UNIQUE ACADEMY FOR COMMERCE

TAX LAWS
50 MARKS QUESTION PAPER
LESSON : INCOME FROM SALARY

A. Discuss the provision related to section 10(10A) Leave Encashment?

B. Can the limit of INR 1,000 per month per child be allowed as standard
deduction, while Computing the perquisite value of free or concessional
education facility provided to the Employee by the employer?

C. Niteen is an employee of XYZ Ltd. He was appointed on 1 st Mar 2019 at a

scale of 50000 – 5000 – 70000. He is paid DA (which form part of retirement
benefits) @ 15% of Basic Pay and Bonus equivalent to 2 month’s Salary at
end of FY. He contributes 18% of his Basic + DA to a recognised provident
fund, and the contribution Is matched by the employer. He is provided rent
free accommodation, hired by the employer, @ 25000pm. He is also
provided the following
Benefits / amenities:
a) Medical Treatment of his dependant spouse INR 40000
b) Monthly salary to housekeeper INR 4000
c) Telephone Allowance INR 1200 pm
d) Gift Voucher of INR 4500 on account of his marriage anniversary
e) Medical Insurance Premium for Niteen, paid by his employer INR 15000
f) Motor Car owned and driven by Niteen, and engine capacity within 1.6 L; used
partly for official and partly for personal purposes. Running & maintenance
expenses borne by the employer INR 36,600/-.
g) Lunch during office hours valued at INR 2200/-.

He was also allotted 2000 sweat equity shares in Sep 2019. The shares were
allotted @ INR 227 per share Against the FMV of INR 377 per share as on the date
of exercise of the Option.

Compute the Salary Chargeable to tax.

D. Whether the assessee(s) was under statutory obligation under Income Tax
Act, 1961, and/or the Rulesto collect Evidence to show that its employee(s)
had actually utilized the amount(s) paid towards Leave Travel
Concession(s)/Conveyance Allowance?
 E. Whether the amount received by the employee on cessation of
employment with his Employer will be exempted From tax under section
17(3)(i) of the Income-tax Act?

F. State whether the following receipts should be treated as salary or not?

• A teacher receives emoluments in kind from school in which he teaches.
• A teacher of a college receives fees from a University for checking answer
sheets.
• A payment made to the Member of the Parliament or the State legislature.

G. Explain exemptions In Respect Of Leave Travel Concession [Section

10(5)].
H. Mention the Tax treatment of Provident Fund .

I. Can reimbursement of expenditure on medical treatment taken by the

assessee, who was a member of the Legislative Assembly, be taxed as
perquisite under section 17(2)(iv)?

J. Mr. Ramamoorthy, an employee of M/s. Gopalkrishnan & Co. of Chennai receives

during the previous year Ended March 31, 2020 the following payments:
Particulars (Rs.) (Rs.)
• Basic Salary 40,000
• Dearness allowance 3,000
• Leave Salary 5,400
• Professional tax paid by employer 1,000
• Fair rent of the flat provided by employer 6,000
• Rent paid for furniture 1,000
• Rent recovered by employer 3,000
• Contribution to Statutory Provident Fund 4,000
• Employer’s contribution to Statutory Provident Fund 4,000

Compute his taxable income for the Assessment Year 2020-21.

( 5 MARKS EACH )

UNIQUE ACADEMY FOR COMMERCE – TAX LAWS