TAXATION (MARKS 100)
Module C (3 hours)
Q.1 Saleem, Rashid and Moin are partners in a partnership concern carrying on the business
of manufacturing and sale of consumer goods. They share profit and loss in the ratio
2:3:5 respectively. The results of operations of the firm are as follows:
Rs. ‘000’
Sales (including rental income) 76,000
Cost of sales 53,000
23,000
Selling, administrative and other expenses 16,250
Profit before tax 6,750
Tax deducted at source on import of raw material 900
Tax deducted at source on sale of goods 1,750
2,650
Other information:
(i) The firm has rented out a vacant portion of its factory to a company at an
annual rental of Rs.1 million. Tax was duly deducted by the lessee.
(ii) Mr. Saleem has earned income of Rs. 325,000 from another business as a sole
proprietor. He also sold his personal car for a loss of Rs. 50,000.
(iii) Mr. Rashid earned a gross income of Rs. 200,000 from another partnership
firm where he is entitled to 25% of the total profit of the firm. He also earned
dividend of Rs. 50,000 from a listed company.
(v) Mr. Moin has no other source of income.
Required:
Assuming that the above data pertains to the tax year 2008, compute the tax liability of
the firm and each of its partners and the amount of tax payable by them alongwith the
return of income.
Applicable tax rates are as follows:
Where the taxable income exceeds Rs.175,000 but does not exceed Rs.200,000 4.00%
Where the taxable income exceeds Rs.200,000 but does not exceed Rs.300,000 5.00%
Where the taxable income exceeds Rs.300,000 but does not exceed Rs.400,000 7.50%
Where the taxable income exceeds Rs.400,000 but does not exceed Rs.500,000 10.00%
Where the taxable income exceeds Rs.500,000 but does not exceed Rs.600,000 12.50%
Where the taxable income exceeds Rs.600,000 but does not exceed Rs.800,000 15.00%
Where the taxable income exceeds Rs.800,000 but does not exceed Rs.1,000,000 17.50%
Where the taxable income exceeds Rs.1,000,000 but does not exceed Rs.1,300,000 21.00%
Where the taxable income exceeds Rs.1,300,000 25.00%
Tax on rental income from property 5.00%
Tax on dividends 10.00%
(17)
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