FIN623 Solved MCQs & Subjective Questions by Instructor -1

FIN623 Taxation management Question:

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

Instructor's Reply:

Taxable income                                          = 1,135,000 payments for the execution of the contract   = 250,000 Total income                                             =   1,38,5000 Tax payable                                               = 1,38,5000 *0.35 = 484,750

FIN623 Taxation management Question: 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? Sir is it the right working for above question? Basic salary = 350,000 Car maintenance 880,000@5%= 44000+350000=394000@1.5%-5910

Instructor's Reply:

Good work. Your calculation is right.

FIN623 Taxation management Question: 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? Sir see my working is it right? i am confused in loan amount that there are two values given for loan which one we have to take? 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

Instructor's Reply:

Your caclulation is correct but the rate will be 1.5%.

FIN623 Taxation management Question: 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?
Instructor's Reply:
The amount of 4000 has been paid to each of the employee. So, Basic Salary                = 10,000*12= 120,000 Salary of driver            = 4,000*12= 48,000 Salry of housekeeper   = 4,000*12= 48,000 Taxable salary            = 216,000

FIN623 Taxation management Question: 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

Instructor's Reply:

Tax is charged on the income of the current tax year.

FIN623 Taxation management Question: Sir chk my calculation is it right? 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 Particulars Total income Exempt Income Taxable Income basic salary= Rs. 280,000. Nil 280,000 gratuity from the government= Rs. 21,600 Nil Rs.21,600 Taxable income 258,400 Where the taxable income exceeds Rs. 250,000 but does not exceed Rs. 350,000, Rate of tax=0.75% tax payable=258,400*0.75%= Rs. 1,938

Instructor's Reply:

Gratuity is exempt. So tax payable will be 280,000*0.0075= 2100

FIN623 Taxation management Question: (Question Asked on 11th July 2011) Shared by Fuad Hasan from LMS Moderated Discussion Board Dear Sir, Which Year Taxation rules  2009 Or 2010 are apply on our course. Please explain to me.

Instructor's Reply:

Dear Student, We are following tax year 2010.

FIN623 Taxation management Question: Dear sir, Can General provident fund can be also called statutary provident fund. thanks

Instructor's Reply:

Yes General provident Fund is also called statutory provident fund.

FIN623 Taxation management Question: dear sir in lec 35 , the tax rates for individuals and associaions of persons means these are for soleproprieters and partnership firms , right? and all those individuals who have taxable income from other sources. am i right sir or no.

Instructor's Reply:

Yes you are right. Indivudulas involves all type of individuals except the salaried persons.

FIN623 Taxation management Question: Dear sir , If person has an income from salary and also has  share of income from partnership, so how the tax rate will be applied, the rate of income from salary or the rate under associations of persons. Please sir clarify this concept. thanks

Instructor's Reply:

If his salary income is 50% of total taaxable from all sources then the rate of tax for salaries will be applied and vice versa.

FIN623 Taxation management Question: Dear sir , Please explain the concept of input and output tax in sales tax , as i could not fully understand it. Another question profit of mutual funds in banking company will be considered what type of income? thanks

Instructor's Reply:

In simple words you can say that out put tax is one which is received by the company and input tax is one which is paid by the company. There is no need to go in more details. It will be included in the other income of the bank.

FIN623 Taxation management Question: Mr.Afzal would like to compute the tax rate apply on the gratuity received the formula to compute the the tax rate is: Select Correct Option: 1. A*B/100 2. A*100/B 3. A/B*100 4. 100*B/A

Instructor's Reply:

A/B * 100 is the right option.

FIN623 Taxation management - Question: Sir Kindly Check out am i Right? Mrs. Mazhar during the year ended 30th June 2009 received salary of Rs. 80,000 per month. She has received income from fish catching business of Rs. 30,000. What will be her income from profession? ► Rs. 50,000 ► Rs. 110,000 ► Rs. 990,000 ► Rs. 960,000

Instructor's Reply:

right answer is 960,000+30,000= 990,000. Both are income so they will be added.

FIN623 Taxation management - Question: Sir kindly check it out. Mr. Jamil an engineer has received consultancy fee of Rs. 385,000. He has paid design and draft related salaries and site supervisors Rs. 45,000 and Rs. 36,000 respectively. What will be his income from profession? ► Rs. 304,000  ► Rs. 394,000 ► Rs. 376,000 ► Rs. 466,000 Sir do we have to add these three particulars given in the question? Consultancy fee= Rs. 385,000 Paid design and draft related salaries= Rs. 45,000 site supervisors= Rs. 36,000 Income from profession=

Instructor's Reply:

Yes as both are expenses so the right answer will be 304,000

FIN623 Taxation management - Question: M/s Junior during the year ended 30th June 2009 received a net profit of Rs. 139,400. The income tax as per P&L account is worth Rs. 2,500 and loss by embezzlement of Rs. 5,000. What will be the tax payable of the company? ► Rs. 785,000 ► Rs. 51,415  ► Rs. 730,000 ► Rs. 725,000 Sir do we have to subtract both tax per account 2500 and embezzelment loss 5000? i tried but couldn't get the right answer.

Instructor's Reply:

As the amount of net profit is given so both the values will be add back as net profit is calculated by subtracting these amounts.  139400+5000+2500= 146,900 146,900*0.35= 51,415

FIN623 Taxation management - Question: Sir am i right? Mr. Mohsin during the year ended 30th June 2009 received a net profit of Rs. 250,000. He has maintained a reserve for meeting contingent liability. The maintenance cost him Rs. 25,000 and he has paid for purchase of goodwill Rs. 30,000. What will be his income from profession? ► Rs. 170,000 ► Rs. 230,000 ► Rs. 255,000  ► Rs. 330,000 net profit = Rs. 250,000 maintained cost a reserve for meeting = Rs. 25,000 paid for purchase of goodwill= Rs. 30,000 income from profession= Rs. 255,000

Instructor's Reply:

V.Good. Your calculations are correct.

FIN623 Taxation management - Question: What will be the tax liability of an individual who has received an income of Rs. 470,000 under the head income from property? ► Rs.17,750  ► Rs. 23,500 ► Rs. 47,000 ► Rs. 70,500

Instructor's Reply:

The correct answer is 17,750. 12,500 + 7.5% of the amount exceeding 400,000 7.5% of 70,000 = 5250 12500+5250= 17,750

FIN623 Taxation management - Question: Sir kindly check out my working and guide me if there is any mistake. Mr. Amjad (employed by Federal Government) received a basic salary of Rs. 100,000 during the year ended 30.06.2009. He received leave encashment amounting to Rs. 12,000 per month and the special allowance @ 25% which is Rs. 8,400 per month. What would be his taxable income? ► Rs. 50,000 ► Rs. 100,000  ► Rs. 200,800 ► Rs. 244,000

Instructor's Reply:

The corrrect answer is 100,000 as he is federal Government so the allowance and leave encashment is exempt form tax.

FIN623 Taxation management - Question: Mr. Shahmeer has a gross tax of Rs. 97,200 and taxable income of Rs. 972,000 during the year ended 30.06.2009. He has invested shares in public company of Rs. 120,000 and donated to Mayo Hospital Rs. 30,180. What would be the amount of average relief?   ► Rs. 12,738  ► Rs. 3,018 ► Rs. 9,720 ► Rs. 12,000

Instructor's Reply:

A/B*C is the formula to calculate tax relief. A= Gross Tax B= Taxable income C in case of Donation is lesser of: 30% of taxable income or amount of donation 972,000*0.30= 291600 So the amount of donation is less it will be C C=30,180 C in case of shares of public company will be lesser of: Total cost of acquiring the shares 10% of tax able income 300,000 rupees Cost of acquiring shares= 120,000 10% of 972,000= 97,200 So C is 97,200 Add both C= 30,180+97,200= 127,380 97,200/972,000 * 127,380 12,738

FIN623 Taxation management Question: Sir Check my calculations and tell me whether i am right or not? Mr. Zahoor received a basic salary of Rs. 10,000 per month during the year ended 30.06.2009. He has received rent free unfurnished accommodation by his employer. He was entitled to receive rent @ Rs. 4,000, per month, if this accommodation was not provided to him. What would be his tax payable? ► Nil ► Rs. 133,980 ► Rs. 195,000 ► Rs. 210,000 Working: Basic salary (10,000 *12) 120,000 rent free unfurnished accommodation (4000*12% = 48000) Or 45% of basic salary ( 120000*45%= 54000) 54,000 ______ Tax payable 174,000 Where the taxable income does not exceed Rs. 180,000, Rate is 0%

Instructor's Reply:

V.Good. Your calculations are correct.

FIN623 Taxation management Question: Mr. Shafqat received a basic salary of Rs. 200,000 during the year ended 30.06.2009. He has received lunch facility, cost of living allowance and adhoc relief of Rs. 6,000, 50,000, and 7,800          respectively. What would be his tax payable? ► Rs. 1,030 ► Rs. 1,039 ► Rs. 1,069 ► Rs. 1,978.5 Calculations: Tax payer: Mr. Shafqt Tax year: 2009 Residential Status: Resident NTN: 000111 Computation of taxable income and tax thereon: In Rs Particulars                  Total income               Exempt             Taxable income income Salary                          200,000                       Nil                  200,000 Lunch facility                6,000                         Nil                   6,000 Cost living allowance    50,000                        Nil                  50,000 adhoc relief                 7,800                         Nil                      7,800  Total income taxable   263,800 Tax rate income payable=263,800*0.75%=1,978.5

Instructor's Reply:

V.Good. Your calculations are correct.

FIN623 Taxation management Question: what is the difference between wealth statement and wealth tax?

Instructor's Reply:

In simple words wealth statement is a statement in which a person represents its all assets and liabilities. The tax paid on the wealth is called wealth tax.

FIN623 Taxation management Question: Reepected Sir, Kindly explain what is deduction at source and what are modaraba companies????

Instructor's Reply:

Tax deduction at source means that employer deduct the taxes from the salaries and is resposible to submit to the tax authorities.  Read this link for information. http://www.financedoctors.net/Notes/195.pdf