Tax Book 2023

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

d) What are company's tax and duties liabilities under the:

i) Customs Act, 1969. ii) Sales Tax Act, 1990

iii) Federal Excise Act, 2005 iv) Income Tax Ordinance, 2001

Solution

a) Under what category this company falls for Income Tax purposes?

b) Workout company's sales

Sales = Cost of goods sold + (Cost of goods sold x 30%)

Sales = 79,750,000 + (79,750,000 x 30%)

BeingasmanufacturertheincomeofthecompanyisfullycoveredunderNormalTaxRegimeu/s

153 of the Income tax Ordinance, 2001 and being as small company the rate of tax shall be 20%.

c) Workout its net profit chargeable to income tax for the tax year 2023 (ignore

initial depreciation).

Conceptual Approach to Taxes _____801

Sales = 79,750,000 + (79,750,000 x 30%)

Sales = 79,750,000 + 23,925,000

Sales = 103,675,000

Cost of goods sold

Imported value (before custom duty and taxes) 55,000,000

Custom duty @ 25% 13,750,000

Local purchases 4,500,000

Other manufacturing / trading expenses 6,500,000

79,750,000

c) Workout profit chargeable to income tax

Rs. Rs.

Sales 103,675,000

Cost of sales 79,750,000

Gross profit 23,925,000

Selling and admin expenses 12,600,000

Profit before tax as per accounts 11,325,000

Add: Accounting depreciation ( 5,000,000 + 80,000 ) 5,080,000

Purchase of Laptop charged to profit and loss account 80,000

Income tax and sales tax paid with electricity billsIncome tax and sales tax paid with electricity bills(86,000 + 134,000)(86,000 + 134,000) 220,000220,000

5,380,000

Less: Tax depreciation:

Assumed plant & machinery b/f [(5,000,000 / 25%) x 15%] 3,000,000

96,000

On laptop (assumed used purchased) (Rs. 80,000 x 30%) 24,000

3,120,000

13,585,000

Assumed computers b/f [(80,000 / 25%) x 30%]

(Assumed for business use)

Conceptual Approach to Taxes _____801