After ascertaining the total income, i.e., income liable to tax, the next step is to compute the tax liability for the year. Tax liability is to be computed by applying the rates prescribed in this regard. Following table will help in understanding the manner of computation of the total tax liability of the taxpayer.
Computation of total income and tax liability for the year
| Particulars | Amount |
| Income from salary | XXXXX |
| Income from house property | XXXXX |
| Profits and gains of business or profession | XXXXX |
| Capital gains | XXXXX |
| Income from other sources | XXXXX |
| Total of head wise income | XXXXX |
| Set off of cosses | XXXXX |
| Gross Total Income | XXXXX |
| Less : Deductions under Chapter VI-A (i.e., under section 80C to 80U)) | (XXXXX) |
| Total Income (i.e., taxable income) | XXXXX |
| Tax on total income to be computed at the applicable rates (for rates of tax, refer “Tax Rate” section) | XXXXX |
| Less : Rebate under section 87A (discussed in later FAQ) | (XXXXX) |
| Tax Liability After Rebate | XXXXX |
| Add: Surcharge (discussed in later FAQ) | XXXXX |
| Tax Liability After Surcharge | XXXXX |
| Add: Health & Education cess @ 4% on tax liability after surcharge | XXXXX |
| Tax liability before rebate under sections 86, section 89, sections 90, 90A and 91 (if any) (*) | XXXXX |
| Less : Rebate under sections 86, section 89, sections 90, 90A and 91(if any) (*) | (XXXXX) |
| Tax liability for the year before pre-paid taxes | XXXXX |
| Less: Prepaid taxes in the form of TDS, TCS and advance tax | (XXXXX) |
| Tax payable/Refundable | XXXXX |
(*) Rebate under section 86 is available to a member of association of persons (AOP) or body of individuals (BOI) in respect of income received by such member from the AOP/BOI.
Rebate (i.e., relief) under section 89 is available to a salaried employee in respect of sum received towards arrears of salary, gratuity, etc.
Rebate under sections 90, 90A and 91 is available to a taxpayer in respect of double taxed income, i.e., income which is taxed in India as well as abroad.
Note : For provisions relating to Minimum Alternate Tax (MAT) in case of corporate taxpayers and Alternate Minimum Tax (AMT) in case of non-corporate taxpayers refer tutorial on “MAT/AMT”.