Question

Mr. X's salary is increased by $20\%$. On the increase, the tax rate is $10\%$ higher. Find the percentage of increase in the tax liability.

Answer 1

Let his original salary be Rs. 100.

Salary after increment = Rs. 120

Let the tax on original salary be 20% and now tax on increased salary of Rs. 20 will be 22% i.e. Rs. 4.40.

Thus, increase in tax liability = $\frac{\left(\frac{6.60}{20}\right)}{100}=22\%$