97 Practice Question On SALARY by Sir Tariq Tunio

CAF 02 Tax Practices by Sir TARIQ Tunio (The Taxman) ARTT Business School
SALARY
(A) BASICS OF SALARY
TARIQ TUNIO THE TAXMAN @ ARTT 03322130867

QUESTION ● 1 AKRAM
Mr. Akram, a mechanical engineer, joined M/s Super Appliance as Manager (Production) on
August 1st, 2020. Details of his salary for tax year 2021 are given as under:
 Basic salary (per month) 50,000

 House rent allowance (per month) 24,000
 Overtime payment 48,000
 Bonus 290,000
Further Information
(i) Bonus was credited in Akram’s bank account on 17th July, 2022.
(ii) During the year, he made expenditure of Rs. 45,000/- in connection with deriving salary
income.
Requirement: Compute income chargeable under Salary for tax year 2021.
Tax Kit for Tax Practices CAF-02 ( 1 ) Prepared by Sir Tariq Tunio
QUESTION ● 2 QASIM
Mr. Qasim retired from M/s Woodland on April 18th, 2020 and joined M/s Oceans Ltd w/e/f July 1st,
2020. Details of his salary for tax year 2021 are as under:
 Basic salary (PM) 110,000

 Conveyance allowance (per month) 20,000
 Bonus 500,000

Further Information
(i) As per the company policy, salary for each month becomes due on 2nd of the next month.
(ii) The employer announced bonus of Rs. 500,000/- on June 30th, 2020, which was received by
Qasim on July 5th, 2020.
QUESTION ● 3 AKMAL
Mr. Akmal works at M/s Birds (Pvt) Ltd. Details of amounts received from employer in tax year
2021 are as under:

 Advance salary of July 2022 (BS only) 45,000
 Bonus 88,000
 Pension (PM) 30,000
Further Information
(i) As per the company policy, salary for each month becomes due on last day of the month.
(ii) Due to a dispute, the monthly salary for the months of May and June 2021 were stopped by
the employer.
(iii) The pension was from an earlier employment and is exempt under the Income Tax Ordinance,
2001.
QUESTION ● 4 ANOUSHA
Ms. Anousha works at M/s Tree (Pvt) Ltd. Details of amounts received from employer in tax year
2021 are as under:

 Conveyance allowance (PM) 8,8000
 Bonus 500,000

 Advance basic salary of two months (July & August 2022)
Further Information
(i) On February 1st, 2021, she received advance against salary of Rs. 200,000, which was repayable
in 20 equal monthly installments.
(ii) On her request, employer transferred bonus amount bank account of Anousha’s husband.
QUESTION ● 5 NOOR
Mr. Noor works at M/s Hussain & Co. Details of his salary for tax year 2021 are given as under:

 House rent allowance (PM) 24,000
 Commission (PA) 300,000
Further Information
(i) In the month of May 2021, the employer decided to give him bonus of Rs. 450,000/- but it was
not paid into his bank account. Rather, Rs. 50,000 was paid to a grocery shop at instruction of
Mr. Noor and the remaining was paid under a court order to a leasing company on account of
unpaid lease rentals of a car.
(ii) Since he had not done biometric verification of his bank account, the bank blocked his bank
account and the salary for the month of June 2021 could not be credited in it. The employer
gave him option to collect salary for June through demand draft but as on June 30th, 2021, he
did not collect it.
(iii) Commission was paid from the account of M/s Moeen & Co, which is associate of M/s
Hussain & Brothers.
(B) CORE AMOUNTS
QUESTION ● 6 BABAR
Mr. Babar, a resident individual, is an employee of M/s Airways Ltd. During tax year 2021, he
received following amounts/benefits from employer:

 Monthly Basic Salary 75,000
 Leave pay during the tax year 12,500
 Bonus 250,000
Following further information is also available to you:
(i) Monthly basic salary of Rs. 75,000 is the take-home amount. Employer had deducted
Rs. 5,000 on monthly basis from his basic salary and paid it a bank under a court order
as repayment of his loan.
(ii) During the year, Babar was given extra amount Rs. 11,666 not included in his regular
salaryon account of working 10 days of his sanctioned leaves.
(iii) On working days, Babar did overtime of 120 hours, for which he was given Rs.
1,500 perhour.
(iv) The employer gave him Rs. 150,000 as commission for bringing new customers.
(v) Babar’s work involves processing chemicals, which is hazardous to health. Hence,
the company provides him Rs. 20,000 per month as work condition supplement to
his monthly salary.
Requirement: Compute amount chargeable under ‘Salary’ for tax year 2021.
PRACTICAL QUESTION ● 7 AHMAR
Mr. Ahmar is an employee at M/s While Ltd, a salt manufacturer. For tax year 2021, details
of hisreceipts from the employer are given as under:
 Basic Salary (per month) 50,000

 Bonus (Quarterly) 40,000

 Overtime payments 22,500
 Commission 125,500
Following further information is also available to you:
(i) He received leave pay as well as payment of in lieu of leave of Rs. 10,000/- and
12,000/- respectively.
(ii) The employer paid Rs. 10,000 every month to a club on account of his monthly club
fees/charges.
(iii) Ahmar requested the company to pay for his monthly utilities bills amounting to
Rs. 12,500 apart from his salary. The requested was accepted.
(iv) In addition to the aforesaid amounts, A’ received Rs. 25,000 per quarter for
conduction inspection inside salt mine.
(v) He was also given fee amounting to Rs. 50,000 for providing training to new
employees of the company.
(C) ALLOWANCES
PRACTICAL QUESTION ● 8 AKBAR
Mr. Akbar joined Hawai Products (HP), a sole proprietorship, as manager production on July
01,2020. HP is engaged in production of tea and is based in Rawalpindi, with one factory in

Lahore.During tax year 2021, Akbar derived following emoluments:
 Basic Salary (per month) 60,000

 Ex gratia Payment 85,000
 Conveyance Allowance (per month) 10,250
 Cost of Living Allowance (COLA) (per month) 15,000
 House Rent Allowance (HRA) (per month) 25,000
 Travel Allowance 50,000
 Leave Fare Assistance Allowance (LFA) 62,000
 Entertainment Allowance (per month) 25,000
Following further details are available to you:
(i) In the first month of employment, before the first salary was due, the employer
provided one-time payment amounting to Rs. 10,000 as subsistence allowance.
(ii) He was given monthly utilities allowance equal to 10% of the basic salary.
(iii) Akbar was also given Rs. 12,000 per month for education of his children.
(iv) Travel allowance was given to Akbar for visiting Lahore factory.
(v) Fuel allowance amounting to Rs. 30,000 per month was given to him for expenditure
in performance of duties of employment. However, only Rs. 160,000 was expended
on fuel consumed in official purpose. Akbar was allowed to retain the rest of the
amount.
(vi) 70% of the entertainment allowance was for clients and customers.
PRACTICAL QUESTION ● 9 ZAKIR
Mr. Zakir is Director (Finance) at M/s Lawmen, a law firm. The employer provided
followingamounts to him during tax year 2021.
Rs.
 Ex gratia Bonus 50,000

 Monthly Conveyance Allowance 3,500
 Monthly Dearness Allowance 15,000
 Monthly Entertainment Allowance 5,000
 Monthly Utilities Allowance 18,000
 Monthly Education Allowance 8,500
 Special allowance 35,000
 Uniform Allowance (bi-monthly) 5,000
Following further details are available to you:
(i) House rent allowance amounting to Rs. 18,500 was given to him on monthly basis.
(ii) He was also given cost of living allowance (COLA) of Rs. 12,000 per month.
(iii) Travelling allowance of Rs. 76,000 on account of his personal travel, as well as 50%
of the air fare (as LFA) amounting to Rs. 35,000 were also given to him.
(iv) In the first month of employment, before the first salary was due, the employer
provided one-time payment amounting to Rs. 10,000 as subsistence allowance.
(v) 20,000 from special allowance were expended in the performance of duties of
employment.
(D) MEDICAL BENEFITS & MEDICAL ALLOWANCE
PRACTICAL QUESTION ● 10 HASAAN
Mr. Hasaan is an employee at M/s Asia Motorcycles. Details of his emoluments during tax year
2021 are given as under:

 Basic Salary (PM) 40,000
 Dearness Allowance (PM) 8,000
 Special allowance (PM) 5,000
Further Information:
(i) As per the term of employment, he was given free medical treatment amounting
to Rs. 55,000/- during the year.
(ii) Special allowance was expended in the performance of duties of employment.
Requirement: Calculate amount chargeable under Salary for tax year 2021.
PRACTICAL QUESTION ● 11 FAROOQ
Mr. Farooq works at M/s Tahseen Brothers. Details of his salary during tax year 2021 are as
under:
 Conveyance Allowance 15,000
 Bonus 100,000
- He was given free medical treatment amounting to Rs. 85,000/- during the year. The
facility of medical treatment was not provided in his terms of employment.
Requirement: Calculate amount chargeable under the head Salary for tax year 2021.
PRACTICAL QUESTION ● 12 FAIZ
Mr. Faiz is employed at M/s AirTech Co. His salary for tax year 2021 is as under:
- Basic Salary (Annual) 1,200,000

- House rent allowance (PA) 240,000

- During the year he underwent surgery and expended Rs. 500,000 on account of medical
treatment and hospital charges. The amount was reimbursed by employer as per terms of
his employment.
PRACTICAL QUESTION ● 13 HAMAD
Mr. Hamad works M/s BB & Sons. His salary for tax year 2021 is as under:
- Basic Salary (PM) 62,000

- Seniority allowance (PM) 15,000
- He underwent a minor surgery, on which Rs. 200,000 were spent. This amount was
reimbursed by employer on humanitarian grounds despite the fact that it was not
provided in his TOE.
PRACTICAL QUESTION ● 14 JAMIL
Mr. Jamil works at M/s Khan Brothers. His salary for tax year 2021 is as under:

- Dearness Allowance (10% of basic salary)
- During the year he spent Rs. 90,000 on medical treatment. No medical benefits were
provided in TOE, yet employer reimbursed 50,000/-.
PRACTICAL QUESTION ● 15 LAEEQ
Mr. Laeeq is employee at M/s HH Consultants. His salary for tax year 2021 is as under:

- Leave encasement 45,000

- As per terms of employment, the employer reimbursed Rs. 68,000 expended by him on
medical charges. The hospital where laeeq received medical treatment was not borne on
FBR NTN register.
PRACTICAL QUESTION ● 16 MUSTAQEEM
Mr. Mustaqeem works at M/s Nano Tech Ltd. His salary for tax year 2021 is as under:

- HRA (PM) 50,000
- Leave Fare Assistance Allowance 140,000
- As per the TOE, company reimbursed medical charges of Rs. 270,000 without attesting the
bills. The clinic in which he was treated had NTN.
PRACTICAL QUESTION ● 17 ALAM
Mr. Alam works at M/s BMT Ltd. Details of his salary during tax year 2021 are as under:
- Basic Salary (per month) 60,000

- House rent allowance (per month) 22,000
- Medical allowance (per month) 5,000
PRACTICAL QUESTION ● 18 KAMRAN
Mr. Kamran is employee at M/s Hussain Eximp. Details of his salary during tax year 2021 are as
under:

- House rent allowance (per month) 18,000

PRACTICAL QUESTION ● 19 SALEEM
Mr. Saleem is an employee at M/s America Kitchen Company. Details of his emoluments during
tax year 2021 are given as under:

- Dearness Allowance (PM) 15,000
- Medical allowance (PM) 6,500
- As per the term of employment, he was also provided free medical treatment amounting
to Rs. 120,000/- during the tax year.
PRACTICAL QUESTION ● 20 BADAR
Mr. Badar works at M/s Cool Fans. Details of his salary during tax year 2021 are given as under:

- Bonus 250,000
- During the year he went through a minor surgery. The surgery expenses of Rs. 140,000
were born by the employer despite the fact that they were not provided in his terms of
employment.
PRACTICAL QUESTION ● 21 ZEESHAN
Mr. Zeeshan is head of finance at M/s Fashion Vista. Details of his salary during tax year 2021
are given as under:

- House rent allowance (PM) 30,000

- As per terms of employment, Zeeshan had the facility of free medical treatment and
hospitalization. However, no amount was expended by employer on this account as no
need arose for it during the year.
PRACTICAL QUESTION ● 22 MANSOOR
Mr. Mansoor works as marketing executive at M/s Super Cars (Pvt) Ltd. Details of his salary
during tax year 2021 are given as under:

- Commission 600,000
- The company provided the facility of free medical treatment of upto Rs. 500,000/- by
making arrangements with M/s Care Medical Insurance (CMI). During the tax year, medical
treatment of Rs. 320,000/- was received by Mansoor, as per TOE.
PRACTICAL QUESTION ● 23 DANISH
Mr. Danish has been working at M/s Comfort Air (Pvt) Ltd. Details of his salary during tax year

- Conveyance (PM) 8,000

- The company provided the facility of free medical treatment and hospitalization of upto
Rs. 1 million per annum through medical insurance. During the tax year, medical treatment
of only Rs. 50,000/- was received by him.
PRACTICAL QUESTION ● 24 FATIMA
Ms. Fatima is an employee at M/s Z Technologies. Details of her salary during tax year 2021 are
given as under:

- Overtime 65,000
- Special allowance 50,000
- To provide her free medical treatment, the employer paid health insurance premium of
Rs. 130,000 per annum to M/s New Health Insurance Ltd.
- Special allowance was given in connection with performance of duties of employment, on
which Rs. 55,000 was spent. The employer reimbursed 5,000/- to him.
(E) PERQUISITES
PRACTICAL QUESTION ● 25 HAMEED
Mr. Hameed is an employee at M/s Shamim Ali Brothers. Details of his emoluments during tax
year 2021 are given as under:

- Dearness Allowance (PM) 5,000
- He was given a flat by employer for accommodation purposes
- Since he was given an accommodation, he was not given monthly House Rent Allowance
(HRA) of Rs. 15,000.
- As per the terms of employment, he received free medical treatment of Rs. 40,000/- during
the year.
PRACTICAL QUESTION ● 26 FARHEEN
Ms. Farheen works at M/s Digital Technologies. Details of her salary during tax year 2021 are
as under:
- Monthly Basic Salary 60,000

- Conveyance Allowance 15,000
- Bonus 100,000
- Rent free accommodation with fair market rent of Rs. 35,000 per month.
- She was given free medical treatment amounting to Rs. 82,000/- during the year. The
facility of medical treatment was not provided in her terms of employment.
PRACTICAL QUESTION ● 27 ANBREEN
Ms. Anbreen works at M/s Titans (Pvt) Ltd. Details of her salary during tax year 2021 are as
under:


- 15% of basic salary was given as monthly conveyance allowance.
- A banglow located in Model Town was given to him.
Further information
- Time scale of his basic salary is as follows: 60,000-5,000-80,000.
PRACTICAL QUESTION ● 28 SAMI
Mr. Sami joined M/s Dada Pipes w/e/f September 1st, 2020. Details of his salary during tax year
2021 are as under:

- Furnished flat was given to him
Further information:
- The minimum of time scale of his basic salary is Rs. 30,000/-
- Fair market rent of the furniture is Rs. 20,000 per month
PRACTICAL QUESTION ● 29 SALMAN
Mr. Salman is an employee at M/s European Tours & Travels. Details of his emoluments during
tax year 2021 are given as under:


- A car was given to him for full private use
- As per the term of employment, he was also provided free medical treatment amounting
to Rs. 100,000/- during the tax year.
- Car was purchased by the employer at 3,600,000 five years ago.
PRACTICAL QUESTION ● 30 BAHADUR KHAN
Mr. Bahadur Khan works as cook at M/s Hot & Hot Food. Details of his salary during tax year

- Bonus 200,000
- Motor vehicle for partial private use
- During the year he went through a minor surgery. The surgery expenses of Rs. 140,000
were born by the employer despite the fact that they were not provided in his terms of
employment.
- Cost of vehicle to the employer was at Rs. 2,400,000.
PRACTICAL QUESTION ● 31 ZAMEER
Mr. Zameer is head of procurement wing at M/s The Doors Distributors. Details of his salary


- Car (cost of the car was Rs. 1,800,000)
- As per terms of employment, Zeeshan had the facility of free medical treatment and
hospitalization. However, no amount was expended by employer on this account as no
need arose for it during the year.
- Car was given for full official use only.
PRACTICAL QUESTION ● 32 MUHAMMAD ALI
Mr. Muhammad Ali works as regional manager at M/s Wheels (Pvt) Ltd. Details of his salary

- Two cars were given to him
o Car 1 was for full private use and was owned by the company. Cost Rs. 3,200,000
o Car 2 was for partial private and was leased by the company. Its current fair market
value is Rs. 2,200,000/-.
- The company provided the facility of free medical treatment of upto Rs. 500,000/- by
making arrangements with M/s Care Medical Insurance (CMI). During the tax year, medical
treatment of Rs. 400,000/- was received by Muhammad Ali, as per TOE.
- At the time of lease agreement fair market value of Car 2 was 3,400,000.
PRACTICAL QUESTION ● 33 FAKHAR
Mr. Fakhar works at M/s Flyers Travel (Pvt) Ltd. Details of his salary during tax year 2021 are
given as under:


- Company-maintained car was given to him for full private use
- The company provided the facility of free medical treatment and hospitalization of upto
Rs. 600,000 million per annum through medical insurance. During the tax year, medical
treatment of only Rs. 150,000/- was received by him.
- Car was leased by the company at total value of Rs. 3,500,000 (including mark up of Rs.
500,000).
- Monthly cost of maintenance of company of car is Rs. 24,000 (which includes Rs. 18,000
on account of fuel).
PRACTICAL QUESTION ● 34 USMAN
Mr. Usman is an employee of M/s Generations (Pvt) Ltd. Details of his salary during tax year

- Payment in lieu of leave 85,000
- A chauffer-driven car for full private use
- To provide his free medical treatment, the employer paid health insurance premium of Rs.
180,000 per annum to M/s Hum Tum Insurance.
- Car has fair market value of Rs. 2,900,000. It was purchased at Rs. 3,800,000.
- Salary of driver is Rs. 20,000 per month.
PRACTICAL QUESTION ● 35 ILYAS
Mr. Ilyas is an employee of M/s PakNews. Details of his salary during tax year 2021 are given as
under:

- Conveyance allowance (PM) 15,000

- Banglow with guard and cook
- Monthly Salary of the guard and cook was Rs. 16,000 and 20,000 respectively. Ilyas paid
50% of salary of the cook to the employer.
PRACTICAL QUESTION ● 36 JAMEEL
Mr. Jameel is executive director at M/s Ravi Heavy Industries Ltd. Details of his salary during tax
year 2021 are given as under:

- Conveyance allowance (PM) 40,000
- Banglow located at DHA Karachi
- The company provided him following assistants and servants:
Assistant / Servant Monthly Salary

Person Assistant (for office) 35,000
Gardener (for residence) 15,000
Driver (both for office and private) 20,000
PRACTICAL QUESTION ● 37 KARAMAT
Mr. Karamat works at M/s Salman and bros. Details of his salary during tax year 2021 are given
as under:

- Dearness allowance (PM) 5,000

- On 22nd May, 2021, employer waived Rs. 130,000, which represented loan taken by
Karamat from his employer one year ago.
PRACTICAL QUESTION ● 38 MURTAZA
Mr. Murtaza is employee of M/s Mahfooz Security (Pvt) Ltd. Details of his salary during tax year

- Cost of living allowance (PM) 10,000
- Bonus 140,000
- Murtaza had taken loan amounting to Rs. 50,000/- from a friend. During the tax year,
employer paid off this loan.
PRACTICAL QUESTION ● 39 IMRAN
Mr. Imran works M/s Bee (Pvt) Ltd. Details of his salary during tax year 2021 are given as under:

- Leave fare assistance allowance 60,000

- Internet Services 120,000
- Rs. 40,000 was paid by Imran to employee for internet services
PRACTICAL QUESTION ● 40 MUBBASHIR
Mr. Mubbashir is an employee at M/s T Tea Distributors. During tax year 2021, following
amounts were given to him by employer:

- Work condition supplement (PM) 5,000
- Special allowance 80,000
- Interest free loan 800,000
- Special allowance was given for performance of duties of employment.
PRACTICAL QUESTION ● 41 SABIR
Mr. Sabir works at M/s AA Co. During tax year 2021, following amounts were given to him by
employer:

- Bonus (Biannual) 150,000

- Motor vehicle (Cost) 2,400,000
- Loan 1,900,000
- Motor vehicle was given for partial private use.
- Mr. Sabir has waived interest on his account maintained by the employer.
PRACTICAL QUESTION ● 42 ABDUL SHAKOOR
Mr. Abdul Shakoor is employee at M/s M Motors. During tax year 2021, following amounts
were given to him by the employer:

- Advance salary of July 2021 42,000
- Interest free loan 2,000,000
PRACTICAL QUESTION ● 43 MOEN
Mr. Moen works at M/s Works Ltd. During tax year 2021, following amounts were given to him
by employer:

- Monthly HRA 22,000

- Loan 1,400,000
- The employer charged interest of 4% on the loan.
Requirement: Calculate amount chargeable under Salary for tax year 2021
PRACTICAL QUESTION ● 44 NADEEM
Mr. Nadeem works at M/s Works Ltd. During tax year 2021, following amounts were given to
him by employer:

- Monthly rent allowance 35,000
- Loan 2,500,000
- The employer charged interest of 10% on the loan against the prevailing market rate of
12.5%.
PRACTICAL QUESTION ● 45 IKRAM
Mr. Ikram is employed at M/s Al-Farooq Brothers. Details of his salary during tax year 2021 are
as under:

- Loan 1,300,000

- New mobile phone (handset)
- Employer charged interest of 8% on the loan.
- Employer provided free electricity to his residence and incurred expenditure of Rs.
230,000. He paid Rs. 50,000 to employer for provision of electricity.
- Mobile phone handset was purchased by the employer on 22nd May, 2020 at Rs. 160,000
and was given to him on the same day.
PRACTICAL QUESTION ● 46 IKRAM
As per the company policy, M/s XYZ LIMITED made following loans to its employees:
Sr. Employee Total Loan Interest rate

No. Name Amount in Rs. charged
by the Company
1 A 400,000 2%
2 B 500,000 (1) 5%
3 C 800,000 0%
4 D 800,000 0% & 3% (2)
4 E (3) 2,500,000 0%
5 F (3) 1,600,000 8%
6 G 2,000,000 12%
7 H 3,000,000 2%
(1) B borrowed Rs. 1,500,000 two years ago, and has so far paid off 1,000,000/-.
(2) D was given 500,000 in the previous year at 0% and 300,000 in the current year at
3%
(3) E & F have waived interest on their account with employer.
Requirement: Compute the amount to be charged to the employees of XYZ Ltd under the
TARIQ
head "Salary" for Tax Year 20X1.
TARIQ
PRACTICAL QUESTION ● 47
TUNIO
M/s ABC (Pvt) Ltd. following loans to its employees in Tax Year 20X1.
TUNIO
THE THE
has made loan of Rs. 2 (m) & 5 (m) to its employees Mr. A & B respectively
TAXMAN
Sr. Employee Loan Interest rate
No. Name Amount charged
TAXMAN
(Rs) by the Company
1 A 2,000,000 0%
@ ARTT
2 B 5,000,000 3%
3 C 1,200,000 11.5%
@ ARTT
03322130867
(1) The benchmark rate for the year is 10%.
(2) Mr. A & C invested the whole amount of loan in acquiring machines and equipments
03322130867
used in deriving business income of Rs. 60,000 and 45,000 per month respectively.
(3) Mr. B used 20% of the loan amount in marriage of his daughter and the rest of the
amount was used in acquiring generators which were let on rent to various customers
generating income from business of Rs. 400,000 per month.
Requirement: Compute taxable income of A, B & C for TY 20X1.
PRACTICAL QUESTION ● 48 EJAZ
Mr. Ejaz retired from M/s Wool Ltd on March 31st, 2021. Details of his salary during tax year
2021 are as under:

- Payment of Post-paid mobile phone bill (PM) 4,000

- As reward for his excellent service, the company allowed him to retained following assets:
FMV
ASSET PURPOSE COST WDV
(As on March 31st, 2021)
CAR Private use 2,200,000 8,00,000 1,200,0000
Laptop Office use 250,000 60,000 50,000
Cell Phone Office use 180,000 120,000 140,000
- He had to pay Rs. 250,000 to the employer for the car.
PRACTICAL QUESTION ● 49 HUMZA
Mr. Humza works at M/s NTM Ltd. Details of his salary during tax year 2021 are as under:

- Gas & Water (PM) 5,000
- Bonus 90,000
- Air Conditioner (Cost) 70,000
- Air conditioner was given for use at his home. The company depreciated it at 15%>
PRACTICAL QUESTION ● 50 MAHMOOD
Mr. Mahmood works at M/s Bottles (Pvt) Ltd. He was given following amounts/assets during
tax year 2021.

- Gas & Water (PM) 5,000

- Bonus 90,000
- Air Conditioner (Cost) 70,000
- New Motorcycle 150,00
- Facility of gas and water is for his residence.
- Air conditioner was given for use at his home. The company depreciated it at 15%.
PRACTICAL QUESTION ● 51 LIAQUAT
Mr. Liaquat is employee at M/s Bee Bee. He was given following amounts/assets during tax
year 2021.

- Honorarium 100,000
- Old furniture (FMV) 70,000
- Car for partial private use (Cost) 1,800,000
- Liaquat was allowed to purchase the car at WDV of Rs. 200,000 on December 31st, 2020.
He sold the car immediately at Rs. 500,000.
(F) EMPLOYEE SHARE SCHEME
PRACTICAL QUESTION ● 52 SARMAD
Mr. Sarmad is employee at M/s Heights Ltd. Details of his salary during tax year 2021 are as
under:

- Monthly HRA 12,000
- Daily Allowance 500
- He was given option/right to receive 5,000 shares of the company at Rs. 30,000.
PRACTICAL QUESTION ● 53 SALMAN
Mr. Salman is employee at M/s M&N (Pvt) Ltd. Details of his salary during tax year 2021 are as
under:

- Loan at 8% 1,100,000
- Travel allowance 60,000
- Daily Allowance (per day) 500
- Travel was in connection with performance of duties. Daily allowance was given for 10
days of his official travel.
- He received right to receive 15,000 shares of the company at Rs. 25,000, which was
transferred to a colleague at Rs. 40,000.
Mr. Sikandar Hayat is employee at M/s Melody Voices Ltd. Details of his salary during tax year
2021 are as under:

- Rent free accommodation with fair market rent 39,000

- Shares of company as per following details:
NO OF FMV (RS. PER CONSIDERATION PAID

DATE OF ISSUE
SHARES SHARE) FOR SHARES (RS.)
10,000 22.02.2021 12 50,000
- As per TOE, he was entitled for free medical treatment.
Mr. Shahzaib is employee at M/s AB (Pvt) Ltd. Details of his salary during tax year 2021 are as
under:
- Company maintained car (for full private use)
- Bonus 190,000
- Shares of company as per following details:
NO OF FMV (RS. PER CONSIDERATION PAID

DATE OF ISSUE
SHARES SHARE) FOR SHARES (RS.)
8,000 10.05.2021 20 12,000
- Car was leased by the company in 2019. Fair market value of car is Rs. 1,800,000. The car
maintenance expenditure was Rs. 47,000.
Ms. Tabbasum is employee at M/s AB (Pvt) Ltd. Details of his salary during tax year 2021 are as
under:

- HRA (PM) 50,000

- Car (partial private use) – Cost 3,800,000
- Shares of company under employee share scheme:
No. of Shares Date of issue 02.09.2020

FMV on the date of issue Rs. 25 per share
Date of Free Right 01.07.2021
12,000
Consideration Paid for shares Rs. 35,000
- Shares were issued with restriction on their disposal.
Mr. Kaleemullah is employee at M/s Baba Jee (Pvt) Ltd. Details of his salary during tax year 2021
are as under:

- Leave encashment 38,000
- Interest free loan 500,000
- Shares of company given under ESS:

1,000
Ms. Zulfiqar is employee at M/s AB (Pvt) Ltd. Details of his salary during tax year 2021 are as
under:

- Free utilities with fair market value 145,000

- Shares of company under ESS

14,000
Mr. Ovais is employee at M/s T (Pvt) Ltd. Details of his salary during tax year 2021 are as under:

- Bonus 500,000
- Shares of company (No.) 20,000

DATE FMV (Rs. Per Share)
FMV on the date of issue 10.05.19 18
Date of Free Right 15.11.2020 33
Date of Disposal 28.02.2022 46
Consideration given for Option/shares is Rs. 20,000.
Requirement: Calculate taxable income for tax year 2021.
Mr. Junaid is employee at M/s T (Pvt) Ltd. Details of his salary during tax year 2021 are as under:

- Conveyance allowance at 10%
- Shares of company (No.) 16,000

DATE FMV (Rs. Per Share)
FMV on the date of issue 05.03.19 20
Date of Free Right 01.07.2022 50
Date of Disposal 07.04.2021 37
Consideration given for Option and shares is Rs. 10,000 and Rs. 30,000 respectively.
Requirement: Calculate taxable income for tax year 2021
M/s Red Ltd launched an Employee Share Scheme (ESS). The employees wereoffered 10,000
shares each at the exercise price of Rs. 10 per share. An amount of Rs. 2 per shares was
received from employees as consideration for the right/option. Following further details are
available to you:
Particulars A B C D E

Date of issue -- -- 10.04.2019 01.12.2019 15.05.2021
FMV on the date of issue -- -- Rs.23.5/share Rs.20/share Rs.24/share
Date of free right -- -- -- 01.12.2020 15.05.2022
FMV on the date of free -- -- -- Rs.26/share Rs.35/share
right
Date of disposal -- -- -- 10.07.2021 20.05.2021
FMV on the date of disposal -- -- -- Rs.30/share Rs.25/share
(4) A and B only paid consideration for right/option whereas no amount was paid by
them for shares as shares were not issued to them yet. In the meanwhile a colleague
X approached them both to buy their right/option at Rs. 3 per share. A declined but
B accepted the offer and sold the right/option to X.
(5) C was employee of M/s Green (Pvt.) Limited, a subsidiary of M/s Red Limited.
(6) Shares have been issued to D and E with restriction on their transfer.
Requirement: Calculate amount chargeable to tax under "Salary" of each employee

for the relevant tax year.
Ali (A), Babar (B), Chiragh (C) and Ijlal (I) are employees and have received shares as per the
following details:
Employee Name A B C I
Employer Name RR Ltd TT Ltd LED Ltd FEX Ltd

Number of shares received 10,000 25,000 30,000 1,000
Fair market value on 23.08.2018 Rs. 10/- Rs. 20/- Rs. 15/- Rs. 100/-
Fair market value on 01.01.2020 Rs. 20/- Rs. 25/- Rs. 10/- Rs. 102/-
Fair market value on 15.07.2020 Rs. 30/- Rs. 35/- Rs. 12/- Rs. 102.5/-
Consideration paid for right/option Rs. 10,000 Rs. 20,000 Rs. 5,000 Rs. 10/share
Consideration paid for the shares Rs. 50,000 Rs. 75,000 Rs. 10,000 Rs. 5,000
Additional Information:
(1) Shares were issued to A on 23.08.2018 by his employer M/s RR Ltd.

(2) Shares were issued to B on 01.01.2020 by M/s TT Ltd.
(3) Shares were issued to C on 23.08.2018 by M/s LED Ltd. The shares were issued with
restriction on their transfer which was lifted with effect from 01.01.2020.
(4) Shares were issued to I on 23.08.2018 with restriction on their transfer. Date of free
right is 15.06.2021. The shares were, however, disposed of on 01.01.2020.
Requirement: Compute the amount to be added to ‘salary’ of each employee for the
relevant tax years.
Dr. Ayaan is employee at M/s Biochem (Pvt) Ltd, 80% shares of which are held by Mr. Bilal.
Details of Ayaan’s salary are as under:
TY 2020 TY 2021
- Basic Salary (per month) 145,000 150,000

- PhD. Allowance (per month) 20,000 20,000

Date of free right 15.11.2019
FMV on the date of free right Rs. 28 per share
5,000
Date of free disposal 10.8.2020
FMV on the date of disposal Rs. 32 per share
Requirement: Calculate taxable income of Ayaan for tax years 2020 and 2021.
Mr. Faizan works at M/s Baby Pink (Pvt) Ltd. Details of his salary are as under:
TY 2020 TY 2021 TY 2022

- Basic Salary (per month) 58,000 60,000 65,000
- Loan (at 6%) 1,200,000 1,100,000 1,000,00

Number of Date of issue 22.05.2020

Shares FMV on the date of issue Rs. 200 per share
is Date of free right 22.05.2022
2000 FMV on the date of free right Rs. 240 per share
Date of free disposal 05.12.2020
FMV on the date of disposal Rs. 210 per share
Requirement: Calculate taxable income of Ayaan for tax years 2020 and 2021.
The employees of M/s XYZ Limited have contacted you compute their tax liability for tax year
20X1.
A B C D
Monthly Basic Salary 50,000 90,000 145,000 220,000

Allowances 120,000 155,000 450,000 610,000
Perquisites (value in Rs.) 85,000 125,000 200,000 750,500
 The Co has undertaken to pay tax amounting to Rs.5,000/- in case of A.

 The Co has undertaken to pay tax amounting to Rs.350,000/- in case of B.
 The Co has undertaken to pay tax on allowances only in cases of C.
 The Co has undertaken to pay all tax in cases of D.
Requirement: Compute the tax liability of above employees.
QUESTION ● 66
Mr. A works at XYZ Ltd. During Tax Year 20X1, he received the following emoluments:
Amounts in Rs
Monthly Basic Salary 50,000/-
Employer’s Contribution to his Provident Fund 125,000/-
Interest credited to Provident Fund Account 230,000/
Notes:
 Provident Fund is recognized by CIR.
 The balance to his credit in the Provident Fund is Rs. 900,000/-
Requirement: Compute his Income under the head “Salary” for the tax year.
Mr. A is an employee of XYZ Ltd. The employer has paid following amounts to him during
the Tax Year 20X5:
Amounts in Rs
Basic Salary 480,000/-

Notes:
 An equal amount to the contribution made by the employer is also contributed by
employee to his Provident Fund.
 Balance to his credit in the Provident Fund is Rs. 1.5 (m) on which interest of Rs.
360,000/- was credited during the years.
the Tax Year 20X7:
Amounts in Rs
Notes:
the Tax Year 20X9:
Amounts in Rs
Basic Salary 1,200,000/-

Notes:
the Tax Year 20X5:
Amounts in Rs
Accumulated Balance received from the Provident Fund 8,000,000/-
Employer’s Contribution in Provident Fund for 6 months 50,000/-
Interest credited on his balance for 6 months 175,000/-
Notes:
 Provident Fund is un-recognized.
 Accumulated balance received from the Provident Fund includes repayment of
employee’s own contribution amount to Rs. 2 (m).
the Tax Year 20X2:
Amounts in Rs

Notes:
the Tax Year 20X4:
Amounts in Rs
Notes:

Mr. A was an employee at XYZ Ltd. During Tax Year 20X1, he retired from services with
effect from 30.06.2001, and received the following amounts:
Amounts in Rs

Employer’s Annual Contribution in Provident Fund 90,000/-
Interest credited on his balance in the Provident Fund 200,000/-
Notes:
employee’s own contribution amount to Rs. 1.5 (m).
Mr. Sagheer is an employee of a private company with fixed basic salary of Rs. 45,000/- per
mensem. During tax year 2021, he was also provided with the following perquisites/benefits:
(i) Rent free furnished accommodation. The annual market value of the accommodation
is Rs. 360,000/-.
(ii) Expenses of Rs. 125,000/- were incurred on Sagheer by the employer in accordance
with the terms of his employment.
(iii) The company has provided him with free car (all expenses borne by the employer)
which he is entitled to use for his private purposes also. The cost of the car to the
employer is Rs. 1,800,000/-.
(iv) Tea/Coffee and other similar entertainments are provided to him free of cost on
employer’s premises, which cost his employer Rs. 60,000/- per annum.
Requirement: From facts given above please compute his taxable income and tax liability
for the tax year 2021.
Mr. A was an employee at XYZ Ltd. During Tax Year 20X8, he retired from services with
effect from 31.12.2007, and received the following amounts:
Rs.

Notes:
employee’s own contribution amount to Rs. 400,000/-.
Mr. A was an employee of Federal Government, and has retired from services with effect
from 30.06.2003, and received the following amounts:
Rs.
Notes:
 Provident Fund is statutory, being formed under the Provident Funds Act, 1925.
XYZ Limited, a textile company, suffered consecutive losses for the past 5 years. As part of
its cost-cutting strategy, the new management of the company decided to lay off some of
its employees.
Four employees of the company have approached you and provided the following details:

 A, a manager marketing drawing salary of Rs 175,000/- pm, was laid off as the marketing
functions had been out-sourced by the company to a reputable advertisement agency,
making his job redundant. Since his employment agreement contained a clause for
termination of services for payment of Rs. 2,000,000/-, the company paid the said
amount on 31.12.20X7 and terminated his services.
 B, a supervisor at the dye section, drew salary of Rs. 150,000 pm. Since, there was no
clause in his employment agreement, the company was not obliged to pay him anything
for loss of his employment. However, the company voluntarily give him golden
handshake amounting to Rs. 500,000/- on 30.06.20X8.
 C, a driver of delivery trucks, was compulsorily retired on 05.07.20X7. He immediately

filed a case against the company in the court of law. On 30.06.20X7, the company struck
a deal with him as part of out-of-court settlement, and gave him following amounts: (1)
Rs. 900,000 for termination of his services, (2) Rs. 200,000 in lieu of notice, and (3) monthly
salary of Rs. 25,000/- for the whole period.
 D, an engineer, opted for Voluntary Severance Scheme (VSS) announced by the company
for all engineering staff. He received Rs. 1,500,000/- on 28.02.20X8 under the scheme. He
was re-hired on 01.4.20X8 by the company at monthly salary of 80,000/-. (He previously
drew gross salary of Rs. 120,000/- pm).
(1) Taxable income and tax liability of A for the preceding 3 years is given as under:
Particulars 20X7 20X6 20X5

Taxable Income 1,920,000 1,800,000 1,680,000
Tax Liability 384,000 324,000 252,000
(2) For TY 20X7, A had paid only Rs. 300,000/- to the tax department. The remaining
amount of Rs. 84,000/- was still due from him as tax arrears.

(3) Average rate of three preceding years for B, C and D is 18%, 7.5%, and 14%
respectively
Requirement: Compute the amount to be charged to each employee under the head
"Salary" in relevant tax years.
Mr. Aslam is an employee of a multinational corporation. During tax year 2021, his monthly
cash emoluments (basic salary) are Rs. 500,000. He is also provided with the following
perquisites/facilities.
(i) Rent free furnished accommodation. The bungalow is located in the Islamabad and
has a land area of 2000 sq yards.
(ii) Travel expenses on his personal travels both inside the country and abroad and of his
family members in accordance with his terms of employment are Rs. 1,000,000 paid
by Co.
(iii) Two motor cars costing Rs. 2,000,000 and Rs. 1,200,000 have been provided to him.
The first car is meant both for his official and private uses while the later car is meant
exclusively for his private and personal uses. All maintenance expenses including are
borne by the employees. Expenses incurred by the employer on both cars including
depreciation costs are Rs. 1,000,000/-.
(iv) He was issued, shares of the company under the employee share scheme of the value
(cost) of Rs. 1,000,000. Market value of these shares was Rs. 1,500,000.
Requirement: Compute his taxable income and tax liability for the year 2021.
Mr. Tarzan, a senior executive at Jungle (Pvt) Ltd (JPL), retired on 28th February 20X1 after
completion of 25 years of dedicated service in collecting bananas for JPL from the jungle.
Details of Tarzan’s income for the tax year 20X1 are given below:
Income from JPL

(i) Monthly remuneration:

Rupees
Basic salary 350,000
Medical allowance 50,000
Utilities allowance 46,000
Cost of living allowance 25,000
Market value of rent free accommodation (i.e. a tree
house) provided in the posh locality of the jungle 144,000
(ii) During the year, he fell off a tree and was taken to clinic by Madam Monkey. He
was treated there by Dr. Bhallu. JPL bore all medical expenses, amounting to Rs.
250,000/-, as per terms of employment.
(iii) On his retirement, JPL arranged a jungle party for all employees of the company.
The famous singer Mr. Donkey and renowned rope-dancer Ms Goat were also
invited. The total expenses on the party were Rs. 1,000,000/- . JPL also gave
Tarzan gratuity of Rs. 3,500,000 from an unrecognized gratuity fund maintained
by the company.
(iv) He is receiving pension amounting to Rs. 60,000 per month from the date of his
retirement.
(v) As per terms of employment, tax liability of Mr. Tarzan to the extent of Rs. 80,000
is to be borne by JPL.
Other Information
(v) He is also receiving pension amounting to Rs. 15,000 per month from a
multinational company where he worked previously.
Required:
(a) Compute taxable income and tax liability of Mr. Tarzan for the tax year 20X1.
(b) Briefly comment on the items which are not considered in the above computation.
Mr. Sultan Ali Sikandar Zulqurnain Haidar Mirza Khan (aka Chottu) is a general manager in
Hotel Plus Minus, a no-star hotel of M/s Al-belli Company Ltd in Karachi. Details of his
income for the tax year 20X1 are as follows:
(i)
Basic salary (per month) Rs. 845,000

Uniform Allowance (half yearly) 50,000
House rent allowance (per month) 65,000
Medical allowance (per month) 15,000
(ii) Besides medical allowance, he is also entitled to free medical treatment at

hospitals listed on the panel of the company.
(iii) He has been provided a 1600cc car (leased from a leasing company) which was
used partly for official and partly for personal purposes. Total lease rentals
payable by the company are Rs. 2,700,000. The fair market value of the car at
the time of lease was Rs. 1,600,000. The total lease rentals paid by the hotel
during the year amounted to Rs. 800,000.
(iv) He took lunch at the hotel’s restaurants where the usual charges are Rs. 500
per person. He was charged concessional rate of Rs. 50 per day which is
deducted from his salary. The number of working days in the year was 330.
(v) He went for a training course to Institute of Hotel Management, in Dubai. The
expenses of fare, boarding and lodging costing Rs. 550,000 were borne by the
employer. He also incurred a further expense of Rs. 335,000 on family gifts which
was reimbursed by the hotel.
(vi) His contribution to the recognized provident fund was deducted @10% of his
basic salary. An equal amount was contributed by the employer. Interest
credited to his provident fund account amounted to Rs.3 63,000. The
accumulated balance to his credit is Rs. 2,250,000
(vii) As per terms of employment, tax payable on his salary will be borne by the
company.
Required:
(a) Compute Mr. Chottu’s taxable income and tax payable for the tax year 20X1.
(b) Briefly explain the treatment of items which are not considered in the above
computation.
Mr. Masoom, a graduate from Tera Mera Apna College (TMAC) in banking and finance, was
jobless for the past many years (). Being a very ambitious person, he did not accept low
level jobs and wanted to rise () to the top through a short-cut. Hence, he was in search for
a ladder i.e. rich girl to marry. He succeeded in his goal on 15 July 20X2, when he married
Miss Batooni, who was the president of Chor-Bazaar Bank (CBB). On 01 September 20X2, he

joined the bank as regional manager. Compute his taxable income and tax liability on the
basis of following details of his income / receipts during the tax year 20X3:
(a) His monthly cash remuneration in CBB is as follows:

Rupees
Basic salary 200,000
Medical allowance 30,000
Utilities allowance 10,000
Extra payment for working in dangerous locality of
DHA. 20,000
(b) In addition to the above, he was also provided the following benefits in
accordance with his terms of employment:
(i) He received medical insurance for hospitalization and surgery, limited to
Rs. 2,500,000 per annum.
(ii) He was given two company-maintained cars (). One of the cars was
purchased by CBB for Rs. 2,800,000 and is exclusively for his business use.
The second car was obtained on lease on February 1, 20X1 and is used
partly for official and partly for personal purposes. The fair market value of
the leased vehicle at the time of lease was Rs. 1,800,000.
(iii) Two months into the marriage, he declared to the Accounting and Finance
Deptt. of the bank that he had children () from an earlier marriage. So he
received payment of his children’s school fees of Rs. 20,000 per month,
which was deposited directly into the school’s bank account.
(iv) He was given rent free furnished accommodation (  ) on 2000 square
yards. He gave the accommodation to his first wife and continued to live
in second wife’s house.
(v) He also received leave encashment amounting to Rs. 100,000.

(vi) An amount equal to one basic salary was paid by CBB to an approved
pension fund.
(c) Mr. Masoom had received 20,000 shares of CBB on December 1, 20X2 under an
employee share scheme. He had the option to transfer the shares on or after
January 1, 20X5. However, he sold all the shares on April 1, 20X3. Fair value of

the shares were as follows: Rs. 35 per share on December 1, 20X2; Rs. 42 per
share on January 1, 20X5; Rs. 48 per share on April 1, 20X3
(d) When Ms. Batooni came to know about his first marriage, she called her
childhood friend Ms. Bewakoof for advice. On her suggestion, she fired him and
filed for divorce. An out-of court settlement was reached whereby Mr. Masoom
was given Rs. 1,000,000/- as golden handshake. On the morning of 29 June
20X3, Mr. Masoom took all the money from his bank account (except for Rs.
100), and was on his way to home, when he was intercepted by two farishtas,
who snatched all his money. So, he was on the road again ().
Mr. Teeli Pahlawan (TP), a Pakistani national, is employed as chief trainer at Mr. Muscular
(MM), a gym, since 199X. Following information pertains to his income for the tax year 20X3:
 TP was employed with MM up to 31 December 20X2. During this period he received

the following emoluments:
 Basic salary of Rs. 540,000 per month, medical allowance of Rs. 105,000 per
month and utility allowance equivalent to 10% of basic salary.
 A car for both official and private use. The car was purchased two years ago
at a cost of Rs. 2.6 million. MM deducted Rs. 10,000 per month from his
salary, for private use of the car.
 On 31 July 20X2, TP pulled a leg muscle while training a client at the gym and had to
undergo a major surgery and incurred an expenditure of Rs. 1,350,000. MM
reimbursed the entire amount on special case basis as he was MM’s prime trainer.
The reimbursement was not covered under the terms of employment.
 Surprisingly after the injury, Teeli Pahlwan gained weight. Due to which his health
become poor again and he opted for early retirement on 31 December 20X2 under
the MM’s voluntary retirement scheme. He received the following benefits on his
retirement:

 Rs. 5,500,000 as a golden handshake under the voluntary retirement
scheme. (The average rate of his three preceding tax years is 20%)
 Rs. 8,250,000 from an unapproved gratuity fund maintained by MM.
 Transfer of company’s car for Rs. 750,000. The amount was deducted from
his final settlement. The fair market value of the car as of 31 December 20X2
was Rs. 2,500,000.
Required: (a) Compute the amount of taxable income, tax liability and tax payable /
(refundable), if any, for the tax year 20X3.
(b) Briefly comment on the items which are not considered by you in the above
computation.
Miss Management, a confirmed spinster, was employed as an event organizer with a

company engaged in the business of wedding organizing under the name and style of M/s
Marry, No Merry (MNM) (). On June 30, 20X7 she resigned from her employment without
completion of notice period. On July 01, 20X8 she joined another company M/s Marry for
Merry (MFM) (). You are given the following information relating to her assessment for the
tax year 20X8:
(a) On joining MFM, she was given a gold set worth Rs. 285,000 as a welcome gesture.
(b) July 01, 20X7 MFM paid Rs. 280,000 to MNM as compensation in lieu of un-served
notice period by Miss Management.
(b) On July 15, 20X7 Miss Management received a gratuity of Rs. 440,000 from an
unrecognized gratuity fund maintained by MNM. She also received Rs. 135,000 as
leave encashment.
(c) In accordance with the terms of her employment with MFM, Miss Management was
provided with the following emoluments / benefits during the tax year 20X8:
(i) Basic salary of Rs. 145,000 per month.

(ii) Utility allowance of Rs. 25,000 per month.
(vii) A commission of Rs. 500,000 was paid for introducing new clients.
(ii) A reimbursement of personal medical expenses up to 12 % of the annual basic

salary and Rs. 300,000 on account of hospitalization charges of her father were
made after procuring hospital bills showing the national tax number of the
hospital. These bills were also attested and certified by MFM.
(iii) For the first one month of her employment, a pick and drop facility was
provided to her, which cost her employer Rs. 25,000. On September 01, 20X7
MFM provided a company maintained 1600 cc car which was partly used for
private purposes. The cost of the car was Rs. 1,800,000.
(iv) She decided to get married, abandoning her decision not to marry ever in life.
All expenses of her wedding were borne by MFM, which came to Rs. 2 million.
(iv) Monthly salary of Rs. 8,000 was paid to her house keeper. She, however,
reimbursed 25% of the house keeper’s salary to MFM.
(v) A special allowance of Rs. 35,000 was paid to her for performance of duties of
her employment. Actual expenditure was Rs. 20,000. She retained the balance
amount.
(vi) On March 01, 20X8, she received an interest-free loan of Rs. 5,000,000 from
the employer.
Required: Compute the taxable income, tax liability and tax payable / refundable, if any,
by Miss Management for the tax year 20X8.
Miss Heera is a pathar tara (i.e. rock star), known for her hit song “Jee Nawaz Jee”. A
famous music company M/s Papa Tera Inaam (PTI) approached her sing a song for the
company’s CEO Mr. Cup Taan (). Heera refused. However, when PTI staged a dharna in
front of her house, she agreed. Heera entered into employment of the company as full-time
employee w/e/f 01st July 20X1. She composed and sang “Dharna He Mera Ishq Tau Shaadi

mein Kion Karon”, which was an instant hit. The company gave her prize of Rs. 1,500,000/-
on her excellent performance. In addition, she received following amount from the
company.
 Fixed monthly salary of Rs. 250,000

 Free air tickets worth Rs. 360,000 to visit dharnas throughout the country and sing
the company songs there. She was also given Rs. 25,000 per song. She sang 38 songs
during the year.
 A chauffeur-driven car for her personal and official use, having cost of Rs. 700,000 to
the employer.
 She was given the facility to stay at any five star hotel during her stay in any city. The
facility cost the company Rs. 680,000.
 Special allowance of Rs 15,000 to meet traveling, boarding and lodging expenses to
be incurred by him in the normal course of her employment duties.
 She was given loan amounting to Rs. 5,000,000. The company charge interest at the
rate of 2%.
(i) The salary given to her driver by the company was Rs. 15,000 per month. She was
required to pay Rs. 5,000 to the company.
(ii) Heera had waived interest on her account maintained by the company.
Requirement: Compute her Taxable Income and Tax Liability for Tax Year 20X1
Mahmood Sab (MS) is an employee of YRA TV. As per terms of his employment contract he
acts in a show with Momo, Nabeel and Khushboo. During tax year 20X2, he received
following emoluments:
(i) Basic salary Rs. 85,000 per month

(ii) House rent allowance Rs. 50,000 per month
(iii) Utilities allowance Rs. 35,000 per month
In addition to the above cash emoluments, he was provided with a car, exclusively for official
use. The cost of the car to the company was Rs. 1,800,000. As per company’s policy, the car
was sold to him in January 20X2 at WDV of Rs. 240,000 whereas its FMV at the time of sale
was Rs. 300,000.
In May 20X1, MS was approached by OEG TV. They offered him employment at a higher
salary and some extra benefits, alongwith one-time payment of Rs. 200,000 as an
inducement to accept their offer. He was also informed that he’d act with better actors on
OEG TV. MS accepted OEG’s offer by resigning from YRA with effect from June 1, 20X2. He
joined OEG TV from July 1, 20X2. The amount of Rs 200,000 was, however, paid to him on
June 29, 20X2.
In the light of above information, compute the taxable income of Ms. Fatima for the tax year
2005 by giving brief explanation for the items not included in the taxable income.
Mr. Ayub, after retirement from a multinational company as a senior executive, was rehired
on contract for a period of three years. However, due to certain reasons, the contract was
prematurely terminated six months earlier i.e. on December 31, 2006.
The detail of emoluments received by him during the tax year 2007 are given below:

Rupees
Basic salary (per month) 70,500
Rent of furnished accommodation (per month) 30,000
Utilities allowance (per month) 12,000
Medical benefits reimbursed during the year 25,000
House rent was paid by the company directly to the landlord. Medical benefits were
reimbursed against bills submitted by Mr. Ayub.
On his retirement as a permanent employee, he had been paid gratuity from the approved
fund. According to the rules of the fund, he was also entitled to a special gratuity in lieu of
his services rendered under the contract. Accordingly, an amount of Rs. 120,000 was also
paid out of the fund, on termination of the contract.
In lieu of premature termination, the following additional benefits were allowed to Mr. Ayub:
(i) A compensation for early termination of Rs. 150,000 was paid.

(ii) Mr. Ayub had obtained an interest free loan of Rs. 200,000 on July 1, 2006 which
was payable in lumpsum on March 31, 2007. 25% of the outstanding balance
was waived and remaining amount of loan was deducted from his final
settlement. The benchmark rate according to the Income Tax Ordinance, 2001
is 10%.
(iii) He was allowed to retain a 1600cc car which was in his use, at accounting book
value of Rs. 650,000. The fair market value of the car at the time of settlement
was Rs. 700,000.
Required: Compute the taxable income and tax liability for the tax year 2007.
Mr. Ali Raza is working as a Senior Executive in DD Pakistan Ltd. The details of his
income/receipts during the tax year 2008 are as follows:
(i) He received basic salary of Rs. 65,000 per month.

(ii) He was provided with furnished accommodation for which DD

PakistanLimited paid a rent of Rs. 25,000 per month.
(iii) A company owned car was provided to him which was used partly for
official and partly for private purposes. The car was purchased at a cost of
Rs. 500,000but had a fair market value of Rs. 520,000.
(iv) Medical allowance of Rs. 150,000 was paid to him during the year. The
actualmedical expenses incurred by him amounted to Rs. 40,000.
(v) He earned an income of Rs. 45,000 on the sale of jewellery but incurred a
lossof Rs. 28,000 on sale of an antique.
(vi) An apartment owned by him was rented on July 1, 2007 at a monthly rent of
Rs. 10,000. He received a non-adjustable security deposit of Rs. 100,000,
whichwas partly used to repay the non-adjustable security deposit received
from theprevious tenant in July 2005, amounting to Rs. 70,000.
(vii) He incurred the following expenses on the apartment:
Rupees
 Repairs 8,000
 Share of rent to House Building Finance
Corporation 15,000
(viii) Gross dividend of Rs. 12,000 was received from a listed company.
(ix) Provident fund was deducted @ 12% of his basic salary. An equal amount
wascontributed by the company.
(x) He withdrew cash from the bank on which the bank deducted tax of Rs. 400.
(xi) Tax deducted by the company amounted to Rs. 170,000.
Compute his taxable income, total tax payable and tax payable with the return.

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CAF 02 Tax Practices by Sir TARIQ Tunio (The Taxman) ARTT Business School

TARIQ TUNIO THE TAXMAN @ ARTT 03322130867

 Basic salary (per month) 50,000

 Basic salary (PM) 110,000

TARIQ TUNIO THE TAXMAN @ ARTT 03322130867

 Basic salary (PM) 45,000

 Basic salary (PM) 88,000

TARIQ TUNIO THE TAXMAN @ ARTT 03322130867

 Basic salary (PM) 90,000

(B) CORE AMOUNTS

TARIQ TUNIO THE TAXMAN @ ARTT 03322130867

Following further information is also available to you:

PRACTICAL QUESTION ● 7 AHMAR

 Basic Salary (per month) 50,000

TARIQ TUNIO THE TAXMAN @ ARTT 03322130867

Following further information is also available to you:

PRACTICAL QUESTION ● 8 AKBAR

TARIQ TUNIO THE TAXMAN @ ARTT 03322130867

 Basic Salary (per month) 60,000

Following further details are available to you:

PRACTICAL QUESTION ● 9 ZAKIR

TARIQ TUNIO THE TAXMAN @ ARTT 03322130867

Following further details are available to you:

(D) MEDICAL BENEFITS & MEDICAL ALLOWANCE

PRACTICAL QUESTION ● 10 HASAAN

TARIQ TUNIO THE TAXMAN @ ARTT 03322130867

PRACTICAL QUESTION ● 11 FAROOQ

PRACTICAL QUESTION ● 12 FAIZ

- Basic Salary (Annual) 1,200,000

TARIQ TUNIO THE TAXMAN @ ARTT 03322130867

PRACTICAL QUESTION ● 13 HAMAD

- Basic Salary (PM) 62,000

PRACTICAL QUESTION ● 14 JAMIL

- Basic Salary (PM) 35,000

PRACTICAL QUESTION ● 15 LAEEQ

- Basic Salary (PM) 60,000

TARIQ TUNIO THE TAXMAN @ ARTT 03322130867

PRACTICAL QUESTION ● 16 MUSTAQEEM

- Basic Salary (PM) 200,000

- Basic Salary (per month) 60,000

PRACTICAL QUESTION ● 18 KAMRAN

- Basic Salary (per month) 50,000

TARIQ TUNIO THE TAXMAN @ ARTT 03322130867

PRACTICAL QUESTION ● 19 SALEEM

- Basic Salary (PM) 65,000

PRACTICAL QUESTION ● 20 BADAR

- Basic Salary (PM) 70,000

PRACTICAL QUESTION ● 21 ZEESHAN

- Basic Salary (PM) 80,000

TARIQ TUNIO THE TAXMAN @ ARTT 03322130867

PRACTICAL QUESTION ● 22 MANSOOR

- Basic Salary (PM) 40,000

PRACTICAL QUESTION ● 23 DANISH

- Basic Salary (PM) 74,000

TARIQ TUNIO THE TAXMAN @ ARTT 03322130867

PRACTICAL QUESTION ● 24 FATIMA

- Basic Salary (PM) 100,000

PRACTICAL QUESTION ● 25 HAMEED

TARIQ TUNIO THE TAXMAN @ ARTT 03322130867