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

Meera Iyer, a resident individual aged 35, has a total income of Rs 12,00,000 for tax year 2026-27. It is wholly salary income, computed after the standard deduction, with no special-rate income. She has not opted out of the default new tax regime. What is her total tax liability, including cess, for the year?

Her tax liability is nil. The slab tax on Rs 12,00,000 under the new regime is Rs 60,000, and the rebate available to a resident individual with total income up to Rs 12,00,000 is up to Rs 60,000. The tax therefore falls to zero, and cess on zero is also zero.

  1. ANilCorrect
  2. BRs 60,000
  3. CRs 62,400
  4. DRs 25,000

Explanation

Tax at the new regime slabs: 4-8 lakh at 5% gives Rs 20,000 and 8-12 lakh at 10% gives Rs 40,000, so Rs 60,000. A resident individual whose total income does not exceed Rs 12,00,000 gets a rebate of up to Rs 60,000, which wipes out the tax. Cess on nil tax is nil. Rs 62,400 ignores the rebate and just adds cess.

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