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Friday, 8 March 2013

Define the term Tax Year








TAX YEAR :-
This concept has been introduced through income tax ordinance. It is period of time for which tax is to be collected regarding a person. Tax year has three kinds.
  1. Normal tax year
  2. Special tax year
  3. Transitional tax year

  1. Normal Tax Year :-
Normal year is period of 12 months ending on 30th June.

  1. Special Tax Year :- 
Central board of revenue (CBR) may specify a period of 12 month as a tax year for any person or class of persons.

Example 1 :
CBR has declared special year for the companies manufacturing cotton textiles or sugar w.e.f.1st October to 30th September (12 months ).

Example 2 :
All persons exporting rice the special year is w.e.f. 1St January to 31st December.

Example 3 :
All persons caring on business of oil is w.e.f. 1St September to 31st August.

Example 4 :
The period of special year for all the insurance companies is from 1st January to 31st December.

Transitional Tax Year :-
If central board of revenue (CBR) or commissioner of income tax changes the tax year of any person or class of persons, it results in the emergence of changing tax period which is known as transitional tax year. This tax year consists of the period.
(1)   Before change end of the last year.
(2)   Start of the changed tax year.
Example :
Suppose Mr. Ash was observing special tax year (1-1-2009 to 31-12-2009) nowhe applies for change and wants to adopt the period of 12 month from 1-7-2010o 30-6-2011 The commission allows him the change according the new change next tax year will start from 1-7-2010to 30-6-2011 So transitional tax of year will be from 1-1-2011 to 30-6-2011.
1-1-2009 to 31-12-2009
1-7-2010 to 30-6-2011
1-1-2010 to 30-6-2010

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