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Government of Pakistan
Ministry of Finance, Economic Affairs,
Statistics and Revenue Division
(Revenue Division)
No.F.4(137)ITP/2003
Islamabad, January 3, 2004
Circular
No. 01 of 2004
(Income Tax)
SUBJECT: ALLOWABILITY OF WORKER WELFARE FUND (WWF) AS DEDUCTIBLE ALLOWANCE – CLARIFICATION REGARDING.
Queries have been received in the Board as to whether the Worker Welfare Fund (WWF) would be an admissible allowance when it becomes payable or at the time when it is actually paid since section 60A of the Income Tax Ordinance, 2001 uses the word “payment” for allowing of Worker Welfare Fund (WWF) as a deductible allowance.
2. The issue has been examined. Under section 32, of the Income Tax Ordinance, 2001, a person’s income chargeable to tax shall be computed in accordance with the method of accounting regularly employed by such person whereas it is mandatory for a company to account for income chargeable to tax under the head “income from business”, on accrual basis, other persons may follow cash or accrual basis of accounting. It is, therefore, clarified that the allowability of Worker Welfare Fund as a deductible allowance would depend on the method of accounting being employed by the taxpayers in accordance with the provisions of income tax law.
(ABDUL
HAMID)
SECRETARY (IT POLICY)
Ph:9205561
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