CSS Accounting and Auditing Business Taxation and Company Law Syllabus

Business Taxation and Company Law syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Business Taxation and Company Law in CSS Accounting and Auditing, not a summary of it.

1. 1

   Principles of Income Tax

   4 topics

   • Concept and Heads of Income
   • Resident and Non-Resident Status
   • Total Income and Taxable Income
   • Exemptions and Tax Credits
2. 2

   Income Tax Ordinance 2001

   4 topics

   • Salient Features and Definitions
   • Computation of Tax Liability
   • Withholding Tax and Advance Tax
   • Returns, Assessment and Appeals
3. 3

   Sales Tax and Indirect Taxes

   4 topics

   • Sales Tax Act 1990 Overview
   • Input and Output Tax Adjustment
   • Registration and Filing
   • Federal Excise Duty Basics
4. 4

   Taxation of Business Entities

   3 topics

   • Taxation of Individuals and AOPs
   • Taxation of Companies
   • Capital Gains and Other Sources
5. 5

   Company Law

   4 topics

   • Companies Act 2017 Overview
   • Formation and Types of Companies
   • Memorandum and Articles of Association
   • Statutory Books and Returns

Business Taxation and Company Law flashcards for CSS Accounting and Auditing

25 of 51 cards from the Business Taxation and Company Law deck — real questions with worked answers.

1. Under the Income Tax Ordinance 2001 (Pakistan), what are the five heads of income under which total income is classified?

   (1) Salary, (2) Income from Property, (3) Income from Business, (4) Capital Gains, and (5) Income from Other Sources.

2. How does the Income Tax Ordinance 2001 define 'income'?

   Income includes any amount chargeable to tax under the Ordinance, any amount subject to deduction/collection of tax as final/minimum tax, any loss of income, and amounts treated as income under any provision. It is an inclusive definition covering every head of income.

3. What is the criterion for a resident individual in Pakistan for a tax year under the Income Tax Ordinance 2001?

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

4. When is a company treated as a resident company in Pakistan under the Income Tax Ordinance 2001?

   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 in Pakistan.

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

   A resident is taxed on worldwide income (Pakistan-source plus foreign-source income), whereas a non-resident is taxed only on Pakistan-source income.

6. When is an Association of Persons (AOP) considered resident in Pakistan for a tax year?

   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 that year.

7. Define 'Total Income' under the Income Tax Ordinance 2001.

   Total Income is the sum of a person's income under all five heads of income (Salary, Property, Business, Capital Gains, Other Sources), including income subject to final/separate taxation, computed for a tax year.

8. How is 'Taxable Income' derived from Total Income under the Income Tax Ordinance 2001?

   $\text{Taxable Income} = \text{Total Income} - \text{Deductible Allowances}$ (such as Zakat paid, Workers' Welfare Fund, and certain approved allowances). Taxable income is the amount on which tax rates are applied.

9. What is the difference between an 'exemption' and a 'tax credit' under the Income Tax Ordinance 2001?

   An exemption removes a particular income from being charged to tax altogether (it is excluded from total income), whereas a tax credit reduces the amount of tax payable after tax on taxable income has been computed.

10. Give three examples of incomes exempt from tax under the Income Tax Ordinance 2001.

    Examples include: agricultural income (taxed by provinces), income of approved pension/gratuity funds, certain allowances of government employees, income of charitable/non-profit organizations meeting conditions, and profit on certain government securities/Behbood certificates (concessionary).

11. Name three categories of tax credits available to individuals under the Income Tax Ordinance 2001.

    Tax credit for charitable donations (Sec 61), tax credit for investment in approved pension funds (Sec 63), and tax credit for persons employing fresh graduates / certain enlisted entities. (Historically also investment in shares and insurance premiums.)

12. What is a 'tax year' under the Income Tax Ordinance 2001 and what is the normal tax year?

    A tax year is the period for which income is computed. The Normal Tax Year is the 12-month period ending on 30 June, denoted by the calendar year in which it ends. A Special Tax Year is any 12-month period approved by the FBR/Commissioner different from the normal year.

13. Distinguish between a 'filer' and a 'non-filer' under Pakistan's income tax regime.

    A filer is a person whose name appears on the FBR's Active Taxpayers List (ATL) for having filed the return for the relevant year; a non-filer is not on the ATL and is subjected to higher (enhanced) withholding tax rates on many transactions.

14. What is the basic formula to compute an individual's tax liability after determining taxable income?

    $$\text{Tax Liability} = (\text{Taxable Income} \times \text{Applicable Slab Rate}) - \text{Tax Credits} - \text{Taxes Already Paid/Withheld}$$

15. In Pakistan's salaried individual tax regime, how is tax computed when income falls within a progressive slab?

    Tax equals the fixed amount specified for the lower threshold of the slab plus a stated percentage of the amount by which taxable income exceeds that threshold (progressive slab system).

16. What is 'Withholding Tax' (WHT) and who is responsible for it under the Income Tax Ordinance 2001?

    Withholding tax is tax deducted/collected at source by a 'withholding agent' (e.g., employer, bank, buyer/payer) from a payment, who must deposit it to the government on behalf of the recipient and file withholding statements.

17. Distinguish between 'final tax', 'minimum tax' and 'adjustable' withholding tax.

    Final tax: the WHT discharges the full liability and the income is not further taxed. Minimum tax: the WHT is the minimum payable even if normal tax is lower; excess normal tax over it is payable. Adjustable: the WHT is credited against the final computed liability and any excess is refundable.

18. What is 'Advance Tax' under Section 147 of the Income Tax Ordinance 2001 and when is it paid?

    Advance tax is tax paid by the taxpayer in quarterly installments during the tax year (by 25th of Sept, Dec, March and 15th of June) based on estimated/preceding-year income, adjustable against the final liability.

19. What is the due date for filing the income tax return for a company versus an individual/AOP in Pakistan (normal cases)?

    Individuals and AOPs: generally by 30 September following the tax year. Companies with a normal tax year: by 31 December; companies with a special tax year (or year-end falling 1 Jan–30 Jun): by 30 September.

20. What is a 'Best Judgment Assessment' under the Income Tax Ordinance 2001?

    It is an assessment (Sec 121) made by the Commissioner to the best of their judgment when a person fails to furnish a return, statement, documents, or comply with a notice—based on available information and material.

21. Describe the appeal hierarchy under the Income Tax Ordinance 2001.

    Order of the Commissioner → appeal to the Commissioner (Appeals) → appeal to the Appellate Tribunal Inland Revenue (ATIR) → reference to the High Court (on question of law) → appeal to the Supreme Court of Pakistan.

22. What is 'Universal Self-Assessment' under Section 120 of the Income Tax Ordinance 2001?

    Under Section 120, a return of income filed by a taxpayer is treated as a complete assessment order issued by the Commissioner on the day it is furnished—i.e., the taxpayer self-assesses and the return is deemed an assessment.

23. What is the scope of the Sales Tax Act 1990 (Pakistan)?

    It governs the levy, collection, and administration of sales tax on taxable supplies of goods made in Pakistan and on goods imported into Pakistan, administered by the Federal Board of Revenue (FBR).

24. Define 'taxable supply' under the Sales Tax Act 1990.

    A taxable supply is a supply of taxable goods made by a registered person in the course or furtherance of any taxable activity, other than a supply of exempt goods. (Includes supplies on which the rate is zero.)

25. What is the standard rate of sales tax under the Sales Tax Act 1990, and how is output tax computed?

    The standard rate is 18%. $$\text{Output Tax} = \text{Value of Taxable Supply} \times 18\%$$

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