Answer :
Sure, let’s break down the solution step by step for each part of the question.
### Part a: Define income tax
Income tax is a type of tax that governments impose on income generated by businesses and individuals within their jurisdiction. By law, taxpayers must file an income tax return annually to determine their tax obligations.
### Part b: Finding the annual social security tax paid by an employee
We first need to determine the annual income of the employee.
Given:
- Monthly salary: Rs. 60,000
- Salary for 15 months in a year (including allowances)
To find the annual salary:
[tex]\[ \text{Annual Salary} = \text{Monthly Salary} \times 15 \][/tex]
[tex]\[ \text{Annual Salary} = 60,000 \times 15 \][/tex]
[tex]\[ \text{Annual Salary} = 900,000 \, \text{Rs} \][/tex]
Next, we calculate the social security tax. Assume the social security tax rate is 8%.
[tex]\[ \text{Social Security Tax Rate} = 8\% = 0.08 \][/tex]
[tex]\[ \text{Annual Social Security Tax} = \text{Annual Salary} \times \text{Social Security Tax Rate} \][/tex]
[tex]\[ \text{Annual Social Security Tax} = 900,000 \times 0.08 \][/tex]
[tex]\[ \text{Annual Social Security Tax} = 72,000 \, \text{Rs} \][/tex]
### Part c: Finding the annual income tax paid by him
To calculate the annual income tax, we refer to the provided income tax rates table and apply the rates to the respective income slabs step-by-step.
Given slabs and tax rates are:
- Up to Rs. 5,00,000: 1%
- Rs. 5,00,001 - Rs. 7,00,000: 10%
- Rs. 7,00,001 - Rs. 10,00,000: 20%
- Rs. 10,00,001 - Rs. 20,00,000: 30%
- Above Rs. 20,00,000: 36%
Since the annual salary is Rs. 900,000, it falls into different slabs. We calculate the tax for each portion of the income in these slabs step by step:
1. For income up to Rs. 5,00,000:
[tex]\[ \text{Tax} = 5,00,000 \times 0.01 = 5,000 \, \text{Rs} \][/tex]
2. For income between Rs. 5,00,001 and Rs. 7,00,000:
[tex]\[ \text{Income in this slab} = 7,00,000 - 5,00,000 = 2,00,000 \][/tex]
[tex]\[ \text{Tax} = 2,00,000 \times 0.10 = 20,000 \, \text{Rs} \][/tex]
3. For income between Rs. 7,00,001 and Rs. 9,00,000:
[tex]\[ \text{Income in this slab} = 9,00,000 - 7,00,000 = 2,00,000 \][/tex]
[tex]\[ \text{Tax} = 2,00,000 \times 0.20 = 40,000 \, \text{Rs} \][/tex]
Total income tax:
[tex]\[ \text{Annual Income Tax} = 5,000 + 20,000 + 40,000 = 65,000 \, \text{Rs} \][/tex]
Thus, the annual income tax paid by the employee is Rs. 65,000.
### Summary of Results:
a. Income tax definition:
Income tax is a type of tax that governments impose on income generated by businesses and individuals within their jurisdiction. By law, taxpayers must file an income tax return annually to determine their tax obligations.
b. Annual social security tax:
Annual Social Security Tax = Rs. 72,000
c. Annual income tax:
Annual Income Tax = Rs. 65,000
### Part a: Define income tax
Income tax is a type of tax that governments impose on income generated by businesses and individuals within their jurisdiction. By law, taxpayers must file an income tax return annually to determine their tax obligations.
### Part b: Finding the annual social security tax paid by an employee
We first need to determine the annual income of the employee.
Given:
- Monthly salary: Rs. 60,000
- Salary for 15 months in a year (including allowances)
To find the annual salary:
[tex]\[ \text{Annual Salary} = \text{Monthly Salary} \times 15 \][/tex]
[tex]\[ \text{Annual Salary} = 60,000 \times 15 \][/tex]
[tex]\[ \text{Annual Salary} = 900,000 \, \text{Rs} \][/tex]
Next, we calculate the social security tax. Assume the social security tax rate is 8%.
[tex]\[ \text{Social Security Tax Rate} = 8\% = 0.08 \][/tex]
[tex]\[ \text{Annual Social Security Tax} = \text{Annual Salary} \times \text{Social Security Tax Rate} \][/tex]
[tex]\[ \text{Annual Social Security Tax} = 900,000 \times 0.08 \][/tex]
[tex]\[ \text{Annual Social Security Tax} = 72,000 \, \text{Rs} \][/tex]
### Part c: Finding the annual income tax paid by him
To calculate the annual income tax, we refer to the provided income tax rates table and apply the rates to the respective income slabs step-by-step.
Given slabs and tax rates are:
- Up to Rs. 5,00,000: 1%
- Rs. 5,00,001 - Rs. 7,00,000: 10%
- Rs. 7,00,001 - Rs. 10,00,000: 20%
- Rs. 10,00,001 - Rs. 20,00,000: 30%
- Above Rs. 20,00,000: 36%
Since the annual salary is Rs. 900,000, it falls into different slabs. We calculate the tax for each portion of the income in these slabs step by step:
1. For income up to Rs. 5,00,000:
[tex]\[ \text{Tax} = 5,00,000 \times 0.01 = 5,000 \, \text{Rs} \][/tex]
2. For income between Rs. 5,00,001 and Rs. 7,00,000:
[tex]\[ \text{Income in this slab} = 7,00,000 - 5,00,000 = 2,00,000 \][/tex]
[tex]\[ \text{Tax} = 2,00,000 \times 0.10 = 20,000 \, \text{Rs} \][/tex]
3. For income between Rs. 7,00,001 and Rs. 9,00,000:
[tex]\[ \text{Income in this slab} = 9,00,000 - 7,00,000 = 2,00,000 \][/tex]
[tex]\[ \text{Tax} = 2,00,000 \times 0.20 = 40,000 \, \text{Rs} \][/tex]
Total income tax:
[tex]\[ \text{Annual Income Tax} = 5,000 + 20,000 + 40,000 = 65,000 \, \text{Rs} \][/tex]
Thus, the annual income tax paid by the employee is Rs. 65,000.
### Summary of Results:
a. Income tax definition:
Income tax is a type of tax that governments impose on income generated by businesses and individuals within their jurisdiction. By law, taxpayers must file an income tax return annually to determine their tax obligations.
b. Annual social security tax:
Annual Social Security Tax = Rs. 72,000
c. Annual income tax:
Annual Income Tax = Rs. 65,000
