Tax rate and exemption

04212007, 07:08 PM
Post: #1




Tax rate and exemption
Hello,
I was wondering what the actual salary would be if take home is 60,000? I have heard that latest tax laws have only one tax exemption and that's medical allowance (10%). So, if somebody wants 60K as take home salary, how much the employer has to show in his books as salary expense? For example 63,000 total salary [ 6300 (10% medical  exempted?) ] 2552 (4.5% tax on salarymedical)  60448 take home by employee (after tax) Is that right? 

04222007, 01:13 AM
Post: #2




AoA
I read your question. However, i think you must explain your question in detail. that will be easily for others to understand your point of view. Zia ur Rahman 

04222007, 05:05 AM
Post: #3




<blockquote id="quote"><font size="1" face="Verdana, Tahoma, Arial" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by zurpk</i>
<br />AoA I read your question. However, i think you must explain your question in detail. that will be easily for others to understand your point of view. Zia ur Rahman <hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote"> Basically what I am asking is that if an employer demands that he wants to take 60,000 as take home salary, how much tax would be paid on that and what maximum allowance is allowed. Hope I am clear now. 

04222007, 05:13 PM
Post: #4




I am still confused about the word " take home salary" used by you. However, if an employee gross salary is Rs. 60,000. his tax for the month can be calculated as follows;
Gross Salary Rs. 60,000 Basic Salary Rs. 54,545 Medical Allowance Rs. 5,455 (Exempted upto 10% of Basic Salary) So taxable Salary is Rs. 54,545 (60,0005,455) Taxable Salary for the year (54,545*12)= 6,54,540 Taxable Rate = 6% Tax for the year (6,54,540*6/100) = 39,272 Tax for the month (39272/12) = Rs. 3,273 if you need any more information plz inform us. you can also visit http://www.taxonline.com.pk http//www.taxonline.com.pk/incometax/itax.html With Best Regards. 

04222007, 06:21 PM
Post: #5




Thanks a lot. This satisfies my query. By the way, is there any other allowance available for the employee or only medical allowance is tax exempted?


04222007, 10:55 PM
Post: #6




AOA
In my knowledge, medical allowance (10% of Basic Salary) is exempted and all others are taxable. However for more detail you can visit to http://www.taxonline.com.pk Thanks & Regards. 

04232007, 07:13 PM
Post: #7




I think the query of this gentleman is not the calculation of tax on a salary of Rs. 60,000 per month. Rather he is interested in knowing the figure which, after deduction of tax, would amount to Rs. 60,000 (referred as take home salary). I have prepared the calculation, as following.
Annual Salary = 864,866 Exempt (10% Medical Allowance) = 86,487 Taxable Salary = 778,380 Tax on 778,380 @ 7.5% = 58,380 Net amount = 720,000 Net Salary per month = 60,000 So for net salary of Rs.60,000 per month, the gross salary would be Rs. 72,072 (864,866 / 12) 

04232007, 08:24 PM
Post: #8




And by the way, if the medical allowance is not provided, you'll have to pay Rs. 64,865 per month to get take home salary of Rs. 60,000 per month.


04232007, 09:46 PM
Post: #9




Thank you MCS.


04242007, 03:37 PM
Post: #10




Welcome. I always try to be of any help with my little knowledge and experience.


04242007, 05:44 PM
Post: #11




that is great. Please also reply to my topic in the career section.


05022007, 06:36 AM
Post: #12




msc286 Many thanks for the details and sorry I wasn't able to check that earlier.
I have revised the calculations a bit and will appreciate a review Annual Salary = 762,000 (@ 63,500 pm) Exempt (10% Medical Allowance) = 76,200 (@ 6,350 pm) Taxable Salary = 685,800 (@ 57,150 pm) Tax on 685,800 @ 6% = 41148 (@3,429 pm) Net Amount = 720,852 (@ 60,071) So for 60,071 take home, gross salary will be 63,500 per month. Now, I have another question. Suppose the guy joined in April and Company's year end is June so how much tax per month will be deducted? because the person is taking salary only for 3 months of that year (Apr, May, June). In my opinion, the tax will be Gross salary = 190,500 (63,500 * 3) Exempt (10% Medical Allowance) = 19,050 (@ 6,350 pm) Taxable Salary = 171,450 (@ 57,150 pm) Tax on 171,450 @ 0.25% = 429 (@ 143 pm) Net Amount = 190,071 (@ 63,357) So the person will get Rs. 63,357 per month for Apr, May, June. Please correct me if I am wrong. 

05022007, 02:13 PM
Post: #13




AOA
We shall calculate tax for the year and then the total tax for the year can be divided by 12 months. thus we can find tax per month. For Example Basic Salary of per month = Rs. 65,000 Medical Allowance(10% of B.S) Rs. 6,500 Total Gross Salary Rs. 71,500 Taxable Salary for the Year (65000*12) Rs. 780,000 Tax for the Year (780,000*7.50%) Rs. 58,500 Income Tax per month (58,500/12) Rs. 4,875 So the person will pay Rs. 4,875 per month as income tax if his Gross Salary is Rs. 71,500. Please remember that we shall calculate tax for the year first and then we can calculate tax for the month. 

05022007, 02:15 PM
Post: #14




Seniors are also requested to quote their comments.
thank you 

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