Question
| (i) Basic Pay | 40,000 |
| (ii) Dearness Pay | 11,000 |
| (iii) Dearness Allowance | 13,000 |
| (iv) Entertainment Allowance | 2,800 |
| (v) Hill Area Allowance | 1,450 |
| (vi) Tribal Area Allowance | 750 |
| (vii) Own contribution towards Statutory Provident Fund | 12,500 |
Answer :
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Salary for tax purposes is calculated under the head “Salaries” as follows: 1. Compute Gross Salary: Basic Pay = 40,000 Dearness Pay = 11,000 Dearness Allowance = 13,000 Entertainment Allowance = 2,800 Hill Area Allowance = 1,450 Tribal Area Allowance = 750 Gross Salary = 40,000 + 11,000 + 13,000 + 2,800
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