07-09-2011, 04:22 PM
Then it is certainly a foreign source income u/s 101(16) read with 101(7).
Foreign source salary is exempt from tax while for other heads of income I could not find exemption.
However,s.103 allows tax credit to resident taxpayer for foreign source income, PROVIDED THAT the taxpayer has already paid foreign income tax.
So by reading these sections, we may infer, that if you have already paid foreign income tax on this income you may claim tax credit in accordance with s.103.
If you have not paid that, then this income will be added to your other Pakistani income and you will pay tax accordingly.
Suppose
Your business income in Pakistan is 5 lac
While you derive profit on debt from foreign company, 2 lac, upon which no tax has been paid in the foreign country
Then your total income will be 7 lac and you will pay tax at the rate of 10% according to first schedule.
IN MY EARLIER REPLY I ASSUMED THAT EVERY NON-PAKISTANI SOURCE OF INCOME IS EXEMPT FROM TAX - I APPOLOGIZE FOR THAT ERROR
Still the above is my opinion, I invite other experts to comment. If any case law could be cited, it will help us more
Foreign source salary is exempt from tax while for other heads of income I could not find exemption.
However,s.103 allows tax credit to resident taxpayer for foreign source income, PROVIDED THAT the taxpayer has already paid foreign income tax.
So by reading these sections, we may infer, that if you have already paid foreign income tax on this income you may claim tax credit in accordance with s.103.
If you have not paid that, then this income will be added to your other Pakistani income and you will pay tax accordingly.
Suppose
Your business income in Pakistan is 5 lac
While you derive profit on debt from foreign company, 2 lac, upon which no tax has been paid in the foreign country
Then your total income will be 7 lac and you will pay tax at the rate of 10% according to first schedule.
IN MY EARLIER REPLY I ASSUMED THAT EVERY NON-PAKISTANI SOURCE OF INCOME IS EXEMPT FROM TAX - I APPOLOGIZE FOR THAT ERROR
Still the above is my opinion, I invite other experts to comment. If any case law could be cited, it will help us more
