CA Intermediate · Taxation

Deductions from Gross Total Income: formula sheet

Full chapter guide

Key formulas

Total income: Total income = Gross total income − Eligible deductions from GTI; Deductions are applied only after clubbing, set-off and carry forward of losses have been done.
Gross total income: GTI = Income under the five heads (after clubbing, set-off and brought-forward loss adjustment); Exempt income is never part of GTI, so no deduction is allowed against it.
Cap on aggregate deductions: Aggregate deductions allowed ≤ GTI (after leaving out special-rate capital gains, against which these deductions are generally not allowed); Excess deductions lapse. They are not carried forward and cannot create a loss. Special-rate capital gains are taxed separately at their own rates.
Deduction on income of a specific source: Deduction = Eligible % × Net income of that source included in GTI (subject to the limit given in the provision); Use net income after expenses of that source, not gross receipts.
Rounding of total income: Round total income to the nearest multiple of ₹10 (last digit 5 or more goes up; below 5 goes down); Round only the final total income, not the intermediate figures.
No double deduction: Same amount cannot be deducted twice (once within a head and again from GTI); If an expense is already allowed in computing a head, you cannot claim it again as a GTI deduction.
Aggregate ceiling (old regime): Savings group deduction = lower of (total eligible amounts, ₹1,50,000); The group covers life insurance premium, PPF, EPF, tuition fees, ELSS, NSC, tax-saver FD, Sukanya Samriddhi and own NPS contribution (within its 10% or 20% limit). Home loan principal and stamp duty belong to the housing-loan topic.
Life insurance premium: policy issued on or before 31 March 2012: Premium eligible = lower of (premium paid, 20% × actual capital sum assured); Capital sum assured excludes bonus and similar benefits. Premium for self, spouse or any child qualifies. HUF: any member. Parents' policies do not qualify.
Life insurance premium: policy issued on or after 1 April 2012: Premium eligible = lower of (premium paid, 10% × actual capital sum assured); For policies on a person with disability or specified disease, issued on or after 1 April 2013, the limit is 15%.
Employee's own NPS contribution: Salaried: up to 10% of salary. Others: up to 20% of gross total income. Still within ₹1,50,000.; Salary for this purpose means basic pay plus dearness allowance if the terms of employment provide for it to count for retirement benefits. Do not use gross salary. This limit applies first.
Additional own NPS contribution: Extra deduction = lower of (own NPS contribution − amount within the 10% or 20% limit, ₹50,000); Only for the assessee's own NPS contribution, not the employer's. The 10% or 20% limit is applied first and the excess over it is tested against ₹50,000. It is over and above the ₹1,50,000 ceiling. Old regime only.
Employer's NPS contribution: Deduction = lower of (employer contribution, limit % × salary). New regime: 14% for all employees. Old regime: 14% for Central or State Government employees, 10% for others.; Salary means basic plus DA (if terms provide). This is outside the ₹1,50,000 ceiling, but total deductions are still capped by the overall limit below.
Tuition fees: Eligible = tuition fees only, for at most two children, full-time education in India; Excludes development fees, donations and capitation fees. The fees must be paid to a university, college, school or other educational institution.
Overall limit on deductions: Total of these deductions ≤ gross total income − specified special-rate incomes; The total deduction cannot exceed gross total income after leaving out the specified special-rate incomes (such as certain capital gains). If the question has no such incomes, the cap is simply gross total income.
Health insurance: self, spouse, dependent children: Limit = ₹25,000 (₹50,000 if the individual or spouse is a senior citizen, aged 60 or more); Premium must be paid by any mode other than cash. For a HUF, premium for any member is covered, with the same limits.
Health insurance: parents: Additional limit = ₹25,000 (₹50,000 if a parent is a senior citizen); Parents need not be dependent. The limit is separate from the self-family limit. Maximum possible is ₹1,00,000 when both sets are senior.
Preventive health check-up: Deduction ≤ ₹5,000 in total, within the overall limits above; The ₹5,000 is combined for self, family and parents. It is not extra. Cash payment is allowed for check-up.
Medical expenditure on a senior citizen without insurance: Where no health insurance is held on a senior citizen (self, spouse or parent), actual medical expenditure on that person, plus any check-up and any premium for other persons in the same category, is allowed within the ₹50,000 limit of that category; Applies only if no health insurance is held on that senior citizen. It is part of, not additional to, the limit of that person's category only (self-family or parents). Cash payment is allowed for this expenditure.
Dependant with disability: Fixed ₹75,000 (disability 40% or more); fixed ₹1,25,000 (severe, 80% or more); Dependant: spouse, children, parents, brothers and sisters, wholly or mainly dependent on you (any member for a HUF). Claim is fixed whatever you spend. The dependant must not have claimed the deduction for own disability.
Specified disease treatment: Lower of (actual expense − insurance or reimbursement received) and ₹40,000 (₹1,00,000 if the patient is a senior citizen); Patient: the assessee or a dependant (spouse, children, parents, brothers and sisters, wholly or mainly dependent on the assessee). Specialist prescription needed.
Person with disability (self): Fixed ₹75,000 (40% or more); fixed ₹1,25,000 (80% or more, severe); Only for an individual who is certified as a person with disability. Disability certificate needed. Cannot be used for a dependant.
Education loan interest deduction: Deduction = total interest paid in the year (no cap); Allowed for the first year of interest payment plus 7 more years, or until repaid if earlier. Individuals only. Interest only, not principal.
Rent paid deduction (no HRA received): Least of: (a) ₹5,000 × number of months; (b) 25% × adjusted total income; (c) rent paid − 10% × adjusted total income; Annual ceiling is ₹60,000, which is ₹5,000 per month for 12 months. Individual who receives no HRA. Not allowed if the individual, spouse or minor child owns residential accommodation at the place of residence or work, or if the individual owns a self-occupied house elsewhere. Declaration of rent paid is required.
Adjusted total income: Gross total income − long-term capital gains − short-term capital gains taxed at special rate − other special-rate income − all Chapter-type deductions other than the rent deduction; Do not subtract the rent deduction itself. Only the items listed above are removed from gross total income. Use this base for both 25% and 10% in the rent formula.
Affordable housing loan interest (legacy deduction): Deduction = lower of (interest paid − interest allowed under Income from House Property) and ₹1,50,000; Covers only the interest in excess of the amount allowed under Income from House Property, so no interest is deducted twice. Loan from a financial institution sanctioned 1 April 2019 to 31 March 2022; stamp duty value ≤ ₹45,00,000; no residential house owned on date of sanction. The window has closed, so this is a legacy deduction for a loan sanctioned inside it. Use it only if the question states it, and never for a new loan. Cannot be claimed together with the earlier ₹50,000 home-loan interest deduction for the same loan.
Electric vehicle loan interest (legacy deduction): Deduction = lower of interest paid and ₹1,50,000; Loan from a financial institution sanctioned 1 April 2019 to 31 March 2023 for buying an EV. The window has closed, so this is a legacy deduction for a loan sanctioned inside it. Use it only if the question states it. A loan sanctioned after 31 March 2023 gets no deduction. Individual only.
Four groups of donations: 100% no limit | 50% no limit | 100% with limit | 50% with limit; Group is decided by the recipient. Typical 100% no limit: National Defence Fund, Prime Minister's National Relief Fund, Swachh Bharat Kosh, Clean Ganga Fund. Typical 50% with limit: Government or local authority for charitable purposes, and other approved charitable funds or institutions. Donations to Government for family planning are in a separate limited category, so check the rate in your study material. For the 50% no-limit group, use the recipients listed in your current study material, or the group stated in the question.
Adjusted gross total income: AGTI = Gross total income − long-term capital gains − special-rate short-term capital gains (listed securities) − other excluded special-rate income − Chapter VIII deductions other than donations; Do not subtract the donation deduction itself. Follow the exclusions the question gives.
Qualifying limit: Qualifying limit = 10% × AGTI; Applies to the total of all donations in the 'with limit' groups, not to each donation separately.
Qualifying amount: Qualifying amount = Lower of (actual eligible donations in the limited groups, 10% × AGTI); Cash above ₹2,000 and donations in kind are left out before this step.
Total deduction: Deduction = (100% no-limit donations) + (50% no-limit donations × 50%) + (100% limited group qualifying amount) + (50% limited group qualifying amount × 50%); If both 100% and 50% donations are subject to the limit, cap their combined total at 10% of AGTI. Then split the capped amount between the 100% and 50% items as the question or study material directs. Allowing the 100% items first is not a statutory rule, so follow the question's instruction.
Cash rule for charities: Cash donation > ₹2,000 → no deduction; Cash of ₹2,000 or less is allowed. Payment by cheque, draft or electronic mode is always acceptable.
Political parties and electoral trusts (contributor's deduction): Deduction = 100% of contribution; no qualifying limit; no cash; Recipient must be a registered political party or an approved electoral trust. This is the contributor's deduction. The exemption of the party's own income is a separate provision. Local authorities and artificial juridical persons wholly or partly funded by the Government cannot claim it.
Eligible start-up deduction: Deduction = 100% × profits from the eligible business, for any 3 consecutive tax years out of the 10 years beginning with the year of incorporation; Company or LLP only. Incorporated on or after 1 April 2016 and before 1 April 2030 as extended by the Finance Act, 2026, per the study material (use the cut-off given in your study material). Turnover must not exceed ₹100 crore in the years relevant to the claim. Needs recognition as a start-up. Not formed by splitting up or reconstructing an existing business, and previously used plant or machinery transferred must not exceed 20% of the total value of plant and machinery. Choose the 3 years yourself.
Additional employee cost deduction: Deduction = 30% × additional employee cost, for 3 tax years including the year of hiring; Business must be subject to tax audit. Employee monthly emoluments up to ₹25,000, employed for 240 days or more (150 days for apparel, footwear, leather), in a recognised provident fund. Cash-paid emoluments are excluded.
Profit of SEZ unit eligible before applying the deduction percentage (existing units): Profit of the unit × Export turnover of the unit ÷ Total turnover of the business carried on by the assessee; This gives only the profit eligible for deduction, not the deduction itself. For a services unit, use the export turnover of services of the unit and the total turnover of the business. Unit must have begun on or before 31 March 2021. Then apply: 100% of this profit for the first 5 years, 50% for the next 5 years, and for the next 5 years up to 50% of the profit, limited to the amount credited to the Special Economic Zone Re-investment Reserve Account and used for the specified purpose.
Cooperative society deduction: Deduction = income from specified activities (as the law allows), plus interest and dividend from investment in other cooperative societies; Not available to most cooperative banks. Not available if the society opts for the concessional tax rate regime.
Overall ceiling: Total deductions ≤ Gross total income; A deduction can reduce total income to nil but never below nil. It is not allowed against losses to be carried forward.
Claim condition: Claim only through a return filed by the due date; Profit-linked deductions are lost if the return is filed late. Check the exact wording in your study material.
Gross total income: GTI = Salary + House property + Business or profession + Capital gains + Other sources (after set-off and carry forward of losses, and after clubbing); Compute each head fully before touching deductions.
Total income: Total income = GTI − Deductions allowed; Round the result to the nearest ₹10 before applying slabs.
Overall cap on deductions: Deductions allowed ≤ GTI (less any income on which the deduction is barred); Some deductions are not allowed against certain special-rate capital gains. Check the condition for each deduction.
Savings-type combined limit: Life insurance + PPF + ELSS + tuition fee and similar items, together with employee pension-type contributions in the same group ≤ ₹1,50,000 (old regime); Add all items in the group first, then apply the limit once. Employer NPS contribution is not part of this group. It has its own separate limit and sits outside the ₹1,50,000 limit.
Health insurance premium (old regime): Self, spouse and children (below 60): up to ₹25,000. Parents are a separate additional limit.; Premium must be paid by a mode other than cash. Higher limits apply for senior citizens.
Savings bank interest deduction (old regime): Lower of interest received and ₹10,000 (individual or HUF below 60); Only for savings account interest, not fixed deposit interest.
Employer NPS contribution (available in both regimes): Deduction = Lower of employer contribution and 14% of salary (basic + DA) under new regime; 10% under old regime; The contribution is first included in taxable salary, then deducted. This deduction is separate from the ₹1,50,000 group limit and is outside it.
Tax payable: Tax on total income − Rebate (if eligible) + Surcharge (if applicable) + 4% cess; Cess applies on tax plus surcharge, after rebate and marginal relief.
Rates assumed in this page (tax year 2026-27): New regime: ₹0–4,00,000 nil; 4–8 lakh 5%; 8–12 lakh 10%; 12–16 lakh 15%; 16–20 lakh 20%; 20–24 lakh 25%; above 24 lakh 30%. Old regime (below 60): ₹0–2,50,000 nil; 2.5–5 lakh 5%; 5–10 lakh 20%; above 10 lakh 30%.; Always use the rates given in the question, or confirm them against the Finance Act, 2026 provisions in your study material.

Quick revision

Total income = gross total income minus eligible deductions.
Total deductions cannot exceed gross total income.
Deductions are not allowed against certain special-rate capital gains.
Check the regime first: most of these deductions are not available in the default new regime.
Some deductions share a combined limit, so add them before applying the cap.
Eligibility often depends on who the claimant is: individual, HUF, company or firm.
Health and disability deductions depend on the person for whom the payment is made and on their age or disability level.
Donation deductions depend on the recipient, the mode of payment and the qualifying limit.
Rent, loan and interest deductions need conditions on the claimant and the property or loan to be met.
Use the tax year and the Income-tax Act, 2025, not the old Act or assessment year.
Always show the gross total income line before the deductions in your answer.
Attempt every MCQ because there is no negative marking.

Common mistakes

Deducting Chapter-type deductions before computing GTI, or using them within a head. Fix: Finish each head with its own deductions first. Reach GTI. Only then deduct amounts that the deduction chapter allows.
Allowing deductions that push total income below nil, or setting them against special-rate capital gains. Fix: Always compare total claims with the GTI against which they can be claimed. Leave out special-rate capital gains. Restrict the deduction to that amount and do not carry forward the excess.
Claiming savings deductions under the default new regime Fix: Check the regime before anything else. Under the new regime, only employer NPS is claimed in this topic.
Allowing the full life insurance premium Fix: Compute 10% (or 20% or 15%) of the actual capital sum assured and take the lower of that and the premium.
Allowing a premium paid in cash Fix: Premium must be paid by a mode other than cash. Only the check-up and senior medical expenditure may be in cash.
Adding ₹5,000 check-up on top of the ₹25,000 or ₹50,000 limit Fix: The check-up is part of the category limit. Add it, then cap the total at the limit.
Taking 25% or 10% on gross total income instead of adjusted total income. Fix: Always compute adjusted total income as a separate line before the three-way comparison.
Claiming the rent deduction when HRA is received, even partly. Fix: Read for 'no HRA received'. If any HRA is received, this deduction is not available.
Applying 10% to gross total income instead of adjusted gross total income. Fix: Always write AGTI as a separate line. Subtract capital gains taxed at special rates and other Chapter VIII deductions before taking 10%.
Applying the 10% limit to each donation separately. Fix: Add all donations in the limited groups, then compare the total with 10% of AGTI once.

Exam tips

Begin every computation answer with the regime assumption. It decides which deductions you may list.
Present GTI as a separate line. Examiners look for it as a checkpoint before the deductions.
For each deduction, write the limit and the amount allowed in two columns. This makes partial marks easy to award.
In MCQs, check whether the question asks for GTI or total income. The two differ by exactly the allowed deductions.
If the question has special-rate capital gains, do not set these deductions against them. Say so in one line.
Do not quote section numbers of the 2025 Act unless you are sure of them. Stating the rule and its condition clearly earns the marks.
Write the regime in the first line of your answer. Examiners look for it, and it stops you losing marks for an invalid claim.
Show each limit calculation separately: the sum-assured percentage, the salary percentage and the ₹1,50,000 cap. Step marks are given for each.