Skip to content

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

Under the Income-tax Act, 2025, Mr. Kiran Rao, a non-resident Indian, has gross total income consisting only of interest from a foreign-currency investment (investment income) of Rs 6,00,000 and long-term capital gains of Rs 2,00,000. He has made eligible payments under Chapter VIII. What is the position on Chapter VIII deductions?

No Chapter VIII deduction is allowed. For a non-resident Indian whose gross total income consists only of investment income, long-term capital gains or both, the Act bars deductions under Chapter VIII, and Mr. Rao's entire Rs 8,00,000 falls within these categories.

  1. ANo Chapter VIII deduction is allowed because his gross total income consists only of investment income and long-term capital gainsCorrect
  2. BDeduction is allowed against the investment income only
  3. CDeduction is allowed against the long-term capital gains only
  4. DDeduction is allowed against the full Rs 8,00,000 up to the amount paid

Explanation

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. Here the whole Rs 8,00,000 falls in these two categories. Options B, C and D wrongly allow a deduction against such income.

Did you get it right without looking?

One question tells you little. A timed set on Computation of Total Income and Tax Liability of various Entities shows your real accuracy, how long you take and where you lose marks.

Practise Computation of Total Income and Tax Liability of various EntitiesFree diagnostic mock

More Computation of Total Income and Tax Liability of various Entities questions