ASSIGNMENT

On

TAX CALCULATION

By

JATIN AGGARWAL
Amity Business School, Noida

INTERNSHIP BATCH OF 5th JULY,2021

Under the Supervision of

Mr. Chinmay Dev Tiwari

Corporate sales manager at AIM INDIA
Q: Mr. B aged 62 years, has earned rupees 75,00,000 out of his business. His ex-wife
gifted him a car worth rupees 8 lakh. He spent a total of rupees 20 lakh during a family
trip. He won a lottery of 16 lakh rupees. Out of happiness he gifted his wife a diamond
set of rupees 450000. He bought a life insurance policy and paid a premium of 55000
annually. He paid tuition fee for his daughter for rupees 50000. He invested rupees 80000
in PPF. One of his existing life insurance policy got matured and he received a total of
rupees 35 lakh. Seeing his health conditions, the doctor advised him a medical test of
rupees 7000 following he bought a health insurance for rupees 28000. Calculate his
taxable income and tax liability.

SOLUTION
Interpretation of Data:
 It is given that, Mr. B is 62yeras old. Therefore, he would fall
under the senior Citizen income Slab.
 Income from winning of Lottery would fall under income from
other sources and therefore it is directly taxable @30% tax rate.
 Tuition fees, Contribution to PPF, and LIC premium would be
allowed as a deduction under 80C.
 Medical insurance contribution =28000 which is exceeding the
limit of 25000. Thus, 25000 would be an allowable deduction
under 80D
 Maximum medical test expenditure allowed as a deduction would
be 500.

Computation of Taxable Income:

Particular Amount Amount

Income from 75,00,000
business
Add: Income from
other sources
Gift received from 8,00,000
ex-wife

Lottery Winning 16,00,000 24,00,000

Total Income 99,00,000
Less: Deductions
80C:

LIC Premium 55,000

Tuition Fee 50,000

PPF Contribution 80,000

Total 1,85,000

The maximum
allowable deduction
limit 1,50,000 -150,000

80D:

Medical health
insurance 25,000

Medical Test 5,000 -30,000

NET TAXABLE
INCOME 97,20,000
 Computation of Taxable Income:
Particular Amount Amount
Taxable Income 97,20,000
Less: Income directly
taxed at 30% 16,00,000
Net taxable income
charged at normal tax
slab 81,20,000
Up to 300,000 nil

From 3,00,000-
5,00,000@5% 10,000

From 5,00,000-
10,00,000 @20% 1,00,000

Above 10,00,000
@30% 21,36,000
Add: Income from
speculation @30% 4,80,000
Total tax liability 27,26,000
Add: Surcharge @10% 2,72,600
Add: Cess@4%
(2726000+27600) *4% 1,19,994
TOTAL TAX
LIABILITY 31,18,544