Skip to content

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

Ms. Kavya Rao, a resident individual under the default new tax regime, has a total income of ₹12,10,000 for tax year 2026-27, all of it normal income (salary, after standard deduction). Applying the rebate and marginal relief provisions, what is her tax including health and education cess?

Her tax is ₹10,400. Slab tax would be ₹61,500, but marginal relief restricts the tax to the excess of income over ₹12 lakh, which is ₹10,000. Adding 4% cess of ₹400 gives ₹10,400.

  1. A₹63,960
  2. B₹10,000
  3. C₹10,400Correct
  4. D₹61,500

Explanation

Slab tax on 12,10,000 = 20,000 + 40,000 + 15% of 10,000 (1,500) = 61,500. Rebate is not available as income exceeds ₹12 lakh, but marginal relief limits tax to the income above ₹12 lakh, i.e. ₹10,000. Cess at 4% adds ₹400, giving ₹10,400. ₹63,960 is the full tax with cess, ignoring 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