For the tax year 2026-27, the steps in computing the income-tax of a resident individual who has net…
Agricultural income is excluded from total income under section 11 read with Schedule II (Table: Sl. No. 1) to the Income-tax Act, 2025, but under the Finance Act, 2026…
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For the tax year 2026-27, the steps in computing the income-tax of a resident individual who has net agricultural income exceeding Rs 5,000 and whose non-agricultural total income exceeds the maximum amount not chargeable to tax (partial integration under the Finance Act, 2026) are followed in which sequence?
A. Add the basic exemption limit to net agricultural income and calculate tax on it.
B. Deduct the rebate under section 156 of the Income-tax Act, 2025, if admissible.
C. Add Health and Education Cess.
D. Add agricultural and non-agricultural income and calculate tax on the aggregate.
E. Calculate the difference of tax in both computations.
Answer and explanation
Correct answer D
Agricultural income is excluded from total income under section 11 read with Schedule II (Table: Sl. No. 1) to the Income-tax Act, 2025, but under the Finance Act, 2026 (section 3(2)) it is partially integrated where net agricultural income exceeds Rs 5,000 and the non-agricultural total income exceeds the maximum amount not chargeable to tax. The tax is computed as Zn = Xn - Yn: (D) tax is first computed on the aggregate of total income and net agricultural income; (A) tax is then computed on net agricultural income increased by the basic exemption limit; (E) the difference between the two is the income-tax on total income; (B) the rebate under section 156, if admissible, is deducted from it (formerly section 87A of the 1961 Act); and (C) Health and Education Cess at 4% is added last (after any surcharge). The other sequences place the rebate or the cess before the difference is computed, or the cess before the tax itself, and are wrong.
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UGC NET Commerce