computationofincomefromsalaries-140805035647-phpapp02

UNIT II: COMPUTATION OF INCOME FROM SALARIES: 25 Marks)

Computation of Income from Salaries for B Com studentsBased on B. Com Syllabus of Goa University Presented by Dr. Sanjay P Sawant Dessai Associate Professor VVMs Shree Damodar College Margao Goa [email protected] Any salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from the firm shall not be regarded as "salary" for the purposes of this section.

Its an appropriation of profit chargeable under the head profits and gains of business and profession

[email protected]: 15, (Basis of charge )

Section 15 stated that following income shall be chargeable to income-tax under the head "Salaries"

(a) any salary due from an employer or a former employer to an assessee in the previous year, whether paid or not;

(b) any salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer though not due or before it became due to him;

(c) any arrears of salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer, if not charged to income-tax for any earlier previous year.

[email protected] norms Salary is taxable on due or Receipt basis whichever is earlier Relationship between payer and payee Employer and employee relationship Remuneration paid to person in respect of service rendered

[email protected] (17)Salary 17(1) includes the following Wages Annuity or pension Any gratuityAny fees, commission, perquisites or profits in lieu of salary or wagesAny advance salaryAny payment received in respect of any period of leave not availed by him (Leave encashment) Portion of the annual accretion to the balance at the credit of an employee participating in recognised provident fund to the extent taxable Transferred balance in a recognised provident fund to the extent it is taxable Any contribution made by central govt or any employer to the account covered under pension scheme refereed in section 80CCD.

[email protected]

Allowances are fixed quantity of money or other substance given regularly in addition to salary for the purpose of meeting some particular requirement connected with the service rendered by employee.Amount of Exemption Amount of allowance or the actual amount spent whichever is lower [email protected] House rent allowance Transport AllowanceConveyance AllowancesDaily AllowanceUniform AllowanceHelper AllowanceResearch AllowanceChildren Education AllowanceChildrens Hostel Expenditure Allowance. (Covered under section 10)

[email protected] Rent Allowance u/s. 10 (13A).Exemption in respect of house rent allowance is least of the following three Amount equal to 50 percent of salary, where house is situated in metros and 40 percent of salary where residential house is situated at any other place.Actual house rent allowance receivedExcess of rent paid over 10 percent of salary [email protected] AllowanceTransport allowance is granted to meet his expenditure for the purpose of commuting between the place of his residence and place of duty .Exemption Up to Rupees 800 per month Rupees 1600 per month in the case of blind or orthopedically handicapped [email protected] Education AllowanceThe allowance is given for children's education Rupees 100 per month per child up to a maximum of 2 children [email protected] Expenditure AllowanceThe allowance is granted to an employee to meet the hostel expenditure on his child Rupees 300 per month per child up to a maximum of two children.

[email protected] allowanceFixed medical allowance is chargeable to tax Reimbursement of medical expenses Exemption up to Rs. 15,000 per year

[email protected] contribution to approved superannuation Employers contribution towards approved superannuation fund chargeable to tax above Rs 1,00,000 per assessment year [email protected] contribution to Provident fund Employers contribution to statutory provident fund fully exempt Employers contribution to recognised provident fund Excess of 12 percent of salary is taxable

[email protected] credited to provident fund Statutory provident fund not taxable Recognised provident fund excess of 9.5 percent is taxable Public provident fund exempt from tax

[email protected] 17(2)Dictionary meaning A gain or profit incidentally made from employment in addition to regular salary or wages, especially one of a kind expected or promised.Any casual emolument or benefit attached to an office or position in addition to salary or [email protected] of perquisitesThe value of rent-free accommodation The value of concession in the matter of rent respecting any accommodation Benefit or amenity granted or provided free of cost or at concessional [email protected] Any sum paid by an employer in respect of any obligation but for which payment would have been payable by assesseeInsurance premium on life of the employee paid by the employer The value of any specified security or sweat equity allotted free of cost or at concessional rate Contribution to an approved super annuation fund by the employer in respect of the assessee in excess of Rs. I lakh.The value of any fringe benefit or amenity as may be prescribed [email protected] in lieu of Salary 17(3)Profit in lieu of salary includes-Any compensation due or received by an employee in connection with the termination of the employment/ modification of the terms and conditions of his employment Payment from employer or former employer from provident fund or such other funds, excluding the amount exempted form tax under section 10Any sum received under Keyman Insurance policy including the sum allocated by way of bonus on such policyAmount due to or received, whether in lumpsome or otherwise by any assessee from any person -before his joining any employment -after cessation of his employment [email protected] from salaries (section 16)Entertainment allowance 16(ii)A deduction of entertainment allowance specifically granted by an employer to the assessee who is in receipt of a salary from the GovernmentA sum equal to one-fifth of his salary (exclusive of any allowance, benefit or other perquisite) or five thousand rupees, whichever is less

[email protected] allowance deductions Least of the following amount is to be deducted from salary income Actual amount of entertainment allowance received 1/5th of his basic salary Rupees 5,000

[email protected] on employment 16(iii)A deduction of any sum paid by the assessee on account of a tax on employment leviable by or under any law.Profession tax

[email protected] itemsAdvance salary taxable in the year of receipt, however assesse can claim relief u/s 89Arrears of salary taxable on receipt basis, however not taxed earlierLeave salary ( leave encashment ) At the time of retirement - exempt Leave encashment at the time of employment taxable, but relief under section 89 is available

[email protected]

computationofincomefromsalaries-140805035647-phpapp02

Documents

Transcript of computationofincomefromsalaries-140805035647-phpapp02