Karan, aged 38 years, working as Sales Manager with Arjun Grand Ltd., provides the following information for the year ended 31st March, 2025: Particulars Amount (₹) Basic salary 6,00,000 p.a. DA (50% of it is meant for r

CS Executive · Tax Laws and Practice · PYQS · December 2025
Karan, aged 38 years, working as Sales Manager with Arjun Grand Ltd., provides the following information for the year ended 31st March, 2025: Particulars Amount (₹) Basic salary 6,00,000 p.a. DA (50% of it is meant for retirement benefits) 3,00,000 p.a. Commission as a percentage of turnover of the Company 0.5% Turnover of the Company 60 lakhs Bonus 60,000 p.a. Project Allowance 40,000 p.a. Own Contribution to R.P.F. 40,000 p.a. Professional tax total paid ₹ 2,500 of which ₹ 2,000 was paid by the employer — Employer's contribution to R.P.F. 20% of basic salary Interest credited in the R.P.F. account @ 15% p.a. 15,000 Following further information is given to you as under: Music System purchased on 01.04.2024 by the company for ₹ 95,000 and was given to Karan for personal use on same day. Smart TV worth ₹ 15,000 was given by employer to Karan as gift on his 25th wedding anniversary. Gold ring worth ₹ 75,000 received from Sanjay who is school friend of Karan as gift on his 25th wedding anniversary. Two old light goods vehicles owned by him were leased to a transport company against the fixed charges of ₹ 6,500 p.m. Books of account are not maintained. Karan wants to opt the section 44AE of Income Tax Act, 1961. Received interest of ₹ 8,000 from SBI Bank FD on 24.4.2024 and interest of ₹ 8,100 (Net) from the debentures of Indian Companies on 5.5.2024. Made payment by cheques of ₹ 15,000 towards premium on Life Insurance policies for self and ₹ 22,500 for Mediclaim Insurance policy for spouse. Invested in NSC ₹ 30,000 and in FDR of SBI for 5 years ₹ 50,000. Donations of ₹ 1,50,000 to an institution approved u/s 80G by account payee cheque and of ₹ 25,000 to Prime Minister's National Relief Fund through BHIM UPI were made during the year. On the basis of the above information, you are required to give the following answers, assuming that he has shifted out of the default tax regime under section 115BAC : Compute the total allowable deduction under chapter VI-A of the Income Tax Act, 1961 for Karan for the Assessment Year 2025-26.

Answer & Explanation:

Computation of allowable deduction under chapter VI-A for Karan for A.Y. 2025-26 Particulars Amount (₹) Amount (₹) A. Deduction under section 80C: Premium on life insurance policy 15,000 Investment in NSC 30,000 FDR of SBI for 5 years 50,000 Employee's contribution to recognized provident fund 40,000 1,35,000 B. Deduction under section 80D: Mediclaim Insurance (for spouse) 22,500 C. Deduction under section 80G: Donation to PM National Relief Fund (100%) 25,000 Donation to institution approved under section 80G (50% of qualifying amount i.e. ₹ 1,14,540) 57,270 (Maximum qualifying amount is actual donation ₹ 1,50,000 or 10% of Adjusted Total Income i.e. ₹ 1,14,540, whichever is lower) (Adjusted Total Income = Gross Total Income - Deductions under section 80C and 80D = 13,02,900 - ₹ 1,57,500 = ₹ 11,45,400) 82,270 Total Deduction 2,39,770 Note: Gift in kind is not taxable upto ₹5,000 per annum. Hence, upto ₹ 5,000 is taken as exempt income.

Topics: Income Tax

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic