FBR issues computation of taxable income for tax year 2020

FBR issues computation of taxable income for tax year 2020

KARACHI: Federal Board of Revenue (FBR) has issued computation of taxable income for the tax year 2020 (July 01, 2019 to June 30, 2020).

The FBR issued Income Tax Ordinance, 2001 updated till June 30, 2019 under which the computation of taxable income for tax year 2020 has also been updated.

According to Section 09 of the Ordinance, the taxable income of a person for a tax year shall be the total income under clause (a) of section 10 of the person for the year reduced (but not below zero) by the total of any deductible allowances under Part IX of this Chapter of the person for the year.

Section 10: Total Income

The total income of a person for a tax year shall be the sum of the –

(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.

Section 11: Heads of income

(1) For the purposes of the imposition of tax and the computation of total income, all income shall be classified under the following heads, namely: —

(a) Salary;

(b) Income from Property;

(c) Income from Business;

(d) Capital Gains; and

(e) Income from Other Sources.

(2) Subject to this Ordinance, the income of a person under a head of income for a tax year shall be the total of the amounts derived by the person in that year that are chargeable to tax under the head as reduced by the total deductions, if any, allowed under this Ordinance to the person for the year under that head.

(3) Subject to this Ordinance, where the total deductions allowed under this Ordinance to a person for a tax year under a head of income exceed the total of the amounts derived by the person in that year that are chargeable to tax under that head, the person shall be treated as sustaining a loss for that head for that year of an amount equal to the excess.

(4) A loss for a head of income for a tax year shall be dealt with in accordance with Part VIII of this Chapter.

(5) The income of a resident person under a head of income shall be computed by taking into account amounts that are Pakistan-source income and amounts that are foreign-source income.

(6) The income of a non-resident person under a head of income shall be computed by taking into account only amounts that are Pakistan-source income.

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