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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, Ms. Neha Iyer, a non-resident Indian, has gross total income of Rs 9,00,000, comprising Rs 4,00,000 of long-term capital gains and Rs 5,00,000 of other income. She has eligible Chapter VIII payments of Rs 7,00,000. Applying the rule for non-residents, what is the maximum Chapter VIII deduction available, ignoring any per-section limits?

The maximum deduction is Rs 5,00,000. The long-term capital gains of Rs 4,00,000 are first removed from gross total income, leaving Rs 5,00,000, and Chapter VIII deductions are allowed as if that reduced figure were the gross total income.

  1. ARs 4,00,000
  2. BRs 5,00,000Correct
  3. CRs 7,00,000
  4. DRs 9,00,000

Explanation

Gross total income is first reduced by the long-term capital gains: 9,00,000 - 4,00,000 = 5,00,000. Chapter VIII deductions are then allowed as if this reduced amount were the gross total income, so the cap is Rs 5,00,000. Rs 7,00,000 ignores the cap and Rs 9,00,000 ignores the reduction.

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