tax free allowances of a salaried person

[Imran Sheikh]

tax free allowances of a salaried person for the year 2009-10

[saadashfaq]

plz send me at [email protected]

[olympia]

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by akbarkhan2</i>
<br />Regarding,mails forwarding to each user, i want to make a suggestion that there should be a download section at accountancy.com, where user can find useful downloads.
Thanks,
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

agreed with akbarkhan v all want to update our knowledge & share our day to day problems & experiances which v face in our practical life.

[olympia]

faisal if u dont mind could u plz upload this file on shared.com & put the link below so v all r able to download the data which u want to share.

If u face any problem in uploading ask from Laptop in this regard he must help u )

[Rana R A Aziz]

10 % Radical Allowance & 10 % TADA is exempted.. 15% TADA if Manager Grade.... that,s it..

[Smahnz]

pls also send the file to [email protected]

[faisal_desperado]

Dear Rana R A Aziz,

There is no such exemption available in the ordinance, which specifically reveals, what you said .

Olympia,

Do you think that sharing the information over the net is a difficult task, which requires guidence to be taken?

To others,
The said email was the extract from the ordinance, which has been erased inadvertently, however, the same may be sent to you by those who have been sent the same.

Best Regards,

Faisal.

[olympia]

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by faisal_desperado</i>
<br />Dear Rana R A Aziz,

Olympia,

Do you think that sharing the information over the net is a difficult task, which requires guidence to be taken?

Best Regards,

Faisal.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

that's y i m shocked y u send e-mail to the persons who request u for the same. Just put the link here everyone is able to download the file & updat his knowledge.

looking forward for ur reply

[silent_eyes135]

pls can u send me the mail tax free allownces on [email protected]

[ArsalanYousuf]

Dear Laptop and other

Special allowance ki koi practical example dey sektey hai ap..

During the period hum variable perfomance rewards daitey hai employees ko .. kya hum us reward ko SPECIAL ALLOWANCE DEKHA SEKTA HAI.. takey tax save ker sekey employees ka..

warmest regards

[LapTop]

2008 P T D 1075
[Karachi High Court]
Before Mrs. Yasmin Abbasey and Nadeem Azhar Siddiqi, JJ
MUHAMMAD IQBAL GHORI
Versus
COMMISSIONER OF INCOME TAX, KARACHI

I.T.R.As. Nos.357, 358 and 36'7 of 2007, decided on 5th April, 2008.


Income Tax Ordinance (XLIX of 2001)---
----Ss.12 & 13---Income Tax Rules, 2001, R.9(3) & (5)(b)---Perquisite---Salary---Value and scope of perquisites---Running and maintenance expenses of a vehicle provided by the employer to the employee directly incurred by the employer come within definition of `perquisite' and will be included in the taxable income of the employee (assessee)---Principles.

I.T.A. No.490/KB of 2006 and Black's Law Dictionary Sixth Edition ref.

Aziz H. Nishtar for Applicant.
Jawaid Farooqi for Respondent.

ORDER

NADEEM AZHAR SIDDIQI, J.---The appellant has challenged the order, dated 30-5-2007 passed by .the learned Income Tax Appellate Tribunal of Pakistan-Karachi (hereinafter referred to as the Tribunal) allowing the appeal of the respondent.

The facts necessary for the disposal of the above said reference are that the applicant is salaried individual employee with Pak-Libya Holding Company (Pvt.) Limited and furnished annual statement of deduction of income tax from salary for the tax year, 2005 as prescribed under the Income Tax Rules, 2002.

The Taxation Officer issued notice, dated 31-12-2005 for including the running and maintenance expenses of vehicle provided to the applicant by his employer. The applicant has replied the notice maintaining that the vehicle running and maintenance expenses were purely company's business expenses incurred on the maintaining the company owned vehicles.

The Taxation Officer issued further notices and finalized the assessment and issued demand notice treating the running and maintenance expenses of vehicles as income of the applicant. The assessment order was challenged before the Commissioner (Appeals) who passed order, dated 13-4-2006 in favour of applicant and the Taxation Officer was directed to exclude the running and maintenance expenses from the taxable income of the applicant. Against the order of Commissioner (Appeals) the respondent preferred appeal before the Tribunal who allowed the appeal and upheld the order of Taxation Officer.

The learned counsel for the applicant has framed the following questions of law--

(i) Whether on the facts and circumstances of the case the learned ITAT was correct in annulling the Commissioner (Appeals) order.

(ii) Whether on the facts and circumstances of the case the learned Tribunal was justified in law in holding that vehicle running and maintenance expenses incurred by the employer are not covered under Rule 9(5) but under rule 9(3).

The learned counsel for applicant submits that the learned Appellate Tribunal has erred in law in accepting the department's point of view that the vehicles running and maintenance expenses were a benefit in kind separate from the scheme of addition into employee's income as provided under Rule 9(5). He further submits that the two learned Benches of the Tribunal has taken conflicting view in the matters and placed on record the order passed in I.T.A. No.490/KB of 2006, dated 8-8-2007.

The learned counsel for respondent supported the judgment of the learned Tribunal and submits that no question of law has arisen from the judgment of the Tribunal and that the running and maintenance charges of vehicles were rightly included in the taxable income of applicant as in the salary statement it has been clearly stated that perquisite was given in kind and the same is taxable in view of Rule 9(3) of the Income Tax Rules, 2002.

The controversy appears to be the additions of running and maintenance expenses of vehicle provided to the applicant by the employer in the taxable income of the applicants. It is not disputed that the employer has provided the vehicle and has directly paid the expenses. The applicant claims that the expenses cannot be added in their taxable income in view of Rule 9(5)(b). The view of the department is that Rule 9(3) and Rule 9(5)(b) caters two different situations and perquisites were rightly added in the income under Rule 9(3) of the Rules.

In terms of Clause (b) of subsection (2) of section 12 salary means any perquisite, whether convertible to money or not and is chargeable to tax under the head salary. Section 13 of the Ordinance provides that for purpose of computing the income of an employee for a tax year chargeable to tax under the head "salary" the value of any perquisite provided by an employer to the employee in that year is included in the employee's salary under section 12 shall be determined in accordance with section 13. Subsection (3) of section 13 provides that where a motor vehicle is provided by an employer to an employee wholly or partly for the private use of the employee, the amount chargeable to tax to the employee under the head "salary" for that year shall include an amount computed as may be prescribed. Subsection (13) of section 13 provides that where an employer has provided an employee with perquisite which is not covered by subsection (3) through (12), the amount chargeable to tax to the employee under the head "salary" for that year shall include the fair market value of the perquisite determined at the time it is provided as reduced by any payment made by the employee for the perquisite except where the rules, if any, provides otherwise. From the perusal of above sections it appears that the salary includes the amount computed as may be prescribed for providing a motor vehicle as well as perquisite provided by the employer which is not covered by subsection (3) through (12). The provisions of Rule 9(3) are covered by subsection (13) of section 13 of the Ordinance and Rule 9(5)(b) is covered by subsection (3) of section 13 of the Ordinance. The contention of Mr. Jawaid Farooqi has force that sub-rules (3) and (5)(b) of Rule 9 caters different situations and the perquisite provided by the employer is to be included in the salary and chargeable to tax. The word "perquisite" has not been defined in the Income Tax Ordinance, 2001 and Income Tax Rules, 2002. The word "perquisites" is defined in Black's Law Dictionary sixth edition as under---

"Emoluments, privileges, fringe benefits, or other incidental - profits or benefits attaching to an office or employment position in addition to regular salary or wages. Shortened term "perks" is used with reference to such extraordinary benefits afforded to business executives (e.g. free cars, club membership, insurance, etc.)."

From the above definition it appears that all emoluments, privileges, fringe benefits or other emoluments provided by the employer to the employee are to be included in the salary.

The Tribunal has held as under---
"(13) I am however, not in agreement with the learned A.R. as Clause (b) of Sub-Rule (5) of Rule 9 deals with cost incurred by employer for acquiring the motor vehicle in case the motor vehicle is provided by the employer for private use. This provision is relevant in the situation where matter pertains to providing of motor vehicles and where motor vehicle is provided by an employer partly for private use of the employee, in that way the value of the perquisite would be (i) 5% of the cost to employer for acquiring the motor vehicle (ii) or the fair market value of the vehicle at the commencement of lease, if taken on lease by the employer, In the circumstances where, not the, running and maintenance of the vehicle but cost of acquiring the motor vehicle is involved, Rule 9(5)(b) shall apply as this simply deals with the valuation of the provision of motor vehicle, for the purpose of section 13(3) of the Income Tax Ordinance, 2001 and does not refer the issue of running and maintenance provided by the employer. I, therefore, find reasons to direct the taxation officer that amount pertaining to running and main­tenance incurred by the employee directly be taxed under the provisions contained in Rule 9(3) of the Income Tax Rules, 2002."

From the above discussion it appears that running and' maintenance expenses of a vehicle provided by the employer to the employee directly incurred by the employer come within definition of perquisite and will be included in the taxable income of the applicant.

In view of the above we do not find any illegality, infirmity and perversity in .the order of the Tribunal which is maintained and this Income Tax Reference Application is dismissed in limine with no order as to costs.

This order mutatis mutandis will also apply in connected ITRA Nos.358 to 367 of 2007.

M.B.A./M-33/K Applications dismissed

[ArsalanYousuf]

i have read your case.. Sir koi aisa way nikal sektey hai jiss sey 'varialbe reward' main exempt kerwa sekun?

[LapTop]

2008 P T D 527
[Federal Tax Ombudsman]
Before Justice (Retd.) Saleem Akhtar, Federal Tax Ombudsman
M. A. FAROOQI, REGISTRAR, SUPREME COURT OF PAKISTAN, ISLAMABAD
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD

Complaint No. 368 of 2004, decided on 4th August, 2004.


(a) Income Tax Ordinance (XXXI of 1979)---
----Ss.59(3), 56, 61, 13(1)(aa) & Second Sched., Cls. (39) & (77A)---Supreme Court Rules, Part-II, R.24---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)---Self-­assessment---Income from salary and rent---Filing of salary certificate---Exemption was claimed on account of honorarium/reward---Issuance of notices under Ss.61 and 13(1)(aa) of the Income Tax Ordinance, 1979---Validity---Admittedly, complainant/assessee filed only salary Certificate (LT.-11E) whereas he was required to file return of income (I.T.-11B) under R. 190(3) of the Income Tax Rules, 1982, because besides salary, complainant/assessee had income from house properly therefore no valid return was filed---Honorarium /reward and special allowance was claimed to be exempt---Taxation Officer instead of issuing notice under S.56 of the Income Tax Ordinance, 1979, issued notices under Ss.61 and 13(1)(aa) of the Income Tax Ordinance, 1979 and demand notice was served on the basis of IT-30 produced by PRAL under S.59(3) of the Income Tax Ordinance, 1979 which proved maladministration on account of incompetence in discharge of responsibility; that if there was no valid return, a notice under S.56 of the Income Tax Ordinance, 1979 was required to be served calling for a valid return that notice under S.61 could be issued only when there was a valid return; hence proceedings under S.61 of the Income Tax Ordinance, 1979 were contrary to law; that there was no basis on the foregoing facts, to issue a notice under S.13(1)(aa) of the Income Tax Ordinance, 1979; hence contrary to law; complainant/assessee had claimed certain exemptions, which after obtaining a valid return could be considered on merits ; that order was not passed under S.62 of the Income Tax Ordinance, 1979 despite proceedings under S.61 of the Income Tax Ordinance, 1979 and that order was passed under S.59(3) of the Income Tax Ordinance, 1979 after making adjustments on account of alleged legally inadmissible claims, although it required a proper consideration and finding through an order under S.62 of the Income Tax Ordinance, 1979---Federal Tax Ombudsman recommended that the Commissioner undertakes written counselling of the concerned Taxation Officer to pay more attention to correct application of relevant provisions of law so that assessees are saved from undue harassment and that the Commissioner in discharge of his responsibility under S.122A of the Income Tax Ordinance, 2001 may call for the record of proceedings considered in which the orders have been passed by the Taxation Officer working under him and proceed under S.122A(2) of the Income Tax Ordinance, 2001 as he deems fit.

(b)Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---
----S.9(2)(b)---Jurisdiction, functions and powers of the Federal Tax Ombudsman---Invalid return---Where an assessment is based on an invalid return, it is contrary to settled law and ab initio void and invalid ; it is a defect that is jurisdictional in nature and does not refer to the judgment of the Assessing Officer in assessment of complainant/ assessee's income.

Shamim Ahmad and S.M. Sibtain, Advisers (Dealing Officers).
Muhammad Siddiq Mughal, Advocate for the Complainant.
Mazhar Iqbal, ACIT, for Respondent.

FINDINGS/DECISION

JUSTICE (RETD.) SALEEM AKHTAR, FEDERAL TAX OMBUDSMAN.---The Complainant earns income from salary and rent.

The Return of Income for assessment year 2002-2003 was filed under Self Assessment Scheme. However, it was not accepted under the said Scheme and notice under section 61 of the Income Tax Ordinance, 1979 (R.O) was issued. Additionally, notice under section 13(1)(aa) of the R.O. was also issued. Detailed hearings were conducted in which the exemption claimed on account of Honorarium/ Reward amounting to Rs.8,454,333 (later on the caption was changed to "any other allowance") and special allowance of Rs.24,456 was discussed. The final hearing was conducted on 28-6-2003. As stated by the Complainant, he did not hear anything from the department till the receipt of a recovery notice on 10-5-2004. The demand was created at Rs.2,776,436.

2. The treatment meted out to the complainant was challenged on many grounds, specially the following---

a) The Income Tax Return filed by the Complainant qualified for acceptance under the Self Assessment Scheme and there was no reason for its exclusion.

(b) It was the requirement of the law to pass order under section 62 of the R.O. after the issuance of notices under sections 61 and 13(1)(aa). Therefore there was no justification for passing the order under section 59(3).

(c) Without the service of an assessment order and a Demand Notice, the recovery notice issued was a mala fide act.

(d) None of the arguments and submissions made by the Complainant before the Taxation Authorities were considered. Therefore, he was condemned unheard.

(e) That the Complainant was entitled for the statutory exemption, denial of which was against his constitutional right.

(f) That the impugned order was never communicated to the Complainant. He received the copy after the service of recovery notice.

3. In be reply, the RCIT, Northern Region, Islamabad raised the following preliminary objections

(a) That no act of maladministration was established in the instant complaint.

(b) The case involved interpretation of law which has been specifically excluded from the jurisdiction of the Federal Tax Ombudsman within the meaning of Section 9(2)(b) of the FTO Ordinance, 2000.

(c) As the matter related to the assessment of income for which legal remedy of appeal was available, the case fell outside the jurisdiction of the FTO.

4. On the merits of the case, the RCIT submitted that---

a) The Complainant submitted only a Salary Certificate in the form of IT 11E (Salary Certificate) which was not legally correct because the Complainant enjoyed rental income in addition to his salary. He was required to file his return sin the form of IT 11B under Rule 190(3) of the Income Tax Rules, 1982.

(b) The Complainant claimed huge, amount of Rs.8,455,333 as exempt. Therefore, it did not qualify for the Self Assessment Scheme.

(c) In the return of income filed by the Complainant, he claimed deduction of Zakat at Rs.2001. However, the certificate submitted in support thereof showed the deduction only at Rs.859.

(d) Notices issued under sections 61 and 13(1)(aa) were within time .and in accordance with the provisions of law. The Complainant's claim of exemption of Honorarium/Reward was not admissible under the law. The nomenclature of the claim was changed to special allowance. That too was not exempt.

(e) The assessment was completed by Pakistan Revenue Automation Services Ltd [PRAL). The assessment for the year under consideration was not finalized under section 62 because, while the assessee's explanations and documents were under examination, IT 30 and Demand Notice were received from PRAL. Thus an order under section 62 would have amounted to double assessment.

(f) IT 30 was despatched to the Complainant through ordinary mail on 27-11-2003 along with the IT 30s of other employees of Supreme Court of Pakistan in a single envelope.

(g) The assessment was made after making adjustment as provided under section 59(3) by the PRAL. So the question of being condemned unheard did not arise.

5. The Counsel of the Complainant along with 'the Departmental Representative attended. The learned Advocate discussed the grounds of the complaint as enumerated in para 2 supra at length and quoted decisions of higher judiciary in support of his arguments. He argued that the special allowance was given to the Complainant under Rule 24 of Part-II of Supreme Court Rules which, under the provisions of Clause (39) of the Second Schedule to the R.O., was exempt. Claim of exemption of the interest income received from Hubco/WAPDA under Clause (77A) of the Second Schedule was not pressed.

6. The Departmental Representative reiterated the points raised by the RCIT in his written reply. It was stated that, according to rule 190(3) of the Income Tax Rules, 1982, the furnishing of return of income in IT 11E was not legal that is why the case could not be accepted under Self Assessment Scheme. Besides, the exemption claimed on account of special allowance was not admissible.

7. The contents of the Complaint and the reply furnished by the RCIT along with arguments of the representatives of the two sides were considered. The admitted facts in the complaint are that the complainant filed only a Salary Certificate (I.T-11E) whereas he was required to file return of income (IT-11B) under Rule 190(3) of I.T. Rules, 1982, because besides salary, he also had income from house property in assessment year 2002-03. Thus there were no valid return. Honorarium/ Reward amounting to Rs.8,454,333 and special allowance Rs.24,456 was claimed to be exempt from tax under clause (39) of 2nd schedule and exemption was also claimed on interest earned from HUBCO/WAPDA under clause (77 A).

8. The Taxation Officer (T.O.) instead of issuing notice under section 56 of R.O., issued notices under sections 61 and 13(1)(aa). Proceedings were conducted till 28-6-2003. However, a demand notice for Rs.2,776,436 was served on 11-5-2004 on the basis of IT-30 produced by PRAL under section 59(3). It proves maladministration on Account of---

(a) Incompetence in discharge of responsibility as the T.O, did not know ---

(i) That if there was no valid return, a notice under section 56 was required to be served calling for a valid return.

(ii) That notice under section 61 can be issued only when there is a valid return; hence proceedings under section 61 contrary to law.

(iii) There was no basis on the foregoing facts, to issue a notice under section 13(1)(aa) of R.O; hence contrary to law. The complainant had claimed certain exemptions, which after obtaining a valid return could be considered on merits.

(iv) Order was not passed under section 62 despite proceedings under section 61.

(v) Order was passed under section 59(3) after making adjustments on account of alleged legally inadmissible claims, although it required a proper consideration and finding through an order under section 62 of R. Ord.

The provision of this section empowers the assessing officer to "make such adjustments as may be necessary, including any adjustment under sections 34, 35, 36, 37, 38, 50, 53 or 54, the rules made under section 165, the First- Schedule and the Third Schedule" but not the Second Schedule.

9. The preliminary objection of the Respondent to the jurisdiction of this Forum is thus misconceived. The traits of maladministration, inter alia, the foregoing would not have been specifically included to its wide dictionary meanings if provisions of section 9(2)(b) were not meant to be construed strictly and restrictively. Where an assessment is based on an invalid return, it is contrary to settled law and ab initio void and invalid. It is a defect that is jurisdictional in nature and does not refer to the judgment of the assessing officer in assessment of complainant's income. The matters which are raised in the instant complaint do not relate to assessment of income or interpretation of law. The said matters relate to processes and acts contrary' to settled law and incompetence and ineptitude in discharge of duties and responsibility-a malady that has acquired alarming proportions warranting thorough diagnosis in order to take effective remedial measures. Cosmetic actions or sheltering such elements behind the loose and exaggerated veil of section 9(2) would amount to sabotaging the very purpose of this Forum.

10. It is recommended---

(i) That the Commissioner Companies Zone II, Lahore under-takes written counseling of the concerned Taxation Officer to pay more attention to correct application of relevant provisions of law so that assessees are saved from undue harassment.

(ii) That the Commissioner in discharge of his responsibility under section 122A of the Ordinance may call for the record of proceedings considered supra in which the orders ibid have been passed by the Taxation Officer working under him and proceed under subsection (2) of section 122A as he deems fit.

(iii) That compliance is reported within 45 days.
C. M. A./348/FTO Order accordingly.

[ArsalanYousuf]

Dear Laptop

Thanks

Mujhe yeah batao.. Kya hum tax deduct kerengey on payment of Insurance premium made to Dawood Family Takaful Limited.

Dawood Takaful is resident company as incorporated in pakistan.

Please assist

regards