Mr. Rohit, a resident individual, aged 65 years, is a qualified medical practitioner. He runs his own clinic. Income & Expenditure A/c of Mr.…

Computation of net taxable income and net tax liability of Mr. Rohit for A.Y. 2024-25 under the normal provisions of the Act Particulars Particulars ₹ I Income from Salaries Basic Pay (₹ 13,000 × 12) 1,56,000 Transport Allowance (₹ 2,000 x 12) [Fully taxable] 24,000 Cost of treatment for son in Care Hospitals Pvt. Ltd. [Exempt, since value of medical treatment provided to an employee's family member in any hospital maintained by the employer is excluded from the definition of perquisite] Nil Gross Salary 1,80,000 Less: Standard deduction u/s 16 [Actual salary or - 50,000, whichever is less] 50,000 Net Salary 1,30,000 Less: Set off of loss from house property 41,500 88,500 II Income from house property Let out portion [First floor] Gross Annual Value [Rent received is taken as GAV = 10,000 p.m. x 6 months] 60,000 Less: Municipal taxes paid in the P.Y. 2023-24 pertaining to let out portion [(₹ 4,000 +6,000)/2], allowable since it is paid during the year, even if it relates to earlier years 5,000 Net Annual Value (NAV) 55,000 Less: Deduction u/s 24 (a) 30% of 55,000 16,500 (b) Interest on housing loan [(₹ 60,000 (+) ₹ 40,000)/2] 50,000 66,500 (11,500) Self-occupied portion [Ground Floor] Annual Value Nil Less: Deduction u/s 24 Interest on housing loan for reconstruction - 1,00,000 [(₹ 40,000 +60,000)/2] restricted to 30,000 (30,000) Loss from house property (41,500) III Profits and gains of business or profession Net profit as per Income and Expenditure account 8,59,000 Add: Items of expenditure not allowable while computing business income (a) Excessive salary paid to sister-in law [allowed, since sister-in law does not fall within the definition of relative] Nil (b) Conveyance expenses in relation to her employment with Care Hospital Pvt. Ltd. debited to Income and Expenditure A/c, not allowed 12,000 (c) Power and fuel expenses incurred for providing power back up to tenant not deductible 6,000 (d) Municipal tax paid relating to residential house included in administrative expenses, not deductible 10,000 (e) Interest on housing loan for reconstruction of residential house 1,00,000 (f) Interest on education loan for son 26,000 1,54,000 10,13,000 Less: Allowable expenditure Depreciation on Clinic equipments On Opening WDV - 1,00,000 @15% 15,000 On additions during the year 25,000, no depreciation is allowable, since payment was made in cash and hence, it will not form part of actual cost. Nil 15,000 9,98,000 Less: Items of income to be treated separately under the respective head of income (i) Salary received from Care Hospitals Pvt. Ltd. 1,80,000 (ii) Rental income from house property 78,000 (iii) Dividend from foreign companies 10,000 2,68,000 7,30,000 Note – Mr. Rohit, is a medical professional and if he claims that his profits and gains from profession are lower than - 11,00,000 (50% of gross receipts i.e.,22,00,000) and his total income exceeds the maximum amount not chargeable to tax, he would be required to maintain books of accounts and get them audited from an accountant by virtue of section 44ADA(4). IV Income from Other Sources Power back up charges from tenant (₹ 3,000 p.m. x 6 months) 18,000 Less: Actual expenditure incurred for providing power back up 6,000 12,000 Dividend from foreign companies 10,000 22,000 Gross Total Income 8,40,500 Less: Deduction under Chapter VI-A Deduction under section 80C – Tuition fee paid for grand child is not allowable Nil Deduction under section 80E – Interest on loan taken for higher education of her son is deductible 26,000 Principal repayment of loan taken for education is not deductible Nil 26,000 Total Income 8,14,500 Net tax liability Tax on total income of 8,14,500 Up to 3,00,000 Nil 3,00,001 - 5,00,000 [@5% of 2,00,000] 10,000 5,00,000 - 8,14,500 [@20% of 3,14,500] 62,900 72,900 Add: Health and education cess @4% 2,916 Net tax liability 75,816 Net tax liability (rounded off) 75,820