5. Income from Ordinary Sources Income from Ordinary Sources Income from House Property Income from Business Income From Employment Capital Gains Income from Residuary Sources
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9. Income from Employment – Looks Old is Gold !!!! 90,000 1,08,000 9,600 9,600 1,08,000 18,000 Deduction u/s10(10)13A House rent allowance 0 0 Exempted under sec10(16) Conveyance allowance 2,00,000 2,00,000 Basic salary Under New Code (Rs.) Under Present Act( Rs.) Particulars
10. Income from Employment - Old is Gold !!!! 6,50,000 0 EPF (withdrawn for daughter’s marriage) 2,00,000 0 Commuted value of superannuation (to repay HL) 15,000 0 15,000 Medical allowance 18,000 0 18,000 Leave travel concession 2,00,000 0 2,00,000 Leave encashment at retirement (TO REPAY HL)
11. Income from Employment – Looks Old is Gold !!!! Warrants a relook to eschew avoidable upheaval 17,80,000 3,42,400 Total taxable salary 1,50,000 9,600 84,000 5,000 2,40,000 0 Total tax payable 3,00,000 0 Gratuity( Withdrawn for daughter’s marriage) 0 -1,50,000 Interest on Housing Loan 84,000 74,400 Exempted portion for 2 child Children educational allowance 5,000 0 Food coupons
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27. Aggregation of income xxx Total income = Gross total income from ordinary sources - Aggregate amount of deductions allowed under sub-chapter I + Total income from special sources xxx Gross total income from special sources (if negative unabsorbed current loss from ordinary sources’, for the financial year) xxx Less :Unabsorbed preceding year loss from the special source xxx Current income from the special source xxx Gross total income from ordinary sources (if negative unabsorbed current loss from ordinary sources’, for the financial year) xxx Less : Unabsorbed preceding year loss from the ordinary sources xxx Current income from ordinary sources xxx Income under the head ‘Capital gains’(current income from capital gains + unabsorbed preceding year capital loss) xxx Income under any head of income, other than ‘Capital gains
(2) The contractual rent referred to in sub-section (1) shall be the rent receivable by the assessee under a contract, whether in writing or otherwise. For the purposes of section 22 , the annual value of any property shall be deemed to be— ( a ) the sum for which the property might reasonably be expected to let from year to year; or ( b ) where the property or any part of the property is let and the actual rent received or receivable 20 by the owner in respect thereof is in excess of the sum referred to in clause ( a ), the amount so received or receivable; or ( c ) where the property or any part of the property is let and was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in clause ( a ), the amount so received or receivable :
“ the deductions under d, e, and f above would be available only to the extent the amount is deposited in a “Retirement Benefit Account” or the “NEW PENSION SYSTEM TRUST”. The amount received from approved superannuation fund, which hither to exempted fromincome tax will henceforth will also be treated in the same manner” As per paragraph 7.5 of the code, the amount deposited in the tax saving schemes during the period of earning is restricted to only four avenues namely, approved provident funds[GPF,EPF,PPF], approved superannuation fund, life insurance schemes and New Pension System Trust only. The accretions to the deposits in these accounts remain untaxed till they are withdrawn. At the time of withdrawal they are taxed on receipt basis at the marginal rate applicable to the assessee in the year of withdrawal. 169. “maximum marginal rate” means the rate of income-tax applicable in relation to the highest slab of income in the case of an individual, as specified in the First Schedule;
a) operating expenditure referred to in section 33, incurred by the assessee; (b) permitted finance charges referred to in section 34, incurred by the assessee; (c) expenditure on any license charges, rental fees or other charges, if actually paid; (d) expenditure on purchase, lease or rental of land or land rights; (e) capital expenditure incurred by the assessee; (f) expenditure on infructuous or abortive exploration of any area; (g) expenditure referred to in clauses (a) to (f) incurred before commencement of the business; (h) the amount of negative profit computed under this Schedule for any financial year immediately preceeding the relevant financial year.
Every person shall keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of this Code. legal, medical, engineering, architectural profession or profession of accountancy, technical consultancy, interior decoration or any other profession as “ business” includes - (a) any trade, commerce or manufacture; (b) any adventure, or concern of that nature; (c) any profession;and (d) any vocation; Every person carrying on business or profession [not being a profession referred to in sub-section (1)] shall,— ( i ) if his income from business or profession exceeds 38 [one lakh twenty] thousand rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession exceed or exceeds 39 [ten lakh] rupees in any one of the three years immediately preceding the previous year; or ( ii ) where the business or profession is newly set up in any previous year, if his income from business or profession is likely to exceed 40 [one lakh twenty] thousand rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession are or is likely to exceed 41 [ten lakh] rupees, 42 [during such previous year; or
A business shall be deemed to be distinct and separate from another business, if- (a) the unit of the business is processing, producing or manufacturing the same goods as in the other business and such unit is located physically apart from other unit; (b) the unit of the business is producing, processing or manufacturing the same goods as in the other business and utilizes raw material or manufacturing process, which is different from the raw material or the manufacturing process of the other unit; (c) separate books of account are maintained or capable of being maintained, for such business; or (d) it is a business in respect of which profits are determined under sub-section (2) of section 30. Business of operating a qualifying ship Tenth Schedule 02. Business of mineral oil or natural gas Eleventh Schedule 03. Business of developing a special economic zone Thirtheen th schedule business of generation, transmission or distribution of power; (b) business of developing, or operating and maintaining, any infrastructure facility; (c) business of operating and maintaining a hospital in any area, other than the excluded area; (d) business of processing, preservation and packaging of fruits and vegetables. (e) business of laying and operating a cross country natural gas or crude or petroleum oil pipeline network for distribution, including storage facilities being an integral part of the network; (f) business of setting up and operating a cold chain facility; and (g) business of setting up and operating a warehousing facility for storage of agricultural produce.
Q ualifying ship having Amount of daily tonnage net tonnage income (1) (2) up to 1,000 tons Rs. 46 for each 100 tons exceeding 1,000 tons but not more Rs. 460 plus Rs. 35 for each than 10,000 tons 100 tons exceeding 1,000 tons exceeding 10,000 tons but not more Rs. 3,610 plus Rs. 28 for each than 25,000 tons 100 tons exceeding 10,000 tons exceeding 25,000 tons Rs.7,810 plus Rs. 19 for each 100 tons exceeding 25,000 tons. The amount of permitted finance charges referred to in sub-section (1) shall not include- (a) any amount paid in respect of capital borrowed or debt incurred for acquisition of a capital asset (whether capitalized in the books of account or not) for any period - (i) in the case of a new business, prior to the date of commencement of such business; and (ii) in any other case, prior to the date on which such asset was first put to use; and
42. “business capital asset” means,- (a) any capital asset self -generated in the course of business; (b) any intangible capital asset in the nature of,- (i) goodwill of a business, (ii) a trade mark or brand name associated with the business, (iii) a right to manufacture or produce any article or thing, (iv) right to carry on any business, (v) tenancy right in respect of premises occupied by the assessee and used by him for the purposes of his business, or (vi) licence, right or permit (by whatever name called) acquired in connection with, or in the course of, any business; (c) any tangible capital asset in the nature of a building, machinery, plant or furniture;or (d) any other capital asset connected with or used for the purposes of any business of the assessee; cash assistance (by whatever name called) received or receivable by any person against exports under any scheme of the Government of India ;]
Around 43 items exhaustively defined as operating expenditure (i) in the case of a new business, prior to the date of commencement of such business; and (ii) in any other case, prior to the date on which such asset was first put to use; and Any interest referred to in sub-section (3) which has been converted into a loan or borrowing shall not be deemed to have been actually paid for the purposes of that sub-section. (5) The depreciation allowance on assets referred to in section 35 shall, regardless of the fact that all business capital assets in any block of assets have ceased to exist by reason of being demolished, destroyed, discarded or transferred, be allowed to a person in respect of the block of asset if the adjusted value of the block of assets is greater than zero.
As a result, all capital gains before April 2000 will be exempt. The carry forward loss under this head will be allowed as deduction from gains before it is subjected to tax in the current year. However, if the investment asset is transferred at any time after one year from the end of the financial year in which the asset is acquired by the assessee,
Value adopted for stamp duty valuation is to be considered If the stamp duty value exceeds the fair market value then reference is to be made to the Valuation officer If there is still an unabsorbed loss the same may be carried forward to next year. If the capital gain is available then it has to be added to the other heads of income and taxed at the appropriate marginal tax rate applicable to person’s total income.
within a period of one year before or 30 [two years] after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is The original investment asset was acquired prior to one year before the beginning of the financial year in which the transfer of the asset took place. Agricultural land One or more pieces of The original investment asset was agricultural land. (i) an agricultural land during two years immediately preceeding the financial year in which the asset is transferred; and (ii) acquired prior to one year before the beginning of the financial year in which the transfer of the asset took place. 2. Any investment Residential house. (i) The assessee does not own any asset residential house, other than the new investment asset, on the date of transfer of the original investment asset; and (ii) The original investment asset was acquired prior to one year before the beginning of the financial year in which the transfer of the asset took place. 3. Any investment Deposit in an account (i) The original investment asset was asset maintained under the acquired prior to one year before B-48 Capital Gains Savings the beginning of the financial Scheme year in which the transfer of asset took place; and (ii) The deposit is made within a period of sixty days from the date of transfer of the original investment asset. Sl Description of Description of the Conditions No. the original new investment investment asset asset (1) (2) (3) (4)
The amount referred to in clause (h) of sub-section (2) shall not include any amount received - (a) from any relative; (b) on the occasion of the marriage of the individual; (c) under a will or by way of inheritance; (d) in contemplation of death of the payer; (e) from any local authority; or (f) from any non-profit organisation. (4) For the purposes of this section,- (a) ‘relative’ shall not include any person referred to in sub-clause (g) of clause (233) of section 284; (b) ‘specified property’shall mean- (i) immovable property being land or building or both; (ii) shares and securities; (iii) jewellery; (iv) archaeological collections; (v) drawings; (vi) paintings; B-51 (vii) sculptures; or (viii)any work of art; the amount equal to thirty-three and one-third per cent of income or fifteen thousand rupees, whichever is less, in respect of family pension interest received by a person on compensation, or an enhanced compensation, Shall The following amounts shall, regardless of anything to the contrary contained in this section, not be allowed as a deduction, namely:- (a) any amount relating to personal expenses of the person; (b) any amount paid on account of wealth-tax;or (c) any sum received under a Keyman insurance policy; (6)
any amount found credited in the books of an person maintained for the financial year, if - (i) the person offers no explanation about the nature and source thereof; or (ii) the person offers an explanation but fails to substantiate the explanation; or (iii) the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory; the value of any investment made by the person in the financial year to the extent for which,- the value of any money, bullion, jewellery or other valuable article owned by the person to the extent for which,- the amount of any expenditure incurred by the person in the financial year, if-
Capital expenditure incurred for specified businesses will be allowed as a deductible expenditure and the loss hall be allowed to be carried forward till it is absorbed completely. A grandfather clause is an exception that allows an old rule to continue to apply to some existing situations, when a new rule will apply to all future situations. It is often used as a verb : to grandfather means to grant such an exemption. Frequently, the exemption is limited; it may extend for a set period of time, or it may be lost once a change is made. For example, a "grandfathered power plant" might be exempt from new, more restrictive pollution laws, which would be applied if the plant were expanded. Often, such a provision is used as a compromise , to effect new rules without upsetting a well-established logistical or political situation. This extends the idea of a rule not being retroactively applied .
• However, profit-linked incentives are inherently inefficient. Essentially, a profitlinked incentive is regressive in nature. Consequently, there is an inbuilt incentive for laundering and shifting of profits to the exempted activity. Since profit is the basis for exemption, there is no incentive for investment and upgradation during the period of tax holiday. Such profit-linked incentives also lead to significant loss of revenue and encourage rent-seeking behaviour. Hence, the Code substitutes profit-linked incentives by a new scheme. Under the new scheme, a person would be allowed to recover all capital and revenue expenditure during the tax holiday period “ permitted savings intermediaries” means,- (a) approved provident fund; (b) approved superannuation fund; (c) life insurer; and (d) New Pension System Trust;
The payment to, or deposit with, the permitted savings intermediary shall be made in accordance with the scheme framed and prescribed by the Central Government in this behalf. The amount of deduction under sub-section (1) shall not exceed in the aggregate - (a) twenty thousand rupees, if the amount is paid in respect of a specified person, who is a senior citizen; and (b) fifteen thousand rupees, in any other case. The amount of deduction under sub-section (1) shall not exceed in the aggregate - (a) sixty thousand rupees, if the amount is paid in respect of any specified person, who is a senior citizen; and (b) forty thousand rupees, in any other case. (2) The amount of deduction under sub-section (1) shall not exceed in the aggregate - (a) one hundred thousand rupees, if the dependant is a person with severe disability; and (b) fifty thousand rupees, in any other case. B-58 (a) one and one-fourth times of the amount of money actually paid by him in the financial year as donation to any person specified in Part-A of the Sixteenth Schedule; (b) hundred per cent. of the amount of money actually paid by him in the financial year as donation to any person specified in Part-B of the Sixteenth Schedule; (c) fifty per cent of the aggregate of the amount of money actually paid by him in the financial year as donation to any person specified in Part-C of the Sixteenth Schedule.
The amount of ‘unabsorbed current capital loss’, ‘unabsorbed current loss from ordinary sources’and the ‘unabsorbed current loss from the special source’, for the financial year shall, regardless of anything contained in any provision of this Code, be deemed to be ‘nil’, if the return of income for the financial year is not furnished by the due date.
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