MIDTERMEXAMINATION
Spring 2009 Paper
FIN623- Taxation Management (Session - 2)
FIN623 - Taxation Management - Question No: 1 ( Marks: 1 ) http://vuzs.net
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
Ref:
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.
FIN623 - Taxation Management - Question No: 2 ( Marks: 1 ) http://vuzs.net
Which 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 Development
Raising level of employment (Achieving full employment level
Influencing consumption patterns
Price stability
Redistribution of income
Removal of deficit in Balance of Payments
FIN623 - Taxation Management - Question No: 3 ( Marks: 1 ) http://vuzs.net
Government Expenditure is one of the instruments of which of the following policy?
Monetary policy
Fiscal policy
Trade Policy
Economic Policy
Ref:
Instruments of Fiscal Policy
Government Expenditures
Taxes
Deficit Financing
Subsidies
Transfer Payments—like Unemployment Allowances etc.
FIN623 - Taxation Management - Question No: 4 ( Marks: 1 ) http://vuzs.net
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
FIN623 - Taxation Management - Question No: 5 ( Marks: 1 )tp://vuzs.net
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:
First law on Income Tax was promulgated in Pakistan from 1st
July, 1979.
FIN623 - Taxation Management - Question No: 6 ( Marks: 1 ) http://vuzs.net
Superior judiciary includes which of the following authorities?
City Court
Supreme Court
High Court
Both supreme and High court
FIN623 - Taxation Management - Question No: 7 ( Marks: 1 ) http://vuzs.net
Section 2(15) of Income Tax Ordinance 2001 defined:
“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; 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’.
FIN623 - Taxation Management - Question No: 8 ( Marks: 1 )
Section 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’.
FIN623 - Taxation Management - Question No: 9 ( Marks: 1 ) http://vuzs.net
Under 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)
FIN623 - Taxation Management - Question No: 10 ( Marks: 1 ) http://vuzs.net
Which one of the following is the example of tax payer?
Salaried Person
LESCO
All of the given options
WAPDA
FIN623 - Taxation Management - Question No: 11 ( Marks: 1 ) http://vuzs.net
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
FIN623 - Taxation Management - Question No: 12 ( Marks: 1 ) http://vuzs.net
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
Ref: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 years
FIN623 - Taxation Management - Question No: 13 ( Marks: 1 ) http://vuzs.net
Certain incomes those are excluded from tax are called as:
Perquisites
Exemptions
Allowances
Deductions
FIN623 - Taxation Management - Question No: 14 ( Marks: 1 ) http://vuzs.net
Which 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
FIN623 - Taxation Management - Question No: 15 ( Marks: 1 ) http://vuzs.net
What is the tax treatment of the salary of an employee of foreign government but citizen of Pakistan?
Exempt form tax
Wholly Taxable
Partly Taxable
No Tax treatment given in IT Ordinance 2001
Ref:
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 and
c.Foreign government also grants similar exemptions to employees of Federal Government.
FIN623 - Taxation Management - Question No: 16 ( Marks: 1 ) http://vuzs.net
Income of Federal Government exempt from tax under which of the following section of IT Ordinance 2001?
Section 41
Section 43
Section 47
Section 49
Ref:
Section 49 Federal & Provincial Govt. and Local Authority Income
• Income of Federal Government exempt from tax
FIN623 - Taxation Management - Question No: 17 ( Marks: 1 )htt://vuzs.net
An Individual will be termed as Short Term Resident under section 50 of the IT Ordinance 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 years
Ref:
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; and
b.Who is present in Pakistan for a period or periods not exceeding three years,
FIN623 - Taxation Management - Question No: 18 ( Marks: 1 ) - Please choose one
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
FIN623 - Taxation Management - Question No: 19 ( Marks: 1 )
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
FIN623 - Taxation Management - Question No: 20 ( Marks: 1 )
Which of the following days shall be counted as whole day for the computation of residential status of an individual?
A public holiday
A day of sick leave
Any strike day
All of the given options
Ref:
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 Pakistan
FIN623 - Taxation Management - Question No: 21 ( Marks: 1 ) http://vuzs.net
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: 22 ( Marks: 1 ) http://vuzs.net
Which of the following does Not come under the ambit of permanent establishment (PE)?
Branch office
Factory or workshop
Premises for soliciting orders
Liaison 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);
FIN623 - Taxation Management - Question No: 23 ( Marks: 1 ) http://vuzs.net
Mr. Ali resident of Pakistan received salary form UK? What will be the tax treatment of his salary in Pakistan?
Wholly taxable
Partly Taxable
Wholly exempt
Wholly exempt only if resident paid foreign tax on his salary
FIN623 - Taxation Management - Question No: 24 ( Marks: 1 ) http://vuzs.net
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
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 individual
has paid foreign income tax in respect of the salary.
FIN623 - Taxation Management - Question No: 25 ( Marks: 1 ) - Please choose vuzs one
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
FIN623 - Taxation Management - Question No: 26 ( Marks: 1 ) http://vuzs.net
Mr. A resident of Pakistan received interest on Australian Bonds Rs. 100,000 (half amount received in Pakistan). What is the treatment of this amount for calculating 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
FIN623 - Taxation Management - Question No: 27 ( Marks: 1 ) http://vuzs.net
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 particular 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
FIN623 - Taxation Management - Question No: 28 ( Marks: 1 ) http://vuzs.net
Mr. X employed in Pakistan received share of profit Rs. 60,000 in India from a business situated in Dubai but controlled through PE in Pakistan. Which of the following 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 Gross
total income
Mr. X being non-resident of Pakistan Rs. 60,000 will be added in Gross
total income
Mr. X being non-resident of Pakistan Rs. 60,000 will be subtracted in
Gross total income
FIN623 - Taxation Management - Question No: 29 ( Marks: 1 ) http://vuzs.net
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 Grosstotal income
Remittance is not income hence it is not included
FIN623 - Taxation Management - Question No: 30 ( Marks: 1 ) http://vuzs.net
Mr. X resident of Pakistan remittance from UK received Rs. 20,000 in Pakistan
from 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 total income
Mr. X being resident of Pakistan Rs. 20,000 will be Subtracted in Gross total income
Mr. X being non-resident of Pakistan Rs. 20,000 will be added in Gross total income
None of the given options
FIN623 - Taxation Management - Question No: 31 ( Marks: 5 )
Why Government levy tax on Person? What are the important elements that take into 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.
FIN623 - Taxation Management - Question No: 32 ( Marks: 10 )
Determine Gross total income of Mr. Imran in the light of following particulars information pertaining to tax year 2008.
a. Dividends received in UK on 20th Aug 2008 from a Pakistani resident company: 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 and
received there on 01-01-2008; Rs.500,000.
e. Income from agriculture in New York received there but later on remitted
to Pakistan Rs.80,000.
Find out gross total income of Mr. Imran, if he is:
a. Pakistani resident
b. Non– resident
