Saad earns a basic monthly salary of Rs 20,000. As a salesman, he must sell Rs 300,000 worth of itemsper month but if he sells beyond this monthly quota, he makes a 4% commission on the additional sale.Saad sells Rs 460,000 worth of items in a certain month.i. Find his total (gross) salary for this month. (3 Marks)ii. Saad needs to pay income tax on his basic salary. If first Rs 15,000 is tax exempted, find theamount of tax that he will pay on his basic salary if the rate of income tax is 20%. (2 Marks)
Question
Saad earns a basic monthly salary of Rs 20,000. As a salesman, he must sell Rs 300,000 worth of itemsper month but if he sells beyond this monthly quota, he makes a 4% commission on the additional sale.Saad sells Rs 460,000 worth of items in a certain month.i. Find his total (gross) salary for this month. (3 Marks)ii. Saad needs to pay income tax on his basic salary. If first Rs 15,000 is tax exempted, find theamount of tax that he will pay on his basic salary if the rate of income tax is 20%. (2 Marks)
Solution
i. To find Saad's total (gross) salary for the month, we first need to calculate his commission. He sold Rs 460,000 worth of items, which is Rs 160,000 more than his monthly quota of Rs 300,000. His commission is therefore 4% of Rs 160,000, which is Rs 6,400. Adding this to his basic monthly salary of Rs 20,000, we find that his total salary for the month is Rs 26,400.
ii. To find the amount of tax Saad will pay on his basic salary, we first need to subtract the tax-exempt amount of Rs 15,000 from his basic salary of Rs 20,000, which leaves Rs 5,000. The tax he will pay is therefore 20% of Rs 5,000, which is Rs 1,000.
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