View
8
Download
0
Category
Preview:
Citation preview
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
33
Basic salary xxx
Add:Commission / Fee xxx
Bonus xxx
Taxable allowance xxx
Taxable Perquisites xxx
Taxable Retirement Benefits xxx
Gross Salary xxx
Less: Deduction U/S 16
(ia) Standard Deduction 50000
(ii)Entertainment Allowances (xxx)
(iii)Professional tax (xxx)
Income from Salaries xxx
INCOME FROM SALARIES
Taxable Allowances
Fully taxable allowances Partly taxable allowances
Depends on the actual expenditure
Not depends on actual expenditure
Fully exempted allowances
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
34
FULLY EXEMPTED ALLOWANCES
1. Allowances given for High Court Judges
2. Allowances given for Supreme Court Judges
3. Allowances paid by UNO
4. Allowances for Government employee received outside India
DEPENDS ON THE ACTUAL EXPENDITURE
1. Conveyance allowances
2. Daily allowances
3. Transfer Allowances
4. Travelling Allowances
5. Helper allowances
6. Research/Academic allowances
7. Uniform allowances
NOT DEPENDS ON ACTUAL EXPENDITURE
NAME OF ALLOWANCE EXEMPTION
Children education allowance Rs.100 p.m – maximum – 2 children
Children hostel expenditure allowance Rs.300 p.m – maximum – 2 children
Tribal area allowance Rs.200 p.m
Underground allowance Rs.800 p.m
Transport allowance Rs.3,200 p.m(blind/deaf/handicapped)
Transport allowances for drivers / Running
allowance
70% of allowance (or) 10,000 p.m –
WEL
Compensatory field area allowance Rs.2,600 p.m
Compensatory modified field area allowance Rs.1,000 p.m
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
35
High altitude allowance(armed forces)
9,000 ft – 15,000 ft
Above 15,000 ft
Rs.1,060 p.m
Rs.1,600 p.m
Special compensatory highly active field area
allowance(armed forces)
Rs.4,200 p.m
Counter insurgency allowance(armed forces
operating away from permanent locations)
Rs.3,900 p.m
Island duty allowance(armed forces operating in
Andaman & Nicobar & Lakshadweep)
Rs.3,250 p.m
Special compensatory hilly area allowance Rs.800 (or) Rs.300 p.m depending on
the location
Rs.7,000 p.m in Siachen
House Rent Allowances
House Rent Allowances xxx
LESS: Exemption xxx
Taxable HRA xxx
Least of the following
1. HRA received
2. Rent paid -10% of salary
3. 40% of salary (other Cities) / 50% of salary (Metropolitan cities )
NOTE: Salary = Basic + DA (Forming Part) + % on Turnover
Metropolitan cities
Chennai
Mumbai
Calcutta
Delhi
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
36
FULLY TAXABLE ALLOWANCES
1. City Compensatory Allowances
2. Dearness Allowances
3. Tiffin / Lunch / Dinner Allowances
4. Servant Allowances
5. Interim Allowances
6. Warden Allowances / Proper Allowances
7. Non-practicing Allowances
8. Over time Allowances
9. Any other cash Allowances
10. Medical Allowances
11. Entertainment Allowances
RETIREMENT BENEFITS
Voluntary Retirement Scheme
Provident Fund
Pension
Gratuity
Leave Encashment
Retrenchment Compensation
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
37
PROVIDENT FUND
RPF SPF URPF PPF
Employer
contribution (income)
Upto 12% of
salary is not
taxable
Exempted
Exempted
Not
applicable
Employee
contribution
(deduction u/s 80C)
Available
Available
Not
available
Available
Interest credited
(income)
Upto 9.5%
interest is not
taxable
Exempted
Exempted
Exempted
Salary = Basic + DA (forming part ) + % on turnover
Provident fundStatutory Provident Fund (SPF)
Recognised Provident Fund (RPF)
Unrecognised Provident Fund (URPF)
Public Provident Fund (PPF)
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
38
Least of the following
1. Actually received.
2. Rs.3,00,000 – exempted earlier.
3. Average monthly salary X 10
4. Average monthly salary X unearned leave
Average Salary = Basic + DA (forming part ) + % on turnover. Preceding the 10
months retirement
PENSION
Commuted pension
Govt employee
Exempted
Non-govt employee
When gratuity received
1/3 X Full value of pension
When gratuity not received
1/2 X Full value of pension
Uncommuted pension
Fully taxable
LEAVE SALARY / LEAVE ENCASHMENT
During the service
Fully taxable
After the service
Govt employee
Exempted
Non-govt employee
Leave salary XXX
Less: Exemption XXX
XXX
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
39
GRATUITY
* - Round off is applicable | ** - Round off is not applicable
NOTE: Last month salary drawn = Salary = Basic + DA (FULL)
Average Salary = Basic + DA (forming part ) + % on turnover
Preceding the 10 months retirement
VOLUNTARY RETIREMENT SCHEME
VRS Compensation xxx
Less: Exemption xxx
xxx
Least of the following
1. VRS compensation received
2. Statutory limit Rs.5,00,000
3. i. Last month salary X 3 X No. of years completed Service
ii Last month salary X No. of month left service WEH
NOTE:: Last month salary = Basic + DA (Forming part)
GRATUITY
Non-govt employee
Covered by Gratuity act
1. Last month salary x 15/26 x no.of years of service*
2. Rs.20,00,000
3. Actually received
Govt employee
Not covered by Gratuity act
1. Average Salary X 1/2 X completed no. of years of service**
2. Rs. 20,00,000
3. Actually received
Exempted
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
40
RETRENCHMENT COMPENSATION
Actually received xxx
Less: Exemption xxx
xxx
Least of the following:
1. Actually received
2. Rs.5,00,000
3. Average monthly salary X 15/26 X No. of years service
Note
Average monthly salary = preceding 3 month salary from the date of
Retirement
Salary includes all except PF and Bonus
DEDUCTIONS:
16(ia) Standard deduction
16 (ii) Entertainment Allowances
16 (iii) Professional Tax
Standard deduction
Rs.50,000 (or) the amount of salary
WEL
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
41
PROFESSIONAL TAX Sec. 16 (iii)
Professional Tax is paid by employer or employee, we can claim it as deduction u/s 16
Whereas, when employer pays, we should also show it as income
Entertainment AllowanceEntertainment allowances sec 16 (ii)
Govt Employee
Deduction is allowed
Least of the following
1. Actually received
2. Rs.5000
3. 20% of basic salary
Non-Govt Employee
Deduction is not allowed
PERQUISTIES
Taxable incase of specified employees
Taxable incase of all employees
Exempted for all the employees
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
42
TAXABLE FOR SPECIFIED EMPLOYEES:
SPECIFIED EMPLOYEE:
i. Director
ii. Substantial interest / 20% of voting power / shares above (i) $ (ii) clause
are not satisfied
iii. Salary should exceed Rs.50,000 p.a
Note: Salaries includes all, including entertainment allowances, and profession at taxes
1. Services of gardener, Sweeper, Watchman, Personal Attender
2. Usage of gas / Water / Electricity
3. Educational facilities in the concessional rate
4. Valuation of motor car
5. Free / concessional – Transport facility
1. Services of Sweeper / Gardener / Watchman / PA
Total Salary paid xxx
Less: Amount paid by employee xxx
Taxable perks xxx
2. Usage : Gas / Water / Electricity
Actual cost xxx
Less: Amount paid by employee xxx
Taxable Perks xxx
3. Free / Concessional Educational Facilities
Cost incurred by the employer xxx
Less: exemption Rs.1000 per month xxx
xxx
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
43
Less: Amount paid by the employee xxx
Taxable Perks xxx
4. Transport Facilities
Actual Cost xxx
Less: Amount paid by the employee xxx
Taxable Perks xxx
TAXABLE INCASE OF ALL EMPLOYEES
1. Rent Free Accommodation
2. Concessional Rent
3. Obligation from employer to employee
4. Approved super annulation Fund (exceeds Rs.1,50,000)
5. Specified shares or sweat equity shares
6. Fringe benefits
Salary = Basic + DA (R/B) + Bonus + Commission + Fee + Taxable Allowances
Rent Free Accommodation
Govt employee
License fee
Non-Govt employee
Owned by the Employer
2.Population exceeds 10 L to 25 L (10% of salary)
1.Population UPTO 10 lakhs (7.5% of Salary)
3. Above 25 L (15% of salary)
Not owned by the Employer
15% of salary
(or) WEL
Rent paid
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
44
Unfurnished RFA xxx
Add: 10 % of cost / Actual Cost* xxx
Furnished RFA xxx
Less: Amount paid by employee xxx
(concessional rent) xxx
*Actual Cost = Rent paid for the furnished house
7. Fringe Benefit:
Meal - Rs.50 per meal
Credit card / Club expenditure xxx
Less: Amount paid by employee xxx
xxx
Use of movable assets (other than computer and laptop)
10 % of cost xxx
Less: Paid by employee xxx
xxx
Interest free / concessional Loan
i. Exceeds Rs.20,000 Taxable
ii. Medical treatment, except for cancer, AIDS, TB
Gift in Kind
Exceeds Rs.5000 is taxable
Transfer of property
Computer / Electronics - 50% of WDV
Motor Car - 20% of WDV
Other assets - 10% of SLM
Valuation of Motor car
Owned by the Employer Owned by the Employee
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
45
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
46
Owned by the employer
Official use
Nil
Personal use
Actual Cost xxx
Add : 10% cost xxx
xxx
Less: Amount paid
by employee (xxx)
xxx
Partly Official / Partly personal
Running / maintenance by employer
Upto 1.6 cc
Rs.1800 p.m.
Add : Driver Salary Rs.900 p.m.
Exceed 1.6cc
Rs.2400 p.m.
Add: Driver salary Rs.900 p.m.
Running / maintenance by employee
Upto 1.6 cc
Rs.600 p.m.
Add: Driver salary Rs.900 p.m.
Exceed 1.6 cc
Rs.900 p.m.
Add: Driver salary Rs.900
p.m.
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
47
Owned by the employee
Official use
Nil
Personal use
Actual Cost xxx
Less: Amount paid
by employee (xxx)
xxx
Partly Official / Partly personal
Running / maintenance by employer
Actual cost xxx
Less: upto 1.6cc-Rs.1800 p.m
Exceeds1.6cc-Rs.2400 p.m ( xxx)
Less:Driver salary-900 p.m ( xxx)
Taxable perks xxx
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
48
EXEMPTED PERQUISITES:
PERQUISITES NATURE
Telephone Provided by employer to employee at his
residence
Transport facility Provided by employer engaged in the
business of carrying passengers (or) goods
to employees
Privilege passes and tickets Provided by Indian Railways to employees
Perquisites allowed outside India by
Government
Provided by Government of India to
citizens residing outside India.
Contribution to Staff Group Insurance
scheme.
Provided by Employer to Employee
Annual premium on personal accident
policy
Provided by employer to employee
Refreshment Provided by employer to employee during
working hours.
Subsidised lunch Provided by employer to employee upto
Rs.50
Recreational facilities Provided by employer to employee
Training expenses Provided by employer to employee
Amount paid to RPF or approved
superannuation fund
Provided by employer to employee
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
49
The following perquisites provided to judges of High court / Supreme court /
Ministers of Parliament:
Medical facilities (upto certain limits)
Rent – free official residence
Rent – free furnished residence
Conveyance facility
LEAVE TRAVEL CONCESSION (LTC):
Limit of exemption: Exemption will be available in respect of two journeys
performed in a block of four calendar years(Amount actually spent).
Leave travel concession
Journey performed by
Air
Amount not exceeding air
economy fair of the National Carrier by the shortest route
Rail
Amount not exceeding air-
conditioned first class rail fare by the
shortest route
Recognised public transport system
Amount not exceeding first class or deluxe class fare by the shortest route
No recognised public transport system
Amount equivalent to air-conditioned first
class rail fare
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
50
EMPLOYEE’S STOCK OPTION PLAN (ESOP): DETERMINATION OF
FMV
LEAVE TRAVEL CONCESSION[SEC.10(5)]
MODE OF TRAVEL CLASS OF TRAVEL AMOUNT EXEMPT
AIRWAYS ECONOMY CLASS TRAVEL CHARGES ON SHORTEST ROUTE
TRAIN 1ST CLASS AC TRAVEL CHARGES ON SHORTEST ROUTE
RECOGNISED TRANSPORT DELUXE CLASS TRAVEL CHARGES ON SHORTEST ROUTE
OTHER TRANSPORT - 1ST CLASS AC FARE AS PER RAILWAYS
VALUE OF PERQUISITE:
FMV of securities or sweat equity shares xxx
Less: Amount recovered from the employee xxx
Value Of Perquisite xxx
FMV
Unlisted company
As determined by merchant banker
Listed company
Trading on the date of vesting of option
Listed in one rse
Avg of opening & closing price
Listed in more than one rse
Avg of opening and closing price in stock exchange that records the highest volume of
trading
No trading on the date of vesting of
option
Listed in one rse
Closing price of share
Listed in more than one rse
Closing price in stock exchange that records the highest volume
of trading
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
51
MEDICAL FACILITIES:
The following medical facilities are exempted:
Note:
i)Such expenditure should be approved by RBI.
ii)The expenses in respect of traveling of the patient & attendant will be exempt if
the employee’s gross total income computed before including the said expenditure
does not exceed Rs.2,00,000/-
Medical Facilities
Hospital maintained by
employer
Hospital maintained by Government
(or) approved by Principal
Chief Commissioner
Premium paid on health
insurance policy of employee approved by Government
Reimbursement of premium paid on health
insurance policy approved by Government
Expenditure incurred abroad(Refer note)
For medical treatment
travel and stay abroad of patient & attendant
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
52
QUICK REFERENCE FOR MEANING OF SALARY:
GRATUITY (covered under
Payment of Gratuity Act)
(Basic salary + D.A.) last drawn
GRATUITY (not covered
under Payment of Gratuity
Act)
(Basic salary + D.A.[forming part of Retirement
Benefits] + Commission as a percentage on
turnover) Average of last 10 months preceding the
year of retirement
LEAVE ENCASHMENT (Basic salary + D.A.[forming part of Retirement
Benefits] + Commission as a percentage on
turnover) Average of last 10 months immediately
from the retirement
VOLUNTARY
RETIREMENT
(Basic salary + D.A.[forming part of Retirement
Benefits] + Commission as a percentage on
turnover) last drawn
RENT FREE
ACCOMODATION
(Basic + D.A. [forming part of Retirement
Benefits] + Commission as a percentage on
turnover + Bonus + Fees + Any other taxable
allowance + Any other monetary benefits
excluding perquisite)
SPECIFIED EMPLOYEE (Basic + DA + Commission + Bonus + Fees +
Any other taxable allowance + Any other
monetary benefits – Deduction u/s 16)
ENTERTAINMENT
ALLOWANCE
(DEDUCTION U/S 16(ii))
Only basic salary
ALL OTHER CASES Basic salary + D.A.(forming part of retirement
benefits) + Commission as a percentage on
turnover
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
53
Allowances
1. Mr.Giri who resides, in Chennai, get Rs.6,00,000 p.a. as basic salary. He
receives Rs.1,00,000 p.a. as house rent allowance. Rent paid by him is
Rs.80,000 p.a. find out the amount of taxable house rent allowance for the AY
2020-21.
2. Mr. Gurvindar who is posted in Delhi but resides in Noida, gets Rs.90,000 per
annum as basic pay. He gets Rs.13,500 per annum as house rent allowance,
though he pays Rs.18,000 per annum as rent. During the previous year 2019-
20, he receives Rs.7,500 as advance salary of April 2019. Can he claim the
entire amount of house rent allowance as exempt from tax for the assessment
year 2020-2021.
3. Compute taxable salary of Mr.M for the assessment year 2020-21
Nature of allowance Amount of
allowance Rs.
Amount
actually
spent Rs.
Amount
chargeable for
tax* Rs.
1. conveyance allowance for official
purpose 25000 23000
2.Travelling allowance for official
purpose 15000 18000
Practice Problems
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
54
3.transfer allowance given at the time of
transfer of Arvind from Goa to Varanasi 20000 18000
4.Helper allowance for engaging helper
for official purposes 60000 45000
5.research allowance 50000 45000
6.uniform allowance for official
purposes 10000 12000
*Amount chargeable to tax shall be lower of amount of allowance or
amount actually spent for the purpose whichever is lower.
4. Mr. x is employed at Hyderabad at the Basic Salary of Rs.25,000 p.m. and he is
also getting following allowances:
Rs. P.m.
1 Dearness allowance 2000
2 Lunch allowance 1000
3 Servant allowance (He is paying Rs.1,200 p.m. to a
servant)
1000
4 Transport allowance 1000
5 Education allowance @ 200 p.m. per child for three
children
6 Hostel allowance to one child 500
7 Conveyance allowance 800
8 Overtime allowance 2000
9 Officiating allowance 2000
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
55
10 Cash allowance 1200
11 Entertainment allowance 2000
12 Medical allowance 800
13 City compensatory allowance 600
14 House rent allowance 5000
He is having family house at the place of his posting but he is living in a
rented house and is paying a rent of Rs.7,000 p.m. find out his gross
salary.
5. Mr. Chonga is an area manager of M/s Bokaro, Steels Co.Ltd. During the
financial year 2019-20, he gets the following emoluments from his employer:
Basic salary
Up to 31.8.2019 Rs. 20,000 p.m.
From 01.9.2019 Rs. 25,000 p.m.
Transport allowance Rs. 2800 p.m.
Contribution to recognized provident fund 15% of basic salary
Children education allowance Rs.500 p.m. for two children
City compensatory allowance Rs. 300 p.m.
Hostel expenses allowance Rs.380 p.m. for two children
Tiffin allowance (Actual expenses Rs.3700) Rs. 5,000 p.a.
Tax paid on employment Rs.2500
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
56
Leave salary
6. Mr. H was employed by Elite Ltd, up to March 15, 2000. At the time of leaving
Elite Ltd, he was paid Rs.3,50,000 as leave salary out of which Rs.72,000 was
exempt from tax under section 10(10AA)(ii). Thereafter he joined XYZ (P) Ltd.
and received Rs.5,00,250 as leave salary at the time of his retirement on
December 31, 2019. Determine the amount of taxable leave salary from the
following information.
Salary at the time of retirement (per month)
Average salary received during 10 months ending on
Dec,31,2019
. from March 1, 2019 to July 31, 2019 (per month)
. from August 1, 2019 to December 31, 2019 (per month)
Duration service(a)
Leave entitlement for every year of service (b)
Leave availed while in service ©
Rs.28,000
Rs.27,000
Rs.27,500
14 year & 8 month
44 days
80 days
17.866 Months
Gratuity
7. Mr.L an employee of Lovely Co. Ltd., receives Rs.1,20,000 as gratuity. He is
covered by the payment of Gratuity Act, 1972. He retires on December 1,2019 after
rendering service of 29 years and 8 months. At the time of retirement his monthly
basic salary and dearness allowance (40% forming part of retirement benefit) was
Rs. 4,000 and Rs.1,500 respectively. Is the entire amount of gratuity exempt from
tax?
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
57
8. Mr. D, who is not covered by the Payment of Gratuity Act, 1972, retires on
November 20, 2019 from Divya Ltd. and receives Rs.2,50,000 as gratuity after
service of 35 years and 11 months. His salary is Rs.10,000 per month up to July 31,
2019 and Rs.12,000 per month from august 1, 2019. Besides, he gets Rs.1,000 per
month as dearness allowance (60% of which is part of salary of computing
retirement benefits). What amount of gratuity will be exempt from tax?
Pension
9. Determine the amount of pension taxable for the assessment year 2020-21 in the
following cases on the assumption that it becomes due on the last day of each month:
1. X receives Rs.825 per month as pension from the Central Government
during the P/Y 2019-20
2. X receives Rs.1,200 p.m. as pension from the government of Punjab
during the P/Y 2019-20
3. X receives Rs.1,000 per month as pension from ABC Ltd., a public
limited company during the previous year 2019-20
4. X retire from the Central Government Service on May, 2019 he gets
pension of Rs.900 per month upto November 30, 2019 (i.e. Rs.900 x 6).
With effect from December 1 , 2019. He gets one – third of his pension
commuted for Rs.46,000
5. X retires from ABC Co. on June 30,2019. He gets pension of Rs.2,000
per month up to January 31,2020. With effect from February 1, 2020, he
gets 60% of pension commuted for Rs.40,800. Does it make any
difference if he also gets gratuity of Rs.4,000 at the time of retirement?
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
58
Comprehensive (Allowances, Pension, Leave Salary & Gratuity)
10. Mr. Ashok, who retired from the services of Hotel Taj Ltd, on 31.1.2020
after putting on service for 5 years, received the following amounts from the
employer for the year ending on 31.3.2020:
Salary @ Rs.16,000 p.m. comprising of basic salary of Rs.10,000.
Dearness allowance of Rs.3,000, City compensatory allowance of
Rs.2,000 and Night duty allowance of Rs.1,000
Pension @ 30% of basic salary from 1.2.2020
Leave salary of Rs.75,000 for 225 days of leave accumulated during 5
years @ 24 days leave in each year. He has not availed any earned
leave during his tenure of 5 years and utilized only his casual leave
Gratuity of Rs.50,000
Compute the total income of Mr.Ashok for the assessment year 2020-21
Provident Fund
11. For the previous year 2019-20, Udai submits the following information –
Basic salary: Rs.1,80,000; dearness allowance : Rs.60,000 (46% of which is
part of salary for retirement benefits) commission: Rs.6,000 (i.e. 1% of
Rs.6,00,000 being turnover achieved by Udai) and children education
allowance for his 2 children : Rs.7200. the employer contributes Rs.20,000
towards provident fund to which a matching contribution is made by Udai.
Interest credited in the provident fund account on March 15, 2020 @ 11%
comes to Rs.93500. Income of Udai from other sources is Rs.1,00,000. Find
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
59
out the net income of Udai for the assessment year 2020-21 if the provident
fund is
(a) Statutory provident fund
(b) Recognized provident fund
(c) Unrecognized provident fund.
Comprehensive
(Allowances, Pension, Leave Salary, Gratuity & Provident fund)
12. On the basis of the following information compute the taxable income of
Om Prakash under the hear “Salaries” for the assessment year 2020-21
Particulars Rs.
(i) Basic pay
(ii) Dearness allowance
(iii) Entertainment allowance
(iv) Tribal area allowance
(v) His own contribution towards statutory provident
fund
(vi) Employer’s contribution
(vii) Interest credited to SPF @ 10% p.a.
(viii) House rent allowance
8400 p.m.
1200 p.m.
750 p.m.
350 p.m.
1000 p.m.
1000 p.m.
13000
1600 p.m.
Om Prakash is an employee of the Government of UP. He is paying Rs.2400 p.m.
as house rent.
13. Mrs. Lakshmi aged about 66 years is a Finance Manager of M/s Lakshmi & Co.
Pvt Ltd., based at Calcutta, She is in continuous service since 1967 and receives
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
60
the following salary and perks from the company during the year ending
31.03.2020
i) Basic Salary (50000 x 12) = Rs.600000
ii) D.A. (20000x12)-Rs.240000 (forms part of pay for retirement benefits)
iii) Bonus – 2 months basic pay
iv) Commission – 0.1% of the turnover of the company. The turnover for the
F.Y. 2019-20 was Rs.15.00 crores
v) Contribution of the employer and employee to the PF Account Rs.300000
each
vi) Interest credited to P.F. Account at 8.5% - Rs.60000
vii) Entertainment Allowance Rs.30000
viii) Hostel allowance for three children Rs.5000 each
Compute the total income for the Assessment Year 2020-21
Voluntary Retirement Scheme: (VRS)
14. From the following information given by Mr.Shiva Shankaran, find the amount
of
Employer - A limited company
Date of retirement - 31st October 2019
Years of Service - 28 years
Amount received from employer - Rs.2,49,000
Salary at the time of retirement - Rs.9,500 p.m.
Actual date of retirement - 31st, march 2021
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
61
Deduction U/S 16 (ia), (ii) & (iii) from Salary
15. Mr.Bharat who joined the ABC (P) Ltd in 1955, he receives Rs.9000 as basic
salary and Rs.400 per month as entertainment allowance during the previous year
2019-20. Determine the amount of income chargeable under the hear “Salaries”.
16. Mr.Raja an employee of the central government, gets Rs.6000 p.m. as basic salary
and is entitled to Rs.1,500 p.m. as entertainment allowance. Compute the
deduction U/S 16 (ii) from gross salary
17. Mr. V.J., an employee of the central government, gets Rs.10,000 p.m. as basic
salary and is entitled to Rs.2,500 p.m. as entertainment allowance. Compute the
taxable entertainment allowance U/S . 16(ii)
18. Compute the net salary in the following cases for the assessment year 2020-21
a. Basic salary Rs.10,000 p.m. DA Rs.500 p.m., CCA Rs.200 p.m. Commission
Rs.500 p.m. Bonus700 p.m.. Professional tax paid by employer Rs.1,200.
Employer’s contribution to SPF R.3,000 p.m. Interest credited to SPF during
2019-2020 Rs.30,000 at 15% A is Govt. employee.
He is receipt of Entertainment allowance @ Rs.1,000 per month
b. Basic salary Rs.3,000 p.m. DA Rs.200 p.m. Bonus Rs.5,000. Professional tax
paid by Assessee Rs.1,500. Entertainment allowance received from his
employer @ 500 per month. His employer is a Ltd. Company
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
62
19. Rithika submits following information regarding her salary income for the
previous year 2019-20
1. Basic salary Rs.16000 p.m.
2. D.A. (Forming Part Of Salary For Retirement Benefit) 40% of basic salary
3. City Compensator allowance Rs.300 p.m.
4. Children education allowance Rs.200 p.m. per child for 2 child
5. Transport allowance Rs.1800 p.m.
She is provided with a rent free unfurnished accommodation which is owned by
the employer. The fair rental value of the house is Rs.24000 p.m.
Compute the gross salary assuming accommodation is provided in a city having
population
A. Not exceeding 10 lakhs as per 2011 census
B. Exceeding 10 lakhs but not exceeding 25 lakhs as per 2011 census.
C. Exceeding 25 lakhs as per 2011 census
20. X has been provided with the benefit of a car by his employer, a sole proprietary
concern. Compute the perquisite value of the car for the assessment year 2020-21.
In the following situation if the taxable monetary emoluments of X are
Rs.1,50,000
1. The car is owned by X but the running and maintenance expenses
amounting to Rs.40000 during the previous year are met by the
employer. The car is used
a. For personal benefit of X
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
63
b. Only for official duties
c. 30% for personal benefit and 70% for official use
2. The employer provides a car of 1.5 ltr. Engine cubic capacity costing
Rs.500000 exclusively for the personal benefit of X. The expenses
incurred on the car are Rs.52000
3. The employer provides a car (below 1.6 lt.) along with a driver to X party
for official and partly for personal purpose. The expenses incurred by the
company are:
a. Running and maintenance expenses Rs.32000
b. Driver’s salary Rs.36000
4. In case(3) the employer maintains a log book and it is established than
30% of the total coverage of the car is for personal use of X and 70% for
official duties
5. The employer provides a car (above 1.6 It) to X which is used for official
work and is also used by X for commuting from his residence to office
and back
6. X is provided with 2 cars to be used for official and personal work and
the following information is available from the company’s records:
Car 1 Exceeding Car 2 Below
1.6 It. Rs. 1.6 It. Rs.
Cost of the car 600000 400000
Running and maintenance 60800 48000
Salary of driver 44000 44000
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
64
21. Mr. K Sonu is Asst. Manager of a Textile company of Jaipur, since 1987. He has
submitted the following particulars of his income for the financial year 2019-20
I. Basic salary Rs.46,000
II. Dearness allowance Rs.5,000 per month (Rs.200 p.m. enters into
retirement benefits)
III. Education allowance for two children at Rs.150 p.m. per child
IV. Commission on sales 1% of turnover of Rs.10,00,000
V. Entertainment allowance Rs.700 p.m.
VI. Travelling allowance for his official tours Rs.30,000. The entire amount
is spent on the official tour.
VII. He was given cloth worth Rs.1,000 by his employer free cost
VIII. He resides in the flat of the company. Its market rent is Rs.2,000 p.m. A
watchman and a cook have been provides by the company at the flat who
are paid Rs.4,00 per month each
IX. He has been provided with a motor car of 1.8 ltr. Engine capacity for his
official as well as personal use. The running and maintenance costs are
borne by the Company.
X. Rent of house recovered from Sonu Rs.4,600
Compute income from salaries for the assessment year 2020-21. Assume the
population of Jaipur is 26 lakhs as per 2011 census.
22.
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
65
23. Sri Bhagawan Das is a Purchase Officer in a company in Jaipur. He furnished the
following particulars regarding his income for previous year 2019-20
i. Basic salary Rs.84000
ii. Bonus Rs.5000
iii. Dearness allowance Rs.3000 p.m.
iv. Travelling allowance Rs.45000. He spends Rs.30000 for official purpose;
v. Reimbursement of medical bills Rs.25000 (treatment was done in a
Government hospital India)
vi. He lived a bungalow belonging to the company. Its fair rent is Rs.2500per
month. The company has provided on his bungalow, the facility of a
watchmen and a cook each of whom is being paid a salary of Rs.250 per
month. The company paid in respect of this bungalow Rs.5000 for electric
bills and Rs.3000 for water bills
vii. He has been provided with 1.5 ltr. Engine capacity car for official and
personal use. The company maintenance and running expenses of the car
(including diver ) are borne by the company.
viii. The following amount were deposited in his provided fund account;
a. Own contribution Rs.8400
b. Company’s contribution Rs.12000 and
c. Interest @ 12% p.a. Rs.12600
ix. Rent of house recovered from Sri Bhagawan Das Rs.3600
Compute his taxable income from salary for the assessment year 2018-10.
Assume the population of Jaipur is 26 lakhs as per 2011 census.
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
66
24. Mr. Vignesh, Finance manager of KLM Ltd, Mumbai, furnished the following
particulars for the financial year 2019-20
I. Salary Rs.46000 per month
II. Value of medical facility in hospital maintained by the company Rs.7000
III. Rent free accommopdation owned by the company
IV. Houseing loan of Rs.600000 at the interest rate of 6% p.a. (No repayment
made during the year. SBI Rate 10% p.a.)
V. Gifts in kind made by the coomapny on the occasion of wedding
anniversary of Mr.Vignesh Rs.4,750
VI. A wodden table and 4 chair wer provided to Mr.Vignesh at his residence
(dining table) This was purchased on 1.5.14 for Rs.60000 and sold to
Mr.Vignesh on 1.8.2017 Rs.30,000. This was given for use from the date
of purchase by employer to Mr.Vignesh
VII. Personal purchase through credit card provided by the company
amounting to Rs.10,000 was paid by the company. No part of the amount
was recovered from Mr.Vignesh
VIII. An ambassador car which was purchased by the company on 16.7.14 for
Rs.250000 was sold to the assessee on 14.7.17 for Rs.80,000
Other income received by the assessee during the previous year 2017-18
a. Interest on Fixed Deposits with a company Rs.5000
b. Income from specified mutual fund Rs.3000
c. Interest on bank deposits of a minor married daughter Rs.3000
Compute the Gross Total Income of Mr.Vignesh and the tax thereon for the
Assessment year 2020-21
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
67
1. Compute his income under the head salary of PKJ the assessment year 2020-21 from the
following information submitted to you:
Sl. No. Particulars Rs.
1. Basic Salary 20,000 p.m.
2. D.A. (60% of which is part of retirement benefits) 10,000 p.m.
3. Children education allowance (for two children) 200 p.m. per
child
4. Free lunch for 300 days in the office during office hours 80 per meal
5. Reimbursement of expenses incurred on credit card provided by
the employer
10,000
6. Gift of Titan watch 12,000
7. Rent free unfurnished accommodation at Delhi, the fair rent value of which is
Rs. 84,000
p.a.
8. Motor car of 1.8 litre with driver both for official and private purposes
9. Watchman facility by the employer. Wages of watchman paid by employer
1,000 p.m.
10. Telephone facility at his residence. The employer has incurred expenses of Rs.
15,000 for the same.
COMPREHENSIVE PRACTICE PROBLEMS
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
68
2. Mrs. Z has the following income during the previous year 2019-20:
Sl. No. Particulars Rs.
1 Salary 3,10,000
2 Dearness Allowance (forming part of salary for retirement benefits) 72,000
3 Medical Allowance (Actual expenditure Rs. 28,000) 30,000
4 Education Allowance (for three children) 5,200
5 Rent free house in Delhi for which Z Ltd., the employer, paid Rs. 5,000 per
month as rent. The house is equipped with rented furniture. The rent of the
furniture is Rs. 3,000 per month.
6 The employer had provided her a domestic servant, a sweeper and a watchman.
The
employer paid Rs. 500 per month to each.
7 The employer spent Rs. 2,500 on her refresher course.
8 The employer paid her telephone bills of 22,200
9 Profession tax paid by Mrs. Z 1,200
Compute her taxable income for the assessment year 2020-21 assuming that she has
no other income.
3. Mr. K. Sikri is Asstt. Manager of a Textile Company of Jaipur, since 1991. He has
submitted the following particulars of his income for the financial year 2019-20:
(i) Basic salary Rs.2,40,000.
(ii) Dearness Allowance Rs. 5,000 per month (Rs. 200 p.m. enters into
retirement benefits).
(iii) Education allowance for two children at Rs. 150 p.m. per child.
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
69
(iv) Commission on sales 1% of turnover of Rs.10,00,000.
(v) Entertainment allowance Rs. 700p.m.
(vi) Travelling Allowance for his official tours Rs. 30,000. The entire amount is
spent on the official tour.
(vii) He was given cloth worth Rs. 1,000 by his employer free of cost.
(viii) He resides in the flat of the company. Its market rent is Rs. 12,000 p.m.
A watchman and a cook have been provided by the company at the bungalow
who are paid Rs. 400 per month each.
(ix) He has been provided with a motor car of 1.8 ltr. engine capacity for his
official as well as personal use. The running and maintenance costs are borne
by the Company.
(x) Employer's contribution to R.P.F. is Rs. 40,000 and the interest credited to this
fund at 13% rate amounted to Rs.16,250.
(xi) Contribution by Sikri to recognised provident fund Rs.40,000.
(xii) Rent of house recovered from Sikri Rs. 1,500p.m.
Compute income from salaries for the assessment year 2020-21. Assume the
population of Jaipur is 26 lakhs as per 2001 census.
4. P, a Director of XYZ Pvt. Ltd. Pune is offered an employment with the following two
alternative packages:
Particulars I (Rs.) II (Rs.)
Basic Pay per annum 1,38,000 1,38,000
Conveyance allowance for private use 9,000 —
Motor car facility for private use of P and his family members — 9,000
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
70
(valued)
Entertainment Allowance 18,000 —
Club facility (Valued) — 18,000
Children Education Allowance (for 2 children) 9,700 —
Free Education Facility in an institution run by the employer for
Children
(Valued)
9,700
Rent Free unfurnished house with fair rental value 30,000 30,000
Which of the two packages should P opt for on the assumption that both employer and
employeewillcontribute20%ofthebasicpaytowardsanunrecognisedprovidentfund?Assume
the population of Pune is more than 25 lakhs as per 2001census.
5. Mr. J is Manager of a HUF of Jaipur (population exceeds 25 lakhs). He has submitted
the following particulars of his income for the AY 2020-2021 i.e. PY 2019-2020
I. Net Salary Rs. 80,000 after TDS of Rs. 6,000, contribution to RPF Rs. 9,000 and
rent of bungalow @5% of salary.
II. Dearness Allowance Rs. 1,000 per month (Rs.200 pm enters into retirement
benefits).
III. Education Allowance for two children at Rs.150 pm per child.
IV. Commission on sales Rs.10,000.
V. Entertainment Allowance Rs.1,000 per month.
VI. Travelling Allowance for his official tours Rs.30,000, Actual expenditure on tours
Rs. 22,000.
VII. He was given shirts worth Rs.4,800 by employer free of cost (employer is
manufacturer of shirts).
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
71
VIII. He resides in the bungalow belonging to HUF. Its fair rent is Rs.1,500 pm A
gardener, watchman and a cook have been provided by the employer at the
bungalow who are paid Rs.1,300 per month each.
IX. He has been provided with a motorcar of 1.8 liter (1800 cc) for his official as well
as personal use. The running and maintenance costs are borne by the HUF.
X. Employer’s contribution of RPF is Rs. 7,000 and interest credited to fund @13% pa
was Rs.16,250.
His employer paid in December 2019 for his medical treatment in London
Rs.80,000, Rs.7,5000 for travelling in this connection and Rs. 25,000 for stay there.
6. Mr. Goyal receives the following emoluments during the previous year ending
31.03.2020.
Basic pay Rs. 40,000
Dearness Allowance Rs. 15,000
Commission Rs. 10,000
Entertainment allowance Rs. 4,000
Medical expenses reimbursed Rs. 25,000
Professional tax paid Rs. 2,000 (Rs. 1,000 was paid by his
employer)
Mr. Goyal contributes Rs. 5,000 towards recognized provident fund. He has no
other income. Determine the income from salary for A.Y. 2020-21, if Mr. Goyal is
a State Government employee.
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
72
7. Mr. Balaji, employed as Production Manager in Beta Ltd., furnishes you the
following information for the year ended31.03.2020:
I Basic salary upto
31.10.2019
Rs. 50,000 p.m.
Basic salary from
01.11.2019
Rs. 60,000 p.m.
Note: Salary is due and paid on the last day of every month.
ii. Dearness allowance @ 40% of basic salary.
iii. Bonus equal to one month salary. Paid in October 2019 on basic salary
plus dearness allowance applicable for that month.
iv. Contribution of employer to recognized provident fund account of the
employee@16% of basic salary.
v. Professional tax paid Rs. 2,500 of which Rs. 2,000 was paid by the
employer.
vi. Facility of laptop and computer was provided to Balaji for both official
and personal use. Cost of laptop Rs. 45,000 and computer Rs. 35,000
were acquired by the company on01.12.2019.
vii. Motor car owned by the employer (cubic capacity of engine
exceeds1.60 litres) provided to the employee from 01.11.2019 meant for
both official and personal use. Repair and running expenses of Rs.
45,000 from 01.11.2019 to 31.03.2020, were fully met by the employer.
The motor car was self-driven by the employee.
viii. Leave travel concession given to employee, his wife and three children
(one daughter aged 7 and twin sons aged 3). Cost of air tickets
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
73
(economy class) reimbursed by the employer Rs. 30,000 for adults and
Rs. 45,000 for three children. Balaji is eligible for availing exemption
this year to the extent it is permissible in law.
Compute the salary income chargeable to tax in the hands of Mr. Balaji for the
assessment year 2020-21.
8. Ms. Suhaani, a resident individual, aged 33 years, is an assistant manager of
Daily Needs Ltd. She is getting a salary of Rs. 48,000 per month. During the
previous year 2019-20, she received the following amounts from her
employer.
(i) Dearness allowance (10% of basic pay which forms part of salary
for retirement benefits).
(ii) Bonus for the previous year 2018-19 amounting to Rs. 52,000 was
received on 30thNovember,2019.
(iii) Fixed Medical allowance of Rs. 48,000 for meeting medical
expenditure.
(iv) She was also reimbursed the medical bill of her father dependent on
her amounting to Rs.4,900.
(v) Ms. Suhaani was provided;
a laptop both for official and personal use. Laptop was acquired
by the company on 1stJune, 2017 at Rs.35,000.
a domestic servant at a monthly salary of Rs. 5,000 which was
reimbursed by her employer.
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
74
(vi) Daily Needs Ltd. allotted 700 equity shares in the month of October
2019 @ Rs. 170 per share against the fair market value of Rs. 280
per share on the date of exercise of option by Ms. Suhaani. The fair
market value was computed in accordance with the method
prescribed under the Act.
(vii) Professional tax Rs. 2,200 (out of which Rs. 1,400 was paid by the
employer).
Compute the Income under the head “Salaries” of Ms. Suhaani for the assessment
year 20-21.
9. Ms. Poorvisha is the HR Manager in Poorni Textiles Ltd. She gives you the
following particulars for the yearended31-03-2020:
- Basic Salary Rs. 1,00,000 p.m.
- Dearness Allowance Rs. 24,000 p.m. (30% of which forms part of
retirement benefits).
- Bonus Rs.21,000 p.m.
- Heremployer-
companyhasprovidedherwithanaccommodationon1stApril,2019 at a
concessional rent. The house was taken on lease by the company for
Rs.12,000 p.m. Ms.Poorvisha occupied the house from1st November
2019,Rs.4,800 p.m is recovered from the salary of Ms. Poorvisha.
- The employer gave her a gift voucher of Rs. 10,000 on her birthday.
- She contributes 18% of her salary (Basic Pay plus DA) towards
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
75
recognised provident fund and the company contributes the same
amount.
- Uniform allowance Rs.24,000.
- The company pays medical insurance premium to effect insurance on the
health of Ms. Poorvisha Rs. 20,000.
- Motor car owned by the employer (Cubic capacity of engine exceeds 1.6
liters) provided to Ms. Poorvisha from 1st November, 2019 which is used
for both official and personal purposes. Repair and running expenses of Rs.
70,000 were fully met by the company. The motor car was self-driven by
the employee.
Compute the income chargeable to tax under the head “Salaries” in the hands of Ms.
Poorvisha. Brief note on treatment of each item is required.
10. Mr. Subramani is Senior Manager (Finance) of VKS Steel Ltd. The particulars of
h-is emoluments for the year ended 31.03.2020 are given below:
Basic Salary Rs. 60,000 per month
Dearness Allowance Rs. 40,000 per month (30% is for
retirement benefit) Annual performance Incentive Rs.1,80,000
House Rent Allowance Rs. 10,000 per month
Mr. Subramani pays rent of Rs.20,000 per month for a flat occupied from
1stNovember, 2019 at Erode, Tamil Nadu.
He received gift voucher of Rs.6,000 from the employer on the occasion of
his marriage anniversary.
The employer provided him a motor car (cubic capacity of the engine
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
76
exceeds 1.6 liters) without chauffeur with effect from 1st December,
2019. Running and maintenance expenses of Rs. 30,000 were fully borne
by the employer. The car is used by Mr. Subramani both for official and
private purposes.
The employer paid the following premiums for Mr. Subramani:
(i) Medical insurance premiumRs.12,000
(ii) Life insurance premium Rs.15,000
(iii) Accident insurance premiumRs.10,000
Tax on employment paid to Erode Municipal Corporation by Mr. Subramani Rs.
5,000. Compute the income chargeable to tax under the head "Salaries" in the hands of
Mr. Subramani for AssessmentYear2020-21.
11. Mr. Kamal employed in Rajini Mfg. Co. Ltd., Mumbai as General Manager
furnishes the following information for the year ended 31.03.2020:
Particulars Amount (Rs.)
Basic salary (per month) 50,000
Dearness Allowance (eligible for retirement benefits) 80% of basic
salary
House Rent Allowance (per month) 10,000
Rent paid by him Rs. 15,000 per month for 6 months and Rs.
20,000
per month for balance 6 months (at Mumbai)
City Compensatory Allowance (per month) 2,500
Medical reimbursements (annual) 13,000
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
77
Gymkhana club annual membership fee reimbursed by employer 20,000
Mobile phone bill reimbursed by the employer (Used for both
official and personal use)
37,500
Motor car (cubic capacity of engine 2.2 litres) owned by the
employee but the maintenance expenses fully met by the
employer (Motor car was used both for personal and official use)
85,800
Cash gift paid by the employer in appreciation of performance on
01.012020
30,000
Contribution to recognized provident fund :
Employee 1,20,000
Employer 90,000
Contribution to National Pension Trust:
Employee 60,000
Employer 55,000
Medical insurance premium paid by means of uncrossed cheque 18,000
You are requested compute the total income of Mr. Kamal for the assessment year
2020-21.
12. Mr. Raghu is employed with Yes Power Co Ltd. as General Manager
(Finance) at Kolkata. He furnishes you the following information for
theyearended31.03.2020.
Basic salary (per month) 40,000
Dearness allowance (per month) eligible for retirement benefits 30,000
SRINIVASA ACADEMY (An Academy of Professionals for CA / ICWA / CS)`
Contact no: 7299953258 / 7299963258 / 7299973258 / 7299993258
78
Rent-free accommodation is provided.
A car was provided to him from 01.06.2019 (engine cubic capacity more
than 1.6 litres). It is used both for official and personal purposes. Running
expenses are fully met by employer. Mr. Raghu drives the car himself.
Provident fund contribution of both employer and employee 12% of basic
pay and dearness allowance.
Fixed tiffin allowance (per annum) 20,000
Fixed medical allowance (per annum) 30,000
Credit card annual fee paid by employer (used for personal purposes) 7,000
Only son of Mr. Raghu is given free education in the school run by the
employer. Cost of education is 1,500 per month.
Loan taken by Mr. Raghu from provident fund during the year 50,000
Compute the total income of Mr.Raghu for the assessment year 2020-21.
Recommended