CA Intermediate · Taxation · Income Tax Liability - Computation and Optimisation
Shree Textiles Pvt Ltd, a domestic company, has opted for the concessional 22% tax regime for tax year 2026-27 and has total income of ₹40,00,000. Surcharge for such a company is a flat 10% and cess is 4%. What is its total tax liability?
The liability is ₹10,06,720. Tax at 22% is ₹8,80,000, 10% surcharge adds ₹88,000, and 4% cess on ₹9,68,000 adds ₹38,720. The concessional regime fixes the surcharge at 10%, so higher surcharge rates do not apply.
- A₹10,06,720Correct
- B₹9,68,000
- C₹13,72,800
- D₹10,52,480
Explanation
Basic tax is 22% of ₹40,00,000 = ₹8,80,000. Surcharge at 10% is ₹88,000, so tax plus surcharge is ₹9,68,000. Cess at 4% is ₹38,720, giving ₹10,06,720. ₹9,68,000 omits cess; ₹10,52,480 wrongly uses 15% surcharge; ₹13,72,800 wrongly applies the 30% rate.
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