Mr. Abdulala paid income tax according to the following table.Annual Income Tax percentageFirst 500 000 tax freeNext 500 000 4%Next 500 000 8%The annual income of Mr. Abdull from his business is Rs. 670 000 and his monthly salary is Rs. 40 000(i) Calculate Mr. Abdulla's annual salary.7Selecting a bag Selecting a bulbsBag B...........................Bag A...........................Grade 11 - Maths - NWPS1200 2 3 6B BCA >>Time - hoursdistance - km(ii) How much income tax does he have to pay according to his total income?
Question
Mr. Abdulala paid income tax according to the following table.Annual Income Tax percentageFirst 500 000 tax freeNext 500 000 4%Next 500 000 8%The annual income of Mr. Abdull from his business is Rs. 670 000 and his monthly salary is Rs. 40 000(i) Calculate Mr. Abdulla's annual salary.7Selecting a bag Selecting a bulbsBag B...........................Bag A...........................Grade 11 - Maths - NWPS1200 2 3 6B BCA >>Time - hoursdistance - km(ii) How much income tax does he have to pay according to his total income?
Solution
(i) To calculate Mr. Abdulla's annual salary, we need to multiply his monthly salary by the number of months in a year.
Mr. Abdulla's monthly salary is Rs. 40,000.
So, his annual salary = Monthly salary x Number of months in a year = Rs. 40,000 x 12 = Rs. 480,000
(ii) To calculate the income tax Mr. Abdulla has to pay, we first need to calculate his total annual income.
His total annual income = Annual income from his business + Annual salary = Rs. 670,000 (from business) + Rs. 480,000 (salary) = Rs. 1,150,000
According to the tax table:
- The first Rs. 500,000 is tax-free.
- The next Rs. 500,000 is taxed at 4%.
- Any income above Rs. 1,000,000 is taxed at 8%.
So, Mr. Abdulla's income tax is calculated as follows:
- Tax on the first Rs. 500,000 = Rs. 0 (because it's tax-free)
- Tax on the next Rs. 500,000 = 4/100 x 500,000 = Rs. 20,000
- Tax on the remaining Rs. 150,000 (i.e., Rs. 1,150,000 - Rs. 1,000,000) = 8/100 x 150,000 = Rs. 12,000
Therefore, the total income tax Mr. Abdulla has to pay = Rs. 0 + Rs. 20,000 + Rs. 12,000 = Rs. 32,000.
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