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]
Answer:
| 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]
Answer:
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 |
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]
Answer:
| 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]
Answer:
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 | |
| 1,40,000 | ||
| 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 |
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]
Answer:
| 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. |