Income From Business Chapter- 09
Provided also that this clause shall come into force with effect from the first day of
October, 2020.
(r) any expenditure attributable to sales claimed by any person who is required to integrate but
fails to integrate his business with the Board through approved fiscal electronic device and
software:
Provided that disallowance of expenditure under this clause shall not exceed 8% of the
allowable deduction.Example: Profit before tax of Sigma (Pvt.) Ltd. is Rs. 1,000,000. Following items have been included
in the computation of profit.
(a) Income tax paid (Tax deducted at source by others) Rs. 40,000.
(b) Taxable salaries paid to employees without deduction of tax Rs. 425,000.
(c) Donation to unapproved institution Rs. 20,000.
Required: Compute taxable profit according to the provisions of Income Tax Ordinance, 2001.
Solution:
Taxable profit: Rs.
Profit before tax 1,000,000
Add: deductions not admissible:
Tax paid or deducted at source 40,000
Payment of salaries without deduction of tax 425,000
Donation to unapproved institution 20,000 485,000
Taxable profit 1,485,000
Example: The following payments of expenses paid through cash.
Nature of payment Rs.Rent of one month paid to an AOP for Karachi rented office
6 0,000
Air tickets purchased 100,000
Payment of monthly wages of Mr. B 14,000
Bill paid for repair of car 35 ,000
Electricity bill paid 115,000
Telephone bill paid 48,000
Paid professional tax 30,000
Paid audit fee 60,000
Paid tax consultant 40 ,000
Compute the addition u/s 21(1) of the Income Tax Ordinance, 2001
Solution:
Calculation of addition u/s 21(1) Rs.
Rent paid to an AOP for Karachi rented office (N- 5 ) 6 0,000
Air tickets purchased (N-1) -
Payment of wages of Mr. B (N-3) -
Bill paid for repair of car (N-2) -
Electricity bill paid (N- 1 ) -
Telephone bill paid (N- 1 ) -
Paid professional tax (N- 1 ) -
Paid audit fee (N- 4 ) 60,000
Paid tax consultant (N-2) -
Total inadmissible expenses 120 ,000