Income

Question 1

Define salaried person.

Answer 1

An individual whose income from salary exceeds 75% of taxable income in a tax year will be considered as
a salaried person.

Question 2

Define taxable income.

Answer 2

The taxable income of a person for a tax year shall be the total income (under clause (a) of section 10) for the year
reduced (but not below zero) by the total of any ―deductible allowances‖ of the person for the year.

Question 3

What is the total income?

Answer 3

The total income is sum of -
(a) Person‗s income under all heads of income for the year; and
(b) Person‗s income exempt from tax under any of the provisions of this Ordinance.

Question 4

Explain heads of income.

Answer 4

For imposing tax and calculating total income, all income shall be classified under the following heads:
a) Salary;
b) Income from property
c) Income from Business;
d) Capital Gains; and
e) Income from Other Sources.

Question 5

What is income under a head of income?

Answer 5

The income under a head of income for a tax year shall be the total chargeable amounts derived by the person
under the head as reduced by the total deductions.

Question 6

Explain loss for that head

Answer 6

Where total deduction allowed to a person for a tax year under a head of income exceed the total amounts
chargeable to tax, the person shall be treated as sustaining a loss for that head.

Question 7

Explain the computation of income of the resident person and a non-resident person.

Answer 7

(5) The income of a resident person under a head of income shall be computed by adding:
 Pakistan-source income and
 Foreign-source income.
(6) The income of a non-resident person under a head of income shall be computed by considering only amounts
that are Pakistan-source income.