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CA Intermediate · Taxation · Income Tax Liability - Computation and Optimisation

Arjun Mehta, a resident individual aged 35, has only salary income of ₹10,00,000 for tax year 2026-27 and does not opt out of the default tax regime. He has no other income. Ignoring any employer-specific allowances, what is his total tax liability including cess?

His liability is nil. After the ₹75,000 standard deduction his total income is ₹9,25,000, producing slab tax of ₹32,500. As a resident individual with income up to ₹12,00,000 he gets a rebate of up to ₹60,000, which fully offsets that tax.

  1. ANilCorrect
  2. B₹32,500
  3. C₹33,800
  4. D₹20,000

Explanation

Under the default regime the standard deduction of ₹75,000 gives total income of ₹9,25,000. Tax is 5% on ₹4,00,000 (₹20,000) plus 10% on ₹1,25,000 (₹12,500), totalling ₹32,500. Since total income is within ₹12,00,000, the rebate of up to ₹60,000 wipes out this tax, so liability is nil. ₹32,500 and ₹33,800 ignore the rebate.

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