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CA Intermediate · Taxation · Deductions from Gross Total Income

Meera is a salaried individual under the old tax regime. She receives no house rent allowance and does not own a residential house at her place of work. She paid rent of ₹15,000 per month for all 12 months of tax year 2026-27. Her adjusted total income for this deduction is ₹4,00,000. Under the rent-paid deduction for persons not receiving HRA, the deduction is the least of ₹5,000 per month, 25% of adjusted total income, and rent paid minus 10% of adjusted total income. What is her deduction?

Her deduction is ₹60,000. The three limits are ₹60,000 (₹5,000 for 12 months), ₹1,00,000 (25% of adjusted total income) and ₹1,40,000 (rent minus 10% of adjusted total income). The deduction is the least of these, which is ₹60,000.

  1. A₹1,00,000
  2. B₹60,000Correct
  3. C₹1,40,000
  4. D₹1,80,000

Explanation

Three limits: ₹5,000 × 12 = ₹60,000; 25% of ₹4,00,000 = ₹1,00,000; rent ₹1,80,000 less 10% of ₹4,00,000 (₹40,000) = ₹1,40,000. The least is ₹60,000. ₹1,00,000 would result from using only the percentage limit.

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