Tax Book 2023

Chapter 30 Solved Past Papers Income Tax Numericals of ICMAP Stage IV - (2003 to 2018)

• SE has Pakistan source income of Rs. 2,800,000.


• 
  

Rupees

Head of Income

Capital Other

Gain Sources

600,000 (1,100,000) 750,000 1,350,000

150,000 - 75,000 187,500

Required:

Non-

Speculation

Business

Speculati

on

Business

SE's foreign source incomes, tax paid thereon and foreign losses

brought forward are as follows:

Foreign income/ (loss)

Foreign losses brought

forward

from latest year (250,000) - (1,400,000)

The foreign tax credit relating to income from other sources was remained unadjusted

during the last tax year amounted to Rs. 40,000.

Calculate the taxable income and tax liability of Sunshine Enterprises for the tax year 2023. Also

Foreign tax paid

Conceptual Approach to Taxes _____759

ANSWER

Computation of Taxable Income and Tax Liability:

Taxable Income for the tax year 2023

Rupees Rupees

Pakistan source income 2,800,000

Foreign source income:

Speculation 600,000

Less: B/f speculation loss 250,000 350,000

Non-speculation business loss c/f (1,100,000) -

Capital gain 750,000

Less: B/f capital loss 1,400,000

Capital loss c/f 650,000 -

Other source 1,350,000

Taxable income 4,500,000

Tax Liability:

Calculate the taxable income and tax liability of Sunshine Enterprises for the tax year 2023. Also

calculate its foreign tax losses (if any) to be carried forward to the next year.

Tax Liability:

Rupees

Income tax on Rs. 4,500,000 [Rs. 680,000 + 32.5% (4,500,000 - 4,000,000)] 842,500

Foreign tax credit on speculation business

(a) Tax paid in foreign country 150,000

(b) 842,500 / 4,500,000 x 250,000 46,806

Whichever is lower (46,806)

Conceptual Approach to Taxes _____759