Morality overtakes legality….

DVG

1. Mr. Madhava Sen (age 45 years) is working as assistant in the Marketing Department of TTD Ltd.
Bengaluru. His salary income details are as follows:
• Basic salary ₹ 15,000 p.m.
• Dearness allowance ₹ 5,000 p.m.
• Dearness Pay ₹ 2,000 p.m.
• Commission ₹ 45,000 p.a.
• Entertainment allowance ₹ 700 p.m. (₹ 6,000 spent on entertainment during the year)
• House Rent allowance ₹ 7,500 p.m. (Rent paid ₹ 9,000 p.m.)
Compute taxable salary for the Assessment Year 2025-26. (Ignore Alternative Tax Regime)

2. Mrs. Ranjita Thakur (resident) working in a company and getting a basic pay of ₹ 8,000 p.m. DA
at 20% of basic pay, Commission at 5% of basic pay, HRA at 12% of basic pay and bonus equal to two
months of basic pay. She is residing in a rented house at ₹ 1,800 p.m. Determine her exempted amount
of HRA, for the A.Y. 2025-26. (Ignore Alternative Tax Regime under Section 115BAC)

3. Mr. Praveen Banik is the employee of West Bengal Govt. working in Hugli. He received the
following emoluments for the financial year ending 31st March, 2025:
Basic pay ₹ 8,000 p.m.
Dearness allowance 20% of basic pay of which 40% enters into calculation of all retirement benefit.
Conveyance allowance ₹ 300 per month of which ₹ 2,000 was spent.
House rent allowance ₹ 1,000 p.m.
Mr. Praveen resided in a rented house on a monthly rent of ₹ 1,500 per month. But he is allotted rent
free quarter on 1st November 2024 from which date he is not entitled to get house rent allowance.
Calculate the taxable house rent allowance for the Assessment Year 2025-26. (Ignore Alternative Tax
Regime under Section 115BAC)

4. Ms. Bhoomika resides in Kolkata, during the P.Y. 2024-25.

She gets ₹ 12,000 p.a. as basic salary. She gets DA at 20% of basic salary (enters for all retirement
benefits). She has also received a commission of ₹ 15,000 (calculated at 2% on turnover achieved by
her). HRA received by her is ₹ 11,800 p.a., but rent paid is ₹ 14,800 p.a.
Calculate the taxable HRA for the A.Y. 2025-26.
(Ignore Alternative Tax Regime under Section 115BAC)

5. Mr. Narasimha (resident) was a manager in a Private Company. He sought pre mature retirement
from service on 1st November 2024 after completing 25 years of service. His salary for 10 Months
preceding retirement was ₹ 36,900. He had seven months leave to his credit on the basis of 30 days per
year which was approved and he was paid ₹ 27,300 as salary.
Compute the amount of encashment exempt from tax for P.Y. 2024-25, if his last drawn salary is ₹
3,900. (Ignore Alternative Tax Regime under Section 115BAC)

6. Mr. Kumar (resident) resigned from his service from a public company on 30th November 2024
after completing 24 years and 10 months of service. During his service he was allowed to get 45 days
of earned leave for every completed year of service. During his service he had availed 10 months leave
and had encashed 6 months leave. On resignation he was paid leave salary of ₹ 2,20,000 for his credit
 Morality overtakes legality…. DVG

of 20 months earned leave. His average salary during the 10 months preceding to the date of his
resignation was ₹ 11,000.
Compute his taxable leave salary for the assessment year 2025-26. (Ignore Alternative Tax Regime
under Section 115BAC)

7. Mr. Suresh (resident) retired from ABC Ltd. on 1-11-2024 after serving the company for 25 years
and 9 months. At the time of retirement his basic pay was ₹ 20,000 p.m. and DA of ₹ 800 p.m. [which
is treated as salary for the purpose of all retirement benefits] but it was ₹ 18,000 per month basic and
₹ 200 p.m DA upto 31-7-2024.
He is entitled for 45 days of leave per year of service and has availed 55 days leave and encashed 20
days of leave throughout his service and received a leave salary ₹ 7,28,000.
Compute taxable part of leave salary for the A.Y. 2025-26. (Ignore Alternative Tax Regime under Section
115BAC)

8. Mr. Sumanth (resident) is employed at a salary of ₹ 6,200 per month. He is also getting DA of ₹
2,800 per month. He receives ₹ 5,000 as bonus. On 30.5.2024, he retired from his service. He had
service of 29 years and 5 months. He received ₹ 2,00,000 as gratuity under the Payment of Gratuity
Act. Compute his taxable gratuity for the Assessment Year 2025-26. (Ignore Alternative Tax Regime)

9. Mrs. Mousumi Das (resident), an employee of SRM Ltd., retires from her service on 16th January
2025 after serving for 36 years and 6 months and 1 day. She receives ₹ 97,000 as Gratuity under the
Gratuity Act 1972. At the time of retirement, her Basic Salary was ₹ 2,300 p.m. and Dearness Allowance
was ₹ 400 p.m.
What amount of Gratuity will be taxable for the assessment year 2025-26. (Ignore Alternative Tax
Regime under Section 115BAC)

10. Sri. Vinayaka received ₹ 60,000 on his retirement on 30/09/2024 as gratuity from his employer
with whom he served for 29 years and 7 months.
Compute taxable amount in each of the following cases: If his salary during calendar year 2021 was ₹
2,000 and during 2023 was ₹ 2,400 and it is due on 1st of every month. He had worked earlier with a
company for 6 years and received ₹ 92,000 as gratuity, which was fully exempted.
He is Govt. employee
He is working in a factory (covered under the Payment of Gratuity Act)
He is working in a commercial office at Delhi.

11. Mr. Ganguly (resident), a marketing manager in Kolkata, retired from XYZ Ltd. on Dec. 15, 2024
after 28 years and 8 months of service and receives ₹ 3,50,000 as death cum retirement gratuity. His
average basic salary for the preceding 10 months ended on 30 Nov. 2024 was ₹ 18,200 per month.
Besides, he has received ₹ 1,000 per month as DA, 80% of which form part of the salary for the purpose
of computation of all retirement benefits and 6% commission on turnover achieved by him. Total
turnover achieved by him for 10 months ended on 30th Nov 2024 is ₹ 1,50,000. Assume he is not
covered under Payments of Gratuity Act. Compute the taxable gratuity for the A.Y. 2025-26. (Ignore
Alternative Tax Regime under Section 115BAC)
 Morality overtakes legality…. DVG

12. Mr. Chandrashekar retires from LMN company on 30.6.2024. He gets ₹ 2,000 per month as
pension upto 31.1.2025. With effect from 1.2.2025, he gets 60% pension commuted for ₹ 40,800.
Compute taxable pension for A.Y. 2025-26.

Does it make any difference if:

a) Mr. Chandrashekar gets gratuity of ₹ 40,000 at the time of retirement.

b) If Mr. Chandrashekar is a government employee?
(Ignore Alternative Tax Regime under Section 115BAC)

13. Mr. Srinidi Basak (resident) retires from a Pvt. Company on June 30, 2024. He is paid a pension
of ₹ 7,500 per month. He commutes 75% of pension on Dec. 1, 2024 and received ₹ 4,50,000 as
commuted pension. Compute taxable amount of commuted and uncommuted pension for the A.Y.
2025-26 assuming:
a) He has received a gratuity of ₹ 5,40,000 at the time of retirement.
b) He has not received any gratuity at the time of retirement.
Also state the tax benefit Mr. Srinidi Basak would have enjoyed in respect of commuted pension, if he
were to be an employee of Government of West Bengal. (Ignore Alternative Tax Regime)

14. Mr. Laxman Shaha retires from service on 30.11.2024 and is in receipt of ₹ 3,000 p.m. as
pension, upto 31.1.2025. On 1.2.2025, he gets 2/3rd of his pension commuted for ₹ 1,20,000. Compute
taxable Pension. (Ignore Alternative Tax Regime under Section 115BAC)

15. Mr. Rajesh an employee of ABC Co Ltd. Bangalore, retired on 31st May 2024 after completing
28 years of service. His monthly pension was fixed at ₹ 20,000. He commuted 60% of pension on 1st
Jan. 2024 and received a sum of ₹ 5,40,000 as commuted pension. Calculate his taxable commuted and
uncommuted pension for the assessment year 2025-26.
(Ignore Alternative Tax Regime)

16. Mr. Suman is employed in Bangalore. His particulars of income for the P.Y. 2024-25 are basic
salary ₹ 8,000 per month, DA ₹ 2,000 per month (40% enter into all retirement benefits), Bonus ₹ 4,000
p.a., Commission ₹ 8,500 p.a, E.A. ₹ 500 per month. Fair Rental Value of Rent-Free house provided by
the employer ₹ 40,000 p.a. Value of furniture provided ₹ 20,000. Its WDV as on 01-04-2024 ₹ 5,000.
Compute income from salary of Mr. Suman for the A.Y. 2025-26.
(Ignore Alternative Tax Regime)

17. Mr. Anurag Basu (resident), an employee of a private sector company in Bangalore, draws ₹
6,000 per month as Basic salary. Other allowances and benefits attached to his office are dearness
allowance (forming part of salary) 10% on Basic. Bonus 20% of Basic salary, Commission ₹ 100 per
month, Pension from previous employer ₹ 1,200.
Conveyance Allowance ₹ 500 per month (40% utilised for official purposes and 25% is utilised for
personal purposes), Tribal area allowance ₹ 7,200. Rent free house has been provided whose Fair Rent
is ₹ 600 per month during the P.Y. 2024-25. He is given furniture on 1.6.2024 ₹ 36,000. Mr. Anurag Basu
draws salary of April and May 2024 in advance of ₹ 12,000. Determine the value of perquisite in respect
of rent-free house for the A.Y. 2025-26.
(Under Existing Tax Regime and Alternative Tax Regime)
 Morality overtakes legality…. DVG

18. Mr. Srinath Das, an employee of A Ltd., gets the following emoluments during PY 2024-25. Basic
salary ₹ 6,000 p.m. (which has been increased to ₹ 7,000 p.m. from 01/01/2025), DA ₹ 4,000 p.m. (72%
of which forms part of salary); Education allowance 500 p.m. per child for 4 children, tribal area
allowance ₹ 600 p.m.; Transport allowance ₹ 2,150 p.m. [Allowance is used for covering journey
between office and residence] He gets ₹ 4,500 pm as HRA up to 30/11/2024 [Rent paid is ₹ 5,500 p.m.].
WEF 01/12/2024, he has been provided a furnished flat by the employer at Manipur [Rent paid by
employer ₹ 7,500 p.m.]. Rent of furniture provided ₹ 5,000; Rent recovered from Srinath ₹ 900; find
out the taxable value of RFA for AY 2025-26 on the assumption that WEF 01/01/2024, he joins a part
time employment with ‘B’ Ltd. [salary ₹ 2,000 p.m.] with the permission of A Ltd [Without leaving the
job of A Ltd].
(Ignore Alternative Tax Regime under Section 115BAC)

19. Mr. Anand (resident) is working as a marketing manager in a company in Mumbai. Particulars of
his salary for the financial year 2024-25 are as under: (Ignore Alternative Tax Regime)
i) Basic salary ₹ 15,000 p.m.
ii) Bonus 20% of salary.
iii) Conveyance allowance ₹ 2,500 p.m. (80% spent on official duties)
iv) Entertainment allowance ₹ 3,000 p.m.
v) Employer’s contribution to Recognised Provident Fund 15% of salary.

He has been provided with a house by the company for which a sum of ₹ 1,200 p.m. is deducted from
his salary. The company pays a rent of ₹ 6,000 p.m. for this house directly to the landlord. Compute the
taxable value of concessional house to be included in the salary of Mr. Anand.

20. Mr. Arun Lal (resident), who served KSSC Ltd. for 25 years 10 months and 11 days retired from
service on 31 Dec 2024. The following were his salary particulars for the Previous Year 2024-25.
a) Basic salary ₹ 6,000 per month (Upto 31 Mar. 2024 it was ₹ 5,000 per month).
b) Dearness pay 20% of basic pay.
c) DA ₹ 1,000 per month (60% enters into pay for all retirement benefits).
d) HRA ₹ 5,000 per month (Rent paid ₹ 6,500 at Bangalore).
e) Conveyance Allowance ₹ 800 per month (Completely used for official purposes).
f) CCA ₹ 150 per month.
g) Motor car (1400cc) with driver is provided.
h) Payment of his LIC premium ₹ 8,000 and education expenses of his son ₹ 10,000 paid by the
company.
i) Services of sweeper (Salary ₹ 250 per month).
On the date of retirement, he received a gratuity of ₹ 90,000 and a leave salary of ₹ 70,200. During the
service period he had availed leave of 16 months. He had 9 months leave to his credit on the basis of
30 days per year. He was also entitled to a pension of ₹ 1,000 per month. Three fourth of which he got
commuted at the end of February for ₹ 27,000. He also gets refund from URPF ₹ 1,00,000 (employer
contribution plus interest thereon).
Compute Taxable salary for A.Y. 2025-26. (under Existing Tax Regime and Alternative Tax Regime)
 Morality overtakes legality…. DVG

21. Mr. Karthik Subramanya (resident), a company employee, who is also a director in the employer
company, gets the following emoluments during P.Y. 2024-25.
Basic salary ₹ 6,000 per month (increased to 8000 PM from 1.1.2025)
DA ₹ 4,000 per month (50% of which is part of salary for computing all retirement benefits)
Education allowance ₹ 400 per month per child for his 3 children.
Medical allowance ₹ 600 per month. (Medical expenses ₹ 800 per month).
Upto 31.10.2024 he was provided a furnished flat at Delhi (rent paid by employer ₹ 7,000 per month.
Cost of furniture provided ₹ 15,000).
With effect from 1.11.2024, he was given HRA of ₹ 7,000 p.m. (Rent paid by Karthik being ₹ 5,000 per
month).
LTC facility ₹ 58,770 (travel by air at business class ₹ 24,000 and other expenses ₹ 6,000 but economy
class air fare for covering the same distance ₹ 13,640).
Income Tax penalty paid by the employer ₹ 2,000.
He enjoys club facility (expenditure of the company ₹ 2,000).
On 1-09-2024, he was given transfer allowance ₹ 14,000 (amount spent in connection with transfer ₹
10,200).
He gets hostel allowance for his son of ₹ 300 p.m. but son does not stay in hostel.
Compute his taxable salary for the A.Y. 2025-26.
(under Existing Tax Regime and Alternative Tax Regime)

22. Mrs. Hemamalini (age 42 years) is working as a Director in Maruthi Suzuki Ltd. Mumbai. Her
salary income details are as follows:
Basic salary ₹ 21,000 p.m.
Bonus 2 months basic pay.
Commission 3% on sales. During the year she reached a sales target of ₹ 50,00,000
Dearness allowance forming part of salary ₹ 7,000 p.m.
Medical allowance ₹ 1,400 p.m. (Medical expenses were ₹ 20,000)
Entertainment allowance ₹ 3,000 p.m.
Children’s Hostel allowance for her two children @ ₹ 500 p.m. per child ₹ 12,000
RPF company’s contribution ₹ 6,000 p.m.
RPF own contribution ₹ 5,000 p.m.
Interest accrued on 15th June 2024 RPF @ 11% ₹ 44,000
Diwali gift ₹ 7,000
Holiday home facility at Kulu ₹ 26,000
She has been provided with rent free furnished accommodation in Mumbai for which company pays
monthly rent of ₹ 10,000 and cost of furniture being ₹ 60,000
Honda City car above 1600cc has been provided along with driver for both private and official use.
Company owns the car and spent ₹ 55,000 on petrol and ₹ 36,000 on drivers’ salary. Hemamalini paid
professional tax ₹ 2,400.
She has been provided health club facility in a hotel by the employer. This facility is available to all
employees. Actual expenditure for providing this facility ₹ 5,000 p.a.
Employer provided a watchman facility employer bears salary of ₹ 2,000 p.m. out of which ₹ 500 p.m.
is recovered.
Compute Taxable Salary for the Assessment Year 2025-26.
(Ignore Alternative Tax Regime under Section 115BAC)
 Morality overtakes legality…. DVG

23. Mr. Praveen (resident) is an employee in XY Ltd. at Bengaluru. He gives the following information
for the A.Y. 2025-26.
a) Basic salary ₹ 8,000 p.m.
b) Dearness allowance ₹ 6,000 p.m. (₹ 1,000 p.m. enters into all retirement benefits)
c) Education allowance for 2 children at ₹ 350 p.m. per child.
d) House Rent allowance ₹ 1,600 p.m. but he pays ₹ 3,000 p.m. as actual rent.
e) He and the company contribute 14% of salary towards the RPF.
f) Interest on RPF was ₹ 15,000 at 15% p.a.
g) Company has paid his income tax of ₹ 6,420 during the previous year on his taxable income.
h) Company has provided a telephone at his residence by meeting all the expenses amounting to ₹
6,000 for the year.
i) City compensatory allowances ₹ 29,600 p.a.
j) Conveyance allowance of ₹ 8,000 for visiting the branches (fully spent).
k) Family allowance ₹ 600 p.m.
l) Entertainment allowances ₹ 750 p.m.
m) Company provides a small car for personal and official purpose. The entire expenditure of ₹ 76,000
is met by the company and ₹ 9,000 is recovered in providing car.
n) The employer provided tea and snacks to all employees during the tea break ₹ 5,000.

Compute his taxable income from salary in the assessment year 2025-26. (Ignore Alternative Tax
Regime under Section 115BAC)

24. Mr. Vyasa Raj is the principal of a college in Bangalore. He furnishes the following details.
a) Basic Salary ₹ 16,200 per month
b) DA (Under terms of employment) ₹ 11,800 per month
c) He contributes 12.5% of his basic pay to RPF.
The employer also contributes the same amount.
d) Education allowance for 3 children ₹ 6,000
e) Medical allowance ₹ 8,000 actual amount spent ₹ 3,000
f) Telephone bill ₹ 5,000 paid by the employer on behalf of Mr. Vyasa Raj
g) Sweeper, servant, watchman at a salary of ₹ 350 per month per person appointed by Mr. Vyasa Raj
and their salary paid by employer.
h) Surrender of earned leave and received an amount of ₹ 22,000
i) LIC premium paid by employer on the life policy of Mr. Vyasa Raj is ₹ 6,000
j) Mr. Vyasa Raj paid professional tax of ₹ 2,400
k) He has been provided with rent free furnished house by the college whose FRV is ₹ 5,000 pm and
furniture facility of which cost ₹ 25,000 by the employer.
l) Group Insurance premium also being paid by the employer ₹ 1,560
m) He went on tour for official purpose and received travelling allowance ₹ 6,000

Compute his taxable salary for the A.Y. 2025-26. (Ignore Alternative Tax Regime under Section 115BAC)
 Morality overtakes legality…. DVG

25. Mr. George is an employee of NSK Ltd., Bangalore. Particulars of his income for the P.Y. 2024-25
are as follows:
Basic salary ₹ 13,500 p.m.
DA 35% of basic salary (60% of it forms part of salary for all retirement benefits).
HRA ₹ 4,000 per month (rent paid ₹ 5,000 per month).
Children education allowance ₹ 50 per month per child for 3 children.
Helper allowance ₹ 300 per month (actual amount spent ₹ 200 per month).
Bonus ₹ 25,000.
Leave encashment ₹ 13,500.
Advance salary of April 2025 ₹ 14,000.
Entertainment allowance ₹ 250 per month.
Mr. Prabhakar has been provided with free use of a small car for both official and personal use. During
the year the company reimbursed ₹ 4,200 towards medical expenses incurred by him.
His contribution to RPF is 14% of salary and the company also makes a matching contribution. Interest
credited by the company on the accumulated balance of RPF account at 12% p.a. amounts to ₹ 18,000.
Professional tax paid by him is ₹ 200 per month. Pension received in London from his former employer
in London ₹ 25,000. Hard duty allowance ₹ 500 p.m.
Compute Mr. George’s salary income for the A.Y. 2025-26, if he is NOR in India.
(Ignore Alternative Tax Regime under Section 115BAC)

26. Mr. Prabhakar (resident) is a central Government employee posted at Bangalore. He furnishes
the following particulars of his salary income for the P.Y. 2024-25.
Salary ₹ 30,000 p.m.
Dearness allowance 30% of salary
Entertainment allowance ₹ 1,000 p.m.
School fees of his son, ₹ 800 p.m. is directly paid by the Government to the school. The Government
has made arrangement with the school to admit their employees’ children.
Free meals in office (cost ₹ 60 for 290 days = 17,400), and free holiday home facility at Simla (cost ₹
8,000). An accommodation is provided by the employer in a Blue star hotel from 18.3.2024 to 31.3.2024
on account (Tariff being ₹ 2,000 per day is paid by employer)
Employer gifts a music system to Mr. Prabhakar on his completing 10 years of service (cost of music
system ₹ 22,470)
He has purchased a second-hand small car of the employer for 1,50,000. It’s market value ₹ 1,60,000.
But W.D.V. was 1,80,000. The car is used for personal cum official purpose. The company meets
maintenance expenses of the car amounting ₹ 45,000 p.a. and also provides a driver at ₹ 1,200 p.m.
The employer sells an air conditioning system for ₹ 2,000. It was purchased by the company on 10-04-
2021 for ₹ 50,000.
On 01-03-2024 he received an advance of 3 months’ salary.

Compute his income from salary for the A.Y. 2025-26. (under Existing Tax Regime and Alternative Tax
Regime)
 Morality overtakes legality…. DVG

27. Mr. Ganesh the manager of Maruthi Suzuki Ltd., Mumbai, has furnished the following details of
his income for the year ended 31st March 2025.

i) Basic salary ₹ 21,000 per month.

ii) Bonus at two months basic salary.
iii) Commission is 3% on sales. During the year he achieved a sale of ₹ 5,00,000
iv) Dearness allowance forming part of salary ₹ 7,000 per month (considered for retirement benefits)
v) Medical allowance ₹ 1,400 per month.
vi) Entertainment allowances ₹ 3,000 per month.
vii) Children hostel allowance for his two children at ₹ 500 per month per child.
viii) RPF company’s contribution ₹ 6,000 per month.
ix) RPF own contribution ₹ 5,000 per month.
x) Interest on RPF at 11% p.a. ₹ 44,000
xi) Transport allowance ₹ 1,800 p.m.

He has been provided rent free furnished accommodation at Mumbai whose fair rental value is ₹ 10,000
and cost of furniture ₹ 60,000. He paid professional tax of ₹ 2,400.

Compute his taxable salary for the assessment year 2025-26. (Ignore Alternative Tax Regime under
Section 115BAC)