TAXATION

01 Revision
Haroon Tabraze

a) Person
b) Tax Year
c) Total Income
d) Deductable Allowance

Deductible Allowance
a) Zakat
b) WWF (companies)
c) WPPF (companies)
d) House loan interest
e) Education Expenses

a)
b)
c)
d)

Individual
Company
Association of Person
Federal / Foreign Govt.

Company
Body Corporate
Modaraba
Foreign Company
Cooperative/Finance Society
NPO
Trust
Foreign Association
Provincial/Local Govt
Small Company

PERSON

firm means the relation between

persons who have agreed to share the
profits of a business carried on by all or
any of them acting for all

Individual

HUF, Firm, Artifical Juridical person,

body of persons formed under foreign
law

Association of
Persons
Company

Company, Body Corporate, Modaraba,

Cooperative Society, Finance Society,
Non-Profit Organization, Trust,
Provincial & Local Government

Federal or Foreign
Government

Tax Rates
Tax Rates

1 July 2015 30 June 2016 Tax Year 2016

1 July 2016 30 June 2017 Tax Year 2017

 Special Tax Years:

Sugar: 1.10.2014 30.9.2015 Tax Year 2015
Banks: 1.1.2016 31.12.2016
Tax Year 2016
Insurance Companies:
1.1.2017 31.12.2017 Tax Year 2017
Atlas Honda Limited (special permission)
1.4.2015 31.3.2016
Tax Year 2016

Heads of Income
Salary
XXX
Income from Property
XXX
Income from Business
XXX
Capital Gains
XXX
Income from Other Sources XXX
Sub-Total
XXX
Less: Zakat
XXX
Less: WWF
XXX
Less: WPPF
XXX
Less: Interest on House Loan XXX
Less: Education Expense
XXX
Taxable Income
XXX
Exempt Income
XXX
Total Income
XXX

HAROON TABRAZE

Revision of Salary

Salary
Pay
XXX
Wages
XXX
Leave Pay
XXX
Payment in lieu of leaves
XXX
Overtime
XXX
Bonus
XXX
Commission
XXX
Fee
XXX
Work Condition Supplement XXX
Cost of Living Allowance (COLA) XXX
House Rent Allowance
XXX
Utilities Allowance
XXX
Education Allowance
XXX
Entertainment / Travel Allowance XXX
Conveyance Allowance
XXX

i.e. Golf Club Subscription /

Credit Card Bill

a) Enter into
contract
b) Conditions /
change in
conditions
c) Termination
(separately
taxed
according to
average rate
of tax of last
three years)

Valuation of Accommodation (Income Tax Rules, 2002)

Accommodation = House Rent Allowance paid if the accommodation

was not provided, or 45% of salary

Valuation of Conveyance (Income Tax Rules, 2002)

Partly personal and partly official = 5% of Cost of Car

For personal use only = 10% of Cost of Car

Ali worked as manager in XYZ Ltd. at monthly salary of

Rs. 80,000 per month till December 2016. From
January 2017, his salary was increased to Rs. 100,000
per month. Salary is credited on 1 st of next month of
service. He gets a 10% medical allowance. XYZ Ltd.
pays Rs. 5,000 per month for Alis Golf Club
membership. On 1.1.17, Ali was provided with a car
costing Rs. 1,200,000 for both personal and official use.
He is also provided with a company flat since 1.7.16.
XYZ Ltd. paid Ali bonus of Rs. 150,000 for the year
2016 on 1.8.2016. Find out Salary income for Tax Year
2017.

Basic Salary 80,000 x 7 months =

560,000
Basic Salary 100,000 x 5 months =
500,000
Medical Allowance =
Exempt
Golf Club subscription (5,000 x 12 months) = 60,000
Car 1,200,000 x 5% x 6/12 =
30,000
Accommodation (45% of 1,060,000) =
477,000
Bonus (received in TY17) =
150,000
Salary
1,777,000

We do not make a P&L for Salary.

Tax on Tax

Salary
XXXX
Car (Cost of car x 5%/10%)
XXXX
Medical Allowance (Exempt upto 10%) XXXX
Drivers Salary
XXXX
Less: Reimbursed by employee (XXXX) XXXX
Bill for Electricity / Gas / Telephone XXXX
Less: Reimbursed by employee (XXXX) XXXX

Section 13(7): Interest free loan, or loan at a rate lower

than market value will be taxable at benchmark rate of
10%. This section is not applicable on loans of Rs.
500,000 or less.

Arif works at monthly salary of Rs. 350,000 per month. He is

provided a brand new Prado costing 15,000,000 with unlimited
fuel for both personal and official use. He is also provided a
driver, whose Rs. 15,000 per month salary is paid by the
company, although Arif has to reimburse Rs. 3,000 per month.
Arif is provided a company maintained flat. A domestic servant
at a salary of Rs. 15,000 per month is provided by the company
to Arif. During the year the company paid Rs. 120,000 for fuel
and also paid electricity and gas bills of Arifs flat amounting to
Rs. 155,000 . Rs. 6,000 per month were deducted from Arifs
salary in relation to the electricity and gas bills. On 1 st January
2017, Arif took an interest free loan of Rs. 1 million from his
company for personal reasons. On 30 th June 2017, Arif paid Rs.
600,000 of the loan back, while the remaining was written off.

Basic Salary 350,000 x 12 months =

4,200,000
Car (15,000,000 x 5%) =
750,000
Salary of Driver (15,000 3,000) x 12 =
144,000
Salary of Servant (15,000 x 12 ) =
180,000
Fuel = (included with car valuation)
Electricity & Gas (155,000 72,000)
83,000
Interest free loan (1,000,0000 x 10% x 6/12) =
50,000
Loan Written off by company =
400,000
5,807,000

 Free medical treatment under terms of employment

contract is exempt, if the employee provides NTN
(National Tax Number) of the hospital or the clinic.
Medical treatment includes expense for
hospitalization. (Clause 139 of Second Schedule)
If not entitled - then fully taxable.
Cash medical allowance - exempt upto 10% of salary.
Where the employee is allowed free medical
treatment under terms of his employment, as well as
provided a cash medical allowance, then free medical
treatment and hospitalization will be exempt, and the
cash allowance will be taxable.