Income Tax

Normal tax year

The tax year shall be a period of 12 months ending on June 30th (hereinafter referred to as normal tax year‘) and shall be denoted by the calendar year in which 30th June falls.

Special tax year

Where a person is allowed, to use a 12 months‘ period different from normal tax year, such period shall be that person‘s tax year (hereinafter referred to as special tax year‟) and shall, be denoted by the calendar year relevant to normal tax year in which the closing date of the special tax year falls.

Ruling 2A

(2A) The Board,- 

(i) in the case of a class of persons having a special tax year may permit, through official Gazette, to use a normal tax year; and 

(ii) in the case of a class of persons having a normal tax year may permit, through official Gazette, to use a special tax year.

Transitional tax year

Where the tax year of person changes, the period between:

• The end of the last tax year prior to change and 
• The date on which the changed tax year commences 

shall be treated as a separate tax year, to be known as the ―transitional tax year‖.

Switch Rulings

(5) The Commissioner shall grant the permission to change the tax year: 

 from normal to special or 

 special to normal only if the person has shown a compelling need. The Commissioner may impose conditions while giving permission. (6) An order by Commissioner of change in tax year shall be passed after providing to the applicant an opportunity of being heard. If the application is rejected the Commissioner shall mention in order the reasons for rejection. 

(7) The Commissioner may by order, after providing an opportunity of being heard, withdraw the permission granted regarding change in tax year. 

(8) An order of change in tax year [under sub-section (3) or (4)] shall take effect from 1st day of the special tax year or the normal tax year

Order

(3) A person may apply, in writing, to the Commissioner to allow him to use a 12 months‘ period, other than normal tax year, as special tax year and the Commissioner may allow him. The order will be passed by the Commissioner if the condition mentioned below (in sub-section (5)) is fulfilled. 

(4) A person using a special tax year, may apply in writing, to the Commissioner to allow him to use normal tax year and the Commissioner may allow him. The order will be passed by the Commissioner if the condition mentioned below (in sub-section (5)) is fulfilled.