(‫) بسم ہللا الرحمن الرحیم٭‬

Special Notes for

INSPECTOR INLAND REVENUE SERVICES (IIRS)
Updated AMENDED UPTO 30th JUNE, 2021
Note. All the Information here described below for test preparation only for Aspirants of IIRS or Audit
Officer. Don’t sell this Note to any Person because these notes are FREE of Cost for Aspirants of IIRS.
May Sure you can cover all syllabus after completely reading this Notes. If you found any mistakes like
Date/Name/Org/Other Please inform us immediately that we shall update her for next aspirants.
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FBR INLAND REVENUE INTRODUCTION

CBR (Act 1924) Changed FBR at 15th July 2006 Act

CBR changed name as FBR at FBR ACT 2007
Chairman appointed by Govt of Pakistan
Chairman tenure is only for 3 Years and extended for 3 Years more
FBR HQ in Islamabad
FBR Chairman: Doctor Muhammad Ashfaq Ahmad
Directors
 POWER AND FUNCTIONS OF FBR
Power and Functions of FBR used under FBR ACT 2006
POWER TO COLLECT REVENUE
FBR collect Revenue with the allows of Federal Government within Country
and Abroad
RULES AND RAGULATIONS
FBR create Rules and Regulations in FBR Act 2006 in Official Gazzate in 30
days reminder
ASSISTANCE OF BOARD
FBR covers Provincial Govt FATA, FANA, Departments ,Wings , Offices
Directorate General of Internal Audit (Direct Taxes) is changes as Finance
Act 2007 as Directorate General of Internal Audit (IR)
LAW
Section 228
Directorate General of Internal Audit (IR) is control these officers Directors ,
Additional Directors , Deputy Directors , Assistant Directors , Inspectors and
so on.
Directorate General of Inspection is consist on following
1- Director General of Inspection
2- Directors of Inspection
3- Additional Directors
4- Deputy Directors
5- Assistant Directors
6- Extra Assistant Directors
ORGANOGRAM
Director General of Internal Audit (IR)
Northern Range Central Range Southern Range
Islamabad Lahore Main Karachi
Rawalpindi Lahore ii Sukkur
Peshawar Gujranwala Hyderabad
Abbottabad Multan Quetta
Faisalabad Gawadar
Sambrial
Chief Collector Chief Collector
Northern Range Southern Range
 INTRODUCTION OF LEGAL WING FBR

INCOME TAX ORDINANCE :

Income Tax - This tax is collect from extra Income like Business
Sales Tax - Sales Tax under Section 2 Subsection (29A)
Federal Excise Duty - Products manufactured within a Country give this tax
 FORMATION
FBR Create a formation as Inland Revenue Services (IRS) on 30 June 2009 now
known as LTUs and RTOs.
According to Income Tax Ordinance Act 2001 is period of 12 months count as 1
July to 30 June.
LTU List
Large Taxpayer Unit , Islamabad
Large Taxpayer Unit , Lahore
Large Taxpayer Unit , Karachi
Large Taxpayer Unit , Multan

Regional Tax Officers (RTOs) List

FBR Officers Selection Procedure below.

Important: All Exempt details
Important Relevant Laws
 MULTIPLE CHOICE QUESTIONS
(ITO 2001)
TAX ON TAXABLE INCOME – Section 9 to 11 Chapter-01

1. The Income Tax for a person for a tax year shall be the __________ income
of the person for the year reduced (but not below zero) by the total of any
deductible allowances.
a) Taxable
b) Exempt
c) Total
d) None of the above
2. The total income of a person for a tax year shall be the sum of
the____________.
a) income under all heads of income for the year + exempt income for the
year
b) Total income + exempt income
c) Normal tax regime income + Final tax regime income
d) Final tax regime income + Separate block of income
3. For the purposes of the imposition of tax and the computation of total
income, all income shall be classified under the following
___________heads of income.
a) Income from salary + income from property
b) Income from salary + income from property + Income from Business
c) Income from salary + income from property + Income from Business +
Capital gains
d) Income from salary + income from property + Income from Business +
Capital gains
e) Income from salary + income from property + Income from Business +
Capital gains + income from other sources
4. The income of a person under a head of income for a tax year shall be the
total of the amounts derived by the person in that year that are
______________________ to tax under the head as reduced by the total
deductions, if any, allowed under this Ordinance to the person for the year
under that head.
a) Exempted
b) Allowed
c) Chargeable
d) None
5. A loss under the head of income will arise where total deductions allowed
under this Ordinance to a person for a _________________ under a head of
income exceed the total income chargeable to tax.
a) Whole month
b) Tax year
c) Half year
d) None
6. The income of a resident person shall be computed by taking into account
amount that are _________________Pakistan source income and amounts
that are _____________ income.
a) Only Pakistan source income
b) Only foreign source income
c) Pakistan source income + Foreign source income
d) None of the above
7. The income of a non-resident person shall be computed by taking into
account only amounts that are _______________________.
a) Foreign-source income
b) Pakistan-source income
c) Both Pakistan source income and foreign-source income
d) None of the above

INCOME FROM SALARY [SECTION [12 to 14]

Chapter-02

1. The income received by an employee from --------- employer is treated as

salary income
(a) Present
(b) Past
(c) Future or
(d) All of the above
2. Benchmark rate of interest on loan provided by the employer to his
employee in tax year 2017 is: ________
(a) 1%
(b) 5%
(c) 8%
(d) 10% or
(e) none of the above
3. The value of any right or option to acquire shares is ________.
(a) Chargeable to tax
(b) Chargeable at a concessional rate
(c) Not chargeable to tax or
(d) None of the above
4. An amount required as compensation on termination of employment is a
________.
(a) Perquisite
(b) Profit in addition to salary
(c) Work conditions supplements or
(d) None of the above
5. Salary income is chargeable to tax on ________
(a) Accrual basis
(b) Actual receipt basis or
(c) Both (a) and (b)
6. Salary income is chargeable to tax at the rates specified in the
________schedule to the ITO, 2001.
(a) First
(b) Second
(c) Third or
(d) Fourth
7. In case an employee receive shares from a company under the employee
share scheme the cost of shares would be________
(a) Face value
(b) Price paid by employee
(c) Fair market value or
(d) None of the above
8. In case of rent free accommodation the amount to be included in the salary
income of the employee is ________
(a) FM value of rent
(b) 45% of basic salary
(c) Lower of FMR or 45% of basic salary or
(d) Higher of FMR or 45% of basic salary
9. In case of conveyance provided by the employer to his employee for
business use, amount to be included in salary is________
(a) 10% of FMV of car
(b) 5% of cost of car
(c) Higher of cost or FMR or
(d) None of the above
10. Where an employee has a salary income with bonus, the bonus received
shall be ___________salary income:
(a) Included in
(b) Excluded from
(c) Ignored for
11. In case of rent free accommodation, amount to be included in the salary
income of the employee is ____________.
(a) 10% of basic salary
(b) 20% of basic salary
(c) 25% of basic salary
(d) 45% of basic salary
12. The amount expended by the employer on leave fare assistance is included
in the salary income of the employee _______.
(a) Whole
(b) Half
(c) Proportionate
(d) None of these
13. An employee is entitled to deduct ________ incurred in deriving salary
income.
(a) travelling expenses
(b) personal expenses
(c) entertainment expenses
(d) None of above
14. House rent allowance provided by employer to his employees is _______.
(a) taxable
(b) not taxable
(c) exempt up to 45% of basic salary
(d) none of the above
15. Tax free salary paid to an employee will be included in the _________of the
employee.
(a) business income
(b) tax payable
(c) salary
(d) income from other sources
16. An amount of perquisite is treated as received by an employee if it is paid
_____.
(a) to him
(b) applied on his behalf
(c) to any person on his behalf
(d) all of above
17. Entertainment allowance for official performance received by the employee
is _______.
(a) exempt
(b) taxable
(c) 50% exempt
(d) 80% taxable
18. The option available to an employee in respect of salary ________ shall be
exercised in writing.
(a) received in arrears
(b) for the current year
(c) to be received in next year
(d) none of the above
19. The utilities provided by the employer to his employee are chargeable to
tax under the head _____________ of employee.
(a) Income from salary
(b) Other sources
(c) Income from business
(d) Income from utilities
20. Gross salary consists of _______.
(a) basic salary
(b) perquisites
(c) profit in lieu of or addition to salary
(d) all of the above
21. When the employer charges a _____ interest rate than the benchmark rate,
then nothing shall be included in the salary income of the employee.
(a) higher
(b) lower
(c) equal
(d) both ‘a’ or ‘c’
22. Under “employee share scheme” shares can only be issued to the ______
of the company.
(a) employees
(b) directors
(c) shareholders
(d) chief executive
23. The right or option given to an employee ________.
(a) is always free of cost
(b) is chargeable to tax as business income
(c) is chargeable to tax as property income
(d) none of above
24. An employee may be a person who is engaged in __________.
(a) employment
(b) business
(c) trading
(d) all of above
25. If the insurance premium of the employee paid by the employer then it
should be included in the _____ income of the employee.
(a) business income
(b) salary income
(c) property income
(d) insurance income
26. In case of the self-hiring of the property, it has ____ effect(s) under the law
on the income of the recipient.
(a) one
(b) two
(c) three
(d) no
27. In case of golden handshake, employee has option to offer the amount of
golden handshake as _________.
(a) SBI under NTR
(b) FTR
(c) income from business
(d) all of the above
28. The Commissioner Inland Revenue is empowered to charge tax on the
salary income of the employee of a private limited Company on ______
basis where he has reason to believe that the salary income has
deliberately been deferred.
(a) cash
(b) accrual
(c) tax
(d) accounting
29. A salaried person income is taxable @ 0%, if his / her annual income is
equal or less than _______.
(a) 1,000,000
(b) 350,000
(c) 400,000
(d) 500,000
30. Commission paid to a part time employee director is chargeable to tax
under the head ______ of such director.
(a) salary income
(b) commission income
(c) property income
(d) all of above
31. Any amount payable by employee to employer that has been waived of by
the employer is _______ in the hands of the employee.
(a) not taxable
(b) taxable
(c) exempt
(d) all of above
32. Any salary received by an employees in a tax year, other than salary that is
exempt from tax under this ordinance, shall be chargeable to tax in that
year under the head __________________
a) Salary
b) Pay
c) Income
d) All of these
33. Salary means any amount received by an employee from any employment,
whether of a revenue of capital nature, including____________________
a) Any pay, wages or other remuneration provided to and, including leave
pay, payment in lieu of leave, overtime payment, bonus, commission,
fees, gratuity of work condition supplements
b) Any perquisite, whether convertible to money or not;
c) The amount of any allowance provided by an employer to an employee
including a cost of living, subsistence, rent, utilities, education,
entertainment or travel allowance, but shall not include any allowance
solely expended in the performance of the employee’s duties of
employment
d) All of above.
34. The amount of any expenditure incurred by an employee that paid or
reimbursed by the employer, other than expenditure incurred on behalf of
the employer in the performance of the employee’s duties of employment
comes under the definition of ________________________
a) Income
b) Salary
c) Tax
d) All
35. Salary can be the amount of any profits in lieu of , or in addition to, salary
or wages, including any amount received ________________________
i. As consideration for a person’s agreement to enter into an employment
relationship;
ii. As consideration for an employee’s agreement to any conditions of
employment or any changes to the employee’s conditions of employment
a) Only (i)
b) Only (ii)
c) Both (i) & (ii)
d) None of the above
36. Where an employer agrees to pay the tax chargeable on an employee’s
salary, the amount of the employee’s income chargeable under the head
_________________ shall be grossed up by the amount of tax payable by
the employer
a) Pay
b) Income
c) Salary
d) None
37. No deduction shall be allowed for any expenditure incurred by an employee
in deriving amounts chargeable to tax under the head
___________________.
a) Business income
b) Property income
c) Income from salary
d) Income from other sources
38. For the purposes of Income Tax Ordinance the amount or perquisite shall
be treated as received by an employee from any employment regardless of
whether the amount or perquisite is paid or
provided____________________________
a) By the employee’s employer, and associate of the employer or by a third
party under an arrangement with the employer or an associate of the
employer
b) By a past employer or a prospective employer; or
c) To the employee or to an associate of the employee
d) All of the above
39. An employee who has received an amount as compensation for loss of
employment in a tax year may, by notice in writing to the commissioner
elect for the amount to be taxed at the average rate on taxable income for
the three _____________________ tax years.
a) Following
b) preceding
c) current
d) none of the above
40. An election under income tax Ordinance shall be made by the due date for
furnishing the employee’s return of income or employer certificate, as the
case may be , for the tax year in which the amount was received or by such
later date as the ___________ may allow.
a) Assistant Commissioner In land Revenue
b) Deputy Commissioner In land Revenue
c) Commissioner In land Revenue
d) Commissioner In land Revenue (Appeals)
41. For the purposes of computing the income of an employee for a tax year
chargeable to tax under the head salary, the value of any perquisite
provided by an employer to the employee in that year that is included in the
employee’s salary under ___________________ of the Income Tax
Ordinance, 2001.
a) section 22
b) section 32
c) section 12
d) none of the above
42. Where, in a tax year, a motor vehicle is provided by an employer to an
employee wholly or partly for the __________ use of the employee, the
amount chargeable to tax to the employee under the head salary income
for that year shall be 5% of the cost of motor vehicle to the employer.
a) private
b) official
c) both a & b
d) none
43. Where, in a tax year, the services of a housekeeper, driver, gardener or
other domestic assistant is provided by an employer to an employee, the
amount chargeable to tax to the employee under the head ____________for
that year shall include the total salary paid to the domestic assistant such
house keeper, driver, gardener or other domestic assistant in that year for
services rendered to the employee, as reduced by any payment made for
such services.
a) services
b) salary
c) Record
d) None
44. Where, in a tax year __________________________ are provided by an
employer to an employee, the amount chargeable to tax to the employee
under the head Salary for that year shall include the fair market value of the
utilities provided, as reduced by any payment made by the employee for
the utilities.
a) services
b) pay
c) utilities
d) none
45. Where a loan is made, on or after the 1st day of July 2002, by an employer
to an employee then such loan shall not be less than from the __________
benchmark rate.
a) 5%
b) 9%
c) 15%
d) 10%
46. The amount chargeable to tax to the employee under the head salary
regarding loan from employer during the tax year shall include an amount
equal to ______________________.
a) The profit on loan computed at the benchmark rate, where no profit on
loan is payable by the employee.
b) The difference between the amount of profit on loan paid by the employee
in that tax year and the amount of profit on loan computed at the
benchmark rate.
c) Both a & b
d) None
47. Where a motor vehicle is available to more than one employee for a tax
year, the amount chargeable to tax under the head Salary for each such
employee for that Year shall be the amount determined divided by the
______ of employees permitted to use the vehicle.
a) Number
b) Owner
c) Authority
d) All
48. Where, in a tax year, an obligation of an employee to pay or repay an
amount owing by the employee to the employer is waived by the employer,
the amount chargeable to tax to the employee under the head
____________for the year shall include the amounts so paid or waived.
a) Salary income
b) Income from property
c) Capital gains
d) None of the above
49. Where, in a tax year, property is transferred or services are provided by an
employer to an employee, the amount chargeable to tax to the employee
under the head Salary for that year shall include the
_____________________ of the property or services determined at the time
the property is transferred or the services are provided, as reduced by an
payment made by the employee for the property or services.
a) fair market value
b) sale value
c) purchase value
d) all
50. Where, in a tax year, an employee is issued with shares under an employee
share scheme including as a result of the exercise of an option or right to
acquire the shares; the amount chargeable to tax to the employee under
the head Salary for that year shall include the fair market value of the
shares determined at the date of issue as reduced by any consideration
given by the employee for the shares including any amount given as
consideration for the grant of a right or option to ____________ the shares.,
a) Sale
b) Acquire
c) Purchase
d) None
51. Benchmark rate can also means the state Bank of Pakistan discount rate at
the ____________ of the tax year;
a) Commencement
b) End
c) Middle
d) None
52. Which one is not included in salary received by an employee from
employment
a) Commission income
b) Overtime payment
c) Payment in lieu of leave
d) Reimbursement of job related expenses
53. Salary is always taxable at
a) Receipt basis
b) Accrual basis
c) Can be at receipt or at accrual basis
d) None of the above
54. Tax paid by employer for employee shall be
a) Included in salary
b) Fully exempt from tax
c) Partially exempt from tax
d) Employer is not allowed to pay tax by law
55. Payment receipt under golden handshake scheme
a) Can be taxable at fixed rate defined by law
b) Can be taxable at slab rates of non salaried individuals
c) Can be taxable at average tax rate of last three years
d) Can be taxable at the tax rate of last year
56. Employee Loan from employer at less than benchmark rate shall be taxable
a) If amount is less than 500,000
b) If more than 500,000
c) Any loan receipt by employee
d) Shall not be taxable
57. Value of right share is
a) Taxable at actual value of share
b) Value of right share
c) Higher of actual or right amount
d) Not taxable

INCOME FROM PROPERTY [SECTION [15, 15A & 16]

Chapter-03

Q.1 _______________ is taken as rent chargeable to tax.

(a) Actual rent
(b) Fair market rent
(c) Higher of FMR and actual rent plus 1/10th of non-adjustable advance, if any
(d) Lower of FMR and actual rent
Q.2 ____________ part of advance not adjustable against rent is charged to
tax
every year.
(a) 10%
(b) 5%
(c) 12%
(d) 50%
Q.3 Advances adjustable against rent_____________ the future rent
chargeable
to tax.
(a) Increase
(b) Decrease
(c) Has no effect
Q.4 The amount received by employee to vacate the possession less amount for
taking the possession is charged to tax under__________ in ten equal
proportions in the succeeding 10 years.
(a) Income from other sources
(b) Property income.
(c) Business income
(d) None of these
Q.5 The income of the persons having definite share in a joint property shall
be
taxed_________.
(a) As association of person
(b) The respective share in the hands of the members
(c) None of the above
Q.6 Where the rent includes charges for utilities, then __________should be
charged to tax under income from property.
(a) Whole of the rent
(b) Rent less amount for utilities
(c) Rent less expenditure for utilities.
(d) (b) or (c)
Q.7 The property income is taxable __________
(a) Under SBI
(b) Under NTR
(c) SBI under FTR
(d) None of above
Q.8 An individual will not pay tax if his income under the head property
is_____________.
(a) Zero
(b) Rs.200,000
(c) Rs.100,000
(d) Rs.150,000
(e) None of these
Q.9 Income tax is charged @ __________ of rent chargeable to tax (after
admissible deductions u/s 15A) till Rs. 400,000 received by a Company
(other than a small company).
(a) 0%
(b) 5%
(c) 7%
(d) 31%
(e) none of the above
Q.10 Deduction for__________is allowed to a company while computing
income
under the head property.
(a) 1/5th repair allowance
(b) Insurance premium for property damage
(c) Property tax for property
(d) All of the above
Q.11 If tax at source has been deducted or not from rent received even then
the
rent received shall taxable under_________ for a company.
(a) FTR
(b) NTR
(c) Separate block of income
(d) None of above
Q.12 ____________of the forfeited deposit against sale of property is included
in
the rent chargeable to tax.
(a) 25%
(b) 50%
(c) 75%
(d) 100%
Q.13 The rent of the building let out together with the plant and machinery
installed therein is taxable under ____________.
(a) Property income
(b) Business income
(c) Income from other sources
Q.14 Legal charges paid by the owner (company) of property are allowed as
deduction against property income under____________.
(a) NTR
(b) FTR
(c) Not allowed
(d) all of these
Q.15 In case where the property is hired by the employee and rent is payable
by
the employer then _________ shall be included in the salary income of the
employee.
(a) Actual rent
(b) Fair market value of rent
(c) none of these
Q.16 Where the employee or his / her spouse is the owner of the building and
that
building has been provided by the employer against the entitlement of the
rent free accommodation then it has ________________.
(a) One effect
(b) two effects
(c) no effect
Q.17 Obligation of the owner paid by the tenant included in the property
income
of the ___________ in the respective tax year, where the same is as per
terms of rent deed.
(a) Owner of the property
(b) Tenant
(c) None of these
Q.18 Property income received by subletting of property by the tenant is
taxable
under______________.
(a) Property income
(b) Income from other sources
(c) FTR
Q.19 If portion of the rent and utilities cannot be segregated from each other
then
expenses incurred for provision of utilities shall
(a) Be deducted from rent
(b) not be deducted from rent
Q.20 The property income (after allowable deductions u/s 15A) of a small
company is taxable @ __________.
(a) 35%
(b) 25%
(c) 33%
Q.21 The amount received for utilities is taxable under the head
_________________, only if separable.
(a) Income from property
(b) Income from other sources
(c) Income from business
Q.22 The repair charges and insurance premium paid by a individual shall
____________________ against rent chargeable to tax.
(a) Allowed as deduction
(b) Not be allowed
(c) 1/10th is allowed
(d) None of the above
Q.23 The amount received for utilities is taxable under the head income from
__________.
(a) Salary
(b) Property
(c) Other sources
(d) Business
Q.24 1/10th of any amount of advance received by the owner as advance
________ against rent is included in rent chargeable to tax.
(a) Adjustable
(b) Not adjustable
(c) payable
(d) Receivable
Q.25 Security received as an advance is ________ against rent.
(a) Adjustable
(b) Not adjustable
(c) payable
(d) Receivable
Q.26 Amount received by tenant for vacating the possession, less amount
already paid is chargeable to tax under the head Income from ____________.
(a) Salary
(b) Property
(c) Other sources
(d) Business
Q.27 If the employee owned property after renting out to employer has been
given to the employee for accommodation then in such case the actual rent
shall be taxable in the hands of employee without comparing it with the
________.
(a) FMV
(b) Market value
(c) Cost of asset
(d) None of the above
Q.28 Rent chargeable to tax includes ______________.
(a) amount forfeited under an agreement for sale of property
(b) Accommodation allowance received from employer
(c) Ground rent
(d) None of above
Q.29 Rent ________ is taxable against property income.
(a) Received
(b) Receivable
(c) payable
(d) Both ‘a’ and ‘b’
Q.30 Ground rent is chargeable to tax under the head “income from
_________”.
(a) Other sources
(b) Salary
(c) Property
(d) Business
Q.31 Amount received from vacating possession is charged to tax in ten years
in
_______ proportion.
(a) Equal
(b) Unequal
(c) None of above
Q.32 Share of each person is taxable as ___ in case of property in co
ownership.
(a) FTR
(b) NTR
(c) SBI under NTR
(d) All of above
Q.33 Rent chargeable to tax is _________ actual rent or FMR plus 1/10th of
non
adjustable advance.
(a) Equal to
(b) Higher of
(c) Lower of
(d) None of above
Q.34 Any forfeited deposit received under a contract of sale of property by the
owner of such property is taxable under the head “income from _______”.
(a) Property
(b) Other sources
(c) Salary
(d) Business
Q.35 Income from any rent from agricultural building derived will be treated
as
income from ______.
(a) Property
(b) Other sources
(c) Agricultural income
(d) None of above
Q.36 The rent received or receivable by a person a tax year, other than rent
exempt from tax under this Ordinance, shall be chargeable to tax in that year
under the head ______________.
(a) Income from property
(b) Income & property
(c) Income with property
(d) None
Q.37 Rent means any amount received or receivable by the owner of land or a
building as consideration for the use or occupation of, or the right to use or
occupy, the land or building, and includes any _____________________
deposit paid under a contract for the sale of land or a building.
(a) Forfeited
(b) Adjustable
(c) Non adjustable
(d) None
Q.38 This income from property section shall not apply to any rent received
or
receivable by any person in respect of the __________________ of a building
together with plant and machinery and such rent shall be chargeable to tax
under the head Income from Other Sources.
(a) Sale
(b) Purchase
(c) Lease
(d) None
Q.39 Where any amount is included in rent received or receivable by any
person
for the provision of ___________________________ or any other service
connected with the renting of the building, such amount shall be chargeable
to tax under the head Income from other sources.
(a) Contracts
(b) Utilities
(c) goods
(d) All of these
Q.40 Where the rent received or receivable by a person is less than the fair
market rent for the property, the person shall be treated as having derived
the ____________for the period the property is let on rent in the tax year.
(a) Fair market rent
(b) Market rent
(c) Actual rent
(d) None of the above
Q.41 Non- adjustable amounts received in relation to buildings, where the
owner
of a building receives from a tenant an amount which is not adjustable
against the rent payable by the tenant, the amount shall be treated as rent
chargeable to tax under the head Income from property in the tax year in
which it was received and the following nine tax years in
______________________ proportion.
(a) Greater
(b) Lower
(c) Equal
(d) None
Q.42 Where an amount received ________________ by the owner to the
tenant on
termination of the tenancy before the expiry of ten years, no portion of the
amount shall be allocated to the tax year in which it is refunded or to any
subsequent tax year except as provided for in sub-section
(a) Is refunded
(b) Is not refunded
(c) None
Q.43 which one of the following is not included in the head income from
property
(a) Rent received
(b) Rent receivable
(c) Income from sale of property
(d) Any forfeited deposit
Q.44 Rent received in respect of lease of building together with plant and
machinery by individual is taxable under the head
(a) Income from business
(b) Income from property
(c) Income from other source
(d) Income from capital gain
Q.45 If a person received rent less than fair market value, ------ is taxable
(a) Actual rent received
(b) Fair market value
(c) Depends on circumstances
(d) None of the above
Q.46 Deduction under the head income from property to an individual is not
allowed for
(a) Repair and maintenance allowance
(b) Property tax paid
(c) Collection charges
(d) All of the above

FPSC INSPECTOR INLAND REVENUE (IIR) Paper 2016

 (PART-I)
ENGLISH PROFICIENCY
A- Which of these words is closest in meaning to the word provided?
1- remote
(a) automatic (b) distant(c) savage (d) mean
2- detest
(a) argue (b) hate(c) discover (d) reveal
3- gracious
(a) pretty (b) clever(c) pleasant (d) present
4- predict
(a) foretell (b) decide(c) prevent (d) discover
5- kin
a) exult (b) twist(c) friend (d) relative
B- Which of these words is most nearly the opposite of the word provided?
6- withdraw
(a) reduce (b) need(c) advance (d) want
7- secret
(a) friendly (b) covert(c) hidden (d) overt
8- heartfelt
(a) loving (b) insincere(c) unhealthy (d) humorous
9- impartial
(a) hostile (b) biased(c) dislike (d) worried
10- luminous
(a) clear (b) dim(c) brittle (d) clever
C- Which is the correction option:-
11- Ali is afraid ___ spiders.
(a) from (b) in(c) about (d) of
12- I am worried ______ the exam (a) in (b) about(c) on (d) of
13- He looks upset, I think he took the criticism ____ heart.(a) to (b) in(c)
about (d) of
14- I am envious _____ them.(a) of (b) in(c) about (d) on
15- He confided ____ me.(a) about (b) in(c) on (d) of
16- They decided ____ the pink sofa.(a) about (b) on(c) of (d) in
17- She suffers ____ a heart disease.(a) about (b) in(c) from (d) on
18- The teacher set some homework _____ the end of the lesson.(a) about (b)
in(c) of (d) at
19- I am good ____ tennis.(a) about (b) in(c) at (d) of
20- We arrived _____ the station an hour late.(a) about (b) in(c) at (d) of
(PART-II)PROFESSIONAL TEST
(Comprising Sales Tax Act, 1990 amended upto July, 2014)
21- Tax fraction means the amount worked out in accordance with the
following formula:
(a) (b)
(c) (d) None of these.
22- Taxable goods means all goods other than those which have been
exempted under section:-
(a) 12 (b) 15(c) 13 (d) 11
23- The goods specified in the Fifth Schedule shall be charged to tax at the
rate of:
(a) 17% (b) 16%(c) 19% (d) 0%
24- If the amount shown in the tax invoice or the return needs to be modified
the registered person
shall issue a:
(a) Debit Note (b) Credit Note(c) (a) or (b) above (d) None of these
25- If the input tax paid by a registered person exceeds the output tax on
account of zero rated local
supplies or exports made during the tax period; the excess amount of input
tax shall be refunded not
later than _____ days. (a) 40 (b) 45(c) 50 (d) 60
26- No penalty under section 33 of this Act shall be imposed on a registered
person unless a
____________ is given to such person.
(a) Summon (b) Arrest warrant(c) Show Cause Notice(d) Warning
27- De-registration, blacklisting and suspension of registration are dealt under
section ____ of Sales
Tax Act, 1990.(a) 31 (b) 32(c) 21 (d) 22
28- A registered person making a taxable supply shall issue a serially
numbered tax invoice in
compliance to Section ___________?
(a) 21 (b) 23(c) 25 (d) 26
29- A person who is required to maintain any record or documents under this
act shall retain the
record and documents for a period of _____ years.
(a) Five (b) Six(c) Eight (d) Three
30- Section ____ empowers an authorized Officer of Inland Revenue to take a
sample of any good or
raw material for determining their liability to sales tax.
(a) 25 (b) 25-A(c) 25-AA (d) 26
31- A person who applies for de-registration shall require to furnish a final
return under Section ___ of
Sales Tax Act, 1990.(a) 27 (b) 28(c) 29 (d) 30
32- Section 30 of Sales Tax Act, 1990 deals with:
(a) De-Registration (b) Delegation of Powers(c) Appointment of Officers &
Their Powers
(d) None of the above.
33- A Directorate General of Training and Research is established under
Section:
(a) 30A (b) 30B(c) 30C (d) 30D
34- Special Audit of a registered person may be conducted under section____
(a) 31 (b) 32(c) 32A (d) 28
35- In case a person files a return within fifteen days of the due date. He shall
pay a penalty of
___________ Rupees for each day of default.
(a) One Hundred (b) Five Hundred(c) Five Thousand (d) Three Hundred
36- Any person who fails to issue an invoice when required under this act, he
shall pay a penalty of
(a) Rs.5,000/-(b) 3% of the amount of tax involved(c) (a) or (b) whichever is
higher.
(d) None of the above.
37- Where a registered person fails to produce the record on receipt of 3rd
Notice in non-compliance
with Section 25; such person shall pay a penalty of:-
(a) Rs.5,000/- (b) Rs.10,000/-(c) Rs.50,000/- (d) Rs.30,000/-
38- A person who obstructs the authorized officer in the performance of his
official duties, he shall
pay a penalty of:-
(a) Rs.25,000/-
(b) 100% of the amount of tax involved.(c) (a) or (b) whichever is higher(d)
None of the above.
39- Where any person repeats an offence for which a penalty is provided
under this act.
(a) He shall pay twice the amount of penalty provided under the act for the
said offence.
(b) He shall pay thrice the amount of penalty provided under the act for the
said offence.
(c) Rs.50,000/-
(d) None of the above.
40- Any Office of Inland Revenue shall have power to summon any person
under section:
(a) 38 (b) 39(c) 37 (d) None of the above
41- All arrests made under this act shall be carried out in accordance with the
relevant provisions of:
(a) Sales Tax Act, 1990.(b) Federal Excise Act, 2005(c) Code of Criminal
Produced, 1898.
(d) Income Tax Ordinance, 2001
42- Procedure to be followed on arrest of a person is laid down under section
___ of Sales Tax Act,
1990.
(a) 37 (b) 37A(b) 37B (d) 37C
43- It is necessary to produce an arrested person before the Special Judge or
the nearest Judicial
Magistrate, within __ hours of such arrest.
(a) 36 (b) 48(c) 72 (d) 24
44- The Sales Tax Officer authorized to hold inquiry shall maintain a register
to be called:-
(a) Register of arrests (b) Register of detention(c) Register of Arrests and
Detention
(d) None of the above.
45- A Special Judge is appointed by the Federal Government under Section:
(a) 37A (b) 37B(c) 37C (d) 37D
46- A Special Judge may hold sitting at any other place according to section:
(a) 37D (b) 37G(c) 37H (d) 38
47- According to Section _____, the Commissioner may, by notice in writing,
require any person,
including a banking company to furnish such information or such statement
in connection with any
investigation or inquiry in cases of tax fraud.
(a) 37A (b) 37B(c) 38A (d) 38B
48- The Officer of Inland Revenue may enter a place to search any documents
or things useful for any
proceedings, after obtaining a warrant from the magistrate, under section
____:
(a) 40 (b) 40A(c) 40B (d) None of the above.
49- Clause ___ of Section 45A empowers the Commissioner to take suo moto
and examine the record
of any proceeding.
(a) 1 (b) 2(c) 3 (d) 4
50- An appeal shall be accompanied by a fee of Rs.
(a) Rs.5,000/- (b) Rs.1,000/-(c) Rs.2,000/- (d) Rs.10,000/-
51- Appeal to the Appellate Tribunal can be made under section:-
(a) 45A (b) 45B(c) 46 (d) 47
52- Reference to the High Court can be send within ____ days of
communication of the order of the
Appellate Tribunal:
(a) 120 (b) 90(c) 70 (d) 60
53- A reference to the High Court under this Section shall be head by a Bench
of not less than ____
Judges of the High Court.
(a) 02 (b) 03(c) 04 (d) 05
54- An application to the High Court by a person other than the Additional
Commissioner authorized
by the Commissioner shall be accompanied by a fee of :-
(a) One Hundred Rupees(b) Five Hundred Rupees(c) One Thousand
Rupees(d) Five Thousand Rupees
55- Section ____ of the Limitation Act, 1908 shall apply to an application
made to the High Court
under sub-section:-(a) 7 (b) 1(c) 9 (d) 10
56- According to Section 48, Sub-Section 1, Clause (c); the Officer of Inland
Revenue may take
following action for recovery of arrears of tax:
(a) Seal the business premises.(b) Stop removal of any goods from business
premises
(c) Attach and Sell or Sell without attachment any moveable or
immoveable property of the registered person.
(d) A & B Above.
57- A liquidator is required to give written notice to the Commissioner within
____ days of being
appointed.(a) 14 (b) 15(c) 30 (d) 60
58- Board has a power to make rules under Section ______:
(a) 50 (b) 49(c) 49A (d) 50A
59- Board may prescribe the use of computerized system under section ____
(a) 50 (b) 50A(c) 49 (d) 49A
60- Board establishes bar of suits, prosecution and other legal proceedings
under section:-
(a) 50 (b) 51(c) 52 (d) 52A
61- An authorized representative of a registered person may appear before
the Appellate Tribunal as
spells section:
(a) 50 (b) 51(c) 52 (c) 53
62- Board may appoint a person to electronically file return on behalf of a
registered person under
section:
(a) 50 (b) 52(c) 52A (d) 53
63- According to Section ____ the tax liability of a deceased registered person
under the Act shall be
the first charge on his estate in the hands of his successor.
(a) 51 (b) 52(c) 53 (d) 54
64- Section ___ deals with removal of difficulties:
(a) 53 (b) 54(c) 55 (d) 56
65- Service of orders, decisions etc are done in accordance with the procedure
laid down under
section:
(a) 54 (b) 55(c) 56 (d) 57
66- Any order, Notice or requisition require to be served on a resident
individual is sent by a register
post or courier service to the individual’s
(a) e-mail address (b) last known address in Pakistan
(c) official address (d) None of the above
67- Rectification of mistake in any order passed by an Officer of Inland
Revenue, Commissioner, The
Commission (Appeals) or the Appellate Tribunal can be made as envisaged
under section:
(a) 53 (b) 55(c) 57 (d) 59
68- No person shall be declared as the representative of non-resident person
unless the person has
been given an opportunity by the _____of being heard.
(a) Inspector Inland Revenue(b) Commissioner(c) Collector(d) None of these.
69- Tax paid on goods purchased by a person who get registered within 30
days of purchase of goods,
shall be treated as:-
(a) Input Tax (b) Output Tax(c) Ad Velorum Tax (d) Both (a) and (b)
70- When a person imports goods, the tax paid by him thereon during a
period of ______ days before
making an application of registration shall be treated as:
(a) Output Tax (b) Input Tax(c) Progressive Tax (d) None of these
71- Section ___ provides powers to deliver certain goods, without payment of
tax:
(a) 52 (b) 54(c) 60 (d) 62
72- Board may authorize the repayment in whole or in part of the tax paid on
goods of such class or
description as it may determine under section __
(a) 60 (b) 61(c) 62 (d) 64
73- According to Section _____ repayment of tax to person registered in Azad
Jammu & Kashmir can
be made in whole or in part of the input tax, on any goods acquired in or
imported into Pakistan by
person registered in Azad Jammu & Kashmir and are engaged in making
zero rated supplies.
(a) 59 (b) 60(c) 61 (d) 61A
74- Drawback is allowed on re-export but not such drawback is repaid unless
the re-export is made
within a period of ___ years from date of importation as per record of Custom
House.
(a) 03 (b) 02(c) 01 (d) 04
75- Section ___ deals with drawback on goods taken into use between
importation & re-exportation
period.
(a) 61 (b) 62(c) 63 (d) 64
76- Federal Government may prohibit the payment of drawback on the
exportation of goods or any
specified goods or class of goods to any specified foreign port or territory in
compliance with Section
___
(a) 64 (b) 65(c) 66 (d) 67
77- Federal Government may by a notification direct that the tax not levied or
short levied as a result
of inadvertent practice shall not be required to be paid for the period prior to
the discovery of such
inadvertent practice, as per section :
(a) 64 (b) 65(c) 66 (d) 67
78- All refunds have to be claimed within ____ year(s)
(a) 1 (b) 2(c) 3 (d) 4
79- Application or claim filed under section 66 shall be disposed off within
____ days from date of
filing of claim(a) 60 (b) 90(c) 120 (d) 160
80- According to section _____ liability of the acts of agent solely lies upon a
registered person.
(a) 66 (b) 67(c) 68 (d) 69
81- Duplicate copy of sales tax documents may be issued to a registered person
on the payment of
Rs.___
(a) One Hundred (b) Two Hundred(c) Three Hundred (d) Five Hundred
82- All Officers of Inland Revenue and other persons employed in the
execution of this Act shall
observe and follow the order, instructions and direction of the Board under
section ---- :
(a) 71 (b) 72(c) 72A (d) 72B
83- Board may select persons or classes of persons for audit of tax affairs
through ____
(a) Random Selection (b) Computer Ballot(c) Manual Entry (d) None of the
above.
84- According to Section 72C, Board may give ________ to Inland Revenue
Officer/Officials in cases
involving concealment or evasion of sales tax and other taxes, on their
meritorious conduct in such
cases.
(a) Promotion (b) Cash Reward(c) Certificate of Appreciation(d) None of
these
85- Payment of the amount for a transaction exceeding value of _______,
excluding payment against a
utility bill, shall be made by a crossed banking instrument showing transfer of
the amount of the sales
tax invoice in favour of supplier.
(a) Rs.1,00,000/- (b) Rs.50,000/-(c) Rs.2,00,000/- (d) Rs. 25,000/-
86- Retailer means a person supplying goods to general public for the purpose
of:
(a) Sale (b) Purchase(c) Consumption (d) Demand
87- _________ means a person who is registered or is liable to be registered
under this act.
(a) Manufacturer (b) Supplier(c) Registered Person (d) Retailer
88- Special Audit means an audit conducted under section ____
(a) 31 (b) 32(c) 32A (d) 33
89- Taxable activity means any _________ activity carried on by a person
whether or not for profit.
(a) Financial (b) Fiscal(c) Monetary (d) Economic
90- Taxable goods means all goods other than those which have been
exempted under section:-
(a) 11 (b) 12(c) 13 (d) 15
91- Tax period means a period of ____ month(s) or such other period as
specified by the Federal Govt.
(a) one (b) three(c) five (d) twelve
92- Tax invoice means a document required to be issued under section _____
(a) 21 (b) 23(c) 25 (d) 26
93- ‘Open Market Price’ means the consideration in money which that supply
or ___________ would
generally fetch in an open market.
(a) Demand (b) different supply(c) similar supply (d) None of these
94- Appellate Tribunal means the Appellate Tribunal Inland Revenue
established under Section ____
of Income Tax Ordinance, 2001.
(a) 120 (b) 130(c) 131 (d) None of the above.
95- Banking Company means a banking company as defined in the Banking
Companies Ordinance,
____.
(a) 1990 (b) 1962(c) 1984 (d) 1969
96- “Common taxpayer identification number” means the registration
number or any other number
allocated to a _____________.
(a) Wholesaler (b) Retailer(c) Registered Person (D) Importer
97- CREST is an abbreviation of:-
(a) Computerized Return and E-Filing of Sales Tax
(b) Computerized Risk-Based Evaluation of Sales Tax
(c) Certificated Return E-Filing System
(d) None of these.
98- ‘KIBOR’ stands for:-
(a) Karachi Intra-Bank Offered Rate
(b) Karachi Inter-Bank Offered Rate
(c) Karachi Inter Bank On-Spot Rate
(d) None of the above.
99- Directorate of Post Clearance Audit is established under section;-
(a) 30A (b) 30B(c) 30D (d) 30DD
100- Delegation of Powers to the Officers of Inland Revenue are conferred
under section:-
(a) 31 (b) 32(c) 33 (d) 34
ANSWERS:-
1 (b) 2 (b) 3 (c) 4 (a) 5 (d) 6 (c) 7 (d) 8 (b) 9 (b) 10 (b) 11 (d) 12 (b) 13 (a) 14 (a)
15 (b) 16 (b) 17 (c) 18 (d)
19 (c) 20 (c) 21 (a) 22 (c) 23 (d) 24 (c) 25 (b) 26 (c) 27 (c) 28 (b) 29 (b) 30 (b) 31
(b) 32 (c) 33 (c) 34 (c) 35
(a) 36 (c) 37 (c) 38 (c) 39 (a) 40 (c) 41 (c) 42 (c) 43 (d) 44 (c) 45 (c) 46 (c) 47 (c)
48 (a) 49 (d) 50 (b) 51 (c)
52 (b) 53 (a) 54 (a) 55 (b) 56 (b) 57 (a) 58 (a) 59 (b) 60 (b) 61 (c) 62 (c) 63 (c) 64
(c) 65 (c) 66 (b) 67 (c) 68
(b) 69 (a) 70 (b) 71 (c) 72 (b) 73 (d) 74 (b) 75 (c) 76 (a) 77 (b) 78 (a) 79 (b) 80 (c)
81 (a) 82 (b) 83 (b) 84
(b) 85 (b) 86 (c) 87 (c) 88 (c) 89 (d) 90 (c) 91 (a) 92 (b) 93 (b) 94 (b) 95 (b) 96 (c)
97 (b) 98 ( b) 99 (d) 100
(b)

THE SALES TAX ACT, 1990

Chapter I
The Sales Tax Act III of 1951 is amendment now VII of 1990.
Substituted for the words “or consumption of goods” by the Finance Act, 1960.
Substituted for the words “or consumption of goods” by the Finance Act, 1960.
Chapter I to X substituted for Chapters I to XVI by the Finance Act, 1990.
Brackets and word “(Amendment)” omitted by the Finance Act, 1991.
Sales Tax Act 1990 forced all over Pakistan on 1st November, 1990.
(1A) “Appellate Tribunal” means the Appellate Tribunal Inland Revenue
established under section 130 of the Income Tax Ordinance, 2001 (XLIX of 2001)
(2A) “arrears”, in relation to a person, means, on any day, the sales tax due and
payable by the person under this Act before that day but which has not yet been
paid.
(3A) “association of persons” includes a firm, a Hindu undivided family, any
artificial juridical person and anybody of persons formed under a foreign law, but
does not include a company.
(3AA) “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.
Clause (3A) Re-Named as (3AA). Earlier it was inserted by Finance Act, 2004.
(4) “Board” means the Federal Board of Revenue established under section 3 of
the Federal Board of Revenue Act, 2007
(4A) “Chief Commissioner” means a person appointed as the chief Commissioner
Inland Revenue under section 30
(4AA) “Commissioner (Appeals)” means Commissioner of Inland Revenue
(Appeals) appointed under section 30
(5) “Commissioner” means the Commissioner of Inland Revenue appointed under
section 30
(5A) “common taxpayer identification number” means the registration number
or any other number allocated to a registered person
(5AA) “company” means –
(a) A company as defined in the Companies Ordinance, 1984 (XL VII of 1984)
(b) A body corporate formed by or under any law in force in Pakistan
(c) A modaraba
(d) A body incorporated by or under the law of a country outside Pakistan relating
to incorporation of companies;
(e) A trust, a co-operative society or a finance society or any other society
established or constituted by or under any law for the time being in force
(5AAA) “computerized system” means any comprehensive information
technology system to be used by the Board or any other office as may be notified
by the Board, for carrying out the purposes of this Act
(5AB) “cottage industry” means a manufacturing concern, which fulfils each of
following conditions, namely:-
(a) Does not have an industrial gas or electricity connection;
(b) Is located in a residential area
(c) Does not have a total labor force of more than ten workers; and
(d) Annual turnover from all supplies does not exceed 10 million rupees
(5AC) “CREST” means the computerized program for analyzing and cross
matching of sales tax returns, also referred to as COMPUTERISED RISK-BASED
EVALUATION of SALES TAX:
(6) “Customs Act” means the Customs Act, 1969 (IV of 1969), and where
appropriate all rules and notifications made under that Act:
(6A) “defaulter” means a person and, in the case of company or firm, every
director, or partner of the company, or as the case may be, of the firm, of which he
is a director or partner or a proprietor and includes guarantors or successors, who
fail to pay the arrears
(6B) “default surcharge” means the default surcharge levied under section 34
(7) “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 and
includes a person who in addition to being a distributor is also engaged in supply
of goods as a wholesaler or a retailer;
(8) “Document” includes any electronic data, computer programmer, computer
tapes, computer disks, micro-films or any other medium for the storage of such
data
(9) “Due date” in relation to the furnishing of a return 2 under section 26,3,4,5
means the 6[15th] day of the month
(11B) “firm” means the relation between persons who have agreed to share the
profits of a business carried on by all or any of them acting for all
(12) “Goods” include every kind of movable property other than actionable claims,
money, stocks, shares and securities;
(12A) “green industry” in relation to the entry at serial number 150 of the Table-1
of the Sixth Schedule
(13) “importer” means any person who imports any goods into Pakistan
(14) “input tax”, in relation to a registered person, means
(14A) the expression “KIBOR” means Karachi Inter-Bank Offered Rate prevalent
on the first day of each quarter of the financial year
(15) “Local Inland Revenue Office” means the office of Superintendent of Inland
Revenue
(18) “Officer of Inland Revenue” means an officer appointed under section 30
(18A) “online market place” includes an electronic interface such as a market
place, e-commerce platform, portal or similar means which facilitate sale of goods,
including third party sale, in any of the following manner, namely:

(a) By controlling the terms and conditions of the sale

(b) Authorizing the charge to the customers in respect of the payment for the
supply

(c) Ordering or delivering the goods

New clause 18A inserted by Finance Act, 2021.

(43) “Tax period” means a period of one month

Chapter II
(11B) Assessment giving effect to an order.
(1) Except where sub-section (2) applies, where, in consequence of, or to give
effect to, any finding or direction in any order made under Chapter-VIII by the
Commissioner (Appeals), Appellate Tribunal, High Court or Supreme Court an
order of assessment of tax is to be issued to any registered person, the
Commissioner or an officer of Inland Revenue empowered in this behalf shall
issue the order within one year from the end of the financial year in which the
order of the Commissioner (Appeals), Appellate Tribunal, High Court or Supreme
Court, as the case may be, was served on the Commissioner or officer of Inland
Revenue.
(2) Where, by an order made under Chapter-VIII by the Appellate Tribunal, High
Court or Supreme Court, an order of assessment is remanded wholly or partly and
the Commissioner or Commissioner (Appeals) or officer of Inland Revenue, as the
case may be, is directed to pass a new order of assessment, the Commissioner or
Commissioner (Appeals) or officer of Inland Revenue, as the case may be, shall
pass the new order within one year from the end of the financial year in which the

Chapter III
(21A) Active taxpayers list (ATL)
The Board shall have the power to maintain active taxpayers list in the manner as
may be prescribed by rules and such rules may provide for the restrictions and
limitations to be imposed on a person who ceases to be an active taxpayer

Chapter IV
(25AA) Transactions between Associates
 The Commissioner or an office of Inland Revenue may, in respect of any
transaction between persons who are associates, determine the transfer price of
taxable supplies between the persons as is necessary to reflect the fair market value
of supplies in an arm’s length transaction.

(2) The Board may, by notification in official gazette, prescribe rules for
carrying out the purpose of sub-section (1)
Existing sub-section renumbered as sub-section (1) and new sub-section (2)
inserted by Finance Act, 2021.

Chapter V
(26AB) Extension of time for furnishing returns.
(1) A registered person required to furnish a return under section 26 may apply, in
writing, to the Commissioner for an extension of time to furnish the return.
(2) An application under sub-section (1) shall be made by the due date for
furnishing the return in terms of section 2(9) for the period to which the application
relates.
(3) Where an application has been made under sub-section (1) and the
Commissioner is satisfied that the applicant is unable to furnish the return to which
the application relates by the due date because of–

(a) Absence from Pakistan;

(b) Sickness or other misadventure

(c) Any other reasonable cause

Chapter VI
APPOINTMENT OF (OFFICERS OF SALES TAX) &
THEIR POWERS
(30) Appointment of Authorities:
(1) For the purposes of this Act, the Board may, appoint in relation to any area,
Person or class of persons, any person to be –
(a) A chief commissioner of Inland Revenue
(b) A commissioner of Inland Revenue
(c) A commissioner of Inland Revenue (Appeals)
(d) An Additional commissioner of Inland Revenue
(e) A Deputy Commissioner of Inland Revenue;
(f) District Taxation Officer Inland Revenue;]
(g) An Assistant commissioner of Inland Revenue
(h) Assistant Director Audit Inland Revenue
(i) An Inland Revenue Officer
(j) A Superintendent Inland Revenue
(k) An Inland Revenue Auditor Officer

(L) An inspector Inland Revenue

(30A) Directorate General (Intelligence and Investigation), Inland Revenue.–

(1) The Directorate General (Intelligence and Investigation) Inland Revenue shall
consist of a Director General and as many Directors, Additional Directors, Deputy
Directors and Assistant Directors and such other officers as the Board

Chapter-VII
OFFENCES AND PENALTIES
37A. Power to arrest and prosecute
(1) An officer of 4[Inland Revenue not below the rank of an Assistant
Commissioner of Inland Revenue] or any other officer of equal rank authorized by
the 5[Board] in this behalf, who on the basis of material evidence has reason to
believe that any person has committed a tax fraud 6[or any offence warranting
prosecution under this Act 7. 8[may cause arrest of such person.]
(2) All arrests made under this Act shall be carried out in accordance with the
relevant provisions of the Code of Criminal Procedure, 1898 (Act V of 1898).

37B. Procedure to be followed on arrest of a person

(1) When [an officer of Inland Revenue] authorized in this behalf arrests a person
under Section 37A, he shall immediately intimate the fact of the arrest of that
person to the Special Judge who may direct such Officer to produce that person at
considers such time and place and on such date as the Special Judge considers
expedient and such Officer shall act accordingly.

40. Searches under warrant

(1) Where any officer of [Inland Revenue] has reason to believe that any
documents or things which in his opinion, may be useful for, or relevant to, any
proceedings under this Act are kept in any place, he may after obtaining a warrant
from the magistrate, enter that place and cause a search to be made at any time

Chapter-IX
RECOVERY OF ARREARS
48. Recovery of arrears of tax
(1) [Subject to sub-section (1A), where any amount of tax 2 is due from any
person, the officer of [Inland Revenue] may:-
(a) Deduct the amount from any money owing to person from whom such amount
is recoverable and which may be at the disposal or in the control of such officer or
any officer of Income Tax, Customs or Central Excise Department.

Introduction in Urdu Language

 INCOME TAX ORDINANCE, 2001

CHAPTER I

PRELIMINARY
(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

(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

(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

Clause (10A) inserted by the Finance Act, 2021.

(11B) “Chief Commissioner” means a person appointed as Chief Commissioner

Inland Revenue under section 208 and includes a Regional Commissioner of
Income Tax

(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

New clause (13AA) inserted by the Finance Act, 2021.

Clause (13AA) re-numbered as clause (13AB) by the Finance Act, 2021.

(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;

(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 programmed for operation and
management of Inland Revenue taxes and laws administered by the Board

(30AD) Information Technology (IT) services include software development,

software maintenance, system integration, web design, web development, web
hosting and network design
(30AE) IT enabled services include inbound or outbound call centers, 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

(31A) “Local Government” shall have the same meaning for respective provisions
and Islamabad Capital Territory as contained in the Baluchistan 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)]

(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)

“NCCPL” means National Clearing Company of Pakistan Limited, which is a

company incorporated under the 5[Companies Act, 2017 (XIX of 2017)] and
licensed as “Clearing House” by the Securities and Exchange Commission of
Pakistan,6[or any subsidiary of NCCPL notified by the Board for the purpose of
this clause
(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

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

101

(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 (SECP)

CHAPTER III
PART I

COMPUTATION OF TAXABLE INCOME

11. Heads of Income

(1) For the purposes of the imposition of tax and the computation of total income,
all income shall be classified under the following heads, namely:
(a) Salary
(b) Income from Property
(c) Income from Business
(d) Capital Gains; and
(e) Income from Other Sources

PART VII

EXEMPTIONS AND TAX CONCESSIONS

41. Agricultural Income
(1) Agricultural income derived by a person shall be exempt from tax under this
Ordinance.
(2) In this section, “agricultural income” means,
(a) Any rent or revenue derived by a person from land which is situated in Pakistan
and is used for agricultural purposes;

42. Diplomatic and United Nations exemptions.

(1) The income of an individual entitled to privileges under the Diplomatic and
Consular Privileges Act, 1972 (IX of 1972) shall be exempt from tax under this
Ordinance to the extent provided for in that Act.

43. Foreign government officials.

Any salary received by an employee of a foreign government as remuneration for
services rendered to such government shall be exempt from tax under this
Ordinance provided
(a) The employee is a citizen of the foreign country and not a citizen of Pakistan;

44. Exemptions under international agreements.

(1) Any Pakistan-source income which Pakistan is not permitted to tax under a tax
treaty shall be exempt from tax under this Ordinance.

45. President’s honors

(1) Any allowance attached to any Honor, Award, or Medal awarded to a person
by the President of Pakistan shall be exempt from tax under this Ordinance.

47. Scholarships.

Any scholarship granted to a person to meet the cost of the person’s education
shall be exempt from tax under this Ordinance, other than where the scholarship is
paid directly or indirectly by an associate

48. Support payments under an agreement to live apart.

Any income received by a spouse as support payment under an agreement to live

apart shall be exempt from tax under this Ordinance.

49. Federal Government, Provincial Government, and Local Government

income.

(1) The income of the Federal Government shall be exempt from tax under this
Ordinance.
PART VIII

LOSSES
56. Set off of losses.

(1) Subject to sections 58 and 59, where a person sustains a loss for any tax year
under any head of income specified in section 11, the person shall be entitled to
have the amount of the loss set off against the person’s income, if any, chargeable
to tax under any other head of income except income under the head salary for the
year.

58. Carry forward of speculation business losses.

(1) Where a person sustains a loss for a tax year in respect of a speculation
business carried on by the person (hereinafter referred to as a “speculation loss”),
the loss shall be set off only against the income of the person from any other
speculation business of the person chargeable to tax for that year.

59AA. Group taxation

(1) Holding companies and subsidiary companies of 100% owned group may opt
to be taxed as one fiscal unit. In such cases, besides consolidated group accounts as
required under the Companies Act, 2017 (XIX of 2017), computation of income
and tax payable shall be made for tax purposes

PART IX

DEDUCTIBLE ALLOWANCES
60. Zakat

(1) A person shall be entitled to a deductible allowance for the amount of any
Zakat paid by the person in a tax year under the Zakat and Usher Ordinance, 1980
(XVIII of 1980).

60A. Workers’ Welfare Fund.

A person shall be entitled to a deductible allowance for the amount of any
Workers’ Welfare Fund paid by the person in tax year under Workers’ Welfare
Fund Ordinance, 1971 (XXXVI of 1971) 2[or under any law relating to the
Workers’ Welfare Fund enacted by Provinces after the eighteenth Constitutional
amendment Act, 2010:

60B. Workers’ Participation Fund.

A person shall be entitled to a deductible allowance for the amount of any

Workers’ Participation Fund paid by the person in a tax year in accordance with
the provisions of the Companies Profit (Workers’ Participation) Act, 1968 (XII of
1968) 2[or under any law relating to the Workers’ Profit Participation Fund
enacted by Provinces after the eighteenth Constitutional amendment Act, 2010:

60C. Deductible allowance for profit on debt.

(1) Every individual shall be entitled to a deductible allowance for the amount of
any profit or share in rent and share in appreciation for value of house paid by the
individual in a tax year on a loan by a scheduled bank or non-banking finance
institution regulated by the Securities and Exchange Commission of Pakistan or
advanced by Government or the Local Government, Provincial Government or a
statutory body or a public company listed on a registered stock exchange in
Pakistan where the individual utilizes the loan for the construction of a new house
or the acquisition of a house.

60D. Deductible allowance for education expenses.

(1) Every individual shall be entitled to a deductible allowance in respect of tuition

fee paid by the individual in a tax year provided that the taxable income of the
individual is less than 6 million rupees.

PART X

TAX CREDITS
61. Charitable donations.

(1) A person shall be entitled to a tax credit in respect of any sum paid, or any
property given by the person in the tax year as a donation
62A. Tax credit for investment in health insurance.

(1) A resident person other than a company shall be entitled to a tax credit for a tax
year in respect of any health insurance premium or contribution paid to any
insurance company registered by the Securities and Exchange Commission of
Pakistan under the Insurance Ordinance, 2000 (XXXIX of 2000), provided the
resident person is deriving income chargeable to tax under the head “salary” or
“income from business”.

63. Contribution to an Approved Pension Fund.

(1) An eligible person as defined in sub-section (19A) of section 2 deriving income

chargeable to tax under the head “Salary” or the head “Income from Business”
shall be entitled to a tax credit for a tax year in respect of any contribution or
premium paid in the year by the person in approved pension fund under the
Voluntary Pension System Rules, 2005.

64B. Tax credit for employment generation by manufacturers.

(1) Where a taxpayer being a company formed for establishing and operating a
new manufacturing unit sets up a new manufacturing unit between the 1st day of
July, 2015 and the 30th day of June, 5[“2019”], (both days inclusive) it shall be
given a tax credit for a period of ten years.

PART II

TAX YEAR
74. Tax year.

(1) For the purpose of this Ordinance and subject to this section, the tax year shall
be a period of twelve months ending on the 30th day of June (hereinafter referred
to as ‘normal tax year’) and shall, subject to sub-section (3), be denoted by the
calendar year in which the said date falls.

PART III
 ASSETS
77. Consideration received.
(1) The consideration received by a person on disposal of an asset shall be the total
amount received by the person for the asset or the fair market value thereof,
whichever is the higher, including the fair market value of any consideration
received in kind determined at the time of disposal.
(2) Where an asset has been lost or destroyed by a person, the consideration
received for the asset shall include any compensation, indemnity or damages
received by the person under
(a) An insurance policy, indemnity or other agreement
(b) A settlement; or
(c) A judicial decision

91. Income of a minor child.

(1) Any income of a minor child for a tax year chargeable under the head "Income
from Business" shall be chargeable to tax as the income of the parent of the child
with the highest taxable income for that year.

CHAPTER VI
SPECIAL INDUSTRIES
PART I
INSURANCE BUSINESS
99. Special provisions relating to insurance business.

The profits and gains of any insurance business shall be computed in accordance
with the rules in the Fourth Schedule.

TAXATION OF FOREIGN-SOURCE INCOME OF

RESIDENTS
102. Foreign source salary of resident individuals.

(1) Any foreign-source salary received by a resident individual shall be exempt

from tax if the individual has paid foreign income tax in respect of the salary.

110. Salary paid by private companies.

Where, in any tax year, salary is paid by a private company to an employee of the
company for services rendered by the employee in an earlier tax year and the
salary has not been included in the employee’s salary chargeable to tax in that
earlier year, the Commissioner may, if there are reasonable grounds to believe that
payment of the salary was deferred, include the amount in the employee’s income
under the head “Salary” in that earlier year.

114A. Business bank account.

(1) Every taxpayer shall declare to the Commissioner the bank account utilized by
the taxpayer for business transactions

PART IV
COLLECTION AND RECOVERY OF TAX
138A. Recovery of tax by District Officer (Revenue).

(1) The Commissioner may forward to the District Officer (Revenue) of the district
in which the taxpayer resides or carries on business or in which any property
belonging to the taxpayer is situated, a certificate specifying the amount of any tax
due from the taxpayer, and, on receipt of such certificate, the District Officer
(Revenue) shall proceed to recover from the taxpayer the amount so specified as, it
were an arrear of land revenue.

138B. Estate in bankruptcy.

(1) If a taxpayer is declared bankrupt, the tax liability under this Ordinance shall
pass on to the estate in bankruptcy

139. Collection of tax in the case of private companies and associations of

persons.
(1) Notwithstanding anything in the [Companies Act, 2017 (XIX of 2017) where
any tax payable by a private company (including a private company that has been
wound up or gone into liquidation) in respect of any tax year cannot be recovered
from the company, every person who was, at any time in that tax year
140. Recovery of tax from persons holding money on behalf of a taxpayer.
(1) For the purpose of recovering any tax due by a taxpayer, the Commissioner
may, by notice, in writing, require any person –
(a) Owing or who may owe money to the taxpayer; or
(b) Holding or who may hold money for, or on account of the taxpayer;
(c) Holding or who may hold money on account of some other person for payment
to the taxpayer; or
(d) Having authority of some other person to pay money to the taxpayer,
141. Liquidators.
(1) Every person (hereinafter referred to as a “liquidator”) who is –
(a) A liquidator of a company
(b) A receiver appointed by a Court or appointed out of Court
(c) A trustee for a bankrupt or
(d) A mortgagee in possession
146. Recovery of tax from persons assessed in Azad Jammu and Kashmir and
Gilgit-Baltistan.
(1) Where any person assessed to tax for any tax year under the law relating to
income tax in the Azad Jammu and Kashmir Gilgit-Baltistan has failed to pay the
tax and the income tax authorities of the Azad Jammu and Kashmir or Gilgit-
Baltistan cannot recover the tax because —
(a) The person’s residence is in Pakistan; or
(b) The person has no movable or immovable property in the Azad Jammu and
Kashmir or Gilgit-Baltistan.
146A. Initiation, validity, etc., of recovery proceedings.
(1) Any proceedings for the recovery of tax under this Part may be initiated at any
time.
(2) The Commissioner may, at any time, amend the certificate issued under section
138A, or recall such certificate and issue fresh certificate, as he thinks fit.
(3) It shall not be open to a taxpayer to question before the District Officer
(Revenue) the validity or correctness of any certificate issued under section 138A,
or any such certificate as amended, or any fresh certificate issued, under sub-
section (2).
146C. Assistance in the recovery and collection of taxes.
The provisions of sections 138, 138A, 138B, 139, 140, 141, 142, 143, 144, 145,
146, 146A, and 146B shall mutatis mutandis apply in respect of assistance in
collection and recovery of taxes in pursuance of a request from a foreign
jurisdiction under a tax treaty, a multilateral convention, an intergovernmental
agreement or similar arrangement or mechanism
155. Rent of immoveable] property.
(1) [Every] prescribed person making a payment in full or part (including a
payment by way of advance) to any person on account of rent of immovable
property (including rent of furniture and fixtures, and amounts for services relating
to such property) shall deduct tax from the gross amount of rent paid at the rate
specified in Division V of Part III of the First Schedule.
156. Prizes and winnings.
(1) Every person paying a prize bond, or winnings from a raffle, lottery, winning a
quiz, prize offered by companies for promotion of sale, or cross-word puzzle shall
deduct tax from the gross amount paid at the rate specified in Division VI of Part
III of the First Schedule
PART VIII
RECORDS, INFORMATION COLLECTION AND AUDIT
174. Records
(1) Unless otherwise authorized by the Commissioner, every taxpayer shall
maintain in Pakistan such accounts, documents and records as may be prescribed.
The accounts and documents required to be maintained under this section shall be
maintained for 6 years after the end of the tax year
177. Audit.
(1) The Commissioner may call for any record or documents including books of
accounts maintained under this Ordinance or any there law for the time being in
force for conducting audit of the income tax affairs of the person and where such
record or documents have been kept on electronic data, the person shall allow
access to the Commissioner or the officer authorized by the Commissioner for use
of machine and software on which such data is kept and the Commissioner or the
officer may have access to the required information and data and duly attested hard
copies of such information or data for the purpose of investigation and proceedings
under this Ordinance in respect of such person or any other person:
Provided that—
178. Assistance to Commissioner.
Every Officer of Customs, Provincial Excise and Taxation, District Coordination
Officer, District Officers including District Officer Revenue, the Police and the
Civil Armed Forces is empowered and required to assist the Commissioner in the
discharge of the Commissioner’s functions under this Ordinance.
181A. Active taxpayers’ list.
(1) The Board shall have the power to institute active taxpayers’ list.
181C. Displaying of National Tax Number.
Every person deriving income from business chargeable to tax, who has been
issued a National Tax Number (NTN), shall display his National Tax Number at a
conspicuous place at every place of his business
181D. Business license scheme.
(1) Every person engaged in any business, profession or vocation shall be required
to obtain and display a business license as prescribed by the Board.
(2) Where a person fails to obtain business license under sub-section (1), the
Commissioner may, in addition to and not in derogation of any punishment to
which the person may be liable under this Ordinance or any other law, impose a
fine of –

(a) twenty thousand Rupees, in case of a taxpayer deriving income chargeable to

tax under this Ordinance; or
(b) five thousand Rupees, in all other cases

PART X
PENALTY
182. Offences and penalties.
(1) Any person who commits any offence specified in column (2) of the Table
below shall, in addition to and not in derogation
Of any punishment to which he may be liable under this Ordinance or any other
law, be liable to the penalty mentioned against that offence in column (3) thereof

1-Where any person fails to furnish a return of income as required under section
114 within the due date.
2-Such person shall pay a penalty equal to 0.1% of the tax payable in respect of
that tax year for each day of default subject to a maximum penalty of 50% of the
tax payable provided that if the penalty worked out as aforesaid is less than 40
thousand rupees or no tax is payable for that tax year such person shall pay a
penalty of 40 thousand rupees

3-Provided that If seventy-five percent of the income is from salary and the amount
of income under salary is less than five million Rupees, the minimum amount of
penalty shall be five thousand Rupees

4-Provided further that if taxable income is up-to eight hundred thousand Rupees,
the minimum amount of penalty shall be five thousand Rupees

5-Provided also that the amount of penalty shall be reduced by 75%, 50% and 25%
if the return is filed within one, two and three months respectively after the due
date or extended due date of filing of return as prescribed under the law.

6-Any person who is required to furnish or update a taxpayer’s profile but fails to
furnish or update within the due date.

114A-Such a person shall pay a penalty of Rs. 2,500 for each day of default from
the due date subject to a minimum penalty of Rs. 10,000.

193. Prosecution for failure to maintain records.

A person who fails to maintain records as required under this Ordinance shall
commit an offence punishable on conviction with –
(a) where the failure was deliberate, a fine [not exceeding fifty thousand rupees] or
imprisonment for a term not exceeding two years, or both; or
(b) In any other case, a fine [not exceeding fifty thousand rupees
203A. Appeal against the order of a Special Judge.—
An appeal against the order of a Special Judge shall lie to the respective High
Court of a Province within thirty days of the passing of the order and it shall be
heard as an appeal under the Code of Criminal Procedure 1898 (Act V of 1898) by
a single Judge of the High Court.
203B. Power to arrest and prosecute.
(1) Where on the basis of material evidence brought on record, as a result of audit
conducted by the auditors in terms of sub-section (8) of section 177 read with
section 214C of this Ordinance, an assessment is made or amended under section
121 or 122 of this Ordinance, as the case may be, and the assessing officer records
a finding that the taxpayer has committed the offence of concealment of income
which has resulted in non-payment of tax of Rupees one hundred million and
above in case of a filer and rupees twenty five million or above in case of non-filer,
the taxpayer may be arrested after obtaining written approval of the committee
specified under sub-section (2).
203C. Procedure to be followed on arrest of a person.
(1) When an officer of Inland Revenue authorized under sub-section (1) of section
203B in this behalf arrests a person under section 203B, he shall immediately
intimate the fact of the arrest of that person to the Special Judge who may direct
such officer to produce that person at such time and place and on such date as the
Special Judge considers expedient and such Officer shall act accordingly
Sections 203B to 203I added by the Finance Act, 2021
CHAPTER XI
ADMINISTRATION
207. Income tax authorities.
(1) There shall be the following Income Tax authorities for the purposes of this
Ordinance and rules made there under, namely

1 Board 10
Inland Revenue Audit Officer
2 11
Chief Commissioner Inland Revenue District Taxation Officer Inland Revenue
3 12
Commissioner Inland Revenue Assistant Director Audit
4 13
Commissioner Inland Revenue (Appeals); Superintendent Inland Revenue
5 14
Additional Commissioner Inland Revenue Inspector Inland Revenue
6 15
Deputy Commissioner Inland Revenue Auditor Inland Revenue
7
Assistant Commissioner Inland Revenue
8
Special audit panel
9
Inland Revenue Officer

212. Authority of approval.

The [Board] may, by a general or special order, authorize the [Chief Commissioner
Inland Revenue] or the Commissioner to grant approval in any case where such
approval is required from the [Board] under any provision of this Ordinance
DIRECTORATES-GENERAL
228. The Directorate General of Internal Audit.
(1) The Directorate General of Internal Audit shall consist of a Director-General
and as many Directors, Additional Directors, Deputy Directors and Assistant
Directors and such other officers as the Board, may by notification in the official
Gazette, appoint
229. Directorate General of Training and Research.
230. Directorate General (Intelligence and Investigation), Inland Revenue.
230A. Directorate-General of Withholding Taxes
230B. Directorate-General of Law
230D. Directorate-General of Broadening of Tax Base
230E Directorate General of International 2[Tax] Operations
230E. Directorate-General of Transfer Pricing
230F. Directorate General of Immovable Property
230G. Directorate General of Special Initiative
230H. Directorate General of Valuation
230I. Directorate General of Compliance Risk Management
Section 231A omitted by the Finance Act, 2021. The omitted section read as
follows:
231A. Cash withdrawal from a bank.
(1) Every banking company shall deduct tax at the rate specified in Division VI of
Part IV of the First Schedule, if the payment for cash withdrawal, or the sum total
of the payments for cash withdrawal in a day, exceeds 50 thousand rupees.
[“Explanation.- For removal of doubt, it is clarified that the said fifty thousand
rupees shall be aggregate withdrawals from all the bank accounts in a single day.”
Section 231AA omitted by the Finance Act, 2021. The omitted section read as
follows:
231AA. Advance tax on transactions in bank.
(1) Every banking company, non-banking financial institution, exchange company
or any authorized dealer of foreign exchange shall collect advance tax at the time
of sale against cash of any instrument, including Demand Draft, Pay Order, CDR,
STDR, SDR, RTC, or any other instrument of bearer nature or on receipt of cash
on cancellation of any of these instruments
Section 233AA omitted by the Finance Act, 2021. The omitted section read as
follows:
233AA. Collection of tax by NCCPL.—NCCPL shall collect advance tax from
the members of Stock Exchange registered in Pakistan ( margin financiers, trading
financiers and lenders) in respect of margin financing in share business [or
providing of any margin financing, margin trading or securities lending under
Securities (Leveraged Markets and Pledging) Rules, 2011 in share business] at the
rate specified in Division 2[IIB] of Part IV of First Schedule
Section 234A omitted by the Finance Act, 2021. The omitted section read as
follows:
234A CNG Stations.
(1) There shall be collected advance tax at the rate specified in Division VIB of
Part III of the First Schedule on the amount of gas bill of a Compressed Natural
Gas station.
(2) The person preparing gas consumption bill shall charge advance tax under sub-
section (1) in the manner gas consumption charges are charged

Division I
Rates of Tax for Individuals
Taxable income Rate of tax

Where the taxable income does 0%

not exceed Rs. 400,000

Rs. 400,000 but does not exceed Rs. 1,000

Rs. 800,000

Rs. 800,000 but does not exceed Rs. 2,000

Rs. 1,200,000
5% of the amount exceeding Rs.
Rs.1,200,000 but does not exceed 1,200,000
Rs. 2,400,000

Rs. 2,400,000 but does not exceed 60,000 + 15% of the amount
Rs. 3,000,000 exceeding Rs. 2,400,000

Rs. 3,000,000 but does not exceed 150,000 + 20% of the amount
Rs. 4,000,000 exceeding Rs. 3,000,000

Rs. 4,000,000 but does not exceed

Rs. 5,000,000 350,000 + 25% of the amount
exceeding Rs. 4,000,000

Where the taxable income 600,000 + 29% of the amount

exceeds Rs. 5,000,000 exceeding Rs. 5,000,000

(56) The following perquisites, benefits and allowances received by a Judge of

Supreme Court of Pakistan and Judge of High Court, shall be exempt from tax.
(1) (a) Perquisites and benefits derived from use of official car maintained at
Government expenses.
(b) Superior judicial allowance payable to a Judge of supreme Court of Pakistan
and Judge of a High Court.
(c) Transfer allowance payable to a Judge of High Court.
(2) The following perquisites of the Judge of Supreme Court of Pakistan and Judge
of High Court shall also be exempt from tax during service, and on or after
retirement.
(a) The services of a driver and an orderly.
(b) 1000 (one thousand) free local telephone calls per month.
(c) 1000 units of electricity as well as (25 hm3 of gas) per month and free supply
of water; and
(d) 200 liters of petrol per month.
Clause (61) omitted by the Finance Act, 2021. Earlier this amendment was made
through Tax Laws (Second Amendment) Ordinance, 2021. The omitted clause read
as follows:
(61) Any amount paid as donation to the following institution, foundations,
societies, boards, trusts and funds
Clause (64A) omitted by the Finance Act, 2021. Earlier this amendment was made
through Tax Laws (Second Amendment) Ordinance, 2021. The omitted clause read
as follows:
(64A) Any amount donated to the Prime Minister’s Special Fund for victims of
terrorism
Clause (28B) omitted by the Finance Act, 2021. Earlier this amendment was made
through Tax Laws (Second Amendment) Ordinance, 2021. The omitted clause read as
follows:
(28B) The rate of tax shall be 0.15% under section 231A on cash withdrawal by an
exchange company, duly licensed and authorized by the State Bank of Pakistan,
exclusively dedicated for its authorized business related transactions, subject to the
condition that a certificate issued by the concerned Commissioner Inland Revenue
for a financial year mentioning details and particulars of its Bank Account being
used entirely for business transactions is provided
PART III
REDUCTION IN TAX LIABILITY
(a)flying allowance by flight engineers, navigators of Pakistan Armed Forces,
Pakistani Airlines or Civil Aviation Authority, Junior Commissioned Officers or
other ranks of Pakistan Armed Forces; and
(b) Submarine allowance by the officers of the Pakistan Navy,
shall be taxed 2.5% as a separate block of income
1AA) Total allowances received by pilots of any Pakistani airlines shall be taxed at
a rate of 7.5%, provided that the reduction under this clause shall be available to so
much of the allowances as exceeds an amount equal to the basic pay.]
9B .The tax payable on the income, profits and gains of projects of ‘low cost
housing’ developed or approved by Naya Pakistan Housing and Development
Authority (NAPHDA) or under the Ehsaas Program me shall be reduced by 90%
Provided that exemption under this clause shall continue to remain available to
such projects which commence on or before the 30th day of June, 2024
17 .The tax payable by cotton ginners on their income and profits shall not be more
than sum of 1% of their turnover from cotton lint, cotton seed, cotton seed oil and
cotton seed cake:
Provided that the tax so payable shall be final tax in respect of their cotton ginning
and oil milling activities only‫۔‬

Important Shortcuts of ITO 2001

Federal Excise Act, 2005
(Federal Excise Duty (Fed)
Chapter I – Preliminary
1. Short title, extent and commencement
(1) This Act may be called the Federal Excise Act, 2005,

2. It extends to the whole of Pakistan

3. It shall come into force on 1st day of July, 2005

“Appellate Tribunal” means the Appellate Tribunal Inland Revenue established

under section 130 of the Income Tax Ordinance, 2001 (XLIX of 2001
“default surcharge” means surcharge levied under section 8
“dutiable goods” means all excisable goods specified in the First Schedule except
those which are exempt under section 16 of the Act;
“dutiable supply” means a supply of dutiable goods made by a manufacturer other
than a supply of goods which is exempt under section 16 of the Act;
“KIBOR” means Karachi Inter Bank Offered Rate prevalent on first day of each
quarter of the financial year;”
“sales tax mode” means the manner of collection and payment under the Sales Tax
Act, 1990, and rules made there under, of the duties of excise chargeable under this
Act specified to be collected and paid as if such duties were tax chargeable under
section 3 of the said Act and all the provisions of that Act and rules, notifications,
orders and instructions made or issued there under shall, mutatis mutandis, apply to
the excise duty so chargeable
(24A) “un-manufactured tobacco” means tobacco useable for manufacture of
cigarettes as manufactured by Green Leaf Threshing Units after processing and
conversion of tobacco green leaf
(24B) “whistleblower” means whistleblower as defined in section 42D of the
Federal Excise Act, 1990
(26) “Zero-rated” means duty of Federal excise levied and charged at the rate of
zero per cent under section 5 of this act.

CHAPTER II
LEVY, COLLECTION AND PAYMENT OF DUTY
Duty in respect of goods imported into Pakistan shall be levied and collected in the
same manner and at the same time as if it were a duty of customs payable under the
Customs Act, 1969 (IV of 1969), and the provisions of the said Act including
section 31A thereof shall apply
4. Filing of return and payment of duty etc.
For every month, a registered person shall furnish not later than the due date a true
and correct return in such manner and form as may be prescribed by the Board by
notification in the official Gazette
A registered person may, subject to approval of the [Commissioner Inland
Revenue] of Federal Excise having jurisdiction, file a revised return within one
hundred and twenty days of the filing of return under sub-section (1), to correct
any omission or wrong declaration made therein
5. Zero Rate 0% of duty and drawback of duty etc.
(1) Notwithstanding the provisions of section 3, the goods exported out of Pakistan
or such goods as may be, by a notification in the official Gazette, specified by the
Federal Government shall be charged to duty at the rate of zero per cent/ 0% and
adjustment of duty in terms of section 6 shall be admissible on such goods
8. Default surcharge.
If a person does not pay the duty due or any part thereof within the prescribed time
or receives a refund of duty or drawback or makes an adjustment which is not
admissible to him, he shall, in addition to the duty due, pay default surcharge at the
rate of 12 per cent” 6 per annum of the duty due, refund of duty or drawback
14C. Power of tax authorities to modify orders, etc
Where a question of law has been decided by a High Court or the Appellate
Tribunal in the case of a registered person, on or after first day of July 2005, the
Commissioner or an officer of Inland Revenue may, notwithstanding that he has
preferred an appeal against the decision of the High Court or made an application
for reference against the order of the Appellate Tribunal, as the case may be,
follow the said decision in the case of the said taxpayer in so far as it applies to
said question of law arising in any assessment pending before the Commissioner or
an officer of Inland Revenue, until the decision of the High Court or of the
Appellate Tribunal is reversed or modified
16. Exemptions.
(1) All goods imported, produced or manufactured in Pakistan and services
provided or rendered except such goods and services as are specified in the First
Schedule shall be exempt from whole of excise duties levied under section 3
17. Records.
(1) Every person registered for the purposes of this Act shall maintain and keep for
a period of 6 years or till such further period the final decision in any proceedings
including proceedings for assessment, appeal, revision, reference, petition and any,
proceedings before an Alternative Dispute Resolution Committee is finalized
18. Invoices.
(1) A person registered under this Act shall issue for each transaction a serially
numbered invoice at the time of clearance or sale of goods, including goods
chargeable to duty at the rate of zero per cent, or providing or rendering services
containing the following particulars, namely:–
i. name, address and registration number of the seller;
ii. name, address and registration number of the buyer;
iii. date of issue of the invoice;
iv. description and quantity of goods or as the case may be, description of services

In sub-section (1), where a registered person is also engaged in making supplies

taxable under the Sales Tax Act, 1990, such person shall not be required to issue a
separate invoice for excise purposes and the amount of excise duty and other
related information may in such cases be mentioned on the invoice issued for sales
tax purposes

CHAPTER III
OFFENCES AND PENALTIES
19. Offences, penalties, fines and allied matters.
(1) Any person who fails to file or files an incorrect return within the period
specified in sub-section (1) of section 4 or fails to make payment or makes short
payment of duty on any account, shall pay a penalty of [five thousand rupees in
case of non-filing of return and ten thousand rupees or five per cent of the duty
involved.
Provided that where a person files the return within fifteen days after the due date
he shall pay a penalty of one hundred rupees for each day of default”
Which may extend to twenty thousand rupees and in case of offence under clause
(b), the fine may extend to one hundred thousand rupees and he shall be punishable
with imprisonment for a term which may extend to five years or with both.
Where any goods are chargeable to duty on the basis of retail price under this Act
and the retail price is not indicated on the goods [and in case of cigarettes, retail
price, health warning and name of the manufacturer is not mentioned] in the
manner specified therein or in the rules made there under, the duty shall be charged
at the rate of 500 per cent ad valorem in case of cigarettes, and 40 per cent ad
valorem in case of goods other than cigarettes.

Any person who contravenes any provision of this Act or rules made there under
for which no penalty has specifically been provided in this section shall be liable to
pay a penalty of five thousand rupees or three percent of the amount of duty
involved, whichever is higher.

19A. Proceedings against authority and persons.

(1) Subject to section 41, the Board shall prescribe rules for initiating criminal
proceedings against any authority mentioned in section 29,
20. Appointment of Special Judges for trial of offences
A Special Judge shall be a person who is or has been or is qualified to be a
Sessions Judge
21. Trial of offences by Special Judge
The provisions of the Code of Criminal Procedure, 1898 (Act V of 1898), except
those of Chapter XXXVIII of that Code, shall apply to the proceedings of the court
of a Special Judge and, for the purposes of the said provisions, the court of a
Special Judge shall be deemed to be a Court of Session trying cases, and a person
conducting prosecution before the court of a Special Judge shall be deemed to be a
Public Prosecutor
21A. Appeal against the order of Special Judge.
An appeal against the order of a special Judge in respect of the trial of offence
shall lie to the respective High Court of the Province within 30 days of the passing
of the order and it shall be heard as an appeal under the Code of Criminal
Procedure 1898 (Act V of 1898) by a single judge of High Court
24. Officers required to Assist [Officer of Inland Revenue].
All officers of Police and Customs, sales tax, the civil armed forces and all officers
of Government engaged in the collection of land-revenue, and all village officers
shall assist the [officer of Inland Revenue] in the execution of this Act as and when
required by such Officers.

CHAPTER IV
SEARCHES, ARRESTS AND SEIZURES
25. Searches and arrests how to be made.
All searches or arrests made under this Act or any rules made there under and all
arrests made under this Act shall be carried out in accordance with the relevant
provisions of the Code of Criminal Procedure, 1898 V of 1898
CHAPTER V
POWERS, ADJUDICATION AND APPEALS
33. Appeals to Commissioner (Appeals)
Federal Excise officer aggrieved by any decision or order passed under this Act or
the rules made there under by a [officer of Inland Revenue up to the rank of
[Additional Commissioner Inland Revenue], other than a decision or order or
notice given or action taken for recovery of the arrears of duty under this Act or
rules made there under may within thirty days of receipt of such decision or order
prefer appeal there from to the [Commissioner] (Appeals).
Provided that such order shall be passed not later than [one hundred and twenty]
days from the date of filing of appeal or within such extended period, not
exceeding [sixty] days, as the [Commissioner] (Appeals) may, for reasons to be
recorded in writing, extend
34. Appeals to the Appellate Tribunal
(1) Any person or [officer of Inland Revenue] aggrieved by any of the following
orders may within sixty days of the receipt of such orders file appeal to the
Appellate Tribunal against such orders,–
(a) an order passed by the [Commissioner] (Appeals) and
(b) an order passed by the Board or the Commissioner Inland Revenue under
section 35
The Appellate Tribunal may admit, hear and dispose of the appeal as per procedure
laid down in sections 131 and 132 of the Income Tax Ordinance, 2001 (XLIX of
2001), and rules made there.
34A. Reference to High Court.
(1) Within 90 days of the communication of the order of the Appellate Tribunal
under sub-section (2A) of section 34, the aggrieved person or the Commissioner
may preference application, in the prescribed form along with a statement of the
case, to the High Court, stating any question of law arising out of such order
A reference to the High Court under this section shall be heard by a Bench of not
less than two judges of the High Court and, in respect of the reference , the
provisions of section 98 of the Code of Civil Procedure, 1908 (Act V of 1908),
shall apply
Where recovery of tax has been stayed by the High Court by an order, such order
shall cease to have effect on the expiration of a period of six month following the
day on which it was made unless the appeal is decided or such order is withdrawn
by the High Court earlier
37. Deposit, pending appeal, of duty demanded or penalty levied.
officer of Inland Revenue subordinate to him shall not issue notice under this
section or recovery rules made under the Federal Excise Rules, 2005 for recovery
of any tax due from a taxpayer if the said taxpayer has filed an appeal under
section 33 in respect of the order under which the tax sought to be recovered has
become payable and the appeal has not been decided by the Commissioner
(Appeals), subject to the condition that 10 per cent of the said amount of tax due
has been paid by the taxpayer

CHAPTER VI
SUPPLEMENTAL PROVISIONS
40. Power of Board to make rules

(1) The Board may make rules to carry into effect the purposes of any or all the
provisions of this Act including charging fee for processing of returns,
claims and other documents and for preparation of copies thereof.
For the purpose of this section, “whistleblower” means a person who reports
concealment or evasion of duty leading to detection or collection of duty,
corruption or misconduct, to the competent authority having power to take action
against the person or a federal excise authority committing fraud, corruption,
misconduct, or involved in concealment or evasion of duty
45AA. Licensing of brand name.
(1) Manufacturers of the specified goods shall be required to obtain brand license
for each brand or stock keeping unit (SKU) in such manner as may be prescribed
by the Board.
(2) Any specified brand and SKU found to be sold without obtaining a license
from the Board shall be deemed counterfeit goods and liable to outright
confiscation and destruction in the prescribed manner and such destruction and
confiscation shall be without prejudice to any other penal action which may be
taken under this Act ‫۔‬

New Section 45AA inserted by Finance Act, 2021

46. Audit.
(1) The [officer of Inland Revenue] authorized by the Board [or Chief
Commissioner] by designation may, once in a year, after giving advance notice in
writing, conduct audit of the records and documents of any person registered under
this Act.
Provided that if a registered person wishes to deposit the amount of duty not paid,
short paid or amount of duty evaded along with default surcharge during or after
the audit but before the [determination of liability under sub-section (2A)
conclusion of original adjudication proceedings, he may deposit such amount along
with twenty five percent of the amount of penalty prescribed under this Act or the
rules made there under and in such case, further proceedings in the case shall abate
The Board may appoint as many special audit panels as may be necessary,
comprising two or more members from the following –
(a) An officer or officers of Inland Revenue;
(b) A firm of Chartered Accountants as defined under the Chartered Accountants
Ordinance, 1961 (X of 1961);
(c) A firm of Cost and Management Accountants as defined under the Cost and
Management Accountants Act, 1966 (XIV of 1966)
47AB. Real-time access to information and databases.
(1) Notwithstanding anything contained in any law for the time being in force,
including but not limited to the National Database and Registration Authority
Ordinance, 2000 (Ordinance VIII of 2000) and the Emigration Ordinance, 1979
(Ordinance XVIII of 1979), arrangements shall be made to provide real-time
access of information and database to the Board in the prescribed form and manner
by
(a) the National Database and Registration Authority with respect to information
pertaining to National Identity Card (NIC), Pakistan Origin Card, Overseas
Identity Card, Alien Registration Card and other particulars contained in the citizen
database;
(b) The Federal Investigation Agency and the Bureau of Emigration and Overseas
Employment with respect to details of international travel;
(c) the Islamabad Capital Territory and provincial and local land record and
development authorities with respect to record-of-rights including digitized edition
of record-of-rights, periodic record, record of mutations and report of acquisition
of rights;
(d) The Islamabad Capital Territory and provincial excise and taxation departments
with respect to information regarding registration of vehicles, transfer of ownership
and other associated record;
(e) All electricity suppliers and gas transmission and distribution companies with
respect to particulars of a consumer, the units consumed and the amount of bill
charged or paid:
Provided that where the connection is shared or is used by a person other than the
owner, the name and NIC of the owner and the user shall also be furnished

6A Following Respective 75 paisa per

6[ 7*** ] telecommunic sub-heading call in
ation of 98.12 addition to
services: the rates of
Mobile phone duty specified
call, if call under Serial
duration No.6]
exceeds five
minutes;
New serial number 6A and entries relating thereto inserted by Finance Act, 2021.

Federal Excise Act , 2005 in Urdu

NFC AWARD

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