FIN623 Subjective 2010

FIN623 5 PAPERS SOLVED BY LAIBA BUTT & QAZI UMER · PAPER NUMBER 1 · FINALTERM EXAMINATION · Spring 2009 · FIN623- Taxation Management (Session - 1) · Marks: 81

Q1. __________ is a type of tax where the tax rate increases as the income to which (1 marks)

the rate is applied increases. Proportional tax

Progressive tax

Regressive tax Corporate tax

REFERENCE:

A progressive tax is a tax by which the tax rate increases as the taxable base amount increases.

Handouts pagr#3

Q2. If the accounting year of Mr. Aslam, a rice exporter is started from 01 January (1 marks)

2005 and ending on 31st December 2005. What will be its tax year?

Tax year 2003 Tax year 2004 Tax year 2005

Tax year 2006

Q3. In case of lump sum receipt of income like Golden hand shake the tax payer pays tax in which of the following way? (1 marks)

Average of last 3 years tax rate

Option to choose current or average of last 3 years tax rate Current tax rate Previous year tax rate

REFERENCE:

Tax payer can opt to seek approval from CIT to charge lump sum payments received in a tax year at average tax rate of last three years

Q4. Which of the following methods of accounting is compulsory to adopt for Firm? (1 marks)

1. Accrual Basis
2. Cash Basis
3. Both Accrual and Cash Basis
4. Free to choose any kind of base

Correct answer: Accrual Basis

REFERENCE:

• For Companies ‘Accrual Basis’ method of accounting is compulsory [Section 32(2)]

Q5. Suppose a Profit acquired by a cultivator from the sale of standing crops or the produce after harvesting. The profit of the cultivator will be treated in which of the following way? (1 marks)

Income from Business

Agriculture Income

Income from Property Capital Gain

REFERENCE:

Following Income are held to be “Agricultural Income”

•If denuded parts of the forest are replanted and subsequent operations in forestry is carried out the income arising from the sale of replanted trees. •The fees collected from owners of cattle (normally used for agricultural purpose) for allowing them to graze on forest lands covered by jungle and grass grown spontaneously. •Profit on sale of standing crops or the produce after harvest by a cultivating owner or tenant of land

If person supplying water to the land for the purpose of growing rice in the field and he charged money from the cultivator against the water supplied. What will be the tax treatment of such income?