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FORMAT OF RULES FOR THE COMPUTATION OF SALARY INCOME Rs. Rs.


Income from Salary U/S 12: Taxable
Basic salary Taxable
Bonous Taxable
Commission Taxable
Cost of living allowance Taxable
Dearness allowance Taxable
Overseas allowance Taxable
Research allowance Taxable
Utilities allowance, bills reimburrsed or bills paid by employer Taxable
Utilities = Gas, water, electricity and telephone.
Perquisites/Facilities(free of cost or subsidized) received from
Exempt -----
employer (According to the nature of employer's business)
For example
i) Lunch/dinner facility by a hotel or restaurant at work.
ii) Education facility by an educational institution.
iii) Medical facility or treatment by a hospital/clinic.
Relocation allowance Taxable
Efficiency honorarium/Performance award/Incentive award Taxable
Overtime/Part time payment Taxable
Qualification pay/ M.Phil or Ph.D allowance Taxable
Computer allowance Taxable
Waiver of an amount payable by the employee to employer Taxable
Salary of Mali, Chowkidar, Cook, Driver, Sweeper or Domestic Taxable
Servant paid by employer Taxable
Membership or registration fee of any club paid by employer Taxable
Loan of employee or life insurance premium of employee or any
Taxable
other obligation of the employee paid by employer
Special pay Taxable
Special allowance
(Travelling allowance -- T.A., Daily allowance -- D.A. and Exempt
Uniform allowance etc.)
Special additional allowance Taxable
Medical allowance xxxx
Less: Exempt upto 10% of basic salary xxxx Taxable
Note: Medical allowance shall be totally taxable if received in
addition to medical facility as per terms of employment.
Medical facility as per terms of employment agreement Exempt -----
Medical bills/expenditures reimbursed as per terms of employment Exempt -----
Pension reveiced from government organization or former employer Exempt -----
Pension reveiced:
i) If working for same employer after retirement Taxable
ii) If two pensions reveived then lower pension shall be Taxable
Note: If age of taxpayer is 60 years or above then pension received
from same employer shall be exempt. Exempt -----
Fee for management or refresher or training course paid by employer
Fixed educational allowance for children Taxable
PROFESSOR AAMIR ABBAS GCC SHAHPUR SADAR
Typed By: Muhammad Safdar(Pupil)
2

Entertainment allowance Taxable


Entertainment facility/Bills reimbursed Exempt -----
Project allowance Taxable
Senior post allowance Taxable
Orderly allowance Taxable
Re-imbursement of internet usage bills:
i) For official use Exempt -----
ii) For Personal use Taxable
Special or Adhoc relief allowance Taxable
Reward on passing an examination according to the terms of
Taxable
employment agreement
Leave fare assistance (LFA) Taxable
Loan obtained from employer:
a) Amount of loan upto Rs. 500,000 Exempt ------
b) Amount of loan above Rs. 500,000
i) If the loan is Interest Free:
= Amount of loan * 10% Taxable
ii) If Interest Rate is less than 10%:
=Amount loan *(10% - Given %) Taxable
iii) If Interest Rate is 10%:
=Nothing shall be taxable -------
iv) If Interest Rate is above 10%:
=Nothing shall be taxable -------

Leave encashment/Pay in lieu of leave:


(For Government employmees at the time of retirement) Exempt ------
Amount of gratuity /Commutation of Pension:
i) Approved by the Commissioner Exempt ----
ii) Approved by FBR ----- Amount of gratuity xxxx
less: Exempt upto 200,000 Taxable
iii) Not approved ---- Amount of gratuity xxxx
less: Exempt upto Rs.75,000 or 50% of gratuity
(Whichever is less) xxxx Taxable
iv) For government organization employees Exempt -----
Accommodation
a) Not owned/Not provided:
House rent/Accoommodation allowance Taxable
b) Provided by employer (Furnished/Unfurnished):
i) Annual value of accommodation xxxx
ii) 45% OF MTS/Basic salary xxxx
[Whichever is higher b/w (i) &(ii)] Taxable
c) Rent ciling paid by employer:
i) Amount of rent ceiling xxxx
ii) 45% of MTS/Basic salary xxxx
[Whichever is higher b/w (i) & (ii)] Taxable

PROFESSOR AAMIR ABBAS GCC SHAHPUR SADAR


Typed By: Muhammad Safdar(Pupil)
3

Note:
i) If the accommodation is provided in a mufasal area/town/not in
a big city then the value of accommodation shall be detemined
@ 30% instead of 45%.

Ii) In the absence of MTS, for the value of accommodation,


45% or 30% shall be applied on basic salary.
Conveyance:
a) Not owned/Not provided:
Conveyance allowance Taxable
b) Owned by the employer:
Conveyance allowance Taxable
c) Provided by the employer:
For personal use only: Taxable
Conveyance allowance Taxable
Cost or FMV of vehicle x 10%
For personal & office use: Taxable
Conveyance allowance Taxable
Cost or FMV of vehicle x 5%
Note: Any other case or information regarding conveyance shall not be
taken into consideration for tax purpose.
Provident Fund:
a) Employee's contribution to:
i) Government Provident Fund (Aready included in salary) xxxx -----
ii) Unrecognized Provident Fund (Aready included in salary) xxxx -----
iii) Recognized Provident Fund (Aready included in salary) xxxx ------
b) Employer's Contribution to:
i) Government Provident Fund Exempt ------
ii) Unrecognized Provident Fund Exempt ------
iii) Recognized Provident Fund xxxx
less: 10% of salary OR Rs.100,000(whichever is less) xxxx Taxable
c) Profit or Interest on:
i) Government Provident Fund Exempt -----
ii) Unrecognized Provident Fund Exempt ------
iii) Recognized Provident Fund xxxx
less: Exempt upto 16% or 1/3 of salary(whichever is less) xxxx Taxable
d) Accumulated balance received from:
i) Government Provident Fund Exempt -----
ii) Unrecognized Provident Fund Exempt -----
iii) Recognized Provident Fund
(Employer's contribution and interest thereon) Taxable
Note: For the exemption in Provident Fund, salary means
Basic Salary + Dearness allowance.
Income from Property U/S 15: Rs. Rs.

PROFESSOR AAMIR ABBAS GCC SHAHPUR SADAR


Typed By: Muhammad Safdar(Pupil)
4

Rent received/Receivable or FMR (whichever is higher) xxxx


Add: 1/10 of un-adjustable advance xxxx
For feited amount token money xxxx
Burden of the land lord paid by tenant xxxx
Irrecoverable rent received (Note-I) xxxx
Rent Chargeable to tax(RCT) xxxx
Less: Deduction allowed: xxxx
Repair charges -1/5 of RCT(NOTE-2) Rs.xxxx
Any tax regarding property:
Porperty tax xxxx
Corporation /Municipal taxes xxxx
Local taxes or rate etc. xxxx
Fire insurance premium xxxx
Legal expenses for suit of property in court xxxx
Ground rent xxxx
Interest on money borrowed for property xxxx
Shares of rent paid to HBFC/Scheduled Bank xxxx
Adminstration/Rent collection charges (Note-3) xxxx xxxx xxxx
Notes: 1) where a rent could not be recovered it is allowed as deduction.
if in succeeding years this amount is recovered.(whether full or any part of it), it is
add in the rent chargeable to tax for the year in which it is received.
2) Repair allowance equal to 1/5th of the RCT is allowed as deduction
Actual expenditure on repair has no concern with the computation
of Taxable income from property.
3) Administration/Rent collection charges equal to lesser of actual expenses or 6%
of RCT is allowed as deduction.

INCOME FROM BUSINESS U/S 18:


Profit on the sale of timer /yarn Taxable
Profit on the purchase and sale(trading) of agricultural produce Taxable
Profit from renting out agricultural/textile machinery or other items Taxable
Income derived from event management activities Taxable
Income derived from poultry farming business Taxable
Income derived from fish catching/farming business Taxable
Income from royalty received as professional writer Taxable
Income from network designing business Taxable
Income from fruit processing business Taxable
(Exempt for (5) years it set up between 01-07-2014 to 30-06-2017
in Balochistan,Malakand,Gilgit and FATA)
Income from educational institute established for profit Taxable
Income from educational institute established not for profit Exempt ----
Income from the export of computer software Exempt ----
CAPITAL GAINS U/S 37, 37A, & 37(1A)

PROFESSOR AAMIR ABBAS GCC SHAHPUR SADAR


Typed By: Muhammad Safdar(Pupil)
5

1) Gain on sale of shares of Public/listed company, PTCL


vouchers, NIT units or Modaraba Certificates
(Holding period 48 months or more) Exempt

If holding period is less than 48 months then gain shall be taxable


as separate block income.
Loss on sale of above mentioned securities is only adjustable against
the gain on sale of such securities.
2) Gain on sale of shares of industrial undertaking set up in export
processing zone (EPZ) Exempt
3) Gain on sale of shares of private/unlisted company, jewllery,
antique, painting and medallion etc.

i) Within 12 Months:
Gain xxxx
less: Capital loss xxxx Taxable
ii) After 12 Months:
Gain xxxx
less: 25% of gain xxxx
less:Capital loss xxxx Taxable
4)Gain on sale of immovable property:

i) If holding period more than 24 months Exempt


ii) If holding period upto 24 months then gain shall be taxable as
separate block income

Gain on sale of a painting, a sculpture, jewellery, a rare manuscript


a postage stamp, a coin, medallion or an antique etc. is taxable according to the
rule but loss on sale of such capital assets are not set off/adjusted against any
capital gain.
Note: i) If capital loss is given but capital gain is not given then such
capital loss sahll not be set off/adjusted.
ii) Loss on exempted capital assets is also not set off/adjusted.
Iii) Gain on sale of "Bonus shares" shall be treated according
to rules mentioned above [ Rule (1), (2), &(3)] for tax
purpose.
INCOME FROM OTHER SOURCES U/S 39
Rent of furniture or machinery (not being a regular activity) Taxable
Royalties received as non-professional writer Taxable
Gift from father, mother or any other person Exempt
Birthday present received Exempt
Insurance money received on maturity of policy Exempt
Cash award or medal received from President of Pakistan Exempt
(From other than president -Taxable)
Amount received from abraod Exempt
Gain on sale of residential furniture/Personal car Exempt

PROFESSOR AAMIR ABBAS GCC SHAHPUR SADAR


Typed By: Muhammad Safdar(Pupil)
6

Annuity received from Pakistan Postal Annuity Certificate Taxable


Income from sub letting of property Taxable
Ground rent received Taxable
Sale of irrigation water Taxable
Rental income of lift installed in Plaza Taxable
Scholarship received from HEC for PH.D Exempt ---
Rental income from building let out together with plant & machinery Taxable
Encashment of DSC/other deposit certificates Exempt
Amount received for vocating the property:
=Amount received -Amount paid as advance x1/10 Taxable
Name of Taxpayer
Tax year:2016
Tax year ended: June 30, 2016
Computation of Taxable income and Tax Payable
Income from Salary U/S 12 (chapter#5) Rs. Rs.
Income from Property U/S 15 (chapter#6) xxxx
Income from Business U/S 18 (chapter#9) xxxx
Capital Gains U/S 37 (chapter#10) xxxx
Income from other sources U/S 39 (chapter#11) xxxx
Total income xxxx
less: Deduction allowed:
i) Zakat paid/deducted under Zakat & Ushr Ordinance xxxx
ii) Payment to worker's welfare fund/participation fund xxxx
iii) Donation to approved institutions specified in the
Clause 61 of the Second Schedule of the Ordinance.
[30% of income or actual amount of donation
whichever is less] xxxx

iv) Profit on debt used for acquisition of house or construction


of a new house [Actual amount or Rs. 1,000,000 or 50%
of taxable income - W.E.L.] xxxx xxxx
Taxable income (excluding share from AOP) xxxx
Add: Share of profit from AOP (only for rate purpose) xxxx
Taxable income (excluding share from AOP) xxxx

PROFESSOR AAMIR ABBAS GCC SHAHPUR SADAR


Typed By: Muhammad Safdar(Pupil)
7

Computation of Tax Payable:


1) Tax according to the specified rates(See note-1)
2 Tax on actual taxable income/Taxable income excluding share from AOP:
= Tax payable
X Taxable income excluding
Taxable income including
share from AOP

3) Less: Tax reduction in case of senior citizen & disabled person @ 50% of tax
payable if:
i) In case of senior citizen: Age of taxpayer is 60 years or above on the first
day of tax year (OR) in case of disabled person: the person should hold CNIC for
disabled person.
ii) Taxable income during the tax year is upto Rs.1,000,000.
Less: Tax reductin @ 40% of tax payable on salary income in case of a teacher or
researcher employed in a non-profit educational or research institution.
Less: Tax credit in case of foreign source income:

i) Foreign tax paid xxxx


ii Tax payble
Foreign income xxxx
Taxable income
[whichever is less between (i) &(ii)]
6) Less: Average Relief/Rebate:
Tax payable
Amounts admissible for relief
Taxable income
Amounts Allowed/Admissible for Average Relief:
Following amounts are admissible for average relief:
a) Investment in shares of public companies /life insurance:
i) Actual investment/insurance premium; or
ii) 20% of taxable income ;or
iii) Rs.1,500,000
[whichever is less, so]
b)Contribution to approved pension fund:
i) Actual contribution ; or xxxx
ii) 20% of taxable income;
[whichever is less; so]
c) Donation to approved or government institutions:
i) Actual donation; or xxxx
ii) 30% of taxable income; or
[whichever is less; so] xxxx
(In case of companies 20% of taxable income)
Total amount admissible/allowed for average relief xxxx

PROFESSOR AAMIR ABBAS GCC SHAHPUR SADAR


Typed By: Muhammad Safdar(Pupil)
8

7) Less: Tax credit @ 2.5% of tax payble to a registered manufacturer under Sales
Tax Act if he sells 90% of his goods to registered persons.
Add: Tax on separate block income:
i) Capital gain on public/listed company shares or modaraba certificates etc.
a) Holding period less than 12 months @ 15%
b)Holding period 12 months but less than 24 months @ 12.5%
c) Holding period 24 months but less than 48 months @ 7.5%
d) Holding period 48 months or more @ 0%(Exempt)

iii) Compensation received on termination of services or early


retirement or loss of employment and as golden handshake @
average tax rate of last 2 or 3 years.
9) less: Tax deducted at source / advance tax:
i) Tax deducted from salary or by employer.
Ii) Tax paid on the purchase of air ticket:
=> Domestic @ 5%
=> International (Economy @ 0%, other than economy Rs. 12,000
and first/executive class Rs. 16,000)
iii) Tax on property income (See Note-2)
iv) Tax deducted on cash withdrawal from bank if withdrawal is more
than Rs. 50,000 on a single day @ 0.3% for filer and @ 0.6% for
non-filer on whole amount.
v) Tax collected on purchase of motorcar or with motor vehicle tax
vi) Tax paid on telephone bill exceeding Rs. 1,000 @ 10% of the
exeeding amount. Tax paid by the subscriber of internet,
mobile phone and prepaid internet or telephone card @14%.
vii) Remuneration for services rendered not under employment
agreemnt e.g., examiner-ship/paper setting /paper checking etc.
@ 10% for filer and 15% for non-filer.
viii) On saler or transfer of immovable property @ 0.5% for filer and of
the gross value.
ix) On purchase of immovalbe property @ 1% for filer and 2% for
non-filer if the value of property is more than Rs. 3,000,000.
x) On functions and gtherings @ 5% of the total amount of bill.
xi) On fee paid to educational institution exeeding Rs. 200,000 @ 5%
xii) On domestic electricity bill @ 7.5% if the amount of monthy bill
is Rs. 75,000 or more.

PROFESSOR AAMIR ABBAS GCC SHAHPUR SADAR


Typed By: Muhammad Safdar(Pupil)
9

PROFESSOR AAMIR ABBAS GCC SHAHPUR SADAR


Typed By: Muhammad Safdar(Pupil)