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  #1  
June 27th, 2016, 03:01 PM
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Income Tax Example

Hii sir, I wants to know the procedure to Calculate the Income tax on Salary will you please give me the Example to Calculate the Income tax on Salary?
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  #2  
June 27th, 2016, 03:02 PM
Super Moderator
 
Join Date: Mar 2012
Re: Income Tax Example

Any income received by an employee is taxed under the head Income from Salaries. It is only taxable when an employer-employee relationship exists.

Here I Am giving you the Example to Calculate the Income tax from the Salary the procedure is as follow :

Let's take the example of Mr. A who is a CA and his Gross Salary is Rs.80,450, which includes:

Basic= 50000 + HRA=20000 + Travel allowance=1000 + Child's educational allowance=200 + Medical allowance=1250 + other allowance=8000

The deductions allowed will be Travel allowance=1000 + Child's educational allowance=200 + Medical allowance=1250 provided that Mr. A submits medical bills worth Rs.1250. Mr. A has a house of his own so the HRA is not deducted. So his total exemption will be Rs.2,450.

The taxable annual gross income will be Rs. (80,450-2,450) x 12 which is Rs.9,36,000.


If Mr. A declares loss on House Property for the interest he is paying for the loan taken to buy his house worth Rs.1,00,000. The Gross total income will be Rs.8,36,000 (9,36,000-1,00,000).

Mr. A declares Rs.1,00,000 as investment under Section 80C and Rs.25,000 under Section 80D, the total taxable income will be Rs.7,11,000 (8,36,000-1,25,000). This is the net taxable income. And Mr. A's income tax rate would be:

For the first Rs,2,00,000 it is nil, for the next Rs.5,00,000 it will be 10% that is Rs.50,000. And on the balance of Rs,11,000, the tax rate is 20% amounting to Rs.2,200.

Mr. A's total annual tax is Rs.53,766 (Rs.52,200 plus the educational cess and higher education cess that is charged at 3% which is Rs.1,566). The monthly tax that is levied on him will be Rs.4,480.50/-


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