FINALTERM EXAMINATION
Spring 2009
FIN623- Taxation Management

Marks: 81

Question No: 1 ( Marks: 1 ) - Please choose one
Taxes are important instrument of which one of the following policy?
  • Monetary policy
  • Fiscal policy
  • Trade Policy
  • Economic Policy


Question No: 2 ( Marks: 1 ) - Please choose one
Which of the following is opposite to the literal meanings of Tax?
  • Burden
  • Strain
  • Load
  • Relieve


Question No: 3 ( Marks: 1 ) - Please choose one
Sec. (11A) of Income Tax Ordinance 2001 defined:
Charitable purpose includes relief of the poor, education, medical 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


Question No: 4 ( Marks: 1 ) - Please choose one
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)


Question No: 5 ( Marks: 1 ) - Please choose one
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


Question No: 6 ( Marks: 1 ) - Please choose one
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


Question No: 7 ( Marks: 1 ) - Please choose one
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 hailstorm.
What will be the tax treatment of such amount received?
  • Income from Business
  • Exempt as Agriculture Income
  • Income from Property
  • Capital Gain


Question No: 8 ( Marks: 1 ) - Please choose one
What is the tax treatment of any profit on the US Dollar Bonds purchased by the
resident person after December 1999 under Second Schedule?
  • Wholly exempt
  • Wholly taxable
  • Tax @10% of profit paid
  • Not mention in second schedule


Question No: 9 ( Marks: 1 ) - Please choose one
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


Question No: 10 ( Marks: 1 ) - Please choose one
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


Question No: 11 ( Marks: 1 ) - Please choose one
In which of the following heads of Income No deductions are allowed:
  • Salary Income
  • Income from Property
  • Income from Business
  • Capital Gains


Question No: 12 ( Marks: 1 ) - Please choose one
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


Question No: 13 ( Marks: 1 ) - Please choose one
MTS stands for which of the following?
  • Minimum time scale
  • Minimum transfer Salary
  • Maximum time scale
  • Maximum transfer Salary


Question No: 14 ( Marks: 1 ) - Please choose one
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


Question No: 15 ( Marks: 1 ) - Please choose one
Which of the following may grant approval to any gratuity fund?
  • Federal Tax Ombudsman
  • Federal Government
  • Superior judiciary
  • Commissioner of Income Tax



Question No: 16 ( Marks: 1 ) - Please choose one
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


Question No: 17 ( Marks: 1 ) - Please choose one
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


Question No: 18 ( Marks: 1 ) - Please choose one
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



Question No: 19 ( Marks: 1 ) - Please choose one
Which section defines Speculation business' under head Income from business?
  • Section 20
  • Section 19
  • Section 24
  • Section 18


Question No: 20 ( Marks: 1 ) - Please choose one
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%


Question No: 21 ( Marks: 1 ) - Please choose one
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


Question No: 22 ( Marks: 1 ) - Please choose one
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


Question No: 23 ( Marks: 1 ) - Please choose one
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


Question No: 24 ( Marks: 1 ) - Please choose one
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


Question No: 25 ( Marks: 1 ) - Please choose one
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


Question No: 26 ( Marks: 1 ) - Please choose one
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


Question No: 27 ( Marks: 1 ) - Please choose one
Appeal to the collector of sales tax may be filed within which of the following time
period?
  • 60 days
  • 90 days
  • 180 days
  • 30 days


Question No: 28 ( Marks: 1 ) - Please choose one
Members of income tax appellate tribunal are appointed by which of the following
authorities?
  • Income Tax Department
  • Provincial Government
  • Federal Government
  • Judicial Commission


Question No: 29 ( Marks: 1 ) - Please choose one
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


Question No: 30 ( Marks: 1 ) - Please choose one
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


Question No: 31 ( Marks: 1 ) - Please choose one
Capital value tax is levied on which of the following?
  • Capital gain
  • Gross profits
  • Capital value of asset
  • Intangible assets


Question No: 32 ( Marks: 1 ) - Please choose one
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


Question No: 33 ( Marks: 1 ) - Please choose one
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


Question No: 34 ( Marks: 1 ) - Please choose one
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


Question No: 35 ( Marks: 1 ) - Please choose one
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%


Question No: 36 ( Marks: 1 ) - Please choose one
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


Question No: 37 ( Marks: 1 ) - Please choose one
Statutory Provident Fund is governed by:
  • Finance Act 2006
  • Insurance Act 1969
  • Provident Funds Act 1925
  • None of the given options appetence


Question No: 38 ( Marks: 1 ) - Please choose one
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


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Question No: 39 ( Marks: 1 ) - Please choose one
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


Question No: 40 ( Marks: 1 ) - Please choose one
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%


Question No: 41 ( Marks: 1 ) - Please choose one
What is the tax rate of Banking companies for the tax year 2009?
  • 35%
  • 44%
  • 54%
  • 42%


Question No: 42 ( Marks: 1 ) - Please choose one
Amount of Capital value tax for the year 2009 for a motor vehicle, not exceeding 850 cc,
should be which of the following?
  • Rs. 3,500
  • Rs. 7,500
  • Rs. 8,500
  • Nil


Question 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 )
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?

Question No: 46 ( Marks: 5 )
What are the exemptions available under Clause 58 of the second schedule of Income
Tax Ordinance 2001 related to Property Income?

Question No: 47 ( Marks: 5 )
What are the basic features of Sales Tax prevailing in Pakistan?


Question No: 48 ( Marks: 10 )
Compute the taxable income and tax liability of Mr. Jamil, 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 8,000p.m.
7. Dearness Allowance Rs 6,000p.m.
8. Utilities Rs. 40,000