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CA Intermediate · Taxation · Deductions from Gross Total Income

Karan, a resident salaried individual, receives no house rent allowance and owns no residential house anywhere. He pays rent of Rs 22,000 per month for a flat in Pune for all 12 months of tax year 2026-27 and has opted out of the concessional regime. His adjusted total income is Rs 6,00,000 before this deduction. What deduction for rent paid can he claim for tax year 2026-27?

Karan can claim Rs 60,000. The deduction for rent paid by a person without HRA is the least of Rs 5,000 per month (Rs 60,000), 25% of adjusted total income (Rs 1,50,000), and rent paid less 10% of that income (Rs 2,04,000). The lowest is Rs 60,000.

  1. ARs 1,50,000
  2. BRs 2,04,000
  3. CRs 60,000Correct
  4. DRs 2,64,000

Explanation

The deduction is the least of: (i) Rs 5,000 per month = Rs 60,000; (ii) 25% of adjusted total income = Rs 1,50,000; (iii) rent paid minus 10% of adjusted total income = 2,64,000 - 60,000 = Rs 2,04,000. The least is Rs 60,000. Rs 1,50,000 and Rs 2,04,000 each take a limb of the test other than the lowest.

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