Examples Salary 2015

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ANNEXURE 'G'

EXAMPLES .. SALARYTAX YEAR: 2015

Note: For computation of tax liability, use tax calculator availabe at www.softax.com.pk

Example 1

Mr. A is the employee of M/s ABC Ltd. Mr. A provided following particulars.

Compute his taxable income and tax liability for the Tax Year 2015

SOLUTION

Mr. AM/s ABC Ltd.Salaried IndividualTax Year: 2015

COMPUTATION OF TAXABLE INCOME

Notes:1. Medical allowance is exempt upto 10% of Basic Salary. (Clause 139, Part I , 2nd Schedule)

COMPUTATION OF TAX LIABILITY

Tax deducted by the employer u/s 149 5,805

Net Tax payable / (refundable) 95

Tax payable 5,900

Total 548,000

Medical Allowance 36,000

Taxable income 518,000

Less: Zakat - Taxable Income

Conveyance Allowance 12,000 Utilities Allowance 30,000

Basic salary 300,000 Bonus 20,000 House Rent Allowance 150,000

Total Income 518,000

Less: Tax deducted by the employer u/s 149 (5,805)

518,000

Medical Allowance 36,000 30,000 6,000

30,000 518,000

Conveyance Allowance 12,000 - 12,000 Utilities Allowance 30,000 - 30,000

- 20,000 Basic Salary 300,000

House Rent Allowance 150,000 - 150,000

Description Gross Exempt Taxable- 300,000

Bonus 20,000

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Example 2

Mr. B is the employee of M/s BCD Ltd. Mr. B provided following particulars.Compute his taxable income and tax liability for the Tax Year 2015

SOLUTION

Mr. BM/s BCD Ltd.Salaried IndividualTax Year: 2015


Notes:1. Annual value of accomodation is higher than 45% of Basic salary, so actual is taken. (Rule 4)2. Medical allowance is exempt upto 10% of Basic Salary. (Clause 139, Part I , 2nd Schedule)3. Life insurance premium paid by the employer is taxable.



Taxable Income 643,000

Basic salary 300,000

Less: Zakat -

Tax payable 12,150

Total 673,000 30,000 643,000

Taxable income 643,000

Total Income 643,000

Medical allowance 36,000 30,000 6,000 Life insurance premium paid by the employer 12,000 - 12,000

Furnished accommodation 150,000 - 150,000 Utilities allowance 30,000 - 30,000

Bonus 20,000 - 20,000 Commission 125,000 - 125,000

Life insurance premium paid by the employer 12,000

Basic salary 300,000 - 300,000


Furnished accommodation with annual value 150,000

Utilities Allowance 30,000 Medical Allowance 36,000

Bonus 20,000 Commission 125,000

Description Gross

Net Tax payable / (refundable) (350)

Exempt Taxable

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Example 3

Mr. C is the employee of M/s CDE Ltd. Mr. C provided following particulars.Compute his taxable income and tax liability for the Tax Year 2015

Mr. CM/s CDE Ltd.Salaried IndividualTax Year: 2015


Notes:

1. Annual value of accomodation is less than 45% of Basic salary, so 45% of BS is taken. (Rule 4)2. Vehicle provided for personal use, so 10% of the cost of vehicle is taken. [Rule 5(ii)]3. Medical allowance is exempt upto 10% of Basic Salary. (Clause 139, Part I , 2nd Schedule)


Tax deducted by the employer u/s 149 12,000 Tax paid on mobile phone u/s 236 800

Less: Tax deducted by the employer u/s 149 (12,000) Less: Tax paid on mobile phone u/s 236 (800)

Conveyance provided for personal use (Cost Rs. 400,000) - Utilities Allowance 30,000 Medical Allowance 36,000

Furnished accommodation with annual value 130,000 Commission 125,000 Bonus 20,000


Net Tax payable / (refundable) -

Taxable income 656,000 Tax payable 12,800

Total Income 656,000 Less: Zakat -

Medical allowance 36,000 30,000 6,000 Total 686,000 30,000 656,000

Conveyance provided for personal use 40,000 - 40,000 Utilities allowance 30,000 - 30,000

Commission 125,000 - 125,000 Furnished accommodation 135,000 - 135,000

Basic salary 300,000 - 300,000 Bonus 20,000 - 20,000

Description Gross Exempt Taxable


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Example 4

Mr. D is the employee of M/s DEF Ltd. Mr. D provided following particulars.Compute his taxable income and tax liability for the Tax Year 2015

SOLUTIONMr. DM/s DEF Ltd.Salaried IndividualTax Year: 2015


Notes:1. Annual value of accomodation is less than 45% of Basic salary, so 45% of Basic salary is taken. (Rule 4)2. Vehicle provided for partial use, so 5% of the cost of vehicle is taken. [Rule 5(i)]3. Medical allowance is exempt upto 10% of Basic Salary. (Clause 139, Part I , 2nd Schedule)4. Employer's contribution in Recognized provident fund is exempt upto 10% of Salary (excluding

perquisites & allowances) or Rs. 100,000 whichever is less. [Rule 3(a) Part I, 6th Schedule]


Recognized Provident Fund .. Employer's contribution 40,000

Tax paid on mobile phone u/s 236 1,200 Tax paid with Motor vehicle tax 1,000


Conveyance Allowance 36,000 Utilities Allowance 45,000 Medical Allowance 45,000 Leave Fare Assistance 20,000

Bonus 30,000 Un-furnished accommodation with annual value 160,000 Conveyance provided for partial use (Cost Rs. 400,000) -


Less: Tax paid on mobile phone u/s 236 (1,200)

Net Tax payable / (refundable) (400) Less: Tax paid with motor vehicle tax (1,000)

Taxable income 736,000 Tax payable 16,800 Less: Tax deducted by the employer u/s 149 (15,000)

Less: Zakat - Taxable Income 736,000

Total 816,000 80,000 736,000 Total Income 736,000

Leave Fare Assistance 20,000 - 20,000 Provident Fund Employer's Contribution 40,000 40,000 -

Utilities allowance 45,000 - 45,000 Medical allowance 45,000 40,000 5,000

Conveyance provided for partial use 20,000 - 20,000 Conveyance allowance 36,000 - 36,000

Bonus 30,000 - 30,000 Unfurnished accommodation 180,000 - 180,000

Description Gross Exempt TaxableBasic salary 400,000 - 400,000

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Example 5

Mr. E is the employee of M/s EFG Ltd. Mr. E provided following particulars.Compute his taxable income and tax liability for the Tax Year 2015

SOLUTION

Mr. EM/s EFG Ltd.Salaried IndividualTax Year: 2015


Notes:1. Annual value of accomodation is not given, so 45% of Basic salary is taken as minimum value. (Rule 4)2. Vehicle provided only for business use, so nothing should be taken in the income of employee.3. Medical allowance is exempt upto 10% of Basic Salary. (Clause 139, Part I , 2nd Schedule)4. Employer's contribution in Recognized provident fund is exempt upto 10% of Salary (excluding

perquisites & allowances) or Rs. 100,000 whichever is less [Rule 3(a) Part I, 6th Schedule]5. Provident fund employee's contribution, no treatment.

Tax deducted on cash withdrawal from bank u/s 231A 1,500

Interest credit on Provident Fund Account Balance Rs. 500,000 75,000

Tax paid on mobile phone u/s 236 1,000 Tax deducted by the employer u/s 149 15,200

Medical Allowance 45,000 Qualification Pay 60,000 Recognized Provident Fund .. Employer's contribution 45,000 Recognized Provident Fund .. Employee's contribution 45,000

Utilities Allowance 45,000

Un-furnished accommodation (provided within factory premises of the employer) -


Total Income 761,000 Less: Zakat -

Provident Fund Interest 75,000 75,000 - Total 916,000 155,000 761,000

Provident Fund Employer's Contribution 45,000 40,000 5,000 Provident Fund Employee's Contribution - - -

Medical allowance 45,000 40,000 5,000 Qualification pay 60,000 - 60,000

Conveyance allowance 36,000 - 36,000

Utilities allowance 45,000 - 45,000

Unfurnished accommodation 180,000 - 180,000 Conveyance provided for business use - - -


Bonus 30,000


Conveyance provided for business use (Cost Rs. 400,000) -

Conveyance Allowance 36,000


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6 Interest on recognized provident fund contribution. "Interest credit on the balance is exempt upto 1/3rd ofthe salary or is allowed at the rate fixed by Federal Government in this behalf (i.e. 16%). If interest creditedexceed 1/3rd of the Salary or is allowed at a higher rate, the amount exceeding the salary of the said rateshall be taxable". [Rule 3(b), Part I, 6th Schedule]




Less: Tax deducted on cash withdrawal from bank u/s 231A (1,500) Less: Tax paid on mobile phone u/s 236 (1,000)

Taxable income 761,000 Tax payable 18,600

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Example 6

Mr. F is the employee of M/s FGH Ltd. Mr. F provided following particulars.Compute his taxable income and tax liability for the Tax Year 2015

SOLUTIONMr. FM/s FGH Ltd.Salaried IndividualTax Year: 2015


Notes:1. Annual value of accomodation is not given, so 45% of Basic salary is taken as minimum value. (Rule 4)2. Vehicle provided for partial use, so 5% of the cost of vehicle is taken. [Rule 5(i)]3. Medical reibursement according to the terms of employment is exempt. (Clause 139, Part I, 2nd Sch.)4. Employer's contribution in Recognized provident fund is exempt upto 10% of Salary (excluding

perquisites & allowances) or Rs. 100,000 whichever is less [Rule 3(a) Part I, 6th Schedule]5. Provident fund employee's contribution, no treatment.6 Interest on recognized provident fund contribution. "Interest credit on the balance is exempt upto 1/3rd of

the salary or is allowed at the rate fixed by Federal Government in this behalf (i.e. 16%). If interest creditedexceed 1/3rd of the Salary or is allowed at a higher rate, the amount exceeding the salary of the said rateshall be taxable". [Rule 3(b), Part I, 6th Schedule]

Taxable Income 1,142,000

Total Income 1,147,000 Less: Zakat (5,000)

Provident Fund Interest 115,000 112,000 3,000 Total 1,454,000 307,000 1,147,000

Provident Fund Employer's Contribution 52,000 50,000 2,000 Provident Fund Employee's Contribution - - -

Utilities allowance 50,000 - 50,000 Medical reimbursement 145,000 145,000 -

Conveyance provided for partial use 25,000 - 25,000 Conveyance allowance 42,000 - 42,000

Unfurnished accommodation 225,000 - 225,000 House rent allowance 250,000 - 250,000

Bonus 50,000


Un-furnished accommodation (provided within factory premises of the employer) - House Rent Allowance 250,000


Utilities Allowance 50,000 Medical reimbursement according to the terms of employment 145,000

Conveyance provided for partial use (Cost Rs. 500,000) - Conveyance Allowance 42,000

Zakat paid under Zakat & Ushr Ordinance, 1980 5,000

Recognized Provident Fund .. Employer's contribution 52,000 Recognized Provident Fund .. Employee's contribution 52,000




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7. Zakat paid under Zakat & Ushr Ordinance, 1980 is deductible allowance (Section 60), so directly deductedfrom total income of the taxpayer.


Tax payable 56,700 Less: Tax deducted by the employer u/s 149 (56,750)

Taxable income 1,142,000

Net Tax payable / (refundable) (50)

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Example 7

Mr. G is the employee of M/s GHI Ltd. Mr. G provided following particulars.Compute his taxable income and tax liability for the Tax Year 2015

SOLUTIONMr. GM/s GHI Ltd.Salaried IndividualTax Year: 2015


Notes:1. Annual value of accomodation is less than 45% of Basic salary, so 45% of Basic salary is taken. (Rule 4)2. Vehicle provided for personal use, so 10% of the cost of vehicle is taken. [Rule 5(ii)]3. Medical reibursement not in accordance with the terms of employment is taxable

(Clause 139, Part I, 2nd Schedule)4. Employer's contribution in Recognized provident fund is exempt upto 10% of Salary (excluding perquisites

& allowances) or Rs. 100,000 whichever is less [Rule 3(a) Part I, 6th Schedule]

Tax collected by hotel on birthday fuction of daughter u/s 236D 10,000

-


Less: Zakat

Total 1,671,000 204,000 1,467,000 Total Income 1,467,000

Provident Fund Interest 210,000 144,000 66,000 Interest free loan (No benchmark treatment) - - -

Provident Fund Employer's Contribution 60,000 60,000 - Provident Fund Employee's Contribution - - -

Utilities allowance 65,000 - 65,000 Medical reimbursement not in TOE 145,000 - 145,000

Conveyance provided for personal use 75,000 - 75,000 Children Education allowance 42,000 - 42,000

Accommodation provided 270,000 - 270,000 Entertainment allowance 24,000 - 24,000

Fee for professional services 120,000

- 60,000


Children Education Allowance 42,000

Fee for professional services 120,000 - 120,000

Bonus 60,000

Accommodation provided with annual value 250,000

Entertainment Allowance 24,000


Conveyance provided for personal use (Cost Rs. 750,000) -

Recognized Provident Fund .. Employer's contribution 60,000 Recognized Provident Fund .. Employee's contribution 60,000

Utilities Allowance 65,000 Medical reimbursement not in accordance with terms of employment 145,000

Donation paid to recognized institution 45,000 Tax deducted by the employer u/s 149 75,000

Interest credit on Provident Fund Account Balance Rs. 900,000 210,000 Interest free loan for daughter's marriage Rs. 300,000 -


Basic salary 600,000 - 600,000 Bonus 60,000

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5. Provident fund employee's contribution, no treatment.6 Interest on recognized provident fund contribution. "Interest credit on the balance is exempt upto 1/3rd of


7. Loan is made by an employer to an employee without profit or the rate of profit is less than the benchmarkrate (i.e. 10% for TY 2015), the amount of profit at benchmark rate or the difference between the amount ofprofit paid by the employee and the amount of profit computed at the benchmark rate as the case may beshall be included in the income of the employee, if the loan amount is not less than Rs. 500,000.


Notes:1. Donation paid to recognized charitable organization. Tax credit is available u/s 61.

(10,000) Less: Tax deducted by Hotel u/s 236DLess: Tax deducted on cash withdrawal from bank u/s 231A (2,800) Net Tax payable / (refundable) 287


Taxable income 1,467,000 Tax payable 90,875 Less: Tax credit on donation Tax / Taxable income x Donation (2,788) Tax payable 88,087

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Example 8

Mr. H is the employee of M/s HIJ Ltd. Mr. H provided following particulars.Compute his taxable income and tax liability for the Tax Year 2015

SOLUTIONMr. HM/s HIJ Ltd.Salaried IndividualTax Year: 2015


Tax paid on residential telephone u/s 236 300

Vehicle sold to employee on book value for Rs. 200,000 (FMV: 275,000) -

200,000 75,000 Reimbursement of Children Education exp. 100,000 - 100,000

1,688,000 Less: Zakat - Taxable Income

Total 1,948,000 260,000 1,688,000 Total Income 1,688,000

- 60,000 Medical allowance 70,000

Received against job agreement 200,000 - 200,000

Vehicle transferred on book value 275,000

House rent allowance 275,000 - 275,000

Profit of loan (Benchmark rate) (10% - 5%) 50,000 - 50,000

Utilities allowance 60,000

Subsistance allowance 24,000 - 24,000

60,000 10,000

Travel allowance (Personal) 36,000 - 36,000

Conveyance allowance 36,000 - 36,000 Cost of living allowance 40,000 - 40,000

Overtime 38,000 - 38,000 Sales Commission 80,000 - 80,000

24,000 Basic salary 600,000

Payment in lieu of leaves 40,000 - 40,000 Leave pay 24,000 -


Overtime 38,000

Sales commission 80,000

Basic salary 600,000 Leave pay 24,000 Payment in lieu of leaves 40,000

Subsistence allowance 24,000 Travel allowance (Personal) 36,000

Conveyance Allowance 36,000 Cost of Living Allowance 40,000

Medical Allowance 70,000 Reimbursement of Children Education expenses 100,000

House Rent Allowance 275,000 Utilities Allowance 60,000

Tax deducted by the employer u/s 149 100,000 Tax paid on mobile phone u/s 236 800

Loan for construction of house Rs. 1,000,000 @ 5% pa 50,000 Amount received against 5 years job agreement 200,000

Tax paid on registration of new motor vehicle u/s 231B 30,000


- 600,000

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Notes:1. Medical allowance is exempt upto 10% of Basic Salary. (Clause 139, Part I , 2nd Schedule)2. Loan is made by an employer to an employee without profit or the rate of profit is less than the benchmark

rate (i.e. 10% for TY 2015), the amount of profit at benchmark rate or the difference between the amount ofprofit paid by the employee and the amount of profit computed at the benchmark rate as the case may beshall be included in the income of the employee.

3 Amount received on job agreement is taxable in the hands of employee[Section 12(2)(e)(i)]4 Vehicle transferred to employee on book value Rs. 200,000 but the FMV was Rs. 275,000,

the difference of Rs. 75,000 will become taxable [Ref. Section 13(11)]


Notes:1. Profit paid on loan for construction of house. Tax credit is available u/s 64. Total amount taken for credit

(Actual Paid + added into the income of the employee on the basis of benchmark rate)(Actual paid Rs. 50,000 added due to benchmark rate Rs. 50,000 total Rs. 100,000 available for credit)

Less: Tax paid on residential telephone u/s 236 (300) Less: Tax deducted on cash withdrawal from bank u/s 231A (2,400) Net Tax payable / (refundable) (17,599)

Less: Tax deducted by the employer u/s 149 (100,000) Less: Tax paid on mobile phone u/s 236 (800)


Tax payable 115,901

Less: Tax paid on registration of new motor vehicle u/s 231B (30,000)

Less: Tax credit on loan for construction of house Tax / Taxable income x total profit (7,299) Tax payable 123,200

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Example 9

Mr. I is the employee of M/s IJK Ltd (Unlisted company) and terminated on April 30,2015 under GoldenHandshake sheme. Mr. I provided following particulars. Compute his taxable income and tax liability forthe Tax Year 2015

Tax paid on renewal of Annual vehicle registration u/s 234 1,750

Leave pay 60,000

Recognized Provident Fund .. Employer's contribution 100,000 Recognized Provident Fund .. Employee's contribution

Basic salary 1,000,000

100,000

Consideration for change in conditions of employment 150,000

Golden handshake payment 2,000,000

Conveyance provided for personal use (10 months) Cost Rs. 1,000,000 - Accommodation provided (Annual Value Rs. 400,000) -

Interest credit on Provident Fund Account Balance Rs. 2,000,000 340,000 Pension received from former employer 240,000

Utilities allowance 100,000 Arrears for Tax Year 2014 received (Opted to add in current year's income) 60,000

Medical re-imbursement according to the terms of employment 80,000 Medical allowance 100,000

Received balance of provident fund 2,340,000 Gratuity received under unapproved gratuity scheme 800,000

Driver provided by the employer with monthly salary 6,000 Shares issued under Employee share scheme (FMV Rs. 90,000) Cost = 40,000 -

Tax paid on residential telephone u/s 236 800

Last three years average rate of tax 14%Tax deducted by the employer u/s 149 590,000


Tax paid on mobile phone u/s 236 1,200

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SOLUTIONMr. IM/s IJK Ltd.Salaried IndividualTax Year: 2015


Notes:1. Consideration paid for any change in conditions of employment is taxable u/s 12(2)(e)(ii).2. Golden handshake payment - option is avaialable with taxpayer to add in the current year income or to be

taxed at an average rate of tax for preceeding three years. Section 12(6)3. Employer's contribution in Recognized provident fund is exempt upto 10% of Salary (excluding perquisites

& allowances) or Rs. 100,000 whichever is less [Rule 3(a) Part I, 6th Schedule]4. Provident fund employee's contribution, no treatment.5 Interest on recognized provident fund contribution. "Interest credit on the balance is exempt upto 1/3rd of


6. Pension received from former employer is exempt from tax under clause 8, Part I of second schedule.7. Vehicle provided for personal use, so 10% of the cost of vehicle is taken for 10 months, because he

worked for 10 months. [Rule 5(ii)]8. Annual value of accomodation is less than 45% of Basic salary, so 45% of Basic salary is taken. (Rule 4)

Basic salary is for 10 months so the value of accomodation is not apportioned to number of monthsoccupied.

9. Medical reibursement in accordance with the terms of employment is exempt from tax.(Clause 139, Part I, 2nd Schedule)

10. Facility of medical actual reimbursement is provided in accordance with terms of employment, therefore medical allowance is taxable.


Total Income 2,133,333 Less: Zakat -

Gratuity received (as separate block of income) - - Total 5,213,333 3,080,000 2,133,333

Shares under Employee share scheme 50,000 - 50,000 Provident Fund Balance received 2,340,000 2,340,000 -

Arrears for TY 2014 60,000 - 60,000 Driver's salary 60,000 - 60,000

Medical allowance 100,000 - 100,000 Utilities allowance 100,000 - 100,000

Accommodation provided 450,000 - 450,000 Medical reimbursement 80,000 80,000 -

Pension 240,000 240,000 - Conveyance provided for personal use 83,333 - 83,333

- - -

Change in conditions of employment

Interest on provident fund 340,000 320,000 20,000

Provident Fund Employer's contribution 100,000 100,000 -

60,000

Golden handshake payment (as separate block of income) - -

- 1,000,000

Leave pay

Description Gross Exempt TaxableBasic salary 1,000,000

- 60,000 150,000 - 150,000

Provident Fund Employee's contribution

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11. Arrear received by a taxpayer .. Option is available to the taxpayer to add in the current year's income or add in the relevant year for which arrears are paid, it depends on the tax liability. Section 12(7)

12. Driver or any other servant provided by the employer, the salary of the servant should be added to the income of the employee. Section 13(5)

13. Shares issued under Employee Share Scheme, Section 14. The difference between Fair Market Value of the share and the cost borne by the employee should be added to the income of the employee.

14. Balance amount received from Recognized provident fund is exempt. (Rule 4, Part I, 6th schedule)15. Gratuity received from unapproved gratuity scheme is exempt upto Rs. 75,000 or 50% of the amount

of gratuity, whichever is less. Remaining should be taxed at an average rate of tax for the preceeding

three years or added in the current year's income. Option is with the taxpayer.(Clause 13, Part I, 2nd Schedule)


Notes:1. Tax on Golden handshake payment is computed on the basis of preceding three years average rate

i.e. 14% as given in the question.

2. Tax on Gratuity payment from unapproved gratuity scheme is computed on the basis of preceding threeyears average rate i.e. 14% as given in the question.

Less: Tax paid on annual renewal of registration u/s 234 (1,750)

Less: Tax paid on mobile phone u/s 236 (1,200)

Net Tax payable / (refundable) (20,917) Less: Tax deducted on cash withdrawal from bank u/s 231A (7,000)

Less: Tax paid on residential telephone u/s 236 (800)

Tax on Golden handshake payment (Amount x 3 years' average rate) 280,000 Tax on Gratuity payment [(Amount-75000) x 3 years' average rate) 101,500

Less: Tax deducted by the employer u/s 149 (590,000) Tax payable 579,833

Taxable income 2,133,333 Tax payable on current year's salary 198,333

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Example 10

Mr. J is the employee of FBR under pay scale 25,000-3,000-35,000Mr. J provided following particulars. Compute his taxable income and tax liability for the Tax Year 2015

SOLUTIONMr. JFederal Board of RevenueSalaried IndividualTax Year: 2015Pay scale: 25,000 - 3,000 - 35,000


Notes:1. This is Statutory Provident Fund for Government Departments. Amount received from this fund is exempt

from tax under clause 22 of Part I of 2nd schedule. Therefore, no treatment is required during the year oncontribution and credit of interest.

2. Vehicle provided for personal use, so 10% of the cost of vehicle is taken. As well as running andmaintenance expenses are concerned no treatment is available in the rules, therefore not taken into account.


Total 1,052,000 318,000 734,000 Total Income 734,000

Special additional allowance 20,000 - 20,000 Special allowance for official duties 50,000 50,000 -

Driver's salary 54,000 - 54,000 TA/DA (Saving) 40,000 40,000 -

Medical allowance 40,000 40,000 Utilities provided 48,000 - 48,000

Accommodation provided 150,000 - 150,000 Medical reimbursement 80,000 80,000 -

Interest on provident fund 108,000 108,000 -

Conveyance provided for personal use 50,000 - 50,000

Statutory Provident Fund .. Employer's contribution 40,000



Provident Fund Employee's contribution - - -

Statutory Provident Fund .. Employee's contribution 40,000

Description Gross

Driver provided by the employer with monthly salary 4,500

Car provided for personal use Cost Rs. 500,000, Running & Maintenance cost borneby the employer 30,000

Accommodation provided (Annual Value Rs. 150,000) - Medical re-imbursement according to the terms of employment 80,000

Saving out of TA/DA 40,000

Medical allowance 40,000 Utilities provided 48,000

Special additional allowance 20,000 Special allowance for official duties 50,000

Provident Fund Employer's contribution 40,000 40,000 -


Basic salary 372,000 - 372,000 Exempt Taxable

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3. Accomodation provided - 45% of Basic salary is Rs. 167,400, but MTS is given so, 45% of MTS will betaken and 45% of MTS i.e Rs. 135,000 is less than the actual value. So, actual value is taken.


5. Facility of medical actual reimbursement is provided in accordance with terms of employment, therefore medical allowance is taxable.

6. Driver or any othe servant provided by the employer, the salary of the servant should be added to the income of the employee. Section 13(5)

7. TA/DA is exempt from tax, because it is paid for official duties. Reference Circular # 12 of 1980.

8. Special allowance for official duties is exempt from tax under clause 39, Part I of 2nd schedule.



Taxable income 734,000 Tax payable 16,700 Less: Tax deducted by the employer u/s 149 (15,954)

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Example 11

Mr. K is a full time teacher working with KLM College, a recognized Non profit making educational institutionMr. K provided following particulars. Compute his taxable income and tax liability for the Tax Year 2015

SOLUTIONMr. KKLM CollegeSalaried IndividualTax Year: 2015


Notes:1. Employer's contribution in Recognized provident fund is exempt upto 10% of Salary (excluding perquisites



4. Pension received from former employer is exempt from tax under clause 8, Part I of second schedule.


Total Income 1,604,000 Less: Zakat -

Home servant salary 60,000 - 60,000 Total 2,014,000 410,000 1,604,000

Medical reimbursement 90,000 - 90,000 Utilities provided 60,000 - 60,000

Conveyance allowance 60,000 60,000 Accomodation provided 360,000 - 360,000

Interest on Provident Fund 90,000 90,000 - Pension 240,000 240,000 -

Provident Fund Employer's contribution 100,000 80,000 20,000 Provident Fund Employee's contribution - - -

Payment in lieu of leaves 30,000 - 30,000 Fee 124,000 - 124,000

Exempt TaxableBasic salary 800,000 - 800,000

Fee 124,000 Payment in lieu of leave 30,000



Interest credit on Provident Fund Account Balance Rs. 600,000 90,000 Pension received from former employer 240,000

Recognized Provident Fund .. Employee's contribution 100,000

Medical re-imbursement not in accordance with the terms of employment 90,000 Utilities provided by the employer 60,000

Conveyance allowance 60,000 Accommodation provided within College premises -

Home servant provided by the employer 60,000 Tax deducted by the employer u/s 149 47,225

Description Gross

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5. Annual value of accomodation is not given, so 45% of Basic salary is taken as minimum value. (Rule 4)6. Medical reibursement not in accordance with the terms of employment is exempt upto 10% of Basic

Salary. (Clause 139, Part I, 2nd Schedule)7. Home servant provided by the employer, the salary of the servant should be added to the

income of the employee. Section 13(5)


Notes:1. 40% tax rebate is available to full time teachers and researchers. Clause 2, Part III, 2nd schedule.

Net Tax payable / (refundable) 19,135

Tax on salary 110,600

Less: Tax rebate (40%) Full time teacher [Clause (2) Part III, 2nd Schedule] (44,240) Tax payable 66,360 Less: Tax deducted by the employer u/s 149 (47,225)


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Example 12

Mr. L (Age 68 years) is a full time teacher working with LMN University, a recognized government ownededucational institution. Mr. L provided following particulars. Compute his taxable income and tax liabilityfor the Tax Year 2015

SOLUTIONMr. LLMN UniversitySalaried IndividualTax Year: 2015


Notes:1. Employer's contribution in Recognized provident fund is exempt upto 10% of Salary (excluding perquisites





Total 680,000 146,000 534,000 Total Income 534,000

Medical reimbursement 68,000 68,000 - Utilities allowance 20,000 - 20,000

Interest on Provident Fund 48,000 48,000 - Conveyance allowance 24,000 24,000

Provident Fund Employer's contribution 30,000 30,000 - Provident Fund Employee's contribution - - -

Basic salary 450,000 - 450,000 Fee 40,000 - 40,000


Basic salary 450,000 Fee 40,000



Recognized Provident Fund .. Employee's contribution 30,000

Medical re-imbursement in accordance with the terms of employment 68,000 Utilities allowance 20,000

Conveyance allowance 24,000


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Notes:1. 50% tax rebate is available to Senior Citizen age 60 years or more if income is less than Rs. 1million.

Clause 1A, Part III, 2nd schedule.2. 40% tax rebate is available to full time teachers and researchers. Clause 2, Part III, 2nd schedule.

Less: Tax rebate (50%) Senior Citizen [Clause (1A), Part III, 2nd Schedule] (3,350) Tax after 1st rebate 3,350 Less: Tax rebate (40%) Full time teacher [Clause (2) Part III, 2nd Schedule] (1,340)

Less: Tax deducted by the employer u/s 149 (1,255) Net Tax payable / (refundable) 755

Taxable income 534,000 Tax on salary 6,700

Tax payable 2,010

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Examples Salary 2015

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Transcript of Examples Salary 2015