How to Calculate Income Tax- Illustrations issued by Income Tax Department

| October 25, 2012 | Reply

Example 1

For Assessment Year 2013-14

(A) Calculation of Income tax in the case of an employee below the age of sixty years and having gross salary income of:

(i)  Rs. 1,50,000/-,

(ii)  Rs.2,00,000/-,

(iii)  Rs.5,00,000/-,

(iv)  Rs. 10,00,000/-and

(v)  Rs.20,00,000/-.

(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) 1,50,000 2,00,000 5,00,000 10,00,000 20,00,000
Contribution of G.P.F. 10,000 45,000 50,000 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 1,50,000 2,00,000 5,00,000 10,00,000 20,00,000
Less: Deduction U/s 80C 10,000 45,000 50,000 1,00,000 1,00,000
Taxable Income 1,40,000 1,55,000 4,50,000 9,00,000 19,00,000
(A) Tax thereon Nil Nil 25,000 1,10,000 4,00,000
Add:

(i) Education Cess @ 2%.

(ii) Secondary and Higher

Education Cess @1%

Nil

Nil

Nil

Nil

500

2200

250

1100

8000

4000

Total tax payable Nil Nil 25,750 1,13,300 4,12,000
(B) TDS under sec. 206AA in case where PAN is not furnished by the employee Nil Nil 90,000 1,80,000 4,12,000

Example 2

For Assessment Year 2013-14

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 3,20,000
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) 50,000
4 GPF Contribution 25,000
5 LIP Paid 10,000

Computation of Tax

S.No. Particulars Rupees
1 Gross Salary 3,20,000
Less: Deduction U/s 80DD (Restricted to Rs.50,000/- only) 50,000
2 Taxable income 2,70,000
Less: Deduction U/s 80C (i) GPF Rs.25,000/-

(ii) LIP Rs. 10,000/- = Rs.35,000/-

35,000
3 Total Income 2,35,000
4 Income Tax thereon/payable 3,500
Add:

(i). Education Cess @2%

(ii). Secondary and Higher Education Cess @1%

70

35

5 Total Income Tax payable 3,605
6 Rounded off to 3,610

Example 3

For Assessment Year 2013-14

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. Articulars Rupees
1 Gross Salary 3,00,000
2 Medical Reimbursement by employer on the treatment of self and dependent family member 30,000
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 20,000

Computation of Tax

S.No. Particulars Rupees
1 Gross Salary 3,00,000
Add: Perquisite in respect of reimbursement of Medical Expenses In excess of Rs. 15,000/- in view of Section 17(2)(v) 15,000
2 Taxable income 3,15,000
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. 20,000/-
Total =Rs. 1,45,000/-
Restricted to Rs. 1,00,000/- 1,00,000
3 Total Income 2,15,000
4 Income Tax thereon/payable 1,500
Add:

(i). Education Cess @2%

(ii). Secondary and Higher Education Cess @1%

30

15

5 Total Income Tax payable 1,545
6 Rounded off to 1,550

Example 4

For Assessment Year 2013-14

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 2,50,000
2 Dearness Allowance 1,00,000
3 House Rent Allowance 1,40,000
4 House rent paid 1,44,000
5 General Provident Fund 36,000
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 2,50,000+1,00,000+1,40,000 = 4,90,000 4,90,000
2 Total Salary Income 4,90,000
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) (1,44,000-35,000) = 1,09,000

(c) 50% of Salary(Basic+ DA) = 1,75,000

1,09,000
Gross Total Income 3,81,000
Less: Deduction U/s 80C

(i)  GPF Rs. 36,000/-

(ii)  LIC Rs. 4,000/-

(iii) Investment in Unit-Linked Insurance Plan Rs. 50,000/-

Total =Rs.90,000/-

90,000
3 Total Income 2,91,000
Tax payable on total income 9,100
Add:

(i). Education Cess @2%

(ii). Secondary and Higher Education Cess @1%

182

91

Total Income Tax payable 9,373
Rounded off to 9370

Example 5

For Assessment Year 2013-14

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 Free gas, electricity, water etc. (Actual bills paid by company) 40,000
4(a) Flat at concessional rate (for ten month). = Rs. 3,60,000 3,60, 000
4(b) Hotel rent paid by employer (for two month) 1,00,000
4(c) Rent recovered from employee 60,000
4(d) Cost of furniture. 2,00,000
5 Subscription to Unit Linked Insurance Plan 50,000
6 Life Insurance Premium 10,000
7 Contribution to recognized P.F. 42,000
8 Investment in long term infrastructure bonds (80CCF) 20,000

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(l+2) for Valuation of Perquisites 8,40,000
Valuation of perquisites
4(a) Perq. for flat: Lower of (15% of salary for 10 mnths.=Rs. 1,05,000/-) and (actual rent paid= Rs 3,60,000) Rs. 1,05,000 1,38,600 Rs l,38,600
4(b) Perq for hotel : Lower of (24% of salary of 2 mths.=Rs 33,600) and (actual payment= Rs 1,00,000) Rs. 33,600
4(c) Perquisites for furniture(Rs.2,00,000) @ 10% of cost 20,000
4(c)(i) Total of [4(a)+(b)+(c)] (1,05,000+ 33,600+ 20,000) Rs. 158,600

Less: rent recovered (-)Rs. 60,000

= Rs. 98,600

4(d) Add

perq. for free gas, electricity, water etc. Rs.40,000 (+) Rs 98,600

[4(c)(i)] = Rs l,38,600

Total perquisites

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 & 80CCF:

(i). Provident Fund (80C) :42,000

(ii) LIC (80C) :10,000

(iii) Subscription to Unit Linked Insurance Plan(80C) :50,000/-

(iv) Investment in Infrastructure Bond(80CCF) :20,000

Total = 1,22,000

Restricted to Rs 1,00,000 u/s 80C and Rs 20,000 u/s 80CCF

1,20,000
8 Total Income 8,58,600
9 Tax Payable 1,01,720
10 Add:

(i) Education Cess @2%

(ii) Secondary and Higher Education Cess @1%

2,034

1,017

11 Total Income Tax payable 1,04,771
12 Rounded off to 1,04,770

Example 6

For Assessment Year 2013-14

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 3,00,000
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) 5,92,000
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 including for retirement benefits (1,20,000- 40,000) :Rs. 80,000

(c). 50% of salary (including D.A) : Rs. 2,00,000

80,000
2 Gross Total Taxable Income 5,12,000
Less: Deduction U/s 80C

(i). Provident Fund : 60,000

(ii). LIP : 10,000

(iii). NSC VIII Issue : 30,000

(iv). Repayment of HBA : 60,000

(v). Tuition Fees (Restricted to two children) : 20,000

Total : 1,80,000

Restricted to 1,00,000

1,00,000
Total Income 4,12,000
Income Tax thereon/payable 21,200
Add:

(i)  Education Cess @ 2%

(ii)  Secondary and Higher Education Cess @ 1%

424

212

Total Income Tax payable 21836
Rounded off to 21840

Example 7

For Assessment Year 2013-14

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:

  i.  Rs. 4,50,000/-,

ii.  Rs. 8,00,000/-,

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)
Gross Pension 4,50,000 8,00,000
Contribution of P.P.F. 70,000 70,000

Computation of Total Income and tax payable thereon

Particulars Rupees (i) Rupees (ii)
Gross Pension 4,50,000 8,00,000
Less: Deduction u/s 80C 70,000 70,000
Taxable Income 3,80,000 7,30,000
Tax thereon 13,000 71,000
Add:

(i)  Education Cess @ 2%.

(ii) Secondary and Higher Education Cess @ 1%

260

130

1420

710

Total tax payable 13,390 73,130
TDS under sec. 206AA in case where PAN is not furnished by the employee 26,000 1,46,000

Example 8

For Assessment Year 2013-14

A. Calculation of Income tax in the case of a retired employee above the age of 80 years and having gross pension of:

iii. Rs. 4,50,000/-,

iv. Rs. 8,00,000/-,

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)
Gross Pension 4,50,000 8,00,000
Contribution of P.P.F. 70,000 70,000

Computation of Total Income and tax payable thereon

Particulars Rupees (i) Rupees (ii)
Gross Pension 4,50,000 8,00,000
Less: Deduction U/s 80C 70,000 70,000
Taxable Income 3,80,000 7,30,000
Tax thereon Nil 46,000
Add:

(i) Education Cess @ 2%.

(ii) Secondary and Higher Education Cess @ 1%

920

460

Total tax payable Nil 47,380
TDS under sec. 206AA in case where PAN is not furnished by the employee Nil 1,46,000

MORE DETAILS VISIT- law.incometaxindia.gov.in-Circular Page

Circular No. 8/2012, dated 5-10-2012

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Category: Income Tax

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