Government of
revenue division
(central board of revenue)
****
(INCOME TAX)
S.R.O.609(I)/2002:- In exercise
of the powers conferred by sub-section (1) of section 237 of the Income Tax
Ordinance, 2001 (XLIX of 2001), the Central Board of Revenue is pleased to
direct that the following further amendments shall be made in the Income Tax
Rules, 2002, the same having been previously published as required by
sub-section (3) of the said section, namely:-
In
the aforesaid rules, in Chapter II for PART-I, the following shall be
substituted, namely:-
“CHAPTER-II
DETERMINATION
OF INCOME – HEADS OF INCOME
3.
Valuation of perquisites,
allowances benefits.- For the purposes of computing the income
chargeable to tax under the head “salary”, the value of perquisites, allowances
and benefits includable in the said income shall be determined in accordance
with the rule 4 to 9.
(4) For the purpose of
determining the value of perquisites, allowances and benefits under rule 3,-
(a) “annual value” of an accommodation
means the sum for which the accommodation might reasonably be expected to let
from year to year;
(b) “basic salary” means the pay and allowances payable monthly
or otherwise, but does not include-
(i) dearness
allowance or dearness pay unless it enters into the computation of
superannuation or retirement benefits of the employee concerned;
(ii) employer’s contribution to a recognised provident fund or a
fund to which the Provident Funds Act, 1925 (XIX of 1925), applies and the
interest credited on the accumulated balance of an employee in such fund;
(iii) allowances which are exempt from the payment of tax under
any provision of this Ordinance;
(iv) allowances and perquisites referred to in sub-clauses (b) to
(f) of sub-section (2) of section 12, sub-section (3) of section 12, section
14; and
(v) allowances, perquisites, annuities and benefits referred to
in rules
(c) “salary” means remuneration or compensation for services
rendered, paid or to be paid at regular intervals and includes overseas,
dearness or cost of living allowance by whatever name it may be described, and
bonus or commission which is payable to an employee in accordance with the
terms of his employment as remuneration or compensation for services including
any amount received by an employee from any employment, whether of a revenue or
capital nature, including the amounts referred to in sub-section (2) of section
12, but does not include the employer’s
contribution to a recognized provident or superannuation fund or gratuity fund
or any other sum which does not enter into the computation for pension or
retirement benefits;
(d) “employee”
includes a director of a company working whole-time for one company
(e) "unfurnished accommodation or housing" includes electric
fans, built in cupboards, cooking range and water heater; and
(f) "furnished accommodation or housing" includes basic
furniture and furnishing, appliances for cooking, refrigeration and heating and
cooling appliances in addition to the items available in respect of
"unfurnished accommodation or housing".
5. House
rent allowances receivable in cash.- Where the house rent allowance is receivable
by the employee in cash, the amount, if any, by which the house rent allowance
so receivable exceeds forty-five per cent of the minimum of the time scale of
the basic salary or the basic salary where there is no time scale, shall be
included in his income.
5A. Rent-free
unfurnished accommodation.- Where
rent-free accommodation is provided to an employee, there shall be included, in
the total income of such employee, an amount calculated as under:-
Value of accommodation
|
Amount to be included in the total income. |
|
(a) Where the annual value of the accommodation
does not exceed an amount equal to forty-five per cent of the minimum of the
time scale of his basic salary or the basic salary where there is no time
scale. |
Nil |
|
(b) Where the annual value of the
accommodation exceeds an amount equal to forty-five per cent of the minimum
of the time scale of his basic salary or the basic salary where there is no
time scale.. |
The amount exceeding forty-five
per cent of the minimum of the time scale of his basic salary or the basic
salary where there is no time scale, subject to a maximum of fifteen percent
of salary. |
5B. Rent
free furnished accommodation.- Where rent free furnished accommodation is
provided to the employee, an amount equal to ten percent of his salary over and
above the amount determined for inclusion under rule 5A shall be added to his
income.
5C. Accommodation
hired by the employee with rent payable by the employer.- Where the accommodation is hired by the
employee in his own name but the rent is payable by the employer, the amount
includable in the salary shall be determined under rule 5A or 5B, as the case
may be as reduced by any payment made by the employee for such accommodation.
5D. Accommodation
provided at a concessional rate.- Where the accommodation is provided to the
employee, other than a person in the civil or military employment of the
Government, at a concessional rate, the
difference between the rent actually
paid by him and the amount determined to be includible in an employee’s salary
under rule 5A or 5B shall be added to his income.
5E. House
rent allowance receivable in addition to accommodation, etc.-
Where any house rent allowance is receivable by the employee in addition to the
benefits referred to in rules 5A, 5B, 5C or 5D, the whole amount of the
allowance shall be added in his income in addition to the amount computed under
any of the said rules.
6. Conveyance
allowance receivable in cash with no conveyance facility.- Where neither any conveyance is provided by
the employer nor any conveyance owned or maintained by the employee is used by
him in the performance of the duties of office held by him and conveyance
allowance is receivable by him in cash, the amount of such allowance exceeding Rs. 3600 or the actual expenditure incurred by the
employee, which ever is less, shall be included in his income.
6A. Motor
vehicle provided exclusively for personal or private use.- Where a motor
vehicle is provided by the employer for the use of the employee exclusively for
personal or private purposes, there shall be included in the employee’s income
an amount equal to-
(a) the
sum actually expended by the employer on running and maintenance of the motor
vehicle (including normal depreciation, where the motor vehicle is owned or the
amount of rental where the motor vehicle is hired by the employer) if the motor
vehicle is used by one employee; and
(b) the sum arrived at by dividing the amount as computed under
sub-rule (a) by the number of persons entitled to use the motor vehicle if the
motor vehicle is used by more than one employee.
6B. Additional
conveyance allowance.- Where any
conveyance allowance is receivable by an employee in addition to the perquisite
mentioned in rule 6A, the whole amount of such allowance plus the amount
determined under the rule 6A shall be included in his income.
6C. Motor
vehicle used partly for personal and partly for business purposes.- Where the motor vehicle is used by the
employee partly for his personal and partly for business purposes, there shall
be included in his income,-
(a) where
the motor vehicle is owned or hired by the employer and its running (including
hire and maintenance) costs are also borne by the employer and the motor
vehicle is used exclusively by one person, 50 per cent of the sum actually
expended on the running of the motor vehicle (including maintenance and normal
depreciation where the motor vehicle is owned or the amount of rental where it
is hired by the employer) or Rs.3600, whichever is the less;
(b) where
the motor vehicle is owned or hired by the employer and its running (including
hire and maintenance) costs are also borne by the employer and the motor
vehicle is used by more than one person, the sum arrived at by dividing the
amount representing 50 per cent of the sum actually expended by the employer on
the running of the motor vehicle (including maintenance and normal depreciation
where the motor vehicle is owned or the amount of rental where it is hired by
the employer) by the number of such persons or Rs.2400, whichever is the less;
(c) where
the motor vehicle is owned or hired by the employer and its running cost is
borne by the employee, the amount, if any, by which the conveyance allowance
paid by the employer exceeds Rs.2400 or 7.5 per cent of the basic salary,
whichever of these two sums is the
higher;
(d) where
the motor vehicle is owned by the employee and its running (including hire and
maintenance) costs are also borne by him the amount by which the conveyance
allowance paid by the employer exceed Rs.3600 or 10 per cent of the basic
salary, whichever of these two sums is
the higher; and
(e) where the motor vehicle is owned by the employee and its
running (including hire and maintenance) costs are borne by the employer, the
amount, if any, by which the conveyance allowance paid by the employer exceeds
Rs.1200 or 2.5 per cent of the basic salary, whichever of these two sums is the higher.
6D. Motor
vehicle used exclusively for business purposes.- Where the motor vehicle is used by the employee exclusively for business
purposes, there shall be included in his income,-
(a) where
the motor vehicle is owned or hired by the employer and its running (including hire and
maintenance) costs are also borne by him, the whole amount of the conveyance
allowance, if any, receivable by the employee;
(b) where
the motor vehicle is owned or hired by the employer and its running (including
hire and maintenance) costs are borne by the employee, the amount, if any, by
which the conveyance allowance paid by the employer exceeds the actual
expenditure incurred by the employee on the running (including maintenance) of
the motor vehicle;
(c) where
the motor vehicle is owned or hired by the employee and its running (including
maintenance) costs are borne by him, the amount, if any, by which the
conveyance allowance paid by the employer exceeds Rs.4800 or 10 per cent of the
basic salary, whichever of these two sums
is the higher; and
(d) where the motor vehicle is owned by the employee and its
running (including maintenance) costs are borne by the employer, the amount, if
any, by which the conveyance allowance
paid by the employer exceeds Rs.2400 or 7.5 per cent of the basic salary,
whichever of these two sums is the
higher.
7. Provision
of passage for travel.- (1) Where
free or concessional passage for travel abroad or
within Pakistan is provided by the employer to an employee (including the
members of his household and dependants), there shall be included in the income
of the employee-
(i) where the passage is provided in
accordance with the terms of employment, an amount equal to the sum by which
the cash payment, if any, made by the employer exceeds the actual expenditure
on fare incurred by the employee; or
(ii) where the passage is not in accordance with the terms of
employment, the whole of the amount paid in cash, if any, or if no cash payment
is made, the amount which would have been expended by the employee had the free
or concessional passage, as the cash may be, not been
provided by the employer:
Provided that where free or concessional passage for travel abroad is availed of by the
employee more than once in two years and more than once in three years for the
members of his household and dependants, the whole of the amount paid to him in
cash, if any, for such additional passage or if no cash payment is made the
amount which would have been expended by him, had the additional passage not
been provided by the employer shall be included in his income.
(2) Where
the transport is provided free of cost, or at the concessional
rate, by an undertaking engaged in the transport of passengers or the carriage
of goods to any employee of the undertaking (including the members of the
household and dependants) in any conveyance owned or chartered by the
undertakings for the purpose of the transport of the passengers or carriage of
goods, nothing shall be added in his income.
8. Minor
Perquisites.- The
provision by an employer to an employee of tea, coffee and other similar
refreshment at the employer’s business premises during the course of work shall
not be treated as salary of employee.
9. Valuation
of perquisites, allowances, benefits where salary is Rs.600,000
or more.- (1) Where income chargeable under the head
“Salary” of an employee including the value of perquisites as determined under
rule 4 to 8 is six hundred thousand rupees or more for any tax year, the value
of allowances perquisites and benefits shall be determined in accordance with
sub rule (2 to 5) of this rule.
(2) Where
any perquisite is receivable in cash the whole amount shall be included in employee’s
salary
(3) Where
any perquisite is receivable otherwise, than in cash, the amount chargeable to
the employee under the head “salary” for that year shall include the fair
market value of the perquisite, determined at time it is provided, except
provision of housing or accommodation, and provision of motor vehicle, as
reduced by any amount paid by the employee for the perquisite.
(4) The
value of accommodation or housing for the purposes of sub-section (12) of
section 13 shall be determined as under:
(a) Where
free unfurnished accommodation or housing is provided to the employee, the
value for addition to the income shall be made on the following basis:
|
Accommodation or housing- |
Value for areas falling within the limits of Metropolitan
Corporation, Municipal Corporation, Cantonment Board or the |
Value for
other areas |
|
With land area upto 250 sq. yards. |
Rs.40,000 |
Rs.27,000 |
|
With land areas exceeding 250 sq. yards but not
exceeding 500 sq. yards. |
Rs.106,000
|
Rs. 66000 |
|
With land area exceeding 500
sq. yards but not exceeding 1000 sq. yards. |
Rs.1,99,000
|
Rs.106,000 |
|
With land area
exceeding 1000 sq. yards but not exceeding 2000 sq.
yards. |
Rs. 370,000
|
Rs.198,000
|
|
With land area
exceeding 2000 sq. yards. |
Rs.462,000
|
Rs.
264,000
|
(b) Where
free furnished accommodation is provided to the employee, the value for
addition to income shall be the amount determined under clause (a) of this
sub-rule as increased by and a further sum equal to 15 per cent of the said
amount.
(5) The
value of perquisite representing provision of a motor vehicle, for the purposes
of sub-section (3) of section 13, shall be determined as under:-
(a)
where the motor vehicle is provided by an employer wholly for private use
of the employee, 10% of the cost to the employer for acquiring the motor
vehicle or the fair market value of the vehicle at the commencement of lease,
if the motor vehicle is taken on lease by the employer;
(b)
where the motor vehicle is provided by an employer partly for private use
of the employee, 5% of the cost to the employer for acquiring the motor vehicle
or the fair market value of the vehicle at the commencement of lease, if the
motor vehicle is taken on lease by the employer;
(c)
where the motor vehicle is used by more than one employee, the amount as
determined in clause (a) or (b), as the case may be, divided by number of
employees using the motor vehicle;
(d) where an employee makes any payment to the employer in
respect of the use of motor vehicle, the value of perquisite as determined
under clause (a), (b) or (c) as reduced by the amount paid by him.”.
[No.F.4(29)ITP/2002]
(VAKIL AHMAD KHAN)
Member (Direct Taxes)/
Additional Secretary