Tax Book 2023

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

·Leave encashment 50,000

(i)

(ii) He has paid Zakat of Rs. 25,000 to an approved institution.

(iii)

(iv)

(v)

He paid a donation of Rs. 20,000 to a charitable institution for which a tax credit is

allowed u/s 61.

He received a pension amounting to Rs. 7,000 p.m from his past employment in the

government.

Required: Compute the amount of taxable income and tax liability of Mr. Hussain for the tax year

2023.

He paid donation of Rs.10,000 to an approved institution specified in Thirteenth

Schedule of the ITO, 2001.

Company alsoprovide him with a 800CCcar valuing Rs. 600,000as perbooks of

accounts. The car is used for official and personal purposes.

788___ Conceptual Approach to Taxes

Solution:

Mr. Hussain Ahmad (Resident)

Computation of taxable income and tax liability

For the Tax year 2023

Rs. Rs.

INCOME FROM SALARY

Basic salary (Rs. 50,000 x 12 months)(Note - 1) 600,000

House rent allowance (Rs. 22,500 x 12 months)(Note - 1) 270,000

Utility allowance (Rs. 5,000 x 12 months)(Note - 1) 60,000

Medical allowance (Rs. 6,000 x 12 months) 72,000

Less: Exempt upto 10% of basic salary U/C 139 60,000 12,000

Leave encashment (Note - 1) 50,000

Conveyance (Rs. 600,000 x 5% of cost of asset to employer) U/R 5 30,000

Pension as Govt. employee (exempt u/c 9 of Part I of second schedule) -

Total income 1,022,000

Less deductible allowances:

Less: Zakat paid (maximum upto total income) (25,000)

Taxable incomeTaxable income 997,000997,000

COMPUTATION OF TAX LIABILITY:

Tax on Rs. 997,000 [2.5% x (997,000 - 600,000)] 9,925

As the person is having only salary income hence tax liability for a salaried person is computed as

under:

788___ Conceptual Approach to Taxes