Karan, aged 38 years, working as Sales Manager with Arjun Grand Ltd., provides the following information for the year ended 31st March, 2025: Particulars Amount (₹) Basic salary 6,00,000 p.a. DA (50% of it is meant for r

CS Executive · Tax Laws and Practice · PYQS · December 2025
Karan, aged 38 years, working as Sales Manager with Arjun Grand Ltd., provides the following information for the year ended 31st March, 2025: Particulars Amount (₹) Basic salary 6,00,000 p.a. DA (50% of it is meant for retirement benefits) 3,00,000 p.a. Commission as a percentage of turnover of the Company 0.5% Turnover of the Company 60 lakhs Bonus 60,000 p.a. Project Allowance 40,000 p.a. Own Contribution to R.P.F. 40,000 p.a. Professional tax total paid ₹ 2,500 of which ₹ 2,000 was paid by the employer — Employer's contribution to R.P.F. 20% of basic salary Interest credited in the R.P.F. account @ 15% p.a. 15,000 Following further information is given to you as under: Music System purchased on 01.04.2024 by the company for ₹ 95,000 and was given to Karan for personal use on same day. Smart TV worth ₹ 15,000 was given by employer to Karan as gift on his 25th wedding anniversary. Gold ring worth ₹ 75,000 received from Sanjay who is school friend of Karan as gift on his 25th wedding anniversary. Two old light goods vehicles owned by him were leased to a transport company against the fixed charges of ₹ 6,500 p.m. Books of account are not maintained. Karan wants to opt the section 44AE of Income Tax Act, 1961. Received interest of ₹ 8,000 from SBI Bank FD on 24.4.2024 and interest of ₹ 8,100 (Net) from the debentures of Indian Companies on 5.5.2024. Made payment by cheques of ₹ 15,000 towards premium on Life Insurance policies for self and ₹ 22,500 for Mediclaim Insurance policy for spouse. Invested in NSC ₹ 30,000 and in FDR of SBI for 5 years ₹ 50,000. Donations of ₹ 1,50,000 to an institution approved u/s 80G by account payee cheque and of ₹ 25,000 to Prime Minister's National Relief Fund through BHIM UPI were made during the year. On the basis of the above information, you are required to give the following answers, assuming that he has shifted out of the default tax regime under section 115BAC : Compute the Tax Payable/Refundable on total income for Karan for the Assessment Year 2025-26.

Answer & Explanation:

Computation of Tax Payable / Refundable for Karan for A.Y. 2025-26 Particulars Amount (₹) Income from Salary (as above) 10,30,900 Income from Business & Profession (as above) 1,80,000 Income from Other Sources (as above) 92,000 Gross Total Income 13,02,900 Less: Deduction under chapter VI-A (as above) (2,39,770) Total Income / Taxable Income (Rounding Off) 10,63,130 Tax on Total Income Tax on first 2,50,000 Nil Next 2,50,000 (2,50,001 to 5,00,000) @ 5% 12,500 Next 5,00,000 (5,00,001 to 10,00,000) @ 20% 1,00,000 Remaining 63,130 (10,00,001 to 10,63,130) @ 30% 18,939 Tax Liability before Cess 1,31,439 Less: Rebate u/s 87A, Nil since total income exceed ₹ 5,00,000 Nil Tax Liability after Rebate 1,31,439 Add: Health and Education Cess @ 4% 5,258 Total Tax Liability 1,36,697 Less: Tax deducted at source (₹ 9,000 - ₹ 8,100) (900) Net Tax Payable 1,35,797 Net Tax Payable (Round off) 1,35,800 Note: Gift in kind is not taxable upto ₹5,000 per annum. Hence, upto ₹ 5,000 is taken as exempt income.

Topics: Income Tax

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