Professional Documents
Culture Documents
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PREQUISITS
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MBA (HRM)
ACCOMODATION
House rent Allowance/ Accommodation Allowance
Rule: Taxable
Accommodation Facility (Furnished or Un-Furnished)
Rule: a) Amount receivable if Accommodation was not provided.
OR
b) 45% of MTS of annual basic salary
Whichever (a) or (b) is higher is Taxable.
Note :
If MTS will not be given then basic salary should be taken
for computation.
2. If amount of allowance point (a) will not given then only point
(b) of MTS of Annual Basic Salary should be taken for
computation.
CONVEYANCE
Conveyance Allowance
Rule : Taxable
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HEADS OF INCOME
INCOME FROM SALARY
(Section 12)
Annual Basic salary (Amount x 12 if monthly given in Question.)
+ Bonus
+ Commission
+ Dearness Allowance
+ Cost of living Allowance
+ Research Allowance
+ Utilities Allowance
+ Bills reimbursed (or Bills paid by employer.)
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Note:
Ignore annual lease paid by employer to leasing company and
expenditures incurred on vehicle by employer or employee.
MEDICAL CHARGES AND MEDICAL ALLOWNACES
Medical facility
Rule: Fully Exempt
Medical Allowance
Rule : Amount of Allowance and
Exempt 10% of Basic Salary
Re-imbursement of medical bills/expenditures
Rule: Fully exempt
Medical insurance for hospitalization.
Rule : Fully exempt
Note:
1. Medical Allowances and Medical Facility both OR
2. Medical Allowances and Re-imbursement of medical
Expenses both are given in problem then Medical Allowance
will be Taxable.
ENTERTAINMENT
Lunch facility / Entertainment Facility for personal benefit of
Employee.
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and
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Note:
Ignore Actual Expenses.
SPECIAL ADDITIONAL ALLOWANCE
Special additional allowance
Rule: Taxable
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SPECIAL ALLOWANCE
Special Allowance (Traveling and Daily Allowance TADA etc.)
Rule : Fully Exempt
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Rule : Taxable
Lunch facility / Entertainment Facility provided by employer
during official tour.
Rule : Fully exempt
Entertainment Allowance
Rule : Taxable
Free of subsidized lunch facility
Rule: Fully Exempt
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BUT IF
Rate of interest is more than 16% then. (suppose 18%)
Amount of interest on Provident fund given
Exempt (a) Amount of interest x 16/100
OR
(b)1/3 rd of salary
Whichever of (a) or (b) is less is Exempted.
Accumulated Balance of RPF
Rule: Fully Exempt
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PROVIDENT FUND
GOVT PROVIDENT FUND (GPF)
Employees contribution to GPF
Rule: Fully Exempt (Already included)
Employers contribution to GPF
Rule: Fully Exempt
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Note:
Gas, water, electricity, telephone bills will be Exempt if
employer will provide such services from his own resources.
Obligations (loan and expenses) of an employee paid by employer.
Rule: Taxable
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etc)paid
by
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Note:
Relocation allowance
Rule: Taxable
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Computer allowance
Rule: Taxable
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Project allowance
Rule: Taxable
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Ad-Relief allowance
Rule: Taxable
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Qualification pay
Rule: Taxable
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Overtime payment
Rule: Taxable
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Performance award
Rule: Taxable
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Incentive award
Rule: Taxable
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Research allowance
Rule: Taxable
MBA (HRM)
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Orderly allowance
Rule: Taxable
Note:
Golden hand shake is included in salary income if average rate
of last two or three years are not given otherwise it shall be
separately taxable under FTR.
Children allowance/ children education allowance
Rule: Taxable
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PhD Allowance
Rule: Taxable
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PENSION
Pension
Rule: Fully Exempt
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Rule:
(a)
(b)
(c)
(d)
FROM
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MBA (HRM)
Collection charges
Rule: (a) Actual collection expenses
OR
(b) 6% of RCT
Whichever (a) or (b) is less, Taxable.
Note :
1. If Net property income is given in question then it means
every deduction has been made already. So no need of
deduction.
2. In the case of gifted property then it means every deduction
has been made already. So no need of deduction.
3. In the case of open plot then no need of repair charges
deduction.
4. If repair of property bears by tenant the 1/4th of annual rent
is added in Actual Rent.
Rule: Taxable
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Gain
on
sale
Mudaraba
/
Musharaka
Certificates/
PTCs/TFCs/NIT Units
Rule: (a) Fully Exempt if holding period is more than one year
(b) Taxable under separate block @ 8% if holding period is
more than
6 months and less than 12 Months.
(c) Taxable under separate block @ 10% if holding period less
than 12 Months.
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(
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Less: DEDUCTIONS
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Sr.
Taxable Income
Rate
1
2
Up to Rs. 400,000
Rs. 400,000- Rs.750,000
0%
5% of amount exceeding Rs. 750,000
3
4
Rs.750,001 - Rs.140,0000
Rs.140,0001 - Rs.150,0000
5
6
Rs.150,0001 - Rs.180,0000
Rs.180,0001 - Rs.250,0000
7
8
Rs.250,0001 - Rs.300,0000
Rs.300,0001 - Rs.350,0000
9
10
Rs.350,0001 - Rs.400,0000
Rs.400,0001 - Rs.700,0000
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Rs.142,5000
700,0000
30%
of
amount
exceeding
Rs.
STEP 2:
Gross Tax = Taxable Income for Rate x Slab Rate
=
MBA (HRM)
STEP 1:
SLAB RATES in case of salaried individual. (For the Computation of Tax)
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Note:
Zakat cannot be deducted from total income if Zakat paid
personally.
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(b)
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OR
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STEP 4:
Less: Teacher Concession (Incentive)
Rule: Tax incentive has been provided @ 40% to full time teachers and researchers which is
calculated by the following working.
(a) Calculate Tax on Salary Income according to Slab Rates
(b) Teacher Concession = Tax on Salary Income x 40 %
STEP 5:
Less: Foreign Tax Credit
Rule: If a resident taxpayer derives foreign source income and has paid foreign income tax in such
a case, the taxpayer shall be allowed a tax credit. The amount of tax credit is calculated by the
following.
(a) Foreign Income Tax Paid
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STEP 7:
ADD: Tax on separate block of income
Gain on sale of securities / public company shares /PTCs / Mudaraba & Musharaka Certificates/
Pakistan Telecom Vouchers.
(a) If holding period is less than 12 months.@ 12.5%
(b) If holding period is more than 12 months and less than 24 months .. @ 10%
(c) After 24 months
Nil
Gain on sale of Immoveable property /Residential or Inheritated House/ Residential land and
Building
(a) If holding period is less than 1 year .@ 10%
(b) If holding period is more than 1 year and less than 2 years .@5%
(c) More than 2 years
Nil
MBA (HRM)
MUHAMMAD SHAFIQ
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4. Average relief on investment in shares will not be provided if the person sells or
transfer these shares within two years of purchase.
C.Contribution to the Approved Pension Fund or Annual Scheme (Section 63)
Rule: (a) Actual Amount
OR
(b) 20% of Actual Taxable Amount
Whichever of (a) or (b) is less.
D.Mark-up on Housing Finance Scheme. (Section 64)
Rule: (a)Actual Amount OR
(b) 50% of Actual Taxable Income OR
(c) Rs. 750,000
Whichever of (a) or (b) or (c) is less.
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Rule: if average rate of last three years will be given then Golden Hand Shake will be taxed as
separate Block of income on Average rate for 3 proceeding years by the formula.
( + + )
ITEM
Flying Allowance & Sub-marine Allowance
Prize on Prize Bond / Cross Word Puzzle
Profit on debt (PO saving Account/Banking
Company / Other Financial institutions /
Fed.Govt /Prov.Govt / Local.Govt/ Finance
Society etc.)
Profit on bank deposit
Profit /yield/interest on special deposit
certificate
RATE
2.5%
15%
10%
10%
10%
10%
15%
20%
7.5%
STEP 9
INCOME COVERED UNDER FINAL TAX REGIME (FTR) (Separately Taxable items at the end
of Numerical because these items are not charged above .)
MBA (HRM)
MUHAMMAD SHAFIQ
STEP 8:
Less: Tax Deducted at Source
Rule: Tax already paid by a person is deducted from Net Tax.
Cash withdraw from bank exceeding Rs.50,000 @ 0.3%
Remuneration for Exam Fee/ Paper Setting Remuneration ...@ 7%
Remuneration from talk delivered on TV...@ 7%
Tax paid with utility bills
Tax paid with motor vehicle tax
Tax paid on Domestic Air Ticket
Tax paid on property income (if property is let out to a company)
Tax deducted at source from salary of an employee
Tax paid by the employer
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Net Tax
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12.5%
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Charity to bagger
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