High School

Dr. C.B. Chatterjee, a 48-year-old resident of India, needs to compute his total income and tax liability for the year ended March 31, 2024, under the new scheme of taxation.

**Income:**

(a) **Gross Receipts:**
- Consultation fees: ₹ 12,46,000
- Surgical fees: ₹ 15,77,000
- Gift from patients: ₹ 2,10,000

(b) **Interest and Dividend Income:**
- Interest from bank savings account: ₹ 13,700
- Interest from bank fixed deposits: ₹ 3,37,300
- Interest accrued from NSC: ₹ 1,12,000
- Dividend from Indian companies: ₹ 2,37,000
- Dividend from a foreign company: ₹ 1,18,000

(c) **Rental Income:**
- Rent from a house let out: ₹ 6,00,000

**Expenses:**

(a) **Business Expenses:**
- Rent of chamber: ₹ 3,00,000
- Electricity: ₹ 60,000
- Motor car expenses (including depreciation): ₹ 1,12,500
- Salary of employees: ₹ 3,20,000
- Other office expenses: ₹ 72,600

(b) **House Expenses:**
- Repairing expenses of house: ₹ 71,500
- Local taxes paid: ₹ 50,000

**Capital Gains:**

(a) **Sale of Equity Shares:**
- Sold on February 22, 2024, for ₹ 3,20,000
- Purchased on August 5, 2023, for ₹ 1,80,000

(b) **Sale of Furniture:**
- Sold for ₹ 1,80,000
- Cost of furniture: ₹ 51,000

**Insurance and Medical Expenses:**

(a) **Medical Insurance Premiums:**
- Own health: ₹ 22,700
- Wife's health: ₹ 13,200
- Adult son (not dependent): ₹ 7,800
- Father's health (aged 72, not dependent): ₹ 27,300

(b) **Medical Expenditure:**
- Mother's treatment (aged 68, not insured): ₹ 2,70,000

(c) **Life Insurance Premium:**
- Own life and wife's life: ₹ 45,000 (Sum assured: ₹ 50,00,000)

**Other Income:**

- Minor son's interest income: ₹ 69,000

**Donations:**

- Jawaharlal Nehru Memorial Fund: ₹ 15,000
- Local club for cultural programs: ₹ 10,000

Compute Dr. Chatterjee's total income and tax liability based on this information.

Answer :

To solve this question regarding Dr. C.B. Chatterjee’s total income and tax liability under the new scheme of taxation in India, we need to follow several steps:

  1. Income from Profession

    • Consultation fees: ₹ 12,46,000
    • Surgical fees: ₹ 15,77,000
    • Gifts from patients: ₹ 2,10,000
    • Total Professional Income: ₹ 30,33,000 (sum of all the above)
  2. Expenses Deductible from Professional Income

    • Rent of chamber: ₹ 3,00,000

    • Electricity: ₹ 60,000

    • Motor car expenses: ₹ 1,12,500

    • Salary of employees: ₹ 3,20,000

    • Other office expenses: ₹ 72,600

    • Total Deductible Expenses: ₹ 8,65,100

    • Net Income from Profession: ₹ 30,33,000 - ₹ 8,65,100 = ₹ 21,67,900

  3. Other Sources of Income

    • Interest from bank savings account: ₹ 13,700
    • Interest from bank fixed deposits: ₹ 3,37,300
    • Interest (accrued from NSC): ₹ 1,12,000
    • Dividend from Indian companies: ₹ 2,37,000
    • Dividend from a foreign company: ₹ 1,18,000
    • Rent from a house: ₹ 6,00,000 (less repairing: ₹ 71,500, local taxes: ₹ 50,000)
      • Net Rent Income: ₹ 6,00,000 - (₹ 71,500 + ₹ 50,000) = ₹ 4,78,500
  4. Capital Gains Income

    • Sale of shares (equity):
      • Purchase cost: ₹ 1,80,000
      • Sale proceeds: ₹ 3,20,000
      • Short-term Capital Gain: ₹ 3,20,000 - ₹ 1,80,000 = ₹ 1,40,000 (Since the period of holding is short-term)
    • Sale of furniture: While this amount appears capital in nature, personal effects typically are not considered capital assets in India, so no gain applies.
  5. Calculation of Total Income

    • Net Income from Profession: ₹ 21,67,900

    • Other Income:

      • Interest Income: ₹ 13,700 + ₹ 3,37,300 + ₹ 1,12,000 = ₹ 4,63,000
      • Dividend Income: ₹ 2,37,000 + ₹ 1,18,000 = ₹ 3,55,000
      • Net Rent Income: ₹ 4,78,500
      • Short-term Capital Gain: ₹ 1,40,000
    • Gross Total Income: ₹ 21,67,900 + ₹ 4,63,000 + ₹ 3,55,000 + ₹ 4,78,500 + ₹ 1,40,000 = ₹ 36,04,400

  6. Deductions under Chapter VIA

    • Medical insurance under section 80D:
      • Own and family: ₹ 22,700 + ₹ 13,200 = ₹ 35,900 (limited to ₹ 25,000 for self and family)
      • Father (above 60 years): ₹ 27,300 (additional deduction for senior citizens allowed)
      • Total deduction for 80D: ₹ 25,000 + ₹ 27,300 = ₹ 52,300
    • Medical expenses for mother (aged 68 years) can be claimed for deduction under section 80DDB (subject to limits)
    • Interest income from minor son is clubbed in father's income (as it's considered income of the parent)
    • Donations:
      • Jawaharlal Nehru Memorial Fund: 100% deduction available under section 80G
        • ₹ 15,000 is eligible for deduction
      • Local club: Not eligible for deduction
  7. Net Taxable Income

    • Gross Total Income: ₹ 36,04,400
    • Less Total Deductions under 80D and 80G (as calculated and applicable)
  8. Tax Calculation

    • Tax rates under the new tax regime have various slabs and rates as specified by the income tax regulations in India, computed without considering common deductions available in the older regime.

Calculating tax liability requires applying appropriate slab rates to the taxable income determined after deductions are taken into account. Note that under the new regime, common deductions such as HRA, Section 80C, and others are not available except a few as specified.

This step-by-step procedure identifies the components required to compute the total income and then the tax liability using the stated rules. For precise computation, it would be contingent on the current and prevailing tax slab rates for the financial year in question and specific guidelines of the new tax regime.