A person X earns NPR. 60,000 basic salary per month. The company provides 10% PF and 8.33% Gratuity, and person X contributes 10% PF on it. Can you prepare the accounting entries for the first month, total payroll tax, and total contribution amount in CIT?

1. Prepare the journal entry for the first month.
2. What is the total payroll tax?
3. What is the total contribution amount in CIT?

Please provide answers and explanations for each question. And could you please provide complete guidance for CIT, and PF that an accountant should and must know?

Basic Salary - 60k

PF by employer - 6k

Gratuity - 5k

G. Total = 71k

Annual Taxable Salary  - [(71-(6k*2)] * 12 = 7,08,000

(assuming this salary is for shrawan)

Annual Tax (FY 79-80) = 26,600

Monthly Tax = (26600/12) = 2217

SST - 5000/12 = 417

TDS - (2217-417) = 1800

Journal Entry:

Salary Exp       Dr. 71000

     SST                        Cr.         417

     TDS on Salary        Cr.      1,800

     PF Liab                   Cr.    12,000

     Gratuity Liab          Cr.      5,000

     Bank / Sal Payable  Cr.    56,783

(Being salary booked for shrawan month)

Please note CIT is different from PF and Gratuity and it is optional for tax payer.

Limit being Rs. 3 lakhs or 1/3rd of taxable income.