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CA Intermediate · Taxation · Basic Concepts

Vikram, a resident individual, earns total income of Rs 14,00,000 for tax year 2026-27 from salary, after all deductions. He also holds a share in a company which gave him dividend of Rs 20,000 (included in the figure above). Which statement about the concept of 'person' and 'total income' is correct for Vikram?

Vikram is a person as an individual, and total income means the aggregate of income under the five heads after set-off and carry forward of losses, clubbing and then reduced by permitted deductions. Deductions are subtracted to reach total income, and a resident is taxed on global income.

  1. AVikram is a person, and his total income is the aggregate of income under the heads of income after set-off, carry forward and deductionsCorrect
  2. BVikram is not a person until he is registered under the Act
  3. CTotal income includes only the income received in India, regardless of residential status
  4. DTotal income is computed before applying the deductions under the Chapter on deductions

Explanation

An individual is a person under the Act. Total income is the gross total income (sum of income under heads after set-off and carry forward of losses and clubbing) reduced by deductions allowed. Option D reverses the order, since deductions are subtracted to reach total income. Option C is wrong because residents are taxed on global income.

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