Question

In a financial year monthly salary of a person is Rs.$50,000$. He deposited Rs.$60,000$ in Prime Minister's relief fund on which income tax rebate is $100$%. He denoted RS.$20,000$ to a hospital on which income tax rebate is $50$%. He invests RS.$7,000$ per month in G.P.F. Rs.$15,000$ annually in L.I.C and purchases N.S.C for Rs.$35,000$. Find income tax to be paid by him in that financial year. Rates of income tax are as follows:
$100$% rebate up to total savings of Rs.$1,00,000$

Taxable income	Income Tax
(i) Upto Rs. $2,00,000$	Nil
(ii) FRom Rs.$2,00,001$ to Rs.$5,00,000$	$10$% of amount exceeding RS.$2,00,000$

In addition Education Cess: $3$% of income tax.

Answer 1

Total annual income = $12\times Rs50000$

= $Rs600000$

Amount on which tax would be rebated on investments/donations = 100% of Prime Minister's Relief Fund + 50% of Hospital Donation

$=100\%$ of Rs $60000+50\%$ of Rs $20000$

$=Rs70000$

Total Savings $=$ Amount in G.P.F $+$ Amount in L.I.C $+$ Amount in N.S.C

$=12\times 7000+15000+35000$

$=Rs134000$

$100\%$ Rebate on savings up to $Rs100000$. That implies $Rs34000$ would be taxable

Therefore amount of salary after deduction of rebated amount $=$ Total Salary $-$ Rebate on investment/Donations $-$ Rebate on Savings

$=600000-70000-100000$

$=Rs430000$

Income tax $=0\%\times Rs200000$ $+$ $10\%\times (Rs430000-Rs200000)$

$=Rs23000$

Education Cess $=3\%$ of Income Tax

$=3\%$ of RS $23000$

$=Rs690$

$TotalTax$ $=Rs23000+Rs690$

$=Rs23690$