XAT 2011 Question 70

Instructions

Based on the following information


Total income tax payable is obtained by adding two additional surcharges on calculated income tax.

Education Cess : An additional surcharge called ‘Education Cess’ is levied at the rate of 2% on the amount of income tax.

Secondary and Higher Education Cess : An additional surcharge called ‘Secondary and Higher Education Cess` is levied at the rate of 1% on the amount of income tax.

Question 70

Mr. Madan observed his tax deduction at source, done by his employer, as Rs. 3,17,910/-. What was his total income (in Rs.) if he neither has to pay any additional tax nor is eligible for any refund?

Solution

Madan's tax deduction at source = Rs. 3,17,910

From the table we can see that one can pay this much amount of tax if he earns more than 5 lakh. 

Let say Madan's is Rs. x more than 5 lakhs. Therefore, Madan's total income = Rs. 500000+x.  

Total income tax paid by Madan = 1.03{0.3*(x) + 0.2*(200000) + 0.1(140000)}

$$\Rightarrow$$ $$\dfrac{317910}{1.03} = 0.3x + 54000$$

$$\Rightarrow$$ x = 848835.

Therefore, Madan's total income = 500000+848835 = Rs. 1348835.  Hence, option A is the correct answer. 



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