Tax Book 2023

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

(a) Monthly cash remuneration from ATL:

Basic salary Rs.300,000

Utility allowance 15% of basic salary

Medical allowance 12% of basic salary

(i) Rent-freefurnishedaccommodationinabungalowsituatedona 500 squareyardplotofland.Rentfor

comparable accomodation facility in the vicinity is Rs 150,000 per month.

(b) In addition to above, he was also provided the following benefits in accordance with his terms of

employment:

Conceptual Approach to Taxes ___ 527

(d)Fiveyearsago,Mr.Creativehadpurchased20,000sharesofRs.10each,ofanunlistedpubliccompanyat

therateofRs.140pershare.Afteroneyearofacquisition,hereceived8,000bonussharesfromthecompany.

During the latest tax year, he sold 75% of the bonus shares at a price of Rs. 145 per share.

TheLeaseexpiredon 31 December.Mr.Creativerefusedtorenewtheleaseinspiteofthetenant'sofferto

renew the lease offer after increasing the rent by 10%.

(c) A house owned by Mr. creative had been leased out by him at a monthly rent of Rs 50,000.

comparable accomodation facility in the vicinity is Rs 150,000 per month.

(ii) An1800cccompany–maintainedcar.ThecarwaspurchasedtwoyearsagoatacostofRs.1,600,000

and is used both for official and personal purposes.

Hereturnedthenon-adjustabledepositofRs.300,000tothetenant,whichwasreceivedtwoyearsago.The

house was immediately leased to his cousin without any security deposit on a monthly rent of Rs.48,000.

e) During the latest tax year, following

Rs.

Approved voluntary pension fund 600,000

Open – end mutual fund 1,100,000

Required:

(g) Donations of Rs.50,000 were paid to relatives.

Compute the taxable income, tax liability and tax payable for the tax year 2023.

(h) Tax deducted at source from his salary was Rs.737,000.

(f)Duringthelatesttaxyear,heredeemed4,000unitsofanopen-endmutualfundatRs. 50 perunitandMr.

creative had claimed a tax credit of Rs.40,000 on this investment.

Solution

Mr. Creative (Resident)

Computation of taxable income and tax

liability

For the tax year 2023

INCOME FROM SALARY U/S 12 Rupees Rupees

Basic salary (Rs. 300,000 × 12) 3,600,000

Utility allowance (300,000 × 12 × 15%) 540,000

Medical allowance (300,000 × 12 x 12%) 432,000

(360,000) 72,000

1,800,000

Less: Exempt up to 10% of basic salary U/C 139

Rent free furnished accommodation (Higher of fair market rent

Rs. 1,800,000 or 45% of basic pay (1,620,000) shall be added

80,000

6,092,000

INCOME FROM PROPERTY U/S 15

600,000

Less: 20% repaie allowance (120,000)

Net income from property 480,000

870,000

(600,000)

Rs. 1,800,000 or 45% of basic pay (1,620,000) shall be added

in the taxable salary income)

Less cost of bonus shares (Rs.6,000 x 2,800,000 / 28,000)

INCOME FROM CAPITAL GAINS U/S 37

Company maintained car (1,600,000 × 5%) U/R 5

Rent (Rs. 50,000 × 12 months) (including his cusine rent at

FMV) (Note -1)

Gain on sale of bonus shares of unquoted public Company

treated as other than a public Company (8,000 x 75% x Rs.145

each)

Conceptual Approach to Taxes ___ 527