Calculation of Gross Total and Taxable income, Tax rebate and Computation of Tax Liability

At the end of March, your uncle in Kharghar opens a folder of papers: salary slips, a rent receipt book, a share statement, bank interest certificates, insurance premium receipts. His accountant turns the folder into one page and says, this is what you owe. How does a pile of documents become a single number? The Act lays down a fixed route, and once you can walk it you can do any computation question in the paper.

In two minutes

Tax liability is computed in a fixed sequence: compute income under each head, club and set off losses to reach gross total income, subtract the deductions the Act allows to reach total income, apply the rates to it, reduce the tax by any rebate and relief, and add surcharge and cess where applicable.

The rest of this chapter

The full explanation, the cheat sheet, every previous-year question at every mark weight, the quiz and the answer skeletons are part of Law of Taxation on LexBlox Semester. Sign in to unlock the subject, or read Module 1 of Legal Language and Writing free.