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CMA Intermediate · Direct and Indirect Taxation · Income which does not form part of Total Income

Meena, aged 40, a resident individual, has non-agricultural income of Rs 6,00,000 and net agricultural income of Rs 1,00,000 from land in India. Assume that she is taxed under the old-regime slabs (nil up to Rs 2,50,000; 5% from Rs 2,50,001 to Rs 5,00,000; 20% from Rs 5,00,001 to Rs 10,00,000), and that no rebate applies. What is her income-tax before cess, using partial integration?

Her tax before cess is Rs 47,500. Tax on non-agricultural plus agricultural income of Rs 7,00,000 is Rs 52,500. Tax on agricultural income plus the basic exemption of Rs 2,50,000, that is Rs 3,50,000, is Rs 5,000. The difference is Rs 47,500.

  1. ARs 32,500
  2. BRs 47,500Correct
  3. CRs 52,500
  4. DRs 57,500

Explanation

Step 1: tax on (6,00,000 + 1,00,000) = 7,00,000 is 12,500 + 40,000 = 52,500. Step 2: tax on (1,00,000 + 2,50,000) = 3,50,000 is 5,000. Tax payable = 52,500 − 5,000 = 47,500. Rs 32,500 ignores the agricultural income, and Rs 52,500 omits Step 2.

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