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    Rise School of Accountancy: Suggested Solution Test 05

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    iamneonking
    Mr. Manto has total income of Rs. 2,482,030 for TY 2009 consisting of salary, other income, and capital gains. His tax liability is Rs. 192,305 under the NTR. However, Rs. 102,030 was paid by his employer, so he must pay Rs. 90,275 to the government. As a returning expatriate, Rs. 4,000,000 of his income is exempt from tax under section 51(1). The document also provides workings to calculate his income from salary and the tax paid by his employer.

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    Rise School of Accountancy: Suggested Solution Test 05

    Uploaded by

    iamneonking
    45 views1 page
    Mr. Manto has total income of Rs. 2,482,030 for TY 2009 consisting of salary, other income, and capital gains. His tax liability is Rs. 192,305 under the NTR. However, Rs. 102,030 was paid by his employer, so he must pay Rs. 90,275 to the government. As a returning expatriate, Rs. 4,000,000 of his income is exempt from tax under section 51(1). The document also provides workings to calculate his income from salary and the tax paid by his employer.

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    12. Test-5 (Sol.)

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    Mr. Manto has total income of Rs. 2,482,030 for TY 2009 consisting of salary, other income, and capital gains. His tax liability is Rs. 192,305 under the NTR. However, Rs. 102,030 was paid by his employer, so he must pay Rs. 90,275 to the government. As a returning expatriate, Rs. 4,000,000 of his income is exempt from tax under section 51(1). The document also provides workings to calculate his income from salary and the tax paid by his employer.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    45 views1 page

    Rise School of Accountancy: Suggested Solution Test 05

    Uploaded by

    iamneonking
    Mr. Manto has total income of Rs. 2,482,030 for TY 2009 consisting of salary, other income, and capital gains. His tax liability is Rs. 192,305 under the NTR. However, Rs. 102,030 was paid by his employer, so he must pay Rs. 90,275 to the government. As a returning expatriate, Rs. 4,000,000 of his income is exempt from tax under section 51(1). The document also provides workings to calculate his income from salary and the tax paid by his employer.

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    © All Rights Reserved
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    of 1

    Rise School of Accountancy

    Suggested Solution Test 05


    Question 01

    Mr. Manto
    Computation of income and tax thereon
    For TY 2009

    Income from salary (W-1) 1,882,030


    Income from other source 100,000
    Income from capital gain – Gain on sale of shares 25,000 x (62-42) 500,000
    (holding period is less than one year)
    Taxable income 2,482,030

    Tax liability on income under NTR (90,000 + 682,030 x 15%) (2) 192,305
    Less: Tax paid by employer [S.12(3)] (102,030)
    Payable to Government 90,275
    Items which are not considered
    (N-1) Lease rentals are not considered when car is acquired on lease, rather fair market value is considered.
    (N-2) Interest credited is exempt up to higher of interest calculated @ 16% or 1/3 of salary. Since the rate
    atwhich interest has been credited is not given therefore it cannot be compared with 1/3rd of salary.
    (N-3) As Mr. Manto is returning expatriate as per section 51(1), therefore Rs. 4,000,000 is exempt.
    Workings
    (W-1) Income from salary
    Basic Salary [S.12(2)(a)] (100,000 x 12) 1,200,000
    House rent allowance [S.12(2)(c)] (30,000 x 12) 360,000
    Medical allowance (Fully taxable)[S.12(2)(c)] (10,000 x 12) 120,000
    Medical facility (Fully exempt because as per terms) [2nd Sch. Clause 139] -
    Conveyance provided [S.13(3)] (2,000,000x5%) 100,000
    Concessional lunch facility (Exempt because Manto is employee of a hotel)[2nd Sch. Clause 53A(ii)] -
    Training course (Not chargeable because for official purpose) [S.12(2)(d)] -
    Employer contribution to provident fund (1,200,000 x 10%) 120,000
    Less: Exempt up to lower of:
    - 10% of basic salary and dearness all. (10% of 1,200,000 = 120,000) or
    - 150,000 (120,000) -
    Interest credited 48,000
    Less: Exempt up to 1/3rd of (basic salary+dearness allowance) (1/3 x 1,200,000) (400,000) -
    1,780,000
    Add: Tax borne by employer [S.12(3)] (W-2) 102,030
    1,882,030
    (W-2) Tax borne by employer
    Step 1
    Salary income 1,780,000
    Tax thereon (30,000 + 580,000 x 10%) 88,000
    Step 2
    Salary income (1,780,000 + 88,000) 1,868,000
    Tax thereon (90,000 + 68,000 x 15%) 100,200
    Step 3
    Salary income (1,780,000 + 100,200) 1,880,200
    Tax thereon (90,000 + 80,200 x 15%) 102,030

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