Question 1 (e)

Total income of a senior citizen with house property, deposit interest, PPF and NSCs (as set, 1961 Act, AY 2022-23)

5 marks

Time to write
About 10 minutes

From an older CBCS paper

Question

Question 1 (e) · 5 marks

Attempt any three questions from the 6 questions given below:

  1. X (62 years) has the following incomes in the Previous Year 2021-22. Compute his Total Income in respect of the Assessment Year, 2022-23:
IncomeRs.
House property (as computed)7,20,000
Interest from Post Office Savings Bank4,000
Interest on Deposits with a Bank60,000
Deposits made with PPF1,20,000
Purchase of NSCs (of the VIII Issue)40,000

Paper note: The as-set version: set and answered under the Income-tax Act, 1961 for assessment year 2022-23 (previous year 2021-22), with the dates as printed. Q1 is "any three of six" (15 marks); this slot is item (5). The question does not say whether X is resident or non-resident; the answer states how it reads this.

Reworded from the university paper: names and figures differ, the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.

Before you write

Read off the question and its marks

10 minfor 5 marks

Read from the question

  • any threeThe paper asks for any 3, and this is one of them. Only 3 are marked: a fourth earns nothing.
  • ComputeHead by head: each income under its head, exempt items marked exempt, then the deductions and the tax.

Write it in this order

  1. Read the data; note exactly what is asked 1 min
  2. 1 Post Office savings interest and bank interest 1½ marks 2 min
  3. 2 Section 80C limit 1½ marks 2 min
  4. 3 Section 80TTB for a resident senior citizen 1 mark 2 min
  5. 4 Total income 1 mark 2 min
  6. Check: arithmetic, units (₹, %), final answer underlined 1 min

Try it first. About 10 minutes for 5 marks. Write it out, then open the solution.

Solution

Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.

Readings

  1. Residence. The question gives X's age (62) but not his residential status. He is read as a resident individual, the usual case; the figures for a non-resident are given at the end.
  2. Regime. The normal provisions apply (X has not opted for section 115BAC; Finance Act, 2020, section 53), since the question lists deductions. The option counts only if exercised in the prescribed manner: with the section 139(1) return by a person with no business or professional income, or on or before the section 139(1) due date by one who has such income (section 115BAC(5)).
  3. Post Office savings interest. The ₹4,000 is read as interest on an individual account.

Treatment of each item

  1. House property ₹7,20,000: taken as computed.
  2. Post Office Savings Bank interest ₹4,000: interest on a Post Office savings account is exempt up to the limit the Central Government notifies (section 10(15)(i)), ₹3,500 for an individual account; the other ₹500 is income from other sources (CBDT Notification No. 32/2011 of 3 June 2011 (S.O. 1296(E))).
  3. Interest on bank deposits ₹60,000: income from other sources.
  4. Public Provident Fund ₹1,20,000 and NSCs (VIII Issue) ₹40,000: investments that qualify under section 80C (section 80C(2)(v) and (ix)); together ₹1,60,000, but section 80C allows at most ₹1,50,000 (CBDT Notification No. 222/2005 of 3 November 2005 (S.O. 1559(E)), which specifies the Public Provident Fund for section 80C(2)(v) from assessment year 2006-07; CBDT Notification No. 223/2005 of 3 November 2005 (S.O. 1560(E)), which specifies the National Savings Certificates (VIII Issue) for section 80C(2)(ix) from assessment year 2006-07); the PPF account is taken to stand in his own name, as section 80C(2)(v) requires an account of a person it allows.
  5. Interest on deposits of a senior citizen: a resident aged 60 or more may deduct the interest on deposits with a bank, a co-operative bank or a post office, up to ₹50,000 (section 80TTB). His deposit interest (₹60,000 from the bank and the taxable ₹500 from the Post Office) is above that, so ₹50,000 is deducted. A senior citizen gets no deduction under section 80TTA (section 80TTA(1) excludes an assessee covered by section 80TTB).

Computation of total income

Particulars₹
Income from house property (as computed)7,20,000
Income from other sources: Post Office savings interest (4,000 − 3,500 exempt)500
Income from other sources: interest on bank deposits60,000
Gross total income7,80,500
Less: section 80C (PPF 1,20,000 + NSCs 40,000 = 1,60,000, limited to)1,50,000
Less: section 80TTB (interest on deposits, limited to)50,000
Total income, assessment year 2022-235,80,500

If the facts are read otherwise

  • X a non-resident. Section 80TTB is for residents only (its Explanation), and the senior-citizen slabs too. Instead section 80TTA allows the interest on a savings account with a bank, a co-operative bank or a post office (section 80TTA(1)), not one held by or for a firm, association of persons or body of individuals (section 80TTA(2)) up to ₹10,000: here the taxable ₹500 of the Post Office savings interest (the bank interest is on deposits, not a savings account, and does not qualify). Deductions ₹1,50,500; total income ₹6,30,000.

Where the 5 marks sit

#ComponentMarks
1Post Office savings interest and bank interest1.5
2Section 80C limit1.5
3Section 80TTB for a resident senior citizen1
4Total income1
Total5
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