Condition 1- The property should consist of any building or lands appurtenant. Condition 2- The assessee should be owner of the property. Condition 3- The property should not be used by the owner for the purpose of any business or profession carried on by him, the profits of which are chargeable to income-tax.
Building Land appurteant thereto
Income from subletting is not taxable under section 22. Deemed Owner ◦ Transfer to spouse or minor child. ◦ Holder of impartible estate. ◦ Property held by a member of Co-Operative Society/Company/AOP. ◦ A person who has acquired a property under a power of Attorney transaction. ◦ A person who has acquired a right in a building under section 269UA.
The owner of the property utilizes the property for the purpose of carrying on his business or profession. Income of the above business or profession is chargeable to tax.
House property in a foreign country. Disputed ownership. Property held as stock-in-trade. Treatment of composite rent. When a house property is owned by co- owners. Principle of mutuality.
Income from farm house Annual value of any one place of an ex-ruler. Property income of a local authority. Property income of an approved scientific research association. Property income of an educational institution and hospital. Property income of trade union. House property held for charitable purposes. Property income of a political party. Property used for own business or profession. One self-occupied property.
Gross annual value xxx ◦ Less: Municipal Taxes xxx Net annual value xxx ◦ Less: Deduction under section 24 ◦ Standard deduction xxx ◦ Interest on borrowed capital xxx Income from house property xxx
Income From Other Sources:- Section 56 to 59 of Income Tax Act, 1961 deal with this. Acc to Section 56(1), income of every kind which is includible in totalincome under this Act, but which is not chargeable to income-tax under anyof four head, shall be chargeable to income-tax under this head. Thus any income which satisfies the following two conditions will betaxed under this head-1. Income is chargeable to tax under this Act.2. Such income is not chargeable to tax under any of four heads i.e. Income from salaries, Income from property, Profits and gains of business or profession, Income from capital gains.
CHARGEABILITY1. DIVIDEND:- under section 2(22), the following payments or distributions made by a company to its shareholders are deemed as dividend:-1) Any distribution of accumulated profits2) Any distribution of debentures, debentures stock or deposit certificate, whether with or without interest3) Any distribution of bonus shares made by a company to its preference shareholders.4) Any distribution made by a company to its shareholders on its liquidation5) any payment by way of loan or advance, to following:-a) A shareholder who is the beneficial owner of at least 10% equity shares of companyb) Any concern(HUF, firm, company), in which such shareholder is a member or partner or has substantial interest (beneficial owner of at least 20% profits of the concern)
Dividend does not include following:-1) Any distribution made by company out of its accumulated profits in the event of winding up or reduction of capital2) Any advance or loan given to a shareholder by a company in the ordinary course of its business where money-landing is a substantial part of the business of the company.3) Any dividend paid by company which is set-off by the company against the whole or any part of any sum previously paid by it and treated as dividend as per provision.4) Any payment made by company on purchase of its own shares.5) Any distribution of shares at the time of demerger by the resulting company to the shareholders of demerged company.
Following are various rules relating to assessment of dividend:-1) Basis of charge-a. Normal or Final or annual dividendb. Interim dividendc. Deemed dividend2) Chargeability- The following provisions should be kept in mind while taxing the dividend in the hands of a shareholder:-a. If dividend is declared, distributed or paid by a domestic company after march 31, 2003(or during June 1,1997 to March 31, 2002), then it is not taxable in hands of shareholder or who has a right to receive it. Such dividend is exempt from tax u/s 10(34). On such dividend company pay dividend tax u/s 115-O.b. in case of dividend received from a non-domestic or a foreign company from which tax has been deducted at source and such tax has not been deposited with the GOI, such dividend is chargeable to tax.c. No deduction is made in the case of dividend paid by a co-operative society.
3) Place of accrual- as per section 9(1) (iv), dividend paid by an Indian company outside India is deemed to accrue or arise in India. If dividend is paid by a foreign company outside India is not deemed to accrue or arise in India. Dividend from foreign company, if operating in India, is taxable in hands of non-resident only when it is paid in India.4) Dividend out of tax-free profits- Dividend received by a shareholder is chargeable to tax whether it is paid by company out of its taxable or tax free profits.5) No deduction at source from dividend- As per section 194, no deduction shall be made in following cases:-a) The dividend is paid by an account payee cheque.b) Any dividend which is declared, distributed or paid by a domestic company on or after 1st April, 2003.
2. WINNING FROM LOTTORIES, CROSSWORD PUZZLES, RACES ANDCARD GAMES etc. Income by way of winning from lottery or crossword puzzles or horse race or card game or any other game is subject to deduction of tax at 30% (plus surcharge, education cess and secondary and higher education cess). For resident or non-resident rate of TDS is 30.9% (up to income 10.00.000) or 33.99% ( more than 10,00,000). For domestic company rate of TDS is 33.99%. For non-domestic company rate of TDS is 31.6725%.3. INTEREST ON SECURITIES Security is a documentary evidence of loan, rate of interest, conditions for the repayment of loan and time of repayment is specifically and clearly noted and which is signed by debtor himself or any other person authorized on his behalf. Share is not a security. Acc to sec 2 (28-B), interest on following securities is chargeable to tax:- a. Int on securities of Central or State Gov. b. Int on debenture or other securities for money issued by or on behalf of- a local authority, a company or a corporation established by Central, State or provincial Act.
Kind of securities:- Securities Govt. Securities Non-govt. securities Tax-free Less-tax Tax-free Less-taxBasic Principles:-a. Interest on securities is chargeable to tax on receipt or on due basis.b. Only the owner of security on the due date is chargeable to tax.c. Interest is deemed to be earned on certain dates on which it becomes due.d. Interest on securities is paid after deducting tax therefrom.e. When there are two or more joint owner of a security, the payment of interest and the deduction of tax at source shall be deemed to be in proportion of their ownership.Securities not subjected to TDS:-a. National development bonds.b. Any interest payable to LIC in respect of any securities.c. Any interest payable to General Insurance Corporation of India.d. 7-years national savings certificates.e. 6.5% Gold Bonds, 1977 or 7% Gold Bonds, 1980 held by resident and total nominal value of such bonds did not exceed Rs. 10,000 at any time to which interest relates.f. Notified debentures issued by any institute or authority, public sector company or any co-operative society or bank.
4. CONTRIBUTION RECEIVED FROM EMPLOYEESAcc to section 2(24)(x), if an assesses receives any of following amounts from his employees, he ischargeable to tax:-a. Contribution to an provident fundb. Contribution to superannuation fundc. Contribution to any fund set up under Employees’ State Insurance Act, 1948d. Contribution to any other fund for welfare of employees.5. INCOME FROM MACHINERY, PLANT OR FURNITURE LET ON HIRE6. INCOME FROM COMPOSITE LETTING OFBUILDINGS, MACHINERY, PLANT OR FURNITURE7. RECEIPT WITHOUT COONSIDERATION As per section 56 (2) (vi), if any sum of money exceeds Rs. 50,000 is received without anyconsideration by an individual or a HUF, in any previous year from any person or persons on or after April1, 2006, then the whole of such sum shall be taxable.Exceptions-a. Any sum of money received from any relativeb. Any sum of money received on occasion of marriage of individualc. Any sum of money received under a will or inheritanced. Any sum of money received in contemplation of death of payere. Any sum of money received from any fund or foundation of university or other educational institutions or hospital or other medical institution.f. Any sum of money received from any trust or institution.
8. INTEREST ON KISAN VIKAS PATRA9. INTEREST ON INDIRA VIKAS PATRA10. INTEREST ON NATIONAL SAVINGS CERTIFICATES11. INTEREST ON SOCIAL SECURITY CERTIFICATE
Besides these income, the following income are also chargeable to income-taxunder ‘Income from other sources’:-1) Agricultural income received from outside India2) Interest on securities of foreign Government or authority3) Salaries due to a member of Parliament4) Compensation received for use of business assets5) Any fee, commission, reward or other remuneration received by an employee from a person other than his employer, e.g., examination remuneration received by teacher, tips received by a waiter etc.6) Income from sub-letting of property7) Royalties or rent of mines received or receivable by owner of a coal mine8) Income from fisheries9) Amount received for loss of income from land10) Interest other than interest on securities such as int. on loan, on bank deposit and on provident fund etc11) Int. on employee’s contribution to unrecognized provident fund12) Gratuity received by director, who is not employee of company13) Income of cricket players who have been selected to play for India. Following rules are applicable:-a. 25% of income received from cricket Control Board of India for test matches played in Indiab. 50% of income received for matches played outside Indiac. Income from other matches played in India is tax-free if income is received from Cricket Control Board of India.14) Interest earned by a company on deposits during pre-production period15) Director’s fee or salary to a director employee16) Rent received from leasing out the trademark17) Income from buster lands18) Income from units of Unit Trust of India.19) Int. on securities issued by a private body, institution or authority.