Arvind, a textile merchant and resident Indian is doing business in India and abroad. During the previous year 2015-16, he disclosed the following information: ₹ Income from business in India 27,00,000 Income from busine

Computation of Taxable Income & Tax Liability of Arvind for the AY 2016-17 Computation of Taxable Income and Tax Liability Amount (In ₹) Amount (In ₹) Business Income earned from India 27,00,000 Business Income earned from Country A 15,00,000 Business Income earned from Country B (4,00,000) Gross Total Income 38,00,000 Less: Deduction under Chapter VI-A (PPF + Life Insurance Premium = 1,50,000 + 20,000 = 1,70,000, restricted to 1,50,000) (1,50,000) Total Income 36,50,000 Tax Liability On first ₹2,50,000 - NIL - ₹2,50,001 - ₹5,00,000 - 10% 25,000 ₹5,00,000 - ₹10,00,000 - 20% 1,00,000 Balance @ 30% (₹26,50,000 * 30%) 7,95,000 Total Tax (excluding EC & SHEC) 9,20,000 Education Cess & SHEC @ 3% 27,600 Total Tax 9,47,600 Relief under section 91 (Note 1) (3,89,425) Tax payable in India 5,58,175 Note 1: Computation of Relief under section 91 of the Income Tax Act, 1961 Average rate of Tax in India ₹(9,47,600/36,50,000 * 100) = 25.9616% Average rate of tax in foreign country (5,00,000/15,00,000*100) = 30% Doubly Taxed Income: ₹15,00,000 Relief under section 91 (on ₹15,00,000 @25.96%) i.e. rate 25.9616% or 30% whichever is lower: ₹3,89,425