ZeePedia buy college essays online


Taxation Managment

<<< Previous Significant points regarding Salary Next >>>
 
img
Taxation Management ­ FIN 623
VU
MODULE 6
LESSON 6.23
SALARY AND ITS COMPUTATION
Significant points regarding Salary:
Reimbursement of expenditure by the employer
Taxable
Taxable
Profits in lieu of salary received as:
Consideration for a person's agreement to enter into an
employment relationship
On termination of employment/ Golden handshake
payments
Provident fund payments, only Employers contribution
Taxable
Computation of value of perquisites (Sec 13)
Motor vehicle
As prescribed in IT rules
2002
Services of house keeper, driver, gardener, other domestic servant
Amount provided by
employer added back to
employee's salary.
Add FMV of utilities as reduced by any amount paid by
employee
Loan below benchmark rate for tax year 2007 is 9% PA
Add back
In case, Conessional loan as above used for construction of house or No Add back
purchase of house
Obligation of employee waived off by employer.
Add back
Any property transferred to employee.
FMV of property to be
added back
Accommodation or housing provided.
As prescribed in IT rules
2002
According to sub section14 of Section 13:
 Bench mark rate means rate of 5%PA
For tax year 2003 and increase by 1% for succeeding tax years.
Services include any facility provided.
Utilities include electricity, gas, water, and telephone.
Employee share schemes (sec 14)
Treatment of value of a right or option vested in an employee.
Formula:
A­B
When Commissioner can tax "salary" on due basis:-
In certain cases, the Commissioner has been given powers to tax salary on due basis. Section 110 reads as
under:
"Salary paid by Private Companies":
where, in any tax year, salary is paid by a private company to an employee of the company for services
rendered by the employee in an earlier tax year and the salary has not been included in the employee's salary
chargeable to tax in that earlier year, the Commissioner may, if there are reasonable grounds to believe that
payment of the salary was deferred, include the amount in the employee's income under the head "Salary"
in the earlier year.
Leave Salary:
This is taxable whenever received or right to receive is exercised by the employee. Leave encashment on
retirement falls in this category. The only exemption available is for the members of the Armed Forces of
Pakistan, employees of the Federal Government and Provincial Governments.
35
img
Taxation Management ­ FIN 623
VU
Under clause (19), Part I of Second
Schedule to the Ordinance any sum representing encashment of leave preparatory to retirement in their case
is exempt.
 Salary in lieu of notice:
Taxable
 Fee and Commission:
Taxable
 Bonus:
Taxable
 Remuneration for extra duties:
Taxable
 Voluntary payments to employees:
Taxable
Flying Allowance
Any amount received as flying allowance by:
a) pilots, flight engineers and navigators of Pakistan Armed forces, Pakistani Airline or Civil Aviation
Authority; and
b) Junior commissioned officers of Pakistan Armed Forces.
Shall be taxed @ 2.5% as a separate block of income
Deductible Allowance:
The person shall be entitled to a deductible allowance for any Zakat paid by the person in a tax year
according to provisions of sec.60, for the amount of any Workers' Welfare Fund paid by the person in a
tax year under Sec 60-A, for the amount of any Workers' Participation Fund paid by the person in a tax
year under section 60-B.
36
Table of Contents:
  1. AN OVERVIEW OF TAXATION
  2. What is Fiscal Policy, Canons of Taxation
  3. Type of Taxes, Taxation Management
  4. BASIC FEATURES OF INCOME TAX
  5. STATUTORY DEFINITIONS
  6. IMPORTANT DEFINITIONS
  7. DETERMINATION OF LEGAL STATUS OF A PERSON
  8. HEADS OF INCOME
  9. Rules to Prevent Double Derivation of Income and Double Deductions
  10. Agricultural Income
  11. Computation of Income, partly Agricultural,
  12. Foreign Government Officials
  13. Exemptions and Tax Concessions
  14. RESIDENTIAL STATUS & TAXATION 1
  15. RESIDENTIAL STATUS & TAXATION 2
  16. Important Points Regarding Income
  17. Geographical Source of Income
  18. Taxation of Foreign-Source Income of Residents
  19. Exercises on Determination of Income 1
  20. Exercises on Determination of Income 2
  21. SALARY AND ITS COMPUTATION
  22. Definition of Salary
  23. Significant points regarding Salary
  24. Tax credits on Charitable Donations
  25. Investment in Shares
  26. SALARY AND ITS COMPUTATION EXERCISES 1
  27. SALARY AND ITS COMPUTATION EXERCISES 2
  28. SALARY AND ITS COMPUTATION EXERCISES 3
  29. Tax treatment of Gratuity
  30. Gratuity Exercise
  31. PROVIDENT FUND
  32. Exemptions on Business income, Treatment of Speculation Business
  33. Deductions Allowed & Not Allowed
  34. Deductions: Special Provisions, Depreciation
  35. Methods of Accounting
  36. Taxation of Resident Company
  37. Taxation of Companies: Exercises
  38. Computation of Capital Gain
  39. Disposals Not Chargeable To Tax
  40. TAX RETURNS & ASSESSMENT OF INCOME UNIVERSAL SELF ASSESSMENT SCHEME
  41. Normal Assessment, USAS, Provisional Assessment, Best Judgment Assessment
  42. ADVANCE TAX COLLECTION & RECOVERY OF TAX PENALTIES & PROSECUTION
  43. What is Value Added Tax (VAT)?
  44. SALES TAX
  45. SALES TAX RETURNS