Tax Book 2023

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

W-1: Computation of profit under accrual basis of accounting Rupees

Profit as given in the question - on cash basis 13,870,000

Adjustment on account of:

• Closing Stock under Absorption Cost Method 8,800,000


• Closing Stock under Prime Cost Method (7,500,000)
  1,300,000
  Profit under accrual basis of accounting 15,170,000

(B)

Q.1 March 2019

Conceptual Approach to Taxes ___ 493

(B)

(i)   A monthly salary of Rs. 200,000.

Required:

Answer

Besides the share of income from MAZE, Zain has received the following amounts from his employment with

Hasan Pakistan Limited (HPL) during the tax year 2023:

(ii)  Reimbursement of Rs. 350,000 for actual cost of medical services for him and his dependents, from an 

insurance company, under the health insurance policy.

On 31 March 2023, he purchased a car from HPL for Rs. 110,800. The market value of this car on 31 March

2023 was Rs. 250,000.

Compute the total income, taxable income and tax liability of Zain for the tax year 2023

Answer

Rupees

Salary (200,000 × 12) 2,400,000

Reimbursement for actual cost of medical services -

Purchase of car at less than market value (250,000 – 110,800) 139,200

Taxable income without share of AOP 2,539,200

Share of profit from AOP (W-1) 7,256,339

Taxable income including share of AOP 9,795,539

Tax liability for Zain

Tax on Rs. 6,000,000 1,330,000

For tax year 2023

MAZ Enterprises

Computation of the taxable income of Zain

Tax on Rs. 6,000,000 1,330,000

35% on amount exceeding Rs. 6,000,000 1,328,439

Tax Liability 2,658,439

Tax rate to be charged (2,548,438 / 9,795,539) x 100 27.14%

Tax liability of Zain(2,539,200 x27.14%) 689,139

W-1: Determination of Zain's share of profit from MAZE Rupees

Partners divisible income 21,769,033

1/3 share of Zain (7,256,339 –1,800,000) 5,456,339

Monthly remuneration received from MAZE (150,000 × 12) 1,800,000

7,256,339

Conceptual Approach to Taxes ___ 493