Question

If the Education cess is ₹500, and there is no rebatable component of Income tax declared, find the annual income if the person is 35 years old?

• A. ₹5,04,750
• B. ₹5,92,200
• C. ₹6,52,500
• D. ₹5,62,500

Answer 1

The correct option is D ₹5,62,500

Let the income tax be ₹x.
Education cess = 2% of x
$\Rightarrow$ 500 = $\frac{2x}{100}$
$\Rightarrow$ x = ₹25,000
Income tax being paid is ₹25,000
We now have to check the tax Slab for a Citizen below 60 years because age mentioned is 35 years.
Upto ₹2,50,000 is exempted.
Income tax slab for the income between ₹2,50,000 to 5,00,000 = ₹12500
Income tax remaining = ₹25000 - ₹12500 = ₹12500
As we know it falls in 20% slab which is between ₹5 lakhs and ₹10 lakhs.
Let the remaining income be ₹y.
$\frac{20y}{100}$ = ₹12500
$\Rightarrow$ y = $\frac{12500\times 100}{20}$ = ₹62500
$\therefore$ Total Income = ₹62,500 + ₹5,00,000 = ₹5,62,500