ILLUSTRATION 12

Mr. Farooq’s salary is Rs. 22,000 per month. He received commission during the year amounting to Rs. 33,000. The employer took this jeep from a leasing company at an annual lease of Rs 80,000. The fair market value of the jeep at commencement of lease was Rs. 8,50,000. Calculate the taxable income of Mr. Farooq.

Solution

Basic salary @Rs. 22,000 p.m.            Rs. 2,64,000

Commission                                            33,000

Salary                                                      2,97,000

Value of conveyance facility (5% of fair market value of 42.500 jeep, 5% of Rs. 8,50,000 Taxable income Rs. 3.39.500

Note:

The amount of annual lease paid by the employer will not be taken into consideration.

Medical Charges, Hospital Charges or Medical Allowance In case an employee:

(1) receives free medical treatment or hospitalization or both by the employer or receives re-imbursement of the medical expenses under the terms of employment whole such benefit will be exempt from tax. It is necessary, however, that National Tax Number of Dfa Ho the hospital or clinic is provided and the employer also certifies and attests the medical or hospital bill.

(ii) In case where the above mentioned facilities are not provided for in the terms of employment any medical allowance given by the employer will be exempt up to 10% of basic salary of employee.