Question

The salary of a person is increased by Rs. 4800 and the rate of tax is decreased by 2% from 12% to 10% . The effect is such that he is now paying the same tax as before. If in both the cases, the standard tax deduction is fixed at 20% of the total income, find the increased salary ?

• A. Rs. 32800
• B. Rs. 36800
• C. Rs. 2800
• D. None of these
• E. Rs. 24000

Answer 1

The correct option is E Rs. 24000

Let the salary of the person is Rs x

Then taxable income after deducting 20% standard deduction =$\frac{x\times 80}{100}=Rs\frac{4x}{5}$

And Tax on it = $Rs\frac{4x}{5}\times \frac{12}{100}=\frac{48x}{500}Rs$

If salary increased by Rs 4800 then total salary after increased=Rs x+4800

So taxable incomeafter increase=$(x+4800)\times \frac{80}{100}=(x+4800)\times \frac{4}{5}Rs$

So tax after increase=$(x+4800)\times \frac{4}{5}\times \frac{10}{100}=(x+4800)\times \frac{4}{50}Rs$

As per question both tax are equal

$\therefore \frac{48x}{500}=(x+4800)\frac{4}{50}$

$\Rightarrow 48x=40(x+4800)$

$\Rightarrow 48x-40x=192000$

$\Rightarrow 8x=192000=x=24000$ Rs

So salary of person is Rs 24000