Mr. Sahil, a resident individual, aged 40 years, is an assistant manager of Fox Ltd. He is getting a salary of 55,000 per month. During the previous…

CA Intermediate · Taxation · MTP · May 2024
Mr. Sahil, a resident individual, aged 40 years, is an assistant manager of Fox Ltd. He is getting a salary of 55,000 per month. During the previous year 2023-24, he received the following amounts from his employer. (i) Dearness allowance (10% of basic pay which forms part of salary for retirement benefits). (ii) Bonus of 60,000. (iii) Fixed Medical allowance of 50,000 for meeting medical expenditure. (iv) He was also reimbursed the medical bill of his mother dependent on him amounting to 6,500. (v) Mr. Sahil was provided; a laptop both for official and personal use. Laptop was acquired by the company on 1st June, 2021 at 35,000.a domestic servant at a monthly salary of 8,000 which was reimbursed by his employer. (vi) Fox Ltd. allotted 700 equity shares in the month of October 2023 @170 per share against the fair market value of 280 per share on the date of exercise of option by Mr. Sahil. The fair market value was computed in accordance with the method prescribed under the Act. (vii) Professional tax 2,200 (out of which - 1,400 was paid by the employer). Compute the Income under the head “Salaries” of Mr. Sahil for the assessment year 2024-25 if he is paying tax under default tax regime under section 115BAC.

Suggested Answer and Working Notes:

Computation of Income under the head “Salaries” in the hands of Mr. Sahil for the A.Y. 2024-25 Particulars ₹ Basic Salary [₹ 55,000 x 12] 6,60,000 Dearness allowance [10% of basic salary] 66,000 Bonus 60,000 Fixed Medical Allowance [Taxable] 50,000 Reimbursement of Medical expenditure incurred for his father [Fully taxable] 6,500 Facility of laptop [Facility of laptop is an exempt perquisite, whether used for official or personal purpose or both] Nil Reimbursement of salary of domestic servant [₹ 8,000 x 12] [Fully taxable, since perquisite includes any sum paid by the employer in respect of any obligation which would have been payable by the employee] 96,000 Value of equity shares allotted [700 equity shares x 110 (₹ 280, being the fair market value - 170, being the amount recovered)] 77,000 Professional tax paid by the employer [Perquisite includes any sum paid by the employer in respect of any obligation which would have been payable by the employee] 1,400 Gross Salary 10,16,900 Less: Deduction under section 16 Professional tax paid [Not allowed] - Standard Deduction (Lower of 50,000 or amount of salary) 50,000 Taxable Salary 9,66,900

Topics: Paper 3A: Income Tax Laws, Paper 3B: Goods and Services Tax

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