RISE PREMIER SCHOOL OF ACCOUNTANCY

Batch: C-3 Subject:

Total marks: 50 marks
Tax Practice
Time allowed: 90 minutes
Teacher: Mr.Zahid Qavi. FCA
Revision Test:1
Date: 6 Feb, 2025
Syllabus: Income from Salary, Capital gain, Income from
other sources, Chapter 1,2,3
Name: Rise ID:
Instructions to Examinees:
Answer in Black pen only
Question # 01:
Aslam, a citizen of Pakistan joined Hamza Pharma Limited (HPL) as a General Manager on 01 Oct 2023. He
was offered following monthly salary and allowance in HPL:
Rupees
Basic salary 600,000
Medical allowance 66,000
In addition to the above, he was also provided the following:
(i) Bonus equal to two monthly basic salaries. However, bonus amount was adjusted in proportion to the
duration of his stay in the company. The bonus amount was paid to him on 5 July 2024.
(ii) Two company maintained cars. Both cars were purchased on 1 October 2023. The car costing Rs.
3,500,000 was used for official purposes whereas the car costing Rs. 1,900,000 was used for personal
purposes.
(iii) Free lunch from the restaurant owned by one of HPL‟s directors. The fair market value of food provided
to him during the year was Rs. 80,000.
(iv) A special allowance of Rs. 5,000 per month to meet expenses wholly and necessarily incurred in the
performance of his official duties.
(v) Provident fund contribution of Rs. 60,000 per month. An equal amount per month was also contributed
by Aslam to the fund.
Other information relevant to tax year 2024 is as under:
(i) During the year, he received dividends of Rs. 575,000 from a listed company. The amount was net of
withholding income tax at the rate of 15% and Zakat of Rs. 62,500 deducted under the Zakat and Usher
Ordinance, 1980.
(ii) Withholding tax deducted by HPL from Aslam‟s salary during the tax year 2024 amounted to Rs.
1,300,000.
Required: Under the provisions of the Income Tax Ordinance, 2001 and Rules made thereunder, compute
under the appropriate head of income, the total income, taxable income and net tax payable by or
refundable to Aslam for the tax year 2024. (17)
Question # 2:
During the year, Ali received various amounts and properties as gifts and advances. Discuss whether the
following are taxable or not under any head of Income.
i. Ali received Rs. 500,000 as a gift from his father through a crossed cheque.
ii. Ali received Rs. 300,000 in cash as a gift from his friend.
iii. Ali received a house worth Rs. 4,000,000 as a gift from his aunt.
iv. Ali received Rs. 200,000 as an advance payment for the sale of his car in cash from a person holding an NTN.
v. Ali received Rs. 150,000 in cash as an advance payment for providing consultancy services to a non-NTN holder.

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(5)
Question # 03:
Under the provisions of the Income Tax Ordinance, 2001 determine the residential status for tax year 2024
in each of the following cases:
(i) Arshad, an Emirati gold merchant, arrived in Pakistan for the first time on 15 March 2023, and
departed the country on 30 September 2023.
(ii) Chang Li, a Chinese sugar manufacturer, arrived in Pakistan on 1 March 2023. During his stay until 1
September 2023 in Pakistan, he resided in Sargodha, Punjab until 31 May 2023 and thereafter until
his departure from Pakistan, he stayed in Ghotki, Sindh. Assume that a calendar year serves as his
special tax year (04)
Question # 04:
Akbar, a Pakistani citizen, worked at ABC Pakistan Limited, an unlisted public company and a wholly owned
subsidiary of ABC International, which is based in the USA. Akbar’s engagement was formed through a two-
year agreement, with the provision that at the end of this period, he had the option to continue with ABC
International in USA. The two-year period ended on 30 September 2022 and Akbar left for USA on 1 October
2022 to continue his employment in USA as per the agreement.
On 15 February 2023, he resigned from ABC International, USA, and joined DEF Limited in the UK under an
employment agreement. However, due to his family problems, he resigned from DEF Limited and returned
to Pakistan on 30 April 2023.
Required:
Under the provisions of the Income Tax Ordinance, 2001, discuss the tax treatment of Akbar’s foreign source
salary income earned during the tax year 2023. (06)
Question # 05:
Sarah Ahmed, a Pakistani citizen, has had a varied residential status over the past few years due to her
international career. Her residential and income details are as follows:

1. Tax Year 2019:

o Sarah was a resident of Pakistan.
o She earned both local and foreign source income.
2. Tax Year 2020:
o Sarah was a resident of Pakistan.
o She continued to earn both local and foreign source income.
3. Tax Year 2021:
o ssSarah was a resident of Pakistan.
o She earned both local and foreign source income.
4. Tax Year 2022:
o Sarah moved abroad in January 2022 and was a non-resident for the entire year.
o During 2022, Sarah earned foreign source salary from her job overseas.
5. Tax Year 2023:
o Sarah remained abroad and was a non-resident for the entire year.
o She continued to earn foreign source salary.
6. Tax Year 2024:
o Sarah returned to Pakistan and became a resident again.
o She earned local income and foreign source income in 2024.

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Required: Considering the provisions of Section 51 of the Income Tax Ordinance, 2001, answer the following:

(i) For the tax year 2022, is Sarah’s foreign source income taxable in Pakistan? Explain why or why not.(02)
(ii) For the tax year 2023, how is Sarah’s foreign source income treated under Pakistani tax law? Provide the
relevant details. . (02)
(iii) For the tax year 2024, how is Sarah’s foreign source income derived from 2022 treated for tax purposes in
Pakistan? Justify your answer based on the provisions of Section 51. (02)
Question # 06:
Faraz is a resident filer who owns the following properties during the tax year 2024:
Description Fair market Remarks
value
Rs. in million
Bungalow located in Karachi 60 Faraz uses this as his residence.
Apartment located in Karachi 20 Faraz’s son resides in this apartment.
Office premises located in 25 Faraz uses this for his business.
Karachi
Open plot located in a 12 No construction has been
residential area in Karachi commenced during the year.
Open plot in Multan 18 This property was purchased during
the year and withholding tax under
section 236K was duly paid.
Shop located in a commercial 80 No tenant could be found for this
area of Lahore property and it remained
unoccupied during the year. Annual
fair market value of the rent is Rs. 6
million.
Bungalow located in Dubai 450 Received rent equivalent to
Rs. 31.5 million during the year.

Required: Under the provisions of the Income Tax Ordinance, 2001, compute total income of Faraz in respect of above-
mentioned properties for the tax year 2024. Also, state the reason(s) for excluding any of the properties from this
computation. (10)

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Rates of Tax for salaried Individuals
S. No Taxable Income Rate of Tax
1. Where taxable income does not exceed Rs. 600,000 0%
2. Where taxable income exceeds Rs. 600,000 but 5% of the amount exceeding Rs. 600,000
does not
exceed Rs. 1,200,000
3. Where taxable income exceeds Rs. 1,200,000 but Rs. 30,000 + 15% of the amount exceeding
does not Rs. 1,200,000
exceed Rs. 2,200,000
4. Where taxable income exceeds Rs. 2,200,000 but Rs. 180,000 + 25% of the amount
does not exceeding Rs. 2,200,000
exceed Rs. 3,200,000
5. Where taxable income exceeds Rs. 3,200,000 but Rs. 430,000 + 30% of the amount
does not exceeding Rs. 3,200,000
exceed Rs. 4,100,000
6. Where taxable income exceeds Rs. 4,100,000 Rs. 700,000 + 35% of the amount
exceeding Rs. 4,100,000

S.no (Properties acquired on or before 30 June 2024) Properties acquired after 01

July 2024
Holding period Open Constructed Flats
plot property
1 Where holding period does not 15% 15% 15% Active taxpayers: 15%
exceed one year Non-active persons:
2 Exceeds one year but does not 12.5% 10% 7.5% progressive slab rates
exceed 2 years
3 Exceeds 2 years but does not 10% 7.5% 0%
exceed 3 years
4 Exceeds 3 years but does not 7.5% 5% -
exceed 4 years
5 Exceeds 4 years but does not 5% 0% -
exceed 5 years
6 Exceeds 5 years but does not 2.5% - -
exceed 6 years
7 Exceeds 6 years 0% - -

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