PART - C
Examples of computation of income of the nature of 'Salary' received by a foreign national showing clearly the scope of total income, the basis of valuation of perquisites received and chargeability under various alternatives:

COMPUTATION OF INCOME TAX ON SALARIES FOR INDIVIDUALS

ALTERNATIVE - 'A'
COMPUTATION OF INCOME TAX ON SALARIES FOR INDIVIDUALS

ASSESSMENT YEAR 2002-2003 (FINANCIAL YEAR 2001-2002)
(WHERE TAX IS BORNE BY THE EMPLOYEE)

  

A

B

C

1 Basic salary in DM (per month)

8,000

9,000

10,000

2 Basic Salary converted in INR Conversion Rate 1 DM = Rupees 23.00 (per annum)
2,208,000
2,484,000
2,760,000
Value of Perquisites
3

Rent Free Accommodation: Lower of the following:

  Actural Lease rental
480,000
   
  10% of Salary
220,800
248,400
276,000
4 Transport
26,400
26,400
26,400
5 Utilities
96,000
96,000
96,000
6 Taxable Salary
2,551,200
2,854,800
3,158,400
7 Ttax on Above
754,147
847,049
939,950
8

Net take Home Pay (2 - 7)

1,453,853
1,636,951
1,820,050

Assumptions
Income Tax is to be deducted from the salary of the employee at an average rate at the time of each payment, and the same is not borne by the employer.
Rental value of the accommodation provided to the employee has been taken @ Rs 40,000/- per month.
Transport and utilities are provided by the employer. As per Income Tax Rules, Perquisite value of transport (including provision of chauffeur) has been considered @ Rs 2,200/- per month and Utilities Rs. 8000 p.m.. No other perquisite has however been considered for the purpose of this computation.

ALTERNATIVE - 'B'
COMPUTATION OF INCOME TAX ON SALARIES FOR INDIVIDUALS

ASSESSMENT YEAR 2002-2003 (FINANCIAL YEAR 2001-2002)
(WHERE TAX IS BORNE BY THE EMPLOYER-Section10(5B) EXEMPTION NOT CLAIMED)

 

A

B

C

1

Basic salary in DM (per month)

8,000

9,000

10,000

2

Basic Salary converted in inr Conversion Rate 1 DM = Rupees 23.00 (per annum)
2,208,000
2,484,000
2,760,000

Value of Perquisites

3

Income Ttax paid by the Eemployer

1,086,667

1,220,531

1,354,395

4

Rent free Accommodation: Lower of following:-

 

Actural Lease Rental
480,000
  
  

 

10% of salary
220,800
248,400
276,000

5

transport
26,400
26,400
26,400

6

utilities
96,000
96,000
96,000

7

gross salary
3,637,867
4,075,331
4,512,795

8

tax on above
1,086,667
1,220,531
1,354,395

9

net take home pay (2)

2,208,000
2,484,000
2,760,000

Assumptions

  • Income Tax is not to be deducted from the salary of the employee as tax is borne by employer.
  • Rental value of the accommodation provided to the employee has been taken @ Rs 40,000/- per month
  • Transport and utilities are provided by the employer. As per Income Tax Rules, perquisite value of transport (including provision of chauffeur) has been considered @ Rs 2,200/- per month and Utilities @ Rs 8,000/- p.m. No other perquisite has however been considered for the purpose of this computation

 

   
   
 
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