Total Marks=30
After going through this assignment, the students should be able to:
1. Calculate the taxable income of salaried person;
2. Calculate the tax liability of the salaried person; &
3. Present the correct treatment of different perquisites provided to salaried persons.
Mr. Rashid was employed with Star Limited (SL) as an event organizer. On June 30, 20X3 he resigned from his employment without completion of notice period. On July 01, 20X3 he rejoined another company Creative solution Limited (CSL) as a senior event organizer. Following information is available to his assessment for
the tax year 20X4:
A. On July 01, 20X3 CSL paid Rs. 280,000 to SL as compensation in lieu of un-served notice period by Mr. Rashid.
B. On July 15, 20X3 Mr. Rashid received gratuity of Rs. 350,000 from an unrecognized gratuity fund maintained by SL. He also received Rs. 150,000 as leave encashment.
C. In accordance with the terms of his employment with CSL, Mr. Rashid was provided with the
following benefits during the tax year 20X4:
1. Basic salary of Rs. 245,000 per month and utility allowance of Rs. 21,000 per month.
2. A reimbursement of personal medical expenses up to 15% of the annual basic salary and Rs. 250,000 on account of hospitalization charges of his daughter were made after procuring hospital bills showing the national tax number of the hospital. These bills were also attested and certified by CSL.
3. For the first two months of his employment, a pick and drop facility was provided to Mr. Rashid at a monthly rent of Rs. 25,000. On September 01, 20X3 CSL provided a company maintained 1300cc car which was partly used for private purpose. The cost of the car was Rs. 1,500,000.
4. Monthly salary of Rs. 6,000 was paid to Mr. Rashid’s house keeper. Mr. Rashid however, reimbursed 20% of the house keeper’s salary to CSL.
5. A special allowance of Rs. 50,000 was paid to meet expenses necessarily to be incurred in the performance of his official duties. Actual expenditure was Rs. 40,000.
6. On January 01, 20X4, he was provided an interest free loan of Rs. 1,500,000.
7. A commission of Rs. 500,000 was paid for introducing new clients to the company. Withholding tax was deducted by CSL at the rate of 10% from such payments.
8. The tax deducted at source from his salary by CSL for the tax year 20X4 amounted to Rs. 550,000.
D. Apart from his employment with CSL, Mr. Rashid also organized events for private clients. He received a total of Rs. 1,000,000 from such clients. No tax was deducted from such receipts. However,
he incurred an overall loss of Rs. 350,000 on organizing these events.
E. He received a share of profit from a business in Malaysia equivalent to Pak Rs. 535,000. He paid Rs. 130,000 in taxes in Malaysia on such income.
F. Mr. Rashid acquired 10,000 shares of a listed company from the Privatization Commission of Pakistan at a price of Rs. 100 per share on May31, 20X3. He was allowed a tax credit of Rs. 100,000 in tax year
20X3 against this investment. On May 20, 20X4 he sold all the shares for Rs. 1,000,000.
G. He paid Zakat of Rs. 250,000 to an approved organization through cross cheque.
Requirement:
Compute the taxable income, tax liability and tax payable/refundable, if any, by Mr. Rashid for the tax year
20X4. Provide complete calculations and notes.
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