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CA Intermediate · Taxation · Deductions from Gross Total Income

Ms. Meera, a resident individual under the old regime, has gross total income of ₹7,00,000 for tax year 2026-27 (no long-term capital gains or other specially taxed income). She claims ₹1,50,000 as deduction for specified savings/investments. She made these donations: ₹20,000 by cheque to the Prime Minister's National Relief Fund (100% deduction without qualifying limit); ₹90,000 by cheque to an approved charitable trust (50% deduction, subject to the qualifying limit of 10% of adjusted gross total income); and ₹5,000 in cash to the same trust. What is her deduction for donations?

The deduction is ₹47,500. Adjusted gross total income is ₹5,50,000, so the qualifying limit is ₹55,000. The trust donation qualifies at ₹55,000 and gives 50%, or ₹27,500. The cash donation above ₹2,000 is disallowed, and the PMNRF cheque donation of ₹20,000 is fully deductible.

  1. A₹47,500Correct
  2. B₹55,000
  3. C₹65,000
  4. D₹75,000

Explanation

Adjusted gross total income = 7,00,000 − 1,50,000 = ₹5,50,000, so the qualifying limit is ₹55,000. Trust donation: cash of ₹5,000 exceeds ₹2,000 and is ignored; the cheque donation of ₹90,000 is limited to ₹55,000, and 50% of this is ₹27,500. PMNRF gives ₹20,000 in full. Total = ₹47,500. ₹65,000 results from applying 50% to the full ₹90,000 without the qualifying limit.

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