income from salary
DESCRIPTION
A project report on Calculation of Income from SalaryTRANSCRIPT
UNIVERSITY OF MUMBAI
RAYAT SHIKSHAN SANTHA’S
KARMAVEER BHAURAO PATIL COLLAGE
VASHI, NAVI MUMBAI
PROJECT REPORT ON
INCOME FROM SALARY
SUBMITTED BY
HARSHAD M. NAGARKAR
ROLL NO.
PROJECT GUIDE
PROF.MR. VIVEK H. BOHIR
IN PARTIAL FULFILMENT FOR THE COURSE OF
MASTERS IN COMMERCE (DIRECT AND INDIRECT TAX)
M.Com. Semester - III
ACADEMIC YEAR 2014-2015
[1]
[2]
ACKNOWLEDGEMENT
I, would take this opportunity to thank the University of Mumbai for providing
me an opportunity to study on a project on Income from salary. This has been a
huge learning experience for me.
With great pleasure I take this opportunity to acknowledge people who have
made this project work possible. First of all I would sincerely like to express my
gratitude towards my project Guide Prof. VIVEK BOHIR for having shown
so much flexibility, guidance as well as supporting me in all possible ways
whenever I needed help. I am thankful for the motivation provided by my
project guide throughout and helped me to understand the topic in a very
effective and easy manner.
I would like to thank Principal Dr. V. S. Shivankar, and the coordinator of the
course Prof. K.G.Tapase for their indirect support throughout. Aniket Patil.
Without their support and conviction this project would not have been possible.
I acknowledge my indebtedness and express my great appreciation to all people
behind this work.
Signature
Harshad Nagarkar
DECLARATION
I, Harshad Milind Nagarkar student of KARMAVEER BHAURAO PATIL,
OBJECTIVES
After reading this lesson, you should be able to understand:• Classification of income into various heads.• Concept of salary income• Incomes forming part of salary• The computation of basic salary in grade system• Types of commission an employee can get• The concept of allowances• Various income tax provisions for computing taxable value of allowances• Computation of taxable value of allowances
RESEARCH METHODOLOGY
SECONDARY DATA
The secondary data has been collected from books, internet and research engine. There has been immense and valuable data which put forth for the compulsion of my project.
[3]
Index
Sr. Title page no.
1 Introduction to salary 1-9
2 Allowances under salary 10-16
3 Perquisites under salary 7-20
4 Deductions under salary 21-22
5 Exemption under salary 23-29
7 Computation of salary 30-37
8 Conclusion
Biligophy
38
39
[4]
Chaper1
[5]
INCOME FROM SALART (U/S 15-17)
INCOME FROM HOUSE PROPERTY U/S 22-27
PROFIT AND AGAIN FROM BUSINESS PROFESSINTON
U/S (28-44)
CAPTIAL GAINS
U/S (45-55)
INCOME FROM OTHER SOURCE S
U/S (56-59)
HEADS OF INCOME
Meaning of salary
The term salary usually refers to a payment for services. It means remuneration for services rendered to another person.
Basic elements of salary
Payer and payee must have employer and employee relationship.
Any payment received by an individual from a person other than his employer cannot be termed as salary.
Basis of charge
Salary is chargeable to tax on due or on receipt basis whichever is earlier; Salary received in advance is taxable in the year of receipt. Such salary
not be included again in the total income when it become due; Outstanding salary is taxable on due basis i.e. salary is taxable in the year
in which it falls due. Arrear salary is taxable on receipt basis.
Definition of salary
As per section 17 (1) of the Income Tax, Salary includes:
i) wages;
(ii) Any annuity or pension
(iii) Any gratuity;
(iv) Any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages;
(v) Any advance of salary(vi) Any payment received by an employee in respect of any period of leave not availed of by him;
[6]
(vi) The annual accretion to the balance at the credit of an employee participating in a recognized provident fund, to the extent to which it is chargeable to tax under rule 6 of Part A of the Fourth Schedule; and
(vii) The aggregate of all sums that are comprised in the transferred balance as referred to in sub-rule (2) of rule 11 of Part A of the Fourth Schedule of an employee participating in a recognized provident fund, to the extent to which it is chargeable to tax under sub-rule (4) thereof;
(viii) The contribution made by the Central Government [or any other employer] in the previous year, to the account of an employee under a pension scheme referred to in section 80CCD;
Characteristics of Salary
1. The relationship of payer and payee must be of employer and employeefor an income to be categorized as salary income. For example: Salaryincome of a Member of Parliament cannot be specified as salary, since it isreceived from Government of India which is not his employer.
2. The Act makes no distinction between salary and wages, though generally salary is paid for non-manual work and wages are paid for manual work.
3. Salary received from employer, whether one or more than one is included in this head.
4. Salary is taxable either on due basis or receipt basis which ever maturesearlier: I) Due basis – when it is earned even if it is not received in the previousyear.
ii) Receipt basis – when it is received even if it is not earned in the previousyear.
iii) Arrears of salary- which were not due and received earlier are taxablewhen due or received, whichever is earlier.
Chapter 2
Allowances[7]
Extra compensation paid by the employer, apart from salary, due to presence of some unusual conditions in rendering the service is called allowance. Allowances by whatever name called is taxable. However following allowance are exempt to certain extent.
Some common allowance, which are exempt to the extent of amount received or the received other limit specified, whichever is less;
sr no
Nature of Allowance limit specified (amount up to
which exempt)
1 Children Education Allowance Maximum of Rs. 100 p.m. per child up to maximum of 2 children
2 Hostel Expenditure Allowance for the children
Maximum of Rs. 300 p.m. per month per up to maximum of 2 children
3
Transport Allowance to meet the expenditure for the purpose of commuting between the place of residence and the place of work
Maximum of Rs. 800 p.m. (Rs. 1600 p.m. if the employment is blind or orthopedically handicapped).
Fully Exempt from tax Fully Taxable Allowance1. Allowances to Govt. employees
outside India 1. Dearness Allowance2. Allowances to high court
&Supreme Court judges.2. City Compensatory
Allowance3. Allowance from United Nations
Organizations. 3. Rural Allowance4. Special allowance 4. Proctorship Allowance
5. Warden ship Allowance6. Project Allowance7. Deputation Allowance8. overtime Allowance9. Interim Allowance10.Tiffin Allowance11.Fixed Medical Allowance12.Servant Allowance
Other Special Allowances
[8]
Children Education AllowanceTribal Area AllowanceHostel Expenditure AllowanceRemote Area AllowanceCompensatory Field Area AllowanceCounter Insurgency AllowanceBorder Area AllowanceHilly Area Allowance
Entertainment Allowance
It is the amount paid by employer for availing entertainment services. Under section 16(ii) of Income Tax Act, 1961 it is entitled to deduction in tax from is salary. But in this case deduction is given to his gross salary which also includes entertainment allowance. Deduction in tax against this allowance can be divided into two parts :In case of Government employee entitled to minimum deduction of
Entertainment allowance received 20% of basic salary excluding any other allowance Rs. 5000 In case of other employee entitled to minimum deduction of (a) Entertainment allowance received 20% of basic salary excluding any other allowance Rs. 7500 Entertainment allowance received during 1954-1955
Specific allowances that are fully exempt in the hands of employees
[9]
Allowance Conditions to claim full exemption
Travelling allowance Should be provided by the employer
and spent by the employee to meet the
cost of official tour or transfer
expenses. Cost of travel or transfer
includes payments for transfer,
packing and transportation of personal
effects.
Daily Allowance Should be spent by the employee for
meeting the daily charges incurred on
a tour or transfer.
Conveyance allowance Should be used by the employee to
meet the expenditure on
conveyance in performance of official
duties
Helper allowance Should be used by an employee to
meet the expenditure on a helper who
assists him in the performance of
official duties
Academic allowance Should be used by the employee for
his academic research and training
pursuits.
Uniform allowance Should be spent by the employee for
purchasing/maintaining office uniform
for official duties.
HOUSE RENT ALLOWANCE [Sec. 10(13A) Rule 2A]
[10]
Conditions for claiming exemption:
• Assessed is in receipt of HRA
• Pays rent
• Rent paid is more than 10% of salary.
Very Important:
• The exemption shall be calculated on the basis of where the accommodation is
situated.
• If the place of employment is the same for the whole year, then exemption
shall be calculated for the whole year.
• If there is a change in place during the previous year, then it will be calculated
on a monthly basis
• Exemption should be calculated in respect of the period during which rental
accommodation is occupied by the employee during the previous year.
• Salary for the period during which rental accommodation is not occupied shall
not be considered.
Salary for HRA= Basic Pay + DA(considered for retirement benefits) +
Commission ( if received as a fixed percentage on turnover as per terms of
employment)
[11]
CALCULATION OF TAXABLE HRA
PARTICULAR AMOUNT AMOUNT
Amount received during the financial year for HRA XXX
Less: Exemption u/s 10(13A) Rule 2A Least of the
followings:
(a) Actual amount received
(b) 50% of the salary if house is placed at Delhi, Mumbai, Kolkata, and Chennai OR40% of the salary in it is placed in any other city
(c) Rent paid less 10% of Salary
xxx
xxx
xxx
TAXABLE HRA XXX
GRATUITY
[12]
1. Government Employee: Fully exempted from tax u/s 10(10)(i).
2. Non-Govt. Employee:
(a) Employee covered by Payment of Gratuity Act,1972
Computation of Taxable Gratuity:
PARTICULAR AMOUNT AMOUNT
Amount received as Gratuity XXX
Less: Exemption u/s 10(10)(ii)
Least of the followings:
(i) Actual amount received
(ii) 15/26 × Last drawn salary × No. of years of
completed
service or part thereof in excess of 6 months
(iii) Maximum Limit
xxx
xxx
10,00,000
Taxable Gratuity XXX
PENSION
[13]
Taxability of Commuted Pension :
(a) Pension is received in lump sum as per the terms of the employment on
retirement or superannuation.
(b) Full Value of Commuted Pension = Amount received on commutation /
percentage of commutation.
Recipient Amount Taxable
Government employee (
Central/State/Local
Authority or Statutory Corporation)
Fully exempted u/s 10(10A)(i)
Non-Govt. employee who has also
received
Gratuity u/s 10(10A)(ii)
Amount Received
Less: 1/3 of Full Value of Commuted
Pension
Non-Govt. employee who has not
received
Gratuity u/s 10(10A)(iii)
Amount Received
Less:1/2 of Full Value of Commuted
Pension
Chapter 3
[14]
Perquisite
Under section 17(2) of Income Tax Act, 1961 perquisite is defined as:
Amount paid for the rent-free accommodation provided to the assessed by his employer
Any concession in the matter of rent respecting any accommodation provided to the assesses by his employer
Any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases:
1. Employer may provide accommodation facility to the employee with or with furniture. Such accommodation may be rent free at a concessional rent.
[15]
a) For Rent free Accommodation
The amount taxable for such perquisite is as follows:
Note: Salary for the purpose of above includes basis, D.A, bonus, commission, free and all taxable allowance by whatever name called, but doesn’t include allowance which are exempt or doesn’t form part of salary for the calculation of retirement benefit and also does not include the employer’s contribution to PF.
2. Car Facility
Motor car facility provided by an employer is taxable in the hands of the employee on the following basis.
[16]
Type of employee
Taxable amt for unfurnished accommodation (1)
Taxable amt to be added if furniture is provided (2)
Taxable amt for furnished accommodation (3)
a. Government employees
Amt payable as per Govt. rules
10% per annum of cost of furniture or rent payable
(1) Plus (2)
b. Non - Government employees:
If house is owned by the employer
15% of salary if population exceeds 25 lakhs.
10% per annum of cost of furniture or rent payable.
(1) Plus (2)
10% of salary if population is between 10 to 25 lakhs.
7.5% of salary if population is below 10 lakhs.
If house is not owned by the employed
15% of salary or lease rent, whichever is lower
10% per annum of cost of furniture or rent payable
(1) Plus (2)
Car is owned by
Car is maintained by
Used by employees for
Taxable ValuePerson
chargeable
Employer
Official purpose
Not a PerquisiteNot applicable
Personal Purpose
Maintenance + 10% Depreciation
Specified Employee
Both PurposeRs. 1,800 /Rs. 2,400 p.m
Employer Employee
Official purpose
Not a PerquisiteNot applicable
Personal Purpose
Hire charges of the car /10% depreciation
Specified Employee
Both Purpose Rs.600/900 p.m
Employee Employer
Official purpose
Not a PerquisiteNot applicable
Personal Purpose
Maintenance
Specified Employee
Both Purpose
Actual expenditure incurred - Rs 1,800 /2,400+(Rs 900p.m. for driver, if any)
Employee Any Purpose Not a PerquisiteNot applicable
# depends on the cubic capacity of the car whether it exceeds 1.6 liters or not.
3. Gas, Electricity or Water Supply
Employer may also provide gas, electricity or water supply to the employee either free of cost or at concessional price.
[17]
Following will be the taxable amount.
Situations (1) If employer provides the above free of cost (2)
If employer provides the above at a concessional rate
(3)
If the employer purchases it from
outside:
Cost incurred by the employer to provide the
same
Column (2) - amount recovered from the
employee.
if the employer provides it from its own
source:
Manufacturing cost per unit
Column (2) - amount recovered from the
employee.
Insurance paid by the employer
Any premium borne by the employer to run an assurance on the life of the employees’ taxable in the hands of the employee.
Chapter 4
DEDUCTION FROM SALARY
The following two deductions from Gross salary are allowed vide section 16
[18]
(1)Entertainment allowance
(2)Professional tax
ENTERTAINMENT ALLOWANCE
ONLY TO GOVERNMENT EMPLOYEE
It is initially included in gross taxable salary. Thereafter, section
16(ii) allows a deduction from Salaries only to the Government
employees to the least of the following:
a. 1/5th of the Basic Salary.
b. Rs. 5000
c. Amount of entertainment allowances actually received.
NON GOVERNMENT EMPLOYEE
It is not entitled to any deduction for entertainment allowances.
BASIC SALARY above would include Dearness Allowance if it forms part of
salary but exclude bonus, allowances, benefits and perquisites.
PROFESSIONAL TAX
Section 16(iii) allows a deduction from salaries of the amount of tax on
employment imposed by or under any law by the State Government under
Article 276 of the constitution.
COMPUTING DEDUCTIONS UNDER CHAPTER VI AASSESSEE:PREEVIOUS YEAR: ASSESSMENT YEAR:PARTICULARS Rs.
[19]
DEDUCTIONS UNDER CHAPTER VI A1. SECTION 80C
Life insurance premium Deferred annuity Deferred annuity by government Contribution to statutory P.F Contribution to P.P.F Contribution to recognized P.F National saving scheme National savings certificates Unit linked insurance plan P.O cumulative time deposits Pension fund of UTI Housing finance deposits New house Tuition fees Infrastructure debentures Bank fixed deposits NABARD bonds P.O. 5 year time deposit ____________________
2. Section 80D : medical insurance Self, spouse, dependent children 15000 Parents 15000 Additional ( senior citizen) 5000______
3. Section 80DD maintenance of handicapped ( Rs. 50000 to Rs. 100000)
4. Section 80DDB medical treatment (40000 to 60000)5. Section 80E interest on higher education loan6. Section 80U blind/handicapped/retarded ( lump sum)
( 50000 or 100000)
TOTAL DEDUCTIONS
xxxxx
xxxxxxxxxxxxxxxxxxxx
XXXXX
Chapter 5
Exemption from salary
[20]
LEAVE ENCASHMENT1. Leave encashment while in service is fully taxable as income of previous year
in which it is enchased.
2. Leave encashment on retirement: if
(a) an individual receives leave encashment on his retirement, then the amount
received will be eligible for exemption. The amount of exemption is based on
his employment:
(b) Government employee: fully exempted from tax
(c) Non-Govt. employee: An individual who is not a Government employee is
also entitled for exemption in respect of Leave Encashment compensation
received by him.
3. Computation of exemption from Leave Encashment:
Step 1 : Computation of Salary = 10 months average salary preceeding the
month of retirement.
Step 2 : Salary = Basic Pay + Dearness Allowance (forming a part of salary for
retirement benefits) + Commission
(if received as a fixed percentage on turnover)
Step3 : This calculation is only applicable where the employer has sanctioned
leave to the employee in excess of 30 days for every completed year of service.
[21]
Particulars Amount
(i) Leave credit available on the date of retirementLess: Excess leave sanctioned by the employer(Leave sanctioned by the employer per year – 30 days per year) × No. of completed years of service)
Leave credit on the basis of 30 days credit for completed years of service
xxx
xxx
xxx
(ii) Leave salary on the basis of 30 days credit = Step 3(i) x Step 1
xxx
Taxable Leave Salary on Retirement:
Particulars Amount Amount
[22]
Amount Received on Leave Encashment
Less: Exemption u/s 10(10AA)
Least of the followings:
(i) Actual amount of Leave encashment received
(ii) Average salary of the individual for the past 10
months ×10 months
(iii) Maximum Limit
(iv) Leave at credit at the rate of 30 days p.a. for every
Completed
year of service as calculated in Step 3(ii)
xxx
xxx
xxx
xxx
xxx
xxx
Taxable Value of Leave Encashment xxx
PROVIDENT FUND
[23]
Provident fund scheme provides for monthly contributions from the
employees as well as the employer to a Provident fund account. The balance to
the credit of such accounts also earns interest. The entire balance is paid to an
employee on his retirement. The taxability of employer’s contribution, interest
credited annually and balance paid on retirement depends upon the type of
Provident fund. There are different types of provident fund such as
1. Statutory provident fund
2. Recognizes provident fund
3. Unrecognized provident fund.
Particulars Statutory Recognized UnrecognizedContribution by
Employers and employees
Employers and employees
Employers and employees
Assessor’s contribution
Deduction u/s 80c
Deduction u/s 80c No income tax benefit
Employer’s contribution
Not taxable Amount exceeding 12% of salary is taxable
Not taxable at the time of contribution
Interest credited
Fully exempted Exempt up to 9.5% p.a. any excess is taxable.
On Employee’s contributiontaxable under thehead “Other Sources”On Employer’s contributionnot taxable at the time of credit.
[24]
NORMAL RATE OF TAXES
FOR THE ASSESSMENT YEAR 2013-14 AND PREVIOUS YEAR 2012-13
SR NO. TOTAL INCOME RATE OF TAX
1. Where the total income
does not exceed Rs.
200000
Nil
2. Where the total income
exceeds Rs. 200000 but
does not exceed Rs.
500000
10 % of the amount by
which the total income
exceeds Rs. 200000
3. Where the total income
exceeds Rs. 500000 but
does not exceed Rs.
1000000.
Rs. 30000 plus 20% of
the amount by which the
total income exceeds Rs.
500000
4. Where the total income
exceeds Rs. 1000000
Rs. 130000 plus 30% of
the amount by which the
total income exceeds Rs.
1000000.
[25]
Rates of tax for every individual, resident in India, who is of the age of sixty years or more but less than eighty years at any time during the financial year.
SR NO. TOTAL INCOME RATE OF TAX
1. Where the total income
does not exceed Rs.
250000
Nil
2. Where the total income
exceeds Rs. 250000 but
does not exceed Rs.
500000
10 % of the amount by
which the total income
exceeds Rs. 250000
3. Where the total income
exceeds Rs. 500000 but
does not exceed Rs.
1000000.
Rs. 25000 plus 20% of
the amount by which the
total income exceeds Rs.
500000
4. Where the total income
exceeds Rs. 1000000
Rs. 125000 plus 30% of
the amount by which the
total income exceeds Rs.
1000000.
In case of every individual being a resident in India, who is of the age of eighty years or more at any time during the financial year.
[26]
SR NO. TOTAL INCOME RATE OF TAX
1. Where the total income
does not exceed Rs.
500000
Nil
2. Where the total income
exceeds Rs. 500000 but
does not exceed Rs.
1000000
20 % of the amount by
which the total income
exceeds Rs. 500000
3. Where the total income
exceed Rs. 1000000.
Rs. 100000 plus 30% of
the amount by which the
total income exceeds Rs.
1000000
COMPUTATION OF INCOME FROM SALARY.
[27]
Name of assesses
Previous year 1-4-2012 to 31-3-2013
Assessment year 2013-14
Particular Amount
Income from salary
1. salary
gross- net + deductions
due/ deemed to accrue in India
advance/ arrears received
voluntary payments
less:- exempt u/s 10
2. allowances
dearness allowances
entertainment allowances
leave travel allowances( less
exempt u/s10(10) )
house rent allowances ( less
exempt u/s 10(13) )
expenses allowances ( less
exempt u/s 10(14) )
3. Annuity ( less : exempt u/s
10(13))
XXXXX
[28]
4. Pension
uncommented (monthly)
commuted
less:- commuter pension exempt u/s
10(10A)
govt employee – fully
exempt
non govt :-
a. gratuity, 1/3 of full
commuted value
b. otherwise, ½ of full
commuted value
5. Gratuity (gross loss: exempt u\s
10(10)
govt employee – fully exempt
employee under payment of
gratuity act – least of
a) Salary p.m x 15/26 x completed
year of service.
b) Rs. 10,00,000
c) Gratuity actually received.
XXXXX
XXXXX
XXXXX
[29]
Other employee:- lower of
a. Average salary of last 10
months x 3/2 x no. of years
of service
b. Rs. 10,00,000
c. Gratuity actually received.
6. Fees and Commissions
7. Perquisites
Perquisites taxable for all
employees
Perquisites not taxable at all.
8. Profit in lieu of salary
Compensation for
termination of employment
Compensation for
modification of terms of
employment
Employer’s contribution to
PF + interest thereon
Less:-
Compensation to
XXXXX
XXXXX
XXXXX
[30]
workman/ VRS
Payment from statutory
P.F
Payment from
superannuation fund.
9. Leave encashment ( gross less
exempt u/s 10(10AA)
Government employees , fully
exempt
Non govt employee – least of
Encashment of earned leave
10 x average salary for last
10 months
Rs. 300000
Amount actually received
GROSS TAXABLE SALARY
Less :- deduction under section 16
Entertainment allowances
Govt.Empolyee – least of
a. 1/5th of Basic salary
XXXXX
XXXXX
XXXXX
XXXXX
[31]
b. Rs.5,000
c. Actual allowance
Professional tax
NET TAXABLE SALARY ( GROSS
LESS DEDUCTION)
XXXXX
XXXXX
IIIustration 1(Retiring Employee)
Mr. X retired from the services of M/s Y ltd. On 31.01.2013 after completing service of 30 years and one month. He had joined the company in 1982 at the age of 30 years and received the following on his retirement:
1) Gratuity Rs.6, 00,000. He was covered under the payment of gratuity act, 1972.
[32]
2) Leave encashment of Rs. 3, 30,000 for 330 day leave balance in his account. He was credited 30 days leave for each completed year of service.
3) As per the scheme of the company, he was offered a car which was purchased on 01.02.2010 by the company for Rs. 5, 00,000. Company has recovered 2,00,000 from him for the car. Company depreciated vehicles at the rate of15% on straight line method.
4) An amount of Rs. 3, 00,000 as commutation of 2/3 of his pension.5) Company presented him a gift voucher worth Rs.6,000 on his retirement.6) His colleagues also gifted him a television ( LCD) worth 50,000 form
their own contribution.
Following are the other particulars;
1) He has drawn a Basis salary of Rs. 20,000 and 50% Dearness allowance per allowance per month for the period from 01.04.2012 to 31.01.2013.
2) Received pension of 5,000 per month for the period 01.02.2013 to 31.03.2013 after commutation of pension.
Compute his total income from the above for Assessment Year 2013-14.
Solution:
Computation of Gross total Income
Particular Rs. Basic Salary (20,000 *10) 2,00,000 DA (2,00,000*50%) 1,00,000
[33]
Gift voucher (6000-5000) 1000 Motor car ( WN) 56,000 Uncommitted Pension (Sec 17(1)( (5,000*2) 10,000 Commuted pension (Sec10(10A)) 1,50,000 Gratuity (Sec10(10)) 80,789 Leave salary ( Sec 10(10A)) 1,30,000 Gross Salary 7,27,769
Working notes:
1.
Motor car ( 17(2)(viii)rule3(7)(viii) cost 5,00,0000Less: Depreciation @20% 01.02.2010-31.01.2011 1,00,00001.02.2011-31.01.2012 80,00001.022013-31.01.2013 64,000WDV 2,56,000Less: Amount Recovered 2,00,000Perquisite value of Car 56,000
2.
commuted pension {Sec 10(10)}
Amount received 3,00,000
(Less) Exempted (3,00,000*3/2*1/3) 1,50,000
Taxable 1,50,000
3. Gratuity {Sec10 (10)}
Least of the following is exempt
1. Gratuity received-Rs.6, 00,0002. Rs. 10, 00,0003. 15/26*30,000*30=5, 19,231
Received =6, 00,000Exempt =5, 19,231
[34]
Taxable = 80,769
4. Leave Salary {Sec 10(10A)}
Least of the following is exempt
1. Rs.3,30,0002. Rs. 10*20,0000 =2,20,0003. Rs.3,00,0004. 330/30*20,000 =2,20,000
Received = Rs. 3, 30,000Exempt = Rs. 2, 00,000Taxable = Rs. 1, 30,000
CONCLUSION
[35]
1. The employee or individual who earn salary has to pay tax on income of previous year in the assessment year.
2. They can also get benefits of deduction which help them to reduce tax liability.
3. The individual has to pay tax in advance if his tax liability is more than Rs. 10000 in previous year through assumption .
Bibliography
www.google.com
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