Income Tax Ordinance, 2001

CHAPTER-III

TAX ON TAXABLE INCOME PART IV HEAD OF INCOME: INCOME FROM BUSINESS Division IV Tax Accounting

From: 2023-07-01 - To: 0000-00-00 32. Method of accounting.- 1[(1) Subject to this Ordinance, a person’s income chargeable to tax shall be computed in accordance with the method of accounting regularly employed by such person.] (2) Subject to sub-section (3), a company shall account for income chargeable to tax under the head “Income from Business” on an accrual basis, while other persons may account for such income on a cash or accrual basis. (3) The 2[Board] may prescribe that any class of persons shall account for income chargeable to tax under the head “Income from Business” on a cash or accrual basis. (4) A person may apply, in writing, for a change in the person’s method of accounting and the Commissioner may, by 3[order] in writing, approve such an application but only if satisfied that the change is necessary to clearly reflect the person’s income chargeable to tax under the head “Income from Business”. (5) If a person’s method of accounting has changed, the person shall make adjustments to items of income, deduction, or credit, or to any other items affected by the change so that no item is omitted and no item is taken into account more than once. _____________________________________________________________ 1-Substituted vide the Finance Act, 2003 (I of 2003 assented on 16th June, 2003). At the time of substitution sub-section (1) was as under:-- “(1) A person’s income chargeable to tax under the head “Income from Business shall be computed in accordance with the method of accounting regularly employed by the person.” 2-The words “Central Board of Revenue” substituted vide the Finance Act, 2007 (IV of 2007 assented on 30th June, 2007) 3-Substituted for the word “notice” vide the Finance Act, 2003 (I of 2003 assented on 16th June, 2003) From: 2007-07-01 - To: 2023-06-30 32. Method of accounting.- 1[(1) Subject to this Ordinance, a person’s income chargeable to tax shall be computed in accordance with the method of accounting regularly employed by such person.] (2) Subject to sub-section (3), a company shall account for income chargeable to tax under the head “Income from Business” on an accrual basis, while other persons may account for such income on…