This document will help you in tax studies. In this document a complete tax process is given which is very easy to understand for everyone.

1. Assessment of
Salaried
Individual Person
Tax Year 2023

2. Sources of Income
• Income from Salary (Section 12)
• Income from Property (Section 15)
• Income from Business (Section 18)
• Income from Capital Gains (Section 37)
• Income from other sources (Section 39)

3. Recall, Difference between
Total Income & Taxable Income
Head Total Exempt Taxable
Basic salary 400,000 -- 400,000
Conveyance allowance 100,000 -- 100,000
Medical Allowance 120,000 40000 80000
Agricultural income 500,000 500,000 0
11,20,000 580,000

4. Calculation of Income from Salary (Section 12)
• Concept of MTS, Basic Salary (Ref: i=4)
• Accommodation (Ref: i=5-8)
• Conveyance (Ref: i=9-12 )
• Medical Charges, Hospital Charges or Medical
allowance
• Entertainment
• Loan to Employee
• Special Allowance

5. MTS
Scale BPS-17 (45070-3420-113,470)

6. (i=4)
• Basic Salary +
Bonus
Commission
Overseas allowance
Cost of living allowance
Dearness allowance

8. Accommodation
PARTICULARS TAX TREATMENT
a. House Rent Allowance
[illustration 5]
Totally Taxable
b. Accommodation facility,
[illustration 6, 7]
Taxable
a) Rent entitlement OR
b) 45% of MTS
Whichever is higher
c. Accommodation facility, small city
[illustration 8]
Taxable
a) Rent entitlement OR
b) 30 % of MTS
Whichever is higher
Notes:
i. If MTS not given, then take Basic salary
ii. No difference in furnished and unfurnished accommodation

10. Practice Numerical
Mr.(Miss) CR is working in ABC Company.
Particulars about his salary are given below
• Basic Salary Rs. 50,000 p.m. [40,000-2000-80,000]
• Bonus Rs. 25,000 p.m.
• Commission 300,000 p.a.
• Accommodation facility is provided to
employee, house allowance Rs. 30,000 pm was
provided to him if accommodation facility not
provided
Required: Calculate Taxable Salary Income

11. Answer:
Rs. 15,60,000

12. Conveyance
PARTICULARS TAX TREATMENT
a. Conveyance allowance
Practice: Illustration # 09
Totally Taxable
b. Conveyance facility, for personal use
Practice: Illustration # 10
Taxable 10% of cost
of motor vehicle
c. Conveyance facility, for both purposes
Practice: Illustration # 11
Taxable 5% of cost of
motor vehicle
d. Conveyance facility, leased
Practice: Illustration # 12
Taxable
i. 10% of fair market value
ii. 5% of fair market value

14. Medical Charges, Hospital Charges or
Medical allowance
PARTICULARS TAX TREATMENT
a. *Medical charges, facilities or
reimbursement
Totally Exempt
b. Medical Allowance Exempt upto 10% of
basic salary
Practice: Illustration # 13

16. Entertainment
PARTICULARS TAX TREATMENT
a. Coffee, Tea facility or reimbursement Totally Exempt
b. Entertainment Allowance Totally Taxable

17. Loan to Employee
Subsidized/concessional loan to employee by employer
 Benchmark rate is 10% (for calculation of concession)
 Rule is applicable when loan amount exceeds Rs
1,000,000
Practice: Illustration # 14

18. Special Allowance
PARTICULARS TAX TREATMENT
Special allowance (TA/DA, Uniform
allowance, shave allowance)
Totally Exempt
Special Allowance Given on regular
basis
Totally Taxable

19. Self Practice Problem-1
Calculate taxable income of Mr. Khalid Mahmood
(30000-2000-50000) for the tax year 2022.
1) Basic salary Rs 40,000 p.m.
2) Bonus Rs. 50,000
3) Cost of living allowance Rs 20,000
4) Rent free accommodation provided to him. If
accommodation was not provided to him, allowance Rs.
20,000 pm would be admissible.
5) Conveyance provided by employer for both purposes, cost
of motor vehicle Rs. 12,00,000
6) Medical expenses reimbursement Rs. 200,000
7) Entertainment allowance Rs 2000 pm
8) Concessional loan @ 3% to employee 12,00,000
9) TA/DA Rs. 25,000

20. Answer
Taxable income
Rs 9,58,000

21. Provident Fund
 What it is
 Types of provident fund
 Working of provident fund
 Tax treatment of fund amounts
Practice: Illustration # 15,
Problem 18

22. Tax Treatment of Provident Fund
GPF RPF URPF
Employee's Contribution NTT NTT NTT
Employer's Contribution TE NTT
Interest Credited on Contributions TE NTT
Receipt of Accumulated Balance TE NTT

24. Tax Treatment of Receipt of Accumulated
Balance to Unrecognized Provident Fund
No Tax Taxable
Employee's Contribution (All) xxxx
Interest Credited on Employee’s Contribution xxxx
Employer's Contribution (All) xxxx
Interest Credited on Employer’s Contribution xxxx
Taxable Amount XXX

25. Tax Treatment of Employer’s Contribution
to Recognized Provident Fund
Employer’s Contribution xxxx
Less: Exempt
a) 10% of Basic Salary OR xxxx
b) Rs. 150,000 xxxx
whichever of (a) or (b) is less, exempt xxxx
Taxable Amount XXX
P-18

26. Tax Treatment of Interest Credited to
Recognized Provident Fund
Interest Credited @ ___ xxxx
Less: Exempt
a) Interest amount at 16% xxxx
OR
b) 1/3 of Basic Salary xxxx
whichever of (a) or (b) is less, exempt xxxx
Taxable Amount XXX
Note: in case (a) is not given in question, then only (b) will be applied
P-18

27. Recognized Provident Fund
Demonstration
• Basic Salary of Mr ABC Rs. 10,00,000
• Employee Contribution 110,000
• Employer’s Contribution Rs. 110,000
• Interest credited @ 20% Rs. 200,000

28. Tax Treatment of Employee’s Contribution
to Recognized Provident Fund
Employee’s Contribution
Employee’s Contribution 110,000
Already included in Taxable Income -----
Taxable Amount ----
P-18

29. Tax Treatment of Employer’s Contribution
to Recognized Provident Fund
Employer’s Contribution 110,000
Less: Exempt
a) 10% of Basic Salary OR 100,000
b) Rs. 150,000 150,000
whichever of (a) or (b) is less, exempt 100,000
Taxable Amount 10,000
P-18

30. Tax Treatment of Interest Credited to
Recognized Provident Fund
Interest Credited @ 20% 200,000
Less: Exempt
a) Interest amount at 16% 160,000
OR
b) 1/3 of Basic Salary 333,334
whichever of (a) or (b) is less, exempt 160,000
Taxable Amount 40,000
Note: in case (a) is not given in question, then only (b) will be applied
P-18

31. Heading
Practice: Illustration # 16, 17 & 18

32. Heading to Numerical
1. Name of Taxpayer:
2. Tax Year
3. Tax Year Ended
4. Residential Status
5. Requirement of Question

33. Heading to Numerical
1. Mr ABC
2. Tax Year 2022
3. Tax Year Ended on 30.06.2022
4. Residential Status: Resident Individual
5. Computation of Taxable income and Tax
Payable

34. Deductions from total income
 Zakat paid under the Zakat and Ushar Ordinance
 Payment to workers’ welfare fund
 Payment to participation fund [Deleted TY 2023]
 Mark up on housing finance scheme [Deleted TY 2023]
Actual Markup paid OR
50% of total income OR
Rs. 20,00,000
Whichever is less, i.e. to be taken as deduction
 Children education (total income less than Rs 1500,000)
5% of total fee paid OR
25% of total income OR
Number of children X Rs 60,000
Whichever is less, i.e. to be taken as deduction
Practice: Illustration # 18A, 19 & 20

35. Self Practice Problem-1
Tayyaba Gull is employed in Agha Steel Industries in the scale
(60,000-5000-120,000). Data regarding her income are given
below for tax year ended on June 30, 2022.
1) Basic salary Rs. 80,000 pm
2) Cost of living allowance Rs. 100,000
3) Bonus Rs. 50,000
4) Accommodation facility provided by the employer. An allowance of Rs.
300,000 was provided to her if this accommodation was not given.
5) Conveyance facility provided by employer for both purposes. Leased
value of vehicle is Rs. 40,00,000 whereas fair market value is Rs. 2800,000
6) Medical allowance Rs. 100,000
7) Entertainment reimbursed Rs. 20,000
8) Subsidized loan to employee Rs. 1600,000 @ 6% interest p.a.
9) Uniform allowance Rs. 5000 pm
10) Data regarding recognized provident fund is given below
a) Employee Contribution Rs. 100,000
b) Employer Contribution Rs. 100,000
c) Interest credited @ 21% Rs. 210,000
11) Zakat paid under the Zakat Ordinance Rs. 150,000
12) Mark up on housing finance paid to Meezan bank Rs. 220,000

36. Answer
Total income
Rs 16,96000
Taxable income
Rs 13,26000

37. Self Practice Problem-2
Kashif Moqueem is employed in Bank Al Baraka. Data regarding
his income are given below for tax year ended on June 30, 2022.
1) Basic salary Rs. 800,000
2) Overseas allowance Rs. 10,000 p.m.
3) Commission Rs. 40,000
4) Accommodation facility provided by the employer in small city. Rent
Entitlement Rs. 250,000.
5) Conveyance facility provided by employer for personal purposes. Cost of
motor vehicle is Rs. 35,00,000
6) Medical reimbursement Rs. 200,000
7) Entertainment allowance Rs. 1,000 pm
8) Subsidized loan to employee Rs. 20,00,000 @ 0% interest p.a.
9) TA/DA Rs. 50,000
10) Data regarding recognized provident fund is given below
a) Employee Contribution Rs. 80,000
b) Employer Contribution Rs. 80,000
c) Interest credited @ 12% Rs. 240,000
11) Zakat paid Rs. 50,000
12) Payment to workers welfare fund. 120,000

38. Answer
Total income
Rs 17,72,000
Taxable income
Rs 16,02,000

39. Self Practice Problem-3
Dilawaiz is employed in a Brokerage House XYZ. Data regarding
his income are given below for tax year ended on June 30, 2022.
1) Salary Rs. 200,000 pm
2) Bonus Rs. 200,000
3) Cost of living allowance Rs. 100,000
4) House Rent Allowance Rs. 25,000 pm
5) Conveyance facility provided by employer for personal purposes. Cost of
motor vehicle is Rs. 55,00,000
6) Medical treatment facility Rs. 100,000
7) Entertainment allowance Rs. 10,000 pm
8) Subsidized loan to employee Rs. 30,00,000 @ 12% interest p.a.
9) Special allowance Rs. 50,000
10) Receipt of accumulated balance from Un-recognized provident fund Rs.
12,00,000 segregated as follows
a) Total Employee Contribution Rs. 300,000
b) Total interest on Employee Contribution Rs. 200,000
c) Total Employer Contribution Rs. 400,000
d) Total interest on Employer Contribution Rs. 300,000
11) Zakat paid Rs. 100,000
12) Expenses on children education Rs. 60,000 pm a child (2 children)

40. Answer
Total income
Rs 43,70,000
Taxable income
Rs 42,70,000

41. Self Practice Problem-4
Mehboob Hussain is employed in a university. Data regarding his
income are given below for tax year ended on June 30, 2022.
1) Basic Salary Rs. 20,00,000
2) Special additional allowance Rs. 200,000
3) Bonus Rs. 80,000
4) House Rent Allowance Rs. 250,000
5) Conveyance allowance Rs. 10,000 pm
6) Medical facility Rs. 120,000 (actual expenses Rs. 100,000)
7) Entertainment facility Rs. 10,000
8) Subsidized loan to employee Rs. 8,00,000 @ 2% interest p.a.
9) TA/DA Rs. 50,000
10) Receipt of accumulated balance from Recognized provident fund Rs.
12,00,000 segregated as follows
a) Total Employee Contribution Rs. 300,000
b) Total interest on Employee Contribution Rs. 200,000
c) Total Employer Contribution Rs. 400,000
d) Total interest on Employer Contribution Rs. 300,000
11) Zakat paid Rs. 50,000
12) Payment to participation fund Rs. 30,000

42. Answer
Total income
Rs 26,50,000
Taxable income
Rs 25,70,000

43. Self Practice Problem-5
Miss Fatima is employed in FBR. Data regarding her income
are given below for tax year ended on June 30, 2022.
1) Basic salary Rs. 90,000 p.m.
2) Bonus Rs. 60,000 p.a.
3) Utilities allowance Rs. 10,000 pm
4) House Rent Allowance Rs. 15,000 pm
5) Conveyance facility provided by employer for both purposes. Cost
of motor vehicle is Rs. 30,00,000
6) Medical Facility Rs. 200,000
7) Coffee, tea during working hours Rs. 2,000 pm
8) Subsidized loan to employee Rs. 11,00,000 @ 1% interest p.a.
9) Special allowance Rs. 70,000
10) Pension from previous employer Rs. 40,000 pm
11) Data regarding recognized provident fund is given below
a) Employee Contribution Rs. 90,000
b) Employer Contribution Rs. 90,000
c) Interest credited @ 18% Rs. 360,000
12) Zakat paid poor relatives Rs. 50,000

44. Answer
Total income
Rs 17,29,000
Taxable income
Rs 17,29,000

45. Calculation of tax:
Tax Rates
 FTR (Final Tax Regime)
25% Tax Rebate to Full Time Teacher
Practice: Illustration # 21-31

46. Average Relief
Practice Illustration 32-44
Heads of average relief are:
 Donation for Charitable Purposes
 Investment in Shares and Insurance [Deleted TY 2023]
 Investment in Health Insurance [Deleted TY 2023]
 Contribution to an approved pension fund

47. Formula of Average Relief
Gross Tax X Amount Admissible
Taxable Income for Average Relief

48. Admissibility for average relief under the heads
1. Donation for Charitable Purposes
Amount of Actual donation OR
30% of Taxable income (in case of individual and AOP,
and in case of company it is 20%)
Whichever is less, i.e. amount admissible for average relief

49. 2.Contribution to an Approved Pension Fund
Amount of actual contribution OR
20% of taxable income
[for age Upto 40 years]
If age is above 40 years, add 2 % for every year exceeding 40 Years
(20%-30%)
Whichever is less, i.e. amount admissible for average relief

50. Practice Average Relief

51. Golden Handshake
1. Under Separate Block of Income: Taxable separately at
average rates of tax of last 3 years given in question
2. Under Normal Block of Income: If previous tax rates are not
given, straightly add it in salary income for normal taxation
Practice: Illustration 33

52. Share of Income from AOP
1. Share of income from AOP is not taxable in partner’s income
2. It is included in taxable income for rate purposes.
3. It is added in taxable income to arrive at higher RATE of tax
4. Proportional tax on such income is deducted in gross tax
computations

53. Income from Property (Sec 15)
Rent Received xxxx
Add: 1) Forfeited deposits xxxx
2) Proportional un-adjustable advance (1/10) xxxx
3) Any owner burden paid by tenant (local taxes etc.) xxxx
4) Cost of repairs bear by tenant xxxx xxxx
Rent Chargeable to tax (RCT) xxxx

54. Deductions Admissible under Income from
Property Section 15A
1. Repairs allowance (1/5 of RCT fixed deduction)
2. Insurance premium
3. Municipal and other local taxes
4. Ground Rent
5. Profit Paid or payable on borrowed money
6. Share of rental income paid to financial
institutions
7. Profit paid or payable on mortgage
8. Administration and collection charges (Max 4% of Rent)
9. Legal expenses
10. Unrealized rent

55. Income from Business U/S 18
Income from business: Totally Taxable

56. Capital gain is 03 types and having different tax
treatment . They are
a) Capital gains from securities
b) Capital gains from Immoveable Property (for
both, plot & building)
c) Capital gains from other capital asset (private
company shares)
Income from Capital Gains u/s 37

57. 1. Capital Gain on Disposal of
Securities
Case Holding Period Tax Treatment
(Filer)
Acquired before 1st July 2013
[Deleted TY 2023]
0%
A Acquired upto 30.06.2022 Tax @ 12.50 % of CG
B Acquired after 01.07.2022 Tax @ 15.00 % of CG
[for TY 2023 Only]

58. 2. Capital Gain on Disposal of
Immoveable Property
[Deleted TY 2023]
Case Holding Period Tax Treatment
1 Holding Period does not exceed one year 100% CG Taxable
2 Holding Period 1 Year --------2 Years 75% CG taxable
3 Holding Period 2 Year --------3 Years 50% CG taxable
4 Holding Period 3 Year --------4 Years 25% CG taxable
5 Holding Period exceeds 4 years Nil

59. 2. Capital Gain on Disposal of
Immoveable Property
Sr. No. Holding
Period
Open Plot Constructed
Property
Flats
1 0 ------ 1 year 15 % 15% 15%
2 1 ------- 2 years 12.50 10 7.5
3 2 ------- 3 years 10 7.5 0
4 3 -------- 4 years 7.5 5 0
5 4 -------- 5 years 5 0 0
6 5 -------- 6 years 2.5 0 0
7 Exceeds 6 years 0 0 0

60. 3. Capital Gain on Disposal of Capital
Asset (e.g. Pvt company shares)
Case Holding Period Tax Treatment
A Disposed off within 12 Months
[Deleted TY 2023]
CG Totally Taxable
B Disposed off after 12 Months
[Deleted TY 2023]
Exempt: 25% of CG
A Irrespective of holding period Totally taxable as normal
profit

61. Income from other Sources U/S 39
Transaction wise tax treatment