Tax Book 2023

Chapter 21 ___ Solved Past Papers Income Tax Numericals of CA Module C - (2001 to 2022)

Answer

Mr. Basit

For tax year 2023

Salary Rupees

Pakistan source income:

Salary [Rs. 610,000×7 months] 4,270,000

Allowance for services of domestic servant [60,000×7] 420,000

Computation of total income, taxable income and net tax payable/refundable

(^472) ____ _ _Conceptual Approach to Taxes
Allowance for services of domestic servant [60,000×7] 420,000
213,500
Acquired car on lease
780,000
Leave encashment 320,000
Gratuity (2,200,000–300,000) - u/c (13)
Part I of 2nd Schedule
1,900,000
Salary arrears of tax year 2022 700,000
Foreign source income:
Salary (3,200×250×3) 2,400,000
11,003,500
(50,000)
Allowance @ 5% of salary solely expended in the performance
of his duties of
employment (4,270,000×5%)
Total income from salary (A)
Capital gain (B)
Loss on sale of ML’s shares
Shares acquired under employee share scheme
[1,170,000(13,000×90)–390,000(13,000×30)]
Income from other sources
Pakistan source income:
200,000
Foreign source income:
250,000
450,000
11,403,500
(2,400,000)
50,000
Taxable income 9,053,500
Tax liability as salaried individual
On Rs. 6,000,000 1,005,000
On remaining Rs. 3,053,500 @ 32.5% 992,388
Income earned from university [1,000(1,500–500)×250]
Total income from other sources (C)
Total income [A+B+C]
Less: Foreign source salary – Exempt u/s 51(2)
Add: Capital loss (Separate block of income)
Loss on sale of ML’s shares
[400,000(5,000×80)–450,000(5,000×90)]
Gift received from friend - not being as relative u/s 39
On remaining Rs. 3,053,500 @ 32.5% 992,388
1,997,388
(55,150)
1,942,238
0
1,942,238
Less: Withholding tax (1,400,000)
Tax payable 542,238
For the purpose of this part of the question, assume that the date today is 31 August 2023.
Less: Tax credit for investment in mutual fund - no more
available as section 62 omitted by Finance Act, 2022
Q.2 (b) Spring 2022
During the year ended 30 June 2023, Faster & Co. (FC) started a new project. Following information is
Less: Foreign tax credit [250,000×22.06% (1,997,388 /
9,053,500 × 100) = 55,150] OR [225×250 = 56,250] whichever
is lower.
(i) Incurred Rs. 5 million on feasibility study of the project.
During the year ended 30 June 2023, Faster & Co. (FC) started a new project. Following information is
available:
(ii) Obtained a 3% loan of AED 2 million from a UAE bank on 1 January 2022 for the purchase of plant and
machinery. The interest is payable annually and principal amount is repayable at the end of third year.
(iii) Installed the plant and machinery at a cost of Rs. 150 million on 14 March 2023.
(^472) __ ___ _Conceptual Approach to Taxes