Tosha Khana Review Under Income Tax Ordinance

TOSHA KHANA CASE

THE TAX TAKE AWAYS

1. While gifts are not taxable, you have to declare the gifts in your wealth statement (116) at fair market value as at the time of receiving of gifts.
2. Any sales proceeds from the sale of gift, is to be declared and “profit” on sale of gift is taxable.
3. You have to declare the income or profit in your income tax return (114) as “Other Income” by formula Income = A – B, where A is the fair market value of the gift at the time of receipt, B is the sales proceed from sale of the gift.
4. Loss arising out of sale of gift is not a tax deductible, since you have not been taxed on the receipt of gift.
5. Quality comes with a price tag!
6. Keep yourself updated on the tax laws and other relevant tax laws, you can’t escape your liability by solely depending upon a consultant or lawyer.
7. The practice of consultants and lawyers (دو ہزار روپے میں فائلر بنے والے کنسلٹنٹ / وکیل) who declare gift at zero or nil value, is wrong. For example, the Tosha Khana Case.
8. Always hire a professional person to file your tax returns, wealth statements or else you will land in troubles.

DISCLAIMER : This is a general guidance and does not construe to be a legal professional advice. Always consult a professional for guidance related to your tax matters, as a slight change in mode of transaction or even a change in words can have very different implications.

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