Tax Book 2023

Chapter 30 Solved Past Papers Income Tax Numericals of ICMAP Stage IV - (2003 to 2018)

Reimbursement of official expenses (exempt) -

Special merit reward (20,000 x 2) 40,000

Personal expenses paid by company (Funeral expenses) 20,000

Accommodation:

Higher of Rs. 200,000, or

45% of B.S i.e. Rs.108,000 200,000

Tax liability paid by employer 20,000

727,996

CAPITAL GAINS

Capital gain on sale of shares of listed company (SBI)

(0% rate on the assumtion of holding period of shares is more than six years)

INCOME FROM OTHER SOURCES

President's award (exempt under section 45) -

Gain on sale of land (not taxable on assumption of holding period is more than six

years)

820___ Conceptual Approach to Taxes

President's award (exempt under section 45) -

Total income 727,996

Less deductible allowance for education expenses u/s 60D

Lower of:

3,600

• 25% of taxable income i.e. Rs. 724,396 181,099


• Rs. 60,000 x 2 daughters 120,000 (3,600)
  Taxable income 724,396

COMPUTATION OF TAX LIABILITY:

As the there is only income from salary hence tax under salary slab is computed as under.

Tax on Rs. 724,396 [2.5% x (724,396 - 600,000] 3,110

Tax credit on donation U/S 61

Tax credit shall be allowed on lower of:

• Actual amount of donation i.e. Rs. 500,000


• 30% of taxable income i.e. Rs. 217,319


• Actual amount of education fee 5% x (Rs. 3,000 x 12 x
  2 daughters)


• 30% of taxable income i.e. Rs. 217,319

Tax credit = (217,319 x 3,110 / 724,396) (933)

Total tax liability 2,177

Less: Tax deducted from salary 40,000

Tax paid by employer 20,000

60,000

820___ Conceptual Approach to Taxes