Question

Mr. Kartarsingh (age 48 years) works in a private company. His monthly income after deduction of allowances is Rs. 42,000 and every month he contributes Rs. 3000 to GPF.  He has also bought Rs. 15,000 worth of NSC (National Savings Certificate) and donated Rs. 12,000 to the PM's Relief Fund. Compute his income tax.

Answer 1

Monthly Income = Rs. 42,000

Gross annual income = Rs. 42,000 × 12 = Rs. 5,04,000

Applicable deductions:

Monthly GPF contribution = Rs. 3000

Annual GPF contribution = Rs. 3000 × 12 = Rs. 36,000

NSC = Rs. 15,000

Donation in PM's relief fund = Rs. 12000

Total applicable deductions = Rs. 36,000 + 15,000 + 12,000 = Rs. 63,000

Total taxable income = Gross annual income - total applicable deductions 

= Rs. 5,04,000 - Rs. 63,000 = Rs. 4,41,000

Now the Total taxable income falls in the slab of 2,50,001 to 5,00,000. 

So, Income tax = 5% of (Taxable income - 2,50,000)

= 5% of (441000 − 250000)

= `5/100 xx 191000`

= ₹ 9550

Education Cess = 2% of Income Tax

= 9550 × `2/100` '

= Rs. 191

Secondary and Higher Education Cess = 1% of Income Tax

= 9550 × `1/100`

= Rs. 95.5

Total tax to be paid = Income tax + education cess + secondary and higher education cess

= 9550 + 191 + 95.5

= Rs. 9836.5

∴ Mr. Kartar Singh will have to pay 9836.50 income tax.