KARACHI: Federal Board of Revenue (FBR) has recently issued updated Income Tax Ordinance, 2001 and explained the concealed or unexplained income for the purpose of tax chargeability.
Provided that where a taxpayer explains the nature and source of the amount credited or the investment made, money or valuable article owned or funds from which the expenditure was made, by way of agricultural income, such explanation shall be accepted to the extent of agricultural income worked back on the basis of agricultural income tax paid under the relevant provincial law.
(ii) in the tax year immediately preceding the tax year in which the investment, money, valuable article or expenditure is discovered by the Commissioner and is situated or incurred outside Pakistan and concealed income is foreign-source.
Explanation.—For the removal of doubt, it is clarified that where the investment, money, valuable article or expenditure is acquired or incurred outside Pakistan in a prior tax year and is liable to be included in the income of tax year 2018 and onwards on the basis of discovery made by the Commissioner during tax year 2019 and onwards and the person explains the acquisition of such asset or expenditure from sources relating to tax year in which such asset was acquired or expenditure was incurred, such explanation shall not be rejected on the basis that the source does not relate to the tax year in which the amount chargeable to tax is to be included.
Sub-Section (3): Where the declared cost of any investment or valuable article or the declared amount of expenditure of a person is less than reasonable cost of the investment or the valuable article, or the reasonable amount of the expenditure, the Commissioner may, having regard to all the circumstances, include the difference in the person’s income chargeable to tax under the head “Income from Other Sources” in the tax year to which the investment, valuable article or the expenditure relates.
(a) to any amount of foreign exchange remitted from outside Pakistan through normal banking channels not exceeding ten million Rupees in a tax year that is encashed into rupees by a scheduled bank and a certificate from such bank is produced to that effect.
(1) Sub-section (1) shall continue to apply to the amount representing value recorded by the authority registering or attesting the transfer.
Sub-Section (5): The Board may make rules under section 237 for the purposes of this section.