Mr. X salary increased by 20%. On the increase, the tax rate is 10% higher. The percentage increase in tax liability is:

Answer: Option B

Let his original salary be Rs. 100
Salary after increment = Rs. 120
Let the tax on original salary be 20% and now tax on increased salary (Rs. 20) will be 22% i.e. Rs. 4.40
Thus, increase in tax liability $$=\frac{4.40}{20}\times 100=22\%$$