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CA Intermediate · Taxation · Basic Concepts

Mr. Arvind, a resident individual, has the following for tax year 2026-27: salary taxable Rs 6,00,000; short-term gain on sale of listed equity shares (STT paid) Rs 1,00,000. He also has income of Rs 50,000 that is exempt. His brother's minor child's income of Rs 20,000 is not clubbed. Which is correct regarding his total income before deductions, and which concept links to it?

Total income before deductions is Rs 7,00,000. Salary and the short-term capital gain are added, exempt income is left out, and the brother's child's income is not clubbed because clubbing covers only specified relations such as spouse or own minor child.

  1. ARs 7,00,000; exempt income is excluded from total incomeCorrect
  2. BRs 7,50,000; exempt income is included in total income
  3. CRs 7,20,000; clubbing of the nephew's income is required
  4. DRs 6,00,000; capital gains are not part of total income

Explanation

Total income includes salary Rs 6,00,000 plus short-term capital gain Rs 1,00,000 = Rs 7,00,000. Exempt income is excluded when computing total income. Clubbing applies only to specified relationships such as a spouse or the person's own minor child, not a brother's child.

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