Lahore 22°C
Income from business
(1) The following incomes of a person for a tax year, other than income exempt from tax under this Ordinance, shall be chargeable to tax under the head Income from Business —
(a) the profits and gains of any business carried on by a person at any time in the year;
(b) any income derived by any trade, professional or similar association from the sale of goods or provision of services to its members . Explanation.– For the removal of doubt, it is clarified that income derived by co-operative societies including recreational club from the sale of goods, immoveable property or provision of services to its members is and has always been chargeable to tax under the provisions of this Ordinance;
(c) any income from the hire or lease of tangible movable property;
(d) the fair market value of any benefit or perquisite, whether convertible into money or not, derived by a person in the course of, or by virtue of, a past, present, or prospective business relationship . Explanation. — For the purposes of this clause, it is declared that the word ‘benefit’ includes any benefit derived by way of waiver of profit on debt or the debt itself under the State Bank of Pakistan Banking Policy Department’s Circular No.29 of 2002 or in any other scheme issued by the State Bank of Pakistan;
(e) any management fee derived by a management company (including a modaraba management company ). Explanation.—For the removal of doubt it is clarified that income subject to taxation under sections 5A, 5AA, 6, 7 and 7A shall not be chargeable to tax under this section.
(2) Any profit on debt derived by a person where the person’s business is to derive such income shall be chargeable to tax under the head Income from Business and not under the head Income from Other Sources.
(3) Where a lessor , being a scheduled bank or an investment bank or a development finance institution or a modaraba or a leasing company has leased out any asset, whether owned by it or not, to another person, any amount paid or payable by the said person in connection with the lease of said asset shall be treated as the income of the said lessor and shall be chargeable to tax under the head Income from Business.
(4) Any amount received by a banking company or a non-banking finance company, where such amount represents distribution by a mutual fund or a Private Equity and Venture Capital Fund out of its income from profit on debt, shall be chargeable to tax under the head Income from Business and not under the head Income from Other Sources.
(a) the profits and gains of any business carried on by a person at any time in the year;
(b) any income derived by any trade, professional or similar association from the sale of goods or provision of services to its members . Explanation.– For the removal of doubt, it is clarified that income derived by co-operative societies including recreational club from the sale of goods, immoveable property or provision of services to its members is and has always been chargeable to tax under the provisions of this Ordinance;
(c) any income from the hire or lease of tangible movable property;
(d) the fair market value of any benefit or perquisite, whether convertible into money or not, derived by a person in the course of, or by virtue of, a past, present, or prospective business relationship . Explanation. — For the purposes of this clause, it is declared that the word ‘benefit’ includes any benefit derived by way of waiver of profit on debt or the debt itself under the State Bank of Pakistan Banking Policy Department’s Circular No.29 of 2002 or in any other scheme issued by the State Bank of Pakistan;
(e) any management fee derived by a management company (including a modaraba management company ). Explanation.—For the removal of doubt it is clarified that income subject to taxation under sections 5A, 5AA, 6, 7 and 7A shall not be chargeable to tax under this section.
(2) Any profit on debt derived by a person where the person’s business is to derive such income shall be chargeable to tax under the head Income from Business and not under the head Income from Other Sources.
(3) Where a lessor , being a scheduled bank or an investment bank or a development finance institution or a modaraba or a leasing company has leased out any asset, whether owned by it or not, to another person, any amount paid or payable by the said person in connection with the lease of said asset shall be treated as the income of the said lessor and shall be chargeable to tax under the head Income from Business.
(4) Any amount received by a banking company or a non-banking finance company, where such amount represents distribution by a mutual fund or a Private Equity and Venture Capital Fund out of its income from profit on debt, shall be chargeable to tax under the head Income from Business and not under the head Income from Other Sources.
Amendment history (11)
- Semi colon substituted and Explanation added by the Finance Act, 2021.
- Words inserted by the Finance Act, 2025.
- The semi-colon and the word “and” substituted by the Finance Act, 2011.
- Inserted by the Finance Act, 2011.
- Inserted by the Finance Act, 2002
- Added by the Finance Act, 2018
- Added by the Finance Act, 2003.
- The word “lesser” substituted by the word “lessor” by the Finance Act, 2014.
- Inserted by the Finance Act, 2007.
- The word “stock” substituted by the Finance Act, 2005.
- The word “arbitrate” substituted by the Finance Act, 2005.
Amendment notes captured from the source page(s); they may include changes to neighbouring provisions.
Source FBR PDF page 62
Unofficial reference, compiled from the FBR’s consolidated Income Tax Ordinance 2001 (amended up to 30 June 2026). Provided for general information only — not an official FBR publication and not legal or tax advice. Always verify against the official FBR text before relying on it for filing or any decision.