Income Tax Ordinance, 2001

CHAPTER-VII

INTERNATIONAL PART I GEOGRAPHICAL SOURCE OF INCOME

Income Tax Ordinance, 2001 CHAPTER-VII INTERNATIONAL PART I GEOGRAPHICAL SOURCE OF INCOME From: 2024-12-29 - To: 0000-00-00 101. Geographical source of income.- (1) Salary shall be Pakistan-source income to the extent to which the salary - (a) is received from any employment exercised in Pakistan, wherever paid; or (b) is paid by, or on behalf of, the Federal Government, a Provincial Government, or a 1[Local Government] in Pakistan, wherever the employment is exercised. (2) Business income of a resident person shall be Pakistan-source income to the extent to which the income is derived from any business carried on in Pakistan. (3) Business income of a non-resident person shall be Pakistan-source income to the extent to which it is directly or indirectly attributable to - (a) a permanent establishment of the non-resident person in Pakistan; (b) sales in Pakistan of goods merchandise of the same or similar kind as those sold by the person through a permanent establishment in Pakistan; 2[***] (c) other business activities carried on in Pakistan of the same or similar kind as those effected by the non-resident through a permanent establishment in Pakistan 3[; or] (d) 4[any business connection in Pakistan 5[:or]] (e) 6[import of goods, whether or not the title to the goods passes outside Pakistan, if the import is part of an overall arrangement for the supply of goods, installation, construction, assembly, commission, guarantees or supervisory activities and all or principal activities are undertaken or performed either by the associates of the person supplying the goods or its permanent establishment, whether or not the goods are imported in the name of the person, associate of the person or any other person. Explanation.- For the removal of doubt, it is clarified that where the income is subject to taxation under sections 5A, 5AA, 6, 7 and 7A, the income shall not be chargeable to tax under the head income from business.] 7[(3A) For the purposes of clause (d) of sub-section (3), business connection in Pakistan shall include “significant economic presence in Pakistan” of a nonresident. (3B) significant economic presence in Pakistan shall mean – (a) transaction in…