Mr. Krishnamurthy is employed with XYZ Ltd. as Marketing Manager. His CTC details as per proposed offer for the appointment are as under: Basic Pay…

CA Final · Direct Tax Laws and International Taxation · PYQS · May 2026
Mr. Krishnamurthy is employed with XYZ Ltd. as Marketing Manager. His CTC details as per proposed offer for the appointment are as under: Basic Pay -30,00,000/- HRA -15,00,000/- Other taxable allowances -5,00,000/- Mr. Krishnamurthy requested his employer to restructure salary component of
(A) is a tax evasion method as it reduces tax liability of Mr. Krishnamurthy.
(B) is a tax planning method as it reduces tax liability of Mr. Krishnamurthy in legitimate way.
(C) is a tax avoidance method as it reduces tax liability of Mr. Krishnamurthy
(D) is a colourable method to reduce tax liability of Mr. Krishnamurthy

Suggested Answer and Working Notes:

Correct Answer: Option (B)

is a tax planning method as it reduces tax liability of Mr. Krishnamurthy in legitimate way.

Topics: Double Taxation Relief, Assessment of Various Entities, Non-Resident Taxation

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