Mr. Yuvaan, a resident individual, aged 45 years, is engaged in manufacturing of textile business, as a proprietor. He follows mercantile system of…

Computation of total income of Mr. Yuvaan for A.Y. 2026-27 under default tax regime Particulars ₹ I Income from house property Rent received (GAV) 3,50,000 Less: Municipal taxes [Will be allowed only in the year of actual payment. Since it was paid on 30.4.2026 i.e., after the end of the relevant previous year, it will be allowed only in P.Y. 2026-27. - NAV 3,50,000 Less: Deduction under section 24 - 30% of NAV 1,05,000 - interest on housing loan 80,000 1,85,000 1,65,000 II Income from business or profession Net profit as per profit and loss account 20,00,000 Add: Items of expenditure not allowable while computing business income - Payment to creditor in cash [Payment to creditor in cash is not allowable as business expenditure by virtue of section 40A(3), since such amount exceeds - 10,000 and paid in cash] 25,000 - Contribution to notified approved research association for scientific research [Not allowable under default tax regime] 1,10,000 - Job charges without deduction of tax [30% of 1,10,000] [Mr. Yuvaan's turnover for the P.Y. 2024-25 exceeds 1crore, hence, he is liable to deduct tax at source u/s 194C on Job charges of 1,10,000. Since he has not deducted tax at source on 1,10,000, 30% would be disallowed under section 40(a)(ia)] 33,000 - Insurance deposited with LIC of India for the maintenance of her mother [Personal expenses not allowable under section 37] 50,000 - Revenue expenditure incurred for promoting family planning [Allowable only in case of company and not allowable for non-corporate assessee] 75,000 - Purchases made from Kanha & Co., a medium enterprise [Disallowance under section 43B(h) is not applicable on payment to a medium enterprise. Accordingly, allowable on due basis during the P.Y. 2025-26] - 2,93,000 22,93,000 Less: Items credited but not taxable or taxable under other heads - Gross interest received from saving bank account 15,000 - Subsidy on new machinery [Subsidy on new machinery has to be reduced from actual cost of machinery] 3,00,000 3,15,000 19,78,000 Add: Depreciation claimed on subsidy received for new machinery [15lakhs x 20% x 15%] 45,000 Less: Additional depreciation on new machinery [Not allowable under default tax regime] - 20,23,000 III Capital Gains Long term capital gain on sale of gold bracelet since it is held for more than 24 months Sale consideration 5,00,000 Less: Cost of acquisition 40,000 Less: Cost of improvement 50,000 Long term capital gains 4,10,000 IV Income from other sources - Gross interest received from saving bank account 15,000 - Pre-mature withdrawal from post office time deposit [Amount including interest received on pre-mature withdrawal from post office time deposit, in respect of which deduction u/s 80C was claimed, would be deemed to be the income of Mr. Yuvaan] 75,000 5,000 90,000 Gross Total Income 26,88,000 Less: Deduction under Chapter VI-A Deduction under section 80C Housing loan repayment [Not allowed under default tax regime] - Deduction under section 80DD Deposit with life insurance Corporation of India for the maintenance of her mother [Not allowed under default tax regime] - Deduction under section 80TTA Interest on saving bank account [Not allowed under default tax regime] - Total Income 26,88,000 Computation of tax liability of Mr. Yuvaan for A.Y. 2026-27 under default tax regime Particulars Particulars ₹ Tax @12.5% on LTCG of 4,10,000 on sale of gold bracelet 51,250 Tax at slab rate on balance income of 22,78,000 Upto 2,50,000 Nil 2,50,001 - 5,00,000 [@5% of 2.50 lakh] 12,500 5,00,001 -10,00,000 [@20% of 5,00,000] 1,00,000 10,00,001 -17,18,000 [@ 30% of 7,18,000] 2,15,400 3,27,900 3,79,150 Add: Health and education cess@4% 15,166 Tax liability 3,94,316 Tax liability (Rounded off) 3,94,320 Computation of total income of Mr. Yuvaan for A.Y. 2026-27 under optional tax regime Particulars ₹ Gross Total Income as per default tax regime 26,88,000 Less: Contribution to notified approved research association for scientific research [Allowable as deduction under section 35(1)(ii) under optional tax regime] 1,10,000 Less: Additional depreciation on new machinery [(15,00,000 -3,00,000) x 20%] 2,40,000 Gross Total Income as per optional tax regime 23,38,000 Less: Deduction under Chapter VI-A Deduction under section 80C Housing loan repayment 75,000 Deduction under section 80DD Deposit with life insurance Corporation of India for the maintenance of her mother 1,25,000 Deduction under section 80TTA Interest on saving bank account 10,000 Total Income as per optional tax regime 21,28,000 Computation of tax liability of Mr. Yuvaan for A.Y. 2026-27 under optional tax regime Particulars Particulars ₹ Tax @12.5% on LTCG of 4,10,000 on sale of gold bracelet 51,250 Tax at slab rate on balance income of 17,18,000 Upto 2,50,000 Nil 2,50,001 - 5,00,000 [@5% of 2.50 lakh] 12,500 5,00,001 -10,00,000 [@20% of 5,00,000] 1,00,000 10,00,001 -17,18,000 [@ 30% of 7,18,000] 2,15,400 3,27,900 3,79,150 Add: Health and education cess@4% 15,166 Tax liability 3,94,316 Tax liability (Rounded off) 3,94,320