CSS Accounting and Auditing Business Taxation and Company Law Syllabus

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.

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.

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).

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.)

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

Define 'Input Tax' and 'Output Tax' under the Sales Tax Act 1990.

Input tax is the sales tax paid by a registered person on goods/services acquired (purchases/imports) for taxable activity. Output tax is the sales tax charged on taxable supplies made by the registered person to customers.

How is the net sales tax payable to the government computed under the Sales Tax Act 1990?

$$\text{Sales Tax Payable} = \text{Output Tax} - \text{Input Tax (adjustable)}$$ If input tax exceeds output tax, the excess is carried forward or refunded subject to conditions.

What is the limit on input tax adjustment for a registered person under the Sales Tax Act 1990?

A registered person may deduct input tax up to a maximum of 90% of the output tax for that tax period (the input tax adjustment cap), with the excess carried forward; certain inputs are wholly inadmissible.

What is a 'zero-rated supply' versus an 'exempt supply' under the Sales Tax Act 1990?

Zero-rated supply: taxed at 0%; the supplier charges no output tax but CAN claim/refund input tax (e.g., exports). Exempt supply: no sales tax is charged AND input tax related to it is NOT claimable.

Who is required to register under the Sales Tax Act 1990?

Manufacturers, importers, wholesalers, distributors, retailers (meeting thresholds), and exporters/persons making taxable supplies who are required by the Act—generally anyone engaged in making taxable supplies in the course of a taxable activity must register with the FBR.

What is the due date for filing the monthly sales tax return and depositing the tax under the Sales Tax Act 1990?

The sales tax return is filed monthly; tax is generally deposited by the 15th and the return filed by the 18th of the month following the tax period (a tax period being one month).

What is a 'tax invoice' under the Sales Tax Act 1990 and why is it important?

A tax invoice is the document a registered person must issue for a taxable supply showing supplier/buyer details, registration numbers, description, value, and sales tax charged. It is the legal basis for claiming input tax credit.

What is Federal Excise Duty (FED) and under which law is it levied in Pakistan?

FED is a duty levied under the Federal Excise Act 2005 on the production/manufacture of specified goods in Pakistan, import of goods, and provision of certain services (e.g., tobacco, cement, beverages, air travel, telecom services).

On what basis can Federal Excise Duty be charged under the Federal Excise Act 2005?

FED may be charged on an ad valorem basis (a percentage of the value/retail price) or on a specific basis (a fixed amount per unit/quantity, e.g., per kg, per cigarette, per litre), as specified for each item.

What is the 'VAT mode' of Federal Excise Duty under the Federal Excise Act 2005?

For certain goods/services, FED is collected like sales tax in VAT mode—duty paid on inputs is adjustable against duty on outputs, integrating FED with the sales tax system.

How is an Association of Persons (AOP) taxed under the Income Tax Ordinance 2001, and how are members treated?

An AOP is taxed as a separate entity at AOP slab rates on its taxable income; the share of profit received by a member from a taxed AOP is generally exempt in the member's hands (to avoid double taxation) but may be included for rate purposes.

How are companies taxed under the Income Tax Ordinance 2001 — what is the standard corporate tax rate?

The standard corporate tax rate is 29% of taxable income for companies (with banking companies and small companies taxed at different rates—small company rate being lower, e.g., 20%). Companies are also subject to super tax and minimum tax where applicable.

What is 'Minimum Tax on Turnover' under Section 113 of the Income Tax Ordinance 2001?

Where a company's (or certain persons') normal tax is less than a prescribed percentage of turnover (generally 1.25%), it must pay that percentage of turnover as minimum tax. $$\text{Minimum Tax} = \text{Turnover} \times 1.25\%$$

What is a 'small company' as defined in the Income Tax Ordinance 2001?

A small company is a company registered on/after 1 July 2005, with paid-up capital plus undistributed reserves not exceeding Rs. 50 million, annual turnover not exceeding Rs. 250 million, employees not exceeding 250, and not formed by splitting up an existing business.

How is a 'capital gain' computed under the Income Tax Ordinance 2001?

$$\text{Capital Gain} = \text{Consideration Received on Disposal} - \text{Cost of the Capital Asset}$$ For assets (other than securities/immovable property) held more than one year, only 75% of the gain is taxable (a 25% reduction).

What are examples of 'Income from Other Sources' under the Income Tax Ordinance 2001?

Dividends, profit on debt (interest), royalties, ground rent, rent from sub-letting, annuities/pensions not from former employer, prize bond/lottery winnings, and any income not falling under the other four heads.

What is the scope and purpose of the Companies Act 2017 (Pakistan)?

The Companies Act 2017 governs the incorporation, regulation, management, and winding-up of companies in Pakistan. It is administered by the Securities and Exchange Commission of Pakistan (SECP) and replaced the Companies Ordinance 1984.

Define a 'company' under the Companies Act 2017.

A company is a body corporate formed and registered under the Companies Act 2017 (or an existing company formed under prior company law)—a separate legal entity distinct from its members with perpetual succession and a common seal.

What are the main types of companies based on liability under the Companies Act 2017?

(1) Company limited by shares, (2) Company limited by guarantee (with or without share capital), and (3) Unlimited company (members have unlimited liability).

Distinguish between a private company and a public company under the Companies Act 2017.

A private company restricts share transfer, limits members to 50 (excluding employees), and prohibits public invitation to subscribe for shares; it can be formed by a single member (SMC). A public company has no such restrictions, can invite the public to subscribe, and requires at least 3 members.

What is a Single Member Company (SMC) under the Companies Act 2017?

An SMC is a private company incorporated with one member who holds 100% of its shares. It must nominate a person to act as director and a separate nominee to manage affairs in case of the sole member's death.

What is the minimum number of members and directors required for different companies under the Companies Act 2017?

Members: Single Member Company = 1; private company = 2 (min); public (unlisted) = 3; public listed = 3. Directors: SMC = 1; private = 1; public unlisted = 3; public listed = 7 (minimum).

What is the 'Memorandum of Association' (MOA) and what is its significance?

The MOA is the charter/constitution of a company defining its scope and relationship with the outside world. It contains the name, registered office (province), objects, liability, and capital clauses. Acts beyond it were historically 'ultra vires' (void).

List the clauses contained in the Memorandum of Association under the Companies Act 2017.

(1) Name clause, (2) Registered office/situation clause (province), (3) Objects clause, (4) Liability clause, and (5) Capital (share capital) clause; for guarantee companies, a guarantee clause; plus the subscription/association clause.

What are the 'Articles of Association' (AOA) and how do they differ from the Memorandum?

The AOA are the internal rules and regulations governing the company's management and the rights of members (e.g., share transfers, meetings, directors' powers). The MOA defines the company's external scope and objects, is superior, and the AOA must not conflict with it or the Act.

Name three documents required to be filed with the SECP for incorporation of a company under the Companies Act 2017.

Memorandum of Association, Articles of Association (or adoption of Table A model articles), and the declaration/application for incorporation with details of subscribers and directors (Form for incorporation), after name availability/reservation—upon which the Certificate of Incorporation is issued.