2. Mr. Habib is one of the officers of APL and is planning to file his annual income tax return first time. For calculation of his income tax liability he has provided you the following particulars of his sources of income pertaining to the year ended June 30, 2013: Basic Salary Bonus Furnished accommodation (annual value) Conveyance allowance (per month) Medical allowance (actual expense Rs.18,500) Utility expense Entertainment allowance Property income Expenditures claimed against property income: Legal expenses Property tax Insurance premium 231,000 20,000 110,000 1,650 25,000 26,400 13,200 132,000 8,250 5,500 3,300 Mr. Habib is entitled as per service rules free passage for travel abroad for self and his dependents after every three years. The expenditures incurred during the year in this respect are as under: Air tickets 110,000; Hotel expenses 55,000; Car rental 22,000 Dividend (zakat deducted Rs. 275 and tax deducted Rs.1,100) Leave encashment preparatory to retirement 11,000 27,500 Birthday present received through cross-cheque by closed relative He also received an income tax refund related to tax year 2012. Insurance money received on maturity of policy 11,000 5,000 110,000 Expenses on children education (receipts are available) 44,000 Zakat deducted by bank, Rs. 11,000; Tax deducted at source 2,000 Required: You being a Tax Consultant, compute taxable income and tax liability of Mr. Habib for the tax year 2013. Page 1 of 6 EXTRACT OF TAX RATES FOR SALARIED INDIVIDUAL Sr. Taxable Income No. 1. Upto Rs. 600,000 2. Rs. 600,001 Rs. 1,200,000 0% Rate of Tax 3. Rs. 1,200,001 4. Rs. 1,800,001 - Rs. 1,800,000 Rs. 2,500,000 5. Rs.2,500,001 - Rs. 3,500,000 6. Rs.3,500,001 Rs. 5,000,000 5% of the amount exceeding Rs.600,000 Rs. 30,000+ 10% of the amount exceeding Rs. 1,200,000 Rs. 90,000+15% of the amount exceeding Rs. 1,800,000 Rs. 195,000+ 17.5% of the amount exceeding Rs. 2,500,000 Rs. 370,000+ 20% of the amount exceeding Rs. Page 4 of 6 7. Rs.5,000,001 - Rs. 8,000,000 8. Rs.8,000,001 Rs. 12,000,000 9. Rs.12,000,001 - Rs. 30,000,000 10. Rs.30,000,001 ----- Rs. 50,000,000 11. Rs.50,000,001 ----- Rs. 75,000,000 12. OVER Rs.75,000,000 3,500,000. Rs. 670,000+22.5% of the amount exceeding Rs. 5,000,000. Rs. 1,345,000+25% of the amount exceeding Rs. 8,000,000. Rs. 2.345,000+27.5% of the amount exceeding Rs. 12,000,000. Rs. 7.295,000+30% of the amount exceeding Rs. 30,000,000. Rs. 13,295,000+32.5% of the amount exceeding Rs. 50,000,000. Rs. 21,420,000+35% of the amount exceeding Rs. 75,000,000