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CS Executive · Tax Laws and Practice · Deductions

Under the Income-tax Act, 2025 (applicable from the June 2027 session), which statement correctly describes the cap placed on the aggregate of deductions under the Chapter on deductions (Section 122)?

The total of all deductions under the deductions Chapter cannot exceed the assessee's gross total income. The Act sets this ceiling at gross total income itself, not at a percentage of it, so deductions cannot create a negative total income.

  1. AThe aggregate deductions cannot exceed the gross total income of the assesseeCorrect
  2. BThe aggregate deductions cannot exceed 50% of the gross total income
  3. CThe aggregate deductions cannot exceed the total income after set-off of losses brought forward
  4. DThe aggregate deductions are not subject to any ceiling

Explanation

Section 122(2) provides that the aggregate amount of deductions under the Chapter shall not in any case exceed the gross total income. No percentage cap exists and the ceiling is not tied to brought-forward losses. Hence the option stating the gross total income cap is correct.

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