Tax Reduction for Full-time Teacher or Researcher

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LAW

Under Clause 2 of Part III of the Second Schedule to the Income Tax Ordinance, 2001, the tax payable by a person shall be reduced by 40% of tax payable on salary income if the following conditions are fulfilled

  1. He/she is be a full time teacher or a researcher;
  2. He/she is employed in a non-profit education or research institution duly recognized by Higher Education Commission, a Board of Education or a University recognized by the Higher Education Commission, including Government training and research institutions.

 

PROCESS

To claim this reduction while filing income tax return in Iris

(i) click ‘Tax Chargeable / Payments’ on the left of the screen

(ii) click ‘Tax Reductions’

(iii) Enter the amount of Tax Reduction for Full Time Teacher / Researcher against code 9302 in the third column titled ‘Amount’

If the amount entered against the code is greater than the reduction allowed as per law, Iris will automatically reduce it to the allowable amount on pressing ‘Calculate’

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18 comments on Tax Reduction for Full-time Teacher or Researcher

  1. Whether a full time teacher of private school, which is not a non profit institution, can claim a tax reduction of 40% of salaries tax. Whether private schools covered under the board of education. Please make reference if possible.

    1. A taxpayer (an individual) is entitled to a further 40% reduction in tax liability subject to the following conditions:
      – He/she should be a full time teacher or researcher; and
      – He/she should be employed in:
      – A non-profit education or research institution duly recognized by:
      Higher Education Commission;
      A Board of Education recognized by Higher Education Commission; or
      A University recognized by Higher Education Commission; or
      – Government training and research

      institutions

  2. If a person receive foreign income in term of Introduction fee. What will be the tax rate? and under which Section?

    1. Section 101 of the Income Tax Ordinance
      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;
      (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) any business connection in Pakistan.]
      [(4) Where the business of a non-resident person comprises the rendering of independent services (including professional services and the services of
      entertainers and sports persons), the Pakistan-source business income of the person shall include [in addition to any amounts treated as Pakistan-source income under sub-section (3) any remuneration derived by the person where the remuneration is paid by a resident person or borne by a permanent establishment in Pakistan of a non-resident person.]
      (5) Any gain from the disposal of any asset or property used in deriving any business income referred to in sub-section (2), (3) or (4) shall be Pakistan source income.
      (6) A dividend shall be Pakistan-source income if it is
      ( a) paid by a resident company; or
      (b) dividend as per provisions of sub-clause (f) of clause (19) of
      section 2.
      (7) Profit on debt shall be Pakistan-source income if it is —
      (a) paid by a resident person, except where the profit is payable in respect of any debt used for the purposes of a business carried on by the resident outside Pakistan through a permanent establishment; or
      (b) borne by a permanent establishment in Pakistan of a nonresident person.
      (8) A royalty shall be Pakistan-source income if it is —
      (a) paid by a resident person, except where the royalty is payable in respect of any right, property, or information used, or services utilised for the purposes of a business carried on by the resident outside Pakistan through a permanent establishment; or
      (b) borne by a permanent establishment in Pakistan of a nonresident person.
      (9) Rental income shall be Pakistan-source income if it is derived from the lease of immovable property in Pakistan whether improved or not, or from
      any other interest in or over immovable property, including a right to explore for, or exploit, natural resources in Pakistan.
      (10) Any gain from the alienation of any property or right referred to in sub-section (9) or from the alienation of any share in a company the assets of
      which consist wholly or principally, directly or indirectly, of property or rights referred to in sub-section (9) shall be Pakistan-source income.
      (11) A pension or annuity shall be Pakistan-source income if it is paid by a resident or borne by a permanent establishment in Pakistan of a non-resident person.
      (12) A technical fee shall be Pakistan-source income if it is –
      (a) paid by a resident person, except where the fee is payable inrespect of services utilised in a business carried on by the resident outside Pakistan through a permanent establishment; or
      (b) borne by a permanent establishment in Pakistan of a nonresident person.
      (13) Any gain arising on the disposal of shares in a resident company shall be Pakistan-source income.
      [(13A).Any amount paid on account of insurance or re-insurance premium by an insurance company to an overseas insurance or re-insurance company shall be deemed to be Pakistan source income.]
      (14) Any amount not mentioned in the preceding sub-sections shall be Pakistan-source income if it is paid by a resident person or borne by a permanent establishment in Pakistan of a non-resident person.
      (15) Where an amount may be dealt with under sub-section (3) and under another sub-section (other than sub-section (14)), this section shall apply—
      (a) by first determining whether the amount is Pakistan-source income under that other sub-section; and
      (b) if the amount is not Pakistan-source income under that subsection, then determining whether it is Pakistan-source income under sub-section (3).
      (16) An amount shall be foreign-source income to the extent to which it is not Pakistan-source income

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