FINALTERM EXAMINATION
Spring 2009 FIN623 Paper
Taxation Management (Session - 2)
FIN623 Taxation Management - Question No: 1 ( M a r k s: 1 )
Taxes are important instrument of which one of the following policy?
Monetary policy
Fiscal policy
Trade Policy
Economic Policy
PAGE 1
FIN623 Taxation Management - Question No: 2 ( M a r k s: 1 )
Which of the following is opposite to the literal meanings of Tax?
Burden
Strain
Load
Relieve
PAGE 1
FIN623 Taxation Management - Question No: 3 ( M a r k s: 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
FIN623 Taxation Management - Question No: 4 ( M a r k s: 1 )
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.
FIN623 Taxation Management - Question No: 5 (M a r k s: 1)
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
FIN623 Taxation Management - Question No: 6 ( M a r k s: 1 )
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.
FIN623 Taxation Management - Question No: 7 ( M a r k s: 1 )
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?
Income from Business
Exempt as Agriculture Income
Income from Property
Capital Gain
PAGE 20
FIN623 Taxation Management - Question No: 8 ( M a r k s: 1 )
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
FIN623 Taxation Management - Question No: 9 ( M a r k s: 1 )
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
FIN623 Taxation Management - Question No: 10 ( M a r k s: 1 )
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.
FIN623 Taxation Management - Question No: 11 ( M a r k s: 1 )
In which of the following heads of Income No deductions are allowed:
Salary Income
Income from Property
Income from Business
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”
FIN623 Taxation Management - Question No: 12 ( M a r k s: 1 )
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
Finance Act 2007
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.
FIN623 Taxation Management - Question No: 13 ( M a r k s: 1 )
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
FIN623 Taxation Management - Question No: 14 ( M a r k s: 1 )
Which of the following is the tax treatment of free hospitalization services provided under the terms of employment?
Wholly exempt PAGE 48
Wholly taxable
Taxable up to 10% of MTS
Exempt up to 10% of MTS
FIN623 Taxation Management - Question No: 15 ( M a r k s: 1 )
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.
FIN623 Taxation Management - Question No: 16 ( M a r k s: 1 )
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
2005
FIN623 Taxation Management - Question No: 17 ( M a r k s: 1 )
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
None of the given options
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;
FIN623 Taxation Management - Question No: 18 ( M a r k s: 1 )
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.
FIN623 Taxation Management - Question No: 19 ( M a r k s: 1 )
Which section defines 'Speculation business' under head Income from business?
Section 20
Section 19
Section 24
Section 18
PAGE 66 Speculations 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:
FIN623 Taxation Management - Question No: 20 ( M a r k s: 1 )
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%.
FIN623 Taxation Management - Question No: 21 ( M a r k s: 1 )
A/B 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 deductions allowed as under
A/B
Where
A is the cost of intangible; and
B is normal useful life of intangible
FIN623 Taxation Management - Question No: 22 ( M a r k s: 1 )
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
FIN623 Taxation Management - Question No: 23 ( M a r k s: 1 )
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
FIN623 Taxation Management - Question No: 24 ( M a r k s: 1 )
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
FIN623 Taxation Management - Question No: 25 ( M a r k s: 1 )
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
FIN623 Taxation Management - Question No: 26 ( M a r k s: 1 )
Income from Dividends charged to tax under which of the following heads of Income?
Income form Property
Income from Business
Income from Capital Gain
Income from Other Sources
FIN623 Taxation Management - Question No: 27 ( M a r k s: 1 )
Appeal to the collector of sales tax may be filed within which of the period?
60 days
0 days
180 days
30 days
PAGE 120
FIN623 Taxation Management - Question No: 28 ( M a r k s: 1 )
Members of income tax appellate tribunal are appointed by which of the following authorities?
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
None of the given options
PAGE 113
FIN623 Taxation Management - Question No: 30 ( M a r k s: 1 )
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
FIN623 Taxation Management - Question No: 31 ( M a r k s: 1 )
Capital value tax is levied on which of the following?
Capital gain
Gross profits
Capital value of asset
Intangible assets
PAGE 121
FIN623 Taxation Management - Question No: 32 ( M a r k s: 1 )
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
FIN623 Taxation Management - Question No: 33 ( M a r k s: 1 )
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
FIN623 Taxation Management - Question No: 34 ( M a r k s: 1 )
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
FIN623 Taxation Management - Question No: 35 ( M a r k s: 1 )
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
FIN623 Taxation Management - Question No: 36 ( M a r k s: 1 )
Mr. A is an employee of Government of the Punjab, his data for the year 2009 is given below.
Salary Rs. 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
Gratuity is exempt and tax deducted at source is subtracted after calculating the taxable income. So the taxable income will be 60,000*12=72,0000FIN623 Taxation Management - Question No: 37 ( M a r k s: 1 )
Statutory Provident Fund is governed by:
Finance Act 2006
Insurance Act 1969
Provident Funds Act 1925
None of the given options appetence
PAGE 60
FIN623 Taxation Management - Question No: 38 ( M a r k s: 1 )
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
FIN623 Taxation Management - Question No: 39 ( M a r k s: 1 )
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
FIN623 Taxation Management - Question No: 40 ( M a r k s: 1 )
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
FIN623 Taxation Management - Question No: 41 ( M a r k s: 1 )
What is the tax rate of Banking companies for the
35%
44%
54%
42%
FIN623 Taxation Management - Question No: 42 ( M a r k s: 1 )
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
FIN623 Taxation Management - Question No: 43 ( M a r k s: 3 )
What is the main purpose of Gratuity?
FIN623 Taxation Management - Question No: 44 ( M a r k s: 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 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.
FIN623 Taxation Management - Question No: 45 ( M a r k s: 3 )
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?
FIN623 Taxation Management - Question No: 46 ( M a r k s: 5 )
What are the exemptions available in Tax Ordinance 2001 related to Prope Income?
FIN623 Taxation Management - Question No: 47 ( M a r k s: 5 )
What are the basic features of Sales?
FIN623 Taxation Management - Question No: 48 ( M a r k s: 10 )
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
FIN623 Taxation Management - Question No: 49 ( M a r k s: 10 )
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
Confessional Loan of Rs 1 million provide
(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
Markup of 6% per anum
