Presentation On New Income Tax Code 2009 (India)

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  • 1. Income Tax Code, 2009 (may came into force on 1st April, 2011) By CA Abhishek Kacholiya 09920704185 & CA Manish Kabra 09702496332 “To accomplish great things we must dream as well as act”
  • 2. Gross Total Income Income From Income from Special Ordinary Source Source i) From Lottery, Puzzle etc. i) From Employment ii) From Horse Race, Card Game ii) From House Property iii) Of Non Resident Sports Man iii) From Business iv) Of Non Resident Sports Association iv) Capital Gains v) Investment Income & Royalty Income v) From Residuary Source of Non Resident
  • 3. Rates of Taxes a) For Individual & H.U.F up to 1,60,000 - Nil* up to 10,00,000 - 10% up to 25,00,000 - 20% above 25,00,000 - 30% *Basic Exemption Limit For Women is 190000 & For Senior Citizen is 240000 b) For Un Incorporate Body (Firm, AOP &BOI) - 30% c) For Domestic & Foreign Company - 25% d) For Non Profit Organization - 15% e) Income form Lottery Puzzle etc. - 30% Note : - No Surcharge & Education Cess - Capital Gain taxable as per normal Tax Rate - Mutual Funds are Exempted from Tax
  • 4. Tax on Gross Asset* a) In case of Banking Co. - 0.25% of Gross Assets b) In case of Any Other Co. - 2% of Gross Assets Gross Assets : Gross Block of Fixed Assets Plus : Capital Work in Progress Plus : Book Value of all other Assets Less : Accumulated Depreciation Less : Debit Balance of P & L a/c if included in all other assets *MAT replace by Tax on Gross Assets and no credit on it. Tax on Dividend Distributed on Domestic Co. - 15% Tax on Branch Profit on Foreign Co. - 15%# So effective Tax Rate for Foreign Companies are 36.25% #Earlier it was Nil
  • 5. Wealth Tax Applicability - Individual, H.U.F., Private Discretionary Trust Rate of Tax - 0.25% of the Net Wealth exceed Rs. 50 Crore Assets* - Assets means all Assets except i) Property held under Trust ii) Interest in coprancy Property of HUF iii) Any one Building & Jewellery of Ruler iv) Any one house or part of house or plot acquired or Constructed on or after 01/04/2000 v) Assets located Outside India if person is Either Non Resident or not a Citizen of India *Specific Definition of Assets replace by Inclusive definition
  • 6. Income from Employment will be the Gross Salary as reduced by following deduction – a) Tax on Employment b) Conveyance Allowance c) Special Allowance to meet Office Duties d) Amount received under VRS* e) Gratuity & Pension* *If deposited in Retirement Benefit Account with Permitted Saving Intermediaries Note : i ) HRA, LTC, Leave salary & medical Reimb. are not allowed ii) All Allowance & Perquisites are Taxable iii) Withdrawn from Retirement Benefit Account is taxable under the head ‘Income From Residuary Sources, iv) Permitted Saving Intermediaries - Approved Provident & Superannuation Fund, Life Insurer, New Pension System Trust
  • 7. Income from House Property will be, Gross Rent* as reduced by following deduction – - Municipal taxes actually paid - Service Tax Paid - 20% of Gross Rent (earlier it was 30%) - Amount of Any Interest *In case of Self Occupied house Gross Rent & Interest amount will be Nil Gross Rent - Higher of Contractual & Presumptive Rent Contractual Rent - Rent Receivable by Assessee Presumptive Rent - 6% of Ratable Value fixed by Local Authorities or 6% of Cost of Construction or Acquisition if Ratable value is not Fixed
  • 8. Income from Any Business carried on by Assessee shall be computed under “Income from Business” Gross Earnings XXX Less : Operating Expenditure XXX Less : Permitted Finance Charges XXX Less : Capital Allowance XXX Income From Business XXX Special Points – a) 150% weighted deduction for in-house scientific R&D expenditure extended to all industries. b) Loss on sale of entire block of assets is ignored – assessee can claim Depreciation continue. c) Adjustment for Exchange Fluctuation in Actual Cost of Assets is not Available. d) Amount paid for scientific research to a company is not eligible for deduction. e) Limits on partners remuneration and on interest abolished *Business includes Profession
  • 9. Income from transfer of any Investment assets shall be computed under the head Capital Gain Capital Gain = Full Value of Consideration Less : Expenditure on Transfer Less : Cost of Acquisition* Less : Cost of Improvement* *If Investment Assets is held for more then 1 Year then Concept of indexation will be applicable. Indexed Cost = Cost of Acquisition X CII for the FY in which Assets was Transferred CII for the AY in which assets was acquired or FY 00-01 whichever is later Note :- i) Indexation Benefit is now available on Bonds & Debentures & also available to Non Residents. ii) Cost of Acquisition of Assets deemed to be ‘Nil’ if not determinable
  • 10. a) Investment Assets means any type of Capital Assets Excluding – i) Stock in Trade, Consumable Stores, Raw Material ii) Self Generated Capital Assets iii) Intangible Assets iv) Building, Furniture, Plant & Machinery v) Any other Capital Assets connected with or used for the purpose of Business of the Assessee. b) Transfer of Urban Agricultural Land are also Taxable c) No difference between Short Term & Long Term Investment Assets d) Security Transaction Abolished e) Capital Gains are taxable at Normal Tax Rate* *Earlier i) STCG on Equity shares are taxed at 15% ii) All other STCG are taxed at Normal Tax Rate iii) LTCG on Equity Shares are Exempted iv) All other LTCG are taxed at 20%
  • 11. f) Following Deduction under Section 53 are available only to Individual & HUF on fulfillment of Certain Condition – Original Investment Assets* New Investment Assets Agricultural Land Agricultural Land Any Investment Assets Residential House Deposit in CG Saving Any Investment Assets Scheme# *If acquired prior to 1 Year before beginning of the Financial Year in which the transfer took place. #Withdrawn from scheme in any case will be liable for tax under income from residuary sources.
  • 12. Any income which is not included in any other head & in Income from Special Source will be taxable under Income from Residuary Source a) Amount Withdrawn from any account maintained with Permitted Saving Intermediaries* (Double Taxation) b) Any sum received under a Life Insurance Policy c) Aggregate of any money & the value of any specified property which is received without consideration by Individual & HUF exceeding Rs. 50000/- *Accumulated balances in provident fund as on 31st march 2011 and accretion thereof are exempted from tax.
  • 13. a) Income under any of the head, except Income from Capital Gain now can be clubbed with the income of any other head b) Losses can be carried forwarded up to Indefinite periods if return of income is furnished with in due date. Note – i) Now Losses of Business can be set off against income from Salary. ii) Loss on House Property could be carried forwarded only if return of income is filed with in due date.
  • 14. a) Any sum deposited in any account maintained with any Permitted Saving Intermediaries* b) Deduction in respect of Children’s Education* *Deduction should not exceed 3 lacs in an financial year. c) Deduction to Individual in respect of Interest on Loan taken for Higher Education. d) Deduction in respect of Health Insurance Premium - 15000 for Others & 15000 for Parents. e) Deduction in respect of Medical Treatment – Rs. 40000/- f) Deduction in respect of maintenance of a disabled dependent – Rs. 50000/- g) Deduction in respect of Donation to certain Funds – Donation to Scientific research Association are Eligible for 125% h) Deduction in respect of Political Contribution – As per Companies Act i) Deduction in respect of Interest Income on Bonds
  • 15. j) Deduction in respect of Income of Investor Protection Fund k) Deduction in respect of Income from House Property & Income from Other Sources of Trade Union l) Deduction in respect of Royalty Income of Authors of Certain Books m) Deduction in respect of Royalty on Patents n) Deduction in case of Person with Disability – 50000/- o) Deduction in respect of Income of Co-operative Society from Banking Activity p) Deduction in respect of Income of Primary Co- operative Societies q) Expenditure for promoting family planning & preventing HIV-aids
  • 16. i) Deduction for payment of Housing Loan shall not be allowed. ii) Deduction for purchase of NSC not available. iii) Deduction for Term Deposit with any scheduled bank & for subscription to notified bond of NABARD not available iv) Deduction for Rent paid not available. v) Deduction under series 80I shall not be allowed. vi) Instead of Series 80I Schedule 11, 12 & 13 introduced
  • 17. Applicability - Certain Specified Business* * i) Business of Generation, Transmission or Distribution of Power ii) Business of Developing, or Operating and Maintaining any Infrastructure Facility iii) Business of Operating and Maintaining a Hospital iv) Business of Processing, Preservation & Packaging of Fruits & Vegetables. v) Business of Laying & Operating a Cross Country Natural Gas or Crude or Petroleum Oil Pipeline Network for distribution vi) Business of Setting up & Operating a Cold Chain Facility vii) Business of Setting up & Operating a Warehousing Facility for storage of Agricultural Produce. viii) Business of Developing a Special Economic Zone ix) Business of Mineral Oil & Natural Gas
  • 18. Calculation of Profit of the Specified Business Gross Income XXX Less : Operating Expenses XXX Less : Permitted Finance Charges XXX Less : Capital Expenditure incurred XXX Less : Expenditure on License XXX Less : Expenditure Incurred before XXX Commencement of Business Less : Amount of Negative Profit for XXX Preceding Financial Years* Profits of the Business XXX *Deduction for Negative Profits of the predecessor shall also be allowed to Successor in Business Reorganization.
  • 19. Business Amount of Income Condition Plying, Leasing & Hiring of Rs. 5000 Per Month No. of Vehicles owned Heavy Goods Vehicle Per Vehicle should be <=10 Plying, Leasing & Hiring of 4500 Per Month Per No. of Vehicle owned Light Goods Vehicle Vehicle should be <=10 Any Other Business 8% of Total Turnover / Turnover / Gross Receipt Gross Receipt should be <= 1 Crore* * Earlier it was Rs. 40 Lacs
  • 20. Miscellaneous a) Due date of Return Filing – (i) 30th June – If the Person is not a Company & does not derive any Income from Business (ii) 31st August – In all Other Case b) Residential Status of Foreign companies - It is resident in India only if wholly or partly managed and controlled from India at any time during the year c) Income of political party form House Property, Capital Gain and Residuary Sources are exempted from Tax. d) Any Allowances received by MP or MLA are exempted from tax