Thursday, January 21, 2016

Examples of Income Tax Calculation

Examples of Income Tax Calculation

Example 1
For Assessment Year 2016-17
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/-
(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)Rupees (iv)Rupees (v)
Gross Salary Income (including allowances)2,50,0005,00,00010,00,00020,00,0001,10,00,000
Contribution of G.P.F.45,00050,0001,00,0001,00,0001,00,000
  Computation of Total Income and tax payable thereon 
ParticularsRupees (i)Rupees (ii)Rupees (iii)Rupees (iv)Rupees (v)
Gross Salary2,50,0005,00,00010,00,00020,00,0001,10,00,000
Less: Deduction U/s 80C45,00050,0001,00,0001,00,0001,00,000
Taxable Income2,05,0004,50,0009,00,00019,00,0001,09,00,000
(A)             Tax thereonNil18,000*1,05,0003,95,0003095000
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 payableNil18,5401,08,15040685035,06,635
(B) TDS under sec. 206AA in case where PAN is not furnished by the employeeNil38,0001,30,00040685035,06,635
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). 
1Gross Salary4,20,000
2Amount spent on treatment of a dependant, being person with disability (but not severe disability)7000
3Amount paid to LIC with regard to annuity for the maintenance of a dependant, being person with disability( but not severe disability)60,000
4GPF Contribution25,000
5LIP Paid10,000
6Interest Income on Savings Account12,000
 Computation of Tax 
1Gross Salary4,20,000
2Add: Income from Other SourcesInterest Income on Savings AccountRs 12,000
3Gross Total Income4,32,000
4Less: Deduction U/s 80DD (Restricted to Rs.60,000/- only)60,000
5Less:  Deduction U/s 80C (i) GPF Rs.25,000/-(ii) LIP   Rs.10,000/-   = Rs.35,000/-35,000
6Less: Deduction u/s 80TTA on Interest Income on savings account (restricted to Rs 10000/-)10000
7Total Income3,27,000
8Income Tax thereon/payable(includes Rebate of Rs 2000 as per Section 87A)5,700
9Add:(i).       cation Cess @2%(ii).       Secondary and Higher Education Cess @1% 11457
10Total Income Tax payable5,871
11Rounded off to5,870
 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). 
1Gross Salary5,20,000
2Medical Reimbursement by employer on the treatment of self and dependent family member35,000
3Contribution of GPF20,000
4LIC Premium20,000
5Repayment of House Building Advance25,000
6Tuition fees for two children60,000
7Investment in Unit-Linked Insurance Plan30,000
8Interest Income on Savings Account8,000
9Interest Income on Time Deposit15,000
 Computation of Tax
1Gross Salary5,20,000
2Add: Perquisite in respect of reimbursement of Medical ExpensesIn excess of Rs.15,000/- in view of Section 17(2)(v)20,000
3Income from Other Sourcesi)           Interest  Income  on Savings Account       Rs  8,000ii)          Interest  Income  on Savings Account       Rs 15,00023,000
4Gross Total Income5,63,000
5a.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
6Total Income4,05,000
7Income Tax thereon/payable (after rebate u/s 87A)15,800
8Add:(i).       cation Cess @2%(ii).       Secondary and Higher Education Cess @1% 276138
9Total Income Tax payable14,214
10Rounded off to14,214
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). 
2Dearness Allowance2,00,000
3House Rent Allowance1,40,000
4House rent paid1,44,000
5General Provident Fund36,000
6Life Insurance Premium4,000
7Subscription to Unit-Linked Insurance Plan50,000
 Computation of total income and tax payable thereon 
1Salary + Dearness Allowance + House Rent Allowance 3,50,000+2,00,000+1,40,000 = 6,90,0006,90,000
2Total Salary Income6,90,000
3Less: 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
 Gross Total Income6,01,000
 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
3Total Income5,11,000
 Tax payable27,200
 Add:(i).       cation Cess @2%(ii).       Secondary and Higher Education Cess @1% 544272
 Total Income Tax payable28016
 Rounded off to28020
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).
3Free gas, electricity, water etc. (Actual bills paid by company)40,000
4(a)Flat at concessional rate (for  ten month).     @ Rs.36000/month3,60, 000
4(bHotel 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
5Subscription to Unit Linked Insurance Plan50,000
6Life Insurance Premium10,000
7Contribution to recognized P.F.42,000


3Total Salary(1+2) for Valuation of Perquisites8,40,000
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
5Gross Total Income (Rs.8,40,000+ 1,38,600)9,78,600
6Gross Total Income9,78,600
7Less: 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
8Total Income8,76,600

9Tax Payable1,00,320
10Add:(i).         cation Cess @2%(ii).       Secondary and Higher Education Cess @1% 2,0061,003
11Total Income Tax payable