Mr. Anshul, a salaried employee in a private company, furnishes you the following information for the year ended on 31-03-2024: (i) Basic salary -…

CA Intermediate · Taxation · RTP · September 2024
Mr. Anshul, a salaried employee in a private company, furnishes you the following information for the year ended on 31-03-2024: (i) Basic salary - 75,000 p.m. From 1st December 2023, basic salary increased to 85,000 p.m. (ii) Dearness allowance @50% of basic salary (40% of D.A. forms part of salary for retirement benefits). (iii) Entertainment allowance - 10,000 (iv) Contribution of employer to recognized provident fund account of the employee @18% of basic salary. Employees also contribute an equivalent amount. (v) Professional tax paid - 2,200 of which - 1,800 was paid by the employer. (vi) House rent allowance of 16,000 p.m. He paid rent of 17,000 p.m. for accommodation in Meerut. (vii) Conveyance allowance of 1,500 p.m. by the company towards actual reimbursement of conveyance spent on official duty. (viii) Loan of 2,00,000 was taken from the employer on 1.7.2023 for medical treatment of his brother for tuberculosis treatment. Interest charged on such loan is 5%. The entire loan is outstanding as on 31.3.2024. No medical insurance has been taken for his brother. SBI rate of interest on 1.4.2023 was 11%. (ix) Free education was provided to the sister of Mr. Anshul in a school maintained and owned by the company. The cost of such education facility is computed at 900 p.m. No amount was recovered by the company for such education facility from Anshul. (viii) Leave travel concession given to Anshul, his wife and three children (one daughter aged 6 and twin sons aged 4). Cost of air tickets (economy class) reimbursed by the employer - 20,000 for adults and lumpsum of 25,000 for three children. Anshul is eligible for availing exemption this year to the extent it is permissible under the Income-tax Act, 1961. Compute the taxable salary of Mr. Anshul if he has shifted out of the default tax regime under section 115BAC.

Suggested Answer and Working Notes:

Computation of taxable salary of Mr. Anshul for the A.Y. 2024-25 Particulars ₹ ₹ Basic Salary [(₹ 75,000 x 8) + (₹ 85,000 × 4)] 9,40,000 Dearness allowance [50% of basic salary] 4,70,000 Employer's contribution to recognized provident fund [18% x 9,40,000] 1,69,200 Less: Exempt upto 12% of basic salary and D.A. forms part of retirement benefit [12% x 11,28,000] 1,35,360 33,840 Taxable allowances Entertainment allowance 10,000 Conveyance allowance [Exempt, since it is based on actual reimbursement for official purpose] - House rent allowance 1,92,000 Less: Least of the following exempt under section 10(13A) 91,200 1,00,800 (i) HRA received 1,92,000 (ii) Rent paid (-) 10% of salary [2,04,000 – 10% x 11,28,000] 91,200 (iii) 40% of salary [40% X 11,28,000] 4,51,200 Taxable Perquisite 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] 1,800 Interest on loan [Not a perquisite, since loan is for medical treatment of his brother for tuberculosis treatment] - Provision of education facility [900x 12] 10,800 Leave travel concession 45,000 Less: Exempt 45,000 -

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

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