Computation Of Taxable Salary Income
Basic salary
Dearness allowance
Cost of Living allowance (COLA)
Overseas allowance
Bonus
Commission
Leave encashment (N-2]
Overtime
Gas
Water
Electricity
Telephone
Tax on salary paid by tho employer (In case of tax-free salary)
Receipts on termination of ernployrn(e.g , golden handshake payment) [14,1-3)
Salary received in arrears [N-4]
Services of domestic servants (e.g., housoknepor, driver, etc )
Interest free loan [N-5]
Waiver of an amount payable by tirliployee
Obligation of an employee paid by employer
Transfer of property or provision of services to employee:
Fair market value of property or services XXX
Less: Payment made by the employee, if any M XXX
House rent allowance
Rent-free accommodation-Higher of FMR or 45% (or 30%) of MTS or basic salary
Conveyance allowance
Value of Conveyance [N-6]
Leave fare assistance (LFA) [N-7]
Medical allowance [N-8]
Entertainment allowance XXX
Less: Amount expended for official purposes XXX
Employer's contribution to provident fund
Government provident fund -- Totally exempt
Unrecognized provident fund -- No tax treatment
Recognized provident fund XXX
Less: Exempt up to lesser of 10% of the salary or Rs. 150,000 IN-91 XXX
Interest on provident fund:
Government provident fund -- Totally exempt
Unrecognized provident fund -- No tax treatment
Recognized provident fund XXX
Less: Exempt (Higher of 1/3rd of salary or amount calculated @ 16%) XXX
Receipt of accumulated balance of provident fund
Government provident fund -- Totally exempt
Recognized provident fund -- Totally exempt
Unrecognized provident fund [N-10]
Profit in lieu of or in addition to salary
Gratuity or commutation of pension received from:
Government (Federal, Provincial or Local) -- Totally exempt
Fund approved by C1R-- Totally exempt
Approved superannuation fund -- Totally exempt
Gratuity scheme approved by Board XXX
Less: Exempt 300,000
Any other case XXX
Less: Exempt (Lesser of Rs. 75,000 or 50% of amount received) XXX
Pension — only one pension with higher amount is exempt
Any other benefits, allowances, etc.
Benefit under Employee Share Option Scheme
Total taxable salary income XXX
me
xxx
xxx
xxx
xxx
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
-
-
XXX
-
-
XXX
-
-
XXX
XXX
-
-
-
XXX
XXX
XXX
XXX
XXX
COMPUTATION OF TAXABLE INCOME FROM PROPERTY
Rent Chargeable to Tax (RCT) XXX
Rent received/receivable XXX
1/10th of advance not adjustable rent XXX
Forfeited advance against sale of property XXX
Owner's burden (i.e. tax , etc ) paid by tenant XXX
Irrecoverable rent received XXX
Non-payment of an expense (previously Allowed as deduction XXX
Total rent chargeable to tax (RCT) XXX
Less: Allowable Deductions:
Repair allowance (1/5 of RCT) XXX
Any tax in connection with property XXX
Property tax XXX
Corporation/Municipal taxes XXX
Local taxes or rate XXX
Any other tax XXX XXX
Ground rent (if the property is on leased land) XXX
Interest on moneys borrowed for property XXX
Interest on loan against mortgage of property XXX
Share of rent paid to HBFC XXX
Rent collection charges (up to 6% of RCT) XXX
Legal charges in connection with property XXX
irrecoverable rent XXX
Payment of expense already treated as income due to its non-paym XXX XXX
Taxable Income from Property XXX
•Example: During Hassan (Private) Limited has rented out a house at a monthly rent of Rs. 20,000. During the year th
1.Repair of house Rs. 15,000
2.Insurance premium 10,000
3.Property tax Rs. 6,000
4.Municipal tax Rs. 5,000
5.Interest on loan from HBFC Rs. 12,000
6.Salary to Mr. Ramzan whose sole duty is to collect rent15,000
7.Legal expenses Rs. 2,000
•In the previous year the tenant vacated the property without paying the rent of two months (Rs. 15,000 per month) w
Rent Charged 20,000.00 240,000.00
Less Allowable Deductio
Repair allowance 15% 240,000.00 48,000.00
Insrance premium 10,000.00
Property tax 6,000.00
Municipal Tax 5,000.00
Interest 12,000.00
Salary (lesser 15,000 or 4% of RCT) 9,600.00
Legal Exp 2,000.00
Irrecoverable rent 30,000.00
Total 122,600.00
Taxable Incom From Property 117,400.00
•Example: M/s. Ali Limited has a building, which is rented out at a monthly rent of Rs. 30,000. As per agreement the rent includes
Repair charges Rs. 10,000
Insurance premium Rs. 8,000
Interest on loan from HBFC for the house Rs. 12,000
Property tax Rs. 5,000
Electricity bills Rs. 16 000
Water bills paid to WASA Rs. 17,200
Gas bills Rs. 14,800
Required: Compute the taxable income under each of the following conditions:
1. The rent includes Rs. 5,000 p.m. on account of utilities provided to the tenant.
2. The rent deed does not clearly specify the amount being received on account of utilities.
Answer: 227,200
Income From Property
Rent Chargeable to Tax (25,000x12) 300,000.00
less: Admissible deduction
Repair allowance 1/5th of RCT 60,000.00
Insurance Premium 8,000.00
Interest Paid 12,000.00
Property Tax 5,000.00 85,000.00
Taxable Property 215,000.00
Income from Other Sources
Income from Utility 5000x12 60,000.00
less: Electricity 16,000.00
Water 17,200.00
Gas 14,800.00 48,000.00 12,000.00
Total Taxable Income For the Year 227,000.00
20,000. During the year the company, incurred the following expenses in respect of the house:
s (Rs. 15,000 per month) which could not be recovered. Compute the amount which is chargeable to tax under the head "Income from Prop
Rent 25,000.00 300,000.00
Q 180,000.00
K 120,000.00
agreement the rent includes the payment on account of utility bills. The company incurred the following annual expenses in respect of the house:
Rent Chargeable to Tax (30,000x12) 360,000.00
less: Electricity 16,000.00
Water 17,200.00
Gas 14,800.00 48,000.00
RCT 312,000.00
less: Admissible deduction
Repair allowance 1/5th of RCT 62,400.00
Insurance Premium 8,000.00
Interest Paid 12,000.00
Property Tax 5,000.00
87,400.00
Total Taxable Income For the Year 224,600.00
the head "Income from Property". Answer: 117,400
n respect of the house:
