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I am facing a problem regarding salary tax calculation in my country. I need your assistance.
Suppose an employee is agreed 200,000AFN gross salary amount per month in his employment contract. Suppose in some month he is only present 5 days then how should be tax calculated? Should we calculate the tax on 200,000 gross and then reduce it as per days absent OR should we calculate the tax on 5 days gross income (i.e., we should first reduce the monthly gross amount to 5 days and then calculate tax).
Here we have conflicting practices. Some calculate the tax on 200,000 and then reduce the tax as per number of days absent while some organizations calculate the tax on actual amount that employee receives and they give the reason that tax is only calculated on the amount which is earned i.e., earned income. They say for tax purpose the amount that employee is entitled is considered, the contract amount doesn’t matter. The others say that we are deducting the reduced tax as per number of days but we consider the contractual amount in calculation of tax.
Thank you very much for your time and considerations.
This has nothing to do with the UK Tax exam and you will need to seek local advice on your domestic tax system