Chapter 1 - Computation of Tax Liability (Feb 2023 Batch)

CHAPTER 1 COMPUTATION OF TAX LIABILITY 1.
1 Computation Of Tax Liability

BASIC CONCEPTS OF INCOME TAX
++ The power to levy income tax is available with the Central Government vide Entry 82 of the Union List of the
Constitutional Seventh Schedule to the Constitution of India.
Provisions
++ Entry 82 reads as “Taxes on income other than agricultural income”.
Sources Of An understanding of the income tax law requires a combined study of the following:
Income Tax 1) The Income Tax Act, 1961: The provisions of income tax are contained in the Income Tax Act, 1961 which
Law extends to the whole of India. The Income Tax Act contains the provisions for determination of taxable
income, determination of tax liability, procedure for assessment, appeals, penalties and prosecutions.
2) Annual Finance Act: The Finance Minister of India annually presents the Budget (ie, the Finance Bill) for
the next financial year before the Parliament of India. The Finance Bill ultimately becomes the Finance Act
after being passed by both the Houses of the Parliament and after receiving the assent of the President of
India. The Annual Finance Act contains the tax rates in respect of each assessment year.
3) The Income Tax Rules, 1962: Rules are framed by the Central Government for carrying out the provisions of
the Act. Rules cannot override the provisions contained in the Act.
4) Notifications: Notifications are issued by the Central Government or the Central Board of Direct Taxes
(‘CBDT’) to deal with any other matter which the Central Government may think would facilitate the
governance of income tax in India.
5) Circulars & Clarifications: The CBDT has been issuing certain circulars and clarifications from time to time,
which have to be followed and applied by the income tax authorities. A circular or clarification is issued by
the CBDT to serve as a guideline for the officials to implement the provisions of the income tax law.
6) Judgements Given By Courts: It is not possible for the lawmakers to conceive and provide for all
possible issues that may arise in the implementation of any Act. Hence, the judiciary hears the disputes
between the assessees and the Department and gives decisions on various issues. The Supreme Court is
the Apex Court of the country and the law laid down by the Supreme Court becomes the law of the land.
The decisions given by various High Courts apply in the respective States in which such High Courts have
jurisdiction.
DEFINITIONS/MEANING OF VARIOUS TERMS

General Meaning: Assessee means a person by whom any tax or any other sum is payable under the Income
Tax Act, 1961. (Any other sum would normally include interest, penalty, fines, etc)
Specific Inclusions: The followings persons have also been specifically included under the definition of ‘assessee’:
++ Every person in respect of whom any proceeding has been taken under the Income Tax Act, 1961 for the
assessment of:
¡¡ his income; or
Assessee
¡¡ the income of any other person in respect of which he is assessable; or
{Section 2(7)}
¡¡ the loss sustained by him or by such other person; or
¡¡ the amount of refund due to him or such other person.
++ Every person who is deemed to be an assessee under the Income Tax Act, 1961. Example: Representative
assessee, legal representative, executor, administrator, etc
++ Every person who is deemed to be an assessee in default under any provision of the Income Tax Act.
Example: Failure of a person to deduct TDS/collect TCS.
Person includes:
i. an individual (ie, a natural human being);
ii. a Hindu Undivided Family (‘HUF’) (The meaning of HUF has not been given under the tax laws. As per the
Person Hindu law, it means a family which consists of all persons lineally descended from a common ancestor
{Section 2(31)} including their wives and daughters. Married daughters are no longer treated as members of HUF after they
get married in other families);
iii. a company;
iv. a partnership firm, including limited liability partnership firm;
A BOOK BY CA VIJENDER AGGARWAL

SRCC, Delhi University
All India Topper At CA-Inter & CA-Final
CHAPTER 1 COMPUTATION OF TAX LIABILITY 1. 2
v. an association of persons (AOP), whether incorporated or not (an AOP refers to a situation where two or
more persons join hands to carry on any business);
vi. a body of individuals (BOI), whether incorporated or not (a BOI is similar to AOP; however all the participants
of BOI are only individuals whereas in case of AOP, one or more participant is a non-individual);
vii. a local authority (ie, panchayat, municipality, cantonment board, etc); and
viii. every artificial juridical person not covered above (artificial juridical persons are entities which are not
natural persons but are separate entities in the eyes of law. Though they may not be sued directly in a court
of law, but they can be sued through persons managing them. Examples are universities, ICAI, ICSI, etc)
Assessment ++ Assessment Year means the period of 12 months commencing on the first day of April every year.
Year ++ Previous Year means the financial year immediately preceding the Assessment Year.
{Section 2(9)}
For May 2023 & November 2023 Examination, Previous Year 2022-23 (ie, Assessment Year 2023-24) is applicable.
Previous Year Note 1: Financial Year means a year starting on 1st April and ending on 31st March.
{Section 3} Note 2: Income tax is payable on the income earned during the previous year and it is assessed in the
immediately succeeding financial year which is called assessment year. Therefore, the income earned during
PY 2022-23 (ie, April 1, 2022 to March 31, 2023) will be assessed or charged to tax in AY 2023-24.
Note 3: All assessees are required to follow a uniform financial year as their previous year (ie, each block of
12 months starting from 1st April and ending on next 31st March shall be treated as one previous year).
Cases Where Income Of Previous Year Is Assessed In The Same Year:
As a normal rule, the income earned during any previous year is assessed or charged to tax in the succeeding assessment year.
However, in the following circumstances, the income is taxed in the same year in which it is earned. Therefore, the assessment
year and the previous year in these exceptional circumstances will be the same. These exceptions have been provided to safeguard
the collection of taxes in respect of those assessees who may not be traceable later on. The exceptions are:
1) Shipping Business Of Non-Residents (Section 172):
A non-resident who is carrying on a shipping business and earns income from carrying passengers/ livestock/goods from a port
in India, will be charged to income-tax before the ship is allowed to leave the Indian port. Therefore, in this case, the tax is
chargeable on the income in the same year in which it is earned.
2) Assessment Of Persons Leaving India (Section 174):
When it appears to the Assessing Officer that any individual may leave India during the current year or shortly after its expiry,
and such individual has no present intention of returning to India, the total income of such individual for the current year shall
be charged to tax in the current year itself.
Example: R wishes to migrate to USA permanently and plans to leave India on 15.11.2022. He submitted his return for
AY 2022-23 on 31.07.2022, the assessment of which is still pending. In this case, the Assessing Officer will make two
assessments:
(a) regular assessment for AY 2022-23; and
(b) assessment of income of the period 1.4.2022 to 15.11.2022 (on either actual basis or on estimated basis) during
AY 2022-23 itself.
3) Assessment Of AOP Or BOI Or Artificial Juridical Person Formed For A Particular Event Or Purpose (Section 174A):
Where it appears to the Assessing Officer that any AOP or BOI or an artificial juridical person formed/established/incorporated
for a particular event or purpose is likely to be dissolved
++ in the previous year in which such AOP or BOI or artificial juridical person was formed or established or incorporated; or
++ immediately after such previous year,
the total income of such AOP or BOI or artificial juridical person for the current previous year shall be chargeable to tax in the
same previous year itself.
Example: If an AOP is formed during PY 2022-23 and it is going to be dissolved during PY 2022-23 itself, then the Assessing
Officer can assess the income of the AOP for PY 2022-23 during AY 2022-23 itself. Therefore, in this case, the assessment
year is same as the previous year.
4) Assessment Of Persons Likely To Transfer Property To Avoid Tax (Section 175):
If it appears to the Assessing Officer during any current previous year, that any person is likely to charge, sell, transfer, dispose
of or otherwise part with any of his assets with a view to avoiding any payment of his tax liability, then the total income of
such person shall be chargeable to tax in the same assessment year.
5) Discontinued Business (Section 176):
Where any business or profession is discontinued during any previous year, the income from the commencement of the
previous year till the date of such discontinuance may, at the discretion of the Assessing Officer, be charged to tax during
the year of discontinuance.
Example: If a business is discontinued on 16.07.2022, then the income for the period from 01.04.2022 to 16.07.2022 may be
assessed during AY 2022-23 itself.

STATEMENT SHOWING COMPUTATION OF ‘TOTAL INCOME’
++ Income under the head
‘Salary’ XXXX
‘House Property’ XXXX
‘Business/Profession’ XXXX
‘Capital Gains’ XXXX
‘Other Sources’ XXXX
GROSS TOTAL INCOME XXXX
Less: Deductions u/s 80C – 80U (XXXX)
TOTAL INCOME XXXX
(To Be Rounded Off In Nearest Multiple Of Rs 10 As Per Sec 288A)
COMPUTATION OF GROSS TOTAL INCOME & TOTAL INCOME

Under the Income Tax Act, 1961, income is computed under five different heads which have been explained below. Gross Total
Income (‘GTI’) is the aggregate of the income falling under the following five heads:
Heads Of Income Legislative Provisions
++ Salary is a periodic payment made by an employer to an employee as per the terms specified in the
employment contract signed by both the parties.
Salary ++ Income is taxable u/h ‘salary’ only where there exists an employer-employee relationship b/w the payer
(Sections 15-17) and the payee.
++ Salary income is treated as normal income which is taxable at the normal rates.
House Property ++ Income from letting out of any house property is taxable u/h ‘house property’.
(Sections 22- 27) ++ Income from house property is treated as normal income which is taxable at the normal rates.
Business/ ++ Where a person carries on any business/profession, such person is required to compute his income from
Profession such business/profession by preparing a Profit & Loss A/c.
(Sections 28-44) ++ Expenses incurred in relation to such business/profession shall be debited to the Profit & Loss A/c in the
manner and to the extent specified under the Income Tax Act, 1961.
++ Income from business/profession is treated as normal income which is taxable at the normal rates.
Capital Gains ++ Income arising on transfer of any capital asset is commonly known as ‘capital gains’.
(Sections 45-55A) ++ Income from transfer of short-term capital asset is known as ‘short-term capital gains’ and income
from transfer of long-term capital asset is known as ‘long-term capital gains’.
++ LTCG (other than Section 112A) are taxable @ 20% in case of all assessees as per Section 112. However,
LTCG u/s 112A are taxable @ 10% in case of all assessees. (LTCG u/s 112A covers situations where
long-term equity shares or long-term units of equity oriented mutual fund have been sold and Securities
Transaction Tax has been paid on their sale)
++ STCG (other than Section 111A) are treated as normal income and taxable at the normal rates. However,
STCG u/s 111A are taxable @ 15% in case of all assessees. (STCG u/s 111A covers situations where
short-term equity shares or short-term units of equity oriented mutual fund have been sold and Securities
Transaction Tax has been paid on their sale)
Other Sources ++ If any income does not get covered under the first four heads, such income would be taxable u/h ‘other
(Sections 56-59) sources’. Example: Gift, dividends, interest, casual income, etc
++ Income u/h other sources (other than casual income) is treated as normal income which is taxable at
the normal rates. However, casual income is taxable @ 30% in case of all assessees.
++ Meaning Of Casual Income: Income in the nature of winnings from lotteries, crossword puzzles, races
including horse races, card games and other games of any sort, gambling or betting of any form or
nature is referred to as casual income.
++ Certain concessions are allowed to be deducted from Gross Total Income u/s 80C–80U to arrive at the Total
Income. Deductions u/s 80C–80U are also commonly referred to as ‘Deductions under Chapter VI-A’.
++ Deductions are never allowed from income taxable at special rates. In other words, deductions u/s 80C–80U
are not allowed from LTCG, STCG u/s 111A and casual income.
++ Example: Mr X has earned PGBP income of Rs 1,00,000, LTCG of Rs 2,00,000, STCG u/s 111A of Rs 1,50,000
and casual income of Rs 3,00,000. Eligible deductions u/s 80C–80U come out to Rs 2,70,000. Mr X’s gross
Deductions
total income would come out to Rs 7,50,000 out of which normal income is Rs 1,00,000 and special income is
u/s 80C-80U Rs 6,50,000. In this case, deduction of only Rs 1,00,000 would be available and the balance Rs 1,70,000 cannot be
deducted because deductions are never available from income taxable at special rates.
++ Example: Mr X has earned PGBP income of Rs 1,00,000, LTCG of Rs 2,00,000, STCG of Rs 1,50,000 and casual
income of Rs 3,00,000. Eligible deductions u/s 80C–80U come out to Rs 2,20,000. Mr X’s gross total income
would come out to Rs 7,50,000 out of which normal income is Rs 2,50,000 and special income is Rs 5,00,000. In
this case, the entire amount of Rs 2,20,000 can be deducted from GTI.
Deductions u/s 80C – 80U are deducted from the Gross Total Income and the resultant figure so obtained is known
as Total Income.
Section 288A - Rounding-Off Of Total Income
The total income shall be rounded off to the nearest multiple of Rs 10. For this purpose, any paise shall be ignored
Total Income
and if the last digit is 5 or more, such amount will be rounded off to the higher multiple. If the last digit is less
than 5, such amount will be rounded off to the lower multiple.
Example: Total income of Rs 1,00,005.60 shall be rounded off to Rs 1,00,010 whereas total income of Rs 1,00,004.99
shall be rounded off to Rs 1,00,000.

COMPUTATION OF TAX LIABILITY OF INDIVIDUALS

++ Special Incomes: Taxable at special rates.
Type Of Income Tax Rates
Long Term Capital Gains Tax @ 10% u/s 112A; Tax @ 20% u/s 112
STCG u/s 111A Tax @ 15% u/s 111A
Casual Income Tax @ 30% u/s 115BB
++ Normal Income: Taxable at slab rates.
Category 1: Normal Income Tax Rates
++ Non-residents (any age)
First Rs 2,50,000 Nil
++ Residents below the age of
60 years throughout the Next Rs 2,50,000 5% on amount in excess of Rs 2,50,000
relevant previous year Next Rs 5,00,000 20% on amount in excess of Rs 5,00,000
Balance Income In Excess Of Rs 10,00,000 30% on amount in excess of Rs 10,00,000
Category 2 (Senior Citizens): Normal Income Tax Rates

Residents who are of the age of
60 years or more but below the age First Rs 3,00,000 Nil
of 80 years at any time during the Next Rs 2,00,000 5% on amount in excess of Rs 3,00,000
relevant previous year Next Rs 5,00,000 20% on amount in excess of Rs 5,00,000
Category 3 (Very Senior Citizens): Normal Income Tax Rates

Residents who are of the age of
80 years or more at any time First Rs 5,00,000 Nil
during the relevant previous year Next Rs 5,00,000 20% on amount in excess of Rs 5,00,000
OPTION TO PAY TAX ON NORMAL INCOME AT CONCESSIONAL SLAB RATES {Sec 115BAC}:
Section 115BAC, inserted vide the Finance Act, 2020, provides Individuals & HUFs an option to pay tax in respect of their normal
income at following concessional rates, if they do not avail certain exemptions/deductions like Leave Travel Concession, standard
deduction u/h salary, interest on housing loan on self-occupied property, specified deductions under Chapter VI-A, etc:
Normal Income Tax Rates
Next Rs 2,50,000 (Rs 2.5L – Rs 5L) 5% on amount in excess of Rs 2,50,000
Next Rs 2,50,000 (Rs 5L – Rs 7.5L) 10% on amount in excess of Rs 5,00,000
Next Rs 2,50,000 (Rs 10L – Rs 12.5L) 20% on amount in excess of Rs 10,00,000
Note: Section 115BAC has been taken up for detailed discussion under ‘Chapter 17 – Miscellaneous Topics’.
CLARIFICATION REGARDING ATTAINING PRESCRIBED AGE OF 60 YEARS/80 YEARS WHERE DATE OF BIRTH OF
ASSESSEE FALLS ON 1ST APRIL
++ An individual who is resident in India and of the age of 60 years or more (senior citizen) and 80 years or more (very senior
citizen) is eligible for a higher basic exemption limit of Rs 3,00,000 and Rs 5,00,000, respectively.
++ Vide Circular No 28/2016, dated 27th July 2016, the CBDT has clarified that a person born on 1st April would be considered to
have attained a particular age on 31st March, the day preceding the anniversary of his birthday. In particular, the question of
attainment of age of eligibility for being considered a senior/very senior citizen would be decided on the basis of above criteria.
++ Therefore, a resident individual whose 60th birthday falls on 1st April 2023, would be treated as having attained the age of 60
years in PY 2022-23 and thus would be eligible for higher basic exemption limit of Rs 3,00,000. Likewise, a resident individual
whose 80th birthday falls on 1st April 2023, would be treated as having attained the age of 80 years in PY 2022-23 and thus
would be eligible for higher basic exemption limit of Rs 5,00,000.

Surcharge Rates Applicable In Case Of Assessees Taxable At Slab Rates {Individuals/HUF/AOP/BOI/AJP}
– Changes Made Through The Taxation Laws (Amendment) Act, 2019 & Budgets 2020/2022:
++ Vide the Budget 2019 introduced on 5th July 2019, the Finance Minister increased the rate of surcharge sharply for those
Individuals/HUF/AOP/BOI/AJP who fall in higher income bracket. Two new rates of surcharge were introduced, ie 25% and 37%
where income of said persons exceeds Rs 2 cr and Rs 5 cr, respectively.
++ Though the Government had enhanced the rate of surcharge with an intention to tax the high net-worth individuals but this
decision severely impacted the flow of investments in stock-market. To encourage investment in the capital market, the
Taxation Laws (Amendment) Ordinance, 2019 (introduced in September 2019) withdrew the enhanced rates of surcharge (25%
& 37%) on capital gains arising u/s 111A and 112A. Thus, the enhanced rate of surcharge (ie, 25% or 37%) shall not be levied
on Individuals/HUF/AOP/BOI/AJP in respect of tax payable on income arising from transfer of listed equity shares or units of
equity oriented mutual fund (whether long-term or short-term).
++ In November 2019, the Ministry of Finance issued a press release stating that the Union Cabinet has approved the proposal for
introducing the Taxation Laws (Amendment) Bill, 2019 in order to replace the Taxation Laws (Amendment) Ordinance, 2019. The
Taxation Laws (Amendment) Bill, 2019 has now been passed by both Houses of the Parliament. After receiving the asset of the
President on 11th December 2019, the Taxation Laws (Amendment) Bill, 2019 has now become the Taxation Laws (Amendment)
Act, 2019.
++ Till PY 2019-20, the provisions of Dividend Distribution Tax (DDT) were applicable wherein a domestic company was liable to pay
DDT on the distribution of dividends to the shareholders and the resultant dividend was exempt in the hands of the recipient
shareholders. With the introduction of Budget 2020, the concept of DDT was done away with due to which dividend income has
become taxable in the hands of the shareholders at the applicable rate and the domestic company is not required to pay any
DDT. The Finance Act, 2020 further clearly stated that the surcharge rate in respect of dividend income shall not exceed 15%.
++ The Finance Act, 2022 has further granted a relaxation by providing that the surcharge rate in respect of LTCG covered u/s 112
shall not exceed 15%. Resultantly, surcharge rate in respect of all types of LTCG (Section 112 or Section 112A) has now been
capped at maximum 15%.
++ Surcharge Rates Applicable In Case Of Individuals/HUF/AOP/BOI/AJP:
Range Of Total Income
Types Of Income More Than More Than More Than
More Than
Upto Rs 50L Rs 50L But Upto Rs 1 Cr But Upto Rs 2 Cr But
Rs 5 Cr
Rs 1 Cr Rs 2 Cr Upto Rs 5 Cr
++ STCG u/s 111A;
++ LTCG (Section 112 As Well As
Nil 10% 15% 15% 15%
Section 112A); and
++ Dividend Income.
Unexplained Income u/s 115BBE 25% 25% 25% 25% 25%
Any Other Income Nil 10% 15% 25% 37%
++ Manner Of Computation Of Surcharge In Case Of Individuals/HUF/AOP/BOI/AJP:
Example
Rate Of Surcharge
S.No. Particulars Applicable Rate
On Income Tax Components Of Total Income
Of Surcharge
(i) Total Income (Including Dividend 10% ++ Dividend Income – Rs 10 lakhs Surcharge would be
Income, STCG u/s 111A, LTCG u/s 112 ++ STCG u/s 111A - Rs 20 lakhs levied @ 10% on
& LTCG u/s 112A) Exceeds Rs 50L income tax computed
++ LTCG u/s 112 – Rs 15 lakhs
But Does Not Exceed Rs 1 Cr on total income of
++ LTCG u/s 112A - Rs 20 lakhs Rs 90 lakhs
++ Other Incomes - Rs 25 lakhs
Total Income – Rs 90 lakhs
(ii) Total Income (Including Dividend 15% ++ Dividend Income – Rs 10 lakhs Surcharge would be
Income, STCG u/s 111A, LTCG u/s 112 ++ STCG u/s 111A - Rs 40 lakhs levied @ 15% on
& LTCG u/s 112A) Exceeds Rs 1 Cr income tax computed
But Does Not Exceed Rs 2 Cr on total income of
++ LTCG u/s 112A - Rs 35 lakhs Rs 1.90 crore
++ Other Incomes - Rs 50 lakhs
Total Income – Rs 1.90 crore
APPLICABILITY OF SURCHARGE AND MARGINAL RELIEF

(Uniformly Applicable In Case Of Both Residents & Non-Residents)
++ The Finance Act, 2019 introduced in July 2019 has introduced a multi-tier surcharge for individuals wef PY 2019-20
(ie, AY 2020-21). The revised rates of surcharge have been listed below:
Level Of Total Income Rate Of Surcharge
Upto Rs 50L Not Applicable
More Than Rs 50L But Upto Rs 1 Crore 10%
More Than Rs 1 Crore But Upto Rs 2 Crores 15%
More Than Rs 2 Crores But Upto Rs 5 Crores 25%
More Than Rs 5 Crores 37%
Note: In respect of following incomes, as discussed on the adjacent page, surcharge rate has been capped at maximum 15%:
¡¡ STCG u/s 111A;
¡¡ LTCG (Section 112 as well as Section 112A); and
¡¡ Dividend Income.
++ Surcharge shall be calculated on the total tax payable before Health & Education Cess.
++ Marginal Relief: Where the total income of an individual marginally exceeds Rs 50 lakhs/Rs 1 cr/ Rs 2 cr/Rs 5 cr, surcharge is
calculated on the entire amount of income tax due to which increase in tax amount may be more than the increase in income.
Such defect is rectified by allowing the assessee the benefit of marginal relief. The amount of marginal relief is calculated as
follows:
¡¡Case 1 - Total Income Of Individual Exceeds Rs 50 Lakhs But Does Not exceed Rs 1 Crore:
Particulars (Rs)
Tax + Surcharge of 10% (Total Income > 50 lakhs) XXXX
Less: Tax on total income of Rs 50 lakhs (XXXX)
Increase in tax due to total income becoming more than Rs 50 lakhs – (A) XXXX
Increase in income beyond Rs 50 lakhs – (B) XXXX
Marginal Relief – [(A) minus (B)] {Marginal relief is always positive} XXXX
¡¡ Case 2 – Total Income Of Individual Exceeds Rs 1 Crore But Does Not Exceed Rs 2 Crore:
Particulars (Rs)
Tax + Surcharge of 15% (Total Income > 1 crore) XXXX
Less: Tax + Surcharge of 10% on total income of Rs 1 crore (XXXX)
Increase in tax due to total income becoming more than Rs 1 crore – (C) XXXX
Increase in income beyond Rs 1 crore – (D) XXXX
Marginal Relief – [(C) minus (D)] {Marginal relief is always positive} XXXX
¡¡ Case 3 – Total Income Of Individual Exceeds Rs 2 Crore But Does Not Exceed Rs 5 Crore:
Particulars (Rs)
Tax + Surcharge of 25% (Total Income > 2 crores) XXXX
Less: Tax + Surcharge of 15% on total income of Rs 2 crores (XXXX)
Increase in tax due to total income becoming more than Rs 2 crores – (E) XXXX
Increase in income beyond Rs 2 crore – (F) XXXX
Marginal Relief – [(E) minus (F)] {Marginal relief is always positive} XXXX
¡¡ Case 4 – Total Income Of Individual Exceeds Rs 5 Crore:
Particulars (Rs)
Tax + Surcharge of 37% (Total Income > 5 crores) XXXX
Less: Tax + Surcharge of 25% on total income of Rs 5 crores (XXXX)
Increase in tax due to total income becoming more than Rs 5 crores – (G) XXXX
Increase in income beyond Rs 5 crore – (H) XXXX
Marginal Relief – [(G) minus (H)] {Marginal relief is always positive} XXXX

(iii) Total Income (Excluding 25% ++ Dividend Income – Rs 51 lakhs ++ Surcharge would be levied @ 15%
Dividend Income, STCG u/s ++ STCG u/s 111A - Rs 44 lakhs on income tax on:
111A, LTCG u/s 112 & LTCG ¡¡ Dividend income of Rs 51 lakhs;
u/s 112A) Exceeds Rs 2 Cr ¡¡ STCG u/s 111A of Rs 44 lakhs;
But Does Not Exceed Rs 5 Cr ++ LTCG u/s 112A - Rs 55 lakhs
¡¡ LTCG u/s 112 of Rs 42 lakhs; and
++ Other Incomes - Rs 3 crore
Surcharge Rate On Income ¡¡ LTCG u/s 112A of Rs 55 lakhs.
15% Total Income – Rs 4.92 crore
Tax Payable On Portion Of ++ Surcharge @ 25% would be levied
Dividend Income & Capital on income tax computed on other
Gains Chargeable To Tax As incomes of Rs 3 crore included in
Per Section 111A, Section 112 total income.
& Section 112A
(iv) Total Income (Excluding 37% ++ Dividend Income – Rs 60 lakhs ++ Surcharge would be levied @ 15%
Dividend Income, STCG u/s ++ STCG u/s 111A - Rs 50 lakhs on income tax on:
111A, LTCG u/s 112 & LTCG ¡¡ Dividend income of Rs 60 lakhs;
u/s 112A) Exceeds Rs 5 Cr ¡¡ STCG u/s 111A of Rs 50 lakhs;
++ LTCG u/s 112A - Rs 65 lakhs
Surcharge Rate On Income ¡¡ LTCG u/s 112 of Rs 42 lakhs; and
15% ++ Other Incomes - Rs 6 crore
Tax Payable On Portion Of ¡¡ LTCG u/s 112A of Rs 65 lakhs.
Dividend Income & Capital Total Income – Rs 8.17 crore
++ Surcharge @ 37% would be levied
Gains Chargeable To Tax As on income tax computed on other
Per Section 111A, Section 112 incomes of Rs 6 crore included in
& Section 112A total income.
(v) Total Income (Including 15% ++ Dividend Income – Rs 55 lakhs Surcharge would be levied @ 15% on
Dividend Income, STCG u/s ++ STCG u/s 111A - Rs 60 lakhs income tax computed on total income of
111A, LTCG u/s 112 & LTCG Rs 3.22 crore
u/s 112A) Exceeds Rs 2 Cr
In Cases Not Covered Under ++ LTCG u/s 112A - Rs 55 lakhs
(iii) & (iv) Above ++ Other Incomes - Rs 1.10 crore
Total Income – Rs 3.22 crore
SPECIAL BENEFITS FOR ONLY RESIDENT INDIVIDUALS

(Not Available In Case Of Non-Residents)
1) DEFICIENCY IN NORMAL INCOME:
++ This benefit is available to a resident individual provided his normal income is below the exemption limit (Rs 2,50,000/
Rs 3,00,000/Rs 5,00,000).
++ The difference between the normal income and the exemption limit is referred to as deficiency. {Deficiency = Applicable
Slab Exemption (-) Normal Income After Deductions u/s 80C-80U}
++ Such deficiency is allowed to be set-off against the special incomes and tax is charged @ 20%/15%/10% (as the case may
be) on the balance income remaining after adjustment of deficiency. Deficiency needs to be adjusted in the following order:
¡¡ Firstly against LTCG u/s 112
¡¡ Secondly against STCG u/s 111A
¡¡ Balance against LTCG u/s 112A
¡¡ No deficiency can be adjusted against Casual Income
++ Example: A resident individual, aged 56 years, has LTCG of Rs 1,00,000, STCG u/s 111A of Rs 2,00,000 and normal income of
Rs 80,000. In this case, there is a deficiency of Rs 1,70,000 (Rs 2,50,000 – Rs 80,000). Such deficiency shall be first adjusted
towards LTCG and the balance Rs 70,000 shall be adjusted towards STCG u/s 111A. Tax @ 15% on STCG u/s 111A shall be
calculated on Rs 1,30,000 only.
2) REBATE OF Rs 12,500 u/s 87A:
++ A rebate is available to a resident individual u/s 87A where his/her total income does not exceed Rs 5,00,000 (ie, total
income is Rs 5,00,000 or less).
++ Rebate is available from tax on all kinds of income including casual income. Amount of rebate is deducted from the
tax payable before Health & Education Cess. In other words, rebate is first allowed and then Health & Education Cess is
calculated.
++ The amount of rebate is lower of the following:
¡¡ 100% of the tax payable before Health & Education Cess; or
¡¡ Rs 12,500.
Section 288B - ROUNDING-OFF OF TAX LIABILITY

(Uniformly Applicable In Case Of Both Residents & Non-Residents)
The final tax liability shall be rounded off to the nearest multiple of Rs 10. For this purpose, any paise shall be ignored and if the
last digit is 5 or more, such amount will be rounded off to the higher multiple. If the last digit is less than 5, such amount will be
rounded off to the lower multiple.
Example: Income tax liability of Rs 50,005.60 shall be rounded off to Rs 50,010 whereas Rs 50,004.99 shall be rounded off to
Rs 50,000.
STATEMENT SHOWING COMPUTATION OF ‘TAX LIABILITY OF INDIVIDUALS’

++ Tax On Special Income At Special Rates After Adjusting Deficiency, If Any XXXX
(LTCG @ 20% u/s 112, LTCG u/s 112A @ 10%, STCG u/s 111A @ 15%, Casual Income @ 30% u/s 115BB)
++ Tax On Normal Income (as per the applicable slab rates) XXXX
Total Tax (Before Surcharge/Rebate/Cess) XXXX
Add: Surcharge (10%, 15%, 25% or 37%, as the case maybe) XXXX
Less: Marginal Relief (if any) (XXXX)
Less: Rebate u/s 87A (only for residents if total income does not exceed Rs 5,00,000) (XXXX)
Tax Liability Before Cess XXXX
Add: Health & Education Cess @ 4% XXXX
Tax Liability
XXXX
(To Be Rounded Off In Nearest Multiple Of Rs 10 As Per Sec 288B)

COMPUTATION OF TAX LIABILITY OF HUF

++ Normal Income: Taxable at slab rates (Basic slab of Rs 2,50,000 is applicable; the age of Karta is irrelevant for the purposes
of determining the applicable slab).
Next Rs 2,50,000 5% on amount in excess of Rs 2,50,000
++ Surcharge & Marginal Relief: The provisions relating to applicability of surcharge (and its rates) and calculation of marginal
relief shall apply to a HUF in the same manner as they apply to an individual.
OTHER POINTS:
++ The benefit of adjustment of deficiency in normal income is allowed to a resident HUF in the same manner as available to
a resident individual.
++ The benefit of rebate u/s 87A is not available to a HUF.
++ The provisions relating to Health & Education Cess and rounding-off of tax liability u/s 288B shall apply to a HUF in the
same manner as they apply to an individual.
++ Profits of HUF distributed amongst its members are exempt in their hands u/s 10(2).
COMPUTATION OF TAX LIABILITY OF PARTNERSHIP FIRM (INCLUDING LLP FIRM)

++ Normal Income: Taxable at flat rate of 30%.
OTHER POINTS:
++ The benefit of adjustment of deficiency in normal income is not available to a partnership firm.
++ The benefit of rebate u/s 87A is not available to a partnership firm.
++ Where the total income of a partnership firm exceeds Rs 1 crore, a surcharge of 12% shall apply. Marginal relief to be
checked in order to ensure that increase in tax should in no case be more than increase in income.
++ The provisions relating to Health & Education Cess and rounding-off of tax liability u/s 288B shall apply to a partnership
firm in the same manner as they apply to an individual.
++ Profits of a partnership firm distributed to the partners are exempt in their hands u/s 10(2A).

COMPUTATION OF TAX LIABILITY OF COMPANIES

++ Normal Income: Taxable at flat rates.
¡¡ In case of domestic companies, flat rate of 30% applies (Concessional rate of 25% shall apply if the gross turnover of
domestic company during PY 2020-21 does not exceed Rs 400 crores).
¡¡ In case of foreign companies, flat rate of 40% applies (a foreign company is a company other than a domestic company)
MEANING OF DOMESTIC COMPANY:

++ An Indian company (ie, a company registered in India) is always a domestic company.
++ A foreign company (ie, a company registered outside India) is treated as a domestic company if all the following three
conditions are satisfied:
¡¡ The register of shareholders is maintained at its principal place of business in India;
¡¡ The Annual General Meeting of the foreign company is held in India; and
¡¡ Necessary arrangements have been made for declaration and payment of dividend within India.
++ Surcharge:
Total Income Domestic Company Foreign Company
Exceeds Rs 1 Crore; Surcharge of 7% on the amount of tax Surcharge of 2% on the amount of tax
Does Not Exceed Rs 10 Crores payable before H&EC payable before H&EC
Surcharge of 12% on the amount of tax Surcharge of 5% on the amount of tax
Exceeds Rs 10 Crores
payable before H&EC payable before H&EC
++ Marginal Relief:
¡¡Case 1: Total Income Of Individual Exceeds Rs 1 Crore But Does Not exceed Rs 10 Crore:
Particulars (Rs)
Tax + Surcharge of 7% or 2% (Total Income > 1 crore) XXXX
(Surcharge of 7% in case of domestic companies & 2% in case of foreign companies)
Less: Tax on income of Rs 1 crore (XXXX)
Increase in tax due to total income becoming more than Rs 1 crore – (A) XXXX
Increase in income beyond Rs 1 crore – (B) XXXX
Marginal Relief – [(A) minus (B)] {Marginal relief is always positive} XXXX
¡¡ Case 2 – Total Income Of Individual Exceeds Rs 10 Crore:
Particulars (Rs)
Tax + Surcharge of 12% or 5% (Total Income > 10 crores) XXXX
Less: Tax + Surcharge of 7% or 2% on income of Rs 10 crores (XXXX)
Increase in tax due to total income becoming more than Rs 10 crores – (P) XXXX
Increase in income beyond Rs 10 crores – (Q) XXXX
Marginal Relief – [(P) minus (Q)] {Marginal relief is always positive} XXXX
OTHER POINTS:
++ The benefit of adjustment of deficiency in normal income is not available to a company.
++ The benefit of rebate u/s 87A is not available to a company.
++ The provisions relating to Health & Education Cess and rounding-off of tax liability u/s 288B shall apply to a company in
the same manner as they apply to an individual.

SIGNIFICANT REDUCTION IN CORPORATE TAX RATES

(Applicable Only In Case Of Domestic Companies)
With an objective of providing a stimulus to the economy and to attract fresh investment in manufacturing sector (thereby boosting
‘Make in India’ initiative), the Finance Minister introduced two new sections vide the Taxation Laws (Amendment) Ordinance, 2019. The
Ordinance has now been replaced by a proper law passed by both Houses of the Parliament, ie, the Taxation Laws (Amendment) Act, 2019.
I. Section 115BAA - Tax On Income Of Certain Domestic Companies:
++ In order to provide relief to domestic companies, Section 115BAA has been newly inserted in the Income Tax Act, 1961 with
effect from AY 2020-21 to provide an option to domestic companies to pay tax @ 22% (plus 10% Surcharge and 4%
H&EC). However, the option to avail the benefit of Section 115BAA shall be available only when the total income of the
company is computed without providing for the following deductions/exemptions:
¡¡ Section 10AA (SEZ Units)
¡¡ Section 32(1)(iia) (Additional Depreciation)
¡¡ Section 32AD (Investments in Notified Backward Areas)
¡¡ Section 33AB (Tea/Coffee/Rubber Development Allowance)
¡¡ Section 33ABA (Site Restoration Expenditure Fund)
¡¡ Section 35 (Scientific Research)
¡¡ Section 35AD (Expenditure on Specified Business)
¡¡ Section 35CCC (Expenditure on Agricultural Extension Project)
¡¡ Section 35CCD (Expenditure on Skill Development Project)
¡¡ ‘Heading C’ of Chapter VI-A Deductions (other than Section 80JJAA)
++ Further, the option to avail the benefit of Section 115BAA must be exercised on or before the due date of furnishing return
of income u/s 139(1) in the prescribed manner. This option once exercised cannot be subsequently withdrawn.
II. Section 115BAB – Tax On Income Of Certain New Domestic Manufacturing Companies:
++ The Taxation Laws (Amendment) Ordinance, 2019 has inserted Section 115BAB under the Income Tax Act, 1961 with
effect from AY 2020-21 to provide an option to pay tax @ 15% (plus 10% Surcharge and 4% H&EC) in case of domestic
manufacturing companies incorporated on or after 1st October 2019. A domestic company can avail the benefit of Section
115BAB only if it fulfils the following conditions:
¡¡ The domestic company should be incorporated on or after 1st October 2019.
¡¡ It should commence the manufacturing activities on or after 1st October 2019 but before 31st March 2023.
¡¡ It is not formed by splitting up or the reconstruction, of a business already in existence.
¡¡ It does not use any plant or machinery which has been previously used.
¡¡ It does not use any building previously used as a hotel or convention centre.
¡¡ The total income of the company has been computed without claiming specified deductions, exemption or incentives as
discussed u/s 115BAA.
++ Further, the option to avail the benefit of Section 115BAB must be exercised on or before the due date of furnishing the
first return of income u/s 139(1) in the prescribed manner. This option once exercised cannot be subsequently withdrawn.
SURCHARGE RATES APPLICABLE IN CASE OF DOMESTIC COMPANIES:
Range Of Total Income
Particulars
Upto Rs 1 Cr More Than Rs 1 Cr But Upto Rs 10 Cr More Than Rs 10 Cr
Domestic Company Opting For Section 115BAA 10% 10% 10%
Domestic Company Opting For Section 115BAB 10% 10% 10%
Any Other Domestic Company Nil 7% 12%
COMPUTATION OF TAX LIABILITY OF LOCAL AUTHORITY

++ Local authorities have been given a preferential status under income tax by way of exemption u/s 10(20) of the Income Tax
Act, 1961. Section 10(20) grants exemption to various incomes earned by a local authority from its jurisdictional areas. Where
such exemption is not available, the tax rates applicable on incomes earned by local authority have been discussed below:
++ Special Incomes: Taxable at special rates (as already discussed earlier).
++ Normal Income: Taxable at flat rate of 30%.
OTHER POINTS:
++ The benefit of adjustment of deficiency in normal income is not available to a local authority.
++ The benefit of rebate u/s 87A is not available to a local authority.
++ Where the total income of a local authority exceeds Rs 1 crore, a surcharge of 12% shall apply. Marginal relief to be checked
in order to ensure that increase in tax should in no case be more than increase in income.
++ The provisions relating to Health & Education Cess and rounding-off of tax liability u/s 288B shall apply to a local authority
in the same manner as they apply to an individual.

COMPUTATION OF TAX LIABILITY OF AOP, BOI & ARTIFICIAL JURIDICAL PERSON

(OTHER THAN CO-OPERATIVE SOCIETY)
++ Normal Income: Taxable at slab rates (Basic slab of Rs 2,50,000 is applicable)
relief shall apply to an AOP/BOI/AJP in the same manner as they apply to an individual. However, in case of an AOP consisting
of only companies as members, the following rates of surcharge shall apply:
Total Income Surcharge Rates In Case Of An AOP Consisting Of Only Companies As Members
Exceeds Rs 50L; Does Not Exceed Rs 1 Crore Surcharge of 10% on the amount of tax payable before H&EC
Exceeds Rs 1 Crore Surcharge of 15% on the amount of tax payable before H&EC
OTHER POINTS:
++ The benefit of adjustment of deficiency in normal income is not available to AOP/BOI/AJP.
++ The benefit of rebate u/s 87A is not available to AOP/BOI/AJP.
++ The provisions relating to Health & Education Cess and rounding-off of tax liability u/s 288B shall apply to AOP/BOI/AJP in
the same manner as they apply to an individual.
COMPUTATION OF TAX LIABILITY OF CO-OPERATIVE SOCIETY

(NOT OPTING FOR PROVISIONS OF SECTION 115BAD)
++ Normal Income: Taxable at special slab rates as given below.
First Rs 10,000 10%
Next Rs 10,000 20% on amount in excess of Rs 10,000
Balance Income In Excess Of Rs 20,000 30% on amount in excess of Rs 20,000
relief shall apply to a co-operative society in the same manner as they apply to a domestic company.
Total Income Surcharge Rates In Case Of A Co-operative Society
Exceeds Rs 1 Crore; Does Not Exceed Rs 10 Crores Surcharge of 7% on the amount of tax payable before H&EC
Exceeds Rs 10 Crores Surcharge of 12% on the amount of tax payable before H&EC
OTHER POINTS:
++ The benefit of adjustment of deficiency in normal income is not available to a co-operative society.
++ The benefit of rebate u/s 87A is not available to a co-operative society.
++ The provisions relating to Health & Education Cess and rounding-off of tax liability u/s 288B shall apply to a co-operative
society in the same manner as they apply to an individual.
++ Where a co-operative society opts for the provisions of Section 115BAD, the rates of tax on normal income and the rates of
surcharge would vary. Section 115BAD would be taken up for discussion at CA-Final level.

COMPUTATION OF TAX LIABILITY By: CA Vijender Aggarwal 1.1
SUBJECTIVE QUESTIONS:
Taxability Of Individuals
Question 1
Compute the tax liability in the following cases for Assessment Year 2023-24.
(i) Mr X has total income of Rs 7,00,000
(ii) Mr X has total income of Rs 10,00,000
(iii) Mr X has total income of Rs 12,00,000
Question 2
Mr A has income as given below:
Particulars Amount (Rs)
Income under the head Salary 2,50,000
Income under the head House Property 4,50,000
Income under the head Business/Profession 5,49,684
Deductions allowed u/s 80C to 80U are Rs 1,15,000. Compute the income tax liability for PY 2022-23.
Question 3
Compute tax liability in the following cases for Assessment Year 2023-24:
(i) Mr A (resident) has total income of Rs 20,00,000
(ii) Mr A (non-resident) has total income of Rs 20,00,000
(iii) Mr A (resident), aged 60 years has total income of Rs 20,00,000
(iv) Mr A (non-resident), aged 60 years has total income of Rs 20,00,000
(v) Mr A (resident), aged 80 years has total income of Rs 20,00,000
(vi) Mr A (non-resident), aged 80 years has total income of Rs 20,00,000
Question 4 (Surcharge)
Compute tax liability in the following cases for Assessment Year 2023-24.
(i) Mrs A (resident) has total income of Rs 50,50,000
(ii) Mrs A (resident) has total income of Rs 51,00,000
(iii) Mrs A (resident) has total income of Rs 51,50,000
(iv) Mrs A (resident), aged 60 years has total income of Rs 51,80,000
(v) Mrs A (resident), aged 80 years has total income of Rs 52,50,000
(vi) Mrs A (resident) has total income of Rs 1,01,00,000
(vii) Mrs A (resident) has total income of Rs 1,02,00,000
(viii) Mrs A (resident) has total income of Rs 1,03,00,000
Question 5 (Rebate)
Compute the tax liability of Mr A having total income of Rs 3,49,000.
Question 6 (Rebate)
Compute the tax liability of Mr A for Assessment Year 2023-24.
• Gross total income Rs 5,62,000
• Deductions allowed u/s 80C to 80U are Rs 1,30,000
Question 7 (Rebate)
Compute the tax liability of Mrs A, aged 64 years for PY 2022-23 (AY 2023-24):
“Gross total income Rs 4,44,000; Deductions allowed u/s 80C to 80U are Rs 98,000”
Case 1: Mrs A is a resident
Case 2: Mrs A is a non-resident
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Summaries, Revisionary Videos, Amendment Notes & Videos, Latest Subjective Q&A, Latest MCQs, etc
1.2 COMPUTATION OF TAX LIABILITY By: CA Vijender Aggarwal
Question 8 (Casual Income)
Compute the tax liability of Mr Z under the following two cases if he has salary income of Rs 6,00,000 and casual
income of Rs 2,00,000.
• Case I: Deductions u/s 80C to 80U Rs 1,80,000.
• Case II: Deductions u/s 80C to 80U Rs 8,00,000.
Question 9 (Casual Income)

Compute the tax liability of Mr Y having casual income of Rs 51,00,000 and deductions allowed u/s 80C to 80U are
Rs 2,50,000.
Question 10
Compute tax liability of Mr B for AY 2023-24 from the following information:
Income under the head Salary 48,000
Income under the head House Property 32,000
Income under the head business/Profession 28,000
Long Term Capital Gains 1,90,000
Short Term Capital Gains 42,000
Short Term Capital Gains u/s 111A 5,00,000
Lottery Income 2,00,000
Other Income 11,000
Deductions allowed u/s 80C-80U 2,00,000
• Case 1: Mr B is resident.
• Case 2: Mr B is resident and aged about 68 years.
• Case 3: Mr B is resident and aged about 81 years.
• Case 4: Mr B is non-resident.
Question 11
Compute tax liability of Mr X for AY 2023-24 from the following information:
(i) Mr X (a resident) has casual income Rs 3,50,000.
(ii) Mr X (a resident) has short term capital gains u/s 111A Rs 3,30,000.
(iii) Mr X (a resident) has long term capital gains Rs 2,80,000.
(iv) Mr X (a non-resident) has casual income Rs 3,50,000.
(v) Mr X (a non-resident) has short term capital gains u/s 111A Rs 4,40,000.
(vi) Mr X (a non-resident) has long term capital gains Rs 2,80,000.
(vii) Mr X (a non-resident), aged 64 years, has casual income Rs 3,50,000.
(viii) Mr X (a non-resident), aged 64 years, has short term capital gains u/s 111A Rs 4,40,000
(ix) Mr X (a non-resident), aged 64 years, has long term capital gains Rs 2,80,000.
Question 12
What will be the tax liability of Mr A for AY 2023-24 if he has normal income of Rs 21 Lakhs and LTCG of Rs 30 lakhs?
Question 13
Compute the tax liability of Mr Dherya, aged 58 years, for AY 2023-24 from the following details:
Income from salaries 25,28,000
Profits and gains from business/profession 73,00,000
Income from other sources (Interest on bank FD) 3,82,000
Amount deposited in Public Provident Fund (PPF) 1,30,000

Taxability Of HUF
Question 14
Compute the tax liability of a HUF for AY 2023-24 from the following information:
Long term capital gains 5,00,000
Short term capital gains u/s 111A 2,00,000
Casual Income 3,00,000
Deductions allowed under sections 80C to 80U 95,000
Question 15
Compute the tax liability of HUF and Karta if AB HUF has PGBP income of Rs 30,00,000 and its Karta, Mr A, has
individual income of Rs 12,50,000.
Taxability Of Partnership Firm

Question 16
ABC is a partnership firm. Compute the tax liability for AY 2023-24 from the following information:
(i) The firm has income under the head Business/Profession Rs 10,000.
(ii) The firm has income under the head Business/Profession Rs 5,00,000.
(iii) The firm has income under the head Business/Profession Rs 1,00,00,000.
(iv) The firm has income under the head Business/Profession Rs 9,00,00,000.
(v) The firm has long term capital gains of Rs 10,000.
(vi) The firm has long term capital gains of Rs 5,00,000.
(vii) The firm has long term capital gains of Rs 1,00,00,000.
(viii) The firm has long term capital gains of Rs 9,00,00,000.
Question 17
Compute the income tax liability of AB Partnership Firm for AY 2023-24 from the following information:
Income under the head business/Profession 11,50,000
Long Term Capital Gains 2,30,000
Short Term Capital Gains 1,20,000
Short Term Capital Gains u/s 111A 2,00,000
Lottery Income 2,00,000
Other Income 61,000
Deductions allowed u/s 80C-80U 2,00,000
Taxability Of Domestic Companies

Question 18 (Surcharge)
ABC Ltd is a domestic company. Compute the tax liability of company for AY 2023-24:
• Case I: The company has income under the head Business/Profession Rs 1,00,00,000
• Case II: The company has income under the head Business/Profession Rs 1,02,00,000
• Case III: The company has income under the head Business/Profession Rs 10,00,00,000
• Case IV: The company has income under the head Business/Profession Rs 10,02,00,000

Question 19
RST Ltd is a domestic company. Compute the tax liability for AY 2023-24 in the following situations:
(i) The company has winnings from lottery Rs 3,00,00,000.
(ii) The company has long term capital gains of Rs 2,50,000.
(iii) The company has long term capital gains of Rs 10,00,000.
(iv) The company has long term capital gains of Rs 5,00,00,000.
(v) The company has PGBP income Rs 20,000 (Turnover of FY 20-21 is Rs 348 crores).
(vi) The company has PGBP income Rs 2,00,00,000 (Turnover of FY 20-21 is Rs 498 crores).
(vii) The company has PGBP income Rs 12,00,00,000 (Turnover of FY 20-21 is Rs 47.50 crores).
Question 20
DEL Ltd, a domestic company has total income of Rs 6,00,00,000. Compute tax liability of company for PY 2022-23.
Question 21
Compute the tax liability of ABC Limited for AY 2023-24 from the following information:
Deductions allowed u/s 80C to 80U 2,00,000
Taxability Of Foreign Companies:

Question 22
XYZ Ltd is a foreign company. Compute the tax liability of the company for Assessment Year 2023-24.
• Case I: The company has income under the head Business/Profession Rs 1,00,00,000.
• Case II: The company has income under the head Business/Profession Rs 1,01,00,000.
• Case III: The company has income under the head Business/Profession Rs 10,00,00,000.
• Case IV: The company has income under the head Business/Profession Rs 10,01,00,000.
Question 23
GST Ltd is a foreign company. Compute the tax liability of the company for AY 2023-24 in the following situations:
(i) The company has winnings from lottery Rs 3,00,00,000.
(ii) The company has long term capital gains of Rs 2,50,000.
(iii) The company has long term capital gains of Rs 10,00,000.
(iv) The company has long term capital gains of Rs 5,00,00,000.
(v) The company has PGBP income Rs 20,000.
(vi) The company has PGBP income Rs 2,00,00,000.
(vii) The company has PGBP income Rs 12,00,00,000.
Question 24
XYZ Ltd, a foreign company has total income of Rs 6,00,00,000. Compute its tax liability for PY 2022-23.
Question 25
Compute the tax liability of ABC Limited, a foreign company, for AY 2023-24 from the following information:
Deductions allowed u/s 80C to 80U 5,00,000

SOLUTIONS TO SUBJECTIVE QUESTIONS:
Taxability Of Individuals
Answer 1
Part (i)
Tax Liability 54,600
Part (ii)
Tax Liability 1,17,000
Part (iii)
Answer 2
Total Income (Rounded off u/s 288A) 11,34,680
Tax Liability (Rounded off u/s 288B) 1,59,020
Answer 3
Part (i) Computation of Tax Liability:
Part (ii) Computation of Tax Liability:

Part (iii) Computation of Tax Liability:

Part (iv) Computation of Tax Liability:

Part (v) Computation of Tax Liability:

Part (vi) Computation of Tax Liability:

Answer 4
Part (i) Computation of Tax Liability:
Marginal Relief (1,47,750 – 50,000) 97,750
Part (ii) Computation of Tax Liability:

Marginal Relief (1,64,250 – 1,00,000) 64,250
Part (iii) Computation of Tax Liability:

Marginal Relief (1,80,750 – 1,50,000) 30,750
Part (iv) Computation of Tax Liability:

Marginal Relief 10,400

Part (v) Computation of Tax Liability:
Marginal Relief Nil
Part (vi) Computation of Tax Liability:

Marginal Relief (1,75,125 - 1,00,000) 75,125
Part (vii) Computation of Tax Liability:

Marginal Relief (2,09,625 - 2,00,000) 9,625
Part (viii) Computation of Tax Liability:

Marginal Relief (2,44,125 - 3,00,000) Nil
Answer 5
Tax Liability Nil
Answer 6
Tax Liability Nil
Answer 7
Case I: Computation of Tax Liability:
Tax Liability Nil
Case II: Computation of Tax Liability:

Tax Liability (Rounded off u/s 288B) 4,990
Answer 8
Case I:
Case II:
Answer 9
Marginal Relief (1,83,000 – 1,00,000) 83,000
Answer 10
TOTAL INCOME 8,90,000
• CASE 1 – Mr B is resident: Computation of Tax Liability

• CASE 2 – Mr B is resident and aged about 68 years: Computation of Tax Liability

• CASE 3 – Mr B is resident and aged about 81 years: Computation of Tax Liability


• CASE 4 – Mr B is non-resident: Computation of Tax Liability
Answer 11
Case (i)
Case (ii)
Tax Liability Nil
Case (iii)
Tax Liability Nil
Case (iv)
Case (v)
Case (vi)
Case (vii)
Case (viii)
Case (ix)
Answer 12
Answer 13
Taxability Of HUF
Answer 14
Answer 15
Tax Liability Of HUF:
Tax Liability Of Karta:
Taxability Of Partnership Firms

Answer 16
Case (i) – Computation of Tax Liability:
Tax Liability 3,120

Case (ii) – Computation of Tax Liability:
Case (iii) – Computation of Tax Liability:

Case (iv) – Computation of Tax Liability:

Tax Liability 3,14,49,600
Case (v) – Computation of Tax Liability:

Tax Liability 2,080
Case (vi) – Computation of Tax Liability:

Case (vii) – Computation of Tax Liability:

Case (viii) – Computation of Tax Liability:

Answer 17
Computation of Total Income of AB Partnership Firm (Assessment Year 2023-24):
Total Income 29,61,000
Computation of Tax Liability:

Taxability Of Domestic Companies

Answer 18
• Case I:
• Case II:
• Case III:
• Case IV:
Answer 19




Tax Liability 5,200


Answer 20
Assumption: The total income includes only PGBP income and does not include capital gains or casual income.
Answer 21
Taxability Of Foreign Companies

Answer 22
• Case I:
• Case II:
• Case III:
• Case IV:
Answer 23




Tax Liability 8,320



Answer 24
Assumption: The total income includes only PGBP income and does not include any capital gains or casual income.
Answer 25


Chapter 1 - Computation of Tax Liability (Feb 2023 Batch)

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CHAPTER 1 COMPUTATION OF TAX LIABILITY 1.

1 Computation Of Tax Liability

DEFINITIONS/MEANING OF VARIOUS TERMS

A BOOK BY CA VIJENDER AGGARWAL

A BOOK BY CA VIJENDER AGGARWAL

COMPUTATION OF GROSS TOTAL INCOME & TOTAL INCOME

A BOOK BY CA VIJENDER AGGARWAL

COMPUTATION OF TAX LIABILITY OF INDIVIDUALS

Category 2 (Senior Citizens): Normal Income Tax Rates

Category 3 (Very Senior Citizens): Normal Income Tax Rates

A BOOK BY CA VIJENDER AGGARWAL

APPLICABILITY OF SURCHARGE AND MARGINAL RELIEF

A BOOK BY CA VIJENDER AGGARWAL

SPECIAL BENEFITS FOR ONLY RESIDENT INDIVIDUALS

Section 288B - ROUNDING-OFF OF TAX LIABILITY

STATEMENT SHOWING COMPUTATION OF ‘TAX LIABILITY OF INDIVIDUALS’

A BOOK BY CA VIJENDER AGGARWAL

COMPUTATION OF TAX LIABILITY OF HUF

COMPUTATION OF TAX LIABILITY OF PARTNERSHIP FIRM (INCLUDING LLP FIRM)

A BOOK BY CA VIJENDER AGGARWAL

COMPUTATION OF TAX LIABILITY OF COMPANIES

MEANING OF DOMESTIC COMPANY:

A BOOK BY CA VIJENDER AGGARWAL

SIGNIFICANT REDUCTION IN CORPORATE TAX RATES

COMPUTATION OF TAX LIABILITY OF LOCAL AUTHORITY

A BOOK BY CA VIJENDER AGGARWAL

COMPUTATION OF TAX LIABILITY OF AOP, BOI & ARTIFICIAL JURIDICAL PERSON

COMPUTATION OF TAX LIABILITY OF CO-OPERATIVE SOCIETY

A BOOK BY CA VIJENDER AGGARWAL

Subscribe CA Vijender Aggarwal’s Telegram Channel (https://t.me/vijenderaggarwaltax) For Accessing Notes,

Question 9 (Casual Income)

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Taxability Of Partnership Firm

Taxability Of Domestic Companies

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Taxability Of Foreign Companies:

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Part (ii) Computation of Tax Liability:

Part (iii) Computation of Tax Liability:

Part (iv) Computation of Tax Liability:

Part (v) Computation of Tax Liability:

Part (vi) Computation of Tax Liability:

Marginal Relief (1,47,750 – 50,000) 97,750

Part (ii) Computation of Tax Liability:

Marginal Relief (1,64,250 – 1,00,000) 64,250

Part (iii) Computation of Tax Liability:

Marginal Relief (1,80,750 – 1,50,000) 30,750

Part (iv) Computation of Tax Liability:

Marginal Relief 10,400

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Marginal Relief Nil

Part (vi) Computation of Tax Liability:

Marginal Relief (1,75,125 - 1,00,000) 75,125

Part (vii) Computation of Tax Liability:

Marginal Relief (2,09,625 - 2,00,000) 9,625

Part (viii) Computation of Tax Liability:

Marginal Relief (2,44,125 - 3,00,000) Nil

Case II: Computation of Tax Liability:

Marginal Relief (1,83,000 – 1,00,000) 83,000

• CASE 1 – Mr B is resident: Computation of Tax Liability

• CASE 2 – Mr B is resident and aged about 68 years: Computation of Tax Liability

• CASE 3 – Mr B is resident and aged about 81 years: Computation of Tax Liability

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