Income from other sources3A 18 and 31

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Income from other sources3A 18 and 31

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Income from other sources3A 18 and 31

  1. 1. INCOME TAX You earn it & The Government takes a part (a big part) of it
  2. 2. Sources of Income <ul><ul><ul><li>Agricultural Income </li></ul></ul></ul><ul><ul><ul><li>Income from Salaries </li></ul></ul></ul><ul><ul><ul><li>Income from House Property </li></ul></ul></ul><ul><ul><ul><li>Profits & Gains from Business OR Profession </li></ul></ul></ul><ul><ul><ul><li>Capital Gains </li></ul></ul></ul><ul><ul><ul><li>Income from Other Sources </li></ul></ul></ul>
  3. 3. You are going to be taxed anyways …………. So grin and bear it!! We could pay taxes with a smile, but normally CA$H is required!!
  4. 4. INCOME The definition of the term “Income” in Sec. 2(24) is inclusive and not exhaustive It may be broadly defined as the true increase in the amount of wealth which comes to a person during a fixed period of time <ul><li>Periodical monetary return with regularity </li></ul><ul><ul><li>May be recurring </li></ul></ul>
  5. 5. GROSS TOTAL INCOME As per Section 14, income of a person is computed under the following heads: <ul><li>Salaries </li></ul><ul><li>Income from House Property </li></ul><ul><li>Profits & Gains from Business or Profession </li></ul><ul><li>Capital Gains </li></ul><ul><li>Income from Other Sources </li></ul>
  6. 6. A source of income which does not specifically fall under any one of the other four heads of income is to be computed and brought to charge under the head: “ Income from Other Sources”. Sec. 56(1)
  7. 7. Section 56(2) enacts that in particular and without prejudice to the generality of the provisions of sub section (1), the following incomes shall be chargeable under the head Income from Other Sources. <ul><li>Dividends </li></ul><ul><li>Winnings from lotteries, crossword puzzles, horse races, card games, gambling or betting </li></ul><ul><li>Interest on securities </li></ul><ul><li>Income from machinery, plant or furniture let on hire </li></ul><ul><li>Sum received from Keyman Insurance Policy </li></ul><ul><li>Income from sub-letting of a house property </li></ul><ul><li>Casual income & non-recurring income </li></ul><ul><li>Insurance commission </li></ul><ul><li>Family pension </li></ul><ul><li>Directors Sitting Fee </li></ul>
  8. 8. Conditions <ul><li>There is an income </li></ul><ul><li>Income shall not be exempt </li></ul><ul><li>Not covered by other heads </li></ul>Examples : <ul><ul><ul><li>Casual Income </li></ul></ul></ul><ul><ul><ul><li>Subletting </li></ul></ul></ul><ul><ul><ul><li>Undisclosed sources </li></ul></ul></ul><ul><ul><ul><li>Salaries payable to a Member of Parliament </li></ul></ul></ul><ul><ul><ul><li>Family pension received by family members of a deceased employee </li></ul></ul></ul>
  9. 9. Income to also include any sum of money (i.e., gift) exceeding the specified amount received by an individual / HUF, if it exceeds Rs. 50,000, but will not apply to a sum of money received from: <ul><li>from any relative; or </li></ul><ul><li>on the occasion of the marriage of the individual; or </li></ul><ul><li>under a will or by way of inheritance; or </li></ul><ul><li>in contemplation of death of the payer; or </li></ul><ul><li>from any fund or foundation or university or other educational institution or hospital or medical institution; or </li></ul><ul><li>from any trust or institution registered u/s 12AA </li></ul>
  10. 10. In other words……………. you just can’t escape being T - axed
  11. 11. BUT…… all is not lost! You do get some deductions (Section 57) <ul><li>In respect of income from machinery, plant or furniture let on hire: </li></ul><ul><li>amount paid on account of current repairs to premises [Sec 30(a)(ii); </li></ul><ul><li>amount paid on account of current repairs to machinery, plant or furniture </li></ul><ul><li>premium paid for insurance against risk of damage to premises </li></ul><ul><li>depreciation on building, machinery, plant or furniture [Sec 32(1) and 32(1A)] </li></ul><ul><li>benefit of unabsorbed depreciation </li></ul>
  12. 12. <ul><li>In respect of income in the nature of family pension: </li></ul><ul><li>a deduction of a sum equal to 33 ⅓ % of such income subject to a ceiling limit of Rs. 15,000 [Section 57(iia)] </li></ul>Any other expenditure (not being in the nature capital expenditure) laid out or expended wholly or exclusively for the purposes of making or earning such income. [ Section 57(iii)]
  13. 13. Method of Accounting & Tax MERCANTILE CASH SYSTEM Due Basis On receipt/payment basis
  14. 14. Dividend Any dividend declared, distributed or paid by a company to its shareholders is chargeable under this head. Includes any distribution of: <ul><li>company’s assets </li></ul><ul><li>debentures, debenture stock, deposit certificates and bonus to preference share holders </li></ul><ul><li>liquidation of company </li></ul><ul><li>reduction of capital </li></ul><ul><li>any payment made to a shareholder, holding substantial interest, in a closely held company </li></ul>Dividend from domestic Company EXEMPT
  15. 15. from lotteries, crossword puzzles, horse races, card games, gambling or betting Winnings Under Sec. 56(2)(ib), amount taxable is WINNINGS “ Lottery” includes winnings from prizes awarded to any person by draw of lots or by chance. Also includes game shows, entertainment programs on TV or electronic mode
  16. 16. Interest on Securities <ul><li>Interest on any security of the Central/State Government. </li></ul><ul><li>Interest on debentures/other securities for money issued by/on behalf of a local authority/company established by a Central/State/Provincial Act. </li></ul>Section 56(2)(id)
  17. 17. Interest exempt from tax Interest on the following is exempt from tax: Notified securities, bonds or certificates. 7 % Capital Investment Bonds Interest received by a NRI from Notified Bonds Interest payable to any foreign bank performing central banking functions outside India Gold Deposit Bonds
  18. 18. Receipts without consideration to be treated as income: Following conditions are to be satisfied U/S 56(2)(vi): <ul><li>The recipient is an individual/HUF </li></ul><ul><li>Any sum of money is received without consideration on or after April 1,2006 </li></ul><ul><li>The aggregate amount received exceeds Rs 50,000 </li></ul>
  19. 19. Permissible Deductions <ul><li>Commission/remuneration for realising dividend/interest on securities </li></ul><ul><li>Employee’s contribution towards staff welfare schemes </li></ul><ul><li>Repairs/Depreciation in let out of plant, machinery, furniture & building </li></ul><ul><li>Standard Deduction in the case of family pension </li></ul><ul><li>Other expenses for earning income </li></ul>
  20. 20. The Income Tax Department is “trying” to make “easier” for the tax payer!!
  21. 21. They are also trying to improve their “image”
  22. 22. Specific Disallowances U/S 58: <ul><li>Personal Expenses </li></ul><ul><li>Interest </li></ul><ul><li>Salary </li></ul><ul><li>Wealth Tax </li></ul><ul><li>Amount Specified by Sec 40 A </li></ul><ul><li>Expenditure in respect of Royalty & Technical Fees received by a foreign Company </li></ul><ul><li>Expenditure in respect of winnings from Lottery </li></ul>
  23. 23. YOUR INCOME WHEN YOU EARNED IT THE TAX MAN WHAT YOU ARE LEFT WITH
  24. 24. Be a responsible citizen and pay your taxes on time (for listening) [email_address] Contact me on: GOD-HELP-US (463- 4357-87) Christopher Rodricks - 05A018 | Neville Unvalla – 05A031

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