A person pays 10% tax on his income up to 4.0 lakhs. For the amount between 4.0 lakhs and 8.0 lakhs he…
Tax on the first 4 lakh is \(0.10\times4=0.4\) lakh and on the next 4 lakh is \(0.20\times4=0.8\) lakh, so the first 8 lakh bears 1.2 lakh. The remaining \(1.8-1.2=0.6\)…
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A person pays 10% tax on his income up to 4.0 lakhs. For the amount between 4.0 lakhs and 8.0 lakhs he pays a tax of 20% and for the amount above 8.0 lakhs, he pays 30% tax. If the total tax paid by the person is 1.8 lakhs, then find his average percentage of tax paid on the whole income.
Answer and explanation
Correct answer B
Tax on the first 4 lakh is lakh and on the next 4 lakh is lakh, so the first 8 lakh bears 1.2 lakh. The remaining lakh is charged at 30 per cent, so income above 8 lakh is lakh and total income is 10 lakh. The average rate is per cent, which is lower than the 20 per cent slab because the lower slabs pull the average down.
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