Computation of Total Taxable Income

Prof. Raihan Reza

Income Year: 2009-2010

Assessment Year: 2010-2011

A. Income from Salary U/S 21 Tk.

1.1 Basic Pay Tk. 230,000pm*12 = 2,760,000
1.2 Employer’s Contribution to R.P.F = 55,000
1.3 Bonus – Equivalent to two months pay = 460,000
1.4 Dearness Allowance = 35,000
1.5 Special Allowance for Overtime Work = 25,000
1.6 Remuneration for Examining Scripts, Setting of Question = 20,000
1.7 Club Bills = 10,000
1.8 Lunch Allowance ( 2000pm*12) = 24,000
1.9 School Fee (3500pm*12) = 42,000
1.10 Entertainment Allowance @Tk. 1000pm*12 = 12,000
1.11 Conveyance Allowance Tk.3000pm*12 = 36,000
Less: Maximum allowable exemption for a year = 24,000
= 12,000
1.12 Full Free Accommodation:
Rental Value of Accommodation (28,000pm*12) = 336,000 = 336,000
Or, 25% of Basic Salary (whichever is less) = 690,000
1.13 Medical Allowance = 40,000
Less: Actual Expenditure per Vouchers = 40,000 = Nil
1.14 Servant’s Salary ( 1200pm*12) = 14,400
1.15 Pension from Earlier Employment Tk.5000pm( Non Assessable ) = Nil
Total Income from Salary = Tk. 3,805,400
 B. Interest from Securities U/S 22

He had invested in the earlier year Tk. 400,000 in approved securities out of bank loan
for which he paid Tk. 20,000. He received interest on securities and debentures Tk.
45,000 for the year.

Taxable Income Tk.

1.1 Income from Securities = 5,000
1.2 Income from Debentures = 20,000
Total Interest Income = 25,000
General Exemption = 20,000

Total Interest Income from Securities and Debentures = 5,000

Note: Interest on securities alone is exempted up to Tk. 5,000 only. Interest on debentures alone
is exempted up to Tk.20,000 only. But the two taken together is limited to Tk. 20,000.

C. Income from House Property U/S 24

Prof. Raihan Reza had a three storied house at Banani. The third and second floors were
let out from 1st July 2008 at Tk. 28,000 and Tk. 28,000 per month respectively and the
ground floor was occupied as his residence.

Annual Letting Value

3rd Floor = Tk. 28,000pm
2nd Floor = Tk. 28,000pm
Total letting value annually (56,000pm*12) = Tk. 672,000
 Deduction from Letting Value Tk.
1.1 Statutory Allowance of 1/4th for Repair(Maintenances, Electrician etc.) = 168,000
1.2 City Corporation Tax = 50,000
1.3 Insurance Premium = 50,000
1.4 HBFC Loan Interest = 60,000
Tk.160,000

Since he occupied 1/3rd as his residence, proportionate expense are disallowed

Less: (Tk.160,000/3) = 53,333 = 106,667

= 274,667

1.5 3rd Floor Remain Vacant for 2 months (28,000pm*2) = 56,000

= 330,667
Net Income from the House Property = Tk. 341,333

D. Income from Agriculture U/S 26

He owns 3 acres of land of double corp. Yield per acre was 35 tons of paddies.
Total production 35*3*2 = (210 tons * 340Tk. per ton) = Tk. 71,400
Tk.
Sales Proceeds = 71,400
Less: 60% of the Price being the Statutory Allowance = 42,840
Net Income from Agriculture =Tk. 28,560

Note: Production cost was shown Tk. 60,000 by the assessee however allowable expense should
not exceed 60% of the sales proceeds. In addition, as the individual assessee has other source of
income other than agriculture income, he will not get the special exemption of additional Tk.
50,000.
 E. Income from Business and Profession U/S 28
1.1 Income from Export = Tk. 150,000
Less: 50% Exemption = Tk. 75,000

Taxable Income from Export Business = Tk. 75,000

1.2 Income from Pisciculture = Tk. 150,000 = Non-Assessable

1.3 Income from Dairy Firm = Tk. 300,000 = Non-Assessable

Net Income from Business and Profession = Tk. 75,000

Note: As income from pisciculture and dairy firm is totally non assessable therefore it will not
included with the calculation of total taxable income.

F. Income from Capital Gain U/S 31

1.1 Income from Dividend from A Public Ltd. Co. = Tk. 50,000

Less: Interest on Bank Loan for Investment in Such Share = Tk. 5,000

Tk.

Net Income from Dividend = 45,000

1.2 Sale of Machinery = Tk. 1,600,000

Less: Cost (3years back) = Tk. 1,000,000

Capital Gain from disposal of machinery = 600,000

(No Depreciation was Charged Before)

1.3 Sale of Copyright = 200,000

1.4 Sale of Land = Nil

Net Income from Capital Gain = Tk. 845,000

Note:

1. Capital gain arising within 5 years shall be taxed at normal rate with other income and
beyond that, it will be at normal rates or tax on other incomes plus 15% on the portion of
capital gains, whichever, is beneficial for the tax payer.
2. Capital gain out of disposal of shares of public ltd. Companies listed with stock
exchanges is entirely non-assessable, but dividend income received from public ltd
companies is taxable.
3. In the case of sale of land since tax @ 3% has been realized at source at the time of
registration the sale deed, there would be no further tax on the receipts from the sale of
the land.

G. Income from Other Sources U/S 33

1.1 Unexplained Expenditure = Tk. 250,000

Net Income from Other Sources = Tk. 250,000

Note:

1. Expenditures spent behind travelling and daughter’s marriages dose not commensurate
with the income. So the deficiency is added to the assesse’s total income who incurred
such expenses.
2. Income from other source will also include any other incomes, which are deemed to be
income under different subsections of sec. 19 of the IT ordinance, 1984.

Calculation of Total Income of Prof. Raihan Reza for the Assessment year 2009-2010

1.1 Income from Salary = Tk. 3,805,400

1.2 Income from Securities = Tk. 5,000
1.3 Income from House Property = Tk. 341,333
1.4 Income from Agriculture = Tk. 28,560
1.5 Income from Business and Professions = Tk. 75,000
1.6 Income from Capital Gain = Tk. 845,000
1.7 Income from Other Sources = Tk. 250,000

Total Taxable Income = Tk. 5,350,293

Computation of Investment Allowance

1.1 Investment as Above: Shares of Public ltd. Co = Tk. 400,000

1.2 Contribution to RPF = Tk. 110,000

1.3 Contribution to Zakat Fund and Others = Tk. 350,000

Total Investment Allowance Claimed = Tk. 860,000

As per section 44(3) of the ITO, allowable investment allowance comes to 25% of total income
(excluding employers contribution to R.P.F) = (5,350,293 – 55,000) * 25% = Tk. 1,323,823 or,
actual investment Tk. 860,000 or, Tk. 1,000,000 whichever is less.

Tax Calculation:

First Tk. 165,000 @Nil

Next Tk. 275,000 @10% 27,500

Next Tk. 325,000 @15% 48,750

Next Tk. 375,000 @20% 75,000

Balance Tk. 4,210,293 @25% 1,052,573

Tk. 5,350,293 Tk. 1,203,823

Less: Tax Rebate on Investment Allowance

(860,000*10%) = Tk. 86,000

Net Tax Liability = Tk. 1,117,823

 Home Assignment

Act 322

Sec. 1

Submitted by.

M Talhatul Islam

Id. 072 388 030