WORKER’S WELFARE FUND

Any amount of Worker’s Welfare Fund paid during a tax year will be excluded from total income. This amount is necessary to be paid by every industrial establishment, with a total income of Rupees one lac or more.

WORKERS’ PARTICIPATION FUND

Contribution made to Workers’ Participation Fund under the Com- panies Profit (Workers’ Participation) Act, 1968, is also a legally admissible expense. This section was inserted in the Income Tax Ordinance, 2001, by Finance Act, 2004. arriving at the taxable profits of a business:

DEDUCTIONS NOT ALLOWED

The following deductions are not allowed to be deducted before

Cess, Rate, Taxes

Any sum paid or payable by the person in Pakistan or outside Pakistan on account of any cess, rate or tax levied on the profits or gains of the business,

Tax Deducted at Source

Any amount of tax deducted at source under sections 149 to 158 from an amount received by the person.

Payment to Non-Resident

Any sum paid to a non-resident on account of salary, rent, brokerage or commission, profit on debt, payment for services or fee or any other sum chargeable under the provisions of Income Tax Ordinance, 2001, unless tax thereon has been paid or deducted and paid under sections 149 to 158 and

Expenditure on Entertainment in Excess of Prescribed Limits

Any entertainment expenditure in excess of such limits or in violation of such conditions as may be prescribed is not allowed as deduction.

Sum Paid to Unrecognized or Unapproved Fund Any contribution made by the person towards unrecognized provident

fund, superannuation fund, pension fund or gratuity fund which is not approved or recognized is not allowed as deduction.

Employer’s Contribution to a Provident Fund or Other Fund

Any payment of employer’s contribution to any provident fund or other fund established for the benefit of employee of the person is not deductible in computing the taxable profits of a business unless the person has made effective arrangements to deduct tax at source from any payment made from the fund which are chargeable under the head salary.

Fine or Penalty Paid or Payable for Violation of Law

Any fine or penalty paid or payable by the person for the violation of any law, rule or regulation.

Personal Expenditure Incurred by the Person

Any personal expenditure incurred by the person is not allowed as deduction.

Amount Transfer to Reserve Fund or Capitalized

Any amount transfer to a reserve fund or capitalized in any way is not allowed as deduction.

Remuneration Paid to a Member of the Association

Any profit on debt, brokerage, commission, salary Dfa Ho or other remunera- tion paid by an association of persons to a member of the association.

Limitation on the Allowability of Perquisites

Any expenditure incurred by an employer in providing perquisites to an employee in excess of 50% of the salary of the employee for the tax year. This clause has been omitted and will not be applicable with effect from tax year 2007.