Basic Concepts of Income Tax QB (May & June 2022)
Basic Concepts of Income Tax QB (May & June 2022)
Solution:
First Rs. 2,50,000 Nil
Next Rs. 2,50,000 @ 5% Rs. 12,500
Next Rs. 5,00,000 @ 20% Rs. 1,00,000
Balance Rs. 8 Lacs @ 30% Rs. 2,40,000
Total Rs. 3,52,500
Add: 4% HEC Rs. 14,100
Total Tax (rounded off) Rs. 3,66,600
PC Note: Tax on Rs. 10 Lacs = Rs. 1,12,500 in case of Normal Individual (Remember this). Only Tax on Income above
Rs. 10 Lacs shall be calculated & such amount shall be added by Rs. 1,12,500 to arrive at final tax amount.
PQ2. Total income of Mrs. X (44 years) resident is Rs. 12 Lacs. Compute tax liability for AY 2022-23.
Solution: BEL is same for male & female Assessee. Thus Mrs. X will get the same BEL of Rs. 2,50,000.
Tax on Rs. 10 Lacs Rs. 1,12,500
Balance Rs. 2 Lacs @ 30% Rs. 60,000
Total Rs. 1,72,500
Add: 4% HEC Rs. 6,900
Total Tax (rounded off) Rs. 1,79,400
PQ3. Total income of Mr. Rahim (63 years) is Rs. 15 Lacs. Compute his tax liability for AY 2022-23.
Solution: Since Mr. Rahim is a senior citizen, he will get the BEL of Rs. 3 Lacs.
First Rs. 3,00,000 Nil
Next Rs. 2,00,000 @ 5% Rs. 10,000
Next Rs. 5,00,000 @ 20% Rs. 1,00,000
Balance Rs. 5,00,000 @ 30% Rs. 1,50,000
Total Rs. 2,60,000
Add: 4% HEC Rs. 10,400
Tax rounded off Rs. 2,70,400
PQ4. Total income of Mr. Ram (83 years) is Rs. 15 Lacs. Compute his tax liability for AY 2022-23.
Solution: Since Mr. X is a super-senior citizen, he will get BEL of Rs. 5 lacs.
First Rs. 500,000 Nil
Next Rs. 5,00,000 @ 20% Rs. 1,00,000
Balance Rs. 5,00,000 @ 30% Rs. 1,50,000
Total Rs. 2,50,000
Add: 4% HEC Rs. 10,000
Tax rounded off Rs. 2,60,000
PQ5. Total income of Jon (70 years) non-resident is Rs. 12 lacs. Compute his tax liability for AY 2022-23.
Solution: Mr. Joe is not eligible for higher BEL since he is a NR. He is eligible for BEL of Rs. 2,50,000.
Tax on Rs. 10 Lacs Rs. 1,12,500
Balance Rs. 2 Lacs @ 30% Rs. 60,000
Total Rs. 1,72,500
Add: 4% HEC Rs. 6,900
Total Tax (rounded off) Rs. 1,79,400
For MCQs, Doubt Clearing Sessions, Revision Lectures & Marathons Website: www.pranavchandak.com
Mobile App: Pranav Chandak Academy
1
PQ6. Total income of Mr. Raghav (26 years) is Rs. 4,40,000. Compute tax liability for AY 2022-23.
Solution: Since Mr. Raghav is a resident having Total Income < Rs. 5,00,000, rebate u/s 87A is available.
First Rs. 2,50,000 Nil
Next Rs. 1,90,000 @ 5% Rs. 9,500
Less: Rebate u/s 87A = Lower of (i) Tax payable i.e Rs. 9,500; OR (ii) Rs. 12,500 (Rs. 9,500)
Tax payable after rebate u/s 87A Nil
PQ7. Total income of Mr. Anup (22 years) resident in India is Rs. 5,00,000. Compute tax liability for AY 2022-23.
Solution: Since Mr. Anup is a resident having Total Income = Rs. 5,00,000, rebate u/s 87A is available.
First Rs. 2,50,000 Nil
Next Rs. 2,50,000 @ 5% Rs. 12,500
Total Rs. 12,500
Rebate u/s 87A = Lower of (i) Tax payable or (ii) Rs. 12,500 (Rs. 12,500)
Tax payable after rebate u/s 87A Nil
PQ8. Total income of Mr. Rahul (22 years) resident in India is Rs. 5,00,100. Compute tax liability for AY 2022-23.
Solution: Since Mr. Rahul is a resident having TI > Rs. 5,00,000, rebate u/s 87A is NOT available.
First Rs. 2,50,000 Nil
Next Rs. 2,50,000 @ 5% Rs. 12,500
Next Rs. 100 @ 20% Rs. 20
Total Rs. 12,520
Rebate u/s 87A = Lower of (i) Tax payable or (ii) Rs. 12,500 NA
Add: 4% HEC Rs. 500.80
Tax payable (rounded off) Rs. 13, 020
PQ9. Total income of Mr. John aged 35 years (NR) in India is Rs. 4,50,000. Compute tax liability for AY 2022-23.
Solution: Since Mr. John is a non-resident, rebate u/s 87A is not available.
First Rs. 2,50,000 Nil
Next Rs. 2,00,000 @ 5% Rs. 10,000
Total Rs. 10,000
Add: 4% HEC Rs. 400
Tax rounded off Rs. 10,400
PQ10. Total income of Mr. Joe (70 yrs) NR in India for PY 2021-22 is Rs. 12 lacs. Compute his tax liability.
Solution: Mr. Joe is not eligible for higher BEL since he is a NR. However, he is eligible for BEL of Rs. 2,50,000.
Tax on Rs. 10 Lacs Rs. 1,12,500
Balance Rs. 2 Lacs @ 30% Rs. 60,000
Total Rs. 1,72,500
Add: 4% HEC Rs. 6,900
Total Tax (rounded off) Rs. 1,79,400
PQ11. Compute Marginal relief available to Y Ltd., a domestic company, assuming that the total income of Y Ltd. for AY 2022-
23 is Rs. 10,01,00,000 & TI does not include any income in the nature of capital gains. Assume that the company has not
exercised option u/s 115BAA or 115BAB. (Gross Receipts of Y Ltd. for the PY 2019-20 is Rs. 410 Cr) [CA FINAL SM Q5]
Solution:
▪ Tax payable on TI of Rs. 10,01,00,000 of Y Ltd. computed@ 33.6% (including SC @ 12%) is Rs. 3,36,33,600.
▪ However, tax cannot exceed Rs. 3,22,00,000 [i.e., tax of Rs. 3,21,00,000 (32.1% of Rs. 10 crore) payable on TI of Rs. 10 Cr
+ Rs. 1,00,000, being the amount of total income exceeding Rs. 10 Cr].
▪ Therefore, tax payable on Rs. 10,01,00,000 would be Rs. 3,22,00,000.
▪ Marginal relief is Rs. 14,33,600 (i.e., Rs. 3,36,33,600 - Rs. 3,22,00,000).
For MCQs, Doubt Clearing Sessions, Revision Lectures & Marathons Website: www.pranavchandak.com
Mobile App: Pranav Chandak Academy
2
PQ12. Compute the tax liability & Marginal Relief for Resident Assessee in following situations for AY 2022-23:
Name Mr. Pranav Mr. Akshay Mr. Bharat
Age of Assessee 25 years 62 years 81 years
Total Income Rs. 1.01 Cr Rs. 1.01 Cr Rs. 1.01 Cr
Note: Any of the assessee does not have any income in the nature of Capital gains u/s 111A & 112A.
Solution:
SN Particulars Mr. Amar Mr. Akbar Mr. Anthony
1(a) Tax on Total Income 1,12,500 + (91 L x 30%) 1,10,000 + (91 L x 30%) 1,00,000 + (91 L x 30%)
= Rs. 28,42,500 = Rs. 28,40,000 = Rs. 28,30,000
1(b) SC @ 15% on 1(a) Rs. 4,26,375 Rs. 4,26,000 Rs. 4,24,500
1 Total Tax = 1(a) + 1(b) Rs. 32,68,875 Rs. 32,66,000 Rs. 32,54,500
2(a) Tax if Income = Rs. 1 Cr 1,12,500 + (90 L x 30%) 1,10,000 + (90 L x 30%) 1,00,000+ (90 L x 30%)
= Rs. 28,12,500 = Rs. 28,10,000 = Rs. 28,00,000
2(b) SC @ 10% on 2(a) Rs. 2,81,250 Rs. 2,81,000 Rs. 2,80,000
2 Total Tax = 2(a) + 2(b) Rs. 30,93,750 Rs. 30,91,000 Rs. 30,80,000
3 Excess Tax payable Rs. 1,75,125 Rs. 1,75,000 Rs. 1,74,500
4 Excess Income (i.e > 1 Cr) Rs. 1,00,000 Rs. 1,00,000 Rs. 1,00,000
5 Marginal Relief (3 – 4) Rs. 75,125 Rs. 75,000 Rs. 74,500
6 Tax Payable (1 - 5) Rs. 31,93,750 Rs. 31,91,000 Rs. 31,80,000
7 HEC at 4 % on (6) Rs. 1,27,750 Rs. 1,27,640 Rs. 1,27,200
8 Tax Liability Rs. 33,21,500 Rs. 33,18,640 Rs. 33,07,200
PQ2. An employee instructs his employer to pay a certain portion of his salary to a charity & claims it as exempt as it is
diverted by overriding charge/title. Comment.
Answer: In the instant case, it is an application of income & in the nature of foregoing of salary. According to the Supreme
Court judgment in CIT v. L.W. Russel (1964) 52 ITR 91, the salary which has been foregone after its accrual in the hands
of the employee is taxable. Hence, the amount paid by the employer to a charity as per the employee’s directions is taxable
in the hands of the employee.
PQ14. Describe ‘Average rate of tax’ & ‘Maximum marginal rate’ u/s 2(10) & 2(29C). [ICAI SM Ex. Q1]
PQ18. Explain “Assessee”, “Deemed Assessee”, “Assessee in Default” with suitable examples. [ICAI SM Ex. Q2]
PQ19. List out the capital receipts which are taxable under the Income Tax Act, 1961.
PQ20. Based on “Application of Income Vs. Diversion of Income” [Source: CA Final Module]
Mr. Bhargava, a leading advocate on corporate law, decided to reduce his practice & to accept briefs only for paying his taxes
& making charities with the fees received on such briefs. In a particular case, he agreed to appear to defend one company in
Supreme Court on the condition that he would be provided with Rs. 5 lacs for a public charitable trust that he would create.
He defended the company & was paid Rs. 5 Lacs by the company. He created a trust of that sum by executing a trust deed.
Decide whether the amount received by Mr. Bhargava is assessable in his hands as income from profession.
Answer: In instant case, the trust was created by Mr. Bhargava himself out of his professional income. The client did not
create the trust. The client did not impose any obligation in the nature of a trust binding on Mr. Bhargava. Thus, there is
no diversion of the money to the trust before it became professional income in the hands of Mr. Bhargava. This case is one
of application of professional income & not of diversion of income by overriding title. Therefore, amount received by Mr.
Bhargava is chargeable to tax u/h ‘PGBP’.
For MCQs, Doubt Clearing Sessions, Revision Lectures & Marathons Website: www.pranavchandak.com
Mobile App: Pranav Chandak Academy
3
PQ21. Based on “Application of Income Vs. Diversion of Income” [Source: CA Final Module]
XYZ Ltd. took over the running business of a sole-proprietor by sale deed. As per the sale deed, XYZ Ltd. undertook to pay
overriding charges of Rs. 15,000 p.a. to the wife of the sole-proprietor in addition to the sale consideration. The sale deed
also specifically mentioned that the amount was charged on the net profits of XYZ Ltd., who had accepted that obligation as
a condition of purchase of the going concern. Is payment of overriding charges by XYZ Ltd. to wife of sole-proprietor
‘diversion of income’ or ‘application of income’? Discuss.
Answer: Allahabad High Court observed that the overriding charge which had been created in favour of the wife of the sole-
proprietor was an integral part of the sale deed by which the going concern was transferred to the assessee. The obligation,
therefore, was attached to the very source of income i.e. the going concern transferred to the assessee by the sale deed. The
sale deed also specifically mentioned that amount in question was charged on the net profits of the assessee-company & the
assessee-company had accepted that obligation as a condition of purchase of the going concern. Hence, it is clearly a case of
diversion of income by an overriding charge & not a mere application of income. [Jit & Pal X-Rays (P.) Ltd. v. CIT (2004)]
PQ22. Based on “Application of Income Vs. Diversion of Income” [Source: CA Final Module]
MKG Agency is a partnership firm consisting of father & 3 major sons. Partnership deed provided that after the death of
father, business shall be continued by the sons, subject to the condition that the firm shall pay 20% of the profits to the
mother. Father died in March 2020. In PY 2022-23, reconstituted firm paid Rs. 1 Lac (20%) to the mother & claimed the
amount as deduction from its income. Examine the correctness of claim of the firm.
Answer: Amount of Rs. 1 Lac (20% of profits of the firm) paid to the mother gets diverted at source by the charge created in
her favour as per the terms of the partnership deed. Such income does not reach assessee-firm. Rather, such income stands
diverted to the other person as such other person has a better title on such income than the title of the assessee. Firm might
have received the said amount but it so received for & on behalf of mother, who possesses overriding title. Therefore, the
amount paid to the mother should be excluded from the income of the firm. [CIT vs. Nariman B. Bharucha & Sons (1981)]
PQ23. Based on ‘Existence of HUF having Single Male Member’ [Source: CA Final Module]
Anand was the Karta of HUF. He died leaving behind his major son Prem, his widow, his grandmother & brother’s wife. Can
the HUF retain its status as such or the surviving persons would become co-owners?
Answer: SC has made it clear that there need not be more than one male member to form a HUF.
Under Hindu Law, a joint family may consist of a single male member & widows of deceased male members. Therefore,
property of a joint HUF does not cease to belong to the family merely because the family is represented by a single co-
parcener who possesses the right which an owner of property may possess. Therefore, HUF would retain its status as such
(as before).
PQ24. Based on “Amount borrowed on Hundi u/s 69D” [Source: CA Final Module]
Mr. C borrowed on Hundi, a sum of Rs. 25,000 by way of bearer cheque on 11.09.2021 & repaid the same with interest
amounting to Rs. 30,000 by A/c payee cheque on 12.10.2021. AO wants to treat the amount borrowed as income during the
previous year. Is the action of AO valid?
Answer: Section 69D provides that where any amount is borrowed on a hundi or any amount due thereon is repaid
otherwise than by way of A/c Payee cheque, amount so borrowed or repaid shall be deemed to be the income of the person
borrowing or repaying the amount for PY in which the amount was so borrowed or repaid. Mr. C has borrowed Rs. 25,000
on Hundi by way of bearer cheque. Therefore, it shall be deemed to be income of Mr. C for AY 2022-23. Since the repayment
of the same along with interest was made by A/c payee cheque, it would not be taxed.
If the amount is deemed as an Income at the time of borrowing, it will not be taxed again on repayment.
Therefore, action of AO treating the amount borrowed as income during PY is valid in law.
For MCQs, Doubt Clearing Sessions, Revision Lectures & Marathons Website: www.pranavchandak.com
Mobile App: Pranav Chandak Academy
4
Illustration 1. Mr. X has a total income of Rs. 12 Lacs for PY 2021-22, comprising of income from house property & interest
on fixed deposits. Compute his tax liability for AY 2022-23 if his age is (a) 45 years; (b) 63 years; (c) 82 years.
[Assume that Mr. X has not opted for the provisions of section 115BAC]
Solution: (a) Age = 45 years
First Rs. 2,50,000 Nil
Next Rs. 2,50,000 @ 5% Rs. 12,500
Next Rs. 5,00,000 @ 20% Rs. 1,00,000
Balance Rs. 2 Lacs @ 30% Rs. 60,000
Total Rs. 1,72,500
Add: 4% HEC Rs. 6,900
Total Tax (rounded off) Rs. 1,79,400
PC Note: Tax on Rs. 10 Lacs = Rs. 1,12,500 in case of Normal Individual (Remember this). Only Tax on Income above
Rs. 10 Lacs shall be calculated & such amount shall be added by Rs. 1,12,500 to arrive at final tax amount.
(b) Age = 63 years. Mr. X is a senior citizen, he will get BEL of Rs. 3 Lacs & remaining slabs will be same.
First Rs. 3,00,000 Nil
Next Rs. 2,00,000 @ 5% Rs. 10,000
Next Rs. 5,00,000 @ 20% Rs. 1,00,000
Balance Rs. 2,00,000 @ 30% Rs. 60,000
Total Rs. 1,70,000
Add: 4% HEC Rs. 6,800
Tax rounded off Rs. 1,76,800
(c) Age = 82 Years. Since Mr. X is a super-senior citizen, he will get BEL of Rs. 5 lacs.
First Rs. 500,000 Nil
Next Rs. 5,00,000 @ 20% Rs. 1,00,000
Balance Rs. 2,00,000 @ 30% Rs. 60,000
Total Rs. 1,60,000
Add: 4% HEC Rs. 6,400
Tax rounded off Rs. 1,66,400
Illustration 2. Compute the tax liability of Mr. A (Age 25), having total income of Rs. 51 Lacs for AY 2022-23.
Solution: Computation of tax liability of Mr. A for AY 2022-23
1. Tax payable including surcharge on Total Income of Rs. 51,00,000 Rs 14,76,750.
2. Tax Payable on total income of Rs. 50 Lacs Rs. 13,12,500.
3. Excess tax payable = [(1) - (2)] = Rs. 14,76,750 – Rs. 13,12,500 Rs. 1,64,250.
4. Marginal Relief = [(Rs. 1,64,250- Rs. 1,00,000) Income in excess of Rs. 50,00,000] Rs. 64,250.
5. Tax Payable = Rs. 14,76,750 – Rs. 64,250 (Marginal Relief) = Rs. 14,12,500 + 4% HEC Rs. 14,69,000
Illustration 3. Compute tax liability of Mr. B (Age 42), having total income of Rs. 1,01,00,000 for AY 2022-23.
Solution: Computation of tax liability of Mr. B for AY 2022-23
1. Tax payable including surcharge on total income of Rs. 1,01,00,000 @ 15% Rs. 32,68,875.
2. Tax Payable on total income of Rs. 1 crore [SC @ 10%] Rs. 30,93,750.
3. Excess tax payable = [(1) - (2)] = Rs. 32,68,875 - Rs. 30,93,750 Rs. 1,75,125.
4. Marginal Relief = [(Rs. 1,75,125 - Rs. 1,00,000) Income in excess of Rs. 50,00,000] Rs. 75,125.
5. Tax Payable = Rs. 32,68,875 – Rs. 75,125 (Marginal Relief) = Rs. 31,93,750 + 4% HEC Rs. 33,21,500
Illustration 4. Compute tax liability of Mr. C (Age 58), having total income of Rs. 2,01,00,000 for AY 2022-23.
For MCQs, Doubt Clearing Sessions, Revision Lectures & Marathons Website: www.pranavchandak.com
Mobile App: Pranav Chandak Academy
5
Solution: Computation of tax liability of Mr. C for AY 2022-23
1. Tax payable including surcharge on total income of Rs. 1,01,00,000 @ 25% Rs. 73,03,125
2. Tax Payable on total income of Rs. 2 Crores [SC @ 15%] Rs. 66,84,375
3. Excess tax payable = [(1) - (2)] = Rs. 73,03,125 - Rs. 66,84,375 Rs. 6,18,750
4. Marginal Relief = Extra Tax – Extra Income [Rs. 6,18,750 – Rs. 1,00,000] Rs. 5,18,750
5. Tax Payable = Rs. 73,03,125 – Rs. 5,18,750 (Marginal Relief) = Rs. 67,84,375 + 4% HEC Rs. 70,55,750
Illustration 5. Compute tax liability of Mr. D (Age 37), having total income of Rs. 5,01,00,000 for AY 2022-23.
Solution: Computation of tax liability of Mr. D for AY 2022-23
1. Tax payable including surcharge on total income of Rs. 5,01,00,000 @ 37% Rs. 2,03,34,225
2. Tax Payable on total income of Rs. 5 Crores [SC @ 25%] Rs. 1,85,15,625
3. Excess tax payable = [(1) - (2)] = Rs. 2,03,34,225 - Rs. 1,85,15,625 Rs. 18,18,600
4. Marginal Relief = Extra Tax – Extra Income [Rs. 18,18,600 – Rs. 1,00,000] Rs. 17,18,600
5. Tax Payable = Rs. 2,03,34,225 – Rs. 17,18,600 (Marginal Relief) = Rs. 1,86,15,625 + 4% HEC Rs. 1,93,60,250
Illustration 6. Total income of Mr. Raghav (26 years) is Rs. 4,40,000. Compute the tax liability for AY 2022-23.
Solution: Since Mr. Raghav is a resident having Total Income < Rs. 5,00,000, rebate u/s 87A is available.
First Rs. 2,50,000 Nil
Next Rs. 1,90,000 @ 5% Rs. 9,500
Less: Rebate u/s 87A = Lower of (i) Tax payable i.e Rs. 9,500; OR (ii) Rs. 12,500 (Rs. 9,500)
Tax payable after rebate u/s 87A Nil
Illustration 7. Mr. Dinesh (age 35 years) & a resident in India has a total income of Rs. 4,80,000, comprising of LTCG u/s
112. Compute his tax liability for AY 2022-23.
Solution: Computation of tax liability of Mr. Dinesh for AY 2022-23
1 Tax @ 20% on Rs. 2,30,000 (Rs. 4,80,000 – Rs. 2,50,000, being unexhausted BEL) Rs. 46,000
2 Less: Rebate u/s 87A = Lower of (i) Tax payable i.e Rs. 46,000; OR (ii) Rs. 12,500 (Rs. 12,500)
3 Tax payable after rebate u/s 87A Rs. 33,500
4 Add: Health & Education cess @ 4% Rs. 1,340
5 Tax Liability Rs. 34,840
Q2. State any four instances where the income of PY is assessable in the previous year itself instead of AY.
Answer: Income of an assessee for a previous year is charged to income-tax in AY following the previous year. However, in
a few cases, the income is taxed in the previous year in which it is earned. These exceptions have been made to protect the
interests of revenue. The exceptions are as follows:
For MCQs, Doubt Clearing Sessions, Revision Lectures & Marathons Website: www.pranavchandak.com
Mobile App: Pranav Chandak Academy
6
1. Where a ship, belonging to or chartered by a non-resident, carries passen- gers, livestock, mail or goods shipped at a port
in India, the ship is allowed to leave the port only when the tax has been paid or satisfactory arrangement has been made
for payment thereof. 7.5% of the freight paid or payable to the owner or the charterer or to any person on his behalf,
whether in India or outside India on account of such carriage is deemed to be his income which is charged to tax in
the same year in which it is earned.
2. Where it appears to AO that any individual may leave India during the current AY or shortly after its expiry & he has no
present intention of returning to India, the total income of such individual for the period from the expiry of the respective
previous year up to the probable date of his departure from India is chargeable to tax in that AY.
3. If an AOP/BOI etc. is formed or established for a particular event or purpose & AO apprehends that the AOP/BOI is likely
to be dissolved in the same year or in next year, he can make assessment of the income up to the date of dissolution as
income of the relevant AY.
4. During current AY, if it appears to AO that a person is likely to charge, sell, transfer, dispose of or otherwise part with any
of his assets to avoid payment of any liability under this Act, the total income of such person for the period from the
expiry of the previous year to the date, when AO commences proceedings under this section is taxable in that AY.
5. Where any business or profession is discontinued in any AY, the income of the period from the expiry of the PY up to the
date of such discontinuance may, at the discretion of AO, be charged to tax in that AY.
Q3. Compute tax liability of Mr. Kashyap (aged 35), having total income of Rs. 51,75,000 for AY 2022-23. Assume that his
total income comprises of salary income, income from house property and interest on fixed deposit. Assume that Mr.
Kashyap has not opted for the provisions of section 115BAC.
Solution: Computation of tax liability of Mr. Kashyap for AY 2022-23
1. Tax payable including surcharge on Total Income of Rs. 51,75,000 Rs. 15,01,500
2. Tax Payable on total income of Rs. 50 Lacs Rs. 13,12,500
3. Excess tax payable = [(1) - (2)] = Rs. 15,01,500 – Rs. 13,12,500 Rs. 1,89,000
4. Marginal Relief = [(Rs. 1,89,000 - Rs. 1,75,000) Income in excess of Rs. 50,00,000] Rs. 14,000
5. Tax Payable = Rs. 15,01,500 – Rs. 14,000 (Marginal Relief) = Rs. 14,87,500 + 4% HEC Rs. 15,47,000
Q4. Compute tax liability of Mr. Gupta (aged 61), having total income of Rs. 1,02,00,000 for AY 2022-23. Assume that his total
income comprises of salary income, income from house property and interest on fixed deposit. Assume that Mr. Gupta has
not opted for the provisions of section 115BAC.
Solution: Computation of tax liability of Mr. Gupta for AY 2022-23
1. Tax payable including surcharge on Total Income of Rs. 1,02,00,000 Rs. 33,00,500
2. Tax Payable on total income of Rs. 1 Crore Rs. 30,91,000
3. Excess tax payable = [(1) - (2)] = Rs. 33,00,500 - Rs. 30,91,000 Rs. 2,09,500
4. Marginal Relief = [(Rs. 2,09,500 - Rs. 2,00,000) Income in excess of Rs. 1,00,00,000] Rs. 9,500
5. Tax Payable = Rs. 33,00,500 – Rs. 9,000 (Marginal Relief) = Rs. 32,91,500 + 4% HEC Rs. 34,22,640
Q5. Mr. Agarwal (age 40 years) & a resident in India, has a total income of Rs. 4,50,00,000, comprising LTCG u/s 112 of Rs.
55 Lacs, STCG u/s 111A of Rs. 65 Lacs & other income of Rs. 3.30 Crores. Compute his tax liability for AY 2022-23. Assume
that Mr. Agrawal has not opted for the provisions of section 115BAC.
Solution: Computation of tax liability of Mr. Agrawal for AY 2022-23
SN Particulars Rs. Rs.
1 Tax on total income of Rs. 4,50,00,000
(i) Tax @ 20% of Rs. 55,00,000 11,00,000
(ii) Tax @ 15% of Rs. 65,00,000 9,75,000
(iii) Tax on other income of Rs. 3,30,00,000
Rs. 2,50,000 – Rs. 5,00,000 @ 5% 12,500
Rs. 5,00,000 – Rs. 10,00,000 @ 20% 1,00,000
Rs. 10,00,000 – Rs. 3,30,00,000 @ 30% 96,00,000 97,12,500
Total Tax 1,17,87,500
2 Surcharge @ 15% on Rs. 20,75,000 [on Share Market Income i.e (i) & (ii) Above] 3,11,250
Surcharge @ 25% on Rs. 97,12,500 [Since other income > Rs. 2 Cr but Less than 5 Cr] 24,28,125 27,39,375
For MCQs, Doubt Clearing Sessions, Revision Lectures & Marathons Website: www.pranavchandak.com
Mobile App: Pranav Chandak Academy
7
Total Tax & Surcharge [1,17,87,500 + 27,39,375] 1,45,26,875
3 Add: 4% HEC 5,81,075
4 Total Tax Liability 1,51,07,950
Q6. Mr. Sharma (age 62 years) & a resident in India, has a total income of Rs. 2,30,00,000, comprising LTCG u/s 112 of Rs.
52 Lacs, STCG u/s 111A of Rs. 64 Lacs & other income of Rs. 1.14 Crores. Compute his tax liability for AY 2022-23. Assume
that Mr. Sharma has not opted for the provisions of section 115BAC.
Solution: Computation of tax liability of Mr. Sharma for AY 2022-23
SN Particulars Rs. Rs.
1 Tax on total income of Rs. 2,30,00,000
(i) Tax @ 20% of Rs. 52,00,000 10,40,000
(ii) Tax @ 15% of Rs. 64,00,000 9,60,000
(iii) Tax on other income of Rs. 1,14,00,000
Rs. 3,00,000 – Rs. 5,00,000 @ 5% 10,000
Rs. 5,00,000 – Rs. 10,00,000 @ 20% 1,00,000
Rs. 10,00,000 – Rs. 1,14,00,000 @ 30% 31,20,000 32,30,000
Total Tax 52,30,000
2 Surcharge @ 15% on Rs. 20,00,000 [on Share Market Income i.e (i) & (ii) Above] 3,00,000
Surcharge @ 15% on Rs. 32,30,000 [Since other income < Rs. 2 Cr] 4,84,500 7,84,500
Total Tax & Surcharge [52,30,000 + 7,84,500] 60,14,500
3 Add: 4% HEC 2,40,580
4 Total Tax Liability 62,55,080
Q3. Mr. Sunil Patni (age 45) furnishes following details of his TI for AY 2022-23:
Income from Salaries (computed) Rs. 26,56,000
Income from House Property (computed) Rs. 16,90,000
Interest income from FDRs Rs. 7,34,000
He has not claimed any Chapter VI-A deduction. Compute his tax liability for AY 2022-23.
For MCQs, Doubt Clearing Sessions, Revision Lectures & Marathons Website: www.pranavchandak.com
Mobile App: Pranav Chandak Academy
8
Answer: Computation of tax liability of Mr. Sunil Patni for AY 2022-23
➢ Total Income = Rs. 26,56,000 + Rs. 16,90,000 + Rs. 7,34,000 = Rs. 50,80,000.
➢ Tax Liability: First Rs. 10 Lacs = Rs. 1,12,500 + Next Rs. 40,80,000 @ 30% = Rs. 12,24,000.
➢ Total Tax Liability = Rs. 1,12,500 + 12,24,000 = Rs. 13, 36,500.
➢ Surcharge @ 10% of Rs. 13, 36,500 = Rs. 1,33,650.
Tax payable (b) - (iii) [Rs. 14,70,150 – Rs. 77,650] = Rs. 13,92,500 + 4% HEC = Rs. 14,48,200.
May 2020 Q4. During the AY 2022-23, Mr. Ranjit has STCG of Rs. 95 lacs taxable u/s 111A, LTCG of Rs. 110 lacs
taxable u/s 112A & business income of Rs. 90 lacs. Which of the following statements is correct?
(a) Surcharge @ 25% is leviable on income-tax computed on total income of Rs. 2.95 crore, since total
income exceeds Rs. 2 crores.
(b) Surcharge @ 15% is leviable on income-tax computed on total income of Rs. 2.95 cr.
(c) Surcharge @ 15% is leviable i.r.o income-tax computed on capital gains of Rs. 2.05 cr; i.r.o business
income, surcharge is leviable@25% on income- tax, since total income exceeds Rs. 2 crore.
(d) Surcharge @ 15% is leviable i.r.o income-tax computed on capital gains of Rs. 2.05 crore; surcharge @
10% is leviable on income-tax computed on business income, since the same exceeds Rs. 50 lacs but
is less than Rs. 1 crore.
Answer: (b) [Hint: 5th Point in Errorless Income Tax Book on Page 21]
N20 No Direct Question was asked.
M21 No Direct Question was asked.
N21 No Direct Question was asked.
For MCQs, Doubt Clearing Sessions, Revision Lectures & Marathons Website: www.pranavchandak.com
Mobile App: Pranav Chandak Academy
9
M18 Q5. Briefly Explain the purpose for which the words “Proviso” & “Explanations” are incorporated under the
various sections of the Income Tax Act, 1961.
Answer: Already Discussed in the chapter.
N18 Q6. Mr. Rajat Saini (age 32) furnishes following details of his total income for AY 2022-23:
Income from Salaries (computed) Rs. 27,88,000
Income from House Property (computed) Rs. 15,80,000
Interest income from FDRs Rs. 7,22,000
He has not claimed any Chapter VI-A deduction. Compute his tax liability for AY 2020-21.
Answer: Computation of tax liability of Mr. Sunil Patni for AY 2022-23
➢ Total Income = Rs. 27,88,000 + Rs. 15,80,000 + Rs. 7,22,000 = Rs. 50,90,000.
➢ Tax Liability: First Rs. 10 Lacs = Rs. 1,12,500 + Next Rs. 40,90,000 @ 30% = Rs. 12,27,000.
➢ Total Tax Liability = Rs. 1,12,500 + 12,24,000 = Rs. 13, 39,500.
➢ Surcharge @ 10% of Rs. 13, 39,500 = Rs. 1,33,950.
Calculation of Relief u/s 89
(a) Tax on Rs. 50 Lacs: Rs. 13,12,500.
(b) Tax on Rs. 50,90,000: Rs. 13,39,500 + Rs. 1,33,950 = Rs. 14,73,450.
Extra Tax = Rs. 14,73,450 - Rs. 13,12,500 = Rs. 1,60,950 ____(i)
Extra Income = Rs. 50,90,000 – Rs. 50,00,000 = Rs. 90,000 ____(ii)
Marginal Relief u/s 89 = Extra Tax – Extra Income = Rs. 70,950 _____(iii)
Tax payable (b) - (iii) [Rs. 14,73,450 – Rs. 70,950] = Rs. 14,02,500 + 4% HEC = Rs. 14,58,600.
M19 No Direct Question was asked.
N19 No Direct Question was asked.
M20 No Direct Question was asked.
N20 No Direct Question was asked.
M21 No Direct Question was asked.
N21 No Direct Question was asked.
For MCQs, Doubt Clearing Sessions, Revision Lectures & Marathons Website: www.pranavchandak.com
Mobile App: Pranav Chandak Academy
10