FIN623 Assignment # 2 Solution

Taxation Management (FIN623)
Assignment # 02
Solution:
Name of Taxpayer : Hamid
National Tax No : XXX
Tax year : 200A
Personal Status : Individual-Salaried
Residential Status : Resident
Computation of Taxable Income & Tax Liability
Salary Income: Rs.
Basic salary 120,000
House rent allowance (N-1) 57,000
Utilities allowance (N-2) 15,000
Conveyance allowance (N-3) 18,000 210,000
Taxable income 210,000
Computation of Tax Liability:
Tax on Rs. 210,000 @ 0.5% 1,050
Add: Tax on property income (N-4) 1,000
Total tax 2,050
Less: Tax deducted at sources from salary (1,000)
Net tax payable 1,050
Notes:
N-1 House rent allowance is totally taxable
N-2 Utilities allowance is totally taxable
N-3 Conveyance allowance is fully taxable
N-4 Income from property:
Rent chargeable to tax (Rs. 10,000 x 12) 120,000
Add: 1/10th of non-refundable deposit (500,000/10) 50,000
Total rent 170,000
Tax is computed as below:
Tax on Rs. 150,000 Nil
Tax on Rs. 20,000 @ 5% 1,000
1,000