Question
There are two slabs of income tax, 7% tax for income up
to 3 lakh and 12.5% for income above 3 lakh. Nitin tried to evade tax by hiding some of the income, to fall in the 7% tax slab. The amount hid by Nitin is 6/29 of the original taxable income. If Nitin paid Rs. 32,200 as tax, what is the original amount of tax he had to pay?Solution
Tax paid = 32200 (7% of the taxable income) Shown income = (32200 × 100)/7 = 460000 Amount hid = 6/29 of original income. Shown income = 23/29 × original taxable income Original Taxable income = (29/23) × 460000 = 580000 Tax = 12.5% × 580000 = Rs. 72500
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