—— PROBLE 1, X, employed as Production Mar * gnded 31 March 2020: a) Basie salary upto 31 October 2019, & so,999 Note: Salary is chte ane! pid om the last day of every month, by Deamess allowance (@ 40% of basic satiny ¢) Bonus equal to one month's sa ance applicable for that month, 4) Contribution of employer to tecognized salary. ¢) Profession tax paid 8 2,500 of which 2,000 was paid by the employer. 1, Facility of laptop and computer was provided to X for both offen) %1.10.000 and computer is & 60,000 and these 9 8) Motor car owned by the employer (cubic eapy ployee from | November 2019 meant for bot of 8 90,000 trom | November 2019 to 31 M was self-driven by the employee. b) Leave travel cone aged 3). Cost of air tickets (economy eh % 50.000 for three children. X is eligible for in law, Compute the taxable income of X for the assessment year 2020-21 ©2,00,000 and winnings from lottery is % 30,000. He has deposited & account on 31 March 2020. Ms furnishes you the follows wer in M Ld, t information for the year Dam. and % 60,000 per month from 1 November 2019. try which is paid in October 2019 on b; asic salary plus dearness allow Provident fund account of the ployee @ 16% of basic and peryonal use. Cost of laptop is quired by the company on 1 December 2019 of engine execeds 1.60 litres) provid: 1h official and personal use, Repair and nu arch inet to the em: ng Expenses 2020, were fully met by the employer. The motor car sion given to employee, his wife and three children (one daughter aged 7 and twin ass) reimbursed by the employer % 60,000 for adults and availing exemption this year to the extent itis permissible sons assuming that his rental income is 20,000 in his public provident fund Solution Computation of taxable income of X for the assessment year 2020-21: ia Basic salary [8 50,000 x 7 + & 60,000 x 5] 6,50,000 Dearness allowance [40% of % 6,50,000) 2,60,000_| Bonus [& 50,000 + 40% of & 50,000) 70,000 | Employer's contribution to RPF [16% of & 6,50,000]: Note 1 and 2 41,04,000 | Less: Exempt up to 12% of salary [12% of & 6,50,000) 78,000 26,000 _| Perquisite of employee's obligation met by the employer — Professional tax paid by the employer 2,000_| | Perquisite of use of laptops and computers (exempt) =|4.58 Income Tax Law & Practice Motor car [2,400 SI: i cave travel concession exempt: Note 4 Pe Gross salary 201 Zesst_ Deductions under section 16: Standard deduction St Professional tax 2800 Income under the head Salaries £67.00 Income from house property Rental ineome/Net annual value 200,000 Less: Standard deduction [30% of net annual value) 60,000 140.00 Income from other sources — Winnings from lottery 20,01 Gross total income 113750) Lessi_ Deductions under section 80¢~ Deposit in PPE 2000) “Taxable income T1730nee solution Comput "ars) receives the following incomes from Y Lud. during the year ending 31 My © salary @ 2 25.000pm. teh 2029, b) Tittin Nallowance (actual expenditure & Hi actual expenditure & 8,000) @ @ 1,000 p.m. ©) Commission @ 2.000 pan . 4) Reimbursement of i 7 " sement of ordinary medical expenditure for the treatment of X and his fy seins cy taeieal expire fr the amy etary ©) Transport allowance @ % 200 p.m, (actual expenditure: & 1,009), Resides, X enjoys the follow s 1 perks: a) Unfumished flat provided at Delhi at a nominal rent of © 3,500 pam. (rent psid by 2 12,000 p.m), mas elo: b) Interest tree Joan for purchasing home appliances (Amount: 7 1,00,000; Date of taking loan: 2017: Amount outstanding between April 2019 and November 2019: € 50,009 and afer Novent 2019: 18,000. The SBI lending rate for similar loan on | April 2019 is 18.50%), ibe ©) The employer company sells the following assets to X on 10 January 2020: Assets Sold Car Computer Fridge Cost of asset to the employer %4,00,000 7 60,000 % 20,000 Sale price %2,00,000 18,000 % 10,000 Date of purchase of all the assets (put to use on same day): 10 June 2017, d) He contributed 20% of his salary to. recognized provident fund account to which his employer yy, matching contribution, " ©) Interes account on 10 December 2019, 1) He donated % 20,000 to National Defence Fund. Determine the total income of X for the assessment year 2020-21 [Dethi University B.Com.(H) 2009 (Modies) 1 @ 13% paa, amounting to $2,000 hes been credited to his aforessid provident yy jon of total income of X for the asses nent year 2020- Basic salary [€ 25,000 x 12) Tiffin allowance (fully taxable} (F 1,000 121 ~ Commission [& 2,000 x 12 ‘Medical rembursem Note 1 Transport allowance [% 200% 32) ‘Accommodation at concessional rent: Note 2 Interest free loon: Note 3 (€ £0,000 x 18.50% x B/12 + 18,000 x 18,50%6% 4/22] ‘Sale of movable asset(% 56,000 + Nil 6,000): Note 4 Employer's contribution towards RPF [20% of &3,00,000) 60,000 Less: _Exemat [12% of & 3,00,000): Note 5 36,000 Interest crecited to the RPF account 52,000 Less: __ Exempt [8 52,000/13 9.5) 38,000 oTwher aecoun 40, seems tess ji et salary 30,000 Income under other heads 4,69,437 “iar SENDS aes Decent secon ane Employees ontbton owas RP 0x ot duction under section 806 20.000): Notes 0,000 Deduction under section 806 ~ Donation to National Defence Fun without any limit on donated amount) ence Fund (allowed as 100%dedluction i Total income (Rounded off} isa = 1. {tis assumed thal the medical reimburseme hospital a) Hospital maintained by the employer; or b) Hospital maintained by the Government or any local authority; or €) Hospital approved by the Government for the purposes of Central Government Health Scheme; or d) Hospital approved by the Principal Chief Commissioner/Chief Commissioner for the prescribed disease under rule 3A. Had the medical reimbursement from the em members in the above hospitals, the amount the hands of the employee. 2, In case of accommodation which is taken on rent by the employer, the value of perquisite taxable is rent paid/payable by the employer to thied party or 15% of salary, whichever is lower. Salary for this purpose means basic salary, dearness allowance (forming part of sala:y), all monetary benefits (taxable value) and excludes all perquisites and lumpsum payments received at the time of retirement Thus, salary for the purpose of perquisite of accommodation is € 3,38,400 [& 3,00,000 + 12,000 + 224,000 + % 2,400), Value of perquisite of accommodation is € 50,760 [& 1,44,000 (€ 12,000 x 12) or 15% of ® 3,38,400, whichever is lower] From this value, rent recovered from the employee is deducted and thus, the final value of accommo dation taxable in the hands of the employee is ® 8,760 [8 $0,760 ~ 42,000 (€ 3,500 x 12)]. 3. The value of perquisite of interest-free loan is computed on the basis of maximum outstanding balance on the last day of each month multiplied by the rate of interest charged by the SBI on such loan on 1 April 2019. 4, The value of perquisite of sale of movable assets: nt for the treatment of X and his family members is not in iployer been for the medical treatment of X and his family I of reimbursement would have been exempt from tax in fee Computer (2) Gea Actual cost on 10 June 2017 60,000 20,000 tess: Normal wear and tear (year 2) 30,000 2,000 WOV on 10 June 2018 3,20,000 30,000 18,000 tess: Normal wear and tear (year 2) 64,000 15,000, 2,000 WDV on 10 June 2019 2,56,000 15,000 16,000 fess: Sale consideration 2,00,000 18,000 10,000 Taxable value 56,900 Nit §,000Income from Salaries 4.61 Gross salary 5 19,437 Deduction under section 16 ess [50,000 et salary 769,437 Income under other heads a Gross total income aaah [ess _ Deductions under section 80: Deduction under section 80¢ Employees contribution towards RPF [20% of 2 3,00,000|: wate $ 60,000 Deduction under section 80G ~ Donation to National Defence Fund (alowedas 100% deduction wwithut any limit on donated amount) 20,000 Total income (Rounded off) 54 Note: J. Iris assumed that the medical reimbursement for the treatment of X and his family member: the following hospitals: 2) Hospital maintained by the employer; or 1) Hospital maintained by the Government or any local authority; or ©) Hospital approved by the Government for the purposes of Central Government Health Scheme; or d) Hospital approved by the Principal Chief Commissioner/Chief Commissioner for the prescribed disease under rule 3A, Had the medical reimbursement from the employer been for the medical treatment of X and his family members in the above hospitals, the amount of reimbursement would have been exempt from tax in the hands of the employee. 2. In case of accommodation which is taken oa rent by the employer, the value of perquisite taxable i rent paid/payable by the employer to third party or 15% of salary, whichever is lower. Salary for this purpose means basic salary, dearness allowance (forwiing part of salary), all monctary benefits (taxable value) and excludes all perquisites and lumpsum payments received at the time of retirement. Thus, salary for the purpose of perquisite of accommodation is & 3,38,400 [¥ 3,00,000 + % 12,000 + %24,000 + % 2,400). Value of perquisite of accommodation is % 50,760 [¥ 1,44,000 (& 12,000 x 12) or 15% of & 3,38,400, whichever is lower]. From this value, rent recavered from the employee is deducted and thus, the final value of accommo- dation taxable in the hands of the employce is & 8,760 [% 50.760 ~% 42,000 (€ 3,500 x 12)]. 3. The value of perquisite of interest-free loan is computed on the basis of maximum outstanding balance on the last day of each month multiplied by the rate of interest charged by the SBI on such loan on 1 April 2019, 4. The value of perqui ic of sale of movable assets: Gn ei Cea cru) Actual east on 10 June 2017 20,000 tess: Normal wear end tear (year 1) 80,000 72,000 WDV on 10 june 2018 3,20,000 18,000 tess: Normal wear and tear (year 2) 64,000 2,000 WDV on 10 June 2019 2,56,000 16,000 fess: Sale consideration 2,00,000 10,000 Taxable value 56,000 | 8,000Income Tax Law oe ; 20% on reducing batanee ing. te of eomputers and 10% on sehen Me eeoving MlHEE EES, of completed year and any Fraction © Pg fh Tere score ans basi say plus dears agg Yee eh or the PUPS e's percentage of tumover achieved by form, Ba, 5, Salary foe Tad on fixed peteetage Y the emp ttng ts = omumission cam purpose is ¢ ction SOGG ean also be ele Fon under section 8OGG can al immed by ates fet of scton 80G are satisfied. For the purpose ops ad contin ° ; ovide : paid Bree en ignored in this Case. seston $OGG his WE conditions of section 80GG are satistie es sumed thar coneliti , tint, However. fat sould be least ofthe FONT mont | 0 A Total income” (ie, 25% of 3,89,437) a3 2) - 10% of salary (10% of & 3,89,437); vat paid (% 3.500% 12) 10% of eal 7437) Lee tren At dadoction under section 80GG., 2 ‘purpose of section 80GG is ealeulated as Follows: 462 8 Nonnal wear and tea ein Stes. Mig ne” for the t oss total income ie ee sains (whether section 112A or others) ae Ni Less: Long-term capital e Short-term capital gains under section 111A Less: . Deductioas under section 80C to 80U (except 80GG) walt Less soa Total income aia 4. Z is a public relationship officer of A Ltd. in Gurgaon. He has furnished the {ollowieg tn income for the year ended 31 March 202 R ty a) Basic salary b) Deamess allowance (50% forms part of salary for retirement purposes) Pt ©) Commission 4 ) Entertainment allowance 1 ©) Transport allowance (actual expenditure incurred on commutation between offce 5 and residence is € 500 p.m.) 1) Employer company pravided him with rent free accommodation for which the comper was required to pay & 13,000 pan, 2) He raised interest free loan of % 20,000 on 1 April 2019 to purchase a motor eycle. h) Employer reimbursed medical bills amounting to € $5,000 during financial year wit ') Company paid professional tax amounting to % 2,500 on his behalf i) Company contributed % 50,000 to his recognized provident fund account to which b= ‘contribution. 4K) Received & 20,000 as share of profit from a partnership firm. és 2 € 30.000 was credited to aforesaid provident Fund account during 2019-20 @ 12%p2.by¥#" m) Dividend received from Tata Motors Ltd,, an Indian company 10,000. Fa 1m) He pad LIC premium on the life policy (issued before 1 April 2012) of his sar mat ing to ¥25,000 (sum assured: & |,00,000) 8) Donation to PM CARES Fund: 710,000. P) Donation paid to Government for promoting family planning: € 80,000 Desi the taxable income and tax lability of Z forthe avgesement year Sp: [Delhi University B.Co™Income from Salaries solution Computation OF taxable income of 2. forthe assessment year 2020.21 nm 463 Sh asic salary [& 30,000 x 12) 3,60,000 Dearness allowance [8 8,000 x 12) | _ 96,000 Commission [2 3,000 x 13} 36,000 Entertainment allowanee (2 800 x 12] 9,600 “transport allowance [8 200% 12] 2,400 Rent free accommodation: Note 1 68,400 interest free loan: Note 2 = | Reimbursement of mecical expenditure; Note 3 53,000 | Employee's obligation met by employer ~ Professional tax pald by the employer 2,500 Emaployer's contrinution towards RPF 0,000 | |e __fxemet [12% of &4,02,000): Note 4 48960 1,040 interest credited in RPF 70,000 tess: _ Exempt [8 30,000/12 x 9.5] 23.750 6250 Gross salary - 637,190 [ess _ Deductions under section 16; “standard deduction 30,000 Professional tax 72.500 Net salary 5,74,690 Profts and gains of business or profession: Share of profit from a fire [exempt in the hands of partnets under section 10(2A)] = income frow other sources Dividend from Tata Motors Utd, an indian company: Note 5 = ross total Income 5,84,690 tess: Deductions under section 80: Deduction under section 80C: Employees contribution towards RPF 130,000 Life insurance premium: Hote & 20.000 70,000 Deduction under section 80: PM CARES (100% allowed) 30,000 Promoting family planning: Note 7 [100% of @ 51,465) 51.469 isco | Total income (Rounded off) 453,220 Computation of tax liability of Z for the assessment year 2020-21: Tax [5% (© 4,53,220—% 2,50,000)] 10,161 Lets: Rebate under section 87 [% 12,809 or 100% of t 10,161, whichever is less; | applicable because total income does not exceed | ¥5,00,000] Add: Health and education cess @ 4% Tax payable4.64 Income Tax Law & Pra Note: i. 1, Imease of accommodation which is taken is rent paidipayable by the employer 19 UE Fo for this purpose means basic salary, He benefits (taxable value) and excludes oo eet by the employer the valve Of per ved pasty 15% of aly, whichever yey, lowance (forming part of salary), an tt pegs am NSU POYMENS eg ha ® ab reliremaeat, «r- ofaecommudation is € 4,56,000 [8 3,60,000 Thus, salary for the purpose of perquisite ofaccomm R500, my 0}. of € 96,000) +2 36,000 + 9,000 +% 240 ; ere Value vFpeepaste of aceommoxaton i 68,400 [& 1,80,000 (& 15,000 x 12) or 15 ots whichever is lower]. 2. Incase of interest free loan, it is not met sitioned whether the loan has been taken by the, EMploy, the employer or from another person (for instance, pons ae ee “ S i Assumed thug Joan is not taken from the employer, then it is not treated as 28 m ter ary head. Bux jn they is assumed that the loan is taken from the emptoyer, then the amount of loan of & 20,000 wit) ye® exempt from tax in the hands of the employee because Loan taken from an employer upto ® 2000056 ‘year is not taxable as a perquisite in the hands of the employee. ; 3. Inis assumed that the medical reimbursement is for the medical treatment of X and his family Memb but not in the following hospitals: a) Elospital maintained by the employer; ot b) Hospital maintained by the Government or any local authority; or ©) Hospital approved by the Govemment for the purposes of Central Government Health Scheme; 4) Hospital approved by the Principal Chief Commissioner:Chicf Commissioner for the presen disease under nile 3A. Had the medical reimbursement from the employer been for the medical (reattment of X and his fan members in the above hospitals, the amount of reimbursement would have been exempt from tx i. the hands of the employee. 4, Salary for the purpose of RPF means basic salary plus deamess allowance forming part of salary phy commission based on fixed percentage of tamover achieved by the employee, Here, salary fortis purpose is & 4,08,000 [8 3,60,000 + % 48,000 (50% of € 96,000)]. Dividend received by a shareholder from an Indian company til 10,00,000 per year is exempt inks hands undee seetion 10(34). On such dividend, company declaring such dividend has to pay compe dividend tax under section 115-0 @ 20.555%, 6. In case of life insurance policy taken by an assessce for his son, deduction allowed under section ¢ is lower of actual premium paid or 20% of sum assured (being the policy issued before 1 April 2012, Thus, eligible amount for deduction under section 80C is & 20,000 [€ 25,000 (actual premium paid)er % 20,000 (20% of € 1,00,000), whichever is lower]. 7. Amount donated for promoting fomily planning is lower of actual amount donated for this purpose" 10% of adjusted gross total income, Adjusted gross total income is calculated as follows: Gross total income 594.600 Less: Long-term capital gains (whether section 112A or others) Zess; Short-term capital gains under section IIIA Zessi Deductions uilr section 80C to 8OU (except 806) Adjusted gross total ineome 560 10% of adjusted gross total income is € 51,469. Thus, eligible amount of donation for the purpo® deduction under section 80G is € 51,469, being the lower of 51,469 or & 80,000, Further, this do™ iy tion is allowed. 100% for deduction under section 80G. iIncome from Salaries mi 4.65 5, X is employed with the Central Government with effect From 10 June 2015, His details of incomes and jnvestments for the previous year 2019-20 are as follows: z Basic salary (& 80,000 per month) 9,60,000 Income from house property (computed) 80,000 Income from other sources, 1,00,000 He deposits 70,000 in public provident fund and Pays % 30,000 as tuition fees of his daughter studying in a school in Delhi. He also contributes % 20,000 towards pension fund of LIC. He contributes 10% of his salary towards notified pension fund (i.¢,, NPS) of the Central Government, His employer con- tributes 14% of X's salary towards his pension fund, Compute taxable income of X for the assessment year 2020-21. [Delhi University B.Com.(I1) 2011 (Modified)] Solution Computation of taxable income of X for the assessment year 2020-21 Basic salary & 80,000. 12} 9,60,000 Employer's contribution towards notified pension fund (ie, NPS) of Central Government [14% of £9,60,000] 1.34,400 ‘Gross salary 10,94;400 Tess: __ Standard deduction $0,000 Income from salary 10,48,400 Income (rom house property 80,000 Income from other sources 1,00,000 Gross total income 12,24,400 tess: Deduction under section 806, BOCCC and BOCCDI I}: Nore 1,50,000 less: Deduction under section 80CCD(2): Note 134.400 Taxable income 2.40,000 Note: 1, Deduction under section SOC: Deposit in PPF Payment of tuition fees of his child % 30,000 Total amount of deduction under section $0C 1.00.00 2. Deduction under section 80CCC is F 20,000 for contribution towards pension fund of an insurance company. 3. Salary for the purpose af NPS is basie salary plus deamess allowance forming part of salary ples com= mission based on fixed percentage of tumover achieved by the employee, Here, salary for this purpose is 9,60,000. Employee's contribution of & 96,000 (ie, 10% of & 9,60,000) towards NPS is eligible for deduction under section 80CCD(1} to the extent of maximum 10% of salary, € 96,000 is within the limits of 10% of salary of the employee and thus, elig n SOCCD(I), e for deduction under sex 4. The total amount under sections 80C, 8OCCC and 8OCCD(1) is % 2,16,000 [& 1,00,000 + 20,000 + % 96,000). However, the total amount of deduction under section 80C, 8OCCC and 8OCCD(1) cannot exceed & 1,50,000,4.68 Ml Income Tax Law & Practice calculated by first assuming th 3. In eave of furnished accommodation, val fe by ee Commodi ae sere atu vo ave. he vb oFFomiure i sled 10 SOmpU he gy. accommodation sali Mig (ep 1: Value of unfurnished aecommestation © taxable is rent paidipayable by the employer 10 third Party oF Ds Of salary, pig for this purpose means dave salary, deaness allowance (o-ming part gr, monetary benefits (taxable value) and excludes all perquisites an empsem payment ep a the time of retirement | ‘Thus, salary for the purpose of perquisite of unfurnished ace 2020 anil March 2020 is calculated as follow’ -ommodation pro led during lay z= Basie salary [% 43,000 73] tasa00 Dearness allowance (forming part) 24,000/12 * 3] 5.000 Lunch allowance [% 6000/12 7 3] : tg Transport allowance (given till January 2020 only) Wie ” 136,700 Value of perquisite of unfurnished accommodation is € 20,505 [% 30,000 (& 10,000 x3) or isyag 7 1,30,700, whichever is lower}. Step 2: Value of furniture Value of furniture iy 10% pat. of actual cost because the furniture is owned by the employer Thus, the value of furniture is & 1,200 [& 48,000 x 10% x 3/12]. Step 3: Value of furnished accommodation isthe sum total of value of untu value of furniture. Thus, the value of furnished accommodation = & 21,705 [2 20,505 + % 1,200} From this value, rent recovered from the employee is deducted and thus, the final value of ccom- dation taxable in the hands of the employee is & 21,555 [8 21,705 ~ & 150 (& 600 x 3/12)] 4. Salary for the purpose of RPF means basic salary plus dearness allowance forming part of salay pla commission based on fixed percentage of turnover achieved by the employee. Here, salary fr purpare is # 5,32,000 (8 5,08,000 + % 24,000), 5, Gilt received from a relative is exempt from tax in the hands of the recipient but gifts raccivel fa friends of mother are taxable under the head Income from Other sources. In case of clubbing ofiaeat of minorchild, @ 1,500 per child is the exemption available to the parent in whose hands the incomes! ‘4 minor child is clubbed. red accommodation af . 7. retired from Reserve Bank of India, a statutory corporation on 30 June 2019, At the time of retiree his rerauncration included: a) Basic salary: ® 32,000 per month (annual increment of € 4,000 has been given on 1 Decembt 2019) b) Dearness allowance: 25% of basic salary (40% was part of retirements benefits). ¢) Transport allowance: & 3,400 per month, d) Entertainment allowance: € 3,000 per month. e) Rent free accommodation owned by the employer at Delhi. It was furnished with a cost of incurted by the employer 5 years azo, (On retirement, his pension was fixed at € 18,000 per mionth. 40% of the pension was commuted employer on 1 October 2019 and a sum of & 5,40,000 was paid in licu thereof, Z also received 2 3 2,96,000 for unavsiled leave of 222 days. He was entitled toa leave of 36 days for cach complete), of service, Total service period of Z was 24 years ard 9 months. After retirement, Z went back 18 T10.00Income from Salaries Mi 4.69 town Assam and occupied his own house, worth € 23,009. The tickets were years old). Besides, the income from employment, Z re a) Long-term capital gains: % 80,000, b) Gifts from friends on the occasion of retirement: & 142,000. 6) Gifts from relatives: % 93,000. 4) Income of minor child: & 19,500. He invested & 70,000 in PPF and 2 40,000 in Kisan Vi of Z for the assessment year 2020.21 The employer gave him five tickets of “Air India’ flight, each meant for Z, his wife and three children (one of the children was eight ported the following incomes: ikas Patra. Compute the total [Delhi University B.Com.(#) 2012 (Modified)] Solution Computation of total income of Z for the assessment yeur 2020-21: Basic salary {8 32,000 x3) RSE BU i 96,000 Dearness allowance [25% of 896,000] 24,000 Transport allowance [& 3,400 x 3} 10,200 Entertainment allowance [% 3,000 x 3] 9,000 ‘Accommodation: Note 1 20,720 Leave Travel Child ~ one Child: Note 2 23,000 Pension: Note 3 1,48,800 Taxable leave salary: Nate 4 2.35,808 Gross salary 5,37,528 tess: Deduction under section 16: Standard deduction 50,000 Entertainment allawance: Note 5 Nil Net salary 487528 Long-term capital gains 80,000 | Income from other sources: Gift from friends 1,42,000 Minor’s income [2 19,500 — 1,500}: Note 6 18,000 60,000 Gross total income 7.27528 less: Deduction under section 80C — PPF: Note7 70,000 Total income (Rounded off) 657,530 Computation of tax liability of Z for the assessment year 2020-21: z Tax on long- term capital gains [& $0,000 x 20%) 16,000 Tax on remaining income of € 5,77,530 Gic., € 6,57,530 80,000) [F 10,000 + 20% @ 5,77,530~ 5,00,000)] Add: Health & Education cess @ 4% Tax liability (Rounded off)10, 4.74 BL Income Tax Law & Practice 3. The value of perquisite of sale ‘of movable asst fd 7 ‘Actual cost [10 June 2017, 12 July 2016 and S April 202171 | 44 20,000 Less: Normal wear and tear (year 1) —— WDV [10 June 2028, 12 July 2017 and 5 April 2018] 3,20,000 64,000 Less: Normal wear and tear (year 2) —_ WDV {10 June 2019, 12 july 2018 and § April 2019) 2,56,000 Less: Normal wear and tear (year 3) WOV {12 July 2019] Less:_Sale consideration 200,000 Taxable value 56.000 Normal wear and tear i charged @ 20% on reducing balance in case of Sle of mol, reducing balance in eas of sale of computes and 10% on straight line basis in ease gf ‘he rae is charged on the basis of completed year and any fraction of the year signori 4. Salary for the purpose of RPF means basi salary plus deamessallowanlee forming part gy commission based on fixed percentage of turnover achieved by the employee, Here, salay te purpose is & 7,80,000. fo Zs an individual (100% visually impaired), He isa working as a manager ina companyat Mn, has furnished the following details of his income for the year ended 31 March 2020: i a) Basic salary & 50,000 p.m. 1b) Deamess allowance % 10,000 p.m. (50% forms part of salary for retirement purpose) ¢) Commission 5,000 p.m. 4) Entertainment allowance % 2,500 p.m. €) Transport allowance & 3,600 p.m. (expenditure incurred on commuting between off oe and tes 21,000 only). ; 1}, Employer company provided him with an accommodation ftee of rent for which the compan the rent of & 10,000 p.m. 8) His employer provided him an interest free loan of 20,000 to purchase one LED. h) Company paid professional tax of & 2,000 on his behalE. i) Company contributed © 8,000 towards his RPF account to which he made a matey contribution DD % 52,000 was credited to the aforesaid account during 2019-20 @ 13% p.a, by way o 4) Received & 30,000 as share of profit from a partnership firm. 1) Received a dividend of € 5,000 from an Indian company. m) Eamed % 10,000 as interest income on debentures of X Ltd, ny He paid LIC premium on the life of his married daughter & 30,000 (sum assured: & 1 00,000). 9) Donation to Prime Minister's National Relief Fund & 20,000, p) Donation paid to Government of India for promotion of Family Planning & 80,000. 4) Paid medical insurance premium on his wife’s health & 25,000. Compute the total income and tax lability of Z for the assessment year 202 [Dethi University B.Com.¢e 2013 (toatla Income from Salaries 4.75 ee __ CAME OS ATR Eee, a ition of total income of Z forthe assessment year 2020-21: Basie salary (8 $0,000 x 12] ~ Ea] 6,00,000 Dearness allowance [10,000 % 13) 1,20,000 Commission (85000 x 12] 60,000 Entertainment allowance (€2,500% 13) 30,000 Transport allowance [3,600 €3,200) x 12] Nowe 4,800 | Rent free accomadation: Note 2 | 1,13,220 Interest tree loan: Note 3 = Employee's obligation met by employer — Professional tax pal by the employer 2,000, Employer's contribution towards RPF 000 Exempt maximum up to 12% of € 6,60,000: Note 4 8,000 Nil Interest credited in RPE 52000 Exempt 52,000/13 x9.5} 38000 14,000 Gross salary 9,44,020 Ceductions under section: Standard deduction 50,000 Frofesional tax 7.000 Net salary 8,92,020 Profits and gains of business or profession: Share of profit from a firm [exempt inthe hands of partners under section 10(2A)) = \ncome from other sources: Interest income on debenturesofX td. = Dividend from an indian company: Note S 19,000 10,900 ‘Gross total income 9,02,020 ‘Deductions under section 80: Deduction under section 80C: Employee's contripution towards RPF 8,000 Life insurance premium: Note 6 20,000 28,000 Deduction under section 800 (medical insurance premium for spouse) 25,000 Deduction under section 806° PM National Relief Fund (100% allowed) 20,000 Promoting family planning [100% of & 72,402): Kote 7 12,402 92,402 Deduction under section SU [severe dinaity) 125,000 Total income (Rounded off) 631.620 ‘ompuation of tax liability of Z forthe assessment year 2020-21: z Tax [% 12,500 + 20% (% 6,31,620 — % 5,00,000)] 38,824 es; Rebate under section 87A, {not applicable because total income execeds & 5,00,000) Nil 38.824 dé: Health and education cess @ 4% 1,553 ‘Tax payable (Rounded off) 0,380peceived Exempt Taxable Nilwill be included gs taxat Pee " far for 10. mols immediately Pree jon of salary z 2020): 10,50,000 Less: ile compulin’ ple gratuity ¥! 21 rary [& 1,00.000 x5et i 5! 0,000 5] ad wance (Formine pat Dai oftumover Nil 10,50,000 sjion fixed perce! oo = eines average monty sala - Calculation my neat AER monthly ai Faarmont’saverszesiaty 7 Pe 2 %52,500 Computation 0 % had been the employee from | January 1984. ice will be 36 complete ALtd. since os yeas, starting from ‘The servic 2019. ‘i 44, Since the employee retired on 31 Maren 2020, pension income will start from Apri oy will be taxable in the assessment year 2021-2: Mang 4 of € 12,60,000) is allowed as ¢ 5, Employee's contribution tow ars RDF & 1,89,000 (15 erection S0C but maximum deduction © 4: irene of resident senior eitiens (age 60 9° nome from bank (whether on savings 3c maximum upto % 50,000. 14. Raj (age: 48 years) is a Finance Executive at X are as follows: .@ the income from sal ~ aT of Y of x ceding the month of ret n reme mt sfeompleted year of service . fom A 1994, It means itis calendar year 1984 2 ty, i 1 | January 1984 and ending on 5 1 Dea HHowed under section SOC is & 150,000, ete more during the relevant previous etnor not is allowed as deduction under S36 i cit Lt, Tis income details for the financial year Year 2ijy fy ‘ 5 | diting Basic salary {per month) ‘Deamness allowance [Forming part of salary) Transport allowance (for commuting between place of resid id maintenance charges fully paid by employer. The motor car is owned sacity of car is below 1.6 litres, The motor car is used jence per month and office) Motor car running ani ‘and driven by Raj. The engine cubic ca i Ine cubic capi both for official and personal purpase by Rai) Fente unihedacammodaton pro ees es craton ect eee DEH Fo sir eonatiane taken on taken on fre bythe emp ee ern Expenditure on accommodation it rion in hotels while touring on official duties met the employer 330000 Catal contr ded erred by teense oa (nso Eericanumeee %s0,000 | oo 18,000 35,000 JIncome from Salaries ml 4.81 Income from other sources: Interest income from savings account Other incomes of other sources 2, 38,000—¥ 55,000] Gross total income 13.000 Deduction under section 806: Note § 38,50,300 Deduction under section 80TTB: Note 6 4,50,000 Table income 30,000 Computation of tax payable by X for the assessment year 2020-21; z Tax [& 1, 10,000 + 30% & 16,60,300 ~ 10,00,000)) £ez090 Add, Wealth & Education cess @ 4% ane ‘Tax Payable (Rounded off) ot Note: 1, [tis assumed that the engine capacity of the car does not exceed 1.6 litres. Further, incase the motor car is owned by the employee, expenses are incurred by the employer and the ear is used for official as well as personal purposes, the value of the ear is: Actual expenditure of the employer Less: Higher of the following: 2 1,800 per month 2,400 depending upon the en plus % 900 per month if driver is also provided or Actual amount spent for official purposes as per the log-book maintained for the car XX capacity Less; Amount recovered from the employee ‘Taxable value Thus, the value of motor car is: Actual expenditure of the employer 195,000 Less: Amount incurred for official purposes: (8 32,400 (@ 1,800 + € 900) x 12 or % 1,36,500 (70% of 1,95,000), whichever is higher} 2, Salary for the purpose of RPF means basic salary plus deamess allowance forming part of salary plus commission based on fixed percentage of tumover achieved by the employee, Here, salary for this purpose is € 12,60,000. 3. Being a non-Government employee who is not covered under the Payment of Gratuity Act, 1972, least of the following amount is exempt from tax: a) 7 18,90,000, being half month’s average salary multiplied by the completed year of service (Le., % 52,500 x 36) b) % 20,00,000, being the amount notified by the Goverment ©) & 12,00,000, being gratuity actually received. 2 12,00,000, being the least is exempt from tax and thus, the taxable amount of gratuity is: