Tax Book 2023

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

On 1 September 2021 hepaidanamountequivalenttoPKR300,000toacquirethesharesinMP,Theshares

(iii)     On 1 January 2023 HFLsoldanitemofinventorytoBaberforRs.12,000.Thenetrealizablevalueof

theitemofinventoryattheendof 31 December 2022 and 30 June 2023 wasRs.22,000andRs.24,000

respectively. HFL had acquired it in July 2021 at a cost of Rs. 35,000.

(iv)     AnoptionwasgrantedtoBaberinAugust 2019 toacquire2,500sharesinHFL’sparentcompany,

Mamooplc,(MP),listedonHongKongstockexchange.However,theoptionwasexercisableaftercompletion

ofoneyearofservicewithHFL,BaberpaidanamountequivalenttoPKR200,000toacquiretheoptionwhen

the fair market value of the option was PKR 250,000

Conceptual Approach to Taxes ___ 509

were issued to him on 15 September 2021 when the market value of each share was equivalent to PKR 375.

Other information relevant to tax year 2023 is as under:

(i)  On 1 July 2022 Baber received following payments from his previous employer sultan Hospital Limited:

·         Rs. 485,000 against gratuity under an unapproved scheme.

On 15 June, 2023 Babersold2,000sharesinMPandreceivednetproceedsequivalenttoPKR875,000inhis

bankaccountinPakistan,ThisamountwasreceivedafterdeductionofbankchargesofPKR5,000and

brokerage commission equivalent to PKR 10,000

(ii)    On 1 November 2022 BaderfellillandwasadmittedtoSultanHospitalLimited.ThehospitalincurredRs.

65,000 on his treatment but did not charge anything to Bader.

·         Rs. 600,000 in respect of termination benefits under an agreement.

Required:

(iii)   On 1 December 2022 he paid a premium of Rs. 300,000 on a life insurance policy.

(vi)   Histotalassessedtaxableincomeandtotaltaxespaidthereonduringthethreeprecedingtaxyears

amounted to Rs. 10,500,000 and Rs. 1,260,000 respectively.

UndertheprovisionsoftheIncomeTaxOrdinance, 2001 andRulesmadethereunder,computerthetaxable

income and net tax payable by or refundable to Bader for tax year 2023.

65,000 on his treatment but did not charge anything to Bader.

(iv)   On 1 January 2020 Baderpurchased35,000listedsharesinMuftLimited(ML)atapriceofRs. 25 per

share.On 20 March 2023 hefullysubscribed15%rightsharesofferedbyMLtoitsexistingshareholdersata

price of Rs. 20 per share.

(v)    Withholding tax deducted from Bader’s salary during tax year 2023 amount to Rs. 1,105,000

ANSWER

National Tax Number :

Tax Year : 2023

Personal Status : Individual

Residential Status : Resident

(Rs.) (Rs.)

INCOME FROM SALARY U/S 12

Basic Salary (250,000 x 12) 3,000,000

Name of Taxpayer : Mr. Bader

income and net tax payable by or refundable to Bader for tax year 2023.

Income year ended : 30th June, 2023

Basic Salary (250,000 x 12) 3,000,000

Medical allowance (28,000 x 12) 336,000

Exempt upto 10% of Basic Salary (300,000) 36,000

House rent allowance (120,000 x 12) 1,440,000

Bond amount on restriction of resigning before 30 June, 2023 900,000

68,750

Prequisites in the shape of inventory provided by the employer 22,000

937,500

(500,000) 437,500

Gratuity under an unapproved scheme 485,000

Less: Exemption upto 75,000 or 50% of the amount payable (75,000) 410,000

Termination benefit from previous employer 600,000

• Total income under the head Salary (A) 6,914,250

Conveyance facility for both official and private use (1,500,000 x

5% x 11/12)

Medical facility free of cost from previous employer [Exempt u/c (53A) of Part I of

Second Schedule]

Fair market value of shares at the time of issue of shares (2,000

x 375)

Less: Amount already paid as consideration (200,000 +

300,000)

Conceptual Approach to Taxes ___ 509