SlideShare a Scribd company logo
1 of 9
Download to read offline
LESSON - 13
COMPUTATION AND ASSESSMENT
OF INDIVIDUALS AND FIRMS
                                                                Mr. Surinder Munjal

STRUCTURE
13.0    Introduction
13.1    Objective
13.2    Statement of taxable income and tax
13.3    Computation and Assessment of Individuals
13.4    Computation and Assessment of Firms
13.5    Let us Sum Up
13.6    Further and Suggested Readings

13.0 INTRODUCTION
Up to now you have read eleven lessons in which you have read in detail the
various heads of income, residential status, setoff, clubbing, deductions etc. when
it comes to practice/ practical life all these things jointly are applicable to all types
of persons. When we say jointly, we mean to say that an individual may earn
income from salary, house property, interest, dividend, business and so on. Thus,
we have to make a computation of all these incomes jointly for a person. Now, in
this chapter we are going to study some problems where all these will be applied
together.

13.1OBJECTIVE
After going through this lesson you should be able to revise all the important
provisions of the previous chapters. At the same time you should be able to solve
the problems consisting of more than one head of income, find the gross total
income, give deduction and compute taxable income and tax thereon.



13.2 SATEMENT OF TAXABLE INCOME AND
     TAX

Following is the statement of calculating the taxable income and tax.



                                                                                    181
Particulars                                Amount
       Income from Salary
       Add: Income from House Property
       Add: Profit and Gain from Business ad Profession
       Add: Capital Gains
       Add: Income from Other Sources
       Gross Total Income
       Less: Deductions
       Taxable Income

       Tax on Taxable Income
       Add: Surcharge
       Tax and Surcharge
       Add: Education Cess
       Total Tax
       Less: Advance Tax
       Less: T.D.S
       Tax Payable at the time of submission of Income



13.3 COMPUTATION & ASSESSMENT –
     INDIVIDUAL
Q-1 Compute total income of X from the particulars given below:

Basic pay: Rs. 12,000 pm; education allowance for one child: Rs. 300 pm; bonus:
Rs. 20,000 and salary in lieu of leave: Rs. 15,000; medical expenses of a private
hospital reimbursed by the employer: Rs. 24,000; rent free unfurnished flat in
Calcutta for his residence for which the employer paid a monthly rent of Rs. 8,000
pm. He contributed Rs. 18,400 to the recognized provident fund and an equal
amount was contributed by his employer. Interest credited @ 14% in the
provident fund account was Rs. 16,800.
He used employer’s car of 1.6 liters cubic capacity for his personal and official
purposes. All expenses including salary of driver was met by the employer.
He received Rs. 14,000 from bank as interest, dividend of Rs. 10,000 from a
foreign company and winning from horse race of Rs. 42,500 (gross).
He paid Rs. 500 professional tax and donated Rs. 5,000 to the national defense
fund.
B.Com (P) 1996

Q-2    X is a principal in a college of Delhi University. His details of income are:

Basic Pay: Rs. 10,000 pm; Dearness allowance (forming part of salary) Rs. 1,600
pm; City compensation allowance Rs. 400 pm; House rent allowance Rs. 2,400


                                                                                182
pm; examination remuneration from various universities Rs. 8,000 pm; Annual
dividend received from Indian Company Rs. 20,000;
Being principal of the college he has been given a free telephone at his residence,
costing the college Rs. 13,200 in a year. The college has also provided him a
domestic servant @ Rs. 400 pm. He spent Rs. 16,000 on the treatment of his wife
in a private hospital in Delhi. The medical bill was fully reimbursed by the
college. During the year, the college also reimbursed hi, Rs. 6,000 for his travel to
Kashmir under leave travel concession scheme.

He is a member of statutory provident fund to which the colleges contribute 8 %
of his salary. Interest on accumulated provident fund is Rs. 3,300 (the rate of
interest being 13%). He pays rent of Rs. 2,600 pm in respect of accommodation
occupied by him for his residence. He donated Rs. 9,000 during the year to the
government for the promotion of family planning and Rs. 3,000 to the national
defense fund. His own contribution to provident fund is 15% of basic salary and
dearness allowance.

Compute his salary income and total income.                   B.Com (P) 1997

Q-3    X furnishes the following particulars of his income:

Basic salary Rs. 16,000 pm; bonus Rs. 20,000 pa; hostel allowance Rs. 800 pm
for one child; medical allowance Rs. 1,000 pm and actual medical expenses being
Rs. 6,000.

He and his employer both contributed Rs. 24,000 each to the recognized provident
fund. Interest credited to the recognized provident fund @ 15% was Rs. 21,000.
His s provided with an unfurnished residential house by his employer at Calcutta.
The employer paid Rs. 8,000 pm as rent to the landlord and deducted Rs. 1,200
pm from the employer’s salary. He is provided with a maruti 100 cc car for his
personal and official purposes by the employer, who incurred all the expenses,
including the salary of driver.

He received Rs. 8,000 as interest from banks and won Rs. 60,000 (gross) from
horse races. He paid Rs. 2,000 as professional tax and donated Rs. 10,000 to the
national defense fund. Compute total income of Mr. X.     B.Com (P) 1998

Q-4 X is employed in Y Ltd. He gives the following particulars of income:
Basic salary Rs. 16,000 pm. D.A. Rs. 1,000 p.m. (40% form part of salary)
Commission on sale @ 4% Sales during the year were Rs. 4,00,000. House Rent
Allowance 25% of B.P. Rent paid for house in Delhi Rs. 9,000 p.m. Car from
employer @ concessional rate, expenditure being Rs. 22,000, 50% of the
expenditure were born by Mr. X. Company contributed 30% of his salary to
recognized provident fund. A similar amount was contributed by X. Interest credit
to PF during year @ 13% is Rs. 26,000. He got leaves encashment during the year
Rs. 10,000.



                                                                                 183
He is the owner of the small house whose income is computed to Rs. 20,000.

He received during the year interest from UTI Rs. 6,000 and net interest from
listed debenture of Z Ltd. Rs. 9,000.

His investments and savings, etc., are as follows:
    1. He has paid LIC premium Rs. 4,000 (on own life policy). Rs. 6,000 (on
        Life policy of Married Major son) and Rs. 4,000 (on life policy of father
        in law).
    2. He paid during the year health insurance premium Rs. 3,000 (on own
        health), Rs. 3,000 (on wife health), Rs. 4,000 (on mother in law health)
        and Rs. 2,000 (on his minor son’s health).
    3. During the year, he donated Rs. 6,000 to National Defense Fund, Rs.
        8,000 to government for Family planning and Rs. 8,000 to the charitable
        trust covered by section 80 G.
Compute X’s Total Income and Deduction available to him u/s 80.
B.Com (P) 1999


Q-5 X furnishes the following particulars of his income. Compute total income
and deduction u/s 80.

Salary Rs. 15,000 p.m.; D.A Rs. 1,500 p.m. (50% forming part of salary);
Commission @ 1 % of sale (sale during the year was Rs. 10, 00,000); HRA Rs.
3,000 p.m. (he paid Rs. 5,000 p.m. as rent for a rented house in Delhi).

He contributed 15% to recognize PF and his employer contributes the same
amount.

Interest credited to RPF @ 15% p.a. was Rs. 30,000.

Net interest on listed debentures of Y Ltd. Rs. 8,100.

He paid Rs. 12,000 through a crossed cheque to the General Insurance
Corporation as medical insurance premium for his own health.

He donated Rs. 5,000 to rime minister National Relief Fund and Rs. 20,000 to a
charitable hospital (eligible for deduction).             B.Com (P) 2000

Q-6 X has furnished the following details with regard to his income:

Basis Salary Rs. 10,000 p.m. D.A Rs. 4,000 p.m.; Transport Allowance Rs. 1,000
p.m.; Education allowance Rs. 90 p.m. for each of his three children; Personal
medical bills for the treatment of X reimbursed by the employer Rs. 19,000 (The
treatment has been done by a private doctor).



                                                                                184
He has been provided with an unfurnished house by the employer @ Rs. 400 p.m.
for which the employer is paying a monthly rent of Rs. 4,000 p.m. His
contribution for the company recognized PF is Rs. 2,000 p.m. the employer
contributes an equal amount and also paid X’s Life insurance premium amounting
Rs. 4,800.

Interest Credited to the PF @ 13% p.a. is Rs. 6,500. Interest on Govt. Securities
Rs. 18,000.

Compute his total income and deduction assuming he is living in Lucknow.
                                                                 B.Com         (P)
2001
Q-7 The following are particulars of income of X:

Salary Rs. 15,000 p.m. contribution to PF @ 14% of salary, the employer also
contributes a similar amount; interest credited to PF account @ 13% p.a. is Rs.
18,200; she is provided by her employer with a rent free unfurnished house ( rent
paid by employer for the house Rs. 20,000) and proceeds of life insurance policy
on maturity Rs. 20,000.

She paid Rs. 600 as employment tax to the state government. She also gave Rs.
10,000 as donation to a poor boy.
Compute her taxable salary if:
   i)      The provident fund is recognized
   ii)     The provident fund is unrecognized.         B.Com(P) 2002

Q-8 Compute total income of X:
Net Salary received after deduction of:                           Rs. 1, 43,200
   i)      his own contribution in recognized PF Rs. 18,000
   ii)     income tax Rs. 14,000
   iii)    house rent Rs. 4,800
Employer’s contribution to recognized PF                          Rs. 18,000
Dearness Allowance                                                Rs. 20,000
Education Allowance for two children                              Rs. 12,000
Entertainment Allowance                                           Rs. 6,000
Provided unfurnished house for which rent was paid by employer
Rs. 36,000, but charged from employee Rs. 4,800.
Free use of gas, electricity and water, costing to employer       Rs. 4,000
Provided 1.6 Ltr. Cubic capacity motor cars for personal use of employee.
All expenses borne by use of employee. All expenses borne by employer
(Cost of car Rs. 3, 00,000)                                       Rs. 40,000


                                                                               185
He earned taxable long term capital gain                           Rs. 60,000
Interest earned on fixed deposit in scheduled banks                Rs. 8,000
Donation to Prime Minister Relief Fund                             Rs. 5,000
B. Com (P) 2003
Q-9 X, who was an employee of Y Ltd. Delhi, furnishes the following
particulars regarding his income:

Basic Salary                                                      Rs. 5,000 p.m.
Dearness Allowance                                                Rs. 800 p.m.
House Rent Allowance                                              Rs. 1,000 p.m.
Rent Paid by X                                                    Rs. 1,200 p.m.
He retired from service on 1st January of the previous year after completing 25
years of service with the company. The company paid him Rs. 84,000 as gratuity,
Rs. 2,40,000 (including Rs. 80,000 as interest) from unrecognized provident fund,
and pension @ Rs. 1,500 p.m. He got half the pension commuted on 1st February
of Previous Year and received Rs. 75,000. The assessee’s average monthly salary
for the last ten months was Rs. 5,000. One half of the provident fund account
balance represents employer’s contribution and interest thereon. Salary and
pension become due to the last day of each month.
During the year, he contributed Rs. 7,500 towards his provident fund. The
employer also contributed similar amount. He also paid Rs. 5,000 as insurance
premium on the policy of his wife and purchased infrastructure company bonds
worth Rs. 20,000.

You are required to calculate gross salary, net salary and gross total income along
with the qualifying amount for deduction u/s 80.             B.Com (P) 2004
Correspondence

Q-10 Compute total income of X, who is working as executive in a company at
Delhi, on the basis of the following information:
Basic Salary                                          Rs. 10,000 per month
Dearness allowance                                    Rs. 5,000 per month
Education allowance for one child                     Rs. 300 per month
Entertainment allowance                               Rs. 1,000 per month
House Rent allowance                                  Rs. 3,000 per month
Actual Rent paid by him                               Rs. 3,500 per month

Bonus two month’s basic salary. The company provides 1.6 Ltr. Car along with
driver for official and personal use both. The company provides services of
sweeper and cook, who are paid salary Rs. 500 per month and Rs. 1,000 per
month respectively. Contribution in recognized provident fund @ 15% of basic
salary by X and his employer, both. Interest from fixed deposit in bank Rs. 8,000
and interest from Government securities Rs. 6,000. He donated Rs. 5,000 in
National Defence Fund.       B.Com (P) 2004 Correspondence



                                                                                186
Q- 11 Mrs. X is employed with Y Ltd. on a monthly salary of Rs. 15,000. She
has been provided with the following perquisites:

Rent free accommodation at Delhi with fair rental value of Rs. 60,000. A mobile
phone and a fixed line telephone at her residence. The bill reimbursed by the
company during the previous year amounted to Rs. 25,000. on the eve of silver
jubilee celebrations of the company, she got a gift worth Rs. 12,000 from the
company. The company had purchased these assets for Rs. 75,000 and Rs. 1,
50,000 respectively. She was given a chauffeur driver car (1.6 cc) for private and
official use. All expenses of running and maintenance including driver’s salary
were paid by the company. She also drew the following allowance:

Dearness allowance (50% forms the part of basic pay)      Rs. 5,600 per month
Education allowance for 2 children                        Rs. 300 per child
Transport allowance                                       Rs. 1,000 per month
During the year, she got reimbursement from the company Rs. 20,000 spent on
the medical treatment of her husband at a private nursing home. She made the
following payments and contribution:
Life insurance premium paid Rs. 12,000 against a policy taken on the life of her
husband and her married daughter. Paid Rs. 15,000 to Prime Minister National
Fund to help Tsunami victims. Contributed Rs. 2,500 per month to Recognized
provident fund. Employer contributing an equal sum. You are required to
compute: Gross salary income; net salary; qualifying amount for deduction u/s 80.

B.Com (P) 2005 Correspondence


Q-12 X, the manager of a private company at Delhi, has furnished the following
details of his income:

Basic Salary Rs. 16,000 per month; Dearness allowance Rs. 1,000 per month
(40% forms part of salary); commission on sale at the rate of 4% (sale during the
year were Rs. 4, 00,000); house rent allowance Rs. 4,000 per month (rent paid by
him for the house Rs. 9,000 per month); entertainment allowance Rs. 500 per
month; traveling allowance Rs. 1,000 per month spent fully in the performance
official duties. He has taken a loan of Rs. 15,000 from the employer for
purchasing a motorcycle. The company paid telephone bills of Rs. 10,000 for the
telephone installed at his residence. The company contributes 13% of his salary to
recognized provident fund, a similar amount is contributed by X. interest credited
to provident fund during the year at the rate of 12% per annum was Rs. 24,000.
Received Rs. 10,000 being half share from a firm. Dividend received from Indian
company Rs. 5,000. Interest received on government securities Rs. 10,000.
Donation paid to the Prime Minister’s National Relief Fund Rs. 5,000. Donation
paid to the Govt. for promotion of family planning Rs. 10,000. Compute the total
income of X.
                                                           B. Com (P) 2005



                                                                              187
Q-13 Mr. Rohit is a sales manager in Delhi. He furnishes the following
particulars regarding his income:

Basic Salary                                                 Rs. 96,000
Bonus                                                        Rs. 6,000
Dearness allowance (Rs. 200 p.m.
Enters into retirement benefit)                              Rs. 1,000 per month
Traveling allowance for official duty                        Rs. 25,000

He has been provided a big car for official and personal use. The maintenance and
running expenses of the car (including driver) a re borne by the company.

He lived in a house belonging to company. Its fair rent is Rs. 2,500 p.m. the
company has provided the facility of gardener who is being paid a salary of Rs.
300 p.m.

He has been given cloth worth Rs. 2,600 by the employer free of cost.

Rent recovered from Rohit Rs. 2,600.

The following amount was deposited in his provident Fund A/c:

i)     Own contribution                              Rs. 9,400
ii)    Company’s contribution                        Rs. 13,000
iii)   Interest @ 12% p.a.                           Rs. 12,000

Compute his taxable income from salary and deduction u/s 80.
                                                         B.Com (P) 2006

13.4 COMPUTATION & ASSESSMENT – FIRMS
Assessment of Firms is slightly different from assessment of individuals. The
major point of difference is the rate of tax. In case of individuals the tax rate is
based on slabs of income, which is nil if income is below Rs. 1,00,000, 10% for
income between Rs. 1,00,000 and Rs. 1,50,000, 20% for income between Rs.
1,50,001 and Rs. 2,50,000, and thereafter 30%. However, in case of firms the rate
of income tax is flat @ 30% plus surcharge plus education cess. There are various
other assessments special provisions for assessment of firms, some of them are:
    1. A partnership firm will be assessed as firm if there is a written partnership
        deed.
    2. The partnership deed must specify the share of partners
    3. A certified copy of the deed must be submitted in the income tax office.

Computation of firms is also slightly different from computation of individuals.
The major point of difference is that first of all the taxable income of partnership


                                                                                188
firms is calculated, and the tax @ 30% plus surcharge plus education cess is
applied on it. After this the after tax profit is distributed between partners. This
share of profit distributed among individual partners from firm is exempt for
partners in order to avid double taxation, as firm has already paid tax on it.



13.5 LET US SUM UP
Assessment and computation of individuals and firms require first of all head wise
calculation of income, which is then summed up in the statement of income and
tax. After adding all the five heads of income the gross total income is computed.
Various deductions are allowed from the computed gross total income to find the
total or taxable income. After applying the tax rates to the total or taxable income
the tax on taxable income is arrived. This tax is added with surcharge and
education cess. Finally the TDS and advance tax is subtracted from it to compute
the balance tax payable.



13.6 FURTHER AND SUGGESTED READINGS
 1. Dr. Vinod K. Singhania and Monica Singhania; Students’ Guide to Income
    Tax; Taxmann Publications Pvt. Ltd.; latest edition.
 2. Mahesh Chandra & D.C. Shukla; Income-tax Law and Practice; Pragati
    Publications; latest edition.
 3. H.C.Mehrotra; Income-tax Law and Accounts; Sahitya Bhawan; latest
    edition.
 4. Girish Ahuja and Ravi Gupta; An Elementary Approach to Income Tax &
    Sales Tax; Bharat Publications; latest edition.
 5. Dinkar Pagare; Law and Practice of Income Tax; Sultan Chand & Sons;
    latest edition




                                                                                189

More Related Content

What's hot

Employee+taxation
Employee+taxationEmployee+taxation
Employee+taxationPSPCL
 
Income under head salaries
Income under head salariesIncome under head salaries
Income under head salariesVaibhav Badgi
 
Income under the head salary
Income under the head salaryIncome under the head salary
Income under the head salaryParminder Kaur
 
Heads of income in India (salaries,house property, business and profession)
Heads of income in India (salaries,house property, business and profession)Heads of income in India (salaries,house property, business and profession)
Heads of income in India (salaries,house property, business and profession)afukhan
 
Exempt incomes - Income which do not form part of total income
Exempt incomes - Income which do not form part of total incomeExempt incomes - Income which do not form part of total income
Exempt incomes - Income which do not form part of total incomeCA Bala Yadav
 
Income from salary bangladesh negative & positive by mushfiqul haque mukit
Income from salary bangladesh negative & positive  by mushfiqul haque mukitIncome from salary bangladesh negative & positive  by mushfiqul haque mukit
Income from salary bangladesh negative & positive by mushfiqul haque mukitMohammad Mushfiqul Haque Mukit
 
Income presentation
Income presentationIncome presentation
Income presentationHelena Smith
 
Lesson 7 income frm-bbusi
Lesson 7 income frm-bbusiLesson 7 income frm-bbusi
Lesson 7 income frm-bbusiKinnar Majithia
 
Perquisites and assessment of individuals
Perquisites and assessment of individualsPerquisites and assessment of individuals
Perquisites and assessment of individualsKriti Varshney
 

What's hot (20)

Employee+taxation
Employee+taxationEmployee+taxation
Employee+taxation
 
Tds on salaries
Tds on salariesTds on salaries
Tds on salaries
 
Income from salary
Income from salaryIncome from salary
Income from salary
 
job
jobjob
job
 
Income from salary
Income from salaryIncome from salary
Income from salary
 
Income under head salaries
Income under head salariesIncome under head salaries
Income under head salaries
 
Salary
SalarySalary
Salary
 
Income under the head salary
Income under the head salaryIncome under the head salary
Income under the head salary
 
INCOME FROM SALARY
INCOME FROM SALARYINCOME FROM SALARY
INCOME FROM SALARY
 
Heads of income in India (salaries,house property, business and profession)
Heads of income in India (salaries,house property, business and profession)Heads of income in India (salaries,house property, business and profession)
Heads of income in India (salaries,house property, business and profession)
 
Exempt incomes - Income which do not form part of total income
Exempt incomes - Income which do not form part of total incomeExempt incomes - Income which do not form part of total income
Exempt incomes - Income which do not form part of total income
 
Salary income.bose
Salary income.boseSalary income.bose
Salary income.bose
 
Income from salary bangladesh negative & positive by mushfiqul haque mukit
Income from salary bangladesh negative & positive  by mushfiqul haque mukitIncome from salary bangladesh negative & positive  by mushfiqul haque mukit
Income from salary bangladesh negative & positive by mushfiqul haque mukit
 
Income presentation
Income presentationIncome presentation
Income presentation
 
Income Exempted from Tax
Income Exempted from TaxIncome Exempted from Tax
Income Exempted from Tax
 
Lesson 7 income frm-bbusi
Lesson 7 income frm-bbusiLesson 7 income frm-bbusi
Lesson 7 income frm-bbusi
 
Tax presentation salaries part 2
Tax presentation salaries   part 2Tax presentation salaries   part 2
Tax presentation salaries part 2
 
Income From Salary
Income  From SalaryIncome  From Salary
Income From Salary
 
Income from salary (Sec 12)
Income from salary (Sec 12)Income from salary (Sec 12)
Income from salary (Sec 12)
 
Perquisites and assessment of individuals
Perquisites and assessment of individualsPerquisites and assessment of individuals
Perquisites and assessment of individuals
 

Viewers also liked (20)

Lesson 6 income from house pro
Lesson 6 income from house proLesson 6 income from house pro
Lesson 6 income from house pro
 
Lesson 12 deductions
Lesson 12 deductionsLesson 12 deductions
Lesson 12 deductions
 
The Income Tax Problem
The Income Tax ProblemThe Income Tax Problem
The Income Tax Problem
 
Lesson 18 weath-2
Lesson 18 weath-2Lesson 18 weath-2
Lesson 18 weath-2
 
Lesson 11
Lesson 11Lesson 11
Lesson 11
 
income tax
income taxincome tax
income tax
 
Lesson 16 advanced tax
Lesson 16 advanced taxLesson 16 advanced tax
Lesson 16 advanced tax
 
Lesson 10 clubbing of -income
Lesson 10 clubbing of -incomeLesson 10 clubbing of -income
Lesson 10 clubbing of -income
 
Lesson 14
Lesson 14Lesson 14
Lesson 14
 
Lesson 8 capital-gains
Lesson 8 capital-gainsLesson 8 capital-gains
Lesson 8 capital-gains
 
Lesson 2 residential status
Lesson 2 residential statusLesson 2 residential status
Lesson 2 residential status
 
Dividend Decisions
Dividend DecisionsDividend Decisions
Dividend Decisions
 
Dividend policies-financial mgt
Dividend policies-financial mgtDividend policies-financial mgt
Dividend policies-financial mgt
 
Income tax act 1961
Income tax act 1961Income tax act 1961
Income tax act 1961
 
Business & Profession
Business & ProfessionBusiness & Profession
Business & Profession
 
Dividend policy ppt
Dividend policy  pptDividend policy  ppt
Dividend policy ppt
 
Dividend Decisions
Dividend DecisionsDividend Decisions
Dividend Decisions
 
Concepts of Taxation
Concepts of TaxationConcepts of Taxation
Concepts of Taxation
 
Direct tax
Direct taxDirect tax
Direct tax
 
Basic principles of income tax
Basic principles of income taxBasic principles of income tax
Basic principles of income tax
 

Similar to Lesson 13

Accounting And Bookkeeping For Business And Management 13 October
Accounting And Bookkeeping For Business And Management  13 OctoberAccounting And Bookkeeping For Business And Management  13 October
Accounting And Bookkeeping For Business And Management 13 OctoberDr. Trilok Kumar Jain
 
21913rtp may11 pcc_5
21913rtp may11 pcc_521913rtp may11 pcc_5
21913rtp may11 pcc_5Syed Faheem
 
Itr salary ppt
Itr salary pptItr salary ppt
Itr salary pptsunmitt74
 
54317688 personal-taxation-tax-management-4
54317688 personal-taxation-tax-management-454317688 personal-taxation-tax-management-4
54317688 personal-taxation-tax-management-4Trupti2710
 
Modified direct tax notes ppt
Modified direct tax notes pptModified direct tax notes ppt
Modified direct tax notes pptDhruv Bajpai
 
Pptonepfact 120728005455-phpapp02
Pptonepfact 120728005455-phpapp02Pptonepfact 120728005455-phpapp02
Pptonepfact 120728005455-phpapp02rupesh jaiswal
 
Q & a income from other sources
Q & a   income from other sourcesQ & a   income from other sources
Q & a income from other sourcessumit235
 
A C C O U N T I N G F O R A P A R T N E R S H I P F I R M
A C C O U N T I N G  F O R  A  P A R T N E R S H I P  F I R MA C C O U N T I N G  F O R  A  P A R T N E R S H I P  F I R M
A C C O U N T I N G F O R A P A R T N E R S H I P F I R MDr. Trilok Kumar Jain
 
A C C O U N T I N G A D J U S T M E N T S F O R F I N A N C I A L A N A L...
A C C O U N T I N G  A D J U S T M E N T S  F O R  F I N A N C I A L  A N A L...A C C O U N T I N G  A D J U S T M E N T S  F O R  F I N A N C I A L  A N A L...
A C C O U N T I N G A D J U S T M E N T S F O R F I N A N C I A L A N A L...Dr. Trilok Kumar Jain
 
21904rtp may2011 ipcc_4
21904rtp may2011 ipcc_421904rtp may2011 ipcc_4
21904rtp may2011 ipcc_4Syed Faheem
 
Income Tax - Meaning, Implementation and Exempted Incomes
Income Tax - Meaning, Implementation and Exempted IncomesIncome Tax - Meaning, Implementation and Exempted Incomes
Income Tax - Meaning, Implementation and Exempted IncomesRajaKrishnan M
 
I N C O M E T A X L A W O F I N D I A
I N C O M E  T A X  L A W  O F  I N D I AI N C O M E  T A X  L A W  O F  I N D I A
I N C O M E T A X L A W O F I N D I ADr. Trilok Kumar Jain
 

Similar to Lesson 13 (20)

Accounting And Bookkeeping For Business And Management 13 October
Accounting And Bookkeeping For Business And Management  13 OctoberAccounting And Bookkeeping For Business And Management  13 October
Accounting And Bookkeeping For Business And Management 13 October
 
Entrepreneurship Quiz 13 Oct
Entrepreneurship Quiz  13  OctEntrepreneurship Quiz  13  Oct
Entrepreneurship Quiz 13 Oct
 
21913rtp may11 pcc_5
21913rtp may11 pcc_521913rtp may11 pcc_5
21913rtp may11 pcc_5
 
Itr salary ppt
Itr salary pptItr salary ppt
Itr salary ppt
 
54317688 personal-taxation-tax-management-4
54317688 personal-taxation-tax-management-454317688 personal-taxation-tax-management-4
54317688 personal-taxation-tax-management-4
 
Taxation issues for entrepreneurs
Taxation issues for entrepreneursTaxation issues for entrepreneurs
Taxation issues for entrepreneurs
 
Perquisites
PerquisitesPerquisites
Perquisites
 
Modified direct tax notes ppt
Modified direct tax notes pptModified direct tax notes ppt
Modified direct tax notes ppt
 
Pptonepfact 120728005455-phpapp02
Pptonepfact 120728005455-phpapp02Pptonepfact 120728005455-phpapp02
Pptonepfact 120728005455-phpapp02
 
Q & a income from other sources
Q & a   income from other sourcesQ & a   income from other sources
Q & a income from other sources
 
A C C O U N T I N G F O R A P A R T N E R S H I P F I R M
A C C O U N T I N G  F O R  A  P A R T N E R S H I P  F I R MA C C O U N T I N G  F O R  A  P A R T N E R S H I P  F I R M
A C C O U N T I N G F O R A P A R T N E R S H I P F I R M
 
A C C O U N T I N G A D J U S T M E N T S F O R F I N A N C I A L A N A L...
A C C O U N T I N G  A D J U S T M E N T S  F O R  F I N A N C I A L  A N A L...A C C O U N T I N G  A D J U S T M E N T S  F O R  F I N A N C I A L  A N A L...
A C C O U N T I N G A D J U S T M E N T S F O R F I N A N C I A L A N A L...
 
Accounting For A Partnership Firm
Accounting For A Partnership FirmAccounting For A Partnership Firm
Accounting For A Partnership Firm
 
Tax Planning
Tax PlanningTax Planning
Tax Planning
 
21904rtp may2011 ipcc_4
21904rtp may2011 ipcc_421904rtp may2011 ipcc_4
21904rtp may2011 ipcc_4
 
Income Tax - Meaning, Implementation and Exempted Incomes
Income Tax - Meaning, Implementation and Exempted IncomesIncome Tax - Meaning, Implementation and Exempted Incomes
Income Tax - Meaning, Implementation and Exempted Incomes
 
Rule of salary
Rule of salaryRule of salary
Rule of salary
 
Provident fund
Provident fundProvident fund
Provident fund
 
Salaries(1).ppt
Salaries(1).pptSalaries(1).ppt
Salaries(1).ppt
 
I N C O M E T A X L A W O F I N D I A
I N C O M E  T A X  L A W  O F  I N D I AI N C O M E  T A X  L A W  O F  I N D I A
I N C O M E T A X L A W O F I N D I A
 

More from Kinnar Majithia

More from Kinnar Majithia (15)

South korea final
South korea finalSouth korea final
South korea final
 
Inflation & unemployment
Inflation & unemploymentInflation & unemployment
Inflation & unemployment
 
Fiscal policy
Fiscal policyFiscal policy
Fiscal policy
 
Business+cycles
Business+cyclesBusiness+cycles
Business+cycles
 
Business cycles 2
Business cycles 2Business cycles 2
Business cycles 2
 
Aggregate+demand+&supply
Aggregate+demand+&supplyAggregate+demand+&supply
Aggregate+demand+&supply
 
Aggregate demand &supply
Aggregate demand &supplyAggregate demand &supply
Aggregate demand &supply
 
National income accounting 1
National income accounting 1National income accounting 1
National income accounting 1
 
Lesson 3
Lesson 3Lesson 3
Lesson 3
 
Lesson 17 wealth-tax
Lesson 17 wealth-taxLesson 17 wealth-tax
Lesson 17 wealth-tax
 
Banks marketing proj questionnaire
Banks   marketing proj questionnaireBanks   marketing proj questionnaire
Banks marketing proj questionnaire
 
Banking Loyalty
Banking LoyaltyBanking Loyalty
Banking Loyalty
 
Session 3 learning
Session 3 learningSession 3 learning
Session 3 learning
 
Session 4 attitudes
Session 4 attitudesSession 4 attitudes
Session 4 attitudes
 
Teamwork perspective management
Teamwork perspective managementTeamwork perspective management
Teamwork perspective management
 

Recently uploaded

BỘ LUYỆN NGHE TIẾNG ANH 8 GLOBAL SUCCESS CẢ NĂM (GỒM 12 UNITS, MỖI UNIT GỒM 3...
BỘ LUYỆN NGHE TIẾNG ANH 8 GLOBAL SUCCESS CẢ NĂM (GỒM 12 UNITS, MỖI UNIT GỒM 3...BỘ LUYỆN NGHE TIẾNG ANH 8 GLOBAL SUCCESS CẢ NĂM (GỒM 12 UNITS, MỖI UNIT GỒM 3...
BỘ LUYỆN NGHE TIẾNG ANH 8 GLOBAL SUCCESS CẢ NĂM (GỒM 12 UNITS, MỖI UNIT GỒM 3...Nguyen Thanh Tu Collection
 
Spring gala 2024 photo slideshow - Celebrating School-Community Partnerships
Spring gala 2024 photo slideshow - Celebrating School-Community PartnershipsSpring gala 2024 photo slideshow - Celebrating School-Community Partnerships
Spring gala 2024 photo slideshow - Celebrating School-Community Partnershipsexpandedwebsite
 
MOOD STABLIZERS DRUGS.pptx
MOOD     STABLIZERS           DRUGS.pptxMOOD     STABLIZERS           DRUGS.pptx
MOOD STABLIZERS DRUGS.pptxPoojaSen20
 
Graduate Outcomes Presentation Slides - English (v3).pptx
Graduate Outcomes Presentation Slides - English (v3).pptxGraduate Outcomes Presentation Slides - English (v3).pptx
Graduate Outcomes Presentation Slides - English (v3).pptxneillewis46
 
MSc Ag Genetics & Plant Breeding: Insights from Previous Year JNKVV Entrance ...
MSc Ag Genetics & Plant Breeding: Insights from Previous Year JNKVV Entrance ...MSc Ag Genetics & Plant Breeding: Insights from Previous Year JNKVV Entrance ...
MSc Ag Genetics & Plant Breeding: Insights from Previous Year JNKVV Entrance ...Krashi Coaching
 
Implanted Devices - VP Shunts: EMGuidewire's Radiology Reading Room
Implanted Devices - VP Shunts: EMGuidewire's Radiology Reading RoomImplanted Devices - VP Shunts: EMGuidewire's Radiology Reading Room
Implanted Devices - VP Shunts: EMGuidewire's Radiology Reading RoomSean M. Fox
 
When Quality Assurance Meets Innovation in Higher Education - Report launch w...
When Quality Assurance Meets Innovation in Higher Education - Report launch w...When Quality Assurance Meets Innovation in Higher Education - Report launch w...
When Quality Assurance Meets Innovation in Higher Education - Report launch w...Gary Wood
 
Championnat de France de Tennis de table/
Championnat de France de Tennis de table/Championnat de France de Tennis de table/
Championnat de France de Tennis de table/siemaillard
 
Envelope of Discrepancy in Orthodontics: Enhancing Precision in Treatment
 Envelope of Discrepancy in Orthodontics: Enhancing Precision in Treatment Envelope of Discrepancy in Orthodontics: Enhancing Precision in Treatment
Envelope of Discrepancy in Orthodontics: Enhancing Precision in Treatmentsaipooja36
 
Removal Strategy _ FEFO _ Working with Perishable Products in Odoo 17
Removal Strategy _ FEFO _ Working with Perishable Products in Odoo 17Removal Strategy _ FEFO _ Working with Perishable Products in Odoo 17
Removal Strategy _ FEFO _ Working with Perishable Products in Odoo 17Celine George
 
UChicago CMSC 23320 - The Best Commit Messages of 2024
UChicago CMSC 23320 - The Best Commit Messages of 2024UChicago CMSC 23320 - The Best Commit Messages of 2024
UChicago CMSC 23320 - The Best Commit Messages of 2024Borja Sotomayor
 
ĐỀ THAM KHẢO KÌ THI TUYỂN SINH VÀO LỚP 10 MÔN TIẾNG ANH FORM 50 CÂU TRẮC NGHI...
ĐỀ THAM KHẢO KÌ THI TUYỂN SINH VÀO LỚP 10 MÔN TIẾNG ANH FORM 50 CÂU TRẮC NGHI...ĐỀ THAM KHẢO KÌ THI TUYỂN SINH VÀO LỚP 10 MÔN TIẾNG ANH FORM 50 CÂU TRẮC NGHI...
ĐỀ THAM KHẢO KÌ THI TUYỂN SINH VÀO LỚP 10 MÔN TIẾNG ANH FORM 50 CÂU TRẮC NGHI...Nguyen Thanh Tu Collection
 
An overview of the various scriptures in Hinduism
An overview of the various scriptures in HinduismAn overview of the various scriptures in Hinduism
An overview of the various scriptures in HinduismDabee Kamal
 
The Liver & Gallbladder (Anatomy & Physiology).pptx
The Liver &  Gallbladder (Anatomy & Physiology).pptxThe Liver &  Gallbladder (Anatomy & Physiology).pptx
The Liver & Gallbladder (Anatomy & Physiology).pptxVishal Singh
 
Dementia (Alzheimer & vasular dementia).
Dementia (Alzheimer & vasular dementia).Dementia (Alzheimer & vasular dementia).
Dementia (Alzheimer & vasular dementia).Mohamed Rizk Khodair
 
Đề tieng anh thpt 2024 danh cho cac ban hoc sinh
Đề tieng anh thpt 2024 danh cho cac ban hoc sinhĐề tieng anh thpt 2024 danh cho cac ban hoc sinh
Đề tieng anh thpt 2024 danh cho cac ban hoc sinhleson0603
 
Improved Approval Flow in Odoo 17 Studio App
Improved Approval Flow in Odoo 17 Studio AppImproved Approval Flow in Odoo 17 Studio App
Improved Approval Flow in Odoo 17 Studio AppCeline George
 
Capitol Tech Univ Doctoral Presentation -May 2024
Capitol Tech Univ Doctoral Presentation -May 2024Capitol Tech Univ Doctoral Presentation -May 2024
Capitol Tech Univ Doctoral Presentation -May 2024CapitolTechU
 

Recently uploaded (20)

BỘ LUYỆN NGHE TIẾNG ANH 8 GLOBAL SUCCESS CẢ NĂM (GỒM 12 UNITS, MỖI UNIT GỒM 3...
BỘ LUYỆN NGHE TIẾNG ANH 8 GLOBAL SUCCESS CẢ NĂM (GỒM 12 UNITS, MỖI UNIT GỒM 3...BỘ LUYỆN NGHE TIẾNG ANH 8 GLOBAL SUCCESS CẢ NĂM (GỒM 12 UNITS, MỖI UNIT GỒM 3...
BỘ LUYỆN NGHE TIẾNG ANH 8 GLOBAL SUCCESS CẢ NĂM (GỒM 12 UNITS, MỖI UNIT GỒM 3...
 
Word Stress rules esl .pptx
Word Stress rules esl               .pptxWord Stress rules esl               .pptx
Word Stress rules esl .pptx
 
Spring gala 2024 photo slideshow - Celebrating School-Community Partnerships
Spring gala 2024 photo slideshow - Celebrating School-Community PartnershipsSpring gala 2024 photo slideshow - Celebrating School-Community Partnerships
Spring gala 2024 photo slideshow - Celebrating School-Community Partnerships
 
MOOD STABLIZERS DRUGS.pptx
MOOD     STABLIZERS           DRUGS.pptxMOOD     STABLIZERS           DRUGS.pptx
MOOD STABLIZERS DRUGS.pptx
 
Graduate Outcomes Presentation Slides - English (v3).pptx
Graduate Outcomes Presentation Slides - English (v3).pptxGraduate Outcomes Presentation Slides - English (v3).pptx
Graduate Outcomes Presentation Slides - English (v3).pptx
 
“O BEIJO” EM ARTE .
“O BEIJO” EM ARTE                       .“O BEIJO” EM ARTE                       .
“O BEIJO” EM ARTE .
 
MSc Ag Genetics & Plant Breeding: Insights from Previous Year JNKVV Entrance ...
MSc Ag Genetics & Plant Breeding: Insights from Previous Year JNKVV Entrance ...MSc Ag Genetics & Plant Breeding: Insights from Previous Year JNKVV Entrance ...
MSc Ag Genetics & Plant Breeding: Insights from Previous Year JNKVV Entrance ...
 
Implanted Devices - VP Shunts: EMGuidewire's Radiology Reading Room
Implanted Devices - VP Shunts: EMGuidewire's Radiology Reading RoomImplanted Devices - VP Shunts: EMGuidewire's Radiology Reading Room
Implanted Devices - VP Shunts: EMGuidewire's Radiology Reading Room
 
When Quality Assurance Meets Innovation in Higher Education - Report launch w...
When Quality Assurance Meets Innovation in Higher Education - Report launch w...When Quality Assurance Meets Innovation in Higher Education - Report launch w...
When Quality Assurance Meets Innovation in Higher Education - Report launch w...
 
Championnat de France de Tennis de table/
Championnat de France de Tennis de table/Championnat de France de Tennis de table/
Championnat de France de Tennis de table/
 
Envelope of Discrepancy in Orthodontics: Enhancing Precision in Treatment
 Envelope of Discrepancy in Orthodontics: Enhancing Precision in Treatment Envelope of Discrepancy in Orthodontics: Enhancing Precision in Treatment
Envelope of Discrepancy in Orthodontics: Enhancing Precision in Treatment
 
Removal Strategy _ FEFO _ Working with Perishable Products in Odoo 17
Removal Strategy _ FEFO _ Working with Perishable Products in Odoo 17Removal Strategy _ FEFO _ Working with Perishable Products in Odoo 17
Removal Strategy _ FEFO _ Working with Perishable Products in Odoo 17
 
UChicago CMSC 23320 - The Best Commit Messages of 2024
UChicago CMSC 23320 - The Best Commit Messages of 2024UChicago CMSC 23320 - The Best Commit Messages of 2024
UChicago CMSC 23320 - The Best Commit Messages of 2024
 
ĐỀ THAM KHẢO KÌ THI TUYỂN SINH VÀO LỚP 10 MÔN TIẾNG ANH FORM 50 CÂU TRẮC NGHI...
ĐỀ THAM KHẢO KÌ THI TUYỂN SINH VÀO LỚP 10 MÔN TIẾNG ANH FORM 50 CÂU TRẮC NGHI...ĐỀ THAM KHẢO KÌ THI TUYỂN SINH VÀO LỚP 10 MÔN TIẾNG ANH FORM 50 CÂU TRẮC NGHI...
ĐỀ THAM KHẢO KÌ THI TUYỂN SINH VÀO LỚP 10 MÔN TIẾNG ANH FORM 50 CÂU TRẮC NGHI...
 
An overview of the various scriptures in Hinduism
An overview of the various scriptures in HinduismAn overview of the various scriptures in Hinduism
An overview of the various scriptures in Hinduism
 
The Liver & Gallbladder (Anatomy & Physiology).pptx
The Liver &  Gallbladder (Anatomy & Physiology).pptxThe Liver &  Gallbladder (Anatomy & Physiology).pptx
The Liver & Gallbladder (Anatomy & Physiology).pptx
 
Dementia (Alzheimer & vasular dementia).
Dementia (Alzheimer & vasular dementia).Dementia (Alzheimer & vasular dementia).
Dementia (Alzheimer & vasular dementia).
 
Đề tieng anh thpt 2024 danh cho cac ban hoc sinh
Đề tieng anh thpt 2024 danh cho cac ban hoc sinhĐề tieng anh thpt 2024 danh cho cac ban hoc sinh
Đề tieng anh thpt 2024 danh cho cac ban hoc sinh
 
Improved Approval Flow in Odoo 17 Studio App
Improved Approval Flow in Odoo 17 Studio AppImproved Approval Flow in Odoo 17 Studio App
Improved Approval Flow in Odoo 17 Studio App
 
Capitol Tech Univ Doctoral Presentation -May 2024
Capitol Tech Univ Doctoral Presentation -May 2024Capitol Tech Univ Doctoral Presentation -May 2024
Capitol Tech Univ Doctoral Presentation -May 2024
 

Lesson 13

  • 1. LESSON - 13 COMPUTATION AND ASSESSMENT OF INDIVIDUALS AND FIRMS Mr. Surinder Munjal STRUCTURE 13.0 Introduction 13.1 Objective 13.2 Statement of taxable income and tax 13.3 Computation and Assessment of Individuals 13.4 Computation and Assessment of Firms 13.5 Let us Sum Up 13.6 Further and Suggested Readings 13.0 INTRODUCTION Up to now you have read eleven lessons in which you have read in detail the various heads of income, residential status, setoff, clubbing, deductions etc. when it comes to practice/ practical life all these things jointly are applicable to all types of persons. When we say jointly, we mean to say that an individual may earn income from salary, house property, interest, dividend, business and so on. Thus, we have to make a computation of all these incomes jointly for a person. Now, in this chapter we are going to study some problems where all these will be applied together. 13.1OBJECTIVE After going through this lesson you should be able to revise all the important provisions of the previous chapters. At the same time you should be able to solve the problems consisting of more than one head of income, find the gross total income, give deduction and compute taxable income and tax thereon. 13.2 SATEMENT OF TAXABLE INCOME AND TAX Following is the statement of calculating the taxable income and tax. 181
  • 2. Particulars Amount Income from Salary Add: Income from House Property Add: Profit and Gain from Business ad Profession Add: Capital Gains Add: Income from Other Sources Gross Total Income Less: Deductions Taxable Income Tax on Taxable Income Add: Surcharge Tax and Surcharge Add: Education Cess Total Tax Less: Advance Tax Less: T.D.S Tax Payable at the time of submission of Income 13.3 COMPUTATION & ASSESSMENT – INDIVIDUAL Q-1 Compute total income of X from the particulars given below: Basic pay: Rs. 12,000 pm; education allowance for one child: Rs. 300 pm; bonus: Rs. 20,000 and salary in lieu of leave: Rs. 15,000; medical expenses of a private hospital reimbursed by the employer: Rs. 24,000; rent free unfurnished flat in Calcutta for his residence for which the employer paid a monthly rent of Rs. 8,000 pm. He contributed Rs. 18,400 to the recognized provident fund and an equal amount was contributed by his employer. Interest credited @ 14% in the provident fund account was Rs. 16,800. He used employer’s car of 1.6 liters cubic capacity for his personal and official purposes. All expenses including salary of driver was met by the employer. He received Rs. 14,000 from bank as interest, dividend of Rs. 10,000 from a foreign company and winning from horse race of Rs. 42,500 (gross). He paid Rs. 500 professional tax and donated Rs. 5,000 to the national defense fund. B.Com (P) 1996 Q-2 X is a principal in a college of Delhi University. His details of income are: Basic Pay: Rs. 10,000 pm; Dearness allowance (forming part of salary) Rs. 1,600 pm; City compensation allowance Rs. 400 pm; House rent allowance Rs. 2,400 182
  • 3. pm; examination remuneration from various universities Rs. 8,000 pm; Annual dividend received from Indian Company Rs. 20,000; Being principal of the college he has been given a free telephone at his residence, costing the college Rs. 13,200 in a year. The college has also provided him a domestic servant @ Rs. 400 pm. He spent Rs. 16,000 on the treatment of his wife in a private hospital in Delhi. The medical bill was fully reimbursed by the college. During the year, the college also reimbursed hi, Rs. 6,000 for his travel to Kashmir under leave travel concession scheme. He is a member of statutory provident fund to which the colleges contribute 8 % of his salary. Interest on accumulated provident fund is Rs. 3,300 (the rate of interest being 13%). He pays rent of Rs. 2,600 pm in respect of accommodation occupied by him for his residence. He donated Rs. 9,000 during the year to the government for the promotion of family planning and Rs. 3,000 to the national defense fund. His own contribution to provident fund is 15% of basic salary and dearness allowance. Compute his salary income and total income. B.Com (P) 1997 Q-3 X furnishes the following particulars of his income: Basic salary Rs. 16,000 pm; bonus Rs. 20,000 pa; hostel allowance Rs. 800 pm for one child; medical allowance Rs. 1,000 pm and actual medical expenses being Rs. 6,000. He and his employer both contributed Rs. 24,000 each to the recognized provident fund. Interest credited to the recognized provident fund @ 15% was Rs. 21,000. His s provided with an unfurnished residential house by his employer at Calcutta. The employer paid Rs. 8,000 pm as rent to the landlord and deducted Rs. 1,200 pm from the employer’s salary. He is provided with a maruti 100 cc car for his personal and official purposes by the employer, who incurred all the expenses, including the salary of driver. He received Rs. 8,000 as interest from banks and won Rs. 60,000 (gross) from horse races. He paid Rs. 2,000 as professional tax and donated Rs. 10,000 to the national defense fund. Compute total income of Mr. X. B.Com (P) 1998 Q-4 X is employed in Y Ltd. He gives the following particulars of income: Basic salary Rs. 16,000 pm. D.A. Rs. 1,000 p.m. (40% form part of salary) Commission on sale @ 4% Sales during the year were Rs. 4,00,000. House Rent Allowance 25% of B.P. Rent paid for house in Delhi Rs. 9,000 p.m. Car from employer @ concessional rate, expenditure being Rs. 22,000, 50% of the expenditure were born by Mr. X. Company contributed 30% of his salary to recognized provident fund. A similar amount was contributed by X. Interest credit to PF during year @ 13% is Rs. 26,000. He got leaves encashment during the year Rs. 10,000. 183
  • 4. He is the owner of the small house whose income is computed to Rs. 20,000. He received during the year interest from UTI Rs. 6,000 and net interest from listed debenture of Z Ltd. Rs. 9,000. His investments and savings, etc., are as follows: 1. He has paid LIC premium Rs. 4,000 (on own life policy). Rs. 6,000 (on Life policy of Married Major son) and Rs. 4,000 (on life policy of father in law). 2. He paid during the year health insurance premium Rs. 3,000 (on own health), Rs. 3,000 (on wife health), Rs. 4,000 (on mother in law health) and Rs. 2,000 (on his minor son’s health). 3. During the year, he donated Rs. 6,000 to National Defense Fund, Rs. 8,000 to government for Family planning and Rs. 8,000 to the charitable trust covered by section 80 G. Compute X’s Total Income and Deduction available to him u/s 80. B.Com (P) 1999 Q-5 X furnishes the following particulars of his income. Compute total income and deduction u/s 80. Salary Rs. 15,000 p.m.; D.A Rs. 1,500 p.m. (50% forming part of salary); Commission @ 1 % of sale (sale during the year was Rs. 10, 00,000); HRA Rs. 3,000 p.m. (he paid Rs. 5,000 p.m. as rent for a rented house in Delhi). He contributed 15% to recognize PF and his employer contributes the same amount. Interest credited to RPF @ 15% p.a. was Rs. 30,000. Net interest on listed debentures of Y Ltd. Rs. 8,100. He paid Rs. 12,000 through a crossed cheque to the General Insurance Corporation as medical insurance premium for his own health. He donated Rs. 5,000 to rime minister National Relief Fund and Rs. 20,000 to a charitable hospital (eligible for deduction). B.Com (P) 2000 Q-6 X has furnished the following details with regard to his income: Basis Salary Rs. 10,000 p.m. D.A Rs. 4,000 p.m.; Transport Allowance Rs. 1,000 p.m.; Education allowance Rs. 90 p.m. for each of his three children; Personal medical bills for the treatment of X reimbursed by the employer Rs. 19,000 (The treatment has been done by a private doctor). 184
  • 5. He has been provided with an unfurnished house by the employer @ Rs. 400 p.m. for which the employer is paying a monthly rent of Rs. 4,000 p.m. His contribution for the company recognized PF is Rs. 2,000 p.m. the employer contributes an equal amount and also paid X’s Life insurance premium amounting Rs. 4,800. Interest Credited to the PF @ 13% p.a. is Rs. 6,500. Interest on Govt. Securities Rs. 18,000. Compute his total income and deduction assuming he is living in Lucknow. B.Com (P) 2001 Q-7 The following are particulars of income of X: Salary Rs. 15,000 p.m. contribution to PF @ 14% of salary, the employer also contributes a similar amount; interest credited to PF account @ 13% p.a. is Rs. 18,200; she is provided by her employer with a rent free unfurnished house ( rent paid by employer for the house Rs. 20,000) and proceeds of life insurance policy on maturity Rs. 20,000. She paid Rs. 600 as employment tax to the state government. She also gave Rs. 10,000 as donation to a poor boy. Compute her taxable salary if: i) The provident fund is recognized ii) The provident fund is unrecognized. B.Com(P) 2002 Q-8 Compute total income of X: Net Salary received after deduction of: Rs. 1, 43,200 i) his own contribution in recognized PF Rs. 18,000 ii) income tax Rs. 14,000 iii) house rent Rs. 4,800 Employer’s contribution to recognized PF Rs. 18,000 Dearness Allowance Rs. 20,000 Education Allowance for two children Rs. 12,000 Entertainment Allowance Rs. 6,000 Provided unfurnished house for which rent was paid by employer Rs. 36,000, but charged from employee Rs. 4,800. Free use of gas, electricity and water, costing to employer Rs. 4,000 Provided 1.6 Ltr. Cubic capacity motor cars for personal use of employee. All expenses borne by use of employee. All expenses borne by employer (Cost of car Rs. 3, 00,000) Rs. 40,000 185
  • 6. He earned taxable long term capital gain Rs. 60,000 Interest earned on fixed deposit in scheduled banks Rs. 8,000 Donation to Prime Minister Relief Fund Rs. 5,000 B. Com (P) 2003 Q-9 X, who was an employee of Y Ltd. Delhi, furnishes the following particulars regarding his income: Basic Salary Rs. 5,000 p.m. Dearness Allowance Rs. 800 p.m. House Rent Allowance Rs. 1,000 p.m. Rent Paid by X Rs. 1,200 p.m. He retired from service on 1st January of the previous year after completing 25 years of service with the company. The company paid him Rs. 84,000 as gratuity, Rs. 2,40,000 (including Rs. 80,000 as interest) from unrecognized provident fund, and pension @ Rs. 1,500 p.m. He got half the pension commuted on 1st February of Previous Year and received Rs. 75,000. The assessee’s average monthly salary for the last ten months was Rs. 5,000. One half of the provident fund account balance represents employer’s contribution and interest thereon. Salary and pension become due to the last day of each month. During the year, he contributed Rs. 7,500 towards his provident fund. The employer also contributed similar amount. He also paid Rs. 5,000 as insurance premium on the policy of his wife and purchased infrastructure company bonds worth Rs. 20,000. You are required to calculate gross salary, net salary and gross total income along with the qualifying amount for deduction u/s 80. B.Com (P) 2004 Correspondence Q-10 Compute total income of X, who is working as executive in a company at Delhi, on the basis of the following information: Basic Salary Rs. 10,000 per month Dearness allowance Rs. 5,000 per month Education allowance for one child Rs. 300 per month Entertainment allowance Rs. 1,000 per month House Rent allowance Rs. 3,000 per month Actual Rent paid by him Rs. 3,500 per month Bonus two month’s basic salary. The company provides 1.6 Ltr. Car along with driver for official and personal use both. The company provides services of sweeper and cook, who are paid salary Rs. 500 per month and Rs. 1,000 per month respectively. Contribution in recognized provident fund @ 15% of basic salary by X and his employer, both. Interest from fixed deposit in bank Rs. 8,000 and interest from Government securities Rs. 6,000. He donated Rs. 5,000 in National Defence Fund. B.Com (P) 2004 Correspondence 186
  • 7. Q- 11 Mrs. X is employed with Y Ltd. on a monthly salary of Rs. 15,000. She has been provided with the following perquisites: Rent free accommodation at Delhi with fair rental value of Rs. 60,000. A mobile phone and a fixed line telephone at her residence. The bill reimbursed by the company during the previous year amounted to Rs. 25,000. on the eve of silver jubilee celebrations of the company, she got a gift worth Rs. 12,000 from the company. The company had purchased these assets for Rs. 75,000 and Rs. 1, 50,000 respectively. She was given a chauffeur driver car (1.6 cc) for private and official use. All expenses of running and maintenance including driver’s salary were paid by the company. She also drew the following allowance: Dearness allowance (50% forms the part of basic pay) Rs. 5,600 per month Education allowance for 2 children Rs. 300 per child Transport allowance Rs. 1,000 per month During the year, she got reimbursement from the company Rs. 20,000 spent on the medical treatment of her husband at a private nursing home. She made the following payments and contribution: Life insurance premium paid Rs. 12,000 against a policy taken on the life of her husband and her married daughter. Paid Rs. 15,000 to Prime Minister National Fund to help Tsunami victims. Contributed Rs. 2,500 per month to Recognized provident fund. Employer contributing an equal sum. You are required to compute: Gross salary income; net salary; qualifying amount for deduction u/s 80. B.Com (P) 2005 Correspondence Q-12 X, the manager of a private company at Delhi, has furnished the following details of his income: Basic Salary Rs. 16,000 per month; Dearness allowance Rs. 1,000 per month (40% forms part of salary); commission on sale at the rate of 4% (sale during the year were Rs. 4, 00,000); house rent allowance Rs. 4,000 per month (rent paid by him for the house Rs. 9,000 per month); entertainment allowance Rs. 500 per month; traveling allowance Rs. 1,000 per month spent fully in the performance official duties. He has taken a loan of Rs. 15,000 from the employer for purchasing a motorcycle. The company paid telephone bills of Rs. 10,000 for the telephone installed at his residence. The company contributes 13% of his salary to recognized provident fund, a similar amount is contributed by X. interest credited to provident fund during the year at the rate of 12% per annum was Rs. 24,000. Received Rs. 10,000 being half share from a firm. Dividend received from Indian company Rs. 5,000. Interest received on government securities Rs. 10,000. Donation paid to the Prime Minister’s National Relief Fund Rs. 5,000. Donation paid to the Govt. for promotion of family planning Rs. 10,000. Compute the total income of X. B. Com (P) 2005 187
  • 8. Q-13 Mr. Rohit is a sales manager in Delhi. He furnishes the following particulars regarding his income: Basic Salary Rs. 96,000 Bonus Rs. 6,000 Dearness allowance (Rs. 200 p.m. Enters into retirement benefit) Rs. 1,000 per month Traveling allowance for official duty Rs. 25,000 He has been provided a big car for official and personal use. The maintenance and running expenses of the car (including driver) a re borne by the company. He lived in a house belonging to company. Its fair rent is Rs. 2,500 p.m. the company has provided the facility of gardener who is being paid a salary of Rs. 300 p.m. He has been given cloth worth Rs. 2,600 by the employer free of cost. Rent recovered from Rohit Rs. 2,600. The following amount was deposited in his provident Fund A/c: i) Own contribution Rs. 9,400 ii) Company’s contribution Rs. 13,000 iii) Interest @ 12% p.a. Rs. 12,000 Compute his taxable income from salary and deduction u/s 80. B.Com (P) 2006 13.4 COMPUTATION & ASSESSMENT – FIRMS Assessment of Firms is slightly different from assessment of individuals. The major point of difference is the rate of tax. In case of individuals the tax rate is based on slabs of income, which is nil if income is below Rs. 1,00,000, 10% for income between Rs. 1,00,000 and Rs. 1,50,000, 20% for income between Rs. 1,50,001 and Rs. 2,50,000, and thereafter 30%. However, in case of firms the rate of income tax is flat @ 30% plus surcharge plus education cess. There are various other assessments special provisions for assessment of firms, some of them are: 1. A partnership firm will be assessed as firm if there is a written partnership deed. 2. The partnership deed must specify the share of partners 3. A certified copy of the deed must be submitted in the income tax office. Computation of firms is also slightly different from computation of individuals. The major point of difference is that first of all the taxable income of partnership 188
  • 9. firms is calculated, and the tax @ 30% plus surcharge plus education cess is applied on it. After this the after tax profit is distributed between partners. This share of profit distributed among individual partners from firm is exempt for partners in order to avid double taxation, as firm has already paid tax on it. 13.5 LET US SUM UP Assessment and computation of individuals and firms require first of all head wise calculation of income, which is then summed up in the statement of income and tax. After adding all the five heads of income the gross total income is computed. Various deductions are allowed from the computed gross total income to find the total or taxable income. After applying the tax rates to the total or taxable income the tax on taxable income is arrived. This tax is added with surcharge and education cess. Finally the TDS and advance tax is subtracted from it to compute the balance tax payable. 13.6 FURTHER AND SUGGESTED READINGS 1. Dr. Vinod K. Singhania and Monica Singhania; Students’ Guide to Income Tax; Taxmann Publications Pvt. Ltd.; latest edition. 2. Mahesh Chandra & D.C. Shukla; Income-tax Law and Practice; Pragati Publications; latest edition. 3. H.C.Mehrotra; Income-tax Law and Accounts; Sahitya Bhawan; latest edition. 4. Girish Ahuja and Ravi Gupta; An Elementary Approach to Income Tax & Sales Tax; Bharat Publications; latest edition. 5. Dinkar Pagare; Law and Practice of Income Tax; Sultan Chand & Sons; latest edition 189