Ch-04 basic Concepts of Income Tax

Question 1

What is a normal tax year?

Answer 1

1. 12 months period.
2. Starting from 1 July and ending on 30 June.
3. Denoted by the calendar year in Which 30 June falls.

Question 2

What is a special tax year?

Answer 2

1. 12-month period different from normal tax year. (E.g 1 January to 31 December,1 April to 31 March.
2. That’s the personal tax year to whom is allowed.
3. Denoted by calendar year relevant to the normal tax year in which the closing date of the special tax year falls.

Question 3

The Board can allow?

Answer 3

1. Class of persons to change special tax year into normal tax year through official Gazette.
2. Class of persons to change normal tax year into special tax year through official Gazette.

Question 4

The Commissioner can allow?

Answer 4

1. A person ( i-e individual) using a normal tax year may apply in writing to the commissioner to change his tax year to a special tax year and the commissioner may allow him.
2. A person ( i-e individual) using a special tax year may apply in writing to the commissioner to change his tax year to a normal tax year and the commissioner may allow him.
3. The order will be passed if conditions are fulfilled.

Question 5

What conditions are required by the commissioner to grant permission to change the take year?

Answer 5

1. The person has shown a compelling need.

2. The commissioner may impose further conditions

Question 6

An order by the commissioner of change in the tax year shall be passed after?

Answer 6

1. providing the applicant the opportunity of being heard.

2. If the application is rejected the commissioner shall mention in the order the reasons for rejection.

Question 7

Can the commissioner withdraw the permission granted?

Answer 7

The commissioner may by order withdraw the permission granted regarding the change in a tax year after providing the opportunity of being heard.

Question 8

what is a transitional tax year?

Answer 8

The period between

1. The end of the last tax year prior to the change and
2. The date on which the changed tax year commences and shall be treated as a separate tax year.

Question 9

If a person is dissatisfied with the order of the commissioner can file a review application?

Answer 9

1. To the board.

2. The decision by the board shall be final.

Question 10

Who is resident person?

Answer 10

1. Resident individual, a resident company, a resident association of persons.
2. The Federal Government.

Question 11

Who is non-resident person?

Answer 11

The person who is the non-resident person for the tax year.

Question 12

Who is the Resident individual?

Answer 12

1. if the individual is present in Pakistan for a period of, or a period amounting in the aggregate to, 183 days or more in the tax year.
2. is an employee or official of the Federal or Provincial Government posted abroad during the tax year.

Question 13

183 days include?

Answer 13

1. a part of the day an individual is present in Pakistan counts as a whole day of such presence.
2. If an individual is present wholly or partially in Pakistan counts as a whole day of such presence in the following days
   a) . a public holiday.
   b) . a day of leave including sick leave.
   c) . a day that the individual’s activity is interrupted in Pakistan because of strikes, lock-out, or delays in receipt of supplies.
   d) . a holiday spent by an individual in Pakistan before, during, or after any activity in Pakistan.

Question 14

183 days does not include?

Answer 14

A day or a part of a day where an individual is in Pakistan solely by reason of being in transit between two different places outside Pakistan.

Question 15

What is the resident company?

Answer 15

1. If it is incorporated, formed by, or under any law in force in Pakistan.
2. A Provincial or Local Government in Pakistan.
3. The Control and Management of affairs of the company are wholly situated in Pakistan at any time in the year.

Question 16

What is a resident association of persons?

Answer 16

If the Control and Management of affairs of the association are wholly or partly situated in Pakistan at any time in the year.

Question 17

What is the person?

Answer 17

1. An individual
2. A company, association of persons incorporated, formed, or established in Pakistan or elsewhere.
3. The Federal Govt, a foreign Govt, a political subdivision of a foreign Govt, a public international organization.

Question 18

Define company?

Answer 18

1. a company as defined in the Companies Act, 2017.
2. a body corporate formed by or under any law in force in Pakistan.
3. a Modaraba.
4. a body incorporated under the law of a country, outside Pakistan.
5. a co-operative society, a finance society, or any other society.
6. a non-profit organization.
7. a trust, an entity, a body of persons formed by or under any law in force at that time.
8. a Provincial, or Local Govt.
9. a small company.
10. a foreign association, whether incorporated or not, which the board has declared to be a company.

Question 19

Principle of taxation of individuals?

Answer 19

The taxable income of each individual shall be determined separately.

Question 20

The legal representative of deceased individual shall be liable for ?

Answer 20

1. Any tax that the individual would have become liable if he had not died:
2. Any tax payable in respect of the income of the deceased’s estate:

Question 21

The liability of a legal representative shall be limited?

Answer 21

To the extent of deceased’s estate.

Question 22

The tax liability shall be?

Answer 22

the first charge on the deceased’s estate.

Question 23

Any proceedings taken against the deceased before his death shall be assumed as?

Answer 23

1. Having been taken against the legal representative.

2. The proceedings will be continued against the representative from the stage at which they were at the time of death.

Question 24

Any proceedings which could have been taken against the deceased may be?

Answer 24

Taken against the legal representative of deceased?

Question 25

“Legal representative” means?

Answer 25

The person

1. who in law represents the estate of a deceased person.
2. who intermeddles with the estate of a deceased person.
3. on whom the estate devolves on the death of representative. if the representative is being sued in the case.

Question 26

Provisions for authors?

Answer 26

Where the time taken by the author of literary or artistic work to complete the work exceeds 24 months, the author may elect the lump sum amount received as having been received in that tax year and the preceding 2 years in equal proportions.

Question 27

Taxation rule for minor income?

Answer 27

1. Income from the business of minor is taxable in the hands of parents who has highest taxable income.
2. If business is acquired through inheritance, income is taxable in the hands of minor.