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MIDTERM EXAMINATION
SPRING 2008
Marks: 40
Time: 60min
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Student Name:
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Exam Date:
Saturday, May 31, 2008
Question
1
2
3
4
5
6
7
8
9
10
Total
Marks
Question
11
12
13
14
15
16
17
18
19
20
Marks
Question
21
Marks
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Monetary policy
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Fiscal policy
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Trade Policy
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Economic Policy
Which one of the following is the main source of revenue generation of the state?
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Taxes
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Tariffs
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Internal Borrowing
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Penalties & Fines
Question No: 3 ( Marks: 1 ) - Please choose one
In the canon of taxation, which one of the following statements best describe the benefits principle?
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Persons deriving more income leads to enjoy less benefits from the state, should be taxed at the
lower rates
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Persons deriving more income leads to enjoy less benefits from the state, should be taxed at the
higher rates
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Persons deriving less income leads to enjoy more benefits from the state, should be taxed at the
lower rates
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All persons deriving more or less income should be taxed at the same rate
Question No: 4 ( Marks: 1 ) - Please choose one
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Direct Taxes
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Indirect Taxes
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Value Added Taxes
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Federal Taxes
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1st January to 31st December
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1st July to 30th June
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1st October to 30th September
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1st September to 31st August
Which one of the following is the legal status of Mr. Z a Director in Private Company under section
80 of the Income Tax Ordinance 2001?
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Individual
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Company
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Hindu Undivided Family
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AOP
Mr. Ali is 60 years old and being a citizen of Pakistan, if his total taxable income is Rs. 400,000. His
tax liability will be reduced by ______ under Part 3 of second schedule.
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10%
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25%
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50%
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75%
Mr. Khan is an employee of ABC Co. the company has provided a driver and a gardener to him.
What will be the treatment of their salaries as per Income Tax Ordinance 2001?
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Salaries paid to them added in the salary of Mr. Khan
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Ssalaries paid to them subtracted from the salary of Mr. Khan
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Have no relation with salary of Mr. Khan
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Salaries paid to them are exempted from Tax
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Mr. Javed transfers stock to his grandchildren so that the dividend income is included in their
taxable income
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Mis Saima sells her corporate bonds and reinvests the proceeds in tax exempt municipal bonds
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Imran wins $500 at beach bingo and does not report the income on his tax return
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Khuram invests in an apartment that expects to show losses for the next three years
Mr. Suleman is an employee of ABC Co. utilities are provided by Company to him for the tax year
2007. What will be the treatment of Utilities as per Income Tax Ordinance 2001 in the tax year
2007?
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Utilities paid are added in the salary of Mr. Suleman
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Fair market value of Utilities is added in the salary of Mr. Suleman
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10% of Utilities is exempted from tax and remaining amount will be added in the salary of Mr.
Suleman
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Utilities paid are exempted from Tax
Simplicity principle implies that taxation system should be plain, and easily understandable by the
tax payer.
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True
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False
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True
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False
Scholarship granted to a person to meet the cost of person’s education shall be exempt from tax
under Section 45 of Income Tax Ordinance 2001.
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True
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False
Question No: 14 ( Marks: 1 ) - Please choose one
Part 2 of the Second Schedule of Income Tax Ordinance 2001 deals with reduction in Tax Rates.
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True
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False
Mr. Akbar a resident individual received Dividends in Tokyo from a Pakistani resident company.
Dividend will be added in his gross total income.
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True
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False
Mr. Zeeshan an employee of federal government has been posted at Paris on 1st July, 2006. He
came on a visit to Pakistan on 1st November, 2006 and returned back to Paris on 15th December,
2006. For the rest of the period pertaining to tax year 2007, he remained in UK.
Determine residential status for the tax year 2007 with respect to section 81 of Income Tax
Ordinance 2001.
Make a comparison between the residential status of Resident AOP and Resident Company.
Is the income of non- resident taxed in Pakistan? Which part of his/her income is taxed?
1. Determine gross total income of Mr. Majid in the light of following informations pertaining to tax
year 2006. (5+5)
a.Pension from Pakistan Government but received in New York Rs. 25,000.
b.Dividends received in UK on 20th August 2006 from a Pakistani resident company
amounting Rs. 50,000.
c.Interest on Swiss Bonds (Half is received in Pakistan) Rs. 60,000.
d.Rent for tax year 2006 of a house property situated in New York and received there on 01-01-
2006 Rs.500, 000.
e.Income from agriculture in New York received there but later on remitted to Pakistan 80,000.