Skip to content

CA Final · Direct Tax Laws & International Taxation · Deductions from Gross Total Income

Ms. Kavya Rao, a resident individual, has a gross total income of Rs. 3,20,000 for the tax year, made up entirely of salary and interest. She has made eligible payments that would qualify for deductions under Chapter VIII totalling Rs. 4,10,000 in the aggregate. What is the maximum aggregate deduction under the Chapter that can be allowed to her?

The maximum aggregate deduction is Rs. 3,20,000. The Act says that total deductions under this Chapter can never exceed the assessee's gross total income, so even though eligible payments are Rs. 4,10,000, the deduction is limited to the gross total income and total income becomes nil.

  1. ARs. 4,10,000
  2. BRs. 3,20,000Correct
  3. CRs. 90,000
  4. DRs. 7,30,000

Explanation

Section 122(2) provides that the aggregate of deductions under this Chapter cannot in any case exceed the gross total income. The eligible deductions are Rs. 4,10,000, which is more than the GTI of Rs. 3,20,000, so the deduction is capped at Rs. 3,20,000. Rs. 4,10,000 ignores the cap. Rs. 90,000 is the excess, not the permitted deduction.

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