Q 1. How to calculate income tax?

Income tax is based on your taxable income after excluding all exempted income and after claiming all eligible deductions. Assuming that you are not a senior citizen, tax on your taxable income will be computed as per the following slabs: upto a taxable income of Rs. 150000, 0%; for income from Rs.150001  to Rs. 300,000, 10%, for income between 300,001 and 500,000 20% and all income thereafter at 30%. There is a surcharge of 10% on the tax if the taxable income exceeds Rs. 10, 00,000. There is a cess of 3% on the tax and the surcharge.

Q 2. Every month I am paying Rs.2200/- as a TDS from salary & I have invested on medical insurance. Rs 8890 PA & Life Insurance Rs. 1500 per month. Pls explain me how I get all my TDS amount.

In the absence of exact details of salary it is difficult to comment. Normally, the TDS on salary would be determined after taking into account expected deductions under 80C provided you have informed your employer of these investments being made by you and proof thereof is provided to him. If there is still a larger TDS than required, you need to file a tax return at the end of the year and claim the excess TDS back as a refund from the Government.

Q 3. We are three partners, having 3 heavy trucks. i.e. all partners have one truck each. The truck use to carry oil, petrol from kandla to Jaipur with the contract of Indian oil company (IOC). When the payment made by company (IOC) to partnership firm they deduct tax @2% as contractor. As per agreement between partners and firm that firm will deduct 2% commission on payment received from IOC remaining amount 98% credited to partners capital account as per trip made by their trucks. My question is, whether agreement between partners and their firm is proper? 2. Whether firm will deduct the T.D.S. on payment of 98% amount directly credit Capital account. This is for information that all expenses like driver's salary, diesel, lubricants, tire & tube and other vehicle running expenses bear by partners for their own truck? Please answer in layman's language so that we can under stand. My consultant advice me to deduct T.D.S. on payment of 98% (credited to partners capital a/c directly) although we have not debited any amount in P. & L. a/c except Bank charges.

A partnership firm can pay a rent to partners for any property used as well as remuneration for work done and interest on capital contributed. No other payments made to a partner are tax deductible for the firm. The firm has to first pay a tax on the entire income earned by it (income means receipts less expenses incurred band borne by the firm). After the tax has been so paid, the balance profit can be credited to the partners in the ratio decided and can be distributed to them without any TDS. The money so received is tax free for the partners. If the partner receives a rent for the truck then he can claim depreciation against the rent so received - but this rental will be subjected to a larger TDS of 10%.

Q 4. My current package is 2.7 lacs what is the tax liability that I have to pay and the alternate to reduce the same.

For 2008-09 on Rs.270000 your tax liability will be Rs 9270. Upto an income of Rs. 180,000 women assessee are not required to pay tax. Beyond that, upto an income of Rs.300, 000 you need to pay tax @ 10%. There will be a cess on the tax of 3%   You can save such tax by making investment of upto Rs. 100,000 under 80C  and upto Rs.35,000 under 80D towards medical insurance. You can also claim interest on a housing loan.

Q 5. I am retired defense officer drawing pension. I am working with basic salary of Rs.23030+HRA11515+Conveyance allowanceRs.2000+ Special Allowance Rs. 10632= Medical Allowance Rs. 3000= Special Benefit Reimbursement Rs. 15000 per month. I joined present job on 01.12.2008. I have already paid Rs. 70000 in PPF A/c+ Rs. 25000 in ICICI Prudential Lifetime Pension fund, Rs. 24000 to be paid as premium towards insurance policy of my son. I am paying back housing loan to HDFC. Advise on tax saving.

For F.Y.2008-09 your income will be exempt from tax upto Rs.150, 000 or Rs.225, 000 (If you are senior citizen). As per the information provided by you it seems that your salaried income itself will be more than the basic exemption limit mentioned above. You can save taxes by making an investment under 80C of a maximum of Rs.100, 000-which you have already invested. You can also claim a deduction under 80D for mediclaim paid upto Rs.35, 000 (Rs. 15,000 for self plus Rs. 20,000 for parents). As you said you are repaying a home loan, you can claim the interest on this loan upto a maximum of Rs.150, 000 assuming it is self occupied and the loan was taken after 1.4.1999.

Q 6. Hi, my name is Naresh and I am an employed individual. My total gross salary is 2, 90,000 per annum. What is my tax liability for the year 2008-2009?

For 2008-09 on a gross salary of Rs. 290,000 your tax liability will be Rs.14, 420. Upto an income of Rs. 150,000, you are not required to pay tax. Beyond that, upto an income of Rs.300, 000 you need to pay tax @ 10%. There will be a cess on the tax of 3%   You can save such tax by making investment of upto Rs. 100,000 under 80C  and upto Rs.35,000 under 80D towards medical insurance. You can also claim interest on a housing loan taken if any.

Q 7. Calculate tax total income = 5LACKS

For 2008-09 on Rs. 500,000 your tax liability will be Rs.56650. Upto an income of Rs. 150,000, you are not required to pay tax. Beyond that, upto an income of Rs.300, 000 you need to pay tax @ 10% and beyond that upto Rs.500000 @20%. There will be a cess on the tax of 3%   You can save such tax by making investment of upto Rs. 100,000 under 80C  and upto Rs.35,000 under 80D towards medical insurance. You can also claim interest on a housing loan taken if any.