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CS Executive · Tax Laws and Practice · Classification and Tax Incidence on Companies

Under Section 124(2) of the Income-tax Act, 2025, the 10% limit for employer contribution in sub-section (1)(b) is replaced by 14% in which situation?

The limit rises from 10% to 14% where the assessee's total income is chargeable to tax under section 202(1). Section 124(2) provides this substitution for clause (b) of sub-section (1), irrespective of employer size, minor deposits or other deductions.

  1. AWhere the assessee's total income is chargeable to tax under section 202(1)Correct
  2. BWhere the employer is a private company with more than 100 employees
  3. CWhere the assessee is a minor's parent making deposits under sub-section (4)
  4. DWhere the assessee has also claimed a deduction under section 123

Explanation

Sub-section (2) states that where total income is chargeable to tax under section 202(1), the 10% in clause (b) is read as 14%. Employer size, parental deposits for a minor and claims under section 123 have no bearing on this substitution.

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