Mr. X deposits ₹ 65,000 in the term deposit of 5 years with the Post Office to avail tax deduction…
A five-year time deposit under the Post Office Time Deposit Rules, 1981 is an eligible investment under section 123 read with Schedule XV of the Income-tax Act, 2025…
Choose your answer
Mr. X deposits ₹ 65,000 in the term deposit of 5 years with the Post Office to avail tax deduction under section 123 of the Income-tax Act, 2025. Assume that Mr. X has opted out of the new tax regime under section 202 of that Act. On the basis of the above problem, select the correct option.
Answer and explanation
Correct answer B
A five-year time deposit under the Post Office Time Deposit Rules, 1981 is an eligible investment under section 123 read with Schedule XV of the Income-tax Act, 2025 (formerly section 80C of the Income-tax Act, 1961), so claiming the deduction after opting out of the section 202 new tax regime is lawful tax planning: "Mr. X is not guilty of either tax evasion / tax avoidance." Nothing in the facts shows concealment of income or an abusive avoidance arrangement.
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