Name: _____________________ Programme ____________ Roll No.

____________

AHMEDABAD UNIVERSITY
AMRUT MODY SCHOOL OF MANAGEMENT
2020 MONSOON SEMESTER
DIRECT TAXES- FAC121
EVALUATION TYPE: ASSIGNMENT – 2
TOPIC- INCOME FROM SALARY

Date: Total Marks: 40

Section No: No. of printed pages: 04
Course Owner: Poonam Dugar

Question 1:- LEAVE SALARY

X, a non-government employee, receives Rs. 3, 75,000 as leave salary at the time of
retirement on February 20, 2020. On the basis of the following information, determine the
amount of taxable leave salary: Basic Salary: Rs, 15,000 p.m. Duration of service: 26 years,
entitlement of leave salary: 60 days’ salary for every year of service and leave availed while
in service: 20 months.
(3)

Question 2: LEAVE SALARY

X, an employee of the Himachal Pradesh Government, retires on January 3, 2020 and
receives Rs. 11,60,000 as cash equivalent of earned leave to his credit. Is Rs. 11,60,000 fully
taxable in the hands of X ?
(1)

Question 3: LEAVE SALARY

From the following information, find out the amount of leave salary chargeable to tax for the
assessment year 2020-21 ·:
Date of retirement of X from a private job November 30, 2019
Basic Salary from January 1, 2019 to April 30, 2019 Rs. 10,000 per month
Basic Salary from May 1, 2019 onwards Rs. 12,000 per month
Leave availed in service 300 days
Rate of leave entitlement according to the service rule 60 days leave for each
year of service
Duration of service 16 years
Amount of leave encashment given at the time of retirement Rs. 2,64,000
(3)

Question 4: LEAVE SALARY

R an employee of XYZ Ltd. retired from service w.e.f. 1.1.2020 after serving for 16 years
and 7 months. At the time of retirement, he received a sum of Rs. 50,000 as leave
encashment. He was entitled to 40 days leave for each year of completed service and had
availed a leave of 300 days while in service. He was getting a salary of Rs. 5,000 per month

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at the time of the retirement. He received an increment of Rs. 500 w.e.f. 1.7.2019. Calculate
the amount of taxable leave salary.
(3)
Question 5: GRATUITY
X, an employee of LMN Ltd., receives Rs. 45,000 as gratuity under the Payment of Gratuity
Act, 1972. He retires on November 10, 2019 after rendering service of 30 years and 4
months. At the time of retirement monthly salary was Rs. 2,340 (inclusive of dearness
allowance of Rs. 200 per month). Calculate amount of gratuity chargeable to tax.
(3)

Question 7: GRATUITY
R joined the service on 1.6.2000 retired from his service on 17.11.2019 and received
11,20,000 as gratuity. At the time of retirement his basic salary was Rs. 70,000 p.m. and
dearness allowance Rs. 35,000 p.m. (60% of which was part of salary). Compute the amount
of gratuity exempt from tax and the amount which is taxable. He is covered under the
Payment of Gratuity Act.
(3)

Question 8: HOUSE RENT ALLOWANCE

X, a resident of Ajmer, receives Rs. 1,92,000 per annum as basic salary during the previous
year 2019-20. In addition, he gets Rs. 19,200 per annum as dearness allowance forming part
of basic salary for computation of all retirement benefits, 7 percent commission on sales
made by him (sale made by X during the relevant previous year is Rs. 86,000) and Rs. 24,000
per annum as house rent allowance. He, however, pays Rs. 21,500 per annum as house rent.
Determine the quantum of house rent allowance exempt from tax.
(3)

Question 9: HOUSE RENT ALLOWANCE

X is employed at Noida as the Finance Manager of R Company Ltd. The particulars of his
salary for the previous year 2019-20 are as under:
Basic Salary 30,000 p.m.
Dearness Allowance (forming part of basic salary) 10,000 p.m.
Commission Rs. 45,000 p.a.
House Rent Allowance Rs. 15,000 p.m.
The actual rent paid by him is Rs. 10,000 p.m. for an accommodation at Noida till
31.12.2019. From 1.1.2020 the rent was increased to Rs. 20,000 p.m. Compute the taxable
HRA.
(HINT- Calculate exemption for both periods separately) (4)

Question 11: ENTERTAINMENT ALLOWNACE

X, a Government employee, gets Rs. 8,00,000 per annum as basic pay. In addition, he
receives Rs. 8,500 as entertainment allowance. His actual expenditure on entertainment for

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official purposes, however, exceeds Rs. 9,000. Can he claim deduction of actual amount
spent by him on entertainment?
(2)

Question 12: ALLOWNACES

During the previous year 2019-20, the following allowances are given to X by the employer
company. Calculate the Taxable allowances.
Nature of allowance Amount of Allowance Amount
given Actually Spent
1. Travelling allowance for official purposes 36,000 32,000
2. Conveyance allowance for official purposes 50,000 52,000
3. Helper allowance for engaging helper for 68,000 64,000
official purposes
4. Research allowance 1,00,000 90,000
5. Uniform allowance for official purposes 18,000 20,000
(2.5)

Question 13: ALLOWANCES

During the previous year 2019-20, the following allowances are given to X by the employer
company. Calculate the Taxable allowances.
Nature of allowance Amount of
Allowance
Tribal area allowance for X's posting in Assam for two months 1,000
Child education allowance for X's elder son 1,800 p.a.
Child education allowance for X's younger son 900 p.a.
Child education allowance for X's daughter 1,080 p.a.
Hostel expenditure allowance for X's elder son 6,600 p.a.
Transport allowance for commuting between office and residence 21,000 p.a.
(2.5)

Question 14: PERQUISITES

X gives the following information for the previous year ending March 31, 2020 –
Rs.
Basic salary 9,00,000
Dearness allowance 70 per cent is considered for retirement benefits 80,000
Fixed lunch allowance 24,000
Children education allowance (for two children) 9,600
X has been provided with a rent free unfurnished house. Find out the taxable value of
perquisite in the following situations considering both the assumptions of the location of
accommodation given below the situations.

Situation 1- X is a Government employee .He has been allotted a rent-free accommodation

by the Government. License fee of the house according to the house allotment scheme of the
Government is Rs. 6,000 per annum.

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Situation 2 - X is an employee of a private sector company. He has been allotted a rent-free
accommodation. The house is owned by the employer.

Find the taxable value of the perquisite in respect of rent-free accommodation on the
assumption that-
 The house is situated in Mumbai (population is more than 25 lakhs); or
 The house is situated in Pratapgarh (population is 8 lakhs). (5)
Question 15: PERQUISITES
R, furnishes the following particulars of his remuneration for the previous year 2019-20:
Rs.
Basic salary 12,000 p.m.
Dearness allowance 1,000 p.m.,
(40% of which forms part of salary for retirement benefits)
Lunch Allowance 200 p.m.
Medical Allowance 500 p.m.,
City Compensatory Allowance 300 p.m.,
Children Education Allowance (per child for 2 children,) 230 p.m.
He is provided with a rent-free accommodation in Delhi. The cost of the furniture provided is
Rs. 1,00,000 and two air-conditioners, which have been taken on hire by the company, have
also been provided in the accommodation. The hire charges of each air conditioner is Rs.
2,000 per annum, Compute the value of the rent-free accommodation if the accommodation is
provided by: ·
1. The Government and the value of the accommodation as per Govt. rules is Rs. 500 p.m.
2. XYZ Ltd, and the accommodation has been taken on rent by the company at Rs. 5,000
p.m. (5)