Pakistan Income Tax MCQs (With Answers)

Based on Income Tax Ordinance, 2001 – Updated for Tax Year 2026

Exempted Income

1. Salary received by an employee of a foreign government is exempt from tax if : The employee is a Pakistani citizen The employee holds dual nationality The employee works in Pakistan A foreign citizen doing similar work as Pakistani government employees abroad, with mutual tax exemption between both countries.

Explanation:
Salary received by an employee of a foreign government is exempt from tax if employee is a foreign citizen, performs similar services as Federal Government employees abroad, and reciprocal exemption is granted

Reference: Section 43. Foreign government officials - ITO, 2001

Exemptions and Tax Concessions

2. Which section of the Income Tax Ordinance, 2001 deals with Foreign government officials ? Section 41 Section 42 Section 43 Section 44

Explanation:
Any salary received by an employee of a foreign government as remuneration for services rendered to such government shall be exempt from tax under the ITO, 2001.

Reference: Section 43. Foreign government officials - ITO, 2001

Advance Tax – Transitional Phase

3. Which section of the Income Tax Ordinance, 2001 deals with Advance tax on private motor vehicles ? Section 235 Section 234 Section 231B Section 210

Explanation:
Every registering authority of the Excise and Taxation Department shall collect advance tax when a motor vehicle is registered.

Reference: Section 231B. Advance tax on private motor vehicles - ITO, 2001

4. Which section of the Income Tax Ordinance, 2001 deals with Advance tax on cash withdrawal ? Section 231AB Section 231C Section 233 Section 234

Explanation:
When the amount is withdrawn from the bank, advance tax will be deducted by the bank from the gross amount.

Reference: Section 231AB. Advance tax on cash withdrawal - ITO, 2001

Enforcement of Filing of Return

5. Which section of the Income Tax Ordinance, 2001 deals with Enforcement of Filing Return ? Section 115 Section 111 Section 113 Section 114B

Explanation:
This section empowers the Board to issue an income tax general order against persons who are liable to file a return but are not on the Active Taxpayers’ List. Under this order, measures such as blocking mobile SIMs, discontinuing utility connections, or restricting foreign travel may be taken to enforce filing of the return.

Reference: Section 114B. Powers to enforce filing of returns - ITO, 2001

Filing of Return

6. Which section of the Income Tax Ordinance, 2001 deals with Business Bank Account ? Section 114 Section 114A Section 115 Section 116

Explanation:
Every taxpayer shall declare to the Commissioner the bank account used for business transactions.

Reference: Section 114A. Business Bank Account - ITO, 2001

7. Which section of the Income Tax Ordinance, 2001 deals with Wealth Statement ? Section 113 Section 114 Section 115 Section 116

Explanation:
The person is required to file a statement of assets and liabilities under section 116 of the Income Tax Ordinance, 2001.

Reference: Section 116. Wealth Statement - ITO, 2001

Deduction of Tax at Source

8. Which section of the Income Tax Ordinance, 2001 deals with tax deduction at source from Petroleum Products ? Section 156A Section 147 Section 148 Section 138

Explanation:
Every person who sells petroleum products to a petrol pump operator shall deduct tax from the commission or discount allowed to the operator.

Reference: Section 156A. Petroleum Products - ITO, 2001

9. Which section of the Income Tax Ordinance, 2001 deals with tax deduction at source from Payments for Goods , Services and Contracts ? Section 137 Section 138 Section 153 Section 152

Explanation:
Every prescribed person shall deduct tax at source from the gross amount at the time of making payment for Goods, Services or Contracts.

Reference: Section 153. Payments for Goods , Services and Contracts - ITO, 2001

10. Which section of the Income Tax Ordinance, 2001 deals with tax deduction at source from Prizes and Winnings ? Section 156 Section 138 Section 147 Section 137

Explanation:
Every person paying a prize on a prize bond, or winnings from a raffle, lottery, quiz, sales promotion scheme, or crossword puzzle shall deduct tax at source.

Reference: Section 156. Prizes and Winnings - ITO, 2001

11. Which section of the Income Tax Ordinance, 2001 deals with tax deduction at source from Payments to non-residents ? Section 147 Section 148 Section 151 Section 152

Explanation:
Every person making payment of royalty or fees for technical services to a non-resident person, which is chargeable to tax, shall deduct tax at source.

Reference: Section 152. Payments to non-residents - ITO, 2001

12. Which section of the Income Tax Ordinance, 2001 deals with tax deduction at source from Rent of Immovable Property ? Section 155 Section 147 Section 156 Section 152

Explanation:
Every prescribed person shall deduct tax at source at the time of making payment to the owner.

Reference: Section 155. Rent of Immovable Property - ITO, 2001

13. Which section of the Income Tax Ordinance, 2001 deals with tax deduction at source from Exports of Services ? Section 148 Section 154 Section 154A Section 155

Explanation:
The bank shall deduct tax at source at the time the amount is credited.

Reference: Section 154A. Export of Services - ITO, 2001

14. Which section of the Income Tax Ordinance, 2001 deals with tax deduction at source from Exports ? Section 149 Section 148 Section 154 Section 151

Explanation:
The bank shall deduct tax at source at the time the amount is credited.

Reference: Section 154. Export - ITO, 2001

15. Which section of the Income Tax Ordinance, 2001 deals with tax deduction at source from Dividends ? Section 152 Section 150 Section 151 Section 149

Explanation:
Every person paying a dividend shall deduct tax from the gross amount at the time of payment.

Reference: Section 150. Dividends - ITO, 2001

16. Which section of the Income Tax Ordinance, 2001 deals with tax deduction at source from Profit on debt ? Section 151 Section 150 Section 148 Section 152

Explanation:
Every person, bank, or financial institution is required to deduct tax at source on profit on debt and deposit the deducted amount into the government treasury.

Reference: Section 151. Profit on debt - ITO, 2001

17. Which section of the Income Tax Ordinance, 2001 deals with tax deduction at source from salary? Section 149 Section 150 Section 151 Section 152

Explanation:
The Employer is responsible for deducting tax from the employee’s salary and depositing it into the government treasury.

Reference: Section 149. Salary - ITO, 2001

Default Surcharge

18. Which section of the Income Tax Ordinance, 2001 deals with default surcharge? Section 210 Section 205 Section 204 Section 203

Explanation:
Default surcharge is imposed on unpaid tax, penalty, or other specified amounts at 12% or KIBOR plus 3% per annum, calculated from the due date until payment.

Reference: Section 205. Default Surcharge - ITO, 2001

Income from Other Sources – Nature of Income

19. Which of the following incomes is chargeable to tax under the head Income from Other Sources ? Salary received from an employer Rental income from property Capital gain on sale of immovable property Profit on debt

Explanation:
Any profit on debt earned by a person from a bank or a financial institution is treated as income from other sources.

Reference: Section 39(1)(c). Income from Other Sources - ITO, 2001

Advance Tax – Transitional Phase

20. Which section of the Income Tax Ordinance, 2001 deals with Electricity Consumption ? Section 233 Section 234 Section 236 Section 235

Explanation:
Advance tax will be collected on the electricity bills of commercial, industrial, and domestic consumers.

Reference: Section 235. Electricity Consumption - ITO, 2001

21. Which section of the Income Tax Ordinance, 2001 deals with Advance tax on persons remitting amounts abroad through credit or debit or prepaid cards ? Section 236Y Section 236 Section 235 Section 233

Explanation:
Advance tax is collected by the bank on foreign payments made through debit, credit, or prepaid cards at the time of remittance.

Reference: Section 236Y.Advance tax on persons remitting amounts abroad - ITO, 2001

Filing of Return

22. Which section of the Income Tax Ordinance, 2001 deals with Persons Not Required to Furnish a Return of Income ? Section 114 Section 115 Section 113 Section 111

Explanation:
A widow, orphan, disabled person, or a non-resident owning immovable property is not required to file a return of income under section 114, solely due to sub-clauses (iii) to (vi) of section 114(1)(b).

Reference: Section 115. Persons not required to furnish a return of income - ITO, 2001

Minimum Tax

23. Which section of the Income Tax Ordinance, 2001 deals with Minimum Tax on Turnover ? Section 110 Section 111 Section 112 Section 113

Explanation:
This section applies to resident companies, permanent establishments of non-resident companies, individuals, and associations of persons having a turnover of Rs. 100 million or more.

Reference: Section 113. Minimum tax on the income of certain persons - ITO, 2001

Filing of Return

24. Which section of the Income Tax Ordinance, 2001 deals with Return of Income ? Section 110 Section 111 Section 113 Section 114

Explanation:
A person is required to file an income tax return for the tax year in accordance with section 114 of the Income Tax Ordinance, 2001.

Reference: Section 114. Return of Income - ITO, 2001

Advance Tax – Transitional Phase

25. Which section of the Income Tax Ordinance, 2001 deals with Advance Tax on Purchase or Transfer of Immovable Property ? Section 236Y Section 235 Section 236K Section 236C

Explanation:
At the time of purchase or transfer of immovable property, advance tax shall be collected by the withholding agent.

Reference: Section 236K. Advance Tax on purchase or transfer of immovable Property - ITO, 2001

26. Which section of the Income Tax Ordinance, 2001 deals with Advance Tax on Sale or Transfer of Immovable Property? Section 235 Section 236K Section 236Y Section 236C

Explanation:
At the time of sale or transfer of immovable property, advance tax shall be collected by the withholding agent.

Reference: Section 236C. Advance Tax on sale or transfer of immovable Property - ITO, 2001

Resident and Non-resident Persons

27. Which section of the Income Tax Ordinance, 2001 deals Resident Individual? Section 80 Section 81 Section 82 Section 83

Explanation:
A person shall be treated as a resident for a tax year in Pakistan if he or she stays in Pakistan for a period of 183 days or more.

Reference: Section 82. Resident Individual - ITO, 2001

Computation of Total Income

28. Total income is calculated after combining how many heads of income ? 2 3 5 4

Explanation:
Total income is the combined income from all heads: Salary, Property, Business, Capital Gains, and Other Sources.

Reference: Section 10. Total Income - ITO, 2001

Exempted Income

29. Which of the following incomes are exempt from tax under the Income Tax Ordinance, 2001 ? Income from Salary Income from Property Income from Business Agricultural Income

Explanation:
Any agricultural income received or earned by a person shall be exempt from tax under the Income Tax Ordinance, 2001.

Reference: Section 41. Agricultural Income - ITO, 2001

Exemptions and Tax Concessions

30. Which section of the Income Tax Ordinance, 2001 deals with Agricultural Income ? Section 39 Section 40 Section 41 Section 42

Explanation:
Any agricultural income received or earned by a person shall be exempt from tax under the Income Tax Ordinance, 2001.

Reference: Section 41. Agricultural Income - ITO, 2001

Types of Income

31. How many Heads of Income are prescribed under the Income Tax Ordinance, 2001 ? 2 3 4 5

Explanation:
There are five main heads of income: Salary, Property, Business, Capital Gains, and Other Sources.

Reference: Section 11. Heads of Income - ITO, 2001

Deductible Allowances

32. Which section of the Income Tax Ordinance, 2001 deals with Workers’ Welfare Fund ? Section 61 Section 59 Section 63 Section 60A

Explanation:
A person is entitled to a deductible allowance for any amount paid as Workers’ Welfare Fund during a tax year under the Workers’ Welfare Fund Ordinance, 1971, or under any provincial law relating to the Workers’ Welfare Fund enacted after the Eighteenth Constitutional Amendment, 2010. However, this allowance shall not apply to any Workers’ Welfare Fund paid to the provinces by a trans-provincial establishment.

Reference: Section 60A. Workers’ Welfare Fund- ITO, 2001

33. Which section of the Income Tax Ordinance, 2001 deals with Workers’ Participation Fund ? Section 61 Section 63 Section 60B Section 59

Explanation:
A person shall be entitled to a deductible allowance for any amount paid to the Workers’ Participation Fund during a tax year, in accordance with the Companies Profit (Workers’ Participation) Act, 1968, or under any provincial law relating to the Workers’ Profit Participation Fund enacted after the Eighteenth Constitutional Amendment, 2010.

Reference: Section 60B. Workers’ Participation Fund - ITO, 2001

34. Which section of the Income Tax Ordinance, 2001 deals with Deductible allowance for education expenses ? Section 59 Section 60D Section 61 Section 60A

Explanation:
An individual is entitled to claim a deductible allowance for tuition fees paid during a tax year, provided that the individual’s taxable income does not exceed Rs. 1.5 million.

Reference: Section 60D.Deductible allowance for education expenses - ITO, 2001

35. Which section of the Income Tax Ordinance, 2001 deals with Zakat ? Section 59 Section 60 Section 61 Section 63

Explanation:
A person is entitled to a deductible allowance equal to the amount of Zakat paid during a tax year under the Zakat and Ushr Ordinance, 1980.

Reference: Section 60. Zakat - ITO, 2001

Head of Income

36. Which section of the Income Tax Ordinance, 2001 deals with Income from Other Sources ? Section 37 Section 40 Section 39 Section 44

Explanation:
Any income earned by a person that does not fall under the other four heads of income is treated as Income from Other Sources and is chargeable to tax.

Reference: Section 39. Income from Other Sources - ITO, 2001

37. Which section of the Income Tax Ordinance, 2001 deals with Income from Business ? Section 37 Section 39 Section 18 Section 12

Explanation:
Any income derived from business, other than exempt income, is chargeable to tax under the head Income from Business.

Reference: Section 18. Income from Business - ITO, 2001

38. Which section of the Income Tax Ordinance, 2001 deals with Capital Gains ? Section 39 Section 37 Section 9 Section 11

Explanation:
Any profit earned from the sale or disposal of immovable property is taxable under the head Capital Gains.

Reference: Section 37. Capital Gain - ITO, 2001

39. Which section of the Income Tax Ordinance, 2001 deals with Income from Property ? Section 15 Section 18 Section 37 Section 39

Explanation:
Any rent received or receivable by a person, except exempt income, is taxable under the head Income from Property.

Reference: Section 15. Income from Property - ITO, 2001

40. Which section of the Income Tax Ordinance, 2001 deals with Income from Salary ? Section 12 Section 15 Section 18 Section 37

Explanation:
Section 12 of the Income Tax Ordinance, 2001 covers income taxable under the head Salary, including pay, allowances, and employment benefits etc.

Reference: Section 12. Salary - ITO, 2001

Computation of Taxable Income

41. Which section of the Income Tax Ordinance, 2001 deals with Taxable Income ? Section 9 Section 10 Section 11 Section 12

Explanation:
The taxable income of a person for a tax year is the total of income under all heads after deducting allowable allowances, but it shall not be reduced below zero.

Reference: Section 9. Taxable Income - ITO, 2001

42. Which section of the Income Tax Ordinance, 2001 deals with Total Income ? Section 9 Section 10 Section 11 Section 12

Explanation:
Total income represents the aggregate of income from all heads, including exempt income, for the tax year.

Reference: Section 10. Total Income - ITO, 2001

43. Which section of the Income Tax Ordinance, 2001 deals with Heads of Income ? Section 9 Section 10 Section 11 Section 12

Explanation:
There are five heads of income: Income from Salary, Income from Property, Income from Business, Capital Gains, and Income from Other Sources.

Reference: Section 11. Heads of Income - ITO, 2001

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Pakistan Income Tax MCQs (With Answers)

Exempted Income

Exemptions and Tax Concessions

Advance Tax – Transitional Phase

Enforcement of Filing of Return

Filing of Return

Deduction of Tax at Source

Default Surcharge

Income from Other Sources – Nature of Income

Advance Tax – Transitional Phase

Filing of Return

Minimum Tax

Filing of Return

Advance Tax – Transitional Phase

Resident and Non-resident Persons

Computation of Total Income

Exempted Income

Exemptions and Tax Concessions

Types of Income

Deductible Allowances

Head of Income

Computation of Taxable Income