Income Tax Ordinance 1979 Taxation Law Pakistan Fiscal Legislation Tax Compliance Pakistan Income Tax Regulation Pakistani Tax Policy Financial Legal Framework Tax Assessment and Collection

    THE INCOME TAX ORDINANCE, 1979   The Income Tax Ordinance, 1979, is a fundamental piece of legislation in Pakistan that governs the imposition, collection, and regulation of income tax. Enacted in 1979, this ordinance provides a comprehensive legal framework for the taxation of income earned by individuals, businesses, and other entities within Pakistan’s jurisdiction. In this introduction, we will explore the historical context, key objectives, and legal significance of this ordinance.   An Ordinance to consolidate and amend the law relating to income-tax and super-tax   WHEREAS it is expedient to consolidate and amend the law relating to income tax and super tax for the purposes hereinafter appearing;   AND WHEREAS the President is satisfied that circumstances exist which render it necessary to take immediate action;   NOW, THEREFORE, in pursuance of the Proclamation of the fifth day of July, 1977 read with the Laws (Continuance in Force) Order, 1977 (CMLA Order No.1 of 1977), and in exercise of all powers enabling him in that behalf, the President is pleased to make and promulgate the following Ordinance:-       CHAPTER I PRELIMINARY   Short title, extent and commencement. (1) This Ordinance may be called the Income Tax Ordinance, 1979.   (2)       It extends to the whole of Pakistan.   (3)       It shall come into force on the first day of July, 1979.   Definitions.-In this Ordinance, unless the context otherwise requires,-   (1)       “Agricultural income” means-   (a)        any rent or revenue derived from land which is situated in Pakistan and is used for agricultural purposes;   (b)        any income derived from such land by-   (i)         agriculture; or   (ii)        the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market; or   (iii)       the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in paragraph (ii);   (c)        any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator, or the receiver of rent-in-kind, of any land with respect to which, or the produce of which, any operation mentioned in paragraphs (ii) and (iii) of sub-clause (b) is carried on:   Provided that the building is on, or in the immediate vicinity of, the land, and is a building which the receiver of the rent or revenue or the cultivator, or the receiver of the rent-in-kind by reason of his connection with the land, requires as a dwelling-house, or as a store-house, or other out-building;   (2) “Appellate Additional Commissioner” means a person appointed to be an Appellate Additional Commissioner of Income Tax under section 4;   (3) “Appellate Tribunal” means the Appellate Tribunal constituted under section 133;   (4) “approved gratuity fund” means a gratuity fund which has been, and continues to be, approved by the Commissioner in accordance with the rules contained in Part III of the Sixth Schedule;   (5) “approved superannuation fund” means a superannuation fund, or any part of a superannuation fund, which has been, and continues to be, approved by the Commissioner in accordance with the rules contained in Part II of the Sixth Schedule;   (6) “assessee” means a person by whom any tax or any other sum of money is payable under this Ordinance, and includes-     (a)        every person in respect of whom any proceeding under this Ordinance has been taken for the assessment of his income or the income of any other person in respect of which he is assessable or of the amount of refund due to him or to such other person;   (b)        every person who is required to file a return of total income under section 55, section 72 or section 81; and   (c)        every person who is deemed to be an assessee, or an assessee in default, under any provision of this Ordinance;   (7) “assessment” includes re-assessment and additional assessment and the cognate expressions shall be construed accordingly;   (8)        “assessment year” means the period of twelve months beginning on the first day of July next following the income year and includes any such period which is deemed, under any provision of this Ordinance, to be the assessment year in respect of any income or any income year;   (9)        “average rate of tax” means the rate arrived at by dividing the amount of tax calculated on the total income by such income;   (10) “banking company” has the same meaning as in the Banking Companies Ordinance, 1962 (LVII of 1962), and includes any body corporate formed by, or under, any law for the time being in force which transacts the business of banking in Pakistan;   (11)      “business” includes any, trade, commerce or manufacture, or any adventure or concern in the nature of trade, commerce or manufacture;   (12)      “capital asset” means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include-   (i)         any stock-in-trade (not being stocks and shares), consumable stores or raw materials held for the purposes of his business or profession;   (ii)        personal effects, that is to say, movable property (including wearing apparel, jewellery and furniture) held for personal use by the assessee or any member of his family dependent on him; and   (iii)       any land from which the income derived by the assessee is agricultural income;   (13)      “Central Board of Revenue” means the Central Board of Revenue constituted under the Central Board of Revenue Act, 1924 (IV) of (1924);   (14)      “charitable purpose” includes relief of the poor, education, medical relief