Question 1 OR (b)

Tax liability of a resident aged 83 on a taxable income of ₹11,50,000 (as set, 1961 Act, AY 2019-20)

3 marks

Time to write
About 6 minutes

From an older CBCS paper

Question

Question 1 OR (b) · 3 marks

Calculate the tax liability for AY 2019-20 of Mr. Paresh, aged 83 years and a resident individual, whose taxable Income is ₹ 11,50,000. 3

Paper note: The as-set version: set and answered under the Income-tax Act, 1961 for assessment year 2019-20 (previous year 2018-19), 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

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

Write it in this order

  1. 1 Slabs for a resident aged 80 or more 1 mark 2 min
  2. 2 Tax on total income 1 mark 2 min
  3. 3 Rebate, cess and tax liability 1 mark 2 min

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.

Facts used

Mr. Paresh is a resident individual aged 83, so for the assessment year 2019-20 he is taxed at the rates for a resident aged 80 or more. His taxable income is ₹11,50,000, a multiple of ten (section 288A).

Slabs for a resident individual aged 80 or more (Finance (No. 2) Act, 2019, First Schedule, Part I, Paragraph A, item (III)): nil up to ₹5,00,000; 20% on ₹5,00,001 to ₹10,00,000; 30% above ₹10,00,000; health and education cess at 4% of the tax (Finance (No. 2) Act, 2019, section 2(11)); no surcharge unless total income exceeds ₹50,00,000.

Computation of tax liability

Particulars₹
Taxable income11,50,000
Tax on the first ₹5,00,000Nil
Tax on the next ₹5,00,000 at 20%1,00,000
Tax on the balance ₹1,50,000 at 30%45,000
Tax on total income1,45,000
Less: rebate under section 87ANil
Add: health and education cess at 4%5,800
Tax liability1,50,800

Notes

  1. No rebate. For assessment year 2019-20 the rebate of section 87A is given only where total income does not exceed ₹3,50,000 (the held text shows ₹5,00,000, which its footnotes date from 1 April 2020). His income is far above that limit.
  2. No surcharge. His income is below ₹50,00,000 (Finance (No. 2) Act, 2019, First Schedule, Part I, Paragraph A, Surcharge on income-tax).
  3. Age. The higher exemption limit of ₹5,00,000 is given only to a resident who is 80 or more at any time in the previous year; Mr. Paresh, at 83, qualifies. A resident aged 60 to 79 would pay ₹1,55,000 before cess on the same income (Finance (No. 2) Act, 2019, First Schedule, Part I, Paragraph A, item (II)).
  4. Rounding. ₹1,50,800 is already a multiple of ten (section 288B).

Where the 3 marks sit

#ComponentMarks
1Slabs for a resident aged 80 or more1
2Tax on total income1
3Rebate, cess and tax liability1
Total3
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