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Prabhu, a resident individual aged 45 years, is employed with a private limited company as HR manager, on a basic salary of 80,000 p.m. He has been…

CA Intermediate · Taxation · PYQS · September 2025

Prabhu, a resident individual aged 45 years, is employed with a private limited company as HR manager, on a basic salary of 80,000 p.m. He has been provided with the following other benefits: (i) A rent-free unfurnished accommodation (owned by the company) in Mumbai from 01.05.2024. However, he occupied the accommodation only from 01.12.2024. The company had bought this house in the financial year 2023-24 at a cost of 2 crores. (ii) A mobile phone for his personal use on 01.04.2024. The cost of the phone was - 90,000. The company also gives him a telephone allowance amounting to 1,000 p.m. to cover his mobile phone bill. During the F.Y. 2024-25, his aggregate mobile phone bill was - 15,000. (iii) Company had purchased a car on 01.07.2022 for 10 lakhs. This car is sold to Prabhu on 01.08.2024 for 2,50,000. (iv) He was allowed to use the video camera and laptop belonging to the company from 01.04.2024. The company had purchased these assets for 50,000 and - 2,00,000, respectively on 01.04.2022. Compute the taxable salary of Prabhu assuming he has opted out of default tax regime. Cost Inflation Index: F.Y. 2023-24:348; F.Y. 2024-25:363

Suggested Answer and Working Notes:

Computation of taxable salary of Mr. Prabhu for A.Y. 2025-26 as per the optional tax regime Particulars Particulars Particulars ₹ Income from Salaries Basic Salary [₹ 80,000 x 12] 9,60,000 Perquisite Value of Rent-free accommodation 10% of salary [₹ 9,60,000 x 10% x 4/12] 32,000 Mr. Prabhu has occupied the accommodation from 01.12.2024. Therefore, the value of rent-free accommodation will be calculated for 4 months only. Mobile phone given for personal use is not taxable perquisite. Since telephone allowance of 12,000 is less than the actual mobile phone bill of 15,000, nothing is taxable as perquisite. - Perquisite Value on sale of car Original cost of car 10,00,000 Less: Depreciation from 01.7.2022 to 30.6.2023 @20% 2,00,000 8,00,000 Less: Depreciation from 01.7.2023 to 30.6.2024 @20% 1,60,000 Value as on 01.08.2024- being the date of sale to Mr. Prabhu 6,40,000 Less: Amount received from the Mr. Prabhu on 01.08.2024 2,50,000 3,90,000 Perquisite value on use of moveable assets Use of Laptop [Not taxable as perquisite] - Use of Video Camera [₹ 50,000 x 10%] 5,000 Gross Salary 13,87,000 Less: Standard deduction u/s 16 [Actual salary or - 50,000, whichever is less] 50,000 Net salary 13,37,000

Topics: Paper 3A: Income Tax Laws

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Prabhu, a resident individual aged 45 years, is employed with a private limited company as HR manager, on a basic salary of 80,000 p.m. He has been…

Suggested Answer and Working Notes:

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