TAXATION (MARKS 100)
Module C (3 hours)
Q.1 Mr. Ali Raza is working as a Senior Executive in DD Pakistan Ltd. The details of his
income/receipts during the tax year 2008 are as follows:
(i) He received basic salary of Rs. 65,000 per month.
(ii) He was provided with furnished accommodation for which DD Pakistan Limited
paid a rent of Rs. 25,000 per month.
(iii) A company owned car was provided to him which was used partly for official and
partly for private purposes. The car was purchased at a cost of Rs. 500,000 but had a
fair market value of Rs. 520,000.
(iv) Medical allowance of Rs. 150,000 was paid to him during the year. The actual
medical expenses incurred by him amounted to Rs. 40,000.
(v) He earned an income of Rs. 45,000 on the sale of jewellery but incurred a loss of
Rs. 28,000 on sale of an antique.
(vi) An apartment owned by him was rented on July 1, 2007 at a monthly rent of
Rs. 10,000. He received a non-adjustable security deposit of Rs. 100,000, which was
partly used to repay the non-adjustable security deposit received from the previous
tenant in July 2005, amounting to Rs. 70,000.
(vii) He incurred the following expenses on the apartment:
Rupees
Repairs 8,000
Share of rent to House Building Finance Corporation 15,000
(viii) Gross dividend of Rs. 12,000 was received from a listed company.
(ix) Provident fund was deducted @ 12% of his basic salary. An equal amount was
contributed by the company.
(x) He withdrew cash from the bank on which the bank deducted tax of Rs. 400.
(xi) Tax deducted by the company amounted to Rs. 170,000.
Compute his taxable income, total tax payable and tax payable with the return. (15)
Applicable tax rates are as follows:
Where the taxable income exceeds Rs. 950,000 but does not exceed Rs. 1,050,000 10.0%
Where the taxable income exceeds Rs. 1,050,000 but does not exceed Rs. 1,200,000 11.0%
Where the taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 1,500,000 12.5%
Where the taxable income exceeds Rs. 1,500,000 but does not exceed Rs. 1,700,000 14.0%
Q.2 (a) List the persons who are required to file a return of income under the Income Tax
Ordinance, 2001. (06)
(b) Explain the term “long term contract” and the method of computing the income from
long term contract, under the Income Tax Ordinance, 2001. (06)
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