Deductions from Gross Total Income – CA Inter Tax Study Material

Deductions from Gross Total Income – CA Inter Taxation Study Material is designed strictly as per the latest syllabus and exam pattern.

Deductions from Gross Total Income – CA Inter Taxation Study Material

Question 1.
Answer the following with regard to the provisions of the Income-tax Act, 1961 :
Briefly explain provisions of section 80U of the Income-tax Act, 1961, in respect of deduction available on permanent physical disability [Nov. 2008, 4 Marks]

Section Explanation
80U Deduction from Gross Total Income under section 80U is allowed to a resident individual who is certified by appropriate medical authority as a person of disability. The deduction is fixed ₹ 75,000. But in case of severe disability the amount of deduction is ₹ 1,25,000. In all cases a certificate of disability is required to be submitted along with return of income. This certificate is valid for the period mentioned in it. Normal disability means 40% to less than 80% and severe disability means 80% or more. Disability covers blindness, very low vision searing impairment locanto disability, leprosy cured, mental retardation, mental illness, etc.

Question 2.
Mr. Abhik, an individual made payment of health insurance premium to GIC in an approved scheme. Premium paid on his health ₹ 10,000 and his spouse ₹ 15,000 during the year 2020-21. He also paid health insurance premium of ₹ 25,000 on his father’s health who is a senior citizen and not dependent on him. The payments have not been by cash. Compute the amount of deduction under chapter VI-A of the Income Tax Act, 1961 available to Mr. Abhik from his total income for the assessment year 2021-22. [May 2009, 4 Marks]
As per provisions of deductions from gross total income u/s 80D re-garding payment of medical insurance premium, the maximum deduction allowable for self and family (wife and children) is ₹ 25,000/-. Additional deduction of ₹ 25,000/- is available for senior parents, whether dependent upon assessee or not.

In the instant case the amount paid as medical insurance premium u/s | SOD is within permissible limit, hence fully deductible as under:

Particulars Amount(₹) Amount(₹)
i. For Self 10,000
ii. For Spouse 15,000 25,000
iii. For Father (Senior Citizen) 25,000
Total 50,000

Deductions from Gross Total Income – CA Inter Tax Study Material

Question 3.
Determine the eligibility and quantum of deduction under chapter VIA in the following case:
Contribution to notified pension scheme (referred to in section 80CCD) by the employer ₹ 40,000 for an employee whose basic salary plus dearness allowance is ₹ 3,00,000 for the year. [Nov. 2014, 4 Marks]

Section Explanation
80CCD(2) Contribution by employer in National Pension System is deductible from gross total income u/s 80CCD(2) upto 14% of Salary. In this case ₹ 40,000 contributed by employer on salary ₹ 3,00,000 is less than 14%, hence fully deductible. This deduction is in addition to monetary ceiling of ₹ 1,50,000 under section 80CCE.

Question 4.
Compute the eligible deduction under Chapter VI-A for the Assessment Year 2021-22 of Ms. Roma, who has a gross total income of ₹ 15,00,000 for the Assessment Year 2021-22 and provide the following information’s about his investments/payments during the year 2020-21:

S.No. Particulars Amount(₹)
1 Life Insurance premium paid (Policy taken on 01.01.2012 and sum assured is ₹ 1,50,000) 35,000
2 Public Provident Fund Contribution 90,000
3 Repayment of Housing Loan to Bhartiya Mahila Bank Bangalore. 20,000
4 Payment to LIC Pension Fund 25,000
5 Mediclaim Policy taken for self, wife and dependent children, premium paid 20,000
6 Medical Insurance premium paid for parents (Senior Citizen) 25,000

[May. 2009, 4 Marks]
Eligible deductions from gross total income

Particulars Amount(₹) Amount(₹)
(1) U/s 80CEE –
Life Insurance Premium (Maximum 20°o of sum Assured) 30,000
Contribution in Public Provident Fund 90,000
Repayment of Housing Loan 20,000
U/s 80CCC –
Total Deduction is restricted to ₹ 1,50,000/- U/s 80CCE 25,000
(2) U/s 80D – 1,65,000
Medical Insurance Premium for self, spouse and children 1,50,000
For Senior Citizen Parents 20,000 45,000
Total 1,95,000

Deductions from Gross Total Income – CA Inter Tax Study Material

Question 5.
Mr. Srivastava, aged 40 years, a salaried employee of Nirja Ltd. was contributing to National Pension Scheme ₹ 50,000 every year since 2017 and was claiming deduction under section 80CCD. In December 2019, he opted out of the pension scheme and withdrew a lump sum amount of ₹ 2,00,000. Is the amount so withdrawn taxable? If yes, how much is amount? [Nov. 2017, 5 Marks]

Section Explanation
10(12 A) As per section 10(12A) payment received from National Pension System Trust at the time of closure is exempt upto 40% of total amount received (including contribution plus amount accrued thereupon). Hence is this case ₹ 80,000 (40% of 2,00,000) is exempt and balance ₹ 1,20,000 (2,00,000 – 80,000) is taxable under head ‘Income from other Sources’ in the previous year of withdrawal.

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