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CA Intermediate · Taxation · Deductions from Gross Total Income

Mr Rohit Sharma, a salaried individual who receives no house rent allowance, pays rent of ₹12,000 per month for a flat in Pune for the whole of tax year 2026-27. Neither he, his spouse nor his minor child owns residential accommodation at the place of residence or elsewhere. His adjusted total income for the purpose of the rent deduction is ₹4,80,000. Under the regime allowing Chapter VIII deductions, what deduction is available for rent paid?

The deduction is ₹60,000. It is the least of ₹5,000 per month (₹60,000), 25% of adjusted total income (₹1,20,000) and rent paid less 10% of adjusted total income (₹96,000). The monthly cap of ₹5,000 is therefore the binding limit.

  1. A₹60,000Correct
  2. B₹96,000
  3. C₹1,20,000
  4. D₹1,44,000

Explanation

The deduction is the least of three amounts. (a) ₹5,000 per month × 12 = ₹60,000. (b) 25% of ₹4,80,000 = ₹1,20,000. (c) Rent paid less 10% of adjusted total income = 1,44,000 − 48,000 = ₹96,000. The least is ₹60,000. ₹96,000 is only one of the three limbs and is not the lowest.

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