Skip to content

CA Intermediate · Taxation · Deductions from Gross Total Income

Mr. Raghunath, aged 66 years, is a resident individual who has opted for the old tax regime for tax year 2026-27. During the year he earned interest of ₹18,000 on a savings bank account, ₹40,000 on a bank fixed deposit and ₹12,000 on a post office time deposit. He has no other deduction-eligible interest. What is the deduction he can claim for interest income from deposits under the Chapter on deductions?

The deduction is ₹50,000. Interest on savings, bank fixed and post office deposits totals ₹70,000, but a resident senior citizen's deduction for deposit interest is capped at ₹50,000. The deduction is the lower of actual eligible interest and the cap, so ₹50,000 is allowed.

  1. A₹70,000
  2. B₹50,000Correct
  3. C₹40,000
  4. D₹10,000

Explanation

A resident senior citizen can claim a deduction for interest on deposits with banks, co-operative banks and post offices, limited to ₹50,000. Eligible interest is 18,000 + 40,000 + 12,000 = ₹70,000. The deduction is the lower of ₹70,000 and ₹50,000, i.e. ₹50,000. Claiming the full ₹70,000 ignores the ceiling.

Did you get it right without looking?

One question tells you little. A timed set on Deductions from Gross Total Income shows your real accuracy, how long you take and where you lose marks.

Practise Deductions from Gross Total IncomeFree diagnostic mock

More Deductions from Gross Total Income questions