Dr.

Mishra aged 47 years , working in a private hospital in Bangalore on a pay scale o

the ta

1 DA
2 Commision
3 Contribution by him and employee to Statutory Provident Fund
4 Interest credited to SPF at 9.5%
5 City compensatory allowance
6 Entertainment allowance
7 Overtime allowance
8 Medical allowance
9 Children education allowance for 3 children
10 Meeting allowance
11 Provided with rent free furnished house .House owned by employer
12 Watchman and gardener were also provided at a monthly salary of
13 Provided with car of 1.8cc for both personal and official use with driver.
14 Hospital has provided free lunch for 300 days
15 Payment of Dr. Mishra children college fee is done by hospital
16 Gift in kind
17 Laptop provided for both personal and official use
18 Club bill reimbursed by hospital
19 He has taken housing loan of 40lakhs in 2015 at 3% . Normal lending rate 8.75%
20 Encashment of earned leave
21 Hospital sold a car at Rs.5,00,000.The car was purchased on 15th dec 2016 at 11,00,000
22 He, along with his family consists of 3 children made one week tour to different places in North

In January 2018, Company announced Stock Option Plan for all managerial personal. On 15th Fe
23 May 2018 at Rs 150 per share and the FMV as on 15th May was Rs 610 per share.

24 Professional tax deducted from salary

Dr. Mishra own another house which

Particulars
Date of completion
Standard rent
Fair rent
 Municipal value
Standard rent
Municipal tax
Interest on loan for the construction.
2015– 16
2016 – 17
2017 – 18
2018 – 19
2019 – 20

Note: Loan was taken by mishra from the hospital on 2015 amounting 40lakhs @ 3% and on 201

Following are the details of receipts and payment of Dr. Mishra for AY 20-21

Receipts
Balance b/d
Consultation Fees
18-19 18000
19-20 92000
20-21 18000
Visitation Fees
Operation Fees
Loan from Bank
Sale of Medicine
Gifts and presents
Remuneration from journals
Dividend
Interest on POSB
Any other professional receipt

Other information :
1 Depreciate equipments @ 15% books @ 40%.
2 Gifts include Rs 1500 from relatives.
3 Loan was taken for professional use.
4 Closing stock of medicine is Rs 15000.

Following are the details for Mishra's income from other sources
 Particulars

Lottery income
Winning from card games
Interest received from IT Dept. on delayed
Dividend from a foreign company
Winnings from horse races
Family pension received
Insurance commission
Income from royalty
Interest from FDR
Post office savings
Government securities

Note:
1 Government securities are issued at the state level, not central.
2 Insurance commission mentioned is for first year only

3
ng in a private hospital in Bangalore on a pay scale of Rs 60,000 -83,500 – 77000 - 5,000 - 102000 with eff
the tax liability for Mr. Mishra for the AY 20-21, assumi

Particulars

ee to Statutory Provident Fund

r 3 children

d house .House owned by employer

so provided at a monthly salary of
oth personal and official use with driver.
for 300 days
college fee is done by hospital

al and official use

akhs in 2015 at 3% . Normal lending rate 8.75%

0.The car was purchased on 15th dec 2016 at 11,00,000

ts of 3 children made one week tour to different places in North India under LTC.

unced Stock Option Plan for all managerial personal. On 15th February 2018, Jayant has exercised the option for 300 shares. Th
d the FMV as on 15th May was Rs 610 per share.

alary

Dr. Mishra own another house which is used by his children in Pune. The details of that house ar
ion.

from the hospital on 2015 amounting 40lakhs @ 3% and on 2019 the loan outstanding amount was 35,50,000

s and payment of Dr. Mishra for AY 20-21

Amt.
40000

137000
21000
34300
52000
110000
4500
6000
23000
14000
19200

461000

ooks @ 40%.

ishra's income from other sources

 Amount

2000
2500
4000
150,000
7000
24600
5000
4570
6250
2550
1300

d at the state level, not central.

d is for first year only

Following are the details for Mishra's income from Capital G

Mr. Mishra sold a house on 1-9-2019 for 30,00,000. This house was inherited by him in the year 200
father who had constructed it in year 1992-93 for Rs. 1,00,000. Mr. Mishra has spent Rs. 80,000 on r
of this house in year 2007-08. Fair value of the house as on 1-4-2002 9,00,000. This house was unde
for sale in May 2011, he received Rs. 20,000 as advance money. The contrat could not materialise an
money was forfieted. Compute the amount of capital gain. CII for 2000-01: 100, 2007-08: 122, 2011

Cost of Acquisition in 2002-03 is Rs 1,20,000. Find out the indexed cost if sold in 2019-20 for Rs 7,00

Mr. Mishra puchased a land in the year 2012-2013 for 50,00,000. It was sold in the previous year for
term capital gain (CII for 2012-2013 is 200)

Mr. Mishra purchased in the year 2018-2019 for Rs. 50,00,000. It was sold in the previous year for R
gain (CII for 2012-2013).
- 5,000 - 102000 with effect from 1st January 2017. He works for the private hospital in morning and si
or the AY 20-21, assuming that salary becomes due on the last day of each month.

culars

the option for 300 shares. The fair market value of shares on this date was Rs 550 per share.He was alloted 300 shares on 15th

The details of that house are as follows:

Amount
3/31/2018
NA
100,000
 800000
SOP
40000

120000
120000
120000
120000
106500

s 35,50,000

Payment Amt.
Rent of Clinic
18-19 4000
19-20 36000
20-21 3000 43000
Electricty & Water bills 24600
Purchase of books 26500
Surgical equipments 26000
Income tax 20000
Salary to staff 55000
Life insurance premium 27000
Interest on loans 17000
Dispensary Expenses 10000
Purchase of medicine 45000
Balance c/d 166900

461000
s income from Capital Gains

ted by him in the year 2002-03 from his

a has spent Rs. 80,000 on renovation
000. This house was under negotiation
at could not materialise and the advance
: 100, 2007-08: 122, 2011-2012: 167.

sold in 2019-20 for Rs 7,00,000( CII for 2002-03 is 105)

ld in the previous year for Rs. 98,00,000. Calculate the long

in the previous year for Rs. 98,00,000. Calculate the short term capital
pital in morning and sits in his own clinic in evening. From the following, compute
h.

Amount
40% of Basic Pay
50,000 during year
12% each of his salary
Rs. 47,500
Rs. 3000 per month
Rs. 1500 per month
2500 per month
2000 per month
Rs.500 per month
Rs.3000 per month
Rental value= Rs.50000 , cost of furnishing = Rs 4,50,000
Rs.5000 each
Driver salary= Rs. 35,000. all expenses met by employeer
Rs 150 per day
Rs. 1,50,000
4,500 pa
Rs.50000
Rs. 45,000(personal
Loan outstanding as on 1-4-2019, use)
Rs 35,50,000.

Rs. 40,000

Total amount spent by the hospital is Rs 2,40,000.

alloted 300 shares on 15th

Rs. 6000 for the year

Amount
3/31/2018
NA
100,000
800000
SOP
40000

120000
120000
120000
120000
106500
INCOME OF DR. Mishra Amount
Income from Salary 2,308,430
Income from House Property -154,500
Income from Profession 132,400
Income from Capital Gains
Income from other sources 180,900
Total Income 2,467,230
Less: Deduction under section 80C -150000
Taxable income 2317230

Tax Liability of Dr. Mishra

Income chargable at special rates @ 30%. 1035

Income chargable under slab rates (2317230- 3450) 2313780

Tax Slabs Amount

Upto 2.5lakh 0% Nil
2.5L - 5L 5% 12,500
5L-10L 20% 100,000
Above 10L 30% 394,134
Total 507669
Add: Cess @ 4% 20306.76
TAX LIABILITY 527975.76
Rounding off of tax liability 527980
INTERPRETATION

a. Employee contribution to SPF for Rs. 157752 i.e., 12% of Basic pay + DA and insurance premium paid for Rs. 270
cted to Rs 150000 only.
 I. INCOME FROM SALARY

Computation of Total Income of Dr. Mishra for AY 20-21

Sl.No Particulars

1 Basic Pay
DA @ 40% of basic pay (as per terms of employment)
Commission
Banks contribution to SPF - exempted
Interest credited to SPF - exempted
2 Allowances
City compensatory allowance = 3000 x 12
Entertainment allowance = 1500 x 12
Overtime allowance = 2500 x 12 = 30000
Medical allowance = 2000 x 12

Children education allowance = 500 x 12 x 3 = 18000

Less: exempted = 100 x 12 x 2 = 2400
Meeting allowance = 3000 x 12
3 Perquisites
Rent free furnished house:
15% of salary = 939000 + 375600
+50000+36000+18000+30000+24000+15600+36000 = 1524200 x
15/100 =228630
Add: 10% of the cost of furnishing = 450000 x 10/10
= 45000
Watchman's salary = 5000 x 12

Garderner's salary - not taxable since house is owned by the bank

Motor car of 1.8cc
= 2400 + 900 x 12
Free lunch for 300 days = 150-50*300
Payment of children college fee
Gift in kind - 4500
Laptop provided for official and personal use
Club bill paid by the bank (personal use)
 Concessional interest loan - 8.75% - 3% = 5.75% is taxable
= 3550000 x 5.75/100
Leave encashment
Sale of car at concessional amount
Cost on
Less 15th December
depreciation at 20%2015
per annum on WDV basis =1100000

In 16-17 for 6 months = 1100000 x 20/100 x 6/12

= 110000

=990000
Depreciation in 17-18 @ 20% = 198000
= 792000
Depreciation in 18-19 @ 20% = 158400
WDV as on 1st April 2019 = 613600
Less selling price = 500000
Leave travel concession - for 5 members including 3 children
= 240000
Less: exemption only for 2 children = 240000 x 4/5
= 192000
Stock Option Plan
FMV on the date on which option was exercised = 550 x 300
=165000 Less:
Allotment price = 150x 300 =45000

4 Other Items
Gross Salary
5 Deductions U/S 16
Standard deduction U/S 16 (i)

Professional tax paid U/S 16 (iii)

Income from salary

AY 20-21

Amount

939000
375600
50000
0
0

36000
18000
30000
24000

15600
36000

183630
60000

39600
30000
150000
Exempted
Exempted
45000
204125
90000

113600

48000

120000
0
2364430

50000
2314430
6000

2308430
Employer's contribution to statutory provident fund is exempt under section 10(11).
Employer's contribution to statutory provident fund is exempt under section 10(11).

Entertainment allowance is allowed as deduction only for government employees. Hence, it is taxable here because h

Children’s education allowance is exempt @ Rs. 100 per month per child up to maximum of 2 children. Section 10(1

Where accomodation is provided by the employer and owned by the employer, then taxable value of the perquisite is

In case of furnished accomodation, the value will be increased by 10% of the cost of furniture.
Obligation of employee is discharged by employer so it is fully taxable.

Perquisite value of Motor car where car is owned by the employer and the car is partly used for personal use. Then the p
Subsidised lunch provided to employee at office or business premises is exempt up to Rs. 50
Obligation of employee is discharged by employer so it is fully taxable.
If gift value is below Rs. 5000 there would be no perquisite
Value of perquisites towards use of laptops and computers is NIL. Sub rule 7 of rule 3
Interest computed at the rate charged for similar loans (less interest actually paid by employee)
In case of assets transferred is a motor car then, value of perquisite as determined under sub rule 7 of rule 3 is the dep

Value of perquisites is determined in accordance of Rule 3.

Value of perquisite is determined as fair market value on the date of exercising the option (less amount paid to the em
should be added to the value.
II. INCOME FROM HOUSE PROPERTY

Calculation of Income from House Property for Dr. Mishra for PY 2019-20

Particulars

Gross annual value

Less: Municipal tax
Net annual value
Less: Deduction U/S 24
Standard deduction @ 30% NAV
Interest on loan 19-20 106500
Add: 1/5 of pre-construction int.(240000/5) 48000

Loss on Income from house property

for PY 2019-20

Amount

Nil
--
Nil

--

154500

-154500
INTERPRETATION

Since, the house is occupied by children of the assesse and up to 2 houses the GAV can be considered as NIL. So, in

Date ofon
Interest completion of construction
loan borrowed is specified
is completely as 31
used for the
st
March
purpose 2018. Pre construction
of construction. periodasis deduction.
So, it is allowed the period prior to
acquired or construction is completed. In this case previous year in which property is completed is 2017-2018. So,
2017. Pre construction period interest is Rs. 2,40,000. Pre construction period interest can be claimed as deduction o
the date of acquisition or completion of construction.
 INCOME FROM PROFESSION

Calculation of Income from Profession of Mr. Mishra for PY 2019-20

Professional Receipts

Consultation fee
Operation fee
Visiting fee
Sale of medicine

Gift

Remuneration from journal

Any other professional receipt
Total Professional Receipts

Professional expenses.

Rent of clinic
Income tax
Insurance premium
Electricity and water charges
Depreciation on books = 26500 x 40/100
Depreciation on equipment = 26000 x 15/100
Salary to staff
Interest on loan
Dispensary expenses
Purchase of medicine

Total Professional Expenses

Income from profession (326500-194100)
SION

or PY 2019-20

Amount

137,000
34,300
21,000
110000
EXEMPTED
The whole amount of
gift is less than Rs.
50000
5000
19200
326500

Amount

43000
0
0
24600
10600
3900
55000
17000
10000
30000 (45000-15000)

194100
132400
INTERPRETATION

Consultation fees is considered as Rs. 1,37,000 assuming that the assesse is following cash basis of accounting i.e., in
receipt basis.

Gift received for Rs. 4500 is not taken into consideration since, monetary gifts up to Rs. 50,000 is not taxable.

Income tax which is shown as payment is not allowed as deduction.

Life insurance premium paid for Rs. 27,000 is considered as deduction from total income under section 80C.

Depreciation on books is considered for the entire year.

Depreciation on equipment’s is considered for the entire year.

Interest on loan is allowed as deduction since it was mentioned that the loan was taken completely for professional us

Purchase of medicine was for Rs. 45,000 but for the purpose of expenditure Rs. 30,000 is only considered because clo
50,000 is maintained.
 INCOME FROM CAPITAL GAINS

1
Sales consideration

Less: Indexed cost (120000*289/105

Capital Gains

Computation of Capital gain for Mr. Mishra for AY

2020-21
Sales consideration
Less: cost
Less: forfeited cost
Cost
Less: Indexed cost 880000*289/100
Less: Indexed cost of improvement 880000*289/122
LTCG

2
Sales consideration
Less: index cost
Capital Gain

3
sales consideration
Less: index cost
Capitan gain
 Interpretation
1 Section 45 of Income Tax Act,1961 provides that any profits
or gains arising from the transfer of a capital asset effected in th
Rs. 700,000.00 year will be chargable to income tax under the head - 'Capital G
will be deemed to be the income of the previous year in which t
Rs. 330,285.71
2 There are two types of capital gains: Short-term capital : capital
Rs. 369.714.29 capital asset. Long- term capital: capital arising on transfe

3 Cost of Inflation Index is a measure of inflation, used to calculat

of capital assets.

3,000,000
Rs. 900,000.00
Rs. 20,000.00 4 The amount Rs. 20,000 is acquired when we deduct
Rs. 880,000.00
Rs. 25,43,200
Rs. 189,508.20 5 For computing indexed cost is (Index for the year of sale/ Index
Rs. 267,291.80

Rs. 9,800,000.00
Rs.7,225,000.00
Rs. 2,575,000.00 6 Value of Long-term capital

Rs. 9,800,000.00
Rs. 5,000,000.00
Rs. 4,800,000.00 7 Value of Short-term capital
61 provides that any profits
of a capital asset effected in the previous
tax under the head - 'Capital Gains' . Such capital gains
e of the previous year in which the transfer took place.

ins: Short-term capital : capital gain arising on transfer of short-term

capital arising on transfetransfer of long-term capital asset.

ure of inflation, used to calculate long-term capital gains from sale

ed when we deduct the renovation value spent by Mr. Mishra from the fairvalue of the house which his father purchased at.

ndex for the year of sale/ Index in the year of acquisition) x cost.
which his father purchased at.
V INCOME FROM OTHER SOURCES

Computation of income from other sources for Dr Mishra

Particulars
Lottery income
Winning from card games
Interest received from IT Dept. on delayed refunds

Dividend from a foreign company

Winnings from horse races
Family pension received
Insurance commission
Income from royalty

Interest from FDR

Post office savings
Government securities
Gross Income from Other Sources
(-) Deductions
Income from royalty
Deduction for family pension
Gross Total Income
Interest on NSC
Net Total Income
m other sources for Dr Mishra

Amount
600
750
4000

150,000
2100
24600 (As the amount is more than 15,000 INR)
2500
4570

6250 (State level)

exempted
1300
196670

4570
8200
183900
3000
180900
INTERPRETATION

Income chargable at special rates. Lottery income, winning from card games and winning from horse races are kind o
Income chargable at special rates. Lottery income, winning from card games and winning from horse races are kind o

Dividend income received from domestic company exceeding Rs. 10 Lakhs is exempt under section 10(34). Howeve
dividend from a foreign company which is fully taxable.
Income chargable at special rates. Lottery income, winning from card games and winning from horse races are kind o
Only one-third or Rs. 15000 whichever is less is allowed as deduction.

Deduction is allowed for Rs. 300000 or amount of royalty received (Section 80 QQB)
Interest income received from FDRs are fully taxable and no deduction is allowed under section 80 TTA. Since, thi
received from saving accounts.
Post office savings is exempt up to Rs. 3500 as per section 10(15).
30% of such winnings.
30% of such winnings.

30% of such winnings.

 Working notes

Calculation of Basic Pay for the PY 19- 20. When Salary becomes due on the last day of the month.

1-1-2017 to 31-12-2017 = 60,000

1-1-2018 to 31-12-2018 = 83,500
1-1-2019 to 31-12-2019 = 77,000
1-1-2020 to 31-12-2020 = 82,000.

April 2019’s salary , due on 30th April to December 2019’s salary due on 31st December 2019, for 9 mo
January 2020’s salary to March salary due on 31st march 2020 for 3 months at Rs 82000 each.
77000 x 9 = 693000
82000 x 3 = 246000
= 939000
 day of the month.

cember 2019, for 9 months at Rs 77000 each.

82000 each.