Hi Harpreet,
yes, you can add physical education in calculation of best four.
But since it is not a subject mentioned in list C1 or C2, 2.5% will be deducted from % of best four. Here,2.5 % marks means 10 marks. So include marks of physical education in your best 4 only when the marks of your next best subject is 10 marks less than your marks in physical education.
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