Tag: FBR

Definitions of prevailing provisions of Income Tax Laws in Pakistan updated up to June 30, 2022. Federal Board of Revenue (FBR) has updated Income Tax Ordinance, 2001 up to June 30, 2022 by inserting amendments made through Finance Act, 2022.

Section 2 of Income Tax Ordinance, 2001 provides definitions of terminology used in the Ordinance to understand the tax laws

Following is the text of Section 2 of the Ordinance:

Section 2. Definitions. — In this Ordinance, unless there is anything repugnant in the subject or context —

(1) “accumulated profits” in relation to distribution or payment of a dividend, include —

(a) any reserve made up wholly or partly of any allowance, deduction, or exemption admissible under this Ordinance;-.9230

(b) for the purposes of sub-clauses (a), (b) and (e) of clause (19)” all profits of the company including income and gains of a trust up to the date of such distribution or such payment, as the case may be; and

(c) for the purposes of sub-clause (c) of clause (19), includes all profits of the company including income and gains of a trust up to the date of its liquidation;

(1A) “active taxpayer’ list” means the list instituted by the Board under Section 181A and includes such list issued by the Azad Jammu and Kashmir Central Board of Revenue or Gilgit-Baltistan Council Board of Revenue;

(1B) “amalgamation” means the merger of one or more banking companies or non-banking financial institutions, or insurance companies, or companies owning and managing industrial undertakings or companies engaged in providing services and not being a trading company or companies in either case at least one of them being a public company, or a company incorporated under any law, other than Companies Act, 2017 (XIX of 2017), for the time being in force, (the company or companies which so merge being referred to as the “amalgamating company” or companies and the company with which they merge or which is formed as a result of merger, as the “amalgamated company”) in such manner that –

(a) the assets of the amalgamating company or companies immediately before the amalgamation become the assets of the amalgamated company by virtue of the amalgamation, otherwise than by purchase of such assets by the amalgamated company or as a result of distribution of such assets to the amalgamated company after the winding up of the amalgamating company or companies; and

(b) the liabilities of the amalgamating company or companies immediately before the amalgamation become the liabilities of the amalgamated company by virtue of the amalgamation.

(2) “Appellate Tribunal” means the Appellate Tribunal Inland Revenue established under section 130;

(3) “approved gratuity fund” means a gratuity fund approved by the Commissioner in accordance with Part III of the Sixth Schedule;

(3A) “Approved Annuity Plan” means an Annuity Plan approved by Securities and Exchange Commission of Pakistan (SECP) under Voluntary Pension System Rules, 2005 and offered by a Life Insurance Company registered with the SECP under Insurance Ordinance, 2000 (XXXIX of 2000);

(3B) “Approved Income Payment Plan” means an Income Payment Plan approved by Securities and Exchange Commission of Pakistan (SECP) under Voluntary Pension System Rules, 2005 and offered by a Pension Fund Manager registered with the SECP under Voluntary Pension System Rules, 2005;

(3C) “Approved Pension Fund” means Pension Fund approved by Securities and Exchange Commission of Pakistan (SECP) under Voluntary Pension System Rules, 2005, and managed by a Pension Fund Manager registered with the SECP under Voluntary Pension System Rules, 2005;

(3D) “Approved Employment Pension or Annuity Scheme” means any employment related retirement scheme approved under this Ordinance, which makes periodical payment to a beneficiary i.e. pension or annuity such as approved superannuation fund, public sector pension scheme and Employees Old-Age Benefit Scheme;

(3E) “Approved Occupational Savings Scheme” means any approved gratuity fund or recognized provident fund;

(4) “approved superannuation fund” means a superannuation fund, or any part of a superannuation fund, approved by the Commissioner in accordance with Part II of the Sixth Schedule;

(5) “assessment” includes provisional assessment, re-assessment and amended assessment and the cognate expressions shall be construed accordingly;

(5A) “assessment year” means assessment year as defined in the repealed Ordinance;

(5B) “asset management company” means an asset management company as defined in the Non-Banking Finance Companies and Notified Entities Regulations, 2007;

(5C) “assets move” means the transfer of an offshore asset to an unspecified jurisdiction by or on behalf of a person who owns, possesses, controls or is the beneficial owner of such offshore assets for the purpose of tax evasion;

(6) “association of persons” means an association of persons as defined in section 80;

(7) “banking company” means a banking company as defined in the Banking Companies Ordinance, 1962 (LVII of 1962) and includes anybody corporate which transacts the business of banking in Pakistan;

(7A) “beneficial owner” means a natural person who –

(a) ultimately owns or controls a Company or association of persons, whether directly or indirectly, through at least twenty five percent shares or voting rights; or

(b) exercise ultimate effective control, through direct or indirect means, over the company or association of persons including control over the finances or decisions or other affairs of the company or association of persons;

(8) “Board” means the Central Board of Revenue established under the Central Board of Revenue Act, 1924 (IV of 1924), and on the commencement of Federal Board of Revenue Act, 2007, the Federal Board of Revenue established under section 3 thereof;

(9) “bonus shares” includes bonus units in a unit trust;

(10) “business” includes any trade, commerce, manufacture, profession, vocation or adventure or concern in the nature of trade, commerce, manufacture, profession or vocation, but does not include employment;

(10A) “business bank account” means a bank account utilized by the taxpayer for business transaction declared to the Commissioner through original or modified registration form prescribed under section 181;

(11) “capital asset” means a capital asset as defined in section 37;

(11A) “charitable purpose” includes relief of the poor, education, medical relief and the advancement of any other object of general public utility;

(11B) “Chief Commissioner” means a person appointed as Chief Commissioner Inland Revenue under section 208 and includes a Regional Commissioner of Income Tax and a Director-General of Income Tax and Sales Tax;

(11C) “Collective Investment Scheme” shall have the same meanings as are assigned under the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003;

(12) “company” means a company as defined in section 80;

(13) “Commissioner” means a person appointed as Commissioner Inland Revenue under section 208 and includes any other authority vested with all or any of the powers and functions of the Commissioner;

(13A) “Commissioner (Appeals)” means a person appointed as Commissioner Inland Revenue (Appeals) under section 208;

(13AA) concealment of income includes –

(a) the suppression of any item of receipt liable to tax in whole or in part, or failure to disclose income chargeable to tax;

(b) claiming any deduction or any expenditure not actually incurred;

(c) any act referred to in sub-section (1) of section 111; and

(d) claiming of any income or receipt as exempt which is otherwise taxable.

Explanation.- For removal of doubt it is clarified that none of the aforementioned acts would constitute concealment of income unless it is proved that taxpayer has knowingly and willfully committed these acts;

(13AB) “consumer goods” means goods that are consumed by the end consumer rather than used in the production of another good;”

(13B) “Contribution to an Approved Pension Fund” means contribution as defined in rule 2(j) of the Voluntary Pension System Rules, 2005;

(14) “co-operative society” means a co-operative society registered under the Co-operative Societies Act, 1925 (VII of 1925) or under any other law for the time being in force in Pakistan for the registration of co-operative societies;

(15) “debt” means any amount owing, including accounts payable and the amounts owing under promissory notes, bills of exchange, debentures, securities, bonds or other financial instruments;

(16) “deductible allowance” means an allowance that is deductible from total income under Part IX of Chapter III;

(17) “depreciable asset” means a depreciable asset as defined in section 22;

17A. ”Developmental REIT Scheme” means Developmental REIT Scheme as defined under the Real Estate Investment Trust Regulations, 2015;

(17B) “digital means” means digital payments and financial services including but not limited to— online portals or platforms for digital payments/receipts; online interbank fund transfer services; online bill or invoice presentment and payment services; over the Counter digital payment services or facilities; card payments using Point of Sale terminals, QR codes, mobile devices, ATMs, Kiosk or any other digital; payments enabled devices; or any other digital or online payment modes.

(18) “disposal” in relation to an asset, means a disposal as defined in section 75;

(18A) “distributor” means a person appointed by a manufacturer, importer or any other person for a specified area to purchase goods from him for further supply;

(19) “dividend” includes —

(a) any distribution by a company of accumulated profits to its shareholders, whether capitalised or not, if such distribution entails the release by the company to its shareholders of all or any part of the assets including money of the company;

(b) any distribution by a company, to its shareholders of debentures, debenture-stock or deposit certificate in any form, whether with or without profit, to the extent to which the company possesses accumulated profits whether capitalised or not;

(c) any distribution made to the shareholders of a company on its liquidation, to the extent to which the distribution is attributable to the accumulated profits of the company immediately before its liquidation, whether capitalised or not;

(d) any distribution by a company to its shareholders on the reduction of its capital, to the extent to which the company possesses accumulated profits, whether such accumulated profits have been capitalised or not;

(e) any payment by a private company as defined in the Companies Act, 2017 (XIX of 2017) or trust of any sum (whether as representing a part of the assets of the company or trust, or otherwise) by way of advance or loan to a shareholder or any payment by any such company or trust on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company or trust, in either case, possesses accumulated profits; or

(f) remittance of after tax profit of a branch of a foreign company operating in Pakistan; but does not include —

(i) a distribution made in accordance with sub-clause (c) or (d) in respect of any share for full cash consideration, or redemption of debentures or debenture stock, where the holder of the share or debenture is not entitled in the event of liquidation to participate in the surplus assets;

(ii) any advance or loan made to a shareholder by a company in the ordinary course of its business, where the lending of money is a substantial part of the business of the company;

(iii) any dividend paid by a company which is set off by the company against the whole or any part of any sum previously paid by it and treated as a dividend within the meaning of sub-clause (e) to the extent to which it is so set off; and

(iv) remittance of after tax profit by a branch of Petroleum Exploration and Production (E&P) foreign company, operating in Pakistan.

(19A) “Eligible Person”, for the purpose of Voluntary Pension System Rules, 2005, means an individual Pakistani who holds a valid National Tax Number or Computerized National Identity Card or National Identity Card for Overseas Pakistanis issued by the National Database and Registration Authority:

Provided that the total tax credit available for the contribution made to approved employment pension or annuity scheme and approved pension fund under Voluntary Pension System Rules, 2005, should not exceed the limit prescribed or specified in section 63.

(19B) The expressions “addressee”, “automated”, “electronic”, “electronic signature”, “information”, “information system”, “originator” and “transaction”, shall have the same meanings as are assigned to them in the Electronic Transactions Ordinance, 2002 (LI of 2002);

(19C) “electronic record” includes the contents of communications, transactions and procedures under this Ordinance, including attachments, annexes, enclosures, accounts, returns, statements, certificates, applications, forms, receipts, acknowledgements, notices, orders, judgments, approvals, notifications, circulars, rulings, documents and any other information associated with such communications, transactions and procedures, created, sent, forwarded, replied to, transmitted, distributed, broadcast, stored, held, copied, downloaded, displayed, viewed, read, or printed, by one or several electronic resources and any other information in electronic form;

(19D) “electronic resource” includes telecommunication systems, transmission devices, electronic video or audio equipment, encoding or decoding equipment, input, output or connecting devices, data processing or storage systems, computer systems, servers, networks and related computer programs, applications and software including databases, data warehouses and web portals as may be prescribed by the Board from time to time, for the purpose of creating electronic record;

(19E) “telecommunication system” includes a system for the conveyance, through the agency of electric, magnetic, electro-magnetic, electro-chemical or electro-mechanical energy, of speech, music and other sounds, visual images and signals serving for the impartation of any matter otherwise than in the form of sounds or visual images and also includes real time online sharing of any matter in manner and mode as may be prescribed by the Board from time to time.

(20) “employee” means any individual engaged in employment;

(21) “employer” means any person who engages and remunerates an employee;

(22) “employment” includes –

(a) a directorship or any other office involved in the management of a company;

(b) a position entitling the holder to a fixed or ascertainable remuneration; or

(c) the holding or acting in any public office;

(22A) “fast moving consumer goods” means consumer goods which are supplied in retail marketing as per daily demand of a consumer excluding durable goods.

(22AA) “fair market value” means value as provided in section 68;

(22B) ”fee for offshore digital services” means any consideration for providing or rendering services by a non-resident person for online advertising including digital advertising space, designing, creating, hosting or maintenance of websites, digital or cyber space for websites, advertising, e-mails, online computing, blogs, online content and online data, providing any facility or service for uploading, storing or distribution of digital content including digital text, digital audio or digital video, online collection or processing of data related to users in Pakistan, any facility for online sale of goods or services or any other online facility.

(22C) “FBR Refund Settlement Company Limited” means the company with this name as incorporated under the Companies Act, 2017 (XIX of 2017), for the purposes of settlement of income tax refund claims including payment by way of issuing refund bonds under section 171A;

(23) “fee for technical services” means any consideration, whether periodical or lump sum, for the rendering of any managerial, technical or consultancy services including the services of technical or other personnel, but does not include —

(a) consideration for services rendered in relation to a construction, assembly or like project undertaken by the recipient; or

(b) consideration which would be income of the recipient chargeable under the head “Salary”;

(24) “financial institution” means an institution as defined under the Companies Act, 2017 (XIX of 2017);

(25) “finance society” includes a co-operative society which accepts money on deposit or otherwise for the purposes of advancing loans or making investments in the ordinary course of business;

(26) “firm” means a firm as defined in section 80;

(27) “foreign-source income” means foreign-source income as defined in sub-section (16) of section 101.

(27A) “greenfield industrial undertaking” means –

(a) a new industrial undertaking which is –

(i) setup on land which has not previously been utilized for any commercial, industrial or manufacturing activity and is free from constraints imposed by any prior work;

(ii) built without demolishing, revamping, renovating, upgrading, remodeling or modifying any existing structure, facility or plant;

(iii) not formed by the splitting up or reconstitution of an undertaking already in existence or by transfer of machinery, plant or building from an undertaking established in Pakistan prior to commencement of the new business and is not part of an expansion project;

(iv) using any process or technology that has not earlier been used in Pakistan and is so approved by the Engineering Development Board; and

(b) is approved by the Commissioner on an application made in the prescribed form and manner, accompanied by the prescribed documents and, such other documents as may be required by the Commissioner:

Provided that this definition shall be applicable from the 1st July, 2019 and onwards.

(28) “House Building Finance Corporation” means the Corporation constituted under the House Building Finance Corporation Act, 1952 (XVIII of 1952);

(28A) “imputable income” in relation to an amount subject to final tax means the income which would have resulted in the same tax, had this amount not been subject to final tax;”

(29) “income” includes any amount chargeable to tax under this Ordinance, any amount subject to collection or deduction of tax under section 148, 150, 152(1), 153, 154, 156, 156A, 233, sub-section (5) of section 234 and any amount treated as income under any provision of this Ordinance and any loss of income;

(29A) “income year” means income year as defined in the repealed Ordinance;

(29B) “Individual Pension Account” means an account maintained by an eligible person with a Pension Fund Manager approved under the Voluntary Pension System Rules, 2005;

(29C) “Industrial undertaking” means —

(a) an undertaking which is set up in Pakistan and which employs,—

(i) ten or more persons in Pakistan and involves the use of electrical energy or any other form of energy which is mechanically transmitted and is not generated by human or animal energy; or

(ii) twenty or more persons in Pakistan and does not involve the use of electrical energy or any other form of energy which is mechanically transmitted and is not generated by human or animal energy: and which is engaged in,—

(i) the manufacture of goods or materials or the subjection of goods or materials to any process which substantially changes their original condition; or

(ii) ship-building; or

(iii) generation, conversion, transmission or distribution of electrical energy, or the supply of hydraulic power; or

(iv) the working of any mine, oil-well or any other source of mineral deposits;

(aa) from the 1st day of May, 2020, a person directly involved in the construction of buildings, roads, bridges and other such structures or the development of land, to the extent and for the purpose of import of plant and machinery to be utilized in such activity, subject to such conditions as may be notified by the Board;

(ab) from the first day of July, 2020 a resident company engaged in the hotel business in Pakistan; and

(c) telecommunication companies operating under the license of Pakistan Telecommunication Authority (PTA).;

(30) “intangible” means an intangible as defined in section 24;

(30A) “integrated enterprices” means a person integrated with the Board through approved fiscal electronic device and software, and who fulfills obligations and requirements for integration as may be prescribed;

(30AA) “investment company” means an investment company as defined in the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003;

(30AB) KIBOR means Karachi Inter Bank Offered Rate prevalent on the first day of each quarter of the financial year;

(30AC) “Iris” means a web based computer programme for operation and management of Inland Revenue taxes and laws administered by the Board;

(30AD) Information Technology (IT) services include but not limited to software development, software maintenance, system integration, web design, web development, web hosting and network design; and

(30AE) IT enabled services include but not limited to inbound or outbound call centres, medical transcription, remote monitoring, graphics design, accounting services, Human Resource (HR) services, telemedicine centers, data entry operations, cloud computing services, data storage services, locally produced television programs and insurance claims processing;

(30B) “leasing company” means a leasing company as defined in the Non-Banking Finance Companies and Notified Entities Regulation, 2007;

(30C) “liaison office” means a place of business acting for the principal, head office or any entity of which it is a part, and

(a) its activities do not result in deriving income in Pakistan; and

(b) maintains itself out of any amount remitted from outside Pakistan received through normal banking channels.

Explanation,— It is clarified that—

(i) a place of business shall not be treated as liaison office if it engages in –

(a) commercial activities;

(b) trading or industrial activities; or

(c) the negotiation and conclusion of contracts;

(ii) the activities shall be treated to be commercial activities, if these include—

(a) providing after sales services for goods or services; or

(b) marketing or promoting pharmaceutical and medical products or services;

(iii) subject to clause (i), a place of business shall be treated as a liaison office, if it undertakes activities of—

(a) an exploratory or preparatory nature, to investigate the possibilities of trading with, or in, Pakistan;

(b) exploring the possibility of joint collaboration and export promotion;

(c) promoting products where such products are yet to be supplied to, or sold in, Pakistan;

(d) promoting technical and financial collaborations between its principal and taxpayers in Pakistan; or

(e) provision of technical advice and assistance.

(31) “liquidation” in relation to a company, includes the termination of a trust;

(31A) “Local Government” shall have the same meaning for respective provisions and Islamabad Capital Territory as contained in the Balochistan Local Government Act,2010 (V of 2010), the Khyber Pakhtunkhwa Local Government Act, 2013 (XXVIII of 2013), the Sindh Local Government Act, 2013 (XLII of 2013), the Islamabad Capital Territory Local Government Act, 2015 (X of 2015) and the Punjab Local Government Act, 2019(XIII of 2019)

(32) “member” in relation to an association of persons, includes a partner in a firm;

(33) “minor child” means an individual who is under the age of eighteen years at the end of a tax year;

(34) “modaraba” means a modaraba as defined in the Modaraba Companies and Modarabas (Floatation and Control) Ordinance, 1980 (XXXI of 1980);

(35) “modaraba certificate” means a modaraba certificate as defined in the Modaraba Companies and Modarabas (Floatation and Control) Ordinance, 1980 (XXXI of 1980);

(35A) “Mutual Fund” means a mutual fund registered or approved by the Securities and Exchange Commission of Pakistan;

(35AA) “NCCPL” means National Clearing Company of Pakistan Limited, which is a company incorporated under the Companies Act, 2017 (XIX of 2017) and licensed as “Clearing House” by the Securities and Exchange Commission of Pakistan, or any subsidiary of NCCPL notified by the Board for the purpose of this clause

(35B) “non-banking finance company” means an NBFC as defined in the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003;

(36) “non-profit organization” means any person other than an individual, which is —

(a) established for religious, educational, charitable, welfare purposes for general public, or for the promotion of an amateur sport;

(b) formed and registered by or under any law as a non-profit organization;

(c) approved by the Commissioner for specified period, on an application made by such person in the prescribed form and manner, accompanied by the prescribed documents and, on requisition, such other documents as may be required by the Commissioner; and none of the assets of such person confers, or may confer, a private benefit to any other person;

(37) “non-resident person” means a non-resident person as defined in Section 81;

(38) “non-resident taxpayer” means a taxpayer who is a non-resident person;

(38A) “Officer of Inland Revenue” means any Additional Commissioner Inland Revenue, Deputy Commissioner Inland Revenue, Assistant Commissioner Inland Revenue, Inland Revenue Officer, Inland Revenue Audit Officer, District Taxation Officer Inland Revenue, Assistant Director Audit, or any other officer however designated or appointed by the Board for the purposes of this Ordinance;

(38AA) “offshore asset” in relation to a person, includes any movable or immovable asset held, any gain, profit, or income derived, or any expenditure incurred outside Pakistan;

(38AB) “offshore evader” means a person who owns, possesses, controls, or is the beneficial owner of an offshore asset and does not declare, or under declares or provides inaccurate particulars of such asset to the Commissioners.;

(38AC) “offshore enabler” includes any person who, enables, assists, or advises any person to plan, design, arrange or manage a transaction or declaration relating to an offshore asset, which has resulted or may result in tax evasion;

(38B) “online marketplace” means an information technology platform run by e-commerce entity over an electronic network that acts as a facilitator in transactions that occur between a buyer and a seller;

(39) “Originator” means Originator as defined in the Asset Backed Securitization Rules, 1999;

(40) “Pakistan-source income” means Pakistan-source income as defined in section 101;

(40A) “Pension Fund Manager” means an asset management company registered under the Non-Banking Finance Companies (Establishment and Regulations) Rules, 2003, or a life insurance company registered under Insurance Ordinance, 2000 (XXXIX of 2000), duly authorized by the Securities and Exchange Commission of Pakistan and approved under the Voluntary Pension System Rules, 2005, to manage the Approved Pension Fund;

(41) “permanent establishment” in relation to a person, means a fixed place of business through which the business of the person is wholly or partly carried on, and includes –

(a) a place of management, branch, office, factory or workshop, premises for soliciting orders, warehouse, permanent sales exhibition or sales outlet, other than a liaison office except where the office engages in the negotiation of contracts (other than contracts of purchase);

(b) a mine, oil or gas well, quarry or any other place of extraction of natural resources;

(ba) an agricultural, pastoral or forestry property;

(c) a building site, a construction, assembly or installation project or supervisory activities connected with such site or project but only where such site, project and its connected supervisory activities continue for a period or periods aggregating more than ninety days within any twelve-months period;

(d) the furnishing of services, including consultancy services, by any person through employees or other personnel engaged by the person for such purpose;

(e) a person acting in Pakistan on behalf of the person (hereinafter referred to as the “agent”), other than an agent of independent status acting in the ordinary course of business as such, if the agent –

(i) has and habitually exercises an authority to conclude contracts on behalf of the other person or habitually concludes contracts or habitually plays the principal role leading to the conclusion of contracts that are routinely concluded without material modification by the person and these contracts are─

(a) in the name of the person; or

(c) for the provision of services by that person; or”

(ii) has no such authority, but habitually maintains a stock-in-trade or other merchandise from which the agent regularly delivers goods or merchandise on behalf of the other person; or

Explanation.—For removal of doubt, it is clarified that an agent of independent status acting in the ordinary course of business does not include a person acting exclusively or almost exclusively on behalf of the person to which it is an associate; or ”;

(f) any substantial equipment installed, or other asset or property capable of activity giving rise to income;

(g) a fixed place of business that is used or maintained by a person if the person or an associate of a person carries on business at that place or at another place in Pakistan and─

(i) that place or other place constitutes a permanent establishment of the person or an associate of the person under this sub-clause; or

(ii) business carried on by the person or an associate of the person at the same place or at more than one place constitute complementary functions that are part of a cohesive business operation.

Explanation.—For the removal of doubt, it is clarified that─

(A) the term ”cohesive business operation” includes an overall arrangement for the supply of goods, installation, construction, assembly, commission, guarantees or supervisory activities and all or principal activities are undertaken or performed either by the person or the associates of the person; and

(B) supply of goods include the goods imported in the name of the associate or any other person, whether or not the title to the goods passes outside Pakistan.

(42) “person” means a person as defined in section 80;

(42A) “PMEX” means Pakistan Mercantile Exchange Limited a futures commodity exchange company incorporated under the Companies Act, 2017 (XIX of 2017) and is licensed and regulated by the Securities and Exchange Commission of Pakistan;”

(43) “pre-commencement expenditure” means a pre-commencement expenditure as defined in section 25;

(44) “prescribed” means prescribed by rules made under this Ordinance;

(44A) “principal officer” used with reference to a company or association of persons includes –

(a) a director, a manager, secretary, agent, accountant or any similar officer; and

(b) any person connected with the management or administration of the company or association of persons upon whom the Commissioner has served a notice of treating him as the principal officer thereof;

(45) “private company” means a company that is not a public company;

(46) “profit on a debt” whether payable or receivable, means—

(a) any profit, yield, interest, discount, premium or other amount, owing under a debt, other than a return of capital; or

(b) any service fee or other charge in respect of a debt, including any fee or charge incurred in respect of a credit facility which has not been utilized;

(47) “public company” means —

(a) a company in which not less than fifty per cent of the shares are held by the Federal Government or Provincial Government;

(ab) a company in which not less than fifty per cent of the shares are held by a foreign Government, or a foreign company owned by a foreign Government;

(b) a company whose shares were traded on a registered stock exchange in Pakistan at any time in the tax year and which remained listed on that exchange at the end of that year; or

(c) a unit trust whose units are widely available to the public and any other trust as defined in the Trusts Act, 1882 (II of 1882);

(47A) “REIT Scheme” means a REIT Scheme as defined in the Real Estate Investment Trust Regulations, 2015;”

(47B) “Real Estate Investment Trust Management Company” (RMC) means RMC as defined under the Real Estate Investment Trust Regulations, 2015;

(47C) “Rental REIT Scheme” means a Rental REIT Scheme as defined under the Real Estate Investment Trust Regulations, 2015;”

(48) “recognised provident fund” means a provident fund recognised by the Commissioner in accordance with Part I of the Sixth Schedule;

(49) “rent” means rent as defined in sub-section (2) of section 15 and includes an amount treated as rent under section 16;

(49A) “repealed Ordinance” means Income Tax Ordinance, 1979 (XXXI of 1979);

(50) “resident company” means a resident company as defined in section 83;

(51) “resident individual” means a resident individual as defined in section 82;

(52) “resident person” means a resident person as defined in section 81;

(53) “resident taxpayer” means a taxpayer who is a resident person;

(54) “royalty” means any amount paid or payable, however described or computed, whether periodical or a lump sum, as consideration for —

(a) the use of, or right to use any patent, invention, design or model, secret formula or process, trademark or other like property or right;

(b) the use of, or right to use any copyright of a literary, artistic or scientific work, including films or video tapes for use in connection with television or tapes in connection with radio broadcasting, but shall not include consideration for the sale, distribution or exhibition of cinematograph films;

(c) the receipt of, or right to receive, any visual images or sounds, or both, transmitted by satellite, cable, optic fibre or similar technology in connection with television, radio or internet broadcasting;

(d) the supply of any technical, industrial, commercial or scientific knowledge, experience or skill;

(e) the use of or right to use any industrial, commercial or scientific equipment;

(f) the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such property or right as mentioned in sub-clauses (a) through (e); and

(g) the disposal of any property or right referred to in sub-clauses (a) through (e);

(55) “salary” means salary as defined in section 12;

(56) “Schedule” means a Schedule to this Ordinance;

(57) “securitization” means securitization as defined in the Asset Backed Securitization Rules, 1999;

(58) “share” in relation to a company, includes a modaraba certificate and the interest of a beneficiary in a trust (including units in a trust);

(59) “shareholder” in relation to a company, includes a modaraba certificate holder, a unit holder of a unit trust and a beneficiary of a trust;

(59A) “small and medium enterprise” means a person who is engaged in manufacturing as defined in clause (iv) of sub-section (7) of section 153 of the Ordinance and his business turnover in a tax year does not exceed two hundred and fifty million rupees:

Provided that if annual business turnover of a small and medium enterprise exceeds two hundred and fifty million rupees, it shall not qualify as small and medium enterprise in the tax year in which annual turnover exceeds that turnover or any subsequent tax year.

(59AB) “Small Company” means a company registered on or after the first day of July, 2005, under the Companies Act, 2017 (XIX of 2017), which,—

(i) has paid up capital plus undistributed reserves not exceeding fifty million rupees;

(ia) has employees not exceeding two hundred and fifty any time during the year;

(ii) has annual turnover not exceeding two hundred and fifty million rupees;

(iii) is not formed by the splitting up or the reconstitution of company already in existence; and

(iv) is not a small and medium enterprise as defined in clause (59A);

(59B) “Special Judge” means the Special Judge appointed under section 203;

(60) “Special Purpose Vehicle” means a Special Purpose Vehicle as defined in the Asset Backed Securitization Rules, 1999;

(60A) “specified jurisdiction” means any jurisdiction which has committed to automatically exchange information under the Common Reporting Standard with Pakistan;

(61) “speculation business” means a speculation business as defined in section 19;

(61A) “stock fund” means a collective investment scheme or a mutual fund where the investible funds are invested by way of equity shares in companies, to the extent of more than seventy per cent of the investment;

(62) “stock-in-trade” means stock-in-trade as defined in section 35;

(62A) “startup” means,—

(i) a business of a resident individual, AOP or a company that commenced on or after first day of July, 2012 and the person is engaged in or intends to offer technology driven products or services to any sector of the economy provided that the person is registered with and duly certified by the Pakistan Software Export Board (PSEB) and has turnover of less than one hundred million in each of the last five tax years; or

(ii) any business of a person or class of persons, subject to the conditions as the Board with the approval of Federal Minister-in-charge may, by notification in the official Gazette, specify;

(62B) “Synchronized Withholding Administration and Payment System agent” or “SWAPS agent” means any person or class of persons notified by Board to collect or deduct withholding taxes through Synchronized Withholding Administration and Payment System;

(63) “tax” means any tax imposed under Chapter II, and includes any penalty, fee or other charge or any sum or amount leviable or payable under this Ordinance;

(64) “taxable income” means taxable income as defined in section 9;

(66) “taxpayer” means any person who derives an amount chargeable to tax under this Ordinance, and includes —

(a) any representative of a person who derives an amount chargeable to tax under this Ordinance;

(b) any person who is required to deduct or collect tax under Part V of Chapter X and Chapter XII; or

(b) any person required to furnish a return of income or pay tax under this Ordinance;

(66A) “tax invoice” means an invoice as prescribed under the Income Tax Rules, 2002;

(67) “tax treaty” means an agreement referred to in section 107;

(68) “tax year” means the tax year as defined in sub-section (1) of section 74 and, in relation to a person, includes a special year or a transitional year that the person is permitted to use under section 74;

(69) “total income” means total income as defined in section 10;

(70) “trust” means a “trust” as defined in section 80;

(70A) “turnover” means turnover as defined in sub-section (3) of section 113;

(71) “underlying ownership” means an underlying ownership as defined in section 98;

(72) “units” means units in a unit trust;

(73) “unit trust” means a unit trust as defined in section 80; and

(73A) “unspecified jurisdiction” means a jurisdiction which is not a specified jurisdictions.

(74) “Venture Capital Company” and “Venture Capital Fund” shall have the same meanings as are assigned to them under the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003;

(75) “whistleblower” means whistleblower as defined in section 227B;”

DOWNLOAD: INCOME TAX ORDINANCE, 2001 UPDATED UP TO JUNE 30, 2022