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Assignment 01
TAXATION MANAGEMENT (FIN623)

Dear Students!

This is to inform that Assignment 01 will be opened on November 27, 2015 and due date of assignment submission will be December 03, 2015.

Assignment No. 01 will cover first 14 lessons of your course.

A 24 hours extra/grace period after the due date is usually available to overcome uploading difficulties which may be faced by the students on last date. This extra time should only be used to meet the emergencies; and above mentioned due date should always be treated as final to avoid any inconvenience.

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Hope from all concerned to participate.  

                                       SEMESTER FALL 2015
                                TAXATION MANAGEMENT (FIN623)
                                       ASSIGNMENT NO. 01


DUE DATE: DECEMBER 03, 2015
MARKS: 10


Learning Objective
The students are expected to develop an understanding regarding the provisions of medical allowance, medical treatment, hospitalization and foreign source income under the Income Tax ordinance 2001.


Learning Outcomes
After going through this activity, the students will be able to determine taxable income using provisions of medical allowance, medical treatment, hospitalization and foreign source income for an individual under the Income Tax ordinance 2001.

Assignment
Question: 01 - Mr. Ali is an accounts officer in a company. His basic salary is Rs. 88,000 per month for the tax year 2016. He has been provided with rent-free furnished accommodation in a big city by his employer. He has been given a car by the company and it pays some monthly running expenses as well.

You are required to discuss the tax treatment of following cases:


a. Received medical allowance of Rs. 10,000 per month. Calculate the amount chargeable to tax for the tax year 2016. (show complete working) (4 Marks)


b. Free medical treatment provided by the employer under employment agreement. Employer incurred Rs. 50,000 on him and his family. (1 Mark)


c. Free medical treatment provided by the employer which is not under employment agreement. Employer incurred Rs. 50,000 on him and his family. (1 Mark)


Question: 02 – Discuss the tax treatment of the following different aspects under the relevant provision (Mention relevant provisions as well) of Income Tax Ordinance 2001:


a. Mr. Ahmad is a solely resident of Pakistan due to his employment but citizen of other country. Apart from his employment he is engaged in a trading business of toys and earns Rs. 45,000 monthly. Does his income is taxable for the tax year 2016 in Pakistan? Explain in either case. (2 Marks)


b. Mr. Hassan is a citizen of Pakistan but due to his business in other foreign country and earns Rs. 250,000 per month from his business (money bring into Pakistan by him). He was not resident of Pakistan for the last 5 years. Does his income is taxable for the tax year 2016 in Pakistan? Explain in either case. (2 Marks)


IMPORTANT:
24 hours extra / grace period after the due date is usually available to overcome uploading difficulties. This extra time should only be used to meet the emergencies and above mentioned due dates should always be treated as final to avoid any inconvenience.
IMPORTANT INSTRUCTIONS/ SOLUTION GUIDELINES/ SPECIAL
INSTRUCTIONS
BE NEAT IN YOUR PRESENTATION
OTHER IMPORTANT INSTRUCTIONS:
DEADLINE:
 Make sure to upload the solution file before the due date on VULMS.
 Any submission made via email after the due date will not be accepted.
FORMATTING GUIDELINES:
 Use the font style “Times New Roman” or “Arial” and font size “12”.
 It is advised to compose your document in MS-Word format.
 You may also compose your assignment in Open Office format.
 Use black and blue font colors only.
REFERENCING GUIDELINES:
 Use APA style for referencing and citation. For guidance search “APA reference
style” in Google and read various websites containing information for better
understanding or visit
http://linguistics.byu.edu/faculty/henrichsenl/apa/APA01.html
RULES FOR MARKING
Please note that your assignment will not be graded or graded as Zero (0), if:
 It is submitted after the due date.
 The file you uploaded does not open or is corrupt.
 It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint,
PDF etc.
 It is cheated or copied from other students, internet, books, journals etc.
Note related to load shedding: Please be proactive
Dear students!
As you know that Pre Mid-Term semester activities have started and load
shedding problem is also prevailing in our country. Keeping in view the fact,
you all are advised to post your activities as early as possible without waiting for
the due date. For your convenience; activity schedule has already been uploaded
on VULMS for the current semester, therefore no excuse will be entertained
after due date of assignments or GDBs.

Question: 01 - Mr. Ali is an accounts officer in a company. His basic salary is Rs. 88,000 per month for the tax year 2016. He has been provided with rent-free furnished accommodation in a big city by his employer. He has been given a car by the company and it pays some monthly running expenses as well.

You are required to discuss the tax treatment of following cases:


a. Received medical allowance of Rs. 10,000 per month. Calculate the amount chargeable to tax for the tax year 2016. (show complete working) (4 Marks)


1st of all:

Medical allowance received by an employee not exceeding ten per cent of the basic salary of the employee.

if exceed then consider tax able:

basic salary 88000

medical allowance 10000 = 10% = 8800 which is exceed: 1200

so, taxable amount of Rs: basic salary+on exceed medical allowance

Total income tax amount= 46,564

ok now try to calculate yours self.

Calculate the amount chargeable to tax for the tax year 2016

88000 X 12 = 1,056,000

1200 X 12 = 14, 400

1,070,400 is a tax chargeable amount

Tax on chargeable amount
Income Tax of Rs: 46,540

dear follow calculate and reply. is it correct or not

misal tu bhoot achi es baat k leya magr choroo

a) If Medical Facility or reimbursement of actual Medical expenses is provided: 

in accordance with terms of employment: The amount provided is fully exempt if NTN of medical practitioner and employer's attestation are available.


Not in accordance with terms of employment: The amount provided is fully taxable


b) Medical Allowance provided: Tax Treatment is exempt upto 10% of Basic Salary


c) Medical allowance is provided in addition to medical facility or reimbursement in accordance with the terms: Tax Treatment is Medical allowance fully taxable and Facility / reimbursement is Fully Exempt if NTN of medical practitioner and employer's attestation are available.


d) Medical allowance is provided in addition to medical facility or reimbursement but
NOT in accordance with the terms: Tax Treatment is Medical allowance is exempt upto
10 % of Basic Salary and Facility / reimbursement is Fully taxable.

Medical Allowance - with out medical facility] Taxable     (Exempt up10% of Basic salary) 

Medical Allowance - with Reimbursement ]   Taxable               (with  No exemption)

Medical benefit / Reimbursement (in accordance with the terms of employment ) Exempt if

­

NTN of the hospital / clinic is disclosed


­ The employer certifies and attests the bills

see in the light of above criteria 

b. Free medical treatment provided by the employer under employment agreement. Employer incurred Rs. 50,000 on him and his family. (1 Mark)

b)....medical treatment provided by the employer under employment agreement
make the decision;

Reimbursement of medical charges or hospitalization charges or both is exempted from tax if:

it is provided for under the terms of employer's employment agreement. The employee provides NTN of the hospital or clinic and medical or hospital bills are also certified and attested by the employer.

c. Free medical treatment provided by the employer which is not under employment agreement. Employer incurred Rs. 50,000 on him and his family. (1 Mark)

it mean that with out employment contract both medical charges or hospitalization charges are not exempted.

dear all concerned please, participate in discussion 

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