Question

Q2

: Kaleem Limited (KL) is a listed company and its accounting year ends on 30 June. KL is now considering to change its accounting year from 30 June to 30 September. Under the provisions of the Income Tax Ordinance, 2001:
(a) Briefly describe normal, special and transitional tax year.
(b) State the requirements regarding change in tax year from normal to special.
(c) State the tax year corresponding to the income year ended 30 September 20X8 and the due date for filing the return of income.

Answer 1

a). As per Section 74 of the Income Tax Ordinance, 2001:-

1). Tax year shall be a period of twelve months ending on the 30^th day of June (hereinafter referred to as ‘normal tax year’).

2). Where a person’s income year, under the repealed Ordinance, is different from the normal tax year, or where a person is allowed, to use a twelve months’ period different from normal tax year, such income year or such period shall be that person’s tax year (hereinafter referred to as ‘special tax year’).

3). Where the tax year of a person changes as a result of an order, the period between the end of the last tax year prior to change and the date on which the changed tax year commences shall be treated as a separate tax year, to be known as the “transitional tax year”.

b). A person may apply, in writing, to the Commissioner to allow him to use a twelve months’ period, other than normal tax year, as special tax year and the Commissioner may, subject to sub-section (5), by an order, allow him to use such special tax year. The Commissioner shall grant permission under sub-section (3) or (4) only if the person has shown a compelling need to use special tax year, as the  case may be, and the permission shall be subject to such conditions, if any, as the Commissioner may impose.

c). Tax Year is 2008 and due date of filing of return of income is 31st December 2008.