Salary Head Income Tax. Income from salary problems and solutions 2020 21 pdf : Income TaxPe

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Salary Head Income Tax

Compute Income under the head Salary of Gopal for the assessment year 2020-21 from the following particulars:


1. Basic Salary 12,000 p.m.


2. DA 2,000 p.m. (which enters the retirement benefits as per the terms of employment)


3. Bonus 4,000 p.a.


4. Rent free accommodation in Delhi. Fair rental value 48,000.


5. Entertainment allowance 500 p.m.


6. His contribution to RPF is 12%.


7. Employer’s contribution to RPF is 15,000 p.a.


8. Interest on RPF balance at 12% p.a. is 12,000


9. Free use of motor car of 1.8 litre. Engine capacity driver using that as official and personal purpose




Computation of income from salary for the A.Y. 2020-2021


Particular                                                                                                     Rs.


Basic Salary (Rs. 12000*12)                                                                      1,44,000


DA (Rs. 2000*12)                                                                                          24,000


Bonous                                                                                                             4,000


Rent Free House                                                                                              26,700


Entertainment Allowance (500*12)                                                                 6,000


RPF (less than 12% of salary)                                                                            Nil


Interest In Excess of 9.5%  i.e. 2.5%                                                                2,500


Car (2,400+900)*12                                                                                        39,600


Taxable Salary                                                                                             2,46,800



 Working Notes:-

Note 1: Rent Free House


Salary(1,44,000+24,000+4,000+6,000)= Rs. 1,78,000


15% of salary as population more than 25 lakhs= (1,78,000*15%)=26,700


Note 2: RPF contribution up to 12% is exempted


Note 3 : Interest Of RPF Up To 9.5% is Exempted & Above That Will Be Taxable


Note 4: Use Of  Motor Car Above 1600 CC is (2,400+900) P.M.



 income from salary practical question pdf

Income from salary problems and solutions 2020 21 pdf

Practical Problems 2:-


The following are particulars of Mr Lokesh’s income:


(i) Salary 2,14,000 per annum.


(ii) Dearness Allowance (under the terms of employment)72,000 per annum


(iii) Education allowance (for three children) 5,200 per annum.


 (iv) Medical allowance (actual expenditure 8000)9000 per annum.


(v) Rent free house in a city with population 15 lakhs) for which the company paid 4,000 per month as rent. The house is furnished and the rent of the furniture is 1,500 per month.


(vi) The company spent 4,000 on her refresher course.


 (vii) The contribution to R.P.F. 28,000 and employer’s contribution 26,000.


(viii) Professional tax 1,000 paid by Mr Lokesh


Computation of taxable Income from salary for the assessment year 2020-21.




Computation of Income from salar for the A.Y. 2020-21


Particular                                                                                                   Rs.


Basic Salary                                                                                        2,14,000


DA                                                                                                         72,000


Education allowance                               5,200


          Less: exemted (100*2*12)            2,400                                         2,800


Medical allowance                                                                                    9,000


Rent Free House                                                                                        62,670


Refresher course                                                                                          Nil


RPF (exempt as less than 12% of salary)                                                     Nil


Gross taxable salary                                                                                3,60,470


Less: professional salary                                                                           1,000




Taxable Salary                                                                                          3,59,470


Working Notes:-

Note 1: Rent free house- house has been taken on rent by the company . Thus , rent paid by the company or 15% of salary whichever is less shall be taxable.


Salary= Basic+DA+ Taxable allowance= 2,14,000+72,000+2,800+9,000= 2,97,800


Rent paid (4,000*12) Rs. 48,000 Or 15% of salary (2,97,800*15%) Rs. 44670 whichever is less


15% of salary                                      44,670


Add: rent of furniture                           18,000


Value of furnished house                       62,670



Note 2: RPF 12% of salary=12% of (2,14,000+72,000)=34,320


Employer’s contribution 26,000 which is less than 12% of salary. Thus nothing is taxable.



Practical problems 3:-


Mr. shankar is a production manager of an industry at mumbai. The particular of his salary income are as under


Particular                                                                                               Rs.


Basic salary                                                                                    15000 p.m


DA       (as under terms of employment.)                                        5000 p.m


Entertainment allowance                                                                 1000 p.m


City Compensatory allowance Medical allowance                          1.200 pm


Medical allowance                                                                              800 pm


House rent allowance                                                                         4,000 pm


Rent paid for the house                                                                       5,000 pm


Small car provided by employer for private and official use. Employer meets all expenses of car: 

He and his employer (each) contribute 15% of salary to R.P.F . Mr. shankar had taken interest free loan of 18.000 to purchase furniture. 

Compute income under the head salary for the assessment year 2020-2021.





Computation of Income from Salary for the A.Y. 2018-19


Particulars                                                                                              Rs

Basic Salary    (15000*12)                                                                      1,80,000


DA       (5000*12)                                                                                    60,000


Entertainment allowance (1000*12)                                                        12,000


City Compensatory allowance  (1200*12)                                               14.400


Medical allowance    (800*12)                                                                 9,600


House rent allowance                                                                             12,000


Car (1,800 *12 )                                                                                      21.600


RPF                                                                                                         7,200


Taxable Salary                                                                                       3,16,800



Working Notes: 

Note:- 1. House rent allowance: Salary for HRA shall be basic + D.A. as under terms of employment.


Salary = 1,80,000+60,000=2,40,000


least of the following is exempt:


(a) HRA received                                                                        48,000


(b) 50% of Salary 2,40,000 (House is at Mumbai)                    1,20,000


 (c) Rent paid – 10% of salary (60,000-24,000)                           36,000



36,000 being the least is exempt and 12,000 (received – exempt) is taxable.


2. Employer’s contribution to RPF in excess of 12% of salary is taxable. Salary for RPF shall be basic + D.A. as under terms of employment.


Salary = 1,80,000+60,000= 2,40,000


Taxble RPF (15- 12) % of  2,40,000=7,200


3. Car


Here in above 3 Practical problems you will get a well knowledge about salary head income tax and also get income from salary problems and solutions 2020 21 pdf

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