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

Vikram Rao, a resident individual aged 45, has total income of ₹50,50,000 for tax year 2026-27, all normal-rate income, and is taxed under the default new regime. Tax on ₹50,00,000 is ₹10,80,000 with no surcharge. Considering the 10% surcharge and marginal relief, his total tax liability including 4% cess is:

The liability is ₹11,75,200. Slab tax is ₹10,95,000 and the normal surcharge of ₹1,09,500 is cut by marginal relief so that tax with surcharge is only ₹11,30,000. Adding 4% cess of ₹45,200 gives ₹11,75,200.

  1. A₹11,75,200Correct
  2. B₹12,52,680
  3. C₹11,38,800
  4. D₹11,30,000

Explanation

Slab tax on ₹50,50,000 = ₹3,00,000 (up to ₹24,00,000) + 30% of ₹26,50,000 (₹7,95,000) = ₹10,95,000. Surcharge at 10% = ₹1,09,500, but tax plus surcharge cannot exceed ₹10,80,000 + ₹50,000 = ₹11,30,000, so surcharge becomes ₹35,000. Cess 4% of ₹11,30,000 = ₹45,200; total ₹11,75,200. ₹12,52,680 ignores marginal relief; ₹11,30,000 omits cess.

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