Tax Book 2023

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

Required:

Solution of Q.NO. 2 Autumn 2003

DuringtheyearCompany“A”haddeductedtaxu/s 149 amountingtoRs.270,000andCompany“B”had

deducted tax u/s 149 amounting to Rs.800,000 from payments made to Mr. Bashir.

Compute the taxable income and tax liability of Mr. Bashir based on the data provided above for the tax year

2023.

Conceptual Approach to Taxes ___ 565

INCOME FROM SALARY U/S 12 Total (Rs.)

Co. A + Co. B

Basic Salary 1,286,730

Bonus 221,800

House Rent Allowance 481,409

Utility Allowance 128,672

Name of Taxpayer : Mr. Bashir Ahmed

National Tax Number : XXX

Income year ended : June 30, 2023

Tax Year : 2023

Personal Status : Individual

Residential Status : Resident

Utility Allowance 128,672

Conveyance provided by employer partly for personal use (1,100,000 x 5%) 55,000

Leave encashment 77,783

Medical reimbursement as per the terms of employment (fully exempt) 0

Ex-gratia payment 2,048,300

Salary Income taxable under normal procedure 4,299,694

COMPUTATION OF TAX LIABILITY:

Tax under Option 1

Normal procedure:

579,923

Tax under Option 2

Tax on Rs. 4,299,694 [405,000 + {(4,299,694 - 3,600,000) x 25%]

Tax on income without golden handshake

146,424

479,553

Total tax payable 625,977

Tax liability

579,923

Less: Tax deducted at source 1,070,000

Balance tax refundable (490,077)

As tax under option 1 is lower than from tax payable under

option 2 hence the tax payer shall opt to pay tax under option 1.

Tax on golden hand shake: ( tax of last 3 years / Taxable

Income of last 3 years x 100) x Amount of golden hand shake

Rs. (1,198,790 / 5,120,360 x 2,048,300)

Tax on Rs. 2,251,394 [15,000 + (4,299,694 - 2,048,300-

1,200,000) x 12.5%]

Note 1: for golden handshake payments Taxable income Income tax

2020 1,309,570 269,902

2021 1,545,850 371,255

2022 2,264,940 557,633

Total 5,120,360 1,198,790

Q.NO. 4 Autumn 2003

ComputetheprojectedadvancetaxliabilityandnetadvancetaxpayableinrespectofABCLimitedapublic

company,forthequarterendedSeptember30,2022.Thedataofturnoverandtaxliabilityassessedinrespect

of the latest assessed tax year is as follows:

Golden handshake payment is taxed as separate block of income, if we include golden handshake payment in

salary income the higher amount of tax shall be payable on it.

Conceptual Approach to Taxes ___ 565