Lecture by Mohammad Iqbal Ghori

1. EXEMPTIONS UNDER
ND
PART-I OF 2
SCHEDULE

2. EXEMPTIONS FROM TOTAL
INCOME
The income or classes of income, or persons or
classes of persons specified in the Second Schedule
shall be subject to the conditions and shall be
restricted to the extent specified under each case.
Where any income which is exempt from tax under
any provision of the Second Schedule, such income,
as may be specified in the said Schedule and subject
to such conditions as may be specified therein, shall
be included in the total income, however the tax shall
not be payable in respect of such income

3. EXEMPTIONS UNDER PART-I OF 2ND
SCHEDULE
Salary Income
Employees of Agha Khan Devlopment Network
(Pakistan). [Clause (3)
The salary income of a person working as expert,
advisor, consultant or senior management staff in any
institution run by AKDNP is exempt if the said person is
not a citizen of Pakistan.

4. EXEMPTIONS UNDER PART-I OF 2ND
SCHEDULE
Salary Income of Seafarer [Clause 4]
The salary income of a Pakistani Seafarer working
on a vessel shall be exempt from tax if any of the
following conditions is satisfied:
1.
The person has worked on vessel for 183 days or
more during a tax year.
2.
The income is remitted to Pakistan through
normal banking Channel maximum within two
months of the relevant income year, if it is a
foreign vessel.

5. EXEMPTIONS UNDER PART-I OF 2ND
SCHEDULE
Allowances etc to Person W
orking
Outside Pakistan [Clause 5]
Any allowances and perquisites paid by the
Government to a Pakistani, rendering services
outside Pakistan are exempt from tax

6. EXEMPTIONS UNDER PART-I OF 2ND
SCHEDULE
Pension Received by a Pakistani
Any amount received as pension by a Pakistani is
exempt. This exemption shall be withdrawn if the
retired person is re-employed by the same employer.
Where a person receives more than one pension,
then only one pension having higher amount will be
exempt and remaining others will be taxable [Clause
8]

7. EXEMPTIONS UNDER PART-I OF 2ND
SCHEDULE
Pension Received by a Pakistani
1.
2.
3.
4.
5.
6.
Pension received by the follwing persons is exempt from
tax:
Any citizen of Pakistan
Members of Armed Forces of Pakistan.
Employees of the Federal Government or a Provincial
Government
Families and dependents of public servants or members
of armed forces of Pakistan died during service.
Commutation of pension received from Government or
under any pension scheme approved by Board.
Pension received by dependents of Shuhuda and public
servants died during service.

8. EXEMPTIONS UNDER PART-I OF 2ND
SCHEDULE
GRATUITY OR COMMUTATION OF PENSION
[CLAUSE 13] .
Any amount of gratuity or commutation of pension
received by an employee on his retirement or his
heirs upon the death of an employee is exempt
from tax subject to the limits specified.

9. EXEMPTIONS UNDER PART-I OF 2ND
SCHEDULE
LEAVE ENCASHMENT [CLAUSE 19] .
Any amount received on encashment of “leave
preparatory to retirement” (LPR) is exempt, if it is
received by a Government Employee.

10. EXEMPTIONS UNDER PART-I OF 2ND
SCHEDULE
Annuity [CLAUSE 20] .
Any Income received as annuity is exempt upto
Rs. 10,000 per annum if it is received from
Pakistan Postal Annuity Certificate Scheme.

11. EXEMPTIONS UNDER PART-I OF 2ND
SCHEDULE
Amount Received From Voluntary Pension System [CLAUSE 23A] .
50% of the accumulated balance received shall be exempt from tax if
the following conditions are satisfied:
It is received from the voluntary pension system offered by a pension
fund manager under the Voluntary Pension System Rules, 2005; and
It is received by
1.
2.
1.
2.
.
An eligible person on his retirement or on disability rendering him unable to
work or
Nominated survivors on death of the eligible person

12. EXEMPTIONS UNDER PART-I OF 2ND
SCHEDULE
MONTHLY INSTALMENT FROM AN INCOME PAYMENT PLAN (23B)
The amount received as monthly installment from an income payment plan
shall be exempt from tax if the following conditions are satisfied:
1.
2.
.
The amount is invested out of:
1.
The accumulated balance of an individual pension accounts with a pension
fund manager; or
2.
An approved annuity plan or another individual pension account of eligible
person or the survivors pension account maintained with any other
pension fund manager
The accumulated balance is invested for a period of ten years.

13. EXEMPTIONS UNDER PART-I OF 2ND
SCHEDULE
COMPENSATORYALLOW
ANCE
(Clause 35)
Any amount received as compensatory allowance is
exempt up to 75% of the gross salary of the recipient if
the following conditions are fulfilled:
1.
2.
.
The recipient is a citizen of Pakistan
He is locally recruited in a Pakistan Mission abroad.

14. EXEMPTIONS UNDER PART-I OF 2ND
SCHEDULE
Perquisites [Clauses 51 to 56]
1.
2.
3.
4.
5.
.
Perquisites in respect of residents, conveyance and sumptuary
(entertainment) allowance granted to the following persons is exempt
from tax:
President of Pakistan
Provincial Governors
Chiefs of Staff, Pakistan Armed Forces
Corps Commanders
Judges of the supreme court and the High Court