Tax Book 2023

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

1 200,000

2 100,000

300,000 2,580,000

3 50,000

4 180,000

5 1,650,000 (2,550,000)

2 500,000 3,050,000

400,000 (1,800,000)

1,250,000

(57,000)

1,193,000

57,000

1,136,000

329,440

Taxable Turnover 12,000,000

Minimum tax liability @ 1.25% on total turnover 150,000

Tax liability for the tax year 2023 329,440

Finance charges on leased

Tax Liability shall be higher of the following: Tax Liability@ 29%

Subsidies received from Government

Taxable income

Un-vouched and unverifiable

Donation

Less: Tax depreciation

Provision for doubtful debts

Zakat Paid

Premium on issue of shares

Lease rental

Taxable income

Brought forward loss

770___ Conceptual Approach to Taxes

Tax liability for the tax year 2023 329,440

(52,200)

Tax credit for enlistment in stock exchanges (no more available) -

Balance tax payable 277,240

Notes

Note-1:

Note-2: Finance Charges

Note-3: Un-vouched and unverifiable expenses and payments are inadmissible.

Note-4:

Less: Rebate for donation to approved trust (N - 4)

Leaserentalpaidduringtheyearinrespectofassetsacquiredonleaseareadmissible

whilefinance chargespaidonsuchassetsareinadmissible.Therefore,theleaserentals

allowed as a deduction instead of finance charges.

Aspersection29(1)oftheIncome TaxOrdinance, 2001 deduction isallowedwherea

bad debt is irrecoverable and has been written off in the books ofaccounts. The

amount must be added back asageneral provisionmadeonthebasisofthetotal

trade debts.

Donationtouniversityestablishedunderaprovinciallawisnottobetreatedasallowable

deduction;ratherarebateshallbeallowedattheaveragerateoftax.Theamountoftax

credit shall be:

(180,000 x (329,440 / 1,136,000) = 52,200

FinancechargesofRs.200,000paidtobankisallowed asdeduction becauseinterest

on loan for imports of Machinery is a normal business expense.

Note-5: Premium on issue of shares is a capital receipt.

(c) Taxation and Depreciation of Second Hand Machinery:

(180,000 x (329,440 / 1,136,000) = 52,200

Maximum amountofdonation isrestrictedupto 20%of taxableincome whichisRs.

227,200(i.e.,20%of1,136,000).Asthedonationiswithinthepermittedlimit,taxcredit

shall be calculated on the actual amount of donation.

770___ Conceptual Approach to Taxes