Subject Name : Taxation subject code : 19MBAFM322

Unit-1

Brief History of Income Tax in India: In India, this tax was introduced for the first time in
1860, by Sir James Wilson in order to meet the losses sustained by the Government on
account of the Military Mutiny of 1857. In 1918, a new income tax was passed and again it
was replaced by another new act which was passed in 1922.This Act remained in force up to
the assessment year 1961-62 with numerous amendments.
In consultation with the Ministry of Law finally the Income Tax Act, 1961 was passed. The
Income Tax Act 1961 has been brought into force with 1 April 1962. It applies to the whole
of India and Sikkim (including Jammu and Kashmir).
Since 1962 several amendments of far-reaching nature have been made in the Income Tax
Act by the Union Budget every year.

Components of Financial and Money market in India:

Central Board of Revenue bifurcated and a separate Board for Direct Taxes known as Central
Board of Direct Taxes (CBDT) constituted under the Central Board of Revenue Act, 1963.

The major tax enactment in India is the Income Tax Act, 1961 passed by the Parliament,
which imposes a tax on the income of persons.

This Act imposes a tax on income under the following five heads:
I. Income from salaries
II. Income from business and profession
III. Income in the form of capital gains
IV. Income from house property
V. Income from other sources

Income tax Act 1961

It specifies the various provision for determining taxable income, tax liability procedure for
assessment , appeals, penalties

It contains 298 section and 14 schedules

Income tax rules ,1962 : Central board of direct taxes has the power to frame rules by way
of notification in the official gazette

Finance Act : The finance minister of India present a finance bill in the parliament every
year , which consists of various amendments proposed to be made in the direct and indirect
tax

If the bill is passed by both the house of parliament and the assent of the president of India
is received it becomes the finance Act

Charge of Income Tax –section (4)

1. Income tax is charged on every person for every assessment year.

2. Income tax is charged on the total income earned by the person during the previous year

3. Income tax is levied at the rates prescribed by the finance Act

Legal Frame work :

Central Board of direct taxes

Administrative Function appellate functions

1. Director General of income tax Commissioner or Income Tax

2. Director of Income Tax Additional commissioner of Income Tax

3. Additional Director of income Tax joint Commissioner of income tax

4. Joint director of income tax

5. Dept director of income Tax

6. Assistant Directors of income tax

7. Income tax officer

8, Tax recovery officer

9. income tax inspector

1. What are the Benefits of Taxes?

The government can work on important infrastructures and developmental plans for the
nation from the income generated through taxes
These also encourage citizens to create sufficient investments and savings and use several
financial investments to reduce the taxable income and thus lessening the tax amount to
be paid
Paying taxes includes that you must file for tax returns. On doing so it gets easier to
apply for home loan or credits and easing your financial journey.

Types of Taxes:

Direct and indirect taxes are different in a way these are implemented. You may have to
directly pay some taxes such as corporate tax, income tax etc., while some are indirectly paid
such as service tax, sales tax, value added tax etc. There are few other taxes that the Central
Government has brought into effect and levied on both indirect and direct taxes such as
Krishi Kalyan Cess tax, Swachh Bharat Cess tax, infrastructure cess tax etc.
. Direct Tax
The Central Board of Direct Taxes is one of the bodies that takes care of direct taxes and
helps on with its support, duties, governing etc. Some of these are mentioned below:

Income Tax Act : Following the IT Act of 1961, the government rules the income tax in
India. It comes from the sources such as owning of property or house, business, salaries,
gains from investment etc

Expenditure Tax Act : The expenditure tax was introduced in 1987 and concerns the
expenses you incur when availing services at a restaurant or hotel. It does not apply on
Jammu and Kashmir but rest of the India

Securities Transaction Tax: When you trade in stock market or securities, you gain some
substantial amount of money which becomes a source of income, and is levied with securities
transaction tax. The same is added to the share price, so when you sell or buy shares, you pay
this tax every time.

Capital Gains Tax :The capitals gains tax is implied on sizeable earning from sale of
property or investments. There are two types: short term capital gains and long term capital
gains. The interest earned on investment is taxed

Perquisite Tax: The privileges that employers bestow on employees are taxed as well. These
come under the perquisite tax. The perks can extend to compensations such as housing, cars,
phone and fuel bills etc. If these facilities are used for official purpose, then the costs incurred
may be exempted from such taxes.

Corporate Tax: This tax is paid by firms for the revenue these earn. There are specific tax
slabs in this section and the payment of tax is according to these slabs. Types are: minimum
alternative tax, fringe benefit tax, and dividend distribution tax

Wealth Tax Act : As per the budget 2015, the Wealth Tax stands abolished, but it was
enacted in 1951. It was meant to pose taxation as per the net wealth of the company,
individual or a Hindu Unified Family.

Gift Tax Act : Since 1958, the Gift Tax came into being, which taxed people on receiving
gifts worth a value and shelling an amount up to 30% of the gift's expense. However, this tax
was done away with in 1998. Now if someone other than the exempted entities gives gift to
you, exceeding INR 50,000 then this gift amount will be taxed.

Indirect Tax
Some of the taxes are levied on the facilities and services you enjoy and these come to be
taxed by the government. Here are few of the important indirect taxes.

Value Added Tax : VAT is a commercial tax but not levied on commodities with zero rates
such as essential drugs and food items or those that come under exports. However, value
added tax comes in play for supply chain where it is paid by dealers, distributors and
manufacturers.

Sales Tax: This tax was levied on sale of product and came under both central and state
legislation. The limitation of the sale tax is that it can be taken once for particular product.
Thus if the product is resold, this tax won't apply.

Service Tax : The service tax as the name implies is a tax added on services provided in
India. The last ratio percentage for it was 14 and it is not applied on goods but firms that offer
services. Such amount is reflected in the bill to customers

Goods and Services Tax (GST) : The most talked about tax is the Good and
Services Tax, which has superimposed several of the indirect taxes, which now stands
defunct. GST is consumption based tax and applies on value added services, goods at several
stages of consumption in supply chain. Merchants can pay the GST rate applicable and claim
it through the tax credit system

Excise Duty : This tax is imposed on things manufactured in India and called as Central
Value Added Tax or CENVAT. It is collected from the manufacturer of goods by the
government. No excisable goods that bear any payable duty are allowed to move without the
payment of duty to the destination where these are manufactured or produced

Custom Duty and Octroi: On making a purchase that has to be imported in India
from another country, you may have to pay custom duty and Octroi tax. The Octroi is for
ensuring that goods from across the borders and coming into the country are taxed properly.
Other Taxes
The other taxes are referred to as cess and are levied by the government with intention of
generating funds for specific purposes as decided by the Finance Minister.

Swachh Bharat Cess: Starting from November 2015, the Swachh Bharat Cess is applicable on
taxable services of India and is accounted at 0.5% over and above service tax of 14%. This
cess is not implemented on services which are completely exempt from service tax or
services covered under negative services list. This is collected by the Consolidate Fund of
India and utilize in promoting and funding government campaigns related to Swachh Bharat
efforts

Krishi Kalyan Cess : Applicable since June 2016, the Krishi Kalyan Cess is levied on all
services of India in order to extend welfare to farmers and improve the agricultural facilities
of the nation. The rate for this tax is 0.5% and charged over and above the Swachh Bharat
Cess and service tax

Professional Tax : Employment or professional tax is a tax levied by the state governments.
As per the norms, individuals practising a profession such as lawyer, doctor, company
secretary, chartered accounted or earning etc must pay this tax. Not every state levy
professional tax, whose rate also differs as per the state government's discretion.

Property Tax : Real estate tax or property tax is levied by the local municipal bodies of all
cities. These are levied to make funds for maintaining basic civic services. The owners of
commercial and residential properties are subject to the Municipal tax

Entertainment Tax : The entertainment tax is levied by the government on television series,
amusement, feature films and recreational parlours. Such tax is taken into account as the
business entity's total collection of earnings from film festival earnings, commercial shows
and audience participation.

Stamp Duty, Registration Fee, Transfer Tax : The mentioned taxes supplement property
tax and are incurred at specific such as charges of stamp duty, property registration or transfer
of ownership to another person or entity
Infrastructure Cess : The infrastructure cess came into effect on 1st June 2016. A cess of
1% is eligible on motor vehicles driven on LPG/CNG/Petrol. The vehicles accounted for such
cess must be 4 meters or less in length and 1200cc or lower engine capacity. 2.5% tax has to
be paid for diesel motor vehicles that do not exceed the mentioned length and contain engines
with capacities lower than 1500cc. 4% cess is applicable on vehicle's overall cost for big
SUVs and sedans

Education Cess/Surcharge : The Education Cess helps to cover the cost by government for
sponsoring educational programs. The tax is collected independently and applicable on all
Indian corporations, citizens and other people residing in the country. Currently, the cess
amount is 2% of individual's income

Entry Tax: Under entry tax, select states in India such as Madhya Pradesh, Assam, Gujarat,
Uttarakhand, and Delhi account for tax payable on items that enter this state via e-commerce
establishments.

Road Tax and Toll Tax : This form of tax is paid for the infrastructure developed by the
government for roads and bridges. The amount of such tax is rather negligible and utilized for
maintenance of particular roadway projects

Assessment year : sec 2 (9) : Assessment year means period of twelve month starting from
April 1st of the every year and ending on march 31 of the next year

Previous year: Sec : 3 Income earned in a year is taxable in the next year . they year in
which income is earned is known as previous year and the next year in which income is
taxable is known as assessment year . In other words it can be said income earned during the
previous year 2018-2019. It taxable in the immediately following assessment year 2019-2020

Assessee : sec 2(7) : Assessee Means a person by whom any tax or any other sum of
money is payable under Act

Deemed Assessee: A person assessable for income of some other person

Deemed Assessee in default: Deemed assessee in default means the person who has failed
to fulfill his statutory obligation

Person : sec 2 (31) : The term person includes :

a. Individual

b. a Hindu undivided Family

c. a company

d. a firm

e. an association of person or a body of individual whether incorporated or not

f. a local authority

g. every artificial juridical person

An individual : under the present Act, the word of individual means only a nature person

A Hindu undivided family : A Hindu undivided family consists of all person lineally
descended from a common ancestors and includes their wives and unmarried daughters.
Profits made by a joint Hindu family are chargeable to tax as income of the Hindu
undivided family as a distinct entity or unit of assessment

A Company : under section 2 (17) : the expression company is defined to mean the
following

a. Any Indian company

b. Any body corporate under law of a foreign country

c. Any institution ,association or a body which assessed or was assessable / assessed as

a company for any assessment year commencing on or before April 1, 1970

A firm : under section 4 of the Indian partnership Act 1932 defines partnership as relation
ship between person who have agreed to share the profit of business carried on by all or
any of them acting all.

An association of person : Association of person means of association in which two or more

person join in common purpose or common action. The term person includes any company
or association or body of individual

Local Authority: local authority is a separate unit of assessment . As per section 3(31) of
the General clause Act 1897 a local authority means a municipal committee, district board,
body of port commissioners or entrusted by the government with the control and
management of a municipal or local fund

Income sec2 (24) : section 2 (24) defines income which includes the following :

1. Profits and gains of business

2. Dividends

3. Voluntary contribution received by a trust or an institutions

4. Any special allowances

5. Other allowances

6. Value of any benefits

7. Any cash assistance received by the government of India

8. Any capital gains

9. Insurance profit

10. Any income from other sources

11. Any contribution towards provident fund or ESI Fund

Gross total income ( section 14) : Gross total income is the aggregate of the incomes
computed under various heads of income according to the income tax act before
making any deduction Under section 80C and 80U

Section 14 deals with the Gross total income :

1. Income of salaries

2. Income from house property

3. Profits and gains of business or profession

4. Income from capital gains

5. Income from other sources

Total income Section 5

Total income of an assessee is gross total income after making deduction under section
80C and 80 U

Casual income An income becomes casual income if it contains the following feature
1. It is unanticipated , It is non-recurring in nature , it arises from unknown sources , no
specific efforts were put in to earn such income

For example : 1.winning from lottery 2, tips given to taxi drivers 3. Income from
cross word puzzles and car games

Agricultural income : Agricultural income means Any Rent or Revenue derived from
a land situated in India and used for agricultural purposes ( basic operation like sowing
of seeds ,planting, harvesting , irrigation should be carried out on the land)

Example of Agricultural income :

 1. Income from growing and selling paddy, wheat, flowers, trees.

2. Income from growing and maintaining nursery, tea leaves

3. Income from sale of dried Tobacco leaves

Example of Agricultural Income :

1. Income from butter and cheese making

2. Income from Fishing

3. Income from dairy farm

4. Interest on loan given to a farmer

Capital and Revenue : capital is different from of money. Money is used simply to
purchase goods and services for consumption .Capital is more durable and is used to
generate wealth through investment.

Revenue: Revenue is the amount of money that a company actually receives during a
specific period , including discounts and deduction for returned merchandise . Revenue is
also known as sales, an alternatives to the price earning ratio that uses revenue in the
denominator

Capital and revenue are mainly classified into:

1. Receipts : capital Receipts and revenue Receipts

2. Expenditure : capital Expenditure and revenue Expenditure

3. Losses : Capital Losses and Revenue Losses

Difference between capital and Revenue Receipts :

1. Sale proceeds of a fixed Asset is a capital receipts whereas, the sales proceeds of a
trading asset is a revenue receipts

2. A receipts in substitution of a sources of income is a capital receipts whereas, a

receipts in substitution of income is a revenue receipts

3. Compensation received for loss of business is a capital receipts. Whereas,

compensation received for loss of profit is a revenue receipt

4. Grants received from the government for any development scheme is a capital receipt
where as, Grants received from the government for meeting foreign competition is a
revenue receipt

Difference between Capital and Revenue Expenditure :

 1. An expenditure which increases the earning capacity of a fixed asset is a capital
expenditure . where as an expenditure incurred for maintaining a fixed asset is a
revenue Expenditure

2. Cost of acquisition and installation of affixed asset is a capital expenditure where as

purchases price of goods bought for resale is revenue expenditure

3. An expenditure incurred in obtaining capital by issuing shares is a capital expenditure

whereas an expenditure incurred for raising loans or issuing debenture is a revenue
expenditure

Difference between Capital and Revenue Loss:

1. Capital losses do not arise in the course of regular business. Whereas, Revenue losses
arise in the course of regular business

2. Loss on sale of capital asset in a capital loss whereas, loss on sale of trading asset in a
revenue loss.

Powers and Function of central Board of Direct Taxes (CBDT)

1. To make rules for carrying out the objectives of IT act.

2. To issues orders and instruction to subordinate authorities for proper administration of

IT act.

3. To declare any institution, associate or body to be a company

4. To exercise control over IT authorities

5. To decide jurisdiction of IT authorities

Commissioner of Income Tax (CIT) :

1. To review the order of the Assessing officer

2. To set –off refund against arrears of Tax

3. To appoint an IT authority below the rank of an assistant commissioner or Deputy

commissioner

4. To transfer cases from one subordinate assessing officer to another

Introduction : Tax is charged on the income of the assessee . under the income tax Act.1961,
the total income of every person is computed based on upon his/ her Residential status
Residential status of an individual (sec.6):

Residential status

Resident Non- resident

(Fulfills at least one basic condition ) (fulfils none of the basic condition )

Basic condition (satisfy any one Residential)

a. Individual assessee must be in India for at least 182 days or more during the previous
year

Or

b. Individual assessee must be in India for at Least 60 days or more during the previous
year and 365 days or more during 4 year preceding the previous year

1. If an individual assessee fulfils any one of the basic condition, he/she is said to be
resident in India

2. If an individual assessee fulfils none of the basic condition he/she is said to be non
resident in India

Additional condition ( sec6(6) :If an individual assessee becomes resident in India , the
following additional conditions(sec 6 (6) ) shall be applied to find out whether an
individual assessee is Resident and ordinary Resident or Resident but not ordinarily resident

1. Stay in India for 730 days or more during 7 previous years immediately preceding
the previous year

2. Resident in India for 2 out of 10 previous years preceeding the previous year

a. If an individual assessee satisfies both the additional conditions, he/she is said to

resident and ordinary resident in India
 b. If an individual assessee satisfies one or none of the additional conditions, he/she is
said to be resident but not ordinarily resident in India

Problem related to residential status

1. Mr Steve , an American citizen has been visiting India for a period of 102 days every year
since 2008-2009. During the pervious year 2018-19 also he visited India for the same
period .what is his residential status for the AY 2019-2020?

2. Mr. Mahesh comes to India for the first time on 16-4-2016. He stay in Chennai up to 1-4-
2018 and thereafter shifts to Mumbai. He departs from Mumbai for his native country on 2-
10-2018 Determine his residential status for the AY 2019-2020 ?

3.X is a foreign citizen (not being a person of India origin ). Since 1981 , he visit India every
year in the month of April for 100 days .find out the residential status of X for the AY 2019-
2020?

4.Ascertain the residential status of the assesses in the following cases for the assessment
year 2019-2020. Gautham left for USA on 10-3-2016 after having lived in India for 20 days.
He returned to India on 10-8-2018

5. X an India citizen. Leaves India for the first time on September 20,2016 for the purpose
employment .He comes to India for a visit of 146 days on april10,2017. Comes back on May
16, 2018 .Find out the residential status of X for the assessment year 2019-2020

BASIC SALARY

1. Base income of an individual

2. It is fixed income paid by employer to employee for his work performed
3. Basic salary will not include any bonus or compensation benefits
4. Basic salary is taxable, therefore it should not be more than 40% of the cost to
company
5. Gross salary = B/S+ HRA+ conveyance +DA +......
6. Net salary = Gross salary – Deduction
7. Net salary = Taken home salary

HRA = HRA or House rent allowance is a salary component paid by employer to employees
for meeting the accommodation expense of renting a place for residential purposes. HRA
forms an integral component of a person salary

HRA is applicable to both salaried as well as self-employed individuals

Allowance : Allowance is generally defined as fixed quantity of money

City compensatory allowance : It is always taxable Even if city compensatory allowance

is paid to meet additional expenditure
Entertainment Allowance : (sec16(ii)) : Entertainment allowance is first included in income
under the head salaries 1. The least of a. 5000 b.20% of salary and (Entertainment
allowance is taxable for private employee, for government employee is exempted)

Some of allowance will be given exemption as specified in rule 2BB

1. Special compensatory (Hill Area) : Amount exempt from tax from Rs 7,000 per
month
2. Tribal areas including Madhya Pradesh, Tamil Nadu, U P Karnataka, W B Bihar,
Orissa : Amount exempt from the tax Rs. 200 per month
3. Allowance for transport employees: Amount of exemption is a. 70% of such
allowance or Rs. 10,000 per month whichever is lower.
4. Child education allowance: The amount exempt is limited to Rs.100 per month per
child up to a maximum of two children.
5. Transport Allowance : Amount of exemption is a Rs.3200 per month
6. Tiffin allowance : It is taxable
7. Servant allowance : It is taxable

Deduction from salary income section 16 :

1. Standard deduction ; Standard deduction is Rs 40,000 or the amount of salary

whichever is lower
2. Entertainment allowance
3. Professional tax

Employee provident fund : provident fund scheme is a retirement benefit scheme a

stipulated sum is deducted from the salary of the employee as his contribution towards the
fund

1. Statutory provident fund : Statutory fund is set up under the provision of the
provident funds Act, 1925 .This fund is maintained by government and semi-
government organization , local authorities , railways, Universities and recognised
educational institutions.
2. Recognised provident f und : A provident fund scheme to which the employee
provident fund applies is recognised provident fund . As per PF Act 1952 any
establishment employing20 or more person is covered by PF act 1952
3. Unrecognised Provident Fund: If a provident fund is not recognised by the
commissioner of Income –Tax

Public provident fund : The central govt has established the PPF for the benefit of general
public to mobilise personal saving any person can be deposited minimum of Rs.500 to
maximum 1,50,000 and interest rate of RPF is 12% is exempt
Under section 80C : under section 80 C. an assessee is entitled to be deduction in respect of
the amount invested or deposited in the life insurance policies, provident fund
superannuation

HRA : House rent allowance (sec.10 (13A) and rule 2A)

Computation of salary for HRA

Basic salary XXXX

Dearness Allowance (if enters to XXXX
retirement benefits), dearness pay
Commission (fixed % on sales XXXX

Format for calculating HRA

Particulars Amount Amount

Actual HRA received XXX
(-) Least of the following Exempted
1. Actual received Xxx
2. 40% or 50% of salary Xxx
3. Rent paid -10% of salary Xxx
Xxx
Total taxable HRA XXX

Note: 50% of salary in case of Mumbai, Delhi , Chennai, Kolkata

Problem 1: Mr K an employee of soft ware company in Bangalore submits the following

information . Compute taxable HRA

Basic Salary : Rs. 40,000 Pm Rent paid by K Rs. 72000 Annual bonus : Rs.30,000

DA 30% of Basic (60% enters to retirement Benefits) HRA: Rs.3500 pm

Problem 2.Sanay resides in Chennai . He gets Rs. 3,00,000 p. a as basic salary. He receives
30% of basic salary as house rent allowance. Rent paid by him is 10,8,000 p.a. Compute the
Taxable for the AY 2019-2020

Problem 3 Suman resides in Kolkata gets Rs.3,00,000 pa as basic salary he receives 50,000
pa as HRA , rent paid by him is Rs.40,000 pa. Compute the taxable HRA for the AY 2019-
2020

Problem : 4 Mr. praveen a resident of Ajmer, receives Rs.1,92,000 pa as basic salary during
the previous year 2019-2020 in additional he gets 19200 as dearness allowance forming part
of basic salary, 7% commission on sales made by him (sale made during the relevant
previous year is 86,000) and 24000 per annum as HRA. He however pays 21500 per annum
as house rent. Determine the quantum of HRA exempt from Tax?
Gratuity act 1972 : gratuity is a payment made to an employee by the employer either at
the time of retirement or when he is leaving the job. It is given to the employee once he/she
has completed atleast 5 years of continuous service. It is mandatory for any employer in the
private and public sector who has 10 or more employees to pay gratuity to all employees.It is
a monetary reward for being in service with the company

Format for calculate of Gratuity:

Particular Amount Amount

Gratuity actually Received XXX
Least of the following is exempted from
Tax
Gratuity actually received XXX
Maximum limit of 10,00,000
(15/26)* (last drawn salary)*(service XXX
period) xxx
Taxable of gratuity xxx

Note: Service period excess of 6 months shall be treated as 1 year , lessthan 6 months
shall be Ignored.

Problem 1: Mr.Harish retired on 31-1-2018 from a private company after 30 years and 7
month of service . He gets 380000 as gratuity . His salary details for the financial year 2018-
19 are. Basic pay 16000pm, DA 8000Pm, CCA2000pm and HR 5500pm.DA enters into
retirement benefits .What is the taxable value gratuity if the covered under payment of
gratuity act?

Problem 2: X an employee of PQ company ltd receives78000 gratuity .He covered by the

payment of gratuity act 1972. He retires on December 12,2018 after rendering for service of
38 years and 8 months. At the time of retirement his monthly basic salary and dearness
allowance was 2400 and 800 respectively .Is the entire amount of gratuity exempt from tax ?

Problem :3 Sunil, an employee of SSRCO .. Ltd receives 2,00,000 as gratuity. He is covered

by the payment of gratuity act, 1972. He retried on Dec14,2018 after rendering service of 38
years and 8 months. At the time of retirement his monthly basic salary was 8000 and dearness
was 800 (70% of which is part of salary for computing all retirement benefits) respectively
.Calculate the amount of gratuity chargeable to tax.

Problem :4 X an employee of LMN ltd receives 45000 as gratuity under the payment of
gratuity act 1972 .He retires on November 10,2018 after rendering services of 30 years and 4
months. At the time of retirement monthly salary was 2340 (inclusive of dearness allowance
of 200pm) calculate amount of gratuity chargeable to tax

Encashment of Leave salary: sec 10 (10AA): Leave encashment refers to an amount

received in exchange for a period of leave not availed by an employee. Encashment of
accumulated leave can be availed by an employee at the time of retirement, during the
continuation of service or at the time of leaving job. The leave encashment policy varies
from employer to employer. Some let the employees carry forward the balances leaves in a
year to the next calendar year.

Format for leave salary received at the retirement

Particular Amount Amount

Least of the following is exempt from Tax;
1. Leave encashment actually received XXX
2. 10Months of Average salary XXX
3. Maximum limit of Rs:3,00,000 XXX
4. Leave salary as per IT Law ( leave XXX
credit *per month average salary ) XXX XXX
Taxable leave salary XXX

1. Mr. N was manager in a private company he made a pre mature retirement from the
service on 1/11/2018 After completing 25 years of service his salary for 10 months
preceding retirement was 36900 he had 7 months leave to his credit on the basis of 30
days per year which was approved and he was paid 27300 as salary. Compute the
amount of leave encashment exempted from tax. His last drawn salary was 3900.

Problem related to Income of salary:

1.from the particulars given below calculate salary income of Mrs. S who is working in west
Bengal and receive the following during the PY

Basic Pay : 20000pm , DA : 1500pm(enters into benefits) Education Allowance:200pm per

child for his two children, Tribal area allowance : 300pm, CCA: 125 pm, conveyance
allowance: 100pm Helper allowance :50pm

2.Mr.R employed as a manager in a company furnishes the following information for the
year ended 31-3-2019

Basic salary up to 31-10-18: 50,000pm

From 1-11- 2018: 60,000 pm

Dearness allowance: 40% of basic pay ( not part of retirement Benefits )

Bonus: 50,000

Contribution of Employer to RPF @ 16% of basic pay

Profession Tax paid by Mr. R: 3000. Compute taxable salary Mr. R

3.KumariSmitha an employee of TVS Ltd gives the following particulars for year ending
31-3-2019

Basic pay Rs.25,000 PM Medical Allowance Rs.200 PM

Bonus Rs. 15,000 PM Family Allowance Rs. 500 PM
DA (participates ) Rs. 12500 PM HRA Rs. 5,000 PM
CCA Rs. 1000 PM EA Rs. 2000 PM
Project allowance Rs. 1500PM Rent paid by Rs. 7250 PM
employee
Smitha is a member of recognised provident fund and contribution 12% of her salary and
the company also contributes similar amount .The interest of RPF is credited at 14% 5600 ,
professional Tax 900. Compute net salary income