2 Words "the Commissioner of Income Tax," omitted by SRO 392(I)/2009, dated May 19, 2009.
3 Word inserted by SRO 392(I)/2009 dated May 19, 2009.
4 Substituted for "Certificate" by SRO 392(I)/2009, dated May 19, 2009.
5 Substituted for "owed" by SRO 392(I)/2009, dated May 19, 2009.
6 Substituted for "1'in" by SRO 392(I)/2009, dated May 19, 2009.
7 Substituted for "upon" by SRO 392(I)/2009, dated May 19, 2009.
8 Substituted for "and penalty, interest" by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 137
CHAPTER - XVI INCOME TAX RECOVERY RULES
(1) Where a sale of immovable property has become absolute, the Commissioner shall grant
a certificate specifying the property sold, and the name of the person who at the time of sale
was declared to be the purchaser.
(2) Such certificate shall state the date on which the sale become absolute.
176. Postponement of sale to enable defaulter to raise amount due under notice.-
(1) Where an order for the sale of immovable property has been made and the defaulter
satisfies the Commissioner of Tax that there is reason to believe that the amount of the
notice may be raised by mortgage or lease or private sale of such property, or some part
thereof, or of any other immovable property of the defaulter, the Commissioner of Tax
may, on the application of the defaulter, postpone the sale of the property specified in the
order for sale, on such terms and for such period as he thinks proper, to enable the
defaulter to raise the amount.
(2) In such case, the Commissioner shall grant a certificate to the defaulter authorizing him,
within a period to be mentioned therein and notwithstanding anything contained in these
rules, to make the proposed mortgage, lease or sale:
Provided that all money payable under such mortgage, lease or sale shall be paid, not
to the defaulter, but to the Commissioner:
Provided further that no mortgage, lease or sale under this rule shall become
absolute until it has been confirmed by the Commissioner.
177. Fresh proclamation before resale.-
Every re-sale of immovable property, in default of payment of the purchase money within the
period allowed for such payment, shall be made after the issue of a fresh proclamation in the
manner and for the period herein-before provided for the sale.
178. Bid of co-sharer to have preference.-
Where the property sold is a share of undivided immovable property and two or more persons,
of whom one is a co-sharer, respectively bid the same sum for such property or for any lot, the bid
of the co-sharer shall have preference.
PART - IV
APPOINTMENT OF RECEIVER
179. Appointment of receiver for business.-
(1) Where the property of Defaulter consists of a business, the Commissioner may attach the
business and appoint a person as receiver to manage the business.
(2) Attachment of a business under this rule shall be made by an order prohibiting the defaulter
from transferring or subjecting the business to a charge in any manner and prohibiting all
persons from taking any benefit under such transfer or charge and intimating that the business
has been attached under this rule. A copy of the order of attachment shall be served on the
defaulter and another copy shall be affixed on a conspicuous part of the premises in which the
business is carried on and at a conspicuous place in the office of the Commissioner.
(3) Where the Commissioner so directs, such order shall also be published in a newspaper.
180. Appointment of receiver for immovable property.-
Income Tax Rules, 2002 138
CHAPTER - XVI INCOME TAX RECOVERY RULES
Where immovable property is attached, the Commissioner may, instead of directing sale of the
property, appoint a person as receiver to manage such property.
181. Power of receivers, etc.-
(1) Where it appears to the 1[Officer] to be just and convenient, the Officer may by order-
(a) remove any person from the possession or custody of the property;
(b) commit the same to the possession, custody or management of the receiver; and
(c) confer upon the receiver all such powers, as to bringing and defending suits and
for the realization, management, protection, preservation and improvement of the
property, the collection of the rents and profits thereof, the application and disposal
of such rents and profits, and the execution of documents as the owner himself
has or such of those powers as the Commissioner thinks fit:
Provided that nothing in this rule shall authorize the Commissioner to remove
from the possession or custody of property any person whom any party to
recovery proceedings has not a present right so to remove.
(2) The Commissioner may by general or special order fix the amount to be paid as
remuneration for the services of the receiver.
(3) Every receiver appointed by the Commissioner shall -
(a) furnish such security, if any, as the Commissioner thinks fit, to account duly for
what he shall receive in respect of the property;
(b) submit his accounts at such periods and in such form as the Commissioner
directs;
(c) pay the amount due from him as the Commissioner of Income directs; and
(d) be responsible for any loss occasioned to the property by his willful default or
gross negligence.
(4) The profits or rents and profits, of such business or other property after defraying the
expenses of management, be adjusted towards discharge 2[of] arrears, and the balance, if
any, shall be paid to the defaulter.
182. Withdrawal of management.-
The attachment and management under this part may be withdrawn at any time at the discretion
of the Commissioner, or if the arrears are discharged by receipt of such profits and rents or are
otherwise paid.
PART - V
ARREST AND DETENTION OF THE DEFAULTER
183. Notice to show cause.-
(1) No order for the arrest and detention in civil prison of a defaulter shall be made unless
the Commissioner has issued and served a notice upon the defaulter, calling upon him
to appear before him on the date specified in the notice and to show cause why he should
not be committed to the civil prison, and unless the Commissioner, for reasons to be
recorded in writing, is satisfied-
1 Substituted for "Commissioner" by SRO 392(I)/2009 dated May 19, 2009.
2 Word inserted by SRO 392(I)/2009 dated May 19, 2009.
Income Tax Rules, 2002 139
CHAPTER - XVI INCOME TAX RECOVERY RULES
(a) that the defaulter, with the object or effect of obstructing the execution of the 1[notice]
has, after the receipt of the 1[notice] in the office of the Commissioner, dishonestly
transferred, concealed or removed any part of his property, or
(b) that the defaulter has, or has had since the receipt of the notice in the office of the
Commissioner, the means to pay the arrears or some substantial part thereof and
refuses or neglects or has refused or neglected to pay the same.
(2) Notwithstanding anything contained in sub-rule (1) a warrant for the arrest of the defaulter may
be issued by the Commissioner, if he is satisfied, by affidavit or otherwise, that, with the object
or effect of delaying the execution of the notice, the defaulter is likely to abscond or leave the
local limits of the jurisdiction of the Commissioner.
(3) Where appearance is not made in compliance to a notice issued and served under sub-rule
(1), the Commissioner may issue a warrant for the arrest of the defaulter.
(4) Every person arrested in pursuance of a warrant of arrest under sub-rule (2) or sub-rule (3)
shall be brought before the Commissioner as soon as practicable and in any event within
twenty-four hours of his arrest, 2[exclusive of] the time required for the journey:
Provided that if the defaulter pays the amount entered in the warrant 3[of] arrest as due to the
officer arresting him, such officer shall at once release him.
4
[(5) The warrant of arrest of the defaulter to be issued by the Commissioner under sub-rule shall be
in the following form, namely:-
WARRANT FOR ARREST OF THE DEFAULTER
(Rule 183(2) of the Income Tax Rules, 2002)
Commissioner ___________________________
No._____________ dated _______________
To ________________________
S/O.________________________
Whereas a notice u/s 138(1) of the Income Tax Ordinance, 2001, dated was issued and served upon Mr.
___________________________ son of _______________________ (full address) _____________________
_____________________________________ for recovery of arrears. An amount due from the said defaulter is
detailed as below:-
Amount as per notice u/s 138(1): ________________________
Cost and charges: ________________________
Total: ________________________
Inspite of the service of the said notice, the said arrears have not been paid. Accordingly, you are hereby
commanded to arrest the said defaulter and produce him before the undersigned as soon as practicable in any
event within 24 hours of his arrest (exclusive of time required for the journey) unless the defaulter pays to you
the amount of arrears of Rs.___________ (Rupees _______________________) and Rs.___________
(Rupees _______________________) being the cost of executing the process.
1 Substituted for "Certificate" by SRO 392(I)/2009, dated May 19, 2009.
2 Substituted for "exclusively" by SRO 392(I)/2009, dated May 19, 2009.
3 Substituted for "ii" by SRO 392(I)/2009, dated May 19, 2009.
4 Sub-rule (5) inserted by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 140
CHAPTER - XVI INCOME TAX RECOVERY RULES
You are hereby further commanded to return the warrant on or before the day of __________________ with an
endorsement given on the day on which and the manner in which it has been executed or the reasons why it
has not been executed.
Given under my hand and seal at (city) ________________ on this _________________ day of (month)
_____________________ (year) ______.
Commissioner of 1[“Inland Revenue”]]
184. Hearing.-
When a defaulter appears before the Commissioner in compliance to a notice to show cause or is
brought before the Commissioner under rule 183 the Commissioner shall give the defaulter an
opportunity of showing cause why he should not be committed to the civil prison.
185. Custody pending hearing.-
Pending the conclusion of the inquiry, the Commissioner may order the defaulter to be detained in the
custody of such officer as the Commissioner of Income Tax may think fit or release him on his
furnishing security to the satisfaction of the Commissioner for his appearance when required.
186. Order of detention.-
(1) Upon the conclusion of the inquiry, the Commissioner may make an order for the detention of
the defaulter in the civil prison and shall in that event cause him to be arrested if he is not,
already under arrest:
Provided that in order to give the defaulter an opportunity of satisfying the arrears, the
Commissioner may, before making the order of detention leave the defaulter in the custody of
the officer arresting him or of any other officer for specified period not exceeding fifteen days,
or release him on his furnishing security to the satisfaction of the Commissioner for his
appearance at the expiration of the specified period if the arrears are not so satisfied.
(2) When the Commissioner does not make an order of detention under sub-rule (1), he shall, if
the defaulter is under arrest, direct his release.
2
[(3) The warrant for detention of the defaulter in civil prison to be made by the Commissioner
under this rule shall be in the following form, namely:-
WARRANT FOR DETENTION OF THE DEFAULTER IN CIVIL PRISON
(Rule 186(1) of the Income Tax Rules, 2002)
Commissioner _________________
No. ____________ dated ___________________________
To
The Officer In charge of the civil prison
__________________________________
Where Mr. _____________________________ S/o. _______________________ (Full address) ___________
____________________________________ has been brought before the undersigned under a warrant in
execution of a notice under section 138(1) of the Income Tax Ordinance, 2001, for recovery of tax arrears.
1
The words “Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
2 Sub-rule (3) inserted by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 141
CHAPTER - XVI INCOME TAX RECOVERY RULES
And whereas he has not satisfied the undersigned that he is entitled to be discharged from custody and has not
paid the amount due from him as specified below:-
Income Tax _____________________
Penalty ______________________
Additional Tax ______________________
Cost and charges ______________________
Total ______________________
And whereas the undersigned is satisfied that the said defaulter _______________________ should be
committed to the civil prison and an order to that effect has been passed by the undersigned on this _____ day
of (month) ________________ (year) _____,
You are hereby commanded and required to take and receive the said defaulter _________________________
in the civil prison and to keep him imprisoned therein for a period of __________________ or until the amount
aforesaid together with further additional tax at a rate equal to ______________________ percent per annum
u/s.205 of the Income Tax Ordinance, 2001 on the amount unpaid being Rs.________________ for the period
commencing immediately after the date of issue of this warrant to the date on which it is paid to you on behalf
of the Commissioner of income tax or until you receive an order of his release from the undersigned.
The undersigned does hereby fix Rs.________________ per day (calculated under rule 198 of the Income Tax
Rules, 2002) as a rate for subsistence allowance for the period of his detention.
Given under my hand and seal at (name of city) ___________________ on this day of _________
(month)________ (year) _______
Commissioner of 1[“Inland Revenue”]]
187. Detention in and release from prison.-
(1) Every person detained 2[in] the civil prison in execution of a 3[notice] may be so detained-
(a) where the 2[notice] is for a demand of an amount exceeding twenty five
thousands, for a period of six months, and
(b) in any other case for a period of six weeks:
Provided that he shall be released from such detention-
(i) on the amount mentioned in the warrant for his detention being paid to
the Officer-in-charge of the civil prison, or
(ii) on the request of the Commissioner who has issued the notice or of
the Commissioner on any ground other than the grounds mentioned in
4
[rules] 193(1) and 196:
Provided further that where he is to be released on the request of the
Commissioner, he shall not be released without the order of the
Commissioner.
(2) A defaulter released from detention under this rule shall not, merely by 5[reason] of his
release, be discharged from his liability for the arrears; but he shall liable to be re -arrested
under the notice in execution of which he was detained in the civil prison.
1
The words “Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
2 Inserted by SRO 392(I)/2009, dated May 19, 2009.
3 Substituted for "certificate" by SRO 392(I)/2009, dated May 19, 2009.
4 Substituted for "rule" by SRO 392(I)/2009, dated May 19, 2009.
5 Inserted by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 142
CHAPTER - XVI INCOME TAX RECOVERY RULES
188. Release.-
(1) The Commissioner may order the release of a defaulter who has been arrested in
execution of a notice upon being satisfied that he has disclosed the whole of his
property and has placed it at the disposal of Commissioner and that he has not committed
any act in bad faith.
(2) If the Commissioner has ground for believing the disclosure made 2[by] the defaulter
under sub-rule (1) to have been untrue, he may order the re-arrest of the defaulter
in execution of the notice but the period of his detention in the prison shall not in the
aggregate exceed that authorized by rule 187.
189. Release on ground of illness.-
(1) At any time after a warrant for the 1[arrest] of a defaulter has been issued, the
Commissioner may cancel it on ground of the serious illness of the defaulter.
(2) Where a defaulter has been arrested, the Commissioner may 2[release] him if, in the opinion of
the Commissioner of Tax, he is not in a fit state of 2[mind] to be detained in the civil prison.
(3) Where a defaulter has been committed to the civil prison, he may be, 2[released] therefrom by
the Commissioner on the ground of the existence of any infectious or contagious disease or
on the ground of his suffering from any illness.
(4) A defaulter released under this rule may be re-arrested, but the period 2[of his] detention in the
civil prison shall not in the aggregate exceed that authorized by rule 164.
190. Entry into dwelling house.-
For the purpose of making an arrest under these rules,-
(a) no dwelling house shall be entered after sunset and before sunrise;
(b) no outer door of a dwelling house shall be broken open unless such dwelling house or a
portion thereof is in the occupancy of the defaulter and he or any other occupant of the house
refuses or in any way prevents access thereto; but, when the person executing any such
warrant has duly gained access to any dwelling house, he may break open the door or any
room or apartment if he 2[has] reason to believe that the defaulter is likely to be found there;
and
(c) no room, which is in the actual occupancy of a woman who, according to the custom of the
country, does not appear in public shall be entered into unless the officer authorized to make
the arrest has given notice to her that she is at liberty to withdraw and has given her
reasonable time and facility for withdrawing.
191. Prohibition against arrest of woman or minor, etc.-
The Commissioner shall not order the arrest or detention in the civil prison of-
(a) a woman, or
(b) any person who, in his opinion, is a minor or of unsound mind.
1 Inserted by SRO 392(I)/2009, dated May 19, 2009.
2 Substituted for "bas" by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 143
CHAPTER - XVI INCOME TAX RECOVERY RULES
PART - VI
MISCELLANEOUS
192. Continuance of Notice.-
No notice shall cease to be in force by reason of the death of the defaulter.
193. Procedure on death of defaulter.-
If, at any time after the issue of a Notice 1[by] the Commissioner, the defaulter dies, the proceedings
under these rules (except arrest and detention) may be continued against the legal representative of
the defaulter who shall be liable to pay out of the estate of the deceased person to the extent to which
the estate is capable of meeting the arrears demand and the provisions of these rules shall 2[ ] apply
as if the legal representative were the defaulter.
194. Appeal.-
3
[(1) Where –
(a) the Commissioner passes any order under Chapter XVI, the appeal against such
order shall lie to the 4[“Chief Commissioner”], Regional Tax Office or Large Taxpayer
Unit, as the case may be; and
(b) any 5[”officer of Inland Revenue 6[, Inspector Inland Revenue] ”] or authority to
whom powers have been delegated passes any order under the said Chapter, an
appeal against such order shall lie to the Commissioner,]
(2) Every appeal under this rule shall be presented within thirty days from the date of the
order appealed against.
(3) The appellate authority (hereinafter referred to as "the authority") after hearing the party
or his representative may admit the appeal for hearing or reject it summarily if he is of
the opinion that the appeal is without any substance.
(4) Where the appeal is admitted for hearing under sub-rule (3), the authority hearing
appeal shall fix a date for hearing 7[for] which notice shall be given to the 8[concerned
parties].
(5) If, on the date of hearing, no step is taken on behalf of either party, the authority
hearing appeal may forthwith take up the appeal for ex-parte disposal or dismiss it for
default, as the case may be:
Provided that the appeal may be adjourned to some other date for hearing on sufficient
cause being shown by either party by an application in that behalf.
9
(6) After hearing both the parties or their representatives or when the appeal is taken up for
exparte order, the appellate authority may make an order, to confirm, modify, reverse or
remand the case for fresh decision in the light of directions that the appellate authority
may think appropriate to give, being not inconsistent with these rules.]
1 Substituted for "to" by SRO 392(I)/2009, dated May 19, 2009.
2 Word "be" omitted by SRO 392(I)/2009, dated May 19, 2009.
3 Sub-rule (1) substituted by SRO 392(I)/2009, dated May 19, 2009.
4
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
5
The words “taxation officer” substituted by SRO 1218(I)/2015 dated 08.12.2015.
6 th
Inserted by the S.R.O. 754(I)/2016 dated 15 August, 2016.
7 Substituted for "of" by SRO 392(I)/2009, dated May 19, 2009.
8 Substituted for "other party" by SRO 392(I)/2009, dated May 19, 2009.
9 Sub-rule (6) substituted by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 144
CHAPTER - XVI INCOME TAX RECOVERY RULES
(7) Pending the decision of any appeal, execution of the 1[notice] may be stayed if the
appellate authority so directs, but not otherwise.
195. Review.-
Any order passed under these rules may, after notice to all persons interested. be reviewed by
the officer who made the order, or by his successor in office, on account of any mistake apparent
from the record.
196. Recovery from surety.-
Where any person has under these rules 2[become] surety for the amount due by the defaulter, he
may be proceeded against 3[under] these rules as if he were the defaulter.
197. Receipt to be given.-
If any amount is received by any officer or other person in pursuance of these rules, he shall issue
a receipt of the amount so received.
198. Subsistence allowance.-
3
[ ] When a defaulter is arrested or; detained in the civil prison, the sum payable for the
subsistence of the defaulter 4[during detention or] arrest until he is released shall be borne by the
Commissioner.
199. The sum under rule 198, shall be calculated on the scale fixed by the Provincial Government for
the subsistence of judgement-debtors arrested in execution 5[decree] of a civil court.
200. Delivery of property in occupancy of defaulter.-
Where the immovable property sold is in the occupancy of the defaulter or of some person on his
4
[behalf], or of some person claiming under a title created by the defaulter subsequently to the
attachment of such property and a 6[notice] in respect thereof has been made, the
Commissioner shall, on the application of the purchaser, order delivery to be made by putting
such purchaser or any person whom he may appoint to receive delivery on his behalf in possession
of the property and if be by removing any person who refuses to vacate the same.
201. Delivery of property in occupancy of tenant.-
Where the immovable property sold is in the occupancy of a tenant or other person entitled to
occupy the same and a certificate in respect thereof has been granted, the Commissioner shall,
on the application of the purchaser, order delivery to be made by affixing a copy of the
certificate of sale at some conspicuous place on the property, and proclaiming to the occupant
by beat of drum or other customary mode, at some convenient place that the interest of the
defaulter has been transferred to the purchaser.
202. Resistance or obstruction to possession of immovable property.-
(1) Where the holder of a certificate for the possession of immovable property or the
1 Substituted for "Certificate" by SRO 392(I)/2009, dated May 19, 2009.
2 Substituted for "e" and "r" respectively by SRO 392(I)/2009, dated May 19, 2009.
3 Bracket and figure "(1)" omitted by SRO 392(I)/2009, dated May 19, 2009.
4 Substituted for "from the definition or of" by SRO 392(I)/2009, dated May 19, 2009.
5 Inserted by SRO 392(I)/2009, dated May 19, 2009.
6 Substituted for "Certificate" by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 145
CHAPTER - XVI INCOME TAX RECOVERY RULES
purchaser of any such property sold in execution of a 1[notice is resisted or] obstructed
by any person in obtaining possession of the property, he may make an application to
the Commissioner complaining of such resistance or obstruction.
(2) The Commissioner shall fix a day for investigating the matter and shall summon the party
against whom the application is made to appear and answer the same.
203. Resistance or obstruction by defaulter.-
Where the Commissioner is satisfied that the resistance or obstruction was occasioned without
any just cause by the defaulter or by some other person at his instigation, he shall direct that the
applicant be put into possession of the property, and where the applicant is still resisted or
obstructed in obtaining possession, the Commissioner may also, at the instance of the applicant,
order the defaulter, or any person acting at his instigation, to be detained in the civil prison for
a term which may extend to thirty days.
204. Resistance or obstruction by bona fide Claimant.-
Where the Commissioner is satisfied that the resistance or obstruction was occasioned by any
person (other than the defaulter) claiming in good faith to be in possession of the property on his
own account 2[or] some person other than the defaulter, the Commissioner shall make an order
dismissing the application.
205. Dispossession by certificate holder or purchaser.-
(1) Where any person other than defaulter is dispossessed of immovable property by the
holder of a certificate for the possession of such property or where on such property has
been sold in execution of a Certificate, by the purchaser thereof, he may make an
application to the Commissioner complaining of such dispossession.
(2) The Commissioner shall fix a day for investigating the matter and shall summon the party
against whom the application is made to appear and answer the same.
206. Bona fide claimant to be restored to possession.-
Where the Commissioner is satisfied that the applicant was in possession of the property on his
own account or on account of some person other than defaulter, he shall direct that the applicant
be put into possession of the property.
207. Rules not applicable to transferee lite pendente.-
Nothing in rules 211 and 205 shall apply to resistance or obstruction in execution of a certificate for
the possession of immovable property by a person to whom the defaulter has transferred the
property after the institution of the proceedings in which the order was passed or to the
dispossession of any such person.
208. Delivery of movable property, debts and shares.-
(1) Where the property sold is movable property of which actual seizure has been made, it
shall be delivered to the purchaser.
(2) Where the property sold is movable property in the possession of some person other than
the defaulter, the delivery thereof to the purchaser shall be made by giving notice to the
person in possession prohibiting him from delivering possession of the property to any
1 Substituted for "Certificate is resisted" by SRO 392(I)/2009, dated May 19, 2009.
2 Substituted for "of" by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 146
CHAPTER - XVI INCOME TAX RECOVERY RULES
person except the purchaser.
(3) Where the property sold is a debt not secured by a negotiable instrument or is a share in
a corporation, the delivery thereof shall be made by a written order of the Commissioner
prohibiting the creditor from receiving the debt or any, 1[interest] thereon, and the debtor
from making payment thereof to any person except the purchaser, or prohibiting the
person on in whose name the share may be standing from making any transfer of the
share to any person except the 2[purchaser], or receiving payment of any dividend or
interest thereon, and the manager, secretary, or other proper officer of the corporation
from permitting any such transfer or making any such payment to any person except the
purchaser.
209. Execution of documents and endorsement of negotiable instruments.-
Where any endorsement or execution of document is required to transfer a negotiable instrument
or any share to a purchaser under these rules, such document shall be executed or endorsement
shall be made by the Commissioner.
210. Forms.-
Any notice, warrant of attachment, warrant of arrest, sale proclamation, sale certificate or order to
be issued under these rules, shall be issued in such form as the Board may from time to time
direct, and any defect or deficiency in form unless it adversely effects the interest of the parties,
shall not vitiate the proceedings taken or initiated.
1 Substituted for "rest" by SRO 392(I)/2009, dated May 19, 2009.
2 Substituted for "chaser" by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 147
CHAPTER - XVII NON-PROFIT ORGANISATIONS
1
[CHAPTER - XVII
NON-PROFIT ORGANIZATIONS
211. Procedure for the approval of a non-profit organization.-
(1) An institution, fund, trust, society or any other non-profit organization (hereinafter referred to in
this Chapter as organization) established in Pakistan for religious, educational, charitable,
welfare or development purposes or for the promotion of an amateur sport requiring approval
of the Commissioner under clause (36) of section 2 of the Ordinance, shall make an
application to the Commissioner in the following form, namely:-
APPLICATION FOR APPROVAL
FOR THE PURPOSES OF CLAUSE (36) OF SECTION 2
OF THE INCOME TAX ORDINANCE, 2001
To,
The Commissioner of 2[“Inland Revenue”],
______________ Zone,
______________ (City).
1. With reference to clause (36) of section 2 of the Income Tax Ordinance, 2001 (XLIX
of 2001), I the undersigned, hereby apply, on behalf of ________________________
(name of the organization) for its approval for the purposes of the said clause for the
tax year ending on __________________.
2. Necessary particulars are set out below, and in the schedule to this application.
3. The following documents required under sub-rule (2) of rule 211 of the Income Tax
Rules, 2002, are enclosed.
(i) ____________________________________________________
(ii) ____________________________________________________
(iii) ____________________________________________________
(iv) ____________________________________________________
(v) ____________________________________________________
Signature __________________________________
Name (in block letters). _______________________
Designation _______________________________
Application must be signed either by the President or the Secretary of the organization or by a
Trustee, of the trust.
SCHEDULE
PARTICULARS
1. Name of the organization (in block letters) _.
2. Full address of the organization (in block letters)
3. Date of registration of the organization .
1 Chapter XVII substituted by Notification No. SRO 541(I)/2003, dated June 13, 2003.
2
The words “Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 148
CHAPTER - XVII NON-PROFIT ORGANISATIONS
4. Its aims and objects.
(a) ____________________________________________________
(b) ____________________________________________________
(c) ____________________________________________________
(d) ____________________________________________________
5. Whether the organization has been registered under 1[the Companies Ordinance,
1984,] the Societies Registration Act, 1860 (XXI of 1860), or the Voluntary Social
Welfare Agencies (Registration and Control) Ordinance, 1961 (XLVI of 1961), or any
other law in substitution thereof relating to the registration of welfare organization or
established in pursuance of a Trust Deed. Please give/state the law and the number
and date of registration ________________.
6. Whether constitution, memorandum and articles of association, trust deed, rules and
regulations or bye-laws, as the case may be, conform(s) to the provisions of sub-rule
(1) of rule 213. If so, please give the number of Article/ Clause/ Rule etc., for each
provision.
7. Whether the organization ensures for the benefit of the general public or a particular
community or class of persons only (give full details).
8. The number of members /trustees of the organization on the date of application.
9. Accounting year of the organization commences on ______________________ and
ends on ______________________.
10. The following books of accounts are being regularly maintained by the organization
and are open for inspection without any hindrance to the general public.
(i) ____________________________________________________
(ii) ____________________________________________________
(iii) ____________________________________________________
2
[11. (i) Bank A/c No. _______________________________________
(ii) Name of Bank_______________________________________
(iii) Branch_____________________________________________]
Signature __________________________________
Name (in block letters). _______________________
Designation _______________________________
(2) An application under sub-rule (1) shall be accompanied by –
(a) a duly attested copy of the constitution, memorandum and articles of association,
rules and regulations or bye-laws, as the case may be, of the organization specifying
the aims and objects for which it is established;
1 Words etc. inserted by SRO 392(I)/2009, dated May 19, 2009.
2 th
Inserted by the S.R.O. 754(I)/2016 dated 15 August, 2016.
Income Tax Rules, 2002 149
CHAPTER - XVII NON-PROFIT ORGANISATIONS
1
[(aa) Details of Members/Trustees of the organization on the date of application.
(i) Name________________________
(ii) CNIC_________________________
(iii) Income declared________________
(iv) Tax Year______________________]
(b) a certified copy of the registered trust deed, in case of a Trust;
(c) a certified copy of certificate of registration in the case of an organization registered
under 1[the Companies Ordinance, 1984,] the Societies Registration Act, 1860 (XXI of
1860), the Voluntary Social Welfare Agencies (Registration and Control) Ordinance,
1961 (XLVI of 1961), or under any other law in substitution thereof relating to the
registration of welfare organization as applicable;
(d) duly attested copies of the balance sheet and of revenue accounts of the
organization as audited by a “qualified accountant” for the year immediately
preceding the year in which the application is made;
(e) the names 2[, CNIC/NTN, Last income declared, tax year] and addresses of the
promoters, directors, trustees, president, secretary, treasurer, manager and other
office bearers, as the case may be, of the organization, and indicating clearly their
family relationships, if any, with each other;
(f) for the purposes of clause (d), “qualified accountant” means,-
(i) a retired audit, accounts, treasury or taxation officer of the Government
not below BPS-17 or a bank manager, where the annual receipts of the
organization do not exceed Rs.0.5 million;
3
[ ]
4
[(iii) in other cases, a Chartered Accountant as defined under the Chartered
accountants Ordinance, 1960 (x of 1960) or a Cost and Management
accountant as defined under the Cost and Management Accountants Act,
1966 (XIV of 1966) or a firm of Chartered Accountants as defined under
the Chartered Accountants Ordinance, 1960 (X of 1960) or a firm of Cost
and Management Accountants as defined under the Cost and
Management Accountants Act, 1966 (XIV of 1966);]
(g) a detailed report with regard to the performance of the organization for
achieving its aims and objects during the 5[preceding financial year] preceding the
date on which application is made, duly evaluated and certified by an independent
certification agency approved by an authority designated by the Government of
Pakistan for this purpose or, till that authority is established, under
arrangements made by the Federal Board of Revenue 6[ 7[ 8[“Commissioner”] ] 9[:]
10
[Provided that till the approval of two such agencies, the applicant
1 th
Inserted by the S.R.O. 754(I)/2016 dated 15 August, 2016.
2 th
Inserted by the S.R.O. 754(I)/2016 dated 15 August, 2016.
3 Sub-clause (ii) as follows omitted by SRO 774(I)/2006, dated July 29, 2006.
4 Sub-clause (iii) as follows substituted by SRO 774(I)/2006, dated July 29, 2006.
5 Substituted for "three financial years" by SRO No. 608(I)/2005, dated June 13, 2005.
6 Inserted by SRO No. 608(I)/2005, dated June 13, 2005.
7 Inserted by SRO No. 608(I)/2005, dated June 13, 2005.
8
The words “or Commissioner of Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
9 Substituted for full stop by Notification No. SRO 1015(I)/2003, dated November 05, 2003.
10 Provisos inserted by Notification No. SRO 1015(I)/2003, dated November 05, 2003.
Income Tax Rules, 2002 150
CHAPTER - XVII NON-PROFIT ORGANISATIONS
organization shall have an option to get its performance appraised by 1[2[“Chief
Commissioner”], Regional Tax Office or Large Taxpayers Unit]:
Provided further that 3[4[“Chief Commissioner”] or Officers of Regional Tax
Office or Large Taxpayer Unit] shall apply the same parameters on applicant
organizations for the purpose of aforesaid evaluation as are approved by the FBR
to be applied by the certification agency.]
212. Decision on application.-
(1) On receipt of an application under rule 211, the Commissioner may make such inquiries
or call for such further information as the Commissioner may deem necessary and
after completion of formalities may approve the organization for the purpose of clause (36)
of section 2 of the Ordinance.
(2) An approval granted under sub-rule (1) shall be –
(a) notified in the official Gazette; 5[ and]
(b) subject to such conditions as the Commissioner may specify in the approval; 6[ ]
7
[ ]
213. Refusal to grant approval.-
(1) The approval shall not be granted if the constitution, memorandum and articles of
association, trust deed, rules and regulations or bye-laws, as the case may be,
specifying the aims and objects of the organization do(es) not provide-
(a) for the audit of the annual accounts of the organization every year by a qualified
accountant as specified in clause (f) of sub-rule (2) of rule 211;
(b) where the organization is registered under 8[the Companies Ordinance, 1984,] the
the Societies Registration Act, 1860 (XXI of 1860), the Voluntary Social Welfare
(Registration Control) Ordinance, 1961 (XLVI of 1961), or any other law in
substitution thereof relating to the registration of welfare organization, for the
quorum of a meeting of the members of the body in which the control of the
affairs of the organization vests, being not less than four or one-third of the total
number of the members of such body, whichever is greater;
(c) where the organization is a Trust as defined in the Trust Act, 1882 (II of 1882), for
the quorum of a meeting of the members of the body in which the control of the
affairs of the trust vests, being not less than three or one-third of the total number
of the members of such a body, whichever is greater;
(d) for the transfer of its assets, in the event of its dissolution, after meeting all
liabilities, if any, to another organization which is an approved non-profit
organization, within three months of the dissolution under intimation to the
Commissioner;
(e) for the utilization of its money, property or income or any part thereof solely for
promoting its objects;
1 Substituted for "CBR" by SRO 707(I)/2007, dated July 14, 2007.
2
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
3 Substituted for "CBR or its officer" by SRO 707(I)/2007, dated July 14, 2007.
4
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
5 Substituted for "semi colon" by Notification No. SRO 667(I)/2006, dated June 27, 2006.
6 Word omitted for "and" by Notification No. SRO 667(I)/2006, dated June 27, 2006.
7 Clause "(c)" omitted by Notification No. SRO 667(I)/2006, dated June 27, 2006.
8 Words etc. inserted by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 151
CHAPTER - XVII NON-PROFIT ORGANISATIONS
(f) for prohibiting any portion of its money, property or income being paid or
transferred directly by way of dividend, bonus or profit to any of its members or
the relative or relatives of a member or members;
(g) for the maintenance of accounts of the organization being kept in a scheduled
bank or in a post office or national savings organization, National Bank of
Pakistan or nationalized commercial banks;
(h) for prohibiting the making of any changes in the constitution, memorandum and
articles of association, trust deed, rules and regulations or bye-laws, as the case
may be, without the prior approval of the Commissioner:
Provided this clause will have effect only in cases where the approval is granted;
and
1
[(i) for restricting the surpluses or monies validly set apart, excluding restricted funds,
upto twenty-five percent of the total income of the year:
Provided that such surpluses or monies set apart are invested in
Government securities, 2[National Saving Schemes, issued by the Central
Directorate of National Savings] NIT units, a collective investment scheme
authorized or registered under the Non-Banking Finance Companies
(Establishment and Regulation) Rules, 2003, mutual fund, a real estate
investment trust approved and authorized under the Real Estate Investment Trust
Rules, 2006, or scheduled banks:
Explanation: For the purpose of this rule, “restricted funds” mean any fund
received by the organization but could not be spent and treated as revenue
during year due to any obligation placed by the donor.]
(2) The Commissioner may refuse to approve the organization if the Commissioner is satisfied
that the organization-
(a) has been or is being used for personal gain of any particular person or a group of
persons;
(b) has been propagating the view of a particular political party or a religious sect;
(c) has been or is being managed in a manner calculated to personally benefit its
members or their families; 3[ ]
(d) has not been or will not be able to achieve its declared aims and objects in view
of its set up, administration or otherwise as evaluated and certified by an
independent certification agency 4[or as evaluated by 5[“Chief Commissioner”],
Regional Tax Office or Large Taxpayer Unit under clause (g) of sub-rule (2) of
rule 211; or ]
6
[(e) has made expenditure on salaries exceeding 50% of the total receipts excluding
restricted donations or funds received during a tax year.]
7
[(f) the names, CNIC/NTN, last income declared, tax year and addresses of the
promoters, directors, trustees, president, secretary, treasurer, manager and other
1 Sub-clause (i) as follows substituted by SRO 774(I)/2006, dated July 29, 2006.
2 Words inserted by SRO 392(I)/2009, dated May 19, 2009.
3 Word "or" omitted by SRO 392(I)/2009 dated May 19, 2009.
4 Substituted for full stop and words inserted by SRO 392(I)/2009, dated July 19, 2009.
5
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
6 Clause "(e)" inserted by SRO 392(I)/2009, dated May 19, 2009.
7 th
Inserted by the S.R.O. 754(I)/2016 dated 15 August, 2016.
Income Tax Rules, 2002 152
CHAPTER - XVII NON-PROFIT ORGANISATIONS
office bearers, as the case may be, of the organization and indicating clearly their
family relationships, if any, with each other.]
(3) The Commissioner shall notify the applicant, in writing, the decision to refuse the
approval.
(4) The notice referred to in sub-rule (3) shall include a statement of reasons for the
refusal.
1
[214. Validity of the approval.-
The approval granted under rule 212 will remain in force for the 2[subsequent three years or] unless
withdrawn under rule 217 3[whichever is earlier].]
215. Finalization of applications.-
The Commissioner shall finalize applications under rules 4[211] within two months of their receipt.
5
[ ]
6
[217. Power to withdraw approval.-
(1) The Commissioner may, at any time, withdraw approval granted under rule 212, if he is
satisfied that-
(a) the constitution, memorandum and articles of association, trust deed, rules and
regulations or bye-laws, as the case may be, specifying the aims and objects of the
organization do(es) not provide for prohibiting the making of any changes in the
constitution, memorandum and articles of association, trust deed, rules, regulations
and bye-laws without prior approval of the Commissioner;
(b) the organization has-
(i) been or is being used for personal gain of any particular person or a group
of persons as specified in clause (a) of sub-rule (2) of rule 213;
(ii) been propagating the view of a particular political party or a religious sect
as specified in clause (b) of sub-rule (2) of rule 213;
(iii) been or is being managed in a manner calculated to personally benefit its
members or their families as specified in clause (c) of sub-rule (2) of rule
213; or
(iv) not been or will not be able to achieve its declared aims and objects in view
of its set up, administration or otherwise as evaluated and certified by an
independent certification agency as specified in clause (d) of sub-rule (2)
of rule 213;
(v) failed to give valid reasons for setting apart, or not utilizing, or
accumulating surpluses, excluding 7[restricted] funds, in excess of twenty
five percent of the income for the year;
(vi) failed to file the return of income supported with following documents;
1 Rule 214 substituted by SRO 667(I)/2006, dated June 27, 2006.
2 th
The words “subsequent years” substituted by the S.R.O. 754(I)/2016 dated 15 August, 2016.
3 th
Added by the S.R.O. 754(I)/2016 dated 15 August, 2016.
4 Substituted for "rules 211 and 214" by SRO 392(I)/2009, dated May 19, 2009.
5 Rule 216 omitted by SRO 667(I)/2006, dated June 27, 2006.
6 Rule 217 substituted by SRO 667(I)/2006, dated June 27, 2006.
7 Substituted for "unrestricted" by SRO 21(I)/2007, dated January 05, 2007.
Income Tax Rules, 2002 153
CHAPTER - XVII NON-PROFIT ORGANISATIONS
(a) the statement of audited balance sheet and statement of
accounts as mentioned in clause (d) of sub-rule (2) of rule 211;
(b) statement showing names and addresses of the persons from
whom donations, contributions, subscriptions etc exceeding
Rs.5,000/- have been received during the tax year;
(c) statement showing the names and addresses of donees and
beneficiaries etc to whom payments, services etc exceeding
Rs.5,000/- have been made during the tax year; and
(d) statement showing the money set apart or kept un-utilized with
reasons thereof;
(vii) failed to provide a detailed performance evaluation report in terms of
clause (g) of sub-rule (2) of rule 211, after every three years1[:]
4
[Provided that where such detailed performance evaluation report is not
submitted on or before 30th of September following every three tax years,
the Commissioner shall issue a show cause notice for withdrawal of
approval to the concerned organization as required under sub-rule (2)]
2
[(viii) failed to file statements of deduction of income tax under section 165
read with rule 44.]
3
[(ix) the names, CNIC/NTN, last income declared, tax year and addresses of the
promoters, directors, trustees, president, secretary, treasurer, manager
and other office bearers, as the case may be, of the organization and
indicating clearly their family relationships, if any, with each other.]
(2) Approval shall not be withdrawn under sub-rule (1) unless the organization has had an
opportunity to show cause against the action proposed to be taken.
(3) Where the Commissioner decides to withdraw approval under sub-rule (1), he shall intimate
the organization, in writing, of the decision including a statement of reasons for the decision.]
218. Appeal against a decision of Commissioner.-
4
[(1)] An organization dissatisfied with –
(a) a decision to refuse an application made under rule 211 or 5[ ]; or
(b) a decision to withdraw an approval under rule 217, may lodge an appeal 6[within
sixty days of the receipt of order from the Commissioner] in the following form with
the 7[8[“Chief Commissioner”], Regional Tax Office or Large Taxpayer Unit]
concerned, namely:-
GROUNDS OF APPEAL
(i) ____________________________________________________
(ii) ____________________________________________________
1 Substituted for full stop and proviso inserted by SRO 392(I)/2009, dated May 19, 2009.
2 Clause "(vii)" inserted by SRO 392(I)/2009, dated May 19, 2009.
3 th
Added by the S.R.O. 754(I)/2016 dated 15 August, 2016.
4 Rule 218 renumbered as sub-rule (1) by SRO 392(I)/2009, dated May 19, 2009.
5 Word and figure "or 214" omitted by SRO 392(I)/2009, dated May 19, 2009.
6 Words inserted by SRO 392(I)/2009, dated May 19, 2009.
7 Substituted for "Regional Commissioner of Income Tax" by SRO 392(I)/2009, dated May 19, 2009.
8
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 154
CHAPTER - XVII NON-PROFIT ORGANISATIONS
(iii) ____________________________________________________
(iv) ____________________________________________________
(v) ____________________________________________________
We/I __________________________________________ the appellant(s) named in the
above appeal do declare that what is stated therein is true to the best of our/my information
and belief.
Date _____________________________________
Signature __________________________________
Name. ____________________________________
Address ___________________________________
PARTICULARS
1. Name of the organization (in block letters).
2. Full address of the organization (in block letters).
3. Date of establishment of the organization.
4. Its aims and objects.-
(a) __________________________________
(b) __________________________________
(c) __________________________________
(d) __________________________________
5. Whether the organization has been registered under 1[the Companies Ordinance,
1984, or] the Societies Registration Act, 1860 (XXI of 1860), or the Voluntary
Social Welfare Agencies (Registration and Control) Ordinance, 1961 (XLVI of
1961), or any other law in substitution thereof relating to the registration of welfare
organization or established in pursuance of a Trust Deed. Please give/state the law
and the number and date of registration ____________________________.
6. Whether constitution, memorandum and articles of association, trust deed, rules and
regulations or bye-laws, as the case may be, conform(s) to the provisions of sub-rule
(1) of rule 213. If so, please give the number of Article/ Clause/ Rule etc., for each
provision.
7. Whether the organization ensures for the benefit of the general public or a particular
community or class of persons only (give full details).
8. The number of members/ trustees of the organization on the date of application.
Signature __________________________________
Name. (in block letters) _______________________
Designation ________________________________
1 Words etc. inserted by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 155
CHAPTER - XVII NON-PROFIT ORGANISATIONS
1
[(2) The 2[“Chief Commissioner”], Regional Tax Office or Large Taxpayer Unit shall make a decision
on the appeal of the organization within sixty days of its filing.]
219. Organization granted approval before commencement of these rules.-
The approval granted prior to the commencement of these rules to an organization shall be
deemed to have been withdrawn unless an application in the manner laid down in rule 214 is
made on behalf of such organization for3[and upto calendar year 2003 by the 30 th day of June
2004].
220. Relaxation of requirements or conditions.-
The Commissioner may relax or modify any of the requirements or conditions of this chapter, in
any individual case, if he is satisfied that the requirements or conditions could not be fulfilled by
the applicant for reasonable cause.
220A. Procedure for approval 4[ ] for purpose of 5[―clause (c) of sub section (2) of section 100C of the
Ordinance‖].-
(1) An organization established in Pakistan requiring the approval of the 6[ 7[“Chief
Commissioner”] ] under 8[ clause (c) of sub section (2) of section 100C of the Ordinance], shall;
(a) make an application to the 9[ 10[“Chief Commissioner”] ] in Form-I annexed to
this rule;
(b) the application shall be accompanied by-
(i) a duly attested copy of the constitution, memorandum and articles of
association, rules and regulations or bye-laws, as the case may be, of
the organization specifying the aims and objects for which organization is
established;
(ii) a certified copy of the registered trust deed, in case of a Trust;
(iii) a certified copy of the certificate of registration in the case of an
organization registered under 11[Companies Ordinance, 1984,] the
Societies Registration Act, 1860 (XXI of 1860), or the Voluntary Social
Welfare Agencies (Registration and Control) Ordinance, 1961 (XLVI of
1961), or under any other law in substitution thereof relating to the
registration of welfare organizations as applicable;
(iv) duly attested copies of balance sheets and of revenue accounts of
organization as audited by a “qualified accountant” for the three years
1 Sub-rule (2) inserted by SRO 392(I)/2009, dated May 19, 2009.
2
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
3 SRO 1015(I)/2003, dated November 05, 2003, substitutes "calendar year 2002 within the time specified before June
2003" while these words etc. appeared in the rule 219 before substitution of Chapter XVIII by SRO 541(I)/2003, dated
June 13, 2003. Moreover the proposed words "and upto calendar year 2003 by the 30th day of June 2014" appear to be
an intended insertion instead of substitution and has been so dealt with here.
4 Words "of a non-profit organization" omitted by SRO 595(I)/2005, dated June 02, 2005.
5
The expression “sub-clause (3) of clause (58) of Part I of the Second Schedule‖ substituted by SRO
1218(I)/2015 dated 08.12.2015.
6 Substituted for "Federal Board of Revenue" by SRO 880(I)/2006, dated August 25, 2006.
7
The words “Regional Commissioner of Income Tax” substituted by SRO 1218(I)/2015 dated
08.12.2015.Substituted
8
The expression “sub-clause (3) of clause (58) of Part I of the Second Schedule” substituted by SRO
1218(I)/2015 dated 08.12.2015
9 Substituted for "Board" by SRO 880(I)/2006, dated August 25, 2006.
10
The words “Regional Commissioner of Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
11 Words etc. inserted by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 156
CHAPTER - XVII NON-PROFIT ORGANISATIONS
immediately preceding the tax year in which the application is made;
1
[(v) the names, CNIC/NTN, last income declared, tax year and addresses of the
promoters, directors, trustees, president, secretary, treasurer, manager
and other office bearers, as the case may be, of the organization and
indicating clearly their family relationships, if any, with each other]; and
(vi) a detailed report with regard to the performance of the organization,
for achieving its aims and objects during the three financial years
immediately preceding the date of the application duly evaluated and
certified by an independent certification agency approved 2[and
appointed by the 3Federal Board of Revenue].
4
[Provided that the 5[6[“Chief Commissioner”], Regional Tax Office or Large
Taxpayers Unit] shall also receive applications for performance appraisal and
certification of applicant organizations till at least two such agencies have been
appointed:
Provided further that 7[8[“Chief Commissioner”], Regional Tax Office or Large
Taxpayers Unit] shall apply the same parameters on applicant organizations for
the purpose of aforesaid evaluation as are approved by the FBR to be applied by
the certification agency.]
(2) (a) On receipt of an application for registration under this rule, the 9[10[“Chief
Commissioner”] ], subject to the requirements and conditions specified in sub-rule
(3) and after such inquiry as it may deem necessary, grant approval to the
organization if-
(i) the organization has been formed for the purpose of establishing hospitals
or providing education or for community welfare or development;
(ii) it has operated and functioned anywhere in Pakistan, for a period of not
less than three years and has complied with minimum acceptable
standards of internal governance, accountability, transparency and
efficiency prescribed by any law for the time being in force;
(iii) its area of operation is wholly within Pakistan; and
(iv) its books of accounts are maintained regularly and in accordance with
the generally accepted accounting principles and satisfactory
arrangements exist for their inspection by interested members of the
public-.
(b) The approval shall be notified in the official Gazette.
1 th
The sub-clause (v) substituted by the S.R.O. 754(I)/2016 dated 15 August, 2016. The substituted sub-clause
reads as follows:-
“(v) the names and addresses of the promoters, directors, trustees, president, secretary,
treasurer, manager and other office bearers, as the case may be, of the organization and
indicating clearly their family relationships, if any, with each other]
2 Substituted for "by an authority designated by the Government of Pakistan for this purpose or till that authority
is established, under arrangements made by the Federal Board of Revenue" by SRO 1015(I)/2003, dated
November 05, 2003.
3
The words “Central Board of Revenue” substituted by the Finance Act, 2007
4 Provisos inserted by Notification No. SRO 1015(I)/2003, dated November 05, 2003.
5 Substituted for "CBR" by SRO 707(I)/2007, dated July 14, 2007.
6
The words “Director-General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
7 Substituted for "CBR or its officer" by SRO 707(I)/2007, dated July 14, 2007.
8
The words “Director-General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
9 Substituted for "Federal Board of Revenue" by SRO 880(I)/2006, dated August 25, 2006.
10
The words “Regional Commissioner of Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 157
CHAPTER - XVII NON-PROFIT ORGANISATIONS
1
[(c) The approval granted under rule 220A (2) will remain in force for subsequent years
unless withdrawn under sub-rule (7) of rule 220A.]
(d) For the purposes of this rule, “qualified accountant” has the same meaning as
assigned to it in clause (f) of sub-rule (2) of rule 211.
(3) Approval shall not be granted to an organization if the 3[ 2[“Chief Commissioner”] ] is
satisfied that-
(a) any of the requirements or conditions specified in sub-rules (1) and (2) has not
been fulfilled; or
(b) the organization has been or is being used or is likely to be used for personal
gains of any particular person or a group of persons; or
(c) the organization has been or is likely to be used for propagating the views of a
particular political party or a religious sect; or
(d) the organization has not been or will not be able to achieve its declared aims and
objects in view of its set up, administration or otherwise as evaluated and certified
by an independent certification agency; or
(e) the constitution, memorandum and articles of association, trust deed, rules and
regulations or bye-laws, as the case may be, specifying the aims and objects
of the organization do(es) not provide-
(i) for audit of the annual accounts of the organization, every year by a
“qualified accountant”;
(ii) for the transfer of its assets, in the event of its dissolution, after
meeting all liabilities, if any, to an organization approved under this rule or
rule 212 within three months of the dissolution under intimation to the
3 4
[ [“Chief Commissioner”] ]
(iii) for the regular maintenance of books of accounts in accordance with the
generally accepted accounting principles and for their inspection by the
interested members of the public, without any hindrance, at all reasonable
times;
(iv) for the utilization of its money, property or income or any part thereof
solely for promoting the objects specified in sub-clause (i) of clause (a) of
sub-rule (2);
(v) for the maintenance of accounts of the organization being kept in a
scheduled bank or in a post office or national savings organization,
National Bank of Pakistan or nationalized commercial banks;
(vi) for prohibiting the making of any changes in the constitution,
memorandum and articles of association, trust deed, rules and
regulations or bye-laws, as the case may be, without the prior approval of
the 5[ 6[“Chief Commissioner”] ]; and
7
[(vii) for restricting the surpluses or monies validly set apart, excluding
restricted funds, up-to twenty-five percent of the total income of the year:
1 Clause "(c)" substituted by SRO 880(I)/2006, dated August 25, 2006.
2
The words “Regional Commissioner of Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
3 Substituted for "Federal Board of Revenue" by SRO 880(I)/2006, dated August 25, 2006.
4
The words “Regional Commissioner of Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
5 Substituted for "Federal Board of Revenue" by SRO 880(I)/2006, dated August 25, 2006.
6
The words “Regional Commissioner of Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
7 Sub-clause (vii) substituted by SRO 880(I)/2006, dated August 25, 2006.
Income Tax Rules, 2002 158
CHAPTER - XVII NON-PROFIT ORGANISATIONS
Provided that such surpluses or monies validly set apart are invested in Government
securities, 1[National Saving Schemes issued by the Central Directorate of National
Savings,] NIT units, a collective investment scheme authorized or registered under the
Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003, mutual
fund, a real estate investment trust approved and authorized under the Real Estate
Investment Trust Rules, 2006, or scheduled banks:
Explanation: For the purpose of this rule, “restricted funds” mean any fund received by
the organization but could not be spent and treated as revenue during year due to any
obligation placed by the donor.]
2
[(4) The 3[“Chief Commissioner”] shall make a decision on the application of the organization
within two months of its receipt.]
4
[ ]
5
[(7) Power to withdraw approval.-
(1). The 6[“Chief Commissioner”] may, at any time, withdraw approval granted under
rule 220A(2), if he is satisfied that-
(a). the constitution, memorandum and articles of association, trust deed,
rules and regulations or bye-laws, as the case may be, specifying the
aims and objects of the organization do not provide for prohibiting the
making of any changes in the constitution, memorandum and articles of
association, trust deed, rules, regulations and bye-laws without prior
approval of the 7[“Chief Commissioner”];
(b) the organization has-
(i). been or is being used for personal gain of any particular person
or a group of persons;
(ii). been propagating the view of a particular political party or a
religious sect;
(iii). been or is being managed in a manner calculated to personally
benefit its members or their families; or
(iv). has not been, or will not be, able to achieve its declared aims and
objects in view of its set up, administration or otherwise as
evaluated and certified by an independent certification agency;
(v). failed to give valid reasons for setting apart, or not utilizing, or
accumulating surpluses, excluding 8[restricted] funds, in excess
of twenty five percent of the income for the year;
(vi). failed to file the return of income supported with the following
documents namely:-
(a). the statement of audited balance sheet and statement of
accounts;
1 Words etc. inserted by SRO 392(I)/2009, dated May 19, 2009.
2 Sub-rule (4) inserted by SRO 392(I)/2009, dated May 19, 2009.
3
The words “Regional Commissioner of Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
4 Sub-rules 4, 5 and 6 omitted by SRO 880(I)/2006, dated August 25, 2006.
5 Sub-rule 7 substituted by SRO 880(I)/2206, dated August 25, 2006.
6
The words “Regional Commissioner” substituted by SRO 1218(I)/2015 dated 08.12.2015.
7
The words “Regional Commissioner” substituted by SRO 1218(I)/2015 dated 08.12.2015.
8 Substituted for "unrestricted" by SRO 21(I)/2007, dated January 05, 2007.
Income Tax Rules, 2002 159
CHAPTER - XVII NON-PROFIT ORGANISATIONS
(b). statement showing names and addresses of the persons
from whom donations, contributions, subscriptions etc
exceeding five thousand rupees have been received
during the tax year;
(c). statement showing the names and addresses of donees
and beneficiaries etc to whom payments, services etc
exceeding five thousand have been made during the tax
year; and
(d). statement showing the money set apart or kept un-
utilized with reasons thereof; and
(e). a detailed performance evaluation report in terms of sub-
clause (vi) of clause (b) of sub-rule (1) of rule 220A, after
every three years;
1
[Provided that where such detailed performance evaluation
report is not submitted on or before the 30th of September
following every three Tax Years, 2[“Chief Commissioner”] shall
issue a show cause notice for withdrawal of approval to the
concerned organization as required under para (2) of the sub-
rule;]
3
[vii) failed to file statements of deduction of income tax under section 165 of
the Income Tax Ordinance, 2001 read with rule 44.]
(2). approval shall not be withdrawn under 4[para (1) of sub-rule (7)] unless the
organization has had an opportunity to show cause against the action proposed
to be taken; and.
(3). where the 5[“Chief Commissioner”] decides to withdraw an approval under 6[para
(1) of sub-rule (7)] he shall intimate the organization, in writing, of the decision
including a statement of reasons for the decision.]
7
[ ]
(9). The 8[ 9[“Chief Commissioner”] ] may relax or modify any of the requirement(s) or
condition(s) of this rule in any individual case, if it is satisfied that the
requirement(s) or condition(s) could not be fulfilled by the applicant for reasonable
cause.
10
[ ]
Form-1
1 Proviso inserted by SRO 392(I)/2009 dated May 19, 2009.
2
The words “Regional Commissioner of Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
3 Clause (vii) inserted by SRO 392(I)/2009, dated May 19, 2009.
4 Substituted for "sub-rule (1)" by SRO 392(I)/2009, dated May 19, 2009.
5
The words “Regional Commissioner” substituted by SRO 1218(I)/2015 dated 08.12.2015.
6 Substituted for "sub-rule (1)" by SRO 392(I)/2009, dated May 19, 2009.
7 Sub-rule 8 omitted by SRO 880(I)/2006, dated August 25, 2006.
8 Substituted for "Board" by SRO 880(I)/2006, dated August 25, 2006.
9
The words “Regional Commissioner of Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
10
Sub-rule (10) omitted by SRO1218(I)/2015 dated 08.12.2015. The omitted sub-rule read as under:
“(10) The approval granted prior to the commencement of these rules to an organization shall be deemed
to have been withdrawn unless an application in the manner laid down in sub-rule (4) is made on behalf of
such organization for calendar year 2003 by the 30th June, 2004.”
Income Tax Rules, 2002 160
CHAPTER - XVII NON-PROFIT ORGANISATIONS
[See rule 220A (1)(a)]
Application for Approval under 1[“clause (c) of sub section (2) of section 100C of”] the
Income Tax Ordinance, 2001
To,
2
[The 3[“Chief Commissioner of Inland Revenue”] ]
With reference to 4[“clause (c) of sub section (2) of section 100C of”] the Income Tax
Ordinance, 2001 (XLIX of 2001), I, the undersigned, hereby apply, on behalf of
_________________ ________________________________ (name of the organization)
for its approval for the purposes of the said clause for the tax year ending on
______________________.
2. Necessary particulars are set out below, and in the schedule to this application.
3. The following documents required under clause (b) of sub-rule 1 of Rule 220A are
enclosed.
(i)
(ii)
(iii)
(iv)
(v)
Signature __________________________________
Name (in block letters) _______________________
Designation ________________________________
Application must be signed either by the President or the Secretary of the organization or
by a Trustee of the Trust.
SCHEDULE
Particulars
1. Name of the Organization (in block letters) .
2. Full address of the organization (in block letters) .
3. Date of registration of the organization .
4. Its aims and objects
(a) ____________________________________________________
(b) ____________________________________________________
(c) ____________________________________________________
5. Where the organization has been registered under 5[the Companies Ordinance,
1984,] the Societies Registration Act, 1860 (XXI of 1860), or the Voluntary Social
1
The expression “clause (58) of Second Schedule to” omitted by SRO 1218(I)/2015 dated 08.12.2015.
2 Substituted for "The Secretary, Federal Board of Revenue, Islamabad" by SRO 880(I)/2006, dated August 25, 2006.
3
The words “Regional Commissioner of Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
4
The words “clause (58) of the Second Schedule to” substituted by SRO 1218(I)/2015 dated 08.12.2015.
5 Words etc. inserted by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 161
CHAPTER - XVII NON-PROFIT ORGANISATIONS
Welfare Agencies (Registration and Control) Ordinance, 1961 (XLVI of 1961), or
any other law or established in pursuance of a Trust Deed. Please give/ state the
law, the number and date of Registration ___________________.
6. Whether the constitution, memorandum and articles of association, trust deed,
rules and regulations or bye-laws, conforms to the provisions of sub-rules (2) and
(3) of rule 220A. If so, please give the number of article/ clause/ rule for each
provision.
7. Whether the organization ensures for the benefit of the general public or a
particular community or class of persons only (give full details).
8. The number of members/ trustees of the organization on the date of application.
9. Accounting year of the organization commences on ___________________ and
ends on ___________________.
10. The following books of accounts are being regularly maintained by the
institution and are open for inspection without any hindrance to the general
public.
(i)
(ii)
(iii)
Signature __________________________________
Name (in block letters) _______________________
Designation ________________________________
1
[ ]
2
[220B. Approval and appointment of certification agencies.-
(1) Whereas rule 211 to 220A, both inclusive, provide for performance evaluation of non-profit
organizations with regard to their aims and objectives during the last three years by
approved independent certification agencies, the procedure given in the following sub-
rules shall apply in respect of approval and appointment of such certification agencies.
(2) The Chairman, Federal Board of Revenue, shall, in his discretion, constitute a Committee
for approval and appointment of certification agencies, hereinafter referred to as the
Committee, comprising of not less than three members. The Chairman, Federal Board of
Revenue shall also designate a member of the Committee to serve as its Chairman. All
nominations to the Committee shall be ex-officio. One third of the membership or two
members of the Committee, whichever is larger, shall constitute the quorum for meetings
of the Committee.
(3) An application for approval and appointment as a certification agency shall be placed
before the Committee.
(4) The Committee shall consider the application on its own merit and decide through a
majority vote. The Chairman of the Committee shall caste a vote only in case of a tie.
(5) In its deliberations on the application, the Committee shall consider, inter alia, the
following criteria, for approval and appointment of certification agency, namely:-
1 Form II omitted by SRO 880(I)/2006, dated August 25, 2006.
2 Rule 220B inserted by Notification No. SRO 745(I)/2004, dated August 30, 2004.
Income Tax Rules, 2002 162
CHAPTER - XVII NON-PROFIT ORGANISATIONS
(a) demonstrated and established eminence, credibility and stature of the governing
body of such organization that brings respect and credibility to the organization
and its work;
(b) understanding of the organization, essentially the senior management and
program staff, of the parameters of evaluation as approved by the Federal
Board of Revenue;
(c) human resource, quantity as well as quality, available with the organization to
conduct professional, objective and transparent evaluations of non-profit
organizations;
(d) financial resources available with the organization for meeting the costs
incurred on such evaluations;
(e) organizational understanding and experience of working with the non-profit
organizations;
(f) experience of evaluating non-profit organizations or social programs;
(g) systems put in place by the organization to conduct evaluation and award of
certification; and
(h) monitoring mechanisms to ensure transparency and objectivity.
(6) The Committee may call for any document, report and statement from the organization
concerned to assess the capacity of the organization to undertake professional, objective
and transparent evaluation as per the criteria specified in sub-rule (5). The
Committee may also interview the managerial and program staff of the organization to
assess their level of experience, understanding and professionalism.
(7) In no case, however, the committee shall decide to authorize an organization which-
(a) is not registered in Pakistan under any of the relevant laws;
(b) does not specifically prohibit distribution of profit, if any, to its members or staff;
(c) is controlled in part or wholly by the Federal Government, Provincial Government
or a local Government; and
(d) in its other programmes create a conflict of interest in evaluating non-profit
organization.
Explanation: A grant-making organization would have a conflict of interest if it undertakes
evaluation and certification of its grant-recipient or potential-recipient organizations.
Similarly, a capacity building organization, evaluating non-profit organizations whose
capacity it has built or may build in future, would be in a conflict of interest situation.
(8) An application received by the Committee may be decided upon within a period of three
months from the date of the receipt of such application.
(9) An applicant adversely affected by any decision of the Committee may file an appeal
before the Member (1[“Inland Revenue”]), Federal Board of Revenue, within thirty days of
the service of the decision upon the application.
(10) The approval and appointment of an organization as a certification agency shall be
notified in the official Gazette.
(11) Any approval and appointment granted under this rule shall be for a period of three years
and thereafter the Committee shall re-assess the capacity and evaluate the performance
1
The words “Direct Taxes” substituted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 163
CHAPTER - XVII NON-PROFIT ORGANISATIONS
of such organization to function as a certification agency. The Committee shall complete
such re-evaluation and its decision within three months, during which the certification
agency shall continue to function as a legitimate certification agency.
(12) In case of any change in the status of an approved and appointed certification agency that
may adversely affect its functioning as such an agency or in case of any violation of the
standards of professionalism, transparency, integrity or objectivity coming to the
knowledge of the Committee, the Committee may, after due inquiry and after providing
proper opportunity of being heard to the agency, withdraw such approval and appointment
at any time.]
Income Tax Rules, 2002 164
CHAPTER - XIX MISCELLANEOUS
CHAPTER - XVIII
TAX CLEARANCE CERTIFICATE
221. Tax clearance certificate.-
(1) A person leaving Pakistan permanently may apply to the Commissioner for a tax
clearance certificate referred to in sub-section (3) of section 145 where –
(a) the person has satisfied all income tax liabilities; or
(b) the person has made arrangements to the satisfaction of Commissioner for
payment of income tax liabilities.
(2) An application referred to in sub-rule (1) shall be in the following form, namely:-
APPLICATION FOR A CERTIFICATE UNDER SECTION 145
OF THE INCOME TAX ORDINANCE, 2001
Not for tourists who have earned no income from Pakistan source and have come on
tourist visa and stay is not more than 90 days in a tax year.
To,
The Commissioner,
______________ Zone,
______________ (City).
Sir,
I request that an Tax Clearance Certificate under section 145 of the Income Tax
Ordinance, 2001, be granted to me. I give below necessary particulars:-
1. Name of applicant (in block letters) ______________________________________
2. Domicile _____________________________________________________________
3. Present address ____________________________________________________
4. Address in Home Country _____________________________________________
5. Nature of business, professions or vocation in Pakistan (if visit to Pakistan was
made only as a tourist and no income was earned during the period of stay in
Pakistan, it should be so stated).
6. Place(s) at which the business, profession or vocation is or was carried on _______
_______________________________.
7. Name and address of employers of the ________________________________
_________________________ Applicant (in case the applicant is representing a
firm or a company, the name and address of the company or firm should be
stated here.
8. Name of the Commissioner, if any, where last assessment of the applicant was
made _________________.
9. Date of arrival in Pakistan ____________________________________________
10. Probable date of departure ____________________________________________
11. Destination __________________________________________________________
Income Tax Rules, 2002 165
CHAPTER - XIX MISCELLANEOUS
12. Mode of travel (by air/sea/land) _________________________________________
13. Place ________________________ Date ________________________
14. Made the payment of tax with the evidence.
15. Guarantee as per rule 158 is enclosed.
Date ____________________ 20___
Yours faithfully,
Signature
(3) An application referred to in clause (b) of sub-rule (1) shall be accompanied by a
certificate of guarantee of the applicant's employer or business associate in the following
form, namely:-
GUARANTEE CERTIFICATE TO BE FURNISHED BY EMPLOYER OR
BUSINESS ASSOCIATE OF THE APPLICANT
(1) Certified that (Name in block letters) is our employee/ representative /associate.
(2) (i) Certified that _______________ (give name) is leaving Pakistan and tax
demand of Rs.______________ is outstanding him. The assessment is
pending resulting in tax liability.
(ii) A cheque for the amount of tax due along with the computation of income is
enclosed.
(iii) We undertake to pay the tax liability, if any, when determined.
Address Signature
Associates Designation
Seal of the business
Strike out whichever is in applicable.
222. Form of tax clearance certificate under section 145.-
For the purposes of sub-section (3) of section 145, a tax clearance certificate shall be in the following
form, namely:-
TAX CLEARANCE CERTIFICATE UNDER
COUNTERFOIL OF TAX CLEARANCE SECTION 145 OF THE INCOME TAX
CERTIFICATE UNDER SECTION, ORDINANCE.
Book No. Serial No. Book No. Serial No.
Name
Income Tax Office
Address
Date
Nationality
Nature of business, This is to certify that _________________________
profession or of________________________________________
Vocation Pakistan has no liability has made satisfactory arrangement
for his/her liabilities under the Income Tax
Date of arrival in Ordinance, 2001 or the Income Tax Ordinance,
Pakistan 1979)
Income Tax Rules, 2002 166
CHAPTER - XIX MISCELLANEOUS
Date of departure
This Certificate is valid
Destination
Certificate valid
Initials of
Commissioner Commissioner
Signature/ left hand thumb of Application/ or person Signature/ left hand thumb of Application/ or person
receiving the Certificate on behalf of the applicant. receiving the Certificate on behalf of the applicant.
1
[223. Form of tax exemption certificate.-
On receipt of an application under rule 221, the Commissioner shall issue an exemption certificate
under section 145 in the following form, namely:-
TAX EXEMPTION CERTIFICATE
COUNTERFOIL OF TAX EXEMPTION UNDER SECTION 145 OF THE
CERTIFICATE UNDER SECTION 145 INCOME TAX ORDINANCE, 2001
Book No. Serial No. Book No. Serial No.
Name
Address
Commissioner
Nationality
Division __________ Jurisdiction
Nature of business,
profession or
vocation in Pakistan
Signature/ left hand thumb of impression of
Date of departure Applicant/ or person receiving the certificate on
behalf of the applicant.]
Destination
Probable date of
return to Pakistan
Certificate valid upto
Initials of Commissioner
Signature/ left hand thumb of impression of
Applicant/ or person receiving the certificate
on behalf of the applicant.
(i) they have not spent more than 90 days at a time in Pakistan; and
(ii) they have not spent more than 90 days in any financial year in Pakistan.
2
[ ]
1 Rule 223 substituted by SRO 392(I)/2009, dated May 19, 2009.
2
Omitted “(iii) passengers travelling by a pilgrim ship which sails direct from a Port in Pakistan to Jeddah.”
Income Tax Rules, 2002 167
CHAPTER - XIX MISCELLANEOUS
CHAPTER - XIX
MISCELLANEOUS
1
[224. Conditions for approval of leasing companies for claim of depreciation deduction.-
The following conditions shall be fulfilled by a leasing company or a modaraba to claim
deduction for depreciation on lease of depreciable assets under this rule, namely:-
(i) The leasing company is engaged principally in the business of leasing of assets and has
been issued a licence by the Securities and Exchange Commission of Pakistan to
operate under the terms and conditions specified therein; and
(ii) the leasing company or a modaraba doing leasing business undertakes that where a
motor vehicle is given on lease, the purchase value thereof shall be restricted to the
amount specified in the Third Schedule to the Ordinance, for the purposes of claiming
depreciation or the expenditure on such lease.]
225. Recognized Associations of Accountants for the purpose of section 223.-
The following bodies are recognized by the Board as associations of accountants for the
purpose of section 223, namely:-
(a) The Institute of Chartered Accountants in England and Wales;
(b) The Institute of Chartered Accountants in Scotland;
(c) The Institute of Chartered Accountants in Ireland;
(d) The Society of Incorporated Accountants and Auditors, London; and
(e) The Association of 2[Chartered] Certified Accountants, United Kingdom.
226. Appointment of valuers.-
(1) A person desiring to be appointed as a valuer for the purposes of section 222 shall make
an application to the Commissioner in duplicate setting out the fact or facts by virtue of
which the person claims to be qualified for such appointment.
(2) For the purpose of sub-rule (1) a person qualified for appointment as a valuer means a
person who:-
(a) holds a degree or equivalent qualification in civil engineering or mechanical
engineering or mechanical and electrical engineering from any University
incorporated under any law for the time being or accredited or affiliated by any
association of universities or college in force in Pakistan and Azad Kashmir or a
like degree or qualification conferred by any foreign university incorporated by law
of that country and recognized by a Pakistani University;
(b) holds an internationally recognized qualification in architecture equivalent to or
comparable with the Associate- ship of Royal Institute of British Architects;
(c) having successfully completed a diploma course in architecture or civil
engineering or mechanical engineering or mechanical and electrical engineering
or automobile engineering from a recognized institution has worked with a
qualified architect or engineer or in a Government or quasi-Government
department for a period of three years;
1 Rule 224 substituted by SRO 392(I)/2009, dated May 19, 2009.
2 Word inserted by SRO 590(I)/2004 dated July 07, 2004.
Income Tax Rules, 2002 168
CHAPTER - XIX MISCELLANEOUS
(d) has held the insurance surveyor certificate issued by the department of Insurance
for a period of five years;
(e) has retired after putting in satisfactory service in the 1[“Inland Revenue”]
Department or the Customs Department or judiciary or in a revenue collecting
agency of the Government for period of not less than ten years in a post or
posts in a grade not less than Grade 17; or
(f) for the purpose of valuation of such assets as require specialized knowledge not
available to persons qualified under clauses (a), (b), (c), (d) and (e) of this sub-
rule, any person, who is in the opinion of the Commissioner is fit to be
appointed as a valuer.
(3) Notwithstanding anything contained in sub-rule (2), no person shall qualify for
appointment as a valuer if the person-
(a) has been dismissed or removed from Government service;
(b) is an un-discharged insolvent;
(c) has been convicted of any offence under any law or has been found guilty of
misconduct in his professional capacity which, in the opinion of the
Commissioner, renders him unfit to 2[be] registered as a valuer; or
(d) has been representing taxpayers before income tax authorities.
(4) On receipt of an application under sub-rule (1), the Commissioner may make such
inquiries or call for such further information or evidence as may be deemed necessary.
(5) If the Commissioner is satisfied that a person should be appointed as a valuer for the
purposes of section 222, the Commissioner shall notify the person in writing of the
decision.
(6) Where the Commissioner decides to refuse an application under this rule, the
Commissioner shall give the applicant notice, in writing, of the decision including a
statement of reasons for the decision.
(7) The appointment of a value may be terminated by the Commissioner at his discretion at
any time without assigning any reason and without any compensation.
3
[227. Scale of remuneration, fees and allowances for a valuer.-
(1) A valuer appointed under section 222 shall not be paid any retention fee but would be
entitled to remuneration at the following scale:-
Rs.
Where the value of assets does not exceed
Rs.1,000,000/- 5,000/-
Where the value of assets exceeds Rs.1,000,000/- but
does not exceed Rs.5,000,000/- 10,000/-
Where the value of assets exceeds Rs.5,000,000/- but
does not exceed Rs.10,000,000/- 20,000/-
Where the value of assets exceeds Rs.10,000,000/- 30,000/-
1
The words “Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
2 Substituted for "e" by SRO 392(I)/2009, dated May 19, 2009.
3 Rule 227 substituted by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 169
CHAPTER - XIX MISCELLANEOUS
(2) In addition to remuneration at the scale prescribed under sub-rule (1), a valuer shall be
entitled to the following fee and allowance:-
(a) a fee of Rs.500/- per day in the event of attendance before the Appellate
Tribunal in connection with the valuation made in any case; and
(b) traveling expenses to which a Government servant in BPS-17 is entitled.]
228. Valuation of assets.-
1
[(1) The valuation of immovable property for the purposes of section 111 shall be taken to be-
2
[(a) the fair market value of immovable property shall be the value notified by the Board
under sub-section (4) of section 68, in respect of area or areas specified in the said
notifications;
(b) if the fair market value of any immovable property of any area or areas has not been
determined by the Board in the notification referred to in sub-section (4) of section 68,
the fair market value of such immovable property shall be deemed to be the value
fixed by the District Officer (Revenue) or provincial or any other authority authorized in
this behalf for the purposes of stamp duty; and
(c) in the case of agricultural land, the value shall be equal to the average sale price of
the sales recorded in the revenue record of the estate in which the land is situated for
the relevant period or time;
(d) if in a case sale price recorded in the instrument of sale of any property is higher than
the fair market value as determined under clauses (a), (b) and (c), the applicable price
shall be higher of the two; and
(e) in the case of sale price of any auctioned property or the fair market value as
determined under clauses (a), (b) and (c), the higher price shall be applicable.] ]
(2) For the purposes of section 111 and subject to sub-rule (2), the value of motor cars and
jeeps shall be determined in the following manner, namely:-
(a) the value of the new imported car or jeep shall be the C.I.F. value of such car or
the jeep, as the case may be, plus the amount of all charges, customs-duty, sales
tax, levies, octroi fees and other duties and taxes leviable thereon and the costs
incurred till its registration;
(b) the value of a new car or jeep purchased from the manufacturer or assembler or
dealer in Pakistan, shall be the price paid by the purchaser, including the amount
of all charges, customs-duty, sales tax and other taxes, levies, octroi, fees and all
other duties and taxes leviable thereon and the costs incurred till its registration;
(c) the value of used car or jeep imported into Pakistan shall be the import price
adopted by the customs authorities for the purposes of levy of customs-duty plus
freight, insurance and all other charges, sales tax, levies octroi, fees and other
duties and taxes leviable thereon and the costs incurred till its registration;
1 Sub-rule (1) substituted by SRO 392(I)/2009, dated May 19, 2009.
2
Clauses (a), (b) and (c) substituted by the S.R.O. 978(I)/2016 dated 18.10.2016. Substituted clauses read as
follows:-
(a) in the case of open plot, the value determined by the development authority or government agency on the basis
of the auction price in respect of similar plots in the area where the plot in question is situated or in case where
such value is not determined, the value fixed by the District Officer Revenue or provincial authority authorized in
this behalf for the purposes of stamp duty;
(b) in the case of agricultural land, the value equal to the average sale price of the sales recorded in the revenue record
of the estate in which the land is situated for the relevant period or time; or
(c) in the case of constructed immovable property, value shall be determined at the fair market value as defined in
section 68 or the value fixed by the District Officer (Revenue) whichever is higher.”
Income Tax Rules, 2002 170
CHAPTER - XIX MISCELLANEOUS
(d) the value of a car or jeep specified in clause (a), (b) and (c) at the time of its
acquisition shall be the value computed in the manner specified in the clause (a),
(b) or (c), as the case may be, as reduced by a sum equal to ten percent of the
said clause for each successive year, upto a maximum of five years; or
(e) the value of a used car or jeep purchased by an assessee locally shall be
taken to be the original cost of the car or the jeep determined in the manner
specified in clause (a), (b) or (c), as the case may be, as reduced by an amount
equal to ten percent for every year following the year in which it was
imported or purchased from a manufacturer.
(3) In no case shall the value be determined at an amount less than fifty percent of the value
determined in accordance with clause (a), (b) or (c) or the purchase price whichever is
more.
(4) For the purposes of section 61, the value of any property donated to a non-profit
organization shall be determined in the following manner, namely:-
(a) the value of articles or goods imported into Pakistan shall be the value
determined for the purposes of levy of customs duty and the amount of such duty
and sales tax, levies, fees, octroi and other duties, taxes or charges leviable
thereon and paid by the donor;
(b) the value of articles and goods manufactured in Pakistan shall be the price as
recorded in the purchase vouchers and the taxes, levies and charges leviable
thereon and paid by the donor;
(c) the value of articles and goods which have been previously used in Pakistan and
in respect of which depreciation has been allowed, the written down value, on
the relevant date as determined by the Commissioner;
(d) the value of a motor vehicle shall be the value as determined in accordance with
rule; and
(e) the value of articles or goods other than those specified above, shall be the fair
market value as determined by the Commissioner.
229. Filing of returns, statements and documents and issuance of orders, notices through
computers.-
(1) Notwithstanding anything contained in these rules taxpayer or any person responsible for
furnishing the prescribed statements or returns may furnish such statement or return, on
computer media and in such language, program arrangement and data formats and
representations which are compatible with those of the 1[“Inland Revenue”] Department
and any other technical specification as the 2[Federal Board of Revenue] may prescribe;
accompanied by a certificate in the following form and duly signed by the person
authorized to sign such statement or return or the department may issue notice orders, or
communication or production of documents in appeals or courts taken through computers
or scanning images duly certified, namely:-
CERTIFICATE
I, ____________________________ S/o. _________________________ do hereby certify
that the data and information contained in the enclosed disk, diskette, tape or cartridge or
scanning image or electric communication is complete, correct and true to the best of my
knowledge and belief.
1
The words “Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
2 Substituted for "RCIT or Committees" by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 171
CHAPTER - XIX MISCELLANEOUS
I, further certify that the return of income contained in the aforementioned media have been
duly verified and affirmed to be true by the respective assessee.
Signature __________________________________
Name. (in block letters) _______________________
Designation ________________________________
Date _____________________________________
(2) Notwithstanding anything contained in these rules, any order required to be made or
notice to be issued or assessment or computation made, or document required to be
prepared or issued under the Ordinance may be generated through the computer system
and no such order, notice, assessment, computer document shall require the signature of
the concerned officer whose name and designation is specified on the aforementioned
documents.
230. Charges for various forms.-
The following forms shall be provided after 30th June, 2002 on payment as mentioned against
each:-
Form Charge
(i) Form of return of total income. Rupees Five each.
Form of Wealth statement under section 116 of the
(ii) Rupees Five each.
Income Tax Ordinance.
1
[ ]
2
[231. Computation of export profits attributable to export sales.-
(1) Where a taxpayer exports any goods manufactured in Pakistan, the taxpayer's profits
attributable to export sales of such goods shall be computed in the following manner,
namely:-
(a) where a taxpayer maintains separate accounts of the business of export of
goods manufactured in Pakistan, the profits of the export business shall be
taken to be such amount as may be determined by the Commissioner in
accordance with the provisions of Ordinance on the basis of such accounts; or
(b) in other cases, the profits of such business shall be taken to be an amount
which bears to the total profits of the business of the taxpayer from the sale of
goods, the same proportion as the export sales of goods manufactured in
Pakistan bear to the total sales of goods.
(2) For the purpose of sub-rule,-
(a) the expression “export sales'' means the f.o.b. price of the goods exported;
(b) the expression “total sales'' means,-
(i) the aggregate of export sales as determined under clause (a);
(ii) the ex-factory price of goods sold in Pakistan, where the goods exported
out of Pakistan were manufactured by the exporter; or
(iii) the ex-godown price of goods sold in Pakistan, in other cases.]
1 Rule 231 omitted by SRO 392(I)/2009, dated May 19, 2009.
2 Rule 231 inserted by SRO 58(I)/2010, dated February 02, 2010.
Income Tax Rules, 2002 172
CHAPTER - XIX MISCELLANEOUS
1
[231A. Procedure for issuance of advance ruling under section 206A.-
(1) A non-resident person desiring an advance ruling under section 206A of the Ordinance,
2001 (XLIX of 2001) shall make an application to the Federal Board of Revenue in the
following form set out in the Schedule below.
(2) The application under sub-section (1) shall be considered by a Committee consisting of
the following members, namely:-
(a) Chairman, Federal Board of Revenue Chairman
(b) Member 2[“(Inland Revenue)”], FBR Member
3
(c) [Senior Joint Secretary], Law, Justice . Member
and Human Rights Division.
(3) The Committee may obtain comments of the Commissioner 4[ ] concerned and, if it
considers necessary, advice of a legal expert on the application and decide the issue,
as it may deem appropriate, in a joint sitting or through circulation amongst its members.
(4) Advance ruling for the purposes of this rule means determination by the Committee in
relation to the transaction which has been undertaken or is proposed to be undertaken
by a non-resident person the question of law specified in the application.
(5) The advance ruling shall be binding on the Commissioner only in respect of the specific
transaction on which such advance ruling is issued. The advance ruling shall continue
to remain in force unless there is a change in facts or in the law on the basis of which the
advance ruling was pronounced.
(6) The copy of the advance ruling pronounced by the Federal Board of Revenue shall be
provided to the applicant and to the Commissioner 5[ ] having jurisdiction over the case.
(7) Notwithstanding anything contained in this rule, the advance ruling shall cease to be
binding on the Commissioner, if it is subsequently found to have been obtained by fraud
or misrepresentation of facts about the nature of the transaction on which advance ruling
was issued.
(8) An application filed under this rule shall be disposed of not later than ninety days of its
receipt.
231B. Withdrawal of application.-
The applicant may withdraw the application made under rule 231A at any time before the advance
ruling in issued.
SCHEDULE
[See sub-rule (1)]
Application for advance ruling under section 206A
of the Income Tax Ordinance, 2001
To
The Chairman,
Federal Board of Revenue,
Islamabad
1 Rule 231A and 231B inserted by SRO 130(I)/2004, dated February 27, 2004.
2
The words and brackets “(Direct Taxes)” substituted by SRO 1218(I)/2015 dated 08.12.2015.
3 Substituted for "Solicitor General" by SRO 54(I)/2009, dated January 22, 2009. Earlier it was substituted for "Additional
Secretary" by SRO 756(I)/2008, dated July 15, 2008.
4
The words “of Income Tax” omitted by SRO 1218(I)/2015 dated 08.12.2015.
5
The words “of Income Tax” omitted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 173
CHAPTER - XIX MISCELLANEOUS
Dear Sir,
The undersigned being duly authorized hereby apply on behalf of _________________ (name of
the non-resident) for advance ruling under section 206A of the Income Tax Ordinance, 2001 (XLIX
of 2001).
2. Necessary details of the transaction are set out below and in the Annexure to this
application.
3. The following documents as required under rule 231A of Income Tax Rules, 2002 are
enclosed:-
(a) _______________________________________________
(b) _______________________________________________
(c) _______________________________________________
(d) _______________________________________________
(e) _______________________________________________
Yours faithfully,
Signature __________________________________
Name (in block letters) _______________________
Designation ________________________________
Annexure
[See paragraph 2 of the Schedule]
(1) Name of the non-resident person (in block letters) ________________________________
(2) Permanent address and telephone and fax numbers of the non-resident person (in block
letters) __________________________________________________________________
1
[ ]
2
[ ]
(5) Country of origin ___________________________________________________________
(6) National Tax Number _______________________________________________________
(7) The following is the statement of the relevant facts of the transaction having bearing on the
question(s) on which the resolution is required (Please annex extra sheet, if required):
(8) Statement containing the applicant's interpretation of law or facts, as the case may be,
in respect of the question(s) on which advance ruling is required (Please annex extra sheet,
if required) is as follows:-
(9) The undersigned, solemnly declare that :-
(a) full and true particulars of the transaction relevant for the purposes of advance
ruling applied for have been disclosed and no material aspect affecting the
determination of the application of the Income Tax Ordinance, 2001, in this behalf
has been withheld; and
1
Serial (3) omitted by SRO 1218(I)/2015 dated 08.12.2015. The omitted serial read as under:
“(3) Address in Pakistan __________________________”
2
Serial (4) omitted by SRO 1218(I)/2015 dated 08.12.2015. The omitted serial read as under:
“(4) Telephone Number ___________ Fax Number ______________”
Income Tax Rules, 2002 174
CHAPTER - XIX MISCELLANEOUS
(b) that the above issue(s) is/ are not pending before any Income Tax Authority,
Appellate Tribunal or Court for adjudication.
Yours faithfully,
Signature __________________________________
Name (in block letters) _______________________
Designation ________________________________
Address in Pakistan__________________________
Telephone No. ______________________________
Fax No. ___________________________________ ]
1
[231C. Income tax 2[alternative] dispute resolution.-
(1) This rule shall apply to all cases of disputes brought or specified for resolution under
section 134A.
(2) In this rule, unless there is anything repugnant in the subject or context,-
(a) "applicant" means a person or a class or persons who has brought a dispute for
resolution under section 134A;
(b) "Board" means the Federal Board of Revenue.
(c) "Committee" means a Committee constituted under sub-section (2) of section
134A; and
(d) "dispute" means any matter of income tax pertaining to liability of income tax,
admissibility of refund, waiver or fixation of penalty or fine, relaxation of any
period or procedural and technical condition as specified in sub-section (1) of
section 134A.
(3) Any person or class of persons interested for resolution of any dispute under section 134A
shall submit a written application for alternative dispute resolution to the Board in the form
as set out in the Schedule below.
(4) The Board, after examination of the contents of an application by a taxpayer and facts
stated therein and on satisfaction that the application may be referred to a
Committee for the resolution of the hardship or dispute, shall constitute a Committee
consisting of the following members, namely:-
(a) the 3[“Chief Commissioner”], Large Taxpayers Unit or Commissioner, Medium
Taxpayers Unit or any other Commissioner or officer of the 4[“Inland Revenue
Department”] nominated by the Board;
(b) a Fellow of Chartered Accountants, registered with the Institute of Chartered
Accountants of Pakistan or an Associate of Cost and Management Accountant,
an advocate of High Court or Income Tax Practitioner 5[ ]; and
(c) a reputable taxpayer.
1 Rule 231C inserted by Notification No. SRO 748(I)/2004, dated August 30, 2004.
2 Substituted for "alternate" by SRO 1032(I)/2006, dated October 03, 2006.
3
The words “Director-General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
4
The words “Income Tax Department” substituted by SRO 1218(I)/2015 dated 08.12.2015.
5 Words "having at least twenty-five reported cases in a reputed journal to his credit" omitted by SRO 679(I)/2005, dated
July 04, 2005.
Income Tax Rules, 2002 175
CHAPTER - XIX MISCELLANEOUS
(5) The Board may appoint one of the members of the Committee to be its Chairman.
(6) An application filed under this rule may be disposed of by the Committee within thirty
days of its constitution:
Provided that the time so specified may, if requested by the Chairman of the Committee
for reasons to be recorded in the request, be extended by the Board to such extent and
subject to such conditions and limitations as it may deem proper.
(7) The Chairman of the Committee shall be responsible for deciding the procedure to be
followed by the Committee which may inter-alia, include the following, namely:-
1
[(a) to decide about the place of sitting of the Committee, in consultation with the
2
[“Chief Commissioner”] Regional Tax Office, or as the case may be, the 3[“Chief
Commissioner”] Large Taxpayer Unit;]
(b) to specify date and time for conducting proceedings by the Committee;
(c) to supervise the proceedings of the Committee;
(d) to issue notices by courier or registered post or electronic mail to the applicant;
(e) to requisition and produce relevant records or witnesses from the Commissioner
or other concerned quarters;
(f) to ensure attendance of the applicant for hearing either in person or through an
advocate, representative or a tax consultant;
(g) to consolidate recommendations of the Committee and submission of a
conclusive report to the Board; and
(h) for any other matter covered under these rules.
(8) The Committee may conduct inquiry, seek expert opinion, direct any 4[ “ officer of
Inland Revenue”] or any other person to conduct an audit and make recommendations to
the Committee in respect of dispute or hardship.
(9) The Committee may determine the issue and may thereafter seek further information or
data or expert opinion or make or cause to be made such inquiries or audit as it may
deem fit, to formulate its recommendations in respect of any matter specified in sub-
section (1) of section 134A.
(10) The applicant may withdraw the application made under sub-rule (3) of these rules at any
time before the Committee submits its recommendations to the Board.
5
[ ***]
(12) The Chairman of the Committee shall send a copy of the recommendations of the
Committee to the Board, applicant and the concerned Commissioner, simultaneously.
(13) The Board on its own motion or on the request of the applicant, may refer back the
recommendations of the Committee for rectification of any mistake apparent from
record or for reconsideration of the facts or law, as the case may be, not considered
1 Clause "(a)" substituted by SRO 814(I)/2008, dated July 31, 2008.
2
The words “Director-General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
3
The words “Director-General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
4
The words “officer of income tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
5 Sub-rule (11) omitted by SRO 213(I)/2005, dated March 03, 2005.
Income Tax Rules, 2002 176
CHAPTER - XIX MISCELLANEOUS
earlier by the Committee.
(14) The Committee after rectification of the mistake or reconsideration of the facts or law as
aforesaid shall furnish to the Board its fresh or amended recommendation within such
period as specified by the Board.
(15) The Board, after examining the recommendations of the Committee shall finally decide
the dispute or hardship and make such orders as it may deem fit for the resolution of
the dispute or hardship 1[,within ninety days of receipt of such recommendations,] under
intimation to the applicant, Chairman of the Committee and the concerned Commissioner:
Provided that the resolution reached by the taxpayer and the Board shall not bind them
for tax year not covered by the agreement. Any such resolution shall not be used as
precedent, except as provided in the agreement.
(16) The copy of order passed by the Board shall be provided to the applicant and to the
Commissioner having jurisdiction over the case for modification of all decisions, orders
and judgments passed in respect of the said dispute or hardship, within such period as
may be specified by the Board in the order.
(17) On receipt of the Board's order as aforesaid, the Concerned Commissioner shall
implement the order in such manner and within such period as may be specified by the
Board in the order.
(18) Notwithstanding anything contained in this rule an order passed by the Board shall cease
to exist if it is subsequently found to have been obtained by fraud or misrepresentation of
facts about the nature of dispute or hardship on which the said order was passed and all
decisions, orders and judgments modified under the said order shall deemed to be re
modified.
THE SCHEDULE
[See sub-rule (3)]
Application for 2[alternative] dispute resolution
under section 134A of the Income Tax Ordinance, 2001
To
The Chairman,
Federal Board of Revenue,
Islamabad
Dear Sir,
The undersigned being duly authorized hereby apply _________________ (name and address of
the applicant) for dispute to hardship resolution under section 134A of the Income Tax
Ordinance, 2001(XLIX of 2001).
2. Necessary details of the dispute or hardship are set out below and in the annexure to
this application.
3. A request is made to constitute a Committee as provided under sub-rule (4) of rule 231C
of Income Tax Rules, 2002.
4. The following documents as are necessary for the resolution of the dispute or hardship
are enclosed.
(a) _______________________________________________
1 Inserted by SRO 771(I)/2008, dated July 21, 2008.
2 Substituted for "alternate" by SRO 1032(I)/2006, dated October 03, 2006.
Income Tax Rules, 2002 177
CHAPTER - XIX MISCELLANEOUS
(b) _______________________________________________
(c) _______________________________________________
Yours faithfully,
Signature __________________________________
Name (in block letters) _______________________
NTN ______________________________________
Address ___________________________________
Date ______________________________________
Income Tax Rules, 2002 178
CHAPTER - XIX MISCELLANEOUS
Annexure
[See paragraph 2 of the Schedule]
(1) Name of the applicant (in block letters) ________________________________________
(2) National tax number _______________________________________________________
(3) Address of the applicant ___________________________________________________
(4) Telephone Number __________________ Fax Number __________________
1
[(4A) Tax year to which the dispute or hardship relates __________________]
(5) The Commissioner with whom a dispute has arisen _________________
(6) The following is the statement of the relevant facts and law with respect to dispute or
hardship having bearing on the question(s) on which the resolution is required (Please
annex extra sheet, if required):-
(7) Statement containing the applicant's interpretation of law or facts, as the case may be
in respect of question(s) on which resolution is required (Please annex extra sheet, if
required) is as follows:-
(8) The extent or the amount of tax which the applicant agrees to pay, if any.
(9) The undersigned, solemnly declare that,-
(a) full and true particulars of the dispute or hardship for the purposes of resolution
have been disclosed and no material aspect affecting the determination of the
application filed under the Income Tax Ordinance, 2001, in this behalf has been
withheld;
(b) that the above issue(s) is/are pending before (name of the appellate forum, ITAT
or court)/ not pending before any forum, ITAT, High Court or Supreme Court of
Pakistan for adjudication 2[.]
3
[ ]
Yours faithfully,
Signature __________________________________
Name (in block letters) _______________________
Designation ________________________________
Date ______________________________________ ]
1 Clause "(4A)" inserted by Notification No. SRO 679(I)/2005, dated July 04, 2005.
2 Full stop substituted for "; and" by SRO 679(I)/2005, dated July 04, 2005.
3 Clause "(c)" omitted by SRO 679(I)/2005, dated July 04, 2005.
Income Tax Rules, 2002 179
CHAPTER - XIX MISCELLANEOUS
1
[231D. Procedure for group taxation under section 59AA.-
(1) For the purposes of this rule, a 100% owned company shall be a subsidiary company where
another company, herein-referred to as “holding company”, owns all equity shares of such
company except those held by nominees to meet the statutory requirements of the
Companies Ordinance, 1984 (XLVII of 1984).
(2) A holding company and each of its subsidiary companies of 100% owned group which fulfill
the conditions specified in section 59AA shall make separate application containing
declaration of irrevocable option for group taxation as one fiscal unit to the concerned
Commissioner in the form as set out in the Schedule below within the first quarter of the tax
year for which group taxation is opted for.
(3) The application shall be signed, in the case of a holding company, by the Chief Executive
Officer of the holding company and in the case of a subsidiary company the Chief Executive
Officer of the subsidiary company, identifying the Commissioner having jurisdiction over the
holding company or as the case may be, subsidiary company, National Tax Number and
Corporate Registration Number.
(4) The holding company as well as each subsidiary company shall furnish a certificate issued by
the Securities and Exchange Commission of Pakistan verifying that the company has been
complying with the Code of Corporate Governance as notified from time to time by the SECP.
(5) The return for the tax year following the option for group taxation shall be prepared as one
fiscal unit under the name of the holding company and the tax liability shall be discharged or
the refund shall be claimed respectively as if the business of the subsidiary companies were
the business of the holding company. However, for that purpose, no effect shall be taken for
losses including unabsorbed depreciation of subsidiary companies for the tax year prior to the
exercise of option for group taxation. Along with the group return, copies of audited accounts
of every company in the group shall be attached.
(6) On option for group taxation under sub-section (2) of section 59AA, the subsidiary companies
shall furnish their returns of income in their respective tax jurisdiction along with a copy of
application for group taxation for record and future adjustments and intimating non-taxability of
the returned income. The subsidiary companies shall also intimate to the Commissioner
having jurisdiction over the holding company regarding their option for group taxation.
(7) Taxation matters relating to the period prior to the adoption of one fiscal unit shall continue to
be dealt with by the Commissioner having jurisdiction over the subsidiary company.
(8) In case, there is divestment of a subsidiary company and the provisions of group taxation
become inapplicable, no effect shall be taken for group taxation during the year of disposal.
(9) All the provisions of the Ordinance, including withholding provisions as applicable on a holding
company shall mutatis mutandis apply to a subsidiary company during the period when the
group is taxed as one fiscal unit. Each company shall file independent withholding statements
as required under the provisions of the Ordinance.
(10) The relief under group taxation shall be limited only to those companies which are locally
incorporated under the Companies Ordinance, 1984 (XLVII of 1984).
(11) All companies opting for group taxation under section 59AA shall have the similar accounting
period for computation of income.
(12) The transaction by any company within the group and with its associated companies shall be
carried out and recorded on arm‟s length basis.
1 Rule 231D inserted by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 180
CHAPTER - XIX MISCELLANEOUS
SCHEDULE
(See sub-rule (2) of rule 231D)
APPLICATION/ DECLARATION FOR GROUP TAXATION
UNDER SECTION 59AA OF THE INCOME TAX ORDINANCE, 2001
To,
The Commissioner,
________________________
Dear Sir,
I _________________________________ S/O _____________________ being Chief Executive of
M/s.______________________________________________ (Name/ NTN and address of the
holding company or as the case may be subsidiary company) duly authorized in this regard
hereby apply on behalf of the aforesaid company for group taxation under section 59AA of the
Income Tax Ordinance, 2001, in respect of the following companies of the group:-
Whether Commissioner having
Address holding or jurisdiction over
Name of the (Head Office/ Incorporation subsidiary holding/ subsidiary
S.No. company postal) NTN No. No. company company
(1) (2) (3) (4) (5) (6) (7)
2. The following documents are attached:-
(i) Copies of incorporation certificates of the above mentioned companies seeking
group taxation;
(ii) Copy of the certificate issued by the SECP (as set out in Annexure to this
Schedule) confirming that the company had complied with corporate governance
requirements, as notified by the SECP, and are not defaulters of any rules or
regulations.
3. It is declared that,-
(i) the company asks for irrevocable option for group taxation as one fiscal unit;
(ii) the companies in the group are locally incorporated under the Companies
Ordinance, 1984; and
(iii) the company complies with corporate governance requirements as notified by
the Securities and Exchange Commission of Pakistan from time to time.
4. Further I certify that to the best of my knowledge and belief the information given in the
application is correct and complete in accordance with the provisions of section 59AA of
the Income Tax Ordinance, 2001.
Yours faithfully,
Signature __________________________________
Name (in block letters) _______________________
CNIC _____________________________________
Designation ________________________________
Date ______________________________________
Income Tax Rules, 2002 181
CHAPTER - XIX MISCELLANEOUS
ANNEXURE
(See paragraph 2(ii) of the Schedule)
CERTIFICATE FROM THE SECURITIES
AND EXCHANGE COMMISSION OF PAKISTAN
It is certified that M/s._______________________________, incorporated at No._____________
dated _________________________ is a holding company having 100% share of the following
subsidiary companies, namely:-
(a) _______________________________________________
(b) _______________________________________________
(c) _______________________________________________
(d) _______________________________________________
And the holding company and its subsidiary companies (mentioned above) have not violated any
corporate governance requirements notified by the SECP from time to time, and the said
companies are entitled to avail group taxation under section 59AA of the Income Tax Ordinance.
The SECP shall also inform the 1[“Commissioner of Inland Revenue”] concerned, if any code of
corporate governance is violated by the holding company or its subsidiary companies mentioned
above availing the benefit of group taxation under section 59AA of the Income Tax Ordinance,
2001
Signature __________________________________
Name of the issuing authority __________________
Seal/Stamp ________________________________
Date: _____________________________________
2
[―231E.- Special Audit Panel.-(1) This rule shall under section 177 of the Ordinance apply to all cases for
conducting audit by the special audit panel as determined by the Commissioner in the light of sub-section (1B)
of section 210 of the Ordinance.
(2) The Board may appoint as many special audit panels as may be necessary, comprising two or
more members from the following, namely:-
(a) an officer or officers of Inland Revenue;
(b) a firm of chartered accountants as defined under the Chartered Accountants Ordinance, 1961
(X of 1961);
(c) a firm of cost and management accountants as defined under the Cost and Management
Accountants Act, 1966 (XIV of 1966); or
(d) any other person as directed by the Board.
(3) Board shall invite firm of Chartered Accountant or Cost and Management Accountant through
advertisement and shall determine their eligibility and remuneration on case to case basis or on the basis as
determined by the Board.
(4) Special audit panel shall conduct audit, including a forensic audit of the income tax affairs of:-
(a) any person, or
(b) classes of persons
(5) The Commissioner shall determine the scope of audit under sub-rule (4) on case- to-case basis.
1
The words “Commissioner of Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
2
Inserted by the SRO 31(I)/2016 dated 13.01.2016.
Income Tax Rules, 2002 182
CHAPTER - XIX MISCELLANEOUS
(6) Special audit panel shall be headed by a chairperson who shall be an officer of Inland Revenue.
(7) The chairperson of special audit panel shall be responsible for the procedure which may inter-
alia include the following, namely:-
(a) to decide in consultation with the Commissioner about the place of sitting of the special audit
panel;
(b) to specify date and time for conducting audit;
(c) to supervise the proceedings of audit;
(d) to issue notices by courier or registered post or electronic mail to the taxpayer under audit;
(e) to requisition and produce records, documents, information from the taxpayer under audit and
from other persons in respect of the taxpayer under audit; and
(f) to ensure attendance of the taxpayer for hearing in person or through an advocate or
representative.
(8) The special audit penal may conduct inquiry or seek expert opinion as may be considered
necessary.
(9) Powers under section 175 and 176 of the Ordinance for conducting audit under sub-section (11)
of section 177 of the Ordinance shall be exercised by an officer or officers of Inland Revenue.
(10) Audit proceedings shall not be held invalid in case of absence of any member of the panel, other
than chairperson.
(11) The chairperson shall consolidate audit findings and get signatures of all other members of the
panel for further action in light of sub-section (6) or sub-section (14) of section 177 of the Ordinance as deemed
fit.
(12) In case of difference of opinion among members of the special audit panel, the audit findings of
majority members would carry weight, and the chairperson shall proceed as per sub-rule (11). In case the
majority members do not include chairperson, then the special audit panel shall send the report of difference of
opinion to the Commissioner and the Commissioner may decide either to constitute new special audit panel or
send the said report to another officer or officers of Inland Revenue. The audit findings either from the new
special audit panel or from another officer or officers of Inland Revenue would suffice for further actions under
sub-rule (11).
(13) Audit proceedings under sub-rule (12) shall include the taxpayer‟s record, documents,
statements and difference of opinion by previous special audit panel and opportunity of being heard to the
taxpayer under audit.”]
1
[―231F.- Selection and conduct of audit.-(1) This rule shall apply to selection of cases for audit by the FBR
under section 214C of the Income Tax Ordinance, 2001 (XLIX of 2001).
(2) The following steps shall be followed for selection of cases for audit through a computer ballot
on random and parametric selection basis for tax years mentioned therein, namely:-
(a) data of all returns (e-filed and manually filed) shall be utilized as a basic data;
(b) the Board shall decide the cases of persons or classes of persons which are to be
excluded from audit selection and such exclusions shall be publicized each year
through FBR‟s web-portal for information, prior to the process of balloting or selection;
(c) cases falling under exclusions shall be identified and such cases shall be excluded
from the data to be used for balloting;
(d) the data of the remaining cases shall be utilized for computer ballot for audit selection;
(e) for each tax year cases for audit shall be selected in accordance with the
predetermined percentage, to be publicized through FBR‟s web-portal, and prior to
the balloting process, each year;
1
Inserted by the SRO 131(I)/2016 dated 18.02.2016.
Income Tax Rules, 2002 183
CHAPTER - XIX MISCELLANEOUS
(f) immediately after computer ballot, the lists of selected case shall be generated and
placed on FBR‟s web-portal;
(g) the whole balloting system for audit selection shall be based only on the NTNs/
CNICs of the filers;
(h) the NTNs and CNICs of the cases selected for audit shall be communicated to
concerned RTOs and LTUs as per their respective jurisdictions;
(i) for the purpose of selection of cases on parametric basis, risk parameters for persons
or classes or persons to be used for balloting, wherever necessary, shall be
determined by the Board, as under:-
(A) risk parameters for persons or classes of persons to be used for balloting
shall be determined by the Board;
(B) audit selection parameters may be based upon the following:-
(I) financial ratios for the year viz a viz the history of the case;
(II) financial ratios viz a viz industrial, sectoral or national ratios;
(III) industrial comparisons or bench marks;
(IV) quantum of losses or refunds beyond certain thresholds; or
(V) compliance history; and
(j) computer balloting process in both categories of selection for audit shall be held in the
presence of representatives from Chambers of Commerce and Industries and
representatives of Tax Bar Associations.
(3) The cases selected for audit by the Board shall be processed and the Commissioner Inland
Revenue concerned shall issue intimation letter to the taxpayer about the selection of his case for audit with the
following details:-
(a) section under which selection has been made;
(b) tax year for which the case has been selected for audit;
(c) mode of selection whether random or parametric;
(d) compliance requirements on the part of taxpayer e.g.-
(i) provision of prescribed books of accounts;
(ii) supporting information and documents, etc;
(iii) computerized data, access to computerized data or provision of attested hard copies
of computerized data.
(4) On completion of examination of books of accounts, data or information under this rule the
discrepancies, if found, shall be intimated to the taxpayer for obtaining taxpayers‟ explanation, in the form of
audit report, seeking taxpayer‟s explanation on these points.
(5) Explanations of the taxpayer, where found not acceptable, shall be intimated to the taxpayer,
through a notice under section 122(9) of the Income Tax Ordinance, 2001 about the amendment in
assessment alongwith the rationale or basis of such amendment and necessary amendment in assessment
order shall be passed under section 122 of the said Ordinance after affording adequate opportunity of hearing
to the taxpayer.”]
1
[―231G. Determination of value of bonus shares issued by a company not quoted on the stock
exchange, to the shareholders of the company.
(1) The value of bonus shares issued by a company, not quoted on the stock exchange, to its
shareholders in terms of sub-section (6) of section 236N of the Ordinance shall be the face value, or the
breakup value, as determined below, whichever is higher.
(2) The breakup value of the bonus share shall be determined in the following manner:-
1 th
Added by the SRO 1085(I)/2016 dated 24 November, 2016.
Income Tax Rules, 2002 184
CHAPTER - XIX MISCELLANEOUS
(a) the total equity of the company divided by the total number of ordinary shares (after the
issuance of bonus shares) , as of the last day of the period for which financial statements
are prepared and approved by the Board of Directors for the purpose of issuance of bonus
shares. The total equity of the company shall be determined by adding paid up capital of
the ordinary shares and the reserves; and
(b) for the purpose of sub-clause (a) above, the term “reserve” shall have the same meaning
as defined under sub-section (3) of section 5A of the Ordinance.”]
1
[―231H. Reduced rate of tax for Shari’ah compliant companies in terms of Sub-Clause (a) of clause
(18B) of Part-II of the Second Schedule to the Ordinance.— In order to avail reduced rate of tax in terms of
sub-clause (a) of clause (18B) of Part-II of the Second Schedule to the Ordinance, the Shari’ah compliant
criteria for a company, whose shares are traded on a stock exchange, shall be as follows:-
(i) The business of the company shall be Halal i.e. it shall not include processing or manufacturing
of pork, liquor, non-Halal products, pornographic material or any other activity not permitted by
Shari’ah.
(ii) There should be Riba free financing on the balance sheet of the company, however the
company may be leveraged through Islamic modes of financing obtained from licensed Islamic
financial institutions.
(iii) All the investments made by the company should be one hundred percent Shari’ah compliant,
therefore, it would not be permissible for the company to acquire non-Shari’ah compliant
instruments or securities which yield interest or income that is not Halal.
(iv) The company shall be obliged to maintain free float of the company at thirty percent of the
outstanding shares.”]
232. Repeal & Savings.-
(1) The following rules as in force before the commencement of these rules are hereby
repealed, namely Income Tax Rules, 1982.
"(2A) Notwithstanding anything contained in sub-rule (1), rules 190 to 198,
201. 20ID, 201F, 202(C), 202D, 202E, 202F of Income Tax Rules,
1982 shall stand repealed on the first day of July, 2003; and
(2B) Any proceedings including proceedings under part IX (Chapters A, B,
C, D, E & F) initiated, or any action taken or initiated, or approval
sought, under Income Tax Rules, 1982 prior to 01.07.2002; such
proceedings, action, or approval sought shall be completed under the
Income Tax Rules, 1982 and to that extent Income Tax Rules, 2002
would not apply."
2
[―Inland Revenue Reward Rules, 2016:-
NOTIFICATION
S.R.O.398(I)/2016.− In exercise of the powers conferred by sections 237 of the Income Tax Ordinance
2001 (XLIX of 2001), section 50 of the Sales Tax Act, 1990 and section 40 of the Federal Excise Act 2005, the
Federal Board of Revenue is pleased to make the following rules, namely:-
1. Short title and commencement.− (1) These rules may be called the Inland Revenue Reward Rules,
2016.
(2) They shall come into force at once.
1 th
Added by the SRO 12(I)/2017 dated 10 January, 2017.
2
Inserted by the SRO 398(I)/2016 dated 05.05.2016
Income Tax Rules, 2002 185
CHAPTER - XIX MISCELLANEOUS
2. Definitions.− In these rules, unless there is anything repugnant in the subject or context,−
(a) “Board” means the Federal Board of Revenue established under the Federal Board of
Revenue Act, 2007;
1
[“(aa) “employees” means all officers and officials of Inland Revenue, including ministerial and
ex-cadre officers and officials, wherever they may be;”]
(b) “field offices” means all Inland Revenue offices including all Directorates, Directorate
Generals, Commissionerates, data processing centres or units, etc;
(c) “Informer” means any person, a group of persons or a company who provides any original
information in the shape of concrete evidence, which conclusively leads to detection of tax
evasion, formulation of assessment, and eventual recovery of the evaded tax and includes a
whistleblower as defined under the tax laws;
(d) “meritorious conduct“ means a performance 2[“by an employee”] falling in one or more of the
following categories, namely:-
(i) extraordinary contribution, to the satisfaction of the sanctioning authority defined in
rule 10, in detection, assessment and recovery of the evaded amount of tax in the
manner and mode provided under various provisions of the tax laws;
(ii) rendering extraordinary legal assistance to the Supreme Court, High Courts and
Appellate Tribunals Inland Revenue in litigation cases resulting in decisions
favourable to the department; and
(iii) extraordinary meritorious conduct exhibited by the 3[“employee”] in all field offices and
Board (HQ), duly approved by the respective head of the field offices and wings.
(e) “tax” means all types of taxes and duties levied and collected under the tax laws; and
(f) “tax laws” means the Income Tax Ordinance, 2001 (XLIX of 2001), the Sales Tax Act, 1990
and the Federal Excise Act, 2005;
3. Persons qualified to be registered as informer. (1) A person, other than a lunatic or idiot, may be
registered as informer, if he fulfills the criteria of whistleblower as defined in the tax laws.
(2) Notwithstanding anything contained in sub-rule (1), a registered informer shall be liable to de-registration
on such condition to be recorded in writing and as may be deemed fit by Chief Commissioner, member or
Director General, as the case may be.
4. Registration of informer. (1) Subject to section 227B of the Income Tax Ordinance 2001 (XLIX of
2001), section 72D of the Sales Tax Act, 1990 and section 42D of the Federal Excise Act, 2005, as the case
may be, any person desirous of getting himself registered as an informer may make an application to the Chief
Commissioner for registration under this rule.
(2) The application under sun-rule (1) shall be in the prescribed form and shall be verified in the prescribed
manner.
(3) The application shall be accompanied by the following documents, namely.-
(a) copy of the Computerized National Identity Card of the applicant;
(b) copy of national tax number (NTN) certificate; and
(c) a duly sworn in affidavit stating therein that the information being provided is correct and
nothing has been concealed there from and that in case any incorrect information is provided
1 th
Inserted by the SRO 981(I)/2016 dated 19 October, 2016.
2 th
Inserted by the SRO 981(I)/2016 dated 19 October, 2016.
3 th
The words “officers and officials of Inland Revenue” substituted by the SRO 981(I)/2016 dated 19 October,
2016.
Income Tax Rules, 2002 186
CHAPTER - XIX MISCELLANEOUS
or any information is concealed he shall be liable to penal action under the laws for the time
being in force.
5. Submission of information and further action thereupon.-(1) An informer shall submit any
information regarding concealment or evasion of tax leading to detection or collection of taxes, fraud, corruption
or misconduct that is in his possession to the Chief Commissioner giving precise details of the alleged act along
with all supporting evidences that are in his possession:
Provided that no information shall be entertained unless it gives precise details of the alleged act and is
accompanied with the supporting evidences.
(2) On receipt of the information, the Chief Commissioner shall scrutinize the information and forward it
to the concerned Commissioner.
(3) On receipt of the information from the Chief Commissioner, the concerned Commissioner shall
conduct such further enquiry as he may deem fit and submit his report to the Chief Commissioner.
(4) On completion of the enquiry, the concerned Commissioner shall take such further action as may be
required under the tax laws or any other law for the time being in force, as may be necessary on the basis of
the facts of the case, and furnish his report to the Chief Commissioner.
(5) Notwithstanding anything contained in these rules, an informer, who −
(a) has knowingly provided false information under these rules; or
(b) has provided the information under these rules with the intention to intimidate or
blackmail a person, or to bring him into disrepute, or to otherwise cause him financial
loss, shall be liable to punishment and fine under the tax laws and other laws for the
time being in force.
1
[“6. Eligibility for reward.- An employee and informer shall, for having meritorious conduct, be entitled to
grant of reward.”]
7. Determination of reward.- (1) The amount of reward as specified in column (2) of the Table below,
in cases of exhibiting meritorious conduct relating to detection, assessment and recovery of tax evaded to the
extent specified in column (1) of the said Table, shall be admissible, namely:-
TABLE
Amount of tax evaded Amount of reward
(1) (2)
Rs. 500,000 or less Twenty per cent of the tax, duty and other taxes
More than Rs. 500,00 but not more than 1,000,000 Rs. 100,000 plus ten percent of the tax in excess of
Rs. 500,000
Over Rs. 1,000,000 Rs. 150,000plus five per cent of the tax in excess of
Rs. 1,000,000
(2). The amount of reward shall be sanctioned after realization of the whole amount of the tax involved.
(3). In cases of meritorious conduct, the amount of reward shall be such as determined by the
sanctioning authority, provided that the total amount of reward paid to an 2[“employee”] during one financial
year shall not exceed thirty six months‟ basic pay.
3
[“(4) In case more than one meritorious conduct is performed by an employee, the amount of reward shall
not exceed thirty percent of realization of the whole amount of tax involved.”]
1 th
Rule 6 substituted by the SRO 981(I)/2016 dated 19 October, 2016. The substituted rule read as follows:-
―6. Eligibility for reward.- Cash reward shall be sanctioned under these rules to the following categories of
persons for having meritorious conduct, namely:-
(a) officers and officials of Inland Revenue; and
(b) informers.”
2 th
The words “officer or official” substituted by the SRO 981(I)/2016 dated 19 October, 2016.
3 th
Inserted by the SRO 981(I)/2016 dated 19 October, 2016.
Income Tax Rules, 2002 187
CHAPTER - XIX MISCELLANEOUS
8. Establishment of Inland Revenue Welfare fund.- (1) A fund, to be known as Inland Revenue
Welfare Fund, shall be established for welfare of the 1[“employee”], this fund shall be operated by Member
Operations of the Inland Revenue.
(2) The welfare fund established under sub-rule (1) shall be utilized for the general welfare of the
officers and officials of Inland Revenue Service in the manner as may be prescribed under the Inland Revenue
Welfare Fund Rules, 2016.
(3) Twenty-five percent of the reward money shall be remitted to such fund for the welfare of
officers and officials of Inland Revenue.
9. Payment of reward.-(1) The amount of reward determined under rule 7, in cases of exhibiting
meritorious conduct relating to recovery of tax evaded or refund unlawfully paid, shall be apportioned, as
under:−
(a) where no informer is involved, the apportionment of the reward shall be as under:-
2
[“Employees”] 50%
Supervising officers who write performance evaluation 10%
reports (PERs)
Supporting staff of officers 15%
Inland Revenue Welfare Fund 25%
(b) where informer is involved, the apportionment of the reward shall be as under:-
3
[“Employees”] 30%
Supervising officers who write performance evaluation 10%
reports (PERs)
Supporting staff of officers 15%
Inland Revenue Welfare Fund 25%
Informer or informers 20%
(2) The amount of reward as determined under this rule relating to officers and officials in the case
where more than one individual is involved shall be distributed in proportion of their basic pay.
10. Reward sanctioning authorities.−The authorities specified in column (2) of the Table below shall be
competent for sanctioning of reward under these rules to the respective categories of 4[“employee”] and
informers specified in column (1) of the said Table, namely:-
TABLE
5
[“employee”] Sanctioning Authority
(1) (2)
BS-1 to BS-19 in RTOs/LTUs Chief Commissioner
BS-20 and BS-21 in RTOs/LTUs Member (Inland Revenue) Operations Federal Board
of Revenue
BS-1 to BS-20 in FBR (HQ) Relevant Member/DG
BS-21 to BS-22 in FBR (HQ) Chairman FBR
BS-1 to BS 20 of other field offices Head of the Office concerned
1 th
The words “officers and officials of Inland Revenue Service” substituted by the SRO 981(I)/2016 dated 19
October, 2016.
2 th
The words “The officers and officials specified in rule 6” substituted by the SRO 981(I)/2016 dated 19 October,
2016.
3 th
The words “The officers and officials specified in rule 6” substituted by the SRO 981(I)/2016 dated 19 October,
2016.
4 th
The words “officers and officials” substituted by the SRO 981(I)/2016 dated 19 October, 2016.
5 th
The words “Officers & officials of Inland Revenue” substituted by the SRO 981(I)/2016 dated 19 October, 2016.
Income Tax Rules, 2002 188
CHAPTER - XIX MISCELLANEOUS
BS-21 to BS-22 of other field offices Chairman FBR
Informers Chief Commissioner, DG or Member (Inland
Revenue) Operations, as the case may be
11. Sanction of reward amount.−(1) The reward sanctioning authority in the field offices shall constitute
a committee consisting of at least one BS-20 and two BS-19 officers to examine the cases and make
recommendations for sanction of reward:
Provided that the beneficiary of reward shall not become member of the committee entrusted with
examination of reward cases and formulation of recommendations thereof.
(2) On the basis of recommendations of the committee under sub-rule (1), the sanctioning authority shall
decide the eligibility of reward to be sanctioned.
(3) The reward sanctioning authority shall ensure that the reward amount is apportioned on the basis of
basic pay amongst the case instituting team as well as the officers and staff making meaningful efforts in the
case till such stage that recovery of the duties and other taxes was effected.
12. Redressal of grievances.-(1) Any 1[“employee”] or informer who has claimed a reward under these
rules and is aggrieved by a decision of the reward sanctioning authority, may request for copy of the said
decision in writing, which shall be provided within fifteen days.
(2) The aggrieved person may thereafter file appeal in writing, within sixty days, for redressal of the
grievance, to the Chief Commissioner or the Member or the Director General concerned 2[“as the case may
be”], who shall decide the appeal within thirty days, through an order in writing.
(3) If the aggrieved person is not satisfied with such an order or in case the appeal is not decided within
thirty days for any reason, the aggrieved person may file an appeal to the Chairman, FBR who shall be the final
authority.
13. Periodic review of reward sanctioning process and allied matters.-The Board shall, every two
years, invite suggestions, opinions and proposals for improvement in the reward sanctioning process to make it
more just, fair, transparent and equitable. This periodic review shall be publicized, in order to have the widest
participation for value addition through the review process.”]
3
[Inland Revenue Welfare Fund Rules, 2016:-
.
NOTIFICATION
S.R.O. 895(I)/2016.- In exercise of the powers conferred by sub-section (1) of section 237 of the Income
Tax Ordinance, 2001 (XLIX of 2001), section 50 of the Sales Tax Act, 1990 and section 40 of the Federal
Excise, Act, 2015, the Federal Board of Revenue is pleased to direct that the following further amendments
shall be made in the Income Tax Rules, 2002, the same having been previously published vide Notification No.
S.R.O. 755(I)/2016 dated the 15th August, 2016, as required by sub-section (3) of the said section, namely:-
1. Short title, extent and commencement.- (1) These rules may be called the Inland Revenue Welfare
Fund Rules, 2016.
(2) They shall apply to the Central Inland Revenue Welfare Fund maintained at the Federal Board of
Revenue (FBR) Headquarters and the Regional Inland Revenue Welfare Funds maintained at all Inland
Revenue formations.
(3) They shall come into force at once.
2. Definitions.- In these rules, unless there is anything repugnant in the subject or context,-
(a) “Inland Revenue Welfare Fund” means a Fund established under rule 8 of the
1 th
The words and comma “officer, official” substituted by the SRO 981(I)/2016 dated 19 October, 2016.
2 th
Inserted by the SRO 981(I)/2016 dated 19 October, 2016.
3
Inserted by the SRO 895(I)/2016 dated 21.09.2016
Income Tax Rules, 2002 189
CHAPTER - XIX MISCELLANEOUS
Inland Revenue Reward Rules, 2016 and shall include the Central Inland
Revenue Welfare Fund and the Regional Inland Revenue Welfare Funds; and
(b) “Fund” may be construed as the Central Inland Revenue Welfare Fund or the
Regional Inland Revenue Welfare Funds, as the context requires, and the word
“Board of Fund” may be construed as the Central Inland Revenue Welfare Fund
Board or the Regional Inland Revenue Welfare Fund Boards, as the context
requires.
3. Constitution of Central Inland Revenue Welfare Fund Board.- (1) There shall be constituted and
managed a Central Inland Revenue Welfare Fund Board at FBR Headquarters, Islamabad which shall consist
of the following officers, namely:-
(a) Member (IR-Operation) Chairperson
(b) Senior most Member of FBR from IR Member
(c) Chief Management (Inland Revenue) Member
(d) Secretary to the Member (IR) Secretary
(2) The Central Inland Revenue Welfare Fund Board shall act as governing body of the Regional
Inland Revenue Welfare Funds of all field formations. It shall grant approvals of proposals and requests from
the Regional Inland Revenue Welfare Fund Boards.
(3) The Central Inland Revenue Welfare Fund Board shall look after the Inland Revenue Welfare
Fund activities at the FBR Headquarters.
4. Formation of Regional Inland Revenue Welfare Fund Boards.- There shall be formed and
managed a Regional Inland Revenue Welfare Fund Board in each Large Taxpayer Unit (LTU) and Regional
Taxpayer Office (RTO) and Directorate General which shall consist of the following, namely:-
(a) Chief Commissioner or Director General Chairperson
(b) Senior most Commissioner or Director Member
(c) Additional Commissioner (HQ) or Additional Director Secretary
(d) One officer working in BS 17 or 18 Member
(e) One official working in BS 7 to 16 Member
(f) One official working in BS 1-6 Member
5. Functions of the Central Inland Revenue Welfare Fund Board.- (1) The Central Inland Revenue
Welfare Fund Board shall perform the following functions, namely:-
(a) management of income and expenditure of the Central Inland Revenue Welfare Fund;
(b) formulation of policies and taking all measures to implement such policies for the
investments, generation of further funds and all matters relating thereto;
(c) supervision over the Regional Inland Revenue Welfare Fund Boards;
(d) appointment of auditors for the Fund; and
(e) holding of an annual general meeting not more than six months after the end of the
financial year for the purpose of scrutiny of the auditor‟s report and the review of the
working of the Board of Fund during the financial year:
Provided that the Board of Fund may hold an annual general meeting within three
months of the period stipulated above, for sufficient reasons to be given in writing.
(2) The Central Inland Revenue Welfare Fund Board shall not spend more than sixty percent of the
receipts or anticipated receipts for the financial year during the year:
Provided that if the Board of Fund is of a unanimous view that sufficient reasons exist to incur an
expenditure in excess of the above limits, it may, for the reasons to be shown in writing, authorize an
expenditure in excess of these limits:
Provided further that the expenditure shall not in any case exceed eighty percent of the receipts or
anticipated receipts for the financial year.
Income Tax Rules, 2002 190
CHAPTER - XIX MISCELLANEOUS
(3) Any amount that is not expended by the pool during the year shall be invested in Government
securities and the profit received there from every year shall form part of the receipts of the Fund for that year:
Provided that no investment shall be made in any speculative or risky transactions.
6. Functions of the Regional Inland Revenue Welfare Fund Boards.- (1) The Regional Inland
Revenue Welfare Fund Boards shall perform the following functions, namely:-
(a) management of the income and expenditure of the respective Regional Inland Revenue Welfare Fund;
(b) formulation of policies and taking all measures to implement such policies for the investments,
generation of further funds and all matters relating thereto;
(c) holding of an annual general meeting not more than six months after the end of the financial year for
the purpose of scrutiny of the auditor‟s report and the review of the working of the Board during the
financial year:
Provided that the Board of Fund may hold an annual general meeting within three months of the
period stipulated above, for sufficient reasons to be given in writing.
(2) Each Regional Inland Revenue Welfare Fund Board shall transfer twenty percent of its receipts for the
financial year to the Central Inland Revenue Welfare Fund within six months of the close of the financial year,
for utilization by the Board of Fund at FBR Headquarters.
(3) Subject to sub-rule (2), the provisions of sub-rules (2) and (3) of rule 5 shall mutatis mutandis apply to
the Regional Inland Revenue Welfare Fund Boards.
7. Income of the Central Inland Revenue Welfare Fund Board.- (1) Any amount that has
remained unutilized with the Income Tax Central Board, or the Central Sales Tax Common Pool Fund Board, or
Central Federal Excise Common Pool Fund Board on commencement of these rules shall immediately stand
transferred to the Central Inland Revenue Welfare Fund Board.
(2) Any amount contributed, granted or allocated by the Federal Government, Federal Board of Revenue
or FBR Foundation shall be transferred to the Central Inland Revenue Welfare Fund Board.
(3) It shall be obligatory for every officer and staff member posted at the FBR Headquarters, Islamabad
to contribute an amount specified under sub-rule (3) of rule 9 of the Inland Revenue Reward Rules, 2016
towards this Fund out of the amount received under those rules.
(4) Each Regional Inland Revenue Welfare Fund Board shall transfer an amount stipulated under sub-rule
(2) of rule 6 to this Fund.
(5) Nothing contained under these rules shall bar the Central Inland Revenue Welfare Fund Board from
raising money through any lawful activity, such as holding a Mela or a Bazaar, or by raising hoarding or
billboard on Inland Revenue Service property:
Provided that nothing contained in this rule shall authorise the Board of Fund to seek contribution from any
taxpayer on an expectation of gaining any undue favour in connection with the assessment and collection of any
tax.
(6) It shall be open to the officers and staff members of the Inland Revenue Service to make any voluntary
contributions to the Fund.
8. Income of the Regional Inland Revenue Welfare Fund Boards.- (1) The Central Inland Revenue
Welfare Fund Board may distribute the amount received from the Income Tax Central Common Pool Fund
Board, or the Central Sales Tax Common Pool Fund Board, or Central Federal Excise Common Pool Fund
Board under sub-rule (1) of rule 7 or amount received from the Federal Government, Federal Board of Revenue
or FBR Foundation under sub-rule (2) of rule 7 to the Regional Inland Revenue Welfare Fund Boards, for
investment or utilization by these Boards of Fund:
Provided that the amount shall be distributed among the Regional Inland Revenue Welfare Fund
Income Tax Rules, 2002 191
CHAPTER - XIX MISCELLANEOUS
Boards in proportion to the strength of their staff:
Provided further that the maximum expenditure out of this amount by a Regional Inland Revenue Welfare
Fund Board during a financial year shall not exceed twenty percent of the amount transferred.
(2) The provisions of sub-rules (3), (5) and (6) of rule 7 shall mutatis mutandis apply to the Regional
Inland Revenue Welfare Fund Boards and the references to the officers and staff of FBR Headquarters shall be
construed as references to the officers and staff of the respective LTU, RTO or the Directorate General.
9. Expenditure from the Inland Revenue Welfare Fund Boards.- (1) Subject to the provisions of
these rules, the amounts lying with the Central Inland Revenue Welfare Fund Board and the Regional Inland
Revenue Welfare Fund Boards shall be utilized for the following purposes, namely:-
(a) reimbursement of medical charges;
(b) reimbursement of health insurance premium for the staff upto BS-16, subject to the limits
prescribed by the Central Inland Revenue Welfare Fund Board from time to time;
(c) stipend for education;
(d) marriage expenses;
(e) burial expenses;
(f) maintenance of transit accommodation and officers mess; and
(g) construction or maintenance of the premises of the local chapters of Pakistan Taxation
Club.
(2) Notwithstanding anything contained in sub-rule (1), the expenditure under this rule shall be subject
to the following maximum limits, namely:-
(a) in respect of medical charges, for the officers/officials and their dependents,
reimbursement not exceeding 50% of the cost of consultation, treatment and medicines or
Rs.5000 per month, whichever is lower;
(b) in respect of stipend for education, annual stipend of Rs.20,000 for one child of staff
members upto BS-16 who secures 70% marks in Matric and is admitted to a college. The
stipend may continue till graduation subject to scoring of 70% marks in each subsequent
year;
(c) in respect of subsidy on marriage expenditure, an amount of Rs.50,000 for not more than
two daughters of staff members upto BS-16;
(d) in respect of burial expenses, an amount of Rs.50,000 for in-service death of staff
members upto BS-16; and
(e) in respect of transit accommodation and officers’ mess, hiring of building, its furnishing
including purchase of essential items, equipments, payment of utility bills and salaries of staff
working in the mess. The officers availing the facility of mess will pay monthly service
charges as prescribed by the Fund from time to time.
10. Expenditure with prior approval of Central Inland Revenue Welfare Fund Board.- The Central
Inland Revenue Welfare Fund may authorize and sanction expenditure for the following purposes after
getting prior approval from the Central Inland Revenue Welfare Fund Board, namely:-
(a) personal loan;
(b) renovations and repairs of Government residences;
(c) purchase and repair of vehicles for pick and drop of staff;
(d) hiring of officials for the Fund related work;
(e) expenses to hold a function and activity for common good of staff;
(f) subsidy and financial assistance to staff upto BS-16 retired from service; or
(g) any other project or activity involving common welfare of the staff,
Provided that the expenditure shall be sanctioned for the purposes enumerated in clauses (a) and (b) only
under exceptional circumstances.
Income Tax Rules, 2002 192
CHAPTER - XIX MISCELLANEOUS
11. Regulation of the Funds.- (1) Notwithstanding anything contained in these rules, the Central Inland
Revenue Welfare Fund Board shall monitor and regulate expenditure of Regional Inland Revenue Welfare
Funds and may place restrictions and curtail disbursement of funds under various heads.
(2) The audit of the Central and Regional Funds shall be carried out annually by a firm of chartered
accountants or a firm of cost and management accountants appointed by the Central Inland Revenue Welfare
Fund Board.
(3) Subject to these rules, the decisions shall be taken by the Central Inland Revenue Welfare Fund
Board or by the Regional Inland Revenue Welfare Fund Boards by majority of the votes, provided that the
dissenting votes shall be recorded.”
PART-I OF THE FIRST SCHEDULE
Government of Pakistan
1
[“DEPARTMENT OF INLAND REVENUE”]
Office of the _____________________
APPLICATION FOR FOREIGN TAX CREDIT
The application for a foreign tax credit required to be furnished under the rules shall be in the
following form, namely:-
Application for relief in respect of tax paid in another country.- An application for relief by way of
credit against Pakistan tax for tax paid by a person resident in an tax year in Pakistan shall be made
in the following form, namely:-
APPLICATION FOR UNILATERAL RELIEF
UNDER SECTION 103 OF THE INCOME TAX ORDINANCE, 2001
To
The Commissioner
I, _____________________ of _____________________ hereby declare that I have paid taxes
on income by deduction or otherwise in the territory of ______________ amounting to
______________ in respect of income from sources therein for the tax year ending
__________________ amounting to ______________ and that Pakistan tax amounting to
Rs._______________ is also payable, on the said income.
2. I further declare that I was resident in Pakistan for the period on the basis of which the
doubly taxed income stated above is assessable in Pakistan.
3. I now apply for relief by way of tax credit amounting to Rs.________________ under
section 103 of the Income Tax Ordinance, 2001. My net income from all source to which the
ordinance applies during the tax year ending on __________________ 20___ amounted to
Rs.________________ only, as shown in my return of income attached herewith/ already
submitted.
Signature __________________________________
Name _____________________________________
Address ___________________________________
Dated ___________, 20___ National Tax Number
1
The words “DEPARTMENT OF INCOME TAX” substituted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 193
CHAPTER - XIX MISCELLANEOUS
PART-II OF THE FIRST SCHEDULE
Government of Pakistan
1
[“DEPARTMENT OF INLAND REVENUE”]
Office of the _____________________
Notice Letter under section 122
of The Income Tax Ordinance, 2001
(See rule 2[68])
NTN/3[CNIC] ____________________________
Name: ____________________________
Address: ____________________________
Tax year: ____________________________
Dated: __________________
Dear Sirs,
Whereas I consider necessary that the assessment order treated as issued under section 120 or
issued under section 121 or amended assessment u/s.122(3) needs alteration or and to make
addition to income by amended or further amended assessment of amended assessment under
section 122 for imposition of the correct amount of tax for the tax year ____________, as in my
opinion, Income Tax Return/ Statement and documents relating to the income and tax filed under the
relevant provisions of this Ordinance.
2. In view of situation above, amended assessment or further assessment is necessary u/s.122
and for that the tax year, examination of books of account/ record is necessary. I, therefore require
you to produce or cause to be produced at my office on the date and time mentioned below. the
following accounts/documents on which you have relied your return of income, so that correct income
may be determined and proper tax be imposed.
3. Please note that in case you or your authorized representative duly authorized to represent
you in the assessment proceedings fails to attend the office/ produce the documents/ accounts
mentioned above, assessment may be framed ex-parte which may also entail further legal punitive
actions in accordance with law.
Name ____________________________________
Signature __________________________________
Code No. __________________________________
of the Commissioner
1
The words “DEPARTMENT OF INCOME TAX” substituted by SRO 1218(I)/2015 dated 08.12.2015.
2 Substituted for figure "62" by Notification No. 310(I)/2007, dated April 05, 2007.
3
The word “TRN” substituted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 194
CHAPTER - XIX MISCELLANEOUS
Part-III of the First Schedule
Government of Pakistan
1
[“DEPARTMENT OF INLAND REVENUE”]
Office of the _____________________
Notice under section 2[138(1)] of The Income Tax Ordinance, 2001
National Tax Number ____ ____________________
Commissioner __________ ____________________
Date __________________ ____________________
To
M/s. __________________________
______________________________
Dear Sir,
Whereas it is established that the sum of Rs._____________ which is due from you on account of
tax as per details given in the schedule below, is in arrear, you are, hereby, required to pay these
arrears of tax by __________________ and produce necessary evidence to that effect before me
at my office on __________________ failing which proceedings may be initiated under these
rules to recover the said amount by one or more of the following modes, namely:-
(a) attachment and sale of moveable or immovable property;
(b) appointment of receiver for the management of your moveable or immovable property;
(c) your arrest and detention in person for a period not exceeding six months.
3
I, in exercise of the powers vested in me [ ] under section 138 of the Income Tax
Ordinance, hereby further direct that you shall not sell, mortgage, charge, issue or otherwise deal
with any property belonging to except with my permission to that effect in writing.
Commissioner
Range _______________ Zone _______________
SCHEDULE
Number in
Demand and
Assessment Collection Income Additional
Sr. No year(s) Register Tax Penalty Tax Surcharge Total
1 2 3 4 5 6 7 8
1
The words “DEPARTMENT OF INCOME TAX” substituted by SRO 1218(I)/2015 dated 08.12.2015.
2 Substituted for "138(2)" by SRO 392(I)/2009, dated May 19, 2009.
3 Words "under the Income Tax Rules framed" omitted by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 195
CHAPTER - XIX MISCELLANEOUS
Part-IV of the First Schedule
Government of Pakistan
1
[“DEPARTMENT OF INLAND REVENUE”]
Office of the _____________________
Notice u/s.140 read with rule 69 of Income Tax Rules, 2002 Recovery of
Tax
M/s. Mr. ____________________
Dear Sir,
Whereas the undersigned is empowered to issue this notice and has reasons to believe that in respect of
Mr. _________________________________ a tax defaulter/ taxpayer for Rs.______________;
(i) You are owing to this taxpayer money, amount, debt or may at a future date/ month owe
to him.
(ii) You hold money on behalf of the taxpayer/ defaulter.
(iii) You are holding money on some other person's behalf for payment to the above
named taxpayer defaulter.
(iv) You hold authority of some other person to pay money to him or defaulter.
2. And whereas, an amount of Rs._____________ is tax due outstanding against the person, and
whereas the taxpayer has not paid the same amount in time, therefore, under the provisions of section
148, you are required to remit or send the money to the undersigned through pay order/ D. Draft or
through banking transfer or cheque for payment to the government, treasury under income tax head of
account. Please take notice that:
(i) Any tax paid in lieu of and on behalf defaulter in pursuance of this notice shall be treated as
having been paid under the authority of taxpayer concerned - section 140(6).
(ii) In case of failure to comply, the said amount shall be recovered from you, and all the
provisions relating to tax recovery u/s.160, 161, 162 and 163 shall apply for effecting recovery
of such amount from you.
(iii) In case of default, additional tax u/s.205 shall also be charged and prosecution proceedings
shall also be launched.
3. Since law provides for such mode of recovery, and payment shall be taken as made by the taxpayer to
the government.
N.B. This notice requires the payment to the extent shown in the notice out of any amount due or
due to be paid as mentioned at 1(i to iv).
Given under my hand and seal
Commissioner
1
The words “DEPARTMENT OF INCOME TAX” substituted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 196
CHAPTER - XIX MISCELLANEOUS
PART-V OF THE FIRST SCHEDULE
Government of Pakistan
1
[“DEPARTMENT OF INLAND REVENUE”]
Office of the _____________________
Notice u/s.145 of Income Tax Ordinance, 2001 and rule 70 in respect of a person
who is likely to leave Pakistan permanently
The Director of Immigration,
Airport/Seaport.
Incharge Immigration Department,
Airports/Seaport.
(See section 145 of the Income Tax Ordinance, 2001) on collection of tax from person leaving
Pakistan.
Sir,
Whereas section 145 of the Income Tax Ordinance, 2001 empowers the undersigned to issue this
certificate of outstanding tax demand and there are reasons to believe that Mr.___________________ NTN
_______________ has to pay tax/ government dues of Rs._______________, or based on the return of
income filed and the amended assessment made for which notice has been issued, a tax demand is likely
to be raised, for which he has not made satisfactory arrangement for tax payment, and is likely to leave
Pakistan permanently, therefore, you are required under section 145 not to allow Mr. _______________
Mrs. ____________________ to leave the country, till he has discharged tax liability by way of making
payment of tax by prescribed challan in the NBP/SBP and produces a copy of challan bearing date of
payment of the amount after issuance of this certificate, or, produces from the undersigned withdrawal of
the certificate/ notice, or makes payment of tax through pay order/ demand draft or bank cheque in favour of
income tax department.
The certificate issued under my signature and seal is not to be disputed and would be valid till it is modified
or withdrawn by the undersigned.
Commissioner
N.B. This certificate shall be withdrawn in case in the matter of pending amended assessment,
proper arrangements are made for the payment of tax. This certificate shall be withdrawn
immediately.
1
The words “DEPARTMENT OF INCOME TAX” substituted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 197
CHAPTER - XIX MISCELLANEOUS
PART-VI OF THE FIRST SCHEDULE
Government of Pakistan
1
[“DEPARTMENT OF INLAND REVENUE”]
Office of the _____________________
(See Rule 71)
Prescribed application for refund of tax.- An application for refund of tax under section 170 shall be
made in the following form, namely:-
The Commissioner,
______________ Zone,
______________ (City).
Dear Sir,
I _________________________________________________ of _________________________________
hereby declare:-
(a) that my total income computed in accordance with the provisions of Income Tax
Ordinance, 2001 (XLIV of 2001), during the year ending on being the income year for the
assessment for the year ending on the _______________ amounted to Rs._______________.
(b) that the total tax chargeable in respect of such total income is Rs._______________.
(c) that the total amount of tax paid is Rs._______________.
2
[(d) that I have already filed evidence of payment of tax along with my return of income for the
year or I enclose herewith evidence of tax already paid during the tax year for taking
credit.]
I, therefore, request that a refund of Rs._______________ may be allowed to me.
Yours faithfully_________________________
Signature ____________________________
NTN_________________________________
Address_______________________________
I hereby declare that I am resident/ non-resident and that what is in this application is correct.
Date ____________________ Signature ______________________
1
The words “DEPARTMENT OF INCOME TAX” substituted by SRO 1218(I)/2015 dated 08.12.2015.
2 Para "d" inserted in Part VI by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 198
CHAPTER - XIX MISCELLANEOUS
PART-VII OF THE FIRST SCHEDULE
Government of Pakistan
1
[“DEPARTMENT OF INLAND REVENUE”]
Office of the _____________________
Application for Certificate of Exemption from deduction of tax or deduction at a lower rate under
section 2[159].-
(1) An application for a certificate under the section 3[159] shall be made in the following form,
namely:-
APPLICATION FOR CERTIFICATE
UNDER SECTION 159 OF THE INCOME TAX ORDINANCE, 2001
The Commissioner
I _____________________________________________ of ______________________________
hereby declare that I am entitled to nil/ reduce rate withholding tax certificate, on the following
basis, in accordance with the provisions of the Income Tax Ordinance, 2001 for the tax year
____________.
(i) was less than the minimum liable to tax;
(i)* amounted to Rs.________________ on which tax is chargeable at the rate of
(ii) is under the Agreement for Avoidance of Double Taxation signed by the
Government of Pakistan with the Government of ________________ the country
of my residence, not liable to Pakistan tax/ chargeable to Pakistan at the rate of
_____________.
(iii) was held exempt under clause _________ of the Second Schedule or is exempt
under clause _________ of the Second Schedule.
(iv) that income is not likely to be chargeable to tax in view of tax credits or
unabsorbed losses, or
(v) or, in any case, since advance tax rules 147 has been duly paid already, or
(vi) the goods imported are for manufacturing purposes at own factory/ mills/ unit.
(vii) for any other reasons (to be specified).
I, therefore, request that certificate may be issued to the person responsible for paying profit on
securities/dividends/royalties/other amounts particulars of which are given in the Schedule
annexed thereto, or to a person responsible for collecting tax at source, authorizing him not to
deduct tax at the rate of ________________ at the time of payment of such amount or to exempt
1
The words “DEPARTMENT OF INCOME TAX” substituted by SRO 1218(I)/2015 dated 08.12.2015.
2 Figure inserted by SRO 392(I)/2009, dated May 19, 2009.
3 Substituted for "152" by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 199
CHAPTER - XIX MISCELLANEOUS
from withholding tax at source.
Signature __________________________________
Name _____________________________________
Nationality _________________________________
Address ___________________________________
Date ______________________________________
National Tax Number (if any)
I, hereby declare that I am resident/ non-resident in Pakistan and that what is stated in the
application is correct.
Signature __________________________________
Name _____________________________________
Address ___________________________________
Dated _____________________________________
(2) An application under sub-rule (1) in respect of income derived from sources within Pakistan (other
than pensions paid by or on behalf of the Government of Pakistan) in accordance with the
provisions of an agreement having effect under section 107 by a person resident in the territory
with the Government of which the agreement is made shall be accompanied by further information
in the following form, namely:-
1
[PART-VII(A) OF THE FIRST SCHEDULE
Application for Certificate of Exemption
under section 159 of the Income Tax Ordinance, 2001
[See Rule 40(3)]
To,
The 2[“Commissioner of Inland Revenue”] _________________
I, __________________________________________________ Principal Officer/Member of
AOP/Individual Proprietor of M/s.
_______________________________________________________ hereby declare that I am
entitled to import goods without collection of tax at source on the following basis, in accordance
with the provisions of clause (v) of paragraph 1 of Notification No. S.R.O. 947(I)/2008, dated 05-
09-2008 for the tax year ___________:
(i) The goods imported consist of plant, machinery, fixtures, fittings or its allied equipments
for the purposes of setting up an industrial undertaking (including hotel) owned by me.
(ii) Goods imported consist of plant, machinery, fixtures, fittings or its allied equipments are
for the purpose of installation/utilization in an existing industrial undertaking (including
hotel) owned by me.
I, therefore, request that certificate may be issued to the Collector of Customs
_____________________ not to collect tax at source on the value of imports. Necessary details in
this regard are given as under:-
(a) Copy of Memorandum and Articles of the Association in case of Company/AOP owning
industrial undertaking/ Registration No.___________________
(b) NTN ___________________
1 Part VII(a) inserted by SRO 1139(I)/2008, dated October 31, 2008.
2
The words “Commissioner of Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 200
CHAPTER - XIX MISCELLANEOUS
(c) Location address of the industrial undertaking ___________________
(d) Nature of the business of industrial undertaking ___________________
(e) Copy of the balance sheet of the industrial undertaking for the latest tax year ______
(f) Description of goods imported ___________________
(g) L.C. No. ___________________
(h) Value of goods ___________________
(i) Port of clearance ___________________
I, hereby declare that whatever is stated in the application is correct to the best of my
knowledge and belief.
Signature __________________________________
Name _____________________________________
Address ___________________________________
Dated _____________________________________ ]
PART-VIII OF THE FIRST SCHEDULE
Government of Pakistan
1
[“DEPARTMENT OF INLAND REVENUE”]
Office of the _____________________
Reduce rate/exemption certificate:
Form for certificate of exemption from deduction or deduction of tax at a lower rate.-
(1) On an application made under rule 40, the 2[“Commissioner of Inland Revenue”] may, subject to the
conditions laid down in sub-rule (2), give a certificate authorizing the person making the
application to receive income specified in Part V of Chapter X without deduction of tax or after
deduction of tax at a rate specified therein, in the following form, namely:-
Book No. Voucher No. Book No. Voucher No.
Counterfoil of certificate under proviso to Certificate under Section 159 of the Income
section of the Income Tax Ordinance, _____ Tax Ordinance, 2001
1. Date
Income Tax Office
2. Person to whom given
Circle ___________ Zone ___________
3. Person to whom addressed.
Date ___________________ 20___-
4. Rate of deduction sanctioned.
5. Description of income, nature of To
payment or description of
asset/property Subject matter in this
certificate.
I hereby authorize you to deduct the tax at the
rate of _____________________
Initials of the Commissioner 2. The income in this case is exempt under
the Income Tax Ordinance, 2001.
Date on which certificate revised
________________ 20___.
Remarks _____________________________ 3. This authorization will remain in force
1
The words “DEPARTMENT OF INCOME TAX” substituted by SRO 1218(I)/2015 dated 08.12.2015.
2
The words “Commissioner of Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 201
CHAPTER - XIX MISCELLANEOUS
____________________________________ until the date it is cancelled by me.
____________________________________
__________
Initials of the _______________________
Commissioner
1
[“Commissioner of Inland Revenue”]
Description of securities payments _________
(2) The certificate referred to in sub-rule (1) shall be issued only if the 2[“Commissioner of Inland
Revenue”] is satisfied that the person concerned–
(i) has furnished such return of returns of income as became due, if any, on or before the
date on which the application under rule - is made; and
(ii) is not in default or deemed to be in default in respect of any tax (including advance tax
under section 147 or tax payable under section 137).
3
PART-VIII(A) OF THE FIRST SCHEDULE
Government of Pakistan
4
[“DEPARTMENT OF INLAND REVENUE”]
Office of the _____________________
EXEMPTION CERTIFICATE UNDER SECTION 159
OF THE INCOME TAX ORDINANCE, 2001
[See Rule 40(4)]
On an application made under Rule 40, the 5[“Commissioner of Inland Revenue”] may, subject to conditions
laid down in sub-rule (3) of the said rule, give a certificate authorizing the Collector of Customs not to
collect tax on the import of goods from the person making the application in the following form specified
herein namely:-
To,
The Collector of Customs _____________________________
M/S.__________________________ have applied for issuance of exemption certificate under section 159 of
the Income Tax Ordinance, 2001. The relevant particulars are given hereunder:-
1. Certificate No.__________________ Date of Issue __________________
2. Validity period From: __________________ To __________________
3. N.T.N. __________________
4. Location address of the industrial undertaking: __________________
5. Description of goods imported: __________________
6. L.C. No. __________________
7. Value of goods: __________________
I hereby authorize you to exempt the import of goods from collection of tax under section 148 of the Income
1
The words “Commissioner of Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
2
The words “Commissioner of Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
3 Part VIII(a) inserted by SRO 1139(I)/2008, dated October 31, 2008.
4
The words “DEPARTMENT OF INCOME TAX” substituted by SRO 1218(I)/2015 dated 08.12.2015.
5
The words “Commissioner of Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 202
CHAPTER - XIX MISCELLANEOUS
Tax Ordinance, 2001 as specified in clause (v) of paragraph 1 of Notification No. S.R.O. 947 (I)/2008,
dated 05-09-2008 for setting up of an industrial undertaking or for installation in an existing industrial
undertaking. This authorization will remain in force until the date specified above or cancelled by me
earlier.
Any Remarks ________________________________________
1
[“Commissioner of Inland Revenue”]
Enforcement Division ____________
RTO/LTU________]
1
The words “Commissioner of Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 203
CHAPTER - XIX MISCELLANEOUS
1
[PART-IX OF THE FIRST SCHEDULE
FORM OF E-ENROLMENT
”]
1
Part IX substituted by SRO 1076(I)/2015 dated 02.11.2015. The substituted Part-IX is as under:
Income Tax Rules, 2002 204
CHAPTER - XIX MISCELLANEOUS
Income Tax Rules, 2002 205
CHAPTER - XIX MISCELLANEOUS
PART-X OF THE FIRST SCHEDULE
APPLICATION FOR REGISTRATION OF INCOME TAX PRACTITIONER
To
1
[2[“Chief Commissioner”] of Regional Tax Office],
_______________ Region,
______________ (City),
_______________ (Jurisdiction)
Dear Sir,
With reference to section 223 of the Income Tax Ordinance, 2002, I, the undersigned, hereby apply for
registration as an Income Tax Practitioner within the meaning of the said section.
Necessary particulars are as below:-
(1) Name (in block letters) __________________________________________________________________________________
(2) Father's name (in block letters) _______________________________________________________________________
(3) Residential address: ____________________________________________________________________________________
(a) _______________________________________________________________________
(b) _______________________________________________________________________
(4) Date of birth ______________________________________________________________
(5) Academic/professional qualifications on the basis of which registration has been sought
(6) Present occupation _________________________________________________________
(7) Particulars of Chartered Accountant/ Cost and Management Accountant/ Income Tax
Practitioner with whom apprenticeship was completed and the period and dates of
apprenticeship.
I hereby declare on solemn affirmation that whatever information has been given above is correct to the
best of my knowledge.
It is further affirmed that-
(a) I have not been dismissed or removed from service;
(b) I am not an un-discharged insolvent;
(c) I have not been disqualified to represent an income tax assesses by a 3[ “ Commissioner
of Inland Revenue”] or any authority empowered to take disciplinary action against lawyers
or registered accountants;
(d) A period of two years elapsed since I resigned from service after having been employed in
the 4[“Inland Revenue Department”] for two years or more;
(e) I have not been convicted of any offence connected with any income tax proceeding
under the Income Tax Ordinance, 2001, or the repealed Income Tax Ordinance, 1979
5
[ ] ; and
(f) I have not been convicted of any offence under the Pakistan Penal Code.
Yours faithfully
1 Substituted for "The Regional Commissioner of Income Tax" by SRO 392(I)/2009, dated May 19, 2009.
2
The words “Director General” substituted by SRO 1218(I)/2015 dated 08.12.2015.
3
The words “Commissioner of Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015
4
The words “Income Tax Department” substituted by SRO 1218(I)/2015 dated 08.12.2015.
5
The expression “and Income Tax Act, 1922” omitted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 206
CHAPTER - XIX MISCELLANEOUS
Signature __________________________________
Name of the Appellant ________________________
Office Address ______________________________
Date ______________________________________
Income Tax Rules, 2002 207
CHAPTER - XIX MISCELLANEOUS
PART-XI OF THE FIRST SCHEDULE
Government of Pakistan
1
[“Department of Inland Revenue”]
office of the _____________________
Notice under sub-section 4 of section 114 of the Income Tax Ordinance, 2001
NTN//2[“CNIC”] ____________________________________
Name: ____________________________________________
Address: _________________________________________
3
[“Tax”] year: ________________________________________
Dated: ____________________________________________
Dear Sir,
1. You have not furnished a return of income for the tax year _________ required to be filed under clause
______ of sub-section (1) of section 114 of the Income Tax Ordinance, 2001. You are, hereby, required
to furnish 4[“with thirty days from the date of service of notice”] on or before
_______________________ a Return of Income for the said tax year, in the prescribed form and
verified in the prescribed manner. A copy of the Return of Income is enclosed.
2. Please note that failure to comply with any of the terms of this notice may result in 5[“provisional”]
assessment under sub-section (1) of section 6[“122C”] of the said Ordinance, and may also render you
liable to a penalty under sub-section ( 1) of section 182, or, prosecution under section 191 of
the said Ordinance or both.
Commissioner/
7
[“Officer of Inland Revenue”]
8
[PART-XII OF THE FIRST SCHEDULE
9
[Prescribed Form for Notice of Demand 10[for] payment of tax due].-
Notice of demand required to be served upon the taxpayers under section 137(2) shall be in the
following form, namely:-
Government Of Pakistan
11
[“Department of Inland Revenue”]
office of the _____________________
NOTICE OF DEMAND UNDER SECTION 137(2)
OF THE INCOME TAX ORDINANCE, 2001
N.T.No.
1
[“CNIC”]
1
The words “Department of Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
2
The word “TRN” substituted by SRO 1218(I)/2015 dated 08.12.2015.
3
The word “Assessment” substituted by SRO 1218(I)/2015 dated 08.12.2015.
4
Inserted by SRO 1218(I)/2015 dated 08.12.2015.
5
The words “an ex-parte” substituted by SRO 1218(I)/2015 dated 08.12.2015.
6
The figure “121” substituted by SRO 1218(I)/2015 dated 08.12.2015.
7
The word “Taxation Officer” substituted by SRO 1218(I)/2015 dated 08.12.2015.
8 Part XII substituted by SRO 189(I)/2006, dated February 28, 2006.
9 Underlining omitted by SRO 392(I)/2009, dated May 19, 2009.
10 Substituted for "in" by SRO 392(I)/2009, dated May 19, 2009.
11
The words “Department of Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 208
CHAPTER - XIX MISCELLANEOUS
Tax Year ______________
Year ending ____________
To
_________________________________
_________________________________
Dear Sir/Madam
As a result of order passed u/s.____________ in your case for the tax year _____________ whereby
your total income has been determined at Rs.______________________ and an amount of
Rs._______________ (Rupees ___________________________________________________) has been
determined to be payable/refundable as specified below.-
(a) Income Tax Rs
2
(b) [“Default Surcharge”] Rs
(c) WWF Rs
(d) Penalty u/s Rs
(e) Others Rs
Total Rs
(2) You are required to make the payment of the above amount on or before _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
but not later than 3[ 4[“thirty”] ] days from the date of service of this notice in the National Bank of
Pakistan/ State Bank of Pakistan/Treasury Office/Sub-Treasury Office.
(3) If you intend to appeal against the order, you may file an appeal under section 127 to the
Commissioner of 5[“Inland Revenue”] (Appeals), Zone _______________ within thirty days of the receipt
of this notice.
(4) Please note that by timely payment of your tax liability you can avoid:
(a) mandatory levy of 6[“default surcharge”] under section 205 7[ ];
(b) penalty under section 8[“182(1)”]; and
(c) proceedings under 138(2).
9
[“(d) Recovery of tax under section 140.”]
(5) Copy of the order on which demand/refund is based is enclosed.
Date ________________
Seal
[Commissioner/ 10[“officer of Inland
Revenue”]]
Personal Code ___________]
1
Inserted by SRO 1218(I)/2015 dated 08.12.2015.
2
The words “Additional Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
3 Substituted for "30" by SRO 755(I)/2008, dated July 15, 2008. Earlier it was substituted for "15" by SRO 612(I)/2006,
dated June 08, 2006.
4
The words “fifteen” substituted by SRO 1218(I)/2015 dated 08.12.2015.
5
The words “Income Tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
6
The words “additional tax” substituted by SRO 1218(I)/2015 dated 08.12.2015.
7
The words “@ 12% per annum” omitted by SRO 1218(I)/2015 dated 08.12.2015.
8
The figure “183” substituted by SRO 1218(I)/2015 dated 08.12.2015.
9
Added by SRO 1218(I)/2015 dated 08.12.2015
10
The words “Taxation Officer” substituted by SRO 1218(I)/2015 dated 08.12.2015.
Income Tax Rules, 2002 209
CHAPTER - XIX MISCELLANEOUS
PART-XIII OF THE FIRST SCHEDULE
Government Of Pakistan
1
[“DEPARTMENT OF INLAND REVENUE”]
office of the _____________________
Form of authorization
(See Rule 72 Section 175)
In pursuance of and as empowered under section 175 and to carry out the purpose and objects of the
Section, M/s._____________________ and M/s.____________________ 2[“officer of Inland Revenue”]
and/or M/s.____________________ __________________________________ valuer(s) is/ are
authorized with regard to the tax related matters of M/s. _______________________________ to enter any
premises and to have full and free access to any place, accounts, documents or computer, and to
impound or to take extracts or copy of such material and/or examine and prepare notes, details of
inventory and its valuation, or computer disc of information or floppies from hard disc or inventory of any
article found at the place. The officer(s) authorized shall handover a copy of inventory of goods and
material to the persons available o n premises and/or put/affix on the conspicuous place in case of
refusal of such person to receive or accept. In the later situation, may also send such copy through
registered post/courier service as early as possible. The 3[“officer of Inland Revenue”] may keep in mind
the enquiry/investigation, audit relating to tax issues only.
Commissioner
4
[PART-XIV OF THE FIRST SCHEDULE
APPLICATION FOR GROUP RELIEF UNDER SECTION 59B
OF THE INCOME TAX ORDINANCE, 2001
Prescribed application for group relief.- An application by the taxpayer for group relief under section
59B of the Income Tax Ordinance, 2001, shall be in the following form, namely: -
To,
The Commissioner,
_____________________________
Dear Sir,
.
The undersigned being duly authorized hereby apply on behalf of M/s.____________________________
(Name, NTN and address of the company) for group relief under section 59B of the Income Tax
Ordinance, 2001, in respect of the following companies of the group.
Whether Commissioner
Name of holding/ having jurisdiction
the Address (Head Incorporation subsidiary over holding/
S.No. company Office / postal) NTN No. No. company subsidiary company
(1) (2) (3) (4) (5) (6) (7)
2. The following documents are attached:-
(i) Copies of locally incorporation certificates of the above mentioned companies under the
Companies Ordinance, 1984; and
1
The words “DEPARTMENT OF INCOME TAX” substituted by SRO 1218(I)/2015 dated 08.12.2015.
2
The words “Taxation Officer” substituted by SRO 1218(I)/2015 dated 08.12.2015.
3
The words “Taxation Officer” substituted by SRO 1218(I)/2015 dated 08.12.2015.
4 Part XIV inserted by SRO 392(I)/2009, dated May 19, 2009.
Income Tax Rules, 2002 210
CHAPTER - XIX MISCELLANEOUS
(ii) Copy of the certificate issued by the SECP (as set out in Annexure to this Part)
confirming that the companies had complied with the corporate governance requirements,
as Notified by the SECP, and are not defaulters of any rules or regulations.
3. It is declared that in accordance with the provisions of section 59B of the Income Tax Ordinance,
2001,-
(i) there is continued ownership for five years of share capital of the subsidiary company to the
extent of,-
(a) fifty five percent in the case of a listed company; or
(b) seventy-five percent or more, in the case of other companies;
(ii) a company within the group has not engaged in the business of trading;
(iii) holding company, being a private limited company with seventy-five percent of ownership
of share capital gets itself listed within three years from the year in which set off for loss is
claimed;
(iv) the Board of Directors of the respective companies have approved the loss surrendered
and loss claimed under section 59B of the Income Tax Ordinance, 2001;
(v) the Board of Directors of the loss claiming company has approved transfer of cash to the
loss surrendering company equal to the amount of tax payable on the profit set off against
the acquired loss; and
(vi) after the approval of cash transfer by the Board of Directors, the cash has been
actually transferred before the filing of returns of the loss claiming company and the
loss surrendering company.
Yours faithfully
Signature __________________________________
Name (in block letters) _______________________
CNIC No. __________________________________
Designation. _______________________________
Date ______________________________________
ANNEXURE
(See paragraph 2(ii) of this part)
CERTIFICATE FROM THE SECURITIES AND
EXCHANGE COMMISSION OF PAKISTAN
It is certified that M/s __________________________________, incorporated at No.__________
dated__________________ is a holding company having 55% share of the following subsidiary companies,
namely:-
(a) ________________________________________
(b) ________________________________________
(c) ________________________________________
(d) ________________________________________
It is certified that M/s _________________, M/s_________________ and M/s __________ are the
subsidiary companies of the holding company M/s_______________________________ holding 75% share of
the aforementioned subsidiary companies.
Income Tax Rules, 2002 211
CHAPTER - XIX MISCELLANEOUS
And the holding company and its subsidiary companies (mentioned above) have not violated any
corporate governance requirements notified by the SECP from time to time, and the above said companies are
entitled to avail group relief under section 59B of the Income Tax Ordinance, 2001. This certificate shall be valid
till no violation from the date of issuance of this certificate onwards is committed by the concerned companies.
The SECP is obliged to intimate the Commissioner of Income Tax concerned, if any, code of corporate
governance is violated by any of companies availing benefit of group relief under section 59B of the Income Tax
Ordinance, 2001.
Signature __________________________________
Name of the issuing authority __________________
Seal/Stamp ________________________________
Date ______________________________________
Income Tax Rules, 2002 212
CHAPTER - XIX MISCELLANEOUS
PART-I OF THE SECOND SCHEDULE
PART-II OF THE SECOND SCHEDULE
1
[―
1
Inserted by the S.R.O. 841(I)/2015 dated 26.08.2015
213
CHAPTER - XIX MISCELLANEOUS
214
CHAPTER - XIX MISCELLANEOUS
215
CHAPTER - XIX MISCELLANEOUS
216
CHAPTER - XIX MISCELLANEOUS
217
CHAPTER - XIX MISCELLANEOUS
218
CHAPTER - XIX MISCELLANEOUS
219
CHAPTER - XIX MISCELLANEOUS
220
CHAPTER - XIX MISCELLANEOUS
221
CHAPTER - XIX MISCELLANEOUS
222
CHAPTER - XIX MISCELLANEOUS
223
CHAPTER - XIX MISCELLANEOUS
224
CHAPTER - XIX MISCELLANEOUS
225
CHAPTER - XIX MISCELLANEOUS
226
CHAPTER - XIX MISCELLANEOUS
”]
227
CHAPTER - XIX MISCELLANEOUS
1
Part II G
[―Company Income Tax Return 2015
1
Inserted by the S.R.O. 877(I)/2015 dated 01.09.2015
228
CHAPTER - XIX MISCELLANEOUS
229
CHAPTER - XIX MISCELLANEOUS
230
CHAPTER - XIX MISCELLANEOUS
231
CHAPTER - XIX MISCELLANEOUS
232
CHAPTER - XIX MISCELLANEOUS
233
CHAPTER - XIX MISCELLANEOUS
234
CHAPTER - XIX MISCELLANEOUS
235
CHAPTER - XIX MISCELLANEOUS
”]
236
CHAPTER - XIX MISCELLANEOUS
1
[―Individual Income Tax Return 2015
11
Inserted by the S.R.O. 877(I)/2015 dated 01.09.2015
237
CHAPTER - XIX MISCELLANEOUS
238
CHAPTER - XIX MISCELLANEOUS
239
CHAPTER - XIX MISCELLANEOUS
240
CHAPTER - XIX MISCELLANEOUS
241
CHAPTER - XIX MISCELLANEOUS
242
CHAPTER - XIX MISCELLANEOUS
243
CHAPTER - XIX MISCELLANEOUS
1
[―AOP Income Tax Return 2015
11
Inserted by the S.R.O. 877(I)/2015 dated 01.09.2015
244
CHAPTER - XIX MISCELLANEOUS
245
CHAPTER - XIX MISCELLANEOUS
246
CHAPTER - XIX MISCELLANEOUS
247
CHAPTER - XIX MISCELLANEOUS
248
CHAPTER - XIX MISCELLANEOUS
”]
249
CHAPTER - XIX MISCELLANEOUS
1
[Part-II H
AOP Income Tax Return 2016
1 th
Added by the S.R.O. 792(I)/2016 dated 25 August, 2016.
250
CHAPTER - XIX MISCELLANEOUS
251
CHAPTER - XIX MISCELLANEOUS
252
CHAPTER - XIX MISCELLANEOUS
253
CHAPTER - XIX MISCELLANEOUS
254
CHAPTER - XIX MISCELLANEOUS
255
CHAPTER - XIX MISCELLANEOUS
‖]
256
CHAPTER - XIX MISCELLANEOUS
[Part-II H
1
Individual Income Tax Return 2016
1 th
Added by the S.R.O. 792(I)/2016 dated 25 August, 2016.
257
CHAPTER - XIX MISCELLANEOUS
258
CHAPTER - XIX MISCELLANEOUS
259
CHAPTER - XIX MISCELLANEOUS
260
CHAPTER - XIX MISCELLANEOUS
261
CHAPTER - XIX MISCELLANEOUS
262
CHAPTER - XIX MISCELLANEOUS
263
CHAPTER - XIX MISCELLANEOUS
264
CHAPTER - XIX MISCELLANEOUS
265
CHAPTER - XIX MISCELLANEOUS
266
CHAPTER - XIX MISCELLANEOUS
267
CHAPTER - XIX MISCELLANEOUS
268
CHAPTER - XIX MISCELLANEOUS
269
CHAPTER - XIX MISCELLANEOUS
270
CHAPTER - XIX MISCELLANEOUS
271
CHAPTER - XIX MISCELLANEOUS
272
CHAPTER - XIX MISCELLANEOUS
273
CHAPTER - XIX MISCELLANEOUS
274
CHAPTER - XIX MISCELLANEOUS
275
CHAPTER - XIX MISCELLANEOUS
276
CHAPTER - XIX MISCELLANEOUS
277
CHAPTER - XIX MISCELLANEOUS
278
CHAPTER - XIX MISCELLANEOUS
279
CHAPTER - XIX MISCELLANEOUS
280
CHAPTER - XIX MISCELLANEOUS
1
[―Part-II I
Companies Income Tax Return 2016
1
Added by the S.R.O. 972(I)/2016 dated 17.10.2016.
281
CHAPTER - XIX MISCELLANEOUS
282
CHAPTER - XIX MISCELLANEOUS
283
CHAPTER - XIX MISCELLANEOUS
284
CHAPTER - XIX MISCELLANEOUS
285
CHAPTER - XIX MISCELLANEOUS
286
CHAPTER - XIX MISCELLANEOUS
287
CHAPTER - XIX MISCELLANEOUS
288
CHAPTER - XIX MISCELLANEOUS
289
CHAPTER - XIX MISCELLANEOUS
‖
290
CHAPTER - XIX MISCELLANEOUS
PART-IV OF THE SECOND SCHEDULE
1
[―Statement of Assets / Liabilities for Tax Year 2015
”]
11
Inserted by the S.R.O. 877(I)/2015 dated 01.09.2015
291
CHAPTER - XIX MISCELLANEOUS
292
CHAPTER - XIX MISCELLANEOUS
293
CHAPTER - XIX MISCELLANEOUS
294
CHAPTER - XIX MISCELLANEOUS
295
CHAPTER - XIX MISCELLANEOUS
296
CHAPTER - XIX MISCELLANEOUS
297
CHAPTER - XIX MISCELLANEOUS
298
CHAPTER - XIX MISCELLANEOUS
PART-X OF THE SECOND SCHEDULE
1
[“Monthly Statement of collection or deduction of income tax under section 165(2)
[See rule 44(2)]
1
Inserted by the S.R.O. 941(I)/2015 dated 18.09.2015
299
CHAPTER - XIX MISCELLANEOUS
”]
300
CHAPTER - XIX MISCELLANEOUS
301
CHAPTER - XIX MISCELLANEOUS
302
CHAPTER - XIX MISCELLANEOUS
303
CHAPTER - XIX MISCELLANEOUS
304
CHAPTER - XIX MISCELLANEOUS
305
CHAPTER - XIX MISCELLANEOUS
306
CHAPTER - XIX MISCELLANEOUS
307
CHAPTER - XIX MISCELLANEOUS
308
Source: Pakistan Code, Ministry of Law and Justice (pakistancode.gov.pk). Text on this page is reproduced verbatim from the official PDF and is provided for reference only. For the authoritative version, always consult the source document or a current reported edition.
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