Income from salary

Salary under ITO,1984 an inclusive definition is given in Sec. 2(58) where it is said that salary
includes:
a) Any pay or wages
b) Any annuity, pension or gratuity
c) Any fee, commission, allowance , perquisites, profit in lieu of salary or in addition to salary and
wages
d) Any advance salary
e) Leave encashment

Elements of salary:
 Basic salary
 Bonus
 Dearness allowance
 Medical allowance
 Special allowance

 Income from salary
 House rent allowance
-where house rent allowance paid in cash
-rent free house
-accommodation at a concession rate
 Entertainment allowance
 Conveyance allowance
-paid in cash
-vehicle is provided
-additional allowance over and above the vehicle
 Fees and commission
 Annuity
 Pension
 Gratuity
 Leave encashment
 Interest on RPF

 Income from salary
Provident fund:
Recognized provident fund
Government provident fund
Unrecognized provident fund

Problem :1
Mr. X withdraw monthly salary of tk 7000 on June,2015 in the scale of tk 6000-200-10000
and his date of yearly salary increment falls on March,1 and basic salary for the income
year 2014-2015 will be?



 Income from salary
Mr. Nisar Ahmed ,a Bangladeshi citizen ,joined S. Group in Dhaka on 1.11.14 with a
consolidated salary of tk 1,80000(60% basic and 40% house rent). He stayed in Doha in a
job from 1.03.11 and came back to BD on 17.10.14. During 1.03.11 to 17.10.14 ,he visited
BD for 60 days in each fiscal year. In addition to basic and house rent , Mr. Ahmed also enjoy
the following benefits during the period:
Full time car with taka 20000 per month as allowance for maintenance; 10% of basic as
entertainment allowance (he spent the full amount); servant allowance tk 2000 per month; tk
71600 on 30.6.15 as profit bonus;medical allowance tk 2000 per month (actual expense tk
20000);leave encashment 20 days basic salary; Mr. Ahmed contributes 10% of his basic salary
to a recognized PF like his employer; As per the terms of employment ,Mr Ahmed received tk
150000 for travelling abroad(he actually spent tk 130000for the purposes).
Mr. Ahmed has made investments during the period as :contribution to DPS tk 10000 per month;
Purchase of shares:primary tk 50000,secondary tk 100000 ; purchase of debenture from DSE
tk 30000;purchase a personal desktop computer spending tk 60000; Donated to Bangobondhu
National Museum tk 60000; purchase of govt treasury bond tk 50000;his net asset amount to tk
11crore.
Requirements: Compute taxable income and tax liability of Mr.Ahmed for the assessment year
2015-2016 assuming total tax deducted at sources amount tk 120000.

 Income from salary
Mr. X is the MD of ABC co. Ltd. He has given the following monthly salary and allowance for
the year ending on 30thJune,2015.
1. Basic salary 25000 per month
2. Dearness allowance 5000 per month
3. Entertainment allowance tk 1000 per month
4. Employers contribution to RPF tk 2500 per month
5. Lunch allowance tk 1000 per month
6. School fee for the children of Mr. X tk 5000 per month
7. Utility allowance tk 3000 per month
8. Fee of golf club(Yearly) tk 5000 per year
9. Medical allowance tk 3000(actual expenditure during the year was tk 30000)
10. Festival bonus equal to basic pay (got two bonus during the year)
Other particulars:
1. He has purchased 5 years savings certificate amounting to tk 100000
2. Employer provided him a free accommodation ( rent of the house is roughly tk 35000 p.m.)
3. Employer also provided him a full time car
4. He has given a servant from his office whose monthly salary tk 1200
5. He paid LIP tk 50000(policy value is tk 400000)
6. He contributed tk 2500 per month to the RPF , Employer also contributed the same.
7. During the year he received bank interest amount to tk 180000(net of tax)
8. He purchased secondary share of tk 75000 of a public ltd company which is listed in DSE
Compute total income and determine the tax liability of Mr. X for the assessment year 2015-2016.

 Income from house property
Rental status of the house property:
 Fully let out house property
 Partly let out house property
 Fully occupied house property by the owner
Annual value of the house:
Annual value= Building+ Furniture & Fixture+ Land & Apartment
*if tenant bears any owners expense
*if the owners bears any tenants expense
Admissible expenses of house property:
 Repair and collection(collection charge,electricity,sewerage bill,salary of guard,liftmen,caretaker and
incidental charge)
 Land revenue
 Insurance premium
 Land development tax or rent
 Interest on mortgage loan
 Annual tax
 Ground rent
 Interest on borrowed capital
 Vacancy allowance
 Uncollectible rent

 Income from house property
Mrs Atifa Iqbal owns two houses at Chowbazar and another at Khulshi. From the following particulars
compute his a) Income from house property for the income year 2014-2015 b)Tax liability for the
assessment year 2015-2016
House at Chowkbazar:
This is three storied building(in each floor there are two flats. One of the flat in the 1st floor (flat no 2A) is
used as residence by Mrs Atifa and the other flat (flat no 2B) in the same floor is used by his son-in-
law who pays nothing for it. All other flats were let out fr residential purpose at a monthly rent of tk
8000 each. The municipal value of the house is tk 480000. He has also received tk 100000 as
advance from the tenants which is not adjustable to rents.
Expense of the house for the year were:
a)Repair expense tk 120000
b)Rent collection expense tk 3000
c)City corporation tax ,quarterly tk 2400,
d)Land revenue paid tk 12000,
e)Salary of guard ,monthly tk 500
f)Loan repayment to HBFC (inc. interest tk 4200) tk 42500 and
g)Installation of generator tk 15000.
Income from house property
The owner paid the water and gas bill of the tenants which amounted to tk 30000 for the year.Flat no
3B remains vacant for two months during the year. Moreover ,he has refunded tk 25000 advance
to a tenant at the time of his departure.
House at Khulshi:
The house is let out to a private bank branch and received monthly rent of tk 47500 net of TDS @ 5
% .The municipal value of the house is tk 625000.
Expense of the house for the year:
a)Repair exp. Tk 200000,
b) Fire insurance premium tk 25000
c) Municipal taxes tk 12000
d)cost of alteration tk 55000
e)Ground rent tk 10000
f) Legal expense tk 12000
According to the terms of the agreement the tenants are to bear the cost of repair which amounted
to tk 15000 for the year.
 Income from house property
Investment and expenses:
During the year, Mrs Iqbal incurred the investments and expenses as:
a) Family expenses tk 350000
b) Insurance premium
own(policy value tk 500000) tk 40000
spouse ( policy value tk 500000) tk 60000
c)Purchase of unlisted company’s share tk 25000,
d)Donation to the president’s relief fund tk 20000
e)Donation to govt. Zakat fund tk 30000
f)Donation to a Mosque tk 10000
 Income from interest on securities

Section 2(38) of the ITO,1984 defines interest as any sum payable in any manner in respect of any
money borrowed ,debt incurred or any credit facility availed.

Classification of securities:
1.Government securities (treasury bill or bond, promissory note, national bond, stock certificate,
bearer bond, govt. loan document)
a. Tax exempted govt. securities
b. Taxable govt. securities
2.Commercial securities
a. Non-assessable commercial securities
b. Assessable commercial securities

 Income from interest on securities
Admissible expenses of income from interest on securities:
1.Bank commission/charge for collecting interest
2.Interest on borrowed capital for investment in securities
*Ex-dividend & cum-dividend transaction and Bond washing

 Income from interest on securities
From the given information compute income chargeable under the head interest on securities for Mr
Razu for the income year 2020-2021
a. Taka 65000,10% tax free govt. securities.
b. Interest on less tax govt securities tk 5700
c. Taka 19000 as interest on commercial securities
d. Income from zero coupon bond tk 2000
e. Interest on municipal debenture tk 38000
f. Interest on treasury bond(gross) taka 10000
g. Interest on 8% commercial securities valued at taka 30000
h. Interest on company debenture (gross) 135000
Bank charges amounting to tk 1200 was paid for collecting interest on 10% tax free govt. securities,
commercial securities and municipal debenture .Company debenture was purchased by taking a
bank loan of tk 100000 @ 7% interest
His income from sole trader ship business amounted to tk 500000. During the year he purchased
share from stock exchange tk 50000 and donated tk 10000 to a charitable community hospital.
 Income from interest on securities
From the following particulars compute income from securities business and salaries for Mr. Abir
for the year ending on 30/6/18 and show tax to be paid by him:
1.Income from taxable commercial securities (gross)-tk 5500
2.Interest on 7% tax free govt. securities valued @ tk 25000
3. Income from govt. securities (gross)- tk 20000
4.Interest on 8% commercial securities valued @ tk30000
5.Interest received from commercial securities tk 45000
6.Interest on municipal debenture tk 35000
7. Interest on company debenture (gross) tk 135000
8. tk 9500 as Interest on 10% treasury bond.
Bank charges amounting to tk 1000 was paid for collecting interest on 7% tax free govt. securities
company and municipal debenture .Company debenture was purchased by taking a bank loan of
tk 100000 @ 8% interest
His income from sole trader ship business & income from part time salary from indenting firm
amounted to tk 400000 and tk 120000. During the year he purchased share from stock exchange
tk 50000 and donated tk 10000 to a charitable community hospital.
 Income from Agriculture
U/S of ITO ,1984 the term ‘Agricultural income means any income derived by cultivator from
any land or building in Bangladesh and used for agricultural purpose on the following
prescribed conditions:
a)in respect of income is derived from agricultural land
b) in respect of income is derived from agricultural building
c)as to gain arising from sale of machine: excess of the sale proceeds of machinery over
WDV
d)as to gain received through discarding agricultural machine :discarded value of
machinery over WDV
e)other income
 income from tea garden
 income from sugar mill
 income from plantation of rubber
 income from tobacco

 Income from Agriculture
Characteristics of Agricultural income.
 Come from agricultural land and building situated in BD
 Come from fundamental agricultural work
 Marketing of agricultural product
 Arise from adjacent agricultural land
 May come from partly agricultural and partly non-agricultural income
Allowable deduction:
 Land development tax and rent for land
 Local tax
 Production cost(cultivation,marketable processing,trasportation ,maintaing agri and machine)
 Insurance premium
 Repair and maintenance of agri machine(irrigation & capital asset)
 Depreciation
 Interest on mortgage

Income from Agriculture
 Interest on borrowed capital
 Losses from the sale of demolished machineries
 Losses on sale or exchange of machineries
 Other revenue expenditure
Non-assessable agricultural income
 If assessee has no income other than agricultural
 Income from indigenous hill tracman
 Income from poultry, fisheries ,cattle farming
 Income from Capital Gain
Capital gain basically arise on transfer of capital asset if transferred at a value more than the original
costs.
Sec 2(15) of I.T. Ordinance defines “ capital asset as property of any kind held by an assesse whether
or not connected with his business or profession , but does not include –
a) Any stock-in-trade
b) Personal effects
Conditions to be taxable:
Arise from sale or transfer of capital asset
Title of the property must be transferred to the purchaser
Shall be taxable in the year of transfer unless it has been re-invested
Tax exempted transfer of capital assets:
 Any transfer of the capital asset under a gift, bequest, will or an irrevocable trust
 Any distribution of the assets of a company to its shareholders or its liquidation; and
 Any distribution of capital assets on the dissolution of a firm or other association of persons or on the
partition of HUF
 Transfer of holding company’s asset to subsidiary company will be exempted from charging capital
gains subject to three conditions.
 Income from Capital Gain
Computation of capital gains:
Following deduction from the Full value of the consideration received or fair market value thereof, whichever is
higher ,namely-
a)Any expenditure incurred for the transfer of capital
b) The cost of acquisition and improvement of the capital asset.
*fair market value-the price determine through bargaining of purchaser and seller taking into consideration the
demand, supply and environment.
 Capital gain from purchased properly
Capital gain=sales price-acquisition price
 Capital gain from property gifted ,transfer on trust or distributed on liquidation of company or firm etc.
Capital gain=sales price –(acquisition price of the previous owner less depreciation allowed.)
 Capital gain from property by succession, inheritance or devolution
Capital gain =sales price-fair market value prevailing at the time of the property became the asset of the
assesse.
Tax rate:
a) On disposal of capital assets within five years of acquisition.
b) On disposal of capital assets after five years of acquisition.(company and others)

 Income from Capital Gain
X and Co. purchased a machine at tk 500000on 1st July,2012. In December, 2014 an amount of tk
80000 was spent to increase its capacity . On 30th June,2018 its WDV stood at tk 300000. This
machine was sold on the same date at tk 550000 and the cost incurred for this sale amounted to tk
10000. compute capital gain and tax to be paid on the same .


Mr Andaleb has purchased a machine at a total cost of tk 500000 on 23rd April,2012 for the purpose
of his profession . In addition ,he has paid tk 10000 as legal fees. He has spent an additional sum of
tk 50000for improvement of the machine . On 30th December 2015 ,he had sold the machine at a
total price of tk 600000 when the balance of accumulated depreciation was 126000 in his books of
accounts. But the fair market value on that amounts to tk 650000 in the opinion of DCT. He incurred
advertisement cost of tk 20000 and 1.5% as brokerage commission on the sale value . He has
taxable income of tk 230000 from other sources. Compute capital gain, total taxable income.
 Income from Capital Gain
Mr. Hasan runs a business of his own. He has purchased a piece of land at a cost of tk 10000000 on
1st January ,2010 within the jurisdiction of Chittagong municipality having a total population of
around 50000 according to the last census. He has paid tk 50000 as finders fee another tk 120000
as registration fee for the land. He has sold the land on July 15, 2015 at a price of tk 22000000. For
the sale ,he has to pay brokerage fee @ 2% on the gross sales amount receipt . In DCT’s opinion the
fair market value of the land at the time of sale is tk 20000000. On June 30,2016 he has purchased
another land at a cost of a) tk 10000000 (b) 12000000 and expressed his intention of getting roll
over relief of capital gain on new land in writing to DCT . He also had tk 200000 as taxable income
from interest on securities and another tk 200000 taxable income from other sources.
Compute the amount of capital gain and tax liability.
Mr. Hasan is an officer of NCC Bank. Particulars of his income are as follows from which compute tax to
be paid by him for the income year 2018-2019:
1.Interest on bank deposit tk 40000 after deduction at source tk 4000
2. Interest on fixed deposit tk 38000 less tax at sources @ 10%
3. Income from paribarik shanchayapatra tk 40000,tax deducted @10% on it.
4.He has shares of tk 100000 in a private ltd company on which dividend declare @ 15% which amount
yet to be received.
5.Income from sole trader ship business tk 300000 and partnership tk 425000; in last year the sole trader
ship business incurred a loss of tk 25000
6.Income from salt production tk 50000
7.Dividend from reg. company tk 64500
8.Receipt from gift tk 40000
9. Sale of car tk 250000, cost of the car was tk 400000 and depreciation so far charged tk 200000
10. Royalty from book tk 60000
11.Income from tea garden tk 60000
12.Income from letting out property tk 23000
13. Income from agriculture tk 100000.
His investment during year were as follows :
1.Life insurance premium tk 20000
2. Purchase of share from IPO tk 60000 of which tk 40000 has been provided from sale of share
purchased in last year ,the purchase value of which was tk 50000.
 Mr. A is 60 years old and employed by a private limited company. He has joined the company on 01 July
2014. He has received the following income and benefits during the year ended 30 June 2015:
a) Basic salary Tk. 100,000 per month sent to his bank directly. He had outstanding salary for the month of
June 2015 which was paid on 02 July 2015. He had also received arrear salary of Tk. 50,000 during the
year from previous employment.
b) . The present employer allowed house accommodation at a concessional rate. Mr. A paid Tk. 60,000
only as rent during the income year 2014-15.
c) Additional conveyance allowance of Tk. 50,000 was paid to Mr. A in addition to the conveyance allowed
under Rule 33D.
d) Entertainment allowance @ 5% of basic salary was paid to Mr. A.
e) Free and consessional passage of Tk. 200,000 for travel in Bangladesh by Mr. A was allowed by the
employer against actual claim of expenditure of Tk. 300,000.
f) Employer spent Tk. 500 p.m. for free tea, coffee and beverage for the office of Mr. A durig working hours.
g) Company spent Tk. 200,000 for Mr. A during the year against reimbursement of utility bills of his
residence.
h) Received share of net profit of Tk. 200,000 from partnership. He is entitled to tax rebate as per tax law.
i) Derived net income from production of corn, maize and sugar beet for Tk. 5,000.
j) Purchased wage earners' bonds on 30 June 2014 and received interest of Tk. 50,000 in the following
year on the said investment of Tk. 500,000.
k) Taken advance of Tk. 200,000 from a company against accumulated profit where he was an alternate
director and a shareholder.
l) Mr. A is also a manufacturer and exporter of garments products. He sold export quota at Tk. 25,000
against export value of Tk. 500,000.
m) Mr. A incurred a capital loss of Tk. 500,000 on account of sale of shares in the earlier year, but this year
he made a capital gain of Tk. 600,000 from the sale of shares.
n) Rental income of Tk. 600,000 received from a five-storied building consists of 10 flats constructed
during the period from 01 July 2012 to 30 June 2013 in an area of Muladi, Barisal.
During the year Mr. A has claimed the following expenditures as his investments:
1. Purchased Sanchay Patra for Tk. 50,000.
2. Contributed 10% of his basic salary towards Super Annuation Fund.
3. Deposited Tk. 75,000 under Deposit Pension Scheme with a Financial Institution.
4. Deposited Tk. 20,000 to Benevolent Fund
5) Contributed 10% of basic salary to a recognised provident fund. A similar contribution was made by the
employer wherefrom he receive interest of Tk. 1,800 from the said fund @ 18%
6. Paid insurance premium of Tk. 20,000 for his spouse and minor child. The policy value is Tk. 100,000.
7. Purchased a computer for Tk. 50,000 and a laptop for Tk. 60,000.
You are required to calculate the total income and tax liabilityof Mr. A for the assessment year 2015-2016.
Make necessary assumptions, if required.
 Income from interest on securities
From the following particulars compute income from securities business and salaries for Mr. Abir
for the year ending on 30/6/18 and show tax to be paid by him:
1.Income from taxable commercial securities (gross)-tk 5500
2.Interest on 7% tax free govt. securities valued @ tk 25000
3. Income from govt. securities (gross)- tk 20000
4.Interest on 8% commercial securities valued @ tk30000
5.Interest received from commercial securities tk 45000
6.Interest on municipal debenture tk 35000
7. Interest on company debenture (gross) tk 135000
8. tk 9500 as Interest on 10% treasury bond.
Bank charges amounting to tk 1000 was paid for collecting interest on 7% tax free govt. securities
company and municipal debenture .Company debenture was purchased by taking a bank loan of
tk 100000 @ 8% interest
His income from sole trader ship business & income from part time salary from indenting firm
amounted to tk 400000 and tk 120000. During the year he purchased share from stock exchange
tk 50000 and donated tk 10000 to a charitable community hospital.