Tax Book 2023

Chapter 30 Solved Past Papers Income Tax Numericals of ICMAP Stage IV - (2003 to 2018)

Foreign tax credit on other sources

(a) Tax paid in foreign country 187,500

(b) 842,500 / 4,500,000 x 1,350,000 252,750

Whichever is lower (187,500)

Balance tax payable 608,194

Q. NO. 1 WINTER 2016

Rs.

40,000

Mr.Abid wasworkingasAssistant Manager Marketingin ICR PrivateLimited forthree years.

Duringthetaxyear2023,heleftthecompanyandhasgotanotherverygoodopportunityinDaxo

Pharmaas a Marketing Manager. Since,he has tofile income tax return for the tax year

2023, he isconfusedaboutcalculationofhistaxableincomeandtaxliabilitybecausehereceived

various perks and benefits from previous and current employers during the year.

Suppose you are Mr.Abid's Tax Consultant and he has provided youfollowingcalculation

of his taxable income and tax liability for the tax year 2023:

Perks and benefits received from ICR Private

Limited:

Basic salary (per month)

760___ Conceptual Approach to Taxes

40,000

2,000

3,000

5,000

20,000

300,000

130,000

50,000

20,000

1,500

Other Information

Contribution toward recognized provident fund (per month)

(including equal contribution by the employer)

Gratuity received

(the gratuity fund was not approved by the

Commissioner Inland Revenue)

Perks and benefits received from Daxo Pharma:

Basic salary (per month)

House rent allowance (per month)

Entertainment allowance (per month)

Yearly re-imbursement of medical expense allowed to Rs. 40,000 out of which Rs.

10,000 (vouchers verified) have been claimed by Mr. Abid during the year.

Withdrawal from recognized provident fund

Thecompanyhasprovidedawhollymaintained1000cccartoMr.Abidforhispersonalandofficial

use. The cost of the car is Rs. 800,000.

Basic salary (per month)

Utility allowance (per month)

Conveyance allowance (per month)

Bonus received in December 2022 equalto 50%of

one month basic salary

Final Settlement on Leaving of ICR Private Limited:

Other Information

Mr.AbidleftICRPrivateLimitedonMarch31, 2023 andjoinedDaxoPharmaonMay1,

2023.

Apart from his employment, he hasalso been working asa visitingfaculty in a

professionalinstitute. Hehasalsoreceivedhonorarium ofRs.58,500 (netof10%tax

withheld) from such institute during the year.

Almost 15 months ago, Mr. Abid had acquired 1,000 shares from Alpha Private

Limited. He received capital gain of Rs. 30,000 on sale of such shares.

760___ Conceptual Approach to Taxes