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CS Professional · Advanced Direct Tax Laws and Practice · Computation of Total Income, Tax Liability and Filing of Return of Companies

A foreign company has gross total income consisting only of dividend from an Indian company (not an IFSC unit) of ₹10,00,000 and bank interest on a foreign currency loan, taxable under section 207(1) (Sl. No. 3). Which statement about deductions under Chapter VIII and Schedule XV is correct under the Income-tax Act, 2025?

No deduction is allowed under Chapter VIII and Schedule XV. Under section 207(6)(a), when gross total income consists only of the income at serial numbers 1 to 7 of the section 207(1) table, such as dividend and foreign currency interest, those deductions are barred.

  1. AChapter VIII deductions are allowed on the whole gross total income
  2. BNo deduction is allowed under Chapter VIII and Schedule XVCorrect
  3. CDeduction is allowed only on dividend income
  4. DDeduction is allowed only on interest income

Explanation

Section 207(6)(a) says that where gross total income consists only of income at Sl. Nos. 1 to 7 of the section 207(1) table, no deduction is allowed under Chapter VIII and Schedule XV. Dividend (Sl. 1) and foreign currency interest (Sl. 3) both fall in that range.

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