Taxation - Income TaxQuestion 5627 of 146
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5. Which of the following statement is correct in respect of deductions available to him under Chapter VI-A?

Options

AHe shall be eligible for a deduction of ` 1,50,000 in respect of interest on loan irrespective of the tax regime opted by him.
BHe shall not be eligible for any deduction under Chapter VI-A irrespective of the tax regime opted by him.
CHe shall be eligible for a deduction of ` 1,50,000 in respect of interest on loan only if he opts out of the default tax regime.
DHe shall be eligible for a deduction of ` 50,000 in respect of interest on loan only if he opts out of the default tax regime. (2 Marks)
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Correct Answer

Option CHe shall be eligible for a deduction of ` 1,50,000 in respect of interest on loan only if he opts out of the default tax regime.

All Options:

  • AHe shall be eligible for a deduction of ` 1,50,000 in respect of interest on loan irrespective of the tax regime opted by him.
  • BHe shall not be eligible for any deduction under Chapter VI-A irrespective of the tax regime opted by him.
  • CHe shall be eligible for a deduction of ` 1,50,000 in respect of interest on loan only if he opts out of the default tax regime.
  • DHe shall be eligible for a deduction of ` 50,000 in respect of interest on loan only if he opts out of the default tax regime. (2 Marks)

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Detailed Solution & Explanation

Under the default tax regime (Section 115BAC) of the Income-tax Act, 1961, deductions under Chapter VI-A (such as Section 80C, 80D, 80EEB, etc.) are generally not allowed.
- Section 80EEB provides a deduction of up to u20b91,50,000\displaystyle \\u20b91,50,000 in respect of interest on a loan taken for purchasing an electric vehicle.
- If Mr. Desai opts out of the default tax regime (i.e. chooses the old tax regime), he becomes eligible to claim the deduction of u20b91,50,000\displaystyle \\u20b91,50,000 under Section 80EEB.
- If he pays tax under the default tax regime, he cannot claim any such deduction.
- Thus, he shall be eligible for a deduction of u20b91,50,000\displaystyle \\u20b91,50,000 in respect of interest on loan only if he opts out of the default tax regime.

Hence, **Option C** is the correct answer.

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