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CS Executive · Tax Laws and Practice · Computation of Total Income and Tax Liability of various Entities

Under the Income-tax Act, 2025, a non-resident Indian has investment income of Rs 3,00,000 and incurred Rs 20,000 on expenses connected with earning it. How is the investment income computed under section 213?

The investment income is Rs 3,00,000. Section 213(1) of the Income-tax Act, 2025 denies any deduction for expenditure or allowance when computing a non-resident Indian's investment income, so the Rs 20,000 expense is ignored and the gross amount is taxed.

  1. ARs 2,80,000, allowing the expense as a deduction
  2. BRs 3,00,000, as no deduction of any expenditure or allowance is allowedCorrect
  3. CRs 1,50,000, allowing a 50% standard deduction
  4. DRs 2,90,000, allowing half the expense

Explanation

Section 213(1) states that no deduction in respect of any expenditure or allowance is allowed under any provision of the Act in computing the investment income of a non-resident Indian. Hence the full Rs 3,00,000 is taxed; the other options allow a deduction that the section denies.

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