UNIT-1

1. Determine the status of following persons: (Pg.no: 1.13)

a) Reliance Industries Limited
b) Punjab National Bank
c) Madras University
d) Calcutta Municipal Corporation
e) A partnership firm with A, B and C partners
f) A Brahmin Parivar consisting of Mr. A, his brother B, Mrs. A and B
g) Kalyani Publishers Ltd.
h) Reserve Bank of India
i) Mr. Narendra Modi, Prime Minister of India
j) Markfed, Housefed
2. Mr. Ram, an Indian citizen leaves India for the first time on 31st May 2019 and comes back on 15th
May 2022. He again leaves India on 10th June 2023 to come back on 14th January 2024. He is living in
India since then. Determine the status for the previous year 2023-24. (Pg.no: 1.47)

3. Mr. Rohan, a foreign national came to India for the first time on June 15, 2018. During the financial
years 2018-19, 2019-20, 2020-21, 2021-22, 2022-23 and 2023-24, he stays in India for 120 days, 115
days, 15 days, 191 days, 124 days and 80 days respectively. Determine his residential status for the
assessment year 2024-25.

(Pg.no: 1.50)

4. Show how the following incomes are to be assessed in the hands of an Assessee who is (a) Resident
(b) Non-Resident and (c) not ordinarily resident. (Pg.no:1.71, Q/No: 19)
a) Salary drawn during the year for employment outside India from Government of India –
Rs.93,500
b) Salary drawn for employment in London Office of an Indian Company for three months
-Rs.18,000
c) Profits earned abroad & received in India – Rs. 25,000
d) Profit earned from business transactions outside India & kept in Bank there -Rs. 18,000
e) Dividend received from an Indian Company - Rs. 3,000

5. Following are the income of Sri Rathnam for the previous year 2023-2024: Pg.no:1.72, Q/No: 21)
i) Profit from the business in Bangalore – Rs.10,000
ii) Income accrued in India but received in Japan – Rs. 4,000
iii) Profit from business in Canada but received in India -
Rs.5,000
 iv) Income from house property in Karachi received in Bombay
-Rs.4,000
v) Profit from business established in England and deposited
there, the business being controlled from India -Rs. 20,000
vi) Income from house property in America and deposited there -
Rs. 2,000
g) Past untaxed income brought into India during the previous
year -Rs. 10,000

Compute the total income of Shri Rathnam for the assessment year 2024-25 if he is (a) Resident (b)
Not Ordinarily Resident or (c) Non-Resident

6. The following are the incomes of Shri Kiran for the previous year 2023-24 (Pg.No: 1.73, Q:No-
24)
i) Profit from Business in Dharwad -Rs. 7,000
ii) Income accrued in India but received in Italy -Rs. 6,000
iii) Profit from Business in England received in India -Rs. 5,000
iv) Income from house property in Africa received in India -Rs.
4,000
v) Profit from business established in Iran and deposited in a
bank there, the business being controlled from India- Rs. 3,000
vi) Income from house property in Pakistan and deposited in
bank there- Rs. 2,000
g) Past untaxed foreign income brought in to India during this
previous year – Rs. 1,000
Compute the total income of Shri Kiran for the assessment year 2024-25 if he is (a) Ordinary Resident
(b) Non Ordinarily Resident (c) Non-Resident
7. Mr. B, a married citizen of India left for Germany for the first time on 15-9-2022 on a business trip.
He returned to India on 5-6-2023. During his absence from India, he maintained a dwelling house for
himself in Calcutta. What will be his residential status for the assessment year 2024-25. (Pg.No: 1.69.
Q:No- 5)
8. Find out the assessment year for the following previous years:
Income Previous Year
Salary Income of Mr. A April 2023 to March 2024
Business Income of Mr. B April 2023 to March 2024
Newly set up business on 12-5-2023
 House Property Income April 2024 to March 2025

Unit-2
Ex-1:
Ms. Priya works as a manager in a company and receives the following income and benefits:
1. Basic Salary: ₹40,000 per month
2. Dearness Allowance (DA): ₹10,000 per month (fully taxable)
3. House Rent Allowance (HRA): ₹15,000 per month
4. She pays ₹12,000 as monthly rent for her house in a metro city.
5. Perquisites: Rent-free accommodation valued at ₹50,000 annually.
6. Standard Deduction: ₹50,000
Calculate Ms. Priya's taxable salary for the financial year.
Sol:
1. Annual Basic Salary:
₹40,000 × 12 = ₹4,80,000
2. Annual Dearness Allowance (DA):
₹10,000 × 12 = ₹1,20,000
3. Exemption for HRA (least of the following three):
o Actual HRA received: ₹15,000 × 12 = ₹1,80,000
o Rent paid – 10% of Basic Salary + DA: ₹12,000 × 12 – 10% of (₹4,80,000 +
₹1,20,000)
= ₹1,44,000 – ₹60,000 = ₹84,000
o 50% of Basic Salary + DA (since Priya lives in a metro city): 50% of ( ₹4,80,000 +
₹1,20,000) = ₹3,00,000
Exempted HRA = ₹84,000
Taxable HRA = ₹1,80,000 – ₹84,000 = ₹96,000
4. Value of Perquisites:
Rent-free accommodation = ₹50,000 (fully taxable).
5. Gross Salary:
Basic Salary + DA + Taxable HRA + Perquisites
= ₹4,80,000 + ₹1,20,000 + ₹96,000 + ₹50,000
= ₹7,46,000
6. Deductions under Section 16:
o Standard Deduction: ₹50,000
 7. Taxable Salary:
₹7,46,000 – ₹50,000 = ₹6,96,000
The Taxable Salary of Ms. Priya is ₹6,96,000.

1. Mr. A receives Rs. 4,20,000 p.a. as net salary. Employer had deducted Rs. 4,000 p.m. as
Employee’s contribution to R.P.F Rs. 5,000 p.a. as tax deducted at source and Rs. 2,000 p.a.
as professional tax. During the year employer had deducted Rs. 2,500 p.m. towards the
recovery of house building advance taken by Mr. A. Compute his gross salary. (Pg: no: 2.7)
SOL:

2. Calculate the taxable amount of annual accretion to R.P.F. if following information is

provided by Assessee:
a) Pay @ Rs. 40,000 p.m.
b) Commission received by him on the basis of turnover achieved by him – Rs. 1,36,000
c) Employer’s contribution to R.P.F. @ 13% of Salary;
d) Interest credited during the year to R.P.F. Balance @ 12% is Rs. 64,000 (Pg: no: 2.15)

3. Mr. Hari is employed at Amritsar on a salary of Rs. 30,000 p.m. The employer is paying
H.R.A. of Rs. 8,000 p.m. but the actual rent paid by him (employee) is Rs. 12,000 p.m. He is
also getting 2% Commission on turnover achieved by him and turnover is Rs. 50,00,000.
Calculate his Gross Salary. (Pg: no: 2.25)
 Sol:

4. An air conditioner was transferred by the employer company to Mr. A for Rs. 26,000 on 1-12-
2023. Its cost on 1-11-2021 was Rs. 40,000. What is the value of perk? (Pg: no: 2.58)

5. Compute taxable part of annual accretion from information given below:

i) Salary @ Rs.48,000 p.m.
ii) Commission @ 1% of turnover of Rs. 80,00,000 achieved by him during the previous
year
iii) Employer’s contribution to R.P.F @ 7,000 p.m.
iv) Interest credited to R.P.F. balance @ 12% p.a. is Rs.72,000 (Pg: no: 2.15)
Sol:
Components of Taxable Annual Accretion
1. Employer’s Contribution to R.P.F.: Taxable if it exceeds 12% of salary.
2. Interest Credited to R.P.F.: Taxable if it exceeds 9.5% per annum.
Salary for R.P.F. Contribution
Salary includes Basic Salary and Commission based on turnover.
Salary = (₹48,000 × 12) + (1% × ₹80,00,000) = ₹5,76,000 + ₹80,000 = ₹6,56,000
Employer’s Contribution to R.P.F.
Total Employer's Contribution = ₹7,000 × 12 = ₹84,000
Exempt Contribution = 12% × ₹6,56,000 = ₹78,720
Taxable Employer’s Contribution = ₹84,000 - ₹78,720 = ₹5,280
Interest Credited to R.P.F.
Excess Interest Rate = 12% - 9.5% = 2.5%
Taxable Interest = 2.5% × ₹72,000 = ₹18,000
Total Taxable Annual Accretion
Total Taxable Accretion = Taxable Employer’s Contribution + Taxable Interest
= ₹5,280 + ₹18,000
= ₹23,280

6. Compute gross salary from information given below:

i) Salary @ Rs. 25,000 p.m.

ii) D.A. @ 5,000 p.m. (Rs. 2,500 p.m. enters into pay for service benefits)

iii) Advance salary for two months Rs. 55,000

iv) Employer’s contribution to R.P.F Rs. 3,500 p.m. (Pg: no: 2.23)

7. Mr. Babu retired on 30-11-2023 from a coal mine after putting a service of 28 years and 10

months. At the time of his retirement, he was getting a salary of Rs. 16,000 p.m. and he use to

get an increment of Rs. 500 p.m. on 1st April every year. His D.A. was Rs. 2,000 p.m. Gratuity

received Rs. 3,40,000. Find out his taxable gratuity, if he is covered under Gratuity Act, 1972.

(Pg.no: 2.73)

8. Mr. Patil was appointed as a manager on 1 st July 2019 in the grade of 20,000- 500- 22,000-

1,000-25,000 with two advance increments. Find out his salary for the previous year 2022-23

if

a) Salary is due on first day of the month: and

b) Salary is due on last day of the month (Pg.no: 2.9)

 9. Mr.Ramesh Swain is employed at Hyderabad at a Basic Salary of Rs. 25,000 p.m. and he is

also getting following allowances:

1. Dearness Allowance – Rs. 2,000 p.m.

2. Lunch Allowance – Rs. 1,000 p.m.

3. Servant Allowance (He is paying Rs. 1,200 p.m. to a servant) – Rs. 1,000 p.m.

4. Transport Allowance - Rs. 2,000 p.m.

5. Education Allowance @ 200 p.m. per child for three children

6. Hostel Allowance to one child – Rs. 500 p.m.

7. Conveyance Allowance (He does not spend anything) – Rs. 800 p.m.

8. Overtime Allowance – Rs. 2,000 p.m.

9. Officiating Allowance – Rs.2,000 p.m.

10. Cash Allowance – Rs. 1,200 p.m.

11. Entertainment Allowance – Rs. 2,000 p.m.

12. Medical Allowance – Rs. 800 p.m.

13. City Compensatory Allowance – Rs. 600 p.m.

14. House Rent Allowance – Rs. 5,000 p.m.

He is having a family house at the place of his posting but he is living in a rented house and is paying

a rent of Rs. 7,000 p.m. Find out his Gross Salary.

a) If he opts to be taxed u/s 115BAC (Pg: no: 2:30)