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Assignment on

Taxation in Banladesh

Topic- Income from salary and Tax-credit income if the provident fund is recognized
And Tax liability.

Prepared For
Dr. Dipak Kanti Dutta
Professor
School of business
Ahsanullah University of Science and technology

Prepared By
MMd. LikhonlLikhon ID: 08.01.02.00005

Date of submission: 30th October 2010

Ahsanullah University of Science and technology


Mr. Ali Asgar is a manager of an organization. During the year 2008-2009 he had the following
income from his salary:

1. Basic salary tk 40,000 p.m.

2. Two bonus equivalent to one basic salary each.

3. Dearness allowance @ 20% on Basic Salary

4. House rent allowance @ 30% of Basic Salary

5. Entertainment allowance tk 600 per month

6. Medical allowance @ tk 300 per month (Actual expense tk3000).

7. He received 3 months’ advance salary for certain family expenses.

8. Conveyance allowance tk 2500 per month.

9. Duty allowance for performing additional office duty @ tk 2000 per month for 3 months.

He contributes 10% of his basic salary to recognize provident fund in which his employer also
contributed same amount of money. He purchase shares of a company for tk 10,000 and paid
Life insurance premium tk 15,000 for the year. Where the policy amount tk 1, 25,000.He
purchased ICB unit certificate worth tk 25,000 and he also donated tk 4,000 to local sports club.

Compute his Income from salary and Tax-credit income if the provident fund is recognized
and Tax liability.
Solution:

Assessment of Mr.Ali Asgar


For the Income year 2008-2009 and assessment year 2009-2010
Part: A Calculation of Income from salary

TK TK
1. Basic Salary (tk40,000 p.m.) 40,000×12 480,000
2. Bonus (Two equivalent to one B.S. each) 40,000×2 80,000
3. Dearness Allowance @ 20% of 480,000 96,000
4. House Rent allowance: Cash
HRA Received : @ 30% of 480,000 144,000
Exempted up to lower amount of following:
50 % of Basic Salary tk 480,000
= 240,000 180,000
Tk 1500 per month : 12×15000 0
= 180,000 600×12 7200
House Rent Allowance 3600
5. Entertainment Allowance (tk 600 per month) 3000
6. Medical Allowance: Received tk 300 per month 600
300×12 40,000×3 120,000
Less: Actual Expense 48,000
Medical Allowance 30,000
7. Advance Salary (3 months for family expenses) 24000 6,000
8. Employer’s contribution to R.P.F@ 10% 480,000 2000×3 6,000
9. Conveyance Allowance@ tk 2500 per month 0
2500×12
Less: Exempted up to tk 2000 per month
2000×12
10.Duty Allowance @tk 2000 per month for 3
months
11.Others income from salary
Total Income from salary TK 8,43,800
Part B: Calculation of Tax Credit Income
1. Total of approved investment :

TK
a. Contribution to Recognize provident fund
(48,000+48,000) 96,000
b. Purchase of Company share 10,000
c. Life insurance premium : lower of following
Premium paid
15,000 12,500
10% of policy amount 25,000
tk125,000 12,500
d. Purchase of ICB unit certificate
Total approved investment TK
1,43,500

2. 25% of Total Income excluding employer’s contribution to

recognize provident fund = 0.25 × ( 8,43,800-48,000) TK


1,98,950

3. Maximum Limit Tk 10,00,000

Tax credit Income (Lowest of above 1, 2 and 3) TK 1,


43,500

Tax credit / Tax rebate 10% of TK 1, 43,500 (Tax credit inc0me) TK


14,350

Part C: Calculation of Tax Liability


TK
On first TK 165,000 @ 0% 0
On next TK 275,000 @ 10% 27,500
On next TK 325,000 @ 15% 48,750
On next TK 3,75,000@ 20% (here TK 15,760
78,800) 92,010
Gross Tax 14,350
Tax Credit/Tax Rebate 77,660
Net Tax Payable