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

Kabir Malhotra, a resident individual aged 45, has total income of ₹52,00,000 for tax year 2026-27, all from salary and business taxed at normal rates under the default (new) regime. Tax on ₹50,00,000 would be ₹10,80,000 before cess. Surcharge is 10% for income above ₹50 lakh up to ₹1 crore. What is his total tax liability including surcharge, marginal relief if applicable, and 4% cess?

The liability is ₹13,04,160. Slab tax is ₹11,40,000, surcharge at 10% adds ₹1,14,000 giving ₹12,54,000, and marginal relief does not apply because the extra tax of ₹1,74,000 is below the ₹2,00,000 excess income. Cess of 4% then brings it to ₹13,04,160.

  1. A₹13,04,160Correct
  2. B₹13,31,200
  3. C₹11,85,600
  4. D₹12,54,000

Explanation

Slab tax on ₹52 lakh: ₹3,00,000 on income up to ₹24 lakh plus 30% of ₹28 lakh (₹8,40,000) = ₹11,40,000. Surcharge 10% = ₹1,14,000, so tax with surcharge = ₹12,54,000. Increase over tax on ₹50 lakh is ₹1,74,000, which is less than the ₹2,00,000 income excess, so no marginal relief is needed. Cess at 4% on ₹12,54,000 is ₹50,160, total ₹13,04,160.

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