INCOME TAX

Mubashir Ilyas E10MBA040 Riasat Ali E10MBA047 Ahsan saleem E10MBA021 Hussain Mushtaq E10MBA073 Daniyal Bhati E10MBA011

TAX POLICY
Tax policy is an administrative apparatus that is

built to levy and collect tax, through applying different tariff and basis taxation, in order to apply policy that has built. Policymakers debate the nature of the tax structure they plan to implement (i.e., how progressive or regressive) and how they might affect individuals and businesses (i.e., tax incidence).

Features of The Taxation Policy

Heavy Reliance on Foreign Trade Based Taxes. - Convenience in Collections. - - Receipts Susceptible to Fluctuations. Narrow Tax base- Both Direct and Indirect Taxes. -High Elasticity of Demand - High Chances of Tax Evasion

Features of The Taxation Policy

Large Scale Tax Evasion
Corruption and Inefficiency of Tax Machinery. Lack of Political Will to Tax.

Excessive Centralization in Tax Collection.

Growth of Inefficient Industries Under High Protection.

TYPES OF TAXATION
Income Tax

Progressive Income Tax

Capital Gain Corporate Tax Property Tax Inheritance Tax Value ADDED tax Sales Tax

Income And Progressive Income Tax

A charge imposed by government on the annual

gains of a person, corporation, or other taxable unit derived through work, business pursuits, investments, property dealings, and other sources determined in income tax ordinance. A progressive income tax system where people earning below a certain amount receive supplemental pay from the government instead of paying taxes to the government.

Capital Gain And Corporate Tax

Capital gain is generally a gain on sale of capital

assets that is those assets not held for sale in the ordinary course of business. Capital assets include personal assets in many jurisdictions. Some jurisdictions provide preferential rates of tax or only partial taxation for capital gains. Corporate tax refers to income, capital, net worth, or other taxes imposed on corporations. Rates of tax and the taxable base for corporations may differ from those for individuals or other taxable persons.

Property And Inheritance Tax

A property tax (or millage tax) is an ad valorem tax levy

on the value of property that the owner of the property is required to pay to a government in which the property is situated. There are three general varieties of property: land, improvements to land (immovable man-made things, e.g. buildings) and personal property (movable things).
Inheritance tax, estate tax, and death tax or duty are

the names given to various taxes which arise on the death of an individual.

Value added And Sales Tax

A value added tax (VAT), also known as Goods

and Services Tax (G.S.T), Single Business Tax, or Turnover Tax in some countries, applies the equivalent of a sales tax to every operation that creates value. Sales taxes are levied when a commodity is sold to its final consumer. Retail organizations contend that such taxes discourage retail sales. The question of whether they are generally progressive or regressive is a subject of much current debate.

PTR/RTR
Presumptive tax regime is that tax which have

been taken in advance by FBR on a fixed rate and discharge the tax payer from his liability. In this regime tax payer has to submit statement of final tax instead of return of income. Regular tax rate comprises 30% income tax and 25% super tax. STR apply on account of the varying rebates granted to the following banks, specified small companies, Agricultural food processing companies, foreign incomes and specified public companies.

Minimum Tax Concept

Levy imposed on taxpayers with large income to

assure that all pay a fair share of the total tax burden. The traditional minimum tax was replaced by the alternative minimum tax (amt). AMT not only replaced the minimum tax, but extended it to corporations. The tax base for minimum tax starts with regular taxable income. This base then is adjusted by re-computing certain deductions and deferrals-such as depreciation, long-term contracts, and installment sales gain-in a manner that offsets to a great extent the reduction that these items generate in regular taxable income.

Corporate Tax Rate

The Corporate Tax Rate in Pakistan stands at 35

percent. Corporate Tax Rate in Pakistan is reported by the Federal Board of Revenue, Government of Pakistan. From 2006 until 2013, Pakistan Corporate Tax Rate averaged 35.0 percent reaching an all time high of 35.0 percent in January of 2013 and a record low of 35.0 percent in January of 2006. In Pakistan, the Corporate Income tax rate is a tax collected from companies.

GDP TAX RATIO

Pakistan has one of the lowest tax to GDP ratios in

the world as only 0.9 per cent of the population of the country pays income tax. Pakistan ranks 23rd from the bottom of a list of 176 countries while 80 per cent of population of Canada pays tax and even 4.7 per cent of Indians also contributing towards tax. During the year 2010-11, only 3.1 million NTNs were issued which constitutes only 0.92 per cent of population.

GDP TAX RATIO

82 per cent of all sales tax and federal excise duty is

paid by the top 100 companies. Any person earning less than Rs 400,000 annually or Rs 33,333 per month is not subject to pay any income tax at all. Only 269,770 individuals filed for taxes and paid a positive amount consistently from2009-2011 while 3.1 per cent of the governments total tax revenue is collected from the income tax on salaried individuals.

NUMBER OF POPULATION OF TAXPAYER

FBR has been claiming happily that it has in its net

1.44 million people who regularly file tax returns, it turns out that there are only 856,987 taxpayers in the country that the bureau can trace to their homes or workplaces. Does this mean that the missing numbers 583,013 are imaginary tax payers. FBR revealed that just 856,987 tax payers were there, and even among them 51,522 did not pay any taxes last year.

TAX AMESTY SCHEME

Tax amnesty is a limited-time opportunity for a

specified group of taxpayers to pay a defined amount, in exchange for forgiveness of a tax liability (including interest and penalties) relating to a previous tax period or periods and without fear of criminal prosecution. It typically expires when some authority begins a tax investigation of the past-due tax. In some cases, legislation extending amnesty also imposes harsher penalties on those who are eligible for amnesty but do not take it.

DIRECT TAX AND INDIRECT TAX

The term direct tax generally means a tax paid directly to

the government by the persons on whom it is imposed. However, there are other definitions as well, under which taxes paid directly from individuals to the government are not legally classified as direct taxes.
An indirect tax (such as sales tax, a specific tax, value

added tax (VAT), or goods and services tax (GST)) is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the consumer). The intermediary later files a tax return and forwards the tax proceeds to government with the return