Tax liability of a senior citizen under the old regime, with deductions

Assumptions

1. Residential status: the question's gross total income of ₹17,05,000 includes the income from the house in Germany, so she is taken as resident and ordinarily resident. If she were not ordinarily resident, that ₹4,00,000 (accruing outside India, from no business or profession in India) would drop out and her total income would be ₹10,35,800. Foreign tax: none is given. If tax was paid in Germany on that income, relief under the agreement with Germany (section 159) would reduce the tax computed below; its amount cannot be found from the question.
2. Being a resident aged 60, she is a senior citizen (section 2(100)), and opts out of the default regime (section 202(4)) as the question says; the slabs are those of the Finance Act, 2026, First Schedule, Part I-B, Paragraph A(II).
3. The diamond was sold during the tax year 2026-27, so its long-term capital gain is taxed at 12.5% (section 197(1)).
4. The donations to PM CARES and the National Foundation for Communal Harmony were made otherwise than in cash (or in cash of not more than ₹2,000).
5. The education loan was taken from a financial institution or an approved charitable institution, the interest is paid out of income chargeable to tax, and the year is within the initial tax year and the seven that follow (section 129(1)-(2)). If not, nothing is allowed under section 129 and the total income is ₹14,50,800.

Deductions allowed

Computation of total income for tax year 2026-27

The deductions are set against income other than the long-term capital gain (section 197(5)); the other income of ₹16,25,000 is far larger than them.

Computation of tax liability

Notes

1. The short-term capital gain on land is taxed at the normal slab rates.
2. Only 60% of the mediclaim premium is allowed: the part paid in cash (40%) is barred (section 126(9)).
3. If the post office savings interest is first treated as exempt up to ₹3,500, the deduction for deposit interest falls by the same amount, so the total income and tax are unchanged.
4. No rebate is available: the total income is far above the rebate limit.

What changed from the Income-tax Act, 1961

The deductions and slabs are the same as under sections 80C, 80CCD(1) and (1B), 80CCE, 80D, 80E, 80G and 80TTB of the 1961 Act. The difference is the rate on the long-term capital gain: 12.5% from 23 July 2024, against 20% as set (assessment year 2024-25, given separately), where the tax liability is ₹2,42,050.