CFAP 5: Tax Planning and Practices - Introduction & Key Concepts

Vocabulary flashcards covering key concepts, schedules, and tax regimes from the CFAP 5 Tax Planning and Practices lecture.

SROs (Notifications)

Extensions of law that are binding on both tax payers and tax authorities.

Circulars

Clarification of law provided by FBR that is binding on tax authorities, but the taxpayer may or may not follow.

Circular letters

Clarification of law provided by FBR against a specific query, binding on tax authorities but optional for taxpayers.

Income Tax Ordinance, $2001$

The primary statute governing income tax, which includes various schedules specifying rates, exemptions, and computation rules.

First Schedule

The schedule within the Income Tax Ordinance, $2001$ that specifies the $Rate\,of\,tax$.

Second Schedule, Part I

Provisions relating to Exemptions from total income.

Second Schedule, Part II

Provisions relating to the Reduction in tax rates.

Second Schedule, Part III

Provisions relating to the Reduction in tax liability.

Second Schedule, Part IV

Provisions relating to Exemption from specific provisions of the law.

Third Schedule

Specifies the rates for depreciation, initial allowance, and pre-commencement expenditure.

Fourth Schedule

Rules for the computation of the profits and gains of an insurance business.

Fifth Schedule

Rules for the computation of profits and gains from the exploration and production of petroleum ($Part\,I$) and extraction of mineral deposits ($Part\,II$).

Sixth Schedule

Covers recognized provident funds, approved superannuation funds, and approved gratuity funds.

Seventh Schedule

Rules for the computation of the profits and gains of a banking company and the tax payable thereon.

Eight Schedule

Rules for the computation of capital gains on listed securities.

Ninth Schedule

Rules for the computation of the tax payable on profits and gains of a trader.

Tenth Schedule

Special provisions for persons not appearing on the active taxpayers list.

Eleventh Schedule

Rules for computation of profits and gains of builders and developers and tax payable thereon.

Twelfth Schedule

Relates to $Section\,148$ regarding imports.

Thirteen Schedule

Provisions for non-profit organizations, trusts, or welfare institutions.

Fourteen Schedule

Rules for the computation of profit and gains of Small and Medium Enterprises (SMEs).

Allowable Deductions

Reductions specific to each head of income that can create a loss under that particular head.

Deductible Allowance

Reductions to the total income that cannot create a loss, including $Zakat$, $WWF$, $WPPF$, and $Education\,expense$.

Zakat ($Section\,60$)

A specific deductible allowance categorized under the Income Tax Ordinance, $2001$.

Worker Welfare Fund ($Section\,60A$)

A deductible allowance ($WWF$) applied to total income.

Worker Profit Participation Fund ($Section\,60B$)

A deductible allowance ($WPPF$) applied to total income.

Separate Block of Income

Income subject to special tax rates rather than general slab or corporate rates, such as capital gains on securities or immovable property.

Normal Tax Regime (NTR)

The regime for income that is not provided as taxable under FTR or MTR, subject to general corporate or slab rates.

Minimum Tax Regime (MTR)

A regime where the withholding tax collected or deducted is provided as the minimum tax liability.

Final Tax Regime (FTR)

A regime where the withholding tax collected or deducted is treated as the final tax liability and no further deductions or loss set-offs are allowed.

Separate Tax Regime

A category of FTR where tax is determined by imposition specifically provided in the Ordinance ($e.g.,\,Dividend\,u/s\,5$).

Presumptive Tax Regime (PTR)

A category of FTR where tax is handled through withholding.