Income Tax planning [AY 2020-21]

Question 1
Compute tax liability in the following cases for the assessment year 2020-21.
(i) Mr. X (resident) has total income of `50,05,000
(ii) Mrs. X (resident) has total income of `101,00,000
(iii) Mr. X (non-resident), aged 60 years has total income of `108,00,000
(iv) Mrs. X (resident), aged 80 years has total income of `102,00,000
(v) Mr. X (resident) has total income of `501,00,000
(vi) Mr. X (resident) has total income of `505,00,000
Question 2
Compute tax liability in the following cases for the assessment year 2020-21.
(i) Mrs. X (resident) has total income of `4,95,000
(ii) Mrs. X (non-resident), aged 80 years has total income of `4,90,000

Question 3
Mr. X has incomes as given below:
 Income under the head salary 35,000
 Income under the head house property 45,000
 Income under the head business/profession 30,000
 Long term capital gains 1,10,000
 Long term capital gains u/s 112A 5,00,000
 Short term capital gains 25,000
 Short term capital gains u/s 111A 7,00,000
 Casual Income (winnings of lottery) 55,000
 Other income 3,000
Deductions allowed under section 80C to 80U 2,00,000
Compute his tax liability for the assessment year 2020-21.
(a) Presume he is resident
(b) Presume he is non-resident

Question 4
Mr. X, aged 68 years, has income under the head House Property `5,25,000, agricultural income of `1,00,000,
Long term capital gain amounting to `45,000 and casual income `35,000. He is eligible for deduction under
section 80C `20,000. Compute tax liability of Mr. X for assessment year 2020-21.

Question 5
Mr. X has dividend of ` 16 lakh from a domestic company and he has deduction under section 80C to 80U `
1,00,000, Calculate his tax liability.

Question 6
Mr. X was employed in ABC Ltd. getting basic pay `18,000 p.m. but it was increased to ` 24,000 p.m. w.e.f.
01-07-2019, dearness allowance `6,000 p.m. but it was increased to `9,000 p.m. w.e.f. 01-07-2019 (50% of
DA forms part of salary). The employee was retired on 10.01.2020 after serving the employer for 20 years and
10 months. The employer has paid him gratuity of `9,10,000 and the employee was covered under Payment of
Gratuity Act, 1972. Compute taxable portion of gratuity and also Tax Liability.

Question 7
Mr. X is employed in ABC Ltd. getting basic pay `22,000 p.m., dearness allowance `5,000 p.m. He was
retired on 21.12.2019. The employer has allowed him pension of `9,000 p.m. and the employee has requested
for commutation of 52% of his pension. The employer has allowed him such commutation on 01.02.2020 and
has paid `5,61,600. The employer has paid him gratuity of `6,95,000 and employee has completed service of
20 years and 11 months. Compute Tax Liability for the Assessment Year 2020-21.
Question 8
Mrs. X is employed in Central Government since 01.01.2019 and is getting basic pay of `1,00,000 p.m. She
has contributed `10,000 p.m. to the notified pension scheme of Central Government and employer has also
contributed an equal amount. She has paid premium of Jeevan Suraksha Policy `3,000 and invested `1,00,000
in NSC. Compute her tax liability for the assessment year 2020-21.

Question 9
Mr. X is employed in ABC Ltd. getting basic pay `20,000 p.m., dearness allowance `7,000 p.m. and half of
the dearness allowance forms the part of salary for the purpose of retirement benefits. The employer has paid
bonus @ `500 p.m., commission @ 1% on the sales turnover of `20 lakhs. The employer paid him house rent
allowance `6,000 p.m. Employee has paid rent `7,000 p.m. and was posted at Agra. Compute his Tax Liability
for the Assessment Year 2020-21.

Question 10
Mr. X furnishes you the following information: Raw material purchased `5,00,000. Manufacturing expenses
(revenue nature) `2,00,000. Sale price `18,00,000. Plant & machinery acquired `2,60,000. Depreciation is
allowed @ 15%.
He has made the investments as given below:
(i) Fixed deposit with State Bank for two years `5,000.
(ii) Investment in National Saving Certificates `5,000.
(iii) Deposit in Public Provident Fund Account in the name of major married independent son `5,000.
(iv) Deposit in Public Provident Fund Account in the name of minor son `5,000.
(v) Payment of premium for LIC policy in name of major married independent daughter on 15.09.2019
`5,000. (sum assured `1,00,000).
(vi) Payment of premium for LIC policy in name of major married independent son on 11.11.2019 `5,000.
(sum assured `20,000)
(vii) Investment in Home Loan Account Scheme of National Housing Bank `5,000 (Investment was made out
of past savings).
(viii) Investment in units of Mutual Funds notified under section 10(23D) `5,000. (Investment was made out
of current income exempt from income tax).
(ix) Investment in Equity Shares of Infrastructure Companies `5,000.
(x) Payment of Tuition fees of his son to a private coaching centre for coaching in taxation `5,000. Compute
his income and tax liability for assessment year 2020-21.

Question 11
Mr. X has income under the head salary `6,00,000 and income under the head house property `7,00,000 and he
has submitted information as given below:
(i) Paid premium of life policy `40,000 (sum assured `1,50,000) and policy has taken before 01.04.2012 in the
name of Mr. X
(ii) Paid premium of life policy `40,000 (sum assured `1,50,000) and policy has taken after 01.04.2012 in the
name of Mrs. X
(iii) Paid premium of life policy `40,000 (sum assured `1,50,000) and policy has taken before 01.04.2012 in
the name of father of Mr. X who is dependant on Mr. X.
(iv) Paid premium of life policy `40,000 (sum assured `1,50,000) and policy has taken before 01.04.2012 in
the name of son of Mr. X who is not dependant on Mr. X.
(v) He has donated `1,00,000 by cheque in rural development fund setup by government.
(vi) He has paid premium of Jeevan Suraksha Policy `10,000 by cheque in the name of Mrs. X.
(vii) He has paid `15,000 in cash in connection with preventive health checkup for his father.
(viii) He has donated `60,000 by cheque to a charitable institution notified under section 80G Compute his tax
liability assessment year 2020-21.