loading...

FIN623 Assignment No 2 Spring 2012 solution

Mr. Jamal is now 62 years old and he is working on contract basis in a multinational group of companies. He has to stay in different cities for more than one year for performing his duties. Rent free accommodation and medical facility is provided to him by the company as per contract agreement. He is also entitled to accommodation allowance of Rs. 17,000 per month, if, in case the company’s accommodation is not available. For tax purpose, the house rent allowance is admissible at the rate of thirty percent. Further, the following information is available for the tax year 2012:

Particulars

Rs.

Basic salary (per month)

40,000

Medical expenses reimbursed

90,000

Children fee paid

10,000

Bonus

70,000

Free food during duty hours paid by employer

50,000

Gratuity approved from Commissioner of Income Tax received

50,000

Agricultural income

150,000

Loan payable to previous employer @ 14% for purchase of an asset paid by

50,000

current employer

Loan amount waived off

10,000

Cheque received as performance award from president of the company

50,000

Fair market value of Jeep provided by employer for personal and official use

950,000

Annual lease payment of jeep by the employer

90,000

Required:

·Calculate the taxable income and tax liability for the tax year 2012.

·Show working notes also.

Marking Scheme:

·22 Marks for correct solution + 3 marks for formatting and presentation = Total 25 marks

Solution:

Assignment no: 2

Taxation management (FIN 623)

Mr.Jamal

Tax year: 2008

Residential status: Resident

Computation of income tax payable

 

Particulars of income

Exempt income

Taxable income

Basic salary (w-1)

480000

Medial expense reimbursed

90000

Accommodation allowance (w-2)

22100

Children fee paid

10000

Bonus

70000

Free food during duty time paid by employer

50000

Gratuity approved from commissioner of income tax

50000

Agricultural income

150000

Loan paid to previous employer @14% by current employer (w-3)

57000

Cheque received from president of company as reward

50000

Jeep provided by employer for personal and official use    (w-4)

47500

Annual lease payment of jeep by the employer

90000

Total taxable income

786600

Note:

According to income tax ordinance 2001 if a taxpayer is a senior citizen (aged 60 years or above) and his taxable income is upto Rs.400000/- gets a special tax rebate, which will be provided @ 50 % of tax payable.

 

Calculation on tax payable income:

786600 @ 7.50 = 58995

Taxable income = 58995 @ 50% rebate available for senior citizens

Taxable income = 29497.5

 

Working notes:

W-1:

Basic salary = 40000 x 12 = 480000

 

W-2:

Accommodation allowance = 17000 x 30% = 5100

Accommodation allowance = 5100 + 17000 = 22100

 

W-3:

Loan paid to previous employer = 50000 @ 14% = 7000

+ amount of loan paid to previous employer        = 50000

Total amount paid to previous employer              = 57000

 

W-4:

Jeep provided for personal and official use = 950000 @ 5% charged to income tax

Jeep provided for personal and official use = 47500

 

DOWNLOAD SOLUTION HERE
loading...
  • Mahmood Sml1

    please agar kisi k pass fin 623 ki assisgnment ki solution ha tu please mahmood.sml1 @gmail.com pa pa send kar da.
     Thanks

  • Correct and Complete solution has been shared.