BUSINESS TAXATION MCQs

BUSINESS TAXATION MCQs

Chapter 01: BASIC TAXATION

Question No: 1

A/An_________ is one that the taxpayer pays directly to the government. These
taxes cannot be shifted to any other person or group. (i.e. Income Tax, Corporate
Income Tax, Property Tax)

a. Indirect tax
b. Direct tax
c. Final tax regime
d. Normal tax regime

Question No: 2

A/An _________ is one that can be passed on-or shifted-to another person or
group by the person or business that owes it. (i.e. sales tax)

a. Indirect tax
b. Direct tax
c. Final tax regime
d. Normal tax regime

Question No: 3

A_______ is a compulsory financial charge or some other type of levy imposed on a

taxpayer (an individual or legal entity) by a governmental organization in order to fund
government spending and various public expenditures.

a. Salary
b. Profit
c. Interest
d. Tax

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Question No: 4

FBR has the responsibility for ________________

a. Formulation and administration of fiscal policies

b. Levy and collection of federal duties, taxes and other levies
c. Quasi-judicial function of deciding taxation cases and appeals
d. All of the above

Question No: 5

Person shall include

a. An individual
b. Company or Association of persons (AOP) incorporated, formed,
organized or established in Pakistan or elsewhere
c. The Federal Government
d. A foreign government, a political subdivision of a foreign government
e. Public international organization
f. All are correct

Question No: 6

Association of persons (AOP)” includes

a. Firm
b. Hindu undivided family
c. Any artificial juridical person
d. Anybody of persons formed under a foreign law, but does not include a
company
e. All are correct

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Question No: 7

Company means

a. A company as defined in the Companies Act 2017

b. A body corporate formed by or under any law in force in Pakistan; 3. A
Modaraba
c. A body incorporated by or under the law of a country outside Pakistan
relating to incorporation of companies
d. A co-operative society, a finance society or any other society
e. A non-profit organization
f. A Provincial Government
g. A Local Government in Pakistan;
h. A Small Company as defined in section 2
i. A trust, an entity or a body of persons established or constituted by or under
any law for the time being in force
j. A foreign association, whether incorporated or not, which the Board has
declared to be a company for the purposes of this Ordinance
k. All are correct

Question No: 8

An individual shall be a resident individual for a tax year if the individual is present
in Pakistan for a period of, or periods amounting in aggregate to, _______ days or
more in the tax year

a. 120
b. 180
c. 183
d. 90

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Question No: 9

An individual shall be a resident individual for a tax year

a. Is present in Pakistan for a period of, or periods amounting in aggregate to,

183 days or more in the tax year
b. Is present in Pakistan for a period of 120 or more in the tax year and, in the
four years preceding the tax year, has been in Pakistan for a period of 365
days or more
c. Is an employee or official of the Federal Government or a Provincial
Government posted abroad in the tax year
d. All are absolutely correct

Question No: 10

The income of a resident person under a head of income shall be computed by

taking into account amounts that are _______________

a. Pakistan-source income
b. Foreign-source income.
c. Both A & B
d. None of the above

Question No: 11

The income of a non-resident person under a head of income shall be computed

by taking into account amounts that are _______________

a. Pakistan-source income
b. Foreign-source income.
c. Both A & B
d. None of the above

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Question No: 12

Part of a day that an individual is present in Pakistan (including the day of arrival in,
and the day of departure from, Pakistan) counts as a whole day of such presence.
Rules sec (82)

a. True
b. False

Question No: 13

A day or part of a day where an individual is in Pakistan solely by reason of being

in transit between two different places outside Pakistan does not count as a day
present in Pakistan.
Rules sec (82)

a. True
b. False

Question No: 14

______________is a period of twelve months ending on the 30th day of June and
is denoted by the calendar year in which the said date falls.
i.e. (01 July 2020 to 30 June 2021, tax year 2021)

a. Normal tax year

b. Special tax year
c. Transitional tax year
d. All are correct

Question No: 15

where a person is allowed to use a twelve months’ period different from normal
tax year such period shall be referred to as ‘__________ and shall be denoted by
the calendar year relevant to normal tax year in which the closing date of the
_________ falls.
i.e. (01 Jan 2020 to 31 Dec 2020, tax year 2020)

a. Normal tax year

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b. Special tax year

c. Transitional tax year
d. All are correct

Question No: 16

Where the tax year of a person changes from the normal tax year to special tax
year or vice versa, the period between the end of the last tax year prior to
change and the date on which the changed tax year commences shall be
treated as a ______________
i.e. (01 April 2020 to 31 March 2021 & 01 July 2020 to 30 June 2021)
3 months period ka tax alag se charge hoga

a. Normal tax year

b. Special tax year
c. Transitional tax year
d. All are correct

Question No: 17

A person may apply to the __________for change of tax year from normal tax year
to special tax year or from special tax year to normal tax year

a. FBR
b. SECP
c. Commissioner
d. None of the above

Question No: 18

Which of the following is not a head of income as per income tax ordinance 2001

a. Salary
b. House property (rent)
c. Income from business (profit)
d. Sales revenue
e. Income from capital gains (investment income)
f. Income from other sources
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Question No: 19

A person will be a Salaried Individual if

a. Salary exceed 50% of the total income

b. Salary exceed 75% of the total income
c. Salary is less than 75% of the total income
d. Salary is less than 50% of the total income

Question No: 20

A person will be a Non-Salaried Individual if

a. Salary exceed 50% of the total income

b. Salary exceed 75% of the total income
c. Salary is less than 75% of the total income
d. Salary is less than 50% of the total income

Question No: 21

Dividend income is chargeable to

a. Normal tax regime (NTR)

b. Separate block
c. Final tax regime FTR)
d. None of the above

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Question No: 22

Normal tax regime is also known as

a. Net income basis

b. Gross income basis
c. Presumptive tax regime
d. All of the above

Question No: 23

Final tax regime is also known as

a. Net income basis

b. Gross income basis
c. Presumptive tax regime
d. Both B & C

Data relates to Question No: 24 - 26

Waqas is resident individual and the details of his Incomes under different
heads of incomes during the year ended 30 June 2021 are as under:
1. Annual Salary received from Ismail Limited Rs 9,500,000
2. Received Rs 700,000 from letting out one of his house in Madina Town.
3. He gained taxable profit of Rs 800,000 from his private business
activities.
4. During this Tax year he obtained gain by disposing of following Capital
Assets
a) Private Company Shares Rs 100,000
b) 2 Tola Gold Set Rs 150,000
c) Painting/Drawing Sec 38(5) Rs 10,000
d) House in Susan Road Rs 1,000,000
e) Public Company Shares 70,000
5. He also received following payments during this tax year
A payment of Rs 170,000 as a dividend from ABC Limited and this
payment was Disbursed after deduction of 15% Tax.

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Question No: 24

What will be the total amount charged to Final tax regime (FTR)

a. Rs. 170,000
b. Rs. 200,000
c. Rs. 195,500
d. Rs. 145,500

Question No: 25

What will be the total amount charged to separate block

a. Rs. 1,770,000
b. Rs. 12,530,000
c. Rs. 200,000
d. Rs. 10,560,000

Question No: 26

What will be the total amount charged to Normal tax regime (NTR)

a. Rs. 1,770,000
b. Rs. 12,530,000
c. Rs. 200,000
d. Rs. 10,560,000

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Question No: 27

Anees is resident individual, his income under Normal Tax regime

during the year ended 30 June 2021 is Rs. 10,000,000
Deductible Allowances
 Anees paid Zakat Rs 100,000 under Zakat and usher ordinance.
 Anees obtained a loan of Rs. 5 million from a scheduled bank at 15%
mark-up per annum to acquire a residential house and he paid
markup of Rs 700,000 during tax year.

What is the amount of taxable income?

a. Rs. 1,770,000
b. Rs. 12,530,000
c. Rs. 9,200,000
d. Rs. 10,000,000

Question No: 28

Deductions are only allowed to be done from_________

a. Normal tax regime (NTR)

b. Separate block
c. Final tax regime FTR)
d. None of the above

Question No: 29

The ___________of a person for a tax year shall be the total income of the person
for the year reduced (but not below zero) by the total of any deductible
allowances for that year under Income Tax Ordinance 2001.

a. Normal tax regime (NTR)

b. Total Income
c. Final tax regime FTR)
d. Taxable Income

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Question No: 30

Total Income of Mr. Akbar is Rs. 2,000,000

Salary = Rs. 1,450,000
Golden shake hand = Rs. 200,000
Property Income = Rs. 125,000

a. Mr. Akbar is a non- salaried individual

b. Mr. Akbar is a salaried individual
c. Both A & B
d. Neither A nor B

Question No: 31

Which of the following income is not chargeable to separate block

a. Income from property

b. Gain on disposal of immovable Property
c. Profit on debt
d. Gain on disposal of Securities

Question No: 32

Which of the following income is not chargeable to Final tax regime (FTR)

a. Income from property

b. Salary
c. Profit on debt
d. Fee for technical services earned by non-resident

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Question No: 33

Income subject to final tax are those which are subject to collection or deduction
of tax at source and the tax so collected or deducted at source is treated as
________ on the income arising from such transactions.

a. Normal tax regime (NTR)

b. Separate block
c. Final tax regime FTR)
d. None of the above

Question No: 34

The amount of _______________income is not reduced by

a) Any deductible allowance
b) The set off of any loss
c) The tax deducted is not reduced by any tax credit

a. Normal tax regime (NTR)

b. Separate block
c. Final tax regime FTR)
d. Both B & C

Question No: 35

A _______is an amount of money that taxpayers can subtract directly from taxes
owed to their government. Unlike deductions, which reduce the amount of taxable
income, ________ reduce the actual amount of tax owed.

a. Taxable income
b. Tax credit
c. Deductible allowances
d. Tax losses

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Question No: 36
Ali is resident individual, his taxable income during the year ended 30
June 2021 is Rs. 9,460,000
Tax Credit
 Ali is also partner in a business and during this tax year he received
Rs1000,000 as Share from this AOP
 Donation paid to NGO by cross cheque of Rs 300,000. Mr. Ali also
donated his Picanto Car to another NGO that he was purchased 2 year
ago at 1,700,000 the fair market value of that car at time of transfer
was 1,900,000.
What will be the amount of Tax Liability?

a. Rs. 1,360,383
b. Rs. 10,460,000
c. Rs. 1,960,000
d. Rs. 1,772,620

Question No: 37

In case a taxpayer has made investment in shares and life insurance during a tax
year, he will be entitled for only one tax credit that is ______of both amounts

a. Difference
b. Lower
c. Higher
d. Proportion

Question No: 38

The person has made a disposal of the share within ________ months of the date
of acquisition, then the amount of tax payable by the person for the tax year in which
the shares were disposed of shall be increased (add) by the amount of the credit
allowed

a. 12 months
b. 6 months
c. 16 months
d. 24 months

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ANSWERS
1. B
2. A
3. D
4. D
5. F
6. E
7. K
8. C
9. D
10. C
11. A
12. A
13. A
14. A
15. B
16. C
17. C
18. D
19. B
20. C
21. C
22. A
23. D
24. B
25. A
26. D
27. C
28. A
29. D
30. B
31. C
32. B
33. C
34. D
35. B
36. A
37. C
38. D

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