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+--- Thread: Foreign Income Tax credit (/showthread.php?tid=10660)
Foreign Income Tax credit - Information Consultant - 01-02-2012
Dear Friend
Pls confirm the following working is correct or it require correction.
c) Example
Mr. As income for the tax year 2008 is as under
Pakistan source income
Taxable salary 800,000
Tax deducted from salary 60,000
Taxable capital gain 200,000
Foreign source business income not exempt under tax treaty 300,000
Foreign tax paid in the foreign country @ 10% 30,000
Solution
Taxable salary 800,000
Taxable capital gain 200,000
Foreign source income 300,000
Taxable income 1,300,000
Tax liability (salaried case)
Income tax on 1,300,000 @ 12.5% 162,500
Less Foreign tax credit
a) Pakistan average rate of tax applicable on foreign
source income 162,500/1,300,000 x 300,000 37,500
b) Foreign income tax paid 30,000
Whichever is lower 30,000
Total tax liability 132,500
Less Tax deducted from salary 60,000
Tax payable with return of income 72,500
- student_of_law - 01-02-2012
In my opinion your working is in accordance with section 103 of ITO, 2001 and it is correct.
- Information Consultant - 01-03-2012
Thanks
Same treatment in case if a business individual ,partner of firm and director of company earned foreign income apart of local income ?