ASSESSMENT PROCEDURE UNDER INCOME TAX IN PAKISTAN

Briefly explain the provisions governing the filing of return of total income under income tax law.

Assessment Procedure

Assessment is the act through which the taxable income, the tax liability or the amount of refund is determined.

The whole process which enables the tax department to finalize an assessment is termed as Assessment Procedure. this procedure involves the following steps;
1-filing of return of total income,
2-examining the return  and documents in order to form an opinion,
3-issuance of assessment order
4-payment of the amount of tax payable, if any.


What is return
                              All the details of income , total income, taxable income and tax liability are provided  to tax department in a prescribed form. this form is technically known as a return of income or simply return.


Who should file a return





The following persons are required to furnish a return of income for a tax year, namely:–
1 .every company;
2. every person (other than a company) whose taxable income for the year exceeds the maximum amount that is not chargeable to tax under this Ordinance for the year;
3.  any non-profit organization as defined in clause (36) of section
4. any welfare institution approved under clause (58) of Part I of the Second Schedule;]
5. any person  has been charged to tax in respect of any of the two preceding tax years.
6. any person who claims a loss carried forward under this Ordinance for a tax year;
7. any person who owns immovable property with a land area of two hundred and fifty square yards or more or owns any flat located in areas falling within the municipal limits existing immediately before the commencement of Local Government laws in the provinces; or areas in a Cantonment; or the Islamabad Capital Territory.
8.any person who  owns immovable property with a land area of five hundred square yards or more located in a rating area;]

9.any person who  owns a flat having covered area of two thousand square feet or more located in a rating area;]
10.any person who owns a motor vehicle having engine capacity above 1000 CC;
11.any person who has obtained National Tax Number
12.any person who is the holder of commercial or industrial connection of connection of electricity where the amount of annual bill exceeds rupees one million.]

13. Every individual whose income under the head ‗Income from business‘ exceeds rupees three hundred thousand but does not exceed rupees three hundred and fifty thousand in a tax year is also required to furnish return of income from the tax year.]
                                         
. Persons not required to furnish a return of income. —
(1) Where the entire income of a taxpayer in a tax year consists of income chargeable under the head ―Salary, Annual Statement of Deduction of Income Tax  from Salary, filed by the employer of such taxpayer, in prescribed form, the same shall, for the purposes of this Ordinance, be treated as a return of income furnished by the taxpayer under section 114:
1
[Provided that where salary income, for the tax year is five
hundred thousand rupees or more, the taxpayer shall file return of
income electronically in the prescribed form and it shall be
accompanied by the proof of deduction or payment of tax and wealth
statement as required under section 116.] ]



1[120. Assessments.- (1) Where a taxpayer has furnished a complete return of income (other than a revised return under sub-section (6) of section 114) for a tax year ending on or after the 1st day of July, 2002,- 1 (a) the Commissioner shall be taken to have made an assessment of taxable income for that tax year, and the tax due thereon, equal to those respective amounts specified in the return; and
(b) the return shall be taken for all purposes of this Ordinance to be an assessment order issued to the taxpayer by the Commissioner on the day the return was furnished. 2
(2) A return of income shall be taken to be complete if it is in accordance with the provisions of sub-section (2) of section 114.
(3) Where the return of income furnished is not complete, the Commissioner shall issue a notice to the taxpayer informing him of the deficiencies (other than incorrect amount of tax payable on taxable income, as specified in the return, or short payment of tax payable) and directing him to provide such information, particulars, statement or documents by such date specified in the notice. [(1A) Notwithstanding the provisions of sub-section (1), the Commissioner may 3[conduct audit of the income tax affairs of a person] under section 177 and all the provisions of that section shall apply accordingly.]