Thursday, January 21, 2016

Example of income tax calculation -2

 Example 6
For Assessment Year 2016-17 

Illustrating Valuation of perquisite and calculation of tax in the case of an employee below the age of 60 years of a Private Company posted at Delhi and repaying House Building Loan  ( With valid PAN furnished to employer). 

2Dearness Allowance1,00,000
3House Rent Allowance1,80,000
4Special Duties Allowance12,000
5Provident Fund60,000
7Deposit in NSC VIII issue30,000
8Rent Paid by the employee for house hired by her1,20,000
9Repayment of House Building Loan (Principal)60,000
10Tuition Fees for three children (Rs.10,000 per child)30,000
 Computation of total income and tax payable thereon 
1Gross Salary (Basic+DA+HRA+SDA)6,92,000
 Less: House rent allowance exempt U/s 10 (13A) Least of:(a). Actual amount of  HRA received.                     :Rs.1,80,000 (b). Expenditure on rent in excess of 10% of salary(Including D.A.)assuming D.A. is included forretirement benefits (1,20,000- 50,000)               :Rs. 70,000(c). 50% of salary  (including D.A)                           : Rs. 2,50,000      70,000
2Gross Total Taxable Income6,22,000
 Less:  Deduction U/s 80C(i).         Provident   Fund                                         60,000(ii).      LIP                                                              :   10,000(iii).     NSC  VIII  Issue                                         :   30,000(iv).    ayment  of  HBA                                         60,000 (v).    Tuition Fees (Restricted to two children)        :  20,000Total                   : 1,80,000Restricted to  1,50,000       1,50,000

 Total Income4,72,000
 Income Tax thereon/payable20,200
 Add:(i).       cation Cess @2%(ii).       Secondary and Higher Education Cess @1% 404202
 Total Income Tax payable20,806
 Rounded off to20,810
 Example 7 
For Assessment Year 2016-17 

A.        Calculation of Income tax in the case of a retired employee above the age of sixty years but below the age of 80 years and having gross pension of:

 iv) Rs.4,50,000/-,v)   Rs.8,00,000/- ,vi)  Rs. 12,50,000/-. B         What will be the amount of TDS in case of above employees, if PAN is not submitted by them to their DDOs/Offices: 
ParticularsRupees (i)Rupees (ii)Rupees (iii)
Gross Pension4,50,0008,00,00012,50,000
Contribution of P.P.F.70,0001,00,0001,50,000
 Computation of Total Income and tax payable thereon 
ParticularsRupees (i)Rupees (ii)Rupees (iii)
Gross Pension4,50,0008,00,00012,50,000
Less: Deduction U/s 80C70,0001,00,0001,50,000
Taxable Income3,80,0007,00,00011,00,000
Tax thereon (after rebate u/s 87A)6,00060,0001,50,000
Add:(i)   Education Cess @ 2%.(ii)   Secondary and Higher Education Cess @1% 12060 1200600 30001500
Total tax payable6,18061,8001,54,500
TDS under sec. 206AA in case where PAN is not furnished by the employee24,00090,0001,70,000
 Example 8 
For Assessment Year 2016-17 

A.        Calculation of Income tax in the case of a retired    employee above the age of 80 years and having gross pension of:

 i)    Rs.5,00,000/-,ii)  Rs.8,00,000/- ,iii) Rs. 12,50,000/-. B         What will be the amount of TDS in case of above employees, if PAN is not submitted by them to their DDOs/Offices: 
ParticularsRupees (i)Rupees (ii)Rupees (iii)
Gross Pension5,00,0008,00,00012,50,000
Contribution of P.P.F.80,0001,20,0001,50,000
 Computation of Total Income and tax payable thereon 
ParticularsRupees (i)Rupees (ii)Rupees (iii)
Gross Pension5,00,0008,00,00012,50,000
Less: Deduction U/s 80C80,0001,20,0001,50,000
Taxable Income4,20,0006,80,00011,00,000
Tax thereonNil36,0001,30,000
Add:(i)   Education Cess @ 2%.(ii)   Secondary and Higher Education Cess @1%  720360 26001300
Total tax payableNil37,0801,33,900
B. TDS under sec. 206AA in case where PAN is not furnished by the employeeNil37,0801,33,900
 Example 9
 Exemption u/s 10 (13A) 
1.       Mr. A, employed with XYZ Ltd. Up to 31.10.2015, received following emoluments : 
1.Basic pay p.m.13,000
2.Bonus for the year received in July, 201572,000
3.Club facility (for private use only) Expenditure by employer p.m.700
4.House Rent Allowance p.m.2,800
5.Employer’s contribution to URPF p.m. (Mr. A also made equal contribution)1,000
W.e.f. 01.11.2015, Mr. A joined PQR Ltd., with following pay package :
1.Basic pay p.m.18,000
2.House Rent Allowance p.m.1,600
3.Club Facility (for private use only) Expenditure by employer p.m.1,100
4.Use of car for journey between office and residence – Employer’s expenditure p.m.600
5.Employer’s contribution to RPF p.m. (Mr. A also made equal contribution)2,000
Other particulars of Mr. A are as under :
1.Mr. A resides at Amritsar paying a monthly rent of3,500
2.Mr. A’s income from other sources95,000
3.Mr. A contributed to LIC/PPR/NSC etc.20,000
Compute Mr. A’s taxable income and tax liability for A.Y. 2016-17.
 Computation of Tax 
1.Income from Salary 
 (a) From XYZ Ltd. 
 Basic pay (Rs.13,000 x 7)91,000
 Club facility (Rs.700 x 7)Rupees4,900
 H.R.A. (Rs.2,800 x 7)19,600 
 Less : Exempt u/s 10(13A)15,4004,200
 Employer’s Contribution to U.R.P.F. 1,07,300
 (b)  From PQR Ltd.Rupees 
 Basic pay (Rs.18,000 x 5)90,000 
 H.R.A. (Rs.1,600 x 5)8,000 
 Less : Exempt u/s 10(13A)8,000 
 Club Facility (Rs.1,100 x 5)5,500 
 Facility of Car (not taxable as perquisite)15,400 
 Employer’s Contribution to R.P.F.95,500
 Gross Salary2,02,800
 Less: Deduction—–
 Net Salary2,02,800

2.Income from Others Sources95,000
 Gross Total Income2,97,800
 Less : Deduction u/s 80C 
 : Contribution to LIC/PPF/NSCRs. 20,000 
 : Contribution to RPF ( Rs.2000 x 5)Rs. 10,00030,000
 Total Income2,67,800
 Computation of Tax Liability 
 Tax payable on Rs.2,67,8001,780
 Less : Rebate u/s 87A1,780
 Net Income-tax payableNil
 Add : SurchargeNil
 Add : EC @ 2%
 Add : S&HEC @ 1%
 Total Tax PayableNil
  Example 10 2.      
One Computation of Taxable Salary and allowances, Deduction for Interest on Housing Loan and Deduction u/s 80C. Mr. X, a Central Govt. Officers in Delhi, is receiving Basic Pay Rs.23,720, grade Pay Rs.7,600, DA at prescribed rates, transport allowances @ Rs.3200+DA thereon, and HRA 30% of basic pay + grade pay (though living in his own house). His date of increment is Ist July. The following are other particulars of his income. Compute his taxable income and tax payable, for A.Y.2015-16. 
1.Honorarium for valuation of answer books of a departmental examination3,000
2.Fee for work done for a  private body (1/3rd  of fees  has  been retained    byGovt.)6,000
3.Contributions to G.P.F. p.m.4,700
4.Postal Life Insurance Premium financed from G.P.F. p.m.280
5.Contribution to Central Govt. Employees Group Insurance Scheme p.m.500
6.Life Insurance Premium (being a Life Insurance Policy of Rs.1,00,000 taken in name of his wife before 1.04.2012)10,500
7.Contribution to Public Provident Fund10,000
8.Repayment of HDFC loan borrowed after 1.04.1999 EMI Rs.25,000 (Towards loan Rs.95,000, towards interest Rs.2,05,000)3,00,000
 Computation of Tax 
1.Income from Salary 
 Basic Pay @ Rs 23,720 p.m 
 (March to June ’14)94,880 
 @ Rs 24,660 p.m * (July 2014 to Feb 2015)1,97,2802,92,160

 Grade Pay @ Rs 7,600 p.m  
 Dearness Allowance  
 1.3.2014 to 30.06.2014 @ 100% i.e., Rs 31,320 p.m1,25,280 
 1.7.2014 to 31.12.2014 @ 107% i.e. Rs 34,518 p.m2,07,108 
 1.1.2015 to 28.02.2015 @ 113% (assumed) i.e.,  
 Rs. 36,454 p.m72,9084,05,296
 House Rent Allowance  
 @ 30% of basic pay + grade pay  
 1.3.2014 to 30.06.2014 @ Rs 9,39633,584 
 1.07.2014 to 28.2.2015 @ Rs 9,67877,4241,15,008
 Transport Allowance 
 1.3.2014 to 30.6.2014 @ Rs 6,400 p.m25600 
 1.7.2014 to 31.12.2014 @ Rs 6,624 p.m39,744 
 1.1.2015 to 28.2.2015 @ Rs 6,816 p.m13,632 
 Less: Exempt u/s 10(14) @ 800 p.m960069,376
 Fees (2/3 retained by him)4000
 Total Salary9,80,040
 Less: Standard Deduction
 Net Salary9,80,040
2.Income from House Property 
 Self-occupied u/s 23(2)(a) deemed at nil  
 Less: Interest on HDFC Loan2,00,000 (-)2,00,000
 Gross Total Income 7,80,040
 Less: Deduction u/s 80 C  
      GPF @ Rs 4,700/-p.m56,400 
       CGEGIS @ Rs 500/- p.m6,000 
      Life Insurance Premium10, 500 
      Repayment of HDFC Loan95,000 
      Deposit in Public Provident Fund10,000 
 Restricted to a maximum of Taxable Income6,30, 040
 Computation of Tax Liability 
 Tax payable51,008
 Add: Surcharge
 Add: Education Cess1020
 Total Tax Liability52,538