Question Paper

Section: C-1
Total marks: 34
Subject: CAF-06
Time allowed: 55 mins
Teacher: Sir Adnan Rauf
Test-2 Date: October 14, 2019
Name: _________________________________ Rise ID:______________
Question-1
a) Mr. Spiderman has rented out his house to Mr. Ben-10 on 1 September, 2009 for a monthly
rental of Rs. 55,000 due to his close friendship. Fair market rent of house is Rs. 70,000/month.
He also received Rs. 300,000 as non-adjustable amount on 1 September, 2009.
b) Further the house was given on rent by Mr. Spiderman to Mr. X-man on 1 June, 2012 at a
monthly rental of Rs. 85,000/month. Mr. X-man gave Rs. 500,000 as non-adjustable amount
which was partly used to make payment of Rs. 300,000 to Mr. Ben-10 who vacated house on 31
May, 2012.
c) Mr. Spiderman has also started receiving Rs. 500,000 from TY 2010 and onwards against
letting out a building together with plant and machinery.
d) Mr. Spiderman earned foreign source business income of Rs. 40,000 during TY 2010.
e) He has paid the Zakat of Rs. 40,000 in TY 2012.

Required:
Calculate tax liability for TY 2010, 2011 and 2012? (12)

Question-2
Rizwan and his brother, Saeed, jointly own a freehold house in Islamabad which is let out. Each
brother has a 50%share in the house. The house was let throughout the tax year 2013 to Mr Waseem,
at a monthly rent of US$ 1,500.The total rent amount was paid in advance on 1 July 2012, on which
date the exchange rates were:
Rupees
State Bank of Pakistan rate 1 US$ 88·5
Open market rate 1 US$ 90·0

Required:
Compute Mr Rizwan‟s taxable income. (02)
Question-3
Mr Idrees, a resident tax payer, makes the following information available to you relating to his
accounting year ended 30 June 2003.
(1) He retired from his employment with Prime Foods (Pakistan) Limited on 30 June 2000 and
since then he has been self-employed as a management consultant. His income from self-
employment adjusted for tax purposes for the year ended 30 June 2003 is Rs.850,000.
(2) He sold jewellery on 31 May 2003 for Rs.12,000,000 which was purchased by him two years
earlier for Rs. 9,000,000. The jewellery was held for the personal use of his wife. Out of the
sale proceeds, he purchased a rare manuscript for Rs.10,000,000 and old coins for
Rs.2,000,000. On 30 June 2003, he disposed of the manuscript for Rs.15,000,000 and of the
coins for Rs.1,000,000.
(3) Disposal of shares: Gain of Rs.75,000 on the sale of shares in a private company. The sale was
made more than two years after the acquisition of the shares.
(4) Rs.100,000 Zakat was paid by Idrees.
Required:
Compute the taxable income of Idrees for the tax year 2003, giving clear explanations for exclusion of
each of the items listed above. Also calculate his tax liability. (06)

Question-4
What is the treatment of loss under the head Income from Capital Gain? (04)

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Question-5
‘TEST THE KNOWLEDGE YOU HAVE ACQUIRED’
(Precaution: Do not read the next question before answering the one you are attempting and do not
come back to a question already attempted)
1. A building is for the first time let-out and the owner receives „non-adjustable amount‟ of
Rs.500,000 in tax year 2005. On termination of tenancy, before expiry of ten years, by the tenant
the amount of Rs. 500,000 is refunded and the building is re-let-out to another tenant and the
owner receives „non-adjustable amount‟ of Rs.800,000 in tax year 2009. How this amount will
be taxed?
2. A building is for the first time let-out and the owner receives „non-adjustable amount‟ of
Rs.500,000 in tax year 2005. How this amount will be taxed in TY 2005?
3. A building is for the first time let-out and the owner receives „non-adjustable amount‟ of
Rs.500,000 in tax year 2005. The tenancy is terminated in tax year 2009 and the „non-adjustable
amount‟ of Rs.500,000 is refunded by the Owner to the Tenant. How this amount will be taxed
in TY 2009?
4. Mr. Mehmood purchased the land for the purpose of construction of house on 23 rd August 2012
at a cost of Rs. 27 million. Due to increase in costs of material, he could not be able to construct
the house. Therefore, he sold the land on 7th January 2015 at a price of Rs. 35 million. Calculate
tax liability of Mr. Mehmood.
5. Shares of ABC (Pvt.) Limited were purchased by Mr. Ali on 2nd August 2015 at a cost of Rs.
200,000. 53% of the shares of ABC company are held by a foreign company, Gamma Limited
which is owned by Government of Belgium. Shares were sold by Mr. Ali on 8th November 2017
at a price of Rs. 350,000. Calculate tax liability of Mr. Ali.
(10)

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THE FIRST SCHEDULE

Division I
Rates of Tax for Individuals and
Association of Persons
(1) Subject to clause (2), the rates of tax imposed on income of every individual and association of
persons except a salaried individual shall be as set out in the following Table, namely:—

TABLE

S. No Taxable Income Rate of Tax

1. Where taxable income does not exceed Rs. 0%
400,000
2. Where taxable income exceeds 5% of the amount exceeding Rs. 400,000
Rs. 400,000 but does not exceed
Rs. 600,000
3. Where taxable income exceeds Rs. 10,000 plus 10% of the amount
Rs. 600,000 but does not exceed exceeding Rs. 600,000
Rs. 1,200,000
4. Where taxable Income exceeds Rs. 70,000 plus 15% of the amount
Rs. 1,200,000 but does not exceed exceeding Rs. 1,200,000
Rs. 2,400,000
5 Where taxable Income exceeds Rs. 250,000 plus 20% of the amount
Rs. 2,400,000 but does not exceed exceeding Rs. 2,400,000
Rs. 3,000,000
6 Where taxable Income exceeds Rs. 370,000 plus 25% of the amount
Rs. 3,000,000 but does not exceed exceeding Rs. 3,000,000
Rs. 4,000,000
7. Where taxable Income exceeds Rs. 620,000 plus 30% of the amount
Rs. 4,000,000 but does not exceed exceeding Rs. 4,000,000
Rs. 6,000,000
8. Where taxable Income exceeds Rs. 1,220,000 plus 35% of the amount
Rs. 6,000,000 exceeding Rs. 6,000,000

(2) Where the income of an individual chargeable under the head “„salary” exceeds seventy-five per cent
of his taxable income, the rates of tax to be applied shall be as set out in the following Table, namely:—

S. No Taxable Income Rate of Tax

(1) (2) (3)
1. Where taxable income does not exceed Rs. 0%
600,000
2. Where taxable income exceeds 5% of the amount exceeding
Rs. 600,000 but does not exceed Rs. 600,000
Rs. 1,200,000
3. Where taxable income exceeds Rs. 30,000 plus 10% of the
Rs. 1,200,000 but does not exceed amount exceeding Rs. 1,200,000
Rs. 1,800,000
4. Where taxable income exceeds Rs. 90,000 plus 15% of the
Rs. 1,800,000 but does not exceed amount exceeding Rs. 1,800,000
Rs. 2,500,000

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5. Where taxable income exceeds Rs. 195,000 plus 17.5% of the
Rs. 2,500,000 but does not exceed amount exceeding Rs. 2,500,000
Rs. 3,500,000
6. Where taxable income exceeds Rs. 370,000 plus 20% of the
Rs. 3,500,000 but does not exceed amount exceeding Rs. 3,500,000
Rs. 5,000,000
7. Rs. 670,000 plus 22.5% of the
Where taxable income exceeds
amount exceeding Rs. 5,000,000
Rs. 5,000,000 but does not exceed
Rs. 8,000,000
8. Where taxable income exceeds Rs. 1,345,000 plus 25% of the
Rs. 8,000,000 but does not exceed amount exceeding Rs. 8,000,000
Rs. 12,000,000
9. Where taxable income exceeds Rs. 2,345,000 plus 27.5% of the Amount
Rs. 12,000,000 but does not exceed exceeding Rs. 12,000,000
Rs.30,000,000
10. Where taxable income exceeds Rs. 7,295,000 plus 30% of the
Rs. 30,000,000 but does not exceed amount exceeding Rs. 30,000,000
Rs.50,000,000
11. Where taxable income exceeds Rs. 13,295,000 plus 32.5% of the amount
Rs. 50,000,000 but does not exceed exceeding Rs. 50,000,000
Rs.75,000,000
12. Where taxable income exceeds Rs. 21,420,000 plus 35% of the
Rs.75,000,000 amount exceeding Rs. 75,000,000

The rate of tax to be paid under section 15, in the case of individual and association of person shall be as
follows:-

S. No. Gross amount of rent Rate of tax

1. Where the gross amount of rent does not exceed Nil
Rs. 200,000.
2. Where the gross amount of rent exceeds Rs. 5% of the gross amount exceeding
200,000 but does not exceed Rs. 600,000. Rs.200,000.
3. Where the gross amount of rent exceeds Rs. Rs. 20,000 + 10% of the gross amount
600,000 but does not exceed Rs. 1,000,000. exceeding Rs. 600,000
4. Where the gross amount of rent exceeds Rs. Rs. 60,000 + 15% of the gross amount
1,000,000 but does not exceed Rs. 2,000,000. exceeding Rs. 1,000,000.
5. Where the gross amount of rent exceeds Rs. 210,000 + 20% of the gross amount
Rs.2,000,000 exceeding Rs. 2,000,000.
6. Where the gross amount of rent exceeds Rs. Rs. 610,000 + 25% of the gross amount
4,000,000 but does not exceed Rs. 6,000,000. exceeding Rs. 4,000,000
7. Where the gross amount of rent exceeds Rs. Rs. 1,110,000 + 30% of the gross amount
6,000,000 but does not exceed Rs. 8,000,000 exceeding Rs. 6,000,000
8. Where the gross amount of rent exceeds Rs. Rs. 1,710,000 + 35% of the gross amount
8,000,000 exceeding Rs. 8,000,000

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(3A) The amount of any gain arising on disposal of immovable property being an open plot shall be
computed in accordance with the formula specified in the Table below:

S.No. Holding Period Gain

1. Where holding period of open plot does not exceed one year A
2. Where holding period of open plot exceeds one year but does not exceed A x 3/4
eight years
3. Where holding period of open plot exceeds eight years 0
Where A is the amount of gain on disposal of open plot.

(3B) the amount of any gain arising on disposal of immovable property being a constructed property
shall be computed in accordance with the formula specified in the Table below:

S. No. Holding Period Gain

1. Where holding period of constructed property does not exceed one year A
2. Where holding period of constructed property exceeds one year but does A x 3/4
not exceed four years
3. Where holding period of constructed property exceeds four years 0
Where A is the amount of gain on disposal of constructed property.

The tax will be calculated on open plot and constructed property at the following rates:

S. No. Amount of gain Rate of tax

1. Where the gain does not exceed Rs. 5 million 5%

2. Where the gain exceeds Rs. 5 million but does not exceed Rs. 10 million 10%

3. Where the gain exceeds Rs. 10 million but does not exceed Rs. 15 million 15%

4. Where the gain exceeds Rs. 15 million 20%

Rates of tax for securities

TY 2018, TY 2019& TY 2020

Securities acquired Securities acquired

S. No. Period
before 01.07.2016 after 01.07.2016

1. Where holding period of a security is less than 12 15%

months
2. Where holding period of a security is 12 months or 12.5% 15%
more but less than 24 months
3. Where holding period of a security is 24 months or 7.5%
more but the security was acquired on or after 1.7.2013
4. 0% 0%
Where the security was acquired before 1st July, 2013

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