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CHAPTER 3
NON TAXABLE INCOME
(A) INTRODUCTION
Section 5 of income tax Act ,1961 says that income tax is leviable on total income. Total Income includes all income
whether Indian or non-Indian, except those income referred to in Section 10. Therefore the income mentioned in
section 10 are non taxable income are exempt from income tax or to be more specific, income not forming part of
total income
In this chapter, we will study the general exemptions. Exemptions related to specific head of income will be covered
under that head only
The Following are some of the examples of incomes which are not agricultural income
a) Income from lease of agricultural land
b) Income from growing flowers or creepers
c) Compensation received from insurance company for damage to crop or tea garden
The Following are some of the examples of incomes which are not agricultural income
1.Dividend from company engaged in Agriculture activities
2.Income from forest trees of spontaneous growth
3.Royalty income from mines etc
(B) Provision:
Section 14 of the income tax Act states that “ all incomes shall,for the purposes of charge of income tax and computation of
total income, be classified under the following heads of income”
I Salaries
II Income from House Properties
III Profit & Gains of Business or Profession
IV Capital Gains
V Income From Other Sources
(E) Heads are Different But Tax is One i.e. Income Tax
The different heads of income do not make different kinds of taxes. The tax is always one, but the income may arise from
different sources to which different rules of computation are applied. Section 14 classifies the income under different heads
only for providing appropriate rules of computation
(F) Gross Total Income = Total Income From All Sources Computed Under Different Heads
The classification of income under different heads is with reference to the” source” of Income. Income generally arises from
several “sources” such as employment, house property, investments, business and so on
For the same head of income, there can be more than one source of income for e.g. In Income from House property there are
two sources i.e. Income from SOP and Income from LOP.
Income from each source is computed as per the rules of computation provided for the relevant head
Finally Income under all the five heads will be added together and such income is called the Gross Total Income of the
assessee during that previous year
The amount of such disallowable expenses is determined on the basis of the method to be prescribed by the CBDT (central
board of Direct Taxes)
HEADS OF INCOME
I. INCOME FROM SALARY
(A) Introduction:
Salary means any payment made at regular intervals for services rendered. If any person renders personal services as
per any contract of employment, the remuneration received by him is known as Salary
Section 15,16 and 17 of Income tax Act, 1961 deals with computation of income under the head salaries
7) Remuneration of a Partner
Any Salary, Bonus, commission or remuneration, due to or received by a partner of a firm from the firm is not
regarded as salaries under this section. The same is to be taxed as Profit and Gains of Business or Profession
8) Voluntary Payments
Salary, perquisites or allowances may be given as a gift to an employee, yet would be taxable. The Act does
not make any difference between gratuitous payment and contractual payment
9) Salary, Income must be real and not fictitious
Amount taxable under the head salaries should be real salary and not fictitious salary
10) Salary Paid Tax Free
If Salary is paid tax free by the employer, the employee has to include in his taxable income not only salary
received but also amount of tax paid by the employer. It does not make any difference whether tax is paid
under terms of contract by the employer or voluntarily
11) Grossing up of Salary
Whenever the amount of net salary is given, then we have to add back all the deductions made from the
salary by the employer on various accounts like contribution to provident funds, income tax deducted at
source, profession tax, installment for repayment of loan so as to arrive at gross salary income. This is because
income tax is levied on gross salary income. This process of ascertaining gross salary income from net salary is
called as Grossing up of Salary
c) Basic Salary
Basic Salary above would include Dearness Allowance (it itform part of Salary) but excludes bonus, allowances,
benefits and perquisites. However if remuneration is by way commission the same has to be taken into
account
Perquisites taxable in case of all employees Perquisites Taxable only in case of Specified Employees Perquisites not taxable at all
1. Rent Free Accommodation 1. Gas, electricity or water 1. Medical treatment in
2. Concession in Rent supply pro v ided free o f employer's hospital
3. Payment of Employee's C o s t 2. medical treatment in
O b l i g a t i o n 2. free education facilities go v ernm ent/ appro ve d
4. Premium to insurance life f o r f am i l y m e m be r s o f h o s p i t a l
o f e m p l o y e e E m p l o y e e 3. Medical expenses up to
5. Prescribed amenitie s 3. Free Domestic Servants Rs 15,000 in private clinic
(interest free loans/ use or such as sweeper, 4. Premium on employee
transfer to movable assets) watchman, Gardner, cook health insurance
E t c 5. premium on Medi-Claim
i n s u r a n c e
6.Medical treatment, travel
and stay abroad(only to
extent permitted by
R B I )
7 . Subsidized L unch o r
D i n n e r
8. Free Refreshments during
o f f i c e h o u r s
9.recreation facilities to
e m p l o y e e s
10.amount spent on
t r a i n i n g o f em p lo ye e s
11.telephone provided at
the residence of employee
12.Goods sold to an
employee at concessional
r a t e .
13.Conveyance facility to
cover the journey between
office and residence
14.Actual travelling
expenses paid/reimbursed
by an employer for journey
undertaken for business
p u r p o s e s
However, the amount exempt can notexceeds the expenditure actually incurred for the purpose of such travel
Family of the individual includes (a) his spouse and children and (b) his parents, brothers and sister who are mainly dependent
upon him
This exemption is subject to further conditions like number of journeys, amount of exemption per head etc.
FULLY EXEMPT
Least of the Following Least of the Following
1) Gratuity actually 1) Gratuity actually
received received
2) Rs 10,00,000 4) Rs 10,00,000
3) Salary Last 5) Average Salary
Drawn *15/26*- *1/2*-No of
No of years of years of
completed completed
services services
Leave encashment means cash received by an employee against leave earned but not taken and accumulated. The provision of
section 10(10AA) regarding taxability of leave salary are given below
Note:
1. Maximum earned leave entitlement being 1 month for every year of actual services rendered
2. If leave encashment is received during the continuity of the employment then it is taxable to government as well as non
government employee
3. Salary includes Basic Salary + DA (if terms of employment so provide) + Commission
4. Average Salary for the aforesaid purpose is to be calculated on the basis of average salary drawn during the period of 10
months immediately preceding the retirement
5. Where leave encashment is received by an employee from two or more employers in the same year, the exemption can
notexceeds he notified limit of RS 3,00,000
Any amount received on voluntary retirement by an employee under ay scheme of voluntary retirement is exempt from tax.
This exemption is available only to employees of
a) A public sector company
b) Any other company
c) An authority established under a central or state
d) A local authority
e) A co operative society
f) A recognized university
g) An Indian institute of technology
h) Notified institute of management
i) State government
j) Central government
MEANING OF SALARY
1. FOR ENTERTAINMENT ALLOWANCE: ONLY BASIC SALARY
2) Mr. . A retires from X Limited on June 30,2017. He had joined the company on 4-1-1981. He gets pension of Rs 2000
p.m. up to 30thnovember 2017. On 1stdecember2017, he requests for computation of 50% of his pension .his request is
accepted and he receives Rs 75,000 .compute the gross taxable salary if he has received Rs 50,000 as gratuity , which
is fully exempt from tax.
3) Compute the taxable income of A if no gratuity is received by him, in the above case
4) Mr. cashier received leave salary from outdated Ltd. Calculated @ Rs 10,000 for every month of leave to his credit on
his retirement on 31-3-2018. Compute taxable amount of leave salary on the basis of the following information
i. Period of services : 15 years and 6 months
ii. Earned leave entitlement; 2 months per year
iii. Earned leave taken in services : 3 months
iv. Average salary for 10 months ending 31-3-2018: Rs 10,000 p.m.
5) X a government employee receives Rs 50,000 as salary and Rs 12,000 as entertainment allowance. His actual
expenditure is only Rs 3,000. Compute the taxability of the entertainment allowance
6) Compute the taxable salary of Mr.ranjit, a resident Indian citizen, for the assessment year 2018-19, using the following
information
a. Basic salary of Rs 13,000 per month
b. Dearness allowance of Rs 3,000 per month
c. Rent free furnished house provided by employer (taxable value Rs 30,000)
d. Bonus Rs 15,000
e. Salary for 3 months taken in advance on 31/3/2018 Rs 39,000
f. Education allowance received for 3 children @ Rs 40 p.m. (exempt under rules @ Rs 100 p.m. each for only 2
children)
g. Profession tax paid Rs 2,500
7) X is a lecturer in a college at mumbai. The details of his salary and other expenses for the previous year 2017-18 are as
follows
a. Basic Salary 40,000
b. Dearness Allowance (forming part of salary) 7,000
c. City compensatory allowance 3,000
d. Education allowance for his son 4,000
(exempt under rules @ Rs 100 p.m. for two children)
e. House rent allowance 6,200
Rent paid 7,100
DIRECT TAXES IPage 15
Prof Kunal S ChandikaT.Y.B.Com(A&F)OM SAI RAM
Exempt u/s 10(13A) 2,400
f. Remuneration from mumbai university for acting as examiner Rs 3,000 and remuneration from delhi university for
acting as paper setter Rs 500
g. Allowance for looking after the evening shift of college Rs 500 pm
h. He incurred an expenditure of Rs 1000 for attending a seminar at nagpur. Expenditure was reimbursed by the
college
i. During the year he spent Rs 3,000 on purchase of books for teaching purposes
j. Professional tax paid was Rs 1600
Determine the taxable salary of Mr. X for the assessment year 2018-19
8) Mr. P retired from government services on 30/9/2017 from 1/11/2017 he joined as superintendent of a nursing home.
He furnishes the following particulars for the previous year ending 31/3/2018. Compute his taxable salary for the
assessment year 2018-19
a. Basic salary & DA up to 30/9/2017 60,000
b. Entertainment allowance from government up to 30/9/2017 5,000
c. Pension p.m. from 1/10/2017 @ Rs 1500 9,000
d. Leave salary in respect of earned leave to his credit 13,500
e. Gratuity 1,10,000
f. Provident fund 1,50,000
g. Commuted pension 32,000
h. Salary from nursing home
i. 30,000
Important Sum
9) Mr. Abbas aliBaig was the general manager of P Ltd .he retired on December 31,2017 after thirty years of services.
Following information is available
a. Salary Rs 5,000 p.m. up to December 31,2017. House rent allowance Rs 2,000 p.m. up to December 31,2017. He
resides in his own house
b. Mr.Baig and his family went to his home town and the expenses of Rs 5600 being the cost of the first class rail
ticket were reimbursed by the employer. This is as per prescribed conditions
c. Mr.Baig contributes 20% being 10% regular and 10% voluntary contribution to R.P.F. and the company matches
his regular contribution
d. He receives Rs 75,000 as gratuity. He is not covered under the payment of gratuity act. His salary for the calendar
years ending December 31,2015,2016,2017 was as follows
Rs 36,000 Rs 42,000 & Rs 60,000 respectively
e. He receives Rs 50,000 for encashment of leave, being 10 months leave not availed of
f. Professional tax is Rs 600
Compute Net taxable salary of Mr.Baig for the assessment year 2018-19
10) Mr. Ketan was the finance manager of a company Stock scam Ltd since January 1988. He was entitled to a basic
salary of Rs 9,000 p.m.. he also received Rs 1500 p.m. as dearness allowance, Rs 200 p.m. as city compensatory
allowance, Rs 500 p.m. as entertainment allowance and Rs 400 p.m. as house rent allowance. He resides with his
parents at their house. He contributed Rs 1000 p.m. to the S.P.F. the company also contributed an equal amount. He
retired voluntary on 31/12/2017. He received the following amounts on retirement
a. Gratuity Rs 80,000 ( he is not covered under payment of gratuity Act )
b. Compensation for voluntary retirement under a scheme approved by the central government Rs 1,80,000
c. Payment of Rs 2,00,000 as accumulated balance from S.P.F.
d. Payment of Rs 3,00,000 from an approved superannuation fund in lieu of an annuity
e. His pension was fixed at Rs 4000 p.m. on 1/2/2018 he commuted ½ of the pension for Rs 1,50,000.
f. Professional tax deduction was Rs 2500
Compute the income of Mr. Ketan under the head salaries for the previous year 2017-18
11) Mr. C who is currently employed with JSM Ltd. Furnishes you wih the following information
a. The details of monthly salary for the year ended 31/3/2018 are as under
DIRECT TAXES IPage 16
Prof Kunal S ChandikaT.Y.B.Com(A&F)OM SAI RAM
Basic salary per month 5,000
Dearness allowance per month
From 1/4/2017 to 31/12/2017 25% of basic
From 1/1/2018 to 31/3/2018 32% of basic
Professional Tax deducted per month Rs 120
b. Taxable conveyance allowance Rs 3,500
c. Bonus @ 20% of basic plus dearness allowance
d. Medi claim premium paid by employer on behalf of Mr. C
e. Compute his taxable salary for the assessment year 2018-19
12) Mr. Datta is employed with cybertech ltd he provides the following information for the assessment year 2018-19
a. Net salary per month Rs 9000
b. Income tax deducted at source Rs 900 per month
c. Professionaltax deducted at source Rs 100 per month
d. He has been employed since April 1989 and received entertainment allowance of Rs 750 per month since that
date
e. Perquisite value of water, gas and electricity Rs 10,000
f. Received bonus during the year in respect of earlier year Rs 6000
g. Received arrears of salary 2011-12 Rs 6000
h. The employer paid LIC premium of Mr. Datta amounting to Rs 5000
i. Took advance salary of Rs 10000 on account of marriage of his son and loan of Rs 6000
j. Mr. data who is also a director in the company received Rs 2000 as directors sitting fees during the year
k. Medi claim premium paid by the company Rs 2500
l. He incurred the expenses incidental to employment, such as purchases of books, car expenses etc amounting to
Rs 12000
m. He received Rs 16000 as salary from M/s reema perfumes (a partnership firm) where he is partner
n. He also received an amount of Rs 8000 for his work as an agent for the life insurance corporation of India as
commission and travelling allowance.Compute his total taxable salary for the assessment year 2018-19
13) Mr. Dharmesh Gandhi, an employee of Tata Ltd covered by the payment of gratuity Act 1972 retires on 31/1/2018
after 35 years and 7 months services. At the time of retirement his employer paid him gratuity of Rs 65000 and he
receives Rs 50000 being the accumulated balance of SPF. The due date of salary and alloanceetc was 1 st day of the
next month and were paid on due date. He was entitled to monthly pension of Rs 400 w.e.f. 1st day of February 2018
which becomes due on the last date of the month. Professional tax is Rs 800
Compute the taxable income of Mr.dharmesh for the assessment year 2018-19on the basis of the following further
information
a. Basic salary Rs 2500 p.m.
b. House rent allowance Rs 400p.m. taxable amount is 50% of the amount received
c. Project allowance apid during the year Rs 12000
d. Bonus paid during the year Rs 3600
e. In retirement on encashment of earned leave at his credit of 15 months he received Rs 37500
14) Mr. X joined a company AB Ltd on June 1,2017 and was paid the following emoluments and allowed perquisites as
under
Emoluments : Basic Pay Rs 50,000 p.m.
Dearness allowance Rs 2000 p.m.
Bonus (target Achiever) Rs 1,00,000 p.m.
Perquisites
a. Furnished accommodation owned by the employer and provided free of cost. Taxable value of this rent free
furnished accommodation was Rs 256000
b. The company paid medical insurance premium of Mr. X amounting to Rs 15000
c. Before joining the company AB Ltd. He was a central government employee and retired on May 31,2017. He was
paid the following emoluments and perquisites till may 31,2017 by the government
Basic salary Rs 96000p.a.
DIRECT TAXES IPage 17
Prof Kunal S ChandikaT.Y.B.Com(A&F)OM SAI RAM
Dearness allowance Rs 6000 p.a.
Entertainment allowance Rs 24000 p.a.
From June 1,2017 he received the monthly pension of Rs 3000 from the government he receives Rs 30000 as
leave salary in respect of earned leave at his credit. He received Rs 120000 as gratuity.
Compute the taxable salary of Mr. X for the assessment year 2018-19
15) X a resident individual retired from AB Co Ltd on February 2018 after 20 years and 9 months of services he joined PQ
co ltd on the same day i.e. February 1, 2018 and remained in service till March 31,2018 when he furnished the
following information
Salary and allowances from april 1,2017 to January 31,2018 from Ab Co Ltd
Basic salary p.m. Rs 8000
Dearness Allowance considered for retirement benefits p.m. Rs 1000
Commission @ 4% on turnover of Rs 100000 achieved by X
Gratuity received ( not covered by the POGA 1972) Rs 105000
Salary & Allowances from PQ co Ltd
Basic Salary p.m. Rs 6000
Entertainment allowances .m. Rs 800
Fixed medical allowances p.m. Rs 200
House rent allowances P.m. Rs 500
Leave salary received Rs 3000
X resides in his own house.Compute X salary income for the assessment year 2018-19
16) X the general manager of Y Ltd retired on December 31,2017 after 30 years of sevices. The particulars of his income
are as follows
a. Salary Rs 8000 p.m. from January 1,2017. House rent allowance Rs 3000 p.m. from January 1,2017
b. Medical expenses reimbursed by employer Rs 26400 for the period from April1,2017 which includes Rs 5000 paid
to government hospital
c. He lives in a rented house in delhi and pays Rs 4000 p.m. as rent (exempt HRA Rs 27000)
d. X received Rs 150000 as gratuity. He is not covered by the POGA 1972
e. He receives Rs 160000 for encashment of leave being 10 months leave not availed of
f. Compute X’s income for the assessment year 2018-19
17) Mr. M is an area manager of M/s N steels Co Ltd. During the financial year2017-18. He gets the following emoluments
from his employer
Basic salary Rs 20000 p.m.
Transport allowance Rs 2000 p.m.
Contribution to RPF 15% of Basic Salary
Children education allowance Rs 500p.m. for 2 children
City compensatory allowance Rs 300 p.m.
Hostel expenses allowances Rs 380 p.m. for two children
Tiffin allowance (actual expenses Rs 3700) Rs 5000 p.a.
Tax paid on employment Rs 2500
Compute taxable salary of Mr. M for the Assessment year 2018-19
1) Raina, an employee of Godrej Co. Ltd , received Rs 78,000 as gratuity. She is covered by the payment of gratuity
Act,1972. She retires on December 12,2017 after rendering services of 38 years and 8 months. At the time of
retirement her monthly basic salary and dearness allowance was Rs 2400 and Rs 800, respectively. Is the entire
amount of gratuity exempt from tax?
2) Mr. A is not covered by payment of gratuity Act, retires on 29/2/2018 after serving the employer company for a period
of 18 years and 10 months. He was drawing a salary of Rs 5000 up to sept 2016 and thereafter Rs 6000 per month. On
retirement he received gratuity of Rs 67500. Compute exempted & taxable gratuity
3) Mr.subhash is a non government employee and also not covered by the payment of gratuity Act 1972. He retires on
30/6/2017 and receives Rs 148000 as gratuity after a service of 38 years and eight months. His average monthly salary
during the last 10 months immediately preceding the month in which he retires works out Rs 7000 per month.
Determine the amount of gratuity taxable and exempt for the assessment year 2018-19
4) Mr. Prashant retires from Indian economics services on 31/10/2017 and receives Rs 3250 per month as pension on the
last day of each month. Determine the amount of pension to be included under the head “ income from salary” for the
assessment year 2018-19
5) Mr.qureshi retires from the Indian administrative services on 31/5/2017. He gets pension of Rs 3500 pm up to
31/10/2017. W.e.f. 1/11/2017 he gets 20% of his pension commuted for Rs 70000/- pension becomes due on last day
of each month. Determine the amount of pension to be included under the head “ income from salary” for the
assessment year 2018-19
6) Mr. shah is entitled to get a pension of Rs 600 per month from private company. He gets 3/5 of the pension
commuted and receives Rs 36000. Compute the taxable portion of commuted value when a) he receives the
gratuity b) when he doesn’t receivesgratuity
7) Mr. Sharma retires from Private company on 30/6/2017. He gets pension of Rs 2800 p.m. up to 31/1/2018. W.e.f.
1/2/2018 he gets 75% of pension commuted for Rs 126000. Pension becomes due on the last day of each
month.Compute the taxable portion of commuted value when a) he receives the gratuity b) when he doesn’t
receivesgratuity
8) Mr. P an employee of a company receives Rs 775000 as leave salary at the time of his retirement on December
31,2017. Determine the amount of taxable leave salary for the assessment year 2018-19 from the following
information
Salary at the time of retirement 25000
Average salary received during the last 10 months
From march 1,2017 to sept 30,2017 24000
From October 1,2017 to dec 31,2017 25000
Duration of service 26 years
Leave entitlement for each year of services 1.5 months
Leave availed while in services 8 months
Leave at the credit of employee at the time of retirement 31 months
Leave salary paid at the time of retirement 775000
9) Mr. B was the general manager of P Ltd .he retired on December 31,2017 after thirty years of services. Following
information is available
g. Salary Rs 10,000 p.m. up to December 31,2016. House rent allowance Rs 4,000 p.m. up to December 31,2017. He
resides in his own house
h. Mr. B and his family went to his home town and the expenses of Rs 5600 being the cost of the first class rail ticket
were reimbursed by the employer. This is as per prescribed conditions
i. Mr. B contributes 20% being 10% regular and 10% voluntary contribution to R.P.F. and the company matches his
regular contribution
j. He receives Rs 1,50,000 as gratuity. He is not covered under the payment of gratuity act. His salary for the
calendar years ending December 31,2015,2016,2017 was as follows
Rs 72,000 Rs 84,000 & Rs 1,20,000 respectively
k. He receives Rs 1,00,000 for encashment of leave, being 10 months leave not availed of
l. Professional tax is Rs 1200
Compute Net taxable salary of Mr. B for the assessment year 2018-19
10) Mr.Keval was the manager of a company scam Ltd since January 1987. He was entitled to a basic salary of Rs 90,000
p.m.. he also received Rs 15000 p.m. as dearness allowance, Rs 2000 p.m. as city compensatory allowance, Rs 5000
p.m. as entertainment allowance and Rs 4000 p.m. as house rent allowance. He resides with his parents at their
house. He contributed Rs 10000 p.m. to the S.P.F. the company also contributed an equal amount. He retired
voluntary on 31/12/2017. He received the following amounts on retirement
g. Gratuity Rs 8,00,000 ( he is not covered under payment of gratuity Act )
h. Compensation for voluntary retirement under a scheme approved by the central government Rs 18,00,000
i. Payment of Rs 20,00,000 as accumulated balance from S.P.F.
j. Payment of Rs 30,00,000 from an approved superannuation fund in lieu of an annuity
k. His pension was fixed at Rs 40000 p.m. on 1/2/2018 he commuted ½ of the pension for Rs 15,00,000.
l. Professional tax deduction was Rs 2500
Compute the income of Mr.Keval under the head salaries for the previous year 2017-18.
PRACTICE BANK
1) Mr. C who is currently employed with JSM Ltd furnishes you with the following information
a. The details of monthly salary for the year ended 31/3/2018 are as under
Basic salary per month Rs 5000
Dearness allowance per month
2) Mr. Dutta is employed with Cybertech Ltd. he provides the following information for the assessment year 2018-19
a. Net salary per month Rs 9000
b. Income tax deducted at source Rs 900 pm
c. Professional tax deducted at source Rs 100 pm
d. He has been employed since 1/4/1979 and receives entertainment allowance of Rs 750 p.m. since that date
e. Perquisite value of water, gas and electricity Rs 10000
f. Received bonus during the year in respect of earlier year Rs 6000
g. Received arrears of salary for 2012-13 Rs 6000
h. The employer paid LIC premium of Mr. data amounting to Rs 5000
Compute the taxable income from salary for the assessment year 2018-19
3) Mr. B is employed with Tata information Ltd he provides you with the following information for the assessment year
2018-19
a. Net salary Rs 9500 pm
b. Income tax deducted at source of Rs 2300 pm
c. Profession tax deducted Rs 200 pm
d. He is employed since 1/4/1996 and he receives entertainment allowance of Rs 750 pm since that date
e. He is provided free gas, water and electricity, perquisite value of which is Rs 9900 p.a.
f. He received bonus of Rs 8000 for the financial year2017-18
g. He took the advance salary of Rs 18000 for occasion of his family
h. The employer paid his LIC premium aggregating Rs 5500 for the year 2017-18
Compute his taxable salary income for the assessment year 2018-19
4) Nikunj who is totally blind is employed with BXL Ltd. the details of his salary for the previous year 2017-18 as follows
a. Basic salary Rs 8000 pm
b. DA @75% of basic
c. HRA @20% of Basic
d. Exempt amount of HRA is Rs 400 pm
e. Entertainment allowance Rs 2000 pm
f. Arrears of salary Rs 6000
g. Advance against salary Rs 5000
h. Contribution to RPF in excess of prescribed limits Rs 2300
i. Interest on RPF in excess of prescribed limits Rs 780
j. Bonus equal to 2 months of basic declared
k. Education allowance Rs 600 pm
l. Perquisite value of vehicle provided by employer for
Personal use Rs 4000
m. Professional tax deducted from salary Rs 200 pm
Compute the net taxable income for AY 2018-19
DIRECT TAXES IPage 21
Prof Kunal S ChandikaT.Y.B.Com(A&F)OM SAI RAM
5) Mr.Dilip is employed with M/s P tyres Ltd. As per the terms of employment, salary for the month is paid on 10th day of
the next month or on the earlier day if that day happens to being holiday during the year he received
a. Salary Rs 3500 pm
b. Bonus of 20% on salary was declared
c. DA Rs 6900
d. Leave travel concession Rs 3000 (exempt 2100)
e. HRA Rs 500pm (exempt 400)
f. Professional tax deducted Rs 60 pm
Compute the taxable salary of Mr.Dilip for the assessment year 2018-19
6) Compute the taxable salary of Mr. R, a resident Indian citizen, for the assessment year 2018-19, using the following
information
h. Basic salary of Rs 30,000 per month
i. Dearness allowance of Rs 6,000 per month
j. Rent free furnished house provided by employer (taxable value Rs 30,000)
k. Bonus Rs 15,000
l. Salary for 3 months taken in advance on 31/3/2017 Rs 90,000
m. Education allowance received for 3 children @ Rs 80 p.m. (exempt under rules @ Rs 100 p.m. each for only 2
children)
n. Profession tax paid Rs 2,500
7) X is a lecturer in a college at mumbai. The details of his salary and other expenses for the previous year 2017-18 are as
follows
k. Basic Salary 80,000
l. Dearness Allowance (forming part of salary) 14,000
m. City compensatory allowance 6,000
n. Education allowance for his son 8,000
(exempt under rules @ Rs 100 p.m. for two children)
o. House rent allowance 12,200
Rent paid 7,100
Exempt u/s 10(13A) 4800
p. Remuneration from mumbai university for acting as examiner Rs 3,000 and remuneration from delhi university for
acting as paper setter Rs 500
q. Allowance for looking after the evening shift of college Rs 500 pm
r. He incurred an expenditure of Rs 1000 for attending a seminar at nagpur. Expenditure was reimbursed by the
college
s. During the year he spent Rs 3,000 on purchase of books for teaching purposes
t. Professional tax paid was Rs 1600
Determine the taxable salary of Mr. X for the assessment year 2018-19
8) Mr.. Rahul Gandhi, an employee of Reliance Ltd covered by the payment of gratuity Act 1972 retires on 31/1/2018
after 37 years and 7 months services. At the time of retirement his employer paid him gratuity of Rs 105000 and he
receives Rs 100000 being the accumulated balance of SPF. The due date of salary and allowance etc was 1st day of the
next month and were paid on due date. He was entitled to monthly pension of Rs 1200 w.e.f. 1st day of February 2018
which becomes due on the last date of the month. Professional tax is Rs 200pm
Compute the taxable income of Mr. Rahul for the assessment year 2018-19on the basis of the following further
information
f. Basic salary Rs 25000 p.m.
g. House rent allowance Rs 4000p.m. taxable amount is 50% of the amount received
9) Mr. Z joined a company CD Ltd on June 1,2017 and was paid the following emoluments and allowed perquisites as
under
Emoluments : Basic Pay Rs 5,000 p.m.
Dearness allowance Rs 2000 p.m.
Bonus (target Achiever) Rs 10,000 p.m.
Perquisites
d. Furnished accommodation owned by the employer and provided free of cost. Taxable value of this rent free
furnished accommodation was Rs 25600
e. The company paid medical insurance premium of Mr. Z amounting to Rs 1500
f. Before joining the company CD Ltd. He was a central government employee and retired on May 31,2017. He was
paid the following emoluments and perquisites till may 31,2017 by the government
Basic salary Rs 48000p.a.
Dearness allowance Rs 12000 p.a.
Entertainment allowance Rs 40000 p.a.
From June 1,2017 he received the monthly pension of Rs 6000 from the government he receives Rs 60000 as
leave salary in respect of earned leave at his credit. He received Rs 1020000 as gratuity.
Compute the taxable salary of Mr. Z for the assessment year 2018-19
10) R a resident individual retired from Tata Co Ltd on February 2018 after 30 years and 9 months of services he joined RQ
co ltd on the same day i.e. February 1, 2018 and remained in service till March 31,2018 when he furnished the
following information
Salary and allowances from April 1,2017 to January 31,2018 from Tata Co Ltd
Basic salary p.m. Rs 80000
Dearness Allowance considered for retirement benefits p.m. Rs 10000
Commission @ 4% on turnover of Rs 1000000 achieved by R
Gratuity received ( not covered by the POGA 1972) Rs 105000
Salary & Allowances from RQ co Ltd
Basic Salary p.m. Rs 60000
Entertainment allowances .m. Rs 8000
Fixed medical allowances p.m. Rs 2000
House rent allowances P.m. Rs 5000
Leave salary received Rs 30000
R resides in his own house.Compute R salary income for the assessment year 2018-19
HEADS OF INCOME
II. INCOME FROM HOUSE PROPERTY
(A) INTRODUCTION
(B) MEANING
In Simple Words, Income From house Property means
“Annual value of property of which assessee is the owner will be taxed under income from house property”
Section 22 : Charging Section
Rental Income (Annual Value) is taxable under the head income from house property if following two conditions are
satisfied:
1. There should be house property
2. Assessee should be the owner of that house property
NOTE: If Loan is taken for the Purpose other than purpose mentioned in condition mention in (ii) then no Deduction is
allowed
1) Mr. A the Proprietor of M/s ABC Associates owns a house property. The rateable value of this property is associated by
municipality as Rs 30,000 for the year. ABC associated Pays Rs 4000 for municipal tax every year. The property is
occupied by tenant. The tenant pays rent of Rs 32,000 per year. Determine the net annual value of the property for
the assessment year 2018-19
2) Mr.s A of Nagpur owns a house property. The rent received is Rs 7000 p.m. whereas municipal valuation is Rs 50,000
and fair rent is Rs 55,000. The property remains vacant for two months during the year. Find out the gross annual
value for the assessment year 2018-19.
3) Miss A owns a house whose municipal value is Rs 60,000 and fair rent is Rs 68,000. The standard rent of the house is
Rs 62,000. During the year, the house was let out on annual rent of Rs 66,000. However, unrealized rent was Rs 2,000.
Determine the gross annual value
4) Mr.A , a resident of India, is a owner of house property in thane. The property is occupied by three tenants for
residential purposes. Each tenant pays a rent of Rs 25,000. Thane municipality ascertained the rate able value of the
said property Rs 80,000, whereas rent of a similar property in the same locality is Rs 90,000. Determine the gross
annual value of the property for the assessment year 2018-19
5) Ascertain the deduction of interest on loans taken in respect of a self occupied property from the following details
P a r t i c u l a r s R s
i. Interest o n lo an taken befo re 1 -4 -1 99 9 fo r co nstructio 2 1n , 0 0 0
ii. I n t e r e s t o n l o a n t a k e n a f t e r 1 - 4 - 1 9 9 9 f o r r e p1a i r1s , 0 0 0
iii. I n t e r e s t o n l o a n t a k e n a f t e r 1 - 4 - 1 9 9 9 f o r a c q u i s i 9t i o4n , 0 0 0
6) Mr. Deepesh owns a property at Bhendi Bazar, Mumbai . The Particulars of the property Let out on rent are given
below
P a r t i c u l a r s R s
i. M u n i c i p a l V a l u a t i o2 1n , 0 0 0
ii. F a i r r e n 2 6t , 0 0 0
iii. S t a n d a r d r e n 2 7t , 0 0 0
iv. A c t u a l r e n t r e c e i v a b l e @ R s 2 5 0 0 p 3. m0. , 0 0 0
v. M u n i c i p a l t a x e s p a i d b y t h e o w n1 e 2r , 0 0 0
vi. G r o u n d r e n 6 t 0 0
vii. C o l l e c t i o n c h a r g e s i n c u r r 5e d 0 0
viii. I n s u r a n c e p r e m i u m o n t h e p r o p e 5r t y 0 0
ix. The house remained vacant for two months
You are required to work out income from house property for the assessment year 2018-19
7) Mr.Dilip has let out the house property situated at Dadar, Mumbai for residential purposes. Particulars of which are as
follows
P a r t i c u l a r s R s
i. R e n t r e c e i v e 3 0d , 0 0 0
ii. M u n i c i p a l v a l u a t i o 3 6n , 0 0 0
iii. M u n i c i p a l t a x e s p a i d b y t e n a3 n ,t 6 0 0
iv. R e p a i r s ( m e t b y t e n a n 4 t ,) 6 0 0
v. I n s u r a n c e p r e m i u m p a 1i d, 3 5 6
vi. C o l l e c t i o n c h a r g 3e ,s 3 0 0
vii. I n t e r e s t o n b o r r o w e d c a p i t a l f o r t h e y e a r 2 0 1 71- 1 8, 9 5 0
(out of which Rs 950 are outstanding)
viii. L a n d r e v e n u 1 e, 7 5 0
ix. G r o u n d r e n t f o r 2 0 1 7 - 1 8 p a i d o n 3 1 / 5 / 2 80 1 8 6 4
Determine the taxable income under the head “ income from House Property” for the assessment year 2018-19 of
Mr.. Dilip
8) X has a house in Mumbai, which he used for his own residence in the previous year 2015-16. Due to his transfer to
Nagpur. He could not occupy this house for the previous year 2017-18. He stays in a rented house in Nagpur. Following
further information is available in connection with Mumbai house
P a r t i c u l a r s R s
i. R e a s o n a b l e l e t t i n g v a l 3u 6e , 0 0 0
ii. R e p a i r s e x p e n d i t u 1r e, 0 0 0
iii. I n t e r e s t f o r a b o v e h o u s e ( l o a n t a k e n i n M a r c h 1 93 9 90 ) , 9 7 0
Calculate house property income of Mr. X assuming that X has derived no benefit from Mumbai house during the
assessment year 2018-19
9) Mr. Ramesh owns two houses, one at Vashi Navi Mumbai and other at Parel Mumbai. He gave the following
particulars for the year ended 31/3/2018
A. Vashi House: the house is let out for Rs 12,000 a year. He borrowed funds from Thane Co-operative Bank for
construction of this house. He made following payments during the year
a) Municipal taxes Rs 3,240 which were recovered from the tenant subsequently as per the terms of tenancy
b) Insurance premium Rs 1,300
c) Ground rent Rs 500
d) As per the court decision Mr. Ramesh has to pay Rs 800 per month to his mother towards her maintenance
out of the income from property
e) Interest paid to thane co-operative bank Rs 1200
f) Land revenue Rs 300
g) He paid collection charges of Rent Rs 200
h) Rent of 1 month could not be recovered and is to be treated as unrealized rent
B. Parel House : the house is occupied by himself. Rate able value of this house is ascertained Rs 24,000. He incurred
the following expenses
a) Rs 3000 on repairs
b) Municipal Taxes Paid Rs 6,500
c) Interest paid to HDFC Rs 36,000
d) He borrowed funds from HDFC for the purpose of construction of this house, prior to 1/4/1999.You are
required to compute taxable income of Mr.Ramesh from house property for the assessment year 2018-19
10) Mr. Rohit is the owner of a residential house known as ‘ Gurukripa ‘ at Ghatkopar. The house was occupied by three
tenants namely, Mr. Kumar, Mr. Rahul and Mr. Sahil. The other particulars of the house are given below tenant wise
for the year ended 31/3/2018
P a r t i c u l a r s First unit Second unit T hi r d u ni t
N a m e o f t h e t e n a n t Kumar R a h u l S a h i l
G r o s s R a t e a b l e v a l u e 12,000 1 4 , 0 0 0 1 5 , 0 0 0
F a i r r e n t 9 , 0 0 0 1 5 , 0 0 0 1 6 , 0 0 0
A c t u a l r e n t r e c e i v e d 11,400 1 0 , 8 0 0 1 8 , 0 0 0
M u n i c i p a l t a x e s p a i d 3 , 2 4 0 3 , 7 8 0 4 , 0 5 0
E x p e n s e s o n r e p a i r s 1 , 0 0 0 N i l N i l
Expenses of collection of rent N i l 5 0 0 N i l
The repairs cost of the first and second unit is to be borne by tenants themselves. Owner Mr. Rohit is to bear
municipal taxes only in respect of the first unit, while rahul and sahil reimbursed the municipal taxes paid by owner
Compute the income from house property of Mr. Rohit for the assessment year 2018-19
12) Mr.Shyam is a retired government employee. He owns two houses known as “ Ashirwad” and “ gurukripa”
He occupied house ashirwad for his own residence up to 31/12/2017 and thereafter w.e.f. 1/1/2018 it was let out on a
monthly rent of Rs 1000 p.m. other particulars of this house were as follows
P a r t i c u l a r s R s
i. I n t e r e s t o n bo r ro w e d f u n d s f o r co n s t r u ct i o n o f t h i s h o4u s, e 8 0 0
ii. C o s t o f r e p a i r s a n d a l t e r a t i o5 n , s 6 0 0
iii. I n s u r a n c e p a i1 d2 0
iv. G r o u n d r e n 2 t4 0
v. Municipal taxes for the financial year2017 -18 paid on 15/4/2017 2 , 5 0 0
House Gurukripa was let out on a monthly rent of Rs 500 p.m. up to 30/9/2017 and was self occupied from 1/10/2017.
He paid Rs 3,000 towards repairs, Rs 292 towards insurance and Rs 108 as land revenue. Municipal taxes amounting Rs
1200 were outstanding as on 31/3/2018
From the above information you are required to compute income from house property of Mr.Shyam for the
assessment year 2018-19
13) Mr.Mehra owns a house at delhi, which was let out. Fair rent of the house is Rs 24,000 whereas actual rent received is
Rs 30,000. He also received Rs 10,000 from the tenant for charges towards lift, generator and security. He makes the
following expenditure in respect of the house property
P a r t i c u l a r s R s
i. M u n i c i p a l t a x e s p a i d b y M r . M e h4 r a, 0 0 0
ii. F i r e i n s u r a n c 2 e, 4 0 0
iii. C o l l e c t i o n c h a r g 5e s 0 0
iv. R e p a i r 2 ,s 0 0 0
v. L a n d r e v e n u 3 e, 8 0 0
vi. G r o u n d r e n 2 ,t 0 0 0
Interest on borrowed capital during the previous year 2017-18 is Rs 4,000. Funds borrowed on April 1,2010 Rs 40,000
@ 10% interest p.a. were used for construction of the house which was completed on January 31,2016. Compute the
income earned by Mr.Mehra from his let-out house property during the assessment year 2018-19
14) Mr. Pedro and his sons Congo, Bongo and Chongo are equal co-owners of a house property consisting of 20 residential
flats. Out of the above one flat each is occupied by pedro and his sons for own residential purposes. The balance 16
flat are let out at the rent of Rs 2000 per flat per month. The reasonable letting value of each flat is Rs 10000 per
annum. The municipal taxes paid for each flat is @ 50% of the RLV. The following expenses were incurred by them
during the year ended 31/3/2018 in respect of the property
i. Fire insurance premium Rs 12000 ( 20 flats)
ii. Interest on money borrowed for construction of property RS 60000 ( 20 flats)
15) Mr. Shekhar has occupied two houses for his own residential purpose viz. Shanti bhavan and Ganesh Bhavan,
particulars of which are as follows
P a r t i c u l a r s Shanti Bhavan Ganesh Bhavan
M u n i c i p a l v a l u a t i o n 8 0 , 0 0 0 4 0 , 0 0 0
F a i r R e n t 1 , 0 0 , 0 0 0 4 4 , 0 0 0
M u n i c i p a l t a x e s P a i d 1 0 % 1 0 %
Interest on borrowed capita l 1 0 , 0 0 0 1 6 , 0 0 0
F i r e i n s u r a n c e 5 0 0 3 0 0
G r o u n d r e n t 7 5 0 1 , 0 0 0
L a n d r e v e n u e 3 8 5 0 2 , 0 0 0
You are required to ascertain which property should be treated as self occupiedproperty .determine taxable income
for the assessment year 2018-19
16) Compute the income from house property from the following particulars in respect of a new property owned by Mr.
Sharma which was let out from 1/4/2008 onwards:
P a r t i c u l a r s R s
F a i r R e n t 6 0 , 0 0 0
A c t u a l r e n t r e c e i v a b l e 7 , 5 0 0 p m
Rent actually received for 10 months (2 months vacancy ) 7 5 , 0 0 0
Municipal taxes paid (including arrears for previous years ) 1 4 , 4 0 0
Interest on borrowed paid during the year 2 3 , 0 0 0
Interest on borrowed paid prior to 1/4/2008 2 0 , 0 0 0
C o l l e c t i o n c h a r g e s 3 , 4 0 0
Unrealized rent claimed as deduction earlier year. But received during the year 2017-18 1 , 0 0 0
Arrear of rent for earlier years received during the yea r
E x p e n d i t u r e o n r e p a i r s t o p r o p e r t y 8 , 0 0 0
G r o u n d r e n t 3 , 0 0 0
I n s u r a n c e p r e m i u m p a i d 4 , 5 0 0
Expenditure incurred on collecting unrealised ren t 2 , 2 0 0
3 , 5 0 0
17) Mr. Girish is the owner of house property. The house is self occupied for the period from 1/4/2017 to 30/6/2017 and
was let out for the remaining period at the rate of Rs 2800p.m. cost of repairs of Rs 1750 are borne by tenant
Following information relates to the previous year ended on 31/3/2018
P a r t i c u l a r s R s
M u n i c i p a l t a x e s p a i d 1 , 2 0 0
C o l l e c t i o n c h a r g e s 1 , 4 5 0
G r o u n d r e n t 5 6 0
Land revenue (Rs 1000 are outstanding ) 2 , 0 0 0
Interest on borrowed fund(used for marriage of daughter ) 1 , 7 0 0
I n s u r a n c e 7 5 0
Mr.girish stated that rent amounting to Rs 5600 in respect of previous year is not recovered this will remain
unrecovered and satisfy all the conditions of Rule 4
You are required to ascertain the income chargeable to tax under the head “ income from house Property” of Mr.
Girish for A.Y. 2018-19
1) Mr. B the Proprietor of M/s ABC Associates owns a house property. The rate able value of this property is associated
by municipality as Rs 40,000 for the year. ABC associated Pays Rs 6000 for municipal tax every year. The property is
2) A owns a house property at pune. The municipal value of such house property is Rs 1,70,000 whereas fair rent is Rs
1,75,000. The property is let out at a monthly rent of Rs 14,000. House property was vacant for 1 month and rent of Rs
14,000 was unrealized. Conditions of rule 4 for claiming the deduction were satisfied. Find out the gross annual value
of house property for assessment year 2018-19
3) Mr. Sai is owner of the house at Mumbai. The house was let out for Rs 24,000 a year. The tenant agrees to pay
municipal taxes of Rs 4,480. Rate able value of the house was ascertained Rs 18,000 by municipal corporation. The
following expenses were incurred
P a r t i c u l a r s R s
i. L a n d r e v e n u 3 e 0 0
ii. F i r e i n s u r a n c e p r e m i u8 m 0 0
iii. R e p a i r 4 ,s 0 0 0
Compute the income from this house property for the assessment year 2018-19
4) Mr.s. Z of Nagpur owns a house property. The rent received is Rs 5000 p.m. whereas municipal valuation is Rs 40,000
and fair rent is Rs 45,000. The property remains vacant for two months during the year. Find out the gross annual
value for the assessment year 2018-19.
5) Miss C owns a house whose municipal value is Rs 1,20,000 and fair rent is Rs 1,36,000. The standard rent of the house
is Rs 1,24,000. During the year, the house was let out on annual rent of Rs 1,32,000. However, unrealized rent was
Rs32,000. Determine the gross annual value
6) D owns a house property at pune. The municipal value of such house property is Rs 17,000 whereas fair rent is Rs
17500. The property is let out at a monthly rent of Rs 1400. House property was vacant for 1 month and rent of Rs
1400 was unrealized. Conditions of rule 4 for claiming the deduction were satisfied. Find out the gross annual value of
house property for assessment year 2018-19
7) Mr..E , a resident of India, is a owner of house property in thane. The property is occupied by three tenants for
residential purposes. Each tenant pays a rent of Rs 75,000. Thane municipality ascertained the rate able value of the
said property Rs 2,40,000, whereas rent of a similar property in the same locality is Rs 2,70,000. Determine the gross
annual value of the property for the assessment year 2018-19
8) Ascertain the deduction of interest on loans taken in respect of a self occupied property from the following details
P a r t i c u l a r s R s
iv. Interest o n lo an taken befo re 1 -4 -1 99 9 fo r co nstructio 4 1n , 0 0 0
v. I n t e r e s t o n l o a n t a k e n a f t e r 1 - 4 - 1 9 9 9 f o r r e p9a i r ,s 0 0 0
vi. I n t e r e s t o n l o a n t a k e n a f t e r 1 - 4 - 1 9 9 9 f o r a c q u i s i 1t i o, n9 4 , 0 0 0
9) Mr.. Shekhar has occupied two houses for his own residential purpose viz. Shanti bhavan and Ganesh Bhavan,
particulars of which are as follows
P a r t i c u l a r s Shanti Bhavan Ganesh Bhavan
M u n i c i p a l v a l u a t i o n 8 0 , 0 0 0 4 0 , 0 0 0
F a i r R e n t 1 , 0 0 , 0 0 0 4 4 , 0 0 0
M u n i c i p a l t a x e s P a i d 1 0 % 1 0 %
10) Mr..Sriniwas is an owner of two houses, both of which are used by him for his own residence. Particulars of these
house are as follows
P a r t i c u l a r s House I House II
F a i r R e n t 15,000 2 0 , 0 0 0
M u n i c i p a l T a x e s – d u e 1,800 2,00 0
- p a i d 1,500 1,50 0
R e p a i r s 8 0 0 9 0 0
I n s u r a n c e P r e m i u m - d u e 5 0 0 7 5 0
- p a i d 4 0 0 5 0 0
Interest on borrowed funds taken for construction of properties 6 , 0 0 0 2 , 0 0 0
G r o u n d r e n t d u e 1 5 0 2 0 0
Compute the income from house property of Mr..Sriniwas for the assessment year 2018-19
11) Mr.. A is the owner of a house in Mumbai. It has been let out for Rs 1,00,000. The tax paid by the tenant to the
municipality amounted to Rs 15,000. The landlord however, bears the following expenses on tenants amenities under
an agreement
P a r t i c u l a r s R s
W a t e r c h a r g e s 2 , 0 0 0
L i f t m a i n t e n a n c e 2 , 0 0 0
S a l a r y o f g a r d e n e r 2 , 4 0 0
L i g h t i n g o f s t a i r s 1 , 6 0 0
The landlord claims the following deductions
R e p a i r s 3 5 , 0 0 0
L a n d r e v e n u e 2 , 0 0 0
C o l l e c t i o n c h a r g e s 4 , 0 0 0
You are required to ascertain the income chargeable to tax under the head “income from house Property” of Mr..A for
A.Y. 2018-19
2) Mr.. Parshuram a physically handicapped person owns two house properties. He furnishes the following information
for the previous year ended 31/3/2018. You are required to compute his net taxable income for the previous year
ended 31/3/2018
P a r t i c u l a r s H o u s e I H o u s e I I
i. N a t u r e o f O c c u p a nS c y O P L O P
ii. M u n i c i p a l v a l u a t i 2o n8 0 0 0 6 6 0 0 0
iii. R e n t r e c e i v e- d 9200p.m.
iv. M u n i c i p a l t a x e s p a i d o n 1 5 / 37/ 1 8 2 0 0 9 6 0 0
v. F i r e i n s u r a n c e p r e m i u m p 6a i d 2 0 0 5 3 0 0
vi. R e n t c o l l e c t i o n c h a r g1 e s 7 5 1 5 2
vii. L a n d r e v e n u e p a y a b1 l e 2 8 1 7 5
viii. Interest on loan taken for construction of house property
ix. R e p a y m e n t o f p r i n c i p a l a m o u n t o f l1o a n3 5 0 0 1 2 9 0 0
1 2 0 0 0 1 0 0 0 0
3) Mr.. Khanna owns three houses, the details regarding which for the year ended 31/3/2018 are as follows-
a) The first house of the annual value of Rs 12500 was let out at 1800 pm .he paid Rs 2000 as interest on money
borrowed for construction of this house . Rs 450 as ground rent, and Rs 600 as fire insurance premium
b) The second house of the annual rental value of Rs 55,000 was occupied by him for his residence. Its municipal
taxes were Rs 12500. He had borrowed Rs 100000 from HDFC Ltd for its repairs on which Rs 16000 interest was
due on the 31/3/2018
c) The fair rent of the third house is Rs 30,000 and its actual rent is Rs 25000 but in favor of this house a legal
maintenance charges of Rs 7000 per year existed in favor of his mother as per terms of a family arrangement
4) Mr.. Kunal is the owner of two house properties. From the following information furnished by him for the year ending
31/3/2017. Compute his taxable income for the assessment year 2018-19
P a r t i c u l a r s H o u s e I H o u s e I I
i. N a t u r e o f O c c u p a nS c y O P L O P
ii. A n n u a l r a t e a b l e v a l2u 0e , 0 0 0 3 0 , 0 0 0
iii. C o n s t r u c t i o n c o m m e n c e d 1 o/ n4 / 2 0 0 2 1 / 4 / 2 0 0 1
iv. C o n s t r u c t i o n c o m p l e t e d 1 o/ n4 / 2 0 0 3 2 8 / 2 / 2 0 0 4
v. Municipal taxes paid for the period 1/4/2017 to 31/3/2018
vi. Insurance premium paid for the period 1/10/2017 to 30/9/2018
8 , 0 0 0 9 6 0 0
vii. Interest on loan for construction
2 , 0 0 0 2 0 0 0
6 , 0 0 0 6 0 0 0
6) From the following particulars furnished by Rahul, compute his income from house property for the assessment year
2018-19
a) Income from house property
P a r t i c u l a r s House I (SOP) House II (LOP) House III(LOP)
Rent Receivable - 3 0 0 0 0 5 0 0 0 0
Municipal taxes paid 1 0 0 0 1 0 0 0 1 5 0 0
Interest on loan - 1 0 0 0 -
Insurance premium 3 5 0 4 0 0 5 0 0
b) The assessee has settled in Ahmadabadfor the purpose of his business where he resides in a rented house
c) All the three properties are situated in Pune
d) The RLV of House I,II,II are 6000,36000,45000respectively
e) The assessee was on leave for 3 months during the P.Y. 17-18. During this period he resided in property I. No other
benefit was derived from that property
f) Rs 20000 raised on mortgage of property II was utilized for the purchase of a plot of land on which rahul intends to
construct forth house
7) Mr..Viniyak and his son are equal owners of two houses one at Mumbai, and another at pune. They furnished
following particulars of the houses for the year ended march 31,2018.
A. Mumbai House:
This house is let out for Rs 40000 per year. They incurred following expenses connection with this house
a) Municipal taxes paid Rs 5400 subsequently recovered from the tenant Rs 4000
b) Interest paid on loan taken from HDFC for repairs of this house Rs 5000
B. Pune House:
This house is occupied by Mr.. Vinayak and his son for their own residence. Municipal valuation of the house is Rs
90000 and fair rent is Rs 95000 per year. During the year the interest on loan taken for reconstruction of this
house amounted to Rs 50000
You are required to compute taxable income of Mr.. Vinayak and his son under the head income from house
property for the AY 2018-19
8) Mr. Shah has occupied three houses for his own residential purposes, particulars of which are as follows
P a r t i c u l a r s H o u s e I H o u s e I I H o u s e I I I
Standard rent 1 8 0 0 0 2 0 0 0 0 -
Municipal valuation 1 1 5 0 0 3 0 0 0 0 3 0 0 0 0
F a i r r e n t 1 5 0 0 0 2 5 0 0 0 3 5 0 0 0
Municipal taxes paid 1 2 0 0 2 4 0 0 3 6 0 0
9) Mr.. Salman is the owner of a house property. One-third of the house is used for business and the remaining is let out
for 8 months at the rate of Rs 3000 pm. Following additional information is available to you
P a r t i c u l a r s R s
i. M u n i c i p a l t a x e s p a 1i d5 0 0
ii. I n t e r e s t o n f u n d s b o r r o w e d f o r r e p a6i r s 0 0 0
iii. R e p a i r 2 s0 0 0
iv. M u n i c i p a l r a t e a b l e v a l 4u e8 0 0 0
Mr..salman receives during the year unrealized rent of the previous year Rs 750
You are required to ascertain the income chargeable to tax under the head “ income from house Property”
10) Mr.s. Sharma owns a house property which was let out for the part of the year for residential purposes and was self
occupied for the remaining period of the year. It was let out on monthly rent of Rs 2500 from 1/7/2017 to 31/12/2017
The information in respect of the house is as follows
1. Municipal value of the house Rs 21600
2. Municipal taxes paid Rs 6400
3. Interest on money borrowed for the construction of this house Rs 8000
4. Land revenue payable Rs 300
5. Ground rent payable Rs 300
6. Fire insurance premium paid Rs 1000
7. Repairing expenses incurred Rs 4000
From the above information compute the taxable income of Mr.s. Shah for the year ended 31/3/2018.