Skip to content

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

Meera Shah, a resident individual under the default (new) regime, has total income of ₹51,00,000 for tax year 2026-27, all taxable at normal slab rates. Slab tax on ₹51,00,000 is ₹11,10,000. Slab tax on ₹50,00,000 is ₹10,80,000, and surcharge at 10% applies above ₹50 lakh. Applying marginal relief on surcharge, what is her total tax liability including 4% cess?

Her liability is ₹12,27,200. Tax with full surcharge would be ₹12,21,000, but marginal relief limits tax plus surcharge to ₹10,80,000 plus the ₹1,00,000 excess income, i.e. ₹11,80,000. Adding 4% cess of ₹47,200 gives ₹12,27,200.

  1. A₹12,27,200Correct
  2. B₹12,69,840
  3. C₹11,54,400
  4. D₹11,80,000

Explanation

Tax plus surcharge at 10% = ₹11,10,000 + ₹1,11,000 = ₹12,21,000. Income above ₹50 lakh is ₹1,00,000, so tax plus surcharge cannot exceed ₹10,80,000 + ₹1,00,000 = ₹11,80,000. Cess at 4% on ₹11,80,000 is ₹47,200, giving ₹12,27,200. ₹12,69,840 ignores marginal relief.

Did you get it right without looking?

One question tells you little. A timed set on Income Tax Liability - Computation and Optimisation shows your real accuracy, how long you take and where you lose marks.

Practise Income Tax Liability - Computation and OptimisationFree diagnostic mock

More Income Tax Liability - Computation and Optimisation questions