Chapter 7: Income Tax

Example 5. Annual salary of Mr. Atul Mani is Rs. 12,48,000. He contribute Rs. 5,000 P.M towards his PF and donated Rs.60,000 PA in L.I.C He purchase NSCs worth Rs. 40,000 and donates Rs. 40,000 in Prime Minister relief of fund. Calculate his Taxable income and tax to be paid by him in the last month his monthly deduction as advance tax is Rs. 25,000.

Assum the following for calculating income tax

  1. Exemption on savings: savings up to Rs. 11lakh is specified investment will be deducted from the income before tax is calculated.
  2. Exemption Donation: Deduction on income is allowed on certain specified donation.
  3. Rate of Income Tax:
    Taxable i ncome Rates
    1. Up to Rs. 1 lakh
    2. More than Rs. 1 lakh up to Rs. 1.5 lakh
    3. More than Rs. 1.5 lakh up to Rs. 2.5 lakh
    4. More than Rs. 2.5 lakh
    		 Nil
    10%
    20%
    30%
  4. Surcharge: For salaried persons having taxable income exceeding Rs. 10lakh, a surcharge of 10% is levied on the amount of tax payable.
  5. Education cess: For every tax payer an education cess of 2% is levied on the tax payable (including surcharge where ever applicable)

Solutin:

Salary Income

Saving:

 Rs. 12,48,000
  1. Contribution to P.F. Rs. 5000 X 12 = Rs. 60,000
  2. LIC Premium                                      = Rs. 60,000
  3. NSCs                                                    = Rs. 40,000
                                                      Total = Rs. 1,40,000
 (-)     1,00,000

 

        11,48,000

Donations:

To Prime Minister Relief fund = 100% of Rs. 40,000

 (-)        40,000
         11,08,000
(a) Taxable Income  = Rs. 11,08,000
  
Computation of Income Tax:
  
 
  
  1. Tax on first Rs. 1,00,000 = Nil
  2. Tax on nest Rs. 50,000 = 10% of Rs. 50,000
                                               = Rs. 10/100 X 50,000
                                              
  3. Tax on next Rs. 1,00,000 = 20% of Rs. 1,00,000
                                               = Rs. 20/100 X 1,00,000
                                              = Rs. 20,000
  4. Tax on next (Rs. 11,08,000 - 250000)
                           = 30% of Rs. 8,58,000
                           = Rs. 30/100 X 8,58,000
                           = 2,57,400

Tax Payable = Rs. 2,82,400

Surcharge = 10% of Rs. 2,82,400

= 10/100 X Rs. 2,82,400

= Rs. 28,240

Education cess = 2% of Rs. 3,10,640

                              = Rs. 2/100 X 3,10,640

                              = 6212.80

Net Tex Payable  = Rs. 3,16,853

Tax deducted at source = Rs. 25,000 X 11

                                           = 2,75,000

(b) Tax to be paid in the last month = Rs (3,16,853 - 2,75,000)

                                                                = Rs. 41,853

                     Nil

          Rs. 5000

 

       Rs. 20,000



     Rs.2,57,400

     Rs.2,82,400

 


(+)      2,82,240


             310640

 

(+)             6213

           3,16,853
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Subjects Maths (Part-1) by Mr. M. P. Keshari
Chapter 1 Linear Equations in Two Variables
Chapter 2 HCF and LCM
Chapter 3 Rational Expression
Chapter 4 Quadratic Equations
Chapter 5 Arithmetic Progressions
Chapter 6 Instalments
Chapter 7 Income Tax
Chapter 8 Similar Triangles