May-June 2003 XYZ Limited Computation of Total Income Assessment year 2002-2003 (Income year ended 30 June 2002)

Note Income from business or Profession (u/s-28): Profit before tax as per profit and loss account Less:

Textile unit

Taka

2,015,000

Add:

Non-business income included in P&L A/c for consideration at appropriate heads of income: Income from house property m 90,000 90,000 1,925,000 1,925,000 Expenditure to be considered as per provision of law afterwards 1,925,000 Inadmissible expenses as per provision of law: Undervaluation of stock Excess paid for purchase of goods from relative of a Director Preliminary expenses written off Provision for bad and doubtful debt General charges Salary expenses Insurance premium Miscellaneous expenses Advertising expenses Interest on borrowing Munincipal tax

Add:

a b c e g h i j k l m

200,000 80,000 25,000 120,000 6,000 400,000 65,000 15,000 0 15,000 30,000 956,000

Add:

Less:

Deemed income u/s-19 Balancing charge(revenue gain) on sale of machine Unclaimed wages Profit before charging separate considerable expenses Admissible expenses as per provision of law: Income from business or Profession (u/s-28):

d f

200,000 25,000 225,000 3,106,000

Income House Property (u/s-24): Actual Rental Municipal value Annual Value (higher one of actual rental and municipal value) Less: Admissble expenses(u/s-25) Repair and maintenance (25% of Annual Value) 22500 Municipal tax 30000 Income House Property (u/s-24):

90,000 0 90,000

52,500 37,500

Income from Capital Gain(u/s-31): Capital gain on sale of machine Income from Capital Gain(u/s-31): Income from Other sources (u/s-33): Interest income Income from Other sources (u/s-33): Total income Tax Liability Total income excluding capital gain Capital gain tax @ 15% (under para-2 Second schedule) Total Total income 3,143,500 200,000 3,343,500

200,000 200,000

0 3,343,500

tax rate 37.50% 15%

Tax liability 1,178,813 30,000 1,208,813

Gross tax payable Less: Tax credit: Tax deducted at source Advance tax paid u/s 64 Tax adjustable from any refund (u/s 152) Net Tax refundable

1,208,813

0 0 0 0 1,208,813

Notes (a) Under valuation of stock Opening stock as per account Opening stock under valued by 10% (A) Closing stock as per account Closing stock under valued by 10% (B) Net profit understated (B-A) 2,700,000 300,000 4,500,000 500,000 200,000

The opening and closing stock of cloths were valued 10% less than their costs. As a result the net profit of the Company has been understated for charging higher COGS in P/L account for the undervalued closing stocks. And net profit has been overstated for charging lower COGS in P/L account for undervalued opening stocks. So total net profit has been understated for net amount Tk. 200,000 which has been add back with the profit. Market price is higher than costs. (b) Purchase of goods from relative of a Director Tk. 490,000 Goods purchased from a relative of a Director at price (Tk 490,000) higher than the market value (410,000). The profit reduced by excess amount Tk 80,000 has been added back with the net profit because this amount not expended wholly and exclusively for the business purpose u/s-29(1)(xxii). Preliminary expenses written off Tk. 25,000 Preliminary expense written off which is considered incurred for the business purpose and was allowed in the year when amount paid.

(c)

(d)

Balancing charge(revenue gain) on sale of machine(u/s-19(16)) Cost price(B) Net proceeds from sale of machine(A) Less: Written Down value(WDV) Net gain on sale of machine Capital gain[u/s-32(1) & (2)](A-B) Balancing charge(revenue gain) on sale of machine(net gain-capital gain)

300,000 500,000 100,000 400,000 200,000 200,000

(e)

Provision for bad and doubtful debt Tk 120,000 Disallowed fully being no provision for bad and doubtful debt is allowable u/s-29(xv) unless the debt become irrecoverable and actually been written-off in the books of accounts. So total provision added back with profit. Unclaimed wages Tk. 25,000 Unclaimed wages Tk. 25,000 not paid within 3 years of expiration of income year in which expenses were allowed for and legal claim for wages is unavailable. So this trading liability is added back u/s19(15)(c ). General charges Tk. 6,000 The Company did not complied with the legal formalities for termination of employee by serving notice as per job agreement. This is incurred not for the purpose of business and disallowed fully u/s29(1)(xxii). Salary expenses Tk 400,000 No tax has been deducted from the salary payment to Engineer which is fully disallowable u/s-30(aa). The non deduction of employer can not remediable by compliance of the employee.

(f)

(g)

(h)

(i)

Insurance premium Tk. 65,000 The insurance premium against the loss of profit during strike is considered non-business expenditure and hence disallowed u/s-29(1)(xxii) Miscellaneous expenses Tk. 15,000 Salary paid for MD's residence is not a contractual obligation of the company and considered as personal expenses of MD. So it is fully disallowed. Advertising expenses Tk. 500,000 Advertising expenses paid for cinema slides assumed been capitalized being deferred revenue expenses and are distributed within 5 years is allowable expenses. Interest on borrowing Tk 15,000 Interest has been paid to director at free of interest is fully disallowable since in this case the loan assumed to have been borrowed for non-business purposes.

(J)

(k)

(l)

(m) Municipal tax Tk 30,000 House property A Assumed house property A has been let out to employees as per contractual obligation with the company and is considered as business expenses and the municipal taxes will be considered as business expenses (Tk 60,000 and Tk. 25,000 for rental and municipal taxes of A respectively). House property B House property B has been let out to outsiders for Tk. 90,000 which is considered as income under "Income form House property" u/s-24. The property is considered as let out for residential purpose.

May-June 2003 John Morris Inc. Computation of Total Income Assessment year 2002-2003 (Income year ended 30 June 2002) Note Income from business or Profession (u/s-28): Profit before tax as per profit and loss account Less: Add: Non-business income included in P&L A/c for consideration at appropriate heads of income: Expenditure to be considered as per provision of law afterwards Head office expense for separate consideration as per u/s-30(g) b Foreign travel for holiday recreation as per rule 65 A i Accounting depreciation for consideration as per 3rd schedule d Inadmissible expenses as per provision of law: Director's salary Fines Commission to local agent Doantion to unrecognised school Miscellaneous expenses Interest on bank loan Excess perquisites u/s-30(e) Deemed income u/s-19 Balancing charge(revenue gain) on sale of machine Profit before charging separate considerable expenses Admissible expenses as per provision of law: Head office expense as per u/s-30(g) Foreign travel for holiday recreation as per rule 65 A Fiscal depreciation Income from business or Profession (u/s-28): Income from Capital Gain(u/s-31): Capital gain on sale of machine Income from Capital Gain(u/s-31): Total income Tax Liability Total income Total income excluding capital gain Capital gain tax @ 15% (under para-2 Second schedule) Total 1,498,214 140,000 1,638,214 tax rate 37.50% 15% Tax liability 561,830 21,000 582,830 3,000,000 Taka

1,100,000 220,000 900,000 2,220,000 330,000 11,000 1,000,000 15,000 72,000 1,196,429 42,000 2,666,429 2,553,571 255,357 800,000 1,055,357 1,498,214

Add:

a c e g h j k

Add:

Less:

b i d

140,000 140,000 1,638,214

Gross tax payable Less: Tax credit: Tax deducted at source Advance tax paid u/s 64 Tax adjustable from any refund (u/s 152) Net Tax refundable

582,830 0 0 0 0 582,830

Notes (a) Director's salary Tk 330,000 In accordance with u/s-50 no tax has been deducted from the salary payment to Director which is fully disallowable u/s-30(aa). (b) Head office expense Tk.1,100,000 In accordance with u/s-30(g) 10% of the profit before charging separate considerable expenses for head office which is not an incorporated company in Bangladesh under Companies Act 1994.

(c)

Fine Tk. 11,000 Fines paid for violation of customs law considered not for business purpose hence fully disallowable. Accounting depreciation Tk. 900,000 Two Motor vehicle (Nissan Petrol Jeeps) purchased Accounting depreciation @ 20% on costs Cost allowable (under para-11(6) 3rd Schedule) Fiscal/tax depreciation @20%(under para-3(1)(b) 3rd Schedule) 4,500,000 900,000 4,000,000 800,000

(d)

(e)

Commission to local agent Tk 1,000,000 As the Company did not deduct tax @7.5% us/53(E) while making payment of commssion will be fully disallowable u/s-30(aa). Balancing charge(revenue gain) on sale of motor vehicle(u/s-19(16)) Cost price(B) Net proceeds from sale of machine(A) Less: Written Down value(WDV) Net gain on sale of machine Capital gain[u/s-32(1) & (2)](A-B) Balancing charge(revenue gain) on sale of motor vehicle(net gain-capital gain)

(f)

525,000 465,000 325,000 140,000 140,000 -

In accordance with the u/s-19(16) the balancing charge is applicable for only building, machinery or plant not for the motor vehice. So the total gain on sale of motor vehicle is considered as capital gain.

(g)

Doantion to unrecognised school Tk.15,000 Donation to unrecognised school is considered non-business expense and hence is disallowed fully.

(h)

Miscellaneous expenses Tk 72,000 Salaries paid to servant of MD is considered as not a part of contractual obligation of the Company and hence is to be non business expenses will be disallowed fully for being personal expenses of MD.

(i)

Foreign travel for holiday recreation Tk 220,000 Name of Basic per Actual 3/4th of 3 months Basic salary Admissible Inadmissible Employee month travelling actual expense expense expenses expense MD 0 220,000 165,000 220,000 As per Rule-65A(1) expenditure on foreign travel for holiday recreation of employee and his dependants allowed upto lower one of 3/4 of actual expense and 3 months basic salary. This amount is allowable for once in every 2 years. The amount is disallowed u/s 65A(2) as the payment exceeding Tk.10,000 has considered been paid in cash rather than in cross cheque or cross bank draft.

(j)

Interest on bank loan Tk 3,350,000 In accordance with u/s-29(1)(iii) interest on bank loan is proportionately allowable for the loan amount used for the business purpose. Total interest not for business purpose=(3,350,000/21,000,000)*7,500,000=Tk 1,196,429. Excess perquisites u/s-30(e) Conveyanc Other House Designation e/ allowance Rent utilities s MD 220,000 72000

(k)

Total perquisites 292,000

Allowable limit 250,000

Excess perquisites 42,000

Nov-Dec2006 Q-2 Mr. Azgar Computation of Total Income Assessment year 2010-2011 (Income year ended 30 June 2006) Note Income from Salary (u/s-21): Basic salary(10,000 *12) Festival Bonus(two month Basic salary) Rent free accomodation(Rule-33B) 25% of Basic salary or Rental valueTk 25,000 Lower one of above Less: Concessional rate by employee@7.5% of basic Medical allowance(Tk 3600) Less: Exemption(Rule-33I): Actual expenseTk 5000(allowed upto allowance Conveyance allowance Tk 500 per month Less: Exemption Rule-33C Upto Taka

120,000 20,000 30,000 25,000 25,000 9,000 16,000 3,600 3,600 6,000 24,000 -

Employer's Contribution to RPF(10% of Basic) Income from Salary (u/s-21) Income from agricuture(u/s-26): Income from Other sources (u/s-33): Total income

12,000 168,000 0 0 168,000

Calculation of investment allowance(under Part B 6th schedule): Investment in listed company's share (allowable as per para-8) Purchase of ICB certificate(allowed as para-10) Payment of insurance premium(as para-1) Allowed for assessee, spouse, minor child only Group Insurance & benevolent fund(allowed as para-17) Allowed for assessee, spouse, child and dependent only Employee and employer's contribution to RPF(10% of salary each) (allowable as per para-5) Actual investment

10,000 5,000 9,000 200 24,000 48,200

Allowable investment allowance(u/s-44): Actual investment 25% of total income [excluding employer's contribution to RPF, interest on RPF (excluding interest para-25, part-A 6th schedule), income u/s-82C]. So 25% on Tk 156,000(168,000-12,000-0-0). Maximum allowable investment

48,200 39,000

1,000,000 Allowable investment (lower of the above) Computation of tax liabilities

39,000

On total income other than Capital gain=Tk.1741,000 On first Tk. 165000 @ 0% 3,000 @ 10% On next Tk. @ 15% On next Tk. @ 20% On next Tk. @ 25% On balanceTk. 168,000 Total

487,000 300 300 Gross tax liability

300

3,900 (3,600) Less: 0 TDS Net tax liability (3,600) Assessee having the taxable income exceeding the maximum exempted amount, the minimum tax is Tk 2,000. 10% Rebate on investment Tk 39000

Less:

May-June 2007 Q-3 Mr. Arman Computation of Total Income Assessment year 2010-2011 (Income year ended 30 June 2006) Note Income from Salary (u/s-21): Basic salary(50,000 *12) Festival Bonus(two month Basic salary) Rent free accomodation(Rule-33B) 25% of Basic salary 150,000 or Rental valueTk 25,000 p.m 300,000 Lower one of above Medical allowance(Tk 150,000) Less: Exemption(Rule-33I): Actual expense(assumed allowance are expended) 150,000 150,000 45,000 Taka

600,000 100,000

150,000 -

Conveyance facilities @7.5% on basic salary Driver's salary borned by company from which nothing to be added considering general practice of company for solely business purpose. Foreign travel expenditure Tk 250000 Assuming that the passage provided in accordance with terms of service contract & arranged in yearly trip basis. So the air ticket Tk 100,000 is added with salary. Assuming that he has availed travel more than once in each two years, total actual expenditure Tk 220,000 is added.

320,000

Entertainment allowance Tk 3,000 per month As u/s-33H total allowance is added with the salary income. Other allowance Tk 100,00 Assuming U/s-33J the allowances has been expended wholly, necessarily and exclusively in the performance of the duties of the office paid by him in cash. So fully allowed. Employer's Contribution to RPF(10% of Basic) Income from Salary (u/s-21) Income from agricuture(u/s-26): Income from agricuture(nothing prod. Cost as barga u/s-27(1)(c)(iii) Income from Other sources (u/s-33): Income from Lecture Income from Other sources (u/s-33): Total income

36,000

60,000 1,311,000

280000

150,000 150,000 1,741,000

Calculation of investment allowance(under Part B 6th schedule): Investment in listed company's share (allowable as per para-8) Employee and employer's contribution to RPF(10% of salary each) (allowable as per para-5) Actual investment Allowable investment allowance(u/s-44): Actual investment 25% of total income [excluding employer's contribution to RPF, interest on RPF (excluding interest para-25, part-A 6th schedule), income u/s82C]. So 25% on Tk 1741,000(60,000-24,000-0-0). Maximum allowable investment

500,000 120,000 620,000 620,000 420,250

1,000,000 Allowable investment (lower of the above) Computation of tax liabilities

420,250

On total income other than Capital gain=Tk.1741,000 On first Tk. 165000 @ 0% 275000 @ 10% On next Tk. 325000 @ 15% On next Tk. 375000 @ 20% On next Tk. 601,000 @ 25% On balanceTk. 1,741,000 Total

487,000 27,500 48,750 75,000 150,250 301,500 Gross tax liability 301,500 42,025 259,475 259,475

Less: Less:

10% Rebate on investment Tk 115,750 TDS Net tax liability

Nov-Dec 2006Q-5 Marine Fisheries Computation of Total Income Assessment year 2006-2007 (Income year ended 31 July 2005) Note Income from business or Profession (u/s-28): Profit before tax as per profit and loss account Less: Non-business income included in P&L A/c for consideration at appropriate heads of income: a) Dividend (for consideration at income from other source) 760,760 (760,760) Add: Expenditure to be considered as per provision of law afterwards 1 Entertainment(for consideration as per Rule-63) 2 Depreciation(for consideration as per 3rd schedule) 10,362,924 Taka

125,321 4,681,665 4,806,986 14,409,150

Add:

Inadmissible expenses as per provision of law: 1 Refund of VAT on cost of diesel Tk 8,002,241 As VAT Tk 8,002,241 paid for cost of diesel which has been refunded for export earning Tk 94,446,822 is disallowable because already refunded for export. 2 Salary expense Tk 9,344,035 No tax has been deducted from the salary payment Tk 3,540,000 out of Tk 9,344,035 which is fully disallowable u/s-30(a). 3 Import duty on packing material & fishing gear Tk 240,500 Import duty paid allowed as tax credit as AIT. So nothing to add from this custom duty. 4 WASA bill Tk 30,000 Disallowed for being not business expense rather personal expense of Director. 5 Excess perquisites Tk 360,300 Excess perquisites disallowed u/s-30(e). 6 Salary & allowances of Crew, captain Tk 360,000 Tax paid by company on salary is allowable fully as job agreement and expended for business. 7 Insurance expense Tk 218,500 Disallowed for being not business expense rather personal expense of Director.

8,002,241

3,540,000

30,000

360,300

218,500

8 Miscellaneous expense Tk 25,000 Donation to local orphange center approved by NBR is allowable assuming expended for business u/s-29(1)(xxvii). 9 Office rent Tk 1,026,647 60000*12=Tk720,000 disallowed for non tax deduction u/s-53A. 10 Picnic expense Tk 150,000 Incurred for sister concern so disallowed as non business expense u/s29(1)(xxvii).

720,000

150,000

Add: Less:

Deemed income u/s-19 Admissible expenses as per provision of law: Tax depreciation as per 3rd schedule Profit before charging separate considerable expenses Entertainment as per Rule-65 upto Tk 1,000,000 4% of profit before charging entertainment exp. 2% On rest of balance of profit before charging entertainment exp. Allowable limit Actual entertainment expense Allowable lower one of above Income from business or Profession (u/s-28):

13,021,041 27,430,191 27,430,191 (3,390,000) 24,040,191

40,000 460,804 500,804 125,321 125,321 23,914,870

Income from Other sources (u/s-33) Dividend income (gross) Total income Calculation of proprtionate income on export:

760,760 760,760 24,675,630

[23,914,870/154,283,278)*94,465,822]=Tk 14,642,791 Export income to be excluded from export income @50% as per para-28 Part-A of 6th schedule. Exclusion from export income=[14,642,791/2]=Tk 7,321,396 So non business income=Tk 23,914,870-7,321,396=Tk 16,593,474 Computation of tax liabilities 1 On total income other than dividend income @37.5% (Being non listed trading Company) 2 On dividend income @20% Gross tax liability Less: Tax credit: Tax deducted at source on dividend @15%(u/s-54) Net Tax liabilities Income 23,914,870 760,760 Tax 8,968,076 152,152 9,120,228 (114,114) 9,006,114

May-June 2007 KMA Ltd. Computation of Total Income Assessment year 2006-2007 (Income year ended 31 December 2005) Note Income from business or Profession (u/s-28): Profit before tax as per profit and loss account Less: Non-business income included in P&L A/c for consideration at appropriate heads of income: Sale of scrap Tk 20,000 20,000 Sale of scrap is non-business income classifiable under income from othe sources. Expenditure to be considered as per provision of law afterwards Accounting depreciation for consideration as per 3rd schedule Inadmissible expenses as per provision of law: Provision for bad and doubtful debt Tk 16,000 Disallowed fully being no provision for bad and doubtful debt is allowable u/s-29(xv) unless the debt become irrecoverable and actually been written-off in the books of accounts. So total provision added back with profit. Director's fee Tk 48000 No tax has been deducted from the Director's fee payment which is fully disallowable u/s-30(aa). Audit fee Tk. 25,000 No tax has been deducted from the audit fee payment which is fully disallowable u/s-30(aa). Legal expense Tk 15,000 Defending an action of evasion of customs duty is not allowable because of non-business expense u/s-29(1)(xvii). Donations Tk 10,000 Donations out of which Tk 5,000 paid to charitable fund under the Zakat Fund Ordinance, 1982 which is only allowable as business expense u/s-29(1)(xvii). Brokerage on loans obtained Tk 10,000 Brokerage on loans disallowed as non-business exp. u/s-29(1)(xvii). Fines and penaltiess Tk 21,000 Disallowed u/s-29(1)(xvii) assuming Company committed offences. Deemed income u/s-19 Profit before charging separate considerable expenses 230,000 Taka

(20,000)

Add:

28,000 28,000

Add:

16,000

48,000

25,000

15,000

5,000

10,000 21,000 140,000 378,000

Add:

Less:

Admissible expenses as per provision of law: Fiscal depreciation (assumed as per para-3 3rd schedule) Income from business or Profession (u/s-28):

30,000 (30,000) 348,000

Income from Other sources (u/s-33) Sale of scrap Tk 20,000 Total income

20,000 368,000

Tax Liability Total income Total income excluding capital gain Capital gain tax @ 15% (under para-2 Second schedule) Total 368,000 0 368,000 tax rate 37.50% 15% Tax liability 138,000 0 138,000

Gross tax payable Less: Tax credit: Tax deducted at source Advance tax paid u/s 64 Net Tax payable

138,000 138,000

May-June 2008Q-4 Mr Rahman Computation of Total Income Assessment year 2008--2009 (Income year ended 30 June 2007) Note Taka

Income from business or Profession (u/s-28): Surplus of income over expenditure Less: Non-business income included in P&L A/c for consideration at appropriate heads of income: 1 Dividend from pvt. co(for consideration at income from other source) 2 Interest free govt securities 3 Rent from sub-let of premise 50,000 40,000 36,000 (126,000) Add: Expenditure to be considered as per provision of law afterwards Entertainment as per Rule -65 Loan to client Inadmissible expenses as per provision of law: 1 Fines for breaking custom rule Tk 20,000 (being violation of law it is disallowed fully u/s-30(i). 2 Loss of investment in shares Tk 18,000 3 Purchase of books Tk 12000 (Being capital nature(plant definition disallowed fully) Profit before charging separate considerable expenses a Entertainment as per Rule -65 @4% on Tk 155000 Income from business or Profession (u/s-28): 20,000 193,000

10,000 40,000 50,000

Add:

18,000 12,000 50,000 167,000 (6,680) 160,320

Interest on Securities(u/s-22): Interest free govt securities (exempted under para-24 Part-A schedule) Income from Other sources (u/s-33) 1 Dividend income from pvt. company 2 Rent from sub-let Total income Computation of tax liabilities 1 On total income including Capital gain On first Tk. 165,000 81,320 On next Tk. On next Tk. On next Tk. On balanceTk. 246,320 Total @ @ @ @ @ 0% 10% 15% 20% 25% Gross tax liability Less: 10% Rebate on investment Tk 8,132 8,132 8,132 8,132 8,132 246,320

50,000 36,000 86,000 246,320

Less: Tax credit Net tax liability

May June 2008 Q-3C Mr. X Computation of Total Income Assessment year 2000-2010 (Income year 2007-2008) Note Income from Agriculture (u/s-26): Income from sale of rice(200 maunds*Tk 600) Income from sale of rabi crops Lease of agricultural land Income from sale of bamboo(assumed not being forest bamboo) Income from tea garden and sale of tea(agriculture income@60%*60000) Income from sale of palm juice Income from cattle rearing Less: Admissible expense (u/s-27) Production costs(60% on 120000 +25,000+36000) Interest on loan(50000*8%) UP tax Land revenue Loss on sale of pump machine: Costs Tax Depreciation@20% Written down value Sale Loss on sale of pump machine 108,600 4,000 2,000 1,000 25,000 10,000 15,000 12,000 3,000 118,600 180,400 180,400 50,000 130,400 120,000 25,000 40,000 20,000 36,000 18,000 40,000 299,000 Taka

Income from Agriculture (u/s-26): Total income As per para-29 Part A 6th schedule individual having only agricultural income, Tk 50,000 is exempted from the total income. Total taxable income Calculation of investment allowance(under Part B 6th schedule): Life insurance premium for son (Tk4,000) (as per para-1 LIP allowable only for assessee, spouse and minor child). Investment in listed company's share Tk 5,000 (allowable as per para-8 for Investment in listed company's share) Actual investment 4,000

5,000 9,000

Allowable investment allowance(u/s-44): Actual investment 25% of total income [excluding employer's contribution to RPF, interest on RPF (excluding interest para-25, part-A 6th schedule), income u/s-82C]. So 25% on Tk 130400=(Tk 130400-0-0-0). Maximum allowable investment Allowable investment (lower of the above) Computation of tax liabilities 1 On total income including Capital gain On first Tk. On next Tk. On next Tk. On next Tk. On balanceTk. Total 130,400 130,400 @ @ @ @ @ 0% 10% 15% 20% 25% Gross tax liability Less: 10% Rebate on investment Tk 9,000 -

9,000 32,600

1,000,000 9,000

130,400

(900) (900) Less: Tax credit Net tax liability (900) Since the individual having total taxable income less than the maximum exemption limit, then there is not applicable to minimum tax liability Tk 2,000. So there is no tax liability.

Nov-Dec 2008 Oak Limited Computation of Total Income Assessment year 2008--2009 (Income year ended 31 December 2007) Note Taka

Income from business or Profession (u/s-28): Profit before tax as per profit and loss account Less: Non-business income included in P&L A/c for consideration at appropriate heads of income: 1 Dividend (for consideration at income from other source) 6,000,000 2 Interest income(for consideration at interest on securities) 800,000 3 Capital gain on sale of shares(as it was tax free u/s-32(7) & will be taxable 1,000,000 from AY 2011-2012. It will not be treated as income) 4 Share income from partnership firm 5 Keyman life insurance proceeds(for consideration at income from other source) 6 Tax refund(tax cannot be income or expenses rather it is an appropriation of profit. So it will not be considered as income afterwards) 6,000,000 25,000,000 19,700,000

500,000 (39,300,000) Add: Add: Expenditure to be considered as per provision of law afterwards Inadmissible expenses as per provision of law: 1 Salary to finance manager Tk 600,000 (being not paid by cheque or bank transfer disallowed fully u/s-30(i). -

600,000

2 Compensation to Voluntary Retirement Scheme Tk 1,500,000 (assume govt approved this is not taxable in the hand of recipient as para26 part A 6th schedule. So no TDS. As part of salary it is allowable u/s29(1)(xvii). 3 Gratuity provision(unrecognised) Tk 1,500,000 (no provision recognized/unrecognised is allowed). 4 Actual gratuity payment disallowed for unrecognised Tk1,000,000 (Only payment by employees to approved gratuity fund is allowable as per para-6 part-C 1st schedule. As it is unrecognised so fully disallowable).

1,500,000 1,000,000

5 Incentive bonusTk 2,000,000(for consideration as per u/s-30(j)) (10% of disclosed profit=(19,700,000*10%)=1,970,000 is allowable limit u/s30(j). So (20,000,000-19,700,000)=Tk 30,000 is disallowable. Again, as no tax deducted so as part of salary incentive bonus is fully disallowable u/s30(a). 6 Doubtful accounts Tk 2,000,000 (allowed u/s-29(1)(xv) only actual Tk 1,100,000 out of 2,000,000 and the rest is added with profit. 7 Tax Tk 9000,000 Only Payroll taxes not deducted as part of salary & assuming employee tax paid by the employer as terms of employment. So there is nothing to be disallowed u/s-30(aa). 8 9 10 11 12 13 14 Security service disallowed u/s-30(aa) Audit, accountancy & advisory services disallowed u/s-30(aa) Office rent disallowed u/s-30(aa) Car rental disallowed u/s-30(aa) Interest on working capital allowed as business exp. u/s-29(1)(xxvii) Donation to DU (unapproved institution so disallowed fully) Board meeting attendance fee(only applicable for VAT which is not deducted, become disallowable u/30(aa).

30,000 2,000,000

900,000

300,000 500,000 600,000 100,000 1,800,000 300,000

15 Depreciation Tk 8,000,000(as depreciation claims as per 3rd schedule so nothing to add back.) 16 Premium on LIP of controller ( as u/s-29(1)(vii) LIP is allowable for only against risk of damage, destruction or loss building & machinery, plant, furniture, stocks & stores not any life insurance premium. So disallowed fully. 17 Entertainment expense Tk 500,000 (as personal expense CEO, so rather allowing it as business expense U/s-65 disallowed fully. 18 Overseas travelling Tk 800,000 (allowable u/s-30(k) upto 1% of disclosed turnover Tk 90,000,000. As claims is within the allowable limit Tk 900,000 nothing is added back from here.)

1,500,000

500,000

19 Corporate income tax Tk 4,500,000 (Income tax is not an expense rather appropriation of profit that is not a part of P&L a/c. So disallowed fully). 20 Dividend paid Tk 9,000,000(disallowed u/s-30(aa) for non deduction of TDS. 21 Insurance claim Tk 1,500,000 (assuming loss on fire of Tk 1,000,000 (costs) was porperly accounted for & allowed by the tax authority. So it is treated as income).

4,500,000

9,000,000 1,500,000

Income from business or Profession (u/s-28):

26,630,000 7,030,000

Interest on Securities(u/s-22): Interest on govt bond Income from partnership firm: Income from partnership firm(gross/before tax) Income from Other sources (u/s-33) 1 Dividend income from local company Dividend income from Singapore based company(net) Dividend income from Russian based company(net) 2 Keyman life insurance proceed Tk 25,000,000(which is not classifiable under other head treated as income u/s-33(e) Less: LIP premium Tk 1,500,000 Share capital raised through cash not received by cross cheque or bank transfer disallowed u/s-33(d) & treated as income u/s-19(24). Total income Break up of total income Income from business or Profession (u/s-28): Less: set off previous loss Business income after setoff of Carried forward loss Interest on Securities(u/s-22): Income from partnership firm: Income from Other sources (u/s-33) Total income Computation of tax liabilities 1 On total income excluding dividend income @27.5%(listed Company) Less: Rebate @10% on Tk 11,200,750 for declaring more than 20% dividend 2 On dividend income @20% 39,230,000 10,788,250 (1,078,825) 9,709,425 1,200,000 10,909,425 7,030,000 (1,000,000) 6,030,000 800,000 7,900,000 30,500,000 45,230,000 800,000 7,900,000 800,000 7,900,000

2,000,000 2,000,000 2,000,000 23,500,000

1,000,000 30,500,000 46,230,000

Less: Credit against tax payable in Bangladesh on dividend from Singapore as U/s144(4) read with 7th schedule as para-4 as there is DTAA between Bangladesh and Singapore: (10909,425/45230000)*2000000=Tk 482,398. But restricted upto foreign tax Tk 200,00. Allowable lower one of above Less: Tax relief as per section-145 for tax on dividend on Russian based company (as there is no DTAA). But restricted upto foreign tax & foreign tax is lower because average tax Tk. 482,802. Less: Average tax rate firm(10,309,425/45230,000)*7900000 on income from partnership

6,000,000 45,230,000 482,398

200,000 (400,000) (200,000) (400,000)

10,309,425 (1,800,673) 8,508,752

Net tax liability

Nov-Dec 2008 Q-6 Mrs. Rahim Computation of Total Income Assessment year 2008-2009 (Income year ended 30 June 2008) Note Income from Salary (u/s-21): a Basic salary(20,000 *12) House rent allowance(11000*12): Less: Exemption(Rule-33A): 50% of Basic salary or Tk 15,000 per month Lower one Medical allowance(Tk 2000 p.m) Less: Exemption(Rule-33I): Actual expense(assumed allowance are expended) Conveyance allowance(per month Tk. 1,000) Less: Exemption(rule-33) Taka

240,000 132,000 120,000 180,000 120,000 12,000 24,000 24,000 12,000 24,000 -

Basic salary(20,000 *12) House rent allowance(9000*12): Less: Exemption(Rule-33A): 50% of Basic salary or Tk 15,000 per month Lower one Conveyance allowance(per month Tk1,000 Less: Exemption(rule-33) Bonus(per month Tk 40,000) Entertainment allowance (Tk2000 per month) Honorarium as BOD from Rupali bank

240,000 108000 120,000 180,000 120,000 12,000 24,000 480,000 24,000 50,000

As per Rule33(2)(b) there is only bar to allow allowance for calculation of perquisites of Employer from more than one company for shareholder director. As Mrs Rahim is not that category, so all the benefits from many companies is asumed to be applicable for her. Income from Salary (u/s-21) 1,046,000

Interest on Securities(u/s-22): Income from house property(u/s-24): Annual value(AV): Rental income(Tk25,000*12) Municipal value Higher one of above Less: Admissible deduction(u/s-25): Repair & maintenance(1/4 of AV u/s-25(1)(h) Municipal tax(Tk40,000 u/s-25(1)(a)) Insurance premium(Tk 15,000 u/s-25(1)(b)) Land revenue Vacancy allowance(2 months) Income from house property(u/s-24) Income from Agriculture (u/s-26); Sale of crops Less: 60% Cost of production(u/s-27) 75,000 40,000 15,000 2,000 50,000 (182,000)

300000 300,000

118,000

25,000 (15,000) 10,000

Income from business or Profession (u/s-28): Consultancy fee from UNDP-BD Consultancy fee from World Bank-Bhutan & Nephal) (Note: UNDP & WB are the organisation of UN. Only the salary categorized persosn employee at UN is tax free. As Mrs Rahim is not salaried person of UNDP & WB, so her income from there is not tax free. Moreover, there is no DTAA with Bhutan and Nephal. So all the income will be taxable in our country).

400,000 300,000

Less: Membership fee to ICAB Income from paertnership firm: Income from Capital Gain(u/s-31): 1 Capital gain of Tk 200,000 by buying and selling listed company shares which is exempted form tax in the hand of indidual. 2 Sale of appartment (u/s-82C) (Sale of property which is treated u/s-82C i.e. final settlement of tax liability. At the time of registration, TDS @2% of sale proceeds. In this problem the assessee already reached highest slab. So the showed income as follows: TDS=(10,000,000*2%)=Tk200,000 and shown income=Tk 200,000/0.25=Tk 800,000. 3 Money received from the real estate company against a contract which is included in the definition of transfer u/s-2(66). So here Tk 2,000,000 is treated as part of capital gain. Income from Capital Gain(u/s-31):

700,000 (4,800) 695,200 -

800,000

2,000,000

2,800,000

Income from Other sources (u/s-33): Dividend income u/s-54(assumed gross) Interest on post office savings bank account Income from part time lecture Lecture Articles publication Question settings Less: Actual expense to earn above income Income from Other sources (u/s-33): Total income Calculation of investment allowance(under Part B 6th schedule): Life insurance premium for son (Tk5,000*4) (as per para-1 LIP allowable only for assessee, spouse and minor child). Investment in listed company's share (allowable as per para-8)

50,000 15,000 60,000 25,000 12,000 97,000 (3,000) 94,000 159,000 4,828,200

20,000

600,000 Actual investment 620,000 620,000 1,007,050

Allowable investment allowance(u/s-44): Actual investment 25% of total income [excluding employer's contribution to RPF, interest on RPF (excluding interest para-25, part-A 6th schedule), income u/s-82C]. So 25% on Tk 4820,200(Tk 4828,200-0-0-800,000). Maximum allowable investment Allowable investment (lower of the above) Computation of tax liabilities 1 On total income including Capital gain On first Tk. On next Tk. On next Tk. On next Tk. On balanceTk. Total 180,000 275,000 325,000 375,000 3,673,200 4,828,200 @ @ @ @ @ 0% 10% 15% 20% 25% 27,500 48,750 75,000 918,300 1,069,550 Gross tax liability

1,000,000 620,000

4,828,200

1,069,550 3,856,833 771,367 (19,284) (62,000) 988,266 5,000 200,000 Net tax liability (205,000) 783,266

Less: 10% tax rebate for showing 20% higher income Last year's income(4828200-200000)/1.2=Tk 3856833 Higher income shown(4828200-200000)-3856833 Rebate 10% on higher tax paid=771367*0.25*0.1 Less: 10% Rebate on investment Tk. 620,000

Less: Tax credit on dividend@10% on Tk 50,000 On sale of apartment@2% on 1000,000

May-June 2009 Q-9 ABC Limited Computation of Total Income Assessment year 2010-2011(Income year 2009--2010 ) Note Interest on Securities(u/s-22): Interest on tax free govt securities Tk 10,000 (Interest on tax free govt securities is fully exempted under para-24 part A 6th schedule). Income from business or Profession (u/s-28): Profit before tax as per profit and loss account Less: Non-business income included in P&L A/c for consideration at appropriate heads of income: Dividend 20,000 Interest on bank deposit 12,000 Profit on sale of machineries 30,000 Interest on tax free govt securities 10,000 Sundry income 5,000 30,000 Refund of income tax(it is not income. So it is not considered afterwards) Interest on investment outside Bangladesh 20,000 (127,000) Add: Expenditure to be considered as per provision of law afterwards Depreciation(for consideration as 3rd schedule) Inadmissible expenses as per provision of law: Income Tax paid in advanceTk 200,000 Tax is not an expense. So it not chargeable in P/L a/c and disallowable fully being non business expense. Fines paid to Customs authorityTk 20,000 Disallowed u/s-29(1)(xvii) assuming Company committed offences as Customs Act, 1969. Salary & allowance Tk 250,000 No tax has been deducted from the salary payment Tk 50,000 which is fully disallowable u/s-30(aa). Legal expense Tk 14,000 Income taxes related legal expense Tk 10,000 is allowable upto appeal to the appellate Tribunal. So as it is allowable expense nothing to added back from here considering rest amount incurred for business purpose. 200,000 Taka -

573,000

180,000

180,000

Add: a

20,000

50,000

Conveyance allowance Tk 20000 Paid to General Manager for overseas travelling as representative of chamber which is allowable upto 1% of turnover disclosed Tk 4980,000. So nothing to add back from here.

Excess perquisitess Tk 20000 Excess perquisitess Tk 20000 over allowable income tax paid fully added here u/s-30(e).

20,000

(290,000) Less: Admissible expenses as per provision of law: Tax depreciation as per 3rd schedule Add: Deemed income U/s-19 1 Profit on sale of machine Tk 800,000 Sale price(Tk 40000+profit Tk 30000) Written down value Total profit Cost price 70,000 70,000 60,000 115,000 (115,000)

Capital gain(sale-costs)under capital gain head 10,000 Revenue gain(total profit-capital gain) 60,000 Capital gain to be considered in income from other sources afterwards. Only revenue gain to be added u/s-19(16) now for being sale of machinery.

60,000

Profit before charging separate considerable expenses Income from business or Profession (u/s-28): Income from Capital Gain(u/s-31): Capital gain on sale of machine Income from Other sources (u/s-33) Dividend income (assuming gross) Interest on bank deposit(assuming gross) Sundry income Interest on investment outside Bangladesh (Lack of proper information in the given problem assume that interest received from country which is not fully under DTAA & the company did not claim for income tax rebate). Total income Computation of tax liabilities 1 On total income excluding capital gain and dividend income @37.5% on (assuming not publicly traded listed Company)=Tk568000-1000020000=Tk 538,000 On capital gain@15%(para-2(a) 2nd schedule On dividend income @20%

60,000 281,000 281,000 10,000 10,000

20,000 12,000 5,000 20,000

57,000 629,000

224,625

599,000.000

2 3

1,500 4,000 230,125 (200,000) (4,000) (1,200) 24,925

Less: Advance tax paid( assuming it has paid on the basis of last assessed income as per section-64. So there is no question of charging simple interest). TDS on dividend income TDS on interest(12000*10%) Net tax liability

But the corporate minimum tax liability either profi/loss in IY is Tk 5,000 as per Finance Act 2010.

Nov-Dec 2008 Mr. Khan & Co Limited Computation of Total Income Assessment year 2008--2009 (Income year 2007-2008) Note Income from business or Profession (u/s-28): Profit before tax as per profit and loss account Less: Add: Add: a Non-business income included in P&L A/c for consideration at appropriate heads of income: Expenditure to be considered as per provision of law afterwards Depreciation(for consideration as 3rd schedule) Inadmissible expenses as per provision of law: Salary to Mr X Tk 755,375 (assume capital expenditure for installation of machineries which is disallowed fully u/s-29(1)(xxvii). Goods damaged in store Tk 125,000 As normal course of business goods cannot be damaged in store. In case of accident like flood, it is allowable expenditure because its out of human comntrol. But as there is no such indication it assume it was damaged due to neglegence. So disallowed fully. 4,000,000 755,375 37,500,525 Taka

4,000,000

125000

Tax deducted at source from Dividend Tk 1,275,850 Tax is not an expense. So it not chargeable in P/L a/c and disallowable fully being non business expense. Late fine for renewal of trade license Tk 35,450 Disallowed fully as incurred for violation of law Commission to Abul & Co Tk 2,000,000 As commission paid for security provided against loan by bank to the company which is solely revenue expense & incurred for business and allowed u/s-29(1)(xxvii). Depreciation of leasehold assets Tk 5,00000 As accounting depreciation was disallowed earlier in which this depreciation was included no need to diallowed futher. Profit on sale of motor car Tk 800,000 Written down value 1,200,000 Total Profit 800,000 Sale price 2,000,000 Cost price 1,800,000 Capital gain(sale-costs)under capital gain head 200,000 Revenue gain(total profit-capital gain) 600,000 Both revenue gain and capital gain to be considered in other heads afterwards. Nothing to be added u/s-29(1)(xi) now for not being sale of building, plant & machinery.

1,275,850

35,450

Money looted on the way Tk 5,000,0,00 Loss of money by theft is allowable expense as it is incurred during the course of business. Here money looted Tk 5,000,000 & recovered was Tk 3,500,000. So the net loss Tk 1,500,000 as loss. So afterwards allowing actual loss the recovered amount is disallowed.

3,500,000

5,691,675 Less: Admissible expenses as per provision of law: Leased depreciation(assuming it was operating lease) Tax depreciation as per 3rd schedule Profit before charging separate considerable expenses Income from business or Profession (u/s-28): Income from Capital Gain(u/s-31): Capital gain on sale of motor car Income from Other sources (u/s-33) Balancing charge(revenue gain) on sale of motor car Dividend income (gross) Total tax deducted at source@20% on dividend income. So total dividend income=(1275850/0.2)=Tk6,379,250 Total income Computation of tax liabilities 1 On total income excluding capital gain and dividend income @27.5% on (listed Company)=Tk50746,450-200000-6,379,250=Tk 44,167,200. 12,145,980 43,567,200 125,000 3,500,000 (3,625,000)

200,000

200,000

600,000 6,379,250

6,979,250 50,746,450

2 3 Less:

Less: Rebate @10% on Tk 12,145,980 for declaring more than 20% dividend On capital gain@15%(para-2(a) 2nd schedule On dividend income @20% Advance tax paid( assuming it has paid on the basis of last assessed income as per section-64. So there is no question of charging simple interest). TDS on dividend income Net tax liability

(1,214,598) 10,931,382 30,000 1,275,850 12,237,232 (5,000,000) (1,275,850) 5,961,382

Nov-Dec 2009 Q-4 Mr. Azim Computation of Income from House property Assessment year -------------- (Income year ended -------) Note Income from house property(u/s-24): Annual value(AV): Rental income(Tk25,000*12) Municipal value Higher one of above Less: Admissible deduction(u/s-25): Repair & maintenance(1/4 of AV u/s-25(1)(h) Municipal tax(u/s-25(1)(a)) Insurance premium(u/s-25(1)(b)) Interest on mortgage Land revenue 75,000 5,000 4,000 4,000 2,000 (90,000) Income from house property(u/s-24) Notes 1 2 3 4 210,000 Taka

300,000 220,000 300,000

Half of house used by his son in law who is not dependant on him is not considered in annual value. It is assumed that cost of alteration is a capital nature so it is not admissible expense. Repair & maintenance include water and swerage charge , white wash & repair. Residential house at Uttara used by the assessee. So it is not considered for computation in income and its realated expenditure.

May-June 2010 X Limited Computation of Total Income Assessment year 2010-2011 (Income year ended 30 June 2010) Note Sources of income: 1 Income from business or Profession (u/s-28): 2 Capital gain (u/s-31) 3 Income from Other sources (u/s-33) Income from business or Profession (u/s-28): Profit before tax as per profit and loss account Less: Non-business income included in P&L A/c for consideration at appropriate heads of income: a) Dividend (for consideration at income from other source) b) Share premium ( Not to be considered as income til AY 2010-2011. It is to be treated as income with effect from 1st July 2010 as per NBR Circular no: 1 of 2010) c) Sundrey income( for consideration at Income from Other sources) d) Capital gain on sale of machine(for consideration at capital gain head) 30,000 30,000 232,300 Taka

13,000 40,000 (113,000)

Add:

Expenditure to be considered as per provision of law afterwards 1 Entertainment(for consideration as per Rule-63) 2 Depreciation(for consideration as per 3rd schedule)

9,500 46,600 56,100 175,400

Add:

Inadmissible expenses as per provision of law: 1 Rent & Taxes Tk 24,500 As VAT Tk 4,200 paid for importing machines is charged at P&L A/c is disallowable Tk. 4,200 being part of value of machine(capital expenditure). As the machine does not used does not used during the year, so no tax depreciation is allowable. 2 Repair and operating expense Tk 27,300 Tk. 6,000 disallowed for being not business expense rather personal expense of MD. 3 Legal expense Tk 14,500 Income taxes related legal expense is allowable upto appeal to the appellate Tribunal. So as it is allowable expense nothing to added back from here. 4 Compensation for termination of staff Tk 10,000 Assuming compensation paid for violation of job agreement. So disallowable fully, 5 Type writer Tk, 5948 Type writer machine is capital nature expenditure. As it is chareged at P&L A/c as a revenue expenditure so disallowable fully. 4,200

6,000

10,000

5,948

6 Bad debt provision Tk 4,400 Disallowable fully being no provision other than actual bad debt is allowable u/s-29(1)(xv).

4,400

30,548 205,948 Add: Deemed income u/s-19 Bad debt recovered is to be treated as business income u/s-19(15)(a) Admissible expenses as per provision of law: Tax depreciation Profit before charging separate considerable expenses Entertainment as per Rule-65 Allowable limit upto 4% of profit before charging entertainment exp. Here the actual expenditure is Tk 9,500 out of which Tk 2,000 is unexplained and Tk 5,276 is personal expnditure. So after deducting those two, calims remains for Tk 9,500--Tk 2,000-Tk 5276=Tk 2224. As it is lower than the ceiling of Rule-65 Tk 5982, so it is allowable expenditure. 2,000 207,948 (58,400) 149,548

Less:

5,982 (2,224)

Income from business or Profession (u/s-28): Income from Capital Gain(u/s-31): Capital gain on sale of machine Income from Capital Gain(u/s-31): Income from Other sources (u/s-33) a Dividend income(gross assumed) b Sundry income Total income Computation of tax liabilities 1 On total income other than Capital gain and dividend income @37.5% (Being non listed trading Company)

147,324

40,000 40,000

30,000 13,000 43,000 230,324

60,122

2 On Capital gain tax @ 15% (under para-2 Second schedule) 3 On dividend income @20% Gross tax liability Less: Tax credit: Tax deducted at source on dividend @20%(u/s-54) Net Tax liabilities

6,000 6,000 72,122 6,000 66,122

Nov-Dec-2010 Mr. Rahman Computation of Total Income Assessment year 2010-2011 (Income year 2009-2010) Note Income from Salary (u/s-21): Basic salary(9,000 *12) Dearness allowance(20% of Basic salary) Bonus(Two months Basic salary) Rent free accommodation(Rule-33B): Rental value(annual value) or 25% of Basic salary Lower one Medical allowance(Tk 300 p.m) Less: Exemption(Rule-33I): Actual expense(assumed allowance are expended) 3,600 2,500 1,100 8,100 183,800 Taka

108,000 21,600 18,000 30,000 27,000 27,000

Conveyance facilities(u/s-33D)7.5% of Basic Income from Salary (u/s-21) before considering Contribution & interest on PF:

Salary Income before considering Cont. & interest on PF: Employer's Contribution to PF(10% of Basic) (Since para-4(1) part-A 6th schedule excludes govt PF income for PF registered only under PF Act, 1925. Employee contribution in RPF exempted in Para-6 Part-B 1st schedule). Interest on PF (for RPF Para-25 Part-A 6th schedule) Interest on RPF Less: Exemption 1/3 of total salary 36,000 1,611 14.5% of cumulative RPF(Tk1000/.09)*14.5% higher one exempted

Provident Fund Recognized Unrecognized Government 183,800 183,800 183,800 10,800 -

1,000

36,000 183,800

For GPF Para-4(1) Part-A 6th schedule (exempted for income PF which is under PF Act 1925) For UPF Income from Salary (u/s-21) Calculation of investment allowance(under Part B 6th schedule): Life insurance premium for father Tk 5000 (as per para-1 LIP allowable upto 10% of policy value). Purchase of compnay's share Tk 4000 (assumed purchased listed company's share which allowed as per para-8) . Employee and employer's cont. to PF(10% of salary each) (both allowable for RPF as per para-5, only employee cont. allowable for GPF as para-4 and nothing allowed for UPF). Actual investment

194,600

183,800

5,000 4,000

5,000 4,000

5,000 4,000

10800

21,600

19,800

30,600

9,000

Allowable investment allowance(u/s-44): Actual investment 25% of total income [excluding employer's contribution to PF, interest on PF]. So 25% on (Tk 194600-10800);(183800-0);((183800-0). Maximum allowable investment Allowable investment (lower of the above)

19,800 45,950

30,600 45,950

9,000 45,950

1,000,000 19,800

1,000,000 30,600

1,000,000 9,000

On first Tk. On next Tk. On next Tk. On next Tk. On balance Total income

Computation of tax liabilities Total income for Provident Fund Total tax for Provident Fund Recognized Unrecognized Government Recognized Unrecognized Government 165000 165000 165000 0 0 0 29600 18800 18800 2960 1880 1880 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 194,600 183,800 183,800 2,960 1,880 1,880 Less: 1,980 980 2,000 3,060 (1,180) 2,000 900 980 2,000

10% Rebate on investment Net tax liability Minimum tax liability for individual for having taxable income above exemption limit.

Exam of Mr Akbar Q-6 XYZ Limited Computation of Total Income Assessment year 2009-2010 (Income year 2008-2009) Note Taka

Income from business or Profession (u/s-28): Profit before tax as per profit and loss account Less: Exempted income included in P&L A/c: Income from export of handicraft(Exempted under para-35 Part A 6th shcedule) Less: 57,580,350

9,250,000

9,250,000

Non-business income included in P&L A/c for consideration at appropriate heads of income: Expenditure to be considered as per provision of law afterwards Accounting depreciation( for consideration as per 3rd schedule) Entertainment(for consideration as per Rule-63) Inadmissible expenses as per provision of law: 1 Incentive bonusTk 6870,500(for consideration as per u/s-30(j)) (10% of disclosed profit=(57,580,350*10%)=5758035 is allowable limit u/s-30(j). So (6,870,500-5,758,035)=Tk 1112,465 is disallowable. 2 Overseas travelling Tk 8,550,000 U/s-30(k) allowable upto 1% of disclosed turnover Tk 739,068,560. So the excess amount disallwed =8,550,000-7,390,685=Tk 1,159,315 is added with total income. 3 Free sample Tk 82,570 (for consideration as Rule -65C) Allowable limit in Rule 65C as follows: 750,000 Upto Tk 5 crore turnover@1.5% On excess of Tk5 crore to Tk 10 crore @0.75% 750,000 In excess of Tk 10 crore turnover@0.375% onTk 739,068,560=Tk 2,771,507 2,396,507 Since the claim amount is within the allowable limit, it is fully admissible expeense and nothing to be added back. 2,271,780

Add:

2,136,860 112,980 2,249,840

Add:

1,112,465

1,159,315

Less: Add:

Admissible expenses as per provision of law: Tax depreciation as per 3rd schedule Deemed income u/s-19 Profit before charging separate considerable expenses Entertainment as per Rule-65 Allowable limit: 4% upto Tk 10 lac of profit before charging entertainment exp. on rest 2% of profit before charging entertainment exp.

(2,315,970) 69,036,000

40,000 1,380,720 (1,420,720)

Income from business or Profession (u/s-28): Income from Capital Gain(u/s-31): 1 Sale of shares Purchase of shares Capital gain on sale of shares But capital gain arise from transfer of listed company share is fully exempted from tax u/s-32(7) in AY 2009-2010 as income tax rate applicable in last IY retrospectively(i.e. AY 2010-2011 tax @10% under SRO 269 dated 1.7.2010 is applicable) and TDS prospectively. Income from Other sources (u/s-33) 1 Total bank deposit Deposits from sales Less: Transfer deposit from CD to SA a/c Deposit from cash subsidy

67,615,280

19,095,000 11,812,000 7,283,000

857,690,580 748,234,890 49,987,520 19,000,000 (817,222,410) 40,468,170 10,000,000

Deemed income u/s-19(1) Unpaid cash loan Tk 10,000,000 According to u/s-19(21) cash loan is to be paid back within 3 years from end of which year loan has been taken. Otherwise such loan will be treated as income from other sources in the following income year. Total income Income from export of handicraft (Since handicraft income is not main business of company, it is Exempted under para-35 Part A 6th shcedule and nothing to be added.

118,083,450 9,250,000 -

Total taxable income

108,833,450

Computation of tax liabilities 1 On total income excluding capital gain @37.5%(listed but not declaring dividend at least 15% at the end of six months of income year) 108,833,450 40,812,544

Add: XYZ Ltd has not declared any dividend during IY 2008-2009. So u/s16B additional charge will be imposed on undistributed profit @5%. Opening Retained earnings Add: Tax holiday reserve Add: General reserve Undistributed profit Charge of additional tax@5% on Tk 66,347,500 42,077,500 11,270,000 13,000,000 66,347,500

3,317,375

Net tax liability

44,129,919

Class Test Mr. X Computation of Total Income Assessment year 2010-2011 (Income year ended 30 June 2010) Note Income from Salary (u/s-21): Basic salary(20,000 *12) Dearness allowance(20% of Basic salary) Bonus(one month Basic salary) House rent allowance(55% of basic salary): Less: Exemption(Rule-33A): 50% of Basic salary or Tk 15,000 per month Lower one Taka

240,000 48,000 20,000 132,000 120,000 180,000 120,000 12,000 6,000 6,000 14,400 24,000 60,000 60,000

Medical allowance(Tk 500 p.m) Less: Exemption(Rule-33I): Actual expense(assumed allowance are expended) Conveyance allowance(per month Tk1200) Less: Exemption(rule-33) Posting subsidy(Tk5,000 p.m.) Less:Exempted under para-5 Part-A, 6th schedule (Assumed allowance expended wholly and necessarily for performance office duties or employment).

Employer's Contribution to RPF(10% of Basic) (Since para-4(1) part-A 6th schedule excludes income for PF registered only under PF Act, 1925)

24,000

Interest on RPF(Para-25 Part-A 6th schedule) Less: Exemption 1/3 of total salary Tk 544400 114,667 All salary related exp except those allowed under ITO in above cases.So Total salary=(240000+48000+20000+132000+6000+14400+ 60000+24000)=544400 14.5% of cumulative RPF 87,000 higher one exempted

96,000

544,400

114,667 344,000

Income from Salary (u/s-21) Interest on Securities(u/s-22): Interest on SEC approved debenture Interest on govt bond (Assumed that Tk 7,000 deducted as a upfront basis for which tax credit is taken. So no tax credit and 35,000 70,000 105,000

exemption is allowable). Less: Exemption(para-12 & 13 Part-A 6th schedule)

20,000 85,000 85,000

Interest on Securities(u/s-22) Income from house property(u/s-24): Annual value(AV): Rental income(Tk10,000*12) Municipal value-not given (Assumed that actual rental is higher than municipal value) Higher one of above Less: Admissible deduction(u/s-25): Repair & maintenance(1/4 of AV u/s-25(1)(h) Municipal tax(1/2 of Tk10,000 u/s-25(1)(a)) Insurance premium(1/2 of Tk 6,000 u/s-25(1)(b)) Interest on house building loan Interest allowable u/s-25(1)(g) for deduction upto rented portion (as loan has been taken for personal=(3,200,000/2)=Tk 1,600,000 which is bellow the allowable limit Tk 2,000,000). If personal loan exceeds Tk 2,000,000 then interest on the amount exceeding Tk 2,000,000 must deducted from House property income. If whole or portion occupied by the owner then interest on upto Tk 2,000,000 loan (personal) allowed as deduction from total income. Allowable interest(147000/2)=73,500. Income from house property(u/s-24) Income from paertnership firm: Income from partnership firm(gross/before tax) (1/3 of 225,000) Income from Capital Gain(u/s-31): As per u/s-53H TDS @2% of deed value Tk5,000,000 comes at Tk 100,000. It is final settlement of tax liability as per u/s-82C.Assuming the land was transferred(inherited) after 5 years of acquisition. So applying 15% tax rate as per para-2 2nd schedule tax on total income including CG or tax @15% on CG, lower one). Income on Capital gain comes at (10000/0.15)=666,667 Income from Other sources (u/s-33): Cash Dividend u/s-54(gross) [45,000/90)*100] Stock dividend(Tk10*100 share)=1,000 (as per u/s-2(26) dividend income and u/s-2(34) income definition excludes the bonus dividend as an income). Interest on saving account(gross) u/s-53I(5400/90)*100 Income from Other sources (u/s-33): Total income Less: Interest on house building loan(147,000/2)

120,000 120,000

30,000 10,000 6,000 73,500

(119,500) 500

75,000

666,667

50,000 -

6,000 56,000 1,227,167 73,500

(as per u/s-25(1)(g) interest on upto Tk 2,000,000 loan which is allowable as deduction for personal loan for construction of building fully /partly occupied by owner). Residual total income on which tax to be imposed

1,153,667

Calculation of investment allowance(under Part B 6th schedule): Life insurance premium for father Tk 60,000 (as per para-1 LIP allowable only for assessee, spouse and minor child). Investment in listed company's share (allowable as per para-8) Deposit pension Scheme at Islami Bank(Tk5,000*12)=Tk60,000 (allowable only for schedule bank and govt approved bank as per para-11 ) . Employee and employer's contribution to RPF(10% of salary each) (allowable as per para-5) Actual investment Allowable investment allowance(u/s-44): Actual investment 25% of total income [excluding employer's contribution to RPF, interest on RPF (excluding interest para-25, part-A 6th schedule), income u/s-82C]. So 25% on Tk 463,000(1162,667-24,000-9000-666,667). Maximum allowable investment -

100,000 -

48,000 148,000 148,000 115,750

1,000,000 Allowable investment (lower of the above) Computation of tax liabilities

115,750

On total income other than Capital gain=Tk.487,000=(1153,667-666,667) On first Tk. 165000 @ 0% 0 275000 @ 10% 27500 On next Tk. 47000 @ 15% 7050 On next Tk. 0 @ 20% 0 On next Tk. 0 @ 25% 0 On balanceTk. 487000 On Capital gain Tk 666,667 tax @ 15% (under para-2 Second schedule) Gross tax liability Less: Less: Less: 10% Rebate on investment Tk 115,750

487,000

34,550 100,000 134,550 11,575 122,975 7,995 114,980

Tax credit average rate for partnership firm income[(122975/1153667)*75000] TDS on dividend on saving interest on Capital gain Net tax liability

5,000 600 100,000 105,600 9,380