FIN623 Taxation Management Assignment 1 Solution Fall 2014

After going through this assignment, the students should be able to:
1. Calculate the gross total income
2. Differentiate the sources of income according to residential status
3. Differentiate between taxable and non-taxable income of a person Mr. Ali furnishes the following particulars of his income earned during tax Year 2014-15:
1. Income from agriculture in Bangladesh, received there Rs. 3, 80,000, but later on remitted to Pakistan.
2. Interest on Indian Development Bonds, Rs. 90,000, one-sixth of which received in India.
3. Gift of Rs. 70,000 received in foreign currency from a relative in Pakistan.
4. Arrears of salary Rs. 1, 50,000 received in India from a former employer in Pakistan.
5. Income from property received outside India Rs. 3, 00,000 (Rs. 1,00,000 is used in Bahrain for the educational expenses of his son in Bahrain, and Rs. 2,00,000 later on remitted to Pakistan).
6. Income from business in Iran which is controlled from Pakistan Rs. 2, 00,000 (Rs. 1, 00,000 being received in Pakistan).
7. Dividends received on 30.06.2014 outside Pakistan from a Pakistani company, Rs. 2, 50,000.
8. Profit from business in Lahore managed from outside Pakistan Rs. 1, 00,000, 60% of which is received outside Pakistan. Requirement:
a) Determine the Gross Total Income of Mr. Ali for tax Year 2014-2015, if Mr. Ali is a Resident individual of Pakistan.
b) Give reasons if any item is not included in the gross total income of Mr. Ali.