CONCEPTUAL

APPROACH TO TAXES

Income Tax Sales tax

Capital Value Tax Federal Excise Act & Rules, 2005

By:

NADEEM BUTT Chartered Accountant

FCA, FPFA, B.Com.

AMAN PUBLICATIONS COMPANY

TAX YEAR 2016 6th EDITION

ALL RIGHTS RESERVED BY THE AUTHOR

No responsibility shall be taken for any mistake, error or omission regarding any material contained in this book.

AUTHOR

NADEEM BUTT Chartered Accountant

FCA, FPFA, B.Com.

PRICE Rs. 600/-

6TH Edition: 2016

SALIENT FEATURES OF THIS EDITION

Use of easy & understandable language.

Covers the syllabus of CA Module C, CAM-IV, ICMAP Stage IV & M.Com.

Helpful for the students & teachers of CA - Final, ACCA (PAK), Higher National Diploma (HND), MBA, MPA, PIPFA & LLB.

Added various examples & solved practice questions to demonstrate the theory.

Reference of relevant provisions of income tax & sales tax law has been given.

Added after each chapter past papers topic wise theoretical questions of ICMA Stage IV from

tax year 2003 to 2015 & CA Module C / Stage-II CAF-06 from tax year 2001 to 2015.

Added past papers numerical questions of ICMA Stage IV from tax year 2003 to 2015 & CA

Module C / Stage-II CAF-06 from tax year 2001 to 2015.

Includes the amendments incorporated by the Finance Act, 2015.

Useful for all who want to learn, teach & practice Income tax & Sales tax.

FACILITY FOR ANY QUESTION OR QUERY FROM THE AUTHOR AT:

Ph No: 042-35408635-6 and 042-35408638-9

Cell: 0333 / 0301 - 4245240

E-mail: info@nbandco.com and nadeembutt@nbandco.com

PREFACE TO THE SIXTH EDITION

With the grace of Almighty ALLAH and prayers of my family, friends, and students, I am presenting the Sixth Edition of “Conceptual approach to taxes”. This book is primarily for the students of CAF - of ICAP, Stage IV of ICMAP and M. Com.

I hope this book will serve the purpose of the students, teachers & other persons related with the taxation. The book primarily consists of notes on each chapter with examples, multiple choice questions, practical problems with solutions and topic wise last year questions from tax year 2003 to 2015.

I am grateful to all those who contributed a lot in the completion of this book. My special thanks are due to my staff.

All positive criticism with suggestions for the improvement will be entertained.

Nadeem Butt Chartered Accountant October 01, 2015

THE AUTHOR

Mr. Nadeem Butt qualified as a Chartered Accountant in 1998 & after working with a well known professional firm as Tax Manager has started his own professional firm under the name and style Nadeem & Co. Chartered Accountants in 2007 & is practicing as Fellow member of ICAP mainly in audit, income tax & sales tax for more than 200 various corporate and non-corporate clients in Pakistan. He is also the life time member of Lahore Tax Bar Association and Audit & Tax advisor of All Pakistan Cottage Industry & Small Traders Association.

Member, (special invitees) Taxation Committee of Lahore Chamber of Commerce & Industry (LCCI).

17 years post qualification teaching experience in the subjects of Taxation..

Visiting faculty member of the following professional educational institutions in providing coaching for the exams of Taxation:

1. College of Accountancy & Professional Studies(CAPS) Module C & F

2. Institute of Cost & Management Accountants of Pakistan (ICMAP) Stage – IV

3. Institute of Chartered Accountants of Pakistan (ICAP) Module C

4. Rise School of Accountancy Module C

5. Premier DLC (A project of Beacon house) AFC- CA

6. The University of Lahore M. Com.

7. SKANS School of Accountancy Module C

8. Punjab Group of Colleges M. Com.

9. GC University, Lahore Business Taxation Coaching

Appointed as auditor on behalf of the tax department by the Federal Board of Revenue for Special Audit Under section 4A of the repealed Income Tax Ordinance of various corporate and non-corporate entities.

Two students of Mr. Nadeem Butt (FCA) got 1st & 2ndpositions all over the Pakistan by scoring 98% & 97% marks in Taxation exam of ICMAP.

Student of Mr. Nadeem Butt (FCA) got the first gold medal in the history of SKANS School of Accountancy, Lahore in Financial Accounting Module C exam of ICAP.

INCOME TAX For CA & ICMAP Students

S. No. CHAPTERS Page No.

1 Taxation System 1 2 Ethics in tax Laws 9 3 Constitutional Provisions 17 4 Preliminary 27 5 Introduction & geographical source of income 59 6 Computation of taxable income 71 7 Income from Salary 85 8 Income from property 111 9 Income from business 125 10 Assets and depreciation 147 11 Method of accounting & records 171 12 Capital gains 183 13 Income from other sources 205 14 Losses 219 15 Tax credits 237 16 Common rules 255 17 Returns and Assessments 265 18 Appeals & Revisions 287 19 Income Tax Authorities 301 20 Exemptions other than Covered in Respective Chapters 319

21 Solved Past Papers Income Tax Numericals of CA Module C - (2001 to 2015) 323

For CA Mod F & ICMAP Students

S. No. CHAPTERS Page No.

22 Final Tax Regime & Minimum Tax 383 23 Deduction / Payment of Tax 407 24 Offences and prosecutions 455 25 Insurance business 465 26 Oil, natural gas & other mineral deposits 473 27 Banking business 481 28 Solved Past Papers Income Tax Numericals of ICMAP Stage IV

(2003 to 2015) 489

SALES TAX For CA & ICMAP Students

S. No. CHAPTERS Page No. 1 Preliminary 535 2 Registration 549 3 Sales Tax Returns 561 4 Records & Books 569 5 Scope and Payment of Tax 577 6 Practice questions with solutions 603 7 Solved Past Papers Sales Tax Numericals of ICAP - (2003 to 2015) 615

For CA Mod F & ICMAP Students S. No. CHAPTERS Page No.

8 Recovery of Arrears & Refund 637 9 Offences & Penalties 649 10 Appeals 659 11 Sales Tax Special Procedure Rules, 2007 665 12 Sales Tax Special Procedure (Withholding) Rules, 2007 685 13 Solved Past Papers Sales Tax Numericals of ICMAP Stage IV

(2003 to 2015) 691 14 Third, fifth and sixth Schedules 705 15 Eighth and Ninth Schedules 715

CAPITAL VALUE TAX & FEDERAL EXCISE DUTY

For CA Mod F & ICMAP Students S. No. CHAPTERS Page No.

(A) CAPITAL VALUE TAX 729

(B) FEDERAL EXCISE ACT & RULES, 2005

1 Definition 733 2 Levy, Collection & Payment of Duty 737 3 Offences & Penalties 745 4 Federal Excise Rules, 2005 751