CAF-02 Tax Practices Test-3 Solution

Test 3 – Suggested Solution

Answer-1 Rupees
Mr. Atif 0.5
Income and tax thereon
TY 20XX
Pakistan source income:
Income from Business (Pak) 1,800,000 0.5
Income from Capital gain (Pakistan)
Paramount Pvt Co. 900,000 0.5
Exotic Pvt Co. [Sec.38(2)] (400,000) 500,000 0.5
Foreign source incomes: [Sec.103]
Capital gain (US) (FSI) (850 x 90) 76,500 0.5
Income from business (FSI) (740 x 120) 88,800 0.5
Total income 2,465,300
Less: Zakat (Not allowed as not paid under Zakat and Ushr Ord.) (0) 0.25
2,465,300
Less: Child fee (as income is > than 1,500,000, So No allowance allowed) (0) 0.25
Taxable Income 2,465,300 0.25
Tax Liability (315,000 + 25% of 65,300) 331,325 0.5
Less: Foreign tax credit (Lower of) [Sec.103 (2)]
- Capital Gain
Foreign tax paid 23 x 90 2,070
Pakistani tax 331,325/2,465,300 x 76,500 10,281 (2,070) 1.5
- Non Speculation
Foreign tax paid 400 x 120 48,000
Pakistani tax 331,325/2,465,300 x 88,800 11,934 (11,934) 1.5
317,321
Less: Tax credit u/s 61: = (317,321/ 2,465,300) x 80,000 (10,297) 1.5
C is Lower of:
- 80,000
- 30% of 2,465,300=739,590
Less: Tax credit u/s 63: = (317,321/ 2,465,300) x 70,000 (9,010) 1.5
C is Lower of:
- 70,000
- 20% of 2,465,300 = 493,060
Payable to Government 298,014 0.25

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CAF-02 Tax Practices Test-3 Solution
Answer-2

ASSOCIATES:
I. Mouse Company & Mr. A
II. Cat Company & Mr. A
III. Mouse Company & Cat Company
IV. Parrot Company & Federal Govt.
V. Parrot Company & Mr. A
VI. Mouse Company & Parrot Company
VII. Cat Company & Parrot Company
VIII. Mr. C & Pigeon Company
IX. Monkey Company & Rest Company
X. Pigeon Company & Monkey Company
XI. Rest Company & Pigeon Company
(0.5 marks each upto maximum of 5)

Answer-3
“Fee for technical services” means amount received whether periodical or lump sum, for rendering of managerial,
technical or consultancy services (including the services of technical or other personnel), but does not
include :-
(a) Amount received for services rendered for a construction, assembly or like project; or
(b) receipt which is chargeable under the head “Salary”;

Answer-4
Tax credit for point of sale machine [Sec 64D]
(1) All Tier 1 retailers are required to integrate with Board's Point of Sale online real time reporting system. A
tax credit for POS machines will be allowed to them.
(2) The tax credit will be allowed for the tax year in which the point of sale machine is installed, integrated and
configured with the FBR‟s computerized system, at the lower of:
i. amount actually invested in purchase of point of sale machine; or
ii. Rs. 150,000/ machine.
(3) „Point of sale machine‟ is a machine made for processing and recording the sale transactions for goods or
services, either in cash or through credit and debit cards or online payments (in an internet enabled
environment).
(1 mark each)