Skip to content

NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Concepts in Taxation

Mr. Rohan Mehta, a resident individual aged 35, has taxable income of Rs 12,00,000 under a hypothetical regime with these slabs: up to Rs 4,00,000 nil; Rs 4,00,001 to Rs 8,00,000 at 5%; Rs 8,00,001 to Rs 12,00,000 at 10%; above Rs 12,00,000 at 15%. Ignore rebate, surcharge and cess. What is his tax liability?

The tax liability is Rs 60,000. The first Rs 4 lakh is nil, the next Rs 4 lakh at 5% gives Rs 20,000, and the next Rs 4 lakh at 10% gives Rs 40,000. Slab rates apply only to each slice of income, not the whole amount.

  1. ARs 60,000Correct
  2. BRs 20,000
  3. CRs 40,000
  4. DRs 1,20,000

Explanation

Tax on 4,00,001-8,00,000 = 4,00,000 x 5% = Rs 20,000. Tax on 8,00,001-12,00,000 = 4,00,000 x 10% = Rs 40,000. Total = Rs 60,000. Rs 1,20,000 wrongly applies 10% to the entire income; Rs 20,000 or Rs 40,000 omit one slab.

Did you get it right without looking?

One question tells you little. A timed set on Concepts in Taxation shows your real accuracy, how long you take and where you lose marks.

Practise Concepts in TaxationFree diagnostic mock

More Concepts in Taxation questions