Page 224 - DCOM301_INCOME_TAX_LAWS_I

Unit 7: Income under the Head Salaries

Employee’s contribution to Provident Fund 2,000 Notes
Premium of Mrs. Z’s life policy of ` 50,000 6,000
Purchase of books necessary for duty 1,000
Share of HUF 50,000

9. Lata submits the following information regarding her salary income:
Basic salary ` 11,000 per month
City compensatory allowance ` 150 per month
Children education allowance ` 400 per month (for 3 children)

Reimbursement of medical expenses ` 25,000
She was entitled to house rent allowance of ` 6,000 per month from 1st April, 2011 to 31st
August, 2012. However, she was paying a rent of ` 7,000 per month for a house in
New Delhi. With effect from 1st September, 2012, she was provided with an accommodation
by the company for which the company was paying a rent of ` 5,000 per month. Compute
her gross salary for the assessment year 2013–14.
10. Arnav is working as Accounts Officer with Badri Steels Ltd., Ghaziabad drawing a salary
of ` 40,000 per month. He gets D.A. @ 12% of salary and entertainment allowance @ ` 800
per month. He spends 40% of entertainment allowance on entertaining the customers of
the company. The company has provided him the facility of rent-free unfurnished house
for which the company pays rent @ ` 3,000 per month. The company has provided the
services of a cook at the house of Arnav for which the company pays ` 1,000 per month as
salary. The facility of free refreshment and free meal for 300 days is provided to Arnav
costing ` 25 per day and ` 120 per day respectively during working hours in the office.
Arnav and the company both contribute 15% of basic pay and D.A. towards recognised
provident fund; ` 10,000 is credited to provident fund account by way of interest @ 9% per
annum. Compute taxable income from salary of Arnav for the assessment year 2013–14.

Answers: Self Assessment

1. Salary 2. Profit and gains from business

3. Wages 4. Annuity
5. True 6. True
7. False 8. False
9. Allowance 10. Gross salary
11. DA 12. Tiffin allowance

13. Perquisites 14. Specific securities
15. Fair market value 16. Option
17. True 18. True

19. False 20. True
21. True 22. False
23. True 24. False
25. Termination of employment 26. Gratuity

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