Question 5 OR (a)
Total income and tax under the new regime with winnings, gifts and a property bought below stamp value
12 marks
- Time to write
- About 24 minutes
- Notes
- Crux notes
Question
Question 5 OR (a) · 12 marksMr. Pankaj Singh, aged 64 years, a residential individual, has given the information below for the tax year 2026-27. Compute his taxable income and tax liability for tax year 2026-27, assuming that he has opted to be taxed under the new tax regime.
| 1) House property income | Rs. 300000 |
|---|---|
| 2) Interest from saving bank | Rs. 40000 |
| 3) A gift from his father's friend, received | Rs. 180000 |
| 4) Purchased a house property from Mr. Dinesh, his close friend | Rs. 300000 |
| The stamp value of the property, however, is | Rs. 1500000 |
| 5) Winnings, net of TDS @ 30%, from lotteries | Rs. 1400000 |
| 6) Dividend on ABC Limited shares (a domestic company) | Rs. 100000 |
| 7) Rental income from letting furniture (not charged as business income) | Rs. 20000 |
| 8) Capital gain (long term), STT paid, on listed equity shares | Rs. 90000 |
Paper note: Set under the Income-tax Act, 1961 for assessment year 2024-25 (previous year 2023-24); answered under the Income-tax Act, 2025 for tax year 2026-27, so the year term moves forward by 3 years and every date in the question moves forward by the same 3 years, so that intervals, holding periods and ages are as printed. Every figure and name is as printed. "Residential individual" is read as resident.
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
Read from the question
- assuming that he has opted to…The paper fixes this: use it as given, and say so in your answer.
- ComputeHead by head: each income under its head, exempt items marked exempt, then the deductions and the tax.
Write it in this order
- Read the data; note exactly what is asked 2 min
- 1 Gift, property below stamp value and winnings 4 marks 7 min
- 2 Interest, dividend, furniture rent and the equity gain 3 marks 5 min
- 3 Total income 1½ marks 2 min
- 4 Tax at slab and special rates, cess and tax payable 3½ marks 6 min
- Check: arithmetic, units (₹, %), final answer underlined 2 min
Try it first. About 24 minutes for 12 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.
- Mr. Pankaj Singh is resident; his age does not change the slabs of the default regime of section 202(1), under which he is taxed, as the question says.
- The income from house property is as computed; the long-term capital gain is on listed equity shares sold on a recognised stock exchange with securities transaction tax paid on purchase and sale (section 198(1)).
| Item | Treatment | Rs. |
|---|---|---|
| 1) Income from house property | As computed | 3,00,000 |
| 2) Savings bank interest | Income from other sources; no deduction for deposit interest under the default regime | 40,000 |
| 3) Gift from his father's friend | Not a relative and above ₹50,000: all of it is income (section 92(2)(m)(i)) | 1,80,000 |
| 4) House bought from a friend for ₹3,00,000, stamp value ₹15,00,000 | The excess, ₹12,00,000, exceeds the higher of ₹50,000 and 10% of the price (₹30,000): all of it is income (section 92(2)(m)(ii)(B)) | 12,00,000 |
| 5) Lottery winnings ₹14,00,000 after tax deducted at 30% | Grossed up: ₹14,00,000 × 100/70; taxed at 30% with no deduction or basic exemption (sections 94(4) and 194(1), Table: Sl. No. 1) | 20,00,000 |
| 6) Dividend from ABC Limited (a domestic company) | Income from other sources, at slab rates | 1,00,000 |
| 7) Rent from letting furniture (not business income) | Income from other sources | 20,000 |
| 8) Long-term capital gain on listed equity shares | Taxed only above ₹1,25,000 (section 198(2)); ₹90,000 is below it, so no tax arises | 90,000 |
Computation of total income for tax year 2026-27
| Particulars | Rs. |
|---|---|
| Income from house property | 3,00,000 |
| Long-term capital gain on listed equity shares | 90,000 |
| Income from other sources: savings bank interest | 40,000 |
| Income from other sources: gift from father's friend | 1,80,000 |
| Income from other sources: excess stamp value of the house | 12,00,000 |
| Income from other sources: lottery winnings (gross) | 20,00,000 |
| Income from other sources: dividend | 1,00,000 |
| Income from other sources: rent from furniture | 20,000 |
| Gross total income = total income (no Chapter VIII deduction applies) | 39,30,000 |
| Particulars | Rs. |
|---|---|
| Income at slab rates (₹39,30,000 − ₹20,00,000 − ₹90,000) | 18,40,000 |
| Tax at the section 202(1) slabs: up to ₹4,00,000 nil; ₹4,00,001 to ₹8,00,000 at 5% | 20,000 |
| ₹8,00,001 to ₹12,00,000 at 10% | 40,000 |
| ₹12,00,001 to ₹16,00,000 at 15% | 60,000 |
| ₹16,00,001 to ₹18,40,000 at 20% | 48,000 |
| Lottery winnings ₹20,00,000 at 30% | 6,00,000 |
| Long-term capital gain ₹90,000 (within ₹1,25,000) | Nil |
| Tax before cess | 7,68,000 |
| Add: Health and Education Cess at 4% | 30,720 |
| Tax liability | 7,98,720 |
| Less: Tax deducted at source on the winnings | 6,00,000 |
| Tax payable | 1,98,720 |
No rebate is due (total income above ₹12,00,000) and no surcharge (total income below ₹50,00,000).
What changed from the Income-tax Act, 1961
The default regime's slabs (₹4,00,000 nil band, then steps of ₹4,00,000) and the ₹1,25,000 limit for gains on listed equity replace the slabs and the ₹1,00,000 limit of assessment year 2024-25. As set (given separately), the tax liability is ₹8,86,080.
Where the 12 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Gift, property below stamp value and winnings | 4 |
| 2 | Interest, dividend, furniture rent and the equity gain | 3 |
| 3 | Total income | 1.5 |
| 4 | Tax at slab and special rates, cess and tax payable | 3.5 |
| Total | 12 |
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