Who are Employees on Payroll
It means Employee has proper job in Company and he is officially employee of company
Income Tax is applicable as per following Slab Rate
Income Tax Slab Rate Applicable
|
INCOME |
TAX |
|
UPTO 250000 |
0 |
|
250000-500000 |
5% of (Income-250000) |
|
5000001-1000000 |
20% of (Income-500000)+12500 |
|
>1000000 |
30% of (Income-500000)+112500 |
There is Rebate of 5000 2500 also if Income between 250000-350000
Example 1
Suppose an Employee gets a Salary of 15000 per month.
What is Income Tax Payable by him?
View answer
Monthly Salary=15000
Annual Salary=180000
Since Salary is less than 250000,no income tax is payable
Example 2
Suppose an Employee gets a Salary of 35000 per month.
What is Income Tax Payable by him?
View answer
Monthly Salary=35000
Annual Salary=35000*12=420000
Income Tax
=5%*(420000-250000)
=5%* 170000
=8500
Rebate=0
Net Tax=8500
Cess = 3%*8500 = 255
Tax + Cess = 8755
TDS Deduction by Employer as per income Tax Slab Rate
In case, net tax is payable by employee,TDS is deducted on same by company as per Income Tax Slab Rate
Example 2 Continue
What is monthly TDS to be deducted in this case?
View answer
Tax + Cess = 8755
TDS=Net Tax/12 = 8755/12 = 730
Net Salary=Monthly Salary-Monthly TDS=35000 - 730 = Rs 34270
Example 3
Suppose an Employee gets a Salary of 75000 per month.
What is Income Tax Payable by him?
View answer
Monthly Salary=75000
Annual Salary=75000*12=900000
Income Tax
=20%*(900000-500000)+12500
=20%* 400000+12500
=80000+12500
=92500
Rebate=0 (As Income is more than 350000)
Net Tax=92500
Cess = 3%*92500 = 2775
Tax + Cess = 95275
Example 3 Continued
What is monthly tax to be deducted in this case?
View answer
Net Tax=95275
TDS=Net Tax/12 = 95275/12 = 7940
Net Salary=Monthly Salary-Monthly TDS=75000-7940=Rs 67060
Assignment
Q1
Complete the following table in Excel
| Case | 1 | 2 | 3 | 4 | 5 | 6 |
| MONTHLY SALARY | 10000 | 25000 | 40000 | 50000 | 100000 | 22000 |
| ANNUAL SALARY | ||||||
| LESS STANDARD DEDUCTION | ||||||
| NET ANNUAL SALARY | ||||||
| TAX | ||||||
| REBATE | ||||||
| NET TAX | ||||||
| CESS | ||||||
| TAX+ CESS | ||||||
| MONTHLY TDS | ||||||
| NET SALARY |
DOWNLOAD AND TRY
View answer
| Case | 1 | 2 | 3 | 4 | 5 | 6 |
| MONTHLY SALARY | 10000 | 25000 | 40000 | 50000 | 100000 | 22000 |
| ANNUAL SALARY | 120000 | 300000 | 480000 | 600000 | 1200000 | 264000 |
| LESS STANDARD DEDUCTION | 40000 | 40000 | 40000 | 40000 | 40000 | 40000 |
| NET ANNUAL SALARY | 80000 | 260000 | 440000 | 560000 | 1160000 | 224000 |
| TAX | 0 | 500 | 9500 | 24500 | 160500 | 0 |
| REBATE | 0 | 500 | 0 | 0 | 0 | 0 |
| NET TAX | 0 | 0 | 9500 | 24500 | 160500 | 0 |
| CESS | 0 | 0 | 380 | 980 | 6420 | 0 |
| TAX+ CESS | 0 | 0 | 9880 | 25480 | 166920 | 0 |
| MONTHLY TDS | 0 | 0 | 823 | 2123 | 13910 | 0 |
| NET SALARY | 10000 | 25000 | 39177 | 47877 | 86090 | 22000 |
Q2
How much Income Tax is payable by employee at the time of filing ITR in each of above cases
View answer
Income Tax Computation
| Case | 1 | 2 | 3 | 4 | 5 | 6 |
| Income From Salary | 10000 | 25000 | 40000 | 50000 | 100000 | 22000 |
| Gross Total Income | 80000 | 300000 | 480000 | 600000 | 1200000 | 264000 |
| LESS STANDARD DEDUCTION | 40000 | 40000 | 40000 | 40000 | 40000 | 40000 |
| NET ANNUAL SALARY | 40000 | 260000 | 440000 | 560000 | 1160000 | 224000 |
| Tax | 0 | 500 | 9500 | 24500 | 160500 | 0 |
| Rebate | 0 | 500 | 0 | 0 | 0 | 0 |
| Net Tax | 0 | 0 | 9500 | 24500 | 160500 | 0 |
| Cess | 0 | 0 | 380 | 980 | 6420 | 0 |
| Tax + Cess | 0 | 0 | 9880 | 25480 | 166920 | 0 |
| Less: Annual TDS | 0 | 0 | 9876 | 25476 | 166920 | 0 |
| Net Tax Payable | 0 | 0 | 4 | 4 | 0 | 0 |
NEW SLAB RATES BUDGET 2018
Income Tax Slab Rate is as follows :-
Example
Calculation of Tax on Income of Rs 340000
Note:- This will be applicable from Next year ITR (Financial Year 2018-19 Assessment Year 2019-20)