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/-

(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	1,03,329
12	Rounded off to	1,03,330

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).

S.No.	Particulars	Rupees
1	Salary	4,00,000
2	Dearness Allowance	1,00,000
3	House Rent Allowance	1,80,000
4	Special Duties Allowance	12,000
5	Provident Fund	60,000
6	LIP	10,000
7	Deposit in NSC VIII issue	30,000
8	Rent Paid by the employee for house hired by her	1,20,000
9	Repayment of House Building Loan (Principal)	60,000
10	Tuition Fees for three children (Rs.10,000 per child)	30,000

Computation of total income and tax payable thereon

S.No.	Particulars	Rupees
1	Gross 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
2	Gross Total Taxable Income	6,22,000
	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 Income	4,72,000
	Income Tax thereon/payable	20,200
	Add:(i). cation Cess @2%(ii). Secondary and Higher Education Cess @1%	404202
	Total Income Tax payable	20,806
	Rounded off to	20,810

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:

Particulars	Rupees (i)	Rupees (ii)	Rupees (iii)
Gross Pension	4,50,000	8,00,000	12,50,000
Contribution of P.P.F.	70,000	1,00,000	1,50,000

Computation of Total Income and tax payable thereon

Particulars	Rupees (i)	Rupees (ii)	Rupees (iii)
Gross Pension	4,50,000	8,00,000	12,50,000
Less: Deduction U/s 80C	70,000	1,00,000	1,50,000
Taxable Income	3,80,000	7,00,000	11,00,000

Tax thereon (after rebate u/s 87A)	6,000	60,000	1,50,000
Add:(i) Education Cess @ 2%.(ii) Secondary and Higher Education Cess @1%	12060	1200600	30001500
Total tax payable	6,180	61,800	1,54,500

TDS under sec. 206AA in case where PAN is not furnished by the employee	24,000	90,000	1,70,000

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:

Particulars	Rupees (i)	Rupees (ii)	Rupees (iii)
Gross Pension	5,00,000	8,00,000	12,50,000
Contribution of P.P.F.	80,000	1,20,000	1,50,000

Computation of Total Income and tax payable thereon

Particulars	Rupees (i)	Rupees (ii)	Rupees (iii)
Gross Pension	5,00,000	8,00,000	12,50,000
Less: Deduction U/s 80C	80,000	1,20,000	1,50,000
Taxable Income	4,20,000	6,80,000	11,00,000

Tax thereon	Nil	36,000	1,30,000
Add:(i) Education Cess @ 2%.(ii) Secondary and Higher Education Cess @1%		720360	26001300
Total tax payable	Nil	37,080	1,33,900

B. TDS under sec. 206AA in case where PAN is not furnished by the employee	Nil	37,080	1,33,900

Example 9

Exemption u/s 10 (13A)

1. Mr. A, employed with XYZ Ltd. Up to 31.10.2015, received following emoluments :

S.No.	Particulars	Rupees
1.	Basic pay p.m.	13,000
2.	Bonus for the year received in July, 2015	72,000
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 of	3,500
2.	Mr. A’s income from other sources	95,000
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

S.No.	Particulars		Rupees
1.	Income from Salary
	(a) From XYZ Ltd.
	Basic pay (Rs.13,000 x 7)		91,000
	Bonus		7,200
	Club facility (Rs.700 x 7)	Rupees	4,900
	H.R.A. (Rs.2,800 x 7)	19,600
	Less : Exempt u/s 10(13A)	15,400	4,200
	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 Salary		2,02,800
	Less: Deduction		—–
	Net Salary		2,02,800

2.	Income from Others Sources		95,000
	Gross Total Income		2,97,800
	Less : Deduction u/s 80C
	: Contribution to LIC/PPF/NSC	Rs. 20,000
	: Contribution to RPF ( Rs.2000 x 5)	Rs. 10,000	30,000
	Total Income		2,67,800
	Computation of Tax Liability
	Tax payable on Rs.2,67,800		1,780
	Less : Rebate u/s 87A		1,780
	Net Income-tax payable		Nil
	Add : Surcharge		Nil
	Add : EC @ 2%		—
	Add : S&HEC @ 1%		—
	Total Tax Payable		Nil

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.

S.No.	Particulars	Rupees
1.	Honorarium for valuation of answer books of a departmental examination	3,000
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 Fund	10,000
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

S.No.	Particulars		Rupees
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)	1,97,280	2,92,160
			91,200

	Grade Pay @ Rs 7,600 p.m
	Dearness Allowance
	1.3.2014 to 30.06.2014 @ 100% i.e., Rs 31,320 p.m	1,25,280
	1.7.2014 to 31.12.2014 @ 107% i.e. Rs 34,518 p.m	2,07,108
	1.1.2015 to 28.02.2015 @ 113% (assumed) i.e.,
	Rs. 36,454 p.m	72,908	4,05,296
	House Rent Allowance
	@ 30% of basic pay + grade pay
	1.3.2014 to 30.06.2014 @ Rs 9,396	33,584
	1.07.2014 to 28.2.2015 @ Rs 9,678	77,424	1,15,008

	Transport Allowance
	1.3.2014 to 30.6.2014 @ Rs 6,400 p.m	25600
	1.7.2014 to 31.12.2014 @ Rs 6,624 p.m	39,744
	1.1.2015 to 28.2.2015 @ Rs 6,816 p.m	13,632
		78,976
	Less: Exempt u/s 10(14) @ 800 p.m	9600	69,376
			9,73,040
	Honorarium		3,000
	Fees (2/3 retained by him)		4000
	Total Salary		9,80,040
	Less: Standard Deduction		–
	Net Salary		9,80,040
2.	Income from House Property
	Self-occupied u/s 23(2)(a) deemed at nil
	Less: Interest on HDFC Loan	2,00,000 (-)	2,00,000
	Gross Total Income		7,80,040
	Less: Deduction u/s 80 C
	– GPF @ Rs 4,700/-p.m	56,400
	– CGEGIS @ Rs 500/- p.m	6,000
	– Life Insurance Premium	10, 500
	– Repayment of HDFC Loan	95,000
	– Deposit in Public Provident Fund	10,000
	1,77,900
			1,50,000
	Restricted to a maximum of Taxable Income		6,30, 040

	Computation of Tax Liability
	Tax payable		51,008
	Add: Surcharge		–
	Add: Education Cess		1020
	Total Tax Liability		52,538

Source file

The All India Association of Inspectors & Asstt. Supdt. Posts - U.P. Circle

Thursday, January 21, 2016

Examples of Income Tax Calculation

Examples of Income Tax Calculation

COMPUTATION OF TOTAL INCOME AND TAX PAID THEREON:

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).

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:

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