ACCA Pakistan Taxation (TX-PKN) and Pakistan Tax Syllabus

Taxation (TX-PKN) and Pakistan Tax syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Taxation (TX-PKN) and Pakistan Tax in ACCA Pakistan, not a summary of it.

1. 1

   The Pakistan Tax System and Administration

   4 topics

   • Federal Board of Revenue (FBR)
   • Income Tax Ordinance 2001 Framework
   • Tax Year and Residential Status
   • Filing, Assessment and Appeals
2. 2

   Income from Salary

   3 topics

   • Scope of Salary Income
   • Allowances and Perquisites
   • Tax Credits and Deductible Allowances
3. 3

   Income from Property and Business

   2 topics

   • Income from Property
   • Income from Business
4. 4

   Capital Gains and Other Sources

   3 topics

   • Capital Gains Taxation
   • Income from Other Sources
   • Set-Off and Carry Forward of Losses
5. 5

   Taxation of Companies and AOPs

   3 topics

   • Computation of Company Taxation
   • Minimum Tax and Alternative Corporate Tax
   • Association of Persons
6. 6

   Withholding Taxes and Advance Tax

   3 topics

   • Withholding Tax Regime
   • Final and Minimum Tax Regimes
   • Advance Tax Payments
7. 7

   Sales Tax

   3 topics

   • Sales Tax Act 1990 Framework
   • Input and Output Tax
   • Zero-Rated and Exempt Supplies

Taxation (TX-PKN) and Pakistan Tax flashcards for ACCA Pakistan

24 of 50 cards from the Taxation (TX-PKN) and Pakistan Tax deck — real questions with worked answers.

1. What is the Federal Board of Revenue (FBR) and what is its primary function in Pakistan?

   The FBR is the apex federal revenue authority responsible for administering and collecting federal taxes in Pakistan, including income tax, sales tax, federal excise duty and customs. It enforces tax laws, issues rules/circulars (SROs), and is supervised by the Federal Government under the FBR Act 2007.

2. Which statute governs the levy and collection of income tax in Pakistan, and from when did it take effect?

   The Income Tax Ordinance 2001 (ITO 2001), effective from tax year 2003 (1 July 2002), supplemented by the Income Tax Rules 2002.

3. What are the heads of income under Section 11 of the Income Tax Ordinance 2001?

   Five heads: (1) Salary, (2) Income from Property, (3) Income from Business, (4) Capital Gains, and (5) Income from Other Sources. Total income is the sum of income under all heads.

4. Define 'tax year' under the Income Tax Ordinance 2001.

   A normal tax year is the 12-month period ending on 30 June, denoted by the calendar year in which it ends (e.g. year ended 30 June 2026 = tax year 2026). A special tax year is any other 12-month period approved by the FBR/Commissioner.

5. What is the difference between a normal tax year and a special tax year?

   A normal tax year ends 30 June. A special tax year is a 12-month period ending on any other date, allowed for certain businesses (e.g. seasonal industries) with Commissioner approval. The special tax year is denoted by the normal tax year in which its closing date falls.

6. When is an individual a resident person in Pakistan for a tax year?

   An individual is resident if present in Pakistan for 183 days or more in the tax year, OR is an employee/official of the Federal or Provincial Government posted abroad during the tax year.

7. When is a company treated as a resident in Pakistan for a tax year?

   A company is resident if it is incorporated/formed under any Pakistani law, OR its control and management of affairs is situated wholly in Pakistan at any time in the year, OR it is a Provincial/Local Government.

8. How is residential status of an Association of Persons (AOP) determined?

   An AOP is resident for a tax year if the control and management of its affairs is situated wholly or partly in Pakistan at any time during the year.

9. What is the difference in tax scope between a resident and a non-resident person?

   A resident is taxed on world-wide income (Pakistan-source and foreign-source). A non-resident is taxed only on Pakistan-source income.

10. What is the difference between a filer and a non-filer in Pakistan tax law?

    A filer is a person whose name appears on the Active Taxpayers List (ATL) for having filed the required return. A non-filer is not on the ATL and is subject to higher withholding tax rates and certain restrictions/surcharges.

11. What is a 'universal self-assessment' under Section 120 of the ITO 2001?

    When a taxpayer files a complete return of income, it is automatically treated as an assessment order issued by the Commissioner on the day the return is furnished — no separate assessment order is required unless the return is amended or selected for audit.

12. Under the ITO 2001, what is the order of the income tax appeal hierarchy?

    (1) Commissioner (Appeals) / Appellate Tribunal as first appeal, (2) Appellate Tribunal Inland Revenue (ATIR), (3) Reference to the High Court (on questions of law), (4) Appeal to the Supreme Court of Pakistan.

13. What is an amended assessment under Section 122 of the ITO 2001?

    The Commissioner may amend (or further amend) an assessment to correct it where income has escaped assessment, generally within 5 years of the original assessment, after giving the taxpayer an opportunity to be heard.

14. What is the scope of salary income under Section 12 of the ITO 2001?

    Salary includes any amount received from employment, whether of a revenue or capital nature — pay, wages, leave pay, overtime, bonus, commission, gratuity, perquisites, allowances, and amounts in lieu of/in addition to salary or wages.

15. On what basis is salary income taxed in Pakistan — receipt or accrual?

    Salary is taxed on a receipt basis — it is chargeable in the tax year in which it is actually received by the employee, regardless of the period to which it relates.

16. How is the value of motor vehicle perquisite provided by an employer computed for salary income?

    If used partly for personal purposes: 5% of the cost (or fair market value at lease commencement) of the vehicle. If used wholly for private use: 10% of the cost / FMV. This amount is added to the employee's salary income.

17. How is accommodation provided by an employer valued for salary tax purposes?

    The amount that would have been paid had accommodation not been provided, but not less than 45% of the Minimum of Time Scale (MTS) or the basic salary where there is no time scale.

18. What is the tax treatment of an interest-free or concessional loan provided by an employer to an employee?

    If the loan exceeds Rs 1,000,000, the benefit is the difference between the benchmark rate (10% per annum) and the rate actually charged, added to salary. Loans up to Rs 1,000,000 are exempt.

19. Distinguish between an 'allowance' and a 'perquisite' in salary income.

    An allowance is a fixed monetary amount paid to the employee (e.g. house rent, conveyance, utilities), generally fully taxable. A perquisite is a non-cash benefit/facility provided by the employer (e.g. car, accommodation, loan), valued under prescribed rules and added to salary.

20. Name two deductible allowances available to an individual under the ITO 2001.

    (1) Deductible allowance for Zakat paid under the Zakat & Ushr Ordinance, and (2) deductible allowance for profit/interest on a house loan and Workers' Welfare Fund contributions (subject to limits). These reduce taxable income.

21. What is the difference between a tax credit and a deductible allowance?

    A deductible allowance is subtracted from total income before computing tax (reduces taxable income). A tax credit is subtracted from the tax liability itself (reduces tax payable), generally computed as: (tax assessed / taxable income) × eligible amount.

22. How is the tax credit for charitable donations to approved institutions computed under Section 61?

    Tax credit = (A/B) × C, where A = tax assessed before credit, B = taxable income, and C = the lower of the donation amount or 30% of taxable income (15% for associates). It reduces the tax payable.

23. What is the tax credit available to a non-profit organisation / approved NPO under the ITO 2001?

    Approved NPOs, trusts and welfare institutions are eligible for a 100% tax credit on their income (effectively exempt), provided they comply with conditions such as filing returns, maintaining accounts and using income for the approved purpose.

24. What is the basis of charge for Income from Property under Section 15 of the ITO 2001?

    Rent received or receivable by the owner from the lease of land or buildings is chargeable as Income from Property. The taxable amount is the higher of actual rent or the fair market rent.

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