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Lecture 2 Salary and Its Scope

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24 views19 pages

Lecture 2 Salary and Its Scope

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RMC
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© © All Rights Reserved
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Taxation

EXERCISES ON SALARY AND ITS COMPUTATION

• Exercise 1
• Compute taxable income and tax thereon from following information/ data in respect of Mr. A,
an employee of XYZ Company for tax year 2009.
• ŸBasic salary from 1st Jan-08 To 31st Dec-08
• Rs 30,000 per month

• Tax Liability
• Tax rate of 0 percent shall apply as given at serial #1 where the taxable income does not exceed
Rs. 180,000.
• Note:
• Income received by Mr. A during calendar year 2008 (that is 01-01-08 t0 31-12-2008) is Rs
360,000 but during tax year 2009, the income of Mr. A is Rs 180,000 (since tax year 2009 covers
the period from 01-07- 08 to 30-06-09).
• Exercise 2
• Compute taxable income & tax thereon from following information/ data pertaining to tax
year 2009 in respect of Mr. X, an employee of a private Company.
• Salary Rs 40,000 per month
• Bonuses Rs 80,000 for tax yr.
• Utilities paid by employer Rs 40,000 for tax yr.

• Tax liability:
• Tax rate of 4.50% percent as given at serial #7 for taxable income exceeding Rs 550,000 up
to Rs 650,000
• Income tax payable:
• 600,000 x 4.50% = Rs 27,000

• Note 1:
• Utilities were exempt up to 10% of MTS or Basic salary till 30th June, 2006, vide clause 38 of
part 1 of Second Schedule. This clause has been omitted by Finance Act, 2006. Hence no
exemption is available for tax year 2009.
• Exercise 3
• Compute taxable income from following information/ data in respect of Mr. Y an employee of a
private Company for tax year 2009.
• MTS of Mr. YRs. 20,000—2000—30,000
• Salary Rs. 24,000 per month
• House allowance Rs. 2000 per month
• Utilities paid by employer Rs. 36,000 for tax yr.
•
• Tax liability:
• Tax rate of 0.75% percent as given at serial #3 for taxable income exceeding Rs 250,000 up to Rs
350,000.
• Income tax payable:
• 348,000 x 0.75%= Rs 2,610
•
• Note 1:
• Utilities were exempt up to 10% of MTS or Basic salary till 30th June, 2006, vide clause 38 of part 1 of
Second Schedule. This clause has been omitted by Finance Act, 2006. Hence no exemption is
available for tax year 2009.
• Exercise 4:
• Compute taxable income from following information/ data in respect of Mr. A,
an employee of XYZ Company for tax year 2009.
• MTS of Mr. A Rs 30,000--5000--50,000
• Basic salary Rs 40,000 per month
• House Allowance Rs 120,000 p.a.
• Tax Deducted at Source Rs 6,000
• Tax liability:
• Tax rate of 4.50% percent as given at serial #7 for taxable income exceeding Rs
550,000 up to Rs 650,000
• Income tax payable:
• 600,000 x 4.50% = Rs 27,000
• Tax deducted at source Rs 6,000
• Tax payable: = Rs 21,000
• Exercise 5:
• Compute taxable income and tax thereon in respect of Mr. Yasir (a salaried individual) for the tax year 2009
from the following information/ data:
• Basic salary Rs 20,000 pm
• House rent allowance Rs 5,000 pm
• Medical Allowance Rs 5,100 pm
• Free hospitalization services availed under terms of employment Rs 40,000 pm
• Driver’s salary paid by employer Rs 8,000 pm
• Dearness Allowance Rs 6,000 pm
• Tax liability:
• Tax rate of 3.50% percent as given at serial #6 for taxable income exceeding Rs 450,000 up to Rs 550,000
• Income tax payable:
• 529,000 x 3.50%= Rs 18,515
•
• Note 1:
• Clause 139(a) & (b) of part 1 of second schedule:
• a. Free hospitalization services provided under the terms of employment are exempt.
• If (a) not available then 10% of basic salary is exempt in case medical allowance provided.

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