Illustration:

Mr. A who is 46 years old, has the following details for financial year 2018-19:-

 Income from business Rs.3,50,000/=

 Deposited in PPF account Rs.60000/=

Calculate the amount of income tax payable by him.

Solution:

Income from business Rs.350000/=

Less: Deduction under Chapter VI-A

Deposit in PPF Account Rs.60000/=

Net taxable Income Rs.290000/=

Income Tax on above Rs.2000/=

Tax Rebate under section 87A Rs.2000/=

Net tax payable NIL

Note:-

 Rate of income tax for resident individual is 5% in respect of income from

Rs.250000/= to Rs.500000/= and income up to Rs.250000/= is exempted from
income tax.
 A tax rebate is available u/s 87A equal to amount of tax or Rs.2500/=, whichever
is less, in case of resident individual having total income up to Rs.350000/=

Illustration:

Mr. X who is 35 years old and employed in M/s ABC Ltd., has the following details
relating to his income and investment during financial year 2018-19:-

 Basic pay Rs. 300000/=

 Commission on sales Rs.100000/=
 House rent allowance Rs.150000/=
 Contribution by Mr. X to Provident Fund Rs.36000/=
 Amount deposited in PPF account Rs.50000/=
 House rent paid for residence in Delhi Rs.72000/=
 LIC premium paid Rs.10000/=
 Medical insurance premium paid for self Rs.16000/=
  Interest received from Saving Bank Account Rs.12000/=

Calculate income tax liability of Mr. X for assessment year 2019-20.

Solution:

COMPUTATION OF TAXABLE INCOME

Income from Salary

Basic Pay Rs.300000/=

Commission on sales Rs.100000/=

House Rent Allowance Rs.150000/=

Less: Exempt (see notes)Rs.42000/= Rs.108000/= Rs.508000/=

Income from other sources

Interest received from saving bank account Rs.12000/=

Gross Total Income Rs.520000/=

Less: Deduction under Chapter VI-A

Under Section 80C

Contribution to Provident Fund Rs.36000/=

Deposit in PPF Account Rs.50000/=

LIC Premium paid Rs.10000/= Rs.96000/=

Under Section 80D

Medical Insurance Premium Paid Rs.16000/=

Under Section 80TTA

Interest from saving bank account Rs.10000/=

Rs.122000/=

Taxable Income Rs.398000/=

Income Tax payable on Rs.398000/= Rs.7400/=

Add: Health & Education Cess @ 4% Rs.296/=

Total Tax Liability Rs.7696/=

Notes:-

1. Amount of HRA exempt is the least of following:-

(i) Actual HRA received Rs.150000/=

(ii) Rent paid – 10% of salary i.e

(72000-30000) Rs.42000/=

(iii) 50% of salary Rs.150000/=

2. Medical Insurance Premium is allowed up to Rs.25000/= as deduction under

section 80D.
3. Deduction under section 80TTA is allowed up to Rs.10000/= in respect of interest
received from saving bank accounts.
4. A rebate of income tax is not allowed under section 87A since the taxable income
in above case is more than Rs.350000/=. The amount of rebate will be Rs.2500/=
or actual income tax payable, whichever is less if the taxable income is up to
Rs.350000/=.

Illustration:

Mr. Y submits the following information in respect of his property for financial year 2018-
19:-

Rent received Rs.240000/=

Municipal taxes paid Rs.20000/=

Expenditure on repair Rs.15000/=

Insurance charges paid for building Rs.6000/=

Ground rent paid Rs.2000/=

Interest paid against loan taken to purchase above-

Property Rs.20000/=
Compute the income under the head ‘Income from House Property’ for assessment
year 2019-20.

Solution:

Computation of Income from House Property

Rent received Rs.240000/=

Less: Municipal Tax Rs.20000/=

Net Annual Value Rs.220000/=

Less: Standard Deduction @ 30% u/s 24 Rs.66000/=

Less: Interest against loan Rs.20000/=

Income from house property Rs.134000/=

Notes:-

1. No deduction is allowed in respect of repair, insurance and ground rent etc. while
calculating the income from house property. Only standard deduction @30% is
allowed from net annual value i.e. rent minus municipal tax.
2. Deduction in respect of interest paid on loan taken for purchasing or construction
of the building is allowed.

Illustration:

Mr. X who is 40 year old, submits following information for F.Y. 2018-19. Calculate his
income tax liability:-

Income from business Rs.400000/=

Rent from house property Rs.200000/=

Municipal Tax paid for above house Rs.20000/=

Bank interest from fix deposits Rs.40000/=

Life Insurance Premium paid Rs.15000/=

Medical Insurance Premium paid for self Rs.20000/=

Solution:
 Computation of Taxable Income

Income from Business or Profession

Income from Business Rs.400000/=

Income from House Property

Rent received Rs.200000/=

Less: Municipal Tax Rs.20000/=

Net annual value Rs.180000/=

Less: Standard Deduction @ 30% Rs.54000/=

Net Income from house property Rs.146000/=

Income from Other Sources

Interest from fix deposits Rs.40000/=

Gross total income Rs.586000/=

Less: Deduction under Chapter VI-A

Deduction u/s 80C

Life insurance premium paid Rs.15000/=

Deduction u/s 80D

Medical Insurance Premium paid Rs.20000/= Rs.35000/=

Net taxable income Rs.551000/=

Income tax on income Rs.22700/=

Add: Health & Education Cess @ 4% Rs.908/=

Total tax liability Rs.23608/=

Notes:- Income tax slabs for individual are:-

up to Rs.250000/= nil, Rs.250001/= to Rs.500000/= @5% and Rs.500001/= to

Rs.1000000/= @ 20%