Question 1 OR (b)

Tax liability on a total income of ₹3,50,000, with the rebate under section 87A (as set, 1961 Act, AY 2018-19)

3 marks

Time to write: About 6 minutes

From an older CBCS paper

Question

Question 1 OR (b) · 3 marks

For AY 2018-19, compute the Income Tax liability of Mr. Sachin (age 39 years, a resident individual) having a total Income of ₹ 3,50,000. 3

Paper note: The as-set version: set and answered under the Income-tax Act, 1961 for assessment year 2018-19 (previous year 2017-18), with the dates as printed.

Reworded from the university paper: names and figures differ, the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.

Before you write

Read off the question and its marks

6 minfor 3 marks

Read from the question

computeHead by head: each income under its head, exempt items marked exempt, then the deductions and the tax.

Write it in this order

1 Tax at the slab rates 1 mark 2 min
2 Rebate under section 87A 1½ marks 3 min
3 Cess and tax liability ½ mark 1 min

123

Short on time? Step 2 carries 1½ of the 3 marks: guard its minutes.

Try it first. About 6 minutes for 3 marks. Write it out, then open the solution.

Solution

Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.

Rates for assessment year 2018-19

Mr. Sachin is a resident individual below 60, so the slabs are (Finance Act, 2018, First Schedule, Part I, Paragraph A, item (I)): nil up to ₹2,50,000; 5% on ₹2,50,001 to ₹5,00,000; 20% on ₹5,00,001 to ₹10,00,000; 30% above. Education cess and secondary and higher education cess together are 3% of the tax (Finance Act, 2018, section 2(11) and (12)). No surcharge arises at this income.

Computation of tax liability

Particulars	₹
Total income	3,50,000
Tax on the first ₹2,50,000	Nil
Tax on the next ₹1,00,000 at 5%	5,000
Tax on total income	5,000
Less: rebate under section 87A (the lower of the tax and ₹2,500)	2,500
Tax after rebate	2,500
Add: education cess 2% and secondary and higher education cess 1%	75
Tax liability	2,575
Tax liability rounded off to the nearest ₹10 (section 288B)	2,580

The rebate under section 87A

Section 87A gives a resident individual whose total income does not exceed a stated limit a deduction from the tax on it, up to a stated amount. The held text shows the limits in force from assessment year 2020-21; its footnotes show the earlier figures. For assessment year 2018-19 the limit of total income was ₹3,50,000 (substituted for ₹5,00,000 with effect from 1 April 2018) and the rebate was up to ₹2,500 (substituted for ₹5,000 from the same date). Mr. Sachin's total income is exactly ₹3,50,000, which does not exceed the limit, so he gets the full ₹2,500. The rebate is allowed before the cess is added.

Where the 3 marks sit

#	Component	Marks
1	Tax at the slab rates	1
2	Rebate under section 87A	1.5
3	Cess and tax liability	0.5
	Total	3

Keyboard: ← → previous and next question, / search

Report a problemopens an email to admin@getkunji.com with the question ID1204-Q1bORalready filled in.