Question Analysis

TAXATION I
Knowledge Level

1. Mr. Mac a foreign national says in Bangladesh for 80 days during the financial year 2008-2009.
Determine his residential status for the assessment year 2009-2010 from the following information
that he stayed in Bangladesh previously as follows: 5

Assessment Year No. of days stayed

2003 – 2004 20 days
2004 – 2005 350 days
2005 – 2006 180 days
2006 – 2007 310 days
2007 – 2008 60 days
2008 – 2009 110 days

2. P Ltd. Bought a machine for Tk.10,00,000; written down value of which is Tk.3,00,000. It was sold
for Tk.2, 00,000. What would be the tax impact? 4 June-11
3. Find out the income year and assessment year of the assessed whose account year ends on the
following dates: 5 Dec-11
a. 30.06.2011
b. 15.09.2010
c. 31.12.2010
d. 15.03.2009
e. 31.07.2009
4. Mr. Khan aged 66 years has the following house property income for the year ended June 30, 2011.
How much tax does he have to pay for his following income? 10 Dec-11
(i) Rent received for the year Tk.6, 00,000;
(ii) Annual value of his house Tk.6, 50,000; (Determined by the tax authority)
(iii) He spent for repairing his house Tk.25, 000;
(iv) Ground rent paid Tk.5, 000;
(v) Collection of charges or rent 2% of the total rent;
(vi) Paid guard’s salary maintained for his house Tk.24, 000;
(vii) Liftman was paid salary Tk.30, 000;
(viii) Insurance premium paid Tk.25, 000;
(ix) He paid bank interest due to mortgage of the house Tk.10, 000;
(x) Land development Tax paid to Government Tk.12, 000.
4. Mr. Jalal has earned income from various sources in the Income year 2010-2011 which are as
follows: 6
i) Salary income earned and payable in Bangladesh Tk. 1,00,000
ii) Profit of Tk. 40,000 from a business in London has been brought in Bangladesh. The
business has been managed and controlled from London.
iii) Profit of Tk. 60,000 from a business in Singapore has not yet been brought in Bangladesh.
The business has been managed and controlled wholly from Singapore.
iv) Fees for professional services of Tk. 70,000 for a consultancy in Dubai has not yet been
brought in Bangladesh.
 Compute the amount of total income of Mr. Jalal, assuming that he is a
a) Resident
b) Non- resident

Charge of Tax
1. Determine Minimum Tax of a Private Limited Company under section 16CCC of the Income Tax
Ordinance, 1984, on the basis of following information: 6 Dec-11
Business Loss Tk. 4, 50,000/=
Bank Interest Tk. 2, 50,000/=
Sales Tk.2, 00, 00,000/=

Computation of income Tax

1. Mr. Rahman is an employee of Publicly Listed Company who received the facilities under the
following heads as salaries and allowances in a year. 3 June-10
i. Basic Salary
ii. House Rent Allowance
iii. Festival Bonus
iv. Leave Encashment Salary
v. Conveyance Allowance
vi. Contribution to Recognized Provident Fund
vii. Servants Wages
viii. Children Educational Allowance
ix. Leave fare Assistant
x. Bungalow Utilities
Ascertain the heads of perquisites from the above

2. Mr. Amin has been working as General Manager in ABC Ltd. during the income year
ended June 30, 2009. He has the following income: 10
1) Basic Salary Tk. 25,000 pm
2) Festival Bonus Equivalent 2 months basic salary
3) Free furnished accommodation
4) Employer’s and Employees’ Contribution to P.F @ 10% of the basic Salary
5) Car used partly for business and partly for personal
6) Life Insurance premium paid for himself and for his wife Tk. 30,000
7) He purchased Bangladesh Sanchaya Patra for Tk. 100,000
8) He earned Interest on Savings Bank Account (Gross) Tk. 100,000
Calculate his Total Income and Tax Liability mentioning the assessment year.

4. From the following profit and loss account of Mr. Alam for the year ended June 30, 2009, ascertain
his taxable income from the business and also his total tax liability: 16 Dec-10

Office salaries 24,800 Gross profit 215,532

General expenses 22,550 Commission 23,205
Bad debts 22,100 Discount 2,751
Reserve for doubtful debts 23,000 Sundry Receipts 252
Fire insurance premium 2,450 Bad debts recovered 2,150
 Advertising 22,500 Interest on Govt. Securities 22,640
Income Tax 22,375 Capital gain in sale of shares of listed company 22,100
Interest on capital 21,000
Interest on Bank loan 21,550
Loss on Building by fire
(uninsured) 1,500
Depreciation 1,200
Net Profit 1,03,605
288,630 288,630

Notes:
1. General expenses include Tk.2,500 given as donation to an unapproved institution and an
amount of Tk.3,500 being the cost of a permanent signboard fixed on the shop has been included
in advertisement.
2. The allowable depreciation under the law is Tk.3,000.

5. State whether the following are capital or revenue expenditures: 5 Dec-10

1. Sums paid as compensation in the ordinary course of business.
2. Cost incurred in transferring plant from one set of premises to another.
3. Price paid for purchase of patents.
4. Payment for acquiring the right to use secret manufacturing process.
5. Advertisement charges ordinarily incurred.
6. Expenses incurred in connection with the issue of debentures.
7. Sums spent for construction of a factory.
8. Legal expenses for drafting partnership agreement / memorandum of association.

6. Mr. Ali, a retired Government official owns a two storied house in Gulshan, Dhaka. He along with
his family occupies the ground floor while the upper floor has been let out to Mr. Alam from 1st
July 2008 for a monthly rental of Tk. 100,000 and before that it was vacant for about 6 months. He
has constructed the house with a loan of 20 lacs from a commercial bank and paid interest of
Tk.225, 000 during construction period from February 2007 to December 2007. During the
financial year 2008-2009 he has paid Tk.5 lacs to the bank including Tk.90, 000 as interest. His
other expenses in relation to the property are: 15 Dec-10
a) Repairs & maintenance 150,000
b) Insurance on the building 25,000
c) Municipal tax 50,000
He does not have any other income. Compute the property of Mr. Ali for the relevant assessment
year, assuring that the municipal value of the property is Tk.350, 000 and also compute his tax
liability.

8. Ahmed Ahmed Ltd. Filed their income tax showing income of Tk.660,090 for the year ended
December 31, 2009. On scrutiny of the documents submitted by the Company, the DCT made the
following observations while completed the assessment:
a) Office Rent paid Tk.600, 000 to the Land Lord against which no income tax was deducted.
b) Staff salaries paid during the year were Tk.2,550,000 against which required income tax were
deducted but no VAT has been deducted.
 c) An amount of Tk.300, 000 paid to a Director as Loan has been debited as Directors
remuneration.
d) General expenses include Tk.50, 000 being the advertisement expenses as published in the
souvenir of a Rotary Club.
e) An amount of Tk.600, 000 paid as employer contribution to recognize Provident Fund has
been debited to Profit & Loss Account.
f) Bank charges includes Tk.15, 000 spent for taking loan for purchase of file cabinet to be used
in the residence of the Managing Director.
g) Accounting depreciation to the amount of Tk.560, 000 has been debited in the account as
against the allowable depreciation of Tk.650, 000.
h) Entertainment Expenses claimed Tk.450, 000.
From the above compute the total income and tax liability of the company mentioning the
assessment year. 15 June-11

9. Mrs. G. Akhter, General Manager of a Private Limited Company, had the following for the year
ended June 30, 2010:
Basic pay Tk.35, 000 p.m.
Festival Bonus Tk.70, 000 p.m.
House Rent Allowance Tk.15, 000 p.m.
Entertainment Allowance Tk. 1,000 p.m.
Medical Allowance Tk. 5,000 p.m.
She has been provided with a car for official and private use. Employer’s contribution to recognized
P.F. is @10% of the Basic Pay. She is entitled to 2 months Basic pay as gratuity at the time of
retirement.
a) Income from the trading of share business of a listed company during the year were
Tk.525, 000
b) She has earned Tk.1, 500,000 by transferring her share of a private Ltd. company during the
year.
Mrs. Akhter purchased 5 years Bangladesh Sanchay Patra for Tk.50,000.
Compute total income and tax liabilities of Mrs. G. Akhter for the assessment year 2010‐2011. 10
June-11

10. XYZ Ltd. is a private limited company engaged in the business of supply of goods and execution of
contract. The following information has been extracted from the books of account of XYZ Ltd. For
the year ended 30 June 2011: 15 June-11
(i) Profit as per Income Statement Tk.50, 00,000/=
(ii) Tax deducted at source from the payments made on account of supply of goods and
execution of contract Tk.9,37,500/=
(iii) Income from Dividend Tk.5, 00,000/=
(iv) Payment made by way of commission from which tax has not been deducted at source Tk.1,
00,000/=
(v) Payment of salary made in cash to the employees having gross monthly salary of Tk.15,
000/= or more Tk.2,00,000/=
(vi) Disclosed turnover Tk.10, 00, 00,000/=
(vii) Overseas travelling expenditure Tk.Tk.10,50,000/=
(viii) Excess perquisites Tk.1, 50,000/=
(ix) Capital gain from sale of fixed assets Tk.5, 00,000/=
(x) Tax deducted at source from the dividend income Tk.1, 00,000/=
 Compute the tax liability of the company based on the aforementioned information for the
assessment year 2011-2012.

11. Mr. S. Alam is a Chartered Accountant in practice. He has the following income for the year ended
June 30, 2011. 17 Dec-11

Taka
01. Share income from CA firm (Taxed) 4, 99,454
02. Interest income (Gross):
a. Interest income from leasing company 12, 27,085
b. Bank interest on fixed deposit 5, 39,380
c. Bank interest on saving account 49,056
03. Dividend income (Gross) 6,500
04. Income from ICAB as examiner fees etc. 3, 07,300
05. Income from Business 58,212
06. Capital gain on sale of shares of a publicly listed company 69,032
07. Income from Govt. Prize bond lottery (Gross) 10,000
He has the following investment during the year 2010-2011:
Bangladesh Sanchya Patra 2, 00,000
Life insurance premium 28,200
Primary shares of Ananda Shipyard & Shipways Ltd. 8, 00,000
During the year he has paid Tk.99, 800 as advance tax.
His total wealth during the year is Tk.3, 20,55,500.
Compute the total income and tax payable by Mr. S. Alam.

13. Mr. Khan submitted the following information for the income year 2010-2011: 16 June-12
Monthly basic salary Tk.50, 000/=
Annual festival bonus 2 months’ basic salary
Monthly house rent allowance Tk.20, 000/=
Monthly conveyance allowance Tk.5, 000/=
Annual medical allowance Tk.60, 000/=
Employer of Mr. Khan provides him with a car partly for private use. Mr. Khan is a member of the
recognized provident fund. He contributes 10% of his basic salary to the recognized provident fund
in which the employer also contributes the equal sum. Mr. Khan owns a two-storied building
located at bananI in Dhaka, one floor of which is used by him as his residence and the other floor is
let out at a monthly rent of Tk.50,000/=. The tenant uses the flat for residential purpose. In
connection with the building, the following expenditures were incurred by Mr. Khan in the income
year 2010-2011:
Land development tax Tk.10, 000/=
Repairs Tk.15, 000/=
Expenditure for collection of rent Tk.5, 000/=
Water and sewerage Tk.12, 000/=
Electricity Tk.12, 000/=
Salary of guard and caretaker Tk.30, 000/=
Insurance premium Tk.15, 000/=
The building was constructed in the year 2008 with borrowed capital, balance of which stands at
Tk.10, 00,000/= as of 1st July 2010. Mr. Khan paid interest of Tk.1,00,000 on the said borrowing
for the income year 2010-2011. The flat let out was vacant for 1 month in the aforementioned
 income year. Mr. Khan invested Tk.84, 000/= in a deposit pension scheme sponsored by a bank. He
also paid Tk.50, 000/= as life insurance premium.
Calculate the total income and the tax liability of Mr. Khan on the basis of above information for
the assessment year 2011-2012.

14. X Ltd., a private limited company, reports net profit (before tax) of Tk.20,00,000/= for the year
ended 30 June 2011. The following information as regards income year 2010-2011 has been
extracted from the books of account of X Ltd.: 16 June-12

(i) Profit from sale of shares of companies listed on stock exchanges Tk.5, 00,000/=
(ii) Income from Dividend Tk.1, 00,000/=
(iii) Payment made by way of Technical Know-how fee Tk.5, 00,000/=
(iv) Payment of office rent for which VAT has not been deposited in government treasury
Tk.1, 00,000/=
(v) Provisions for Gratuity Tk.1, 00,000/=
(vi) Gratuity Paid Tk.50, 000/=
(vii) Financial Depreciation Tk.3, 00,000/=
(viii) Depreciation as per 3rd Schedule of the ITO, 1984 Tk.1, 50,000/=
(ix) Tax deducted at source from the dividend income Tk.20, 000/=
(x) Expenditure incurred on account of Corporate Social Responsibility Tk.1, 00,000/=
(xi) Loan received from Y Ltd. otherwise than by crossed cheque or by bank transfer
Tk.3, 00,000/=
(xii) Trading liability, which was incurred in the income year 2006-2007 Tk.50, 000/=
Compute the tax liability of the company based on the aforementioned information for the
assessment year 2011-2012.

15. ABC Ltd. purchased a machine in the year 2006 at Tk.5,00,000 and sold the same in November
2010 at Tk.3, 50,000. The written down value is Tk.3,00,000. The year end of the company is
December.
Calculate business profit or loss and also the capital profit or loss, if any, for the relevant
assessment year. 5 June-12
b) Data in respect of Mr. Kamal for the year ended on 30 June 2011 is as under:
Salary Income Tk.1, 76,000
Other Income Tk. 10,000
Total Income Tk.1, 86,000
Investment in Shares of listed companies Tk. 30,000

Calculate tax payable by Mr. Kamal. 5 June-12

16. ABC Ltd., a private limited company, filed its Income Tax Return showing net income of
Tk.6,75,300 for the year ended 30 June 2011. On examination of papers submitted at the time of
hearing, the Deputy Commissioner of Taxes comes across the following information:

a) Salary claimed at Tk.2, 000,000 includes an amount paid to Production Manager at

Tk.4,00,000 against which no tax has been deducted.
 b) An amount of private loan of Tk.2, 000,000 which was added to income in the assessment of
the immediate proceeding year on the ground of the same being not paid within three years has
been paid in the income year.
c) Tk.2, 000,000 for staff welfare fund, Tk.75,000 for sinking fund and Tk.3,30,000 for taxation
reserve fund debited to profit & loss account.
d) Bank charges claimed at Tk.76, 306 include Tk.10, 000 in respect of expenditure for loan
procurement.
e) Amount of depreciation charged to the accounts was Tk.2, 56,700 whereas amount allowable
against depreciation was Tk.4, 70,900.
f) Entertainment expenses claimed were Tk.7, 000,000.
From the above, compute the total income and tax liability of the company. 10 June-12

18. From the following particulars compute the total income and tax liability of Mr. Akram for the
income year ending 30 June, 2012:- 20 Dec-12

(a) Salary Income:

Basic salary Tk. 20,000 p.m.
Entertainment allowance-20% of basic salary.
Bonus – equivalent to 2 months’ basic salary.
Free accommodation (out of which 1 room was sub-let by Mr. Akram for Tk.3,000 p.m.)
Medical allowance- Tk. 500 p.m.
Conveyance allowance-Tk. 1,200 p.m.
Subscription to Approved PF-10% (Employer also contributed the same).
(b) Interest on Securities:
Interest on SEC approved debenture - Tk. 10,000.
Interest on Government securities -Tk.70,000 (TDS @ 10% Tk.7,000
(c) Income from House Property:
Mr. X has one residential house-one half of which is let out at a monthly rent of Tk. 50,000
and
the other half is self-occupied.
Following actual expenditures were incurred by Mr. X for the full house:
Municipal tax Taka 20,000
Repairs and maintenance Taka 60,000
Insurance premium Taka 12,000
Salary of caretaker Taka 30,000
Interest on house building loan Taka 1,47,000 (total loan amount Tk. 32,00,000)
(d) Capital Gain:
Gain from sale of shares of listed companies Tk. 5,27,335.
(e) Income from Other Sources:
Cash dividend (net) from a listed company Tk. 45,000.
Interest (net) on savings bank account Tk. 5,400.
(f) During the year Mr. X made the following investments:-
(1) Life insurance premium in the name of his dependent old father Tk. 60,000 (Policy Value
Tk. 5,00,000);
(2) Investment in secondary shares of listed companies Tk. 1,00,000;
(3) Donation to Prime Minister’s relief fund Tk. 10,000.
19. You are given the following Profit and Loss Account of ABC Company Ltd. for the year ended 31st
December, 2011: 20 Dec-12
Particulars Taka Particulars Taka

Cost of Goods Sold 35,00,000 Sales Dividend 89,80,000

Salaries and Allowances 42,50,000 Interest on Bank 16,000
Rent and Electricity 1,90,000 Deposit Profit on 14,400
Telephone and Postage 30,000 Sale on Machine 30,000
Interest on Loan 35,000 Interest on 10,000
Traveling Allowance 25,000 Government
Legal Expenses 14,000 Securities
Advertisement 31,000 Sundry Income 5,000
Charity 10,000 Refund of Income 30,000
Audit Fees 25,000 Tax
Income Tax paid in Advance 2,00,000 Bad Debt
Fines 20,000 Recovered 71,600
Contribution to Provident Fund 20,000
Entertainment 54,000
Depreciation 1,80,000
Net Profit 5,73,000
Total 91,57,000 Total 91,57,000

(1) Depreciation allowed by income tax authority was Tk. 1,15,000.

(2) Salaries and Allowances included Tk.10,50,000 from which taxes were not deducted at source.
Moreover excess perquisites were given Tk.3,70,000. All salaries were paid in cash. Salaries included
incentive bonus of Tk.6,00,000.
(3) Interest on loan was given to a sister concern. The loan amount was Tk. 3,50,000 though it was not
received through bank transfer or crossed cheque but it was properly reflected in both the audited
accounts.
(4) Legal expenses included Tk. 10,000 paid for Income Tax Appeal.
(5) Travelling allowance included Tk. 20,000 paid to the General Manager for overseas traveling in
connection with business.
(6) The machine sold was purchased six years ago and its book value was Tk. 42,000 but its written
down value as per Income Tax law was Tk.12,000. The cost price and the sales price of the machine
were Tk. 62,000 and Tk. 72,000 respectively.

Required:
Determine the Tax Liability of the Company assuming it to be a listed company.
Value Added Tax

2. An Electronic Goods importer Mr. Akber purchased electronic parts at the month of December of
2008 and sold it to Khaer & Co. for Tk. 40, 00,000. Using these parts Khaer & Co. assembled 400
Pc of colour TV and sold it to East‐West Electronic Co. for Tk. 56,00,000/‐ who is a wholesaler.
East‐West Co. sold that goods (TV) to retail saler Lemo Int. for Tk. 80,00,000/. In each case and
each stage 15% VAT was counted. Determine VAT in each case. 10 June-10

2. ABC Ltd. produces Duplex Board, declaring its price at Tk.100, 000 per metric ton. Received an
order on 20 June, 2008 from Lafaz Surma Cement Ltd. to deliver 500 metric tons of duplex board
on 25 June, 2008. It intended to deliver the goods on 25 June, 2009 if VAT could be paid by then.
The company had a VAT deposit balance on the morning of 25 June, 2008 in the amount of
Tk.10, 00,000.

Calculate the amount to be deposited by the company 25 June, 2008 to enable it to dispatch the goods on
that date. 5 Dec-10

b) Mr. Habib is a VAT registered trader. He has the following transactions in the month of July 2009:
a) Goods purchased for Tk.57, 500 including VAT
b) The above goods have been sold for Tk.80, 500 including VAT
c) Tk.3, 000 deposited to Bangladesh Bank for VAT Current A/c
d) Out of the sold goods Tk.4, 600 have been returned
e) VAT return submitted after adjusting the input and output VAT.
Give the journal entries and show how these transactions will be disclosed in the financial
statements.