Comprehension
Based on the following information
Total income tax payable is obtained by adding two additional surcharges on calculated income tax.
Education Cess : An additional surcharge called ‘Education Cess’ is levied at the rate of 2% on the amount of income tax.
Secondary and Higher Education Cess : An additional surcharge called ‘Secondary and Higher Education Cess` is levied at the rate of 1% on the amount of income tax.
| Income - Tax Rates for Financial Year 2009 - 10 | |||
|---|---|---|---|
| Individual & HUF below age of 65 years | Women below age of 65 years | Tax Rates | |
| Income up to Rs. 1,60,000/- | Income up to Rs. 1,90,000/- | Nil | |
| Rs. 1,60,001 to Rs. 3,00,000/- | Rs. 1,90,001 to Rs. 3,00,000/- | 10% | |
| Rs. 3,00,001 to Rs. 5,00,000/- | Rs. 3,00,001 to Rs. 5,00,000/- | 20% | |
| Above Rs. 5,00,001 | Above Rs. 5,00,001 | 30% | |
Total income tax payable is obtained by adding two additional surcharges on calculated income tax.
Education Cess : An additional surcharge called ‘Education Cess’ is levied at the rate of 2% on the amount of income tax.
Secondary and Higher Education Cess : An additional surcharge called ‘Secondary and Higher Education Cess` is levied at the rate of 1% on the amount of income tax.
Question: 1
Sangeeta is a young working lady. Towards the end of the financial year 2009–10, she found her total annual income to be Rs. 3,37,425. What % of her income is payable as income tax?
Sangeeta is a young working lady. Towards the end of the financial year 2009–10, she found her total annual income to be Rs. 3,37,425. What % of her income is payable as income tax?
Show Hint
Always split income into correct tax slabs and then apply cess separately on the calculated tax. Avoid applying cess directly on income.
Updated On: Aug 23, 2025
- 5.64
- 6.82
- 7.38
- 8.10
- None of the above
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The Correct Option is A
Solution and Explanation
Step 1: Understand the tax slabs for women (below 65 years).
- Up to Rs. 1,90,000: Nil tax
- Rs. 1,90,001 – 3,00,000: 10% tax
- Rs. 3,00,001 – 5,00,000: 20% tax
Step 2: Break down Sangeeta’s income.
Her total income = Rs. 3,37,425
Taxable income = above Rs. 1,90,000 - For income between 1,90,001 and 3,00,000 = Rs. (3,00,000 – 1,90,000) = Rs. 1,10,000 taxed at 10%
Tax = Rs. 11,000 - For income between 3,00,001 and 3,37,425 = Rs. (3,37,425 – 3,00,000) = Rs. 37,425 taxed at 20%
Tax = Rs. 7,485
Step 3: Compute base tax.
Total base tax = 11,000 + 7,485 = Rs. 18,485
Step 4: Add Education Cess (2%) and SHEC (1%).
Cess = 3% of 18,485 = 0.03 × 18,485 = Rs. 554.55
So total tax = 18,485 + 555 ≈ Rs. 19,040
Step 5: Compute percentage of income.
\[ \text{Percentage tax} = \frac{19,040}{3,37,425} \times 100 \approx 5.64% \]
Final Answer:
\[ \boxed{5.64%} \]
- Up to Rs. 1,90,000: Nil tax
- Rs. 1,90,001 – 3,00,000: 10% tax
- Rs. 3,00,001 – 5,00,000: 20% tax
Step 2: Break down Sangeeta’s income.
Her total income = Rs. 3,37,425
Taxable income = above Rs. 1,90,000 - For income between 1,90,001 and 3,00,000 = Rs. (3,00,000 – 1,90,000) = Rs. 1,10,000 taxed at 10%
Tax = Rs. 11,000 - For income between 3,00,001 and 3,37,425 = Rs. (3,37,425 – 3,00,000) = Rs. 37,425 taxed at 20%
Tax = Rs. 7,485
Step 3: Compute base tax.
Total base tax = 11,000 + 7,485 = Rs. 18,485
Step 4: Add Education Cess (2%) and SHEC (1%).
Cess = 3% of 18,485 = 0.03 × 18,485 = Rs. 554.55
So total tax = 18,485 + 555 ≈ Rs. 19,040
Step 5: Compute percentage of income.
\[ \text{Percentage tax} = \frac{19,040}{3,37,425} \times 100 \approx 5.64% \]
Final Answer:
\[ \boxed{5.64%} \]
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Question: 2
Mr. Madan observed his tax deduction at source, done by his employer, as Rs. 3,17,910. What was his total income (in Rs.) if he neither has to pay any additional tax nor is eligible for any refund?
Mr. Madan observed his tax deduction at source, done by his employer, as Rs. 3,17,910. What was his total income (in Rs.) if he neither has to pay any additional tax nor is eligible for any refund?
Show Hint
When solving income tax reverse-calculation problems, always include cess in the final step. Ignoring cess leads to incorrect results.
Updated On: Aug 23, 2025
- 13,48,835
- 14,45,522
- 14,47,169
- 15,70,718
- None of the above
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The Correct Option is A
Solution and Explanation
Step 1: Given data.
TDS deducted = Rs. 3,17,910
We need to find his total income.
Step 2: Assume income structure.
Let Madan’s income = Rs. (5,00,000 + x)
– First Rs. 1,60,000: Nil tax (as per slab for individuals).
– Next Rs. 1,40,000 (1,60,001 – 3,00,000): taxed at 10% = Rs. 14,000
– Next Rs. 2,00,000 (3,00,001 – 5,00,000): taxed at 20% = Rs. 40,000 So, up to Rs. 5,00,000 → Tax = Rs. 54,000
Step 3: For remaining income (x).
Income above Rs. 5,00,000 is taxed at 30%.
So, additional tax = 0.3x Total base tax = 0.3x + 54,000
Step 4: Add Education Cess.
Including 3% cess: \[ \text{Tax payable} = 1.03 \times (0.3x + 54,000) \]
Step 5: Use given condition.
We know tax = Rs. 3,17,910 \[ 3,17,910 = 1.03 \times (0.3x + 54,000) \] \[ \Rightarrow 0.3x + 54,000 = \frac{3,17,910}{1.03} \] \[ = 3,08,650 \] \[ \Rightarrow 0.3x = 2,54,650 \quad \Rightarrow x = 8,48,835 \]
Step 6: Compute total income.
Total income = Rs. 5,00,000 + Rs. 8,48,835 = Rs. 13,48,835
Final Answer:
\[ \boxed{13,48,835} \]
TDS deducted = Rs. 3,17,910
We need to find his total income.
Step 2: Assume income structure.
Let Madan’s income = Rs. (5,00,000 + x)
– First Rs. 1,60,000: Nil tax (as per slab for individuals).
– Next Rs. 1,40,000 (1,60,001 – 3,00,000): taxed at 10% = Rs. 14,000
– Next Rs. 2,00,000 (3,00,001 – 5,00,000): taxed at 20% = Rs. 40,000 So, up to Rs. 5,00,000 → Tax = Rs. 54,000
Step 3: For remaining income (x).
Income above Rs. 5,00,000 is taxed at 30%.
So, additional tax = 0.3x Total base tax = 0.3x + 54,000
Step 4: Add Education Cess.
Including 3% cess: \[ \text{Tax payable} = 1.03 \times (0.3x + 54,000) \]
Step 5: Use given condition.
We know tax = Rs. 3,17,910 \[ 3,17,910 = 1.03 \times (0.3x + 54,000) \] \[ \Rightarrow 0.3x + 54,000 = \frac{3,17,910}{1.03} \] \[ = 3,08,650 \] \[ \Rightarrow 0.3x = 2,54,650 \quad \Rightarrow x = 8,48,835 \]
Step 6: Compute total income.
Total income = Rs. 5,00,000 + Rs. 8,48,835 = Rs. 13,48,835
Final Answer:
\[ \boxed{13,48,835} \]
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