Examples of Income Tax Calculation
SOME ILLUSTRATIONS
Example 1
For Assessment Year 2016-17
(A)
Income tax in the case of an employee (Male or Female) below the age of sixty years and having gross salary income of:
i) Rs.2,50,000/- ,
ii) Rs.5,00,000/- ,
iii) Rs.10,00,000/-
iv) Rs.20,00,000/-. and v) Rs. 1,10,00,000/-
ii) Rs.5,00,000/- ,
iii) Rs.10,00,000/-
iv) Rs.20,00,000/-. and v) Rs. 1,10,00,000/-
(B) What will be the amount of TDS in case of above employees, if PAN is not submitted by them to their DDOs/Offices:
| Particulars | Rupees (i) | Rupees (ii) | Rupees (iii) | Rupees (iv) | Rupees (v) |
| Gross Salary Income (including allowances) | 2,50,000 | 5,00,000 | 10,00,000 | 20,00,000 | 1,10,00,000 |
| Contribution of G.P.F. | 45,000 | 50,000 | 1,00,000 | 1,00,000 | 1,00,000 |
Computation of Total Income and tax payable thereon
| Particulars | Rupees (i) | Rupees (ii) | Rupees (iii) | Rupees (iv) | Rupees (v) |
| Gross Salary | 2,50,000 | 5,00,000 | 10,00,000 | 20,00,000 | 1,10,00,000 |
| Less: Deduction U/s 80C | 45,000 | 50,000 | 1,00,000 | 1,00,000 | 1,00,000 |
| Taxable Income | 2,05,000 | 4,50,000 | 9,00,000 | 19,00,000 | 1,09,00,000 |
| (A) Tax thereon | Nil | 18,000* | 1,05,000 | 3,95,000 | 3095000 |
| Surcharge | 3095000 | ||||
| Add:(i) Education Cess @ 2%.(ii) Secondary and Higher Education Cess @1% | Nil Nil | 360180 | 21001050 | 7,9003950 | 68,09034,045 |
| Total tax payable | Nil | 18,540 | 1,08,150 | 406850 | 35,06,635 |
| (B) TDS under sec. 206AA in case where PAN is not furnished by the employee | Nil | 38,000 | 1,30,000 | 406850 | 35,06,635 |
* include Rebate of Rs 2000 u/s 87A
Example 2
For Assessment Year 2016-17
Calculation of Income Tax in the case of an employee below the age of sixty years having a handicapped dependent (With valid PAN furnished to employer).
| S.No. | Particulars | Rupees |
| 1 | Gross Salary | 4,20,000 |
| 2 | Amount spent on treatment of a dependant, being person with disability (but not severe disability) | 7000 |
| 3 | Amount paid to LIC with regard to annuity for the maintenance of a dependant, being person with disability( but not severe disability) | 60,000 |
| 4 | GPF Contribution | 25,000 |
| 5 | LIP Paid | 10,000 |
| 6 | Interest Income on Savings Account | 12,000 |
Computation of Tax
| S.No. | Particulars | Rupees |
| 1 | Gross Salary | 4,20,000 |
| 2 | Add: Income from Other SourcesInterest Income on Savings Account | Rs 12,000 |
| 3 | Gross Total Income | 4,32,000 |
| 4 | Less: Deduction U/s 80DD (Restricted to Rs.60,000/- only) | 60,000 |
| 5 | Less: Deduction U/s 80C (i) GPF Rs.25,000/-(ii) LIP Rs.10,000/- = Rs.35,000/- | 35,000 |
| 6 | Less: Deduction u/s 80TTA on Interest Income on savings account (restricted to Rs 10000/-) | 10000 |
| 7 | Total Income | 3,27,000 |
| 8 | Income Tax thereon/payable(includes Rebate of Rs 2000 as per Section 87A) | 5,700 |
| 9 | Add:(i). cation Cess @2%(ii). Secondary and Higher Education Cess @1% | 11457 |
| 10 | Total Income Tax payable | 5,871 |
| 11 | Rounded off to | 5,870 |
Calculation of Income Tax in the case of an employee below age of sixty years where medical treatment expenditure was borne by the employer (With valid PAN furnished to employer).
| S.No. | Particulars | Rupees |
| 1 | Gross Salary | 5,20,000 |
| 2 | Medical Reimbursement by employer on the treatment of self and dependent family member | 35,000 |
| 3 | Contribution of GPF | 20,000 |
| 4 | LIC Premium | 20,000 |
| 5 | Repayment of House Building Advance | 25,000 |
| 6 | Tuition fees for two children | 60,000 |
| 7 | Investment in Unit-Linked Insurance Plan | 30,000 |
| 8 | Interest Income on Savings Account | 8,000 |
| 9 | Interest Income on Time Deposit | 15,000 |
Computation of Tax
| S.No. | Particulars | Rupees |
| 1 | Gross Salary | 5,20,000 |
| 2 | Add: Perquisite in respect of reimbursement of Medical ExpensesIn excess of Rs.15,000/- in view of Section 17(2)(v) | 20,000 |
| 3 | Income from Other Sourcesi) Interest Income on Savings Account Rs 8,000ii) Interest Income on Savings Account Rs 15,000 | 23,000 |
| 4 | Gross Total Income | 5,63,000 |
| 5 | a.Less: Deduction U/s 80C(i) GPF Rs.20,000/-(ii) LIC Rs.20,000/-(iii) Repayment of House Building Advance Rs.25,000/-(iv) Tuition fees for two children Rs.60,000/-(v) Investment in Unit-Linked Insurance Plan Rs.30,000/-Total =Rs.1,55,000/- Restricted to Rs. 1,58,000/-b. Less: Deduction u/s 80TTA on Interest Income on savings account (restricted to Rs 8000/- – available only on Savings account interest) Rs 8000Total deduction available Rs 1,58,000/- | 1,58,000 |
| 6 | Total Income | 4,05,000 |
| 7 | Income Tax thereon/payable (after rebate u/s 87A) | 15,800 |
| 8 | Add:(i). cation Cess @2%(ii). Secondary and Higher Education Cess @1% | 276138 |
| 9 | Total Income Tax payable | 14,214 |
| 10 | Rounded off to | 14,214 |
Illustrative calculation of House Rent Allowance U/s 10 (13A) in respect of residential accommodation situated in Delhi in case of an employee below the age of sixty years (With valid PAN furnished to employer).
| S.No. | Particulars | Rupees |
| 1 | Salary | 3,50,000 |
| 2 | Dearness Allowance | 2,00,000 |
| 3 | House Rent Allowance | 1,40,000 |
| 4 | House rent paid | 1,44,000 |
| 5 | General Provident Fund | 36,000 |
| 6 | Life Insurance Premium | 4,000 |
| 7 | Subscription to Unit-Linked Insurance Plan | 50,000 |
Computation of total income and tax payable thereon
| S.No. | Particulars | Rupees |
| 1 | Salary + Dearness Allowance + House Rent Allowance 3,50,000+2,00,000+1,40,000 = 6,90,000 | 6,90,000 |
| 2 | Total Salary Income | 6,90,000 |
| 3 | Less: House Rent allowance exempt U/s 10(13A):
Least of:(a). Actual amount of HRA received= 1,40,000 (b). Expenditure of rent in excess of 10% of salary(including D.A. presuming that D.A. is takenfor retirement benefit) (1,44,000-55,000) = 89,000(c). 50% of Salary(Basic+ DA) = 2,75,000
| 89,000 |
| Gross Total Income | 6,01,000 | |
| Less: Deduction U/s 80C(i) GPF Rs.36,000/-(ii) LIC Rs. 4,000(iii) Investment in Unit-Linked Insurance Plan Rs.50,000/-Total =Rs.1,14,000/- | 90,000 | |
| 3 | Total Income | 5,11,000 |
| Tax payable | 27,200 | |
| Add:(i). cation Cess @2%(ii). Secondary and Higher Education Cess @1% | 544272 | |
| Total Income Tax payable | 28016 | |
| Rounded off to | 28020 |
For Assessment Year 2016-17
Illustrating valuation of perquisite and calculation of tax in the case of an employee below age of sixty years of a private company in Mumbai who was provided accommodation in a flat at concessional rate for ten months and in a hotel for two months ( With valid PAN furnished to employer).
| S.No. | Particulars | Rupees |
| 1 | Salary | 7,00,000 |
| 2 | Bonus | 1,40,000 |
| 3 | Free gas, electricity, water etc. (Actual bills paid by company) | 40,000 |
| 4(a) | Flat at concessional rate (for ten month). @ Rs.36000/month | 3,60, 000 |
| 4(b | Hotel rent paid by employer (for two month) | 1,00,000 |
| 4(c) | Rent recovered from employee. | 60,000 |
| 4(d) | Cost of furniture. | 2,00,000 |
| 5 | Subscription to Unit Linked Insurance Plan | 50,000 |
| 6 | Life Insurance Premium | 10,000 |
| 7 | Contribution to recognized P.F. | 42,000 |
COMPUTATION OF TOTAL INCOME AND TAX PAID THEREON:
| S.No. | Particulars | Rupees |
| 1 | Salary | 7,00,000 |
| 2 | Bonus | 1,40,000 |
| 3 | Total Salary(1+2) for Valuation of Perquisites | 8,40,000 |
| Valuation of perquisites | ||
| 4(a) | Perquisite for flat:Lower of (15% of salary for 10 months=Rs.1,05,000/-) and (actual rent paid= Rs 3,60,000) i.e. Rs. 1,05,000 | 1,38,600 |
| 4(b) | Perquisite for hotel :Lower of (24% of salary of 2 months=Rs 33,600) and (actual payment= Rs 1,00,000) i.e. Rs 33,600 | |
| 4(c) | Perquisites for furniture(Rs.2,00,000) @ 10% of cost Rs. 20,000 | |
| 4(c)(i) | Total of [4(a)+(b)+(c)] (1,05,000+ 33,600+ 20,000)Rs.158,600Less: rent recovered (-)Rs. 60,000= Rs. 98,600 | |
| 4(d) | AddPerquisite for free gas, electricity, water etc. Rs.40,000 (+) Rs 98,600 [4(c)(i)] = Rs1,38,600Total perquisites | |
| 5 | Gross Total Income (Rs.8,40,000+ 1,38,600) | 9,78,600 |
| 6 | Gross Total Income | 9,78,600 |
| 7 | Less: Deduction U/s 80C:(i). Provident Fund (80C) :42,000(ii). LIC (80C) :10,000(iii). Subscription to Unit Linked Insurance Plan(80C) :50,000/-Total = 1,02,000Restricted to Rs 1,02,000 u/s 80C | 1,02,000 |
| 8 | Total Income | 8,76,600 |
| 9 | Tax Payable | 1,00,320 |
| 10 | Add:(i). cation Cess @2%(ii). Secondary and Higher Education Cess @1% | 2,0061,003 |
| 11 | Total Income Tax payable |