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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 (applicable from the June 2027 session), which statement correctly describes how the gross total income of a non-resident Indian is treated where it consists only of investment income and income by way of long-term capital gains?

No deduction under Chapter VIII is allowed. Where a non-resident Indian's gross total income consists only of investment income, long-term capital gains, or both, section 213(2)(a) of the Income-tax Act, 2025 bars Chapter VIII deductions entirely, with no partial relief.

  1. ADeductions under Chapter VIII are allowed in full against such income
  2. BNo deduction under Chapter VIII is allowedCorrect
  3. CDeductions under Chapter VIII are allowed up to 50% of such income
  4. DDeductions under Chapter VIII are allowed only against long-term capital gains

Explanation

Section 213(2)(a) provides that where the gross total income of a non-resident Indian consists only of investment income or long-term capital gains or both, no deduction under Chapter VIII is allowed. The option allowing full deduction ignores this restriction, and the partial or capital-gains-only options are not found in the provision.

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