Section 2 Definitions in Income Tax Ordinance 2001 updated till 30 June 2014
For CA – Pakistan, ACCA
1-Accumulated profits
In relation to distribution or payment of a dividend, include —
- any reserve made up wholly or partly of any allowance, deduction, or exemption admissible under this Ordinance;
- for the purposes of sub-clauses (a), (b) and (e) of clause (19)” all profits of the company including income and gains of a trust up to the date of such distribution or such payment, as the case may be; and
- for the purposes of sub-clause (c) of clause (19), includes all profits of the company including income and gains of a trust up to the date of its liquidation.
1A- Amalgamation
Means the merger of one or more banking companies or non-banking financial institutions, or insurance companies, or companies owning and managing industrial undertakings or companies engaged in providing services and not being a trading company or companies in either case at least one of them being a public company, or a company incorporated under any law, other than Companies Ordinance, 1984 (XLVII of 1984), for the time being in force, the company or companies which so merge being referred to as the “amalgamating company” or companies and the company with which they merge or which is formed as a result of merger, as the “amalgamated company” in such manner that –
- the assets of the amalgamating company or companies immediately before the amalgamation become the assets of the amalgamated company by virtue of the amalgamation, otherwise than by purchase of such assets by the amalgamated company or as a result of distribution of such assets to the amalgamated company after the winding up of the amalgamating company or companies; and
- The liabilities of the amalgamating company or companies immediately before the amalgamation become the liabilities of the amalgamated company by virtue of the amalgamation.
2-Appellate Tribunal
Means the Appellate Tribunal Inland Revenue established under section 130.
3-Approved gratuity fund
Means a gratuity fund approved by the Commissioner in accordance with Part III of the Sixth Schedule.
3A-Approved Annuity Plan
Means an Annuity Plan approved by Securities and Exchange Commission of Pakistan (SECP) under Voluntary Pension System Rules, 2005 and offered by a Life Insurance Company registered with the SECP under Insurance Ordinance, 2000 (XXXIX of 2000).
3B-Approved Income Payment Plan
Means an Income Payment Plan approved by Securities and Exchange Commission of Pakistan (SECP) under Voluntary Pension System Rules, 2005 and offered by a Pension Fund Manager registered with the SECP under Voluntary Pension System Rules, 2005.
3C-Approved Pension Fund
Means Pension Fund approved by Securities and Exchange Commission of Pakistan (SECP) under Voluntary Pension System Rules, 2005, and managed by a Pension Fund Manager registered with the SECP under Voluntary Pension System Rules, 2005.
3D-Approved Employment Pension or Annuity Scheme
Means any employment related retirement scheme approved under this Ordinance, which makes periodical payment to a beneficiary i.e. pension or annuity such as approved superannuation fund, public sector pension scheme and Employees Old-Age Benefit Scheme.
3E-Approved Occupational Savings Scheme
Means any approved gratuity fund or recognized provident fund.
4-approved superannuation fund
Means a superannuation fund, or any part of a superannuation fund, approved by the Commissioner in accordance with Part II of the Sixth Schedule.
5-assessment
Includes provisional assessment, re-assessment and amended assessment and the cognate expressions shall be construed accordingly.
5A-Assessment year
Means assessment year as defined in the repealed Ordinance.
5B-Asset Management Company
Means an asset management company as defined in the Non-Banking Finance Companies and Notified Entities Regulations, 2007;]
6-association of persons
Means an association of persons as defined in section 80;
7-banking company
Means a banking company as defined in the Banking Companies Ordinance, 1962 (LVII of 1962) and includes anybody corporate which transacts the business of banking in Pakistan.
8-Board
Means the Central Board of Revenue established under the Central Board of Revenue Act, 1924 (IV of 1924), and on the commencement of Federal Board of Revenue Act, 2007, the Federal Board of Revenue established under section 3 thereof.
9-bonus shares
Includes bonus units in a unit trust.
10-business
Includes any trade, commerce, manufacture, profession, vocation or adventure or concern in the nature of trade, commerce, manufacture, profession or vocation, but does not include employment.
11-capital asset
Means a capital asset as defined in section 37.
11A-charitable purpose
Includes relief of the poor, education, medical relief and the advancement of any other object of general public utility.
11B-Chief Commissioner
Means a person appointed as Chief Commissioner Inland Revenue under section 208 and includes a Regional Commissioner of Income Tax and a Director-General of Income Tax and Sales Tax.
11C-Collective Investment Scheme
Shall have the same meanings as are assigned under the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003.
12-Company
Means a company as defined in section 80;
13-Commissioner
Means a person appointed as Commissioner Inland Revenue under section 208 and includes any other authority vested with all or any of the powers and functions of the Commissioner.
13A-Commissioner (Appeals)
Means a person appointed as Commissioner Inland Revenue (Appeals) under section 208.
13B-Contribution to an Approved Pension Fund
Means contribution as defined in rule 2(j) of the Voluntary Pension System Rules, 2005.
14-co-operative society
Means a co-operative society registered under the Co-operative Societies Act, 1925 (VII of 1925) or under any other law for the time being in force in Pakistan for the registration of co-operative societies.
15-debt
Means any amount owing, including accounts payable and the amounts owing under promissory notes, bills of exchange, debentures, securities, bonds or other financial instruments.
16-deductible allowance
Means an allowance that is deductible from total income under Part IX of Chapter III.
17-depreciable asset”
Means a depreciable asset as defined in section 22.
18-disposal
In relation to an asset, means a disposal as defined in section 75;
19-dividend
Includes —
- any distribution by a company of accumulated profits to its shareholders, whether capitalized or not, if such distribution entails the release by the company to its shareholders of all or any part of the assets including money of the company;
- any distribution by a company, to its shareholders of debentures, debenture-stock or deposit certificate in any form, whether with or without profit, to the extent to which the company possesses accumulated profits whether capitalized or not;
- any distribution made to the shareholders of a company on its liquidation, to the extent to which the distribution is attributable to the accumulated profits of the company immediately before its liquidation, whether capitalized or not;
- any distribution by a company to its shareholders on the reduction of its capital, to the extent to which the company possesses accumulated profits, whether such accumulated profits have been capitalized or not;
- any payment by a private company [as defined in the Companies Ordinance, 1984 (XLVII of 1984)] or trust of any sum (whether as representing a part of the assets of the company or trust, or otherwise) by way of advance or loan to a shareholder or any payment by any such company or trust on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company or trust, in either case, possesses accumulated profits;
But does not include —
- a distribution made in accordance with sub-clause (c) or (d) in respect of any share for full cash consideration, or redemption of debentures or debenture stock, where the holder of the share or debenture is not entitled in the event of liquidation to participate in the surplus assets;
- any advance or loan made to a shareholder by a company in the ordinary course of its business, where the lending of money is a substantial part of the business of the company;
- any dividend paid by a company which is set off by the company against the whole or any part of any sum previously paid by it and treated as a dividend within the meaning of [sub-clause] (e) to the extent to which it is so set off; and
- Remittance of after tax profit by a branch of Petroleum Exploration and Production (E&P) foreign company, operating in Pakistan.
- remittance of after tax profit of a branch of a foreign company operating in Pakistan;
19A-Eligible Person
for the purpose of Voluntary Pension System Rules, 2005, means an individual Pakistani who holds a valid National Tax Number or Computerized National Identity Card [or National Identity Card for Overseas Pakistanis] issued by the National Database and Registration Authority
Provided that the total tax credit available for the contribution made to approved employment pension or annuity scheme and approved pension fund under Voluntary Pension System Rules, 2005, should not exceed the limit prescribed or specified in section 63.
19B-The expressions “addressee”, “automated”, “electronic”, “electronic signature”, “information”, “information system”, “originator” and “transaction”,
Shall have the same meanings as are assigned to them in the Electronic Transactions Ordinance, 2002 (LI of 2002).
19C-electronic record
includes the contents of communications, transactions and procedures under this Ordinance, including attachments, annexes, enclosures, accounts, returns, statements, certificates, applications, forms, receipts, acknowledgements, notices, orders, judgments, approvals, notifications, circulars, rulings, documents and any other information associated with such communications, transactions and procedures, created, sent, forwarded, replied to, transmitted, distributed, broadcast, stored, held, copied, downloaded, displayed, viewed, read, or printed, by one or several electronic resources and any other information in electronic form.
19D-electronic resource
includes telecommunication systems, transmission devices, electronic video or audio equipment, encoding or decoding equipment, input, output or connecting devices, data processing or storage systems, computer systems, servers, networks and related computer programs, applications and software including databases, data warehouses and web portals as may be prescribed by the Board from time to time, for the purpose of creating electronic record.
19E-telecommunication system
includes a system for the conveyance, through the agency of electric, magnetic, electro-magnetic, electro-chemical or electro-mechanical energy, of speech, music and other sounds, visual images and signals serving for the impartation of any matter otherwise than in the form of sounds or visual images and also includes real time online sharing of any matter in manner and mode as may be prescribed by the Board from time to time.
20-Employee
Means any individual engaged in employment;
21-employer
Means any person who engages and remunerates an employee;
22-Employment
Includes –
- a directorship or any other office involved in the management of a company;
- a position entitling the holder to a fixed or ascertainable remuneration; or
- the holding or acting in any public office;
23-Fee for technical services
Means any consideration, whether periodical or lump sum, for the rendering of any managerial, technical or consultancy services including the services of technical or other personnel, but does not include —
- consideration for services rendered in relation to a construction, assembly or like project undertaken by the recipient; or
- consideration which would be income of the recipient chargeable under the head “Salary”;
23A-filer
Means an a tax payer whose name appears in the active taxpayers’ list issued by the Board from time to time or is holder of taxpayer’s card;
24-financial institution
Means an institution as defined under the Companies Ordinance, [1984 (XLVII of 1984).
25-finance society
Includes a co-operative society which accepts money on deposit or otherwise for the purposes of advancing loans or making investments in the ordinary course of business;
26-firm
Means a firm as defined in section 80;
27-foreign-source income
Means foreign-source income as defined in sub-section (16) of section 101.
28-House Building Finance Corporation
Means the Corporation constituted under the House Building Finance Corporation Act, 1952 (XVIII of 1952);
29-income
Includes any amount chargeable to tax under this Ordinance, any amount subject to collection or deduction of tax under section 148, 150, 152(1), 153, 154, 156, 156A, 233, 233A and], sub-section (5) of section 234, and 236M any amount treated as income under any provision of this Ordinance, any loss of income.
29A-income year
Means income year as defined in the repealed Ordinance.
29B-Individual Pension Account
Means an account maintained by an eligible person with a Pension Fund Manager approved under the Voluntary Pension System Rules, 2005.
29C-Industrial undertaking
Means —
- an undertaking which is set up in Pakistan and which employs,—
- ten or more persons in Pakistan and involves the use of electrical energy or any other form of energy which is mechanically transmitted and is not generated by human or animal energy; or
- twenty or more persons in Pakistan and does not involve the use of electrical energy or any other form of energy which is mechanically transmitted and is not generated by human or animal energy:
And which is engaged in,—
- the manufacture of goods or materials or the subjection of goods or materials to any process which substantially changes their original condition; or
- ship-building; or
- generation, conversion, transmission or distribution of electrical energy, or the supply of hydraulic power; or
- the working of any mine, oil-well or any other source of mineral deposits; and
- Any other industrial undertaking which the Board may by notification in the official gazette, specify.
30-intangible
Means an intangible as defined in section 24;
30A-investment Company
Means an investment company as defined in the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003;]
30AA-KIBOR
Means Karachi Inter Bank Offered Rate prevalent on the first day of each quarter of the financial year;]
30B-leasing company
Means a leasing company as defined in the Non-Banking Finance Companies and Notified Entities Regulation, 2007;]
31-liquidation
In relation to a company, includes the termination of a trust;
31A-Local Government
Shall have the same meaning as defined in the Punjab Local Government Ordinance, 2001 (XIII of 2001), the Sindh Local Government Ordinance, 2001 (XXVII of 2001), the NWFP Local Government Ordinance, 2001 (XIV of 2001) and the Baluchistan Local Government Ordinance, 2001 (XVIII of 2001);]
32-member
In relation to an association of persons, includes a partner in a firm;
33-minor child
Means an individual who is under the age of eighteen years at the end of a tax year;
34-modaraba
Means a modaraba as defined in the Modaraba Companies and Modarabas (Floatation and Control) Ordinance, 1980 (XXXI of 1980).
35-modaraba certificate
Means a modaraba certificate as defined in the Modaraba Companies and Modarabas (Floatation and Control) Ordinance, 1980 (XXXI of 1980).
35A-Mutual Fund
Means a mutual fund registered or approved by the Securities and Exchange Commission of Pakistan.
35AA-NCCPL
Means National Clearing Company of Pakistan Limited, which is a company incorporated under the Companies Ordinance, 1984 (XLVII of 1984) and licensed as “Clearing House” by the Securities and Exchange Commission of Pakistan.
35B-non-banking finance company
Means an NBFC as defined in the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003.
35C-non-filer
Means a person who is not a filer.
36-non-profit organization
Means any person other than an individual, which is —
- established for religious, educational, charitable, welfare or development purposes, or for the promotion of an amateur sport;
- formed and registered under any law as a non-profit organization;
- approved by the Commissioner for specified period, on an application made by such person in the prescribed form and manner, accompanied by the prescribed documents and, on requisition, such other documents as may be required by the Commissioner;
And none of the assets of such person confers, or may confer, a private benefit to any other person.
37-non-resident person
Means a non-resident person as defined in Section 81.
38-non-resident taxpayer
Means a taxpayer who is a non-resident person.
38A-Officer of Inland Revenue
Means any Additional Commissioner Inland Revenue, Deputy Commissioner Inland Revenue, Assistant Commissioner Inland Revenue, Inland Revenue Officer, Inland Revenue Audit Officer or any other officer however designated or appointed by the Board for the purposes of this Ordinance.
39-Originator
Means Originator as defined in the Asset Backed Securitization Rules, 1999.
40-Pakistan-source income
Means Pakistan-source income as defined in section 101.
40A-Pension Fund Manager
Means an asset management company registered under the Non-Banking Finance Companies (Establishment and Regulations) Rules, 2003, or a life insurance company registered under Insurance Ordinance, 2000 (XXXIX of 2000), duly authorized by the Securities and Exchange Commission of Pakistan and approved under the Voluntary Pension System Rules, 2005, to manage the Approved Pension Fund.
41-permanent establishment
In relation to a person, means a fixed place of business through which the business of the person is wholly or partly carried on, and includes –
- a place of management, branch, office, factory or workshop, [premises for soliciting orders, warehouse, permanent sales exhibition or sales outlet,] other than a liaison office except where the office engages in the negotiation of contracts (other than contracts of purchase);
- a mine, oil or gas well, quarry or any other place of extraction of natural resources;
(ba) an agricultural, pastoral or forestry property;
- a building site, a construction, assembly or installation project or supervisory activities [connected] with such site or project [but only where such site, project and its [connected] supervisory activities continue for a period or periods aggregating more than ninety days within any twelve-months period;
- the furnishing of services, including consultancy services, by any person through employees or other personnel engaged by the person for such purpose;
- a person acting in Pakistan on behalf of the person (hereinafter referred to as the “agent ”), other than an agent of independent status acting in the ordinary course of business as such, if the agent –
- has and habitually exercises an authority to conclude contracts on behalf of the other person;
- has no such authority, but habitually maintains a stock-in-trade or other merchandise from which the agent regularly delivers goods or merchandise on behalf of the other person; or
- any substantial equipment installed, or other asset or property capable of activity giving rise to income;
42-person
Means a person as defined in section 80;
43-pre-commencement expenditure
Means a pre-commencement expenditure as defined in section 25;
44-prescribed
Means prescribed by rules made under this Ordinance;
44A-principal officer
Used with reference to a company or association of persons includes –
- a director, a manager, secretary, agent, accountant or any similar officer; and
- any person connected with the management or administration of the company or association of persons upon whom the Commissioner has served a notice of treating him as the principal officer thereof.
45-private Company
Means a company that is not a public company;
46-profit on a debt
Whether payable or receivable, means —
- any profit, yield, interest, discount, premium or other amount, owing under a debt, other than a return of capital; or
- any service fee or other charge in respect of a debt, including any fee or charge incurred in respect of a credit facility which has not been utilized;
47-public Company
Means —
(a) a company in which not less than fifty per cent of the shares are held by the Federal Government or Provincial Government;
(ab) a company in which not less than fifty per cent of the shares are held by a foreign Government, or a foreign company owned by a foreign Government;
(b) a company whose shares were traded on a registered stock exchange in Pakistan at any time in the tax year and which remained listed on that exchange at the end of that year; or
(c) a unit trust whose units are widely available to the public and any other trust as defined in the Trusts Act, 1882 (II of 1882).
47A-Real Estate Investment Trust (REIT) Scheme
Means a REIT Scheme as defined in the Real Estate Investment Trust Regulations, 2008.
47B-Real Estate Investment Trust Management Company (REITMC)
Means REITMC as defined under the Real Estate Investment Trust Regulations, 2008.
48-recognised provident fund
Means a provident fund recognized by the Commissioner in accordance with Part I of the Sixth Schedule.
49-rent
Means rent as defined in sub-section (2) of section 15 and includes an amount treated as rent under section 16.
49A-repealed Ordinance
Means Income Tax Ordinance, 1979 (XXXI of 1979).
50-resident Company
Means a resident company as defined in section 83.
51-resident individual
Means a resident individual as defined in section 82.
52-resident person
Means a resident person as defined in section 81.
53-resident taxpayer
Means a taxpayer who is a resident person.
54-royalty
Means any amount paid or payable, however described or computed, whether periodical or a lump sum, as consideration for —
- the use of, or right to use any patent, invention, design or model, secret formula or process, trademark or other like property or right;
- the use of, or right to use any copyright of a literary, artistic or scientific work, including films or video tapes for use in connection with television or tapes in connection with radio broadcasting, but shall not include consideration for the sale, distribution or exhibition of cinematograph films;
- the receipt of, or right to receive, any visual images or sounds, or both, transmitted by satellite, cable, optic fiber or similar technology in connection with television, radio or internet broadcasting;
- the supply of any technical, industrial, commercial or scientific knowledge, experience or skill;
- the use of or right to use any industrial, commercial or scientific equipment;
- the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such property or right as mentioned in [sub-clauses] (a) through (e); [and]
- the disposal of any property or right referred to in [sub-clauses] (a) through (e);
55-salary
Means salary as defined in section 12.
56-Schedule
Means a Schedule to this Ordinance.
57-securitization
Means securitization as defined in the Asset Backed Securitization Rules, 1999.
58-share
In relation to a company, includes a modaraba certificate and the interest of a beneficiary in a trust (including units in a trust);
59-shareholder
In relation to a company, includes a modaraba certificate holder, a unit holder of a unit trust and a beneficiary of a trust.
59A-Small Company
Means a company registered on or after the first day of July, 2005, under the Companies Ordinance, 1984 (XLVII) of 1984, which,—
- has paid up capital plus undistributed reserves not exceeding twenty-five million rupees;
(ia) has employees not exceeding two hundred and fifty any time during the year
- has annual turnover not exceeding two hundred and fifty million rupees; and
- is not formed by the splitting up or the reconstitution of company already in existence.
59B-Special Judge
Means the Special Judge appointed under section 203.
60-Special Purpose Vehicle
Means a Special Purpose Vehicle as defined in the Asset Backed Securitization Rules, 1999.
61-Speculation business
Means a speculation business as defined in section 19.
61A-stock fund
Means a collective investment scheme or a mutual fund where the investible funds are invested by way of equity shares in companies, to extent of more than seventy percent of the investment.
62-stock-in-trade
Means stock-in-trade as defined in section 35.
53-tax
Means any tax imposed under Chapter II, and includes any penalty, fee or other charge or any sum or amount leviable or payable under this Ordinance;
64-taxable income
Means taxable income as defined in section 9.
66-taxpayer
Means any person who derives an amount chargeable to tax under this Ordinance, and includes —
- any representative of a person who derives an amount chargeable to tax under this Ordinance;
- any person who is required to deduct or collect tax under Part V of Chapter X [and Chapter XII;] or
- any person required to furnish a return of income or pay tax under this Ordinance.
67-tax treaty
Means an agreement referred to in section 107.
68-tax year
Means the tax year as defined in sub-section (1) of section 74 and, in relation to a person, includes a special year or a transitional year that the person is permitted to use under section 74.
69-total income
Means total income as defined in section 10.
70-trust
Means a “trust” as defined in section 80.
70A-turnover
Means turnover as defined in sub-section (3) of section 113.
71-underlying ownership
Means an underlying ownership as defined in section 98.
72-units
Means units in a unit trust.
73-unit trust”
Means a unit trust as defined in section 80.
74-Venture Capital Company” and “Venture Capital Fund”
Shall have the same meanings as are assigned to them under the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003.