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CA Final · Direct Tax Laws & International Taxation · Deductions from Gross Total Income

Mr. Anil Menon, a non-resident Indian, has the following income for the tax year: long-term capital gains of Rs. 6,00,000 and interest on a specified investment of Rs. 2,00,000, both of which are treated as investment income or long-term capital gains for this purpose, and business income in India of Rs. 5,00,000. He has eligible deductions under Chapter VIII of Rs. 1,50,000. Under section 213, what is the total income after deduction?

Total income is Rs. 11,50,000. For a non-resident Indian, investment income and long-term capital gains are excluded when determining the base for Chapter VIII deductions. The reduced gross total income is Rs. 5,00,000, which covers the Rs. 1,50,000 deduction, which is then subtracted from the full Rs. 13,00,000.

  1. ARs. 11,50,000Correct
  2. BRs. 12,50,000
  3. CRs. 6,50,000
  4. DRs. 13,00,000

Explanation

Under section 213(2)(b), the investment income and long-term capital gains are removed from GTI (Rs. 13,00,000 less Rs. 8,00,000 = Rs. 5,00,000), and Chapter VIII deductions are allowed against this reduced figure. Deduction of Rs. 1,50,000 is within Rs. 5,00,000, so it is allowed. Total income is Rs. 13,00,000 less Rs. 1,50,000 = Rs. 11,50,000. Rs. 13,00,000 would ignore the deduction entirely.

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