Tax Book 2023

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

Conveyance allowance 8,000

In addition to the above, Wajahat was also provided the following:

Following further information is also available:

(i) Provident fund (PF) contributionofRs. 8,400 per month. An equal amount permonth was

contributedbyWajahattothefund.InterestincomeofRs.391,000attherateof20%ofaccumulated

balance of PF was credited to his PF account.

(ii) Reimbursement of electricity bills during the year amounting to Rs. 60,000.

(^514) ____ ___ _Conceptual Approach to Taxes
Following further information is also available:
(iii)On 1 September2022,Wajahatstartedatuitioncentreforthestudentsoffinanceinaposhlocality.He
received tuition fees of Rs. 2,198,000 and incurred following expenses:
Travelling, boarding and lodging expenses of Rs. 300,000. These expenses were incurred by
Wajahat in Sri Lanka for attending teachers training workshop.
Monthly salaryofRs.50,000paidtohimselfandRs.35,000tohisfriendYousufwhotaughtfinancial
accounting at the centre.
(ii)WajahatcontributedRs.890,000inanapprovedpension fundundertheVoluntaryPensionSystem
Rules, 2005.
(i) WajahatreceivednetdividendofRs.78,200fromBEELimited,acompanylistedonPakistan Stock
Exchange Limited. Withholding taxand zakat deducted fromdividend amountedtoRs.9,200and
Rs.4,600respectively. HealsoreceiveddividendofRs.65,000fromacompanyinU.A.Ethroughnormal
banking channels. However, no tax was withheld either in Pakistan or U.A.E.
Rs. 500,000 against purchase of used computers for the centre.
Other miscellaneous expenses amounting to Rs. 195,000.
(iv) Wajahat’s total taxable income during the previous tax year was Rs. 1,850,000.
Required:
Note: Show all relevant exemptions, exclusions and disallowances.
Underthe provisions ofthe IncomeTaxOrdinance, 2001 and Rulesmadethereunder,computethe
total income, taxable income and net tax payable by/refundable to Wajahat during the tax year 2023.
Wajahat
Wajahat in Sri Lanka for attending teachers training workshop.
ANSWER
Rupees Rupees
Income from Salary:
Basic salary (70,000 x 12) 840,000
Dearness allowance (10,000 x 12) 120,000
Conveyance allowance (8,000 x 12) 96,000
4,800
71,000
PF contrib. [(8,400 x 12) - (lower of Rs. 150,000 or 1/10th of
basic + DA)]
Working: (100,800) or (lower of Rs.150,000 or
(840,000+120,000)110 = 96,000
Interest on PF [391,000 - (higher of: interest @16% or 1/3rd of
basic + DA)] Hence [Rs. 391,000 - 320,000]
Wajahat
Computation of Income Tax Liability
For the Year 2023
Reimbursement of electricity bill 60,000
Total income under the head salary 1,191,800
Income from business:
2,198,000
Less: Admissible expenses:

Friend ( 35,000 x 10) (350,000)

Training expenses (300,000)

(150,000)

Other misc. expenses (195,000)

Total income under the head Business 1,203,000

Working: (391,000 / 20% x 16% = 312,800 or

((840,000+120,000) x 1/3= 320,000)

basic + DA)] Hence [Rs. 391,000 - 320,000]

Tuition fees (for ten months ended 30 June 2023)

Salaries paid: Wajahat (inadmissible being the owner of

the centre)

Dep.: Computers (500,000 x 30% ) [no initial allowance is

admissible]

(^514) ____ ___ _Conceptual Approach to Taxes