Mrs. Vijayta aged 31 years working as finance manager of M/s MPK & Co. Pvt. Ltd. registered at Mumbai. She has been in continuous service since 1-8-2018 and received the following salary and perks from the company du

CS Executive · Tax Laws and Practice · PYQS · December 2024
Mrs. Vijayta aged 31 years working as finance manager of M/s MPK & Co. Pvt. Ltd. registered at Mumbai. She has been in continuous service since 1-8-2018 and received the following salary and perks from the company during the year ending 31-3-2024: (i) She joined the service in the grade of ₹40,000-5,000-60,000-6,000-90,000 on 1-8-2018. (ii) Dearness Allowance 40% of basic pay forming part of retirement benefits. (iii) The Company gifted a Smart Watch costing ₹35,000 to Mrs. Vijayta on the occasion of her birthday. (iv) Children education allowance for one child ₹2,500 per month. (v) Entertainment Allowance ₹2,400 per month. (vi) Motor car (engine cubic capacity below 1.60 liters) owned by employer and provided to employee since 01-08-2023. It is partly used for official and personal purposes by the employee. Expenditure fully met by the employer ₹75,100. (Car is self-driven by the employee). (vii) Leave travel facility provided by her employer to Mrs. Vijayta, her husband and one child. Cost of air tickets (economy class) reimbursed by the employer ₹35,000 per person. Vijayta is eligible for availing exemption this year to the extent it is permissible in law. (viii) The employer also paid professional tax of ₹2,500 for F.Y. 2023-24 on behalf of Mrs. Vijayta to State Govt. You are required to compute the Taxable Income under the head of Salary of Mrs. Vijayta for the assessment year 2024-25, assuming that she opts the benefits of the provisions under section 115BAC.

Answer & Explanation:

Computation of Taxable Income from Salary of Mrs. Vijayta for A.Y. 2024-25 (Under the scheme of provisions of section 115BAC) Particulars Amount (₹) Basic Salary (W.N. 1) From 1-4-2023 to 31-7-2023 (₹60,000 x 4) ₹2,40,000 From 1-8-2023 to 31-3-2024 (₹66,000 x 8) ₹5,28,000 7,68,000 Dearness Allowance 40% of Basic Pay (₹7,68,000 x 40%) 3,07,200 Gift received from employer on birthday [Entire amount is taxable since the perquisite value exceeds ₹5,000 as per Rule 3(7)(iv)] 35,000 Children education allowance (₹2,500 x 12) ₹30,000 Less: Exemption (not allowed under section 115BAC) Nil 30,000 Entertainment Allowance (fully taxable) (₹2,400 x 12) 28,800 Motor car Facility (₹1,800 pm is taxable from 1-8-2023) (₹1,800 x 8) 14,400 Leave travel facility (fully taxable under section 115BAC) (₹35,000 x 3) 1,05,000 Professional Tax paid by Employer (fully taxable) 2,500 Gross Income from Salary 12,90,900 Less: Standard Deduction u/s 16(ia) (Allowed u/s 115BAC) (50,000) Net Income from Salary 12,40,900 Working Note: Calculation of Salary using grading system Particular Amount Salary Grade (40,000-5,000-60,000-6,000-90,000) Salary from 1-8-2018 to 31-7-2019 40,000 p.m. Salary from 1-8-2019 to 31-7-2020 45,000 p.m. Salary from 1-8-2020 to 31-7-2021 50,000 p.m. Salary from 1-8-2021 to 31-7-2022 55,000 p.m. Salary from 1-8-2022 to 31-7-2023 60,000 p.m. Salary from 1-8-2023 to 31-7-2024 66,000 p.m. Note: The computation of taxable income from Gift received from employer on birthday can be considered as ₹30,000 (₹35,000 - ₹5,000 as exempt perquisites by taking reference to the circular No. 15/2001).

Topics: Income Tax

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