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CS Executive · Tax Laws and Practice · Deductions

Sunita, a resident individual, claims a deduction under section 127 for her dependent sister, who has a disability. The sister herself claims a deduction under section 154 in computing her own total income for the same tax year. What is the consequence for Sunita's claim?

Sunita cannot claim the deduction. Under section 127, a dependant does not include a person who has claimed the section 154 disability deduction in computing his own total income for the tax year, so the two deductions cannot both be claimed for the same person.

  1. ASunita can claim only half of the limit
  2. BSunita can claim in full, as the claims are independent
  3. CSunita cannot claim, because the sister is excluded from being a dependantCorrect
  4. DSunita can claim only if the sister's claim is below Rs. 75,000

Explanation

Section 127(8) says the dependant under that section does not include a person who has claimed a deduction under section 154 in computing his total income for the tax year. Hence the sister is not a dependant for Sunita, and no deduction is available. There is no halving or comparison with amounts, so the other options have no basis.

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