Assignment-01

Course Title: Taxation

Course Code: ACT311
Section: 01

Prepared for:
Dr. Nikhil Chandra Shil
Associate Professor
Department of Business Administration
East West University

Prepared By:
Md. Aminur Rahman Nayan
2016-1-10-270
Department of Business Administration

Date of submission: November4, 2019

Problem:
Mr. Akash is a MTO of British American Tobacco. On July 2018 his basic salary falls on Tk.
105,000 in the scale of 95,000-5000*8-135,000. his yearly increment date is 18th March. he
received dearness allowance @10% of basic and medical allowance of Tk. 5000 per month. During
the year his actual medical expense was Tk. 80,000. Two festival bonus each equivalent to one-
month basic salary- received in month November and April. Besides his basic salary he received
20% of basic salary as house rent. he also received full time car with Tk.20,000 per month as
maintenance allowance; servant allowance Tk.5000 per month; Tk.70,000 as school fee allowance
yearly ; Leave encashment 13 days of basic salary. ; Company has also given his travel allowance
of Tk.100000 as a reward for his good performance. Company also gave his International Air ticket
for a tour as a part of his service contract for which the company spent Tk.100,000. he received
entertainment allowance of Tk.10,000 per month of which two third of total money has been
actually spent. he also contributes 10% of basic salary to a recognized provident fund from which
he has also received an interest of Tk6500@ 15% interest. His additional income from this sources
Tk.200,000.

His investment during the year were: Purchase of shares of a private limited company TK.50,000
and a registered partnership firm Tk.40,000. Contribution to DPS Tk.20,000 per month. Purchase
of debenture from DSE Tk.50000. Payment of life insurance premium Tk.30,000 (Policy value
Tk.250,000). Donated to Prime Minister relief fund Tk.40,000; Donation to mosque Tk.25,000.
his net asset amounted to Tk. 2 crore. his tax deducted in source 120,000
Solution:
Assesses: Mr.Akash
Assessment year:2019-2020; Income year:2018-2019
Income from basic salary TK TK
a) Basic Salary (100,000*8=800000) + (100,000*18/31=58065) 1,21710
+(105,000*13/31=44035) +(105,000*3=315000) 0

b) Dearness Allowance (1,097,096*10%) 121710

c) Medical Allowance (5000*12)
Less: Lower of Tk120,000 or 10% of B.S Tk121710 60,000
121710
d) Bonus (100,000+105,000) 205000
e) House rent allowance (121710*20%) 243420
Less; Exempted –lower of 50% B.S Tk608550 or Tk25,000 per month 300,00
(12*25,000) 0

f) Maintenance Allowance (20,000*12)

240,000
g) Servant Allowance (5,000*12)
60,000
h) School fee Allowance
70,000
i) Leave Encashment (105,000/30*13) 44035
j) Travel Allowance
100,000
k) Entertainment Allowance (10,000*12)
120,000
l) Employer’s Contribution to RPF 10% of B. S 121710
m) Interest on RPF @ 15% 6,500
6283 217
Less: Exempted – lower interest @ 14.5% (6500/15*14.5) or
One third of B.S Tk405700

Income from othis sources 200000

Total 2499777
 Computation of Investment Allowance TK
1) Contribution to DPS (20000*12) 240,000
2) Purchase of Debenture 50,000
3) Life Insurance Premium Tk30,000; Maximum (10% of Tk250,000) 25,000
4) Donation to Prime Minister relief fund 40,000
5) Donation to mosque 25,000
6) Employee’s and Employer’s Contribution to RPF (Tk121710*2) 243420
Total 623420

Maximum limit of the investment allowance: 25% of total income (2,499772*25% =

Tk624943) or Tk15,000,000 whichever is less. So, the eligible amount for tax rebate will be
(623420*10%) = Tk62342

Computing Tax Liability:

Rate TK
On the first Tk300,000 0% Nil
On the next 400,000 10% 40,000
On the next 500,000 15% 75,000
On the next 600,000 20% 120,000
On the next 699777 25% 174944
Total 2,499777 409944
Less: Investment tax credit 10% (62342)
TDS (120,000)
Net tax liability 227602