Government Trading Taxation Act, 1926

The Government Trading Taxation Act, 1926 (Act III of 1926) settles a specific tax-liability question: whether a provincial government carrying on a trade or business is liable to taxation the same way a private company would be. Section 1 says the Act comes into force on a date to be notified by the Federal Government.

Section 2, as substituted by the Federal Laws (Revision and Declaration) Ordinance, 1981 (noted in the extract's footnotes), provides that where a Provincial Government carries on a trade or business outside that province, the Province is liable to taxation under the Income Tax Ordinance, 1979, in respect of that trade or business, all connected operations, all income arising from it, and all property occupied for its purposes — in the same manner and to the same extent as a company would be liable in a similar case.

The extract shows this is a heavily amended, very old law: multiple footnotes record substitutions and omissions dating from 1937, 1956, 1960, 1964, 1975, and 1981, including the reference to the old Income Tax Ordinance, 1979 (itself since replaced by the Income Tax Ordinance, 2001, in current Pakistani tax law — a point not shown in this extract but worth checking).

Given its age and layered amendment history, and the outdated statutory cross-reference to the 1979 Income Tax Ordinance, this Act should be read alongside current income tax law rather than relied on for present-day rates or procedure.