Mr.Naseer is an employee of M/s.ABC Pvt Ltd, the terms of empoloyment provide that the tax will be paid by the company. The company paid a total of Rs.1,535,000 to Mr.Naseer and the Income Tax Department.
What will be tax and salary to be paid to Mr.Naseer?
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by shakilicma76</i>
<br />Mr.Naseer is an employee of M/s.ABC Pvt Ltd, the terms of empoloyment provide that the tax will be paid by the company. The company paid a total of Rs.1,535,000 to Mr.Naseer and the Income Tax Department.
What will be tax and salary to be paid to Mr.Naseer?
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Dear,
Your question is having dual meanings i.e. by considering the following statement, <b>"the terms of empoloyment provide that the tax will be paid by the company"</b>, one can evaluates two meanings from the statement, i.e. either,
1- Tax will be paid by the company on behalf of its employees by way of deduction under section 149 from their salaries or,
2- Tax will be borne by the company on behalf of the said employee.
By assuming 1st statement to be the requirement, Rs. 1,535,000 will be divided by 111% (i.e. 11% is the applicable rate of tax in this case), which will deflate Rs. 1535000 to Rs. 1382883 (i.e. 1535000/1.11)
Hence, taxable income is <b>Rs. 1382883</b> and Tax liablity will be <b>Rs. 152117</b> (i.e. 1382883* 11%).
Total is Rs. 1535000(1382883+152117), which has been paid by the company to Mr Naseer and tax department.
I hope the answer to be sufficied for your understanding.
Best Regards,
Faisal
Mr. Naseer Annual salary year 2008-09 ...... 13,47,969/=
Tax on salary income @11% ................. 1,48,276.6/=
where an employer agrees to pay the tax chargeable on an employees salary, the amount of the employees income chargeable under the head "Salary" shall be grossed up by the amount of tax payable by the employer.
So, now Mr. naseer taxable income is ........ 14,96,246/=
Tax on taxable income @12.5% ................ 1,87,030.7/=
therefore employeer paid to Mr. Naseer .... 13,47,969/-
and tax paid by employer on behalf of employee.. 1,87,031/-
Total salary + Tax paid by employer .... 15,35,000/-
Dears,
Since the question is silent with regard to the treatment, and in such a case, assumptions are to be taken, while solving, i took an assumption, i.e. statement number one out of the two statements is the requirement.
By taking the second statement to be the requirement, Laptop has replied correctly. However i will be glad, if Laptop reveals the way through which he has arrived at the amount 1,347,969 and it will be easy for the readers to understand.
Best Regards,