Income Tax MCQs Pakistan — 200+ Practice Questions

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Practice Pakistan income tax with free multiple-choice questions based on the Income Tax Ordinance, 2001 and the Sales Tax Act, 1990. Each question is tagged with its relevant section reference and comes with a detailed explanation, so you learn the reasoning — not just the right option. The questions are useful for CA, ICMAP, ACCA, CSS and FBR exam preparation, as well as for taxpayers who simply want to understand Pakistan's tax rules better.

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Question 1 of 52 Computation of Taxable Income

Basic

📖 Section 10. Total Income - ITO, 2001

Which section of the Income Tax Ordinance, 2001 deals with Total Income ?

1 Section 9 ❌

2 Section 10 ✅

3 Section 11 ❌

4 Section 12 ❌

✅ Correct Answer!

✅

Correct Answer

📝 Explanation

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

⚖️ Legal Reference

📖 Income Tax Ordinance, 2001 — Section 10. Total Income - ITO, 2001

💡 Why This Matters

Understanding this provision is essential for tax compliance and frequently tested in CA, ICMAP & ACCA Pakistan exams.

Question 2 of 52 Computation of Taxable Income

Basic

📖 Section 9. Taxable Income - ITO, 2001

Which section of the Income Tax Ordinance, 2001 deals with Taxable Income ?

1 Section 9 ✅

2 Section 10 ❌

3 Section 11 ❌

4 Section 12 ❌

✅ Correct Answer!

✅

Correct Answer

📝 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.

⚖️ Legal Reference

📖 Income Tax Ordinance, 2001 — Section 9. Taxable Income - ITO, 2001

💡 Why This Matters

Understanding this provision is essential for tax compliance and frequently tested in CA, ICMAP & ACCA Pakistan exams.

Question 3 of 52 Computation of Taxable Income

Basic

📖 Section 11. Heads of Income - ITO, 2001

Which section of the Income Tax Ordinance, 2001 deals with Heads of Income ?

1 Section 9 ❌

2 Section 10 ❌

3 Section 11 ✅

4 Section 12 ❌

✅ Correct Answer!

✅

Correct Answer

📝 Explanation

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

⚖️ Legal Reference

📖 Income Tax Ordinance, 2001 — Section 11. Heads of Income - ITO, 2001

💡 Why This Matters

Understanding this provision is essential for tax compliance and frequently tested in CA, ICMAP & ACCA Pakistan exams.

Question 4 of 52 Head of Income

Basic

📖 Section 12. Salary - ITO, 2001

Which section of the Income Tax Ordinance, 2001 deals with Income from Salary ?

1 Section 12 ✅

2 Section 15 ❌

3 Section 18 ❌

4 Section 37 ❌

✅ Correct Answer!

✅

Correct Answer

📝 Explanation

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

⚖️ Legal Reference

📖 Income Tax Ordinance, 2001 — Section 12. Salary - ITO, 2001

💡 Why This Matters

Understanding this provision is essential for tax compliance and frequently tested in CA, ICMAP & ACCA Pakistan exams.

Question 5 of 52 Head of Income

Basic

📖 Section 15. Income from Property - ITO, 2001

Which section of the Income Tax Ordinance, 2001 deals with Income from Property ?

1 Section 15 ✅

2 Section 18 ❌

3 Section 37 ❌

4 Section 39 ❌

✅ Correct Answer!

✅

Correct Answer

📝 Explanation

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

⚖️ Legal Reference

📖 Income Tax Ordinance, 2001 — Section 15. Income from Property - ITO, 2001

💡 Why This Matters

Understanding this provision is essential for tax compliance and frequently tested in CA, ICMAP & ACCA Pakistan exams.

Question 6 of 52 Head of Income

Basic

📖 Section 18. Income from Business - ITO, 2001

Which section of the Income Tax Ordinance, 2001 deals with Income from Business ?

1 Section 37 ❌

2 Section 39 ❌

3 Section 18 ✅

4 Section 12 ❌

✅ Correct Answer!

✅

Correct Answer

📝 Explanation

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

⚖️ Legal Reference

📖 Income Tax Ordinance, 2001 — Section 18. Income from Business - ITO, 2001

💡 Why This Matters

Understanding this provision is essential for tax compliance and frequently tested in CA, ICMAP & ACCA Pakistan exams.

Question 7 of 52 Head of Income

Basic

📖 Section 37. Capital Gain - ITO, 2001

Which section of the Income Tax Ordinance, 2001 deals with Capital Gains ?

1 Section 39 ❌

2 Section 37 ✅

3 Section 9 ❌

4 Section 11 ❌

✅ Correct Answer!

✅

Correct Answer

📝 Explanation

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

⚖️ Legal Reference

📖 Income Tax Ordinance, 2001 — Section 37. Capital Gain - ITO, 2001

💡 Why This Matters

Understanding this provision is essential for tax compliance and frequently tested in CA, ICMAP & ACCA Pakistan exams.

Question 8 of 52 Head of Income

Basic

📖 Section 39. Income from Other Sources - ITO, 2001

Which section of the Income Tax Ordinance, 2001 deals with Income from Other Sources ?

1 Section 37 ❌

2 Section 40 ❌

3 Section 39 ✅

4 Section 44 ❌

✅ Correct Answer!

✅

Correct Answer

📝 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.

⚖️ Legal Reference

📖 Income Tax Ordinance, 2001 — Section 39. Income from Other Sources - ITO, 2001

💡 Why This Matters

Understanding this provision is essential for tax compliance and frequently tested in CA, ICMAP & ACCA Pakistan exams.

Question 9 of 52 Types of Income

Basic

📖 Section 11. Heads of Income - ITO, 2001

How many Heads of Income are prescribed under the Income Tax Ordinance, 2001 ?

1 2 ❌

2 3 ❌

3 4 ❌

4 5 ✅

✅ Correct Answer!

✅

Correct Answer

📝 Explanation

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

⚖️ Legal Reference

📖 Income Tax Ordinance, 2001 — Section 11. Heads of Income - ITO, 2001

💡 Why This Matters

Understanding this provision is essential for tax compliance and frequently tested in CA, ICMAP & ACCA Pakistan exams.

Question 10 of 52 Exemptions and Tax Concessions

Basic

📖 Section 41. Agricultural Income - ITO, 2001

Which section of the Income Tax Ordinance, 2001 deals with Agricultural Income ?

1 Section 39 ❌

2 Section 40 ❌

3 Section 41 ✅

4 Section 42 ❌

✅ Correct Answer!

✅

Correct Answer

📝 Explanation

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

⚖️ Legal Reference

📖 Income Tax Ordinance, 2001 — Section 41. Agricultural Income - ITO, 2001

💡 Why This Matters

Understanding this provision is essential for tax compliance and frequently tested in CA, ICMAP & ACCA Pakistan exams.

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