Arrange the following in correct sequence:
A. Income under the different heads of Income.
B. Deduction from gross total income.
C. Adjustment of losses of the current year and earlier years.
D. rounding off.
Choose the correct answer from the options given below:

Correct option is A

The correct sequence for computing income tax liability is as follows:
1. Income under different heads (A) – Income tax is calculated based on five heads of income:
· Salary
· House property
· Profits and gains from business or profession
· Capital gains
· Other sources
2. Adjustment of losses (C) – Losses from previous years or the current year (such as business loss or capital loss) are adjusted before computing the total taxable income.
3. Deduction from Gross Total Income (B) – Certain deductions are allowed under Section 80C to 80U (e.g., life insurance premiums, provident fund contributions, medical expenses).
4. Rounding off (D) – As per Section 288A and 288B of the Income Tax Act, final income and tax payable are rounded off to the nearest multiple of 10.
Since the correct order is A → C → B → D, the correct answer is (a) A, C, B, D.
Information Booster:
1. Five Heads of Income – The computation starts by classifying income into salary, house property, business/profession, capital gains, and other sources.
2. Set-off and Carry Forward of Losses – Losses from business, capital gains, or house property can be adjusted or carried forward.
3. Deductions under Chapter VI-A – Includes deductions like 80C (Investments), 80D (Health Insurance), 80E (Education Loan Interest), etc.
4. Exemptions vs. Deductions – Exemptions (e.g., agricultural income) reduce taxable income, while deductions reduce the gross total income.
5. Rounding Off Rules – Taxable income is rounded to the nearest ₹10 before tax is calculated.
6. Tax Computation & Rebate – After deductions, applicable rebates like Section 87A (for incomes below ₹7 lakh) are considered.