fin 623 all combined mcqs

FINALTERM EXAMINATION

FIN623- Taxation Management (Session - 1) Spring 2009

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

Progressive tax

Regressive tax

Corporate tax

Ref:

™ Progressive Taxes

This is based on the “capacity to pay” principle of taxation. In this type, the rate of tax increase asthe income increase.


If the accounting year of Mr. Aslam, a rice exporter is started from 01 January 2005 and ending on 31st December 2005. What will be its tax year?

Tax year 2003

Tax year 2004

Tax year 2005

Tax year 2006


In case of lump sum receipt of income like Golden hand shake the tax payer pays tax in which of the following way?

Average of last 3 years tax rate

Option to choose current or average of last 3 years tax rate

Current tax rate

Previous year tax rate


Which of the following methods of accounting is compulsory to adopt for Firm?

Accrual Basis

Cash Basis

Both Accrual and Cash Basis

Free to choose any kind of base

Ref:

For Companies –Accrual basis mandatory.

For Others --- optional, cash or Accrual Basis


Suppose a Profit acquired by a cultivator from the sale of standing crops or the produce after harvesting. The profit of the cultivator will be treated in which of the following way?

Income from Business

Agriculture Income

Income from Property

Capital Gain

Ref:

Following Income are held to be “Agricultural Income”

•Profit on sale of standing crops or the produce after harvest by a cultivating owner or tenant of land.


If person supplying water to the land for the purpose of growing rice in the field and he charged money from the cultivator against the water supplied.

What will be the tax treatment of such income?

Exempt as Agriculture Income

Allowed Reduction in tax rate

Allowed reduction in tax liability

Taxable as Non-Agriculture Income

Ref provided by azeemkhan2000: Following Incomes are held to be “Non-Agricultural Income”

Income from sale of agricultural produce received by way of price for water supplied to land.


Mr. Imran is an employee of Provincial Government of Punjab posted in UK for two years? What will be the residential status of Mr. Imran?

Resident Individual

Non-Resident Individual

Resident HUF

Resident AOP

Ref:

Resident Individual (Section 82)

• Is an employee or official of the Federal Government or a Provincial Government posted abroad in the tax year?


For a non-resident AOP which of the following condition must be satisfied?

Control and management of affairs of AOP is situated partly in Pakistan

Control and management of affairs of AOP is situated wholly in Pakistan

Control and management of affairs of AOP is situated wholly or partly in Pakistan

None of the given options

Ref:

Residential Status of “Association of Person” Under the law a Firm, HUF, etc. are placed under the head AOP

Control and management of affairs of AOP is situated wholly or partly in Pakistan


What is the tax treatment of the reimbursement of expenditure made by the employer?

Wholly Taxable

Wholly exempt

Partly Taxable

Not mentioned in Income Tax Ordinance 2001

Ref:

Reimbursement of expenditure by the employer is Taxable


What is the tax treatment of the leave encashment of the armed forces of Pakistan on retirement made by the employer?

Wholly Taxable

Wholly exempt

Partly Taxable

Not mention in Income Tax Ordinance 2001

Ref:

Leave Salary:

This is taxable whenever received or right to receive is exercised by the employee. Leave encashment on retirement falls in this category. The only exemption available is for the members of the Armed Forces of Pakistan, employees of the Federal Government and Provincial Governments.


As part of remuneration package, a company provides for reimbursement of telephone costs on actual basis to its employees in case the facility is used for official purposes only, what are the tax consequences of this policy?

Treated as taxable

No tax consequences

Partially taxable

Not discussed in Income Tax Ordinance 2001

Ref:

Reimbursement of expenditure by the employer is Taxable


MTS stands for which of the following?

Minimum time scale

Minimum transfer Salary

Maximum time scale

Maximum transfer Salary

Ref:

Concept of MTS (Minimum of Time Scale):

This is the starting point or minimum amount which is available to an employee under a time scale


Condition for the approval of gratuity fund is based on which of the following?

Trust is irrevocable

Trust is revocable

Trust is established by Government

Trust is approved by Officer of Income Tax

Ref:

Condition for Approval

• • Fund established under an irrevocable trust and purposes of gratuity fulfilled.


Clause (10) and (11) of Part 1 of second schedule related to Pension are omitted by which of the following?

Finance Ordinance 2004

Finance Ordinance 2005

Finance Bill 2006

Finance Bill 2007

Ref;

twenty per cent of the eligible person’s taxable income for the relevant tax year; Provided that an eligible person (words "a person" substituted by Finance Bill 2006)


Which of the following is the tax treatment for Income from property received as a rent for the year 2007?

1 /4 of the rent is deduct able as repairs allowance



No deduction is allowed


A non adjustable advance is received from a building as income from property. Such rent will be spread in how many of the following years?

5 years

6years

8 years

10 years

Ref:

Non adjustable advance is spread over ten years.


Under clause (93 A) of the Part 1 of second schedule of Income Tax Ordinance 2001, which of the following business income is exempted from tax?

Income of a Text-Book Board

University or Educational Institution established not for profit purpose

Recognized Vocational Institute

Income of Recognized Sports Board

Ref:

(93A) Recognized Vocational Institute.


Head Income from property section 15 defines land as:

Constructed building

Block of brick

Vacant plot



One of the following options doesn t come under the definition of Business income section 2 (9):

Trade

Commerce

Profession

Employment

Ref:

Business Defined Section 2(9)

“Business includes any trade, commerce, manufacture, profession, vocation but doesn’t include employment”


Which one of the following section defines Income under the head Income from Business section 18?

Section 2(9)

Section 2(29)

Section 75

Section 2(15)


Which of the following section deals with the deductions Not allowed to income from business?

Section 2 (9)

Section 20

Section 21

Section 22

Ref:

Deductions not Allowed – Sec. 21


Gain on sale of depreciable asset, under section 31 of the Income Tax Ordinance 2001, is charged to tax under which of the following head of Income?



Income from Capital Gain

Income from Other sources

Ref:

Transfer to Participatory Reserve (Sec 31)

Following Incomes are taxable under the head Income from Business even in cases where no business is carried on by taxpayer.

ƒRecovery against any deduction/expenses previously allowed (Add back to income).

ƒGain on sale of depreciable asset.

ƒRecovery of bad debt/or written off loan.

ƒTrading liabilities not paid within expiration of three years.

ƒAmount received after discontinuance of business.


Amount received after discontinuance of business, under section 31 of the Income Tax Ordinance 2001, is charged to tax under which of the following head of Income?



Income from Capital Gain

Income from Other sources

Ref:

Transfer to Participatory Reserve (Sec 31)

Following Incomes are taxable under the head Income from Business even in cases where no business is carried on by taxpayer.

ƒRecovery against any deduction/expenses previously allowed (Add back to income).

ƒGain on sale of depreciable asset.

ƒRecovery of bad debt/or written off loan.

ƒTrading liabilities not paid within expiration of three years.

ƒAmount received after discontinuance of business.


Which of the following is the tax rate that a Resident Company is subjected to pay on its turnover for a tax year, even in cases where the company sustains loss?

0.25%

0.50%

0.75%

1.00%

Ref:

Resident Company is subjected to minimum tax @ 0.50% of its turnover for a tax year, even in cases where the company sustains loss.


The amount of minimum tax liability is arrived at as follows:

(A x 0.5%) B

(A x B) 0.5%

(A + B) 0.5%

(A / 0.5%) B


In case of disposal of asset between spouses under an agreement to live apart, what would be the tax treatment of such disposal of asset?

Charged to tax under the head Income from Business

Charged to tax under the head Income from Capital Gain

Exempt from tax under section 79 of the Income Tax Ordinance 2001

Charged to tax under the head Income from Property

Ref:

Disposals Not Chargeable To Tax Under Sec.79 Non Recognition Rules

No gain or loss shall be taken to arise on the disposal of an asset:

ƒBetween spouses under an agreement to live apart;


Which of the following is NOT required to file the return of Income Tax under section 115?

Every Company

Every Firm

Every person with land 250 sq yards

Salaried individual having salary certificate in lieu

Ref:

Person Not Required to File Tax Return Section 115 grants immunity to salaried person in lieu of filing a return as outlined below:

ƒSalary certificate from employer sufficient in lieu of return


A person may furnish Revised Return from the date when the original return was furnished up to which of the following time period?

5 Days

5 Months

5 Years

15 Months

Ref:

Provision of Revised Tax Return:

A person may furnish Revised Return within five years of the date when the original return was furnished.


A person where taxable income for a tax year exceeds the maximum amount not chargeable to tax is required to file a return of income for the tax year, presently this

amount is:

Rs.100, 000

Rs.300, 000

Rs.250, 000

Rs.500, 000

Ref:

Provided further that where the total income of a taxpayer marginally exceeds the maximum limit of aslab in the table, the income tax payable shall be the tax payable on the maximum of that slab plus anamount equal to –

(i)20% of the amount by which the total income exceeds the said limit where the total income doesnot exceed Rs. 500,000.


Which of the following is NOT a liquidator under section 141 of the income tax ordinance 2001?

Receiver appointed by a Court

Trustee for a bankrupt

Mortgagee in possession

Tax payer

Ref:

Liquidators (Sec. 141):

Following are referred to as liquidator:

ƒA liquidator of a company

ƒA receiver appointed by a Court or appointed out of court

ƒA trustee for a bankrupt

ƒA mortgagee in possession


Federal Tax Ombudsman has the same powers as _____________ to punish any person for its contempt.

Supreme

High court

City court

Provincial Government

Ref:

The Federal Tax Ombudsman has the same powers as the Supreme Court has to punish any person forits contempt.


The office of Superintendent of Sales Tax, or such other office as the Board may, by notification in the official Gazette, specify is called;

Income tax office

Registered office

Local Sales Tax Office


Ref:

(15) "Local Sales Tax Office" means the office of Superintendent of Sales Tax, or such other office as he Board may, by notification in the official Gazette, specify;


Capital Value Tax was levied on the capital value of assets with effect from;

1st July, 1989

1st June 1990

1st July 2000

1st July 1999

Ref:

Capital Value Tax was levied with effect from 1st July, 1989 on the capital value of assets.


A directorship or any other office involved in the management of a company under section 2(22) of Income Tax Ordinance, 2001 is termed as:

Employment

Employer

Employee

Business premises

Ref:

2(22) “employment includes:

• a directorship or any other office involved in the management of a company;

• a position entitling the holder to a fixed or ascertainable remuneration; or

• the holding or acting in any public office


Mr. X resident of Pakistan earned income from Property situated in London Rs. 50,000 but received in India. Which one of the following option is right for this particular scenario?

Mr. X being resident of Pakistan Rs. 50,000 will be added in Gross total income

Mr. X being resident of Pakistan Rs. 50,000 will be subtracted in Gross total income

Mr. X being resident of Pakistan Rs. 50,000 will be claimed as admissible deduction

Mr. X being resident of Pakistan Rs. 50,000 will be exempted


Mr. X non-resident of Pakistan earned income from property situated in Dubai Rs. 70,000 but received in Pakistan. Which one of the following option is right for this particlar scenario?

Mr. X being non-resident of Pakistan Rs. 70,000 will be added in Gross total income

Mr. X being non-resident of Pakistan Rs. 70,000 will be subtracted in Gross total income

Mr. X being non-resident of Pakistan Rs. 70,000 will be claimed as admissible deduction

Mr. X being non-resident of Pakistan Rs. 70,000 will be exempted


Which of the following is the rate of tax for salaried Individuals for tax year 2009, where the taxable income exceeds Rs. 250,000 but does not exceed Rs. 350,000?

Nil

0.250%

0.50%

0.75%

Ref:

Page no 45 of handouts


Which of the following is the rate of tax for salaried Individuals for tax year 2009, where the taxable income exceeds Rs. 400,000 but does not exceed Rs. 450,000?

0.25%

1.50%

2.50%

3.50%

Ref:

Page no 45 of handouts


Miss Sonia s total taxable income for the year 2009 is Rs. 240,000. Which of the following is the tax liability of Miss Sonia?

Nil

Rs. 500

Rs. 1,000

Rs. 1,500

Ref:

Where the taxable income exceeds Rs. 180,000 but does not exceed Rs 250,000, the tax rate is 0.50%

So the tax amount will be

240000 @ 0.50% = 1200

There is not any correct option


Mr. As total taxable income for the year 2009 is Rs. 600,000. Which of the following is the tax liability of Mr. A?

Rs. 15,000

Rs. 21,000

Rs. 27,000

Rs. 36,000

Ref:

Where the taxable income exceeds Rs. 550,000 but does not exceed Rs. 650,000, the tax rate is 4.50% So

600,000 @ 4.50% = 27000


Which of the following is the Tax Treatment of utilities for the year 2009?

Wholly taxable

Wholly exempted

Exempt up to 10% of MTS

Exempt up to 1% of MTS

Ref:

Utilities were exempt up to 10% of MTS or Basic salary till 30th June, 2006, vide clause 38 of part 1 of Second Schedule. This clause has been omitted by Finance Act, 2006. Hence no exemption is available fortax year 2009.


A firm ABC maintaining its account in cash basis, at June 27, 2008 it incurred expenses for Rs. 10,000 but actual payments made at 01 August 2008. It would be charge to tax into the tax year:

2006

2007

2008

2009

Question No: 43 ( Marks: 3 )

What is the main purpose of Gratuity?


Mr. Farooq s salary is Rs.22, 000 per month. He received commission during the year amounting to Rs.33, 000. He is provided a jeep by his employer for personal as well as official use. The employer took this jeep from a leasing company at an annual lease of Rs.80, 000. The fair market value of the jeep at commencement of lease was Rs.800, 000.Calculate the taxable income of Mr.Farooq.


Briefly explain the unexplained income or assets under section 111 of Income Tax Ordinance 2001.


Under what conditions a commissioner of Income Tax may ask for the filing of returns by notice?


Mr. Ghaus is employed in a company after his retirement from army. Details of his income for the year ended 30th June 2009 are as under;

Basic salary from company Rs.20, 000 per month

Entertainment allowance Rs. 1,000 per month

Pension received from army Rs. 48,000 per annum

Calculate the total taxable income of Mr.Ghaus.


Mr. Irfan is 62 years of age. At present he is working as General Manager of a private organization. His particulars for the year ended 30th June 2009 are as follows. Rs

Basic salary (40,000-1,000-55,000) 50,000p.m.

Traveling allowance 112,000

Conveyance allowance 48,000

Pension from Government 12,000 p.m.

Bonus 50,000

Zakat paid under zakat ordinance 20,000

Medical expenses 27,000

Further information provided:

1. Mr. Irfan has been provided a car for personal purposes. The cost of the car is Rs. 780,000.

2. He has been provided a rent - free accommodation. He was entitled to a house allowance of Rs. 8,000 per month.

3. The medical expenditures incurred during the year are verifiable.

4. Tax rate prevail 9%.

Compute the taxable income and tax payable on it.


From the following particulars, calculate the tax payable by Mr.Gauhar employed in a private limited company for the year ended 30th June 2009 @ 0.5 %. Mr Gauhar is 62 years of age;

Salary (in scale 14,000-200-16,000) Rs.15, 000 p.m.

Cost of living allowance 20,000 p.a.

Special additional allowance 6,000 p.a.

Medical allowance 21,200 p.a.

Books of religious nature purchased 2,000

Zakat paid under zakat ordinance 3,200

Contribution to approved charitable institute Rs. 19,200


Spring 2009

FIN623- Taxation Management (Session - 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 taxProgressive taxRegressive taxCorporate taxQuestion No: 2 ( Marks: 1 ) - Please choose oneIf the accounting year of Mr. Aslam, a rice exporter is started from 01 January 2005 and ending on 31st December 2005. What will be its tax year?Tax year 2003Tax year 2004Tax year 2005Tax year 2006Question No: 3 ( Marks: 1 ) - Please choose oneIn case of lump sum receipt of income like Golden hand shake the tax payer pays tax in which of the following way?Average of last 3 years tax rateOption to choose current or average of last 3 years tax rateCurrent tax ratePrevious year tax rateReference: Golden handshake amount can be taxed @average rate of tax of last 3 yearsQuestion No: 4 ( Marks: 1 ) - Please choose oneWhich of the following methods of accounting is compulsory to adopt for Firm?Accrual BasisCash Basis

Both Accrual and Cash BasisFree to choose any kind of baseReference: Adoption rule of accounting methods are as under:For Companies –Accrual basis mandatory.For Others --- optional, cash or Accrual BasisQuestion No: 5 ( Marks: 1 ) - Please choose oneSuppose a Profit acquired by a cultivator from the sale of standing crops or the produce after harvesting. The profit of the cultivator will be treated in which of the following way?Income from BusinessAgriculture IncomeIncome from PropertyCapital GainRef: Profit on sale of standing crops or the produce after harvest by a cultivating owner or tenant of land will be treated as agricultural income. Whereas:Profit accruing from the purchase of standing crops and resale of it after harvest by a merchant having no interest in land except a mere license to enter upon the land and gather upon the produce, land is not direct, immediate or effective source of income will be treated as non agriculture income.Question No: 6 ( Marks: 1 ) - Please choose oneIf person supplying water to the land for the purpose of growing rice in the field and he charged money from the cultivator against the water supplied. What will be the tax treatment of such income?Exempt as Agriculture IncomeAllowed Reduction in tax rateAllowed reduction in tax liabilityTaxable as Non-Agriculture IncomeRef: Income from sale of agricultural produce received by way of price for water supplied to land will be treated as non agricultural income.Question No: 7 ( Marks: 1 ) - Please choose oneMr. Imran is an employee of Provincial Government of Punjab posted in UK for two years? What will be the residential status of Mr. Imran?Resident IndividualNon-Resident IndividualResident HUFResident AOPRef: According to section82 of income tax ordinance, resident individual is an employee or official of the Federal Government or a Provincial Government posted abroad in the tax year?Question No: 8 ( Marks: 1 ) - Please choose oneFor a non-resident AOP which of the following condition must be satisfied?Control and management of affairs of AOP is situated partly in PakistanControl and management of affairs of AOP is situated wholly in PakistanControl and management of affairs of AOP is situated wholly or partly inPakistanNone of the given options.Ref: Control and management of affairs of resident AOP is situated wholly or partly in Pakistan.Question No: 9 ( Marks: 1 ) - Please choose oneWhat is the tax treatment of the reimbursement of expenditure made by the employer?Wholly TaxableWholly exemptPartly TaxableNot mentioned in Income Tax Ordinance 2001Question No: 10 ( Marks: 1 ) - Please choose oneWhat is the tax treatment of the leave encashment of the armed forces of Pakistan on retirement made by the employer?Wholly TaxableWholly exemptPartly TaxableNot mention in Income Tax Ordinance 2001Ref:Leave Salary: This is taxable whenever received or right to receive is exercised by the employee. Leave encashment on retirement falls in this category. The only exemption available is for the

members of the Armed Forces of Pakistan, employees of the Federal Government and Provincial GovernmentsQuestion No: 11 ( Marks: 1 ) - Please choose oneAs part of remuneration package, a company provides for reimbursement of telephone costs on actual basis to its employees in case the facility is used for official purposes only, what are the tax consequences of this policy?Treated as taxableNo tax consequencesPartially taxableNot discussed in Income Tax Ordinance 2001Question No: 12 ( Marks: 1 ) - Please choose oneMTS stands for which of the following?Minimum time scaleMinimum transfer SalaryMaximum time scaleMaximum transfer SalaryQuestion No: 13 ( Marks: 1 ) - Please choose oneCondition for the approval of gratuity fund is based on which of the following?Trust is irrevocableTrust is revocableTrust is established by GovernmentTrust is approved by Officer of Income TaxRef: Condition for Approval• Fund established under an irrevocable trust and purposes of gratuity fulfilled.Question No: 14 ( Marks: 1 ) - Please choose oneClause (10) and (11) of Part 1 of second schedule related to Pension are omitted by which of the following?Finance Ordinance 2004Finance Ordinance 2005Finance Bill 2006Finance Bill 2007Ref;twenty per cent of the eligible person’s taxable income for the relevant tax year; Provided that an eligible person (words "a person" substituted by Finance Bill 2006).Question No: 15 ( Marks: 1 ) - Please choose oneWhich of the following is the tax treatment for Income from property received as a rent for the year 2007?1 /4 of the rent is deduct able as repairs allowance1 /2 of the rent is deduct able as repairs allowance1 /5 of the rent is deduct able as repairs allowanceNo deduction is allowedQuestion No: 16 ( Marks: 1 ) - Please choose oneA non adjustable advance is received from a building as income from property. Such rent will be spread in how many of the following years?5 years6years8 years10 yearsReference: Treatment of Non-Adjustable Amounts Received in Relation to BuildingsThese amounts shall be treated as rent and chargeable to tax under the head “income from property”. These amounts are spread over a period of 10 years, It is adjustable as Rent.Question No: 17 ( Marks: 1 ) - Please choose oneUnder clause (93 A) of the Part 1 of second schedule of Income Tax Ordinance 2001, which of the following business income is exempted from tax?Income of a Text-Book BoardUniversity or Educational Institution established not for profit purposeRecognized Vocational InstituteIncome of Recognized Sports BoardRef: Exemptions on Business income Under Part 1 of second scheduleClause Exempt Income

(91) Income of a Text-Book Board.(92) University or Educational Institution established not for profit purpose.(93) Recognized Computer Training Institution.(93A) Recognized Vocational Institute.(98) Income of Recognized Sports Board.(100) Income of Modaraba Companies.Question No: 18 ( Marks: 1 ) - Please choose oneHead Income from property section 15 defines land as:Constructed buildingBlock of brickVacant plotNone of the given optionsQuestion No: 19 ( Marks: 1 ) - Please choose oneOne of the following options doesn’t come under the definition of Business income section 2 (9):TradeCommerceProfessionEmploymentRef: Business Defined Section 2(9)“Business includes any trade, commerce, manufacture, profession, vocation but doesn’t include employment”Question No: 20 ( Marks: 1 ) - Please choose oneWhich one of the following section defines Income under the head Income fromBusiness section 18?Section 2(9)Section 2(29)Section 75Section 2(15)Ref: Business Defined Section 2(9)“Business includes any trade, commerce, manufacture, profession, vocation but doesn’t include employment”Question No: 21 ( Marks: 1 ) - Please choose oneWhich of the following section deals with the deductions Not allowed to income from business?Section 2 (9)Section 20Section 21Section 22Ref: Deductions not Allowed – Sec. 21Question No: 22 ( Marks: 1 ) - Please choose oneGain on sale of depreciable asset, under section 31 of the Income Tax Ordinance 2001, is charged to tax under which of the following head of Income?Income from BusinessIncome from PropertyIncome from Capital GainIncome from Other sourcesRef: Transfer to Participatory Reserve (Sec 31)Following Incomes are taxable under the head Income from Business even in cases where no business is carried on by taxpayer.

Recovery against any deduction/expenses previously allowed (Add back to income).

Gain on sale of depreciable asset.

Recovery of bad debt/or written off loan.

Trading liabilities not paid within expiration of three years.

Amount received after discontinuance of business.


Amount received after discontinuance of business, under section 31 of the Income Tax Ordinance 2001, is charged to tax under which of the following head of Income?Income from BusinessIncome from PropertyIncome from Capital GainIncome from Other sourcesReference is same as for previous question.Question No: 24 ( Marks: 1 ) - Please choose oneWhich of the following is the tax rate that a Resident Company is subjected to pay on its turnover for a tax year, even in cases where the company sustains loss?0.25%0.50%0.75%1.00%Ref: According to section 113:Resident Company is subjected to minimum tax @ 0.50% of its turnover for a tax year, even in cases where the company sustains loss.Question No: 25 ( Marks: 1 ) - Please choose oneThe amount of minimum tax liability is arrived at as follows:(A x 0.5%) B(A x B) 0.5%(A + B) 0.5%(A / 0.5%) BQuestion No: 26 ( Marks: 1 ) - Please choose oneIn case of disposal of asset between spouses under an agreement to live apart, what would be the tax treatment of such disposal of asset?Charged to tax under the head Income from BusinessCharged to tax under the head Income from Capital GainExempt from tax under section 79 of the Income Tax Ordinance 2001Charged to tax under the head Income from PropertyRef: No gain or loss shall be taken to arise on the disposal of an assetBetween spouses under an agreement to live apart.Question No: 27 ( Marks: 1 ) - Please choose oneWhich of the following is NOT required to file the return of Income Tax under section 115?Every CompanyEvery FirmEvery person with land 250 sq yardsSalaried individual having salary certificate in lieuRef: Section 115 grants immunity to salaried person in lieu of filing a return as outlined below:

Salary certificate from employer sufficient in lieu of return

Question No: 28 ( Marks: 1 ) - Please choose oneA person may furnish Revised Return from the date when the original return wasfurnished up to which of the following time period?5 Days5 Months5 Years15 MonthsRef: In case of any omission by a tax payer, a revised return can be filed within 5 years of the date that the original return was furnished.Question No: 29 ( Marks: 1 ) - Please choose oneA person where taxable income for a tax year exceeds the maximum amount notchargeable to tax is required to file a return of income for the tax year, presently this amount is:Rs.100, 000Rs.300, 000Rs.250, 000Rs.500, 000Question No: 30 ( Marks: 1 ) - Please choose oneWhich of the following is NOT a liquidator under section 141 of the income tax ordinance 2001?

Receiver appointed by a CourtTrustee for a bankruptMortgagee in possessionTax payerRef: Liquidators (Sec. 141):Following are referred to as liquidator:A liquidator of a companyA receiver appointed by a Court or appointed out of courtA trustee for a bankruptA mortgagee in possessionQuestion No: 31 ( Marks: 1 ) - Please choose oneFederal Tax Ombudsman has the same powers as _____________ to punish any person or is contempt..Supreme courtHigh courtCity courtProvincial GovernmentRef: The Federal Tax Ombudsman has the same powers as the Supreme Court has to punish any person for its contempt.(Page no.111)Question No: 32 ( Marks: 1 ) - Please choose oneThe office of Superintendent of Sales Tax, or such other office as the Board may, by notification in the official Gazette, specify is called;Income tax officeRegistered officeLocal Sales Tax OfficeNone of the given optionsRef: “Local Sales Tax Office" means the office of Superintendent of Sales Tax, or such other office as the Board may, by notification in the official Gazette, specify;Question No: 33 ( Marks: 1 ) - Please choose oneCapital Value Tax was levied on the capital value of assets with effect from;1st July, 19891st June 19901st July 20001st July 1999Ref: Capital Value Tax was levied with effect from 1st July, 1989 on the capital value of assets. This is payable by every individual, association of persons, firm or a company which acquires by purchase gift, exchange, relinquishment, surrender if rights by the owners (whether effected orally or by deed or obtained through court decree) except by inheritance an asset or a right to the use thereof for more than twenty years. An asset or a right to the use thereof for more than twenty years.Question No: 34 ( Marks: 1 ) - Please choose oneA directorship or any other office involved in the management of a companyunder section 2(22) of Income Tax Ordinance, 2001 is termed as:EmploymentEmployerEmployeeBusiness premisesRef: 2(22) “employment includes:• a directorship or any other office involved in the management of a company;• a position entitling the holder to a fixed or ascertainable remuneration; or• the holding or acting in any public office;Question No: 35 ( Marks: 1 ) - Please choose oneMr. X resident of Pakistan earned income from Property situated in London Rs.50,000 but received in India. Which one of the following option is right for this particular scenario?Mr. X being resident of Pakistan Rs. 50,000 will be added in Gross total incomeMr. X being resident of Pakistan Rs. 50,000 will be subtracted in Gross total incomeMr. X being resident of Pakistan Rs. 50,000 will be claimed as admissible deductionMr. X being resident of Pakistan Rs. 50,000 will be exemptedQuestion No: 36 ( Marks: 1 ) - Please choose oneMr. X non-resident of Pakistan earned income from property situated in Dubai Rs. 70,000 but received in Pakistan. Which one of the following option is right for this particlar scenario?

Mr. X being non-resident of Pakistan Rs. 70,000 will be added in Gross total incomeMr. X being non-resident of Pakistan Rs. 70,000 will be subtracted in Gross total incomeMr. X being non-resident of Pakistan Rs. 70,000 will be claimed as admissible deductionMr. X being non-resident of Pakistan Rs. 70,000 will be exemptedQuestion No: 37 ( Marks: 1 ) - Please choose oneWhich of the following is the rate of tax for salaried Individuals for tax year 2009, where the taxable income exceeds Rs. 250,000 but does not exceed Rs. 350,000?Nil0.250%0.50%0.75%Question No: 38 ( Marks: 1 ) - Please choose oneWhich of the following is the rate of tax for salaried Individuals for tax year 2009, where the taxable income exceeds Rs. 400,000 but does not exceed Rs. 450,000?0.25%1.50%2.50%3.50%Question No: 39 ( Marks: 1 ) - Please choose oneMiss Sonia’s total taxable income for the year 2009 is Rs. 240,000. Which of the following is the tax liability of Miss Sonia?NilRs. 500Rs. 1,000Rs. 1,500Ref: Provided that where income of a woman taxpayer is covered by this clause, no tax shall be charged if the taxable income does not exceed Rs. 240,000:Question No: 40 ( Marks: 1 ) - Please choose oneMr. A’s total taxable income for the year 2009 is Rs. 600,000. Which of the following is the tax liability of Mr. A?Rs. 15,000Rs. 21,000Rs. 27,000Rs. 36,000Ref: Where the taxable income exceeds Rs. 650,000 but does not exceed Rs.750,000, 6.00% rate will be applied. (600000*6/100=36000).Question No: 41 ( Marks: 1 ) - Please choose oneWhich of the following is the Tax Treatment of utilities for the year 2009?Wholly taxableWholly exemptedExempt up to 10% of MTSExempt up to 1% of MTSRef: Utilities were exempt up to 10% of MTS or Basic salary till 30th June, 2006, vide clause 38 of part 1 of Second Schedule. This clause has been omitted by Finance Act, 2006. Hence no exemption is available for tax year 2009.Question No: 42 ( Marks: 1 ) - Please choose oneA firm ABC maintaining its account in cash basis, at June 27, 2008 it incurred expenses for Rs. 10,000 but actual payments made at 01 August 2008. It would be charge to tax into the tax year:2006200720082009Question No: 43 ( Marks: 3 )What is the main purpose of Gratuity?Question No: 44 ( Marks: 3 )Mr. Farooq s salary is Rs.22, 000 per month. He received commission during the year amounting to Rs.33, 000. He is provided a jeep by his employer for personal as well as official use. The employer took this jeep from a leasing company at an annual lease of Rs.80, 000. The fair market value of the jeep at commencement of lease was Rs.800, 000.Calculate the taxable income of Mr.Farooq.

Question No: 45 ( Marks: 3 )Briefly explain the unexplained income or assets under section 111 of Income Tax Ordinance 2001.Question No: 46 ( Marks: 5 )Under what conditions a commissioner of Income Tax may ask for the filing of returns by notice?Question No: 47 ( Marks: 5 )Mr. Ghaus is employed in a company after his retirement from army. Details of his income for the year ended 30th June 2009 are as under;Basic salary from company Rs.20, 000 per monthEntertainment allowance Rs. 1,000 per monthPension received from army Rs. 48,000 per annumCalculate the total taxable income of Mr.Ghaus.Question No: 48 ( Marks: 10 )Mr. Irfan is 62 years of age. At present he is working as General Manager of a private organization. His particulars for the year ended 30th June 2009 are as follows. Rs Basic salary (40,000-1,000-55,000) 50,000p.m.Traveling allowance 112,000Conveyance allowance 48,000Pension from Government 12,000 p.m.Bonus 50,000Zakat paid under zakat ordinance 20,000Medical expenses 27,000Further information provided:1. Mr. Irfan has been provided a car for personal purposes. The cost of the car is Rs. 780,000.2. He has been provided a rent - free accommodation. He was entitled to a house allowance of Rs. 8,000 per month.3. The medical expenditures incurred during the year are verifiable.4. Tax rate prevail 9%.Compute the taxable income and tax payable on it.Question No: 49 ( Marks: 10 )From the following particulars, calculate the tax payable by Mr.Gauhar employed in a private limited company for the year ended 30th June 2009 @ 0.5 %. Mr Gauhar is 62 years of age;Salary (in scale 14,000-200-16,000) Rs.15, 000 p.m.Cost of living allowance 20,000 p.a.Special additional allowance 6,000 p.a.Medical allowance 21,200 p.a.Books of religious nature purchased 2,000Zakat paid under zakat ordinance 3,200Contribution to approved charitable institute Rs. 19,200///////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

MIDTERM EXAMINATION

Spring 2009

FIN623- Taxation Management (Session - 2)


Taxes are important instrument of which one of the following policy?

Monetary policy

Fiscal policy

Trade Policy

Economic Policy


Removal of deficit in Balance of Payments is one of the objectives of which of the

following policy?

Monetary policy

Fiscal policy

Trade Policy

Economic Policy

Ref:

Objectives of Fiscal Policy

Removal of deficit in Balance of Payments


In the canons of taxation, which one of the following statements best describe the

benefits principle?

Persons deriving more income leads to enjoy less benefits from the state,

should be taxed at the lower rates.

Persons deriving more income leads to enjoy less benefits from the state,

should be taxed at the higher rates.

Persons deriving less income leads to enjoy more benefits from the state,

should be taxed at the lower rates.

All persons deriving more or less income should be taxed at the same rates.

Ref:

Benefit principle

This principle suggests that taxes should be levied according to the benefits derived by the person from the state. Since more benefits are derived by lower income groups, hence according to this principle, those who derive more income but enjoy less benefits from the state should be taxed at the lower rates and those persons who derives less income but more benefits from State should be taxed at high rates.


Taxation management is a strategy where by a person manages its business in

such a way so as to maximize the utilization of which of the following?

Tax holidays

Exemption, Rebates & Concession

Tax credits

All of the given options

Ref:

Taxation Management—Explained

Taxation management is a strategy where by a person manages its business and other transactions/activities in such a way so as to make maximum use of tax holidays, exemption, concession, rebates, tax credits, deductible allowances available under law and as a result is able to derive the benefit of minimizing his tax liability.


Which of the following was the First law on Income Tax promulgated in

Pakistan?

1st July, 1979

1st July, 1969

1st July, 1949

1st July, 2002

Ref:

Income Tax Ordinance, 1979

First law on Income Tax was promulgated in Pakistan from 1st

July, 1979.


How many Sections are included in the Income Tax Ordinance 2001?

340 sections

440 sections

140 sections

240 sections

Ref:

Basic Features of Income Tax Ordinance 2001

Scheme of the Ordinance is given below:

¾ There are thirteen chapters

¾Chapters are divided into:

ƒParts &

ƒDivisions

¾There are 240 Sections


Superior judiciary includes which of the following authorities?

City Court

Supreme Court

High Court

Both supreme and High court


The _____ year is a period of twelve months arbitrarily chosen for tax purposes.

Economic

Fiscal

Economy

Monetary


Which of the following is the Special Accounting Year of Insurance Companies?

1st January to 31st December

1st July to 30th June

1st October to 30th September

1st September to 31st August

Ref: All persons exporting rice and carrying insurance business 1st January to 31st December.


Which of the following is the Special Accounting year of the persons carrying cotton

ginning, rice husking and oil milling?





Ref: All persons carrying on business of cotton ginning, rice husking and oil milling1st September to 31st August.


Which one of the following is the example of tax payer?

Salaried Person

LESCO

WAPDA


for more contents visit

http://groups.google.com/group/vuZs


Which of the following is the legal status of the Virtual University under the

provisions of section 80 of the ordinance?

Individual

Company

Banking Company

Hindu Undivided Family

Ref:

Page no 16


For the purpose of Taxation the total Income includes which of the following?

Income as per Section 11

Income from Capital gain

Only business income

Only Salary income

Ref: HEADS OF INCOME (Section 11)

Following are the heads of income, ascertained in section 11

• Salary (Section 12)

• Income from Property (Section 15)

• Income from Business (Section 18)

• Capital Gains (Section 37)

• • Income from other Sources (Section 39)


Which of the following section deals with the change of accounting method

adopted by an entity?

Section 32(1)

Section 32(2)

Section 32(3)

Section 32(4)

Ref: Method of accounting (Section 32)

ƒ Cash Basis or

ƒ Accrual Basis

• For Companies ‘Accrual Basis’ method of accounting is compulsory [Section 32(2)]

• Change of Method of Accounting can be made under [Section 32(4)]


What will be the tax treatment of any income chargeable under the head Salary

earned by an individual outside Pakistan during that year?

Wholly Taxable

Wholly Exempt

Partly Exempt

Not mention in Ordinance

Ref:

2.Where a citizen of Pakistan leaves Pakistan during a tax year and remains abroad during that tax year, any income chargeable under the head :Salary” earned by him outside Pakistan during that year shall be exempt from tax under the Ordinance


Date for the exemption limit for Foreign Currency Account (FCA) under Clause

80 of the Part I of Second Schedule is available to which of the following?

16 December 1999

16 November 1999

16 July 2001

1st

July 2002

Ref:

Foreign Currency Accounts [Clause (80), Part I of the Second Schedule]

“Any income derived from a private foreign currency account held with an authorized bank in Pakistan, [or certificates of investment issued by Investment Banks,] in accordance with the Foreign Currency Accounts Scheme introduced by the State Bank of Pakistan, by a resident individual who is a citizen of Pakistan. Provided that the exemption under this clause shall not be available in respect of any incremental deposits made in the said accounts on the after the 16th day of December, 1999, or in respect of any accounts opened under the said scheme on or after the said date.”




Senior citizen-age 60 years & above where taxable income not exceeding

________ tax liability reduced by 50% under Part 3 of second schedule.

Rs. 500,000

Rs. 200,000

Rs. 300,000

Rs. 400,000

Ref: Reduction in Tax Liability under Second Schedule Part 3

• Any amount received as flying allowance by pilots etc. and junior commissioned officers or other ranks shall be taxed @2.5% as separate block.

• Senior citizen-age 60 years &above where taxable income not exceeding Rs. 400,000/- tax liability reduced by 50%.


M/s ABC & Co. has been incorporated under Pakistan Companies Ordinance 1984.

However it’s most of the branched and control and management of affairs wholly

situated out of Pakistan? What will be the residential status of M/s ABC & Co.?

Resident Company

Non-Resident Company

Resident Individual

Resident AOP


Salary income received by resident person from Federal Government of Pakistan

in UK belongs to which of the following?

Pakistani source of Income

Foreign source of income

Both Pakistan and foreign source of income

None of the given option


Rental income shall be Pakistan-source income if it is derived from:

The lease of immovable Property in Pakistan

The lease of immovable Property outside Pakistan

The lease of immovable Property both in and out of Pakistan


Ref:

9) Rental income shall be Pakistan-source income if it is derived from the lease of immovable property in Pakistan whether improved or not, or from any other interest in or over immovable property, including a right to explore for, or exploit, natural resources in Pakistan.


Any gain arising on the disposal of shares in a non-resident company belongs to

which of the following?

Pakistan- source income

Foreign source of income

Both Pakistan and foreign source of income

None of the given option

Ref:

13)Any gain arising on the disposal of shares in a resident company shall be Pakistan- source income.




Which of the following come under the ambit of Royalty under section 2 (54)?

Right to use any patent

Copy right of a literary

Right to use any industrial or scientific equipment


Ref:

Royalty Defined Sec. 2 (54)

Royalty means any amount paid or payable however described or computed, whether periodical or lump sum as a consideration for:

a)The use of, or right to use any patent, invention, design or model, secret formula or process, trade mark r other like property or right;

b) The use of, or right to use any copy right of a literary, artistic or scientific work, including films or video

Tapes for use in connection with television or tapes in connection with radio broadcasting, but shall not include consideration for the sale, distribution or exhibition of cinematograph films.

c)The receipt of, or right to receive, any visual images or sounds or both, transmitted by satellite, cable, optic fiber or similar technology in connection with television, radio or internet broadcasting;


What is the tax treatment of losses from the foreign source under section 104 of

the ordinance?

Wholly taxable

Partly Taxable

Deductible expenditure


Ref:

Foreign losses Sec.104: Deductible expenditures incurred by a person in deriving foreign-source income chargeable to tax under a head of income shall be deductible only against that income.


Which of the following section of Income Tax Ordinance 2001 deals with Income

from Salary and its treatment?

Section 11

Section 12

Section 13

Section 14

Ref:

MODULE 4

HEADS OF INCOME (Section 11)

Following are the heads of income, ascertained in section 11

• Salary (Section 12)

• Income from Property (Section 15)

• Income from Business (Section 18)

• Capital Gains (Section 37)

• • Income from other Sources (Section 39)


The definition of Employment under Sec. 2(22) of the ordinance is categorized in:

Inclusive Definition

Exclusive Definition

Both Inclusive and Exclusive


Ref:

Inclusive Definition:

Examples of inclusive definitions are given below:

It includes dictionary meanings as well as meanings conveyed by definition.


Salary by members of AOP is not treated as Salary but treated as appropriation of

profit and charged under the head:

Income from Salary



Income from Other Sources

Ref:

Salary by members of AOP is not treated as Salary but treated as appropriation of profit and charged under the head “Income from Business”




Tax year for the salaried individuals is called as:

Special Tax Year

Normal Tax Year

Fiscal Year

Financial Year

Ref:

Tax year of a salaried Person shall be Normal Tax year


Which of the following is the Tax year available for salaried individual?





Ref:

Tax on salary income for Tax year 2009 (1st July 2008 to 30th July 2009) shall be computed according to amendments as made by Finance Act, 2008.


Mr. A non-resident of Pakistan received interest on Canadian Bonds Rs. 150,000

(entire amount received in Pakistan). What is the treatment of this amount for

calculating his gross total income?

Rs. 150,000 added in his total income

Rs. 150,000 subtracted from his total income

Rs. 75,000 added in his total income

Exempt from tax


Mr. X employed in Pakistan earned pension from Pakistan Government but

received in London Rs. 100,000. Which one of the following option is right for

this particular scenario?

Mr. X being resident of Pakistan Rs. 100,000 will be added in Gross total

income

Mr. X being resident of Pakistan Rs. 100,000 will be subtracted in Gross

total income

Mr. X being non-resident of Pakistan Rs. 100,000 will be added in Gross

total income

Mr. X being non-resident of Pakistan Rs. 100,000 will be exempted


Define Income that is charged to tax under section 2(9).

Answer:

Business Defined Section 2(9)

“Business includes any trade, commerce, manufacture, profession, vocation but doesn’t include employment”

Following incomes (except exempt income) shall be charged to tax under the head ‘Income from Business’.

a)Profits & Gains from any business in a tax year.

b)Income derived from any trade, profession, sale of goods or provision of any services.

c)Income from hire or lease of tangible movable property.

d)FMV of Perquisites derived by a person by virtue of business relationships.

e)Management Fee derived by a management company.

Income from Business also includes:

• Any profit on debt derived by a person. (it is only applicable to such person, whose is business is to

derive such income. e.g.; a banking company)

• Any amount received by schedule bank from mutual fund, as share of profit.

• Profit earned on debts in course business shall be chargeable to ‘income from business’.

• Income on leasing by lessor, being banks, leasing companies etc.

Income derived from any trade, profession, sale of goods or provision of any services.

• Income from hire or lease of tangible movable property

• FMV of Perquisites derived by a person by virtue of business relationships.

• Management Fee derived by a management company


Determine the legal status of the following persons under section 80 of the

ordinance.

1. Virtual University of Pakistan (company)

2. A joint family of Mr. Arun (a Hindu), Comprising Mr. Hamel, His sons

Mr. Kumar & Mr. Deepak (Hindu undivided family)

3 . Government of Punjab, Pakistan (company)

4. Edhi Welfare Trust (company)

5. Federal Government (person)

6 . Mr. Suleman & his wife Joint Owners in a House (Association of persons)

7. Alpha Cooperative Housing Society (company)

8. Mr. Ali & Babar Joint Owners in Building (Association of persons)

9. Mr. Imran Serving as a Manager in a Textiles Company (Individual)

10. Habib Modaraba (company)

///////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

MIDTERM EXAMINATION Spring 2009

FIN623- Taxation Management (Session - 2) Question No: 1 ( Marks: 1 ) - Please choose oneWhich of the following is the general definition of tax? Compulsory contribution of wealth by persons Optional contribution of wealth by persons Compulsory contribution of wealth by state Optional contribution of wealth by stateRef:General Definition of Tax:General compulsory contributions of wealth levied upon persons by the state, to meet the expenses incurred in providing common benefits upon the residents. Question No: 2 ( Marks: 1 ) - Please choose oneWhich of the following is the main objective of Fiscal Policy? Economic Development Price stability Removal of deficit in Balance of Payments All of the given options Ref:Objectives of Fiscal Policy Economic DevelopmentRaising level of employment (Achieving full employment levelInfluencing consumption patternsPrice stabilityRedistribution of incomeRemoval of deficit in Balance of PaymentsQuestion No: 3 ( Marks: 1 ) - Please choose oneGovernment Expenditure is one of the instruments of which of the followingpolicy? Monetary policy Fiscal policy Trade Policy Economic Policy

Ref:Instruments of Fiscal Policy Government ExpendituresTaxesDeficit FinancingSubsidiesTransfer Payments—like Unemployment Allowances etc.Question No: 4 ( Marks: 1 ) - Please choose oneTaxation management is a strategy where by a person manages its business insuch a way so as to maximize the utilization of which of the following? Tax holidays Exemption, Rebates & Concession Tax credits All of the given options Question No: 5 ( Marks: 1 ) - Please choose oneWhich of the following was the First law on Income Tax promulgated inPakistan? 1st July, 1979 1st July, 1969 1st July, 1949 1st July, 2002 Ref:First law on Income Tax was promulgated in Pakistan from 1stJuly, 1979.Question No: 6 ( Marks: 1 ) - Please choose oneSuperior judiciary includes which of the following authorities? City Court Supreme Court High Court Both supreme and High court Question No: 7 ( Marks: 1 ) - Please choose oneSection 2(15) of Income Tax Ordinance 2001 defined: “debt” means any amount owing, including accounts payable and the amountsowing under promissory notes, bills of exchange, debentures, securities, bonds orother financial instruments;In which criteria the above definition falls? Exclusive definition Inclusive definition Both Exclusive and Inclusive definitions Statutory definition Ref:Exclusive or Exhaustive Definition: • It excludes ordinary dictionary meanings of the word. Exclusive definitions start with the expression‘mean’ or ‘means’.Question No: 8 ( Marks: 1 ) - Please choose oneSection 2(6) of Income Tax Ordinance 2001 defined:“association of persons” means an association of persons as defined in section 80.In which criteria the above definition falls? Exclusive definition Inclusive definition Both Exclusive and Inclusive definitions Statutory definition Ref:Exclusive or Exhaustive Definition: • It excludes ordinary dictionary meanings of the word. Exclusive definitions start with the expression‘mean’ or ‘means’.Question No: 9 ( Marks: 1 ) - Please choose oneUnder which of the following conditions a tax payer can adopt a special tax year? Whenever he decides so After seeking approval from Tax Office

After seeking approval from Commissioner of income tax After seeking approval from High Court Ref:•A tax payer can adopt a special Tax year after seeking approval from Commissioner of Income Tax (CIT)Question No: 10 ( Marks: 1 ) - Please choose oneWhich one of the following is the example of tax payer? Salaried Person LESCO All of the given options WAPDA Question No: 11 ( Marks: 1 ) - Please choose oneWhich of the following is the legal status of the Virtual University under theprovisions of section 80 of the ordinance? Individual Company Banking Company Hindu Undivided FamilyRef:Page no 16 Question No: 12 ( Marks: 1 ) - Please choose oneIn case of lump sum receipt of income like Golden hand shake the tax payer paystax in which of the following way? Average of last 3 years tax rate Option to choose current or average of last 3 years tax rate Current tax rate Previous year tax rateRef:Tax payer can opt to seek approval from CIT to charge lump sum payments received in a tax year at average tax rate of last three yearsQuestion No: 13 ( Marks: 1 ) - Please choose oneCertain incomes those are excluded from tax are called as: Perquisites Exemptions Allowances DeductionsQuestion No: 14 ( Marks: 1 ) - Please choose oneWhich of the following incomes are treated as agriculture income? Spontaneous forests Agro based industry Interest received by a farmer on lending Income from land in Pakistan used for agriculture

Question No: 15 ( Marks: 1 ) - Please choose oneWhat is the tax treatment of the salary of an employee of foreign government butcitizen of Pakistan? Exempt form tax Wholly Taxable Partly Taxable No Tax treatment given in IT Ordinance 2001Ref:Section 43 Foreign Government Officials Salary of an employee of foreign government exempt provided:a.Employee citizen of foreign country and not a citizen of Pakistan.b.Services performed are similar to services performed by employees of the Federal Government in foreign countries andc.Foreign government also grants similar exemptions to employees of Federal Government.Question No: 16 ( Marks: 1 ) - Please choose oneIncome of Federal Government exempt from tax under which of the followingsection of IT Ordinance 2001? Section 41

Section 43Section 47 Section 49 Ref:Section 49 Federal & Provincial Govt. and Local Authority Income • Income of Federal Government exempt from taxQuestion No: 17 ( Marks: 1 ) - Please choose oneAn Individual will be termed as Short Term Resident under section 50 of the ITOrdinance 2001 on which of the following condition? His period of stay in Pakistan equal to 183 days The employee of Foreign Government The citizen of Pakistan His period of stay in Pakistan not exceeding 3 yearsRef:Section 50 Foreign-Source Income of Short-Term Resident Individuals 1.Subject to sub-section-2, the foreign-source income of an individual shall be exempt:a.Who is a resident individual solely by reason of the individual’s employment; andb.Who is present in Pakistan for a period or periods not exceeding three years,Question No: 18 ( Marks: 1 ) - Please choose oneM/s ABC & Co. has been incorporated under Pakistan Companies Ordinance 1984.However it’s most of the branched and control and management of affairs whollysituated out of Pakistan? What will be the residential status of M/s ABC & Co.? Resident Company Non-Resident CompanyResident Individual Resident AOPQuestion No: 19 ( Marks: 1 ) - Please choose oneMr. Imran is an employee of Provincial Government of Punjab posted in UK for twoyears? What will be the residential status of Mr. Imran? Resident Individual Non-Resident Individual Resident HUFResident AOP Question No: 20 ( Marks: 1 ) - Please choose oneWhich of the following days shall be counted as whole day for the computation ofresidential status of an individual? A public holiday A day of sick leave Any strike day All of the given optionsRef:Following days shall be counted as whole day: • A Public Holiday• A day of leave including sick leave• A day that individual’s activity is stopped because of strike etc• A holiday spent in PakistanQuestion No: 21 ( Marks: 1 ) - Please choose oneWhich part of income is charged to tax of resident person under the income taxordinance 2001? Pakistani source of income Foreign source of income Both Pakistan and foreign source of income None of the given option Question No: 22 ( Marks: 1 ) - Please choose oneWhich of the following does Not come under the ambit of permanentestablishment (PE)? Branch office Factory or workshop Premises for soliciting ordersLiaison or relationship office

Ref:a)A place of management, branch office, factory or workshop, premises for soliciting orders, warehouse, permanent sales exhibitions or sales outlet, other than a liaison office except where the office engages in the negotiation of contracts (other than contracts of purchase);Question No: 23 ( Marks: 1 ) - Please choose oneMr. Ali resident of Pakistan received salary form UK? What will be the taxtreatment of his salary in Pakistan? Wholly taxable Partly Taxable Wholly exempt Wholly exempt only if resident paid foreign tax on his salary Question No: 24 ( Marks: 1 ) - Please choose oneThe salary received from the UK Government by Mr. Amir resident of Pakistan.Which section of the income tax ordinance explains his tax treatment of suchsalary? Section 110 Section 101 Section 102 Section 50 Ref:Foreign Source Salary of Resident Individuals Sec. 102(1) Any foreign-source salary received by a resident individual shall be exempt from tax if the individualhas paid foreign income tax in respect of the salary.

Question No: 25 ( Marks: 1 ) - Please choose oneWhich of the following section of Income Tax Ordinance 2001 deals with Incomefrom Salary and its treatment? Section 11 Section 12 Section 13Section 14

Question No: 26 ( Marks: 1 ) - Please choose oneMr. A resident of Pakistan received interest on Australian Bonds Rs. 100,000(half amount received in Pakistan). What is the treatment of this amount forcalculating his gross total income? Rs. 100,000 added in his total income Rs. 100,000 subtracted from his total income Rs. 50,000 added in his total income Exempt from tax Question No: 27 ( Marks: 1 ) - Please choose oneMr. X non-resident of Pakistan earned income from property situated in DubaiRs. 70,000 but received in Pakistan. Which one of the following option is rightfor this particlar scenario? Mr. X being non-resident of Pakistan Rs. 70,000 will be added in Gross total income Mr. X being non-resident of Pakistan Rs. 70,000 will be subtracted inGross total income Mr. X being non-resident of Pakistan Rs. 70,000 will be claimed asadmissible deduction Mr. X being non-resident of Pakistan Rs. 70,000 will be exempted Question No: 28 ( Marks: 1 ) - Please choose oneMr. X employed in Pakistan received share of profit Rs. 60,000 in India from abusiness situated in Dubai but controlled through PE in Pakistan. Which of thefollowing is right for the above scenario? Mr. X being resident of Pakistan Rs. 60,000 will be added in Gross total income \

Mr. X being resident of Pakistan Rs. 60,000 will be subtracted in Grosstotal income Mr. X being non-resident of Pakistan Rs. 60,000 will be added in Grosstotal income Mr. X being non-resident of Pakistan Rs. 60,000 will be subtracted inGross total income Question No: 29 ( Marks: 1 ) - Please choose oneMr. X employed in Pakistan remittance from USA received Rs. 10,000 inPakistan from past profits. Which of the following is right for the above scenario? Mr. X being resident of Pakistan Rs. 10,000 will be added in Gross totalincome Mr. X being resident of Pakistan Rs. 10,000 will be Subtracted in Grosstotal income Mr. X being non-resident of Pakistan Rs. 10,000 will be added in Grosstotal income Remittance is not income hence it is not included Question No: 30 ( Marks: 1 ) - Please choose oneMr. X resident of Pakistan remittance from UK received Rs. 20,000 in Pakistanfrom past profits. Which of the following is right for the above scenario? Mr. X being resident of Pakistan Rs. 20,000 will be added in Gross totalincome Mr. X being resident of Pakistan Rs. 20,000 will be Subtracted in Grosstotal income Mr. X being non-resident of Pakistan Rs. 20,000 will be added in Grosstotal income None of the given optionsQuestion No: 31 ( Marks: 5 )Why Government levy tax on Person? What are the important elements that takeinto consideration while levying tax?Answer:™ Taxes Vs Fees:Taxes are compulsory levy and it is the legal obligation of the person to pay the amount of tax which is required to pay under the law, where as payment of fee is the discretion of any person and when a fee is paid, the person becomes an entitled to claim counter benefits.™ Taxes are important instrument of Fiscal Policy.Question No: 32 ( Marks: 10 )Determine Gross total income of Mr. Imran in the light of following particularsinformation pertaining to tax year 2008. a. Dividends received in UK on 20th Aug 2008 from a Pakistani residentcompany: amounting Rs. 50,000. b. Interest on Swiss Bonds (one-third is received in Pakistan) Rs. 60,000.c. Pension from Pakistan Government but received in New York Rs. 25,000.d. Rent for tax year 2008 of a house property situated in New York andreceived there on 01-01-2008; Rs.500,000. e. Income from agriculture in New York received there but later on remittedto Pakistan Rs.80,000.Find out gross total income of Mr. Imran, if he is:a. Pakistani residentb. Non– resident

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Spring 2009 FIN623- Taxation Management (Session - 2)


Taxes are important instrument of which one of the following policy?

► Monetary policy

► Fiscal policy

► Trade Policy

► Economic Policy

PAGE 1


Which of the following is opposite to the literal meanings of Tax?

► Burden

► Strain

► Load

► Relieve

PAGE 1


Sec. (11A) of Income Tax Ordinance 2001 defined:

Charitable purpose includes relief of the poor, education, m edictal relief and the advancement of any other object of general public utility.

In which criteria the above definition falls?

► Exclusive definition

► Inclusive definition

► Both Exclusive and Inclusive definitions

► Statutory definition

PAGE 8


Which of the following is the mutual example of both inclusive and exclusive definitions?

► Appellate Tribunal 2(2)

► Banking Company 2(7)

► Association of Person 2(6)

► Employment 2(22)

PAGE 9 Exclusive as well as Inclusive

Examples of above type are given below:

Sec 2(7) banking company means a banking company as defined in the banking companies ordinance, 1962

and includes any body corporate which transacts the business of banking in Pakistan.


Which of the following is the Special Accounting Year of Sugar Companies?

► 1st January to 31st December

► 1st July to 30th June

► 1st October to 30th September

► 1st September to 31st August

PAGE 13


Suppose a Profit acquired by a cultivator for produce after harvesting.

The profit of the cultivator will be treated in

► Income from Business

► Agriculture Income

► Income from Property

► Capital Gain

PAGE 20 Following Income are held to be “Agricultural Income”

•Profit on sale of standing crops or the produce after harvest by a cultivating owner or tenant of land.


Suppose due to hailstorm damages caused to crops that was insured against Insurance policy. The compensation received from an insurance company for damages caused by

What will be the tax treatment of such amount received?


► Exempt as Agriculture Income


► Capital Gain

PAGE 20


What is the tax treatment of any profit on the US Dollar Bonds purchased by t resident person after December 1999 under Second Schedule?

► Wholly exempt

► Wholly taxable

► Tax @10% of profit paid

► Not mention in second schedule

PAGE 25

Reduction in Tax Rates under Second Schedule Part 2

• Profit on Special US Dollar Bonds or out of new account opened after December 16, 1999.At the

Rate of 10 percent of amount of profit by Resident Person

Salary income received by resident person from Federal Government of Pakistan in UK belongs to which of the following?

► Pakistani source of Income

► Foreign source of income

► Both Pakistan and foreign source of income

► None of the given option

Geographical Source of Income-Sec101 Pakistan-Source Income:

Is paid by, or on behalf of, the Federal Government, a Provincial Government, or a local authority

in Pakistan, wherever the employment is exercised


Mr. Khan Resident of Pakistan received salary from UK? His salary will be included in which of the following?

► Pakistan source income

► Foreign source income

► Both Pakistan and foreign source income

► None of the given options

Foreign Source Salary of Resident Individuals Sec. 102

(1) Any foreign-source salary received by a resident individual shall be exempt from tax if the individual has paid foreign income tax in respect of the salary.


In which of the following heads of Income No deductions are allowed:

► Salary Income



► Capital Gains

PAGE 36 Significant Points:

Salary from more than one source during a tax year is taxable income.

· No deductions are allowed under the head “Income from Salary”

Utilities were exempted up to 10% of MTS or Basic salary till 30th June, 2006, vide clause 38 of part 1 of Second Schedule. This clause has been omitted by:

► Finance Ordinance 2004

► Finance Ordinance 2005

► Finance Act 2006


PAGE 46

Note 1:

Utilities were exempt up to 10% of MTS or Basic salary till 30th June, 2006, vide clause 38 of part 1 of Second Schedule. This clause has been omitted by Finance Act, 2006. Hence no exemption is available for tax year 2009.


MTS stands for which of the following?

► Minimum time scale

► Minimum transfer Salary

► Maximum time scale

► Maximum transfer Salary

Concept of MTS (Minimum of Time Scale):

This is the starting point or minimum amount which is available to an employee under a timescale


Which of the following is the tax treatment of free hospitalization services provided under the terms of employment?

► Wholly exempt

► Wholly taxable

► Taxable up to 10% of MTS

► Exempt up to 10% of MTS

PAGE 48


Which of the following may grant approval to any gratuity fund?

► Federal Tax Ombudsman

► Federal Government

► Superior judiciary

► Commissioner of Income Tax

PAGE 54

Approved Gratuity Fund

• Commissioner of Income Tax may accord approval to any gratuity fund.


Rental income earned is taxable on a net income basis that is, after deduction of tax admissible expenditure and allowances from gross rent, for up to Tax year:

► 2007

► 2008

► 2006 not sure

► 2005


Debt means "any amount owing", than which one of the following doesn't cover by the definition of Debt under section 2(15)?

► Accounts payable

► Promissory notes

► Bills of exchange


PAGE 8 2(15) “debt” means any amount owing, including accounts payable and the amounts owing under

Promissory notes, bills of exchange, debentures, securities, bonds or other financial instruments;

What is the tax treatment for any fine or penalty paid or payable by the person for the violation of any law, rule or regulation?

► Deducted as per section 20

► Not allowed to be deducted as per section 21

► Deducted as per section 21

► Not allowed to be deducted as per section 22

PAGE 67 Deductions not Allowed – Sec. 21

g. Any fine or penalty paid or payable by the person for the violation of any law, rule or regulation.


Which section defines 'Speculation business' under head Income from business?

► Section 20

► Section 19

► Section 24

► Section 18

PAGE 66 Speculation Business Sec. 19:

• Speculation means any business in which a contract for the purchase and sale of any commodity (including [stocks] and shares) is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity, but does not include a business in which:


Which of the following is the rate of amortization of pre-commencement expenditure under section 25 of the income tax ordinance 2001?

► 10%

► 20%

► 30%

► 50%

PAGE 69Pre-commencement expenditure (Sec.25)

Rate of amortization of pre-commencement expenditure shall be 20%.


A/B

The above formula is for the calculation of Amortization deduction allowed under section 24. Which of the following is the value of A?

► Normal useful life of intangible

► Book value of intangible

► Cost of intangible

► Sale price of intangible

PAGE 68 Amortization deduction allowed as under

A/B

Where

A is the cost of intangible; and

B is normal useful life of intangible


Turnover from all sources Rs.50, 000,000

Tax liability (due to loss or exemption from tax) = Nil

What will be the minimum tax to be paid at 0.5% of turnover?

► Rs.300, 000

► Rs.200, 000

► Rs.250, 000

► Rs.100, 000


Section 22(15) defines depreciable asset means:

► Any tangible movable property

► Any tangible immovable property (other than unimproved land)

► Structural improvement to immovable property

► All of the given options

PAGE 68


Which section define this 'Income tax depreciation is admissible only in respect of depreciable assets'.

► Section 22(15)

► Section 22 (11)

► Section 23 A

► Section 24


A-B

From the above formula the value 'B' represents which of the following?

► Consideration received on disposal of the capital asset

► Cost of the asset

► Amount of Depreciation

► Market value of the Capital asset

PAGE 79


Income from Dividends charged to tax under which of the following heads of Income?

► Income form Property


► Income from Capital Gain

► Income from Other Sources


Appeal to the collector of sales tax may be filed within which of the period?

► 60 days

► 90 days

► 180 days

► 30 days PAGE 120


Members of income tax appellate tribunal are appointed by which of the following authorities? http://vuattach.ning.com/

► Income Tax Department

► Provincial Government

► Federal Government

► Judicial Commission

PAGE 108

The office of Superintendent of Sales Tax, or such other office as the Board may, by notification in the official Gazette, specify is called;

► Income tax office

► Registered office

► Local Sales Tax Office


PAGE 113


In relation to any registered person means the tax charged under the Sales tax Act in respect of a supply of goods made by that person and shall include duties of excise chargeable under section 3 of the Central Excises Act, 1944 (I of 1944) is known as;

► Output tax

► Input tax

► Income tax

► Wealth tax

PAGE 115


Capital value tax is levied on which of the following?

► Capital gain

► Gross profits

► Capital value of asset

► Intangible assets

PAGE 121


Mr. X employed in Pakistan remittance from USA received Rs. 10,000 in Pakistan from past profits. Which of the following is right for the above scenario?

► Mr. X being resident of Pakistan Rs. 10,000 will be added in Gross total income

► Mr. X being resident of Pakistan Rs. 10,000 will be Subtracted in Gross total income

► Mr. X being non-resident of Pakistan Rs. 10,000 will be added in Gross total income

► Remittance is not income hence it is not included


Which of the following is the general formula for calculating tax credits?

► (A+B) x C

► (A-B) x C

► (A/B) x C

► (A/B) + C

PAGE 41


A woman taxpayer shall be charged to tax if taxable income is:

► Less than Rs. 100,000

► Less than Rs. 150,000

► More than Rs. 200,000

► More than Rs. 240,000

PAGE 125


Which of the following is the rate of tax for salaried Individuals for tax year 2009, wh the taxable income exceeds Rs. 250,000 but does not exceed Rs. 350,000?

►Nil

►0.250%

►0.50%

► 0.75%

PAGE 125


Mr. A is an employee of Government of the Punjab, his data for the year 2009 is given below.

SalaryRs. 60,000 per month

Gratuity Rs. 1,000,000

Tax deducted at source Rs. 54,000

What will be the Mr. A's taxable income for tax year 2009?

► 774,000

► 720,000

► 1,060,000

► 1,720,000


Statutory Provident Fund is governed by:


► Insurance Act 1969

► Provident Funds Act 1925

► None of the given options appetence

PAGE 60


What will be the tax liability of an individual under the head income from property

► Rs.17,750

► Rs. 23,500

► Rs. 47,000

► Rs. 70,500


Any salary paid or payable exceeding paid other than by a crossed cheque or direct transfer of funds to the employee's bank account is not allowed to deduct under section 21 of the ordinance.

► Five thousand rupees per month

► Ten thousand rupees per month

► Fifteen thousand rupees per year

► Two hundred thousand rupees per year

PAGE 67


Which of the following is the rate of tax for AOP for ta income exceeds Rs. 100,000 but does not exceed Rs. 180000

►0%

►0.25%

►0.50%

► 0.75%

PAGE 125


What is the tax rate of Banking companies for the

► 35%

► 44%

► 54%

► 42%


Amount of Capital value tax for the year 2009 for a mo should be which of the following?

► Rs. 3,500

► Rs. 7,500

► Rs. 8,500

► Nil

PAGE 122


What is the main purpose of Gratuity?


Mr. Farooq's salary is Rs.22, 000 per month. He received commission during the year amounting to Rs.33, 000. He is provided a jeep by his employer for personal as well a official use. The employer took this jeep from a leasing company at an annual lease of Rs.80, 000. The fair market value of the 000.Calculate the taxable income of Mr.


What are the Penalties in case of failure to maintain record and non compliance with the notice under section 185 and 186 of Income Tax Ordinance 2001 respectively?


What are the exemptions available in Tax Ordinance 2001 related to Prope Income?


What are the basic features of Sales?


Compute the taxable income and tax liability of M r. Jami a salaried individual. The data pertaining to tax year 2009 is given below:

1. Basic salary Rs 20,000p.m.

2. House rent allowance Rs 5,000 p.m.

3. Bonus Rs. 6,000p.m.

4. Medical Allowance Rs 5,100 p.m.

5. Free hospitalization services availed under terms of employment. Rs 40,000

6. Driver's salary paid by employer Rs 8,000 p.m.

7. Dearness Allowance Rs 6,000 p.m.

8. Utilities Rs. 40,000


For tax year 2009 in respect of compute taxable income and tax thereon employee of Government of the Punjab. Relevant information/data is given below

Salary

Utilities

Bonus

Dearness Allowance

Gratuity

Conveyance allowance (Partly for Person

Cost of vehicle to the employer was

Tax deducted at source

Concessional Loan of Rs 1 million provid

(bench mark rate for tax year 2009 is 11%

Rs. 500,000

Rs. 50,000

Rs. 72,000

Rs. 60,000

Rs. 1,000,000

y for office use)

Rs 1,000,000

Rs. 54,000

oyer @ of markup of 6% per anum

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Which one of the following is the main objective of Fiscal Policy? Select correct option: Economic Development Price stability Removal of deficit in Balance of Payment All of the given options Question # 2 of 15 ( Start time: 03:18:46 PM ) Total Marks: 1 Utilities were exempted up to which of the following tax year? Select correct option:

2004 2005 2006 2007 Question # 3 of 15 ( Start time: 03:20:09 PM ) Total Marks: 1 Which of the following is the main tool of Fiscal Policy? Select correct option: Taxes Deficit Financing Subsidies Transfer Payments Question # 4 of 15 ( Start time: 03:20:33 PM ) Total Marks: 1 Which of the following is the general formula for calculating tax credits? Select correct option: (A + B) x C (A - B) x C (A / B) x C (A / B) + C Question # 5 of 15 ( Start time: 03:21:11 PM ) Total Marks: 1 Which of the following is tax, where the tax rate decreases as the amount to which the rate is applied increases? Select correct option: Proportional tax Progressive tax Regressive tax Corporate tax Question # 6 of 15 ( Start time: 03:21:27 PM ) Total Marks: 1 Which one of the following is the general definition of tax? Select correct option: Compulsory contribution of wealth by persons Optional contribution of wealth by persons Compulsory contribution of wealth by state Optional contribution of wealth by state Question # 7 of 15 ( Start time: 03:21:46 PM ) Total Marks: 1 Payment of Zakat is entitled to a deductible allowance according to provisions of sec.60. Select correct option: True 000 False Question # 8 of 15 ( Start time: 03:22:34 PM ) Total Marks: 1

Which of the following section deal with tax treatment of person who is a cultivator or receiver of agricultural produce as rent-in-kind in the business of cultivator? Select correct option: Rule 11 of the IT Rule 2002 Section 40 of the Income Tax Ordinance 2001 Section 41 of the Income Tax Ordinance 2001 Section 42 of the Income Tax Ordinance 2001 Question # 9 of 15 ( Start time: 03:23:33 PM ) Total Marks: 1 Agricultural income does NOT include which one of the following? Select correct option: Rent or Revenue derived by a person from land Income derived from land situated in Pakistan The land is used for agricultural purposes Income from spontaneous forest Question # 10 of 15 ( Start time: 03:24:04 PM ) Total Marks: 1 Which part of income is charged to tax of non-resident person under the income tax ordinance 2001? Select correct option: Pakistani source of income Foreign source of income Both Pakistan and foreign source of income None of the given option Question # 11 of 15 ( Start time: 03:24:25 PM ) Total Marks: 1 Mr.John a non-resident received profit in Pakistan on a security issued by a resident person, how the profit will be treated under sec (46) of IT Ordinance 2001? Select correct option: Wholly Taxable Wholly Exempt Partly Exempt None of the given options Question # 12 of 15 ( Start time: 03:25:25 PM ) Total Marks: 1 Any dividend is Pakistan source income if it is paid by which of the following? Select correct option: By resident Company By non resident Company By resident Individual By resident AOP Question # 13 of 15 ( Start time: 03:26:42 PM ) Total Marks: 1 Which of the following tax is payable on merchandise imported or exported from one country to another? Select correct option:

Custom duty Income tax Sales tax Wealth tax Question # 14 of 15 ( Start time: 03:27:03 PM ) Total Marks: 1 Which of the following is the rate of tax for salaried Individuals for tax year 2009, where the taxable income exceeds Rs. 650,000 but does not exceed Rs. 750,000? Select correct option: 3.50% 4.50% 6.00% 7.50% Question # 15 of 15 ( Start time: 03:27:55 PM ) Total Marks: 1 Special tax year is adopted after seeking approval from the ____________ under section 74(3). Select correct option: Commissioner Tax Officer Appellate Tribunal Supreme Court Question # 1 of 15 ( Start time: 03:32:13 PM ) Total Marks: 1 Which of the following tax is paid in relation to how much you earn? Select correct option: Income Tax Inheritance Tax Value added Tax Sales Tax Question # 2 of 15 ( Start time: 03:32:32 PM ) Total Marks: 1 Which of the following section of Income Tax Ordinance 2001 deals with perquisites of Income from Salary and its treatment? Select correct option: Section 11 Section 12 Section 13 Section 14 Question # 3 of 15 ( Start time: 03:33:48 PM ) Total Marks: 1 An Individual will be termed as Short Term Resident under section 50 of the IT Ordinance 2001 provided: Select correct option: His period of stay equal to 183 days The employee of Federal Government The citizen of Pakistan Resident solely by reason of the individual’s employment

Question # 4 of 15 ( Start time: 03:34:18 PM ) Total Marks: 1 A definition that includes the dictionary meanings of the word is termed as: Select correct option: Exclusive definition Inclusive definition Both Inclusive & Exclusive definitions Statutory definition Question # 5 of 15 ( Start time: 03:34:38 PM ) Total Marks: 1 Which one of the following is the general meaning of Tax? Select correct option: Relax Lighten Relieve Fatigue

Question # 6 of 15 ( Start time: 03:35:13 PM ) Total Marks: 1 Which of the following is similar to the concept of clubbing of Incomes? Select correct option: Unification only two heads of Income Association of two or more heads of Income Splitting up of only two heads of Income Division of two or more than two heads of Income Question # 7 of 15 ( Start time: 03:35:35 PM ) Total Marks: 1 Non-Agricultural income includes which one of the following? Select correct option: Income from sale of wild grass Income from fisheries Royalty income of mines All of the given options Question # 9 of 15 ( Start time: 03:38:04 PM ) Total Marks: 1 Which of the following is the legal status of Al-Habib Bank Limited under section 80 of the ordinance? Select correct option: Individual Firm Banking Company Hindu Undivided Family Question # 10 of 15 ( Start time: 03:38:30 PM ) Total Marks: 1 A firm ABC maintaining its account in accrual basis, at June 27, 2008 it is entitled to receive Rs. 10,000 but actual payments made at 01 August 2008. In which year it is charged to tax?

Select correct option: 2006 2007 2008 2009 Question # 11 of 15 ( Start time: 03:38:53 PM ) Total Marks: 1 Which of the following is the important content for calculating tax on income? Select correct option: Taxable Income Residential Status Tax Year All of the given options Question # 12 of 15 ( Start time: 03:39:10 PM ) Total Marks: 1 _____________ is the payment to the holder for the right to use property such as a patent, copyrighted material, or natural resources. Select correct option: Permanent Establishment Royalty Dividend Goodwill Question # 13 of 15 ( Start time: 03:39:25 PM ) Total Marks: 1 Which of the following is the rate of tax for salaried Individuals for tax year 2009, where the taxable income exceeds Rs. 4,550,000 but does not exceed Rs. 8,650,000? Select correct option: 17.50% 18.50% 19.00% 20.00%

Question # 14 of 15 ( Start time: 03:39:57 PM ) Total Marks: 1 Utilities were exempted up to which of the following tax year? Select correct option: 2004 2005 2006 2007 Question # 15 of 15 ( Start time: 03:40:32 PM ) Total Marks: 1 Which of the following is tax, where the tax rate decreases as the amount to which the rate is applied increases? Select correct option: Proportional tax

Progressive tax Regressive tax Corporate tax

1. Under the head “Income from Property” any rental income received from a trust or welfare institution as provided in sub clause (2) and (3) of clause (58) is:1. Wholly exempted2. Partly exempted3. Wholly Taxable4. None of the given options

2. _____________ on account of cancellation of sale agreement of building shall be treated as rental income and fully taxable.a. Fair market rentb. Forfeited amountc. Rent collection chargesd. Penalty

3. If income of an individual received under the head income from property, is Rs.470,000, then his tax liability is:a. Rs. 23,500b. Rs. 47,000c. Rs. 70,500d. Rs. 94,000

4. Rates of Tax for Banking Companies for Tax Year 2007 is:1. 44%2. 41%3. 38%4. 35%

5. ____________ means a fixed place of business through which the business of an enterprise is wholly or partly carried on.a. Franchiseb. Permanent establishmentc. Small Business Units SBUd. Venture

6. Which of the following is the tax treatment for Income from property received as a rent for the year 2007?a. 1 /4 of the rent is deduct able as repairs allowanceb. 1 /2 of the rent is deduct able as repairs allowancec. 1 /5 of the rent is deduct able as repairs allowanced. No deduction is allowed

7. In case of non adjustable advance received from a building as income from property.Such rent will be spread in how much of the following years?a. 5 yearsb. 6yearsc. 8 yearsd. 10 years

8. Suppose non-adjustable advance received from a building as income from property isRs. 500,000 in the year 2006. The amount adjustable for each coming year will be?a. Rs. 100,000b. Rs. 62,500c. Rs. 50,000d. Rs. 500,000

9. Mr. A had constructed a property after availing loan from a commercial bank and paid mark-up amounting Rs 40,000 during the tax year 2006. What is the treatment of this mark-up in calculating the total taxable income from property as per Income Tax Ordinance 2001?a. Mark-up is allowed as admissible deduction in the year 2006b. Mark-up is not allowed as admissible deduction in the year 2006c. Mark-up is allowed as admissible deduction in the year 2007d. Half amount of mark up is allowed as admissible deduction in the year 2006

10. Mr. Ali let out a building to M/S XYZ and received gross total rent amounting Rs 1,600,000 during the tax year 2006. He has also hired staff for the collection of rent the salary paid to employees in this context is Rs 120,000 in the tax year 2006. What is the treatment of this collection charges in calculating the total taxable income from property as per Income Tax Ordinance 2001?a. 60,000b. 80,000c. 96,000d. 120,000

11. Under clause (93 A) of the Part 1 of second schedule of Income Tax Ordinance 2001 which of the following’s Business income is exempted from tax?a. Income of a Text-Book Board.b. University or Educational Institution established not for profit purpose.c. Recognized Vocational Institute.d. Income of Recognized Sports Board.

12. A loss sustained under the head Capital Gain can be carried forward for the following period:a. Up to 8 yearsb. Up to 10 yearsc. Up to 7 yearsd. Up to 6 years

13. Capital gain shall be treated a gain:a. On international transactionb. On domestic transactionc. On disposal by way of gift of an assetd. On disposal of a capital asset

14. A person shall be entitled to a tax credit in respect of any sum given as a donationin a tax year shall be computed according to which of the following formula:a. (A/B) x Cb. (A/C) x Bc. (A + B) x Cd. (A - B) x C

15. Members of income tax appellate tribunal are appointed by:a. Collector of Income Taxb. Commissioner of Income Taxc. Federal Governmentd. Judicial Commission

1. Agriculture income means an income derived by a person from:a. Agri-businessb. land situated in Pakistan and used for any purposec. land situated outside Pakistand. land situated in Pakistan and used for agriculture purpose

2. Which of the following is the best treatment of any “Pakistan Source Income” of a resident of Pakistan?

a. Wholly Taxableb. Wholly Exemptc. Partially exemptd. None of the given options

3. Which one of the following condition must be satisfied for a resident AOP?a. AOP must be registered in Pakistanb. Owners of AOP must be resident of Pakistanc. Control and management of AOP is situated wholly or partly in Pakistand. Control and management of AOP lies outside Pakistan

4. Which one of the following sources of income of a Non-resident is taxable inPakistan?a. Pakistan Source Income onlyb. Foreign Source Income onlyc. Both Pakistan and Foreign Source Incomed. Receipt of any Income in Pakistan

5. Mr. Kamran is a pilot in air force; his salary will be taxed from a separate block, which one of the following rates will be applied to him?1. 2.0%2. 2.5%3. 3.0%4. 3.5%

6. Which one of the following conditions must be fulfilled by XYZ Co. in order to become Pakistan Resident Company under Income Tax Ordinance 2001?a. Most of it’s branches located in Pakistanb. Control and management is situated wholly in Pakistanc. Control and management is situated partly in Pakistand. Owners of the company must be resident of Pakistan

7. For the calculation of residential status of an individual, which of the following day is considered as whole day?a. Day of arrivalb. Day of departurec. Day of leave including sick leaved. All of the given options

8. Under which one of the following conditions a profit can be Pakistan Source Income?a. It is paid by Non-resident Personb. It is received by Resident Person through permanent establishment outsidePakistanc. Borne by Non-resident through permanent establishment in Pakistand. It is paid to non resident person through permanent establishment out sidePakistan

9. Under which one of the following conditions a Business Income can be “Pakistan Source Income”?a. Income derived from any business carried on in Pakistanb. Income derived by Non president through permanent establishment in Pakistanc. Any remuneration paid by resident of Pakistand. All of the given options

10. ____________ means a fixed place of business through which the business of an enterprise is wholly or partly carried on.1. Franchise2. Permanent establishment3. Small Business Units (SBU)4. Venture

Fill in the Blanks

1. Section 17 of the income Tax Ordinance 2001 has been omitted by Finance Bill2006.

2. Section 17 of Income Tax Ordinance 2001, Income from property the rent collectioncharges should not to exceed 6% of gross rental income.

3. In case of discontinuance of business, return to be file within 15 days ofdiscontinuance.

4. Pension from Pakistan Government but received outside in Pakistan, is taxable incase of resident individual.

5. Income of a woman tax payer is not taxable income if it does not exceed Rs.200,000.

BC080201009 : MUHAMMAD ADNAN AWAIS

Quiz Start Time: 11:29 PM

Time Left 37

sec(s)

Question # 3 of 15 ( Start time: 11:30:36 PM ) Total Marks: 1

Which of the following person fulfilled the criteria of a Taxpayer?

Select correct option:

BC080201009 : MUHAMMAD ADNAN AWAIS

Quiz Start Time: 11:29 PM

Time Left 13

sec(s)

Question # 10 of 15 ( Start time: 11:38:46 PM ) Total Marks: 1

Which of the following is the tax where the tax rate remained fixed to the amount on which the rate is applied

Any representative of a person w ho derives an amo

Any person w ho is required to deduct or collect tax

Any person required to furnish a return of income


increases?

Select correct option:

Proportional tax

Progressive tax

Regressive tax

Corporate tax

fin 623 all combined mcqs

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