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

Ravi Kumar, a non-resident Indian, has the following income for the tax year: interest on a non-resident deposit and long-term capital gains on shares, both of which are investment income or long-term capital gain as per section 213, aggregating Rs. 5,00,000; and no other income. He has made eligible Chapter VIII investments of Rs. 1,50,000. What deduction under Chapter VIII can be allowed to him?

No deduction is allowed. Under section 213(2)(a), when a non-resident Indian's gross total income consists only of investment income or long-term capital gains, nothing is deductible under Chapter VIII, so the Rs. 1,50,000 of eligible investments gives no relief.

  1. ARs. 1,50,000
  2. BRs. 5,00,000
  3. CNilCorrect
  4. DRs. 3,50,000

Explanation

Section 213(2)(a) states that where the GTI of a non-resident Indian consists only of investment income or long-term capital gains or both, no deduction is allowed under Chapter VIII. Ravi's GTI consists solely of such income, so the Rs. 1,50,000 is disallowed. Option A wrongly treats the normal limit as applicable.

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