Page 213 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes Professional tax paid by employer 1,000
Fair rent of the flat provided by employer 6,000
Rent paid for furniture 1,000
Rent recovered by employer 3,000

Contribution to Statutory Provident Fund 4,000
Employer’s contribution to Statutory Provident Fund 4,000
Compute his taxable income for the Assessment Year 2013–14.
Solution:

Computation of taxable income of Mr. Ramamoorty for the Assessment Year 2013–14
Basic Pay 40,000
Dearness allowance 3,000
Leave salary 5,400

Professional tax paid by employer 1,000
Perquisite for House:
15% of salary (‘ 40,000 + 3,000 + 5,400) 7,260
Add: Furniture rent 1,000

Less: Rent recovered (–) 3,000 5,260
54,660
Less: Professional tax u/s 16 1,000
Gross Total Income 53,660

Less: Tax deduction under Section 80C 4,000
Tax on total income 49,660
Total tax payable NIL
Note: Assumed that dearness allowance forms part of the salary for the purpose of computation
of superannuation or retirement benefits.

Example: For the year ended 31.3.2013, B receives a salary of 91,000 and conveyance
allowance of 24,000. He is also provided with accommodation at Mumbai at concessional rent.
The monthly rent of the accommodation is 7,500 of which 5,000 is paid by the employer. The
balance of 2,500 is paid by B. B’s contribution to employee’s provident fund account is 7,592 and
he pays 10,298 as life insurance premia. His expense on conveyance for official purposes was
22,500 for the year. Compute B’s tax liability for the assessment year 2013–14 assuming that he
has no other income.
Solution:
Basic Salary 91,000
Conveyance allowance 24,000

Less: Amount exempt under Section 10(14) (800 × 12) 9,600 14,400

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