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1.Concepts of Taxation & Tax Structure in Pakistan
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Transcript of 1.Concepts of Taxation & Tax Structure in Pakistan
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TAXATIONMANAGEMENTChapter No.1: Concepts of taxation & Taxstructure in Pakistan
This Chapter contains the suar! of thefo""o#in$ chapters of the text %ookChapter 1: Intro'uction & histor! of Incoe
Tax (a#Chapter ): Incoe Tax AuthoritiesChapter 1*: Appea"s
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Concept of Tax & Taxation
Tax: Compulsory contributions of wealth
levied upon the persons by the state, to
meet the expenses incurred in providingcommon benets to the nation
Taxation Mana$eent: The strategy where by a person manages its
business and other activities in such a way so
as to legally minimize his tax liability, notthrough illegal concealments, but throughlegal compliance to avail tax credits, rebates,
exemptions, reductions and deductions etc.
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Cannons of Taxation
Cannons of Taxation revolve around #ho #i""
contribute ho#uch +ip"icit!:Tax laws must be simple
Con,enience:Tax procedures must be convenient
Certaint!: Tax amount must be certain
-u'iciousness:Tax system must be just
ene/t:Taxes must be imposed on the beneciaries
usiness frien'"!:Taxes must encourage business
Capacit! to Pa!0orionta" E2uit!: ersons having the same income should
pay the same taxes
3ertica" E2uit!:Those who have more income should paytaxes at high rates whereas those who have low income,
they should pay taxes at lower rates
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T!pes of Taxes
4irect Tax: !urden of taxation is on the person on
whom levied. ".g income tax
In'irect Tax: !urden of tax is shifted by the person
on whom levied to other persons. ".g. sale tax Proportiona" Tax: #evied with the same
percentage. ".g. sales tax is levied at the rate of $%&
Pro$ressi,e Tax: 'ate of tax increases as the
income increases. ".g income tax
3a"ue A''e' Tax: #evied at each stage of value
addition. ".g. sales tax
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5isca" Po"ic!
(trategy adopted by government to collect therevenue and ma)e the expenditures so that social andeconomic stability could be attained 6e,enue:Taxes * Tari+s, nternal * "xternal !orrowing,
enalties * -ines, ids * /rants, ncome from governmentowned enterprises, rinting of currency, (ale of state assets
Expen'itures: 0evelopmental * 1on2developmental"xpenditures, (ubsidies, Transfer ayments3li)e4nemployment llowances, 0ebt (ervicing, ension,
0efence, 'unning of government, (0 5isca" 4e/cit: "xpenditures5'evenue 5isca" +urp"us:"xpenditures6'evenue 5isca" Neutra"it!: "xpenditures7'evenue
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4i7erent Taxes inPakistan 5e'era" Taxes: #evied by the federal government
ncome tax
(ales tax on goods -ederal "xcise 0uty
Customs duty Pro,incia" Taxes:#evied by the provincial government
(tamps 0uty
roperty Tax
8otor vehicle tax
(ales tax on services (oca" taxes: #evied by the local government
Toll tax 8unicipal taxes
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6o"e of Pi""ars of the +tate in taxations!ste in Pakistan
(e$is"ati,e
Executi,e
-u'iciar
!
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(e$is"ature888Par"iaent
8a)es substantive legislation to impose di+erent
taxes in the light of cannons of taxation . ".g. ncome Tax ct of $9, ncome Tax ;rdinance $9%9, ncome Tax
;rdinance
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Executi,e888Tax Authorities
dminister taxes with eAciency *e+ectiveness. ".g. -ollowing uthoritiesadminister ncome Tax, (ales Tax * -"0
5inance Minister & 5inance +ecretar! 6e,enue 4i,ision of 5e'era" Go,t.: 56
"stablished under -!' ct
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Executi,e888TaxAuthorities
ncome Tax 'ules
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Executi,e888TaxAuthorities
Authorities in 5ie"' 5orations: n?#arge Taxpayers 4nits, $ 'egional Tax
;Aces * DB Taxpayer -acilitation Centers,following tax authorities are practicing Chief Commissioner nland 'evenue EFead of
'T;G#T4H /rade $
Commissioner nland 'evenue EFead of IoneH/rade