Taxes in Pakistan

Topics: Tax, Value added tax, Taxation Pages: 3 (898 words) Published: April 22, 2011
Tax Definition:
1. A fee charged ("levied") by a government on a product, income, or activity 2. A financial charge or other levy upon a taxpayer (an individual or legal entity) by a state such that failure to pay is punishable by law Types of Tax:

If tax is levied directly on personal or corporate income, then it is a direct tax. If tax is levied on the price of a good or service, then it is called an indirect tax. Who collects tax?
There is a major organization working to safeguard the collection of taxes in Pakistan 1. Federal Board of Revenue (FBR)
By the enactment of FBR Act 2007 in July 2007 the Central Boards of Revenue has now become Federal Board of Revenue. Their work is to enhance the capability of the tax system to collect due taxes through application of modern techniques, providing taxpayer assistance and by creating a motivated, satisfied, dedicated and professional workforce. Governments use different kinds of taxes and vary the tax rates. This is done to distribute the tax burden among individuals or classes of the population involved in taxable activities, such as business, or to redistribute resources between individuals or classes in the population Purpose of Tax:

1. The purpose of taxation is to finance government expenditure and so that they can spend this money on development expenditure 2. One of the most important uses of taxes is to finance public goods and services, such as street lighting and street cleaning 3. Some of these include expenditures on war

4. The enforcement of law and public order
5. Protection of property, economic infrastructure (roads, legal tender, enforcement of contracts, etc.) 6. Public works, social engineering, and the operation of government itself 7. Governments also use taxes to fund welfare and public services. These services can include education systems, health care systems, pensions for the elderly, unemployment benefits, and public transportation 8....
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