1

2
3

5
6

7
8
Assignment 1 - Would be considered for Internal Evaluation

Points to note -
Answers shall be submitted in excel format
Workings for all should be clearly mentioned
Formulas and/or rules as per Income Tax Act for each such work workings shall be mentioned

Numerical on Salary

From the following particulars of Mr. Lakshman, working at N Ltd., Chennai, compute taxable salary
income for the assessment year 2016-17:

Accommodation taken on lease by N Ltd. for Rs. 15,000 p.m.

Rs. 5,000 per month is recovered from the salary of Mr. Lakshman
He was provided with Furniture, for which the hire charges paid by N Ltd. is Rs. 4000 per month
No amount is recovered from the employee in respect of the same
A Maruti DZire Car (1200 cc) which is owned by N Ltd. and given to Mr. Lakshnan which was used both for
official and personal purposes.
All running and maintenance expenses fully met by the employer. He is also provided with a driver.
His salary included Rs. 6,40,000 was Basic Pay, DA of Rs. 1,60,000 (not part of retirement benefits), and
fixed commission of Rs. 1,00,000 per annum
He was paid Rs. 25,000 as Medical Allowance every year.
N Ltd. was spending Rs. 60 per day for the snacks and refreshments provided during office hours. There
were 240 working days in that year.
No amount was recovered from Mr. Lakshman.
Mr. Lakshman was getting Rs. 5,000 per month as Entertainment Allowance.
An amount of Rs. 3,000 was deducted from his salary during the year towards Professional Tax.
 COMPUTATION FROM INCOME SALARY OF MR. LAKSHMAN FOR AY- 2016-1

Particulars Amount

Basic Salary 640,000

Dearness Allowance 160,000
Commission 100,000
Allowance
Medical Allowance 10,000

Entertainment Allowan 60,000

Perquisites
Motor car 32,400
Rent Free Accomodation 133,500
Meal/Snacks 2,400
Gross Salary 1,138,300
Less Deductions
Standard Deduction 50,000
Entertainment Allowance 0
Prefessional Tax 2,500
ncome From Salaries 1,085,800
ON FROM INCOME SALARY OF MR. LAKSHMAN FOR AY- 2016-17

Working Notes

1. RFA
Calculation of Unfurnished RFA
Accommodation is not Owned by Employer
15% of salary or Lease Rent which ever is lower is taxable
15% Salary 145,500

Lease Rent 1,8,000

Taxable RFA 145,500
Less: Amount Recovered from Employee 60,000
Value of unfurnished RFA 85,500
Calculation of Furnished RFA
Value of Unfurnished RFA 85,500
Add: Rent Paid for Furniture 48,000
Value of Furnished RFA 133,500

2. Motor Car
Motor car (1200cc) is owned by
the employer and given for both
official and personal use
Since the motor car cc is less than 1600
Taxable Value 21,600
Driver 10,800
Taxable Perquisite 32,400

3.Medical Allowance
Medical Treatment Provided by employer
to employee for Medical treatment upto
15000 is exempt
Medical Allowance 25000
Exempt 15,000
Taxable Allowance 10,000

4. Lunch/Meals
50 per meal maximum of 2 meals per day for 22 working days is exempt

Allowance Received 14,400

Exempt 12000
Taxable 2,400
5. Entertainment allowance is fully taxable
and is first included in salary and
thereafter deduction is to be made to gross
salary. However deduction in respect of
entertainment I availed in case of
government employees only. Since, Mr
Lakshman is private employee he is not
eligible for deduction

6. Professional tax paid upto 2500 is

allowed as deduction
 Salary =Basic + DA + Taxable
Allowances + Bonus + Commission

15000 Per Month

1800 per month

900 per month

50*240 working day