Heads of Income Notes

1. Salary Income
Basic salary
Bonus
Furnished accomodation
Conveyance allowance N-1
Medical allowance N-2
Utility expense
Entertainment allowance
Air tickets N-3
Hotel expenses N-4
Car rental N-5
Leave encashment N-6:
Total
2. Property Income
Property Income
Less : Expenditures claimed against property
*Legal expenses
*Property tax
*Insurance premium
Total expenses against property N-7
Total property income
3. Income from Other Sources
Insurance money received on maturity N-8
Dividend N-9
Birthday present received N-10
Total Income
Deductions
Zakat paid N-11
Expense of children education N-12
Taxable Income After Deductions
Tax Liability (5% tax on amount exceeding 4 lac) N-13
Tax deducted at source
Net Tax Liability
 Name of Tax Payer
Income Tax Year ended
Tax Year
Personal status
Computation of taxable Income & Sales Tax Liability
Income (Rupees) Taxable Income (Rupees)
 Notes:
N-1:
According to ITO 2001, Conveyance allowance given to the employee is taxable
1650*12=19800
N-2:
According to ITO 2001, Medical allowance upto 10% of the basic salary is exempted,
But in this case it is more than 10%. So the exceeding amount would be taxable
231000*10%=23100, 25000-23100=1900 which is taxable
N-3,N-4,N-5:
The employee went for an official trip so all the expenses incurred will be reimbursed
According to ITO 2001, reimbursements are non-taxable.
N-6:
Accordng to ITO 2001, Leave encashments are the earned leaves and they are non-taxable.
N-7:
Accordng to ITO 2001, expenses incurred against the earning of property income can be deducted
N-8:
According to ITO 2001, Insurance money is exempted from tax.
N-9:
According to ITO 2001, Dividend is covered under FTR
N-10:
According to ITO 2001, Present received which is verified from the bank is exempted from tax
N-11:
Total Zakat paid: 11000+275=11275
N-12:
As the no of children are not mentioned, so we will assume 1 child here.
Following are the rules regarding educational expense.
i) 60,000* 1 = 60,000
ii) Taxable income*20% = 551275*20% = 110255
iii) Education expense* 5% = 44000*5% = 2200
According to ITO 2001, whichever wil be the lower amount, would be allowed for deduction
N-13:
Taxable Income
0 to Rs.400,000
Rs.400,000 to Rs.750,000
Rs.750,000 to Rs.1,500,000
Rs.1,500,000 to Rs.2,000,000
Rs.2,000,000 to Rs.2,500,000
Income exceeds Rs.2,500,000
As here we're falling in the slab rate of Rs 4 lac to 7.5 lac so 5% of amount exceedind 4 lac would be paid
151275*5% = 7564
 Slab rates of Tax
0%
5% of the amount exceeding Rs.400,000
Rs.17,500 plus 10% of the amount exceeding Rs.750,000
Rs.95,000 plus 15% of the amount exceeding Rs.1,500,000
Rs.175,000 plus 17.5% of the amount exceeding Rs.2,000,000
Rs.420,000 plus 20% of the amount exceeding Rs.2,500,000