INCOME TAX ORDINANCE, 1979

The Income Tax Ordinance, 1979, was promulgated through the Finance Ordinance on June 28, 1979 and came into force on the 1″ of July of the same year. It adopted all the basic concepts of the repealed Income Tax Act, 1922, so that the benefit of the whole case law built up over the last 57 years is not rendered useless.

This law continued to prevail in the country for 22 years. Under this law an Income Tax Survey was conducted in 1999-2000. Moreover, the government issued many tax amnesty schemes, the latest one in year 2000 yielded a revenue of Rs. 12 billion. However, government felt that after 22 years of service, the law is not fulfilling the requirements of a modern taxation system. Thus, the government formed a Commission and on the basis of its recommendations a new Income Tax Ordinance was promulgated with effect from 1″ July 2002.

This Ordinance has been drafted with the following objects:

1. To re-arrange the provisions in a more systematic and logical form;

2. To simplify the law so as to make it easily understandable by the taxpayers;To plug loop-holes, remove lacunae and ambiguities;

4. To rationalize and amplify the existing provisions and to introduce new ones, where necessary, in the light of the decisions of the superior courts,

5. To eliminate, as far as possible, tax evasion;

6. To evolve a fair and equitable tax system which is capable of voluntary compliance and effective administration; and

7. To introduce a system of assessment designed to dfaho create an atmosphere of mutual trust and confidence between the taxpayers and the tax officials.