Syllabus CAF-6 OF ICAP

Transcription

1 Syllabus CAF-6 OF ICAP Objective The aim of this paper is to develop basic knowledge and understanding in the core areas of Income Tax and its chargeability as envisaged in the Income Tax Ordinance 2001 and the Income Tax Rules 2002 (relevant to the syllabus), Sales Tax Act 1990 and the Sales Tax Rules (relevant to the syllabus). Grid Weighting Objective, system and historical background, constitutional provisions and ethics 10 Income tax 65 Sales tax 25 Total 100 Syllabus Ref Contents Level Learning Outcome A Basic concepts of taxation 1 Objectives 1 LO 1.1.1: Comprehend the main objectives of taxation LO 1.1.2: Justify Taxation as means of development 2 Basic concept 1 LO 1 2.1: Understands the implication of direct and indirect taxation 3 System of taxation in Pakistan (Income Tax, Sales Tax, Federal Excise Tax, Capital Value Tax, Customs) 1 LO 1.3.1: Comprehend different kinds of taxes and their scope 4 Historical background 1 LO 1.4.1: State the history of taxation in sub-continent B Constitutional provisions 1 Federal financial procedures (Article 78 to 88 of the Constitution of Pakistan) 2 Provincial financial procedures (Article 118 to 127 of the Constitution of Pakistan) 1 LO 2.1.1: Demonstrate familiarity with the Federal Consolidated Fund and Public Account LO 2.1.2: Demonstrate familiarity with the expenditure that can be charged upon Federal Consolidated Fund 1 LO 2.2.1: Demonstrate familiarity with the Provincial Consolidated Fund and Public Account LO 2.2.2: Demonstrate familiarity with the expenditure that can be charged upon Provincial Consolidated Fund i

2 Syllabus Ref Contents Level Learning Outcome C 3 Distribution of revenues between Federation and the Provinces (Article 160 to 165A of the Constitution of Pakistan) 4 Federal legislative lists relating to revenue generating measures Ethics (related part of Fourth Schedule to the Constitution of Pakistan) 1 LO 2.3.1: Demonstrate familiarity with the formation of National Finance Commission and its main function. LO 2.3.2: Demonstrate familiarity with the taxes that can be raised under the authority of Parliament LO 2.3.3: Demonstrate familiarity with the powers of provincial assemblies in respect of professional tax LO 2.3.4: Demonstrate familiarity with the exemption available to federal and provincial governments LO 2.3.5: Demonstrate familiarity with the tax on corporation owned by federal and provincial government 1 LO 2.4.1: Enlist the revenue collection mentioned at S. No. 43 to 53 in Fourth Schedule attached to the Constitution 1 Ethics for tax legislation 2 LO 3.1.1: Describe how canons of taxation developed by economist are relevant for legislators while formulating tax policies 2 Ethics for taxpayers 2 LO 3.2.1: Understand the right and purpose of state to tax its citizen 3 Ethics for tax implementing authorities LO 3.2.2: Understand morality behind compliance with tax laws 2 LO 3.3.1: Understand the powers Vs. ethical responsibilities of tax implementation authorities LO 3.3.2: Understand pillars of tax administration, namely, fairness, transparency, equity and accountability 4 Tax evasion and avoidance 2 LO 3.4.1: Explain with simple examples the basic difference between evasion and avoidance of tax ii

3 Syllabus Ref Contents Level Learning Outcome D Income Tax 1 Chapter I Preliminary (concepts of terms defined section 2 subsection 1, 5, 5A, 6, 7, 9, 10, 11A, 19, 19C, 20, 21, 22, 23, 29, 29A, 29C, 36, 37, 38, 41, 44A, 46, 47, 49, 50, 51, 52, 53, 68) 2 Chapter II Charge of tax (excluding section 7) 3 Chapter III Tax on Taxable income (Excluding Section 29A, 30 and 31) 4 Chapter IV (Part I, II and III) Common rules (Excluding Sections 78 and 79) 5 Chapter V Part I Central concepts 6 Chapter V Part II Div I and II Individuals (Excluding Section 88A) 7 Chapter V Part III Association of persons 8 Chapter VII Part II Taxation of foreign-source income of residents 1 LO 4.1.1: Describe the definitions given in section 2 sub-section 1, 5, 5A, 6, 7, 9, 10, 11A, 19, 19C, 20, 21, 22, 23, 29, 29A, 29C, 36, 37, 38, 41, 44A, 46, 47, 49, 50, 51, 52, 53, 68 LO 4.1.2: Describe other definitions covered under relevant sections LO 4.1.3: Apply definitions on simple scenarios 2 LO 4.2.1: Explain the chargeability of tax with simple examples 2 LO 4.3.1: Compute taxable income and tax thereon relating to salary, income from property, income from business, capital gain, dividend, profit on debt, ground rent, rent from sub-lease, income from provision of amenities, utilities or any other services connected with rented building and consideration for vacating the possession of building 1 LO 4.4.1: Understand and apply on simple scenarios provisions for income of joint owner, apportionment of deductions, fair market value and receipt of income LO 4.4.2: Explain using simple examples the provisions relating to tax year LO 4.4.3: Explain with simple examples the provisions relating to disposal and acquisition of assets, cost and consideration received 2 LO 4.5.1: Describe with simple examples the meaning of persons, resident and non-resident persons and associates 2 LO 4.6.1: Describe with simple examples the principles of taxation of individuals 2 LO 4.7.1: Describe with simple examples the principles of taxation of association of persons 2 LO 4.8.1: Understand the applicability of tax on foreign salary income, credit against foreign tax and treatment of foreign loss of a resident on simple scenarios. 9 Chapter X Part I Returns 2 LO 4.9.1: Identify persons required to furnish a return of income LO 4.9.2: Identify persons not required to furnish a return of income LO 4.9.3: Identify persons required to furnish wealth statements LO 4.9.4: List the contents of wealth statement 10 Chapter X Part II Assessments 1 LO : Understand the meaning of assessment by Commissioner and power of Commissioner to conduct audit iii

4 Syllabus Ref Contents Level Learning Outcome 11 Chapter X Part III Appeals 1 LO : List the appellate bodies 12 Chapter X Part VIII Records, Information Collection and Audit (Section174 and 177) 13 The Income Tax Rules related to the above chapters of the Income Tax Ordinance 2001 shall also be examined 14 First and Second Schedule attached to the Income Tax Ordinance 2001 LO : Explain using simple examples the circumstances when appeal to the Commissioner (Appeals) is made and the pre-conditions applicable LO : Explain the provisions relating to decision of appeals by Commissioner (Appeals) using simple examples 2 LO : Understand the provisions relating to records to be kept by the taxpayers LO : Describe the provisions relating to audit by Commissioner 1 LO : Apply rules relevant to learning outcomes specified against each topic on well explained scenarios 2 LO : Apply clauses relevant to learning outcomes specified against each topic on well explained scenario iv

5 Syllabus Ref Contents Level Learning Outcome E Sales Tax Sales Tax Act Chapter I Preliminary (concepts of terms defined Section 2 subsections 3, 5AA, 9, 11, 14, 16, 17, 20, 21, 22A, 25, 27, 28, 29A, 33, 35, 39, 40, 41, 43, 44, 46) 2 Chapter II Scope and payment of tax 2 LO 5.1.1: Describe the definitions given in section 2 sub-section 3, 5AA, 9, 11, 14, 16, 17, 20, 21, 22A, 25, 27, 28, 29A, 33, 35, 39, 40, 41, 43, 44, 46 LO 5.1.2: Describe other definitions covered under relevant sections LO 5.1.3: Apply definitions on simple scenarios 2 LO 5.2.1: Understand the application sales tax law on taxable supplies including zero rated and exempt supplies LO 5.2.2: State the determination, time and manner of sales tax liability and payment using simple examples 3 Chapter III Registration LO 5.3.1: State the requirement and procedure of registration 4 Chapter IV Book keeping and invoicing requirements LO 5.4.1: List the record to be kept by a registered person LO 5.4.2: State the requirements of tax invoice LO 5.4.3: Explain the retention period of record using simple examples. 5 Chapter V Returns LO 5.5.1: Understand the various types of returns required to be filed by registered and un-registered persons. Sales Tax Rules, Chapter I Registration, Compulsory registration and Deregistration 2 LO 6.1.1: Explain the requirement and procedure of registration, compulsory registration and deregistration using simple examples 2 Chapter II Filing of return 2 LO 6.2.1: Explain the requirement and procedure of filing of return using simple examples 3 Chapter III Credit and Debit And Destruction of Goods 4 Chapter IV Apportionment of Input Tax 2 LO 6.3.1: Explain the requirement and procedure of issuing debit and credit notes using simple examples LO 6.3.2: State the procedure for destruction of goods 2 LO 6.4.1: Explain the requirement and procedure of apportionment of input tax using simple examples v

6 Syllabus ICMAP Stage IV Introduction: This course covers Income Tax Ordinance, 2001, the Income Tax Rules, 2002 and other Tax Laws such as the Sales Tax Act, 1990, Customs Act, 1969 and Federal Excise Act and Rules, 2005, as amended to date. Objectives: To provide the students with an in-depth knowledge of Tax Laws, enabling them to apply in decisionmaking process in different business situations. Outcomes: On completion of this course, students should be able to: identify and interpret principal types of taxation, such as direct taxes on individuals, income, business individuals, Association of persons, registered and unregistered firms and companies, trading profit and capital gains, and indirect taxes such as sales tax, customs duty and central excise duty, describe features of the direct and indirect taxes, describe record-keeping, filing and tax payment requirements of principal types of taxation, relating to business, compute for recommendations to the management on issues, pertaining to tax liabilities of company or firm, arising from income generation and capital gains, compute and advise on tax liabilities of individuals, arising from income receipts, capital gains, business or professions and other sources, and Identify foreign tax obligations, situations and apply appropriate methods for relieving from such tax. Indicative grid PART SYLLABUS CONTENT AREA WEIGHTAGE A B INCOME TAX 1. Income Tax Ordinance, Income Tax Rules, 2002 INDIRECT TAX (SALES TAX) 3. Sales Tax Act, Sales Tax Rules 5. Sales Tax Special Procedures 6. Federal Excise Act and Rules, 2005 INDIRECT TAX (OTHER INDIRECT TAXES) 50% 30% C 7. Sindh Sales Tax on Services Act, Sindh Sales Tax on Services Rules, The Punjab Sales Tax Ordinance Punjab Sales Tax on Services Rules, % 11. Islamabad Capital Territory (Tax on Services) Ordinance, The North-west Frontier Province Sales Tax Ordinance, The Balochistan Sales Tax Ordinance, 2000 TOTAL 100% Note: The weightage shown against each section indicates, study time required for the topics in that section. This weightage does not necessarily specify the number of marks to be allocated to that section in the examination. vi

7 Detailed Contents of Syllabus of ICMAP Stage IV PART-A INCOME TAX 1. The Income Tax Ordinance 2001 Definitions; charge to tax; tax on taxable income (computation of income from salary, property, business, capital gains (as per Capital Gain Tax Ordinance 2012), other sources, exemptions, losses, deductible allowances, tax credits); common rules (general, tax year, assets); provisions governing persons (concept, individuals, AOP, companies); special industries (insurance, oil & gas and other mineral deposits); international (geographical source of income, taxation of foreign source of income of residents, taxation of non-residents, double taxation); anti-avoidance; procedures (returns, assessments, appeals, collection and recovery of tax, payments and deductions, refunds, records and audit, penalty, offence and prosecutions, additional tax); administration (general, transitional advance tax provisions, miscellaneous); Schedules (first schedule, second schedule, third schedule, sixth schedule, seventh schedule). Special provisions regarding depreciation, initial allowance, intangibles, pre-commencement expenses, scientific research expenditures, employees training and facilities, profit on debt, financial costs and lease payment, bad debts, provisioning regarding consumer loans, profit on non-performing debts, transfer to participating reserve and tax accounting. Nature and areas of tax management; deduction of tax at source; advance payment of tax; minimum tax. 2. Income Tax Rules, 2002 Definitions related to the rules; heads of income; income of residents; tax of non-residents; transfer pricing; records and books of accounts; certificates; advance tax collection or deduction, payment, statements of tax collected or deducted. Income tax recovery rules, registration of income tax practitioners, Recognized terminal benefits funds. vii

8 PART-B SALES TAX 3. The Sales Tax Act, 1990 Chapter No. I, II, III, IV, V VII, VIII and IX of the Act, as amended up-to-date covering; definitions; scope and payment of tax; registration; book-keeping and invoicing requirements; returns; offences and penalties, appeals and recovery of arrears. 4. The Sales Tax Rules 2006 Definitions related to rules, registration, compulsory registration and de-registration, filing of returns, credit and debit note destruction of goods, apportionment of input tax, refund, supply of zero-rated goods to diplomats, diplomatic missions, privileged persons and privileged organizations, taxpayer s authorized representatives, alternative dispute resolution, special procedure for issuance of electronic sales tax invoices between buyers and sellers. 5. Sales Tax Special Procedure Rules 2007 Payment of Sales Tax by Retailers, providing or Rendering Services Subject to Tax under Provincial Laws, Refund claim by the Persons Engaged in Making Zero Rates, payment of Sales Tax by Importers. Payment of Tax by Steel Melters and Ship Breakers, sales tax special procedure (withholding) Rules INDIRECT TAX 6. Federal Excise Act and Rules, 2005 Federal Excise Act, 2005, Sections 2 to 19, 31 & 33 to 39, Federal Excise Rules, 2005, Rules 7 to 10, 15 to 17, & 32 to 34. Capital value tax: section 7 of the Finance Act 1989 as amended up-to-date. Notifications, rules general orders and circulars, issued under the above-mentioned laws PART C PROVINCIAL SALES TAX 7. Sindh Sales Tax on Services Act, 2011 Preliminary, Scope of Tax, Payment and Collection of Tax on Taxable Services, Registration & De- Registration, Book Keeping and Audit Proceedings, Returns 8. Sindh Sales Tax on Services Rules, 2011 Definitions, Registration and De-Registration, Filling of Returns, Adjustment of Input Tax And Tax paid, Procedure For Collection of Sales tax on services. 9. The Punjab sales Tax ordinance 2000 Preliminary, Scope of Tax, Payment & Collection of Tax on Taxable Services, Registration & De- Registration, Book Keeping And Audit Proceedings, Returns, First schedule (Classification of Services), Second Schedule (Taxable Services) 10. Punjab sales Tax on services Rules, 2012 Definition, Registration & De- Registration, Filling of Return, Adjustment of Tax. 11. Islamabad Capital Territory (Tax on Services) Ordinance, The North West Frontier Province Sales Tax Ordinance, The Balochistan Sales Tax Ordinance, 2000 viii

9 Syllabus M.Com. COURSE DESCRIPTION: This course is designed to give student an understanding of the structure of taxation system in Pakistan and the policy factors essential to the application of tax system in business enterprise. This comprehensive course will enable students to know how the taxation system of the Pakistan allows them to take effective business decisions.it will also guide them to apply current tax rules in their organization for effective usage of resources, LEARNING OBJECTIVES: After studying this course the student should be able: a) to understand the various terms with concepts used under the income tax and sales tax law in Pakistan; b) to compute income, total income and taxable income and tax thereon of individuals, AOP s / partnerships and corporations after taking into account the different exemptions and reliefs available; c) to compute the advance tax liability under section 147 and withholding tax provisions under specific sections of the Income tax Ordinance, 2001; d) to understand how income tax returns are filed, how assessment under various sections framed and ultimately the procedure to file appeals under the Income tax Ordinance, 2001; and e) to file the various sales tax returns and how to compute the sales tax liability / refund of various persons in Pakistan. Course contents: INCOME TAX ORDINANCE 2001 AND INCOME TAX RULES 2002 Overview, scheme and scope Comprehension of basic rules and concepts Basic principles of construction, relevant definitions / concepts 1. Assessment [section 2(5) ] 2. Business[section 2,(9) ] 3. Deductible allowance[section 2(16) ] 4. Dividend [section 2(19) ] 5. Employment [section 2(22) ] 6. Income [section 2(29) ] 7. Permanent establishment [section 2(41) ] 8. Persons [section 2(42) ] 9. Taxable income [section 2(64) Read with total income under section 2(69)] 10. Taxpayer [section 2(66) ] 11. Tax year [[section 2 (68) ] TAX ADMINISTRATION [COVERED IN 19 TH CHAPTER] 1. Tax authorities [section 207] 2. Circulars, orders and directions issued by the FBR [Section 206,213 and 214] 3. Advance rulings [section 206 A] Provisions governing persons [Section 80 to 84] Central concepts Person Resident and non / resident persons Associates ix

10 Tax on taxable income 1. Heads of income [section 11 ] 2. Income for tax purposes [section 9 and 10 ] 3. Tax payable on taxable income [first Schedule to the Ordinance ] Salary [Sections 12 to 14 along with all other operating sections read with rule 3 to 7 income tax rules, 2002] 1. Basis of assessment 2. Residence 3. Employee share schemes 4. Perquisites and benefits in kind 5. Taxation at source 6. Pension, gratuity and receipts from provident fund 7. Exemptions and tax concession Income from property 1 Basis of charge 2 Non / adjustable amounts received in relation to buildings Profits chargeable to tax as income from business [Sections 18 to 36, relevant clauses of Second Schedule and Rules 10 TO 12 and 13] 1 Principles regarding chargeable income 2 General principles for all allowable deductions 3 Deductions not allowed 4 Depreciation 5 Special provisions for allowable deductions in computing profits chargeable to tax as income from business 6 Intangibles 7 Pre /commencement expenditure 8 Scientific research expenditure 9 Employee training and facilities 10 Profit on debt, financial costs and lease payments 11 Bad debts 12 Profit on the non-performing debts of a banking company or development finance institution 13 Transfer to participatory reserve 14 Relief for losses 15 Exemptions and tax concessions Capital gains [Sections 2(10) read with 37, section 76, 77, 78, 79, 95 to 97 and various exemption clauses] 1 Principles for computing capital gains 2 Deduction of losses Income from other sources [Section 39, 40, 55(1), 67, 89,101(6), 111] 1. Description of other sources 2. Allowable deductions x

11 Tax credits [Sections 61 to 65] Set off and carry forward of losses [Sections 56 to 59B] A. Principles relating to inter-head adjustments B. Rules for carrying forward and subsequent adjustments Minimum tax [Sections 113 to113b] Advance tax and withholding tax regime [Sections 14, 231A to 236B] Default surcharge [Section 205 and 205A] Procedure for filing of income tax returns and assessment [Sections 114 to 126] Appellate system [Sections 127 to 136] xi

12 SALES TAX ACT 1990 OR REFORMED GST WITH RELEVANT RULES / NOTIFICATIONS Overview, scheme and scope Comprehension of basis rules and concepts relevant definitions/ concepts 1 Due date [section 2(9)] 2 Exempt supply [section 2(11)] 3 Goods [section 2(12)] 4 Input tax [section 2(14) ] 5 Registered person [section 2(25)] 6 Supply [section 2(33) ] 7 Tax [section 2(34)] 8 Taxable activity [section 2(41)] 9 Taxable supply [section 2(43)] 10 Tax period [section 2(43)] 11 Time of supply [section 2(44)] Scope and payment of tax [Sections 3 to13 with relevant rules 19 to 25] Scope of chargeability, mode of collection etc. Zero rating Change in the rate of tax Time and manner of payment Determination of tax liability Tax credit not allowed Debit and credit note Excess amount to be carried forward or refunded Assessment of tax Short-paid amounts recoverable without notice Exemption Return [Sections 26, 26AA, section 27 to 29 with relevant Rules 13 to 18] Monthly return Turnover tax return Retail tax return Special return Final return Return deemed to have been made xii