University of Barishal

Department of Accounting and Information Systems

Assignment

Course Title: Principles and Practices of Taxation 1

Course Code: AIS 2205
Topic: Income from House Property

Submitted To:
Sujan Chandra Paul FCA
Associate Professor,
Department of Accounting and Information Systems,
University of Barishal
Submitted By:
Mahtab Siddiki
Roll: 20 AIS 036
Department of Accounting and Information Systems,
 University of Barishal
Question 1: Mr. Himel has a house at Mirpur consisting of four flats. The whole house has been let
out to an advertising firm for Tk. 75,000 per month. The municipal value of the house is Tk. 500,000.
Expenses relating to the house are for the year includes repair and maintenance expenses Tk
150,000, collection charge Tk. 1,000 per month, municipal tax Tk. 15,000, WASA charge Tk 12,000,
interest on borrowed capital Tk. 5,000, insurance premium paid Tk. 10,000 One of the flats remained
vacant for two months during the year. Calculate taxable income and tax liability for Mr. Himel for
the current income year considering the following details of his income for the year.

Solution:

Assessee: Mr. Himel

Assessment Year: 2022-2023

Income Year: 2021-2022

Calculation of taxable income: Tk Tk Tk

Income from house property(Section
24,25) 900,00
Actual rental value ( 75,000×12) 0
Municipal value 500,00 900,000
Annual value (Higher of ARV and MV) 0

Less: Admissible expenses

Repair & maintenance (30% of AV) 270,000
Municipal tax 270,00
Interest on borrowed capital 0
Insurance 15,000
Vacancy allowance (900,000÷4×2÷12) 5,000 (377,500)
10,000
Total taxable income: 37,500 562,500

Tax Liability:

Taxable First Next Next Total

amount 300,000 tk 100,000 tk 162,500 tk 562,500 tk
Rate 0% 5% 10% -
Tax Nil 5,000 tk 16,250 tk 21,250 tk
Question 2: Mr. Sojeb owns a two-storied house in Gulshan. He stays in one floor with his family and
another floor is let out for residential purpose at a rate of Tk. 10,000 per month. The municipal value
of the house is Tk. 150,000 per annum. During the year he incurred expenses for: repair Tk. 30,000;
insurance Tk. 6,000; land development tax Tk. 2,500; sewerage and utilities expense Tk. 1,500;
payment of DBH loan installment (including interest of Tk. 500) Tk. 5,000. During the year, the house
remained vacant for two months. Mr. Sojeb claims tax rebate for investment in: life insurance
premium Tk. 10,000 (policy value Tk. 100,000); purchase of a listed company's primary share Tk.
7,000, books and magazines Tk. 1,000; share of co-operative society Tk. 2,000; Contribution to
President's relief fund Tk. 5,000; contribution to government zakat fund Tk. 3,000; and purchase of
furniture Tk. 15,000. Calculate taxable income and investment allowance for Mr. Sojeb for the
current income year considering the following details of his income for the year.

Solution:

Assessee: Mr. Sojeb

Assessment Year: 2022-2023

Income Year: 2021-2022

Calculation of taxable income Tk Tk Tk

Income from House Property (sections 24, 25)
Actual rental value (10,000 × 12) 120,000
Municipal value (150,000÷2) 75,000
Annual value (higher of ARV and MV) 120,000

Less: admissible expenses

Repair and maintenance (25% of AV) 30,000
Insurance (6,000÷2) 30,000
Land development tax (2,500÷2) 3,000
Interest on loan (500÷2) 1250
Vacancy allowance (120,000×2÷12) 250
20,000
(54,500)
Total taxable income:
65,500

Calculation of allowable investment:

Tk
Life insurance premium 10,000
Share purchase 7,000
Contribution to relief fund 5,000
Contribution to zakat fund 3,000
Actual investment: 25,000

Maximum limit: lower of 10,000,000

and 20% of 65,500 13,100

Allowable investments 25,000

Question 3: Abdur Rahman owns two houses in Faridpur. He uses one of the house as his residence
and the other one has been let out for commercial purpose for Tk. 50,000 monthly rental. The
municipal value of the houses are Tk. 200,000 and Tk. 300,000 per annum respectively. During the
year, he has spent Tk. 15,000 for the house he uses as residence and the expenses for the let out
house includes, repairs Tk. 190,000: legal charges Tk. 4,000; municipal tax Tk. 2,000; land revenue
Tk. 500: salary of the caretaker Tk. 5,000. During the year, the let out part of the house remained
vacant during June of current income year. Calculate Abdur Rahman’s taxable income and tax
liability for the year.

Solution:

Assessee: Abdur Rahman

Assessment Year: 2022-2023

Income Year: 2021-2022

Calculation of taxable income: Tk Tk Tk

Income from House Property (sections 24, 25)
Actual rental value (50,000 × 12) 600,000
Municipal value (MV) 300,000
Annual value (AV: higher of ARV and MV) 600,000

Less: admissible expenses

Repair and maintenance (30% of 600,000) 180,000
Municipal tax 2,000
Land revenue 500
Vacancy allowance (600,000× 1/12) 50,000
(232,500)
Total taxable income: 367,500

Tax Liability:

Taxable amount On first On next Total amount

300,000 tk 67,500 tk 367,500 tk
Rate 0% 5% -
Tax Nil 3,375 tk 3,375 tk