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ALLAMA IQBAL OPEN UNIVERSITY (Department of Commerce) TAXATION MANAGEMENT (8531) CHECKLIST SEMESTER: AUTUMN, 2018

This packet comprises the following material: 1. 2. 3. 4.

Textbook (One) Course Outline Assignment No. 1,2 Assignment Forms ( 2 sets )

In this packet, if you find anything missing out of the above mentioned material, please contact at the address given below: Mailing Officer Allama Iqbal Open University H-8, Islamabad Moazzam Ali (Course Coordinator)

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ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD (Department of Commerce) [

WARNING 1. 2.

PLAGIARISM OR HIRING OF GHOST WRITER(S) FOR SOLVING THE ASSIGNMENT(S) WILL DEBAR THE STUDENT FROM AWARD OF DEGREE/CERTIFICATE, IF FOUND AT ANY STAGE. SUBMITTING ASSIGNMENTS BORROWED OR STOLEN FROM OTHER(S) AS ONE’S OWN WILL BE PENALIZED AS DEFINED IN “AIOU PLAGIARISM POLICY”.

Course: Taxation Management (8531)

Level: M. Com

Semester: Autumn, 2018

Total Marks: 100 Pass Marks: 50

Note: You are required to solve all questions if you are unable to understand any question of assignment, do seek help from your concerned tutor. But keep in mind that tutors are not supposed to solve the assignment questions for you.

ASSIGNMENT No. 1 Q.1 Discuss in detail the key features of the Federal Excise Duty Act 2005 and the Customs Duty Act 1969. (20) Q.2 a)

What is the withholding tax? Explain its legal provisions as per the Income Tax Ordinance 2001 on withholding tax. (10+10=20) b) Calculate the tax liability of a registered firm ABC where three partners A, B & C are working on equal profit & loss sharing basis: (Assume a 25% rate of tax on profit) Expenses Rs. Revenues Rs. Purchases 312,000 Sales 15,00,000 Wages to labour 50,000 Sales tax refund 100,000 Rent 40,000 Interest on saving 12000 Interest paid to A 10,000 certificate Commission paid to B 15000 Commission paid to C 10000 Salary paid to A 12000 Salary paid to C 14000 Utilities expenses 10000 Sundry expenses 15000 Depreciation 40,000 Net profit 10,084,000 16,12,000 16,12,000 Additional Information: 2

1. 2. 3. 4.

Tax depreciation amounts to Rs. 52000 Legal expenses of Rs.15000 have not been recorded. The sundry expenses include a payment of Rs. 5000 as school fees for children of A & B. The salary paid to partner B has been recorded for Rs.11000.

Q.3 a) Compute the tax liability of X (PVT) Ltd. from the following records. (10+10=20) Expenses Purchases Wages Sundry expenses. Provision for the bad debts. Depreciation Research expenses. Entertainment expenses. Net profit

Rs. 300,000 40,000 5000 10,000

Revenues Sales Interest on debentures

Rs. 900,000 10,000

15000 16000 24000 500,000 910,000

910,000 Additional Information: 1. The tax depreciation amounts to Rs.22000. 2. The sundry expenses include a payment of Rs.3000 for federal excise duty (FED). 3. The research expenses of Rs.4000 do not meet the criteria prescribed by income tax ordinance 2001. 4. The entertainment expenses of Rs.14000 are not allowed by CIR. 5. The corporate income tax rate is 30% & the alternate tax rate is 17%. b) What are the corporate tax credits under the Income Tax ordinance 2001. Explain in detail. Q.4 Calculate the tax liability of Mr. Ali from the following data: (Tax rates are given at the end of the assignment)

No. 1 2 3 4 5 6 7

Item Basic salary Conveyance allowance Utility allowance Overtime House facility is provided to Mr.Ali. His house rent allowance entitlement is Rs. 25,000 per month Medical expenses reimbursed Computer allowance 3

Amount 30,000 per month 6,000 per month 2,500 per month 6,000 per month

15,000 per annum 4,000 per month

(20)

8 9 10 11 12 13 14 15 16

Loan of Rs. 11,00,000 from employer at 0% interest rate Shares gifted to Mr. Ali by his employer Rent received from property Income from vegetable store Sale of shares of public company for Rs. 200,000 after 5 year of acquisition (purchase price Rs. 100,000) Royalty received Zakat paid Donation to a Prime Minister Relief Fund for Earthquake Victims Withholding tax paid in the year

Market value Rs. 15,000 35,000 per month Rs. 125,000 per annum

Rs. 35,000 per annum Rs. 10,000 Rs. 20,000 Rs. 15,000

Q.5 Calculate Sales Tax Due/Refundable in each case: a)

b)

OTEX Ltd, a registered manufactured manufacturer, has reported the following transactions for the month of January 2018 for calculation of sales tax: (20) (1) Supplies to registered person at discount (7%) = Rs.450,000 ( Normal discount) (2) Supplies to a government school as donation = Rs.16,000. (3) Export supplies = Rs. 50,000. (4) Supplies to a non-registered person = Rs.200,000. (5) Purchases from registered person = Rs.110,000. (6) Purchases from non-registered person = Rs.60, 000. (7) Import of raw materials = Rs. 70, 000. (8) Sales tax paid on phone bills = Rs. 7000. (9) Sales for refund due = Rs. 4000 Zity Ltd, a manufactures, has reported the following transactions for the month of October 2018 for calculation of sales tax: (1) Supplier to registered person = Rs, 10,00,000 (2) Supplies to non-registered person Rs. 400,000 (3) Purchases from registered person = Rs. 300,000 (4) Purchases from non-registered person = Rs. 100,000 (5) Imports = Rs. 150,000 (6) Water charges paid = Rs. 50,000 (7) Sales tax paid on electricity bills = Rs. 14,000 (8) Sales Tax refund due from last year = Rs.4000

GUIDELINES FOR ASSIGNMENT # 1 The student should look upon the assignments as a test of knowledge, management skills, and communication skills. When you write an assignment 4

answer, you are indicating your knowledge to the teacher:     

Your level of understanding of the subject; How clearly you think; How well you can reflect on your knowledge & experience; How well you can use your knowledge in solving problems, explaining situations, and describing organizations and management; How professional you are, and how much care and attention you give to what you do.

To answer a question effectively, address the question directly, bring important related issues into the discussion, refer to sources, and indicate how principles from the course materials apply. The student must also be able to identify important problems and implications arising from the answer.

ASSIGNMENT No. 2 Select one of the following topics according to the last digit of your roll number. For example, if your roll number is P-3427180 then you will select issue # 0 (the last digit): TOPICS: 0. 1. 2. 3. 4. 5. 6. 7. 8. 9.

Does sales tax contributes to inflation in Pakistan? Wealth tax as an alternate to income tax in Pakistan Is taxation in Pakistan regressive in nature? Tax frauds in the companies of Pakistan Super tax on the incomes of banking companies in Pakistan The future of capital gains tax in Pakistan FBR, a facilitator or a hurdle in the revenue collection? Alternate tax dispute resolution mechanism The prospects of carbon taxes in Pakistan The benefits of E-Filing system of the FBR

The report should follow the following format: 1. Title page 2. Acknowledgements 3. An abstract (one page summary of the paper) 5

4. 5. 6. 7. 8. 9. 10.

Table of contents Introduction to the issue (brief history & significance of issue assigned) Detailed arguments with supporting data Conclusion (one page brief covering important aspects of your report) Recommendations (specific recommendations relevant to issue assigned) References (as per APA format) Annexes (if any)

GUIDELINES FOR ASSIGNMENT # 2:  1.5 line spacing  Use headers and subheads throughout all sections  Organization of ideas  Writing skills (spelling, grammar, punctuation)  Professionalism (readability and general appearance)  Do more than repeat the text  Express a point of view and defend it. WORKSHOPS The workshop presentations provide students opportunity to express their communication skills, knowledge & understanding of concepts learned during practical study assigned in assignment # 2. You should use transparencies and any other material for effective presentation. The transparencies are not the presentation, but only a tool; the presentation is the combination of the transparencies and your speech. Workshop presentation transparencies should only be in typed format. The transparencies should follow the following format: 1) Title page 2) An abstract (one page summary of the paper) 3) Introduction to the issue (brief history & significance of issue assigned) 4) Practical study (with respect to the issue) 5) Data collection methods 6) Conclusion (one page brief covering important aspects of your report) 7) Recommendations (specific recommendations relevant to issue assigned)

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TAXATION MANAGEMENT (8531) COURSE OUTLINE UNIT 1

UNIT 2

UNIT 3

UNIT 4

UNIT 5

UNIT 6

UNIT 7

Understanding the Tax System of Pakistan 1.1 History of taxation in Sub-Continent 1.2 Evolution of tax system of Pakistan 1.3 Major taxes in Pakistan 1.4 Adam Smith’s Principles of Taxation 1.5 Budgets and taxation 1.6 Society and taxes Income Tax Ordinance 2001: Heads of Income 2.1 Understanding Key Components of Income Tax Ordinance 2001 2.2 Major terms and their definitions under Income Tax Ordinance 2001 2.3 Salary and its taxation 2.4 Income from property 2.5 Income from business 2.6 Capital gains 2.7 Income from other sources Income from Business : Non-Salaried Individual 3.1 Non-Salaried Individuals and their incomes 3.2 Taxation of incomes of non-salaried individuals 3.3 Taxation of income of traders 3.4 Tax credits, deductions and set-off of loses 3.5 Income tax return requirements for Non-Salaried Persons Income from Business: Association of Persons 4.1 Forms of Associations of Persons in Pakistan 4.2 Incomes of AOPs in Pakistan 4.3 Taxation of incomes of AOPs 4.4 Tax credits and deductions allowed to AOPs 4.5 Income tax return requirements for AOPs Income from Business: Companies 5.1 Companies and their incomes 5.2 Reporting of incomes in accounting format 5.3 Taxation of incomes of companies 5.4 Understanding capital and revenue expenses and receipts 5.5 Adjusting accounting & taxation incomes 5.6 Income tax return requirement for companies Tax Credits, Deductions, Exemptions and Loss Adjustments for Companies 6.1. Tax credits for companies under Income Tax Ordinance 2001 6.2. Deductions allowed to companies 6.3. Understanding exemptions for companies 6.4. Rules for set-off and carry-forward of losses Withholding Taxes & Advance Taxes 7.1. Nature and form of withholding tax u/d Income Tax Ordinance 2001 7.2. Withholding tax on certain transactions 7.3. Schedule of withholding tax for companies and AOPs 7.4. Procedure for deduction and deposit of withholding tax 7.5. Withholding tax statement 7.6. Advance tax u/d Income Tax Ordinance 2001 7.7. Schedule of advance tax 7

UNIT 8

UNIT 9

Customs Duties Act 1969 8.1. Customs Duties and their forms in Pakistan 8.2. Registration requirements for importers 8.3. Rates of customs duties 8.4. Customs Authorities in Pakistan 8.5. Documents required for customs clearance 8.6. Return filing under Customs Duty Act 1969 8.7. Exemptions under Customs Duty Act 1969 Sales Tax Act 1990 & Federal Excise Act 2005 8.1. Sales tax and its application in corporate sector 8.2. Registration under Sales Tax Act 1990 8.3. Sales Tax Return Filing 8.4. Exemptions under Sales tax Act 1990 8.5. Excise Duties and their forms in Pakistan 8.6. Registration requirements for various persons 8.7. Rates of excise duties 8.8. Return filing under Federal Excise Act 2005 8.9. Exemptions under Federal Excise Act 2005

Recommended Books (Latest Editions) 1. 2. 3. 4. 5. 6. 7.

Income Tax Ordinance 2001 Federal Excise Act 2005 Sales tax Act 1990 Customs Duties Act 1969 Federal Budget, Govt. Of Pakistan (Latest) Business Taxation by Moazzam Ali Tarar, Azeem Academy, Lahore. Synopsis of Taxes in Pakistan, Mirza Munawar Hussain, Waheid Pbl;ishers, Lahore.

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Taxable Income Rate of tax (2) (3) Where the taxable income does not exceed Rs.400,000 0% Where the taxable income exceeds Rs.400,000 but does 2% of the amount exceeding not exceed Rs.500,000 Rs.400,000 3. Where the taxable income exceeds Rs.500,000 but does Rs. 2000 + 5% of the amount not exceed Rs.750,000 exceeding Rs.500,000 4. Where the taxable income exceeds Rs.750,000 but does Rs.14,500 + 10% of the amount not exceed Rs.1,400,000 exceeding Rs.750,000 5. Where the taxable income exceeds Rs.1,400,000 but does Rs. 79,500 + 12.5% of the not exceed Rs.1,500,000 amount exceeding Rs.1,400,000 6. Where the taxable income exceeds Rs.1,500,000 but does Rs. 92,000 + 15% of the amount not exceed Rs.1,800,000 exceeding SCHEDULE OF TAX RATES FOR THE TAX YEAR 2017-18 FOR SALARIED PERSONS (1) 1. 2.

AIOU-AS-280(18)PPU-14-9-2018-300

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