3. TAX
Tax can be defined as a levy or financial charge or fee imposed by state or
central government on legal entities or individuals.
• Tax Classifications
A direct tax is a form of tax is collected directly by the
government from the persons who bear the tax burden.
Examples of direct taxes are Income Tax and Wealth Tax.
– An indirect tax is a form of tax collected by mediators
who transfer the taxes to the government, and also
perform functions associated with filing tax returns. The
customers bear the final tax burden.
Examples of indirect tax is Goods and Service Tax (GST)
4. INCOMETAX
The government needs money to maintain law and order in the
country.
Safeguard the security of the country from foreign powers
Foremost duty of the government to bring out such welfare and
development programmes which will bright the gap between the rich
and the poor .
All this requires mobilisation of funds from various sources.
Income tax is very important direct tax.
It is an important and most significant source of revenue of the
government.
Income tax, being a direct tax, is an important tool to achieve balanced
socio-economic growth by providing concession and incentives in
income tax for various development purposes.
5. Whois liableto pay incometax
• Every person, whose taxable income for the
previous financial year exceeds the minimum
taxable limit is liable to pay to the Central
Government income tax during the current
financial year on the income of the previous
financial year at the rates in force during current
financial year.
7. DEFINITIONS
1. Assessee – Section 2(7)
2. Assessment year – Section 2(9)
3. Previous year – Section 3
4. Income – Section 2 (24)
5. Person – Section 2(31)
6. Gross Total Income – Section 80B (5)
7. Total Income – Section 2(45)
8. TYPES OF RESIDENTIAL STATUS SEC -6
The different types of residential status are:-
Resident(R)
Not Ordinarily Resident (NOR)
Non-Resident (NR)
9. Basic Conditions u/s 6(1)
a) He is in India in the pervious year for a period of 182 days or
more; or
b) He has in India for at least of 60 days or more during the
previous year and 365 days or more during the four years
immediately preceding the previous year.
Additional Conditions u/s 6(6)
i. He must be a resident in India in two out of the ten previous
years preceding that year; and
ii. He must be in India during 7 preceding previous years for
aggregate period of 730 days or more.
11. Introduction
• The total income of an assessee is to be
computed after making deductions permissible
u/s 80C to 80U. However, the aggregate
amount of deductions cannot exceed the Gross
Total Income.
12. Deduction for Payment of
Life Insurance Premium, etc., [Sec.
80C]
Deduction under this section is allowed as follows –
Deduction is available only in respect of ‘specified sums’
actually paid or deposited during the previous year (sum
not actually paid and outstanding is not allowed)
Specified sums must have been paid/deposited by an
Individual
The total amount of deduction under this section is subject
to a maximum limit of Rs.1,50,000.
13. Deduction In Respect Of
Health Insurance Premium [Sec. 80D]
Deduction is available in respect of the amount paid to effect or to keep in
force health insurance under a scheme –
made by General Insurance Corporation of India (GIC) and
approved by Central Government; or
made by any other insurer and approved by Insurance Regulatory
and Development Authority.
Deduction shall be to the extent of lower of –
Health insurance premium paid in respect of health of individual
Rs. 25,000 (Rs. 50,000 in case the insured is a senior citizen).
14. Maintenance of A Dependent Being
Person With Disability [Section 80DD]
Deduction is available in respect of –
expenditure incurred for medical / treatment / nursing / training/
rehabilitation, or
amount paid under scheme LIC / UTI other insurer approved by CBDT
for maintenance, of a “dependent”, being a person with disability.
Deduction shall be allowed to the extent of –
Rs. 75,000 (Rs. 1,25,000 in case of dependent suffering with severe
disability), irrespective of expenditure incurred or sum paid.
15. Deduction in respect of
Medical Treatment, etc. [Sec. 80DDB]
Deduction is available in respect of sum actually paid during
previous year for medical treatment of prescribed disease or
ailment for the following –
In case of individual: himself or his spouse, children,
parents, brothers and sisters,
Deduction shall be available to the extent of lower of the
following –
sum actually paid; or
Rs. 80,000 (Rs. 1,00,000 in case of a
senior citizen).
Rs. 1,00,000 for super senior citizen.
16. Deduction in respect of Interest on
Loan taken for Higher Education
[Sec.80E]
• Deduction in available in respect of sum paid by the
assessee in the previous year, out of his income
chargeable to tax, by way of interest on loan taken –
– for his higher education, or
– for the higher education of his relatives.
• 100% of the amount of interest on such loan Deduction
will be admissible.
17. Deduction in respect of Donations
[Section 80G]
Deduction is allowed under this section to all assesses in respect of donations of
sum of money in the following manner –
100% deduction will be allowed if donations are given to any of the
specified funds.
50% deduction will be allowed if donations made to any of the 5
specified funds.
100% deduction shall be allowed subject to the qualifying amount if
donations are made for promoting family planning.
50% deduction shall be allowed subject to the qualifying amount if
donations are made towards any of the 5 specified purposes.
18. Section 80 TTA – Interest on Savings
Account
• Deduction of maximum Rs 10,000
• Interest income from your savings account
with a bank, co-operative society, or post
office
• Deduction is not available on interest income
from fixed deposits, recurring deposits, or
interest income from corporate bonds
19. Section 80 TTB – Interest Income
• A new section 80TTB has been inserted vide
Budget 2018 in which deductions with respect
to interest income from deposits held by
senior citizens will be allowed. The limit for
this deduction is Rs.50,000
20. Section 80U – Physical Disability
• A deduction of Rs.75,000 is available to a
resident individual who suffers from a physical
disability (including blindness) or mental
retardation. In case of severe disability, one
can claim a deduction of Rs 1,25,000
22. RATES OF INCOME TAX FOR AN INDIVIDUAL
(Assessment Year 2020-221)
(Male or female)
1. INDIVIDUAL- (Resident in India and below age of 60 years
during the previous year.
2. INDIVIDUAL- SENIORCITIZEN (Resident in India , who is of
the age of 60 to 80 years during the previous year )
3. INDIVIDUAL = SUPER SENIOR CITIZEN (Resident in India , who
is of the age of 80 years above during the previous year
)
23. 1. INDIVIDUAL- (Resident in India and below age of
60 years during the previous year.
INCOME (Rs.) RATE
0 - 2,50,000 NIL
2,50,001 - 5,00,000 5%
5,00,001 - 10,00,000 20%
Above 10,00,000 30%
24. 2. INDIVIDUAL- SENIORCITIZEN (Resident in India ,
who is of the age of 60 to 80 years during the
previous year )
INCOME (Rs. ) RATE
0 - 3,00,000 NIL
3,00,001 - 5,00,000 5%
5,00,001 - 10,00,000 20%
Above 10,00,000 30%
25. 3. INDIVIDUAL= superSENIORCITIZEN (Resident in
India , who is of the age of 80 years above
during the previous year )
INCOME (`Rs. ) RATE
Upto 5,00,000 NIL
5,00,001 - 10,00,000 20%
Above 10,00,000 30%
26. RATES OF INCOME TAX
(Assessment Year 2020-21)
Long Term Capital Gain 20%
Short Term Capital Gain on sale of Listed equity
shares15%
Casual Income 30%
Rebate u/s 87A:
Rebate of Rs. 12,500 for individual having
total taxable amount not exceeding Rs.5,00,000.
28. Mr. Ram given following information to earn the income of Previous Year
2019-20 in various heads.
Particulars Rs.
Income from Salary 2,00,000
Income from House Property 2,80,000
Income from Business or Profession 1,10,000
Income from Capital Gain
(Long term capital gain)
50,000
Income from Other Sources
(Winning from lottery Rs. 10,000 include)
1,60,000
Life Insurance Premium paid to himself 75,000
Medical treatment of his father (Age 75 years) 80,000
Determine the Tax liability of Mr. Ram for the A.Y. 2020-21.
