Salary [Chapter 2]

Question 1

WHAT ARE TWO CATEGORIES OF TAX RATES FOR INDIVIDUALS AND AOP?

Answer 1

1-SALRIED CASE WHERE TAXABLE SALARY EXCEEDS 75% OF TAXABLE INCOME

2-NON-SALARIED INCOME WHERE TAXABLE SALARY IS NILL OR UPTO 75% OF TAXABLE INCOME

TAXABLE SALARY /
TAXABLE INCOME*100

Question 2

WHAT IS EXCLUDED FROM TAXABLE INCOME WHILE DETERMINING SALARIED OR NON SALARIED NATURE?

Answer 2

SEPARATE BLOCK OF INCOME

Question 3

what are the deductions made from total income to arrive at taxable income?

Answer 3

1-zakat paid under zakat and ushr ordinance
2-workers welfare fund
3-workers profit participation fund
4-education expenses under section 60d

Question 4

how education expenses are deducted from income under section 60d?

Answer 4

a) an individual can deduct in respect of tution fee if his taxable income is less than 1.5 million

b)deductable allowance shall be lower of:
-5% of tution feee paid by individual;
-25% of taxable income;
-rs 60000 multiplied by no of children of individual

Question 5

examples of separate block of income?

Answer 5

1- dividend
2- Profit loss a/c
3- price bond

Question 6

Treatment of zakat in numerical?

Answer 6

1- zakat paid under zakat and ushr ordinance (deductible
2- zakat paid to relatives or others ( not deductible)
3- zakat on dividend (deductible)
4- zakat on profit on PLS a/c ( deductible)
5- zakat deducted / paid (deductible)

Question 7

salary is taxed on receipt basis. write its exceptions?

Answer 7

1- the commissioner is of the view that the salary of employee of a private company is deffered
2- an employee may opt to tax his salary on accrual basis subjected to following conditions:
a) salary was paid late; and
b) the applicable rates were higher

Question 8

Explain Receipt?

Answer 8

1- Actually received by the person
2- Made available to person
3- Applied on the behalf of person, at the instruction of person or under any law

Question 9

Treatment of directoship fee?

Answer 9

It is Taxable Salary and 20% is charged as advance tax of directorship fee
if net amount is given make it gross by dividing .80 because 20% tax is already cut

this 20% advance tax is adjustable

Question 10

Reference

when loan is not made part of salary?

Answer 10

In any of the following cases:

1- Loan amount does not exceed 1000000/-

2- Employer provides special extension due the wavier of interest by employee on his accounts maintained with the employer

Question 11

how loan free of cost or at rate lower than bench mark rate provided to employee by employer is made part of taxable salary?

Answer 11

1-In case of free of cost 10% of loan shall be made part of taxable salary.

2- In case of loan provided at lower rate than benchmark, the difference between actual rate and benchmark rate(10%) shall be included in his taxable salary

Question 12

Golden hand shake is taxable salary, tell two options of its treatment?

Answer 12

1- Add into taxable salary and calculate tax normally

2- Take it into separate block of income and calculate tax liability on basis of tax paid combined average rate in last 3 tax periods

Quiz:
Q-14 Page 52

Question 13

Valuation of accommodation provided by the employer?

Answer 13

the taxable salary is equal to the fair value market of rent of accommodation or 45% of the basic salary, whichever is higher.

Question 14

numerical treatments in salry?

Answer 14

1-loan
2- redundancy cost
3-accomodation provided by employer
4- value of conveyance

Question 15

treatment of depreciation in case of car, conveyance and other assets?

Answer 15

in case of car and convenyance depreciation has nothing to do, their self rules are applied only

in case of other assets like laptops etc depreciation as well as rentals are taxable salary

Question 16

certain perquisites without marginal cost to employer

Answer 16

HHE — exempt
H. free or subsidized services by a hospital to its employees
H. free or subsidizied food by a hotel to it employees
E. free or subdized education to its employees by an educational institution

Question 17

Treatment of medical allowance or facility in taxable income?

Answer 17

1-
2-
3-
4-
5-

Question 18

Conditions in which 75000 or 50% of amount receivable exemption of unapproved pension shall not apply?

Answer 18

Any payment:
1- not received in pakistan
2- received by a non resident
3- received by director of company who is not a regular employee

Question 19

medical allowance is exempt upto 10% of basic salary

Question 20

Conveyance Car 5%/10% treatment will be done only when
-car belongs to
company/employer
-maintained by
company/employer

if only maintained by employer but of employee or maintained by employee and belongs to employer than there will be no 5%/10% treatment