Income Tax Exemptions in Pakistan

In The name Of Allah The Most Merciful & The Most Beneficent

Assignment of:

Principle & Practice

Income Tax

Topic:

Need of Tax Exemption

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Question:

What is the need of Tax Exemption or Tax Concession in income tax from government point of view?
And

Does present income tax exemption policy of Pakistan effective in achieving its objectives give comments?

TAX EXEMPTION

According To “Community Benefit” theorists

Tax-exemption contributes to pluralism “by providing the public goods and services that either are undersupplied by the private market or by the government or else not provided in the same socially desirable manner”

NEED OF TAX EXEMPTION

Tax Exemption is provided for various purposes discussed below which are:

➢ To Promote Economic activity

➢ To Provide Benefit to society

➢ To Provide Corporate Welfare

➢ To Attract Businesses

➢ To Promote Organizations

➢ To Encourage Religious Activities

➢ To Encourage Economic Activities

➢ To Encourage Retirement-Led Investment

➢ To Promote Economic activity

Tax exemptions are usually meant to either reduce the tax burden on a particular segment of society in the interests of fairness or to promote some type of economic activity through reducing the tax burden on those organizations or individuals who are involved in that activity.

➢ To Provide Benefit To Society

Tax Exemptions are accorded to certain organizations because they provide a benefit to society which the government is unable or unwilling to provide.

➢ To Provide Corporate Welfare

Tax Exemption to specific businesses such as Big Oil is for corporate welfare.

➢ To Attract Businesses

Exemption from property tax and other local tax is used as a tool for attracting business to areas suffering from economic down turn or depression.

➢ To Promote Organizations