Basic Rules Of Income Tax-Taxation Managment-Lecture Notes, Study notes for Taxation Management. Indian Institute of Management (IIM)

Taxation Management

Description: Tax is an instrument of fiscal policy. There are different types of taxes. Tax is compulsory contributions of wealth levied upon persons by the state, to meet the expenses incurred in providing common benefits upon the residents. This lecture includes: Income, Tax, Act, Ordinance, Integral, Part, Enactment, Law, Administrative, Instructions, Case
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LESSON 2.4
BASIC FEATURES OF INCOME TAX
Background/ History
Income Tax Act of 1922:
At the time of independence, this Act prevalent in undivided India was adopted by the Government of
Pakistan as its Income Tax Law.
Income Tax Ordinance, 1979
First law on Income Tax was promulgated in Pakistan from 1st July, 1979.
Income Tax Ordinance, 2001
To updates the tax laws and brings our law in accordance with international standards, this ordinance
was promulgated on 13th September, 2001, which became effective from 1st July, 2002.
IT rules 2002
These were promulgated by CBR on 1st July 2002 in exercise of powers granted under section 237 of the
Ordinance.
Rules are integral part of the main enactment / Law.
I.T Ordinance 1979 stands repealed vide section 238 of the Ordinance.
The Ordinance overrules all other laws for the time being in force (Sec 3).
Federal Government empowered to allow exemptions to certain types of income or specific
persons during financial year but required to place the same before National Assembly at the end of
that financial year Sec 53(3).
CBR can issue administrative instructions explanations/circulars under the powers vested through
Sec 206 and 213. However, CBR’s instructions not binding on Tax Payers since these are
administrative interpretation not judicial interpretation.
Sec 206 and sec 213 of the ordinance are reproduced below:
Section 206:
(1)To achieve consistency in the administration of this Ordinance and to provide guidance to
taxpayers and officers of the Central Board of Revenue, the Central Board of Revenue may
issue Circulars setting out the Board’s interpretation of this Ordinance.
(2)A circular issued by the Central Board of Revenue shall be binding on all Income Tax
Authorities and other persons employed in the execution of the Ordinance, under the
control of the said Board other than Commissioners of Income Tax (Appeals).
(3)A Circular shall not be binding on a taxpayer.
Section 213:
In the course of any proceedings under this Ordinance, the Commissioner or any taxation officer may be
assisted, guided or instructed by any income tax authority to which he is subordinate or any other person
authorized in this behalf by the Central Board of Revenue.
Case Law is an important source of interpretation.
Decisions and interpretation of Supreme Court are binding on all courts in Pakistan, according to
Article 189 of constitution 1973.
Decisions and interpretation of High courts are binding on subordinate courts/tribunals in the area
of their jurisdictions.
Basic Features of Income Tax Ordinance 2001
Scheme of the Ordinance is given below:
¾ There are thirteen chapters
¾Chapters are divided into:
Parts &
Divisions
¾There are 240 Sections
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¾
¾Schedules are integral part of the Ordinance.
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Following aids
/
assistance are available that help in the interpretation of law
/
statue.
Internal Aids:
These are available in the Act:
Explanation to the section
Marginal notes
Punctuation marks
Preamble
Title of a chapter
Non-Obstinate clause
Proviso
Context
External Aids:
These are not available in the statute/ law but are available in the following instruments / sources.
Dictionary
Tax committee report
Statement of objects appended to a finance bill
Finance Minister’s budget speech
CBR’s circulars
Definitions in other statutes
Departmental manuals
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