07-06-2011, 11:46 PM
First question to be determined in your case is whether the profit on debt received by foreign company would be taxable in Pakistan. S.101(7) helps in this regard. In two cases only profit on debt by foregin company would be taxable; (i) If the foreign company has a resident status under the income tax ordinance (see s.83) or (ii)foregin company has permanent establishment in Pakistan which bears the burden of payment of profit on debt.
Provided tax is payable then
If the foreign company is a financial institution then it will deduct tax at the rate of 10% under s.151 and you donot need to pay any other tax [see Div I of Part III of First Schedule and s.151(3)]
If it is not a financial institution and does not deduct tax then just add the income from profit on debt with your other incomes and pay tax according to the rates mentioned in Table 1 of Part 1 of First Schedule.
If your salary income is more than 50% of your total income then add income from profit on debt to your salary income and other incomes and pay tax at the rate mentioned in Table 1A of First Schedule
Provided tax is payable then
If the foreign company is a financial institution then it will deduct tax at the rate of 10% under s.151 and you donot need to pay any other tax [see Div I of Part III of First Schedule and s.151(3)]
If it is not a financial institution and does not deduct tax then just add the income from profit on debt with your other incomes and pay tax according to the rates mentioned in Table 1 of Part 1 of First Schedule.
If your salary income is more than 50% of your total income then add income from profit on debt to your salary income and other incomes and pay tax at the rate mentioned in Table 1A of First Schedule
