CS Executive · Tax Laws and Practice · Deductions
Under the Income-tax Act, 2025 (applicable from the June 2027 session), which of the following correctly states the overall ceiling on the aggregate deductions allowed under Chapter VIII-type deductions (the Chapter containing section 122) in computing total income?
The aggregate of deductions under the Chapter cannot exceed the assessee's gross total income. The Income-tax Act, 2025 sets this ceiling in section 122(2), so total income cannot be reduced below zero by these deductions, and no percentage or book-profit cap applies.
- AThe aggregate deductions cannot exceed the gross total income of the assesseeCorrect
- BThe aggregate deductions cannot exceed 50% of the gross total income
- CThe aggregate deductions cannot exceed the net profit shown in the books
- DThe aggregate deductions cannot exceed the total income after set-off of losses carried forward
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 such as 50% applies, and the ceiling is not linked to book profit.
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