Mr. X has invested in debt securities of a Pvt. Ltd., company deriving its main source of income from business of growing and processing organic vegetables and fruits. Thus, the company has 80% of income exempt as agricultural income and 20% is taxable as business income. During the P.Y. 2020-21, Jenny derived Rs.5,000 as interest income from the above investments. Which of the following statements are correct on taxability:
A. 80% Interest is exempt from tax
B. 20% Interest is exempt from tax
C. Interest is fully taxable
D. Interest is fully exempt
Answer:C
Mr. X has invested in debt securities of a Pvt. Ltd., company deriving its main source of income from business of growing and processing organic vegetables and fruits. Thus, the company has 80% of income exempt as agricultural income and 20% is taxable as business income. During the P.Y. 2020-21, Jenny derived Rs.5,000 as interest income from the above investments. Which of the following statements are correct on taxability:
A. 80% Interest is exempt from tax B. 20% Interest is exempt from tax C. Interest is fully taxable D. Interest is fully exempt