This slides are Prepared for Any one who Had not Attended classes regularly Or do not have Time or money.
Income from Salary Players!! Now you Do some Exercise Even not Studied So far.
By Prof. Augustin Amaladas and Prof.Amala shanthi St. Josephs College of Commerce and Jyoti Nivas college respectively, Bangalore M.Com., AICWA.,PGDFM., B.Ed. 09845844319 aug_bang@yahoo.com
M B As
ICWA 1 CA CS
salary
Definition of salary
Section 15 Employer and employee relationship is very important. Director of a company is not an employeetherefore his remuneration does not come under salary Emolument received by college lecturer for valuation of answer scripts in the university does not come under salary because he/She is not an employee of the university but employee of a college.They come under income from 4 other sources
Employer includes
Former Present And prospective employer
If No intention to pay?
Agreement between teacher and management to pay salary to employee and another agreement by which an identical sum has to be returned by the same teacher(assessee)-does not constitute salary because salary is not real but fictitious.(Actual intension to pay is important)
Play every day
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earlier Advance salary received or salary of the last month not received is taxed in the current previous year See Example: Next slide
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Example
April 2008 salary received in March 2008-taxable in the previous year 2007-08 itself as it is received in 2007-08 period(receipt or due which ever is earlier) March 2008 salary received in April 2008-taxable in the previous year 2007-08 only(receipt or due which ever is earlier)
Otherwise hardship
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Surrender of salary
Surrender to central government- either by government employee or private employee-not taxable salary.
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Pension received outside india by an employee who rendered services in India taxable in India to all assessees(resident, not ordinarily resident and non resident) as salary is from India. Place of accrual of salary is importantfrom India or from outside India
After meal why?
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Exercise-1
1.Pension paid abroad for the services rendered in India? 2.Leave salary paid outside India for the services rendered in India? 3.Salary paid by government of India to an Indian National outside India if services rendered outside India? 4.Allowances received outside India by Central government employee for services rendered outside India?
Normally people do not fight after meal.
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Answer-1
1.taxable as services rendered in India 2. Taxable as services rendered in India 3. - DO4. Allowances paid by government of India to its employees(Indian nationals) outside India for the services rendered outside India are exempted as per
section 10(7)
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Leave encashment
It is not related to casual leave For every completed year of service employee is entitled to receive a certain number of days of paid leave.Employee either can take leave or en cash it while in service or after retirement. Note: Any thing received while in service is normally taxable.After retirement there are some concessions given.
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1.Leave encashment
1.Received while in Service Fully taxable(government or Non government employee) Received At the time of retirement
Government Employees-Exempted
Non government employee (including local authority and corporation employees) (see next slide)
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sales.
a) 10 months average salary* b) Amount specified by the government-3,50,000 c) Actually received at the time of retirement d) [Period of leave on 30 days basis (if more than 30 days as per service rules)for every completed year of service( -) leave availed while in service(-)leave encashed while in service] x (average salary)*
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percentage of commission only on sales. Do not consider fixed amount of commission on sales Do not consider variable or fixed percentage of
commission on purchase BDA employee is not a government employee as for as the leave encashment point of view. Note: 1.Fixed % of commission is different from fixed amount of commission(monthly fixed amount)
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Exercise-1
X an employee of the central government receives Rs.4,00,000 as cash equivalent to leave credit to his salary on 1st Feb. 200X after his retirement. a)How much is taxable? b)Suppose X is a private employee and received Rs.15000 as salary and served 20 years and 3 months and taken 3 months leave while in service at the time of retirement? c)If X had rendered 24 years and 8 months of service and he is employee of BDA and received Rs 15,000 basic, 40% DA out of which only 60% will come for retirement purpose and 5% variable and 4% fixed commission on sales where sales achieved in the previous year was Rs.30,00,000. Leave availed while in service was 10 months and 8 months leave en cashed ? d)Suppose X receives leave encashment while in service and he is a government employee?
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Answer
a) after the retirement leave encashment by government employee is not taxable. b)If he is a private employee the least of the following is exempted from the amount received Rs.4,00,000 1.Actually received-Rs.4,00,000; 2.10 months average salary=15000 x 10=1,50,000; 3.Maximum limit=Rs.3,00,000 4. One month for completed year of service(-)leave availed while in service(-)leave en cashed while in service x (average salary) = 20months-3month-0 months(15,000)=2,55,000 How much is exempted? How much is taxable?
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The lowest of all four is Rs.1,50,000 is exempted from Rs.4,00,000 Therefore taxable leave encashment is Rs.2,50,000. (Rs.4,00,000-1,50,000)
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c) Working Notes: No of years of service= 24 years and 8 months=24 years only(fraction is ignored) Average salary=15000 +(40% x 60% x15000) +(4% x 10/12)(30,00,000)=15000 +3600 +30,00,000 x10/12 x 4%/10=28,600 Rs. 30,00,000 is for 12 months but we have to calculate for ten months only before the date of retirement. Least of the following is exempted out of Rs.4,00,000: A) Actually received-Rs.4,00,000 B) 10 months average salary-10 x 28,600=Rs.2,86,000 C) (24 months-10 months-8 months) x 28,600=Rs.1,71,600 D) Maximum limit-Rs.3,00,000 Least of the above is Rs.1,71,600 which is exempted . Therefore taxable leave salary is Rs.4,00,000-Rs.1,71,600=Rs.2,28,400 28
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@Exercise-2
X a non government employee receives Rs.2,50,000 as leave salary at the time of retirement on February 20, 2008. On the following information, determine the amount of taxable leave salary: Basic salary Rs.15,000 per month since 2005. Duration of service : 26 years; leave at the credit of X at the time of retirement: 25 months; entitlement of leave salary: 60 days salary for every year of service and leave availed while in service: 27 months.
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Bonus
It is taxable on due basis. If it is not taxable on due basis it is taxable on receipt basis.
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Gratuity
1.Government Employee(Central,Sta te and local authority employees)(three) 2.Average salary: Not necessary
3.No of days in a month-Not necessary
Non Government employee under the payment of gratuity Act. Including statutory corporation Average salary:last drawn includes Basic+DA
No of days in a month-
Non Government employee under not covered under the payment of gratuity Act. Including statutory corporation Average Salary: Basic +DA comes for retirement +Fixed % of commission on sales No of days in a month-
26 days only
30 days only
Received while in service is fully taxable Received Gratuity at the time of retirement: Least of the following is exempted(next page) 34
4..Received while in Received while in service is service is fully taxable fully taxable Received Gratuity at the 5.Received Gratuity at time of retirement: the time of retirement Least of the following is Exempted exempted see in the next page.
Non Government employee under the payment of gratuity Act. Including statutory corporation
Non Government employee under not covered under the payment of gratuity Act. Including statutory corporation
The Least of the following is The least of the following is exempted from gratuity received: exempted from gratuity received: 1.(15/26) x (last salary drawn 1.(15/30) x (10 preceding months average salary) x (number of )x (number of years of service ) fully completed years of service) ie.Basic+DA Basic + % DA comes for (No commission please) retirement + Fixed Percentage of Year= above 6 months is commission on sales considered as one year. 2. Rs.3,50,000 2.Rs.3,50,000 3. Gratuity actually received 3.Gratuity actually received Note: Note: Fraction of the year is not If he worked more than one company 35 collectively more than 6 months equal to considered
Exercise-1
Mr. X retires from service on Nov.18 200X and received Rs.3,40,000 as gratuity after 32 years and 8 months. His salary at the time of retirement is Basic Rs.19000 and DA 40% on Basic and 4% commission on sales. Sales achieved preceding ten months was Rs.15,00,000. Basic salary was more by Rs.2000 since 1st April 200X. 60% of DA will come for retirement purpose. Answer the following:How much is taxable gratuity? A)If Mr.X is a government employee? B) If Mr. X is a private employee who is covered under the payment of gratuity act? C) If Mr. X is a BDA employee? D) If Mr.X is a Bangalore Mahanagara paliga(BMP) employee? E) If Mr. X is a XYZ public Ltd.(a Government company)employee who is not covered under the payment of gratuity Act. F) After the death of Mr.X wife receives gratuity how much taxable under the head salary?
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Answer
Particulars Government employee A BDA employee BMP Employee
1.Years of service
Not applicable
BMP is a corporation.therefore the employee is a private employee who is covered under the payment of gratuity Act. Year of service=33 years. Not necessary Basic + Full DA =Rs.19,000 +40%(19000)=26,600
Least of the following is exempted: 1. Rs.3,50,000 2. Gratuity actually received Rs.Rs.3,40,000 3. (15/26)x 33 x Rs.26,600=5,06,423 Least=Rs.3,40,000 exempted.Therefore 37 nothing is taxable
Not taxable
Not taxable
Particulars
XYZ Public limited government company not covered under the payment of gratuity Act Fraction of the year is ignored. Therefore 32 years
1.Year of service
Not required as there is no employer employee relationship after the death of Mr.X.The gratuity received is taxable under the head income under other sources.
2.Meaning of salary
Average salary 10 months preceding the month of retirement=Basic+DA which comes for retirement +fixed % of commission= January to October salary= Jan to March Rs.17,000 each and 19000 from April to October=Rs.1,84,000+ Rs.7360 x10(DA)+6000 x 10(Commission) Average salary=3,17,600/10 =Rs.31760
Least of the following is exempted: 1.(15/30) x32 x31,760=Rs.5,08,160 2.Rs. 3,50,000 3.Gratuity actually received=Rs. 3,40,000 Least : Rs. 3,40,000 Therefore Gratuity received is fully exempted.
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Pension
Regular pension received by the employee himself ( not dead )after the retirement is taxable as salary. Family pension(after the death of husband/wife) received by wife/husband comes under income from other sources as there is no employer and employee relationship after the death of husband who was an employee.
Standard deduction is available ie. 1/3 rd of family pension or 15,000 whichever is lower is deductible from family pension.
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Commuted pensionSec.17(1)(ii)
Instead of receiving monthly pension some portion of regular pension can be accumulated and can be received( after retirement/voluntary retirement) a lump sum is known as commuted pension. 1. Government employee-Exempted after retirement. Government employee means:-Central, state,local authority and corporation employees(totally 4)
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Exercise
Mr. X joined a government service on January 2007 for a salary of Rs.40,000 per month.The government contributes towards pension scheme is Rs.5000 per month.Find out how much is taxable for the year 2007-08, 2008-09 and 2009-10 previous year? Answer: 1st April-31st March 12 months salary=40,000 x12= 4,80,000 Government contribution 5000 x12= 60,000 Total 5,40,000 Less: deduction U/S 80CCD Upto 10% both by employer and employer=4000 x2=8000 per month. Annual Saving =8000 x12=96000 deductible from 5.40,000. Net taxable salary=Rs.5,40,000-96,000=4,44,000.Applicable for all three years. 45 Does it make any difference if he had joined XYZ Ltd?
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Annuity[17(1)(ii)]
Annual payment constantly paid by employer to employee. Even paid voluntarily it is taxable Annuity received from ex employer is taxed as profit in lieu of salary-taxed as salary.
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Retrenchment compensation[10(10B)]
The Least of the following is exempted: 1. Amount calculated as per Industrial dispute act. (15 days salary for every completed year of service and fraction beyond 6 months ie. 25 years and 7 months=26 years.) 2. Rs. 5,00,000 notified by Government 3.The amount received Exercise:-next page
Note: If approved by government, under any scheme, such amount is fully exempted.
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Exercise
Mr. X has working in BPL. Due to closing down of the company, company pays to Mr.X Rs. 2,60,000 as compensation.He has rendered service 20 years and 8 months.Average salary was Rs.20,000. How much is taxable? How much is exempted? Answer: no of years of service=21 years 1.Compensation as per Industrial dispute 15/30(20,000)(21)=2,10,000 2.Rs.5,00,000 3.Rs.2,60,000 Least is Rs.2,10,000 is exempted. Therefore 50,000 is taxable ie (2,60,000-2,10,000)
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VRS[10(10C)]
Voluntary Retirement scheme Maximum amount of exemption is Rs.5,00,000. Up to Rs. 5,00,000 is exempted Conditions: The same employee can not be re-employed in the same or any other company comes under the same management. Salary means the last salary drawn for computation of compensation Basic+ DA which comes for retirement + fixed 53 % of commission on sales.
Provident fund
Particulars Statutory PF Recognised PF Un-recognised PF Public PF
1.Who maintains?
2.Who contributes?
Private establishments having 20 or more employees Both employer and similar contribution by employees
Not recognised by commissioner of Income-tax act Employer contributes but there is no separate account in the name of employee
3.Exempted or not? Employees contribution comes under Section 80C as savings in all cases
Only when employer transfers Employers his account to contribution exceeding 12% of employees account is taxable or salary and converted to Interest recognised PF exceeding 9.5% excess over 12% of taxable. salary and excess over 9.5% towards interest is taxable
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There will be no tax exemption if the residential accommodation is self occupied (not taken house for rent by employee or employee has not paid any rent for residential accommodation used by him [section 10(13A) of Income Tax Act and rule 2A]
Salary means basic plus DA (if forming part of retirement benefits) plus commission (if fixed as a percentage of turnover).
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Exercise-1
Mr. X works in Mumboi but stays in Pune and receives house rent allowance of Rs.12,000. He pays Rs. 15,000 per month as rent.His Basic is Rs.20,000, DA-30% which will come for retirement purpose. A)Compute taxable House rent allowance if he has taken a rented house in Pune. B) If he stays in Mumboi and pays the same rent. C) suppose he stays in his own house in Mumboi D) suppose he has taken a house for rent in Mumboi for the same rent but rent his own house in Pune? E) Suppose he stays in a rented house upto December in Mumboi by paying same rent and taken a rented house in Pune from 1st January for a rent of Rs.10,000. Note:-Each question has to be approached independently keeping the base same for all questions.
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Answer-HRA
A) Rented house in Pune: Since salary, place of stay, HRA and rent paid are same throughout the year we can calculate for the whole financial year. House rent Allowance received (12,000x12) Rs.1,44,000 Least of the following is exempted: 1.40% of salary*=26000 x 12 x40% 1,24,800 2.Rent paid-10% of salary* 1,48,800 [(15000-10% x26000) x 12] 3.Actually received 1,44,000 The Least is Rs.1,24,800 which is exempted out of HRA received.There fore taxable HRA is Rs.19,200 ie (1,44,000-1,24,800)
Answer-HRA
A) Rented house in Mumboi Since salary, place of stay, HRA and rent paid are same throughout the year we can calculate for the whole financial year. House rent Allowance received (12,000x12) Rs.1,44,000 Least of the following is exempted: 1.40% of salary*=26000 x 12 x50% 1,56,800 2.Rent paid-10% of salary* 1,48,800 [(15000-10% x26000) x 12] 3.Actually received 1,44,000 The Least is Rs.1,44,000 which is exempted out of HRA received.There fore taxable HRA is Zero ie (1,44,000-1,44,000)
Entertainment allowance[16(ii)]
In case of *government employees:Least of the following is deductible: 1. Rs. 5,000; 2. 20% of salary**; 3.Amount of entertainment allowance granted during the previous year. Non government employees are not exempted
*Government employee Central and State government employees
Special allowances[10(14)]
For official duties (after Reaching office) 1.Official travel/transfer Allowance to meet the cost 2.Conveyance allowance to meet customers 3.daily allowance on official Tour/journey 4.Helper allowance to carry Official documents 5. Research allowance 6. Uniform allowance to do Official duty To be Spent Fully Other Wise, amount not Spent taxable Not directly relate to Official duty (General)
3. Traveling allowance to commute from home to office 4. Other border area allowances
Rs. 800 per month. If handicapped person Rs.1600 per month is exempted. Depends on altitude/Place
They are fixed. Whether spent Or not.Excess Taxable as they Are not given For official Duty
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Exercise
Particulars No. of Amount Children/ received Name from employer
Three Three 300 PM per child 400 per child per month
Chargeable to tax
(200 x2 x12+300 x12=8400 (100 x2 x12 +400 x12)=7200
1.Educational allowance 2.Hostel expenditure 3. Transport allowance from house to office or vice-versa 4.Transport company employee daily allowance 5. -DO-
-------
12000-9600=2400
12000 70%(72000) or 6000 per 72000-50,400=21600 month which ever is lower=50,400 6000 x 12=72000 or 67 70%(1,20000)=84000 1,20,000-72000=48000 Whichever is lower
72000
1,20,000
aug_bang@yahoo.com
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Exercise
Salary income and various allowances: Compute the gross salary of Mr. Amal for the assessment year 2008-09on the basis of the following information: 1. Basic pay Rs. 8,000 per month 2. DA 40% of basic pay 3. City compensatory allowance-10% of basic pay 4.Medical allowance Rs.800 per month 5. Children educational allowance- Rs. 200 per month for three children 6. Hostel expenditure allowance-Rs. 400 per child per month for 2 children 7. Tribal area allowance Rs. 500 per month in Bihar 8. Travelling allowance Rs. 12000(However actual expenditure was only Rs. 8000 for official duties 9. Conveyance allowance Rs. 500 per month(the whole amount spent for official duties) 10. Transport allowance- Rs. 18,600 11. Overtime allowance-Rs. 4000 69
Answer: Computation of gross salary of Mr. Amal for the assessment year 2008-09:
Taxable allowances
1. Basic pay Rs. 8,000 x 12 96,000 . DA 40% of basic pay(8000 x 40% x12) 38 400 3. City compensatory allowance-10% x 8000 x12 9,600 4.Medical allowance Rs.800 x 12 9,600 5. Children educational allowance-[ (Rs. 200-100)2 x 12+ 200 x 12] 4,800 6. Hostel expenditure allowance-(Rs. 400-300) 2 x 12 2,400 7. Tribal area allowance (Rs. 500-200) x 12 3,600 8. Travelling allowance (Rs. 12000-8000) official duties 4,000 9. Conveyance allowance Rs. 500 500) 12 Nil 10. Transport allowance- Rs. 18,600-(800 x 12) 9,000 11. Overtime allowance-Rs. 4000 4,000 Gross salary 1,81,400
Children education Rs. 100 per month per child for two children allowed. Hostel expenditure Rs. 300 per child per month for two children allowed
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For middle and below class family god has given brain. Brain Is your wealth. How to develop your brain???
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Pass on such good information to Others at free of cost. You are born in this world Only to give.
By giving you receive including knowledge This is the base of double entry book keeping
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Perquisites
to an office or position in
addition to salary or wages Something that benefits a man by going into his own pocket Whether perquisites should be given in Kind?
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Perquisites
Need not be in kind.It can be in cash.
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Conditions To become perquisites 1.Allowed by Employer to Employee 4.Personal advantage To the employee
3.Directly Depend upon service 2.Allowed during Continuance Of employment 5. Derived by Virtue of Employers authority
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Other conditions
Employer and employee relationship should exist at any point of time-need not be an employee now. Legal origin is important-Un authorized advantage taken by employee without employers authority will not become perquisites.
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6.Fringe 3.value of Benefits Benefits provided Allowed Like furniture 5. Funds paid To employees Of Other 2.concessional In the accommodation By employer Than Accommodation Other than companies Provided RPF/Insurance By employer fund 79
3.
4.
5.
Short form(RSGEL)
Companys House given at free of cost or rented by company given to employee at free/cocessional rent. Includes: house, flat, farm house, carvan(people go by camel place to place), mobil home,ship, floating structure-like boat. Step1. Unfurnished Accomodation
Central or State Government employees
Private employees
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RFA-Government employeeExercise
Exercise:- Mr. X is working in Central government service given rent free accommodation in an government apartment at free of cost. The license fee prescribed by government is Rs.3000 but fair rental value of the house is Rs. 10,000. How much is taxable? Answer:-next page
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Answer-RFA
Fair rent is not considered. The license fee Rs. 3,000 is taxable in the hands of Specified employee.
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Exceeding population Population beyond 25 lakhs 10 lakhs-Up to25 lakhs Owned Owned By By employer Rented employer By company 10% of
15% of salary salary
Rented
15%of salary
or amount paid
By company To outsider Whichever Is lower
Owned By employer
7.5% of Salary
Rented By company
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If owned
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If any allowance is exempted ( like HRA(partly), children educational allowance upto Rs.100 Per month or transport allowance up to Rs. 800 per month etc.) to the extent exempted is not included in the meaning of salary but balance is included in the meaning of salary.
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Exercise-RFA
Value of rent free accommodation : Preetham is sales manager of a private company and for previous year 2007-08,he received the following emoluments(amts in Rs) Basic Salary 248000 Bonus 16000 Dearness allowance(50% forming part of salary) 60000 Project allowance 15000 Commission on sales 16000 City compensatory allowance 25000 Medical allowance 12000 Employer contribution to recognized provision fund 20000 Salary pertaining the year 2008-09 has been received in advance 20000 He has been provided with a rent free accommodation in Bangalore owned by the employer. The population of Bangalore may be assumed to be 50 lakhs as per 2001 census Determine the taxable value of the perquisite in respect of rent free 90 accommodation.
He has been provided with a rent free accommodation in jaipur owned by the employer. The population of jaipur may be assumed to be 15lakhs as per 2001 census Determine : a) Meaning of salary for RFA b)the taxable value of the perquisite in respect of rent free accommodation. 1. Meaning of salary:-
All Cash salary received or recivable in hand including taxable allowances by the employee himself. Excludes all *perquisites and *DA which will not come under retirement purpose
Any allowance is not taxed( like HRA(partly), children educational allowance upto Rs.100 Per month or transport allowance up to Rs. 800 per month etc.) are not included in the meaning of salary.
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Meaning of salaryExercise
The valuation of rent free accommodation shall be 15% of the salary i.e. 15% of (248000+ 16000+30000+15000+16000+25000+12000)=Rs 54,300 Note: Salary shall be taken on basis for the period for which accommodation has been provided. Hence advance salary for 2008-09 shall not be taken in account. Employers contribution does not come to the assessee in cash as it is paid directly to the department. That is why I have mentioned the meaning of salary is cash salary received by the assessee himself. 92
Exercise
Value of free rent accommodation : sri Mohan is purchase manager of a private company and for previous year 2007-08 he received the following emolumentsBasic Salary Bonus Dearness allowance(50% forming part of salary) Project allowance Commission on purchase City compensatory allowance Medical allowance Employer contribution to recognized provision fund Salary pertaining the year 2008-09 has been received in advance 120000 16000 60000 15000 16000 25000 12000 20000 20000
He is also in part employment with B ltd and is receiving salary of Rs 80000 P.A. he has been provided with a rent free accommodation in Mysore owned by the employer. The population of Mysore may be assumed to be 15 lakhs as per 2001 census. Determine taxable salary
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solution
Computation of taxable salary of Sri Mohan for assessement Year 2008-09 Basic Salary Bonus Dearness allowance(50% forming part of salary) Project allowance Commission on purchase City compensatory allowance Medical allowance Employer contribution to RPF in excess of 12% of salary [20000- 12% of (120000+ 50% of 60000)] Salary from B ltd Advance of salary Value of housing facility[10% of (120000+16000+30000+ 15000+16000+25000+12000+80000)] Taxable Salary 120000 16000 60000 15000 16000 25000 12000 2000 80000 20000 31400
397400
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Exercise
Value of concessional accommodation: Sri Basant is purchase manager of a private company and for the previous 2007-08 he received the following emolumentsBasic Salary 240000 Bonus 32000 Dearness allowance(50% forming part of salary) 120000 Project allowance 30000 Commission on purchase 32000 City compensatory allowance 50000 Medical allowance 24000 Employer contribution to recognized provision fund 40000 2 months salary for year 2008-09 has been received in advance 20000
What would be the value of accommodation if the employer charges rent of Rs 2000 p.m. in the following independent cases: (a) The accommodation is provided in Hyderabad where popln as per 2001 census exceeds 25 lakh (b) The accommodation is provided in Alwar where popln as per 2001 census exceeds 18 lakh 95 (c) The accommodation is provided at Tumkore (popln less than 10 lakhs)
Solution
Soln: The valuation of accommodation provided at concessional rent shall be as under Place of accommodation Value of perquisite Hyderabad 15% of salary less rent recovered = Rs 7020024000=Rs46200 Alwar 10% of salary less rent recovered = Rs 4680024000=Rs22800 Tumkore 7.5% of salary less rent recovered =Rs 3510024000=Rs11100 Salary = 240000+32000+60000+32000+30000+50000+24000 = Rs 468000
Any rent collected by employer from employee, such amount is deductible from taxable perquisite.
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Scholarships
Scholarship given by employer company is not taxable as perquisites.
Note:- It should not be related to his/her employment.
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Employees obligation met by employer either giving money or reimbursed is taxed in the hands of employee(17(2)(iv)) Example:1.Domestic servants salary reimbursed by employer. 2.Gas connection in the name of the employee but monthly gas bill paid by employer-Taxable to all employee whether specified or not. 3.If gas connection in the name of the company then there is no obligation to employer. Such perquisites is taxable in the hands of Specified employee.
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Example
X is employed by A Ltd. on 1st June 2007, he has taken interest free Housing loan of Rs. 14,00,000.How much is taxable?
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Answer
Lending rate upto 5 years is 10.25% per annum 10.25% x 14,00,000=1,19,583 is taxable. Suppose the interest charged by the company from assessee is 6%, then how much is taxable?
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Answer
(10.25%-6%) x 14,00,000=Rs59500 taxable
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10 % of Original cost of such asset purchased by employer(- )reimbursed by employee If taken on rental basis by employer: Rent payable(-)reimbursed by employee
Note: It is not on WDV value
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Medical facilities
Medical facilities availed in employers hospital, government hospital or hospitals recognised by Income tax department is not taxable.( No limit for specified diseases. If private Up to Rs.15000 is not taxable if reimbursed to specified employees. If bill is issued in the name of employee but paid by employer then it is taxable in all types of employees. Family means: spouse, children, parents, brothers, sisters who are wholly or mainly dependent on 116 him/her.
Motor car-Owned /Hired and maintained by employer by employer Used for private purpose:(All expenditure met by employer + 10% depreciation on original cost are perquisites) or higher charges Partly for private partly for oficial: Up to 1.6 litres1200(car) +600(if Driver provided) per month-taxable. If more than 1.6 litre:1600 (car) + 600(If driver provided) per month is taxable. Note: Nothing is deductible when recovered from the 119 employee
or
Used Partly for private partly for officialdifficult to identify: If 1.6 litres cubic capacity- Rs.400Per month(Car) + 600 per month(if driver provided)----Taxable If above 1.6 litres cubic capacity: Rs.600 per month(car) +Rs.600per month(if driver provided) taxable.
Note: amount recovered from employee is not deductible
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Other than car like two wheeler owned by employee but maintained by employer Partly for office and partly for private-if difficult to measure: Expenditure incurred by employer Less: Rs.600 per month or higher sum for official purpose as per log book if maintained Less: Amount recovered from employee balance is taxable in the hands of assessee.
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Perquisites-car
Owned by employee Re imbursed by employer
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