FINALTERM EXAMINATION
Spring 2010
FIN623- Taxation Management (Session - 4)
Time: 90 min
M a r k s: 69
FIN623 Taxation Management - Question No: 1 ( M a r k s: 1 )
Mrs. Sara received a basic salary of Rs. 280,000 during the year ended 30.06.2009. She received gratuity from the government of Sindh of Rs. 21,600. What would be her tax payable?
► Rs. 1,938
► Rs. 2,262
► Rs. 140
► Rs. 1,980
FIN623 Taxation Management - Question No: 2 ( M a r k s: 1 )
Which of the following canon of taxation suggests that there should not be any arbitrariness or ambiguity in respect of amount of tax paid?
► Capacity to Pay
► Certainty
► Simplicity
► Convenience
FIN623 Taxation Management - Question No: 3 ( M a r k s: 1 )
2(22) of Income Tax Ordinance 2001 defined:
“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;
In which criteria the above definition falls?
► Exclusive definition
► Inclusive definition
► Both Exclusive and Inclusive definitions
► Statutory definition
FIN623 Taxation Management - Question No: 4 ( M a r k s: 1 )
Which of the following is the example of inclusive definition?
► Appellate Tribunal 2(2)
► Debt 2(15)
► Employment 2(22)
► Association of person 2(6)
FIN623 Taxation Management - Question No: 5 ( M a r k s: 1 )
Any Income entitled to be received by a Company then entry of such amount will only be made in the books of accounts if:
► Company maintaining its books of account on Cash basis
► Company maintaining its books of account on Accrual basis
► Company maintaining its books of account on Both Accrual and Cash basis
► None of the given options
FIN623 Taxation Management - Question No: 6 ( M a r k s: 1 )
Income Tax is charged on which of the following?
► Income of the current tax year
► Income of the previous year
► Income of the coming year
► Any Receipt of money
FIN623 Taxation Management - Question No: 7 ( M a r k s: 1 )
What is the tax treatment of support payment received by spouse made under the agreement to live apart?
► Wholly Taxable
► Wholly Exempt
► Partly Exempt
► Not mention in Ordinance
FIN623 Taxation Management - Question No: 8 ( M a r k s: 1 )
Pension is defined in which of the following schedule of the Income Tax Ordinance 2001?
► 2nd Schedule Part 1 Cl. (8)
► 2nd Schedule Part 1 Cl. (24)
► 2nd Schedule Part 2 Cl. (22)
► 1st Schedule of Part 2 Cl. (20)
FIN623 Taxation Management - Question No: 9 ( M a r k s: 1 )
Resident Person (Section 81) includes which of the following?
► Resident Individual & Association of Persons
► Resident Company
► Federal Government
► All of the given options
FIN623 Taxation Management - Question No: 10 ( M a r k s: 1 )
Which part of income is charged to tax of resident person under the income tax ordinance 2001?
► Pakistani source of income
► Foreign source of income
► Both Pakistan and foreign source of income
► None of the given option
FIN623 Taxation Management - Question No: 11 ( M a r k s: 1 )
____________ means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
► Franchise
► Permanent establishment
► Small Business Units SBU
► Venture
FIN623 Taxation Management - Question No: 12 ( M a r k s: 1 )
Which 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 state
FIN623 Taxation Management - Question No: 13 ( M a r k s: 1 )
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)
FIN623 Taxation Management - Question No: 14 ( M a r k s: 1 )
'Income is recorded when received and expenditure when paid', which one of the following accounting systems describe this statement?
► Cash basis accounting system
► Accrual basis accounting system
► Both cash and accrual basis
► None of the given options
FIN623 Taxation Management - Question No: 15 ( M a r k s: 1 )
On Building (all types) the depreciation rate specified for the purposes of section 22 shall be:
► 10%
► 12%
► 5%
► 20%
FIN623 Taxation Management - Question No: 16 ( 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
FIN623 Taxation Management - Question No: 17 ( M a r k s: 1 )
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
► Widow
FIN623 Taxation Management - Question No: 18 ( M a r k s: 1 )
The salary received from the UK Government by Mr. Amir resident of Pakistan. Which section of the income tax ordinance explains his tax treatment of such salary?
► Section 110
► Section 101
► Section 102
► Section 50
FIN623 Taxation Management - Question No: 19 ( M a r k s: 1 )
Revision of return can be made on an application made by the tax payer relating to issuance of an exemption, by which of the following authorities?
► Income Tax Officer
► Assistant Controller of Income tax
► Deputy Controller of Income tax
► Regional Commissioner of Income tax
FIN623 Taxation Management - Question No: 20 ( M a r k s: 1 ) vu zs
Appeal to CIT (appeals) shall be filed in which of the following manner?
► On prescribed form
► On plane paper
► On stamped paper
► Legal documents
Ref: Appeal shall be filed:
i In prescribed form
ii Verification
iii Grounds of appeal
iv Prescribed fee
v Within 30 days of the date of service of the order against which appeal is filed.(108)
FIN623 Taxation Management - Question No: 21 ( M a r k s: 1 )
Federal Tax Ombudsman has the same powers as _____________ to punish any person for
its contempt..
► Supreme court
► High court
► City court
► Provincial Government
FIN623 Taxation Management - Question No: 22 ( M a r k s: 1 )
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
FIN623 Taxation Management - Question No: 23 ( M a r k s: 1 )
Which of the following is included in the assessment order by commissioner?
► Taxable Income
► Tax Due
► Amount of Tax Paid
► All of the given options
FIN623 Taxation Management - Question No: 24 ( M a r k s: 1 )
In Sales Tax Act "Zero - rated supply" means a taxable supply which is charged to tax at the rate of zero per cent define under
► Section 4
► Section 5
► Section 6
► Section 22
Ref: "Zero - rated supply" means a taxable supply which is charged to tax at the rate of zero per cent under section 4 .(Page No.117)
FIN623 Taxation Management - Question No: 25 ( M a r k s: 1 )
Mr. Kishan Kumar during his yearly tour in Pakistan spends 155 working days, 26 off-working days 1 strike day and 1 Public Holiday in a tax year 2008-09? What will be the status of the individual?
► Resident Individual
► Non Resident Individual
► Resident Person
► Resident HUF
Ref: His total stay in Pakistan is of 183 days , so he is resident individual.
FIN623 Taxation Management - Question No: 26 ( M a r k s: 1 )
Mr. Zeeshan during his yearly tour in Pakistan spends 180 working days and in a tax year 2008-09? What will be the status of individual?
► Resident Individual
► Non-Resident Individual
► Resident Person
► Resident HUF
Rationale: His total stay in Pakistan is less than 183 days , so he is non resident individual as per income tax ordinance section 81.
FIN623 Taxation Management - Question No: 27 ( M a r k s: 1 )
Which of the following is the rate of tax for AOP for tax year 2009, where the taxable income exceeds Rs. 100,000 but does not exceed Rs. 110,000?
► 0%
► 0.25%
► 0.50%
► 0.75%
Ref: See page 70, table of AOP rates.
FIN623 Taxation Management - Question No: 28 ( M a r k s: 1 )
Which of the following is the rate of tax for AOP for tax year 2009, where the taxable income exceeds Rs. 125,000 but does not exceed Rs. 150,000?
► 0.50%
► 0.75%
► 1.00%
► 2.00%
Ref: See page 70, table of AOP rates.
FIN623 Taxation Management - Question No: 29 ( M a r k s: 1 )
Which of the following is the Rate of Tax for dividend received from power generation company for Tax Year 2009?
► Nil
► 2.5%
► 5%
► 7.5%
Ref: Rate of Dividend tax under Section 5:
a) Dividend received from another company. 10% of gross amount of dividend.
b) Dividend received from power project
company privatized by WAPDA. 7.5% of gross amount of dividend.
c) Dividend received from power generation
company. 7.5% of gross amount of dividend.(Page No.71)
FIN623 Taxation Management - Question No: 30 ( M a r k s: 1 )
Which one of the following is not the feature of Sales Tax?
► Indirect tax
► Broad based
► Elastic/ Flexible
► None of the given options
Ref: Features of Sales Tax
• Indirect tax
• Broad based
• Elastic/ Flexible
• Easy to collect
• Potential for revenue generation
FIN623 Taxation Management - Question No: 31 ( M a r k s: 1 )
Mr. Ali received a basic salary of Rs. 20,000 per month during the year ended 30.06.2009. During the year domestic bills of water, telephone and electricity amounting to Rs. 6,000, 12,000, and 9,600 were paid by his employer respectively. What would be his taxable income?
► Rs. 240,000
► Rs. 267,600
► Rs. 270,000
► Rs. 289,800
Ref: Total of all amounts is 267,600. Utility bills are added back to salary as they are taxable under income tax ordinance 2009.
FIN623 Taxation Management - Question No: 32 ( M a r k s: 1 )
Mr. Saleem received a basic salary of Rs. 10,000 per month during the year ended 30.06.2009. During the year his employer provided the services of a driver and a housekeeper. The company paid Rs. 4,000 per month to each of these employees. What would be his taxable income?
► Rs. 120,000
► Rs. 186,000
► Rs. 216,000
► Rs. 244,500
FIN623 Taxation Management - Question No: 33 ( M a r k s: 1 )
The basic salary of Mr. Ghauri (a salaried person) during the year 30.06.2009 is Rs. 445,000. He paid Zakat under Zakat Ordinance of Rs. 8,000 and received commission of Rs. 24,000. What will be his taxable income?
► Rs. 429,000
► Rs. 437,000
► Rs. 461,000
► Rs. 469,000
FIN623 Taxation Management - Question No: 34 ( M a r k s: 1 )
Concessional loan provided by the employer is taxable and added back to the income of employee. But under which of the following conditions there is no need to add back such loan?
► When loan is used for the purchase of furniture
► When loan is used for the education of children
► When loan is used for the construction of house
► When loan is used for the purchase of shares
FIN623 Taxation Management - Question No: 35 ( M a r k s: 1 )
Which part of the Income Tax Ordinance 2001 deals with Tax credits?
► Chapter III Part VII
► Chapter III Part VIII
► Chapter III Part IX
► Chapter III Part X
FIN623 Taxation Management - Question No: 36 ( M a r k s: 1 )
Which of the following is the rate of tax for salaried Individuals for tax year 2009, where the taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 1,450,000?
► 9.00%
► 10.00%
► 11.00%
► 12.50%
Ref: Page No.45.
FIN623 Taxation Management - Question No: 37 ( M a r k s: 1 )
Which of the following is the rate of tax for salaried Individuals for tax year 2009, where the taxable income exceeds Rs. 1,950,000 but does not exceed Rs. 2,250,000?
► 9.00%
► 10.00%
► 12.50%
► 15.00%
Ref: Page No.45.
FIN623 Taxation Management - Question No: 38 ( M a r k s: 1 )
Mr. Sadiq received a salary of Rs. 200,000 during the year ended 30.06.2009. His MTS is (Rs. 200,000-5,000-300,000). He has received medical allowance and facility of interest free loan from his employer of Rs. 10,000 per month and Rs. 900,000 respectively. What would be his tax payable?
► Rs. 1,987.5
► Rs. 2,535
► Rs. 107,500
► Rs. 134,200
Ref: Note 1:
Clause 139(a) & (b) of part 1 of second schedule:
a. Free hospitalization services provided under the terms of employment are exempt.
b. If (a) not available then 10% of basic salary is exempt in case medical allowance provided.
Interest free loan is chargeable to tax upto benchmark rate which is 11% for year 2009.
Taxpayble of Mr.Sadiq:
Basic salary 200,000
Medical Allowance 120,000
(10% of 200,000=20,000) (20,000) 180,000
11% of loan is chargeable to tax
11% 900,000=99000 99000
399000
Tax liability :
399000@2% =7980
FIN623 Taxation Management - Question No: 39 ( M a r k s: 1 )
Mr. Shafqat received a basic salary of Rs. 350,000 during the year ended 30.06.2009. His company maintained car for personal and official use. The cost of the vehicle is Rs. 880,000. What would be his tax payable?
► Rs. 1,030
► Rs. 5,910
► Rs. 10,950
► Rs. 135,300
Calculation:
Basic salary = 350,000
Car maintenance 880,000@5%= 44000+350000=394000@1.5%-5910
FIN623 Taxation Management - Question No: 40 ( M a r k s: 1 )
A retailer whose value of supplies in any period during the last twelve months ending any tax period exceeds_______ are required to be registered under the Sales Tax Act 1990;
► Forty million rupees
► Twenty million rupees
► Ten million rupees
► Five million rupees
FIN623 Taxation Management - Question No: 41 ( M a r k s: 1 )
What is the tax treatment of recognized Provident fund under section 2 (48) of part I of sixth schedule?
► Wholly exempt
► Partially taxable
► Wholly taxable
► Partially exempt
FIN623 Taxation Management - Question No: 42 ( M a r k s: 1 )
Statutory Provident Fund is governed by which one of the following?
► Finance Act 2006
► Insurance Act 1969
► Provident Funds Act 1925
► Finance Bill 2007
Ref: Statutory Provident Fund, governed by the Provident Funds Act, 1925 (GP Fund).(Page No.60)
FIN623 Taxation Management - Question No: 43 ( M a r k s: 1 )
Any amount received under Part 3 of Second Schedule, as flying allowance by pilots etc. and junior commissioned officers or other ranks shall be taxed at the rate of __________ as separate block.
► 2.5%
► 5.5%
► 7.5%
► 9.5%
FIN623 Taxation Management - Question No: 44 ( M a r k s: 1 )
Mrs. Waseem has rented out her house at Rs. 15,000 per month. As per rent deed she has received an amount of Rs. 75,000 as advance, which is non adjustable against rent. What would be the amount of rent chargeable to tax where the fair market rent is Rs. 100,000?
► Rs. 90,000
► Rs. 1,87500
► Rs. 92,400
► Rs. 1,200
FIN623 Taxation Management - Question No: 45 ( M a r k s: 1 )
Mr. Waqas is a practicing chartered accountant. He has received audit fees of Rs. 300,000 and the examiner’s fees of Rs. 2,000. During tax year 2009 he has made membership and certificate expenses of Rs. 500. What will be his income from profession?
► Rs. 198,834
► Rs. 301,500
► Rs. 297,500
► Rs. 298,500
FIN623 Taxation Management - Question No: 46 ( M a r k s: 1 )
M/s. RST filed tax return for tax year 2009, declaring taxable income as Rs. 1,135,000 made payments in execution of a contract for purchase of office appliances Rs. 250,000. What will be the tax payable of the company?
► Rs. 100,000
► Rs. 150,000
► Rs. 300,000
► Rs. 484,750
Calculation: Tax Liability
1135000*35/100 = 397250
250,000*35/100 = 87,500
484,750
FIN623 Taxation Management - Question No: 47 ( M a r k s: 1 )
Mr. Qasim received income from business of Rs. 107,000. He has received gain on sale of residential house of Rs. 140,000. What will be his taxable income?
► Rs. 50,000
► Rs. 300,000
► Rs. 107,000
► Rs. 100,000
FIN623 Taxation Management - Question No: 48 ( M a r k s: 1 )
Mr. Jamil has received income from poultry farm of Rs. 645,000 and gain on sale of shares of private company Rs. 136,000 where the shares were disposed off after 12 months. The capital loss amounted to Rs. 15,000 was reported. What will be his taxable income?
► Rs. 566,000
► Rs. 694,000
► Rs. 732,000
► Rs. 776,000
Calculation: Income from poultry form = 645,000
Profit on shares(136000*75/100) = 102000
Less: Capital losses = 15000
= 732,000
Rationale:Shares of private limited company are 25% exempt if disposed off after 12 months and if disposed off within 12 months then totally exempt.And capital losses are also exempt.
