Mr. Ram Prakash, a resident Indian aged 58 years, has business interest in India and in some other foreign nations also. He has derived income from…

Computation of total income of Mr. Ram Prakash for the A.Y. 2024-25 Particulars ₹ Income from house property Rent received [₹ 2.5 lakhs + 2.5 lakhs] 5,00,000 Less: Deduction u/s 24(a) at 30% of NAV 1,50,000 3,50,000 Profits and gains of business or profession Own business income [₹ 2,80,000 (Country X) +3,40,000 (Country Y) +1,80,000 (India)] 8,00,000 Loss from partnership firm in Country X (2,50,000) [1.2 lakh] and Country Y [ 1.3 lakhs] [Share of profit from foreign firm is not exempt, since the partnership is not evidenced by an instrument. Hence, loss can be set-off against business income] (2,50,000) 5,50,000 Capital gains Long-term capital gains on transfer of residential house in Delhi 37,00,000 Less: Exemption u/s 54 – Purchase of residential house in Delhi in joint name with wife within two years from the date of transfer 25,00,000 Net long-term capital gains 12,00,000 Short-term capital gains on transfer of vacant site in Country X 10,80,000 22,80,000 Income from other sources Agricultural income in Country X and Country Y [₹ 3.4 lakhs +1.8 lakhs] 5,20,000 Agricultural income from land situated in India [exempt u/s 10(1)] - 5,20,000 Gross Total Income 37,00,000 Less: Deduction under Chapter VI-A: Section 80C – PPF [Not available as per section 115BAC] Total Income 37,00,000 Computation of net tax liability of Mr. Ram Prakash for A.Y.2024-25 Particulars ₹ Tax on 42.2 lakhs, being non-agricultural income [37lakhs] + agricultural income [5.2 lakhs] Tax on LTCG of 12lakhs@20% 2,40,000 Tax on other income of 30.2 lakhs Upto 3,00,000 Nil 3,00,001 - 6,00,000 [i.e.,3,00,000 @5%] 15,000 6,00,001 - 9,00,000 [i.e.,3,00,000 @10%] 30,000 9,00,001 - 12,00,000 [i.e.,3,00,000 @15%] 45,00,000 12,00,001 - 15,00,000 [i.e.,3,00,000 @20%] 60,000 15,00,001 - 30,20,000 [i.e.,15,20,000 @30%] 4,56,000 6,06,000 8,46,000 (-) Tax on 8.2 lakhs, being agricultural Income [5.2 lakhs] + Basic Exemption Limit [ 3 lakhs] 37,000 8,09,000 Add: Health and education cess @4% 32,360 8,41,360 Indian rate of tax = 8,41,360 x 100/37,00,000 = 22.74% Less: Rebate u/s 91 on income of Country X + Country Y 3,63,314 Net Tax liability 4,78,046 Net Tax liability (Rounded off) 4,78,050 Computation of average rate of tax in Country X Particulars ₹ Gross rental receipts from commercial property [No deduction is allowed from this in Country X] 2,50,000 Share income from partnership firm (loss) to be ignored Business income 2,80,000 STCG from sale of vacant site on 11-11-2023 10,80,000 Agricultural income [Exempt in Country X] - Total income 16,10,000 Rates of tax in Country X Upto 3 lakhs Nil 3 to 6 lakhs 15% Above 6 lakhs 22% 45,000 2,22,200 2,67,200 Average rate of tax in Country X = 2,67,200 x 100/16,10,000 = 16.596% Computation of Rebate u/s 91 Particulars ₹ Country X Gross rental receipts form commercial property (2.5 lakhs – 0.75 lakhs, being 30% of 2.5 lakhs) 1,75,000 Share of loss from partnership firm (1,20,000) Business income 2,80,000 STCG from sale of vacant site on 11-11-2023 10,80,000 Agricultural income [Not included in doubly taxed income as it is exempt in Country X] Doubly Taxed Income (in Country X) 14,15,000 Double Taxation Relief at Indian rate of tax (22.74%) or rate of tax in Country E (16.596%), whichever is lower 16.596% Double Taxation Relief = 16.596% of 14.15 lakhs = 2,34,833 Country Y Gross rental receipts from commercial property [2.5 lakhs (-) 30% of 2.5 lakhs] 1,75,000 Business income 3,40,000 Share of loss from partnership firm (1,30,000) Agricultural income 1,80,000 Doubly Taxed Income (in Country Y) 5,65,000 Rate of tax in Country Y 27% Double Taxation Relief at Indian rate of tax (22.74%) or rate of tax in Country Y (27%), whichever is lower 22.74% Double Taxation Relief = 22.74% of 5,65,000 = 1,28,481 Double Taxation Relief [Country X & Country Y] = 2,34,833 +1,28,481 3,63,314