Ms. Nisha is a marketing manager in Rose Ltd. She gives you the following details for P.Y. 2025-26: (i) Basic salary of 45,000 p.m. (ii) Dearness…

Computation of income chargeable to tax under the head “Salaries” in the hands of Ms. Nisha for A.Y.2026-27 Particulars ₹ Basic Salary [₹ 45,000 x 12] 5,40,000 Dearness allowance [₹ 10,000 x 12] 1,20,000 Bonus 45,000 Employer's contribution to recognized provident fund in excess of 12% of salary = 18% x [(₹ 45,000 +10,000) x 12] – 12% x {[₹ 45,000 +3,000 (being 30% of 10,000)] x 12} = 1,18,800 - 69,120 [Salary = Basic Salary + Dearness allowance, to the extent it forms part of pay for retirement benefits] 49,680 Perquisite value Provision of motor car (engine cubic capacity more than 1.6 litres) owned by employer to an employee without chauffeur for both official and personal purpose, where the expenses are fully met by the employee - the perquisite value would be 900p.m. [₹ 900 × 5 months] 4,500 Medical insurance premium of 18,000 paid by the employer to effect an insurance on the health of an employee is an exempt perquisite - Value of rent free accommodation [Lower of 62,100 i.e., 10% of 6,21,000 (5,40,000, being salary +36,000, being DA forming part of retirement benefit +45,000, being bonus) or - 1,44,000, being rent paid by the employer] As per Rule 3, value of perquisite in case of accommodation continued to be provided to an employee for more than one previous year, shall not exceed the amount calculated for first previous year, as multiplied by the amount which is a ratio of CII for the previous year for which the value is calculated and CII for the previous year in which accommodation was initially provided to the employee. Accordingly, value of perquisite for P.Y. 2025-26 to be restricted to = 55,000 x 376/363 62,100 56,970 Medical expenditure including stay expenses of 1,50,000 incurred by employer for treatment of her daughter outside India [Exempt since it is permitted under RBI guidelines] - Travel expense of 80,000 incurred by employer on foreign travel for medical treatment [Travel expenses would be exempt, since Ms. Nisha's gross total income before including travel expenditure does not exceed 8lakhs.] - Gross Salary 8,16,150 Less: Standard deduction under section 16(ia) 50,000 Salary chargeable to tax 7,66,150