ITO Section 44

Exemptions under international agreements:

(1) Any Pakistan-source income which Pakistan is not permitted to tax under a tax treaty shall be exempt from tax under this Ordinance.

(2) Any salary received by an individual (not being a citizen of Pakistan) shall be exempt from tax under this Ordinance to the extent provided for in an Aid Agreement between the Federal Government and a foreign government or public international organization, where –

• (a) the individual is either 1[not a resident] individual or a resident individual solely by reason of the performance of services under the Aid Agreement;
• (b) if the Aid Agreement is with a foreign country, the individual is a citizen of that country; and
• (c) the salary is paid by the foreign government or public international organisation out of funds or grants released as aid to Pakistan in pursuance of such Agreement.

(3) Any income received by 2[any person] engaged as a contractor, consultant, or expert on a project in Pakistan shall be exempt from tax under this Ordinance to the extent provided for in a bilateral or multilateral 3[ ] agreement between the Federal Government and a foreign government or public international organisation, where —

• (a) the project is financed out of grant funds in accordance with the agreement;
• (b) the person is either a non-resident person or a resident person solely by reason of the performance of services under the agreement; and
• (c) the income is paid out of the funds of the grant in pursuance of the agreement.

(4) Federal Government may, in respect of an official development assistance financed loans and grants-in-aid, subject to such conditions and limitations as it may specify, exempt income of any person on a case-to-case basis through a notification in the official Gazette.