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Illustrations – For Assessment Year 2015-16: Income Tax on Salaries Circular No. 17/2014

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INCOME TAX ON SALARIES: Circular No. 17/2014

SOME ILLUSTRATIONS
Example 1

For Assessment Year 2015-16



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

i) Rs.2,50,000/- ,

ii) Rs.5,00,000/- ,

iii) Rs.10,00,000/-

iv) Rs.20,00,000/-. and

v) Rs. 1,10,00,000/-

(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 Rupees Rupees Rupees Rupees
(i) (ii) (iii) (iv) (v)
Gross Salary Income (including allowances) 2,50,000 5,00,000 10,00,000 20,00,000 1,10,00,000
Contribution of G.P.F. 45,000 50,000 1,00,000 1,00,000 1,00,000



Computation of Total Income and tax payable thereon


Particulars Rupees Rupees Rupees Rupees Rupees
(i) (ii) (iii) (iv) (v)
Gross Salary 2,50,000 5,00,000 10,00,000 20,00,000 1,10,00,000
Less: Deduction U/s 80C 45,000 50,000 1,00,000 1,00,000 1,00,000
Taxable Income 2,05,000 4,50,000 9,00,000 19,00,000 1,09,00,000
(A) Tax thereon Nil 18,000* 1,05,000 3,95,000 3095000
Surcharge 309500
Add:
(i) Education Cess @ 2%. Nil 360 2100 7,900 68090
(ii) Secondary and Higher Education Cess @1% Nil 180 1050 3950 34045
Total tax payable Nil 18,540 1,08,150 406850 3506635
(B) TDS under sec. 206AA in case where PAN is not furnished by the employee Nil 90,000 1,30,000 406850 3506635

* includes Rebate of Rs 2000 u/s 87A


Example 2
For Assessment Year 2015-16

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 4,00,000
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) 60,000
4 GPF Contribution 25,000
5 LIP Paid 10,000
6 Interest Income on Savings Account 12,000

Computation of Tax

S.No. Particulars Rupees
1 Gross Salary 4,00,000
2 Add: Income from Other Sources

Interest Income on Savings Account
 Rs 12,000
3 Gross Total Income 4,12,000
4 Less: Deduction U/s 80DD (Restricted to Rs.50,000/- only) 50,000
5 Less: Deduction U/s 80C (i) GPF Rs.25,000/- + (ii) LIP Rs.10,000/- = Rs.35,000/- 35,000
6 Less: Deduction u/s 80TTA on Interest Income on savings account (restricted to Rs 10000/-) 10000
7 Total Income 3,17,000
8 Income Tax thereon/payable
(includes Rebate of Rs 2000 as per Section 87A)		 4,700
9 Add:
(i). Education Cess @2% 94
(ii). Secondary and Higher Education Cess @1% 47
10 Total Income Tax payable 4,841
11 Rounded off to 4,840

Example 3

For Assessment Year 2015-16



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. Particulars Rupees
1 Gross Salary 5,20,000
2 Medical Reimbursement by employer on the treatment of self and dependent family member 35,000
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 30,000
8 Interest Income on Savings Account 8,000
9 Interest Income on Time Deposit 15,000



Computation of Tax


S.No. Particulars Rupees
1 Gross Salary 5,20,000
2 Add: Perquisite in respect of reimbursement of Medical Expenses 20,000
In excess of Rs.15,000/- in view of Section 17(2)(v)
3 Income from Other Sources
 

i) Interest Income on Savings Account Rs 8,000
ii) Interest Income on Savings Account Rs 15,000
23,000
4 Gross Total Income 5,63,000
5 a.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.30,000/-
Total
 = Rs.1,55,000/-
Restricted to
Rs. 1,50,000/-
b. Less: Deduction u/s 80TTA on Interest Income on savings account (restricted to Rs 8000/- available only on Savings account interest) Rs8,000/-
Total deduction available
Rs 1,58,000/-
1,58,000
6
Total Income
 4,05,000
7 Income Tax thereon/payable
(includes Rebate of Rs 2000 as per Section 87A)		 13,500
8 Add:
(i). Education Cess @2% 270
(ii). Secondary and Higher Education Cess @1% 135
9 Total Income Tax payable 13,905
10 Rounded off to 13,910

Example 4
For Assessment Year 2015-16



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 3,50,000
2 Dearness Allowance 2,00,000
3 House Rent Allowance 1,40,000
4 House rent paid 1,44,000
5 General Provident Fund 60,000
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
3,50,000+2,00,000+1,40,000 = 6,90,000		 6,90,000
2 Total Salary Income 6,90,000
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) (1,44,000-55,000) = 89,000
(c). 50% of Salary(Basic+ DA) = 2,75,000
89,000
4
Gross Total Income
 6,01,000
5 Less: Deduction U/s 80C

(i). GPF Rs.60,000/-
(ii).  LIC Rs. 4,000/-
(iii). Investment in Unit-Linked Insurance Plan Rs.50,000/-
Total = Rs.1,14,000/-
1,14,000
6 Total Income 4,87,000
7 Tax payable on total income
(includes Rebate of Rs 2000 as per Section 87A)		 21700
8 Add:
(i). Education Cess @2% 434
(ii). Secondary and Higher Education Cess @1% 217
9 Total Income Tax payable 22351
10 Rounded off to 22350

Example 5
For Assessment Year 2015-16

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



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(1+2) for the purpose of valuation of perquisites (12 months) 8,40,000
Valuation of perquisites
4(a) Perquisite for flat:
 

Lower of (15% of salary for 10 months = Rs.1,05,000/-) and (actual rent paid= Rs 3,60,000) i.e. Rs. 1,05,000/-
Less : Rent recovered Rs.60000/-
Rs 45,000 1,38,600
4(b) Perquisite for hotel :
Lower of (24% of salary of 2 months=Rs 33,600)
and (actual payment= Rs 1,00,000)		 Rs 33,600
4(c) Perquisites for furniture
@ 10% of cost of Rs.2,00,000		 Rs 20,000
4(d) Perquisite for free gas, electricity, water etc. Rs 40,000
4
Total
 1,38,600
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:
 

(i). Provident Fund (80C) :  Rs.42,000/-
(ii). LIC (80C) :  Rs.10,000/-
(iii). Subscription to Unit Linked Insurance Plan(80C) :  Rs.50,000/-
Total
 = Rs.1,02,000/-
1,02,000
8 Total Income 8,76,600
9 Tax Payable 1,00,320
10 Add:
(i). Education Cess @2% 2,006
(ii). Secondary and Higher Education Cess @1% 1,003
11 Total Income Tax payable 1,03,329
12 Rounded off to 1,03,330

Example 6
For Assessment Year 2015-16



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 4,00,000
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) 6,92,000
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 included for retirement benefits (1,20,000- 50,000) : Rs.70,000
(c). 50% of salary (including D.A) : Rs. 2,00,000
70,000
2 Gross Total Taxable Income 6,22,000
3 Less: Deduction U/s 80C

(i). Provident Fund : Rs.60,000
(ii). LIP : Rs.10,000
(iii).  NSC VIII Issue : Rs.30,000
(iv).  Repayment of HBA : Rs.60,000
(v). Tuition Fees (Restricted to two children) : Rs.20,000
Total : Rs.1,80,000
Restricted to Rs.1,50,000
1,50,000
4 Total Income 4,72,000
5 Income Tax thereon/payable
(includes Rebate of Rs 2000 as per Section 87A)		 20,200
6 Add:
(i). Education Cess @2% 404
(ii). Secondary and Higher Education Cess @1% 202
7 Total Income Tax payable 20,806
8 Rounded off to 20,810

Example 7
For Assessment Year 2015-16



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:



Particulars Rupees
(i)		 Rupees
(ii)		 Rupees
(iii)
Gross Pension 4,50,000 8,00,000 12,50,000
Contribution of P.P.F. 70,000 1,00,000 1,50,000

B What will be the amount of TDS in case of above employees, if PAN is not submitted by them to their DDOs/Offices:

Computation of Total Income and tax payable thereon



Particulars Rupees
(i)		 Rupees
(ii)		 Rupees
(iii)
Gross Pension 4,50,000 8,00,000 12,50,000
Less: Deduction U/s 80C 70,000 1,00,000 1,50,000
Taxable Income 3,80,000 7,00,000 11,00,000
Tax thereon (A) 6,000 60,000 1,50,000
Add:
(i) Education Cess @ 2%. 120 1200 3000
(ii) Secondary and Higher Education Cess @1% 60 600 1500
Total tax payable 6,180* 61,800 1,54,500
B. TDS under sec. 206AA in case where PAN is not furnished by the employee 16,000 80,000 1,60,000

*includes Rebate of Rs 2000 as per Section 87A

Example 8
For Assessment Year 2015-16

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



Particulars Rupees
(i)		 Rupees
(ii)		 Rupees
(iii)
Gross Pension 5,00,000 8,00,000 12,50,000
Contribution of P.P.F. 80,000 1,20,000 1,50,000

B What will be the amount of TDS in case of above employees, if PAN is not submitted by them to their DDOs/Offices:

Computation of Total Income and tax payable thereon



Particulars Rupees
(i)		 Rupees
(ii)		 Rupees
(iii)
Gross Pension 5,00,000 8,00,000 12,50,000
Less: Deduction u/s 80C 80,000 1,20,000 1,50,000
Taxable Income 4,20,000 6,80,000 11,00,000
Tax thereon (A)
 Nil 36,000 1,30,000
Add:
(i) Education Cess @ 2%. 720 2600
(ii) Secondary and Higher Education Cess @1% 360 1300
Total tax payable
 Nil 37,080 1,33,900
B. TDS under sec. 206AA in case where PAN is not furnished by the employee Nil 37,080 1,33,900

Other Parts of Circular

1. Income Tax on Salaries – Assessment Year 2015-16 – Financial Year 2014-15 Circular No. 17/2014

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