Under which conditions any profit on debt is treated as Pakistan source income if it is paid by: 3
Resident Person
Non-resident Person
Solution:-
Any profit on Debt will be considered Pakistani source of Income if
Resident Person:-
It is paid by a resident person and except it is not paid in respect of any other outstanding debt used by him for the purpose of business outside of Pakistan through a permanent establishment.
Non-Resident Person:-
It is paid by a non-resident person through permanent establishment in Pakistan.
Explain the concept of 'Permanent Establishment. 3
Permanent establishment means a fixed place through which the business is fully or partly commenced and includes; A permanent place for management, warehouse, sales outlet, factory or workshop, branch office etc.
Define the following under the Income Tax Ordinance 2001 with their respective sections: 5
Resident Individual
Resident Associations of Persons
Solution:
Resident Individual: It pertains to Section 82 of Income Tax Ordinance 2001.
An individual will be resident individual for a tax year if
· The individual is present in Pakistan for a period amounting to 183(One Hundred Eighty Three) days or more in a tax year OR
· Any individual is posted abroad being the employee of the Federal or Provincial Govt; in tax year.
Resident Association of Persons: It pertains to Section 84 of Income Tax Ordinance 2001.
An association of persons will be Resident Association of persons for a particular tax year if its control and management of affairs are situated totally or partly in Pakistan at any time in a tax year.
Determine total income of Mr. Sharif, a non-resident individual for tax year 2009. Relevant data is given below:
· Share of profit received in Singapore from a business controlled through a permanent establishment in Pakistan Rs 200,000.
· Salary income of Mr. Sharif from an employment in Pakistan Rs600,000
· Remittance received from China Rs 400,000
· Profit on debt received on deposits kept with a bank in Pakistan Rs 50,000
Particulars
Gross Income for Non-Resident
Share of Profit Received through PE in Pakistan
200,000/-
Salary
600,000/-
Remittance Received
NIL
Profit on Debt
50,000/-
TOTAL
850,000/-
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