The document is a tax practices exam containing 5 questions testing knowledge of tax law and rates in Pakistan. Question 1 requires calculating the tax liability of Mr. Idrees based on income information provided, including business income, capital gains, shares sold, and zakat paid. Question 2 requires calculating the tax payable by Mr. Bilal on sales of real estate and shares. Question 3 requires computing Usman Shinwari's total income, taxable income, and tax payable/refund based on capital gains, rental income, gifts, loans, and previous transactions. The document also provides tables of tax rates for individuals, immovable property, and securities.
The document is a tax practices exam containing 5 questions testing knowledge of tax law and rates in Pakistan. Question 1 requires calculating the tax liability of Mr. Idrees based on income information provided, including business income, capital gains, shares sold, and zakat paid. Question 2 requires calculating the tax payable by Mr. Bilal on sales of real estate and shares. Question 3 requires computing Usman Shinwari's total income, taxable income, and tax payable/refund based on capital gains, rental income, gifts, loans, and previous transactions. The document also provides tables of tax rates for individuals, immovable property, and securities.
The document is a tax practices exam containing 5 questions testing knowledge of tax law and rates in Pakistan. Question 1 requires calculating the tax liability of Mr. Idrees based on income information provided, including business income, capital gains, shares sold, and zakat paid. Question 2 requires calculating the tax payable by Mr. Bilal on sales of real estate and shares. Question 3 requires computing Usman Shinwari's total income, taxable income, and tax payable/refund based on capital gains, rental income, gifts, loans, and previous transactions. The document also provides tables of tax rates for individuals, immovable property, and securities.
The document is a tax practices exam containing 5 questions testing knowledge of tax law and rates in Pakistan. Question 1 requires calculating the tax liability of Mr. Idrees based on income information provided, including business income, capital gains, shares sold, and zakat paid. Question 2 requires calculating the tax payable by Mr. Bilal on sales of real estate and shares. Question 3 requires computing Usman Shinwari's total income, taxable income, and tax payable/refund based on capital gains, rental income, gifts, loans, and previous transactions. The document also provides tables of tax rates for individuals, immovable property, and securities.
Certificate in Accounting and Finance Stage Examination
October 14 ,2023 45 minutes – 25 marks Additional Reading Time – 10 minutes
Tax Practices Test-2 Instructions to examinee
(i) Answer All 5 Questions
(ii) Answer in Black pen only (iii) Attempt each Question on new page.
Question-1 Mr Idrees, a resident tax payer, makes the following information available to you relating to his accounting year ended 30 June 2018. (1) His income from business for the year ended 30 June 2018 is Rs. 850,000. (2) He sold jewellery on 31 May 2018 for Rs.12,000,000 which was purchased by him two years earlier for Rs. 9,000,000. The jewellery was held for the personal use of his wife. Out of the sale proceeds, he purchased a rare manuscript for Rs.10,000,000 and old coins for Rs.2,000,000. On 30 June 2018, he disposed of the manuscript for Rs.15,000,000 and of the coins for Rs.1,000,000. (3) Disposal of share in TY 2018: – Gain of Rs.75,000 on the sale of shares in a private company. The sale was made more than two years after the acquisition of the shares. (4) Rs.100,000 Zakat was paid by Idrees. Required: Compute the tax liability of Idrees for the tax year 2018. (5)
Question-2 Mr Bilal, aged 45 and resident in Pakistan, disposed of the following assets during the year ended 30 June 2021:
Immovable asset (1) 10 August 2020: Sold a flat in Karachi for Rs. 5,000,000 which he had bought on 1 January 2019 for Rs. 4,000,000. Others (1) 30 June 2021: Sold 5,000 shares in Turbo Motors Limited, an unlisted company in which 50% of the shares are held by the Government of Baluchistan, at Rs. 170 per share. He had purchased these shares on 1 November 2020 at Rs. 120 per share and paid commission of Rs. 0.10 per share on each side of the trade. (2) 1 January 2021: Sold 150,000 shares in Farid Sugar Mills (Pvt) Ltd (FSM) at a gain of Rs. 1,125,000. Required: Compute the tax payable by Mr Bilal for the tax year 2021. (5) Question-3 Usman Shinwari is a UK national who stayed in Pakistan from November 1, 2017 to June 30, 2018. He has provided you the following information for TY 2018. 1. He sold a rare manuscript in Karachi at a gain of Rs. 3,000,000. 2. Usman let out a building with machinery installed to Hasan on November 1, 2017. Hasan pays a monthly rent of Rs. 80,000. The depreciation of building and plant and machinery as per tax rules is Rs. 200,000. A repair expense of Rs. 20,000 is also incurred. 3. Usman vacated his house in Karachi in TY 2018 and received Rs. 50,000 as consideration to vacate the property. Earlier, in TY 2005, he had paid Hafeez Rs. 20,000 when Hafeez had vacated the property. 4. Usman received a gift of Rs. 100,000 through cross cheque on his birthday, by his father. 5. A loan was received by Usman of Rs. 200,000 in TY 2018 from his friend, in cash. 6. A loan of Rs. 45,000 was received by him from his brother in cash to pay of an earlier debt owed to a bank. Required: Under the provisions of the Income Tax Ordinance 2001 and Rules made thereunder, compute the total income, taxable income and net tax payable by/refundable to Usman during the tax year. (8) Tax Practices Page 2 of 3
Question-4 Define the term “debt securities”. (4)
Question-5 List down inadmissible deductions under the head Income from Other Source. (3)
Rates of Tax for Individuals and
Association of Persons The rates of tax imposed on income of every individual and association of persons except a salaried individual shall be as set out in the following Table, namely:— S. No Taxable Income Rate of Tax 1. Where taxable income does not exceed 0% Rs. 600,000 2. Where taxable income exceeds 7.5% of the amount exceeding Rs. 600,000
Rs. 600,000 but does not exceed
3. Where taxable income exceeds Rs. 15,000 + 15% of the amount exceeding Rs. Rs. 800,000 800,000 Rs. 800,000 but does not exceed 4. Where taxable income exceeds Rs. 75,000 + 20% of the amount exceeding Rs. Rs. 1,200,000 1,200,000 Rs. 1,200,000 but does not exceed 5 Where taxable income exceeds Rs. 315,000 + 25% of the amount exceeding Rs. Rs. 2,400,000 2,400,000 Rs. 2,400,000 but does not exceed 6 Where taxable income exceeds Rs. 465,000 + 30% of the amount exceeding Rs. Rs. 3,000,000 3,000,000 Rs. 3,000,000 but does not exceed 7. Where taxable income exceeds Rs. 765,000 + 35% of the amount exceeding Rs. Rs. 4,000,000 4,000,000 Rs. 4,000,000 Rates of tax for immoveable property Gain S.No. Holding Period Open Constructed Flats Plots Property (1) (2) (3) (4) (5) 1. Where the holding period does not exceed one year 15% 15% 15% 2. Where the holding period exceeds one year but does 12.5% 10% 7.5% not exceed two years 3. Where the holding period exceeds two years but does 10% 7.5% 0 not exceed three years 4. Where the holding period exceeds three years but does 7.5% 5% - not exceed four years 5. Where the holding period exceeds four years but does 5% 0 - not exceed five years 6. Where the holding period exceeds five years but does 2.5% - - not exceed six years 7. Where the holding period exceeds six years. 0% - - Tax Practices Page 3 of 3
Rates of tax for securities
Holding Period Securities acquired on or Securities acquired
before 30.06.2022 on or after (Between 1.7.13 – 30.6.22) 01.07.2022 1. Where the holding period does not exceed one year 15% 2. Where the holding period exceeds one year but does 12.5% exceed two years 3. Where the holding period exceeds two years but does not 12.5% 10% exceed three years Where the holding period exceeds three years but does not [Irrespective of the holding 7.5% 4. period] exceed four years Where the holding period exceeds four years but does not 5% 5. exceed five years Where the holding period exceeds five years but does not 2.50% 6. exceed six years 7. Where the holding period exceeds six years 0% Future commodity contracts entered into by members of 5% 8. Pakistan Mercantile Exchange
