A man’s annual income has increased by Rs 5 lakhs but the tax on income that he has to pay has reduced from 12% to 10%. He now pay Rs 10,000 more income tax. What is his increased income (in Rs lakhs)?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 ie 25.
Starting income = x
New income = x + 5,00,000
Income tax at starting income = 0.12x
Income tax now = (x + 5,00,000)(0.1)
Difference = 10,000
0.1x + 5,00,000 - 0.12x = 10,000
x = 20,00,000
New salary = 25 lakhs