History of Income Tax Law in Pakistan

History of Income Tax Law in Pakistan: 1) Promulgation of Income Tax Act, 1922: When Pakistan came into being, the Government of Pakistan promulgated promulgated 2)

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the Income Tax Act, 1922, as amended upto the date for regulating the taxation system in Pakistan.

An Applicability of the Income Tax Act, 1922: The provisions sions of of the Act were were extended extended to the whole of Pakistan Pakistan except except the

specified areas.

Formation of the Taxation Inquiry Committee: "A Taxation Inquiry Inquiry Committee", was introduced in 1958 which which was consist consist of

officials and the representatives of trade and and commerce.

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Recommendations of Taxation Inquiry Committee: "Taxation Inquiry Committee" submitted submitted a report after keen analysis of Tax Act, 1922. 5)

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prevailing tax system and suggested some recommendations. Some of the

Abolishment of Super Tax: Before 1959, 1959, super super tax was imposed on the incomes of all all the persons but

in registered stered firm and and companies. companies.

Expression of Rate Slab as a Percentage of Income: In 1959, the rates of each slab were expressed as a percentage of income

considering the recommendations of "Taxation "Taxation Inquiry committee".

Change in Financial Year: st st st th Before 1960, the financial year was considered from 1 April to 31 March but in 1960, it was changed from 1 July to 30 June. Introduction of Income Tax Committee: In 1961, FBR FBR introduced an "Income Tax Committee". Main purpose of introduction of such committee was to make recommendations recommendations for Introduction of Self Assessment Scheme: Before 1965, an assessment officer was assessed the income and

recommendations were accommodated accommodated which resulted in the amendment

of Income

simplification of the Income Income Tax Act, 1922 and procedure of taxation.

determined the tax liability of the person but in 1965, "Self Assessment

Scheme" was introduced.

10) Promulgation and Enforcement Enforcement of the the Income Income Tax Tax Ordinance, Ordinance, 1979: Till 1979, lot of amendments were made in the context of the Income Tax Act, 1922. As a result of these amendments, the Act became a complicated law and difficulties arose in its working. Keeping these difficulties in view, the Government promulgated a new income tax law namely "The Income Tax Ordinance, nance, 1979" through the Finance Ordinance Ordinance on June 28, 1979 and included all the basic concept concept of the repealed Act, so that the benefit benefit of the whole case law built up over over the last 57 years is not rendered useless. 11)

Formation of National Tax Reform Commission: In 1985, the Federal Government formed formed a National Tax Reform Commission. It was consist of members members of Senate and National Assembly, Assembly, high government officials and renowned renowned industrialist. Major purpose of such commission commission was to suggest way and means to improve the existing structure of tax laws in Pakistan. 12)

Income Tax Survey 1999-2000: In 1999-2000, under the Income Tax Ordinance, 1979, an income tax survey was conducted to analyze the prevailing taxation structure and to procure the

Introduction of Tax Amnesty Schemes: Many tax amnesty amnesty schemes were introduced under the Income Income Tax Latest scheme was introduced in the year 2002.

suggestions and recommendations recommendations from surveyors.

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Ordinance, 1979. These schemes were introduced to provide a chance chance to

Promulgation of the Income Tax Ordinance, 2001:  After 22 years of the promulgation of the Income Income Tax Ordinance, 2001, to modernize the taxation system, a government government of Pakistan introduced a new promulgated on September September 13, 2001. It was published published in the Extraordinary nary Gazette of of Pakistan at pages bearing Nos. 969 to 1217.

black money holders, so that they can change their black black money money into white white

money.

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Short Title of the Income Tax Ordinance, 2001: Under section section 1, the Ordinance Ordinance specifies specifies that "The Income Income Tax Ordinance, Applicability of the Income Tax Ordinance, 2001: Under section 1, the Ordinance specifies specifies that the Income Tax Ordinance, 2001 2001

income tax law namely, "The Income Tax Tax Ordinance, 2001" which was

2001" shall shall be the short short title of the law.

shall extend to the whole of Pakistan. Pakistan.

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Date of the Enforcement Enforcement of of the Income Tax Tax Ordinance Ordinance 2001: Section 1 of the Ordinance, empowers the Federal Government to notify the date from which which the Income Income Tax Ordinance, Ordinance, 2001 shall came into into force. The June, 2002, announced that the Income Tax Ordinance, 2001 shall came into force on the first day of July, 2002. 18) Status of the Income Tax Ordinance, 2001:

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Federal Government, vide its notification notification No. S.R.O. S.R.O. 381 (1)/ (1)/ 2002, dated 15

According to section 3 "The Income Tax Ordinance, 2001" overrides other the country, the provisions of the Income Tax Ordinance, 2001 shall prevail. 19) the

Purpose of the Income Tax Ordinance, 2001: The preamble of the Ordinance specifies the object of law. It specifies that the income tax.

laws enforceable in Pakistan. It means, in case of any contradiction

between the provisions of the Income Tax Ordinance, 2001 and any other

Income Tax Ordinance, 2001, is promulgated to consolidate and to amend law

law of 

relating income tax and provide for matters ancillary to and connected with

20) Income Tax Rules, 2002: The FBR under the authority of section 237 of the Income Tax Ordinance, 2001 made the Income Tax rules, 2002. These rules were published on July1, 2002 in Extraordinary Gazette of Pakistan at pages 1819 to 1966. 21)

Finance Act, 2009: To update the income tax law in Pakistan according to the requirements of time, different methods of changes have been adopted by competent income tax source of change, it is presented in the month of June in each year. Finance Act, 2009 is one step to continuance process of change.

authorities like S.R.O's and Circular’s etc. Finance Act is the regular