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CA Intermediate · Taxation · Deductions from Gross Total Income

Mrs. Kamala Iyer, a resident individual aged 66, has opted for the old tax regime for tax year 2026-27. She earned interest of Rs 32,000 on a savings bank account, Rs 28,000 on bank fixed deposits and Rs 15,000 on a post office savings account. None of this is business income. What is the maximum deduction she can claim for this interest income?

The deduction is Rs 50,000. A resident senior citizen can deduct interest from bank, co-operative bank and post office deposits, up to Rs 50,000. Her total interest is Rs 75,000, which exceeds the cap, so the limit applies. The Rs 10,000 cap is for non-seniors on savings interest only.

  1. ARs 10,000
  2. BRs 32,000
  3. CRs 50,000Correct
  4. DRs 75,000

Explanation

For a resident senior citizen the deduction covers interest from bank deposits, co-operative bank deposits and post office deposits. Total interest is 32,000 + 28,000 + 15,000 = Rs 75,000. The deduction is limited to the lower of interest earned and Rs 50,000, so it is Rs 50,000. Rs 10,000 is the cap for non-senior individuals on savings interest only, and so is wrong here.

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