P1 to P4 - Taxation | Income Tax for assessment (Inter Level) PDF Download

Assignment

P1: Mr. Taxcrazy is the manager of a company at Delhi since 1-1-1999. He is getting a salary of Rs 10,000 p.m. plus a dearness allowance @ 20% of his basic pay, half of which enters into retirement benefits. He contributes 10% of his salary and one half of dearness allowance to unrecognised provident fund to which his employer contributes an equal amount. On 1-1-2016 he took a loan of Rs 20,000 from his provident fund for his daughter’s marriage. He has been provided with rent-free house owned by the company. He is getting medical allowance of Rs 200 p.m. and servant allowance of Rs 200 p.m. His club bills of Rs 3,000 were also paid by the company.

He has been provided with a facility of a cook who is paid Rs 300 p.m. by the employer. He is also provided a car of 1.6 litre (c.c) by the employer for official use only. Three children of Mr. Taxcrazy are studying in the institution run by the employer for which no fees is paid. Normal expenditure per student in such institution is Rs 500 p.m.

He retired on 1-9-2016. He received Rs 1,30,000 for encashment of leave on 1-9-2016 being 12 months leave not availed of. As per the rule of the company, Mr. Taxcrazy was entitled to 45 days leave for each year of service. He also received Rs 1,10,000 as gratuity from the employer on the same date. He is not covered under the payment of Gratuity Act.

On 1-10-2016 he received Rs 18,000 being the balance of his provident fund account after deducting the amount of loan.

Compute Mr. Taxcrazy’s income from salary for the AY 2017-18 assuming that his salary is due on the first day of next month.

Ans: 2,16,160. [BS 60,000 + DA 12,000 + MA 1,200 + SA 1,200 + Club 3,000 + AS 10,260 + Cook 1,500 + LS 91,500 + Grat 16,500 + URPF 19,000 = 2,16,160] W

P2: Mr. Taxcrazy was appointed as the branch manager of a company at Delhi on 1-1-2015 in the pay scale of 7,000-500-12,000. He also receives 10% of his pay as dearness allowance, Rs 1,500 p.m. as medical allowance and Rs 3,000 p.m. as conveyance allowance.

The company has given him a rent free residential house since 1-10-2016. The company has re imbursed following expenses in respect of this house from 1-10-2016 to 31-3-2017 :

Electricity bills                                                 350

Water bills                                                     200

Telephone bills for personal purpose.        1,000

On 1-10-2016 his conveyance allowance was stopped.

Company gifted him an item of Rs 5,000 on 1-11-2016 and sold its products of Rs 10,000 in Rs 6,000 only.

He as well as company contribute 14.5% of his salary to a recognised provident fund. Interest credited during the previous year to his provident fund account @ 12.5% p.a. was Rs 1,250.

Compute his total income for the AY 2017-18 assuming that he has not spent any amount of conveyance allowance for official duties.

Ans: 1,35,850. [BS 91,500+ DA 9,150+ MA 18,000+CA 18,000+Acc 8,325+rep 0 + Elec 350+Wat  200+Tele 1,000+Gifts 0+ER-PF 2,288+ Int 300=1,49,113–EE-PF 13,268=1,35,845]

P3: X is employed with Y Ltd., an Indian company, having manufacturing unit in South Africa. For the past fifteen years, X has been regularly visiting India for export promotion of company’s goods in India. He has stayed in India for 120 days every year. Compute his income under the head ‘salaries’ from the following particulars for the assessment year 2017-18 

Salary for 8 months while abroad received there only             Rs 20,000 p.m.

Salary for 4 months during his stay in India received in India Rs 20,000 p.m.

Rent-free accommodation abroad where he and his family members stay for which his employer pays Rs 15,000 as rent per month.

During his stay in India, he stays in the company’s guest house and gets free food. The company incurs an expenditure of Rs 20,000 for such facilities.

During his stay in India, he has been given conveyance allowance of Rs 10,000 out of which he has spent Rs 8,000. His elder son is studying in India for which his employer spends Rs 15,000 per year whereas his younger son is studying in U.S.A. and stays in a hostel for which X gets Rs 700 per month as allowance.

Ans: R-OR 2,97,440; NR 97,000. [R-OR:2,40,000+36,840+0+2,000+15,000+3,600=2,97,440] [NR: 80,000+0+0+2,000+15,000+0=97,000] [Take assumption whether Indian citizen or foreign citizen]

P4: X is a cost accountant in ABC Ltd., Mumbai and gets Rs 18,000 p.m. as salary. He owns a house which is let out to the employer company on a annual rent of Rs 63,000 which in turn provided the same to X as rent free accommodation. Municipal tax paid for the house is Rs 14,000. Determine the net income of X for the AY 2017-18.

Ans: 2,82,700. [2,16,000+32,400=2,48,400+34,300=2,82,700]