Exemption And Tax Concession

Question 1

Short term resident

Exemption?

Answer 1

• he is resident solely because of his employment

- he is present in Pakistan 4 periods not exceding 3 years

Question 2

Short term resident FSI chargeable to tax?

Answer 2

Any income derived from business of person established in Pakistan

Any FSI brought into or receives in Pakistan

Question 3

FSI of returning expatriates?

Answer 3

Any foreign- source income derived by a citizen of Pakistan in a tax year who was not a resident individual in
any of the 4 tax years preceding the tax year in which the individual became a resident shall be exempt from
tax:

in the tax year in which the individual became a resident and
in the following tax year.
2) Already covered under the head Income from Salary.

Question 4

Exemptions in Second schedule?

Answer 4

The incomes/persons specified in the Second Schedule shall be -
(a) exempt from tax.
(b) charged at lower rates.
(c) allowed a reduction in tax liability.
(d) exempted from the operation of any provision of this Ordinance.
(1A) Where any income is exempt it shall be included in the total income, however no tax shall be paid on it.
(2) Federal Government may amend the Second Schedule by adding, omitting or changing any clause or
condition.

All the amendments shall have effect for any tax year beginning on any date before or after the
commencement of the financial year in which the notification is issued.
(3) The Federal Government shall place before the National Assembly all amendments made by it in the 2nd Schedule in F/S

Question 5

Agricultural income

Answer 5

Chapter 13: Exemptions and Tax Concessions

any rent or revenue received by a person from land:
situated in Pakistan and

(b) any income received by a person from land situated in Pakistan from
(i) agriculture
(ii) the performance by a cultivator or receiver of rent-in-kind of process employed for taking the produce
to the market; or
(ii) the sale by a cultivator or receiver of rent-in-kind of the produce, for which no process is performed
other than a process described above; or
() income from building is also agricultural income if:
(i) building is@wned and occupied by cultivator or receiver of the rent;
(ii) building is located in the immediate vicinity of the land used for agricultural purpose
(iii) building is used as a@welling-house, storehouse, or other out-building by cultivator or receiver of rent in kind due to his connection with agricultural land

Question 6

Agricultural produce as raw material?

Answer 6

Total income
Less: Market value of agricultural produce used in the business as raw material

1-If produce is sold in the market in its raw state or the market price at the time it is used as raw
after application of any process ordinarily employed materials in the person’s business
to render it fit to be taken to market

The market price at that time

2. in any other case
   Market price is sum of:

a) the expenses of cultivation; and
b) the land rent paid for the area in which the
produce is grown