#LetsCrackTax

1 BASIC CONCEPTS CA Amit Mahajan

Assume that Mr. X has exercised the option to shift out/ opt out of the default
Question 1
tax regime.
Mr. X has a total income of Rs 16,00,000 for P.Y.2024-25, comprising of income
from house property and interest on fixed deposits. Compute his tax liability
for A.Y.2025-26 under the default tax regime under section 115BAC. Solution
(a) Computation of Tax liability of Mr. X (aged 45 years)
Solution
Tax liability:
Computation of Tax liability of Mr. X for A.Y. 2024-25
First Rs 2,50,000 - Nil
Income Slab (`) Tax Rate Taxable Tax Calculation Next Rs 2,50,001 – - @5% of Rs 2,50,000 Rs 12,500
Income (`) (`) Rs 5,00,000
Up to 3,00,000 Nil 3,00,000 0 Next Rs 5,00,001– Rs - @20% of Rs 5,00,000 Rs 1,00,000
3,00,001 to 7,00,000 5% 4,00,000 20,000 10,00,000
7,00,001 to 10,00,000 10% 3,00,000 30,000 Balance i.e., Rs 16,L - @30% of Rs 6,00,000 Rs 1,80,000
10,00,001 to 12,00,000 15% 2,00,000 30,000 minus Rs 10L
12,00,001 to 15,00,000 20% 3,00,000 60,000 Rs 2,92,500
Above 15,00,000 30% 1,00,000 30,000 Add: Health and Education Rs 11,700
Total Tax Before Cess 1,70,000 cess@4%
Health & Education Cess @ 4% 6,800 = Rs 3,04,200
Total Tax Payable 176,800
Final Tax Liability: (b) Computation of Tax liability of Mr. X (aged 63 years)
• Total Tax payable by Mr. X for A.Y. 2025-26 = `176,800 Tax liability:
First Rs 3,00,000 - Nil
Question 2 Next Rs 3,00,001 – Rs - @5% of Rs 2,00,000 Rs 10,000
Mr. X has a total income of Rs 16,00,000 for P.Y.2024-25, comprising of income 5,00,000
from house property and interest on fixed deposits. Compute his tax liability Next Rs 5,00,001 – Rs - @20% of Rs 5,00,000 Rs 1,00,000
for A.Y.2025-26 assuming his age is – 10,00,000
(a) 45 years Balance i.e., Rs 16L - @30% of Rs 6,00,000 Rs 1,80,000
(b) 63 years minus Rs 10L
(c) 82 years
Rs 2,90,000

Basic Concepts 1
#LetsCrackTax
CA Amit Mahajan

Add: Health and Rs 11,600 Add: Surcharge @ 10% Rs 1,34,250 Rs 14,76,750

Education cess@4% (B) Income-tax computed on total income of Rs 50 lakhs Rs 13,12,500
Rs 3,01,600 (Rs 12,500 plus Rs 1,00,000 plus Rs 12,00,000)
(C) Total Income Less Rs 50 lakhs Rs 1,00,000
(c) Computation of Tax liability of Mr. X (aged 82 years) (D) Income-tax computed on total income of Rs 50 lakhs Rs 14,12,500
Tax liability: plus the excess of total income over Rs 50 lakhs (B
First Rs 5,00,000 - Nil +C)
Next Rs 5,00,001 – Rs - @ 20% of Rs 5,00,000 = Rs 1,00,000 (E) Tax liability: lower of (A) and (D) Rs 14,12,500
10,00,000 Add: Health and education cess @4% Rs 56,500
Balance i.e., Rs 16L - @ 30% of Rs 6,00,000 = Rs 1,80,000 Tax liability (including cess) Rs 14,69,000
minus Rs 10L (F) Marginal Relief (A – D) Rs 64,250
Rs 2,80,000
Add: Health and Rs 11,200 Alternative method -
Education cess@4% (A) Income-tax (including surcharge) computed on total income of Rs
` = Rs 2,91,200 51,00,000
Rs 2,50,000 – Rs 5,00,000@5% Rs 12,500
Question 3 Rs 5,00,001 – Rs 10,00,000@20% Rs 1,00,000
Compute the tax liability of Mr. A (aged 42), having total income of Rs 51 lakhs Rs 10,00,001 – Rs 51,00,000@30% Rs 12,30,000
for the Assessment Year 2025-26. Assume that his total income comprises of Total Rs 13,42,500
salary income, Income from house property and interest on fixed deposit. Add: Surcharge@10% Rs 1,34,250 Rs 14,76,750
Assume that Mr. A has exercised the option to shift out of section 115BAC. (B) Income-tax computed on total income of Rs 50 lakhs Rs 13,12,500
(Rs 12,500 plus Rs 1,00,000 plus Rs 12,00,000)
Solution
(C) Excess tax payable (A)-(B) Rs 1,64,250
Computation of tax liability of Mr. A for the A.Y.2025-26
(D) Marginal Relief (Rs 1,64,250 – Rs 1,00,000, being Rs 64,250
(A) Income-tax (including surcharge) computed on total income of Rs the amount of income in excess of Rs 50,00,000)
51,00,000
(E) Tax liability (A)-(D) Rs 14,12,500
Rs 2,50,000 – Rs 5,00,000 @5% Rs 12,500
Add: Health and education cess @4% Rs 56,500
Rs 5,00,001 – Rs 10,00,000 @20% Rs 1,00,000
Tax liability (including cess) Rs 14,69,000
Rs 10,00,001 – Rs 51,00,000 @30% Rs 12,30,000
Total Rs 13,42,500

Basic Concepts 2
#LetsCrackTax
CA Amit Mahajan

Alternative method:
Question 4
(A) Income-tax (including surcharge) computed on total income
Compute the tax liability of Mr. B (aged 51) under the default tax regime,
₹1,01,00,000
having total income of Rs 1,01,00,000 for the Assessment Year 2025-26.
Assume that his total income comprises of salary income, Income from house ₹ 3,00,000 - ₹ 7,00,000@5% ₹ 20,000
property and interest on fixed deposit. ₹ 7,00,001- ₹ 10,00,000@10% ₹ 30,000
₹ 10,00,001 - ₹ 12,00,000@15% ₹ 30,000
Solution ₹ 12,00,001 - ₹ 15,00,000@20% ₹ 60,000
Computation of tax liability of Mr. B for the A.Y. 2025-26 ₹ 15,00,001 - ₹ 1,01,00,000@30% ₹ 25,80,000
(A) Income-tax (including surcharge) computed on total income of Total ₹ 27,20,000
₹1,01,00,000 Add: Surcharge @ 15% 4,08,000 ₹ 31,28,000
₹ 3,00,000 - ₹ 7,00,000@5% ₹ 20,000 (B) Income-tax computed on total income of 1 crore ₹ 29,59,000
₹ 7,00,001 - ₹ 10,00,000@10% ₹ 30,000 [(1,40,000 plus 25,50,000) plus surcharge@10%]
₹ 10,00,001 - ₹ 12,00,000@15% ₹ 30,000 (C) Excess tax payable (A)-(B) ₹ 1,69,000
₹ 12,00,001 - ₹ 15,00,000@20% ₹ 60.000 (D) Marginal Relief (₹ 1,69,000 - ₹ 1,00,000, being the ₹ 69,000
₹ 15,00,001 - ₹ 1,01,00,000@30% ₹ 25.80.000 amount of income in excess of ₹ 1,00,00,000)
Total ₹ 27,20,000 (E) Tax liability (A) - (D) ₹ 30,59,000
Add: Surcharge@15% ₹ 4,08,000 Add: Health and education cess @4% ₹ 1,22,360
Tax liability without marginal relief ₹ 31,28,000 Tax liability (including cess) ₹ 31,81,360
(B) Income-tax computed on total income of ₹ 1 crore 26,90,000
Question 5
(₹1,40,000 plus ₹25,50,000)
Compute the tax liability of Mr. C (aged 58), having total income
Add: Surcharge@10% ₹ 2.69.000
of Rs 2,01,00,000 for the Assessment Year 2025-26. Assume that his total
₹ 29,59,000
income comprises of salary income, Income from house property and interest
(C) Total Income Less ₹ 1 crore ₹ 1,00,000
on fixed deposit. Assume that Mr. C has exercised the option to shift out of
(D) Income-tax computed on total income of 1 crore ₹30,59,000
section 115BAC.
plus the excess of total income over 1 crore (B+C)
(E) Tax liability: lower of (A) & (D) ₹ 30,59,0 Solution
Add: Health and education cess @4% ₹1,22,3 Computation of tax liability of Mr. C for the A.Y. 2025-26
Tax liability (including cess) ₹ 31,81,3 (A) Income-tax (including surcharge) computed on total income of Rs
(F) Marginal relief (A-D) ₹ 69,0 2,01,00,000

Basic Concepts 3
#LetsCrackTax
CA Amit Mahajan

Rs 2,50,000 – Rs 5,00,000 @ 5% Rs 12,500 (B) Income-tax computed on total income of Rs 2 crore Rs 66,84,375
Rs 5,00,001 – Rs 10,00,000 @ 20% Rs 1,00,000 [(Rs 12,500 plus Rs 1,00,000 plus Rs 57,00,000)
plus surcharge@15%]
Rs 10,00,001 – Rs 2,01,00,000@30% Rs 57,30,000
(C) Excess tax payable (A)-(B) Rs 6,18,750
Total Rs 58,42,500
(D) Marginal Relief (Rs 6,18,750 – Rs 1,00,000, being the Rs 5,18,750
Add: Surcharge @ 25% Rs 14,60,625
amount of income in excess of Rs 2,00,00,000)
Add: Surcharge @ 25% Rs 14,60,625
(E) Tax liability (A) - (D) Rs 67,84,375
Rs 73,03,125
Add: Health and education cess@4% Rs 2,71,375
(B) Income-tax computed on total income of Rs Rs 58,12,500
Tax liability (including cess) Rs 70,55,750
2 crore (Rs 12,500 plus Rs 1,00,000 plus Rs
57,00,000)
Question 6
Add: Surcharge@15% Rs 8,71,875
Compute the tax liability of Mr. D (aged 65) in a most beneficial manner.
Rs 66,84,375
He is having total income of ₹5,01,00,000 for the Assessment Year 2025-
(C) Total Income Less Rs 2 crore Rs 1,00,000 26. Assume that his total income comprises of salary income, Income from
(D) Income-tax computed on total income of Rs 2 Rs 67,84,375 house property and interest on fixed deposit and is the same under both tax
crore plus the excess of total income over Rs 2 regimes.
crore (B +C)
(E) Tax liability (A) or (D), whichever is lower Rs 67,84,375 Solution
Add: Health and education cess @4% Rs 2,71,375 Computation of tax liability of Mr. D under default tax regime for the A.Υ.
Tax liability (including cess) Rs 70,55,750 2025-26
Marginal relief (A-D) Rs 5,18,750 Income-tax (including surcharge) computed on total income of 5,01,00,000
₹3,00,000 - ₹7,00,000@5% ₹ 20,000
Alternative method ₹7,00,001 - ₹10,00,000@10% ₹ 30,000
(A) Income-tax (including surcharge) computed on total income of Rs ₹10,00,001 - ₹12,00,000@15% ₹ 30,000
2,01,00,000
₹12,00,001- ₹15,00,000@20% ₹ 60,000
Rs 2,50,000 – Rs 5,00,000 @ 5% Rs 12,500
₹15,00,001- ₹5,01,00,000@30% ₹1,45,80,000
Rs 5,00,001 – Rs 10,00,000 @ 20% Rs 1,00,000
Total ₹1,47,20,000
Rs 10,00,001 – Rs 2,01,00,000@30% Rs 57,30,000
Add: Surcharge@25% ₹36,80,000
Total Rs 58,42,500
₹1,84,00,000
Add: Surcharge@25% Rs 14,60,625 Rs 73,03,125

Basic Concepts 4
#LetsCrackTax
CA Amit Mahajan

Add: Health and education cess @4% ₹7,36,000 Add: Surcharge @ 37% ₹ 54,90,800 ₹ 2,03,30,800
Tax liability ₹1,91,36,000 (B) Income-tax computed on total income of 5 crore ₹ 1,85,12,500
[(10,000 plus 1,00,000 plus 1,47,00,000) plus
(A) Income-tax (including surcharge) computed on total income of ₹ surcharge@25%]
5,01,00,000 (C) Excess tax payable (A)-(B) ₹ 18,18,300
₹ 3,00,000 - ₹ 5,00,000 ₹10,000 (D) Marginal Relief (18,18,300 - ₹ 1,00,000, being the ₹ 17,18,300
₹ 5,00,001 - ₹ 10,00,000 @ 20% ₹ 1,00,000 amount of income in excess of 5,00,00,000)
₹ 10,00,001 - ₹ 5,01,00,000@30% ₹ 1.47.30.000 (E) Tax liability (A) - (D) ₹ 1,86,12,500
Total ₹ 1,48,40,000 Add: Health and education cess @4% ₹ 7,44,500
Add: Surcharge @ 37% ₹ 54,90,800 ₹ 2,03,30,800 Tax liability (including cess) ₹ 1,93,57,000
(B) Income-tax computed on total income of ₹ 5 crore ₹1,48,10,000 It is beneficial for Mr. D to pay tax under default tax regime under section
(₹ 10,000 plus ₹ 1,00,000 plus ₹ 1,47,00,000) 115BAC, since his tax liability would be lower by 2,21,000 (₹1,93,57,000-
Add: Surcharge@25% ₹ 37,02,500 1,91,36,000).
₹ 1,85,12,500
(C) Total Income Less 5 crore Question 7
₹ 1,00,000
(D) Income-tax computed on total income of ₹ 5 crore ₹ 1,86,12,500 Mr. Raghav aged 26 years and a resident in India, has a total income of Rs
6,50,000, comprising his salary income and interest on bank fixed deposit.
plus the excess of total income over ₹ 5 crore (B+C)
Compute his tax liability for A.Y.2025-26 under default tax regime under
(E) Tax liability (A) or (D), whichever is lower ₹ 1,86,12,500
section 115BAC.
Add: Health and education cess@4% ₹ 7,44,500
Tax liability (including cess) ₹ 1,93,57,000
Computation of tax liability of Mr. Raghav for A.Y. 2025-26
(F) Marginal Relief (A - D) ₹ 17,18,300 Step 1: Calculation of Tax Before Rebate
Income Slab (`) Income (`) Rate (%) Tax (`)
Alternative method
0-3,00,000 3,00,000 Nil 0
(A) Income-tax (including surcharge) computed ₹ 5,01,00,000 on total
3,00,001-6,50,000 3,50,000 5% 17,500
income of
Total Tax Before Rebate : `17,500
₹ 3,00,000 - ₹ 5,00,000@5% ₹ 10,000
₹ 5,00,001 - ₹ 10,00,000@20% ₹ 1,00,000 Step 2: Rebate Under Section 87A
₹ 10,00,001 - ₹ 5,01,00,000@30% ₹ 1,47,30,000 • Eligibility : Individuals with total income up to `7,00,000 are eligible for
Total ₹1,48,40,000 rebate under section 87A

Basic Concepts 5
#LetsCrackTax
CA Amit Mahajan


Solution
• Rebate Amount : The rebate is the amount of tax payable or ` 25,000
whichever is less. Computation of tax liability of Mr. Pawan for A.Y. 2025-26
Particulars Rs
In this case, the tax before rebate is ` 17,500, so the entire amount will be Step 1: Total Income of Rs 7,15,000 - Rs 7,00,000 15,000 (A)
eligible for a rebate under section 87A. Step 2: Tax on total income of Rs 7,15,000 Tax@10%of 26,500 (B)
Rs 1,15,000 + Rs 15,000
Step 3: Compute Final Tax Liability Step 3: Since B>A, rebate u/s 87A would be B-A [Rs 11,500
26,500 - Rs 15,000]
• Tax Before Rebate: ₹ 17,500 15,000
• Rebate Under Section 87A: ₹ 17,500 Add: HEC@4% 600
• Net Tax Liability: 17,500 - 17,500 = ₹ 0 Tax Liability 15,600

Final Tax Liability Question 9

Component Amount (₹) Mr. Piyush, aged 35 years and a resident in India, has a total income of Rs
Total Income 6,50,000 4,15,000, comprising his salary income and interest on bank fixed deposit.
Tax Calculation Compute his tax liability for A.Y.2025-26 if he exercises the option to shift out
0-3,00,000 (Nil) 0 of the default tax regime.
3,00,001 - 6,50,000 @ 5% 17,500
Solution
Total Tax Before Rebate 17,500
Rebate Under Section 87A 17,500 Computation of tax liability of Mr. Piyush for A.Y. 2025-26
Final Tax Liability ₹0 Particulars Rs
Mr. Raghav’s final tax liability for AY 2024-25 is ₹ 0 after applying the rebate Tax on total income of Rs 4,15,000
under section 87A. Tax@5%of Rs 1,65,000 8,250
Less: Rebate u/s 87A (Lower of tax payable or Rs 12,500) 8,250
Question 8 Tax Liability Nil
Mr. Pawan aged 35 years and a resident in India, has a total income of Rs
7,15,000, comprising his salary income and interest on bank fixed deposit.
Compute his tax liability for A.Y.2025-26 under default tax regime under Question 10
section 115BAC. Mr. X, a resident, has provided the following particulars of his income for the
Ρ.Υ. 2024-25.
Basic Concepts 6
#LetsCrackTax
CA Amit Mahajan

i. Income from salary (computed) - ₹ 10,80,000 Step 2 : ` 3 ,10,000 + ` 3,00,000 = ` 6,10,000

ii. Income from house property (computed) - ₹ 2,50,000 Tax on ` 6,10,000 = 15,500
iii. Agricultural income from a land in Jaipur - ₹ 4,80,000 (i.e. 5% of ₹3,10,000)
iv. Expenses incurred for earning agricultural income - ₹ 1,70,000 Step 3 : ` 1,82,000 - ` 15,500 = ` 1,66,500
Compute his tax liability for A.Y. 2025-26 assuming his age is - Step 4 & 5: Total tax payable = ` 1,66,500
(a) 45 years =` 1 ,66,500+4% of ₹ 1,66,500 = ` 1,73,160
(b) 70 years
Computation of total income of Mr. X for the A.Y. 2025-26 under normal
Solution provisions of the Act
(a) Computation of tax liability (age 45 years) For the purpose of partial integration of taxes, Mr. X has satisfied both
Computation of total income of Mr. X for the A.Y. 2025-26 under the conditions i.e.
default tax regime under section 115BAC 1. Net agricultural income exceeds ` 5,000 p.a., and
For the purpose of partial integration of taxes, Mr. X has satisfied both 2. Non-agricultural income exceeds the basic exemption limit of `
the conditions i.e. 2,50,000.
1. Net agricultural income exceeds ₹ 5,000 p.a., and
2. Non-agricultural income exceeds the basic exemption limit of ₹ His tax liability is computed in the following manner:
3,00,000. Particulars ` `
His tax liability is computed in the following manner: Income from salary 10,80,000
Particulars ` ` Income from house property 2,50,000
Income from salary 10,80,000 Net agricultural income [` 4,80,000-` 3,10,000
Income from house property 2,50,000 1,70,000]
Net agricultural income [` 4,80,000-` 3,10,000 Less: Exempt under section 10(1) (3,10,000) -
1,70,000] Gross Total Income 13,30,000
Less: Exempt under section 10(1) (3,10,000) - Less: Deductions under Chapter VI-A -
Gross Total Income 13,30,000 Total Income 13,30,000
Less: Deductions under Chapter VI-A - Step 1 : ` 13,30,000 + ` 3,10,000 = ` 16,40,000
Total Income 13,30,000 Tax on ` 16,40,000 = ` 3,04,500
Step 1 : ` 13,30,000 + ` 3,10,000 = ` 16,40,000 (i.e., 5% of 2,50,000 plus 20% of 5,00,000 plus 30% of
Tax on ` 16,40,000 = ` 1 ,82,000 ₹6,40,000)
(i.e., 5% of ` 4,00,000 plus 10% of ₹ 3,00,000 plus 15% of Step 2 : ` 3,10,000 + ` 2,50,000 = ` 5,60,000
` 2,00,000 plus 20% of ` 3,00,000 plus 30% of ₹ 1,40,000) Tax on ` 5,60,000 = ` 24,500
Basic Concepts 7
#LetsCrackTax
CA Amit Mahajan

(i.e. 5% of 2,50,000 plus 20% of ` 60,000)

Step 3 : ` 3,04,500-`24,500 = `2,80,000 Additional Questions
Step 4 & 5: Total tax payable = ` 2,80,000
= ` 2,80,000 + 4% of ` 2,80,000 = ` 2,91,200.
(b) Computation of tax liability (age 70 years) Question 11
Computation of total income of Mr. X for the A.Y. 2025-26 under default Who is an “Assessee”?
tax regime under section 115BAC
Tax liability of Mr. X would be same under default tax regime whether he is of Solution
age of 45 years of 70 years i.e., ` 1,73,160. As per section 2(7), assessee means a person by whom any tax or any other
sum of money is payable under the Income-tax Act, 1961.
Computation of total income of Mr. X for the A.Y. 2025-26 under normal In addition, the term includes –
provisions of the Act  Every person in respect of whom any proceeding under the Act has been
taken for the assessment of –
His tax liability is computed in the following manner: • his income; or
• the income of any other person in respect of which he is assessable;
Step 1 : ` 13,30,000 + ` 3,10,000 = ` 16,40,000 or
Tax on ` 16,40,000 = ` 3,02,000 • the loss sustained by him or by such other person; or
(i.e., 5% of ` 2,00,000 plus 20% of ` 5,00,000 plus 30% of • the amount of refund due to him or to such other person.
`6,40,000)  Every person who is deemed to be an assessee under any provision of
Step 2 : ` 3,10,000 + ` 3,00,000 = ` 6,10,000 the Act;
Tax on 6,10,000 = ` 32,000  Every person who is deemed to be an assessee in default under any
(i.e. 5% of ` 2,00,000 plus 20% of ` 1,10,000) provision of the Act.
Step 3 : ` 3,02,000 - ₹ 32,000 = 2,70,000
Step 4 & 5: Total tax payable = ` 2,70,000 Question 12
= ` 2,70,000 + 4% of ` 2,70,000 = ` 2,80,800. State any four instances where the income of the previous year is assessable
in the previous year itself instead of the assessment year.

Solution
The income of an assessee for a previous year is charged to income-tax in
the assessment year following the previous year. However, in a few cases, the
income is taxed in the previous year in which it is earned. These exceptions

Basic Concepts 8
#LetsCrackTax
CA Amit Mahajan

have been made to protect the interests of revenue. The exceptions are as Officer, be charged to tax in that assessment year.
follows:
(i) Where a ship, belonging to or chartered by a non-resident, carries Question 13
passengers, livestock, mail or goods shipped at a port in India, the ship is What is the difference between an Association of Persons and Body of
allowed to leave the port only when the tax has been paid or satisfactory Individuals?
arrangement has been made for payment thereof. 7.5% of the freight
paid or payable to the owner or the charterer or to any person on his Solution
behalf, whether in India or outside India on account of such carriage is In order to constitute an Association of Persons (AOP), persons must join for a
deemed to be his income which is charged to tax in the same year in common purpose or action and their object must be to produce income; it is not
which it is earned. enough that the persons receive the income jointly.
(ii) Where it appears to the Assessing Officer that any individual may leave Body of Individuals denotes the status of persons like executors or trustees who
India during the current assessment year or shortly after its expiry and merely receive the income jointly and who may be assessable in like manner
he has no present intention of returning to India, the total income of and to the same extent as the beneficiaries individually. Thus, co- executors or
such individual for the period from the expiry of the respective previous co-trustees are assessable as a BOI as their title and interest are indivisible.
year up to the probable date of his departure from India is chargeable to The difference between an AOP and BOI is that in case of a BOI, only individuals
tax in that assessment year. can be the members, whereas in case of AOP, any person can be its member
(iii) If an AOP/BOI etc. is formed or established for a particular event or i.e. entities like company, firm etc. can be the member of AOP but not of BOI.
purpose and the Assessing Officer apprehends that the AOP/BOI is In case of an AOP, members voluntarily come together with a common will for
likely to be dissolved in the same year or in the next year, he can make a common intention or purpose, whereas in case of BOI, such common will may
assessment of the income up to the date of dissolution as income of the or may not be present.
relevant assessment year. Question 14
(iv) During the current assessment year, if it appears to the Assessing Officer The Jain HUF in Assam comprises of Mr. Suresh Jain, his wife Mrs. Sapna Jain,
that a person is likely to charge, sell, transfer, dispose of or otherwise his son Mr. Sarthak Jain, his daughter-in-law Mrs. Preeti Jain, his daughter
part with any of his assets to avoid payment of any liability under this Miss Seema Jain and his unmarried brother Mr. Pritam Jain. Which of the
Act, the total income of such person for the period from the expiry of members of the HUF are eligible for coparcenary rights?
the previous year to the date, when the Assessing Officer commences
proceedings under this section is chargeable to tax in that assessment Solution
year. Dayabaga school of Hindu law is prevalent in Assam. In Dayabaga school of
Where any business or profession is discontinued in any assessment Hindu law, nobody acquires the right, share in the property by birth as long as
year, the income of the period from the expiry of the previous year up to the head of family is living.
the date of such discontinuance may, at the discretion of the Assessing Thus, the children do not acquire any right, share in the family property, as long

Basic Concepts 9
#LetsCrackTax
CA Amit Mahajan

as his father is alive and only on death of the father, the children will acquire
right/share in the property.
Hence, Mr. Suresh Jain and his brother, Mr. Pritam Jain would be the coparceners
of the Jain HUF and are eligible for coparcenary rights

Question 15
Mr. Sharma aged 62 years and a resident in India, has a total income of
2,30,00,000, comprising long term capital gain taxable under section 112 of
52,00,000, short term capital gain taxable under section 111A of 64,00,000
and other income of 1,14,00,000Compute his tax liability for AY 2025-26
under the default tax regime and optional tax regime as per the normal
provisions of the Act assuming that the total income and its components are Question 16
the same in both tax regimes Explain the difference between Circulars and Notifications in the context to
the Income-tax Act, 1961. (MTP 3 Marks, Aug’18)

Solution
Difference between Circulars and notifications
Circulars Notifications
Circulars are issued by CBDT. Notifications are issued by the
Central Government. The CBDT is also
empowered to issue notifications.
Circular are issued with certain Central Government issues
specific problems and to clarify doubt notifications to affect the provisions
regarding the scope and meaning of of the Act and CBDT issues
certain provisions of the Act. notifications to make and amend
Income-tax Rules.
The department is bound by the Notifications are binding in nature.
circulars. While such circulars are Both department and assesses are
not binding on the assesses, they bound by the notifications.
can take advantage of beneficial
circulars.

Basic Concepts 10
#LetsCrackTax
CA Amit Mahajan

with regard to the provisions of Income-tax Act, 1961:

Question 17
Cash credit of ₹ 1,50,000 were traced in the books of accounts of Mr. Yogesh
Briefly explain the purpose for which the words “PROVISO” and
for which no explanation about its source was provided. Such income is
“EXPLANATION” are incorporated under various sections of the Income-tax taxable @30% under section 115BB in the hands of Yogesh. (RTP Nov ‘23)
Act, 1961. (PYP 4 Marks, May’18)
Solution
Solution
The statement is incorrect.
Proviso: The Proviso to a section is incorporated to specify the exception(s) Unexplained cash credit is taxable @60%plus surcharge @25% plus cess
to the provision contained in the respective section i.e., the proviso spells out @4% under section 115BBE.
the cases where the provision contained in the respective section would not
apply or where the provision contained in the respective section would apply Question 20
with certain modification. Mr. Jay is having total income of ₹ 6,90,000 during the P.Y. 2023-24 consisting
Explanation: An Explanation is incorporated in a section to provide a
of Income from business of ₹ 40,000, lottery winnings (gross) ₹ 5,60,000,
clarification relating to the provision contained in that section. Generally, an
income by way of salary (computed) ₹ 1,20,000 and loss from house property
Explanation is clarificatory in nature.
₹ 30,000. Compute his tax liability and advance tax obligations for A.Y. 2024-
Question 18 25. (MTP 4 Marks, Oct’21)
The assesses is found to be the owner of the gold (market value of which is
₹ 50,00,000) during the financial year ending 31-03-2025 but he recorded Solution
to have spent ₹ 10,00,000 in acquiring the same. Explain how the Assessing Computation of tax liability and advance tax obligations of Mr. Jay for A.Y.
Officer will deal with the issue. (PYP 2 Marks May’22) 2024-25
Particulars ` `
Solution Income from salary (computed) 1,20,000
As per section 69B, if the assesses is found to be the owner of gold (market Less: Set-off loss from house property (30,000) 90,000
value of which is ₹ 50 lakhs) during the financial year ending 31.3.2025 but house property 30,000
he has recorded to have spent only ₹ 10 lakhs in acquiring it, the Assessing
Less: Set-off against salary income (30,000) -
Officer can add the difference of the market value of such gold and ₹ 10 lakhs
i.e., ₹ 40 lakhs as the income of the assesses for A.Y.2024-25, if the assesses Income from business 40,000
offers no satisfactory explanation thereof. Such income would be chargeable Lottery winning 5,60,000
to tax@78% (@60% plus surcharge @25% and cess @4%). Total Income 6,90,000
Tax liability
Question 19 Tax @30% on lottery income 1,68,000
Examine with reasons whether the following statements are correct/incorrect

Basic Concepts 11
#LetsCrackTax
CA Amit Mahajan

Tax on other income of ₹ 1,30,000 (Nil, since it -

does not exceed the basic exemption limit of ₹
2,50,000)
1,68,000
Add: Health and education cess@4% 6,720
Total tax liability 1,74,720
Less: TDS on lottery income under section 194B 1,68,000
Net tax payable 6,720
Since tax payable for the P.Y. 2023-24 is less than
₹ 10,000, Mr. Jay is not liable to pay advance tax.

Basic Concepts 12