Ramesh, an employee of Gauri & Co. of Delhi, received the following payments during the previous year ended 31st March, 2014: Basic salary ₹2,40,000 and dearness allowance: 40% of basic salary (40% forming part of sa

CS Executive · Tax Laws and Practice · PYQS · December 2014
Ramesh, an employee of Gauri & Co. of Delhi, received the following payments during the previous year ended 31st March, 2014: Basic salary ₹2,40,000 and dearness allowance: 40% of basic salary (40% forming part of salary). Rent-free unfurnished accommodation provided by employer for which rent paid by employer being ₹50,000. The value of taxable perquisite in the hands of Ramesh will be —
(A) ₹41,760
(B) ₹50,000
(C) ₹36,000
(D) ₹52,500.

Answer & Explanation:

Correct Answer: Option (A)

Correct answer: (A) ₹41,760. Valuation salary = 2,40,000 + 96,000×40% = 2,78,400. The lower of actual lease rent 50,000 and 15% salary 41,760 is 41,760. This answer applies to the historical law and assessment-year context of this December 2014 paper; later amendments may differ.

Topics: Income Tax Act, 1961

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