Income Tax Procedure For Company

SMEDA Business Guide Series
Procedure for Income Tax

(For a Company)
PP&S/1(Reg-5)/R-2/September 20th, 2003
Prepared By: Policy Planning & Strategy
Small and Medium Enterprise Development Authority

Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
Waheed Trade Complex, 1st Floor , 36-Commercial Zone, Phase III, Sector XX, Khayaban-e-Iqbal, DHA Lahore
Tel: (042) 111-111-456, Fax: (042) 5896619, 5899756
Helpdesk@smeda.org.pk
REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE

PUNJAB SINDH NWFP BALOCHISTAN
Waheed Trade Complex,
1st Floor, 36-Commercial Zone, 5TH Floor, Bahria Ground Floor Bungalow No. 15-A
Phase III, Sector XX, Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Khayaban-e-Iqbal, DHA Lahore. Karachi. The Mall, Peshawar. Airport Road, Quetta.
Tel: (042) 111-111-456 Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 831623, 831702
Fax: (042) 5896619, 5899756 Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 831922
helpdesk@smeda.org.pk helpdesk-khi@smeda.org.pk Helpdesk-pew@smeda.org.pk helpdesk-qta@smeda.org.pk
1
TABLE OF CONTENTS
1. Introduction of SMEDA 03
2. Role of Policy Planning and Strategy Group 03
3. Flow Chart 04
4. National Tax Number 05
5. Maintenance of Book Accounts 05
6. Penalties 07
7. Preparation of Accounts 09
8. Computation of Income Tax 09
9. Filing of Annual Income Tax Return 15
10. Assessment 16
11. Annexures 16-23
2
INTRODUCTION OF SMEDA
The Small and Medium Enterprise Development Authority (SMEDA) was established in
1998, with the objective to provide fresh impetus to the economy through the launch
of an aggressive SME development strategy.
SMEDA initially focused on nine priority sectors with the intention of developing sector
strategies and proposing regulatory reforms to stimulate growth on the sole criterion of
SME presence. In depth research was conducted and comprehensive plans were
formulated after identification of impediments and retardants. These strategies as
proposed by SMEDA comprehensively covered all important areas of business
operation such as regulatory environment, finance, marketing, technology and human
resource development. Resultantly, SMEDA successfully formulated strategies for
sectors, including fruits and vegetables, marble and granite, gems and jewellery,
marine fisheries, leather and footwear, textiles, surgical instruments, transport and
dairy.
The task of SME development at a broader scale still required more coverage and
enhanced reach in terms of SMEDA’s areas of operation. Therefore, after successfully
qualifying in the first phase of sector development SMEDA reorganised its operations
in January 2001. Currently, SMEDA along with the sectoral focus offers a range of
services to the SMEs including over the counter support systems, exclusive business
development facilities, training and development for SMEs and information
dissemination through wide range of publications. SMEDA’s activities can now be
classified into following three broad areas:
1. Creating a Conducive Environment; includes collaboration with policy makers to
devise facilitating mechanisms for SMEs by removing regulatory impediments across
numerous policy areas
2. Cluster/Sector Development; comprises formulation and implementation of projects
for SME clusters/sectors in collaboration with industry/trade associations and
chambers
3. Enhancing Access to Business Development Services (BDS); take into account
development and provision of services to meet the business management, strategic
and operational requirements of SMEs
The aforementioned reorganisation of SMEDA is driven by enhanced interaction with
the stakeholders and suggests that SMEDA’s is a true learning organization and
always ready to take lead in the SME development arena.
Role of Policy Planning and Strategy Department
Policy planning and Strategy (PP&S) department of Smeda is the hub of policy and
regulatory research that feeds national, provincial and local government institutions,
SME associations, industrial clusters and individual entrepreneurs with an ultimate
objective of creating a conducive business environment. It has a mandate to identify
and where suitable initiate strategic projects. Library and Information resource center
of SMEDA is an integral part of PP&S while development of Regulatory Procedures is a
part of an overall information dissemination function of the department.
3
FLOW CHART1
Registration of a company with Income Tax
• Complete IT-A
• One attested
Application for NTN NIC copy of all
partners/direct
ors
• Incorporation
File of application on IT-A for a company with concerned NTN certificate
Cell • Memorandum/
• Books Articles of
• Record Association.
Maintenance of books of accounts for a financial/income year
⇒ Profit and
Calculation of income/profit
Loss
from accounts for a financial
account
year, audited by a Chartered
⇒ Balance
Accountant Firm
Sheet
⇒ Fixed assets
Calculation of total and
taxable income depreciation
`• Tax deductions Computation of income tax
schedule
• Calculation of tax at
applicable slab rate
• Deduction of advance Filing of Income Tax return along • Form of income
taxes with audited accounts tax returns for
• Total tax payable with companies
return • 4 Tax payment
(Total income – Challans IT 31
deductions) * slab rate – Assessment by Tax department (A,B,C,D)
advance taxes = final tax
payable.
4
NATIONAL TAX NUMBER (NTN)
Every company is assigned a national tax number (NTN). The reason for having a NTN
is that a company cannot file its returns if it does not have the NTN, and for those
companies which do not have NTN must file an application for it. The application form
can be obtained from nearest NTN Centers (located at Income Tax Building, Shahrah-
e-Kamal Attaturk, Karachi; Income Tax House, Nabha Road, Lahore; OR CDA Block -II
, Old CBR Building, Melody,G-6 ,Islamabad) or downloadable from CBR website
www.cbr.gov.pk.
The documentation required for companies is as follows.
• Photo copies of NICs of all the partners or directors.

• Incorporation or the registration certificate.
• Application for NTN by individual partners or directors in case they do not have
NTN.
Class-1 gazetted officer or an officer of the state owned bank should attest all
documents.
MAINTAINANCE OF BOOK OF ACCOUNTS

It is mandatory for a company to maintain books of accounts and accounting records.
For this purpose, the company according to Income Tax Rules 2003 must maintain
the following accounting records.
• Cash memo or invoice

It is acknowledgement of sale or transaction, required to be issued for each
transaction of sale and carbon or duplicate copy should be retained to support
the tax return by law. The memo should be serially numbered containing date,
name or business name, national tax number, sales tax registration number,
quantity and value of goods sold or services rendered.
• Daily record of receipts, sales, payment, purchases and expenses

This record should be maintained in a systematic manner and no specific
format prescribed for it but this would help the company to prepare final
income statement.
• Vouchers of purchases and expenses

These vouchers must be retained to support the return and include
• Original cash memos, invoices and receipts of purchases and expenses.
Salary register, copies of NIC of employees, attendance record and acknowledgement
of salary paid to employees
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• Cash book and/or Bank Book or Daily Business Record
The daily transactions of receipts, sales, payments, purchases and expenses
be recorded in cash book or a bank book in a systematic manner which
would help to prepare final income statement and balance sheet.
• Records of utility bills

Records to be Maintained for Income from Other Sources
The taxpayers deriving income from other sources are required to maintain following
records.
• Company deriving income from property

• Tenancy agreement, if executed;
• Tenancy termination agreement, if executed
• Receipt for amount of rent received
• Evidence of deductions claimed in respect of premium paid to insure the
building, local rate, tax, charge or cess, ground rent, profit/interest or share
in rent on money borrowed, expenditure on collecting the rent, legal services
and unpaid rent
• Company deriving income from capital gains

• Evidence of cost of acquiring the capital asset
• Evidence of deduction for any other costs claimed
• Evidence in respect of consideration received on disposal of the capital
asset.
• Income from Dividends

• Dividend warrants.
• Income from Royalty

• Royalty agreement.
• Income from Profit on Debt

• Evidence and detail of profit yielding debt
• Evidence of profit on debt and tax deducted thereon, like certificate in the
prescribed form or bank account statement
• Evidence of Zakat deducted, if any
The preparation and maintenance of these accounts is important for a company to

calculate its annual profit/income. The tax authorities assess a company on the basis
of particulars mentioned in the tax return. These particulars are taken from audited
accounts.
All accounts and documents to be maintained under Section 174 of Income Tax
Ordinance 2001 and Income Tax Rules 2002 shall be kept/maintained for five years
after the end of tax year to which they relate.
6
PENALTIES
There are certain kinds of penalties that can be imposed on the taxpayer upon non-
compliance of the income tax regulations, which are defined in the following section
• Section 182(S182)
If a taxpayer fails to produce income return under the Ordinance or an income
statement under Section 115 (4), a penalty equal to one-tenth of one percent of tax
payable for each default day subject to a minimum penalty of Rs. 500 and maximum
of Rs. 25, 000 is imposed.
A person failing to provide any statements as required under Section 165 of this
Ordinance is required to pay a penalty of Rs.2, 000. Also if a person continues to fail to
furnish the statement, an additional penalty of Rs.200 for each day of default will be
imposed.
According to this section taxpayer who fails to pay any tax by due date shall be
subjected to
1. Penalty of 5% of the amount of tax in case of first default,
2. Additional 20% penalty of amount for second default,
3. 25% in case of third default and
4. Upto 50% for fourth and subsequent default but the total penalty would not exceed
above 100%.
If the amount of tax in respect of any penalty imposed under sub-section (1)
decreases, the amount of penalty would also reduce accordingly.
A person furnishing inaccurate particulars in returns will have to pay a penalty equal
to the amount of tax that he tries to evade by doing so.
If a person fails to maintain records as required by the tax law,
1. A penalty of Rs.2, 000 shall be imposed in case of first failure,
2. Rs.5, 000 for second failure and
3. Rs.10, 000 for third and subsequent failure.
A person submitting false particulars in statement of various advance taxes paid
under Section 147 shall have to pay a penalty equal to 200% of the tax shortfall and
25% of shortfall in cases other than Section 147. PENALTIES
There are certain kinds of penalties that can be imposed on the taxpayer upon non-
compliance of the income tax regulations, which are defined in the following section
7
If a taxpayer fails to produce income return under the Ordinance or an income
statement under Section 115 (4), a penalty equal to one-tenth of one percent of tax
payable for each default day subject to a minimum penalty of Rs. 500 and maximum
of Rs. 25, 000 is imposed.
A person failing to provide any statements as required under Section 165 of this
Ordinance is required to pay a penalty of Rs.2, 000. Also if a person continues to fail to
furnish the statement, an additional penalty of Rs.200 for each day of default will be
imposed.
According to this section taxpayer who fails to pay any tax by due date shall be
subjected to
5. Penalty of 5% of the amount of tax in case of first default,
6. Additional 20% penalty of amount for second default,
7. 25% in case of third default and
8. Upto 50% for fourth and subsequent default but the total penalty would not exceed
above 100%.
If the amount of tax in respect of any penalty imposed under sub-section (1)
decreases, the amount of penalty would also reduce accordingly.
A person furnishing inaccurate particulars in returns will have to pay a penalty equal
to the amount of tax that he tries to evade by doing so.
If a person fails to maintain records as required by the tax law,
4. A penalty of Rs.2, 000 shall be imposed in case of first failure,
5. Rs.5, 000 for second failure and
6. Rs.10, 000 for third and subsequent failure.
A person submitting false particulars in statement of various advance taxes paid
under Section 147 shall have to pay a penalty equal to 200% of the tax shortfall and
25% of shortfall in cases other than Section 147.
8
PREPARATION OF ACCOUNTS
Every company has to prepare its accounts and get them audited by a certified
Chartered Accountant firm. These accounts are required by the company as well as
the income tax authorities to calculate the income of the company and its tax liability/
refund. Following is a set of accounts, which are required with tax returns:
• Profit And Loss Account

• Balance Sheet
• Notes To The Accounts
• Details Of Fixed Assets And Depreciation Schedule
There may be difference between the tax calculated by a company and the tax
calculated by the tax department. This difference is due to change in depreciation2
rates, lease rentals and other differences as stated in the Income Tax Ordinance 2001,
3rd Schedule.
COMPUTATION OF INCOME TAX

Under Section 114 of the Income Tax Ordinance 2001, every company whose income
is assessable for any income year, will furnish a return of its total income. The income
tax returns will be furnished either by registered post or by hand to the Income Tax
authorities. The acknowledgement receipt must be taken from the Income Tax
authorities, at the time of filing of Income Tax returns.
Computation of Total Taxable Income:
In order to compute the income of a company for the year in which it is assessable,
following steps will be taken under the following sections of the Income Tax Ordinance
1979:
1. Section 18 (S18):
This includes income from business such as
a) Profits and gains of any business,
b) Any income derived by any trade, professional or similar relation with the sale
or provision of services to its member
c) From the hire or lease of tangible movable property or
d) Any obtained profit on debt
The deductions are allowed under section -20.
• Section 39 (S39)
This section refers to income earned from any other sources such as, dividend,
royalty, profit on debt, ground rent, rent from the sub-lease of land or a building,
income from the lease of any building together with plant or machinery, any annuity
2 Depreciation: It is a measure of the wearing out, consumption or other losses in the value of
the “Fixed Asset” arising from usage, passage of the time or obsolescence.
9
or pension, rent received or receivables for providing facilities or any other services
related to the renting of building etc. Deductions are allowed according to section 40.
• Section 15 (S15) (If applicable)

This pertains to income earned by a business concern in the form of rent received from
house property subject to deductions allowed under section 17.
• Section 37 (S37) Capital Gains (If applicable)

This section relates to gain arising on discarding or transferring of a capital asset by a
person in a tax year. The deductions allowed are mentioned under section 38.
The total taxable income can be calculated by summing up the above mentioned
sections.
S18 + S39 + (S15 + S37) If Applicable = Total Taxable Income.
It is mandatory for a company to show all incomes mentioned above in its annual
income tax returns.
The bonus shares issued by the companies on or after July 1, 2001 will not be
treated as its income. Thus, the companies will not have to pay taxes at the time
of issuance of bonus shares. But the companies will collect tax @10% from the
shareholders other than the companies.
The companies' income from TFCs is still taxable but the income generated from
TFCs is not taxable.
10
TAXES ON EXPORTERS
The tax on exporters is levied according to First Schedule Part III Division IV under
section 154 of Income Tax Ordinance, 2001.
According to Section 154, an authorised foreign exchange dealer, banking company,

an Export Processing Zone Authority, a direct exporter and an export house shall
deduct tax at the rate specified in Division IV of Part III of First Schedule at the time of
making payment to the exporter or commission agent or to the individual as the case
may be. The tax deducted is taken as final tax payment. Following is a schedule
outlining tax rates on exports and various industrial sectors.
Schedule 7 Percentage of Tax Description of Industrial Sectors

Part –I 0.75% Leather and textile made ups, Engineering goods,
sports goods, etc.
Part –II 1% Refined / treated salt, Ground batteries, Granite
blocks and slabs, etc.
Part –III 1.25% Raw cotton, Rice, Lamb skin, etc.
Deductions
After calculating the total income, various deductions have to be made in order to
arrive at the total taxable income. The detail of which along with examples is given
below:
Under this section a company is allowed to deduct any expenditure which he has
made to earn taxable income and Zakat paid by a person on any profit obtained from
debt which is taxable under section 39. Other deductions included are the
depreciation of any plant, machinery or building used to derive income as per section
22, an initial allowance for any plant or machinery utilised to conclude income
according to section 23
Includes deductions such as house repair, insurance of property, rent paid on
property, profit paid on money borrowed to construct or renovate property, etc.
According to this section a company is allowed to deduct business losses. The
assessee is entitled to set off (adjustment of) his losses under any head of income
against income chargeable to tax. If the loss cannot be completely adjusted, it would
not be permitted to be carried forward to next tax year.
A Company can deduct all expenses, which he has made for obtaining taxable income.
11
If the loss under head “Income from Business” cannot be adjusted completely under
section 56, the amount of loss will be shifted to the next tax year and shall be set off
against the same income head. No loss can be carried forward for more than six years.
The loss from any speculation business can only be adjusted against income from any
other speculation business and if the loss is not completely set off, then that amount
of loss can taken to the next tax year but not more than six years.
This section includes Capital Loses. The loss incurred under the head “capital gains”
can only be adjusted under this and can be carried forward to the next tax year.
A company is entitled to deductible allowance for the amount of any Zakat paid under
Zakat and Ushr Ordinance, 1980.
• Second Schedule
These are exemptions from total income under different conditions.
Therefore, the total deductions would be;
S17 + S20 + S40 + S56 + S57 + S58 + S59 + S60 + II Schedule = Total Deductions
Collection of advance taxes by a company

For a company, it is required under section 50 to deduct, and deposit the advance
income tax in the government treasury, at the time of making payments to other
businesses. The various rates are given below:
• 3.5 % tax for supply of goods will be deducted at the time of payment to other
businesses and deposited in the government treasury within 7 days of the day of
deduction.
• 5% for rendering of services will be deducted from other businesses and deposited
in the government treasury within 7 days of the day of deduction.
• 10% on payment of brokerage fees or commissions will be deducted for payments

made to other businesses and deposited in the government treasury.
• Monthly average tax on the salary of an employee, if taxable, to be deposited
within 7 days of the day of deduction.
The above mentioned advanced taxes are applicable to most of the companies.
However there are other sub-sections of section 50, which are applicable to related
cases. These sections are given from sections 50(1) to 50(10).
The company has to keep the record of income tax deducted under section 165 (and
deposit it along with tax payment challans (IT 31 A,B,C,D) and ledger accounts too.
12
The company is also required to file a six monthly, quarterly and annual report of all
deductions relating to advance taxes,3 to tax authorities.
After deducting the above-mentioned deductions, the company will arrive at the total
taxable income. Tax liability will be calculated on the basis of the following slabs:
Companies
Company Type Rates
Banking Company 47%

Public Company other than a banking company 35%
(inclusive of surcharge)
Other Company(inclusive of surcharge) 43%
Deductions of various Advance Taxes from Tax Liability:

After computing the total taxable income of the business concern, the various advance
taxes, which were paid in advance to the government, during the year, will be
deducted from the income tax liability.
Examples of more frequently deductible advance taxes as per various sections of the
income tax ordinance are given below:
• Section 147
Includes advance tax to be paid by the taxpayer deriving income other than “Capital
Gains”, “Income from Property”, dividends etc on quarterly basis.
• Section 148
It is advance tax collected by the Custom Collectorate @ 6% on imports.
• Section 151
This is the tax deducted on saving certificates or on debt @ 10%.
• Section 153
Includes tax on supply of goods at the rate of 3.5% and 5% on services etc.
• Section 233 (If Applicable)

Includes advance tax deducted on brokerage or commission @ 5%.
• Section 235
Tax collected on commercial or industrial electricity bills.
3Advance Tax: The advance payment of tax is a scheme in which the assessee is required to
pay tax in a particular financial year, preceding the assessment year, on the basis of his
estimated income or the latest assessed income.
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• Section 236
Advance tax deducted on telephone bills.
S147 + S148 + S151 + S153 + S235 + S236 + S233 (If Applicable)= Advance Taxes
Formula for Calculation of Final Tax Liability.

After completing the above mentioned procedure, the total tax liability can be
summarised as;
Step 1:
Total Taxable Income = S18 + S39 + (S15 + 37) If Applicable
Step 2:
= Total DeductionsS17 + S20 + S40 + S56 + S57 + S58 + S59 + S60 + II Schedule
So the total taxable income can be calculated by the formula:
Total Taxable Income = S18 + S39 + (S15 + 37) If Applicable _ (S17 + S20 + S40 +
S56 + S57 + S58 + S59 + S60 + II Schedule) – Advance Taxes as mentioned above
Step 3:
The tax liability is then calculated on the basis of rates given below
COMPANIES
Company Type Rates

Banking Company 50%
Public Company other than a banking 35%
company (inclusive of surcharge)
Other Company (inclusive of surcharge) 45%
Step 4:
Adjustment of advance taxes deducted under section 147, 148, 151, 153, 154, 233,
235 and 236.
Step 6:
After completion of all these steps, the taxpayer shall arrive at his total tax liability,
which he has to pay.
Therefore, the final income tax liability formula is:
14
Total Tax Liability = = S18 + S39 + (S15 + 37) If Applicable _ (S17 + S20 + S40 +
S56 + S57 + S58 + S59 + S60 + II Schedule) _ Adjustments of Deductions
mentioned under various sections stated above.
After the above-mentioned procedure the company will arrive at the income tax
liability/ refund.
In case of liability, the amount of tax liability has to be submitted in the government
treasury through State Bank of Pakistan or designated branches of National Bank
of Pakistan on Tax payment Challan IT 31 (A,B,C,D) of which 4 copies are to be
prepared. The distribution of the copies is as under:
• Two copies of the tax payment challan are kept by the National Bank of Pakistan.
• One copy to be attached with the Annual Income Tax return for Companies.
• Fourth copy to be retained by the company, for its official use.
In case of refund, a company can contact the Income Tax department to get the refund
of tax, after filing the annual income tax return.
FILING OF ANNUAL INCOME TAX RETURN
After preparation and completion of annual income-tax return, it will be deposited

along with a copy of tax payment challan, with the respective income tax department
on or before of Sept 30th of the respective year. A detail of income tax offices in major
cities is given in Annexure I. Acknowledgement on prescribed form will be taken from
the income tax authority at the time of deposit of the said documents.
Under section 165, a company has to provide the Income Tax authorities, a statement
regarding payment of salary to its employees and tax deducted on there salaries, on a
quarterly or six monthly basis.
To file the income tax returns, a taxpayer needs to furnish the following documents to
the income tax authorities:
1. Form of return of total income under Income Tax Ordinance, 2001

2. Tax payment challans (IT 31 A, B, C, D).
3. Statement U/S 115(4) - Statement of receipts / incomes subject to final taxation
4. Copies of:
a) Audited financial statements (income statement and balance sheet) in
accordance with the provisions of the Companies Ordinance, 1984 or
any other statute under which incorporated, registered, formed or
constituted alongwith auditors' and directors' reports thereon.
b) Charts of depreciation/amortization as admissible under the Income
Tax Ordinance, 2001
5. Evidence of payment of Tax deducted/collected at source, Advance tax paid U/S
147, Expenditure on personal medical service, Zakat, Tax paid with return U/S
137
15
6. Photocopies of tax payment challans in case of adjustment of advanced taxes
deducted under Chapter X Part V and Chapter XII of Income Tax Ordinance, 2001.
Please refer to Section 169 of Income Tax Ordinance, 2001 for details of cases that do
not require furnishing return of income.
ASSESSMENT
After completing the above-mentioned procedure, the taxpayer will submit the return
to income tax department and the return filed to the Income Tax Commissioner shall
be considered as an assessment order by the Commissioner the day the return is filed.
However, according to section 122 the Commissioner may amend the assessment
order within period of five years by making alterations or additions to the return as he
conceives necessary.
16
ANNEXURE I
ADDRESSES OF INCOME TAX OFFICES IN MAJOR CITIES
Income Tax Offices in Lahore: Income Tax Office, Gujranwala

Address: Income Tax Building, Address: Income Tax Department,
Syed Mauj Darya Road, Lahore. GT Road, Gujranwala
Fax number: 042-9211857 Fax Number: 0431- 291401
Income Tax Offices in Karachi: Income Tax Office, Sailkot

Address: Income Tax Office, Address: Income Tax Department,
Sharah-e- Kamal Attaturk, Karachi. Katchehry Road, Sialkot
Fax number: 021-2628624 Fax Number: 0432-267296
Income Tax Office, Northern Region Income Tax Office,Peshawar

Islamabad Address: Income Tax Department,
Address: House no.110-H, Jamrud Road, Peshawar
Lukman Hakeem Road, Fax Number: 091-9216140
Sector G-6/3, Islamabad.
Fax Number: 051-9204904 Income Tax Office, Multan
Address: Income Tax Department,
Income Tax Office, Islamabad 57-B, Sher Shah Road, Multan
Address: Buland Markaz, Blue area Fax Number: 061-585219
Islamabad
Fax Number: 051 -9203670 Income Tax Office, Faisalabad
Address: Income Tax Department,
Income Tax Office, Rawalpindi Opposite Allied Hospital, Sargodha
Address: 12 Mayo Road Road
Fax Number: 051-9270422 Fax Number: 041- 761433
17
Income Tax Procedure Of A Company Policy Planning & Strategy
ANNEXURE II
SAMPLE FORMS
• Form for NTN (IT-A)
• Form of Income Tax Returns (For Companies)
14
Income Tax Procedure Of A Company Policy Planning & Strategy
IT-A
Application for the Issuance of National Tax Number (NTN)
(For Registered Firms and Companies)
Category (please tick one): Registered Firm Company
Name of Business:
(Please type in capital letters)

Business Address:
Phone: (Res.) _________________________ (Bus.) _________________________ Fax: _________________________
Principal Business Activity:

Manufacturer Importer Exporter Distributor Wholesaler Retailer Services Others
Description of Business: _________________________________________________________________________________
Principal place of business (address): ______________________________________________________________________
Company type Public Ltd. Private Ltd. Non-Resident Company Others

(if yes, please specify)
Reg./Inc. No: Reg./Inc. No:

(Please attach copy of documents)
Residential Status: Resident Non-Resident Old NTN (if any):
PARTICULARS OF PARTNERS/DIRECTORS
1. Name ____________________________________________________________________________________________
NTN: - - - NIC: -
(Please attach attested copy of NIC)
2. Name ____________________________________________________________________________________________
NTN: - - - NIC: -
3. Name ____________________________________________________________________________________________
NTN: - - - NIC: -
4. Name ____________________________________________________________________________________________
NTN: - - - NIC: -
5. Name ____________________________________________________________________________________________
NTN: - - NIC: - -
(Use additional sheet if required)
I, the undersigned solemnly declare that to the best of my knowledge and belief the information given above is correct and complete.
Name: _________________________________________ Signature of the Principal Officer/Managing Partner
Designation: ___________________________ Official Seal: ________________________________ Date: _______________________
Note:- Please make sure that all information is correctly filled-in and required documents are attached, especially the photocopies of NICs of all the
Partners/Directors and Incorporation/Registration Certificate. Class-I gazetted officer or an officer of the bank should attest all documents. NTN certificate
will not be issued if incomplete form is sent. In case the applicant is a Registered Firm or a Company, its application will not be entertained unless
accompanied by applications of individual Partners/Directors who do not have an NTN.
Sent to: Business Development Manager

NTN Center, CBR House,
Constitution Avenue,
Islamabad. Ph: 9207540 (Ext. 346)
15
FOR COMPANIES ONLY
FORM OF RETURN OF TOTAL INCOME UNDER THE INCOME TAX ORDINANCE, 2001
Write one letter (CAPITAL) or a digit in each box. Leave a blank box between each word
Circle Inward No./Date of Receipt
Tax Year Circle Inward No.
Ending on - -
d d m m y y y y
Zone Circle Signature, Name & Seal of Receiving Official

National Tax Sales Tax
No. - Registration No.
(if any)
Company's Date of
Registration No. Registration - -
d d m m y y y y
Name of Company
Principal Place of Business Address Registered Office Address
Phone No.(s) (i) Phone No.(s) (i)

(ii) (ii)
Fax No. Fax No.
E-mail
Type of Company Type of Public or Banking or

A Company *
B Private**
C Non-banking***
(Use codes listed on page 4)
Residential Status (Please mark in the relevant box) Resident Non-Resident
Nature of Business code (to be

filled by the Dept.)
business
Authorized
representative,
if any
Legal Practioner ITP CA C&MA Others Specify
SUMMARY OF RETURN
Code Amount Code Amount
1. Taxable Income 9199 7. Purchases during the year 3905
2. Total Tax Chargeable 8. Sales/Receipts during the year 3901
Tax Deducted/Collected at
3. 9449 9. Value of Closing Stocks 3917
source
4. Advance Tax Paid U/S 147 9459 10. Gross Profit 3919
5. Tax Paid with Return U/S 137 9469 11. Net Profit 3990
6. Value of Opening Stocks 3916 12. Paid up capital of the Company
Income last Assessed / Declared (whichever
13. is higher)
16
PART I
COMPUTATION OF INCOME
Description Code Amount

1. Income/(loss) from Property (attach prescribed Annex II) 2999
2. Income/(loss) from Business 3999
3. Capital Gains (attach prescribed Annex III) 4999
4. Income/(loss) from Other Sources (attach prescribed Annex IV) 5999
5. Foreign income (attach prescribed Annex V) 9098
6. Total Income [ 1 to 5 ] 9099
7. Exclusions from income
(a) Zakat paid under the Zakat & Ushr Ordinance, 1980 (attach evidence) 9121
(b) Workers welfare fund 9125
(c) Others (Specify) (attach evidence) 9138
(d) Total exclusions [ a to c ] 9139
8. Taxable Income [ 6 minus 7(d) ] 9199
9. Assessed business loss b/f from preceding year

10. Assessed business Loss c/f to next year
11. Assessed unabsorbed depreciation b/f from preceding year
12. Assessed unabsorbed depreciation c/f to next year
PART II
COMPUTATION OF TAX
Description / Particulars Code Amount

1. Taxable Income [ as per part I ]
2. Gross income tax 9201
3. (a) Income tax reductions (attach prescribed Annex VI)
(b) Income tax credits (attach prescribed Annex VI)
4. Income tax [ 2 minus { 3(a) + 3(b) } ] 9301
5. Minimum tax U/S 113 or U/S 148(8) 9302
6. Tax chargeable [ 4 or 5 (whichever is higher) ] 9399
7. Additional tax U/S 205
8. Workers Welfare Fund
9. Total [ 6 to 8 ]
10. (a) Tax deducted/collected at source (attach prescribed Annex VII) 9449
(b) Advance tax paid U/S 147 9459
(c) Tax paid with return U/S 137 9469
(d) Adjustment of prior year(s) refunds (attach year wise details with dates of determination by the department)
11. Tax payments [ 10(a) to 10(d) ] 9499

12. Tax payable / refundable [ 9 minus 11 ] 9999
17
PART III
INCOME CLAIMED TO BE EXEMPT AND NOT INCLUDED IN TOTAL INCOME
Nature of Income State relevant provisions of law Code Amount
1.
2.
3.
4.
5.
6. Total [ 1 to 5 ]
DOCUMENTS ATTACHED
Please mark for the documents attached
1. Prescribed Annex I II III IV V VI VII
2. Statement U/S 115(4) - Statement of receipts / incomes subject to final taxation

3. Copies of: - (a) Audited financial statements (income statement and balance sheet) in accordance with the provisions of
the Companies Ordinance, 1984 or any other statute under which incorporated, registered, formed or
constituted alongwith auditors' and directors' reports thereon.
(b) Charts of depreciation/amortization as admissible under the Income Tax Ordinance, 2001
4. Evidence of (a) Tax deducted/collected at source (b) Advance tax paid U/S 147 (c) Tax paid with return U/S 137
payment of:-
Donations/investment in shares
(d) Zakat. (e) Workers Welfare Fund (f)
etc. (for tax credits)
5. In case of a new taxpayer (without an NTN), NTN Registration Form

6. Any other document (specify)
7. Number of documents attached
Note: 1. If any of the documents prescribed under the Income Tax Rules as part of the return are not enclosed, the return is
liable to be considered as invalid return under the law.
2. Use additional sheets where necessary.
VERIFICATION (See Note 1 below)

I, the undersigned, solemnly declare that to the best of my knowledge and belief:
a. the information given in this Return and the Annex(es) and the accompanying statement(s) are correct and complete;
b. The amount of income and other particulars are truly stated;
c. during the year for which this Return is made -
i. no other income was received, or can be treated to have been received (other than that for which a statement of
receipts/incomes subject to final taxation has been separately filed);
ii. no other income accrued or arose or can be treated to have accrued or arisen;
iii. no legally inadmissible deduction / expenditure has been claimed; and
iv. the company had no other source of income; and
d. the following books of account, documents and records as required by Section 174 of the Income Tax Ordinance, 2001 read with
Rule 29 to 32 of the Income Tax Rules, 2002 thereto have been maintained for the tax year under consideration:-
(i) (iv)
(ii) (v)
(iii) (vi)
I, further declare that I am competent to make this Return and verify it in my capacity as _______________________________
of ___________________________________________________________________________________(see Note 2 below)
Name Signature
(in block letters) (of the Taxpayer)
Date - -
d d m m y y y y
NIC No.
Note: 1. The alternative in the verification which are not applicable should be scored out.
2. The verification should be signed by the Principal officer/or Chief Executive of Company.
18
*Company Codes
Company formed and registered under the Companies Co-operative Society (Other than a Finance Society)
Ordinance, 1984 or any other lawrepealed there under 10 registered under any other lawfor the time being in force 62
Body corporate formed by or under any lawin force in Finance Society registered under the Co-operative Societies
Pakistan 20 Act, 1925 63
Modaraba as defined in the Modaraba Companies and Finance Society registered under any other lawfor the time
Modarabas (Floatation and Control) Ordinance, 1980 30 being in force 64
Body incorporated by or under the lawof a country out-side Any other society (other than Co-operative or Finance)
Pakistan relating to incorporation of companies 40 established or constituted by or under any lawfor the time 65
being in force
Trust (Other than a unit trust) Foreign Association, whether incorporated or not, declared
51 by CBR to be a company 70
Unit Trust Provincial Government
52 80
Co-operative Society (Other than a Finance Society) Local authority in Pakistan
registered under the Co-operative Societies Act, 1925 61 90
** Public Company Codes

A company in which not less than 50%shares are held by Unit trust whose units are widely available to the public
the Federal Government 001 003
A company whose shares are traded on a recognized stock Any other public trust
exchange in Pakistan and remained listed at the end of the 002 004
tax year
** Private Company Code

A Company which is not a public company
009
*** Banking Company Codes *** Non-banking Company Code

As defined in the Banking Companies Ordinance, 1962 A company which is not a banking company
0001 0009
A body corporate which transacts the business of banking in
Pakistan 0002
19

Income Tax Procedure For Company

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Income Tax Procedure For Company

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SMEDA Business Guide Series

Procedure for Income Tax

Prepared By: Policy Planning & Strategy

Small and Medium Enterprise Development Authority

REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE

2. Role of Policy Planning and Strategy Group 03

4. National Tax Number 05

5. Maintenance of Book Accounts 05

8. Computation of Income Tax 09

9. Filing of Annual Income Tax Return 15

11. Annexures 16-23

Registration of a company with Income Tax

The documentation required for companies is as follows.

• Photo copies of NICs of all the partners or directors.

MAINTAINANCE OF BOOK OF ACCOUNTS

• Cash memo or invoice

• Daily record of receipts, sales, payment, purchases and expenses

• Vouchers of purchases and expenses

• Records of utility bills

• Company deriving income from property

• Company deriving income from capital gains

• Income from Dividends

• Income from Royalty

• Income from Profit on Debt

The preparation and maintenance of these accounts is important for a company to

• Profit And Loss Account

COMPUTATION OF INCOME TAX

Computation of Total Taxable Income:

The deductions are allowed under section -20.

• Section 15 (S15) (If applicable)

• Section 37 (S37) Capital Gains (If applicable)

S18 + S39 + (S15 + S37) If Applicable = Total Taxable Income.

According to Section 154, an authorised foreign exchange dealer, banking company,

Schedule 7 Percentage of Tax Description of Industrial Sectors

Therefore, the total deductions would be;

Collection of advance taxes by a company

• 10% on payment of brokerage fees or commissions will be deducted for payments

Company Type Rates

Banking Company 47%

Deductions of various Advance Taxes from Tax Liability:

• Section 233 (If Applicable)

Formula for Calculation of Final Tax Liability.

Total Taxable Income = S18 + S39 + (S15 + 37) If Applicable

Company Type Rates

Therefore, the final income tax liability formula is:

FILING OF ANNUAL INCOME TAX RETURN

After preparation and completion of annual income-tax return, it will be deposited

1. Form of return of total income under Income Tax Ordinance, 2001

ADDRESSES OF INCOME TAX OFFICES IN MAJOR CITIES

Income Tax Offices in Lahore: Income Tax Office, Gujranwala

Income Tax Offices in Karachi: Income Tax Office, Sailkot

Income Tax Office, Northern Region Income Tax Office,Peshawar

• Form for NTN (IT-A)

• Form of Income Tax Returns (For Companies)

Category (please tick one): Registered Firm Company

(Please type in capital letters)

Phone: (Res.) _________________________ (Bus.) _________________________ Fax: _________________________

Principal Business Activity:

Description of Business: _________________________________________________________________________________

Principal place of business (address): ______________________________________________________________________

Company type Public Ltd. Private Ltd. Non-Resident Company Others

Reg./Inc. No: Reg./Inc. No:

Phone: (Res.) _____________ (Bus.) _ Fax: _____________

Designation: _____ Official Seal: Date: _

* Banking Company Codes * Non-banking Company Code