CAF-2 · Chapter 7 · Question 7 of 15
ABC Ltd made a sale of Rs. 500,000 and the corresponding expense for this specific transaction was Rs. 300,000. The customer paid Rs. 250,000 in cash against this single invoice. What is the tax implication under the Income Tax Ordinance, 2001?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) B) 50% of the corresponding expenditure (Rs. 150,000) shall be disallowed.
Explanation
Where a taxpayer receives a payment exceeding Rs. 200,000 otherwise than through a banking channel against a single invoice, 50% of the corresponding expenditure shall be disallowed. Since the cash receipt was Rs. 250,000, 50% of the Rs. 300,000 expense (Rs. 150,000) is disallowed.
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