Amar, an individual, resident of India, receives the following payments after TDS during the previous year 2014-15: (i) Professional fees on 17.08.2014 ₹2,40,000 (ii) Professional fees on 04.03.2015 ₹1,60,000 Both the ab

Computation of Tax Liability of Amar for Assessment Year 2015-16 Particulars Amount (₹) Income under head Business & Profession Gross fees for services rendered in Pakistan on 17.08.2014 (₹2,40,000 + ₹50,000) 2,90,000 Gross fees for services rendered in Pakistan on 04.03.2015 (₹1,60,000 + ₹30,000) 1,90,000 Total Professional Fees 4,80,000 Less: Expenditure incurred (2,40,000) Income from Business & Profession 2,40,000 Income from other sources 3,00,000 Gross Total Income 5,40,000 Deduction u/s 80C Payment towards LIC (70,000) Total Income 4,70,000 Tax Liability Tax on first ₹2,50,000 Nil Tax on remaining ₹2,20,000 @ 10% 22,000 Rebate u/s 87A (Lower of Tax or ₹2,000) (2,000) Tax after Rebate 20,000 Cess @ 2% of ₹20,000 400 SHEC @ 1% of ₹20,000 200 Total Tax before Relief 20,600 Less: Tax Relief u/s 91 (10,519) Tax Payable 10,081 Rounded off 10,080 Tax Relief u/s 91 1. Income for services rendered in Pakistan taxed in India = (Gross Professional Fees - Expenditure) = (₹4,80,000 - ₹2,40,000) = ₹2,40,000 2. Income assessed in Pakistan = Gross Professional Fees = ₹4,80,000 3. Tax paid in Pakistan = ₹50,000 + ₹30,000 = ₹80,000 4. (i) Tax on double taxed Income in India = (Tax before relief × Income taxed in India / Total Income) = (₹20,600 × ₹2,40,000 / ₹4,70,000) = ₹10,519 5. (ii) Tax on double taxed income in Pakistan = (Tax paid in Pakistan × Income taxed in India / Income assessed in Pakistan) = (₹80,000 × ₹2,40,000 / ₹4,80,000) = ₹40,000 Tax relief u/s 91 will be lower of (i) or (ii), which is ₹10,519.