Scribd
Upload
31 views2 pages

Test 7 Solution

The document outlines the tax calculations for Sweet Bakers for the tax year 2023, detailing total income, taxable income, and tax payable. It also defines a woman enterprise and clarifies that Sweet Bakers does not qualify for tax liability reduction due to its partnership structure. Additionally, it discusses the written down value of assets for tax purposes and the conditions for lease agreements related to asset disposal.

Uploaded by

iqbalyaseen289
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
31 views2 pages

Test 7 Solution

The document outlines the tax calculations for Sweet Bakers for the tax year 2023, detailing total income, taxable income, and tax payable. It also defines a woman enterprise and clarifies that Sweet Bakers does not qualify for tax liability reduction due to its partnership structure. Additionally, it discusses the written down value of assets for tax purposes and the conditions for lease agreements related to asset disposal.

Uploaded by

iqbalyaseen289
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Tax practices Suggested Solution (Test-7)

Test 7 – Suggested Solution


Answer-1
Sweet Bakers
Total income, Taxable income and tax thereon
For tax year 2023
Rs. in million 0.5
Income from business (W-1) 108.8 01
Income from agricultural land – Exempt rent (6 + 10.37) (W-1) 16.37 01
Total income 125.17
Income from agricultural land – Exempt rent (6 + 10.37) (16.37) 0.5
Taxable income 108.8
Tax liability on income falling under NTR (1,610,000 + 45% x 95,200,000) 44.45 0.5
Add: surcharge (47.96 x 10%) 4.8 0.5
Less: Tax credit on POS machine (allowed lower of)
- 0.4
- 150,000 x 3 = 0.45 (0.4) 01
Tax payable 52.36

(W-1) Income from business Rs. in million


Profit before tax 77
Add:
Purchase disallowed (W-2) 24 0.5
Purchase for personal use (10 x 10%) 1 01
Salaries of partners ( 8.2 + 6 + 4.8) 19 1.5
Purchase of plant 15 0.5
Purchase of POS machines 0.4 0.5
Payment for application 5.5 0.5
64.9
Less:
Rental income
- Cash (0.5 x 12) (6) 0.5
- In kind (120 x 7,200 x 12M) (10.3 1.5
7)
Market value of eggs received as a rent and used as a raw material – Cost of sales (10.3 0.5
7)
Initial allowance on plant (15 x 25%) (3.75) 0.5
Tax depreciation on plant (15 – 3.75) x 15% (1.69) 0.5
Tax depreciation on POS machines (Not allowed because tax credit is allowed) (-) 0.5
Tax amortisation (App is available for use subsequent to year end) (-) 0.5
Tax depreciation on van (7.5 x 15%) (1.13) 01
(33.31)
Income from non-speculation business 108.8

(W-2) Purchase disallowed (lower of)


- Purchase on which tax is not deducted 24 0.5
- 20% of purchase (200 x 20%) 40 0.5

Page 2
Tax practices Suggested Solution (Test-7)

b)
Woman enterprise means a start-up established on or after first day of July 2021 as:
 sole proprietorship concern owned by a woman or
 an AOP all of whose members are women or
 a company whose 100% shareholding is held or owned by women
Since all partners of SB are not women, the given reduction in tax liability shall not be available to Sweet Baker.
(01 mark each)
Answer-2
Tax Gain/(loss) on disposal.
The WDV at the time of disposal shall be calculated as follows–
Scenario Written down value equals to
Where asset is wholly used for business the cost of the intangible less total amortisation
deductions allowed to the person on intangible or,
where the intangible is not wholly used to the cost of the intangible less amortisation that would
derive income chargeable to tax, be allowed if the intangible was wholly used
(03 Marks)
Answer-3
The actual consideration received by a bank or leasing company (approved by the Commissioner) for an asset leased
by the company to another person shall be the residual value received on maturity of the lease agreement. The
condition is that the residual value plus the amount realized during the term of the lease of the asset is not less than
the original cost of the asset.
(03 marks)

Page 2

You might also like