1. **State the problem:** Calculate the tax free income, taxable income, annual income tax, monthly tax, and percentage of income paid as tax for a director earning 18000 with given allowances and tax rates. 2. **Calculate tax free income:** - Personal allowance = 1200 + 10% of (18000 - 1200) = 1200 + 0.10 \times 16800 = 1200 + 1680 = 2880 - Wife allowance = 600 - Children allowance = 250 \times 4 = 1000 (only first 4 children count) - Dependent relative allowance = 550 - Total tax free income = 2880 + 600 + 1000 + 550 = 5030 3. **Calculate taxable income:** - Taxable income = Salary - Tax free income = 18000 - 5030 = 12970 4. **Calculate income tax paid annually:** Tax brackets and rates: - First 2000 at 10%: 2000 \times 0.10 = 200 - Next 400 at 15%: 400 \times 0.15 = 60 - Next 5000 at 22.8%: 5000 \times 0.228 = 1140 - Next 10000 at 30%: Since taxable income left after first 7400 (2000+400+5000) is 12970 - 7400 = 5570, which is less than 10000, tax on 5570 at 30% = 5570 \times 0.30 = 1671 - Total tax = 200 + 60 + 1140 + 1671 = 3071 5. **Calculate monthly tax:** - Monthly tax = Annual tax / 12 = 3071 / 12 \approx 255.92 6. **Calculate percentage of income paid as tax:** - Percentage tax = (Annual tax / Salary) \times 100 = (3071 / 18000) \times 100 \approx 17.06\% **Final answers:** - Tax free income = 5030 - Taxable income = 12970 - Annual income tax = 3071 - Monthly tax = 255.92 - Percentage of income paid as tax = 17.06%