b.s 3rd

1. Presented by :
Nayab Mudassir
Roll # 01

3. Income Act, 1860:
o As followed as prevailing United Kingdom.
o Come in force on July 1860 and continued for 5 years up to
1st August 1865
o A major characteristic : The agricultural income from land,
above the rental value of Rs. 690 per annum was taxable.
The License Tax Act of 1867:
o Income Tax was not applicable for the next two years.
o Re-imposed with certain changes in 1867 and was called:
“The License Tax Act of 1867”.
o Income earned up to Rs.200 per annum was not taxable
under this law. Amounts earned above this limit were taxable
at the rate of 2 per cent.
o In this Act, agricultural income was exempted from tax.

4. The Certificate Act, 1868:
o In 1868, the license tax act name was changed to ‘The
Certificate Act, 1868”.
o The exemption limit was raised to Rs.500, but the rate of tax
was also reduced to 1.6 percent.
Income Tax Act II:
o In 1869, the Certificate Act was converted again into Income
Tax Act II.
o Agricultural income was again brought under taxation.
o Different rates of tax were proposed on different types of
income.
o Force for only one year and during the next four years, tax
was levied by annual legislation.
o In 1972 limit was raised to Rs.1,000

5. The License Act, 1877:
o Tax on trade and access on land was proposed.
o This Act continued up to 1886 with few changes.
Income Tax Act, 1886:
o Important landmark in the taxation history of the country.
o for long period of time.
o The great improvements in the legislation were also made.
o A proper definition of agricultural income for the first time,
completely exempted
o Concession in payment of tax was provided if a person paid
life insurance premium.
o Income Tax Act, 1886, itself continued up to 1918 and during
its life of 32 years, only one major amendment was made in it
in the year 1903.

6. the Income Tax Act, 1918:
o Another landmark in the taxation history of subcontinent.
o “The Income Tax Act, 1886” was replaced by “the Income Tax
Act, 1918”.
o Difference between “Total Income’.’ and “Taxable Income” was
introduced.
o Previously income of the same year was taxed immediately,
but in this act tax imposed on income earned during the
previous income year.
o Felt difficulty, and first time All India Committee was formed in
1921.
o The purpose of this committee was to revise the-whole law
regarding income tax and on the report of this committee, the
Act (XI of 1922) was introduced.

7. Income Tax Act, 1922:
o a complete machinery and procedure of assessment.
• Rates of tax will be fixed every year by the Finance Acts.
• In 1935, formed an expert committee
• Purpose of this committee was to investigate the law from all
possible angles.
• Submit report about (a) Whether the tax burden imposed by
the government is reasonable and justified,
• (b) Is the income tax administration working efficiently?
• In 1944, “Pay as You Earn” scheme was introduced. (This
scheme which still continues in a little different. shape requires
an early depositing of tax by certain persons.)
• In 1945, distinction between “Earned” and “Unearned” income
was made and some concession was provided on the ‘Earned
Income”.

8. Promulgation of Income Tax Act, 1922:
• After Independence on 14 August 947, the Pakistan
Government adopted the Income Tax Act, 1922.
• The provisions of the Act were extended to the whole of
Pakistan except the special areas.
Formation of the Taxation Inquiry Committee:
• Formed in June 1958.
• Submitted its report to the CBR.
• Recommendations of the committee were accepted and
income Tax Act, 1922, was amended accordingly.

9. Super Tax & Expression of Rate Slab:
• In 1959, Super Tax was abolished on income of all
persons except registered firms and companies. The
rates of each slab were expressed as a percentage of
income. in 1960.
Change in Financial Year:
• Financial year was changed to commence on 1st July
and end on 30 June. Previously, it used to start on 1st
April and end on 31st March.

10. Introduction of Income Tax Committee:
• Formed by the CBR to make recommendations for
simplifying the Income Tax Act and procedures.
Introduction of Self-Assessment Scheme:
• In 1965 “Self-Assessment scheme was introduced.
• Before 1965, an assessment officer was assessed the
income and determined the tax liability of the person but
in 1965, "Self-Assessment Scheme" was introduced.

11. Promulgation of the Income Tax Ordinance, 1979:
• Between 1922 and 1979 as many as 71 amendment acts
were passed by the legislature.
• The purpose of most of these changes was to check
evasion of tax
• The government introduced a new income tax law
namely “Income Tax Ordinance, 1979”.
• The Ordinance replaced the Income Tax Act 1922 and
was enforced as from 1st July 1979.

12. Formation of National Tax Reform Commission:
• In 1985, the Federal Government formed a National Tax
Reform Commission.
• Consist of members of Senate and National Assembly,
high government officials and renowned industrialist.
• In 1985, the government set up a National Tax Reforms
Commission to suggest ways and means to improve the
existing tax structure in the country.

13. Income tax survey 1999-2000:
• Under income tax ordinance 1979 the income tax survey
was conducted in 1999-2000
• PURPOSE : The prevailing taxation structure and to
procure the suggestions and recommendations.
Introduction of Tax Amnesty Scheme:
• Introduce to provide a chance to black money holder to
convert it into white money.

14. Promulgation of income tax ordinance, 2001:
• After 22 years government of Pakistan introduces a new
income tax law namely “ The Income Tax Ordinance
2001”.
• Section 1, the ordinance specifies that Income Tax
Ordinance should extend to whole Pakistan.
• This ordinance was enforced at 1st July 2002.
Status of Income Tax Ordinance, 2001:
• Section 3 The Income Ordinance 2001overrides other
laws enforceable in Pakistan.
Income tax rules:
• FBR has authority to make the income tax rules.

15. Finance act, 2013:
• To update income tax law
• Finance Act is the source to make change.
• It is presented in month of June each year.

16. Taxable income
• Taxable income does not
exceed Rs.400,000
• Taxable income exceeds
Rs.400,000 but does not
exceed Rs.500,000
• Taxable income exceeds
Rs.500,000 but does not
exceed Rs.800,000
• Taxable income exceeds
Rs.800,000 but does not
exceed Rs.1,300,000
• Taxable income exceeds
Rs.1,300,000 but does not
exceed Rs.1,800,000
Rates
• 0%
• 5% of the amount
exceeding Rs.400,000
• Rs.5,000 + 7.5% of the
amount exceeding
Rs.500,000
• Rs.27,500 + 10% of the
amount exceeding
Rs.800,000
• Rs.77,500 + 12.5% of the
amount exceeding
Rs.13,00,000