Illustration 6-1:

Mr. Rahman is a service holder. Following are the particulars of his income from salary for the year ended on
30th June 2014. Compute taxable income from salary and investment allowance.

Basic salary Tk. 20,000 per month; Dearness allowance 10% of basic salary; Two festival bonuses, each equal
to one month’s basic salary; House rent 40% of basic salary; Conveyance allowance Tk. 3,000 per month;
Medical allowance Tk. 2,500 per month (actual expense Tk. 22,500); Entertainment allowance Tk. 100 per
month (actual expense Tk. 1,000); His contribution to recognized provident fund @ 10% of basic salary, The
employer also contributes the same amount; Interest on provident fund @ 10% on accumulated balance
equivalent to Tk. 2,500; Commission & fee Tk. 3,000.

Solution 6-1:

Assessee: Mr Rahman
Assessment year: 2014-2015; Income year 2013-2014
Determination of total Income

Income from Salaries ( Section-21) Tk. Tk.

(a) Basic salary (20,000 x 12) 2,40,000

(b) Dearness allowance (2,40,000 x 10%) 24,000
© Festival bonus ( 20,000 x 2) 40,000
(d) House rent (2,40,000 x 40% ) 96,000
Less Tk. 2,40,000 annually @ 20,000 p.m. or 50% of Basic
salary i.e. 1,20,000 whichever is lower
1,20,000
(e) Conveyance allowance (3,000 x 12 ) 36,000
Less: Exempted 6,000
30,000
(f) Medical allowance (2,500 x 12) 30,000
Less: Lower of Tk. 60,000 or 10% of B.S. i.e. Tk. 24,000 24,000 6,000

(g) Entertainment allowance (100 x 12 ) 1,200

(h) Employers Contribution to R.P.E (2,40,000 x 10% ) 24,000
(i) Interest on R.P.E @ 10% 2,500
Less: Exempted maximum @ 14.5% ( 2,500/10 x 14.5) =
3,625 or one third of B.S i.e. Tk. 80,000 whichever is lower 3,625
(j) Commission & fee 3,000
Total 3,44,200

Notes: (1) Actual medical expense amount is irrelevant (2) For the assessment year 2014-2015, the tax
exemption limit of conveyance allowance paid in cash will be Tk. 30,000. (3) Investment Allowance;
Employer’s contribution to RPE Tk. 24,000 + Employee’s contribution to RPE Tk. 24,000 = Tk.48,000.
Illustration 6-2
Mr. Aksar Salman is a service holder. Following are the particulars of his income from salary for the year
ended on 30th June 2014. Compute taxable income from salary & investment allowance.

Basic salary Tk. 25,000 per month; Dearness allowance – 10% of basic salary; Two festival bonuses each
equal to one month’s of basic salary, He has been provided with a rent-free quarter, the annual rental value of
which is Tk. 50,000; He has been provided with a car for both office & private use; Medical allowance-Tk.
3,000 per month; During the year he received Tk. 6,000 as travelling allowance; His contribution to an
unrecognized provident fund @ 10% of basic salary; Interest on provident fund @ 13% accumulated balance
equivalent to Tk. 2,500; He is given a servant allowance Tk. 200 per month; He contributes 1% of his basic
salary to the group insurance Scheme; He has paid Tk. 5,500 per month on a deposit pension Scheme.

Solution 6-2:
Assessee Mr. Aksar Salman
Assessment year; 2014-2015; Income year 2013-2014
Determination Of total Income

Income From Salary (Section - 21 ); Tk. Tk.

(a) Basic Salary (25,000 x 12) 3,00,000
(b) Dearness allowance (3,00,000 x 10%) 30,000
© Festival Bonus (25,000 x 2) 50,000
(d) Rent free accommodation Lower of rental
value i.e 50,000 or 25% of basic salary i.e. 75,000 50,000
(e) Conveyance facility (5% of basic salary) 15,000
(f) Medical allowance (3,000 x 12) 36,000
Less: lower of Tk. 60,000 or 10% of B.S i.e. Tk.
30,000 30,000 6,000
(g) Travelling allowance 6,000
Less: exempted (actual expense) 6,000
2,400
(h) Servant allowance (200 x !2)
4,53,400
Total
Investment Allowance: (actual)

Tk.
Employee's contribution to Group Insurance Scheme 3,000
1% of B.S. (300,000 x 1%)
Contribution to DPS (5,500 x 12 = 66,000 but 60,000
maximum limit is Tk. 60,000)
Total 63,000

Note: It is assumed that travel allowance was given for official purpose and the full amount has been
expensed.
Illustration 6-3:

Mr. Nahid Hasan Khan is a service holder. Following are the particulars of his income from salary for the year
ended on 30 June 2014. Compute taxable income from salary.

Basic salary Tk. 25,000 per month; Dearness allowance 10% of Basic salary; Two festival bonuses, each equal
to one month's basic salary; He has been provided with a house at a concessional rate for which Tk. 1,000 per
month is deducted from his salary. The annual value of the house is Tk. 50,000 He has been provided with a
car for both office and private use. Besides he is also provided with Tk. 1,000 per month as conveyance
allowance; He has also been provided with telephone facilities at his residence. The bill for this telephone
reimbursed amounted to Tk. 12,000;

During the year he received arrear salary of Tk. 16,000, not charged to income for any earlier income year,
His contribution to unrecognized provident fund@ 10% of basic salary. The employer also contributes the
same amount; Compensation received from previous employer Tk. 50,000; Leve encashment Tk. 20,000,
Gratuity received Tk. 50,000 and Overtime received Tk. 5,000.
Solution 6-3:

Assessee: Mr. Nahid Hasan Khan

Assessment year: 2014-2015; Income year: 2013-2014

Determination of total income

Income From Salary (Section-21): Tk. Tk.

(a) Basic salary (25,000 × 12) 300000

(b) Dearess allowance (300,000 x 10%) 30000

(c) Festival bonus (25,000 x 2) 50000

(d) Accommodation at a concessional rate: Lower of rental

value i.e., 50,000 or 25% of Basic salary i.e., 75,000 50000

Less: Rent paid by the assessee (1,000x12) 12000 38000

(e) Conveyance facility (5% of Basic Salary) 15000

(f)A Conveyance allowance (1,000 × 12)

(g) Telephone bill reimbursed by the employer 12000

(h) Arrear salary received 16000

(i) Compensation received 50000

(j)Leave encashment 20000

(k) Gratuity 50000

Less: exempted (full) 50000

(l) Overtime received 500

Total 548000

Note: Employer’s contribution to unrecognized provident fund is excluded from total income.
Illustration 6-4:
Mr. Zahid, the Additional Secretary of the Ministry of Finance, Government of the People's Republic of
Bangladesh receives basic salary of Tk. 40,000 per month in the income year 2013 2014. Besides basic salary
he received house rent allowance @ 60% of basic salary; a full-time car; medical allowance Tk. 2,000 per
month. During the year he received two bonuses each equal to one month's basic salary, He contributes 10%
of basic salary into a statutory provident fund (SPF). From that fund he also received interest of Tk. 8,000 at
an interest rate of 16% per annum. Compute taxable income of Mr. Zahid under "Income from Salary" for the
income year 2013-14.

Solution 6-4:
Assessee: Mr Zahid

Assessment year: 2014-2015; Income year: 2013-2014

Determination of total income

Income From Salary (Section-21): Tk Tk

(a) Basic salary (40,000 × 12) 480000

(b) House rent (480,000 × 60%) 288000

Less: Exempted-Full 288000

(c) Conveyance facilities (480,000 x 5%) 24000

Less: Exempted-Full 24000

(d) Medical allowance (2500 12) 24000

Less: Exempted-Full 24000

(e) Bonus (40,000 × 2) 80000

Less: Exempted-Full 80000

Total 480000

Notes: As Mr. Zabad 15 a government employee, only basic salary amount is taxable.