Question 5 (a)
Tax liability under the old regime with capital gains and deductions
12 marks
- Time to write
- About 24 minutes
- Notes
- Crux notes
Question
Question 5 (a) · 12 marksMr. Lokesh, aged 46 years, gives his income for the tax year 2026-27 as below:
Salary income (before standard deduction) Rs. 650000
House property income (computed) Rs. 225000
Gold: short-term capital gains Rs. 200000
House property: long-term capital gains Rs. 400000
Other sources: income Rs. 25000
➤ Fixed Deposits: interest Rs. 14000
➤ Saving Banks: interest Rs. 11000
Gross Total Income Rs. 1500000
His investments and savings were:
| 1) Public provident fund contribution | Rs. 180000 |
|---|---|
| 2) Life insurance premium for his married son, who does not depend on him; the policy was issued after April 2012, sum assured Rs. 260000. | Rs.15000 |
| 3) Mediclaim premium for himself, paid by cheque | Rs. 32000 |
| 4) Donation to the National Defence Fund | Rs. 10000 |
| 5) Donation to the Swachh Bharat Kosh | Rs. 15000 |
| 6) To the PM CARES Fund | Rs. 5000 |
| 7) To the Zila Saksharta Samiti | Rs. 8000 |
| 8) Donations to an orphanage, of blankets | Rs. 12000 |
| 9) His own contribution to the National Pension Scheme | Rs. 36000 |
Compute his tax liability for the tax year 2026-27 under the old tax regime. (12)
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.
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
- Gross Total IncomeHead 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 Gross total income standard deduction 2 marks 3 min
- 2 Deductions: savings, pension, mediclaim 3 marks 5 min
- 3 Deductions: donations and interest 3 marks 5 min
- 4 Total income and tax at slab and special rates 3 marks 5 min
- 5 Cess and tax liability 1 mark 2 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. Lokesh is resident and is taxed under the old regime (section 202(4)), as the question says; the slabs are those of the Finance Act, 2026, First Schedule, Part I-B, Paragraph A(I).
- The long-term capital gain of ₹4,00,000 on the house property is as computed; the house was sold during the tax year, so the gain is taxed at 12.5% (section 197(1)). No indexed figure is given, so the ceiling of section 197(3) is not applied.
- The life insurance policy for his son meets the premium condition (₹15,000 is within 10% of the sum assured of ₹2,60,000).
- The donations were paid otherwise than in cash (or in cash of not more than ₹2,000).
Gross total income for tax year 2026-27
| Particulars | Rs. |
|---|---|
| Salary ₹6,50,000 less standard deduction ₹50,000 (section 19(1), Table: Sl. No. 2(b)) | 6,00,000 |
| Income from house property (as computed) | 2,25,000 |
| Short-term capital gain on gold (taxed at slab rates) | 2,00,000 |
| Long-term capital gain on house property | 4,00,000 |
| Income from other sources (fixed deposit interest ₹14,000 + savings bank interest ₹11,000) | 25,000 |
| Gross total income | 14,50,000 |
The printed gross total income of ₹15,00,000 adds the salary before the standard deduction; after it, the figure is ₹14,50,000.
| Item | Provision | Claimed | Allowed |
|---|---|---|---|
| PPF ₹1,80,000 + life insurance for his son ₹15,000 = ₹1,95,000, limited to ₹1,50,000 | Section 123, Schedule XV | 1,95,000 | 1,50,000 |
| Own contribution to the National Pension System (limit ₹50,000) | Section 124(3) | 36,000 | 36,000 |
| Mediclaim premium for himself, by cheque (limit ₹25,000 below age 60) | Section 126 | 32,000 | 25,000 |
| National Defence Fund (100%, no limit) | Section 133(1)(a)(i) | 10,000 | 10,000 |
| Swachh Bharat Kosh (100%, no limit) | Section 133(1)(a)(xx) | 15,000 | 15,000 |
| PM CARES Fund (100%, no limit) | Section 133(1)(a)(ii) | 5,000 | 5,000 |
| Zila Saksharta Samiti (100%, no limit) | Section 133(1)(a)(ix) | 8,000 | 8,000 |
| Blankets donated to an orphanage (a gift in kind, not a sum paid) | Section 133 | 12,000 | Nil |
| Savings bank interest (limit ₹10,000; fixed deposits not covered) | Section 153(2)(a) | 11,000 | 10,000 |
| Total deductions | 2,59,000 |
The deductions are set against income other than the long-term capital gain (section 197(5)); that income, ₹10,50,000, is far larger than them.
₹14,50,000 − ₹2,59,000 = ₹11,91,000, of which ₹4,00,000 is long-term capital gain and ₹7,91,000 is taxed at slab rates.
| Particulars | Rs. |
|---|---|
| Tax on ₹7,91,000 at slab rates: up to ₹2,50,000 nil; ₹2,50,001 to ₹5,00,000 at 5% | 12,500 |
| ₹5,00,001 to ₹7,91,000 at 20% | 58,200 |
| Tax on long-term capital gain of ₹4,00,000 at 12.5% | 50,000 |
| Tax before cess | 1,20,700 |
| Add: Health and Education Cess at 4% | 4,828 |
| Tax liability (rounded to the nearest ₹10, section 516) | 1,25,530 |
What changed from the Income-tax Act, 1961
The deductions and slabs are those of sections 80C, 80CCD(1B), 80D, 80G and 80TTA of the 1961 Act. The rate on the long-term capital gain is 12.5% from 23 July 2024, against 20% as set (assessment year 2024-25, given separately), where the tax liability is ₹1,56,730.
Where the 12 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Gross total income (standard deduction) | 2 |
| 2 | Deductions: savings, pension, mediclaim | 3 |
| 3 | Deductions: donations and interest | 3 |
| 4 | Total income and tax at slab and special rates | 3 |
| 5 | Cess and tax liability | 1 |
| Total | 12 |
Report a problemopens an email to admin@getkunji.com with the question ID831-Q5aalready filled in.