1. Mr Umar Javed was working as a marketing head with an FMCG company in Pakistan and received the following:
a. Basic Salary Rs 150,000 per month
b. House Rent allowance Rs 50,000 per month
c. Utilities allowance Rs 10,000 per month
d. Provident Fund @ 10% of basic salary was deducted and an equal amount contributed by the company on which interest was credited at 8% on the account amount of Rs 1 million. The provident fund is approved.
e. A Honda civic car of Rs 3 million exclusively for official use.
2. Mr Umar also owns a house which he has given on rent. The house is assessed at Rs 300,000 by property tax authorities and has been on rent from September 1st till the end of the year and the next years as well. Monthly rent is Rs 22,000. In the period July to September the house was vacant.
3. Shares in Colgate Palmolive Public Limited were sold for Rs 500,000. These shares were acquired 4 years ago at a cost of Rs 200,000.
4. A painting purchased at a cost of Rs 100,000 was sold for Rs 75,000 in the same year.
5. Dividend was received from various shares amounting to Rs 100,000. Tax has been withheld by the companies at the relevant rate.
6. He donated Rs 45,000 to an approved charitable institution.
7. In January he sold his personal car to his brother at a price of Rs 350,000 which he bought four years ago at Rs 900,000 and the current fair market value was Rs 800,000.
Requirement:
1. Clearly show the working for the total tax due from him at the end of the tax year and the net payment required (after making the necessary assumption of withheld taxes). Use the relevant format, i.e. a one pager showing all calculation for each detail above with references for each working. Each working as part of an annexure should clearly show working and explanation for the treatment followed.
2. For point 3 above explain how this tax could have been avoided.
3. For point 6 above explain how the tax credit on giving charity could have been inadmissible as a deduction.
