Salary income tax: ILLUSTRATION 47

Mr. Sarwar received the following emoluments during the year ended on 30th June 2012:.

Basic salary (Scale 55,000-5,000-70,000) Rs. 60,000 p.m.

House rent allowance  25,000 p.m.

3. Utilities allowance 14,250 p.m.

4. Medical allowance 10,000 p.m.

5. Agricultural income 1,30,000

6. Payment of loan instalment on 30.6.2012   1,00,000

Required Calculate the tax payable by Mr. Sarwar.

Solution

Mr. Sarwar Tax Year: 2012 Tax Year Ended 30th June 2012

Residential Status: Resident

Computation of Tax Payable

Rs. 7,20,000

Basic salary @Rs. 60,000 p.m. (Rs. 55,000-5,000-70,000)

House rent allowance (fully taxable)

Utilities allowance @ Rs. 14,250 p.m. (fully taxable)

Medical allowance @ Rs. 10,000 p.m.

Exempt upto 10% of BS

72.000  8.35.715

Facility of interest free loan  48,000

(benchmark rate 14%) (Rs. 8,35,715 @ 14%)

Agricultural income

1,17,000

Exempt

1,30,000

Value of conveyance (5% of cost) (Rs. 15,00,000 @ 5% )

1.30,000

Total income

75,000

Less Zakat paid under Zakat Ordinance

14,31,000

Taxable income

31.000 14,00,000

Gross Tax

Tax on Rs. 14,00,000 @ 11%

Gross tax

1.54,000 1,54,000

Amount Admissible for Average Relief

Investment in shares

Rs. 2,25,000

(Maximum allowed 15% of taxable income or Rs. 5,00,000 or actual whichever is less) Rs. 2,10,000 or Rs. 5,00,000 or Rs. 2,25,000

whichever is less

2,10,000

Less Rebate of Tax

Gross Tax

Total Income -x Amount Admissible for Average Relief

Average Relief= 1,54,000

14,00,000

23,100

Tax payable

-x2,10,000

1.30.900

Notes

1. Agricultural income is fully non-taxable.

2. Loan instalment does not affect the tax payable. However, tax is

payable on interest free loan calculated Dfa Ho on benchmark rate, i.e. 14% per annum.

3. It is not a case where rule of marginal relief may be applied.