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Under which conditions any royalty is treated as Pakistan source income if it
is paid by:  (3)

Answer: 

i. Resident person

ii. Non-resident person

A royalty shall be Pakistan-source income if it is:

• Paid by resident person, except where the royalty is payable in respect of any right,

property, or information used, or services utilized for the purposes of a business carried on

by the resident outside Pakistan through a permanent establishment; or

• Borne by a permanent establishment in Pakistan of a non-resident person

Is award to a person by the president of Pakistan taxable? also write the section of those awards (3)

Answer: 

Section 45 President's Honour

(1) Any allowance attached to any Honour, Award, or Medal awarded to a person by the President of

Pakistan shall be exempt from tax under this Ordinance.

(2) Any monetary award granted to a person by the President of Pakistan shall be exempt from tax under

this Ordinance.

.Explain Aid agreement w.r.t salary income (5)

Answer: 

Any salary received by an individual (not being a citizen of Pakistan) shall be exempt from tax

under this Ordinance to the extent provided for in an Aid Agreement between the Federal

Government and a foreign government or public international organization, where:

(a)the individual is either not a resident individual or a resident individual solely by reason of the

performance of services under the Aid Agreement;

(b) if the Aid Agreement is with a foreign country, the individual is a citizen of that country; and

(c) The salary is paid by the foreign government or public international organization out of funds

or grants released as aid to Pakistan in pursuance of such Agreement.

Determine total income of Mr. Sharif, a non-resident individual for tax year
2009. Relevant data is given below: (5)
i. Share of profit received in Singapore from a business controlled
through a permanent establishment in Pakistan Rs 200,000.
ii. Salary income of Mr. Sharif from an employment in Pakistan
Rs600,000
iii. Remittance received from China Rs 400,000
iv. Profit on debt received on deposits kept with a bank in Pakistan Rs
50,000

 

Solution: p#33

                     Particulars                                           Gross total income if non-resident

Share of profit received                                                                200,000

Salary income                                                                               600,000

Remittance received                                                                          NIL

Profit on debt received                                                                       NIL

total income                                                                                     800,000

Question No: 30 ( Marks: 3 )

If Mr. Kamal resident of Pakistan suffered a foreign loss against the income

received from foreign country in tax year. What is the treatment of such

foreign loss? Which section deals this kind of loss? Such losses can be

carried forward up to how many years?

Answer

Foreign losses Sec.104: Deductible expenditures incurred by a person in deriving foreign source

income chargeable to tax under a head of income shall be deductible only against that income.

Foreign losses carried forward up to 6 years

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