Net taxable income of a blind resident with lottery winnings, a gift, a forfeited advance and dividends (as set, 1961 Act, AY 2019-20)

Readings

1. Lottery winnings. The ₹70,000 is printed as net; it is read as the amount left after tax deducted at source at 30% under section 194B, so the gross winnings are ₹70,000 × 100/70 = ₹1,00,000 (the rate in force for deduction in 2018-19: Finance Act, 2018, First Schedule, Part II). The result if no tax was deducted is given at the end.
2. Blindness. Total blindness, certified by the medical authority, is read as a disability of 80% or more, that is a severe disability for section 80U. (Persons with Disabilities Act, 1995, section 2(b) and (i): blindness, which includes total absence of sight, is a disability; section 56(4): a severe disability is one of 80% or more. The question gives no percentage, so the 80% is a reading of the certificate, not a figure from the Act.)
3. Donation. The question does not say how the donation was paid; it is read as paid otherwise than in cash.
4. Interest. The savings bank and fixed deposit interest are read as the interest of the previous year 2018-19, as given.
5. Forfeited advance. The question does not say what the advance was for. It is read as a sum received in negotiations for the transfer of a capital asset (such as land or a house, not his personal effects, which section 2(14)(ii) excludes from capital assets), which did not lead to the transfer, forfeited in 2018-19. The result if it was not is given at the end.

Treatment of each income

1. Salary of ₹4,00,000 is taken as computed.
2. Lottery winnings: income from other sources (section 56(2)(ib)) at the gross figure of ₹1,00,000, taxed at the flat rate of 30% (section 115BB). No deduction or allowance is allowed against them (section 58(4)), so the Chapter VI-A deductions are set against his other income.
3. Bank interest: ₹12,000 + ₹30,000 = ₹42,000, income from other sources.
4. Gift of ₹2,00,000: money received without consideration is taxable in full where the year's aggregate exceeds ₹50,000 (section 56(2)(x)(a)), unless it comes from a relative or on one of the occasions the proviso lists. The brother of a grandfather is not a relative: the list covers brothers and sisters of the individual, of the spouse and of either parent, and lineal ascendants and descendants, but not a grandparent's brother (Explanation (e) to section 56(2)(vii)). A marriage anniversary is not the occasion of the individual's marriage. Taxable: ₹2,00,000.
5. Advance money forfeited: a sum received in negotiations for the transfer of a capital asset and forfeited, where the transfer does not take place, is income from other sources (section 56(2)(ix)): ₹40,000.
6. Dividend of ₹9,50,000 from Infosys Ltd.: a dividend referred to in section 115-O, which a domestic company's dividend is, is exempt (section 10(34)). The 10% charge of section 115BBDA on a resident individual applies only to such dividends above ₹10,00,000 in the year; ₹9,50,000 is below that, so the whole is exempt.

Deductions under Chapter VI-A

• Section 80D: for a parent who is a senior citizen the limit is ₹50,000 for assessment year 2019-20 (the held text's footnotes date the increase from ₹30,000 from 1 April 2019); the premium must be paid in the previous year out of his income chargeable to tax (section 80D(1)) and otherwise than in cash (section 80D(2B)); it was paid by cheque. The insurance must be under a scheme of the General Insurance Corporation of India approved by the Central Government, or of any other insurer approved by the Insurance Regulatory and Development Authority (section 80D(5)); the policy is taken to be such. The ₹35,000 is read as the premium for one year; a lump sum paid for cover of more than a year is deducted only in the appropriate fraction for each year of cover (section 80D(4A)), which the question gives no facts to apply.
• Section 80TTA: savings account interest up to ₹10,000, on an 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)); fixed deposit interest does not qualify (time deposits are excluded). Arun is 40, so section 80TTB, for senior citizens, does not apply.
• Section 80U: ₹75,000 for a person with disability and ₹1,25,000 for a person with severe disability (80% or more). A person with disability is one suffering from not less than 40% of a disability, as certified by a medical authority (Explanation (c) to section 80U, read with section 2(t) of the Persons with Disabilities Act, 1995). Arun must furnish a copy of the medical authority's certificate, in the prescribed form and manner, with his return under section 139 (section 80U(2)); it is taken to be so furnished. If the certificate calls for a reassessment and has expired, no deduction is allowed for a later year until a new certificate is obtained and its copy furnished with the return (proviso to section 80U(2)).
• The deductions (₹2,60,000) are within his income other than the lottery winnings (₹6,82,000).

Computation of net taxable income

The tax deducted at source on the winnings (₹30,000) is credited against his tax. The other income is taxed at the slab rates for assessment year 2019-20 (Finance (No. 2) Act, 2019, First Schedule, Part I, Paragraph A).

If the facts are read otherwise

• No tax deducted on the winnings: they are taken at ₹70,000; net taxable income ₹4,92,000.
• Donation paid in cash: a donation above ₹2,000 in cash gets no deduction (section 80G(5D)); net taxable income ₹5,52,000.
• Disability certified at 40% or more but below 80%: the section 80U deduction is ₹75,000; net taxable income ₹5,72,000.
• Disability certified below 40%: he is not a person with disability, so no section 80U deduction is allowed; net taxable income ₹6,47,000.
• Advance not received in negotiations for the transfer of a capital asset (for example, for his personal effects): section 56(2)(ix) does not apply to it, and if no other provision charges it, net taxable income is ₹4,82,000.