Sums on Salary

Lecture 8

Question 1

• Mr Anand, retired from service on 31.10.2011. He had 26 months leave accumulated over the period of time and he had utilized 11 months of leave during his service. He got balanced leaves un cashed during retirement. The amount he received for the same was s. 120000. His salary was 4150 p.m. till March 2011 and increased to 5000 p.m. since April. Find his taxable leave salary?

Question 2

• Ramesh retired from service on 31st December 2010 after completing 24 years & 9 months of service. He received gratuity of Rs. 2.5 lakhs. His salary during the year 2009 – 10 was Rs. 9000/- per month and from 1st April 2010 it was increased to Rs. 10,400/- per month. Compute the taxable gratuity in the folllowing circumstances

1. He is a government employee2. He is covered under Payment of Gratuity Act3. He is in other category

Question 3

• Sachin retired from service and received a pension ( i.e. commuted ) of Rs. 50,000. The commuted pension was 50% of the full value. He also received gratuity . The monthly pension was Rs. 1700 p.m. and was 50% for the period January to March 2011. Calculate his taxable pension in the financial year 2010 - 11

Question 4

• Sneha a resident of Coimbatore, draws a monthly basic salary of Rs.4,000 for the previous year 2011-2012. During the year 2011-2012 she gets Rs.7,200 as dearness allowance forming part of salary, 3% commission on sales made by her(sales made by Sneha during the relevant previous year are Rs.80,000) and Rs.7,500 as house rent allowance. House rent paid by her is Rs.6,200. Determine the house rent allowance that is chargeable to tax.??

Question 5• Mr ‘S’ who works in PQR Ltd., Cochin, furnishes the following particulars of income. Compute the

salary income for the previous year 2010-2011.• Basic Salary – Rs.12,500 p.m.• Dearness allowance (forming part of salary) – Rs.3750 p.m.• Bonus equal to 3 months salary• Employee contributes 12.5% of salary towards recognized provident fund. Employer also

contributes the same amount.• Interest credited in the recognized provident fund @ 12.5% is Rs.18,000.• House rent allowance – Rs.7500 p.m.• Rent paid by employee – Rs.9000 p.m.• Employee is provided with a 1200 cc car which he utilize for official as well as private purposes.

Expenses are met by the employer.• Two children of Mr. S are studying in the institution run by the employer for which no fees are

paid. Normal expenditure per student in such institution is Rs.85 p.m.• Reimbursement of medical expenses incurred on the mother of Mr S in a hospital approved by the

Chief Commissioner – Rs.3,200.• Reimbursement of ordinary medical expenses paid to a private nursing home – Rs.15,700.• Mr. S pays Rs.9,000 as LIC premium on the policy of Rs.80,000. His wife is also insured for Rs.60,000

and he pays a premium of Rs.7,500 p.a.

Question 6

• Mr. Singh is a director of M/s Aura Textiles Ltd. During the year, he received the following

• Salary @ 46000/- per month• Ex – gratia payment Rs. 23,300/-• Salary in lieu of leave Rs. 12,250/-• Fees for attending board meeting Rs. 21,750/-• Reimbursement of car expenses in respect of office Rs. 43,000/- ( He used

his own car for office as well as household purposes)• He was given free holiday home facility at Delhi of Rs. 25,250 & free lunch

facility of Rs. 15,800/-• Profession Tax deducted was Rs. 2500 at the year end

Calculate the taxable income under the head salary in the A.Y. 2013 – 14 ?

Question 7• Suresh is employed with Raj Oil Trading Limited, since 2007. As per

the terms of contract salary becomes due on the last day of every month. Due to some issues in the company, the salary from period March to May, 2013 was paid in May. The rest of the details are as follows

1. Net Salary Rs. 39,820 after deduction of PF contribution Rs. 3,520 and profession tax of Rs. 2,200 for the period of 11 months from April 2012 to February 2013. Salary per month was Rs. 4000/-

2. Bonus Rs. 8000/-3. An award of appreciation of Rs. 4000/- received from the company.4. Compensation of Rs. 6000/- due to the modification of terms &

conditions of the contract of service.Compute the taxable salary of Suresh

Question 8• Mr. Ram who was working as Commissioner of Labour retired on 31-12-

2012. Following are the details given about him

1. Salary received per month Rs. 9000/-

2. During the month of January 2013, he received gratuity amounting to Rs. 85,000/-

3. He received commuted pension of Rs. 1,25,000/- in the month of February 2013

4. He received un commuted pension from Government with effect from 1 st January 2013, which becomes due on the last day of the month @ Rs. 3,800/- per month

5. Entertainment Allowance received Rs. 1000/- per month. He spent on entertainment Rs 800/- per month on average.

6. He received arrears of salary Rs. 13,600 on 24-3-2013

7. He incurred incidental expenses related to employment like purchase of books, car expenses etc. amounting to Rs. 11,500/-

Calculate the taxable salary

Question 9• Prof. Anish was working with Jai Hind College. He received the following

amount during the period of 6 months ending on 30 -09-2012

1. Salary @ 10,500 p.m.

2. Arrears of Salary Rs. 8500/-

He left Jai Hind College and joined Sydenham College w.e.f. 1-10-2012. During the period ending on 31 -3-2013, he received the follows

1. Salary @ 11,350 p.m.

2. Wardenship Allowance @ 1400 p.m.

3. House Rent Allowance Rs. 4800 for 6 months. Exempt is Rs. 2400/-

4. Examinership fees Rs. 3600/-

He further informs that during the year he received Rs. 3000/- from Mumbai University on account of examinership fees. He received royalty of Rs. 6000/- for writing a book. Employers deducted Profession Tax at source amount Rs. 2200/- in all during the previous year. Compute the salary for the A.Y. 2013 – 14.

Question 10

• Mr. Virat gives you the following information

1. Salary @ 9,000/- per month

2. Income Tax 12,400/- & Profession Tax 2,500/- was deducted at source.

3. Employees contribution to the Recognized Provident Fund was Rs. 11,280/-. The Employer also contributed the same amount, the excess of the amount prescribed in the same is Rs. 1,200/-

4. Bonus Paid Rs. 14,600/-

5. Salary paid to the household employee by the employer Rs. 3,600/-

6. Perquisites value of gas, water & electricity supply Rs. 1400/-

7. Value of free accommodation Rs. 10,800/-

8. Arrears of Salary as per revised pay scale Rs. 14,750/-

9. Overtime Wages Rs. 1250/-

Calculate his taxable income under the head salary