11-16-2007, 10:52 PM
Dear,
Section 114 of the Income Tax Ordinance, 2001 interalia includes the following among those who are obliged to file the Income Tax Return
"(ab) every persoon (other than a company) whose taxable income for the year exceeds the maximum amount that is not chargeable to tax under this ordinance;
(b) (i) any person who has been charged to tax in respect of any of the two preceding tax years;
(b) (iii) any person who owns immoveable property with a land area of two hundred and fifty square yards or more or owns any flat located in area falling within municipal limits existing immediately before commencement of local government laws in the provinces; or areas in a cantonment; or the Islamabad capital territory."
Maximum income that is not taxable under Income Tax Law (first schedule of ITO 2001) is prescribed as Rs 100,000 for individuals and AOPs (not the salaried persons) and Rs. 150,000 for the salaried individuals.
I can understand that person highlighted by you would not be falling under the above criteria. Therefore, it can be concluded that his income is not chargeable to tax as it falls below the maximum exempt level of income and he was not filing return before the current scenario as well.
Irrespective of all the above story which would help you to understand the situation in any other scenario, I would like to inform you that through an amendment in Section 151 of the Income Tax Ordinance 2001 (made vide Finance Act, 2006) the tax deducted and collected by banks on customers' accounts and deposits (other than the customers who are Companies) have been treated as Final Tax for the tax payer.
Therefore, any tax deducted from the 'profit on bank depsoit' will stand as final tax liability and final tax payment. Accordingly, such bank profit cannot be claimed as exempt by the person described by you and his profit income will be subject to charge of final tax at the rate of 10% (as per first schedule of ITO 2001).
Such income tax deducted by bank will be final tax of the account/deposit holder.
Furthermore, it would be bank's responsibility to file monthly/quarterly/yearly statements of income tax deduction from profit payments. The account holder in above situation will not be obliged to file income tax return.
Hope your query has been answered.
Let me know if further clarification is required.
Regards,
Kamran.
Section 114 of the Income Tax Ordinance, 2001 interalia includes the following among those who are obliged to file the Income Tax Return
"(ab) every persoon (other than a company) whose taxable income for the year exceeds the maximum amount that is not chargeable to tax under this ordinance;
(b) (i) any person who has been charged to tax in respect of any of the two preceding tax years;
(b) (iii) any person who owns immoveable property with a land area of two hundred and fifty square yards or more or owns any flat located in area falling within municipal limits existing immediately before commencement of local government laws in the provinces; or areas in a cantonment; or the Islamabad capital territory."
Maximum income that is not taxable under Income Tax Law (first schedule of ITO 2001) is prescribed as Rs 100,000 for individuals and AOPs (not the salaried persons) and Rs. 150,000 for the salaried individuals.
I can understand that person highlighted by you would not be falling under the above criteria. Therefore, it can be concluded that his income is not chargeable to tax as it falls below the maximum exempt level of income and he was not filing return before the current scenario as well.
Irrespective of all the above story which would help you to understand the situation in any other scenario, I would like to inform you that through an amendment in Section 151 of the Income Tax Ordinance 2001 (made vide Finance Act, 2006) the tax deducted and collected by banks on customers' accounts and deposits (other than the customers who are Companies) have been treated as Final Tax for the tax payer.
Therefore, any tax deducted from the 'profit on bank depsoit' will stand as final tax liability and final tax payment. Accordingly, such bank profit cannot be claimed as exempt by the person described by you and his profit income will be subject to charge of final tax at the rate of 10% (as per first schedule of ITO 2001).
Such income tax deducted by bank will be final tax of the account/deposit holder.
Furthermore, it would be bank's responsibility to file monthly/quarterly/yearly statements of income tax deduction from profit payments. The account holder in above situation will not be obliged to file income tax return.
Hope your query has been answered.
Let me know if further clarification is required.
Regards,
Kamran.