CMA Intermediate · Direct and Indirect Taxation · Salaries
Sunita, assessed under the new regime, is due salary of Rs 6,00,000 for the tax year. In the same tax year her employer also pays her Rs 40,000 as salary in advance for the following tax year. What is her income under Salaries for the current tax year?
Her salary income is Rs 5,65,000. Salary paid in advance is taxed in the year it is paid, so Rs 40,000 is added to Rs 6,00,000, giving 6,40,000. Deducting the Rs 75,000 new regime standard deduction leaves 5,65,000, and the advance is not taxed again later.
- ARs 5,65,000Correct
- BRs 5,25,000
- CRs 5,90,000
- DRs 6,40,000
Explanation
Salary paid in advance is chargeable in the tax year it is paid, so salary = 6,00,000 + 40,000 = 6,40,000. Less new regime standard deduction of 75,000 gives Rs 5,65,000. When the advance salary later becomes due, it is not included again. Rs 5,25,000 wrongly excludes the advance.
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