This business/management problem is solved step by step below, with detailed explanations to help you understand the method and arrive at the correct answer.
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2. The monthly salary of an unmarried person is 66,000. He monthly deposited 10% of his salary in Investment Trust (CIT) and pays Rs 350,000 annually for insurance premium. According to tax rate given below, answer the following question. a) How much is his total annual income? Step 1: Calculate the total annual income by multiplying the monthly salary by 12 months. Annual Income = Monthly Salary × 12 Annual Income = Rs 66,000 × 12 Annual Income = Rs 792,000 His total annual income is Rs 792,000. b) What amount of his salary is deposited in CIT yearly? Step 1: Calculate the monthly deposit in CIT (10% of monthly salary). Monthly CIT Deposit = 10\% × Rs 66,000 Monthly CIT Deposit = 0.10 × Rs 66,000 = Rs 6,600 Step 2: Calculate the yearly deposit in CIT by multiplying the monthly deposit by 12 months. Yearly CIT Deposit = Rs 6,600 × 12 Yearly CIT Deposit = Rs 79,200 The amount deposited in CIT yearly is Rs 79,200. c) What is his total taxable income? Step 1: Identify the total annual income and total deductions. Total Annual Income = Rs 792,000 (from part a) Total Deductions = Yearly CIT Deposit + Annual Insurance Premium Total Deductions = Rs 79,200 + Rs 350,000 Total Deductions = Rs 429,200 Step 2: Calculate the total taxable income by subtracting total deductions from the total annual income. Taxable Income = Total Annual Income - Total Deductions Taxable Income = Rs 792,000 - Rs 429,200 Taxable Income = Rs 362,800 His total taxable income is Rs 362,800. d) How much tax does he pay in a year? Step 1: Determine the applicable tax rate based on the taxable income. Taxable Income = Rs 362,800 (from part c) According to the tax rate table: • Income up to 6 lakhs: 1% Since Rs 362,800 is less than 6 lakhs, the applicable tax rate is 1%. Step 2: Calculate the tax payable. Tax Payable = 1\% × Taxable Income Tax Payable = 0.01 × Rs 362,800 Tax Payable = Rs 3,628 He pays Rs 3,628 in tax in a year. That's 2 down. 3 left today — send the next one.