Raman is employed as an Engine Driver in Indian Railways. He is getting 15,000 p.m. as Basic pay; 2,500
p.m. as dearness pay and 2,500 per month as dearness allowance.
During 2019-20, he received the following allowances also:
(i) 16,500 as Running Allowance.
(ii) * 200 p.m. per child as Educational Allowance for his two children.
(ii) One of his sons is staying in a hostel on which Raman is spending + 800 p.m. He is getting * 500 p.m. for his
son as Hostel Allowance for meeting this expenditure.
(iv) * 250 p.m. as C.C.A.
(v) 400 p.m. as Uniform Allowance fully spent for employment purposes.
(vi) * 2,500 p.m. as H.R.A. He pays 3,000 p.m. as rent to the house owner.
Compute his Taxable Salary for the Assessment Year 2020-21.
Ans. 2,17,750.
Answers
Answer: His Taxable Salary will be Rs. 227,750.
Explanation:
Step 1:
Computation of Taxable Salary for the Assessment Year -
Basic pay - 180,000
D.Pay - 30,000
D.Allowance - 30,000
Running Allowance - 4950
Education Allowance - 2400
Hostel Allowance - 2400
C.C.A. - 3000
Uniform Allowance - exempted
H.R.A. - 15,000
Gross Salary - 267,750
Less: Standard Deduction 40,000
Taxable Salary - Rs 227,750
Step 2:
Here are the calculations -
1. Running Allowance :
Exempted =70% of Running Allowance i.e. 16,500 or Rs 10,000 p.m. which is less
Rs 11,550
Taxable Running Allowance = 16,500-11550 = Rs 4950
2. Education Allowance :
Exempted= Rs 100 p.m. upto two children= Rs 2400
Taxable Education Allowance = 4800-2400= Rs 2400
3. Hostel Allowance :
Exempted= Rs 300 p.m.= Rs 3600
Taxable Hostel Allowance = 6000-3600= Rs 2400
4. Uniform Allowance : Fully spent for employment purpose is exempted
5. House Rent Allowance :
Least of the following amount can be exempted;
(a) H.R.A. received - Rs 30,000
(b) Rent paid over 10% of salary - Rs 15,000
= Rs 36,000-10% of Rs 210,000
(c) 40% of Salary [40% of 210,000] Rs 84,000
Exempted amount = Rs 15,000
Taxable amount = Rs 30,000- Rs 15,000
= Rs 15,000
After calculating all these,
Raman's Taxable Salary is Rs. 227,750.
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