Ranjiv earns an annual salary of Rs520,000 including the end of the year bonus payable in December (i.e. he earns Rs40,000 per month). He enjoys the benefit of a company car of 1450 cc used by him partly for performing the duties of his employment and partly for private purposes. All the car running expenses are met fully by the employer. Ranjiv is also eligible for an additional bonus of Rs 70,000 for the year to31 December 2009 paid to him on 31 May 2010.
Ranjiv submitted a fresh employee’s declaration form (EDF) to his employer at the beginning of May 2010 as he got married in that month with Indira, a full time student of the University of Technology ,Mauritius (UTM). Ranjiv is planning to leave his employment soon and set up his own consultancy business. However, he does not have a good knowledge of taxation and would like to know whether there is any fundamental difference between the income taxation of a self-employed person and that of an employee.
Required:
(a) Calculate how much tax has been withheld from Ranjiv’s salary in:
- April 2010;
- May 2010;
- June 2010;and
- July 2010.
b) Make a brief report for Ranjiv listing the main differences existing between the taxation of a self-employed and that of an employee.