Solution of Following Paper Question # 1: What is Individual resident status explain its different points?

Answer: Resident Individual (Section 82) => An individual shall be a resident individual for a tax year if the individual=> Is present in Pakistan for a period of, or periods amounting in aggregate to, one hundred and eighty-three days or more in the tax year; or => Is an employee or official of the Federal Government or a Provincial Government posted abroad in the tax year Residential Status and Taxation Rules Governing Resident Individual: => A day of leave including sick leave => A day that individuals activity is stopped because of strike etc => A holiday spent in Pakistan Rules Governing Resident Individual => Part of day shall be counted as a whole day, for example day of arrival or day of departure Following days shall be counted as whole day: => A Public Holiday => A day of leave including sick leave => A day that individuals activity is stopped because of strike etc => A holiday spent in Pakistan Question # 2: If Mr. Kamal resident of Pakistan suffered a foreign loss against the income received from foreign country in tax year. What is the treatment of such foreign loss? Which section deals this kind of loss? Such losses can be carried forward up to how many years? Answer: Foreign losses Sec.104: Deductible expenditures incurred by a person in deriving foreign-source income chargeable to tax under a head of income shall be deductible only against that income. Question # 3: What is association of person and how profit will be distributed among partners? Answer: Sec 93 (6) the share of a member in the total income of a association of persons shall be determined according to the members interest in the association and shall include any profit on debt, brokerage, commission, salary or other remuneration received or due from the association. Salary sec 12(1): any salary received by an employee in a tax year, other than salary that is

exempt from tax under this Ordinance, shall be chargeable to tax in that year under the head Salary.

Under which conditions any royalty is treated as Pakistan source income if it is paid by: (3)

Answer: i. Resident person ii. Non-resident person A royalty shall be Pakistan-source income if it is: Paid by resident person, except where the royalty is payable in respect of any right, property, or information used, or services utilized for the purposes of a business carried on by the resident outside Pakistan through a permanent establishment; or Borne by a permanent establishment in Pakistan of a non-resident person Is award to a person by the president of Pakistan taxable? also write the section of those awards (3) Answer: Section 45 Presidents Honour (1) Any allowance attached to any Honour, Award, or Medal awarded to a person by the President of Pakistan shall be exempt from tax under this Ordinance. (2) Any monetary award granted to a person by the President of Pakistan shall be exempt from tax under this Ordinance. .Explain Aid agreement w.r.t salary income (5) Answer: Any salary received by an individual (not being a citizen of Pakistan) shall be exempt from tax under this Ordinance to the extent provided for in an Aid Agreement between the Federal Government and a foreign government or public international organization, where: (a)the individual is either not a resident individual or a resident individual solely by reason of the performance of services under the Aid Agreement; (b) if the Aid Agreement is with a foreign country, the individual is a citizen of that country; and The salary is paid by the foreign government or public international organization out of funds or grants released as aid to Pakistan in pursuance of such Agreement.

Determine total income of Mr. Sharif, a non-resident individual for tax year 2009. Relevant data is given below: (5) i. Share of profit received in Singapore from a business controlled through a permanent establishment in Pakistan Rs 200,000. ii. Salary income of Mr. Sharif from an employment in Pakistan Rs600,000 iii. Remittance received from China Rs 400,000 iv. Profit on debt received on deposits kept with a bank in Pakistan Rs 50,000 Solution: p#33 Particulars Gross total income if non-resident Share of profit received 200,000 Salary income 600,000 Remittance received NIL Profit on debt received NIL total income 800,000

Question No: 30 ( Marks: 3 ) If Mr. Kamal resident of Pakistan suffered a foreign loss against the income received from foreign country in tax year. What is the treatment of such foreign loss? Which section deals this kind of loss? Such losses can be carried forward up to how many years? Answer Foreign losses Sec.104: Deductible expenditures incurred by a person in deriving foreign source income chargeable to tax under a head of income shall be deductible only against that income. Foreign losses carried forward up to 6 yearsa