Tax Book 2023

Chapter 21 ___ Solved Past Papers Income Tax Numericals of CA Module C - (2001 to 2022)

3,006,017

Less: Tax paid by DPL (1,500,000)

Balance tax payable 1,506,017

Hirani & Company (HC), a resident AOP, is engaged in the manufacturing of various consumer products and is

assessed under normal tax regime. During the year ended 30 June 2023, HC’s sales was Rs. 14,000,000. It

includes sales tax of Rs. 1,000,000 and excise duty of Rs. 500,000. The taxable income for the year is Rs.

1,170,000

Q.3 (a) September 2018

(^496) ____ _ _Conceptual Approach to Taxes
Required:
Compute HC’s tax liability for tax year 2023, under the provisions of the Income Tax Ordinance, 2001
Answer
Rupees
Income tax payable under normal tax regime
Taxable income A 1,170,000
Income tax (Rs. 10,000 + 12.5% of 570,000) 56,250
Income Tax payable under minimum tax regime
Gross sales (14,000,000–1,000,000–500,000) 12,500,000
Turnover tax u/s 113 @ 1.25% on Rs. 12,500,000 B 156,250
1,170,000
Tax liability of HC (higher of A and B) 156,250
PI HG
Amounts Written Off 1,150,000 925,000
Allowed by Tax Authorities 825,000 240,000
Q.3 (b) September 2018
The accounting profit before tax of Bashir Associates (BA) for the year ended 30 June 2023 is Rs. 1,200,000
Last year, BA had written off balances outstanding from two of its debtors namely Pulse International (PI) and
Hussain Global (HG) which were partly allowed by the tax authorities. Details are as follows
RUPEES
During the current tax year, BA received Rs. 652,000 from PI and Rs. 346,000 from HG, in full settlement of
Required:
In the light of the Income Tax Ordinance, 2001 compute BA's taxable income for the tax year 2023.
Answer
Rupees
Accounting profit before adjustments 1,200,000
Less: Amount received from Pulse International (652,000)
Less: Amount received from Hussain Global (346,000)
Bad debts amount previously allowed but recovered by PI W-1 327,000
Bad debts short allowed W-2 (339,000)
Taxable income 190,000
During the current tax year, BA received Rs. 652,000 from PI and Rs. 346,000 from HG, in full settlement of
their debts
W-1 Pulse International (PI)
Amount received 652,000
Bad debts claimed 1,150,000
Less: Bad debts allowed as deduction (825,000)
325,000
Excess income to be added in the income for the tax year 2023 327,000
W-2 Hussain Global (HG
Amount received 346,000
Bad debts claimed 925,000
Less: Bad debts allowed as deduction (240,000)
685,000
Amount short received to be allowed as deduction for the Tax year 2023 (339,000)
(^496) __ ___ _Conceptual Approach to Taxes