Tuesday, December 16, 2014

Seven Examples or Calculations of Income From Salaries During the F.Y.2014-15



 
UPDATE INCOME FROM SALARIES DURING THE FINANCIAL YEAR 2014-15; 
Read Full Article: http://goo.gl/CGHMLs



Example  1
 

(A) Calculation of 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/-.
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




309500
Add:
(i)   Education Cess @ 2%.
(ii)   Secondary and Higher Education Cess  @1%

Nil Nil

360
180

2100
1050

7,900
3950

68090
34045
Total tax payable
Nil
18,540
1,08,150
406850
3506635






(B) TDS under sec. 206AA in case where PAN is not furnished by the employee
Nil
90,000
1,30,000
406850
3506635







* includes Rebate of Rs 2000 u/s 87A



Example  2


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
4,00,000
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
4,00,000
2
Add: Income from Other Sources
Interest Income on Savings Account
Rs 12,000
3
Gross Total Income
4,12,000
4
Less: Deduction U/s 80DD (Restricted to Rs.50,000/- only)
50,000
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
3,17,000
8
Income Tax thereon/payable
(includes Rebate of Rs 2000 as per Section 87A)
4,700
9
Add:
(i).  Education Cess @2%
(ii).  Secondary and Higher Education Cess @1%

94
47
10
Total Income Tax payable
4,841
11
Rounded off to
4,840

 
 Example 3

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 Expenses
In excess of Rs.15,000/- in view of Section 17(2)(v)
20,000
3
Income from Other Sources
i)           Interest Income on Savings Account        Rs  8,000
ii)          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. 1,50,000/-
b. Less: Deduction u/s 80TTA on Interest Income on savings account (restricted to Rs 8000/- available only on Savings account interest)     Rs     8,000/-
Total deduction available Rs 1,58,000/-












1,58,000
6
Total Income
4,05,000
7
Income Tax thereon/payable
(includes Rebate of Rs 2000 as per Section 87A)
13,500
8
Add:
(i).  Education Cess @2%
(ii).  Secondary and Higher Education Cess @1%

270
135
9
Total Income Tax payable
13,905
10
Rounded off to
13,910

 
 Example 4

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
60,000
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 taken
for retirement benefit) (1,44,000-55,000)  =              89,000
(c). 50% of Salary(Basic+ DA)                            =          2,75,000






89,000
4
Gross Total Income
6,01,000
5
Less:  Deduction U/s 80C
(i). GPF                                                                  Rs.60,000/-
(ii). LIC                                                                  Rs.  4,000/-
(iii). Investment in Unit-Linked Insurance Plan    Rs.50,000/-
Total           =Rs.1,14,000/-




1,14,000
6
Total Income
4,87,000
7
Tax payable on total income
(includes Rebate of Rs 2000 as per Section 87A)
21700
8
Add:
(i).  Education Cess @2%
(ii).  Secondary and Higher Education Cess @1%

434
217
9
Total Income Tax payable
22351
10
Rounded off to
22350


 Example 5

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
Flat at concessional rate (for ten month).       = Rs.3,60,00
3,60, 000
4
Hotel rent paid by employer (for two month)
1,00,000
5
Cost of furniture
2,00,000
6
Free gas, electricity, water etc. (Actual bills paid by company)
40,000
7
Rent recovered from employee
60,000
8
Subscription to Unit Linked Insurance Plan
50,000
9
Life Insurance Premium
10,000
10
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 the purpose of valuation of perquisites (12 months)
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/-
Less : Rent recovered   Rs.   60000/-



Rs 45,000










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)
Rs 33,600
4(c)
Perquisites for furniture
@ 10% of cost  of Rs.2,00,000
Rs 20,000
4(d)
Perquisite for free gas, electricity, water etc.
Rs 40,000
4
Total
1,38,600
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)                                           : Rs.42,000/-
(ii). LIC   (80C)                                                           : Rs.10,000/-
(iii). Subscription to Unit Linked Insurance Plan(80C) : Rs.50,000/-
Total                                       = Rs.1,02,000/-




1,02,000
8
Total Income
8,76,600
9
Tax Payable
1,00,320
10
Add:
(i).   Education Cess @2%
(ii).  Secondary and Higher Education Cess @1%

2,006
1,003
11
Total Income Tax payable
1,03,329
12
Rounded off to
1,03,330

 Example 6
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 for
retirement benefits (1,20,000- 50,000)                 :Rs.    70,000
(c). 50% of salary (including D.A)                             :Rs. 2,00,000






70,000
2
Gross Total Taxable Income
6,22,000

Less:  Deduction U/s 80C
(i).    Provident Fund                                            : Rs.     60,000
(ii).   LIP                                                               : Rs.     10,000
(iii).  NSC VIII Issue                                            : Rs.     30,000
(iv).  Repayment of HBA                                     : Rs.     60,000 (v).  Tuition Fees (Restricted to two children)                         : Rs.     20,000
Total        : Rs.   1,80,000
Restricted to Rs. 1,50,000







1,50,000

Total Income
4,72,000

Income Tax thereon/payable
(includes Rebate of Rs 2000 as per Section 87A)
20,200

Add:
(i).  Education Cess @2%
(ii).  Secondary and Higher Education Cess @1%

404
202

Total Income Tax payable
20,806

Rounded off to
20,810

   Example 7

 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:

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

B .What will be the amount of TDS in case of above employees, if PAN is not submitted by them to their DDOs/Offices:

 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 (A)
6,000
60,000
1,50,000
Add:
(i)   Education Cess @ 2%.
(ii)   Secondary and Higher Education Cess  @1%

120
60

1200
600

3000
1500
Total tax payable
6,180*
61,800
1,54,500




B. TDS under sec. 206AA in case where PAN is not furnished by the employee
16,000
80,000
1,60,000
*includes Rebate of Rs 2000 as per Section 87A

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