Tax Credits
Tax Credits
Tax Liability
Personal
Income from Property
Capital Gains u/s 37 A
Sale of Immovable Property
Total (A+B+C+D)
Less Tax Credits
Senior Citizen Allowance
A
B
C
D
XXXX
Category - A
Full Time Teacher ora Researcher Allowance
Foreign Tax Credit
Average Relieves:
Allowances for Investment in Shares (Insurance Premium
Paid)
Contribution to an Approved Pension Fund
Donations to Charitable Institutions
Profit on debt
Average Relieves =
Type of Credit
Senior Citizen
Allowance /
Disabled person
(Clause 1A of 2nd
Schedule)
(SCA)
K
Category - B
Y
L
M
T
𝑻𝒂𝒙 𝑨𝒔𝒔𝒆𝒔𝒔𝒆𝒅
𝑻𝒂𝒙𝒂𝒃𝒍𝒆 𝑰𝒏𝒄𝒐𝒎𝒆
𝒙 𝑻 (𝒔𝒆𝒆 𝒕𝒂𝒃𝒍𝒆 𝒃𝒆𝒍𝒐𝒘)
Advance Tax
Conditions Necessary
Category - C
Calculation of Credit
a)
Taxable income does not exceed
Rs.1,000,000/(Taxable income means income other than FTR
income and Income from property etc).
Tax Liability x 50%
b) Taxpayer aged 60 years or more on the first
day of that tax year,
c) Disabled person holding CNIC (age not matters)
Full Time Teacher
ora Researcher
Allowance
(Clause 2 of 2nd
Schedule)
(FTTA)
Foreign Tax
Credit
(FTC)
1|Page
He should a full time teacher or a researcher,
Employed in a non profit education or research
institution.
Institution is duly recognized by Higher Education
Commission (HEC),
a Board of Education or
a University recognized by the Higher Education
Commission, including government training and
research institution,
a)
b)
c)
d)
A person must be resident
Foreign income is taxable in Pakistan
There is no tax treaty between both countries.
Tax is paid within two years after the end of
the tax year in which the foreign income to
which the tax relates.
by: Imran Shahzad - ACA
Tax liability (salary income only) x
40%
(Note if senior citizen allowance is
applicable then also consider it)
Lower of
Actual Tax Paid
Or
The Pakistan tax payable in respect of the
incomeat average rate of tax:
𝑭𝒐𝒓𝒆𝒊𝒈𝒏 𝑺𝒐𝒖𝒓𝒄𝒆 𝑰𝒏𝒄𝒐𝒎𝒆
𝒙 𝑻𝒂𝒙
𝑻𝒐𝒕𝒂𝒍 𝑻𝒂𝒙𝒂𝒃𝒍𝒆 𝑰𝒏𝒄𝒐𝒎𝒆
Tax Credits
Average Relieves
Type
Allowances for
Investment in Shares
(Insurance Premium
Paid)
Contribution to an
Approved Pension
Fund
Donations to
Charitable
Institutions
Profit on debt
Conditions
A resident person other than a company
Acquiring new shares offered to the public by a public
company.
He is an original allottee.
Acquired from the Privatization Commission of
Pakistan;
Any life insurance premium paid on a policy to a life
insurance company registered by the Securities and
Exchange Commission of Pakistan.
Shares are required to be held for 24 months from the
date of purchase.
An Individual holds NTN or Valid CNIC.
Driving income under the head salary or income from
business.
Contributes or pay premium in the year in approved
pension fund under the Voluntary Pension System
Rules, 2005.
Amount Lower of
1- Actual amount
Paid by a crossed cheque or in kind to:

Any board of education, educational
institution or any university in Pakistan run by Govt.

any govt. hospital or relief fund

Any non-profit organization.
1- Actual amount
2- 20% of taxable
income(1)
3- Rs1,000,000/-
2- 20% of taxable
income(2)
L
2- 30% of taxable
income
M
(20% for companies)
Loan by a scheduled bank or non-banking finance 1- Actual amount of
institution regulated by the Securities and Exchange
Profit.
Commission of Pakistan or advanced by Government
or the Local Government or a statutory body or a 2- 50% of taxable
public company listed on a registered stock exchange
income
Loan is taken for house.
3- Rs750,000/-
(1) Taxable income excluding share from AOP.
(2) 20% limit shall be relaxed if person joining at the age of 41 years or above. 2% additional contribution
each year subject to max of 50% of income taxable of latest tax year.
Note: Amount of tax assessed shall after tax credit i.e.SCA, FTTA and FTC. Tax and taxable
income shall be taken after considering Share from AOP.
by: Imran Shahzad - ACA
K
1- Actual amount
Total
2|Page
Rs.
N
T
Tax Credits
Question - 1
Mr. Z requested you to calculate his tax liability from the following information:
a)
Taxable salary Rs.400,000 as a full time teacher from an approved non-profit educational
institution
b)
Taxable capital gain Rs.90,000.
c)
Taxable business income from a foreign country Rs. 150,000 where Mr. Z paid income tax of
Rs.30,000. There is no tax treaty with that foreign country.
d)
Mr. Z visited that foreign country for 182 days during the year and that was his only foreign
traveling.
e)
Mr. Z was born on 25.7.1941 and therefore he wants to claim senior citizen allowance
f)
Zakat was deducted at source Rs.7,000. He also paid zakat of Rs.23,000 to his relatives
g)
Donation was paid by him Rs.11,000 to a private approved charitable institution in cash for which
he has a proper receipt.
h)
He donated his household furniture to a government hospital. FMV is estimated at Rs.95,000
i)
He obtained a loan 3 year ago for the acquisition of his house. He paid mark up on the loan
Rs.9,000 during the year.
j)
k)
He purchased the following shares during the year:
i.
Shares of Rs.65,000 of a private company as an original allottee
ii.
Shares of Rs. 105,000 of a listed company as an original allottee
iii.
Shares of Rs.25,000 of a listed company from his relatives
Tax deducted at source is Rs. 1,000.
Question - 2
Mr. Asim Javed has been teaching at a well-known university named Pak University. He joined university
25 years ago when he was 40 years old. The detail of his emoluments during the tax year ended June 30,
2015 are as under:
Basic salary (per month) Rs. 30,000
Dearness allowance (per month) Rs. 10,000
Medical Allowance (per month) Rs. 5,000
Annual Bonus Rs. 36,000
Additional Information:
a) During the year, Mr. Asim sold 1,000 shares of a UK based company @ GBP 12.25. The said
shares were purchased by him several months ago @ GBP 11 and paid tax on gain amounting
GBP 31.25 (GBP 1 = Rs. 160).
3|Page
by: Imran Shahzad - ACA
Tax Credits
b) He sold a piece of land for Rs. 500,000 which he had purchased 9 months ago for Rs. 300,000.
c) He sold 20,000 Modaraba Units @ Rs. 55 per Unit in March 2015. These units were purchased in
July 2013 for Rs. 50 per unit.
d) He is also a partner in a trading firm. The firm earned profit before tax amounting Rs. 2,133,333
for the tax year 2015. His share in the profit and loss of the firm is 25%.
e) Zakat deducted Rs. 10,000 and Donation of Rs. 30,000 paid to Shaukat Khanam Memorial Trust.
f) During the year, he made the investment in the following shares:
i) Shares of a listed company as original allottee of Rs. 150,000
ii) Shares of a private company for Rs. 90,000
iii) Shares of a listed company for Rs. 200,000 from Karachi Stock Exchange
g) He made contribution of Rs. 500,000 to an approved pension fund.
h) He donated Rs. 20,000 to a local hospital. The payment was made through banking channel.
i) Loan for the construction of his house from HBFC. Share paid on that loan amounted to
Rs. 10,000.
Required:
Compute the taxable income, tax liability and tax payable/ refundable, if any, to Mr. Asim Javed for the
tax year 2015.
Question -3
Compute the taxable income and tax payable by Mr. AOP for the current tax year from the following
information:
Rs.
Rs.
Taxable annual salary
500,000
Taxable Income from business
300,000
Gain from the disposal of private company’s share within 1 year
100,000
Gain from the disposal of listed company’s share within 1 year
50,000
Taxable Income from other sources
50,000
Taxable business income from Malaysia
200,000
Tax deducted in Malaysia
15,000
Zakat deducted by the bank
20,000
Donation under clause 61
30,000
Donation to approved institutions through cheque
500,000
After tax share received from AOP
300,000
Taxable Income from property
350,000
Tax deducted on salary income
5,000
4|Page
by: Imran Shahzad - ACA
Tax Credits
Mr. ABC
Pakistani resident (Non-Salaried)
Tax year 2015
Computation of taxable income and tax payable
Income from salary
Income from business
Income from capital gain under section 37
Income from other sources
Rs.
500,000
300,000
100,000
50,000
Foreign source income
200,000
Rs.
950,000
1,150,000
Less:
Zakat deducted at source
Donation under clause 61
(20,000)
(30,000)
Add:
Share from AOP
300,000
Income from property
Capital Gain under section 37A
350,000
50,000
(50,000)
1,100,000
1,400,000
Total taxable Income including share from AOP
700,000
1,800,000
Taxation (Non-Salaried Case)
{Salary income/ total income * 100} = [500,000/1,500,000 * 100] = 33.33%
So this is Non-Salaried case.
Calculation of tax Liability:
For rate Purpose
Tax on Rs. 1,400,000
Tax on Rs.(1,400,000 – 750,000)= 650,000 * 15%



Tax Liability under normal slab rates
{132,500/1,400,000 * 1,100,000}
Tax on property income {(350,000 – 150,000) * 5%}
Tax on Capital gain u/s 37A {50,000 * 10%}
35,000
97,500
132,500
104,107
10,000
5,000
119,107
Less:

Foreign tax credit:
Tax actually paid
(119,107/1,500,000 * 200,000}
Credit is allowed on lower amount
5|Page
by: Imran Shahzad - ACA
15,000
15,881
(15,000)
Tax Credits
104,107

Donation under section 61:
Actual amount of donation paid
500,000
1,500,000 * 15%
450,000
Lower amount shall be used in formula.
{(10,000 + 5000 + 132,500) / 1,800,000 * 450,000}
Total tax Liability
Less: Tax deducted on salary at source
Tax payable with return
6|Page
by: Imran Shahzad - ACA
(36,875)
67,232
(5,000)
62,232