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

Meera Iyer, a resident individual aged 35 from Chennai, has gross salary of ₹9,75,000 for tax year 2026-27 and no other income or deductions. She does not opt out of the default (new) tax regime. Ignoring any employer-specific exemptions, what is her total tax liability including health and education cess?

Her tax liability is nil. After the ₹75,000 standard deduction her income is ₹9,00,000, slab tax is ₹30,000, and because income is within ₹12 lakh under the new regime the rebate covers the whole tax, leaving nothing to pay, not even cess.

  1. ANilCorrect
  2. B₹30,000
  3. C₹31,200
  4. D₹20,000

Explanation

Standard deduction of ₹75,000 gives total income of ₹9,00,000. Slab tax is 5% on ₹4,00,000 (₹20,000) plus 10% on ₹1,00,000 (₹10,000) = ₹30,000. Since total income does not exceed ₹12,00,000, the full rebate (up to ₹60,000) wipes out the tax. ₹31,200 results from adding cess and forgetting the rebate.

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