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Chapter 1 – Basic Concepts

Category Details
Income Tax Law • Income Tax Act, 1961 (as amended by Finance Act,
2023): Governs the charge of income tax, effective

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from April 1, 1962.
• Income Tax Rules, 1962: Created under Section 295.
• Notifications and Circulars by CBDT: Issued under
Section 119 for proper administration.
• Judicial Decisions (Case Laws)
Finance Act • Presentation: Annually on February 1 by the
Finance Minister.

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• Approval and Assent: Becomes Finance Act after
presidential assent.
• Incorporation of Amendments: Effective from the
first day of the next financial year. For example,
amendments by Finance Act, 2023 are effective
from 01-04-2023.
Some Important • Assessee: A person required to pay tax.
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Terms • Person: Can be an individual, HUF, company,
partnership firm, AOP/BOI, local authority, or
artificial juridical person.
Heads of Income • Salaries: Income from employer-employee
relationship.
• House Property: Income from ownership of
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property.
• Business or Profession: Profits and gains.
• Capital Gains: Income from transfer of a capital
asset.
• Other Sources: All other incomes.
Previous Year • Previous Year (P.Y.): The period in which income is
and Assessment earned. Example: F.Y. 2023-24.
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Year • Assessment Year (A.Y.): The period in which tax is

paid on that income. Example: F.Y. 2024-25.
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Schemes of Taxation
Schemes of Taxation

Old Scheme New Scheme u/s 115BAC

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

Since both the schemes are available, we have to study both the schemes. We’ll
first study the tax rates under the Old Scheme, and then we’ll look into the New
Scheme as well.

Tax Rates Applicable for A.Y. 2024-25 (P.Y. 2023-24) Under Optional

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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.

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%
Above ₹ 5,00,000 upto ₹ 10,00,000 20%
Above ₹ 10,00,000 30%
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2. In case of Senior Citizens (Resident Individual aged 60 years or more in

the P.Y.)
Income Tax
Rate
Upto ₹ 3,00,000 NIL
Above ₹ 3,00,000 upto ₹ 5,00,000 5%
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Above ₹ 5,00,000 upto ₹ 10,00,000 20%

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
CA

Upto ₹ 5,00,000 NIL

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

60th/80th Birthday on 1st April, 2024

• If an individual’s birthday falls on 1st April, 2024, and he turns 60 years old,

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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
Above ₹ 2,00,00,000 upto ₹ 5,00,00,000 25% of Tax
Above ₹ 5,00,00,000 37% of Tax
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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”.

Health and Education Cess

• Cess means collection of tax for a specified purpose.
• It is calculated @ 4% on Tax (including Surcharge)
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Question 1
Total Income of Ms. Madhuri, a Resident individual is ₹ 2,50,000. Calculate tax
liability for A.Y. 2024-25, assuming her age is 21 years.
Solution
Computation of Tax Liability of Ms. Madhuri (Age 21 Years)
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Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
-
Add: Surcharge -
CA

-
Add: Health and Education Cess @ 4% -

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Net Tax Payable -

Question 2
Total Income of Mr. Bansal, a Resident individual is ₹ 5,50,000. Calculate tax

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liability for A.Y. 2024-25, assuming his age is 25 years.
Solution
Computation of Tax Liability of Mr. Bansal (Age 25 Years)
Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -

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Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
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.
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Solution
Computation of Tax Liability of Mr. X (Age 45 Years)
Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
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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 -
1,72,500
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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

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liability for A.Y. 2024-25, assuming her age is 21 years.
Solution
Computation of Tax Liability of Ms. Priyanka (Age 21 Years)
Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -

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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
2,65,500
Add: Surcharge -
2,65,500
Add: Health and Education Cess @ 4% 10,620
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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 -
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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., ₹ 15,60,000 minus ₹ 10,00,000 30% of ₹ 5,60,000 1,68,000
2,80,500
Add: Surcharge -
2,80,500
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Add: Health and Education Cess @ 4% 11,220

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Net Tax Payable 2,91,720

Question 6
Total Income of Mr. Ghanshyam, a Resident individual is ₹ 50,00,000. Calculate

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tax liability for A.Y. 2024-25, assuming his age is 40 years.
Solution
Computation of Tax Liability of Mr. Ghanshyam (Age 40 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., ₹ 50,00,000 minus 30% of
₹ 10,00,000 ₹ 40,00,000 12,00,000
13,12,500
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Add: Surcharge -
13,12,500

Add: Health and Education Cess @ 4% 52,500

Net Tax Payable 13,65,000
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Question 7
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.
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Solution
Computation of Tax Liability of Mr. X (Age 63 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

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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
1,70,000
Add: Surcharge -
1,70,000

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

Question 8
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

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A.Y. 2024-25 assuming his age is 82 years.
Solution
Computation of Tax Liability of Mr. X (Age 82 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., ₹ 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
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Net Tax Payable 1,66,400

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.
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Solution
Computation of Tax Liability of Mrs. Radhika (Age 80 Years)
Particulars ₹
Tax Liability:
First ₹ 5,00,000 NIL -
CA

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

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Balance, i.e., ₹ 18,00,000 minus ₹ 10,00,000 30% of ₹ 8,00,000 2,40,000
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

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

Particulars
Tax Liability:
First ₹ 2,50,000
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Computation of Tax Liability of Mrs. Swati (Age 65 Years)

Balance, i.e., ₹ 2,75,000 minus ₹ 2,50,000

NIL
5% of ₹ 25,000
₹

-
1,250
1,250
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Add: Surcharge -
1,250
Add: Health and Education Cess @ 4% 50
Net Tax Payable 1,300

Question 11
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Total Income of Mr. Y, a Resident individual is ₹ 1,10,00,000. Calculate tax

liability for A.Y. 2024-25, assuming his age is 50 years.
Solution
Computation of Tax Liability of Mr. Y (Age 50 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., ₹ 1,10,00,000 minus 30% of
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₹ 10,00,000 ₹ 1,00,00,000 30,00,000

31,12,500

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Add: Surcharge @ 15% 4,66,875
35,79,375
Add: Health and Education Cess @ 4% 1,43,175
Net Tax Payable 37,22,550

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Question 12
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.
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
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 1,00,00,000 minus 30% of
₹ 10,00,000 ₹ 90,00,000 27,00,000
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28,12,500
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)
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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
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
CA

Balance, i.e., ₹ 2,00,00,000 minus 30% of

₹ 10,00,000 ₹ 1,90,00,000 57,00,000

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58,12,500
Add: Surcharge @ 15% 8,71,875
66,84,375
Add: Health and Education Cess @ 4% 2,67,375
Net Tax Payable 69,51,750

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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.
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
Next ₹ 5,00,001 - ₹ 10,00,000 20% of ₹ 5,00,000 1,00,000
Balance, i.e., ₹ 5,00,00,000 minus 30% of
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₹ 10,00,000 ₹ 4,90,00,000 1,47,00,000
1,48,12,500
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
Total Income of Mr. Hari (Age 62 Years) is ₹ 64,00,000. He is Resident in Previous
Year. Calculate Tax Liability.
Solution
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Computation of Tax Liability of Mr. Hari (Age 64 Years)

Particulars ₹
Tax Liability:
First ₹ 3,00,000 NIL -
Next ₹ 3,00,001 - ₹ 5,00,000 5% of ₹ 2,00,000 10,000
CA

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

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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

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Net Tax Payable 19,79,120

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).
Solution

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Since he is Non-Resident, so, he’ll get the basic exemption limit of only
₹ 2,50,000.
Computation of Tax Liability of Mr. Sam (Age 83 Years)
Particulars ₹
Tax Liability:
AN
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., ₹ 1,20,30,000 minus 30% of
₹ 10,00,000 ₹ 1,10,30,000 33,09,000
34,21,500
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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
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
CA

Computation of Tax Liability of Ms. Meena (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., ₹ 51,00,000 minus ₹ 10,00,000 30% of ₹ 41,00,000 12,30,000

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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

Question 18

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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 ₹
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., ₹ 1,01,00,000 minus
₹ 10,00,000 30% of ₹ 91,00,000 27,30,000
28,42,500
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Add: Surcharge @ 15% 4,26,375

32,68,875
Add: Health and Education Cess @ 4% 1,30,755
Net Tax Payable 33,99,630
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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.
Solution
Computation of Tax Liability of Ms. Rekha (Age 25 Years)
CA

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., ₹ 2,01,00,000 minus

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₹ 10,00,000 30% of ₹ 1,91,00,000 57,30,000
58,42,500
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
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.
Solution
Computation of Tax Liability of Mr. E (Age 40 Years)
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
Balance, i.e., ₹ 5,01,00,000 minus
₹ 10,00,000 30% of ₹ 4,91,00,000 1,47,30,000
SH

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

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Question 21
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

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Computation of tax liability of Ms. Meena for the A.Y. 2024-25
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., ₹ 51,00,000 minus ₹ 10,00,000 30% of ₹ 41,00,000 12,30,000

Add: Surcharge @ 10%

Restricted to:
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Tax on ₹ 50,00,000 + (NTI – ₹ 50,00,000)
₹ 13,12,500 + (₹ 51,00,000 – ₹ 50,00,0000)
13,42,500
1,34,250
14,76,750

14,12,500
Lower of the above 14,12,500
AN
Add: Health and Education Cess @ 4% 56,500
Tax Payable 14,69,000
Therefore, Marginal Relief (₹ 14,76,750 –
₹ 14,12,500) 64,250
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Computation of tax liability of Ms. Meena 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
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
NI

13,12,500
Add: Surcharge -
Tax 13,12,500

Question 22
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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

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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
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
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
AN
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
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Computation of tax liability of Ms. Sushma on 1 crore

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., ₹ 1,00,00,000 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
CA

Question 23

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

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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
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

TK
58,42,500
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 –
AN
₹ 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
Therefore, Marginal Relief (₹ 73,03,125 –
₹ 67,84,375) 5,18,750
SH

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

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

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
Add: Surcharge @ 15% 8,71,875
Tax 66,84,375
CA

CA NISHANT KUMAR 16
 AR
Question 24
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.
Solution

UM
Computation of tax liability of Ms. Jaya for the A.Y. 2024-25
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., ₹ 5,01,00,000 minus
₹ 10,00,000

Add: Surcharge @ 37%

Restricted to:
TK
Tax on ₹ 5,00,00,000 + (NTI –
30% of ₹ 4,91,00,000 1,47,30,000
1,48,42,500
54,91,725
2,03,34,225

₹ 5,00,00,000)
AN
₹ 1,85,15,625 + (₹ 5,01,00,000 –
₹ 5,00,00,0000) 1,86,15,625
Lower of the above 1,86,15,625
Add: Health and Education Cess @ 4% 7,44,625
Tax Payable 1,93,60,250
Therefore, Marginal Relief
SH

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

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

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

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
CA

Tax 1,85,15,625

CA NISHANT KUMAR 17
 AR
Question 25
NISH10, a resident individual has total income of ₹ 50,20,000. Calculate Tax
liability.

UM
Solution
Computation of Tax Liability of NISH10
Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500

TK
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
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
SH

Question 26
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.
NI

Solution
Computation of tax liability of Mr. A for the A.Y. 2024-25
Particulars ₹
Tax Liability:
CA

First ₹ 2,50,000 NIL -

Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500
CA NISHANT KUMAR 18
 AR
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

UM
Restricted to:
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 –

TK
₹ 14,12,500) 64,250

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
AN
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
SH

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 House Property” and “Interest from
Fixed Deposit Account”. Assume that Mr. A has not opted for the provisions of
NI

section 115BAC.
Solution
Computation of tax liability of Mr. A for the A.Y. 2024-25
Particulars ₹
Tax Liability:
CA

First ₹ 2,50,000 NIL -

CA NISHANT KUMAR 19
 AR
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
28,42,500

UM
Add: Surcharge @ 15% 4,26,375
32,68,875
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

TK
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

Computation of tax liability of Mr. A on 1 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., ₹ 1,00,00,000 minus
₹ 10,00,000 30% of ₹ 90,00,000 27,00,000
SH

28,12,500
Add: Surcharge @ 10% 2,81,250
Tax 30,93,750

Question 28
NI

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.
CA

Solution

CA NISHANT KUMAR 20
 AR
Computation of tax liability of Mr. A for the A.Y. 2024-25
Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
Next ₹ 2,50,001 - ₹ 5,00,000 5% of ₹ 2,50,000 12,500

UM
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
Add: Surcharge @ 25% 14,60,625
73,03,125
Restricted to:

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

Computation of tax liability of Mr. A on 2 crore

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

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
Add: Surcharge @ 15% 8,71,875
NI

Tax 66,84,375

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
CA

“Salary Income”, “Income under the head House Property” and “Interest from

CA NISHANT KUMAR 21
 AR
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

UM
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., ₹ 5,14,00,000 minus
₹ 10,00,000 30% of ₹ 5,04,00,000 1,51,20,000

TK
1,52,32,500
Add: Surcharge @ 37% 56,36,025
2,08,68,525
Restricted to:
Tax on ₹ 5,00,00,000 + (NTI –
₹ 5,00,00,000)
₹ 1,85,15,625 + (₹ 5,14,00,000 –
AN
₹ 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
SH

Computation of tax liability of Mr. A on 5 crore

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

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
CA

CA NISHANT KUMAR 22
 AR
Question 30
Compute the tax liability of Mr. A (aged 42), having total income of ₹ 51,75,000
for the Assessment Year 2024-25. Assume that his total income comprises of
“Salary Income”, “Income under the head House Property” and “Interest from

UM
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:

TK
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
Add: Surcharge @ 10% 1,36,500
15,01,500
AN
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
Therefore, Marginal Relief (₹ 15,01,500 –
SH

₹ 14,87,500) 14,000

Computation of tax liability of Mr. A on 50 lakhs

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

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 -
CA

Tax 13,12,500

CA NISHANT KUMAR 23
 AR
Question 31
Compute the tax liability of Mr. A (aged 42), having total income of ₹ 5,01,00,000
for the Assessment Year 2024-25. Assume that his total income comprises of
“Salary Income”, “Income under the head House Property” and “Interest from

UM
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:

TK
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
1,48,42,500
Add: Surcharge @ 37% 54,91,725
AN
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
Lower of the above 1,86,15,625
SH

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

NI

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
CA

₹ 10,00,000 30% of ₹ 4,90,00,000 1,47,00,000

CA NISHANT KUMAR 24
 AR
1,48,12,500
Add: Surcharge @ 25% 37,03,125
Tax 1,85,15,625

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

UM
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.
Question 32
Mr. Raghav, a resident individual, aged 26 years has a total income of ₹ 3,40,000,
comprising his salary income and interest on bank fixed deposit. Compute his

TK
tax liability for A.Y. 2024-25.
Solution
Computation of tax liability of Mr. Raghav for the A.Y. 2024-25
Particulars ₹
Tax Liability:
First ₹ 2,50,000 NIL -
AN
Next ₹ 2,50,001 - ₹ 3,40,000 5% of ₹ 90,000 4,500
4,500
Less: Rebate u/s 87A
Less: Lower of:
Less: (i) Tax Amount 4,500
Less: (ii) ₹ 12,500 12,500 4,500
SH

Net Tax -

Question 33
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.
NI

Solution
Computation of tax liability of Mr. Dinesh for the A.Y. 2024-25
Particulars ₹
Tax Liability:
CA

First ₹ 2,50,000 NIL -

Next ₹ 2,50,001 - ₹ 4,80,000 (Note) 20% of ₹ 2,30,000 46,000
CA NISHANT KUMAR 25
 AR
46,000
Less: Rebate u/s 87A
Less: Lower of:
Less: (i) Tax Amount 46,000
Less: (ii) ₹ 12,500 12,500 12,500

UM
Tax 33,500
Add: Health and Education Cess @ 4% 1,340
Net Tax Payable 34,840
Note: Tax on Long Term Capital Gains is taxed at a flat rate of 20% u/s 112. Don’t
worry about it right now, we’ll understand it in detail when we’ll study the
chapter on Capital Gains. For now, just understand that since in this question,
the total income comprised of Long Term Capital Gains only, it’ll be taxed at 20%

TK
after providing for the basic exemption limit.

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
AN
Rate
Upto ₹ 3,00,000 NIL
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%
SH

Above ₹ 15,00,000 30%

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.
c. This amount is collected by the government only for the promotion
NI

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
CA

Payable”.

CA NISHANT KUMAR 26
 AR
Question 34
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.

UM
Solution
Computation of Tax Liability of Mr. X for A.Y. 2024-25
Particulars ₹
Tax Liability:
First ₹ 3,00,000 NIL -
From ₹ 3,00,001 to ₹ 6,00,000 5% × ₹ 3,00,000 15,000

TK
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
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
Total Tax Liability 1,87,200
AN
Surcharge and Marginal Relief in Default Scheme u/s 115BAC
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
SH

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.
NI

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

Solution

CA NISHANT KUMAR 27
 AR
Computation of tax liability of Mr. B 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

UM
Next ₹ 6,00,001 - ₹ 9,00,000 10% of ₹ 3,00,000 30,000
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 30% of
₹ 15,00,000 ₹ 86,00,000 25,80,000
27,30,000
Add: Surcharge @ 15% 4,09,500

TK
31,39,500
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
Lower of the above 30,70,000
Add: Health and Education Cess @ 4% 1,22,800
AN
Tax Payable 31,92,800

Therefore, Marginal Relief (₹ 31,39,500 – ₹ 30,70,000) 69,500

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

Particulars ₹
SH

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
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
NI

₹ 15,00,000 30% of ₹ 85,00,000 25,50,000

27,00,000
Add: Surcharge @ 10% 2,70,000
Tax 29,70,000
CA

Question 36 – ICAI SM – Illustration 8

CA NISHANT KUMAR 28
 AR
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.

UM
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

TK
Next ₹ 6,00,001 - ₹ 9,00,000 10% of ₹ 3,00,000 30,000
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
AN
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 greater than ₹ 2,00,00,000.
Computation of Tax Liability of Mr. D Under Optional Tax Regime for the
SH

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
20% of
NI

Next ₹ 5,00,001 - ₹ 10,00,000 ₹ 5,00,000 1,00,000

Balance, i.e., ₹ 5,01,00,000 minus 30% of 1,47,30,00
₹ 10,00,000 ₹ 4,91,00,000 0
1,48,40,00
0
Add: Surcharge @ 37% 54,90,800
CA

2,03,30,80
0
CA NISHANT KUMAR 29
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Restricted to:
Tax on ₹ 5,00,00,000 + (NTI – ₹ 5,00,00,000)
₹ 1,85,15,625 + (₹ 5,01,00,000 – 1,86,12,50
₹ 5,00,00,0000) 0
1,86,12,50

UM
Lower of the above 0
Add: Health and Education Cess @ 4% 7,44,500
1,93,57,00
Tax Payable 0

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

Particulars
Tax Liability:
First ₹ 3,00,000 TK
Computation of tax liability of Mr. D on 5 crore

Next ₹ 3,00,001 - ₹ 5,00,000

Next ₹ 5,00,001 - ₹ 10,00,000
NIL
5% of ₹ 2,00,000
20% of ₹ 5,00,000
₹

-
10,000
1,00,000
Balance, i.e., ₹ 5,00,00,000 minus
AN
₹ 10,00,000 30% of ₹ 4,90,00,000 1,47,00,000
1,48,10,000
Add: Surcharge @ 25% 37,02,500
Tax 1,85,12,500

Rebate u/s 87A Under Default Scheme (“New Scheme”)

SH

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.
NI

If an individual’s total income surpasses ₹ 7,00,000 and the income tax

due on that total 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
CA

B minus A.

CA NISHANT KUMAR 30
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3. The rebate provided under section 87A cannot be higher than the income
tax amount calculated before applying this rebate on the individual's total
income.
Question 37 – ICAI SM – Illustration 9

UM
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

TK
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 - ₹ 6,50,000 10% of ₹ 50,000 5,000
20,000
Less: Rebate u/s 87A
AN
Less: Lower of:
Less: (i) Tax Amount 20,000
Less: (ii) ₹ 25,000 25,000 20,000
Net Tax -

Question 38 – ICAI SM – Illustration 10

SH

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.
Solution
NI

Computation of Tax Liability

Particulars ₹
Step 1 Total Income of ₹ 7,15,000 – ₹ 7,00,000 15,000
(A)
Step 2 Tax on Total Income
CA

First ₹ 3,00,000 NIL -

Next ₹ 3,00,001 to ₹ 6,00,000 5% of ₹3,00,000 15,000
CA NISHANT KUMAR 31
 AR
Next ₹ 6,00,001 to ₹ 7,15,000 10% of ₹1,15,000 11,500
Total (B)
26,500

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

UM
A [₹ 26,500 – ₹ 15,000]

Tax on ₹ 7,15,000 26,500

Less: Rebate u/s 87A 11,500
15,000
Add: Health and Education Cess @ 4% 600
Tax Liability 15,600

Particulars

A) Domestic Company
TK
Tax Rate in Case of Companies

(i) Total T/o or Gross Receipts of P.Y. 2021-22 is upto 400

crores
25%
Tax
Rates
AN
(ii) Otherwise 30%
B) Foreign Company 40%
Default Scheme (“New Scheme”) for Companies will be covered at CA Final
Level.

Surcharge
Total Income Domestic Company Foreign Company
SH

Above 1 crore upto 10 crores 7% 2%

Above 10 crores 12% 5%

Health and Education Cess

Health and Education Cess is levied @ 4%.
Question 39
NI

Compute the marginal relief available to X Ltd., a domestic company, assuming

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

Solution

CA NISHANT KUMAR 32
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Computation of tax liability of X Ltd. for A.Y. 2024-25
Particulars ₹
Tax Liability: 30% on ₹ 1,01,00,000 30,30,000
Add: Surcharge @ 7% 2,12,100
32,42,100

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

Question 40
TK
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]
AN
Solution
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
SH

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
Lower of the above 3,22,30,000
Add: Health and Education Cess @ 4% 12,89,200
NI

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

Particulars ₹
CA

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

Add: Surcharge @ 7% 21,00,000

CA NISHANT KUMAR 33
 AR
Tax 3,21,00,000

Tax Rates in case of Firm/LLP/Local Authority

Particulars Tax Rate
1. Tax Rate 30%

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

Tax Rates for Co-operative Society

Particulars Tax Rate
1. Tax Rate
a. Total Income upto 10,000 10%

TK
b. Above 10,000 upto 20,000 20%
c. Above 20,000 30%
2. Surcharge, if Total Income is above ₹ 1 crore upto ₹ 10 7%
crores
3. Surcharge, if Total Income is above ₹ 10 crore 12%
4. Health and Education Cess on Tax (including Surcharge) 4%
Provisions related to “Default Scheme” (“New Scheme”) will be dealt at CA Final
AN
Level.
SH
NI
CA

CA NISHANT KUMAR 34