Final Term Fin623

FINALTERM EXAMINATION
Spring 2009
FIN623- Taxation Management (Seion - !"
So#$e% &' $() Team
$(*+e#p,gmai#-.om
Mar/0 1!
Question No: 1 ( Marks: 1 ) - Please choose one
__________ is a type of tax where the tax rate increases as the income to which
the rate is applied increases
Proportional tax
2rogrei$e tax
!e"ressi#e tax
$orporate tax
Re30
% Pro"ressi#e &axes
&his is 'ased on the (capacity to pay) principle of taxation *n this type+ the rate of tax increase asthe income increase
Question No: , ( Marks: 1 ) - Please choose one

*f the accountin" year of Mr -slam+ a rice exporter is started from .1 /anuary
,..0 and endin" on 11st 2ecem'er ,..0 3hat will 'e its tax year4
&ax year ,..1
&ax year ,..5
&ax year ,..0
Tax 'ear 2006
*n case of lump sum receipt of income like 6olden hand shake the tax payer pays
tax in which of the followin" way4
A$erage o3 #at 3 'ear tax rate
7ption to choose current or a#era"e of last 1 years tax rate
$urrent tax rate
Pre#ious year tax rate
3hich of the followin" methods of accountin" is compulsory to adopt for 8irm4
-ccrual 9asis
$ash 9asis
9oth -ccrual and $ash 9asis
Free to .+ooe an' /in% o3 4ae
Re30
8or $ompanies :-ccrual 'asis mandatory
8or 7thers --- optional+ cash or -ccrual 9asis
;uppose a Profit ac<uired 'y a culti#ator from the sale of standin" crops or the
produce after har#estin" &he profit of the culti#ator will 'e treated in which of the followin" way4
*ncome from 9usiness
Agri.(#t(re In.ome
*ncome from Property
$apital 6ain
Re30
8ollowin" *ncome are held to 'e (-"ricultural *ncome)
=Profit on sale of standin" crops or the produce after har#est 'y a culti#atin" owner or tenant of land
Question No: > ( Marks: 1 ) - Please choose one

*f person supplyin" water to the land for the purpose of "rowin" rice in the field
and he char"ed money from the culti#ator a"ainst the water supplied
3hat will 'e the tax treatment of such income4
?xempt as -"riculture *ncome
-llowed !eduction in tax rate
-llowed reduction in tax lia'ility
Taxa4#e a Non-Agri.(#t(re In.ome
Re3 pro$i%e% 4' a*eem/+an20000 8ollowin" *ncomes are held to 'e (Non--"ricultural *ncome)
*ncome from sale of a"ricultural produce recei#ed 'y way of . price for water supplied to land
Question No: @ ( Marks: 1 ) - Please choose one
Mr *mran is an employee of Pro#incial 6o#ernment of PunAa' posted in BC for two
years4 3hat will 'e the residential status of Mr *mran4
Rei%ent In%i$i%(a#
Non-!esident *ndi#idual
!esident DB8
!esident -7P
Re30
!esident *ndi#idual (;ection E,)
= *s an employee or official of the 8ederal 6o#ernment or a Pro#incial 6o#ernment posted a'road in the tax year4
Question No: E ( Marks: 1 ) - Please choose one
8or a non-resident -7P which of the followin" condition must 'e satisfied4
$ontrol and mana"ement of affairs of -7P is situated partly in Pakistan
$ontrol and mana"ement of affairs of -7P is situated wholly in Pakistan
$ontrol and mana"ement of affairs of -7P is situated wholly or partly in
Pakistan
None o3 t+e gi$en option
Re30
!esidential ;tatus of (-ssociation of Person)
Bnder the law a 8irm+ DB8+ etc are placed under the head -7P
$ontrol and mana"ement of affairs of -7P is situated wholly or partly in Pakistan
Question No: F ( Marks: 1 ) - Please choose one
3hat is the tax treatment of the reim'ursement of expenditure made 'y the employer4
5+o##' Taxa4#e
3holly exempt
Partly &axa'le
Not mentioned in *ncome &ax 7rdinance ,..1
Re30
!eim'ursement of expenditure 'y the employer is &axa'le
Question No: 1. ( Marks: 1 ) - Please choose one
3hat is the tax treatment of the lea#e encashment of the armed forces of Pakistan on
retirement made 'y the employer4
3holly &axa'le
5+o##' exempt
Partly &axa'le
Not mention in *ncome &ax 7rdinance ,..1
Re30
Lea$e Sa#ar'0
&his is taxa'le whene#er recei#ed or ri"ht to recei#e is exercised 'y the employee Gea#e encashment on retirement falls in this cate"ory &he
only exemption a#aila'le is for the mem'ers of the -rmed 8orces of Pakistan+ employees of the 8ederal 6o#ernment and Pro#incial
6o#ernments
-s part of remuneration packa"e+ a company pro#ides for reim'ursement of telephone
costs on actual 'asis to its employees in case the facility is used for official purposes
only+ what are the tax conse<uences of this policy4
Treate% a taxa4#e
No tax conse<uences
Partially taxa'le
Not discussed in *ncome &ax 7rdinance ,..1
Re30
!eim'ursement of expenditure 'y the employer is &axa'le
Question No: 1, ( Marks: 1 ) - Please choose one
M&; stands for which of the followin"4
Minim(m time .a#e
Minimum transfer ;alary
Maximum time scale
Maximum transfer ;alary
Re30
$oncept of M&; (Minimum of &ime ;cale):
&his is the startin" point or minimum amount which is a#aila'le to an employee under a time scale
$ondition for the appro#al of "ratuity fund is 'ased on which of the followin"4
Tr(t i irre$o.a4#e
&rust is re#oca'le
&rust is esta'lished 'y 6o#ernment
&rust is appro#ed 'y 7fficer of *ncome &ax
Re30
$ondition for -ppro#al
= = 8und esta'lished under an irre#oca'le trust and purposes of "ratuity fulfilled

$lause (1.) and (11) of Part 1 of second schedule related to Pension are omitted 'y which
of the followin"4
8inance 7rdinance ,..5
Finan.e &i## 2006
8inance 9ill ,..@
Re36
twenty per cent of the eli"i'le personHs taxa'le income for the rele#ant tax yearI
Pro#ided that an eli"i'le person (words Ja personJ su'stituted 'y 8inance 9ill ,..>)
3hich of the followin" is the tax treatment for *ncome from property recei#ed as a rent
for the year ,..@4
1 K5 of the rent is deduct a'le as repairs allowance
1 K, of the rent is deduct a'le as repairs allowance
! 78 o3 t+e rent i %e%(.t a4#e a repair a##o9an.e
No deduction is allowed
Question No: 1> ( Marks: 1 ) - Please choose one

- non adAusta'le ad#ance is recei#ed from a 'uildin" as income from property ;uch rent
will 'e spread in how many of the followin" years4
0 years
>years
E years
!0 'ear
Re30
Non adAusta'le ad#ance is spread o#er ten years
Question No: 1@ ( Marks: 1 ) - Please choose one
Bnder clause (F1 -) of the Part 1 of second schedule of *ncome &ax 7rdinance ,..1+
which of the followin" 'usiness income is exempted from tax4
*ncome of a &ext-9ook 9oard
Bni#ersity or ?ducational *nstitution esta'lished not for profit purpose
Re.ogni*e% :o.ationa# Intit(te
*ncome of !eco"niLed ;ports 9oard
Re30
(F1-) !eco"niLed Mocational *nstitute
Question No: 1E ( Marks: 1 ) - Please choose one
Dead *ncome from property section 10 defines land as:
$onstructed 'uildin"
9lock of 'rick
Macant plot
None o3 t+e gi$en option
Question No: 1F ( Marks: 1 ) - Please choose one
7ne of the followin" options doesn t come under the definition of 9usiness income
section , (F):
&rade
$ommerce
Profession
Emp#o'ment
Re30
9usiness 2efined ;ection ,(F)
(9usiness includes any trade+ commerce+ manufacture+ profession+ #ocation 'ut doesnHt include employment)
Question No: ,. ( Marks: 1 ) - Please choose one
3hich one of the followin" section defines *ncome under the head *ncome from
9usiness section 1E4
Se.tion 2(9"
;ection ,(,F)
;ection @0
;ection ,(10)
Question No: ,1 ( Marks: 1 ) - Please choose one
3hich of the followin" section deals with the deductions Not allowed to income from
'usiness4
;ection , (F)
;ection ,.
Se.tion 2!
;ection ,,
Re30
2eductions not -llowed : ;ec ,1
Question No: ,, ( Marks: 1 ) - Please choose one
6ain on sale of deprecia'le asset+ under section 11 of the *ncome &ax 7rdinance ,..1+ is
char"ed to tax under which of the followin" head of *ncome4
In.ome 3rom &(ine
*ncome from $apital 6ain
*ncome from 7ther sources
Re30
&ransfer to Participatory !eser#e (;ec 11)
8ollowin" *ncomes are taxa'le under the head *ncome from 9usiness e#en in cases where no 'usiness is carried on 'y taxpayer
N!eco#ery a"ainst any deductionKexpenses pre#iously allowed (-dd 'ack to income)
N6ain on sale of deprecia'le asset
N!eco#ery of 'ad de'tKor written off loan
N&radin" lia'ilities not paid within expiration of three years
N-mount recei#ed after discontinuance of 'usiness
-mount recei#ed after discontinuance of 'usiness+ under section 11 of the *ncome &ax
7rdinance ,..1+ is char"ed to tax under which of the followin" head of *ncome4
In.ome 3rom &(ine
!ef:
&ransfer to Participatory !eser#e (;ec 11)
N!eco#ery a"ainst any deductionKexpenses pre#iously allowed (-dd 'ack to income)
N6ain on sale of deprecia'le asset
N!eco#ery of 'ad de'tKor written off loan
N&radin" lia'ilities not paid within expiration of three years
N-mount recei#ed after discontinuance of 'usiness
3hich of the followin" is the tax rate that a !esident $ompany is su'Aected to pay on its
turno#er for a tax year+ e#en in cases where the company sustains loss4
.,0O
0-80;
.@0O
1..O
Re30
!esident $ompany is su'Aected to minimum tax P .0.O of its turno#er for a tax year+ e#en in cases wherethe company sustains loss
&he amount of minimum tax lia'ility is arri#ed at as follows:
(- x .0O) 9
(- x 9) .0O
(- Q 9) .0O
(- K .0O) 9
Question No: ,> ( Marks: 1 ) - Please choose one
*n case of disposal of asset 'etween spouses under an a"reement to li#e apart+ what
would 'e the tax treatment of such disposal of asset4
$har"ed to tax under the head *ncome from 9usiness
$har"ed to tax under the head *ncome from $apital 6ain
Exempt 3rom tax (n%er e.tion <9 o3 t+e In.ome Tax Or%inan.e 200!
$har"ed to tax under the head *ncome from Property
Re30
=ipoa# Not >+argea4#e To Tax ?n%er Se.-<9 Non Re.ognition R(#e
No "ain or loss shall 'e taken to arise on the disposal of an asset:
N9etween spouses under an a"reement to li#e apartI
Question No: ,@ ( Marks: 1 ) - Please choose one
3hich of the followin" is N7& re<uired to file the return of *ncome &ax under section
1104
?#ery $ompany
?#ery 8irm
?#ery person with land ,0. s< yards
Sa#arie% in%i$i%(a# +a$ing a#ar' .erti3i.ate in #ie(
Re30
Person Not !e<uired to 8ile &ax !eturn
;ection 110 "rants immunity to salaried person in lieu of filin" a return as outlined 'elow:
N;alary certificate from employer sufficient in lieu of return
Question No: ,E ( Marks: 1 ) - Please choose one
- person may furnish !e#ised !eturn from the date when the ori"inal return was
furnished up to which of the followin" time period4
0 2ays
0 Months
8 @ear
10 Months
Re30
Pro#ision of !e#ised &ax !eturn:
- person may furnish !e#ised !eturn within fi#e years of the date when the ori"inal return was furnished
Question No: ,F ( Marks: 1 ) - Please choose one
- person where taxa'le income for a tax year exceeds the maximum amount not
char"ea'le to tax is re<uired to file a return of income for the tax year+ presently this
amount is:
!s1..+ ...
!s1..+ ...
!s,0.+ ...
R-800A 000
Re30
Pro#ided further that where the total income of a taxpayer mar"inally exceeds the maximum limit of asla' in the ta'le+ the income tax paya'le
shall 'e the tax paya'le on the maximum of that sla' plus anamount e<ual to :
(i),.O of the amount 'y which the total income exceeds the said limit where the total income doesnot exceed !s 0..+...
3hich of the followin" is N7& a li<uidator under section 151 of the income tax
ordinance ,..14
!ecei#er appointed 'y a $ourt
&rustee for a 'ankrupt
Mort"a"ee in possession
Tax pa'er
Re30
Gi<uidators (;ec 151):
8ollowin" are referred to as li<uidator:
N- li<uidator of a company
N- recei#er appointed 'y a $ourt or appointed out of court
N- trustee for a 'ankrupt
N- mort"a"ee in possession
8ederal &ax 7m'udsman has the same powers as _____________ to punish any person
for its contempt
S(preme
Di"h court
$ity court
Pro#incial 6o#ernment
Re30
&he 8ederal &ax 7m'udsman has the same powers as the ;upreme $ourt has to punish any person forits contempt
&he office of ;uperintendent of ;ales &ax+ or such other office as the 9oard may+ 'y
notification in the official 6aLette+ specify is calledI
*ncome tax office
!e"istered office
Lo.a# Sa#e Tax O33i.e
None of the "i#en options
Re30
(10) JGocal ;ales &ax 7fficeJ means the office of ;uperintendent of ;ales &ax+ or such other office as he 9oard may+ 'y notification in the
official 6aLette+ specifyI
$apital Malue &ax was le#ied on the capital #alue of assets with effect fromI
!t B(#'A !919
1st /une 1FF.
1st /uly ,...
1st /uly 1FFF
Re30
$apital Malue &ax was le#ied with effect from 1st /uly+ 1FEF on the capital #alue of assets
- directorship or any other office in#ol#ed in the mana"ement of a company
under section ,(,,) of *ncome &ax 7rdinance+ ,..1 is termed as:
Emp#o'ment
?mployer
?mployee
9usiness premises
Re30
,(,,) (employment includes:
= a directorship or any other office in#ol#ed in the mana"ement of a companyI
= a position entitlin" the holder to a fixed or ascertaina'le remunerationI or
= the holdin" or actin" in any pu'lic office
Mr R resident of Pakistan earned income from Property situated in Gondon !s
0.+... 'ut recei#ed in *ndia 3hich one of the followin" option is ri"ht for this particular scenario4
Mr R 'ein" resident of Pakistan !s 0.+... will 'e added in 6ross total income
Mr R 'ein" resident of Pakistan !s 0.+... will 'e su'tracted in 6ross total income
Mr R 'ein" resident of Pakistan !s 0.+... will 'e claimed as admissi'le deduction
Mr R 'ein" resident of Pakistan !s 0.+... will 'e exempted
Question No: 1> ( Marks: 1 ) - Please choose one
Mr R non-resident of Pakistan earned income from property situated in 2u'ai
!s @.+... 'ut recei#ed in Pakistan 3hich one of the followin" option is ri"ht for this particlar scenario4
Mr R 'ein" non-resident of Pakistan !s @.+... will 'e added in 6ross total income
Mr R 'ein" non-resident of Pakistan !s @.+... will 'e su'tracted in 6ross total income
Mr R 'ein" non-resident of Pakistan !s @.+... will 'e claimed as admissi'le deduction
Mr R 'ein" non-resident of Pakistan !s @.+... will 'e exempted
Question No: 1@ ( Marks: 1 ) - Please choose one
3hich of the followin" is the rate of tax for salaried *ndi#iduals for tax year ,..F+ where the taxa'le income exceeds !s ,0.+... 'ut does
not exceed !s 10.+...4
Nil
.,0.O
.0.O
0-<8;
Re30
Pa"e no 50 of handouts
Question No: 1E ( Marks: 1 ) - Please choose one
3hich of the followin" is the rate of tax for salaried *ndi#iduals for tax year ,..F+ where the taxa'le income exceeds !s 5..+... 'ut does
not exceed !s 50.+...4
.,0O
10.O
2-80;
10.O
Re30
Pa"e no 50 of handouts
Question No: 1F ( Marks: 1 ) - Please choose one

Miss ;onia s total taxa'le income for the year ,..F is !s ,5.+... 3hich of the followin" is the tax lia'ility of Miss ;onia4
Nil
!s 0..
!s 1+...
!s 1+0..
Re30
3here the taxa'le income exceeds !s 1E.+... 'ut does not exceed !s ,0.+...+ the tax rate is .0.O
;o the tax amount will 'e
,5.... P .0.O S 1,..
T+ere i not an' .orre.t option
Mr -s total taxa'le income for the year ,..F is !s >..+... 3hich of the followin" is
the tax lia'ility of Mr -4
!s 10+...
!s ,1+...
R- 2<A000
!s 1>+...
Re30
3here the taxa'le income exceeds !s 00.+... 'ut does not exceed !s
>0.+...+ the tax rate is 50.O
;o
>..+... P 50.O S ,@...
3hich of the followin" is the &ax &reatment of utilities for the year ,..F4
5+o##' taxa4#e
3holly exempted
?xempt up to 1.O of M&;
?xempt up to 1O of M&;
Re30
Btilities were exempt up to 1.O of M&; or 9asic salary till 1.th
/une+ ,..>+ #ide clause 1E of part 1 of ;econd ;chedule &his clause has 'een omitted 'y 8inance -ct+ ,..> Dence no exemption is
a#aila'le fortax year ,..F
- firm -9$ maintainin" its account in cash 'asis+ at /une ,@+ ,..E it incurred
expenses for !s 1.+... 'ut actual payments made at .1 -u"ust ,..E *t would
'e char"e to tax into the tax year:
,..>
,..@
,..E
2009
Question No: 51 ( Marks: 1 )
3hat is the main purpose of 6ratuity4
Mr 8aroo< s salary is !s,,+ ... per month De recei#ed commission durin" the year amountin" to !s11+ ... De is pro#ided a Aeep 'y
his employer for personal as well as official use &he employer took this Aeep from a leasin" company at an annual lease of !sE.+ ... &he
fair market #alue of the Aeep at commencement of lease was !sE..+ ... $alculate the taxa'le income of Mr8aroo<
9riefly explain the unexplained income or assets under section 111 of *ncome &ax 7rdinance ,..1
Question No: 5> ( Marks: 0 )
Bnder what conditions a commissioner of *ncome &ax may ask for the filin" of returns 'y notice4
Question No: 5@ ( Marks: 0 )

Mr 6haus is employed in a company after his retirement from army 2etails of his income for the year ended 1.th
/une ,..F are as underI
9asic salary from company !s,.+ ... per month
?ntertainment allowance !s 1+... per month
Pension recei#ed from army !s 5E+... per annum
$alculate the total taxa'le income of Mr6haus 333MBM7N;&?!$7M
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Question No: 5E ( Marks: 1. )
Mr *rfan is >, years of a"e -t present he is workin" as 6eneral Mana"er of a pri#ate or"aniLation Dis particulars for the year ended 1.th
/une ,..F are as follows
!s
9asic salary (5.+...-1+...-00+...) 0.+...pm
&ra#elin" allowance 11,+...
$on#eyance allowance 5E+...
Pension from 6o#ernment 1,+... pm
9onus 0.+...
Takat paid under Lakat ordinance ,.+...
Medical expenses ,@+...
8urther information pro#ided:
1 Mr *rfan has 'een pro#ided a car for personal purposes &he cost of the car is !s
@E.+...
, De has 'een pro#ided a rent - free accommodation De was entitled to a house allowance of !s E+... per month
1 &he medical expenditures incurred durin" the year are #erifia'le
5 &ax rate pre#ail FO
$ompute the taxa'le income and tax paya'le on it
Question No: 5F ( Marks: 1. )
8rom the followin" particulars+ calculate the tax paya'le 'y Mr6auhar employed in a pri#ate limited company for the year ended 1.th /une
,..F P .0 O Mr 6auhar is >, years of a"eI
;alary (in scale 15+...-,..-1>+...) !s10+ ... pm
$ost of li#in" allowance ,.+... pa
;pecial additional allowance >+... pa
Medical allowance ,1+,.. pa
9ooks of reli"ious nature purchased ,+...
Takat paid under Lakat ordinance 1+,..
$ontri'ution to appro#ed charita'le institute !s 1F+,..
Spring 20!0
FIN623- Taxation Management (Seion - C"
So#$e% &' $() Team
$(*+e#p,gmai#-.om
Time0 90 min
Mar/0 69

D(etion No0 ! ( Mar/0 ! " - 2#eae .+ooe one
Mrs ;ara recei#ed a 'asic salary of !s ,E.+... durin" the year ended 1..>,..F ;he recei#ed "ratuity from the "o#ernment of ;indh of
!s ,1+>.. 3hat would 'e her tax paya'le4
U !s 1+F1E
U !s ,+,>,
U !s 15.
U !s 1+FE.
D(etion No0 2 ( Mar/0 ! " - 2#eae .+ooe one
3hich of the followin" canon of taxation su""ests that there should not 'e any ar'itrariness or am'i"uity in respect of amount of tax paid4
U $apacity to Pay
E >ertaint'
U ;implicity
U $on#enience
,(,,) of *ncome &ax 7rdinance ,..1 defined:
(?mployment) includes:
V a directorship or any other office in#ol#ed in the mana"ement of a companyI
V a position entitlin" the holder to a fixed or ascertaina'le remunerationI or
V the holdin" or actin" in any pu'lic officeI
*n which criteria the a'o#e definition falls4
U ?xclusi#e definition
U In.#(i$e %e3inition
U 9oth ?xclusi#e and *nclusi#e definitions
U ;tatutory definition
D(etion No0 C ( Mar/0 ! " - 2#eae .+ooe one
3hich of the followin" is the example of inclusi#e definition4
U -ppellate &ri'unal ,(,)
U 2e't ,(10)
E Emp#o'ment 2(22"
U -ssociation of person ,(>)
-ny *ncome entitled to 'e recei#ed 'y a $ompany then entry of such amount will only 'e made in the 'ooks of accounts if:
U $ompany maintainin" its 'ooks of account on $ash 'asis
U $ompany maintainin" its 'ooks of account on -ccrual 'asis
U >ompan' maintaining it 4oo/ o3 a..o(nt on &ot+ A..r(a# an% >a+ 4ai
U None of the "i#en options
*ncome &ax is char"ed on which of the followin"4
E In.ome o3 t+e .(rrent tax 'ear
U *ncome of the pre#ious year
U *ncome of the comin" year
U -ny !eceipt of money
D(etion No0 < ( Mar/0 ! " - 2#eae .+ooe one
3hat is the tax treatment of support payment recei#ed 'y spouse made under the a"reement to li#e apart4
U 3holly &axa'le
E 5+o##' Exempt
U Partly ?xempt
U Not mention in 7rdinance
Pension is defined in which of the followin" schedule of the *ncome &ax 7rdinance ,..14
E 2n% S.+e%(#e 2art ! >#- (1"
U ,nd ;chedule Part 1 $l (,5)
U ,nd ;chedule Part , $l (,,)
U 1st ;chedule of Part , $l (,.)
!esident Person (;ection E1) includes which of the followin"4
U !esident *ndi#idual W -ssociation of Persons
U !esident $ompany
U 8ederal 6o#ernment
E A## o3 t+e gi$en option
D(etion No0 !0 ( Mar/0 ! " - 2#eae .+ooe one
3hich part of income is char"ed to tax of resident person under the income tax ordinance ,..14
U Pakistani source of income
U 8orei"n source of income
U &ot+ 2a/itan an% 3oreign o(r.e o3 in.ome
U None of the "i#en option
D(etion No0 !! ( Mar/0 ! " - 2#eae .+ooe one
____________ means a fixed place of 'usiness throu"h which the 'usiness of an enterprise is wholly or partly carried on
U 8ranchise
U Permanent esta'lishment
U ;mall 9usiness Bnits ;9B
U Menture
3hich of the followin" is the "eneral definition of tax4
U >omp(#or' .ontri4(tion o3 9ea#t+ 4' peron
U 7ptional contri'ution of wealth 'y persons
U $ompulsory contri'ution of wealth 'y state
U 7ptional contri'ution of wealth 'y state
3hich one of the followin" section defines X*ncomeH under the head *ncome from 9usiness section 1E4
E Se.tion 2(9"
U ;ection ,(,F)
U ;ection @0
U ;ection ,(10)
D(etion No0 !C ( Mar/0 ! " - 2#eae .+ooe one
Y*ncome is recorded when recei#ed and expenditure when paidY+ which one of the followin" accountin" systems descri'e this statement4
U >a+ 4ai a..o(nting 'tem
U -ccrual 'asis accountin" system
U 9oth cash and accrual 'asis
7n 9uildin" (all types) the depreciation rate specified for the purposes of section ,, shall 'e:
E !0;
U 1,O
U 0O
U ,.O
;ection ,,(10) defines deprecia'le asset means:
U -ny tan"i'le mo#a'le property
U -ny tan"i'le immo#a'le property (other than unimpro#ed land)
U ;tructural impro#ement to immo#a'le property
D(etion No0 !< ( Mar/0 ! " - 2#eae .+ooe one
3hich of the followin" is NOT re<uired to file the return of *ncome &ax under section 1104
U ?#ery $ompany
U ?#ery 8irm
U ?#ery person with land ,0. s< yards
E 5i%o9
&he salary recei#ed from the BC 6o#ernment 'y Mr -mir resident of Pakistan 3hich section of the income tax ordinance explains his tax
treatment of such salary4
U ;ection 11.
E Se.tion !0!
U ;ection 1.,
U ;ection 0.
!e#ision of return can 'e made on an application made 'y the tax payer relatin" to issuance of an exemption+ 'y which of the followin"
authorities4
U *ncome &ax 7fficer
U -ssistant $ontroller of *ncome tax
U 2eputy $ontroller of *ncome tax
E Regiona# >ommiioner o3 In.ome tax
-ppeal to $*& (appeals) shall 'e filed in which of the followin" manner4
E On pre.ri4e% 3orm
U 7n plane paper
U 7n stamped paper
U Ge"al documents
!ef: Appea# +a## 4e 3i#e%0
i *n prescri'ed form
ii Merification
iii 6rounds of appeal
i# Prescri'ed fee
# 3ithin 1. days of the date of ser#ice of the order a"ainst which appeal is filed(1.E)
D(etion No0 2! ( Mar/0 ! " - 2#eae .+ooe one
8ederal &ax 7m'udsman has the same powers as _____________ to punish any person for
its contempt
E S(preme .o(rt
U Di"h court
U $ity court
U Pro#incial 6o#ernment
&he office of ;uperintendent of ;ales &ax+ or such other office as the 9oard may+ 'y notification in the official 6aLette+ specify is calledI
U *ncome tax office
U !e"istered office
E Lo.a# Sa#e Tax O33i.e
3hich of the followin" is included in the assessment order 'y commissioner4
U &axa'le *ncome
U &ax 2ue
U -mount of &ax Paid
D(etion No0 2C ( Mar/0 ! " - 2#eae .+ooe one
*n ;ales &ax -ct JTero - rated supplyJ means a taxa'le supply which is char"ed to tax at the rate of Lero per cent define under
E Se.tion C
U ;ection 0
U ;ection >
U ;ection ,,
!ef: F)ero - rate% (pp#'F means a taxa'le supply which is char"ed to tax at the rate of Lero per cent under section 5 (Pa"e No11@)
Mr Cishan Cumar durin" his yearly tour in Pakistan spends 100 workin" days+ ,> off-workin" days 1 strike day and 1 Pu'lic Doliday in a tax
year ,..E-.F4 3hat will 'e the status of the indi#idual4
E Rei%ent In%i$i%(a#
U Non !esident *ndi#idual
U !esident Person
U !esident DB8
!ef: Dis total stay in Pakistan is of 1E1 days + so he is resident indi#idual
Mr Teeshan durin" his yearly tour in Pakistan spends 1E. workin" days and in a tax year ,..E-.F4 3hat will 'e the status of indi#idual4
U !esident *ndi#idual
E Non-Rei%ent In%i$i%(a#
U !esident Person
U !esident DB8
!ationale: Dis total stay in Pakistan is less than 1E1 days + so he is non resident indi#idual as per income tax ordinance section E1
D(etion No0 2< ( Mar/0 ! " - 2#eae .+ooe one
3hich of the followin" is the rate of tax for -7P for tax year ,..F+ where the taxa'le income exceeds !s 1..+... 'ut does not exceed !s
11.+...4
E 0;
U .,0O
U .0.O
U .@0O
!ef: ;ee pa"e @.+ ta'le of -7P rates
3hich of the followin" is the rate of tax for -7P for tax year ,..F+ where the taxa'le income exceeds !s 1,0+... 'ut does not exceed !s
10.+...4
U .0.O
U .@0O
U 1..O
E 2-00;
!ef: ;ee pa"e @.+ ta'le of -7P rates
3hich of the followin" is the !ate of &ax for di#idend recei#ed from power "eneration company for &ax Zear ,..F4
U Nil
U ,0O
U 0O
E <-8;
Re30 Rate o3 =i$i%en% tax (n%er Se.tion 80
a) 2i#idend recei#ed from another company 1.O of "ross amount of di#idend
') 2i#idend recei#ed from power proAect
company pri#atiLed 'y 3-P2- @0O of "ross amount of di#idend
c) 2i#idend recei#ed from power "eneration
company @0O of "ross amount of di#idend(Pa"e No@1)
3hich one of the followin" is not the feature of ;ales &ax4
U *ndirect tax
U 9road 'ased
U ?lasticK 8lexi'le
E None o3 t+e gi$en option
!ef: Feat(re o3 Sa#e Tax
= *ndirect tax
= 9road 'ased
= ?lasticK 8lexi'le
= ?asy to collect
= Potential for re#enue "eneration
Mr -li recei#ed a 'asic salary of !s ,.+... per month durin" the year ended 1..>,..F 2urin" the year domestic 'ills of water+ telephone
and electricity amountin" to !s >+...+ 1,+...+ and F+>.. were paid 'y his employer respecti#ely 3hat would 'e his taxa'le income4
U !s ,5.+...
E R- 26<A600
U !s ,@.+...
U !s ,EF+E..
!ef: &otal of all amounts is ,>@+>.. Btility 'ills are added 'ack to salary as they are taxa'le under income tax ordinance ,..F
Mr ;aleem recei#ed a 'asic salary of !s 1.+... per month durin" the year ended 1..>,..F 2urin" the year his employer pro#ided the
ser#ices of a dri#er and a housekeeper &he company paid !s 5+... per month to each of these employees 3hat would 'e his taxa'le
income4
U !s 1,.+...
U !s 1E>+...
E R- 2!6A000
U !s ,55+0..
&he 'asic salary of Mr 6hauri (a salaried person) durin" the year 1..>,..F is !s 550+... De paid Takat under Takat 7rdinance of !s
E+... and recei#ed commission of !s ,5+... 3hat will 'e his taxa'le income4
U !s 5,F+...
U !s 51@+...
E R- C6!A000
U !s 5>F+...
$oncessional loan pro#ided 'y the employer is taxa'le and added 'ack to the income of employee 9ut under which of the followin"
conditions there is no need to add 'ack such loan4
U 3hen loan is used for the purchase of furniture
U 3hen loan is used for the education of children
E 5+en #oan i (e% 3or t+e .ontr(.tion o3 +o(e
U 3hen loan is used for the purchase of shares
3hich part of the *ncome &ax 7rdinance ,..1 deals with &ax credits4
U $hapter *** Part M**
U $hapter *** Part M***
E >+apter III 2art IX
U $hapter *** Part R
3hich of the followin" is the rate of tax for salaried *ndi#iduals for tax year ,..F+ where the taxa'le income exceeds !s 1+,..+... 'ut does
not exceed !s 1+50.+...4
U F..O
U 1...O
E !!-00;
U 1,0.O
!ef: Pa"e No50
3hich of the followin" is the rate of tax for salaried *ndi#iduals for tax year ,..F+ where the taxa'le income exceeds !s 1+F0.+... 'ut does
not exceed !s ,+,0.+...4
U F..O
U 1...O
U 1,0.O
E !8-00;
!ef: Pa"e No50
Mr ;adi< recei#ed a salary of !s ,..+... durin" the year ended 1..>,..F Dis M&; is (!s ,..+...-0+...-1..+...) De has recei#ed
medical allowance and facility of interest free loan from his employer of !s 1.+... per month and !s F..+... respecti#ely 3hat would 'e
his tax paya'le4
U !s 1+FE@0
U !s ,+010
U !s 1.@+0..
U !s 115+,..
!ef: Note !0
$lause 11F(a) W (') of part 1 of second schedule:
a 8ree hospitaliLation ser#ices pro#ided under the terms of employment are exempt
' *f (a) not a#aila'le then 1.O of 'asic salary is exempt in case medical allowance pro#ided
*nterest free loan is char"ea'le to tax upto 'enchmark rate which is 11O for year ,..F
Taxpa'4#e o3 Mr-Sa%iG0
&ai. a#ar' 200A000
Me%i.a# A##o9an.e !20A000
(!0; o3 200A000H20A000" (20A000" !10A000
!!; o3 #oan i .+argea4#e to tax
!!; 900A000H99000 99000
399000
Tax #ia4i#it' 0
399000,2; H<910
Mr ;haf<at recei#ed a 'asic salary of !s 10.+... durin" the year ended 1..>,..F Dis company maintained car for personal and official
use &he cost of the #ehicle is !s EE.+... 3hat would 'e his tax paya'le4
U !s 1+.1.
E R- 8A9!0
U !s 1.+F0.
U !s 110+1..
$alculation:
9asic salary S 10.+...
$ar maintenance EE.+...P0OS 55...Q10....S1F5...P10O-0F1.
D(etion No0 C0 ( Mar/0 ! " - 2#eae .+ooe one
- retailer whose #alue of supplies in any period durin" the last twel#e months endin" any tax period exceeds_______ are re<uired to 'e
re"istered under the ;ales &ax -ct 1FF.I
U 8orty million rupees
E T9ent' mi##ion r(pee
U &en million rupees
U 8i#e million rupees
D(etion No0 C! ( Mar/0 ! " - 2#eae .+ooe one
3hat is the tax treatment of reco"niLed Pro#ident fund under section , (5E) of part * of sixth schedule4
U 3holly exempt
U Partially taxa'le
U 3holly taxa'le
E 2artia##' exempt
;tatutory Pro#ident 8und is "o#erned 'y which one of the followin"4
U 8inance -ct ,..>
U *nsurance -ct 1F>F
E 2ro$i%ent F(n% A.t !928
U 8inance 9ill ,..@
!ef: ;tatutory Pro#ident 8und+ "o#erned 'y the Pro#ident 8unds -ct+ 1F,0 (6P 8und)(Pa"e No>.)
-ny amount recei#ed under Part 1 of ;econd ;chedule+ as flyin" allowance 'y pilots etc and Aunior commissioned officers or other ranks
shall 'e taxed at the rate of __________ as separate 'lock
E 2-8;
U 00O
U @0O
U F0O
D(etion No0 CC ( Mar/0 ! " - 2#eae .+ooe one
Mrs 3aseem has rented out her house at !s 10+... per month -s per rent deed she has recei#ed an amount of !s @0+... as ad#ance+
which is non adAusta'le a"ainst rent 3hat would 'e the amount of rent char"ea'le to tax where the fair market rent is !s 1..+...4
U !s F.+...
E R- !A1<800
U !s F,+5..
U !s 1+,..
Mr 3a<as is a practicin" chartered accountant De has recei#ed audit fees of !s 1..+... and the examinerHs fees of !s ,+... 2urin" tax
year ,..F he has made mem'ership and certificate expenses of !s 0.. 3hat will 'e his income from profession4
U !s 1FE+E15
U !s 1.1+0..
U !s ,F@+0..
U !s ,FE+0..
MKs !;& filed tax return for tax year ,..F+ declarin" taxa'le income as !s 1+110+... made payments in execution of a contract for
purchase of office appliances !s ,0.+... 3hat will 'e the tax paya'le of the company4
U !s 1..+...
U !s 10.+...
U !s 1..+...
E R- C1CA<80
$alculation: &ax Gia'ility
1110...[10K1.. S 1F@,0.
,0.+...[10K1.. S E@+0..
5E5+@0.
D(etion No0 C< ( Mar/0 ! " - 2#eae .+ooe one
Mr Qasim recei#ed income from 'usiness of !s 1.@+... De has recei#ed "ain on sale of residential house of !s 15.+... 3hat will 'e his
taxa'le income4
U !s 0.+...
U !s 1..+...
E R- !0<A000
U !s 1..+...
Mr /amil has recei#ed income from poultry farm of !s >50+... and "ain on sale of shares of pri#ate company !s 11>+... where the shares
were disposed off after 1, months &he capital loss amounted to !s 10+... was reported 3hat will 'e his taxa'le income4
U !s 0>>+...
U !s >F5+...
E R- <32A000
U !s @@>+...
$alculation: *ncome from poultry form S >50+...
Profit on shares(11>...[@0K1..) S 1.,...
Gess: $apital losses S 10...
H <32A000
Rationa#e0;hares of pri#ate limited company are ,0O exempt if disposed off after 1, months and if disposed off within 1, months then totally
exempt-nd capital losses are also exempt
Spring 20!0
FIN623- Taxation Management
So#$e% &' Fa9a% 5aeem
999-$(*-net
3hich of the followin" is not an employment tax4
U ;ocial ;ecurity &ax
E Fe%era# Ex.ie Tax
U 8ederal unemployment compensation tax
U ;tate unemployment compensation tax
Dow many ;ections are included in the In.ome Tax Or%inan.e 200!4
U 15. sections
U 55. sections
U 15. sections
E 2C0 e.tion
Dow many ;chedules are contained in the In.ome Tax Or%inan.e 200!I
U &hree ;chedule
U 8ifth ;chedule
E Se$en S.+e%(#e
U Nine ;chedules
;ection ,(11) of *ncome &ax 7rdinance ,..1 defined:
Commissioner means a person appointed as a Commissioner of Income Tax under section 208, and includes a taxation officer vested with
all or any of the powers, and functions of the Commissioner;
*n which criteria the a'o#e definition falls4
E Ex.#(i$e %e3inition
U *nclusi#e definition
U 9oth ?xclusi#e and *nclusi#e definitions
U ;tatutory definition
D(etion No0 8 $(* ( Mar/0 ! " - 2#eae .+ooe one
3hich of the followin" is the ;pecial -ccountin" Zear of *nsurance $ompanies4
E !
t
Ban(ar' to 3!
t
=e.em4er
U 1
st
/uly to 1.
th
/une
U 1
st
7cto'er to 1.
th
;eptem'er
U 1
st
;eptem'er to 11
st
-u"ust
$ertain incomes those are excluded from tax are called as:
U Per<uisites
E Exemption
U -llowances
U 2eductions
*f person supplyin" water to the land for the purpose of "rowin" rice in the field and he char"ed money from the culti#ator a"ainst the water
supplied
E Taxa4#e a Non-Agri.(#t(re In.ome
U ?xempt as -"riculture *ncome
U -llowed !eduction in tax rate
U -llowed reduction in tax lia'ility
&he process of clu''in" of income results in which of the followin"4
U Gower 9racket rate of tax is char"ed
U Di"her 9racket rate of tax is char"ed
E Mo%erate &ra./et rate o3 tax i .+arge%
U No chan"e occur due to clu''in"
2ate for the exemption limit for 8orei"n $urrency -ccount (8$-) under $lause E. of the Part * of ;econd ;chedule is a#aila'le to which of the
followin"4
E !6 =e.em4er !999
U 1> No#em'er 1FFF
U 1> /uly ,..1
U 1
st
/uly ,..,
-ny amount recei#ed under Part 1 of ;econd ;chedule+ as flyin" allowance 'y pilots etc and Aunior commissioned officers or other ranks shall
'e taxed at the rate of __________ as separate 'lock
E 2-8;
U 00O
U @0O
U F0O
!ental income shall 'e Pakistan-source income if it is deri#ed from:
E T+e #eae o3 immo$a4#e 2ropert' in 2a/itan
U &he lease of immo#a'le Property outside Pakistan
U &he lease of immo#a'le Property 'oth in and out of Pakistan
Pension recei#ed 'y Mr /ohn throu"h permanent esta'lishment in Pakistan is 'elon"in" to which of the followin"4
E 2a/itani o(r.e o3 In.ome
U 8orei"n source of income
U 9oth Pakistan and forei"n source of income
U None of the "i#en option
D(etion No0 !C ( Mar/0 ! " $(* - 2#eae .+ooe one
3hat is the tax treatment of losses from the forei"n source under section 1.5 of the ordinance4
U 3holly taxa'le
U Partly &axa'le
E =e%(.ti4#e expen%it(re
!ental income earned is taxa'le on a net income 'asis that is+ after deduction of tax admissi'le expenditure and allowances from "ross rent+
for up to &ax year:
U ,..@
U ,..E
E 2006
U ,..0
7n 9uildin" (all types) the depreciation rate specified for the purposes of section ,, shall 'e:
E !0;
U 1,O
U 0O
U ,.O
!ates of depreciation is prescri'ed in which of the followin" part of third schedule of the *ncome &ax 7rdinance:
U Part **
U Part ***
E 2art I
3hich section define this X*ncome tax depreciation is admissi'le only in respect of deprecia'le assetsY
E Se.tion 22(!8"
U ;ection ,, (11)
U ;ection ,1 -
U ;ection ,5
Profit on de't char"ed to tax under which of the followin" heads of *ncome4
U *ncome form Property
U *ncome from 9usiness
U *ncome from $apital 6ain
E In.ome 3rom Ot+er So(r.e
3hich of the followin" is NOT re<uired to file the return of *ncome &ax under section 1104
U ?#ery $ompany
U ?#ery 8irm
U ?#ery person with land ,0. s< yards
E Orp+an 9it+ age 4e#o9 28
-ppeal to the collector of sales tax may 'e filed within which of the followin" time period4
U >. days
U F. days
U 1E. days
E 30 %a'
Mem'ers of income tax appellate tri'unal are appointed 'y which of the followin" authorities4
U *ncome &ax 2epartment
E Fe%era# Jo$ernment
U /udicial $ommission
8ederal &ax 7m'udsman has the same powers as _____________ to punish any person for
its contempt
E S(preme .o(rt
U Di"h court
U $ity court
*n relation to any re"istered person means the tax char"ed under the ;ales tax -ct in respect of a supply of "oods made 'y that person and
shall include duties of excise char"ea'le under section 1 of the $entral ?xcises -ct+ 1F55 (* of 1F55) is known asI
E O(tp(t tax
U *nput tax
U *ncome tax
U 3ealth tax
*n ;ales &ax -ct JTero - rated supplyJ means a taxa'le supply which is char"ed to tax at the rate of Lero per cent define under
E Se.tion C
U ;ection 0
U ;ection >
U ;ection ,,
$apital #alue tax is le#ied on which of the followin"4
U $apital "ain
U 6ross profits
E >apita# $a#(e o3 aet
U *ntan"i'le assets
3hat will 'e the tax lia'ility of an indi#idual who has recei#ed an income of !s 5@.+... under the head income from property4
E R-!<A<80
U !s ,1+0..
U !s 5@+...
U !s @.+0..
- retailer whose #alue of supplies in any period durin" the last twel#e months endin" any tax period exceeds_______ are re<uired to 'e
re"istered under the ;ales &ax -ct 1FF.I
U 8orty million rupees
E T9ent' mi##ion r(pee
U &en million rupees
U 8i#e million rupees
Mr -mAad (employed 'y 8ederal 6o#ernment) recei#ed a 'asic salary of !s 1..+... durin" the year ended 1..>,..F De recei#ed lea#e
encashment amountin" to !s 1,+... per month and the special allowance P ,0O which is !s E+5.. per month 3hat would 'e his taxa'le
income4
U !s 0.+...
U !s 1..+...
E R- 200A100
U !s ,55+...
Mr ;hahmeer has a "ross tax of !s F@+,.. and taxa'le income of !s F@,+... durin" the year ended 1..>,..F De has in#ested shares in
pu'lic company of !s 1,.+... and donated to Mayo Dospital !s 1.+1E. 3hat would 'e the amount of a#era"e relief4
U !s 1,+@1E
E R- 3A0!1
U !s F+@,.
U !s 1,+...
3hich of the followin" is the "eneral formula for calculatin" tax credits4
U (-Q9) x $
U (--9) x $
E (A7&" x >
U (-K9) Q $
;alary is the first head or source of income mentioned in which of the followin" sections of the *ncome &ax 7rdinance ,..14
E Se.tion !2
U ;ection 15
U ;ection ,.
U ;ection E0
D(etion No0 33 ( Mar/0 ! " $(* - 2#eae .+ooe one
Mr Tahoor recei#ed a 'asic salary of !s 1.+... per month durin" the year ended 1..>,..F De has recei#ed rent free unfurnished
accommodation 'y his employer De was entitled to recei#e rent P !s 5+...+ per month+ if this accommodation was not pro#ided to him
3hat would 'e his tax paya'le4
E Ni#
U !s 111+FE.
U !s 1F0+...
U !s ,1.+...
Mr ;haf<at recei#ed a 'asic salary of !s ,..+... durin" the year ended 1..>,..F De has recei#ed lunch facility+ cost of li#in" allowance
and adhoc relief of !s >+...+ 0.+...+ and @+E.. respecti#ely 3hat would 'e his tax paya'le4
U !s 1+.1.
U !s 1+.1F
U !s 1+.>F
E R- !A9<1-8
Mr -sif recei#ed a salary of !s ,..+... durin" the year ended 1..>,..F Dis M&; is (!s 00+...-0+...-@.+...) De has recei#ed medical
allowance and facility of interest free loan from his employer of !s 1.+... per month and !s F..+... respecti#ely 3hat would 'e his tax
paya'le4
E R- !A91<-8
U !s ,+010
U !s 1.@+0..
U !s 115+,..
*n case+ "eneral pro#ident is appro#ed 'y 6o#t or a local authority or a statutory 'ody under clause 11 (i) of the *ncome &ax 7rdinance ,..1
then what will 'e the treatment of such 6ratuity fund4
E 5+o##' exempt
U ?xempt up to !s 1..+...
U ?xempt up to !s ,..+... and exceedin" amount will 'e char"ed as salary
U 0.O of the amount recei#a'le or !s @0+... whiche#er is less
Mr -fsar recei#ed a 'asic salary of !s F..+... durin" the year ended 1..>,..F De has recei#ed di#idend income of !s 10+... and
#erifia'le personal medical expenses of !s ,.+... 3hat would 'e his tax paya'le4
E R- 6<A800
U !s E5+10.
U !s E,+E..
U !s E,+10.
&he taxa'le income of Mr ;a'ahat is !s 5>.+5.. durin" the year ended 1..>,..F De has recei#ed an interest free loan of !s 1..+... at
which the employer char"ed interest at a rate of 1,O 3hat would 'e his tax paya'le4
E R- !6A83C
U !s 5>.+5..
U !s 5@,+5..
U !s 0>.+5..
Mr ;ufyan has rented out his house at !s E.+... per month -s per rent deed he has recei#ed an amount of !s 10.+... as ad#ance+ which
is non adAusta'le a"ainst rent 3hat would 'e the amount of rent char"ea'le to tax4
U !s 5.+...
E R- 9<8A000
U !s @1+...
U !s 1..+E..
Mr &areen let out a house at the monthly rent of !s 10.+... and recei#ed a deposit of !s >0+... not adAusta'le a"ainst the rent 3hat
would 'e his tax paya'le4
U !s 1+,0.
U !s 1,0
E R- 92AC00
U !s ,10+...
Mr Gia<at durin" the year ended 1.
th
/une ,..F recei#ed a net profit of !s >.+... De has recei#ed profit on sale of in#estments of !s
1.+... and interest on "o#ernment securities of !s 1+... 3hat will 'e his income from profession4
U !s 01+...
U !s >@+...
E R- <3A000
U !s 5@+...
Mr Mohsin durin" the year ended 1.
th
/une ,..F recei#ed a net profit of !s ,0.+... De has maintained a reser#e for meetin" contin"ent
lia'ility &he maintenance cost him !s ,0+... and he has paid for purchase of "oodwill !s 1.+... 3hat will 'e his income from profession4
U !s 1@.+...
U !s ,1.+...
E R- 288A000
U !s 11.+...
Mr /amil an en"ineer has recei#ed consultancy fee of !s 1E0+... De has paid desi"n and draft related salaries and site super#isors !s
50+... and !s 1>+... respecti#ely 3hat will 'e his income from profession4
E R- 30CA000
U !s 1F5+...
U !s 1@>+...
U !s 5>>+...
D(etion No0 CC ( Mar/0 ! " - 2#eae .+ooe one
Mrs MaLhar durin" the year ended 1.
th
/une ,..F recei#ed salary of !s E.+... per month ;he has recei#ed income from fish catchin"
'usiness of !s 1.+... 3hat will 'e her income from profession4
U !s 0.+...
U !s 11.+...
U !s FF.+...
E R- 960A000
MKs /unior durin" the year ended 1.
th
/une ,..F recei#ed a net profit of !s 11F+5.. &he income tax as per PWG account is worth !s ,+0..
and loss 'y em'eLLlement of !s 0+... 3hat will 'e the tax paya'le of the company4
U !s @E0+...
E R- 8!AC!8
U !s @1.+...
U !s @,0+...
D(etion No0 C6 ( Mar/0 ! " $(* - 2#eae .+ooe one
Mr Qasim recei#ed income from 'usiness of !s 1.@+... De has recei#ed "ain on sale of residential house of !s 15.+... 3hat will 'e his
taxa'le income4
U !s 0.+...
U !s 1..+...
E R- !0<A000
U !s 1..+...
D(etion No0 C< ( Mar/0 ! " - 2#eae .+ooe one
Mr ;a'ir recei#ed income from 'usiness of !s 1.@+... De has recei#ed profit on encashment of 2efence ;a#in" $ertificates of !s 1.+...
3hat will 'e his income from profession4
U !s 1..+...
U !s ,..+...
E R- !0<A000
U !s 1F,+...
D(etion No0 C1 $(* ( Mar/0 ! " - 2#eae .+ooe one
Mrs 6ilani has recei#ed 'asic salary of !s 1..+... durin" the tax year ,..F ;he has recei#ed matured 2efence ;a#in" $ertificates of !s
E.+... of which @.+... were encashed 3hat will 'e his taxa'le income4
U !s F>.+...
U !s 11.+...
U !s 0.+...
E R- 3!0A000

Spring 2009
FIN623- Taxation Management (Seion - !"
So#$e% &' $() Team
$(*+e#p,gmai#-.om
Mar/0 1!
__________ is a type of tax where the tax rate increases as the income to which
the rate is applied increases
Proportional tax
2rogrei$e tax
!e"ressi#e tax
$orporate tax
*f the accountin" year of Mr -slam+ a rice exporter is started from .1 /anuary
,..0 and endin" on 11st 2ecem'er ,..0 3hat will 'e its tax year4
&ax year ,..1
&ax year ,..5
&ax year ,..0
&ax year ,..>
*n case of lump sum receipt of income like 6olden hand shake the tax payer pays tax in which of the followin" way4
A$erage o3 #at 3 'ear tax rate
7ption to choose current or a#era"e of last 1 years tax rate
$urrent tax rate
Pre#ious year tax rate
Re3eren.e: 6olden handshake amount can 'e taxed Pa#era"e rate of tax of last 1 years
3hich of the followin" methods of accountin" is compulsory to adopt for 8irm4
-ccrual 9asis
$ash 9asis
9oth -ccrual and $ash 9asis
Free to .+ooe an' /in% o3 4ae
Re3eren.e0 -doption rule of accountin" methods are as under:
8or $ompanies :-ccrual 'asis mandatory
8or 7thers --- optional+ cash or -ccrual 9asis
;uppose a Profit ac<uired 'y a culti#ator from the sale of standin" crops or the
produce after har#estin" &he profit of the culti#ator will 'e treated in which of the followin" way4
*ncome from 9usiness
Agri.(#t(re In.ome
$apital 6ain
Re30 Profit on sale of standin" crops or the produce after har#est 'y a culti#atin" owner or tenant of land will 'e treated as a"ricultural income
3hereas:
Profit accruin" from the purchase of standin" crops and resale of it after har#est 'y a merchant ha#in" no interest in land except a mere
license to enter upon the land and "ather upon the produce+ land is not direct+ immediate or effecti#e source of income will 'e treated as non
a"riculture income
*f person supplyin" water to the land for the purpose of "rowin" rice in the field
and he char"ed money from the culti#ator a"ainst the water supplied
?xempt as -"riculture *ncome
-llowed !eduction in tax rate
-llowed reduction in tax lia'ility
Taxa4#e a Non-Agri.(#t(re In.ome
Re3: *ncome from sale of a"ricultural produce recei#ed 'y way of price for water supplied to land will 'e treated as non a"ricultural income
Mr *mran is an employee of Pro#incial 6o#ernment of PunAa' posted in BC for two years4 3hat will 'e the residential status of Mr *mran4
Rei%ent In%i$i%(a#
Non-!esident *ndi#idual
!esident DB8
!esident -7P
Re30 -ccordin" to sectionE, of income tax ordinance+ resident indi#idual is an employee or official of the 8ederal 6o#ernment or a Pro#incial
6o#ernment posted a'road in the tax year4
8or a non-resident -7P which of the followin" condition must 'e satisfied4
$ontrol and mana"ement of affairs of -7P is situated partly in Pakistan
$ontrol and mana"ement of affairs of -7P is situated wholly in Pakistan
$ontrol and mana"ement of affairs of -7P is situated wholly or partly in
Pakistan
None o3 t+e gi$en option-
Re30 $ontrol and mana"ement of affairs of resident -7P is situated wholly or partly in Pakistan
3hat is the tax treatment of the reim'ursement of expenditure made 'y the employer4
5+o##' Taxa4#e
3holly exempt
Partly &axa'le
Not mentioned in *ncome &ax 7rdinance ,..1
3hat is the tax treatment of the lea#e encashment of the armed forces of Pakistan on retirement made 'y the employer4
3holly &axa'le
5+o##' exempt
Partly &axa'le
Not mention in *ncome &ax 7rdinance ,..1
Re30
Lea$e Sa#ar'0 &his is taxa'le whene#er recei#ed or ri"ht to recei#e is exercised 'y the employee Gea#e encashment on retirement falls in
this cate"ory &he only exemption a#aila'le is for the mem'ers of the -rmed 8orces of Pakistan+ employees of the 8ederal 6o#ernment and
Pro#incial 6o#ernments
D(etion No0 !! ( Mar/0 ! " - 2#eae .+ooe one
-s part of remuneration packa"e+ a company pro#ides for reim'ursement of telephone costs on actual 'asis to its employees in case the
facility is used for official purposes only+ what are the tax conse<uences of this policy4
&reated as taxa'le
No tax conse<uences
Partially taxa'le
Not discussed in *ncome &ax 7rdinance ,..1
M&; stands for which of the followin"4
Minim(m time .a#e
Minimum transfer ;alary
Maximum time scale
Maximum transfer ;alary
$ondition for the appro#al of "ratuity fund is 'ased on which of the followin"4
Tr(t i irre$o.a4#e
&rust is re#oca'le
&rust is esta'lished 'y 6o#ernment
&rust is appro#ed 'y 7fficer of *ncome &ax
Re30 $ondition for -ppro#al
= 8und esta'lished under an irre#oca'le trust and purposes of "ratuity fulfilled
D(etion No0 !C ( Mar/0 ! " - 2#eae .+ooe one
$lause (1.) and (11) of Part 1 of second schedule related to Pension are omitted 'y which of the followin"4
Finan.e &i## 2006
8inance 9ill ,..@
Re36twenty per cent of the eli"i'le personHs taxa'le income for the rele#ant tax yearI Pro#ided that an eli"i'le person (words Ja personJ
su'stituted 'y 8inance 9ill ,..>)
3hich of the followin" is the tax treatment for *ncome from property recei#ed as a rent for the year ,..@4
1 K, of the rent is deduct a'le as repairs allowance
No %e%(.tion i a##o9e%
- non adAusta'le ad#ance is recei#ed from a 'uildin" as income from property ;uch rent will 'e spread in how many of the followin" years4
0 years
>years
E years
!0 'ear
Re3eren.e0 Treatment o3 Non-A%K(ta4#e Amo(nt Re.ei$e% in Re#ation to &(i#%ing
&hese amounts shall 'e treated as rent and char"ea'le to tax under the head (income from property) &hese amounts are spread o#er a
period of 1. years+ *t is adAusta'le as !ent
Bnder clause (F1 -) of the Part 1 of second schedule of *ncome &ax 7rdinance ,..1+ which of the followin" 'usiness income is exempted
from tax4
*ncome of a &ext-9ook 9oard
Bni#ersity or ?ducational *nstitution esta'lished not for profit purpose
Re.ogni*e% :o.ationa# Intit(te
*ncome of !eco"niLed ;ports 9oard
!ef: ?xemptions on 9usiness income Bnder Part 1 of second schedule
$lause ?xempt *ncome
(F1) *ncome of a &ext-9ook 9oard
(F,) Bni#ersity or ?ducational *nstitution esta'lished not for profit purpose
(F1) !eco"niLed $omputer &rainin" *nstitution
(F1-) !eco"niLed Mocational *nstitute
(FE) *ncome of !eco"niLed ;ports 9oard
(1..) *ncome of Modara'a $ompanies
Dead *ncome from property section 10 defines land as:
$onstructed 'uildin"
9lock of 'rick
Macant plot
7ne of the followin" options doesnHt come under the definition of 9usiness income section , (F):
&rade
$ommerce
Profession
Emp#o'ment
Re30 &(ine =e3ine% Se.tion 2(9"
3hich one of the followin" section defines *ncome under the head *ncome from
9usiness section 1E4
Se.tion 2(9"
;ection ,(,F)
;ection @0
;ection ,(10)
Re30 &(ine =e3ine% Se.tion 2(9"
3hich of the followin" section deals with the deductions Not allowed to income from 'usiness4
;ection , (F)
;ection ,.
Se.tion 2!
;ection ,,
Re30 2eductions not -llowed : ;ec ,1
6ain on sale of deprecia'le asset+ under section 11 of the *ncome &ax 7rdinance ,..1+ is char"ed to tax under which of the followin" head of
*ncome4
In.ome 3rom &(ine
Re30 Tran3er to 2arti.ipator' Reer$e (Se. 3!"
!eco#ery a"ainst any deductionKexpenses pre#iously allowed (-dd 'ack to income)
6ain on sale of deprecia'le asset
!eco#ery of 'ad de'tKor written off loan
&radin" lia'ilities not paid within expiration of three years
-mount recei#ed after discontinuance of 'usiness
-mount recei#ed after discontinuance of 'usiness+ under section 11 of the *ncome &ax 7rdinance ,..1+ is char"ed to tax under which of the
followin" head of *ncome4
In.ome 3rom &(ine
Re3eren.e i ame a 3or pre$io( G(etion-
3hich of the followin" is the tax rate that a !esident $ompany is su'Aected to pay on its turno#er for a tax year+ e#en in cases where the
company sustains loss4
.,0O
0-80;
.@0O
1..O
Re30 A..or%ing to e.tion !!30
!esident $ompany is su'Aected to minimum tax P .0.O of its turno#er for a tax year+ e#en in cases where the company sustains loss
&he amount of minimum tax lia'ility is arri#ed at as follows:
(- x .0O) 9
(- x 9) .0O
(- Q 9) .0O
(- K .0O) 9
*n case of disposal of asset 'etween spouses under an a"reement to li#e apart+ what would 'e the tax treatment of such disposal of asset4
$har"ed to tax under the head *ncome from 9usiness
$har"ed to tax under the head *ncome from $apital 6ain
Exempt 3rom tax (n%er e.tion <9 o3 t+e In.ome Tax Or%inan.e 200!
$har"ed to tax under the head *ncome from Property
Re30 No "ain or loss shall 'e taken to arise on the disposal of an asset
9etween spouses under an a"reement to li#e apart
3hich of the followin" is N7& re<uired to file the return of *ncome &ax under section 1104
?#ery $ompany
?#ery 8irm
?#ery person with land ,0. s< yards
Sa#arie% in%i$i%(a# +a$ing a#ar' .erti3i.ate in #ie(
Re30 ;ection 110 "rants immunity to salaried person in lieu of filin" a return as outlined 'elow:
;alary certificate from employer sufficient in lieu of return
- person may furnish !e#ised !eturn from the date when the ori"inal return was
furnished up to which of the followin" time period4
0 2ays
0 Months
8 @ear
10 Months
Re30 *n case of any omission 'y a tax payer+ a re#ised return can 'e filed within 0 years of the date that the ori"inal return was furnished
- person where taxa'le income for a tax year exceeds the maximum amount not
char"ea'le to tax is re<uired to file a return of income for the tax year+ presently this amount is:
R-!00A 000
!s1..+ ...
!s,0.+ ...
!s0..+ ...
3hich of the followin" is N7& a li<uidator under section 151 of the income tax
ordinance ,..14
!ecei#er appointed 'y a $ourt
&rustee for a 'ankrupt
Mort"a"ee in possession
Tax pa'er
Re30 LiG(i%ator (Se.- !C!"0
8ollowin" are referred to as li<uidator:
- li<uidator of a company
- recei#er appointed 'y a $ourt or appointed out of court
- trustee for a 'ankrupt
- mort"a"ee in possession
8ederal &ax 7m'udsman has the same powers as _____________ to punish any person or is contempt
S(preme .o(rt
Di"h court
$ity court
Pro#incial 6o#ernment
Re30 &he 8ederal &ax 7m'udsman has the same powers as the ;upreme $ourt has to punish any person for its contempt-(2age no-!!!"
&he office of ;uperintendent of ;ales &ax+ or such other office as the 9oard may+ 'y notification in the official 6aLette+ specify is calledI
*ncome tax office
!e"istered office
Lo.a# Sa#e Tax O33i.e
Re30 (Gocal ;ales &ax 7fficeJ means the office of ;uperintendent of ;ales &ax+ or such other office as the 9oard may+ 'y notification in the
official 6aLette+ specifyI
$apital Malue &ax was le#ied on the capital #alue of assets with effect fromI
!t B(#'A !919
1st /une 1FF.
1st /uly ,...
1st /uly 1FFF
Re30 $apital Malue &ax was le#ied with effect from 1st /uly+ 1FEF on the capital #alue of assets &his is paya'le 'y e#ery indi#idual+ association
of persons+ firm or a company which ac<uires 'y purchase "ift+ exchan"e+ relin<uishment+ surrender if ri"hts 'y the owners (whether effected
orally or 'y deed or o'tained throu"h court decree) except 'y inheritance an asset or a ri"ht to the use thereof for more than twenty years -n
asset or a ri"ht to the use thereof for more than twenty years
- directorship or any other office in#ol#ed in the mana"ement of a company
under section ,(,,) of *ncome &ax 7rdinance+ ,..1 is termed as:
Emp#o'ment
?mployer
?mployee
9usiness premises
Re30 2(22" Lemp#o'ment in.#(%e0
= a directorship or any other office in#ol#ed in the mana"ement of a companyI
= a position entitlin" the holder to a fixed or ascertaina'le remunerationI or
= the holdin" or actin" in any pu'lic officeI
Mr R resident of Pakistan earned income from Property situated in Gondon !s
0.+... 'ut recei#ed in *ndia 3hich one of the followin" option is ri"ht for this
particular scenario4
Mr R 'ein" resident of Pakistan !s 0.+... will 'e added in 6ross total
income
Mr R 'ein" resident of Pakistan !s 0.+... will 'e su'tracted in 6ross
total income
Mr R 'ein" resident of Pakistan !s 0.+... will 'e claimed as admissi'le
deduction
Mr R 'ein" resident of Pakistan !s 0.+... will 'e exempted
Mr R non-resident of Pakistan earned income from property situated in 2u'ai
!s @.+... 'ut recei#ed in Pakistan 3hich one of the followin" option is ri"ht
for this particlar scenario4
Mr R 'ein" non-resident of Pakistan !s @.+... will 'e added in 6ross
total income
Mr R 'ein" non-resident of Pakistan !s @.+... will 'e su'tracted in
6ross total income
Mr R 'ein" non-resident of Pakistan !s @.+... will 'e claimed as
admissi'le deduction
Mr R 'ein" non-resident of Pakistan !s @.+... will 'e exempted
3hich of the followin" is the rate of tax for salaried *ndi#iduals for tax year ,..F+ where the taxa'le income exceeds !s ,0.+... 'ut does not
exceed !s 10.+...4
Nil
.,0.O
.0.O
0-<8;
3hich of the followin" is the rate of tax for salaried *ndi#iduals for tax year ,..F+ where the taxa'le income exceeds !s 5..+... 'ut does not
exceed !s 50.+...4
.,0O
10.O
2-80;
10.O
Miss ;oniaHs total taxa'le income for the year ,..F is !s ,5.+... 3hich of the
followin" is the tax lia'ility of Miss ;onia4
Ni#
!s 0..
!s 1+...
!s 1+0..
Re30 Pro#ided that where income of a woman taxpayer is co#ered 'y this clause+ no tax shall 'e char"ed if the taxa'le income does not
exceed !s ,5.+...:
Mr -Hs total taxa'le income for the year ,..F is !s >..+... 3hich of the followin" is the tax lia'ility of Mr -4
!s 10+...
!s ,1+...
!s ,@+...
R- 36A000
Re30 3here the taxa'le income exceeds !s >0.+... 'ut does not exceed !s
@0.+...+ >..O rate will 'e applied (600000M67!00H36000"-
3hich of the followin" is the &ax &reatment of utilities for the year ,..F4
5+o##' taxa4#e
3holly exempted
?xempt up to 1.O of M&;
?xempt up to 1O of M&;
Re3: Btilities were exempt up to 1.O of M&; or 9asic salary till 1.th /une+ ,..>+ #ide clause 1E of part 1 of ;econd ;chedule &his clause has
'een omitted 'y 8inance -ct+ ,..> Dence no exemption is a#aila'le for tax year ,..F
- firm -9$ maintainin" its account in cash 'asis+ at /une ,@+ ,..E it incurred expenses for !s 1.+... 'ut actual payments made at .1
-u"ust ,..E *t would 'e char"e to tax into the tax year:
,..>
,..@
,..E
,..F
D(etion No0 C3 ( Mar/0 3 "
3hat is the main purpose of 6ratuity4
D(etion No0 CC ( Mar/0 3 "
Mr 8aroo< s salary is !s,,+ ... per month De recei#ed commission durin" the year amountin" to !s11+ ... De is pro#ided a Aeep 'y his
employer for personal as well as official use &he employer took this Aeep from a leasin" company at an annual lease of !sE.+ ... &he fair
market #alue of the Aeep at commencement of lease was !sE..+ ...$alculate the taxa'le income of Mr8aroo<
9riefly explain the unexplained income or assets under section 111 of *ncome &ax 7rdinance ,..1
Bnder what conditions a commissioner of *ncome &ax may ask for the filin" of returns 'y notice4
D(etion No0 C< ( Mar/0 8 "
Mr 6haus is employed in a company after his retirement from army 2etails of his income for the year ended 1.th /une ,..F are as underI
9asic salary from company !s,.+ ... per month
?ntertainment allowance !s 1+... per month
Pension recei#ed from army !s 5E+... per annum
$alculate the total taxa'le income of Mr6haus
D(etion No0 C1 ( Mar/0 !0 "
Mr *rfan is >, years of a"e -t present he is workin" as 6eneral Mana"er of a pri#ate or"aniLation Dis particulars for the year ended 1.th
/une ,..F are as follows !s
9asic salary (5.+...-1+...-00+...) 0.+...pm
&ra#elin" allowance 11,+...
$on#eyance allowance 5E+...
Pension from 6o#ernment 1,+... pm
9onus 0.+...
Takat paid under Lakat ordinance ,.+...
Medical expenses ,@+...
F(rt+er in3ormation pro$i%e%0
1 Mr *rfan has 'een pro#ided a car for personal purposes &he cost of the car is !s @E.+...
, De has 'een pro#ided a rent - free accommodation De was entitled to a house allowance of !s E+... per month
1 &he medical expenditures incurred durin" the year are #erifia'le
5 &ax rate pre#ail FO
$ompute the taxa'le income and tax paya'le on it
D(etion No0 C9 ( Mar/0 !0 "
8rom the followin" particulars+ calculate the tax paya'le 'y Mr6auhar employed in a pri#ate limited company for the year ended 1.th /une
,..F P .0 O Mr 6auhar is >, years of a"eI
;alary (in scale 15+...-,..-1>+...) !s10+ ... pm
$ost of li#in" allowance ,.+... pa
;pecial additional allowance >+... pa
Medical allowance ,1+,.. pa
9ooks of reli"ious nature purchased ,+...
Takat paid under Lakat ordinance 1+,..
$ontri'ution to appro#ed charita'le institute !s 1F+,..

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