Concept of Marginal relief for salary taxpayers

Concept of Marginal relief for salary taxpayers - Printable Version

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Concept of Marginal relief for salary taxpayers - [email protected] - 06-08-2010

Asalam o alaikum !

Deal All Frnds, I want to confirm the concept of marginal relief for a salary taxpayer from following example / question, kindly check it.

Mr. A a SALARY TAXPAYER whose annual salary is Rs 1,250,000/- and income tax deducted on the specififed in the first schedule of I.T.O whis is 11%. so his tax liablity is Rs 137,500/-

My question is that let suppose if his salary is Rs 1,470,000/- annualy which is marginally exceeded from the above given slab which is (1,200,000 to 1,450,000 11%) then in this situation HOW CAN WE GIVE ADVISE TO MR. A FOR MARGINAL RELIEF UNDER FINANCE ACT-2008 for this difference amount?????

Kindly write ur kind comments as soon as possible.

em waiting for ur replies.

Thanx

Muhammad Umar - PIPFA (finalist)

- zaibkapoor - 06-08-2010

Dear please find below working as desired.

Income tax as per normal rates (1,470,000*12.5%) Rs. 183,750

Income tax as per Marginal Relief formula

Income tax on maximum slab (1,450,000*11%) Rs. 159,500
Plus
Forty percent of excess amount i.e [(1,470,000-1,450,000)*20] Rs.8,000
Total Income tax as per MR formula (159,500+8000) Rs. 167,500

Income tax liability whichever is lower i.e 167,500

I hope you will find it helpful.

- AbdulSamad - 06-09-2010

i think you did not less medical exempt.

- talha.moin - 06-09-2010

medical exempt? 10% of basic salary? can we deduct that even if the employee hasnt availed it??

- [email protected] - 06-10-2010

<blockquote id="quote">quote<hr height="1" noshade id="quote">Originally posted by talha.moin
 medical exempt? 10% of basic salary? can we deduct that even if the employee hasnt availed it??
<hr height="1" noshade id="quote"></blockquote id="quote">

Dear Frnd !

Thnx for supporting with ur kind comments for understanding the concept of marginal relief. but as i know that medical allowance shall be available for computation of taxable income and medical reimbursement shall be exempt from tax.

Thnx

Muhammad Umar - PIPFA (f)

- talha.moin - 06-10-2010

<blockquote id="quote">quote<hr height="1" noshade id="quote">Originally posted by [email protected]
 <blockquote id="quote">quote<hr height="1" noshade id="quote">Originally posted by talha.moin
 medical exempt? 10% of basic salary? can we deduct that even if the employee hasnt availed it??
<hr height="1" noshade id="quote"></blockquote id="quote">

Dear Frnd !

Thnx for supporting with ur kind comments for understanding the concept of marginal relief. but as i know that medical allowance shall be available for computation of taxable income and medical reimbursement shall be exempt from tax.

Thnx

Muhammad Umar - PIPFA (f)

<hr height="1" noshade id="quote"></blockquote id="quote">

Dear Umar,

thanks for explaining. but i am new to all this; thats why couldnt grasp the whole thing.

did you mean that if e.g. Mr A's basic salary (and total income for the ease of calculation) is 10000 per annum then, as far as i know, he is eligible for 10% of exemption on medical allowance i.e. upto 1000. if he gets Rs. 1200 reimbursed from employer on account of medical allowance then his taxable income will be Rs 11200? Did I get right???

- AbdulSamad - 06-10-2010

THE SECOND SCHEDULE
EXEMPTIONS AND TAX CONCESSIONS
[See section 53]
PART I
EXEMPTIONS FROM TOTAL INCOME
139 Clause (b)

Any medical allowance received by an employee not exceeding ten
per cent of the basic salary of the employee if free medical treatment or
hospitalization or reimbursement of medical or hospitalization charges is not
provided for in the terms of employment.

- [email protected] - 06-10-2010

<blockquote id="quote">quote<hr height="1" noshade id="quote">Originally posted by AbdulSamad
 THE SECOND SCHEDULE
EXEMPTIONS AND TAX CONCESSIONS
[See section 53]
PART I
EXEMPTIONS FROM TOTAL INCOME
139 Clause (b)

Any medical allowance received by an employee not exceeding ten
per cent of the basic salary of the employee if free medical treatment or
hospitalization or reimbursement of medical or hospitalization charges is not
provided for in the terms of employment.

Dear Samad Bhai,

i have seen this section and related clauses in ITO-2001 but due to some confusion i want to know that
You mean to say that 10 % of the basic salary is exempt from tax in respect of medical exp?? pls also clarify if the amount exceeded from 10% of medical exp then what should we have to do for computation of taxable income??

Thanks
Muhammad Umar

<hr height="1" noshade id="quote"></blockquote id="quote">

- [email protected] - 06-10-2010

<blockquote id="quote">quote<hr height="1" noshade id="quote">Originally posted by talha.moin
 <blockquote id="quote">quote<hr height="1" noshade id="quote">Originally posted by [email protected]
 <blockquote id="quote">quote<hr height="1" noshade id="quote">Originally posted by talha.moin
 medical exempt? 10% of basic salary? can we deduct that even if the employee hasnt availed it??
<hr height="1" noshade id="quote"></blockquote id="quote">

Dear Frnd !

Thnx for supporting with ur kind comments for understanding the concept of marginal relief. but as i know that medical allowance shall be available for computation of taxable income and medical reimbursement shall be exempt from tax.

Thnx

Muhammad Umar - PIPFA (f)

<hr height="1" noshade id="quote"></blockquote id="quote">

Dear Umar,

thanks for explaining. but i am new to all this; thats why couldnt grasp the whole thing.

did you mean that if e.g. Mr A's basic salary (and total income for the ease of calculation) is 10000 per annum then, as far as i know, he is eligible for 10% of exemption on medical allowance i.e. upto 1000. if he gets Rs. 1200 reimbursed from employer on account of medical allowance then his taxable income will be Rs 11200? Did I get right???
<hr height="1" noshade id="quote"></blockquote id="quote">

Dear Talha Bhai

As i know that medical reimbursement shall not included in computation of taxable income coz this is exempt from tax.

Regards
Umar

- AbdulSamad - 06-10-2010

Mr. Umar
Wo Medical Allowance hai jo include hota hai salary mein.

10% less kerne ke bad baqi taxable ho jaye ga automatic. Means poori salary mein sirf basic ka 10% exempt kerdo.....ab agar medical 10% ho ya us se ziayda wo to automatic add ho jaye ga 10% less kerne ke baad.

Abdul Samad

- [email protected] - 06-10-2010

Many thanx samad bhai, Alhumdulillah my confusion has been cleared...

Muhammad Umar (pipfa-f)

- AbdulSamad - 06-10-2010

Thanks you to....)

- Mohammad Nadeem - 06-17-2010

can any discuss with on 10% Medical Allowance on Salary