Saeed, a citizen of Pakistan, was working on a foreign vessel belonging to Delta Shipping
Company (DSL) based in Spain for the past three years. His monthly salary was USD
15,000 which was remitted to his Pakistani bank account through normal banking channel.
The amount received during the tax year 20X9 was converted to Pak Rupees at an average
exchange rate of USD 1 = PKR 131.
On 1 October 20X8, he resigned from DSL and joined Haris Pharma Limited (HPL) in
Pakistan as a General Manager. He was offered following monthly salary and allowance in
HPL:
Basic salary 600,000
Medical allowance 66,000
In addition to the above, he was also provided the following:
(i) Bonus equal to two monthly basic salaries. However, bonus amount was adjusted in
proportion to the duration of his stay in the company. The bonus amount was paid to
him on 5 July 20X9.
(ii) Two company maintained cars. Both cars were purchased on 1 October 20X8. The car
costing Rs. 3,500,000 was used for official purposes whereas the car costing Rs.
1,900,000 was used for personal purposes.
(iii) Free lunch from the restaurant owned by one of HPL’s directors. The fair market value
of food provided to him during the year was Rs. 125,000.
(iv) A special allowance of Rs. 20,000 per month to meet expenses wholly and necessarily
incurred in the performance of his official duties. Actual expenses incurred by him
during the year were Rs. 150,000.
(v) Provident fund contribution of Rs. 60,000 per month. An equal amount per month was
also contributed by Saeed to the fund.
Other information relevant to tax year 20X9 is as under:
(i) On 1 December 20X8, Saeed obtained a loan of Rs. 25 million from a scheduled
bank at 15% mark-up per annum to acquire a residential house.
(ii) During the year, he received dividends of Rs. 575,000 from a listed company. The
amount was net of withholding income tax at the rate of 15% and Zakat of Rs.
62,500 deducted under the Zakat and Usher Ordinance, 1980.
(iii) Withholding tax deducted by HPL from Saeed’s salary during the tax year 20X9
amounted to Rs. 1,300,000.
Required:
Under the provisions of the Income Tax Ordinance, 2001 and Rules made thereunder,
compute under the appropriate head of income, the total income, taxable income and net tax
payable by or refundable to Saeed for the tax year 20X9.
