Question Income from Salary:

Mr. Shafiqul Islam is Senior Executive at a Private company. His income

and related information for the income year of 2018-19 are as follows:
monthly basic salary is Tk. 40,000. House rent allowance 60%, Medical
allowance Tk. 6,000 per month, and two festival bonus per year, three
performance and incentive bonus every year (all bonus are 100% of basic).
He enjoys a 24 hour car for personal and official use (company pays drivers
salary taka 12,000 per month also). He contributes 10% of basic to the
contributory provident fund. He receives 10% dearness allowance and 15%
servant allowance from the company. During the year Mr Shafiq received
Tk. 90,000 special allowance from the company.
For the mentioned period, Mr. Islam claimed the following investment allowance:
 Contribution to welfare trust and Group Insurance Tk. 500 and Tk. 400
respectively per month
 Purchase of government bond Tk. 30,000
 Educational expenditure for children Tk. 20,000
 Payment of Life insurance premium Tk. 7,000 (Policy value Tk. 100,000)
 Contribution to Deposit Pension Scheme (DPS) Tk. 1,000 per month
 Purchase of primary and secondary share Tk. 1,20,000 and taka 60,000
respectively
Requirement:
(a) Total taxable Income (b) Investment Allowance (c) Net tax liability for the
assessment year 2019-20

(a) Name of assesse: Mr. Shafiqul Islam

Income year: 2018-19
Assessment year: 2019-20
Determination of total taxable Income
Income from salary: Taka
Basic salary 40,000@12 months 4,80,000
House rent allowance received @60% 2,88,000
(-) Exempted (2,40,000) 48,000
50% of basic or 25,000 per month (lower one)
(2,40,000 or 25,000@12=3,00,000)

Medical allowance received 6,000@12 72,000

(-) Exempted (48,000) 24,000
10% of basic or 1,20,000 (Lower one)
(48,000 or 1,20,000)
Bonus (2 Festival & 3 performance) 5@40,000 2,00,000

For conveyance facility/car:

5% of basic or 60,000 (Higher one)
24,000 or 60,000 (higher one) 60,000

Employer’s contribution to RPF 48,000

Dearness allowance @10% 48,000

Servant allowance @15% 72,000

Special allowance received 90,000

(-) Exempted full 90,000 000
Total Taxable income 9,80,000

Recognized provident Fund (RPF)

Mr Shafiq contributes = 48,000
Company pays = 48,000
96,000
(a) Calculating investment allowance
Contribution to welfare trust 6,000
Group insurance 4,800
Purchase of govt bond 30,000

Life insurance premium paid 7,000 7,000

Limit: maximum 10% of policy value
Contribution to DPS 12,000
Primary share purchase 1,20,000
Secondary share purchase 60,000
Employer’s contribution to RPF 48,000
Employee’s contribution to RPF 48,000
3,35,800

Limit of investment allowance:

Actual Investment = 3,35,800
25% of total income = 2,45,000
Or =10,000,000
The lowest one is considered for investment tax credit.
So, Investment tax credit = 245,000×15%
= 36,750

2,50,000 @15% =
100,000@12% =
350,000
On first 250,000 = 15%
The rest amount = 12%
 9,80,000

(b) Calculating net tax liability of Mr Shafiqul Islam

On first 3,00,000 0% 0
On Next 1,00,000 5% 5,000
On next 4,00,000 10% 40,000
On rest 1,80,000 15% 27,000
Total tax liability 72,000
(-) Investment tax credit 36,750
Net Tax liability 35,250

Total tax liability 0000

(-) Investment tax credit
AIT (Advance Income Tax) Paid 0000
TDS (Tax deducted at source) 00000
Net tax liability 00000