Question

Suppose, your last year taxable income was Rs. 22000. Due to hike in salary, your taxable income this year is Rs. 34200. The details for tax calculation are given in the table below.

Consider the appropriate tax slab corresponding to your income. What is theadditional amount of tax you need to pay this year compared to last year?

• A. 1970
• B. 1060
• C. 910
• D. 420

Hint:

Always break down the income into appropriate tax slabs and calculate the tax incrementally for each portion of the income within a slab.

Answer 1

The Correct Option is B

Step 1: Calculate the tax for last year (Rs. 22000).

For last year, the income is Rs. 22000. According to the tax slab, income between Rs. 20000 to Rs. 30000 is taxed as:
\[ \text{Tax} = 750 + 8\% \text{ of income over } 20000 \]
Income over Rs. 20000 is Rs. 22000 - Rs. 20000 = Rs. 2000. So:
\[ \text{Tax} = 750 + 0.08 \times 2000 = 750 + 160 = 910 \]
So, the tax last year is Rs. 910.

Step 2: Calculate the tax for this year (Rs. 34200).

For this year, the income is Rs. 34200. According to the tax slab, income between Rs. 30000 to Rs. 50000 is taxed as:
\[ \text{Tax} = 1550 + 10\% \text{ of income over } 30000 \]
Income over Rs. 30000 is Rs. 34200 - Rs. 30000 = Rs. 4200. So:
\[ \text{Tax} = 1550 + 0.10 \times 4200 = 1550 + 420 = 1970 \]
So, the tax this year is Rs. 1970.

Step 3: Calculate the additional tax to be paid this year.

The additional tax is:
\[ \text{Additional tax} = 1970 - 910 = 1060 \]
So, the additional tax to be paid this year is Rs. 1060.