Mrs. S.C. Bose (aged 62 years) is a widow of a public sector employee who died during his service in 2011. She earns income from business of running…

Computation of total income of Mrs. S.C. Bose for A.Y. 2025-26 under default tax regime under section 115BAC(1A) Particulars Particulars ₹ I Income from house property Self-occupied portion [First Floor] Annual Value Nil Less: Deduction u/s 24 Interest on housing loan [Not allowed under default tax regime] Nil Nil II Profits and gains from business or profession Net profit 20,69,000 Add: Items of expenditure not allowable while computing business income - Expenses relating to books authored by her [Allowed as deduction considering royalty income is taxable under the head "Profits and gains from business or profession"] Nil [Note - Royalty income may be taxed under the head "Income from other Sources". In such case, expenses relating to books would not be allowed as deduction while computing business income and allowed from royalty income while computing "Income from Other Sources".] - Expenses in connection with dividends [Not allowed since expense is in respect of dividend taxable under the head "Income from Other Sources"] 12,000 - Amount paid to IIT Chennai from scientific research projects, not allowable under default tax regime 35,000 - Computers and other electronic items [Capital expenditure not allowed as deduction] 4,50,000 - Payment to a farmer exceeding - 10,000 in cash for purchase of flower and creepers [Not disallowed under section 40A(3), since payment to farmer comes under exclusion] Nil - One-time deposit to electricity and water department, not allowed as deduction 2,00,000 - Excessive salary paid to brother [Disallowed under section 40A(2), since brother falls under the definition of relative and salary paid is in excess of market rate] [₹ 2,40,000 - 1,80,000] 60,000 7,57,000 28,26,000 Less: Items of income to be treated separately under the respective head of income - Family pension from PSU [Taxable under the head "Income from Other Sources"] 3,60,000 - Royalty from California University [No adjustment is required since royalty is taxable under the head "Profits and gains from business or profession"] Nil [Note - Royalty income may be taxed under the head "Income from Other Sources". In such case, the income has to be reduced while computing business income.] - Dividend [Taxable under the head "Income from Other Sources"] 4,50,000 - Interest on FDRs [Taxable under the head "Income from Other Sources"] 76,000 8,86,000 19,40,000 Less: Allowable expenditure - Interest on residential house used for shop [₹ 3,37,500/2] 2 [Since the interest is paid on or before due date of filing return of income, disallowance under section 43B would not be attracted.] 1,68,750 - Depreciation On Computer and other electronic items other than television and washing machine [₹ 3,50,000 x 40% x 50%, since it is purchased and put to use for less than 180 days] 70,000 On residential house used for shop [₹ 1,10,00,000 x 10% x 50% for ground floor] 5,50,000 On electric vehicle [₹ 25,00,000 x 40%] 10,00,000 16,20,000 1,51,250 III Capital Gains Sale consideration on sale of listed shares of SBCL Ltd. 11,66,000 Less: Cost of acquisition 2,65,000 Short term capital gains taxable under section 111A [Since shares are held for less than 12 months and STT has been paid] 9,01,000 IV Income from Other Sources Family pension from PSU 3,60,000 Less: Lower of 33-1/3% of 3,60,000 or - 25,000 allowed as deduction 25,000 3,35,000 Dividend [₹ 4,50,000/90%] 5,00,000 Less: Expenditure to the extent of 20% of dividend 12,000 4,88,000 [Note - If it is assumed that expenditures are in the nature of expenses other than interest expenses, no deduction would be allowed from dividend income.] Interest on FDRs 76,000 8,99,000 Gross Total Income 19,51,250 Less: Deduction under section 80QQB and 80TTB [Not allowable under default tax regime] Nil Total Income 19,51,250 Computation of total income of Mrs. S.C. Bose for A.Y. 2025-26 under the optional tax regime of the Income-tax Act, 1961 Particulars Particulars ₹ Gross Total Income as per default tax regime u/s 115BAC 19,51,250 Less: Interest on borrowings for self-occupied property [₹ 3,37,500 / 2] 1,68,750 100% deduction under section 35(2AA) for amount paid to IIT Chennai from scientific research projects 35,000 2,03,750 17,47,500 Add: Excess deduction from family pension [₹ 25,000 - 15,000] [Lower of 33-1/3% of 3,60,000 or - 15,000 as deduction is allowed from family pension under optional tax regime] 10,000 Gross Total Income as per optional tax regime 17,57,500 Less: Deduction under Chapter VI-A Deduction under section 80QQB Deduction for royalty income of 3,50,000 [₹ 4,25,000 - 75,000], restricted to 3,00,000 3,00,000 Deduction under section 80TTB Interest on FDRs assuming FDRs are with banks, restricted to 50,000 [Note - If it is assumed that FDRs are not with banks, co-operative society engaged in banking business or post office, deduction under section 80TTB would not be available.] 3,50,000 Total Income 14,07,500