Q1. Mr. Hari aged 55 years, a resident individual and practicing Chartered Accountant, furnishes you the receipts and payments account for the Financial Year 2024-25. Receipt and Payments Account
Other Information:
1. Motor car was put to use for both official and personal purposes. 1/4th of the motor car is for personal purpose. No interest on car loan was paid during the year.
2. Mr. Hari purchased a flat in Jaipur for `15,00,000 in July 2014 cost of which was partly financed by a loan from State Bank of India of `10,00,000 @ 10% interest, his own savings `1,00,000 and a deposit from Bank of Baroda for `4,00,000. The flat was given to Bank of Baroda on lease @ `40,000 per month. The following particulars are relevant:
(a) Municipal taxes paid by Mr. Hari `4,200 per annum.
(b) House insurance `1,000
3. He earned `1,00,000 in share speculation business and lost `1,50,000 in commodity speculation business.
4. Mr. Hari received a gift of `15,000 each from four of his family friends.
5. He contributed `1,11,000 to Prime Minister Drought Relief Fund by way of bank draft.
6. He donated to a registered political party `3,00,000 by way of cheque.
Compute the Total Income of Mr. Hari and the Tax Payable for the Assessment Year 2025-26. [May 2018, 10 Marks]
Ans. Computation of Total Income and Tax Liability of Mr. Hari (Assessment Year 2025-26)
1Income from House Property
Gross Annual Value (Rent)4,80,000
Less : Municipal Taxes paid(4,200)
Net Annual Value4,75,800 Deducts :
i. Standard Deduction @ 30% of Net A.V 1,42,740
ii. Interest on Loan (10,00,000×10/100) 1,00,000(2,42,740) 2,33,060
2Profit and Gains from Business or Profession
i. Fees from Professional Services 39,60,000
ii. Deduct Allowable expenses
5Deductions from G.T.I.
Working Notes :
1. Calculation of eligible depreciation :
a. Motor Car (4,00,000 × 15/100 × 1/2 year × ¾)=22,500
b. Books (22,000 × 40/100)=8,800
c. Computer (25,000 × 40/100 × ½ year)=5,000
Total=36,300
2. Net Loss in speculation Business cannot be set off from Income of Profession. Hence to be carried forward to following previous years.
Q2. Miss Sakshitha, a resident individual, aged 32 years, furnishes the following particulars relating to the year ended 31-3-2025 :
1. Analysis of her bank account in her ledger reveals the under-mentioned data:
S. No. ParticularsAmount (`)
1Winnings from a TV Game show (Net)70,000
2Gift received from mother’s father80,000
3Gift received from Ramya, her close friend60,000
4Interest on capital received from Vidyut & Co., a partnership firm in which she is a partner (@ 15% p.a.)
3,00,000
5Rent received for a vacant plot of land2,00,000
6Arrears of Rent received from Sharks Pvt. Ltd., for a house at Salem for which she had been in negotiation for enhanced rent three years back. This has not been taxed in any earlier year. The house was, however, sold off in March, 2022 1,50,000
7Amount received under Key Man Insurance Policy2,20,000
8Amount forfeited by her on selling of her vacant plot, since the buyer could not finalize the deal as per agreement. 3,10,000
2. Donation given in cash to a charitable trust registered u/s 12AA. `12,000
3. She owns agricultural lands at Colombo, Sri Lanka. She has derived agricultural income therefrom. `1,80,000
4. Public Provident Fund paid in the name of her minor daughter `75,000
5. Interest credited in the said PPF account during the year `8,900
6. Share of profits received from Vidyut & Co. `1,90,000
You are required to compute the Total Income of the Assessee and the Tax Payable for the Assessment Year 2025-26. Computation should be made under proper heads of income. [Nov. 2018, 10 Marks]
Ans. Computation of Total Income and tax Liability of Miss Sakshitha (Assessment year 2025-26) S. No.
1Income from House Property
Arrears of Rent Received 1,50,000 Less : Standard Deduction 30% (45,000) 1,05,000
2Profit and Gains of Business or Profession
Interest on Capital from partnership firm as partner at maximum 12% p.a. rate (3,00,000 × 12/15) 2,40,000
3Income from other Sources
Winning from TV Game Show (70,000 × 100/70) 1,00,000 Gift received from friend60,000 Rent received for vacant land2,00,000 Amount received under Keyman Insurance Policy 2,20,000
Amount forfeited on cancellation of agreement for transfer of a vacant plot 3,10,000
from G.T.I U/s 80C – Paid in P.P.F. in name of Minor daughter
6Total Income13,40,000
Computation of Tax Liability as per old tax regime:
7Total Tax Due including 4% Health and Education Cess Total Income 13,40,000 Tax Due: i. On TV Game show Total (A)1,00,00030%30,000 ii. On Balance (13,40,0001,00,000) i.e. 12,40,000
Next 5,00,00020%1,00,000
Balance2,40,00030%72,000
(B)12,40,000 1,84,500
Computation of Tax Liability under default tax regime [Sec. 115BAC]
8Total Tax Due including 4% Health and Education Cess
Income (Gross Total Income) 14,15,000 Tax Due:
i. On TV Game show Total (A)1,00,00030%30,000 ii. On Balance (14,15,0001,00,000) i.e. 13,15,000
Balance 1,15,00020%23,000
(B) 13,15,000 1,03,000
1,38,320
9 Since the tax liability under default tax regime [Sec. 115BAC(1)] is less hence Miss Sakshitha should opt it.
Working Notes :
1. 30% TDS presumed on winning from TV Games show.
2. Gift Received from mother’s father is treated under definition of relative u/s 56(2).
3. Gift from close friend is fully taxable because it exceeds ` 50,000/-
4. Interest on capital received from a firm as its partner is restricted upto 12% p.a.
5. Arrears of rent received is taxable because at the time of let out Miss Sakshitha was owner.
6. Donation paid in cash above 2,000/- is not allowed as deduction.
7. Income from agricultural land situated in Sri Lanka (outside India) is taxable.
8. Interest on Public Provident Fund is exempt.
9. Share of Profit received from a firm as partner is exempt u/s 10(2A).
Q3. Mr. Rajat Saini, aged 32 years, furnishes the following details of his Total Income for the Assessment Year 2025-26: Income from Salaries (computed) `27,88,000 Income from House Property (Computed) `15,80,000 Interest income from FDR’s `7,22,000 He has not claimed any deduction under chapter VIA. You are required to compute the tax liability of Mr. Rajat Saini as per the provisions of Income-tax Act, 1961. [Nov. 2018, 5 Marks]
Ans. Computation of Tax Liability of Mr. Rajat Saini (Assessment Year 2025-26).
3Income from Other Sources (Interest on F.D.)
4Gross Total Income 50,90,000
5Deductions from Gross Total IncomeNil
6Total Income50,90,000
7 Computation of Tax Liability under default tax regime [Section 115BAC] because he is not claiming any deduction under Chapter VI A. Hence beneficial.
On First 3,00,000 – NilNil
On Next 4,00,000 – 5%20,000
On Next 3,00,000 – 10%30,000
On Next 2,00,000 – 15%30,000
On Next 3,00,000 – 20%60,000
On Balance 35,90,000 – 30%10,77,000
Total12,17,000
Add: 10% Surcharge (Total Income exceeding ` 50 lacs) 1,21,700
Total 13,38,700
ii. Tax payable on Total Income ` 50 lacs (without surcharge) as per above calculations (without including surcharge) 11,90,000
iii. Difference in Tax Amount = 13,38,700 –11,90,000 1,48,700
iv. Marginal Relief = Difference in Tax Amount minus Total Income in excess of ` 50 lacs = 1,48,700 – 90,000 58,700
v. finally Tax Payable = Tax calculated in (i) minus Marginal Relief = 13,38,700 – 58,700 12,80,000
Add : Health and Education Cess @4%51,200
Total Tax Payable13,31,200
Notes:
1. There is no mention of TDS from any income.
2. Hence Total Tax Payable ` 13,31,200
Q4. From the following particulars of Shri Jagdish (Aged 59 years) for the Assessment Year 2025-26, you are required to find out his Taxable Income and Net Tax Liability:
1. Basic Salary @ ` 51,000 per month, Dearness allowance @ ` 10,000 per month (Part of salary- for retirement benefits), House rent allowance ` 4,000 per month and rent paid for house in Mumbai is ` 7,000 per month.
2. He owns a commercial building at New Delhi, which is let out on 1-07-2024 at a monthly rent of ` 46,000. He paid for municipal taxes of ` 27,000 and ` 25,000 for the financial years 2023-24 and 2024-25 on 31-3-2025 and 20-4-2025 respectively.
3. He deals in shares. During financial year 2024-25 he earned ` 1,70,000 from his share business and paid ` 30,000 as security transaction tax.
4. He purchased 4000 unlisted shares of Shyam Limited on 16-12013 for ` 80,000. Company declared bonus in the ratio of 1:1 on
1st February, 2013. Shri Jagdish sold 3000 Bonus Shares on 28-122024 for `2,00,000 to his friend Mr. Mehul through unrecognized stock exchange. (Cost Inflation Index: 2012-13 = 200; 2024-25 = 363.
5. He received dividend of `13,00,000 as dividend income from listed domestic company, Interest from saving bank account deposits with IDBI Bank ` 15,000 and lottery winnings (Net of TDS @ 30%) is ` 21,000.
He paid the following amount out of his taxable income:
(a) Deposits in Public Provident Fund ` 2,00,000.
(b) Medical insurance premium paid for health of his wife `19,000 and for health of dependent son ` 12,000 through cheque. [May 2019, 14 Marks]
Ans. Computation of Total Income and Net Tax Liability of Shri Jagdish (Assessment Year 2025-26)
1Income from Salary
Basic Salary (51,000 × 12)6,12,000
DA (Treated Basic Salary) 10,000×121,20,000
House Rent Allowance
Least of the following is exempt
a. HRA received (4000 × 12)48,000
b. Rent paid in excess of 10% of Salary + D.A (84000 – 10% of 7,32,000) = 84000 – 73200 10,800
Hence Taxable = 48000 – 1080037,200
Gross Salary 7,69,200
Less : Standard Deduction (50,000) 7,19,200
2Income from House Property
Gross Annual value Rent (46,000 × 9 month) 4,14,000
Less : Municipal Taxes paid(27,000)
Net Annual Value3,87,000
Less: Standard Deduction @ 30% of Net A.V(1,16,100) 2,70,900
3Profit and Gains of Business or Profession Profit from share Business 1,70,000 Less: Security Transaction Tax paid (30,000) 1,40,000
4Capital Gains (Long-term)
Sales consideration of Bonus shares2,00,000 Less : Cost of Acquisition Nil 2,00,000
5Income from Other Sources Dividend from Domestic company 13,00,000
from S.B. a/c with IDBI Bank 15,000 Winning from Lottery Gross (21,000 × 100/70)
6Gross Total Income 26,75,100
7Deductions from G.T.I.
i. U/s 80C – Deposit in PPF (Maximum Limit) 1,50,000
ii. U/s 80D – Medical Insurance Premium 19,000+12,000 = 31,000 (Maximum Limit)
iii. U/s 80TTA – Interest on S.B. a/c (Maximum Limit)
8Total Income 24,90,100
Computation of Tax Liability as per old tax regime:
9Total Tax Due including 4% Health and Education Cess Total Income 24,90,100 Tax Due:
i. On long term capital Gain (20% of 2,00,000) Total (A) 2,00,00020%40,000
ii. On winning from Lottery (30% of Gross amount 30,000) Total (B) 30,00030%9,000
iii. On Balance Income (24,90,100 - 2,00,00030,000) i.e. 22,60,100 at normal rates
Computation of Tax Liability under default tax regime [Sec. 115BAC] Total Tax Due including 4% Health and Education Cess Total Income = Gross Total Income + House Rent Allowance (26,50,100 + 10,800 = 26,60,900) Note 5 26,60,900
iii. On Balance Income (26,60,900 - 2,00,00030,000) i.e. 24,30,900
tax payable (A + B + C)
Health and Education Cess @ 4% 18,7314,87,001
