Karachi, February 5, 2024 – The Federal Board of Revenue (FBR) in Pakistan has delineated the parameters for Pakistan source income for the tax year 2024, providing a comprehensive framework for the calculation of annual tax liabilities.
This information is crucial for individuals, businesses, and other entities operating within the country to ensure compliance with tax regulations.
The guidelines for Pakistan source income are outlined in section 101 of the Income Tax Ordinance, 2001, which encompasses various types of incomes under different heads and situations. The FBR’s announcement sheds light on some of the common categories of Pakistan source income, serving as a reference for taxpayers and tax professionals.
One notable category identified by the FBR is salary received or receivable from any employment exercised in Pakistan, regardless of where it is paid. This includes individuals employed within the country, regardless of their nationality or residency status. Additionally, the FBR specifies that salaries paid by the Federal Government, a Provincial Government, or a local Government in Pakistan fall under the purview of Pakistan source income, irrespective of where the employment is executed.
Dividends paid by Resident Companies are also categorized as Pakistan source income. This implies that individuals receiving dividends from companies operating within the country will need to account for this income in their annual tax filings. Similarly, profits on debt paid by a Resident Person, such as interest income, are included in the definition of Pakistan source income.
Income generated from property or rental income derived from the lease of immovable property in Pakistan is another aspect covered by the FBR’s definition. This provision targets individuals and businesses earning revenue from real estate transactions within the country.
Pensions or annuities paid or payable by a Resident or a permanent establishment of a Non-Resident are also outlined as part of the Pakistan source income. This includes pension income received by individuals who have worked in Pakistan or have a permanent establishment in the country.
Understanding and complying with these definitions are crucial for individuals and entities to fulfill their tax obligations accurately. Failure to adhere to the guidelines set by the FBR may result in penalties or legal consequences. It is recommended that taxpayers seek professional advice to navigate the complexities of tax regulations and ensure proper compliance with the law.
The FBR’s effort to provide clarity on Pakistan source income aligns with the broader objectives of promoting transparency and accountability in the country’s taxation system. The defined parameters offer a clear roadmap for taxpayers to assess their obligations, contribute to the national revenue, and facilitate a fair and efficient tax administration.
