ICMA Pakistan Business Taxation Syllabus

Business Taxation 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 in ICMA Pakistan, not a summary of it.

1. 1

   Introduction to Taxation in Pakistan

   3 topics

   • Tax structure and fiscal framework
   • Income Tax Ordinance 2001 overview
   • Key definitions and tax year
2. 2

   Heads of Income

   4 topics

   • Salary income
   • Income from property
   • Income from business
   • Capital gains and income from other sources
3. 3

   Computation of Total Income and Tax

   3 topics

   • Deductible allowances and tax credits
   • Set-off and carry forward of losses
   • Computation of taxable income
4. 4

   Taxation of Persons

   3 topics

   • Individuals and association of persons
   • Taxation of companies
   • Minimum tax and final tax regimes
5. 5

   Withholding Tax and Advance Tax

   2 topics

   • Withholding tax obligations
   • Advance tax payments
6. 6

   Sales Tax

   3 topics

   • Sales Tax Act 1990 framework
   • Input and output tax and adjustments
   • Registration, returns and records
7. 7

   Tax Administration

   2 topics

   • Assessment, appeals and refunds
   • Penalties, default surcharge and prosecution

Business Taxation flashcards for ICMA Pakistan

18 of 50 cards from the Business Taxation deck — real questions with worked answers.

1. What are the two broad categories of taxes in Pakistan's fiscal framework, and give an example of each?

   Direct taxes (e.g., Income Tax, levied on income/wealth, borne by the taxpayer) and Indirect taxes (e.g., Sales Tax, Federal Excise Duty, Customs Duty, levied on goods/services and passed on to consumers).

2. Which authority administers federal taxes in Pakistan, and under which division does it operate?

   The Federal Board of Revenue (FBR), operating under the Revenue Division of the Ministry of Finance.

3. Which law governs income tax in Pakistan, and what type of statute is it?

   The Income Tax Ordinance 2001 (read with the Income Tax Rules 2002); it is the principal federal direct-tax statute, amended annually by the Finance Act.

4. What are the five heads of income under the Income Tax Ordinance 2001?

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

5. Define a 'normal tax year' under the Income Tax Ordinance 2001.

   A period of twelve months ending on 30 June, denoted by the calendar year in which that 30 June falls (e.g., year ending 30 June 2026 = Tax Year 2026).

6. What is a 'special tax year' and who uses it?

   A twelve-month period ending on a date other than 30 June, allowed/required by the FBR for certain businesses (e.g., sugar, cotton, insurance); it is denoted by the normal tax year in which its closing date falls.

7. Under the Income Tax Ordinance 2001, when is an individual a 'resident' for a tax year?

   If present in Pakistan for 183 days or more in the tax year, or is an employee/official of the Federal or a Provincial Government posted abroad during the tax year.

8. When is a company treated as 'resident' in Pakistan for tax purposes?

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

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

   A resident is taxed on world income (Pakistan-source + foreign-source); a non-resident is taxed only on Pakistan-source income.

10. Define 'taxable income' under the Income Tax Ordinance 2001.

    Total income for the tax year reduced by the total of any deductible allowances; tax is then computed on this amount (income exempt from tax is excluded).

11. What constitutes 'salary' under the head Salary in the Income Tax Ordinance 2001?

    Any amount received by an employee from employment, including pay, wages, leave pay, fees, commissions, bonuses, gratuity, work-condition supplements, perquisites, allowances and any profits in lieu of salary.

12. On what basis is salary income generally taxed — accrual or receipt?

    Salary is taxed on a receipt basis, i.e., it is chargeable to tax in the tax year in which it is received by the employee.

13. How is the value of employer-provided accommodation generally taxed as a perquisite?

    It is included in salary at the amount that would have been paid as a house rent allowance, or the fair market rent, whichever is higher (subject to prescribed rules).

14. How is income from property (rent) defined under the Income Tax Ordinance 2001?

    The rent received or receivable by the owner of land or a building (chargeable under the head Income from Property), where 'rent' is the amount for the use or occupation of the property, including any non-adjustable advance received.

15. Name three deductions allowed against income from property under the Ordinance.

    Repairs allowance, insurance premium on the property, local rates/property tax/cess, ground rent, interest/profit on debt used to acquire/construct the property, and collection (administration) expenses (subject to limits).

16. How is income from business defined under the Income Tax Ordinance 2001?

    Profits and gains from any trade, commerce, manufacture, profession, vocation or adventure in the nature of trade, computed in accordance with the method of accounting regularly employed.

17. On what accounting basis must companies compute business income under the Ordinance?

    Companies must use the accrual basis; other taxpayers may use the cash or accrual basis consistently applied.

18. Define a 'capital asset' for the purpose of capital gains under the Income Tax Ordinance 2001.

    Property of any kind held by a person, whether or not connected with business, but excluding stock-in-trade, consumable stores/raw materials, depreciable assets/intangibles, and certain movable personal-use property.

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