Geographical source of income Section 101
Geographical source of income Section 101: Finance Act, 2024 — Explanation regarding Important Amendments made in the Income Tax Ordinance, 2001
Important amendments made in Income Tax Ordinance, 2001 (“the Ordinance”) through Finance Act, 2024 are explained in the subsequent paragraphs.
Geographical source of income Section 101
As per sub-section (6) of section 11, the income of a non-resident person under a head of income shall be computed by taking into account only amounts that are Pakistan-source income. Sub-section (3) of section 101 stipulates Pakistan-source business income of a non-resident person. As per clause (d) of sub-section (3) of section 101, business income of a non-resident person shall be Pakistan-source income to the extent to which it is directly or indirectly attributable to any business connection in Pakistan. The expression “business connection in Pakistan” has now been defined by insertion of sub-sections (3A) and (3B) in section 101. The expression “business connection in Pakistan” shall include significant economic presence in Pakistan of a non-resident person. The term, “significant economic presence in Pakistan” means transaction in respect of goods, services, or property carried out by a non-resident with any person in Pakistan including provision of download of data or software in Pakistan, if the aggregate of payments arising from such transaction or transactions during the tax year exceeds such amount as may be prescribed. Further, it means systematic and continuous soliciting of business activities or engaging in interaction through digital means with• such number of users in Pakistan as may be prescribed irrespective of whether or not—
(i) the agreement for such transactions or activities is signed in Pakistan;
(ii) the non-resident has a residence or place of business in Pakistan, or (iii) the non-resident renders services in Pakistan.
Read full text of Explanation of Finance Act, 2024 Amendments made in the Income Tax Ordinance, 2001 for more updates on taxes from FBR click here.
