Ans.

1
(a)

I. Yes, Mr. Ali, Mr. Bilal, and Mr. Charlie qualify as associates. Mr. Ali and Mr. Bilal are
associates because they are brothers and have a written agreement to make joint
business decisions. Mr. Ali and Mr. Charlie are also associates because Mr. Charlie has
significant influence over Mr. Ali's business decisions. Therefore, all three individuals are
associates.

II. Yes, Mr. R and Mr. S qualify as associates. As brothers, they are relatives, and according
to the definition, an individual and their relative are treated as associates. Additionally,
Mr. R and Mr. S have a written agreement to make joint business decisions, which further
supports the conclusion that they are associates. The transactions between Company P
and Company Q at a discounted price also indicate a close relationship between the two
companies and their CEOs.
(b)
(i) Short term resident individual: As Mr. Khan is a resident individual solely by reason of the
employment and his presence in Pakistan for not more than three years, he is treated as short term
resident individual. Consequently, his foreign source income (rental income) shall be exempt from tax
provided that foreign source income shall not be brought into Pakistan. However, he remitted 30% of
the amount to his bank account in Pakistan so 30% of his rental income shall be taxable while the
remaining i.e. 70% shall be exempt from tax.

(ii) Returning expatriates: As Ahmad is citizen of Pakistan and he was not a resident person in any of the
four preceding tax years i.e. from tax year 2021 to tax year 2024, he is treated as a returning expatriate
for tax year 2025 and his dividend income (foreign source income) shall be exempt from tax. In this case,
there is no implication of amount remitted to Pakistan.

(iii) Foreign source salary income of a resident person: Foreign source salary of Andleeb shall be exempt
from tax if she paid foreign income tax in respect of her salary. In this case, there is no implication of
amount remitted to Pakistan.
Ans.2
Mr. Amir
Tax Year 2025
Computation of Total Income, Taxable Income And Tax Liability

Note Rupees
Income From Salary:

Basic Salary 200,000*12 2,400,000

Medical allowance
Total 30,000*12 360,000
Less: Exempt (10% of B.S) 10%*2,400,000 (240,000)
Taxable 120,000 120,000

Other Allowance (250,000 x 12) 3,000,000

Free accommodation (higher of:) 200,000*12*45% 1,080,000
45% of MTS or
Fair market rent 112,500*12 1,350,000
Taxable 1,350,000
Provident Fund contribution:
Actual 10%*2,400,000 240,000
Less: Exempt lower of 10% of B.S or Rs. 150,000 (150,000)
Taxable 90,000 90,000
Deemed interest on interest free loan N-1 525,000
Free air tickets 50,000*4 N-2 200,000
Reward for excellent performance N-3 -

Total taxable salary 7,685,000

Capital Gains (SBI):

Gain on sale of shares -PIA 450,000

Redemption of mutual fund units (45-50)*5,000 25,000
475,000

Income From Other Source:

Profit on debt 1,100,000/110*10 100,000

Exempt income
Rent of Agriculture land 600,000

Total income 8,860,000

Less:

Capital gains (SBI) (475,000)

Rent of Agriculture land (exempt income) (600,000)

Taxable income- NTR 7,785,000

Tax liability (Salaried person case)
Tax 700,000+35%*(7785000-4,100,000) 1,989,750

Less: Tax credit on donation:

(Eligible amount lower of:)
Car value 1,500,000-(1,500,000*10%*3) 1,050,000 N-4
30% of taxable income 7,785,000*30% 2,335,500

Tax credit 1,989,750/7,785,000*1,050,000 (268,367)

1,721,383
Add: Tax liability on:

Capital gains 475,000*12.5% 59,375

Penalty on house 18,000,000*5% N-5 900,000

Total Tax liability 2,680,758

Notes:

N-1 Interest free loan

Rs.
July to Sept 6,000,000*10%*3/12 150,000
Oct to Dec (6,000,000-500,000)*10%*3/12 137,500
Jan to March (5,500,000-500,000)*10%*3/12 125,000
April to June (5,000,000-500,000)*10%*3/12 112,500
525,000

N-2
Any perquisite or benefits for which the employer does not have to bear any marginal cost, as notified

by the Board are exempted from employees’ income. As the Board has not notified any SRO in this

connection, hence the given benefit is fully taxable in the hands of the employee as the same is not within

the ambit of clause (53A) of Part-I of 2nd Schedule to the Income Tax Ordinance, 2001.

N-3
Where the issuance of shares is subject to a restriction on the sale or transfer of the allotted shares, no
amount is chargeable to tax to the employee until the earlier of:

Since neither of these events occurred before 30 June 2025 no amount is taxable as salary of Mr. Amir
for the tax year 2025.
N-4

As per rule 228(4) of Income Tax Rules 2002, for determining the eligible
amount of donation, the original cost of the car shall be reduced by 10% for
each year but not less than the 50% of the cost.

N-5
In case any immovable property having fair market value (FBR value or DC rate
whichever is applicable) greater than five million rupees is purchased in cash,
then such person shall pay a penalty of 5% of the FBR value or DC rate
whichever is higher.
Ans.3
(a)

Income from Capital Gain

Consideration Received on sale of rights 4,100,000

Less: Consideration Paid 2700,000

Capital Gain 1,400,000

Tax Liability (90,000+20% x 200,000) 130,000

(b)

If a gift is received from a person having their national tax number through a banking channel, such a gift
is not to be treated as income. Because Naseer’s son is a taxpayer in Pakistan and the amount has been
received through a banking channel, it is not treated as his income.

(c)

Particulars Rs.
Consideration on sale of 4,000 shares 230,000
Cost of 4000 shares-W-1 224,000
Capital gain 6,000
Tax @ 12.5% 750

W-1

Particulars Rs.
2,000 shares purchased on 1 June at 10:00 AM 90,000
2,000 shares purchased on 1 June at 01:00 PM 150,000
1,000 shares purchased on 1 June at 04:00 PM 40,000
Total Cost of 5000 Shares 280,000
Cost of 4,000 shares sold (280,000/5,000 x 4,000) 224,000

(d)

(i). Shares of APL are not owned by any government and its shares are not listed on any stock exchange in
Pakistan. So, it is not a public company for the purpose of income tax despite the fact that it is a public
company under the Companies Act, 2017.

(ii). If a company is incorporated or formed by or under any law in force in Pakistan, it is treated as a
resident company. Such a company cannot be treated as non-resident merely on the basis that the control
and management of the affairs of the company were situated abroad. Therefore, APL is a resident
company.
Ans.4
Usama
Calculation of Taxable income
Tax Year 2025

Particulars Rs.
Income from property:
Gross rent (Higher of actual or MV) 2,880,000
Non-adjustable deposit- No treatment in case of land -
Less deductions:
Repair allowance-(Ground levelling upto 1/5th)- No treatment in case -
of land
Property tax (150,000)
Rent collection charges allowed upto 4% of gross rent (12,000)
Interest accrued on mortgage of land- Allowed on paid basis -
Insurance premium- No expense allowed in case of land -

Taxable income 2,718,000

Ans.5
Faiq
Computation of taxable income for tax year 2025

Capital gains Rupees

Gain on sale of bungalow (65–35) 30,000,000
Disposal of coin collection (4.2–0.5) 3,700,000
Disposal of antique furniture (W-1) 24,000,000
Disposal of table -
Total capital gain 57,700,000
Less: Gain on sale of bungalow (Separate block of income) (30,000,000)
Taxable income 27,700,000

Tax liability:
Up to 5,600,000 1,610,000
Add: Exceeding 5,600,000 @ 45% 9,945,000
11,555,000
As taxable income is greater than 10 M so surcharge is applicable
(11,555,000 x 10%) 1,155,500
Add: Tax on gain on sale of Bungalow (30,000,000×0%) -
12,750,500

W-1:
Consideration
FMV Cost Gain/loss
received
--------------------------- Rupees ---------------------------
Antique dresser table 30,000,000 25,672,372 16,000,000 14,000,000
Antique vase 1,800,000 1,540,342 2,400,000 (600,000)
Antique clock 50,000,000 42,787,286 40,000,000 10,000,000
81,800,000 70,000,000 58,400,000
Loss on disposal of antiques shall not be deductible from capital gain
24,000,000
therefore capital gain would be (14,000,000 +10,000,000)

Table which was in personal use of Hafeez is not classified a capital asset so no gain or loss
shall be recognized.
Ans.6
A.7 Kashif
Computation of income for tax year 2025

Income from property Rupees

Monthly rent from Ahmed (300,000×3) 900,000
Forfeited deposit 3,500,000
Monthly rent from Rashid (300,000×8) 2,400,000
Non-adjustable security deposit from Rashid (2,450,000(W-1)÷10) 245,000
7,045,000
Less: Repair allowance @ 20% (1,409,000)
Total income from property 5,636,000

Income from other sources

Security charges (40,000×11) 440,000
Electricity generation (50,000×11) 550,000
990,000
Less: Security guard's salary - 20% is personal expense (360,000×80%) (288,000)
Less: Cost of running electricity generator (450,000)
252,000
Total income 5,888,000

W-1:
Non-adjustable security deposit from Rashid 3,500,000
Less: Previous advance from Ahmed charged to tax [(3,500,000÷10)×3] (1,050,000)
2,450,000