Deductions from Gross Total Income: formula sheet

Key formulas

Total income

Total income = Gross total income − Deductions allowed under the deductions chapter

Deductions come after set-off and carry forward of losses, and before tax is computed.

Ceiling rule (general statement)

Total deductions allowed ≤ Gross total income

This is the general statement only. When lottery winnings or VDA transfer income is part of GTI, the operative limit is the narrower one in the next formula. If deductions exceed the limit, total income is not reduced below the excluded income (nil if there is none). The excess lapses and is not carried forward.

Operative deduction ceiling

Maximum deduction = GTI − Income excluded from deductions (lottery and similar winnings, VDA transfer income)

In practice the deductible base leaves out lottery and VDA transfer income, so this is the limit you apply. Other special rate income, such as certain capital gains, stays in the base unless its charging provision bars deductions.

Income eligible for deduction

Deduction is allowed only on income included in GTI

Exempt income is outside GTI, so no deduction can be claimed against it.

Regime condition

Concessional regime: only the specified deductions (including the standard deduction, employer's NPS contribution, Agniveer Corpus Fund and others). Other regime: the full list, subject to each section's conditions.

Test the regime first, then each deduction one by one.

Donations: 100% without qualifying limit

Deduction = 100% × eligible donation

Examples: Prime Minister's National Relief Fund and National Defence Fund. No cap by reference to income.

Donations: 50% without qualifying limit

Deduction = 50% × eligible donation

Applies only to the funds the donation provision lists in this category. Check the donee in the question against that list. No cap by reference to income.

Donations with qualifying limit

Qualifying amount = lower of (actual donation, 10% × adjusted gross total income). Deduction = 100% or 50% (as the donee's category provides) × qualifying amount

Most approved charitable institutions are in the 50% category. Jawaharlal Nehru Memorial Fund, Indira Gandhi Memorial Trust and Rajiv Gandhi Foundation are also in the 50% category with the qualifying limit. A few, such as government for family planning promotion, are in the 100% category. If several donations have a limit, add them and apply the 10% cap to the total.

Adjusted gross total income

Gross total income − long-term capital gains − short-term capital gains taxed at a special rate − other income taxed at special rates (as per the donation provision) − all deductions under this Chapter except the donation deduction itself (the investment deductions including life insurance premium, and others such as health insurance premium, education loan interest and political party contributions)

Use this base only for the 10% test. Every deduction under the Chapter other than the donation deduction is subtracted to reach it. Check the exact exclusions given in the question's data.

Payment condition for donations

Any sum above ₹2,000 must be paid by a mode other than cash. Donations in kind are not eligible.

A cash donation of ₹2,000 or less may qualify. Keep the receipt.

Political party or electoral trust contribution

Deduction = 100% × contribution paid by a mode other than cash

Donee must be a registered political party or an eligible electoral trust. No qualifying limit. Local authorities and artificial juridical persons wholly or partly funded by government cannot claim.

Life insurance premium

Eligible premium is limited to a percentage of actual capital sum assured. Policies issued before 1 April 2012: 20%. From 1 April 2012: 10%. For a disabled person or one with a specified disease, policies issued from 1 April 2013: 15%. The eligible premium, together with other eligible investments, is then limited to the combined ceiling of ₹1,50,000

Individual or HUF only. Premium paid for self, spouse and children (for an individual) is eligible. Two tests apply in order: first the sum assured cap on the premium, then the combined ₹1,50,000 ceiling for specified investments.

Health insurance premium

Self, spouse, dependent children: ₹25,000 (₹50,000 if the insured self or spouse is a senior citizen). Parents: another ₹25,000 (₹50,000 if parent is a senior citizen). Preventive health check-up: up to ₹5,000 within these limits

The ₹50,000 limit for self and family applies where the self or spouse is a senior citizen; otherwise the limit is ₹25,000. Premium must be paid by a mode other than cash. The check-up expense may be paid in cash. Maximum possible deduction is ₹1,00,000.

Education loan interest

Deduction = full interest paid in the year, for the first year of payment and the next 7 years (8 years in all), or until the interest is fully paid, whichever is earlier

Loan must be from a bank, financial institution or approved charitable institution for higher education of self, spouse, children or a student whose legal guardian you are. Principal is not deductible. Individuals only.

Rent paid by an individual with no HRA

Deduction = least of: (a) ₹5,000 × months of rent; (b) 25% × adjusted total income; (c) rent paid − 10% × adjusted total income

Adjusted total income is total income computed after all other deductions under this Chapter but before the rent deduction, less long-term capital gains, short-term capital gains taxed at a special rate and other special-rate income. Neither the assessee, nor the spouse or minor child (nor a HUF of which the assessee is a member), may own residential accommodation at the place of residence. The assessee must also not own any self-occupied residential property elsewhere, and must file the prescribed declaration.

Overall ceiling

Total deductions ≤ gross total income (excluding income that cannot take deductions, such as certain special-rate income)

Deductions cannot create a loss or reduce total income below zero.

Person with disability (self)

As under the earlier provision (section 80U of the 1961 Act), resident individual with disability of 40% or more: ₹75,000. Severe disability (80% or more): ₹1,25,000

Fixed amount. No need to spend anything. Medical authority certificate is required. These are the earlier-provision figures and are not confirmed here for the Income-tax Act, 2025. Verify them against the current Finance Act, 2026 table before use.

Disabled dependant

As under the earlier provision (section 80DD of the 1961 Act), dependant with 40% or more disability: ₹75,000. Severe (80% or more): ₹1,25,000

Claimed by a resident individual or HUF who bears the maintenance cost or pays into a notified scheme. Fixed amount. Not allowed if the dependant himself claims the disability deduction. These are the earlier-provision figures and are not confirmed here for the Income-tax Act, 2025. Verify them against the current Finance Act, 2026 table before use.

Specified disease treatment

Deduction = lower of (actual expenditure − insurance or other reimbursement) and the limit. Limit (as under the earlier provision): ₹40,000; ₹1,00,000 if the patient is a senior citizen (60 or more years)

For self or a dependant. Resident individual or HUF. For an HUF, the patient must be a member of the HUF. The senior citizen limit applies by reference to the patient's age. Prescription or certificate from a specialist is required. These limits are the earlier-provision figures and are not confirmed here for the Income-tax Act, 2025 as amended by the Finance Act, 2026. Confirm them against the current table before using them.

Savings account interest

As under the earlier provision (section 80TTA of the 1961 Act), deduction = lower of interest on savings accounts and ₹10,000

Individual or HUF. Only savings account interest from bank, co-operative bank or post office. Under the earlier provisions, a resident senior citizen could not claim it and claimed the senior citizen deduction (section 80TTB) instead, while a non-resident senior citizen was not barred. Confirm this and the limit against the Income-tax Act, 2025 before treating them as settled.

Senior citizen deposit interest

As under the earlier provision (section 80TTB of the 1961 Act), deduction = lower of interest on deposits with bank, co-operative bank or post office and ₹50,000

Available only to a resident senior citizen (60 or more years). Covers savings and fixed deposit interest. Company deposit interest is excluded. The limit is the earlier-provision figure. Verify it against the current table before use.

Overall cap

Total deductions ≤ gross total income (excluding income taxed at special rates such as section 111A STCG and LTCG)

Apply the cap after summing all eligible deductions. No deduction is allowed against special-rate income.

Royalty on books by an author

Deduction = lower of (net qualifying royalty income) and ₹3,00,000

For a resident individual author of a book of literary, artistic or scientific nature. Qualifying income is computed after expenses related to it, as the Act provides. Journals, magazines, newspapers, diaries, school textbooks and similar publications do not qualify. Income in foreign exchange must be brought into India, or converted, within the time allowed. A certificate in the prescribed form is needed. Check the regime condition in the Income-tax Act, 2025 before claiming.

Royalty on patents

Deduction = lower of (net royalty income from patent) and ₹3,00,000

For a resident individual patentee, the patent being registered under the Patents Act, 1970. Where there are joint patentees, each claims on his own share. A certificate in the prescribed form from the authority is needed. Check the regime condition in the Income-tax Act, 2025 before claiming.

Co-operative society: specified activities

Deduction = whole of profits from the specified activity

The list of specified activities in the Act is exhaustive, and the deduction is available only for the listed activities. The list covers credit to members, marketing members' produce, buying agricultural implements, seeds, livestock and similar articles to supply to members, processing members' agricultural produce (check the Act's condition on the use of power), cottage industry, fishing and collective disposal of labour. A society providing credit to members qualifies. A co-operative bank other than a primary agricultural credit society or primary co-operative agricultural and rural development bank does not get the credit-facilities relief.

Co-operative society: investment and letting income

Deduction = whole of interest/dividend from investments with other co-operative societies + whole of income from letting godowns or warehouses for storage, processing or facilitating marketing of commodities

No monetary cap applies to these.

Co-operative society: other income cap

Deduction = lower of (income in the statutory other-income category, i.e. from activities other than the specified ones) and ₹1,00,000 (consumer society) or ₹50,000 (any other society)

Applies only to income that falls in the other-income category. Classify each item first. It does not cap the specified-activity profits or the full reliefs above. The income must be included in gross total income.

Inter-corporate dividend

Deduction = dividend income included in gross total income − dividend distributed by the company on or before one month before the due date of filing the return

For a domestic company, on dividend taxable under the head Income from Other Sources and included in gross total income. Cannot be negative. Verify the qualifying sources of dividend and the regime condition in the Income-tax Act, 2025 text.

Overall limit

Total deductions ≤ gross total income

A deduction cannot reduce total income below nil. For special-rate income and regime conditions, check the Income-tax Act, 2025 text.

Quick revision

• Total income = gross total income minus deductions allowed under this chapter.
• Gross total income comes only after set-off and carry forward of losses and after clubbing.
• Check each deduction for who may claim it before you check the amount.
• Many deductions are limited to the relevant income included in gross total income, not the whole of it.
• Check the overall ceiling that applies to deductions in the chapter before finalising the figure.
• For donations, note the qualifying limit, the rate of deduction and the permitted mode of payment.
• For payments, a claim needs proof that the payment was actually made in the tax year.
• Incentive deductions usually run for a fixed period, so confirm the year of the claim within it.
• Conditions such as separate books or filing a return on time can decide whether a claim survives.
• Use only the Income-tax Act, 2025 terms: tax year and the new section numbers.
• In answers, state the provision, apply the facts, then give the conclusion with the figure.
• Always end the working with total income, rounded as the rules require.

Common mistakes

• Letting deductions exceed GTI and showing a negative total income. Fix: Always compare total deductions with GTI. Total income cannot go below nil, and the excess lapses.
• Deducting from lottery winnings or VDA transfer income. Fix: Split GTI first. Apply deductions only to the part that can be reduced. Do not treat every special rate income as barred; check the charging provision.
• Applying the 10% limit to gross total income instead of adjusted gross total income Fix: Always write the adjusted gross total income calculation. Deduct special-rate capital gains and the other deductions before taking 10%.
• Treating all donations as subject to the qualifying limit Fix: Classify each donee first. Use the four buckets and apply the limit only to the two with-limit buckets.
• Limiting the disability deduction to the amount actually spent Fix: For self disability and disabled dependant, the deduction is fixed. Give ₹75,000 or ₹1,25,000 even if the spending is lower.
• Not reducing treatment expenditure by insurance or employer reimbursement Fix: Always compute net expenditure first, then compare with the limit.
• Taking gross royalty instead of net royalty as the base for the ₹3,00,000 comparison. Fix: First subtract expenses related to the royalty, then compare the net with ₹3,00,000.
• Allowing the royalty deduction to a non-resident or to a company or firm. Fix: Both reliefs are for resident individuals. Check status, and the regime condition, before computing.

Exam tips

• Write the regime and the status of the assessee in the first line. It helps you avoid most errors.
• In case scenarios, look for words such as lottery, game or virtual digital asset. They signal income that is excluded from the deduction base.
• Show the ceiling check as a visible line, for example: deductions ₹X is less than GTI ₹Y, so allowed in full.
• In written answers, state the general provision that allows deductions from GTI in computing total income, then move to the specific deduction asked.
• For MCQs, compute total income only after separating excluded income such as lottery winnings. Wrong options often ignore this split.
• In MCQs the trap is usually the payment mode or the donee category. Check both before looking at the amounts.
• Write the adjusted gross total income calculation as a separate line in descriptive answers. Examiners award marks for it even if you slip later.
• When a question gives a mix of donations, group them under the four heads. This makes the answer easy to mark and easy for you to recheck.