Income Tax Ordinance, 2001 — Section 4: Tax on taxable income

4. Tax on taxable income.— (1) Subject to this Ordinance, income tax shall be imposed for each tax year, at the rate or rates specified in 1[Division I 2[ ] or II] of Part I of the First Schedule, as the case may be, on every person who has taxable income for the year.

(2)The income tax payable by a taxpayer for a tax year shall be computed by applying the rate or rates of tax applicable to the taxpayer under this Ordinance to the taxable income of the taxpayer for the year, and from the resulting amount shall be subtracted any tax credits allowed to the taxpayer for the year.

(3)Where a taxpayer is allowed more than one tax credit for a tax year, the credits shall be applied in the following order –

(a)any foreign tax credit allowed under section 103; then

(b)any tax credit allowed under Part X of Chapter III; and then

(c)any tax credit allowed under sections 3[ ] 147 and 168.

(4)Certain classes of income (including the income of certain classes of persons) may be subject to –

(a)separate taxation as provided 4[under this chapter]; or

(b)collection of tax under Division II of Part V of Chapter X or deduction of tax under Division III of Part V of Chapter X as a final tax on the income 5[of] the person.

(5)Income referred to in sub-section (4) shall be subject to tax as provided for 6[under this chapter], or Part V of Chapter X, as the case may be, and shall not be included in the computation of taxable income in accordance with section 8 or 169, as the case may be. 1 The words and letters “Division I or II” substituted by the Finance Act, 2010. 2 The expression “IB” omitted through Finance Act, 2020 dated 30th June, 2020 3 The figure and comma “140,” omitted by the Finance Act, 2003. 4 The expression “in sections 5, 6 and 7” substituted by the Finance Act, 2022. 5 The word “or” substituted by the Finance Act, 2010. 6 The expression “in sections 5, 6 and 7” substituted by the Finance Act, 2022. 32 Chapter II – Charge of Tax 1[(6) Where, by virtue of any provision of this Ordinance, income tax is to be deducted at source or collected or paid in advance, it shall, as the case may be, be so deducted, collected or paid, accordingly 2[.] ] 3[ ] 4[(4AB) Subject to this Ordinance, a surcharge shall be payable by every individual and association of persons at the rate of ten percent of the income tax imposed under Division I of Part I of the First Schedule where the taxable income exceeds rupees ten million 5[: Provided that in case of an individual deriving income chargeable under the head “Salary”, a surcharge shall be payable at the rate of nine percent of the income tax imposed under Division I of Part I of the First Schedule where the taxable income exceeds rupees ten million in a tax year.] 6 [4B. Super tax for rehabilitation of temporarily displaced persons.― (1) A super tax shall be imposed for rehabilitation of temporarily displaced persons, for tax years 2015 7[and onwards], at the rates specified in Division IIA of Part I of the First Schedule, on income of every person specified in the said Division.

(2)For the purposes of this section, “income” shall be the sum of the following:

(i)profit on debt, dividend, capital gains, brokerage and commission; Chapter II – Charge of Tax

(ii)taxable income1[(other than brought forward depreciation and brought forward business losses)] under section (9) of this Ordinance, if not included in clause (i);

(iii)imputable income as defined in clause (28A) of section 2 excluding amounts specified in clause (i); and

(iv)income computed, 2[other than brought forward depreciation, brought forward amortization and brought forward business lossess] under Fourth, Fifth, Seventh and Eighth Schedules.

(3)The super tax payable under sub-section (1) shall be paid, collected and deposited on the date and in the manner as specified in sub-section (1) of section 137 and all provisions of Chapter X of the Ordinance shall apply.

(4)Where the super tax is not paid by a person liable to pay it, the Commissioner shall by an order in writing, determine the super tax payable, and shall serve upon the person, a notice of demand specifying the super tax payable and within the time specified under section 137 of the Ordinance.

(5)Where the super tax is not paid by a person liable to pay it, the Commissioner shall recover the super tax payable under subsection (1) and the provisions of Part IV,X, XI and XII of Chapter X and Part I of Chapter XI of the Ordinance shall, so far as may be, apply to the collection of super tax as these apply to the collection of tax under the Ordinance.

(6)The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.]