Income Under the Head Salaries | Problems and Solutions

[Income Under the Head Salaries, Problems and Solutions, Dibrugarh University Questions 2009 - 2019 Exam, Salary Practical Problems and Solutions] 

INCOME UNDER THE HEAD SALARIES
SOLVED PRACTICAL PROBLEMS (2009 TO 2018)

Direct Tax Law’2009 (General)

Q.N.1. Mr. X, Corporate manager (Sales) in Vodafone ltd. receives the following income during the year ending march, 31st, 2008:

a)      Basic Salary 300000

b)      Leave travel concession for proceeding on leave (actual expenditure on rail fare Rs. 11000) 10000

c)       Tiffin allowance 4000

d)      Re – imbursement of medical expenses incurred for his own treatment 31300

e)      Besides, he enjoys the following perks:

f)       Free unfurnished flat in Delhi (Rent paid by the company Rs. 86000)

g)      The company provides two watchman (Salary Rs. 700 pm per person)

h)      Free use of Maruti 800 car for official as well as personal purposes (log book was not maintained by the employer)

i)        Free meal at the work place Rs 14700 (@ Rs. 70 per day for 210 days, amount is directly paid to the canteen by the company)

j)        Interest free loan for purchasing home appliances (Amount Rs. 120000, date of taking loan march 1st, 2004. Amount outstanding between April 1st, 2007 to November 30th, 2007 Rs. 76000 and after November 30th, 2007: Rs. 50000). The SBI lending rate for similar loan on 1st April, 2007 was 15.25%.

Compute his taxable income from salary for the assessment year 2008 – 2009 from the above information.

Computation of salary income of Mr. X for the Assessment Year (2018-2019)

Particulars

Amount

Amount

a) Basic Salary

b) Leave Travel Concession (Exempted Upto Actual Expenditure)

c) Tiffin Allowance

d) Re-imbursement of Medical Expenses

e) Perquisites:

1. Value of rent free house

15% of salary (salary = 3,00,000+4,000)

or Rent paid by the company

Whichever is less

2. Value of Car (Small car = 1,800*12)

3. Free Meal [(70-50)*210] (Free meal is exempted upto Rs. 50 per day)

4. Value of Interest free loan

(76,000*15.25%*8/12+50,000*15.25%*4/12)

5. Salary to watchman (700*2*12)

 

 

 

 

 

45,600

86,000

 

 

3,00,000

Exempt

4,000

31,300

 

 

 

 

45,600

21,600

4,200

 

10,268

16,800

Gross Salary

Less: Deduction U/S 16

Standard deduction u/s 16(ia)

 

4,33,768

 

50,000

Net Salary

 

3,83,768

Direct Tax Law 2010 (General)

Q.N.2. Mr. X has the following income during the previous year 2008-09:

Basic salary: Rs.1, 20,000.

Dearness allowance (forming part of salary)—Rs 24,000

Medical allowance (actual expenditure Rs 4,000)—Rs, 6,000

Educational allowance (for three children)—Rs 6,000  

Rent free house in Delhi for which the employer company paid Rs 5,000 p.m. as rent. The house was furnished with rented furniture. The rent of the furniture is Rs 300 p.m.

The company provided two servants and one watchman. The company paid Rs 300 to each of them per month.

The company paid Rs 2,500 on his training programme.

Mr. X paid his professional tax of Rs 2,400 and deposited Rs 20,000 as LIP on his own life and Rs 15,000 for NSC.

Compute his taxable income for the assessment year 2009-10.

Computation of salary income of Mr. X for the Assessment Year (2018-2019)

Particulars

Amount

Amount

a) Basic Salary

b) Dearness Allowance

c) Medical Allowance (Fully Taxable irrespective of actual expenditure)

d) Education Allowance

Less: Exempted  @ Rs. 100 per month per child for a maximum of two children)

e) Value of Rent free house

15% of Salary (Salary = 1,20,000+24,000+6,000+3,600 = 1,53,600)

Or Actual rent paid by the company

Whichever is less

Add: Hire Charges of Furniture

f) Salary of Servants  (300*2*12)

g) Salary of watchman (300*1*12)

h) Expenses on Training Programme (Fully exempted since it is for official purpose)

 

 

 

6,000

2,400

 

23,040

60,000

23,040

3,600

 

1,20,000

24,000

6,000

 

3,600

 

 

 

 

26,640

7,200

3,600

Exempt

Gross Salary

Less: Deduction U/S 16

(ia) Standard Deduction

(iii) Professional Tax Paid by employee

 

1,91,040

 

50,000

2,400

Income from Salary

Less: Deduction U/S 80C

a) LIP = 20,000

b) NSC= 15,000

 

 

 

 

1,38,640

 

 

35,000

Taxable Income

 

1,03,640

Direct Tax Law 2011 (General)

Q.N.3. From the following information, compute the taxable income for assessment year 2010-2011 under the head “Salaries” of Mr. X who is an employee of a transport company:

Salary @ Rs. 10000 p.m.

Arrears of salary Rs. 5000

DA @ Rs. 4000 p.m.

Employer is paying insurance premium of Rs. 1000 pa on his life.

Bonus Rs. 15000

Education allowance for his two children @ Rs. 300 p.m.

Cash gift Rs. 20000

City compensatory allowance @ Rs. 1000 p.m.

Medical expenses paid by employer Rs. 18000

He contributes 15% of his salary to a recognised provident fund and his employer also contribute the same.

He is given lunch allowance @ Rs. 100 for 250 days during the previous year.

He is provided with a mobile phone, the bill of which is paid by the company Rs. 6000.

Computation of salary income of Mr. X for the Assessment Year 2018-19

Particulars

Amount

Amount

Basic Salary @ Rs. 10,000 p.m.

Arrears of salary

D.A. @ Rs. 4,000 p.m.

Life Insurance Premium paid by employer (Perquisite)

Bonus 

Children Education allowance

Less: Exempted @ Rs. 100 per month per child for a maximum of two children

Cash gift – Fully taxable

City compensatory allowance

Medical expenses paid by employer

Employer’s contribution in employee’s RPF @ 15%

Less: Exempted @ 12% of Salaries (Salaries = 1,20,000)

Lunch allowance @ Rs. 100 x 250 [Fully Taxable]

Mobile bill of employee paid by employer

 

 

 

 

 

3,600

2,400

 

 

 

18,000

14,400

1,20,000

5,000

48,000

1,000

15,000

 

1,200

20,000

12,000

18,000

 

3,600

25,000

Exempted

Gross Salary

Less: Deduction u/s 16

(ia) Standard Deduction

 

2,68,800

 

50,000

Income from Salary

 

2,18,800

Direct Tax Law 2012 (General)

Q.N.4. Mr. X is a manager of a textile company at japer since 1986. He submits the following particulars of his income for the financial year 2010 – 2011:

a)      Basic salary 240000per

b)      Dearness allowance  5000 p.m. (200 p.m. enters into retirement benefit)

c)       Education allowance for two children @ 150 p.m. per child

d)      Commission on sales @1% of turnover of 1000000

e)      Travelling allowance 30000. The entire amount was spent by him for official purpose

f)       He was given cloth worth 1000 by his employer free of cost

g)      He resides in the flat of the company at Jaipur (26 Lacs population)

h)      A cook and a watchman have been provided by the company at the bunglow who are paid @ 400 each p.m.

i)        He has been provided with a motor car of 1.8 ltrs engine capacity for his official and personal use. All expenses are borne by employer of the car.

j)        Employer’s contribution to RPF is 40000 and interest credited to RPF @ 13% amounted to 16250.

k)      His own contribution to RPF 40000

l)        Rent of house recovered from his salary 1500 p.m.

Compute the income from salary for the assessment year 2011 – 2012.

Computation of salary of Mr. X for the Assessment Year (2018-2019)

Particulars

Amount

Amount

a) Basic Salary

b) Dearness Allowance

c) Education Allowance (150*12*2)

Less: Exempted @ Rs. 100 per month per child for a maximum of two children

d) Commission on Turnover (10,00,000*1%)

e) Travelling Allowance (Fully exempted since fully spent for official duties)

f) Free Cloth (It is exempted upto Rs. 5,000)

g) Value of House at concessional rate

15% of Salary (Salary = 2,40,000+2,400+1,200+10,000=2,53,600)

Less: Rent recovered from employee @ 1,500 per month

h) Salary of Cook

i) Salary of Watchman

j) Value of Car (2,400*12)

k) Employer’s Contribution to RPF

Less: Exempted upto 12% of salary (Salary =2,40,000+2,400+10,000)

l) Interest on RPF @ 13%

Less: Exempted up 9.5% (16,250*9.5/13)

 

 

3,600

2,400

 

 

 

 

38,040

18,000

 

 

 

40,000

30,288

16,250

11,875

2,40,000

60,000

 

1,200

10,000

Exempt

Exempt

 

 

20,040

4,800

4,800

28,800

 

9,712

 

4,375

Gross Salary

Less: Deduction U/S 16

(ia) Standard deduction

 

3,83,727

 

50,000

Income from Salary

 

3,33,727

2014 (General -New Course)

Q.N.5. From the following information, compute the taxable income from salary of Mr.X for the AY 13-14

(i)            Salary @10000 pm

(ii)          Dearness allowance (forming part of salary)@5000 p.m.

(iii)         Education allowance for his two children@250 p.m.

(iv)        He resided in the flat of the company at Guwahati (population 30 lakhs)

(v)          Rent of the house recovered from his salary @ 750 p.m.

(vi)        He has been provided with a motor car of 1.6 litre engine capacity for his official and personal use. All expenses of the car are born by the employer

(vii)       Employer contribution to RPF is Rs. 25000 and interest credited to RPF@11% amounted to Rs. 16500.

(viii)     A cook and a watchman have been provided by the employer at his residence and they paid @500 each p.m.

(ix)        Mr. X paid Rs. 3000 for his professional tax.

Ans: Computation of Income under the salaries of Mr. X for the AY 2013 - 14

Particulars

Amount

Amount

1. Basic Salary

2. Dearness Allowance

3. Children Education Allowance

Less: Exempted upto Rs. 100 per month per child for a maximum of 2

4. Value of rent free house

15% of salary (salary = 1,20,000 +60,000 + 600)

Less:  Rent recovered from employee

5. Value of Car  (1,800 * 12)

6. Salary of cook (500*12)

7. Salary of watchman (500*12)

8. Employer’s contribution to RPF

Less: exempted upto 12% of salary (Salary = 1,20,00+60,000)

9. Interest on RPF

Less: Exempted upto 9.5% (16,500*9.5/11)

 

 

3,000

2,400

 

27,090

9,000

 

 

 

25,000

21,600

16,500

14,250

1,20,000

60,000

 

600

 

 

18,090

21,600

6,000

6,000

 

3,400

 

2,250

Gross Salary

Less: Deduction up Sec. 16

(ia) Standard deduction

(iii) Professional tax paid by the employee

 

2,37,940

 

50,000

3,000

Net Salary

 

1,84,940

2016 (New Course)

Q.N.6. From the following information of Mr. Ashok, compute his taxable income for the assessment year, 2015-16: 14

a)      Basic salary @ Rs. 20,000 p.m.

b)      Arrears of salary Rs. 10,000.

c)       Dearness allowance @ Rs. 8,000 p.m.

d)      Employer is paying insurance premium of Rs. 20,000 p.a. on his life.

e)      Bonus Rs. 30,000.

f)       Education allowance for his two children @ Rs. 600 p.m.

g)      Cash gift Rs. 40,000.

h)      City compensatory allowance @ Rs. 2,000 p.m.

i)        Medical expenses paid by employer Rs. 18,000.

j)        He contributes 15% of his salary to a recognized provident fund and his employer also contributes the same.

k)      He is provided with a mobile phone, the bill of which is paid by the company Rs. 6,000.

l)        He is given lunch allowance @ Rs. 100 per day for 250 days during the previous year.

Ans: Computation of Income under the salaries of Mr. Ashok for the AY 2015 - 2016

Particulars

Amount

Amount

1. Basic Salary

2. Dearness Allowance

3. Children Education Allowance

Less: Exempted upto Rs. 100 per month per child for a maximum of 2

4. Bonus

5. Cash Gift (Fully Taxable)

6. CCA

7. Arrear of salary

8. Medical expenses reimbursed

9. Employer’s contribution to RPF (15% of basic i.e. 2,40,000)

Less: exempted upto 12% of salary

10. Mobile phone expenses

11. Lunch allowance is fully taxable (Free meal is exempted upto Rs. 50)

 

 

7,200

2,400

 

 

 

 

 

36,000

28,800

 

 

2,40,000

96,000

 

4,800

30,000

40,000

24,000

10,000

18,000

 

7,200

Exempt

25,000

Gross Salary

Less: Deduction u/s 16

(ia) Standard deduction

 

 

4,95,000

 

50,000

Income under the head Salaries

Less: Deduction under sec. 80 C (Maximum deduction Rs. 1,50,000)

a) LIP

b) Contribution to RPF

 

 

20,000

36,000

4,45,000

 

 

56,000

Taxable income

 

3,89,000

2017 (New course)

Q.N.7. Mr. X has the following Income during the previous year, 2015 – 16:

a)      Basic salary Rs. 2,60,000

b)      Dearness allowance (forming part of salary) Rs. 40,000

c)       Education allowance (for three children) Rs. 6,000

d)      Rent paid for a residential house at Guwahati Rs. 60,000

e)      House rent allowance Rs. 48,000

f)       He has been provided with motorcar of 1.8 litre engine capacity for the official and personal use. All expenses of the motorcar are borne by the employer.

g)      He contributes 14% of his salary to a recognized provident fund and his employer also contributes the same amount.

h)      Interest credited to recognized provident fund @ 13% amounted to Rs. 13,000

i)        Medical expenses paid by his employer Rs. 25,000

j)        Mr. X paid Rs. 2,500 for his professional tax.

Compute the Income from salary for the Assessment year, 2016 – 17.                   

Computation of salary income for the Assessment Year 2018-19

Particulars

Amount

Amount

1. Basic Salary

2. Dearness Allowance

3. Children Education allowance

Less: Exempted @ Rs. 100 per month per child for a maximum of two children

4. House Rent Allowance

Less: Exempted upto minimum of the following three points

a) Actual HRA

b) 40% of Salary (Salary=2,60,000+40,000=3,00,000)

c) Rent paid in excess of 10% of salary (60,000 – 10% of salary)

Exempted

5. Value of Motor car (2,400*12)

6. Medical Expenses

7. Employer’s contribution in employee’s RPF @ 14%

Less: Exempted @ 12% of Salaries (Salaries = 2,60,000+40,000)

8. Interest to RPF @ 13%

Less: Exempted upto @ 9.5%

 

 

6,000

2,400

48,000

 

48,000

1,20,000

30,000

30,000

 

 

42,000

36,000

13,000

9,500

2,60,000

40,000

 

3,600

 

 

 

 

 

18,000

28,800

25,000

 

6,000

 

3,500

Gross Salary

Less: Deduction u/s 16

(ia) Standard Deduction

(iii) Professional Tax paid

 

3,84,900

 

50,000

2,500

Income from Salary

 

3,35,400

2017 (Old Course)

Q.N.8. Mr. X has the following Income during the previous year, 2015 – 16:

a)      Basic salary Rs. 1,50,000

b)      Dearness allowance (forming part of salary) Rs. 50,000

c)       Medical allowance (actual expenditure Rs. 10,000) Rs. 16,000

d)      Educational allowance (for two children) Rs. 4,000

e)      He has been provided with motorcar of 1.6 litre engine capacity along with a driver for the official and personal use. All expenses of the motorcar are borne by the employer.

f)       He contributes 15% of his salary to a recognized provident fund and his employer also contributes the same amount.

g)      The Company paid Rs. 6,000 on his training programme.

h)      He was given cloth worth Rs. 4,000 by his employer free of cost.

i)        A cook and a watchman have been provided by the company who are paid @ Rs. 600 each per month.

Compute the Income from salary for the Assessment year, 2016 – 17.                                                    14

Computation of salary income for the Assessment Year 2018-19

Particulars

Amount

Amount

1. Basic Salary

2. Dearness Allowance

3. Medical Allowance (Fully taxable irrespective of actual expenditure)

4. Children Education allowance

Less: Exempted @ Rs. 100 per month per child for a maximum of two children

5. Value of Motor car (1,800*12)

Add: Salary to driver (900*12)

6. Training programme

7. Free cloth

8. Salary to watchman

9. Salary to cook

10. Employer’s contribution to RPF @ 15% of salary

Less: Exempted upto 12% of salary (Salary = 1,50,000+50,000)

 

 

 

4,000

2,400

21,600

10,800

 

 

 

 

30,000

24,000

1,50,000

50,000

16,000

 

1,600

 

32,400

Exempt

Exempt

7,200

7,200

 

6,000

Gross Salary

Less: Deduction u/s 16

(ia) Standard Deduction

 

2,70,400

 

50,000

Income from Salary

 

2,20,400

2018 (New Course)

Q.N.9. Mr. X is an employee of Ranchi (population 15 lakhs) based on company. He provides the following particulars of his salary income:

1)      Basic salary – Rs. 12,000 per month.

2)      Profit bonus – Rs. 12,000.

3)      Commission on turnover achieved by Mr. X – Rs. 42,000.

4)      Entertainment allowance – Rs. 2,000 per month.

5)      Club facility – Rs. 6,000.

6)      Transport allowance – Rs. 1,800 per month.

7)      Free use of car of more than 1.6 litre capacity for both personal and employment purposes; expenses are met by employer.

8)      Rent-free house provided by employer; lease rent paid by employer – Rs. 6,000 per month.

9)      Free education facility for three children of the employee (bills issued in the name of employer) – Rs. 22,500.

10)   Gas, water and electricity bills issued in the name of the employee but paid by employer – Rs. 16,800.

Compute income under the head salary for the Assessment Year, 2017-18.                                                          14

Computation of salary income of Mr. X for the Assessment year 2018-19

Particulars

Rs.

Rs.

1. Salary

2. Profit Bonus

3. Commission

4. Entertainment Allowance

5. Club facility – Taxable

6. Transport Allowance (exemption available for handicapped employees only)

7. Car Perquisite – Big car @ Rs. 2,400 p.m.

8. Education facility for children

9. Gas, water and electricity bill paid by employer

10. Value of rent free house;  15% of employee’s salary i.e. Rs. 33,660 or rent paid by employer Rs. 72,000, whichever is less

(Salary for this purpose  [1,44,000 + 12,000 + 42,000 + 24,000 + 21,600 = 22,43,600])

 

 

 

 

 

 

1,44,000

12,000

42,000

24,000

6,000

21,600

28,800

22,500

16,800

36,540

Gross Salaries

Less: Deduction u/s 16

(ia) Standard deduction

 

3,54,240

 

50,000

Income from Salaries

 

3,04,240

Note. The perk of car and club facility both are taxable as FBT has been abolished.

2018 (Old course)

Q.N.9. From the particulars given below, compute the gross salary of Mr. X for the Assessment Year, 2017 – 18:

1)      Salary – Rs. 1,48,000.

2)      Bonus – Rs. 12,000.

3)      Free gas, electricity, water, etc. (actual bills paid by company) – Rs. 6,000.

4)      Furnished flat provided to the employee at Kanpur (population above 25 lakhs) for which actual rent paid by the company – Rs. 78,000.

5)      The employee pays rent @ Rs. 1,000 p.m. to the company.

6)      Furniture at cost (including television, fridge and air-conditioner) – Rs. 50,000.

Computation of salary income of Mr. X for the Assessment year 2018-19

Particulars

Rs.

Rs.

1. Salary

2. Bonus

3. Value of rent free house; 

15% of employee’s salary (Salary for this purpose = 1,48,000 + 12,000 =1,60,000)

Or Rent paid by employer

whichever is less

Add: 10% of cost of furniture (50,000*10%)

 

Less: Rent recovered from employee

4. Free gas, electricity bill paid by the company

 

 

 

24,000

78,000

24,000

5,000

29,000

12,000

1,48,000

12,000

 

 

 

 

 

 

17,000

6,000

Gross Salaries

Less: Deduction u/s 16

(ia) Standard deduction

 

1,83,000

 

50,000

Income from Salaries

 

1,33,000

Income Tax 2009 (Speciality)

Q.N.10. Mr. Pratap Singh is a production Manager of an Industrial unit at Mumbai. The particulars of his salary income areas under:

Particulars

Amount

Basic salary

Dearness allowance(given under the terms of employment)

Entertainment allowance

Medical  allowance

House   Rent allowance

Rent  paid  for the house  

15,000 p.m

5000p.m

1000 p.m

500 p.m.

4000 p.m.

5000 p.m.

Car of 1.2 Lt. Capacities provided by employer meets expenses of car. He and his employer (each) contribute 15% of salary to R.P.F.

Mr. Singh had taken interest free loan of Rs. 15,000 to purchase Washing Machine. Compute income under the head salary for the assessment year 2008—2009.

Computation of salary income of Mr. M for the assessment year (2018-2019)

Particulars

Amount

Amount

Salary @ Rs. 15,000 p.m.

D.A. [as per terms of employment] @ Rs. 5,000 p.m.

Entertainment allowance

Medical allowance

Employer’s contribution to RPF @ 15% of salary of 2,40,000

Less: 12% of salary [(Salary = 1,80,000+60,000=2,40,000 x 12%]

 

House Rent Allowance

Less: Exempted upto least of following                                                 

a)     Actual HRA received                                                            

b)     Rent paid – 10% of salary [60,000  – 24,000] 

c)      50% of 2,40,000

Exempted

Car perk taxable @ Rs. 1,800 p.m. being a small car (1,800*12)

 

 

 

 

36,000

28,800

 

48,000

 

48,000

36,000

1,20,000

36,000

1,80,000

60,000

12,000

6,000

 

7,200

 

 

 

 

 

 

12,000

21,600

Gross Salaries

Less: Deduction U/S 16

(ia) Standard deduction

 

2,98,800

 

50,000

Salary Income

 

2,48,800

Note. (1) Car provided by employer is a taxable perk in the hands of the specified employee. (2) Since the amount of loan from employer is less than Rs. 20,000, so it is fully exempted.

Income Tax 2010 (Speciality)

Q.N.11. Mr. Pranjal working as a Manager (sales) with HL Ltd. provides the following information for the year ending March 31, 2009:

Basic Salary—Rs 1, 44,000

DA (50% of it is meant for retirement benefit Rs 1, 44,000)

Commission as a percentage of turnover of the employer company—0.5%

Turnover of the company—Rs 50, 00,000

Bonus—Rs 30,000

Gratuity (received in service)—Rs 30,000

Own contribution towards RPF—Rs 25,000

Employers contribution towards RPF—20% of basic

Interest contribution in the RPF @ 15%--Rs 15,000

Gold ring worth Rs 10,000 was given by employer on his 20th wedding anniversary

He received interest Rs 5,860 on bank fixed deposit, dividend of Rs 1,260 from shares of Indian companies and interest of Rs 7,540 from the debenture of Indian companies. Made payment by cheques of Rs 15,370 towards premium on LIP and Rs 12,500 for Mediclaim insurance policy. He invested in 6 years NSC Rs 30,000, FDR of SBI for 7 years Rs 50,000. He has donated Rs 11,000 to an institution approved under section 80G and of Rs 5,100 to Prime Minister’s national relief fund during the year.

Compute his Income from salary and tax payable thereon for the assessment year 2009-10.

Computation of salary of Mr. X for the Assessment Year (2018-2019)

Particulars

Amount

Amount

a) Basic Salary

b) Dearness Allowance (50% enters into pay for retirement benefit)

c) Commission on turnover (50, 00,000*0.5%)

d) Bonus

e) Gratuity received while in service (Fully taxable if received during service)

f) Employer’s Contribution to RPF (20% of basic salary)

Less: Exempted upto 12% of salary (Salary =1,44,000+72,000+25,000)

g) Interest on RPF @ 15%

Less: Exempted up 9.5% (15,000*9.5/15)

h) Gold Ring (Gift in kind exempted upto Rs. 5000)

 

 

 

 

 

28,800

28,800

15,000

9,500

 

1,44,000

1,44,000

25,000

30,000

30,000

 

Exempt

 

5,500

5,000

Gross Salary

Less: Deduction U/S 16

(ia) Standard Deduction

 

3,83,500

 

50,000

Income from Salary

 

3,33,500

Income Tax 2012 (Speciality)

Q.N.12. Following are the particulars of salary of Mr. Borkakoty, an employee of ONGCL of Ahmedabad (Population exceeding 25 lakhs):

a.       Basic salary 60000 p.m.

b.      DA 10000 p.m. (50% forms part of salary)

c.       Transport allowance 4000 p.m.

d.      Bonus 20000

e.      Commission 80000 on turnover

f.        Telephone bill of his residence paid by employer 20000

g.       Amount paid by employee for free supply of gas and electricity at residence 36000

h.      He got a loan of 1000000 from his employer at a nominal rate of interest of 3.25% for the construction of his house. SBI lending rate as on 1-4-2010 at 8%.

i.         He is paid house rent allowance of 10000 p.m. till 31st July, 2010 and thereafter he is given a rent-free house got by his company on a monthly rent of 20000. Cost of furniture 100000. Before shifting to rent free house he was paying a rent of 8000 p.m.

j.        Leave travel concession 40000

k.       He is given a free lunch worth 100 per day

l.         Both he and his employer are contributing 10000 p.m. each towards recognised provident fund (RPF)

Find out Mr. Borkakoty’s salary income for the assessment year 2011 – 2012.

Computation of salary of Mr. X for the Assessment Year (2018-2019)

Particulars

Amount

Amount

a) Basic Salary

b) Dearness Allowance (50% enters into pay for retirement benefit)

c) Transport Allowance

d) Commission on turnover

e) Bonus

f) Telephone bill-reimbursed

g) Gas and Electricity facility

h) Interest on loan at concessional rate  (10,00,000*4.75%)

i) House Rent Allowance (4 months only)

Less: Exempted upto minimum of the following three points:

a) Actual HRA

b) 40% of Salaries [(7,20,000+60,000+80,000)*40%*4/12]

c) Rent paid in excess of 10% of salaries (32,000-8,60,000*10%*4/12)

j) Value of Rent free house (8 months)

15% of salary [(salary = 7,20,000+60,000+48,000+80,000+20,000)*8/12]

Or Hire charges (20,000*8)

Whichever is less

Add: 10% of cost of furniture (1,00,000*10%*8/12)

k) Leave Travel Concession (Fully taxable)

l) Free Lunch [(100-50)*250](ASSUMING YEARLY WORKING DAYS 250)

m) Employer’s Contribution to RPF

Less: Exempted  upto 12% of salary [(7,20,000+60,000+80,000)*12%]

 

 

 

 

 

 

 

 

40,000

 

40,000

1,14,667

28,667

 

92,800

1,60,000

92,800

6,667

 

 

1,20,000

1,03,200

7,20,000

1,20,000

48,000

80,000

20,000

Exempt

36,000

47,500

 

 

 

 

11,333

 

 

 

 

99,467

40,000

12,500

 

16,800

Gross Salary

Less: Deduction U/S 16

(ia) Standard deduction

 

12,51,600

 

50,000

Income from Salary

 

12,01,600

Income Tax 2013 (Speciality)

Q.N.13. From the following information, compute the taxable income for the assessment year 2013 – 14 under the head ‘salaries’ of Mr. R who is an employee of a tea company at Guwahati:                                    12

1.       Basic Salary Rs. 15,000 p.m.

2.       DA @ Rs. 5,000 p.m.

3.       Employer is paying insurance premium of Rs. 15,000 p.a. on R’s life.

4.       He gets house rent allowance @ Rs. 2,000 p.m. He pays a rent of Rs. 2,500 p.m.

5.       He is provided with a car of 1.5 lt. capacity engine with driver which was used partly for official and partly for private purposes.

6.       Education allowance for grandchild @ Rs. 400 p.m.

7.       Employer’s contribution to recognized provident fund is @ 20% of salary and the interest credited to this fund at 14% rate amounted to Rs. 14,000.

8.       Medical expenses paid by employer Rs. 15,000.

9.       He took advance salary of 2 months.

10.   The company provided him the facility of a gardener and a cook, each of whom is being paid a salary of Rs. 500 per month. The company also paid Rs. 5,000 for his electric bills and Rs. 3,000 for his water bills.

11.   The employer spent Rs. 2,500 on his refresher course.

12.   Profession tax paid by Mr. R is Rs. 2,500.

Computation of salary of Mr. X for the Assessment Year (2018-2019)

Particulars

Amount

Amount

a) Basic Salary

b) Dearness Allowance

c) Education allowance for grand child

d) House Rent Allowance

Less: Exempted upto minimum of the following three points:

a) Actual HRA

b) 40% of Salaries (1,80,000*40%)

c) Rent paid in excess of 10% of salaries (30,000-18,000)

e) Employer’s Contribution to RPF (1,80,000*20%)

Less: Exempted upto 12% of salary (1,80,000*12%)

f) Interest on RPF

Less: Exempted upto 9.5% (14,000*9.5/14)

g) Medical expenses paid by employer

h) Advance salary

i) Salary of gardener (500*12)

j) Salary of Cook (500*12)

k) Electric bill of employee

l) Water bill of employee

m) Expenses on training programme

n) Life insurance premium paid by the employer

o) Value of car (1,800*12)

Add: Driver’s salary (900*12)

 

 

 

24,000

 

24,000

72,000

12,000

36,000

21,600

14,000

9,500

 

 

 

 

 

 

 

 

21,600

10,800

1,80,000

60,000

4,800

 

 

 

 

12,000

 

14,400

 

4,500

15,000

30,000

6,000

6,000

5,000

3,000

Nil

15,000

 

32,400

Gross Salary

Less: Deduction U/S 16

(ia) Standard deduction

 

3,88,100

 

50,000

Income from Salary

 

3,33,100

Income Tax 2014 (Speciality)

Q.N.14. From the following information compute the taxable income under the head ‘Salaries’ for the assessment year 2014 – 15 of Mr. P who is a central government employee at Dibrugarh:                                           14

a)      Basic salary – Rs. 30,000 p.m.

b)      DA (enters) – 60% of salary.

c)       Transport allowance for commuting from home to office – Rs. 2,000 p.m.

d)      Deputation allowance (for two months) – Rs. 3,000 p.m.

e)      Education allowance for two children at Rs. 250 p.m. per child and hostel allowance for two children at Rs. 450 p.m. per child.

f)       He has been provided with a rent free accommodation. The license fee for the accommodation has been fixed at Rs. 2,000 p.m. The government has also provided him with furniture items costing Rs. 1,00,000 (w.d.v. Rs. 75,000) for his personal use.

g)      He has been provided with the facility of a servant and a watchman with effect from 01.10.2013 and the government is paying Rs. 3,000 p.m. to each of them.

h)      A laptop costing Rs. 45,000 has been given to him for his official as well as personal purposes.

i)        On 01.04.2013, he took a loan of Rs. 1,50,000 from his employer to buy a car at a concessional rate of interest of 8% p.a. SBI rate of interest as on 01.04.2013 is 14% p.a.

j)        He paid professional tax of Rs. 3,000 p.a.

Computation of salary of Mr. X for the Assessment Year (2018-2019)

Particulars

Amount

Amount

a) Basic Salary

b) Dearness Allowance (60% of salary)

c) Children education allowance (250*12*2)

Less: Exempted @ 100 per month for a maximum of two children

d) Hostel expenditure allowance (450*12*2)

Less: Exempted @ 300 per month for a maximum of two children

e) Travelling allowance

f) Deputation allowance

g) Use of laptop and computers

h) Salary of servants

i) Salary of watchman

j) Value of rent free house:

License fees of the house

Add: 10% of cost of furniture

k) Interest free loan (1,50,000*6%)

 

 

6,000

2,400

10,800

7,200

 

 

 

 

 

 

24,000

10,000

3,60,000

2,16,000

 

3,600

 

3,600

24,000

6,000

Exempt

18,000

18,000

 

 

34,000

9,000

Gross Salary

Less: Deduction U/S 16

(ia) Standard deduction

(iii) Professional tax paid by employee

 

6,92,200

 

50,000

3000

Income from Salary

 

6,39,200

Income Tax 2015 (Speciality)

Q.N.15. From the following information, compute the taxable income for the assessment year 2014 – 15 under the head ‘Salaries’ of Shri Krishna who is working at Guwahati:                                      14

(i) Basis salary – Rs. 20,000 p.m.

(ii) Dearness allowance – Rs. 6,000 p.m.

(iii) He gets house rent allowance @ 3,000 p.m. He pays a rent of Rs. 4,000 p.m.

(iv) The employer provided him the facility of a gardener and a cook, each of whom is being paid a salary of Rs. 600 p.m.

(v) He is provided with a motor car of 1.8 ltrs. capacity engine with a driver which was used partly for official purpose and partly for private.

(vi) Employer’s contribution to a recognized provident fund is @ 15% of salary and interest credited to this fund @ 13% amounted to Rs. 13,000.

(vii) Medical expenses paid by employer is Rs. 20,000 for medical treatment in a private hospital.

(viii) He took an advance salary for two months.

(ix) A lunch allowance @ Rs. 100 per day was given for 300 days during the previous year.

(x) He paid professional tax of Rs. 3,500 per annum.

Computation of salary of Mr. X for the Assessment Year (2018-2019)

Particulars

Amount

Amount

a) Basic Salary

b) Dearness Allowance

c) Lunch Allowance (300*100)

d) Advance salary

e) House Rent Allowance

Less: Exempted upto minimum of the following three points:

a) Actual HRA

b) 40% of Salaries (Salaries = 2,40,000)

c) Rent paid in excess of 10% of salaries (48,000-24,000)

f) Employer’s Contribution to RPF

Less: Exempted  upto 12% of salary [2,40,000*12%]

g) Interest on RPF

Less: Exempted upto 9.5% (13,000*9.5/13)

h) Salary of gardener (600*12)

i) Salary of cook (600*12)

j) Value of car (2,400*12)

Add: Driver’s salary (900*12)

k) Reimbursement of medical expenses

 

 

 

 

36,000

 

36,000

96,000

24,000

36,000

28,800

13,000

9,500

 

 

28,800

10,800

2,40,000

72,000

30,000

40,000

 

 

 

 

12,000

 

7,200

 

3,500

7,200

7,200

 

39,600

20,000

Gross Salary

Less: Deduction U/S 16

(ia) Standard deduction

(iii) Professional tax

 

4,78,700

 

50,000

3,500

Income from Salary

 

4,25,200

Income Tax 2016 (Speciality- New Course)

Q.N.16. Shri Hari is an employee of a Guwahati based company. He provides the following particulars of his salary income:

Basic Salary – Rs. 15,000/- per month.

Bonus – Rs. 15,000/-

Commission on turnover achieved – Rs. 40,000/-

Club facility – Rs. 7,000/-

Rent-free house provided for employer. Lease rent paid by employer – Rs. 7,200/-

Transport allowance – Rs. 2,000 per month.

Free education facility of three children (bills issued in the name of employer) – Rs. 24,000/-

Interest credited to recognized provident fund @ 12% amounted to Rs. 24,000/-

Free use of motorcar of 1.8. It capacity for both official and personal purposes – expenses are met by employer.

He paid – Rs. 3,000/- as professional tax.

Compute Shri Hari’s income under the head ‘income from salary’ for the assessment year, 2016-17.   14

Computation of salary of Mr. X for the Assessment Year (2018-2019)

Particulars

Amount

Amount

a) Basic Salary

b) Bonus

c) Commission on turnover

d) Transport Allowance

e) Club facility

f) Free education

g) Value of car (2,400*12)

j) Value of Rent free house (8 months)

15% of salary [salary = 1,80,000+15,000+40,000+24,000= 2,59,000]

Or Hire charges (Lease rent or rent)                                                 

Whichever is less

Interest on RPF @ 12%

Less: Exempted @9.5% (24,000*9.5/12)

 

 

 

 

 

 

 

 

38,850

7,200

7,200

24,000

19,000

1,80,000

15,000

40,000

24,000

7,000

24,000

28,800

 

 

 

7,200

 

5,000

Gross Salary

Less: Deduction U/S 16

(ia) Standard deduction

(iii) Professional tax paid

 

3,31,000

 

50,000

3,000

Income from Salary

 

2,78,000

Or

Income Tax 2016 (Speciality- Old Course)

Q.N. 17. From the following information, compute the taxable income from salary of Shri Krishna for the assessment year 2016-17:

Basic Salary – Rs. 2,50,000/-

Dearness allowance – Rs. 50,000/- (enters into retirement benefit)

Rent paid for a residential house at Tinsukia – Rs. 72,000/-

House Rent allowance received by him – Rs. 68,000/-

Education allowance for two children – Rs. 5,000/-

Medical expenses paid by the employer – Rs. 24,000/-

He contributes 15% of his salary to a recognized provident fund to his employer who also contributes an equal amount.

Interest credited to recognized provident fund @ 11% amounted to Rs. 13,530.

He is given a free lunch worth Rs. 200/- per day.

He pays Rs. 2,500/- as professional tax.                                  14

Computation of salary of Mr. X for the Assessment Year (2018-2019)

Particulars

Amount

Amount

a) Basic Salary

b) Dearness Allowance

c) House Rent Allowance

Less: Exempted upto minimum of the following three points:

a) Actual HRA

b) 40% of Salaries (Salaries = 2,50,000+50,000=3,00,000)

c) Rent paid in excess of 10% of salaries (72,000-30,000)

d) Education allowance

Less: Exempted upto Rs. 100 p.m. per child for a maximum of 2 children

f) Employer’s Contribution to RPF

Less: Exempted  upto 12% of salary [3,00,000*12%]

g) Interest on RPF

Less: Exempted upto 9.5% (13,000*9.5/13)

Free lunch [(200-50)*250] (Assuming 250 working days during previous year)

k) Reimbursement of medical expenses

 

 

68,000

 

68,000

1,20,000

42,000

5,000

2,400

45,000

36,000

13,530

11,685

 

 

2,50,000

50,000

 

 

 

 

26,000

 

2,600

 

9,000

 

1,845

37,500

24,000

Gross Salary

Less: Deduction U/S 16

(ia) Standard Deduction

(iii) Professional tax paid

 

4,00,945

 

50,000

2,500

Income from Salary

 

3,48,445

Income Tax 2017 (Speciality-New course)

Q.N.18. Shri Ratan, a manager of a Guwahati based Company. He submits the following particulars of his salary Income:

1)      Basic salary – Rs. 14,000 per month.

2)      Dearness Allowance – Rs. 8,400 per month (Rs. 1,300 per month enters into retirement benefit)

3)      Education allowance for two children at Rs. 6,000 p.a. per child Rs. 3,000 and hostel allowance for two children at Rs. 350 p.m. per child.

4)      Commission – Rs. 25,100.

5)      Leave encashment – Rs. 10,000.

6)      Employer’s contribution to RPF – Rs. 25,200.

7)      Travelling allowance for his official tours Rs. 20,000. Actual expenditure on tour amounted to Rs. 17,000.

8)      Interest credited to RPF account in the previous year @ 10% amounted to Rs. 8,000.

9)      He resides in the Bungalow of the company. Its fair rent is Rs. 6,500 p.m. The company deduct Rs. 1,200 p.m. from salary as rent of the Bungalow.

10)   He paid professional tax of Rs. 250 per month.

Compute Shri Ratan’s income under the head ‘income from salary’ for the assessment year, 2017-18. 14

Computation of salary of Mr. X for the Assessment Year (2018-2019)

Particulars

Amount

Amount

a) Basic Salary

b) Dearness Allowance

c) Education Allowance

Less: Exempted @ Rs. 100 per month per child for a maximum of two children

d) Hostel Expenditure allowance

Less: Exempted @ Rs. 300 per month per child for a maximum of two children

e) Commission on Turnover

f) Leave Encashment during service is fully taxable

g) Travelling allowance

Less: Actual expenses

g) Value of House at concessional rate

10% of Salary (Salary = 1,68,000+15,600+3,600+1,200+25,100+3,000=2,16,500)

Less: Rent recovered from employee @ 1,200 per month

k) Employer’s Contribution to RPF

Less: Exempted upto 12% of salary (Salary =1,68,000+15,600+25,100)

l) Interest on RPF @ 13%

Less: Exempted up 9.5% (16,250*9.5/13)

 

 

6,000

2,400

8,400

7,200

 

 

20,000

17,000

 

21,650

14,400

25,200

25,044

8,000

7,600

1,68,000

1,00,800

 

3,600

 

1,200

25,100

10,000

 

3,000

 

 

7,250

 

156

 

400

Gross Salary

Less: Deduction U/S 16

(ia) Standard deduction

(iii) Professional tax paid

 

3,19,506

 

50,000

3,000

Income from Salary

 

2,66,506

Income Tax 2017 (Speciality-Old Course)

Q.N.19. Shri Swadhin Jyoti originally hail from Assam is working at Pune in a company. He provides the following information about his salary income:

1)      Basic salary @ Rs. 20,000 p.m.

2)      Dearness allowance @ Rs. 3,000 p.m.

3)      City compensatory allowance @ Rs. 1,000 p.m.

4)      Entertainment allowance @ Rs. 14,000 p.a.

5)      Commission received on turnover Rs. 25,000.

6)      Rent-free accommodation of (furnished) on which employer pays municipal tax on Rs. 65,000 p.a. and furniture value is Rs. 1,40,000.

7)      Medical bills reimbursed by company (treatment taken from a private hospital) Rs. 15,000.

8)      He is provided with a car of 1.8 Lt Capacity which is partly used for personal and partly for employment purposes.

9)      During the year, he travelled in connection with his job and his travelling allowance is allotted to Rs. 20,000. Actual expenditure on tour amounted to Rs. 18,000.

10)   Professional tax paid by him is Rs. 2,500.

Compute the taxable income from salary of Shri Swadhin Jyoti for the assessment year, 2017-18.   11

Computation of salary of Mr. X for the Assessment Year (2018-2019)

Particulars

Amount

Amount

a) Basic Salary

b) Dearness Allowance

c) City Compensatory Allowance

d) Entertainment Allowance

e) Commission on turnover

f) Travelling Allowance

Less: Exempted upto actual expenditure

g) Medical bills reimbursed by company

h) Value of car (2,400 * 12)

i) Value of rent free house

15% of salary (Salary = 2,40,000+14,000+12,000+25,000+2,000=2,93,000)

Add: 10% cost of furniture

 

 

 

 

 

20,000

18,000

 

 

 

43,950

14,000

2,40,000

36,000

12,000

14,000

25,000

 

2,000

15,000

28,800

 

 

57,950

Gross Salary

Less: Deduction U/S 16

(ia) Standard Deduction

(iii)Professional tax paid

 

4,30,750

 

50,000

2,500

Income from Salary

 

3,78,250


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