Average tax

Originally posted by : Satheesh
	What do you mean by Average tax.

"Average rate of income-tax" means the rate arrived at by dividing the amount of income-tax calculated on the total income, by such total income.

For the purpose of making the payment of tax on Non-monetary Perquisites by Employer  tax is to be determined at the average of income-tax computed on the basis of rate in force for the financial year, on the income chargeable under the head "salaries", including the value of perquisites for which tax has been paid by the employer himself.
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ILLUSTRATION:
Suppose that the income chargeable under the head "salaries" of an employee below sixty years of age for the year inclusive of all perquisites is Rs. 4,50,000/-, out of which, Rs. 50,000/- is on account of non-monetary perquisites and the employer opts to pay the tax on such perquisites.
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STEPS: