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Income Tax MCQs Pakistan — 200+ Practice Questions

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17
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ITO
2001 Based
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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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21
Question 21 of 52 Income from Other Sources – Nature of Income
Basic
📖 Section 39(1)(c). Income from Other Sources - ITO, 2001
Which of the following incomes is chargeable to tax under the head Income from Other Sources ?
1 Salary received from an employer ❌
2 Rental income from property ❌
3 Capital gain on sale of immovable property ❌
4 Profit on debt ✅
✅ Correct Answer!
✅
Correct Answer
📝 Explanation
Any profit on debt earned by a person from a bank or a financial institution is treated as income from other sources.
⚖️ Legal Reference
📖 Income Tax Ordinance, 2001 — Section 39(1)(c). 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.
22
Question 22 of 52 Default Surcharge
Basic
📖 Section 205. Default Surcharge - ITO, 2001
Which section of the Income Tax Ordinance, 2001 deals with default surcharge?
1 Section 210 ❌
2 Section 205 ✅
3 Section 204 ❌
4 Section 203 ❌
✅ Correct Answer!
✅
Correct Answer
📝 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.
⚖️ Legal Reference
📖 Income Tax Ordinance, 2001 — Section 205. Default Surcharge - ITO, 2001
💡 Why This Matters
Understanding this provision is essential for tax compliance and frequently tested in CA, ICMAP & ACCA Pakistan exams.
23
Question 23 of 52 Deduction of Tax at Source
Basic
📖 Section 149. Salary - ITO, 2001
Which section of the Income Tax Ordinance, 2001 deals with tax deduction at source from salary?
1 Section 149 ✅
2 Section 150 ❌
3 Section 151 ❌
4 Section 152 ❌
✅ Correct Answer!
✅
Correct Answer
📝 Explanation
The Employer is responsible for deducting tax from the employee’s salary and depositing it into the government treasury.
⚖️ Legal Reference
📖 Income Tax Ordinance, 2001 — Section 149. Salary - ITO, 2001
💡 Why This Matters
Understanding this provision is essential for tax compliance and frequently tested in CA, ICMAP & ACCA Pakistan exams.
24
Question 24 of 52 Deduction of Tax at Source
Basic
📖 Section 150. Dividends - ITO, 2001
Which section of the Income Tax Ordinance, 2001 deals with tax deduction at source from Dividends ?
1 Section 152 ❌
2 Section 150 ✅
3 Section 151 ❌
4 Section 149 ❌
✅ Correct Answer!
✅
Correct Answer
📝 Explanation
Every person paying a dividend shall deduct tax from the gross amount at the time of payment.
⚖️ Legal Reference
📖 Income Tax Ordinance, 2001 — Section 150. Dividends - ITO, 2001
💡 Why This Matters
Understanding this provision is essential for tax compliance and frequently tested in CA, ICMAP & ACCA Pakistan exams.
25
Question 25 of 52 Deduction of Tax at Source
Basic
📖 Section 151. Profit on debt - ITO, 2001
Which section of the Income Tax Ordinance, 2001 deals with tax deduction at source from Profit on debt ?
1 Section 151 ✅
2 Section 150 ❌
3 Section 148 ❌
4 Section 152 ❌
✅ Correct Answer!
✅
Correct Answer
📝 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.
⚖️ Legal Reference
📖 Income Tax Ordinance, 2001 — Section 151. Profit on debt - ITO, 2001
💡 Why This Matters
Understanding this provision is essential for tax compliance and frequently tested in CA, ICMAP & ACCA Pakistan exams.
26
Question 26 of 52 Deduction of Tax at Source
Basic
📖 Section 154. Export - ITO, 2001
Which section of the Income Tax Ordinance, 2001 deals with tax deduction at source from Exports ?
1 Section 149 ❌
2 Section 148 ❌
3 Section 154 ✅
4 Section 151 ❌
✅ Correct Answer!
✅
Correct Answer
📝 Explanation
The bank shall deduct tax at source at the time the amount is credited.
⚖️ Legal Reference
📖 Income Tax Ordinance, 2001 — Section 154. Export - ITO, 2001
💡 Why This Matters
Understanding this provision is essential for tax compliance and frequently tested in CA, ICMAP & ACCA Pakistan exams.
27
Question 27 of 52 Deduction of Tax at Source
Basic
📖 Section 154A. Export of Services - ITO, 2001
Which section of the Income Tax Ordinance, 2001 deals with tax deduction at source from Exports of Services ?
1 Section 148 ❌
2 Section 154 ❌
3 Section 154A ✅
4 Section 155 ❌
✅ Correct Answer!
✅
Correct Answer
📝 Explanation
The bank shall deduct tax at source at the time the amount is credited.
⚖️ Legal Reference
📖 Income Tax Ordinance, 2001 — Section 154A. Export of Services - ITO, 2001
💡 Why This Matters
Understanding this provision is essential for tax compliance and frequently tested in CA, ICMAP & ACCA Pakistan exams.
28
Question 28 of 52 Deduction of Tax at Source
Basic
📖 Section 155. Rent of Immovable Property - ITO, 2001
Which section of the Income Tax Ordinance, 2001 deals with tax deduction at source from Rent of Immovable Property ?
1 Section 155 ✅
2 Section 147 ❌
3 Section 156 ❌
4 Section 152 ❌
✅ Correct Answer!
✅
Correct Answer
📝 Explanation
Every prescribed person shall deduct tax at source at the time of making payment to the owner.
⚖️ Legal Reference
📖 Income Tax Ordinance, 2001 — Section 155. Rent of Immovable Property - ITO, 2001
💡 Why This Matters
Understanding this provision is essential for tax compliance and frequently tested in CA, ICMAP & ACCA Pakistan exams.
29
Question 29 of 52 Deduction of Tax at Source
Basic
📖 Section 152. Payments to non-residents - ITO, 2001
Which section of the Income Tax Ordinance, 2001 deals with tax deduction at source from Payments to non-residents ?
1 Section 147 ❌
2 Section 148 ❌
3 Section 151 ❌
4 Section 152 ✅
✅ Correct Answer!
✅
Correct Answer
📝 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.
⚖️ Legal Reference
📖 Income Tax Ordinance, 2001 — Section 152. Payments to non-residents - ITO, 2001
💡 Why This Matters
Understanding this provision is essential for tax compliance and frequently tested in CA, ICMAP & ACCA Pakistan exams.
30
Question 30 of 52 Deduction of Tax at Source
Basic
📖 Section 156. Prizes and Winnings - ITO, 2001
Which section of the Income Tax Ordinance, 2001 deals with tax deduction at source from Prizes and Winnings ?
1 Section 156 ✅
2 Section 138 ❌
3 Section 147 ❌
4 Section 137 ❌
✅ Correct Answer!
✅
Correct Answer
📝 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.
⚖️ Legal Reference
📖 Income Tax Ordinance, 2001 — Section 156. Prizes and Winnings - 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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