Table of Contents
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
Solutions:-
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
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.
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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.
Solution:-
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
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Taxable Salary 3,59,470
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.
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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.
Solution:
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
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