Tax rate and exemption

[kashaziz]

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 salary-medical)
----
60448 take home by employee (after tax)

Is that right?

[zurpk]

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

[kashaziz]

<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.

[zurpk]

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 (60,000-5,455)

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 www.taxonline.com.pk
http//www.taxonline.com.pk/incometax/itax.html

With Best Regards.

[kashaziz]

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?

[zurpk]

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 www.taxonline.com.pk

Thanks & Regards.

[msc286]

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)

[msc286]

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.

[zurpk]

Thank you MCS.

[msc286]

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

[zurpk]

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

[kashaziz]

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.

[zurpk]

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.

[zurpk]

Seniors are also requested to quote their comments.

thank you