LAWS OF TAXATION-SALARY INCOME Q.1.Mr. Samiullah has been working as Assistant Manager-Marketing for last 15 years in M/s. Moonlight Limited, a public limited company. Assume that Mr. Samiullah is 62 years. You are his Tax Consultant. He has submitted the following information for the tax year ended June 30, 2014 in order to seek your advice in respect of the calculation of his taxable income and tax liability. A. Basic salary per annum Perquisites and allowances paid by the employer: Bonus Entertainment allowance Dearness allowance House rent allowance Gratuity (scheme approved by FBR) Encashment of leave preparatory to retirement B. Property Income: 500,000 80,000 10,000 180,000 225,000 625,000 120,000 Mr. Samiullah rented his house @ Rs. 20,000 per month w.e.f 1st July, 2013. He received a deposit of Rs.160,000, not adjustable against rent. Tenant also paid property tax of Rs. 6,000 as per lease agreement. Assume that Mr. Samiullah claimed the following expenditures for the year ended 30th June, 2014: Insurance premium paid to cover the risk for property damage Interest on borrowed capital Repair and maintenance expenses C. Zakat deducted at source Required: 7,000 10,000 25,000 8,000 (a) Calculate the taxable income and tax liability of Mr. Samiullah for the year ended June 30, 2014. (b) Mr. Samiullah is 62 years. Can he claim a tax rebate @ 50% available to senior citizens? Why or why not? State the reasons in support of your answer. 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