Compute the amount of tax relief under section 91(1) and of the tax payable by the assesses, an Indian resident, aged 50 years having following incomes during the previous year 2016-17: (i) Business income in India ₹5,50
CS Professional · Advanced Tax Laws and Practice · PYQS · June 2017
Compute the amount of tax relief under section 91(1) and of the tax payable by the assesses, an Indian resident, aged 50 years having following incomes during the previous year 2016-17: (i) Business income in India ₹5,50,000. (ii) Business income in country A of ₹2,00,000 on which tax was deducted in the foreign country by the Government of ₹50,000. (iii) Loss from business in country B of ₹1,00,000. (Note: Government of India does not have any Double Tax Avoidance Agreement with either country A or with country B).
Answer & Explanation:
Computation of Relief u/s 91(1) for the Assessment Year 2017-18 Particulars Amount (INR) Amount (INR) Business Income earned in India 5,50,000 Business Income earned from Country A 2,00,000 Business loss from Country B (1,00,000) Total Taxable Income 6,50,000 Tax including EC+SHEC 56,650 Average rate of tax in India (56,650 / 6,50,000 * 100) 8.7154% Foreign tax rate (50,000 / 2,00,000 * 100) 25% Doubly Taxed Income 2,00,000 Relief under section 91 (on ₹2,00,000 @ 8.7154%) i.e. rate 8.7154% or 25% whichever is lower 17,431 Tax Liability of the Assessee for the Assessment Year 2017-18 Particulars Amount (INR) Amount (INR) Business Income earned in India 5,50,000 Business Income earned from Country A 2,00,000 Business loss from Country B (1,00,000) Total Taxable Income 6,50,000 Tax including EC+SHEC 56,650 Relief under section 91(1) 17,431 Net Tax Liability 39,219 Alternative Answer 1(b) Computation of Relief u/s 91(1) for the Assessment Year 2017-18 Particulars Amount (INR) Amount (INR) Business Income earned in India 5,50,000 Business Income earned from Country A 2,00,000 Total Taxable Income 7,50,000 Tax including EC+SHEC 77,250 Average rate of tax in India (77,250 / 7,50,000 * 100) 10.30% Foreign tax rate (50,000 / 2,00,000 * 100) 25% Doubly Taxed Income 2,00,000 Relief under section 91 (on ₹2,00,000 @ 10.30%) i.e. rate 10.30% or 25% whichever is lower 20,600 Note: For calculating the relief u/s 91(1), the business loss of foreign country B has not been considered. Tax Liability of the Assessee for the Assessment Year 2017-18 Particulars Amount (INR) Amount (INR) Business Income earned in India 5,50,000 Business Income earned from Country A 2,00,000 Business loss from Country B (1,00,000) Total Taxable Income 6,50,000 Tax including EC+SHEC 56,650 Relief under section 91(1) 20,600 Net Tax Liability 36,050
Topics: Income Tax Act, 1961
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