Exemptions and Tax Concessions

<< Foreign Government Officials

RESIDENTIAL STATUS & TAXATION 1 >>

Taxation Management FIN 623

MODULE 4

LESSON 4.13

HEADS OF INCOME (SECTION 11)

Exemptions and Tax Concessions

· Foreign Currency Bearer Certificates] (81A)

· Profits on Special US Dollar Bonds, 1998 rules [Clause (82), Part I of Second Schedule].

· Income of Text-Book Boards [Clause (91), Part I of the Second Schedule]

· Income of certain educational institutions [Clause (92), Part I of the Second Schedule] "income of

any university or other educational institution established solely for educational purposes and not

for purposes of profit"

· Income of Sports Boards [Clause (98), Part 1 of the Second Schedule] "Any income derived by any

Board or other organization established in Pakistan for the purposes of controlling, regulating or

encouraging major games and sports recognized by Government."

· Mutual Funds [Clause (99), Part 1 of the Second Schedule]

· Encashment of Special US Dollar Bond [Clause (135), Part 1 of the Second Schedule] "Any

amount received on encashment of Special US Dollar Bond issued under the Special US Dollar

Bonds Rules, 1998."

Medical Expenditure by individuals, [Clause (139), Part 1 of the Second Schedule]

"(a) benefit represented by free provision to the employee of medical treatment or hospitalization or both

by an employer or the reimbursement received by the employee of the medical charges or hospital charges

or both paid by him, where such provision or reimbursement is in accordance with the terms of

employment:

Provided that National Tax Number of the hospital or clinic, as the case may be, is given and the employer

also certifies and attests the medical or hospital bills to which this clause applies;

any medical allowance received by an employee not exceeding ten per cent of the basic salary of the

employee if free medical treatment or hospitalization or reimbursement of medical or hospitalization

charges is not provided for in the terms of employment;

Provided that the receipts of such expenditure bearing name, National Tax Number and complete address

of the medical practitioners are furnished along with his return of income.

Exemptions from Total Income under Second Schedule-- Part 1:

· Allowance and perquisites of Govt. employees posted abroad

· Salary of foreign employees of British Council

· Pension Clause (9):

Pension of Federal, Provincial Govt. & Armed Forces employees & Families

· Commutation of pension Clause (12)

· Perquisites to President, Governors and Chiefs of Staff-Residence (51)

· Perquisites of Governors, Chiefs of Staff and Corps Commanders-Conveyance and Entertainment

(52)

· Perquisites of Federal Ministers

· Perquisites of Judges (56)

· Allowances and privileges of Judges

· Income of Sports Boards (61)

Reduction in Tax Rates under Second Schedule Part 2

· Profit on Special US Dollar Bonds or out of new account opened after December 16, 1999.At the

Rate of 10 percent of amount of profit by Resident Person

· Presumptive tax for business of shipping of resident persons

Reduction in Tax Liability under Second Schedule Part 3

· Any amount received as flying allowance by pilots etc. and junior commissioned officers or other

ranks shall be taxed @2.5% as separate block.

· Senior citizen-age 60 years &above where taxable income not exceeding Rs.400,000/- tax liability

reduced by 50%.

Table of Contents: