Question

Compute the income tax payable by following individuals. 

i. Mr. Kadam who is 35 years old and has a taxable income of Rs 13,35,000. 

ii. Mr. Khan is 65 years of age and his taxable income is Rs 4,50,000. 

iii. Miss Varsha (Age 26 years) has a taxable income of Rs 2,30,000.

Answer 1

i. Mr. Kadam is 35 years old and his taxable income is Rs 13,35,000. 

Mr. Kadam’s income is more than Rs 10,00,000. 

∴ Income tax = Rs 1,12,500 + 30% of (taxable income -10,00,000) 

= Rs 1,12,500 + 30% of (13,35,000 – 10,00,000) 

= 112500 + (30/100) x 335000 

= 112500 + 100500 

= Rs 213000 

Education cess = 2% of income tax 

= (2/100) x 213000 

= Rs 4260. 

Secondary and Higher Education cess 

= 1% of income tax 

= (1/100) x 213000 = 2130

Total income tax = Income tax + Education cess + Secondary and higher education cess 

= 213000 + 4260 + 2130 = Rs 2,19,390

∴ Mr. Kadam will have to pay income tax of Rs 2,19,390. 

ii. Mr. Khan is 65 years old and his taxable income is Rs 4,50,000. 

Mr. Khan’s income falls in the slab Rs 3,00,001 to Rs 5,00,000. 

∴ Income tax 

= 5% of (taxable income – 300000) 

= 5% of (450000 – 300000)

= (5/100) x 150000 

= Rs 7500 

Education cess = 2% of income tax 

= (2/100) x 7500

= Rs 150 

Secondary and Higher Education cess = 1 % of income tax 

= (1/100) x 7500 

= 75 

Total income tax = Income tax + Education cess + Secondary and higher education cess

= 7500 + 150 + 75 

= Rs 7725 

Mr. Khan will have to pay income tax of Rs 7725.

iii. Taxable income = Rs 2,30,000 age = 26 years 

The yearly income of Miss Varsha is less than Rs 2,50,000. 

Hence, Miss Varsha will not have to pay income tax.