Through the Finance Act, the scope of “Resident Individual” has been enhanced to the extent to include the persons present in Pakistan;
a. for a period of, or periods amounting in aggregate to, one hundred and twenty days (120) or more in the tax year; and
b. in the four years preceding the tax year, has been in
Pakistan for a period of, or periods amounting in aggregate to, three hundred and sixty‐five days or more,
The introduction of this provision is based on the premise that foreign source incomes of non‐residents are not subject to tax in Pakistan. The provisions of becoming a non‐resident individual, by staying out of Pakistan for more than 183 days in a tax year, were being severely misused in order to avoid the taxation of Foreign Source of Incomes in Pakistan for avoidance of taxation under the Ordinance.
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