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CMA Intermediate · Direct and Indirect Taxation · Income from Other Sources

Mr. Rohan Mehta receives a family pension of Rs. 60,000 in a tax year from his late father's former employer, a regular monthly amount payable to a family member on the employee's death. He is assessed under the default regime where tax is computed under section 202(1). What is the deduction allowed against this income under the head Income from other sources?

The deduction is Rs. 20,000. Where tax is computed under section 202(1), family pension gets a deduction equal to the lower of one-third of the pension or Rs. 25,000. One-third of Rs. 60,000 is Rs. 20,000, which is below the Rs. 25,000 cap.

  1. ARs. 15,000
  2. BRs. 20,000Correct
  3. CRs. 25,000
  4. DRs. 60,000

Explanation

Under section 93(1)(d)(i), the deduction is the lower of one-third of the family pension or Rs. 25,000. One-third of Rs. 60,000 is Rs. 20,000, which is less than Rs. 25,000, so Rs. 20,000 is allowed. Rs. 15,000 is the cap for the other regime, which does not apply here.

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