ILLUSTRATION
Sodhi Company Limited has a paid up capital of Rs. 500,000 consisting of 50,000 shares of Rs. 10 each. On 31.12.2007, company’s balance sheet shows accumulated profits of Rs. 150,000. The company has to be liquidated The official liquidator realized Rs 450,000 and distribution among the shareholders was made at the rate of Rs. 9 per share. Mr. Akram had 20,000 shares in the company
Solution
Mr. Akram received a total of Rs. 180,000 (20,000 9). Out of this amount Rs 3 per share will be treated as dividend. That means Rs. 60,000
(Rs 20,000 3) is dividend because the company at the time of liquidation
possessed Rs 1.50,000 as accumulated profits and every share is receiving
Rs. 3 (150,000 50,000) from such profits
ELIGIBLE PERSON
Any Pakistani individual who holds either a valid National Tax Number or Computerized National Identity Card or a National Identity Card in case of overseas Pakistani will be known as Eligible Person’. This term is used for the purpose of providing tax credit under Voluntary Pension System
EMPLOYMENT
(a) a directorship or any other office involved in the management of a company.
(b) a position due to which the holder is entitled to a fixed or ascertainable remuneration, or
(c) the holding or acting in any public office
FINANCIAL INSTITUTION
“Financial institution” means an institution as defined under the Com- panies Ordinance, 1984, by the Federal Government as a financial institution
FINANCE SOCIETY
Finance society under A co-operative society engaged in the above mentioned activities is also included in the definition of finance society
FIRM
Under the Income Tax Ordinance, 2001, “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
FOREIGN SOURCE INCOME
This is a new concept which has been introduced through the Income
Tax Ordinance, 2001 According to the Ordinance, an amount shall be foreign
source income to the extent to which it is not a Pakistan source income.
INCOME
(a) any amount chargeable to tax under the Income Tax Ordinance, 2001,
(b) any amount subject to collection or deduction of tax at the time of import of goods,
Explanation
It is necessary for Collector of Customs at the time of import of goods to collect the tax at the prescribed rates from the importers The value of the import has been treated as income in the hands of importer under this clause.
(c) any payment received by a resident from a prescribed person for supply of goods and services;
(d) any amount received as export proceeds.
(e) amounts received on prizes and winnings.
Explanation
The total amount received for sale of goods and services, amount of
foreign exchange received as export proceeds and amount received on prizes and winnings have been treated as income under the law. This has been done because in all these cases it is necessary for the person making the payment to deduct tax from such amounts. any amount collected from a person being the owner of goods transport vehicle by the Excise Department.
Explanation
Owners of vehicles have to pay advance tax under the law. The amount so charged is included in the definition of income.
(g) any other amount deducted or collected by any Dfa Ho person at source is included in the definition of income.
(h) any loss of income.
Explanation
(a) above there is possibility of loss while amount chargeable to tax is being calculated. As such loss is duly considered by the law so it has also been included in the definition of income.
