Particulars: Amount to be included in Income (Sec. 9) House rent income net of TDS Bank interest income net of TDS- Nepal Bank Ltd. Natural resources payments net of TDS
Interest income net of TDS from ABC Ltd.
Inclusion 200,000
2,500,000
Compensation received from loss of last
year investment Income from investment insurance net of TDS- Rastriya Beema Sanstha Gift related to investment income
25,000
Dividend income net of TDS from Sanima
Bank Ltd. A. Total Amount to be included in Income Deductions to arrive at Assessable Income Expenses related to collection of house rent
50,000
8,500 5,500
B. Total deductible Expenses
Assessable Income from Investment (AB) Less: Allowable Deductions a. Contribution to ARF b. Donation paid to tax exempt organization
14,000 2,761,000
Taxable Income
2,721,000
40,000
617,350 15,000 525,000 77,500
It is final withholding assuming that Mr. Narayan does
not conduct business of leasing or subleasing of house This is final withholding- bank interest received by natural person and not related to operation of business Included as per Sec. 9 (2) and as its not final withholding. Grossed up as it is net of TDS. This payment attracts 15% WHT, means 170000 is 85% of actual payment, Gross payment is Rs. 200,000 This interest is not final withholding as it is not a resident bank or FI, and the interest is assumed not for debenture or bonds. If we assume the interest is against debenture and bonds, and ABC Ltd. is authorized to issue such securities, it becomes final withholding. WHT on such interest is 15% and thus 2125000 is grossed up to 100% Included as per Sec. 9 & sec. 31 as the amount is included when the compensation is actually received Final withholding as Rastriya Beema Sansthan is resident insurance company Included as per Sec. 9 (2)- gift received in connection to investment Final withholding. Dividend received from resident company is final withholding
2,775,000
Expenses related to natural resources
Allowable depreciation allowance as per the Act Life insurance premium paid to Rastriya Beema Sanstha
Tax Liability 1st Rs. 300,000 Nil Next Rs. 100,000@ 15% Next Rs. 2,100,000 @ 25% Balance Rs. 221,000 @35%
Reason to include or not include
Not allowed as per Sec. 21, expense related to
collection of Final withholding payments Sec. 13- general expenses Sec. 19- as it is said its allowable As related to Final withholding and is considered by Beema Sansthan while computing gain on Investment Insurance
As per Sec. 12, lower of:
a. Actual b. 5% of ATI- 5% of 2,761,000 c. Rs. 100,000 As the question says there is no any assessable income from business or employment Married, and the maximum tax rate for investment is 10%. There is no additional surcharge of 40% on tax above taxable income of Rs. 25 Lakhs as the maximum tax rate for investment is 10% as explained by Sec. 1 (4)
Chapter 13- Income from Investment
Advance tax paid (WHT considered as
advance tax) Natural Resource payment Interest from ABC Co.
(Kha) of Schedule 1 which comes after Sec. 1 (1) and
Sec. 1 (2) of Schedule 1. There is no net tax liability payable, the amount is refundable 30,000 375,000