Question

. The following particulars relate to the income of sri m. Mehta for the previous year 2019-

2020.:

He is employed in a cotton textile mill at Bangalore on a monthly salary of Rs. 25000 p.m. he

is also entitled to commission @ 1% of the sales achieved by him. The sales achieved by him

during the previous year is Rs. 4000000. He received the following allowances and

perquisites during the previous year:

a) Dearness allowances @ Rs. 6000 p.m. (forming part of retirement salary).

b) Bonus @ 2 months basic salary

c) Entertainment allowance @ Rs. 2000 p.m.

d) House rent allowance @ Rs. 5000p.m.

e) The employer paid Rs. 11000 towards the income tax liability of sri m Mehta.

f) He is also provided with gas, electricity and water facility and employer spent Rs. 15000

on these facilities.

g) He and his employer both contribute 15% of his salary to his recognized provided fund

and interest credited to this fund @9% amounted to Rs. 30000 during the previous year.

h) He spent Rs. 6000 p.m. as rent of the house in Bangalore.

i) He provides a car (above 1.6 lt.) to m. Mehta which is used for official work and is also

used by Mehta for commuting from his residence to office and back.

j) He is given children education allowance of Rs. 70 p.m. per child for his four children.

k) He contributes Rs. 10000 as premium on medical insurance policy taken for his father.

Compute his taxable income and tax liability for the assessment year 2020-2021 ​

Answer 1

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Answer 2

Answer:

Explanation:

Salary = Rs 300,000

Commission of Sales [1% of 40,00,000] = Rs 40,000

Dearness Allowance = Rs 72,000

Bonus = Rs 32,000

Value of H.R.A. = Rs 60,000

Entertainment Allowance = Rs 12,000

Gas, Electricity and Water = Rs 15,000

Excess contribution in RPF by employer (2.5% of 850,000)  = Rs 21,250

Gross Salary= Rs 10,02,250

Less: Std. Deduction = Rs 40,000

Taxable Salary = Rs 9,62,250

Note:

1. Taxable portion of H.R.A has been calculated as under:

Least of the following will exempted from H.R.A.

(a) Actual amount of H.R.A. received = Rs 120,000

(b) Excess of rent paid over 10% of salary [Rs 168,000-85,000]= 83,000

(c) 50% of Salary [50% of 850,000] = Rs 4,25,000

Exempted amount of H.R.A= Rs 83,000

Taxable amount of H.R.A. = Rs 120,000- R 83,000= Rs 37,000