TAX YEAR
The concept of tax year has been introduced in our income tax law through Income Tax Ordinance, 2001. Tax year is a period of time for which tax is to be calculated regarding a person.
The tax year may be of three types:
1. Normal Tax Year
It is a period of twelve months ending on 30th June and is known by the Calendar Year in which the ending date falls. Such a tax year is known as normal tax year.
Explanation
Period starting on 1.7.2008 and ending on 30.6.2009 is a normal tax year and will be known as tax year 2009. In some cases a normal tax year may be of less than twelve months, eg if a person starts a business on 1.9.2009 and ends his accounting period on 30.6.2010. This period of ten months will also be a “normal tax year” and will be tax year 2010. Tax years of most of the persons fall under this category.
2. Special Tax Year
In case of any person or class of persons or any source of income the Board may specify a period of twelve months as their tax year. For example, in case of all companies manufacturing cotton textiles the Board has specified that their tax year will commence on 1″ October and will end on 30th September following. This period of 12 months is tax year for all companies engaged in cotton textiles manufacturing. Such a tax year is called special tax year and is known by the calendar year relevant to normal tax year in which the ending date falls.
Explanation
These specific periods of time to be considered Dfa Ho as “tax year” have been declared by the Board keeping in view the nature of businesses. In this respect the following years have been specified by the Board through notification in the official Gazette:
