CAF-02 Tax Practices Test-2 Solution

Test 2 Suggested Solution

Answer-1
Mr. Idrees
Taxable Income and Tax Thereon
Tax year 2018
Income from business:
Income from business 850,000 0.5
Capital gains:
Gain on sale of jewelry (12,000,000 – 9,000,000) 3,000,000 1
Gain on sale of manuscript (15,000,000 – 10,000,000) 5,000,000 0.5
Loss on disposal of old coins (not allowed) - 0.5
Gain on sale of shares 75,000 8,075,000 1
Total income 8,925,000
Zakat paid (100,000) 0.5
Taxable income 8,825,000 0.5

Calculation of tax liability

Tax payable (765,000 + 4,825,000 x 35%) 2,453,750 0.5

Answer-2
Mr. Bilal
Taxable Income and tax thereon
For Tax Year 2018
Rs.
Income from capital gain – separate block
Disposal of immoveable property (Sep. block) (5,000,000 – 4,000,000) 1,000,000 0.5
Disposal of securities (Separate block) [250,000(W-1) – 0.5% of (850,000+600,000)] 242,750 0.75
Income from capital gain – NTR
Disposal of shares in Farid Sugar Mills 1,125,000 0.5
Total income 2,367,750
Less: Disposal of immoveable property (1,000,000) 0.25
Less: Disposal of securities (242,750) 0.25
Taxable income 1,125,000 0.5
Tax Liability (15,000 + 325,000 x 15%) 63,750 0.5
Add : Tax on separate block
- Shares in Turbo Motors Limited (249,000 x 12.5%) 31,125 0.5
- Disposal of flat (1,000,000 x 7.5%) 75,000 0.5
Tax payable to government 106,125 0.25

W-1
Sales proceed (5,000 x 170) 850,000
Cost (,5000 x 120) (600,000)
250,000 0.5

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CAF-02 Tax Practices Test-2 Solution

Answer-3
Usman Shinwari (Resident individual)
Income & Tax thereon
Tax year 2018
Income from capital gain Rs. Rs.
Gain on Manuscript [Sec.37 (5)] 3,000,000 1
Income from other sources
Rent from building together with plant and machinery [Sec.39(1)(f)] (80,000 x 8) 640,000 1
Less:
Depreciation of Plant and machinery 200,000 0.5
Repairs expense 20,000 (220,000) 0.5
420,000
Consideration for vacation of property [Sec.39(1)(k)] ((50,000-20,000)/10) 3,000 1
Gift received from father through crossed cheque - 0.5
Loan received from friend in cash [Sec.39(3)] (Adj. 5) 200,000 1
Loan received from brother in cash [Sec.39(3)] 45,000 1
Total/Taxable income 3,668,000 0.5
Tax liability (465,000 + 668,000 x 30%) 665,400 1

Answer-4

Debt securities means:

a) Corporate Debt Securities such as Term Finance Certificates (TFCs), Sukuk Certificates (Sharia
Compliant Bonds), Registered Bonds, Commercial Papers, Participation Term Certificates
(PTCs) and all kinds of debt instruments issued by any Pakistani or foreign company registered in
Pakistan; and
b) Government Debt Securities such as Treasury Bills (T-Bills), Federal Investment Bonds (PIBs),
Foreign Currency Bonds, Government Papers, Municipal Bonds, Infrastructure Bonds and
all kinds of debt instruments issued by Federal Government, Provincial Governments.
(2 marks for each point)

Answer-5
(1) Any expense which is allowed as deduction under another head will again not be allowed under this
head.
(2) The expenses which are not allowed as deduction under the head income from business (as per S. 21)
will also not be allowed as deduction under the head Income from Other Source.
(1 mark for each point)

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