Income under the head Salaries

( iii )Examine the tax implications of the following transactions under Income Tax Act, 1961 for the assessment year 2025-26 : (Give brief reason)

(a)Government of India has appointed Mr. Ramesh as an ambassador in Sweden. He received salary of ₹ 7,50,000 and allowances of ₹ 2,40,000 during the previous year 2024-25 for rendering his services in Sweden. He is an Indian citizen having status of nonresident in India for the previous year 2024-25.

(b)Mr. Narayanan, a non-resident in India, has earned ₹ 3,00,000 as royalty for a patent right made available to Mr. Rajkumar who is also a non-resident. Mr. Rajkumar has utilized patent rights for development of a product in India and 50% royalty is received in India and 50% outside India.

The definition of Salary for the purposes of computing income under the head ‘‘Salaries ’ is Basic + Dearness Allowance + Commission as a % of Turnover ?

(A)Always

(B)In some cases

(C)The definition is irrelevant

(D)None of the above

( a )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 lncome 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.

As per Section 10(14) of the Income Tax Act read with Rule 2BB of the Income tax Rules, the extent to which Compensatory Modified Field Area Allowance is exempt :

(A)Up to 200 p.m.

(B)Up to 800 p.m.

(C)Up to 1,000 p.m.

(D)Up to 1,600 p.m.

Chola & Co. is a partnership firm engaged in trade of textile goods. Which of the following payments is liable for disallowance under section 40A (3) of the Income Tax Act, 1961?

(i)Debit card payment

(ii)NEFT payment

(iii)UPI payment

(iv)Bearer cheque payment

(v)Net banking

(A)(i) and (iv)

(B)(ii), (iv) and (v)

(C)(i) and (iii)

(D)(iv)

A member of parliament is entitled to salary, constituency allowance and daily allowance when the Parliament is in session. Which out of the following statements is correct ?

(A)His entire income is taxable under the head ‘‘Salaries’’

(B)His salary component and constituency allowance is taxable under the head ‘‘Income from other sources’’. Daily allowance is exempted

(C)Only his salary component is taxable under the head ‘‘Income from other sources’’. Constituency allowance and daily allowance are exempted

(D)Only his salary component is taxable under the head ‘‘Salaries’’. Constituency allowance and daily allowance are exempted

Raj an employee of the Central Government claims the benefit of lower slab rate tax under section 115BAC. His Basic Salary is ₹ 25,000 p.m. and entitled to ₹ 1,500 p.m. as entertainment allowance. He is entitled to deduction under section 16(ii) from gross salary in respect of entertainment allowance for assessment year 2022-23 is :

(A)₹ 5,000

(B)₹ 18,000

(C)₹ 60,000

(D)Nil

B (Non-Government Employee) stays at Delhi received a basic of ₹ 60,000 p.m. and dearness allowance ₹ 3,000 p.m. (forming part of salary) and he is also given a rentfree furnished home. The fair rent of the house is ₹ 1,20,000 p.a. and rent of furniture is ₹ 24,000 p.a. Compute the tax liability for the A.Y. 2022-23. (Assessee has not opted for section 115BAC).

(A)₹ 85,800

(B)₹ 84,427

(C)₹ 82,500

(D)₹ 81,180

Mr. Prakash, a non-Governmental employee has the following salary detail for the assessment year 2021-22 :

Basic Salary ₹ 60,000 p.a., D.A. ₹ 24,000 p.a., Entertainment Allowance 3,600 p.a., LIC Premium Paid by employer ₹ 3,600, Income Tax paid by employee ₹ 2,000, and Professional tax paid by employer on behalf of employee ₹ 2,000. Find his taxable salary for the assessment year 2021-22.

(A)₹ 50,600

(B)₹ 41,200

(C)₹ 43,200

(D)₹ 93,200

ABC Ltd. failed to deduct tax at source on rent payable of ₹ 2,50,000 to Mr. Ghanshyam, a resident during the financial year 2020-21. Mr. Ghanshyam did not pay tax on such income. What is the amount of disallowance to ABC Ltd. according to Income Tax Act, 1961 for the Assessment Year 2021-22 ?

(A)Disallowance of 20% of such expenditure

(B)Disallowance of 30% of such expenditure

(C)Disallowance of 50% of such expenditure

(D)Disallowance of 100% of such expenditure

Mr. Y is a visually impaired person. He is employed in a public sector undertaking since 01.06.2019. He was paid 30,000 for the financial year ended 2020-2021 by way of transport allowance. How much of transport allowance is exempt from income-tax ?

(A)₹ 30,000

(B)₹ 15,000

(C)₹ 21,600

(D)Nil

Subodh Kumar, IAS, a Central Government employee received total salary of ₹ 18,00,000 and ₹ 10,000 as entertainment allowance during the previous year 2019-20. Actual expenditure incurred by him on entertainment for the official purposes was ₹ 9,500. The deduction available for entertainment allowance received or for actual amount spent on entertainment for the assessment year 2020-21 is __________

(A)₹ 4,750

(B)₹ 9,500

(C)₹ 10,000

(D)₹ 5,000

Charles Fried working in Coal Mines in Dhanbad was receiving ‘underground allowance for working in uncongenial, unnatural climate in underground Coal Mines’ of an amount of ₹ 2,000 per month from the employer. Amount of ₹ ______ received per month shall be treated as exempt as per section 10(14) of the Act.

(A)₹ 2,000

(B)₹ 800

(C)₹ 1,000

(D)₹ 1,500

Ms. Bhavani, a blind employee, working in Beta Ltd. was paid transport allowance of ₹ 2,000 per month from April, 2018 to September, 2018. She was paid ₹ 3,000 as transport allowance from October, 2018 to March, 2019. The amount of transport allowance eligible for exemption u/s 10(14) would be :

(A)₹ 7,200

(B)₹ 9,600

(C)₹ 38,400

(D)₹ 30,000

A Central Government Officer received during the year 2018-19 salary excluding all allowances of ₹ 9,00,000 and amount of entertainment allowance of ₹ 12,000 @ ₹ 1,000 p.m. The maximum amount of entertainment allowance so received by him being exempt under section 16(ii) of the Act is ...................... .

(A)1/5th of salary

(B)₹ 1,000 p.m.

(C)₹ 5,000

(D)₹ 10,000

Rohan, an employee of State Government received ₹ 1,000 per month as entertainment allowance during the financial year 2018-19. His salary excluding any allowance, benefit or other perquisite for the year is ₹ 8,40,000. The amount of entertainment allowance eligible for deduction is :

(A)₹ 12,000

(B)1% of salary of ₹ 8,400

(C)₹ 5,000

(D)(12000 - 8400) = 3600

(a)State which of the following is a taxable allowance and the quantum of allowance liable to tax in the hands of salaried employees :

(i)Tiffin allowance given by a company to employees at ₹ 1,000 per month.

(ii)Non-practice allowance ₹ 5,000 per month given by State Government to doctors employed in State Government Service.

(iii)Transport allowance given by a company (home to office and back) ₹ 2,000 per month.

(iv)Leave travel allowance ₹ 10,000 (fixed) given every year to employees above certain grade.

( a )The particulars given below are of Mr. Ramaswamy’s income (age 57 years) posted in J. K. Swami Pvt. Ltd. in Hyderabad, for the previous year 2024-25 :

(1)Basic Pay 30,000 per month till January 31, 2025, ₹ 35,000 p.m. from February 2025.

(2)Dearness allowance 30% of basic salary (50% of DA forms part of retirement benefits).

(3)Employee’s contribution to recognized provident fund ₹ 72,000 and his employer matches the same contribution.

(4)Leave encashment received for P.Y. 2024-25 ₹ 15,000.

(5)He also received salary for the month of April, 2025 in advance without Dearness allowance on 31st March 2025. Also, he received an arrear salary for the month of March, 2024 on the same day assuming it is taxed on the due basis.

(6)The employer also spent ₹ 74,000 on a refresher course for upgrading Mr. Ramaswamy’s skills.

(7)Motor Car owned and driven by Mr. Ramaswamy and engine capacity within 1.6 liters, used partly for official and partly for personal purposes. Running & Maintenance expenses borne by the employer during the year was ₹ 46,600.

Compute the taxable salary income of Mr. Ramaswamy for the assessment year 2025-26 assuming that he has opted out of the default tax regime under section 115BAC.

Mr. Tinto has been provided with an accommodation by the company for which the company was paying a rent of ₹ 5,000 per month with effect from 01.09.2023. His basic salary is ₹ 11,000 per month. Calculate the value of Rent Free Accommodation in this case.

(A)₹ 11,000

(B)₹ 77,000

(C)₹ 35,000

(D)₹ 7,700

Mr. Hiyakash employed in a company at Kolkata furnishes the following information. Basic Salary ₹ 45,000 up to 31st August, 2023 and thereafter an increment of ₹ 5,000 up to 31st March, 2024. DA is 50% of basic salary. Motor car engine with more than 1.6 litres capacity was given by the employer self driven by Hiyakash and is used both for Official and personal purposes Running expenses met by the Employer was ₹ 60,000. Profession Tax on Employment ₹ 7,000 paid by Mr. Hiyakash. Gross Total Income in this case is :

(A)8,34,300

(B)8,41,300

(C)8,12,500

(D)8,05,500

( iii )Gajendra is working as a Sales Manager of Bansal Green Pvt. Ltd. He furnishes the following particulars of his remuneration for the previous year 2023-24 :

The company provided him a furnished accommodation in Chennai. The cost of the furniture provided in this house is ₹ 1,50,000 and three air-conditioners, which have been taken on hire by the company, have also been provided in the accommodation. The hire charge of each air conditioner is ₹ 7,500 per annum. The fair rental value of such house is ₹ 15,000 per month. But the company charges him only ₹ 7,000 per month.

Compute the Taxable Value of rent-free accommodation of Gajendra included in Salary for the assessment year 2024-25. Assume that he does not opt to pay tax under section 115BAC.

Mr. Ramesh, a citizen of India, is employed in the Indian embassy in Australia. He is a non-resident for A.Y. 2024-25. He received salary and allowances in Australia from the Government of India for the year ended 31-3-24 for services rendered by him in Australia. In addition, he was allowed perquisites by the Government. Which of the following statements is correct ?

(A)Salary, allowances and perquisites received outside India are not taxable in the hands of Mr. Ramesh, since he is non-resident.

(B)Salary, allowances and perquisites received outside India by Mr. Ramesh are taxable in India since they are deemed to accrue or arise in India

(C)Salary received by Mr. Ramesh is taxable in India but allowances and perquisites are exempt.

(D)Salary received by Mr. Ramesh is exempt in India but allowances and perquisites are taxable

Form No 12BA of Income Tax Act contains which of the following :

(A)Details of the Tax Deducted by the Employer

(B)Details of Perquisites and Profits in lieu of Salary chargeable U/S 17(3) of Income Tax Act

(C)Details of Salary paid to Foreign National by Indian Employer

(D)Details of tax collected at source

Mr. H has been provided with a servant by his employer whose salary is 5,000 p.m. Mr. H is not a specified employee. The amount taxable for the perquisite in the hands of Mr. H is :

(A)30,000

(B)60,000

(C)45,000

(D)Nil

Santhanam is employed as General Manager of Great Ltd. The employer gave motor car for official use of employee being self- driven by him. Entire expenses were met by employee amounting to ₹ 27,500. The car was used exclusively for official purpose and the engine capacity was more than 1.6 litres. How much is the perquisite value in respect of car given to the employee?

(A)₹ 10,800

(B)₹ 18,000

(C)₹ 27,500

(D)Nil

Naveen is employed in a company. He wants to know which of the following perquisite a tax-free perquisite is:

(i)Subsidized lunch;

(ii)Personal accident insurance

(iii)Interest- free loan from employer ₹ 18,000

(iv)Reimbursement of medical expenditure ₹ 25,000

(A)(i) and (iv)

(B)(i) and (iii)

(C)(i), (ii) and (iii)

(D)(i), (ii), (iii) and (iv)

Karthik acquired an electric motor car on 23rd April, 2022 for ₹ 18 lakh for which he availed loan of ₹ 14 lakh from State Bank of India. Interest on loan for the year ended 31st March, 2023 was ₹ 1, 90,000. How much of interest on loan is eligible for deduction for the assessment year 2023-24?

(A)₹ 50,000

(B)₹ 1, 00,000

(C)₹ 1, 50,000

(D)₹ 1, 90,000

Ashwani is an employee of Bright Public School. His daughter, Asha is studying in the said school at concessional fees of ₹ 600 per month (Actual fee : ₹ 4,000 per month). The amount of perquisite taxable in the hands of Ashwani will be :

(A)Nil

(B)₹ 40,800

(C)₹ 48,000

(D)₹ 28,800

An employer provided free refreshment to his employee for which he incurred an amount of ₹ 80 per such refreshment. State the amount which is treated as a perquisite for the employee and its taxable value as per sec 15BAC of the Income Tax Act, 1961 for the Assessment Year 2022-2023:

(A)₹ 50

(B)Exempt

(C)₹ 80

(D)Nil

State which out of the following perquisite is exempt as per section 115BAC of the Income Tax Act, 1961 for the Assessment Year 2022-23:

(A)Helper facility at the residence of employee

(B)Laptop given to employee for the official use ownership retained with the employer

(C)Children education allowance given by the employer

(D)Uniform allowance provided to the employee

When a car is owned or hired by the employer and its running and maintenance expenses for private use are met by the employee and if the car is used to be partly for official duty and partly for private purposes (where the cubic capacity of the engine exceeds 1.6 It) then how much perquisite is chargeable to tax in the hand of the employee?

(A)₹ 900 p.m. plus ₹ 900 p.m. if chauffeuris also provided.

(B)Value of the perquisite shall be 10% of the actual cost of car or hire charges if car is taken on hire plus salary of chauffeur, if any, paid or payable by the employer.

(C)Value of perquisite shall be ₹ 600 p.m. plus ₹ 900 p.m. if chauffeur is provided

(D)Value of perquisite shall be actual expenditure incurred by the employer plus normal wear and tear @10% or hire charges if car is taken on hire then deduct amount recovered from the employer.

The value of the perquisite to be included in the salary of employee if interest free loan is to be given to an employee (for the purpose of medical treatment of specified diseases) by the employer :

(A)₹ 10,000

(B)₹ 20,000

(C)Nil

(D)₹ 50,000

Leave travel concession is given to Mr. Krishna, his wife and three children (one daughter aged 5 and twin sons aged 2). Cost of air tickets (Economy class) reimbursed by the employer ₹ 10,000 for adults and lump sum of ₹ 15,000 for three children for the financial year 2020-21. Mr. Krishna is eligible for exemption this year to the extent permissible under the Income Tax Act, 1961. You are required to calculate taxable perquisite for the assessment year 2021-22 :

(A)Nil

(B)₹ 10,000

(C)₹ 15,000

(D)₹ 25,000

Harsh (age 45 Years) is appointed as VicePresident in High Hope India Ltd, Mumbai on 1/02/2020. He has been provided a car of 2000 cubic capacity (CC) which is exclusively used by him for private and personal purposes only. The actual cost of the Car is ₹ 18,00,000 and the monthly expenditure of Car of ₹ 5,000 is fully met by the employer. Perquisite value of Car subject to tax in the hands of Harsh in A.Y. 2021-22 would be :

(A)₹ 28,800

(B)₹ 21,600

(C)₹ 60,000

(D)₹ 2,40,000

Calculate the value of amenity of motor car provided by the employer in the following case assuming that the employee is specified one :-

Free use of employer’s car having engine of 2.0 litre cubic capacity for personal as well as official purpose. Expenses relating to personal uses are borne by assessee. The car is driven by the assessee himself. (Assuming assessee has not opted U/s 115BAC).

(A)₹ 10,800

(B)₹ 7,200

(C)₹ 21,600

(D)₹ 28,800

As per section 49 (2AA), where the capital gain arise from the transfer of specified security or sweat equity shares referred to in section 17(2)(vi), the cost of acquisition of such security or shares shall be the ________ which has been taken into account for perquisite valuation.

(A)Fair market value

(B)Cost price

(C)Cost or Market price, whichever is higher

(D)Cost or Market price, whichever is lower

State which of the following perquisite is not exempt perquisite for the assessment year 2021-22 ?

(A)Personal expenditure through credit card reimbursed to employee by the employer

(B)Telephone facility in the residence of employee

(C)Subsidised lunch provided to employee by employer on working days

(D)Laptop given to employee for official use (ownership is with employer)

Car having cubic capacity of engine not exceeding 1.6 liters owned or hired by employer provided to the employee for use wholly for private purposes of which running and maintenance expenses are being borne/ met by the employee than find out from the following as to value chargeable to tax in the hands of employee as a perquisite :

(A)It is not a perquisite, hence not taxable.

(B)Value of perquisite shall be 10% of the actual cost of car or hire charges if car is taken on hire plus salary of chauffeur if any paid or payable by the employer.

(C)Value of perquisite shall be taken at ₹ 600 p.m. and at ₹ 900 p.m. if chauffeur is provided.

(D)Value of perquisite shall be the actual expenditure incurred by the employer plus normal wear and tear @ 10% of the cost of car or hire charges if car is taken on hire.

Sridhar employed as general manager in LMN Ltd. received ₹ 30,000 as medical reimbursement from the employer by producing bills of a Government hospital. The amount of medical reimbursement taxable as perquisite is :

(A)NIL

(B)₹ 30,000

(C)₹ 15,000

(D)₹ 18,000

Dunlop Traders (P) Ltd. is engaged in trade of textile items. On the eve of the Diwali, it sold suitings and shirtings to its employees at cost. The market value of those goods was ₹ 1,60,000. The cost price ₹ 1,20,000. The amount liable for adjustment in its total income would be :

(A)NIL

(B)₹ 1,60,000

(C)₹ 1,20,000

(D)₹ 40,000

(a)Alok is employed in BCD Co. Ltd. as Finance Manager. The employer transferred the following assets to him on 15th April, 2017 :

(i)Computer acquired by the employer in April, 2016 for ₹ 20,000 was given to Alok for a consideration of ₹ 1,000.

(ii)Motor car acquired by the employer for ₹ 6 lakh in July, 2014 was given to Alok for ₹ 3 lakh.

(iii)Furniture items acquired by the employer for ₹ 2 lakh in August, 2014 were given to Alok for ₹ 50,000.

Compute the amount of income, if any, taxable in the hands of Alok for the above transactions.

(a)Rajiv Gupta, aged 45, is employed as a Finance Manager in XYZ Pvt. Ltd., in Mumbai. During the financial year 2025-26, he received the following emoluments :

You are required to compute the taxable salary income of Rajiv Gupta for the assessment year 2026-27, assuming that he is not opting the default tax regime under section 115BAC of the Income Tax Act, 1961.

Mr. A stays in New Delhi. His basic salary is ₹ 20,000 p.m., D.A. (60% of which forms part of pay) is ₹ 12,000 p.m., HRA is ₹ 10,000 p.m. and he is entitled to a commission of 1% on the turnover achieved by him. Mr. A pays a rent of ₹ 11,000 p.m. The turnover achieved by him during the current year is ₹ 24 lakhs. The amount of HRA exempt under section 10(13A) is ............... .

(A)₹ 96,960

(B)₹ 91,200

(C)₹ 99,360

(D)₹ 93,600

(b)Compute the taxable HRA in the hands of Usha for the assessment year 2024-25, on the assumption that she has not opted the scheme of section 115 BAC.

(b)Compute income from salary of Vijay for the assessment year 2023-24, on the assumption that he has opted the scheme of section 115BAC.

Ravi is employed in A Zone Ltd as Marketing Manager at Chennai during the financial year 2022-23. His basic pay and DA (eligible for retirement benefits) amounts to ₹ 15, 40,000. He received ₹ 3 lakh as house rent allowance and paid actual rent of ₹ 30,000 per month during the year 2022 -23. How much of house rent allowance is eligible for exemption under section 10(13A) of the Income Tax Act, 1961?

(A)₹ 7, 70,000

(B)₹ 3, 00,000

(C)₹ 2, 06,000

(D)₹ 3, 08,000

Anish is employed in Global Ltd. Which of the following allowances are eligible for exemption for the assessment year 2023-24 when he has opted for section 115BAC of the Income Tax Act, 1961?

(i)House Rent allowance

(ii)Transport allowance

(iii)Conveyance allowance

(iv)Children education allowance

(A)(i) and (ii)

(B)(iii)

(C)(ii) and (iv)

(D)(i), (ii) and (iii)

If an individual opts to be taxed under the new alternative tax regime, which of following deduction will be allowed :

(A)Leave Travel Concession

(B)Tax on Employment

(C)HRA

(D)Special Allowances exempt u/s 10(14)

Manoj a salaried employee, provides the following information regarding his income for the period 01.04.2020 to 31.03.2021 where he was employed by Ram Company up to 31st May, 2020 and by Shyam Company from 1st June, 2020. All the figures given in the table below are on per month basis paid by the companies.

Amount in ₹

Compute the amount of income of Manoj chargeable to tax for the A.Y. 2021-22 under the head of salary.

(A)₹ 8,06,200

(B)₹ 8,13,000

(C)₹ 7,97,000

(D)₹ 7,63,000

Raja is employed in a company at Kanpur. His monthly salary is ₹ 5,000. He stayed in his father’s house without paying any rent up to 31st December, 2020 and thereafter he took an accommodation on monthly rent of ₹ 2,500. His employer pays him house rent allowance ₹ 500 per month. Calculate the amount of house rent allowance exempt from tax for the A.Y. 2021-22 of Raja. (Assuming assessee has not opted U/s 115BAC).

(A)1,500

(B)6,000

(C)7,500

(D)5,000

Chaturvedi is employed in a company at Delhi. He was paid monthly house rent allowance of ₹ 15,000 during the previous year 2020-21. His Basic pay + DA (eligible for retirement benefits) for the year ended 31st March, 2021 is ₹ 12 lakhs. Chaturvedi paid ₹ 20,000 as rent per month for the accommodation occupied by him throughout the year. Compute the amount of HRA exempt from tax.

(A)₹ 1,80,000

(B)₹ 1,20,000

(C)₹ 2,40,000

(D)₹ 60,000

Nitesh, working in a factory at Kolkata received during the previous year 2019- 20 ₹ 2,00,000 as basic salary and ₹ 50,000 as house rent allowance. Rent paid by him for residence in Kolkata was ₹ 50,000. Amount of house rent allowance taxable in assessment year 2020-21 is ________

(A)₹ 20,000

(B)₹ 30,000

(C)₹ 50,000

(D)₹ 25,000

Paresh, a Company Secretary working in Roly Poly Ltd Chennai besides Salary, HRA, DA and Bonus was also getting fixed medical allowance of ₹ 10,000 from the employer. He spent out of the medical allowance so received an amount of ₹ 6,000 on his treatment, ₹ 2,000 on the treatment of his wife and ₹ 1,000 on the treatment of his major son not dependent on him. The amount of medical allowance received and to be exempt for Asst. Year 2020-21 shall be -----------

(A)₹ 8,000

(B)NIL

(C)₹ 9,000

(D)₹ 5,000

Pension and family pension of notified gallantry award winners is :

(A)Exempted up to ₹ 15,000

(B)Exempted up to 1/3rd of the amount received

(C)Fully taxable

(D)Fully Exempted.

Mr. Mithun employed in a Firm where he is regularly receiving consolidated salary of 25,000 per month during the year 2022-23 and also received family pension @ 15,000 p.m. during the year. His total income for the Financial Year 2022-23 taking that he does not have any deduction under Chapter VI A :

(A)4,80,000

(B)4,30,000

(C)4,15,000

(D)4,20,000

The family of deceased employee is receiving a pension of ₹ 12,000 p.m. from the employer in financial year 2021-22. Compute the income to be chargeable in the hands of family member and also state under which head the income is taxable for the Assessment Year 2022-23 ? (Assessee has not opted for section 115BAC).

(A)₹ 1,44,000, Income from salary

(B)₹ 1,29,000, Income from other sources

(C)₹ 96,000, Income from other sources

(D)₹ 94,000, Income from salary

Family pension received by the family member of a deceased employee from the employer is taxable under the head ‘‘Income from Other Sources’’. What is the standard deduction allowed under Income Tax Act, 1961 ?

(A)1/3rd of such pension or ₹ 15,000 whichever is lower.

(B)1/3rd of such pension or ₹ 15,000 whichever is higher.

(C)2/3rd of such pension or ₹ 15,000 whichever is lower.

(D)2/3rd of such pension or ₹ 15,000 whichever is higher.

Ramachari (age 83) is a pensioner who received ₹ 7,46,000 by way of pension during the previous year 2020-21. His only other income is interest of ₹ 65,000 from fixed deposit held in nationalized bank. What is the total income ?

(A)₹ 8,01,000

(B)₹ 7,11,000

(C)₹ 7,61,000

(D)₹ 7,21,000

Find out from the following incomes which shall not be taken as forming part of the total income of an assessee for the purpose of taxation in any assessment year as per provisions of Income Tax Act, 1961 :

(i)Pension received by an awardee of Mahavir Chakra

(ii)Income of a Notified News Agency

(iii)Pension received by widow of a Major who died in Balakot attack

(iv)Income received on behalf of any Regimental Fund

(A)(i), (ii), (iii) & (iv)

(B)(i), (iii) & (iv)

(C)(ii) & (iv)

(D)(ii) & (iii)

Ramchand (age 62) is a pensioner with monthly pension of ₹ 29,000. His income from interest on bank fixed deposit is ₹ 80,000. His income-tax liability for the assessment year 2019-20 would be :

(A)NIL

(B)₹ 9,170

(C)₹ 9,260

(D)₹ 7,180

Philip who retired from Central Government service on 28-2-2018, received monthly pension of ₹ 42,000 up to 30-9-2018 and ₹ 44,100 thereafter. His income from salary after standard deduction would be :

(A)₹ 5,16,600

(B)₹ 5,01,600

(C)₹ 4,76,600

(D)₹ 4,61,600

John, who recently retired from service of a company on 31st March, 2019 is eligible for a monthly pension of ₹ 20,000. He has received gratuity on his retirement also. He wants to commute 50% of his pension for ₹ 6.00 lakh. How much amount of this commuted pension shall be subject to tax in A.Y. 2019-20?

(A)₹ 6,00,000

(B)₹ 2,00,000

(C)₹ 3,00,000

(D)₹ 3,50,000

Any payment in commutation of pension received from a pension fund setup by the Life Insurance Corporation of India in terms of section 10(23AAB) of the Income Tax Act, 1961, is :

(A)Liable for tax

(B)Fully exempt from tax

(C)Partly liable for tax

(D)Taxable @ 10%

An assessee is not eligible to claim any relief under section 89 of Income Tax Act, 1961, when he is in receipt of income as arrears or in advance during the previous year from his employer :

(A)in respect of gratuity

(B)in respect of commutation of pension

(C)in respect of arrears of family pension

(D)in respect of amount received on voluntary retirement or termination of services

(a)Compute the income chargeable under the head of Salary for Karan for the Assessment Year 2025-26.

Mr. K completed his MBA in April 2023 and joined XYZ Ltd from 01.05.2023. His basic salary is ₹ 2,25,000 p.m. He is paid 12% of basic salary as D.A forming part of retirement benefits. He contributed 11% of his pay and D. A towards recognized provident fund and the company contributes the same amount. Accumulated interest on provident fund as on 31.3.2024 is ₹ 49,325. What would be the income chargeable to tax under the head ‘‘Salaries’’ of Mr. K for the A. Y. 2024-25, if he does not opt for section 115BAC ?

(A)₹ 27,26,442

(B)₹ 27,30,884

(C)₹ 27,22,000

(D)₹ 27,71,325

Mr. P received a Salary of ₹ 3,00,000 for the year ended 31-03-2024. He contributed ₹ 45,000 to employees recognised provident fund account and equal contribution is also done by his employer. Taxable Income of Mr. P will be (considering the fact that Mr. P did not opt 115BAC of the Income Tax Act, 1961).

(A)₹ 2,14,000

(B)₹ 2,50,000

(C)₹ 3,00,000

(D)₹ 2,95,000

(c)Ramesh working in ABC Pvt. Ltd draws the following amount by way of salary for the previous year ended 31st March, 2024 :

(i)Basic salary ₹ 1,25,000 per month.

(ii)Commission on sales @ 2% on sale made by him, Commission amount ₹ 40,000 (per annum).

(iii)Employer’s contribution to Recognized Provident Fund (RPF) ₹ 3,00,000.

(iv)Employer’s contribution to National Pension Scheme (NPS) ₹ 1,00,000.

(v)Employer’s contribution to Superannuation Fund ₹ 2,00.000.

(vi)The company has given him a housing loan of ₹ 15,00,000 on 1st June, 2023 on which it charges interest @ 6% per annum. The entire loan is still outstanding.

(Assume the interest charged by SBI for same kind of home loan is 9.5% p.a.)

Compute the Income chargeable to tax under the head of Salary for the assessment year 2024-25 on the assumption that Ramesh has not opted for section 115 BAC.

Trivedi employed in Max Ltd made a premature withdrawal of ₹ 1, 60,000 from his Recognized Provident Fund (RPF) account on 18th March, 2023. How much would be the amount of tax deductible at source in respect of such withdrawal?

(A)Nil

(B)₹ 8,000

(C)₹ 16,000

(D)₹ 32,000

Where yearly contribution of employee did not exceed ₹ 2,50,000, then amount received from recognized provident fund after five years of continuous service is:

(A)fully taxable

(B)fully exempt

(C)taxable to the extent of employer’s contribution and interest thereon

(D)taxable at the special rate of 10%

Withdrawal of the accumulated balance lying in a Recognized Provident Fund (RPF) account, is exempt from tax :

(A)If the employee renders continuous service with the employer for period of 5 years or more

(B)If the employee renders continuous service with the employer for period of 10 years or more

(C)If the employee renders continuous service with the employer for period of 3 years or more

(D)Withdrawal of the accumulated balance lying in an RPF account is always exempt from tax

Employer's contribution to Recognized Provident Fund (RPF) in excess of 12% of salary income of an employee shall be treated as :

(A)Taxable income from salaries

(B)Deemed income from salaries

(C)Exempted income

(D)Income of other sources

(i)Mohan is sales manager of Khan Co Ltd., at Mumbai. He furnishes you the following details for the year ended 31st March, 2018 :

Basic salary up to 31st August, 2017 ₹ 50,000 per month.

Basic salary from 1st September, 2017 ₹ 70,000 per month.

Dearness allowance 50% of basic salary (It is fully eligible for retirement benefits)

Transport allowance ₹ 2000 per month

Tax on employment ₹ 7,000 ( ₹ 3,000 paid by employer)

Motor car with engine cubic capacity more than 1.6 litres was given by the employer.

The car is self driven by Mr. Mohan. Running and maintenance expenses of car incurred by the employer ₹ 53,500. The car is used both for personal and official use.

Recognised provident fund contribution of the employer at 15% of basic salary.

Recognised provident fund contribution of employee ₹ 10,000 per month.

Donation to Prime Minister’s Relief fund paid by cheque ₹ 20,000.

Compute the total income of Mohan for the assessment year 2018-19.

Relief under Section 89 of the Income Tax Act, 1961 is available except :

(A)Amount received/receivable on Voluntary Retirement

(B)Advance Salary received

(C)Arrear of Salary received

(D)Gratuity Received

Raghu retired on 31st October, 2022 after rendering service for 32 years in a listed company. He received ₹ 23, 00,000 as gratuity at the time of retirement and is covered by Payment of Gratuity Act, 1972. What is the montetary limit for availing exemption in respect of gratuity under the Income Tax Act, 1961?

(A)₹ 10, 00,000

(B)₹ 20, 00,000

(C)₹ 23, 00,000

(D)₹ 5, 00,000

After serving for 28 years and 7 months in M Steels Ltd., Nitin retired on 30th September, 2021. He is covered by the Payment of Gratuity Act, 1972. The company has paid him a gratuity of ₹ 14,21,500. At the time of retirement, he was getting basic salary ₹ 37,800, dearness allowance ₹ 3,800 and house rent allowance ₹ 5,200 per month. However his average salary for last 10 months is ₹ 36,400. Determine the amount of gratuity exempt under section 10(10) of Income Tax Act, 1961.

(A)₹ 5,27,800

(B)₹ 5,09,600

(C)₹ 6,96,000

(D)₹ 6,72,000

No. of days in a month for purposes of computing taxable Gratuity in case the employee is covered under the Payment of Gratuity Act, 1972, are :

(A)25 Days

(B)28 Days

(C)31 Days

(D)None of the above

Malik retired from Mehbooba Ltd. after rendering service for 27 years and 8 months. His 15 days salary is ₹ 26,000. He received ₹ 11,50,000 as gratuity from the employer. He is covered under the Payment of Gratuity Act, 1972. The amount of gratuity eligible for exemption under section 10(10) would be :

(A)₹ 10,00,000

(B)₹ 7,28,000

(C)₹ 11,50,000

(D)₹ 7,02,000

The maximum amount of any death-cumretirement gratuity received by an employee not covered under the payment of Gratuity Act, 1972 on Superannuation from the employer exempt from tax is of .......... .

(A)₹ 20 Lakh

(B)₹ 10 Lakh

(C)₹ 5 Lakh

(D)₹ 15 Lakh

Mohan, retried from Y & Company Ltd. on 31-08-2018 after rendering services for 31 years and 7 months. He was paid ₹ 11 lakhs as gratuity under the Payment of Gratuity Act, 1972. His last drawn salary was ₹ 52,000. How much of the amount of gratuity would be exempt ?

(A)₹ 10,00,000

(B)₹ 20,00,000

(C)₹ 9,30,000

(D)₹ 9,60,000

(d)Mr. Ramseshan, General Manager of Gee Co. Ltd., retired on 31st October, 2017, after rendering service for 29 years and 8 months. His monthly salary break up are :

(i)Basic salary ₹ 52,000;

(ii)DA 50% of basic salary (eligible for retirement benefits);

(iii)HRA ₹ 20,000;

(iv)City Compensatory Allowance ₹ 5,000.

He received ₹ 15 lakh from the employer by way of gratuity. He is governed by the Payment of Gratuity Act, 1972. Determine the amount of gratuity chargeable to tax.

For claiming relief under section 89(1) of Income Tax Act, 1961, it is mandatory to submit which of the following Forms :

(A)Form 10A

(B)Form 10C

(C)Form 10E

(D)Form 10F

From the following in which case, Employer- Employee relationship exists and therefore the Income is taxable under the head ‘‘Income from Salary’’ ?

(A)Partner of a Firm

(B)Official Liquidator

(C)Member of Parliament

(D)Director of a company receiving fees for attending the board meetings

Professional Tax if paid by the Employer on behalf of employee is :

(A)Allowed as deduction

(B)Not Allowed as deduction

(C)Added to the Income of the Employee and then allowed as deduction

(D)None of the above

Under the Income Tax Act, 1961, Salary received by a partner fiom a partnership firm is chargeable under the head of :

(A)Profits and gains of business or profession

(B)Income from other sources

(C)Income fiom Salary

(D)Not Taxable Exempted Income

Raman holds 30% of shares in RS Limited. His Spouse is a software engineer. Now Mrs. Raman is drawing a remuneration of ₹ 50,000 per month (1st April, 2021 to 31st March, 22) from RS Limited. The salary of spouse of Raman will be taxable in the hands of........ .

(A)Raman

(B)Spouse of Raman

(C)Whosever income is higher

(D)As per discretion of Assessing Officer

Which out of the following incomes is exempt u/s 10(6) of the Income Tax Act, 1961 in the hands of an individual who is not a citizen of India :

(i)Salary received by a Non-Resident non-citizen of India as a crew member of foreign ship

(ii)Remuneration received by foreign government employee from foreign government for specified training in India

(iii)Remuneration of foreign diplomats and employee of a foreign enterprise for services rendered in India

(A)(i) & (ii)

(B)(i) & (iii)

(C)(ii) & (iii)

(D)(i), (ii) & (iii)

Priya, (Non-Government Employee) an employee of S Ltd. have received the amount of retrenchment compensation as she is going out of the company due to the retrenchment process. The total years she worked in the company is 17 years. The average pay equals to 15 days is ₹ 30,500. You are required to compute the income which is chargeable under the head salaries in the hands of Priya. (Assessee has not opted for section 115BAC).

(A)₹ 5,18,500

(B)₹ 2,13,500

(C)₹ 18,500

(D)Nil

Where there is a decision to increase the D.A. in March, 2021 with retrospective effect from 1st April, 2019, and increased D.A. is received in April, 2021, the increased portion of D.A. is taxable :

(A)In the Financial year 2019-20

(B)In the Financial year 2020-21

(C)In the Financial year 2021-22

(D)In the respective years to which they relate

Vignesh was appointed in XYZ Ltd on 01.12.2020 for a monthly salary of ₹ 80,000. He was not employed prior to that date during the previous year 2020-21. Compute the salary income chargeable to tax for the assessment year 2021-22 on the assumption that Vignesh opted for section 115BAC.

(A)₹ 3,20,000

(B)₹ 2,70,000

(C)₹ 9,10,000

(D)₹ 1,70,000

What will be the amount of gross salary which shall be required to be declared in the return of income to be filed for the previous year 2018-19 by Harun, who joined services as Manager Accounts on the salary of ₹ 17,000 p.m. in XYZ Ltd. on 1st April, 2016 in the grade of 15,000 – 2000 — 19,000 – 3000 — 28,000 ?

(A)₹ 3,00,000

(B)₹ 2,28,000

(C)₹ 2,64,000

(D)₹ 2,52,000

Leave encashment at the time of retirement of an employee is exempted for Government Employee under Section 10(10AA). Here Government Employee means :

(A)Central Government Employee only

(B)Central and State Government Employee

(C)Central and State Government Employees and Employees of local Authorities

(D)Central and State Government Employees and Employees of local Authorities and Employees of statutory corporations

Under Clause 10AA of Section 10, the maximum amount of leave salary received which is not chargeable to tax for non- governmental employees is ...................

(A)₹ 2,00,000

(B)₹ 3,00,000

(C)₹ 5,00,000

(D)₹ 1,00,000

Ramavtar, an employee of GG Carriers provides the following details of his income received from the employer for the year ended on 31.3.2020 :

He has contributed ₹ 9,000 in statutory PF and had also paid ₹ 1,000 towards LIP premium. His total income for Asst. Year 2020-21 shall be ----

(A)₹ 95,000

(B)₹ 1,08,000

(C)₹ 1,05,000

(D)₹ 98,000

Total income of Nand Kishore under the head ‘Salary’ for the financial year 2018-19 of whose basic salary and DA per month was of ₹ 40,000 and ₹ 3,000 respectively and who was also paid leave salary of ₹ 6,000 and ₹ 1,000 of professional tax by the employer shall be .................... .

(A)₹ 4,82,000

(B)₹ 4,76,000

(C)₹ 5,23,000

(D)₹ 5,16,000

(a)Ramamoorthy, an employee of M/s. Gopalkrishan & Co. of Chennai receives following payments during the previous year ended March 31, 2019.

Compute his taxable income for the assessment year 2019-2020.