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CMA Intermediate · Direct and Indirect Taxation · Filing of Return of Income

Ravi, a resident individual with no foreign assets, has gross total income of Rs 3,40,000 from other sources before any deduction. He claims a Chapter VIII-type deduction that reduces his taxable income to nil. Assume the maximum amount not chargeable to tax for him is Rs 3,00,000. Is he obliged to file under section 263(1)(a)(iii)?

Ravi must file, because section 263(1)(a)(iii) tests total income before giving effect to the specified deductions. His Rs 3,40,000 exceeds the Rs 3,00,000 limit, so the nil income after deductions does not remove the obligation.

  1. ANo, because his total income after deductions is nil
  2. BNo, because tax payable is nil
  3. CYes, because income is tested before giving effect to the specified deductions and exceeds the limitCorrect
  4. DYes, but only if tax was deducted at source

Explanation

Section 263(1)(a)(iii) tests total income without giving effect to the specified deductions (and Chapter XVII-B provisions). Rs 3,40,000 exceeds Rs 3,00,000, so filing is obligatory. The post-deduction nil income is the key distractor and is not the test.

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