Mr. Zaid, an author, spent 30 months writing a novel and received a lump-sum royalty of Rs. 1,500,000 in the tax year 2026. Under the Income Tax Ordinance, 2001, what special tax treatment can he elect for this income?

Correct answer: B) B) He can elect to treat the royalty as having been received in tax year 2026 and the preceding two tax years in equal proportions (i.e., Rs. 500,000 each year).

Explanation

Where the time taken by an author of a literary or artistic work to complete the work exceeds 24 months, the author may elect to treat any lump sum amount received on account of royalties as having been received in that tax year and the preceding two tax years in equal proportions.