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CA Intermediate · Taxation · Deductions from Gross Total Income

Anita Desai, a resident individual under the old tax regime, has gross total income of Rs 6,00,000 for tax year 2026-27, with no long-term capital gains or other special-rate income. She claims Rs 1,50,000 under the PPF and life insurance deduction. She donated Rs 80,000 by cheque to an approved charitable trust, where the deduction is 50% subject to a qualifying limit of 10% of adjusted gross total income. She also donated Rs 20,000 by cheque to the Prime Minister's National Relief Fund (100% deduction without limit). What is her total deduction for donations?

The total donation deduction is Rs 42,500. Adjusted gross total income is Rs 4,50,000, so the qualifying limit is Rs 45,000 and 50% of it gives Rs 22,500. The Rs 20,000 donation to the Prime Minister's National Relief Fund qualifies fully, giving Rs 42,500.

  1. ARs 42,500Correct
  2. BRs 60,000
  3. CRs 50,000
  4. DRs 65,000

Explanation

Adjusted gross total income is Rs 6,00,000 minus Rs 1,50,000, which is Rs 4,50,000. The qualifying limit is 10%, which is Rs 45,000, so the donation qualifying for 50% is Rs 45,000 and the deduction is Rs 22,500. Adding Rs 20,000 for the relief fund gives Rs 42,500. Using gross total income for the limit gives Rs 50,000. Ignoring the limit gives Rs 60,000.

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