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Income Tax

What Is Income Tax?



Tax is an involuntary fee imposed on an individual or a corporation by the federal government. It can be local, regional or even national. A tax set as per a person’s ability or income is called income tax. Therefore, income tax is the highly equitable form of taxation. By law, all capable individuals and businesses must file income tax every year. The government uses this collection of the tax to fund their activities and work. Tax Time is one of the best income tax consultants in Lahore, assisting the clients with matters on taxation. Income tax is progressive by nature; in a way, it reduces the economic disparity. The tax rates and method of calculating taxable income are different as per fiscal status of the taxpayer.

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Filing of Income Tax Returns

For an individual, filing income tax return is a tiresome and uninteresting process. Filing of income tax return in Pakistan involves a prolong calculation and writings, for which people spend long hours on working. It may become a stressful experience, even if it doesn’t include a large data.

The reason is that it involves things that are not generally known to an individual. Also, there are specific deadlines to meet, which makes the process even more unnerving. The details on income tax filing in Pakistan are available under obligations of to file income tax declarations, issued by Federal Board of Revenue, Pakistan.

Who Needs To File Income Tax Returns?


Following is a list of people that are required to submit a return of income for a tax year under Income Tax Ordinance (2001). Check if you fall in any of these categories.

  • A registered company
  • An individual (other than a company) who has a taxable income for the year exceeding the maximum amount that is not chargeable to tax under this Ordinance for the year (Under PKR 400,000 as per Income Tax Ordinance 2001).
  • A non-profit organization as mentioned in clause (36) of section 2
  • A welfare institution approved under clause (58) of Part I of the Second Schedule.
  • Every individual subjected to tax in respect of any of the two preceding years.
  • Every individual claiming a loss to make progress with the Ordinance for a tax year.
  • Every individual who possesses immovable property with a land area of five hundred square yards or more situated in a rating area. in regions that fall inside as far as possible existing instantly before the commencement of Local Government laws in the provinces; or zones in a Cantonment; or the Islamabad Capital Territory.
  • Every individual who possesses a flat of area two thousand square feet or more situated in a rating region.
  • Every individual who claims to own a motor vehicle having engine capacity above 1000 CC.
  • Every individual who possesses a National Tax Number.
  • Every individual who is the holder of commercial or industrial connection of electricity where the amount of annual bill exceeds the prescribed limit (rupees five hundred thousand or more)
  • Every individual registered at any chamber of commerce and industry or any trade or business association or any market including Pakistan Engineering Council, Pakistan, Medical and Dental Council, Pakistan Bar Council or any Provincial Bar Council, Institute of Chartered Accountants of Pakistan or Institute of Cost and Management Accountants of Pakistan.
  • Every individual registered at any chamber of commerce and industry or any trade or business association or any market including Pakistan Engineering Council, Pakistan, Medical and Dental Council, Pakistan Bar Council or any Provincial Bar Council, Institute of Chartered Accountants of Pakistan or Institute of Cost and Management Accountants of Pakistan.