Chapter 1 – Basic Concepts

Overview of Taxation in India

What is Tax?

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Taxes are mandatory contributions levied on individuals or corporations by a government entity.

Introduction
• Government of India needs money to run and develop the country.
• For this, it has three methods:

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o Business, such as Railways, Indian Oil Corporation, BPCL, etc.
o Loan from World Bank
o Taxes

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Brief History of Taxation in India
• Ancient Times
o Manusmriti
▪ The earliest mention of Taxation in India was in Manusmriti, which is believed
to be the first ancient legal text and constitution.
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▪ According to him, the king should arrange the collection of taxes in such a
manner that the subjects did not feel the pinch of paying taxes.
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o Kautilya’s Arthashastra
▪ Chanakya, also known as Kautilya authored Arthasastra, (sometime in 300
BC), which deals with the system of taxation in a real elaborate and planned
manner.
• Modern Times
o There have been so much administrative changes in the past 100 years, that our
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taxation system has also gone through a lot of structural changes.

o Government of India Act, 1935, which was adapted from the United Kingdom
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Parliament commenced from 1st April, 1937.

o On 15th November, 1939, C. Rajgopalachari voiced the demand for a Constituent
Assembly (to frame the Constitution of India), which was accepted by the British in
August, 1940.
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o In 1946, a Cabinet Mission came to India in order to discuss the transfer of power
from the British Government to the Indian Political Leadership.
o Under the Cabinet Mission Plan of 1946, elections were held for the first time for the
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Constituent Assembly.
o On 9th December, 1946, at 11 am, the Assembly began its first session.
o On 26th November, 1949, Constitution of India was passed and adopted by the
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Assembly.
o On 24th January, 1950, last meeting of the Constituent Assembly was held, and
Constitution of India was signed and accepted by all.
o On 26th January, 1950, the Constitution of India became effective thus replacing the
Government of India Act, 1935.

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 Taxes
• The Constitution of India has a lot of Articles.
• Article 265 of the Constitution says that the Government cannot impose tax without the
authority of law.
• Seventh Schedule to Article 246 contains three lists which enumerate the matters under which
the Parliament and the State Legislatures have the authority to make laws for the purpose of
levy of taxes. These lists are:

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o Union List: Parliament has the exclusive power to make laws on the matters contained
in Union List.
o State List: The Legislatures of any State has the exclusive power to make laws on the
matters contained in the State List.
o Concurrent List: Both Parliament and State Legislatures have the power to make laws

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on the matters contained in the Concurrent list.
• What gives Government the power to collect tax?
o Entry No. 82 of Union List of Constitution of India gives power to the Central

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Government to levy tax on all income other than Agricultural Income
o Entry No. 46 of State List of Constitution of India gives power to the State Government
to levy tax on Agricultural Income
• There are two kinds of taxes:
o Direct Tax – Income Tax
o Indirect Tax – GST, Excise, Customs, etc.
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Direct Tax
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• We’ll be studying Income Tax Law, which constitutes of

o Income Tax Act, 1961 (as amended by Finance Act, 2022) – Charge of Income Tax is
governed by the Income-Tax Act, 1961, which came into force w.e.f. 1st April, 1962.
o Income Tax Rules, 1962 – Section 295 of the Act empowers the Central Board of Direct
Taxes to make Rules.
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o Notifications and Circulars issued by CBDT – Section 119 of the Act empowers the
CBDT to issue orders, instructions and directions for the proper administration of the
Act.
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o Judicial Decisions (Case Laws)

Finance Act
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• Presenting the Finance Bill: Every year on the 1st of February, the Finance Minister of India
presents a Finance Bill in the Parliament, which contains various amendments proposed to be
made in the direct and indirect taxes levied by the Central Government.
• Approval and Assent of Bill: As soon as the Bill is passed by both the houses of the Parliament
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and thereafter receives the assent of the President of India, it becomes the Finance Act.
• Incorporation of Amendments: The amendments proposed therein are then incorporated in
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the Income Tax Act which are applicable from the very first day of the next Financial Year.
For example, amendments by Finance Act, 2023 are effective from 01-04-2023.

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 Some Important Terms

Assessee
• In simple terms, one who is being assessed is known as Assessee.
• In technical terms, a person who is required to pay tax is known as Assessee.

Person

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• Individual
o Nishant Kumar
• Hindu Undivided Family (HUF)
o Nishant Kumar’s HUF

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• Company
o Ekagrata Eduserv Pvt. Ltd.
o Reliance Industries Ltd.

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• Partnership Firm (Including LLP)
• Association of Persons (AOP)/ Body of Individuals (BOI)
o Joint Ventures
o Clubs
• Local Authority
o Municipal Committee
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o District Board, etc.
• Artificial Juridical Person
o Anything which is not covered above
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o Deities
o Bar Council
o Universities, etc.

Heads of Income
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• Income from Salaries

o Employer Employee Relationship
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• Income from House Property

o Ownership of House Property
• Profits and Gains from Business or Profession
•
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Capital Gains
o Transfer of a Capital Asset
• Income from Other Sources
o Anything which is not covered above
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Previous Year and Assessment Year

•
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The period in which a person earns the income is known as the Previous Year in respect of
that income, and the period in which the person pays tax on this income is known as the
Assessment Year.
• For example, if a person earns income in the F.Y. 2023-24, he would be required to pay tax on
it in the F.Y. 2024-25. So, for the income earned in F.Y. 2023-24, the P.Y. is 2023-2024, and the
A.Y. is 2024-25.

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 Schemes of Taxation
1. Before discussing the rates of taxation, we need to understand the “Schemes” of taxation.
2. There used to be only one scheme of taxation till the P.Y. 2020-21.
3. However, to simplify the taxation process, and to reduce the burden of taxation for a certain
segment of people, the government introduced a “New Scheme” of taxation from P.Y. 2020-
21 u/s 115BAC.
4. This scheme was optional. This means that from P.Y. 2020-21 to P.Y. 2022-23, the default

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scheme was the “Old Scheme”, and the assessee had the option to avail this “New Scheme”
u/s 115BAC.
5. However, from P.Y. 2023-24, the “New Scheme” has become the default scheme. However,
the assessee still has the option to go for the old scheme, if he wishes.
6. The major difference between these two schemes is in the rates of taxation. Any other

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difference regarding the conditions, etc. will be clear as you proceed through the course.

Schemes of Taxation

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Old Scheme New Scheme u/s 115BAC

Default Scheme till P.Y. 2022-2023 Default Scheme from P.Y. 2023-2024

7. Since both the schemes are available, we have to study both the schemes. We’ll first study
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the tax rates under the Old Scheme, and then we’ll look into the New Scheme as well.
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Tax Rates Applicable for A.Y. 2024-25 (P.Y. 2023-24) Under Optional
Scheme (“Old Scheme”)
In case the assessee exercises the option of shifting out of the default tax regime, (i.e., if the assessee
wishes to opt for the “Old Scheme”), the slab rates are discussed here.
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In case of Individual/HUF/AOP/BOI/AJP
1. In case of Individual/HUF/AOP/BOI/AJP (Resident/Non-Resident)
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Income Tax Rate

Upto ₹ 2,50,000 NIL
Above ₹ 2,50,000 upto ₹ 5,00,000 5%
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Above ₹ 5,00,000 upto ₹ 10,00,000 20%

Above ₹ 10,00,000 30%
2. In case of Senior Citizens (Resident Individual aged 60 years or more in the P.Y.)
Income Tax Rate
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Upto ₹ 3,00,000 NIL

Above ₹ 3,00,000 upto ₹ 5,00,000 5%
Above ₹ 5,00,000 upto ₹ 10,00,000 20%
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Above ₹ 10,00,000 30%

3. In case of Super Senior Citizens (Resident Individual aged 80 years or more in the P.Y.)
Income Tax Rate
Upto ₹ 5,00,000 NIL
Above ₹ 5,00,000 upto ₹ 10,00,000 20%
Above ₹ 10,00,000 30%

CA NISHANT KUMAR 4
 60th/80th Birthday on 1st April, 2024
• If an individual’s birthday falls on 1st April, 2024, and he turns 60 years old, he’ll get the benefit
of higher basic exemption limit of ₹ 3,00,000 in the P.Y. 2023-24.
• Similarly, if an individual’s birthday falls on 1st April, 2024, and he turns 80 years old, he’ll get
the benefit of higher basic exemption limit of ₹ 5,00,000 in the P.Y. 2023-24.

Surcharge Under Optional Scheme (“Old Scheme”)

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Surcharge means Extra Tax. It is imposed as per the following rates:

Income Rate
Above ₹ 50,00,000 upto ₹ 1,00,00,000 10% of Tax
Above ₹ 1,00,00,000 upto ₹ 2,00,00,000 15% of Tax

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Above ₹ 2,00,00,000 upto ₹ 5,00,00,000 25% of Tax
Above ₹ 5,00,00,000 37% of Tax
There are some other issues related to Surcharge as well. We’ll study about them in the chapter

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“Computation of Total Income and Tax Payable”.

Health and Education Cess

• Cess means collection of tax for a specified purpose.
• It is calculated @ 4% on Tax (including Surcharge)

Question 1
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Total Income of Ms. Madhuri, a Resident individual is ₹ 2,50,000. Calculate tax liability for A.Y. 2024-
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25, assuming her age is 21 years.

Solution

Computation of Tax Liability of Ms. Madhuri (Age 21 Years)

Particulars ₹
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Tax Liability:
First ₹ 2,50,000 NIL -
-
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lAdd: Surcharge -
-
Add: Health and Education Cess @ 4% -
Net Tax Payable -
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Question 2

Total Income of Mr. Bansal, a Resident individual is ₹ 5,50,000. Calculate tax liability for A.Y. 2024-25,
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assuming his age is 25 years.

Solution
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Computation of Tax Liability of Mr. Bansal (Age 25 Years)

Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500

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 Next ₹ 5,00,001 - ₹ 5,50,000 20% of ₹ 50,000 10,000
22,500
Add: Surcharge -
22,500
Add: Health and Education Cess @ 4% 900
Net Tax Payable 23,400

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Question 3

Mr. X has a total income of ₹ 12,00,000 for P.Y. 2023-24, comprising of income from house property
and interest on fixed deposits. Compute his tax liability for A.Y. 2024-25 assuming his age is 45 years.

Solution

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Computation of Tax Liability of Mr. X (Age 45 Years)

Particulars ₹

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Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 12,00,000 minus ₹ 10,00,000 30% of ₹ 2,00,000 60,000
1,72,500
Add: Surcharge -
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1,72,500
Add: Health and Education Cess @ 4% 6,900
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Net Tax Payable 1,79,400

Question 4

Total Income of Ms. Priyanka, a Resident individual is ₹ 15,10,000. Calculate tax liability for A.Y. 2024-
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25, assuming her age is 21 years.

Solution
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Computation of Tax Liability of Ms. Priyanka (Age 21 Years)

Particulars ₹
Tax Liability:
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First ₹ 2,50,000 NIL -

Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 15,10,000 minus ₹ 10,00,000 30% of ₹ 5,10,000 1,53,000
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2,65,500
Add: Surcharge -
2,65,500
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Add: Health and Education Cess @ 4% 10,620

Net Tax Payable 2,76,120

Question 5

Total Income of Nishant (Age 32 Years) is ₹ 15,60,000. Calculate tax liability for A.Y. 2024-25.

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 Solution

Computation of Tax Liability of Nishant (Age 32 Years)

Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500

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Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 15,60,000 minus ₹ 10,00,000 30% of ₹ 5,60,000 1,68,000
2,80,500
Add: Surcharge -
2,80,500
Add: Health and Education Cess @ 4% 11,220

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Net Tax Payable 2,91,720

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Question 6

Total Income of Mr. Ghanshyam, a Resident individual is ₹ 50,00,000. Calculate tax liability for A.Y.
2024-25, assuming his age is 40 years.

Solution

Computation of Tax Liability of Mr. Ghanshyam (Age 40 Years)

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Particulars ₹
Tax Liability:
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First ₹ 2,50,000 NIL -

Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 50,00,000 minus ₹ 10,00,000 30% of ₹ 40,00,000 12,00,000
13,12,500
Add: Surcharge -
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13,12,500
Add: Health and Education Cess @ 4% 52,500
Net Tax Payable 13,65,000
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Question 7
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Mr. X has a total income of ₹ 12,00,000 for P.Y. 2023-24, comprising of income from house property
and interest on fixed deposits. Compute his tax liability for A.Y. 2024-25 assuming his age is 63 years.

Solution
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Computation of Tax Liability of Mr. X (Age 63 Years)

Particulars ₹
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Tax Liability:
First ₹ 3,00,000 NIL -
Next ₹ 3,00,001 - ₹ 5,00,000 5% of ₹ 2,00,000 10,000
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 12,00,000 minus ₹ 10,00,000 30% of ₹ 2,00,000 60,000
1,70,000

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 Add: Surcharge -
1,70,000
Add: Health and Education Cess @ 4% 6,800
Net Tax Payable 1,76,800

Question 8

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Mr. X has a total income of ₹ 12,00,000 for P.Y. 2023-24, comprising of income from house property
and interest on fixed deposits. Compute his tax liability for A.Y. 2024-25 assuming his age is 82 years.

Solution

Computation of Tax Liability of Mr. X (Age 82 Years)

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Particulars ₹
Tax Liability:
First ₹ 5,00,000 NIL -

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Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 12,00,000 minus ₹ 10,00,000 30% of ₹ 2,00,000 60,000
1,60,000
Add: Surcharge -
1,60,000
Add: Health and Education Cess @ 4% 6,400
Net Tax Payable 1,66,400
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Question 9

Total Income of Mrs. Radhika, a Resident individual is ₹ 18,00,000. Calculate tax liability for A.Y. 2024-
25, assuming her age is 80 years.

Solution
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Computation of Tax Liability of Mrs. Radhika (Age 80 Years)

Particulars ₹
Tax Liability:
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First ₹ 5,00,000 NIL -

Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 18,00,000 minus ₹ 10,00,000 30% of ₹ 8,00,000 2,40,000
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3,40,000
Add: Surcharge -
3,40,000
Add: Health and Education Cess @ 4% 13,600
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Net Tax Payable 3,53,600

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Question 10

Total Income of Mrs. Swati, a Non-Resident individual is ₹ 2,75,000. Calculate tax liability for A.Y. 2024-
25, assuming her age is 65 years.

Solution

Computation of Tax Liability of Mrs. Swati (Age 65 Years)

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 Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
Balance, i.e., ₹ 2,75,000 minus ₹ 2,50,000 5% of ₹ 25,000 1,250
1,250
Add: Surcharge -
1,250
Add: Health and Education Cess @ 4% 50

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Net Tax Payable 1,300

Question 11

Total Income of Mr. Y, a Resident individual is ₹ 1,10,00,000. Calculate tax liability for A.Y. 2024-25,

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assuming his age is 50 years.

Solution

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Computation of Tax Liability of Mr. Y (Age 50 Years)
Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
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Balance, i.e., ₹ 1,10,00,000 minus ₹ 10,00,000 30% of ₹ 1,00,00,000 30,00,000
31,12,500
Add: Surcharge @ 15% 4,66,875
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35,79,375
Add: Health and Education Cess @ 4% 1,43,175
Net Tax Payable 37,22,550

Question 12
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Total Income of Mr. Z, a Resident individual is ₹ 1,00,00,000. Calculate tax liability for A.Y. 2024-25,
assuming his age is 55 years.
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Solution

Computation of Tax Liability of Mr. Z (Age 55 Years)

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Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
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Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000

Balance, i.e., ₹ 1,00,00,000 minus ₹ 10,00,000 30% of ₹ 90,00,000 27,00,000
28,12,500
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Add: Surcharge @ 10% 2,81,250

30,93,750
Add: Health and Education Cess @ 4% 1,23,750
Net Tax Payable 32,17,500

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 Question 13

Total Income of Mr. B, a Resident individual is ₹ 2,00,00,000. Calculate tax liability for A.Y. 2024-25,
assuming his age is 55 years.

Solution

Computation of Tax Liability of Mr. B (Age 55 Years)

Particulars ₹

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Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 2,00,00,000 minus ₹ 10,00,000 30% of ₹ 1,90,00,000 57,00,000

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58,12,500
Add: Surcharge @ 15% 8,71,875
66,84,375

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Add: Health and Education Cess @ 4% 2,67,375
Net Tax Payable 69,51,750

Question 14

Total Income of Mr. D, a Resident individual is ₹ 5,00,00,000. Calculate tax liability for A.Y. 2024-25,
assuming his age is 30 years.
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Solution
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Computation of Tax Liability of Mr. D (Age 30 Years)

Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
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Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000

Balance, i.e., ₹ 5,00,00,000 minus ₹ 10,00,000 30% of ₹ 4,90,00,000 1,47,00,000
1,48,12,500
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Add: Surcharge @ 25% 37,03,125

1,85,15,625
Add: Health and Education Cess @ 4% 7,40,625
Net Tax Payable 1,92,56,250
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Question 15
A

Total Income of Mr. Hari (Age 62 Years) is ₹ 64,00,000. He is Resident in Previous Year. Calculate Tax
Liability.
C

Solution

Computation of Tax Liability of Mr. Hari (Age 64 Years)

Particulars ₹
Tax Liability:
First ₹ 3,00,000 NIL -

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 Next ₹ 3,00,001 - ₹ 5,00,000 5% of ₹ 2,00,000 10,000
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 64,00,000 minus ₹ 10,00,000 30% of ₹ 54,00,000 16,20,000
17,30,000
Add: Surcharge @ 10% 1,73,000
19,03,000
Add: Health and Education Cess @ 4% 76,120
Net Tax Payable 19,79,120

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Question 16

Mr. Sam (Age 83 years) is a Non-Resident has total income of ₹ 1,20,30,000. Calculate tax liability for
A.Y. 2024-25 (P.Y. 2023-24).

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Solution

Since he is Non-Resident, so, he’ll get the basic exemption limit of only ₹ 2,50,000.

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Computation of Tax Liability of Mr. Sam (Age 83 Years)

Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
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Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 1,20,30,000 minus ₹ 10,00,000 30% of ₹ 1,10,30,000 33,09,000
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34,21,500
Add: Surcharge @ 15% 5,13,225
39,34,725
Add: Health and Education Cess @ 4% 1,57,389
Tax Payable 40,92,114
Net Tax Payable (Rounded Off) 40,92,110
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Question 17
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Total Income of Ms. Meena, a Resident individual is ₹ 51,00,000. Calculate tax liability for A.Y. 2024-
25, assuming her age is 55 years.
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Solution

Computation of Tax Liability of Ms. Meena (Age 55 Years)

Particulars ₹
Tax Liability:
A

First ₹ 2,50,000 NIL -

Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
C

Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000

Balance, i.e., ₹ 51,00,000 minus ₹ 10,00,000 30% of ₹ 41,00,000 12,30,000
13,42,500
Add: Surcharge @ 10% 1,34,250
14,76,750
Add: Health and Education Cess @ 4% 59,070
Net Tax Payable 15,35,820

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 Question 18

Total Income of Ms. Sushma, a Resident individual is ₹ 1,01,00,000. Calculate tax liability for A.Y. 2024-
25, assuming her age is 40 years.

Solution

Computation of Tax Liability of Ms. Sushma (Age 40 Years)

Particulars ₹

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Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 1,01,00,000 minus ₹ 10,00,000 30% of ₹ 91,00,000 27,30,000

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28,42,500
Add: Surcharge @ 15% 4,26,375
32,68,875

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Add: Health and Education Cess @ 4% 1,30,755
Net Tax Payable 33,99,630

Question 19

Total Income of Ms. Rekha, a Resident individual is ₹ 2,01,00,000. Calculate tax liability for A.Y. 2024-
25, assuming her age is 25 years.
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Solution
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Computation of Tax Liability of Ms. Rekha (Age 25 Years)

Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
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Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000

Balance, i.e., ₹ 2,01,00,000 minus ₹ 10,00,000 30% of ₹ 1,91,00,000 57,30,000
58,42,500
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Add: Surcharge @ 25% 14,60,625

73,03,125
Add: Health and Education Cess @ 4% 2,92,125
Net Tax Payable 75,95,250
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Question 20
A

Total Income of Ms. Jaya, a Resident individual is ₹ 5,01,00,000. Calculate tax liability for A.Y. 2024-25,
assuming her age is 40 years.
C

Solution

Computation of Tax Liability of Mr. E (Age 40 Years)

Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500

CA NISHANT KUMAR 12
 Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 5,01,00,000 minus ₹ 10,00,000 30% of ₹ 4,91,00,000 1,47,30,000
1,48,42,500
Add: Surcharge @ 37% 54,91,725
2,03,34,225
Add: Health and Education Cess @ 4% 8,13,369
Net Tax Payable 2,11,47,594

AR
Marginal Relief
• Sometimes, when the income increases slightly, the increase in tax exceeds the increase in
income.
• Government provides relief with respect to excess of tax over excess of income.
•

M
Such relief is known as Marginal Relief.
• Following questions will make it clear.

Question 21

KU
Total Income of Ms. Meena, a Resident individual is ₹ 51,00,000. Calculate tax liability for A.Y. 2024-
25, assuming her age is 55 years.

Solution

Computation of tax liability of Ms. Meena for the A.Y. 2024-25

T
Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
AN

Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500

Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 51,00,000 minus ₹ 10,00,000 30% of ₹ 41,00,000 12,30,000
13,42,500
Add: Surcharge @ 10% 1,34,250
H

14,76,750
Restricted to:
Tax on ₹ 50,00,000 + (NTI – ₹ 50,00,000)
IS

₹ 13,12,500 + (₹ 51,00,000 – ₹ 50,00,0000) 14,12,500

Lower of the above 14,12,500
Add: Health and Education Cess @ 4% 56,500
Tax Payable 14,69,000
N

Therefore, Marginal Relief (₹ 14,76,750 – ₹ 14,12,500) 64,250

Computation of tax liability of Ms. Meena on 50 lakhs

A

Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
C

Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500

Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 50,00,000 minus ₹ 10,00,000 30% of ₹ 40,00,000 12,00,000
13,12,500
Add: Surcharge -
Tax 13,12,500

CA NISHANT KUMAR 13
 Question 22

Total Income of Ms. Sushma, a Resident individual is ₹ 1,01,00,000. Calculate tax liability for A.Y. 2024-
25, assuming her age is 40 years.

Solution

Computation of tax liability of Ms. Sushma for the A.Y. 2024-25

Particulars ₹

AR
Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 1,01,00,000 minus ₹ 10,00,000 30% of ₹ 91,00,000 27,30,000

M
28,42,500
Add: Surcharge @ 15% 4,26,375
32,68,875

KU
Restricted to:
Tax on ₹ 1,00,00,000 + (NTI – ₹ 1,00,00,000)
₹ 30,93,750 + (₹ 1,01,00,000 – ₹ 1,00,00,0000) 31,93,750
Lower of the above 31,93,750
Add: Health and Education Cess @ 4% 1,27,750
Tax Payable 33,21,500
Therefore, Marginal Relief (₹ 32,68,875 – ₹ 31,93,750) 75,125
T
Computation of tax liability of Ms. Sushma on 1 crore
AN

Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
H

Balance, i.e., ₹ 1,00,00,000 minus ₹ 10,00,000 30% of ₹ 90,00,000 27,00,000

28,12,500
Add: Surcharge @ 10% 2,81,250
IS

Tax 30,93,750

Question 23
N

Total Income of Ms. Rekha, a Resident individual is ₹ 2,01,00,000. Calculate tax liability for A.Y. 2024-
25, assuming her age is 25 years.

Solution
A

Computation of tax liability of Ms. Rekha for the A.Y. 2024-25

Particulars ₹
C

Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 2,01,00,000 minus ₹ 10,00,000 30% of ₹ 1,91,00,000 57,30,000
58,42,500

CA NISHANT KUMAR 14
 Add: Surcharge @ 25% 14,60,625
73,03,125
Restricted to:
Tax on ₹ 2,00,00,000 + (NTI – ₹ 2,00,00,000)
₹ 66,84,375 + (₹ 2,01,00,000 – ₹ 2,00,00,0000) 67,84,375
Lower of the above 67,84,375
Add: Health and Education Cess @ 4% 2,71,375
Tax Payable 70,55,750

AR
Therefore, Marginal Relief (₹ 73,03,125 – ₹ 67,84,375) 5,18,750

Computation of tax liability of Ms. Rekha on ₹ 2 crore

Particulars ₹

M
Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000

KU
Balance, i.e., ₹ 2,00,00,000 minus ₹ 10,00,000 30% of ₹ 1,90,00,000 57,00,000
58,12,500
Add: Surcharge @ 15% 8,71,875
Tax 66,84,375

Question 24
T
Total Income of Ms. Jaya, a Resident individual is ₹ 5,01,00,000. Calculate tax liability for A.Y. 2024-25,
AN

assuming her age is 40 years.

Solution

Computation of tax liability of Ms. Jaya for the A.Y. 2024-25

Particulars ₹
H

Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
IS

Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000

Balance, i.e., ₹ 5,01,00,000 minus ₹ 10,00,000 30% of ₹ 4,91,00,000 1,47,30,000
1,48,42,500
Add: Surcharge @ 37% 54,91,725
N

2,03,34,225
Restricted to:
Tax on ₹ 5,00,00,000 + (NTI – ₹ 5,00,00,000)
₹ 1,85,15,625 + (₹ 5,01,00,000 – ₹ 5,00,00,0000) 1,86,15,625
A

Lower of the above 1,86,15,625

Add: Health and Education Cess @ 4% 7,44,625
Tax Payable 1,93,60,250
C

Therefore, Marginal Relief (₹ 2,03,34,225 – ₹ 1,86,15,625) 17,18,600

Computation of tax liability of Ms. Jaya on ₹ 5 crore

Particulars ₹
Tax Liability:

CA NISHANT KUMAR 15
 First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 5,00,00,000 minus ₹ 10,00,000 30% of ₹ 4,90,00,000 1,47,00,000
1,48,12,500
Add: Surcharge @ 25% 37,03,125
Tax 1,85,15,625

AR
Question 25

NISH10, a resident individual has total income of ₹ 50,20,000. Calculate Tax liability.

Solution

M
Computation of Tax Liability of NISH10
Particulars ₹
Tax Liability:

KU
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 50,20,000 minus ₹ 10,00,000 30% of ₹ 40,20,000 12,06,000
13,18,500
Add: Surcharge @ 10% 1,31,850
T
14,50,350
Restricted to:
Tax on ₹ 50,00,000 + (NTI – ₹ 50,00,000)
AN

₹ 13,12,500 + ₹ 20,0000 13,32,500

Lower of the above 13,32,500
Add: Health and Education Cess @ 4% 53,300
Tax Payable 13,85,800
Therefore, Marginal Relief (₹ 14,50,350 – ₹ 13,32,500) 1,17,850
H

Question 26
IS

Compute the tax liability of Mr. A (aged 42), having total income of ₹ 51 lakhs for the Assessment Year
2024-25. Assume that his total income comprises of salary income, Income from house property and
interest on fixed deposit. Assume that Mr. A has not opted for the provisions of section 115BAC.
N

Solution

Computation of tax liability of Mr. A for the A.Y. 2024-25

Particulars ₹
A

Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
C

Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000

Balance, i.e., ₹ 51,00,000 minus ₹ 10,00,000 30% of ₹ 41,00,000 12,30,000
13,42,500
Add: Surcharge @ 10% 1,34,250
14,76,750
Restricted to:

CA NISHANT KUMAR 16
 Tax on ₹ 50,00,000 + (NTI – ₹ 50,00,000)
₹ 14,76,750 + (₹ 51,00,000 – ₹ 50,00,0000) 14,12,500
Lower of the above 14,12,500
Add: Health and Education Cess @ 4% 56,500
Tax Payable 14,69,000
Therefore, Marginal Relief (₹ 14,76,750 – ₹ 14,12,500) 64,250

AR
Computation of tax liability of Mr. A on 50 lakhs
Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500

M
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 50,00,000 minus ₹ 10,00,000 30% of ₹ 40,00,000 12,00,000
13,12,500
Add: Surcharge -

KU
Tax 13,12,500

Question 27

Compute the tax liability of Mr. A (aged 42), having total income of ₹ 1,01,00,000 for the Assessment
Year 2024-25. Assume that his total income comprises of “Salary Income”, “Income under the head
T
House Property” and “Interest from Fixed Deposit Account”. Assume that Mr. A has not opted for the
provisions of section 115BAC.
AN

Solution

Computation of tax liability of Mr. A for the A.Y. 2024-25

Particulars ₹
Tax Liability:
H

First ₹ 2,50,000 NIL -

Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
IS

Balance, i.e., ₹ 1,01,00,000 minus ₹ 10,00,000 30% of ₹ 91,00,000 27,30,000

28,42,500
Add: Surcharge @ 15% 4,26,375
32,68,875
N

Restricted to:
Tax on ₹ 1,00,00,000 + (NTI – ₹ 1,00,00,000)
₹ 30,93,750 + (₹ 1,01,00,000 – ₹ 1,00,00,0000) 31,93,750
Lower of the above 31,93,750
A

Add: Health and Education Cess @ 4% 1,27,750

Tax Payable 33,21,500
C

Therefore, Marginal Relief (₹ 32,68,875 – ₹ 31,93,750) 75,125

Computation of tax liability of Mr. A on 1 crore

Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -

CA NISHANT KUMAR 17
 Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 1,00,00,000 minus ₹ 10,00,000 30% of ₹ 90,00,000 27,00,000
28,12,500
Add: Surcharge @ 10% 2,81,250
Tax 30,93,750

AR
Question 28

Compute the tax liability of Mr. A (aged 42), having total income of ₹ 2,01,00,000 for the Assessment
Year 2024-25. Assume that his total income comprises of “Salary Income”, “Income under the head
House Property” and “Interest from Fixed Deposit Account”. Assume that Mr. A has not opted for the
provisions of section 115BAC.

M
Solution

Computation of tax liability of Mr. A for the A.Y. 2024-25

KU
Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 2,01,00,000 minus ₹ 10,00,000 30% of ₹ 1,91,00,000 57,30,000
T
58,42,500
Add: Surcharge @ 25% 14,60,625
73,03,125
AN

Restricted to:
Tax on ₹ 2,00,00,000 + (NTI – ₹ 2,00,00,000)
₹ 66,84,375 + (₹ 2,01,00,000 – ₹ 2,00,00,0000) 67,84,375
Lower of the above 67,84,375
Add: Health and Education Cess @ 4% 2,71,375
H

Tax Payable 70,55,750

Therefore, Marginal Relief (₹ 73,03,125 – ₹ 67,84,375) 5,18,750
IS

Computation of tax liability of Mr. A on 2 crore

Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
N

Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500

Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 2,00,00,000 minus ₹ 10,00,000 30% of ₹ 1,90,00,000 57,00,000
58,12,500
A

Add: Surcharge @ 15% 8,71,875

Tax 66,84,375
C

Question 29

Compute the tax liability of Mr. A (aged 42), having total income of ₹ 5,14,00,000 for the Assessment
Year 2024-25. Assume that his total income comprises of “Salary Income”, “Income under the head

CA NISHANT KUMAR 18
 House Property” and “Interest from Fixed Deposit Account”. Assume that Mr. A has not opted for the
provisions of section 115BAC.

Solution

Computation of tax liability of Mr. A for the A.Y. 2024-25

Particulars ₹
Tax Liability:

AR
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 5,14,00,000 minus ₹ 10,00,000 30% of ₹ 5,04,00,000 1,51,20,000
1,52,32,500
Add: Surcharge @ 37% 56,36,025

M
2,08,68,525
Restricted to:
Tax on ₹ 5,00,00,000 + (NTI – ₹ 5,00,00,000)

KU
₹ 1,85,15,625 + (₹ 5,14,00,000 – ₹ 5,00,00,0000) 1,99,15,625
Lower of the above 1,99,15,625
Add: Health and Education Cess @ 4% 7,96,625
Tax Payable 2,07,12,250
Therefore, Marginal Relief (₹ 2,08,68,525 – ₹ 1,99,15,625) 9,52,900
T
Computation of tax liability of Mr. A on 5 crore
Particulars ₹
AN

Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 5,00,00,000 minus ₹ 10,00,000 30% of ₹ 4,90,00,000 1,47,00,000
1,48,12,500
H

Add: Surcharge @ 25% 37,03,125

Tax 1,85,15,625
IS

Question 30

Compute the tax liability of Mr. A (aged 42), having total income of ₹ 51,75,000 for the Assessment
N

Year 2024-25. Assume that his total income comprises of “Salary Income”, “Income under the head
House Property” and “Interest from Fixed Deposit Account”. Assume that Mr. A has not opted for the
provisions of section 115BAC.
A

Solution

Computation of tax liability of Mr. A for the A.Y. 2024-25

C

Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 51,75,000 minus ₹ 10,00,000 30% of ₹ 41,75,000 12,52,500
13,65,000
CA NISHANT KUMAR 19
 Add: Surcharge @ 10% 1,36,500
15,01,500
Restricted to:
Tax on ₹ 50,00,000 + (NTI – ₹ 50,00,000)
₹ 13,12,500 + (₹ 51,75,000 – ₹ 50,00,0000) 14,87,500
Lower of the above 14,87,500
Add: Health and Education Cess @ 4% 59,500
Tax Payable 15,47,000

AR
Therefore, Marginal Relief (₹ 15,01,500 – ₹ 14,87,500) 14,000

Computation of tax liability of Mr. A on 50 lakhs

Particulars ₹

M
Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000

KU
Balance, i.e., ₹ 50,00,000 minus ₹ 10,00,000 30% of ₹ 40,00,000 12,00,000
13,12,500
Add: Surcharge -
Tax 13,12,500

Question 31
T
Compute the tax liability of Mr. A (aged 42), having total income of ₹ 5,01,00,000 for the Assessment
AN

Year 2024-25. Assume that his total income comprises of “Salary Income”, “Income under the head
House Property” and “Interest from Fixed Deposit Account”. Assume that Mr. A has not opted for the
provisions of section 115BAC.

Solution
H

Computation of tax liability of Mr. A for the A.Y. 2024-25

Particulars ₹
Tax Liability:
IS

First ₹ 2,50,000 NIL -

Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 5,01,00,000 minus ₹ 10,00,000 30% of ₹ 4,91,00,000 1,47,30,000
N

1,48,42,500
Add: Surcharge @ 37% 54,91,725
2,03,34,225
Restricted to:
A

Tax on ₹ 5,00,00,000 + (NTI – ₹ 5,00,00,000)

₹ 1,85,15,625 + (₹ 5,01,00,000 – ₹ 5,00,00,0000) 1,86,15,625
Lower of the above 1,86,15,625
C

Add: Health and Education Cess @ 4% 7,44,625

Tax Payable 1,93,60,250
Therefore, Marginal Relief (₹ 2,03,34,225 – ₹ 1,86,15,625) 17,18,600

Computation of tax liability of Mr. A on 5 crore

CA NISHANT KUMAR 20
 Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 5,00,00,000 minus ₹ 10,00,000 30% of ₹ 4,90,00,000 1,47,00,000
1,48,12,500
Add: Surcharge @ 25% 37,03,125

AR
Tax 1,85,15,625

Rebate u/s 87A Under Optional Scheme (“Old Scheme”)

In case of Resident individual whose total income does not exceed ₹ 5,00,000, rebate shall be allowed
from Income tax @ 100% of such tax or ₹ 12,500 whichever is less.

M
Question 32

Mr. Raghav, a resident individual, aged 26 years has a total income of ₹ 3,40,000, comprising his salary

KU
income and interest on bank fixed deposit. Compute his tax liability for A.Y. 2024-25.

Solution

Computation of tax liability of Mr. Raghav for the A.Y. 2024-25

Particulars ₹
Tax Liability:
T
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 3,40,000 5% of ₹ 90,000 4,500
AN

4,500
Less: Rebate u/s 87A
Less: Lower of:
Less: (i) Tax Amount 4,500
Less: (ii) ₹ 12,500 12,500 4,500
Net Tax -
H

Question 33
IS

Mr. Dinesh aged 35 years and a resident in India, has a total income of ₹ 4,80,000 comprising of long-
term capital gains taxable under section 112. Compute his tax liability for A.Y. 2024-25.
N

Solution

Computation of tax liability of Mr. Dinesh for the A.Y. 2024-25

Particulars ₹
Tax Liability:
A

First ₹ 2,50,000 NIL -

Next ₹ 2,50,001 - ₹ 4,80,000 20% of ₹ 2,30,000 46,000
C

46,000
Less: Rebate u/s 87A
Less: Lower of:
Less: (i) Tax Amount 46,000
Less: (ii) ₹ 12,500 12,500 12,500
Tax 33,500
Add: Health and Education Cess @ 4% 1,340

CA NISHANT KUMAR 21
 Net Tax Payable 34,840

Tax Rates Applicable for A.Y. 2024-25 (P.Y. 2023-24) Under Default
Scheme u/s 115 BAC (“New Scheme”)
1. The tax rates for Individuals/HUFs/AoPs/BoIs or artificial judicial persons are as follows:
Income Tax Rate
Upto ₹ 3,00,000 NIL

AR
From ₹ 3,00,001 to ₹ 6,00,000 5%
From ₹ 6,00,001 to ₹ 9,00,000 10%
From ₹ 9,00,001 to ₹ 12,00,000 15%
From ₹ 12,00,001 to ₹ 15,00,000 20%
Above ₹ 15,00,000 30%

M
2. Health and Education Cess:
a. Cess is a tax that is collected for a particular purpose.
b. There’s a Health and Education Cess which is charged @ 4% on the tax amount.

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c. This amount is collected by the government only for the promotion of providing
Health and Education benefits.
3. Conditions: There are certain conditions and restrictions in this scheme. You’ll be able to
understand it only as and when we proceed with our course. So, it’ll be discussed at the
relevant positions, and will be summarized in the chapter “Computation of Total Income and
Tax Payable”.
T
Question 34
AN

Mr. X has a total income of ₹ 16,00,000 for P.Y.2023-24, comprising of income from house property
and interest on fixed deposits. Compute his tax liability for A.Y.2024-25 under the default tax regime
under section 115BAC.

Solution
H

Computation of Tax Liability of Mr. X for A.Y. 2024-25

Particulars ₹
Tax Liability:
IS

First ₹ 3,00,000 NIL -

From ₹ 3,00,001 to ₹ 6,00,000 5% × ₹ 3,00,000 15,000
From ₹ 6,00,001 to ₹ 9,00,000 10% × ₹ 3,00,000 30,000
From ₹ 9,00,001 to ₹ 12,00,000 15% × ₹ 3,00,000 45,000
N

From ₹ 12,00,001 to ₹ 15,00,000 20% × ₹ 3,00,000 60,000

From ₹ 15,00,001 to ₹ 16,00,000 30% × ₹ 1,00,000 30,000
1,80,000
Add: Health and Education Cess @ 4% 7,200
A

Total Tax Liability 1,87,200

Surcharge and Marginal Relief in Default Scheme u/s 115BAC

C

1. Surcharge Rates under the default scheme are as follows:

Income Rate
Above ₹ 50,00,000 upto ₹ 1,00,00,000 10% of Tax
Above ₹ 1,00,00,000 upto ₹ 2,00,00,000 15% of Tax
Above ₹ 2,00,00,000 25% of Tax

CA NISHANT KUMAR 22
 2. There are some other issues related to Surcharge as well. We’ll study about them in the
chapter “Computation of Total Income and Tax Payable”.
3. Marginal Relief under the default scheme (“New Scheme”) is the same as Old Scheme.

Question 35 – ICAI SM – Illustration 6

Compute the tax liability of Mr. B (aged 51) under the default tax regime, having total income of
₹ 1,01,00,000 for the Assessment Year 2024-25. Assume that his total income comprises of salary

AR
income, Income from house property and interest on fixed deposit.

Solution

Computation of tax liability of Mr. B for the A.Y. 2024-25

Particulars ₹

M
Tax Liability:
First ₹ 3,00,000 NIL -
Next ₹ 3,00,001 - ₹ 6,00,000 5% of ₹ 3,00,000 15,000
Next ₹ 6,00,001 - ₹ 9,00,000 10% of ₹ 3,00,000 30,000

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Next ₹ 9,00,001 - ₹ 12,00,000 15% of ₹ 3,00,000 45,000
Next ₹ 12,00,001 - ₹ 15,00,000 20% of ₹ 3,00,000 60,000
Balance, i.e., ₹ 1,01,00,000 minus ₹ 15,00,000 30% of ₹ 86,00,000 25,80,000
27,30,000
Add: Surcharge @ 15% 4,09,500
31,39,500
T
Restricted to:
Tax on ₹ 1,00,00,000 + (NTI – ₹ 1,00,00,000)
₹ 29,70,000 + (₹ 1,01,00,000 – ₹ 1,00,00,0000) 30,70,000
AN

Lower of the above 30,70,000

Add: Health and Education Cess @ 4% 1,22,800
Tax Payable 31,92,800
Therefore, Marginal Relief (₹ 31,39,500 – ₹ 30,70,000) 69,500
H

Computation of tax liability of Mr. B on ₹ 1 crore

Particulars ₹
IS

Tax Liability:
First ₹ 3,00,000 NIL -
Next ₹ 3,00,001 - ₹ 6,00,000 5% of ₹ 3,00,000 15,000
Next ₹ 6,00,001 - ₹ 9,00,000 10% of ₹ 3,00,000 30,000
N

Next ₹ 9,00,001 - ₹ 12,00,000 15% of ₹ 3,00,000 45,000

Next ₹ 12,00,001 - ₹ 15,00,000 20% of ₹ 3,00,000 60,000
Balance, i.e., ₹ 1,00,00,000 minus ₹ 15,00,000 30% of ₹ 85,00,000 25,50,000
27,00,000
A

Add: Surcharge @ 10% 2,70,000

Tax 29,70,000
C

Question 36 – ICAI SM – Illustration 8

Compute the tax liability of Mr. D (aged 65) in a most beneficial manner. He is having total income of
₹ 5,01,00,000 for the Assessment Year 2024-25. Assume that his total income comprises of salary
income, Income from house property and interest on fixed deposit and is the same under both tax
regimes.
CA NISHANT KUMAR 23
 Solution

Computation of Tax Liability of Mr. D Under Default Tax Regime for the A.Y. 2024-25
Particulars ₹
Tax Liability:
First ₹ 3,00,000 NIL -
Next ₹ 3,00,001 - ₹ 6,00,000 5% of ₹ 3,00,000 15,000
Next ₹ 6,00,001 - ₹ 9,00,000 10% of ₹ 3,00,000 30,000

AR
Next ₹ 9,00,001 - ₹ 12,00,000 15% of ₹ 3,00,000 45,000
Next ₹ 12,00,001 - ₹ 15,00,000 20% of ₹ 3,00,000 60,000
Balance, i.e., ₹ 5,01,00,000 minus ₹ 15,00,000 30% of ₹ 4,86,00,000 1,45,80,000
1,47,30,000
Add: Surcharge @ 25% 36,82,500

M
1,84,12,500
Add: Health and Education Cess @ 4% 7,36,500
Tax Payable 1,91,49,000
Note: There's no scope for Marginal Relief at all under this scheme because the income is significantly

KU
greater than ₹ 2,00,00,000.

Computation of Tax Liability of Mr. D Under Optional Tax Regime for the A.Y. 2024-25
Particulars ₹
Tax Liability:
First ₹ 3,00,000 NIL -
Next ₹ 3,00,001 - ₹ 5,00,000 5% of ₹ 2,00,000 10,000
T
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 5,01,00,000 minus ₹ 10,00,000 30% of ₹ 4,91,00,000 1,47,30,000
AN

1,48,40,000
Add: Surcharge @ 37% 54,90,800
2,03,30,800
Restricted to:
Tax on ₹ 5,00,00,000 + (NTI – ₹ 5,00,00,000)
₹ 1,85,15,625 + (₹ 5,01,00,000 – ₹ 5,00,00,0000) 1,86,12,500
H

Lower of the above 1,86,12,500

Add: Health and Education Cess @ 4% 7,44,500
IS

Tax Payable 1,93,57,000

Therefore, Marginal Relief (₹ 2,03,30,800 – ₹ 1,86,12,500) 17,18,300
N

Computation of tax liability of Mr. D on 5 crore

Particulars ₹
Tax Liability:
First ₹ 3,00,000 NIL -
A

Next ₹ 3,00,001 - ₹ 5,00,000 5% of ₹ 2,00,000 10,000

Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 5,00,00,000 minus ₹ 10,00,000 30% of ₹ 4,90,00,000 1,47,00,000
C

1,48,10,000
Add: Surcharge @ 25% 37,02,500
Tax 1,85,12,500

CA NISHANT KUMAR 24
 Rebate u/s 87A Under Default Scheme (“New Scheme”)
1. In case of Resident individual whose total income does not exceed ₹ 7,00,000, rebate shall be
allowed from Income tax @ 100% of such tax or ₹ 25,000 whichever is less. (Refer Question
37)
2. Before reading this point, just know that you’ll need to refer to Question 38 to understand it
completely; so, don’t worry. First read this point, then refer Question 38.
If an individual’s total income surpasses ₹ 7,00,000 and the income tax due on that total

AR
income is higher than the excess over ₹ 7,00,000, the rebate will be determined as follows:
a. Step 1 - Subtract ₹ 7 lakhs from the total income (A).
b. Step 2 - Calculate the income tax liability for the total income (B).
c. Step 3 - If B is greater than A, the rebate under section 87A will be B minus A.
3. The rebate provided under section 87A cannot be higher than the income tax amount

M
calculated before applying this rebate on the individual's total income.

Question 37 – ICAI SM – Illustration 9

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Mr. Raghav aged 26 years and a resident in India, has a total income of ₹ 6,50,000, comprising his
salary income and interest on bank fixed deposit. Compute his tax liability for A.Y. 2024-25 under
default tax regime under section 115BAC.

Solution

Computation of tax liability of Mr. Raghav for the A.Y. 2024-25

T
Particulars ₹
Tax Liability:
AN

First ₹ 3,00,000 NIL -

Next ₹ 3,00,001 - ₹ 6,00,000 5% of ₹ 3,00,000 15,000
Next ₹ 6,00,001 - ₹ 6,50,000 10% of ₹ 50,000 5,000
20,000
Less: Rebate u/s 87A
Less: Lower of:
H

Less: (i) Tax Amount 20,000

Less: (ii) ₹ 25,000 25,000 20,000
Net Tax -
IS

Question 38 – ICAI SM – Illustration 10

N

Mr. Pawan aged 35 years and a resident in India, has a total income of ₹ 7,15,000, comprising his salary
income and interest on bank fixed deposit. Compute his tax liability for A.Y.2024-25 under default tax
regime under section 115BAC.
A

Solution

Computation of Tax Liability

C

Particulars ₹
Step 1 Total Income of ₹ 7,15,000 – ₹ 7,00,000 (A) 15,000
Step 2 Tax on Total Income
First ₹ 3,00,000 NIL -
Next ₹ 3,00,001 to ₹ 6,00,000 5% of ₹ 3,00,000 15,000
Next ₹ 6,00,001 to ₹ 7,15,000 10% of 11,500
₹ 1,15,000

CA NISHANT KUMAR 25
 Total (B) 26,500

Step 3 Since B > A, rebate u/s 87A would be B – A [₹ 26,500 – 11,500

₹ 15,000]

Tax on ₹ 7,15,000 26,500

Less: Rebate u/s 87A 11,500
15,000

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Add: Health and Education Cess @ 4% 600
Tax Liability 15,600

Tax Rate in Case of Companies

Particulars Tax Rates

M
A) Domestic Company
(i) Total T/o or Gross Receipts of P.Y. 2021-22 is upto 400 crores 25%
(ii) Otherwise 30%

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B) Foreign Company 40%
Default Scheme (“New Scheme”) for Companies will be covered at CA Final Level.

Surcharge
Total Income Domestic Company Foreign Company
Above 1 crore upto 10 crores 7% 2%
T
Above 10 crores 12% 5%
AN

Health and Education Cess

Health and Education Cess is levied @ 4%.

Question 39

Compute the marginal relief available to X Ltd., a domestic company, assuming that the total income
H

of X Ltd. is ₹ 1,01,00,000 for A.Y. 2024-25 and the total income does not include any income in the
nature of Capital Gains.
IS

[Note – The gross receipts of X Ltd. for the P.Y. 2021-22 is ₹ 470 crore]

Solution

Computation of tax liability of X Ltd. for A.Y. 2024-25

N

Particulars ₹
Tax Liability: 30% on ₹ 1,01,00,000 30,30,000
Add: Surcharge @ 7% 2,12,100
32,42,100
A

Restricted to:
Tax on ₹ 1,00,00,000 + (NTI – ₹ 1,00,00,000)
C

₹ 30,00,000 + (₹ 1,01,00,000 – ₹ 1,00,00,0000) 31,00,000

Lower of the above 31,00,000
Add: Health and Education Cess @ 4% 1,24,000
Tax Payable 32,24,000
Therefore, Marginal Relief (₹ 32,42,100 – ₹ 31,00,000) 1,42,100

CA NISHANT KUMAR 26
 Question 40

Compute the marginal relief available to Y Ltd., a domestic company, assuming that the total income
of Y Ltd. for AY 2024-25 is ₹ 10,01,30,000 and the total income does not include any income in the
nature of Capital Gains.

[Note – The gross receipts of Y Ltd. for the P.Y. 2021-22 is ₹ 490 crore]

Solution

AR
Computation of tax liability of Y Ltd. for A.Y. 2024-25
Particulars ₹
Tax Liability: 30% on ₹ 10,01,30,000 3,00,39,000
Add: Surcharge @ 12% 36,04,680

M
3,36,43,680
Restricted to:
Tax on ₹ 10,00,00,000 + (NTI – ₹ 10,00,00,000)
₹ 3,21,00,000 + (₹ 10,01,30,000 – ₹ 10,00,00,0000) 3,22,30,000

KU
Lower of the above 3,22,30,000
Add: Health and Education Cess @ 4% 12,89,200
Tax Payable 3,35,19,200
Therefore, Marginal Relief (₹ 3,36,43,680 – ₹ 3,22,30,000) 14,13,680

Computation of tax liability of Y Ltd. on ₹ 10 crores

T
Particulars ₹
Tax Liability: 30% on ₹ 10,00,00,000 3,00,00,000
AN

Add: Surcharge @ 7% 21,00,000

Tax 3,21,00,000

Tax Rates in case of Firm/LLP/Local Authority

Particulars Tax Rate
H

1. Tax Rate 30%

2. Surcharge, if Total Income is above ₹ 1 crore 12%
3. Health and Education Cess on Tax (including Surcharge) 4%
IS

Tax Rates for Co-operative Society

Particulars Tax Rate
N

1. Tax Rate
a. Total Income upto 10,000 10%
b. Above 10,000 upto 20,000 20%
c. Above 20,000 30%
A

2. Surcharge, if Total Income is above ₹ 1 crore upto ₹ 10 crores 7%

3. Surcharge, if Total Income is above ₹ 10 crore 12%
C

4. Health and Education Cess on Tax (including Surcharge) 4%

Provisions related to “Default Scheme” (“New Scheme”) will be dealt at CA Final Level.

CA NISHANT KUMAR 27