1st Test Time Allowed : 60 Minutes
CAF-02 Max Marks : 30
Q1 Cheng, a Chinese citizen, has been in Pakistan since 1st December 2023, as a senior manager at leading chain of hotels
namely Desire Hotels (DH), He resigned on 31 January 2025. During the tax year 2025, he received the following
emoluments from DH:
(i) Basic Salary : Rs. 610,000 per month
(ii)Medical allowance : Rs 100,000 per month
(iii)
Cost of living allowance : Rs 200,000 per month
(iv)Servant Allowance : Rs. 60,000 per month for services of domestic servant. Out of which, he paid Rs. 36,000
per month to Mr Boota, who is his domestic servant.
(v) Monthly Allowance : 5% of salary solely expended in the performance of his duties of employment.
Additional information:
(i) Lunch provided by the employer at subsidized rate. Per month cost to employer Rs 10,000.
(ii) Residential house (owned by employer) for no rent. The fair market value of the rent was Rs. 100,000 per
month.
(iii) On 1 July 2024, he leased a car having fair market value of Rs. 4,800,000 at a monthly rental of Rs. 120,000.
He pays lease rentals from his own sources but has used this vehicle for both official and personal purposes.
(iv) Company maintained car. The car was acquired on lease by DH on 1 July 2024 at an annual rental of Rs.
1,100,000. The fair market value of the car as on 1 July 2024 and 30 June 2025 were Rs. 4,000,000 and Rs.
6,000,000 respectively. 70% of the car is used for office purpose while 30% is used for personal purposes.
(v) 250 liter of fuel every month. The average petrol price during the year was Rs. 180 per liter.
(vi) Reimbursement of car maintenance expenses upto Rs. 20,000 per month. During the year, APL reimbursed Rs.
150,000 to him in this respect.
(vii) Health insurance for Mr Cheng and his dependents as per the terms of employment. For this purpose, DH is
paying annual insurance premium of Rs. 100,000. The insurance company incurred expenses of Rs. 500,000
on hospitalization of his dependents.
(viii) During the year, he received CNY 31,500 equivalent to Rs. 1,260,000 in his Pakistani bank account being a
share of profit from a business in China.
(ix) Withholding tax deducted by DH from salary during the tax year 2025 amounted to Rs. 1,400,000.
(x) For career growth, on 1 April 2025, he left for United Kingdom and joined Oliver Limited (OL) as an employee at
a monthly salary of GBP 3,200. He remained abroad till end of the tax year 2025. No withholding tax was
deducted by OL from his salary. Average exchange rate during 1 April 2025 to 30 June 2025 was GBP 1 = Rs.
250.
Required:
Under provisions of Income Tax Ordinance 2001, compute taxable income and tax payable for tax year 2025. (15)
Q2 Under the provisions of the Income Tax Ordinance, 2001, discuss the taxability of foreign source income of the following
resident persons for tax year 2025. (Computation of tax amount, if any, is not required)
a) Li, a Chinese engineer, has been working since March 2023 as a production manager in a Karachi based
company, Karam Limited. During the tax year 2025, his bank account in China was credited with CNY 40,000
on account of rental income for his apartment situated in China. He remitted 40% of this amount to his bank
account in Pakistan. (3)
b) Omar, a Pakistani national, came into Pakistan on 1 September 2024 after 20 years of service in UAE. On 1
January 2025, his bank account in UAE was credited with AED 50,000 on account of dividend received from a
UAE based company. He remitted 50% of this amount to his bank account in Pakistan. (3)
c) Sidra, a Pakistani national, left Pakistan on 1 July 2024 for employment in a Singapore based company at a
monthly salary of SGD 10,000. However, due to personal reasons, she returned back to Pakistan on 20
December 2024 and remained in Pakistan till 30 June 2025. She brought the entire foreign salary amount to
Pakistan. (2)
Q3 Under the provisions of the Income Tax Ordinance, 2001 determine the residential status for tax year 2025 in each of the
following cases:
(i) Arshad, an Emirati gold merchant, arrived in Pakistan for the first time on 15 March 2024, and departed the
country on 30 September 2024.
(3)
(ii) Chang Li, a Chinese sugar manufacturer, arrived in Pakistan on 1 March 2024. During his stay until 1
September 2024 in Pakistan, he resided in Sargodha, Punjab until 31 May 2024 and thereafter until his
departure from Pakistan, he stayed in Ghotki, Sindh. Assume that a calendar year serves as his special tax
year. (4)
***The End***
