ADVANCED TAXATION

Summary of Marking Key

Certified Finance and Accounting Professional Examination – Summer 2021

Note regarding marking scheme:

The marking scheme is given as a guide. However, markers also award marks for alternative
approaches to a question and relevant/well-reasoned comments/explanations. Moreover, the
available marks in answer may exceed the total marks of a question.

Mark(s)
A.1 (a)
Identifying the amount on which withholding tax was to be collected by
MPL 1.0

Identifying the components of gross rent and the amounts on which
withholding was to be deducted by MPL 2.0

Identifying the circumstances under which withholding is not required
when goods are purchased from the importer 2.0

Giving correct reason for non-withholding of tax from profit on debt paid
to a Pakistani bank 1.0

Giving correct reason for non-collection of tax from sale of pesticides to
retailers 2.0

Up to 01 mark for explaining the consequences 2.0

(b)
Discussing the tax treatment of the income of the foreign contractor 5.0

Discussing the tax treatment of the income of the sub-contractor 2.0

A.2 Comments on the treatment of each of the following:

Adjustment of sales tax and credit for tax deducted at source 3.0

Awards received from the President and health minister 2.0

Service charges deducted from the tax withheld from suppliers and treated as
income 2.0

Payment against purchase of raw material without deduction of withholding
tax 1.0

Expenses incurred on account of training of a Pakistani citizen 1.0

Inter-corporate dividend received from a subsidiary within the group 5.0

Government grant received against purchase of a new machinery 6.0

Default surcharge 5.0

A.3
Identification of foreign controllers 3.0

Computation of total equity at the beginning of the year and calculation of
foreign equity share in the equity of CPL 3.0

Identification of debts falling within the ambit of thin capitalization rule 1.0

Computation of profit on debts 3.0

Computation of deductible profit on debt under section 106 2.0

Computation of deductible profit on debt under section 106A 3.0

Decision with regard to the admissibility of deduction under sections 106 or
106A 1.0

A.4
Up to 01 mark for the correct treatment of each item of input/output sales tax 8.0

Up to 01 mark for each exemption/exclusion/disallowance 6.0

Computation of withholding tax, further tax, sales tax payable and input tax to
be carried forward 6.0

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 ADVANCED TAXATION
Summary of Marking Key
Certified Finance and Accounting Professional Examination – Summer 2021

Mark(s)
A.5 (a)
Discussion on Mukhtar’s contention of not getting registration as a Tier-1
retailer and continue to pay sales tax on monthly electricity bill 3.0

Discussion on Mukhtar’s registration as a manufacturer cum retailer after
acquisition of another meat shop 3.0

(b)
Advise with regard to filing of sales tax return 1.5

Advise with regard to consequences of non-filing of sales tax return 1.5

A.6
Identification of the breach of fundamental principles of code of ethics 1.0

Identification of the potential threats 2.0

Suggestion of safeguards to minimize/mitigate the threats 2.0

A.7 (a)
Advise with regard to payment of excise duty on services rendered by CBI 1.5

Computation of excise duty payable by CPL 3.5

(b)
Identification of time of payment of duty in case of biscuits and cookies 1.5

Identification of time of payment of duty in case of beverages and Choco
Chip cookies 1.5

(THE END)

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