Q.Mr. Kumar's Gross Total Income for a previous year is ₹7,00,000. He is eligible for deductions of ₹50,000 under Chapter VI-A. Using the illustrative slab structure from this chapter (nil up to the exemption slab, 5% on the next slab, 20% on the following slab, 30% above that, applied progressively), compute his Total Income and explain the method by which his gross tax liability would be calculated. (Note: use the illustrative rates for practising the METHOD only — always use the actual Finance Act rates for a real return.)

This is really a two-step exercise: first find Total Income by subtracting the deduction, then apply the slab method (only the portion of income falling in each slab is taxed at that slab's own rate) to that Total Income. …

Step 1 — Compute Total Income:

Gross Total Income = ₹7,00,000

Less: Deduction under Chapter VI-A = ₹50,000

Total Income = ₹7,00,000 − ₹50,000 = ₹6,50,000

Step 2 — Apply the slab method (illustrative rates only, for practising the method):

A progressive slab structure taxes only the portion of income that falls within each slab at that slab's own rate — it does NOT apply the highest rate reached to the entire income. So, using the illustrative slabs from Section 6 (nil up to the basic exemption slab, 5% on the next slab, 20% on the slab after that, 30% above that):

• The portion of Total Income falling in the nil slab → tax = ₹0.
• The portion falling in the 5% slab → taxed at 5%.
• The portion falling in the 20% slab → taxed at 20%.
• Any remaining portion above that → taxed at 30%.

The gross tax liability is the sum of the tax computed on each slab-portion separately. This slab-wise (marginal) method is the defining feature of a progressive tax system — it ensures a taxpayer's entire income is never suddenly pushed into a higher rate merely by crossing into the next slab by a small amount; only the excess over each slab boundary is taxed at the higher rate. …

Subtract the stated Chapter VI-A deduction from Gross Total Income to get Total Income, then apply the progressive slab-wise computation method (tax each slab's own portion at its own rate and sum), verified independently by re-deriving Total Income arith …

Applying the top slab rate (illustratively 30%) to the ENTIRE Total Income instead of only to the portion actually falling in that top slab — this is the …