Under the provisions of Income Tax Ordinance, 2001, there are five heads of income under which all types of the incomes earn by a person are covered:

  1. Salary Income

Under this head of income, any amount derived by a person in relation to his employment is referred to as Salary source or Salary Income. This includes:

  • Basic salary
  • Any perquisite provided by the employer
  • Any amount received under an employment relationship with prospective or previous employer
  • Any leave pay, overtime and bonus
  • Any commission, fees, gratuity, work condition supplements (such as for the un-pleasant
  • or dangerous working conditions)
  • Any expenditure reimbursed fully or partly by the employer
  • Any gain received under Employee share scheme
  • Any pension or gratuity received from the employer.


  1. Property Income

This head includes the amount of rent received or receivable in connection to letting out the property. It does not include the amount rent which is exempt from tax.


  1. Business Income

Business income includes:

  • Income earned from any trade and business
  • Profits earned by a person in connection to business
  • Income earned from hire of tangible moveable property
  • Lease rentals derived by a business where the principal business is to derive such type of income
  • Any management fee derived by a management company
  • Any income earned from legal business


  1. Capital Gains

Any amount derived by a person as Gain from disposal of Capital assets fall under the head of Capital Gain. Subsection (5) of the section 37 of the Income Tax Ordinance, 2001 States that:

โ€œCapital asset means property of every kind held by a person, whether or not connected with a

business, but does not include:

  • any stock-in-trade, consumable stores or raw materials held for the purpose of business;
  • any property with respect to which the person is entitled to a depreciation deduction under section 22 or amortization deduction under section 24; or
  • any movable property held for personal use by the person or any member of personโ€™s family dependent on the person excluding capital assets mentioned under section 38(5) i.e. painting, sculpture, drawing or other work of art, jewellery, rare manuscript, folio, book, postage stamp, first day cover, coin, medallion or an antique. โ€œ


  1. Income from other sources

Any income derived by a person that does not fall within the aforementioned four heads of income will fall under this head.

Income from other sources may include the following namely:

  • Dividend
  • Royalty;
  • Profit on debt;
  • Additional payment on delayed refund under any tax law;
  • Ground rent;
  • Rent from the sub-lease of land or a building;
  • Income from the lease of any building together with plant or machinery;
  • Income from provision of amenities, utilities or any other service connected with renting of building;
  • Income deemed u/s 111 – unexplained assets or income;
  • Any annuity or pension;
  • Any prize bond, or winnings from a raffle, lottery, prize on winning a quiz or crossword puzzle;
  • Any other amount received as consideration for the provision, use or exploitation of property, including from the grant of a right to explore for, or exploit, natural resources;
  • The fair market value of any benefit, whether convertible to money or not, received in connection with the provision, use or exploitation of property; and,
  • Any amount received by a person as consideration for vacating the possession of a building or part thereof, reduced by any amount paid by the person to acquire possession of such building or part thereof. This income shall be taxable in 10 years from the year of receipt in equal proportion.
  • Any amount received by a person from Approved Income Payment Plan or Approved Annuity Plan under Voluntary Pension System Rules, 2005.


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