CMA DECEMBER- 2020 EXAMINATION

MANAGEMENT LEVEL
SUBJECT: R2. TAXATION

MODEL SOLUTION

Solution of the Question No. 2

(a) Company M is subject to both 82C(2) and 82C(4) and thus, minimum tax will be computed
as below:
Minimum Tax Under Section 82C(2):
Tax deducted at source Tk. 200,000
Regular tax on regular sources at regular rate (35% of Tk. 760,000) Tk. 266,000
Thus minimum tax U/S 82C(2) will be (whichever is higher) Tk. 266,000
Minimum Tax Under Section 82C(4):
Gross receipt of the company Tk. 75,00,000
Minimum tax rate on gross receipt × 0.60%
Thus minimum tax U/S 82C(4) will be Tk. 45,000
Thus minimum tax for Company M will be Tk. 266,000 under section 82C .

(b)
(i) Dividend Income
From Public Limited Company (18,000 ÷ 0.9) 20,000
Less: Exempted 20,000 -
From Mutual Fund (63,000 ÷ 0.9) 70,000
Less: Exempted 25,000 45,000
Total taxable dividend income 45,000
(ii) Royalty Income
Applicable TDS Rate 12%
Income to be reported during the year of receipt 2,800,000 ÷ 3 933,333
(iii) Interest on BIDB
Taxable interest 27,000 ÷ 0.9 30,000
As section 82C is applicable, none of the interest will be exempted, however, Tk.
3,000 will be considered as minimum tax

(c)

Amount (Tk.)
FOB value of the imported chocolates 575,000
Add: Freight 75,000
Insurance @ 2.5% 14,375
CIF Value 664,375
Add: Landing charge 13,288
Assessable Value (AV) 677,663
Import duty @25% of AV 169,416
Regulatory duty @10% of AV 67,766
914,849
Supplementary Duty @ 10% 91,485
1,006,334
Value Added Tax @ 15% 150,950
Advance Income Tax @ 10% of AV 67,766
Advance Value Added Tax @ 3% 30,190

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(d)

Mr. Jalal
Income Year: 2019-2020
Assessment Year: 2020-2021
Computation of Total Income
Resident Non-resident
1. Income earned in Bangladesh: Salary Income 100,000.00 100,000.00
2. Foreign Income: Profit from Business in London 40,000.00
Profit of Business in Singapore 60,000.00
Fees from consultancy service in Dubai 70,000.00
Total Income 270,000.00 100,000.00

(e)

Assessee: Mr. Kabir

Computation of Taxable Gift for Income Year: 2019-2020; Assessment Year: 2020-21
Tk Tk

1. Cash donation on marriage of brother in law 80,000.00

Less: Exempted to the extent of Tk. 20,000[U/s 4(1)(d) 20,000.00 60,000.00
2. Donation to a local charitable institution 100,000.00
3.Donation to a local high school under a will 500,000.00
Less: Fully Exempted [U/s 4(1)(f) 500,000.00 -
4.Donation to a charitable institution 300,000.00
Less: Exempted -lower of Tk. 200,000(20% od Tk. 10,00,0000 or
Tk,. 100,000) 100,000.00 200,000.00
5. Donation to a body corporation 60,000.00
Gift tax is not applicable here [U/s 20(a)] - -
6. Donation to a religious institution 60,000.00 -
Gift tax is not applicable here [U/s 20(a)] -
Total 360,000.00
Less: General Exemption[U/s 4(2)] 20,000.00
Taxable Gift 340,000.00
Computable of Gift Tax Liability:
On first Tk. 340,000 @ 5% 17,000.00

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Solution of the Question No. 3

Mrs. Razib Ahsan

AY: 2020-21; IY: 2019-20
Particulars Amount Amount Amount
Income from Salary:
Basic Salary [(40,000 × 8) + (44,000 × 4)] 496,000
Dearness allowance (15% of Tk. 496,000) 74,400
Entertainment allowance (20% of Tk. 496,000) 99,200
Medical Allowance (15% of Tk. 496,000) 74,400
Less: exempted (10% of basic or Tk 120,000; lower) 49,600 24,800
Special allowance 20,000
Less: exempted - full 20,000 -
Annual bonus and fees 40,000
House rent allowance (25,000 × 12) 300,000
Less: exempted upto 50% of basic or Tk. 25,000 p.m., 248,000 52,000
lower one
Conveyance allowance (3,000 × 12) 36,000
Conveyance facility (5% of basic or Tk. 60,000 p.a., 60,000
higher one)
Employer’s contribution to RPF (10% of Tk. 496,000) 49,600
Interest on RPF 15,000
Less: exempted upto 1/3rd of basic or interest @ 14.5%, 14,500 500
lower
Taxable income from salary 932,500
Income from security
Interest on 10% tax exempt government securities 20,000
Less: exempted - full 20,000 -
Interest on 12% taxable government securities 18,000
Interest on 15% debenture 37,500
Less: Interest on loan 10,000 27,500
Income from zero-coupon bond 10,000
Less: exempted - full 10,000 -
Income from Interest on Securities 45,500
Income from Business and Profession
Profit from sole proprietorship business 160,000
Loss carried forward from last year (20,000) 140,000

Income from Other Sources

Profit from Islami Bank Account 6,000
Dividend 160,000
Less: exempted 50,000 110,000 116,000

Share of Profit from Partnership Firm 100,000

Total Taxable Income 1,334,000

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Investment Allowance:
Life Insurance Premium 40,000
Purchase of share 30,000
Contribution to DPS 60,000
Contribution to RPF (49,600 × 2) 99,200
Contribution to old age fund (5% of 496,000) 24,800
Donation to Govt. Zakat Fund 7,500
Donation to president relief fund 28,000
Donation to a blind school 15,000
Actual Investment 304,500
Maximum Limit: 25% of 1,334,000 or Tk. 1.5 crore
Rebate on investment @ 15% 45,675

Tax Liability Calculation:

On first Tk. 400,000 0% 0
On next 100,000 5% 5,000
On next 300,000 10% 30,000
On next 400,000 15% 60,000
On next 134,000 20% 26,800
On total income 1,334,000 121,800
Less: Rebate
On investment 45,675
On profit 9,130 54,805
Net Tax Liability 66,995
Less: TDS (900+1,875+600+16,000) 19,375
Tax Liability 47,620
Less: Refund claim 18,000
Remaining tax liability 29,620
Add: Surcharge @ 10% 6,700
Final Tax Liability 36,320

Solution of the Question No. 4(a)

Stage-1 : Importer Tk Stage-2: Whole Seller

CIF price of imported goods 19,500,000.00 Cost of Purchase from importer 10,341,950.00
(Tk.65,000 x 300) Less: Input VAT recoverable 1,348,950.00
Add: Incidental Charges 50,000.00 Net COGS 8,993,000.00
Total cost of input 19,550,000.00 Add: Profit (12%) 1,079,160.00
Input VAT Recoverable - Selling Price excluding VAT 10,072,160.00
Net COGS(300 units) 19,550,000.00 Add: Output VAT @15% 1,510,824.00
Net COGS(120 units) 7,820,000.00 Selling Price excluding VAT 11,582,984.00
Add: Mark up(15%) 1,173,000.00
Selling price excluding VAT 8,993,000.00
Add: Output VAT @15% 1,348,950.00
Selling price inclusive VAT 10,341,950.00

Stage-3 : Retailer Tk Stage-4: Customer

Cost from Wholesaler(120 units 11,582,984.00 Cost of Purchase from Retailer 9,038,987.73

Cost of 80 units 7,721,989.33 (80 units )

Less: Input VAT recoverable 1,007,216.00
(15,10,824/120*80)
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Net COGS(80 units) 6,714,773.33
Add: Maintenance & other
expsense 120,000.00
(Tk. 1500 X 80)
Total COGS 6,834,773.33
Add: Profit(15%) 1,025,216.00
Selling price excluding VAT 7,859,989.33
Add: Output VAT @ 15% 1,178,998.40
Selling price inclusive VAT 9,038,987.73

Workings:
Wholesaler(120 Retailer(80 Consumer(80
Importer(300 units) units) units) units)

Output VAT 1,348,950.00 1,510,824.00 1,178,998.40

Less: Input VAT 0 1,348,950.00 1,007,216.00

Gross VAT Payable 1,348,950.00 161,874.00 171,782.40 -

Net VAT payble 899,300.00 107,916.00 171,782.40

VAT to be borne by consumer(80 units) = 899300+107916+171782.40= Tk.

11,78,998.40

(b)
Zenith & Co
Status: Resident Company
Income Year: 2019-2020
Assessment Year: 2020-2021
Tk Tk
Income from Business:
Net Profit as per Profit & Loss Account 1,257,000.00
Add: Inadmissible Expenses
Depreciation 80,000.00
Provision for Bad & Doubtful Debt 25,000.00
Income Tax 40,000.00
Legal Expenses 20,000.00
Loss on sale of investment 15,000.00
Donation 25,000.00
Penalty 25,000.00

Addition to Building 450,000.00 680,000.00

1,937,000.00
Less: Expenses Admissible but not shown
Depreciation 100,000.00

Provision for Bad & Doubtful Debt 10,000.00 110,000.00

1,827,000.00
Less: Income received from Non-Business Heads
Dividend 60,000.00
Share Premium 400,000.00
Gain on sales of assets 40,000.00
Interest on Tax Exempt Govt. Securities 22,000.00 522,000.00
1,305,000.00
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Add: Revenue profit on sale of assets 20,000.00
Taxable income from business 1,325,000.00
Non-Business Income:
Dividend 60,000.00
Capital Gain on sale of assets 20,000.00
80,000.00
Total Income 1,405,000.00

Computation of Tax Liability

Tax on Total income excluding dividend and capital gain Tk
(32.5% of Tk. 1325,000) 430,625.00
Tax on dividend (20% of Tk. 60000) 12,000.00
Tax on capital gain(15% of Tk. 20000) 3,000.00
Gross Tax liability 445,625.00
Less: Tax Rebate @ 10%(no areas of CSR, no rebate)
Net Tax Liability 445,625.00

= THE END =

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